Performance Shipping Inc.
Annual Report 2023

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549FORM 20-F(Mark One)☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report _________________ For the transition period from _________________ to _________________Commission file number 001-35025PERFORMANCE SHIPPING INC.(Exact name of Registrant as specified in its charter)Not applicable(Translation of Registrant’s name into English)Republic of the Marshall Islands(Jurisdiction of incorporation or organization)373 Syngrou Avenue, 175 64 Palaio Faliro, Athens, Greece(Address of principal executive offices)Mr. Andreas Michalopoulos, 373 Syngrou Avenue, 175 64 Palaio Faliro, Athens, GRTel: + 30-216-600-2400, Fax: + 30-216-600-2599, E-mail: amichalopoulos@pshipping.com(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)Securities registered or to be registered pursuant to Section 12(b) of the Act.Title of each classTrading Symbol(s)Name of each exchange on which registeredCommon shares, $0.01 par value, including the Preferred stockpurchase rights“PSHG”The Nasdaq Stock Market LLCSecurities registered or to be registered pursuant to Section 12(g) of the Act.None(Title of Class)Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.None(Title of Class)Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.As of December 31, 2023, there were 12,279,676 of the registrant’s common shares, par value $0.01, outstanding, 50,726 shares of the registrant’s Series B Convertible CumulativePerpetual Preferred Stock outstanding and 1,428,372 shares of the registrant’s Series C Convertible Cumulative Redeemable Perpetual Preferred Stock outstanding.Indicate by check mark if the registrant is a well‑known seasoned issuer, as defined in Rule 405 of the Securities Act.☐ Yes ☒ NoIf this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.☐ Yes ☒ NoNote-Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations underthose Sections.Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (orfor such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.☒ Yes☐ NoIndicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of thischapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).☒ Yes☐ NoIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large acceleratedfiler”, “accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:Large accelerated filer ☐Accelerated filer ☐Non-accelerated filer ☒Emerging growth company ☐ If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extendedtransition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April5, 2012.Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reportingunder Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of anerror to previously issued financial statements. ☐Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’sexecutive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:U.S. GAAP ☒International Financial Reporting Standards as issued by theOther ☐International Accounting Standards Board ☐ If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. ☐ Item 17 ☐ Item 18If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).☐ Yes ☒ No(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to thedistribution of securities under a plan confirmed by a court. N/A☐ Yes☐ NoTABLE OF CONTENTSTable of ContentsPART I 3Item 1.Identity of Directors, Senior Management, and Advisers3Item 2.Offer Statistics and Expected Timetable3Item 3.Key Information3Item 4.Information on the Company34Item 4A.Unresolved Staff Comments51Item 5.Operating and Financial Review and Prospects63Item 6.Directors, Senior Management, and Employees67Item 7.Major Shareholders and Related Party Transactions69Item 8.Financial information70Item 9.The Offer and Listing71Item 10.Additional Information78Item 11.Quantitative and Qualitative Disclosures about Market Risk78Item 12.Description of Securities Other than Equity Securities79PART IΙ 79Item 13.Defaults, Dividend Arrearages and Delinquencies79Item 14.Material Modifications to the Rights of Security Holders and Use of Proceeds79Item 15.Controls and Procedures79Item 16.[Reserved]80Item 16A.Audit Committee Financial Expert80Item 16B.Code of Ethics80Item 16C.Principal Accountant Fees and Services80Item 16D.Exemptions from the Listing Standards for Audit Committees80Item 16E.Purchases of Equity Securities by the Issuer and Affiliated Purchasers81Item 16F.Change in Registrant’s Certifying Accountant81Item 16G.Corporate Governance81Item 16H.Mine Safety Disclosure81Item 16I.Disclosure Regarding Foreign Jurisdictions that Prevent Inspections81Item 16J.Insider Trading Policies81Item 16K.Cybersecurity82PART III 83Item 17.Financial Statements83Item 18.Financial Statements83Item 19.Exhibits 1Table of ContentsFORWARD-LOOKING STATEMENTS Matters discussed in this annual report on Form 20-F and the documents incorporated by reference may constitute forward-looking statements. The Private Securities LitigationReform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include, but are not limited to, statements concerning plans, objectives, goals, strategies, future events or performance, underlying assumptions, and otherstatements, which are other than statements of historical facts. Performance Shipping Inc., or the Company, desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including thiscautionary statement in connection with this safe harbor legislation. This document and any other written or oral statements made by the Company or on its behalf may include forward-looking statements, which reflect its current views with respect to future events and financial performance, and are not intended to give any assurance as to future results. When used inthis document, the words “believe,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” “plan,” “potential,” “will,” “may,” “should,” “expect,” “targets,” “likely,” “would,” “could,”“seeks,” “continue,” “possible,” “might,” “pending,” and similar expressions, terms, or phrases may identify forward-looking statements, but the absence of these words does not meanthat a statement is not forward-looking. The forward-looking statements in this document are based upon various assumptions, many of which are based, in turn, upon further assumptions, including withoutlimitation, our management’s examination of historical operating trends, data contained in its records, and other data available from third parties. Although the Company believes thatthese assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible topredict and are beyond its control, the Company cannot assure you that it will achieve or accomplish these expectations, beliefs, or projections. Such statements reflect the Company’s current views with respect to future events and are subject to certain risks, uncertainties, and assumptions. Should one or more of theserisks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated,expected, or intended. The Company is making investors aware that such forward-looking statements, because they relate to future events, are by their very nature subject to manyimportant factors that could cause actual results to differ materially from those contemplated. In addition to these important factors and matters discussed elsewhere herein, including under the heading “Item 3. Key Information—D. Risk Factors,” and in the documentsincorporated by reference herein, important factors that, in its view, could cause actual results to differ materially from those discussed in the forward-looking statements include, but arenot limited to: the strength of world economies; fluctuations in currencies and interest rates; inflation general market conditions, including fluctuations in charter rates and vessel values;changes in demand in the tanker shipping industry; changes in the supply of vessels; changes in worldwide oil production, consumption, and storage; changes in our operatingexpenses, including bunker prices, crew costs, drydocking, and insurance costs; our future operating or financial results; availability of financing and refinancing; changes to ourfinancial condition and liquidity, including our ability to pay amounts that we owe and obtain additional financing to fund capital expenditures, acquisitions, and other general corporateactivities; our ability to obtain financing and comply with the restrictions and other covenants in our financing arrangements; our ability to continue as a going concern; our ability topay dividends to holders of our preferred shares and common shares; potential liability from pending or future litigation and potential costs due to environmental damage and vesselcollisions; changes in the market for our vessels; availability of skilled workers and the related labor costs; compliance with governmental, tax, environmental, and safety regulations;any non-compliance with the U.S. Foreign Corrupt Practices Act of 1977 (FCPA) or other applicable regulations relating to bribery; the impact of the replacement of the introduction ofthe Secured Overnight Financing Rate (“SOFR”) on interest rates of our debt; general economic conditions and conditions in the oil industry; effects of new products and newtechnology in our industry; the failure of counterparties to fully perform their contracts with us; our dependence on key personnel; adequacy of insurance coverage; our ability to obtainindemnities from customers; changes in laws, treaties, or regulations; volatility of the price of our common shares; our incorporation under the laws of the Republic of the MarshallIslands and the different rights to relief that may be available compared to other countries, such as the United States; changes in governmental rules and regulations or actions taken byregulatory authorities; general domestic and international political conditions or events, including “trade wars,” acts by terrorists, acts of piracy on ocean-going vessels, or otherhostilities, including the war between Russia and Ukraine and Israel and Hamas, and tensions in the Middle East region, including missile attacks by the Houthis on vessels in the RedSea; the outbreak, length, and severity of epidemics and pandemics, such as the novel coronavirus (COVID-19) and its variants, and governmental responses thereto and any resultantimpact on the demand for seaborne transportation of petroleum and other types of products; potential disruption of shipping routes due to accidents, labor disputes, or political events;and other important factors described from time to time in the reports filed by the Company with the U.S. Securities and Exchange Commission, or the SEC. This report may contain assumptions, expectations, projections, intentions, and beliefs about future events. These statements are intended as forward-looking statements. TheCompany may also, from time to time, make forward-looking statements in other documents and reports that are filed with or submitted to the SEC in other information sent to theCompany’s security holders, and in other written materials. The Company also cautions that assumptions, expectations, projections, intentions, and beliefs about future events may, andoften do, vary from actual results and the differences can be material. The Company undertakes no obligation to publicly update or revise any forward-looking statement contained inthis report, whether as a result of new information, future events, or otherwise, except as required by law. 2Table of ContentsPART I Item 1.Identity of Directors, Senior Management, and Advisers Not Applicable. Item 2.Offer Statistics and Expected Timetable Not Applicable. Item 3.Key Information In this annual report, “we,” “us,” “our,” and “the Company” all refer to Performance Shipping Inc. and its subsidiaries, unless the context requires otherwise. References in thisannual report, other than as incorporated by reference, to our common shares and earnings per share amounts, including the number of common shares issuable upon exercise ofcommon stock purchase warrants or upon conversion of shares of our Series C Convertible Cumulative Redeemable Perpetual Preferred Stock, or the Series C Preferred Shares, and theexercise or conversion price of such warrants and Series C Preferred Shares, are adjusted to reflect the consolidation of our common shares through reverse stock splits, including theone-for-fifteen reverse stock split which became effective as of November 15, 2022. A.[Reserved] B.Capitalization and Indebtedness Not Applicable. C.Reasons for the Offer and Use of Proceeds Not Applicable. D.Risk Factors Some of the following risks relate principally to the industry in which we operate and our business in general. Other risks relate principally to the securities market andownership of our shares. The occurrence of any of the events described in this section could significantly and negatively affect our business, financial condition, or operating results, orthe trading price of our common shares. 3Table of ContentsSummary of Risk Factors Below is a summary of the principal factors that make an investment in our common shares speculative or risky. This summary does not address all of the risks that we face.Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found below under the headings “Industry Specific Risk Factors,”“Company Specific Risk Factors,” and “Risks Relating to our Common Shares and Preferred Shares” and should be carefully considered, together with other information in this annualreport and our other filings with the SEC before making an investment decision regarding our common shares. Industry Specific Risk Factors •The international tanker industry has historically been both cyclical and volatile.•An over-supply of tanker capacity may lead to a reduction in charter rates, vessel values, and profitability.•Our results of operations are subject to seasonal fluctuations, which may adversely affect our financial condition.•If economic conditions throughout the world continue to deteriorate or become more volatile, it could have an adverse impact on our operations and financial results.•Tanker vessel values may fluctuate due to economic and technological factors, which may adversely affect our financial condition, or result in the incurrence of a lossupon disposal of a tanker vessel, impairment losses, or increases in the cost of acquiring additional tanker vessels.•An increase in operating costs could adversely affect our cash flows and financial condition.•Rising fuel prices may adversely affect our profits.•Compliance with safety and other vessel requirements imposed by classification societies may be very costly and may adversely affect our business.•We are subject to regulation and liability under environmental laws that could require significant expenditures and affect our cash flows and net income.•We, or our in-house managers, may be unable to attract and retain qualified, skilled employees or crew necessary to operate our business. In addition, laborinterruptions could disrupt our business.•We operate our vessels worldwide and, as a result, our vessels are exposed to international risks and inherent operational risks of the tanker vessel industry, whichmay adversely affect our business and financial condition.•Political instability, terrorist or other attacks, war, and international hostilities could affect our results of operations and financial condition.•Outbreaks of epidemic and pandemic of diseases and the related governmental responses thereto, could adversely affect our business.•Increasing growth of electric vehicles and renewable fuels could lead to a decrease in trading and the movement of crude oil and petroleum products worldwide.•Acts of piracy on ocean-going vessels could adversely affect our business.•Our operations may be adversely impacted by severe weather, including as a result of climate change.•If our vessels call on ports located in countries or territories that are the subject of sanctions or embargoes imposed by the U.S. government or other governmentalauthorities, it could lead to monetary fines or adversely affect our business, reputation, and the market for our common shares.•We conduct business in China, where the legal system is unpredictable and has inherent uncertainties that could limit the legal protections available to us.•Governments could requisition our vessels during a period of war or emergency, resulting in loss of earnings.•Failure to comply with the U.S. Foreign Corrupt Practices Act of 1977, or the FCPA, could result in fines, criminal penalties, and an adverse effect on our business.•The smuggling of drugs or other contraband onto our vessels may lead to governmental claims against us.•Maritime claimants could arrest or attach our vessels, which would interrupt our business or have a negative effect on our cash flows.•Changing laws and evolving reporting requirements could have an adverse effect on our business. Company Specific Risk Factors •The market values of our vessels are highly volatile and may decline, which could limit the amount of funds that we can borrow and trigger breaches of certain financialcovenants under our future loan facilities.•Our business, operating results, financial condition, and growth will depend on our ability to successfully charter our vessels, for which we will face substantialcompetition.•The failure of our counterparties to meet their obligations to us under any vessel purchase agreements or charter agreements could cause us to suffer losses orotherwise adversely affect our business.•We may be unable to locate suitable vessels or dispose of vessels at reasonable prices, which would adversely affect our ability to operate our business.•Our purchasing and operating secondhand vessels, and the aging of our fleet may result in increased operating costs and vessels off-hire, which could adverselyaffect our earnings.•There is a lack of historical operating history provided with our secondhand vessel acquisitions, and profitable operation of the vessels will depend on our skill andexpertise.•Technical innovation and technical quality and efficiency requirements from our customers could reduce our charter hire income and the value of our vessels.•The Public Company Accounting Oversight Board inspection of our independent accounting firm could lead to findings in our auditor’s reports and challenge theaccuracy of our published audited consolidated financial statements.•Our ability to obtain debt financing in the future may be dependent on the performance of our then-existing charters and the creditworthiness of our charterers.•We may be unable to attract and retain key management personnel and other employees in the shipping industry, which may negatively impact the effectiveness of ourmanagement and results of operations.•Aliki Paliou, the Chairperson of the Board, controls a majority of voting power over matters on which our shareholders are entitled to vote and, accordingly, may exertconsiderable influence over us and may have interests that are different from the interests of our other shareholders.•Our Chief Financial Officer participates in business activities not associated with us and does not devote all of his time to our business, which may create conflicts ofinterest and hinder our ability to operate successfully.•We are currently subject to litigation and we may be subject to similar or other litigation in the future. 4Table of Contents•We expect to continue to operate substantially outside the United States, which will expose us to political and governmental instability, which could harm ouroperations.•We generate all of our revenues in U.S. dollars and incur a portion of our expenses in other currencies and, therefore, exchange rate fluctuations could have an adverseimpact on our results of operations.•Volatility of SOFR could affect our profitability, earnings, and cash flow.•We may have to pay tax on United States source income, which would reduce our earnings.•We may be treated as a “passive foreign investment company,” which could have certain adverse U.S. federal income tax consequences to U.S. holders.•We may be subject to increased premium payments, or calls, because we obtain some of our insurance through protection and indemnity associations.•The international nature of our operations may make the outcome of any bankruptcy proceedings difficult to predict.•A cyber-attack could materially disrupt our business.•If we do not identify suitable vessels for acquisition or successfully integrate any acquired vessels, we may not be able to grow or effectively manage our growth.•Inflation could adversely affect our operating results and financial condition.•The IMO 2020 regulations may cause us to incur substantial costs and procure low-sulfur fuel oil directly on the wholesale market for storage at sea and onwardconsumption on our vessels.•Climate change and greenhouse gas restrictions may adversely impact our operations and markets.•Increasing scrutiny and changing expectations from investors, lenders, and other market participants with respect to our Environmental, Social, and Governance(“ESG”) policies may impose additional costs on us or expose us to additional risks.•If we are unable to operate our vessels profitably, we may be unsuccessful in competing in the highly competitive international tanker vessel market, which wouldnegatively affect our financial condition and our ability to expand our business.•Regulations relating to ballast water discharge may adversely affect our revenues and profitability.•Insurance may be difficult to obtain or, if obtained, may not be adequate to cover our losses that may result from our operations due to the inherent operational risks ofthe shipping industry.•Adverse market conditions could cause us to breach covenants in our credit facilities and adversely affect our operating results.•A shift in consumer demand from crude oil towards other energy sources or changes to trade patterns for crude oil and refined petroleum products may have a materialadverse effect on our business. Risks Relating to our Common and Preferred Shares •The market price of our common shares is subject to significant fluctuations.•Future sales of our common shares, including through the exercise of conversion rights under our outstanding convertible preferred shares, could cause the marketprice of our common shares to decline.•As a key component of our business strategy, we might issue additional common shares or other securities to finance our growth as market conditions warrant. Theseissuances, which would generally not be subject to shareholder approval, may lower your ownership interests and may depress the market price of our common shares.•There is no guarantee of a continuing public market for your to resell our common shares.•The issuance of common shares in future offerings may trigger anti-dilution provisions in our outstanding convertible securities and warrants and affect the interestsof our common shareholders.•We cannot assure you that our board of directors will declare dividend payments on our common shares in the future or when such payment might occur.•Future offerings of debt securities and amounts outstanding under any future credit facilities or other borrowings, which would rank senior to our common sharesupon our liquidation, may adversely affect the market value of our common shares.•We may not have sufficient cash from our operations to enable us to pay dividends on or redeem our Series B Preferred Shares and Series C Preferred Shares followingthe payment of expenses and the establishment of any reserves.•Our ability to pay dividends on and redeem our Series B Preferred Shares and Series C Preferred Shares and, therefore, your ability to receive payments on the Series BPreferred Shares and Series C Preferred Shares, is limited by the requirements of Marshall Islands law and our contractual obligations.•Our Series B Preferred Shares and Series C Preferred Shares are subordinated to our debt obligations, and the interests of the holders of Series B Preferred Shares andSeries C Preferred Shares could be diluted by the issuance of additional shares, including other preferred shares, or by other transactions.•The Series B Preferred Shares and Series C Preferred Shares represent perpetual equity interests in us.•There is no established trading market for the Series B Preferred Shares or Series C Preferred Shares, which may negatively affect the market value of the Series BPreferred Shares and Series C Preferred Shares and your ability to transfer or sell them.•The Series B Preferred Shares and Series C Preferred Shares are only redeemable at our option and investors should not expect us to redeem the Series B PreferredShares or Series C Preferred Shares in the future.•We are a holding company, and we depend on the ability of our current and future subsidiaries to distribute funds to us in order to satisfy our financial obligations andmake dividend payments.•We are incorporated in the Republic of the Marshall Islands, which does not have a well-developed body of corporate law, which may negatively affect the ability ofshareholders to protect their interests.•As a Marshall Islands corporation with principal executive offices in Greece, and also having subsidiaries in the Republic of the Marshall Islands, our operations maybe subject to economic substance requirements.•It may not be possible for our investors to enforce judgments of U.S. courts against us.•Anti-takeover provisions in our organizational documents could make it difficult for our shareholders to replace or remove our current board of directors or have theeffect of discouraging, delaying, or preventing a merger or acquisition, which could adversely affect the value of our securities. 5Table of ContentsIndustry Specific Risk Factors The international tanker industry has historically been both cyclical and volatile. The international tanker industry in which we operate is cyclical, with attendant volatility in charter hire rates, vessel values and industry profitability. For tanker vessels, thedegree of charter rate volatility has varied widely. The Baltic Dirty Tanker Index, or the BDTI, a U.S. dollar daily average of charter rates issued by the Baltic Exchange that takes intoaccount input from brokers around the world regarding crude oil fixtures for various routes and oil tanker vessel sizes, has been volatile. In 2023, the BDTI reached a high of 1,642 and alow of 713. The Baltic Clean Tanker Index, or BCTI, a comparable index to the BDTI but for petroleum product fixtures, has similarly been volatile. In 2023, the BCTI reached a high of1,250 and a low of 563. Although the BDTI and BCTI were 1,212 and 1,268, respectively, as of March 18, 2024, there can be no assurance that the crude oil and petroleum products chartermarket will continue to increase, and the market could again decline. Recent heightened volatility in charter prices has resulted primarily from the war in Ukraine and sanctions onRussian exports of crude oil and petroleum products, and there is great uncertainty about the future impact of those events. More recently, the war between Israel and Hamas hasresulted in increased tensions in the Middle East region, including missile attacks by the Houthis on vessels in the Red Sea. Such circumstances have had and could in the future resultin adverse consequences for the tanker industry. In general, volatility in charter rates depends, among other factors, on (i) supply and demand for tankers, (ii) the demand for crude oiland petroleum products, (iii) the inventories of crude oil and petroleum products in the United States and in other industrialized nations, (iv) oil refining volumes, (v) oil prices, and (vi)any restrictions on crude oil production imposed by the Organization of the Petroleum Exporting Countries, or OPEC, and non-OPEC oil producing countries.Currently, five of our vessels are employed on short- and medium-term time charters, and the remaining two of our operating vessels operate under pool arrangements withexposure to the prevailing robust Aframax spot rates. Changes in spot rates and time charter rates can affect the revenues we receive from operations in the event our charterers defaultor seek to renegotiate the charter hire, as well as the value of our vessels, even if our vessels are employed under long-term time charters. Our ability to re-charter our vessels on theexpiration or termination of their time or bareboat charters and the charter rates payable under any renewal or replacement charters will depend upon, among other things, economicconditions in the tanker markets and several other factors outside of our control and we cannot guarantee that any renewal or replacement charters we enter into will be sufficient toallow us to operate our vessels profitably. If we are not able to obtain new contracts in direct continuation with existing charters or for newly acquired vessels, or if new contracts areentered into at charter rates substantially below the existing charter rates or on terms otherwise less favorable compared to existing contracts terms, our revenues and profitability couldbe adversely affected, we may have to record impairment adjustments to the carrying values of our fleet and we may not be able to comply with the financial covenants in our loanagreements. A decline in charter hire rates will also likely cause the value of our vessels to decline.6Table of ContentsFluctuations in charter rates and vessel values result from changes in the supply and demand for vessels and changes in the supply and demand for oil, chemicals and otherliquids our vessels carry. Factors affecting the supply and demand for our vessels are outside of our control and are unpredictable. The nature, timing, direction and degree of changes inthe tanker industry conditions are also unpredictable.The factors that influence demand for tanker vessel capacity include: •supply of and demand for energy resources and oil and petroleum products; •oil prices; •competition from, and supply of and demand for, alternative sources of energy, other shipping companies and other modes of transportation; •regional availability of refining capacity and inventories; •global and regional economic and political conditions and developments, including national oil reserve policies, fluctuations in industrial and agricultural production,wars or other armed conflicts, including the war in Ukraine, the war between Israel and Hamas or the Houthi crisis in or around the Red Sea, terrorist activities, tradewars, tariffs embargoes, and strikes; •currency exchange rates; •changes in seaborne and other transportation patterns, including shifts in transportation demand between crude oil and refined oil products and the distance they aretransported by sea and changes in the price of crude oil and changes to the West Texas Intermediate and Brent Crude Oil pricing benchmarks, and changes in tradepatterns; •changes in governmental or maritime self-regulatory organizations’ rules and regulations or actions taken by regulatory authorities; •environmental and other legal and regulatory developments; •government subsidies of shipbuilding; •increases in the production of oil in areas linked by pipelines to consuming areas, construction or expansion of new or existing pipelines or railways or conversion ofexisting non-oil pipelines to oil pipelines; •weather, natural disasters, and other acts of God; •economic slowdowns caused by public health events or inflationary pressures and resultant governmental responses; •developments in international trade, including those relating to the imposition of tariffs; •worldwide and regional availability of refining capacity and inventories; •changes in the production levels of crude oil (including in particular production by OPEC, the United States, and other key producers); and •international sanctions, embargoes, import and export restrictions, nationalizations, and wars or other conflicts, including the ongoing war in Ukraine and betweenIsrael and Hamas. The factors that influence the supply of tanker vessel capacity include: •demand for alternative sources of energy; •the number of newbuilding orders and deliveries; •the number of shipyards and availability of shipyards to deliver vessels; •the scrapping rate of older vessels; •vessel casualties; •the recycling of older vessels, depending, among other things, on recycling rates and international recycling regulations; •conversion of tanker vessels to other uses; •the number of vessels that are out of service, namely those that are laid up, dry-docked, awaiting repairs, or otherwise not available for hire; •availability of financing for new or secondhand vessels; •speed of vessel operation; •vessel freight rates, which are affected by factors that may affect the rate of newbuilding, swapping, and laying up of vessels; •the price of steel and vessel equipment; 7Table of Contents•technological advances in the design, capacity, propulsion technology and fuel consumption efficiency of vessels; •changes in national or international regulations that may effectively cause reductions in the carrying capacity of vessels or early obsolescence of tonnages; •changes in environmental and other regulations that may limit the useful lives of vessels; •port or canal congestion and weather delays; •environmental concerns and regulations, including ballast water management, low sulfur fuel consumption regulations, and reductions in CO2 emissions; and •sanctions (in particular, sanctions on Russia, Iran, and Venezuela, among others). Declines in crude oil and natural gas prices for an extended period of time, or market expectations of potential decreases in these prices, could negatively affect our futuregrowth in the tanker vessel sector. Sustained periods of low oil and natural gas prices typically result in reduced exploration and extraction because oil and natural gas companies’ capitalexpenditure budgets are subject to cash flow from such activities and are, therefore, sensitive to changes in energy prices. These changes in commodity prices can have a material effecton demand for our services, and periods of low demand can cause excess vessel supply and intensify the competition in the industry, which often results in vessels, particularly olderand less technologically-advanced vessels, being idle for long periods of time. We cannot predict the future level of demand for our services or future conditions of the oil and naturalgas industry. Any decrease in exploration, development, or production expenditures by oil and natural gas companies could reduce our revenues and materially harm our business,results of operations, and cash available for distribution. An over-supply of tanker capacity may lead to a reduction in charter rates, vessel values, and profitability. The market supply of tanker vessels is affected by a number of factors, such as the supply of and demand for energy resources, including oil and petroleum products, thesupply of and demand for seaborne transportation of such energy resources, the current and expected price for newbuildings, and the number of vessels being recycled for scrap steel,as well as strong overall economic growth of the world economy. In recent years, shipyards have produced a large number of new tankers. As of March 2024, newbuilding orders havebeen placed for an aggregate of approximately 8.2% of the existing global tanker fleet, with the bulk of deliveries expected during 2025. If the capacity of new tanker vessels deliveredexceeds the capacity of tanker vessels being recycled for scrap steel or converted to non-trading tanker vessels, tanker vessel capacity will increase. If the supply of tanker vesselcapacity increases and the demand for tanker vessel capacity decreases or does not increase correspondingly, charter rates could materially decline, resulting in a decrease in the valueof our vessels and the charter rates that we can obtain. A reduction in charter rates and the value of our tanker vessels may have a material adverse effect on our results of operations,earnings, and available cash, our ability to pay dividends and our ability to comply with the covenants in our loan agreements.The impact of the sanctions on Russian exports of crude oil and petroleum products is uncertain and has generated increased volatility in the supply of tanker vessels availablefor worldwide trade. If this volatility persists, we may not be able to find profitable charters for our vessels, or vessels we may acquire, which could have a material adverse effect on ourbusiness, results of operations, cash flows, financial condition, ability to pay dividends, and compliance with current or future covenants with respect to any of our financingarrangements.Our results of operations are subject to seasonal fluctuations, which may adversely affect our financial condition. We operate our vessels in markets that have historically exhibited seasonal variations in demand and, as a result, charter rates. Peaks in tanker vessel demand quite oftenprecede seasonal oil consumption peaks, as refiners and suppliers anticipate consumer demand. Seasonal peaks in oil demand can broadly be classified into two main categories: (1)increased demand prior to Northern Hemisphere winters as heating oil consumption increases and (2) increased demand for gasoline prior to the summer driving season in the UnitedStates. Unpredictable weather patterns and variations in oil reserves disrupt tanker scheduling. This seasonality may result in quarter-to-quarter volatility in our operating results, asmany of our vessels trade in the spot market. Seasonal variations in tanker vessel demand will affect any spot market-related rates that we may receive. If economic conditions throughout the world continue to deteriorate or become more volatile, it could have an adverse impact on our operations and financial results. Various macroeconomic factors, including rising inflation, higher interest rates, global supply chain constraints, and the effects of overall economic conditions anduncertainties, such as those resulting from the current and future conditions in the global financial markets, could adversely affect our results of operations, financial condition andability to pay dividends. Inflation and rising interest rates may negatively impact us by increasing our operating costs and our cost of borrowing. Interest rates, the liquidity of the creditmarkets and the volatility of the capital markets could also affect the operation of our business and our ability to raise capital on favorable terms, or at all. Adverse economic conditionsalso affect demand for goods and oil. Reduced demand for these or other products could result in significant decreases in rates we obtain for chartering our vessels. In addition, the costfor crew members, oils and bunkers, and other supplies may increase. Furthermore, we may experience losses on our holdings of cash and investments due to failures of financialinstitutions and other parties. Difficult economic conditions may also result in a higher rate of losses on our accounts receivable due to credit defaults. As a result, downturns in theworldwide economy could have a material adverse effect on our business, results of operations, financial condition, and ability to pay dividends.8Table of ContentsThe world economy continues to face a number of actual and potential challenges, including the war between Ukraine and Russia and between Israel and Hamas, tensions inand around the Red Sea, and Russia and NATO tensions, China and Taiwan disputes, United States and China trade relations, instability between Iran and the West, hostilities betweenthe United States and North Korea, political unrest and conflict in the Middle East, the South China Sea region, and other geographic countries and areas, terrorist or other attacks(including threats thereof) around the world, war (or threatened war) or international hostilities, and epidemics or pandemics, such as COVID-19 and its variants, and banking crises orfailures, such as the recent Silicon Valley Bank, Signature Bank, and First Republic Bank failures. See also “—Outbreaks of epidemic and pandemic diseases, such as COVID-19, and therelated governmental responses thereto, could adversely affect our business.” In addition, the continuing war in Ukraine, the length and breadth of which remains highly unpredictable,has led to increased economic uncertainty amidst fears of a more generalized military conflict or significant inflationary pressures, due to the increases in fuel and grain prices followingthe sanctions imposed on Russia. Furthermore, it is difficult to predict the intensity and duration of the war between Israel and Hamas or the Houthi rebel attacks on shipping in andaround the Red Sea and their impact on the world economy is uncertain. If such conditions are sustained, the longer-term net impact on our business would be difficult to predict withany degree of accuracy. Such events may have unpredictable consequences and contribute to instability in the global economy or cause a decrease in worldwide demand for certaingoods and, thus, shipping. Whether the present dislocation in the markets and resultant inflationary pressures will transition to a long-term inflationary environment is uncertain, and the effects of such adevelopment on charter rates, vessel demand and operating expenses in the sector in which we operate are uncertain. On the tanker market, the sanctions imposed by the EU on Russiaaffected imports of crude oil and petroleum products. This had a positive effect on the tankers’ charter market, as Europe had to import these amounts of crude oil and petroleumproducts from other sources of greater distance, increasing the overall ton-mile demand. Furthermore, it is difficult to predict the intensity and duration of the war between Israel andHamas or the Houthi rebel attacks on shipping in the Red Sea and their impact on the world economy is uncertain. If such conditions are sustained, the longer-term net impact on thetanker freight market and our business would be difficult to predict with any degree of accuracy. Such events may have unpredictable consequences and contribute to instability in theglobal economy or cause a decrease in worldwide demand for certain goods and, thus, shipping. See also “—Political instability, terrorist or other attacks, war, and internationalhostilities could affect our results of operations and financial condition.” In Europe, concerns regarding the possibility of sovereign debt defaults by European Union, or EU, member countries, although generally alleviated, have in the past disruptedfinancial markets throughout the world, and may lead to weaker consumer demand in the European Union, the U.S. and other parts of the world. The withdrawal of the UK from theEuropean Union, or Brexit, further increases the risk of additional trade protectionism. Brexit, or similar events in other jurisdictions, could impact global markets, including foreignexchange and securities markets; any resulting changes in currency exchange rates, tariffs, treaties and other regulatory matters could in turn adversely impact our business, operatingresults, cash flows and financial condition. In addition, the recent economic slowdown in the Asia Pacific region, particularly in China, may exacerbate the effect of the weak economic trends in the rest of the world.Before the global economic financial crisis that began in 2008, China had one of the world’s fastest growing economies in terms of gross domestic product, or GDP, which had asignificant impact on shipping demand. China’s GDP growth rate for the year ended December 31, 2022, was approximately 3.0%, one of its lowest rates in 50 years, thought to be mainlycaused by the country’s zero-COVID policy and strict lockdowns. For the year ended December 31, 2023, China reported that its GDP growth rate recovered to 5.2%, but the economycontinues to be weighed down by the ongoing crisis in the property market. It is possible that China and other countries in the Asia Pacific region will continue to experience volatile,slowed or even negative economic growth in the near future. Changes in the economic conditions of China, and changes in laws or policies adopted by its government or theimplementation of these laws and policies by local authorities, including with regards to tax matters and environmental concerns (such as achieving carbon neutrality), could affectvessels that are either chartered to Chinese customers or that call to Chinese ports, vessels that undergo drydocking at Chinese shipyards and Chinese financial institutions that aregenerally active in ship financing, and could have a material adverse effect on our business, operating results, cash flows and financial condition. Furthermore, governments may turn to trade barriers to protect their domestic industries against foreign imports, thereby depressing shipping demand. There is significantuncertainty about the future relationship between the United States, China, and other exporting countries, including with respect to trade policies, treaties, government regulations, andtariffs. Protectionist developments, or the perception that they may occur, may have a material adverse effect on global economic conditions, and may significantly reduce global trade.Moreover, increasing trade protectionism may cause an increase in (i) the cost of goods exported from regions globally, particularly from the Asia-Pacific region, (ii) the length of timerequired to transport goods and (iii) the risks associated with exporting goods. Such increases may further reduce the quantity of goods to be shipped, shipping time schedules, voyagecosts and other associated costs, which could have an adverse impact on our charterers’ business, operating results and financial condition and could thereby affect their ability to maketimely charter hire payments to us and to employ our vessels. This could have a material adverse effect on our business, operating results, cash flows and financial condition. 9Table of ContentsCredit markets in the United States and Europe have in the past experienced significant contraction, deleveraging and reduced liquidity, and there is a risk that the U.S. federalgovernment and state governments and European authorities may continue to implement a broad variety of governmental action and/or introduce new financial market regulations.Global financial markets and economic conditions have been, and continue to be, volatile and we face risks associated with the trends in the global economy, such as changes in interestrates, instability in the banking and securities markets around the world, the risk of sovereign defaults, and reduced levels of growth, among other factors. Major market disruptions andthe current adverse changes in market conditions and regulatory climate worldwide may adversely affect our business, results or operations or impair our ability to borrow under anyfuture financial arrangements we may enter into contemplating borrowing from the public and/or private equity and debt markets. Many lenders have increased interest rates, enactedtighter lending standards, refused to refinance existing debt at all or on terms similar to current debt and reduced (or in some cases ceased to provide) funding to borrowers and othermarket participants, including equity and debt investors and, in some cases, have been unwilling to provide financing on attractive terms or even at all. Due to these factors, we cannotbe certain that financing will be available if needed and to the extent required, on acceptable terms or at all. In the absence of available financing or financing in favorable terms, we maybe unable to complete vessel acquisitions, take advantage of business opportunities or respond to competitive pressures. Tanker vessel values may fluctuate due to economic and technological factors, which may adversely affect our financial condition, or result in the incurrence of a loss upondisposal of a tanker vessel, impairment losses, or increases in the cost of acquiring additional tanker vessels. Tanker vessel values may fluctuate due to a number of different factors, including: general economic and market conditions affecting the shipping industry; competition fromother shipping companies; the types and sizes of available tanker vessels; the availability of other modes of transportation; increases in the supply of tanker vessel capacity; the cost ofnewbuildings; governmental or other regulations; and the need to upgrade secondhand and previously owned tanker vessels as a result of charterer requirements, technologicaladvances in vessel design or equipment or otherwise, including as a result of compliance with more stringent emissions regulations. In addition, as tanker vessels grow older, theygenerally decline in value. Due to the cyclical nature of the shipping market, if we sell any of our owned tanker vessels at a time when prices are depressed, we could incur a loss and ourbusiness, results of operations, cash flow, and financial condition could be adversely affected. Moreover, if the book value of a tanker vessel is impaired due to unfavorable marketconditions, we may incur a loss that could adversely affect our operating results. In 2023, 2022, and 2021 we did not recognize any impairment losses. Conversely, if tanker vessel values are elevated at a time when we wish to acquire additional tanker vessels, the cost of acquisition may increase, and this could adversely affectour business, results of operations, cash flows, financial condition, and ability to pay dividends to our shareholders. Over the past ten years, the value of a ten-year-old Aframax tankerhas fluctuated widely within a range of $18 million to $55 million. An increase in operating costs could adversely affect our cash flows and financial condition. Vessel operating expenses include, among others, the costs of crew, provisions, deck and engine stores, lube oil, bunkers, insurance, and maintenance and repairs, whichdepend on a variety of factors, many of which are beyond our control. Some of these costs, primarily relating to insurance and enhanced security measures implemented after September11, 2001, and as a result of increases in the frequency of acts of piracy, have been increasing. If our vessels suffer damage, they may need to be repaired at a drydocking facility. Thecosts of drydock repairs are unpredictable and can be substantial. Increases in any of these costs could have a material adverse effect on our business, results of operations, cash flows,financial condition, and ability to pay dividends to our shareholders. Rising fuel prices may adversely affect our profits. Fuel is a significant, if not the largest, expense in our shipping operations when vessels are operated on the spot market under voyage charters. While we do not directly bearthe cost of fuel or bunkers under our time charters, fuel is also a significant factor in negotiating charter rates. As a result, an increase in the price of fuel beyond our expectations mayadversely affect our profitability at the time of charter negotiation. The price and supply of fuel is unpredictable and fluctuates based on events outside our control, includinggeopolitical developments, supply of and demand for crude oil and natural gas, actions by the Organization of the Petroleum Exporting Countries, or OPEC, and other oil and natural gasproducers, the imposition of new regulations adopted by the International Maritime Organization, or IMO, war and unrest in oil producing countries and regions, regional productionpatterns, and environmental concerns and regulations. While fuel prices remained generally lower in 2023 as compared to 2022, fuel has and may become much more expensive in thefuture, including as a result of the developments in Ukraine and the sanctions against Russia, political unrest and conflicts in the Middle East, the imposition of sulfur oxide emissionslimits in January 2020 and reductions of carbon emissions from January 2023 under new regulations adopted by the IMO, which may reduce the profitability and competitiveness of ourbusiness. Other future regulations may have a similar impact. Compliance with safety and other vessel requirements imposed by classification societies may be very costly and may adversely affect our business. The hull and machinery of every commercial vessel must be classed by a classification society authorized by its country of registry. The classification society certifies that avessel is safe and seaworthy in accordance with the applicable rules and regulations of the country of registry of the vessel and the IMO’s International Convention for the Safety ofLife at Sea of 1974, or SOLAS. A vessel must undergo annual surveys, intermediate surveys, and special surveys. In lieu of a special survey, a vessel’s machinery may be on a continuous survey cycle underwhich the machinery would be surveyed periodically over a five-year period. If any vessel does not maintain its class and/or fails any annual survey, intermediate survey, or specialsurvey, the vessel will be unable to trade between ports and will be unemployable. If this were to happen to one or more of our vessels, it could negatively impact our results ofoperations and financial condition. 10Table of ContentsWe are subject to regulation and liability under environmental laws that could require significant expenditures and affect our cash flows and net income. Our business and the operations of our vessels are materially affected by environmental regulation in the form of international conventions, national, state, and local laws andregulations in force in the jurisdictions in which our vessels operate, as well as in the country or countries of their registration, including those governing the management and disposalof hazardous substances and wastes, the cleanup of oil spills and other contamination, air emissions (including greenhouse gases), water discharges and ballast water management.These regulations include, but are not limited to, European Union regulations, the U.S. Oil Pollution Act of 1990, requirements of the U.S. Coast Guard and the U.S. EnvironmentalProtection Agency, the U.S. Clean Air Act of 1970 (including its amendments of 1977 and 1990), the U.S. Clean Water Act, and the U.S. Maritime Transportation Security Act of 2002, andregulations of the IMO, including the International Convention on Civil Liability for Oil Pollution Damage of 1969, the International Convention for the Prevention of Pollution from Shipsof 1973, as modified by the Protocol of 1978, collectively referred to as MARPOL 73/78 or MARPOL, including designations of Emission Control Areas, thereunder, SOLAS, theInternational Convention on Load Lines of 1966, the International Convention of Civil Liability for Bunker Oil Pollution Damage, and the ISM Code. Because such conventions, laws, andregulations are often revised, we cannot predict the ultimate cost of complying with such requirements or the impact thereof on the re-sale price or useful life of any vessel that we ownor will acquire. Additional conventions, laws, and regulations may be adopted that could limit our ability to do business or increase the cost of our doing business and which maymaterially adversely affect our operations. Government regulation of vessels, particularly in the areas of safety and environmental requirements, continues to change, requiring us toincur significant capital expenditures on our vessels to keep them in compliance, or even to scrap or sell certain vessels altogether. In addition, we may incur significant costs in meetingnew maintenance and inspection requirements, in developing contingency arrangements for potential environmental violations, and in obtaining insurance coverage. In addition, we are required by various governmental and quasi-governmental agencies to obtain certain permits, licenses, certificates, approvals, and financial assurances withrespect to our operations. Our failure to maintain necessary permits, licenses, certificates, approvals, or financial assurances could require us to incur substantial costs or temporarilysuspend the operation of one or more of the vessels in our fleet or lead to the invalidation or reduction of our insurance coverage. Environmental requirements can also affect the resale value or useful lives of our vessels, require a reduction in cargo capacity, ship modifications or operational changes orrestrictions, lead to decreased availability of insurance coverage for environmental matters, or result in the denial of access to certain jurisdictional waters or ports, or detention in certainports. Under local, national, and foreign laws, as well as international treaties and conventions, we could incur material liabilities, including for cleanup obligations and natural resourcedamages, in the event that there is a release of petroleum or hazardous substances from our vessels or otherwise in connection with our operations. We could also become subject topersonal injury or property damage claims relating to the release of hazardous substances associated with our existing or historic operations. Violations of, or liabilities under,environmental requirements can result in substantial penalties, fines, and other sanctions, including, in certain instances, seizure or detention of our vessels. We, or our in-house managers, may be unable to attract and retain qualified, skilled employees or crew necessary to operate our business. In addition, labor interruptions coulddisrupt our business. Our success will depend largely on our ability and on the ability of Unitized Ocean Transport Limited, or UOT, our wholly-owned subsidiary, which acts as our in-housemanager, to attract and retain highly skilled and qualified personnel. In crewing our vessels, we require technically skilled employees with specialized training who can perform physicallydemanding work. Competition to attract and retain qualified crew members is intense. If we are not able to increase our charter rates to compensate for any crew cost increases, it couldhave a material adverse effect on our business, results of operations, cash flows, and financial condition. Any inability we or UOT experience in the future to hire, train, and retain asufficient number of qualified employees could impair our ability to manage, maintain, and grow our business, which could have a material adverse effect on our financial condition,results of operations, and cash flows. Our vessels are manned by masters, officers, and crews that are employed by our vessel-owning subsidiaries. If not resolved in a timely and cost-effective manner, industrialaction or other labor unrest could prevent or hinder our operations from being carried out normally and could have a material adverse effect on our financial condition, results ofoperations, and cash flows. We operate our vessels worldwide and, as a result, our vessels are exposed to international risks and inherent operational risks of the tanker vessel industry, which may adverselyaffect our business and financial condition. The operation of an ocean-going vessel carries inherent risks. Our vessels and their cargoes are at risk of being damaged or lost because of events such as marine disasters,bad weather, and acts of God, business interruptions caused by mechanical failures, grounding, fire, explosions and collisions, human error, war, terrorism, piracy, epidemic or pandemics,and other circumstances or events. In addition, changing economic, regulatory, and political conditions in some countries, including political and military conflicts, have from time to timeresulted in attacks on vessels, mining of waterways, piracy, terrorism, labor strikes, and boycotts. These events may result in death or injury to persons, loss of revenues or property, thepayment of ransoms, environmental damage, higher insurance rates, damage to our customer relationships, and market disruptions, delay, or rerouting, which may also subject us tolitigation. Epidemics and other public health incidents may also lead to crew member illness, which can disrupt the operations of our vessels, or result in the imposition of public healthmeasures, which may prevent our vessels from calling on ports or discharging cargo in the affected areas or in other locations after having visited the affected areas. In addition, theoperation of tanker vessels has unique operational risks associated with the transportation of oil. An oil spill may cause significant environmental damage and the associated costscould exceed the insurance coverage available to us. Compared to other types of vessels, tanker vessels are exposed to a higher risk of damage and loss by fire, whether ignited by aterrorist attack, collision, or other cause, due to the high flammability and high volume of the oil transported in tanker vessels. 11Table of ContentsIf our vessels suffer damage, they may need to be repaired at a drydocking facility. The costs of drydock repairs and maintenance are unpredictable and may be substantial. Wemay have to pay drydocking costs that our insurance does not cover in full. The loss of revenues while these vessels are being repaired and repositioned, as well as the actual cost ofthese repairs, may adversely affect our business and financial condition. In addition, space at drydocking facilities is sometimes limited and not all drydocking facilities are convenientlylocated. We may be unable to find space at a suitable drydocking facility, or our vessels may be forced to travel to a drydocking facility that is not conveniently located to our vessels’positions. The loss of earnings while these vessels are forced to wait for space, or to travel to more distant drydocking facilities, may adversely affect our business and financialcondition. Further, the total loss of any of our vessels could harm our reputation as a safe and reliable vessel owner and operator. If we are unable to adequately maintain or safeguardour vessels, we may be unable to prevent any such damage, costs, or loss which could negatively impact our business, financial condition, results of operations, and available cash. In addition, international shipping is subject to various security and customs inspection and related procedures in countries of origin and destination and transshipment points.Inspection procedures can result in the seizure of the cargo and/or our vessels, delays in the loading, offloading, or delivery, and the levying of customs duties, fines, or other penaltiesagainst us. It is possible that changes to inspection procedures could impose additional financial and legal obligations on us. Furthermore, changes to inspection procedures could alsoimpose additional costs and obligations on our customers and may, in certain cases, render the shipment of certain types of cargo uneconomical or impractical. Any such changes ordevelopments may have a material adverse effect on our business, results of operations, cash flows, financial condition, and available cash. Political instability, terrorist or other attacks, war, and international hostilities could affect our results of operations and financial condition. We conduct most of our operations outside of the United States and our business, operating results, cash flows, financial condition, and available cash may be adverselyaffected by changing economic, political, and governmental conditions in the countries and regions in which our vessels are employed or registered. Moreover, we operate in a sector ofthe economy that is likely to be adversely impacted by the effects of political uncertainty and armed conflicts, including the war between Ukraine and Russia and between Israel andHamas, Russia and NATO tensions, China and Taiwan disputes, United States and China trade relations, instability between Iran and the West, hostilities between the United States andNorth Korea, political unrest and conflicts in the Middle East, the South China Sea region, the Red Sea region (including missile attacks controlled by the Houthis on vessels transitingthe Red Sea or Gulf of Aden), and other countries and geographic areas, geopolitical events, such as Brexit or another withdrawal from the European Union, terrorist or other attacks (orthreats thereof) around the world, and war (or threatened war) or international hostilities. Such events may contribute to further economic instability in the global financial markets andinternational commerce, and could also adversely affect our ability to obtain additional financing on terms acceptable to us or at all. The war between Russia and Ukraine may lead to further regional and international conflicts or armed action. This war has disrupted supply chains and caused instability in theenergy markets and the global economy, with effects on the tanker market, which has experienced volatility. The United States, the United Kingdom, and the European Union, amongother countries, have announced unprecedented economic sanctions and other penalties against certain persons, entities, and activities connected to Russia, including removingRussian-based financial institutions from the Society for Worldwide Interbank Financial Telecommunication payment system and restricting imports of Russian oil, liquefied natural gas,and coal. These sanctions have caused supply disruptions in the oil and gas markets and could continue to cause significant volatility in energy prices, which could result in increasedinflation and may trigger a recession in the U.S. and China, among other regions. While much uncertainty remains regarding the global impact of the war in Ukraine, it is possible thatsuch tensions could adversely affect our business, financial condition, operating results, and cash flows. Moreover, we will be subject to additional insurance premiums in case wetransit through or call to any port or area designated as listed areas by the Joint War Committee or other organizations. These factors may also result in the weakening of the financialcondition of our charterers, suppliers, counterparties, and other agents in the shipping industry. As a result, our business, operating results, cash flows, and financial condition may benegatively affected since our operations are dependent on the success and economic viability of our counterparties. The ongoing war between Russia and Ukraine could result in the imposition of further economic sanctions by the United States, the United Kingdom, the European Union, orother countries against Russia, trade tariffs, or embargoes with uncertain impacts on the markets in which we operate. In addition, the U.S. and certain other North Atlantic TreatyOrganization (NATO) countries have been supplying Ukraine with military aid. U.S. officials have also warned of the increased possibility of Russian cyberattacks, which could disruptthe operations of businesses involved in the shipping industry, including ours, and could create economic uncertainty particularly if such attacks spread to a broad array of countriesand networks. While much uncertainty remains regarding the global impact of the war in Ukraine, it is possible that such tensions could adversely affect our business, financialcondition, operating results, and cash flows. 12Table of ContentsBeginning in February 2022, President Biden and several European leaders also announced various economic sanctions against Russia in connection with the aforementionedconflicts in the Ukraine region, which have continued to expand over the past year and which may adversely impact our business. The Russian Foreign Harmful Activities Sanctionsprogram includes prohibitions on the import of certain Russian energy products into the United States, including crude oil, petroleum, petroleum fuels, oils, liquefied natural gas andcoal, as well as prohibitions on all new investments in Russia by U.S. persons, among other restrictions. Furthermore, the United States, the EU and other countries has also prohibited avariety of specified services related to the maritime transport of Russian Federation origin crude oil and petroleum products, including trading/commodities brokering, financing,shipping, insurance (including reinsurance and protection and indemnity), flagging, and customs brokering. These prohibitions took effect on December 5, 2022, with respect to themaritime transport of crude oil and took effect on February 5, 2023, with respect to the maritime transport of other petroleum products. An exception exists to permit such services whenthe price of the seaborne Russian oil into non-EU countries does not exceed the relevant price cap; but implementation of this price exception relies on a recordkeeping and attestationprocess that allows each party in the supply chain of seaborne Russian oil to demonstrate or confirm that oil has been purchased at or below the price cap. Violations of the price cappolicy or the risk that information, documentation, or attestations provided by parties in the supply chain are later determined to be false may pose additional risks adversely affectingour business. Furthermore, the intensity and duration of the recently declared war between Israel and Hamas is difficult to predict and its impact on the world economy and our industry isuncertain. Beginning in late 2023, vessels in the Red Sea and Gulf of Aden have increasingly been subject to attempted hijackings and attacks by drones and projectiles characterized byHouthi groups in Yemen as a response to the war between Israel and Hamas. An increasing number of companies have rerouted their vessels to avoid transiting the Red Sea, incurringgreater shipping costs and delays. For vessels transiting the region, war risk premiums have increased substantially, and should these attacks continue, we could similarly experience asignificant increase in our insurance costs and we may not be adequately insured to cover losses from these incidents. While much uncertainty remains regarding the global impact ofthe war between Israel and Hamas, it is possible that such tensions could result in the eruption of further hostilities in other regions, including in and around the Red Sea, and couldadversely affect our business, financial conditions, operating results, and cash flows. In the past, other political conflicts have also resulted in attacks on vessels, mining of waterways, and other efforts to disrupt international shipping, particularly in the ArabianGulf region. The ongoing war in Ukraine has previously resulted in missile attacks on commercial vessels in the Black Sea. The recent outbreak of conflict in and around the Red Sea hasalso resulted in missile attacks on vessels. Acts of terrorism and piracy have also affected vessels trading in regions such as the Gulf of Guinea, the Red Sea, the Gulf of Aden off thecoast of Somalia, and the Indian Ocean. Any of these occurrences could have a material adverse impact on our future performance, operating results, cash flows, financial condition, andability to pay cash distributions to our shareholders. Outbreaks of epidemic and pandemic diseases and the related governmental responses thereto, could adversely affect our business. Global public health threats, such as the COVID-19 outbreak and its variants, influenza, and other highly communicable diseases or viruses, outbreaks which have from time to timeoccurred in various parts of the world in which we operate, including China, could disrupt global financial markets and economic conditions and adversely impact our operations, thetiming of completion of any future newbuilding projects, as well as the operations of our charterers and other customers. For example, the outbreak of COVID-19 caused severe global disruptions, with governments in affected countries imposing travel bans, quarantines, and other emergency publichealth measures. Companies had also taken precautions, such as requiring employees to work remotely, imposing travel restrictions, and temporarily closing businesses. Although theincidence and severity of COVID-19 and its variants have diminished, similar restrictions, and future prevention and mitigation measures against outbreaks of epidemic and pandemicdiseases, are likely to have an adverse impact on global economic conditions, which could materially and adversely affect our future operations. As a result of such measures, ourvessels may not be able to call on, or disembark from ports located in regions affected by the outbreak. In addition, we may experience severe operational disruptions and delays,unavailability of normal port infrastructure and services including limited access to equipment, critical goods and personnel, disruptions to crew changes, quarantine of ships or crew,counterparty solidity, closure of ports and custom offices, as well as disruptions in the supply chain and industrial production, which may lead to reduced cargo demand, among otherpotential consequences attendant to epidemic and pandemic diseases. The extent to which our business, operating results, cash flows, financial condition, financings, value of our vessel or other vessels we may acquire, and ability to paydividends may be negatively affected by a resurgence of COVID-19 or future pandemics, epidemics, or other outbreaks of infectious diseases is highly uncertain and will depend onnumerous evolving factors that we cannot predict, including, but not limited to, (i) the duration and severity of the infectious disease outbreak; (ii) the imposition of restrictive measuresto combat the outbreak and slow disease transmission; (iii) the introduction of financial support measures to reduce the impact of the outbreak on the economy; (iv) shortages orreductions in the supply of essential goods, services, or labor; and (v) fluctuations in general economic or financial conditions tied to the outbreak, such as a sharp increase in interestrates or reduction in the availability of credit. We cannot predict the effect that an outbreak of a new COVID-19 variant or strain, or any future infectious disease outbreak, pandemic, orepidemic may have on our business, operating results, cash flows, and financial condition, which could be material and adverse. Increasing growth of electric vehicles and renewable fuels could lead to a decrease in trading and the movement of crude oil and petroleum products worldwide. The IEA noted in its Global EV Outlook 2023 that total electric cars sold annually worldwide grew from about 120,000 in 2012 to more than 10 million in 2022, bringing the totalnumber of electric cars to approximately 26 million, more than five times the number from 2018. Electric car sales in the first quarter of 2023 were 2.3 million, up 25% from the same quarterof 2022. This was driven mainly by government subsidies and policy initiatives, such as the phasing-out of internal combustion engines and vehicle electrification targets, combinedwith high oil prices in 2022 that further motivated prospective buyers. IEA forecasts are for electric vehicles (“EVs”) to grow from 17 million in 2021 to 240 million by 2030, which the IEAforecasts would reduce worldwide demand for oil products by 5 million barrels per day in 2030. IEA estimates that EV operations in 2019 avoided the consumption of almost 0.7 millionbarrels per day of oil products. According to the World Economic Forum, there were about 1.1 billion cars registered in 2015 and there will be about 2 billion cars registered by 2040. 13Table of ContentsAccording to the IEA, U.S. biodiesel production increased rapidly from 32,000 barrels per day in 2009 to 118,000 barrels per day in 2020, a growth of about 260% (that productionwas up from 112 thousand barrels per day in 2019). During the same period, diesel production from U.S. refineries grew from an average of 4.0 million barrels per day in 2009 to a maximumof 5.6 million barrels per day in December 2018 before declining to 4.6 million barrels per day in January 2021 during the pandemic. A growth in EVs or a slowdown in imports or exports ofcrude or petroleum products worldwide may result in decreased demand for our vessels and lower charter rates, which could have a material adverse effect on our business, results ofoperations, cash flows, financial condition, and ability to make cash distributions. Acts of piracy on ocean-going vessels could adversely affect our business. Acts of piracy have historically affected ocean-going vessels trading in regions of the world such as the Red Sea, the Gulf of Aden off the coast of Somalia, the Indian Ocean,and the Gulf of Guinea region off the coast of Nigeria, which has experienced increased incidents of piracy in recent years. Sea piracy incidents continue to occur, particularly in theSouth China Sea, the Indian Ocean, the Gulf of Guinea, and the Strait of Malacca, and there has been a recent resurgence of such incidents in the Gulf of Aden. Acts of piracy couldresult in harm or danger to the crews that man our vessels. Additionally, if piracy attacks result in regions in which our vessels are deployed being characterized by insurers as “war risk”zones, or Joint War Committee “war and strikes” listed areas, premiums payable for such coverage could increase significantly, and such insurance coverage may be more difficult toobtain, if available at all. In addition, crew and security equipment costs, including costs that may be incurred to employ onboard security armed guards, could increase in suchcircumstances. Furthermore, while we believe the charterer remains liable for charter payments when a vessel is seized by pirates, the charterer may dispute this and withhold charter hireuntil the vessel is released. A charterer may also claim that a vessel seized by pirates was not “on-hire” for a certain number of days and is, therefore, entitled to cancel the charterparty, aclaim that we would dispute. We may not be adequately insured to cover losses from these incidents, which could have a material adverse effect on us. In addition, any detentionhijacking, involving the hostile detention of a vessel, as a result of an act of piracy against our vessels, or an increase in cost or unavailability of insurance for our vessels, could have amaterial adverse impact on our business, financial condition, and operating results. Our operations may be adversely impacted by severe weather, including as a result of climate change. Tropical storms, hurricanes, typhoons, and other severe maritime weather events could result in the suspension of operations at the planned ports of call for our vessels andrequire significant deviations from our vessels’ routes. In addition, climate change could result in an increase in the frequency and severity of these extreme weather events. The closureof ports, rerouting of vessels, damage of production facilities, as well as other delays caused by increasing frequency of severe weather, could stop operations or shipments forindeterminate periods and have a material adverse effect on our business, results of operations, and financial condition. If our vessels call on ports located in countries or territories that are the subject of sanctions or embargoes imposed by the U.S. government or other governmental authorities, itcould lead to monetary fines or adversely affect our business, reputation, and the market for our common shares. While none of our vessels have called on ports located in countries or territories that are the subject of country-wide or territory-wide sanctions or embargoes imposed by theU.S. government or other governmental authorities (“Sanctioned Jurisdictions”) in 2023 and through the date of this report, and although we intend to maintain compliance with allapplicable sanctions and embargo laws, and we endeavor to take precautions reasonably designed to ensure compliance with such laws, it is possible that, in the future, our vessels maycall on ports in Sanctioned Jurisdictions on charterers’ instructions and without our consent. If such activities result in a violation of sanctions or embargo laws, we could be subject tomonetary fines, penalties, or other sanctions, and our reputation and the market for our common shares could be adversely affected. The U.S. sanctions and embargo laws and regulations vary in their application, as they do not all apply to the same covered persons or proscribe the same activities, and suchsanctions and embargo laws and regulations may be amended or expanded over time. In particular, the war in Ukraine could result in the imposition of further economic sanctions by theUnited States and the European Union against Russia. Current or future counterparties of ours may be affiliated with persons or entities that are or may be, in the future, the subject ofsanctions imposed by the governments of the U.S., European Union, and/or other international bodies. If we determine that such sanctions require us to terminate existing or futurecontracts to which we, or our subsidiaries, are party or if we are found to be in violation of such applicable sanctions, our results of operations may be adversely affected or we maysuffer reputational harm. Although we believe that we have been in compliance with all applicable sanctions and embargo laws and regulations, and intend to maintain such compliance, any suchviolation could result in fines, penalties or other sanctions that could severely impact our ability to access U.S. capital markets and conduct our business, and could result in someinvestors deciding, or being required, to divest their interest, or not to invest, in us. In addition, certain institutional investors may have investment policies or restrictions that preventthem from holding securities of companies that have contracts with countries identified by the U.S. government as state sponsors of terrorism. The determination by these investors notto invest in, or to divest from, our common shares may adversely affect the price at which our common shares trade. Moreover, our charterers may violate applicable sanctions andembargo laws and regulations as a result of actions that do not involve us or our vessels, and those violations could, in turn, negatively affect our reputation. Investor perception of thevalue of our common shares may also be adversely affected by the consequences of war, the effects of terrorism, civil unrest and governmental actions in countries or territories that weoperate in. 14Table of ContentsWe conduct business in China, where the legal system is unpredictable and has inherent uncertainties that could limit the legal protections available to us. Some of our vessels may be chartered to Chinese customers, and from time to time, on our charterers’ instructions, our vessels may call on Chinese ports. Such charters andvoyages may be subject to regulations in China that may require us to incur new or additional compliance or other administrative costs and may require that we pay to the Chinesegovernment new taxes or other fees. Applicable laws and regulations in China may not be well-publicized and may not be known to us or to our charterers in advance of us or ourcharterers becoming subject to them, and the implementation of such laws and regulations may be inconsistent. Changes in Chinese laws and regulations, including with regards to taxmatters, or changes in their implementation by local authorities, could affect our vessels if chartered to Chinese customers, as well as our vessels calling to Chinese ports, and couldhave a material adverse impact on our business, financial condition, and results of operations. Governments could requisition our vessels during a period of war or emergency, resulting in loss of earnings. A government of a vessel’s registry could requisition for title or hire or seize one or more of our vessels. Requisition for title occurs when a government takes control of a vesseland becomes the owner. A government could also requisition one or more of our vessels for hire. Requisition for hire occurs when a government takes control of a vessel and effectivelybecomes the charterer at dictated charter rates. Generally, requisitions occur during a period of war or emergency. Although we would be entitled to compensation in the event of arequisition of one or more of our vessels, the amount and timing of payment of such compensation is uncertain. Government requisition of one or more of our vessels could have amaterial adverse effect on our business, results of operations, cash flows, and financial condition. Failure to comply with the U.S. Foreign Corrupt Practices Act of 1977, or the FCPA, could result in fines, criminal penalties, and an adverse effect on our business. We may operate in a number of countries throughout the world, including countries known to have a reputation for corruption. We are committed to doing business inaccordance with applicable anti-corruption laws and have adopted a code of business conduct and ethics that is consistent and in full compliance with the FCPA. We are subject,however, to the risk that we, our affiliated entities or our or their respective officers, directors, employees, and agents may take actions determined to be in violation of such anti-corruption laws, including the FCPA. In addition, actual or alleged violations could damage our reputation and ability to do business. Furthermore, detecting, investigating, andresolving actual or alleged violations is expensive and can consume significant time and attention of our senior management. Any such violation could result in substantial fines,sanctions, civil and/or criminal penalties, curtailment of operations in certain jurisdictions, and might adversely affect our business, earnings or financial condition. The smuggling of drugs or other contraband onto our vessels may lead to governmental claims against us. We expect that our vessels will call in ports in areas where smugglers attempt to hide drugs and other contraband on vessels, with or without the knowledge of crew members.To the extent our vessels are found with contraband, whether inside or attached to the hull of our vessel and whether with or without the knowledge of any of our crew, we may facegovernmental or other regulatory claims and our vessels may be detained for a prolonged period of time, which could have an adverse effect on our business, results of operations, cashflows, and financial condition. Under some jurisdictions, vessels used for the conveyance of illegal drugs could result in the forfeiture of such vessel to the government of suchjurisdiction. Maritime claimants could arrest or attach our vessels, which would interrupt our business or have a negative effect on our cash flows. Crew members, suppliers of goods and services to a vessel, shippers of cargo, lenders, and other parties may be entitled to a maritime lien against that vessel for unsatisfieddebts, claims, or damages. In many jurisdictions, a maritime lien holder may enforce its lien by arresting or attaching a vessel through foreclosure proceedings. The arrest or attachmentof one or more of our vessels could interrupt our business or require us to pay large sums of funds to have the arrest or attachment lifted, which would have a negative effect on ourcash flows. In addition, in some jurisdictions, such as South Africa, under the “sister-ship” theory of liability, a claimant may arrest both the vessel that is subject to the claimant’s maritimelien and any “associated” vessel, which is any vessel owned or controlled by the same owner. Claimants could try to assert “sister-ship” liability against one vessel in our fleet for claimsrelating to another of our ships. Changing laws and evolving reporting requirements could have an adverse effect on our business. Changing laws, regulations, and standards relating to reporting requirements, including the EU General Data Protection Regulation, or GDPR, may create additional compliancerequirements for us. GDPR broadens the scope of personal privacy laws to protect the rights of EU citizens and requires organizations to report on data breaches within 72 hours and be bound bymore stringent rules for obtaining the consent of individuals on how their data can be used. GDPR was enforced on May 25, 2018, and non-compliance exposes entities to significantfines or other regulatory claims which could have an adverse effect on our business, financial condition, and operations. 15Table of ContentsCompany Specific Risk Factors The market values of our vessels are highly volatile and may decline, which could limit the amount of funds that we can borrow and trigger breaches of certain financial covenantsunder our future loan facilities. The market values of our vessels are related to prevailing charter rates. While the market values of vessels and the charter market have a very close relationship as the chartermarket moves from trough to peak, the time lag between the effects of charter rates on market values of ships can vary. The market values of our vessels have generally experienced highvolatility, and you should expect the market value of our vessels to fluctuate depending on a number of factors, including: •the prevailing level of charter rates; •general economic and market conditions affecting the shipping industry; •competition from other shipping companies and other modes of transportation; •the types, sizes, and ages of vessels; •the supply of and demand for vessels; •applicable governmental or other regulations; •exchange rate levels; •the price of steel; •number of tankers scrapped; •the need to upgrade secondhand and previously owned vessels as a result of charterer requirements; •technological advances in vessel design or equipment or otherwise; •fuel efficiency and level of air emissions; •the cost of newbuildings; and •shipyard capacity and slot availability. Dislocations in the supply of and demand for tankers as a result of the war in Ukraine and sanctions on Russian exports have resulted in greatly increased volatility in tankerasset prices. Furthermore, the ongoing war between Israel and Hamas and the Houthi rebel attacks on shipping in the Red have an uncertain impact on the supply and demand fortankers. At times when we have loans outstanding with covenants based on vessels’ market values, if the market values of our vessels decline further, we may not be in compliance withcertain covenants contained in such loan facilities, and we may not be able to refinance our debt or obtain additional financing or incur debt on terms that are acceptable to us or at all.As of December 31, 2023, we had $55.2 million outstanding under our loan facilities and were in compliance with all our loan covenants. In the future, if we are not in compliance with thecovenants in our loan facilities or are unable to obtain waivers or amendments or otherwise remedy the relevant breaches, our lenders under the facilities could accelerate our debt andforeclose on our fleet. We may not be successful in obtaining any such waiver or amendment, and we may not be able to refinance our debt or obtain additional financing. Moreover, ourloan facilities, as amended or pursuant to any waiver, and any refinancing or additional financing, may be more expensive and carry more onerous terms than those in our existing debtagreements. In addition, if the book value of a vessel is impaired due to unfavorable market conditions, or if a vessel is sold at a price below its book value, we would incur a loss that couldadversely affect our operating results. Our business, operating results, financial condition, and growth will depend on our ability to successfully charter our vessels, for which we will face substantial competition. The process of obtaining new charters is highly competitive and generally involves an intensive screening process and competitive bids, and often extends for several months.Charters are awarded based upon a variety of factors relating to the vessel operator, including: •shipping industry relationships and reputation for customer service and safety; •the experience and quality of ship operations, including cost-effectiveness; •quality and experience of the seafaring crew; •the ability to finance vessels at competitive rates and financial stability generally; •relationships with shipyards and the ability to get suitable berths; •the technical specifications of the vessel; •construction management experience, including the ability to obtain on-time delivery of new ships according to customer specifications; •willingness to accept operational risks pursuant to the charter, such as allowing termination of the charter for force majeure events; and •competitiveness of the bid in terms of overall price. 16Table of ContentsWe expect substantial competition for providing tanker vessel transportation services from a number of experienced companies, including state-sponsored entities and majorshipping companies. Many of these competitors have significantly greater financial resources than we do and can therefore operate larger fleets and may be able to offer better charterrates. As a result of these factors, we may be unable to attract new customers or secure charters at profitable charter rates, if at all, which will impede our operating results, financialcondition, and growth. Furthermore, if our vessels become available for employment under new charters during periods when charter rates are at depressed levels, we may have to employ our tankervessels at depressed charter rates, if we are able to secure employment for our vessels at all, which would lead to reduced or volatile earnings. Future charter rates may not be at a levelthat will enable us to operate our vessels profitably. The failure of our counterparties to meet their obligations to us under any vessel purchase agreements or charter agreements could cause us to suffer losses or otherwise adverselyaffect our business. Generally, we intend to selectively employ our vessels in the spot market under short- to medium-term time charters or voyage charters and pool arrangements, which exposesus to counterparty risks. The ability and willingness of each of our counterparties to perform its obligations under a vessel purchase agreement or charter agreement with us will dependon a number of factors that are beyond our control and may include, among other things, general economic conditions, the condition of the shipping market, and the overall financialcondition of the counterparty, charter rates received for specific types of vessels, work stoppages or other labor disturbances and various expenses. From time to time, we may enter intoagreements to acquire vessels, and if the seller of a vessel fails to deliver a vessel to us as agreed, or if we cancel a purchase agreement because a seller has not met its obligations, thismay have a material adverse effect on our business. The combination of a reduction of cash flow resulting from declines in world trade, a reduction in borrowing bases under reserve-based credit facilities , and the lack ofavailability of debt or equity financing may result in a significant reduction in the ability of charterers to make charter payments to us. In addition, in depressed market conditions, therehave been reports of charterers renegotiating their charters or defaulting on their obligations under charters, and our future customers may fail to pay charter hire or attempt torenegotiate charter rates. Furthermore, it is possible that third parties with whom we have charter contracts may be impacted by the war between Russia and Ukraine or the resultingsanctions, which could adversely affect their ability to perform. If our future charterers fail to meet their obligations to us or attempt to renegotiate our future charter agreements, it maybe difficult to secure substitute employment for such vessels, and any new charter arrangements we secure may be at lower rates. As a result, we could sustain significant losses, whichcould have a material adverse effect on our business, financial condition, results of operations, and cash flows. We may be unable to locate suitable vessels or dispose of vessels at reasonable prices, which would adversely affect our ability to operate our business. There are periods when we may be interested in further growing our fleet through selective acquisitions. Our business strategy is dependent on identifying and purchasingsuitable vessels. Changing market and regulatory conditions may limit the availability of suitable vessels because of customer preferences or because they are not or will not becompliant with existing or future rules, regulations, and conventions. Additional vessels of the age and quality we desire may not be available for purchase at prices we are prepared topay or at delivery times acceptable to us, and we may not be able to dispose of vessels at reasonable prices, if at all. If we are unable to purchase and dispose of vessels at reasonableprices in accordance with our business strategy or in response to changing market and regulatory conditions, our business would be adversely affected. Our purchasing and operating secondhand vessels, and the aging of our fleet may result in increased operating costs and vessels off-hire, which could adversely affect our earnings. While we will typically inspect secondhand vessels before purchase, this does not provide us with the same knowledge about their condition that we would have had if thesevessels had been built for and operated exclusively by us. Accordingly, we may not discover defects or other problems with such vessels before purchase. Any such hidden defects orproblems, when detected, may be expensive to repair, and if not detected, may result in accidents or other incidents for which we may become liable to third parties. In addition, whenpurchasing secondhand vessels, we do not receive the benefit of any builder warranties if the vessels we buy are older than one year. In general, the costs to maintain a vessel in good operating condition increase with the age of the vessel. Older vessels are typically less fuel efficient than more recentlyconstructed vessels due to improvements in engine technology. Potential charterers may also choose not to charter older vessels. Governmental regulations and safety and otherequipment standards related to the age of vessels may require expenditures for alterations or the addition of new equipment to some of our vessels and may restrict the type of activitiesin which these vessels may engage. We cannot assure you that, as our vessels age, market conditions will justify those expenditures or enable us to operate our vessels profitablyduring the remainder of their useful lives. As a result, regulations and standards could have a material adverse effect on our business, financial condition, results of operations, and cashflows. 17Table of ContentsThere is a lack of historical operating history provided with our secondhand vessel acquisitions, and profitable operation of the vessels will depend on our skill and expertise. Consistent with shipping industry practice, other than inspection of the physical condition of the vessels and examinations of classification society records, neither we, norUOT, will conduct any historical financial due diligence process at times when we acquire vessels. Accordingly, neither we, nor UOT, will obtain the historical operating data for anysecondhand vessels we may acquire in the future from the sellers because that information is not material to our decision to make acquisitions, nor do we believe it would be helpful topotential investors in assessing our business or profitability. Most vessels are sold under a standardized agreement, which, among other things, provides the buyer with the right toinspect the vessel and the vessel’s classification society records. The standard agreement does not give the buyer the right to inspect, or receive copies of, the historical operating dataof the vessel. Prior to the delivery of a purchased vessel, the seller typically removes from the vessel all records, including past financial records and accounts related to the vessel. Inaddition, the technical management agreement between the seller’s technical manager and the seller is automatically terminated and the vessel’s trading certificates are revoked by itsflag state following a change in ownership. Consistent with shipping industry practice, we treat the acquisition of a vessel (whether acquired with or without charter) as the acquisition of an asset rather than a business.Although vessels are generally acquired free of charter, we have acquired and may also in the future acquire some vessels with time charters. Where a vessel has been under a voyagecharter, the vessel is delivered to the buyer free of charter, and it is rare in the shipping industry for the last charterer of the vessel in the hands of the seller to continue as the firstcharterer of the vessel in the hands of the buyer. In most cases, when a vessel is under time charter, and the buyer wishes to assume that charter, the vessel cannot be acquired withoutthe charterer’s consent and the buyer’s entering into a separate direct agreement with the charterer to assume the charter. The purchase of a vessel itself does not transfer the charterbecause it is a separate service agreement between the vessel owner and the charterer. Due to the differences between the prior owners of these vessels and the Company with respect to the routes we expect to operate, our future customers, the cargoes we expectto carry, the freight rates and charter rates we will charge in the future, and the costs we expect to incur in operating our vessels, we believe that our operating results will be significantlydifferent from the operating results of the vessels while owned by the prior owners. The profitable operation of the vessels will depend on our skill and expertise. If we are unable tooperate the vessels profitably, it may have an adverse effect on our financial condition, results of operations, and cash flows. Technical innovation and technical quality and efficiency requirements from our customers could reduce our charter hire income and the value of our vessels. Our customers, in particular those in the oil industry, have a high and increasing focus on quality and compliance standards with their suppliers across the entire supply chain,including the shipping and transportation segment. Our continued compliance with these standards and quality requirements is vital for our operations. The charter rates and the valueand operational life of a vessel are determined by a number of factors, including the vessel’s efficiency, operational flexibility, and physical life. Efficiency includes speed, fuel economy,and the ability to load and discharge cargo quickly. Flexibility includes the ability to enter harbors, utilize related docking facilities, and pass through canals and straits. The length of avessel’s physical life is related to its original design and construction, its maintenance, and the impact of the stress of operations. If new vessels are built that are more efficient or moreflexible or have longer physical lives than our vessels, competition from these more technologically advanced vessels could adversely affect the amount of charter hire payments wereceive for our vessels, and the resale value of our vessels could significantly decrease. This could have an adverse effect on our results of operations, cash flows, financial condition,and ability to pay dividends. The Public Company Accounting Oversight Board inspection of our independent accounting firm could lead to findings in our auditor’s reports and challenge the accuracy of ourpublished audited consolidated financial statements. Auditors of U.S. public companies are required by law to undergo periodic Public Company Accounting Oversight Board, or PCAOB, inspections that assess their compliancewith U.S. law and professional standards in connection with the performance of audits of financial statements filed with the SEC. For several years, certain European Union countries,including Greece, did not permit the PCAOB to conduct inspections of accounting firms established and operating in such European Union countries, even if they were part of majorinternational firms. Accordingly, unlike most U.S. public companies, the PCAOB was prevented from evaluating our auditor’s performance of audits and its quality control procedures,and, unlike stockholders of most U.S. public companies, we, and our stockholders, were deprived of the possible benefits of such inspections. Since 2015, Greece has agreed to allow thePCAOB to conduct inspections of accounting firms operating in Greece. In the future, such PCAOB inspections could result in findings in our auditor’s quality control procedures,question the validity of the auditor’s reports on our published consolidated financial statements and the effectiveness of our internal control over financial reporting, and cast doubtupon the accuracy of our published audited financial statements. Our ability to obtain debt financing in the future may be dependent on the performance of our then-existing charters and the creditworthiness of our charterers. The actual or perceived credit quality of our charterers, and any defaults by them, may materially affect our ability to obtain the additional capital resources that we will requireto purchase additional vessels in the future or may significantly increase our costs of obtaining such capital. Our inability to obtain financing at all or at a higher than anticipated costmay materially affect our results of operation and our ability to implement our business strategy. 18Table of ContentsWe may be unable to attract and retain key management personnel and other employees in the shipping industry, which may negatively impact the effectiveness of our managementand results of operations. Our success depends to a significant extent upon the abilities and efforts of our management team, the Chairperson of the Board, Aliki Paliou, and our Chief Executive Officer,Director and Secretary, Andreas Michalopoulos. Our success will depend upon our ability to retain key members of our management team and to hire new members as may be necessary.The loss of any of these individuals could adversely affect our business prospects and financial condition. Difficulty in hiring and retaining replacement personnel could adverselyaffect our business, results of operations, and ability to pay dividends. We do not intend to maintain “key man” life insurance on any of our officers or other members of ourmanagement team. Aliki Paliou, the Chairperson of the Board, controls a majority of voting power over matters on which our shareholders are entitled to vote and, accordingly, may exertconsiderable influence over us and may have interests that are different from the interests of our other shareholders. Aliki Paliou may be deemed to beneficially own 1,314,792 Series C Preferred Shares, and through the beneficial ownership of such Series C Preferred Shares currently controls inexcess of 88.0% of the voting power of our capital stock. As a result, Ms. Paliou has the power to exert considerable influence over our actions through her ability to control the outcomeof any matter submitted to a vote of our shareholders, including the election of our directors and other significant corporate actions. The Series C Preferred Shares bear superior votingrights to our common shares, are entitled to vote on all matters on which our shareholders are entitled to vote, and are convertible into our common shares. The superior voting rights ofour Series C Preferred Shares may limit our common shareholders’ ability to influence corporate matters. The interests of the holders of the Series C Preferred Shares may conflict with theinterests of our common shareholders and, as a result, the holders of our capital stock may approve actions that our common shareholders do not view as beneficial. Any such conflictsof interest could adversely affect our business, financial condition, and results of operations, and the trading price of our common shares. For additional information regarding the termsof our Series C Preferred Shares, please see “Description of Securities,” attached hereto as Exhibit 2.5 and incorporated by reference herein. Our Chief Financial Officer participates in business activities not associated with us and does not devote all of his time to our business, which may create conflicts of interest andhinder our ability to operate successfully. Anthony Argyropoulos, our Chief Financial Officer, participates in business activities not associated with us and, as a result, may devote less time to us than if he was notengaged in other business activities. This may create conflicts of interest in matters involving or affecting us and our customers, and it is not certain that any of these conflicts ofinterest will be resolved in our favor. This could have a material adverse effect on our business, financial condition, results of operations, and cash flows. We are currently subject to litigation and we may be subject to similar or other litigation in the future. We, and our former Chief Executive Officer, are defendants in a purported class action lawsuit brought in 2017 and currently pending in the U.S. District Court for the EasternDistrict of New York. The lawsuit alleges violations of the Securities Exchange Act of 1934, as amended. In addition, we, our Chief Executive Officer, the Chairperson of the Board, fiveformer directors of the Board, and two entities affiliated with our Chief Executive Officer and Chairperson of the Board were named as defendants in a lawsuit commenced on October 27,2023 in New York State Supreme Court, County of New York, alleging, among other things, violations of fiduciary duties by the named defendants in connection with the exchange offercommenced in December 2021. For more information see “Item 8. Financial information—Legal Proceedings.” While we believe these claims to be without merit and intend to defend these lawsuits vigorously, we cannot predict their outcome. Also, costs associated with the litigation areunpredictable, and could increase our general administrative expenses above their current levels. Furthermore, we may, from time to time, be a party to other litigation in the normalcourse of business. Monitoring and defending against legal actions, whether or not meritorious, is time-consuming for our management and detracts from our ability to fully focus ourinternal resources on our business activities. Uncertainty regarding such pending legal actions, even if eventually resolved in our favor, could have an adverse effect on our ability toobtain financing, raise capital, or otherwise execute our business strategy. In addition, legal fees and costs incurred in connection with such activities may be significant, and we could inthe future be subject to judgments or enter into settlements of claims for significant monetary damages. A decision adverse to our interests could result in the payment of substantialdamages and could have a material adverse effect on our cash flow, results of operations, and financial position. With respect to any litigation, our insurance may not reimburse us or may not be sufficient to reimburse us for the expenses or losses we may suffer in contesting andconcluding such a lawsuit. Substantial litigation costs, including the substantial self-insured retention that we are required to satisfy before any insurance is applied to the claim, or anadverse result in any litigation may adversely impact our business, operating results, or financial condition. We expect to continue to operate substantially outside the United States, which will expose us to political and governmental instability, which could harm our operations. We expect that our operations will continue to be primarily conducted outside the United States and may be adversely affected by changing or adverse political andgovernmental conditions in the countries where our vessels are flagged or registered and in the regions where we otherwise engage in business. Any disruption caused by these factorsmay interfere with the operation of our vessels, which could harm our business, financial condition, and results of operations. Past political efforts to disrupt shipping in these regions,particularly in the Arabian Gulf, have included attacks on ships and mining of waterways. In addition, terrorist attacks outside this region and continuing hostilities in the Middle Eastand globally may lead to additional armed conflicts or to further acts of terrorism and civil disturbance in the United States and elsewhere. Any such attacks or disturbances may disruptour business, increase vessel operating costs, including insurance costs, and adversely affect our financial condition and results of operations. Our operations may also be adverselyaffected by expropriation of vessels, taxes, regulation, tariffs, trade embargoes, economic sanctions, disruption of or limit to trading activities, or other adverse events or circumstancesaffecting the countries and regions in which we operate or may operate in the future. 19Table of ContentsWe generate all of our revenues in U.S. dollars and incur a portion of our expenses in other currencies and, therefore, exchange rate fluctuations could have an adverse impact onour results of operations. We generate all of our revenues in U.S. dollars and incur a portion of our expenses in currencies other than the dollar. This difference could lead to fluctuations in net incomedue to changes in the value of the U.S. dollar relative to the other currencies, in particular the Euro. Expenses incurred in foreign currencies against which the U.S. dollar falls in value canincrease, decreasing our revenues. Further declines in the value of the dollar could lead to higher expenses payable by us. While we historically have not mitigated the risk associated with exchange rate fluctuations through the use of financial derivatives, we may employ such instruments from timeto time in the future in order to minimize this risk. Our use of financial derivatives would involve certain risks, including the risk that losses on a hedged position could exceed thenominal amount invested in the instrument and the risk that the counterparty to the derivative transaction may be unable or unwilling to satisfy its contractual obligations, which couldhave an adverse effect on our results. Volatility of SOFR could affect our profitability, earnings, and cash flow. The calculation of interest in most financing agreements in our industry was historically based on the London Interbank Offered Rate (“LIBOR”). LIBOR has been the subject ofnational, international, and other regulatory guidance and proposals for reform. In response thereto, the Alternative Reference Rate Committee, a committee convened by the FederalReserve Board that includes major market participants proposed the Secured Overnight Financing Rate, or “SOFR,” as an alternative rate to replace U.S. Dollar LIBOR. While ourfinancing arrangements previously used LIBOR, including during the fiscal years ended December 31, 2023, 2022, and 2021, in 2023 we either refinanced, amended or repaid sucharrangements. As a result, none of our financing arrangements currently utilize LIBOR, and those that have a reference rate use SOFR, in line with current market practice. An increase in SOFR, including as a result of the interest rate increases effected by the United States Federal Reserve and the United States Federal Reserve’s recent hike ofU.S. interest rates in response to rising inflation, would affect the amount of interest payable under our existing loan agreements, which, in turn, could have an adverse effect on ourprofitability, earnings, cash flow, and ability to pay dividends. Furthermore, as a secured rate backed by government securities, SOFR may be less likely to correlate with the fundingcosts of financial institutions. As a result, parties may seek to adjust spreads relative to SOFR in underlying contractual arrangements. Therefore, the use of SOFR-based rates may resultin interest rates and/or payments that are higher or lower than the rates and payments that were expected when interest was based on LIBOR. If SOFR performs differently than expectedor if our lenders insist on a different reference rate to replace SOFR, that could increase our borrowing costs (and administrative costs to reflect the transaction), which would have anadverse effect on our profitability, earnings, and cash flows. Alternative reference rates may behave in a similar manner or have other disadvantages or advantages in relation to ourfuture indebtedness and the transition to SOFR or other alternative reference rates in the future could have a material adverse effect on us. In order to manage our exposure to interest rate fluctuations, we may, from time to time, use interest rate derivatives to effectively fix some of our floating rate debt obligations.No assurance can be given, however, that the use of these derivative instruments, if any, may effectively protect us from adverse interest rate movements. The use of interest ratederivatives may affect our results through mark to market valuation of these derivatives. Also, adverse movements in interest rate derivatives may require us to post cash as collateral,which may impact our free cash position, and have the potential to cause us to breach covenants in our loan agreements that require maintenance of certain financial positions andratios. We may have to pay tax on United States source income, which would reduce our earnings. Under the United States Internal Revenue Code of 1986, or the Code, 50% of the gross shipping income of a vessel owning or chartering corporation, such as us and oursubsidiaries, that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States may be subject to a 4% United States federal income taxwithout allowance for deduction, unless that corporation qualifies for exemption from tax under Section 883 of the Code, or Section 883, and the applicable Treasury Regulationspromulgated thereunder. We intend to take the position that we qualified for this statutory tax exemption for U.S. federal income tax return reporting purposes for our 2023 taxable year. However, thereare factual circumstances that could cause us to lose the benefit of this tax exemption for any future taxable year and thereby become subject to U.S. federal income tax on our U.S.-source shipping income. Due to the factual nature of the issues involved, there can be no assurances on our tax-exempt status. If we are not entitled to exemption under Section 883 for any taxable year, we would be subject for those years to an effective 2% U.S. federal income tax on the shipping incomewe derive during the year, which is attributable to the transport of cargoes to or from the United States. The imposition of this taxation would have a negative effect on our business andwould result in decreased earnings available for distribution to our shareholders. 20Table of ContentsWe may be treated as a “passive foreign investment company,” which could have certain adverse U.S. federal income tax consequences to U.S. holders. A foreign corporation will be treated as a “passive foreign investment company,” or PFIC, for U.S. federal income tax purposes if either (1) at least 75% of its gross income forany taxable year consists of certain types of “passive income”, or (2) at least 50% of the average value of the corporation’s assets produce or are held for the production of those typesof “passive income.” For purposes of these tests, cash will be treated as an asset held for the production of passive income. For purposes of these tests, “passive income” generallyincludes dividends, interest, and gains from the sale or exchange of investment property and rents and royalties other than those received from unrelated parties in connection with theactive conduct of a trade or business. For purposes of these tests, income derived from the performance of services does not constitute “passive income.” U.S. holders of stock in aPFIC are subject to a disadvantageous U.S. federal income tax regime with respect to the income derived by the PFIC, the distributions they receive from the PFIC and the gain, if any,they derive from the sale or other disposition of their stock in the PFIC. Whether we will be treated as a PFIC will depend upon our method of operation. In this regard, we intend to treat the gross income we derive or are deemed to derive from timeor voyage chartering activities as services income rather than rental income. Accordingly, we believe that any income from time or voyage chartering activities will not constitute“passive income,” and any assets that we may own and operate in connection with the production of that income will not constitute passive assets. However, any gross income that wemay be deemed to have derived from bareboat chartering activities will be treated as rental income and thus will constitute “passive income,” and any assets that we may own andoperate in connection with the production of that income will constitute passive assets. There is substantial legal authority supporting this position consisting of case law and InternalRevenue Service, or IRS, pronouncements concerning the characterization of income derived from time charters and voyage charters as services income for other tax purposes. However,it should be noted that there is also authority which characterizes time charter income as rental income rather than services income for other tax purposes. Accordingly, no assurance canbe given that the IRS or a court of law will accept our position with regard to our status from time to time as a PFIC, and there is a risk that the IRS or a court of law could determine thatwe are or have been a PFIC for a particular taxable year. If we are or have been a PFIC for any taxable year, U.S. holders of our common shares will face certain adverse U.S. federal income tax consequences and information reportingobligations. Under the PFIC rules, unless such U.S. holders make certain elections available under the Code (which elections could themselves have certain adverse consequences forsuch U.S. holders), such U.S. holders would be liable to pay U.S. federal income tax at the then-prevailing income tax rates on ordinary income plus interest upon excess distributions andupon any gain from the disposition of our common shares, as if the excess distribution or gain had been recognized ratably over such U.S. holder’s holding period for such commonshares. See “Item 10. Additional Information—E. Taxation—United States Federal Income Tax Considerations, United States Federal Income Taxation of U.S. Holders, PFIC Status andSignificant Tax Consequences” for a more comprehensive discussion of the U.S. federal income tax consequences to U.S. holders of our common shares if we are or were to be treated asa PFIC. We may be subject to increased premium payments, or calls, because we obtain some of our insurance through protection and indemnity associations. We may be subject to increased premium payments, or calls, in amounts based on our claim records as well as the claim records of other members of the protection andindemnity associations in the International Group, which is comprised of 13 mutual protection and indemnity associations and insures approximately 90% of the world’s commercialtonnage and through which we receive insurance coverage for tort liability, including pollution-related liability, as well as actual claims. Amounts we may be required to pay as a result ofsuch calls will be unavailable for other purposes. The international nature of our operations may make the outcome of any bankruptcy proceedings difficult to predict. We are incorporated under the laws of the Republic of the Marshall Islands and we conduct operations in countries around the world. Consequently, in the event of anybankruptcy, insolvency, liquidation, dissolution, reorganization, or similar proceeding involving us or any of our subsidiaries, bankruptcy laws other than those of the United Statescould apply. If we become a debtor under U.S. bankruptcy law, bankruptcy courts in the United States may seek to assert jurisdiction over all of our assets, wherever located, includingproperty situated in other countries. There can be no assurance, however, that we would become a debtor in the United States, or that a U.S. bankruptcy court would be entitled to, oraccept, jurisdiction over such a bankruptcy case, or that courts in other countries that have jurisdiction over us and our operations would recognize a U.S. bankruptcy court’sjurisdiction if any other bankruptcy court would determine it had jurisdiction. A cyber-attack could materially disrupt our business. We rely on information technology systems and networks in our operations and administration of our business. Information systems are vulnerable to security breaches bycomputer hackers and cyber terrorists. We rely on industry accepted security measures and technology to securely maintain confidential and proprietary information maintained on ourinformation systems. However, these measures and technology may not adequately prevent security breaches. Our business operations could be targeted by individuals or groupsseeking to sabotage or disrupt our information technology systems and networks or to steal data. A successful cyber-attack, including as a result of spam, targeted phishing-type emails,and ransomware attacks, or other breaches of or significant interruption or failure of our information technology systems, could materially disrupt our operations, including the safety ofour operations, or lead to the unauthorized release of information or alteration of information in our systems. Any such attack or other breach of our information technology systemscould have a material adverse effect on our business and results of operations. In addition, the unavailability of the information systems or the failure of these systems to perform asanticipated for any reason could disrupt our business and could result in decreased performance and increased operating costs, causing our business and results of operations to suffer.Any significant interruption or failure of our information systems or any significant breach of security could adversely affect or disrupt our business and could result in decreasedperformance and increased operating costs, causing our business and operating results to suffer. 21Table of ContentsAdditionally, any changes in the nature of cyber threats might require us to adopt additional procedures for monitoring cybersecurity, which could require additional expensesand/or capital expenditures. Most recently, the escalation of the war between Russia and Ukraine has been accompanied by cyber-attacks against the Ukrainian government and othercountries in the region. It is possible that these attacks could have collateral effects on additional critical infrastructure and financial institutions globally, which could adversely affectour operations. We rely on industry-accepted security measures and technology to securely maintain confidential and proprietary information maintained on our information systems.However, these measures and technology may not adequately prevent security breaches and, therefore, it is difficult to assess the likelihood of such threat and any potential impact atthis time. If we do not identify suitable vessels for acquisition or successfully integrate any acquired vessels, we may not be able to grow or effectively manage our growth. One of our strategies is to continue to grow by expanding our operations and adding tanker vessels to our fleet. Our future growth will depend upon a number of factors, someof which may not be within our control. These factors include our ability to: •identify suitable vessels for acquisitions at attractive prices, which may not be possible if asset prices rise too quickly; •obtain financing for our existing and new operations; •manage relationships with customers and suppliers; •identify businesses engaged in managing, operating, or owning tanker vessels for acquisitions or joint ventures; •integrate any acquired vessels successfully with our then-existing operations; •attract, hire, train, integrate, and retain qualified, highly trained personnel and crew to manage and operate our growing business and fleet; •identify additional new markets; •enhance our customer base; •improve our operating, financial, and accounting systems and controls; and •obtain required financing for our existing and new operations. Our failure to effectively identify, purchase, develop, and integrate any new vessels could adversely affect our business, financial condition, and results of operations. Thenumber of employees that perform services for us and our current operating and financial systems may not be adequate as we implement our plan to expand the size of our fleet, and wemay not be able to effectively hire more employees, or adequately improve those systems. We may incur unanticipated expenses as an operating company. Our current operating andfinancial systems may not be adequate as we implement our plan to expand the size of our fleet. Finally, additional acquisitions may require additional equity issuances, which may diluteour common shareholders if issued at lower prices than the price they acquired their shares or debt issuances (with amortization payments), both of which could reduce our cash flow. Ifwe are unable to execute the points noted above, our financial condition may be adversely affected. Growing any business by acquisition presents numerous risks such as undisclosed liabilities and obligations, difficulty in obtaining additional qualified personnel andmanaging relationships with customers and suppliers and integrating newly acquired operations into existing infrastructures. The expansion of our fleet may impose significantadditional responsibilities on our management and staff, and the management and staff of our commercial and technical managers, and may necessitate that we, and they, increase thenumber of personnel. We cannot give any assurance that we will be successful in executing our growth plans or that we will not incur significant expenses and losses in connection withour future growth. Inflation could adversely affect our operating results and financial condition. Inflation could have an adverse impact on our operating results and, subsequently, on our financial condition both directly through the increase of various costs necessary forthe operation of our vessels such as crew, repairs, and materials, and indirectly through its adverse impact on the world economy in terms of increasing interest rates and slowing globalgrowth. If inflationary pressures intensify further, we may be unable to raise our charter rates enough to offset the increasing costs of our operations, which would decrease our profitmargins. Inflation may also raise our costs of capital, which would result in the deterioration of our financial condition. The IMO 2020 regulations may cause us to incur substantial costs and procure low-sulfur fuel oil directly on the wholesale market for storage at sea and onward consumption onour vessels. Effective January 1, 2020, the IMO implemented a new regulation for a 0.50% global sulfur cap on emissions from vessels (the “IMO 2020 Regulations”). Under this new globalcap, vessels are required to use marine fuels with a sulfur content of no more than 0.50% against the former regulations specifying a maximum of 3.50% sulfur in an effort to reduce theemission of sulfur oxide into the atmosphere. 22Table of ContentsWe have incurred increased costs to comply with these revised standards. Additional or new conventions, laws, and regulations may be adopted that could require, amongothers, the installation of expensive emission control systems and could adversely affect our business, results of operations, cash flows, and financial condition. As of January 1, 2020, our fleet has been burning IMO compliant fuels except for our vessel P. Aliki that was acquired with an approved exhaust gas cleaning system for thecompliance with the existing sulfur emission regulations. Low sulfur fuel is more expensive than standard marine fuel containing 3.5% sulfur content and may become more expensive ordifficult to obtain as a result of increased demand. If the cost differential between low sulfur fuel and high sulfur fuel is significantly higher than anticipated, or if low sulfur fuel is notavailable at ports on certain trading routes, it may not be feasible or competitive to operate our vessels on certain trading routes without installing scrubbers or without incurringdeviation time to obtain compliant fuel. Scrubbers may not be available to be installed on such vessels at a favorable cost or at all if we seek them at a later date. Furthermore, although as of the date of this annual report, over two years has passed since the IMO 2020 Regulations became effective, it is uncertain how the availability ofhigh-sulfur fuel around the world will be affected by the implementation of the IMO 2020 Regulations, and both the price of high-sulfur fuel generally and the difference between the costof high-sulfur fuel and that of low-sulfur fuel are also uncertain. Scarcity in the supply of high-sulfur fuel, or a lower-than-anticipated difference in the costs between the two types offuel, may cause us to fail to recognize anticipated benefits from installing scrubbers. Fuel is a significant, if not the largest, expense in our shipping operations when vessels are under voyage charter and is an important factor in negotiating charter rates. Ouroperations and the performance of our vessels, and as a result, our results of operations, face a host of challenges. These include concerns over higher costs, international compliance,and the availability of low-sulfur fuel at key international bunkering hubs such as Rotterdam and Singapore. In addition, we take seriously concerns raised in Europe that certain blendsof low-sulfur fuels can emit greater amounts of harmful black carbon than the high-sulfur fuels they are meant to replace. Costs of compliance with these and other related regulatorychanges may be significant and may have a material adverse effect on our future performance, results of operations, cash flows, and financial position. As a result, an increase in theprice of fuel beyond our expectations may adversely affect our profitability at the time of charter negotiation. While we carry cargo insurance to protect us against certain risks of loss of or damage to the procured commodities, we may not be adequately insured to cover any losses fromsuch operational risks, which could have a material adverse effect on us. Any significant uninsured or under-insured loss or liability could have a material adverse effect on ourbusiness, results of operations, cash flows and financial condition, and our available cash. Climate change and greenhouse gas restrictions may adversely impact our operations and markets. Due to concern over the risk of climate change, a number of countries and the IMO have adopted, or are considering the adoption of, regulatory frameworks to reducegreenhouse gas emissions. These regulatory measures may include, among others, the adoption of cap and trade regimes, carbon taxes, increased efficiency standards, and incentives,or mandates for renewable energy. In July 2023, the IMO adopted a strategy to reduce greenhouse gas emissions from ships. The initial strategy identifies levels of ambition to reducinggreenhouse gas emissions, including (1) decreasing the carbon intensity from ships through the implementation of further phases of the EEDI for new ships; (2) reducing carbon dioxideemissions per transport work, as an average across international shipping, by at least 40% by 2030, pursuing efforts towards 70% by 2050, compared to 2008 emission levels; and (3)reducing the total annual greenhouse emissions by at least 50% by 2050 compared to 2008 while pursuing efforts towards phasing them out entirely. Since January 1, 2020, ships have been required to either remove sulfur from emissions or buy fuel with low sulfur content, which may lead to increased costs andsupplementary investments for ship owners. The interpretation of “fuel oil used on board” includes use in main engines, auxiliary engines, and boilers. Shipowners may comply with thisregulation by (i) using 0.5% sulfur fuels on board, which are available around the world but at a higher cost; (ii) installing scrubbers for cleaning of the exhaust gas; or (iii) by retrofittingvessels to be powered by liquefied natural gas, which may not be a viable option due to the lack of supply network and high costs involved in this process. Costs of compliance withthese regulatory changes may be significant and may have a material adverse effect on our future performance, results of operations, cash flows, and financial position. In addition, although the emissions of greenhouse gases from international shipping currently are not subject to the Kyoto Protocol to the United Nations FrameworkConvention on Climate Change, which entered into force in 2005 and required adopting countries to implement national programs to reduce emissions of certain gases (this task wasdelegated under the Kyoto Protocol to the IMO for action), a new treaty may be adopted in the future that includes restrictions on shipping emissions. 23Table of ContentsFurthermore, on January 1, 2024 the EU Emissions Trading Scheme, or the ETS, for ships sailing into and out of EU ports came into effect, and the FuelEU Maritime Regulation isexpected to come into effect on January 1, 2025. The ETS is to apply gradually over the period from 2024 to 2026. 40% of allowances would have to be surrendered in 2025 for the year2024; 70% of allowances would have to be surrendered in 2026 for the year 2025; and 100% of allowances would have to be surrendered in 2027 for the year 2026. Compliance is to be ona companywide (rather than per ship) basis and “shipping company” is defined widely to capture both the ship owner and any contractually appointed commercial operator/shipmanager/bareboat charterer who assumes full compliance under the ETS and the ISM Code. If the latter contractual arrangement is entered into this needs to be reflected in a certifiedmandate signed by both parties and presented to the administrator of the scheme. The cap under the ETS would be set by taking into account EU MRV system emissions data for theyears 2018 and 2019, adjusted, from year 2021 and is to capture 100% of the emissions from intra-EU maritime voyages; 100% of emissions from ships at berth in EU ports and 50% ofemissions from voyages which start or end at EU ports (but the other destination is outside the EU). Furthermore, the newly passed EU Emissions Trading Directive 2023/959/EC makesclear that all maritime allowances would be auctioned and there will be no free allocation. 78.4 million emissions allowances are to be allocated specifically to maritime. If we do not haveallowances, we will be forced to purchase allowances from the market, which can be costly, especially if other shipping companies are similarly looking to do the same. New systems,including personnel, data management systems, costs recovery mechanisms, revised service agreement terms, and emissions reporting procedures, will have to be put in place, atsignificant cost, to prepare for and manage the administrative aspect of ETS compliance. The cost of compliance, and of our future EU emissions and costs to purchase an allowance foremissions (if we must purchase in order to comply) are unknown and difficult to predict, and are based on a number of factors, including the size of our fleet, our trips within and to andfrom the EU, and the prevailing cost of allowances.Compliance with changes in laws, regulations, and obligations relating to climate change affects the propulsion options in subsequent vessel designs and could increase ourcosts related to acquiring new vessels, operating and maintaining our existing tanker vessels and require us to install new emission controls, acquire allowances or pay taxes related toour greenhouse gas emissions or administer and manage a greenhouse gas emissions program. Revenue generation and strategic growth opportunities may also be adversely affected. Adverse effects upon the crude oil and natural gas industry relating to climate change, including growing public concern about the environmental impact of climate change,may also adversely affect demand for our services. For example, increased regulation of greenhouse gases or other concerns relating to climate change may reduce the demand for crudeoil and natural gas in the future or create greater incentives for the use of alternative energy sources. In addition, the physical effects of climate change, including changes in weatherpatterns, extreme weather events, rising sea levels, and scarcity of water resources, may negatively impact our operations. Any long-term material adverse effect on the crude oil andnatural gas industry could have a significant financial and operational adverse impact on our business that we cannot predict with certainty at this time. Increasing regulation as well as scrutiny and changing expectations from investors, lenders, and other market participants with respect to our Environmental, Social, andGovernance (“ESG”) policies may impose additional costs on us or expose us to additional risks. Companies across all industries are facing increasing scrutiny relating to their ESG policies. Investor advocacy groups, certain institutional investors, investment funds,lenders, and other market participants are increasingly focused on ESG practices and, in recent years, have placed increasing importance on the implications and social cost of theirinvestments. The increased focus and activism related to ESG and similar matters may hinder access to capital, as investors and lenders may decide to reallocate capital or to not commitcapital as a result of their assessment of a company’s ESG practices. Companies that do not adapt to, or comply with, investor, lender, or other industry shareholder evolvingexpectations and standards, or which are perceived to have not responded appropriately to the growing concern for ESG issues, regardless of whether there is a legal requirement to doso, may suffer from reputational damage and the business, financial condition, and/or stock price of such a company could be materially and adversely affected. We may face increasing pressures from investors, lenders, and other market participants who are increasingly focused on climate change to prioritize sustainable energypractices, reduce our carbon footprint, and promote sustainability. As a result, we may be required to implement more stringent ESG procedures or standards so that our existing andfuture investors and lenders remain invested in us and make further investments in us, especially given the highly focused and specific trade of crude oil transportation in which we areengaged. If we do not meet these standards, our business and/or our ability to access capital could be harmed. On March 6, 2024, the SEC adopted final rules to enhance and standardize climate-related disclosures by public companies and in public offerings. The final rules will becomeeffective 60 days following publication of the adopting release in the Federal Register. As a non-accelerated filer, we will be required to provide the enhanced climate-related disclosuresin our annual reports for the year ending December 31, 2027. On March 15, 2024, the Fifth Circuit Court of Appeals stayed application of these rules pending further judicial review, buton March 25, 2024, the Fifth Circuit Court of Appeals ordered the transfer of the petition to the Eighth Circuit Court of Appeals and the dissolution of the administrative stay. The impactof the ongoing litigation with respect to these rules on the content of these rules or the timing of their effectiveness is uncertain. Costs of compliance with these new rules may besignificant and may have a material adverse effect on our future performance, results of operations, cash flows and financial position.Additionally, certain investors and lenders may exclude oil transport companies, such as us, from their investing portfolios altogether due to environmental, social, andgovernance factors. These limitations in both the debt and equity capital markets may affect our ability to grow as our plans for growth may include accessing the equity and debt capitalmarkets. If those markets are unavailable, or if we are unable to access alternative means of financing on acceptable terms, or at all, we may be unable to implement our business strategy,which would have a material adverse effect on our financial condition and results of operations and impair our ability to service our indebtedness. Further, it is likely that we will incuradditional costs and require additional resources to monitor, report, and comply with wide-ranging ESG requirements. The occurrence of any of the foregoing could have a materialadverse effect on our business and financial condition. 24Table of ContentsIf we are unable to operate our vessels profitably, we may be unsuccessful in competing in the highly competitive international tanker vessel market, which would negatively affectour financial condition and our ability to expand our business. The operation of tanker vessels and transportation of crude oil and refined petroleum products is extremely competitive, and reduced demand for transportation of crude oil andrefined petroleum products could lead to increased competition. Competition arises primarily from other tanker vessel owners, including major oil companies and national oil companiesor companies linked to authorities of oil producing or importing countries, as well as independent tanker companies, some of whom have substantially greater resources than we do.Competition for the transportation of oil and oil products can be intense and depends on price, location, size, age, condition, and acceptability of the tanker and its operator to thecharterers. Our ability to operate our vessels profitably depends on a variety of factors, including, but not limited to, the (i) loss or reduction in business from significant customers, (ii)unanticipated changes in demand for transportation of crude oil and petroleum products, (iii) changes in the production of, or demand for, oil and petroleum products, generally or inparticular regions, (iv) greater than anticipated levels of tanker vessel newbuilding orders or lower than anticipated levels of tanker vessel recyclings, and (v) changes in rules andregulations applicable to the tanker vessel industry, including legislation adopted by international organizations, such as IMO, and the EU or by individual countries. If we expand our business or provide new services in new geographic regions, we may not be able to compete profitably. New markets may require different skills, knowledge, orstrategies than we use in our current markets, and the competitors in those new markets may have greater financial strength and capital resources than we do. Regulations relating to ballast water discharge may adversely affect our revenues and profitability. The IMO has imposed updated guidelines for ballast water management systems specifying the maximum amount of viable organisms allowed to be discharged from a vessel’sballast water. Depending on the date of the International Oil Pollution Prevention (IOPP) renewal survey, existing vessels constructed before September 8, 2017, are required to complywith the updated D-2 standard on or after September 8, 2019. For most vessels, compliance with the D-2 standard will involve installing on-board systems to treat ballast water andeliminate unwanted organisms. Vessels constructed on or after September 8, 2017, are required to comply with the D-2 standards on or after September 8, 2017. The IMO has imposedupdated guidelines for ballast water management systems specifying the maximum amount of viable organisms allowed to be discharged from a vessel’s ballast water. Depending on thedate of the International Oil Pollution Prevention (IOPP) renewal survey, existing vessels constructed before September 8, 2017, are required to comply with the updated D-2 standard onor after September 8, 2019. Vessels are required to meet the D-2 standard by installing an approved Ballast Water Management System (or BWMS). BWMSs installed on or after October28, 2020 shall be approved in accordance with BWMS Code, while BWMSs installed before October 23, 2020 must be approved taking into account guidelines developed by the IMO orthe BWMS Code. All of our vessels have installed approved ballast water management systems. Furthermore, United States regulations are currently changing. Although the 2013 Vessel General Permit (VGP) program and U.S. National Invasive Species Act (NISA) arecurrently in effect to regulate ballast discharge, exchange, and installation, the Vessel Incidental Discharge Act or VIDA, which was signed into law on December 4, 2018, requires thatthe EPA develop national standards of performance for approximately 30 discharges, similar to those found in the VGP within two years. On October 26, 2020, the EPA published a Noticeof Proposed Rulemaking for Vessel Incidental Discharge National Standards of Performance under VIDA, and in November 2020, held virtual public meetings. On October 18, 2023, theEPA published a Supplemental Notice to the Vessel Incidental Discharge National Standards of Performance, which shares new ballast water information that the EPA received from theUSCG. Under VIDA, all provisions of the VGP 2018 and the USCG ballast water regulations remain in force and effect as currently written until the EPA publishes standards. The newregulations could require the installation of new equipment, which may cause us to incur substantial costs, which may adversely affect our profitability. Insurance may be difficult to obtain or, if obtained, may not be adequate to cover our losses that may result from our operations due to the inherent operational risks of theshipping industry. There are a number of risks associated with the operation of ocean-going vessels, including mechanical failure, collision, fire, human error, war, terrorism, piracy, loss of life,contact with floating objects, property loss, cargo loss or damage, and business interruption due to political circumstances in foreign countries, hostilities, and labor strikes. Any ofthese events may result in loss of revenues, increased costs, and decreased cash flows. In addition, the operation of any vessel is subject to the inherent possibility of marine disaster,including oil spills and other environmental mishaps. We carry insurance to protect us against most of the accident-related risks involved in the conduct of our business, including marine hull and machinery insurance, protectionand indemnity insurance, which include pollution risks, crew insurance, and war risk insurance. However, we may not be adequately insured to cover losses from our operational risks,which could have a material adverse effect on us. Additionally, our insurers may refuse to pay particular claims, and our insurance may be voidable by the insurers if we take, or fail totake, certain actions, such as failing to maintain certification of our vessels with applicable maritime regulatory organizations. Any significant uninsured or under-insured loss or liabilitycould have a material adverse effect on our business, results of operations, cash flows, financial condition, and available cash. In addition, we may not be able to obtain adequateinsurance coverage at reasonable rates in the future during adverse insurance market conditions. Under our vessel management agreements with UOT, UOT is responsible for procuring and paying for insurance for our vessels. Our insurance policies contain standardlimitations, exclusions, and deductibles. The policies insure against those risks that the shipping industry commonly insures against, which are hull and machinery, protection andindemnity, and war risk. UOT currently maintains hull and machinery coverage in an amount at least equal to the vessels’ market value. UOT maintains an amount of protection andindemnity insurance that is at least equal to the standard industry level of coverage. We cannot assure you that UOT will be able to procure adequate insurance coverage for our fleet inthe future or that our insurers will pay any particular claim. 25Table of ContentsIn addition, changes in the insurance markets attributable to terrorist attacks may also make certain types of insurance more difficult for us to obtain due to increased premiums,or reduced or restricted coverage for losses caused by terrorist acts generally. Since we obtain some of our insurance through protection and indemnity associations, which result in significant expenses to us, we may be required to make additionalpremium payments. We may be subject to increased premium payments, or calls, in amounts based on our claim records, the claim records of our managers, as well as the claim records ofother members of the protection and indemnity associations through which we receive insurance coverage for tort liability, including pollution-related liability. In addition, our protectionand indemnity associations may not have enough resources to cover claims made against them. Our payment of these calls could result in significant expense to us, which could have amaterial adverse effect on our business, results of operations, cash flows, financial condition, and available cash. Adverse market conditions could cause us to breach covenants in our credit facilities and adversely affect our operating results. The market values of tanker vessels are subject to significant volatility. Indicatively, market prices for ten-year-old Aframax tankers over the past ten years have fluctuatedsignificantly from a high level of $55 million in 2023 to a low level of $18 million in 2016. You should expect the market value of our vessels to fluctuate depending on general economicand market conditions affecting the shipping industry and prevailing charter rates, competition from other tanker companies and other modes of transportation, types, sizes, and ages ofvessels, applicable governmental regulations, and the cost of newbuildings. We believe that our vessels’ current aggregate market value will be in excess of loan to value amountsrequired under our credit facilities. Our credit facilities generally require that the fair market value of the vessels pledged as collateral never be less than 125% or 135% of the aggregateprincipal amount outstanding under the loans. We were in compliance with these requirements as of December 31, 2023, and as of the date of this annual report. A decrease in vessel values could cause us to breach certain covenants in our existing credit facilities and future financing agreements that we may enter into from time to time.If we breach such covenants and are unable to remedy the relevant breach or obtain a waiver, our lenders could accelerate our debt and foreclose on our owned vessels. Additionally, ifwe sell one or more of our vessels at a time when vessel prices have fallen, the sale price may be less than the vessel’s carrying value on our consolidated financial statements, resultingin a loss on sale or an impairment loss being recognized, ultimately leading to a reduction in earnings. A shift in consumer demand from crude oil towards other energy sources or changes to trade patterns for crude oil and refined petroleum products may have a material adverseeffect on our business. A significant portion of our earnings are related to the crude oil industry. A shift in the consumer demand from crude oil towards other energy resources, such as wind energy,solar energy, hydrogen energy, or nuclear energy, will potentially affect the demand for our vessels. This could have a material adverse effect on our future performance, results ofoperations, cash flows, and financial position. Seaborne trading and distribution patterns are primarily influenced by the relative advantage of the various sources of production, locations of consumption, pricingdifferentials, and seasonality. Changes to the trade patterns of crude oil and oil products may have a significant negative or positive impact on the ton-mile and, therefore, the demand forour tanker vessels. This could have a material adverse effect on our future performance, results of operations, cash flows, and financial position. Risks Relating to our Common and Preferred Shares The market price of our common shares is subject to significant fluctuations. The market price of our common shares has been and may in the future be subject to significant fluctuations as a result of many factors, some of which are beyond our control. During the period from January 1, 2023 to March 26, 2024, the trading price of our common shares has ranged from an intra-day high of $3.69 on January 3, 2023 to an intra-daylow of $0.68 on June 26, 2023. Among the factors that have in the past and could in the future affect our share price are: •the failure of securities analysts to publish research about us or make appropriate changes in their financial estimates; •announcements by us or our competitors of significant contracts, acquisitions, or capital commitments; •variations in quarterly operating results; •general economic conditions, including inflationary pressures; •terrorist or piracy acts; •unforeseen events, such as natural disasters or pandemics; •international sanctions, embargoes, import and export restrictions, nationalizations, piracy, and wars or other conflicts, including the ongoing war between Ukraine andRussia and the war between Israel and Hamas; 26Table of Contents•actual or anticipated fluctuations in our operating results from period to period; •fluctuations in interest rates; •fluctuations in the availability or the price of oil and chemicals; •fluctuations in foreign currency exchange rates; •the loss of any of our key management personnel; •our failure to successfully implement our business plan; •future sales of our common shares or other securities; •stock splits or reverse stock splits; •shareholder activism, such as the tender offer and related actions commenced by Sphinx Investment Corp. during 2023; and •investors’ perception of us and the international tanker sector. These broad market and industry factors may materially reduce the market price of our common shares, regardless of our operating performance. The seaborne transportationindustry has been highly unpredictable and volatile. The market for common shares of companies in this industry may be volatile as a consequence. Therefore, we cannot assure youthat you will be able to sell any of our common shares you may have purchased at a price greater than or equal to its original purchase price, or that you will be able to sell them at all. In addition, over the last few years, the stock market has experienced price and volume fluctuations, including due to factors relating to the outbreak of COVID-19 and itsvariants, and the governmental responses thereto, and the war in Ukraine and between Israel and Hamas, and this volatility has sometimes been unrelated to the operating performanceof particular companies. As a result, there is a potential for rapid and substantial decreases in the price of our common shares, including decreases unrelated to our operatingperformance or prospects. This market and share price volatility relating to the effects of COVID-19 and its variants, and the governmental responses thereto, or the war in Ukraine andbetween Israel and Hamas, as well as general economic, market, or political conditions, has and could further reduce the market price of our common shares in spite of our operatingperformance and could also increase our cost of capital, which could prevent us from accessing debt and equity capital on terms acceptable to us or at all. In addition, the market price and trading volume of our common shares have at certain times in the past exhibited, and may continue to exhibit, extreme volatility, includingwithin a single trading day. For example, over a period of three trading days from August 9, 2022, through August 11, 2022, the trading price of our common shares ranged from an intra-day high of $9.75 to an intra-day low of $5.25. Such price volatility could cause purchasers of our common shares to incur substantial losses. With respect to certain such instances oftrading volatility, including the period beginning on August 9, 2022, we are not aware of any material changes in our financial condition or results of operations that would explain suchprice volatility or trading volume, which we believe reflect market and trading dynamics unrelated to our operating business or prospects and outside of our control. We are thus unableto predict when such instances of trading volatility will occur or how long such dynamics may last. Under these circumstances, we would caution you against investing in our commonshares unless you are prepared for the risk of incurring substantial losses. Extreme fluctuations in the market price of our common shares may occur in response to strong and atypical retail investor interest, including on social media and online forums,the direct access by retail investors to broadly available trading platforms, the amount and status of short interest in our common shares and our other securities, access to margin debt,trading in options and other derivatives on our common shares, and any related hedging and other trading factors. In particular, a proportion of our common shares may be traded byshort sellers which may put pressure on the supply and demand for our common shares, creating further price volatility. A possible “short squeeze” due to a sudden increase in demandof our common shares that largely exceeds supply may lead to sudden extreme price volatility in our common shares. Investors may purchase our common shares to hedge existingexposure in our common shares or to speculate on the price of our common shares. Speculation on the price of our common shares may involve long and short exposures. To the extentaggregate short exposure exceeds the number of common shares available for purchase in the open market, investors with short exposure may have to pay a premium to repurchase ourcommon shares for delivery to lenders of our common shares. Those repurchases may in turn, dramatically increase the price of our common shares until investors with short exposureare able to purchase additional common shares to cover their short position. This is often referred to as a “short squeeze.” Following such a short squeeze, once investors purchase theshares necessary to cover their short position, the price of our common shares may rapidly decline. A short squeeze could lead to volatile price movements in our shares that are notdirectly correlated to the performance or prospects of our company and could cause purchasers of our common shares to incur substantial losses. Further, shareholders may institute securities class action litigation following periods of market volatility. If we were involved in securities litigation, we could incur substantialcosts and our resources and the attention of management could be diverted from our business. 27Table of ContentsFuture sales of our common shares, including through the exercise of conversion rights under our outstanding convertible preferred shares, could cause the market price of ourcommon shares to decline. Our amended and restated articles of incorporation authorize us to issue up to 500,000,000 common shares, of which 12,279,676 shares were issued and outstanding as of March26, 2024. As of the date of this report, 1,428,372 of our Series C Preferred Shares are currently issued and outstanding. Each Series C Preferred Share will be convertible, at the option ofthe holder at any time and from time to time after six months from the date of original issuance of such Series C Preferred Share, into a number of common shares equal to the Series CPreferred Share liquidation preference of $25.00 divided by a conversion price equal to $1.3576 (subject to adjustment from time to time). The conversion price is subject to customaryadjustments, including for any stock splits, reverse stock splits or stock dividends, and will also be adjusted to equal the lowest price at which common shares are sold by us in anyregistered offering, provided that such adjusted conversion price shall not be less than $0.50. For additional information regarding the terms of our issued and outstanding Series CPreferred Shares, please see “Item 10. Additional Information—B. Memorandum and Articles of Association” and “Item 3. Key Information—D. Risk Factors” entitled “Aliki Paliou, theChairperson of the Board, controls a majority of voting power over matters on which our shareholders are entitled to vote, and accordingly, may exert considerable influence over us andmay have interests that are different from the interests of our other shareholders.” We may offer and sell our common shares or securities convertible into our common shares from timeto time, through one or more methods of distribution, subject to market conditions and our capital needs. The market price of our common shares could decline from its current levels dueto sales of a large number of shares in the market, including sales of shares by our large shareholders, our issuance of additional shares, or securities convertible into our common sharesor the perception that these sales could occur. These sales could also make it more difficult or impossible for us to sell equity securities in the future at a time and price that we deemappropriate to raise funds through future offerings of shares of our common shares. The issuance of such additional common shares would also result in the dilution of the ownershipinterests of our existing shareholders. We might issue additional common shares or other securities to finance our growth as market conditions warrant. These issuances, which would generally not be subject toshareholder approval, may lower your ownership interests and may depress the market price of our common shares. We have in the past conducted significant offerings of our common shares and securities convertible into common shares pursuant to previous public and private offerings ofour equity and equity-linked securities. We may finance potential future expansions of our fleet in large part through equity and debt financing. Pursuant to our amended and restatedarticles of incorporation, we are authorized to issue up to 500,000,000 common shares and 25,000,000 preferred shares, each with a par value of $0.01 per share. Therefore, subject toNasdaq rules that are applicable to us, we may issue additional common shares and other equity securities of equal or senior rank, without shareholder approval, in a number ofcircumstances from time to time. On April 21, 2023, we filed a registration statement on Form F-3, which was declared effective on May 4, 2023, and is available for the registered sale of up to $250.0 million ofour securities. In addition, we may be obligated to issue pursuant to the terms of outstanding convertible securities, options, or warrants: •any common shares issuable pursuant to the exercise of conversion rights under our Series C Preferred Shares, of which 1,428,372 shares are currently outstanding; •8,000 common shares issuable upon the exercise of outstanding options exercisable at a price range between $150.00 and $450.00 per share, for a term expiring January1, 2026; •up to 567,366 common shares issuable upon the exercise of our Class A Warrants (at an exercise price of $15.75 per share as of March 26, 2024) which expire in January2028; •up to 1,033,333 common shares that may be issued upon the exercise of warrants (the “July 2022 Warrants”) issued pursuant to a registered direct offering on July 19,2022 (at an exercise price of $1.65 per share as of March 26, 2024) which expire in January 2028; •up to 2,122,222 common shares that may be issued upon the exercise of warrants (the “August 2022 Warrants”) issued pursuant to a registered direct offering onAugust 12, 2022 (at an exercise price of $1.65 per share as of March 26, 2024) which expire in August 2027; •up to 14,300 common shares that may be issued upon the exercise (at an exercise price of $2.25 per share as of March 26, 2024) or exchange (for no additional cashconsideration) of the Series A warrants (the “Series A Warrants”), which expire in March 2028; and •up to 4,167,000 common shares that may be issued upon the exercise of the Series B Warrants (at an exercise price of $2.25 per share as of March 26, 2024) which expirein March 2028. Our existing common shareholders will experience significant dilution if we sell shares at prices significantly below the price at which they invested. We may issue additionalcommon shares or other equity securities of equal or senior rank in the future to raise additional capital in connection with, among other things, debt prepayments, future vesselacquisitions, payment of dividends on our Series B or Series C Preferred Shares, redemptions of our Series C Preferred Shares, or any future equity incentive plan, without shareholderapproval, in a number of circumstances. Holders of our common shares have no preemptive rights that entitle such holders to purchase their pro rata share of any offering of shares ofany class or series of shares and, therefore, are at risk of dilution. 28Table of ContentsOur issuance of additional common shares or other equity securities of equal or senior rank will have the following effects: •our existing shareholders’ proportionate ownership interest in us may decrease; •the relative voting strength of each previously outstanding share may be diminished; •the market price of our common shares may decline; and •the amount of cash available for dividends payable on our common shares, if any, may decrease. The market price of our common shares could decline due to sales, or the announcements of proposed sales, of a large number of common shares in the market, including salesof common shares by our large shareholders or by holders of securities convertible into common shares, or the perception that these sales could occur. These sales or the perceptionthat these sales could occur could also depress the market price of our common shares and impair our ability to raise capital through the sale of additional equity securities or make itmore difficult or impossible for us to sell equity securities in the future at a time and price that we deem appropriate. We cannot predict the effect that future sales of common shares orother equity-related securities would have on the market price of our common shares. There is no guarantee of a continuing public market for you to resell our common shares. Our common shares commenced trading on the Nasdaq Global Market on January 19, 2011. Since January 2, 2013, our common shares have traded on the Nasdaq Global SelectMarket, and since March 6, 2020, our common shares have traded on the Nasdaq Capital Market. We cannot assure you that an active and liquid public market for our common shareswill continue. The Nasdaq Capital Market and each national securities exchange have certain corporate governance requirements that must be met in order for us to maintain our listing.If we fail to maintain the relevant corporate governance requirements, our common shares could be delisted, which would make it harder for you to monetize your investment in ourcommon shares and would cause the value of your investment to decline. We are required to meet certain qualitative and financial tests (including a minimum bid price for our common shares of $1.00 per share, at least 500,000 publicly held shares, atleast 300 public holders, a market value of publicly held securities of $1 million, and net income from continuing operations of $500,000), as well as other corporate governance standards,to maintain the listing of our common shares on the Nasdaq Capital Market, or Nasdaq. It is possible that we could fail to satisfy one or more of these requirements. There can be noassurance that we will be able to maintain compliance with the minimum bid price, shareholders’ equity, number of publicly held shares, net income requirements, or other listingstandards in the future. A decline in the closing price of our common shares could result in a breach of the requirements for listing on the Nasdaq Capital Market. Although we wouldhave an opportunity to take action to cure such a breach, if we do not succeed, Nasdaq could commence suspension or delisting procedures in respect of our common shares. We mayreceive notices from Nasdaq that we have failed to meet its requirements, and proceedings to delist our stock could commence. We have received in the past, and most recently receivedon April 18, 2023, a written notification from The Nasdaq Stock Market LLC, indicating that because the closing bid price of our common shares for the previous 30 consecutive businessdays was below $1.00 per share, we no longer met the minimum bid price requirement under Nasdaq rules. With respect to the most recent such notification, we regained compliance onAugust 15, 2023 as a result of the closing price of our common shares being $1.00 or greater for ten consecutive trading days. With respect to prior such notifications, we have regained compliance through by means of a reverse stock split. For more information, please see “Item 4. Information on theCompany—A. History and Development of the Company.” Since June 2016, we have effected eight reverse stock splits of our common shares, each of which was approved by our boardof directors and by our shareholders at an annual or special meeting of such shareholders. There were no changes to the trading symbol, number of authorized shares, or par value of ourcommon shares in connection with any of the reverse stock splits. All share amounts in this report, not including amounts incorporated by reference, have been retroactively adjusted toreflect these reverse stock splits. If we are required to conduct a reverse stock split in the future to maintain compliance with the continued listing requirements of the Nasdaq CapitalMarket, the market price of our common shares may be negatively affected. The issuance of common shares in future offerings may trigger anti-dilution provisions in our outstanding convertible securities and warrants and affect the interests of ourcommon shareholders. The July 2022 Warrants, August 2022 Warrants, and Series C Preferred Shares contain anti-dilution provisions that have been triggered by our subsequent issuance ofsecurities, and those of the Series C Preferred Shares, our Series A Warrants and Series B Warrants and any other securities we issue in the future containing similar anti-dilutionprovisions could be further triggered by future issuances of common shares or securities convertible into common shares, depending on the offering price of equity issuances, theconversion price or formula of convertible shares, or the exercise price or formula of warrants. Pursuant to the anti-dilution provisions of the July 2022 Warrants and the August 2022Warrants, the exercise price was adjusted and currently is equal to the minimum exercise price under such warrants of $1.65 per common share. Any future issuance or deemed issuanceof common shares below the applicable conversion price of the Series C Preferred Shares may result in a further adjustment downward of the conversion price of the Series C PreferredShares and would result in a corresponding increase in the number of common shares issuable upon conversion of such securities. The current conversion price of the Series C PreferredShares is $1.3576 per common share, subject to anti-dilution adjustments to a minimum conversion price of $0.50. Generally, the anti-dilution provisions of the Series C Preferred Shareswill operate to adjust the conversion price to the lowest price at which we sell shares in any future offering, if such price is below the then-applicable conversion price and equal to orgreater than the minimum conversion price. If the holders of such securities elect to convert or exercise following an adjustment of the exercise or conversion price of such securities, theinterests of the holders of our common shares may be diluted. 29Table of ContentsWe cannot assure you that our board of directors will declare dividend payments on our common shares in the future or when such payment might occur. On October 20, 2020, we announced that our board of directors approved a new variable quarterly dividend policy, after previously suspending the quarterly cash dividend onour common shares since the quarter ended June 30, 2016. On November 9, 2020, we made a dividend payment in the aggregate amount of $0.01 per share (or $0.10 per share as adjustedfor the reverse stock split effected on November 2, 2020) to the shareholders of record at the close of business on October 30, 2020, with respect to the third quarter of 2020. While wehave declared and paid cash dividends on our common shares in the past, there can be no assurance that our board of directors will declare dividend payments in the future. If declared,our variable quarterly dividend is expected to be paid each February, May, August, and November and will be subject to reserves for the replacement of our vessels, scheduleddrydockings, intermediate and special surveys, dividends to holders of our preferred shares, if paid in cash, and other purposes as our board of directors may from time to time determineare required, after taking into account contingent liabilities, the terms of any credit facility, our growth strategy and other cash needs, as well as the requirements of Marshall Islands law,among other factors. In addition, any credit facility that we may enter into in the future may include restrictions on our ability to pay dividends. The declaration and payment of dividends, even during times when we have sufficient funds and are not restricted from declaring and paying dividends by our lenders or anyother party, will always be subject to the discretion of our board of directors. Our board of directors may review and amend our dividend policy from time to time, taking intoconsideration our plans for future growth and other factors. The actual timing and amount of dividend payments, if any, will be determined by our board of directors and will be affectedby various factors, including our cash earnings, financial condition and cash requirements, the loss of a vessel, the acquisition of one or more vessels, required capital expenditures,reserves established by our board of directors, increased or unanticipated expenses, a change in our dividend policy, additional borrowings, and future issuances of securities, amongother factors, many of which will be beyond our control. We may incur expenses or liabilities or be subject to other circumstances in the future that reduce or eliminate the amount of cash that we have available for distribution asdividends, including as a result of the risks described in this report. Our growth strategy contemplates that we will finance the acquisition of additional tanker vessels through acombination of primarily equity capital and, to a lesser extent, cash on hand and debt financing on terms acceptable to us. If external sources of funds on terms acceptable to us arelimited, our board of directors may determine to finance acquisitions with cash from operations, which would reduce or even eliminate the amount of cash available for the payment ofdividends. We are a holding company, and we depend on the ability of our subsidiaries to distribute funds to us to satisfy our financial obligations and make dividend payments. Inaddition, our existing or future credit facilities may include restrictions on our ability to pay dividends. The shipping sector is highly cyclical and volatile. We cannot predict with accuracy the amount of cash flows our operations will generate in any given period. Our quarterlydividends, if any, will vary significantly from quarter to quarter as a result of variations in our operating performance, cash flow, and other contingencies, and we cannot assure you thatwe will generate available cash for distribution in any quarter, and so we may not declare and pay any dividends in certain quarters, or at all. Our ability to resume payment of dividendswill be subject to the limitations set forth in this report. In times when we have debt outstanding, we intend to limit our dividends per share, if dividend payment is reinstated, to the amount that we would have been able to pay if wewere financed entirely with equity. In addition, any credit facilities that we may enter into in the future may include restrictions on our ability to pay dividends. Marshall Islands lawgenerally prohibits the payment of dividends other than from surplus or while a company is insolvent or would be rendered insolvent by the payment of such a dividend. Future offerings of debt securities and amounts outstanding under any future credit facilities or other borrowings, which would rank senior to our common shares upon ourliquidation, may adversely affect the market value of our common shares. In the future, we may attempt to increase our capital resources with further borrowing under credit facilities, making offerings of debt or additional offerings of equity securities,including commercial paper, medium-term notes, senior or subordinated notes, and classes of preferred stock. Upon liquidation, holders of our debt securities and certain series of ourpreferred stock and lenders with respect to our credit facilities and other borrowings will receive a distribution of our available assets prior to the holders of our common shares. Anypreferred stock could, and our Series B Preferred Shares and Series C Preferred Shares do, have a preference on liquidating distributions or a preference on dividend payments that wouldlimit amounts available for distribution to holders of our common shares. As our decision to borrow additional amounts under credit facilities or issue securities in any future offering willdepend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing, or nature of our future indebtedness or offering of securities.Therefore, holders of our common shares bear the risk of our future offerings reducing the market value of our common shares and diluting their shareholdings in us or that, in the eventof bankruptcy, liquidation, dissolution, or winding-up of the Company, all or substantially all of our assets will be distributed to holders of our debt securities or preferred stock orlenders with respect to our credit facilities and other borrowings. 30Table of ContentsWe may not have sufficient cash from our operations to enable us to pay dividends on or redeem our Series B Preferred Shares and Series C Preferred Shares following the paymentof expenses and the establishment of any reserves. We will pay quarterly dividends on the Series B Preferred Shares and Series C Preferred Shares only from funds legally available for such purpose when, as, and if declared byour board of directors or, at our option, through the issuance of additional common shares, valued at the volume-weighted average price of the common shares for the 10 trading daysprior to the dividend payment date. We may not have sufficient cash available each quarter to pay dividends. In addition, we may have insufficient cash available to redeem the Series BPreferred Shares or Series C Preferred Shares. The amount of cash we can use to pay dividends or redeem our Series B Preferred Shares or Series C Preferred Shares depends on theamount of cash we generate from our operations, which may fluctuate significantly, and other factors, including the following: •changes in our operating cash flow, capital expenditure requirements, working capital requirements, and other cash needs; •the amount of any cash reserves established by our board of directors; •restrictions under Marshall Islands law, which generally prohibits the payment of dividends other than from surplus and while a company is insolvent or would berendered insolvent by the payment of such a dividend; •restrictions under our credit facilities and other instruments and agreements governing our existing and future indebtedness; and •our overall financial and operating performance, which, in turn, is subject to prevailing economic and competitive conditions, the risks associated with the shippingindustry, and other factors, many of which are beyond our control. The amount of cash we generate from our operations may differ materially from our net income or loss for the period, and our board of directors, at its discretion, may elect notto declare any dividends. We may incur other expenses or liabilities that could reduce or eliminate the cash available for distribution as dividends. As a result of these and the otherfactors mentioned above, we may pay dividends during periods when we record losses and may not pay dividends during periods when we record net income. Our ability to pay dividends on and redeem our Series B Preferred Shares and Series C Preferred Shares, and, therefore, your ability to receive payments on the Series B PreferredShares and Series C Preferred Shares, is limited by the requirements of Marshall Islands law and our contractual obligations. Marshall Islands law provides that we may pay dividends on and redeem the Series B Preferred Shares and Series C Preferred Shares only to the extent that assets are legallyavailable for such purposes. Legally available assets generally are limited to our surplus. In addition, under Marshall Islands law, we may not pay dividends on or redeem the Series BPreferred Shares or Series C Preferred Shares if we are insolvent or would be rendered insolvent by the payment of such a dividend or the making of such redemption. Further, the terms of some of our outstanding or future credit facilities may prohibit us from declaring or paying any dividends or distributions on preferred stock, including theSeries B Preferred Shares and Series C Preferred Shares, or redeeming, purchasing, acquiring, or making a liquidation payment on preferred stock in certain circumstances. Our Series B Preferred Shares and Series C Preferred Shares are subordinated to our debt obligations, and the interests of the holders of Series B Preferred Shares and Series CPreferred Shares could be diluted by the issuance of additional shares, including other preferred shares, or by other transactions. Our Series B Preferred Shares and Series C Preferred Shares are subordinated to all of our existing and future indebtedness. We may incur additional indebtedness under ourexisting or future credit facilities or other debt agreements. The payment of principal and interest on our debt reduces cash available for distribution to us and on our shares, includingthe Series B Preferred Shares and Series C Preferred Shares. Our Series B Preferred Shares and Series C Preferred Shares rank pari passu as to the payment of dividends and amounts payable upon liquidation or reorganization. If less thanall dividends payable with respect to the Series C Preferred Shares and Series B Preferred Shares are paid, any partial payment shall be made pro rata with respect to the Series CPreferred Shares and any Series B Preferred Shares entitled to a dividend payment at such time in proportion to the aggregate amounts remaining due in respect of such shares at suchtime. The issuance of additional preferred shares on a parity with or senior to our Series B Preferred Shares and Series C Preferred Shares would dilute the interests of the holders ofour Series B Preferred Shares and Series C Preferred Shares, and any issuance of such additional preferred shares or additional indebtedness could affect our ability to pay dividends on,redeem, or pay the liquidation preference on our Series B Preferred Shares and Series C Preferred Shares. The Series B Preferred Shares and Series C Preferred Shares represent perpetual equity interests in us. The Series B Preferred Shares and Series C Preferred Shares represent perpetual equity interests in us and, unlike our indebtedness, will not give rise to a claim for payment of aprincipal amount at a particular date. As a result, holders of the Series B Preferred Shares and Series C Preferred Shares may be required to bear the financial risks of an investment in theSeries B Preferred Shares and Series C Preferred Shares for an indefinite period of time. 31Table of ContentsThere is no established trading market for the Series B Preferred Shares or Series C Preferred Shares, which may negatively affect the market value of the Series B Preferred Sharesand Series C Preferred Shares and your ability to transfer or sell them. There is no established trading market for the Series B Preferred Shares or Series C Preferred Shares. We do not intend to apply to list the Series B Preferred Shares or Series CPreferred Shares on any stock exchange or in any trading market. Since the Series B Preferred Shares and Series C Preferred Shares will have no stated maturity date, holders of Series B Preferred Shares and Series C Preferred Shares may beforced to hold such shares indefinitely, with no guarantee as to ever receiving the liquidation preference. No trading market for the Series B Preferred Shares or Series C Preferred Sharesis expected to develop, and holders of the Series B Preferred Shares or Series C Preferred Shares may not be able to transfer or sell such shares and, if they do, the price received may besubstantially less than the stated liquidation preference. The Series B Preferred Shares and Series C Preferred Shares are only redeemable at our option and investors should not expect us to redeem the Series B Preferred Shares or SeriesC Preferred Shares in the future. At our option, we may redeem all or, from time to time, part of the Series C Preferred Shares at any time on or after the date that is the date immediately following the 15-monthanniversary of the first date of issuance of the Series C Preferred Shares, subject to any applicable restrictions in agreements governing our current or future indebtedness and MarshallIslands law. If we redeem the Series C Preferred Shares, holders of the Series C Preferred Shares will be entitled to receive a redemption price equal to $25.00 plus any accumulated andunpaid dividends thereon to and including the date of redemption (or, if less than 25% of the authorized number of Series C Preferred Shares are outstanding, we may pay the redemptionprice in common shares). Additionally, at our option, we may redeem all or, from time to time, part of the Series B Preferred Shares at any time on or after the date that is the dateimmediately following the 15-month anniversary of the first date of issuance of the Series B Preferred Shares, subject to any applicable restrictions in agreements governing our currentor future indebtedness and Marshall Islands law. Any decision we may make at any time to propose a redemption of the Series B Preferred Shares or Series C Preferred Shares willdepend upon, among other things, our evaluation of our capital position, the composition of our shareholders’ equity, and general market conditions at that time, and investors shouldnot expect us to redeem the Series B Preferred Shares or Series C Preferred Shares on any particular date in the future, or at all. If the Series B Preferred Shares or Series C PreferredShares are redeemed, such redemption generally will be a taxable event for you. In addition, you might not be able to reinvest the money you receive upon redemption of the Series BPreferred Shares or Series C Preferred Shares in a similar security or at similar rates. We may elect to exercise our redemption right on multiple occasions. Any such optional redemptionfor cash would be effected only out of funds legally available for such purpose. We are a holding company, and we depend on the ability of our current and future subsidiaries to distribute funds to us in order to satisfy our financial obligations and makedividend payments. We are a holding company, and our subsidiaries, which are directly or indirectly wholly owned by us, conduct all of our operations and own all of our operating assets. We haveno significant assets other than the equity interests in our wholly-owned subsidiaries. As a result, our ability to satisfy our financial obligations and pay dividends, if any, to ourshareholders will depend on the ability of our subsidiaries to distribute funds to us. In turn, the ability of our subsidiaries to make dividend payments to us will depend on them havingprofits available for distribution. If we are unable to obtain dividends from our subsidiaries, the discretion of our board of directors to pay or recommend the payment of dividends will belimited. Also, our subsidiaries are limited by Marshall Islands law, which generally prohibits the payment of dividends other than from surplus and while a company is insolvent or wouldbe rendered insolvent by the payment of such a dividend. Because we are a foreign corporation, you may not have the same rights or protections that a shareholder in a U.S. corporation may have. We are incorporated in the Republic of the Marshall Islands, which does not have a well-developed body of corporate law and may make it more difficult for our shareholders toprotect their interests. Our corporate affairs are governed by our amended and restated articles of incorporation, our amended and restated bylaws, and the Marshall Islands BusinessCorporations Act, or BCA. The provisions of the BCA resemble provisions of the corporation laws of a number of states in the United States. However, there have been few judicialcases in the Republic of the Marshall Islands interpreting the BCA. The rights and fiduciary responsibilities of directors under the law of the Marshall Islands are not as clearlyestablished as the rights and fiduciary responsibilities of directors under statutes or judicial precedent in existence in certain U.S. jurisdictions. Shareholder rights may differ as well.While the BCA does specifically incorporate the non-statutory law, or judicial case law, of the State of Delaware and other states with substantially similar legislative provisions, ourshareholders may have more difficulty in protecting their interests in the face of actions by the management, directors, or controlling shareholders than would shareholders of acorporation incorporated in a U.S. jurisdiction. Additionally, the Republic of the Marshall Islands does not have a legal provision for bankruptcy or a general statutory mechanism for insolvency proceedings. As such, in theevent of a future insolvency or bankruptcy, our shareholders and creditors may experience delays in their ability to recover for their claims after any such insolvency or bankruptcy.Further, in the event of any bankruptcy, insolvency, liquidation, dissolution, reorganization, or similar proceeding involving us or any of our subsidiaries, bankruptcy laws other thanthose of the United States could apply. If we become a debtor under U.S. bankruptcy law, bankruptcy courts in the United States may seek to assert jurisdiction over all of our assets,wherever located, including property situated in other countries. There can be no assurance, however, that we would become a debtor in the United States, or that a U.S. bankruptcycourt would be entitled to, or accept, jurisdiction over such a bankruptcy case, or that courts in other countries that have jurisdiction over us and our operations would recognize a U.S.bankruptcy court’s jurisdiction if any other bankruptcy court would determine it had jurisdiction. 32Table of ContentsAs a Marshall Islands corporation with principal executive offices in Greece, and also having subsidiaries in the Republic of the Marshall Islands, our operations may be subjectto economic substance requirements. In March 2019, the Council of the European Union, or the Council, published a list of non-cooperative jurisdictions for tax purposes, or the 2019 Conclusions. In the 2019Conclusions, the Republic of the Marshall Islands, among others, was placed by the E.U. on the list of non-cooperative jurisdictions for failing to implement certain commitmentspreviously made to the E.U. by the agreed deadline. However, it was announced by the Council in October 2019 that the Marshall Islands had been removed from the list of non-cooperative jurisdictions. In February 2023, the Marshall Islands was added again to the list of non-cooperative jurisdictions, and removed again in October 2023. E.U. member stateshave agreed upon a set of measures, which they can choose to apply against the listed countries, including, inter alia, increased monitoring and audits, withholding taxes and non-deductibility of costs. The European Commission has stated it will continue to support member states’ efforts to develop a more coordinated approach to sanctions for the listedcountries. E.U. legislation prohibits E.U. funds from being channeled or transited through entities in non-cooperative jurisdictions. We are a Marshall Islands corporation with principal executive offices in Greece and our significant subsidiaries are organized in the Republic of the Marshall Islands. TheMarshall Islands have enacted economic substance regulations with which we are obligated to comply. The Marshall Islands economic substance regulations require certain entities thatcarry out particular activities to comply with a three-part economic substance test whereby the entity must show that it (i) is directed and managed in the Marshall Islands in relation tothat relevant activity, (ii) carries out core income-generating activity in relation to that relevant activity in the Marshall Islands (although it is being understood and acknowledged by theregulators that income-generated activities for shipping companies will generally occur in international waters) and (iii) having regard to the level of relevant activity carried out in theMarshall Islands has (a) an adequate amount of expenditures in the Marshall Islands, (b) adequate physical presence in the Marshall Islands and (c) an adequate number of qualifiedemployees in the Marshall Islands. If we fail to comply with our obligations under such regulations or any similar law applicable to us in any other jurisdictions, we could be subject to financial penalties andspontaneous disclosure of information to foreign tax officials, or could be struck from the register of companies, in related jurisdictions. Any of the foregoing could be disruptive to ourbusiness and could have a material adverse effect on our business, financial conditions and operating results. We do not know (i) if the E.U. will once again add the Marshall Islands to the list of non-cooperative jurisdictions, (ii) how quickly the E.U. would react to any changes inregulations of the Marshall Islands, or (iii) how E.U. banks or other counterparties will react while we remain as an entity organized and existing under the laws of the Marshall Islands.The effect of the E.U. list of non-cooperative jurisdictions, and any noncompliance by us with any legislation or regulations adopted by applicable countries to achieve removal from thelist, including economic substance regulations, could have a material adverse effect on our business, financial conditions and operating results. It may not be possible for our investors to enforce judgments of U.S. courts against us. We are incorporated in the Republic of the Marshall Islands. Substantially all of our assets are located outside of the United States. All of our directors and officers are non-residents of the U.S., and all or a substantial portion of the assets of these non-residents are located outside of the U.S. As a result, it may be difficult or impossible for U.S. shareholdersto serve process within the United States upon us or to enforce a judgment upon us for civil liabilities in U.S. courts. In addition, you should not assume that courts in the countries inwhich we are incorporated or where our assets are located (1) would enforce judgments of U.S. courts obtained in actions against us based upon the civil liability provisions ofapplicable U.S. federal and state securities laws or (2) would enforce, in original actions, liabilities against us based upon these laws. Anti-takeover provisions in our organizational documents could make it difficult for our shareholders to replace or remove our current board of directors or have the effect ofdiscouraging, delaying, or preventing a merger or acquisition, which could adversely affect the value of our securities. Several provisions of our amended and restated articles of incorporation and amended and restated bylaws could make it difficult for our shareholders to change thecomposition of our board of directors in any one year, preventing them from changing the composition of management. In addition, the same provisions may discourage, delay, orprevent a merger or acquisition that shareholders may consider favorable. These provisions include: •authorizing our board of directors to issue “blank check” preferred stock without shareholder approval; •providing for a classified board of directors with staggered, three-year terms; •prohibiting cumulative voting in the election of directors; •authorizing the removal of directors only for cause and only upon the affirmative vote of the holders of two-thirds of the outstanding common shares entitled to votegenerally in the election of directors; •limiting the persons who may call special meetings of shareholders; and •establishing advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted on by shareholders atshareholder meetings. 33Table of ContentsIn addition, we have entered into a stockholders’ rights agreement, dated December 20, 2021, or the Stockholders’ Rights Agreement, pursuant to which our board of directorsmay cause the substantial dilution of any person that attempts to acquire us without the approval of our board of directors. These anti-takeover provisions, including provisions of our Stockholders’ Rights Agreement, could substantially impede the ability of our shareholders to benefit from achange in control and, as a result, may adversely affect the value of our securities, if any, and the ability of our shareholders to realize any potential change of control premium. Item 4.Information on the Company A. History and Development of the Company Performance Shipping Inc. (formerly Diana Containerships Inc.) is a corporation incorporated under the laws of the Republic of the Marshall Islands on January 7, 2010. Each ofour vessels is owned by a separate wholly owned subsidiary. Performance Shipping Inc. is the owner of all the issued and outstanding shares of the subsidiaries listed in Exhibit 8.1 tothis annual report. We maintain our principal executive offices at 373 Syngrou Avenue, 175 64 Palaio Faliro, Athens, Greece. Our telephone number at that address is +30 216 600 2400.Our agent and authorized representative in the United States is our wholly owned subsidiary, established in the State of Delaware in July 2014 under the name Container Carriers (USA)LLC and amended to change the name of the company to Performance Shipping USA LLC as of November 20, 2020, which is located at 2711 Centerville Road, Suite 400, Wilmington,Delaware 19808. Our website is http://www.pshipping.com/. The SEC maintains a website that contains reports, proxy and information statements, and other information that we fileelectronically at http://www.sec.gov. The information contained on, or that can be accessed through, these websites is not incorporated by reference herein and does not form part ofthis annual report. Business Development, Capital Expenditures and Divestitures and Share History On January 1, 2021, we granted our Chief Financial Officer stock options to purchase 8,000 of our common shares as share-based remuneration, which can be exercised onlywhen our stock price increases. The stock options are exercisable at a price range between $150.00 and $450.00 per share, for a term of five years. The stock options were grantedpursuant to, and in accordance with, our Equity Incentive Plan. On February 25, 2021, the re-election of Aliki Paliou and Reidar Brekke as Class II Directors was approved by the requisite vote at our 2021 Annual Meeting. On March 5, 2021, we entered into an At The Market Offering Agreement with H.C. Wainwright & Co., LLC, as sales agent, pursuant to which we could offer and sell, from timeto time, up to an aggregate of $5.9 million of our common shares. Pursuant to the agreement, we sold 35,128 common shares at an average price of $44.11 per share, for net proceeds of$1.3 million after payment of commissions and fees. We terminated this agreement effective August 23, 2022. In November 2021, we sold to a subsidiary of Diana Shipping Inc. our co-owned indivisible share in a plot of land, located in Athens, Greece, for a purchase price of Euro1,100,000 (or $1.2 million based on a $1.13 Euro/USD exchange rate). In connection with this sale, we recorded a gain, net of $0.2 million taxes and expenses, of $0.1 million, which ispresented as Gain from property sale in the consolidated statement of operations. On December 20, 2021, we entered into a Stockholders’ Rights Agreement with Computershare Inc., as rights agent, and our board of directors authorized and declared adividend distribution of one right for each outstanding common share to stockholders of record as of the close of business on December 30, 2021. Each right entitles the registeredholder to purchase from us one one-thousandth of a share of Series A Participating Preferred Stock at an exercise price of $750.00 per one one-thousandth of a preferred share, subject toadjustment. For additional information, please see “Item 10. Additional Information—B. Memorandum and Articles of Association—Stockholders’ Rights Agreement.” On December 21, 2021, we offered to exchange up to 271,078 of our then issued and outstanding common shares for newly issued shares of our Series B Convertible CumulativePerpetual Preferred Stock, par value $0.01 and liquidation preference $25.00 (the “Series B Preferred Shares”) at a ratio of 4.2 Series B Preferred Shares for each common share. The offerexpired on January 27, 2022 and a total of 188,974 common shares were validly tendered and accepted for exchange in the offer, which resulted in the issuance of 793,657 Series BPreferred Shares, out of which 657,396 were beneficially owned by Aliki Paliou, 28,171 were beneficially owned by Andreas Michalopoulos and 29,510 in aggregate were beneficiallyowned by other former members of our board of directors. On February 28, 2022, the election of Loïsa Ranunkel as a Class I Director and elections of Alex Papageorgiou and Mihalis Boutaris as Class III Directors were approved by therequisite vote at our 2022 Annual Meeting. Symeon Palios, Giannakis (John) Evangelou and Christos Glavanis did not stand for re-election. Effective February 28, 2022, AntoniosKaravias and Reidar Brekke resigned from our board of directors, the size of our board of directors decreased from seven to five members, and Aliki Paliou was appointed as Chairpersonof our board of directors. On March 2, 2022, we entered into an unsecured credit facility with Mango Shipping Corp. (“Mango Shipping”), an affiliated entity whose beneficial owner is Aliki Paliou, for upto $5.0 million, to be used for general working capital purposes. The facility, which was repayable in one year from the date of the agreement, was utilized in advances at our request andbore interest of 9.0% per annum and commitment fees of 3.0% per annum on any undrawn amount. Arrangement fees of $0.2 million were payable on the date of the agreement. 34Table of ContentsOn June 1, 2022, we completed a public offering of 508,000 units, each unit consisting of (i) one common share or a pre-funded warrant to purchase one common share at anexercise price equal to $0.01 per common share, and (ii) one Class A Warrant to purchase one common share at an exercise price equal to $15.75 per Common Share (a “Class A Warrant”),at a public offering price of $15.75 per unit. In June 2022, we acquired the tanker vessel P. Sophia (formerly “Maran Sagitta”), a 2009-built Aframax tanker of 105,071 dwt for $27.6 million. The vessel was delivered to us inJuly 2022. On July 19, 2022, we issued 1,133,333 of our common shares in a registered direct offering concurrently with a private placement of warrants (the “July 2022 Warrants”)exercisable to purchase up to 1,133,333 common shares for an exercise price of $5.25 (currently $1.65 per common share, as adjusted pursuant to the terms of the July 2022 Warrants), fora purchase price of $5.25 per common share and July 2022 Warrant. On August 16, 2022, in a registered direct offering, we issued 2,222,222 of our common shares and warrants to purchase up to 2,222,222 common shares (the “August 2022Warrants”), each exercisable to purchase one common share for an exercise price of $6.75 (currently $1.65 per common share, as adjusted pursuant to the terms of the August 2022Warrants), for a purchase price of $6.75 per share and August 2022 Warrant. In August 2022, we acquired the tanker vessel P. Aliki (formerly “Alpine Amalia”), a 2010-built LR2 Aframax oil product tanker of 105,304 dwt, for $36.5 million. The vessel wasdelivered to us in November 2022. In September 2022, we acquired the tanker vessel P. Monterey (formerly “Phoenix Beacon”), a 2011-built Aframax tanker vessel of 105,525 dwt, for $35 million. The vessel wasdelivered to us in December 2022. In October 2022, we sold the 2007-built Aframax tanker vessel P. Fos for $34.0 million and delivered the vessel to her new owners in November 2022. On October 17, 2022, we entered into a stock purchase agreement with Mango Shipping, pursuant to which we agreed to issue to Mango, in a private placement, 1,314,792shares of our newly-designated Series C Preferred Shares in exchange for (i) all 657,396 Series B Preferred Shares held by Mango and (ii) the agreement by Mango to apply $4.93 million(an amount equal to the aggregate cash conversion price payable upon conversion of such Series B Preferred Shares into Series C Preferred Shares pursuant to their terms) as aprepayment by us of an unsecured credit facility agreement dated March 2, 2022 and made between us as borrower and Mango as lender, maturing in March 2023 and bearing interest at9.0% per annum. We subsequently repaid the remaining amounts of $0.07 million due and terminated the credit facility. The transaction was approved by a special independentcommittee of our board of directors. In November 2022, we acquired the tanker vessel P. Long Beach (formerly “Fos Hamilton”), a 2013-built LR2 Aframax tanker vessel of 105,408 dwt, for $43.75 million. The vesselwas delivered to us in December 2022. On November 8, 2022, our board of directors determined to effect a reverse stock split of our common shares at a ratio of one-for-fifteen. Our shareholders had previouslyapproved the reverse stock split at the Company’s Special Meeting of Shareholders held on November 7, 2022. The reverse stock split was effective as of the opening of trading onNovember 15, 2022. All share amounts in this report, not including amounts incorporated by reference, have been retroactively adjusted to reflect this reverse stock split. On November 30, 2022, we regained compliance with the minimum bid price requirements for continued listing on the Nasdaq Capital Market, as a result of the closing bid priceof the Company’s common shares having been at $1.00 per share or greater for at least ten consecutive business days, from November 15, 2022 through November 29, 2022. On December 9, 2022, we entered into an ATM Sales Agreement with Virtu Americas LLC (the “ATM Agreement”), as sales agent, pursuant to which we offered and sold, fromtime to time, up to an aggregate of $30 million of our common shares. We terminated the ATM Agreement on February 27, 2023. Prior to termination, we issued and sold 365,196 commonshares under the ATM Agreement at an average price per share of $3.30, raising total gross proceeds of approximately $1.2 million, net of agent’s commissions. On February 13, 2023, we notified our Series B preferred stockholders, that pursuant to the effective registration statement on Form F-3 that we filed with the SEC on January 27,2023, the holders of the Company’s issued and outstanding Series B Preferred Shares may at any time through and including March 15, 2023, convert, at the option of the holder, oneSeries B Preferred Share, for additional cash consideration of $7.50 per converted Series B Preferred Share, into two shares of Series C Convertible Cumulative Perpetual Preferred Stock.Upon the closing of the conversion period on March 15, 2023, 85,535 Series B preferred shares have been converted to 171,070 Series C preferred shares, and we collected grossproceeds of $0.6 million. On February 22, 2023, the re-election of Andreas Michalopoulos and Loïsa Ranunkel, each as a Class I director was approved by the requisite vote at our 2023 Annual Meeting. On February 28, 2023, we entered into a securities purchase agreement with certain unaffiliated institutional investors to purchase (i) 5,556,000 of our common shares, (ii) theSeries A Warrants to purchase 3,611,400 Common Shares and (iii) Series B warrants (the “Series B Warrants”) to purchase 4,167,000 Common Shares, at a purchase price of $2.25 percommon share together with the accompanying Series A and Series B Warrants in a registered direct offering. The terms of the Series A Warrants provided that, as an alternative toexercise, they could be exchanged for common shares for no additional cash consideration under certain circumstances. The gross proceeds to us were approximately $12.5 millionbefore deducting the placement agent’s fees and other offering expenses. Subsequent to the closing, we issued 3,597,100 common shares in exchange for 3,597,100 Series A Warrants forno additional cash consideration, according to the terms of the Series A Warrants. 35Table of ContentsOn March 7, 2023, we entered into a shipbuilding contract with China Shipbuilding Trading Company Limited and Shanghai Waigaoqiao Shipbuilding Company Limited for theconstruction of a 114,000 DWT LNG ready LR2 Aframax product/crude oil tanker for a gross contract price of $63.3 million. We expect to take delivery of the vessel in the fourth quarterof 2025. In April 2023, we paid the first installment of $9.5 million, as per the terms of the shipbuilding contract. In April 2023, our board of directors authorized a share repurchase plan (the “April 2023 Repurchase Plan”) to purchase up to an aggregate of $2.0 million of our common shares.Under the April 2023 Repurchase Plan, we repurchased a total of 2,222,936 common shares for a total amount of approximately $2.0 million, successfully completing the April 2023Repurchase Plan in the third quarter of 2023. On April 18, 2023, we received written notification from NASDAQ, indicating that because the closing bid price of our common stock for 30 consecutive business days wasbelow the minimum $1.00 per share bid price requirement for continued listing on The NASDAQ Capital Market, we were not in compliance with Nasdaq Listing Rule 5550(a)(2). On August 7, 2023, we refinanced our existing loan facility with Nordea Bank Abp, filial i Norge (“Nordea”) by entering into a new revolving credit facility with Nordea of up to$20.0 million. For more information regarding the new revolving credit facility, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—LoanFacilities—Nordea Bank Abp, Filial i Norge (Nordea).” On August 15, 2023, we regained compliance with the minimum bid price requirements for continued listing on the Nasdaq Capital Market, as a result of the closing bid price ofthe Company’s common shares having been at $1.00 per share or greater for at least ten consecutive business days, from August 1, 2023 through August 14, 2023. We regained suchcompliance as a result of an organic increase in the market price of our shares, without the need to effect a reverse stock split. In August 2023, our board of directors authorized a new share repurchase plan (the “August 2023 Repurchase Plan”) to repurchase up to $2.0 million of our outstandingcommon shares. As of March 26, 2024, 327,100 common shares have been repurchased for a total amount of approximately $0.7 million under the August 2023 Repurchase Plan. On September 29, 2023, 100,000 of the July 2022 Warrants and 100,000 of the August 2022 Warrants were exercised by their holders, generating net proceeds of $0.3 million forus. On October 11, 2023, Sphinx Investment Corp., a corporation incorporated under the laws of the Republic of the Marshall Islands (the “Offeror”), launched a cash tender offer topurchase from all of our outstanding common shares and associated preferred stock purchase rights issued pursuant to our Stockholders’ Rights Agreement (the “Rights” and, togetherwith the common shares, the “Shares”), at a price of $3.00 per Share (without interest and less any applicable withholding taxes, upon the terms and subject to the conditions set forth in(a) the Amended and Restated Offer to Purchase, dated October 30, 2023, as amended and supplemented by the Supplement to the Amended and Restated Offer to Purchase datedDecember 5, 2023 and (b) the related revised Notice of Guaranteed Delivery and the related revised Letter of Transmittal, as set forth in the Offeror’s Tender Offer Statement on ScheduleTO filed with the SEC on October 11, 2023, as amended) (the “Offer”). Unless the Offer is extended by the Offeror, the Offer and withdrawal rights thereunder will expire at 11:59 p.m., NewYork City Time, on June 28, 2024. In December 2023, we sold the 2007-built Aframax tanker vessel P. Kikuma for $39.3 million and delivered the vessel to her new owners. On December 18, 2023, we completed the approximately $44.6 million voluntary prepayment of all of our existing loans with Piraeus Bank S.A. and released the security over ourvessels P. Monterey, P. Yanbu and P. Sophia. The prepayment was completed through the deployment of our excess liquidity. On December 18, 2023, we entered into two shipbuilding contracts with China Shipbuilding Trading Co. Ltd. and Shanghai Waigaoqiao Shipbuilding Co. Ltd. for theconstruction of two 114,000 DWT LNG-ready LR2 Aframax product/crude oil tanker vessels, for a purchase price of $64.845 million per vessel, payable in instalments, net of third-partycommission. The vessels are expected to be delivered in January and April of 2026. On January 30, 2024, the Company paid an aggregate amount of $19.5 million, representing the firstinstallment of the purchase price for each of these two newbuildings. During 2023, 57,490 Series C Preferred Shares were converted at the option of their holders into 1,064,207 common shares, calculated with an adjusted conversion price of$1.3576. Recent Developments On March 8, 2024, we entered into time charter contracts with Clearlake Shipping Pte Ltd for our three newbuilding Aframax tanker vessels. Each employment will be for a firmperiod of five years with the charterer’s option to extend for a sixth and seventh year. The gross charter rate will be US$31,000 per vessel per day for the firm period and a base rate plusprofit share for the optional periods, if declared. Employment is expected to commence upon delivery of the vessels. 36Table of ContentsB.Business Overview We provide global shipping transportation services through the ownership of tanker vessels. As of the date of this annual report, our fleet consists of seven Aframax tankervessels with a combined carrying capacity of 735,910 DWT and a weighted average age of approximately 12.9 years, and also one newbuild LR2/Aframax tanker vessel of which weexpect to take delivery in the fourth quarter of 2025, and two newbuild LR2 Aframax product/crude oil tanker vessels of which we expect to take delivery in January and April of 2026,respectively. At our inception in January 2010, our business was focused on the ownership of container vessels and we have since gradually transitioned to a purely tanker fleet,completing our exit from the containership sector in August 2020.During 2023, 2022 and 2021, we had a fleet utilization (including ballast leg) of 98.7%, 96.8%, and 85.5% respectively, our vessels achieved a daily time charter equivalent rate of$36,954, $29,579, and $9,963, respectively, and we generated revenues from our vessels of $108.9 million, $75.1 million, and $36.5 million, respectively. Set forth below is summary information concerning our fleet as of March 26, 2024. VesselYear ofBuildCapacityBuilderCharter Type Aframax Tanker Vessels BLUE MOON2011104,623 DWTSumitomo Heavy Industries Marine & Engineering Co., LTD.Time charterBRIOLETTE2011104,588 DWTSumitomo Heavy Industries Marine & Engineering Co., LTD.Time charterP. YANBU2011105,391 DWTSumitomo Heavy Industries Marine & Engineering Co., LTD.Time charterP. SOPHIA2009105,071 DWTHyundai Heavy Industries Co. LTD.PoolP. ALIKI2010105,304 DWTHyundai Heavy Industries Co. LTD.PoolP. MONTEREY2011105,525 DWTHyundai Heavy Industries Co. LTD.Time charterP. LONG BEACH2013105,408 DWTHyundai Heavy Industries Co. LTD.Time charterManagement of Our Fleet The business of Performance Shipping Inc. is the ownership of vessels. Performance Shipping Inc. wholly owns, directly or indirectly, the subsidiaries which own the vesselsthat comprise our fleet. The holding company sets the general overall direction for the company and interfaces with various financial markets. The day-to-day commercial and technicalmanagement of our fleet, as well as the provision of administrative services relating to our fleet’s operations, have been carried out since March 1, 2013, by UOT, our in-house fleetmanager. Pursuant to an Administrative Services Agreement, we pay UOT a fixed monthly administrative fee of $10,000 in exchange for providing us with accounting, administrative,financial reporting, and other services necessary for the operation of our business. In addition, in exchange for providing us with day-to-day commercial and technical services, we payUOT a commission of 2.00% of our gross revenues, a fixed management fee of $15,000 per month for each vessel in operation, and a fixed monthly fee of $7,500 for any vessels underconstruction or laid-up. For as long as part of the management services were assigned to third-party managers (see below), we paid to UOT a reduced monthly management fee in therange of $1,000 to $5,000, and a commission of 1.00% or 2.00% of our gross revenues, depending on the level of involvement of the third-party managers. Furthermore, for as long as ourvessels are chartered under pool arrangements, UOT receives no commission on the vessels’ gross revenues. All management fees and commissions payable to UOT are consideredinter-company transactions and are, therefore, eliminated from our consolidated financial statements. Business Strategy Our primary objective is to operate our business on behalf of our shareholders in a manner that is consistent with our business strategy. The key elements of our strategy are: Fleet Modern, High Specification Fleet. We intend to operate a fleet of modern, high specification tanker vessels that include high cargo-carrying capacity and competitive fuel efficiency.We believe these features will be commercially attractive to charterers because the high specifications will result in cost-effective vessels with increased flexibility, and we expect thesefactors will, in turn, maximize our vessels’ utilization rates. We believe that owning a versatile, modern, well-maintained fleet reduces operating costs, improves the quality of service wedeliver, and enables us to secure employment with high-quality counterparties. As we grow our fleet, we intend to continue acquiring secondhand vessels built in well-establishedshipyards in South Korea, Japan, and China with high specifications and fuel efficiency standards. Depending on market conditions, we may also opportunistically purchase newbuildvessels equipped with the latest high specification engines and meeting the stringent emission requirements, which will be constructed in large and reputable shipyards and will result inan even more modern and highly competitive fleet composition. Growing Sector Presence. While we cannot assure you that we will do so, we intend to grow our fleet over time primarily through selective acquisitions of secondhand vessels. This willincrease our market presence and enhance our attractiveness to charterers and other customers, including major oil companies, oil traders, and refineries. We believe that by expandingour fleet, we will gain a significant presence in the tanker vessel market, enabling us to offer customers greater flexibility and a higher level of service while achieving greater efficienciesthrough economies of scale and enhanced vessel utilization. 37Table of ContentsContinuous Fleet Renewal. We are focused on renewing our fleet as our vessels age. We plan to acquire younger vessels as we dispose of our older ones to continuously renew andreplace our fleet. We expect that this will, in part, be funded through our mandatory debt repayments and replacement reserves and will enable us to maintain a fleet of modern, high-specification tankers. Secondhand Acquisitions and Construction. We expect to grow our fleet primarily through selective acquisitions of secondhand tanker vessels from unaffiliated third parties. We mayacquire vessels upon their delivery from the shipyard or may enter into newbuilding contracts opportunistically. During 2023, we have entered into three shipbuilding contracts for theconstruction of three Aframax product/crude oil tanker vessels with scheduled deliveries from October 2025 to April 2026. When evaluating acquisitions, we will consider and analyzeour expectation of fundamental developments in the seaborne transportation of crude oil and refined petroleum products, changes in trading patterns, the cash flow currently earned andour expectation of future cash flows to be earned by the target vessel relative to its value, as well as its condition and technical specifications. Management Significant Management Expertise. We believe that our executive management team has extensive public company and vessel operations experience. In the competitive tanker vesselindustry, charterers are focused on the quality of vessel operators and we believe that our wholly owned subsidiary fleet manager has a reputation as a respected commercial andtechnical manager. The long experience of our executive, commercial and technical management team ensures we have established relationships with charterers, financial institutions,insurers, suppliers, ship repair yards, and other industry participants. We believe that these relationships will assist us in further developing our position as a sought-after businesspartner with our charterers and provide access to attractive acquisition opportunities. Highly Efficient Operations. We believe that we have established our Company as a cost-efficient and reliable operator due to the skill of our executive management team, backed by anexperienced commercial and technical team comprised of industry veterans, and the quality and maintenance standards of our fleet. We intend to actively monitor and seek to controlvessel operating expenses without compromising the quality of our vessels by utilizing regular inspection and maintenance programs, employing and retaining qualified crew members,and taking advantage of the economies of scale that we expect to enjoy when we acquire additional vessels. Commercial Spot Market Focus. Our commercial policy is focused mainly on voyage charters and short-term time charters of less than 12 months and, in some cases, medium-term charters of lessthan 36 months to provide our shareholders with exposure to cyclical fluctuations in charter rates. When available, we will also consider entering pool arrangements or time charters witha fixed floor rate and profit-sharing participation in the spot market. Our spot market focus should allow us and our shareholders to realize the benefits from rising charter rates. Still, thespot market is very volatile, and our strategy will also expose us and our shareholders to periods when spot rates decline below the cash breakeven level of our fleet. In line with ourstrategy, our current fleet of tankers operate primarily under voyage charters and through pool arrangements that enhance our spot market exposure and enable us to achieve economiesof scale, obtain increased cargo, better flow of information and greater vessel utilization. Established Commercial Relationships. We expect to capitalize on our commercial and technical management team’s long-standing relationships with leading charterers such asmultinational oil companies, including Shell, BP, Saudi Aramco, Total, Marathon Petroleum, Exxon, and Chevron; international oil traders, including Glencore, Vitol, Trafigura and Gunvor;refiners, including Valero and Reliance. We believe that our experienced management team will assist us in securing employment for our vessels and will provide us with an establishedand diverse customer base in both western and eastern geographical basins. Following their delivery to us, we expect all our vessels to be acceptable for business by one or more majoroil companies, oil traders, and refineries based on their inspections of our vessels and their review of our operational procedures. Financial Maintain Low Leverage. Our policy is to incur an amount of debt that, upon its incurrence, does not cause our ratio of net debt-to-market value of our fleet to exceed our target of 35%.We believe that having a level of indebtedness upon its incurrence that is at or below our target will allow us to operate in adverse market conditions. On December 31, 2023, ouroutstanding debt was $55.2 million, we held approximately $68.3 million in cash and cash equivalents (including restricted cash of $1.0 million), and our ratio of net debt to the value ofour fleet was approximately -4%. However, despite our current negative net leverage, the possible new debt financing, which is expected to be used to partially fund the constructioncosts of our newbuilding vessels and will be incurred at the time of the vessels’ delivery to us, may increase our net debt-to-market value of our fleet, at or above our target level.. Equity Capital Reliance. Depending on market conditions, we may partially rely on follow-on offerings of common shares to fund the acquisition of additional vessels. Consistent withour low leverage strategy, we may enter into new credit agreements or access the public or private debt markets to fund the remaining portion of these acquisitions. The issuance ofcommon shares to grow our fleet generally may increase our market capitalization and the trading activity for the common shares, but there can be no assurances that such increases willmaterialize or be sustained. In addition, our potential reliance on follow-on offerings of our common shares may significantly dilute existing shareholders. 38Table of ContentsGovernance In-House Management. We wholly own, directly or indirectly, the subsidiaries that own the vessels comprising our fleet. Our executive management team’s responsibilities includeworking to ensure the implementation of our business strategy, general corporate oversight, interfacing with financial markets, and supervising the day-to-day commercial and technicalmanagement teams. The day-to-day commercial and technical management of our fleet, and the provision of administrative services relating to the fleet’s operations, is carried out by ourwholly owned subsidiary company, UOT, our fleet manager. For accounting and administrative purposes only, in exchange for providing us with commercial and technical services, wepay UOT certain fees and commissions. These amounts are considered inter-company transactions and are, therefore, eliminated from our consolidated financial statements. Transparent Corporate Structure. In addition to performing all management functions in-house, we maintain a majority independent board of directors comprising of individuals withextensive experience in all aspects of our business. We do not intend to enter into any transactions with related parties for the acquisition or disposal of vessels. Members of ourexecutive, commercial, and technical management teams have no other ownership in other tanker vessel companies, and do not have any executive positions in other public or privateshipping companies. Our Customers Our customers include national, regional, and international companies, such as Aramco Trading Company, Dhahran, Saudi Arabia, BP Singapore PTE LTD, Reliance IndustriesLimited, Nayara Energy Limited, Trafigura. In 2023, four of our charterers accounted for 84% of our revenues: ST Shipping Transport (28%), Aramco Trading Company (11%), SignalMaritime Aframax Pool LTD (13%) and Penfield Tankers (Aframax) LLC (32%). In 2022, two of our charterers accounted for 59% of our revenues: Signal Maritime Aframax Pool LTD (41%)and Penfield Tankers (Aframax) LLC (18%). In 2021, two of our charterers accounted for 43% of our revenues: Aramco Trading Company, Dhahran, Saudi Arabia (26%) and Vitol (17%).We believe that developing strong relationships with the end-users of our services allows us to better satisfy their needs with appropriate and capable vessels. A prospective charterer’sfinancial condition, creditworthiness, reliability, and track record are important factors in negotiating our vessels’ employment. The Tanker Shipping Industry The oil tanker shipping industry constitutes a vital link in the global energy supply chain, in which tanker vessels play a critical role by carrying large quantities of crude oil.The rationale behind this is that only tanker vessels can carry crude oil from one continent to the other and across the oceans based on practical and economical terms. The shipping ofcrude oil is the only transportation method that implies the lower cost per oil barrel compared to other methods, such as pipelines. An oil tanker shipping company earns revenues by the freight rates paid for transportation capacity. Freight is paid for the movement of cargo between a load port and adischarge port. The cost of moving the ship from a discharge port to the next load port is not directly compensated by the charterers in the freight payment but is an expense of theowners if not on time charter. Types of Crude Tanker Vessels The main categories of crude tanker vessels are: •VLCCs, with an oil cargo carrying capacity in excess of 200,000 dwt (typically 300,000 to 320,000 dwt or approximately two million barrels). VLCCs generally trade onlong-haul routes from the Middle East and West Africa to Asia, Europe, and the U.S. Gulf or the Caribbean. •Suezmax tankers, with an oil cargo carrying capacity of approximately 120,000 to 200,000 dwt (typically 150,000 to 160,000 dwt or approximately one million barrels).Suezmax tanker vessels are engaged in a range of crude oil trades across a number of major loading zones. •Aframax tankers, with an oil cargo carrying capacity of approximately 80,000 to 120,000 dwt (or approximately 500,000 barrels). Aframax tanker vessels are employed inshorter regional trades, mainly in North West Europe, the Caribbean, the Mediterranean, and Asia. Tanker Newbuilding Prices The factors which influence new-built prices include ship type, shipyard capacity, demand for ships, “berth cover”, i.e., the forward book of business of shipyards, buyerrelationships with the yard, individual design specifications, including fuel efficiency or environmental features and the price of ship materials, engine and machinery equipment andparticularly the price of steel. Tanker Secondhand Prices Second-hand prices are primarily driven by trends in the supply and demand for vessel capacity. During extended periods of high demand, as evidenced by high charter rates,secondhand vessel values tend to appreciate, and during periods of low demand, evidenced by low charter rates, vessel values tend to decline. Vessel values are also influenced by ageand specification and by the replacement cost (new-built price) in the case of vessels up to five years old. The sale and purchase (S&P) market, where vessels are sold and bought through specialized brokers, determines vessel values on a daily basis. The S&P market is transparentand liquid, with a significant number of vessels changing hands annually. Values for younger vessels tend to fluctuate on a percentage basis less than values for older vessels. This is due to the fact that younger vessels with a longer remainingeconomic life are less susceptible to the level of charter rates than older vessels with limited remaining economic life. 39Table of ContentsThe Crude Oil Tanker Freight Market Charter Types Employment of oil tanker vessels occurs through the following chartering options: Bareboat Charter: In this charter type, vessels are usually employed for several years. All voyage related costs such as bunkers, port dues, and daily operating expenses arepaid by the charterer. The owner of the vessel is entitled to monthly charter hire payments and covers the capital cost associated with the vessel. Time Charter: Involves the use of the vessel for a number of months or years or for a trip between specific delivery and redelivery positions. The charterer covers all voyagerelated costs while the owner receives monthly charter hire payments on a per day basis and pays all operating expenses and capital costs of the vessel. Pool Charter: In this charter type, the vessel’s owner earns a portion of total revenues generated by the pool, net of expenses incurred by the pool. The amount allocated toeach pool participant vessel, is determined in accordance with an agreed-upon formula, which is determined by the margins awarded to each vessel in the pool based on the vessel’s age,design and other performance characteristics. Spot or Voyage Charter: Vessels are used for a single voyage for the carriage of a specific amount and type of cargo on a load port to discharge port. The owner covers therepositioning cost of the ship as well as all expenses, namely voyage, operating, and capital costs of the ship. Tanker Vessels Charter Rates The main factors affecting vessel charter rates are primarily the supply and demand for tanker shipping. The shorter the charter period, the greater the vessel charter rate isaffected by the current supply to demand balance and by the current phase of the market cycle (high point or low point). For longer charter periods, vessel charter rates tend to be morestable and less cyclical because the period may cover not only a particular phase of a market cycle but a full market cycle or several market cycles. Other factors affecting charter ratesinclude the age and characteristics of the ships (fuel consumption, speed), the price of new-built and secondhand ships (buying as an alternative to chartering ships), and marketconditions. Seasonality We operate our vessels in markets that have historically exhibited seasonal variations in demand and, as a result, charter rates. Historically, peaks in tanker vessel demand quite oftenprecede seasonal oil consumption peaks, as refiners and suppliers anticipate consumer demand. Seasonal peaks in oil demand can broadly be classified into two main categories: (1)increased demand prior to Northern Hemisphere winters as heating oil consumption increases and (2) increased demand for gasoline prior to the summer driving season in the UnitedStates. Unpredictable weather patterns and variations in oil reserves disrupt tanker scheduling. Unpredictable weather patterns and variations in oil reserves disrupt tanker scheduling.This seasonality may result in quarter-to-quarter volatility in our operating results, as many of our vessels trade in the spot market. Seasonal variations in tanker vessel demand willaffect any spot market-related rates that we may receive. Environmental and Other Regulations in the Shipping Industry International, Federal, State, and local regulations and laws significantly affect the ownership and operation of our fleet. We are subject to international conventions andtreaties, national, state, and local laws and regulations in force in the countries in which our vessels may operate or are registered relating to safety and health and environmentalprotection, including the storage, handling, emission, transportation, and discharge of hazardous and non-hazardous materials, and the remediation of contamination and liability fordamage to natural resources. Compliance with such laws, regulations, and other requirements, entails significant expense, including vessel modifications and implementation of certainoperating procedures. A variety of government and private entities subject our vessels to both scheduled and unscheduled rigorous inspections. These entities include the local port authorities(applicable national authorities such as the Ports State Controls (PSC) or USCG, harbormaster or equivalent), classification societies, flag state administrations (countries of registry), andparticularly the charterers through the SIRE inspection regime and terminal inspections. SIRE inspection program stands for Ship Inspection Report and is a comprehensive, worldwideinspection regime utilizing inspectors with common training and oversight to inspect oil tankers, chemical tankers, and gas carriers, based on a standardized set of questions andrequirements known as the SIRE Vessel Inspection Questionnaire. Certain of these entities require us to obtain permits, licenses, certificates, and other authorizations for the operation ofour vessels. Failure to maintain necessary permits or approvals could require us to incur substantial costs or result in the temporary suspension of the operation of one or more of ourvessels. Increasing environmental concerns have created a demand for vessels that conform to stricter environmental standards. We are required to maintain operating standards for allof our vessels that emphasize operational safety, quality maintenance, continuous training of our officers and crews, and compliance with U.S. and international regulations. We believethat the operation of our vessels is in substantial compliance with applicable environmental laws and regulations and that our vessels have all material permits, licenses, certificates, orother authorizations necessary for the conduct of our operations. However, because such laws and regulations frequently change and may impose increasingly stricter requirements, wecannot predict the ultimate cost of complying with these requirements or the impact of these requirements on the resale value or useful lives of our vessels. In addition, a future seriousmarine incident that causes significant adverse environmental impact could result in additional legislation or regulation that could negatively affect our profitability. 40Table of ContentsInternational Maritime Organization The International Maritime Organization, the United Nations agency for maritime safety and the prevention of pollution by vessels (the “IMO”), has adopted the InternationalConvention for the Prevention of Pollution from Ships, 1973, as modified by the Protocol of 1978 relating thereto, collectively referred to as MARPOL 73/78 and herein as “MARPOL,”the International Convention for the Safety of Life at Sea of 1974 (“SOLAS Convention”), International Convention on Standards of Training, Certification and Watchkeeping forSeafarers, or STCW, and the International Convention on Load Lines of 1966 (the “LL Convention”). MARPOL establishes environmental standards relating to oil leakage or spilling,garbage management, sewage, air emissions, handling and disposal of noxious liquids, and the handling of harmful substances in packaged forms. MARPOL applies to vessels of anytype, operating in the marine environment, and is broken into six Annexes, each of which regulates a different source of pollution. Annex I relates to oil leakage or spilling; Annexes IIand III relate to harmful substances carried in bulk in liquid or packaged form, respectively; Annexes IV and V relate to sewage and garbage management, respectively; and Annex VI,lastly, relates to air emissions. Annex VI was separately adopted by the IMO in September of 1997. In 2013, the IMO’s Marine Environmental Protection Committee, or the “MEPC,” adopted a resolution amending MARPOL Annex I Condition Assessment Scheme, or “CAS.”These amendments became effective on October 1, 2014, and require compliance with the 2011 International Code on the Enhanced Programme of Inspections during Surveys of BulkCarriers and Oil Tankers, or “ESP Code,” which provides for enhanced inspection programs. In January 2023, amendments to the ESP Code relating to thickness measurements for doublehull oil tankers at the first renewal survey of double hull oil tankers became effective. We may need to make certain financial expenditures to comply with these amendments. Air Emissions In September of 1997, the IMO adopted Annex VI to MARPOL to address air pollution from vessels. Effective May 2005, Annex VI sets limits on sulfur oxide and nitrogen oxideemissions from all commercial vessel exhausts and prohibits “deliberate emissions” of ozone-depleting substances (such as halons and chlorofluorocarbons), emissions of volatilecompounds from cargo tanks, and the shipboard incineration of specific substances. Annex VI also includes a global cap on the sulfur content of fuel oil and allows for special areas tobe established with more stringent controls on sulfur emissions, as explained below. Emissions of “volatile organic compounds” from certain vessels and the shipboard incineration(from incinerators installed after January 1, 2000) of certain substances (such as polychlorinated biphenyls, or PCBs) are also prohibited. We believe that all our vessels are currentlycompliant in all material respects with these regulations. The Marine Environment Protection Committee, or “MEPC,” adopted amendments to Annex VI regarding emissions of sulfur oxide, nitrogen oxide, particulate matter, and ozone-depleting substances, which entered into force on July 1, 2010. The amended Annex VI seeks to further reduce air pollution by, among other things, implementing a progressivereduction of the amount of sulfur contained in any fuel oil used onboard ships. Effective January 1, 2020, there has been a global 0.5% m/m sulfur oxide emissions limit (reduced from3.50%). This limitation can be met by using low-sulfur compliant fuel oil, alternative fuels, or certain exhaust gas cleaning systems. Ships are now required to obtain bunker deliverynotes and International Air Pollution Prevention (“IAPP”) Certificates from their flag states that specify sulfur content. Additionally, at MEPC 73, amendments to Annex VI to prohibitthe carriage of bunkers above 0.5% sulfur on ships were adopted and took effect on March 1, 2020. Additional amendments to Annex VI revising, among other terms, the definition of“Sulphur content of fuel oil” and “low-flashpoint fuel” and relating to the sampling and testing of onboard fuel oil, became effective in April 2022. These regulations subject ocean-goingvessels to stringent emissions controls and may cause us to incur substantial costs. MEPC 77 adopted a non-binding resolution which urges member states and ship operators to voluntarily use distillate or other cleaner alternative fuels or methods ofpropulsion that are safe for ships and could contribute to the reduction of black carbon emissions from ships when operating in or near the Arctic. Sulfur content standards are even stricter within certain “Emission Control Areas” or (“ECAs”). As of January 1, 2015, ships operating within an ECA were not permitted to usefuel with sulfur content over 0.1% m/m. Amended Annex VI establishes procedures for designating new ECAs. Currently, the IMO has designated four ECAs, including specifiedportions of the Baltic Sea area, North Sea area, North American area, and the United States Caribbean Sea area. In December 2022, the MEPC adopted a resolution establishing a newECA for the Mediterranean Sea as a whole. These amendments will enter into force on May 1, 2024, however ships operating in this ECA will be exempted from compliance with the0.10%m/m sulfur content standard for fuel oil until July 1, 2025. Ocean-going vessels in these areas will be subject to stringent emission controls and ocean-going vessels trading inECAs may see increased operational costs due to the higher price of fuel with low sulfur content and may cause us to incur additional costs. Other areas in China are subject to localregulations that impose stricter emission controls. If other ECAs are approved by the IMO, or other new or more stringent requirements relating to emissions from marine diesel enginesor port operations by vessels are adopted by the U.S. Environmental Protection Agency (“EPA”) or the states where we operate, compliance with these regulations could entailsignificant capital expenditures or otherwise increase the costs of our operations. 41Table of ContentsMEPC 79 adopted amendments to Annex VI on the reporting of mandatory values related to the implementation of the IMO short-term GHG reduction measure, includingattained EEXI, CII and rating values to the IMO DCS, which will become effective May 1, 2024. MEPC 80 adopted the 2023 IMO Strategy on Reduction of GHG Emissions from Ships withenhanced targets to mitigate harmful emissions. The revised IMO GHG Strategy comprises a common ambition to ensure an uptake of alternative zero and near-zero GHG fuels by 2030and to achieve net-zero emissions from international shipping by 2050. MEPC 81 will take place in spring 2024 in which the IMO will decide on the market-based mechanism to reach theemission reduction targets– either through a global emissions trading scheme for shipping or a global carbon levy. Annex VI also establishes tiers of stringent nitrogen oxide emissions standards for marine diesel engines, depending on their date of installation. At the MEPC meeting heldfrom March to April 2014, amendments to Annex VI were adopted, which address the date on which Tier III Nitrogen Oxide (NOx) standards in ECAs will go into effect. Under theamendments, Tier III NOx standards apply to ships that operate in the North American and U.S. Caribbean Sea ECAs designed for the control of NOx produced by vessels with a marinediesel engine installed and constructed on or after January 1, 2016. Tier III requirements could apply to areas that will be designated for Tier III NOx in the future. At MEPC 70 and MEPC71, the MEPC approved the North Sea and Baltic Sea as ECAs for nitrogen oxide for ships built on or after January 1, 2021. The EPA promulgated equivalent (and in some senses stricter)emissions standards in 2010. As a result of these designations or similar future designations, we may be required to incur additional operating or other costs. Additionally, amendmentsto Annex II, which strengthen discharge requirements for cargo residues and tank washings in specified sea areas (including North West European waters, Baltic Sea area, WesternEuropean waters, and the Norwegian Sea), came into effect in January 2021. As determined at the MEPC 70, Regulation 22A of MARPOL Annex VI became effective as of March 1, 2018, and requires ships above 5,000 gross tonnage to collect and reportannual data on fuel oil consumption to an IMO database, with the first year of data collection having commenced on January 1, 2019. The IMO intends to use such data as the first stepin its roadmap (through 2023) for developing its strategy to reduce greenhouse gas emissions from ships, as discussed further herein. Amendments to Annex VI requiring bunkerdelivery notes to include a flashpoint of fuel oil or a statement that the flashpoint has been measured at or above 70°C as mandatory information, will become effective May 1, 2024.Pursuant to MPC 80, in July 2023, the IMO adopted the 2023 IMO Strategy on Reduction of GHG Emissions from Ships, which identifies a number of levels of ambition, including (1)decreasing the carbon intensity from ships through implementation of further phases of energy efficiency for new ships; (2) reducing carbon dioxide emissions per transport work, as anaverage across international shipping, by at least 40% by 2030; and (3) pursuing net-zero GHG emissions by or around 2050. As of January 1, 2013, MARPOL made certain measures mandatory relating to energy efficiency for ships. All ships are now required to develop and implement a Ship EnergyEfficiency Management Plan (“SEEMP”), and new ships must be designed in compliance with minimum energy efficiency levels per capacity mile as defined by the Energy EfficiencyDesign Index (“EEDI”). Under these measures, by 2025, all new ships built will be 30% more energy-efficient than those built-in 2014. Additionally, MEPC 75 adopted amendments toMARPOL Annex VI which brought forward the effective date of the EEDI’s “phase 3” requirements from January 1, 2025, to April 1, 2022, for several ship types, including gas carriers,general cargo ships, and LNG carriers. Additionally, MEPC 76 adopted amendments to Annex VI which impose new regulations to reduce greenhouse gas emissions from ships. The revised Annex VI entered intoforce in November 2022, and includes requirements to assess and measure the energy efficiency of all ships and set the required attainment values, to reduce the carbon intensity ofinternational shipping. The requirements include (1) a technical requirement to reduce carbon intensity based on a new Energy Efficiency Existing Ship Index (“EEXI”), and (2)operational carbon intensity reduction requirements based on a new operational carbon intensity indicator (“CII”). The attained EEXI is required to be calculated for ships of 400 grosstonnage and above, under different values set for ship types and categories. Concerning the CII, ships of 5,000 gross tonnage are required to document and verify their actual annualoperational CII achieved against a determined required annual operational CII. The EEXI and CII certification requirements became effective in January 1, 2023.. We have conducted athorough baseline evaluation of the current CII ratings of all vessels in the fleet. This includes analyzing historical data on fuel consumption, distances traveled, and cargo loads. We willuse it to set clear performance improvement targets for each vessel based on their baseline CII ratings. To achieve this the Company is currently investigating technologies to installadvanced performance monitoring systems on vessels to collect real-time data on fuel consumption, speed, and emissions. We will use this data to optimize operational efficiency andtrack progress toward CII targets. We are also cooperating with the vessel’s charterers and commercial operators to implement speed optimization strategies, considering weather routingto reduce fuel consumption while maintaining operational schedules, and collaborating with industry partners to share best practices. Additionally, MEPC 76 adopted amendments requiring ships of 5,000 gross tonnage and above to revise their SEEMP to include a methodology for calculating the ship’sattained annual operation CII and the required annual operational CII, on or before January 1, 2023. MEPC 76 also approved amendments to MARPOL Annex I to prohibit the use andcarriage for use as fuel of heavy fuel oil (“HFO”) by ships in Arctic waters on and after July 1, 2024. For ships subject to Regulation 12A (oil fuel tank protection), the prohibitionbecomes effective on or after July 1, 2029. Pursuant to the IMO’s short-term targets for the reduction of greenhouse gas emissions in the shipping industry by 2030, we may incur costs to comply with these revisedstandards. Additional or new conventions, laws, and regulations may be adopted that could require the installation of expensive emission control systems and could adversely affect ourbusiness, results of operations, cash flows, and financial condition. 42Table of ContentsManagement System Requirements The SOLAS Convention was amended to address the safe manning of vessels and emergency training drills. The Convention of Limitation of Liability for Maritime Claims (the“LLMC”) sets limitations of liability for a loss of life or personal injury claim or a property claim against ship owners. We believe that our vessels are in substantial compliance withSOLAS and LLMC standards. Under Chapter IX of the SOLAS Convention, or the International Safety Management Code for the Safe Operation of Ships and Pollution Prevention (the “ISM Code”), ouroperations are also subject to environmental standards and requirements. The ISM Code requires the party with operational control of a vessel to develop an extensive managementsystem that includes, among other things, the adoption of a safety and environmental protection policy setting forth instructions and procedures for operating its vessels safely anddescribing procedures for responding to emergencies. The company’s technical management team has developed a functional Management System (MS), conforming to ISM Coderequirements, which includes a safety and environmental protection policy, safe operating procedures, defined levels of authority, procedures for internal audits, etc. The failure of avessel owner or bareboat charterer to comply with the ISM Code may subject such party to increased liability, may decrease available insurance coverage for the affected vessels, andmay result in a denial of access to, or detention in, certain ports. The Military Sealift Command adopted amendments to modernize the Global Maritime Distress and Safety System (or GMDSS), which entered into force on January 1, 2024. Theamendments, which include amendments to SOLAS, may require vessel owners/operators to ensure their radio equipment is compliant. The ISM Code requires that vessel operators obtain a safety management certificate for each vessel they operate. This certificate evidences compliance by a vessel’smanagement with the ISM Code requirements for a management system. No vessel can obtain a safety management certificate unless its manager has been awarded a document ofcompliance, issued by each flag state, under the ISM Code. We have obtained applicable documents of compliance for our offices and safety management certificates for all of ourvessels for which the certificates are required by the IMO. The document of compliance and safety management certificate is renewed as required. Amendments to the SOLAS Convention Chapter VII apply to vessels transporting dangerous goods and require those vessels to comply with the International MaritimeDangerous Goods Code (“IMDG Code”). Effective January 1, 2018, the IMDG Code includes (1) updates to the provisions for radioactive material, reflecting the latest provisions fromthe International Atomic Energy Agency, (2) new marking, packing, and classification requirements for dangerous goods; and (3) new mandatory training requirements. Amendmentswhich took effect on January 1, 2020, also reflect the latest material from the UN Recommendations on the Transport of Dangerous Goods, including (1) new provisions regarding IMOtype 9 tank, (2) new abbreviations for segregation groups; and (3) special provisions for carriage of lithium batteries and vehicles powered by flammable liquid or gas. Amendments tothe IMDG Code relating to segregation requirements for certain substances, and classification and transport of carbon, following incidents involving the spontaneous ignition ofcharcoal, came into effect in June 2022. Updates to the IMDG Code, in line with the updates to the United Nations Recommendations on the Transport of Dangerous Goods, which setthe recommendations for all transport modes, became effective January 1, 2024. The IMO has also adopted the International Convention on Standards of Training, Certification, and Watchkeeping for Seafarers (“STCW”). As of February 2017, all seafarersare required to meet the STCW standards and have a valid STCW certificate. Flag states that have ratified SOLAS and STCW generally employ the classification societies, which haveincorporated SOLAS and STCW requirements into their class rules, to undertake surveys to confirm compliance. Actions by the IMO’s Maritime Safety Committee and the United States agencies indicates that cybersecurity regulations for the maritime industry are likely to be furtherdeveloped in the near future in an attempt to combat cybersecurity threats. For example, cyber-risk management systems were required to be incorporated by shipowners and managersby 2021. This might cause companies to create additional procedures for monitoring cybersecurity, which could require additional expenses and/or capital expenditures. The impact ofsuch regulations is hard to predict at this time. Pollution Control and Liability Requirements The IMO has negotiated international conventions that impose liability for pollution in international waters and the territorial waters of the signatories to such conventions. Forexample, the IMO adopted an International Convention for the Control and Management of Ships’ Ballast Water and Sediments, or the BWM Convention, in 2004. The BWMConvention entered into force on September 9, 2017. The BWM Convention requires ships to manage their ballast water to remove, render harmless, or avoid the uptake or discharge ofnew or invasive aquatic organisms and pathogens within ballast water and sediments. The BWM Convention’s implementing regulations call for a phased introduction of mandatoryballast water exchange requirements, to be replaced in time with mandatory concentration limits, and require all ships to carry a ballast water record book and an international ballastwater management certificate. Specifically, ships over 400 gross tons generally must comply with a “D-1 standard,” requiring the exchange of ballast water only in open seas and away from coastal waters.The “D-2 standard” specifies the maximum amount of viable organisms allowed to be discharged, and compliance dates vary depending on the IOPP renewal dates. For most ships,compliance with the D-2 standard will involve installing onboard systems to treat ballast water and eliminate unwanted organisms. Ballast Water Management systems (or BWMS),which include systems that make use of chemical, biocides, organisms, or biological mechanisms, or which alter the chemical or physical characteristics of the Ballast Water, must beapproved per IMO Guidelines (Regulation D-3). Under the BWM Convention amendments that entered into force in October 2019, BWMS installed on or after October 28, 2020, shall beapproved per BWMS Code, while BWMS installed before October 23, 2020, must be approved taking into account guidelines developed by the IMO or the BWMS Code. As of October13, 2019, MEPC 72’s amendments to the BWM Convention took effect, requiring all ships to meet the D-2 standard by September 8, 2024. Costs of compliance with these regulations maybe substantial. The cost of compliance could increase for ocean carriers and may have a material effect on our operations. However, many countries already regulate the discharge ofballast water carried by vessels from country to country to prevent the introduction of invasive and harmful species via such discharges. The U.S., for example, requires vessels enteringits waters from another country to conduct mid-ocean ballast exchange, or undertake some alternate measure, and comply with certain reporting requirements. Amendments to the BWMConvention concerning commissioning testing of BWMS became effective in 2022. 43Table of ContentsAlthough mid-ocean ballast exchange or ballast water treatment is not yet mandated by many countries, the cost of compliance could increase for ocean carriers and may have amaterial effect on our operations. The IMO adopted the International Convention on Civil Liability for Oil Pollution Damage of 1969, as amended by different Protocols in 1976, 1984, and 1992, and amended in2000 (“the CLC”). Under the CLC and depending on whether the country in which the damage results is a party to the 1992 Protocol to the CLC, a vessel’s registered owner may bestrictly liable for pollution damage caused in the territorial waters of a contracting state by discharge of persistent oil, subject to certain exceptions. The 1992 Protocol changed certainlimits on liability expressed using the International Monetary Fund currency unit, the Special Drawing Rights. The limits on liability have since been amended so that the compensationlimits on liability were raised. The right to limit liability is forfeited under the CLC where the spill is caused by the shipowner’s actual fault and under the 1992 Protocol where the spill iscaused by the shipowner’s intentional or reckless act or omission where the shipowner knew pollution damage would probably result. The CLC requires ships over 2,000 tons coveredby it to maintain insurance covering the liability of the owner in a sum equivalent to an owner’s liability for a single incident. We have protection and indemnity insurance forenvironmental incidents. P&I Clubs in the International Group issue the required Bunkers Convention “Blue Cards” to enable signatory states to issue certificates. All of our vesselshave a CLC State-issued certificate attesting that the required insurance coverage is in force. The IMO also adopted the International Convention on Civil Liability for Bunker Oil Pollution Damage (the “Bunker Convention”) to impose strict liability on ship owners(including the registered owner, bareboat charterer, manager, or operator) for pollution damage in jurisdictional waters of ratifying states caused by discharges of bunker fuel. The BunkerConvention requires registered owners of ships over 1,000 gross tons to maintain insurance for pollution damage in an amount equal to the limits of liability under the applicable nationalor international limitation regime (but not exceeding the amount calculated per the LLMC). Concerning non-ratifying states, liability for spills or releases of oil carried as fuel in ship’sbunkers typically is determined by the national or other domestic laws in the jurisdiction where the events or damages occur. Ships are required to maintain a certificate attesting that they maintain adequate insurance to cover an incident. In jurisdictions, such as the United States where the BunkerConvention has not been adopted, various legislative schemes or common law govern, and liability is imposed either based on fault or on a strict-liability basis. Anti-Fouling Requirements In 2001, the IMO adopted the International Convention on the Control of Harmful Anti-fouling Systems on Ships or the “Anti-fouling Convention.” The Anti-foulingConvention, which entered into force on September 17, 2008, prohibits the use of organotin compound coatings to prevent the attachment of mollusks and other sea life to the hulls ofvessels. Vessels of over 400 gross tons engaged in international voyages will also be required to undergo an initial survey before the vessel is put into service, or before an InternationalAnti-fouling System Certificate is issued for the first time and subsequent surveys when the anti-fouling systems are altered or replaced. In 2023, amendments to the Anti-foulingConvention came into effect which includes controls on the biocide cybutryne; ships shall not apply cybutryne or re-apply anti-fouling systems containing cybutryne from January 1,2023. All of our vessels have obtained Anti-fouling System Certificates per the Anti-fouling Convention. Compliance Enforcement Noncompliance with the ISM Code or other IMO regulations may subject the shipowner or bareboat charterer to increased liability, may lead to decreases in available insurancecoverage for affected vessels and may result in the denial of access to, or detention in, some ports. The USCG and European Union authorities have indicated that vessels not incompliance with the ISM Code by applicable deadlines will be prohibited from trading in U.S. and European Union ports, respectively. As of the date of this report, each of our vesselshas a valid Safety Management Certificate (SMC) per ISM Code, a document issued to the vessel which signifies that the Company and its shipboard management operate under theapproved Management System. However, there can be no assurance that such certificates will be maintained in the future. The IMO continues to review and introduce new regulations.It is impossible to predict what additional regulations, if any, may be passed by the IMO and what effect if any, such regulations might have on our operations. United States Regulations The U.S. Oil Pollution Act of 1990 and the Comprehensive Environmental Response, Compensation and Liability Act The U.S. Oil Pollution Act of 1990 (“OPA”), established an extensive regulatory and liability regime for the protection and cleanup of the environment from oil spills. OPA affectsall “owners and operators” whose vessels trade or operate within the U.S., its territories and possessions, or whose vessels operate in U.S. waters, which includes the U.S.’s territorialsea and its 200 nautical miles exclusive economic zone around the U.S. The U.S. has also enacted the Comprehensive Environmental Response, Compensation and Liability Act(“CERCLA”), which applies to the discharge of hazardous substances other than oil, except in limited circumstances, whether on land or at sea. OPA and CERCLA both define “ownerand operator” in the case of a vessel as any person owning, operating, or chartering by demise, the vessel. Both OPA and CERCLA impact our operations. 44Table of ContentsUnder OPA, vessel owners and operators are “responsible parties” and are jointly, severally, and strictly liable (unless the spill results solely from the act or omission of a thirdparty, an act of God, or an act of war) for all containment and clean-up costs and other damages arising from discharges or threatened discharges of oil from their vessels, includingbunkers (fuel). OPA defines these other damages broadly to include: (i)injury to, destruction or loss of, or loss of use of, natural resources and related assessment costs; (ii)injury to, or economic losses resulting from, the destruction of real and personal property; (iii)loss of subsistence use of natural resources that are injured, destroyed, or lost; (iv)net loss of taxes, royalties, rents, fees or net profit revenues resulting from injury, destruction or loss of real or personal property, or natural resources; (v)lost profits or impairment of earning capacity due to injury, destruction, or loss of real or personal property or natural resources; and (vi)net cost of increased or additional public services necessitated by removal activities following a discharge of oil, such as protection from fire, safety or health hazards,and loss of subsistence use of natural resources. OPA contains statutory caps on liability and damages; such caps do not apply to direct cleanup costs. Effective December 23, 2022, the USCG adjusted the limits of OPA liabilityfor a tank vessel, other than a single-hull tank vessel, over 3,000 gross tons liability to the greater of $2,500 per gross ton or $21,521,000 (subject to periodic adjustment for inflation), fornon-tank vessels, edible oil tank vessels, and any oil spill response vessels, to the greater of $1,300 per gross ton or $1,076,000 (subject to periodic adjustment for inflation). These limitsof liability do not apply if an incident was proximately caused by the violation of any applicable U.S. federal safety, construction, or operating regulation by a responsible party (or itsagent, employee, or a person acting pursuant to a contractual relationship), or a responsible party’s gross negligence or willful misconduct. The limitation on liability similarly does notapply if the responsible party fails or refuses to (i) report the incident as required by law where the responsible party knows or has reason to know of the incident; (ii) reasonablycooperate and assist as requested in connection with oil removal activities; or (iii) without sufficient cause, comply with an order issued under the Federal Water Pollution Act (Section311 (c), (e)) or the Intervention on the High Seas Act. CERCLA contains a similar liability regime whereby owners and operators of vessels are liable for cleanup, removal, and remedial costs, as well as damages for injury to, ordestruction or loss of, natural resources, including the reasonable costs associated with assessing the same, and health assessments or health effects studies. There is no liability if thedischarge of a hazardous substance results solely from the act or omission of a third party, an act of God, or an act of war. Liability under CERCLA is limited to the greater of $300 pergross ton or $5.0 million for vessels carrying a hazardous substance as cargo and the greater of $300 per gross ton or $500,000 for any other vessel. These limits do not apply (renderingthe responsible person liable for the total cost of response and damages) if the release or threat of release of a hazardous substance resulted from willful misconduct or negligence, or theprimary cause of the release was a violation of applicable safety, construction or operating standards or regulations. The limitation on liability also does not apply if the responsibleperson fails or refuses to provide all reasonable cooperation and assistance as requested in connection with response activities where the vessel is subject to OPA. OPA and CERCLA each preserve the right to recover damages under existing law, including maritime tort law. OPA and CERCLA both require owners and operators of vessels toestablish and maintain with the USCG evidence of financial responsibility sufficient to meet the maximum amount of liability to which the particular responsible person may be subject.Vessel owners and operators may satisfy their financial responsibility obligations by providing proof of insurance, a surety bond, qualification as a self-insurer, or a guarantee. Wecomply and plan to comply going forward with the USCG’s financial responsibility regulations by providing applicable certificates of financial responsibility. The 2010 Deepwater Horizon oil spill in the Gulf of Mexico resulted in additional regulatory initiatives or statutes, including higher liability caps under OPA, new regulationsregarding offshore oil and gas drilling, and a pilot inspection program for offshore facilities. However, several of these initiatives and regulations have been or may be revised. Forexample, the U.S. Bureau of Safety and Environmental Enforcement’s (“BSEE”) revised Production Safety Systems Rule (“PSSR”), effective December 27, 2018, modified and relaxedcertain environmental and safety protections under the 2016 PSSR. Additionally, in August 2023, the BSEE amended the Well Control Rule, which strengthens testing and performancerequirements, and may affect offshore drilling operations. Compliance with any new requirements of OPA and future legislation or regulations applicable to the operation of our vesselscould impact the cost of our operations and adversely affect our business. OPA specifically permits individual states to impose their own liability regimes concerning oil pollution incidents occurring within their boundaries, provided they accept, at aminimum, the levels of liability established under OPA, and some states have enacted legislation providing for unlimited liability for oil spills. Many U.S. states that border a navigablewaterway have enacted environmental pollution laws that impose strict liability on a person for removal costs and damages resulting from a discharge of oil or a release of a hazardoussubstance. These laws may be more stringent than U.S. federal law. Moreover, some states have enacted legislation providing for unlimited liability for discharge of pollutants withintheir waters, although in some cases, states which have enacted this type of legislation have not yet issued implementing regulations defining vessel owners’ responsibilities underthese laws. The Company’s Management System details all the important operational practices, guidelines, and procedures that are to be followed to ensure compliance with allapplicable state regulations in the ports where the Company’s vessels call. 45Table of ContentsWe currently maintain pollution liability coverage insurance for $1 billion per incident for each of our vessels. If the damages from a catastrophic spill were to exceed ourinsurance coverage it could have an adverse effect on our business and results of operation. Other United States Environmental Initiatives The U.S. Clean Air Act of 1970 (including its amendments of 1977 and 1990) (“CAA”) requires the EPA to promulgate standards applicable to emissions of volatile organiccompounds and other air contaminants. Our vessels are subject to vapor control and recovery requirements for certain cargoes when loading, unloading, ballasting, cleaning andconducting other operations in regulated port areas. The CAA also requires states to draft State Implementation Plans, or “SIPs,” designed to attain national health-based air qualitystandards in each state. Although state-specific, SIPs may include regulations concerning emissions resulting from vessel loading and unloading operations by requiring the installationof vapor control equipment. Our vessels operating in such regulated port areas with restricted cargoes are equipped with vapor recovery systems that satisfy these existingrequirements. The U.S. Clean Air Act of 1970 (including its amendments of 1977 and 1990) (“CAA”) requires the EPA to promulgate standards applicable to emissions of volatile organiccompounds and other air contaminants. The CAA requires states to adopt State Implementation Plans, or SIPs, some of which regulate emissions resulting from vessel loading andunloading operations, which may affect our vessels. The U.S. Clean Water Act (“CWA”) prohibits the discharge of oil, hazardous substances, and ballast water in U.S. navigable waters unless authorized by a duly issued permit orexemption and imposes strict liability in the form of penalties for any unauthorized discharges. The CWA also imposes substantial liability for the costs of removal, remediation, anddamages and complements the remedies available under OPA and CERCLA. In 2015, the EPA expanded the definition of “waters of the United States” (“WOTUS”), thereby expandingfederal authority under the CWA. On December 30, 2022, the EPA and U.S. Army Corps of Engineers announced the final revised WOTUS rule, which was published on January 18, 2023.In August 2023, the EPA and Department of the Army issued a final rule to amend the revised WOTUS definition to conform the definition of WOTUS to the U.S. Supreme Court’sinterpretation of the CWA in its decision dated May 25, 2023. The final rule became effective on September 8, 2023 and operates to limit the CWA. The EPA and the USCG have also enacted rules relating to ballast water discharge, compliance with which requires the installation of equipment on our vessels to treat ballastwater before it is discharged or the implementation of other port facility disposal arrangements or procedures at potentially substantial costs, and/or otherwise restrict our vessels fromentering U.S. Waters. The EPA will regulate these ballast water discharges and other discharges incidental to the normal operation of certain vessels within United States waterspursuant to the Vessel Incidental Discharge Act (“VIDA”), which was signed into law on December 4, 2018, and requires that the USCG develop implementation, compliance andenforcement regulations regarding ballast water. On October 26, 2020, the EPA published a Notice of Proposed rulemaking for Vessel Incidental Discharge National Standards ofPerformance under VIDA, and in November 2020, held virtual public meetings. On October 18, 2023, the EPA published a Supplemental Notice to the Vessel Incidental Discharge NationalStandards of Performance, which shares new ballast water information that the EPA received from the USCG. Comments to the Supplemental Notice were due by December 18, 2023.Under VIDA, all provisions of the VGP 2018 and the USCG ballast water regulations remain in force and effect as currently written until the EPA publishes implementation regulations(anticipated in 2026). The new regulations could require the installation of new equipment. Currently USCG ballast water management regulations adopted under the U.S. NationalInvasive Species Act, or NISA, require mid-ocean ballast exchange programs and installation of approved USCG technology for all vessels equipped with ballast water tanks bound forU.S. ports or entering U.S. waters. Until new USCG regulations are final and enforceable, non-military non-recreational vessels at least 79 feet in length must continue to comply with therequirements of the VGP, including submission of a Notice of Intent (“NOI”) or retention of a PARI form and submission of annual reports. We shall submit NOIs for our vessels whererequired. Compliance with the EPA, U.S Coast Guard, and state regulations requires the installation of ballast water treatment equipment on our vessels or the implementation of otherport facility disposal procedures at potentially substantial cost, or may otherwise restrict our vessels from entering U.S. waters. European Union Regulations In October 2009, the European Union amended a directive to impose criminal sanctions for illicit ship-source discharges of polluting substances, including minor discharges, ifcommitted with intent, recklessly, or with serious negligence, and the discharges individually or in the aggregate result in deterioration of the quality of water. Aiding and abetting thedischarge of a polluting substance may also lead to criminal penalties. The directive applies to all types of vessels, irrespective of their flag, but certain exceptions apply to warships orwhere human safety or that of the ship is in danger. Criminal liability for pollution may result in substantial penalties or fines and increased civil liability claims. Regulation (EU) 2015/757of the European Parliament and of the Council of 29 April 2015 (amending EU Directive 2009/16/EC) governs the monitoring, reporting, and verification of carbon dioxide emissions frommaritime transport, and, subject to some exclusions, requires companies with ships over 5,000 gross tonnage to monitor and report carbon dioxide emissions annually, which may causeus to incur additional expenses. As of January 2019, large ships calling at EU ports have been required to collect and publish data on carbon dioxide emissions and other information.The system entered into force on 1 March 2018. July 2020 saw the European Parliament’s Committee on Environment, Public Health and Food Safety vote in favor of the inclusion ofvessels of 5000 gross tons and above in the EU Emissions Trading System (in addition to voting for a revision to the monitoring, reporting, and verification of CO2 emissions). InSeptember 2020, the European Parliament adopted the proposal from the European Commission to amend the regulation on monitoring carbon dioxide emissions from maritime transport. 46Table of ContentsOn July 14, 2021, the European Commission published a package of draft proposals as part of its ‘Fit for 55’ environmental legislative agenda and as part of the wider EU GreenDeal growth strategy. There are two key initiatives relevant to maritime arising from the package: (a) a bespoke emissions trading scheme for maritime (Maritime ETS) which hascommenced in 2024 and which applies to all ships above a gross tonnage of 5000; and (b) a FuelEU regulation which seeks to require all ships above a gross tonnage of 5000 to carry onboard a ‘FuelEU certificate of compliance’ from 30 June 2025 as evidence of compliance with the limits on the greenhouse gas intensity of the energy used on-board by a ship and withthe requirements on the use of on-shore power supply (OPS) at berth. Maritime ETS was agreed in December 2022 and FuelEU was passed into law on July 25, 2023 and will apply fromJanuary 2025. More specifically, Maritime ETS is to apply gradually over the period from 2024 to 2026. 40% of allowances would have to be surrendered in 2025 for the year 2024; 70% ofallowances would have to be surrendered in 2026 for the year 2025; 100% of allowances would have to be surrendered in 2027 for the year 2026. Compliance is to be on a company-wide(rather than per ship) basis and “shipping company” is defined widely to capture both the ship owner and any contractually appointed commercial operator/charterer. The cap under theETS would be set by taking into account EU MRV system emissions data for the years 2018 and 2019, adjusted, from the year 2021, and is to capture 100% of the emissions from intra-EUmaritime voyages; 100% of emissions from ships at berth in EU ports; and 50% of emissions from voyages which start or end at EU ports (but the other destination is outside the EU).More recent proposed amendments signal that 100% of non-EU emissions may be caught if the IMO does not introduce a global market-based measure by 2028. All maritime allowanceswill be auctioned and there will be no free allocation We note that from a risk management perspective, new systems, including personnel, data management systems, cost recoverymechanisms, revised service agreement terms, and emissions reporting procedures will have to be put in place, at significant cost, to prepare for and manage the administrative aspectsof ETS compliance. Responsible recycling and scrapping of ships are becoming increasingly important issues for shipowners and charterers alike as the industry strives to replace old ships withcleaner, more energy-efficient models. The recognition of the need to impose recycling obligations on the shipping industry is not new. In 2009, the IMO oversaw the creation of theHong Kong Ship Recycling Convention (the “Hong Kong Convention”), which sets standards for ship recycling. Concerned at the lack of progress in satisfying the conditions neededto bring the Hong Kong Convention into force, the EU published its own Ship Recycling Regulation 1257/2013 (SRR) in 2013, to facilitate early ratification of the Hong Kong Conventionboth within the EU and in other countries outside the EU. The 2013 regulations are vital to responsible ship recycling in the EU. SRR requires that, from 31 December 2020, all existingships sailing under the flag of EU member states and non-EU flagged ships calling at an EU port or anchorage must carry on board an Inventory of Hazardous Materials (IHM) with acertificate or statement of compliance, as appropriate. For EU-flagged vessels, a certificate (either an Inventory Certificate or Ready for Recycling Certificate) will be necessary, while non-EU-flagged vessels will need a Statement of Compliance. Now that the Hong Kong Convention has been ratified and will enter into force on June 26, 2025, it is expected the EU ShipRecycling Regulation will be reviewed in light of this. The European Union has adopted several regulations and directives requiring, among other things, more frequent inspections of high-risk ships, as determined by the type, age,and flag, as well as the number of times the ship has been detained. The European Union also adopted and extended a ban on substandard ships and enacted a minimum ban period anda definitive ban for repeated offenses. The regulation also provided the European Union with greater authority and control over classification societies, by imposing more requirementson classification societies and providing for fines or penalty payments for organizations that failed to comply. Furthermore, the EU has implemented regulations requiring vessels to usereduced sulfur content fuel for their main and auxiliary engines. The EU Directive 2005/33/EC (amending Directive 1999/32/EC) introduced requirements parallel to those in Annex VIrelating to the sulfur content of marine fuels. In addition, the EU imposed a 0.1% maximum sulfur requirement for fuel used by ships at berths in the Baltic, the North Sea, and the EnglishChannel (the so-called “SOx-Emission Control Area”). As of January 2020, EU member states must also ensure that ships in all EU waters, except the SOx-Emission Control Area, usefuels with a 0.5% maximum sulfur content. EU Directive 2004/35/CE (as amended) regarding the prevention and remedying of environmental damage addresses liability for environmental damage (including damage towater, land, protected species, and habitats) based on the “polluter pays” principle. Operators whose activities caused the environmental damage are liable for the damage (subject tocertain exceptions). Concerning specified activities causing environmental damage, operators are strictly liable. The directive applies where damage has already occurred and where thereis an imminent threat of damage. The directive requires preventative and remedial actions, and that operators report environmental damage or an imminent threat of such damage. In 2021, the EU adopted a European Climate Law (Regulation (EU) 2021/1119), establishing the aim of reaching net-zero greenhouse gas emissions in the EU by 2050, with anintermediate target of reducing greenhouse gas emissions by at least 55% by 2030, compared to 1990 levels. In July 2021, the European Commission launched the Fit for 55 (describedabove) to support the climate policy agenda. On November 10, 2022, the EU Parliament adopted the Corporate Sustainability Reporting Directive (“CSRD”). EU member states have 18 months to integrate it into national law.The CSRD will create new, detailed sustainability reporting requirements and will significantly expand the number of EU and non-EU companies subject to the EU sustainability reportingframework. The required disclosures will go beyond environmental and climate change reporting to include social and governance matters (for example, respect for employee and humanrights, anti-corruption and bribery, corporate governance, and diversity and inclusion). In addition, it will require disclosure regarding the due diligence processes implemented by acompany in relation to sustainability matters and the actual and potential adverse sustainability impacts of an in-scope company’s operations and value chain. The CSRD will begin toapply for financial years starting in 2024 to large EU and non-EU undertakings subject to certain financial and employee thresholds being met. New systems, personnel, data managementsystems and reporting procedures will have to be put in place, at significant cost, to prepare for and manage the administrative aspect of CSRD compliance. 47Table of ContentsInternational Labour Organization The International Labour Organization (the “ILO”) is a specialized agency of the UN that has adopted the Maritime Labor Convention 2006 (“MLC 2006”). A Maritime LaborCertificate and a Declaration of Maritime Labor Compliance is required to ensure compliance with the MLC 2006 for all ships that are 500 gross tonnage or over and are either engaged ininternational voyages or flying the flag of a Member and operating from a port, or between ports, in another country. The Company’s Management System establishes working andliving standards for all seafarers working onboard that exceed MLC 2006 requirements. All our vessels have been issued the MLC Certificate following surveys, inspections, paperwork,and approval by the registered flag state. Greenhouse Gas Regulation Currently, the emissions of greenhouse gases from international shipping are not subject to the Kyoto Protocol to the United Nations Framework Convention on ClimateChange, which entered into force in 2005 and according to which adopting countries have been required to implement national programs to reduce greenhouse gas emissions withtargets extended through 2020. In December 2009, more than 27 nations, including the U.S. and China, signed the Copenhagen Accord, which includes a non-binding commitment toreduce greenhouse gas emissions. The 2015 United Nations Climate Change Conference in Paris resulted in the Paris Agreement, which entered into force on November 4, 2016, and doesnot directly limit greenhouse gas emissions from ships. The United States rejoined the Paris Agreement on February 19, 2021 At MEPC 70 and MEPC 71, a draft outline of the structure of the initial strategy for developing a comprehensive IMO strategy on the reduction of greenhouse gas emissionsfrom ships was approved. Following this roadmap, at MEPC 80, in July 2023, the IMO adopted the 2023 IMO Strategy on Reduction of GHG Emissions from Ships, which identifies anumber of levels of ambition, including (1) decreasing the carbon intensity from ships through the implementation of further phases of the EEDI for new ships; (2) reducing carbondioxide emissions per transport work, as an average across international shipping, by at least 40% by 2030, pursuing efforts towards 70% by 2050, compared to 2008 emission levels; and(3) reducing the total annual greenhouse emissions by at least 50% by 2050 compared to 2008 while pursuing efforts towards phasing them out entirely. These regulations could causeus to incur substantial additional expenses. As noted above, the 70th MEPC meeting in October 2016 adopted a mandatory data collection system (DCS) which requires ships above 5,000 gross tons to reportconsumption data for fuel oil, hours under way and distance travelled. Unlike the EU MRV (see below), the IMO DCS covers any maritime activity carried out by ships, includingdredging, pipeline laying, ice-breaking, fish-catching and off-shore installations. The SEEMPs of all ships covered by the IMO DCS must include a description of the methodology fordata collection and reporting. After each calendar year, the aggregated data are reported to the flag state. If the data have been reported in accordance with the requirements, the flagstate issues a statement of compliance to the ship. Flag states subsequently transfer this data to an IMO ship fuel oil consumption database, which is part of the Global IntegratedShipping Information System (GISIS) platform. IMO will then produce annual reports, summarizing the data collected. Thus, currently, data related to the GHG emissions of ships above5,000 gross tons calling at ports in the European Economic Area (EEA) must be reported in two separate, but largely overlapping, systems: the EU MRV - which applies since 2018 - andthe IMO DCS - which applies since 2019. The proposed revision of Regulation (EU) 2015/757 adopted on 4 February 2019 aims to align and facilitate the simultaneous implementation ofthe two systems, however it is still not clear when the proposal will be adopted. IMO’s MEPC 76 adopted amendments to Annex VI that will require ships to reduce their greenhouse gas emissions. Effective November 1, 2022, the Revised MARPOL AnnexVI will enter into force. The revised Annex VI includes carbon intensity measures (requirements for ships to calculate their Energy Efficiency Existing Ship Index (EEXI) followingtechnical means to improve their energy efficiency and to establish their annual operational carbon intensity indicator and rating. MEPC 76 also adopted guidelines to support theimplementation of the amendments. In 2021, the EU adopted a European Climate Law (Regulation (EU) 2021/1119), establishing the aim of reaching net-zero greenhouse gas emissions in the EU by 2050, with anintermediate target of reducing greenhouse gas emissions by at least 55% by 2030, compared to 1990 levels. In July 2021, the European Commission launched the Fit for 55 (describedabove) to support the climate policy agenda. Starting in January 2018, large ships over 5,000 gross tonnage calling at EU ports have been required to collect and publish data on carbondioxide emissions and other information. As previously discussed, regulations relating to the inclusion of greenhouse gas emissions from the maritime sector in the European Union’scarbon market are also forthcoming. In the United States, the EPA issued a finding that greenhouse gases endanger public health and safety, adopted regulations to limit greenhouse gas emissions from certainmobile sources, and proposed regulations to limit greenhouse gas emissions from large stationary sources. The EPA or individual U.S. states could enact environmental regulations thatwould affect our operations. On November 2, 2021, the EPA issued a proposed rule under the CAA designed to reduce methane emissions from oil and gas sources. In November 2022,the EPA issued a supplemental proposal that would achieve more comprehensive emissions reductions and add proposed requirements for sources not previously covered. The EPAheld a public hearing in January 2023 on the proposal and in December 2023, issued a final rule to sharply reduce emissions of methane and other air pollution from oil and natural gasoperations, including storage vessels. 48Table of ContentsAny passage of climate control legislation or other regulatory initiatives by the IMO, the EU, the U.S., or other countries where we operate, or any treaty adopted at theinternational level to succeed the Kyoto Protocol or Paris Agreement, that restricts emissions of greenhouse gases could require us to make significant financial expenditures which wecannot predict with certainty at this time. Even in the absence of climate control legislation, our business may be indirectly affected to the extent that climate change may result in sea-level changes or certain weather events. Vessel Security Regulations Since the terrorist attacks of September 11, 2001, in the United States, there have been a variety of initiatives intended to enhance vessel security, such as the U.S. MaritimeTransportation Security Act of 2002 (“MTSA”). To implement certain portions of the MTSA, the USCG issued regulations requiring the implementation of certain security requirementsaboard vessels operating in waters subject to the jurisdiction of the United States and at certain ports and facilities, some of which are regulated by the EPA. Similarly, Chapter XI-2 of the SOLAS Convention imposes detailed security obligations on vessels and port authorities and mandates compliance with the International Shipand Port Facility Security Code (“the ISPS Code”). The ISPS Code is designed to enhance the security of ports and ships against terrorism. To trade internationally, a vessel must attainan International Ship Security Certificate (“ISSC”) from a recognized security organization approved by the vessel’s flag state. Ships operating without a valid certificate may bedetained, expelled from, or refused entry at a port until they obtain an ISSC. The various requirements, some of which are found in the SOLAS Convention, include, for example: •on-board installation of automatic identification systems to provide a means for the automatic transmission of safety-related information from among similarly equippedships and shore stations, including information on a ship’s identity, position, course, speed, and navigational status; •on-board installation of ship security alert systems, which do not sound on the vessel but only alert the authorities onshore; •the development of vessel security plans; •a ship identification number to be permanently marked on a vessel’s hull; •a continuous synopsis record kept onboard showing a vessel’s history, including the name of the ship, the state whose flag the ship is entitled to fly, the date onwhich the ship was registered with that state, the ship’s identification number, the port at which the ship is registered and the name of the registered owner(s) and theirregistered address; and •compliance with flag state security certification requirements. The USCG regulations, intended to align with international maritime security standards, exempt non-U.S. vessels from MTSA vessel security measures, provided such vesselshave onboard a valid ISSC that attests to the vessel’s compliance with the SOLAS Convention security requirements and the ISPS Code. Future security measures could have asignificant financial impact on us. All vessels have been issued with ISSC, which is subject to Verifications that have ensured that the security system and any associated security equipment of the vessel fullycomplies with the applicable requirements of MTSA and the ISPS Code, is in satisfactory condition and fit for the service for which the vessel is intended. The cost of vessel security measures has also been affected by the escalation in the frequency of acts of piracy against ships, notably off the coast of Somalia, including theGulf of Aden and the Red Sea and Arabian Sea areas and the West Africa area, including the Gulf of Guinea. Substantial loss of revenue and other costs may be incurred as a result ofthe detention of a vessel or additional security measures, and the risk of uninsured losses could significantly affect our business. Costs are incurred in taking additional securitymeasures per Best Management Practices to Deter Piracy, notably those contained in the BMP5 industry standard. Inspection by Classification Societies Every commercial vessel must be classed by a classification society recognized by its country of registry and member of the International Association of ClassificationSocieties, the IACS. The classification society certifies that a vessel is constructed to specific structural standards and carries out regular surveys throughout the vessel’s service life toensure continuing compliance with the standards. The Classification Certificate issued is required to enable the vessel’s owner to register the ship and to obtain Marine Insurance on theship. Commercially, it is required to be produced before a vessel’s entry into ports or waterways and is of interest to Charterers and potential Buyers. The IACS has adopted harmonizedCommon Structural Rules, or the Rules, which apply to oil tankers and bulk carriers contracted for construction on or after July 1, 2015. The Rules attempt to create a level of consistencybetween IACS Societies. All of our vessels are certified as being “in class” by IACS recognized Classification Societies (e.g., Bureau Veritas, Lloyd’s Register of Shipping). 49Table of ContentsThe Class and Statutory Certificates need to be renewed every five (5) years. A vessel must undergo a five-year survey cycle consisting of periodical surveys, such as annualand intermediate surveys, and special or renewal surveys. Periodical surveys are carried out to confirm the vessel’s compliance with Rules and Regulations. In the scope of ensuring thevessel’s structural integrity, a docking survey is required twice in the five-year cycle and without exceeding a 36 month interval between surveys. Vessels younger than fifteen (15) yearsold can be exempted from the intermediate docking survey by an Underwater Inspection to Class acceptance. In lieu of a special survey, the vessel’s Machinery may be on a continuoussurvey cycle, under which the machinery would be surveyed periodically over a five-year period. In addition, Hull and Construction are surveyed and tested, resulting in the renewal ofClass and Statutory Certificates. If any vessel does not maintain its class and/or fails any annual survey, intermediate survey, docking, or special survey, the vessel will be unable tocarry cargo between ports and will be unemployable and uninsurable, which could cause us to be in violation of certain covenants in our loan agreements. Any such inability to carrycargo or be employed, or any such violation of covenants, could have a material adverse impact on our financial condition and results of operations. Risk of Loss and Liability Insurance Coverage General The operation of any cargo vessel includes risks such as mechanical failure, physical damage, collision, property loss, cargo loss or damage, and business interruption due topolitical circumstances in foreign countries, piracy incidents, hostilities, and labor strikes. In addition, there is always an inherent possibility of marine disaster, including oil spills andother environmental mishaps, and the liabilities arising from owning and operating vessels in international trade. OPA, which imposes virtually unlimited liability upon shipowners,operators and bareboat charterers of any vessel trading in the exclusive economic zone of the United States for certain oil pollution accidents in the United States, has made liabilityinsurance more expensive for shipowners and operators trading in the United States market. While we maintain hull and machinery insurance, war risks insurance, loss of hire, protection and indemnity cover and freight, demurrage and defense cover for our vessels inamounts and with deductibles (if applicable) that we believe to be prudent to cover normal risks in our operations, we may not be able to achieve or maintain this level of coveragethroughout a vessel’s useful life. Furthermore, while we believe we procure adequate insurance coverage, not all risks can be insured, and there can be no guarantee that any specificclaim will be paid, or that we will always be able to obtain adequate insurance coverage at reasonable rates. Hull and Machinery and War Risk Insurance We maintain for our vessels marine hull and machinery and war risks insurance, which covers, among other risks, the risk of actual or constructive total loss. Our vessels areeach covered up to at least market value with deductibles which vary according to the size and value of the vessel. Protection and Indemnity Insurance Protection and indemnity insurance is provided by mutual protection and indemnity associations, or “P&I Associations,” and covers our third-party liabilities in connectionwith our shipping activities. This includes third-party liability and other related expenses including injury or death of crew, passengers, and other third parties, loss or damage to cargo,claims arising from collisions with other vessels, damage to other third-party property, pollution arising from oil or other substances, wreck removal, and salvage, towing and otherrelated costs. Protection and indemnity insurance is a form of mutual indemnity insurance, extended by protection and indemnity mutual associations, or “clubs.” We procure protection and indemnity insurance coverage for pollution in the amount of $1 billion per vessel per incident. The 12 P&I Associations that comprise theInternational Group insure approximately 90% of the world’s commercial tonnage and have entered into a pooling agreement to reinsure each association’s liabilities. The InternationalGroup’s website states that the Pool provides a mechanism for sharing all claims in excess of $10 million up to approximately $8.9 billion. As a member of certain P&I Associations whichare members of the International Group, we are subject to calls payable to the associations based on the group’s claim records as well as the claim records of all other members of theindividual associations and members of the pool of P&I Associations comprising the International Group. Supplemental calls may be made by the P&I Associations based on estimatesof premium income and anticipated and paid claims, and such estimates are adjusted each year by the board of directors of the P&I Associations until the closing of the relevant policyyear, which generally occurs within three years from the end of the policy year. We do not know whether any supplemental calls will be charged in respect of any policy year by the P&IAssociations in which the Company’s vessels are entered. To the extent we experience supplemental calls, our policy is to expense such amounts. C.Organizational Structure We are a corporation incorporated under the laws of the Republic of the Marshall Islands on January 7, 2010. We are the sole owner of all of the issued and outstanding sharesof the subsidiaries listed in Exhibit 8.1 of this annual report.D.Property, Plants, and EquipmentOur in-house fleet manager, UOT, rents our office space from unrelated third parties and owns office furniture and equipment. In December 2014, UOT also acquired, jointly withtwo other related parties, a plot of land in Athens, Greece, which was sold to a subsidiary of Diana Shipping Inc. in November 2021. Our only material properties are the vessels in our fleet.50Table of ContentsItem 4A.Unresolved Staff Comments Not applicable. Item 5.Operating and Financial Review and Prospects The following management’s discussion and analysis should be read in conjunction with our consolidated financial statements, and their notes included elsewhere in thisreport. This discussion contains forward-looking statements that reflect our current views with respect to future events and financial performance. Our actual results may differ materiallyfrom those anticipated in these forward-looking statements as a result of certain factors, such as those set forth in the section entitled “Item 3. Key Information—D. Risk Factors” andelsewhere in this report. A.Operating Results We have historically chartered our vessels to customers primarily pursuant to short-term and medium-term time charters, on spot voyages and pool arrangements. Under ourtime charters, the charterer typically pays us a fixed daily charter hire rate and bears all voyage expenses, including the cost of bunkers (fuel oil) and port and canal charges. Under spotcharter arrangements, voyage expenses that are unique to a particular charter are paid for by us. For vessels operating in pooling arrangements, we earn a portion of total revenuesgenerated by the pool, net of expenses incurred by the pool. We remain responsible for paying the chartered vessel’s operating expenses, including the cost of crewing, insuring,repairing and maintaining the vessel, the costs of spares and consumable stores, tonnage taxes, environmental costs, and other miscellaneous expenses. We also pay commissions tounaffiliated shipbrokers for the arrangement of the relevant charter, and have historically paid for a limited period of time management fees and commissions to third-party managers. Factors Affecting Our Results of Operations We believe that the important measures for analyzing trends in our results of operations consist of the following: •Ownership days. We define ownership days as the aggregate number of days in a period during which each vessel in our fleet has been owned by us. Ownership daysare an indicator of the size of our fleet over a period and affect both the amount of revenues and the amount of expenses that we record during a period. •Available days. We define available days as the number of our ownership days less the aggregate number of days that our vessels are off-hire due to scheduledrepairs or repairs under guarantee, vessel upgrades or special surveys, including the aggregate amount of time that we spend positioning our vessels for such events.The shipping industry uses available days to measure the number of days in a period during which vessels should be capable of generating revenues. •Operating days. We define operating days, including ballast leg, as the number of available days in a period less the aggregate number of days that our vessels are off-hire. The specific calculation counts as on-hire the days of the ballast leg of the spot voyages, as long as a charter party is in place. The shipping industry usesoperating days to measure the aggregate number of days in a period during which vessels actually generate revenues. •Fleet utilization. We calculate fleet utilization by dividing the number of our operating days during a period by the number of our available days during the period. Theshipping industry uses fleet utilization to measure a company’s efficiency in finding suitable employment for its vessels and minimizing the amount of days that itsvessels are off-hire for reasons other than scheduled repairs or repairs under guarantee, vessel upgrades and special surveys, including vessel positioning for suchevents. •Time Charter Equivalent (TCE) rates. We define TCE rates as revenue (voyage, time-charter and pool revenue), less voyage expenses during a period divided by thenumber of our available days during the period, which is consistent with industry standards. Voyage expenses include port charges, bunker (fuel) expenses, canalcharges and commissions. TCE is a non-GAAP measure. TCE rate is a standard shipping industry performance measure used primarily to compare daily earningsgenerated by vessels despite changes in the mix of charter types (i.e., voyage (spot) charters, time charters, and bareboat charters). •Daily Operating Expenses. We define daily operating expenses as total vessel operating expenses, which include crew wages and related costs, the cost of insuranceand vessel registry, expenses relating to repairs and maintenance, the costs of spares and consumable stores, lubricant costs, tonnage taxes, regulatory fees,environmental costs, lay-up expenses and other miscellaneous expenses divided by total ownership days for the relevant period. The following table reflects our ownership days, available days, operating days, fleet utilization, TCE rate, and daily operating expenses for our fleet for the periods indicated.51Table of Contents For the year endedDecember 31, 2023 For the year endedDecember 31, 2022 For the year endedDecember 31, 2021 Ownership days 2,901 2,069 1,825 Available days 2,830 2,039 1,735 Operating days 2,793 1,974 1,483 Fleet utilization 98.7% 96.8% 85.5%Time charter equivalent (TCE) rate $36,954 $29,579 $9,963 Daily operating expenses $7,537 $6,683 $6,740 For the year endedDecember 31, 2023 For the year endedDecember 31, 2022 For the year endedDecember 31, 2021 Revenue $108,938 $75,173 $36,491 Less voyage expenses $(4,358) $(14,861) $(19,205)Voyage and time charter equivalent rates $104,580 $60,312 $17,286 Available days 2,830 2,039 1,735 Time charter equivalent (TCE) rate $36,954 $29,579 $9,963 Revenues Our revenues are driven primarily by the number of vessels in our fleet, the number of voyage days and the amount of daily charter hire that our vessels earn under charterswhich, in turn, are affected by a number of factors, including: •the duration of our charters; •our decisions relating to vessel acquisitions and disposals; •the amount of time that we spend positioning our vessels; •the amount of time that our vessels spend in drydock undergoing repairs; •maintenance and upgrade work; •the age, condition, and specifications of our vessels; •levels of supply and demand in the shipping industry; and •other factors affecting spot market charter rates for vessels. Vessels operating on time charters for a certain period of time provide more predictable cash flows over that period of time, but can yield lower profit margins than vesselsoperating in the spot charter market during periods characterized by favorable market conditions. Vessels operating in the spot or pool charter market generate revenues that are lesspredictable but may enable their owners to capture increased profit margins during periods of improvements in charter rates, although their owners would be exposed to the risk ofdeclining charter rates, which may have a materially adverse impact on financial performance. As we employ vessels on time and spot or pool charters, we mitigate our charter ratesfluctuation exposure. Currently, the vessels in our fleet are employed either on pool charters or on time charters. Our charter agreements subject us to counterparty risk. In depressed marketconditions, charterers may seek to renegotiate the terms of their existing charter agreements or avoid their obligations under those contracts. Should a counterparty fail to honor itsobligations under agreements with us, we could sustain significant losses, which could have a material adverse effect on our business, financial condition, results of operations and cashflows. Voyage Expenses We incur voyage expenses that include port and canal charges, bunker (fuel oil) expenses and commissions. Port and canal charges and bunker expenses primarily increase inperiods during which vessels are employed on voyage charters because these expenses are for the account of the owner of the vessels, while they are on the account of the chartererwhen vessels are time-chartered. Laid-up vessels, if any, do not incur bunkers costs. However, at times when our vessels are off-hire due to other reasons, we incur port and canalcharges and bunker expenses. We have paid commissions ranging from 0% to 2.5% of the total daily charter hire rate of each charter to unaffiliated shipbrokers, depending on the number of brokers involvedwith arranging the charter, and we typically pay address commissions from 0% to 3.75% to our charterers. Additionally, Pure Brokerage and Shipping Corp, an affiliated entity, receivesfrom us a fixed commission of 1.25% on gross freight and hire income generated by the vessels, subject to the specific terms of each employment contract. Our in-house fleet manager,UOT, our wholly owned subsidiary, receives a commission that is equal to 2% of our gross revenues in exchange for providing us with technical and commercial management services inconnection with the employment of our fleet. However, this commission is eliminated from our consolidated financial statements as an intercompany transaction. 52Table of ContentsVessel Operating Expenses Vessel operating expenses include crew wages and related costs, the cost of insurance and vessel registry, expenses relating to repairs and maintenance, the cost of spares andconsumable stores, tonnage taxes, regulatory fees, environmental costs, lay-up expenses, and other miscellaneous expenses. Other factors beyond our control, some of which may affectthe shipping industry in general, including, for instance, COVID-related disruptions, inflationary pressures or the war in Ukraine, which could cause our crew costs and other operatingexpenses to increase, developments relating to market prices for crew wages and insurance, may also cause these expenses to increase. In conjunction with our senior executive officers,UOT has established an operating expense budget for each vessel and performs the day-to-day management of our vessels under separate management agreements with our vessel-owning subsidiaries. We monitor the performance of UOT by comparing actual vessel operating expenses with the operating expense budget for each vessel. Vessel Depreciation We depreciate all our vessels on a straight-line basis over their estimated useful lives, which we estimate to be 25 years for our tanker vessels from the date of their initialdelivery from the shipyard. Depreciation is based on the cost less the estimated salvage values. Each vessel’s salvage value is the product of her light-weight tonnage and estimatedscrap rate, which is estimated at $350 per light-weight ton for all vessels in our fleet. We believe that these assumptions are common in the tanker industry. General and Administrative Expenses We incur general and administrative expenses, including our onshore related expenses such as legal and professional expenses. Certain of our general and administrativeexpenses have been provided for, effective June 15, 2020, under our Brokerage Services Agreement with Pure Brokerage and Shipping Corp. We also incur payroll expenses of employeesand general and administrative expenses reflecting the costs associated with running a public company, including board of director costs, director and officer insurance, investorrelations, registrar and transfer agent fees, and legal and accounting costs related to our compliance with public reporting obligations and the Sarbanes-Oxley Act of 2002. For 2024, weexpect our general and administrative expenses to remain approximately at the same levels, as these expenses are relatively fixed and are not widely affected by the expansion (orshrinkage) of our fleet, unless inflation rates reach even higher levels than the current ones, at which case our general and administrative expenses are expected to increase. Interest and Finance Costs We have historically incurred interest expense and financing costs in connection with vessel-specific debt. As of December 31, 2023, our aggregate outstanding debt amountedto $55.2 million. We expect to manage any exposure in interest rates through our regular operating and financing activities and, when deemed appropriate, through the use of derivativefinancial instruments. Lack of Historical Operating Data for Vessels before their Acquisition Consistent with shipping industry practice, other than inspection of the physical condition of the vessels and examinations of classification society records, there is nohistorical financial due diligence process when we acquire vessels. Accordingly, we do not obtain the historical operating data for the vessels from the sellers because that information isnot material to our decision to make acquisitions, nor do we believe it would be helpful to potential investors in our common shares in assessing our business or profitability. Mostvessels are sold under a standardized agreement, which, among other things, provides the buyer with the right to inspect the vessel and the vessel’s classification society records. Thestandard agreement does not give the buyer the right to inspect, or receive copies of, the historical operating data of the vessel. Prior to the delivery of a purchased vessel, the sellertypically removes from the vessel all records, including past financial records and accounts related to the vessel. In addition, the technical management agreement between the seller’stechnical manager and the seller is automatically terminated, and the vessel’s trading certificates are revoked by its flag state following a change in ownership. Consistent with shipping industry practice, we treat the acquisition of a vessel (whether acquired with or without charter) as the acquisition of an asset rather than a business.Although vessels are generally acquired free of charter, we have in the past, and we may in the future, acquire vessels with existing time charters. Where a vessel has been under avoyage charter, the vessel is delivered to the buyer free of charter, and it is rare in the shipping industry for the last charterer of the vessel in the hands of the seller to continue as thefirst charterer of the vessel in the hands of the buyer. In most cases, when a vessel is under time charter, and the buyer wishes to assume that charter, the vessel cannot be acquiredwithout the charterer’s consent and the buyer’s entering into a separate direct agreement with the charterer to assume the charter. The purchase of a vessel itself does not transfer thecharter, because it is a separate service agreement between the vessel owner and the charterer. When we purchase a vessel and assume or renegotiate a related time charter, we must take, among other things, the following steps before the vessel will be ready to commenceoperations: •obtain the charterer’s consent to us as the new owner; •obtain the charterer’s consent to a new technical manager; •obtain the charterer’s consent to a new flag for the vessel; •arrange for a new crew for the vessel; •replace all hired equipment on board, such as gas cylinders and communication equipment; 53Table of Contents•negotiate and enter into new insurance contracts for the vessel through our own insurance brokers; •register the vessel under a flag state and perform the related inspections in order to obtain new trading certificates from the flag state; •implement a new planned maintenance program for the vessel; and •ensure that the new technical manager obtains new certificates for compliance with the safety and vessel security regulations of the flag state. The following discussion is intended to help you understand how acquisitions of vessels affect our business and results of operations. Our business is mainly comprised of the following elements: •acquisition and disposition of vessels; •employment and operation of our vessels; and •management of the financial, general and administrative elements involved in the conduct of our business and ownership of our vessels. The employment and operation of our vessels mainly require the following components: •vessel maintenance and repair; •crew selection and training; •vessel spares and stores supply; •contingency response planning; •on board safety procedures auditing; •accounting; •vessel insurance arrangement; •vessel chartering; •vessel hire management; •vessel surveying; and •vessel performance monitoring. The management of financial, general and administrative elements involved in the conduct of our business and ownership of vessels, mainly requires the following components: •management of our financial resources, including banking relationships, i.e., administration of bank loans and bank accounts; •management of our accounting system and records and financial reporting; •administration of the legal and regulatory requirements affecting our business and assets; and •management of the relationships with our service providers and customers. The principal factors that may affect our profitability, cash flows and shareholders’ return on investment include: •rates and periods of charter hire; •levels of vessel operating expenses; •depreciation expenses; •financing costs; and •fluctuations in foreign exchange rates. See “Item 3. Key Information—D. Risk Factors” for additional factors that may affect our business. Our Fleet - Comparison of Possible Excess of Carrying Value Over Estimated Charter-Free Market Value of our Vessels In “Critical Accounting Estimates and Policies” we discuss our policy for impairing the carrying values of our vessels. Historically, the market values of vessels haveexperienced volatility, which from time to time may be substantial. As a result, the charter-free market value of certain of our vessels may have declined below those vessels’ carryingvalue, even though we would not impair those vessels’ carrying value under our accounting impairment policy. In 2023, 2022 and 2021, we did not record any impairment charge. 54Table of ContentsBased on: (i) the carrying value of each of our vessels as of December 31, 2023 plus the carrying value of any unamortized dry docking cost and cost of any equipment not yetinstalled; and (ii) what we believe the charter-free market value of each of our vessels was as of December 31, 2023, the aggregate carrying value of all of our vessels exceeded theiraggregate charter-free market values by approximately $98.7 million. Based on: (i) the carrying value of each of our vessels as of December 31, 2022 plus the carrying value of anyunamortized dry docking cost and cost of any equipment not yet installed; and (ii) what we believe the charter-free market value of each of our vessels was as of December 31, 2022, theaggregate carrying value of all of our vessels at the time exceeded their aggregate charter-free market values by approximately $119.9 million. Our estimates of charter-free market value assume that our vessels were all in good and seaworthy condition without need of repair and if inspected would be certified in classwithout notations of any kind. Our estimates are based on information available from various industry sources, including: •reports by industry analysts and data providers that focus on our industry and related dynamics affecting vessel values; •news and industry reports of similar vessel sales; •offers that we may have received from potential purchasers of our vessels; and •vessel sale prices and values of which we are aware through both formal and informal communications with shipowners, shipbrokers, industry analysts, and variousother shipping industry participants and observers. As we obtain information from various industry reports and other sources, our estimates of charter-free market values are inherently uncertain. In addition, vessel values arehighly volatile; as such, our estimates may not be indicative of the current or future charter-free market values of our vessels or prices that we could achieve if we were to sell them. Wealso refer you to the risk factor under “Item 3. Key Information—D. Risk Factors” entitled “Tanker vessel values may fluctuate due to economic and technological factors, which mayadversely affect our financial condition, or result in the incurrence of a loss upon disposal of a tanker vessel, impairment losses, or increases in the cost of acquiring additional tankervessels”. Carrying Value ofvessels; net book value,unamortized drydockcost and cost ofequipmentnot yet installed(in millions of USdollars) Vessel DWT Year Built AtDecember31, 2023 AtDecember31, 2022 1. Blue Moon 104,623 2011 25.4 27.1 2. Briolette 104,588 2011 25.3 26.9 3. P. Kikuma 115,915 2007 0.0 22.3 4. P. Yanbu 105,391 2011 18.8 19.9 5. P. Sophia 105,071 2009 25.2 26.9 6. P. Aliki 105,304 2010 34.0 36.3 7. P. Monterey 105,525 2011 32.9 35.0 8. P. Long Beach 105,408 2013 42.3 43.8 Total Carrying Value 203.9 238.2 Critical Accounting Estimates and Policies The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordancewith U.S. GAAP. The preparation of consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, revenuesand expenses and related disclosures of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates under differentassumptions and conditions. Critical accounting policies are those that reflect significant judgments of uncertainties and potentially result in materially different results under different assumptions andconditions. We have described below what we believe are our most critical accounting policies when we acquire and operate vessels, because they generally involve a comparativelyhigher degree of judgment in their application. For a description of all our significant accounting policies, see Note 2 to our consolidated financial statements included in this annualreport. 55Table of ContentsFair Value Measurements We follow the provisions of ASC 820 “Fair Value Measurements and Disclosures”, which defines fair value and provides guidance for using fair value to measure assets andliabilities. The guidance creates a fair value hierarchy of measurement and describes fair value as the price that would be received to sell an asset or paid to transfer a liability in anorderly transaction between market participants in the market in which the reporting entity transacts. In accordance with the requirements of accounting guidance relating to Fair ValueMeasurements, we classify and disclose our assets and liabilities carried at the fair value in one of the following categories: Level 1: Quoted market prices in active markets for identical assets or liabilities; Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data; Level 3: Unobservable inputs that are not corroborated by market data. The fair value measurement assumes that an instrument classified in the shareholders’ equity is transferred to a market participant at the measurement date. The transfer of aninstrument classified in shareholders’ equity assumes that the instrument would remain outstanding, and the market participant takes on the rights and responsibilities associated withthe instrument. The fair values of the Series B and Series C Preferred Shares at their issuance, as well as the fair value of the Series C Preferred Shares and of the Warrants that were assessedon the date of triggering of their down-round feature, were determined through Level 3 of the fair value hierarchy as defined in FASB guidance for Fair Value Measurements, as they arederived by using unobservable inputs. Determining the fair value of the equity instruments requires management to make judgments about the valuation methodologies, including theunobservable inputs and other assumptions and estimates, which are significant in the fair value measurement of the preferred stock. For the estimation of the fair values of the Series CPreferred Stock we used the Black & Scholes and the discounted cash flow model, as applicable, and we also used significant unobservable inputs which are sensitive in nature andsubject to uncertainty, such as expected volatility and expected life of convertibility option. Indicatively, the expected volatility used in our various valuations during the year for the fairvalue measurement of our Series C Preferred Stock fluctuated in a range from 86.83% to 118.14% from January 2023 to December 2023, depending, as applicable, on the expected life ofconvertibility option which fluctuated between 1 and 5 years in the non-recurring fair value measurements performed during the year. As part of the methodology used to estimate thefair values of these equity instruments, and specifically the value of the embedded convertibility option, which is perpetual in nature, the Company applied moneyness scenarios. Basedon these moneyness scenarios, it performed an analysis of the option deltas using different assumed expected life of the convertibility option (term) and equivalent (same term) historicalvolatilities of the Company’s stock price to determine the most appropriate term and volatility inputs for the Black & Scholes option pricing formula. The Company selected the mostappropriate term and volatility inputs based on these moneyness scenarios considering the probability that the option will be in the money and thus will be exercised. Therefore, thesignificant unobservable inputs of the fair value measurement, such as the expected life of the convertibility option (term) and (same term) historical volatility, are determined by applyingthe option moneyness scenarios and therefore are considered highly interdependent. For example, applying a higher volatility input without altering the expected life of the convertibilityoption (term) would increase the probability that the option will be exercised and would indicate that a shorter equivalent term should be applied to measure the fair value of theinstrument. On the other hand, applying a longer-term input without altering the volatility would increase the probability that the option will be exercised and would indicate that a lowervolatility should be applied to measure the fair value of the instrument. As such, the specific assumptions are deemed as complex in nature and highly sensitive, affecting the Company’searnings per share. Accounting for Revenues Since our vessels are employed under time charter contracts, voyage charters, and pool arrangements, we disaggregate our revenue from contracts with customers by the typeof charter (time charters, spot charters and pool arrangements). We have determined that all of our time charter agreements contain a lease and are therefore accounted for as operating leases in accordance with ASC 842. Time charterrevenues are accounted for over the term of the charter as the service is provided. Vessels are chartered when a contract exists, and the vessel is delivered (commencement date) to thecharterer, for a fixed period of time, at rates that are generally determined in the main body of charter parties and the relevant voyage expenses burden the charterer (i.e., port dues, canaltolls, pilotages, and fuel consumption). Upon delivery of the vessel, the charterer has the right to control the use of the vessel (under agreed prudent operating practices) as they havethe enforceable right to: (i) decide the delivery and redelivery time of the vessel; (ii) arrange the ports from which the vessel shall pass; (iii) give directions to the master of the vesselregarding vessel’s operations (i.e., speed, route, bunkers purchases, etc.); (iv) sub-charter the vessel and (v) consume any income deriving from the vessel’s charter. Any off-hires arerecognized as incurred. The charterer may charter the vessel with or without the owner’s crew and other operating services. In the case of time charter agreements, the agreed hire ratesinclude compensation for part of the agreed crew and other operating services provided by the owner (non-lease components). We, as a lessor, elected to apply the practical expedientwhich allowed us to account for the lease and the non-lease components of time charter agreements as one, as the criteria of the paragraphs ASC 842-10-15-42A through 42B are met. 56Table of ContentsSpot, or voyage, charter is a charter where a contract is made in the spot market for the use of a vessel for a specific voyage for a specified freight rate per ton, regardless of timeto complete. We have determined that under voyage charters, the charterer has no right to control any part of the use of the vessel. Thus, our voyage charters do not contain a lease andare accounted for in accordance with ASC 606. More precisely, we satisfy our single performance obligation to transfer cargo under the contract over the voyage period. Thus, revenuesfrom voyage charters on the spot market are recognized ratably from the date of loading (Notice of Readiness to the charterer, that the vessel is available for loading) to discharge date ofcargo (loading-to-discharge). Voyage charter payments are due upon discharge of the cargo. Demurrage revenue, which is included in voyage revenues, represents charterers’reimbursement for any potential delays exceeding the allowed lay time as per charter party agreement, represents a form of variable consideration and is recognized as the performanceobligation is satisfied. We have taken the practical expedient not to disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year orless. For vessels operating in pooling arrangements, we earn a portion of total revenues generated by the pool, net of expenses incurred by the pool. The amount allocated to eachpool participant vessel, including our vessels, is determined in accordance with an agreed-upon formula, which is determined by the margins awarded to each vessel in the pool based onthe vessel’s age, design and other performance characteristics. Revenue under pooling arrangements is accounted for as variable rate operating lease on the accrual basis and isrecognized in the period in which the variability is resolved. We recognize net pool revenue on a quarterly basis, when the vessel has participated in a pool during the period and theamount of pool revenue can be estimated reliably based on the pool report. The allocation of such net revenue may be subject to future adjustments by the pool, however, such changesare not expected to be material. Impairment of Long-lived Assets We follow ASC 360-10-40 “Impairment or Disposal of Long-Lived Assets”, which addresses financial accounting and reporting for the impairment or disposal of long-livedassets. We review vessels for impairment whenever events or changes in circumstances (such as market conditions, the economic outlook, technological, regulatory and environmentaldevelopments, obsolesce or damage to the asset, potential sales and other business plans) indicate that the carrying amount of a vessel plus her unamortized dry-dock costs and cost ofany equipment not yet installed may not be recoverable. When the estimate of future undiscounted net operating cash flows, excluding interest charges, expected to be generated by theuse of the vessel over her remaining useful life and her eventual disposition is less than her carrying amount plus unamortized dry-dock costs and cost of any equipment not yetinstalled, we evaluate the vessel for an impairment loss. The measurement of the impairment loss is based on the fair value of the vessel. We determine the fair value of our vessels basedon assumptions, by making use of available market data and taking into consideration third-party valuations. We evaluate the carrying amounts and periods over which vessels aredepreciated to determine if events have occurred which would require modification to their carrying values or useful lives. In evaluating useful lives and carrying values of long-livedassets, management reviews certain indicators of potential impairment, such as undiscounted projected operating cash flows, vessel sales and purchases, business plans, and overallmarket conditions. In developing estimates of future undiscounted cash flows, we make assumptions and estimates about the vessels’ future performance, with the significantassumptions being related to charter rates and fleet utilization, while other assumptions include vessels’ operating expenses, vessels’ residual value, dry-dock costs, and the estimatedremaining useful life of each vessel. The assumptions used to develop estimates of future undiscounted cash flows are based on historical trends as well as future expectations. We alsotake into account factors such as the vessels’ age and employment prospects under the then current market conditions, and determine the future undiscounted cash flows consideringits various alternatives, including sale possibilities existing for each vessel as of the testing dates. In detail, the projected net operating cash flows are determined by considering the historical and estimated vessels’ performance and utilization, as well as historical utilizationof other vessels of similar type and size considering our recent shift to the tanker market and the lack of extended historical data, the charter revenues from existing time charters for thefixed fleet days and an estimated daily rate for the unfixed days (based on the most recent 10 year average historical rates available for each type of vessel) over the remaining estimatedlife of each vessel, net of commissions, expected outflows for scheduled vessels’ maintenance and vessel operating expenses assuming an average annual inflation rate. Effective fleetutilization, which is estimated based on the vessels’ historical performance, is included in our exercise, taking into account the period(s) each vessel is expected to undergo herscheduled maintenance (dry docking and special surveys), assumptions in line with our historical performance since the acquisition of our tanker vessels, peers’ historical performance,and our expectations for future fleet utilization under our fleet employment strategy. For 2023 and 2022, we assessed that there were no indications for potential impairment of any of ourvessels. For 2021, the review of the tanker vessels’ carrying values plus unamortized dry-dock costs and cost of any equipment not yet installed, in connection with the estimatedrecoverable amounts did not result in a recognition of impairment charge. 57Table of ContentsRESULTS OF OPERATIONSYear ended December 31, 2023, compared to the year ended December 31, 2022Results of Operations For the Years Ended December 31, 2023 2022 variation % change in millions of U.S. dollars Revenue 108.9 75.2 33.7 44.8%Voyage expenses (4.4) (14.9) 10.5 (70.5)%Vessel operating expenses (21.9) (13.8) (8.1) 58.7%Depreciation and amortization of deferred charges (14.8) (9.3) (5.5) 59.1%General and administrative expenses (8.0) (6.7) (1.3) 19.4%Gain on vessels’ sale 15.7 9.5 6.2 65.3% Interest and finance costs (9.6) (4.0) (5.6) 140%Loss from debt extinguishment (0.4) 0.0 (0.4) - Interest income 3.3 0.3 3.0 1,000%Changes in fair value of warrants’ liability 0.6 0.0 0.6 - Net income / (loss) from continuing operations 69.4 36.3 33.1 91.2%Net Income / (Loss) from continuing operations. Net income from continuing operations for 2023 amounted to $69.4 million, compared to a net income of $36.3 million in 2022. Theincome of the year ended December 31, 2023, was mainly attributable to the increase in the size of the Company’s fleet as well as the improvement of the vessel’s utilization, and partiallyto increased revenues as a result of the recovery in the tanker market industry. Revenues. Revenues for 2023 amounted to $108.9 million, compared to $75.2 million in 2022. In 2023, revenues increased as a result of higher average time charter equivalent ratesachieved by the Company during the year. On average, the TCE’s achieved by our tanker vessels amounted to $36,954 in 2023 and $29,579 in 2022. Furthermore, the increase was furtherenhanced by the increase in fleet utilization, as well as the increase in operating days during 2023, following the increase of the average fleet during the year. Voyage Expenses. Voyage expenses for 2023 amounted to $4.4 million, compared to $14.9 million in 2022. Voyage expenses mainly consist of bunkers costs, port and canal expenses, andcommissions paid to third-party brokers. The decrease in voyage expenses in 2023 compared to 2022 was mainly attributable to the fact that our vessels operated primarily under timecharter agreements, whereby voyage expenses, such as bunkers and port costs, are borne by the charterers. Vessel Operating Expenses. Vessel operating expenses for 2023 amounted to $21.9 million, compared to $13.8 million in 2022, and mainly consist of crew wages and related costs,consumables and stores, insurances, repairs and maintenance costs, environmental compliance and other miscellaneous expenses. The increase in operating expenses is attributable tothe increase in all our operating expenses categories, and primarily in stores, spares and repairs costs associated with the repairs of our vessels that have undergone drydock during2023, and also to the increase in our ownership days. On an average basis, daily operating expenses for our vessels increased during the year ($7,537 in 2023, as compared to $6,683 in2022). Depreciation and Amortization of Deferred Charges. Depreciation and amortization of deferred charges in 2023 amounted to $14.8 million, compared to $9.3 million in 2022, and mainlyrepresent the depreciation expense and the amortization of the dry-dock costs for our vessels. The increase in 2023 is mainly attributable to the 40% increase in our ownership days. General and Administrative Expenses. General and administrative expenses for 2023 amounted to $8.0 million, compared to $6.7 million in 2022, and mainly consist of payroll expenses ofthe office employees, consultancy fees, brokerage services fees, compensation cost on restricted stock awards, legal fees and audit fees. The increase in general administrative expenseswas mainly attributable to the costs associated with the Sphinx lawsuit, and partially to the increase in our payroll costs. These increases were counterbalanced by a slight decrease inour D&O insurance costs, and lower board of directors’ fees and expenses. Gain on Vessel’s Sale. Gain on vessel’s sale for 2023 amounted to $15.7 million compared to $9.5 million in 2022 and relates to the gains from the disposal of the vessel P. Kikuma in 2023and the vessel P. Fos in 2022. Interest and Finance Costs. Interest and finance costs for 2023 amounted to $9.6 million, compared to $4.0 million in 2022. The increase in 2023 is attributable to the increase in our loaninterest rates, as our weighted average interest rate in 2023 was 7.60%, compared to 4.85% in 2022, and also to the increase in our average debt. Loss from Debt Extinguishment. Loss from debt extinguishment for 2023 amounted to $0.4 million and relates to the write off of the unamortized financing costs of our loans with PiraeusBank, which were fully repaid in 2023. Changes in Fair Value of Warrants’ Liability. Changes in fair value of warrant’s liability for 2023 amounted to $0.6 million and represent the subsequent changes in the fair values of ourSeries A Warrants, which were classified as non-current liabilities on our consolidated balance sheets. Interest Income. Interest income for 2023 and 2022 amounted to $3.3 million and $0.3 million respectively, and mainly consisted of interest income received on deposits of cash and cashequivalents. The increase in 2023 was due to the increase in the interest rates on our time deposits, and also the average increase in our placed time deposits. 58Table of ContentsYear ended December 31, 2022, compared to the year ended December 31, 2021 Please refer to our annual report on Form 20-F for the year ended December 31, 2022, as filed with the SEC on April 28, 2023. B.Liquidity and Capital Resources We have historically financed our capital requirements with cash flow from operations, equity contributions from shareholders, and long- and medium-term debt. Our operatingcash flow is generated from charters on our vessels, through our subsidiaries. Our main uses of funds have been capital expenditures for the acquisition of new vessels, expendituresincurred in connection with ensuring that our vessels comply with international and regulatory standards, repayments of loans, and payments of dividends. At times when we are notrestricted by our lenders from acquiring additional vessels, we will require capital to fund vessel acquisitions and debt service. During the COVD-19 pandemic, global financial markets, including financial markets in the U.S., experienced even greater relative volatility and a steep and abrupt downturn,which volatility and downturn may continue as COVID-19 continues to spread. More recently, the war in Ukraine and resulting sanctions have disrupted supply chains and causeinstability in the energy markets and the global economy, which have experienced significant volatility. Credit markets and the debt and equity capital markets have been distressed, andthe uncertainty surrounding the future of the global credit markets has resulted in reduced access to credit worldwide, particularly for the shipping industry. These issues, along withsignificant write-offs in the financial services sector, the repricing of credit risk, and the current weak economic conditions, have made, and will likely continue to make it difficult toobtain additional financing. The current state of global financial markets and current economic conditions might adversely impact our ability to issue additional equity at prices that willnot be dilutive to our existing shareholders or preclude us from issuing equity at all. As of December 31, 2023 and 2022, our working capital, which is current assets minus current liabilities, including the current portion of long-term debt, was $64.6 million and$27.4 million, respectively. Management monitors the Company’s liquidity position to ensure that it has access to sufficient funds to meet its forecasted cash requirements, includingdebt service commitments, and to monitor compliance with the financial covenants within its loan facilities. Our loan facilities require that we maintain a minimum liquidity balance(compensating cash balance) and a certain level of restricted cash throughout the life of the loans. Currently, and in the short- and long-term, our primary sources of funds are and areexpected to be available cash, cash from operations, proceeds from long-term debt and proceeds from equity offerings, or a combination of those. Our primary liquidity needs in theshort-and long-term are expected to include debt amortization, capital expenditures for the acquisition of new vessels, and the payment of preferred dividends. We believe that ourworking capital will be sufficient to meet our liquidity needs and to comply with our banking covenants for at least twelve months from the end of the period presented in the financialstatements included in this report, and that these sources of funds which we anticipate being available to us will be sufficient to meet our long-term liquidity needs. For the upcoming 12months, we are obligated to make debt amortization payments of $7.5 million in the aggregate under the terms of our existing loan facilities and dividends of $1.8 million in the aggregatewill accrue on our outstanding Series B Preferred Shares and Series C Preferred Shares, assuming that the number of our Series B Preferred Shares and Series C Preferred Shares remainedunaltered, and that such dividends were paid in cash. Installment payments under the shipbuilding contracts we entered into on March 7, 2023 and December 18, 2023 are tied to specificconstruction milestones, the timing of which is uncertain. With respect to the shipbuilding contract entered into in March 2023, in April 2023, we paid the first installment of $9.5 million,and 10% of the purchase price is payable at each of the milestones of steel cutting, keel laying and launching of the vessel, and the remaining 55% of the purchase price is payable uponthe vessel’s delivery. With respect to the two shipbuilding contracts entered into in December 2023, in January 2024, we paid the first installment of the purchase price in the amount of$9.7 million for each of the newbuildings; 10% of the purchase price is payable at each of the milestones of steel cutting, keel laying, and launching of the vessels, and the remaining 55%of the purchase price is payable upon the delivery of the vessels. For additional information on the amortization of our long-term debt obligations, see “- Loan Facilities.” For informationon our future capital expenditures, see “- Capital Expenditures.” In order to meet our liquidity needs, we may enter into new debt facilities in the future, as well as equity or debtinstruments, although there can be no assurance that we will be able to obtain additional debt or equity financing on terms acceptable to us, which will also depend on financial,commercial and other factors, as well as a significant recovery in capital market conditions and a sustainable improvement in the tankers’ charter market, that are beyond our control. Cash Flow As of December 31, 2023, cash and cash equivalents amounted to $68.3 million (including restricted cash of $1.0 million and compensating cash balances of $10.0 million),compared to $39.7 million (including compensating cash balances of $10.5 million) for the prior year. We consider highly liquid investments such as time deposits and certificates ofdeposit with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents are primarily held in U.S. dollars. Net Cash Provided by / (Used in) Operating Activities Net cash provided by operating activities in 2023 amounted to $68.0 million. Net cash provided by operating activities in 2022 amounted to $33.8 million. Net cash used inoperating activities in 2021 amounted to $3.1 million. Cash from operations in 2023 increased compared to 2022, mainly due to the higher revenues generated during 2023 as a result of therecovery market conditions in the tankers’ shipping industry which are depicted in the higher time charter equivalent (“TCE”) achieved by the Company, as compared to 2022. Cash fromoperations in 2022 increased compared to 2021, mainly due to the higher revenues generated during 2022 as a result of the stronger market conditions in the tankers’ shipping industry. 59Table of ContentsNet Cash Provided by/ (Used in) Investing Activities Net cash provided by investing activities in 2023 was $25.7 million and consists of $37.6 million net proceeds received from the sale of one Aframax tanker vessel during theyear, $11.3 million that we paid as advances and other capitalized costs for our newbuildings, $0.1 million that we paid for vessel acquisitions, $0.5 million that we paid for vessels’improvement costs mainly relating to the installation of the ballast water treatment system on certain of our vessels, and $38 thousand we paid for equipment additions. Net cash used in investing activities in 2022 was $113.0 million and consists of $2.1 million we paid for vessels’ improvement costs mainly relating to the installation of theballast water treatment system on certain of our vessels, $143.4 million that we paid for the acquisition of four tanker vessels, $32.6 million net proceeds received from the sale of oneAframax tanker vessel during the year, and $27 thousand we paid for equipment additions. Net cash used in investing activities in 2021 was $0.8 million and consists of $1.8 million we paid for vessels’ improvement costs mainly relating to the installation of the ballastwater treatment system on certain of our vessels, $1.0 million we received from the sale of a plot of land located in Athens, Greece to a subsidiary of Diana Shipping Inc., and $8thousand we paid for equipment additions. Net Cash Provided by / (Used in) Financing Activities Net cash used in financing activities from continuing operations in 2023 was $65.1 million and consists of $75.4 million of bank loan repayments, $2.1 million of bank loanproceeds, $11.4 million net proceeds from the issuance of units, common shares and warrants, $0.3 million proceeds from the exercise of warrants, $0.5 million proceeds from the issuanceof preferred shares, $0.7 million net proceeds from the issuance of common shares under our ATM program, $2.8 million that we paid for the repurchase of our common shares and $1.9million that we paid as cash dividends to our preferred shareholders. Net cash provided by financing activities from continuing operations in 2022 was $109.3 million and consists of $5 million of related parties loans proceeds, $108.6 million ofbank loan proceeds, $70 thousands of repayments of related party loans, $30.3 million of bank loan repayments, $26.1 million proceeds from issuance of common shares, $1.8 millionproceed from issuance of common shares under our ATM program, $0.9 million that we paid for the repurchase of our common shares and $0.9 million that we paid as cash dividends toour shareholders. Net cash used in financing activities from continuing operations in 2021 was $7.9 million and related solely to principal repayments of our long-term bank debt (continuingoperations). Loan Facilities As of December 31, 2023, we had $55.2 million of long-term debt outstanding under our bank loan facilities. As of March 26, 2024, we had $53.3 million aggregate amount ofindebtedness outstanding under our bank loan facilities. As of December 31, 2023, and the date of this report, we have not used any derivative instruments for hedging purposes or other purposes. Our loans are repayable in quarterly installments plus one balloon installment per loan agreement to be paid together with the last installment, and currently bear variableinterest at SOFR plus a fixed margin ranging from 2.35% to 2.60%. Their maturities fall due from November 2027 to August 2028. As of December 31, 2023, all our loans were collateralizedby four out of our seven tanker vessels. For a description of our loan facilities, please see Note 7 to our annual consolidated financial statements included elsewhere in this annualreport. Nordea Bank Abp, Filial i Norge (Nordea): On July 24, 2019, we, through two of our wholly owned subsidiaries (the “Initial Borrowers”), entered into a loan agreement with Nordea for a senior secured term loan facility ofup to $33.0 million (as amended from time to time, the “Nordea Facility”). The purpose of the loan facility was to partially finance the acquisition cost of the tanker vessels Blue Moonand Briolette. In July and November 2019, the Initial Borrowers drew down the maximum amount of $16.5 million each. On December 23, 2019, we, through the “Initial Borrowers” and one new wholly owned subsidiary (collectively “the Borrowers”), entered into the first amendment andrestatement loan agreement with Nordea for a senior secured term loan facility of up to $47.0 million. The purpose of the amended agreement was to provide additional financing of up to$14.0 million for the acquisition of the tanker vessel P. Fos, and in all other respects included identical terms to the initial agreement of July 2019. On January 22, 2020, we drew down theamount of $14.0 million to support the acquisition of the vessel P. Fos, whose delivery took place on January 27, 2020. On March 20, 2020, we signed the second amendment and restatement loan agreement with Nordea for a senior secured term loan facility of up to $59.0 million. The purpose ofthe second amendment and restatement loan agreement was to provide additional financing of up to $12.0 million for the acquisition of the tanker vessel P. Kikuma (ex FSL Shanghai),and in all other respects included identical terms to the prior agreement of December 2019. On March 26, 2020, we drew down the amount of $12.0 million. The vessel P. Kikuma wasdelivered to us on March 30, 2020. 60Table of ContentsOn December 9, 2020, we refinanced the outstanding indebtedness relating to the vessels P. Fos and P. Kikuma in the aggregate amount of $21.2 million using a portion of theproceeds from the Piraeus Facility (described below). Concurrently, we entered into a Supplemental Loan Agreement with Nordea, to amend the existing repayment schedules of the BlueMoon and Briolette tranches and to amend the major shareholder’s clause included in the agreement. The First and Second Amendment and Restatement Loan Agreements, and theSupplemental Loan Agreement with Nordea included substantially identical terms to the Initial Agreement. In November 2021, Nordea provided their consent for a reduction of our minimum liquidity requirement from $9.0 million to $5.0 million, with an effective date December 31, 2021through June 30, 2022, and effective July 1, 2022, the respective clause was reinstated to its initial requirements. On August 7, 2023, we refinanced the Nordea Facility, which at that time had an outstanding balance (including interest) of $17.9 million, by entering into an agreement for aRevolving Credit Facility (the “Nordea RCF”) in an amount not exceeding $20.0 million at any one time with Nordea, through certain wholly-owned subsidiaries. As such, we drew downan amount of $2.1 million, which is reflected line item “Proceeds from Long-term bank debt” in the accompanying consolidated statements of cash flows. The Nordea RCF matures in 5years from the signing date of the agreement. As of December 31, 2023, the outstanding balance on the Nordea RCF was $19.2 million, while there was no amount outstanding under the Nordea Facility. Piraeus Bank S.A.: In June 2022, we, through our vessel-owning subsidiaries of the vessels “P. Sophia” and “P. Yanbu”, entered into a loan agreement with Piraeus Bank S.A. (“Piraeus Bank”) for asenior secured term loan facility of up to $31.9 million. The purpose of this facility was to finance the acquisition of “P. Sophia” by up to $24.6 million and refinance the then- existingindebtedness of $7.3 million of the vessel “P. Yanbu”. The Company utilized the full amount of $31.9 million in July 2022. In November 2022, we, through our vessel-owning subsidiaries of the vessels “P. Monterey” and “P. Kikuma”, entered into a new loan agreement with Piraeus Bank for a seniorsecured term loan facility of up to $37.4 million. The purpose of this facility was to finance the acquisition of “P. Monterey” by up to $29.6 million and refinance the then-existingindebtedness of $7.8 million of the vessel “P. Kikuma.” We utilized an amount of $36.5 million in November 2022. In November 2021, Piraeus Bank provided their consent for a reduction of our minimum liquidity requirement from $9.0 million to $5.0 million, with an effective date December 31,2021 through September 30, 2022, and effective October 1, 2022, the respective clause was reinstated to its initial requirements. On December 18, 2023, we completed the approximately $44.6 million voluntary prepayment of all of our existing loans with Piraeus Bank S.A. and released the security over ourvessels P. Monterey, P. Yanbu and P. Sophia. The prepayment was completed through the deployment of our excess liquidity. In light of the prepayments, as of December 31, 2023, noamounts are outstanding under the Piraeus Bank loans. Alpha Bank S.A.: In November 2022, we, through our vessel-owning subsidiary of the vessel “P. Aliki” signed a loan agreement with Alpha Bank S.A (“Alpha Bank”), to support the acquisitionof the vessel by providing a secured term loan of up to $18.3 million. The maximum loan amount was drawn down upon the vessel’s delivery to us in November 2022. As of December 31,2023, the outstanding balance on the Alpha Bank Facility for “P. Aliki” was $16.3 million. In December 2022, we, through our vessel-owning subsidiary of the vessel “P. Long Beach” signed a loan agreement with Alpha Bank S.A, to support the acquisition of thevessel by providing a secured term loan of up to $22.0 million. The maximum loan amount was drawn down upon the vessel’s delivery to us in December 2022. As of December 31, 2023,the outstanding balance on the Alpha Bank Facility for “P. Long Beach” was $19.8 million. Mango Shipping Corp.: On March 2, 2022, we entered into an unsecured credit facility with Mango Shipping Corp., an affiliated entity whose beneficial owner is Aliki Paliou, for up to $5.0 million, to beused for general working capital purposes. The loan had a term of one year from the date of the agreement, bore interest of 9.0% per annum, and was drawn in arrears at our request. Theagreement also provided for arrangement fees of $0.2 million payable on the date of the agreement, and commitment fees of 3.00% per annum on any undrawn amount until the maturitydate. We drew down the $5.0 million loan amount in two advances in March 2022. On October 17, 2022, we entered into a stock purchase agreement with Mango pursuant to which we agreed to issue to Mango in a private placement 1,314,792 Series CPreferred Stock in exchange for (i) all 657,396 Series B Preferred Shares held then by Mango, and (ii) the agreement by Mango to apply $4.9 million (an amount equal to the aggregatecash conversion price payable upon conversion of such Series B Preferred Shares into Series C Preferred Shares pursuant to their terms) as a prepayment by us of the unsecured creditfacility. The transaction was approved by a special independent committee of our board of directors. On October 19, 2022, we repaid the remaining amounts due of $70, together withaccrued interest, and terminated the credit facility. Covenants and Security Our loan facilities have financial covenants, which require us to maintain, among other things: 61Table of Contents•Minimum hull value of the financed vessels. •Minimum cash liquidity. As of December 31, 2023 and 2022, the maximum compensating cash balance required under our loan agreements amounted to $10.0 million and$10.5 million, respectively. Our loan facilities also contain undertakings limiting or restricting us from, among other things: •Effecting dividend distributions following the occurrence of an event of default. •Effecting certain changes in shareholdings. Our secured loan facilities are generally secured by, among other things: •A parent guarantee by Performance Shipping Inc. •First priority mortgages over the financed tanker vessels. •First priority assignments of earnings, insurances and of any charters exceeding durations of two years. •Pledge over the borrowers’ shares and over their earnings accounts. •Undertakings by the vessels’ managers. As of December 31, 2023, and the date of this report, we were in compliance with all of our loan covenants. Capital Expenditures Our future capital expenditures relate to the purchase of vessels, building of vessels and vessel upgrades. Our primary sources of funds will be available cash, cash fromoperations, proceeds from long-term debt and equity contributions from shareholders, or a combination of those. On March 7, 2023, we entered into a shipbuilding contract with China Shipbuilding Trading Company Limited and Shanghai Waigaoqiao Shipbuilding Company Limited for theconstruction of a product/crude oil tanker of approximately 114,000 dwt. The newbuilding (H1515) has a gross contract price of $63.3 million and we expect to take delivery of it by theend of October 2025. The purchase price of the newbuilding will be paid in five instalments, with the first one at $9.5 million, the second, third and fourth at $6.3 million each, and the finalinstalment for the balance of the amount or $34.9 million. On December 18, 2023, we entered into two shipbuilding contracts with China Shipbuilding Trading Co. Ltd. and Shanghai Waigaoqiao Shipbuilding Co. Ltd. for theconstruction of two 114,000 DWT LNG-ready LR2 Aframax product/crude oil tanker vessels, at a gross purchase price of $64.8 million per vessel. The two vessels are expected to bedelivered in January and April of 2026. The purchase price for each newbuilding will be paid in instalments as follows: 15% of the purchase price was payable upon receipt of a refundguarantee and was paid by the Company on January 30, 2024; 10% of the purchase price is payable at each of the milestones of steel cutting, keel laying, and launching of the vessels,and the remaining 55% of the purchase price is payable upon the delivery of the vessels. We also expect to incur additional capital expenditures when our vessels undergo surveys. This process of recertification may require us to reposition these vessels from adischarge port to shipyard facilities, which will reduce our operating days during the period. The loss of earnings associated with the decrease in operating days, together with thecapital needs for repairs and upgrades results in increased cash flow needs which we fund with cash on hand. C.Research and Development, Patents and Licenses From time to time, we incur expenditures relating to inspections for acquiring new vessels that meet our standards. Such expenditures are capitalized to vessel’s cost upon suchvessel’s acquisition or expensed, if the vessel is not acquired, however, historically, such expenses were not material. D.Trend Information Tanker Shipping Market Global crude oil demand increased by 2.3% in 2023 supported by the global need for crude oil restocking and is currently projected to rise by 1.5% in 2024 (102.8 million barrelsper day). ‘Headline’ fundamentals across the crude oil tanker sector currently appear positive for 2024, as crude tanker dwt demand is projected to grow by 3.4% while the crude tankerfleet is projected to grow marginally by 0.2%. With respect to the Aframax tanker segment, which is the market in which we operate, crude Aframax dwt demand is currently projected toincrease by 2.3% in 2024 supported by recovering crude oil demand from China and other developing regions in Asia. Geopolitical events, such as the ongoing conflict between Russiaand Ukraine and the reported missile attacks to vessels operating in the Red Sea area have had a positive impact on ton mile demand growth as in both cases the disruptions haveresulted in significant shifts in crude oil trade patterns towards longer-haul destinations, thus supporting tanker charter rates and ton-mile demand. Nevertheless, the longer-term impactof the geopolitical crisis in the tanker markets remains a challenging factor which remains to be seen. 62Table of ContentsAccording to industry sources, the average spot earnings for an Aframax tanker trading on selected routes (e.g., Intra-Asia, Med-Med, Black Sea-Med and others) in 2023 was adaily TCE rate of $56,287. This compares to an estimated daily TCE rate of $55,967 in 2022. Specifically, in the Aframax crude oil tanker segment it is expected that the trading Aframax crude tanker fleet will grow by just 1.0% in 2024, while demand for transportation viacrude Aframax tankers will rise by 2.3% in the same period. The above market outlook update is based on information, data and estimates derived from industry sources, and there can be no assurances that such trends will continue orthat anticipated developments in tanker demand, fleet supply or other market indicators will materialize. While we believe the market and industry information included in this report to begenerally reliable, we have not independently verified any third-party information or verified that more recent information is not available. The statements in this “Trend Information”section are forward-looking statements based on our current expectations and certain material assumptions and, accordingly, involve risks and uncertainties that could cause actualresults, performance and outcomes to differ materially from those expressed herein. Impact of War in Ukraine and other global conflicts Furthermore, the ongoing war between Russia and the Ukraine has amplified volatility in the tanker market, disrupting supply chains and causing instability in the globaleconomy. The United States and the European Union, among other countries, announced sanctions against Russia, including sanctions targeting the Russian oil sector, among those aprohibition on the import of oil from Russia to the United States. The ongoing conflict in Ukraine could result in the imposition of further economic sanctions against Russia and givenRussia’s role as a major global exporter of crude oil, the Company’s business may be adversely impacted. Currently, none of the Company’s contracts have been affected by the events inRussia and Ukraine. In the short term, the effect of the invasion of Ukraine has been positive for the tanker market, yet the overall longer term effect on ton-mile demand is uncertaingiven that cargoes exported previously from Russia will need to be substituted by cargoes from different sources due to the oil and oil products embargo enacted by the United States,the European Union and the United Kingdom. As of December 31, 2023, and during the year ended December 31, 2023, the Company’s financial results have not been adversely affectedfrom the impact of war between Russia and Ukraine. However, it is possible that in the future third parties with whom the Company has or will have contracts may be impacted by suchevents. While in general much uncertainty remains regarding the global impact of the conflict in Ukraine, it is possible that such tensions could adversely affect the Company’s business,financial condition, results of operation and cash flows. Following the outbreak of the 2023 Israel–Hamas war, missile attacks by the Houthis have been reported on vessels passing off Yemen’s coast in the Red Sea in December 2023.This has caused several vessels to divert via the Cape of Good Hope in South Africa, in order to avoid transiting the Red Sea. The initial effect of Red Sea tensions on the tanker markethas been positive for the tanker market as the longer route via Cape of Good Hope is absorbing more vessels, thereby reducing supply. Looking forward, it is impossible to predict thecourse of this conflict and whether there would be any serious escalation emanating from the current state of affairs. Similar to the war in Ukraine, we believe that a generalized conflictinvolving several Middle Eastern nations would possibly result in higher inflation and possibly slower economic growth, which could potentially have an adverse effect on the demandfor crude oil and petroleum products. To the extent that Red Sea tensions remain contained to the region, the effects on the tanker market could be similar to what we have seen so far.Apart from the effect on the tanker market, the current situation presents a significant safety hazard for all vessels transiting the Red Sea, and could ultimately potentially result in heavydamage being sustained due to successful missile strikes.Impact of Inflation and Interest Rate Increases Also, we see near-term impacts on our business due to elevated inflation in the United States of America, Eurozone and other countries, including ongoing global pricespressures in the wake of the war in Ukraine, political unrest and conflicts in the Middle East, driving up energy prices, commodity prices, which continue to have a moderate effect on ouroperating expenses. Interest rates have increased rapidly and substantially as central banks in developed countries raise interest rates in an effort to subdue inflation. The eventualimplications of tighter monetary policy, and potentially higher long-term interest rates may drive a higher cost of capital for our business. E.Critical Accounting Estimates For a description of all our principal accounting policies, see Note 2 to our annual consolidated financial statements included elsewhere in this annual report, and for our criticalaccounting estimates, see the paragraph under “Item 5. Operating and Financial Review and Prospects—A. Operating Results” entitled “Critical Accounting Estimates and Policies”discussed above. Item 6.Directors, Senior Management, and Employees A.Directors and Senior Management Set forth below are the names, ages, and positions of our directors and executive officers. Our board of directors is elected annually on a staggered basis, and each directorelected holds office for a three-year term and until his or her successor is elected and has qualified, except in the event of such director’s death, resignation, removal, or the earliertermination of his or her term of office. Officers are appointed from time to time by our board of directors and hold office until a successor is elected. 63Table of ContentsEffective February 28, 2022, Antonios Karavias and Reidar Brekke resigned from our board of directors. Also, effective February 28, 2022, the size of our board of directorsdecreased from seven to five members, and Aliki Paliou was appointed as Chairperson of our board of directors. On February 28, 2022, the election of Loïsa Ranunkel as a Class I Directorand elections of Alex Papageorgiou and Mihalis Boutaris as Class III Directors were approved by the requisite vote at our 2022 Annual Meeting. Symeon Palios, Giannakis (John)Evangelou, Christos Glavanis did not stand for re-election. On February 22, 2023, the re-election of Andreas Michalopoulos and Loïsa Ranunkel, each as a Class I director was approved by the requisite vote at our 2023 Annual Meeting. NameAgePositionAndreas Michalopoulos52Class I Director, Chief Executive Officer and SecretaryLoïsa Ranunkel46Class I DirectorAliki Paliou48Class II Director and Chairperson of the BoardAlex Papageorgiou52Class III DirectorMihalis Boutaris49Class III DirectorAnthony Argyropoulos59Chief Financial OfficerThe term of the Class I directors expires in 2026, the term of the Class II directors expires in 2024, and the term of the Class III directors expires in 2025. The business address of each officer and director is the address of our principal executive offices, which are located at 373 Syngrou Avenue, 175 64 Palaio Faliro, Athens,Greece. Biographical information concerning the directors and executive officers as of the date of this annual report is set forth below. Andreas Michalopoulos has served as the Chief Executive Officer of Performance Shipping Inc. since October 2020 and as a Director since February 2020. From October 2019 toOctober 2020, he served as our Deputy Chief Executive Officer. From January 13, 2010, to October 2020, he also served as our Chief Financial Officer. Andreas Michalopoulos served asChief Financial Officer and Treasurer of Diana Shipping Inc. from March 2006 to February 2020, and he also served as a Director of Diana Shipping Inc. from August 2018 to February2020. He started his career in 1993 when he joined Merrill Lynch Private Banking in Paris. In 1995, he became an International Corporate Auditor with Nestle SA based in Vevey,Switzerland and moved in 1998 to the position of Trade Marketing and Merchandising Manager. From 2000 to 2002, he worked for McKinsey and Company in Paris, France as anAssociate Generalist Consultant before joining a major Greek Pharmaceutical Group with U.S. R&D activity as a Vice President of International Business Development and Member of theExecutive Committee in 2002 where he remained until 2005. From 2005 to 2006, he joined Diana Shipping Agencies S.A. as a Project Manager. Andreas Michalopoulos graduated fromParis IX Dauphine University with Honors in 1993 obtaining an MSc in Economics and a master’s degree in Management Sciences specialized in Finance. In 1995, he also obtained amaster’s degree in Business Administration from Imperial College, University of London. Andreas Michalopoulos is married to Aliki Paliou, who is also one of our Directors and currentChairperson of our Board. Loïsa Ranunkel has served as an independent Director of the Company and as the Chairman of our Compensation Committee since the 2022 annual meeting of shareholders.She is an experienced insurance broker specializing in Trade Credit and Political Risks. Since 2018, she has been involved in overseeing the creation and the development of the PoliticalRisks Insurance (PRI) department at AU Group in Paris, a historical and world-leading broker specializing in securing and financing trade receivables. From 2014 to 2018, she worked as acertified Political and Trade Credit Risks Insurance Broker in Greece with clients based in Greece and abroad, focusing on the construction industry, defense industry, renewableenergies, and shipbuilding. Loïsa Ranunkel began her career in the PRI market in 2006, when she was appointed manager of the Alcatel-Lucent global Political and Commercial Risksprogram. Before entering the PRI market, she worked at HSBC Investment Bank as an information and communication expert and spent six years as a business development officer atEgis Group - BDPA, a consulting firm specializing in international development assistance. Loïsa Ranunkel holds an MBA from the IAE - Paris Sorbonne. Aliki Paliou has served as a Director since February 2020 and as Chairperson of our Board as of the 2022 annual meeting of shareholders. She also serves as Director, Vice-President and Treasurer of Unitized Ocean Transport Limited since January 2020. From 2010 to 2015 she was employed as a Director and Treasurer of Alpha Sigma Shipping Corp. AlikiPaliou studied Theatre Studies at the University of Kent in Canterbury, UK and obtained an M.A. in Scenography at Central Saint Martins School of Art and Design in London, UK. In2005 she graduated with honors from the Greek School of Fine Art in Athens, Greece. She is married to Andreas Michalopoulos, our current Chief Executive Officer, Director andSecretary. 64Table of ContentsAlex Papageorgiou has served as an independent Director of the Company and as the Chairman of our Audit Committee since the 2022 annual meeting of shareholders. He hasover 25 years of experience in banking, capital markets, real estate, and shipping. Alex Papageorgiou previously served as the Chief Executive Officer of Hystead Limited, a retail realestate company with over Euro 750 million in shopping mall assets located throughout Southeast Europe. He was also the founder and Chief Executive Officer of Assos Capital Limited, areal estate private equity firm focused on real estate in Southeast Europe, as well as Assos Property Management EOOD, a leading retail property management company in Bulgaria. Heserved as a Director of Seanergy Maritime Corp. (now Seanergy Maritime Holdings Corp.) from December 2008 to November 2009. From 2007 to 2008, he served as a non-executiveDirector at First Business Bank in Athens, Greece. Between March 2005 and May 2006, he was the chief financial officer of Golden Energy Marine Corp., an international shippingcompany transporting a variety of crude oil and petroleum products based in Athens, Greece. From March 2004 to March 2005, Alex Papageorgiou served as a director in the equitiesgroup in the London office of Citigroup Global Markets Inc., where he was responsible for the management and development of Citigroup’s Portfolio Products business in the Nordicregion. From March 2001 to March 2004, Alex Papageorgiou served as a vice president in the equities group in the London office of Morgan Stanley & Co., where he was responsible forPortfolio Product sales and sales-trading coverage for the Nordic region and the Dutch institutional client base. From April 1997 to March 2001, he was an associate at J.P. MorganSecurities Ltd. in the Fixed Income and Investment Banking divisions. Alex Papageorgiou holds an MSC in Shipping, Trade and Finance from City University Business School inLondon, UK and a BA (Hons) in Business Economics from Vrije Universiteit in Brussels, Belgium. Mihalis Boutaris serves as an independent Director of the Company, as a member of our Audit Committee, and as a member of our Compensation Committee as of the 2022annual meeting of shareholders. He is the founder and director of Athroa Innovations, an early-stage investor & operator of ventures tackling human & planetary health challenges. Hehas served as an advisor to the National Centre of Scientific Research “Demokritos” having a track record of cross-border partnerships to bring to market novel technologies includingan eco-friendly biopesticide, a small hydroelectric power plant, and the first concentrated solar power plant in Greece. Mr. Boutaris is a fifth-generation winemaker and Vice-President ofKir-Yianni with wine apprenticeships in California, Chile, and France. Based in Shanghai, he established Domaine XiGu, one of the pioneering wineries in China producing fine wine,while developing an exports network for Greek wine in Asia Pacific. He began his career at the Boston Consulting Group after graduating with a BA in philosophy from Harvard and aMSc in horticulture from UCDavis. He has served in the Greek Marine Corps and co-founded Arcturos, a prominent wildlife NGO. Anthony Argyropoulos has served as our Chief Financial Officer since October 2020. Anthony Argyropoulos is the founder of Seaborne Capital Advisors, an Athens, Greecebased financial advisory firm focused on the shipping and maritime industries. Prior to Seaborne Capital Advisors, Anthony Argyropoulos was a Partner at Cantor Fitzgerald & Co. untilSeptember 2011, where he was responsible for the investment banking group’s activities in the maritime sector. Through early 2004, he was a Senior Vice President with Jefferies &Company, Inc., where he was instrumental in developing their maritime investment banking practice. Anthony Argyropoulos graduated from Deree College, Athens, with a B.A. inEconomics and from Bentley College, Waltham, Mass. with an M.B.A. in Finance. He is a member of the Beta Gamma Sigma honor society of collegiate schools of business. He is afrequent speaker in global shipping events, contributor to several publications and recipient of a number of awards. As a foreign private issuer listed on the Nasdaq Capital Market, we are required to disclose certain self-identified diversity characteristics about our directors pursuant toNasdaq board diversity and disclosure rules approved by the SEC in August 2021. The Board Diversity Matrix set forth below contains the requisite information as of the date of thisannual report.Board Diversity Matrix (As of March 26, 2024)To be completed by Foreign Issuers (with principal executive offices outside of the U.S.) and Foreign Private IssuersCountry of Principal Executive OfficesGreeceForeign Private IssuerYesDisclosure Prohibited under Home CountryLawNoTotal Number of Directors5 FemaleMaleNon-BinaryDid Not DiscloseGenderPart I: Gender IdentityDirectors2300Part II: Demographic BackgroundUnderrepresented Individual in Home CountryJurisdiction0LGBTQ+0Did Not Disclose Demographic Background0B.Compensation Effective March 1, 2020, our senior management is remunerated based on their consultancy or employment agreements, as applicable. Pursuant to the consultancy agreementwe have in place with Anthony Argyropoulos, our Chief Financial Officer, we have agreed to pay Anthony Argyropoulos additional cash compensation in the amount of 0.35%, andretroactively from September 2021 in the amount of 0.50%, of the consideration paid or received by us in connection with certain capital raising and other transactions. For 2023, the aggregate fees and bonuses of our executive officers amounted to $2.0 million. 65Table of ContentsDuring 2023, our non-executive directors received annual compensation in the aggregate amount of $30,000 plus reimbursement of their out-of-pocket expenses incurred whileattending any meeting of the board of directors or any board committee, and the chairperson of the board received annual compensation of $60,000. In addition, a committee chairmanreceived an additional $10,000 annually, and other committee members received an additional $5,000 annually. In addition, on October 12, 2023, a special committee was formed inconnection with the tender offer commenced by Sphinx Investments Corp. and any related matters, the members of which will receive $10,000 annually and the chairman $20,000 annually.We do not have a retirement plan for our officers or directors. For 2023, fees, bonuses and expenses to non-executive directors amounted to $0.2 million. On January 1, 2021, we granted to Anthony Argyropoulos, our Chief Financial Officer, stock options to purchase 8,000 of our common shares as share-based remuneration,which can be exercised only when our stock price increases. The stock options are exercisable at a price range between $150.00 and $450.00 per share, for a term of five years. As ofDecember 31, 2023, and as of the date of this annual report, no stock options have been exercised. In 2023, compensation costs relating to the aggregate amount of stock option awards amounted to $Nil. In addition, in 2023, compensation costs relating to restricted stockawards that were issued in prior years were $0.1 million. 2015 Equity Incentive Plan On May 5, 2015, we adopted an equity incentive plan, which we refer to as the 2015 Equity Incentive Plan, as amended from time to time, under which directors, officers,employees, consultants and service providers of us and our subsidiaries and affiliates would be eligible to receive options to acquire common shares, stock appreciation rights, restrictedstock, restricted stock units and unrestricted common shares. On February 9, 2018, our board of directors adopted Amendment No 1 to the 2015 Equity Incentive Plan, solely to increasethe aggregate number of common shares issuable under the plan to 3,666 shares (as adjusted after the effectiveness of the reverse stock splits of November 2, 2020 and of November 15,2022). Effective December 30, 2020, we amended and restated the 2015 Equity Incentive Plan, primarily to increase the aggregate number of common shares issuable under the plan to35,922 (as adjusted after the effectiveness of the reverse stock split of November 15, 2022), and to extend the term. The plan will expire ten years from its date of adoption (as amendedand restated) unless terminated earlier by our board of directors. During the year ended December 31, 2020, we issued 4,481 restricted shares (as adjusted after the effectiveness of thereverse stock split of November 15, 2022) under the plan to our executive officers and non-executive directors. On January 1, 2021, we granted to our Chief Financial Officer stock optionsto purchase 8,000 (as adjusted after the effectiveness of the reverse stock split of November 15, 2022) of our common shares as share-based remuneration which can be exercised onlywhen our stock price increases. The stock options are exercisable at a price range between $150.00 and $450.00 per share, for a term of five years. The 2015 Equity Incentive Plan is administered by our compensation committee, or such other committee of our board of directors as may be designated by the board toadminister the plan. Under the terms of the 2015 Equity Incentive Plan, stock options and stock appreciation rights granted under the plan will have an exercise price per common share equal to themarket value of a common share on the date of grant, unless otherwise specifically provided in an award agreement, but in no event will the exercise price be less than the greater of (i)the market value of a common share on the date of grant and (ii) the par value of one common share. Options and stock appreciation rights will be exercisable at times and underconditions as determined by the plan administrator, but in no event will they be exercisable later than ten years from the date of grant. The plan administrator may grant shares of restricted stock and awards of restricted stock units subject to vesting and forfeiture provisions and other terms and conditions asdetermined by the plan administrator in accordance with the terms of the plan. Following the vesting of a restricted stock unit, the award recipient will be paid an amount equal to thenumber of restricted stock units that then vest multiplied by the market value of a common share on the date of vesting, which payment may be paid in the form of cash or commonshares or a combination of both, as determined by the plan administrator. The plan administrator may grant dividend equivalents with respect to grants of restricted stock units. Adjustments may be made to outstanding awards in the event of a corporate transaction or change in capitalization or other extraordinary event. In the event of a “change incontrol” (as defined in the plan), unless otherwise provided by the plan administrator in an award agreement, awards then outstanding will become fully vested and exercisable in full. Our board of directors may amend the plan and may amend outstanding awards issued pursuant to the plan, provided that no such amendment may be made that wouldmaterially impair any rights, or materially increase any obligations, of a grantee under an outstanding award without the consent of such grantee. Shareholder approval of planamendments will be required under certain circumstances. The plan administrator may cancel any award and amend any outstanding award agreement, except no such amendment shallbe made without shareholder approval if such approval is necessary to comply with any tax or regulatory requirement applicable to the outstanding award. C.Board Practices Actions by our Board of Directors Our amended and restated bylaws provide that vessel acquisitions and disposals from or to a related party and long term time charter employment with any charterer that is arelated party will require the unanimous approval of the independent members of our board of directors and that all other material related party transactions shall be subject to theapproval of a majority of the independent members of the board of directors. 66Table of ContentsCommittees of our Board of Directors Our Audit Committee, comprised of two members of our board of directors, is responsible for reviewing our accounting controls, recommending to the board of directors theengagement of our independent auditors, and pre-approving audit and audit-related services and fees. Each member has been determined by our board of directors to be “independent”under Nasdaq rules and the rules and regulations of the SEC. As directed by its written charter, the Audit Committee is responsible for reviewing all related party transactions forpotential conflicts of interest and all related party transactions are subject to the approval of the Audit Committee. Until February 2022, John Evangelou served as Chairman andpotential conflicts of interest and all related party transactions are subject to the approval of the Audit Committee. Until February 2022, John Evangelou served as Chairman andAntonios Karavias served as member of our Audit Committee. Alex Papageorgiou serves as the Chairman of the Audit Committee as of the 2022 annual meeting of shareholders. Webelieve that Alex Papageorgiou qualifies as an Audit Committee financial expert as such term is defined under SEC rules. Mihalis Boutaris serves as a member of our Audit Committee. Our Compensation Committee, comprised of two independent directors, is responsible for, among other things, recommending to the board of directors our senior executiveofficers’ compensation and benefits. As of the 2022 annual meeting of shareholders, Loïsa Ranunkel serves as the Chairman of the Compensation Committee and Mihalis Boutaris servesas a member of our Compensation Committee. Our Executive Committee is responsible for the overall management of our business. Since November 19, 2020, our Executive Committee is comprised of Aliki Paliou, our Directorand Chairperson of our Board, and Andreas Michalopoulos, our Chief Executive Officer. We also maintain directors’ and officers’ insurance, pursuant to which we provide insurance coverage against certain liabilities to which our directors and officers may besubject, including liability incurred under U.S. securities law. D.Employees We crew our vessels with Filipino officers and crew members, who are referred to us by independent crewing agencies. The crewing agencies handle each seafarer’s trainingand payroll. We ensure that all our seafarers have the qualifications and licenses required to comply with international regulations and shipping conventions. We typically crew ourvessels with more crew members than are required by the country of the vessel’s flag in order to allow for the performance of routine maintenance duties. The following table presents the number of shoreside personnel employed by our in-house manager and the number of seafaring personnel employed by our vessel-owningsubsidiaries as of December 31, 2023, 2022, and 2021. The decrease in the number of seafaring employees from 2022 to 2023 was due to the sale of the vessel P. Kikuma during 2023. As of December31, 2023 As of December31, 2022 As of December31, 2021 Shoreside 30 30 25 Seafaring 179 197 127 Total 209 227 152 E.Share Ownership With respect to the total amount of common shares owned by our officers and directors individually and as a group, see “Item 7. Major Shareholders and Related PartyTransactions—A. Major Shareholders.” F.Disclosure of a registrant’s action to recover erroneously awarded compensation None. Item 7.Major Shareholders and Related Party Transactions A.Major Shareholders The following table sets forth current information regarding ownership of our common shares of which we are aware as of March 26, 2024, for (i) beneficial owners of fivepercent or more of our common shares; and (ii) our officers and directors, individually and as a group. All of our shareholders, including the shareholders listed in this table, are entitledto one vote for each common share held. Name Number ofCommon Shares PercentageOwned (1) Mango Shipping Corp. (2)(4) 24,248,967 66.4%Mitzela Corp.(3)(4) 1,039,534 7.8%Sphinx Investment Corp.(5) 1,033,859 8.4%All officers and directors as a group 25,296,501 67.3%67Table of Contents(1) Percentages based on 12,279,676 common shares outstanding as of March 26, 2024.(2) This information is derived from Amendment No. 1 to Schedule 13D jointly filed with the SEC on September 1, 2023 by Mango Shipping Corp. and Aliki Paliou. Aliki Paliou, theChairperson of our board of directors, owns and controls Mango Shipping Corp. As a result, Aliki Paliou may be deemed to beneficially own shares held by Mango Shipping. MangoShipping acquired 156,803 common shares (as adjusted after the effectiveness of the reverse stock splits of November 2, 2020 and of November 15, 2022) from Taracan Investments S.A.(“Taracan”), a Marshall Islands corporation ultimately beneficially owned by Symeon Palios, our Chairman of the Board until the 2022 annual shareholders meeting and former ChiefExecutive Officer, pursuant to a Contribution Agreement dated September 29, 2020, by and between Taracan and Mango Shipping. In exchange, Mango Shipping issued 999 shares of itsown common stock to Taracan. Taracan thereafter distributed as dividend in kind such 999 shares of Mango Shipping (through an intermediary holding company) to its ultimatebeneficial owner, Symeon Palios. Subsequently, also on September 29, 2020, Symeon Palios transferred in a private transaction all of his interest in Mango Shipping to Aliki Paliou. Weconducted an exchange offer, pursuant to which we offered to exchange issued and outstanding Common Shares for newly issued shares of our Series B Convertible CumulativePerpetual Preferred Stock, which closed on January 27, 2022. Pursuant to the Exchange Offer, Mango Shipping exchanged 156,523 Common Shares (as adjusted after the effectiveness ofthe reverse stock splits of November 2, 2020 and of November 15, 2022), representing the majority of the Common Shares beneficially owned by Mango Shipping at that time, for Series BPreferred Shares at an exchange ratio of 0.28 Series B Preferred Shares per Common Share. On October 17, 2022, we entered into a stock purchase agreement with Mango Shipping,pursuant to which we agreed to issue to Mango Shipping in a private placement 1,314,792 shares of our newly-designated Series C Preferred Shares in exchange for, in part, all 657,396Series B Preferred Shares held by Mango Shipping. See “Related Party Transactions” for a description of the private placement transaction with Mango Shipping. Mango Shippingbeneficially owns 1,314,792 Series C Preferred Shares, or 92% of the outstanding Series C Preferred Shares as of the date of this report. The Series C Preferred Shares carry superiorvoting rights. For a description of the rights of the Series C Preferred Shares, see “Description of Securities,” attached hereto as Exhibit 2.5 and incorporated by reference herein, and therisk factor under “Item 3. Key Information—D. Risk Factors” entitled “Aliki Paliou, the Chairperson of the Board, controls a majority of voting power over matters on which ourshareholders are entitled to vote, and accordingly, may exert considerable influence over us and may have interests that are different from the interests of our other shareholders.” In ourannual reports for the years ended December 31, 2022, 2021 and 2020, Aliki Paliou was reported to beneficially own 67.15%, less than 1% and 46.3% of our common shares, respectively.(3) This information is derived from a Schedule 13D jointly filed with the SEC on September 1, 2023 by Mitzela Corp. and Andreas Michalopoulos. Andreas Michalopoulos, our ChiefExecutive Officer, Director and Secretary, owns and controls Mitzela Corp. As a result, Andreas Michalopoulos may be deemed to beneficially own shares held by Mitzela Corp. MitzelaCorp. beneficially owns 56,342 Series C Preferred Shares, or 3.9% of the outstanding Series C Preferred Shares as of the date of this report. In our annual reports for the years endedDecember 31, 2022, 2021 and 2020, Andreas Michalopoulos was reported to beneficially own 8.06%, less than 1% and 2.1% of our common shares, respectively.(4) Aliki Paliou may be deemed to beneficially own 24,248,687 common shares through Mango Shipping Corp. Andreas Michalopoulos may be deemed to beneficially own 1,039,114common shares through Mitzela Corp. Additionally, Aliki Paliou may be deemed to beneficially own 280 restricted common shares through Mango Shipping Corp. AndreasMichalopoulos may be deemed to beneficially own 420 restricted common shares through Mitzela Corp. Anthony Argyropoulos, our Chief Financial Officer, holds stock options topurchase up to 8,000 of our common shares, which stock options we granted to Anthony Argyropoulos as stock-based remuneration. The stock options are exercisable at a price rangebetween $150.00 and $450.00 per share, for a term of five years. Anthony Argyropoulos does not directly own any of our common shares. All other officers and directors each own 0% ofour outstanding common shares.(5) This information is derived from an Amendment No. 10 to Schedule 13D jointly filed with the SEC on March 26, 2024 by Sphinx Investment Corp., Maryport Navigation Corp. and Mr.George Economou. Sphinx Investment Corp. is a wholly-owned subsidiary of Maryport Navigation Corp., which is a Liberian company owned by Mr. George Economou. In the normal course of business, there have been institutional investors that buy and sell our shares, and significant changes in the percentage ownership of such investorshas occurred, as reflected in beneficial ownership reports filed with the SEC. As of March 26, 2024, we had 7 shareholders of record, 1 of which was located in the United States, 1 of which was CEDE & CO., a nominee of The Depository Trust Company,which is located in the United States and held an aggregate of 12,277,896 of our common shares, representing 99.9% of our outstanding common shares. CEDE & CO. is the sole recordshareholder of our Class B Preferred Shares and Class C Preferred Shares. We believe that the shares held by CEDE & CO. include shares beneficially owned by both holders in theUnited States and non-U.S. beneficial owners. We are not aware of any arrangements the operation of which may at a subsequent date result in our change of control. B.Related Party Transactions Pure Brokerage and Shipping Corp. Pure Brokerage and Shipping Corp., or Pure, a company controlled by Aliki Paliou, our Chairperson of the board of directors, provides us with brokerage services since June 15,2020, pursuant to a Brokerage Services Agreement for a fixed monthly fee of $3,000 for each of our owned tanker vessels. Additionally, Pure Brokerage and Shipping Corp, an affiliatedentity, receives from us a fixed commission of 1.25% on gross freight and hire income generated by the vessels, subject to the specific terms of each employment contract, and may alsoreceive sale and purchase brokerage commissions of 1.0% per transaction. For 2023, commissions and brokerage fees paid to Pure Brokerage amounted to $1.3 million and $0.3 million,respectively. 68Table of ContentsDiana Shipping Inc. On November 18, 2021, we sold to a subsidiary of Diana Shipping Inc. our co-owned indivisible share in a plot of land, located in Athens, Greece, for a purchase price of Euro1.1 million (or $1.2 million). In connection with this sale, we recorded a gain, net of $0.2 million taxes and expenses, of $0.1 million, which is presented as Gain from property sale in ourconsolidated statement of operations. Mango Shipping Corp. On March 2, 2022, we entered into an unsecured credit facility with Mango Shipping, an affiliated entity whose beneficial owner is Aliki Paliou, for up to $5.0 million, to be usedfor general working capital purposes. The facility, which is repayable in one year from the date of the agreement, will be utilized in advances at our request and will bear interest of 9.0%per annum and commitment fees of 3.0% per annum on any undrawn amount. Arrangement fees of $0.2 million are payable on the date of the agreement. As of the date of this annualreport, $3.2 million have been drawn under the credit facility. On October 17, 2022, we entered into a stock purchase agreement with Mango Shipping, pursuant to which we agreed toissue to Mango in a private placement 1,314,792 shares of our newly-designated Series C Preferred Shares in exchange for (i) all 657,396 Series B Preferred Shares held by Mango and (ii)the agreement by Mango to apply $4.93 million (an amount equal to the aggregate cash conversion price payable upon conversion of such Series B Preferred Shares into Series CPreferred Shares pursuant to their terms) as a prepayment by us of an unsecured credit facility dated March 2, 2022 and made between us as borrower and Mango as lender, maturing inMarch 2023 and bearing interest at 9.0% per annum. We subsequently repaid the remaining amounts due and terminated the credit facility. The transaction was approved by a specialindependent committee of our board of directors. For more information regarding the Series C Preferred Shares, please see our Form 6-K filed on October 21, 2022 and incorporated byreference herein. C.Interests of Experts and Counsel Not applicable. Item 8.Financial information A.Consolidated Statements and Other Financial Information See “Item 18. Financial Statements.” Legal Proceedings Between October 23, 2017, and December 15, 2017, three largely similar lawsuits were filed against the Company and three of its executive officers. On October 23, 2017, acomplaint captioned Jimmie O. Robinson v. Diana Containerships Inc., Case No. 2:17-cv-6160, was filed in the United States District Court for the Eastern District of New York (“EasternDistrict”). The complaint was brought as a purported class action lawsuit on behalf of a putative class consisting of purchasers of common shares of the Company between January 26,2017 and October 3, 2017. On October 25, 2017, a complaint captioned Logan Little v. Diana Containerships Inc., Case No. 2:17-cv-6236, was filed in the Eastern District. The complaintwas brought as a purported class action lawsuit on behalf of a putative class consisting of purchasers of common shares of the Company between January 26, 2017, and October 3, 2017.On December 15, 2017, a complaint captioned Emmanuel S. Austin v. Diana Containerships Inc., Case No. 2:17-cv-7329, was filed in the Eastern District. The complaint was brought as apurported class action lawsuit on behalf of a putative class consisting of purchasers of common shares of the Company between June 9, 2016, and October 3, 2017. The complaintsnamed as defendants, among others, the Company and three of its executive officers. The complaints asserted claims under Sections 9, 10(b) and/or 20(a) of the Securities Exchange Actof 1934. On April 30, 2018, the Court consolidated the three lawsuits into the first-filed Robinson lawsuit, appointed lead plaintiffs and approved lead plaintiffs’ selection of leadplaintiffs’ counsel. On July 13, 2018, lead plaintiffs filed a consolidated amended complaint (superseding the three initial complaints). On September 21, 2018, the defendants filed amotion to dismiss the lawsuit. Briefing on that motion was concluded on November 30, 2018. On May 28, 2020, prior to any ruling on that motion, lead plaintiffs filed a supersedingsecond amended complaint. On July 22, 2020, the defendants filed a motion to dismiss the second amended complaint. Briefing on that motion concluded on October 9, 2020. On October1, 2021, prior to any ruling on that motion, lead plaintiffs filed a superseding third amended complaint. On October 15, 2021, the defendants filed a motion to dismiss the third amendedcomplaint. Briefing on that motion concluded on November 5, 2021. The Court has not issued a ruling on that motion as of the date of this annual report. The Company believes that thelawsuit is without merit and will vigorously defend against the lawsuit. The Company, its Chief Executive Officer, Chairperson of the Board, five former directors of the Company, and two entities affiliated with the Company’s Chief Executive Officerand Chairperson of the Board were named as defendants in a lawsuit commenced on October 27, 2023 in New York State Supreme Court, County of New York, captioned SphinxInvestment Corp. v. Aliki Paliou et al., Case No. 655326/2023. The complaint alleges, among other things, violations of fiduciary duties by the named defendants in connection with anexchange offer commenced by the Company in December 2021. On January 29, 2024, the defendants filed motions to dismiss the lawsuit. Briefing on that motion is currently scheduled toconclude on April 4, 2024. The Company believes that the lawsuit is without merit and will vigorously defend against the lawsuit. Except as set forth above, we have not been involved in any legal proceedings which may have, or have had a significant effect on our business, financial position, results ofoperations or liquidity, nor are we aware of any proceedings that are pending or threatened which may have a significant effect on our business, financial position, results of operationsor liquidity. From time to time, we may be subject to legal proceedings and claims in the ordinary course of business, principally personal injury and property casualty claims. We expectthat these claims would be covered by insurance, subject to customary deductibles and limitations. Those claims, even if lacking merit, could result in the expenditure of significantfinancial and managerial resources. 69Table of ContentsDividend Policy Our board of directors has adopted a variable quarterly dividend policy, pursuant to which we may declare and pay a variable quarterly cash dividend to our commonshareholders. While we have declared and paid cash dividends on our common shares in the past, there can be no assurance that our board of directors will declare dividend paymentson common shares in the future. If declared, the quarterly dividend is expected to be paid each February, May, August and November and will be subject to reserves for the replacementof our vessels, scheduled drydockings, intermediate and special surveys, dividends to holders of our preferred shares, if paid in cash, and other purposes as our board of directors mayfrom time to time determine are required, after taking into account contingent liabilities, the terms of any credit facility, our growth strategy and other cash needs as well as therequirements of Marshall Islands law. In addition, any credit facilities that we may enter into in the future may include restrictions on our ability to pay dividends. The declaration and payment of dividends, even during times when we have sufficient funds and are not restricted from declaring and paying dividends by our lenders or anyother party, will always be subject to the discretion of our board of directors. Our board of directors may review and amend our dividend policy from time to time, taking intoconsideration our plans for future growth and other factors. The actual timing and amount of dividend payments on common shares, if any, will be determined by our board of directorsand will be affected by various factors, including our cash earnings, financial condition and cash requirements, dividend obligations to holders of our preferred shares, the loss of avessel, the acquisition of one or more vessels, required capital expenditures, reserves established by our board of directors, increased or unanticipated expenses, a change in ourdividend policy, additional borrowings or future issuances of securities, many of which will be beyond our control. We are a holding company, and we depend on the ability of our subsidiaries to distribute funds to us to satisfy our financial obligations and to make dividend payments. Intimes when we have debt outstanding, we intend to limit our dividends per common share, if common share dividend payments are reinstated, to the amount that we would have beenable to pay if we were financed entirely with equity. In addition, our existing or future credit facilities may include restrictions on our ability to pay dividends. The shipping sector is highly cyclical and volatile. We cannot predict with accuracy the amount of cash flows our operations will generate in any given period. Our quarterlydividends, if any, will vary significantly from quarter to quarter as a result of variations in our operating performance, cash flow, and other contingencies, and we cannot assure you thatwe will generate available cash for distribution in any quarter, and so we may not declare and pay any dividends in certain quarters, or at all. Our ability to resume payment of dividendswill be subject to the limitations set forth above and in the section of this annual report entitled “Item 3. Key Information—D. Risk Factors.” B.Significant Changes There have been no significant changes since the date of the annual consolidated financial statements included in this annual report, other than those described in “Note 14-Subsequent Events” of our annual consolidated financial statements. Item 9.The Offer and Listing A.Offer and Listing Details Our common shares have traded on the Nasdaq Global Market since January 19, 2011, on the Nasdaq Global Select Market since January 2, 2013, and on the Nasdaq CapitalMarket since March 6, 2020. Our ticker symbol was “DCIX” through March 30, 2020, at which date it changed to “PSHG.” B.Plan of Distribution Not Applicable. C.Markets Our common shares have traded on the Nasdaq Global Market since January 19, 2011, on the Nasdaq Global Select Market since January 2, 2013, and on the Nasdaq CapitalMarket since March 6, 2020. Our ticker symbol was “DCIX” through March 30, 2020, at which date it changed to “PSHG.” D.Selling Shareholders Not Applicable. E.Dilution Not Applicable. F.Expenses of the Issue Not Applicable. 70Table of ContentsItem 10.Additional Information A.Share capital Not Applicable. B.Memorandum and Articles of Association Our amended and restated articles of incorporation and bylaws were filed as exhibits 3.1 and 3.2, respectively, to our registration statement on Form F-4 (File No. 333-169974)filed with the SEC on October 15, 2010. The information contained in these exhibits is incorporated by reference herein. Our amended and restated articles of incorporation were amended on (i) June 8, 2016, in connection with our one-for-eight reverse stock split, (ii) July 3, 2017, in connection withour one-for-seven reverse stock split, (iii) July 25, 2017, in connection with our one-for-six reverse stock split, (iv) August 23, 2017, in connection with our one-for-seven reverse stocksplit, (v) September 22, 2017, in connection with our one-for-three reverse stock split, (vi) November 1, 2017, in connection with our one-for-seven reverse stock split and (vii) October 30,2020, in connection with our one-for-ten reverse stock split, (viii) November 1, 2017, in connection with our one-for-seven reverse stock split and (ix) November 14, 2022, in connectionwith our one-for-fifteen reverse stock split. Copies of these articles of amendment to the amended and restated articles of incorporation of the Company were filed as exhibit 3.1 to ourreports on Form 6-K filed with the SEC on June 9, 2016, July 6, 2017, July 28, 2017, August 28, 2017, September 26, 2017, November 3, 2017, November 2, 2020 and hereto for our November14, 2022 stock split respectively. The information contained in these exhibits is incorporated by reference herein. Additionally, (i) on March 21, 2017, we filed a Statement of Designations,Preferences and Rights of our Series B-1 Convertible Preferred Stock, (ii) on March 21, 2017, we filed a Statement of Designations, Preferences and Rights of our Series B-2 ConvertiblePreferred Stock, (iii) on May 30, 2017, we filed a Statement of Designations of Rights, Preferences and Privileges of our Series C Preferred Stock, (iv) on January 12, 2022, we filed anAmended and Restated Certificate of Designations of Rights, Preferences and Privileges of our Series B Convertible Cumulative Perpetual Preferred Stock and (v) on October, 17, 2022,we filed a Certificate of Designation of Series C Convertible Cumulative Redeemable Perpetual Preferred Shares. Our amended and restated articles of incorporation were further amendedon February 25, 2019, in connection with our name change from Diana Containerships Inc. to Performance Shipping Inc. A copy of these articles of amendment to the amended andrestated articles of incorporation is filed as an exhibit to this annual report and the information contained in such exhibit is incorporated by reference herein. A description of the material terms of our amended and restated articles of incorporation and bylaws is included in “Description of Securities,” attached hereto as Exhibit 2.5 andincorporated by reference herein. Description of Common Shares Each outstanding common share entitles the holder to one vote on all matters submitted to a vote of shareholders. Subject to preferences that may be applicable to anyoutstanding preferred shares, holders of common shares are entitled to receive ratably all dividends, if any, declared by our board of directors out of funds legally available for dividends.Upon our dissolution or liquidation or the sale of all or substantially all of our assets, after payment in full of all amounts required to be paid to creditors and to the holders of ourpreferred shares having liquidation preferences, if any, the holders of our common shares will be entitled to receive pro rata our remaining assets available for distribution. Holders of ourcommon shares do not have conversion, redemption or preemptive rights to subscribe to any of our securities. The rights, preferences and privileges of holders of common shares aresubject to the rights of the holders of our preferred shares, including our existing classes of preferred shares and any preferred shares we may issue in the future. Description of Preferred Stock Our amended and restated articles of incorporation authorize our board of directors to establish one or more series of preferred shares and to determine, with respect to anyseries of preferred shares, the terms and rights of that series, including the designation of the series; the number of shares of the series; the preferences and relative, participating, optionor other special rights, if any, and any qualifications, limitations or restrictions of such series; and the voting rights, if any, of the holders of the series. Stockholders’ Rights Agreement On December 20, 2021, we entered into a Stockholders’ Rights Agreement, or the Rights Agreement, with Computershare Inc. as Rights Agent. Pursuant to the RightsAgreement, each common share includes one right, or a Right, that entitles the holder to purchase from us one one-thousandth of a share of our Series A Participating Preferred Stock atan exercise price of $750.00 per one one-thousandth of a Series A Preferred Stock, subject to specified adjustments. The Rights will separate from the common shares and becomeexercisable only if a person or group acquires beneficial ownership of 10% or more of our common shares in a transaction not approved by our board of directors. In that situation, eachholder of a Right (other than the acquiring person, whose Rights will become void and will not be exercisable) will have the right to purchase, in lieu of one one-thousandth of a share ofSeries A Preferred Stock, upon payment of the exercise price, a number of our common shares having a then-current market value equal to twice the exercise price. In addition, if we areacquired in a merger or other business combination after an acquiring person acquires 10% or more of our common shares, each holder of the Right will thereafter have the right topurchase, in lieu of one one-thousandth of a share of Series A Preferred Stock, upon payment of the exercise price, a number of common shares of the acquiring person having a then-current market value equal to twice the exercise price. The acquiring person will not be entitled to exercise these Rights. Under the Rights Agreement’s terms, it will expire on December20, 2031. A copy of the Rights Agreement is filed as Exhibit 4.1 to our report on Form 6-K filed with the SEC on December 21, 2021. 71Table of ContentsC.Material Contracts The contracts included as exhibits to this annual report are the contracts we consider to be both material and not entered into in the ordinary course of business, which (i) are tobe performed in whole or in part on or after the filing date of this annual report or (ii) were entered into not more than two years before the filing date of this annual report. Other thanthese agreements, we have no material contracts, other than contracts entered into in the ordinary course of business, to which we or any member of the group is a party. We refer you to“Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources” for a discussion of our loan facilities, “Item 4. Information on the Company—B. BusinessOverview” and “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions” for a discussion of our agreements with our related parties and “Item 6.Directors, Senior Management, and Employees—B. Compensation” for a discussion of our 2015 Equity Incentive Plan. D.Exchange Controls Under Republic of the Marshall Islands law, there are currently no restrictions on the export or import of capital, including foreign exchange controls or restrictions that affectthe remittance of dividends, interest or other payments to non-resident holders of our securities. E.Taxation The following is a discussion of the material Marshall Islands and U.S. federal income tax considerations of the ownership and disposition by a U.S. Holder and a Non-U.S.Holder, each as defined below, of our common shares. This discussion does not purport to deal with the tax consequences of owning common shares to all categories of investors, whomay be subject to special rules such as dealers in securities or commodities, financial institutions, insurance companies, tax-exempt organizations, U.S. expatriates, persons liable for thealternative minimum tax, persons who hold common shares as part of a straddle, hedge, conversion transaction or integrated investment, U.S. Holders whose functional currency is notthe United States dollar, persons required to recognize income for U.S. federal income tax purposes no later than when such income is reported on an “applicable financial statement”,persons subject to the “base erosion and anti-avoidance” tax and investors that own, actually or under applicable constructive ownership rules, 10% or more of the Company’s commonshares. This discussion deals only with holders who hold the common shares as a capital asset. You are encouraged to consult your own tax advisors concerning the overall taxconsequences arising in your own particular situation under U.S. federal, state, local or foreign law of the ownership of our common shares. Marshall Islands Tax Considerations In the opinion of Watson Farley & Williams LLP, the following are the material Marshall Islands tax consequences of the Company’s activities to the Company and of theownership of the Company’s common shares to its shareholders who are not residents of or domiciled or carrying on any commercial activity in the Marshall Islands. Under currentMarshall Islands law, the Company is not subject to tax on income or capital gains, no Marshall Islands withholding tax will be imposed upon payments of dividends by the Company toits shareholders, and shareholders will not be subject to tax on the sale or other disposition of the Company’s common shares. United States Federal Income Tax Considerations The following discussion of U.S. federal income tax matters is based on the U.S. Internal Revenue Code of 1986, as amended, or the Code, judicial decisions, administrativepronouncements, and existing and proposed regulations issued by the U.S. Department of the Treasury, all of which are subject to change, possibly with retroactive effect. Taxation of Operating Income: In General The following discussion addresses the U.S. federal income taxation of our operating income from the international operation of vessels. Unless exempt from U.S. federal income taxation under the rules discussed below, a foreign corporation is subject to U.S. federal income taxation in respect of any income that isderived from the use of vessels, from the hiring or leasing of vessels for use on a time, voyage or bareboat charter basis, from the participation in a pool, partnership, strategic alliance,joint operating agreement, code sharing arrangements or other joint venture it directly or indirectly owns or participates in that generates such income, or from the performance ofservices directly related to those uses, which we refer to as “shipping income,” to the extent that the shipping income is derived from sources within the United States. For thesepurposes, 50% of shipping income that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States constitutes income from sourceswithin the United States, which we refer to as “U.S.-source shipping income.” Shipping income attributable to transportation that both begins and ends in the United States is considered to be 100% from sources within the United States. We are notpermitted by law to engage in transportation that produces income which is considered to be 100% from sources within the United States. Shipping income attributable to transportationexclusively between non-U.S. ports will be considered to be 100% derived from sources outside the United States. Shipping income derived from sources outside the United States willnot be subject to any U.S. federal income tax. 72Table of ContentsExemption of Operating Income from U.S. Federal Income Taxation Under Section 883 of the Code, or Section 883, we will be exempt from U.S. federal income taxation on our U.S.-source shipping income if: •we are organized in a foreign country that grants an “equivalent exemption” to corporations organized in the United States, or U.S. corporations; and either: •more than 50% of the value of our common shares is owned, directly or indirectly, by qualified shareholders, which we refer to as the “50% Ownership Test,” or •our common shares are “primarily and regularly traded on an established securities market” in a country that grants an “equivalent exemption” to U.S. corporations orin the United States, which we refer to as the “Publicly-Traded Test.” The Marshall Islands, the jurisdiction where we are incorporated, grants an “equivalent exemption” to U.S. corporations. We anticipate that any of our shipowning subsidiarieswill be incorporated in a jurisdiction that provides an “equivalent exemption” to U.S. corporations. Therefore, we will be exempt from U.S. federal income taxation with respect to our U.S.-source shipping income if either the 50% Ownership Test or the Publicly-Traded Test is met. Publicly-Traded Test In order to satisfy the Publicly-Traded Test, our common shares must be primarily and regularly traded on one or more established securities markets. The regulations underSection 883 provide, in pertinent part, that shares of a foreign corporation will be considered to be “primarily traded” on an established securities market in a country if the number ofshares of each class of shares that are traded during any taxable year on all established securities markets in that country exceeds the number of shares in each such class that are tradedduring that year on established securities markets in any other single country. Our common shares are “primarily traded” on the Nasdaq Capital Market, which is an establishedsecurities market. Under the regulations, stock of a foreign corporation will be considered to be “regularly traded” on an established securities market if one or more classes of stock representingmore than 50% of the outstanding stock, by both total combined voting power of all classes of shares entitled to vote and total value, are listed on such market, to which we refer as the“listing threshold.” It is further required that with respect to each class of stock relied upon to meet the listing threshold, (i) such class of shares is traded on the market, other than in minimalquantities, on at least 60 days during the taxable year or one-sixth of the days in a short taxable year, which we refer to as the trading frequency test; and (ii) the aggregate number ofstock of such class of shares traded on such market during the taxable year is at least 10% of the average number of shares of such class of stock outstanding during such year or asappropriately adjusted in the case of a short taxable year, which we refer to as the trading volume test. Even if these tests are not satisfied, the regulations provide that such tradingfrequency and trading volume tests will be deemed satisfied if, as is expected to be the case with our common shares, such class of stock is traded on an established securities market inthe United States and such shares are regularly quoted by dealers making a market in such shares. Notwithstanding the foregoing, the regulations provide, in pertinent part, that a class of shares will not be considered to be “regularly traded” on an established securitiesmarket for any taxable year in which 50% or more of the vote and value of the outstanding shares of such class are owned, actually or constructively under specified share attributionrules, on more than half the days during the taxable year by persons who each own 5% or more of the vote and value of such class of stock, to which we refer as the “Five PercentOverride Rule.” For purposes of being able to determine the persons who actually or constructively own 5% or more of the vote and value of our common shares, or “5% Shareholders,” theregulations permit us to rely on those persons that are identified on Schedule 13G and Schedule 13D filings with the SEC, as owning 5% or more of our common shares. The regulationsfurther provide that an investment company which is registered under the Investment Company Act of 1940, as amended, will not be treated as a 5% Shareholder for such purposes. In the event the Five Percent Override Rule is triggered, the regulations provide that the Five Percent Override Rule will nevertheless not apply if we can establish that withinthe group of 5% Shareholders, there are sufficient qualified shareholders for purposes of Section 883 to preclude non-qualified shareholders in such group from owning 50% or more ofour common shares for more than half the number of days during the taxable year. We believe that we did not satisfy the Publicly Traded Test during our 2023 taxable year. 50% Ownership Test Under the regulations, a foreign corporation will satisfy the 50% Ownership Test for a taxable year if (i) for at least half of the number of days in the taxable year, more than 50%of the value of its stock is owned, directly or constructively through the application of certain attribution rules prescribed by the regulations, by one or more shareholders who areresidents of foreign countries that grant “equivalent exemption” to corporations organized in the United States and (ii) the foreign corporation satisfies certain substantiation andreporting requirements with respect to such shareholders. 73Table of ContentsWe believe that we satisfied the 50% Ownership Test for our 2023 taxable year, and expect to satisfy the substantiation and reporting requirements to claim the benefits of the50% Ownership Test. Therefore, we intend to take the position that we were exempt from U.S. federal income tax under Section 883 of the Code during our 2023 taxable year. However,there can be no assurance that we will continue to satisfy the requirements of the 50% Ownership Test in future taxable years. Furthermore, the substantiation requirements are onerousand therefore there can be no assurance that we would be able to satisfy them, even if our share ownership would otherwise satisfy the requirements of the 50% Ownership Test. Taxation in Absence of Exemption To the extent the benefits of Section 883 are unavailable, our U.S.-source shipping income, to the extent not considered to be “effectively connected” with the conduct of a U.S.trade or business, as described below, would be subject to a 4% tax imposed by Section 887 of the Code on a gross basis, without the benefit of deductions, which we refer to as the 4%gross basis tax regime. Since under the sourcing rules described above, no more than 50% of our shipping income would be treated as being derived from U.S. sources, the maximumeffective rate of U.S. federal income tax on our shipping income would never exceed 2% under the 4% gross basis tax regime. To the extent our U.S.-source shipping income is considered to be “effectively connected” with the conduct of a U.S. trade or business, as described below, any such“effectively connected” U.S.-source shipping income, net of applicable deductions, would be subject to the U.S. federal corporate income tax currently imposed at a rate of 21%. Inaddition, we may be subject to an additional 30% “branch profits” tax on earnings effectively connected with the conduct of such trade or business, as determined after allowance forcertain adjustments, and on certain interest paid or deemed paid attributable to the conduct of such U.S. trade or business. Our U.S.-source shipping income would be considered “effectively connected” with the conduct of a U.S. trade or business only if: •we have, or are considered to have, a fixed place of business in the United States involved in the earning of shipping income; and •substantially all of our U.S.-source shipping income is attributable to regularly scheduled transportation, such as the operation of a vessel that follows a publishedschedule with repeated sailings at regular intervals between the same points for voyages that begin or end in the United States (or, in the case of income from thebareboat chartering of a vessel, is attributable to a fixed place of business in the United States). We do not anticipate that we will have any vessel operating to or from the United States on a regularly scheduled basis. Based on the foregoing and on the expected mode ofour shipping operations and other activities, we do not anticipate that any of our U.S.-source shipping income will be “effectively connected” with the conduct of a U.S. trade orbusiness. United States Federal Income Taxation of Gain on Sale of Vessels Regardless of whether we qualify for exemption under Section 883 of the Code, we will not be subject to U.S. federal income taxation with respect to gain realized on a sale of avessel, provided the sale is considered to occur outside of the United States under U.S. federal income tax principles. In general, a sale of a vessel will be considered to occur outside ofthe United States for this purpose if title to the vessel, and risk of loss with respect to the vessel, pass to the buyer outside of the United States. It is expected that any sale of a vesselby us will be considered to occur outside of the United States. United States Federal Income Taxation of U.S. Holders In the opinion of Watson Farley & Williams LLP, the Company’s U.S. counsel, the following are the material U.S. federal income tax consequences to U.S. Holders, as definedbelow, of the ownership and disposition of our common shares. As used herein, the term “U.S. Holder” means a beneficial owner of common shares that is an individual U.S. citizen or resident, a U.S. corporation or other U.S. entity taxable asa corporation, an estate the income of which is subject to U.S. federal income taxation regardless of its source, or a trust if a court within the United States is able to exercise primaryjurisdiction over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust. If a partnership holds the common shares, the tax treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership. If you area partner in a partnership holding the common shares, you are encouraged to consult your tax advisor. Distributions Subject to the discussion of the passive foreign investment company, or PFIC, rules below, distributions made by us with respect to our common shares, other than certain pro-rata distributions of our common shares, to a U.S. Holder will generally constitute dividends, which may be taxable as ordinary income or “qualified dividend income” as described inmore detail below, to the extent of our current and accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess of our current andaccumulated earnings and profits will be treated first as a nontaxable return of capital to the extent of the U.S. Holder’s tax basis in such U.S. Holder’s common shares on a dollar-for-dollar basis and thereafter as a capital gain. Because we are not a United States corporation, U.S. Holders that are corporations will not be entitled to claim a dividends-receiveddeduction with respect to any distributions they receive from us. Dividends paid with respect to our common shares will generally be treated as income from sources outside the UnitedStates and will generally constitute “passive category income” or, in the case of certain types of U.S. Holders, “general category income” for purposes of computing allowable foreign taxcredits for U.S. foreign tax credit purposes. 74Table of ContentsDividends paid on our common shares to a U.S. Holder who is an individual, trust or estate, which we refer to as a U.S. Individual Holder, will generally be treated as “qualifieddividend income” that is taxable to such U.S. Individual Holders at preferential tax rates, provided that (1) the common shares are readily tradable on an established securities market inthe United States such as the Nasdaq Capital Market, on which our common shares are traded; (2) we are not a PFIC for the taxable year during which the dividend is paid or theimmediately preceding taxable year, as discussed below; (3) the U.S. Individual Holder has held the common shares for more than 60 days in the 121-day period beginning 60 days beforethe date on which the common shares become ex-dividend; and (4) the U.S. Individual Holder is not under an obligation to make related payments with respect to positions insubstantially similar or related property. There is no assurance that any dividends paid on our common shares will be eligible for these preferential rates in the hands of a U.S. Individual Holder. Any distributions outof earnings and profits we pay which are not eligible for these preferential rates will be taxed as ordinary income to a U.S. Individual Holder. Special rules may apply to any “extraordinary dividend,” generally, a dividend paid by us in an amount which is equal to or in excess of ten percent of a U.S. Holder’s adjustedtax basis, or fair market value in certain circumstances, in a common share. If we pay an “extraordinary dividend” on our common shares that is treated as “qualified dividend income,”then any loss derived by a U.S. Individual Holder from the sale or exchange of such common shares will be treated as long-term capital loss to the extent of such dividend. Sale, Exchange or other Disposition of Common Shares Subject to the discussion of the PFIC rules below, a U.S. Holder generally will recognize taxable gain or loss upon a sale, exchange or other disposition of our common shares inan amount equal to the difference between the amount realized by the U.S. Holder from such sale, exchange or other disposition and the U.S. Holder’s tax basis in such stock. A U.S.Holder’s tax basis in the common shares generally will equal the U.S. Holder’s acquisition cost less any prior return of capital. Such gain or loss will be treated as long-term capital gainor loss if the U.S. Holder’s holding period is greater than one year at the time of the sale, exchange or other disposition and will generally be treated as U.S.-source income or loss, asapplicable, for U.S. foreign tax credit purposes. A U.S. Holder’s ability to deduct capital losses is subject to certain limitations. PFIC Status and Significant Tax Consequences Special U.S. federal income tax rules apply to a U.S. Holder that holds stock in a foreign corporation classified as a PFIC for U.S. federal income tax purposes. In general, we willbe treated as a PFIC with respect to a U.S. Holder if, for any taxable year in which such U.S. Holder held our common shares, either: •at least 75% of our gross income for such taxable year consists of passive income (e.g., dividends, interest, capital gains and rents derived other than in the activeconduct of a rental business), which we refer to as the income test; or •at least 50% of the average value of our assets during such taxable year produce, or are held for the production of, passive income, which we refer to as the asset test. For purposes of determining whether we are a PFIC, cash will be treated as an asset which is held for the production of passive income. In addition, we will be treated as earningand owning our proportionate share of the income and assets, respectively, of any of our subsidiary companies in which we own at least 25% of the value of the subsidiary’s stock orother equity interest. Income earned, or deemed earned, by us in connection with the performance of services would not constitute passive income. By contrast, rental income wouldgenerally constitute “passive income” unless we were treated under specific rules as deriving our rental income in the active conduct of a trade or business. Our status as a PFIC will depend upon the operations of our vessels. Therefore, we can give no assurances as to whether we will be a PFIC with respect to any taxable year. Inmaking the determination as to whether we are a PFIC, we intend to treat the gross income we derive or are deemed to derive from the time chartering and voyage chartering activities ofus or any of our wholly owned subsidiaries as services income, rather than rental income. There is substantial legal authority supporting this position consisting of case law and IRSpronouncements concerning the characterization of income derived from time charters and voyage charters as services income for other tax purposes. However, there is also authoritywhich characterizes time charter income as rental income rather than services income for other tax purposes. In the absence of any legal authority specifically relating to the statutoryprovisions governing PFICs, the IRS or a court could disagree with our position. On the other hand, any income we derive from bareboat chartering activities will be treated as passiveincome for purposes of the income test. Likewise, any assets utilized in bareboat chartering activities will be treated as generating passive income for purposes of the asset test. On the basis of the foregoing, we do not believe that we were a PFIC in 2023, and do not anticipate becoming a PFIC in the near future. As discussed more fully below, if we were to be treated as a PFIC for any taxable year, a U.S. Holder would be subject to different taxation rules depending on whether the U.S.Holder makes an election to treat us as a “Qualified Electing Fund,” which election we refer to as a “QEF election,” or a “mark-to-market” election with respect to our common shares. Inaddition, if we are a PFIC, a U.S. Holder will be required to file IRS Form 8621 with the IRS. 75Table of ContentsTaxation of U.S. Holders Making a Timely QEF Election. If a U.S. Holder makes a timely QEF election, which U.S. Holder we refer to as an “Electing Holder,” the Electing Holder must report each year for U.S. federal income taxpurposes such holder’s pro-rata share of our ordinary earnings and our net capital gain, if any, for our taxable year that ends with or within the taxable year of the Electing Holder,regardless of whether or not distributions were received from us by the Electing Holder. The Electing Holder’s adjusted tax basis in the common shares will be increased to reflect taxedbut undistributed earnings and profits. Distributions of earnings and profits that had been previously taxed will result in a corresponding reduction in the adjusted tax basis in thecommon shares and will not be taxed again once distributed. An Electing Holder would generally recognize capital gain or loss on the sale, exchange or other disposition of our commonshares. A U.S. Holder would make a QEF election with respect to any year that we are a PFIC by filing IRS Form 8621 with such holder’s U.S. federal income tax return. After the end ofeach taxable year, we will determine whether we were a PFIC for such taxable year. If we determine or otherwise become aware that we are a PFIC for any taxable year, we expect to provideeach U.S. Holder with all necessary information, including a PFIC Annual Information Statement, in order to allow such holder to make a QEF election for such taxable year. Taxation of U.S. Holders Making a “Mark-to-Market” Election. Alternatively, if we were to be treated as a PFIC for any taxable year and, as we anticipate will continue to be the case, our shares are treated as “marketable stock,” a U.S. Holderwould be allowed to make a “mark-to-market” election with respect to our common shares, provided the U.S. Holder completes and files IRS Form 8621 in accordance with the relevantinstructions and related Treasury regulations. If that election is made, the U.S. Holder generally would include as ordinary income in each taxable year the excess, if any, of the fair marketvalue of the common shares at the end of the taxable year over such holder’s adjusted tax basis in the common shares. The U.S. Holder would also be permitted an ordinary loss inrespect of the excess, if any, of the U.S. Holder’s adjusted tax basis in the common shares over their fair market value at the end of the taxable year, but only to the extent of the netamount previously included in income as a result of the mark-to-market election. A U.S. Holder’s tax basis in such holder’s common shares would be adjusted to reflect any such incomeor loss amount. Gain realized on the sale, exchange or other disposition of our common shares would be treated as ordinary income, and any loss realized on the sale, exchange or otherdisposition of the common shares would be treated as ordinary loss to the extent that such loss does not exceed the net mark-to-market gains previously included by the U.S. Holder. Taxation of U.S. Holders Not Making a Timely QEF or Mark-to-Market Election. Finally, if we were to be treated as a PFIC for any taxable year, a U.S. Holder who has not timely made a QEF or mark-to-market election for the first taxable year in which suchholder holds our common shares and during which we are treated as PFIC, whom we refer to as a “Non-Electing Holder,” would be subject to special rules with respect to (1) any excessdistribution (i.e., the portion of any distributions received by the Non-Electing Holder on our common shares in a taxable year in excess of 125% of the average annual distributionsreceived by the Non-Electing Holder in the three preceding taxable years, or, if shorter, the Non-Electing Holder’s holding period for the common shares), and (2) any gain realized on thesale, exchange or other disposition of our common shares. Under these special rules: •the excess distribution or gain would be allocated ratably to each day over the Non-Electing Holder’s aggregate holding period for the common shares; •the amount allocated to the current taxable year and any taxable year before we became a PFIC would be taxed as ordinary income; and •the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, andan interest charge for the deemed tax deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year. These adverse tax consequences would not apply to a pension or profit-sharing trust or other tax-exempt organization that did not borrow funds or otherwise utilize leverage inconnection with its acquisition of our common shares. In addition, if a Non-Electing Holder who is an individual dies while owning our common shares, such holder’s successorgenerally would not receive a step-up in tax basis with respect to such common shares. Net Investment Income Tax A U.S. Holder that is an individual or estate, or a trust that does not fall into a special class of trusts that is exempt from such tax, is subject to a 3.8% tax on the lesser of (1) suchU.S. Holder’s “net investment income” (or undistributed “net investment income” in the case of estates and trusts) for the relevant taxable year and (2) the excess of such U.S. Holder’smodified adjusted gross income for the taxable year over a certain threshold (which in the case of individuals will be between $125,000 and $250,000, depending on the individual’scircumstances). A U.S. Holder’s net investment income will generally include its gross dividend income and its net gains from the disposition of our common shares, unless suchdividends or net gains are derived in the ordinary course of the conduct of a trade or business (other than a trade or business that consists of certain passive or trading activities). Netinvestment income generally will not include a U.S. Holder’s pro rata share of our income and gain (if we are a PFIC and that U.S. Holder makes a QEF election, as described above in “-Taxation of U.S. Holders Making a Timely QEF Election”). However, a U.S. Holder may elect to treat inclusions of income and gain from a QEF election as net investment income. Failureto make this election could result in a mismatch between a U.S. Holder’s ordinary income and net investment income. If you are a U.S. Holder that is an individual, estate or trust, you areurged to consult your tax advisor regarding the applicability of the net investment income tax to your income and gains in respect of your investment in our common shares. 76Table of ContentsU.S. Federal Income Taxation of Non-U.S. Holders A beneficial owner of our common shares, other than a partnership or entity treated as a partnership for U.S. federal income tax purposes, that is not a U.S. Holder is referred toherein as a Non-U.S. Holder. Non-U.S. Holders generally will not be subject to U.S. federal income tax or withholding tax on dividends received from us with respect to our common shares, unless thatincome is effectively connected with the Non-U.S. Holder’s conduct of a trade or business in the United States. In general, if the Non-U.S. Holder is entitled to the benefits of certain U.S.income tax treaties with respect to those dividends, that income is taxable only if it is attributable to a permanent establishment maintained by the Non-U.S. Holder in the United States. Non-U.S. Holders generally will not be subject to U.S. federal income tax or withholding tax on any gain realized upon the sale, exchange or other disposition of our commonshares, unless: •the gain is effectively connected with the Non-U.S. Holder’s conduct of a trade or business in the United States. In general, if the Non-U.S. Holder is entitled to thebenefits of certain income tax treaties with respect to that gain, that gain is taxable only if it is attributable to a permanent establishment maintained by the Non-U.S.Holder in the United States; or •the Non-U.S. Holder is an individual who is present in the United States for 183 days or more during the taxable year of disposition and other conditions are met. If the Non-U.S. Holder is engaged in a U.S. trade or business for U.S. federal income tax purposes, the income from the common shares, including dividends and the gain fromthe sale, exchange or other disposition of the stock, that is effectively connected with the conduct of that trade or business will generally be subject to regular U.S. federal income tax inthe same manner as discussed in the previous section relating to the taxation of U.S. Holders. In addition, a corporate Non-U.S. Holder’s earnings and profits that are attributable to theeffectively connected income, subject to certain adjustments, may be subject to an additional branch profits tax at a rate of 30%, or at a lower rate as may be specified by an applicableU.S. income tax treaty. Backup Withholding and Information Reporting In general, dividend payments, or other taxable distributions, made within the United States to you will be subject to information reporting requirements. Such payments willalso be subject to backup withholding tax if you are a non-corporate U.S. Holder and you: •fail to provide an accurate taxpayer identification number; •are notified by the IRS that you have failed to report all interest or dividends required to be shown on your U.S. federal income tax returns; or •in certain circumstances, fail to comply with applicable certification requirements. Non-U.S. Holders may be required to establish their exemption from information reporting and backup withholding by certifying their status on an applicable IRS Form W-8. If you sell your common shares through a U.S. office of a broker, the payment of the proceeds is subject to both U.S. backup withholding and information reporting unless youcertify that you are a non-U.S. person, under penalties of perjury, or you otherwise establish an exemption. If you sell your common shares through a non-U.S. office of a non-U.S. brokerand the sales proceeds are paid to you outside the United States then information reporting and backup withholding generally will not apply to that payment. However, U.S. informationreporting requirements, but not backup withholding, will apply to a payment of sales proceeds, even if that payment is made to you outside the United States, if you sell your commonshares through a non-U.S. office of a broker that is a U.S. person or has certain other contacts with the United States, unless you certify that you are a non-U.S. person, under penalty ofperjury, or you otherwise establish an exemption. Backup withholding is not an additional tax. Rather, you generally may obtain a refund of any amounts withheld under the backup withholding rules that exceed your U.S.federal income tax liability by timely filing a refund claim with the IRS. U.S. Holders who are individuals (and to the extent specified in applicable Treasury Regulations, certain U.S. entities) who hold “specified foreign financial assets” (as definedin Section 6038D of the Code) are required to file IRS Form 8938 with information relating to the asset for each taxable year in which the aggregate value of all such assets exceeds $75,000at any time during the taxable year or $50,000 on the last day of the taxable year (or such higher dollar amount as prescribed by applicable Treasury Regulations). Specified foreignfinancial assets would include, among other assets, our common shares, unless the common shares are held through an account maintained with a U.S. financial institution. Substantialpenalties apply to any failure to timely file IRS Form 8938, unless the failure is shown to be due to reasonable cause and not due to willful neglect. Additionally, in the event a U.S. Holderwho is an individual (and to the extent specified in applicable Treasury regulations, a U.S. entity) that is required to file IRS Form 8938 does not file such form, the statute of limitations onthe assessment and collection of U.S. federal income taxes of such holder for the related tax year may not close until three years after the date that the required information is filed. 77Table of ContentsF.Dividends and paying agents Not Applicable. G.Statement by experts Not Applicable. H.Documents on display We file reports and other information with the SEC. These materials, including this annual report and the accompanying exhibits, are available on the SEC’s website at http://www.sec.govas well as on our at website http://www.pshipping.com/. The information contained on, or that can be accessed through, these websites is not incorporated by reference herein and doesnot form part of this annual report. I.Subsidiary information Not Applicable. I.Annual Report to Security Holders We are currently not required to provide an annual report to security holders in response to the requirements of Form 6-K. Item 11.Quantitative and Qualitative Disclosures about Market Risk Interest Rates We are exposed to market risks associated with changes in interest rates relating to our loan facilities, according to which we pay interest SOFR plus a margin; and as such,increases in interest rates could affect our results of operations. An average increase of 1% in 2023 interest rates would have resulted in interest expenses of $1.3 million. As of December31, 2023, we had $55.2 million of debt outstanding. In the future, we expect to manage any exposure in interest rates through our regular operating and financing activities and, whendeemed appropriate, through the use of derivative financial instruments. Global financial markets and economic conditions have been, and continue to be, volatile. Specifically, due to theCOVID-19 outbreak and the recent war in Ukraine and resulting sanctions which have disrupted supply chains and caused instability in the energy markets and the global economy,credit markets and the debt and equity capital markets have been distressed, and the uncertainty surrounding the future of the global credit markets has resulted in reduced access tocredit worldwide, particularly for the shipping industry. These issues, along with significant write-offs in the financial services sector, the repricing of credit risk and the current weakeconomic conditions, have made, and will likely continue to make, it difficult to obtain additional financing. As of December 31, 2023, 2022, and 2021 and as of the date of this annual report, we did not and have not designated any financial instruments as accounting hedginginstruments. Currency and Exchange Rates We generate all of our revenues in U.S. dollars, but currently incur approximately half of our general and administrative expenses (around 46% in 2023 and 46% in 2022) andhave historically incurred a significant portion of our operating expenses (around 15% in 2023 and 11% in 2022) in currencies other than the U.S. dollar, primarily the Euro. For accountingpurposes, expenses incurred in Euros are converted into U.S. dollars at the exchange rate prevailing on the date of each transaction. The amount and frequency of some of theseexpenses, such as vessel repairs, supplies and stores, may fluctuate from period to period. Since approximately 2002, the U.S. dollar has depreciated against the Euro, but it has recoveredduring 2023. Depreciation in the value of the dollar relative to other currencies increases the dollar cost to us of paying such expenses. The portion of our expenses incurred in othercurrencies could increase in the future, which could expand our exposure to losses arising from currency fluctuations. While we have not mitigated the risk associated with exchange rate fluctuations through the use of financial derivatives, we may determine to employ such instruments fromtime to time in the future in order to minimize this risk. Our use of financial derivatives would involve certain risks, including the risk that losses on a hedged position could exceed thenominal amount invested in the instrument and the risk that the counterparty to the derivative transaction may be unable or unwilling to satisfy its contractual obligations, which couldhave an adverse effect on our results. Because during 2023 and 2022, our Euro expenses represented 6% and 6%, respectively of our revenues, we do not consider the risk from exchangerate fluctuations to be material for our results of operations and therefore, we are not engaged in derivative instruments to hedge part of those expenses. Item 12.Description of Securities Other than Equity Securities Not Applicable. 78Table of ContentsPART II Item 13.Defaults, Dividend Arrearages and Delinquencies None. Item 14.Material Modifications to the Rights of Security Holders and Use of Proceeds Pursuant to the Stockholders’ Rights Agreement dated December 20, 2021, each common share includes one preferred stock purchase right that entitles the holder to purchasefrom us one-thousandth of a share of our Series A Participating Preferred Stock if any third party acquires beneficial ownership of 10% or more of our common shares without theapproval of our board of directors. See “Item 10. Additional Information - B. Memorandum and Articles of Association - Stockholders’ Rights Agreement.” The superior voting rights of our Series C Preferred Shares limit the ability of our common shareholders to control or influence corporate matters. See “Description ofSecurities,” attached hereto as Exhibit 2.5 and incorporated by reference herein, and the risk factor under “Item 3. Key Information—D. Risk Factors” entitled “Aliki Paliou, theChairperson of the Board, controls a majority of voting power over matters on which our shareholders are entitled to vote, and accordingly, may exert considerable influence over us andmay have interests that are different from the interests of our other shareholders.” Item 15.Controls and Procedures a) Disclosure Controls and Procedures Management, including our Chief Executive Officer and Chief Financial Officer, has conducted an evaluation of the effectiveness of our disclosure controls and procedures, asdefined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and ChiefFinancial Officer have concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submitto the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. b) Management’s Annual Report on Internal Control over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act.Our internal control over financial reporting is a process designed under the supervision of our Chief Executive Officer and Chief Financial Officer to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with U.S. GAAP. Management has conducted an assessment of the effectiveness of our internal control over financial reporting based on the framework established in Internal Control -Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework). Based on this assessment, management has determined thatour internal control over financial reporting as of December 31, 2023, is effective. c) Attestation Report of Independent Registered Public Accounting Firm This annual report does not contain an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report wasnot subject to attestation by our registered public accounting firm since under the SEC adopting release implementing the Dodd-Frank Wall Street Reform and Consumer Protection Actof 2010, companies that are non-accelerated filers are exempt from including auditor attestation reports in their Form 20-Fs. d) Changes in Internal Control over Financial Reporting None. Inherent Limitations on Effectiveness of Controls Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls or our internal control over financial reportingwill prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’sobjectives will be met. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error orfraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments indecision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. Controls can also be circumvented by the individual acts of some persons, bycollusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of futureevents, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controlseffectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance withpolicies or procedures. 79Table of ContentsItem 16.[Reserved] Item 16A.Audit Committee Financial Expert Alex Papageorgiou serves as the Chairman of our Audit Committee. Our board of directors has determined that Alex Papageorgiou qualifies as an “audit committee financialexpert” and is “independent” according to SEC rules. Item 16B.Code of Ethics We have adopted a code of ethics that applies to officers, directors, employees and agents. Our code of ethics is posted on our website, http://www.pshipping.com, under“How We Care-Code of Business Conduct and Ethics.” Information on or accessed through our website does not constitute a part of this annual report and is not incorporated byreference herein. Copies of our Code of Ethics are available in print, free of charge, upon request to Performance Shipping Inc., 373 Syngrou Avenue, 175 64 Palaio Faliro, Athens, Greece.We intend to satisfy any disclosure requirements regarding any amendment to, or waiver from, a provision of this Code of Ethics by posting such information on our website. Item 16C.Principal Accountant Fees and Services a) Audit Fees Our principal accountants, Ernst and Young (Hellas) Certified Auditors Accountants S.A., have billed us for audit services. In 2023 and 2022, audit fees amounted to €183,750 or about $200,000 and €114,900 or about $128,000, respectively, at the then-prevailing exchange rates, and related to auditservices provided in connection with the audit and AS 4105 interim reviews of our consolidated financial statements. b) Audit-Related Fees In 2023 and 2022, our principal accountants, Ernst and Young (Hellas), Certified Auditors Accountants S.A., also billed us for audit-related services provided for the Company’sregistration statements, which amounted to €43,050 or about $46,313, and €118,125 or about $127,000, respectively, at the then-prevailing exchange rates. c) Tax Fees In 2023 and 2022, Ernst and Young LLP, have also billed us for tax services provided for the Company’s earnings and profits calculations, which amounted to $9,000 in each ofthe respective years. d) All Other Fees None. e) Audit Committee’s Pre-Approval Policies and Procedures Our Audit Committee is responsible for the appointment, replacement, compensation, evaluation and oversight of the work of our independent auditors. As part of thisresponsibility, the Audit Committee pre-approves all audit and non-audit services performed by the independent auditors in order to assure that they do not impair the auditor’sindependence from the Company. The Audit Committee has adopted a policy which sets forth the procedures and the conditions pursuant to which services proposed to be performedby the independent auditors may be pre-approved. f) Audit Work Performed by Other Than Principal Accountant if Greater Than 50% Not applicable. Item 16D.Exemptions from the Listing Standards for Audit Committees Not applicable. 80Table of ContentsItem 16E.Purchases of Equity Securities by the Issuer and Affiliated Purchasers MonthTotalNumber ofShares (orUnits)Purchased AveragePrice Paidper Share (orUnits) Total Number of Shares(or Units) Purchased asPart of Publicly Announced Plans orPrograms Maximum Number (orApproximate Dollar Value) ofShares (or Units) that May YetBe Purchased Under the Plansor ProgramsApril 2023(1)772,371 common shares $0.90 772,371 common shares $ 1.3 millionMay 2023(1)458,069 common shares $0.78 458,069 common shares $ 0.9 millionJune 2023(1)463,543 common shares $0.76 463,543 common shares $ 0.6 millionJuly 2023(1)112,933 common shares $0.81 112,933 common shares $ 0.5 millionAugust 2023(1)416,020 common shares $1.21 416,020 common shares $ 0.0 millionAugust 2023(2)33,333 common shares $1.50 33,333 common shares $ 1.9 millionNovember 2023(2)113,026 common shares $2.29 113,026 common shares $ 1.6 millionDecember 2023(2)180,741 common shares $2.29 180,741 common shares $ 1.3 million(1) In April 2023, our board of directors authorized a share repurchase plan (the “April 2023 Repurchase Plan”) to purchase up to an aggregate of $2.0 million of our common shares.Under the April 2023 Repurchase Plan, we repurchased a total of 2,222,936 common shares for a total amount of approximately $2.0 million, successfully completing the April 2023Repurchase Plan in the third quarter of 2023. (2) In August 2023, our board of directors authorized a new share repurchase plan (the “August 2023 Repurchase Plan”) to repurchase up to $2.0 million of our outstanding commonshares. As of March 26, 2024, 327,100 common shares have been repurchased for a total amount of approximately $0.7 million under the August 2023 Repurchase Plan, and $1.3 millionremain available under the August 2023 Repurchase Plan. Item 16F.Change in Registrant’s Certifying Accountant Not applicable. Item 16G.Corporate Governance We have certified to Nasdaq that our corporate governance practices are in compliance with, and are not prohibited by, the laws of the Republic of the Marshall Islands.Therefore, we are exempt from many of Nasdaq’s corporate governance practices other than the requirements regarding the disclosure of a going concern audit opinion, submission of alisting agreement, notification to Nasdaq of non-compliance with Nasdaq corporate governance practices, prohibition on disparate reduction or restriction of shareholder voting rights,and the establishment of an audit committee satisfying Nasdaq Listing Rule 5605(c)(3) and ensuring that such audit committee’s members meet the independence requirement of ListingRule 5605(c)(2)(A)(ii). The practices we follow in lieu of Nasdaq’s corporate governance rules applicable to U.S. domestic issuers are as follows: •As a foreign private issuer, we are not required to have an audit committee comprised of at least three members. Our audit committee is comprised of two members; •As a foreign private issuer, we are not required to adopt a formal written charter or board resolution addressing the nominations process. We do not have anominations committee, nor have we adopted a board resolution addressing the nominations process; •As a foreign private issuer, we are not required to hold regularly scheduled board meetings at which only independent directors are present; •In lieu of obtaining shareholder approval prior to the issuance of designated securities, we will comply with provisions of the Marshall Islands Business CorporationsAct, which allows the board of directors to approve share issuances; •As a foreign private issuer, we are not required to solicit proxies or provide proxy statements to Nasdaq pursuant to Nasdaq corporate governance rules or MarshallIslands law. Consistent with Marshall Islands law and as provided in our bylaws, we will notify our shareholders of meetings between 15 and 60 days before themeeting. This notification will contain, among other things, information regarding business to be transacted at the meeting. In addition, our bylaws provide thatshareholders must give us between 150 and 180 days advance notice to properly introduce any business at a meeting of shareholders. Other than as noted above, we are in compliance with all other Nasdaq corporate governance standards applicable to U.S. domestic issuers. Item 16H.Mine Safety Disclosure Not applicable. Item 16I.Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. Item 16J.Insider Trading Policies81Table of ContentsWe have adopted an insider trading policy governing the purchase, sale, and other dispositions of our securities by directors, senior management, and employees. Our insidertrading policy is reasonably designed to promote compliance with applicable insider trading laws, rules and regulations, and any listing standards applicable to us. A copy of our InsiderTrading Policy has been filed as Exhibit 11.1 to this annual report.Item 16K.CybersecurityWe believe that cybersecurity is fundamental in our operations and, as such, we are committed to maintaining robust governance and oversight of cybersecurity risks and toimplementing comprehensive processes and procedures for identifying, assessing, and managing material risks from cybersecurity threats as part of our broader risk management systemand processes. Our cybersecurity risk management strategy prioritizes detection, analysis and response to known, anticipated or unexpected threats; effective management of securityrisks; and resiliency against incidents. With the ever-changing cybersecurity landscape and continual emergence of new cybersecurity threats, our senior management team ensures thatsignificant resources are devoted to cybersecurity risk management and the technologies, processes and people that support it. We implement risk-based controls to protect ourinformation, our information systems, our business operations, and our vessels.Third parties also play a role in our cybersecurity. We engage third-party services to conduct evaluations of our security controls, whether through independent audits orconsulting on best practices to address new challenges. These evaluations include testing both the design and operational effectiveness of security controls. Our internal auditors auditour information systems, whose findings are reported to our audit committee. Further, any findings relating to the information systems that may result from the audit of the financialstatements is also reported to the audit committee.As part of our cybersecurity risk management system, our incident management teams track and log privacy and security incidents across our Company, including our vessels,to remediate and resolve any such incidents. All incidents are reviewed regularly to determine whether further escalation is appropriate. Any incident assessed as potentially being orpotentially becoming material is immediately escalated for further assessment, and then reported to our senior management who then consult with our audit committee. We consult withoutside counsel as appropriate, including on materiality analysis and disclosure matters, and our senior management makes the final materiality determinations and disclosure and othercompliance decisions. Our senior management apprises our independent public accounting firm of matters and any relevant developments.Our audit committee has oversight responsibility for risks and incidents relating to cybersecurity threats, including compliance with disclosure requirements, cooperation withlaw enforcement, and related effects on financial and other risks, and it reports any findings and recommendations, as appropriate, to our board of directors for consideration. Seniormanagement regularly discusses cyber risks and trends and, should they arise, any material incidents with our audit committee.Overall, our approach to cybersecurity risk management includes the following key elements:1.Continuous monitoring of cybersecurity threats, both internal and external, through the use of data analytics and network monitoring systems. 2.Engagement of third-party consultants and other advisors to assist in assessing points of vulnerability of our information security systems. 3.Training and Awareness – we have various information technology policies relating to cybersecurity. We also provide employee mandatory training that is administered on aperiodic basis that reinforces our information technology policies, standards and practices, as well as the expectation that employees comply with these policies and identifyand report potential cybersecurity risks. We also require employees to sign confidentiality agreements, where appropriate to their role. We continue to invest in our cybersecurity systems and to enhance our internal controls and processes. Our business strategy, results of operations and financial conditionhave not been materially affected by risks from cybersecurity threats, but we cannot provide assurance that they will not be materially affected in the future by such risks or any futurematerial incidents. While we have dedicated significant resources to identifying, assessing, and managing material risks from cybersecurity threats, our efforts may not be adequate, mayfail to accurately assess the severity of an incident, may not be sufficient to prevent or limit harm, or may fail to sufficiently remediate an incident in a timely fashion, any of which couldharm our business, reputation, results of operations and financial condition. For more information certain risks associated with cybersecurity, see the risk factor under “Item 3. KeyInformation—D. Risk Factors” entitled “A cyber-attack could materially disrupt our business.” 82Table of ContentsPART III Item 17.Financial Statements See “Item 18. Financial Statements.” Item 18.Financial Statements The financial statements required by this “Item 18. Financial Statements” are filed as a part of this annual report beginning on page F-1. Item 19.Exhibits (a) Exhibits Exhibit NumberDescription1.1Amended and Restated Articles of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on FormF-4 (File No. 333-169974), filed with the SEC on October 15, 2010).1.2Articles of Amendment to the Amended and Restated Articles of Incorporation of the Company, dated June 8, 2016 (incorporated by reference to Exhibit 3.3to the Company’s report on Form 6-K, filed with the SEC on June 9, 2016).1.3Articles of Amendment to the Amended and Restated Articles of Incorporation of the Company, dated July 3, 2017 (incorporated by reference to Exhibit 3.1to the Company’s report on Form 6-K, filed with the SEC on July 6, 2017).1.4Articles of Amendment to the Amended and Restated Articles of Incorporation of the Company, dated July 26, 2017 (incorporated by reference to Exhibit 3.1to the Company’s report on Form 6-K, filed with the SEC on July 28, 2017).1.5Articles of Amendment to the Amended and Restated Articles of Incorporation of the Company, dated August 23, 2017 (incorporated by reference to Exhibit3.1 to the Company’s report on Form 6-K, filed with the SEC on August 28, 2017).1.6Articles of Amendment to the Amended and Restated Articles of Incorporation of the Company, dated September 22, 2017 (incorporated by reference toExhibit 3.1 to the Company’s report on Form 6-K, filed with the SEC on September 26, 2017).1.7Articles of Amendment to the Amended and Restated Articles of Incorporation of the Company, dated November 1, 2017 (incorporated by reference toExhibit 3.1 to the Company’s report on Form 6-K, filed with the SEC on November 3, 2017).1.8Articles of Amendment to the Amended and Restated Articles of Incorporation of the Company, dated February 25, 2019 (incorporated by reference toExhibit 1.8 to the Company’s Annual Report on Form 20-F, filed with the SEC on March 18, 2019).1.9Articles of Amendment to the Amended and Restated Articles of Incorporation of the Company, dated October 30, 2020 (incorporated by reference to Exhibit3.1 to the Company’s report on Form 6K, filed with the SEC on November 2, 2020).1.10Articles of Amendment to the Amended and Restated Articles of Incorporation of the Company, dated November 15, 2022*1.11Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form F-4 (File No. 333-169974), filed with the SEC on October 15, 2010).2.1Form of Common Share Certificate (incorporated by reference to Exhibit 4.1 to the Company’s report on Form 6-K, filed with the SEC on November 2, 2020).2.2Statement of Designations of Rights, Preferences and Privileges of Series A Participating Preferred Stock of Performance Shipping Inc., dated August 2, 2010(incorporated by reference to Exhibit 4.4 to the Company’s Registration Statement on Form F-4 (File No. 333-169974), filed with the SEC on October 15, 2010).2.3Amended and Restated Certificate of Designation, Preferences and Rights of the Series B Convertible Cumulative Perpetual Preferred Stock of PerformanceShipping Inc., dated January 12, 2022 (incorporated by reference to Exhibit 3.1 to the Company’s report on Form 6-K, filed with the SEC on February 4, 2022).2.4Certificate of Designation of Series C Convertible Cumulative Redeemable Perpetual Preferred Shares dated October 17, 2022 (incorporated by reference toExhibit 99.2 to the Company’s report on Form 6-K, filed with the SEC on October 21, 2022).2.5Description of Securities*4.1Registration Rights Agreement dated April 6, 2010 (incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form F-4 (File No.333-169974), filed with the SEC on October 15, 2010).4.2Stockholders’ Rights Agreement dated December 20, 2021 (incorporated by reference to Exhibit 4.1 to the Company’s report on Form 6-K, filed with the SECon December 21, 2021).83Table of Contents4.3Amended and Restated 2015 Equity Incentive Plan (incorporated by reference to Exhibit 1 to the Company’s report on Form 6-K, filed with the SEC onDecember 31, 2020).4.4Administrative Services Agreement with UOT (incorporated by reference to Exhibit 4.8 to the Company’s Annual Report on Form 20-F, filed with the SEC onMarch 26, 2014).4.5Form of Vessel Management Agreement with UOT (incorporated by reference to Exhibit 4.11 to the Company’s Annual Report on Form 20-F, filed with theSEC on March 26, 2014).4.6Secured Loan Agreement dated 4 August 2023 among Taburao Shipping Company Inc. and Tarawa Shipping Company Inc. as borrowers, PerformanceShipping Inc. as guarantor, the financial institutions listed in schedule 1 thereto as lenders, Nordea Bank Abp as hedge counterparties and Nordea Bank Abp,filial I Norge as bookrunner, agent, and security agent.*4.7First Supplemental Agreement to Secured Loan Facility Agreement dated July 24, 2019 (incorporated by reference to Exhibit 4.8 to the Company’sRegistration Statement on Form F-1/A (File No. 333-255100), filed with the SEC on April 20, 2021).4.8Shipbuilding Contract dated March 7, 2023 among Nakaza Shipping Company Inc, China Shipbuilding Trading Company Limited and Shanghai WaigaoqiaoShipbuilding Company Limited (incorporated by reference to Exhibit 4.9 to the Company’s Annual Report on Form 20-F, filed with the SEC on April 28, 2023).4.9Shipbuilding Contract for the construction of Hull No. H1596 dated December 18, 2023 among Sri Lanka Shipping Company Inc., China Shipbuilding TradingCompany Limited and Shanghai Waigaoqiao Shipbuilding Company Limited.*4.10Shipbuilding Contract for the construction of Hull No. H1597 dated December 18, 2023 among Guadeloupe Shipping Company Inc., China ShipbuildingTrading Company Limited and Shanghai Waigaoqiao Shipbuilding Company Limited.*4.11Credit Facility dated March 2, 2022 between Mango Shipping Corp. and the Company (incorporated by reference to Exhibit 4.10 to the Company’s AnnualReport on Form 20-F, filed with the SEC on March 11, 2022).4.12Warrant Agency Agreement dated as of June 1, 2022 among the Company, Computershare Inc., and Computershare Trust Company, N.A. (incorporated byreference to Exhibit 4.1 to the Company’s report on Form 6-K, filed with the SEC on June 2, 2022).4.13Form of Class A Common Share Purchase Warrant (incorporated by reference to Exhibit 4.2 to the Company’s report on Form 6-K, filed with the SEC on June2, 2022).4.14Form of Securities Purchase Agreement between the Company and the purchasers thereto (incorporated by reference to Exhibit 4.2 to the Company’s reporton Form 6-K, filed with the SEC on July 20, 2022).4.15Form of Common Share Purchase Warrant (incorporated by reference to Exhibit 4.3 to the Company’s report on Form 6-K, filed with the SEC on July 20, 2022).4.16Form of Securities Purchase Agreement between the Company and the purchasers thereto (incorporated by reference to Exhibit 4.2 to the Company’s reporton Form 6-K, filed with the SEC on August 17, 2022).4.17Form of Common Share Purchase Warrant (incorporated by reference to Exhibit 4.3 to the Company’s report on Form 6-K, filed with the SEC on August 17,2022).4.18Stock Purchase Agreement dated October 17, 2022 between Mango Shipping Corp. and the Company (incorporated by reference to Exhibit 99.3 to theCompany’s report on Form 6-K, filed with the SEC on October 21, 2022).4.19Loan Agreement dated November 1, 2022 between Alpha Bank S.A. as lender and Garu Shipping Company Inc., as borrower (incorporated by reference toExhibit 4.19 to the Company’s Annual Report on Form 20-F, filed with the SEC on April 28, 2023).84Table of Contents4.20Loan Agreement dated December 7, 2022 between Alpha Bank S.A., as lender and Arbar Shipping Company Inc., as borrower (incorporated by reference toExhibit 4.21 to the Company’s Annual Report on Form 20-F, filed with the SEC on April 28, 2023).4.21Form of Securities Purchase Agreement dated as of February 28, 2023 between the Company and the purchasers thereto (incorporated by reference to Exhibit4.2 to the Company’s report on Form 6-K, filed with the SEC on March 3, 2023).4.22Form of Series A Common Share Purchase Warrant (incorporated by reference to Exhibit 4.3 to the Company’s report on Form 6-K, filed with the SEC onMarch 3, 2023).4.23Form of Series B Common Share Purchase Warrant (incorporated by reference to Exhibit 4.4 to the Company’s report on Form 6-K, filed with the SEC onMarch 3, 2023).8.1List of Subsidiaries*11.1Insider Trading Policy*12.1Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer*12.2Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer*13.1Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*13.2Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*15.1Consent of independent registered public accounting firm*15.2Consent of Watson Farley & Williams LLP*97.1Policy for the Recovery of Erroneously Awarded Compensation*101The following financial information from Performance Shipping Inc.’s Annual Report on Form 20-F for the fiscal year ended December 31, 2023, formatted asInline eXtensible Business Reporting Language (iXBRL): (1) Consolidated Balance Sheets as of December 31, 2023 and 2022; (2) Consolidated Statements ofOperations for the years ended December 31, 2023, 2022, and 2021; (3) Consolidated Statements of Comprehensive Income / (Loss) for the years endedDecember 31, 2023, 2022, and 2021; (4) Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2023, 2022, and 2021; (5)Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022, and 2021; and (6) Notes to Consolidated Financial Statements.104Cover Page Interactive Data File (formatted as Inline eXtensible Business Reporting Language (iXBRL) and contained in Exhibit 101)* Filed herewith.85Table of ContentsSIGNATURESThe registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on itsbehalf.PERFORMANCE SHIPPING INC.By:/s/ Andreas MichalopoulosAndreas MichalopoulosChief Executive Officer, Director and Secretary Dated: March 28, 202486Table of ContentsPERFORMANCE SHIPPING INC.INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID 1457)F-2 Consolidated Balance Sheets as at December 31, 2023 and 2022F-4 Consolidated Statements of Operations for the years ended December 31, 2023, 2022 and 2021F-5 Consolidated Statements of Comprehensive Income for the years ended December 31, 2023, 2022 and 2021F-6 Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2023, 2022 and 2021F-7 Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021F-8 Notes to Consolidated Financial StatementsF-9F-1Table of ContentsReport of Independent Registered Public Accounting FirmTo the Stockholders and the Board of Directors of Performance Shipping Inc.Opinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of Performance Shipping Inc. (the Company) as of December 31, 2023 and 2022, the related consolidated statements ofoperations, comprehensive income/(loss), stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectivelyreferred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Companyat December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S. generallyaccepted accounting principles.Basis for OpinionThese financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits.We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to theCompany in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal controlover financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion onthe effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respondto those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating theaccounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide areasonable basis for our opinion.Critical audit matterThe critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to theaudit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating thecritical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.F-2Table of Contents Fair value measurement of Series C Preferred Stock using significant unobservable inputs Description ofthe matterAs discussed in Notes 2(t), 2(ae), 9(b) and 13 to the consolidated financial statements, during 2023, the Company measured the effect of the down roundfeature of the Series C preferred stock, categorized as Level 3 of the fair value hierarchy, to be $9.8 million for the year ended December 31, 2023.Management determines the fair value of these Series C Preferred Stock, by applying the methodologies described in Notes 2(t), and 9(b) to the consolidatedfinancial statements and using significant unobservable inputs. Determining the fair value of the Series C Preferred Stock requires management to makesignificant judgments about the valuation methodologies, including the significant unobservable inputs used in the measurements.Auditing the fair value measurement of the Company’s Series C Preferred Stock was complex given the judgement and estimation uncertainty involved. Inparticular, to value its Series C Preferred Stock, the Company estimated significant unobservable inputs such as expected volatility and expected life of theconvertibility option of the Series C Preferred Stock to common shares, which are significant to the valuation of the Series C Preferred Stock and consideredhighly interdependent. How weaddressed thematter in ourauditOur audit procedures included, among others, comparing the valuation methodology used by the Company against accounting guidance in ASC 820,testing significant unobservable inputs and the mathematical accuracy of the Company’s valuation calculations. To test the significant unobservable inputs,we compared the underlying data used in the Company’s fair value measurement to the statement of designations of the Series C Preferred Stock andinformation available from third-party sources, such as historical volatility. In addition, we independently developed fair value estimates and compared themto the Company’s estimates. We involved our valuation specialists to assist with the application of the procedures stated above. We also assessed theadequacy of the disclosures in Notes 2(t), 2(ae), 9(b) and 13./s/ Ernst & Young (Hellas) Certified Auditors Accountants S.A.We have served as the Company’s auditor since 2010.Athens, GreeceMarch 28, 2024F-3Table of ContentsPERFORMANCE SHIPPING INC.Consolidated Balance Sheets as at December 31, 2023 and 2022(Expressed in thousands of U.S. Dollars, except for share and per share data)ASSETS December 31, 2023 December 31, 2022 CURRENT ASSETS: Cash and cash equivalents (Note 2 (e)) $67,267 $38,726 Accounts receivable, net of provision for credit losses (Notes 2 (g), (h) and 3) 8,280 9,110 Deferred voyage expenses (Note 2 (n)) - 20 Inventories (Note 2 (i)) 2,203 3,037 Prepaid expenses and other assets 2,164 2,524 Current assets from discontinued operations (Note 2 (y)) - 46 Total current assets 79,914 53,463 FIXED ASSETS: Advances for vessels under construction and other vessels’ costs (Note 5) 11,303 - Vessels, net (Notes 2 (j), (k), (l) and 6) 202,108 236,607 Property and equipment, net 44 72 Total fixed assets 213,455 236,679 NON-CURRENT ASSETS: Restricted cash, non-current (Notes 2 (f) and 7) 1,000 1,000 Right of use asset under operating leases (Note 8) 99 163 Deferred charges, net (Note 2 (p)) 1,798 1,098 Other non-current assets (Notes 2 (j) and 6) - 522 Prepaid charter revenue - 54 Total non-current assets 2,897 2,837 Total assets $296,266 $292,979 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Current portion of long-term bank debt, net of unamortized deferred fin. costs (Note 7) $7,427 $16,746 Accounts payable, trade and other 4,630 4,580 Due to related parties (Note 4) 245 335 Accrued liabilities 2,976 2,889 Deferred revenue (Note 3) - 1,378 Lease liabilities, current (Note 8) 66 73 Current liabilities from discontinued operations (Note 2 (y)) - 98 Total current liabilities 15,344 26,099 LONG-TERM LIABILITIES: Long-term bank debt, net of unamortized deferred financing costs (Note 7) 47,459 110,929 Other liabilities, non-current 214 156 Long-term lease liabilities (Note 8) 33 90 Commitments and contingencies (Note 8) - - Fair value of warrants’ liability (Note 9) 32 - Total long-term liabilities 47,738 111,175 STOCKHOLDERS’ EQUITY: Preferred stock, $0.01 par value; 25,000,000 shares authorized, 50,726 and 136,261 Series B, and 1,428,372 and 1,314,792 Series C issued andoutstanding as at December 31, 2023 and 2022, respectively (Note 9) 15 15 Common stock, $0.01 par value; 500,000,000 shares authorized; 12,279,676 and 4,187,588 issued and outstanding as at December 31, 2023and 2022, respectively (Note 9) 123 42 Additional paid-in capital (Note 9) 534,112 513,623 Other comprehensive income 49 66 Accumulated deficit (301,115) (358,041)Total stockholders’ equity 233,184 155,705 Total liabilities and stockholders’ equity $296,266 $292,979 The accompanying notes are an integral part of these consolidated financial statements.F-4Table of ContentsPERFORMANCE SHIPPING INC.Consolidated Statements of OperationsFor the years ended December 31, 2023, 2022 and 2021(Expressed in thousands of U.S. Dollars – except for share and per share data) 2023 2022 2021 REVENUE: Revenue (Notes 2 (n) and 3) $108,938 $75,173 $36,491 EXPENSES: Voyage expenses (Note 2 (n)) 4,358 14,861 19,205 Vessel operating expenses (Notes 2 (r) and 12) 21,866 13,828 12,301 Depreciation and amortization of deferred charges (Notes 2 (k), (p) and 6) 14,793 9,281 7,472 General and administrative expenses (Notes 4, 8 and 9) 8,042 6,751 5,782 Gain on vessels’ sale (Note 6) (15,683) (9,543) - (Reversal) / Provision for credit losses and write offs (Notes 2 (h) and 3) (37) 33 160 Foreign currency (gains) / losses (Note 2 (d)) 64 (20) 31 Operating income / (loss) $75,535 $39,982 $(8,460) OTHER INCOME / (EXPENSES) Interest and finance costs (Notes 4, 7, 9 and 10) (9,598) (3,966) (1,801)Loss from debt extinguishment (Notes 2 (q) and 7) (387) - - Interest income 3,302 284 18 Gain from property sale (Note 4) - - 137 Changes in fair value of warrants’ liability (Note 9) 561 - - Total other expenses, net $(6,122) $(3,682) $(1,646) Net income / (loss) from continuing operations $69,413 $36,300 $(10,106) Income allocated to participating securities (Note 11) (2) (6) - Deemed dividend on Series B preferred stock upon exchange of common stock (Notes 9 and 11) - (9,271) - Deemed dividend on Series C preferred stock upon exchange of Series B preferred stock and re-acquisition of loan dueto a related party (Notes 9 and 11) - (6,944) - Deemed dividend to the Series C preferred stockholders due to triggering of a down-round feature (Notes 9 and 11) (9,809) (5,930) - Deemed dividend to the July and August 2022 warrants’ holders due to triggering of a down-round feature (Notes 9and 11) (789) (1,116) - Dividends on preferred stock (Note 11) (1,889) (1,030) - Net income / (loss) attributable to common stockholders from continuing operations $56,924 $12,003 $(10,106) Net income attributable to common stockholders from discontinued operations $- $- $400 Total net income / (loss) attributable to common stockholders $56,924 $12,003 $(9,706) Earnings / (Loss) per common share, basic, continuing operations (Note 11) $5.43 $6.49 $(30.16) Earnings / (Loss) per common share, diluted, continuing operations (Note 11) $1.91 $3.02 $(30.16) Earnings per common share, basic, discontinued operations (Note 11) $- $- $1.19 Earnings per common share, diluted, discontinued operations (Note 11) $- $- $1.19 Earnings / (Loss) per common share, basic, total (Note 11) $5.43 $6.49 $(28.97) Earnings / (Loss) per common share, diluted, total (Note 11) $1.91 $3.02 $(28.97) Weighted average number of common shares, basic (Note 11) 10,491,316 1,850,072 335,086 Weighted average number of common shares, diluted (Note 11) 35,539,671 6,447,710 335,086 The accompanying notes are an integral part of these consolidated financial statements.F-5Table of ContentsPERFORMANCE SHIPPING INC.Consolidated Statements of Comprehensive Income / (Loss)For the years ended December 31, 2023, 2022 and 2021(Expressed in thousands of U.S. Dollars) 2023 2022 2021 Net income / (loss) from continuing and discontinued operations $69,413 $36,300 $(9,706)Other comprehensive income / (loss) (Actuarial gain / (loss)) (17) 68 (10)Comprehensive income / (loss) from continuing and discontinued operations $69,396 $36,368 $(9,716)The accompanying notes are an integral part of these consolidated financial statements.F-6Table of ContentsPERFORMANCE SHIPPING INC.Consolidated Statements of Stockholders’ EquityFor the years ended December 31, 2023, 2022 and 2021(Expressed in thousands of U.S. Dollars – except for share and per share data) Common Stock Preferred Stock Additional Other # of Par # of # of Par Paid-in Comprehensive Accumulated Shares Value B Shares C Shares Value Capital Income / (Loss) Deficit Total Balance, December 31, 2020 337,500 $3 - - $- $457,219 $8 $(360,433) $96,797 - Net loss - - - - - - - (9,706) (9,706) - Compensation cost on restricted stock andstock option awards (Note 9) - - - - - 268 - - 268 - Actuarial loss - - - - - - (10) - (10)Balance, December 31, 2021 337,500 $3 - - $- $457,487 $(2) $(370,139) $87,349 - Net income - - - - - - - 36,300 36,300 - Common shares exchanged for Series Bpreferred shares (Note 9) (188,974) (1) 793,657 - 8 9,264 - (9,271) - - Compensation cost on restricted stock andstock option awards (Note 9) - - - - - 107 - - 107 - Issuance of common stock under ATM program,net of issuance costs 175,507 2 - - - 1,786 - - 1,788 - Actuarial gain - - - - - - 68 - 68 - Issuance of units, net of issuance costs (Note 9) 508,000 5 - - - 7,121 - - 7,126 - Issuance of common stock and July 2022warrants, net of issuance costs (Note 9) 1,133,333 11 - - - 5,260 - - 5,271 - Issuance of common stock and August 2022warrants, net of issuance costs (Note 9) 2,222,222 22 - - - 13,685 - - 13,707 - Series B preferred shares exchanged for Series Cpreferred shares and re-acquisition of loan dueto a related party (Note 9) - - (657,396) 1,314,792 7 11,867 - (6,944) 4,930 - Deemed dividend to the July 2022 warrantsholders due to triggering of a down-roundfeature (Note 9) - - - - - 214 - (214) - - Deemed dividend to the August 2022 warrantsholders due to triggering of a down-roundfeature (Note 9) - - - - - 902 - (902) - - Deemed dividend to the Series C stockholdersdue to triggering of a down-round feature (Note9) - - - - - 5,930 - (5,930) - - Dividends declared and paid on Series Bpreferred shares (at $0.875 per share) (Note 9) - - - - - - - (530) (530) - Dividends declared and paid on Series Cpreferred shares (at $0.3125 per share) (Note 11) - - - - - - - (411) (411)Balance, December 31, 2022 4,187,588 $42 136,261 1,314,792 $15 $513,623 $66 $(358,041) $155,705 - Net income - - - - - - - 69,413 69,413 - Compensation cost on restricted stock awards(Note 9) - - - - - 52 - - 52 - Issuance of common stock under ATM program,net of issuance costs (Note 9) 224,817 2 - - - 671 - - 673 - Issuance of common stock and Series Bwarrants, net of issuance costs (Note 9) 5,556,000 56 - - - 7,713 - - 7,769 - Alternative cashless exercise of Series Awarrants (Note 9) 3,597,100 36 - - - 3,379 - - 3,415 - Series B preferred shares exchanged for Series Cpreferred shares (Note 9) - - (85,535) 171,070 - 482 - - 482 - Series C preferred shares converted to commonshares (Note 9) 1,064,207 11 - (57,490) - (11) - - - - Repurchase and retirement of common stock(Note 9) (2,550,036) (26) - - - (2,723) - - (2,749) - Exercise of July 2022 and August 2022 warrants(Note 9) 200,000 2 - - - 328 - - 330 - Actuarial loss - - - - - - (17) - (17) - Deemed dividend to the July 2022 warrants’holders due to triggering of a down-roundfeature (Note 9) - - - - - 256 - (256) - - Deemed dividend to the August 2022 warrants’holders due to triggering of a down-roundfeature (Note 9) - - - - - 533 - (533) - - Deemed dividend to the Series C preferredstockholders due to triggering of a down-roundfeature (Note 9) - - - - - 9,809 - (9,809) - - Dividends declared and paid on Series Bpreferred shares (at $1.00 per share) (Note 9) - - - - - - - (55) (55) - Dividends declared and paid on Series Cpreferred shares (at $1.25 per share) (Note 9) - - - - - - - (1,834) (1,834)Balance, December 31, 2023 12,279,676 $123 50,726 1,428,372 $15 $534,112 $49 $(301,115) $233,184 The accompanying notes are an integral part of these consolidated financial statements.F-7Table of ContentsPERFORMANCE SHIPPING INC.Consolidated Statements of Cash FlowsFor the years ended December 31, 2023, 2022 and 2021(Expressed in thousands of U.S. Dollars) 2023 2022 2021 Cash Flows provided by / (used in) Operating Activities: Net income / (loss) $69,413 $36,300 $(9,706)Adjustments to reconcile net income / (loss) to net cash provided by operating activities: Depreciation and amortization of deferred charges (Note 6) 14,793 9,281 7,472 Amortization of deferred financing costs 244 402 143 Financing costs 340 - - Changes in fair value of warrants’ liability (561) - - Amortization of prepaid charter revenue 54 (54) - Gain on vessel’s sale (Note 6) (15,683) (9,543) - Gain from property sale - - (137)Compensation cost on restricted stock and stock option awards (Note 9) 52 107 268 Loss from debt extinguishment 387 - - Actuarial gain / (loss) (17) 68 (10)(Increase) / Decrease in: Accounts receivable 830 (5,318) (196)Deferred voyage expenses 20 38 17 Inventories 834 1,249 (2,305)Prepaid expenses and other assets 406 (854) (319)Right of use asset under operating leases 64 (79) 100 Other non-current assets 72 189 (261)Increase / (Decrease) in: Accounts payable, trade and other 16 (293) 3,233 Due to related parties (90) 208 59 Accrued liabilities 87 1,592 84 Deferred revenue (1,378) 1,378 - Other liabilities, non-current 58 (106) 11 Lease liabilities under operating leases (64) 79 (100)Drydock costs (1,922) (797) (1,476)Net Cash provided by / (used in) Operating Activities $67,955 $33,847 $(3,123)Cash Flows provided by / (used in) Investing Activities: Advances for vessels under construction and other vessel costs (Note 5) (11,303) - - Vessel acquisitions and other vessels’ costs (Note 6) (64) (143,440) - Proceeds from sale of vessels, net of expenses (Note 6) 37,636 32,626 - Proceeds from sale of property, net of expenses - - 1,015 Payments for vessels’ improvements (Note 6) (510) (2,109) (1,777)Property and equipment additions (38) (27) (8)Net Cash provided by / (used in) Investing Activities $25,721 $(112,950) $(770)Cash Flows (used in) / provided by Financing Activities: Proceeds from related party loans - 5,000 - Proceeds from long-term bank debt (Note 7) 2,141 108,633 - Repayments of related party loans - (70) - Repayments / Prepayments of long-term bank debt (Note 7) (75,421) (30,327) (7,911)Issuance of units, common stock and warrants, net of issuance costs (Note 9) 11,438 26,104 - Proceeds from exercise of Series A warrants (Note 9) 330 - - Issuance of preferred stock, net of expenses (Note 9) 482 - - Common shares re-purchase and retirement, including expenses (Note 9) (2,749) - - Issuance of common stock under ATM program, net of issuance costs (Note 9) 673 1,788 - Payments of financing costs (Note 7) (140) (932) - Cash dividends (Note 11) (1,889) (941) - Net Cash (used in) / provided by Financing Activities $(65,135) $109,255 $(7,911)Net increase / (decrease) in cash, cash equivalents and restricted cash $28,541 $30,152 $(11,804)Cash, cash equivalents and restricted cash at beginning of the year $39,726 $9,574 $21,378 Cash, cash equivalents and restricted cash at end of the year $68,267 $39,726 $9,574 RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH Cash and cash equivalents at the end of the year $67,267 $38,726 $9,574 Restricted cash at the end of the year 1,000 1,000 - Cash, cash equivalents and restricted cash at the end of the year $68,267 $39,726 $9,574 SUPPLEMENTAL CASH FLOW INFORMATION Alternative cashless exercise of Series A warrants (Note 9) $3,415 $- $- Non-cash extinguishment of a related party debt through the issuance of Series C preferred shares (Note 9) $- $4,930 $- Non-cash investing activities $- $64 $999 Interest payments, net of capitalized amounts $9,135 $3,123 $1,608 The accompanying notes are an integral part of these consolidated financial statements.F-8Table of ContentsPERFORMANCE SHIPPING INC.Notes to Consolidated Financial StatementsDecember 31, 2023(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)1.General InformationCompany’s identityThe accompanying consolidated financial statements include the accounts of Performance Shipping Inc. (or “Performance”) and its wholly-owned subsidiaries (collectively, the“Company”). Performance was incorporated as Diana Containerships Inc. on January 7, 2010, under the laws of the Republic of the Marshall Islands for the purpose of engaging in anylawful act or activity under the Marshall Islands Business Corporations Act. On February 19, 2019, the Company’s Annual Meeting of Shareholders approved an amendment to theCompany’s Amended and Restated Articles of Incorporation to change the name of the Company from “Diana Containerships Inc.” to “Performance Shipping Inc.”, which was effectedon February 25, 2019. The Company’s common shares trade on the Nasdaq Capital Market under the ticker symbol “PSHG”.The Company is a global provider of shipping transportation services through the ownership of tanker vessels, while it owned container vessels since its incorporation through August2020. The Company operates its fleet through Unitized Ocean Transport Limited (the “Manager” or “UOT”), a wholly-owned subsidiary. The fees payable to UOT are eliminated inconsolidation as intercompany transactions.Financial Statements’ presentationFollowing the sale of all Company’s container vessels in 2020, the Company’s results of operations of the container vessels in 2021, as well as their assets and liabilities as of December31, 2022, are reported as discontinued operations in the accompanying consolidated financial statements. For the statement of cash flows of 2021, the Company elected the alternative ofcombining cash flows from discontinued operations with cash flows from continuing operations within each cash flow statement category, and as such, no separate disclosure of cashflows from discontinued operations is presented in the statement of cash flows.Furthermore, effective November 15, 2022, the Company effected a one-for-fifteen reverse stock split on its common stock. All share and per share amounts disclosed in theaccompanying consolidated financial statements give effect to these reverse stock splits retroactively, for all periods presented.Other mattersGlobal public health threats, such as the outbreak of the novel coronavirus (“COVID-19”) and its variants, have the potential to, among other things, disrupt global financial markets andeconomic conditions reducing the global demand for oil and oil products, which the Company’s vessels transport and adversely impact our operations, the timing of completion of anyfuture newbuilding projects, and the operations of our charterers and other customers. During the years ended December 31, 2022 and 2021, the Company incurred increased costs as aresult of the restrictions imposed in various jurisdictions creating delays and additional complexities with respect to port calls and crew rotations. As of December 31, 2023, and during2023, the Company’s financial results have not been adversely affected from the impact of COVID. Given the dynamic nature of these circumstances, the full extent to which the COVID-19 global pandemic may have direct or indirect impact on the Company’s business and the related financial reporting implications cannot be reasonably estimated at this time, although itcould materially affect the Company’s business, results of operations and financial condition in the future.Various macroeconomic factors, including rising inflation, higher interest rates, global supply chain constraints, and the effects of overall economic conditions and uncertainties couldadversely affect our results of operations, financial condition, and ability to pay dividends. In addition, the Company’s revenues are impacted by fluctuations in spot charter rates forAframax tankers. During the year ended December 31, 2021, the Company’s revenue came under pressure due to record OPEC+ oil production cuts and lower production from other oilproducing countries, which reduced crude exports, and the unwinding of floating storage and the delivery of newbuilding vessels to the world tanker fleet. However, during the yearsended December 31, 2022 and 2023, the Company’s revenues improved due to strength in spot charter rates on account of higher OPEC+ production and increased ton mile due to thesanctions imposed on Russian crude oil exports as a consequence of the ongoing war between Russia and Ukraine.F-9Table of ContentsPERFORMANCE SHIPPING INC.Notes to Consolidated Financial StatementsDecember 31, 2023(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)The world economy continues to face a number of actual and potential challenges, including the war between Ukraine and Russia and between Israel and Hamas, tensions in and aroundthe Red Sea and between Russia and NATO, China and Taiwan disputes, United States and China trade relations, instability between Iran and the West, hostilities between the UnitedStates and North Korea, and political unrest and conflict in the Middle East, the South China Sea region, and other geographic countries and areas. In particular, the ongoing warbetween Russia and the Ukraine has disrupted supply chains and caused instability in the global economy, while the United States, the United Kingdom, and the European Union,among other countries, announced unprecedented economic sanctions and other penalties against certain persons, entities, and activities connected to Russia, including sanctionstargeting the Russian oil sector, among those a prohibition on the import of oil from Russia to the United States. The ongoing war could result in the imposition of further economicsanctions against Russia and, given Russia’s role as a major global exporter of crude oil, the Company’s business may be adversely impacted. Currently, none of the Company’scontracts have been affected by the events in Russia and Ukraine. As of December 31, 2023, and during the year ended December 31, 2023, the Company’s financial results were notadversely affected by the war between Russia and Ukraine. However, it is possible that in the future third parties with whom the Company has or will have contracts may be impacted bysuch events. While much uncertainty remains regarding the length, breadth, and global impact of the war in Ukraine, it is possible that such war could adversely affect the Company’sbusiness, financial condition, results of operation, and cash flows. Also, the Company monitors elevated inflation in the United States, Eurozone, and other countries, including ongoingglobal price pressures in the wake of the war in Ukraine, driving up energy and commodity prices, which continue to have a moderate effect on the Company’s operating expenses.Additionally, interest rates have increased rapidly and substantially as central banks in developed countries raise interest rates in an effort to subdue inflation. The eventual implicationsof tighter monetary policy and potentially higher long-term interest rates may result in a higher cost of capital for the Company’s business. Furthermore, it is difficult to predict theintensity and duration of the war between Israel and Hamas and the Houthi rebel attacks on shipping in the Red Sea and their impact on the world economy is uncertain and may cause adecrease in worldwide demand for certain goods and, thus, shipping.2.Recent Accounting Pronouncements and Significant Accounting PoliciesRecent Accounting Pronouncements - Not Yet AdoptedIn October 2023, the Financial Accounting Standards Board issued Accounting Standard Update (“ASU”) No. 2023-06, “Disclosure Improvements: Codification Amendments inResponse to the SEC’s Disclosure Update and Simplification Initiative”. The amendments in this Update modify the disclosure or presentation requirements of a variety of Topics in theCodification. Certain of the amendments represent clarifications to or technical corrections of the current requirements. The effective date for each amendment of the ASU 2023-06 will be,for entities subject to the SEC’s existing disclosure requirements and for entities required to file or furnish financial statements with or to the SEC in preparation for the sale of or forpurposes of issuing securities that are not subject to contractual restrictions on transfer, the date on which the SEC’s removal of that related disclosure from Regulation S-X orRegulation S-K becomes effective, with early adoption prohibited. For all other entities, the amendments will be effective two years later. The amendments in ASU 2023-06 should beapplied prospectively. The Company evaluated the impact of this ASU on its consolidated financial Statements and determined that there is no impact as the disclosure improvementsrequired by the ASU amendments are already required by the SEC’s Regulation S-X and Regulation S-K.Furthermore, in November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting - Improvements to Reportable Segment Disclosures (or ASU 2023-07). ASU2023-07 introduced updates for how significant segment expense categories and amounts for each reportable segment are disclosed. A significant segment expense is defined as anexpense that is: a) Significant to the segment, b) Regularly provided to or easily computed from information regularly provided to the chief operating decision maker, and c) Included inthe reported measure of segment profit or loss. The additional disclosure for segmented reporting is intended to provide additional information to financial statement users as nowexpenses such as direct expenses, shared expenses, allocated corporate overhead, or significant interest expense need to be disaggregated and reported separately for each segment.ASU 2023-07 also requires that all segment-related disclosures required by FASB Topic 280 (Segment Reporting) be made also by entities that have a single reportable segment. ASU2023-07 is effective for public entities for fiscal years beginning after December 15, 2023, and interim periods in fiscal years beginning after December 15, 2024, and early adoption ispermitted. Upon adoption, a public entity will apply the ASU as of the beginning of the earliest period presented. The Company will adopt this standard starting with its annual financialstatements as at and for the year ended December 31, 2024. The adoption of ASU 2023-07 is not expected to have a significant impact on the Company’s consolidated financialstatements and related disclosures.F-10Table of ContentsPERFORMANCE SHIPPING INC.Notes to Consolidated Financial StatementsDecember 31, 2023(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)Recent Accounting Pronouncements - AdoptedReference Rate Reform (Topic 848): In 2020, the Board issued Accounting Standards Update No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of ReferenceRate Reform on Financial Reporting, which provides optional guidance to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financialreporting. The objective of the guidance in Topic 848 is to provide temporary relief during the transition period. The Board included a sunset provision within Topic 848 based onexpectations of when the London Interbank Offered Rate (LIBOR) would cease being published. At the time that Update 2020-04 was issued, the UK Financial Conduct Authority (FCA)had established its intent that it would no longer be necessary to persuade, or compel, banks to submit to LIBOR after December 31, 2021. As a result, the sunset provision was set forDecember 31, 2022—12 months after the expected cessation date of all currencies and tenors of LIBOR. In March 2021, the FCA announced that the intended cessation date of theovernight 1-, 3-, 6-, and 12-month tenors of USD LIBOR would be June 30, 2023, which is beyond the current sunset date of Topic 848. Because the current relief in Topic 848 may notcover a period of time during which a significant number of modifications may take place the sunset date of Topic 848 was deferred from December 31, 2022, to December 31, 2024 withthe issuance of ASU 2022-06 in December 2022, after which entities will no longer be permitted to apply the relief in Topic 848. In addition, in January 2021, the FASB issued another ASU(ASU No. 2021-01) with respect to the Reference Rate Reform (Topic 848). The amendments in this Update clarify that certain optional expedients and exceptions in Topic 848 for contractmodifications and hedge accounting apply to derivatives that are affected by the discounting transition. During 2023, the Company has elected one of the optional expedients providedin the standard that allows entities with contract modifications within the scope of Topic 470; for which the terms that are modified solely relate to directly replacing, or having thepotential to replace, a reference rate with another interest rate index, to account for the modification that meets the scope of paragraphs 848-20-15-2 through 15-3 as if the modificationwas not substantial. That is, the original contract and the new contract shall be accounted for as if they were not substantially different from one another, and the modification shall notbe accounted for in the same manner as a debt extinguishment. During 2023, the Company’s loans’ transition from LIBOR to SOFR was completed, and as such, the Company does notexpect any further material impact on its consolidated financial statements from the adoption of this ASU.Significant Accounting Policies(a) Principles of Consolidation: The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles and includethe accounts of Performance Shipping Inc. and its wholly-owned subsidiaries. During 2023, the Company acquired three newly established subsidiaries named Nakaza ShippingCompany Inc., Sri Lanka Shipping Company Inc., and Guadeloupe Shipping Company Inc., in connection with the three shipbuilding contracts signed within the year (refer to Notes 5and 8). All significant intercompany balances and transactions have been eliminated upon consolidation. Under Accounting Standards Codification (“ASC”) 810 “Consolidation”, theCompany consolidates entities in which it has a controlling financial interest, by first considering if an entity meets the definition of a variable interest entity (“VIE”) for which theCompany is deemed to be the primary beneficiary under the VIE model, or if the Company controls an entity through a majority of voting interest based on the voting interest model. TheCompany evaluates financial instruments, service contracts, and other arrangements to determine if any variable interests relating to an entity exist. The Company’s evaluation did notresult in an identification of variable interest entities as of December 31, 2023 and 2022.F-11Table of ContentsPERFORMANCE SHIPPING INC.Notes to Consolidated Financial StatementsDecember 31, 2023(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)(b) Use of Estimates: The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and thereported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.(c) Other Comprehensive Income / (Loss): The Company follows the provisions of Accounting Standard Codification (ASC) 220, “Comprehensive Income”, which requires separatepresentation of certain transactions, which are recorded directly as components of stockholders’ equity. The Company presents Other Comprehensive Income / (Loss) in a separatestatement.(d) Foreign Currency Translation: The functional currency of the Company is the U.S. Dollar because the Company operates its vessels in international shipping markets, andtherefore, primarily transacts business in U.S. Dollars. The Company’s accounting records are maintained in U.S. Dollars. Transactions involving other currencies during the yearspresented are converted into U.S. Dollars using the exchange rates in effect at the time of the transactions. At the balance sheet dates, monetary assets and liabilities which aredenominated in other currencies are translated into U.S. Dollars at the period-end exchange rates. Resulting gains or losses are reflected separately in the accompanying consolidatedstatements of operations.(e) Cash and Cash Equivalents: The Company considers highly liquid investments such as time deposits, certificates of deposit and their equivalents with an original maturity of threemonths or less to be cash equivalents. Interest earned on cash and cash equivalents and restricted cash is separately presented in the accompanying statement of operations in lineInterest Income.(f) Restricted Cash: Restricted cash, includes minimum cash deposits required to be maintained under the Company’s borrowing arrangements.(g) Accounts Receivable, net: The account includes receivables from pool charterers, charterers for hire, freight and demurrage, net of provision for credit losses and allowances fordoubtful accounts – (refer to paragraph (h) below and to Note 3).(h) Provision for Credit Losses: The Company, in estimating its expected credit losses, gathers annual historical losses on its freight and demurrage receivables and makes forward-looking adjustments in the estimated loss ratio, which is re-measured on an annual basis. As of December 31, 2023 and 2022, the balance of the Company’s allowance for estimated creditlosses on its outstanding freight and demurrage receivables were $171 and $109, respectively, and is included in Accounts receivable, net of provision for credit losses in theaccompanying consolidated balance sheets. For 2023, 2022 and 2021, the Provision for credit losses and write offs in the accompanying consolidated statements of operations includeschanges in the provision of estimated losses of $(85), $(12) and $42, respectively, and for 2023, 2022 and 2021 it also includes an amount of $48, $45 and $118, respectively, representingdemurrages write offs. No allowance was recorded on insurance claims as of December 31, 2023 and 2022, as their balances were immaterial. In addition, no allowance was recorded forcash equivalents as the majority of cash balances as of the balance sheet date was on time deposits with highly reputable credit institutions, for which periodic evaluations of therelative credit standing of those financial institutions are performed.F-12Table of ContentsPERFORMANCE SHIPPING INC.Notes to Consolidated Financial StatementsDecember 31, 2023(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)(i) Inventories: Inventories consist of bunkers, lubricants and victualling. Bunkers inventory exist when the vessel operates under freight charter, or when on the balance sheet date avessel has been redelivered by her previous charterers and has not yet been delivered to new charterers, or remains idle. When the vessel operates under pool charters, the bunkers maybe in the possession of the Company, or of the pool, depending on the terms of the specific pool agreement. All inventories are stated at the lower of cost or net realizable value and costis determined by the first in, first out method. Net realizable value is defined as estimated selling prices in the ordinary course of business, less reasonably predictable costs ofcompletion, disposal and transportation.(j) Vessel Cost for Second-hand Vessels and Newbuildings: Vessels are stated at cost which consists of the contract price and costs incurred upon acquisition or delivery of a vesselfrom a shipyard. All pre-delivery costs incurred during the construction of newbuildings, including interest, supervision and technical costs, are capitalized. Subsequent expenditures forconversions and major improvements are also capitalized when they appreciably extend the life, increase the earnings capacity or improve the efficiency or safety of the vessels;otherwise, these amounts are charged to expense as incurred. For vessels that on the balance sheet date were in the shipyard undergoing their scheduled special survey and theinstallation of their ballast water treatment system, improvement costs of the period under consideration are capitalized in Other non-current assets in the accompanying consolidatedbalance sheets.(k) Vessel Depreciation: The Company depreciates its vessels on a straight-line basis over their estimated useful lives, after considering the estimated salvage value. Each vessel’ssalvage value is the product of her light-weight tonnage and estimated scrap rate, which is estimated at $0.35 per light-weight ton for the tanker vessels. Management estimates theuseful life of the Company’s tanker vessels to be 25 years from the date of initial delivery from the shipyard. Second-hand vessels are depreciated from the date of their acquisitionthrough their remaining estimated useful life. When regulations place limitations on the ability of a vessel to trade on a worldwide basis, the vessel’s useful life is adjusted at the datesuch regulations are adopted.(l) Impairment of Long-Lived Assets: The Company follows ASC 360-10-40 “Impairment or Disposal of Long-Lived Assets”, which addresses financial accounting and reporting for theimpairment or disposal of long-lived assets. The Company reviews vessels for impairment whenever events or changes in circumstances (such as market conditions, the economicoutlook, technological, regulatory and environmental developments, obsolesce or damage to the asset, potential sales and other business plans) indicate that the carrying amount of avessel plus her unamortized dry-dock costs and cost of any equipment not yet installed may not be recoverable. When the estimate of future undiscounted net operating cash flows,excluding interest charges, expected to be generated by the use of the vessel over her remaining useful life and her eventual disposition is less than her carrying amount plusunamortized drydock-costs and cost of any equipment not yet installed, the Company evaluates the vessel for impairment loss. The measurement of the impairment loss is based on thefair value of the vessel. The fair value of the vessel is determined based on assumptions by making use of available market data and taking into consideration third-party valuations. TheCompany evaluates the carrying amounts and periods over which vessels are depreciated to determine if events have occurred which would require modification to their carrying valuesor useful lives. In evaluating useful lives and carrying values of long-lived assets, management reviews certain indicators of potential impairment, such as undiscounted projectedoperating cash flows, vessel sales and purchases, business plans and overall market conditions. In developing estimates of future undiscounted cash flows, the Company makesassumptions and estimates about the vessels’ future performance, with the significant assumptions being related to charter rates and fleet utilization, while other assumptions includevessels’ operating expenses, vessels’ residual value, dry-dock costs and the estimated remaining useful life of each vessel. The assumptions used to develop estimates of futureundiscounted cash flows are based on historical trends as well as future expectations. The Company also takes into account factors such as the vessels’ age and employment prospectsunder the then current market conditions and determines the future undiscounted cash flows considering its various alternatives, including sale possibilities existing for each vessel asof the testing dates.F-13Table of ContentsPERFORMANCE SHIPPING INC.Notes to Consolidated Financial StatementsDecember 31, 2023(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)In detail, the projected net operating cash flows are determined by considering the historical and estimated vessels’ performance and utilization, as well as historical utilization of othervessels of similar type and size considering the Company’s recent shift to the tanker market and the lack of extended historical data, the charter revenues from existing time charters forthe fixed fleet days and an estimated daily rate for the unfixed days (based on the most recent 10 year average historical rates available for each type of vessel) over the remainingestimated life of each vessel, net of commissions, expected outflows for scheduled vessels’ maintenance and vessel operating expenses assuming an average annual inflation rate. Effective fleet utilization, which is estimated based on the vessels’ historical performance, is included in the Company’s exercise taking into account the period(s) each vessel is expectedto undergo her scheduled maintenance (dry docking and special surveys), assumptions in line with the Company’s historical performance since the acquisition of its tanker vessels,peers’ historical performance, and its expectations for future fleet utilization under its fleet employment strategy. For 2023 and 2022, the Company assessed that there were no indicationsfor potential impairment of any of its vessels. For 2021, the review of the tanker vessels’ carrying values plus unamortized dry-dock costs and cost of any equipment not yet installed, inconnection with the estimated recoverable amounts did not result in a recognition of impairment charge.(m) Assets Held for Sale: The Company classifies assets or assets in disposal groups as being held for sale in accordance with ASC 360-10-45-9 “Long-Lived Assets Classified as Heldfor Sale” when the following criteria are met: (i) management possessing the necessary authority has committed to a plan to sell the asset (disposal group); (ii) the asset (disposal group)is immediately available for sale on an “as is” basis; (iii) an active program to find the buyer and other actions required to execute the plan to sell the asset (disposal group) have beeninitiated; (iv) the sale of the asset (disposal group) is probable, and transfer of the asset (disposal group) is expected to qualify for recognition as a completed sale within one year; and(v) the asset (disposal group) is being actively marketed for sale at a price that is reasonable in relation to its current fair value and actions required to complete the plan indicate that it isunlikely that significant changes to the plan will be made or that the plan will be withdrawn. In case a long-lived asset is to be disposed of other than by sale (for example, byabandonment, in an exchange measured based on the recorded amount of the nonmonetary asset relinquished, or in a distribution to owners in a spinoff) the Company continues toclassify it as held and used until its disposal date. Long-lived assets or disposal groups classified as held for sale are measured at the lower of their carrying amount or fair value lesscost to sell. These assets are not depreciated once they meet the criteria to be held for sale. The review of the related criteria as of December 31, 2023 and 2022 did not result in held forsale classification for any of the Company’s vessels.(n) Revenues and Voyage Expenses: Since the Company’s vessels are employed under time, voyage and pool charter contracts, the Company disaggregates its revenue from contractswith customers by the type of charter (time charters, spot charters and pool arrangements).The Company has determined that all of its time charter agreements contain a lease and are therefore accounted for as operating leases in accordance with ASC 842. Time charterrevenues are accounted for over the term of the charter as the service is provided. Vessels are chartered when a contract exists and the vessel is delivered (commencement date) to thecharterer, for a fixed period of time, at rates that are generally determined in the main body of charter parties and the relevant voyage expenses burden the charterer (i.e. port dues, canaltolls, pilotages and fuel consumption). Upon delivery of the vessel, the charterer has the right to control the use of the vessel (under agreed prudent operating practices) as they havethe enforceable right to: (i) decide the delivery and redelivery time of the vessel; (ii) arrange the ports from which the vessel shall pass; (iii) give directions to the master of the vesselregarding vessel’s operations (i.e. speed, route, bunkers purchases, etc.); (iv) sub-charter the vessel and (v) consume any income deriving from the vessel’s charter. Any off-hires arerecognized as incurred. The charterer may charter the vessel with or without owner’s crew and other operating services. In the case of time charter agreements, the agreed hire ratesinclude compensation for part of the agreed crew and other operating services provided by the owner (non-lease components). The Company, as a lessor, elected to apply the practicalexpedient which allowed it to account for the lease and the non-lease components of time charter agreements as one, as the criteria of the paragraphs ASC 842-10-15-42A through 42B aremet. Time-charter revenue is usually received in advance, and as such, deferred revenue represents cash received prior to the balance sheet date for which related service has not beenprovided.F-14Table of ContentsPERFORMANCE SHIPPING INC.Notes to Consolidated Financial StatementsDecember 31, 2023(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)Spot, or voyage charter is a charter where a contract is made in the spot market for the use of a vessel for a specific voyage for a specified freight rate per ton, regardless of time tocomplete. The Company has determined that under voyage charters, the charterer has no right to control any part of the use of the vessel. Thus, the Company’s voyage charters do notcontain lease and are accounted for in accordance with ASC 606. More precisely, the Company satisfies its single performance obligation to transfer cargo under the contract over thevoyage period. Thus, revenues from voyage charters on the spot market are recognized ratably from the date of loading (Notice of Readiness to the charterer, that the vessel is availablefor loading) to discharge date of cargo (loading-to-discharge). Voyage charter payments are due upon discharge of the cargo. Demurrage revenue, which is included in voyage revenues,represents charterers’ reimbursement for any potential delays exceeding the allowed lay time as per charter party agreement, represents a form of variable consideration and is recognizedas the performance obligation is satisfied. The Company has taken the practical expedient not to disclose the value of unsatisfied performance obligations for contracts with an originalexpected length of one year or less.For vessels operating in pooling arrangements, the Company earns a portion of total revenues generated by the pool, net of expenses incurred by the pool. The amount allocated to eachpool participant vessel, including the Company’s vessels, is determined in accordance with an agreed-upon formula, which is determined by the margins awarded to each vessel in thepool based on the vessel’s age, design and other performance characteristics. Revenue under pooling arrangements is accounted for as variable rate operating lease on the accrual basisand is recognized in the period in which the variability is resolved. The Company recognizes net pool revenue on a quarterly basis, when the vessel has participated in a pool during theperiod and the amount of pool revenue can be estimated reliably based on the pool report. The allocation of such net revenue may be subject to future adjustments by the pool, however,such changes are not expected to be material (Note 3). The Company assesses collectability by reviewing accounts receivable on a collective basis where similar characteristics exist andon an individual basis when the Company identifies specific charterers with known disputes or collectability concerns. The Company recognizes allowance for doubtful accountsderiving from the collectability assessment as direct reduction to lease income, which for 2023, 2022 and 2021 amounted to $147, $0, and $0, respectively.As discussed above, under a time charter, specified voyage costs such as bunkers and port charges are paid by the charterer, while commissions are paid by the Company. Under spotcharter arrangements, voyage expenses that are unique to a particular charter are paid for by the Company. Commissions are expensed as incurred. Voyage expenses that qualify ascontract fulfilment costs (mainly consisting of bunkers expenses and port dues) and are incurred by the Company from the latter of the end of the previous vessel employment, providedthat the vessel is fixed, or from the date of inception of a voyage charter contract until the arrival at the loading port, are capitalized to Deferred Voyage Expenses and amortized ratablyover the total transit time of the voyage (loading-to-discharge). Vessel voyage expenses that do not qualify as contract fulfilment costs, and operating expenses are expensed whenincurred.(o) Earnings/(Loss) per Common Share: Basic earnings/(loss) per common share are computed by dividing net income / (loss) attributable to common stockholders by the weightedaverage number of common shares outstanding during the period. The two-class method is an earnings allocation formula that determines earnings per share for common stock andparticipating securities, according to dividends declared and participation rights in undistributed earnings. Under this method, net earnings is reduced by the amount of dividendsdeclared in the current period for common shareholders and participating security holders. The remaining earnings or “undistributed earnings” are allocated between common stock andparticipating securities to the extent that each security may share in earnings as if all of the earnings for the period had been distributed. Once calculated, the earnings per common shareis computed by dividing the net (loss) earnings attributable to common shareholders by the weighted average number of common shares outstanding during each year presented.Diluted earnings/(loss) per common share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised. Diluted (loss) earningsattributable to common shareholders per common share is computed by dividing the net (loss) earnings attributable to common shareholders by the weighted average number ofcommon shares outstanding plus the dilutive effect of restricted shares, warrants and options outstanding during the applicable periods computed using the treasury method and thedilutive effect of convertible securities during the applicable periods computed using the “if converted” method. The two-class method is used for diluted earnings/(loss) per commonshare when such is the most dilutive method, considering anti – dilution sequencing as per ASC 260. In cases when the effect from restricted stock, options, warrants and convertiblesecurities is anti-dilutive, such are not included in the diluted earnings / (loss) per common share calculation. For purposes of the if-converted calculation, the fixed conversion price ofpreferred convertible stock is used, unless the number of shares that may be issued is variable, at which case the average market price of the period is used (Note 11).F-15Table of ContentsPERFORMANCE SHIPPING INC.Notes to Consolidated Financial StatementsDecember 31, 2023(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)(p) Dry-Docking Costs: The Company follows the deferral method of accounting for dry-docking costs whereby actual costs incurred are deferred and amortized on a straight-line basisover the period through the date the next dry-docking will be scheduled to become due. Unamortized dry-docking costs of vessels that are sold are written off and included in thecalculation of the resulting gain or loss in the year of the vessel’s sale. Unamortized dry-docking costs of vessels classified as held for sale are written off as impairment charges whenthese vessels’ carrying values are impaired as a result of their classification. The unamortized dry-docking cost as of December 31, 2023, and 2022 was $1,798 and $1,098, respectively.Amortization of dry-docking costs for 2023, 2022 and 2021 amounted to $571, $544 and $68, respectively, and is included in Depreciation and amortization of deferred charges in theaccompanying consolidated statement of operations. Also, in 2023 and 2022, deferred dry-dock costs which were written off in Gain on vessels’ sale in the accompanying consolidatedstatement of operations amounted to $651 and $562, respectively.(q) Financing Costs and Liabilities: Fees paid to lenders for obtaining new loans, or for refinancing existing ones which are determined as debt modifications, are deferred and recordedas a contra to debt. Other fees paid for obtaining loan facilities not used at the balance sheet date are capitalized as deferred financing costs. Fees are amortized to interest and financecosts over the life of the related debt using the effective interest method and, for the fees relating to loan facilities not used at the balance sheet date, according to the loan availabilityterms. Discount premiums are accounted for similar to other financing fees. Loan commitment fees are charged to expense in the period incurred. A loan liability is derecognized when theCompany pays the creditor and is relieved of its obligation for the liability. For loans repaid or refinanced that meet the criteria of debt extinguishment, the difference between thesettlement price and the net carrying amount of the debt being extinguished (which includes any deferred debt issuance costs) is recognized as a gain or loss in the statement ofoperations. In 2023, an amount of $387 being the unamortized financing costs of the loans with Piraeus Bank, which were repaid in November and December 2023 (Note 7) has beenrecognized as Loss from debt extinguishment and is separately presented in the accompanying consolidated statement of operations.(r) Repairs and Maintenance: All repair and maintenance expenses including underwater inspection expenses are expensed in the period incurred and included in Vessel operatingexpenses in the accompanying consolidated statement of operations.(s) Share-Based Payment: The Company issues restricted share awards which are measured at their grant date fair value and are not subsequently re-measured. That cost is recognizedunder the straight-line method over the period during which an employee is required to provide service in exchange for the award—the requisite service period (usually the vestingperiod). At cases when part of the vesting of the restricted share award takes place on the grant date, then the corresponding compensation cost is recognized as incurred. When theservice inception date precedes the grant date, the Company accrues the compensation cost for periods before the grant date based on the fair value of the award at the reporting date.In the period in which the grant date occurs, cumulative compensation cost is adjusted to reflect the cumulative effect of measuring compensation cost based on the fair value at thegrant date. Forfeitures of awards are accounted for when and if they occur. If an equity award is modified after the grant date, incremental compensation cost will be recognized in anamount equal to the excess of the fair value of the modified award over the fair value of the original award immediately before the modification.F-16Table of ContentsPERFORMANCE SHIPPING INC.Notes to Consolidated Financial StatementsDecember 31, 2023(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)The Company also grants stock options as incentive-based compensation to certain of its officers, in accordance with the terms of the Company’s Equity Incentive Plan. Stock-basedcompensation awards that are classified as equity and do not contain any market, service or performance conditions, are recognized on the grant date with a corresponding credit toequity and are measured at fair value. The compensation cost of the Company’s stock-based compensation awards is included in general and administrative expenses in the consolidatedstatement of operations (Note 9).(t) Fair Value Measurements: The Company follows the provisions of ASC 820 “Fair Value Measurements and Disclosures”, which defines fair value and provides guidance for usingfair value to measure assets and liabilities. The guidance creates a fair value hierarchy of measurement and describes fair value as the price that would be received to sell an asset or paidto transfer a liability in an orderly transaction between market participants in the market in which the reporting entity transacts. In accordance with the requirements of accountingguidance relating to Fair Value Measurements, the Company classifies and discloses its assets and liabilities carried at the fair value in one of the following categories:•Level 1: Quoted market prices in active markets for identical assets or liabilities;•Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data;•Level 3: Unobservable inputs that are not corroborated by market data.The fair value measurement assumes that an instrument classified in the shareholders’ equity is transferred to a market participant at the measurement date. The transfer of an instrumentclassified in shareholders’ equity assumes that the instrument would remain outstanding, and the market participant takes on the rights and responsibilities associated with theinstrument.(u) Concentration of Credit Risk: Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist principally of cash and tradeaccounts receivable. The Company places its temporary cash investments, consisting mostly of deposits, with various qualified financial institutions and performs periodic evaluationsof the relative credit standing of those financial institutions that are considered in the Company’s investment strategy. The Company limits its credit risk with accounts receivable byperforming ongoing credit evaluations of its customers’ financial condition and generally does not require collateral for its accounts receivable and does not have any agreements tomitigate credit risk. For credit losses accounting on the Company’s financial assets refer to paragraph (h) above.(v) Going Concern: The Company evaluates whether there is substantial doubt about its ability to continue as a going concern by applying the provisions of ASC 205-40. In more detail,the Company evaluates whether there are conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern within one year from the date theconsolidated financial statements are issued. As part of such evaluation, the Company did not identify any conditions that raise substantial doubt about the entity’s ability to continueas a going concern within one year from the date the consolidated financial statements are issued. Accordingly, the Company continues to adopt the going concern basis in preparing itsconsolidated financial statements.F-17Table of ContentsPERFORMANCE SHIPPING INC.Notes to Consolidated Financial StatementsDecember 31, 2023(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)(w) Re-purchase and Retirement of Company’s Common Shares: All Company’s common shares re-purchased are immediately cancelled and retired, and the Company’s share capital isaccordingly reduced. The excess of the cost of the common shares over their par value is allocated in additional paid-in capital.(x) Re-purchase and Retirement of Company’s Preferred Shares: All Company’s preferred shares re-purchased are immediately cancelled and retired, and the Company’s share capitalis accordingly reduced. Any difference between the fair value of the consideration transferred to the holders of the preferred stock and the carrying amount of the preferred stockrepresents a return to (from) the preferred stockholder that should be treated in a manner similar to the treatment of dividends paid on preferred stock. If the fair value of theconsideration transferred plus any direct costs incurred in relation to the redemption, is less than the carrying amount of the preferred shares redeemed (net of any issuance costs), thedifference is credited to retained earnings. In addition, any possible excess between the fair value of the consideration paid for the re-purchase of preferred shares and the carryingamount of the shares surrendered is reflected as gain which should be added to the net income/(loss) to arrive at the net income/(loss) available to common stockholders (Note 11). (y) Discontinued Operations: It is a Company’s policy, that the current and prior year periods assets, liabilities, results of operations and cash flows of a Company’s componentdisposed of by sale are reported as discontinued operations when it is determined that their operations and cash flows will be eliminated from the ongoing operations of the Company asa result of their disposal, and that the Company will not have continuing involvement in the operation of these assets after their disposal.(z) Rent Concessions Related to the COVID-19 Pandemic: The FASB has provided accounting elections for entities that provide or receive rent concessions (e.g., deferral of leasepayments, reduced future lease payments) due to the COVID-19 pandemic. Entities are allowed to elect to not evaluate whether a concession provided by a lessor due to COVID-19 is alease modification. An entity that makes this election can then elect whether to apply the modification guidance (i.e., assume the concession was always contemplated by the contract orassume the concession was not contemplated by the contract). During 2021, the Company’s rent costs were reduced as a result of COVID-19 relief measures applied by the Greekgovernment, while for 2022 and 2023 no such relief measures were in force. The Company assessed that the rent concession qualifies for the election, as the concession did not result ina substantial increase in the rights of the lessor or the obligations of the lessee, and then elected to not evaluate whether this concession provided by the Greek government due toCOVID-19 is a lease modification, and further chose to adopt a policy to not account for the concession as a lease modification. Finally, the Company, as a lessee that was contractuallyreleased from certain lease payments, accounts the rent concession like a negative variable lease payment (Note 8).(aa) Segmental Reporting: The Company engages in the operation of tanker vessels which has been identified as one reportable segment. The operation of the vessels is the mainsource of revenue generation, the services provided by the vessels are similar and they all operate under the same economic environment. Additionally, the vessels do not operate inspecific geographic areas, as they trade worldwide. The Company reports financial information and evaluates the operations by charter revenues and not by the length of shipemployment for its customers, i.e. spot or time charters.F-18Table of ContentsPERFORMANCE SHIPPING INC.Notes to Consolidated Financial StatementsDecember 31, 2023(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)(ab) Exchange of Common Shares for Shares of Series B Convertible Preferred Stock: In cases of exchanges of common stock for preferred stock, the Company values separately thecommon stock and the preferred stock on the date of the exchange. When the Company determines that on the measurement date there is an excess value of the preferred stock, ascompared to the fair value of the exchanged common stock, that value represents a dividend to the preferred holders, which should be deducted from the net income/(loss) fromcontinuing operations to arrive at the net income/(loss) available to common stockholders from continuing operations.(ac) Exchange of Series B Convertible Preferred Stock and Related Party Loan for Series C Convertible Preferred Stock: The Company follows the provisions of ASC 470-50“Modifications and Extinguishments” to determine whether exchange of preferred stock should be accounted for as a modification or extinguishment. For extinguishments, the Companyfollows the accounting as per ASC 260-10-S99-2. Under that guidance, when equity-classified preferred shares are extinguished, the difference between (1) the fair value of theconsideration transferred to the holders of the preferred shares (i.e., the cash or the fair value of new instruments issued) and (2) the carrying amount of the preferred shares (net ofissuance costs) are subtracted from (or added to) net income to arrive at income available to common stockholders in the calculation of earnings/(losses) per share. As far as it concernsextinguishment of related party loans, the Company follows provision of ASC 470-50-40-2, indicating that such extinguishment transactions may be in essence capital transactions.(ad) Preferred Shares and Warrants Accounting: The Company follows the provision of ASC 480 “Distinguishing Liabilities from Equity” and ASC 815 “Derivatives and Hedging” todetermine the classification of certain freestanding financial instruments as permanent equity, temporary equity or liability. The Company, when assessing the accounting of the warrants,the pre-funded warrants, the Series B Preferred Shares and the Series C Preferred Shares takes into consideration ASC 480 to determine whether the warrants, the pre-funded warrants,the Series B Preferred Shares and the Series C Preferred Shares should be classified as permanent equity instead of temporary equity or liability. The Company further analyses the keyfeatures of the warrants, the pre-funded warrants, the Series B and Series C Preferred Shares to determine whether these are more akin to equity or to debt. In its assessment, theCompany identifies any embedded features, examines whether these fall under the definition of a derivative according to ASC 815 applicable guidance or whether certain of thesefeatures affect the classification. In cases when derivative accounting is deemed inappropriate, no bifurcation of these features is performed. For those warrants meeting theclassification of liability, the initial recognition is at fair value and are remeasured at each balance sheet date with the offsetting adjustments recorded in change in fair value of warrantliabilities within the consolidated statements of operations. Upon settlement or termination, warrants classified as liabilities at fair value, are marked to their fair value at the settlementdate and then the liability settled. The Company values its warrants classified as liabilities using the Black-Scholes option pricing model (refer to Note 9).(ae) Accounting of Down-Round Features: For preferred stock and warrants bearing down-round features, the Company evaluates whether there are circumstances that trigger thedown-round feature. At the date when the down-round features are triggered, the Company considers the provision of ASC 260-10-30-1 and measures the value of the effect of thefeature as the difference between (a) the fair value of the financial instrument (without the down-round feature) with a conversion price or exercise price (as applicable), corresponding tothe stated conversion or exercise price of the issued instrument before the conversion or exercise price reduction and (b) the fair value of the financial instrument (without the down-round feature) with a conversion or exercise price, corresponding to the reduced conversion or exercise price upon the down-round feature being triggered (refer to Note 9). When theCompany determines that on the measurement date there is an excess value of the preferred stock or the warrant due to the triggering of the down-round feature, then this valuerepresents a deemed dividend to the preferred or to the warrant holders (as applicable), which should be deducted from the net income/(loss) to arrive at the net income/(loss) availableto common stockholders.F-19Table of ContentsPERFORMANCE SHIPPING INC.Notes to Consolidated Financial StatementsDecember 31, 2023(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)3.Revenue and Accounts ReceivableThe Company’s tanker vessels are employed under various types of charters and accordingly, the Company disaggregates its revenue from contracts with customers by the type ofcharter (time charters, spot charters and pool charters).Below are presented, per type of charter, the Company’s revenues for 2023, 2022 and 2021 and also the balance of Accounts receivable, net, for December 31, 2023 and 2022.Charter type 2023 2022 2021 Time charters $57,975 $8,131 $10,282 Pool arrangements 48,332 43,712 2,603 Voyage charters 2,631 23,330 23,606 Total Revenue $108,938 $75,173 $36,491 As of December 31, Charter type 2023 2022 Time charters $2,638 $34 Pool arrangements 5,213 6,440 Voyage charters 429 2,636 Total Acc. Receivable, net $8,280 $9,110 Contract assets included in the receivable balances from spot voyages amounted to $103 for December 31, 2023, and to $167 for December 31, 2022.Moreover, the charterers that accounted for more than 10% of the Company’s revenue are presented below:Charterer 2023 2022 2021 A 11% - 26%B 28% - - C - - 17%D 13% 41% - E 32% 18% - The maximum aggregate amount of loss due to credit risk, net of related allowances, that the Company would incur if the aforementioned charterers failed completely to performaccording to the terms of the relevant charter parties, amounted to $7,947 and to $6,440 as of December 31, 2023 and 2022, respectively.Deferred Revenue relates solely to cash received up-front from the Company’s time-charter contracts and as of December 31, 2023, and 2022 it amounted to $0 and $1,378 respectivelyand is separately presented in the accompanying consolidated balance sheets.F-20Table of ContentsPERFORMANCE SHIPPING INC.Notes to Consolidated Financial StatementsDecember 31, 2023(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)4.Transactions with Related Parties(a) Pure Brokerage and Shipping Corp. (“Pure Brokerage”): Pure Brokerage, a company controlled by the Company’s Chairperson of the Board and controlling shareholder AlikiPaliou, provides brokerage services to the Company since June 15, 2020, pursuant to a Brokerage Services Agreement for a fixed monthly fee per each tanker vessel owned by theCompany. Pure Shipbroking may also, from time to time, receive sale and purchase commissions and chartering commissions on the gross revenue of the tanker vessels, depending onthe respective charter parties’ terms.For 2023, 2022 and 2021, commissions to Pure Brokerage amounted to $1,345, $887, and $431, respectively, and are included in Voyage expenses in the accompanying consolidatedstatements of operations. Also, for 2023, 2022 and 2021 brokerage fees to Pure Brokerage amounted to $286, $204 and $180, respectively, and are included in General and administrativeexpenses in the accompanying consolidated statements of operations. As at December 31, 2023 and 2022, an amount of $245 and $335, respectively, was payable to Pure Brokerage and isreflected in Due to related parties in the accompanying consolidated balance sheets.(b) Mango Shipping Corp (“Mango”): On March 2, 2022, the Company entered into an unsecured credit facility with Mango, whose beneficial owner is the Company’s Chairperson ofthe Board and controlling shareholder Aliki Paliou, of up to $5,000, for general working capital purposes. The loan had a term of one year from the date of the agreement, bore interest of9.0% per annum, and was drawn in arrears at the Company’s request. The agreement also provided for arrangement fees of $200 payable on the date of the agreement, and commitmentfees of 3.00% per annum on any undrawn amount until the maturity date. The Company drew down the $5,000 loan amount in two advances in March 2022, and repaid it in full onOctober 17 and October 19, 2022 (see below the paragraph “Tender Offer to exchange common shares for Shares of Series B Cumulative Perpetual Preferred Stock”). For 2022, interestand commitment fees incurred in connection with the Mango loan amounted to $277, and together with arrangement fees of $200 which were amortized and written off during 2022, areincluded in Interest and finance costs in the accompanying consolidated statements of operations (Note 10).F-21Table of ContentsPERFORMANCE SHIPPING INC.Notes to Consolidated Financial StatementsDecember 31, 2023(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)Tender Offer to Exchange Common Shares for Shares of Series B Convertible Cumulative Perpetual Preferred Stock: In December 2021, the Company commenced an offer toexchange up to 271,078 of its then issued and outstanding common shares, par value $0.01 per share, for newly issued shares of the Company’s Series B Convertible CumulativePerpetual Preferred Stock, par value $0.01, at a ratio of 4.20 Series B Preferred Shares for each common Share (Note 9). The tender offer expired on January 27, 2022, and a total of 188,974common shares were validly tendered and accepted for exchange, which resulted in the issuance of 793,657 Series B Preferred Shares, out of which 657,396 were beneficially owned byAliki Paliou through Mango, and 28,171 were beneficially owned by Andreas Michalopoulos. On October 17, 2022, the Company entered into a stock purchase agreement with Mangopursuant to which it agreed to issue to Mango in a private placement 1,314,792 Series C Preferred Stock in exchange for (i) all 657,396 Series B Preferred Shares held by Mango, and (ii)the agreement by Mango to apply $4,930 (an amount equal to the aggregate cash conversion price payable upon conversion of such Series B Preferred Shares into Series C PreferredShares pursuant to their terms) as a prepayment by the Company of the unsecured credit facility. The transaction was approved by a special independent committee of the Company’sBoard of Directors. On October 19, 2022, the Company repaid the remaining amount due to the credit facility of $70, together with accrued interest, and terminated the agreement.The Series B and the Series C Preferred stock is entitled to an annual dividend of 4.00% and 5.00%, respectively (Note 9). For 2022, dividends declared and paid to Mango on its Series Bpreferred shares amounted to $411 (or $0.875 per each Series B preferred share) and were calculated for the period from February 2, 2022 (date of issuance of the Series B preferred shares)until September 15, 2022. Following the issuance of the Series C preferred shares in October 2022 to Mango, the dividends on the Series B preferred shares held by Mango accrued untilthe last dividend payment date, which was September 15, 2022. Additionally, for 2022, dividends declared and paid to Mango on its Series C preferred shares amounted to $411, (or$0.3125 per each Series C preferred share), and were calculated for the period from September 15, 2022 until December 15, 2022. On December 31, 2022, accrued and not paid dividends onthe Series C preferred shares held by Mango, amounted to $82. For 2023, dividends declared and paid to Mango on its Series C preferred shares amounted $1,643, (or $1.25 per eachSeries C preferred share). On December 31, 2023, accrued and not paid dividends on the Series C preferred shares held by Mango, amounted to $64 (Note 9). As of December 31, 2023,and 2022, Mango held no Series B preferred shares, and held 1,314,792 Series C preferred shares.For the details of the terms of the Series B and C preferred stock, and the respective accounting treatment followed by the Company, refer to Note 9.Ex Related Parties transactions of 2021Until January 2021, the Company was receiving travel services from an affiliated company, which was controlled by the Company’s then Chairman of the Board. Additionally, in 2021, theCompany sold to an ex-affiliated entity its co-owned indivisible share in a plot of land, located in Athens, Greece.For 2021, expenses for services provided by the travel agency amounted to $18 and are included in Vessel operating expenses in the accompanying consolidated financial statements.Also, in 2021, the Company recognized a gain of $137 from the sale of property to an ex-affiliated entity, and it is depicted as Gain from property sale in the accompanying consolidatedfinancial statements.F-22Table of ContentsPERFORMANCE SHIPPING INC.Notes to Consolidated Financial StatementsDecember 31, 2023(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)5.Advances for Vessels Under Construction and Other Vessels’ CostsIn March and December 2023, the Company, through its newly established subsidiaries named Nakaza Shipping Company Inc., Sri Lanka Shipping Company Inc., and GuadeloupeShipping Company Inc., entered into three shipbuilding contracts with China Shipbuilding Trading Company Limited and Shanghai Waigaoqiao Shipbuilding Company Limited for theconstruction of three product/crude oil tankers of approximately 114,000 dwt each. The newbuildings (named Hull 1515, Hull 1596 and Hull 1597) have gross contract prices of $63,250,$64,845, and $64,845, respectively, and the Company expects to take delivery of them from October 2025 to April 2026. The shipbuilding contracts provide that the purchase price of eachnewbuilding will be paid in five installments, each falling at the contract signing, steel cutting, keel laying, launching, and at the delivery of each vessel.As of December 31, 2023, the Company had paid the first installment of $9,488 for Hull 1515, according to the terms of the shipbuilding contract. In addition, interest amounting to $540and other paid costs amounting to $1,275 were capitalized to the vessels under construction and included in Advances for Vessels Under Construction and Other Vessels’ Costs in theaccompanying consolidated balance sheet as of December 31, 2023. The amount of $11,303 is included in line “Advances for vessel acquisition / under construction and other vesselcosts” in the 2023 consolidated statements of cash flows. No Advances for vessels under construction and other vessels’ costs existed as of December 31, 2022.6.Vessels, netVessels’ acquisitions and Vessels’ Improvements During 2022, the Company capitalized in Vessels, net, an aggregate amount of $1,218, out of which $558 was transferred from other non-current assets, representing costs for theinstallation of ballast water treatment system on the vessel “Blue Moon”. During 2022, $1,199 of these costs have been paid and are included in line “Payments for vessels’improvements” in the accompanying consolidated statements of cash flows. Furthermore, in 2022, the Company capitalized in other non-current assets an amount of $450, representingadvances paid for the installation of ballast water treatment system on the vessel “P. Kikuma”, also included in line “Payments for vessels’ improvements” in the accompanyingconsolidated statements of cash flows. From June to November 2022, the Company, through four newly established subsidiaries, entered into four memoranda of agreement withunrelated parties to acquire the Aframax tanker vessels “P. Sophia”, “P. Aliki”, “P. Monterey”, and “P. Long Beach”, for a purchase price of $27,577, $36,500, $35,000, and $43,750,respectively. The vessels were delivered to the Company from July to December 2022. Aggregate pre-delivery costs capitalized in connection with these vessels’ acquisition amounted to$677, out of which $64 were paid in 2023 and are reflected in line Vessel acquisitions and other vessels’ costs in the accompanying 2023 consolidated cash flows.During 2023, the Company capitalized an amount of $510 and an amount of $450 was transferred from other non-current assets, representing costs for the installation of ballast watertreatment system on the vessel “P. Kikuma”. The amount of $510, which was paid in 2023, is reflected in line “Payments for vessels’ improvements” in the accompanying consolidatedstatements of cash flows.F-23Table of ContentsPERFORMANCE SHIPPING INC.Notes to Consolidated Financial StatementsDecember 31, 2023(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)Vessels’ DisposalsIn October 2022, the Company, through one of its subsidiaries, entered into a memorandum of agreement to sell the Aframax tanker vessel “P. Fos” to unrelated parties for an aggregategross price of $34,000. The vessel was delivered to her new owners in November 2022 and the Company received the sale proceeds in accordance with the terms of the contract. For2022, the gain on sale of vessels, net of direct to sale expenses, amounted to $9,543 and is reflected in Gain on vessel’s sale in the accompanying consolidated statement of operations.In November 2023, the Company, through one of its subsidiaries, entered into a memorandum of agreement to sell the Aframax tanker vessel “P. Kikuma” to unrelated parties for anaggregate gross price of $39,300. The vessel was delivered to her new owners in December 2023, and the Company received the sale proceeds in accordance with the terms of thecontract. For 2023, the gain on sale of vessels, net of direct to sale expenses, amounted to $15,683 and is reflected in Gain on vessel’s sale in the accompanying consolidated statement ofoperations.The amounts of Vessels, net, in the accompanying consolidated balance sheets are analyzed as follows: Vessels’ Cost AccumulatedDepreciation Net BookValue Balance, December 31, 2021 $136,782 $(13,746) $123,036 - Transfer from advances for vessel acquisitions and other vessel costs 143,504 - 143,504 - Vessels’ improvements transferred from other non-current assets 558 - 558 - Vessels’ improvements 660 - 660 - Vessel’s disposals (27,208) 4,688 (22,520)- Depreciation - (8,631) (8,631)Balance, December 31, 2022 $254,296 $(17,689) $236,607 - Vessels’ improvements transferred from other non-current assets 450 - 450 - Vessels’ improvements 510 - 510 - Vessel’s disposals (27,098) 5,795 (21,303)- Depreciation - (14,156) (14,156)Balance, December 31, 2023 $228,158 $(26,050) $202,108 F-24Table of ContentsPERFORMANCE SHIPPING INC.Notes to Consolidated Financial StatementsDecember 31, 2023(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)7.Long-Term DebtThe amount of long-term debt shown in the accompanying consolidated balance sheets is analyzed as follows: December 31, 2023 Current Non-current December 31, 2022 Current Non-current Nordea Bank secured term loan $19,167 $3,334 $15,833 $20,663 $3,740 $16,923 Piraeus Bank secured term loans - - - 67,584 9,048 58,536 Alpha Bank secured term loans 36,050 4,200 31,850 40,250 4,200 36,050 less unamortized deferred financing costs (331) (107) (224) (822) (242) (580)Total debt, net of deferred financing costs $54,886 $7,427 $47,459 $127,675 $16,746 $110,929 Secured Term Loans: The Company, through its vessel-owning subsidiaries, has entered into various long term loan agreements with certain financial institutions (as described below)to partially finance the acquisition cost of its tanker vessels. All loans are repayable in quarterly installments plus one balloon installment per loan agreement to be paid together with thelast installment. The Company ‘s loans bear variable interest at SOFR plus a fixed margin, which during 2023 ranged from 2.35% to 2.75%, and as of December 31, 2023, after the refinanceof the Nordea loan (discussed below), the applicable margins ranged from 2.35% to 2.60%. The loan maturities fall due from November 2027 to August 2028, and at each utilization date,arrangement fees ranging from 0.50% to 1.00% were paid. As of December 31, 2023, the term loans were collateralized by four of the Company’s tanker vessels, whose aggregate net bookvalue was $125,200.In July 2019, the Company, through two of its vessel-owning subsidiaries, entered into a loan agreement with Nordea Bank Abp, Filial i Norge (“Nordea Bank”) for a senior secured termloan facility of up to $33,000, to partially finance the acquisition cost of the vessels “Blue Moon” and “Briolette”. In December 2019 and in March 2020, the Nordea Bank loan was twiceamended and restated to increase the loan facility to up to $47,000 and $59,000, respectively, to partially support the acquisition cost of the tanker vessels “P. Fos” and “P. Kikuma”,respectively. In December 2020, the Company entered a Deed of Release with Nordea Bank, according to which the borrowers of the vessels “P. Fos” and “P. Kikuma” were released fromall obligations under the agreement, in connection with the re-finance by Piraeus Bank S.A. (described below). Also in December 2020, the Company entered into a Supplemental LoanAgreement with Nordea Bank, to amend the existing repayment schedules of the “Blue Moon” and “Briolette” tranches and to amend the major shareholder’s clause included in theagreement. On August 4, 2023, the Company refinanced the existing outstanding loan of the amount of $17,859 with Nordea Bank which was initially entered to partially finance theacquisition of the vessels “Blue Moon” and “Briolette”, with a revolving credit in an aggregate amount not exceeding $20,000 at any one time. As such, the Company drew down anamount of $2,141, which is reflected in line Proceeds from Long-term bank debt in the accompanying consolidated cash flows. The new loan has a duration of 5 years from the signingdate of the agreement. The Company followed the applicable guidance of ASC 470 and concluded that the specific loan should be treated as a term loan, however, if a prepayment occursduring the life of the facility, then the accounting guidance for revolving credit facilities would apply.F-25Table of ContentsPERFORMANCE SHIPPING INC.Notes to Consolidated Financial StatementsDecember 31, 2023(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)In December 2020, the Company, through three of its vessel-owning subsidiaries, entered into a loan agreement with Piraeus Bank S.A. (“Piraeus Bank”) for a senior secured term loanfacility of up to $31,526, to refinance the existing indebtedness of the vessels “P. Fos” and “P. Kikuma” with Nordea Bank, described above, and partially finance the acquisition cost ofthe vessel “P. Yanbu”. The three borrowers utilized in December 2020 an aggregate amount of $29,958 under the loan agreement, and no amount remained available for drawdownthereafter. The “P. Fos” trance was repaid in full and released from the loan agreement in November 2022, due to the vessels’ sale. Furthermore, the “P. Yanbu” and the “P. Kikuma”trances were also released from the specific loan agreement in July and December 2022, respectively, as part of their refinancing under the new loan agreements with Piraeus Bank signedin June and November 2022 (discussed below), and as such, the specific loan agreement was terminated.In June 2022, the Company, through the vessel-owning subsidiaries of the vessels “P. Sophia” and “P. Yanbu”, entered into a new loan agreement with Piraeus Bank for a senior securedterm loan facility of up to $31,933. The purpose of this facility was to finance the acquisition of “P. Sophia” by up to $24,600 and refinance the existing indebtedness of $7,333 of thevessel “P. Yanbu”. The Company utilized the full amount of $31,933 in July 2022. On May 29, 2023, the Company signed a Supplemental loan agreement with Piraeus Bank, the purpose ofwhich was to replace LIBOR rate with SOFR rate, effective June 1, 2023. All other terms of the loan agreement remained unaltered. The Company accounted for the Supplemental loanagreement as a contract modification. Finally, in December 2023, the Company pre-paid its existing indebtedness of $27,933 and accordingly, the specific loan agreement was terminated.In November 2022, the Company, through the vessel-owning subsidiaries of the vessels “P. Monterey” and “P. Kikuma”, entered into a new loan agreement with Piraeus Bank for a seniorsecured term loan facility of up to $37,400. The purpose of this facility was to finance the acquisition of “P. Monterey” by up to $29,615 and refinance the existing indebtedness of $7,785of the vessel “P. Kikuma”. The Company utilized the amount of $36,450 in November 2022, and no amount remained available for drawdown thereafter. In November 2023, before the saleof the vessel “P. Kikuma” (Note 6), the Company pre-paid the loan balance of $13,926, and the respective ship-owning company was released from its loan obligations. Finally, inDecember 2023, the Company also pre-paid the remaining outstanding loan balance of $16,676 of the vessel “P. Monterey”, and thus the loan agreement was terminated.Also in November 2022, the Company, through the vessel-owning subsidiary of the vessel “P. Aliki” signed a loan agreement with Alpha Bank S.A (“Alpha Bank”), to support theacquisition of the vessel by providing a secured term loan of up to $18,250. The maximum loan amount was drawn down upon the vessel’s delivery to the Company in November 2022.Finally, in December 2022, the Company, through the vessel-owning subsidiary of the vessel “P. Long Beach” signed a loan agreement with Alpha Bank S.A, to support the acquisitionof the vessel by providing a secured term loan of up to $22,000. The maximum loan amount was drawn down upon the vessel’s delivery to the Company in December 2022.All loans are guaranteed by Performance Shipping Inc. and are also secured by first priority mortgages over the financed fleet, first priority assignments of earnings, insurances and ofany charters exceeding durations of certain length of time, pledge over the borrowers’ shares and over their earnings accounts, and vessels’ managers’ undertakings. The loanagreements also require a minimum hull value of the financed vessels, impose restrictions as to dividend distribution following the occurrence of an event of default and changes inshareholding, include customary financial covenants and require at all times during the facility period a minimum cash liquidity. As at December 31, 2023 and 2022, the maximumcompensating cash balance required under the Company’s loan agreements amounted to $10,000 and $10,500, respectively, and is included in Cash and cash equivalents in theaccompanying consolidated balance sheets. Also, as at December 31, 2023 2022, the restricted cash, being pledged deposits, required under the Company’s loan agreements amountedto $1,000 and $1,000, respectively, and is included in Restricted cash, non-current in the accompanying consolidated balance sheets. As at December 31, 2023 and 2022, the Companywas in compliance with all of its loan covenants.F-26Table of ContentsPERFORMANCE SHIPPING INC.Notes to Consolidated Financial StatementsDecember 31, 2023(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)The weighted average interest rate of the Company’s bank loans for 2023, 2022 and 2021, was 7.60%, 4.85% and 2.90%, respectively.For 2023, 2022 and 2021, interest expense on long-term bank debt amounted to $9,039, $3,191 and $1,596, respectively, and is included in Interest and finance costs in the accompanyingconsolidated statement of operations. Accrued interest on bank debt as of December 31, 2023 and 2022, amounted to $294 and $390, respectively, and is included in Accrued liabilities inthe accompanying consolidated balance sheets.As at December 31, 2023, the maturities of the drawn portions of the debt facilities described above, are as follows: Principal Repayment Year 1 $7,533 Year 2 7,533 Year 3 7,533 Year 4 26,783 Year 5 5,835 Total $55,217 8.Commitments and Contingencies(a) Various claims, suits, and complaints, including those involving government regulations and product liability, arise in the ordinary course of the shipping business. In addition,losses may arise from disputes with charterers, agents, insurance and other claims with suppliers relating to the operations of the Company’s vessels. Currently, management is notaware of any claims or contingent liabilities, which should be disclosed, or for which a provision should be established and has not in the accompanying consolidated financialstatements.The Company accrues for the cost of environmental liabilities when management becomes aware that a liability is probable and is able to reasonably estimate the probable exposure.Currently, management is not aware of any such claims or contingent liabilities, which should be disclosed, or for which a provision should be established in the accompanyingconsolidated financial statements.The Company’s vessels are covered for pollution in the amount of $1 billion per vessel per incident, by the protection and indemnity association (“P&I Association”) in which theCompany’s vessels are entered. The Company’s vessels are subject to calls payable to their P&I Association and may be subject to supplemental calls which are based on estimates ofpremium income and anticipated and paid claims. Such estimates are adjusted each year by the Board of Directors of the P&I Association until the closing of the relevant policy year,which generally occurs within three years from the end of the policy year. Supplemental calls, if any, are expensed when they are announced and according to the period they relate to.The Company is not aware of any supplemental calls outstanding in respect of any policy year.F-27Table of ContentsPERFORMANCE SHIPPING INC.Notes to Consolidated Financial StatementsDecember 31, 2023(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)(b) As of December 31, 2023, part of the Company’s fleet was operating under time-charters. The minimum contractual annual charter revenues, net of related commissions to thirdparties (including related parties), to be generated from the existing as of December 31, 2023, non-cancelable time charter contract are estimated at $39,506 until December 31, 2024, and at$11,788 until December 31, 2025.(c) The Company has entered into three shipbuilding contracts for the construction of three product/crude oil tankers of approximately 114,000 dwt each (Note 5). As of December 31,2023, the remaining aggregate installments under the contracts for the construction of Hulls H1515, H1596 and H1597, amount to $183,453, out of which $19,454 have been paid withrespect to Hulls H1596 and H1597 subsequent to the balance sheet date (Note 14).(d) The Company, its Chief Executive Officer, Chairperson of the Board, five former directors of the Company, and two entities affiliated with the Company’s Chief Executive Officer andChairperson of the Board were named as defendants in a lawsuit (“the Sphinx lawsuit”) commenced on October 27, 2023 in New York State Supreme Court, County of New York, by theattorneys of a current shareholder of the Company, Sphinx Investment Corp., the plaintiff. The complaint alleges, among other things, violations of fiduciary duties by the nameddefendants in connection with an exchange offer commenced by the Company in December 2021 (Note 9). The plaintiff purports to seek, among other things, a declaration that theSeries C Preferred Shares held by the defendants are void and not entitled to vote; an order cancelling such Series C Preferred Shares, or, in the alternative, an order requiring theCompany to issue additional Series C Preferred Shares to non-defendant common stockholders to put them in the same economic, voting, governance and other position as they wouldhave been in had the Series C Preferred Shares issued to the defendants been cancelled; and unspecified damages in an amount, if any, to be proven at trial. On January 29, 2024, thedefendants filed motions to dismiss the lawsuit. Briefing on that motion is currently scheduled to conclude on April 4, 2024 (Note 14). The Company, although it cannot predict itsoutcome, believes that the lawsuit is without merit and will vigorously defend against the lawsuit.(e) The Company rents its office spaces in Greece under various lease agreements with unaffiliated parties. The durations of these agreements vary from a few months to 3 years andcertain of these contracts, and as of December 31, 2023, the weighted-average remaining lease term for all lease agreements is 1.47 years. The contracts also bear the option for theCompany to extend the lease terms for further periods. Under ASC 842, the Company, as a lessee, has classified these contracts as operating leases and accordingly, a lease liability of$99 and $163, respectively, and an equal right-of-use asset based on the present value of future minimum lease payments for the fixed periods of each contract have been recognized onthe December 31, 2023 and 2022 balance sheets. The weighted average discount rate used for the calculation of the present value of future lease payments was 7.52%. The monthly rentcost under the existing as of December 31, 2023 lease agreements are $8 (based on the exchange rate of Euro/US Dollar $1.093 as of December 31, 2023). Rent costs have been reduced forthe Company during 2021 as a result of COVID 19-relief measures applied by the Greek government, as the lessor was partially reimbursed for these rent payments by the state.Accordingly, rent expenses for 2023, 2022 and 2021, amounted to $89, $87 and $47, respectively, and are included in General and administrative expenses in the accompanyingconsolidated financial statements. The Company assessed in 2021 that the rent concession qualifies for the election and elected to not evaluate whether a concession provided due toCOVID-19 is a lease modification under ASC 842. The Company has assessed the right of use asset recognized for office leases for impairment and concluded that no impairment chargeshould be recorded as December 31, 2023 and 2022 as no impairment indicators existed.F-28Table of ContentsPERFORMANCE SHIPPING INC.Notes to Consolidated Financial StatementsDecember 31, 2023(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)The following table sets forth the Company’s undiscounted office rental obligations as at December 31, 2023: Amount Year 1 $78 Year 2 40 Total $118 Less imputed interest (19)Present value of lease liabilities $99 Lease liabilities, current 66 Lease liabilities, non- current 33 Present value of lease liabilities $99 9.Changes in Capital Accounts(a) Company’s Preferred Stock: As of December 31, 2023 and 2022, the Company’s authorized preferred stock consists of 25,000,000 shares of preferred stock, par value $0.01 per share.Of these preferred shares, 1,250,000 have been designated Series A preferred shares, 1,200,000 have been designated Series B preferred shares, and 1,587,314 have been designated asSeries C Preferred Shares (see paragraph (b) below). As of December 31, 2023, 50,726 Series B preferred shares (of liquidation preference $1,268) and 1,428,372 Series C preferred shares(of liquidation preference $35,709) were issued and outstanding. As of December 31, 2022, 136,261 Series B preferred shares (of liquidation preference $3,407) and 1,314,792 Series Cpreferred shares (of liquidation preference $32,870) were issued and outstanding.(b) Tender Offer to Exchange Common Shares for Shares of Series B Convertible Cumulative Perpetual Preferred Stock, and Issuance of Shares of Series C ConvertibleCumulative Perpetual Preferred Stock: In December 2021, the Company commenced an offer to exchange up to 271,078 of its then issued and outstanding common shares, par value$0.01 per share, for newly issued shares of the Company’s Series B Convertible Cumulative Perpetual Preferred Stock (“Series B Preferred Shares”), par value $0.01, at a ratio of 4.20Series B Preferred Shares for each common share.The material terms of the Series B Preferred Shares are as follows: 1) Dividends: The Company pays a 4.00% annual dividend on the Series B Preferred Shares, on a quarterly basis, eitherin cash, or, at the Company’s option, through the issuance of additional common shares, valued at the volume-weighted average price of the common stock for the 10 trading days priorto the dividend payment date; 2) Voting Rights: Each Series B Preferred Share has no voting rights; 3) Conversion Rights: Each Series B Preferred Share was convertible at the option ofthe holder during the applicable conversion period, which expired on March 15, 2023, and for additional cash consideration of $7.50 per converted Series B Preferred Share, into twoSeries C Preferred Shares (see description below); 4) Liquidation: Each Series B Preferred Share has a fixed liquidation preference of $25.00 per share; 5) Redemption: The Series BPreferred Shares are not subject to mandatory redemption or to any sinking fund requirements, and will be redeemable at the Company’s option, at any time, on or after the date that isthe date immediately following the 15-month anniversary of the issuance date, at $25.00 per share plus accumulated and unpaid dividends thereon to and including the date ofredemption. Also, upon the occurrence of a liquidation event, holders of Series B Preferred Shares shall be entitled to receive out liquidating distribution or payment in full redemption ofsuch Series B Preferred Shares in an amount equal to $25.00, plus the amount of any accumulated and unpaid dividends thereon; 6) Rank: Finally, the Series B Preferred Shares ranksenior to common shares with respect to dividend distributions and distributions upon any liquidation, winding up or dissolution of the Company.F-29Table of ContentsPERFORMANCE SHIPPING INC.Notes to Consolidated Financial StatementsDecember 31, 2023(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)The tender offer expired on January 27, 2022, and a total of 188,974 common shares were validly tendered and accepted for exchange, which resulted in the issuance of 793,657 Series BPreferred Shares (with aggregate liquidation preference of $19,841), out of which 657,396 were acquired by Aliki Paliou through Mango (Note 4), and 28,171 were acquired by AndreasMichalopoulos.On October 17, 2022, the Company entered into a stock purchase agreement with Mango, pursuant to which it agreed to issue to Mango in a private placement 1,314,792 shares (withaggregate liquidation preference of $32,870) of its newly-designated Series C Convertible Cumulative Redeemable Perpetual Preferred Stock (“Series C Preferred Shares”) in exchange for(i) all 657,396 Series B Preferred Shares held by Mango and (ii) the agreement by Mango to apply $4,930 (an amount equal to the aggregate cash conversion price payable uponconversion of such Series B Preferred Shares into Series C Preferred Shares pursuant to their terms) as a prepayment by the Company of the unsecured credit facility agreement datedMarch 2, 2022 (Note 4) and made between the Company as borrower and Mango as lender, maturing in March 2023 and bearing interest at 9.0% per annum. The Company repaid onOctober 17, 2022 the amount of $4,930, and on October 19, 2022 the remaining amount due to the credit facility of $70, and any remaining accrued interest, and terminated the loanagreement with Mango. The transaction was approved by a special independent committee of the Company’s Board of Directors. The authorized number of Series C Preferred Shares, parvalue $0.01 and $25.00 liquidation preference, is 1,587,314, out of which 1,314,792 shares were issued to Mango.The remaining Series C Preferred Shares could be issued not earlier than one year from the date of original issuance of the Series B Preferred Shares. Upon the closing of the conversionperiod on March 15, 2023, 85,535 Series B preferred shares have been converted to 171,070 Series C preferred shares, and the net proceeds received, after deducting commissions andother expenses, amounted to $482.F-30Table of ContentsPERFORMANCE SHIPPING INC.Notes to Consolidated Financial StatementsDecember 31, 2023(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)The material terms of the Series C Preferred Shares are as follows: 1) Dividends: Dividends on each Series C Preferred Share shall be cumulative and shall accrue at a rate equal to 5.00%per annum of the Series C liquidation preference per Series C Preferred Share from the dividend payment date immediately preceding issuance, and can be paid either in cash, or, at theCompany’s option, through the issuance of additional common shares; 2) Voting Rights: Each holder of Series C Preferred Shares is entitled, from the date of issuance of the Series CPreferred Shares, to a number of votes equal to the number of Common Shares into which such holder’s Series C Preferred Shares would then be convertible (notwithstanding therequirement that the Series C Preferred Shares are convertible only after six months following the Original Issuance Date), multiplied by 10. The holders of Series C Preferred Shares shallvote together as one class with the holders of Common Shares on all matters submitted to a vote of the Company’s shareholders (with certain exceptions); 3) Conversion Rights: TheSeries C Preferred Shares are convertible into common shares (i) at the option of the holder: in whole or in part, at any time on or after the date that is the date immediately following thesix-month anniversary of the Original Issuance Date at a rate equal to the Series C liquidation preference, plus the amount of any accrued and unpaid dividends thereon to and includingthe date of conversion, divided by an initial conversion price of $0.50, subject to adjustment from time to time, or (ii) mandatorily: on any date within the Series C Conversion Period, being any time on or after the date that is the date immediately following the six-month anniversary of October 17, 2022 (or “the Original Issuance Date”), on which less than 25% of theauthorized number of Series C Preferred Shares are outstanding and the volume-weighted average price of the common shares for the 10 trading days preceding such date exceeds 130%of the conversion price in effect on such date, the Company may elect that all, or a portion of the outstanding Series C Preferred Shares shall mandatorily convert into common shares ata rate equal to the Series C liquidation preference, plus the amount of any accrued and unpaid dividends thereon to and including such date, divided by the conversion price. Theconversion price is subject to adjustment for any stock splits, reverse stock splits or stock dividends, and shall also be adjusted to the lowest price of issuance of common stock by theCompany for any registered offering following the Original Issuance Date, provided that such adjusted conversion price shall not be less than $0.50 (this conversion price adjustmentclause is further analyzed later); 4) Liquidation: Each Series C Preferred Share has a fixed liquidation preference of $25.00 per share; 5) Redemption: The Series C Preferred Shares are notsubject to mandatory redemption, and will be redeemable at the Company’s option, at any time, on or after the date that is the date immediately following the 15-month anniversary of theissuance date, in whole or in part, at $25.00 per share plus accumulated and unpaid dividends thereon to and including the date of redemption. The Company shall effect any suchredemption by paying a) cash or, b) at the Company’s election, and provided on the date of the redemption notice less than 25% of the authorized number of Series C are outstanding,shares of common stock valued at the volume-weighted average price of common stock for the last 10 trading days prior to the redemption date. Also, upon the occurrence of aliquidation event, holders of Series C Preferred Shares shall be entitled to receive out liquidating distribution or payment in full redemption of such Series C Preferred Shares in an amountequal to $25.00, plus the amount of any accumulated and unpaid dividends thereon; 6) Rank: The Series C Preferred Shares rank senior to common shares, and on a parity with the SeriesB Preferred Stock, with respect to dividend distributions and distributions upon any liquidation.During 2023, a number of 57,490 Series C preferred shares, at the options of their holders, were converted to 1,064,207 common shares, calculated with an adjusted conversion price of$1.36, as discussed later.For 2023, declared and paid dividends on Series B preferred shares amounted to $55 (or $1.00 per each Series B preferred share). For 2022, declared and paid dividends on Series Bpreferred shares amounted to $530 (or $0.875 per each Series B preferred share) which represented the dividends calculated for the period from February 2, 2022 (date of issuance of theSeries B preferred shares) until December 15, 2022, out of which $411 were dividends paid to Mango for its Series B preferred shares (Note 4). As of December 31, 2023 and 2022, accruedand not paid dividends on the Series B preferred shares amounted to $2 and $7, respectively.For 2023, declared and paid dividends on the Series C preferred shares amounted to $1,834 (or $1.25 per each Series C preferred share), out of which $1,643 were paid to Mango. For 2022,declared and paid dividends on the Series C preferred shares, which were all held by Mango, amounted to $411 (or $0.3125 per each Series C preferred share) (Note 4), and representedthe dividends calculated for the period from September 15, 2022 until December 15, 2022. On December 31, 2023, and 2022, accrued and not paid dividends on the Series C preferredshares, amounted to $74 and $82, respectively (Note 4).F-31Table of ContentsPERFORMANCE SHIPPING INC.Notes to Consolidated Financial StatementsDecember 31, 2023(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)The Company, when assessing the accounting of the Series B preferred stock, has taken into consideration the provisions of ASC 480 “Distinguishing Liabilities from Equity” and ASC815 “Derivatives and Hedging” and determined that the Series B preferred shares should be classified as permanent equity rather than temporary equity or liability. The preferred stockwas measured as of the date of closing of the tender offer, being January 27, 2022, at fair value on a non-recurring basis. Its fair value was determined through Level 3 inputs of the fairvalue hierarchy as determined by management and amounted to $18,030. The fair value of the preferred stock weighted the probabilities: a) that the Series B are not further exchanged forPreferred C shares, and b) that the Series B are converted to Series C on the applicable conversion date. The fair value of the conversion option embedded in the Series C PreferredShares was estimated using the Black & Scholes model. Moreover, the Company’s valuation used the following assumptions: (a) stated dividend yields for the Series B preferred stockand Series C preferred stock, (b) cost of equity of 11.07%, based on the CAPM theory; (c) expected volatility of 77%, (d) risk free rate of 1.66% determined by management using theapplicable 5-year treasury yield as of the measurement date, (e) market value of common stock of $3.09 (which was the current market price as of the date of the fair value measurement)and (f) expected life of convertibility option of the Series C preferred shares to common shares of 4 years. The Company applied moneyness scenarios and determined theaforementioned assumptions of volatility and expected life of the convertibility option, which are considered highly interdependent. The Company’s valuation determined that theexchange resulted in an excess value of the Series B preferred shares of $9,271, or $11.68 per preferred share, as compared to the fair value of the common shares exchanged, that wastransferred from the common holders to the preferred holders on the measurement date, and that that value represented a deemed dividend to the preferred holders that should bededucted from the net income from continuing operations to arrive to the net income available to common stockholders from continuing operations (Note 11). The fair value of thecommon shares exchanged on the measurement date of $8,759 was determined through Level 1 inputs of the fair value hierarchy (quoted market price on the date of the exchange).Accordingly, in its assessment for the accounting of the Series C preferred stock, the Company has taken into consideration the provisions of ASC 480 “Distinguishing Liabilities fromEquity” and ASC 815 “Derivatives and Hedging” and determined that the Series C preferred shares should be classified as permanent equity rather than temporary equity or liability. TheSeries C preferred stock was measured as of the date of their issuance, being October 17, 2022, at fair value on a non-recurring basis. Its fair value was determined through Level 3 inputsof the fair value hierarchy as determined by management and amounted to $26,809. The fair value of the preferred stock was estimated as the sum of two components: a) the “straight”preferred stock component, using the discounted cash flow model, and b) the embedded option component, using the Black & Scholes model. For this assessment, the Company’svaluation used the following assumptions: (a) stated dividend yield for the Series C preferred stock, (b) cost of equity of 10.38%, based on the CAPM theory; (c) expected volatility of89%, (d) risk free rate of 4.23% determined by management using the applicable 5-year treasury yield as of the measurement date, (e) market value of common stock of $0.31 (which wasthe current market price as of the date of the fair value measurement), and (f) expected life of convertibility option of the Series C preferred shares to common shares of 4 years. TheCompany applied moneyness scenarios and determined the aforementioned assumptions of volatility and expected life of the convertibility option, which are considered highlyinterdependent. The Company’s valuation determined that the transaction resulted in an excess value of the Series C preferred shares of $6,944, or $5.28 per preferred share, as comparedto the sum of the amount of $4,930 (being the carrying value of the amount applied by the Company as a prepayment to the loan facility with Mango) and the carrying value of the SeriesB preferred shares exchanged, that was transferred from the preferred Series B holders to the preferred Series C holders on the measurement date, and that that value represented adeemed dividend to the preferred Series C holders that should be deducted from the net income to arrive to the net income available to common stockholders (Note 11). The carryingvalue of the Series B preferred shares exchanged by Mango on the measurement date was $14,935.F-32Table of ContentsPERFORMANCE SHIPPING INC.Notes to Consolidated Financial StatementsDecember 31, 2023(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)As discussed above, the conversion price adjustment clause of the Series C Preferred Shares provides for a reduction in the initial conversion price in case, subsequent to the issuanceof the Series C preferred shares, any of the following, among others, happens: a) upon stock dividend, split, or reverse stock split, or b) in case the Company issues equity securities atprices below the conversion price of the Series C preferred shares then in effect. The Company concluded that the feature mentioned in b) above provides protection to investors inpromising to give each Series C holder investor the lowest pricing available to any other investors, rather than protecting against true economic dilution, and accordingly, this featureconstitutes a down round feature. During 2022, the conversion price has been adjusted from $0.50 to $7.50, after the reverse stock split on November 15, 2022, and was further adjustedto $3.51, following the triggering of the down round feature in December 2022 because of the issuance of common shares through the ATM offering (as discussed below). From January11, 2023, to January 26, 2023, because of the issuance of common shares through the ATM offering (as discussed below), the conversion price was seven times adjusted, and wasgradually reduced to $2.60, and finally, on March 1, 2023, due to the registered direct offering (discussed below) the conversion price was further reduced to $1.36. To measure the effectof the down-round feature the Company performed fair value measurements as determined through Level 3 inputs of the fair value hierarchy by applying the same methodology as perinitial fair value measurement for Series C preferred stock. For this assessment the Company updated the Level 3 inputs as follows: (a) expected volatility in a range of 86.83% to 118.14%for the valuation of the instrument on the triggering dates, and (b) expected life of convertibility option of the Series C preferred shares to common shares from 1 to 5 years. TheCompany applied moneyness scenarios and determined the aforementioned assumptions of volatility and expected life of the convertibility option, which are considered highlyinterdependent. In this respect, the Company determined an aggregate measurement of the down round feature of $9,809, which was accounted for as a deemed dividend that should bededucted from the net income from continuing operations to arrive to the net income available to common stockholders from continuing operations (Note 11).The fair values of the Series B and Series C Preferred Shares at their issuance in 2022, as well as the fair value of the Series C Preferred Shares that were assessed on the dates oftriggering of the down-round feature as discussed above, were determined through Level 3 of the fair value hierarchy as defined in FASB guidance for Fair Value Measurements, as theyare derived by using significant unobservable inputs. Determining the fair value of the preferred stock requires management to make judgments about the valuation methodologies,including the unobservable inputs and other assumptions and estimates, which are significant in the valuation of the preferred stock.(c) Compensation Cost on Stock Option Awards: On January 1, 2021, the Company granted to its Chief Financial Officer stock options to purchase 8,000 of the Company’s commonshares as share-based remuneration. The stock options, which were granted pursuant to, and in accordance with, the Company’s Equity Incentive Plan, have been approved by theCompany’s board of directors, and have a term of five years. The exercise prices of the options are as follows: 2,000 shares for an exercise price of $150.00 per share, 1,667 shares for anexercise price of $187.50 per share, 1,333 shares for an exercise price of $225.00 per share, 1,000 shares for an exercise price of $300.00 per share, 1,000 shares for an exercise price of$375.00 per share, and 1,000 shares for an exercise price of $450.00 per share.In its assessment for the accounting of the stock options awards, the Company has taken into consideration the provisions of ASC 718 “Compensation – Stock Compensation” anddetermined that these stock options should be classified as equity rather than liability. The award was measured on the grant date, being January 1, 2021, at fair value on a non-recurringbasis. Its fair value was determined through Level 3 inputs of the fair value hierarchy as determined by management and amounted to $134. The fair value of the stock option wasestimated using the binomial-pricing model with the following assumptions: (a) 6% dividend yield, assumed based on Company’s stated dividend policy and existing capital structure, (b)weighted average expected volatility of 75%, (c) risk free rate of 0.36% determined by management using the applicable 5-year treasury yield as of the measurement date, (d) market valueof common stock of $4.64 (which was the current market price as of the date of the fair value measurement) and (e) expected life of 5 years as at January 1, 2021. Until December 31, 2023,no stock options were exercised, and in 2021 the full amount of $134 was recognized as compensation cost in General and administrative expenses in the accompanying statements ofoperations.F-33Table of ContentsPERFORMANCE SHIPPING INC.Notes to Consolidated Financial StatementsDecember 31, 2023(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)(d) Compensation Cost on Restricted Common Stock: On December 30, 2020, the Company’s Board of Directors approved an amendment to the 2015 Equity Incentive Plan (or the“Plan”), to increase the aggregate number of shares issuable under the plan to 35,922 shares, and further approved 4,481 restricted common shares to be issued on the same date as anaward to the Company’s directors. The fair value of the award was $320 and was calculated by using the share closing price of December 29, 2020. One fourth of the shares vested onDecember 30, 2020, and the remainder three fourths vest ratably over three years from the issuance date. As of December 31, 2023, 31,441 restricted common shares remained reserved forissuance under the Plan.Following the resignation of four of the Company’s board members on February 28, 2022, the Company decided to accelerate the vesting of any unvested shares on the date of theirresignation as a severance benefit and the Company recognized the corresponding compensation cost during the first quarter of 2022. During 2023, 2022, and 2021 the aggregatecompensation cost on restricted stock amounted to $52, $107 and $134, respectively, and is included in General and administrative expenses in the accompanying consolidatedstatements of operations. As at December 31, 2023 and 2022, the total unrecognized compensation cost relating to restricted share awards was $0 and $52, respectively.During 2023, 2022 and 2021, the movement of the restricted stock cost was as follows: Numberof Shares WeightedAverage GrantDate Price Outstanding at December 31, 2020 6,672 $100.65 Granted - - Vested (4,432) 115.50 Forfeited or expired - - Outstanding at December 31, 2021 2,240 $71.40 Granted - - Vested (1,890) 71.40 Forfeited or expired - - Outstanding at December 31, 2022 350 $ 71.40 Granted - - Vested (350) 71.40Forfeited or expired - - Outstanding at December 31, 2023 - $- (e) At The Market (“ATM”) Offering: On March 5, 2021, the Company entered into an At The Market Offering Agreement with H.C. Wainwright & Co., LLC (or the “WainwrightATM”), as sales agent, pursuant to which the Company could offer and sell, from time to time, up to an aggregate of $5,900 of its common shares, par value $0.01 per share. During 2022,a total of 35,128 common shares were issued as part of the Company’s Wainwright ATM offering, and the net proceeds received, after deducting underwriting commissions and otherexpenses, amounted to $1,338. The Company terminated the specific ATM agreement effective August 23, 2022.Furthermore, on December 9, 2022, the Company entered into an At The Market Offering Agreement with Virtu Americas LLC (or the “Virtu ATM”), as sales agent, pursuant to which theCompany could offer and sell, from time to time, up to an aggregate of $30,000 of its common shares, par value $0.01 per share. During 2022, a total of 140,379 common shares were issuedas part of the Company’s Virtu ATM offering, and the net proceeds received, after deducting underwriting commissions and other expenses, amounted to $450. From January 1, 2023 andup to February 27, 2023, when the Company terminated its Virtu ATM agreement, a total of 224,817 shares of the Company’s common stock were issued as part of the Company’s ATMoffering, and the net proceeds received, after deducting underwriting commissions and other expenses, amounted to $673.F-34Table of ContentsPERFORMANCE SHIPPING INC.Notes to Consolidated Financial StatementsDecember 31, 2023(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)(f) Equity Offerings of 2022: On June 1, 2022, the Company completed its underwritten public offering of 508,000 units at a price of $15.75 per unit. Each unit consists of one commonshare (or pre-funded warrant in lieu thereof) and one Class A warrant (the “June 2022 Warrants”) to purchase one common share and was immediately separated upon issuance. EachClass A warrant was immediately exercisable for one common share at an exercise price of $15.75 per share and has a maturity of five years from issuance and can be either physicallysettled or through the means of a cashless exercise. The Company may at any time during the term of its warrants reduce the then current exercise price of each warrant to any amountand for any period of time deemed appropriate by the board of directors of the Company, subject to terms disclosed in each warrants’ agreements. The warrants also contain a cashlessexercise provision, whereby if at the time of exercise, there is no effective registration statement, then the warrants can be exercised by means of a cashless exercise as disclosed in eachwarrants’ agreements. The Class A warrants and the pre-funded warrants do not have any voting, dividend or participation rights, nor do they have any liquidation preferences. TheCompany had granted the underwriters a 45-day option to purchase up to an additional 76,200 common shares and/or prefunded warrants and/or 76,200 Class A warrants, at the publicoffering price, less underwriting discounts and commissions. The offering closed on June 1, 2022, and the Company received net proceeds, after underwriting discounts andcommissions and expenses, of $7,126 including the partial exercise of the over-allotment option by the underwriters of 59,366 Class A Warrants to purchase up to 59,366 common sharesat $0.01 per share.Furthermore, on July 18, 2022, the Company completed a direct offering of 1,133,333 common shares and warrants to purchase up to 1,133,333 common shares (the “July 2022 Warrants”)at a concurrent private placement. The combined effective purchase price for one common share and one warrant to purchase one common share was $5.25. Each warrant is immediatelyexercisable for one common share at an initial exercise price of $5.25 per share, and will expire in five and a half years from issuance. The offering closed on July 19, 2022, and theCompany received net proceeds, after underwriting discounts and commissions and expenses, of approximately $5,271.The July 2022 Warrants have similar terms to the June Warrants, with the only significant difference being the existence of an exercise price adjustment clause (discussed below), whichwas assessed by the Company as a down round feature. Following the registered direct offering of August 12, 2022 (discussed below) the July 2022 Warrants’ exercise price has beenreduced to $4.75, and following the share issuances through the Company’s ATM offering in December 2022 (discussed previously), the July 2022 Warrants’ exercise price has beenreduced to $3.51, according to the terms of the Form of Warrant. Furthermore, from January 11, 2023, to January 26, 2023, the July 2022 Warrant’s exercise price was seven times adjustedbecause of the issuance of common shares through the ATM offering, and was gradually reduced to $2.60, while on March 1, 2023, due to the registered direct offering (discussedbelow) their exercise price was further reduced to their floor price of $1.65.Finally, on August 12, 2022, the Company entered into a securities purchase agreement with certain unaffiliated institutional investors to purchase 2,222,222 of its common shares andwarrants to purchase 2,222,222 common shares (the “August 2022 Warrants”) at a price of $6.75 per common share and accompanying warrant in a registered direct offering. The AugustWarrants are immediately exercisable, expire five years from the date of issuance, and had an initial exercise price of $6.75 per common share. The offering closed on August 16, 2022, andthe Company received net proceeds, after deducting underwriting discounts and commissions and expenses, of approximately $13,707.F-35Table of ContentsPERFORMANCE SHIPPING INC.Notes to Consolidated Financial StatementsDecember 31, 2023(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)The August 2022 Warrants have similar terms to the July 2022 Warrants, including the exercise price adjustment clause that constitutes a down-round feature. Further to the shareissuances through the Company’s ATM offering in December 2022 (discussed previously), the August 2022 Warrants’ exercise price has been reduced to $3.51, according to the terms ofthe Form of Warrant. Furthermore, from January 11, 2023, to January 26, 2023, the August 2022 Warrant’s exercise price was seven times adjusted because of the issuance of commonshares through the ATM offering, and was gradually reduced to $2.60, while on March 1, 2023, due to the registered direct offering (discussed below) their exercise price was furtherreduced to their floor price of $1.65.During 2023, 100,000 and 100,000 of the July 2022 and August 2022 warrants, respectively, have been exercised by their holders, generating net proceeds of $330 for the Company, whilenone of the June 2022 warrants had been exercised. During 2022 none of the June 2022, July 2022 and August 2022 warrants had been exercised.The exercise price adjustment clause of the July 2022 and August 2022 Warrants provides for a reduction in the warrants’ initial exercise price in case the company, subsequent to thewarrants issuance: a) issues equity securities at prices below the initial exercise price of the July 2022 and August 2022 Warrants, or b) the Company’s stock trades below the July 2022and August 2022 Warrants’ exercise price during any of the five trading sessions following the issuance of such equity securities. The Company concluded that the specific featureprovides protection to investors in promising to give each warrant holder investor the lowest pricing available to any other investors, rather than protecting against true economicdilution, and accordingly, this feature constitutes a down round feature. Following the Company’s registered offering in August 2022, the down round feature of the July 2022 Warrantswas triggered. Consequently, the Company measured the value of the effect of the feature as of the August 18, 2022, being the date that the down round feature was triggered anddetermined an approximate measurement of the down round feature of $22 (Note 13), which was accounted for as a deemed dividend. Moreover, following the ATM offering with Virtu(discussed previously) and the registered Direct Offering of March 2023 (discussed below) during which common shares were issued, the down round features of the July 2022 andAugust 2022 Warrants were triggered. In this respect, the Company measured the value of the effect of the feature as of the dates that the down round features were triggered, beingDecember 12, 2022 for both the July 2022 and the August 2022 Warrants, and determined an approximate measurement of the down round feature of $192 and $902, respectively, whichwere accounted for as deemed dividends (Note 13). In 2023, the down round features were triggered on eight different dates, leading to a combined effect of an approximate value of $256and $533, for the July 2022 and the August 2022 Warrants, respectively, which were accounted for as deemed dividends (Note 13). The deemed dividends resulting from the re-valuationof the July 2022 and August 2022 Warrants are deducted from the net income to arrive to the net income available to common stockholders (Note 11). The fair values of the warrants, thatwere assessed on the dates of triggering of the down-round features as discussed previously, were determined through Level 3 of the fair value hierarchy as defined in FASB guidancefor Fair Value Measurements, as they are derived by using unobservable inputs such as historical volatility.As of December 31, 2023, the Company had 12,279,676 common shares outstanding, all of the June 2022 warrants were outstanding, and also 1,033,333 of the July 2022 and 2,122,222 ofthe August 2022 warrants remained outstanding. As of December 31, 2022, the Company had 4,187,588 common shares outstanding and all the June 2022, July 2022 and August 2022warrants remained outstanding.F-36Table of ContentsPERFORMANCE SHIPPING INC.Notes to Consolidated Financial StatementsDecember 31, 2023(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)(g) Registered Direct Offering of March 2023: On March 3, 2023, the Company completed a registered direct offering of (i) 5,556,000 of its common shares, $0.01 par value per share, (ii)Series A Warrants to purchase up to 3,611,400 common shares and (iii) Series B Warrants to purchase up to 4,167,000 common shares directly to several institutional investors. EachSeries A Warrant and each Series B Warrant are immediately exercisable upon issuance for one common share at an exercise price of $2.25 per share and expire five years after theissuance date. Both Series A and Series B Warrants have similar terms with the Class A Warrants, with the only significant difference being the “alternative cashless exercise feature”included in the Series A Warrants. In particular, each Series A Warrant could become exchangeable for one common share beginning on the earlier of 30 days following the closing of theOffering and the date on which the cumulative trading volume of the Company’s common shares following the date of entry into a securities purchase agreement with the purchasers inthis offering exceeds 15,000,000 shares. The alternative cashless exercise provisions were met on March 7, 2023. The Company concluded that the Series B warrants met the criteria forequity classification while the alternative cashless exercise of the Series A Warrants, precludes the Series A Warrants from being considered indexed to the Company’s stock. In thisrespect, the Company recorded the Series A Warrants as noncurrent liabilities under Fair value of warrants’ liability on the accompanying consolidated balance sheet, with subsequentchanges in their respective fair values recognized in line “Changes in fair value of warrants’ liability” in the accompanying consolidated statement of operations. Estimating fair values ofliability-classified financial instruments requires the development of estimates that may, and are likely to, change over the duration of the instrument with related changes in internal andexternal market factors. In addition, option-based techniques are highly volatile and sensitive to changes in the trading market price of the Company’s common stock. Because liability-classified financial instruments are carried at fair value, the Company’s financial results will reflect the volatility and changes in these estimates and assumptions. At closing, theCompany received proceeds of $11,438, net of placement agent’s fees and expenses, which is separately presented in line Issuance of units, common stock and warrants, net of issuancecosts in the accompanying consolidated cash flows. As of the date the Company completed the registered direct offering, the Company valued the Series A Warrants using the Black-Scholes model with a fair value of $1.11 per Series A Warrant or $4,009 in aggregate, while the remaining gross proceeds of the offering amounting to $8,492 (net proceeds of $7,769)where allocated to common shares and Series B warrants with the residual value method. Issuance costs of $340 were expensed immediately in a prorated manner, taking into account theportion of the liability recorded at inception included in Interest and finance costs in the accompanying consolidated statements of operations. As of December 31, 2023, the Companyreceived notices of alternative cashless exercises for 3,597,100 Series A Warrants for equal amount of common shares and marked the warrants to their fair value at the settlement dateand then settling the warrant liability. As of December 31, 2023, the Company re-valued 14,300 outstanding Series A Warrants using Black-Scholes model with a fair value of $32. Thegain of $561 resulting from the change in the fair value of the liability for the unexercised warrants and the settlements of the liability throughout the period was recorded as a change infair value of the warrant liability and is presented in “Change in fair value of the warrant’s liability” in the accompanying consolidated statements of operations and consolidatedstatements of cash flows. The Series A Warrants fair value as of settlement and measurement dates per discussion above, was determined through Level 2 inputs of the fair valuehierarchy as determined by management. The fair value of the Series A Warrants weighted the probability that the Series A Warrants are alternatively cashless exercised for commonshares, while the Black & Scholes model was applied under the following assumptions: (a) expected volatility (d) risk free rate (e) market value of common stock of, which was the currentmarket price as of the date of each fair value measurement. Fair value sensitivity is driven by the stock price at the time of valuation and is limited in terms of the other parameters. Theaggregate amount of outstanding warrants Series A and Series B as of December 31, 2023, were 14,300 and 4,167,000, respectively.F-37Table of ContentsPERFORMANCE SHIPPING INC.Notes to Consolidated Financial StatementsDecember 31, 2023(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)(h) Share Buy-Back Plan: In April 2023, the Company’s Board of Directors authorized a share repurchase program (the “April 2023 Repurchase Plan”) to purchase up to an aggregate of$2,000 of the Company’s common shares. Under the April 2023 Repurchase Plan, the Company repurchased in 2023 a total of 2,222,936 common shares for total gross proceeds of $2,000,successfully completing the April 2023 Repurchase Plan in the third quarter of 2023.In August 2023, the Company’s Board of Directors further authorized a new share repurchase plan (the “August 2023 Repurchase Plan”) to repurchase up to $2,000 of the Company’soutstanding common shares. Under the August 2023 Repurchase Plan, the Company re-purchased 327,100 common shares for total gross proceeds of $723.In aggregate, the Company’s net proceeds for both the April 2023 and the August 2023 Repurchase Plans were $2,749.(i) NASDAQ Notification: On April 18, 2023, the Company received written notification from NASDAQ, indicating that because the closing bid price of the Company’s common stockfor 30 consecutive business days was below the minimum $1.00 per share bid price requirement for continued listing on The NASDAQ Capital Market, the Company was not incompliance with Nasdaq Listing Rule 5550(a)(2). Since then, Staff has determined that for 10 consecutive business days the closing bid price of the Company’s common shares has beenat $1.00 per share or greater, and thus on August 15, 2023, the Company was notified that it regained compliance with Listing Rule 5550(a)(2).10.Interest and Finance CostsThe amounts in the accompanying consolidated statements of operations are analyzed as follows: 2023 2022 2021 Interest expense on bank debt (Note 7) $8,499 $3,191 $1,596 Interest expense and other fees on related party debt (Note 4) - 277 - Amortization of deferred financing costs on bank and related party debt 244 402 143 Other financial expenses 759 - - Commitment fees and other 96 96 62 Total $9,598 $3,966 $1,801 F-38Table of ContentsPERFORMANCE SHIPPING INC.Notes to Consolidated Financial StatementsDecember 31, 2023(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)11.Earnings / (Loss) per ShareAll common shares issued (including the restricted shares issued under the equity incentive plan, or else) are the Company’s common stock and have equal rights to vote and participatein dividends, subject to forfeiture provisions set forth in the applicable award agreements. Unvested shares granted under the Company’s incentive plan, or else, are entitled to receivedividends which are not refundable, even if such shares are forfeited, and therefore are considered participating securities for basic and diluted earnings per share calculation purposes.For 2023, 2022 and 2021, the Company paid aggregate dividends amounting to $1,889, $941 and $0 to its Series B and Series C preferred stockholders, while it paid zero dividends to itscommon stockholders. The calculation of basic earnings/ (loss) per share does not consider the non-vested shares as outstanding until the time-based vesting restrictions have lapsed.The dilutive effect of share-based compensation arrangements and for unexercised warrants that are in-the money, is computed using the treasury stock method, which assumes that the“proceeds” upon exercise of these awards or warrants are used to purchase common shares at the average market price for the period, while the dilutive effect of convertible securities iscomputed using the “if converted” method. In particular, for the preferred convertible stock that requires the payment of cash by the holder upon conversion, the proceeds assumed tobe received shall be assumed to be applied to purchase common stock under the treasury stock method and the convertible security shall be assumed to be converted under the “if-converted” method. For 2023, and 2022 the most dilutive method was the two-class method, considering anti-dilution sequencing as per ASC 260. For 2023, the computation of dilutedearnings per share reflects i) the potential dilution from conversion of outstanding preferred convertible stock Series B and C, calculated with the “if converted” method which resulted in24,596,069 shares, and ii) the potential dilution from the exercise of warrants Series A (either exercised during the period end or outstanding) using the treasury stock method whichresulted in 452,286 shares and the deduction of $561, related to the changes in fair value of Series A warrants’ liability, from net income attributable to common stockholders. For 2022, thecomputation of diluted earnings per share reflects the potential dilution from conversion of outstanding preferred convertible stock calculated with the “if converted” method describedabove and resulted in 4,597,638 shares.For 2023, securities that could potentially dilute basic earnings per share in the future that were not included in the computation of diluted earnings per share, because to do so wouldhave anti-dilutive effect, are any incremental shares resulting from the non-vested restricted share awards, Class A warrants and Series B warrants considered to be out of the money,July 2022 and August 2022 warrants that were in the money, but for which no incremental shares were included in the calculation of diluted EPS considering the sequence rules of ASC260, and the non-exercised stock options calculated with the treasury stock method. For 2022, securities that could potentially dilute basic earnings per share in the future that were notincluded in the computation of diluted earnings per share, because to do so would have anti-dilutive effect, are any incremental shares resulting from the non-vested restricted shareawards, Class A warrants, July 2022 and August 2022 warrants considered to be out of the money and the non-exercised stock options calculated with the treasury stock method.For 2023, net income is significantly adjusted by a deemed dividend to the Series C preferred stockholders due to triggering of a down-round feature of $9,809, (Note 9 (b)), by a deemeddividend to the holders of the July and August 2022 Warrants of $789 as a result of triggering of a down-round feature (Note 9 (f)), and also by an amount of $1,889 representingdividends on Series B and Series C Preferred Stock (Note 9 (b)), to arrive at the net income attributable to common equity holders. For 2022, net income / (loss) from continuingoperations is significantly adjusted by an amount of $9,271 representing deemed dividends on Series B preferred stock upon exchange of common stock (Note 9 (b)), by an amount of$6,944 representing deemed dividends on Series C preferred stock upon exchange of Series C preferred stock (Note 9 (b)), by a deemed dividend to the Series C preferred stockholdersdue to triggering of a down-round feature of $5,930, (Note 9 (b)), by a deemed dividend to the holders of the July and August 2022 Warrants of $1,116 as a result of triggering of a down-round feature (Note 9 (f)), and also by an amount of $1,030 representing dividends on Series B and Series C Preferred Stock (Note 9 (b)), to arrive at the net income / (loss) attributable tocommon equity holders.F-39Table of ContentsPERFORMANCE SHIPPING INC.Notes to Consolidated Financial StatementsDecember 31, 2023(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)The following table sets forth the computation for basic and diluted earnings (losses) per share: 2023 2022 2021 Basic EPS Diluted EPS Basic EPS Diluted EPS Basic LPS Diluted LPS Net income / (loss) from continuing operations $69,413 $69,413 $36,300 $36,300 $(10,106) $(10,106)less income allocated to participating securities (2) (2) (6) (2) - - less deemed dividends on Series B preferred stock uponexchange of common stock - - (9,271) (9,271) - - less deemed dividends on Series C preferred stock uponexchange of Series B preferred stock and re-acquisition ofloan due to a related party - - (6,944) - - - less deemed dividend to the Series C preferred stockholdersdue to triggering of a down-round feature (9,809) - (5,930) (5,930) - - less deemed dividend to the July and August warrants’holders due to triggering of a down-round feature (789) (789) (1,116) (1,116) - - less dividends on preferred stock (1,889) (40) (1,030) (493) - - less changes in value of warrants’ liability - (561) - - - - Net income / (loss) attributable to common stockholdersfrom continuing operations 56,924 68,021 12,003 19,488 (10,106) (10,106) Net income from discontinued operations - - - - 400 400 Total net income /(loss) attributable to common stockholders 56,924 68,021 12,003 19,488 (9,706) (9,706) Weighted average number of common shares, basic 10,491,316 10,491,316 1,850,072 1,850,072 335,086 335,086 Effect of dilutive shares - 25,048,355 - 4,597,638 - - Weighted average number of common shares, diluted 10,491,316 35,539,671 1,850,072 6,447,710 335,086 335,086 Earnings / (Loss) per common share, continuing operations $5.43 $1.91 $6.49 $3.02 $(30.16) $(30.16) Earnings per common share, discontinued operations $- $- $- $- $1.19 $1.19 Earnings / (Loss) per common share, total $5.43 $1.91 $6.49 $3.02 $(28.97) $(28.97)12.Income TaxesUnder the laws of the countries of the companies’ incorporation and / or vessels’ registration, the companies are not subject to tax on international shipping income; however, they aresubject to registration and tonnage taxes, which are included in Vessel operating expenses in the accompanying consolidated statements of operations.F-40Table of ContentsPERFORMANCE SHIPPING INC.Notes to Consolidated Financial StatementsDecember 31, 2023(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)The Company is potentially subject to a four percent U.S. federal income tax on 50% of its gross income derived by its voyages that begin or end in the United States. However, underSection 883 of the Internal Revenue Code of the United States (the “Code”), a corporation is exempt from U.S. federal income taxation on its U.S.-source shipping income if: (a) it isorganized in a foreign country that grants an equivalent exemption from tax to corporations organized in the United States (an “equivalent exemption”); and (b) either (i) more than 50%of the value of its common stock is owned, directly or indirectly, by “qualified shareholders,”, which is referred to as the “50% Ownership Test,” or (ii) its common stock is “primarily andregularly traded on an established securities market” in the United States or in a country that grants an “equivalent exemption”, which is referred to as the “Publicly-Traded Test.”The Marshall Islands, the jurisdiction where Performance Shipping Inc. and each of its vessel-owning subsidiaries are incorporated, grant an “equivalent exemption” to U.S.corporations. Therefore, the Company would be exempt from U.S. federal income taxation with respect to its U.S.-source shipping income if either the 50% Ownership Test or thePublicly-Traded Test is met.Based on the trading and ownership of its stock, the Company believes that it satisfied the 50% Ownership Test for its 2023 taxable year and intends to take this position on its 2023 U.S.federal income tax returns. Therefore, the Company does not expect to have any U.S. federal income tax liability for the year ended December 31, 2023.13.Financial Instruments and Fair Value DisclosuresThe carrying values of temporary cash investments, accounts receivable and accounts payable approximate their fair value due to the short-term nature of these financial instruments.The fair values of long-term bank loans approximate the recorded values, due to their variable interest rates. The fair value of the Series A warrants liability is measured at each reportingperiod end and at each settlement date using the Black & Scholes model for the valuation of these instruments, as discussed above (Note 9). The Company is exposed to interest ratefluctuations associated with its variable rate borrowings and its objective is to manage the impact of such fluctuations on earnings and cash flows of its borrowings. Currently, theCompany does not have any derivative instruments to manage such fluctuations.During 2023, the Company measured on a non-recurring basis the fair values of the Series C Preferred Shares (as discussed above Note 9 (b)), July 2022 and August 2022 Warrants usingLevel 3 inputs of the fair value hierarchy, before and after the triggering of the down round features. These valuations resulted: •in a deemed dividend for the Company’s Series C Preferred Shares as of January 11, 2023, of $1,539 (Note 9), •in a deemed dividend for the Company’s Series C Preferred Shares as of January 12, 2023, of $447 (Note 9), •in a deemed dividend for the Company’s Series C Preferred Shares as of January 13, 2023, of $39 (Note 9), •in a deemed dividend for the Company’s Series C Preferred Shares as of January 19, 2023, of $250 (Note 9), •in a deemed dividend for the Company’s Series C Preferred Shares as of January 20, 2023, of $486 (Note 9), •in a deemed dividend for the Company’s Series C Preferred Shares as of January 25, 2023, of $1,486 (Note 9), •in a deemed dividend for the Company’s Series C Preferred Shares as of January 26, 2023, of $171 (Note 9), •in a deemed dividend for the Company’s Series C Preferred Shares as of March 1, 2023, of $5,391 (Note 9).F-41Table of ContentsPERFORMANCE SHIPPING INC.Notes to Consolidated Financial StatementsDecember 31, 2023(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)As of December 31, 2023, the deemed dividend for the Company’s July 2022 Warrants and August 2022 Warrants that resulted from the fair value measurement of the down roundfeatures of July 2022 and August 2022 Warrants amounted to $256 and $533, respectively, both triggered similarly to Series C Preferred Shares above (Note 9).The Company recorded gain from the Series A warrants measured on non-recurring basis at settlement dates amounting to $244, and on recurring basis as of each measurement dateamounting to $317. The Series A Warrants fair value as of settlement and measurement dates per discussion above (Note 9 (g)), was determined through Level 2 inputs of the fair valuehierarchy as determined by management. As of March 31, June 30, September 30 and December 31, 2023, the Company measured on recurring basis the fair value of the outstandingSeries A Warrants at each measurement date of 1,021,800, 446,550, 14,300 and 14,300 Series A warrants, respectively, in the amount of $787, $353, $28 and $32, respectively. The Companymeasured on a non-recurring basis the fair value of Series A Warrants on each of the respective exercise dates as follows (please refer to Note 9(g)): •on March 7, 2023, 42,900 Series A Warrants in the amount of $37, •on March 8, 2023, 1,811,550 Series A Warrants in the amount of $1,612, •on March 9, 2023, 400,400 Series A Warrants in the amount of $340, •on March 10, 2023, 320,450 Series A Warrants in the amount of $269, •on March 17, 2023, 14,300 Series A Warrants in the amount of $11, •on June 15, 2023, 575,250 Series A Warrants in the amount of $420, •on August 29, 2023, 432,250 Series A Warrants in the amount of $726.During 2022, the Company measured on a non-recuring basis its newly-issued equity instruments on their appropriate measurement dates, using Level 3 inputs of the fair valuehierarchy. These valuations resulted:•for the Company’s Series B Preferred Shares as of January 27, 2022, which was the date of the instrument’s issuance, to a fair value of $18,030 (Note 9 (b)),•for the Company’s Series C Preferred Shares as of October 17, 2022, which was the date of the instrument’s issuance, to a fair value of $26,809 (Note 9 (b)).Also, during 2022, the Company measured on a non-recurring basis the fair values of the Series C Preferred Shares, July 2022 and August 2022 Warrants, before and after the triggeringof the down round features. These valuations resulted:•in a deemed dividend for the Company’s Series C Preferred Shares as of December 12, 2022, of $5,930 (Note 9 (b)),•in a deemed dividend for the Company’s July 2022 Warrants as of August 18, 2022, of $22 (Note 9 (f)),•in a deemed dividend for the Company’s July 2022 Warrants as of December 12, 2022, of $192 (Note 9 (f)), and•in a deemed dividend for the Company’s August 2022 Warrants as of December 12, 2022, of $902 (Note 9 (f)).F-42Table of ContentsPERFORMANCE SHIPPING INC.Notes to Consolidated Financial StatementsDecember 31, 2023(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)14.Subsequent Events(a)Payment of First Instalments for the Construction of Hulls: On January 30, 2024, the Company paid an aggregate amount of $19,454, representing the first installments for hullsH1596 and H1597, according to the terms of the shipbuilding contracts (Notes 5 and 8).(b)Dividend Payment to the Series B and Series C Preferred Stockholders: On March 15, 2024, the Company paid cash dividends to its Series B and Series C preferred stockholdersamounting to $13 (or $0.25 per share) and $446 (or $0.3125 per share), respectively, according to the terms of each preferred stock, out of which $411 were paid to Mango (Note 4).(c)Legal Update: On January 29, 2024, the Company filed motions to dismiss the Sphinx lawsuit. Briefing on that motion is currently scheduled to conclude on April 4, 2024 (Note 8).Exhibit 1.10ARTICLES OF AMENDMENTTO THEAMENDED AND RESTATED ARTICLES OF INCORPORATIONOFPERFORMANCE SHIPPING INC.PURSUANT TO SECTION 90 OFTHE MARSHALL ISLANDS BUSINESS CORPORATIONS ACT The undersigned, Andreas Michalopoulos, as the Chief Executive Officer of Performance Shipping Inc., a corporation incorporated under the laws of the Republic of theMarshall Islands (the “Corporation”), for the purpose of amending the Amended and Restated Articles of Incorporation of said Corporation pursuant to Section 90 of the BusinessCorporations Act, as amended, hereby certifies that: 1.The name of the Corporation is: Performance Shipping Inc. 2.The Articles of Incorporation were filed with the Registrar of Corporations on the 7th day of January, 2010. 3.The Articles of Incorporation were amended and restated in their entirety and filed with the Registrar of Corporations on the 19th day of February, 2010; were further amendedand restated in their entirety and filed with the Registrar of Corporations on the 5th day of March, 2010; and were further amended and restated in their entirety and filed withthe Registrar of Corporations on the 5th day of April, 2010 (the “Amended and Restated Articles of Incorporation”). 4.The Statement of Designations of rights, preferences and privileges of the Corporation’s Series A Participating Preferred Stock was filed with the Registrar of Corporations onthe 2nd day of August, 2010. 5.Articles of Amendment were filed with the Registrar of Corporations on the 8th day of June, 2016. 6.The Statement of Designations of rights, preferences and privileges of the Corporation’s Series B-1 Convertible Preferred Stock was filed with the Registrar of Corporations onthe 21st day of March, 2017. 7.The Statement of Designations of rights, preferences and privileges of the Corporation’s Series B-2 Convertible Preferred Stock was filed with the Registrar of Corporations onthe 21st day of March, 2017. 8.The Statement of Designations of rights, preferences and privileges of the Corporation’s Series C Preferred Stock was filed with the Registrar of Corporations on the 30th day ofMay, 2017. 9.Articles of Amendment were filed with the Registrar of Corporations on the 3rd day of July, 2017. 10.Articles of Amendment were filed with the Registrar of Corporations on the 26th day of July, 2017. 11.Articles of Amendment were filed with the Registrar of Corporations on the 23rd day of August, 2017. 12.Articles of Amendment were filed with the Registrar of Corporations on the 22nd day of September, 2017. 13.Articles of Amendment were filed with the Registrar of Corporations on the 1st day of November, 2017. 14.Articles of Amendment were filed with the Registrar of Corporations on the 25th day of February, 2019. 15.Articles of Amendment were filed with the Registrar of Corporations on the 30th day of October, 2020.16.The Statement of Designations of rights, preferences and privileges of the Corporation’s Series B Convertible Cumulative Perpetual Preferred Stock was filed with the Registrarof Corporations on the 20th day of December, 2021. 17.The Amended and Restated Statement of Designations of rights, preferences and privileges of the Corporation’s Series B Convertible Cumulative Perpetual Preferred Stock wasfiled with the Registrar of Corporations on the 12th day of January, 2022. 18.The Statement of Designations of rights, preferences and privileges of the Corporation’s Series C Convertible Cumulative Redeemable Perpetual Preferred Stock was filed withthe Registrar of Corporations on the 17th day of October, 2022. 19.Section D of the Amended and Restated Articles of Incorporation is hereby amended by adding the following paragraph to the end of such Section:“Effective with the commencement of business on November 15, 2022, the Corporation has effected a one-for-fifteen reverse stock split as to its issued common stock, pursuantto which the number of issued shares of common stock shall decrease from 60,728,363 to 4,048,557, as adjusted for the cancellation of fractional shares, and which may befurther adjusted for the cancellation of fractional shares. The reverse stock split shall not change the number of registered shares of common stock the Corporation is authorizedto issue or the par value of the common stock. The stated capital of the Corporation is hereby reduced from $607,283.63 to $40,485.57, which may be further adjusted for thecancellation of fractional shares and the amount of the reduction in stated capital shall be allocated to surplus.”  20.All of the other provisions of the Amended and Restated Articles of Incorporation shall remain unchanged. 21.This amendment to the Amended and Restated Articles of Incorporation was approved by the affirmative vote of a majority of all outstanding shares of the Corporation with aright to vote thereon at the Special Meeting of Shareholders of the Corporation held on November 7, 2022, and by the Corporation’s Board of Directors on November 8, 2022. [Signature Page Follows] IN WITNESS WHEREOF, the undersigned has executed this Amendment to the Amended and Restated Articles of Incorporation on this 14th day of November, 2022. /s/ Andreas MichalopoulosName: Andreas MichalopoulosTitle: Chief Executive OfficerExhibit 2.5 DESCRIPTION OF THE REGISTRANT’S SECURITIES REGISTERED PURSUANTTO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934 As of December 31, 2023, Performance Shipping Inc. (the “Company”) had two classes of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended: (1) Common stock, $0.01 par value (the “common shares”); and (2) Preferred stock purchase rights (the “Preferred Stock Purchase Rights”). The following description sets forth certain material provisions of these securities. The following summary does not purport to be complete and is subject to, and is qualified in itsentirety by reference to, the applicable provisions of (i) the Company’s Amended and Restated Articles of Incorporation, as amended (the “Articles of Incorporation”) and (ii) theCompany’s Amended and Restated Bylaws (the “Bylaws”), each of which is incorporated by reference as an exhibit to the Annual Report on Form 20-F of which this Exhibit is a part. Weencourage you to refer to our Articles of Incorporation and Bylaws for additional information. Please note in this description of securities, “we,” “us,” “our” and “the Company” all refer to Performance Shipping Inc. and its subsidiaries, unless the context requires otherwise. Capitalized terms used but not defined herein have the meanings given to them in the Annual Report on Form 20-F of which this Exhibit is a part. PurposeOur purpose is to engage in any lawful act or activity for which corporations may now or hereafter be organized under the Marshall Islands Business Corporations Act, or BCA.Our Third Amended and Restated Articles of Incorporation and Amended and Restated By-Laws, as further amended, do not impose any limitations on the ownership rights of ourshareholders.Authorized Capitalization Under our amended and restated articles of incorporation, our authorized capital stock consists of 500,000,000 common shares, par value $0.01 per share, of which 12,279,676shares were issued and outstanding as of December 31, 2023 and March 26, 2024, respectively, and 25,000,000 preferred shares, par value $0.01 per share, of which 50,726 of our Series BPreferred Shares and 1,428,372 of our Series C Preferred Shares were issued and outstanding as of December 31, 2023 and March 26, 2024, respectively. DESCRIPTION OF COMMON SHARES The respective number of common shares issued and outstanding as of the last day of the fiscal year for the Annual Report on Form 20-F to which this description is attachedor incorporated by reference as an exhibit, is provided on the cover page of such Annual Report on Form 20-F. Each outstanding common share entitles the holder to one vote on all matters submitted to a vote of shareholders. Subject to preferences that may be applicable to anyoutstanding preferred shares, holders of common shares are entitled to receive ratably all dividends, if any, declared by our board of directors out of funds legally available for dividends.Upon our dissolution or liquidation or the sale of all or substantially all of our assets, after payment in full of all amounts required to be paid to creditors and to the holders of ourpreferred shares having liquidation preferences, if any, the holders of our common shares will be entitled to receive pro rata our remaining assets available for distribution. Holders of ourcommon shares do not have conversion, redemption or preemptive rights to subscribe to any of our securities. The rights, preferences and privileges of holders of common shares aresubject to the rights of the holders of our preferred shares, including our existing classes of preferred shares and any preferred shares we may issue in the future. 1Voting Rights Each outstanding common share entitles the holder to one vote on all matters submitted to a vote of shareholders. At any annual or special general meeting of shareholderswhere there is a quorum, the affirmative vote of a majority of the votes cast by holders of shares of stock represented at the meeting shall be the act of the shareholders. (Under theArticles of Incorporation, at all meetings of shareholders except otherwise expressly provided by law, there must be present in person or proxy shareholders of record holding at leastone third of the shares issued and outstanding and entitled to vote at such meeting in order to constitute a quorum but if less than a quorum is present, a majority of those sharespresent either in person or by proxy shall have power to adjourn any meeting until a quorum shall be present.) Our Bylaws do not confer any conversion, redemption or preemptive rights attached to our common shares. Dividend Rights Subject to preferences that may be applicable to any outstanding preferred shares, holders of common shares are entitled to receive ratably all dividends, if any, declared by ourboard of directors out of funds legally available for dividends. Liquidation Rights Upon our dissolution or liquidation or the sale of all or substantially all of our assets, after payment in full of all amounts required to be paid to creditors and to the holders ofour preferred shares having liquidation preferences, if any, the holders of our common shares will be entitled to receive pro rata our remaining assets available for distribution. Variation of Rights Generally, the rights or privileges attached to our common shares may be varied or abrogated by the rights of the holders of our preferred shares, including our existing classesof preferred shares and any preferred shares we may issue in the future. Limitations on Ownership Under Marshall Islands law generally, there are no limitations on the right of non-residents of the Marshall Islands or owners who are not citizens of the Marshall Islands tohold or vote our common shares. DESCRIPTION OF PREFERRED SHARES Our amended and restated articles of incorporation authorize our board of directors to establish one or more series of preferred shares and to determine, with respect to anyseries of preferred shares, the terms and rights of that series, including: •the designation of the series; •the number of shares of the series; •the preferences and relative, participating, option or other special rights, if any, and any qualifications, limitations or restrictions of such series; and •the voting rights, if any, of the holders of the series. Description of the Series B Convertible Cumulative Perpetual Preferred Stock On December 21, 2021, we offered to exchange up to 271,078 of our then issued and outstanding common shares for newly issued shares of our Series B Convertible CumulativePerpetual Preferred Stock, par value $0.01 and liquidation preference $25.00 (the “Series B Preferred Shares”) at a ratio of 0.28 Series B Preferred Shares for each common share. The offerexpired on January 27, 2022 and a total of 188,974 common shares were validly tendered and accepted for exchange in the offer, which resulted in the issuance of 793,657 Series BPreferred Shares.The authorized number of Series B Preferred Shares was initially 1,200,000 and is currently 457,069 as a result of the cancellation of Series B Preferred Shares following theirrepurchase or conversion. 50,726 Series B Preferred Shares are currently issued and outstanding.The following description of the terms of the Series B Preferred Shares is a summary and does not purport to be complete and qualified in its entirety by the provisions of theAmended and Restated Certificate of Designations of the Series B Preferred Shares, dated January 12, 2022, which is incorporated by reference herein.2Voting. The Series B Preferred Shares have no voting rights except as set forth below, as set forth in the Certificate of Designation for the Series B Preferred Shares, or asotherwise provided by Marshall Islands law. Unless we have received the affirmative vote or consent of the holders of at least two-thirds of the outstanding Series B Preferred Shares,voting as a single class, we may not adopt any amendment to our articles of incorporation that materially and adversely alters the preferences, powers or rights of the Series B PreferredShares. On any matter described above in which the Series B Preferred Shareholders are entitled to vote as a class, whether separately or together with the holders of any ParitySecurities, such holders will be entitled to one vote per Series B Preferred Share.Redemption. The Series B Preferred Shares are redeemable. At any time on or after the date that is the date immediately following the 15-month anniversary of the OriginalIssue Date of the Series B Preferred Shares, we may redeem, at our option, in whole or in part, the Series B Preferred Shares at a redemption price in cash equal to $25.00 plus anyaccumulated and unpaid dividends thereon to and including the date of redemption. Any such optional redemption shall be effected only out of funds legally available for such purpose.We may undertake multiple partial redemptions. The Series B Preferred Shares are not subject to mandatory redemption or to any sinking fund requirements.Liquidation Preference. Upon any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, the Series B Preferred Shares will rank (i) senior to (a)common shares and (b) all Junior Securities (as such terms is defined in the Series B Certificate of Designation), (ii) pari passu with the Parity Securities (as such term is defined in theSeries B Certificate of Designation), including the Series C Preferred Shares, and (iii) junior to Senior Securities (as such term is defined in the Series B Certificate of Designation). TheSeries B Preferred Shares shall be entitled to receive a payment equal to $25, plus the amount of any accumulated and unpaid dividends thereon (whether or not such dividends shallhave been declared) per Series B Preferred Share, in cash, concurrently with any distribution made to the holders of parity securities and before any distribution shall be made to theholders of common shares or any other junior securities. The Series B Preferred Shares holder has no other rights to distributions upon any liquidation, dissolution or winding up of theCompany.Conversion. Each Series B Preferred Share was convertible, at the option of the holder and for additional cash consideration of $7.50 per converted Series B Preferred Share, intotwo Series C Preferred Shares. Such Series B Preferred Share conversion right was only exercisable during a 30-day period, such period commencing on the date that is the later of (i) thedate that is the date immediately following the one-year anniversary of the Original Issue Date and (ii) the date on which the Company notifies the holders of Series B Preferred Sharesthat the issuance of Series C Preferred Shares upon exercise of the Series B Conversion Right is covered under an effective registration statement that is filed with the SEC under theSecurities Act or the date that the Company notifies the holders of Series B Preferred Shares that it has determined, in its sole discretion, that the issuance of such Series C PreferredShares is exempt from the registration requirements of the Securities Act (the “Conversion Period”). The Conversion Period expired on March 15, 2023. During the Conversion Period,85,535 Series B Preferred Shares were converted to 171,070 Series C Preferred Shares.Dividends. Dividends on each Series B Preferred Share shall be cumulative and shall accrue at a rate equal to 4.00% per annum of the liquidation preference per Series BPreferred Share from the Original Issuance Date. When and if declared, the dividend payment dates for the Series B Preferred Shares shall be each June 15, September 15, December 15and March 15. At the Company’s option, such dividends may be paid in common shares of the Company valued at the volume-weighted average price of the common shares for the 10trading days prior to the Dividend Payment Date.Listing. Currently, no market exists for the Series B Preferred Shares, and we do not intend to apply to list the Series B Preferred Shares on any stock exchange or in any tradingmarket.Description of the Series C Convertible Cumulative Redeemable Perpetual Preferred StockOn October 17, 2022 (the “Original Issuance Date”), we filed a Certificate of Designation (the “Series C Certificate of Designation”) with the Registrar of Corporations of theRepublic of the Marshall Islands pursuant to which we established our newly designated Series C Preferred Shares. The authorized number of Series C Preferred Shares is 1,587,314, ofwhich 1,428,372 Series C Preferred Shares are currently issued and outstanding.3The following description of the terms of the Series C Preferred Shares is a summary and does not purport to be complete and is qualified by reference to the Series C Certificateof Designation filed as an exhibit to our Form 6-K filed on October 21, 2022 and incorporated herein by reference.Voting. Each holder of Series C Preferred Shares is entitled to a number of votes equal to the number of Common Shares into which such holder’s Series C Preferred Shareswould then be convertible (notwithstanding the requirement that the Series C Preferred Shares are convertible only after six months following the Original Issuance Date), multiplied by10. Except as set forth in the Series C Certificate of Designation with respect to certain matters requiring the majority vote of the Series C Preferred Shares or as required by law, theholders of Series C Preferred Shares shall vote together as one class with the holders of Common Shares on all matters submitted to a vote of our shareholders.Redemption. The Series C Preferred Shares are redeemable. The Company has the right at any time, on or after the date that is the date immediately following the 15-monthanniversary of the Original Issuance Date, to redeem, at its option, in whole or in part, the Series C Preferred Shares, provided that on the date of any Series C redemption notice, exceptwith respect to any redemption for cash, less than 25% of the authorized number of Series C Preferred Shares are outstanding. The redemption price per Series C Preferred Shares shall beequal to $25.00 plus any accumulated and unpaid dividends thereon to and including the date of redemption, payable in cash or, at the Company’s election, Common Shares valued at thevolume-weighted average price of the Common Shares for the 10 trading days prior to the date of redemption. The Company may undertake multiple partial redemptions. The Series BPreferred Shares are not subject to mandatory redemption or to any sinking fund requirements.Liquidation Preference. Upon any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, the Series C Preferred Shares will rank (i) senior to (a)common shares and (b) all Junior Securities (as such terms is defined in the Series C Certificate of Designation), (ii) pari passu with the Parity Securities (as such term is defined in theSeries C Certificate of Designation), including the Series B Preferred Shares, and (iii) junior to Senior Securities (as such term is defined in the Series C Certificate of Designation). TheSeries C Preferred Shares shall be entitled to receive a payment equal to $25, plus the amount of any accumulated and unpaid dividends thereon (whether or not such dividends shallhave been declared) per Series C Preferred Share, in cash, concurrently with any distribution made to the holders of parity securities and before ay distribution shall be made to theholders of common shares or any other junior securities. The Series C Preferred Shares holder has no other rights to distributions upon any liquidation, dissolution or winding up of theCompany.Conversion. The Series C Preferred Shares are convertible into common shares (i) at the option of the holder: in whole or in part, at a rate equal to the Series C liquidationpreference, plus the amount of any accrued and unpaid dividends thereon to and including the date of conversion, divided by a conversion price of $1.3576 per common share, subjectto adjustment from time to time, or (ii) mandatorily: on any date within the Series C Conversion Period on which less than 25% of the authorized number of Series C Preferred Shares areoutstanding and the volume-weighted average price of the common shares for the 10 trading days preceding such date exceeds 130% of the conversion price in effect on such date, theCompany may elect that all or a portion of the outstanding Series C Preferred Shares shall mandatorily convert into common shares at a rate equal to the Series C liquidation preference,plus the amount of any accrued and unpaid dividends thereon to and including such date, divided by the conversion price. The conversion price is subject to adjustment for any stocksplits, reverse stock splits or stock dividends, and shall also be adjusted to the lowest price of issuance of common shares by the Company for any registered offering following theOriginal Issuance Date, provided that such adjusted conversion price shall not be less than $0.50. Any common shares issued upon conversion of the Series C Preferred Shares will beexempt from registration pursuant to Section 3(a)(9) of the Securities Act.Dividends. Dividends on each Series C Preferred Share shall be cumulative and shall accrue at a rate equal to 5.00% per annum of the liquidation preference per Series CPreferred Share from the dividend payment date immediately preceding issuance. When and if declared, the dividend payment dates for the Series C Preferred Shares shall be each June15, September 15, December 15 and March 15. At the Company’s option, such dividends may be paid in Common Shares of the Company valued at the volume-weighted average price ofthe common shares for the 10 trading days prior to the Dividend Payment Date.4Listing. Currently, no market exists for the Series C Preferred Shares, and we do not intend to apply to list the Series C Preferred Shares on any stock exchange or in any tradingmarket.DESCRIPTION OF PREFERRED STOCK PURCHASE RIGHTS On December 20, 2021, we entered into a new Stockholders’ Rights Agreement, or the Rights Agreement, with Computershare Inc. as Rights Agent. Pursuant to the RightsAgreement, each share of our common stock includes one right, or a Right, that entitles the holder to purchase from us a unit consisting of one one-thousandth of a share of our Series AParticipating Preferred Stock at an exercise price of $50.00, subject to specified adjustments. The Rights will separate from the common stock and become exercisable only if a person orgroup acquires beneficial ownership of 10% or more of our common stock in a transaction not approved by our board of directors. In that situation, each holder of a Right (other than theacquiring person, whose Rights will become void and will not be exercisable) will have the right to purchase, upon payment of the exercise price, a number of shares of our common stockhaving a then-current market value equal to twice the exercise price. In addition, if we are acquired in a merger or other business combination after an acquiring person acquires 10% ormore of our common stock, each holder of the Right will thereafter have the right to purchase, upon payment of the exercise price, a number of shares of common stock of the acquiringperson having a then-current market value equal to twice the exercise price. The acquiring person will not be entitled to exercise these Rights. Under the Rights Agreement's terms, it willexpire on December 20, 2031. The Rights may have anti-takeover effects. The Rights will cause substantial dilution to any person or group that attempts to acquire us without the approval of our board ofdirectors. As a result, the overall effect of the Rights may be to render more difficult or discourage any attempt to acquire us. Because our board of directors can approve a redemption ofthe Rights or a permitted offer, the Rights should not interfere with a merger or other business combination approved by our board of directors. We have summarized the material terms and conditions of the Rights Agreement and the related Rights below. Distribution and Transfer of Rights; Rights Certificates The board of directors has declared a dividend of one Right for each outstanding Common Share. Prior to the Distribution Date referred to below: •the Rights will be evidenced by and trade with the certificates for the Common Shares (or, with respect to any uncertificated Common Shares registered in book entry form,by notation in book entry), and no separate rights certificates will be distributed; •new Common Shares certificates issued after the Record Date will contain a legend incorporating the Rights Agreement by reference (for uncertificated Common Sharesregistered in book entry form, this legend will be contained in a notation in book entry); and •the surrender for transfer of any certificates for Common Shares (or the surrender for transfer of any uncertificated Common Shares registered in book entry form) will alsoconstitute the transfer of the Rights associated with such Common Shares. Rights will accompany any new Common Shares that are issued after the Record Date. Distribution Date Subject to certain exceptions specified in the Rights Agreement, the Rights will separate from the Common Shares and become exercisable following the earlier of (i) the 10thcalendar day (or such later date as may be determined by the board of directors) after the public announcement that a person or group of affiliated or associated persons (an “AcquiringPerson”) has acquired beneficial ownership of 10% or more of the Common Shares; or (ii) the 10th business day (or such later date as may be determined by the board of directors) after aperson or group announces a tender or exchange offer that would result in ownership by a person or group of 10% or more of the Common Shares. For purposes of the RightsAgreement, beneficial ownership is defined to include the ownership of derivative securities. The date on which the Rights separate from the Common Shares and become exercisable is referred to as the “Distribution Date.” 5After the Distribution Date, the Company will mail Rights certificates to the Company’s stockholders (and in the case of uncertificated shares, by notation in book entryaccounts reflecting ownership) as of the close of business on the Distribution Date and the Rights will become transferable apart from the Common Shares. Thereafter, such Rightscertificates alone will represent the Rights. Preferred Shares Purchasable Upon Exercise of Rights After the Distribution Date, each Right will entitle the holder to purchase, for the Exercise Price, one one-thousandth of a Preferred Share having economic and other termssimilar to that of one Common Share. This portion of a Preferred Share is intended to give the stockholder approximately the same dividend, voting and liquidation rights as would oneCommon Share, and should approximate the value of one Common Share. More specifically, each one one-thousandth of a Preferred Share, if issued, will, among other things: •not be redeemable; •entitle holders to quarterly dividend payments in an amount per share equal to 1,000 times the aggregate per share amount of all cash dividends, and 1,000 times theaggregate per share amount (payable in kind) of all non-cash dividends or other distributions other than a dividend payable in Common Shares or a subdivision of theoutstanding Common Shares (by reclassification or otherwise), declared on the Common Shares since the immediately preceding quarterly dividend payment date; and •entitle holders of Series A Participating Preferred Stock to 1,000 votes on all matters submitted to a vote of the stockholders of the Company. Flip-In Trigger If an Acquiring Person obtains beneficial ownership of 10% or more of the Common Shares, then each Right will entitle the holder thereof to purchase, for the Exercise Price, anumber of Common Shares (or, in certain circumstances, cash, property or other securities of the Company) having a then-current market value of twice the Exercise Price. However, theRights are not exercisable following the occurrence of the foregoing event until such time as the Rights are no longer redeemable by the Company, as further described below. Following the occurrence of an event set forth in preceding paragraph, all Rights that are or, under certain circumstances specified in the Rights Agreement, were beneficiallyowned by an Acquiring Person or certain of its transferees will be null and void. Flip-Over Trigger If, after an Acquiring Person obtains 10% or more of the Common Shares, (i) the Company merges into another entity; (ii) an acquiring entity merges into the Company; or (iii)the Company sells or transfers 50% or more of its assets, cash flow or earning power, then each Right (except for Rights that have previously been voided as set forth above) will entitlethe holder thereof to purchase, for the Exercise Price, a number of shares of common stock of the person engaging in the transaction having a then-current market value of twice theExercise Price. Redemption of the Rights The Rights will be redeemable at the Company's option for $0.01 per Right (payable in cash, Common Shares or other consideration deemed appropriate by the board ofdirectors) at any time on or prior to the 10th business day (or such later date as may be determined by the board of directors) after the public announcement that an Acquiring Personhas acquired beneficial ownership of 10% or more of the Common Shares. Immediately upon the action of the board of directors ordering redemption, the Rights will terminate and theonly right of the holders of the Rights will be to receive the $0.01 redemption price. The redemption price will be adjusted if the Company undertakes a stock dividend or a stock split. Exchange Provision At any time after the date on which an Acquiring Person beneficially owns 10% or more of the Common Shares and prior to the acquisition by the Acquiring Person of 50% ofthe Common Shares, the board of directors may exchange the Rights (except for Rights that have previously been voided as set forth above), in whole or in part, for Common Shares atan exchange ratio of one Common Share per Right (subject to adjustment). In certain circumstances, the Company may elect to exchange the Rights for cash or other securities of theCompany having a value approximately equal to one Common Share. 6Expiration of the Rights The Rights expire on the earliest of (i) 5:00 p.m., New York City time, on December 20, 2031 (unless such date is extended); or (ii) the redemption or exchange of the Rights asdescribed above. Amendment of Terms of Rights Agreement and Rights The terms of the Rights and the Rights Agreement may be amended in any respect without the consent of the holders of the Rights on or prior to the Distribution Date.Thereafter, the terms of the Rights and the Rights Agreement may be amended without the consent of the holders of Rights in order to (i) cure any ambiguities; (ii) shorten or lengthenany time period pursuant to the Rights Agreement; or (iii) make changes that do not adversely affect the interests of holders of the Rights (other than an Acquiring Person or an affiliateor associate of an Acquiring Person). Voting Rights; Other Stockholder Rights The Rights will not have any voting rights. Until a Right is exercised, the holder thereof, as such, will have no separate rights as stockholder of the Company. Anti-Dilution Provisions The board of directors may adjust the Exercise Price, the number of Preferred Shares issuable and the number of outstanding Rights to prevent dilution that may occur from astock dividend, a stock split or a reclassification of the Preferred Shares or Common Shares. Taxes The distribution of Rights should not be taxable for federal income tax purposes. However, following an event that renders the Rights exercisable or upon redemption of theRights, stockholders may recognize taxable income. DESCRIPTION OF WARRANTSClass A WarrantsOn June 1, 2022, we completed a public offering of 508,000 units (as adjusted for the one-for-fifteen reverse stock split effective on November 15, 2022), each unit consisting of(i) one common share or a pre-funded warrant to purchase one common share at an exercise price equal to $0.01 per common share, and (ii) one Class A Warrant to purchase one commonshare at an initial exercise price equal to $15.75 per Common Share (a “Class A Warrant”), at a public offering price of $15.75 per unit.At the time of the closing, the underwriters exercised and closed on part of their over-allotment option, and purchased Class A Warrants to purchase up to 59,366 commonshares.Class A Warrants to purchase up to 567,366 common shares are currently outstanding.The following summary of certain terms and provisions of the Class A Warrants is not complete and is subject to, and qualified in its entirety by the provisions of the form ofClass A Warrant, which was filed as Exhibit 4.2 to our Current Report on Form 6-K filed with the SEC on June 2, 2022 and is incorporated herein by reference.Exercisability. The Class A Warrants are exercisable at any time after their original issuance and at any time up to the date that is five years after their original issuance. TheClass A Warrants are exercisable, at the option of each holder, in whole or in part by delivering to us a duly executed exercise notice and, at any time a registration statement registeringthe issuance of the common shares underlying the warrants under the Securities Act is effective and available for the issuance of such shares, by payment in full in immediately availablefunds for the number of common shares purchased upon such exercise. If a registration statement registering the issuance of the common shares underlying the Class A Warrants underthe Securities Act is not effective or available, the holder may, in its sole discretion, elect to exercise the Class A Warrants through a cashless exercise, in which case the holder wouldreceive upon such exercise the net number of common shares determined according to the formula set forth in the warrant. We may be required to pay certain amounts as liquidateddamages as specified in the warrants in the event we do not deliver common shares upon exercise of the warrants within the time periods specified in the warrants. No fractional commonshares will be issued in connection with the exercise of a warrant.7Exercise Limitation. A holder will not have the right to exercise any portion of the Class A Warrants if the holder (together with its affiliates) would beneficially own in excess of4.99% (or, upon election by a holder prior to the issuance of any warrants, 9.99%) of the number of shares of our common shares outstanding immediately after giving effect to theexercise, as such percentage ownership is determined in accordance with the terms of the warrants. However, any holder may increase or decrease such percentage to any otherpercentage not in excess of 9.99%, upon at least 61 days’ prior notice from the holder to us with respect to any increase in such percentage.Exercise Price. The exercise price for the Class A Warrants per whole common share purchasable upon exercise of the warrants is $15.75. The exercise price and number ofcommon shares issuable on exercise of the Class A Warrants are subject to appropriate adjustments in the event of certain stock dividends and distributions, stock splits, stockcombinations, reclassifications or similar events affecting our common shares. The exercise price of the Class A Warrants may also be reduced to any amount not less than $7.50 (asadjusted for stock splits, reverse stock splits or stock dividends) and for any period of time at the sole discretion of our board of directors. Transferability. Subject to applicable laws, the Class A Warrants may be offered for sale, sold, transferred or assigned without our consent.Exchange Listing. We do not intend to list the Class A Warrants on any securities exchange or other trading market. Without an active trading market, the liquidity of the ClassA Warrants will be limited.Warrant Agent. The Class A Warrants were issued in registered form under a warrant agreement between Computershare Trust Company, N.A., as warrant agent, and us. Thewarrants shall initially be represented only by one or more global warrants deposited with the warrant agent, as custodian on behalf of The Depository Trust Company (DTC) andregistered in the name of Cede & Co., a nominee of DTC, or as otherwise directed by DTC.Fundamental Transactions. In the event of a fundamental transaction, as described in the Class A Warrants and generally including, with certain exceptions, anyreorganization, recapitalization or reclassification of our common shares, the sale, transfer or other disposition of all or substantially all of our properties or assets, our consolidation ormerger with or into another person, the acquisition of more than 50% of our outstanding common shares, or any person or group becoming the beneficial owner of 50% of the votingpower represented by our outstanding common shares, the holders of the warrants will be entitled to receive upon exercise of the warrants the kind and amount of securities, cash orother property that the holders would have received had they exercised the warrants immediately prior to such fundamental transaction. In addition, in the event of a fundamentaltransaction, we or the successor entity, at the request of a holder of Class A Warrants, will be obligated to purchase any unexercised portion of such Class A Warrants in accordancewith the terms of the Class A Warrants.Rights as a Shareholder. Except as otherwise provided in the warrants or by virtue of such holder’s ownership of our common shares, the holder of a Class A Warrant does nothave the rights or privileges of a holder of our common shares, including any voting rights, until the holder exercises the warrant.Governing Law. The Class A Warrants and the warrant agreement are governed by New York law.July 2022 WarrantsOn July 19, 2022, we issued approximately 1,133,333 of our common shares in a registered direct offering concurrently with a private placement of July 2022 Warrants topurchase up to approximately 1,133,333 common shares, each exercisable to purchase one common share for an initial exercise price of $5.25, for a purchase price of $5.25 per commonshare and Warrant. This private placement transaction was conducted pursuant to a Securities Purchase Agreement dated July 18, 2022.July 2022 Warrants to purchase up to 1,033,333 common shares are currently outstanding.The following summary of certain terms and provisions of the July 2022 Warrants is not complete and is subject to, and qualified in its entirety by the provisions of the form ofJuly 2022 Warrant, which was filed as Exhibit 4.3 to our Current Report on Form 6-K filed with the SEC on July 20, 2022 and is incorporated herein by reference.8Exercisability. The exercise price for the July 2022 Warrants per whole common share purchasable upon exercise of the warrants is currently $1.65, as adjusted pursuant to theterms of the July 2022 Warrants subsequent to their issuance. The July 2022 Warrants are exercisable for a period of five and a half years commencing on the date of issuance. The July2022 Warrants are exercisable, at the option of each holder, in whole or in part by delivering to us a duly executed exercise notice with payment in full in immediately available funds forthe number of common shares purchased upon such exercise. If a registration statement registering the resale of the common shares underlying the July 2022 Warrants under theSecurities Act is not effective or available at any time after the six month anniversary of the date of issuance of the July 2022 Warrants, the holder may, in its sole discretion, elect toexercise the July 2022 Warrant through a cashless exercise, in which case the holder would receive upon such exercise the net number of common shares determined according to theformula set forth in the Warrant. Exercise Limitation. A holder will not have the right to exercise any portion of the July 2022 Warrant if the holder (together with its affiliates) would beneficially own in excess of4.99% (or, upon election of the holder, 9.99%) of the number of our common shares outstanding immediately after giving effect to the exercise, as such percentage of beneficial ownershipis determined in accordance with the terms of the Warrants. However, any holder may increase or decrease such percentage, but not in excess of 9.99%, provided that any increase willnot be effective until the 61st day after such election.Exercise Price Adjustment. The exercise price of the July 2022 Warrants is subject to appropriate adjustment in the event of certain stock dividends and distributions, stocksplits, stock combinations, reclassifications or similar events affecting our common shares and also upon any distributions of assets, including cash, stock or other property to ourstockholders. The exercise price of the July 2022 Warrants may also be reduced to any amount and for any period of time at the sole discretion of our board of directors subject to a floorprice of $1.65 (as adjusted for stock splits, reverse stock splits or stock dividends). In addition, the exercise price is also subject to an anti-dilution adjustment if we issue or are deemedto have issued securities at a price lower than the then applicable exercise price, subject to a floor price of $1.65 (as adjusted for stock splits, reverse stock splits or stock dividends).The Warrants require “buy-in” payments to be made by us for failure to deliver any shares of common stock issuable upon exercise.Exchange Listing. There is no established trading market for the July 2022 Warrants and we do not expect a market to develop. In addition, we do not intend to apply for thelisting of the July 2022 Warrants on any national securities exchange or other trading market.Fundamental Transactions. If a fundamental transaction occurs, then the successor entity will succeed to, and be substituted for us, and may exercise every right and powerthat we may exercise and will assume all of our obligations under the July 2022 Warrants with the same effect as if such successor entity had been named in the warrant itself. If holdersof our common shares are given a choice as to the securities, cash or property to be received in a fundamental transaction, then the holder shall be given the same choice as to theconsideration it receives upon any exercise of the July 2022 Warrant following such fundamental transaction. In addition, the successor entity, at the request of warrant holders, will beobligated to purchase any unexercised portion of the July 2022 Warrants in accordance with the terms of such Warrants.Rights as a Shareholder. Except as otherwise provided in the July 2022 Warrants or by virtue of such holder’s ownership of our common shares, the holder of a July 2022Warrant will not have the rights or privileges of a holder of our common shares, including any voting rights, until the issuance of common shares upon exercise of the warrant.Resale/Registration Rights. We were required to file a registration statement providing for the resale of the common shares issued and issuable upon the exercise of the July2022 Warrants and to use commercially reasonable efforts to cause such registration to become effective and to keep such registration statement effective at all times until no investorowns any Warrants or shares issuable upon exercise thereof. Such registration statement on Form F-3 (File No. 333-266946) was declared effective on August 29, 2022.9August 2022 WarrantsOn August 16, 2022, we issued approximately 2,222,222 of our common shares and August 2022 Warrants to purchase up to approximately 2,222,222 common shares in aregistered direct offering, each exercisable to purchase one common share for an initial exercise price of $6.75, for a purchase price of $6.75 per share and August 2022 Warrant. Thisissuance was conducted pursuant to a Securities Purchase Agreement dated August 12, 2022.August 2022 Warrants to purchase up to 2,122,222 common shares are currently outstanding.The following summary of certain terms and provisions of the August 2022 Warrants is not complete and is subject to, and qualified in its entirety by, the provisions of the formof August 2022 Warrant, which was filed as Exhibit 4.3 to our Current Report on Form 6-K filed with the SEC on August 17, 2022 and is incorporated herein by reference.Exercisability. The exercise price for the August 2022 Warrants per whole common share purchasable upon exercise of the warrants is currently $1.65, as adjusted pursuant tothe terms of the August 2022 Warrants subsequent to their issuance. The August 2022 Warrants are exercisable for a period of five years commencing on the date of issuance. TheAugust 2022 Warrants are exercisable, at the option of each holder, in whole or in part by delivering to us a duly executed exercise notice with payment in full in immediately availablefunds for the number of common shares purchased upon such exercise. If a registration statement registering the resale of the common shares underlying the August 2022 Warrantsunder the Securities Act is not effective or available at any time after the six month anniversary of the date of issuance of the August 2022 Warrants, the holder may, in its sole discretion,elect to exercise the August 2022 Warrant through a cashless exercise, in which case the holder would receive upon such exercise the net number of common shares determinedaccording to the formula set forth in the Warrant.Exercise Limitation. A holder will not have the right to exercise any portion of the August 2022 Warrant if the holder (together with its affiliates) would beneficially own inexcess of 4.99% (or, upon election of the holder, 9.99%) of the number of our common shares outstanding immediately after giving effect to the exercise, as such percentage of beneficialownership is determined in accordance with the terms of the Warrants. However, any holder may increase or decrease such percentage, but not in excess of 9.99%, provided that anyincrease will not be effective until the 61st day after such election.Exercise Price Adjustment. The exercise price of the August 2022 Warrants is subject to appropriate adjustment in the event of certain stock dividends and distributions, stocksplits, stock combinations, reclassifications or similar events affecting our common shares and also upon any distributions of assets, including cash, stock or other property to ourstockholders. The exercise price of the August 2022 Warrants may also be reduced to any amount and for any period of time at the sole discretion of our board of directors subject to afloor price of $1.65 (as adjusted for stock splits, reverse stock splits or stock dividends). In addition, the exercise price is also subject to an anti-dilution adjustment if we issue or aredeemed to have issued securities at a price lower than the then applicable exercise price, subject to a floor price of $1.65 (as adjusted for stock splits, reverse stock splits or stockdividends).The Warrants require “buy-in” payments to be made by us for failure to deliver any shares of common stock issuable upon exercise.Exchange Listing. There is no established trading market for the August 2022 Warrants and we do not expect a market to develop. In addition, we do not intend to apply for thelisting of the August 2022 Warrants on any national securities exchange or other trading market.Fundamental Transactions. If a fundamental transaction occurs, then the successor entity will succeed to, and be substituted for us, and may exercise every right and powerthat we may exercise and will assume all of our obligations under the August 2022 Warrants with the same effect as if such successor entity had been named in the warrant itself. Ifholders of our common shares are given a choice as to the securities, cash or property to be received in a fundamental transaction, then the holder shall be given the same choice as tothe consideration it receives upon any exercise of the August 2022 Warrant following such fundamental transaction. In addition, the successor entity, at the request of warrant holders,will be obligated to purchase any unexercised portion of the August 2022 Warrants in accordance with the terms of such Warrants.10Rights as a Shareholder. Except as otherwise provided in the August 2022 Warrants or by virtue of such holder’s ownership of our common shares, the holder of an August2022 Warrant will not have the rights or privileges of a holder of our common shares, including any voting rights, until the issuance of common shares upon exercise of the warrant.Series A WarrantsOn March 3, 2023, we issued 5,556,000 of our common shares, Series A Warrants to purchase up to 3,611,400 common shares and Series B Warrants to purchase up to 4,167,000common shares in a registered direct offering, with each Series A Warrant and Series B Warrant exercisable to purchase one common share for an initial exercise price of $2.25, for apurchase price of $2.25 per share, 0.65 of a Series A Warrant and 0.75 of a Series B Warrant. This issuance was conducted pursuant to a Securities Purchase Agreement dated February28, 2023.Series A Warrants to purchase up to 14,300 common shares are currently outstanding.The following summary of certain terms and provisions of the Series A Warrants is not complete and is subject to, and qualified in its entirety by, the provisions of the form ofSeries A Warrant, which was filed as Exhibit 4.3 to our Current Report on Form 6-K filed with the SEC on March 3, 2023 and is incorporated herein by reference.Exercisability. The Series A Warrants are exercisable for a period of five years commencing on the date of issuance. The Series A Warrants will be exercisable, at the option ofeach holder, in whole or in part by delivering to us a duly executed exercise notice with payment in full in immediately available funds for the number of common shares purchased uponsuch exercise. If a registration statement registering the issuance of the common shares underlying the Series A Warrants under the Securities Act is not effective or available at any timeafter the date of issuance of the Series A Warrants, the holder may, in its sole discretion, elect to exercise the Series A Warrants through a cashless exercise, in which case the holderwould receive upon such exercise the net number of common shares determined according to the formula set forth in the Series A Warrant.Exchangeability. Each Series A Warrant is exchangeable for one common share.Exercise Limitation. A holder will not have the right to exercise any portion of the Series A Warrant if the holder (together with its affiliates) would beneficially own in excess of4.99% (or, upon election of the holder, 9.99%) of the number of our common shares outstanding immediately after giving effect to the exercise, as such percentage of beneficial ownershipis determined in accordance with the terms of the Series A Warrants. However, any holder may increase or decrease such percentage, but not in excess of 9.99%, provided that anyincrease will not be effective until the 61st day after such election.Exercise Price Adjustment. The exercise price of the Series A Warrants is subject to appropriate adjustment in the event of certain stock dividends and distributions, stocksplits, stock combinations, reclassifications or similar events affecting our common shares and also upon any distributions of assets, including cash, stock or other property to ourstockholders. The exercise price of the Series A Warrants may also be reduced to any amount not below $0.11 and for any period of time at the sole discretion of our board of directors.The Series A Warrants require “buy-in” payments to be made by us for failure to deliver any common shares issuable upon exercise.Exchange Listing. There is no established trading market for the Series A Warrants and we do not expect a market to develop. In addition, we do not intend to apply for thelisting of the Series A Warrants on any national securities exchange or other trading market.Fundamental Transactions. If a fundamental transaction occurs, then the successor entity will succeed to, and be substituted for us, and may exercise every right and powerthat we may exercise and will assume all of our obligations under the Series A Warrants with the same effect as if such successor entity had been named in the Series A Warrant itself. Ifholders of our common shares are given a choice as to the securities, cash or property to be received in a fundamental transaction, then the holder shall be given the same choice as tothe consideration it receives upon any exercise of the Series A Warrant following such fundamental transaction. In addition, we or the successor entity, at the request of Series AWarrant holders, will be obligated to purchase any unexercised portion of the Series A Warrants in accordance with the terms of such Series A Warrants.11Rights as a Shareholder. Except as otherwise provided in the Series A Warrants or by virtue of such holder’s ownership of our common shares, the holder of a Series A Warrantwill not have the rights or privileges of a holder of our common shares, including any voting rights, until the issuance of common shares upon exercise or exchange of the Series AWarrant.Series B WarrantsOn March 3, 2023, we issued 5,556,000 of our common shares, Series A Warrants to purchase up to 3,611,400 common shares and Series B Warrants to purchase up to 4,167,000common shares in a registered direct offering, with each Series A Warrant and Series B Warrant exercisable to purchase one common share for an initial exercise price of $2.25, for apurchase price of $2.25 per share, 0.65 of a Series A Warrant and 0.75 of a Series B Warrant. This issuance was conducted pursuant to a Securities Purchase Agreement dated February28, 2023.Series B Warrants to purchase up to 4,167,000 common shares are currently outstanding.The following summary of certain terms and provisions of the Series B Warrants is not complete and is subject to, and qualified in its entirety by, the provisions of the form ofSeries B Warrant, which was filed as Exhibit 4.4 to our Current Report on Form 6-K filed with the SEC on March 3, 2023 and is incorporated herein by reference.Exercisability. The Series B Warrants are exercisable for a period of five years commencing on the date of issuance. The Series B Warrants will be exercisable, at the option ofeach holder, in whole or in part by delivering to us a duly executed exercise notice with payment in full in immediately available funds for the number of common shares purchased uponsuch exercise. If a registration statement registering the issuance of the common shares underlying the Series B Warrants under the Securities Act is not effective or available at any timeafter the date of issuance of the Series B Warrants, the holder may, in its sole discretion, elect to exercise the Series B Warrants through a cashless exercise, in which case the holderwould receive upon such exercise the net number of common shares determined according to the formula set forth in the Series B Warrant.Exercise Limitation. A holder will not have the right to exercise any portion of the Series B Warrant if the holder (together with its affiliates) would beneficially own in excess of4.99% (or, upon election of the holder, 9.99%) of the number of our common shares outstanding immediately after giving effect to the exercise, as such percentage of beneficial ownershipis determined in accordance with the terms of the Series B Warrants. However, any holder may increase or decrease such percentage, but not in excess of 9.99%, provided that anyincrease will not be effective until the 61st day after such election.Exercise Price Adjustment. The exercise price of the Series B Warrants is subject to appropriate adjustment in the event of certain stock dividends and distributions, stocksplits, stock combinations, reclassifications or similar events affecting our common shares and also upon any distributions of assets, including cash, stock or other property to ourstockholders. The exercise price of the Series B Warrants may also be reduced to any amount not below $0.11 and for any period of time at the sole discretion of our board of directors.The Series B Warrants require “buy-in” payments to be made by us for failure to deliver any common shares issuable upon exercise.Exchange Listing. There is no established trading market for the Series B Warrants and we do not expect a market to develop. In addition, we do not intend to apply for thelisting of the Series B Warrants on any national securities exchange or other trading market.Fundamental Transactions. If a fundamental transaction occurs, then the successor entity will succeed to, and be substituted for us, and may exercise every right and powerthat we may exercise and will assume all of our obligations under the Series B Warrants with the same effect as if such successor entity had been named in the Series B Warrant itself. Ifholders of our common shares are given a choice as to the securities, cash or property to be received in a fundamental transaction, then the holder shall be given the same choice as tothe consideration it receives upon any exercise of the Series B Warrant following such fundamental transaction. In addition, we or the successor entity, at the request of Series B Warrantholders, will be obligated to purchase any unexercised portion of the Series B Warrants in accordance with the terms of such Series B Warrants.12Rights as a Shareholder. Except as otherwise provided in the Series B Warrants or by virtue of such holder’s ownership of our common shares, the holder of a Series B Warrantwill not have the rights or privileges of a holder of our common shares, including any voting rights, until the issuance of common shares upon exercise of the Series B Warrant.Directors Our directors are elected by a plurality of the votes cast by shareholders entitled to vote. There is no provision for cumulative voting. Our board of directors must consist of at least three members. Our amended and restated articles of incorporation provide that the board of directors may only change thenumber of directors by a vote of not less than two-thirds of the entire board. Directors are elected annually on a staggered basis, and each shall serve for a three-year term and until hissuccessor shall have been duly elected and qualified, except in the event of his death, resignation, removal, or the earlier termination of his term of office. Our board of directors has theauthority to fix the amounts which shall be payable to the members of the board of directors for attendance at any meeting or for services rendered to us. Shareholder Meetings Under our amended and restated bylaws, annual shareholder meetings will be held at a time and place selected by our board of directors. The meetings may be held in or outsidethe Marshall Islands. Special meetings may be called for any purpose or purposes at any time by a majority of our board of directors, the chairman of our board of directors or an officerof the Company who is also a director. Our board of directors may set a record date between 15 and 60 days before the date of any meeting to determine the shareholders that will beeligible to receive notice and vote at the meeting. Shareholders of record holding at least one-third of the shares issued and outstanding and entitled to vote at such meetings, present inperson or by proxy, will constitute a quorum at all meetings of shareholders. Dissenters’ Rights of Appraisal and Payment Under the Marshall Islands Business Corporations Act, or the BCA, our shareholders have the right to dissent from various corporate actions, including any merger orconsolidation sale of all or substantially all of our assets not made in the usual course of our business, and receive payment of the fair value of their shares. In the event of any furtheramendment of our amended and restated articles of incorporation a shareholder also has the right to dissent and receive payment for his or her shares if the amendment alters certainrights in respect of those shares. The dissenting shareholder must follow the procedures set forth in the BCA to receive payment. In the event that we and any dissenting shareholderfail to agree on a price for the shares, the BCA procedures involve, among other things, the institution of proceedings in the high court of the Republic of the Marshall Islands or in anyappropriate court in any jurisdiction in which the Company’s shares are primarily traded on a local or national securities exchange. Shareholders’ Derivative Actions Under the BCA, any of our shareholders may bring an action in our name to procure a judgment in our favor, also known as a derivative action, provided that the shareholderbringing the action is a holder of common stock both at the time the derivative action is commenced and at the time of the transaction to which the action relates. Limitations on Liability and Indemnification of Officers and Directors The BCA authorizes corporations to limit or eliminate the personal liability of directors to corporations and their shareholders for monetary damages for breaches of directors’fiduciary duties. Our amended and restated bylaws provide that certain individuals, including our directors and officers, are entitled to be indemnified by us to the extent authorized by the BCA,if such individuals acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action orproceeding, had no reasonable cause to believe their conduct was unlawful. We shall have the power to pay in advance expenses a director or officer incurred while defending a civil orcriminal proceeding, subject to certain conditions. We believe that these indemnification provisions and insurance are useful to attract and retain qualified directors and executiveofficers. 13The limitation of liability and indemnification provisions in our amended and restated bylaws may discourage shareholders from bringing a lawsuit against our directors forbreach of their fiduciary duties. These provisions may also have the effect of reducing the likelihood of derivative litigation against our directors and officers, even though such anaction, if successful, might otherwise benefit us and our shareholders. In addition, your investment may be adversely affected to the extent we pay the costs of settlement and damageawards against our directors and officers pursuant to these indemnification provisions. Anti-takeover Effect of Certain Provisions of our Amended and Restated Articles of Incorporation and Amended and Restated Bylaws Several provisions of our amended and restated articles of incorporation and amended and restated bylaws may have anti-takeover effects. These provisions, which aresummarized below, are intended to avoid costly takeover battles, lessen our vulnerability to a hostile change of control and enhance the ability of our board of directors to maximizeshareholder value in connection with any unsolicited offer to acquire us. However, these anti-takeover provisions could also discourage, delay or prevent (i) the merger or acquisition ofour Company by means of a tender offer, a proxy contest or otherwise that a shareholder may consider in its best interest and (ii) the removal of incumbent officers and directors. Blank Check Preferred Stock Under the terms of our amended and restated articles of incorporation, our board of directors has authority, without any further vote or action by our shareholders, to issue upto 25,000,000 shares of blank check preferred stock. Our board of directors may issue shares of preferred stock on terms calculated to discourage, delay or prevent a change of control ofour company or the removal of our management. Classified Board of Directors Our amended and restated articles of incorporation provide for the division of our board of directors into three classes of directors, with each class as nearly equal in number aspossible, serving staggered, three-year terms. Approximately one-third of our board of directors is elected each year. This classified board provision could discourage a third party frommaking a tender offer for our shares or attempting to obtain control of us. It could also delay shareholders who do not agree with the policies of our board of directors from removing amajority of our board of directors for two years. Election and Removal of Directors Our amended and restated articles of incorporation prohibit cumulative voting in the election of directors. Our amended and restated bylaws require parties other than the boardof directors to give advance written notice of nominations for the election of directors. Our amended and restated articles of incorporation also provide that our directors may beremoved only for cause and only upon the affirmative vote of two-thirds of the outstanding shares of our capital stock entitled to vote for those directors. These provisions maydiscourage, delay or prevent the removal of incumbent officers and directors. Limited Actions by Shareholders Under the BCA, our amended and restated articles of incorporation and our amended and restated bylaws, any action required or permitted to be taken by our shareholdersmust be effected at an annual or special meeting of shareholders or by the unanimous written consent of our shareholders. Our amended and restated articles of incorporation andamended and restated bylaws provide that, unless otherwise prescribed by law, only a majority of our board of directors, the chairman of our board of directors or an officer of theCompany who is also a director may call special meetings of our shareholders, and the business transacted at the special meeting is limited to the purposes stated in the notice.Accordingly, a shareholder may be prevented from calling a special meeting for shareholder consideration of a proposal over the opposition of our board of directors and shareholderconsideration of a proposal may be delayed until the next annual meeting. 14Advance Notice Requirements for Shareholder Proposals and Director Nominations Our amended and restated bylaws provide that shareholders seeking to nominate candidates for election as directors or to bring business before an annual meeting ofshareholders must provide timely notice of their proposal in writing to the corporate secretary. Generally, to be timely, a shareholder’s notice must be received at our principal executiveoffices not less than 150 days nor more than 180 days prior to the one-year anniversary of the preceding year’s annual meeting. Our amended and restated bylaws also specifyrequirements as to the form and content of a shareholder’s notice. These provisions may impede shareholders’ ability to bring matters before an annual meeting of shareholders or makenominations for directors at an annual meeting of shareholders. Registrar and Transfer Agent The board of directors has the power and authority to make such rules and regulations as they may deem expedient concerning the issuance, registration and transfer of sharesof the Company’s stock, and may appoint transfer agents and registrars thereof. Listing Our common shares are listed on The Nasdaq Capital Market under the symbol “PSHG.” Comparison of Marshall Island Law to Delaware Law The following table provides a comparison between some statutory provisions of the Delaware General Company Law and the Marshall Islands Business Corporations Act relating toshareholders’ rights. Marshall Islands DelawareShareholder MeetingsHeld at a time and place as designated in the bylaws. May be held at such time or place as designated in the certificate of incorporation or thebylaws, or if not so designated, as determined by the board of directors. Special meetings of the shareholders may be called by the board of directors or by suchperson or persons as may be authorized by the articles of incorporation or by the bylaws. Special meetings of the shareholders may be called by the board of directors or by suchperson or persons as may be authorized by the certificate of incorporation or by thebylaws. May be held within or outside the Marshall Islands. May be held within or outside Delaware. Notice: Notice: Whenever shareholders are required to take any action at a meeting, written notice of themeeting shall be given which shall state the place, date and hour of the meeting and,unless it is an annual meeting, indicate that it is being issued by or at the direction of theperson calling the meeting. Notice of a special meeting shall also state the purpose forwhich the meeting is called. Whenever shareholders are required to take any action at a meeting, a written notice of themeeting shall be given which shall state the place, if any, date and hour of the meeting, andthe means of remote communication, if any. A copy of the notice of any meeting shall be given personally, sent by mail or by electronicmail not less than 15 nor more than 60 days before the meeting. Written notice shall be given not less than 10 nor more than 60 days before the meeting. Marshall Islands DelawareShareholders’ Voting RightsUnless otherwise provided in the articles of incorporation, any action required to be takenat a meeting of shareholders may be taken without a meeting, without prior notice andwithout a vote, if a consent in writing, setting forth the action so taken, is signed by all theshareholders entitled to vote with respect to the subject matter thereof, or if the articles ofincorporation so provide, by the holders of outstanding shares having not less than theminimum number of votes that would be necessary to authorize or take such action at ameeting at which all shares entitled to vote thereon were present and voted. Any action required to be taken at a meeting of shareholders may be taken without ameeting if a consent for such action is in writing and is signed by shareholders having notfewer than the minimum number of votes that would be necessary to authorize or takesuch action at a meeting at which all shares entitled to vote thereon were present andvoted. 15Any person authorized to vote may authorize another person or persons to act for him byproxy. Any person authorized to vote may authorize another person or persons to act for him byproxy. Unless otherwise provided in the articles of incorporation or bylaws, a majority of sharesentitled to vote constitutes a quorum. In no event shall a quorum consist of fewer thanone-third of the shares entitled to vote at a meeting. For stock corporations, the certificate of incorporation or bylaws may specify the numberof shares required to constitute a quorum but in no event shall a quorum consist of lessthan one-third of shares entitled to vote at a meeting. In the absence of suchspecifications, a majority of shares entitled to vote shall constitute a quorum. When a quorum is once present to organize a meeting, it is not broken by the subsequentwithdrawal of any shareholders. When a quorum is once present to organize a meeting, it is not broken by the subsequentwithdrawal of any shareholders. The articles of incorporation may provide for cumulative voting in the election of directors. The certificate of incorporation may provide for cumulative voting in the election ofdirectors. Merger or ConsolidationAny two or more domestic corporations may merge into a single corporation if approvedby the board and if authorized by a majority vote of the holders of outstanding shares at ashareholder meeting. Any two or more corporations existing under the laws of the state may merge into a singlecorporation pursuant to a board resolution and upon the majority vote by shareholders ofeach constituent corporation at an annual or special meeting. Any sale, lease, exchange or other disposition of all or substantially all the assets of acorporation, if not made in the corporation’s usual or regular course of business, onceapproved by the board, shall be authorized by the affirmative vote of two-thirds of theshares of those entitled to vote at a shareholder meeting. Every corporation may at any meeting of the board sell, lease or exchange all orsubstantially all of its property and assets as its board deems expedient and for the bestinterests of the corporation when so authorized by a resolution adopted by the holders ofa majority of the outstanding stock of the corporation entitled to vote. Any domestic corporation owning at least 90% of the outstanding shares of each class ofanother domestic corporation may merge such other corporation into itself without theauthorization of the shareholders of any corporation. Any corporation owning at least 90% of the outstanding shares of each class of anothercorporation may merge the other corporation into itself and assume all of its obligationswithout the vote or consent of shareholders; however, in case the parent corporation isnot the surviving corporation, the proposed merger shall be approved by a majority of theoutstanding stock of the parent corporation entitled to vote at a duly called shareholdermeeting. Any mortgage, pledge of or creation of a security interest in all or any part of the corporateproperty may be authorized without the vote or consent of the shareholders, unlessotherwise provided for in the articles of incorporation. Any mortgage or pledge of a corporation’s property and assets may be authorized withoutthe vote or consent of shareholders, except to the extent that the certificate ofincorporation otherwise provides.16 Marshall Islands Delaware DirectorsThe board of directors must consist of at least one member. The board of directors must consist of at least one member. The number of board members may be changed by an amendment to the bylaws, by theshareholders, or by action of the board under the specific provisions of a bylaw. The number of board members shall be fixed by, or in a manner provided by, the bylaws,unless the certificate of incorporation fixes the number of directors, in which case a changein the number shall be made only by an amendment to the certificate of incorporation. If the board is authorized to change the number of directors, it can only do so by a majorityof the entire board and so long as no decrease in the number shall shorten the term of anyincumbent director. If the number of directors is fixed by the certificate of incorporation, a change in thenumber shall be made only by an amendment of the certificate. Removal: Removal: Any or all of the directors may be removed for cause by vote of the shareholders. Any or all of the directors may be removed, with or without cause, by the holders of amajority of the shares entitled to vote unless the certificate of incorporation otherwiseprovides. If the articles of incorporation or the bylaws so provide, any or all of the directors may beremoved without cause by vote of the shareholders. In the case of a classified board, shareholders may effect removal of any or all directorsonly for cause. Dissenters’ Rights of AppraisalShareholders have a right to dissent from any plan of merger, consolidation or sale of all orsubstantially all assets not made in the usual course of business, and receive payment ofthe fair value of their shares. However, the right of a dissenting shareholder under the BCAto receive payment of the appraised fair value of his shares shall not be available for theshares of any class or series of stock, which shares or depository receipts in respectthereof, at the record date fixed to determine the shareholders entitled to receive notice ofand to vote at the meeting of the shareholders to act upon the agreement of merger orconsolidation, were either (i) listed on a securities exchange or admitted for trading on aninterdealer quotation system or (ii) held of record by more than 2,000 holders. The right ofa dissenting shareholder to receive payment of the fair value of his or her shares shall notbe available for any shares of stock of the constituent corporation surviving a merger if themerger did not require for its approval the vote of the shareholders of the survivingcorporation. Appraisal rights shall be available for the shares of any class or series of stock of acorporation in a merger or consolidation, subject to limited exceptions, such as a merger orconsolidation of corporations listed on a national securities exchange in which listed stockis offered for consideration is (i) listed on a national securities exchange or (ii) held ofrecord by more than 2,000 holders. A holder of any adversely affected shares who does not vote on or consent in writing toan amendment to the articles of incorporation has the right to dissent and to receivepayment for such shares if the amendment: 17 Marshall Islands Delaware• Alters or abolishes any preferential right of any outstanding shares having preference; or• Creates, alters, or abolishes any provision or right in respect to the redemption of any outstanding shares; or• Alters or abolishes any preemptive right of such holder to acquire shares or other securities; or• Excludes or limits the right of such holder to vote on any matter, except as such right may be limited by the voting rights given to new shares then being authorized of anyexisting or new class. Shareholder’s Derivative ActionsAn action may be brought in the right of a corporation to procure a judgment in its favor,by a holder of shares or of voting trust certificates or of a beneficial interest in such sharesor certificates. It shall be made to appear that the plaintiff is such a holder at the time ofbringing the action and that he was such a holder at the time of the transaction of which hecomplains, or that his shares or his interest therein devolved upon him by operation of law. In any derivative suit instituted by a shareholder of a corporation, it shall be averred in thecomplaint that the plaintiff was a shareholder of the corporation at the time of thetransaction of which he complains or that such shareholder’s stock thereafter devolvedupon such shareholder by operation of law. A complaint shall set forth with particularity the efforts of the plaintiff to secure theinitiation of such action by the board or the reasons for not making such effort. Other requirements regarding derivative suits have been created by judicial decision,including that a shareholder may not bring a derivative suit unless he or she first demandsthat the corporation sue on its own behalf and that demand is refused (unless it is shownthat such demand would have been futile).Such action shall not be discontinued, compromised or settled, without the approval of theHigh Court of the Republic of the Marshall Islands. Reasonable expenses including attorney’s fees may be awarded if the action is successful. A corporation may require a plaintiff bringing a derivative suit to give security forreasonable expenses if the plaintiff owns less than 5% of any class of outstanding sharesor holds voting trust certificates or a beneficial interest in shares representing less than 5%of any class of such shares and the shares, voting trust certificates or beneficial interest ofsuch plaintiff has a fair value of $50,000 or less. 18Exhibit 4.6a US$20,000,000 Secured Loan Agreement Dated 4 August 2023 (1)Taburao Shipping Company Inc. Tarawa Shipping Company Inc. (as Borrowers) (2)Performance Shipping Inc. (as Original Guarantor) (3)The Financial Institutions listed in Schedule 1 (as Original Lenders)(4)Nordea Bank Abp, filial i Norge (as Bookrunner)(5)Nordea Bank Abp, filial i Norge (as Agent)(6)Nordea Bank Abp (as Original Hedge Counterparties)(7)Nordea Bank Abp, filial i Norge (as Security Agent)Contents Page Section 1Interpretation2 1Definitions and Interpretation2 Section 2The Loan30 2The Loan30 3Purposes30 4Conditions of Utilisation30 Section 3Utilisation32 5Advance32 Section 4Repayment, Prepayment and Cancellation33 6Repayment33 7Illegality, Prepayment and Cancellation34 Section 5Costs of Utilisation38 8Interest38 9Interest Periods42 10Changes to the Calculation of Interest42 11Fees43 Section 6Additional Payment Obligations44 12Tax Gross Up and Indemnities44 13Increased Costs53 14Other Indemnities56 15Mitigation by the Finance Parties58 16Costs and Expenses58 Section 7Accounts and Application of Earnings60 17Earnings Accounts60 18Additional Security61 19Guarantee and Indemnity63 Section 8Representations, Undertakings and Events of Default6620Representations66 21Information Undertakings72 22Financial Covenants75 23General Undertakings75 24Events of Default83 Section 9Changes to Parties88 25Changes to the Lenders and Hedge Counterparties88 26Changes to the Obligors94 Section 10The Finance Parties96 27Role of the Agent, the Security Agent and the Bookrunner96 28Application of Proceeds112 29Conduct of Business by the Finance Parties114 30Sharing among the Finance Parties115 Section 11Administration117 31Payment Mechanics117 32Set-Off120 33Notices120 34Calculations and Certificates122 35Partial Invalidity123 36Remedies and Waivers123 37Amendments and Waivers123 38Confidentiality131 39Confidentiality of Funding Rates136 40Disclosure of Lender Details by Agent137 41Counterparts139 42Joint and Several Liability139 Section 12Governing Law and Enforcement140 43Governing Law140 44Enforcement140Schedule 1The Parties141 Part IThe Original Lenders141 Part IIThe other Finance Parties141 Part IIIThe Obligors142 Schedule 2Conditions Precedent and Subsequent144 Part IInitial Conditions precedent Part IIInitial Utilisation Conditions Precedent Part IIISubsequent Utilisation Conditions Precedent Part IVConditions subsequent Schedule 3Utilisation Request145 Schedule 4Form of Transfer Certificate146 Schedule 5Form of Assignment Agreement147 Schedule 6Form of Accession Deed148 Schedule 7Form of Compliance Certificate149 Schedule 8Form of Hedge Counterparty Accession Letter150 Schedule 9Reference Rate Terms151 Schedule 10Cumulative Compounded RFR Rate153Loan Agreement Dated 4 August 2023 Between: (1)Taburao Shipping Company Inc. ("Borrower A") and Tarawa Shipping Company Inc. ("Borrower B"), each a company incorporated under the law of the Republic of theMarshall Islands, with its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 (together the "Borrowers" andeach a "Borrower") jointly and severally; and (2)Performance Shipping Inc., a company incorporated under the law of the Republic of the Marshall Islands, with its registered address at Trust Company Complex, AjeltakeRoad, Ajeltake Island, Majuro, Marshall Islands MH 96960 (the "Original Guarantor"); and (3)The Financial Institutions listed in Part I (The Original Lenders) of Schedule 1 (The Parties), each acting through its Facility Office (together the "Original Lenders" andeach an "Original Lender"); and (4)Nordea Bank Abp, filial i Norge, acting as bookrunner through its office at Essendrops gate 7, N-0368 Oslo, Norway (in that capacity, the "Bookrunner"); and (5)Nordea Bank Abp, filial i Norge, acting as agent through its office at Essendrops gate 7, N-0368 Oslo, Norway (in that capacity, the "Agent"); and (6)The banks or financial institutions listed in Part II (The other Finance Parties) of Schedule 1 (The Parties) under the heading of "The Original Hedge Counterparties", actingas hedge counterparty through its office indicated in Part II (The other Finance Parties) of Schedule 1 (The Parties) under the heading "The Original Hedge Counterparties"(in that capacity, the "Original Hedge Counterparty"); and (7)Nordea Bank Abp, filial i Norge, acting as security agent through its office at Essendrops gate 7, N-0368 Oslo, Norway (in that capacity, the "Security Agent"). It is agreed as follows: Page 1Section 1Interpretation 1Definitions and Interpretation 1.1Definitions In this Agreement: "2002 ISDA Master Agreement" means the 2002 Master Agreement as published by the International Swaps and Derivatives Association, Inc. "2018 Withdrawal Act" means the European Union (Withdrawal) Act 2018. "2020 Withdrawal Act" means the European Union (Withdrawal Agreement) Act 2020. "Accession Deed" means a document substantially in the form set out in Schedule 6 (Form of Accession Deed). "Account Holder" means Nordea Bank Abp, filial i Norge, acting through its branch at Essendrops gate 7, N-0368 Oslo, Norway or any other bank or financial institutionwhich at any time, with the Security Agent's prior written consent, holds the Earnings Accounts. "Account Security Deed" means a first priority account security deed in respect of all amounts from time to time standing to the credit of the Earnings Accounts. "Additional Guarantor" means a company which becomes an Additional Guarantor in accordance with Clause 26 (Changes to the Obligors). "Additional Hedge Counterparty" means a bank or financial institution which becomes a Hedge Counterparty in accordance with Clause 25.8 (Additional HedgeCounterparties). "Administration" has the meaning given to that term in paragraph 1.1.3 of the ISM Code. "Affiliate" means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company. "Annex VI" means Annex VI of the Protocol of 1997 (as subsequently amended from time to time) to amend the International Convention for the Prevention of Pollution fromShips 1973 (Marpol), as modified by the Protocol of 1978 relating thereto. "Approved Shipbroker" means each of Clarkson Platou, Fearnleys SSY, Braemar, Arrows, Maersk Broker, Vessels Value Ltd. and any other reputable, independent and firstclass firm of ship brokers approved in writing by the Agent. "Assignments" means: (a)first priority deeds of assignment of the Insurances, Earnings and Requisition Compensation of the Vessels from the Borrowers; and (b)first priority assignments of the Insurances from the Managers contained in the Managers' Undertakings. Page 2"Assignment Agreement" means an agreement substantially in the form set out in Schedule 5 (Form of Assignment Agreement) or any other form agreed between the relevantassignor and assignee. "Authorisation" means an authorisation, consent, approval, resolution, licence, exemption, filing, notarisation or registration. "Availability Period" means the period from and including the date of this Agreement to and including the Termination Date. "Break Costs" means: (a)in relation to Term SOFR Utilisation: the amount (if any) by which: (i)the interest which a Lender should have received for the period from the date of receipt of all or any part of its participation in the Loan or an Unpaid Sumto the last day of the current Interest Period in respect of the Loan or Unpaid Sum, had the principal amount or Unpaid Sum received been paid on the lastday of that Interest Period; exceeds: (ii)the amount which that Lender would be able to obtain by placing an amount equal to the principal amount or Unpaid Sum received by it on deposit with aleading bank for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period; or (b)in relation to Compounded SOFR Utilisation: any amount specified as such in the Reference Rate Terms. "Business Day" means a day (other than a Saturday or Sunday) on which banks are open for general business in London, Athens, Piraeus, Norway and New York and: (a)in relation to a Term SOFR Utilisation (in relation to the fixing of an interest rate) which is a US Government Securities Business Day; or (b)in relation to a Compounded SOFR Utilisation (in relation to (i) any date for payment or purchase of an amount relating to that Utilisation or (ii) the determination ofthe first day or the last day of any Interest Period for a Utilisation, or otherwise in relation to the determination of the length of such an Interest Period) which is anAdditional Business Day for that Utilisation or Unpaid Sum. "Cash" means, at any date of determination under this Agreement, the aggregate value of the Original Guarantor and its Subsidiaries credit balances on any deposit, savingsor current account and cash in hand (including, without limitation, short term cash deposits with the Account Holder) to which the Original Guarantor and/or its Subsidiaries(as applicable) have free, immediate and direct access but excluding any such credit balances and cash subject to an Encumbrance (other than Encumbrances in favour of theFinance Parties) at any time. Page 3"Central Bank Rate" has the meaning given to that term in the Reference Rate Terms. "Central Bank Rate Adjustment" has the meaning given to that term in the Reference Rate Terms. "Cash Equivalents" means, at any date of determination under this Agreement and the Guarantee, the aggregate value of the Guarantor's Group's: (a)certificates of deposit of, or overnight bank deposits with, any Lender or any commercial bank whose short-term securities are rated at least A-2 by Standard andPoor's Rating Group and P-3 by Moody's Investor Services, Inc. having maturities of six (6) months or less from the date of acquisition; (b)commercial paper of, or money market accounts or funds with or issued by, any Lender or by an issuer rated at least A-2 by Standard & Poor's Ratings Group and P-3 by Moody's Investor Services, Inc. and having an original tenor of six (6) months or less; and (c)medium term fixed or floating rate notes of any Lender or an issuer rated at least AA- by Standard & Poor's Rating Group and/or Aa3 by Moody's Investor Services,Inc. at the time of acquisition and having a remaining term of six (6) months or less from the date of acquisition, but excluding any of those assets subject to an Encumbrance (other than Encumbrances in favour of the Finance Parties) at any time, provided that the Original Guarantor and/or its Subsidiaries (as applicable) have free, immediate and direct access. "Charters" means any time or bareboat charter or contract of employment in respect of a Vessel with a duration exceeding (or capable of exceeding) 24 months and "Charter"means any of them. "Code" means the US Internal Revenue Code of 1986. "Commercial Manager" means Unitized Ocean Transport Limited a company incorporated under the law of the Republic of the Marshall Islands, with its registered address atTrust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 or any other company which the Agent (acting on the instructions of theMajority Lenders) may approve from time to time (such approval not to be unreasonably withheld) as the commercial manager of a Vessel. "Commitment" means: (a)in relation to an Original Lender, the amount set opposite its name under the heading "Commitment" in Part I (The Original Lenders) of Schedule 1 (The Parties) andthe amount of any other Commitment transferred to it under this Agreement; and (b)in relation to any other Lender, the amount of any Commitment transferred to it under this Agreement, to the extent not cancelled, reduced or transferred by it under this Agreement. Page 4"Commitment Fee" means the commitment fee to be paid by the Borrowers to the Agent under Clause 11.1 (Commitment Fee). "Compliance Certificate" means a certificate substantially in the form set out in Schedule 7 (Form of Compliance Certificate). "Compounded SOFR Utilisation" means a Utilisation which is not a Term SOFR Utilisation. "Compounding Methodology Supplement" means, in relation to the Cumulative Compounded RFR Rate, a document which: (a)is agreed in writing by the Borrowers, the Agent (in its own capacity) and the Agent (acting on the instructions of the Majority Lenders); (b)specifies a calculation methodology for that rate; and (c)has been made available to the Borrowers and each Finance Party. "Confidential Information" means all information relating to any Obligor, any other member of the Group, the Finance Documents or the Loan of which a Finance Partybecomes aware in its capacity as, or for the purpose of becoming, a Finance Party or which is received by a Finance Party in relation to, or for the purpose of becoming aFinance Party under, the Finance Documents or the Loan from either: (a)any Obligor, any other member of the Group or any of its advisers; or (b)another Finance Party, if the information was obtained by that Finance Party directly or indirectly from any Obligor, any other member of the Group or any of itsadvisers, in whatever form, and includes information given orally and any document, electronic file or any other way of representing or recording information which contains or isderived or copied from such information but excludes information that: (i)is or becomes public information other than as a direct or indirect result of any breach by that Finance Party of Clause 38 (Confidentiality); or (ii)is identified in writing at the time of delivery as non-confidential by any Obligor, any other member of the Group or any of its advisers; or (iii)is known by that Finance Party before the date the information is disclosed to it in accordance with (a) or (b) or is lawfully obtained by that Finance Partyafter that date, from a source which is, as far as that Finance Party is aware, unconnected with any Obligor or any other member of the Group and which,in either case, as far as that Finance Party is aware, has not been obtained in breach of, and is not otherwise subject to, any obligation of confidentiality;or (iv)is a Funding Rate. Page 5"Confidentiality Undertaking" means a confidentiality undertaking substantially in a recommended form of the Loan Market Association at the relevant time. "Corresponding Debt" means any amount, other than any Parallel Debt, which an Obligor owes to a Finance Party under or in connection with the Finance Documents. "CTA" means the Corporation Tax Act 2009. "Cumulative Compounded RFR Rate" means, in relation to the Interest Period for a Utilisation, the percentage rate per annum determined by the Agent (or by any otherFinance Party which agrees to determine that rate in place of the Agent) in accordance with the methodology set out in Schedule 10 (Cumulative Compounded RFR Rate) orin any relevant Compounding Methodology Supplement. "Daily Rate" means the rate specified as such in the Reference Rate Terms. "DAC6" means Directive 2011/16/EU (as amended by the Council Directive of 25 May 2018 (2018/822/EU)). "Default" means an Event of Default or any event or circumstance which would (with the expiry of a grace period, the giving of notice, the making of any determination underthe Finance Documents or any combination of any of the foregoing) be an Event of Default. "Defaulting Lender" means any Lender: (a)which has failed to make its participation in a Utilisation available (or has notified the Agent or the Borrowers (which have notified the Agent) that it will not makeits participation in a Utilisation available) by the relevant Utilisation Date in accordance with Clause 5.4 (Lenders' participation); or (b)which has otherwise rescinded or repudiated a Finance Document; or (c)with respect to which an Insolvency Event has occurred and is continuing, unless, in the case of (a): (i)its failure to pay is caused by: (A)administrative or technical error; or (B)a Disruption Event; and payment is made within three Business Days of its due date; or (ii)the Lender is disputing in good faith whether it is contractually obliged to make the payment in question. "Delegate" means any delegate, agent, attorney or co-trustee appointed by the Security Agent. Page 6"Disruption Event" means either or both of: (a)a material disruption to those payment or communications systems or to those financial markets which are, in each case, required to operate in order for payments tobe made in connection with the Loan (or otherwise in order for the transactions contemplated by the Finance Documents to be carried out) which disruption is notcaused by, and is beyond the control of, any of the Parties; or (b)the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to the treasury or payments operations of a Partypreventing that, or any other Party: (i)from performing its payment obligations under the Finance Documents; or (ii)from communicating with other Parties in accordance with the terms of the Finance Documents, and which (in either such case) is not caused by, and is beyond the control of, the Party whose operations are disrupted. "DOC" means, in relation to the ISM Company, a valid Document of Compliance issued for the ISM Company by the Administration under paragraph 13.2 of the ISM Code. "Earnings" means all hires, freights, passage moneys, pool income and other sums payable to or for the account of a Borrower in respect of a Vessel including (withoutlimitation) all remuneration for salvage and towage services, demurrage and detention moneys, insurance proceeds, contributions in general average, compensation in respectof any requisition for hire, and damages and other payments (whether awarded by any court or arbitral tribunal or by agreement or otherwise) for breach, termination orvariation of any contract for the operation, employment or use of a Vessel. "Earnings Accounts" means the bank accounts opened or to be opened and held in the names of the Borrowers respectively with the Account Holder and each designated an"Earnings Account". "Encumbrance" means a mortgage, charge, assignment, pledge, lien or other security interest securing any obligation of any person or any other agreement or arrangementhaving a similar effect. "Environmental Approval" means any present or future permit, ruling, variance or other Authorisation required under Environmental Laws. "Environmental Claim" means any claim, proceeding, formal notice or investigation by any governmental, judicial or regulatory authority or any other person which arises outof an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law and, for this purpose, "claim" includes a claim for damages,compensation, contribution, injury, fines, losses and penalties or any other payment of any kind, including in relation to clean-up and removal, whether or not similar to theforegoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, includingthe arrest or attachment of any asset. "Environmental Incident" means: Page 7(a)any release, emission, spill or discharge into or upon the air, sea, land or soils (including the seabed) or surface water of Environmentally Sensitive Material within orfrom a Vessel; or (b)any incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, sea, land or soils (including the seabed) orsurface water from a vessel other than a Vessel and which involves a collision between a Vessel and such other vessel or some other incident of navigation oroperation, in either case, in connection with which a Vessel is actually or potentially liable to be arrested, attached, detained or injuncted and a Vessel, any Obligor,any operator or manager of a Vessel or any combination of them is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or (c)any other incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, sea, land or soils (including theseabed) or surface water otherwise than from a Vessel and in connection with which a Vessel is actually or potentially liable to be arrested, attached, detained orinjuncted and/or where any Obligor, any operator or manager of a Vessel or any combination of them is at fault or allegedly at fault or otherwise liable to any legal oradministrative action, other than in accordance with an Environmental Approval. "Environmental Law" means any present or future law or regulation relating to pollution or protection of human health or the environment, to conditions in the workplace, tothe carriage, generation, handling, storage, use, release or spillage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally SensitiveMaterial. "Environmentally Sensitive Material" means all contaminants, oil, oil products, toxic substances and any other substance (including any chemical, gas or other hazardous ornoxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous. "Event of Default" means any event or circumstance specified as such in Clause 24.1 (Events of Default). "Existing Loan Agreement" means the loan agreement dated 24 July 2019, as amended and/or supplemented from time to time, made between inter alios the Original Lenders,as lenders and the Borrowers, as borrowers. "Facility Office" means: (a)in respect of a Lender, the office or offices notified by that Lender to the Agent in writing on or before the date it becomes a Lender (or, following that date, by notless than five Business Days' written notice) as the office or offices through which it will perform its obligations under this Agreement; or (b)in respect of any other Finance Party, the office in the jurisdiction in which it is resident for tax purposes. Page 8"Facility Period" means the period beginning on the date of this Agreement and ending on the date when the whole of the Indebtedness has been paid in full and theObligors have ceased to be under any further actual or contingent liability to the Finance Parties under or in connection with the Finance Documents. "FATCA" means: (a)sections 1471 to 1474 of the Code or any associated regulations; (b)any treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in eithercase) facilitates the implementation of any law or regulation referred to in (a); or (c)any agreement pursuant to the implementation of any treaty, law or regulation referred to in (a) or (b) with the US Internal Revenue Service, the US government orany governmental or taxation authority in any other jurisdiction. "FATCA Application Date" means: (a)in relation to a "withholdable payment" described in section 1473(1)(A)(i) of the Code (which relates to payments of interest and certain other payments fromsources within the US), 1 July 2014; or (b)in relation to a "passthru payment" described in section 1471(d)(7) of the Code not falling within (a), the first date from which such payment may become subject toa deduction or withholding required by FATCA as a result of any change in FATCA. "FATCA Deduction" means a deduction or withholding from a payment under a Finance Document required by FATCA. "FATCA Exempt Party" means a Party that is entitled to receive payments free from any FATCA Deduction. "Fee Letter" means any letter or letters dated on or about the date of this Agreement between the Agent, the Borrowers and the Original Guarantor setting out any of the feesreferred to in Clause 11 (Fees). "Finance Documents" means this Agreement, any Hedging Agreement, the Security Documents, any Accession Deed, any Hedge Counterparty Accession Letter, anyCompliance Certificate, any Utilisation Request, the Fee Letter, any Reference Rate Supplement, any Compounding Methodology Supplement any document which is executedfor the purpose of establishing any priority or subordination arrangement in relation to the Indebtedness and any other document designated as such by the Agent, theBorrowers and the Original Guarantor, provided that where the term "Finance Document" is used in, and construed for the purposes of, this Agreement, a Hedging Agreementshall not be a Finance Document for the purposes of: (a)the definitions of "Defaulting Lender" and "Disruption Event"; Page 9(b)the definitions of "FATCA Deduction" and "US Tax Obligor" and Clause 12 (Tax Gross Up and Indemnities); (c)the definition of "Unpaid Sum"; (d)Clause 7.4 (Right of cancellation and prepayment in relation to a single Lender); (e)Clause 14 (Other Indemnities) except for Clauses 14.2.1(a), 14.2.1(b) and 14.2.2; (f)Clause 15 (Mitigation by the Finance Parties); (g)Clause 24.2 (Acceleration); (h)Clause 25 (Changes to the Lenders and Hedge Counterparties), Schedule 4 (Form of Transfer Certificate) and Schedule 5 (Form of Assignment Agreement); (i)Clauses 27.12 (Lenders' indemnity to the Agent and the Security Agent), 27.13.9 (Resignation of the Agent and the Security Agent) and 27.18 (Agent's and SecurityAgent's management time); (j)Clauses 31.6 (No set-off by Obligors) and 31.8 (Currency of account); (k)Clause 32 (Set-Off); (l)Clause 37 (Amendments and Waivers), except for Clause 37.4 (Changes to reference rates); and (m)Clause 40 (Disclosure of Lender details by Agent). "Finance Parties" means the Bookrunner, the Agent, the Security Agent, any Hedge Counterparty and the Lenders, provided that where the term "Finance Party" is used in,and construed for the purposes of, this Agreement, a Hedge Counterparty shall not be a Finance Party for the purposes of: (a)Clause 10.4 (Break Costs); (b)Clause 12 (Tax Gross Up and Indemnities); (c)Clause 13 (Increased Costs); (d)Clause 14 (Other Indemnities) except for Clauses 14.2.1(a), 14.2.1(b) and 14.2.2; (e)Clause 15 (Mitigation by the Finance Parties); (f)Clause 25 (Changes to the Lenders and Hedge Counterparties) and Schedule 5 (Form of Assignment Agreement); (g)Clause 32 (Set-Off); and (h)Clause 37 (Amendments and Waivers). "Financial Indebtedness" means any indebtedness for or in respect of: Page 10(a)moneys borrowed and debit balances at banks or other financial institutions; (b)any acceptance under any acceptance credit or bill discounting facility (or dematerialised equivalent); (c)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, a liability under which would, in accordance with GAAP, be treated as a balance sheetliability; (e)receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis); (f)any Treasury Transaction (and, when calculating the value of that Treasury Transaction, only the marked to market value (or, if any actual amount is due as a resultof the termination or close-out of that Treasury Transaction, that amount) shall be taken into account); (g)any counter-indemnity obligation in respect of a guarantee, bond, standby or documentary letter of credit or any other instrument issued by a bank or financialinstitution in respect of (i) an underlying liability of an entity which is not an Obligor or a member of the Group which liability would fall within one of the othersections of this definition or (ii) any liabilities of any Obligor or any other member of the Group relating to any post-retirement benefit scheme; (h)any amount raised by the issue of shares which are redeemable (other than at the option of the issuer) before the end of the Facility Period or are otherwiseclassified as borrowings under GAAP; (i)any amount of any liability under an advance or deferred purchase agreement if (i) one of the primary reasons behind entering into the agreement is to raise financeor to finance the acquisition or construction of the asset or service in question or (ii) the agreement is in respect of the supply of assets or services and payment isdue more than 30 days after the date of supply; (j)any amount raised under any other transaction (including any forward sale or purchase, sale and sale back or sale and leaseback agreement) having the commercialeffect of a borrowing or otherwise classified as borrowings under GAAP; and (k)the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in (a) to (j). "Fleet Market Value" means in relation to a Fleet Vessel, the market value of such Fleet Vessel determined by a valuation to be provided by the Borrowers and acceptable tothe Agent on the basis of a charter-free sale for prompt delivery for cash at arm's length on normal commercial terms as between a willing seller and a willing buyer and at thecost of the Borrowers. Page 11"Fleet Vessel" means any vessel (including, but not limited to, the Vessels) from time to time wholly owned by a member of the Group (directly or indirectly) includingchartered-in vessels for which a member of the Group has a purchase obligation but excluding, for the avoidance of doubt, any newbuilding vessels not delivered to therelevant member of the Group at the relevant time, and "Fleet Vessels" means more than one of them. "Funding Rate" means any individual rate notified by a Lender to the Agent pursuant to Clause 10.3.1(b) (Cost of funds). "GAAP" means generally accepted accounting principles in the US, including IFRS. "Group" means the Original Guarantor and each of the Subsidiaries for the time being. "Guarantee" means a guarantee and indemnity in respect of the obligations of each other Obligor granted by each Guarantor and contained in Clause 19 (Guarantee andIndemnity). "Guarantor" means an Original Guarantor or an Additional Guarantor, unless it has ceased to be a Guarantor in accordance with Clause 26 (Changes to the Obligors). "Hedge Break Amount" means, with respect to any termination or partial termination of a Hedging Agreement and as of any date of determination thereof, an amountcalculated in relation to such Hedging Agreement then in effect as is or would be payable pursuant to section 6(e) of such Hedging Agreement in respect of such terminationor partial termination of such Hedging Agreement only, as if a Borrower was the only Affected Party (as defined in such Hedging Agreement). "Hedge Breakage Gain" means the absolute value of the Hedge Break Amount if such Hedge Break Amount is a negative number. "Hedge Breakage Loss" means the Hedge Break Amount if such Hedge Break Amount is a positive number. "Hedge Counterparty" means an Original Hedge Counterparty or an Additional Hedge Counterparty. "Hedge Counterparty Accession Letter" means a document substantially in the form set out in Schedule 8 (Form of Hedge Counterparty Accession Letter). "Hedge Reduction Proceeds" means any Hedge Breakage Gain payable to a Borrower as a result of a reduction in the notional amount of one or more transactions under anyHedging Agreement to which it is a party in connection with a prepayment or cancellation under Clause 7 (Illegality, Prepayment and Cancellation). "Hedging Agreement" means any master agreement, confirmation, transaction, schedule or other agreement entered into or to be entered into by a Borrower with a HedgeCounterparty for the purpose of hedging interest payable under this Agreement. "Hedging Close-Out Liabilities" means, as at the relevant determination date, the aggregate of the net amounts in dollars which would be payable by a Borrower under eachHedging Agreement to which it is a party if all Hedging Agreements were terminated or closed out on such date, as certified by the Hedge Counterparties in respect of theHedging Agreements to which they are party. To the extent that a net amount would be payable by a Hedge Counterparty if a Hedging Agreement were terminated or closedout on such date, the net amount payable by a Borrower in respect of such Hedging Agreement shall be deemed to be zero. Page 12"Hedging Force Majeure" means in relation to a Hedging Agreement which is based on the 2002 ISDA Master Agreement, an Illegality or Tax Event, Tax Event Upon Mergeror a Force Majeure Event (each as defined in the 2002 ISDA Master Agreement). "Hedging Security Deeds" means first priority deeds of assignment of the Hedging Agreements from the Borrowers. "Holding Company" means, in relation to a person, any other person in respect of which it is a Subsidiary. "IAPPC" means a valid international air pollution prevention certificate for a Vessel issued under Annex VI. "Identity Letter" means a letter addressed to the Agent identifying the shareholder of the Original Guarantor. "IEEC" means a valid international energy efficiency certificate for a Vessel issued under Annex VI. "IFRS" means international accounting standards within the meaning of the IAS Regulation 1606/2002 and/or section 474(1) of the Companies Act 2006 to the extentapplicable to the relevant financial statements. "Indebtedness" means the aggregate from time to time of: the amount of the Loan outstanding; all accrued and unpaid interest on the Loan; and all other sums of any nature(together with all accrued and unpaid interest on any of those sums) payable to any of the Finance Parties under all or any of the Finance Documents. "Insolvency Event" in relation to an entity means that the entity: (a)is dissolved (other than pursuant to a consolidation, amalgamation or merger); (b)becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due; (c)makes a general assignment, arrangement or composition with or for the benefit of its creditors; (d)institutes or has instituted against it, by a regulator, supervisor or any similar official with primary insolvency, rehabilitative or regulatory jurisdiction over it in thejurisdiction of its incorporation or organisation or the jurisdiction of its head or home office, a proceeding seeking a judgment of insolvency or bankruptcy or anyother relief under any bankruptcy or insolvency law or other similar law affecting creditors' rights, or a petition is presented for its winding-up or liquidation by it orsuch regulator, supervisor or similar official; Page 13(e)has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similarlaw affecting creditors' rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presentedagainst it, such proceeding or petition is instituted or presented by a person or entity not described in (d) and: (i)results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation; or (ii)is not dismissed, discharged, stayed or restrained in each case within 30 days of the institution or presentation thereof; (f)has exercised in respect of it one or more of the stabilisation powers pursuant to Part 1 of the Banking Act 2009 and/or has instituted against it a bank insolvencyproceeding pursuant to Part 2 of the Banking Act 2009 or a bank administration proceeding pursuant to Part 3 of the Banking Act 2009; (g)has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger); (h)seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or forall or substantially all its assets (other than, for so long as it is required by law or regulation not to be publicly disclosed, any such appointment which is to be made,or is made, by a person or entity described in (d)); (i)has a secured party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied,enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged,stayed or restrained, in each case within 30 days thereafter; (j)causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in (a)to (h); or (k)takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts. "Insurances" means all policies and contracts of insurance (including all entries in protection and indemnity or war risks associations) which are from time to time taken out orentered into in respect of or in connection with a Vessel or her increased value or her Earnings and (where the context permits) all benefits under such contracts and policies,including all claims of any nature and returns of premium. "Interest Payment" means the aggregate amount of interest that is, or is scheduled to become, payable under any Finance Document (excluding always any HedgingAgreement or any Hedge Counterparty Accession Letter). Page 14"Interest Payment Date" means each date for the payment of interest in accordance with Clause 8.3 (Payment of interest). "Interest Period" means each period determined in accordance with Clause 9 (Interest Periods) and, in relation to an Unpaid Sum, each period determined in accordance withClause 8.5 (Default interest). "ISM Code" means the International Management Code for the Safe Operation of Ships and for Pollution Prevention. "ISM Company" means, at any given time, the company responsible for a Vessel's compliance with the ISM Code under paragraph 1.1.2 of the ISM Code. "ISPS Code" means the International Ship and Port Facility Security Code. "ISSC" means a valid international ship security certificate for a Vessel issued under the ISPS Code. "ITA" means the Income Tax Act 2007. "Joint Venture" means any joint venture entity, whether a company, unincorporated firm, undertaking, association, joint venture or partnership or any other entity. "Legal Opinion" means any legal opinion delivered to the Agent under Clause 4 (Conditions of Utilisation). "Legal Reservations" means: (a)the principle that equitable remedies may be granted or refused at the discretion of a court and the limitation of enforcement by laws relating to insolvency,reorganisation and other laws generally affecting the rights of creditors; (b)the time barring of claims under the Limitation Acts, the possibility that an undertaking to assume liability for or indemnify a person against non-payment of UnitedKingdom stamp duty may be void and defences of set-off or counterclaim; (c)similar principles, rights and defences under the laws of any Relevant Jurisdiction; and (d)any other matters which are set out as qualifications or reservations as to matters of law of general application in the Legal Opinions. "Lender" means: (a)any Original Lender; and (b)any bank, financial institution, trust, fund or other entity which has become a Party as a Lender in accordance with Clause 25 (Changes to the Lenders and HedgeCounterparties), which in each case has not ceased to be a Party as such in accordance with the terms of this Agreement. Page 15"Limitation Acts" means the Limitation Act 1980 and the Foreign Limitation Periods Act 1984. "Loan" means the aggregate amount advanced or to be advanced by the Lenders to the Borrowers under Clause 2 (The Loan) or, where the context permits, the principalamount advanced and for the time being outstanding. "Lookback Period" means the number of days specified as such in the Reference Rate Terms. "Majority Lenders" means a Lender or Lenders whose Commitments aggregate more than 662/3% of the Total Commitments (or, if the Total Commitments have been reducedto zero, aggregated more than 662/3% of the Total Commitments immediately prior to the reduction). "Management Agreements" means: (a)the agreements for the commercial management of the Vessels entered or to be entered into between the Borrowers respectively and the Commercial Manager; and (b)the agreements for the technical management of the Vessels entered or to be entered into between the Borrowers respectively and the Technical Manager. "Managers" means: (a)in relation to the commercial management of the Vessels, the Commercial Manager; and (b)in relation to the technical management of the Vessels, the Technical Manager. "Managers' Undertakings" means written undertakings of the Managers in form and substance acceptable to the Agent. "Margin" means 2.50 % per annum. "Market Disruption Rate" means the Reference Rate. "Market Value" means the value of a Vessel or any other vessel over which additional security has been created or which is being offered as additional security in accordancewith Clause 18 (Additional Security) conclusively determined by an Approved Shipbroker selected by the Borrowers, and appointed by and reporting to, the Agent on thebasis of a charter-free sale for prompt delivery for cash at arm's length on normal commercial terms as between a willing seller and a willing buyer and evidenced by a valuationof that Vessel or vessel addressed to the Agent certifying a value for that Vessel or vessel and, where two valuations have been obtained, such value shall be the arithmeticaverage of two (2) valuations (in form and substance acceptable to the Agent) of that Vessel addressed to the Agent certifying the value for that Vessel. "Material Adverse Effect" means in the reasonable opinion of the Majority Lenders a material adverse effect on: Page 16(a)the business, operations, property, condition (financial or otherwise) or prospects of any Obligor or the Group taken as a whole; or (b)the ability of any Obligor to perform its obligations under any Finance Document; or (c)the validity or enforceability of, or the effectiveness or ranking of any Encumbrance granted or purporting to be granted pursuant to any of, the Finance Documentsor the rights or remedies of any Finance Party under any of the Finance Documents. "Maximum Loan Amount" means the lesser of (a) $20,000,000 and (b) a sum which, when added to the aggregate amount of the Utilisations advanced and outstanding fromtime to time, equals 45% of the aggregate Market Value of the Vessels in respect of which Utilisations have been advanced as evidenced by the valuations received by theAgent under Clause 4.1 (Initial conditions precedent) reduced from time to time in accordance with Clause 5.6 (Reduction of Maximum Loan Amount) and/or Clause 7.1.3(Illegality) and/or Clause 7.5 (Mandatory prepayment on sale or Total Loss) and/or Clause 10.3 (Cost of funds). "MDR" means the International Tax Enforcement (Disclosable Arrangements) Regulations 2023 SI 2023 No. 38. "Month" means, in relation to an Interest Period (or any other period for the accrual of commission or fees) a period starting on one day in a calendar month and ending on thenumerically corresponding day in the next calendar month, except that: (a)(subject to (c) below) if the numerically corresponding day in the calendar month in which that period is to end is not a Business Day, that period shall end on thenext Business Day in that calendar month if there is one or, if there is not, on the immediately preceding Business Day; (b)if there is no numerically corresponding day in the calendar month in which that period is to end, that period shall end on the last Business Day in that calendarmonth; and (c)if an Interest Period begins on the last Business Day of a calendar month, that Interest Period shall end on the last Business Day in the calendar month in which thatInterest Period is to end. The above rules will only apply to the last Month of any period. "Mortgages" means first preferred mortgages over the Vessels. "New Lender" has the meaning given to that term in Clause 25.1 (Assignments and transfers by the Lenders). "Non-Consenting Lender" has the meaning given to that term in Clause 37.6.4 (Replacement of Lender). "Obligor" means each Borrower, each Guarantor, the Managers or any other person who may at any time during the Facility Period be liable for, or provide security for, all orany part of the Indebtedness. Page 17"Operating Expenses" means expenses properly and reasonably incurred by a Borrower in connection with the operation, employment, maintenance, repair and insurance of aVessel. "Original Guarantor's Shareholder" means the person or persons identified in the Identity Letter. "Original Financial Statements" means the audited consolidated financial statements of the Original Guarantor for the financial year ended 31 December 2022. "Original Jurisdiction" means, in relation to an Obligor, the jurisdiction under whose laws that Obligor is incorporated as at the date of this Agreement or, in the case of anAdditional Guarantor, as at the date on which that Additional Guarantor becomes Party as a Guarantor. "Overseas Regulations" has the meaning given to that term in Clause 20.1.27 (Overseas companies). "Parallel Debt" means any amount which an Obligor owes to the Security Agent under Clause 27.14 (Parallel Debt (Covenant to pay the Security Agent)) or under thatClause as incorporated by reference or in full in any other Finance Document. "Party" means a party to this Agreement. "Permitted Disposal" means any sale, lease, licence, transfer or other disposal: (a)of assets in exchange for other assets comparable or superior as to type, value and quality (other than an exchange of a non-cash asset for cash); (b)of obsolete or redundant equipment for cash; (c)arising as a result of any Permitted Encumbrance; and (d)of a Vessel in accordance with this Agreement. "Permitted Encumbrance" means: (a)any Transaction Encumbrance; (b)any Encumbrance which has the prior written approval of the Agent; (c)any Encumbrance arising by operation of law and in the ordinary course of trading and not as a result of any default or omission by an Obligor; or (d)any Quasi-Security arising as a result of a disposal which is a Permitted Disposal. "Prepayment Date" has the meaning given to that term in Clause 7.5.1. "Prohibited Person" means any person (whether designated by name or by reason of being included in a class of persons) against whom Sanctions are directed. "Quasi-Security" has the meaning given to that term in Clause 23.9 (Negative pledge). Page 18"Quotation Day" means, in relation to a Term SOFR Utilisation, in relation to any period for which an interest rate is to be determined: two US Government Securities BusinessDays before the first day of that period (unless market practice differs in the relevant syndicated loan market, in which case the Quotation Day will be determined by the Agentin accordance with that market practice (and if quotations would normally be given on more than one day, the Quotation Day will be the last of those days)). "Receiver" means a receiver or receiver and manager or administrative receiver of the whole or any part of the Security Assets. "Reduction Date" means each date falling at consecutive intervals of three (3) Months after the first Utilisation Date. "Reference Rate" means: (a)in relation to a Term SOFR Utilisation, in relation to any Utilisation: (i)the applicable Term SOFR as of the Quotation Day and for a period equal in length to the Interest Period for that Utilisation; or (ii)as otherwise determined pursuant to Clause 10.1 (Unavailability of Term SOFR), and if, in either case, that rate is less than zero, the Reference Rate shall be deemed to be zero; and (b)in relation to Compounded SOFR Utilisation, in relation to any Interest Period of a Utilisation, the percentage rate per annum which is the Cumulative CompoundedRFR Rate for that Interest Period. "Reference Rate Supplement" means a document which: (a)is agreed in writing by the Borrowers and the Agent (acting on the instructions of the Majority Lenders); (b)specifies the relevant terms which are expressed in this Agreement to be determined by reference to Reference Rate Terms; and (c)has been made available to the Borrowers and each Finance Party. "Reference Rate Terms" means the terms set out in Schedule 9 (Reference Rate Terms) or in any Reference Rate Supplement. "Related Fund" in relation to a fund (the "first fund"), means a fund which is managed or advised by the same investment manager or investment adviser as the first fund or, ifit is managed by a different investment manager or investment adviser, a fund whose investment manager or investment adviser is an Affiliate of the investment manager orinvestment adviser of the first fund. "Relevant Documents" means the Finance Documents, the Management Agreements, the Managers' Undertakings, each Obligor's constitutional documents. "Relevant Jurisdiction" means, in relation to an Obligor: Page 19(a)its Original Jurisdiction; (b)any jurisdiction where any asset (other than a Vessel) subject to or intended to be subject to a Security Document to be executed by it is situated; (c)any jurisdiction where it conducts its business; and (d)the jurisdiction whose laws govern the perfection of any of the Security Documents entered into by it. "Relevant Market" means the market specified as such in the Reference Rate Terms. "Repeating Representations" means each of the representations set out in Clause 20.1.1 (Status) to Clause 20.1.6 (Governing law and enforcement), Clause 20.1.10 (Nodefault) to Clause 20.1.19 (Pari passu ranking), Clause 20.1.23 (No immunity), Clause 20.1.24 (Money laundering), Clause 20.1.27 (Overseas companies) and Clause 20.1.26(Valuations). "Representative" means any delegate, agent, manager, administrator, nominee, attorney, trustee or custodian. "Requisition Compensation" means all compensation or other money which may from time to time be payable to a Borrower as a result of a Vessel being requisitioned for titleor in any other way compulsorily acquired (other than by way of requisition for hire). "RFR" means the rate specified as such in the Reference Rate Terms. "RFR Banking Day" means any day specified as such in the Reference Rate Terms. "Sanctions" means any sanctions, embargoes, freezing provisions, prohibitions or other restrictions relating to trading, doing business, investment, exporting, financing ormaking assets available (or other activities similar to or connected with any of the foregoing): (a)imposed by law or regulation of the United Kingdom, the Council of the European Union, the United Nations or its Security Council or the United States of America,whether or not any Obligor, any other member of the Group or any Affiliate is legally bound to comply with the foregoing; or (b)otherwise imposed by any law or regulation by which any Obligor, any other member of the Group or any Affiliate of any of them is bound or, as regards aregulation, compliance with which is reasonable in the ordinary course of business of any Obligor, any other member of the Group or any Affiliate of any of them. "Sanctions Event" means: (a)a breach by an Obligor of any obligations under Clause 23.26 (Sanctions); or (b)an Obligor is or becomes a Prohibited Person. "Secured Parties" means each Finance Party from time to time party to this Agreement and any Receiver or Delegate. Page 20"Security Assets" means all of the assets of the Obligors which from time to time are, or are expressed to be, the subject of the Transaction Encumbrances. "Security Documents" means the Mortgages, the Assignments, each Guarantee, the Account Security Deed, the Managers' Undertakings, the Hedging Security Deeds or(where the context permits) any one or more of them, and any other agreement or document which may at any time be executed by any person as security for the payment ofall or any part of the Indebtedness. "Security Property" means: (a)the Transaction Encumbrances expressed to be granted in favour of the Security Agent as trustee for the Secured Parties and all proceeds of such TransactionEncumbrances; (b)all obligations expressed to be undertaken by an Obligor to pay amounts in respect of the Indebtedness to the Security Agent as trustee for the Secured Parties andsecured by the Transaction Encumbrances together with all representations and warranties expressed to be given by an Obligor or any other person in favour of theSecurity Agent as trustee for the Secured Parties; and (c)any other amounts or property, whether rights, entitlements, choses in action or otherwise, actual or contingent, which the Security Agent is required by the termsof the Finance Documents to hold as trustee on trust for the Secured Parties. "SMC" means a valid safety management certificate issued for a Vessel by or on behalf of the Administration under paragraph 13.7 of the ISM Code. "SOFR" means the secured overnight financing rate (SOFR) administered by the Federal Reserve Bank of New York (or any other person which takes over the administrationof that rate) published (before any correction, recalculation or republication by the administrator) by the Federal Reserve Bank of New York (or any other person which takesover the publication of that rate). "Subsidiary" means a subsidiary undertaking within the meaning of section 1162 of the Companies Act 2006. "Tax" means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or interest payable in connection with any failure to pay orany delay in paying any of the same). "Technical Manager" means Unitized Ocean Transport Limited a company incorporated under the law of the Republic of the Marshall Islands, with its registered address atTrust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 or any other company which the Agent (acting on the instructions of theMajority Lenders) may approve from time to time (such approval not to be unreasonably withheld) as the technical manager of a Vessel. "Term SOFR" means the Term SOFR reference rate administered by CME Group Benchmark Administration Limited (or any other person which takes over the administrationof that rate) for the relevant period published (before any correction, recalculation or republication by the administrator) by CME Group Benchmark Administration Limited (orany other person which takes over the publication of that rate). Page 21"Term SOFR Utilisation" has the meaning given to it in Clause 8.1 (Calculation of interest – Term SOFR Utilisation). "Termination Date" means the date falling five (5) years from the signing date of this Agreement. "Total Commitments" means the aggregate of the Commitments. "Total Debt" means, at any time during the Facility Period, the aggregate amount of the Financial Indebtedness all the members of the Group at that time as shown in theOriginal Guarantor's latest financial statements delivered to the Agent pursuant to Clause 21.1 (Financial statements). "Total Loss" means: (a)an actual, constructive, arranged, agreed or compromised total loss of a Vessel; or (b)the requisition for title or compulsory acquisition of a Vessel by any government or other competent authority (other than by way of requisition for hire); or (c)the capture, seizure, arrest, detention, hijacking, theft, condemnation as prize, confiscation or forfeiture of a Vessel (not falling within (b)), unless that Vessel isreleased and returned to the possession of the relevant Borrower or the Charterer within 30 days after the capture, seizure, arrest, detention, hijacking, theft,condemnation as prize, confiscation or forfeiture in question. "Total Loss Date" means, in relation to the Total Loss of a Vessel: (a)in the case of an actual loss of that Vessel, the date on which it occurred or, if that is unknown, the date when that Vessel was last heard of; (b)in the case of a constructive, arranged, agreed or compromised Total Loss of that Vessel, the earlier of: (i)the date on which a notice of abandonment is given (or deemed or agreed to be given) to the insurers; and (ii)the date of any compromise, arrangement or agreement made by or on behalf of the relevant Borrower with that Vessel's insurers in which the insurersagree to treat that Vessel as a Total Loss; and (c)in the case of any other type of Total Loss, the date (or the most likely date) on which it appears to the Agent (acting reasonably) that the event constituting theTotal Loss occurred. "Transaction Encumbrances" means the Encumbrances created or evidenced or expressed to be created or evidenced under the Security Documents. Page 22"Transfer Certificate" means a certificate substantially in the form set out in Schedule 4 (Form of Transfer Certificate) or any other form agreed between the Agent and theBorrowers. "Transfer Date" means, in relation to an assignment or a transfer, the later of: (a)the proposed Transfer Date specified in the relevant Assignment Agreement or Transfer Certificate; and (b)the date on which the Agent executes the relevant Assignment Agreement or Transfer Certificate. "Treasury Transactions" means any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price. "Unpaid Sum" means any sum due and payable but unpaid by any Obligor under the Finance Documents. "US" means the United States of America. "US Government Securities Business Day" means a day other than: (a)a Saturday or Sunday; and (b)a day on which the Securities Industry and Financial Markets Association (or any successor organisation) recommends that the fixed income departments of itsmembers be closed for the entire day for purposes of trading in US Government securities. "US Tax Obligor" means: (a)a Borrower which is resident for tax purposes in the US; or (b)an Obligor some or all of whose payments under the Finance Documents are from sources within the US for US federal income tax purposes. "Utilisation" means any one amount advanced or to be advanced pursuant to a Utilisation Request or, where the context permits, the amount advanced and for the time beingoutstanding. "Utilisation Date" means the date on which the relevant Utilisation is advanced under Clause 5 (Advance). "Utilisation Request" means a notice substantially in the form set out in Schedule 3 (Utilisation Request). "Value Adjusted Equity Ratio" means the amount of the Original Guarantor's total shareholders' equity as reflected in the most recent Accounting Information adjusted by thedifference between the Fleet Market Value and the book value of the Fleet Vessels divided by market value adjusted total assets, as evidenced by the latest financialstatements. "VAT" means: (a)any value added tax imposed by the Value Added Tax Act 1994; Page 23(b)any tax imposed in compliance with the Council Directive of 28 November 2006 on the common system of value added tax (EC Directive 2006/112); and (c)any other tax of a similar nature, whether imposed in a member state of the European Union in substitution for, or levied in addition to, such tax referred to in (b), orimposed elsewhere. "Vessels" means the following vessels, and everything now or in the future belonging to them on board and ashore, currently registered under the respective flags set outbelow in the ownership of the respective Borrowers set out below: Name of VesselIMO noFlagYear BuiltBorrower "BLUE MOON"9524994Republic of the MarshallIslands2011Borrower A"Vessel A""BRIOLETTE"9524982Republic of the MarshallIslands2011Borrower B"Vessel B""VTL Coverage" has the meaning given to that term in Clause 18.1 (VTL Coverage). "Working Capital" means the consolidated current assets minus the consolidated current liabilities (next year's instalment on long-term debt and subordinated shareholderloans shall be excluded from the current liabilities). 1.2Construction Unless a contrary indication appears, any reference in this Agreement to: 1.2.1any "Lender", any "Borrower", any "Obligor", any "Guarantor", the "Bookrunner", the "Agent", any "Hedge Counterparty", any "Secured Party", the"Security Agent", any "Finance Party" or any "Party" shall be construed so as to include its successors in title, permitted assignees and permitted transferees to,or of, its rights and/or obligations under the Finance Documents; 1.2.2"assets" includes present and future properties, revenues and rights of every description; 1.2.3Lender's "cost of funds" in relation to its participation in a Utilisation is a reference to the average cost (determined either on an actual or a notional basis) whichthat Lender would incur if it were to fund, from whatever source(s) it may reasonably select, an amount equal to the amount of that participation in that Utilisationfor a period equal in length to the Interest Period of that Utilisation; Page 241.2.4a "Finance Document", a "Security Document", a "Relevant Document" or any other agreement or instrument is a reference to that Finance Document, SecurityDocument, Relevant Document or other agreement or instrument as amended, novated, supplemented, extended or restated from time to time; 1.2.5a "group of Lenders" includes all the Lenders; 1.2.6"guarantee" means (other than in Clause 19 (Guarantee and Indemnity)) any guarantee, letter of credit, bond, indemnity or similar assurance against loss, or anyobligation, direct or indirect, actual or contingent, to purchase or assume any indebtedness of any person or to make an investment in or loan to any person or topurchase assets of any person where, in each case, such obligation is assumed in order to maintain or assist the ability of such person to meet its indebtedness; 1.2.7"indebtedness" includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual orcontingent; 1.2.8a "person" includes any individual, firm, company, corporation, government, state or agency of a state or any association, trust, joint venture, consortium,partnership or other entity (whether or not having separate legal personality); 1.2.9a "regulation" includes any regulation, rule, official directive, request or guideline (whether or not having the force of law) of any governmental, intergovernmentalor supranational body, agency, department or of any regulatory, self-regulatory or other authority or organisation; 1.2.10a provision of law is a reference to that provision as amended or re-enacted from time to time; and 1.2.11a time of day (unless otherwise specified) is a reference to London time. 1.3Rate for a period equal in length The determination of the extent to which a rate is "for a period equal in length" to an Interest Period shall disregard any inconsistencyarising from the last day of that Interest Period being determined pursuant to the terms of this Agreement. 1.4Headings Section, Clause and Schedule headings are for ease of reference only. 1.5Defined terms Unless a contrary indication appears, a term used in any other Finance Document or in any notice given under or in connection with any Finance Documenthas the same meaning in that Finance Document or notice as in this Agreement. 1.6Default A Default (other than an Event of Default) is "continuing" if it has not been remedied or waived and an Event of Default is "continuing" if it has not been remedied orwaived. 1.7Reference to a page or screen A reference in this Agreement to a page or screen of an information service displaying a rate shall include: 1.7.1any replacement page of that information service which displays that rate; and Page 251.7.2the appropriate page of such other information service which displays that rate from time to time in place of that information service, and, if such page or service ceases to be available, shall include any other page or service displaying that rate specified by the Agent after consultation with the Borrowers. 1.8Reference to a Central Bank Rate A reference in this Agreement to a Central Bank Rate shall include any successor rate to, or replacement rate for, that rate. 1.9Reference Rate Supplement Any Reference Rate Supplement overrides anything in: 1.9.1Schedule 9 (Reference Rate Terms); or 1.9.2any earlier Reference Rate Supplement. 1.10Compounding Methodology Supplement A Compounding Methodology Supplement relating to the Cumulative Compounded RFR Rate overrides anything relating to thatrate in: 1.10.1Schedule 10 (Cumulative Compounded RFR Rate), as the case may be; 1.10.2any earlier Compounding Methodology Supplement. 1.11Currency symbols and definitions "$", "USD" and "dollars" denote the lawful currency of the United States of America. 1.12Third party rights 1.12.1Unless expressly provided to the contrary in a Finance Document a person who is not a Party has no right under the Contracts (Rights of Third Parties) Act 1999(the "Third Parties Act") to enforce or to enjoy the benefit of any term of this Agreement. 1.12.2Notwithstanding any term of any Finance Document, the consent of any person who is not a Party is not required to rescind or vary this Agreement at any time. 1.12.3Any Receiver, Delegate or any person described in Clause 27.11.2 (Exclusion of liability) may, subject to this Clause 1.12 and the Third Parties Act, rely on anyClause of this Agreement which expressly confers rights on it. 1.13Offer letter This Agreement supersedes the terms and conditions contained in any correspondence relating to the subject matter of this Agreement exchanged between anyFinance Party and the Borrowers or their representatives before the date of this Agreement. 1.14Contractual recognition of bail-in 1.14.1In this Clause 1.14: Page 26"Article 55 BRRD" means Article 55 of Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms. "Bail-In Action" means the exercise of any Write-down and Conversion Powers. "Bail-In Legislation" means: (a)in relation to an EEA Member Country which has implemented, or which at any time implements, Article 55 BRRD, the relevant implementing law orregulation as described in the EU Bail-In Legislation Schedule from time to time; (b)in relation to the United Kingdom, the UK Bail-In Legislation; and (c)in relation to any state other than such an EEA Member Country and the United Kingdom, any analogous law or regulation from time to time whichrequires contractual recognition of any Write-down and Conversion Powers contained in that law or regulation. "EEA Member Country" means any member state of the European Union, Iceland, Liechtenstein and Norway. "EU Bail-In Legislation Schedule" means the document described as such and published by the Loan Market Association (or any successor person) from time totime. "Resolution Authority" means any body which has authority to exercise any Write-down and Conversion Powers. "UK Bail-In Legislation" means Part I of the United Kingdom Banking Act 2009 and any other law or regulation applicable in the United Kingdom relating to theresolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (otherwise than through liquidation, administration or otherinsolvency proceedings). "Write-down and Conversion Powers" means: (a)in relation to any Bail-In Legislation described in the EU Bail-In Legislation Schedule from time to time, the powers described as such in relation to thatBail-In Legislation in the EU Bail-In Legislation Schedule; (b)in relation to the UK Bail-In Legislation, any powers under that UK Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is abank or investment firm or other financial institution or affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify orchange the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability intoshares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had beenexercised under it or to suspend any obligation in respect of that liability or any of the powers under that UK Bail-In Legislation that are related to orancillary to any of those powers; and Page 27(c)in relation to any other applicable Bail-In Legislation: (i)any powers under that Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or otherfinancial institution or affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liabilityof such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities orobligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercisedunder it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to orancillary to any of those powers; and (ii)any similar or analogous powers under that Bail-In Legislation. 1.14.2Notwithstanding any other term of any Finance Document or any other agreement, arrangement or understanding between the Parties, each Party acknowledgesand accepts that any liability of any Party to any other Party under or in connection with the Finance Documents may be subject to Bail-In Action by the relevantResolution Authority and acknowledges and accepts to be bound by the effect of: (a)any Bail-In Action in relation to any such liability, including (without limitation): (i)a reduction, in full or in part, in the principal amount, or outstanding amount due (including any accrued but unpaid interest) in respect of anysuch liability; (ii)a conversion of all, or part of, any such liability into shares or other instruments of ownership that may be issued to, or conferred on, it; and (iii)a cancellation of any such liability; and (b)a variation of any term of any Finance Document to the extent necessary to give effect to any Bail-In Action in relation to any such liability. 1.15Sanctions 1.15.1In this Clause 1.15: Page 28"Restricted Lender" means a Lender that notifies the Agent to the effect that the Sanctions Provisions will apply for its benefit according to this Clause 1.15. "Sanctions Provisions" means the representations and warranties given in Clause 20.1.25 (Sanctions) and the undertakings given in Clause 23.26 (Sanctions). 1.15.2The Sanctions Provisions shall only apply for the benefit of a Lender to the extent that the making, the receiving of the benefit of and/or, where applicable, therepetition of these representations and warranties, and the compliance with these undertakings do not result in a violation of or conflict with: (a)any provision of Council Regulation (EC) 2271/1996 of 22 November 1996 protecting against the effects of the extra-territorial application of legislationadopted by a third country, and actions based thereon or resulting therefrom; (b)if applicable, any provision of Council Regulation (EC) 2271/1996 of 22 November 1996 protecting against the effects of the extra-territorial application oflegislation adopted by a third country, and actions based thereon or resulting therefrom (as it forms part of the domestic law of the United Kingdom byvirtue of the 2018 Withdrawal Act) and any provisions of the Sanctions and Anti-Money Laundering Act 2018; (c)if applicable, section 7 of the German Foreign Trade Regulation (Außenwirtschaftsverordnung) (in conjunction with section 4 paragraph 1 of No.3 foreigntrade law (AWG) (Außenwirtschaftsgesetz)); or (d)any similar applicable anti-boycott law or regulation. 1.15.3In connection with any amendment, waiver, determination or direction relating to any part of a Sanctions Provision of which a Restricted Lender does not have thebenefit pursuant to this Clause 1.15, the Commitments of that Restricted Lender will be excluded for the purpose of determining whether the consent of the relevantLenders has been obtained or whether the determination or direction by the relevant Lenders has been made. 1.15.4Any amendment, waiver, determination or direction relating to any part of this Clause 1.15 will be subject to the consent of each Restricted Lender. Page 29Section 2The Loan 2The Loan 2.1Amount Subject to the terms of this Agreement, the Lenders agree to make available to the Borrowers on a joint and several basis a revolving credit in an aggregate amountnot exceeding the Maximum Loan Amount at any one time. 2.2Finance Parties' rights and obligations 2.2.1The obligations of each Finance Party under the Finance Documents are several. Failure by a Finance Party to perform its obligations under the Finance Documentsdoes not affect the obligations of any other Party under the Finance Documents. No Finance Party is responsible for the obligations of any other Finance Partyunder the Finance Documents. 2.2.2The rights of each Finance Party under or in connection with the Finance Documents are separate and independent rights and any debt arising under the FinanceDocuments to a Finance Party from an Obligor is a separate and independent debt in respect of which a Finance Party shall be entitled to enforce its rights inaccordance with Clause 2.2.3. The rights of each Finance Party include any debt owing to that Finance Party under the Finance Documents and, for the avoidanceof doubt, any part of the Loan or any other amount owed by an Obligor which relates to a Finance Party's participation in the Loan or its role under a FinanceDocument (including any such amount payable to the Agent on its behalf) is a debt owing to that Finance Party by that Obligor. 2.2.3A Finance Party may, except as specifically provided in the Finance Documents, separately enforce its rights under or in connection with the Finance Documents. 3Purposes 3.1Purposes The Borrowers shall apply the Loan first towards payment of the existing indebtedness in respect of each Vessel under the Existing Loan Agreement and secondtowards payment of their general corporate and working capital requirements. 3.2Monitoring No Finance Party is bound to monitor or verify the application of any amount borrowed pursuant to this Agreement. 4Conditions of Utilisation 4.1Initial conditions precedent 4.1.1The Finance Parties will only enter into this Agreement if, on or before the date of this Agreement, the Agent has received all of the documents and other evidencelisted in Part I (Initial Conditions Precedent) of Schedule 2 (Conditions Precedent) in form and substance satisfactory to the Agent. Page 304.1.2The Lenders will only be obliged to comply with Clause 5.4 (Lenders' participation) in relation to the advance of a Utilisation if, on or before the relevant UtilisationDate, the Agent has received all of the documents and other evidence listed in Part II (Initial Utilisation Conditions precedent) of Schedule 2 (ConditionsPrecedent and Subsequent) in relation to the first Utilisation or Part III (Subsequent Utilisation Conditions precedent) of Schedule 2 (Conditions Precedent andSubsequent) in relation to a Utilisation other than the first Utilisation in form and substance satisfactory to the Agent. The Agent shall notify the Borrowers andthe Lenders promptly upon being so satisfied. 4.1.3Other than to the extent that the Majority Lenders notify the Agent in writing to the contrary before the Agent gives the notification described in Clause 4.1.1, theLenders authorise (but do not require) the Agent to give that notification. The Agent shall not be liable for any damages, costs or losses whatsoever as a result ofgiving any such notification. 4.2Further conditions precedent The Lenders will only be obliged to advance a Utilisation if on the date of the relevant Utilisation Request and on the proposed UtilisationDate: 4.2.1no Default is continuing or would result from the advance of that Utilisation; and 4.2.2the representations made by each Borrower and each Guarantor under Clause 20 (Representations) are true. 4.3Conditions subsequent The Borrowers undertake to deliver or to cause to be delivered to the Agent within the earlier of: 4.3.1the time limits set out in Part IV (Conditions subsequent) of Schedule 2 (Conditions Precedent and Subsequent); and 4.3.215 days after each Utilisation Date, the documents and other evidence listed in Part IV (Conditions subsequent) of Schedule 2 (Conditions Precedent and Subsequent). 4.4No waiver If the Lenders agree to advance a Utilisation to the Borrowers before all of the documents and evidence required by Clause 4.1 (Initial conditions precedent) havebeen delivered to or to the order of the Agent, the Borrowers undertake to deliver all outstanding documents and evidence to or to the order of the Agent no later than 30days after the relevant Utilisation Date or such other date specified by the Agent (acting on the instructions of all the Lenders). The advance of a Utilisation under this Clause 4.4 shall not be taken as a waiver of the Lenders' right to require production of all the documents and evidence required byClause 4.1 (Initial conditions precedent). 4.5Form and content All documents and evidence delivered to the Agent under this Clause shall: 4.5.1be in form and substance acceptable to the Agent; and 4.5.2if required by the Agent, be certified, notarised, legalised or attested in a manner acceptable to the Agent. 4.6Vessel specified References in Schedule 2 (Conditions Precedent and Subsequent) to "the Vessel" or to any person, document or date relating to a Vessel shall be deemed torelate solely to the Vessel specified in the relevant Utilisation Request or to any person, document or date relating to that Vessel respectively. Page 31Section 3Utilisation 5Advance 5.1Delivery of a Utilisation Request The Borrowers may request a Utilisation to be advanced by delivery to the Agent of a duly completed Utilisation Request not more than tenBusiness Days before the proposed Utilisation Date and not later than 11.00 am (London time) three Business Days before the proposed Utilisation Date. 5.2Completion of a Utilisation Request A Utilisation Request is irrevocable and will not be regarded as having been duly completed unless: 5.2.1it is signed by an authorised signatory of each Borrower; 5.2.2the proposed Utilisation Date is a Business Day within the Availability Period; and 5.2.3the proposed Interest Period complies with Clause 9 (Interest Periods). 5.3Currency and amount The currency specified in a Utilisation Request must be dollars. 5.4Lenders' participation 5.4.1Subject to Clauses 2 (The Loan), 3 (Purpose) and 4 (Conditions of Utilisation), each Lender shall make its participation in any Utilisation available by the relevantUtilisation Date through its Facility Office. 5.4.2The amount of each Lender's participation in any Utilisation will be equal to the proportion borne by its Commitment to the Total Commitments. 5.5Utilisation limit The Lenders will only be obliged to advance a Utilisation if: 5.5.1no other Utilisation has been made on the same Business Day; 5.5.2that Utilisation will not result in there being more than 4 (four) Utilisations outstanding at any one time; 5.5.3that Utilisation is not less than $1,000,000; and 5.5.4that Utilisation will not increase the outstanding amount of the Loan to a sum in excess of the Maximum Loan Amount. 5.6Reduction of Maximum Loan Amount The Maximum Loan Amount: 5.6.1shall be reduced on each Reduction Date by $833,332; and 5.6.2may (in addition to any reduction under Clause 5.6.1) be voluntarily reduced by the Borrowers by $833,332 or an integral multiple of that amount with effect from anyBusiness Day by written notice to the Agent given not fewer than 30 days prior to that Business Day, which notice shall be irrevocable. 5.7Cancellation of Commitment The Total Commitments shall be cancelled at the end of the Availability Period to the extent that they are unutilised at that time. Page 32Section 4Repayment, Prepayment and Cancellation 6Repayment 6.1Repayment of each Utilisation The Borrowers shall repay each Utilisation on the last day of the Interest Period in respect of that Utilisation. 6.2Application of new Utilisations Without prejudice to the Borrowers' obligation under Clause 6.1 (Repayment of each Utilisation), if: 6.2.1one or more Utilisations are to be made available to the Borrowers: (a)on the same day that a maturing Utilisation is due to be repaid by the Borrowers; and (b)in whole or in part for the purpose of refinancing the maturing Utilisation; and 6.2.2the proportion borne by each Lender's participation in the maturing Utilisation to the amount of that maturing Utilisation is the same as the proportion borne by thatLender's participation in the new Utilisations to the aggregate amount of those new Utilisations, the aggregate amount of the new Utilisations shall, unless the Borrowers notify the Agent to the contrary in the relevant Utilisation Request, be treated as if applied in ortowards repayment of the maturing Utilisation so that: (a)if the amount of the maturing Utilisation exceeds the aggregate amount of the new Utilisations: (i)the Borrowers will only be required to make a payment under Clause 31.1 (Payments to the Agent) in an amount in the relevant currency equalto that excess; and (ii)each Lender's participation in the new Utilisations shall be treated as having been made available and applied by the Borrowers in or towardsrepayment of that Lender's participation in the maturing Utilisation and that Lender will not be required to make a payment under Clause 31.1(Payments to the Agent) in respect of its participation in the new Utilisation; and (b)if the amount of the maturing Utilisation is equal to or less than the aggregate amount of the new Utilisations: (i)the Borrowers will not be required to make a payment under Clause 31.1 (Payments to the Agent); and (ii)each Lender will be required to make a payment under Clause 31.1 (Payments to the Agent) in respect of its participation in the new Utilisationsonly to the extent that its participation in the new Utilisations exceeds that Lender's participation in the maturing Utilisation and the remainderof that Lender's participation in the new Utilisations shall be treated as having been made available and applied by the Borrowers in or towardsrepayment of that Lender's participation in the maturing Utilisation. Page 336.3Reborrowing Amounts of the Loan which are repaid or prepaid shall be available for reborrowing in accordance with Clause 4 (Conditions of Utilisation) prior to the end ofthe Availability Period. 7Illegality, Prepayment and Cancellation 7.1Illegality If in any applicable jurisdiction it becomes unlawful (other than by reason of Sanctions) for a Lender to perform any of its obligations as contemplated by thisAgreement or to fund or maintain its participation in the Loan or it becomes unlawful for any Affiliate of a Lender for that Lender to do so: 7.1.1that Lender shall promptly notify the Agent upon becoming aware of that event; 7.1.2upon the Agent notifying the Borrowers, the Commitment of that Lender will be immediately cancelled; and 7.1.3to the extent that the Lender's participation has not been transferred pursuant to Clause 37.6 (Replacement of Lender), the Borrowers shall repay that Lender'sparticipation in any Utilisation on the last day of its current Interest Period or, if earlier, the date specified by that Lender in the notice delivered to the Agent andnotified by the Agent to the Borrowers (being no earlier than the last day of any applicable grace period permitted by law) and the Maximum Loan Amount shall bereduced by the amount of that Lender's Commitment in the Loan. 7.2Voluntary cancellation The Borrowers may, if they give the Agent not less than three (3) Business Days' (or such shorter period as the Majority Lenders may agree) priorwritten notice, cancel the whole or any part (being a minimum amount of $416,666) of the undrawn amount of the Loan. Any cancellation under this Clause 7.2 shall reduce theCommitments of the Lenders rateably. 7.3Voluntary prepayment of Utilisations 7.3.1The Borrowers may prepay the whole or any part of a Utilisation (but, if in part, being an amount that reduces that Utilisation by a minimum amount of $416,666 anamount which is an integral multiple of $416,666) subject the following condition: they give the Agent not less than three (3) RFR Banking Days' (or such shorterperiod as the Majority Lenders and the Agent may agree) prior written notice. 7.3.2If a Borrower fully prepays the Utilisations that correspond to the Indebtedness of that Borrower for the relevant Vessel, the relevant Vessel's mortgage shall bedischarged, and the respective Borrower and the respective Managers shall be released from all obligations under this Agreement and the relevant Manager'sUndertaking(s), provided that: (a) no Event of Default has occurred and (b) the aggregate Market Value of the remaining Vessel is at least 135% of the outstandingUtilisations following such prepayment. Page 347.4Right of cancellation and prepayment in relation to a single Lender 7.4.1If: (a)any sum payable to any Lender by an Obligor is required to be increased under Clause 12.2.3 (Tax gross-up); or (b)any Lender claims indemnification from a Borrower or a Guarantor under Clause 12.3 (Tax indemnity) or Clause 13.1 (Increased costs), the Borrowers may, while the circumstance giving rise to the requirement for that increase or indemnification continues, give the Agent notice of cancellation of theCommitment(s) of that Lender and their intention to procure the repayment of that Lender's participation in each Utilisation. 7.4.2On receipt of a notice referred to in Clause 7.4.1 in relation to a Lender, the Commitment(s) of that Lender shall be immediately reduced to zero. 7.4.3On the last day of the Interest Period in respect of each Utilisation which ends after the Borrowers have given notice under Clause 7.4.1 in relation to a Lender (or, ifearlier, the date specified by the Borrowers in that notice), the Borrowers shall repay that Lender's participation in that Utilisation together with all interest and otheramounts accrued under the Finance Documents. 7.5Mandatory prepayment on sale or Total Loss 7.5.1In this Agreement, "Prepayment Date" means: (a)in the case of the sale of a Vessel, the time at and date on which the sale is completed; and (b)in the case of a Total Loss of a Vessel, the earlier of (i) the date falling 120 days after the Total Loss Date and (ii) the date on which the proceeds of anysuch Total Loss are realised. 7.5.2If a Vessel is sold by a Borrower or becomes a Total Loss: (a)on the relevant Prepayment Date the Maximum Loan Amount shall be reduced by an amount equivalent to the same proportion of the Loan thenoutstanding as the Market Value of that Vessel bears to the aggregate of the Market Value of all the Vessels and the value of any additional security forthe time being provided under Clause 18.1 (Additional security) (such values to be determined in accordance with Clause 18.1 (Additional security)); (b)the Borrowers shall, simultaneously with that reduction, prepay one or more outstanding Utilisations to the extent required to ensure that the aggregateamount of the Utilisations outstanding does not exceed the reduced Maximum Loan Amount; and (c)the Borrowers shall on the relevant Prepayment Date pay any additional amount that is required to ensure that the Borrowers remain in compliance withthe VTL Coverage as calculated on the relevant Prepayment Date and excluding, for the purpose of this calculation, the Vessel sold or that has become aTotal Loss. Page 357.5.3For the purpose of Clause 7.5.2, the determination of the VTL Coverage will be based on: (a)the last valuations of the remaining Vessels obtained by the Agent pursuant to Clause 18.2 (Provision of valuations); or (b)if such last valuations predate the relevant Prepayment Date by more than three months, new valuations to be obtained by the Agent pursuant to Clause18.2 (Provision of valuations) on or before the relevant Prepayment Date. 7.6Application of Hedge Reduction Proceeds Any Hedge Reduction Proceeds arising as a result of any prepayment or cancellation of a Utilisation under this Clause 7(Illegality, Prepayment and Cancellation) shall be applied on the final day of the Interest Period for that Utilisation in or towards repayment of that Utilisation. 7.7Mandatory prepayment on reduction of Maximum Loan Amount If the Maximum Loan Amount is reduced in accordance with Clause 5.6 (Reduction of Maximum LoanAmount) to an amount which is less than the aggregate amount of the Utilisations then outstanding, the Borrowers shall, simultaneously with that reduction, prepay one ormore outstanding Utilisations to the extent required to ensure that the aggregate amount of the Utilisations outstanding does not exceed the reduced Maximum Loan Amount. 7.8Right of cancellation in relation to a Defaulting Lender If any Lender becomes a Defaulting Lender, the Borrowers may, at any time while the Lender continues to be aDefaulting Lender, give the Agent 30 Business Days' notice of cancellation of the Commitment of that Lender. On that notice becoming effective, the Commitment of theDefaulting Lender shall be immediately reduced to zero. The Agent shall as soon as practicable after receipt of that notice notify all the Lenders. 7.9Mandatory Prepayment - Change of Control If: 7.9.1the Original Guarantor's Shareholder or any company controlled directly or indirectly by the Original Guarantor's Shareholder ceases to hold directly (legally andbeneficially) at least 15 per cent of the issued share capital and voting rights on the Original Guarantor; 7.9.2without the prior written consent of the Agent (acting on the instructions of all the Lenders) any person or group of persons acting in concert have the right or theability to control, either directly or indirectly, the affairs or composition of the majority of the board of directors of the Original Guarantor or acquires 1/3 or more ofthe voting and/or common shares in the Original Guarantor other than: (a)the Original Guarantor's Shareholder; or Page 36(b)any company controlled directly or indirectly by the Original Guarantor's Shareholder; or 7.9.3the Original Guarantor ceases to be the sole shareholder of any Borrower, then: (a)the Borrowers shall promptly notify the Agent upon becoming aware of that event; and (b)subject to: (i)any Lender so requiring (such a Lender, an "Outgoing Lender"); and (ii)the Agent giving no less than 3 Business Days' notice to the Borrower, the Commitment of that Outgoing Lender will be immediately cancelled and the Borrowers shall repay within 45 days thereafter that Outgoing Lender's participationin each Utilisation. 7.10Mandatory prepayment Any prepayment under Clauses 7.1 (Illegality), 7.5 (Mandatory prepayment on sale or Total Loss) and 7.9 (Mandatory Prepayment – Change ofControl) shall be applied on a "pro rata basis", in inverse order of maturity, or in order of maturity, at the Borrowers' option. 7.11Restrictions 7.11.1Any notice of prepayment or cancellation given under this Clause 7 shall be irrevocable and, unless a contrary indication appears in this Agreement, shall specifythe date or dates upon which the relevant prepayment or cancellation is to be made and the amount of that prepayment or cancellation. 7.11.2Any prepayment under this Agreement shall be made together with accrued interest on the amount prepaid and, subject to (a) any Break Costs and (b) any amountspayable under the Hedging Agreements in connection with that prepayment, without premium or penalty. 7.11.3The Borrowers shall not repay, prepay or cancel all or any part of the Loan except at the times and in the manner expressly provided for in this Agreement. 7.11.4No amount of the Total Commitments cancelled under this Agreement may be subsequently reinstated. 7.11.5If the Agent receives a notice under this Clause 7 it shall promptly forward a copy of that notice to the Borrowers or the affected Lender and/or the HedgeCounterparties, as appropriate. Page 37Section 5Costs of Utilisation 8Interest 8.1Calculation of interest – Term SOFR Utilisation 8.1.1The rate of interest on each Utilisation for each Interest Period in respect of that Utilisation is the percentage rate per annum which is the aggregate of theapplicable: (a)Margin; and (b)Reference Rate. 8.1.2If any day during the Interest Period for a Utilisation is not an RFR Banking Day, the rate of interest on that Utilisation for that day will be the rate applicable to theimmediately preceding RFR Banking Day. 8.2Calculation of interest – Compounded SOFR Utilisation The rate of interest on each Utilisation for each relevant Interest Period is the percentage rate per annum which is the aggregate of: 8.2.1The Margin; and 8.2.2The Reference Rate. 8.3Payment of interest The Borrowers shall pay accrued interest on each Utilisation on the last day of the Interest Period in respect of that Utilisation (and, if the Interest Periodis longer than six (6) Months, on the dates falling at intervals of three (3) Months on the last day of that Interest Period). 8.4Hedging 8.4.1On or before the first Utilisation Date, the Borrowers may (but are not obliged to) enter into and, if they do so, shall thereafter maintain Hedging Agreements inaccordance with this Clause 8.4. 8.4.2 (a)The aggregate notional amount of the transactions in respect of the Hedging Agreements shall be at least 25% of the relevant Utilisation. (b)Each Hedging Agreement shall: (i)be with a Hedge Counterparty; (ii)be for a term ending on the Termination Date to occur under this Agreement; (iii)have settlement dates coinciding with the relevant Interest Payment Dates; and (iv)be based on the 2002 ISDA Master Agreement and otherwise in form and substance satisfactory to the Agent. Page 38(c)The rights of each Borrower under the Hedging Agreements to which it is a party shall be assigned in favour of the Security Agent pursuant to aHedging Security Deed. Notwithstanding section 7 of the Hedging Agreements, each Hedge Counterparty hereby agrees and consents to theassignment by each Borrower of its interests under the Hedging Agreements to which it is a party (and for the avoidance of doubt, without prejudice to,and after giving effect to, the operation of any payment or close-out netting pursuant to section 2(c) or 6(e) of any such Hedging Agreements). 8.4.3 (a)The parties to each Hedging Agreement must comply with the terms of that Hedging Agreement. (b)The parties to a Hedging Agreement may amend, supplement, extend or waive the terms of such Hedging Agreement provided that such amendment,supplement, extension or waiver does not give rise to a conflict with any provision of this Agreement. 8.4.4 (a)If: (i)at any time, the aggregate notional amount of the transactions in respect of the Hedging Agreements exceeds 100% of the relevant Utilisation;or, (ii)as a result of a prepayment or cancellation in part pursuant to Clause 7 (Illegality, Prepayment and Cancellation), the aggregate notionalamount of the transactions in respect of the Hedging Agreements will exceed 100% of the relevant Utilisation, a Borrower or a Hedge Counterparty may (or, at the request of the Agent, must) reduce the aggregate notional amount of those transactions by anamount and in a manner satisfactory to the Agent so that it no longer exceeds or will not exceed 100% of the relevant Utilisation outstanding at that timeor on the date of such prepayment or cancellation. (b)Any reductions in the aggregate notional amount of the transactions in respect of the Hedging Agreements in accordance with Clause 8.4.4(a) will beapportioned as between those transactions pro rata. 8.4.5A Hedge Counterparty may not terminate or close out any transactions in respect of any Hedging Agreement (in whole or in part) except: (a)to the extent necessary to comply with Clause 8.4.4; (b)if a Hedging Force Majeure has occurred in respect of the relevant Borrower; Page 39(c)if the Indebtedness (other than in respect of the Hedging Agreements) has been unconditionally and irrevocably paid and discharged in full; (d)if the relevant Borrower does not pay on the due date any amount payable by it under a Hedging Agreement to which it is a party at the place at and inthe currency in which it is expressed to be payable unless: (i)its failure to pay is caused by: (A)administrative or technical error; or (B)a Disruption Event; and (ii)payment is made within two Business Days of its due date (in the case of Clause 24.1.1(a) (Non-payment)) or within two Business Days of itsdue date (in the case of Clause 24.1.1(a) (Non-payment)) payment is made within two Business Days of its due date. (e)if the Agent serves notice under Clause 24.2.1(b) (Acceleration) or, having served notice under Clause 24.2.1(c) (Acceleration), makes a demand; or (f)in the case of any other termination or closing out by a Hedge Counterparty, with the consent of the Agent. 8.4.6If a Hedge Counterparty terminates or closes out a transaction in respect of a Hedging Agreement (in whole or in part) in accordance with Clause 8.4.5(b), Clause8.4.5(c), Clause 8.4.5(d) or Clause 8.4.5(e), it shall promptly notify the Agent of that termination or close out. 8.4.7If a Hedge Counterparty is entitled to terminate or close out any transaction in respect of any Hedging Agreement under Clause 8.4.5(f), such Hedge Counterpartyshall promptly terminate or close out such transaction following a request to do so by the Security Agent. 8.4.8To the extent that the relevant Utilisation is to be cancelled, prepaid or repaid in full, any Hedge Reduction Proceeds arising as a result of any termination or closeout in full of any Hedging Agreement shall be paid to the Security Agent for application in accordance with Clause 31.5 (Partial payments) or Clause 28(Application of Proceeds) (as applicable). 8.4.9A Hedge Counterparty may only suspend making payments due under a transaction in respect of a Hedging Agreement if a Borrower is in breach of its paymentobligations under any transaction in respect of that Hedging Agreement and has not remedied such failure to pay within the timeframe specified in Clause 8.4.5(d). Nothing in this Clause 8.4.9 shall constitute a waiver by such Hedge Counterparty of any rights that it may have under any Hedging Agreement. Page 408.4.10The Security Agent shall not be liable for the performance of any of a Borrower's obligations under a Hedging Agreement. 8.5Default interest If a Borrower or a Guarantor fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on the overdue amountfrom the due date up to the date of actual payment (both before and after judgment) at a rate which is two per cent (2%) per annum higher than the rate which would have beenpayable if the overdue amount had, during the period of non-payment, constituted a Utilisation in the currency of the overdue amount for successive Interest Periods, each ofa duration selected by the Agent (acting reasonably). Any interest accruing under this Clause 8.5 shall be immediately payable by the Borrower or the Guarantor on demandby the Agent. Default interest (if unpaid) arising on an overdue amount will be compounded with the overdue amount at the end of each Interest Period applicable to that overdue amountbut will remain immediately due and payable. 8.6Notifications 8.6.1The Agent shall promptly upon an Interest Payment being determinable, notify: (a)the Borrowers of that Interest Payment; (b)each relevant Lender of the portion of that Interest Payment which relates to that Lender's participation in the relevant Utilisation; and (c)for a Compounded SOFR Utilisation the Lenders and the Borrowers of: (i)the determination of the total amount of accrued interest that relates to a Utilisation (or, in the case of a Lender, relates to its participation in aUtilisation) and is, or is scheduled to become, payable under any Finance Document; (ii)the applicable rate of interest for each day relating to the determination of that Interest Payment; and (iii)to the extent it is then determinable, the Market Disruption Rate (if any) relating to the relevant Utilisation. (d)for a Term SOFR Utilisation the determination of a rate of interest under this Agreement. This Clause 8.6.1 shall not apply to any Interest Payment determined pursuant to Clause 10.3 (Cost of funds). 8.6.2The Agent shall promptly notify the Lenders and the Borrowers of the determination of a rate of interest relating to a Utilisation to which Clause 10.3 (Cost of funds)applies. 8.6.3The Agent shall promptly notify the Borrowers of each Funding Rate relating to a Utilisation. Page 418.6.4This Clause 8.6 shall not require the Agent to make any notification to any Party on a day which is not a Business Day. 8.7Calculation of accrued interest In relation to Compounded SOFR Utilisation, if, pursuant to this Agreement, any accrued interest on all or part of a Utilisation becomes payable prior to the last day of anInterest Period for that Utilisation, that Interest Period shall: 8.7.1for the purposes of calculating that accrued interest only, and in relation only to such part of that Utilisation to which that accrued interest relates, be treated asending on the day on which that accrued interest becomes payable pursuant to this Agreement; and 8.7.2for all other purposes under this Agreement, continue to end, and shall be treated as ending, on the last day of that Interest Period. 9Interest Periods 9.1Selection of Interest Periods The Borrowers may select in a written notice to the Agent the duration of the Interest Period for each Utilisation subject as follows: 9.1.1each notice is irrevocable and must be delivered to the Agent by the Borrowers not later than 9.30 a.m. on the day preceding the first day of the Interest Period forthe relevant Utilisation; 9.1.2if the Borrowers fail to give a notice in accordance with Clause 9.1.1, the relevant Interest Period will, subject to Clause 9.2 (Non-Business Days), be three (3)Months; 9.1.3subject to this Clause 9, the Borrowers may select an Interest Period of one (1) or three (3) Months or any other period agreed between the Borrowers and the Agent(acting on the instructions of all the Lenders); 9.1.4an Interest Period shall not extend beyond the Termination Date; and 9.1.5each Interest Period shall start on the Utilisation Date in respect of the Utilisation and end on the date which numerically corresponds to the Utilisation Date in therelevant Month. 9.2Non-Business Days If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in thatcalendar month (if there is one) or the preceding Business Day (if there is not). 10Changes to the Calculation of Interest 10.1Unavailability of Term SOFR If no Term SOFR is available for the Interest Period of a Utilisation, the applicable Reference Rate shall be the Cumulative Compounded RFRRate for that Utilisation. 10.2Market disruption If the Agent receives notifications from a Lender or Lenders (whose participations in that Utilisation exceed 50% of that Utilisation) that its cost of fundsrelating to its participation in that Utilisation would be in excess of that Market Disruption Rate, then Clause 10.3 (Cost of funds) shall apply to that Utilisation for the relevantInterest Period. Page 4210.3Cost of funds 10.3.1If this Clause 10.3 applies to a Utilisation for an Interest Period, then Clause 8.1 (Calculation of interest) shall not apply to that Utilisation for that Interest Periodand the rate of interest on each Lender's share of that Utilisation for that Interest Period shall be the percentage rate per annum which is the sum of: (a)the Margin; and (b)the rate notified to the Agent by that Lender as soon as practicable to be that which expresses as a percentage rate per annum that Lender's cost of fundsrelating to its participation in the relevant Utilisation. 10.3.2If this Clause 10.3 applies and the Agent or the Borrowers so require, the Agent and the Borrowers shall enter into negotiations (for a period of not more than 30days) with a view to agreeing a substitute basis for determining the rate of interest. 10.3.3Any alternative basis agreed pursuant to Clause 10.3.2 shall, with the prior consent of all the Lenders and the Borrowers, be binding on all Parties. 10.3.4If an alternative basis is not agreed pursuant to Clause 10.3.2, the rate of interest shall continue to be determined in accordance with Clause 10.3.1. 10.4Break Costs 10.4.1The Borrowers shall, within three Business Days of demand by a Finance Party, pay to that Finance Party its Break Costs (if any) attributable to all or any part of aUtilisation or Unpaid Sum being paid by the Borrowers on a day prior to the last day of an Interest Period for that Utilisation or Unpaid Sum. 10.4.2Each Lender shall, as soon as reasonably practicable after a demand by the Agent, provide a certificate confirming the amount of its Break Costs for any InterestPeriod in respect of which they become, or may become, payable. 11Fees 11.1Commitment Fee The Borrowers shall pay to the Agent (for the account of the Lenders in proportion to their Commitments) a fee computed at the rate of 35% of the Marginper annum on the undrawn amount of the Maximum Loan Amount for the Availability Period. The accrued commitment fee is payable on the last day of each successive period of three Months which ends during the Availability Period, on the last day of theAvailability Period, (on the cancelled amount of the relevant Lender's Commitment) at the time the cancellation is effective and at any earlier date upon which the Commitmentsare fully utilised. 11.2Arrangement fee The Obligors shall pay to the Agent an arrangement fee in the amount and at the times agreed in the Fee Letter. Page 43Section 6Additional Payment Obligations 12Tax Gross Up and Indemnities 12.1Definitions In this Agreement: "Borrower DTTP Filing" means an HM Revenue & Customs' Form DTTP2 duly completed and filed by the relevant Borrower, which: (a)where it relates to a Treaty Lender that is an Original Lender, contains the scheme reference number and jurisdiction of tax residence stated opposite that Lender'sname in Schedule 1 (The Parties) and is filed with HM Revenue & Customs within 30 days of the date of this Agreement; or (b)where it relates to a Treaty Lender that is not an Original Lender, contains the scheme reference number and jurisdiction of tax residence stated in respect of thatLender in the documentation which it executes on becoming a Party as a Lender and is filed with HM Revenue & Customs within 30 days of the relevant TransferDate. "Protected Party" means a Finance Party which is or will be subject to any liability or required to make any payment for or on account of Tax in relation to a sum received orreceivable (or any sum deemed for the purposes of Tax to be received or receivable) under a Finance Document. "Qualifying Lender" means a Lender which is beneficially entitled to interest payable to that Lender in respect of an advance under a Finance Document and is: (a)a Lender which is a bank (as defined for the purpose of section 879 of the ITA) making an advance under a Finance Document and is within the charge to UnitedKingdom corporation tax as respects any payments of interest made in respect of that advance or would be within such charge as respects such payments apartfrom section 18A of the CTA; or in respect of an advance made under a Finance Document by a person that was a bank (as defined for the purpose of section 879 ofthe ITA) at the time that that advance was made and within the charge to United Kingdom corporation tax as respects any payments of interest made in respect ofthat advance; or (b)a Lender which is: (i)a company resident in the United Kingdom for United Kingdom tax purposes; (ii)a partnership each member of which is: (A)a company so resident in the United Kingdom; or (B)a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment andwhich brings into account in computing its chargeable profits (within the meaning of section 19 of the CTA) the whole of any share of interestpayable in respect of that advance that falls to it by reason of Part 17 of the CTA; orPage 44(C)a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment andwhich brings into account interest payable in respect of that advance in computing the chargeable profits (within the meaning of section 19 ofthe CTA) of that company; or (c)a Treaty Lender. "Tax Confirmation" means a confirmation by a Lender that the person beneficially entitled to interest payable to that Lender in respect of an advance under a FinanceDocument is either: (a)a company resident in the United Kingdom for United Kingdom tax purposes; (b)a partnership each member of which is: (i)a company so resident in the United Kingdom; or (ii)a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which bringsinto account in computing its chargeable profits (within the meaning of section 19 of the CTA) the whole of any share of interest payable in respect ofthat advance that falls to it by reason of Part 17 of the CTA; or (c)a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings intoaccount interest payable in respect of that advance in computing the chargeable profits (within the meaning of section 19 of the CTA) of that company. "Tax Credit" means a credit against, relief or remission for, or repayment of any Tax. "Tax Deduction" means a deduction or withholding for or on account of Tax from a payment under a Finance Document, other than a FATCA Deduction. "Tax Payment" means either the increase in a payment made by an Obligor to a Finance Party under Clause 12.2 (Tax gross-up) or a payment under Clause 12.3 (Taxindemnity). "Treaty Lender" means a Lender which: (a)is treated as a resident of a Treaty State for the purposes of the Treaty; (b)does not carry on a business in the United Kingdom through a permanent establishment with which that Lender's participation in the Loan is effectively connected. Page 45"Treaty State" means a jurisdiction having a double taxation agreement (a "Treaty") with the United Kingdom which makes provision for full exemption from tax imposed bythe United Kingdom on interest. "UK Non-Bank Lender" means a Lender which is not an Original Lender and which gives a Tax Confirmation in the documentation which it executes on becoming a Party as aLender. Unless a contrary indication appears, in this Clause 12 a reference to "determines" or "determined" means a determination made in the absolute discretion of the personmaking the determination. 12.2Tax gross-up 12.2.1Each Borrower and each Guarantor shall (and shall procure that each other Obligor will) make all payments to be made by it without any Tax Deduction, unless a TaxDeduction is required by law. 12.2.2The Borrowers shall promptly upon becoming aware that an Obligor must make a Tax Deduction (or that there is any change in the rate or the basis of a TaxDeduction) notify the Agent accordingly. Similarly, a Lender shall notify the Agent on becoming so aware in respect of a payment payable to that Lender. If theAgent receives such notification from a Lender it shall notify the Borrowers and that Obligor. 12.2.3If a Tax Deduction is required by law to be made by an Obligor, the amount of the payment due from that Obligor shall be increased to an amount which (aftermaking any Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required. 12.2.4A payment shall not be increased under Clause 12.2.3 by reason of a Tax Deduction on account of Tax imposed by the United Kingdom, if on the date on which thepayment falls due: (a)the payment could have been made to the relevant Lender without a Tax Deduction if the Lender had been a Qualifying Lender, but on that date thatLender is not or has ceased to be a Qualifying Lender other than as a result of any change after the date it became a Lender under this Agreement in (orin the interpretation, administration, or application of) any law or Treaty or any published practice or published concession of any relevant taxingauthority; or (b)the relevant Lender is a Qualifying Lender solely by virtue of (b) of the definition of "Qualifying Lender" and: (i)an officer of H.M. Revenue & Customs has given (and not revoked) a direction (a "Direction") under section 931 of the ITA which relates tothe payment and that Lender has received from the Obligor making the payment a certified copy of that Direction; and (ii)the payment could have been made to the Lender without any Tax Deduction if that Direction had not been made; or Page 46(c)the relevant Lender is a Qualifying Lender solely by virtue of (b) of the definition of "Qualifying Lender" and: (i)the relevant Lender has not given a Tax Confirmation to the Borrowers; and (ii)the payment could have been made to the Lender without any Tax Deduction if the Lender had given a Tax Confirmation to the Borrowers, onthe basis that the Tax Confirmation would have enabled the Borrowers to have formed a reasonable belief that the payment was an "exceptedpayment" for the purpose of section 930 of the ITA; or (d)the relevant Lender is a Treaty Lender and the Obligor making the payment is able to demonstrate that the payment could have been made to that Lenderwithout the Tax Deduction had that Lender complied with its obligations under Clause 12.2.7 or Clause 12.2.8 (as applicable). 12.2.5If an Obligor is required to make a Tax Deduction, the relevant Borrower or Guarantor shall (and, in the case of any other Obligor, the Borrowers and each Guarantorshall procure that such other Obligor will) make that Tax Deduction and any payment required in connection with that Tax Deduction within the time allowed and inthe minimum amount required by law. 12.2.6Within 30 days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Borrower or Guarantor making that TaxDeduction shall (and, in the case of any other Obligor, the Borrowers and each Guarantor shall procure that such other Obligor will) deliver to the Agent for theFinance Party entitled to the payment a statement under section 975 of the ITA or other evidence reasonably satisfactory to that Finance Party that the TaxDeduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority. 12.2.7 (a)Subject to (b), a Treaty Lender and each Borrower or Guarantor which makes a payment to which that Treaty Lender is entitled shall co-operate incompleting any procedural formalities necessary for that Borrower or Guarantor to obtain authorisation to make that payment without a Tax Deduction. (b) (i)A Treaty Lender which is an Original Lender and that holds a passport under the HMRC DT Treaty Passport scheme, and which wishes thatscheme to apply to this Agreement, shall confirm its scheme reference number and its jurisdiction of tax residence opposite its name inSchedule 1 (The Parties); and Page 47(ii)a Treaty Lender which is not an Original Lender and that holds a passport under the HMRC DT Treaty Passport scheme, and which wishesthat scheme to apply to this Agreement, shall confirm its scheme reference number and its jurisdiction of tax residence in the documentationwhich it executes on becoming a Party as a Lender, and, having done so, that Lender shall be under no obligation pursuant to (a). 12.2.8If a Lender has confirmed its scheme reference number and its jurisdiction of tax residence in accordance with Clause 12.2.7(b) and: (a)a Borrower making a payment to that Lender has not made a Borrower DTTP Filing in respect of that Lender; or (b)a Borrower making a payment to that Lender has made a Borrower DTTP Filing in respect of that Lender but: (i)that Borrower DTTP Filing has been rejected by HM Revenue & Customs; (ii)HM Revenue & Customs has not given that Borrower authority to make payments to that Lender without a Tax Deduction within 60 days ofthe date of the Borrower DTTP Filing; or (iii)HM Revenue & Customs has given that Borrower authority to make payments to that Lender without a Tax Deduction but such authority hassubsequently been revoked or expired, and in each case, that Borrower has notified that Lender in writing, that Lender and that Borrower shall co-operate in completing any additional proceduralformalities necessary for that Borrower to obtain authorisation to make that payment without a Tax Deduction. 12.2.9If a Lender has not confirmed its scheme reference number and jurisdiction of tax residence in accordance with Clause 12.2.7(b), no Borrower or Guarantor shall makea Borrower DTTP Filing or file any other form relating to the HMRC DT Treaty Passport scheme in respect of that Lender's Commitment(s) or its participation in anyUtilisation unless the Lender otherwise agrees. 12.2.10A Borrower shall, promptly on making a Borrower DTTP Filing, deliver a copy of that Borrower DTTP Filing to the Agent for delivery to the relevant Lender. 12.2.11A UK Non-Bank Lender which is an Original Lender gives a Tax Confirmation to the Borrowers by entering into this Agreement. 12.2.12A UK Non-Bank Lender shall promptly notify the Borrowers and the Agent if there is any change in the position from that set out in the Tax Confirmation. Page 4812.3Tax indemnity 12.3.1Each Borrower and each Guarantor shall (within three Business Days of demand by the Agent) pay to a Protected Party an amount equal to the loss, liability or costwhich that Protected Party determines will be or has been (directly or indirectly) suffered for or on account of Tax by that Protected Party in respect of a FinanceDocument. 12.3.2Clause 12.3.1 shall not apply: (a)with respect to any Tax assessed on a Finance Party: (i)under the law of the jurisdiction in which that Finance Party is incorporated or, if different, the jurisdiction (or jurisdictions) in which thatFinance Party is treated as resident for tax purposes; or (ii)under the law of the jurisdiction in which that Finance Party's Facility Office is located in respect of amounts received or receivable in thatjurisdiction, if that Tax is imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or receivable) bythat Finance Party; or (b)to the extent a loss, liability or cost: (i)is compensated for by an increased payment under Clause 12.2 (Tax gross-up); (ii)would have been compensated for by an increased payment under Clause 12.2 (Tax gross-up) but was not so compensated solely because oneof the exclusions in Clause 12.2.4 (Tax gross-up) applied; or (iii)relates to a FATCA Deduction required to be made by a Party. 12.3.3A Protected Party making, or intending to make a claim under Clause 12.3.1 shall promptly notify the Agent of the event which will give, or has given, rise to theclaim, following which the Agent shall notify the Borrowers. 12.3.4A Protected Party shall, on receiving a payment from a Borrower or a Guarantor under this Clause 12.3, notify the Agent. 12.4Tax Credit If an Obligor makes a Tax Payment and the relevant Finance Party determines that: 12.4.1a Tax Credit is attributable to an increased payment of which that Tax Payment forms part, to that Tax Payment or to a Tax Deduction in consequence of whichthat Tax Payment was required; and 12.4.2that Finance Party has obtained and utilised that Tax Credit, Page 49that Finance Party shall pay an amount to the relevant Obligor which that Finance Party determines will leave it (after that payment) in the same after-Tax position as it wouldhave been in had the Tax Payment not been made. 12.5Lender status confirmation Each Lender which is not an Original Lender shall indicate, in the documentation which it executes on becoming a Party as a Lender, and for thebenefit of the Agent and without liability to any Obligor, which of the following categories it falls in: 12.5.1not a Qualifying Lender; 12.5.2a Qualifying Lender (other than a Treaty Lender); or 12.5.3a Treaty Lender. If such a Lender fails to indicate its status in accordance with this Clause 12.5 then that Lender shall be treated for the purposes of this Agreement (including by each Obligor)as if it is not a Qualifying Lender until such time as it notifies the Agent which category applies (and the Agent, upon receipt of such notification, shall inform the Borrowers). For the avoidance of doubt, the documentation which a Lender executes on becoming a Party as a Lender shall not be invalidated by any failure of a Lender to comply withthis Clause 12.5. 12.6Stamp taxes The Borrowers and each Guarantor shall pay and, within three Business Days of demand, indemnify each Secured Party against any cost, loss or liability thatSecured Party incurs in relation to all stamp duty, registration and other similar Taxes payable in respect of any Finance Document. 12.7VAT 12.7.1All amounts expressed to be payable under a Finance Document by any Party or any Obligor to a Finance Party which (in whole or in part) constitute theconsideration for any supply for VAT purposes are deemed to be exclusive of any VAT which is chargeable on that supply, and accordingly, subject to Clause 12.7.2,if VAT is or becomes chargeable on any supply made by any Finance Party to any Party or any Obligor under a Finance Document and such Finance Party isrequired to account to the relevant tax authority for the VAT, that Party shall (or, where the relevant Obligor is not a Party, the Borrowers and each Guarantor shallprocure that such Obligor will) pay to such Finance Party (in addition to and at the same time as paying any other consideration for such supply) an amount equalto the amount of the VAT (and such Finance Party must promptly provide an appropriate VAT invoice to the recipient of such supply). 12.7.2If VAT is or becomes chargeable on any supply made by any Finance Party (the "Supplier") to any other Finance Party (the "Recipient") under a FinanceDocument, and any Party other than the Recipient (the "Relevant Party") is required by the terms of any Finance Document to pay an amount equal to theconsideration for that supply to the Supplier (rather than being required to reimburse or indemnify the Recipient in respect of that consideration): Page 50(a)(where the Supplier is the person required to account to the relevant tax authority for the VAT) the Relevant Party must also pay to the Supplier (at thesame time as paying that amount) an additional amount equal to the amount of the VAT. The Recipient must (where this Clause 12.7.2(a) applies)promptly pay to the Relevant Party an amount equal to any credit or repayment the Recipient receives from the relevant tax authority which the Recipientreasonably determines relates to the VAT chargeable on that supply; and (b)(where the Recipient is the person required to account to the relevant tax authority for the VAT) the Relevant Party must promptly, following demand fromthe Recipient, pay to the Recipient an amount equal to the VAT chargeable on that supply but only to the extent that the Recipient reasonably determinesthat it is not entitled to credit or repayment from the relevant tax authority in respect of that VAT. 12.7.3Where a Finance Document requires any Party or Obligor to reimburse or indemnify a Finance Party for any cost or expense, that Party shall (or, where the relevantObligor is not a Party, the Borrowers and each Guarantor shall procure that such Obligor will) reimburse or indemnify (as the case may be) such Finance Party for thefull amount of such cost or expense, including such part thereof as represents VAT, save to the extent that such Finance Party reasonably determines that it isentitled to credit or repayment in respect of such VAT from the relevant tax authority. 12.7.4Any reference in this Clause 12.7 to any Party or Obligor shall, at any time when such person is treated as a member of a group for VAT purposes, include (whereappropriate and unless the context otherwise requires) a reference to the representative member of such group at such time (the term "representative member" tohave the same meaning as in the Value Added Tax Act 1994) or any equivalent person in any jurisdiction other than the United Kingdom. 12.7.5In relation to any supply made by a Finance Party to any Party or Obligor under a Finance Document, if reasonably requested by such Finance Party, that Partyshall (or, where the relevant Obligor is not a Party, the Borrowers and each Guarantor shall procure that such Obligor will) promptly provide such Finance Party withdetails of that person's VAT registration and such other information as is reasonably requested in connection with such Finance Party's VAT reporting requirementsin relation to such supply. 12.8FATCA information 12.8.1Subject to Clause 12.8.3, each Party shall, within ten Business Days of a reasonable request by another Party: (a)confirm to that other Party whether it is: (i)a FATCA Exempt Party; or (ii)not a FATCA Exempt Party;Page 51(b)supply to that other Party such forms, documentation and other information relating to its status under FATCA as that other Party reasonably requestsfor the purposes of that other Party's compliance with FATCA; and (c)supply to that other Party such forms, documentation and other information relating to its status as that other Party reasonably requests for the purposesof that other Party's compliance with any other similar law, regulation, or exchange of information regime. 12.8.2If a Party confirms to another Party pursuant to Clause 12.8.1(a)(i) that it is a FATCA Exempt Party and it subsequently becomes aware that it is not or has ceased tobe a FATCA Exempt Party, that Party shall notify that other Party reasonably promptly. 12.8.3Clause 12.8.1 shall not oblige any Finance Party to do anything, and Clause 12.8.1(c) shall not oblige any other Party to do anything, which would or might in itsreasonable opinion constitute a breach of: (a)any law or regulation; (b)any fiduciary duty; or (c)any duty of confidentiality. 12.8.4If a Party fails to confirm whether or not it is a FATCA Exempt Party or to supply forms, documentation or other information requested in accordance with Clause12.8.1(a) or 12.8.1(b) (including, for the avoidance of doubt, where Clause 12.8.3 applies), then such Party shall be treated for the purposes of the FinanceDocuments (and payments under them) as if it is not a FATCA Exempt Party until such time as the Party in question provides the requested confirmation, forms,documentation or other information. 12.8.5If a Borrower is a US Tax Obligor or the Agent reasonably believes that its obligations under FATCA or any other applicable law or regulation require it, each Lendershall, within ten Business Days of: (a)where a Borrower is a US Tax Obligor and the relevant Lender is an Original Lender, the date of this Agreement; (b)where a Borrower is a US Tax Obligor on a date on which any other Lender becomes a Party as a Lender, that date; or (c)where a Borrower is not a US Tax Obligor, the date of a request from the Agent, supply to the Agent: (i)a withholding certificate on Form W-8 or Form W-9 or any other relevant form; or (ii)any withholding statement or other document, authorisation or waiver as the Agent may require to certify or establish the status of suchLender under FATCA or that other law or regulation. Page 5212.8.6The Agent shall provide any withholding certificate, withholding statement, document, authorisation or waiver it receives from a Lender pursuant to Clause 12.8.5 tothe Borrowers. 12.8.7If any withholding certificate, withholding statement, document, authorisation or waiver provided to the Agent by a Lender pursuant to Clause 12.8.5 is or becomesmaterially inaccurate or incomplete, that Lender shall promptly update it and provide such updated withholding certificate, withholding statement, document,authorisation or waiver to the Agent unless it is unlawful for the Lender to do so (in which case the Lender shall promptly notify the Agent). The Agent shallprovide any such updated withholding certificate, withholding statement, document, authorisation or waiver to the Borrowers. 12.8.8The Agent may rely on any withholding certificate, withholding statement, document, authorisation or waiver it receives from a Lender pursuant to Clause 12.8.5 or12.8.7 without further verification. The Agent shall not be liable for any action taken by it under or in connection with Clause 12.8.5, 12.8.6 or 12.8.7. 12.9FATCA Deduction 12.9.1Each Party may make any FATCA Deduction it is required to make by FATCA, and any payment required in connection with that FATCA Deduction, and no Partyshall be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for thatFATCA Deduction. 12.9.2Each Party shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCADeduction) notify the Party to whom it is making the payment and, in addition, shall notify the Borrowers and the Agent and the Agent shall notify the otherFinance Parties. 13Increased Costs 13.1Increased Costs Subject to Clause 13.3 (Exceptions), the Borrowers shall, within three Business Days of a demand by the Agent, pay to the Agent for the account of aFinance Party the amount of any Increased Costs incurred by that Finance Party or any of its Affiliates as a result of (i) the introduction of or any change in (or in theinterpretation, administration or application of) any law or regulation or (ii) compliance with any law or regulation made after the date of this Agreement or (iii) theimplementation or application of or compliance with Basel III or CRD IV or any other law or regulation which implements Basel III or CRD IV (whether such implementation,application or compliance is by a government, regulator, that Finance Party or any of that Finance Party's Affiliates). In this Agreement: Page 5313.1.1"Basel III" means: (a)the agreements on capital requirements, a leverage ratio and liquidity standards contained in "Basel III: A global regulatory framework for more resilientbanks and banking systems", "Basel III: International framework for liquidity risk measurement, standards and monitoring" and "Guidance for nationalauthorities operating the countercyclical capital buffer" published by the Basel Committee on Banking Supervision in December 2010, each as amended,supplemented or restated; (b)the rules for global systemically important banks contained in "Global systemically important banks: assessment methodology and the additional lossabsorbency requirement – Rules text" published by the Basel Committee on Banking Supervision in November 2011, as amended, supplemented orrestated; and (c)any further guidance or standards published by the Basel Committee on Banking Supervision relating to "Basel III". 13.1.2"CRD IV" means EU CRD IV and UK CRD IV. 13.1.3"EU CRD IV" means: (a)Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions andinvestment firms and amending Regulation (EU) No 648/2012; and (b)Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudentialsupervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC. 13.1.4"UK CRD IV" means: (a)Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions andinvestment firms and amending Regulation (EU) No 648/2012 as it forms part of domestic law of the United Kingdom by virtue of the 2018 WithdrawalAct; (b)the law of the United Kingdom or any part of it, which immediately before IP Completion Day (as defined in the 2020 Withdrawal Act) implementedDirective 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudentialsupervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC and itsimplementing measures; and Page 54(c)direct EU legislation (as defined in the 2018 Withdrawal Act), which immediately before IP Completion Day (as defined in the 2020 Withdrawal Act)implemented EU CRD IV as it forms part of domestic law of the United Kingdom by virtue of the 2018 Withdrawal Act. 13.1.5"Increased Costs" means: (a)a reduction in the rate of return from the Loan or on a Finance Party's (or its Affiliate's) overall capital; (b)an additional or increased cost; or (c)a reduction of any amount due and payable under any Finance Document, which is incurred or suffered by a Finance Party or any of its Affiliates to the extent that it is attributable to that Finance Party having entered into any FinanceDocument or funding or performing its obligations under any Finance Document. 13.2Increased cost claims 13.2.1A Finance Party intending to make a claim pursuant to Clause 13.1 (Increased costs) shall notify the Agent of the event giving rise to the claim, following which theAgent shall promptly notify the Borrowers. 13.2.2Each Finance Party shall, as soon as practicable after a demand by the Agent, provide a certificate confirming the amount of its Increased Costs. 13.3Exceptions Clause 13.1 (Increased costs) does not apply to the extent any Increased Cost is: 13.3.1attributable to a Tax Deduction required by law to be made by a Borrower or a Guarantor; 13.3.2attributable to a FATCA Deduction required to be made by a Party; 13.3.3compensated for by Clause 12.3 (Tax indemnity) (or would have been compensated for under Clause 12.3 but was not so compensated solely because any of theexclusions in Clause 12.3 applied); 13.3.4attributable to the wilful breach by the relevant Finance Party or its Affiliates of any law or regulation; or 13.3.5attributable to the implementation or application of or compliance with the "International Convergence of Capital Measurement and Capital Standards, a RevisedFramework" published by the Basel Committee on Banking Supervision in June 2004 in the form existing on the date of this Agreement (but excluding anyamendment arising out of Basel III) ("Basel II") or any other law or regulation which implements Basel II (whether such implementation, application or compliance isby a government, regulator, Finance Party or any of its Affiliates). Page 55In this Clause 13.3, a reference to a "Tax Deduction" has the same meaning given to the term in Clause 12.1 (Definitions). 14Other Indemnities 14.1Currency indemnity If any sum due from a Borrower or a Guarantor under the Finance Documents (a "Sum"), or any order, judgment or award given or made in relation to aSum, has to be converted from the currency (the "First Currency") in which that Sum is payable into another currency (the "Second Currency") for the purpose of: 14.1.1making or filing a claim or proof against that Borrower or that Guarantor (as the case may be); or 14.1.2obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings, that Borrower or that Guarantor (as the case may be) shall as an independent obligation, within three Business Days of demand, indemnify each Secured Party to whom thatSum is due against any cost, loss or liability arising out of or as a result of the conversion including any discrepancy between (a) the rate of exchange used to convert thatSum from the First Currency into the Second Currency and (b) the rate or rates of exchange available to that Secured Party at the time of its receipt of that Sum. Each Borrower and each Guarantor waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currency unit other thanthat in which it is expressed to be payable. 14.2Other indemnities 14.2.1The Borrowers shall, within three Business Days of demand, indemnify each Secured Party against any cost, loss or liability incurred by that Secured Party as aresult of: (a)the occurrence of any Event of Default; (b)a failure by an Obligor to pay any amount due under a Finance Document on its due date, including without limitation, any cost, loss or liability arising asa result of Clause 30 (Sharing among the Finance Parties); (c)funding, or making arrangements to fund, its participation in a Utilisation requested by the Borrowers in a Utilisation Request but not made by reason ofthe operation of any one or more of the provisions of this Agreement (other than by reason of default or negligence by a Finance Party alone); or (d)a Utilisation (or part of a Utilisation) not being prepaid in accordance with a notice of prepayment given by the Borrowers.Page 5614.2.2The Borrowers shall promptly indemnify each Finance Party, each Affiliate of a Finance Party and each officer or employee of a Finance Party or its Affiliate (eachsuch person for the purposes of this Clause 14.2 an "Indemnified Person") against any cost, loss or liability incurred by that Indemnified Person pursuant to or inconnection with any litigation, arbitration or administrative proceedings or regulatory enquiry, in connection with or arising out of the entry into and thetransactions contemplated by the Finance Documents, having the benefit of any Encumbrance constituted by the Finance Documents or which relates to thecondition or operation of, or any incident occurring in relation to, a Vessel, unless such cost, loss or liability is caused by the gross negligence or wilful misconductof that Indemnified Person. Any Affiliate or any officer or employee of a Finance Party or its Affiliate may rely on this Clause 14.2 subject to Clause 1.12 (Thirdparty rights) and the provisions of the Third Parties Act. 14.2.3Subject to any limitations set out in Clause 14.2.2, the indemnity in that Clause shall cover any cost, loss or liability incurred by each Indemnified Person in anyjurisdiction: (a)arising or asserted under or in connection with any law relating to safety at sea, the ISM Code, any Environmental Law or any Sanctions; or (b)in connection with any Environmental Claim. 14.3Indemnity to the Agent Each Borrower and each Guarantor jointly and severally shall promptly indemnify the Agent against: 14.3.1any cost, loss or liability incurred by the Agent (acting reasonably) as a result of: (a)investigating any event which it reasonably believes is a Default; or (b)acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised; or (c)instructing lawyers, accountants, tax advisers, surveyors or other professional advisers or experts as permitted under this Agreement; and 14.3.2any cost, loss or liability (including, without limitation, for negligence or any other category of liability whatsoever) incurred by the Agent (otherwise than byreason of the Agent's gross negligence or wilful misconduct) (or, in the case of any cost, loss or liability pursuant to Clause 31.10 (Disruption to payment systemsetc.) notwithstanding the Agent's negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of theAgent) in acting as Agent under the Finance Documents. 14.4Indemnity to the Security Agent Each Borrower and each Guarantor jointly and severally shall promptly indemnify the Security Agent and every Receiver and Delegateagainst any cost, loss or liability incurred by any of them as a result of: Page 5714.4.1any failure by the Borrowers to comply with their obligations under Clause 16 (Costs and Expenses); 14.4.2acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised; 14.4.3the taking, holding, protection or enforcement of the Transaction Encumbrances; 14.4.4the exercise of any of the rights, powers, discretions, authorities and remedies vested in the Security Agent and each Receiver and Delegate by the FinanceDocuments or by law; 14.4.5any default by any Obligor in the performance of any of the obligations expressed to be assumed by it in the Finance Documents; or 14.4.6acting as Security Agent, Receiver or Delegate under the Finance Documents or which otherwise relates to any of the Security Property (otherwise, in each case,than by reason of the relevant Security Agent's, Receiver's or Delegate's gross negligence or wilful misconduct). The Security Agent and every Receiver and Delegate may, in priority to any payment to the Secured Parties, indemnify itself out of the Security Assets in respect of, and payand retain, all sums necessary to give effect to the indemnity in this Clause 14.4 and shall have a lien on the Transaction Encumbrances and the proceeds of the enforcementof the Transaction Encumbrances for all moneys payable to it. 14.5Indemnity survival The indemnities contained in this Agreement shall survive repayment of the Loan. 15Mitigation by the Finance Parties 15.1Mitigation Each Finance Party shall, in consultation with the Borrowers, take all reasonable steps to mitigate any circumstances which arise and which would result in all orany part of the Loan ceasing to be available or any amount becoming payable under or pursuant to any of Clause 7.1 (Illegality), Clause 12 (Tax Gross Up and Indemnities) orClause 13 (Increased Costs) including (but not limited to) transferring its rights and obligations under the Finance Documents to another Affiliate or Facility Office. The abovedoes not in any way limit the obligations of any Obligor under the Finance Documents. 15.2Limitation of liability The Borrowers shall promptly indemnify each Finance Party for all costs and expenses reasonably incurred by that Finance Party as a result of stepstaken by it under Clause 15.1 (Mitigation). A Finance Party is not obliged to take any steps under Clause 15.1 if, in its opinion (acting reasonably), to do so might beprejudicial to it. 16Costs and Expenses 16.1Transaction expenses The Borrowers shall promptly on demand pay the Agent, the Security Agent and the Bookrunner the amount of all documented costs and expenses(including legal fees) reasonably incurred by any of them (and, in the case of the Security Agent, by any Receiver or Delegate) in connection with: Page 5816.1.1the negotiation, preparation, printing, execution, syndication and perfection of this Agreement and any other documents referred to in this Agreement; 16.1.2the negotiation, preparation, printing, execution and perfection of any other Finance Documents executed after the date of this Agreement; 16.1.3any other document which may at any time be required by a Finance Party to give effect to any Finance Document or which a Finance Party is entitled to call for orobtain under any Finance Document; and 16.1.4any discharge, release or reassignment of any of the Security Documents. 16.2Amendment costs If (a) an Obligor requests an amendment, waiver or consent or (b) an amendment is required pursuant to Clause 31.9 (Change of currency), the Borrowersshall, within three Business Days of demand, reimburse each of the Agent and the Security Agent for the amount of all costs and expenses (including legal fees) reasonablyincurred by the Agent and the Security Agent (and, in the case of the Security Agent, by any Receiver or Delegate) in responding to, evaluating, negotiating or complyingwith that request or requirement. 16.3Agent and Security Agent's management time and additional remuneration Any amount payable to the Agent under Clause 14.3 (Indemnity to the Agent) or to the SecurityAgent under Clause 14.4 (Indemnity to the Security Agent) or to either of them under this Clause 16 or Clause 27.12 (Lenders' indemnity to the Agent and the Security Agent)shall include the cost of utilising the management time or other resources of the Agent or the Security Agent (as the case may be) and will be calculated on the basis of suchreasonable daily or hourly rates as the Agent or the Security Agent may notify to the Borrowers and the Lenders, and is in addition to any other fee paid or payable to theAgent or the Security Agent. 16.4Enforcement and preservation costs The Borrowers shall, within three Business Days of demand, pay to each Secured Party the amount of all costs and expenses (includinglegal fees) incurred by that Secured Party in connection with the enforcement of, or the preservation of any rights under, any Finance Document or the TransactionEncumbrances and any proceedings instituted by or against the Secured Party as a consequence of entering into a Finance Document, taking or holding the TransactionEncumbrances or enforcing those rights including (without limitation) any losses, costs and expenses which that Secured Party may from time to time sustain, incur or becomeliable for by reason of that Secured Party being mortgagee of a Vessel and/or a lender to a Borrower, or by reason of that Secured Party being deemed by any court or authorityto be an operator or controller, or in any way concerned in the operation or control, of a Vessel. 16.5Other costs The Borrowers shall, within three Business Days of demand, pay to each Secured Party the amount of all sums which that Secured Party may pay or becomeactually or contingently liable for on account of a Borrower in connection with a Vessel (whether alone or jointly or jointly and severally with any other person) including(without limitation) all sums which that Secured Party may pay or guarantees which it may give in respect of the Insurances, any expenses incurred by that Secured Party inconnection with the maintenance or repair of a Vessel or in discharging any lien, bond or other claim relating in any way to a Vessel, and any sums which that Secured Partymay pay or guarantees which it may give to procure the release of a Vessel from arrest or detention. Page 59Section 7Accounts and Application of Earnings 17Earnings Accounts 17.1Maintenance of Earnings Accounts 17.1.1The Borrowers shall maintain the Earnings Accounts with the Account Holder for the duration of the Facility Period free of Encumbrances and rights of set off otherthan those created by or under the Finance Documents. 17.1.2No Borrower shall open any bank account except for an Earnings Account. 17.2Earnings Each Borrower shall procure that: 17.2.1all Earnings in respect of its Vessel and any Requisition Compensation in respect of its Vessel are credited to its Earnings Account; and 17.2.2all payments which become due to the Borrowers under any Hedging Agreements (including any Hedge Reduction Proceeds) are paid in to the Earnings Account. 17.3Withdrawals 17.3.1During the Facility Period, sums may be withdrawn from the Earnings Accounts without the prior written consent of the Security Agent, provided that no Event ofDefault is continuing and no notice has been given to the Borrowers by the Agent that any sums shall not be withdrawn from the Earnings Account. 17.3.2No Earnings Account shall be overdrawn as a result of a withdrawal made in accordance with this Clause 17.3. 17.4Additional payments to Earnings Account If for any reason the amount standing to the credit of the Earnings Accounts is insufficient, the Borrowers shall, without demand,procure that there is credited to the Earnings Accounts, an amount equal to the amount of the shortfall. 17.5Application of Earnings Account The Borrowers shall procure that there is transferred from the Earnings Account to the Agent for the account of the Finance Parties: 17.5.1on the due date for repayment of each Utilisation, the amount of that Utilisation; and 17.5.2on each Interest Payment Date in respect of a Utilisation, the amount of interest due in respect of that Utilisation, (such amount being reduced to the extent of anynet payments which are due to the Borrowers under any relevant Hedging Agreements on such Interest Payment Date); 17.5.3on each Interest Payment Date in respect of a Utilisation, the amount payable by any Borrower to any Hedge Counterparty under any Hedging Agreement on suchInterest Payment Date; and Page 6017.5.4if applicable, on such due date for repayment of a Utilisation, all Hedge Reduction Proceeds paid into the Earnings Account prior to such date, and the Borrowers irrevocably authorise the Security Agent to instruct the Account Holder to make those transfers on the relevant date. 17.6Borrowers' obligations not affected If for any reason the amount standing to the credit of the Earnings Account is insufficient to repay any Utilisation, or to make anypayment of interest when due or to pay any amount to any Hedge Counterparty under any Hedging Agreement, the Borrowers' obligation to repay that Utilisation, or to makethat payment of interest or to pay that amount to any Hedge Counterparty under any Hedging Agreement shall not be affected. 17.7Relocation of Earnings Accounts On and at any time after the occurrence of an Event of Default which is continuing, the Security Agent may without the consent of theBorrowers instruct the Account Holder to relocate any Earnings Account to any other branch of the Account Holder, without prejudice to the continued application of thisClause 17 and the rights of the Finance Parties under the Finance Documents. 17.8Access to information The Security Agent (and its nominees) may from time to time during the Facility Period review the records held by the Account Holder (whether inwritten or electronic form) in relation to the Accounts, and the Borrowers irrevocably waive any right of confidentiality which may exist in relation to those records. 17.9Statements Without prejudice to the rights of the Security Agent under Clause 17.8 (Access to information), the Borrowers shall procure that the Account Holder provides tothe Security Agent, no less frequently than each calendar month during the Facility Period, statements of account (in written or electronic form) showing all entries made tothe credit and debit of each of the Accounts during the immediately preceding calendar month. 18Additional Security 18.1VTL Coverage 18.1.1If at any time the aggregate of (a) the Market Value of the Vessels and (b) the value of any additional security (such value to be (i) the face amount of the deposit (inthe case of cash), (ii) determined conclusively by appropriate advisers appointed by the Agent (in the case of other charged assets other than a vessel), (iii) theMarket Value of a vessel (in the case of a vessel), and (iv) determined by the Agent (in all other cases)) for the time being provided to the Security Agent under thisClause 18 is less than 135% of the aggregate of the amount of the Loan then outstanding and the Hedging Close-Out Liabilities (the "VTL Coverage"), theBorrowers shall, within 30 days of the Agent's request, at the Borrowers' option: (a)pay to the Security Agent or to its nominee a cash deposit in the amount of the shortfall to be secured in favour of the Security Agent as additionalsecurity for the payment of the Indebtedness; or Page 61(b)give to the Security Agent other additional security in amount and form acceptable to the Security Agent in its sole discretion for a value determined inaccordance with the first part of this Clause 18.1.1; or (c)prepay one or more outstanding Utilisations to the extent required to eliminate the shortfall. 18.1.2Clause 7.3 (Voluntary prepayment of Utilisations) and Clause 7.11 (Restrictions) shall apply, mutatis mutandis, to any prepayment made under this Clause 18.1. 18.1.3If, at any time after the Borrowers have provided additional security in accordance with the Agent's request under this Clause 18.1, the Agent shall determine whentesting compliance with the VTL Coverage that all or any part of that additional security may be released without resulting in a shortfall in the VTL Coverage, then,provided that no Default is continuing, the Agent shall instruct the Security Agent to, and the Security Agent shall, release all or any part of that additional securityin accordance with the Agent's instructions, but this shall be without prejudice to the Agent's right to make a further request under this Clause 18.1 should thevalue of the remaining security subsequently merit it. 18.2Provision of valuations 18.2.1The Agent shall be entitled to obtain a valuation in evidence of a Market Value for the purpose of testing compliance with Clause 18.1 (VTL Coverage): (a)on or about the date falling semi-annually from the first Utilisation Date (in the case of a Vessel); (b)on or about the date falling semi-annually from the date a vessel (other than a Vessel) is provided as additional security (in the case of a vessel other thana Vessel); and (c)on or before the Prepayment Date, if the last valuation obtained by the Agent before the Prepayment Date pursuant to this Clause 18.2.1 predates thePrepayment Date by more than three months. 18.2.2Additionally, the Agent shall, at the request of the Lenders, be entitled to obtain a valuation in evidence of a Market Value for the purpose of Clause 18.1(VTL Coverage) at any time and each such valuation obtained shall be at the expense of the Lenders except where such valuation shows that the Borrowers are notin compliance with the VTL Coverage. 18.2.3The Agent may at any time after a Default has occurred and is continuing obtain a valuation in evidence of a Market Value. 18.2.4All valuations referred to in this Clause 18.2, except where specified in Clause 18.2.2, and all valuations to be obtained pursuant to Clause 4 (Conditions ofUtilisation) shall be obtained at the cost and expense of the Borrowers and the Borrowers shall within three Business Days of demand by the Agent pay to theAgent the amount of all such costs and expenses. Page 6219Guarantee and Indemnity 19.1Guarantee and indemnity Each Guarantor irrevocably and unconditionally jointly and severally: 19.1.1guarantees to each Finance Party punctual performance by each other Obligor of all that Obligor's obligations under the Finance Documents; 19.1.2undertakes with each Finance Party that whenever another Obligor does not pay any amount when due under or in connection with any Finance Document, thatGuarantor shall immediately on demand pay that amount as if it was the principal obligor; and 19.1.3agrees with each Finance Party that if any obligation guaranteed by it is or becomes unenforceable, invalid or illegal, it will, as an independent and primaryobligation, indemnify that Finance Party immediately on demand against any cost, loss or liability it incurs as a result of an Obligor not paying any amount whichwould, but for such unenforceability, invalidity or illegality, have been payable by it under any Finance Document on the date when it would have been due. Theamount payable by a Guarantor under this indemnity will not exceed the amount it would have had to pay under this Clause 19 if the amount claimed had beenrecoverable on the basis of a guarantee. 19.2Continuing Guarantee This guarantee is a continuing guarantee and will extend to the ultimate balance of sums payable by any Obligor under the Finance Documents,regardless of any intermediate payment or discharge in whole or in part. 19.3Reinstatement If any discharge, release or arrangement (whether in respect of the obligations of any Obligor or any security for those obligations or otherwise) is made by aFinance Party in whole or in part on the basis of any payment, security or other disposition which is avoided or must be restored in insolvency, liquidation, administration orotherwise, without limitation, then the liability of each Guarantor under this Clause 19 will continue or be reinstated as if the discharge, release or arrangement had notoccurred. 19.4Waiver of defences The obligations of each Guarantor under this Clause 19 will not be affected by an act, omission, matter or thing which, but for this Clause 19.4, wouldreduce, release or prejudice any of its obligations under this Clause 19 (without limitation and whether or not known to it or any Finance Party) including: 19.4.1any time, waiver or consent granted to, or composition with, any Obligor or other person; 19.4.2the release of any other Obligor or any other person under the terms of any composition or arrangement with any creditor of any Obligor or any other member of theGroup; 19.4.3the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of,any Obligor or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realisethe full value of any security; Page 6319.4.4any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of an Obligor or any other person; 19.4.5any amendment, novation, supplement, extension restatement (however fundamental and whether or not more onerous) or replacement of a Finance Document orany other document or security including, without limitation, any change in the purpose of, any extension of or increase in any facility or the addition of any newfacility under any Finance Document or other document or security; 19.4.6any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document or any other document or security; or 19.4.7any insolvency or similar proceedings. 19.5Guarantor intent Without prejudice to the generality of Clause 19.4 (Waiver of defences), each Guarantor expressly confirms that it intends that this guarantee shall extendfrom time to time to any (however fundamental) variation, increase, extension or addition of or to any of the Finance Documents and/or any facility or amount made availableunder any of the Finance Documents for the purposes of or in connection with any of the following: business acquisitions of any nature; increasing working capital; enablinginvestor distributions to be made; carrying out restructurings; refinancing existing facilities; refinancing any other indebtedness; making facilities available to new borrowers;any other variation or extension of the purposes for which any such facility or amount might be made available from time to time; and any fees, costs and/or expensesassociated with any of the foregoing. 19.6Immediate recourse Each Guarantor waives any right it may have of first requiring any Finance Party (or any trustee or agent on its behalf) to proceed against or enforce anyother rights or security or claim payment from any person before claiming from that Guarantor under this Clause 19. This waiver applies irrespective of any law or anyprovision of a Finance Document to the contrary. 19.7Appropriations Until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full,each Finance Party (or any trustee or agent on its behalf) may: 19.7.1refrain from applying or enforcing any other moneys, security or rights held or received by that Finance Party (or any trustee or agent on its behalf) in respect ofthose amounts, or apply and enforce the same in such manner and order as it sees fit (whether against those amounts or otherwise) and no Guarantor shall beentitled to the benefit of the same; and 19.7.2hold in an interest-bearing suspense account any moneys received from any Guarantor or on account of any Guarantor's liability under this Clause 19. 19.8Deferral of Guarantors' rights Until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have beenirrevocably paid in full and unless the Agent otherwise directs, no Guarantor shall exercise any rights which it may have by reason of performance by it of its obligationsunder the Finance Documents or by reason of any amount being payable, or liability arising, under this Clause 19: Page 6419.8.1to be indemnified by an Obligor; 19.8.2to claim any contribution from any other guarantor of any Obligor's obligations under the Finance Documents; 19.8.3to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Finance Parties under the Finance Documents or of anyother guarantee or security taken pursuant to, or in connection with, the Finance Documents by any Finance Party; 19.8.4to bring legal or other proceedings for an order requiring any Obligor to make any payment, or perform any obligation, in respect of which any Guarantor has givena guarantee, undertaking or indemnity under Clause 19.1 (Guarantee and indemnity); 19.8.5to exercise any right of set-off against any Obligor; and/or 19.8.6to claim or prove as a creditor of any Obligor in competition with any Finance Party. If a Guarantor receives any benefit, payment or distribution in relation to such rights it shall hold that benefit, payment or distribution to the extent necessary to enable allamounts which may be or become payable to the Finance Parties by the Obligors under or in connection with the Finance Documents to be repaid in full on trust for theFinance Parties and shall promptly pay or transfer the same to the Agent or as the Agent may direct for application in accordance with Clause 31 (Payment mechanics). 19.9Additional security This guarantee is in addition to and is not in any way prejudiced by any other guarantee or security now or subsequently held by any Finance Party. 19.10Subordination Each Guarantor agrees and undertakes with the Finance Parties that all claims of whatsoever nature which it has or may have at any time against any otherObligor or any of its property or assets shall rank after and be in all respects subordinate to any and all claims, whether actual or contingent, which the Finance Parties have ormay have at any time against such other Obligor or any of its property or assets and that it will not without the prior written consent of the Agent (acting on the instructionsof the Majority Lenders): 19.10.1demand or accept payment in whole or in part of any moneys owing to it by any other Obligor; 19.10.2take any steps to enforce its rights to recover any moneys owing to it by any other Obligor and more particularly (but without limitation) take or issue any judicial orother legal proceedings against any other Obligor or any of its property or assets; or 19.11prove in the liquidation or other dissolution of any other Obligor in competition with a Finance Party. Page 65Section 8Representations, Undertakings and Events of Default 20Representations 20.1Representations Each Borrower and each Guarantor makes the representations and warranties set out in this Clause 20 to each Finance Party. 20.1.1Status Each of the Obligors: (a)is a limited liability corporation, duly incorporated and validly existing under the law of its Original Jurisdiction; and (b)has the power to own its assets and carry on its business as it is being conducted. 20.1.2Binding obligations Subject to the Legal Reservations: (a)the obligations expressed to be assumed by each of the Obligors in each of the Relevant Documents to which it is a party are legal, valid, binding andenforceable obligations; and (b)(without limiting the generality of Clause 20.1.2(a)) each Security Document to which it is a party creates the security interests which that SecurityDocument purports to create and those security interests are valid and effective. 20.1.3Non-conflict with other obligations The entry into and performance by each of the Obligors of, and the transactions contemplated by, the Relevant Documents donot and will not conflict with: (a)any law or regulation applicable to such Obligor; (b)the constitutional documents of such Obligor; or (c)any agreement or instrument binding upon such Obligor or any of such Obligor's assets or constitute a default or termination event (however described)under any such agreement or instrument. 20.1.4Power and authority (a)Each of the Obligors has the power to enter into, perform and deliver, and has taken all necessary action to authorise its entry into, performance anddelivery of, the Relevant Documents to which it is or will be a party and the transactions contemplated by those Relevant Documents. (b)No limit on the powers of any Obligor will be exceeded as a result of the borrowing, grant of security or giving of guarantees or indemnities contemplatedby the Relevant Documents to which it is a party. 20.1.5Validity and admissibility in evidence All Authorisations required or desirable: Page 66(a)to enable each of the Obligors lawfully to enter into, exercise its rights and comply with its obligations in the Relevant Documents to which it is a party orto enable each Finance Party to enforce and exercise all its rights under the Relevant Documents; and (b)to make the Relevant Documents to which any Obligor is a party admissible in evidence in its Relevant Jurisdictions, have been obtained or effected and are in full force and effect, with the exception only of the registrations referred to in Part IV (Conditions subsequent) ofSchedule 2 (Conditions Precedent and Subsequent). 20.1.6Governing law and enforcement (a)The choice of governing law of any Finance Document will be recognised and enforced in the Relevant Jurisdictions of each relevant Obligor. (b)Any judgment obtained in relation to any Finance Document in the jurisdiction of the governing law of that Finance Document will be recognised andenforced in the Relevant Jurisdictions of each relevant Obligor. 20.1.7Insolvency No corporate action, legal proceeding or other procedure or step described in Clause 24.1.7 (Insolvency proceedings) or creditors' process described inClause 24.1.8 (Creditors' process) has been taken or, to the knowledge of any Borrower or any Guarantor, threatened in relation to an Obligor; and none of thecircumstances described in Clause 24.1.6 (Insolvency) applies to an Obligor. 20.1.8No filing or stamp taxes Under the laws of the Relevant Jurisdictions of each relevant Obligor it is not necessary that the Finance Documents be filed, recorded orenrolled with any court or other authority in any of those jurisdictions or that any stamp, registration, notarial or similar Taxes or fees be paid on or in relation to theFinance Documents or the transactions contemplated by the Finance Documents except registration of each Mortgage at the Ships Registry where title to therelevant Vessel is registered in the ownership of the relevant Borrower and payment of associated fees, which registrations, filings, taxes and fees will be made andpaid promptly after the date of the relevant Finance Document. 20.1.9Deduction of Tax None of the Obligors is required under the law of its jurisdiction of incorporation to make any deduction for or on account of Tax from anypayment it may make under any Finance Document to a Lender which is: (a)a Qualifying Lender falling within (a) of the definition of Qualifying Lender; or, except where a Direction has been given under section 931 of the ITA inrelation to the payment concerned, a Qualifying Lender falling within (b) of the definition of Qualifying Lender; or Page 67(b)a Treaty Lender and the payment is one specified in a direction given by the Commissioners of Revenue & Customs under Regulation 2 of the DoubleTaxation Relief (Taxes on Income) (General) Regulations 1970 (SI 1970/488). 20.1.10No default (a)No Event of Default and, on the date of this Agreement and each Utilisation Date, no Default is continuing or is likely to result from the advance of anyUtilisation or the entry into, the performance of, or any transaction contemplated by, any of the Relevant Documents. (b)No other event or circumstance is outstanding which constitutes (or, with the expiry of a grace period, the giving of notice, the making of anydetermination or any combination of any of the foregoing, would constitute) a default or termination event (however described) under any otheragreement or instrument which is binding on any of the Obligors or to which its assets are subject which has a Material Adverse Effect. 20.1.11No misleading information Save as disclosed in writing to the Agent prior to the date of this Agreement: (a)all material information provided to a Finance Party by or on behalf of any of the Obligors on or before the date of this Agreement and not supersededbefore that date is accurate and not misleading in any material respect and all projections provided to any Finance Party on or before the date of thisAgreement have been prepared in good faith on the basis of assumptions which were reasonable at the time at which they were prepared and supplied;and (b)all other written information provided by any of the Obligors (including its advisers) to a Finance Party was true, complete and accurate in all materialrespects as at the date it was provided and is not misleading in any respect. 20.1.12Financial statements (a)The Original Financial Statements were prepared in accordance with GAAP consistently applied. (b)The audited Original Financial Statements fairly represent the Group's financial condition and results of operations during the relevant financial year. (c)There has been no material adverse change in the Group's assets, business or financial condition since the date of the Original Financial Statements. (d)The Group's most recent financial statements delivered pursuant to Clause 21.1 (Financial statements): Page 68(i)have been prepared in accordance with GAAP as applied to the Original Financial Statements; and (ii)fairly represent its consolidated financial condition as at the end of, and its consolidated results of operations for, the period to which theyrelate. (e)Since the date of the most recent financial statements delivered pursuant to Clause 21.1 (Financial statements) there has been no material adversechange in the assets, business or financial condition of the Group. 20.1.13No proceedings (a)No litigation, arbitration or administrative proceedings or investigation of or before any court, arbitral body or agency which, if adversely determined, arelikely to have a Material Adverse Effect have (to the best of its knowledge and belief (having made due and careful enquiry)) been started or threatenedagainst any of the Obligors. (b)No judgment or order of a court, arbitral body or agency which is likely to have a Material Adverse Effect has (to the best of its knowledge and belief(having made due and careful enquiry)) been made against any of the Obligors. 20.1.14No breach of laws None of the Obligors has breached any law or regulation which breach has a Material Adverse Effect. 20.1.15Environmental laws (a)Each of the Obligors and each other member of the Group is in compliance with Clause 23.3 (Environmental compliance) and to the best of its knowledgeand belief (having made due and careful enquiry) no circumstances have occurred which would prevent such compliance in a manner or to an extentwhich has or is likely to have a Material Adverse Effect. (b)No Environmental Claim has been commenced or (to the best of its knowledge and belief (having made due and careful enquiry)) is threatened againstany of the Obligors or any other member of the Group where that claim has or is likely, if determined against that Obligor or other member of the Group, tohave a Material Adverse Effect. 20.1.16Taxation (a)None of the Obligors is materially overdue in the filing of any Tax returns or is overdue in the payment of any amount in respect of Tax. (b)No claims or investigations are being, or are likely to be, made or conducted against any of the Obligors with respect to Taxes. Page 69(c)Each of the Obligors is resident for Tax purposes only in its Original Jurisdiction. 20.1.17Anti-corruption law Each of the Obligors and, to their knowledge, each other member of the Group and each Affiliate of any of them has conducted its businessesin compliance with applicable anti-corruption laws and has instituted and maintained policies and procedures designed to promote and achieve compliance withsuch laws. 20.1.18No Encumbrance or Financial Indebtedness (a)No Encumbrance or Quasi-Security exists over all or any of the present or future assets of any of the Borrowers other than as permitted by the FinanceDocuments. (b)None of the Borrowers has any Financial Indebtedness outstanding other than as permitted by this Agreement. 20.1.19Pari passu ranking The payment obligations of each of the Obligors under the Finance Documents to which it is a party rank at least pari passu with the claims ofall its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally. 20.1.20No adverse consequences (a)It is not necessary under the laws of the Relevant Jurisdictions of any of the Obligors: (i)in order to enable any Finance Party to enforce its rights under any Finance Document; or (ii)by reason of the execution of any Finance Document or the performance by it of its obligations under any Finance Document, that any Finance Party should be licensed, qualified or otherwise entitled to carry on business in any of the Relevant Jurisdictions of any of the Obligors. (b)No Finance Party is or will be deemed to be resident, domiciled or carrying on business in any of the Relevant Jurisdictions of any of the Obligors byreason only of the execution, performance and/or enforcement of any Finance Document. 20.1.21Disclosure of material facts No Borrower is aware of any material facts or circumstances which have not been disclosed to the Agent and which might, ifdisclosed, have changed the decision of a person willing to make loan facilities of the nature contemplated by this Agreement available to the Borrowers. Page 7020.1.22Completeness of Relevant Documents (a)The copies of any Relevant Documents provided or to be provided by the Borrowers to the Agent in accordance with Clause 4 (Conditions ofUtilisation) are, or will be, true and accurate copies of the originals and represent, or will represent, the full agreement between the parties to thoseRelevant Documents in relation to the subject matter of those Relevant Documents. (b)There are no commissions, rebates, premiums or other payments due or to become due in connection with the subject matter of the Relevant Documentsother than in the ordinary course of business or as disclosed to, and approved in writing by, the Agent. (c)There is no dispute under any of the Relevant Documents as between the parties to any such document. 20.1.23No immunity No Obligor or any of its assets is immune to any legal action or proceeding. 20.1.24Money laundering Any borrowing by a Borrower under this Agreement, and the performance of its obligations under this Agreement and under the other FinanceDocuments, will be for its own account and will not involve any breach by it of any law or regulatory measure relating to "money laundering" as defined in Article 1of the Directive ((EU) 2015/849) of the European Parliament and of the Council of the European Communities (as it forms part of the domestic law of the UnitedKingdom by virtue of the 2018 Withdrawal Act). 20.1.25Sanctions (a)None of the Obligors, and to the knowledge of the Obligors, no other member of the Group or any Affiliate of any of them is a Prohibited Person or isowned or controlled by, or acting directly or indirectly on behalf of or for the benefit of, a Prohibited Person and none of such persons owns or controls aProhibited Person. (b)No proceeds of the Loan shall be made available, directly or indirectly, to or for the benefit of a Prohibited Person or otherwise shall be, directly orindirectly, applied in a manner or for a purpose prohibited by Sanctions. (c)Each of the Obligors, and to the knowledge of the Obligors, no other member of the Group and each Affiliate of any of them is in compliance with allSanctions. 20.1.26Valuations (a)All information supplied by an Obligor or (with an Obligor’s knowledge) on its behalf to an Approved Shipbroker for the purposes of a valuation inevidence of a Market Value in accordance with this Agreement was true and accurate as at the date it was supplied or (if appropriate) as at the date (ifany) at which it is stated to be given. Page 71(b)No Obligor has omitted to supply any information to an Approved Shipbroker in its possession or knowledge which, if disclosed, would adversely affectany such valuation. (c)To the best of each Obligor’s knowledge, there has been no change to the factual information supplied in relation to any such valuation between the datesuch information was supplied and the date of that valuation which renders that information untrue or misleading in any material respect. 20.1.27DAC6 No transaction contemplated by the Relevant Documents nor any transaction to be carried out in connection with any transaction contemplated by theRelevant Documents (a) meets any hallmark set out in Annex IV of DAC6 or for the purposes of any implementation of DAC6 in any EU member state or (b)constitutes a CRS avoidance arrangement or an opaque offshore structure for the purposes of MDR. 20.2Repetition Each Repeating Representation is deemed to be made by each Borrower and each Guarantor by reference to the facts and circumstances then existing on the dateof each Utilisation Request, on each Utilisation Date, on the first day of each Interest Period and, in the case of those contained in Clauses 20.1.12(c) and 20.1.12(a) (Financialstatements) and for so long as any amount is outstanding under the Finance Documents or any Commitment is in force. 21Information Undertakings The undertakings in this Clause 21 remain in force for the duration of the Facility Period. 21.1Financial statements The Original Guarantor shall supply to the Agent in sufficient copies for all of the Lenders: 21.1.1as soon as the same become available, but in any event within 180 days after the end of each of its financial years its audited consolidated financial statements forthat financial year. 21.1.2as soon as the same become available, but in any event within 90 days after the end of each quarter during each of its financial years, the unaudited quarterlyfinancial statements for that quarter in the form in which they were published in the relevant press release provided that such form is compliant with therequirements of the US Securities and Exchange Commission. 21.2Compliance Certificate 21.2.1The Original Guarantor shall supply to the Agent, with each set of its annual financial statements delivered pursuant to Clause 21.1.1 (Financial statements) andeach set of its quarterly financial statements delivered pursuant to Clause 21.1.2 (Financial statements), a Compliance Certificate setting out (in detail) computationsas to compliance with Clause 22 (Financial Covenants) as at the date as at which those financial statements were drawn up. 21.2.2Each Compliance Certificate shall be signed by the chief executive officer of the Original Guarantor. Page 7221.3Requirements as to financial statements Each set of financial statements delivered pursuant to Clause 21.1 (Financial statements): 21.3.1shall be certified by a director of the Original Guarantor as fairly representing its financial condition and operations as at the date as at which those financialstatements were drawn up; 21.3.2shall be prepared using GAAP, accounting practices and financial reference periods consistent with those applied in the preparation of the Original FinancialStatements unless, in relation to any set of financial statements, it notifies the Agent that there has been a change in GAAP, the accounting practices or referenceperiods and its auditors deliver to the Agent: (a)a description of any change necessary for those financial statements to reflect the GAAP, accounting practices and reference periods upon which theOriginal Financial Statements were prepared; and (b)sufficient information, in form and substance as may be required by the Agent, to enable the Agent to determine whether Clause 22 (FinancialCovenants) has been complied with and make an accurate comparison between the financial position indicated in those financial statements and theOriginal Financial Statements. Any reference in this Agreement to those financial statements shall be construed as a reference to those financial statements as adjusted to reflect the basis uponwhich the Original Financial Statements were prepared. 21.4Information: miscellaneous The Original Guarantor shall supply to the Agent (in sufficient copies for all the Lenders, if the Agent so requests): 21.4.1at the same time as they are dispatched, copies of all documents dispatched by that Borrower to its shareholders generally (or any class of them) or dispatched bythat Borrower or any other Obligor to its creditors generally (or any class of them); 21.4.2promptly upon becoming aware of them, the details of any litigation, arbitration or administrative proceedings which are current, threatened or pending against anyObligor and which, if adversely determined, are likely to have a Material Adverse Effect; 21.4.3promptly upon becoming aware of them, the details of any judgment or order of a court, arbitral body or agency which is made against any Obligor and which islikely to have a Material Adverse Effect; 21.4.4promptly, such information and documents as the Security Agent may require about the Security Assets and compliance of the Obligors with the terms of anySecurity Documents (including without limitation cash flow analyses and details of the operating costs of any Vessel); and Page 7321.4.5promptly on request, such further information regarding the financial condition, assets and operations of any Obligor or any other member of the Group (includingany requested amplification or explanation of any item in the financial statements, budgets or other material provided by any Obligor under this Agreement, anychanges to management of the Group and an up to date copy of its shareholders' register (or equivalent in its Original Jurisdiction)) as any Finance Party throughthe Agent may request. 21.5Notification of default 21.5.1Each Borrower and each Guarantor shall notify the Agent of any Default and any Sanctions Event (and the steps, if any, being taken to remedy it) promptly uponbecoming aware of its occurrence. 21.5.2Promptly upon a request by the Agent, each Borrower shall supply to the Agent a certificate signed by two of its directors or senior officers on its behalf certifyingthat no Default is continuing (or if a Default is continuing, specifying the Default and the steps, if any, being taken to remedy it). 21.6"Know your customer" checks 21.6.1If: (a)the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of thisAgreement; (b)any change in the status of an Obligor (or of a Holding Company of an Obligor) or the composition of the shareholders of an Obligor (or of a HoldingCompany of an Obligor) after the date of this Agreement; or (c)a proposed assignment or transfer by a Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to suchassignment or transfer, obliges the Agent or any Lender (or, in the case of Clause 21.6.1(c), any prospective new Lender) to comply with "know your customer" or similar identificationprocedures in circumstances where the necessary information is not already available to it, each Borrower shall promptly upon the request of the Agent or anyLender supply, or procure the supply of, such documentation and other evidence as is requested by the Agent (for itself or on behalf of any Lender) or any Lender(for itself or, in the case of the event described in Clause 21.6.1(c), on behalf of any prospective new Lender) in order for the Agent, such Lender or, in the case ofthe event described in Clause 21.6.1(c), any prospective new Lender to carry out and be satisfied it has complied with all necessary "know your customer" or othersimilar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents. 21.6.2Each Lender shall promptly upon the request of the Agent supply, or procure the supply of, such documentation and other evidence as is requested by the Agent(for itself) in order for the Agent to carry out and be satisfied it has complied with all necessary "know your customer" or other similar checks under all applicablelaws and regulations pursuant to the transactions contemplated in the Finance Documents. Page 7421.6.3The Borrowers shall, by not less than ten Business Days' prior written notice to the Agent, notify the Agent (which shall promptly notify the Lenders) of theintention to request that any other member of the Group becomes an Additional Guarantor pursuant to Clause 26 (Changes to the Obligors). 21.6.4Following the giving of any notice pursuant to Clause 21.6.3, if the accession of such Additional Guarantor obliges the Agent or any Lender to comply with "knowyour customer" or similar identification procedures in circumstances where the necessary information is not already available to it, the Borrowers shall promptlyupon the request of the Agent or any Lender supply, or procure the supply of, such documentation and other evidence as is requested by the Agent (for itself or onbehalf of any Lender) or any Lender (for itself or on behalf of any prospective new Lender) in order for the Agent or such Lender or any prospective new Lender tocarry out and be satisfied it has complied with all necessary "know your customer" or other similar checks under all applicable laws and regulations pursuant to theaccession of such member of the Group to this Agreement as an Additional Guarantor. 22Financial Covenants 22.1Minimum liquidity The Original Guarantor shall maintain throughout the Facility Period an aggregate amount of (a) Cash and (b) Cash Equivalents not less thanthe higher of: 22.1.1(a) $9,000,000 at all times during the Facility Period for a total five (5) tanker Fleet Vessels plus (b) $500,000 per tanker Fleet Vessel (over and abovefive (5) tanker Fleet Vessels), if any; and 22.1.27.5% of the Total Debt. 22.2Minimum working capital The Original Guarantor shall maintain Working Capital greater than zero dollars throughout the Facility Period. 22.3Minimum Equity Ratio The Original Guarantor shall maintain a Value Adjusted Equity Ratio at a minimum of 35%. 23General Undertakings The undertakings in this Clause 23 remain in force for the duration of the Facility Period. 23.1Authorisations Each Borrower and each Guarantor shall promptly: 23.1.1obtain, comply with and do all that is necessary to maintain in full force and effect; and 23.1.2supply certified copies to the Agent of, any Authorisation required under any law or regulation of a Relevant Jurisdiction to: Page 75(a)enable any Obligor to perform its obligations under the Finance Documents to which it is a party; (b)ensure the legality, validity, enforceability or admissibility in evidence of any Finance Document; and (c)enable any Obligor to carry on its business where failure to do so has or is likely to have a Material Adverse Effect. 23.2Compliance with laws 23.2.1Each Borrower and each Guarantor shall comply (and shall procure that each other Obligor, each other member of the Group and each Affiliate of any of them willcomply), in all respects with all laws to which it may be subject, if (except as regards Sanctions, to which Clause 23.2.2 applies, and anti-corruption laws, to whichClause 23.5 (Anti-corruption law) applies) failure so to comply has or is likely to have a Material Adverse Effect. 23.2.2Each Borrower and each Guarantor shall comply (and shall procure that each other Obligor, each other member of the Group and each Affiliate of any of them willcomply) in all respects with all Sanctions. 23.3Environmental compliance Each Borrower and each Guarantor shall: 23.3.1comply with all Environmental Laws; 23.3.2obtain, maintain and ensure compliance with all requisite Environmental Approvals; and 23.3.3implement procedures to monitor compliance with and to prevent liability under any Environmental Law, where failure to do so has a Material Adverse Effect. 23.4Environmental Claims Each Borrower and each Guarantor shall promptly upon becoming aware of the same, inform the Agent in writing of: 23.4.1any Environmental Claim against any of the Obligors or any other member of the Group which is current, pending or threatened; and 23.4.2any facts or circumstances which are likely to result in any Environmental Claim being commenced or threatened against any of the Obligors or any other member ofthe Group, where the claim, if determined against that Obligor or other member of the Group, has or is likely to have a Material Adverse Effect. 23.5Anti-corruption law 23.5.1Each Borrower and each Guarantor shall not (and, should they be aware of it, shall procure that no other Obligor or no other member of the Group will) directly orindirectly use the proceeds of the Loan for any purpose which would breach the Bribery Act 2010, the United States Foreign Corrupt Practices Act of 1977 or othersimilar legislation in other jurisdictions. Page 7623.5.2Each Borrower and each Guarantor shall (and, should they be aware of it, shall procure that each other Obligor and each other member of the Group will): (a)conduct its businesses in compliance with applicable anti-corruption laws; and (b)maintain policies and procedures designed to promote and achieve compliance with such laws. 23.6Taxation 23.6.1Each Borrower and each Guarantor shall (and shall procure that each other Obligor and each other member of the Group will) pay and discharge all Taxes imposedupon it or its assets within the time period allowed without incurring penalties unless and only to the extent that: (a)such payment is being contested in good faith; (b)adequate reserves are being maintained for those Taxes and the costs required to contest them which have been disclosed in its latest financialstatements delivered to the Agent under Clause 21.1 (Financial statements); and (c)such payment can be lawfully withheld and failure to pay those Taxes does not have or is not likely to have a Material Adverse Effect. 23.6.2Neither any Borrower nor any Guarantor may (and no other Obligor or other member of the Group may) change its residence for Tax purposes. 23.7Evidence of good standing Each Borrower and each Guarantor will from time to time, if applicable and if requested by the Agent, provide the Agent with evidence in form andsubstance satisfactory to the Agent that each Obligor and each corporate shareholder of an Obligor remains in good standing. 23.8Pari passu ranking Each Borrower and each Guarantor shall ensure that at all times any unsecured and unsubordinated claims of a Finance Party against it under theFinance Documents rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors except those creditors whose claims are mandatorilypreferred by laws of general application to companies. 23.9Negative pledge In this Clause 23.9, "Quasi-Security" means an arrangement or transaction described in Clause 23.9.2. Except as permitted under Clause 23.9.3: 23.9.1None of the Borrowers shall create nor permit to subsist any Encumbrance over any of its assets. Page 7723.9.2None of the Borrowers shall: (a)sell, transfer or otherwise dispose of any of its assets on terms whereby they are or may be leased to or re-acquired by an Obligor or any other member ofthe Group; (b)sell, transfer or otherwise dispose of any of its receivables on recourse terms; (c)enter into any arrangement under which money or the benefit of a bank or other account may be applied, set-off or made subject to a combination ofaccounts; or (d)enter into any other preferential arrangement having a similar effect, in circumstances where the arrangement or transaction is entered into primarily as a method of raising Financial Indebtedness or of financing the acquisition of anasset. 23.9.3Clauses 23.9.1 and 23.9.2 do not apply to any Encumbrance or (as the case may be) Quasi-Security, which is a Permitted Encumbrance. 23.10Disposals 23.10.1Except as permitted under Clause 23.10.2 none of the Borrowers shall enter into a single transaction or a series of transactions (whether related or not) and whethervoluntary or involuntary to sell, lease, transfer or otherwise dispose of any asset. 23.10.2Clause 23.10.1 does not apply to any sale, lease, transfer or other disposal which is a Permitted Disposal or any time charter or contract of employment in respect ofa Vessel. 23.11Arm's length basis 23.11.1Except as permitted under Clause 23.11.2, none of the Borrowers shall enter into any transaction with any person except on arm's length terms and for full marketvalue. 23.11.2The following transactions shall not be a breach of this Clause 23.11: fees, costs and expenses payable under the Relevant Documents in the amounts set out in theRelevant Documents delivered to the Agent under Clause 4.1 (Initial conditions precedent) or agreed by the Agent. 23.12Merger None of the Borrowers shall enter into any amalgamation, demerger, merger, consolidation or corporate reconstruction. 23.13Change of business None of the Borrowers shall make any substantial change to the general nature of its business from that carried on at the date of this Agreement. 23.14No other business None of the Borrowers shall engage in any business other than the ownership, operation, chartering and management of the relevant Vessel. Page 7823.15No acquisitions None of the Borrowers shall acquire a company or any shares or securities or a business or undertaking (or, in each case, any interest in any of them) orincorporate a company. 23.16No Joint Ventures None of the Borrowers: 23.16.1enter into, invest in or acquire (or agree to acquire) any shares, stocks, securities or other interest in any Joint Venture; or 23.16.2transfer any assets or lend to or guarantee or give an indemnity for or give security for the obligations of a Joint Venture or maintain the solvency of or provideworking capital to any Joint Venture (or agree to do any of the foregoing). 23.17No borrowings None of the Borrowers shall incur or allow to remain outstanding any Financial Indebtedness (except for the Loan). 23.18No substantial liabilities Except in the ordinary course of business, none of the Borrowers shall incur any liability to any third party which is in the Agent's opinion of asubstantial nature. 23.19No loans or credit None of the Borrowers shall be a creditor in respect of any Financial Indebtedness. 23.20No guarantees or indemnities No Borrower shall incur or allow to remain outstanding any guarantee in respect of any obligation of any person. 23.21No dividends 23.21.1Each Borrower may: (a)declare, make or pay any dividend, charge, fee or other distribution (or interest on any unpaid dividend, charge, fee or other distribution) (whether in cashor in kind) on or in respect of its share capital (or any class of its share capital); (b)repay or distribute any dividend or share premium reserve; (c)pay any management, advisory or other fee to or to the order of any of the shareholders of the Original Guarantor; (d)redeem, repurchase, defease, retire or repay any of its share capital or resolve to do so; or (e)issue any new shares in its share capital or resolve to do so, Provided that no Event of Default has occurred, or would occur as a result of any action referred to in Clause 23.21.1(a) to (e) above. 23.21.2The Original Guarantor may: (a)declare, make or pay any dividend, charge, fee or other distribution (or interest on any unpaid dividend, charge, fee or other distribution) (whether in cashor in kind) on or in respect of its share capital (or any class of its share capital); Page 79(b)repay or distribute any dividend or share premium reserve; (c)pay any management, advisory or other fee to or to the order of any of the shareholders of the Original Guarantor; (d)redeem, repurchase, defease, retire or repay any of its share capital or resolve to do so, provided that: (i)the cash balances of the Original Guarantor (as evidenced by the latest financial statements) following any action referred to in Clause23.21.2(a) to (d) above shall not be less than the higher of (A) $8,000,000 and (B) 12.5% of the Total Debt; and (ii)no Event of Default has occurred, or would occur as a result of any action referred to in Clause 23.21.2(a) to (d) above. 23.22People with significant control regime Each Borrower and each Guarantor shall (and shall procure that each other Obligor will): 23.22.1within the relevant timeframe, comply with any notice it receives pursuant to Part 21A of the Companies Act 2006 from any company incorporated in the UnitedKingdom whose shares are the subject of any Security Document; and 23.22.2promptly provide the Security Agent with a copy of that notice. 23.23Inspection of records Each Borrower and each Guarantor will permit the inspection of its financial records and accounts from time to time by the Agent or its nominee. 23.24No change in Relevant Documents Neither any Borrower nor any Guarantor shall (and the Borrowers shall procure that no other will) amend, vary, novate, supplement,supersede, waive or terminate any term of, any of the Relevant Documents which are not Finance Documents, or any other document delivered to the Agent pursuant toClause 4.1 (Initial conditions precedent) or Clause 4.2 (Further conditions precedent) or Clause 4.3 (Conditions subsequent). 23.25Further assurance 23.25.1Each Borrower and each Guarantor shall (and shall procure that each other Obligor will) promptly do all such acts or execute all such documents (includingassignments, transfers, mortgages, charges, notices and instructions) as the Security Agent may specify (and in such form as the Security Agent may require infavour of the Security Agent or its nominee(s)): (a)to perfect any Encumbrance created or intended to be created under or evidenced by the Security Documents (which may include the execution of amortgage, charge, assignment or other Encumbrance over all or any of the assets which are, or are intended to be, the subject of the Security Documents)or for the exercise of any rights, powers and remedies of the Security Agent or the Finance Parties provided by or pursuant to the Finance Documents orby law; Page 80(b)to confer on the Security Agent or confer on the Finance Parties an Encumbrance over any property and assets of that Borrower (or that other Obligor orthat other member of the Group as the case may be) located in any jurisdiction equivalent or similar to the Encumbrance intended to be conferred by orpursuant to the Security Documents; and/or (c)to facilitate the realisation of the assets which are, or are intended to be, the subject of the Security Documents. 23.25.2Each Borrower and each Guarantor shall (and shall procure that each other Obligor and each other member of the Group will) take all such action as is available to it(including making all filings and registrations) as may be necessary for the purpose of the creation, perfection, protection or maintenance of any Encumbranceconferred or intended to be conferred on the Security Agent or the Finance Parties by or pursuant to the Finance Documents. 23.26Sanctions 23.26.1Each Borrower and each Guarantor shall (and, should they be aware of it, shall procure that the other members of the Group shall) have implemented and maintain ineffect policies and procedures designed to promote and ensure compliance by them and their respective directors, officers, employees with Sanctions and anti-corruption laws and regulations. 23.26.2The Borrowers will not request any utilisation of the Loan and they will not use (and, should they be aware of it, shall procure that no other member of the Group,nor its or their respective directors or officers use) the proceeds of the Loan for the purpose of funding, financing or facilitating any activities, business ortransaction of or with any a Prohibited Person or otherwise in violation of any Sanctions. 23.26.3Each Borrower and each Guarantor shall (and, should they be aware of it, shall procure that each other Obligor and each other member of the Group shall) complywith all Sanctions and anti-corruption laws and regulations and are not engaged in any activity that constitutes or could reasonably be expected to result in aSanctions Event. 23.27No dealings with Master Agreement No Borrower shall assign, novate or encumber or in any other way transfer any of its rights or obligations under the 2002 ISDA MasterAgreement, nor enter into any interest rate exchange or hedging agreement with anyone other than the Original Hedge Counterparty. 23.28US listing The Original Guarantor shall remain listed in the New York Stock Exchange (NASDAQ) throughout the Facility Period. Page 8123.29Charter-in tonnage The Original Guarantor and its Subsidiaries shall not charter-in tonnage any Vessel without the prior consent of the Lenders. 23.30Green scrapping 23.30.1Each Borrower shall use endeavours (including the implementation of internal policies) to ensure that any scrapping of its Vessel is carried out in accordance withthe Hong Kong Convention and the IMO Convention for the Safe and Environmentally Sound Recycling of Ships. 23.30.2If applicable, each Borrower shall obtain and maintain a green passport notification (based on the inventory of hazardous materials) for its Vessel from the relevantclassification society on or prior to the relevant Utilisation Date. 23.31Poseidon Principles 23.31.1In this Clause 23.31: "Poseidon Principles" means the financial industry framework for assessing and disclosing the climate alignment of ship finance portfolios published on 18 June2019 as the same may be amended or replaced (to reflect changes in applicable law or regulation or the introduction of, or changes to, mandatory requirements ofthe International Maritime Organization) from time to time. "Relevant Lender" means a Lender which has, at any time during the Facility Period, become a signatory to the Poseidon Principles. "Statement of Compliance" means a statement of compliance related to fuel oil consumption pursuant to regulations 6.6 and 6.7 of Annex VI. 23.31.2Each Borrower shall, upon the request of any Relevant Lender and at the cost of the Borrowers, on or before 31 July in each calendar year, supply or procure thesupply to the Agent (for transmission to the applicable Relevant Lender) of all information necessary in order for any Relevant Lender to comply with its obligationsunder the Poseidon Principles in respect of the preceding calendar year, including, without limitation, all ship fuel oil consumption data required to be collected andreported in accordance with regulation 22A of Annex VI and any Statement of Compliance, in each case relating to its Vessel for the preceding calendar year,provided that no Relevant Lender shall publicly disclose such information with the identity of the relevant Vessel without the prior written consent of the relevantBorrower and, for the avoidance of doubt, such information shall be "Confidential Information" for the purposes of Clause 38.1 (Confidential Information) but eachBorrower acknowledges that, in accordance with the Poseidon Principles, such information will form part of the information published regarding the applicableRelevant Lender's portfolio climate alignment. Page 8223.32No dealings with Hedging Agreement No Borrower shall assign, novate or encumber or in any other way transfer any of its rights or obligations under a Hedging Agreementexcept as contemplated in the Security Documents, nor enter into any interest rate exchange or hedging agreement with anyone other than a Hedge Counterparty. 24Events of Default 24.1Events of Default Each of the events or circumstances set out in this Clause 24.1 is an Event of Default. 24.1.1Non-payment An Obligor does not pay on the due date any amount payable by it under a Finance Document at the place at and in the currency in which it isexpressed to be payable unless: (a)its failure to pay is caused by: (i)administrative or technical error; or (ii)a Disruption Event; and (b)payment is made within two Business Days of its due date. 24.1.2Other specific obligations (a)Any requirement of Clause 22 (Financial Covenants) is not satisfied. (b)An Obligor does not comply with any obligation in a Finance Document relating to the Insurances, with Clause 7.5 (Mandatory prepayment on sale orTotal Loss) or with Clause 18.1 (Additional Security). 24.1.3Other obligations (a)An Obligor does not comply with any provision of a Finance Document (other than those referred to in Clause 24.1.1 (Non-payment) and Clause 24.1.2(Other specific obligations)). (b)No Event of Default under this Clause 24.1.3 will occur if the failure to comply is capable of remedy and is remedied within ten Business Days of theearlier of (i) the Agent giving notice to the Borrowers and (ii) the Borrowers becoming aware of the failure to comply. 24.1.4Misrepresentation Any representation or statement made or deemed to be made by an Obligor in any Finance Document or any other document delivered by or onbehalf of an Obligor under or in connection with any Finance Document is or proves to have been incorrect or misleading when made or deemed to be made. 24.1.5Cross default (a)Any Financial Indebtedness of an Obligor is not paid when due nor within any originally applicable grace period. Page 83(b)Any Financial Indebtedness of an Obligor is declared to be, or otherwise becomes, due and payable prior to its specified maturity as a result of an eventof default (however described). (c)Any commitment for any Financial Indebtedness of an Obligor is cancelled or suspended by a creditor of an Obligor as a result of an event of default(however described). (d)Any creditor of an Obligor becomes entitled to declare any Financial Indebtedness of an Obligor due and payable prior to its specified maturity as aresult of an event of default (however described). (e)No Event of Default will occur under this Clause 24.1.5 if the aggregate amount of Financial Indebtedness or commitment for Financial Indebtednessfalling within (a) to (d) is less than $10,000,000 (or its equivalent in any other currency or currencies). 24.1.6Insolvency (a)An Obligor: (i)is unable or admits inability to pay its debts as they fall due; (ii)is deemed to, or is declared to, be unable to pay its debts under applicable law; (iii)suspends or threatens to suspend making payments on any of its debts; or (iv)by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors with a view to reschedulingany of its indebtedness. (b)The value of the assets of an Obligor is less than its liabilities (taking into account contingent and prospective liabilities). (c)A moratorium is declared in respect of any indebtedness of an Obligor. If a moratorium occurs, the ending of the moratorium will not remedy any Event ofDefault caused by that moratorium. 24.1.7Insolvency proceedings Any corporate action, legal proceedings or other procedure or step is taken in relation to: (a)the suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, administration, bankruptcy or reorganisation (by way ofvoluntary arrangement, scheme of arrangement or otherwise) of an Obligor; (b)a composition, compromise, assignment or arrangement with any creditor of an Obligor; (c)the appointment of a liquidator, receiver, administrative receiver, administrator, compulsory manager, trustee or other similar officer in respect of anObligor or any of its assets; or Page 84(d)enforcement of any Encumbrance over any assets of an Obligor, or any analogous procedure or step is taken in any jurisdiction. This Clause 24.1.7 shall not apply to (i) any winding-up petition which is frivolous or vexatious and is discharged, stayed or dismissed within 30 days ofcommencement or (ii) any arrest or detention of a Vessel from which that Vessel is released within 14 days from the date of that arrest or detention. 24.1.8Creditors' process Any expropriation, attachment, sequestration, distress or execution (or any analogous process in any jurisdiction) affects any asset or assetsof an Obligor and is not discharged within 30 days. 24.1.9Unlawfulness and invalidity (a)It is or becomes unlawful for an Obligor to perform any of its obligations under the Finance Documents or any Encumbrance created or expressed to becreated or evidenced by the Security Documents ceases to be effective. (b)Any obligation or obligations of any Obligor under any Finance Documents are not (subject to the Legal Reservations) or cease to be legal, valid,binding or enforceable and the cessation individually or cumulatively materially and adversely affects the interests of the Lenders under the FinanceDocuments. (c)Any Finance Document ceases to be in full force and effect or any Encumbrance created or expressed to be created or evidenced by the SecurityDocuments ceases to be legal, valid, binding, enforceable or effective or is alleged by a party to it (other than a Finance Party) to be ineffective. 24.1.10Cessation of business An Obligor ceases, or threatens to cease, to carry on all or a substantial part of its business except as a result of a Permitted Disposal. 24.1.11Expropriation The authority or ability of an Obligor to conduct its business is limited or wholly or substantially curtailed by any seizure, expropriation,nationalisation, intervention, restriction or other action by or on behalf of any governmental, regulatory or other authority or other person in relation to an Obligoror any of its assets. 24.1.12Repudiation and rescission of agreements (a)An Obligor rescinds or purports to rescind or repudiates or purports to repudiate a Finance Document or evidences an intention to rescind or repudiate aFinance Document. (b)Subject to Clause 24.1.12(c), any party to any of the Relevant Documents that is not a Finance Document rescinds or purports to rescind or repudiates orpurports to repudiate that Relevant Document in whole or in part where to do so has or is, in the reasonable opinion of the Majority Lenders, likely tohave a material adverse effect on the interests of the Lenders under the Finance Documents. Page 85(c)Any of the Management Agreements is terminated, cancelled or otherwise ceases to remain in full force and effect at any time prior to its contractualexpiry date and is not immediately replaced by a similar agreement in form and substance satisfactory to the Majority Lenders. 24.1.13Conditions subsequent Any of the conditions referred to in Clause 4.3 (Conditions subsequent) is not satisfied within the time required by the Agent. 24.1.14Revocation or modification of Authorisation Any Authorisation of any governmental, judicial or other public body or authority which is now, or which at any timeduring the Facility Period becomes, necessary to enable any of the Obligors or any other person (except a Finance Party) to comply with any of their obligationsunder any Relevant Document is not obtained, is revoked, suspended, withdrawn or withheld, or is modified in a manner which the Agent considers is, or may be,prejudicial to the interests of any Finance Party, or ceases to remain in full force and effect. 24.1.15Reduction of capital A Borrower reduces its authorised or issued or subscribed capital. 24.1.16Challenge to registration The registration of a Vessel or a Mortgage is contested or becomes void or voidable or liable to cancellation or termination, or thevalidity or priority of a Mortgage is contested. 24.1.17War The country of registration of a Vessel becomes involved in war (whether or not declared) or civil war or is occupied by any other power and the Agentconsiders that, as a result, the security conferred by any of the Security Documents is materially prejudiced. 24.1.18Master Agreement termination A notice is given by the Original Hedge Counterparty under section 6(a) of the 2002 ISDA Master Agreement, or by any personunder section 6(b)(iv) of the 2002 ISDA Master Agreement, in either case designating an Early Termination Date (as defined therein) for the purpose of the 2002ISDA Master Agreement, or the 2002 ISDA Master Agreement is for any other reason terminated, cancelled, suspended, rescinded, revoked or otherwise ceases toremain in full force and effect. 24.1.19Notice of determination A Guarantor gives notice to the Security Agent to determine any obligations under the relevant Guarantee. 24.1.20Litigation Any litigation, arbitration or administrative proceedings or investigations of, or before, any court, arbitral body or agency are started or threatened, orany judgment or order of a court, arbitral body or agency is made, in relation to the Relevant Documents or the transactions contemplated in the RelevantDocuments or against (a) an Obligor or its assets which have, or has, or are, or is, likely to have a Material Adverse Effect, or (b) any other member of the Group orits assets which have, or has a Material Adverse Effect. Page 8624.1.21Material adverse change Any event or circumstance occurs which the Majority Lenders believe has or is likely to have a Material Adverse Effect. 24.1.22Group impact Any event or circumstance of those referred to in Clauses 24.1.5 (Cross default), 24.1.6 (Insolvency), 24.1.7 (Insolvency proceedings), 24.1.8(Creditors' process), 24.1.10 (cessation of business) and 24.1.11 (Expropriation) occurs in respect of a member of the Group which the Majority Lenders believe hasa significant impact on the financial status of the Group. 24.2Acceleration On and at any time after the occurrence of an Event of Default the Agent may, and shall if so directed by the Majority Lenders, do all or any of the following: 24.2.1by notice to the Borrowers: (a)cancel the Total Commitments, at which time they shall immediately be cancelled; and/or (b)declare that all or part of the Loan, together with accrued interest, and all other amounts accrued or outstanding under the Finance Documents areimmediately due and payable, at which time they shall become immediately due and payable; and/or (c)declare that all or part of the Loan is payable on demand, at which time it shall immediately become payable on demand by the Agent on the instructionsof the Majority Lenders; and/or 24.2.2exercise any or all of its rights, remedies, powers or discretions under the Finance Documents; and/or 24.2.3direct the Security Agent to exercise any or all of the Security Agent's rights, remedies, powers or discretions under the Finance Documents. Page 87Section 9Changes to Parties 25Changes to the Lenders and Hedge Counterparties 25.1Assignments and transfers by the Lenders Subject to this Clause 25, a Lender (the "Existing Lender") may: 25.1.1assign any of its rights; or 25.1.2transfer by novation any of its rights and obligations, under any Finance Document to another bank or financial institution or to a trust, fund or other entity which is regularly engaged in or established for the purpose of making,purchasing or investing in loans, securities or other financial assets (the "New Lender"). 25.2Conditions of assignment or transfer 25.2.1An Existing Lender must consult with the Borrowers before it may make an assignment or transfer in accordance with Clause 25.1 (Assignments and transfers by theLenders) unless the assignment or transfer is: (a)to another Lender or an Affiliate of any Lender; (b)to a fund which is a Related Fund of that Existing Lender; or (c)made at a time when an Event of Default is continuing. 25.2.2An assignment will only be effective on: (a)receipt by the Agent (whether in the Assignment Agreement or otherwise) of written confirmation from the New Lender (in form and substancesatisfactory to the Agent) that the New Lender will assume the same obligations to the other Finance Parties and the other Secured Parties as it wouldhave been under if it had been an Original Lender; and (b)performance by the Agent of all necessary "know your customer" or other similar checks under all applicable laws and regulations in relation to suchassignment to a New Lender, the completion of which the Agent shall promptly notify to the Existing Lender and the New Lender, provided always that the liabilities of the Borrowers and each other Obligor under this Agreement and any other Finance Document shall not be increased as aresult of any such assignment or transfer and that in the event that the Borrowers' or of any other Obligors' liabilities (actual or contingent) are increased, neitherthe Borrowers nor any other Obligor shall be liable for any such excess. 25.2.3A transfer will only be effective if the procedure set out in Clause 25.5 (Procedure for transfer) is complied with. 25.2.4If: Page 88(a)a Lender assigns or transfers any of its rights or obligations under the Finance Documents or changes its Facility Office; and (b)as a result of circumstances existing at the date the assignment, transfer or change occurs, a Borrower or a Guarantor would be obliged to make apayment to the New Lender or Lender acting through its new Facility Office under Clause 12 (Tax Gross Up and Indemnities) or Clause 13 (IncreasedCosts), then the New Lender or Lender acting through its new Facility Office is only entitled to receive payment under those Clauses to the same extent as the ExistingLender or Lender acting through its previous Facility Office would have been if the assignment, transfer or change had not occurred. This Clause 25.2.4 shall notapply: (c)in respect of an assignment or transfer made in the ordinary course of the primary syndication of the Loan; or (d)in relation to Clause 12.2 (Tax gross-up), to a Treaty Lender that has included a confirmation of its scheme reference number and its jurisdiction of taxresidence in accordance with Clause 12.2.7(b)(ii) (Tax gross-up) if the Borrower making the payment has not made a Borrower DTTP Filing in respect ofthat Treaty Lender. 25.2.5Each New Lender, by executing the relevant Transfer Certificate or Assignment Agreement, confirms, for the avoidance of doubt, that the Agent has authority toexecute on its behalf any amendment or waiver that has been approved by or on behalf of the requisite Lender or Lenders in accordance with this Agreement on orprior to the date on which the transfer or assignment becomes effective in accordance with this Agreement and that it is bound by that decision to the same extentas the Existing Lender would have been had it remained a Lender. 25.3Assignment or transfer fee 25.3.1Subject to Clause 25.3.2, the New Lender shall, on the date upon which an assignment or transfer takes effect, pay to the Agent (for its own account) a fee of$10,000. 25.3.2No fee is payable pursuant to Clause 25.3.1 if: (a)the Agent agrees that no fee is payable; or (b)the assignment or transfer is made by an Existing Lender: (i)to an Affiliate of that Existing Lender; (ii)to a fund which is a Related Fund of that Existing Lender; or (iii)in connection with primary syndication of the Loan. Page 8925.4Limitation of responsibility of Existing Lenders 25.4.1Unless expressly agreed to the contrary, an Existing Lender makes no representation or warranty and assumes no responsibility to a New Lender for: (a)the legality, validity, effectiveness, adequacy or enforceability of the Relevant Documents or any other documents; (b)the financial condition of any Obligor; (c)the performance and observance by any Obligor or any other member of the Group of its obligations under the Relevant Documents or any otherdocuments; or (d)the accuracy of any statements (whether written or oral) made in or in connection with any of the Relevant Documents or any other document, and any representations or warranties implied by law are excluded. 25.4.2Each New Lender confirms to the Existing Lender, the other Finance Parties and the Secured Parties that it: (a)has made (and shall continue to make) its own independent investigation and assessment of the financial condition and affairs of each Obligor and eachother member of the Group and its related entities in connection with its participation in this Agreement and has not relied exclusively on any informationprovided to it by the Existing Lender in connection with any of the Relevant Documents; and (b)will continue to make its own independent appraisal of the creditworthiness of each Obligor and each other member of the Group and its related entitiesfor the duration of the Facility Period. 25.4.3Nothing in any Finance Document obliges an Existing Lender to: (a)accept a re-transfer or re-assignment from a New Lender of any of the rights and obligations assigned or transferred under this Clause 25; or (b)support any losses directly or indirectly incurred by the New Lender by reason of the non-performance by any Obligor of its obligations under theRelevant Documents or otherwise. 25.5Procedure for transfer 25.5.1Subject to the conditions set out in Clause 25.2 (Conditions of assignment or transfer) a transfer is effected in accordance with Clause 25.5.3 when the Agentexecutes an otherwise duly completed Transfer Certificate delivered to it by the Existing Lender and the New Lender. The Agent shall, subject to Clause 25.2.2(b), assoon as reasonably practicable after receipt by it of a duly completed Transfer Certificate appearing on its face to comply with the terms of this Agreement anddelivered in accordance with the terms of this Agreement, execute that Transfer Certificate. Page 9025.5.2The Agent shall only be obliged to execute a Transfer Certificate delivered to it by the Existing Lender and the New Lender once it is satisfied it has complied withall necessary "know your customer" or other similar checks under all applicable laws and regulations in relation to the transfer to such New Lender. 25.5.3Subject to Clause 25.10 (Pro rata interest settlement), on the Transfer Date: (a)to the extent that in the Transfer Certificate the Existing Lender seeks to transfer by novation its rights and obligations under the Finance Documentseach Borrower and each Guarantor and the Existing Lender shall be released from further obligations towards one another under the Finance Documentsand their respective rights against one another shall be cancelled (being the "Discharged Rights and Obligations"); (b)each Borrower and each Guarantor and the New Lender shall assume obligations towards one another and/or acquire rights against one another whichdiffer from the Discharged Rights and Obligations only insofar as that Borrower and that Guarantor and the New Lender have assumed and/or acquiredthe same in place of that Borrower and that Guarantor and the Existing Lender; (c)the Agent, the Security Agent, the Bookrunner, the New Lender and other Lenders shall acquire the same rights and assume the same obligationsbetween themselves as they would have acquired and assumed had the New Lender been an Original Lender with the rights and/or obligations acquiredor assumed by it as a result of the transfer and to that extent the Agent, the Security Agent, the Bookrunner and the Existing Lender shall each bereleased from further obligations to each other under the Finance Documents; and (d)the New Lender shall become a Party as a "Lender". 25.6Procedure for assignment 25.6.1Subject to the conditions set out in Clause 25.2 (Conditions of assignment or transfer) an assignment may be effected in accordance with Clause 25.6.3 when theAgent executes an otherwise duly completed Assignment Agreement delivered to it by the Existing Lender and the New Lender. The Agent shall, subject to Clause25.6.2, as soon as reasonably practicable after receipt by it of a duly completed Assignment Agreement appearing on its face to comply with the terms of thisAgreement and delivered in accordance with the terms of this Agreement, execute that Assignment Agreement. 25.6.2The Agent shall only be obliged to execute an Assignment Agreement delivered to it by the Existing Lender and the New Lender once it is satisfied it has compliedwith all necessary "know your customer" or other similar checks under all applicable laws and regulations in relation to the assignment to such New Lender. Page 9125.6.3Subject to Clause 25.10 (Pro rata interest settlement), on the Transfer Date: (a)the Existing Lender will assign absolutely to the New Lender its rights under the Finance Documents and in respect of any Encumbrance created orexpressed to be created or evidenced by the Security Documents and expressed to be the subject of the assignment in the Assignment Agreement; (b)the Existing Lender will be released from the obligations (the "Relevant Obligations") expressed to be the subject of the release in the AssignmentAgreement (and any corresponding obligations by which it is bound in respect of any Encumbrance created or expressed to be created or evidenced bythe Security Documents); and (c)the New Lender shall become a Party as a "Lender" and will be bound by obligations equivalent to the Relevant Obligations. 25.6.4Lenders may utilise procedures other than those set out in this Clause 25.6 to assign their rights under the Finance Documents (but not, without the consent of therelevant Obligor or unless in accordance with Clause 25.5 (Procedure for transfer), to obtain a release by that Obligor from the obligations owed to that Obligor bythe Lenders nor the assumption of equivalent obligations by a New Lender) provided that they comply with the conditions set out in Clause 25.2 (Conditions ofassignment or transfer). 25.7Copy of Transfer Certificate or Assignment Agreement to Borrowers The Agent shall, as soon as reasonably practicable after it has executed a Transfer Certificate or anAssignment Agreement, send to the Borrowers a copy of that Transfer Certificate or Assignment Agreement. 25.8Additional Hedge Counterparties 25.8.1The Borrowers or a Lender may request that a Lender or an Affiliate of a Lender becomes an Additional Hedge Counterparty, with the prior approval of the MajorityLenders and (in the case of a request by a Lender) the Borrowers, by delivering to the Agent a duly executed Hedge Counterparty Accession Letter signed by suchLender or Affiliate. 25.8.2A Hedge Counterparty may transfer any of its rights or transfer by novation any of its rights and obligations to its Affiliate, another Lender or an Affiliate ofanother Lender, with the prior approval of the Majority Lenders and the Borrowers, by delivering to the Agent a duly executed Hedge Counterparty AccessionLetter signed by such Lender or Affiliate. 25.8.3In the case of Clauses 25.8.1 and 25.8.2, the relevant Lender or Affiliate will become an Additional Hedge Counterparty when the Agent enters into the relevantHedge Counterparty Accession Letter. Page 9225.9Security over Lenders' rights In addition to the other rights provided to Lenders under this Clause 25, each Lender may without consulting with or obtaining consent fromany Obligor, at any time charge, assign or otherwise create Encumbrances in or over (whether by way of collateral or otherwise) all or any of its rights under any FinanceDocument to secure obligations of that Lender including, without limitation: 25.9.1any charge, assignment or other Encumbrance to secure obligations to a federal reserve or central bank; and 25.9.2any charge, assignment or other Encumbrance granted to any holders (or trustee or representatives of holders) of obligations owed, or securities issued, by thatLender as security for those obligations or securities, except that no such charge, assignment or Encumbrance shall: (a)release a Lender from any of its obligations under the Finance Documents or substitute the beneficiary of the relevant charge, assignment orEncumbrance for the Lender as a party to any of the Finance Documents; or (b)require any payments to be made by an Obligor other than or in excess of, or grant to any person any more extensive rights than, those required to bemade or granted to the relevant Lender under the Finance Documents. 25.10Pro rata interest settlement 25.10.1If the Agent has notified the Lenders that it is able to distribute interest payments on a "pro rata basis" to Existing Lenders and New Lenders then (in respect of anytransfer pursuant to Clause 25.5 (Procedure for transfer) or any assignment pursuant to Clause 25.6 (Procedure for assignment) the Transfer Date of which, in eachcase, is after the date of such notification and is not on the last day of an Interest Period): (a)any interest or fees in respect of the relevant participation which are expressed to accrue by reference to the lapse of time shall continue to accrue infavour of the Existing Lender up to but excluding the Transfer Date ("Accrued Amounts") and shall become due and payable to the Existing Lender(without further interest accruing on them) on the last day of the current Interest Period; and (b)the rights assigned or transferred by the Existing Lender will not include the right to the Accrued Amounts, so that, for the avoidance of doubt: (i)when the Accrued Amounts become payable, those Accrued Amounts will be payable for the account of the Existing Lender; and (ii)the amount payable to the New Lender on that date will be the amount which would, but for the application of this Clause 25.10, have beenpayable to it on that date, but after deduction of the Accrued Amounts. Page 9325.10.2In this Clause 25.10, references to "Interest Period" shall be construed to include a reference to any other period for accrual of fees. 25.10.3An Existing Lender which retains the right to the Accrued Amounts pursuant to this Clause 25.10 but which does not have a Commitment shall be deemed not to bea Lender for the purposes of ascertaining whether the agreement of any specified group of Lenders has been obtained to approve any request for a consent, waiver,amendment or other vote of Lenders under the Finance Documents. 26Changes to the Obligors 26.1No assignment or transfer by Obligors No Obligor may assign any of its rights or transfer any of its rights or obligations under the Finance Documents. 26.2Additional Guarantors 26.2.1Subject to compliance with the provisions of Clauses 21.6.3 and 21.6.4 ("Know your customer" checks), the Borrowers may request that any member of the Groupbecome a Guarantor. 26.2.2A member of the Group shall become an Additional Guarantor if: (a)the Borrowers and the proposed Additional Guarantor deliver to the Agent a duly completed and executed Accession Deed; and (b)the Agent has received all of the documents and other evidence listed in Part II (Initial Utilisation Conditions Precedent) and, if applicable, Part IV(Conditions subsequent) of Schedule 2 (Conditions Precedent and Subsequent) in relation to that Additional Guarantor, each in form and substancesatisfactory to the Agent. 26.2.3The Agent shall notify the Borrowers and the Lenders promptly upon being satisfied that it has received (in form and substance satisfactory to it) all the documentsand other evidence listed in Part II (Initial Utilisation Conditions Precedent) and, if applicable, Part IV (Conditions subsequent) of Schedule 2 (ConditionsPrecedent and Subsequent). 26.2.4Other than to the extent that the Majority Lenders notify the Agent in writing to the contrary before the Agent gives the notification described in Clause 26.2.3, theLenders authorise (but do not require) the Agent to give that notification. The Agent shall not be liable for any damages, costs or losses whatsoever as a result ofgiving any such notification. 26.3Resignation of a Guarantor 26.3.1The Borrowers may request that a Guarantor ceases to be a Guarantor by delivering to the Agent a resignation letter if all the Lenders have consented to theresignation of that Guarantor. 26.3.2The Agent shall accept a resignation letter and notify the Borrowers and the Lenders of its acceptance if: Page 94(a)the Borrowers have confirmed that no Default is continuing or would result from the acceptance of the resignation letter; and (b)no payment is due from any Guarantor under Clause 19.1 (Guarantee and Indemnity). 26.4Repetition of Representations Delivery of an Accession Deed constitutes confirmation by the relevant member of the Group that the Repeating Representations are true and correct in relation to it as at thedate of delivery as if made by reference to the facts and circumstances then existing. Page 95Section 10The Finance Parties 27Role of the Agent, the Security Agent and the Bookrunner 27.1Appointment of the Agent 27.1.1Each of the Bookrunner, and the Lenders and the Hedge Counterparties appoints the Agent to act as its agent under and in connection with the FinanceDocuments. 27.1.2The Security Agent declares that it holds the Security Property and all rights, powers, discretions and remedies vested in the Security Agent by the FinanceDocuments or by law on trust for the Secured Parties on the terms contained in this Agreement. 27.1.3Each of the Finance Parties authorises the Agent and the Security Agent to perform the duties, obligations and responsibilities and to exercise the rights, powers,authorities and discretions specifically given to the Agent and the Security Agent (as applicable) under or in connection with the Finance Documents together withany other incidental rights, powers, authorities and discretions. 27.2Enforcement through Security Agent only The Secured Parties shall not have any independent power to enforce, or have recourse to, any of the Transaction Encumbrancesor to exercise any right, power, authority or discretion arising under the Security Documents except through the Security Agent (unless a Finance Document requiresotherwise). 27.3Instructions 27.3.1Each of the Agent and the Security Agent shall: (a)unless a contrary indication appears in a Finance Document, exercise or refrain from exercising any right, power, authority or discretion vested in it asAgent or Security Agent (as applicable) in accordance with any instructions given to it by: (i)all the Lenders if the relevant Finance Document stipulates the matter is an all Lender decision; and (ii)in all other cases, the Majority Lenders; and (b)not be liable for any act (or omission) if it acts (or refrains from acting) in accordance with Clause 27.3.1(a) (or, if this Agreement stipulates the matter is adecision for any other Finance Party or group of Finance Parties, from that Finance Party or group of Finance Parties). 27.3.2Each of the Agent and the Security Agent shall be entitled to request instructions, or clarification of any instruction, from the Majority Lenders (or, if the relevantFinance Document stipulates the matter is a decision for any other Finance Party or group of Finance Parties, from that Finance Party or group of Finance Parties) asto whether, and in what manner, it should exercise or refrain from exercising any right, power, authority or discretion and the Agent or Security Agent (as applicable)may refrain from acting unless and until it receives any such instructions or clarification that it has requested. Page 9627.3.3Save in the case of decisions stipulated to be a matter for any other Finance Party or group of Finance Parties under the relevant Finance Document and unless acontrary indication appears in a Finance Document, any instructions given to the Agent or Security Agent (as applicable) by the Majority Lenders shall overrideany conflicting instructions given by any other Parties and will be binding on all Finance Parties. 27.3.4Clause 27.3.1 shall not apply: (a)where a contrary indication appears in a Finance Document; (b)where a Finance Document requires the Agent or the Security Agent to act in a specified manner or to take a specified action; (c)in respect of any provision which protects the Agent's or the Security Agent's own position in its personal capacity as opposed to its role of Agent orSecurity Agent for the relevant Finance Parties or Secured Parties (as applicable) including, without limitation, Clause 27.6 (No fiduciary duties) to Clause27.11 (Exclusion of liability), Clause 27.15 (Confidentiality) to Clause 27.23 (Custodians and nominees) and Clause 27.26 (Acceptance of title) to Clause27.29 (Disapplication of Trustee Acts); (d)in respect of the exercise of the Security Agent's discretion to exercise a right, power or authority under any of: (i)Clause 28.1 (Order of application); (ii)Clause 28.2 (Prospective liabilities); and (iii)Clause 28.5 (Permitted deductions). 27.3.5If giving effect to instructions given by the Majority Lenders would (in the Agent's or (as applicable) the Security Agent's opinion) have an effect equivalent to anamendment or waiver referred to in Clause 37 (Amendments and Waivers), the Agent or (as applicable) the Security Agent shall not act in accordance with thoseinstructions unless consent to it so acting is obtained from each Party (other than the Agent or the Security Agent) whose consent would have been required inrespect of that amendment or waiver. 27.3.6In exercising any discretion to exercise a right, power or authority under the Finance Documents where either: (a)it has not received any instructions as to the exercise of that discretion; or (b)the exercise of that discretion is subject to Clause 27.3.4(d), Page 97the Agent or Security Agent shall do so having regard to the interests of (in the case of the Agent) all the Finance Parties and (in the case of the Security Agent) allthe Secured Parties. 27.3.7The Agent or the Security Agent (as applicable) may refrain from acting in accordance with any instructions of any Finance Party or group of Finance Parties until ithas received any indemnification and/or security that it may require (which may be greater in extent than that contained in the Finance Documents and which mayinclude payment in advance) for any cost, loss or liability (together with any applicable Tax) which it may incur in complying with those instructions. 27.3.8Without prejudice to the remainder of this Clause 27.327.3, in the absence of instructions, each of the Agent and the Security Agent may act (or refrain from acting)as it considers to be in the best interest of (in the case of the Agent) the Finance Parties and (in the case of the Security Agent) the Secured Parties. 27.3.9Neither the Agent nor the Security Agent is authorised to act on behalf of a Finance Party (without first obtaining that Finance Party's consent) in any legal orarbitration proceedings relating to any Finance Document. This Clause 27.3.9 shall not apply to any legal or arbitration proceedings relating to the perfection,preservation or protection of rights under the Security Documents or the enforcement of the Transaction Encumbrances or Security Documents. 27.4Duties of the Agent and Security Agent 27.4.1The duties of the Agent and the Security Agent under the Finance Documents are solely mechanical and administrative in nature. 27.4.2Subject to Clause 27.4.3, each of the Agent and the Security Agent shall promptly forward to a Party the original or a copy of any document which is delivered tothe Agent or the Security Agent (as applicable) for that Party by any other Party. 27.4.3Without prejudice to Clause 25.7 (Copy of Transfer Certificate or Assignment Agreement to Borrowers), Clause 27.4.2 shall not apply to any Transfer Certificate orany Assignment Agreement. 27.4.4Except where a Finance Document specifically provides otherwise, neither the Agent nor the Security Agent is obliged to review or check the adequacy, accuracy orcompleteness of any document it forwards to another Party. 27.4.5If the Agent or the Security Agent receives notice from a Party referring to any Finance Document, describing a Default and stating that the circumstance describedis a Default, it shall promptly notify the other Finance Parties. 27.4.6If the Agent is aware of the non-payment of any principal, interest, commitment fee or other fee payable to a Finance Party (other than the Agent, the Bookrunner orthe Security Agent) under this Agreement it shall promptly notify the other Finance Parties. Page 9827.4.7Each of the Agent and the Security Agent shall have only those duties, obligations and responsibilities expressly specified in the Finance Documents to which it isexpressed to be a party (and no others shall be implied). 27.5Role of the Bookrunner Except as specifically provided in the Finance Documents, the Bookrunner has no obligations of any kind to any other Party under or in connectionwith any Finance Document. 27.6No fiduciary duties 27.6.1Nothing in any Finance Document constitutes: (a)the Agent or the Bookrunner as a trustee or fiduciary of any other person; or (b)the Security Agent as an agent, trustee or fiduciary of any Obligor. 27.6.2None of the Agent, the Security Agent or the Bookrunner shall be bound to account to any other Finance Party or (in the case of the Security Agent) any SecuredParty for any sum or the profit element of any sum received by it for its own account. 27.7Business with Obligors and the Group The Agent, the Security Agent and the Bookrunner may accept deposits from, lend money to and generally engage in any kind ofbanking or other business with any Borrower, any other Obligor or its Affiliate and any other member of the Group. 27.8Rights and discretions 27.8.1Each of the Agent and the Security Agent may: (a)rely on any representation, communication, notice or document believed by it to be genuine, correct and appropriately authorised; (b)assume that: (i)any instructions received by it from the Majority Lenders, any Finance Party or any group of Finance Parties are duly given in accordance withthe terms of the Finance Documents; and (ii)unless it has received notice of revocation, that those instructions have not been revoked; and (c)rely on a certificate from any person: (i)as to any matter of fact or circumstance which might reasonably be expected to be within the knowledge of that person; or (ii)to the effect that such person approves of any particular dealing, transaction, step, action or thing, as sufficient evidence that that is the case and, in the case of (c), may assume the truth and accuracy of that certificate. Page 9927.8.2Each of the Agent and the Security Agent may assume (unless it has received notice to the contrary in its capacity as agent or security trustee for the Finance27.8.2Each of the Agent and the Security Agent may assume (unless it has received notice to the contrary in its capacity as agent or security trustee for the FinanceParties or the Secured Parties) that: (a)no Default has occurred (unless, in the case of the Agent, it has actual knowledge of a Default arising under Clause 24.1 (Events of Default)); (b)any right, power, authority or discretion vested in any Party or any group of Finance Parties has not been exercised; and (c)any notice or request made by the Borrowers (other than a Utilisation Request) is made on behalf of and with the consent and knowledge of all theObligors. 27.8.3Each of the Agent and the Security Agent may engage and pay for the advice or services of any lawyers, accountants, tax advisers, surveyors or other professionaladvisers or experts. 27.8.4Without prejudice to the generality of Clause 27.8.3 or Clause 27.8.5, each of the Agent and the Security Agent may at any time engage and pay for the services ofany lawyers to act as independent counsel to the Agent or the Security Agent (as applicable) (and so separate from any lawyers instructed by the Lenders), if theAgent or the Security Agent (as applicable) in its reasonable opinion deems this to be desirable. 27.8.5Each of the Agent and the Security Agent may rely on the advice or services of any lawyers, accountants, tax advisers, surveyors or other professional advisers orexperts (whether obtained by the Agent, the Security Agent or any other Party) and shall not be liable for any damages, costs or losses to any person, anydiminution in value or any liability whatsoever arising as a result of its so relying. 27.8.6Each of the Agent and the Security Agent may act in relation to the Finance Documents and the Security Property through its officers, employees and agents andshall not: (a)be liable for any error of judgment made by any such person; or (b)be bound to supervise, or be in any way responsible for any loss incurred by reason of misconduct, omission or default on the part of, any such person, unless such error or such loss was directly caused by the Agent's or the Security Agent's (as applicable) gross negligence or wilful misconduct. 27.8.7Unless a Finance Document expressly provides otherwise each of the Agent and the Security Agent may disclose to any other Party any information it reasonablybelieves it has received as agent or security trustee under the Finance Documents.Page 10027.8.8Without prejudice to the generality of Clause 27.8.7, the Agent: (a)may disclose; and (b)on the written request of the Borrowers or the Majority Lenders shall, as soon as reasonably practicable, disclose, the identity of a Defaulting Lender to the Borrowers and to the other Finance Parties. 27.8.9Notwithstanding any other provision of any Finance Document to the contrary, none of the Agent, the Security Agent or the Bookrunner is obliged to do or omit todo anything if it would, or might in its reasonable opinion, constitute a breach of any law or regulation or a breach of a fiduciary duty or duty of confidentiality. 27.8.10Notwithstanding any provision of any Finance Document to the contrary, neither the Agent nor the Security Agent is obliged to expend or risk its own funds orotherwise incur any financial liability in the performance of its duties, obligations or responsibilities or the exercise of any right, power, authority or discretion if ithas grounds for believing the repayment of such funds or adequate indemnity against, or security for, such risk or liability is not reasonably assured to it. 27.9Responsibility for documentation None of the Agent, the Security Agent or the Bookrunner is responsible or liable for: 27.9.1the adequacy, accuracy or completeness of any information (whether oral or written) supplied by the Agent, the Security Agent, the Bookrunner, an Obligor or anyother person in or in connection with any Relevant Document or the transactions contemplated in the Finance Documents or any other agreement, arrangement ordocument entered into, made or executed in anticipation of, under, or in connection with, any Finance Document; or 27.9.2the legality, validity, effectiveness, adequacy or enforceability of any Relevant Document or the Security Property or any other agreement, arrangement or documententered into, made or executed in anticipation of, under, or in connection with, any Relevant Document or the Security Property; or 27.9.3any determination as to whether any information provided or to be provided to any Finance Party or Secured Party is non-public information the use of which maybe regulated or prohibited by applicable law or regulation relating to insider dealing or otherwise. 27.10No duty to monitor Neither the Agent nor the Security Agent shall be bound to enquire: 27.10.1whether or not any Default has occurred; 27.10.2as to the performance, default or any breach by any Party of its obligations under any Finance Document; or 27.10.3whether any other event specified in any Finance Document has occurred. Page 10127.11Exclusion of liability 27.11.1Without limiting Clause 27.11.2 (and without prejudice to any other provision of any Finance Document excluding or limiting the liability of the Agent, the SecurityAgent or any Receiver or Delegate), none of the Agent, the Security Agent or any Receiver or Delegate will be liable (including, without limitation, for negligence orany other category of liability whatsoever) for: (a)any damages, costs or losses to any person, any diminution in value, or any liability whatsoever arising as a result of taking or not taking any actionunder or in connection with any Finance Document or the Security Property, unless directly caused by its gross negligence or wilful misconduct; (b)exercising, or not exercising, any right, power, authority or discretion given to it by, or in connection with, any Finance Document, the Security Propertyor any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with, any Finance Documentor the Security Property; (c)any shortfall which arises on the enforcement or realisation of the Security Property; or (d)without prejudice to the generality of Clauses 27.11.1(a), 27.11.1(b) and 27.11.1(c), any damages, costs or losses to any person, any diminution in value orany liability whatsoever arising as a result of: (i)any act, event or circumstance not reasonably within its control; or (ii)the general risks of investment in, or the holding of assets in, any jurisdiction, including (in each case and without limitation) such damages, costs, losses, diminution in value or liability arising as a result of: nationalisation, expropriation orother governmental actions; any regulation, currency restriction, devaluation or fluctuation; market conditions affecting the execution or settlement of transactionsor the value of assets (including any Disruption Event); breakdown, failure or malfunction of any third party transport, telecommunications, computer services orsystems; natural disasters or acts of God; war, terrorism, insurrection or revolution; or strikes or industrial action. 27.11.2No Party (other than the Agent, the Security Agent, that Receiver or that Delegate (as applicable)) may take any proceedings against any officer, employee or agentof the Agent, the Security Agent, a Receiver or a Delegate in respect of any claim it might have against the Agent, the Security Agent, a Receiver or a Delegate or inrespect of any act or omission of any kind by that officer, employee or agent in relation to any Relevant Document or any Security Property and any officer,employee or agent of the Agent, the Security Agent, a Receiver or a Delegate may rely on this Clause subject to Clause 1.12 (Third party rights) and the provisionsof the Third Parties Act. Page 10227.11.3Neither the Agent nor the Security Agent will be liable for any delay (or any related consequences) in crediting an account with an amount required under theFinance Documents to be paid by the Agent or the Security Agent (as applicable) if the Agent or the Security Agent (as applicable) has taken all necessary steps assoon as reasonably practicable to comply with the regulations or operating procedures of any recognised clearing or settlement system used by the Agent or theSecurity Agent (as applicable) for that purpose. 27.11.4Nothing in this Agreement shall oblige the Agent, the Security Agent or the Bookrunner to carry out: (a)any "know your customer" or other checks in relation to any person; or (b)any check on the extent to which any transaction contemplated by this Agreement might be unlawful for any Lender or for any Affiliate of any FinanceParty, on behalf of any Finance Party and each Finance Party confirms to the Agent, the Security Agent and the Bookrunner that it is solely responsible for any suchchecks it is required to carry out and that it may not rely on any statement in relation to such checks made by the Agent, the Security Agent or the Bookrunner. 27.11.5Without prejudice to any provision of any Finance Document excluding or limiting the liability of the Agent, the Security Agent, any Receiver or Delegate, anyliability of the Agent, the Security Agent, any Receiver or Delegate arising under or in connection with any Finance Document or the Security Property shall belimited to the amount of actual loss which has been finally judicially determined to have been suffered (as determined by reference to the date of default of theAgent, the Security Agent, any Receiver or Delegate or, if later, the date on which the loss arises as a result of such default) but without reference to any specialconditions or circumstances known to the Agent, the Security Agent, any Receiver or Delegate at any time which increase the amount of that loss. In no eventshall the Agent, the Security Agent, any Receiver or Delegate be liable for any loss of profits, goodwill, reputation, business opportunity or anticipated saving, orfor special, punitive, indirect or consequential damages, whether or not the Agent, the Security Agent, the Receiver or Delegate has been advised of the possibilityof such loss or damages. Page 10327.12Lenders' indemnity to the Agent and the Security Agent 27.12.1Each Lender shall (in proportion to its share of the Total Commitments or, if the Total Commitments are then zero, to its share of the Total Commitments immediatelyprior to their reduction to zero) indemnify the Agent, the Security Agent, every Receiver and every Delegate, within three Business Days of demand, against anycost, loss or liability (including, without limitation, for negligence or any other category of liability whatsoever) incurred by any of them (otherwise than by reasonof the Agent's, the Security Agent's, the Receiver's or the Delegate's gross negligence or wilful misconduct) (or, in the case of any cost, loss or liability pursuant toClause 31.10 (Disruption to payment systems etc.), notwithstanding the Agent's negligence, gross negligence or any other category of liability whatsoever but notincluding any claim based on the fraud of the Agent) in acting as Agent, Security Agent, Receiver or Delegate under the Finance Documents (unless the Agent,Security Agent, Receiver or Delegate has been reimbursed by an Obligor pursuant to a Finance Document). 27.12.2Subject to Clause 27.12.3, the Borrowers shall immediately on demand reimburse any Lender for any payment that Lender makes to the Agent or the Security Agentpursuant to Clause 27.12.1. 27.12.3Clause 27.12.2 shall not apply to the extent that the indemnity payment in respect of which the Lender claims reimbursement relates to a liability of the Agent or theSecurity Agent to an Obligor. 27.13Resignation of the Agent or the Security Agent 27.13.1Each of the Agent and the Security Agent may resign and appoint one of its Affiliates as successor by giving notice to the other Finance Parties and the Borrowers. 27.13.2Alternatively the Agent or the Security Agent may resign by giving 30 days' notice to the other Finance Parties and the Borrowers, in which case the MajorityLenders (after consultation with the Borrowers) may appoint a successor Agent or Security Agent (as applicable). 27.13.3If the Majority Lenders have not appointed a successor Agent or Security Agent in accordance with Clause 27.13.2 within 20 days after notice of resignation wasgiven, the retiring Agent or Security Agent (as applicable) (after consultation with the Borrowers) may appoint a successor Agent or Security Agent (as applicable). 27.13.4If the Agent wishes to resign because (acting reasonably) it has concluded that it is no longer appropriate for it to remain as agent and the Agent is entitled toappoint a successor Agent under Clause 27.13.3, the Agent may (if it concludes (acting reasonably) that it is necessary to do so in order to persuade the proposedsuccessor Agent to become a party to this Agreement as Agent) agree with the proposed successor Agent amendments to this Clause 27 and any other term of thisAgreement dealing with the rights or obligations of the Agent consistent with then current market practice for the appointment and protection of corporate trusteestogether with any reasonable amendments to the agency fee payable under this Agreement which are consistent with the successor Agent's normal fee rates andthose amendments will bind the Parties. Page 10427.13.5The retiring Agent or Security Agent (as applicable) shall, make available to the successor Agent or Security Agent (as applicable) such documents and recordsand provide such assistance as the successor Agent or Security Agent may reasonably request for the purposes of performing its functions as Agent or SecurityAgent (as applicable) under the Finance Documents. The Borrowers shall, within three Business Days of demand, reimburse the retiring Agent or Security Agent(as applicable) for the amount of all costs and expenses (including legal fees) properly incurred by it in making available such documents and records and providingsuch assistance. 27.13.6The resignation notice of the Agent or the Security Agent (as applicable) shall only take effect upon: (a)the appointment of a successor; and (b)(in the case of the Security Agent) the transfer of the Security Property to that successor. 27.13.7Upon the appointment of a successor, the retiring Agent or Security Agent (as applicable) shall be discharged from any further obligation in respect of the FinanceDocuments (other than its obligations under Clause 27.27 (Winding up of trust) and Clause 27.13.5 ) but shall remain entitled to the benefit of Clause 14.3 (Indemnityto the Agent), Clause 14.4 (Indemnity to the Security Agent) and this Clause 27 (and any fees for the account of the retiring Agent or Security Agent (as applicable)shall cease to accrue from (and shall be payable on) that date). Any successor and each of the other Parties shall have the same rights and obligations amongstthemselves as they would have had if such successor had been an original Party. 27.13.8After consultation with the Borrowers, the Majority Lenders may, by giving 30 days' notice to the Agent or the Security Agent (as applicable), require it to resign inaccordance with Clause 27.13.2. In this event, the Agent or the Security Agent (as applicable) shall resign in accordance with Clause 27.13.2 but the cost referred toin Clause 27.13.5 shall be for the account of the Borrowers. 27.13.9The Agent shall resign in accordance with Clause 27.13.2 (and, to the extent applicable, shall use reasonable endeavours to appoint a successor Agent pursuant toClause 27.13.3) if on or after the date which is three months before the earliest FATCA Application Date relating to any payment to the Agent under the FinanceDocuments, either: (a)the Agent fails to respond to a request under Clause 12.8 (FATCA information) and a Lender reasonably believes that the Agent will not be (or will haveceased to be) a FATCA Exempt Party on or after that FATCA Application Date; (b)the information supplied by the Agent pursuant to Clause 12.8 (FATCA information) indicates that the Agent will not be (or will have ceased to be) aFATCA Exempt Party on or after that FATCA Application Date; or (c)the Agent notifies the Borrowers and the Lenders that the Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCAApplication Date; Page 105and (in each case) a Lender reasonably believes that a Party will be required to make a FATCA Deduction that would not be required if the Agent were a FATCAExempt Party, and that Lender, by notice to the Agent, requires it to resign. 27.14Parallel Debt (covenant to pay the Security Agent) 27.14.1Each Borrower and each Guarantor shall, and shall procure that each other Obligor shall, pay to the Security Agent its Parallel Debt which shall be in an amountequal to, and in the currency or currencies of, its Corresponding Debt. 27.14.2The Parallel Debt of an Obligor: (a)shall become due and payable at the same time as its Corresponding Debt; (b)is independent and separate from, and without prejudice to, its Corresponding Debt. 27.14.3For the purposes of this Clause 27.14, the Security Agent: (a)is the independent and separate creditor of each Parallel Debt; (b)acts in its own name and not as agent, representative or trustee of the Finance Parties and its claims in respect of each Parallel Debt shall not be held ontrust; and (c)shall have the independent and separate right to demand payment of each Parallel Debt in its own name (including, without limitation, through any suit,execution, enforcement of security, recovery of guarantees and applications for and voting in any kind of insolvency proceeding). 27.14.4The Parallel Debt of an Obligor shall be: (a)decreased to the extent that its Corresponding Debt has been irrevocably and unconditionally paid or discharged; and (b)increased to the extent that its Corresponding Debt has increased, and the Corresponding Debt of an Obligor shall be: (i)decreased to the extent that its Parallel Debt has been irrevocably and unconditionally paid or discharged; and (ii)increased to the extent that its Parallel Debt has increased, in each case provided that the Parallel Debt of an Obligor shall never exceed its Corresponding Debt. 27.14.5All amounts received or recovered by the Security Agent in connection with this Clause 27.14 shall be applied, to the extent permitted by applicable law, inaccordance with Clause 28.1 (Order of application) and Clause 31.5 (Partial payments) as applicable. Page 10627.14.6This Clause 27.14 shall apply, with any necessary modifications, to each Finance Document. 27.15Confidentiality 27.15.1In acting as agent or trustee for the Finance Parties, the Agent or the Security Agent (as applicable) shall be regarded as acting through its agency division whichshall be treated as a separate entity from any other of its divisions or departments. 27.15.2If information is received by another division or department of the Agent or the Security Agent, it may be treated as confidential to that division or department andthe Agent or the Security Agent (as applicable) shall not be deemed to have notice of it. 27.16Relationship with the other Finance Parties 27.16.1Subject to Clause 25.10 (Pro rata interest settlement), the Agent may treat the person shown in its records as Lender or Hedge Counterparty at the opening ofbusiness (in the place of the Agent's principal office as notified to the Finance Parties from time to time) as the Lender acting through its Facility Office or, as thecase may be, a Hedge Counterparty: (a)entitled to or liable for any payment due under any Finance Document on that day; and (b)entitled to receive and act upon any notice, request, document or communication or make any decision or determination under any Finance Documentmade or delivered on that day, unless it has received not less than five Business Days' prior notice from that Lender or Hedge Counterparty to the contrary in accordance with the terms of thisAgreement. 27.16.2Any Lender or Hedge Counterparty may by notice to the Agent appoint a person to receive on its behalf all notices, communications, information and documents tobe made or despatched to that Lender or Hedge Counterparty under the Finance Documents. Such notice shall contain the address, fax number and (wherecommunication by electronic mail or other electronic means is permitted under Clause 33.5 (Electronic communication)) electronic mail address and/or any otherinformation required to enable the transmission of information by that means (and, in each case, the department or officer, if any, for whose attention communicationis to be made) and be treated as a notification of a substitute address, fax number, electronic mail address or such other information, department and officer by thatLender or Hedge Counterparty for the purposes of Clause 33.2 (Addresses) and Clause 33.5.1(b) (Electronic communication) and the Agent shall be entitled to treatsuch person as the person entitled to receive all such notices, communications, information and documents as though that person were that Lender or HedgeCounterparty. Page 10727.17Credit appraisal by the Lenders and Hedge Counterparties Without affecting the responsibility of any Obligor for information supplied by it or on its behalf in connectionwith any Relevant Document, each Lender and Hedge Counterparty confirms to the Agent, the Security Agent and the Bookrunner that it has been, and will continue to be,solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with any Relevant Document including but not limitedto: 27.17.1the financial condition, status and nature of each Obligor and each other member of the Group; 27.17.2the legality, validity, effectiveness, adequacy or enforceability of Relevant Document, the Security Property, and any other agreement, arrangement or documententered into, made or executed in anticipation of, under or in connection with any Relevant Document or the Security Property; 27.17.3whether that Finance Party has recourse, and the nature and extent of that recourse, against any Party or any of its respective assets under or in connection withany Relevant Document, the Security Property, the transactions contemplated by Relevant Documents or any other agreement, arrangement or document enteredinto, made or executed in anticipation of under or in connection with any Relevant Document or the Security Property; and 27.17.4the adequacy, accuracy or completeness of any information provided by the Agent, the Security Agent, any Party or by any other person under or in connectionwith any Relevant Document, the transactions contemplated by any Relevant Document or any other agreement, arrangement or document entered into, made orexecuted in anticipation of, under or in connection with any Relevant Document; and 27.17.5the right or title of any person in or to, or the value or sufficiency of any part of, the Security Assets, the priority of any Transaction Encumbrance or the existenceof any Encumbrance affecting the Security Assets. 27.18Agent's and Security Agent's management time 27.18.1Any amount payable to the Agent or the Security Agent under Clause 14.3 (Indemnity to the Agent), Clause 14.4 (Indemnity to the Security Agent), Clause 16(Costs and Expenses) and Clause 27.12 (Lenders' indemnity to the Agent and the Security Agent) shall include the cost of utilising the management time of theAgent or the Security Agent (as applicable) or other resources and will be calculated on the basis of such reasonable daily or hourly rates as the Agent or theSecurity Agent may notify to the Borrowers and the Finance Parties, and is in addition to any fee paid or payable to the Agent or the Security Agent under Clause11 (Fees). 27.18.2Without prejudice to Clause 27.18.1, in the event of: (a)An Event of Default; Page 108(b)the Security Agent being requested by an Obligor or the Majority Lenders to undertake duties which the Security Agent and the Borrowers agree to beof an exceptional nature or outside the scope of the normal duties of the Security Agent under the Finance Documents; or (c)the Security Agent and the Borrowers agreeing that it is otherwise appropriate in the circumstances, the Borrowers shall pay to the Security Agent any additional remuneration that may be agreed between them or determined pursuant to Clause 27.18.3. 27.18.3If the Security Agent and the Borrowers fail to agree upon the nature of the duties, or upon the additional remuneration referred to in Clause 27.18.2 or whetheradditional remuneration is appropriate in the circumstances, any dispute shall be determined by an investment bank (acting as an expert and not as an arbitrator)selected by the Security Agent and approved by the Borrowers or, failing approval, nominated (on the application of the Security Agent) by the President for thetime being of the Law Society of England and Wales (the costs of the nomination and of the investment bank being payable by the Borrowers) and thedetermination of that investment bank shall be final and binding upon the Parties. 27.19Deduction from amounts payable by the Agent If any Party owes an amount to the Agent under the Finance Documents the Agent may, after giving notice to that Party,deduct an amount not exceeding that amount from any payment to that Party which the Agent would otherwise be obliged to make under the Finance Documents and applythe amount deducted in or towards satisfaction of the amount owed. For the purposes of the Finance Documents that Party shall be regarded as having received any amountso deducted. 27.20Amounts paid in error 27.20.1If the Agent or the Security Agent pays an amount to another Party and within 10 Business Days of the date of payment the Agent or the Security Agent notifiesthat Party that such payment was an Erroneous Payment then the Party to whom that amount was paid by the Agent or the Security Agent shall on demand refundthe same to the Agent or the Security Agent together with interest on that amount from the date of payment to the date of receipt by the Agent or the SecurityAgent, calculated by the Agent or Security Agent to reflect its cost of funds. 27.20.2Neither: (a)the obligations of any party to the Agent or the Security Agent; nor (b)the remedies of the Agent or the Security Agent (whether arising under this Clause 27.20 or otherwise) which relate to an Erroneous Payment will be affected by any act, omission, matter or thing which, but for thisClause 27.20.2 would reduce, release or prejudice any such obligation or remedy (whether or not known by the Agent or the Security Agent or any other Party). Page 10927.20.3All payments to be made by a Party to the Agent or the Security Agent (whether made pursuant to this Clause 27.20 or otherwise) which relate to an ErroneousPayment shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim. 27.20.4In this Agreement, "Erroneous Payment" means a payment of an amount by the Agent or the Security Agent to another Party which the Agent or the SecurityAgent (as appropriate) determines (in its sole discretion) was made in error. 27.21No responsibility to perfect Transaction Encumbrances The Security Agent shall not be liable for any failure to: 27.21.1require the deposit with it of any deed or document certifying, representing or constituting the title of any Obligor to any of the Security Assets; 27.21.2obtain any licence, consent or other authority for the execution, delivery, legality, validity, enforceability or admissibility in evidence of any Finance Document orthe Transaction Encumbrances; 27.21.3register, file or record or otherwise protect any Transaction Encumbrance (or the priority of any Transaction Encumbrance) under any law or regulation or to givenotice to any person of the execution of any Finance Document or of the Transaction Encumbrances; 27.21.4take, or to require any Obligor to take, any step to perfect its title to any of the Security Assets or to render the Transaction Encumbrances effective or to secure thecreation of any ancillary Encumbrance under any law or regulation; or 27.21.5require any further assurance in relation to any Security Document. 27.22Insurance by the Security Agent 27.22.1The Security Agent shall not be obliged: (a)to insure any of the Security Assets; (b)to require any other person to maintain any insurance; or (c)to verify any obligation to arrange or maintain insurance contained in any Finance Document, and the Security Agent shall not be liable for any damages, costs or losses to any person as a result of the lack of, or inadequacy of, any such insurance. 27.22.2Where the Security Agent is named on any insurance policy as an insured party, it shall not be liable for any damages, costs or losses to any person as a result ofits failure to notify the insurers of any material fact relating to the risk assumed by such insurers or any other information of any kind, unless the Majority Lendersrequest it to do so in writing and the Security Agent fails to do so within 14 days after receipt of that request. Page 11027.23Custodians and nominees The Security Agent may appoint and pay any person to act as a custodian or nominee on any terms in relation to any asset of the trust as theSecurity Agent may determine, including for the purpose of depositing with a custodian this Agreement or any document relating to the trust created under this Agreementand the Security Agent shall not be responsible for any loss, liability, expense, demand, cost, claim or proceedings incurred by reason of the misconduct, omission or defaulton the part of any person appointed by it under this Agreement or be bound to supervise the proceedings or acts of any person. 27.24Delegation by the Security Agent 27.24.1Each of the Security Agent, any Receiver and any Delegate may, at any time, delegate by power of attorney or otherwise to any person for any period, all or anyright, power, authority or discretion vested in it in its capacity as such. 27.24.2That delegation may be made upon any terms and conditions (including the power to sub-delegate) and subject to any restrictions that the Security Agent, thatReceiver or that Delegate (as the case may be) may think fit in the interests of the Secured Parties. 27.24.3No Security Agent, Receiver or Delegate shall be bound to supervise, or be in any way responsible for any damages, costs or losses incurred by reason of anymisconduct, omission or default on the part of, any such delegate or sub-delegate. 27.25Additional Security Agents 27.25.1The Security Agent may at any time appoint (and subsequently remove) any person to act as a separate trustee or as a co-trustee jointly with it: (a)if it considers that appointment to be in the interests of the Secured Parties; (b)for the purposes of conforming to any legal requirement, restriction or condition which the Security Agent deems to be relevant; or (c)for obtaining or enforcing any judgment in any jurisdiction, and the Security Agent shall give prior notice to the Borrowers and the Finance Parties of that appointment. 27.25.2Any person so appointed shall have the rights, powers, authorities and discretions (not exceeding those given to the Security Agent under or in connection withthe Finance Documents) and the duties, obligations and responsibilities that are given or imposed by the instrument of appointment. 27.25.3The remuneration that the Security Agent may pay to that person, and any costs and expenses (together with any applicable Tax) incurred by that person inperforming its functions pursuant to that appointment shall, for the purposes of this Agreement, be treated as costs and expenses incurred by the Security Agent. Page 11127.26Acceptance of title The Security Agent shall be entitled to accept without enquiry, and shall not be obliged to investigate, any right and title that any Obligor may have toany of the Security Assets and shall not be liable for, or bound to require any Obligor to remedy, any defect in its right or title. 27.27Winding up of trust If the Security Agent, with the approval of the Agent, determines that: 27.27.1all of the Indebtedness and all other obligations secured by the Security Documents have been fully and finally discharged; and 27.27.2no Secured Party is under any commitment, obligation or liability (actual or contingent) to make advances or provide other financial accommodation to any Obligorpursuant to the Finance Documents, then (a)the trusts set out in this Agreement shall be wound up and the Security Agent shall release, without recourse or warranty, all of the TransactionEncumbrances and the rights of the Security Agent under each of the Security Documents; and (b)any Security Agent which has resigned pursuant to Clause 27.13 (Resignation of the Agent or the Security Agent) shall release, without recourse orwarranty, all of its rights under each Security Document. 27.28Powers supplemental to Trustee Acts The rights, powers, authorities and discretions given to the Security Agent under or in connection with the Finance Documents shallbe supplemental to the Trustee Act 1925 and the Trustee Act 2000 and in addition to any which may be vested in the Security Agent by law or regulation or otherwise. 27.29Disapplication of Trustee Acts Section 1 of the Trustee Act 2000 shall not apply to the duties of the Security Agent in relation to the trusts constituted by this Agreement. Where there are any inconsistencies between the Trustee Act 1925 or the Trustee Act 2000 and the provisions of this Agreement, the provisions of this Agreement shall, tothe extent permitted by law and regulation, prevail and, in the case of any inconsistency with the Trustee Act 2000, the provisions of this Agreement shall constitute arestriction or exclusion for the purposes of that Act. 28Application of Proceeds 28.1Order of application Subject to Clause 28.2 (Prospective liabilities), all amounts from time to time received or recovered by the Security Agent pursuant to the terms of anyFinance Document or under Clause 27.14 (Parallel Debt (covenant to pay the Security Agent)) in connection with the realisation or enforcement of all or part of theTransaction Encumbrances (for the purposes of this Clause 28, the "Recoveries") shall be held by the Security Agent on trust to apply them at any time as the Security Agent(in its discretion) sees fit, to the extent permitted by applicable law (and subject to the provisions of this Clause 28), in the following order: Page 11228.1.1first, in discharging any sums owing to the Security Agent (in its capacity as such) other than pursuant to Clause 27.14 (Parallel Debt (covenant to pay theSecurity Agent)), any Receiver or any Delegate; 28.1.2secondly, in payment of all costs and expenses incurred by the Agent or any Secured Party in connection with any realisation or enforcement of the TransactionEncumbrances taken in accordance with the terms of this Agreement; 28.1.3thirdly, in or towards payment pro rata of any unpaid fee, costs and expenses of the Agent, the Security Agent, any Receiver or any Delegate under the FinanceDocuments; 28.1.4fourthly, in or towards payment pro rata of: (a)any accrued interest, fee or commission due but unpaid under this Agreement and any default interest payable under any Hedging Agreement; and (b)any Hedge Breakage Loss due and payable to any Hedge Counterparty but unpaid under any relevant Hedging Agreement; 28.1.5fifthly, in or towards payment pro rata of any principal due but unpaid under this Agreement; 28.1.6sixthly, in or towards payment pro rata of any other sum due but unpaid under the Finance Documents (excluding the Hedging Agreements); 28.1.7lastly, in or towards payment pro rata to the Hedge Counterparties for application in or towards the discharge of any relevant Borrower's liabilities in respect of anyother amounts then due and payable under the Hedging Agreements. The balance (if any) of the amounts received shall be paid to the Borrowers or as the Borrowers may direct. 28.2Prospective liabilities Following enforcement of any of the Transaction Encumbrances the Security Agent may, in its discretion, hold any amount of the Recoveries in aninterest bearing suspense or impersonal account(s) in the name of the Security Agent with such financial institution (including itself) and for so long as the Security Agentshall think fit (the interest being credited to the relevant account) for later application under Clause 28.1 (Order of application) in respect of: 28.2.1any sum to the Security Agent, any Receiver or any Delegate; and 28.2.2any part of the Indebtedness, that the Security Agent reasonably considers, in each case, might become due or owing at any time in the future. Page 11328.3Investment of proceeds Prior to the application of the proceeds of the Recoveries in accordance with Clause 28.1 (Order of application), the Security Agent may, in itsdiscretion, hold all or part of those proceeds in an interest bearing suspense or impersonal account(s) in the name of the Security Agent with such financial institution(including itself) and for so long as the Security Agent shall think fit (the interest being credited to the relevant account) pending the application from time to time of thosemoneys in the Security Agent's discretion in accordance with the provisions of this Clause 28. 28.4Currency conversion 28.4.1For the purpose of, or pending the discharge of, any part of the Indebtedness the Security Agent may convert any moneys received or recovered by the SecurityAgent from one currency to another, at a market rate of exchange. 28.4.2The obligations of any Obligor to pay in the due currency shall only be satisfied to the extent of the amount of the due currency purchased after deducting thecosts of conversion. 28.5Permitted deductions The Security Agent shall be entitled, in its discretion: 28.5.1to set aside by way of reserve amounts required to meet, and to make and pay, any deductions and withholdings (on account of Taxes or otherwise) which it is ormay be required by any applicable law to make from any distribution or payment made by it under this Agreement; and 28.5.2to pay all Taxes which may be assessed against it in respect of any of the Security Assets, or as a consequence of performing its duties, or by virtue of its capacityas the Security Agent under any of the Finance Documents or otherwise (other than in connection with its remuneration for performing its duties under thisAgreement). 28.6Good discharge 28.6.1Any payment to be made in respect of the Indebtedness by the Security Agent may be made to: (a)the Agent on behalf of the Finance Parties; or (b)(as applicable) the Hedge Counterparties and any payment made in that way shall be a good discharge, to the extent of that payment, by the Security Agent. 28.6.2The Security Agent is under no obligation to make the payments to the Agent or the Hedge Counterparties under Clause 28.6.1 in the same currency as that inwhich the obligations and liabilities owing to the relevant Finance Party are denominated. 29Conduct of Business by the Finance Parties No provision of this Agreement will: Page 11429.1interfere with the right of any Finance Party to arrange its affairs (tax or otherwise) in whatever manner it thinks fit; 29.2oblige any Finance Party to investigate or claim any credit, relief, remission or repayment available to it or the extent, order and manner of any claim; or 29.3oblige any Finance Party to disclose any information relating to its affairs (tax or otherwise) or any computations in respect of Tax. 30Sharing among the Finance Parties 30.1Payments to Finance Parties If a Finance Party (a "Recovering Finance Party") receives or recovers any amount from an Obligor other than in accordance with Clause 31(Payment Mechanics) (a "Recovered Amount") and applies that amount to a payment due under the Finance Documents then: 30.1.1the Recovering Finance Party shall, within three Business Days, notify details of the receipt or recovery, to the Agent; 30.1.2the Agent shall determine whether the receipt or recovery is in excess of the amount the Recovering Finance Party would have been paid had the receipt or recoverybeen received or made by the Agent and distributed in accordance with Clause 31 (Payment Mechanics), without taking account of any Tax which would beimposed on the Agent in relation to the receipt, recovery or distribution; and 30.1.3the Recovering Finance Party shall, within three Business Days of demand by the Agent, pay to the Agent an amount (the "Sharing Payment") equal to suchreceipt or recovery less any amount which the Agent determines may be retained by the Recovering Finance Party as its share of any payment to be made, inaccordance with Clause 31.5 (Partial payments). 30.2Redistribution of payments The Agent shall treat the Sharing Payment as if it had been paid by the relevant Obligor and distribute it between the Finance Parties (other thanthe Recovering Finance Party) (the "Sharing Finance Parties") in accordance with Clause 31.5 (Partial payments) towards the obligations of that Obligor to the SharingFinance Parties. 30.3Recovering Finance Party's rights On a distribution by the Agent under Clause 30.2 (Redistribution of payments) of a payment received by a Recovering Finance Party froman Obligor, as between the relevant Obligor and the Recovering Finance Party, an amount of the Recovered Amount equal to the Sharing Payment will be treated as not havingbeen paid by that Obligor. 30.4Reversal of redistribution If any part of the Sharing Payment received or recovered by a Recovering Finance Party becomes repayable and is repaid by that RecoveringFinance Party, then: 30.4.1each Sharing Finance Party shall, upon request of the Agent, pay to the Agent for the account of that Recovering Finance Party an amount equal to the appropriatepart of its share of the Sharing Payment (together with an amount as is necessary to reimburse that Recovering Finance Party for its proportion of any interest onthe Sharing Payment which that Recovering Finance Party is required to pay) (the "Redistributed Amount"); and Page 11530.4.2as between the relevant Obligor and each relevant Sharing Finance Party, an amount equal to the relevant Redistributed Amount will be treated as not having beenpaid by that Obligor. 30.5Exceptions 30.5.1This Clause 30 shall not apply to the extent that the Recovering Finance Party would not, after making any payment pursuant to this Clause, have a valid andenforceable claim against the relevant Obligor. 30.5.2A Recovering Finance Party is not obliged to share with any other Finance Party any amount which the Recovering Finance Party has received or recovered as aresult of taking legal or arbitration proceedings, if: (a)it notified that other Finance Party of the legal or arbitration proceedings; and (b)that other Finance Party had an opportunity to participate in those legal or arbitration proceedings but did not do so as soon as reasonably practicablehaving received notice and did not take separate legal or arbitration proceedings. Page 116Section 11Administration 31Payment Mechanics 31.1Payments to the Agent On each date on which an Obligor or a Lender is required to make a payment under a Finance Document, that Obligor or that Lender shall make thesame available to the Agent (unless a contrary indication appears in a Finance Document) for value on the due date at the time and in such funds specified by the Agent asbeing customary at the time for settlement of transactions in the relevant currency in the place of payment. Payment shall be made to such account in the principal financial centre of the country of that currency and with such bank as the Agent, in each case, specifies. 31.2Distributions by the Agent Each payment received by the Agent under the Finance Documents for another Party shall, subject to Clause 31.3 (Distributions to an Obligor)and Clause 31.4 (Clawback and pre-funding), be made available by the Agent as soon as practicable after receipt to the Party entitled to receive payment in accordance withthis Agreement (in the case of a Lender, for the account of its Facility Office), to such account as that Party may notify to the Agent by not less than five Business Days'notice with a bank specified by that Party in the principal financial centre of the country of that currency. 31.3Distributions to an Obligor The Agent may (with the consent of an Obligor or in accordance with Clause 32 (Set-Off)) apply any amount received by it for that Obligor in ortowards payment (on the date and in the currency and funds of receipt) of any amount due from that Obligor under the Finance Documents or in or towards purchase of anyamount of any currency to be so applied. 31.4Clawback and pre-funding 31.4.1Where a sum is to be paid to the Agent under the Finance Documents for another Party, the Agent is not obliged to pay that sum to that other Party (or to enter intoor perform any related exchange contract) until it has been able to establish to its satisfaction that it has actually received that sum. 31.4.2Unless Clause 31.4.3 applies, if the Agent pays an amount to another Party and it proves to be the case that the Agent had not actually received that amount, thenthe Party to whom that amount (or the proceeds of any related exchange contract) was paid by the Agent shall on demand refund the same to the Agent togetherwith interest on that amount from the date of payment to the date of receipt by the Agent, calculated by the Agent to reflect its cost of funds. 31.4.3If the Agent is willing to make available amounts for the account of a Borrower before receiving funds from the Lenders then if and to the extent that the Agent doesso but it proves to be the case that it does not then receive funds from a Lender in respect of a sum which it paid to a Borrower: (a)the Borrower to whom that sum was made available shall on demand refund it to the Agent; and Page 117(b)the Lender by whom those funds should have been made available or, if that Lender fails to do so, the Borrower to whom that sum was made available,shall on demand pay to the Agent the amount (as certified by the Agent) which will indemnify the Agent against any funding cost incurred by it as aresult of paying out that sum before receiving those funds from that Lender. 31.5Partial payments 31.5.1Provided that no acceleration has occurred under Clause 24.2 (Acceleration), if the Agent or the Security Agent (as applicable) receives a payment that isinsufficient to discharge all the amounts then due and payable by an Obligor under the Finance Documents, the Agent or the Security Agent (as applicable) shallapply that payment towards the obligations of that Obligor under the Finance Documents in the following order: (a)first, in or towards payment pro rata of any unpaid fees, costs and expenses of the Agent, the Security Agent, any Receiver or any Delegate under theFinance Documents; (b)secondly, in or towards payment pro rata of any accrued interest, fee or commission due but unpaid under this Agreement; (c)thirdly, in or towards payment pro rata of any principal due but unpaid under this Agreement; and (d)fourthly, in or towards payment pro rata of any other sum due but unpaid under the Finance Documents. 31.5.2The Agent shall, if so directed by the Majority Lenders, vary, or instruct the Security Agent to vary (as applicable), the order set out in Clause 31.5.1. Any suchvariation may include the re-ordering of obligations set out in that Clause. 31.5.3Clauses 31.5.1 and 31.5.2 will override any appropriation made by an Obligor. 31.6No set-off by Obligors 31.6.1All payments to be made by an Obligor under the Finance Documents shall be calculated and be made without (and free and clear of any deduction for) set-off orcounterclaim. 31.6.2Clause 31.6.1 shall not affect the operation of any payment or close-out netting pursuant to section 2(c) or 6(e) of any Hedging Agreement in respect of anyamounts owing under that Hedging Agreement. 31.7Business Days Any payment under the Finance Documents which is due to be made on a day that is not a Business Day shall be made on the next Business Day in the samecalendar month (if there is one) or the preceding Business Day (if there is not). During any extension of the due date for payment of any principal or Unpaid Sum under this Agreement interest is payable on the principal or Unpaid Sum at the rate payableon the original due date. Page 11831.8Currency of account 31.8.1Subject to Clauses 31.8.2 to 31.8.5, dollars is the currency of account and payment for any sum due from an Obligor under any Finance Document. 31.8.2A repayment or payment of all or part of a Utilisation or an Unpaid Sum shall be made in the currency in which that Utilisation or Unpaid Sum is denominated,pursuant to this Agreement, on its due date. 31.8.3Each payment of interest shall be made in the currency in which the sum in respect of which the interest is payable was denominated, pursuant to this Agreement,when that interest accrued. 31.8.4Each payment in respect of costs, expenses or Taxes shall be made in the currency in which the costs, expenses or Taxes are incurred. 31.8.5Any amount expressed to be payable in a currency other than dollars shall be paid in that other currency. 31.9Change of currency 31.9.1Unless otherwise prohibited by law, if more than one currency or currency unit are at the same time recognised by the central bank of any country as the lawfulcurrency of that country, then: (a)any reference in the Finance Documents to, and any obligations arising under the Finance Documents in, the currency of that country shall be translatedinto, or paid in, the currency or currency unit of that country designated by the Agent (after consultation with the Borrowers); and (b)any translation from one currency or currency unit to another shall be at the official rate of exchange recognised by the central bank for the conversion ofthat currency or currency unit into the other, rounded up or down by the Agent (acting reasonably). 31.9.2If a change in any currency of a country occurs, this Agreement will, to the extent the Agent (acting reasonably and after consultation with the Borrowers) specifiesto be necessary, be amended to comply with any generally accepted conventions and market practice in the Relevant Market and otherwise to reflect the change incurrency. 31.10Disruption to payment systems etc. If either the Agent determines that a Disruption Event has occurred or the Agent is notified by the Borrowers that a Disruption Event hasoccurred: 31.10.1the Agent may, and shall if requested to do so by the Borrowers, consult with the Borrowers with a view to agreeing with the Borrowers such changes to theoperation or administration of the Loan as the Agent may deem necessary in the circumstances; 31.10.2the Agent shall not be obliged to consult with the Borrowers in relation to any changes mentioned in Clause 31.10.1 if, in its opinion, it is not practicable to do so inthe circumstances and, in any event, shall have no obligation to agree to any such changes; Page 11931.10.3the Agent may consult with the Finance Parties in relation to any changes mentioned in Clause 31.10.1 but shall not be obliged to do so if, in its opinion, it is notpracticable to do so in the circumstances; 31.10.4any such changes agreed upon by the Agent and the Borrowers shall (whether or not it is finally determined that a Disruption Event has occurred) be binding uponthe Parties as an amendment to (or, as the case may be, waiver of) the terms of the Finance Documents notwithstanding the provisions of Clause 37 (Amendmentsand Waivers); 31.10.5the Agent shall not be liable for any damages, costs or losses to any person, any diminution in value or any liability whatsoever (including, without limitation, fornegligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Agent) arising as a result of itstaking, or failing to take, any actions pursuant to or in connection with this Clause 31.10; and 31.10.6the Agent shall notify the Finance Parties of all changes agreed pursuant to Clause 31.10.4. 32Set-Off A Finance Party may set off any matured obligation due from an Obligor under the Finance Documents (to the extent beneficially owned by that Finance Party) against anymatured obligation owed by that Finance Party to that Obligor, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are indifferent currencies, the Finance Party may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off. 33Notices 33.1Communications in writing Any communication to be made under or in connection with the Finance Documents shall be made in writing and, unless otherwise stated, maybe made by fax or letter. 33.2Addresses The address and fax number (and the department or officer, if any, for whose attention the communication is to be made) of each Party for any communication ordocument to be made or delivered under or in connection with the Finance Documents is: 33.2.1in the case of each Borrower, that identified with its name in Part III (The Obligors) of Schedule 1 (The Parties); 33.2.2in the case of each Original Guarantor, that identified with its name in Part III (The Obligors) of Schedule 1 (The Parties), and in the case of each AdditionalGuarantor, that notified in writing to the Agent on or prior to the date on which it becomes an Additional Guarantor; 33.2.3in the case of each Lender, that notified in writing to the Agent on or prior to the date on which it becomes a Party; and Page 12033.2.4in the case of each Hedge Counterparty, that identified with its name in Part II (The other Finance Parties) of Schedule 1 (The Parties); and 33.2.5in the case of the Agent or the Security Agent, that identified with its name in Part II (The other Finance Parties) of Schedule 1 (The Parties), or any substitute address, fax number, or department or officer as the Party may notify to the Agent (or the Agent may notify to the other Parties, if a change is made by theAgent) by not less than five Business Days' notice. 33.3Delivery Any communication or document made or delivered by one person to another under or in connection with the Finance Documents will only be effective: 33.3.1if by way of fax, when received in legible form; or 33.3.2if by way of letter, when it has been left at the relevant address or five Business Days after being deposited in the post postage prepaid in an envelope addressed toit at that address; and, if a particular department or officer is specified as part of its address details provided under Clause 33.2 (Addresses), if addressed to that department or officer. Any communication or document to be made or delivered to the Agent or the Security Agent will be effective only when actually received by the Agent or the Security Agentand then only if it is expressly marked for the attention of the department or officer identified with the Agent's or the Security Agent's signature below (or any substitutedepartment or officer as the Agent or the Security Agent shall specify for this purpose). All notices from or to an Obligor in respect of a Finance Document shall be sent through the Agent. Any communication or document which becomes effective, in accordance with this Clause 33.3, after 5.00 p.m. in the place of receipt shall be deemed only to become effectiveon the following day. 33.4Notification of address and fax number Promptly upon changing its address or fax number, the Agent shall notify the other Parties. 33.5Electronic communication 33.5.1Any communication or document to be made or delivered by one Party to another under or in connection with the Finance Documents may be made or delivered byelectronic mail or other electronic means (including, without limitation, by way of posting to a secure website) if those two Parties: (a)notify each other in writing of their electronic mail address and/or any other information required to enable the transmission of information by that means;and (b)notify each other of any change to their address or any other such information supplied by them by not less than five Business Days' notice. Page 12133.5.2Any such electronic communication or delivery as specified in Clause 33.5.1 to be made between an Obligor and a Finance Party may only be made in that way tothe extent that those two Parties agree that, unless and until notified to the contrary, this is to be an accepted form of communication or delivery. 33.5.3Any such electronic communication or document made or delivered by one Party to another will be effective only when actually received (or made available) inreadable form and in the case of any electronic communication or document made or delivered by a Party to the Agent or the Security Agent only if it is addressedin such a manner as the Agent or the Security Agent shall specify for this purpose. 33.5.4Any electronic communication or document which becomes effective, in accordance with Clause 33.5.3, after 5.00 p.m. in the place in which the Party to whom therelevant communication or document is sent or made available has its address for the purpose of this Agreement shall be deemed only to become effective on thefollowing day. 33.5.5Any reference in a Finance Document to a communication being sent or received or a document being delivered shall be construed to include that communication ordocument being made available in accordance with this Clause 33.5. 33.6Direct electronic delivery by Borrowers Each Borrower may satisfy its obligations under this Agreement to deliver any information in relation to a Lender by delivering that information directly to that Lender inaccordance with Clause 33.5 (Electronic communication) to the extent that Lender and the Agent agree to this method of delivery. 33.7English language Any notice given under or in connection with any Finance Document must be in English. All other documents provided under or in connection with anyFinance Document must be: 33.7.1in English; or 33.7.2if not in English, and if so required by the Agent, accompanied by a certified English translation and, in this case, the English translation will prevail unless thedocument is a constitutional, statutory or other official document. 34Calculations and Certificates 34.1Accounts In any litigation or arbitration proceedings arising out of or in connection with a Finance Document, the entries made in the accounts maintained by a Finance Partyare prima facie evidence of the matters to which they relate. 34.2Certificates and determinations Any certification or determination by the Agent of a rate or amount under any Finance Document is, in the absence of manifest error,conclusive evidence of the matters to which it relates. Page 12234.3Day count convention and interest calculation 34.3.1Any interest, commission or fee accruing under a Finance Document will accrue from day to day and the amount of any such interest, commission or fee iscalculated: (a)on the basis of the actual number of days elapsed and a year of 360 days (or, in any case where the practice in the Relevant Market differs, in accordancewith that market practice); and (b)Subject to Clause 34.3.2, without rounding. 34.3.2The aggregate amount of interest, commission or fee which is, or becomes, payable by an Obligor under a Finance Document shall be rounded to two decimalplaces. 35Partial Invalidity If, at any time, any provision of a Finance Document is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality,validity or enforceability of the remaining provisions nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way beaffected or impaired. 36Remedies and Waivers No failure to exercise, nor any delay in exercising, on the part of any Finance Party or Secured Party, any right or remedy under a Finance Document shall operate as a waiverof any such right or remedy or constitute an election to affirm any Finance Document. No election to affirm any Finance Document on the part of any Finance Party orSecured Party shall be effective unless it is in writing. No single or partial exercise of any right or remedy shall prevent any further or other exercise or the exercise of any otherright or remedy. The rights and remedies provided in each Finance Document are cumulative and not exclusive of any rights or remedies provided by law. 37Amendments and Waivers 37.1Required consents 37.1.1Subject to Clauses 37.2 (All Lender matters) and 37.3 (Other exceptions), any term of the Finance Documents may be amended or waived only with the consent ofthe Majority Lenders and the Borrowers and any such amendment or waiver will be binding on all Parties. 37.1.2The Agent may effect, on behalf of any Finance Party, any amendment or waiver permitted by this Clause 37. 37.1.3Without prejudice to the generality of Clauses 27.8.3, 27.8.4 and 27.8.5 (Rights and discretions), the Agent may engage, pay for and rely on the services of lawyersin determining the consent level required for and effecting any amendment, waiver or consent under this Agreement. 37.1.4Clause 25.10.3 (Pro rata interest settlement) shall apply to this Clause 37. Page 12337.2All Lender matters Subject to Clause 37.4 (Changes to reference rates), an amendment, waiver or (in the case of a Security Document) a consent under, or in relation to, anyterm of any Finance Document that has the effect of changing or which relates to: 37.2.1the definition of "Majority Lenders" in Clause 1.1 (Definitions); 37.2.2an extension to the date of payment of any amount under the Finance Documents; 37.2.3a reduction in the Margin or a reduction in the amount of any payment of principal, interest, fees or commission payable; 37.2.4a change in currency of payment of any amount under the Finance Documents; 37.2.5an increase in any Commitment, an extension of the Availability Period or any requirement that a cancellation of Commitments reduces the Commitments of theLenders rateably; 37.2.6a change to a Borrower or a change to a Guarantor other than in accordance with Clause 26 (Changes to the Obligors); 37.2.7any provision which expressly requires the consent of all the Lenders; 37.2.8Clause 2.2 (Finance Parties' rights and obligations), Clause 5.1 (Delivery of a Utilisation Request), Clause 7.1 (Illegality), Clause 7.5 (Mandatory prepayment onsale or Total Loss), Clause 20.1.24 (Money laundering), Clause 23.2.2 (Compliance with laws), Clause 23.5 (Anti-corruption law), Clause 23.26 (Sanctions), Clause25 (Changes to the Lenders and Hedge Counterparties), Clause 26 (Changes to the Obligors), this Clause 37, Clause 43 (Governing Law) or Clause 44.1(Jurisdiction); 37.2.9(other than as expressly permitted by the provisions of any Finance Document) the nature or scope of: (a)any Guarantee; (b)the Security Assets; or (c)the manner in which the proceeds of enforcement of the Transaction Encumbrances are distributed; or 37.2.10the release of any Guarantee or of any Transaction Encumbrance unless permitted under this Agreement or any other Finance Document or relating to a sale ordisposal of an asset which is the subject of the Transaction Encumbrances where such sale or disposal is expressly permitted under this Agreement or any otherFinance Document; shall not be made, or given, without the prior consent of all the Lenders. Page 12437.3Other exceptions 37.3.1An amendment or waiver which relates to the rights or obligations of the Agent, the Security Agent or the Bookrunner (each in their capacity as such) may not beeffected without the consent of the Agent, the Security Agent or, as the case may be, the Bookrunner. 37.3.2An amendment or waiver which relates to any of the following provisions and would adversely affect the rights or obligations of a Hedge Counterparty (in itscapacity as such) may not be effected without the consent of that Hedge Counterparty: (a)the definition of "Finance Parties"; (b)the definition of "Finance Documents"; (c)Clause 8.4 (Hedging); (d)Clause 23.32 (No dealings with Hedging Agreements); (e)Clause 28 (Application of Proceeds); or (f)this Clause 37.3.2. 37.4Changes to reference rates 37.4.1In this Clause 37.4: "Published Rate" means the Term SOFR for any Quoted Tenor or SOFR. "Published Rate Replacement Event" means, in relation to a Published Rate: (a)the methodology, formula or other means of determining that Published Rate has, in the opinion of the Majority Lenders and the Obligors materiallychanged; (b) (i) (A)the administrator of that Published Rate or its supervisor publicly announces that such administrator is insolvent; or (B)information is published in any order, decree, notice, petition or filing, however described, of or filed with a court, tribunal, exchange,regulatory authority or similar administrative, regulatory or judicial body which reasonably confirms that the administrator of thatPublished Rate is insolvent, provided that, in each case, at that time, there is no successor administrator to continue to provide that Published Rate; Page 125(ii)the administrator of that Published Rate publicly announces that it has ceased or will cease, to provide that Published Rate permanently orindefinitely and, at that time, there is no successor administrator to continue to provide that Published Rate; (iii)the supervisor of the administrator of that Published Rate publicly announces that such Published Rate has been or will be permanently orindefinitely discontinued; (iv)the administrator of that Published Rate or its supervisor announces that that Published Rate may no longer be used; or (c)the administrator of that Published Rate (or the administrator of an interest rate which is a constituent element of that Published Rate) determines thatthat Published Rate should be calculated in accordance with its reduced submissions or other contingency or fallback policies or arrangements andeither: (i)the circumstance(s) or event(s) leading to such determination are not (in the opinion of the Majority Lenders and the Obligors) temporary; or (ii)that Published Rate is calculated in accordance with any such policy or arrangement for a period no less than 30 days; or (d)in the opinion of the Majority Lenders and the Obligors, that Published Rate is otherwise no longer appropriate for the purposes of calculating interestunder this Agreement. "Quoted Tenor" means, in relation to Term SOFR, any period for which that rate is customarily displayed on the relevant page or screen of an information service. "Relevant Nominating Body" means any applicable central bank, regulator or other supervisory authority or a group of them, or any working group or committeesponsored or chaired by, or constituted at the request of, any of them or the Financial Stability Board. "Replacement Reference Rate" means a reference rate which is: (a)formally designated, nominated or recommended as the replacement for a Published Rate by: (i)the administrator of that Published Rate (provided that the market or economic reality that such reference rate measures is the same as thatmeasured by that Published Rate); or (ii)any Relevant Nominating Body, Page 126and if replacements have, at the relevant time, been formally designated, nominated or recommended under both (i) and (ii), the "Replacement ReferenceRate" will be the replacement under (ii); (b)in the opinion of the Majority Lenders and the Borrowers, generally accepted in the international or any relevant domestic syndicated loan markets as theappropriate successor to that Published Rate; or (c)in the opinion of the Majority Lenders and the Borrowers, an appropriate successor to a Published Rate. 37.4.2Subject to Clause 37.3.1 (Other exceptions), if a Published Rate Replacement Event has occurred in relation to any Published Rate any amendment or waiver whichrelates to: (a)providing for the use of a Replacement Reference Rate in place of that Published Rate; and (b) (i)aligning any provision of any Finance Document to the use of that Replacement Reference Rate; (ii)enabling that Replacement Reference Rate to be used for the calculation of interest under this Agreement (including, without limitation, anyconsequential changes required to enable that Replacement Reference Rate to be used for the purposes of this Agreement); (iii)implementing market conventions applicable to that Replacement Reference Rate; (iv)providing for appropriate fallback (and market disruption) provisions for that Replacement Reference Rate; or (v)adjusting the pricing to reduce or eliminate, to the extent reasonably practicable, any transfer of economic value from one Party to another as aresult of the application of that Replacement Reference Rate (and if any adjustment or method for calculating any adjustment has been formallydesignated, nominated or recommended by the Relevant Nominating Body, the adjustment shall be determined on the basis of thatdesignation, nomination or recommendation), may be made with the consent of the Agent (acting on the instructions of the Majority Lenders), the Guarantors and the Borrowers. 37.4.3If any Lender fails to respond to a request for an amendment or waiver described in Clause 37.4.1 within 30 Business Days (or such longer time period in relation toany request which the Borrowers and the Agent may agree) of that request being made: Page 127(a)its Commitment(s) shall not be included for the purpose of calculating the Total Commitments under the relevant Utilisation when ascertaining whetherany relevant percentage of Total Commitments has been obtained to approve that request; and (b)its status as a Lender shall be disregarded for the purpose of ascertaining whether the agreement of any specified group of Lenders has been obtained toapprove that request. 37.5Excluded Commitments If: 37.5.1any Defaulting Lender fails to respond to a request for a consent, waiver, amendment of or in relation to any term of any Finance Document or any other vote ofLenders under the terms of this Agreement within five Business Days of that request being made; or 37.5.2any Lender which is not a Defaulting Lender fails to respond to such a request, (unless, in either case, the Borrowers and the Agent agree to a longer time period in relation to any request): (a)its Commitment(s) shall not be included for the purpose of calculating the Total Commitments when ascertaining whether any relevant percentage(including, for the avoidance of doubt, unanimity) of Total Commitments has been obtained to approve that request; and (b)its status as a Lender shall be disregarded for the purpose of ascertaining whether the agreement of any specified group of Lenders has been obtained toapprove that request. 37.6Replacement of Lender 37.6.1If: (a)any Lender becomes a Non-Consenting Lender (as defined in Clause 37.6.4); or (b)a Borrower or a Guarantor becomes obliged to repay any amount in accordance with Clause 7.1 (Illegality) or to pay additional amounts pursuant toClause 12.2 (Tax gross-up), Clause 12.3 (Tax Indemnity) or Clause 13.1 (Increased costs) to any Lender, then the Borrowers may, on ten Business Days' prior written notice to the Agent and such Lender, replace such Lender by requiring such Lender to (and, to theextent permitted by law, such Lender shall) transfer pursuant to Clause 25 (Changes to the Lenders and Hedge Counterparties) all (and not part only) of its rightsand obligations under this Agreement to a Lender or other bank, financial institution, trust, fund or other entity selected by the Borrowers (a "ReplacementLender") which confirms its willingness to assume and does assume all the obligations of the transferring L25accordance with Clause 25 (Changes to the Lendersand Hedge Counterparties) for a purchase price in cash payable at the time of transfer in an amount equal to the outstanding principal amount of such Lender'sparticipation in the outstanding Loan and all accrued interest (to the extent that the Agent has not given a notification under Clause 25.10 (Pro rata interestsettlement)), Break Costs and other amounts payable in relation thereto under the Finance Documents. Page 12837.6.2The replacement of a Lender pursuant to this Clause 37.6 shall be subject to the following conditions: (a)the Borrowers shall have no right to replace the Agent or Security Agent; (b)neither the Agent nor the Lender shall have any obligation to the Borrowers to find a Replacement Lender; (c)in the event of a replacement of a Non-Consenting Lender such replacement must take place no later than 15 days after the date on which that Lender isdeemed a Non-Consenting Lender; (d)in no event shall the Lender replaced under this Clause 37.6 be required to pay or surrender to such Replacement Lender any of the fees received by suchLender pursuant to the Finance Documents; and (e)the Lender shall only be obliged to transfer its rights and obligations pursuant to Clause 37.6.1 once it is satisfied that it has complied with all necessary"know your customer" or other similar checks under all applicable laws and regulations in relation to that transfer. 37.6.3A Lender shall perform the checks described in Clause 37.6.2(e) as soon as reasonably practicable following delivery of a notice referred to in Clause 37.6.1 and shallnotify the Agent and the Borrowers when it is satisfied that it has complied with those checks. 37.6.4In the event that: (a)the Borrowers or the Agent (at the request of the Borrowers) have requested the Lenders to give a consent in relation to, or to agree to a waiver oramendment of, any provisions of the Finance Documents; (b)the consent, waiver or amendment in question requires the approval of all the Lenders; and (c)Lenders whose Commitments aggregate more than 51% of the Total Commitments (or, if the Total Commitments have been reduced to zero, aggregatedmore than 51% of the Total Commitments prior to that reduction) have consented or agreed to such waiver or amendment, then any Lender who does not and continues not to consent or agree to such waiver or amendment shall be deemed a "Non-Consenting Lender". Page 12937.7Disenfranchisement of Defaulting Lenders 37.7.1For so long as a Defaulting Lender has any Commitment, in ascertaining: (a)the Majority Lenders; or (b)whether: (i)any given percentage (including, for the avoidance of doubt, unanimity) of the Total Commitments; or (ii)the agreement of any specified group of Lenders, has been obtained to approve any request for a consent, waiver, amendment or other vote of Lenders under the Finance Documents, that Defaulting Lender'sCommitment will be reduced by the amount of its participation in the Loan it has failed to make available and, to the extent that that reduction results in thatDefaulting Lender's Commitment being zero, that Defaulting Lender shall be deemed not to be a Lender for the purposes of (i) and (ii). 37.7.2For the purposes of this Clause 37.7, the Agent may assume that the following Lenders are Defaulting Lenders: (a)any Lender which has notified the Agent that it has become a Defaulting Lender; (b)any Lender in relation to which it is aware that any of the events or circumstances referred to in (a), (b) or (c) of the definition of "Defaulting Lender" hasoccurred, unless it has received notice to the contrary from the Lender concerned (together with any supporting evidence reasonably requested by the Agent) or the Agentis otherwise aware that the Lender has ceased to be a Defaulting Lender. 37.8Replacement of a Defaulting Lender 37.8.1The Borrowers may, at any time a Lender has become and continues to be a Defaulting Lender, by giving ten Business Days' prior written notice to the Agent andsuch Lender, replace such Lender by requiring such Lender to (and, to the extent permitted by law, such Lender shall) transfer pursuant to Clause 25 (Changes tothe Lenders and Hedge Counterparties) all (and not part only) of its rights and obligations under this Agreement to a Lender or other bank, financial institution,trust, fund or other entity selected by the Borrowers (a "Replacement Lender") which confirms its willingness to assume and does assume all the obligations, or allthe relevant obligations, of the transferring L25accordance with Clause 25 (Changes to the Lenders and Hedge Counterparties) for a purchase price in cashpayable at the time of transfer which is either: (a)in an amount equal to the outstanding principal amount of such Lender's participation in the outstanding Loan and all accrued interest (to the extent thatthe Agent has not given a notification under Clause 25.10 (Pro rata interest settlement)), Break Costs and other amounts payable in relation theretounder the Finance Documents; or Page 130(b)in an amount agreed between that Defaulting Lender, the Replacement Lender and the Borrowers and which does not exceed the amount described in (a). 37.8.2Any transfer of rights and obligations of a Defaulting Lender pursuant to this Clause 37.8 shall be subject to the following conditions: (a)the Borrowers shall have no right to replace the Agent or Security Agent; (b)neither the Agent nor the Defaulting Lender shall have any obligation to the Borrowers to find a Replacement Lender; (c)the transfer must take place no later than 15 days after the notice referred to in Clause 37.8.1; (d)in no event shall the Defaulting Lender be required to pay or surrender to the Replacement Lender any of the fees received by the Defaulting Lenderpursuant to the Finance Documents; and (e)the Defaulting Lender shall only be obliged to transfer its rights and obligations pursuant to 37.8.1 once it is satisfied that it has complied with allnecessary "know your customer" or other similar checks under all applicable laws and regulations in relation to that transfer to the Replacement Lender. 37.8.3The Defaulting Lender shall perform the checks described in Clause 37.8.2(e) as soon as reasonably practicable following delivery of a notice referred to in Clause37.8.1 and shall notify the Agent and the Borrowers when it is satisfied that it has complied with those checks. 38Confidentiality 38.1Confidential Information Each Finance Party agrees to keep all Confidential Information confidential and not to disclose it to anyone, save to the extent permitted by Clause38.2 (Disclosure of Confidential Information) and Clause 38.3 (Disclosure to numbering service providers), and to ensure that all Confidential Information is protected withsecurity measures and a degree of care that would apply to its own confidential information. 38.2Disclosure of Confidential Information 38.2.1Any Finance Party may disclose: Page 131(a)to any of its Affiliates and Related Funds and any of its or their officers, directors, employees, professional advisers, auditors, partners andRepresentatives such Confidential Information as that Finance Party shall consider appropriate if any person to whom the Confidential Information is tobe given pursuant to this Clause 38.2.1(a) is informed in writing of its confidential nature and that some or all of such Confidential Information may beprice-sensitive information except that there shall be no such requirement to so inform if the recipient is subject to professional obligations to maintainthe confidentiality of the information or is otherwise bound by requirements of confidentiality in relation to the Confidential Information; (b)to any person: (i)to (or through) whom it assigns or transfers (or may potentially assign or transfer) all or any of its rights and/or obligations under one or moreFinance Documents or which succeeds (or which may potentially succeed) it as Agent or Security Agent and, in each case, to any of thatperson's Affiliates, Related Funds, Representatives and professional advisers; (ii)with (or through) whom it enters into (or may potentially enter into), whether directly or indirectly, any sub-participation in relation to, or anyother transaction under which payments are to be made or may be made by reference to, one or more Finance Documents and/or one or moreBorrowers or Guarantors and to any of that person's Affiliates, Related Funds, Representatives and professional advisers; (iii)appointed by any Finance Party or by a person to whom Clause 38.2.1(b)(i) or 38.2.1(b)(ii) applies to receive communications, notices,information or documents delivered pursuant to the Finance Documents on its behalf (including, without limitation, any person appointedunder Clause 27.16.2 (Relationship with the other Finance Parties)); (iv)who invests in or otherwise finances (or may potentially invest in or otherwise finance), directly or indirectly, any transaction referred to inClause 38.2.1(b)(i) or 38.2.1(b)(ii); (v)to whom information is required or requested to be disclosed by any court of competent jurisdiction or any governmental, banking, taxation orother regulatory authority or similar body, the rules of any relevant stock exchange or pursuant to any applicable law or regulation; (vi)to whom information is required to be disclosed in connection with, and for the purposes of, any litigation, arbitration, administrative or otherinvestigations, proceedings or disputes; Page 132(vii)to whom or for whose benefit that Finance Party charges, assigns or otherwise creates Encumbrances (or may do so) pursuant to Clause 25.9(Security over Lenders' rights); (viii)who is a Party; or (ix)with the consent of the Borrowers; in each case, such Confidential Information as that Finance Party shall consider appropriate if: (x)in relation to Clauses 38.2.1(b)(i), 38.2.1(b)(ii) and 38.2.1(b)(iii), the person to whom the Confidential Information is to be given has entered intoa Confidentiality Undertaking except that there shall be no requirement for a Confidentiality Undertaking if the recipient is a professionaladviser and is subject to professional obligations to maintain the confidentiality of the Confidential Information; (xi)in relation to Clause 38.2.1(b)(iv), the person to whom the Confidential Information is to be given has entered into a ConfidentialityUndertaking or is otherwise bound by requirements of confidentiality in relation to the Confidential Information they receive and is informedthat some or all of such Confidential Information may be price-sensitive information; (xii)in relation to Clauses 38.2.1(b)(v), 38.2.1(b)(vi) and 38.2.1(b)(vii), the person to whom the Confidential Information is to be given is informed ofits confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be norequirement to so inform if, in the opinion of that Finance Party, it is not practicable so to do in the circumstances; and (c)to any person appointed by that Finance Party or by a person to whom Clause 38.2.1(b)(i) or 38.2.1(b)(ii) applies to provide administration or settlementservices in respect of one or more of the Finance Documents including without limitation, in relation to the trading of participations in respect of theFinance Documents, such Confidential Information as may be required to be disclosed to enable such service provider to provide any of the servicesreferred to in this Clause 38.2.1(c) if the service provider to whom the Confidential Information is to be given has entered into a ConfidentialityUndertaking; and (d)to any rating agency (including its professional advisers) such Confidential Information as may be required to be disclosed to enable such rating agencyto carry out its normal rating activities in relation to the Finance Documents and/or the Borrowers and/or the Guarantors and/or the Group if the ratingagency to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such Confidential Informationmay be price-sensitive information. Page 13338.2.2Nothing in any Finance Document shall prevent disclosure of any Confidential Information or other matter to the extent that preventing that disclosure wouldotherwise cause any transaction contemplated by the Finance Documents or any transaction carried out in connection with any transaction contemplated by theFinance Documents to become an arrangement described in (a) Part II A 1 of Annex IV of DAC6 including as implemented in any EU member state or (b) regulationof MDR. 38.3Disclosure to numbering service providers 38.3.1Any Finance Party may disclose to any national or international numbering service provider appointed by that Finance Party to provide identification numberingservices in respect of this Agreement, the Loan and/or one or more Obligors the following information: (a)names of Obligors; (b)country of domicile of Obligors; (c)place of incorporation of Obligors; (d)date of this Agreement; (e)Clause 43 (Governing law); (f)the names of the Agent and the Bookrunner; (g)date of each amendment and restatement of this Agreement; (h)amount of Total Commitments; (i)currencies of the Loan; (j)type of Loan; (k)ranking of the Loan; (l)Termination Date; (m)changes to any of the information previously supplied pursuant to (a) to (l); and (n)such other information agreed between such Finance Party and that Obligor, to enable such numbering service provider to provide its usual syndicated loan numbering identification services. Page 13438.3.2The Parties acknowledge and agree that each identification number assigned to this Agreement, the Loan and/or one or more Obligors by a numbering serviceprovider and the information associated with each such number may be disclosed to users of its services in accordance with the standard terms and conditions ofthat numbering service provider. 38.3.3Each Borrower and each Guarantor represents that none of the information set out in Clauses 38.3.1(a) to 38.3.1(n) is, nor will at any time be, unpublished price-sensitive information. 38.3.4The Agent shall notify the Borrowers and the other Finance Parties of: (a)the name of any numbering service provider appointed by the Agent in respect of this Agreement, the Loan and/or one or more Obligors; and (b)the number or, as the case may be, numbers assigned to this Agreement, the Loan and/or one or more Obligors by such numbering service provider. 38.4Entire agreement This Clause 38 constitutes the entire agreement between the Parties in relation to the obligations of the Finance Parties under the Finance Documentsregarding Confidential Information and supersedes any previous agreement, whether express or implied, regarding Confidential Information. 38.5Inside information Each of the Finance Parties acknowledges that some or all of the Confidential Information is or may be price-sensitive information and that the use of suchinformation may be regulated or prohibited by applicable legislation including securities law relating to insider dealing and market abuse and each of the Finance Partiesundertakes not to use any Confidential Information for any unlawful purpose. 38.6Notification of disclosure Each of the Finance Parties agrees (to the extent permitted by law and regulation) to inform the Borrowers: 38.6.1of the circumstances of any disclosure of Confidential Information made pursuant to Clause 38.2.1(b)(v) except where such disclosure is made to any of the personsreferred to in that Clause during the ordinary course of its supervisory or regulatory function; and 38.6.2upon becoming aware that Confidential Information has been disclosed in breach of this Clause 38. 38.7Continuing obligations The obligations in this Clause 38 are continuing and, in particular, shall survive and remain binding on each Finance Party for a period of 12 monthsfrom the earlier of: 38.7.1the date on which all amounts payable by the Obligors under or in connection with the Finance Documents have been paid in full and all Commitments havebeen cancelled or otherwise cease to be available; and 38.7.2the date on which such Finance Party otherwise ceases to be a Finance Party. Page 13539Confidentiality of Funding Rates 39.1Confidentiality and disclosure 39.1.1The Agent, each Borrower and each Guarantor agree to keep each Funding Rate confidential and not to disclose it to anyone, save to the extent permitted by Clause39.1.2 and Clause 39.1.3. 39.1.2The Agent may disclose: (a)any Funding Rate to the Borrowers pursuant to Clause 8.6 (Notifications); and (b)any Funding Rate to any person appointed by it to provide administration services in respect of one or more of the Finance Documents to the extentnecessary to enable such service provider to provide those services if the service provider to whom that information is to be given has entered into aconfidentiality agreement substantially in the form of the LMA Master Confidentiality Undertaking for Use With Administration / Settlement ServiceProviders or in such other form of confidentiality undertaking agreed between the Agent and the relevant Lender. 39.1.3The Agent and each Borrower and each Guarantor may disclose any Funding Rate to: (a)any of its Affiliates and any of its or their officers, directors, employees, professional advisers, auditors, partners and Representatives if any person towhom that Funding Rate is to be given pursuant to this Clause 39.1.3 is informed in writing of its confidential nature and that it may be price sensitiveinformation except that there shall be no such requirement to so inform if the recipient is subject to professional obligations to maintain theconfidentiality of that Funding Rate or is otherwise bound by requirements of confidentiality in relation to it; (b)any person to whom information is required or requested to be disclosed by any court of competent jurisdiction or any governmental, banking, taxationor other regulatory authority or similar body, the rules of any relevant stock exchange or pursuant to any applicable law or regulation if the person towhom that Funding Rate is to be given is informed in writing of its confidential nature and that it may be price sensitive information except that there shallbe no requirement to so inform if, in the opinion of the Agent or the Borrowers or the relevant Guarantor, as the case may be, it is not practicable to do soin the circumstances; (c)any person to whom information is required to be disclosed in connection with, and for the purposes of, any litigation, arbitration, administrative or otherinvestigations, proceedings or disputes if the person to whom that Funding Rate is to be given is informed in writing of its confidential nature and that itmay be price sensitive information except that there shall be no requirement to so inform if, in the opinion of the Agent or the Borrowers or the relevantGuarantor, as the case may be, it is not practicable to do so in the circumstances; and Page 136(d)any person with the consent of the relevant Lender. 39.2Related obligations 39.2.1The Agent and each Borrower and each Guarantor acknowledge that each Funding Rate is or may be price sensitive information and that its use may be regulated orprohibited by applicable legislation including securities law relating to insider dealing and market abuse and the Agent, each Borrower and each Guarantorundertake not to use any Funding Rate for any unlawful purpose. 39.2.2The Agent, each Borrower and each Guarantor agree (to the extent permitted by law and regulation) to inform the relevant Lender: (a)of the circumstances of any disclosure made pursuant to Clause 39.1.3(b) except where such disclosure is made to any of the persons referred to in thatClause during the ordinary course of its supervisory or regulatory function; and (b)upon becoming aware that any information has been disclosed in breach of this Clause 39. 39.3No Event of Default No Event of Default will occur under Clause 24.1.3 (Other obligations) by reason only of a Borrower's or a Guarantor's failure to comply with this Clause39. 40Disclosure of Lender Details by Agent 40.1Supply of Lender details to Borrowers The Agent shall provide to the Borrowers within seven Business Days of a request by the Borrowers (but no more frequently thanonce per calendar month) a list (which may be in electronic form) setting out the names of the Lenders as at that Business Day, their respective Commitments, the address andfax number (and the department or officer, if any, for whose attention any communication is to be made) of each Lender for any communication to be made or document to bedelivered under or in connection with the Finance Documents, the electronic mail address and/or any other information required to enable the transmission of information byelectronic mail or other electronic means to and by each Lender to whom any communication under or in connection with the Finance Documents may be made by that meansand the account details of each Lender for any payment to be distributed by the Agent to that Lender under the Finance Documents. 40.2Supply of Lender details at Borrowers' direction 40.2.1The Agent shall, at the request of the Borrowers, disclose the identity of the Lenders and the details of the Lenders' Commitments to any: Page 137(a)other Party or any other person if that disclosure is made to facilitate, in each case, a refinancing of the Financial Indebtedness arising under the FinanceDocuments or a material waiver or amendment of any term of any Finance Document; and (b)Obligor or any other member of the Group. 40.2.2Subject to Clause 40.2.3, the Borrowers shall procure that the recipient of information disclosed pursuant to Clause 40.2.1 shall keep such information confidentialand shall not disclose it to anyone and shall ensure that all such information is protected with security measures and a degree of care that would apply to therecipient's own confidential information. 40.2.3The recipient may disclose such information to any of its officers, directors, employees, professional advisers, auditors and partners as it shall consider appropriateif any such person is informed in writing of its confidential nature, except that there shall be no such requirement to so inform if that person is subject toprofessional obligations to maintain the confidentiality of the information or is otherwise bound by duties of confidentiality in relation to the information. 40.3Supply of Lender details to other Lenders 40.3.1If a Lender (a "Disclosing Lender") indicates to the Agent that the Agent may do so, the Agent shall disclose that Lender's name and Commitment to any otherLender that is, or becomes, a Disclosing Lender. 40.3.2The Agent shall, if so directed by the Requisite Lenders, request each Lender to indicate to it whether it is a Disclosing Lender. 40.4Lender enquiry If any Lender believes that any entity is, or may be, a Lender and: 40.4.1that entity ceases to have an Investment Grade Rating; or 40.4.2an Insolvency Event occurs in relation to that entity, the Agent shall, at the request of that Lender, indicate to that Lender the extent to which that entity has a Commitment. 40.5Lender details definitions In this Clause 40: "Investment Grade Rating" means, in relation to an entity, a rating for its long-term unsecured and non-credit-enhanced debt obligations of BBB- or higher by Standard &Poor's Rating Services or Fitch Ratings Ltd or Baa3 or higher by Moody's Investors Service Limited or a comparable rating from an internationally recognised credit ratingagency. "Requisite Lenders" means a Lender or Lenders whose Commitments aggregate 15% (or more) of the Total Commitments (or if the Total Commitments have been reduced tozero, aggregated 15% (or more) of the Total Commitments immediately prior to that reduction). Page 13841Counterparts Each Finance Document may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of theFinance Document. 42Joint and Several Liability 42.1Nature of liability The representations, warranties, covenants, obligations and undertakings of the Borrowers contained in this Agreement shall be joint and several so thateach Borrower shall be jointly and severally liable with all the Borrowers for all of the same and such liability shall not in any way be discharged, impaired or otherwise affectedby: 42.1.1any forbearance (whether as to payment or otherwise) or any time or other indulgence granted to any other Borrower or any other Obligor under or in connectionwith any Finance Document; 42.1.2any amendment, variation, novation or replacement of any other Finance Document; 42.1.3any failure of any Finance Document to be legal valid binding and enforceable in relation to any other Borrower or any other Obligor for any reason; 42.1.4the winding-up or dissolution of any other Borrower or any other Obligor; 42.1.5the release (whether in whole or in part) of, or the entering into of any compromise or composition with, any other Borrower or any other Obligor; or 42.1.6any other act, omission, thing or circumstance which would or might, but for this provision, operate to discharge, impair or otherwise affect such liability. 42.2No rights as surety Until the Indebtedness has been unconditionally and irrevocably paid and discharged in full, each Borrower agrees that it shall not, by virtue of anypayment made under this Agreement on account of the Indebtedness or by virtue of any enforcement by a Finance Party of its rights under this Agreement or by virtue of anyrelationship between, or transaction involving, the relevant Borrower and any other Borrower or any other Obligor: 42.2.1exercise any rights of subrogation in relation to any rights, security or moneys held or received or receivable by a Finance Party or any other person; or 42.2.2exercise any right of contribution from any other Borrower or any other Obligor under any Finance Document; or 42.2.3exercise any right of set-off or counterclaim against any other Borrower or any other Obligor; or 42.2.4receive, claim or have the benefit of any payment, distribution, security or indemnity from any other Borrower or any other Obligor; or 42.2.5unless so directed by the Agent (when the relevant Borrower will prove in accordance with such directions), claim as a creditor of any other Borrower or any otherObligor in competition with any Finance Party and each Borrower shall hold in trust for the Finance Parties and forthwith pay or transfer (as appropriate) to the Agent any such payment (including an amount equal to anysuch set-off), distribution or benefit of such security, indemnity or claim in fact received by it. Page 139Section 12Governing Law and Enforcement 43Governing Law This Agreement and any non-contractual obligations arising out of or in connection with it are governed by English law. 44Enforcement 44.1Jurisdiction 44.1.1The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement (including a dispute relating to theexistence, validity or termination of this Agreement or any non-contractual obligation arising out of or in connection with this Agreement) (a "Dispute"). 44.1.2The Parties agree that the courts of England are the most appropriate and convenient courts to decide Disputes and accordingly no Party will argue to the contrary. 44.2Service of process 44.2.1Without prejudice to any other mode of service allowed under any relevant law, each Borrower and each Guarantor: (a)irrevocably appoints Hill Dickinson Services (London) Ltd, the Broadgate Tower, 20 Primrose Street, London EC2A 2EW, as its agent for service ofprocess in relation to any proceedings before the English courts in connection with any Finance Document; and (b)agrees that failure by a process agent to notify that Borrower or that Guarantor (as the case may be) of the process will not invalidate the proceedingsconcerned. 44.2.2If any person appointed as an agent for service of process is unable for any reason to act as agent for service of process or terminates its appointment as agent forservice of process, the relevant Borrower or relevant Guarantor (as the case may be) must immediately (and in any event within five days of such event taking place)appoint another agent on terms acceptable to the Agent. Failing this, the Agent may appoint another agent for this purpose. This Agreement has been entered into on the date stated at the beginning of this Agreement. Page 140Schedule 1The Parties Part IThe Original Lenders Name of Original LenderCommitmentTreaty Passport scheme reference number andjurisdiction of tax residence (if applicable)Nordea Bank Abp, filial i NorgeUS$20,000,000 Part IIThe other Finance Parties The Agent Address:Essendrops gate 7 N-0368 Oslo Norway Fax no.: Department/Officer: Email address: The Security Agent Address:Essendrops gate 7 N-0368 Oslo Norway Fax no.: Department/Officer: Email address: The Bookrunner Address:Essendrops gate 7 N-0368 Oslo Norway Fax no.: Department/Officer: Email address: Page 141 The Original Hedge Counterparties Address: Nordea Danmark, Filial af Nordea Bank Abp, Finland, 7288 Derivative Services, PO Box 850, DK-0900 Copenhagen K,Denmark Fax no.: Department/Officer: Email address: Part III The Obligors The Borrowers Name: Taburao Shipping Company Inc. Address: Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 c/o Unitized Ocean transport Limited 373 Syngrou Ave. & 2-4 Ymittou str. 17564, Palaio Faliro, Athens, Greece Fax no.: Department/Officer: Email address: Name: Tarawa Shipping Company Inc. Address: Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 c/o Unitized Ocean transport Limited 373 Syngrou Ave. & 2-4 Ymittou str. 17564, Palaio Faliro, Athens, Greece Fax no.: Department/Officer: Email address: Page 142 The Original Guarantor Name: Performance Shipping Inc. Address: Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 c/o Unitized Ocean transport Limited 373 Syngrou Ave. & 2-4 Ymittou str. 17564, Palaio Faliro, Athens, Greece Fax no.: Department/Officer: Email address: Page 143Schedule 2 Conditions Precedent and Subsequent Page 144Schedule 3Utilisation Request Page 145Schedule 4 Form of Transfer Certificate Page 146Schedule 5Form of Assignment Agreement Page 147Schedule 6Form of Accession Deed Page 148Schedule 7Form of Compliance Certificate Page 149Schedule 8 Form of Hedge Counterparty Accession Letter Page 150Schedule 9 Reference Rate Terms Currencydollars Cost of funds as a fallbackCost of funds will apply as a fallback. Definitions Break CostsNone Specified. Central Bank Rate:(a) the short-term interest rate target set by the US Federal Open Market Committee as published by the Federal Reserve Bankof New York from time to time; or(b) if that target is not a single figure, the arithmetic mean of:(i) the upper bound of the short-term interest rate target range set by the US Federal Open Market Committee andpublished by the Federal Reserve Bank of New York; and(ii) the lower bound of that target range. Central Bank Rate Adjustment: means, in relation to the Central Bank Rate prevailing at close of business on any RFR Banking Day, the 20 per cent trimmedarithmetic mean (calculated by the Agent), of the Central Bank Rate Spreads for the five most immediately preceding RFR BankingDays for which the RFR is available. Central Bank Rate Spread:means, in relation to any RFR Banking Day, the difference (expressed as a percentage rate per annum) calculated by the Agent of:(a) the Central Bank Rate prevailing at close of business on that RFR Banking Day; and(b) the relevant Daily Rate. Daily Rate:The "Daily Rate" for any RFR Banking Day is: (a) the RFR for that RFR Banking Day; or (b) if the RFR is not available for that RFR Banking Day, the percentage rate per annum which is the aggregate of:(i) the Central Bank Rate for that RFR Banking Day; andPage 151 (ii) the applicable Central Bank Rate Adjustment ; or (c) if (b) above applies but the Central Bank Rate for that RFR Banking Day is not available, the percentage rate per annumwhich is the aggregate of:(i) the most recent Central Bank Rate for a day which is no more than five RFR Banking Days before that RFR BankingDay; and(ii) the applicable Central Bank Rate Adjustment,rounded, in either case, to five decimal places and if, in either case, that rate is less than zero, the Daily Rate shall be deemed to bezero. Lookback Period:Five RFR Banking Days. Market Disruption Rate The percentage rate per annum which is the Daily Rate for each day during the Interest Period of the relevant Utilisation. Relevant MarketThe market for overnight cash borrowing collateralised by US Government securities. RFRthe secured overnight financing rate (SOFR) administered by the Federal Reserve Bank of New York (or any other person whichtakes over the administration of that rate) published by the Federal Reserve Bank of New York (or any other person which takesover the publication of that rate). RFR Banking Daya day other than:(a) a Saturday or Sunday; and(b) a day on which the Securities Industry and Financial Markets Association (or any successor organisation) recommendsthat the fixed income departments of its members be closed for the entire day for purposes of trading in US GovernmentsecuritiesPage 152Schedule 10 Cumulative Compounded RFR Rate The "Cumulative Compounded RFR Rate" for any Interest Period for a Utilisation is the Observation Period CCRR for the Observation Period relating to that Interest Period where: the "Observation Period" relating to an Interest Period for a Utilisation is the period from and including the day falling the applicable Lookback Period prior to the first day of thatInterest Period and ending on, but excluding, the day falling the applicable Lookback Period prior to the last day of that Interest Period; and the "Observation Period CCRR" for the Observation Period relating to any Interest Period for a Compounded Rate Relevant is the percentage rate per annum (rounded to five decimalplaces) calculated as set out below: where: "d0" means the number of RFR Banking Days in the Observation Period; "i" means a series of whole numbers from one to d0, each representing the relevant RFR Banking Day in chronological order in the Observation Period; "DailyRatei" means for any RFR Banking Day "i" in the Observation Period, the Daily Rate for that RFR Banking Day "i"; "ni" means, for any RFR Banking Day "i", the number of calendar days from, and including, that RFR Banking Day "i" up to, but excluding, the following RFR Banking Day; "dcc" means 360 or, in any case where market practice in the Relevant Market is to use a different number for quoting the number of days in a year, that number; and "d" means the number of calendar days in that Observation Period. Page 153Signatures The Borrowers Taburao Shipping Company Inc.) ) By: Aikaterini Oikonomea)/s/ Aikaterini Oikonomeac/o Unitized Ocean Transport Limited) 373 Syngrou Ave. & 2-4 Ymittou str.) 17564 Palaio Faliro, Athens, Greece) Fax no.: +30 210 9470101) Officer: Mr Andreas Michalopoulos) Tarawa Shipping Company Inc.) ) By: Aikaterini Oikonomea)/s/ Aikaterini Oikonomeac/o Unitized Ocean Transport Limited) 373 Syngrou Ave. & 2-4 Ymittou str.) 17564 Palaio Faliro, Athens, Greece) Fax no.: +30 210 9470101) Officer: Mr Andreas Michalopoulos) The Original Guarantor Performance Shipping Inc.) ) By: Aikaterini Oikonomea)/s/ Aikaterini Oikonomeac/o Unitized Ocean Transport Limited) 373 Syngrou Ave. & 2-4 Ymittou str.) 17564 Palaio Faliro, Athens, Greece) Fax no.: +30 210 9470101) Officer: Mr Andreas Michalopoulos) The Bookrunner Nordea Bank Abp, filial i Norge) ) By: Georgios Kalpakidis)/s/ Georgios KalpakidisEssendrops gate 7) N-0368 Oslo) Norway) Fax no.: +47 22 48 66 68) Officers: Henrik Trulsen) and Dennis Skoglund) Page 154The Agent Nordea Bank Abp, filial i Norge) ) By: Georgios Kalpakidis)/s/ Georgios KalpakidisEssendrops gate 7) N-0368 Oslo) Norway) Fax no.: +47 22 48 66 68) Officers: Henrik Trulsen) and Dennis Skoglund) The Security Agent Nordea Bank Abp, filial i Norge) ) By: Georgios Kalpakidis)/s/ Georgios KalpakidisEssendrops gate 7) N-0368 Oslo) Norway) Fax no.: +47 22 48 66 68) Officers: Henrik Trulsen) and Dennis Skoglund) The Original Lenders Nordea Bank Abp, filial i Norge) ) By: Georgios Kalpakidis)/s/ Georgios KalpakidisEssendrops gate 7) N-0368 Oslo) Norway) Fax no.: +47 22 48 66 68) Officers: Henrik Trulsen) and Dennis Skoglund) The Original Hedge Counterparties Nordea Bank Abp) ) By: Georgios Kalpakidis)/s/ Georgios KalpakidisPO Box 850, DK-0900 Copenhagen K) Denmark) Fax no.: +47 22 48 66 68) Officers: Henrik Trulsen) and Dennis Skoglund) Page 155Exhibit 4.9SHIPBUILDING CONTRACTFORCONSTRUCTION OF ONE 114,000 DWT PRODUCT/ CRUDE OIL TANKER(HULL NO. H1596)BETWEEN SRI LANKA SHIPPING COMPANY INC.as BUYERandCHINA SHIPBUILDING TRADING COMPANY LIMITEDandSHANGHAI WAIGAOQIAO SHIPBUILDING COMPANY LIMITEDCollectively as SELLERShipbuilding ContractHull No.H1596CONTENTS ARTICLEPAGE NO. ARTICLE I DESCRIPTION AND CLASS2 1. DESCRIPTION:22. CLASS AND RULES23. PRINCIPAL PARTICULARS AND DIMENSIONS OF THE VESSEL34. GUARANTEED SPEED45. GUARANTEED FUEL CONSUMPTION46. GUARANTEED DEADWEIGHT47. SUBCONTRACTING:58. REGISTRATION:5 ARTICLE II CONTRACT PRICE & TERMS OF PAYMENT6 1. CONTRACT PRICE:62. CURRENCY:63. TERMS OF PAYMENT:64. METHOD OF PAYMENT:85. PREPAYMENT:96. SECURITY FOR PAYMENT OF INSTALMENTS BEFORE DELIVERY:97. REFUNDS10 ARTICLE III ADJUSTMENT OF THE CONTRACT PRICE11 1. DELIVERY112. INSUFFICIENT SPEED123. EXCESSIVE FUEL CONSUMPTION134. DEADWEIGHT145. EFFECT OF RESCISSION15 ARTICLE IV SUPERVISION AND INSPECTION16 1. APPOINTMENT OF THE BUYER'S SUPERVISOR162. COMMENTS TO PLANS AND DRAWINGS163. SUPERVISION AND INSPECTION BY THE SUPERVISOR174. LIABILITY OF THE SELLER185. SALARIES AND EXPENSES186. REPLACEMENT OF SUPERVISOR19 ARTICLE V MODIFICATION,CHANGES AND EXTRAS20 1. HOW EFFECTED202. CHANGES IN RULES AND REGULATIONS, ETC.213. SUBSTITUTION OF MATERIALS AND/OR EQUIPMENT224. BUYER'S SUPPLIED ITEMS22 ARTICLE VI TRIALS24 1. NOTICE242. HOW CONDUCTED253. TRIAL LOAD DRAFT254. METHOD OF ACCEPTANCE OR REJECTION265. DISPOSITION OF SURPLUS CONSUMABLE STORES266. EFFECT OF ACCEPTANCE27 ARTICLE VII DELIVERY28 1. TIME AND PLACE282. WHEN AND HOW EFFECTED283. DOCUMENTS TO BE DELIVERED TO THE BUYER284. TITLE AND RISK30IShipbuilding ContractHull No.H15965. REMOVAL OF VESSEL306. TENDER OF THE VESSEL30 ARTICLE VIII DELAYS & EXTENSION OF TIME FOR DELIVERY31 1. CAUSE OF DELAY312. NOTICE OF DELAY313. RIGHT TO CANCEL FOR EXCESSIVE DELAY324. DEFINITION OF PERMISSIBLE DELAY32 ARTICLE IX WARRANTY OF QUALITY33 1. GUARANTEE OF MATERIAL AND WORKMANSHIP332. NOTICE OF DEFECTS333. REMEDY OF DEFECTS334. EXTENT OF THE SELLER'S LIABILITY35 ARTICLE X CANCELLATION, REJECTION AND RESCISSION BY THE BUYER36 ARTICLE XI BUYER'S DEFAULT38 1. DEFINITION OF DEFAULT382. NOTICE OF DEFAULT383. INTEREST AND CHARGE394. DEFAULT BEFORE DELIVERY OF THE VESSEL395. SALE OF THE VESSEL40 ARTICLE XII INSURANCE42 1. EXTENT OF INSURANCE COVERAGE422. APPLICATION OF RECOVERED AMOUNT423. TERMINATION OF THE SELLER'S OBLIGATION TO INSURE43 ARTICLE XIII DISPUTES AND ARBITRATION44 1. PROCEEDINGS442. ALTERNATIVE ARBITRATION BY AGREEMENT443. NOTICE OF AWARD454. EXPENSES455. AWARD OF ARBITRATION456. ENTRY IN COURT457. ALTERATION OF DELIVERY DATE45 ARTICLE XIV RIGHT OF ASSIGNMENT46 ARTICLE XV TAXES AND DUTIES47 1. TAXES472. DUTIES47 ARTICLE XVI PATENTS, TRADEMARKS AND COPYRIGHTS48 ARTICLE XVII NOTICE49 ARTICLE XVIII EFFECTIVE DATE OF CONTRACT51 ARTICLE XIX INTERPRETATION52 1. LAW APPLICABLE522. DISCREPANCIES523. DEFINITION524. ENTIRE AGREEMENT52 ARTICLE XX SANCTIONS53 EXHIBIT "A" : IRREVOCABLE LETTER OF GUARANTEE NO.56 EXHIBIT "B" IRREVOCABLE LETTER OF GUARANTEE59IIShipbuilding ContractHull No.H1596SHIPBUILDING CONTRACTFORCONSTRUCTION OF ONE 114,000 DWT PRODUCT/ CRUDE OIL TANKER (HULL NO. H1596)This CONTRACT, entered into this 18th day of December 2023 by and between SRI LANKA SHIPPING COMPANY INC., a corporation organized and existing under the Laws of theRepublic of the Marshall Islands, having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960, Marshall Islands (hereinafter called the"BUYER") on one part; and CHINA SHIPBUILDING TRADING COMPANY LIMITED, a corporation organized and existing under the Laws of the People's Republic of China, having itsregistered office at 56(Yi) Zhongguancun Nan Da Jie, Beijing 100044, the People's Republic of China (hereinafter called "CSTC"), and SHANGHAI WAIGAOQIAO SHIPBUILDINGCOMPANY LIMITED, a corporation organized and existing under the Laws of the People's Republic of China, having its registered office at 3001 Zhouhai Road, Pudong New District,Shanghai 200137, the People's Republic of China (hereinafter called the "BUILDER") on the other part. CSTC and the BUILDER are hereinafter jointly called the "SELLER".BUYER and SELLER altogether the “Parties” and each one the “Party”.WITNESSETHin consideration of the mutual covenants contained herein, the SELLER agrees to build, launch, equip and complete at BUILDER's Shipyard and to sell and deliver to the BUYER aftercompletion and successful trial one (1) Diesel Driven 114,000 DWT PRODUCT/CRUDE OIL TANKER as more fully described in Article I hereof, to be registered under the flag of theRepublic of the Marshall Islands and the BUYER agrees to purchase and take delivery of the aforesaid VESSEL from the SELLER and to pay for the same in accordance with the termsand conditions hereinafter set forth. 1/62Shipbuilding ContractHull No.H1596ARTICLE I DESCRIPTION AND CLASS 1. DESCRIPTION: The VESSEL is a Steel-Hulled, Single Screw, Diesel Driven Product/Crude Oil Tanker of 114,000 metric tons deadweight, at scantling draft moulded of 15.0 meters (hereinafter calledthe "VESSEL") of the class described below. The VESSEL shall be on identical basis as the repeat vessel to the prototype vessel (BUILDER’s Hull No. H1515, hereinafter called“H1515”), the VESSEL shall have the BUILDER's Hull No. H1596 and shall be constructed, equipped and completed in accordance with the provisions of this Contract and H1515’sfollowing "Specifications": (1) Specification (Drawing No. 114TK –BS21202-CS-R1) (2) General Arrangement (Drawing No. 114TK –BS21202-GA-R1) (3) Midship Section (Drawing No. 114TK –BS21202-MS-R1) (4) Makers list (Drawing No. 114TK –BS21202-ML-R1)(5) Technical Memorandum on the 114,000DWT Product/Crude Oil Tanker Specifications dated 7th March, 2023 attached hereto and signed by each of the parties to this Contract (hereinafter collectively called the "Specifications"), making an integral part hereof.2. CLASS AND RULES The VESSEL, including her machinery and equipment, shall be constructed in accordance with the rules and regulations issued and having become effective up to and on the date ofsigning this Contract of Lloyd’s Register (LR) (hereinafter called the "Classification Society") without any reservation of any kind and classified and registered to the symbol of:+100A1, Double Hull Oil Tanker, CSR, ESP, ShipRight (ACS(B, C), CM), *IWS, LI, DSPM4, ECO(BWT, IHM, P, VECS-L, EEDI-3), EGCS(OPEN), +LMC, IGS, UMS, With descriptive notes “ShipRight (BWMP(S,T), SCM, SERS), ETA, GR(NG, A)”, and shall also comply with the rules and regulations as fully described in the Specifications.The requirements of the authorities as fully described in the Specifications including that of the Classification Society are to include additional rules or circulars thereof issued andbecome effective up to and on the date of signing this Contract.2/62Shipbuilding ContractHull No.H1596The SELLER shall arrange with the Classification Society to assign a representative or representatives (hereinafter called the "Classification Surveyor") to the BUILDER's Shipyardfor supervision of the construction of the VESSEL.All fees and charges incidental to Classification and compliance with the rules, regulations and requirements of this Contract as described in the Specifications issued and effectiveup to the date of signing this Contract as well as royalties, if any, payable on account of the construction of the VESSEL shall be for the account of the SELLER, except as otherwiseprovided and agreed herein. The key plans, materials and workmanship entering into the construction of the VESSEL shall at all times be subject to inspections and tests inaccordance with the rules and regulations of the Classification Society. Decisions of the Classification Society as to compliance or noncompliance with Classification rules and regulations shall be final and binding for the Parties.3. PRINCIPAL PARTICULARS AND DIMENSIONS OF THE VESSEL (a) Hull: Length overallabt. 249.95mLength between perpendiculars243.95m Breadth moulded44.00mDepth moulded21.20mDesign Draft moulded 13.50mScantling Draft moulded15.00m (b) Propelling Machinery:The VESSEL shall be equipped, in accordance with the Specifications, with (1) set of MAN B&W 6G60ME – C10.5 Tier III HPSCR type Main Engine, developing a nominalmaximum continuous rating of 17,040 kW at 103.0 RPM and a continuous service rating of 9,180 kW at 80.1 RPM.The extend of delivery of main engine shall be in line with H1515 as far as possible. However, the subcontractor of components of main engine shall be as per HHM or CSE'spractice.3/62Shipbuilding ContractHull No.H15964. GUARANTEED SPEEDThe SELLER guarantees that the service speed at design draught 13.50 on even keel and NCR of main engine with 15% sea margin shall not be less than 14.5 nautical miles per hour.The service speed shall be verified by corrected trial speed under calm weather (no wind, no wave and no current in accordance with ISO 15016:2015) and deep sea condition. Thecorrection method of the speed shall be as specified in the Specifications.5. GUARANTEED FUEL CONSUMPTION The SELLER guarantees that the specific fuel oil consumption of the Main Engine as determined by shop trial as specified in the Specifications, at NCR is not to exceed 154.8grams/Kilowatt/hour (not including the permitted tolerance of +6%) based on fuel oil having a lower calorific value of 10,200 kilocalories per kilogram at ISO standard referencecondition i.e. blower inlet air temperature of 25 deg C, scavenge air cooling water temperature of 25 deg C and blower inlet air pressure of 100 kpa. If the fuel oil used in shop trialwould have different lower calorific value from 10,200 kilocalories per kilogram, and/or the surrounding shop trial condition would be different from the above ISO condition, then thespecific fuel oil consumption shall be adjusted accordingly based on the conversion formula issued by MAN. The specific fuel oil consumption shall be subject to a tolerance of 6%.6. GUARANTEED DEADWEIGHT The SELLER guarantees that the VESSEL is to have a deadweight of not less than 114,000 metric tons at the scantling draft moulded of 15.00 meters in sea water of 1.025 specificgravity.The term, "Deadweight", as used in this Contract, shall be as defined in the Specifications. The actual deadweight of the VESSEL expressed in metric tons shall be based on calculations made by the BUILDER and checked by the BUYER, and all measurements necessary forsuch calculations shall be performed in the presence of the BUYER's supervisor(s) and the Classification Surveyor or the party authorized by the BUYER. Should there be any dispute between the BUILDER and the BUYER in such calculations and/or measurements, the decision of the Classification Society shall be final.4/62Shipbuilding ContractHull No.H15967. SUBCONTRACTING: The SELLER may, at its sole discretion and responsibility, subcontract any portion of the construction work of the VESSEL to experienced subcontractors, but delivery and finalassembly into the VESSEL of any such work subcontracted shall be at the BUILDER's Shipyard. The SELLER shall remain fully responsible for such subcontracted work andsubcontractors’ liabilities.The performance of the works by SHANGHAI WAIGAOQIAO SHIPBUILDING AND OFFSHORE COMPANY LIMITED (subsidiary of the BUILDER), SWS-SUNHEL ENGINEERINGEQUIPMENT (NAN TONG) CO., LTD does not constitute subcontracting for the purposes of this clause. The BUILDER shall be fully liable for the actions of omissions of itsaforementioned subsidiary and Branch.8. REGISTRATION: The vessel shall be registered by the BUYER at its own cost and expenses in the Marshall Islands Registry at the time of delivery and acceptance thereof. 5/62Shipbuilding ContractHull No.H1596ARTICLE II CONTRACT PRICE & TERMS OF PAYMENT 1. CONTRACT PRICE: The purchase price of the VESSEL is United States Dollars Sixty-Four Million Eight Hundred and Forty Five Thousand only (US$ 64,845,000), net receivable by the SELLER (hereinaftercalled the "Contract Price"), which is exclusive of the cost for the BUYER's Supplies as provided in Article V hereof, and shall be subject to upward or downward adjustment, if any,as hereinafter set forth in this Contract.2. CURRENCY: Any and all payments by the BUYER to the SELLER under this Contract shall be made in United States Dollars.3. TERMS OF PAYMENT: The Contract Price shall be paid by the BUYER to the SELLER in instalments as follows:(a) 1st Instalment:The sum of United States Dollars Nine Million Seven Hundred and Twenty-Six Thousand Seven Hundred and Fifty only (US$ 9,726,750) representing Fifteen percent (15%) of theContract Price, shall become due and payable and be paid by the BUYER within five (5) Banking Days from the date of BUYER's receipt of the Refund Guarantee as described inparagraph 7 of this Article.(b) 2nd Instalment:The sum of United States Dollars Six Million Four Hundred and Eighty-Four Thousand Five Hundred only (US$ 6,484,500), representing Ten percent (10%) of the Contract Price, shallbecome due and payable and be paid within five (5) Banking Days after the cutting of the first steel plate of the VESSEL. The SELLER shall notify the BUYER by e-mail stating andconfirming that the 1st steel plate has been cut in its workshop, providing also a progress statement evidenced by the Classification Society. The SELLER shall then send to theBUYER an e-mail demand for payment of this instalment along with a PDF proforma invoice.6/62Shipbuilding ContractHull No.H1596(c) 3rd Instalment:The sum of United States Dollars Six Million Four Hundred and Eighty-Four Thousand Five Hundred only (US$ 6,484,500), representing Ten percent (10%) of the Contract Price, shallbecome due and payable and be paid within five (5) Banking Days after keel‑laying of the first section of the VESSEL. The SELLER shall notify the BUYER by e-mail stating andconfirming that the said keel‑laying has been carried out, providing also a progress statement evidenced by the Classification Society. The SELLER shall then send to the BUYER ane-mail demand for payment of this instalment, along with a PDF proforma invoice.(d) 4th Instalment:The sum of United States Dollars Six Million Four Hundred and Eighty-Four Thousand Five Hundred only (US$ 6,484,500), representing Ten percent (10%) of the Contract Price, shallbecome due and payable and be paid within five (5) Banking Days after launching of the VESSEL. The SELLER shall notify the BUYER by e-mail stating and confirming that thelaunching of the VESSEL has been carried out. The SELLER shall then send to the BUYER an e-mail demand for payment of this in-stallment, along with a PDF proforma invoice.(e) 5th Installment (Payment upon Delivery of the VESSEL):The sum of United States Dollars Thirty-Five Million Six Hundred and Sixty-Four Thousand Seven Hundred and Fifty only (US$ 35,664,750), representing Fifty-Five percent (55%) ofthe Contract Price, plus any increase or minus any decrease due to modifications and/or adjustments of the Contract Price in accordance with provisions of the relevant Articleshereof, shall become due and payable and be paid by the BUYER to the SELLER concurrently with delivery by the SELLER and acceptance by the BUYER of the VESSEL. TheSELLER shall send to the BUYER an e-mail demanding payment of this installment ten (10) days prior to the scheduled date of delivery of the VESSEL stating the expected delivery ofthe VESSEL to the BUYER.7/62Shipbuilding ContractHull No.H15964. METHOD OF PAYMENT: (a) 1st Instalment:The BUYER shall remit the amount of this installment in accordance with Article II, Paragraph 3 (a) by telegraphic transfer to China CITIC Bank Corporation Limited, Beijing Branch,address at Block C, Fuhua Mansion, No.8, Chaoyangmen Beidajie, Dongcheng District, Beijing, China (SWIFT Code: CIBKCNBJ100) (hereinafter called the “SELLER’s Bank”) asreceiving bank nominated by the SELLER for A/C Beneficiary: China Shipbuilding Trading Company Limited, or through other receiving bank to be nominated by the SELLER fromtime to time and such nomination shall be notified to the BUYER at least ten (10) days prior to the due date for payment.(b) 2nd Instalment:The BUYER shall remit the amount of this installment in accordance with Article II, Paragraph 3(b) by telegraphic transfer to SELLER’s Bank as receiving bank nominated by theSELLER for A/C Beneficiary: China Shipbuilding Trading Company Limited, or through other receiving bank to be nominated by the SELLER from time to time and such nominationshall be notified to the BUYER at least ten (10) days prior to the due date for payment.(c) 3rd Installment:The BUYER shall remit the amount of this installment in accordance with Article II, Paragraph 3(c) by telegraphic transfer to SELLER’s Bank as receiving bank nominated by theSELLER for A/C Beneficiary: China Shipbuilding Trading Company Limited, or through other receiving bank to be nominated by the SELLER from time to time and such nominationshall be notified to the BUYER at least ten (10) days prior to the due date for payment.(d) 4th Installment:The BUYER shall remit the amount of this installment in accordance with Article II, Paragraph 3(d) by telegraphic transfer to SELLER’s Bank as receiving bank nominated by theSELLER for A/C Beneficiary: China Shipbuilding Trading Company Limited, or through other receiving bank to be nominated by the SELLER from time to time and such nominationshall be notified to the BUYER at least ten (10) days prior to the due date for payment.8/62Shipbuilding ContractHull No.H1596(e) 5th Installment (Payable upon delivery of the VESSEL):The BUYER shall, at least three (3) Banking Days prior to the scheduled date of delivery of the VESSEL, make an irrevocable cash deposit by swift message MT103 accompanied byswift message MT199 with conditions of payment to the SELLER’s Bank, namely China CITIC Bank Corporation Limited, Beijing Branch, address at Block C, Fuhua Mansion, No.8,Chaoyangmen Beidajie, Dongcheng District, Beijing, China, Account Number: , or other bank to be nominated by the SELLER with at least ten (10) days’ notice to the BUYER priorto the scheduled date of delivery of the VESSEL, and such amount to be held in trust in the name of the BUYER (and / or in the name of the financing bank as the case may be whichshall be BUYER’s agents for purposes of this Contract) for a period of fifteen (15) Banking Days, covering the amount of this installment (as adjusted in accordance with theprovisions of this Contract), with an irrevocable instruction that the said amount (or any other amount mutually agreed by the Parties) shall be released to the SELLER againstpresentation by the SELLER to the said China CITIC Bank Corporation Limited, Beijing Branch, address at Block C, Fuhua Mansion, No.8, Chaoyangmen Beidajie, DongchengDistrict, Beijing, China , or other bank nominated by the SELLER as above, of (i) a copy of the Protocol of Delivery and Acceptance signed by both the BUYER's and the SELLER’sauthorised representatives and (ii) a copy of release letter setting out the exact amount to be released to the SELLER. Interest, if any, accrued from such deposit, shall be for thebenefit of the BUYER.If the delivery of the VESSEL is not effected on or before the expiry of the aforesaid fifteen (15) Banking Days from the day of the cash deposit payment, the BUYER shall have theright to withdraw the said deposit plus accrued interest upon the expiry date. However, when a newly scheduled delivery date is notified to the BUYER by the SELLER, and theBUYER accepts same, the BUYER shall make the cash deposit in accordance with the same terms and conditions as set out above.5. PREPAYMENT: The BUYER shall have the right to make prepayment of any and all instalments before delivery of the VESSEL, by giving to the SELLER at least thirty (30) calendar days prior writtennotice, without any price adjustment of the VESSEL for such prepayment.6. SECURITY FOR PAYMENT OF INSTALMENTS BEFORE DELIVERY: The BUYER shall, within five (5) Banking Days upon receipt of the Refund Guarantee, deliver to the SELLER an irrevocable and unconditional Letter of Guarantee (hereinafter calledthe “Payment Guarantee”) in the form annexed hereto as Exhibit "B" in favour of the SELLER issued by Performance Shipping Inc. (hereinafter called the "Payment Guarantor")acceptable to SELLER’s bank and the SELLER. This guarantee shall secure the BUYER's obligation for the payment of the 2nd, 3rd and 4th installments of the Contract Price.9/62Shipbuilding ContractHull No.H15967. REFUNDS All payments made by the BUYER prior to delivery of the VESSEL shall be in the nature of advance to the SELLER, and in the event this Contract is rescinded or cancelled by theBUYER, all in accordance with the specific terms of this Contract permitting such rescission or cancellation, the SELLER shall refund to the BUYER in United States Dollars the fullamount of all sums already paid by the BUYER to the SELLER under this Contract, together with any interest (at the rate set out in respective provision thereof) from the date ofreceipt by the SELLER of the respective installment(s) to the date of remittance by telegraphic transfer of such refund by the SELLER to the account specified by the BUYER.As security to the BUYER, the SELLER shall deliver to the BUYER, within sixty (60) calendar days after signing of the Contract, a Refund Guarantee to be issued by China CITICBank Corporation Limited, Beijing Branch, address at Block C, Fuhua Mansion, No.8, Chaoyangmen Beidajie, Dongcheng District, Beijing, China, or any other Chinese Bank, securingthe SELLER’s obligation for refunding to the BUYER the 1st, 2nd, 3rd and 4th instalments received by the SELLER through SELLER’s bank in the form as per Exhibit "A" annexedhereto. If the Refund Guarantee is issued by any other Chinese Bank, it should be a bank that is acceptable to the BUYER. The Refund Guarantee shall be issued by SWIFT.However, in the event of any dispute between the SELLER and the BUYER with regard to the SELLER's obligation to repay the installment or installments paid by the BUYER and tothe BUYER's right to demand payment from the SELLER’s bank, under its guarantee, and such dispute is submitted either by the SELLER or by the BUYER for arbitration inaccordance with Article XIII hereof, the SELLER’s bank shall withhold and defer payment until the arbitration award between the SELLER and the BUYER is notified to SELLER’s bank.The SELLER’s bank shall not be obligated to make any payment unless the arbitration award orders the SELLER to make repayment. If the SELLER fails to honour the award, then theSELLER’s bank shall refund to the extent the final arbitration award orders. 10/62Shipbuilding ContractHull No.H1596ARTICLE III ADJUSTMENT OF THE CONTRACT PRICE The Contract Price of the VESSEL shall be subject to adjustments as hereinafter set forth. It is hereby understood by both parties that any reduction of the Contract Price is by way ofliquidated damages and not by way of penalty.1. DELIVERY (a)No adjustment shall be made, and the Contract Price shall remain unchanged for Thirty (30) calendar days of delay in delivery of the VESSEL beyond the Delivery Date as definedin Article VII hereof ending as of twelve o'clock midnight of the Thirtieth (30th) day of delay. (b)If the delivery of the VESSEL is delayed more than Thirty (30) calendar days after the date as defined in Article VII hereof, then, in such event, beginning at twelve o'clockmidnight of the Thirtieth (30th) day after the Delivery Date, the Contract Price of the VESSEL shall be reduced by deducting therefrom the sum of United States Dollars FifteenThousand only (US$ 15,000) per day.Unless the parties hereto agree otherwise, the total reduction in the Contract Price shall be deducted from the fifth instalment of the Contract Price and in any event (including theevent that the BUYER consents to take the VESSEL at the later delivery date after the expiration of Two Hundred and Ten (210) calendar days delay of delivery as described inParagraph 1(c) of this Article or after the expiration days delay of delivery as described in Paragraph 3 of Article VIII) shall not be more than One Hundred and Eighty (180)calendar days at the above specified rate of reduction after the Thirty (30) calendar days allowance, that is United States Dollars Two Million Seven Hundred Thousand (US$2,700,000) being the maximum. (c)If the delay in the delivery of the VESSEL continues for a period of Two Hundred and Ten (210) calendar days after the Delivery Date as defined in Article VII, then in such event,the BUYER may, at its option, rescind or cancel this Contract in accordance with the provisions of Article X of this Contract. The SELLER may at any time after the expiration ofthe aforementioned Two Hundred and Ten (210) calendar days, if the BUYER has not served notice of cancellation pursuant to Article X, notify the BUYER of the date uponwhich the SELLER estimates the VESSEL will be ready for delivery and demand in writing that the BUYER make an election, in which case the BUYER shall, within thirty (30)calendar days after such demand is received by the BUYER, either notify the SELLER of its decision to cancel this Contract, or consent to take delivery of the VESSEL at an agreedfuture date, it being understood and agreed by the parties hereto that, if the VESSEL is not delivered by such future date, the BUYER shall have the same right of cancellationupon the same terms, as hereinabove provided.11/62Shipbuilding ContractHull No.H1596(d)For the purpose of this Article, the delivery of the VESSEL shall not be deemed delayed and the Contract Price shall not be reduced when and if the Delivery Date of the VESSEL isextended by reason of causes and provisions of Articles V, VI, XI, XII and XIII hereof. The Contract Price shall not be adjusted or reduced if the delivery of the VESSEL is delayedby reason of permissible delays as defined in Article VIII hereof.(e)The Seller shall notify the BUYER by e-mail if the delivery of the VESSEL shall be made earlier than the specified Delivery Date as defined in Article VII of the Contract and suchnotification shall be given not less than Two (2) months prior to the newly planned delivery date.(f)In the event that the SELLER is unable to deliver the VESSEL on the newly planned delivery date as declared, the VESSEL can, nevertheless, be delivered by the SELLER at a dateafter such declared newly planned date.In such circumstances, and for the purpose of determining the liquidated damages to the BUYER (according to the provisions of Paragraph 1(b) of this Article) and the BUYER'sright to cancel or rescind this Contract (according to the provisions of Paragraph 1(c) of this Article), the newly planned delivery date declared by the SELLER shall not be in anyway treated or taken as having substituted the original Delivery Date as defined in Article VII. The BUYER's aforesaid right for liquidated damages and to cancel or rescind thisContract shall be accrued, operated or exercised only to the extent as described in Paragraph 1(a), 1(b) and/or 1(c) of Article III. In whatever circumstances, the Delivery Date asdefined in Article VII (not the newly planned delivery date as declared by the SELLER) shall be used to regulate, as so described in Paragraph 1 (a), 1(b) and/or 1(c) of Article III,the BUYER's right for liquidated damages and to rescind this Contract and the SELLER's liability to pay the aforesaid liquidated damages resulting from the delay in delivery of theVESSEL.2. INSUFFICIENT SPEED (a) The Contract Price of the VESSEL shall not be affected nor changed by reason of the actual speed (as determined by the Trial Run after correction according to the Specifications)being less than three tenths (3/10) of one knot below the guaranteed speed as specified in Paragraph 4 of Article I of this Contract.12/62Shipbuilding ContractHull No.H1596 (b) However, commencing with and including a deficiency of three tenths (3/10) of one knot in actual speed (as determined by the Trial Run after correction according to theSpecifications) below the guaranteed speed as specified in Paragraph 4, Article I of this Contract, the Contract Price shall be reduced as follows:In case of deficiency at or above 0.30 but below 0.40 knot US$ 50,000.00at or above 0.40 but below 0.50 knot US$ 100,000.00at or above 0.50 but below 0.60 knot US$ 150,000.00at or above 0.60 but below 0.70 knot US$ 200,000.00 at or above 0.70 but below 0.80 knot US$ 250,000.00 at or above 0.80 but below 0.90 knot US$ 300,000.00 at or above 0.90 but below 1.00 knot US$ 350,000.00 (c) If the deficiency in actual speed (as determined by the Trial Run after correction according to the Specifications) of the VESSEL upon the Trial Run, is more than 1.00 knot below theguaranteed speed of 14.5 knots, then the BUYER may at its option reject the VESSEL and rescind this Contract in accordance with provisions of Article X of this Contract, or mayaccept the VESSEL at a reduction in the Contract Price as above provided, by United States Dollars Three Hundred and Five Thousand only (US$350,000) being the maximum.3. EXCESSIVE FUEL CONSUMPTION (a)The Contract Price of the VESSEL shall not be affected nor changed if the actual fuel consumption of the Main Engine, as determined by shop trial in manufacturer's works, as perthe Specifications, is greater than the guaranteed fuel consumption as specified and required under the provisions of this Contract and the Specifications if such actual excess isequal to or less than six percent (6%). (b)However, if the actual fuel consumption as determined by shop trial is greater than six percent (6%) above the guaranteed fuel consumption then, the Contract Price shall bereduced by the sum of United States Dollars Sixty Thousand Only (US$60,000) for each full one percent (1%) increase in fuel consumption in excess of the above said six percent(6%) (fractions of one percent to be prorated).13/62Shipbuilding ContractHull No.H1596 (c)If as determined by shop trial such actual fuel consumption of the Main Engine is more than ten percent (10%) in excess of the guaranteed fuel consumption, i.e. the fuelconsumption exceeds 170.28gram/KW/hour, the BUYER may, subject to the BUILDER’s right to effect replacement of a substitute engine or alterations of corrections as specifiedin the following sub-paragraph of Article III 3 (c) hereof, at its option, rescind this Contract, in accordance with the provisions of Article X of this Contract or may accept theVESSEL at a reduction in the Contract Price by United States Dollars Two Hundred and Forty Thousand (US$240,000) being the maximum.If as determined by shop trial such actual fuel consumption of the Main Engine is more than ten percent (10%) in excess of the guaranteed fuel consumption, i.e. the fuelconsumption exceeds 170.28gram/KW/hour, the BUILDER may investigate the cause of the non-conformity and the proper steps may promptly be taken to remedy the same and tomake whatever corrections and alterations and/or re-shop trial test or tests as may be necessary to correct such non-conformity without extra cost to the BUYER. Upon completionof such alterations or corrections of such nonconformity, the BUILDER shall promptly perform such further shop trials or any other tests, as may be deemed necessary to prove thefuel consumption of the Main Engine’s conformity with the requirement of this Contract and the Specifications and if found to be satisfactory, give the BUYER notice by e-mail ofsuch correction and as appropriate, successful completion accompanied by copies of such results, and the BUYER shall, within six (6) Banking Days after receipt of such notice,notify the BUILDER by e-mail of its acceptance or reject the re-shop trial together with the reasons therefor. If the BUYER fails to notify the BUILDER by e-mail of its acceptance orrejection of the re-shop trial together with the reasons therefor within six (6) Banking Days period as provided herein, the BUYER shall be deemed to have accepted the shop trial.4. DEADWEIGHT (a)In the event that there is a deficiency in the actual deadweight of the VESSEL determined as provided in the Specifications, the Contract Price shall not be decreased if suchdeficiency is One Thousand Two Hundred (1200) metric tons or less below the guaranteed deadweight of 114,000 metric tons at assigned scantling draft moulded.(b)However, the Contract Price shall be decreased by the sum of United States Dollars Seven Hundred (US$700) for each full metric ton of such deficiency being more than OneThousand Two Hundred (1,200) metric tons.(c)In the event that there should be a deficiency in the VESSEL's actual deadweight which exceeds Three Thousand (3,000) metric tons below the guaranteed deadweight, the BUYERmay, at its option, reject the VESSEL and rescind this Contract in accordance with the provisions of Article X of this Contract, or may accept the VESSEL with reduction in theContract Price in the maximum amount of United States Dollars One Million Two Hundred Sixty Thousand only (US$1,260,000).14/62Shipbuilding ContractHull No.H15965. EFFECT OF RESCISSION It is expressly understood and agreed by the parties hereto that in any case as stated herein, if the BUYER rescinds this Contract pursuant to any provision under this Article, theBUYER, save its rights and remedy set out in Article X hereof, shall not be entitled to any liquidated damage or compensation whether described above or otherwise. 15/62Shipbuilding ContractHull No.H1596ARTICLE IV SUPERVISION AND INSPECTION 1. APPOINTMENT OF THE BUYER'S SUPERVISOR The BUYER shall send in good time to and maintain at the BUILDER's Shipyard, at the BUYER's own cost and expense, one or more representative(s) who shall be duly accredited inwriting by the BUYER (such representative(s) being hereinafter collectively and individually called the "Supervisor") to supervise and survey the construction by the BUILDER ofthe VESSEL, her engines and accessories. Subject to the SELLER not being hindered to apply for the invitation letter e.g. due to COVID-19 related restrictions or government’sregulations, the SELLER agrees to apply for the necessary invitation letter(s) for the Supervisor to enter China on demand and without delay, provided that the Supervisor meets withthe rules, regulations and laws of the People's Republic of China. The BUYER undertakes to give the SELLER adequate notice for the application of invitation letter.2. COMMENTS TO PLANS AND DRAWINGS The parties hereto shall, within Thirty (30) calendar days after signing of this Contract, mutually agree a list of all the plans and drawings, which are to be sent to the BUYER(hereinbelow called "the LIST"). Before arrival of the Supervisor at the BUILDER's Shipyard, the plans and drawings specified in the LIST shall be sent to the BUYER, and theBUYER shall, within Fourteen (14) calendar days after receipt thereof, return such plans and drawings submitted by the SELLER with comments, if any. Notwithstanding the above,the BUYER shall nevertheless waive its right to comment on the plans and drawings if such plans and drawings have been previously applied to build other vessels with the samespecification as that of the VESSEL.Concurrently with the arrival of the Supervisor at the BUILDER's Shipyard, the BUYER shall notify the BUILDER in writing, stating the authority which the said Supervisor shallhave, with regard to the Supervisor can, on behalf of the BUYER, give comments, as the case may be, which of the plans and drawings specified in the LIST but not yet been sent tothe BUYER, nevertheless in line with the Supervisor's authority. The Supervisor shall, within five (5) calendar days after receipt thereof, return those plans and drawings withcomments, if any.Unless notification is given to the BUILDER by the Supervisor or the BUYER of the comments to any plans and drawings within the above designated period of time for each case,the said plans and drawings shall be implemented for construction by the BUILDER.16/62Shipbuilding ContractHull No.H15963. SUPERVISION AND INSPECTION BY THE SUPERVISOR The necessary inspection of the VESSEL, its machinery, equipment and outfittings shall be carried out by the Classification Society, and inspection team of the BUILDERthroughout the entire period of construction in order to ensure that the construction of the VESSEL is duly performed in accordance with the Contract and Specifications.The Supervisor shall have, at all times until delivery of the VESSEL, the right to attend tests according to the mutually agreed test list, review respective reports and inspect theVESSEL, her engines, accessories and materials at the BUILDER's Shipyard, its subcontractors or any other place where work is done or materials stored in connection with theVESSEL. In the event that the Supervisor discovers any construction or material or workmanship which does not or will not conform with the requirements of this Contract and theSpecifications, the Supervisor shall promptly give the BUILDER a notice in writing as to such nonconformity, upon receipt of which the BUILDER shall correct such nonconformityif the BUILDER agrees with the BUYER. In any circumstances, the SELLER shall be entitled to proceed with the construction of the VESSEL even if there exists discrepancy in theopinion between the BUYER and the SELLER, without however prejudice to the BUYER’s right for submitting the issue for determination by the Classification Society or arbitrationin accordance with the provisions hereof. If in such case the Classification Society or the arbitrator decides in favor of the BUYER, then the SELLER is obliged to correct thediscrepancy at SELLER’s risk, time and expense. However, the BUYER undertakes and assures the SELLER that the Supervisor shall carry out his inspections in accordance with theagreed inspection procedure and schedule and usual shipbuilding practice and in a way as to minimize any increase in building costs and delays in the construction of the VESSEL.Once an inspection and/or a test has been witnessed and approved by the BUYER`s Representatives and/or the Classification Society, the same inspection and/or test should nothave to be repeated, provided it has been carried out in compliance with the requirements of the classification society and Specifications.17/62Shipbuilding ContractHull No.H1596The BUILDER agrees to furnish free of charge the Supervisor with office space, and other reasonable facilities according to BUILDER's practice at, or in the immediate vicinity of theBUILDER's Shipyard. But the fees for the communication like telephone, telefax, international internet communication and telex, etc. shall be borne by the BUYER. At all times,during the construction of the VESSEL until delivery thereof, the Supervisor shall be given free and ready access to the VESSEL, her engines and accessories, and to any other placewhere the work is being done, or the materials are being processed or stored, in connection with the construction of the VESSEL, including the yards, workshops, stores of theBUILDER, and the premises of subcontractors of the BUILDER, who are doing work, or storing materials in connection with the VESSEL's construction. The travel expenses for thesaid access to SELLER's subcontractors outside of Shanghai shall be at BUYER's account. The transportation, of any nature whatsoever, shall be provided to the Supervisor by theBUYER. The transportation within Shanghai shall be provided to the Supervisor by the SELLER.Should the Supervisor fail to conduct any inspection or attend any test (after notice by the BUILDER of the same) due to whatever reason, the BUILDER shall be entitled to carryout the construction and/or test without inspection and/or attendance of Supervisor and such work so carried out shall be treated as approved by the Supervisor.4. LIABILITY OF THE SELLER The Supervisor engaged by the BUYER under this Contract shall at all times be deemed to be in the employ of the BUYER. The SELLER shall be under no liability whatsoever to theBUYER, or to the Supervisor or the BUYER's employees or agents for personal injuries, including death, during the time when they, or any of them, are on the VESSEL, or within thepremises of either the SELLER or its subcontractors, or are otherwise engaged in and about the construction of the VESSEL, unless, however, such personal injuries, including death,were caused by gross negligence of the SELLER, or of any of the SELLER's employees or agents or subcontractors of the SELLER. Nor shall the SELLER be under any liabilitywhatsoever to the BUYER for damage to, or loss or destruction of property in China of the BUYER or of the Supervisor, or of the BUYER's employees or agents, unless such damage,loss or destruction was caused by gross negligence of the SELLER, or of any of the employees, or agents or subcontractors of the SELLER.5. SALARIES AND EXPENSES All salaries and expenses of the Supervisor, or any other employees employed by the BUYER under this Article, shall be for the BUYER's account.18/62Shipbuilding ContractHull No.H15966. REPLACEMENT OF SUPERVISORThe SELLER has the right to request the BUYER in writing to replace any of the Supervisor who is deemed unsuitable and unsatisfactory for the proper progress of the VESSEL'sconstruction together with reasons. The BUYER shall investigate the situation by sending its representative to the BUILDER's Shipyard, if necessary, and if the BUYER considersthat such SELLER's request is justified, the BUYER shall effect the replacement as soon as conveniently arrangeable. 19/62Shipbuilding ContractHull No.H1596ARTICLE V MODIFICATION, CHANGES AND EXTRAS 1. HOW EFFECTED The Specifications and Plans in accordance with which the VESSEL is constructed, may be modified and/or changed at any time hereafter by written agreement of the parties hereto,provided that such modifications and/or changes or an accumulation thereof will not, in the BUILDER's reasonable judgment, adversely affect the BUILDER's other commitments andprovided further that the BUYER shall agree to adjustment of the Contract Price, time of delivery of the VESSEL and other terms of this Contract, if any, as hereinafter provided.Subject to the above, the SELLER hereby agree to exert their best efforts to accommodate such reasonable requests by the BUYER so that the said changes and/or modifications maybe made at a reasonable cost and within the shortest period of time which is reasonable and possible. Any such agreement for modifications and/or changes shall include anagreement as to the increase or decrease, if any, in the Contract Price of the VESSEL together with an agreement as to any extension or reduction in the time of delivery, providing tothe SELLER additional securities satisfactory to the SELLER, or any other alterations in this Contract, or the Specifications occasioned by such modifications and/or changes. Theaforementioned agreement to modify and/or to change the Specifications may be effected by an exchange of letters or e-mail, manifesting such agreement. The letters or e-mailsexchanged by the parties hereto pursuant to the foregoing shall constitute an amendment of the Specifications under which the VESSEL shall be built, and such letters or e-mails shallbe deemed to be incorporated into this Contract and the Specifications by reference and made a part hereof. Upon consummation of the agreement to modify and/or to change theSpecifications, the SELLER shall alter the construction of the VESSEL in accordance therewith, including any additions to, or deductions from, the work to be performed in connectionwith such construction. If due to whatever reasons, the parties hereto fail to agree on the adjustment of the Contract Price or extension of time of delivery or providing additionalsecurity to the SELLER or modification of any terms of this Contract which are necessitated by such modifications and/or changes, then the SELLER shall have no obligation tocomply with the BUYER's request for any modification and/or changes.The BUILDER may make minor changes to the Specifications, if found necessary for introduction of improved production and construction methods or otherwise, provided that theBUILDER shall first obtain the BUYER’s approval which shall not be unreasonably withheld.20/62Shipbuilding ContractHull No.H15962. CHANGES IN RULES AND REGULATIONS, ETC. (1)If, after the date of signing of this Contract, any requirements as to the rules and regulations as specified in this Contract and the Specifications to which the construction of theVESSEL is required to conform, are altered or changed by the Classification Society or the other regulatory bodies authorized to make such alterations or changes, the SELLERand/or the BUYER, upon receipt of the notice thereof, shall exchange such information in full with each other in writing, whereupon within twenty-one (21) calendar days afterreceipt of the said notice by the BUYER from the SELLER or vice versa, the BUYER shall instruct the SELLER in writing as to the alterations or changes, if any, to be made in theVESSEL which the BUYER, in its sole discretion, shall decide. The SELLER shall promptly comply with such alterations or changes, if any in the construction of the VESSEL,provided that the BUYER shall first agree:(a)As to any increase or decrease in the Contract Price of the VESSEL that is occasioned by the cost for such compliance; and/or (b)As to any extension in the time for delivery of the VESSEL that is necessary due to such compliance; and/or (c)As to any increase or decrease in the guaranteed deadweight, fuel consumption and speed of the VESSEL, if such compliance results in increased or reduced deadweight, fuelconsumption and speed; and/or(d)As to any other alterations in the terms of this Contract or of Specifications or both, if such compliance makes such alterations of the terms necessary. (e)If the price is to be increased, then, in addition, as to providing to the SELLER additional securities satisfactory to the SELLER.Agreement as to such alterations or changes under this Paragraph shall be made in the same manner as provided above for modifications and/or changes of the Specificationsand/or Plans. (2)If, due to whatever reasons, the parties fail to agree on the adjustment of the Contract Price or extension of the time for delivery or increase or decrease of the guaranteed speed,fuel consumption and deadweight or providing additional security to the SELLER or any alternation of the terms of this Contract, if any, then, provided that the alterations orchanges are not compulsory, the SELLER shall be entitled to proceed with the construction of the VESSEL in accordance with, and the BUYER shall continue to be bound by, theterms of this Contract and Specifications without making any such alterations or changes.21/62Shipbuilding ContractHull No.H1596If the alterations or changes are compulsorily required to be made by Class or IMO rules, then, notwithstanding any dispute between the Parties relating to the adjustment of theContract Price or extension of the time for delivery or decrease of the guaranteed speed and deadweight or increase fuel oil consumption or any other respect, the SELLER may, atits sole judgment, comply with such alterations or changes. The BUYER shall, in any event, bear the costs and expenses for such alterations or changes (with, in the absence ofmutual agreement, the amount thereof and/or any other discrepancy such as but not limited to the extension of Delivery Date, etc. to be determined by arbitration in accordancewith Article XIII of this Contract).3. SUBSTITUTION OF MATERIALS AND/OR EQUIPMENT In the event that any of the materials and/or equipment required by the Specifications or otherwise under this Contract for the construction of the VESSEL cannot be procured intime to effect delivery of the VESSEL, the SELLER may, provided the SELLER shall provide adequate evidence and the BUYER so agrees in writing, supply other materials and/orequipment of the equivalent quality, capable of meeting the requirements of the Classification Society and of the rules, regulations, requirements and recommendations with whichthe construction of the VESSEL must comply.4. BUYER'S SUPPLIED ITEMS The BUYER shall deliver to the SELLER at its shipyard the items as specified in the Specifications which the BUYER shall supply on BUYER’s account (hereinafter called the“BUYER's Supplied Items”) by the time designated by the SELLER.Should the BUYER fail to deliver to the BUILDER such BUYER's Supplied Items within the time specified, the delivery of the VESSEL shall automatically be extended for a period ofsuch delay, provided such delay in delivery of the BUYER's Supplied Items shall affect the delivery of the VESSEL. In such event, the BUYER shall pay to the SELLER all losses anddamages sustained by the SELLER due to such delay in the delivery of the BUYER's Supplied Items and such payment shall be made upon delivery of the VESSEL.22/62Shipbuilding ContractHull No.H1596Furthermore, if the delay in delivery of the BUYER's Supplied Items should exceed fifteen (15) calendar days, the SELLER shall be entitled to proceed with construction of theVESSEL without installation of such items in or onto the VESSEL, without prejudice to the SELLER's right hereinabove provided, and the BUYER shall accept the VESSEL socompleted.The BUILDER shall be responsible for storing and handling of the BUYER's Supplied Items as specified in the Specifications after delivery to the BUILDER at no cost and shallinstall them on board the VESSEL at the BUILDER's expenses. In order to facilitate installation by the BUILDER of the BUYER’s Supplied Items in or on the VESSEL, the BUYERshall furnish the BUILDER with the necessary specifications, plans, drawings, instruction books, manuals, test reports and certificates required by the rules and regulations of theSpecifications. If so requested by the BUILDER, the BUYER shall, without any charge to the BUILDER, cause the representatives of the manufacturers of the BUYER’s SuppliedItems to assist the BUILDER in installation thereof in or on the VESSEL and/or to carry out installation thereof by themselves or to make necessary adjustments at the Shipyard.Any and all of BUYER’s Supplied Items shall be subject to the BUILDER’s reasonable right of rejection, as and if they are found to be unsuitable or in improper condition forinstallation.Upon arrival of such shipment of the BUYER’s Supplied Items, both parties shall undertake a joint unpacking inspection. If any damages are found to be not suitable for installation,the BUILDER shall be entitled to refuse to accept the BUYER’s Supplied Items.23/62Shipbuilding ContractHull No.H1596ARTICLE VI TRIALS 1. NOTICE The BUYER and the Supervisor shall receive from the SELLER at least fifteen (15) calendar days notice in advance and seven (7) calendar days definite notice in advance in writing orby e-mail of the time and place of the VESSEL's sea trial as described in the Specifications (hereinafter referred to as "the Trial Run") and the BUYER and the Supervisor shallpromptly acknowledge receipt of such notice. The BUYER's representatives and/or the Supervisor shall be on board the VESSEL to witness such Trial Run, and to check upon theperformance of the VESSEL during the same. Failure of the BUYER's representatives to be present at the Trial Run of the VESSEL, after due notice to the BUYER and the Supervisoras provided above, shall have the effect to extend the date for delivery of the VESSEL by the period of delay caused by such failure. However, if the Trial Run is delayed more thanseven (7) calendar days by reason of the failure of the BUYER's representatives to be present after receipt of due notice as provided above, then in such event, the BUYER shall bedeemed to have waived its right to have its representatives on board the VESSEL during the Trial Run, and the BUILDER may conduct such Trial Run without the BUYER'srepresentatives being present, and in such case the BUYER shall be obliged to accept the VESSEL on the basis of a certificate jointly signed by the BUILDER and the ClassificationSociety certifying that the VESSEL, after Trial Run subject to minor alterations and corrections as provided in this Article, if any, is found to conform to the Contract andSpecifications. Subject to the SELLER not being hindered to apply for invitation letter e.g. due to COVID-19 related restrictions or government’s regulations, the SELLER agrees toapply for the necessary invitation letter(s) for the BUYER’S REPRESENTATIVES and/or crew officers to enter China will be issued in order on demand and without delay otherwisethe Trial Run shall be postponed until after the BUYER's representatives have arrived at the BUILDER's Shipyard and any delays as a result thereof shall not count as a permissibledelay under Article VIII thereof. However, should the nationalities and other personal particulars of the BUYER's representatives be not acceptable to the SELLER in accordance withits best understanding of the relevant rules, regulations and/or Laws of the People's Republic of China then prevailing, then the BUYER shall, on the SELLER's e-mail demand, effectreplacement of all or any of them immediately. Otherwise the Delivery Date as stipulated in Article VII hereof shall be extended by the delays so caused by the BUYER. In the event ofunfavorable weather on the date specified for the Trial Run, the same shall take place on the first available day thereafter that the weather conditions permit. The parties heretorecognize that the weather conditions in Chinese waters in which the Trial Run is to take place are such that great changes in weather may arise momentarily and without warning and,therefore, it is agreed that if during the Trial Run of the VESSEL, the weather should suddenly become unfavorable, as would have precluded the continuance of the Trial Run, theTrial Run of the VESSEL shall be discontinued and postponed until the first favorable day next following, unless the BUYER shall assent by e-mail of its acceptance of the VESSEL onthe basis of the Trial Run made prior to such sudden change in weather conditions. In the event that the Trial Run is postponed because of unfavorable weather conditions, suchdelay shall be regarded as a permissible delay, as specified in Article VIII hereof.24/62Shipbuilding ContractHull No.H15962. HOW CONDUCTED (a)All expenses in connection with Trial Run of the VESSEL are to be for the account of the BUILDER, who, during the Trial Run and when subjecting the VESSEL to Trial Run, is toprovide, at its own expense, the necessary crew to comply with conditions of safe navigation. The Trial Run shall be conducted in the manner prescribed in the Specifications andshall prove fulfillment of the performance required for the Trial Run as set forth in the Specifications.The course of Trial Run shall be determined by the BUILDER and shall be conducted within the trial basin equipped with speed measuring facilities.(b)The BUILDER shall provide the VESSEL with and pay for the required quantities of water and fuel oil with exception of lubrication oil, greases and hydraulic oil which shall besupplied by the BUYER for the conduct of the Trial Run or Trial Runs as prescribed in the Specifications. The fuel oil supplied by the SELLER, and lubricating oil , greases andhydraulic oil supplied by the BUYER shall be in accordance with the applicable engine specifications, and the cost of the quantities of water, fuel oil, lubricating oil, hydraulic oil andgreases consumed during the Trial Run or Trial Runs shall be for the account of the SELLER.3. TRIAL LOAD DRAFT In addition to the supplies provided by the BUYER in accordance with sub‑paragraph (b) of the preceding Paragraph 2 hereof, the BUILDER shall provide the VESSEL with therequired quantity of fresh water and other stores necessary for the conduct of the Trial Run. The necessary ballast (fresh and sea water and such other ballast as may be required) tobring the VESSEL to the trial load draft as specified in the Specifications, shall be for the BUILDER's account.25/62Shipbuilding ContractHull No.H15964. METHOD OF ACCEPTANCE OR REJECTION (a)Upon notification of the BUILDER of the completion of the Trial Run of the VESSEL, the BUYER or the BUYER's Supervisor shall within six (6) calendar days thereafter, notify theBUILDER by e-mail of its acceptance of the VESSEL or of its rejection of the VESSEL together with the reasons therefor.(b)However, should the result of the Trial Run indicate that the VESSEL or any part thereof including its equipment does not conform to the requirements of this Contract andSpecifications, then the BUILDER shall investigate with the Supervisor the cause of failure and the proper steps shall be taken to remedy the same and shall make whatevercorrections and alterations and/or re‑Trial Run or Runs as may be necessary without any extra cost to the BUYER, and upon notification by the BUILDER of completion of suchalterations or corrections and/or re‑trial or re‑trials, the BUYER shall, within six (6) calendar days thereafter, notify the SELLER by e-mail of its acceptance of its VESSEL or of therejection of the VESSEL together with the reason therefor on the basis of the alterations and corrections and/or re‑trial or re‑trials by the BUILDER.(c)In the event that the BUYER fails to notify the SELLER by e-mail of its acceptance or rejection of the VESSEL together with the reason therefor within six (6) days period as providedfor in the above sub‑ paragraphs (a) and (b), the BUYER shall be deemed to have accepted the VESSEL. (d)Any dispute arising among the parties hereto as to the result of any Trial Run or further tests or trials, as the case may be, of the VESSEL shall be solved by reference to arbitrationas provided in Article XIII hereof.(e)Nothing herein shall preclude the BUYER from accepting the VESSEL with its qualifications and/or remarks following the Trial Run and/or further tests or trials as aforesaid and theSELLER shall be obliged to comply with and/or remove such qualifications and/or remarks (if such qualifications and/or remarks are acceptable to the SELLER) at the time beforeeffecting delivery of the VESSEL to the BUYER under this Contract.5. DISPOSITION OF SURPLUS CONSUMABLE STORES Should any amount of fuel oil, fresh water, or other unbroached consumable stores furnished by the BUILDER for the Trial Run or Trial Runs remain on board the VESSEL at the time ofacceptance thereof by the BUYER, the BUYER agrees to buy the same from the SELLER at the actual price invoiced to the SELLER by the respective supplier evidenced by thecorresponding purchase invoices, and payment by the BUYER shall be effected as provided in Article II 3 (e) and 4 (e) of this Contract.26/62Shipbuilding ContractHull No.H1596The BUYER shall supply lubricating oil, greases and hydraulic oil for the purpose of Trial Runs at its own expenses and the SELLER will reimburse the BUYER for the amount oflubricating oil and hydraulic oil actually consumed for the said Trial Run or Trial Runs at the original price incurred by the BUYER evidenced by the corresponding purchase invoicesand payment by the SELLER shall be deducted from the 5th installment of the Contract Price as provided in Article II 3(e) and 4(e) of this Contract.6. EFFECT OF ACCEPTANCEThe BUYER's acceptance of the VESSEL by letter or e-mail notification sent to the SELLER, in accordance with the provisions set out above, shall be final and binding so far asconformity of the VESSEL to this Contract and the Specifications is concerned, and shall preclude the BUYER from refusing formal delivery by the SELLER of the VESSEL, ashereinafter provided, if the SELLER complies with all other procedural requirements for delivery as hereinafter set forth.If, at the time of delivery of the VESSEL, there are deficiencies in the VESSEL, such deficiencies should be resolved in such way that if the deficiencies are of minor importance, and donot in any way affect the safety or the operation of the VESSEL, its crew, passengers or cargo the SELLER shall be nevertheless entitled to tender the VESSEL for delivery and theBUYER shall be nevertheless obliged to take delivery of the VESSEL, provided that:i)the SELLER shall for its own account remedy the deficiency and fulfil the requirements as soon as possible, orii)if elimination of such deficiencies will affect timely delivery of the VESSEL, then the SELLER shall indemnify the BUYER for any direct cost reimbursement in association withremedying these minor non-conformities elsewhere from China as a consequence thereof, excluding, however, loss of time and/or loss of profit.)27/62Shipbuilding ContractHull No.H1596ARTICLE VII DELIVERY 1. TIME AND PLACE The VESSEL shall be delivered safely afloat by the SELLER to the BUYER at the BUILDER's Shipyard, in accordance with the Specifications and with all Classification and StatutoryCertificates and after completion of Trial Run (or, as the case may be, re‑Trial or re‑Trials) and acceptance by the BUYER in accordance with the provisions of Article VI hereof on orbefore January 31, 2026 provided that, in the event of delays in the construction of the VESSEL or any performance required under this Contract due to causes which under the termsof the Contract permit extension or postponement of the time for delivery, the aforementioned time for delivery of the VESSEL shall be extended accordingly.The aforementioned date or such later date to which delivery is extended pursuant to the terms of this Contract is hereinafter called the "Delivery Date". 2. WHEN AND HOW EFFECTEDProvided that the BUYER and the SELLER shall each have fulfilled all of their respective obligations as stipulated in this Contract, delivery of the VESSEL shall be effected forthwith bythe concurrent delivery by each of the parties hereto, one to the other, of the Protocol of Delivery and Acceptance, acknowledging delivery of the VESSEL by the SELLER andacceptance thereof by the BUYER, which Protocol shall be prepared in triplicate and executed by each of the parties hereto. 3. DOCUMENTS TO BE DELIVERED TO THE BUYER Upon acceptance of the VESSEL by the BUYER, the SELLER shall deliver to the BUYER the following documents (subject to the provision contained in Article VII hereof) which shallaccompany the aforementioned Protocol of Delivery and Acceptance: (a)PROTOCOL OF TRIALS of the VESSEL made by the BUILDER pursuant to the Specifications.28/62Shipbuilding ContractHull No.H1596 (b)PROTOCOL OF INVENTORY of the equipment of the VESSEL including spare part and the like, all as specified in the Specifications, made by the BUILDER. (c)PROTOCOL OF STORES OF CONSUMABLE NATURE made by the BUILDER referred to under Paragraph 5 of Article VI hereof. (d)FINISHED DRAWINGS AND PLANS pertaining to the VESSEL as stipulated in the Specifications, made by the BUILDER. (e)PROTOCOL OF DEADWEIGHT AND INCLINING EXPERIMENT, made by the BUILDER (f)ALL CERTIFICATES required to be furnished upon delivery of the VESSEL pursuant to the Specifications each free of conditions, recommendations, restrictions and qualificationswhatsoever (except for the conditions, recommendations, restrictions and qualifications which are due to reasons attributable to the BUYER).Certificates shall be issued by relevant Authorities or classification Society. The VESSEL shall comply with the above rules and regulations which are in force at the time ofsigning this Contract. All the certificates shall be delivered in one (1) original to the VESSEL and two (2) copies to the BUYER. If the full term certificate or certificates are unable to be issued at the time of delivery by the Classification Society or any third party other than the BUILDER, then the provisionalcertificate or certificates as issued by The Classification Society or the third party other than the BUILDER with the full term certificates to be furnished by the BUILDER afterdelivery of the VESSEL and in any event before the expiry of the provisional certificates shall be acceptable to the BUYER. (g)DECLARATION OF WARRANTY issued by the SELLER that the VESSEL is delivered to the BUYER free and clear of any liens, charges, claims, mortgages, or other encumbrancesupon the BUYER's title thereto, and in particular, that the VESSEL is absolutely free of all burdens in the nature of imposts, taxes or charges imposed by the province or country ofthe port of delivery, as well as of all liabilities of the SELLER to its sub‑contractors, employees and crews and/or all liabilities arising from the operation of the VESSEL in Trial Runor Trial Runs, or otherwise, prior to delivery.29/62Shipbuilding ContractHull No.H1596 (h)COMMERCIAL INVOICE made by the SELLER.(i)BILL OF SALE made by the SELLER. (j)BUILDER’s Certificate made by the BUILDER. (k)Non-Registration Certificate made by the SELLER.4. TITLE AND RISK Title to and risk of the VESSEL shall pass to the BUYER only upon delivery thereof. As stated above, it being expressly understood that, until such delivery is effected, title to theVESSEL, and her equipment, shall remain at all times with the SELLER and are at the entire risk of the SELLER.5. REMOVAL OF VESSEL The BUYER shall take possession of the VESSEL immediately upon delivery and acceptance thereof, and shall remove the VESSEL from the premises of the BUILDER within seven (7)calendar days after delivery and acceptance thereof is effected. If the BUYER shall not remove the VESSEL from the premises of the BUILDER within the aforesaid seven (7) calendardays, then, in such event, without prejudice to the SELLER's right to require the BUYER to remove the VESSEL immediately at any time thereafter, the BUYER shall pay to the SELLERthe reasonable mooring charge of the VESSEL.6. TENDER OF THE VESSEL If the BUYER fails to take delivery of the VESSEL after completion thereof according to this Contract and the Specifications without justified reason, the SELLER shall have the rightto tender the VESSEL for delivery after compliance with all procedural requirements as above provided. 30/62Shipbuilding ContractHull No.H1596ARTICLE VIII DELAYS & EXTENSION OF TIME FOR DELIVERY 1. CAUSE OF DELAY If, at any time before actual delivery, either the construction of the VESSEL, or any performance required hereunder as a prerequisite of delivery of the VESSEL, is delayed due to war,blockade, revolution, insurrection, mobilization, civil commotions, riots, strikes, sabotage, lockouts, local temperature higher than 35 degree centigrade, Acts of God or the publicenemy, terrorism, plague or other epidemics, quarantines, prolonged failure or restriction of electric current from an outside source, freight embargoes, if any, earthquakes, tidal waves,typhoons, hurricanes, storms or other causes beyond the control of the BUILDER or of its sub‑contractors or its key equipment suppliers (i.e. main engine, propeller, gearbox etc), asthe case may be, or by force majeure of any description, whether of the nature indicated by the forgoing or not, or by destruction of the BUILDER or works of the BUILDER or itssub‑contractors or its key equipment suppliers (i.e. main engine, propeller, gearbox etc), or of the VESSEL or any part thereof, by fire, flood, or other causes beyond the control of theSELLER or its sub‑contractors or its key equipment suppliers (i.e. main engine, propeller, gearbox etc) as the case may be, or due to the bankruptcy of the equipment and/or materialsupplier or suppliers (i.e. main engine, propeller, gearbox etc), or due to the delay caused by acts of God in the supply of parts essential to the construction of the VESSEL, then, inthe event of delay due to the happening of any of the aforementioned contingencies, the SELLER shall not be liable for such delay and the time for delivery of the VESSEL under thisContract shall be extended without any reduction in the Contract Price for a period of time which shall not exceed the total accumulated time of all such delays, subject neverthelessto the BUYER's right of cancellation under Paragraph 3 of this Article and subject however to all relevant provisions of this Contract which authorize and permit extension of the timeof delivery of the VESSEL.2. NOTICE OF DELAY Within seven (7) calendar days from the date of commencement of any delay on account of which the SELLER claims that it is entitled under this Contract to an extension of the timefor delivery of the VESSEL, the SELLER shall advise the BUYER by e-mail, of the date such delay commenced, and the reasons therefor.31/62Shipbuilding ContractHull No.H1596Likewise within seven (7) calendar days after such delay ends, the SELLER shall advise the BUYER in writing or by letter or e-mail, of the date such delay ended, and also shall specifythe maximum period of the time by which the date for delivery of the VESSEL is extended by reason of such delay. Failure of the BUYER to acknowledge the SELLER's notification ofany claim for extension of the Delivery Date within seven (7) calendar days after receipt by the BUYER of such notification, shall be deemed to be a waiver by the BUYER of its rightto object to such extension. Such acknowledgement shall not constitute BUYER’s acceptance to the extension claimed by the SELLER under this clause.3. RIGHT TO CANCEL FOR EXCESSIVE DELAY If the total accumulated time of all delays on account of the causes specified in Paragraph 1 of the Article aggregate to Two Hundred and Ten (210) calendar days or more, or if the totalaccumulated time of all delays on account of the causes specified in Paragraph 1 of the Article and non-permissible delays as described in Paragraph 1 of Article III aggregate to TwoHundred and Forty (240) calendar days or more, in any circumstances, excluding delays due to arbitration as provided for in Article XIII hereof or due to default in performance by theBUYER, or due to delays in delivery of the BUYER's Supplied Items, and excluding delays due to causes which, under Article V, VI, XI and XII hereof, permit extension orpostponement of the time for delivery of the VESSEL, then in such event, the BUYER at any time thereafter in accordance with the provisions set out herein rescind or cancel thisContract by serving upon the SELLER notice of cancellation or rescission by letter or email and the provisions of Article X of this Contract shall apply. The SELLER may, at any time,after the accumulated time of the aforementioned delays justifying cancellation by the BUYER as above provided for, demand in writing that the BUYER shall make an election, inwhich case the BUYER shall, within thirty (30) calendar days after such demand is received by the BUYER either notify the SELLER of its intention to cancel, or consent to anextension of the time for delivery to an agreed future date, it being understood and agreed by the parties hereto that, if any further delay occurs on account of causes justifyingcancellation as specified in this Contract, the BUYER shall have the same right of cancellation upon the same terms as hereinabove provided. 4. DEFINITION OF PERMISSIBLE DELAY Delays on account of such causes as provided for in Paragraph 1 of this Article excluding any other extensions of a nature which under the terms of this Contract permitpostponement of the Delivery Date, shall be understood to be (and are herein referred to as) permissible delays, and are to be distinguished from non‑permissible delays on accountof which the Contract Price of the VESSEL is subject to adjustment as provided for in Article III hereof. 32/62Shipbuilding ContractHull No.H1596ARTICLE IX WARRANTY OF QUALITY 1. 1. GUARANTEE OF MATERIAL AND WORKMANSHIPSubject to the provisions hereinafter set forth, the SELLER undertake to remedy, free of charge to the Buyer, any defects in the VESSEL which are due to defective materialsincluding major and minor equipment and/or poor workmanship on the part of the SELLER provided that (a) defects are discovered within a period of twelve (12) months after thedate of delivery of the VESSEL and a notice thereof is duly given to the Seller as provided under Paragraph 2 of this Article; and (b) such defects have not been caused by perils ofthe sea, rivers or navigation, or by ordinary wear and tear, overload, improper loading or stowage, corrosion of the materials if caused by the BUYER’s, fire, accident, incompetence,mismanagement, negligence or willful neglect or by alteration or addition by the BUYER not previously approved by the SELLER.For the purpose of this Article, the VESSEL shall include her hull, machinery, equipment and gear, but excludes any parts of the VESSEL which have been supplied by or on behalf ofthe BUYER.2. NOTICE OF DEFECTS The BUYER shall notify the SELLER by telefax or e-mail of any defects for which a claim is made under this guarantee as promptly as possible after discovery thereof. The BUYER'swritten notice shall describe the nature and the extent of the defect. The SELLER shall have no obligation for any defects discovered prior to the expiry date of the said twelve (12)months period, unless notice of such defects is received by the SELLER no later than five (5) Banking Days after such expiry date. An email containing brief details of the nature ofsuch defect sent by the BUYER to the SELLER within five (5) Banking Days after such expiry date will be sufficient compliance with the requirements as to time.3. REMEDY OF DEFECTS (a)The SELLER shall remedy, at its expense, any defects, against which the VESSEL is guaranteed under this Contract, by making all necessary repairs and/or replacements at theShipyard or elsewhere as provided for in 3(b) below. In either case whether all necessary repairs or replacements are performed by the SELLER at its shipyard or elsewhere asprovided for in 3(b) below, the SELLER shall not be responsible for towage, dockage, wharfage, port charges and anything else incurred for the Buyer’s getting and keeping theVESSEL ready for such repairing and replacing.33/62Shipbuilding ContractHull No.H1596Any parts or material so repaired or replaced by the SELLER according to this Article shall be guaranteed for a further six (6) months period starting from completion of relevant repairor replacement provided that the maximum period of guarantee shall in any event not exceed eighteen (18) months from the date of delivery of the VESSEL.(b) However, if it is impractical to make the repair by the SELLER, the BUYER shall cause without undue delay the necessary repairs or replacements to be made elsewhere which isdeemed suitable for the purpose after mutual agreement between the Parties, provided that, in such event, the SELLER may forward or supply replacement parts or materials to theVESSEL, unless forwarding or supplying thereof to the VESSEL would impair or delay the operation or working schedule of the VESSEL, in the event that the BUYER proposes tocause the necessary repairs or replacements to be made to the VESSEL elsewhere, the BUYER shall first, but in all events as soon as possible, give the SELLER notice in writing of thetime and place such repairs will be made, and if the VESSEL is not thereby delayed, or her operation or working schedule is not thereby impaired, the SELLER shall have the right toverify by its own representative(s) or representative(s) of Classification Society the nature and extent of the defects complained of. THE SELLER shall, in such cases, promptly advisethe BUYER in writing, after such examination has been completed, of its acceptance or rejection of the defects as ones that are covered by the guarantee herein provided. Upon theSELLER's acceptance of the defects as justifying remedy under this Article, the SELLER shall immediately pay by telegraphic transfer to the BUYER for such repairs or replacements asum equal to the lower figure of (i) the actual cost for such repairs or replacements including forwarding charges; and (ii) the average quotes for making similar repairs or replacementsincluding forwarding charges as quoted by three leading shipyards at or in the vicinity of the port of the repairs or replacements. (c) In any case, the BUYER shall, at its cost and responsibility, bring the VESSEL to the place elected for repairs and replacements, and cause the VESSEL to be ready in all respectsfor such repairs and replacements. (d) Any dispute under this Article shall be referred to arbitration in accordance with the provisions of Article XIII hereof.34/62Shipbuilding ContractHull No.H15964. Extent of SELLER's Responsibility: (a) The SELLER shall have no responsibility or liability for any other defects whatsoever in the VESSEL other than the defects specified in paragraph 1 of this Article. The SELLER shallneither be responsible or liable for any consequential or special losses, damages or expenses, nor be responsible for any losses, damages or expenses including but not limited to anyloss of time, loss of use, loss of profit, loss of earnings or demurrage, damage to the VESSEL caused by the defects specified in paragraph 1 of this Article, regardless of whether theaforesaid losses, damages or expenses are directly or indirectly occasioned to the BUYER by reason of the defects specified in paragraph 1 of this Article or due to repairs or other worksdone the VESSEL to remedy such defects.(b) The SELLER shall not be responsible for any defects in any part of the VESSEL which subsequent to delivery of the VESSEL have been replaced or in any way repaired by any othercontractor not appointed by the SELLER, or for any defects which have been caused or aggravated by mismanagement, accident, negligence, omission, willful neglect or improper useand maintenance of the VESSEL on the part of the BUYER, its servants or agents or by perils of sea or river, or navigation, or fire or accidents at sea or elsewhere or by ordinary wear andtear or by any other circumstances whatsoever beyond the control of the SELLER.(c)The SELLER’s liability provided for in this Article shall be limited to the repairs and replacements as provided for in 3(a) above. The guarantee contained as hereinabove in this Articlereplaces and excludes any other liability, guarantee, warranty and/or condition imposed or implied by the law, customary, statutory or otherwise, by reason of the construction and saleof the VESSEL by the SELLER for and to the BUYER. The guarantee contained in this Article shall not be extended, altered or varied except by a written instrument signed by the dulyauthorized representatives of the SELLER and the BUYER.(d)Upon delivery of the VESSEL to the BUYER, the SELLER shall thereby and thereupon be released from any and all liability whatsoever and howsoever arising out of the Contractand/or the law, customary, statutory or otherwise, by reason of the construction and sale of the VESSEL by the SELLER for and to the BUYER (save for the SELLER's obligations toremedy defects in accordance with this Article). 35/62Shipbuilding ContractHull No.H1596ARTICLE X CANCELLATION, REJECTION AND RESCISSION BY THE BUYER 1.All payments made by the BUYER prior to the delivery of the VESSEL shall be in the nature of advance to the SELLER. In the event the BUYER shall exercise its right of cancellationand/or rescission of this Contract under and pursuant to any of the provisions of this Contract specifically permitting the BUYER to do so, then the BUYER shall notify the SELLERin writing or by e-mail, and such cancellation and/or rescission shall be effective as of the date the notice thereof is received by the SELLER.2.Thereupon the SELLER shall refund in United States dollars within thirty (30) business days immediately after cancellation and/or rescission of the Contract to the BUYER the fullamount of all installments and sums already paid by the BUYER to the SELLER on account of the VESSEL, unless the SELLER disputes the BUYER's cancellation and/or rescissionby commencing arbitration procedures in accordance with Article XIII. If the BUYER's cancellation or rescission of this Contract is disputed by the SELLER by instituting arbitrationas aforesaid, then no refund shall be made by the SELLER, and the BUYER shall not be entitled to demand repayment from SELLER’s Bank under its guarantee, until the arbitrationaward between the BUYER and the SELLER or, in case of appeal or appeals by the SELLER on the arbitration award or any court orders, by the final court order, which shall be infavour of the BUYER, declaring the BUYER's cancellation and/or rescission justified, is made and delivered to the SELLER by the arbitration tribunal. In the event of the SELLER isobligated to make refund, the SELLER shall pay the BUYER interest in United States Dollars at the rate of Five percent (5%), if the cancellation or rescission of the Contract isexercised by the BUYER in accordance with the provision of Article III 1(c), 2(c), 3(c) or 4(c) hereof, on the amount required herein to be refunded to the BUYER computed from therespective dates when such sums were received by SELLER’s bank pursuant to Article II 4(b), 4(c) or 4(d) from the BUYER to the date of remittance by telegraphic transfer of suchrefund to the BUYER by the SELLER, provided, however, that if the said rescission by the BUYER is made under the provisions of Paragraph 3 of Article VIII or Paragraph 2 (b) ofArticle XII, then in such event the SELLER shall not be required to pay any interest.In case of BUYER’s cancellation and/or rescission of this contract and pursuant to any of the provisions of this Contract specifically permitting the BUYER to do so, the SELLERshall also return all Buyers' Supplies to the BUYER, or if they cannot be returned, the SELLER shall pay to the BUYER an amount equal to the BUYER's costs for such equipment.36/62Shipbuilding ContractHull No.H15963. Upon such refund by the SELLER to the BUYER, all obligations, duties and liabilities of each of the parties hereto to the other under this Contract shall be forthwith completelydischarged. 37/62Shipbuilding ContractHull No.H1596ARTICLE XI BUYER'S DEFAULT 1. DEFINITION OF DEFAULT The BUYER shall be deemed in default of its obligation under the Contract if any of the following events occurs: (a)The BUYER fails to pay the First, Second, Third or Fourth installment to the SELLER when any such installment becomes due and payable under the provisions of this Contractand of Article II hereof and provided the BUYER shall have received the SELLER's demand for payment in accordance with Article II hereof; or (b)The BUYER fails to deliver to the SELLER an irrevocable and unconditional Letter of Guarantee to be issued by the Payment Guarantor within the time specified in accordancewith Paragraph 6 of Article II hereof; or (c)The BUYER fails to pay the fifth installment to the SELLER in accordance with the terms and conditions of this Contract and of Paragraph 3(e) and 4(e) of Article II hereofprovided the BUYER shall have received the SELLER's demand for payment in accordance with Article II hereof; or (d)The BUYER fails to take delivery of the VESSEL, when the VESSEL is ready and tendered for delivery according to the terms of this Contract for delivery by the SELLER underthe provisions of this Contract and of Article VII hereof. 2. NOTICE OF DEFAULT If the BUYER is in default of payment or in performance of its obligations as provided hereinabove, the SELLER shall notify the BUYER to that effect by letter or e-mail after the dateof occurrence of the default as per Paragraph 1 of this Article and the BUYER shall forthwith acknowledge by letter or e-mail to the SELLER that such notification has been received. Incase the BUYER does not give the aforesaid letter or e-mail acknowledgment to the SELLER within three (3) calendar days it shall be deemed that such notification has been dulyreceived by the BUYER.38/62Shipbuilding ContractHull No.H15963. INTEREST AND CHARGE (a)If the BUYER is in default of payment as to any installment as provided in Paragraph 1 (a) and/or 1 (c) of this Article, the BUYER shall pay interest on such installment at the rateof Five percent (5%) per annum until the date of the payment of the full amount, including all aforesaid interest. In case the BUYER shall fail to take delivery of the VESSEL whenrequired to as provided in Paragraph 1 (d) of this Article, the BUYER shall be deemed in default of payment of the fifth installment and shall pay interest thereon at the same rateas aforesaid from and including the day on which the VESSEL is tendered for delivery by the SELLER, as provided in Article VII Paragraph 7 hereof. (b)In any event of default by the BUYER under 1 (a) or 1 (b) or 1 (c) or 1 (d) above, the BUYER shall also pay all reasonable direct costs, charges and expenses incurred by theSELLER in consequence of such default, but excluding any indirect or consequential losses, damages or expenses.4. DEFAULT BEFORE DELIVERY OF THE VESSEL (a)If any default by the BUYER occurs as defined in Paragraph 1 (a) or 1 (b) or 1 (c) or 1 (d) of this Article, the Delivery Date shall, at the SELLER's option, be postponed for a periodof continuance of such default by the BUYER. (b)If any such default as defined in Paragraph 1 (a) or 1 (b) or 1 (c) or 1 (d) of this Article committed by the BUYER continues for a period of fifteen (15) calendar days, then, theSELLER shall have all following rights and remedies: (i)The SELLER may, at its option, cancel or rescind this Contract, provided the SELLER has notified the BUYER of such default pursuant to Paragraph 2 of this Article, bygiving notice of such effect to the BUYER by e-mail. Upon receipt by the BUYER of such e-mail notice of cancellation or rescission, all of the BUYER's Supplies shallforthwith become the sole property of the SELLER, and the VESSEL and all its equipment and machinery shall be at the sole disposal of the SELLER for sale or otherwise;and (ii)In the event of such cancellation or rescission of this Contract, the SELLER shall be entitled to retain any instalment or instalments of the Contract Price paid by the BUYERto the SELLER on account of this Contract; and39/62Shipbuilding ContractHull No.H1596(iii)(Applicable to any BUYER's default defined in 1(a) of this Article) The SELLER shall, without prejudice to the SELLER's right to recover from the BUYER the 5th instalment,interest, costs and/or expenses by applying the proceeds to be obtained by sale of the VESSEL in accordance with the provisions set out in this Contract, have the right todeclare all unpaid 1st, 2nd, 3rd and 4th instalments to be forthwith due and payable, and upon such declaration, the SELLER shall have the right to immediately demand thepayment of the aggregate amount of all unpaid but due 1st, 2nd, 3rd and 4th instalments, as the case may be, from the Payment Guarantor in accordance with the terms andconditions of this Contract and of the Payment Guarantee issued by the Payment Guarantor.5. SALE OF THE VESSEL (a)In the event of cancellation or rescission of this Contract as above provided, the SELLER shall have full right and power either to complete or not to complete the VESSEL as itdeems fit, and to sell the VESSEL at a public or private sale on such terms and conditions as the SELLER thinks fit without being answerable for any loss or damage occasionedto the BUYER thereby.In the case of sale of the VESSEL, the SELLER shall give e-mail or written notice to the BUYER. (b)In the event of the sale of the VESSEL in its completed state, the proceeds of sale received by the SELLER shall be applied firstly to payment of all expenses attending suchsale and otherwise incurred by the SELLER as a result of the BUYER's default, and then to payment of all unpaid installments and/or unpaid balance of the Contract Price andinterest on such installment at the interest rate as specified in the relevant provisions set out above from the respective due dates thereof to the date of application. (c)In the event of the sale of the VESSEL in its incomplete state, the proceeds of sale received by the SELLER shall be applied firstly to all expenses attending such sale andotherwise incurred by the SELLER as a result of the BUYER's default, and then to payment of all costs of construction of the VESSEL (such costs of construction, as hereinmentioned, shall include but are not limited to all costs of labour and/or prices paid or to be paid by CSTC and/or the BUILDER for the equipment and/or technical designand/or materials purchased or to be purchased, installed and/or to be installed on the VESSEL) and/or any fees, charges, expenses and/or royalties incurred and/or to beincurred for the VESSEL less the installments so retained by the SELLER, and compensation to the SELLER for a reasonable sum of loss of profit due to the cancellation orrescission of this Contract.40/62Shipbuilding ContractHull No.H1596 (d)In either of the above events of sale, if the proceed of sale exceeds the total of the amounts to which such proceeds are to be applied as aforesaid, the SELLER shall promptlypay the excesses to the BUYER without interest, provided, however that the amount of each payment to the BUYER shall in no event exceed the total amount of installmentsalready paid by the BUYER and the cost of the BUYER's Supplied Items, if any. (e)If the proceed of sale are insufficient to pay such total amounts payable as aforesaid, the BUYER shall promptly pay the deficiency to the SELLER upon request.41/62Shipbuilding ContractHull No.H1596ARTICLE XII INSURANCE 1. EXTENT OF INSURANCE COVERAGE From the time of keel‑laying of the first section of the VESSEL until the same is completed, delivered to and accepted by the BUYER, the SELLER shall, at its own cost and expense,keep the VESSEL and all machinery, materials, equipment, appurtenances and outfit, delivered to the BUILDER for the VESSEL or built into, or installed in or upon the VESSEL,including the BUYER's Supplied Items, fully insured with Chinese insurance companies for BUILDER's RISK and at BUILDER’s expense.The amount of such insurance coverage shall, up to the date of delivery of the VESSEL, be in an amount at least equal to, but not limited to, the aggregate of the payments made bythe BUYER to the SELLER including the value of maximum amount of US$ 400, 000.00 of the BUYER's Supplied Items. The policy referred to hereinabove shall be taken out in the nameof the SELLER and all losses under such policy shall be payable to the SELLER.2. APPLICATION OF RECOVERED AMOUNT (a) Partial Loss:In the event the VESSEL shall be damaged by any insured cause whatsoever prior to acceptance and delivery thereof by the BUYER and in the further event that such damageshall not constitute an actual or a constructive total loss of the VESSEL, the SELLER shall apply the amount recovered under the insurance policy referred to in Paragraph 1 of thisArticle to the repair of such damage satisfactory to the Classification Society and other institutions or authorities as described in the Specifications without additional expenses tothe BUYER, and the BUYER shall accept the VESSEL under this Contract if completed in accordance with this Contract and Specifications and not make any claim for anyconsequential loss or depreciation. (b) Total Loss:However, in the event that the VESSEL is determined to be an actual or constructive total loss, the SELLER shall either:42/62Shipbuilding ContractHull No.H1596 (i)By the mutual agreement between the parties hereto, proceed in accordance with terms of this Contract, in which case the amount recovered under said insurance policyshall be applied to the reconstruction and/or repair of the VESSEL's damages and/or reinstallation of BUYER's Supplied Items , provided the parties hereto shall have firstagreed in writing as to such reasonable extension of the Delivery Date and adjustment of other terms of this Contract including the Contract Price as may be necessary forthe completion of such reconstruction; or (ii)If due to whatever reasons the parties fail to agree on the above, then refund immediately to the BUYER the amount of all installments paid to the SELLER under thisContract without interest, whereupon this Contract shall be deemed to be canceled and all rights, duties, liabilities and obligations of each of the parties to the other shallterminate forthwith.Within thirty (30) calendar days after receiving e-mail notice of any damage to the VESSEL constituting an actual or a constructive total loss, the BUYER shall notify the SELLERby e-mail of its agreement or disagreement under this sub‑paragraph. In the event the BUYER fails to so notify the SELLER, then such failure shall be construed as a disagreementon the part of the BUYER. This Contract shall be deemed as rescinded and canceled and the Paragraph 2 (b) (ii) of this Article shall apply.3. TERMINATION OF THE SELLER'S OBLIGATION TO INSURE The SELLER's obligation to insure the VESSEL hereunder shall cease and terminate forthwith upon delivery thereof to and acceptance by the BUYER.43/62Shipbuilding ContractHull No.H1596ARTICLE XIII DISPUTES AND ARBITRATION 1. PROCEEDINGS In the event of any dispute between the parties hereto as to any matter arising out of or relating to this Contract or any stipulation herein or with respect thereto which cannot besettled by the parties themselves, such dispute shall be resolved by arbitration in London Maritime Arbitrators Association (“LMAA”) in London, England in accordance withEnglish laws, the Arbitration Act 1996 of United Kingdom or any re-enactment or statutory modification thereof for the time being in force, and LMAA’s then prevailing arbitrationrules. Either party may demand arbitration of any such disputes by giving written notice to the other party. Any demand for arbitration by either party hereto shall state the name ofthe arbitrator appointed by such party and shall also state specifically the question or questions as to which such party is demanding arbitration. Within twenty (20) days afterreceipt of notice of such demand for arbitration, the other party shall in turn appoint a second arbitrator. The two arbitrators thus appointed shall thereupon select a third arbitrator,and the three arbitrators so named shall constitute the board of arbitration (hereinafter called the "Arbitration Board") for the settlement of such dispute.In the event however, that said other party should fail to appoint a second arbitrator as aforesaid within twenty (20) days following receipt of notice of demand of arbitration, it isagreed that such party shall thereby be deemed to have accepted and appointed as its own arbitrator the one already appointed by the party demanding arbitration, and the arbitrationshall proceed forthwith before this sole arbitrator, who alone, in such event, shall constitute the Arbitration Board. And in the further event that the two arbitrators appointedrespectively by the parties hereto as aforesaid should be unable to reach agreement on the appointment of the third arbitrator within twenty (20) days from the date on which thesecond arbitrator is appointed, either party of the said two arbitrators may apply to the President for the time being of the LMAA to appoint the third arbitrator. The award of thearbitration, made by the sole arbitrator or by the majority of the three arbitrators as the case may be, shall be final, conclusive and binding upon the parties hereto.2. ALTERNATIVE ARBITRATION BY AGREEMENTNotwithstanding the preceding provisions of this Article, it is recognized that in the event of any dispute or difference of opinion arising in regard to the construction of the VESSEL,her machinery and equipment, or concerning the quality of materials or workmanship thereof or thereon, such dispute may be referred to the Classification Society upon mutual writtenagreement of the parties hereto. In such case, the opinion of the Classification Society shall be final and binding on the parties hereto.44/62Shipbuilding ContractHull No.H15963. NOTICE OF AWARDNotice of any award shall immediately be given in writing or by e-mail to the SELLER and the BUYER.4. EXPENSES The arbitrator(s) shall determine which party shall bear the expenses of the arbitration or the proportion of such expenses which each party shall bear.5. AWARD OF ARBITRATION Award of arbitration, shall be final and binding upon the parties concerned. Any right of appeal available under the English Laws is hereby expressly precluded and excluded by theParties hereto.6. ENTRY IN COURT Judgment on the recognition of the enforceability of any arbitration award in a foreign country may be entered in any court of competent jurisdiction, where the award is to be enforced. 7. ALTERATION OF DELIVERY DATE In the event of reference to arbitration of any dispute arising out of matters occurring prior to delivery of the VESSEL, the SELLER shall not be entitled to extend the Delivery Date asdefined in Article VII hereof and the BUYER shall not be entitled to postpone its acceptance of the VESSEL on the Delivery Date or on such newly planned time of delivery of theVESSEL as declared by the SELLER. However, if the construction of the VESSEL is affected by any arbitration, the SELLER shall then be permitted to extend the Delivery Date asdefined in Article VII and the decision or the award shall include a finding as to what extent the SELLER shall be permitted to extend the Delivery Date. 45/62Shipbuilding ContractHull No.H1596ARTICLE XIV RIGHT OF ASSIGNMENT Neither of the parties hereto shall assign this Contract to any other individual, firm, company or corporation unless prior written consent of the other party is given, with such writtenconsent not to be unreasonably withheld.46/62Shipbuilding ContractHull No.H1596ARTICLE XV TAXES AND DUTIES 1. TAXES All costs for taxes including stamp duties, if any, incurred in connection with this Contract in the People's Republic of China shall be borne by the SELLER. Any taxes and/or dutiesimposed upon those items or services procured by the SELLER in the People's Republic of China or elsewhere for the construction of the VESSEL shall be borne by the SELLER.The SELLER shall not be responsible for the personal income tax for BUYER's Representative or other BUYER’s staff, agent and representatives who work at BUILDER’s Shipyardand premise. 2. DUTIES The BUYER shall bear and pay all taxes, duties, stamps and fees incurred outside China in connection with execution and/or performance of this Contract by the BUYER, except fortaxes, duties, stamps, dues, levies and fees imposed upon those items which are to be procured by the SELLER for the construction of the VESSEL in accordance with the terms ofthis Contract and the Specifications. Any tax or duty other than those described hereinabove, if any, shall be borne by the BUYER. 47/62Shipbuilding ContractHull No.H1596ARTICLE XVI PATENTS, TRADEMARKS AND COPYRIGHTS The machinery and equipment of the VESSEL may bear the patent number, trademarks or trade names of the manufacturers. The SELLER shall defend and hold harmless the BUYER frompatent liability or claims of patent infringement of any nature or kind, including costs and expenses for, or on account of any patented or patentable invention made or used in theperformance of this Contract and also including cost and expense of litigation, if any.Nothing contained herein shall be construed as transferring any patent or trademark rights or copyright in equipment covered by this Contract, and all such rights are hereby expresslyreserved to the true and lawful owners thereof. Notwithstanding any provisions contained herein to the contrary, the SELLER's obligation under this Article should not be terminated bythe passage of any specified period of time.The SELLER's liability hereunder does not extend to equipment or parts supplied by the BUYER to the BUILDER if any. 48/62Shipbuilding ContractHull No.H1596ARTICLE XVII NOTICE Any and all notices and communications in connection with this Contract shall be addressed as follows:To the BUYER : SRI LANKA SHIPPING COMPANY INC.Address : c/o Unitized Ocean Transport Limited373 Syngrou Ave. & 2-4 Ymittou str., 17564, Palaio Faliro,Athens, GreeceTechnical contact information:Telephone:Email:Commercial Contact information:Telephone:Email:To the SELLER: CSTC : China Shipbuilding Trading Company LimitedContacts:Address : Marine Tower,No.1 Pudong Dadao,Shanghai 200120the People's Republic of ChinaTelephone:E-mail :BUILDER : Shanghai Waigaoqiao Shipbuilding Company LimitedContacts:Address: 3001 Zhouhai Road, Pudong New District,Shanghai 200137, P.R. ChinaTelephone:E-mail :49/62Shipbuilding ContractHull No.H1596Any notices and communications sent by CSTC or the BUILDER alone to the BUYER shall be deemed as having being sent by both CSTC and the BUILDER.Any change of address shall be communicated in writing by registered mail or by e-mail by the party making such change to the other party and in the event of failure to give such noticeof change, communications addressed to the party at their last known address shall be deemed sufficient.Notwithstanding any provisions in this Contract stipulating that all the notices shall be sent by email, the SELLER shall be entitled to not only send by email but also send by courier forthe important notices under or in connection with this Contract and such notice sent by courier shall become effective and deemed delivered in accordance with below paragraph of thisArticle.Any and all notices, requests, demands, instructions, advice and communications in connection with this Contract shall be deemed to be given at, and shall become effective from, thetime when the same is delivered to the address of the party to be served, provided, however, that, any express courier service shall be deemed to be delivered upon confirmation ofdelivery or recipients refusal recorded by the courier company, and e-mail acknowledged by the answerbacks shall be deemed to be delivered upon dispatch (unless there is a ‘bounce-back’ message). E-mail transmissions shall be deemed as delivered upon the subject email having been removed to the “Sent” box on the sending computer.Any and all notices, communications, Specifications and drawings in connection with this Contract shall be written in the English language and each party hereto shall have noobligation to translate them into any other language.An email message shall be deemed to be a notice “in writing” for the purposes of this Contract. 50/62Shipbuilding ContractHull No.H1596ARTICLE XVIII EFFECTIVE DATE OF CONTRACT This Contract shall become effective upon being signed by both parties.Upon signing of this Contract, both parties hereto shall do the follows:a)The SELLER to provide the Refund Guarantee to the BUYER to cover BUYER’s first, second, third and fourth instalments in accordance with the terms of Article II paragraph 7 ofthis Contract;b)The BUYER to effect the payment of the first instalment in accordance with the terms of Article II, paragraph 3 (a) and 4 (a) of the Contract;c)The BUYER to provide Letter of Guarantees, within five (5)Banking Days from the date of BUYER's receipt of the Refund Guarantee, to the SELLER covering BUYER’s obligation topay the 2nd, 3rd and 4th instalments as stipulated in Article II, paragraph 6 of this Contract. 51/62Shipbuilding ContractHull No.H1596ARTICLE XIX INTERPRETATION 1. LAW APPLICABLE The parties hereto agree that the validity and interpretation of this Contract and of each Article and part hereof be governed by and interpreted in accordance with the English Laws.2. DISCREPANCIESAll general language or requirements embodied in the Specifications are intended to amplify, explain and implement the requirements of this Contract. However, in the event that anylanguage or requirements so embodied in the Specifications permit an interpretation inconsistent with any provision of this Contract, then in each and every such event theapplicable provisions of this Contract shall prevail. The Specifications and plans are also intended to explain each other, and anything shown on the plans and not stipulated in theSpecifications or stipulated in the Specifications and not shown on the plans, shall be deemed and considered as if embodied in both. In the event of conflict between theSpecifications and plans, the Specifications shall govern.However, with regard to such inconsistency or contradiction between this Contract and the Specifications as may later occur by any change or changes in the Specifications agreedupon by and among the parties hereto after execution of this Contract, then such change or changes shall prevail.3. DEFINITION "Banking Days" are days on which banks are open in New York, Piraeus, Greece, and Shanghai, China, United Kingdom. Saturdays, Sundays are always excluded.In absence of stipulation of “working day(s)”, "banking day(s)" or "business day(s)", the "day" or "days" shall be taken as "calendar day" or "calendar days".4. ENTIRE AGREEMENT This Contract sets forth the entire understanding of the Parties with respect to the subject matter discussed herein. It supersedes all prior discussions, negotiations and agreements,(including but not limited to the Letter of Intent) whether oral or written, expressed or implied.52/62Shipbuilding ContractHull No.H1596ARTICLE XX SANCTIONS (a) Each of the SELLER and the BUYER hereby ensure that at the date of entering into this Contract and continuing until the BUYER has taken delivery of the VESSEL, neither theBUYER nor the SELLER, are designated pursuant to the sanction lists maintained by the Chinese government and/or sanction lists maintained by United Nations and/or EU financialsanctions maintained by the European Commission of European Union and / or the Consolidated List of Financial Sanctions Targets in the UK maintained by UK HM Treasuryand/or OFAC’s SDN List maintained by U.S. Government so that this CONTRACT, as a result of the aforesaid sanction, becomes frustrated (“Sanctions”). (b)Either party shall notify the other party immediately upon the occurrence of a Sanctions event (the “Sanctions Notice”). (c)The Parties shall, from the date of the Sanctions Notice, work together in good faith within 60 days or any longer period as mutually agreed by the Parties to find a mutuallyacceptable solution (the “Standstill Period”). During the Standstill Period, Each Party shall not be entitled to cancel/rescind this Contract by reason of the Sanctions giving rise tosuch Standstill Period, unless there is an explicit order or instruction of the official governmental authorities that orders the Parties to do so. (d)If the Parties have reached a mutually acceptable solution during the Standstill Period and the Parties confirm to reactivate this Contract, the Delivery Date of the VESSEL shall beautomatically extended for a period equal to the period the Contract has been suspended for the reason stated in this Article XX. (e)If, on the last day of the Standstill Period, the Parties fail to reach a mutually acceptable solution despite their best endeavours, then: i)if the Sanctions event was caused by the SELLER, the BUYER shall have the right to terminate this Contract. ii)if the Sanctions event was caused by the BUYER, the SELLER shall have the right to terminate this Contract. 53/62Shipbuilding ContractHull No.H1596 iii)In the event the BUYER terminates the Contract pursuant to this clause, the SELLER shall refund in United States dollars to the BUYER the full amount of all instalment orinstalments paid by the BUYER to the SELLER on account of the VESSEL.In the event the SELLER terminates the Contract pursuant to this clause, the SELLER shall be entitled to retain all instalment or instalments of the Contract Price paid bythe BUYER to the SELLER on account of this Contract, which shall therefore become the property of the SELLER and the Vessel shall be at the sole disposal of theSELLER. Notwithstanding any provisions of this CONTRACT, upon the SELLER’s aforesaid refund of the instalment or instalments paid by the BUYER in case of BUYER’s termination or theSELLER’s retention of BUYER’s paid instalment or instalments in case of the SELLER’s termination pursuant to this Paragraph e), all obligations, duties and liabilities of the one Partytowards the other Party and all rights, benefits and claims against one Party by/of the other Party under or in connection with this CONTRACT and/or any applicable laws shall beforthwith completely discharged and waived.54/62Shipbuilding ContractHull No.H1596In WITNESS WHEREOF, the parties hereto have caused this Contract to be duly executed on the day and year first above written.THE BUYER : SRI LANKA SHIPPING COMPANY INC. By : /s/ Andreas Nikolaos Michalopoulos Name : Andreas Nikolaos Michalopoulos Title : Attorney-in-fact Witness : /s/ Aliki Paliou THE SELLER: CSTC : China Shipbuilding Trading Company Limited By : /s/ Huang Chongyang Name : Huang Chongyang Title : Attorney in fact Witness : /s/ Song Chao THE BUILDER: Shanghai Waigaoqiao Shipbuilding Company Limited By : /s/ Li Hui Name : Li Hui Title : Attorney in fact Witness : /s/ Wang Nan 55/62Shipbuilding ContractHull No.H1596Exhibit "A" : IRREVOCABLE LETTER OF GUARANTEE NO. To: SRI LANKA SHIPPING COMPANY INC.Date:Dear Sirs,Irrevocable Letter of Guarantee No.At the request of China Shipbuilding Trading Company Limited, address at 56(Yi), Zhongguancun Nandajie, Beijing 100044, China, and in consideration of your agreeing to pay ChinaShipbuilding Trading Company Limited and Shanghai Waigaoqiao Shipbuilding Company Limited, address at 3001 Zhouhai Road, Pudong New District, Shanghai 200137, China(hereinafter collectively called the "SELLER") the instalments before delivery of the VESSEL under the Shipbuilding Contract concluded by and amongst you and the SELLER datedDecember 18th, 2023 (hereinafter called the “Contract”) for the construction of one (1) 114,000 DWT Product/Crude Oil Tanker to be designated as Hull No. H1596 (hereinafter called the"VESSEL"), we, China CITIC Bank Corporation Limited, Beijing Branch, address at Block C, Fuhua Mansion, No.8, Chaoyangmen Beidajie, Dongcheng District, Beijing, China, do herebyirrevocably guarantee repayment to you by the SELLER of an amount up to but not exceeding a total amount of United States Dollars Twenty-Nine Million One Hundred and EightyThousand Two Hundred and Fifty Only (USD 29,180,250) representing the first instalment of the Contract Price of the VESSEL of United States Dollars Nine Million Seven Hundred andTwenty-Six Thousand Seven Hundred and Fifty only (US$ 9,726,750), plus the second instalment of the Contract Price of the VESSEL, of United States Dollars Six Million Four Hundredand Eighty-Four Thousand Five Hundred only (US$ 6,484,500), plus the third instalment of the Contract Price of the VESSEL, of United States Dollars Six Million Four Hundred andEighty-Four Thousand Five Hundred only (US$ 6,484,500), plus the fourth instalment of the Contract Price of the VESSEL, of United States Dollars Six Million Four Hundred and Eighty-Four Thousand Five Hundred only (US$ 6,484,500), as you may have paid to the SELLER under the Contract prior to the delivery of the VESSEL, if and when the same or any part thereofbecomes repayable to you from the SELLER in accordance with the terms (Article X or Article XII 2(b)) of the Contract.Should the SELLER fail to make such repayment upon demand, we shall pay you the amount the SELLER ought to pay with no interest if cancellation of the Contract is exercised by youfor the delay caused by permissible delays or total loss in accordance with the provisions of Article XII 2(b), or together with an interest at the rate of Five percent (5%) per annum if thecancellation of the Contract is exercised by you in accordance with the provisions of Article III 1(c), 2(c), 3(c) or 4(c) of the Contract within thirty (30) Beijing banking days after ourreceipt of the relevant written demand from you for repayment.56/62Shipbuilding ContractHull No.H1596However, in the event of any dispute between you and the SELLER in relation to:(1) whether the SELLER is liable to repay the instalment or instalments paid by you and(2) consequently whether you shall have the right to demand payment from us,and such dispute is submitted either by the SELLER or by you for arbitration in accordance with Article XIII of the Contract, we shall be entitled to withhold and defer payment until thearbitration award is published. We shall not be obligated to make any payment to you unless the arbitration award orders the SELLER to make repayment. If the SELLER fails to honourthe arbitration award upon demand then we shall refund you to the extent the arbitration award orders but not exceeding the aggregate amount of this guarantee plus the interestdescribed above.The said repayment shall be made by us in United States Dollars. This Letter of Guarantee shall become effective from the time of the actual receipt of the first instalment by the SELLERfrom you to the SELLER’s a/c No. held by China Shipbuilding Trading Company Limited with China CITIC Bank Corporation Limited, Beijing Branch, address at Block C, Fuhua Mansion,No.8, Chaoyangmen Beidajie, Dongcheng District, Beijing, China and the amounts effective under this Letter of Guarantee shall correspond to the total payment actually received by theSELLER to his a/c stated above from time to time under the Contract prior to the delivery of the VESSEL. However, the available amount under this Letter of Guarantee shall in no eventexceed above mentioned amount actually paid to the SELLER, together with interest calculated, as described above at Zero percent (0%) or, Five percent (5%) per annum, as the casemay be for the period commencing with the date of receipt by the SELLER of the respective instalment to the date of repayments thereof.Any claim, demand or notice in connection with this Letter of Guarantee shall be validly delivered to us by you through your or Performance Shipping Inc. bank (DNB Bank ASA,London Brach) by authenticated SWIFT to our swift address (SWIFT CODE: CIBKCNBJ100).This Letter of Guarantee shall remain in force until the VESSEL has been delivered to and accepted by you as evidence by the SELLER’s presentation to us of copy of the Protocol ofDelivery and Acceptance of the VESSEL under the Contract or refund has been made by the SELLER or ourselves, or until November 27th, 2026, whichever occurs the earliest. Afterwhich, this guarantee shall be null and void whether or not it is returned to us for cancellation.57/62Shipbuilding ContractHull No.H1596This Letter of Guarantee is governed by the Laws of England. For and on behalf of China CITIC Bank Corporation Limited58/62Shipbuilding ContractHull No.H1596Exhibit "B" IRREVOCABLE LETTER OF GUARANTEE FOR THE 2ND, 3RD AND 4TH INSTALLMENTSFrom: Performance Shipping Inc.To: China Shipbuilding Trading Company Limited __________ 56(Yi) Zhongguancun Nan Da Jie, Beijing 100044, ChinaAndShanghai Waigaoqiao Shipbuilding Company Limited3001 Zhouhai Road, Pudong New District, Shanghai 200137, ChinaDear Sirs, (1)In consideration of your entering into a Shipbuilding Contract dated 18th December, 2023 ("the Shipbuilding Contract") with SRI LANKA SHIPPING COMPANY INC., address atTrust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960, Marshall Islands, as the buyer (hereinafter called "the BUYER") for the construction of one (1) 114,000DWT Product/Crude Oil Tanker known as Shanghai Waigaoqiao Shipbuilding Company Limited's Hull No. H1596 (hereinafter called "the VESSEL"), we, Performance ShippingInc., address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH 96960, hereby IRREVOCABLY, ABSOLUTELY and UNCONDITIONALLYguarantee, as the primary obligor and not merely as surety, the due and punctual payment by the BUYER of the 2nd, 3rd and 4th installments of the Contract Price amounting to atotal sum of United States Dollars Nineteen Million Four Hundred and Fifty Three Thousand Five Hundred only (USD 19,453,500) as specified in (2) below. (2)The Instalments guaranteed hereunder, pursuant to the terms of the Shipbuilding Contract, comprise the 2nd installment in the amount of United States Dollars Six Million FourHundred and Eighty-Four Thousand Five Hundred only (US$ 6,484,500) payable by the BUYER within five (5) Banking Days after cutting of the first steel plate in your BUILDER'sShipyard workshop and the third installment in the amount of United States Dollars Six Million Four Hundred and Eighty-Four Thousand Five Hundred only (US$ 6,484,500)payable by the BUYER within five (5) Banking Days after keel‑laying of the first section of the VESSEL and the fourth installment in the amount of United States Dollars Six MillionFour Hundred and Eighty-Four Thousand Five Hundred only (US$ 6,484,500) payable by the BUYER within five (5) Banking Days after launching of the VESSEL .59/62Shipbuilding ContractHull No.H1596 (3)We also IRREVOCABLY, ABSOLUTELY and UNCONDITIONALLY guarantee, as primary obligor and not merely as surety, the due and punctual payment by the BUYER ofinterest on each Instalment guaranteed hereunder at the rate of Five percent (5%) per annum from and including the first day after the date of instalment in default until the dateof full payment by us of such amount guaranteed hereunder. (4)In the event that the BUYER fails to punctually pay any of the 2nd, 3rd and 4th Instalments guaranteed hereunder or the BUYER fails to pay any interest thereon, and any suchdefault continues for a period of fifteen (15) Banking Days, then, upon receipt by us of your first written demand, we shall immediately pay to you or your assignee only theunpaid installment of the 2nd, 3rd and 4th instalments, together with the interest as specified in paragraph (3) hereof, without requesting you to take any or further action,procedure or step against the BUYER or with respect to any other security which you may hold. (5)We hereby agree that at your option this Guarantee and the undertaking hereunder shall be on an exceptional basis assignable to your financing bank only and if so assignedshall inure to the benefit of your bank as your assignee as if your bank were originally named herein. (6)Any payment by us under this Guarantee shall be made in Unites States Dollars by telegraphic transfer to China CITIC Bank Corporation Limited, Beijing Branch, address at BlockC, Fuhua Mansion, No.8, Chaoyangmen Beidajie, Dongcheng District, Beijing, China (SWIFT Code: CIBKCNBJ100) as receiving bank nominated by you for A/C Beneficiary:China Shipbuilding Trading Company Limited or through other receiving bank to be nominated by you from time to time, in favour of you or your assignee bank. (7)Our obligations under this guarantee shall not be affected or prejudiced by any dispute between you as the SELLER and the BUYER under the Shipbuilding Contract or by theBUILDER's delay in the construction and/or delivery of the VESSEL due to whatever causes or by any variation or extension of their terms thereof or by any security or otherindemnity now or hereafter held by you in respect thereof, or by any time or indulgence granted by you or any other person in connection therewith, or by any invalidity orunenforceability of the terms thereof, or by any act, omission, fact or circumstances whatsoever, which could or might, but for the foregoing, diminish in any way our obligationsunder this Guarantee.60/62Shipbuilding ContractHull No.H1596 (8)Any claim or demand shall be in writing signed by one of your authorized officers and may be served on us either by hand or by post and if sent by post to c/o Unitized OceanTransport Limited, 373 Syngrou Ave. & 2-4 Ymittou str, 17564, Palaio Faliro, Athens, Greece (or such other address as we may notify to you in writing), or by email (E-mailAddress: legal@unitizedocean.com), with confirmation in writing. (9)This Letter of Guarantee shall come into full force and effect upon delivery to you of this Guarantee and shall continue in force and effect until the VESSEL is delivered to andaccepted by the BUYER and the BUYER shall have performed all its obligations for taking delivery thereof or until the full payment of the 2nd, 3rd and 4th Instalment together withthe aforesaid interests by the BUYER or us, whichever first occurs. (10)The maximum amount, however, that we are obliged to pay to you under this Guarantee shall not exceed the aggregate amount of U.S. Dollars Nineteen Million Six Hundred andThirteen Thousand Three Hundred and Ninety-Two only (US$ 19,613,392) being an amount equal to the sum of:‑ (a)The 2nd, 3rd and 4th instalment guaranteed hereunder in the total amount of United States Dollars Nineteen Million Four Hundred and Fifty Three Thousand Five Hundredonly (USD 19,453,500); and (b)Interest, if applicable, at the rate of Five percent (5%) per annum on the Instalment for a period of sixty (60) days in the amount of United States Dollars One Hundred andFifty-Nine Thousand Eight Hundred and Ninety-Two only (US$ 159,892). (11)All payments by us under this Guarantee shall be made without any set‑off or counterclaim and without deduction or withholding for or on account of any taxes, duties, orcharges whatsoever unless we are compelled by law or the Contract to deduct or withhold the same. In the latter event we shall make the minimum deduction or withholdingpermitted and will pay such additional amounts as may be necessary in order that the net amount received by you after such deductions or withholdings shall equal the amountwhich would have been received had no such deduction or withholding been required to be made. (12)This Letter of Guarantee shall be construed in accordance with and governed by the Laws of England. We hereby submit to the exclusive jurisdiction of the English courts for thepurposes of any legal action or proceedings in connection herewith in England. (13)When our liabilities under this Letter of Guarantee have expired as aforesaid, you will return it to us without any request or demand from us.61/62Shipbuilding ContractHull No.H1596IN WITNESS WHEREOF, we have caused this Letter of Guarantee to be executed and delivered by our duly authorized representative the day and year above written.Very Truly Yours By: 62/62Exhibit 4.10SHIPBUILDING CONTRACTFORCONSTRUCTION OF ONE 114,000 DWT PRODUCT/ CRUDE OIL TANKER(HULL NO. H1597)BETWEENGUADELOUPE SHIPPING COMPANY INC.as BUYERandCHINA SHIPBUILDING TRADING COMPANY LIMITEDandSHANGHAI WAIGAOQIAO SHIPBUILDING COMPANY LIMITEDCollectively as SELLERShipbuilding ContractHull No.H1597CONTENTS ARTICLE PAGE NO. ARTICLE I DESCRIPTION AND CLASS2 1. DESCRIPTION:2 2. CLASS AND RULES2 3. PRINCIPAL PARTICULARS AND DIMENSIONS OF THE VESSEL3 4. GUARANTEED SPEED4 5. GUARANTEED FUEL CONSUMPTION4 6. GUARANTEED DEADWEIGHT4 7. SUBCONTRACTING:5 8. REGISTRATION:5 ARTICLE II CONTRACT PRICE & TERMS OF PAYMENT6 1. CONTRACT PRICE:6 2. CURRENCY:6 3. TERMS OF PAYMENT:6 4. METHOD OF PAYMENT:8 5. PREPAYMENT:9 6. SECURITY FOR PAYMENT OF INSTALMENTS BEFORE DELIVERY:9 7. REFUNDS10 ARTICLE III ADJUSTMENT OF THE CONTRACT PRICE11 1. DELIVERY11 2. INSUFFICIENT SPEED12 3. EXCESSIVE FUEL CONSUMPTION13 4. DEADWEIGHT14 5. EFFECT OF RESCISSION15 ARTICLE IV SUPERVISION AND INSPECTION16 1. APPOINTMENT OF THE BUYER'S SUPERVISOR16 2. COMMENTS TO PLANS AND DRAWINGS16 3. SUPERVISION AND INSPECTION BY THE SUPERVISOR17 4. LIABILITY OF THE SELLER18 5. SALARIES AND EXPENSES18 6. REPLACEMENT OF SUPERVISOR19 ARTICLE V MODIFICATION,CHANGES AND EXTRAS20 1. HOW EFFECTED20 2. CHANGES IN RULES AND REGULATIONS, ETC.21 3. SUBSTITUTION OF MATERIALS AND/OR EQUIPMENT22 4. BUYER'S SUPPLIED ITEMS22 ARTICLE VI TRIALS24 1. NOTICE24 2. HOW CONDUCTED25 3. TRIAL LOAD DRAFT25 4. METHOD OF ACCEPTANCE OR REJECTION26 5. DISPOSITION OF SURPLUS CONSUMABLE STORES26 6. EFFECT OF ACCEPTANCE27 ARTICLE VII DELIVERY28 1. TIME AND PLACE28 2. WHEN AND HOW EFFECTED28 3. DOCUMENTS TO BE DELIVERED TO THE BUYER28 4. TITLE AND RISK30IShipbuilding ContractHull No.H1597 5. REMOVAL OF VESSEL30 6. TENDER OF THE VESSEL30 ARTICLE VIII DELAYS & EXTENSION OF TIME FOR DELIVERY31 1. CAUSE OF DELAY31 2. NOTICE OF DELAY31 3. RIGHT TO CANCEL FOR EXCESSIVE DELAY32 4. DEFINITION OF PERMISSIBLE DELAY32 ARTICLE IX WARRANTY OF QUALITY33 1. GUARANTEE OF MATERIAL AND WORKMANSHIP33 2. NOTICE OF DEFECTS33 3. REMEDY OF DEFECTS33 4. EXTENT OF THE SELLER'S LIABILITY35 ARTICLE X CANCELLATION, REJECTION AND RESCISSION BY THE BUYER36 ARTICLE XI BUYER'S DEFAULT37 1. DEFINITION OF DEFAULT37 2. NOTICE OF DEFAULT37 3. INTEREST AND CHARGE38 4. DEFAULT BEFORE DELIVERY OF THE VESSEL38 5. SALE OF THE VESSEL39 ARTICLE XII INSURANCE41 1. EXTENT OF INSURANCE COVERAGE41 2. APPLICATION OF RECOVERED AMOUNT41 3. TERMINATION OF THE SELLER'S OBLIGATION TO INSURE42 ARTICLE XIII DISPUTES AND ARBITRATION43 1. PROCEEDINGS43 2. ALTERNATIVE ARBITRATION BY AGREEMENT43 3. NOTICE OF AWARD44 4. EXPENSES44 5. AWARD OF ARBITRATION44 6. ENTRY IN COURT44 7. ALTERATION OF DELIVERY DATE44 ARTICLE XIV RIGHT OF ASSIGNMENT45 ARTICLE XV TAXES AND DUTIES46 1. TAXES46 2. DUTIES46 ARTICLE XVI PATENTS, TRADEMARKS AND COPYRIGHTS47 ARTICLE XVII NOTICE48 ARTICLE XVIII EFFECTIVE DATE OF CONTRACT50 ARTICLE XIX INTERPRETATION51 1. LAW APPLICABLE51 2. DISCREPANCIES51 3. DEFINITION51 4. ENTIRE AGREEMENT51 ARTICLE XX SANCTIONS52 EXHIBIT "A" : IRREVOCABLE LETTER OF GUARANTEE NO.55 EXHIBIT "B" IRREVOCABLE LETTER OF GUARANTEE58IIShipbuilding ContractHull No.H1597SHIPBUILDING CONTRACTFORCONSTRUCTION OF ONE 114,000 DWT PRODUCT/ CRUDE OIL TANKER (HULL NO. H1597)This CONTRACT, entered into this 18th day of December 2023 by and between GUADELOUPE SHIPPING COMPANY INC., a corporation organized and existing under the Laws of theRepublic of the Republic of the Marshall Islands, having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960, Marshall Islands (hereinaftercalled the "BUYER") on one part; and CHINA SHIPBUILDING TRADING COMPANY LIMITED, a corporation organized and existing under the Laws of the People's Republic of China,having its registered office at 56(Yi) Zhongguancun Nan Da Jie, Beijing 100044, the People's Republic of China (hereinafter called "CSTC"), and SHANGHAI WAIGAOQIAOSHIPBUILDING COMPANY LIMITED, a corporation organized and existing under the Laws of the People's Republic of China, having its registered office at 3001 Zhouhai Road, PudongNew District, Shanghai 200137, the People's Republic of China (hereinafter called the "BUILDER") on the other part. CSTC and the BUILDER are hereinafter jointly called the "SELLER".BUYER and SELLER altogether the “Parties” and each one the “Party”.WITNESSETHin consideration of the mutual covenants contained herein, the SELLER agrees to build, launch, equip and complete at BUILDER's Shipyard and to sell and deliver to the BUYER aftercompletion and successful trial one (1) Diesel Driven 114,000 DWT PRODUCT/CRUDE OIL TANKER as more fully described in Article I hereof, to be registered under the flag of theRepublic of the Marshall Islands and the BUYER agrees to purchase and take delivery of the aforesaid VESSEL from the SELLER and to pay for the same in accordance with the termsand conditions hereinafter set forth.1/61Shipbuilding ContractHull No.H1597ARTICLE I DESCRIPTION AND CLASS 1. DESCRIPTION: The VESSEL is a Steel-Hulled, Single Screw, Diesel Driven Product/Crude Oil Tanker of 114,000 metric tons deadweight, at scantling draft moulded of 15.0 meters (hereinafter calledthe "VESSEL") of the class described below. The VESSEL shall be on identical basis as the repeat vessel to the prototype vessel (BUILDER’s Hull No. H1515, hereinafter called“H1515”), the VESSEL shall have the BUILDER's Hull No. H1597 and shall be constructed, equipped and completed in accordance with the provisions of this Contract and H1515’sfollowing "Specifications": (1) Specification (Drawing No. 114TK –BS21202-CS-R1) (2) General Arrangement (Drawing No. 114TK –BS21202-GA-R1) (3) Midship Section (Drawing No. 114TK –BS21202-MS-R1) (4) Makers list (Drawing No. 114TK –BS21202-ML-R1)(5) Technical Memorandum on the 114,000DWT Product/Crude Oil Tanker Specifications dated 7th March, 2023attached hereto and signed by each of the parties to this Contract (hereinafter collectively called the "Specifications"), making an integral part hereof.2. CLASS AND RULES The VESSEL, including her machinery and equipment, shall be constructed in accordance with the rules and regulations issued and having become effective up to and on the date ofsigning this Contract of Lloyd’s Register (LR) (hereinafter called the "Classification Society") without any reservation of any kind and classified and registered to the symbol of:+100A1, Double Hull Oil Tanker, CSR, ESP, ShipRight (ACS(B, C), CM), *IWS, LI, DSPM4, ECO(BWT, IHM, P, VECS-L, EEDI-3), EGCS(OPEN), +LMC, IGS, UMS, With descriptive notes “ShipRight (BWMP(S,T), SCM, SERS), ETA, GR(NG, A)”, and shall also comply with the rules and regulations as fully described in the Specifications.The requirements of the authorities as fully described in the Specifications including that of the Classification Society are to include additional rules or circulars thereof issued andbecome effective up to and on the date of signing this Contract.2/61Shipbuilding ContractHull No.H1597The SELLER shall arrange with the Classification Society to assign a representative or representatives (hereinafter called the "Classification Surveyor") to the BUILDER's Shipyardfor supervision of the construction of the VESSEL.All fees and charges incidental to Classification and compliance with the rules, regulations and requirements of this Contract as described in the Specifications issued and effectiveup to the date of signing this Contract as well as royalties, if any, payable on account of the construction of the VESSEL shall be for the account of the SELLER, except as otherwiseprovided and agreed herein. The key plans, materials and workmanship entering into the construction of the VESSEL shall at all times be subject to inspections and tests inaccordance with the rules and regulations of the Classification Society. Decisions of the Classification Society as to compliance or noncompliance with Classification rules and regulations shall be final and binding for the Parties.3. PRINCIPAL PARTICULARS AND DIMENSIONS OF THE VESSEL (a) Hull:Length overallabt. 249.95mLength between perpendiculars243.95mBreadth moulded44.00mDepth moulded21.20mDesign Draft moulded13.50mScantling Draft moulded15.00m(b) Propelling Machinery:The VESSEL shall be equipped, in accordance with the Specifications, with (1) set of MAN B&W 6G60ME – C10.5 Tier III HPSCR type Main Engine, developing a nominalmaximum continuous rating of 17,040 kW at 103.0 RPM and a continuous service rating of 9,180 kW at 80.1 RPM.The extend of delivery of main engine shall be in line with H1515 as far as possible. However, the subcontractor of components of main engine shall be as per HHM or CSE'spractice.3/61Shipbuilding ContractHull No.H15974. GUARANTEED SPEED The SELLER guarantees that the service speed at design draught 13.50 on even keel and NCR of main engine with 15% sea margin shall not be less than 14.5 nautical miles per hour.The service speed shall be verified by corrected trial speed under calm weather (no wind, no wave and no current in accordance with ISO 15016:2015) and deep sea condition. Thecorrection method of the speed shall be as specified in the Specifications. 5. GUARANTEED FUEL CONSUMPTION The SELLER guarantees that the specific fuel oil consumption of the Main Engine as determined by shop trial as specified in the Specifications, at NCR is not to exceed 154.8grams/Kilowatt/hour (not including the permitted tolerance of +6%) based on fuel oil having a lower calorific value of 10,200 kilocalories per kilogram at ISO standard referencecondition i.e. blower inlet air temperature of 25 deg C, scavenge air cooling water temperature of 25 deg C and blower inlet air pressure of 100 kpa. If the fuel oil used in shop trialwould have different lower calorific value from 10,200 kilocalories per kilogram, and/or the surrounding shop trial condition would be different from the above ISO condition, then thespecific fuel oil consumption shall be adjusted accordingly based on the conversion formula issued by MAN. The specific fuel oil consumption shall be subject to a tolerance of 6%.6. GUARANTEED DEADWEIGHT The SELLER guarantees that the VESSEL is to have a deadweight of not less than 114,000 metric tons at the scantling draft moulded of 15.00 meters in sea water of 1.025 specificgravity.The term, "Deadweight", as used in this Contract, shall be as defined in the Specifications. The actual deadweight of the VESSEL expressed in metric tons shall be based on calculations made by the BUILDER and checked by the BUYER, and all measurements necessary forsuch calculations shall be performed in the presence of the BUYER's supervisor(s) and the Classification Surveyor or the party authorized by the BUYER. Should there be any dispute between the BUILDER and the BUYER in such calculations and/or measurements, the decision of the Classification Society shall be final.4/61Shipbuilding ContractHull No.H15977. SUBCONTRACTING: The SELLER may, at its sole discretion and responsibility, subcontract any portion of the construction work of the VESSEL to experienced subcontractors, but delivery and finalassembly into the VESSEL of any such work subcontracted shall be at the BUILDER's Shipyard. The SELLER shall remain fully responsible for such subcontracted work andsubcontractors’ liabilities.The performance of the works by SHANGHAI WAIGAOQIAO SHIPBUILDING AND OFFSHORE COMPANY LIMITED (subsidiary of the BUILDER), SWS-SUNHEL ENGINEERINGEQUIPMENT (NAN TONG) CO., LTD does not constitute subcontracting for the purposes of this clause. The BUILDER shall be fully liable for the actions of omissions of itsaforementioned subsidiary and Branch.8. REGISTRATION: The vessel shall be registered by the BUYER at its own cost and expenses in the Marshall Islands Registry at the time of delivery and acceptance thereof.5/61Shipbuilding ContractHull No.H1597ARTICLE II CONTRACT PRICE & TERMS OF PAYMENT 1. CONTRACT PRICE: The purchase price of the VESSEL is United States Dollars Sixty-Four Million Eight Hundred and Forty Five Thousand only (US$ 64,845,000), net receivable by the SELLER (hereinaftercalled the "Contract Price"), which is exclusive of the cost for the BUYER's Supplies as provided in Article V hereof, and shall be subject to upward or downward adjustment, if any,as hereinafter set forth in this Contract.2. CURRENCY: Any and all payments by the BUYER to the SELLER under this Contract shall be made in United States Dollars.3. TERMS OF PAYMENT: The Contract Price shall be paid by the BUYER to the SELLER in instalments as follows:(a) 1st Instalment:The sum of United States Dollars Nine Million Seven Hundred and Twenty-Six Thousand Seven Hundred and Fifty only (US$ 9,726,750) representing Fifteen percent (15%) of theContract Price, shall become due and payable and be paid by the BUYER within five (5) Banking Days from the date of BUYER's receipt of the Refund Guarantee as described inparagraph 7 of this Article.(b) 2nd Instalment:The sum of United States Dollars Six Million Four Hundred and Eighty-Four Thousand Five Hundred only (US$ 6,484,500), representing Ten percent (10%) of the Contract Price, shallbecome due and payable and be paid within five (5) Banking Days after the cutting of the first steel plate of the VESSEL. The SELLER shall notify the BUYER by e-mail stating andconfirming that the 1st steel plate has been cut in its workshop, providing also a progress statement evidenced by the Classification Society. The SELLER shall then send to theBUYER an e-mail demand for payment of this instalment along with a PDF proforma invoice.6/61Shipbuilding ContractHull No.H1597(c) 3rd Instalment:The sum of United States Dollars Six Million Four Hundred and Eighty-Four Thousand Five Hundred only (US$ 6,484,500), representing Ten percent (10%) of the Contract Price, shallbecome due and payable and be paid within five (5) Banking Days after keel‑laying of the first section of the VESSEL. The SELLER shall notify the BUYER by e-mail stating andconfirming that the said keel‑laying has been carried out, providing also a progress statement evidenced by the Classification Society. The SELLER shall then send to the BUYER ane-mail demand for payment of this instalment, along with a PDF proforma invoice.(d) 4th Instalment:The sum of United States Dollars Six Million Four Hundred and Eighty-Four Thousand Five Hundred only (US$ 6,484,500), representing Ten percent (10%) of the Contract Price, shallbecome due and payable and be paid within five (5) Banking Days after launching of the VESSEL. The SELLER shall notify the BUYER by e-mail stating and confirming that thelaunching of the VESSEL has been carried out. The SELLER shall then send to the BUYER an e-mail demand for payment of this in-stallment, along with a PDF proforma invoice.(e) 5th Installment (Payment upon Delivery of the VESSEL):The sum of United States Dollars Thirty-Five Million Six Hundred and Sixty-Four Thousand Seven Hundred and Fifty only (US$ 35,664,750), representing Fifty-Five percent (55%) ofthe Contract Price, plus any increase or minus any decrease due to modifications and/or adjustments of the Contract Price in accordance with provisions of the relevant Articleshereof, shall become due and payable and be paid by the BUYER to the SELLER concurrently with delivery by the SELLER and acceptance by the BUYER of the VESSEL. TheSELLER shall send to the BUYER an e-mail demanding payment of this installment ten (10) days prior to the scheduled date of delivery of the VESSEL stating the expected delivery ofthe VESSEL to the BUYER.7/61Shipbuilding ContractHull No.H15974. METHOD OF PAYMENT: (a) 1st Instalment:The BUYER shall remit the amount of this installment in accordance with Article II, Paragraph 3 (a) by telegraphic transfer to China CITIC Bank Corporation Limited, Beijing Branch,address at Block C, Fuhua Mansion, No.8, Chaoyangmen Beidajie, Dongcheng District, Beijing, China (SWIFT Code: CIBKCNBJ100) (hereinafter called the “SELLER’s Bank”) asreceiving bank nominated by the SELLER for A/C Beneficiary: China Shipbuilding Trading Company Limited, or through other receiving bank to be nominated by the SELLER fromtime to time and such nomination shall be notified to the BUYER at least ten (10) days prior to the due date for payment.(b) 2nd Instalment:The BUYER shall remit the amount of this installment in accordance with Article II, Paragraph 3(b) by telegraphic transfer to SELLER’s Bank as receiving bank nominated by theSELLER for A/C Beneficiary: China Shipbuilding Trading Company Limited, or through other receiving bank to be nominated by the SELLER from time to time and such nominationshall be notified to the BUYER at least ten (10) days prior to the due date for payment.(c) 3rd Installment:The BUYER shall remit the amount of this installment in accordance with Article II, Paragraph 3(c) by telegraphic transfer to SELLER’s Bank as receiving bank nominated by theSELLER for A/C Beneficiary: China Shipbuilding Trading Company Limited, or through other receiving bank to be nominated by the SELLER from time to time and such nominationshall be notified to the BUYER at least ten (10) days prior to the due date for payment.(d) 4th Installment:The BUYER shall remit the amount of this installment in accordance with Article II, Paragraph 3(d) by telegraphic transfer to SELLER’s Bank as receiving bank nominated by theSELLER for A/C Beneficiary: China Shipbuilding Trading Company Limited, or through other receiving bank to be nominated by the SELLER from time to time and such nominationshall be notified to the BUYER at least ten (10) days prior to the due date for payment.8/61Shipbuilding ContractHull No.H1597(e) 5th Installment (Payable upon delivery of the VESSEL):The BUYER shall, at least three (3) Banking Days prior to the scheduled date of delivery of the VESSEL, make an irrevocable cash deposit by swift message MT103 accompanied byswift message MT199 with conditions of payment to the SELLER’s Bank, namely China CITIC Bank Corporation Limited, Beijing Branch, address at Block C, Fuhua Mansion, No.8,Chaoyangmen Beidajie, Dongcheng District, Beijing, China, Account Number: , or other bank to be nominated by the SELLER with at least ten (10) days’ notice to the BUYER prior tothe scheduled date of delivery of the VESSEL, and such amount to be held in trust in the name of the BUYER (and / or in the name of the financing bank as the case may be whichshall be BUYER’s agents for purposes of this Contract) for a period of fifteen (15) Banking Days, covering the amount of this installment (as adjusted in accordance with theprovisions of this Contract), with an irrevocable instruction that the said amount (or any other amount mutually agreed by the Parties) shall be released to the SELLER againstpresentation by the SELLER to the said China CITIC Bank Corporation Limited, Beijing Branch, address at Block C, Fuhua Mansion, No.8, Chaoyangmen Beidajie, DongchengDistrict, Beijing, China , or other bank nominated by the SELLER as above, of (i) a copy of the Protocol of Delivery and Acceptance signed by both the BUYER's and the SELLER’sauthorised representatives and (ii) a copy of release letter setting out the exact amount to be released to the SELLER. Interest, if any, accrued from such deposit, shall be for thebenefit of the BUYER.If the delivery of the VESSEL is not effected on or before the expiry of the aforesaid fifteen (15) Banking Days from the day of the cash deposit payment, the BUYER shall have theright to withdraw the said deposit plus accrued interest upon the expiry date. However, when a newly scheduled delivery date is notified to the BUYER by the SELLER, and theBUYER accepts same, the BUYER shall make the cash deposit in accordance with the same terms and conditions as set out above.5. PREPAYMENT: The BUYER shall have the right to make prepayment of any and all instalments before delivery of the VESSEL, by giving to the SELLER at least thirty (30) calendar days prior writtennotice, without any price adjustment of the VESSEL for such prepayment.6. SECURITY FOR PAYMENT OF INSTALMENTS BEFORE DELIVERY: The BUYER shall, within five (5) Banking Days upon receipt of the Refund Guarantee, deliver to the SELLER an irrevocable and unconditional Letter of Guarantee (hereinafter calledthe “Payment Guarantee”) in the form annexed hereto as Exhibit "B" in favour of the SELLER issued by Performance Shipping Inc. (hereinafter called the "Payment Guarantor")acceptable to SELLER’s bank and the SELLER. This guarantee shall secure the BUYER's obligation for the payment of the 2nd, 3rd and 4th installments of the Contract Price.9/61Shipbuilding ContractHull No.H15977. REFUNDS All payments made by the BUYER prior to delivery of the VESSEL shall be in the nature of advance to the SELLER, and in the event this Contract is rescinded or cancelled by theBUYER, all in accordance with the specific terms of this Contract permitting such rescission or cancellation, the SELLER shall refund to the BUYER in United States Dollars the fullamount of all sums already paid by the BUYER to the SELLER under this Contract, together with any interest (at the rate set out in respective provision thereof) from the date ofreceipt by the SELLER of the respective installment(s) to the date of remittance by telegraphic transfer of such refund by the SELLER to the account specified by the BUYER.As security to the BUYER, the SELLER shall deliver to the BUYER, within sixty (60) calendar days after signing of the Contract, a Refund Guarantee to be issued by China CITICBank Corporation Limited, Beijing Branch, address at Block C, Fuhua Mansion, No.8, Chaoyangmen Beidajie, Dongcheng District, Beijing, China, or any other Chinese Bank, securingthe SELLER’s obligation for refunding to the BUYER the 1st, 2nd, 3rd and 4th instalments received by the SELLER through SELLER’s bank in the form as per Exhibit "A" annexedhereto. If the Refund Guarantee is issued by any other Chinese Bank, it should be a bank that is acceptable to the BUYER. The Refund Guarantee shall be issued by SWIFT. However, in the event of any dispute between the SELLER and the BUYER with regard to the SELLER's obligation to repay the installment or installments paid by the BUYER and tothe BUYER's right to demand payment from the SELLER’s bank, under its guarantee, and such dispute is submitted either by the SELLER or by the BUYER for arbitration inaccordance with Article XIII hereof, the SELLER’s bank shall withhold and defer payment until the arbitration award between the SELLER and the BUYER is notified to SELLER’sbank. The SELLER’s bank shall not be obligated to make any payment unless the arbitration award orders the SELLER to make repayment. If the SELLER fails to honour the award,then the SELLER’s bank shall refund to the extent the final arbitration award orders.10/61Shipbuilding ContractHull No.H1597ARTICLE III ADJUSTMENT OF THE CONTRACT PRICE The Contract Price of the VESSEL shall be subject to adjustments as hereinafter set forth. It is hereby understood by both parties that any reduction of the Contract Price is by way ofliquidated damages and not by way of penalty.1. DELIVERY (a)No adjustment shall be made, and the Contract Price shall remain unchanged for Thirty (30) calendar days of delay in delivery of the VESSEL beyond the Delivery Date as defined inArticle VII hereof ending as of twelve o'clock midnight of the Thirtieth (30th) day of delay. (b)If the delivery of the VESSEL is delayed more than Thirty (30) calendar days after the date as defined in Article VII hereof, then, in such event, beginning at twelve o'clock midnightof the Thirtieth (30th) day after the Delivery Date, the Contract Price of the VESSEL shall be reduced by deducting therefrom the sum of United States Dollars Fifteen Thousand only(US$ 15,000) per day.Unless the parties hereto agree otherwise, the total reduction in the Contract Price shall be deducted from the fifth instalment of the Contract Price and in any event (including theevent that the BUYER consents to take the VESSEL at the later delivery date after the expiration of Two Hundred and Ten (210) calendar days delay of delivery as described inParagraph 1(c) of this Article or after the expiration days delay of delivery as described in Paragraph 3 of Article VIII) shall not be more than One Hundred and Eighty (180) calendardays at the above specified rate of reduction after the Thirty (30) calendar days allowance, that is United States Dollars Two Million Seven Hundred Thousand (US$ 2,700,000)being the maximum. (c)If the delay in the delivery of the VESSEL continues for a period of Two Hundred and Ten (210) calendar days after the Delivery Date as defined in Article VII, then in such event, theBUYER may, at its option, rescind or cancel this Contract in accordance with the provisions of Article X of this Contract. The SELLER may at any time after the expiration of theaforementioned Two Hundred and Ten (210) calendar days, if the BUYER has not served notice of cancellation pursuant to Article X, notify the BUYER of the date upon which theSELLER estimates the VESSEL will be ready for delivery and demand in writing that the BUYER make an election, in which case the BUYER shall, within thirty (30) calendar daysafter such demand is received by the BUYER, either notify the SELLER of its decision to cancel this Contract, or consent to take delivery of the VESSEL at an agreed future date, itbeing understood and agreed by the parties hereto that, if the VESSEL is not delivered by such future date, the BUYER shall have the same right of cancellation upon the sameterms, as hereinabove provided.11/61Shipbuilding ContractHull No.H1597(d)For the purpose of this Article, the delivery of the VESSEL shall not be deemed delayed and the Contract Price shall not be reduced when and if the Delivery Date of the VESSEL isextended by reason of causes and provisions of Articles V, VI, XI, XII and XIII hereof. The Contract Price shall not be adjusted or reduced if the delivery of the VESSEL is delayedby reason of permissible delays as defined in Article VIII hereof.(e)The Seller shall notify the BUYER by e-mail if the delivery of the VESSEL shall be made earlier than the specified Delivery Date as defined in Article VII of the Contract and suchnotification shall be given not less than Two (2) months prior to the newly planned delivery date.(f)In the event that the SELLER is unable to deliver the VESSEL on the newly planned delivery date as declared, the VESSEL can, nevertheless, be delivered by the SELLER at a dateafter such declared newly planned date.In such circumstances, and for the purpose of determining the liquidated damages to the BUYER (according to the provisions of Paragraph 1(b) of this Article) and the BUYER'sright to cancel or rescind this Contract (according to the provisions of Paragraph 1(c) of this Article), the newly planned delivery date declared by the SELLER shall not be in anyway treated or taken as having substituted the original Delivery Date as defined in Article VII. The BUYER's aforesaid right for liquidated damages and to cancel or rescind thisContract shall be accrued, operated or exercised only to the extent as described in Paragraph 1(a), 1(b) and/or 1(c) of Article III. In whatever circumstances, the Delivery Date asdefined in Article VII (not the newly planned delivery date as declared by the SELLER) shall be used to regulate, as so described in Paragraph 1 (a), 1(b) and/or 1(c) of Article III, theBUYER's right for liquidated damages and to rescind this Contract and the SELLER's liability to pay the aforesaid liquidated damages resulting from the delay in delivery of theVESSEL.2. INSUFFICIENT SPEED (a)The Contract Price of the VESSEL shall not be affected nor changed by reason of the actual speed (as determined by the Trial Run after correction according to the Specifications)being less than three tenths (3/10) of one knot below the guaranteed speed as specified in Paragraph 4 of Article I of this Contract.12/61Shipbuilding ContractHull No.H1597(b)However, commencing with and including a deficiency of three tenths (3/10) of one knot in actual speed (as determined by the Trial Run after correction according to theSpecifications) below the guaranteed speed as specified in Paragraph 4, Article I of this Contract, the Contract Price shall be reduced as follows:In case of deficiencyat or above 0.30 but below 0.40 knot US$ 50,000.00at or above 0.40 but below 0.50 knot US$ 100,000.00at or above 0.50 but below 0.60 knot US$ 150,000.00at or above 0.60 but below 0.70 knot US$ 200,000.00at or above 0.70 but below 0.80 knot US$ 250,000.00at or above 0.80 but below 0.90 knot US$ 300,000.00at or above 0.90 but below 1.00 knot US$ 350,000.00(c)If the deficiency in actual speed (as determined by the Trial Run after correction according to the Specifications) of the VESSEL upon the Trial Run, is more than 1.00 knot below theguaranteed speed of 14.5 knots, then the BUYER may at its option reject the VESSEL and rescind this Contract in accordance with provisions of Article X of this Contract, or mayaccept the VESSEL at a reduction in the Contract Price as above provided, by United States Dollars Three Hundred and Five Thousand only (US$350,000) being the maximum.3. EXCESSIVE FUEL CONSUMPTION (a)The Contract Price of the VESSEL shall not be affected nor changed if the actual fuel consumption of the Main Engine, as determined by shop trial in manufacturer's works, as perthe Specifications, is greater than the guaranteed fuel consumption as specified and required under the provisions of this Contract and the Specifications if such actual excess isequal to or less than six percent (6%).(b)However, if the actual fuel consumption as determined by shop trial is greater than six percent (6%) above the guaranteed fuel consumption then, the Contract Price shall be reducedby the sum of United States Dollars Sixty Thousand Only (US$60,000) for each full one percent (1%) increase in fuel consumption in excess of the above said six percent (6%)(fractions of one percent to be prorated).13/61Shipbuilding ContractHull No.H1597(c)If as determined by shop trial such actual fuel consumption of the Main Engine is more than ten percent (10%) in excess of the guaranteed fuel consumption, i.e. the fuelconsumption exceeds 170.28gram/KW/hour, the BUYER may, subject to the BUILDER’s right to effect replacement of a substitute engine or alterations of corrections as specifiedin the following sub-paragraph of Article III 3 (c) hereof, at its option, rescind this Contract, in accordance with the provisions of Article X of this Contract or may accept theVESSEL at a reduction in the Contract Price by United States Dollars Two Hundred and Forty Thousand (US$240,000) being the maximum.If as determined by shop trial such actual fuel consumption of the Main Engine is more than ten percent (10%) in excess of the guaranteed fuel consumption, i.e. the fuelconsumption exceeds 170.28gram/KW/hour, the BUILDER may investigate the cause of the non-conformity and the proper steps may promptly be taken to remedy the same and tomake whatever corrections and alterations and/or re-shop trial test or tests as may be necessary to correct such non-conformity without extra cost to the BUYER. Upon completionof such alterations or corrections of such nonconformity, the BUILDER shall promptly perform such further shop trials or any other tests, as may be deemed necessary to prove thefuel consumption of the Main Engine’s conformity with the requirement of this Contract and the Specifications and if found to be satisfactory, give the BUYER notice by e-mail ofsuch correction and as appropriate, successful completion accompanied by copies of such results, and the BUYER shall, within six (6) Banking Days after receipt of such notice,notify the BUILDER by e-mail of its acceptance or reject the re-shop trial together with the reasons therefor. If the BUYER fails to notify the BUILDER by e-mail of its acceptance orrejection of the re-shop trial together with the reasons therefor within six (6) Banking Days period as provided herein, the BUYER shall be deemed to have accepted the shop trial.4. DEADWEIGHT (a)In the event that there is a deficiency in the actual deadweight of the VESSEL determined as provided in the Specifications, the Contract Price shall not be decreased if suchdeficiency is One Thousand Two Hundred (1200) metric tons or less below the guaranteed deadweight of 114,000 metric tons at assigned scantling draft moulded.(b)However, the Contract Price shall be decreased by the sum of United States Dollars Seven Hundred (US$700) for each full metric ton of such deficiency being more than OneThousand Two Hundred (1,200) metric tons.14/61Shipbuilding ContractHull No.H1597(c)In the event that there should be a deficiency in the VESSEL's actual deadweight which exceeds Three Thousand (3,000) metric tons below the guaranteed deadweight, the BUYERmay, at its option, reject the VESSEL and rescind this Contract in accordance with the provisions of Article X of this Contract, or may accept the VESSEL with reduction in theContract Price in the maximum amount of United States Dollars One Million Two Hundred Sixty Thousand only (US$1,260,000).5. EFFECT OF RESCISSION It is expressly understood and agreed by the parties hereto that in any case as stated herein, if the BUYER rescinds this Contract pursuant to any provision under this Article, theBUYER, save its rights and remedy set out in Article X hereof, shall not be entitled to any liquidated damage or compensation whether described above or otherwise.15/61Shipbuilding ContractHull No.H1597ARTICLE IV SUPERVISION AND INSPECTION 1. APPOINTMENT OF THE BUYER'S SUPERVISOR The BUYER shall send in good time to and maintain at the BUILDER's Shipyard, at the BUYER's own cost and expense, one or more representative(s) who shall be duly accredited inwriting by the BUYER (such representative(s) being hereinafter collectively and individually called the "Supervisor") to supervise and survey the construction by the BUILDER ofthe VESSEL, her engines and accessories. Subject to the SELLER not being hindered to apply for the invitation letter e.g. due to COVID-19 related restrictions or government’sregulations, the SELLER agrees to apply for the necessary invitation letter(s) for the Supervisor to enter China on demand and without delay, provided that the Supervisor meets withthe rules, regulations and laws of the People's Republic of China. The BUYER undertakes to give the SELLER adequate notice for the application of invitation letter. 2. COMMENTS TO PLANS AND DRAWINGS The parties hereto shall, within Thirty (30) calendar days after signing of this Contract, mutually agree a list of all the plans and drawings, which are to be sent to the BUYER(hereinbelow called "the LIST"). Before arrival of the Supervisor at the BUILDER's Shipyard, the plans and drawings specified in the LIST shall be sent to the BUYER, and theBUYER shall, within Fourteen (14) calendar days after receipt thereof, return such plans and drawings submitted by the SELLER with comments, if any. Notwithstanding the above,the BUYER shall nevertheless waive its right to comment on the plans and drawings if such plans and drawings have been previously applied to build other vessels with the samespecification as that of the VESSEL.Concurrently with the arrival of the Supervisor at the BUILDER's Shipyard, the BUYER shall notify the BUILDER in writing, stating the authority which the said Supervisor shallhave, with regard to the Supervisor can, on behalf of the BUYER, give comments, as the case may be, which of the plans and drawings specified in the LIST but not yet been sent tothe BUYER, nevertheless in line with the Supervisor's authority. The Supervisor shall, within five (5) calendar days after receipt thereof, return those plans and drawings withcomments, if any.Unless notification is given to the BUILDER by the Supervisor or the BUYER of the comments to any plans and drawings within the above designated period of time for each case,the said plans and drawings shall be implemented for construction by the BUILDER.16/61Shipbuilding ContractHull No.H15973. SUPERVISION AND INSPECTION BY THE SUPERVISOR The necessary inspection of the VESSEL, its machinery, equipment and outfittings shall be carried out by the Classification Society, and inspection team of the BUILDERthroughout the entire period of construction in order to ensure that the construction of the VESSEL is duly performed in accordance with the Contract and Specifications.The Supervisor shall have, at all times until delivery of the VESSEL, the right to attend tests according to the mutually agreed test list, review respective reports and inspect theVESSEL, her engines, accessories and materials at the BUILDER's Shipyard, its subcontractors or any other place where work is done or materials stored in connection with theVESSEL. In the event that the Supervisor discovers any construction or material or workmanship which does not or will not conform with the requirements of this Contract and theSpecifications, the Supervisor shall promptly give the BUILDER a notice in writing as to such nonconformity, upon receipt of which the BUILDER shall correct such nonconformityif the BUILDER agrees with the BUYER. In any circumstances, the SELLER shall be entitled to proceed with the construction of the VESSEL even if there exists discrepancy in theopinion between the BUYER and the SELLER, without however prejudice to the BUYER’s right for submitting the issue for determination by the Classification Society or arbitrationin accordance with the provisions hereof. If in such case the Classification Society or the arbitrator decides in favor of the BUYER, then the SELLER is obliged to correct thediscrepancy at SELLER’s risk, time and expense. However, the BUYER undertakes and assures the SELLER that the Supervisor shall carry out his inspections in accordance with theagreed inspection procedure and schedule and usual shipbuilding practice and in a way as to minimize any increase in building costs and delays in the construction of the VESSEL.Once an inspection and/or a test has been witnessed and approved by the BUYER`s Representatives and/or the Classification Society, the same inspection and/or test should nothave to be repeated, provided it has been carried out in compliance with the requirements of the classification society and Specifications.17/61Shipbuilding ContractHull No.H1597The BUILDER agrees to furnish free of charge the Supervisor with office space, and other reasonable facilities according to BUILDER's practice at, or in the immediate vicinity of theBUILDER's Shipyard. But the fees for the communication like telephone, telefax, international internet communication and telex, etc. shall be borne by the BUYER. At all times,during the construction of the VESSEL until delivery thereof, the Supervisor shall be given free and ready access to the VESSEL, her engines and accessories, and to any other placewhere the work is being done, or the materials are being processed or stored, in connection with the construction of the VESSEL, including the yards, workshops, stores of theBUILDER, and the premises of subcontractors of the BUILDER, who are doing work, or storing materials in connection with the VESSEL's construction. The travel expenses for thesaid access to SELLER's subcontractors outside of Shanghai shall be at BUYER's account. The transportation, of any nature whatsoever, shall be provided to the Supervisor by theBUYER. The transportation within Shanghai shall be provided to the Supervisor by the SELLER.Should the Supervisor fail to conduct any inspection or attend any test (after notice by the BUILDER of the same) due to whatever reason, the BUILDER shall be entitled to carryout the construction and/or test without inspection and/or attendance of Supervisor and such work so carried out shall be treated as approved by the Supervisor.4. LIABILITY OF THE SELLER The Supervisor engaged by the BUYER under this Contract shall at all times be deemed to be in the employ of the BUYER. The SELLER shall be under no liability whatsoever to theBUYER, or to the Supervisor or the BUYER's employees or agents for personal injuries, including death, during the time when they, or any of them, are on the VESSEL, or within thepremises of either the SELLER or its subcontractors, or are otherwise engaged in and about the construction of the VESSEL, unless, however, such personal injuries, including death,were caused by gross negligence of the SELLER, or of any of the SELLER's employees or agents or subcontractors of the SELLER. Nor shall the SELLER be under any liabilitywhatsoever to the BUYER for damage to, or loss or destruction of property in China of the BUYER or of the Supervisor, or of the BUYER's employees or agents, unless such damage,loss or destruction was caused by gross negligence of the SELLER, or of any of the employees, or agents or subcontractors of the SELLER.5. SALARIES AND EXPENSES All salaries and expenses of the Supervisor, or any other employees employed by the BUYER under this Article, shall be for the BUYER's account.18/61Shipbuilding ContractHull No.H15976. REPLACEMENT OF SUPERVISOR The SELLER has the right to request the BUYER in writing to replace any of the Supervisor who is deemed unsuitable and unsatisfactory for the proper progress of the VESSEL'sconstruction together with reasons. The BUYER shall investigate the situation by sending its representative to the BUILDER's Shipyard, if necessary, and if the BUYER considersthat such SELLER's request is justified, the BUYER shall effect the replacement as soon as conveniently arrangeable.19/61Shipbuilding ContractHull No.H1597ARTICLE V MODIFICATION, CHANGES AND EXTRAS 1. HOW EFFECTED The Specifications and Plans in accordance with which the VESSEL is constructed, may be modified and/or changed at any time hereafter by written agreement of the parties hereto,provided that such modifications and/or changes or an accumulation thereof will not, in the BUILDER's reasonable judgment, adversely affect the BUILDER's other commitments andprovided further that the BUYER shall agree to adjustment of the Contract Price, time of delivery of the VESSEL and other terms of this Contract, if any, as hereinafter provided. Subjectto the above, the SELLER hereby agree to exert their best efforts to accommodate such reasonable requests by the BUYER so that the said changes and/or modifications may be madeat a reasonable cost and within the shortest period of time which is reasonable and possible. Any such agreement for modifications and/or changes shall include an agreement as tothe increase or decrease, if any, in the Contract Price of the VESSEL together with an agreement as to any extension or reduction in the time of delivery, providing to the SELLERadditional securities satisfactory to the SELLER, or any other alterations in this Contract, or the Specifications occasioned by such modifications and/or changes. The aforementionedagreement to modify and/or to change the Specifications may be effected by an exchange of letters or e-mail, manifesting such agreement. The letters or e-mails exchanged by theparties hereto pursuant to the foregoing shall constitute an amendment of the Specifications under which the VESSEL shall be built, and such letters or e-mails shall be deemed to beincorporated into this Contract and the Specifications by reference and made a part hereof. Upon consummation of the agreement to modify and/or to change the Specifications, theSELLER shall alter the construction of the VESSEL in accordance therewith, including any additions to, or deductions from, the work to be performed in connection with suchconstruction. If due to whatever reasons, the parties hereto fail to agree on the adjustment of the Contract Price or extension of time of delivery or providing additional security to theSELLER or modification of any terms of this Contract which are necessitated by such modifications and/or changes, then the SELLER shall have no obligation to comply with theBUYER's request for any modification and/or changes.The BUILDER may make minor changes to the Specifications, if found necessary for introduction of improved production and construction methods or otherwise, provided that theBUILDER shall first obtain the BUYER’s approval which shall not be unreasonably withheld.20/61Shipbuilding ContractHull No.H15972. CHANGES IN RULES AND REGULATIONS, ETC. (1)If, after the date of signing of this Contract, any requirements as to the rules and regulations as specified in this Contract and the Specifications to which the construction of theVESSEL is required to conform, are altered or changed by the Classification Society or the other regulatory bodies authorized to make such alterations or changes, the SELLERand/or the BUYER, upon receipt of the notice thereof, shall exchange such information in full with each other in writing, whereupon within twenty-one (21) calendar days afterreceipt of the said notice by the BUYER from the SELLER or vice versa, the BUYER shall instruct the SELLER in writing as to the alterations or changes, if any, to be made in theVESSEL which the BUYER, in its sole discretion, shall decide. The SELLER shall promptly comply with such alterations or changes, if any in the construction of the VESSEL,provided that the BUYER shall first agree: (a)As to any increase or decrease in the Contract Price of the VESSEL that is occasioned by the cost for such compliance; and/or (b)As to any extension in the time for delivery of the VESSEL that is necessary due to such compliance; and/or (c)As to any increase or decrease in the guaranteed deadweight, fuel consumption and speed of the VESSEL, if such compliance results in increased or reduced deadweight, fuelconsumption and speed; and/or (d)As to any other alterations in the terms of this Contract or of Specifications or both, if such compliance makes such alterations of the terms necessary. (e)If the price is to be increased, then, in addition, as to providing to the SELLER additional securities satisfactory to the SELLER.Agreement as to such alterations or changes under this Paragraph shall be made in the same manner as provided above for modifications and/or changes of the Specificationsand/or Plans. (2)If, due to whatever reasons, the parties fail to agree on the adjustment of the Contract Price or extension of the time for delivery or increase or decrease of the guaranteed speed, fuelconsumption and deadweight or providing additional security to the SELLER or any alternation of the terms of this Contract, if any, then, provided that the alterations or changesare not compulsory, the SELLER shall be entitled to proceed with the construction of the VESSEL in accordance with, and the BUYER shall continue to be bound by, the terms of thisContract and Specifications without making any such alterations or changes.21/61Shipbuilding ContractHull No.H1597If the alterations or changes are compulsorily required to be made by Class or IMO rules, then, notwithstanding any dispute between the Parties relating to the adjustment of theContract Price or extension of the time for delivery or decrease of the guaranteed speed and deadweight or increase fuel oil consumption or any other respect, the SELLER may, at itssole judgment, comply with such alterations or changes. The BUYER shall, in any event, bear the costs and expenses for such alterations or changes (with, in the absence of mutualagreement, the amount thereof and/or any other discrepancy such as but not limited to the extension of Delivery Date, etc. to be determined by arbitration in accordance with ArticleXIII of this Contract).3. SUBSTITUTION OF MATERIALS AND/OR EQUIPMENT In the event that any of the materials and/or equipment required by the Specifications or otherwise under this Contract for the construction of the VESSEL cannot be procured intime to effect delivery of the VESSEL, the SELLER may, provided the SELLER shall provide adequate evidence and the BUYER so agrees in writing, supply other materials and/orequipment of the equivalent quality, capable of meeting the requirements of the Classification Society and of the rules, regulations, requirements and recommendations with whichthe construction of the VESSEL must comply.4. BUYER'S SUPPLIED ITEMS The BUYER shall deliver to the SELLER at its shipyard the items as specified in the Specifications which the BUYER shall supply on BUYER’s account (hereinafter called the“BUYER's Supplied Items”) by the time designated by the SELLER.Should the BUYER fail to deliver to the BUILDER such BUYER's Supplied Items within the time specified, the delivery of the VESSEL shall automatically be extended for a period ofsuch delay, provided such delay in delivery of the BUYER's Supplied Items shall affect the delivery of the VESSEL. In such event, the BUYER shall pay to the SELLER all losses anddamages sustained by the SELLER due to such delay in the delivery of the BUYER's Supplied Items and such payment shall be made upon delivery of the VESSEL.22/61Shipbuilding ContractHull No.H1597Furthermore, if the delay in delivery of the BUYER's Supplied Items should exceed fifteen (15) calendar days, the SELLER shall be entitled to proceed with construction of theVESSEL without installation of such items in or onto the VESSEL, without prejudice to the SELLER's right hereinabove provided, and the BUYER shall accept the VESSEL socompleted.The BUILDER shall be responsible for storing and handling of the BUYER's Supplied Items as specified in the Specifications after delivery to the BUILDER at no cost and shallinstall them on board the VESSEL at the BUILDER's expenses. In order to facilitate installation by the BUILDER of the BUYER’s Supplied Items in or on the VESSEL, the BUYERshall furnish the BUILDER with the necessary specifications, plans, drawings, instruction books, manuals, test reports and certificates required by the rules and regulations of theSpecifications. If so requested by the BUILDER, the BUYER shall, without any charge to the BUILDER, cause the representatives of the manufacturers of the BUYER’s SuppliedItems to assist the BUILDER in installation thereof in or on the VESSEL and/or to carry out installation thereof by themselves or to make necessary adjustments at the Shipyard.Any and all of BUYER’s Supplied Items shall be subject to the BUILDER’s reasonable right of rejection, as and if they are found to be unsuitable or in improper condition forinstallation.Upon arrival of such shipment of the BUYER’s Supplied Items, both parties shall undertake a joint unpacking inspection. If any damages are found to be not suitable for installation,the BUILDER shall be entitled to refuse to accept the BUYER’s Supplied Items.23/61Shipbuilding ContractHull No.H1597ARTICLE VI TRIALS 1. NOTICE The BUYER and the Supervisor shall receive from the SELLER at least fifteen (15) calendar days notice in advance and seven (7) calendar days definite notice in advance in writing orby e-mail of the time and place of the VESSEL's sea trial as described in the Specifications (hereinafter referred to as "the Trial Run") and the BUYER and the Supervisor shallpromptly acknowledge receipt of such notice. The BUYER's representatives and/or the Supervisor shall be on board the VESSEL to witness such Trial Run, and to check upon theperformance of the VESSEL during the same. Failure of the BUYER's representatives to be present at the Trial Run of the VESSEL, after due notice to the BUYER and the Supervisoras provided above, shall have the effect to extend the date for delivery of the VESSEL by the period of delay caused by such failure. However, if the Trial Run is delayed more thanseven (7) calendar days by reason of the failure of the BUYER's representatives to be present after receipt of due notice as provided above, then in such event, the BUYER shall bedeemed to have waived its right to have its representatives on board the VESSEL during the Trial Run, and the BUILDER may conduct such Trial Run without the BUYER'srepresentatives being present, and in such case the BUYER shall be obliged to accept the VESSEL on the basis of a certificate jointly signed by the BUILDER and the ClassificationSociety certifying that the VESSEL, after Trial Run subject to minor alterations and corrections as provided in this Article, if any, is found to conform to the Contract andSpecifications. Subject to the SELLER not being hindered to apply for invitation letter e.g. due to COVID-19 related restrictions or government’s regulations, the SELLER agrees toapply for the necessary invitation letter(s) for the BUYER’S REPRESENTATIVES and/or crew officers to enter China will be issued in order on demand and without delay otherwisethe Trial Run shall be postponed until after the BUYER's representatives have arrived at the BUILDER's Shipyard and any delays as a result thereof shall not count as a permissibledelay under Article VIII thereof. However, should the nationalities and other personal particulars of the BUYER's representatives be not acceptable to the SELLER in accordance withits best understanding of the relevant rules, regulations and/or Laws of the People's Republic of China then prevailing, then the BUYER shall, on the SELLER's e-mail demand, effectreplacement of all or any of them immediately. Otherwise the Delivery Date as stipulated in Article VII hereof shall be extended by the delays so caused by the BUYER. In the event ofunfavorable weather on the date specified for the Trial Run, the same shall take place on the first available day thereafter that the weather conditions permit. The parties heretorecognize that the weather conditions in Chinese waters in which the Trial Run is to take place are such that great changes in weather may arise momentarily and without warning and,therefore, it is agreed that if during the Trial Run of the VESSEL, the weather should suddenly become unfavorable, as would have precluded the continuance of the Trial Run, theTrial Run of the VESSEL shall be discontinued and postponed until the first favorable day next following, unless the BUYER shall assent by e-mail of its acceptance of the VESSEL onthe basis of the Trial Run made prior to such sudden change in weather conditions. In the event that the Trial Run is postponed because of unfavorable weather conditions, suchdelay shall be regarded as a permissible delay, as specified in Article VIII hereof.24/61Shipbuilding ContractHull No.H15972. HOW CONDUCTED (a)All expenses in connection with Trial Run of the VESSEL are to be for the account of the BUILDER, who, during the Trial Run and when subjecting the VESSEL to Trial Run, is toprovide, at its own expense, the necessary crew to comply with conditions of safe navigation. The Trial Run shall be conducted in the manner prescribed in the Specifications andshall prove fulfillment of the performance required for the Trial Run as set forth in the Specifications.The course of Trial Run shall be determined by the BUILDER and shall be conducted within the trial basin equipped with speed measuring facilities.(b)The BUILDER shall provide the VESSEL with and pay for the required quantities of water and fuel oil with exception of lubrication oil, greases and hydraulic oil which shall besupplied by the BUYER for the conduct of the Trial Run or Trial Runs as prescribed in the Specifications. The fuel oil supplied by the SELLER, and lubricating oil , greases andhydraulic oil supplied by the BUYER shall be in accordance with the applicable engine specifications, and the cost of the quantities of water, fuel oil, lubricating oil, hydraulic oil andgreases consumed during the Trial Run or Trial Runs shall be for the account of the SELLER.3. TRIAL LOAD DRAFT In addition to the supplies provided by the BUYER in accordance with sub‑paragraph (b) of the preceding Paragraph 2 hereof, the BUILDER shall provide the VESSEL with therequired quantity of fresh water and other stores necessary for the conduct of the Trial Run. The necessary ballast (fresh and sea water and such other ballast as may be required) tobring the VESSEL to the trial load draft as specified in the Specifications, shall be for the BUILDER's account.25/61Shipbuilding ContractHull No.H15974. METHOD OF ACCEPTANCE OR REJECTION (a)Upon notification of the BUILDER of the completion of the Trial Run of the VESSEL, the BUYER or the BUYER's Supervisor shall within six (6) calendar days thereafter, notify theBUILDER by e-mail of its acceptance of the VESSEL or of its rejection of the VESSEL together with the reasons therefor.(b)However, should the result of the Trial Run indicate that the VESSEL or any part thereof including its equipment does not conform to the requirements of this Contract andSpecifications, then the BUILDER shall investigate with the Supervisor the cause of failure and the proper steps shall be taken to remedy the same and shall make whatevercorrections and alterations and/or re‑Trial Run or Runs as may be necessary without any extra cost to the BUYER, and upon notification by the BUILDER of completion of suchalterations or corrections and/or re‑trial or re‑trials, the BUYER shall, within six (6) calendar days thereafter, notify the SELLER by e-mail of its acceptance of its VESSEL or of therejection of the VESSEL together with the reason therefor on the basis of the alterations and corrections and/or re‑trial or re‑trials by the BUILDER.(c)In the event that the BUYER fails to notify the SELLER by e-mail of its acceptance or rejection of the VESSEL together with the reason therefor within six (6) days period as providedfor in the above sub‑ paragraphs (a) and (b), the BUYER shall be deemed to have accepted the VESSEL. (d)Any dispute arising among the parties hereto as to the result of any Trial Run or further tests or trials, as the case may be, of the VESSEL shall be solved by reference to arbitrationas provided in Article XIII hereof.(e)Nothing herein shall preclude the BUYER from accepting the VESSEL with its qualifications and/or remarks following the Trial Run and/or further tests or trials as aforesaid and theSELLER shall be obliged to comply with and/or remove such qualifications and/or remarks (if such qualifications and/or remarks are acceptable to the SELLER) at the time beforeeffecting delivery of the VESSEL to the BUYER under this Contract.5. DISPOSITION OF SURPLUS CONSUMABLE STORES Should any amount of fuel oil, fresh water, or other unbroached consumable stores furnished by the BUILDER for the Trial Run or Trial Runs remain on board the VESSEL at the timeof acceptance thereof by the BUYER, the BUYER agrees to buy the same from the SELLER at the actual price invoiced to the SELLER by the respective supplier evidenced by thecorresponding purchase invoices, and payment by the BUYER shall be effected as provided in Article II 3 (e) and 4 (e) of this Contract.26/61Shipbuilding ContractHull No.H1597The BUYER shall supply lubricating oil, greases and hydraulic oil for the purpose of Trial Runs at its own expenses and the SELLER will reimburse the BUYER for the amount oflubricating oil and hydraulic oil actually consumed for the said Trial Run or Trial Runs at the original price incurred by the BUYER evidenced by the corresponding purchaseinvoices and payment by the SELLER shall be deducted from the 5th installment of the Contract Price as provided in Article II 3(e) and 4(e) of this Contract.6. EFFECT OF ACCEPTANCE The BUYER's acceptance of the VESSEL by letter or e-mail notification sent to the SELLER, in accordance with the provisions set out above, shall be final and binding so far asconformity of the VESSEL to this Contract and the Specifications is concerned, and shall preclude the BUYER from refusing formal delivery by the SELLER of the VESSEL, ashereinafter provided, if the SELLER complies with all other procedural requirements for delivery as hereinafter set forth.If, at the time of delivery of the VESSEL, there are deficiencies in the VESSEL, such deficiencies should be resolved in such way that if the deficiencies are of minor importance, anddo not in any way affect the safety or the operation of the VESSEL, its crew, passengers or cargo the SELLER shall be nevertheless entitled to tender the VESSEL for delivery andthe BUYER shall be nevertheless obliged to take delivery of the VESSEL, provided that:i)the SELLER shall for its own account remedy the deficiency and fulfil the requirements as soon as possible, orii)if elimination of such deficiencies will affect timely delivery of the VESSEL, then the SELLER shall indemnify the BUYER for any direct cost reimbursement in associationwith remedying these minor non-conformities elsewhere from China as a consequence thereof, excluding, however, loss of time and/or loss of profit.)27/61Shipbuilding ContractHull No.H1597ARTICLE VII DELIVERY 1. TIME AND PLACE The VESSEL shall be delivered safely afloat by the SELLER to the BUYER at the BUILDER's Shipyard, in accordance with the Specifications and with all Classification and StatutoryCertificates and after completion of Trial Run (or, as the case may be, re‑Trial or re‑Trials) and acceptance by the BUYER in accordance with the provisions of Article VI hereof on orbefore April 30, 2026 provided that, in the event of delays in the construction of the VESSEL or any performance required under this Contract due to causes which under the terms ofthe Contract permit extension or postponement of the time for delivery, the aforementioned time for delivery of the VESSEL shall be extended accordingly.The aforementioned date or such later date to which delivery is extended pursuant to the terms of this Contract is hereinafter called the "Delivery Date".2. WHEN AND HOW EFFECTED Provided that the BUYER and the SELLER shall each have fulfilled all of their respective obligations as stipulated in this Contract, delivery of the VESSEL shall be effected forthwithby the concurrent delivery by each of the parties hereto, one to the other, of the Protocol of Delivery and Acceptance, acknowledging delivery of the VESSEL by the SELLER andacceptance thereof by the BUYER, which Protocol shall be prepared in triplicate and executed by each of the parties hereto.3. DOCUMENTS TO BE DELIVERED TO THE BUYER Upon acceptance of the VESSEL by the BUYER, the SELLER shall deliver to the BUYER the following documents (subject to the provision contained in Article VII hereof) which shallaccompany the aforementioned Protocol of Delivery and Acceptance: (a)PROTOCOL OF TRIALS of the VESSEL made by the BUILDER pursuant to the Specifications. (b)PROTOCOL OF INVENTORY of the equipment of the VESSEL including spare part and the like, all as specified in the Specifications, made by the BUILDER.28/61Shipbuilding ContractHull No.H1597 (c)PROTOCOL OF STORES OF CONSUMABLE NATURE made by the BUILDER referred to under Paragraph 5 of Article VI hereof. (d)FINISHED DRAWINGS AND PLANS pertaining to the VESSEL as stipulated in the Specifications, made by the BUILDER. (e)PROTOCOL OF DEADWEIGHT AND INCLINING EXPERIMENT, made by the BUILDER (f)ALL CERTIFICATES required to be furnished upon delivery of the VESSEL pursuant to the Specifications each free of conditions, recommendations, restrictions and qualificationswhatsoever (except for the conditions, recommendations, restrictions and qualifications which are due to reasons attributable to the BUYER).Certificates shall be issued by relevant Authorities or classification Society. The VESSEL shall comply with the above rules and regulations which are in force at the time ofsigning this Contract. All the certificates shall be delivered in one (1) original to the VESSEL and two (2) copies to the BUYER. If the full term certificate or certificates are unable to be issued at the time of delivery by the Classification Society or any third party other than the BUILDER, then the provisionalcertificate or certificates as issued by The Classification Society or the third party other than the BUILDER with the full term certificates to be furnished by the BUILDER afterdelivery of the VESSEL and in any event before the expiry of the provisional certificates shall be acceptable to the BUYER. (g)DECLARATION OF WARRANTY issued by the SELLER that the VESSEL is delivered to the BUYER free and clear of any liens, charges, claims, mortgages, or other encumbrancesupon the BUYER's title thereto, and in particular, that the VESSEL is absolutely free of all burdens in the nature of imposts, taxes or charges imposed by the province or country ofthe port of delivery, as well as of all liabilities of the SELLER to its sub‑contractors, employees and crews and/or all liabilities arising from the operation of the VESSEL in Trial Runor Trial Runs, or otherwise, prior to delivery. (h)COMMERCIAL INVOICE made by the SELLER.(i)BILL OF SALE made by the SELLER.29/61Shipbuilding ContractHull No.H1597 (j)BUILDER’s Certificate made by the BUILDER. (k)Non-Registration Certificate made by the SELLER.4. TITLE AND RISK Title to and risk of the VESSEL shall pass to the BUYER only upon delivery thereof. As stated above, it being expressly understood that, until such delivery is effected, title to theVESSEL, and her equipment, shall remain at all times with the SELLER and are at the entire risk of the SELLER.5. REMOVAL OF VESSEL The BUYER shall take possession of the VESSEL immediately upon delivery and acceptance thereof, and shall remove the VESSEL from the premises of the BUILDER within seven (7)calendar days after delivery and acceptance thereof is effected. If the BUYER shall not remove the VESSEL from the premises of the BUILDER within the aforesaid seven (7) calendardays, then, in such event, without prejudice to the SELLER's right to require the BUYER to remove the VESSEL immediately at any time thereafter, the BUYER shall pay to the SELLERthe reasonable mooring charge of the VESSEL.6. TENDER OF THE VESSEL If the BUYER fails to take delivery of the VESSEL after completion thereof according to this Contract and the Specifications without justified reason, the SELLER shall have the rightto tender the VESSEL for delivery after compliance with all procedural requirements as above provided.30/61Shipbuilding ContractHull No.H1597ARTICLE VIII DELAYS & EXTENSION OF TIME FOR DELIVERY 1. CAUSE OF DELAY If, at any time before actual delivery, either the construction of the VESSEL, or any performance required hereunder as a prerequisite of delivery of the VESSEL, is delayed due to war,blockade, revolution, insurrection, mobilization, civil commotions, riots, strikes, sabotage, lockouts, local temperature higher than 35 degree centigrade, Acts of God or the publicenemy, terrorism, plague or other epidemics, quarantines, prolonged failure or restriction of electric current from an outside source, freight embargoes, if any, earthquakes, tidal waves,typhoons, hurricanes, storms or other causes beyond the control of the BUILDER or of its sub‑contractors or its key equipment suppliers (i.e. main engine, propeller, gearbox etc), asthe case may be, or by force majeure of any description, whether of the nature indicated by the forgoing or not, or by destruction of the BUILDER or works of the BUILDER or itssub‑contractors or its key equipment suppliers (i.e. main engine, propeller, gearbox etc), or of the VESSEL or any part thereof, by fire, flood, or other causes beyond the control of theSELLER or its sub‑contractors or its key equipment suppliers (i.e. main engine, propeller, gearbox etc) as the case may be, or due to the bankruptcy of the equipment and/or materialsupplier or suppliers (i.e. main engine, propeller, gearbox etc), or due to the delay caused by acts of God in the supply of parts essential to the construction of the VESSEL, then, in theevent of delay due to the happening of any of the aforementioned contingencies, the SELLER shall not be liable for such delay and the time for delivery of the VESSEL under thisContract shall be extended without any reduction in the Contract Price for a period of time which shall not exceed the total accumulated time of all such delays, subject nevertheless tothe BUYER's right of cancellation under Paragraph 3 of this Article and subject however to all relevant provisions of this Contract which authorize and permit extension of the time ofdelivery of the VESSEL.2. NOTICE OF DELAY Within seven (7) calendar days from the date of commencement of any delay on account of which the SELLER claims that it is entitled under this Contract to an extension of the timefor delivery of the VESSEL, the SELLER shall advise the BUYER by e-mail, of the date such delay commenced, and the reasons therefor.31/61Shipbuilding ContractHull No.H1597 Likewise within seven (7) calendar days after such delay ends, the SELLER shall advise the BUYER in writing or by letter or e-mail, of the date such delay ended, and also shall specifythe maximum period of the time by which the date for delivery of the VESSEL is extended by reason of such delay. Failure of the BUYER to acknowledge the SELLER's notification ofany claim for extension of the Delivery Date within seven (7) calendar days after receipt by the BUYER of such notification, shall be deemed to be a waiver by the BUYER of its right toobject to such extension. Such acknowledgement shall not constitute BUYER’s acceptance to the extension claimed by the SELLER under this clause.3. RIGHT TO CANCEL FOR EXCESSIVE DELAY If the total accumulated time of all delays on account of the causes specified in Paragraph 1 of the Article aggregate to Two Hundred and Ten (210) calendar days or more, or if the totalaccumulated time of all delays on account of the causes specified in Paragraph 1 of the Article and non-permissible delays as described in Paragraph 1 of Article III aggregate to TwoHundred and Forty (240) calendar days or more, in any circumstances, excluding delays due to arbitration as provided for in Article XIII hereof or due to default in performance by theBUYER, or due to delays in delivery of the BUYER's Supplied Items, and excluding delays due to causes which, under Article V, VI, XI and XII hereof, permit extension orpostponement of the time for delivery of the VESSEL, then in such event, the BUYER at any time thereafter in accordance with the provisions set out herein rescind or cancel thisContract by serving upon the SELLER notice of cancellation or rescission by letter or email and the provisions of Article X of this Contract shall apply. The SELLER may, at any time,after the accumulated time of the aforementioned delays justifying cancellation by the BUYER as above provided for, demand in writing that the BUYER shall make an election, inwhich case the BUYER shall, within thirty (30) calendar days after such demand is received by the BUYER either notify the SELLER of its intention to cancel, or consent to anextension of the time for delivery to an agreed future date, it being understood and agreed by the parties hereto that, if any further delay occurs on account of causes justifyingcancellation as specified in this Contract, the BUYER shall have the same right of cancellation upon the same terms as hereinabove provided.4. DEFINITION OF PERMISSIBLE DELAY Delays on account of such causes as provided for in Paragraph 1 of this Article excluding any other extensions of a nature which under the terms of this Contract permitpostponement of the Delivery Date, shall be understood to be (and are herein referred to as) permissible delays, and are to be distinguished from non‑permissible delays on account ofwhich the Contract Price of the VESSEL is subject to adjustment as provided for in Article III hereof.32/61Shipbuilding ContractHull No.H1597ARTICLE IX WARRANTY OF QUALITY 1. 1. GUARANTEE OF MATERIAL AND WORKMANSHIP Subject to the provisions hereinafter set forth, the SELLER undertake to remedy, free of charge to the Buyer, any defects in the VESSEL which are due to defective materialsincluding major and minor equipment and/or poor workmanship on the part of the SELLER provided that (a) defects are discovered within a period of twelve (12) months after thedate of delivery of the VESSEL and a notice thereof is duly given to the Seller as provided under Paragraph 2 of this Article; and (b) such defects have not been caused by perils ofthe sea, rivers or navigation, or by ordinary wear and tear, overload, improper loading or stowage, corrosion of the materials if caused by the BUYER’s, fire, accident, incompetence,mismanagement, negligence or willful neglect or by alteration or addition by the BUYER not previously approved by the SELLER.For the purpose of this Article, the VESSEL shall include her hull, machinery, equipment and gear, but excludes any parts of the VESSEL which have been supplied by or on behalf ofthe BUYER.2. NOTICE OF DEFECTS The BUYER shall notify the SELLER by telefax or e-mail of any defects for which a claim is made under this guarantee as promptly as possible after discovery thereof. The BUYER'swritten notice shall describe the nature and the extent of the defect. The SELLER shall have no obligation for any defects discovered prior to the expiry date of the said twelve (12)months period, unless notice of such defects is received by the SELLER no later than five (5) Banking Days after such expiry date. An email containing brief details of the nature ofsuch defect sent by the BUYER to the SELLER within five (5) Banking Days after such expiry date will be sufficient compliance with the requirements as to time.3. REMEDY OF DEFECTS (a)The SELLER shall remedy, at its expense, any defects, against which the VESSEL is guaranteed under this Contract, by making all necessary repairs and/or replacements at theShipyard or elsewhere as provided for in 3(b) below. In either case whether all necessary repairs or replacements are performed by the SELLER at its shipyard or elsewhere asprovided for in 3(b) below, the SELLER shall not be responsible for towage, dockage, wharfage, port charges and anything else incurred for the Buyer’s getting and keeping theVESSEL ready for such repairing and replacing.33/61Shipbuilding ContractHull No.H1597Any parts or material so repaired or replaced by the SELLER according to this Article shall be guaranteed for a further six (6) months period starting from completion of relevant repairor replacement provided that the maximum period of guarantee shall in any event not exceed eighteen (18) months from the date of delivery of the VESSEL.(b) However, if it is impractical to make the repair by the SELLER, the BUYER shall cause without undue delay the necessary repairs or replacements to be made elsewhere which isdeemed suitable for the purpose after mutual agreement between the Parties, provided that, in such event, the SELLER may forward or supply replacement parts or materials to theVESSEL, unless forwarding or supplying thereof to the VESSEL would impair or delay the operation or working schedule of the VESSEL, in the event that the BUYER proposes tocause the necessary repairs or replacements to be made to the VESSEL elsewhere, the BUYER shall first, but in all events as soon as possible, give the SELLER notice in writing of thetime and place such repairs will be made, and if the VESSEL is not thereby delayed, or her operation or working schedule is not thereby impaired, the SELLER shall have the right toverify by its own representative(s) or representative(s) of Classification Society the nature and extent of the defects complained of. THE SELLER shall, in such cases, promptly advisethe BUYER in writing, after such examination has been completed, of its acceptance or rejection of the defects as ones that are covered by the guarantee herein provided. Upon theSELLER's acceptance of the defects as justifying remedy under this Article, the SELLER shall immediately pay by telegraphic transfer to the BUYER for such repairs or replacements asum equal to the lower figure of (i) the actual cost for such repairs or replacements including forwarding charges; and (ii) the average quotes for making similar repairs or replacementsincluding forwarding charges as quoted by three leading shipyards at or in the vicinity of the port of the repairs or replacements. (c) In any case, the BUYER shall, at its cost and responsibility, bring the VESSEL to the place elected for repairs and replacements, and cause the VESSEL to be ready in all respectsfor such repairs and replacements. (d) Any dispute under this Article shall be referred to arbitration in accordance with the provisions of Article XIII hereof.34/61Shipbuilding ContractHull No.H15974. Extent of SELLER's Responsibility: (a) The SELLER shall have no responsibility or liability for any other defects whatsoever in the VESSEL other than the defects specified in paragraph 1 of this Article. The SELLER shallneither be responsible or liable for any consequential or special losses, damages or expenses, nor be responsible for any losses, damages or expenses including but not limited to anyloss of time, loss of use, loss of profit, loss of earnings or demurrage, damage to the VESSEL caused by the defects specified in paragraph 1 of this Article, regardless of whether theaforesaid losses, damages or expenses are directly or indirectly occasioned to the BUYER by reason of the defects specified in paragraph 1 of this Article or due to repairs or other worksdone the VESSEL to remedy such defects.(b) The SELLER shall not be responsible for any defects in any part of the VESSEL which subsequent to delivery of the VESSEL have been replaced or in any way repaired by any othercontractor not appointed by the SELLER, or for any defects which have been caused or aggravated by mismanagement, accident, negligence, omission, willful neglect or improper useand maintenance of the VESSEL on the part of the BUYER, its servants or agents or by perils of sea or river, or navigation, or fire or accidents at sea or elsewhere or by ordinary wear andtear or by any other circumstances whatsoever beyond the control of the SELLER.(c)The SELLER’s liability provided for in this Article shall be limited to the repairs and replacements as provided for in 3(a) above. The guarantee contained as hereinabove in this Articlereplaces and excludes any other liability, guarantee, warranty and/or condition imposed or implied by the law, customary, statutory or otherwise, by reason of the construction and saleof the VESSEL by the SELLER for and to the BUYER. The guarantee contained in this Article shall not be extended, altered or varied except by a written instrument signed by the dulyauthorized representatives of the SELLER and the BUYER.(d)Upon delivery of the VESSEL to the BUYER, the SELLER shall thereby and thereupon be released from any and all liability whatsoever and howsoever arising out of the Contractand/or the law, customary, statutory or otherwise, by reason of the construction and sale of the VESSEL by the SELLER for and to the BUYER (save for the SELLER's obligations toremedy defects in accordance with this Article). 35/61Shipbuilding ContractHull No.H1597ARTICLE X CANCELLATION, REJECTION AND RESCISSION BY THE BUYER 1.All payments made by the BUYER prior to the delivery of the VESSEL shall be in the nature of advance to the SELLER. In the event the BUYER shall exercise its right of cancellationand/or rescission of this Contract under and pursuant to any of the provisions of this Contract specifically permitting the BUYER to do so, then the BUYER shall notify the SELLERin writing or by e-mail, and such cancellation and/or rescission shall be effective as of the date the notice thereof is received by the SELLER.2.Thereupon the SELLER shall refund in United States dollars within thirty (30) business days immediately after cancellation and/or rescission of the Contract to the BUYER the fullamount of all installments and sums already paid by the BUYER to the SELLER on account of the VESSEL, unless the SELLER disputes the BUYER's cancellation and/or rescissionby commencing arbitration procedures in accordance with Article XIII. If the BUYER's cancellation or rescission of this Contract is disputed by the SELLER by instituting arbitrationas aforesaid, then no refund shall be made by the SELLER, and the BUYER shall not be entitled to demand repayment from SELLER’s Bank under its guarantee, until the arbitrationaward between the BUYER and the SELLER or, in case of appeal or appeals by the SELLER on the arbitration award or any court orders, by the final court order, which shall be infavour of the BUYER, declaring the BUYER's cancellation and/or rescission justified, is made and delivered to the SELLER by the arbitration tribunal. In the event of the SELLER isobligated to make refund, the SELLER shall pay the BUYER interest in United States Dollars at the rate of Five percent (5%), if the cancellation or rescission of the Contract isexercised by the BUYER in accordance with the provision of Article III 1(c), 2(c), 3(c) or 4(c) hereof, on the amount required herein to be refunded to the BUYER computed from therespective dates when such sums were received by SELLER’s bank pursuant to Article II 4(b), 4(c) or 4(d) from the BUYER to the date of remittance by telegraphic transfer of suchrefund to the BUYER by the SELLER, provided, however, that if the said rescission by the BUYER is made under the provisions of Paragraph 3 of Article VIII or Paragraph 2 (b) ofArticle XII, then in such event the SELLER shall not be required to pay any interest.In case of BUYER’s cancellation and/or rescission of this contract and pursuant to any of the provisions of this Contract specifically permitting the BUYER to do so, the SELLERshall also return all Buyers' Supplies to the BUYER, or if they cannot be returned, the SELLER shall pay to the BUYER an amount equal to the BUYER's costs for such equipment.3.Upon such refund by the SELLER to the BUYER, all obligations, duties and liabilities of each of the parties hereto to the other under this Contract shall be forthwith completelydischarged.36/61Shipbuilding ContractHull No.H1597ARTICLE XI BUYER'S DEFAULT 1. DEFINITION OF DEFAULT The BUYER shall be deemed in default of its obligation under the Contract if any of the following events occurs:(a)The BUYER fails to pay the First, Second, Third or Fourth installment to the SELLER when any such installment becomes due and payable under the provisions of this Contract andof Article II hereof and provided the BUYER shall have received the SELLER's demand for payment in accordance with Article II hereof; or(b)The BUYER fails to deliver to the SELLER an irrevocable and unconditional Letter of Guarantee to be issued by the Payment Guarantor within the time specified in accordance withParagraph 6 of Article II hereof; or(c)The BUYER fails to pay the fifth installment to the SELLER in accordance with the terms and conditions of this Contract and of Paragraph 3(e) and 4(e) of Article II hereof providedthe BUYER shall have received the SELLER's demand for payment in accordance with Article II hereof; or(d)The BUYER fails to take delivery of the VESSEL, when the VESSEL is ready and tendered for delivery according to the terms of this Contract for delivery by the SELLER under theprovisions of this Contract and of Article VII hereof.2. NOTICE OF DEFAULT If the BUYER is in default of payment or in performance of its obligations as provided hereinabove, the SELLER shall notify the BUYER to that effect by letter or e-mail after the date ofoccurrence of the default as per Paragraph 1 of this Article and the BUYER shall forthwith acknowledge by letter or e-mail to the SELLER that such notification has been received. Incase the BUYER does not give the aforesaid letter or e-mail acknowledgment to the SELLER within three (3) calendar days it shall be deemed that such notification has been dulyreceived by the BUYER.37/61Shipbuilding ContractHull No.H15973. INTEREST AND CHARGE (a)If the BUYER is in default of payment as to any installment as provided in Paragraph 1 (a) and/or 1 (c) of this Article, the BUYER shall pay interest on such installment at the rateof Five percent (5%) per annum until the date of the payment of the full amount, including all aforesaid interest. In case the BUYER shall fail to take delivery of the VESSEL whenrequired to as provided in Paragraph 1 (d) of this Article, the BUYER shall be deemed in default of payment of the fifth installment and shall pay interest thereon at the same rateas aforesaid from and including the day on which the VESSEL is tendered for delivery by the SELLER, as provided in Article VII Paragraph 7 hereof.(b)In any event of default by the BUYER under 1 (a) or 1 (b) or 1 (c) or 1 (d) above, the BUYER shall also pay all reasonable direct costs, charges and expenses incurred by theSELLER in consequence of such default, but excluding any indirect or consequential losses, damages or expenses.4. DEFAULT BEFORE DELIVERY OF THE VESSEL (a)If any default by the BUYER occurs as defined in Paragraph 1 (a) or 1 (b) or 1 (c) or 1 (d) of this Article, the Delivery Date shall, at the SELLER's option, be postponed for a periodof continuance of such default by the BUYER.(b)If any such default as defined in Paragraph 1 (a) or 1 (b) or 1 (c) or 1 (d) of this Article committed by the BUYER continues for a period of fifteen (15) calendar days, then, theSELLER shall have all following rights and remedies: (i)The SELLER may, at its option, cancel or rescind this Contract, provided the SELLER has notified the BUYER of such default pursuant to Paragraph 2 of this Article, bygiving notice of such effect to the BUYER by e-mail. Upon receipt by the BUYER of such e-mail notice of cancellation or rescission, all of the BUYER's Supplies shallforthwith become the sole property of the SELLER, and the VESSEL and all its equipment and machinery shall be at the sole disposal of the SELLER for sale or otherwise;and (ii)In the event of such cancellation or rescission of this Contract, the SELLER shall be entitled to retain any instalment or instalments of the Contract Price paid by the BUYERto the SELLER on account of this Contract; and38/61Shipbuilding ContractHull No.H1597(iii)(Applicable to any BUYER's default defined in 1(a) of this Article) The SELLER shall, without prejudice to the SELLER's right to recover from the BUYER the 5th instalment,interest, costs and/or expenses by applying the proceeds to be obtained by sale of the VESSEL in accordance with the provisions set out in this Contract, have the right todeclare all unpaid 1st, 2nd, 3rd and 4th instalments to be forthwith due and payable, and upon such declaration, the SELLER shall have the right to immediately demand thepayment of the aggregate amount of all unpaid but due 1st, 2nd, 3rd and 4th instalments, as the case may be, from the Payment Guarantor in accordance with the terms andconditions of this Contract and of the Payment Guarantee issued by the Payment Guarantor.5. SALE OF THE VESSEL (a)In the event of cancellation or rescission of this Contract as above provided, the SELLER shall have full right and power either to complete or not to complete the VESSEL as itdeems fit, and to sell the VESSEL at a public or private sale on such terms and conditions as the SELLER thinks fit without being answerable for any loss or damage occasioned tothe BUYER thereby.In the case of sale of the VESSEL, the SELLER shall give e-mail or written notice to the BUYER.(b)In the event of the sale of the VESSEL in its completed state, the proceeds of sale received by the SELLER shall be applied firstly to payment of all expenses attending such saleand otherwise incurred by the SELLER as a result of the BUYER's default, and then to payment of all unpaid installments and/or unpaid balance of the Contract Price and intereston such installment at the interest rate as specified in the relevant provisions set out above from the respective due dates thereof to the date of application.(c)In the event of the sale of the VESSEL in its incomplete state, the proceeds of sale received by the SELLER shall be applied firstly to all expenses attending such sale andotherwise incurred by the SELLER as a result of the BUYER's default, and then to payment of all costs of construction of the VESSEL (such costs of construction, as hereinmentioned, shall include but are not limited to all costs of labour and/or prices paid or to be paid by CSTC and/or the BUILDER for the equipment and/or technical design and/ormaterials purchased or to be purchased, installed and/or to be installed on the VESSEL) and/or any fees, charges, expenses and/or royalties incurred and/or to be incurred for theVESSEL less the installments so retained by the SELLER, and compensation to the SELLER for a reasonable sum of loss of profit due to the cancellation or rescission of thisContract.39/61Shipbuilding ContractHull No.H1597(d)In either of the above events of sale, if the proceed of sale exceeds the total of the amounts to which such proceeds are to be applied as aforesaid, the SELLER shall promptly paythe excesses to the BUYER without interest, provided, however that the amount of each payment to the BUYER shall in no event exceed the total amount of installments alreadypaid by the BUYER and the cost of the BUYER's Supplied Items, if any.(e)If the proceed of sale are insufficient to pay such total amounts payable as aforesaid, the BUYER shall promptly pay the deficiency to the SELLER upon request.40/61Shipbuilding ContractHull No.H1597ARTICLE XII INSURANCE 1. EXTENT OF INSURANCE COVERAGE From the time of keel‑laying of the first section of the VESSEL until the same is completed, delivered to and accepted by the BUYER, the SELLER shall, at its own cost and expense,keep the VESSEL and all machinery, materials, equipment, appurtenances and outfit, delivered to the BUILDER for the VESSEL or built into, or installed in or upon the VESSEL,including the BUYER's Supplied Items, fully insured with Chinese insurance companies for BUILDER's RISK and at BUILDER’s expense.The amount of such insurance coverage shall, up to the date of delivery of the VESSEL, be in an amount at least equal to, but not limited to, the aggregate of the payments made bythe BUYER to the SELLER including the value of maximum amount of US$ 400, 000.00 of the BUYER's Supplied Items. The policy referred to hereinabove shall be taken out in the nameof the SELLER and all losses under such policy shall be payable to the SELLER.2. APPLICATION OF RECOVERED AMOUNT (a) Partial Loss:In the event the VESSEL shall be damaged by any insured cause whatsoever prior to acceptance and delivery thereof by the BUYER and in the further event that such damageshall not constitute an actual or a constructive total loss of the VESSEL, the SELLER shall apply the amount recovered under the insurance policy referred to in Paragraph 1 ofthis Article to the repair of such damage satisfactory to the Classification Society and other institutions or authorities as described in the Specifications without additionalexpenses to the BUYER, and the BUYER shall accept the VESSEL under this Contract if completed in accordance with this Contract and Specifications and not make any claim forany consequential loss or depreciation. (b) Total Loss:However, in the event that the VESSEL is determined to be an actual or constructive total loss, the SELLER shall either:41/61Shipbuilding ContractHull No.H1597 (i)By the mutual agreement between the parties hereto, proceed in accordance with terms of this Contract, in which case the amount recovered under said insurance policy shallbe applied to the reconstruction and/or repair of the VESSEL's damages and/or reinstallation of BUYER's Supplied Items , provided the parties hereto shall have first agreed inwriting as to such reasonable extension of the Delivery Date and adjustment of other terms of this Contract including the Contract Price as may be necessary for thecompletion of such reconstruction; or (ii)If due to whatever reasons the parties fail to agree on the above, then refund immediately to the BUYER the amount of all installments paid to the SELLER under this Contractwithout interest, whereupon this Contract shall be deemed to be canceled and all rights, duties, liabilities and obligations of each of the parties to the other shall terminateforthwith.Within thirty (30) calendar days after receiving e-mail notice of any damage to the VESSEL constituting an actual or a constructive total loss, the BUYER shall notify the SELLERby e-mail of its agreement or disagreement under this sub‑paragraph. In the event the BUYER fails to so notify the SELLER, then such failure shall be construed as a disagreementon the part of the BUYER. This Contract shall be deemed as rescinded and canceled and the Paragraph 2 (b) (ii) of this Article shall apply.3. TERMINATION OF THE SELLER'S OBLIGATION TO INSURE The SELLER's obligation to insure the VESSEL hereunder shall cease and terminate forthwith upon delivery thereof to and acceptance by the BUYER.42/61Shipbuilding ContractHull No.H1597ARTICLE XIII DISPUTES AND ARBITRATION 1. PROCEEDINGS In the event of any dispute between the parties hereto as to any matter arising out of or relating to this Contract or any stipulation herein or with respect thereto which cannot besettled by the parties themselves, such dispute shall be resolved by arbitration in London Maritime Arbitrators Association (“LMAA”) in London, England in accordance withEnglish laws, the Arbitration Act 1996 of United Kingdom or any re-enactment or statutory modification thereof for the time being in force, and LMAA’s then prevailing arbitrationrules. Either party may demand arbitration of any such disputes by giving written notice to the other party. Any demand for arbitration by either party hereto shall state the name ofthe arbitrator appointed by such party and shall also state specifically the question or questions as to which such party is demanding arbitration. Within twenty (20) days afterreceipt of notice of such demand for arbitration, the other party shall in turn appoint a second arbitrator. The two arbitrators thus appointed shall thereupon select a third arbitrator,and the three arbitrators so named shall constitute the board of arbitration (hereinafter called the "Arbitration Board") for the settlement of such dispute.In the event however, that said other party should fail to appoint a second arbitrator as aforesaid within twenty (20) days following receipt of notice of demand of arbitration, it isagreed that such party shall thereby be deemed to have accepted and appointed as its own arbitrator the one already appointed by the party demanding arbitration, and the arbitrationshall proceed forthwith before this sole arbitrator, who alone, in such event, shall constitute the Arbitration Board. And in the further event that the two arbitrators appointedrespectively by the parties hereto as aforesaid should be unable to reach agreement on the appointment of the third arbitrator within twenty (20) days from the date on which thesecond arbitrator is appointed, either party of the said two arbitrators may apply to the President for the time being of the LMAA to appoint the third arbitrator. The award of thearbitration, made by the sole arbitrator or by the majority of the three arbitrators as the case may be, shall be final, conclusive and binding upon the parties hereto.2. ALTERNATIVE ARBITRATION BY AGREEMENT Notwithstanding the preceding provisions of this Article, it is recognized that in the event of any dispute or difference of opinion arising in regard to the construction of the VESSEL,her machinery and equipment, or concerning the quality of materials or workmanship thereof or thereon, such dispute may be referred to the Classification Society upon mutual writtenagreement of the parties hereto. In such case, the opinion of the Classification Society shall be final and binding on the parties hereto.43/61Shipbuilding ContractHull No.H15973. NOTICE OF AWARD Notice of any award shall immediately be given in writing or by e-mail to the SELLER and the BUYER.4. EXPENSES The arbitrator(s) shall determine which party shall bear the expenses of the arbitration or the proportion of such expenses which each party shall bear.5. AWARD OF ARBITRATION Award of arbitration, shall be final and binding upon the parties concerned. Any right of appeal available under the English Laws is hereby expressly precluded and excluded by theParties hereto.6. ENTRY IN COURT Judgment on the recognition of the enforceability of any arbitration award in a foreign country may be entered in any court of competent jurisdiction, where the award is to be enforced.7. ALTERATION OF DELIVERY DATE In the event of reference to arbitration of any dispute arising out of matters occurring prior to delivery of the VESSEL, the SELLER shall not be entitled to extend the Delivery Date asdefined in Article VII hereof and the BUYER shall not be entitled to postpone its acceptance of the VESSEL on the Delivery Date or on such newly planned time of delivery of theVESSEL as declared by the SELLER. However, if the construction of the VESSEL is affected by any arbitration, the SELLER shall then be permitted to extend the Delivery Date asdefined in Article VII and the decision or the award shall include a finding as to what extent the SELLER shall be permitted to extend the Delivery Date.44/61Shipbuilding ContractHull No.H1597ARTICLE XIV RIGHT OF ASSIGNMENT Neither of the parties hereto shall assign this Contract to any other individual, firm, company or corporation unless prior written consent of the other party is given, with such writtenconsent not to be unreasonably withheld.45/61Shipbuilding ContractHull No.H1597ARTICLE XV TAXES AND DUTIES 1. TAXES All costs for taxes including stamp duties, if any, incurred in connection with this Contract in the People's Republic of China shall be borne by the SELLER. Any taxes and/or dutiesimposed upon those items or services procured by the SELLER in the People's Republic of China or elsewhere for the construction of the VESSEL shall be borne by the SELLER.The SELLER shall not be responsible for the personal income tax for BUYER's Representative or other BUYER’s staff, agent and representatives who work at BUILDER’s Shipyardand premise. 2. DUTIES The BUYER shall bear and pay all taxes, duties, stamps and fees incurred outside China in connection with execution and/or performance of this Contract by the BUYER, except fortaxes, duties, stamps, dues, levies and fees imposed upon those items which are to be procured by the SELLER for the construction of the VESSEL in accordance with the terms ofthis Contract and the Specifications. Any tax or duty other than those described hereinabove, if any, shall be borne by the BUYER.46/61Shipbuilding ContractHull No.H1597ARTICLE XVI PATENTS, TRADEMARKS AND COPYRIGHTS The machinery and equipment of the VESSEL may bear the patent number, trademarks or trade names of the manufacturers. The SELLER shall defend and hold harmless the BUYER frompatent liability or claims of patent infringement of any nature or kind, including costs and expenses for, or on account of any patented or patentable invention made or used in theperformance of this Contract and also including cost and expense of litigation, if any.Nothing contained herein shall be construed as transferring any patent or trademark rights or copyright in equipment covered by this Contract, and all such rights are hereby expresslyreserved to the true and lawful owners thereof. Notwithstanding any provisions contained herein to the contrary, the SELLER's obligation under this Article should not be terminated bythe passage of any specified period of time.The SELLER's liability hereunder does not extend to equipment or parts supplied by the BUYER to the BUILDER if any.47/61Shipbuilding ContractHull No.H1597ARTICLE XVII NOTICE Any and all notices and communications in connection with this Contract shall be addressed as follows:To the BUYER : GUADELOUPESHIPPING COMPANY INC.Address : c/o Unitized Ocean Transport Limited373 Syngrou Ave. & 2-4 Ymittou str., 17564, Palaio Faliro,Athens, GreeceTechnical contact information:Telephone:Email:Commercial Contact information:Telephone:Email:To the SELLER:CSTC : China Shipbuilding Trading Company LimitedContacts:Address : Marine Tower,No.1 Pudong Dadao,Shanghai 200120the People's Republic of ChinaTelephone:E-mail :BUILDER : Shanghai Waigaoqiao Shipbuilding Company LimitedContacts:Address: 3001 Zhouhai Road, Pudong New District,Shanghai 200137, P.R. ChinaTelephone:E-mail :48/61Shipbuilding ContractHull No.H1597Any notices and communications sent by CSTC or the BUILDER alone to the BUYER shall be deemed as having being sent by both CSTC and the BUILDER.Any change of address shall be communicated in writing by registered mail or by e-mail by the party making such change to the other party and in the event of failure to give such noticeof change, communications addressed to the party at their last known address shall be deemed sufficient.Notwithstanding any provisions in this Contract stipulating that all the notices shall be sent by email, the SELLER shall be entitled to not only send by email but also send by courier forthe important notices under or in connection with this Contract and such notice sent by courier shall become effective and deemed delivered in accordance with below paragraph of thisArticle.Any and all notices, requests, demands, instructions, advice and communications in connection with this Contract shall be deemed to be given at, and shall become effective from, thetime when the same is delivered to the address of the party to be served, provided, however, that, any express courier service shall be deemed to be delivered upon confirmation ofdelivery or recipients refusal recorded by the courier company, and e-mail acknowledged by the answerbacks shall be deemed to be delivered upon dispatch (unless there is a ‘bounce-back’ message). E-mail transmissions shall be deemed as delivered upon the subject email having been removed to the “Sent” box on the sending computer.Any and all notices, communications, Specifications and drawings in connection with this Contract shall be written in the English language and each party hereto shall have noobligation to translate them into any other language.An email message shall be deemed to be a notice “in writing” for the purposes of this Contract.49/61Shipbuilding ContractHull No.H1597ARTICLE XVIII EFFECTIVE DATE OF CONTRACT This Contract shall become effective upon being signed by both parties.Upon signing of this Contract, both parties hereto shall do the follows:a)The SELLER to provide the Refund Guarantee to the BUYER to cover BUYER’s first, second, third and fourth instalments in accordance with the terms of Article II paragraph 7 ofthis Contract;b)The BUYER to effect the payment of the first instalment in accordance with the terms of Article II, paragraph 3 (a) and 4 (a) of the Contract;c)The BUYER to provide Letter of Guarantees, within five (5)Banking Days from the date of BUYER's receipt of the Refund Guarantee, to the SELLER covering BUYER’s obligation topay the 2nd, 3rd and 4th instalments as stipulated in Article II, paragraph 6 of this Contract.50/61Shipbuilding ContractHull No.H1597ARTICLE XIX INTERPRETATION 1. LAW APPLICABLE The parties hereto agree that the validity and interpretation of this Contract and of each Article and part hereof be governed by and interpreted in accordance with the English Laws.2. DISCREPANCIES All general language or requirements embodied in the Specifications are intended to amplify, explain and implement the requirements of this Contract. However, in the event that anylanguage or requirements so embodied in the Specifications permit an interpretation inconsistent with any provision of this Contract, then in each and every such event theapplicable provisions of this Contract shall prevail. The Specifications and plans are also intended to explain each other, and anything shown on the plans and not stipulated in theSpecifications or stipulated in the Specifications and not shown on the plans, shall be deemed and considered as if embodied in both. In the event of conflict between theSpecifications and plans, the Specifications shall govern.However, with regard to such inconsistency or contradiction between this Contract and the Specifications as may later occur by any change or changes in the Specifications agreedupon by and among the parties hereto after execution of this Contract, then such change or changes shall prevail.3. DEFINITION "Banking Days" are days on which banks are open in New York, Piraeus, Greece, and Shanghai, China, United Kingdom. Saturdays, Sundays are always excluded.In absence of stipulation of “working day(s)”, "banking day(s)" or "business day(s)", the "day" or "days" shall be taken as "calendar day" or "calendar days".4. ENTIRE AGREEMENT This Contract sets forth the entire understanding of the Parties with respect to the subject matter discussed herein. It supersedes all prior discussions, negotiations and agreements,(including but not limited to the Letter of Intent) whether oral or written, expressed or implied.51/61Shipbuilding ContractHull No.H1597ARTICLE XX SANCTIONS (a) Each of the SELLER and the BUYER hereby ensure that at the date of entering into this Contract and continuing until the BUYER has taken delivery of the VESSEL, neither theBUYER nor the SELLER, are designated pursuant to the sanction lists maintained by the Chinese government and/or sanction lists maintained by United Nations and/or EUfinancial sanctions maintained by the European Commission of European Union and / or the Consolidated List of Financial Sanctions Targets in the UK maintained by UK HMTreasury and/or OFAC’s SDN List maintained by U.S. Government so that this CONTRACT, as a result of the aforesaid sanction, becomes frustrated (“Sanctions”). (b)Either party shall notify the other party immediately upon the occurrence of a Sanctions event (the “Sanctions Notice”). (c)The Parties shall, from the date of the Sanctions Notice, work together in good faith within 60 days or any longer period as mutually agreed by the Parties to find a mutuallyacceptable solution (the “Standstill Period”). During the Standstill Period, Each Party shall not be entitled to cancel/rescind this Contract by reason of the Sanctions giving rise tosuch Standstill Period, unless there is an explicit order or instruction of the official governmental authorities that orders the Parties to do so. (d)If the Parties have reached a mutually acceptable solution during the Standstill Period and the Parties confirm to reactivate this Contract, the Delivery Date of the VESSEL shall beautomatically extended for a period equal to the period the Contract has been suspended for the reason stated in this Article XX. (e)If, on the last day of the Standstill Period, the Parties fail to reach a mutually acceptable solution despite their best endeavours, then: i)if the Sanctions event was caused by the SELLER, the BUYER shall have the right to terminate this Contract. ii)if the Sanctions event was caused by the BUYER, the SELLER shall have the right to terminate this Contract. iii)In the event the BUYER terminates the Contract pursuant to this clause, the SELLER shall refund in United States dollars to the BUYER the full amount of allinstalment or instalments paid by the BUYER to the SELLER on account of the VESSEL. 52/61Shipbuilding ContractHull No.H1597In the event the SELLER terminates the Contract pursuant to this clause, the SELLER shall be entitled to retain all instalment or instalments of the Contract Price paidby the BUYER to the SELLER on account of this Contract, which shall therefore become the property of the SELLER and the Vessel shall be at the sole disposal of theSELLER.Notwithstanding any provisions of this CONTRACT, upon the SELLER’s aforesaid refund of the instalment or instalments paid by the BUYER in case of BUYER’s termination or theSELLER’s retention of BUYER’s paid instalment or instalments in case of the SELLER’s termination pursuant to this Paragraph e), all obligations, duties and liabilities of the one Partytowards the other Party and all rights, benefits and claims against one Party by/of the other Party under or in connection with this CONTRACT and/or any applicable laws shall beforthwith completely discharged and waived.53/61Shipbuilding ContractHull No.H1597In WITNESS WHEREOF, the parties hereto have caused this Contract to be duly executed on the day and year first above written.THE BUYER : GUADELOUPE SHIPPING COMPANY INC. By :/s/ Andreas Nikolaos Michalopoulos Name :Andreas Nikolaos Michalopoulos Title :Attorney-in-fact Witness :/s/ Aliki PaliouTHE SELLER: CSTC :China Shipbuilding Trading Company Limited By :/s/ Huang Chongyang Name :Huang Chongyang Title :Attorney in fact Witness :/s/ Song ChaoTHE BUILDER: Shanghai Waigaoqiao Shipbuilding Company Limited By :/s/ Li Hui Name :Li Hui Title :Attorney in fact Witness :/s/ Wang Nan54/61Shipbuilding ContractHull No.H1597Exhibit "A" : IRREVOCABLE LETTER OF GUARANTEE NO. To: GUADELOUPE SHIPPING COMPANY INC.Date:Dear Sirs,Irrevocable Letter of Guarantee No.At the request of China Shipbuilding Trading Company Limited, address at 56(Yi), Zhongguancun Nandajie, Beijing 100044, China, and in consideration of your agreeing to pay ChinaShipbuilding Trading Company Limited and Shanghai Waigaoqiao Shipbuilding Company Limited, address at 3001 Zhouhai Road, Pudong New District, Shanghai 200137, China(hereinafter collectively called the "SELLER") the instalments before delivery of the VESSEL under the Shipbuilding Contract concluded by and amongst you and the SELLER datedDecember 18th, 2023 (hereinafter called the “Contract”) for the construction of one (1) 114,000 DWT Product/Crude Oil Tanker to be designated as Hull No. H1597 (hereinafter called the"VESSEL"), we, China CITIC Bank Corporation Limited, Beijing Branch, address at Block C, Fuhua Mansion, No.8, Chaoyangmen Beidajie, Dongcheng District, Beijing, China, do herebyirrevocably guarantee repayment to you by the SELLER of an amount up to but not exceeding a total amount of United States Dollars Twenty-Nine Million One Hundred and EightyThousand Two Hundred and Fifty Only (USD 29,180,250) representing the first instalment of the Contract Price of the VESSEL of United States Dollars Nine Million Seven Hundred andTwenty-Six Thousand Seven Hundred and Fifty only (US$ 9,726,750), plus the second instalment of the Contract Price of the VESSEL, of United States Dollars Six Million Four Hundredand Eighty-Four Thousand Five Hundred only (US$ 6,484,500), plus the third instalment of the Contract Price of the VESSEL, of United States Dollars Six Million Four Hundred andEighty-Four Thousand Five Hundred only (US$ 6,484,500), plus the fourth instalment of the Contract Price of the VESSEL, of United States Dollars Six Million Four Hundred and Eighty-Four Thousand Five Hundred only (US$ 6,484,500), as you may have paid to the SELLER under the Contract prior to the delivery of the VESSEL, if and when the same or any part thereofbecomes repayable to you from the SELLER in accordance with the terms (Article X or Article XII 2(b)) of the Contract.Should the SELLER fail to make such repayment upon demand, we shall pay you the amount the SELLER ought to pay with no interest if cancellation of the Contract is exercised by youfor the delay caused by permissible delays or total loss in accordance with the provisions of Article XII 2(b), or together with an interest at the rate of Five percent (5%) per annum if thecancellation of the Contract is exercised by you in accordance with the provisions of Article III 1(c), 2(c), 3(c) or 4(c) of the Contract within thirty (30) Beijing banking days after ourreceipt of the relevant written demand from you for repayment.55/61Shipbuilding ContractHull No.H1597However, in the event of any dispute between you and the SELLER in relation to:(1) whether the SELLER is liable to repay the instalment or instalments paid by you and(2) consequently whether you shall have the right to demand payment from us,and such dispute is submitted either by the SELLER or by you for arbitration in accordance with Article XIII of the Contract, we shall be entitled to withhold and defer payment until thearbitration award is published. We shall not be obligated to make any payment to you unless the arbitration award orders the SELLER to make repayment. If the SELLER fails to honourthe arbitration award upon demand then we shall refund you to the extent the arbitration award orders but not exceeding the aggregate amount of this guarantee plus the interestdescribed above.The said repayment shall be made by us in United States Dollars. This Letter of Guarantee shall become effective from the time of the actual receipt of the first instalment by the SELLERfrom you to the SELLER’s a/c No. held by China Shipbuilding Trading Company Limited with China CITIC Bank Corporation Limited, Beijing Branch, address at Block C, FuhuaMansion, No.8, Chaoyangmen Beidajie, Dongcheng District, Beijing, China and the amounts effective under this Letter of Guarantee shall correspond to the total payment actuallyreceived by the SELLER to his a/c stated above from time to time under the Contract prior to the delivery of the VESSEL. However, the available amount under this Letter of Guaranteeshall in no event exceed above mentioned amount actually paid to the SELLER, together with interest calculated, as described above at Zero percent (0%) or, Five percent (5%) perannum, as the case may be for the period commencing with the date of receipt by the SELLER of the respective instalment to the date of repayments thereof.Any claim, demand or notice in connection with this Letter of Guarantee shall be validly delivered to us by you through your or Performance Shipping Inc. bank (DNB Bank ASA,London Brach) by authenticated SWIFT to our swift address (SWIFT CODE: CIBKCNBJ100).This Letter of Guarantee shall remain in force until the VESSEL has been delivered to and accepted by you as evidence by the SELLER’s presentation to us of copy of the Protocol ofDelivery and Acceptance of the VESSEL under the Contract or refund has been made by the SELLER or ourselves, or until February 24th, 2027, whichever occurs the earliest. Afterwhich, this guarantee shall be null and void whether or not it is returned to us for cancellation.56/61Shipbuilding ContractHull No.H1597This Letter of Guarantee is governed by the Laws of England. For and on behalf of China CITIC Bank Corporation Limited57/61Shipbuilding ContractHull No.H1597Exhibit "B" IRREVOCABLE LETTER OF GUARANTEE FOR THE 2ND, 3RD AND 4TH INSTALLMENTSFrom: Performance Shipping Inc.To: China Shipbuilding Trading Company Limited __________ 56(Yi) Zhongguancun Nan Da Jie, Beijing 100044, ChinaAndShanghai Waigaoqiao Shipbuilding Company Limited3001 Zhouhai Road, Pudong New District, Shanghai 200137, ChinaDear Sirs,(1)In consideration of your entering into a Shipbuilding Contract dated 18th December, 2023 ("the Shipbuilding Contract") with GUADELOUPE SHIPPING COMPANY INC., addressat Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960, Marshall Islands, as the buyer (hereinafter called "the BUYER") for the construction of one (1)114,000 DWT Product/Crude Oil Tanker known as Shanghai Waigaoqiao Shipbuilding Company Limited's Hull No. H1597 (hereinafter called "the VESSEL"), we, PerformanceShipping Inc., address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH 96960, hereby IRREVOCABLY, ABSOLUTELY andUNCONDITIONALLY guarantee, as the primary obligor and not merely as surety, the due and punctual payment by the BUYER of the 2nd, 3rd and 4th installments of the ContractPrice amounting to a total sum of United States Dollars Nineteen Million Four Hundred and Fifty Three Thousand Five Hundred only (USD 19,453,500) as specified in (2) below.(2)The Instalments guaranteed hereunder, pursuant to the terms of the Shipbuilding Contract, comprise the 2nd installment in the amount of United States Dollars Six Million FourHundred and Eighty-Four Thousand Five Hundred only (US$ 6,484,500) payable by the BUYER within five (5) Banking Days after cutting of the first steel plate in your BUILDER'sShipyard workshop and the third installment in the amount of United States Dollars Six Million Four Hundred and Eighty-Four Thousand Five Hundred only (US$ 6,484,500)payable by the BUYER within five (5) Banking Days after keel‑laying of the first section of the VESSEL and the fourth installment in the amount of United States Dollars Six MillionFour Hundred and Eighty-Four Thousand Five Hundred only (US$ 6,484,500) payable by the BUYER within five (5) Banking Days after launching of the VESSEL .58/61Shipbuilding ContractHull No.H1597(3)We also IRREVOCABLY, ABSOLUTELY and UNCONDITIONALLY guarantee, as primary obligor and not merely as surety, the due and punctual payment by the BUYER ofinterest on each Instalment guaranteed hereunder at the rate of Five percent (5%) per annum from and including the first day after the date of instalment in default until the date offull payment by us of such amount guaranteed hereunder.(4)In the event that the BUYER fails to punctually pay any of the 2nd, 3rd and 4th Instalments guaranteed hereunder or the BUYER fails to pay any interest thereon, and any suchdefault continues for a period of fifteen (15) Banking Days, then, upon receipt by us of your first written demand, we shall immediately pay to you or your assignee only theunpaid installment of the 2nd, 3rd and 4th instalments, together with the interest as specified in paragraph (3) hereof, without requesting you to take any or further action,procedure or step against the BUYER or with respect to any other security which you may hold.(5)We hereby agree that at your option this Guarantee and the undertaking hereunder shall be on an exceptional basis assignable to your financing bank only and if so assignedshall inure to the benefit of your bank as your assignee as if your bank were originally named herein.(6)Any payment by us under this Guarantee shall be made in Unites States Dollars by telegraphic transfer to China CITIC Bank Corporation Limited, Beijing Branch, address at BlockC, Fuhua Mansion, No.8, Chaoyangmen Beidajie, Dongcheng District, Beijing, China (SWIFT Code: CIBKCNBJ100) as receiving bank nominated by you for A/C Beneficiary:China Shipbuilding Trading Company Limited or through other receiving bank to be nominated by you from time to time, in favour of you or your assignee bank.(7)Our obligations under this guarantee shall not be affected or prejudiced by any dispute between you as the SELLER and the BUYER under the Shipbuilding Contract or by theBUILDER's delay in the construction and/or delivery of the VESSEL due to whatever causes or by any variation or extension of their terms thereof or by any security or otherindemnity now or hereafter held by you in respect thereof, or by any time or indulgence granted by you or any other person in connection therewith, or by any invalidity orunenforceability of the terms thereof, or by any act, omission, fact or circumstances whatsoever, which could or might, but for the foregoing, diminish in any way our obligationsunder this Guarantee.(8)Any claim or demand shall be in writing signed by one of your authorized officers and may be served on us either by hand or by post and if sent by post to c/o Unitized OceanTransport Limited, 373 Syngrou Ave. & 2-4 Ymittou str, 17564, Palaio Faliro, Athens, Greece (or such other address as we may notify to you in writing), or by email (E-mailAddress: legal@unitizedocean.com), with confirmation in writing.59/61Shipbuilding ContractHull No.H1597(9)This Letter of Guarantee shall come into full force and effect upon delivery to you of this Guarantee and shall continue in force and effect until the VESSEL is delivered to andaccepted by the BUYER and the BUYER shall have performed all its obligations for taking delivery thereof or until the full payment of the 2nd, 3rd and 4th Instalment together withthe aforesaid interests by the BUYER or us, whichever first occurs.(10)The maximum amount, however, that we are obliged to pay to you under this Guarantee shall not exceed the aggregate amount of U.S. Dollars Nineteen Million Six Hundred andThirteen Thousand Three Hundred and Ninety-Two only (US$ 19,613,392) being an amount equal to the sum of:‑ (a)The 2nd, 3rd and 4th instalment guaranteed hereunder in the total amount of United States Dollars Nineteen Million Four Hundred and Fifty Three Thousand Five Hundredonly (USD 19,453,500); and (b)Interest, if applicable, at the rate of Five percent (5%) per annum on the Instalment for a period of sixty (60) days in the amount of United States Dollars One Hundred andFifty-Nine Thousand Eight Hundred and Ninety-Two only (US$ 159,892).(11)All payments by us under this Guarantee shall be made without any set‑off or counterclaim and without deduction or withholding for or on account of any taxes, duties, orcharges whatsoever unless we are compelled by law or the Contract to deduct or withhold the same. In the latter event we shall make the minimum deduction or withholdingpermitted and will pay such additional amounts as may be necessary in order that the net amount received by you after such deductions or withholdings shall equal the amountwhich would have been received had no such deduction or withholding been required to be made.(12)This Letter of Guarantee shall be construed in accordance with and governed by the Laws of England. We hereby submit to the exclusive jurisdiction of the English courts for thepurposes of any legal action or proceedings in connection herewith in England.(13)When our liabilities under this Letter of Guarantee have expired as aforesaid, you will return it to us without any request or demand from us.60/61Shipbuilding ContractHull No.H1597IN WITNESS WHEREOF, we have caused this Letter of Guarantee to be executed and delivered by our duly authorized representative the day and year above written.Very Truly Yours By: 61/61Exhibit 8.1List of Subsidiaries as at December 31, 2023Name of SubsidiaryPlace of Incorporation Unitized Ocean Transport LimitedMarshall Islands Taburao Shipping Company Inc.Marshall Islands Tarawa Shipping Company Inc.Marshall Islands Toka Shipping Company Inc.Marshall Islands Arno Shipping Company Inc.Marshall Islands Maloelap Shipping Company Inc.Marshall Islands Garu Shipping Company Inc.Marshall Islands Bock Shipping Company Inc.Marshall Islands Arbar Shipping Company Inc.Marshall Islands Nakaza Shipping Company Inc.Marshall Islands Sri Lanka Shipping Company Inc.Marshall Islands Guadeloupe Shipping Company Inc.Marshall Islands Performance Shipping USA LLCDelaware, USAExhibit 11.1THIRD AMENDED AND RESTATEDPOLICIES AND PROCEDURES TO DETECT ANDPREVENT INSIDER TRADINGREVISED AS OF FEBRUARY 22, 2023 GENERAL The Securities Exchange Act of 1934 prohibits the misuse of material, non-public information. In order to avoid even the appearance of impropriety, the Board of Directors of PerformanceShipping Inc. (the “Company”) has adopted this policy (this “Policy”) to prevent the misuse of non-public information. Although “insider trading” is not defined in the securities laws, it is generally thought to be described as trading, either personally or on behalf of others, on the basis of material non-public information or communicating material non-public information to others in violation of the law. This Policy will be administered and supervised by the Company’s Financial Reporting and Accounting Director. Please pay special attention to the “Blackout” and “Trading Window”policies discussed below. WHOM DOES THIS POLICY COVER? This Policy covers all of the Company’s officers, directors, and employees (“Covered Persons”), as well as any transactions in any securities participated in by family members, trusts orcorporations directly or indirectly controlled by Covered Persons. In addition, this Policy applies to transactions engaged in by corporations in which the Covered Person is an officer,director, or 10% or greater stockholder, and a partnership of which the Covered Person is a partner, unless the Covered Person has no direct or indirect control over the partnership. The Company forbids any Covered Person from trading, either for his or her personal account or on behalf of others, while in possession of material non-public information, orcommunicating material non-public information to others in violation of the law. This prohibited conduct is often referred to as “insider trading”. •This Policy extends to each Covered Person’s activities within and outside his/her duties at the Company. Each Covered Person must read and retain this statement.•Failure to comply with this Policy may cause a Covered Person to be subject to disciplinary action. WHAT IS INSIDER TRADING? The term “insider trading” generally is used to refer to trading while in possession of material non-public information (whether or not one is an “insider”), and/or to communications ofmaterial non-public information to others. The law in this area is generally understood to prohibit, among other things: •trading by an insider while in possession of material non-public information;•trading by a non-insider while in possession of material non-public information, where the information was disclosed to the non-insider in violation of an insider’s dutyto keep it confidential or the information was misappropriated;•trading while in possession of material non-public information concerning a tender offer; and•wrongfully communicating, or “tipping” material non-public information to others. THE INSIDER CONCEPT As a general guide for our directors, officers and employees, components of what amounts to “insider trading” are described below: Who is an insider? The concept of “insider” is broad. It includes officers, directors, trustees, and employees of a company. In addition, a person can be a “temporary insider” if he or she enters into aspecial confidential relationship in the conduct of a company’s affairs and is given access to information solely for the company’s purposes. A temporary insider can include, amongothers, a company’s attorneys, accountants, consultants, bank lending officers, and the employees of those organizations. What information is material? Trading on information that is “material” is prohibited. Information generally is considered “material” if: •there is a substantial likelihood that a reasonable investor would consider the information important in making an investment decision, or•the information is reasonably certain to have a substantial effect on the price of a company’s securities. Information that should be considered material includes: dividend changes, earnings estimates not previously disseminated, material changes in previously-released earnings estimates,significant merger or acquisition proposals or agreements, major litigation, liquidity problems, and extraordinary management developments. 2What information is non-public? Information is non-public until it has been effectively communicated to the market place. For example, information found in a report filed with the SEC or appearing in Dow Jones,Reuters, The Wall Street Journal, on Bloomberg, or in other publications of general circulation ordinarily would be considered public. In addition, in certain circumstances, informationdisseminated to certain segments of the investment community may be deemed “public”, for example, research communicated through institutional information dissemination servicessuch as First Call. The fact that research has been disseminated through such a service does not automatically mean that it is public. It takes time for information to become public. Theamount of time since the information was first disseminated ordinarily is a factor regarding whether the information is considered “public”. PENALTIES FOR INSIDER TRADING Penalties for insider trading are severe both for the individuals involved as well as for their employers. A person can be subject to some or all of the penalties listed below, even if he orshe does not personally benefit from the violation. Penalties may include: •Jail sentences;•Civil injunctions;•Civil treble (3x) damages;•Disgorgement of profits;•Criminal fines of up to three times the profit gained, or loss avoided, whether or not the person actually benefited; and•Fines for the employers or other controlling persons of up to the greater of $1 million or three times the amount of the profit gained or loss avoided. Clearly, it is in the Company’s and your best interests for the Company to put into place procedures to prevent improper trading by its insiders. PROCEDURES TO PREVENT INSIDER TRADING The following procedures have been established to aid in the prevention of insider trading. Every Covered Person must follow these procedures or risk sanctions, including dismissal,substantial personal liability, and criminal penalties. 3Questions to Ask Prior to trading in the Company’s securities, and if you think you may have material non-public information, ask yourself the following questions: •Is the information material? - Is this information that an investor would consider important in making an investment decision? Would you take it into account indeciding whether to buy or sell? Is this information that would affect the market price of the securities if generally disclosed?•Is the information non-public - To whom has this information been provided? Has it been effectively communicated to the marketplace? Has enough time gone by? Action Required If you are at all uncertain as to whether any information you have is “inside information”, you must: •Immediately report the matter to the Financial Reporting and Accounting Director;•Refrain from purchasing or selling the securities; and•Not communicate the information inside or outside the Company. After the employee and the Financial Reporting and Accounting Director have reviewed the issue and consulted with outside counsel to the extent appropriate, the Covered Person willbe instructed as to whether he/she may trade and/or communicate that information. Blackout Policy and Trading Window To ensure compliance with this Policy and applicable securities laws, the Company requires that all Covered Persons refrain from conducting transactions involving the purchase or saleof the Company’s securities other than during the period commencing at the open of trading on the second business day following the date of public disclosure of the Company’sfinancial results for a particular fiscal quarter or year, and continuing until the close of trading on the fourteenth (14th) day after the last day of the current fiscal quarter (the “TradingWindow”). The Trading Window is subject to periodic adjustment in the sole discretion of the Financial Reporting and Accounting Director. In addition, from time to time material non-public information regarding the Company may be pending. While such information is pending, the Company may impose a special “blackout”period during which the same prohibitions and recommendations shall apply. Even during the Trading Window, any person possessing material non-public information concerning the Company should not engage in any transactions in the Company’s securitiesuntil such information has been made public and absorbed by the market. 4Pre-Clearance of Trades All Covered Persons must refrain from trading in the Company’s securities, even during the Trading Window, without first complying with the Company’s “pre-clearance” process. Eachsuch person should contact the Company’s Financial Reporting and Accounting Director prior to commencing any trade. The Financial Reporting and Accounting Director will consultas necessary with senior management and/or counsel to the Company before clearing any proposed trade. The Financial Reporting and Accounting Director’s personal trading activitywill be reviewed by the Chief Financial Officer. Coverage This Policy applies not only to the Company’s shares, but also any other securities issued by the Company. QUESTIONS OR CONCERNS Any questions or concerns regarding this Policy should be directed to the Financial Reporting and Accounting Director, or, if such questions or concerns involve the FinancialReporting and Accounting Director, to the Chief Financial Officer. 5Exhibit 12.1CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICERI, Andreas Michalopoulos, certify that:1. I have reviewed this annual report on Form 20-F of Performance Shipping Inc. (the “Company”);2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of thecircumstances under which such statements were made, not misleading with respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results ofoperations and cash flows of the Company as of, and for, the periods presented in this report;4. The Company's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that materialinformation relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report isbeing prepared;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to providereasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accountingprinciples;(c) Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of thedisclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d) Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the period covered by the annual report that hasmaterially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and5. The Company's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors andthe audit committee of the Company's board of directors (or persons performing the equivalent functions):(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affectthe Company's ability to record, process, summarize and report financial information; and(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.Date: March 28, 2024 /s/ Andreas MichalopoulosAndreas MichalopoulosChief Executive Officer, Director and Secretary (Principal Executive Officer)Exhibit 12.2CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICERI, Anthony Argyropoulos, certify that:1. I have reviewed this annual report on Form 20-F of Performance Shipping Inc. (the “Company”);2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of thecircumstances under which such statements were made, not misleading with respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results ofoperations and cash flows of the Company as of, and for, the periods presented in this report;4. The Company's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that materialinformation relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report isbeing prepared;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to providereasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accountingprinciples;(c) Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of thedisclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d) Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the period covered by the annual report that hasmaterially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and5. The Company's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors andthe audit committee of the Company's board of directors (or persons performing the equivalent functions):(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affectthe Company's ability to record, process, summarize and report financial information; and(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.Date: March 28, 2024 /s/ Anthony ArgyropoulosAnthony ArgyropoulosChief Financial Officer (Principal Financial Officer)Exhibit 13.1 PRINCIPAL EXECUTIVE OFFICER CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 In connection with this Annual Report of Performance Shipping Inc. (the “Company”) on Form 20-F for the year ended December 31, 2023 as filed with the Securities and ExchangeCommission (the “SEC”) on or about the date hereof (the “Report”), I, Andreas Michalopoulos, Chief Executive Officer, Director and Secretary of the Company, certify, pursuant to 18U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1)the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request. Date: March 28, 2024 /s/Andreas MichalopoulosAndreas MichalopoulosChief Executive Officer, Director and Secretary (Principal Executive Officer)Exhibit 13.2PRINCIPAL FINANCIAL OFFICER CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 In connection with this Annual Report of Performance Shipping Inc. (the “Company”) on Form 20-F for the year ended December 31, 2023 as filed with the Securities and ExchangeCommission (the “SEC”) on or about the date hereof (the “Report”), I, Anthony Argyropoulos, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, asadopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1)the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request. Date: March 28, 2024 /s/ Anthony ArgyropoulosAnthony ArgyropoulosChief Financial Officer (Principal Financial Officer)Exhibit 15.1Consent of Independent Registered Public Accounting FirmWe consent to the incorporation by reference in the following Registration Statements:(1)Registration Statement (Form F-3 No. 333-271398) of Performance Shipping Inc.,(2)Registration Statement (Form F-3 No. 333-266946) of Performance Shipping Inc.,(3)Registration Statement (Form F-3 No. 333-237637) of Performance Shipping Inc., and(4)Registration Statement (Form F-3 No. 333-197740) of Performance Shipping Inc.;of our report dated March 28, 2024, with respect to the consolidated financial statements of Performance Shipping Inc. included in this Annual Report (Form 20-F) of PerformanceShipping Inc. for the year ended December 31, 2023./s/ Ernst & Young (Hellas) Certified Auditors Accountants S.A. Athens, GreeceMarch 28, 2024Exhibit 15.2CONSENT OF WATSON FARLEY & WILLIAMS LLPReference is made to the annual report on Form 20-F of Performance Shipping Inc. (the “Company”) for the year ended December 31, 2023 (the “Annual Report”) and the registrationstatements on Form F-3 (Registration No. 333-271398, Registration No. 333-266946, Registration No. 333-237637 and Registration No. 333-197740) of the Company, including theprospectuses contained therein (the “Registration Statements”). We hereby consent to (i) the filing of this letter as an exhibit to the Annual Report, which is incorporated by referenceinto the Registration Statements and (ii) each reference to us and the discussions of advice provided by us in the Annual Report under the section “Item 10. Additional Information-E.Taxation” and to the incorporation by reference of the same in the Registration Statements, in each case, without admitting we are “experts” within the meaning of the Securities Act of1933, as amended, or the rules and regulations of the U.S. Securities and Exchange Commission promulgated thereunder with respect to any part of the Registration Statements./s/ Watson Farley & Williams LLP Watson Farley & Williams LLP New York, New York March 28, 2024 Exhibit 97.1 PERFORMANCE SHIPPING INC. Policy for the Recovery of Erroneously Awarded Incentive Compensation Adopted Date: December 1, 2023 1.IntroductionThe Board of Directors (the “Board”) of Performance Shipping Inc. (the “Company”) has adopted this policy (the “Policy”), which provides for recoupment, otherwise referred to as“clawback,” of certain Erroneously Awarded Incentive Compensation from Covered Executives in the event of an Accounting Restatement resulting from material noncompliance withfinancial reporting requirements under the federal securities laws. This Policy is designed to comply with Section 10D, as implemented by Rule 10D-1, of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and is made in accordancewith the applicable listing rules (the “Nasdaq Rules”) of the Nasdaq Stock Market (“Nasdaq”). 2.Covered ExecutivesThis Policy applies to each individual who is (i) a current or former executive officer, as determined by the Committee in accordance with Section 10D and Rule 10D-1 of the Exchange Actand the Nasdaq Rules; (ii) a current or former employee who is classified by the Committee as an executive officer of the Company, which includes without limitation any of theCompany’s president, principal financial officer, principal accounting officer (or if there is no such accounting officer, the controller), vice president in charge of a principal business unit,division or function (such as sales, administration or finance), and any other person who performs policy-making functions for the Company (including executive officers of a parent orsubsidiary if they perform policy-making functions for the Company); and (iii) an employee who may from time to time be deemed subject to this Policy by the Committee (“CoveredExecutives”). For the avoidance of doubt, the identification of an executive officer for purposes of this Policy shall include each executive officer who is or was identified pursuant toItem 401(b) of Regulation S-K or Item 6.A of Form 20-F, as applicable. This Policy shall be binding and enforceable against all Covered Executives, as described herein, and, to the extent required by applicable law or guidance from the United StatesSecurities and Exchange Commission (the “SEC”) or Nasdaq, Covered Executives’ beneficiaries, heirs, executors, administrators or other legal representatives. 3.Recovery of Erroneously Awarded Incentive CompensationIn the event the Company is required to prepare an Accounting Restatement of its financial statements, the Compensation Committee (if composed entirely of independent directors, orin the absence of such a committee, a majority of independent directors serving on the Board) (the “Committee”) will determine the amount of Erroneously Awarded IncentiveCompensation (defined below) and the Company will promptly provide each Covered Executive who received Erroneously Awarded Incentive Compensation with a written noticecontaining the amount of Erroneously Awarded Incentive Compensation received by such Covered Executive and shall require the forfeiture, repayment, or return, as applicable, of notless than the full amount of any Erroneously Awarded Incentive Compensation received or deemed received by any Covered Executive, except to the extent determined impracticable inSection 7 below. (a) Cash Awards. With respect to cash awards, the Erroneously Awarded Incentive Compensation is the difference between the amount of the cash award (whetherpayable as a lump sum or over time) that was received and the amount that should have been received applying the restated Financial Reporting Measure. (b) Cash Awards Paid from Bonus Pools. With respect to cash awards paid from bonus pools, the Erroneously Awarded Incentive Compensation is the pro rata portion ofany deficiency that results from the aggregate bonus pool that is reduced based on applying the restated Financial Reporting Measure. (c) Equity Awards. With respect to equity awards, if the shares, options or SARs are still held at the time of recovery, the Erroneously Awarded Incentive Compensation isthe number of such securities received in excess of the number that should been received applying the restated Financial Reporting Measure (or the value in excess of that number). Ifthe options or SARs have been exercised, but the underlying shares have not been sold, the Erroneously Awarded Incentive Compensation is the number of shares underlying theexcess options or SARs (or the value thereof). If the underlying shares have already been sold, then the Committee and/or Board shall determine the amount which most reasonablyestimates the Erroneously Awarded Incentive Compensation. (d) Compensation Based on Stock Price or Total Shareholder Return. For Incentive Compensation based on (or derived from) stock price or total shareholder return, wherethe amount of Erroneously Awarded Incentive Compensation is not subject to mathematical recalculation directly from the information in the applicable Accounting Restatement, (i) theamount shall be determined by the Committee and/or Board based on a reasonable estimate of the effect of the Accounting Restatement on the stock price or total shareholder returnupon which the Incentive Compensation was received; and (ii) the Committee and/or Board shall maintain documentation of such determination of that reasonable estimate and providesuch documentation to the Exchange in accordance with applicable listing standards. Incentive Compensation shall be deemed “received” in the Company’s fiscal period during which the Financial Reporting Measure specified in the Incentive Compensation award isattained, even if (a) the payment or grant of the Incentive Compensation to the Covered Executive occurs after the end of that period or (b) the Incentive Compensation remainscontingent and subject to further conditions thereafter, such as time-based vesting. Any recovery under this Policy shall be made reasonably promptly and in accordance with the Exchange Act and Nasdaq Rules. 4.Incentive Compensation and Financial Reporting MeasuresFor purposes of this Policy: 2“Accounting Restatement” means an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under the securitieslaws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements (a “Big R”restatement), or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period (a “little r” restatement). For theavoidance of doubt, in no event will a restatement of the Company’s financial statements that is not due in whole or in part to the Company’s material noncompliance with any financialreporting requirement under applicable law (including any rule or regulation promulgated thereunder) be considered an Accounting Restatement under this Policy. For example, arestatement due exclusively to a retrospective application of any one or more of the following will not be considered an Accounting Restatement under this Policy: (i) a change inaccounting principles; (ii) revision to reportable segment information due to a change in the structure of the Company’s internal organization; (iii) reclassification due to a discontinuedoperation; (iv) application of a change in reporting entity, such as from a reorganization of entities under common control; (v) adjustment to provisional amounts in connection with aprior business combination (but only if the Company is an International Financial Reporting Standards (“IFRS”) filer); and (vi) revision for stock splits, reverse stock splits, stockdividends or other changes in capital structure. “Financial Reporting Measures” are measures that are determined and presented in accordance with the accounting principles used in preparing the Company’s financialstatements, and all other measures that are derived wholly or in part from such measures. Share price and total shareholder return (and any measures that are derived wholly or in partfrom share price or total shareholder return) shall, for purposes of this Policy, be considered Financial Reporting Measures. For the avoidance of doubt, a Financial Reporting Measureneed not be presented in the Company’s financial statements or included in a filing with the SEC. “Incentive Compensation” means any compensation that is granted, earned, or vested based wholly or in part on the attainment of a Financial Reporting Measure. For purposes of this Policy, specific examples of Incentive Compensation include, but are not limited to: (a) Non-equity incentive plan awards that are earned based, wholly or in part, based on satisfaction of a Financial Reporting Measure performance goal; (b) Bonuses paid from a “bonus pool,” the size of which is determined, wholly or in part, based on satisfaction of a Financial Reporting Measure performance goal; (c) Other cash awards based on satisfaction of a Financial Reporting Measure performance goal; (d) Restricted stock, restricted stock units, performance share units, stock options and SARs that are granted or become vested, wholly or in part, on satisfaction of aFinancial Reporting Measure performance goal; and 3(e) Proceeds received upon the sale of shares acquired through an incentive plan that were granted or vested based, wholly or in part, on satisfaction of a FinancialReporting Measure performance goal. For purposes of this Policy, Incentive Compensation excludes: (a) Any base salaries (except with respect to any salary increases earned, wholly or in part, based on satisfaction of a Financial Reporting Measure performance goal); (b) Bonuses paid solely at the discretion of the Committee or Board that are not paid from a “bonus pool” that is determined by satisfying a Financial Reporting Measureperformance goal; (c) Bonuses paid solely upon satisfying one or more subjective standards and/or completion of a specified employment period; (d) Non-equity incentive plan awards earned solely upon satisfying one or more strategic measures (e.g., consummating a merger or divestiture) or operational measures(e.g., completion of a project, [acquiring a specified number of vessels,] attainment of a certain market share); and (e) Equity awards that vest solely based on the passage of time and/or satisfaction of one or more non-Financial Reporting Measures (e.g., a time-vested award, includingtime-vesting stock options or restricted share rights). “Incentive Compensation Eligible for Recovery” means Incentive Compensation received by a Covered Executive: (a) after beginning service as a Covered Executive; (b) who served as a Covered Executive at any time during the performance period for the applicable Incentive Compensation (regardless of whether such individual isserving as a Covered Executive at the time the Erroneously Awarded Incentive Compensation is required to be repaid); (c) while the Company had a class of securities listed on a national securities exchange or a national securities association; (d) during the applicable Recovery Period; and (e) on or after the effective date of the applicable Nasdaq Rules (i.e., October 2, 2023). “Recovery Period” means, with respect to any Accounting Restatement, the three (3) completed fiscal years of the Company immediately preceding the Restatement Date and, ifthe Company changes its fiscal year, any transition period of less than nine months within or immediately following those three (3) completed fiscal years.4“Restatement Date” means the earlier to occur of (i) the date the Board, a committee of the Board or the officers of the Company authorized to take such action if Board action isnot required, concludes, or reasonably should have concluded, that the Company is required to prepare an Accounting Restatement, or (ii) the date a court, regulator or other legallyauthorized body directs the Company to prepare an Accounting Restatement. 5.Erroneously Awarded Incentive Compensation – Amount Subject to RecoveryThe amount to be recovered will be, with respect to each Covered Executive in connection with an Accounting Restatement, the amount of the Incentive Compensation Eligible forRecovery based on the erroneous data that exceeds the Incentive Compensation Eligible for Recovery that otherwise would have been received by the Covered Executive had it beendetermined based on the restated results (calculated without regard to any taxes paid), as determined by the Committee (the “Erroneously Awarded Incentive Compensation”). For Incentive Compensation based on (or derived from) stock price, total shareholder return, or similar metric where the amount of Erroneously Awarded Incentive Compensation is notsubject to mathematical recalculation directly from the information in the applicable Accounting Restatement, the amount shall be determined by the Committee based on a reasonableestimate of the effect of the Accounting Restatement on the stock price, total shareholder return, or other such metric upon which the Incentive Compensation was received. TheCompany shall maintain documentation of the determination of such reasonable estimate, and, if required by applicable law, regulation or Nasdaq Rule, provide the relevantdocumentation to Nasdaq. The Company shall promptly provide each Covered Executive with a written notice containing the amount of any Erroneously Awarded Incentive Compensation and a demand forrepayment or return of such compensation, as applicable. 6.Method of RecoveryThe Committee will determine, in its sole discretion, the method for recouping Erroneously Awarded Incentive Compensation hereunder which may include, without limitation, any of thefollowing or combination thereof: (a) requiring reimbursement of cash Incentive Compensation Eligible for Recovery previously paid; (b) seeking recovery of any gain realized on the vesting, exercise, settlement, sale, transfer, or other disposition of any equity-based awards; (c) offsetting the recouped amount from any compensation otherwise owed by the Company to the Covered Executive; (d) cancelling outstanding vested or unvested equity awards; and/or (e) taking any other remedial and recovery action permitted by law, as determined by the Committee. 5Except as set forth in Section 7 below, in no event may the Company accept an amount that is less than the amount of Erroneously Awarded Incentive Compensation in satisfaction of aCovered Executive’s obligations hereunder. To the extent that a Covered Executive fails to repay all Erroneously Awarded Incentive Compensation to the Company when due, theCompany shall take all actions reasonable and appropriate to recover such Erroneously Awarded Incentive Compensation from the applicable Covered Executive. The applicableCovered Executive shall be required to reimburse the Company for any and all expenses reasonably incurred (including legal fees) by the Company in recovering such ErroneouslyAwarded Incentive Compensation in accordance with the immediately preceding sentence. To the extent that the Covered Executive has already reimbursed the Company for any Erroneously Awarded Incentive Compensation received under any duplicative recoveryobligations established by the Company or applicable law, it shall be appropriate for any such reimbursed amount to be credited to the amount of Erroneously Awarded IncentiveCompensation that is subject to recovery under this Policy. To the extent that the Erroneously Awarded Incentive Compensation is recovered under a foreign recovery regime, therecovery would meet the obligations of Rule 10D-1. 7.ImpracticalityThe Company shall recover any Erroneously Awarded Incentive Compensation in accordance with this Policy, unless such recovery would be duplicative of compensation recovered bythe Company from the Covered Executive pursuant to Section 304 of the Sarbanes-Oxley Act or would be impracticable, as determined by the Committee in accordance with Rule 10D-1of the Exchange Act and the Nasdaq Rules, and any of the following conditions are satisfied: (a) The Committee has determined that the direct expenses paid to a third party to assist in enforcing the Policy would exceed the amount to be recovered. Before makingthis determination, the Company must make a reasonable attempt to recover the Erroneously Awarded Incentive Compensation, documented such attempt(s) and provide suchdocumentation to Nasdaq; or (b) Recovery would violate home country law where that law was adopted prior to November 28, 2022, provided that, before determining that it would be impracticable torecover any amount of Erroneously Awarded Incentive Compensation based on violation of home country law, the Company has obtained an opinion of home country counsel,acceptable to Nasdaq, that recovery would result in such a violation and a copy of the opinion is provided to Nasdaq; or (c) Recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of the Company, to fail to meet therequirements of Section 401(a)(13) or Section 411(a) of the Internal Revenue Code of 1986, as amended, and regulations thereunder. 68.No IndemnificationThe Company shall not insure or indemnify any Covered Executive against the loss of any Erroneously Awarded Incentive Compensation that is repaid, returned or recovered inaccordance with the terms of this Policy, or for any claims relating to the Company’s enforcement of any of its rights under this Policy. The Company shall not enter into any agreement or arrangement that exempts any Incentive Compensation that is granted, paid or awarded to any Covered Executive from theapplication of this Policy or that waives the Company’s right to recover any Incentive Compensation Eligible for Recovery, and this Policy shall supersede any such agreement (whetherentered into before, on or after the Effective Date of this Policy). While a Covered Executive may purchase a third-party insurance policy to fund potential recovery obligations underthis Policy, the Company may not pay or reimburse the Covered Executive for premiums for such an insurance policy. 9.Other Recovery RightsThe Committee intends that this Policy will be applied to the fullest extent required by applicable law. Any employment agreement, equity award agreement, compensatory plan or anyother agreement or arrangement with a Covered Executive shall be deemed to include, as a condition to the grant of any benefit thereunder, an agreement by the Covered Executive toabide by the terms of this Policy. The Committee may require that any employment agreement, equity award agreement, or similar agreement entered into on or after the Effective Date shall, as a condition to the grant ofany benefit thereunder, require a Covered Executive to agree to abide by the terms of this Policy. Any right of recovery under this Policy is in addition to, and not in lieu of, any other remedies or rights of recovery that may be available to the Company under applicable law, regulationor rule or pursuant to the terms of any similar policy in any employment agreement, equity award agreement, or similar agreement and any other legal remedies available to the Company. 10.Disclosure RequirementsThe Company shall file all disclosures with respect to this Policy required by applicable SEC filings and rules. 11.InterpretationThe Committee is authorized to interpret and construe this Policy and to make all determinations necessary, appropriate, or advisable for the administration of this Policy, and for theCompany’s compliance with Nasdaq Rules, Section 10D, Rule 10D-1 and any other applicable law, regulation, rule or interpretation of the SEC or Nasdaq promulgated or issued inconnection therewith. It is intended that this Policy be interpreted in a manner that is consistent with the requirements of Section 10D and Rule 10D-1 of the Exchange Act and anyapplicable rules or standards adopted by the SEC or Nasdaq. 12.Amendment and TerminationThe Committee may amend or terminate this Policy from time to time in its discretion; provided that, no amendment or termination of this Policy shall be effective if such amendment ortermination would cause the Company to violate any applicable federal securities laws, SEC rule or Nasdaq Rule. 713.Effective DateThis Policy shall be effective as of December 1, 2023 (the “Effective Date”) and shall apply to Incentive Compensation that is approved, awarded or granted to Covered Executives on orafter October 2, 2023. 14.Policy AdministrationThis Policy shall be administered by the Committee, and any determinations made by the Committee shall be final and binding on all affected individuals. 8ANNEX A Performance Shipping Inc. Policy for the Recovery of Erroneously Awarded Incentive Compensation Acknowledgement Form 9

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