UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 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 1934
For the fiscal year ended December 31, 2025
 
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 001-35025

PERFORMANCE 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, GR
Tel: + 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 class
Trading Symbol(s)
Name of each exchange on which registered
Common shares, $0.01 par value, including the Preferred stock purchase rights
“PSHG”
The Nasdaq Stock Market LLC

Securities 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, 2025, there were 12,432,158 of the registrant’s common shares, par value $0.01, outstanding, 50,726 shares of the registrant’s Series B Convertible Cumulative Perpetual Preferred Stock outstanding and 1,423,912 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  ☒ No
If 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  ☒ No
Note-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 under those 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 (or for 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  ☐ No
Indicate 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 this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,” “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 extended transition 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 April 5, 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 reporting under 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 an error 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’s executive 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
the International Accounting Standards Board ☐
Other  ☐

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 18
If 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 the distribution of securities under a plan confirmed by a court. N/A

☐ Yes  ☐ No
TABLE OF CONTENTS

  5
Item 1.
 5
Item 2.
 5
Item 3.
 5
Item 4.
 49
Item 4A.
 73
Item 5.
 74
Item 6.
 90
Item 7.
 95
Item 8.
 96
Item 9.
 98
Item 10.
 98
Item 11.
 108
Item 12.
 109
  109
Item 13.
 109
Item 14.
 109
Item 15.
 109
Item 16.
 110
Item 16A.
 110
Item 16B.
 110
Item 16C.
 110
Item 16D.
 111
Item 16E.
 111
Item 16F.
 111
Item 16G.
111
Item 16H.
 112
Item 16I.
 112
Item 16J.
 114
Item 16K.
 114
  115
Item 17.
 115
Item 18.
 115
Item 19.
 115

2
FORWARD-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 Litigation Reform 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 other statements, 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 this cautionary statement in connection with this safe harbor legislation. This annual report 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 in this document, the words “believe,” “anticipate,” “intend,” “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 mean that a statement is not forward-looking.

The forward-looking statements in this annual report are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, our management’s examination of historical operating trends, data contained in its records, and other data available from third parties. Although the Company believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant risks, uncertainties and contingencies which are difficult or impossible to predict 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 these risks 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 many important factors that could cause actual results to differ materially from those contemplated.

3
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 documents incorporated 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 are not 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 or regional oil production, demand, consumption, and storage; changes in our operating expenses, including bunker prices, crew costs, drydocking, and insurance costs; our future operating or financial results; availability of financing and refinancing; changes to our financial condition and liquidity, including our ability to pay amounts that we owe and obtain additional financing to fund capital expenditures, acquisitions, and other general corporate activities; our ability to take delivery of, integrate into our fleet, and employ any newbuilding vessels we may acquire or order in the future and the ability of shipyards to deliver vessels on a timely basis; 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 to pay dividends to holders of our preferred shares and common shares; our ability to comply with additional costs, expenses and risks related to our environmental, social and governance policies; potential liability from pending or future litigation and potential costs due to environmental damage and vessel collisions; 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, or FCPA, or other applicable regulations relating to bribery; the impact of the Secured Overnight Financing Rate, or SOFR, on interest rates of our debt; general economic conditions and conditions in the oil industry; effects of new products and new technology 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 obtain indemnities 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 Marshall Islands 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 by regulatory authorities and the expected costs thereof; general domestic and international political conditions or events, including “trade wars,” acts by terrorists, acts of piracy on ocean-going vessels, or other hostilities, including the war between Russia and Ukraine, the war between Israel and Hamas, the war between the U.S. and Iran and between Israel and Iran, the U.S. and China, the Houthis crisis in and around the Red Sea, current instability in Venezuela and Iran and potential tensions between the U.S. and Greenland, Denmark, the European Union (“EU”), or Venezuela; the outbreak, length, and severity of public health threats, epidemics and pandemics and other disease outbreaks and governmental responses thereto and any resultant impact on the demand for seaborne transportation of petroleum and other types of products and the condition of the financial markets thereafter; 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. The Company 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 the Company’s security holders, and in other written materials. The Company also cautions that assumptions, expectations, projections, intentions, and beliefs about future events may, and often 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 in this report, whether as a result of new information, future events, or otherwise, except as required by law.

4
PART 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.

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 and ownership of our shares. The occurrence of any of the risks and events described in this section could significantly and negatively affect our business, financial condition, operating results, or the trading price of our common shares.

Summary 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 annual report 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 loss upon 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.

5

 •
Increases in 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, labor interruptions 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, which may 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.

•
Our financial results may be adversely affected by the outbreaks of epidemic and pandemic diseases and the related governmental responses thereto.

•
Increasing growth of electric vehicles 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 governmental authorities, 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 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 one or more of 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.

•
We are a “foreign private issuer,” which could make our common shares less attractive to some investors or otherwise harm our stock price

•
Recent actions by the U.S. and China imposing new port fees could have a material adverse effect on our operations and financial results.

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 financial covenants under our bonds or 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 substantial competition.

•
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 adversely affect our business.

•
Delays or defaults by the shipyards in the construction of newbuildings could increase our expenses and diminish our net income 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.

•
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.

•
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 and expertise.

•
Technical innovation and technical quality and efficiency requirements from our customers could reduce our charter hire income and the value of our vessels.

6

 •
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 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 our management 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 exert considerable 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 of interest and hinder our ability to operate successfully.

•
We have been subject to litigation and we may be subject to similar or other litigation in the future.

•
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 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 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 classified as a “passive foreign investment company,” which could result in 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 onward consumption on our vessels.

•
Climate change and greenhouse gas restrictions may adversely impact our operations and markets.

•
Increasing regulation as well as 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 would negatively 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 of the 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 material adverse 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 market price of our common shares to decline.

•
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 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 you to resell our common shares.

7

 •
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 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 shares upon 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 following the 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 B Preferred 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 and Series 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 B Preferred 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 Preferred Shares 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 and make dividend payments.

•
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.

•
As 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 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 the effect of discouraging, delaying, or preventing a merger or acquisition, which could adversely affect the value of our securities.

Industry 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, the degree 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 into account input from brokers around the world regarding crude oil fixtures for various routes and oil tanker vessel sizes, has been volatile. In 2025, the BDTI reached a high of 1,468 and a low of 799. The Baltic Clean Tanker Index, or BCTI, a comparable index to the BDTI but for petroleum product fixtures, has similarly been volatile. In 2025, the BCTI reached a high of 885 and a low of 534. Although the BDTI and BCTI were 3,705 and 1,966, respectively, as of March 31, 2026 , there can be no assurance that the crude oil and petroleum products charter market 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 on Russian exports of crude oil and petroleum products, and the current instability in Venezuela and Iran, and there is great uncertainty about the future impact of those events. Additionally, the war between Israel and Hamas and the war between Israel and Iran and between the United States and Iran have resulted in increased tensions in the Middle East region, including missile attacks by the Houthis on vessels in the Red Sea and Gulf of Aden and potentially prolonged disruption of shipping through the Strait of Hormuz, a waterway essential to the shipment of crude oil and refined petroleum. Political, economic, and social instability in Venezuela and the resultant sanctions or other measures imposed in response, including the on-going U.S. campaign of seizing Venezuela-linked oil tankers and potential further U.S. military and political intervention, may disrupt the global tanker industry. Such circumstances have had and could in the future result in 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 oil and 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.

8
Currently, all our vessels are employed on short- and medium-term time charters. Changes in spot rates and time charter rates can affect the revenues we receive from operations in the event our charterers default or 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 the expiration 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, economic conditions 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 to allow 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 are entered into at charter rates substantially below the existing charter rates or on terms otherwise less favorable compared to existing contract terms, our revenues and profitability could be 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 bonds or loan agreements. A decline in charter hire rates will also likely cause the value of our vessels to decline.

Fluctuations 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 other liquids 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 in the tanker industry conditions are also unpredictable.

The factors that influence demand for tanker vessel capacity include, without limitation:


 •
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 in international trade, including, “trade wars”, national oil reserve policies, fluctuations in industrial and agricultural production, wars or other armed conflicts and work stoppages;


•
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 are transported 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 trade patterns;


•
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;

9

 •
increases in the production of oil in areas linked by pipelines to consuming areas, the construction or expansion of new or existing pipelines or railways or conversion of existing non-oil pipelines to oil pipelines;


•
increases in the production of oil Venezuela and other oil producing countries or areas;


•
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 wars between Russia and Ukraine and between Israel and Hamas; the war between Israel and Iran and between the U.S. and Iran; the Houthi crisis in and around the Red Sea, on-going political, economic, and social instability in Venezuela and Iran and potential tensions between the U.S. and Greenland, Denmark, or Venezuela.

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;


•
the price of steel;


•
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;


•
technological advances in the design, capacity, propulsion technology and fuel consumption efficiency of vessels;

10

 •
changes in national or international regulations that may effectively cause reductions in the carrying capacity of vessels or early obsolescence of tonnage;


•
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 future growth 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’ capital expenditure 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 effect on 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 older and 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 natural gas 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, the supply 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 April 2026, newbuilding orders have been placed for an aggregate of approximately 21.0% of the existing global tanker fleet, with the deliveries weighted towards 2028 and beyond If the capacity of new tanker vessels delivered exceeds 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 vessel capacity 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 value of 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 bonds or 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 available for worldwide trade. If this volatility persists, we may not be able to find profitable charters for our vessels, or other vessels we may acquire, which could have a material adverse effect on our business, results of operations, cash flows, financial condition, ability to pay dividends, and compliance with current or future covenants with respect to any of our financing arrangements.

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 often precede 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 United States. 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 will affect any spot market-related rates that we may receive.

11
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 and uncertainties, such as those resulting from the current and future conditions in the global financial markets, could adversely affect our results of operations, financial condition and ability 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 credit markets 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 conditions also 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 cost for 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 financial institutions 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 the worldwide economy could have a material adverse effect on our business, results of operations, financial condition, and ability to pay dividends.

The world economy continues to face a number of challenges, including the wars between Ukraine and Russia and Israel and Hamas, political, economic, and social instability in Venezuela and the U.S. responses thereto—including vessel seizures and military and political intervention, war between the U.S. and Israel and Iran and tensions in and around the Red Sea, and Russia and North Atlantic Treaty Organization (“NATO”) country tensions, China and Taiwan disputes, United States and China trade relations, instability between Iran and the West, hostilities between the United States and North Korea, Venezuela, Greenland and Denmark, 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, epidemics or pandemics and banking crises or failures. See also “—Our financial results may be adversely affected by the outbreaks of epidemic and pandemic diseases and the related governmental responses thereto.” 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 following the 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 and around the Red Sea or the disruption of shipping through the Strait of Hormuz. The impact of these events on the world economy is uncertain. Such events may have unpredictable consequences and contribute to instability in the global economy or cause a decrease in worldwide demand for certain goods 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 a development 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 Russia affected 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 petroleum products 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 and Hamas 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 the tanker 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 the global economy or cause a decrease in worldwide demand for certain goods and, thus, shipping. See also “—Political instability, terrorist or other attacks, war, and international hostilities could affect our results of operations and financial condition.”

In Europe, concerns regarding the possibility of sovereign debt defaults by the EU member countries, although generally alleviated, have in the past disrupted financial 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 the EU (“Brexit”), further increased the risk of additional trade protectionism. Brexit or similar events in other jurisdictions, could impact global markets, including foreign exchange and securities markets; any resulting changes in currency exchange rates, tariffs, treaties and other regulatory matters could in turn adversely impact our business, operating results, cash flows and financial condition.

12
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 a significant 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 mainly caused by the country’s zero-COVID policy and strict lockdowns. For the year ended December 31, 2025, China reported that its GDP growth rate recovered to 5.0%. Looking ahead, China’s economic growth is expected to remain steady, with forecasts projecting a GDP growth rate of around 5.0% for 2026. Although the Chinese government has implemented economic stimulus measures, 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 the implementation of these laws and policies by local authorities, including with regards to tax matters and environmental concerns (such as achieving carbon neutrality), could affect vessels 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 are generally active in ship financing, and could have a material adverse effect on our business, operating results, cash flows and financial condition.

Furthermore, governments have, and may continue to, turn to trade barriers to protect their domestic industries against foreign imports, thereby depressing shipping demand. In April 2025, the U.S. government announced a baseline tariff of 10% on products imported from all countries and an additional individualized reciprocal tariff on the countries with which the United States has the largest trade deficits. Many of these reciprocal tariffs went into effect in August 2025. Some of these tariffs, including the 10% baseline tariff, were imposed under the International Emergency Economic Powers Act (the “IEEPA”). In February 2026, the Supreme Court of the United States struck down the tariffs imposed under the IEEPA. Although the IEEPA tariffs were ruled illegal, tariffs imposed through other measures still remain in effect. Further, President Trump, using the Trade Act of 1974, has implemented a temporary, 150-day, 10% tariff on all imports. The tariff imposed under the Trade Act of 1974 is set to expire on July 24, 2026, and the Trump administration may increase the tariff to 15%. The scope and durability of current and future tariff measures are uncertain. Increased tariffs by the United States have led and may continue to lead to the imposition of retaliatory tariffs by foreign jurisdictions. Additionally, the U.S. government has announced and rescinded multiple tariffs on several foreign jurisdictions, which has increased uncertainty regarding the ultimate effect of the tariffs on economic conditions. Although we are continuing to monitor the economic effects of such announcements, as well as opportunities to mitigate their related impacts, costs and other effects associated with the tariffs remain uncertain.

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 time required 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, voyage costs 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 make timely 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. See also “—Recent actions by the U.S. and China imposing new port fees could have a material adverse effect on our operations and financial results.”

Credit 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. federal government 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 interest rates, 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 and the 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 any future financial arrangements we may enter into contemplating borrowing from the public and/or private equity and debt markets. Many lenders have increased interest rates, enacted tighter lending standards, refused to refinance existing debt at all or on terms similar to current debt, reduced (or in some cases ceased to provide) funding to borrowers and other market 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 cannot be 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 may be unable to complete vessel acquisitions, deliveries of any newbuilding vessels, take advantage of business opportunities or respond to competitive pressures.

13
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 upon disposal 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 from other 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 of newbuildings; governmental or other regulations; and the need to upgrade secondhand and previously owned tanker vessels as a result of charterer requirements, technological advances 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, they generally 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 our business, 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 market conditions, we may incur a loss that could adversely affect our operating results. In 2025, 2024, and 2023 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 affect our 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 tanker has fluctuated widely within a range of $18 million to $60 million, and the value of a ten-year-old Suezmax tanker has fluctuated widely within a range of $24 million to $68 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, which depend 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 September 11, 2001 and 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. The costs 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.

Increases in 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 bear the 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 may adversely 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, including geopolitical developments, supply of and demand for crude oil and natural gas, actions by OPEC, and other oil and natural gas producers, the imposition of new regulations adopted by the International Maritime Organization, or IMO, war and unrest in oil producing countries and regions, regional production patterns, and environmental concerns and regulations. While fuel prices remained generally lower in 2025 as compared to 2024, fuel has been and may again become much more expensive, including as a result of reductions of carbon emissions due to new regulations adopted by the IMO, which may reduce the profitability and competitiveness of our business. Other future regulations may have a similar impact.


14
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 a vessel 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 of Life 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 under which 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 special survey, 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 of operations and financial condition.

We 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 and regulations 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 disposal of 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, or OPA, requirements of the U.S. Coast Guard (“USCG”) and the U.S. Environmental Protection Agency, the U.S. Clean Air Act of 1970 (including its amendments of 1977 and 1990, or CAA), the U.S. Clean Water Act, or CWA, and the U.S. Maritime Transportation Security Act of 2002, and regulations of the IMO, including the International Convention on Civil Liability for Oil Pollution Damage of 1969, or the CLC, the International Convention for the Prevention of Pollution from Ships of 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, the International Convention on Load Lines of 1966, or the LL Convention, the International Convention of Civil Liability for Bunker Oil Pollution Damage, or the Bunker Convention, and Chapter IX of the SOLAS Convention, or the International Safety Management Code for the Safe Operation of Ships and Pollution Prevention, or the ISM Code. Because such conventions, laws, and regulations 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 own or 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 may materially adversely affect our operations. Government regulation of vessels, particularly in the areas of safety and environmental requirements, continues to change, requiring us to incur 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 meeting new 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 with respect to our operations. Our failure to maintain necessary permits, licenses, certificates, approvals, or financial assurances could require us to incur substantial costs or temporarily suspend 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 or restrictions, 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 certain ports. Under local, national, and foreign laws, as well as international treaties and conventions, we could incur material liabilities, including for cleanup obligations and natural resource damages, 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 to personal 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.

15
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 could disrupt our business.

Our success will depend largely on our ability and on the ability of Performance Shipping Management Inc. (previously known as Unitized Ocean Transport Limited, or UOT), our wholly-owned subsidiary, which acts as our in-house manager, to attract and retain highly skilled and qualified personnel. In crewing our vessels, we require technically skilled employees with specialized training who can perform physically demanding 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 could have a material adverse effect on our business, results of operations, cash flows, and financial condition. Any inability we or our in-house manager experience in the future to hire, train, and retain a sufficient 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, industrial action 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 of operations, 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 adversely affect 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 time resulted 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, the payment of ransoms, environmental damage, higher insurance rates, damage to our customer relationships, and market disruptions, delay, or rerouting, which may also subject us to litigation. 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 health measures, 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, the operation of tanker vessels has unique operational risks associated with the transportation of oil. An oil spill may cause significant environmental damage and the associated costs could 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 a terrorist attack, collision, or other cause, due to the high flammability and high volume of the oil transported in tanker vessels.

If 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. We may 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 of these repairs, may adversely affect our business and financial condition. In addition, space at drydocking facilities is sometimes limited and not all drydocking facilities are conveniently located. 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 financial condition. 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 safeguard our 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 penalties against us. It is possible that changes to inspection procedures could impose additional financial and legal obligations on us. Furthermore, changes to inspection procedures could also impose 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 or developments may have a material adverse effect on our business, results of operations, cash flows, financial condition, and available cash.

16
Political instability, terrorist or other attacks, war, international hostilities and public health threats can affect the tanker industry, which may adversely 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 adversely affected by changing economic, political, and governmental conditions in the countries and regions in which our vessels or other vessels we may acquire are employed or registered. Moreover, we operate in a sector of the economy that is likely to be adversely impacted by the effects of political uncertainty and armed conflicts, including the wars between Ukraine and Russia, between Israel and Hamas, Hezbollah and Iran, the war between the U.S. and Iran and Israel and Iran and between Russia and NATO, China and Taiwan disputes, U.S. and China trade relations, instability between Iran and the West, hostilities between the U.S. and North Korea, Greenland, Denmark or Venezuela, 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 transiting the 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 (or threats 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 and international 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 the energy 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, among other countries, have implemented unprecedented economic sanctions and other penalties against certain persons, entities, and activities connected to Russia, including removing Russian-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 increased inflation 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 that such tensions could adversely affect our business, financial condition, operating results, and cash flows. Moreover, we will be subject to additional insurance premiums in case we transit 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 financial condition 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 be negatively affected since our operations are dependent on the success and economic viability of our counterparties.

On January 3, 2026, the U.S. military captured Venezuelan president Nicolás Maduro in a special military operation and replaced him with Venezuela’s vice president, Delcy Rodríguez. Under interim president Rodríguez’s administration, new sweeping legislation has granted foreign oil companies greater operational control over oil production ventures, reduced the royalties and taxes that they pay to Venezuela’s government, and allowed companies to resolve disputes in international venues rather than in Venezuela’s legal system. Additionally, beginning in December 2025, the U.S. has carried out an on-going campaign of seizing and taking control of Venezuelan-linked oil tankers. It remains uncertain what the geopolitical and economic impacts of U.S. measures to control the production, refining, and global distribution of Venezuela's oil products will be. Further, the future extent of the U.S. involvement in Venezuela’s government and oil industry is unclear. While we are monitoring these developments closely, these circumstances lead to increased uncertainties, the effects of which on our operations and financial conditions, as well as global oil supply and demand, are difficult if not impossible to predict.
 
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, or other 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 NATO countries have been supplying Ukraine with military aid. U.S. officials have also warned of the increased possibility of Russian cyberattacks, which could disrupt the 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 countries and 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, financial condition, operating results, and cash flows.

17
The Russian Foreign Harmful Activities Sanctions program includes prohibitions on the import of certain Russian energy products into the United States, including crude oil, petroleum, petroleum fuels, oils, liquefied natural gas and coal, 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 have also prohibited a variety 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 the maritime 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 when the 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 attestation process 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 cap policy 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 affecting our business.

Furthermore, the intensity and duration of the war between Israel and Hamas is difficult to predict and its impact on the world economy and our industry is uncertain. Beginning in late 2023, vessels in the Red Sea and Gulf of Aden have been subject to attempted hijackings and attacks by drones and projectiles characterized by Houthi 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, incurring greater shipping costs and delays. For vessels transiting the region, war risk premia have increased substantially, and should these attacks continue, we could similarly experience a significant increase in our insurance costs and we may not be adequately insured to cover losses from these incidents, however since all our vessels are currently on time charters or pool arrangements any such increase in war premiums should be paid by our current time charterers. While much uncertainty remains regarding the global impact of the 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 could adversely affect our business, financial conditions, operating results, and cash flows.

On February 28, 2026, the United States and Israel launched strikes against Iran, killing Iran’s supreme leader Ayatollah Khamenei. In retaliation, Iranian missiles and drones targeted Israel and a number of countries that host US military bases-including Bahrain, the United Arab Emirates, Kuwait, Qatar and Saudi Arabia-and Hezbollah fired projectiles at Israel. While there is significant uncertainty about the duration of the war in Iran, the White House has stated that it may be a protracted engagement. These events have destabilized the region and may lead to significant disruptions across all sectors of the shipping industry. Further, shipping through the Strait of Hormuz, a waterway essential to the shipment of crude oil and refined petroleum, may experience prolonged disruption. Iran’s Islamic Revolutionary Guard Corps has warned vessels to avoid the passage. Increased electronic interference may affect navigational and tracking systems, which would heighten the risk of vessel collisions. A two-week ceasefire was announced on April 7, 2026, although it remains uncertain when and at what levels transit through the Strait of Hormuz will resume. While it is impossible to predict exactly how this conflict will affect the tanker industry, it is very likely that a prolonged war will have significant impacts across the sector. One of our vessels, the P. Aliki, chartered to Pakistan National Shipping Corporation, was operating within the Persian Gulf and its passage out of the Persian Gulf and the completion of its voyage was delayed but completed in March 2026.

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 Arabian Gulf 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 has also 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 the coast 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 and our ability to pay cash distributions to our shareholders.

18
Our financial results may be adversely affected by the outbreaks of epidemic and pandemic diseases and the related governmental responses thereto.

Global public health threats, such as outbreaks of highly communicable diseases or viruses, outbreaks which have from time to time occurred 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, the timing of completion of any future newbuilding projects, as well as the operations of our charterers and other customers.

For example, the outbreak of the novel coronavirus, or COVID-19, and its variants caused severe global disruptions, with governments in affected countries imposing travel bans, quarantines, and other emergency public health measures. Although the incidence and severity of COVID-19 and its variants have diminished over time, similar restrictions, and future prevention and mitigation measures against outbreaks of epidemic and pandemic diseases, 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, our vessels 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 and/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 other potential 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 vessels we may acquire, and ability to pay dividends may be negatively affected by future pandemics, epidemics, or other outbreaks of infectious diseases is highly uncertain and will depend on numerous 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 measures to 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 or reductions 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 interest rates or reduction in the availability of credit. We cannot predict the effect that an outbreak of any future infectious disease outbreak, pandemic, or epidemic may have on our business, operating results, cash flows, and financial condition, which could be material and adverse.

Increasing growth of electric vehicles 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 2025 that total electric car sales exceeded 17 million globally in 2024, bringing the total number of electric cars to approximately 58 million at the end of 2024, corresponding to about 4% of the total passenger car fleet and more than triple the total electric car fleet in 2021. Electric car sales in the first quarter of 2025 were more than 4 million, up 35% from the same quarter of 2024. Over 1 million more electric cars were sold in the first three months of 2025 compared to the same period in 2024 and about 60% of these were sold in China. IEA forecasts are for electric vehicles (“EVs”) to reach  250 million by 2030, which the IEA forecasts would reduce worldwide demand for oil products by 5 million barrels per day in 2030. Notably, IEA estimates that the global stock of electric cars displaced over 1 million barrels per day of oil consumption in 2024. Growth in EVs or a slowdown in imports or exports of crude 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 of operations, cash flows, financial condition, and ability to make cash distributions.

19
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 the South 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 could result in harm or danger to the crews that man our vessels and other vessels we may acquire. Additionally, if piracy attacks occur in regions in which our vessels and other vessels we may acquire are deployed that are characterized by insurers as “war risk” zones or if our vessels and other vessels we may acquire are deployed in Joint War Committee “war and strikes” listed areas, premiums payable for insurance coverage could increase significantly, and such insurance coverage may be more difficult to obtain, 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 such circumstances. 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 hire until 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, a claim 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 detention hijacking, involving the hostile detention of a vessel, as a result of an act of piracy against our vessels or other vessels we may acquire, or an increase in cost or unavailability of insurance for our vessels and other vessels we may acquire could have a material 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 marine weather events could result in the suspension of operations at the planned ports of call for our vessels and require significant deviations from our vessels’ planned routes. In addition, climate change could result in an increase in the frequency and severity of these extreme weather events. The closure of 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 for indeterminate 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, it could lead to monetary fines or adversely affect our business, reputation, and the market for our common shares.

Our business could be adversely impacted if we are found to have violated economic sanctions under the applicable laws of the European Union, the United States or another applicable jurisdiction against countries such as Iran, North Korea and Cuba. U.S. economic sanctions, for example, prohibit a wide scope of conduct, target numerous countries and individuals, and are frequently updated or changed.

Many economic sanctions relate to our business, including prohibitions on certain kinds of trade with countries, such as exportation or re-exportation of commodities, or prohibitions against certain transactions with designated nationals who may be operating under aliases or through non-designated companies.

Additionally, the U.S. Iran Threat Reduction Act amended the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act, to require issuers that file annual or quarterly reports under Section 13(a) of the Exchange Act to include disclosure in their annual and quarterly reports as to whether the issuer or its affiliates have knowingly engaged in certain activities prohibited by sanctions against Iran or transactions or dealings with certain identified persons. We are subject to this disclosure requirement.

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 the U.S. government or other governmental authorities (“Sanctioned Jurisdictions”) in 2025 and through the date of this report, and although we intend to maintain compliance with all applicable 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 may call on ports in Sanctioned Jurisdictions on charterers’ instructions. If such activities result in a violation of sanctions or embargo laws, we could be subject to monetary fines, penalties, or other sanctions, and our reputation and the market for our common shares could be adversely affected.

20
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 such sanctions 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 the United 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 of sanctions 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 future contracts 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 may suffer 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 such violation 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 some investors 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 prevent them 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 not to 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 and embargo 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. If a charterer violates sanctions, it is possible that our ship or the ship owner may become sanctioned, in which case it would be difficult or impossible for us to trade it or utilize international banking systems, which would adversely affect our business, financial condition, and ability to continue our business and pay dividends. Investor perception of the value 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 we operate in.

We conduct business in China, where the legal system is unpredictable and has inherent uncertainties that could limit the legal protections available to us.

We have four newbuilding contracts with shipyards in China. Further, from time to time, some of our vessels may be chartered to Chinese customers and, on our charterers’ instructions, our vessels may call on Chinese ports. Such contracts, charters and voyages 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 Chinese government 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 counterparties in advance of us or our counterparties 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 tax matters, or changes in their implementation by local authorities, could affect our vessels under construction or our operating vessels, if chartered to Chinese customers or calling to Chinese ports, and could have 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 vessel and 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 effectively becomes 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 a requisition 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 a material adverse effect on our business, results of operations, cash flows, and financial condition.

21
Failure to comply with 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 in accordance 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, and resolving 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. In addition, actual or alleged violations could damage our reputation and ability to do business.  Furthermore, detecting, investigating, and resolving actual or alleged violations is expensive and can consume significant time and attention of our senior management.

The smuggling of drugs or other contraband onto our vessels may lead to governmental claims against us.

Our vessels may 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 face governmental 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, cash flows, and financial condition. Under some jurisdictions, vessels used for the conveyance of illegal drugs could result in forfeiture of the subject vessel to the government of such jurisdiction.

Maritime claimants could arrest or attach one or more our vessels, which could 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 a vessel for unsatisfied debts, 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 attachment of 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 our cash 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 maritime lien 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 claims relating 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 compliance requirements for us. To maintain high standards of corporate governance and public disclosure, we have invested in, and continue to invest in, reasonably necessary resources to comply with evolving standards.

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 by more 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 significant fines or other regulatory claims which could have an adverse effect on our business, financial condition, and operations.

We are a “foreign private issuer,” which could make our common shares less attractive to some investors or otherwise harm our stock price.
 
We are a “foreign private issuer,” as such term is defined in Rule 405 under the Securities Act. As a “foreign private issuer” the rules governing the information that we disclose differ from those governing U.S. corporations pursuant to the Exchange Act. We are not required to file quarterly reports on Form 10-Q or provide current reports on Form 8-K disclosing significant events within four days of their occurrence. On December 18, 2025, the Holding Foreign Insiders Accountable Act was enacted as part of the National Defense Authorization Act for Fiscal Year 2026, mandating directors and officers of foreign private issuers to file Section 16(a) reports (Forms 3, 4, and 5) with the SEC to report beneficial ownership interests in companies, effective March 18, 2026. In addition, our officers, directors and principal shareholders are exempt from the “short-swing” profit recovery provisions of Section 16 of the Exchange Act and related rules with respect to their purchase and sales of our securities. Our exemption from certain provisions of the rules of Section 16 of the Exchange Act regarding sales of Common Shares by insiders means that you may have less data in this regard than shareholders of U.S. companies that are subject to the Exchange Act. Moreover, we are exempt from the proxy rules, and proxy statements that we distribute will not be subject to review by the SEC. Accordingly, there may be less publicly available information concerning us than there is for other U.S. public companies that are not foreign private issuers. These exemptions and scaled disclosure requirements are not related to our status as an emerging growth company and will continue to be available to us even if we no longer qualify as an emerging growth company but remain a foreign private issuer. These factors could make our Common Shares less attractive to some investors or otherwise harm our stock price.
 
22
On June 4, 2025, the SEC issued a concept release seeking public comment on whether to amend the current eligibility criteria for foreign private issuer status under the U.S. securities laws to better balance investor protection and capital formation. This marks the first comprehensive review of the FPI regulatory framework since 2008 and signals a potential material shift in the FPI regulatory framework. While no rule changes have been proposed yet, any future amendments could impact our eligibility to qualify as a foreign private issuer.
 
We could lose our foreign private issuer status under U.S. securities laws. The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic issuer may be significantly higher. We would then also be required to file periodic reports and registration statements on U.S. domestic issuer forms with the SEC, which are more detailed and extensive than the forms available to a foreign private issuer. We may then also be required to modify certain of our policies to comply with good or required governance practices associated with U.S. domestic issuers. Such conversion and modifications will involve additional costs.

Recent actions by the U.S. and China imposing new port fees could have a material adverse effect on our operations and financial results.
 
In 2025, the United States Trade Representative (the “USTR”) put forward significant trade actions under Section 301 of the Trade Act of 1974 with the aim of addressing China’s dominance in the maritime, logistics, and shipbuilding industries. These actions have the potential to dramatically increase the port fees and therefore the overall operating expenses for ships calling at U.S. ports. Specifically, the USTR has enacted a series of fees that would function as direct increases to port-related costs.
 
The action generally includes a fee targeting Chinese owners and operators for each instance a vessel owned or operated by a Chinese entity enters a U.S. port. The fee would be calculated at a rate of $50 per net ton of the vessel for each port entrance beginning October 14, 2025 and increasing over time, plateauing at $140 per net ton in 2028.
 
Another fee focuses on operators with fleets comprised of Chinese-built vessels. Under the action, in the case of a vessel not subject to the fees on Chinese owners and operators described above, fees generally would be imposed each time a Chinese-built vessel enters a U.S. port. The fee relevant to our vessels generally would be calculated at a rate of $18 per net ton of the vessel for each port entrance beginning October 14, 2025 and increasing over time, plateauing at $33 per net ton in 2028. There are several exceptions to this fee, including for vessels with capacity of 55,000 dwt or less, vessels arriving to the US empty or in ballast, and vessels entering a port in the continental United States from a voyage of less than 2,000 nautical miles from a foreign port or point.
 
The actual implementation of this action remains uncertain. Specifics, such as applicability to sale and leaseback (“SLB”) arrangements with Chinese leasing financiers, have not been clarified. Of the 11 vessels we operate, three were constructed in China. In addition, we currently have three newbuilding vessels under construction at Chinese shipyards. Further, we have already entered into, and we may enter in the future into additional sale and leaseback transactions with Chinese financial institutions. In an SLB, the lessor is the registered owner of the vessel. It is currently unclear whether the vessels would be subject to fees on Chinese owners due to the SLB arrangements. Additionally, we may enter into further contracts for the purchase of secondhand vessels constructed in China or shipbuilding contracts for vessels to be constructed at Chinese shipyards.
 
In response to the USTR action, on October 10, 2025, China announced retaliatory port fees, effective October 14, 2025, applicable to vessels calling at Chinese ports which are built or flagged in the U.S. or owned or operated by certain U.S.-linked persons. There is significant uncertainty as to the scope of applicability of these new port fees and how they will be implemented. On November 10, 2025, U.S. and Chinese authorities suspended the application of each respective set of port fees for one year. Substantial uncertainty remains as to how the port fees will be assessed after the end of the suspension period, scheduled for November 10, 2026.
 
23
Further retaliatory measures from China or other nations could further compound disruptions and cost increases within the global shipping industry. In addition to direct port fee increases, other retaliatory actions by China or other countries could indirectly impact port-related costs, disrupt global shipping patterns and potentially increase congestion and costs at ports worldwide, including U.S. ports.
 
Given the potential magnitude of these port-related fees and the many uncertainties surrounding their implementation, it is not possible at this time to fully predict the ultimate financial impact. However, if the action or similar measures are implemented, port fees for our vessels or vessels we charter and our operating costs for voyages calling at U.S. or Chinese ports could materially increase.
 
Even though port fees are typically borne by the charterer, if port fees are assessed due to our or the lessor’s ownership of the relevant vessel, it is possible that charterers may demand that we bear these costs or otherwise reduce the applicable charter rate. This, in turn, could significantly reduce our profitability, negatively impact our ability to compete effectively, and materially and adversely affect our operations and financial results.

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 financial covenants under our bonds or 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 charter market 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 high volatility, 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

24

 •
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 tanker asset prices. Furthermore, the ongoing war between Israel and Hamas, the Houthi rebel attacks on shipping in the Red Sea and the sharp reduction in vessel transits through the Strait of Hormuz will have an uncertain impact on the supply and demand for tankers. 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 with certain 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, 2025, we had $128.7 million outstanding under our bank loan facilities and sale-leaseback agreements, and $100.0 million outstanding under our bond, and we were in compliance with all our loan covenants. In the future, if we are not in compliance with the covenants 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 and foreclose 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, our loan 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 debt agreements.

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 could adversely 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.

We expect substantial competition for providing tanker vessel transportation services from a number of experienced companies, including state-sponsored entities and major shipping 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 charter rates. 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, financial condition, 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 tanker vessels 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 level that will enable us to operate our vessels profitably.

25
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 adversely affect 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 exposes us 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 depend on 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 financial condition 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 into agreements 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, this may 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 of availability 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, there have 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 to renegotiate 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 resulting sanctions, 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 may be 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, which could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

Delays or defaults by the shipyards in the construction of newbuilding vessels could increase our expenses and diminish our net income and cash flows.

We currently have contracts for three newbuilding vessels and we may enter into contracts for newbuilding vessels in the future. Vessel construction projects are generally subject to risks of delay that are inherent in any large construction project, which may be caused by numerous factors, including shortages of equipment, materials or skilled labor, unscheduled delays in the delivery of ordered materials and equipment or shipyard construction, failure of equipment to meet quality and/or performance standards, financial or operating difficulties experienced by equipment vendors or the shipyard, unanticipated actual or purported change orders, inability to obtain required permits or approvals, design or engineering changes and work stoppages and other labor disputes, adverse weather conditions or any other events of force majeure. Significant delays could adversely affect our financial position, results of operations and cash flows. Additionally, failure to complete a project on time may result in the delay of revenue from that vessel, and we may continue to incur costs and expenses related to delayed vessels, such as supervision expenses.

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 purchasing suitable 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 be compliant 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 to pay 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 reasonable prices in accordance with our business strategy or in response to changing market and regulatory conditions, our business would be adversely affected.

26
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 these vessels 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 or problems, 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, when purchasing 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 recently constructed vessels due to improvements in engine technology. Potential charterers may also choose not to charter older vessels. Governmental regulations and safety and other equipment 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 activities in 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 profitably during 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 cash flows.

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 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, nor our in-house manager, will conduct any historical financial due diligence process at times when we acquire vessels. Accordingly, neither we, nor our in-house manager, will obtain the historical operating data for any secondhand 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 to potential 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 to inspect 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 data of 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. In addition, 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 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 acquired and may also in the future acquire some vessels with time charters. Where a vessel has been under a voyage 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 the first 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 acquired without 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 the charter because 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 expect to 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 significantly different 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 to operate the vessels profitably, it may have an adverse effect on our financial condition, results of operations, and cash flows.

27
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 value and 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 a vessel’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 more flexible or have longer physical lives than our vessels, competition from these more technologically advanced vessels could adversely affect the amount of charter hire payments we receive 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 our published 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 compliance with 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 major international 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 the PCAOB 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 doubt upon 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 require to 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 cost may materially affect our results of operation and our ability to implement our business strategy.

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 our management and 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 adversely affect 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 our management 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 exert considerable 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 approximately 88% 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 outcome of 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 voting rights 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 of our 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 the interests 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 conflicts of 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 terms of our Series C Preferred Shares, please see “Description of Securities,” attached hereto as Exhibit 2.5 and incorporated by reference herein.

28
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 and hinder 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 not engaged 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 of interest 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 have been subject to litigation and we may be subject to similar or other litigation in the future.

We, and our former Chief Executive Officer, were defendants in a purported class action lawsuit brought in 2017 which was voluntarily dismissed in November 2024. The lawsuit alleged violations of the Exchange Act. In addition, we, our Chief Executive Officer, the Chairperson of the Board, five former 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 offer commenced in December 2021. In August 2024, that lawsuit was dismissed by the court for lack of personal jurisdiction.  The plaintiff then filed a substantially similar complaint in the High Court of the Republic of the Marshall Islands against the same defendants that had been named in the New York lawsuit. On March 27, 2026, the plaintiff voluntarily dismissed the lawsuit. For more information see “Item 8. Financial information—Legal Proceedings.”

Costs associated with litigation are unpredictable, and could increase our general administrative expenses above their current levels. Furthermore, we may, from time to time, be a party to litigation in the normal course 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 our internal 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 to obtain 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 in the 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 substantial damages 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 and concluding 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 an adverse 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 and governmental 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 factors may 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 East and 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 disrupt our business, increase vessel operating costs, including insurance costs, and adversely affect our financial condition and results of operations. Our operations may also be adversely affected by expropriation of vessels, taxes, regulation, tariffs, trade embargoes, economic sanctions, disruption of or limit to trading activities, or other adverse events or circumstances affecting the countries and regions in which we operate or may operate in the future.

29
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 adverse impact on our 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 income due 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 can increase, 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 time 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 the nominal 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 could have an adverse effect on our results.

Volatility of SOFR could affect our profitability, earnings, and cash flow.

The majority of our facility agreements and sale and leaseback agreements bear floating rate interest linked either to SOFR or Term SOFR. An increase in SOFR would affect the amount of interest payable under our existing debt agreements, which, in turn, could have an adverse effect on our profitability, 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 funding costs of financial institutions. As a result, parties may seek to adjust spreads relative to SOFR in underlying contractual arrangements. If SOFR performs differently than expected or 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 an adverse 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 our future indebtedness and the transition to 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 rate derivatives 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 bonds or loan agreements that require maintenance of certain financial positions and ratios.

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 our subsidiaries, 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 tax without allowance for deduction, unless that corporation qualifies for exemption from tax under Section 883 of the Code, or Section 883, and the applicable Treasury Regulations promulgated 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 2025 taxable year. However, there are 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.

30
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 income we 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 and would result in decreased earnings available for distribution to our shareholders.

We may be classified as a “passive foreign investment company,” which could result in 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 for any 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 types of “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” generally includes 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 the active 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 a PFIC 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 time or 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 we may 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 and operate 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 Internal Revenue Service, or IRS, pronouncements concerning the characterization of income derived from time charters and voyage charters as services income. 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 can be 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 that we 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 reporting obligations. Under the PFIC rules, unless such U.S. holders make certain elections available under the Code (which elections could themselves have certain adverse consequences for such 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 and upon 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 common shares. See “Item 10. Additional Information—E. Taxation—United States Federal Income Tax Considerations—United States Federal Income Taxation of U.S. Holders—PFIC Status and Significant 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 as a 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 and indemnity associations in the International Group of P&I Clubs, or the International Group, which is comprised of 13 mutual protection and indemnity associations and insures approximately 90% of the world’s commercial tonnage 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 of such calls will be unavailable for other purposes.

31
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. The Marshall Islands has passed an act, or the Implementation Act, implementing the U.N. Commission on Internal Trade Law (UNCITRAL) Model Law on Cross-Border Insolvency, or the Model Law. The adoption of the Model Law is intended to implement effective mechanisms for dealing with issues related to cross-border insolvency proceedings and encourages cooperation and coordination between jurisdictions. Notably, the Model Law does not alter the substantive insolvency laws of any jurisdiction and does not create a bankruptcy code in the Marshall Islands. Instead, the Implementation Act allows for the recognition by the Marshall Islands of foreign insolvency proceedings, the provision of foreign creditors with access to courts in the Marshall Islands, and the cooperation with foreign courts. Consequently, in the event of any bankruptcy, insolvency, liquidation, dissolution, reorganization, or similar proceeding involving us or any of our subsidiaries, bankruptcy laws other than those 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. bankruptcy court 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.

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 by computer hackers and cyber terrorists. The safety and security of our vessels as well as our business operations could be targeted by individuals or groups seeking to sabotage or disrupt our information technology systems and networks or to steal data. Despite our cybersecurity measures, 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 or significant interruption or failure of our information technology systems, could materially disrupt our operations, including the safety of our operations, or lead to the unauthorized release of information or alteration of information in our systems. The evolution of artificial intelligence capabilities may lead to new or more effective cyber-attack methods, including fraud, phishing or information theft enabled by “deep-fake” technology using generative artificial intelligence tools. Any such attack or other breach of our information technology systems could 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 as anticipated 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 decreased performance and increased operating costs, causing our business and operating results to suffer.

Additionally, recent action by the IMO’s Maritime Safety Committee and United States agencies indicates that cybersecurity regulations for the maritime industry are likely to be further developed in the near future in an attempt to combat cybersecurity threats. For example, effective January 2021, cyber-risk management systems must be incorporated by shipowners and managers. Any changes in the nature of cyber threats might require us to adopt additional procedures for monitoring cybersecurity, which could require additional expenses and/or capital expenditures. The war between Russia and Ukraine has been accompanied by cyber-attacks against the Ukrainian government and other countries in the region. It is possible that these attacks could have collateral effects on additional critical infrastructure and financial institutions globally, which could adversely affect our 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 at this time.

In July 2023, the SEC adopted rules requiring the mandatory disclosure of material cybersecurity incidents, as well as cybersecurity governance and risk management practices. A failure to disclose could result in the imposition of injunctions, fines and other penalties by the SEC. Complying with these obligations could cause us to incur substantial costs and could increase negative publicity surrounding any cybersecurity incident.

32
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, some of 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;


•
raise equity and 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. The number 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 we may 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 and financial 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 dilute our 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. If we 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 and managing relationships with customers and suppliers and integrating newly acquired operations into existing infrastructures. The expansion of our fleet may impose significant additional 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 the number 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 with our 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 for the 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 global growth. 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 profit margins. Inflation may also raise our costs of capital, which would result in the deterioration of our financial condition.

33
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 on our vessels.

Effective January 1, 2020, the IMO implemented a regulation requiring ships to reduce sulfur emissions to 0.50% m/m globally (the “IMO 2020 Regulations”). Under this global cap, vessels are required to use marine fuels with a sulfur content of no more than 0.50% (as compared to the former regulations specifying a maximum of 3.50% sulfur content) in an effort to reduce the emission of sulfur oxide into the atmosphere.

We have incurred increased costs to comply with these revised standards. Additional or new conventions, laws, and regulations may be adopted that could require, among others, 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 the compliance 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 or difficult 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 not available 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 incurring deviation 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 of high-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 cost of 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 of fuel, 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. Our operations 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 blends of 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 regulatory changes 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 the price 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 from such 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 our business, 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 reduce greenhouse gas emissions. These regulatory measures may include, among others, the adoption of cap and trade regimes (of which there are around forty five in the world thus far), 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 reducing greenhouse 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 dioxide 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. At the conclusion of MEPC 82, a draft legal text was used as a basis for ongoing talks about mid-term Green House Gas, or GHG, reduction measures, which were approved in 2025, including a goal-based marine fuel standard, phasing in the mandatory use of fuels with less GHG intensity, and a global GHG emission pricing mechanism. The regulations were approved as amendments and submitted for adoption, the MEPC adjourned the meeting on adoption until October 2026.

34
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 and supplementary 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 this regulation 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 retrofitting vessels 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 with these 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 Framework Convention 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 was delegated under the Kyoto Protocol to the IMO for action), a new treaty may be adopted in the future that includes restrictions on shipping emissions.

Furthermore, 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 came into effect on January 1, 2025. The ETS applies gradually over the period from 2024 to 2026: 40% of allowances had to be surrendered in 2025 for the year 2024; 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 on a companywide (rather than per ship) basis and “shipping company” is defined widely to capture both the ship owner and any contractually appointed commercial operator/ship manager/bareboat charterer who assumes all duties and responsibilities for the ship under the ISM Code, as well as the responsibility for full compliance under the ETS and the ISM Code. If the latter contractual arrangement is entered into this needs to be reflected in a certified mandate 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 the years 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% of emissions 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 makes clear that all maritime allowances would be auctioned and there will be no free allocation. Maritime is to be allocated 78.4 million emissions allowances.  If we do not have allowances, we will be forced to purchase allowances from the market, which can be costly. To prepare for and manage the administrative aspects of EU ETS compliance, we have made significant investments in new systems, including personnel, data management, cost recovery mechanisms, revised service agreement terms and transparent emissions reporting procedures. However, the cost of future compliance and of our future EU emissions and costs to purchase an allowance for emissions (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 and from the EU, and the prevailing cost of allowances. We have registered under the EU ETS regime and maintain a Maritime Operator Holding Account. We have calculated the allowances required for the year 2025,but anticipate that our vessels will continue to make calls in European ports during 2026. The voyages for which we will be required to surrender allowances are primarily undertaken by our charterers, and as such we are currently unable to determine our liability under EU ETS beyond 2025.

Additionally, on July 25, 2023, the European Council of the European Union adopted the Fuel EU Maritime Regulation 2023/1805 (“FuelEU”) under the FuelEU Initiative of its “Fit-for-55” package which sets limitations on the acceptable yearly greenhouse gas intensity of the energy used by covered vessels. Among other things, FuelEU requires that greenhouse gas intensity of fuel used by covered vessels is reduced by 2%, with additional reductions contemplated every five years (up to 80% by 2050). Shipping companies may enter into pooling mechanisms with other shipping companies in order to achieve compliance, bank surplus emissions and borrow compliance balances from future years. A FuelEU Document of Compliance is required to be kept on board a vessel to show compliance by June 30, 2026. Both the ETS and FuelEU schemes have significant impacts on the management of the vessels calling to EU ports, by increasing the complexity and monitoring of, and costs associated with the operation of vessels and affecting the relationships with our time charterers.

35
Compliance with changes in laws, regulations, and obligations relating to climate change affects the propulsion options in subsequent vessel designs and could increase our costs 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 to our 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 crude oil 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 weather patterns, 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 and natural 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, and Governance (“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 their investments. 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 commit capital 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 evolving industry shareholder expectations 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 do so, 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 energy practices, 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 and future 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 are engaged. 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 had adopted final rules to enhance and standardize climate-related and ESG-related disclosures by public companies and in public offerings. The final rules would have added extensive and prescriptive disclosure items requiring companies, including foreign private issuers, to disclose climate-related risks and certain emissions. The rules were challenged in federal court before they became effective. In March 2025, the SEC withdrew its legal defense of the rules and in June 2025, the SEC withdrew the rules entirely. If the SEC were to again adopt climate disclosure rules, then the costs of compliance with such new rules could be significant and may have a material adverse effect on our future performance, operating results, cash flows and financial position.
 
Additionally, certain investors and lenders may exclude shipping companies, such as us, from their investing portfolios altogether due to environmental, social, and governance factors. These limitations in both the debt and equity capital markets may affect our ability to develop as our plans for growth may include accessing the equity and debt capital markets. 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 incur additional 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 material adverse effect on our business and financial condition.

36
Moreover, from time to time, we may incur additional costs, establish and publicly announce goals and commitments in respect of certain ESG items. While we may create and publish voluntary disclosures regarding ESG matters from time to time, many of the statements in those voluntary disclosures are based on hypothetical expectations and assumptions that may or may not be representative of current or actual risks or events or forecasts of expected risks or events, including the costs associated therewith. Such expectations and assumptions are necessarily uncertain and may be prone to error or subject to misinterpretation given the long timelines involved and the lack of an established single approach to identifying, measuring and reporting on many ESG matters. If we fail to achieve or improperly report on our progress toward achieving our environmental goals and commitments, the resulting scrutiny from market participants or regulators could adversely affect our reputation and/or our access to capital.

Additionally, different stakeholder groups have divergent views on ESG matters, which increases the risk that any action or lack thereof with respect to ESG matters may be perceived negatively by at least some stakeholders and adversely impact our reputation and business.
 
If 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 affect our 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 and refined petroleum products could lead to increased competition. Competition arises primarily from other tanker vessel owners, including major oil companies and national oil companies or 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 the charterers. 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 in particular 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 and regulations 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, or strategies 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’s ballast water. Depending on the date 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 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 and eliminate 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 imposed updated 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 the date 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 on or 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 October 28, 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 or the BWMS Code. Amendments to the International Convention for the Control and Management of Ships’ Ballast Water and Sediments, or the BWM Convention, entered into force in June 2022 concerning commissioning testing of BWMS and the form of the International Ballast Water Management Certificate. Additional amendments to the BWM Convention, concerning the form of the Ballast Water Record Book, entered into force on February 1, 2025. All of our vessels have installed approved ballast water management systems.

37
Furthermore, United States regulations are currently changing. Although the 2013 Vessel General Permit (VGP) program and U.S. National Invasive Species Act, or NISA, are currently 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 that the 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 Notice of Proposed Rulemaking for Vessel Incidental Discharge National Standards of Performance 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 National Standards of Performance, which shares new ballast water information that the EPA received from the USCG. On October 9, 2024, the Vessel Incidental Discharge National Standards of Performance were published. Within two years of publication, the USCG is required to develop corresponding implementation regulations. Within two years of publication, the USCG is required to develop corresponding implementation regulations. Until such regulations are final, effective, and enforceable, vessels will continue to be subject to the VGP 2013 requirements and USCG ballast water regulations. The new regulations 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 the shipping 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 interruptions due to political circumstances in foreign countries, hostilities, and labor strikes. Any of these 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, protection and 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 to take, certain actions, such as failing to maintain certification of our vessels with applicable maritime regulatory organizations. Any significant uninsured or under-insured loss or liability could 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 adequate insurance coverage at reasonable rates in the future during adverse insurance market conditions.

Under our vessel management agreements with Performance Shipping Management Inc., our in-house manager, is responsible for procuring and paying for insurance for our vessels. Our insurance policies contain standard limitations, exclusions, and deductibles. The policies insure against those risks that the shipping industry commonly insures against, which are hull and machinery, protection and indemnity, and war risk. Our in-house manager currently maintains hull and machinery coverage in an amount at least equal to the vessels’ market value. Our in-house manager maintains an amount of protection and indemnity insurance that is at least equal to the standard industry level of coverage. We cannot assure you that Performance Shipping Management Inc. will be able to procure adequate insurance coverage for our fleet in the future or that our insurers will pay any particular claim.

In 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 additional premium 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 of other members of the protection and indemnity associations through which we receive insurance coverage for tort liability, including pollution-related liability. In addition, our protection and 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 a material adverse effect on our business, results of operations, cash flows, financial condition, and available cash.

38
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 fluctuated significantly from a high level of $60 million in 2024 to a low level of $18 million in 2016, and market prices for ten-year-old Suezmax tankers over the past ten years have fluctuated significantly from a high level of $68 million in 2024 to a low level of $24 million in 2017. You should expect the market value of our vessels to fluctuate depending on general economic and market conditions affecting the shipping industry and prevailing charter rates, competition from other tanker companies and other modes of transportation, types, sizes, and ages of vessels, 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 amounts required 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 aggregate principal amount outstanding under the loans. We were in compliance with these requirements as of December 31, 2025, and as of the date of this annual report.

A decrease in vessel values could cause us to breach certain covenants in our existing bonds or 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, if we 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, resulting in 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 adverse effect 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 of operations, 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, pricing differentials, 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 for our 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, 2025 to April 22, 2026, the trading price of our common shares has ranged from an intra-day high of $2.58 on December 5, 2025 to an intra-day low of $1.31 on April 8, 2025, on April 9, 2025 and April 29, 2025.

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;

39

 •
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 and Russia and the war between Israel and Hamas;


•
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; 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 transportation industry 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 you that 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, the war in Ukraine, the war between Israel and Hamas, and general economic, market, or political conditions, and this volatility has sometimes been unrelated to the operating performance of 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 operating performance or prospects. This market and share price volatility has and could further reduce the market price of our common shares in spite of our operating performance 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, including within a single trading day. Such volatility could cause purchasers of our common shares to incur substantial losses. We are thus unable to 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 common shares unless you are prepared to incur the risk of incurring substantial losses.

40
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 by short 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 demand of 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 existing exposure 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 extent aggregate 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 our common 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 exposure are 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 the shares 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 not directly 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 substantial costs and our resources and the attention of management could be diverted from our business.

Future sales of our common shares, including through the exercise of conversion rights under our outstanding convertible preferred shares, could cause the market price of our common shares to decline.

Our amended and restated articles of incorporation authorize us to issue up to 500,000,000 common shares, of which 12,432,158 shares were issued and outstanding as of April 24, 2026.

As of the date of this Annual Report, 1,423,912 of our Series C Preferred Shares were issued and outstanding. Each Series C Preferred Share will be convertible, at the option of the 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 C Preferred 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 customary adjustments, 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 any registered 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 C Preferred Shares, please see “Item 10. Additional Information—B. Memorandum and Articles of Association” and “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 our shareholders 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.” We may offer and sell our common shares or securities convertible into our common shares from time to 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 due to 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 shares or 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 deem appropriate 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 ownership interests 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 to shareholder 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 of our 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 restated articles 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 to Nasdaq 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 of circumstances from time to time.

41
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 of our securities.

In addition, we may be obligated to issue pursuant to the terms of outstanding convertible securities, options, or warrants, as of April 24, 2026:


 •
any common shares issuable pursuant to the exercise of conversion rights under our Series C Preferred Shares, of which 1,423,912 shares are currently outstanding;


•
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 the date of this Annual Report) which expire in January 2028;


•
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 the date of this Annual Report) 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 on August 12, 2022 (at an exercise price of $1.65 per share as of the date of this Annual Report) 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 the date of this Annual Report) or exchange (for no additional cash consideration) of the Series A warrants (the “Series A Warrants”), which expire in March 2028; and


•
up to 4,097,000 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 the date of this Annual Report) which expire in 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 additional common 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 vessel acquisitions, 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 shareholder approval, 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 of any class or series of shares and, therefore, are at risk of dilution.

Our 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 sales of 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 perception that 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 it more 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 or other equity-related securities would have on the market price of our common shares.

42
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 Select Market, 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 shares will 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 our common 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, at least 300 public holders, a market value of publicly held securities of $1 million, and net income 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 no assurance 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 listing standards 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 would have 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 may receive 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 received on 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 business days 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 on August 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 the Company—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 board of 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 our common 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 to reflect 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 Capital Market, 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 our common 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 of securities, 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-dilution provisions could be further triggered by future issuances of common shares or securities convertible into common shares, depending on the offering price of equity issuances, the conversion 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 2022 Warrants, 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 issuance of 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 Preferred Shares 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 Preferred Shares 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 Shares will 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 or greater 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, the interests of the holders of our common shares may be diluted.

43
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.

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 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, scheduled drydocking of our vessels, 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 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 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 any other 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 into consideration 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 affected by 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, among other 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 as dividends, 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 a combination 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 are limited, 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 of dividends.

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. 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 quarterly dividends, 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 that we 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 dividends will 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 we were 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 law generally 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.

44
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 our liquidation, 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 our preferred 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. Any preferred 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 would limit 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 will depend 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 event of 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 or lenders with respect to our credit facilities and other borrowings.

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 following the payment of 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 by our 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 days prior 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 B Preferred 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 the amount 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 be rendered 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 shipping industry, 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 not to 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 other factors 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 Preferred Shares 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 legally available 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 B Preferred 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.

45
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 the Series 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 C Preferred 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 our existing 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, including the 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 than all 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 C Preferred 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 such time.

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 of our 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 a principal 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 the Series B Preferred Shares and Series C Preferred Shares for an indefinite period of time.

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 B Preferred Shares and 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 C Preferred 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 be forced 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 Shares is 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 be substantially less than the stated liquidation preference.

46
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 Series C 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-month anniversary 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 Marshall Islands 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 and unpaid 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 redemption price 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 date immediately 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 current or 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 will depend 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 should not 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 Preferred Shares 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 B Preferred 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 redemption for 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 make dividend 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 have no 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 our shareholders 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 having profits 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 be limited. 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 would be 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 to protect their interests. Our corporate affairs are governed by our amended and restated articles of incorporation, our amended and restated bylaws, and the Marshall Islands Business Corporations 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 judicial cases in the Republic of the Marshall Islands interpreting the BCA. The rights and fiduciary responsibilities of directors under the laws of the Republic of the Marshall Islands are not as clearly established 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, shareholders may have more difficulty in protecting their interests in the face of actions by the management, directors or controlling shareholders than would shareholders of a corporation 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 the event 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 than those 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. bankruptcy court 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.

47
As 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 subject to economic substance requirements.

The Council of the European Union, or the Council, routinely publishes a list of “non-cooperative jurisdictions” for tax purposes which includes countries that the Council believes need to improve their legal framework and to work towards compliance with international standards in taxation. In 2019, the Republic of the Marshall Islands, among others, was placed by the EU on the list of non-cooperative jurisdictions for failing to implement certain commitments previously made to the EU by the agreed deadline. However, it was removed from the list of non-cooperative jurisdictions that same year. In February 2023, the Republic of the Marshall Islands was added again to the list of non-cooperative jurisdictions for lacking in the enforcement of economic substance requirement, and was subsequently removed again from the list in October 2023. EU member states have agreed upon a set of measures, which they can choose to apply against the listed countries, including increased monitoring and audits, withholding taxes and non-deductibility of costs. Although we are not currently aware of any such measures being adopted, they can be adopted by one or more EU members states in the future. The European Commission has stated it will continue to support member states’ efforts to develop a more coordinated approach to sanctions for the listed countries. EU legislation prohibits certain EU funds from being channeled or transited through entities in non-cooperative jurisdictions.

We are a Marshall Islands corporation with principal executive offices in Greece. Several of our subsidiaries are organized in the Republic of the Marshall Islands. The Marshall Islands has enacted economic substance regulations relating to, inter alia, shipping business activities, with which we could be obligated to comply. The Marshall Islands economic substance regulations require certain entities that carry 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 to that 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 the regulators that income-generating activities for shipping companies will generally occur in international waters) and (iii) having regard to the level of relevant activity carried out in the Marshall 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 qualified employees in the Marshall Islands.

If we fail to comply with our obligations under these regulations or any similar law applicable to us in any other jurisdictions, we could be subject to financial penalties and spontaneous disclosure of information to foreign tax officials, revocation of the formation documents and dissolution of the applicable non-compliant Marshall Islands entity or being struck from the register of companies, in related jurisdictions. Any of the foregoing could be disruptive to our business and could have a material adverse effect on our business, financial conditions and operating results. Accordingly, any implementation of, or changes to, any of the economic substance regulations that impact us could increase the complexity and costs of carrying on business in these jurisdictions, and thus could adversely affect our business, financial condition or results of operations.

We do not know (i) if the EU will once again add the Republic of the Marshall Islands to the list of non-cooperative jurisdictions, (ii) what actions the Republic of the Marshall Islands may take, if any, to remove itself from such list if it should be placed back on the list of non-cooperative jurisdictions, (iii) how quickly the EU would react to any changes in legislation of the Marshall Islands, or (iv) how EU banks or other counterparties will react while we, or any of our subsidiaries, remain as entities organized and existing under the laws of the Republic of the Marshall Islands. The effect of the EU list of non-cooperative jurisdictions, and any noncompliance by us with any legislation or regulations adopted by applicable countries to achieve removal from the list, 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. shareholders to 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 in which 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 of applicable U.S. federal and state securities laws or (2) would enforce, in original actions, liabilities against us based upon these laws.

48
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 of discouraging, 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 the composition 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, or prevent 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 vote generally 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 at shareholder meetings.

In addition, we have entered into a stockholders’ rights agreement, dated December 20, 2021, or the Stockholders’ Rights Agreement, pursuant to which our board of directors may 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 a change 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 of our 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 to this 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 file electronically with the SEC 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 of this annual report.

49
Business Development, Capital Expenditures and Divestitures and Share History

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, one Series 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 were converted to 171,070 Series C preferred shares, and we collected gross proceeds 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) the Series 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 per common 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 to exercise, they could be exchanged for common shares for no additional cash consideration under certain circumstances. The gross proceeds to us were approximately $12.5 million before 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 for no additional cash consideration, according to the terms of the Series A Warrants.

On March 7, 2023, we entered into a shipbuilding contract with China Shipbuilding Trading Company Limited and Shanghai Waigaoqiao Shipbuilding Company Limited for the construction of a 114,000 DWT LNG ready LR2 Aframax product/crude oil tanker for a gross contract price of $63.3 million. We took delivery of the vessel (Hull 1515), which was named P. Massport, in July 2025.

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 2023 Repurchase 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 was below 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—Loan Facilities—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 of the 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 such compliance 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 outstanding common shares. As of its expiration on August 31, 2024, 327,100 common shares were 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 for us.

50
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 to purchase all of our outstanding common shares at a price of $3.00 per common share, subject to the conditions set forth in the Amended and Restated Offer to Purchase, dated October 30, 2023, as further amended and supplemented (the “Offer”). On March 16, 2026, the Offeror terminated the Offer and no common shares were purchased pursuant to the Offer.

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 our vessels 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 the construction 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-party commission. The vessels (Hulls 1596 and 1597), named P. Tokyo and P. Marseille, were delivered in the third quarter of 2025 and in the first quarter of 2026, respectively.

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.

On March 8, 2024, we entered into time charter contracts with Clearlake Shipping Pte Ltd for our three newbuilding Aframax tanker vessels, the P. Massport, the P. Tokyo and the P. Marseille. Each employment is for a firm period of five years with the charterer’s option to extend for a sixth and seventh year. The gross charter rate is $31,000 per vessel per day for the firm period and a base rate plus profit share for the optional periods, if declared. Employment commenced upon delivery of the vessels.

On April 30, 2024, we entered into a shipbuilding contract with Jiangsu Yangzijiang Shipbuilding Group Co., Ltd., Jiangsu New Yangzi Shipbuilding Co., Ltd., and Jiangsu Yangzi Xinfu Shipbuilding Co., Ltd. for the construction of a scrubber fitted 75,000 DWT LR1 chemical/product oil tanker for a gross contract price of $56.5 million, with an option for the final purchase price to be reduced to $54.1 million, should certain technical conditions exist at delivery. We expect to take delivery of the vessel, to be named P. San Francisco, in the first quarter of 2027.

On July 16, 2024, we entered into a sale and leaseback financing agreement with an unaffiliated Japanese third party for our newbuild LR2 Aframax tanker vessel P. Massport. The bareboat financing amount totals $44.3 million and, as part of this agreement, the vessel was sold and chartered back on a bareboat basis for an eight-year period from delivery at bareboat charter rates equivalent to 96 monthly installments of $7,132 per day and a balloon payment of approximately $23.7 million payable together with the last installment, with an implied interest rate of Term SOFR plus 2.425% per annum. We have continuous options to repurchase the vessel at predetermined rates following the second anniversary of the bareboat charter.

On October 24, 2024, we entered into a sale and leaseback financing agreement with an unaffiliated third party for our newbuild LR2 Aframax tanker vessel P. Tokyo. The bareboat financing amount totals approximately $45.39 million. As part of this agreement, the vessel was sold and then chartered back on a bareboat basis for a ten-year period starting from delivery from the shipyard. The bareboat charter includes 120 monthly installments at a fixed rate of $211,500 plus a variable rate calculated monthly at an implied interest rate of SOFR plus 2.1% per annum. Additionally, a balloon payment of approximately $20 million payable together with the last installment for the repurchase of the vessel. We have continuous options to repurchase the vessel at predetermined rates following the second anniversary of the bareboat charter.

On December 17, 2024, the re-election of Aliki Paliou as a Class II Director was approved by the requisite vote at our 2024 Annual Meeting.

During 2024, 4,460 Series C Preferred Shares were converted at the option of their holders into 82,482 common shares, calculated with an adjusted conversion price of $1.3576.

51
During 2024, 70,000 of the Series B Warrants were exercised by their holders, generating net proceeds of $0.2 million for us.

Effective January 2025, our fleet manager, Unitized Ocean Transport Limited has been renamed to Performance Shipping Management Inc.

On March 5, 2025, we entered into a sale and leaseback financing agreement with an unaffiliated third party for our newbuild LR2 Aframax tanker vessel P. Marseille. The bareboat financing amount totals $45 million and, as part of this agreement, the vessel was sold and chartered back on a bareboat basis for an eight-year period from delivery from the shipyard at bareboat charter rates equivalent to 96 monthly installments of $6,850 per day and a balloon payment of approximately $25 million payable together with the last installment, with an implied interest rate of Term SOFR plus 2.05% per annum. We have continuous options to repurchase the vessel at predetermined rates following the second anniversary of the bareboat charter.

On March 13, 2025, we entered into a Memorandum of Agreement to sell the 2011-built, 105,400 dwt Aframax tanker vessel, P. Yanbu, to an unaffiliated third party for a gross sale price of $39 million. The vessel was delivered to her new owner on March 24, 2025.

On April 7, 2025, we announced that we entered into a forward sale and exclusivity agreement with an unaffiliated third party, based on which the buyers are granted exclusive rights to submit a bid for the conversion of the vessel P. Sophia, in an auction for the provision of a Floating Production Storage and Offloading (FPSO) vessel for charter to a national oil company (the “Offshore Project”). If the buyer were awarded the Offshore Project by the expiration of the auction on April 5, 2026, the buyer would purchase the P. Sophia, for a gross sale price of $36.05 million. Additionally, if the vessel was delivered to the buyer on or before September 30, 2025, the gross sale price would be increased by $1.0 million. In September 2025, the buyer informed us that the P. Sophia was not selected for the Offshore Project. As a result, the potential forward sale and exclusivity agreement automatically lapsed, no sale will be completed under its terms, and the vessel will continue to operate in the Company’s fleet.

On July 2, 2025, we announced that we successfully placed $100.0 million of bonds in the Nordic bond market. The new bonds are due to mature in July 2029 and will pay a fixed coupon of 9.875% per annum, payable semi-annually in arrears and were priced at 97% of par. The bonds are secured in part by first priority mortgages over our two oldest tanker vessels, the P. Monterey and the P. Sophia. The offering closed on July 17, 2025, and we received net proceeds of $94.7 million which shall be used for tanker acquisitions or bond repurchases.

On July 23, 2025, we, through the vessel-owning subsidiaries of the vessels P. Aliki and P. Long Beach, signed a new loan agreement with Alpha Bank for an aggregate amount of $29.75 million with the purpose of refinancing their existing indebtedness with the lenders. The new loan agreement extends the maturity of the loan to five years from drawing, reduces the applicable margin to 1.90% and includes financial and informational covenants similar to the two previously existing loan agreements with Alpha Bank. On July 24, 2025, we drew down in full the amount of $29.75 million and repaid an equal amount in respect of the indebtedness of the old loan agreements with Alpha Bank, which were consequently terminated.

In July 2025, we took delivery of our newbuilding vessel Hull 1515, which was named P. Massport, and in September 2025, we took delivery of our newbuilding vessel Hull 1596, which was named P. Tokyo. At the time of the vessels’ delivery from the shipyard, as part of two previously signed sale and lease back agreements with unaffiliated third parties, we delivered the vessels to the new buyers collecting the financing amount of $44.25 million and $45.39 million, respectively, and chartered back the vessels for eight and ten years, respectively, on a bareboat basis. The agreements are repayable in monthly installments plus one balloon installment per agreement to be paid together with the last installment, and bear variable interest at SOFR plus a fixed margin. We have continuous options to repurchase the vessels at predetermined rates following the second anniversary of the bareboat charter.

On October 9, 2025, we announced that, through separate wholly-owned subsidiaries, we entered into Memoranda of Agreement with an unaffiliated third party for the purchase of the M/T Eco Bel Air and the M/T Eco Beverly Hills, both 157,286 dwt Suezmax tankers built in 2019 by Hyundai Samho Heavy Industries in South Korea. The vessels feature devices for wake optimization such as rudder bulbs and pre-swirl ducts for energy efficiency, eco-design featuring lower consumption electronic engines, and are scrubber-fitted. The purchase price was $75.4 million per vessel, net of brokerage commissions, and we took delivery of both vessels in December 2026. The vessels were renamed P. Bel Air and P. Beverly Hills, respectively.

52
On December 3, 2025, the re-election of Alex Papageorgiou and Mihalis Boutaris as Class III directors was approved by the requisite vote at our 2025 Annual Meeting.

Recent Developments

In January 2026, we took delivery of our newbuilding vessel Hull 1597, which was named P. Marseille. At the time of the vessel’s delivery from the shipyard, as part of a previously signed sale and lease back agreement with unaffiliated third parties, we delivered the vessel to the new buyers collecting the financing amount of $45.0 million and chartered it back for eight years on a bareboat basis.  The agreement is repayable in monthly installments plus one balloon installment to be paid together with the last installment, and bears variable interest at SOFR plus a fixed margin. We have continuous options to repurchase the vessel at predetermined rates following the second anniversary of the bareboat charter.

On January 26, 2026, we closed a $50.0 million tap issue, priced at 103.00% of par value, of our outstanding senior secured bond due July 17, 2029, paying a fixed coupon of 9.875% per annum, payable semi-annually in arrears. Following the tap issue, the total outstanding amount under the bonds is $150.0 million. Net proceeds from the tap issue will be used for general corporate purposes according to the terms of the bonds. On April 1, 2026, we completed the listing of the Bonds in the Oslo Stock Exchange.

On February 17, 2026, we announced that we signed a Memorandum of Agreement to sell the P. Sophia through a separate wholly-owned subsidiary to an unaffiliated third party for a gross sale price of $35.65 million. The vessel is expected to be delivered to her new owners in mid-2026, subject to customary closing conditions.

On March 2, 2026, we announced that, through two separate wholly-owned subsidiaries, we have signed two shipbuilding contracts for the construction of two 158,000 DWT newbuilding Suezmax tanker vessels. The vessels are expected to be delivered in October 2028 and May 2029, respectively, at a contract price of $81.5 million per vessel. The Company paid $12.23 million (or 15% of the purchase price) for each vessel on April 16, 2026, and will further pay 10% of the purchase price 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.

On March 17, 2026, we announced that we entered into a sale and leaseback financing agreement with an unaffiliated third party for our newbuild LR1 tanker newbuilding vessel, to be named P. San Francisco. The bareboat financing amount totals $37.8 million. As part of this agreement, the vessel will be sold and then chartered back on a bareboat basis for a ten-year period starting from delivery from the shipyard. The bareboat charter includes 120 monthly installments equivalent to $5,451 per day, with an implied interest rate of Term SOFR plus 2.00% per annum. Additionally, a balloon payment of approximately $18.1 million will be due together with the last installment. We have continuous options to repurchase the vessel at predetermined rates following the second anniversary of the bareboat charter.

On April 14, 2026, we announced that we signed a Memorandum of Agreement to sell the P. Aliki through a separate wholly-owned subsidiary to an unaffiliated third party for a gross sale price of $42.65 million. The vessel is expected to be delivered to her new owners by the end of the third quarter 2026, subject to customary closing conditions.

B.
Business Overview

We provide global shipping transportation services through the ownership of tanker vessels. As of the date of this annual report, our operating fleet consists of 9 Aframax tanker vessels and 2 Suezmax tanker vessels with a combined carrying capacity of 1,287,118 dwt and a weighted average age of approximately 9.2 years. Additionally, we expect to take delivery of one newbuild eco-design LR1 tanker in the first quarter of 2027 and two newbuilding Suezmax tanker vessels in October 2028 and May 2029. Founded in January 2010, our business initially focused on the ownership of container vessels. Over time, we have transitioned to a purely tanker fleet, successfully exiting the containership sector in August 2020.

53
During 2025, 2024 and 2023, we had a fleet utilization of 98.6%, 99.2% and 98.7% respectively, our vessels achieved a daily time charter equivalent rate of $31,246, $32,954 and $36,954, respectively, and we generated revenues from our vessels of $84.2 million, $87.5 million and $108.9 million, respectively.

Set forth below is summary information concerning our fleet as of the date of this annual report.

 
Vessel
Year of
Build
Capacity
Builder
Charter
Type
Notes
 
Operating Aframax Tanker Vessels
1
BLUE MOON
2011
104,623 DWT
Sumitomo Heavy Industries Marine & Engineering Co., LTD.
Time-Charter
  
2
BRIOLETTE
2011
104,588 DWT
Sumitomo Heavy Industries Marine & Engineering Co., LTD.
Time-Charter
  
3
P. SOPHIA
2009
105,071 DWT
Hyundai Heavy Industries Co., LTD
Time-Charter
3
4
P. ALIKI
2010
105,304 DWT
Hyundai Heavy Industries Co., LTD
Time-Charter
3
5
P. MONTEREY
2011
105,525 DWT
Hyundai Heavy Industries Co., LTD
Time-Charter
  
6
P. LONG BEACH
2013
105,408 DWT
Hyundai Heavy Industries Co., LTD
Time-Charter
  
7
P. MASSPORT
2025
114,036 DWT
China Shipbuilding Trading Company Limited and Shanghai Waigaoqiao Shipbuilding Company Limited
Time-Charter
  
8
P. TOKYO
2025
114,014 DWT
China Shipbuilding Trading Co. Ltd. (“CSTC”) and Shanghai Waigaoqiao Shipbuilding Co. Ltd.
Time-Charter
  
9
P. MARSEILLE
2026
113,977 DWT
China Shipbuilding Trading Co. Ltd. (“CSTC”) and Shanghai Waigaoqiao Shipbuilding Co. Ltd.
Time-Charter
  
Operating Suezmax Tanker Vessels
10
P. BEVERLY HILLS
2019
157,286 DWT
Hyundai Samho Heavy Industries Co., Ltd
Time-Charter
  
11
P. BEL AIR
2019
157,286 DWT
Hyundai Samho Heavy Industries Co., Ltd
Time-Charter
  
Newbuilding Suezmax Tanker Vessels
11
HULL 1627
-
158,000 DWT
China Shipbuilding Trading Co. Ltd. and Shanghai Waigaoqiao Shipbuilding Co. Ltd.
Time-Charter
1, 2
12
HULL 1628
-
158,000 DWT
China Shipbuilding Trading Co. Ltd. and Shanghai Waigaoqiao Shipbuilding Co. Ltd.
Time-Charter
1, 2
Newbuilding LR1 Tanker Vessel
13
HULL 1624
-
75,000 DWT
Jiangsu Yangzijiang Shipbuilding Group Co., Ltd.
Time-Charter
1, 2

1     As per management's current estimate, expected delivery dates for Hull 1624, to be named P. San Francisco, is January 2027, for Hull 1627 is October 2028, and for Hull 1628 is May 2029.

2    We have secured time charter contracts for Hulls 1624, Hull 1627 and Hull 1628, with employment to commence upon delivery of the vessels to the Company.

3   We have entered into two memoranda of agreements for the sale of vessels P. Sophia and P. Aliki. The vessels are expected to be delivered to their new owners by the end of the third quarter 2026.

54
Management 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 vessels that 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 technical management 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 Performance Shipping Management Inc. (ex Unitized Ocean Transport Limited), our in-house fleet manager. Pursuant to an Administrative Services Agreement, we pay our in-house fleet manager 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 pay our fleet manager 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 under construction or laid-up. For as long as part of the management services were assigned to third-party managers (see below), we paid to our fleet manager a reduced monthly management fee within the range 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 our vessels are chartered under pool arrangements, our fleet manager receives no commission on the vessels’ gross revenues. All management fees and commissions payable to our fleet manager are considered inter-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 these factors 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 we deliver, and enables us to secure employment with high-quality counterparties. Since the initiation of our newbuilding program, we have ordered a total of six tanker vessels, of which three LR2 Aframax vessels have already been successfully delivered to our company. The remaining three vessels, comprising one LR1 chemical/product oil tanker and two Suezmax tankers, are expected to be delivered in early 2027 and late 2028 and early 2029, respectively. These newbuild tankers will significantly reduce our fleet age profile and will be equipped with scrubbers and ballast water treatment systems, feature the latest high-specification engines, and comply with stringent emission requirements. Our decision to invest in newbuild tankers reflects our focus on fuel efficiency and our commitment to participating in the energy transition.  As we grow our fleet, we intend to continue acquiring secondhand vessels built in well-established shipyards in South Korea, Japan, and China with high specifications and fuel efficiency standards. Depending on market conditions, we may continue to opportunistically purchase newbuild vessels 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 in an 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 vessels. This will increase our market presence and enhance our attractiveness to charterers and other customers, including major oil companies, oil traders, and refineries. We believe that by expanding our 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 efficiencies through economies of scale and enhanced vessel utilization.

Continuous 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 and replace 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.

55
Secondhand Acquisitions and Construction. We expect to grow our fleet primarily through selective acquisitions of secondhand tanker vessels from unaffiliated third parties and through entering into newbuilding contracts. We may also acquire vessels upon their delivery from the shipyard. During 2023 and 2024, we entered into four shipbuilding contracts for the construction of an eco-design LR1, and three LR2 tanker vessels; we took gradually delivery of the three of these newbuildings during 2025 and early January 2026, while the fourth newbuilding is expected to be delivered to us in the first quarter of 2027. Moreover, in March 2026, we signed two shipbuilding contracts for the construction of two newbuilding Suezmax tanker vessels, which are expected to be delivered to us in October 2028 and May 2029, respectively. When evaluating acquisitions, we will consider and analyze our expectation of fundamental developments in the seaborne transportation of crude oil and refined petroleum products, changes in trading patterns, the cash flow currently earned and our 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 vessel industry, 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 and technical 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 business partner 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 an experienced 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 control vessel 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

Balanced Fleet Deployment. Our commercial policy comprises of i) spot exposure, often through pool arrangements, via voyage charters and short-term time charters with a duration of less than 12 months and ii) period exposure via medium to long term charters with a duration of up to 60 months. When available, we will also consider entering hybrid contracts such as time charters with a fixed floor rate and profit-sharing participation in the spot market. Our commercial policy should provide us and our shareholders with less exposure to cyclical fluctuations in charter rates. Still, the spot 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 our strategy, our current fleet of tankers operate and are expected to operate under voyage charters and through pool arrangements and period time charters.

Established Commercial Relationships. We expect to capitalize on our commercial and technical management team’s long-standing relationships with leading charterers including Aramco Trading Company, Marathon Maritime Company, Exxon Mobil, and AET Tankers. We believe that our experienced management team will assist us in securing employment for our vessels and will provide us with an established and 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 major oil companies, oil traders, and refineries based on their inspections of our vessels and their review of our operational procedures.

56
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 maintaining a level of indebtedness at or below our target policy will enable us to operate effectively in adverse market conditions. On December 31, 2025, our outstanding debt, including the Nordic bond, was $228.7 million, we held approximately $49.3 million in cash and cash equivalents (including restricted cash of $1.1 million), and our ratio of net debt to the value of our fleet was approximately 33%. However, despite our year-end net debt-to-market value ratio of approximately 33%, the possible new debt financing, which is expected to be used to partially fund the construction costs 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 with our 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 of common shares to expand our fleet may generally increase our market capitalization and boost trading activity for our common shares, but there can be no assurances that such increases will occur or be sustained. In addition, our potential reliance on follow-on offerings of our common shares may significantly dilute existing shareholders.

Governance

In-House Management. We wholly own, directly or indirectly, the subsidiaries that own the vessels comprising our fleet. Our executive management team’s responsibilities include working to ensure the implementation of our business strategy, general corporate oversight, interfacing with financial markets, and supervising the day-to-day commercial and technical management 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 our wholly owned subsidiary company, Performance Shipping Management Inc. (ex Unitized Ocean Transport Limited), our fleet manager. For accounting and administrative purposes only, in exchange for providing us with commercial and technical services, we pay to our fleet manager 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 with extensive 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 our executive, 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 private shipping companies.

Our Customers

Our customers include national, regional, and international companies, such as ST Shipping Transport, Aramco Trading Company, Marathon Shipping, Exxon Mobil, AET Tankers and Maersk Tankers. In 2025, six of our charterers accounted for 84% of our revenues: AET Tankers PTE Ltd (12%), ST Shipping Transport (14%), Aramco Trading Company (18%), Clearlake (11%), Marathon (16%) and Maersk Tankers (ex Penfield Tankers (Aframax) LLC) (13%). In 2024, four of our charterers accounted for 80% of our revenues: ST Shipping Transport (26%), Aramco Trading Company (16%), Marathon Maritime Company (16%) and Maersk Tankers (ex Penfield Tankers (Aframax) LLC) (22%). In 2023, four of our charterers accounted for 84% of our revenues: ST Shipping Transport (28%), Aramco Trading Company (11%), Signal Maritime Aframax Pool LTD (13%) and Penfield Tankers (Aframax) LLC (32%). 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’s financial 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 efficiently and economically carry crude oil from one continent to the other and across the oceans. The shipping of crude oil is the only transportation method that implies the lower cost per oil barrel compared to other methods, such as pipelines.

57
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 a discharge 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 the owners 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 on long-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 in shorter regional trades, mainly in Northwest Europe, the Caribbean, the Mediterranean, and Asia.

Tanker Newbuilding Prices

The factors which influence new-build prices include ship type, shipyard capacity, demand for ships, “berth cover”, i.e., the forward book of business of shipyards, buyer relationships with the yard, individual design specifications, including fuel efficiency or environmental features and the price of ship materials, engine and machinery equipment and particularly the price of steel.

Tanker Secondhand Prices

Second-hand vessel prices are primarily influenced by trends in the supply and demand for vessel capacity. During extended periods of high demand, indicated by elevated charter rates, secondhand vessel values tend to appreciate. Conversely, during periods of low demand, reflected by lower charter rates, vessel values tend to decline. Vessel values are also influenced by age, specifications and the replacement cost (new-build price) 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 transparent and 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 remaining economic life are less susceptible to the level of charter rates than older vessels with limited remaining economic life.

The 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 are paid 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 voyage related 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.

58
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 to each 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 the repositioning 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 is affected 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 more stable 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 rates include 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 market conditions.

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 often precede 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 United States. 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 will affect any spot market-related rates that we may receive.

Environmental and Other Regulations in the Shipping Industry

Government regulation and laws significantly affect the ownership and operation of our fleet. We are subject to international conventions and treaties, 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 environmental protection, including the storage, handling, emission, transportation, and discharge of hazardous and non-hazardous materials, and the remediation of contamination and liability for damage to natural resources. Compliance with such laws, regulations, and other requirements, entails significant expense, including vessel modifications and implementation of certain operating procedures.

Our vessels are subject to both scheduled and unscheduled inspections by a range of governmental and private entities. These include local port authorities, national authorities such as Port State Control or the United States Coast Guard (“USCG”), harbormasters, classification societies, flag state administrations, and, notably, charterers who conduct their own assessments through terminal inspections and the SIRE 2.0 inspection regime.

SIRE 2.0, launched globally in Q4 2024 by the Oil Companies International Marine Forum, is the next-generation Ship Inspection Report Programme. It replaces the legacy SIRE model with a risk-based, real-time digital inspection process tailored to each vessel's operational and technical profile. Inspections are conducted by specially trained and accredited inspectors using a dynamic Vessel Inspection Questionnaire via tablet-based technology. The system aims to enhance safety, transparency, and environmental compliance across oil, chemical, and gas tanker operations.

59
Compliance with inspection standards requires the Company to maintain all necessary permits, licenses, certificates, and other operational authorizations. Failure to meet these requirements may result in increased costs, delays, or the temporary suspension of vessel operations.

Increasing environmental concerns have created a demand for vessels that conform to stricter environmental standards. We are required to maintain operating standards for all of our vessels that emphasize operational safety, quality maintenance, continuous training of our officers and crews, and compliance with U.S. and international regulations. We believe that our vessels operate in substantial compliance with applicable environmental laws and regulations and that our vessels have all material permits, licenses, certificates, or other authorizations necessary for the conduct of our operations. However, because such laws and regulations frequently change and may impose increasingly stricter requirements, we cannot 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 serious future marine incident that causes significant adverse environmental impact could result in additional legislation or regulation that could negatively affect our profitability.

International Maritime Organization

The IMO, the United Nations (“UN”) agency for maritime safety and the prevention of pollution by vessels, has adopted MARPOL, SOLAS, the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers (“STCW”), and 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 any type, 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 II and 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.

Since 2014, the IMO’s Marine Environmental Protection Committee, or the MEPC, amendments to Annex I Condition Assessment Scheme have required compliance with the 2011 International Code on the Enhanced Programme of Inspections during Surveys of Bulk Carriers and Oil Tankers (the “ESP Code”) which provides for enhanced inspection programs. Effective July 1, 2024, amendments to the ESP Code addressing inconsistencies on examination of ballast tanks at annual surveys for bulk carriers and oil tankers.

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 oxide emissions from all commercial vessel exhausts and prohibits “deliberate emissions” of ozone depleting substances (such as halons and chlorofluorocarbons), emissions of volatile compounds 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 to be 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) are also prohibited. We believe that all our vessels are currently compliant in all material respects with these regulations.

The 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 progressive reduction of the amount of sulfur contained in any fuel oil used on board ships. Effective January 1, 2020, there has been a global limit of 0.5% m/m sulfur oxide emissions limit (reduced from 3.50%). This limitation can be met by using low-sulfur compliant fuel oil, alternative fuels or exhaust gas cleaning systems (“EGCS”). Ships are required to obtain bunker delivery notes and International Air Pollution Prevention Certificates from their flag states that specify sulfur content. Additionally, at MEPC 73, amendments to Annex VI to prohibit the carriage of bunkers above 0.5% sulfur on ships became effective on March 1, 2020. Fuels with higher sulfur content than required by Reg. 14 of Annex VI can still be delivered to a ship, provided the ship uses equivalent measures, such as an EGCS. Additional amendments to Annex VI revising, among other terms, the definition of “Sulphur content of fuel oil” (if the flashpoint is under 70°C) and “low-flashpoint fuel” and pertaining to the sampling and testing of onboard fuel oil, became effective in April 2022. Amendments to Annex VI requiring bunker delivery 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 became effective on May 1, 2024. Additional amendments intended to prevent the supply of oil fuel not complying with SOLAS flashpoint requirements and adding new definitions regarding probability of ignition became effective January 1, 2026. These regulations subject ocean-going vessels to stringent emissions controls and may cause us to incur substantial costs.

60
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 of propulsion 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 (“ECAs”). As of January 1, 2015, ships operating within an ECA were not permitted to use fuel with sulfur content in excess of 0.1% m/m. MARPOL Annex VI establishes procedures for designating ECAs. The IMO has designated several ECAs, including specified portions of the Baltic Sea area, the North Sea area, the North American area and the United States Caribbean Sea area. In December 2022, the IMO adopted amendments designating the Mediterranean Sea as an ECA for sulphur oxide emissions, which entered into force in May 2025. In April 2025, the IMO also approved the designation of the North-East Atlantic Ocean as an ECA for sulphur oxide, nitrogen oxide and particulate matter emissions, subject to the adoption of amendments to MARPOL Annex VI At MEPC 82, the IMO adopted additional amendments to Annex VI designating the Canadian Arctic and the Norwegian Sea as ECAs, which entered into force on March 1, 2026, taking effect on March 1, 2027. Ocean-going vessels in these areas will be subject to stringent emission controls and ocean-going vessels trading in ECAs are subject to increased operational costs due to the higher price of fuel with low sulfur content and this may cause us to incur additional costs. Other areas in China are subject to local regulations 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 engines or port operations by vessels are adopted by the U.S. Environmental Protection Agency (the “EPA”) or the states where we operate, compliance with these regulations could entail significant capital expenditures or otherwise increase the costs of our operations.

MEPC 79 adopted amendments to Annex VI on the reporting of mandatory values related to the implementation of the IMO short-term GHG reduction measure, including attained EEXI, CII and rating values to the IMO DCS, which became effective May 1, 2024. MEPC 80 adopted the 2023 IMO Strategy on Reduction of GHG Emissions from Ships with enhanced 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 2030 and to achieve net-zero emissions from international shipping by 2050. At its 83rd session in April 2025, the IMO’s Marine Environment Protection Committee (“MEPC 83”) approved draft amendments to MARPOL Annex VI establishing the “IMO Net-Zero Framework.” The proposed framework includes a technical element in the form of a marine fuel standard aimed at reducing the greenhouse gas intensity of marine fuels and an economic element designed to price greenhouse gas emissions from international shipping. The draft amendments are expected to be considered for adoption at a future session of the MEPC. If adopted, the amendments would enter into force in accordance with the MARPOL amendment procedures.

Amended Annex VI also establishes new tiers of stringent nitrogen oxide emissions standards for marine diesel engines, depending on their date of installation. Now Annex VI provides for a three-tier reduction in NOx emissions from marine diesel engines, with the final tier (Tier III) to apply to engines installed on vessels constructed on or after January 1, 2016 and which operate in the North American ECA or the U.S. Caribbean Sea ECA, to vessels constructed on or after January 1, 2021 and operating in the Baltic Sea ECA or North Sea ECA, to vessels with keels laid on or after January 1, 2025 operated in the Canadian Arctic ECA, and to certain vessels as early as March 1, 2026, depending on vessel construction and delivery dates and operating in the Norwegian Sea ECA, as well as ECAs designated in the future by the IMO. The EPA promulgated equivalent (and in some senses stricter) emissions standards in late 2009. Additionally, amendments to Annex II, which strengthen discharge requirements for cargo residues and tank washings in specified sea areas (including North West European waters, Baltic Sea area, Western European waters and 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 (“GT”) to collect and report annual data on fuel oil consumption to an IMO database, with the first year of data collection having commenced on January 1, 2019. The IMO used such data as the first step in its roadmap (through 2023) for developing its strategy to reduce greenhouse gas emissions from ships, as discussed further below.

61
As of January 1, 2013, MARPOL made mandatory certain measures relating to energy efficiency for ships. All ships are now required to develop and implement Ship Energy Efficiency Management Plans (“SEEMPs”), and new ships must be designed in compliance with minimum energy efficiency levels per capacity mile as defined by the Energy Efficiency Design Index (“EEDI”). Additionally, MEPC 75 adopted amendments to MARPOL Annex VI which brought forward the effective date of the EEDI’s “phase 3” requirements to April 1, 2022, for several ship types, including gas carriers, general cargo ships, and LNG carriers, with the remaining vessels required to comply from January 1, 2025. MEPC 81 adopted amendments to the guidelines for the development of SEEMPs, including methodology for collecting data. These amendments came into effect on August 1, 2025.

Additionally, MEPC 76 adopted amendments to Annex VI which impose new regulations to reduce greenhouse gas emissions from ships. The revised Annex VI entered into force in November 2022, and includes requirements to assess and measure the energy efficiency of all ships and set the required attainment values, with the goal of reducing the carbon intensity of international shipping. The requirements include (1) a technical requirement to reduce carbon intensity based on a new EEXI, and (2) operational carbon intensity reduction requirements based on a new operational CII. The attained EEXI is required to be calculated for ships of 400 gross tonnage and above, in accordance with different values set for ship types and categories. With respect to the CII requirement, which took effect from January 1, 2023, ships of at least 5,000 gross tonnage are required to document and verify their actual annual operational CII achieved against a determined required annual operational CII. The EEXI and CII certification requirements entered into effect on January 1, 2023. At MEPC 83, amendments were adopted establishing revised operational carbon intensity reduction factors applicable for the period from 2027 through 2030.

MEPC 76 also adopted amendments requiring ships of 5,000 gross tonnage and above to revise their SEEMP to include methodology for calculating the ship’s attained annual operation CII and the required annual operational CII, on or before June 1, 2023. MEPC 76 also approved amendments to MARPOL Annex I to prohibit the use and carriage for use as fuel of heavy fuel oil by ships in Arctic waters on and after July 1, 2024. For ships subject to Regulation 12A (oil fuel tank protection), the prohibition will become 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 revised standards. Additional or new conventions, laws, and regulations may be adopted that could require the installation of expensive emission control systems and could adversely affect our business, results of operations, cash flows, and financial condition.

Safety Management 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, personal injury claim or property claim against ship owners. We believe that our vessels are in substantial compliance with SOLAS and LLMC standards.

Under the ISM Code, our operations are also subject to environmental standards and requirements. The ISM Code requires the party with operational control of a vessel to develop an extensive safety management system that includes, among other things, the adoption of a safety and environmental protection policy setting forth instructions and procedures for operating its vessels safely and describing procedures for responding to emergencies. We rely upon the safety management system that our technical management team has developed, which constitutes a functional Management System (MS), conforming to ISM Code requirements, which includes a safety and environmental protection policy, safe operating procedures, defined levels of authority, procedures for internal audits, etc. The failure of a vessel 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, and may 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, which entered into force on January 1, 2024. The amendments, which include amendments to SOLAS, may require vessel owners/operators to ensure their radio equipment is compliant.

62
The ISM Code requires that vessel operators obtain a safety management certificate (an “SMC”) for each vessel they operate. This certificate evidences compliance by a vessel’s management with the ISM Code requirements for a safety management system. No vessel can obtain an SMC unless its manager has been awarded a document of compliance (“DOC”), issued by each flag state (or a Recognized Organization on behalf of the flag administration), under the ISM Code. We have obtained applicable DOCs for our offices and SMCs for all of our vessels. The DOCs and SMCs are renewed as required.

Amendments to SOLAS chapter II-2, which are intended to prevent the supply of oil fuel not complying with SOLAS flashpoint requirements, requiring that ships carrying oil fuel must, prior to bunkering, be provided with a declaration certifying that the oil fuel supplied is in conformity with SOLAS regulation II-2/4.2.1, entered into force  on January 1, 2026.

Regulation II-1/3-10 of the SOLAS Convention governs ship construction and stipulates that ships over 150 meters in length must have adequate strength, integrity, and stability to minimize risk of loss or pollution. Goal-based standards amendments in SOLAS regulation II-1/3-10 entered into force in 2012, and from July 1, 2016 apply to new oil tankers and bulk carriers. Regulation II-1/3-10 requires that all oil tankers and bulk carriers of at least 150 meters in length, for which the building contract is placed on or after July 1, 2016, satisfy applicable structural requirements conforming to the functional requirements of the International Goal-based Ship Construction Standards for Bulk Carriers and Oil Tankers. Amendments to the International Code on the Enhanced Programme of Inspections during Surveys of Bulk Carriers and Oil Tankers, 2011 became effective and address inconsistencies on examination of ballast tanks at annual surveys for bulk carriers and oil tankers.

Amendments to the SOLAS Convention Chapter VII apply to vessels transporting dangerous goods and require those vessels to be in compliance with the International Maritime Dangerous Goods Code (“IMDG Code”). Effective January 1, 2018, the IMDG Code includes (1) updates to the provisions for radioactive material, reflecting the latest provisions from the International Atomic Energy Agency, (2) new marking, packing, and classification requirements for dangerous goods; and (3) new mandatory training requirements. Amendments which 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 IMO type 9 tank, (2) new abbreviations for segregation groups; and (3) special provisions for carriage of lithium batteries and of vehicles powered by flammable liquid or gas. Additional amendments to the IMDG Code relating to the segregation requirements for certain substances, and classification and transport of carbon 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 set the recommendations for all transport modes, became effective January 1, 2024. In May 2024, the last IMDG Code amendment was adopted, covering additional provisions for ships carrying dangerous goods. The amendment became effective on January 1, 2026.

The IMO has also adopted the STCW. As of February 2017, all seafarers are required to meet the STCW standards and be in a possession of a valid STCW certificate. Flag states that have ratified SOLAS and STCW generally employ the classification societies, which have incorporated SOLAS and STCW requirements into their class rules, to undertake surveys to confirm compliance.

Actions by the IMO’s Maritime Safety Committee and United States agencies indicate that cybersecurity regulations for the maritime industry are likely to be further developed in the near future in an attempt to combat cybersecurity threats. For example, effective January 2021, cyber-risk management systems must be incorporated by shipowners and managers. Additional requirements apply to U.S. flagged vessels. This might cause companies to create additional procedures for monitoring cybersecurity, which could require additional expenses and/or capital expenditures. The impact of such 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. For example, the IMO adopted the BWM Convention in 2004. The BWM Convention entered globally into force on September 8, 2017. The BWM Convention requires ships to manage their ballast water to remove, render harmless or avoid the uptake or discharge of new or invasive aquatic organisms and pathogens within ballast water and sediments.

63
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 involves installing onboard systems to treat ballast water and eliminate unwanted organisms. Ballast Water Management Systems (“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 be approved in accordance with IMO Guidelines (Regulation D-3). Pursuant to the BWM Convention amendments that entered into force in October 2019, BWMS installed on or after October 28, 2020, shall be approved in accordance with BWMS Code, while BWMS installed before October 23, 2020, must be approved taking into account guidelines developed by the IMO or the BWMS Code. MEPC 72’s amendments to the BWM Convention requires all ships to meet the D-2 standard. Compliance  with these requirements  may increase costs for ocean carriers and may have a material effect on our operations. However, many countries already regulate the discharge of ballast water carried by vessels from country to country to prevent the introduction of invasive and harmful species via such discharges. Amendments to the BWM Convention concerning commissioning testing of BWMS became effective in 2022, and other amendments concerning the form of the Ballast Water Record Book entered into force on February 1, 2025.

The IMO adopted 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 be strictly 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 certain limits 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 compensation limits 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 is caused 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 covered by 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 for environmental incidents. P&I Associations in the International Group issue the required Bunkers Convention “Blue Cards” to enable signatory states to issue certificates. All of our vessels have a CLC State-issued certificate attesting that the required insurance coverage is in force.

The IMO also adopted 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 Bunker Convention 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 national or international limitation regime (but not exceeding the amount calculated in accordance with the LLMC). With respect to non-ratifying states, liability for spills or releases of oil carried as fuel in ship’s bunkers 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 Bunker Convention 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-fouling Convention, 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 of vessels. Vessels of over 400 gross tons engaged in international voyages are required to undergo an initial survey before the vessel is put into service, or before an International Anti-fouling System Certificate is issued for the first time and subsequent surveys are required when the anti-fouling systems are altered or replaced. In 2023, amendments to the Anti-fouling Convention came into effect which include controls on the biocide cybutryne; ships shall not apply cybutryne or reapply anti-fouling systems containing cybutryne from January 1, 2023.

All of our vessels have obtained Anti-fouling System Certificates per the Anti-fouling Convention.

64
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 insurance coverage 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 in compliance 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 vessels has a valid SMC, a document issued to the vessel which signifies that the Company and its shipboard management operate under the approved 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

OPA established an extensive regulatory and liability regime for the protection and cleanup of the environment from oil spills. OPA affects all “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 territorial sea and its 200 nautical mile 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 “owner and 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.

Under 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 third party, 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, including bunkers (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 March 2023, the USCG adjusted the limits of OPA liability for 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), for non-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 limits of 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 its agent, 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 not apply 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) reasonably cooperate 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 (Section 311 (c), (e)) or the Intervention on the High Seas Act.

65
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, or destruction 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 the discharge 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 per gross 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 (rendering the 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 the primary 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 responsible person 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 to establish 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. We comply 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 regulations regarding 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. For example, the U.S. Bureau of Safety and Environmental Enforcement’s revised Production Safety Systems Rule (“PSSR”), effective December 27, 2018, modified and relaxed certain environmental and safety protections under the 2016 PSSR. Compliance with any new requirements of OPA and future legislation or regulations applicable to the operation of our vessels could negatively impact the cost of our operations and adversely affect our business.

OPA specifically permits individual states to impose their own liability regimes with regard to oil pollution incidents occurring within their boundaries, provided they accept, at a minimum, 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 navigable waterway 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 hazardous substance. 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 within their waters, although in some cases, states which have enacted this type of legislation have not yet issued implementing regulations defining vessel owners’ responsibilities under these laws. We intend to comply with all applicable state regulations in the ports where our vessels call.

We 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 our insurance coverage it could have an adverse effect on our business and results of operation.

Other United States Environmental Initiatives

The CAA requires the EPA to promulgate standards applicable to emissions of volatile organic compounds and other air contaminants. The CAA requires states to adopt State Implementation Plans some of which regulate emissions resulting from vessel loading and unloading operations which may affect our vessels.

66
The CWA prohibits the discharge of oil, hazardous substances, and ballast water in U.S. navigable waters unless authorized by a duly issued permit or exemption 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, and damages and complements the remedies available under OPA and CERCLA. In 2015, the EPA expanded the definition of “waters of the United States” (“WOTUS”), thereby expanding federal authority under the CWA. 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’s interpretation of the CWA in its decision dated May 25, 2023. The final rule became effective September 8, 2023 and operates to limit the CWA. On March 12, 2025, the EPA announced it would work with the U.S. Army Corp of Engineers to review the definition of WOTUS and undertake a rulemaking process to revise the definition of WOTUS. During the rulemaking process, the EPA advised it would provide guidance implementing the pre-2015 definition of WOTUS. On November 17, 2025, the EPA and Army Corps proposed a new definition of WOTUS to align with the Supreme Court’s decision, narrowing federal jurisdiction and clarifying exclusions. Public comments closed on January 5, 2026 and will be taken into consideration as federal agencies take final action on the rule.

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 ballast water 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 from entering 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 waters pursuant to the Vessel Incidental Discharge Act (“VIDA”), which was signed into law on December 4, 2018, and requires that the USCG develop implementation, compliance and enforcement regulations regarding ballast water. On October 26, 2020, the EPA published a Notice of Proposed rulemaking for Vessel Incidental Discharge National Standards of Performance 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 National Standards of Performance, which shares new ballast water information that the EPA received from the USCG. On September 20, 2024, the EPA finalized national standards of performance for non-recreational vessels 79-feet in length and longer with respect to incidental discharges and thus the Vessel Incidental Discharge National Standards of Performance were published on October  9, 2024. Within two years of publication, the USCG is required to develop corresponding implementation regulations. Therefore, until new USCG regulations are final and enforceable, non-military non-recreational vessels greater than 79 feet in length must continue to comply with the requirements of the 2013 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 where required.

Compliance with the EPA, USCG, and state regulations requires the installation of ballast water treatment equipment on our vessels or the implementation of other port facility disposal procedures at potentially substantial cost, or may otherwise restrict our vessels from entering U.S. waters. Our vessels are equipped with ballast water treatment systems, which are subject to functionality monitoring and treated ballast water sampling and analysis, in compliance with the requirements stipulated in 2013 VGP.

European Union Regulations

On 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 Green Deal growth strategy. There are two key initiatives relevant to maritime arising from the proposals: (a) a bespoke emissions trading scheme for maritime (“ETS”) which commenced in 2024 and applies to all ships above a gross tonnage of 5,000; and (b) a FuelEU regulation which seeks to require all ships above a gross tonnage of 5,000 to carry on board a “FuelEU certificate of compliance” starting June 30, 2026 as evidence of compliance with the limits on the greenhouse gas intensity of the energy used on-board by a ship and with the requirements on the use of on-shore power supply at berth. ETS was agreed in December 2022 and FuelEU was passed into law on July 25, 2023 and entered into force on January 1, 2025.

More specifically, ETS is to apply gradually over the period from 2024 2026. 40% of allowances had to be surrendered in 2025 for the year 2024; 70% of allowances will have to be surrendered in 2026 for the year 2025; 100% of allowances will 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/ship manager/bareboat charterer who not only assume full compliance for ETS but also under the ISM Code. If the latter contractual arrangement is entered into, this needs to be reflected in a certified mandate signed by both parties and presented to the administrator of the scheme. The first compliance deadline was September 30, 2025 and, going forward, compliance is required on September 30 of each year. The cap under the ETS is set by taking into account EU MRV system emissions data for the years 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% of emissions from voyages which start or end at EU ports (but the other destination is outside the EU). Over time, amendments have emerged that will allow 100% of non-EU emissions to be caught, as a result of the IMO’s recent failure to introduce global market measures. In addition, the EU MRV system is also being revised such that the scope of ships to be monitored will now extend to those that are 400GT and more. The reason for this is because the ETS will likely apply to ships that are between 400GT and 5,000GT starting from circa 2027. EU MRV already captures cargo and offshore vessels between 400GT and 5,000GT as of January 1, 2025. The first deadline for the surrender of allowances was September 30, 2025, with a few shipping companies missing the deadline for opening a Maritime Operator Holding Account on time and incurring penalties of €100 per each unreported ton of carbon. From a risk management perspective, new systems, personnel, data management systems, costs recovery mechanisms, revised service agreement terms and emissions reporting procedures have been put in place across the industry, at significant cost, to continue to manage the administrative aspect of ETS compliance.

67
Additionally, on July 25, 2023, the European Council of the European Union adopted FuelEU under the FuelEU Initiative of its “Fit for 55” package which sets limitations on the acceptable yearly greenhouse gas intensity of the energy used by covered vessels. Due to delays in the incorporation of the regulation into the Agreement on the European Economic Area (“EEA”), there will be delays in its implementation in Europe. Among other things, the Maritime Fuel Regulation requires that greenhouse gas intensity of fuel used by covered vessels is reduced by 2% starting January 1, 2025, with additional reductions contemplated every five years (up to 80% by 2050). Shipping companies may enter into pooling mechanisms with other shipping companies in order to achieve compliance, bank surplus emissions and borrow compliance balances from future years. Decisions whether to pool, bank or borrow Fuel EU compliance balances will have to be made by April 30, 2026. A FuelEU Document of Compliance is required to be kept on board a vessel to show compliance by June 30, 2026. Both the ETS and FuelEU schemes have significant impact on the management of the vessels calling to EU ports, by increasing the complexity and monitoring of, and costs associated with the operation of vessels and affecting the relationships with our time charterers.

Responsible recycling and scrapping of ships are becoming increasingly important issues for shipowners and charterers alike as the industry strives to replace old ships with cleaner, more energy efficient models. The recognition of the need to impose recycling obligations on the shipping industry is not new. In 2009, the IMO adopted the Hong Kong Ship Recycling Convention (the “Hong Kong Convention”), which sets standards for ship recycling. Concerned at the lack of progress in satisfying the conditions needed to 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 Convention both 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 existing ships 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 with a certificate 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 entered into force on June 26, 2025, it is expected the EU Ship Recycling Regulation will be reviewed in light of this. Notably, the Hong Kong Convention has seen weak implementation and poor results to date, suggesting the EU may elect not to alter its regulation for the moment.

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 and a definitive ban for repeated offenses. The regulation also provided the European Union with greater authority and control over classification societies, by imposing more requirements on classification societies and providing for fines or penalty payments for organizations that failed to comply. Furthermore, the EU has implemented regulations requiring vessels to use reduced sulfur content fuel for their main and auxiliary engines. The EU Directive 2016/802 of the Council of May 11, 2016 introduced requirements parallel to those in Annex VI relating 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 English Channel (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, use fuels 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 to water, land, protected species, and habitats) on the basis of the “polluter pays” principle. Operators whose activities caused the environmental damage are liable for the damage (subject to certain exceptions). With regard to specified activities causing environmental damage, operators are strictly liable. The directive applies where damage has already occurred and where there is 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.

68
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 an intermediate 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 (described above) to support the climate policy agenda.

On November 10, 2022, the EU Parliament adopted the Corporate Sustainability Reporting Directive (the “CSRD”). EU member states have 18 months to integrate it into national law. The CSRD creates new, detailed sustainability reporting requirements and will significantly expand the number of EU and non-EU companies subject to the EU sustainability reporting framework. The required disclosures will go beyond environmental and climate change reporting to include social and governance matters (for example, respect for employee and human rights, anti-corruption and bribery, corporate governance, and diversity and inclusion). In addition, it will require disclosure regarding the due diligence processes implemented by a company 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 apply on a phased basis, starting from the financial year 2024 through 2028, to large EU and non-EU undertakings subject to certain financial and employee thresholds being met (as described below). Following the publication of the Omnibus package of proposals on February 26, 2025, which are designed to simplify EU regulations and cut red tape, the application of all reporting requirements in the CSRD for companies that are due to report in 2026 and 2027 has been postponed to 2028 (in respect of the 2027 financial year). The Omnibus package was approved by the EU Parliament on December 16, 2025 and will simplify compliance for small and medium-sized entities and all companies with up to 1,000 employees and less than EUR 450 million turnover will be outside the scope of the CSRD. For companies that are in scope, the European Commission will adopt a delegated act to revise and simplify the existing sustainability reporting standards. The CSRD will now apply to (a) EU undertakings and non-EU issuers, who on an individual or group basis, have more than EUR 450 million net turnover and more than 1,000 employees on average during the financial year; and (b) non-EU ultimate parent undertakings that have more than EUR 450 million net turnover generated in the EU (individually or on a consolidated basis) for each of their last two consecutive financial years; and an EU subsidiary or a branch in the EU with more than EUR 200 million net turnover in the preceding financial year. New systems, personnel, data management systems and reporting procedures will have to be put in place, at significant cost, to prepare for and manage the administrative aspect of CSRD compliance.
 
A new Corporate Sustainability Due Diligence Directive (“CSDDD”) was also adopted on July 25, 2024 as part of the Fit for 55 Package and establishes a corporate due diligence duty. CSDDD was to apply to large companies with more than 1,000 employees and the turnover threshold EUR450 million. However, following the approval of the Omnibus agreement on December, 16, 2025, CSDDD is now expected to apply from July 26, 2029 and the thresholds have now been revised to only apply to (a) EU undertakings that have or—if they are an ultimate parent undertaking, their group—has more than EUR 1.5 billion net turnover, and more than 5,000 employees on average during the financial year; and (b) non-EU undertakings that have or—if they are an ultimate parent undertaking, their group—has more than EUR 1.5 billion net turnover generated in the EU. The aim of CSDDD is to foster sustainable and responsible corporate behavior and to anchor human rights and environmental considerations in companies’ operations and corporate governance. The new rules endeavor to ensure that businesses address adverse impacts of their actions, including in their value chains inside and outside Europe. New systems, personnel, data management systems and reporting procedures will have to be put in place, at significant cost, to prepare for and manage the administrative aspect of CSDDD compliance.
 
International Labour Organization

The International Labour Organization, a specialized agency of the United Nations, adopted the Maritime Labour Convention, 2006 (“MLC 2006”) to establish minimum standards for the working and living conditions of seafarers. The MLC 2006 applies to all ships of 500 gross tonnage or more that are engaged in international voyages or fly the flag of a ratifying Member State and operate between ports in different countries. To demonstrate compliance, affected vessels must carry both a Maritime Labour Certificate and a Declaration of Maritime Labour Compliance, issued following inspection and approval by the vessel’s flag state. The Company has implemented a comprehensive Management System that establishes working and living standards for all seafarers onboard, which exceed the minimum requirements of the MLC 2006. As of the date of this report, all Company vessels have been issued valid MLC Certificates by their respective flag states. The MLC 2006 has been subject to periodic updates, with the most recent amendments entering into force on December 23, 2024, addressing issues such as access to drinking water, internet connectivity, repatriation costs, and protections during public health emergencies.

69
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 Climate Change (this task having been delegated to the IMO), which entered into force in 2005 and pursuant to which adopting countries have been required to implement national programs to reduce greenhouse gas emissions with targets 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 to reduce 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 does not directly limit greenhouse gas emissions from ships. On January 20, 2025, President Donald Trump signed an executive order initiating the United States' withdrawal from the Paris Agreement, which took effect on January 27, 2026.

At MEPC 70 and MEPC 71, a draft outline of the structure of the initial strategy for developing a comprehensive IMO strategy for the reduction of greenhouse gas emissions from ships was approved. In accordance with this roadmap, at MEPC 80 in July 2023, the IMO adopted the 2023 IMO Strategy on Reduction of GHG Emissions from Ships, which revoked the 2018 initial strategy. The 2023 IMO GHG Strategy identified 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 from transport work, as an average across international shipping, by at least 40% by 2030, compared to 2008 and (3) adoption of zero or near-zero GHG emission technologies, fuels, and/or energy sources, striving to represent 10% of the energy sources used by international shipping by 2030; and (4) to reach net-zero GHG emissions by or around 2050. The IMO net-zero framework was approved by MEPC 83, including the new fuel standard for ships and a global pricing mechanism for emissions. These measures were submitted for adoption as legally binding, but in October 2025 the MEPC agreed to adjourn the meeting on adoption until 2026. The UK too is considering introducing a UK-based emissions trading scheme to apply from July 1, 2026 for ships above 5,000GT but for domestic voyages only (i.e. voyages taking place between two UK ports). These regulations could cause us to incur additional substantial expenses.
 
As noted above, at the MEPC 70 meeting in October 2016, IMO DCS was adopted which requires ships above 5,000 gross tons to report consumption 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, including dredging, 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 for data collection and reporting. After each calendar year, the aggregated data is reported to the flag state. If the data has been reported in accordance with the requirements, the flag state 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 Integrated Shipping Information System platform. IMO will then produce annual reports, summarizing the data collected. Thus, currently, data related to the GHG emissions of ships above 5,000 gross tons calling at ports in the EEA must be reported in two separate, but largely overlapping, systems: the EU MRV, which has applied since 2018, and the IMO DCS, which has applied since 2019. The proposed revision of Regulation (EU) 2015/757 adopted on 4 February 2019 aims to align and facilitate the simultaneous implementation of the two systems, however it is still not clear when the proposal will be adopted.

IMO’s MEPC 76 adopted amendments to MARPOL Annex VI requiring ships to reduce greenhouse gas emissions. The Revised Annex VI entered into force on November 1, 2022. and introduced carbon intensity measures, including the Energy Efficiency Existing Ship Index (“EEXI”) and the Carbon Intensity Indicator (“CII”). Further amendments to Annex VI relating to the reporting of EEXI and CII values to the IMO Data Collection System were adopted at MEPC 79 and became effective on May 1, 2024.

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 an intermediate 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 (described above) 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 carbon dioxide emissions and other information. As previously discussed, regulations relating to the inclusion of greenhouse gas emissions from the maritime sector in the European Union’s carbon market are also forthcoming.

70
In the United States, the EPA issued a finding that greenhouse gases endanger the public health and safety, adopted regulations to limit greenhouse gas emissions from certain mobile sources, and proposed regulations to limit greenhouse gas emissions from large stationary sources. The EPA or individual U.S. states could enact environmental regulations that could negatively affect our operations. For example, the EPA held a public hearing in January 2023 on a proposal to achieve comprehensive emissions reductions and in December 2023, issued a final rule to sharply reduce emissions of methane and other air pollution from oil and natural gas operations, including storage vessels. In 2024, the EPA issued a final Waste Emissions Charge rule to reduce methane emissions, applicable to waste emissions from high-emitting oil and gas facilities. On March 14, 2025, a joint Congressional resolution, signed by President Trump, disapproved the 2024 Waste Emissions Charge Rule, such that it is no longer in effect. The EPA is evaluating options and obligations with respect to implementing CAA section 136(c-g) (pertaining to methane emissions and waste reduction).

Any 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 the international level to succeed the Kyoto Protocol or Paris Agreement, that restricts emissions of greenhouse gases could require us to make significant financial expenditures which we cannot 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. Maritime Transportation Security Act of 2002 (“MTSA”). To implement certain portions of the MTSA, the USCG issued regulations requiring the implementation of certain security requirements aboard 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 Ship and 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 attain an International Ship Security Certificate (“ISSC”) from a recognized security organization approved by the vessel’s flag state. Ships operating without a valid certificate may be detained, 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 equipped ships 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 on board showing a vessel’s history, including the name of the ship, the state whose flag the ship is entitled to fly, the date on which 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 their registered address; and


•
compliance with flag state security certification requirements.

71
The USCG regulations, intended to align with international maritime security standards, exempt non-U.S. vessels from MTSA vessel security measures, provided such vessels have 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 a significant negative 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 fully complies 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 the Gulf of Aden and the Red Sea and the 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 of the 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 security measures in accordance with Best Management Practices to Deter Piracy, notably those contained in the BMP Maritime Security Guidelines.

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 Classification Societies, or 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 to ensure 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 the ship. 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 harmonized Common 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 consistency between 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).

The 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 annual and 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 the vessel’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) years old 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 continuous survey 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 of Class 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 to carry cargo between ports and will be unemployable and uninsurable, which could cause us to be in violation of certain covenants in our bonds or loan agreements. Any such inability to carry cargo 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 interruptions due to political circumstances in foreign countries, piracy incidents, hostilities, and labor strikes. In addition, there is always an inherent possibility of marine disaster, including oil spills and other 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 liability insurance more expensive for shipowners and operators trading in the United States market.

72
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 in amounts 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 coverage throughout 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 specific claim 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 are each 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 connection with 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 other related costs. Protection and indemnity insurance is a form of mutual indemnity insurance, extended by protection and indemnity mutual associations.

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 the International Group insure approximately 90% of the world’s commercial tonnage and have entered into a pooling agreement to reinsure each association’s liabilities. The International Group’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 which are 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 the individual 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 estimates of 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 policy year, 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&I Associations 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 shares of the subsidiaries listed in Exhibit 8.1 of this annual report.

D.
Property, Plants and Equipment

Our in-house fleet manager, Performance Shipping Management Inc., rents our office space from unrelated third parties and owns office furniture and equipment.

Our only material properties are the vessels in our fleet.

Item 4A.
Unresolved Staff Comments

Not applicable.

73
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 this report. This discussion contains forward-looking statements that reflect our current views with respect to future events and financial performance. Our actual results may differ materially from 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” and elsewhere in this report.

A.
Operating Results

We have historically chartered our vessels to customers primarily through short-term and medium-term time charters, on spot voyages and pool arrangements. Under our time 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 spot charter 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 revenues generated 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 to unaffiliated 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 days are 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 scheduled repairs 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 uses operating 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. The shipping industry uses fleet utilization to measure a company’s efficiency in finding suitable employment for its vessels and minimizing the amount of days that its vessels are off-hire for reasons other than scheduled repairs or repairs under guarantee, vessel upgrades and special surveys, including vessel positioning for such events.


•
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 the number of our available days during the period, which is consistent with industry standards. Voyage expenses include port charges, bunker (fuel) expenses, canal charges and commissions. TCE is a non-GAAP measure. TCE rate is a standard shipping industry performance measure used primarily to compare daily earnings generated by vessels despite changes in the mix of charter types (i.e., voyage (spot) charters, time charters, and bareboat charters).

74

 •
Daily Operating Expenses. We define daily operating expenses as total vessel operating expenses, which include crew wages and related costs, the cost of insurance and 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.

   
For the year ended
December 31, 2025
    
For the year ended
December 31, 2024
    
For the year ended
December 31, 2023
  
Ownership days
    
2,577
      
2,562
      
2,901
  
Available days
    
2,528
      
2,525
      
2,830
  
Operating days
    
2,492
      
2,506
      
2,793
  
Fleet utilization
    
98.6
%
    
99.2
%
    
98.7
%
Time charter equivalent (TCE) rate
  
$
31,246
    
$
32,954
    
$
36,954
  
Daily operating expenses
  
$
8,384
    
$
7,712
    
$
7,537
  

   
For the year ended
December 31, 2025
    
For the year ended
December 31, 2024
    
For the year ended
December 31, 2023
  
Revenue
  
$
84,172
    
$
87,445
    
$
108,938
  
Less voyage expenses
  
$
(5,181
)
  
$
(4,237
)
  
$
(4,358
)
Voyage and time charter equivalent rates
  
$
78,991
    
$
83,208
    
$
104,580
  
Available days
    
2,528
      
2,525
      
2,830
  
Time charter equivalent (TCE) rate
  
$
31,246
    
$
32,954
    
$
36,954
  

Revenue

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 charters which, 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 vessels operating 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 less predictable 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 of declining 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 rates fluctuation 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 market conditions, 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 its obligations 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 cash flows.

75
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 in periods 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 charterer when 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 canal charges 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 involved with arranging the charter, and historically, we typically pay address commissions from 0% to 3.75% to our charterers. Additionally, Pure Brokerage and Shipping Corp, an affiliated entity, 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. Our in-house fleet manager, Performance Shipping Management Inc. (ex Unitized Ocean Transport Limited), 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 in connection with the employment of our fleet. However, this commission is eliminated from our consolidated financial statements as an intercompany transaction.

Vessel 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 and consumable stores, tonnage taxes, regulatory fees, environmental costs, lay-up expenses, and other miscellaneous expenses. Other factors beyond our control, some of which may affect the shipping industry in general, including, for instance, global epidemic and pandemic disruptions, inflationary pressures or the war in Ukraine and other global conflicts, which could cause our crew costs and other operating expenses 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, our fleet manager 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 our fleet manager 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 initial delivery 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 estimated scrap 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 administrative expenses have been provided for under our Brokerage Services Agreement with Pure Brokerage and Shipping Corp. We also incur payroll expenses of employees and general and administrative expenses reflecting the costs associated with running a public company, including board of director costs, director and officer insurance, investor relations, 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 2026, we expect our general and administrative expenses to remain relatively stable, as these expenses are largely fixed and not significantly impacted by changes in our fleet size. However, if inflation rates rise, we anticipate an increase in these expenses.

76
Interest and Finance Costs

We have historically incurred interest expense and financing costs in connection with vessel-specific debt. As of December 31, 2025, our aggregate outstanding debt amounted to $228.7 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 derivative financial instruments.

Interest Income

Interest earned on cash and cash equivalents and restricted cash constitutes our interest income, which is separately presented in the consolidated statement of operations. For 2026, we expect our interest income to remain relatively constant, should we maintain our current level of cash balances, and assuming that the interest rates remain approximately the same.

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 no historical 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 is not 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. Most vessels 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. The standard 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 seller typically 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’s technical 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. When a vessel has been under a voyage charter, it is delivered to the buyer free of charter. It is rare in the shipping industry for the last charterer of the vessel under the seller to continue as the first charterer of the vessel under the buyer. In most cases, when a vessel is under a time charter and the buyer wishes to assume that charter, the vessel cannot be acquired without the charterer’s consent and the buyer entering into a separate direct agreement with the charterer to assume the charter. The purchase of a vessel itself does not transfer the charter, 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 is ready to commence operations:


 •
obtain the charterer’s consent for us to become the new owner;

•
obtain the charterer’s consent for the appointment of a new technical manager;

•
obtain the charterer’s consent for reflagging of the vessel;

•
arrange for a new crew for the vessel;

•
replace all hired equipment on board, such as gas cylinders and communication equipment;

•
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;

77

 •
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 have experienced 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’ carrying value, even though we would not impair those vessels’ carrying value under our accounting impairment policy. In 2025, 2024 and 2023, we did not record any impairment charge.

Based on: (i) the carrying value of each of our vessels as of December 31, 2025 plus the carrying value of any unamortized dry docking cost; and (ii) what we believe the charter-free market value of each of our vessels was as of December 31, 2025, the aggregate charter-free market values at the time exceeded their aggregate carrying value of all of our vessels by approximately $93.6 million, and also there were no individual vessels whose charter-free market value was below its book value.

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 class without notations of any kind. Our estimates are based on information available from various industry sources, including:

78

 •
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 various other 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 are highly 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. We also 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 may adversely 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 tanker vessels”.

               
Carrying Value of
vessels; net book value,
unamortized drydock
cost
(in millions of US
dollars)
  
Vessel
  
DWT
    
Year Built
    
At
December
31, 2025
    
At
December
31, 2024
  
 
1.
  
Blue Moon
    
104,623
      
2011
    
$
22.1
    
$
23.7
  
 
2.
  
Briolette
    
104,588
      
2011
    
$
21.9
    
$
23.6
  
 
3.
  
P. Sophia
    
105,071
      
2009
    
$
22.5
    
$
24.8
  
 
4.
  
P. Aliki
    
105,304
      
2010
    
$
29.9
    
$
31.6
  
 
5.
  
P. Monterey
    
105,525
      
2011
    
$
28.7
    
$
30.8
  
 
6.
  
P. Long Beach
    
105,408
      
2013
    
$
37.2
    
$
39.8
  
 
7.
  
P. Yanbu
    
105,391
      
2011
    
$
-
    
$
17.7
  
 
8.
  
P. Massport
    
114,036
      
2025
    
$
66.3
    
$
-
  
 
9.
  
P. Tokyo
    
114,014
      
2025
    
$
67.5
    
$
-
  
 
10.
  
P. Beverly Hills
    
157,286
      
2019
    
$
77.9
    
$
-
  
 
11.
  
P. Bel Air
    
157,286
      
2019
    
$
77.8
    
$
-
  
Total Carrying Value
                  
$
451.8
    
$
192.0
  

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 accordance with 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, revenues and expenses and related disclosures of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates under different assumptions and conditions.

Critical accounting policies are those that reflect significant judgments of uncertainties and potentially result in materially different results under different assumptions and conditions. We have described below what we believe are our most critical accounting policies when we acquire and operate vessels, because they generally involve a comparatively higher 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 annual report.

79
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 type of 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 charter revenues 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 the charterer, 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, canal tolls, 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 have the 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 vessel regarding 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 are recognized 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 rates include 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 expedient which 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.

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 to 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 and are 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, 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 available for 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 recognized as the performance obligation 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 or less.

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 each pool 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 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 basis and is recognized 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 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.

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-lived assets. We review vessels for impairment whenever events or changes in circumstances (such as market conditions, the economic outlook, technological, regulatory and environmental developments, 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 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 plus unamortized dry-dock costs, 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 based on 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 are depreciated 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-lived assets, management reviews certain indicators of potential impairment, such as undiscounted projected operating cash flows, vessel sales and purchases, business plans, and overall market conditions. In developing estimates of future undiscounted cash flows, we make assumptions and estimates about the vessels’ future performance, with the significant assumptions being related to charter rates and fleet utilization, while other assumptions include vessels’ operating expenses, vessels’ residual value, dry-dock costs, and the estimated remaining 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 also take into account factors such as the vessels’ age and employment prospects under the then current market conditions, and determine the future undiscounted cash flows considering its various alternatives, including sale possibilities existing for each vessel as of the testing dates.

80
In detail, the projected net operating cash flows are determined by considering the charter revenues from existing time charters for the 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 remaining estimated 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 our exercise taking into account the period(s) each vessel is expected to undergo her scheduled maintenance (dry docking and special surveys), assumptions in line with our historical performance since the acquisition of our tanker vessels, peers’ historical performance, and its expectations for future fleet utilization under our fleet employment strategy. For 2025, 2024 and 2023, we assessed that there were no indications for potential impairment of any of our vessels, including vessels under construction.

RESULTS OF OPERATIONS

Year ended December 31, 2025, compared to the year ended December 31, 2024

Results of Operations
      
   
For the Years Ended December 31,
  
   
2025
    
2024
    
variation
    
% change
  
   
in millions of U.S. dollars
                
Revenue
  
$
84.2
    
$
87.5
    
$
(3.3
)
    
(3.8
)%
Voyage expenses
  
$
(5.2
)
  
$
(4.2
)
  
$
(1.0
)
    
23.8
%
Vessel operating expenses
  
$
(21.6
)
  
$
(19.8
)
  
$
(1.8
)
    
9.1
%
Depreciation and amortization of deferred charges
  
$
(15.1
)
  
$
(13.4
)
  
$
(1.7
)
    
12.7
%
General and administrative expenses
  
$
(9.7
)
  
$
(8.3
)
  
$
(1.4
)
    
16.9
%
Gain on vessel’s sale
  
$
19.5
    
$
0.0
    
$
19.5
      
-
  
Foreign currency losses
  
$
(0.1
)
  
$
(0.0
)
  
$
(0.1
)
    
-
  
Interest and finance costs
  
$
(6.8
)
  
$
(1.4
)
  
$
(5.4
)
    
385.7
%
Interest income
  
$
4.8
    
$
3.3
    
$
1.5
      
45.5
%
Net income
  
$
50.0
    
$
43.7
    
$
6.3
      
14.4
%

Net Income. Net income for 2025 amounted to $50.0 million, compared to a net income of $43.7 million in 2024. The income of the year ended December 31, 2025, was higher as compared to 2024, mainly because of the gain of $19.5 million recorded in connection with the sale of our tanker vessel P. Yanbu in March 2025.

Revenues. Revenues for 2025 amounted to $84.2 million, compared to $87.5 million in 2024. In 2025, revenues decreased mainly as a result of lower TCE rates achieved in 2025. On average, the TCE’s achieved by our tanker vessels amounted to $31,246 in 2025 and $32,954 in 2024.

Voyage Expenses. Voyage expenses for 2025 amounted to $5.2 million, compared to $4.2 million in 2024. Voyage expenses mainly consist of bunkers costs, port and canal expenses, EU ETS expenses and commissions paid to third-party brokers. The increase in voyage expenses in 2025 compared to 2024 was mainly attributable to the EU allowances related expense, in connection with the EU ETS compliance.

81
Vessel Operating Expenses. Vessel operating expenses for 2025 amounted to $21.6 million, compared to $19.8 million in 2024, 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 to increased average crew and stores and spares costs.

Depreciation and Amortization of Deferred Charges. Depreciation and amortization of deferred charges in 2025 amounted to $15.1 million, compared to $13.4 million in 2024, and mainly represent the depreciation expense and the amortization of the dry-dock costs for our vessels. The increase in 2025 was mainly attributable to increased depreciation expense, after the delivery of the vessels P. Massport, P. Tokyo, P, Bel Air and P. Beverly Hills from July to December 2025, despite the disposal of the vessel P. Yanbu in March 2025, and also due to increased drydock amortization expense, after the special survey completed of the vessel P. Aliki in September 2025, and of the P. Sophia in November 2024.

General and Administrative Expenses. General and administrative expenses for 2025 amounted to $9.7 million, compared to $8.3 million in 2024, and mainly consist of payroll expenses of the office employees, consultancy fees, brokerage services fees, compensation cost on restricted stock awards, legal fees and audit fees. The increase in general administrative expenses was mainly attributable to increased payroll and consultancy fees, offsetting the decreased legal costs.

Gain on Vessel’s Sale. During 2025 we recorded a gain of $19.5 million in relation to the sale of our vessel P. Yanbu in March 2025. In 2024 there were no vessels’ disposals.

Interest and Finance Costs. Interest and finance costs for 2025 amounted to $6.8 million, compared to $1.4 million in 2024, and includes the interest expense on our bank loans, our sale-leaseback facilities and our bond, and also imputed interest capitalized for the four newbuilding vessels P. Massport, P. Tokyo, P. Marseille and P. San Francisco. The increase of interest and finance costs in 2025 is mainly attributable to our $100.0 million bond issued in July 2025, for which we pay a fixed coupon of 9.875% per annum. Imputed interest, capitalized, increased to $3.0 million in 2025 from $2.4 million in 2024.

Interest Income. Interest income for 2025 and 2024 amounted to $4.8 million and $3.3 million, respectively, and mainly consisted of interest income received on deposits of cash and cash equivalents. The interest income in 2025 increased as compared to 2024, mainly due to increased average cash deposits held during the year.

Year ended December 31, 2024, compared to the year ended December 31, 2023

Please refer to our annual report on Form 20-F for the year ended December 31, 2024, as filed with the SEC on April 16, 2025.

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 operating cash 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, expenditures incurred 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 not restricted 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. More recently, the war between Russia and Ukraine and resulting sanctions, and the Middle East disruption have disrupted supply chains and cause instability 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, and the 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 with significant 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 to obtain 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 will not be dilutive to our existing shareholders or preclude us from issuing equity at all.

82
As of December 31, 2025 and 2024, our working capital, which is current assets minus current liabilities, including the current portion of long-term debt, was $31.8 million and $64.0 million, respectively. Management monitors the Company’s liquidity position to ensure that it has access to sufficient funds to meet its forecasted cash requirements, including debt 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 are expected 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 the short- 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 our working 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 financial statements 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 12 months from the date of this annual report, we expect to drawdown approximately $37.8 million under our sale and leaseback agreements, and we are obligated to make debt payments of $18.7 million in the aggregate under the terms of our existing loan facilities (including $12.8 million as full repayment of the P. Aliki portion under the Alpha Bank loan upon the vessel’s sale), payments under our sale and leaseback agreements of our newbuilding vessels of $8.1 million, payments under our bonds $14.8 million, and dividends of $1.8 million in the aggregate will 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 remained unaltered, and that such dividends are paid in cash.

With respect to the shipbuilding contract of the Hull 1624 that we entered into in April 2024, in June 2024 we paid the first installment of the purchase price in the amount of $8.5 million, in December  2025 we paid the second installment in the amount of $5.7 million, and we will additionally pay 10% of the purchase price at each of the milestones of keel laying, and launching of the vessel, and the remaining 55% of the purchase price is payable upon the delivery of the vessel. On April 16, 2026 we made the first installment payments under the shipbuilding contracts we entered into on March 2, 2026, while the remaining installments are tied to specific construction milestones, the timing of which is uncertain. For additional information on the amortization of our long-term debt obligations, see “—Loan Facilities.” For information on 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 debt instruments, 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, 2025, cash and cash equivalents amounted to $49.3 million (including restricted cash of $1.1 million and compensating cash balances of $20.0 million), compared to $71.3 million (including restricted cash of $1.0 million and compensating cash balances of $10.0 million) for the prior year. We consider highly liquid investments such as time deposits and certificates of deposit 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 Operating Activities

Net cash provided by operating activities in 2025 amounted to $50.1 million. Net cash provided by operating activities in 2024 amounted to $59.9 million. Net cash provided by operating activities in 2023 amounted to $68.0 million. Cash from operations in 2025 decreased compared to 2024, mainly due to slightly lower TCE rates and increased daily operating expenses, as compared to 2024. Cash from operations in 2024 decreased compared to 2023, mainly due to reduced ownership days of our fleet and to slightly lower TCE, as compared to 2023.

83
Net Cash (Used in) / Provided by Investing Activities

Net cash used in investing activities in 2025 was $244.6 million and consists of $26.9 million that we paid as advances and other capitalized costs for our newbuildings, $254.6 million that we paid for vessel acquisitions, $36.9 million net proceeds received from the sale of one Aframax tanker vessel during the year, and $54 thousand we paid for equipment additions.

Net cash used in investing activities in 2024 was $47.4 million and consists of $47.2 million that we paid as advances and other capitalized costs for our newbuildings, $0.2 million that we paid for vessels’ improvement costs mainly relating to Panama canal fittings on one of our vessels, and $17 thousand we paid for equipment additions.

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 the year, $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 Provided by / (Used In) Financing Activities

Net cash provided by financing activities in 2025 was $172.5 million and consists of $119.4 million of loan proceeds, $97.0 million of bond proceeds, net of discounts, $38.4 million of loan repayments, $3.7 million paid for financing costs and $1.8 million that we paid as cash dividends to our preferred shareholders.

Net cash used in financing activities in 2024 was $9.4 million and consists of $7.5 million of bank loan repayments, $0.2 million proceeds from the exercise of warrants, $1.8 million that we paid as cash dividends to our preferred shareholders, and $0.2 million of payments of financing costs.

Net cash used in financing activities in 2023 was $65.1 million and consists of $75.4 million of bank loan repayments, $2.1 million of bank loan proceeds, $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 issuance of 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 $1.9 million that we paid as cash dividends to our preferred shareholders.

Loan Facilities

As of December 31, 2025, we had $41.2 million of long-term debt outstanding under our bank loan facilities. As of April 24, 2026, we had $38.3 million aggregate amount of indebtedness outstanding under our bank loan facilities. As of December 31, 2024, we had $47.7 million of long-term debt outstanding under our bank loan facilities.

As of December 31, 2025 and 2024, and the date of this report, we have not used any derivative instruments for hedging purposes or other purposes.

Our bank loans are repayable in quarterly installments plus one balloon installment per loan agreement to be paid together with the last installment, and currently bear variable interest at SOFR plus a fixed margin ranging from 0.50% to 2.50%. Their maturities fall due from August 2028 to July 2030. As of December 31, 2025, all our bank loans were collateralized by four out of our ten tanker vessels. For a description of our loan facilities, please see Note 7 to our annual consolidated financial statements included elsewhere in this annual report.

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 of up 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 Moon and Briolette. In July and November 2019, the Initial Borrowers drew down the maximum amount of $16.5 million each.

84
On December 23, 2019, we, through the “Initial Borrowers” and one new wholly owned subsidiary (collectively “the Borrowers”), entered into the first amendment and restatement 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, or the Initial Agreement. On January 22, 2020, we drew down the amount 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 of the 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 was delivered to us on March 30, 2020.

On 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 the proceeds from the Piraeus Facility (described below). Concurrently, we entered into a Supplemental Loan Agreement with Nordea, to amend the existing repayment schedules of the Blue Moon 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 the Supplemental 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, 2021 through 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 a Revolving 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 down an 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 5 years from the signing date of the agreement.

As of December 31, 2025, the outstanding balance on the Nordea RCF was $12.5 million.

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 acquisition of the vessel by providing a secured term loan of up to $18.3 million, or the “P. Aliki” loan. The maximum loan amount was drawn down upon the vessel’s delivery to us in November 2022.

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 the vessel by providing a secured term loan of up to $22.0 million, or the “P. Long Beach” loan. The maximum loan amount was drawn down upon the vessel’s delivery to us in December 2022.

In April 2024, we agreed with Alpha Bank to amend the interest rate clauses of the two loan agreements discussed above. We can, at our option, place in collateral accounts amounts equal, or less, to each outstanding loan principal for the benefit of lowering the margin of the loans from 2.35% and 2.60% to 0.65%. The amounts placed in the collateral accounts are not legally restricted as long as we have not received from the lenders any notice for an event of default, and may, at our option, be withdrawn from the respective collateral accounts on the last day of an interest period with prior written notice to the Lender. Upon such withdrawal, the initial margin (2.35% for the “P. Long Beach” loan, and 2.60% for the “P. Aliki” loan) shall reinstate on such part of the loan. Accordingly, as of December 31, 2025, we had placed in Alpha Bank’s collateral accounts the aggregate amount of $28.7 million, being equal to the loans’ outstanding principal amounts, and these cash amounts are included in Cash and cash equivalents in our consolidated balance sheets.

85
In July 2025, we, through two of our wholly owned subsidiaries, signed a new loan agreement with Alpha Bank for an aggregate amount of $29.8 million with the purpose of refinancing the existing indebtedness with the lenders. The new loan agreement extends the maturity of the loan to five years from drawing, reduces the applicable margin to 1.90% and includes financial and informational covenants similar to the two previously existing loan agreements with Alpha Bank. On July 24, 2025, we drew down in full the amount of $29.8 million and repaid an equal amount in respect of the indebtedness of the previous loan agreements with Alpha Bank, which were consequently terminated. As of December 31, 2025, the outstanding balance on the Alpha Bank loan was $28.7 million.

Sale-Leaseback Agreements:

As of December 31, 2025, we had $87.5 million of debt outstanding under our sale-leaseback agreements. As of April 24, 2026, we had $130.2 million aggregate amount of indebtedness outstanding under our sale-leaseback agreements. Their maturities fall due from 2033 to 2035.

On July 16, 2024, we entered into a sale and leaseback agreement with an unaffiliated third party for our vessel P. Massport. The bareboat financing amount totals $44.3 million and as part of this agreement, the vessel was sold upon its delivery from the shipyard and was chartered back on a bareboat basis for an eight-year period from delivery at bareboat charter rates equivalent to 96 monthly installments of $7,132 per day and a balloon payment of approximately $23.7 million payable together with the last installment, with an implied interest rate of Term SOFR plus 2.425% per annum. We have continuous options to repurchase the vessel at predetermined rates following the second anniversary of the bareboat charter.

On October 24, 2024, we entered into a sale and leaseback agreement with an unaffiliated third party for our vessel P. Tokyo. The bareboat financing amount totals approximately $45.39 million. As part of this agreement, the vessel was sold upon its delivery from the shipyard and then chartered back on a bareboat basis for a ten-year period starting from delivery from the shipyard. The bareboat charter includes 120 monthly installments at a fixed rate of $211,500 plus a variable rate calculated monthly at an implied interest rate of SOFR plus 2.1% per annum. Additionally, a balloon payment of approximately $20 million payable together with the last installment for the repurchase of the vessel. We have continuous options to repurchase the vessel at predetermined rates following the second anniversary of the bareboat charter.

On March 5, 2025, we entered into a sale and leaseback agreement with an unaffiliated third party for our vessel P. Marseille. The bareboat financing amount totals $45 million and as part of this agreement, the vessel will be sold and chartered back on a bareboat basis for an eight-year period from delivery at bareboat charter rates equivalent to 96 monthly installments of $6,850 per day and a balloon payment of approximately $25 million payable together with the last installment, with an implied interest rate of Term SOFR plus 2.05% per annum. We have continuous options to repurchase the vessel at predetermined rates following the second anniversary of the bareboat charter.

On March 16, 2026, we entered into a sale and leaseback agreement with an unaffiliated third party for one of our newbuild LR1 tanker newbuilding vessels. The bareboat financing amount totals $37.8 million. As part of this agreement, the vessel will be sold and then chartered back to the Company on a bareboat basis for a ten-year period starting from delivery from the shipyard. The bareboat charter includes 120 monthly installments equivalent to $5,451 per day, with an implied interest rate of Term SOFR plus 2.00% per annum. Additionally, a balloon payment of approximately $18.1 million will be due together with the last installment. We have continuous options to repurchase the Vessel at predetermined rates following the second anniversary of the bareboat charter.

Nordic Trustee Bond (“the Bonds”)

On July 2, 2025, we successfully placed $100.0 million of bonds in the Nordic bond market. The new bonds are due to mature in July 2029 and pay a fixed coupon of 9.875% per annum, payable semi-annually in arrears and were priced at 97% of par. At the closing of the offering on July 17, 2025, we received net proceeds of $94.7 million, which should be used for tanker acquisitions or bond repurchases. The bonds are partially secured by first priority mortgages over our two oldest tanker vessels, the P. Monterey and the P. Sophia, for which we signed a Memorandum of Agreement to sell to unaffiliated parties in mid 2026. The bond proceeds were blocked and restricted, until their utilization in December 2025 for the acquisition of the two Suezmax vessels P. Beverly Hills and P. Bel Air. As per the bond terms, if any collateral vessel is sold, then have the option to use the sale proceeds to repay similar part of the bond, or to keep the sale proceeds for the purpose of buying additional tanker vessels. The bond agreement also includes customary informational and financial covenants and requires a minimum cash liquidity of $20.0 million at all times during the bond period. We are permitted to make dividend distributions, provided that no events of default exist, and up to a certain percentage of our net profits.

86
On January 13, 2026, we further announced that we successfully placed a $50.0 million tap issue in Bonds, paying a fixed coupon of 9.875% per annum, payable semi-annually in arrears. The tap issue was priced at premium at 103.00% of par value and was initiated by a reverse inquiry, and the amount received, inclusive of the premium and net of expenses was $50.7 million. Following the tap issue, the total outstanding amount under our Bonds is $150.0 million. The tap issue was closed on January 27, 2026. The regulation of use of proceeds under the tap issue is for general corporate purposes according to the terms of the tap issue. On April 1, 2026 we completed the listing of the Bonds in the Oslo Stock Exchange.

Covenants and Security

Our loan facilities have financial covenants, which require us to maintain, among other things:


 •
Minimum hull value of the financed vessels.


•
Minimum cash liquidity. As of December 31, 2025 and 2024, the maximum compensating cash balance required under our loan agreements and bond amounted to $20.0 million and $10.0 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, 2025, 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 from operations, 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 the construction of a product/crude oil tanker of approximately 114,000 dwt. The newbuilding (H1515) had a gross contract price of $63.3 million. It was delivered on July 29, 2025 and named P. Massport. The purchase price of the newbuilding was payable in five instalments, with the first one at the signing of the contract at $9.5 million, the second, third and fourth at $6.3 million each at each of the milestones of steel cutting, keel laying, and launching of the vessel, and the final instalment for the balance of the amount or $34.9 million at the delivery of the vessel. Following delivery to the Company, the P. Massport was delivered to the charterer and commenced operations under the five-year time charter contract at a gross rate of $31,000 per day, with options for a sixth and seventh year at a base rate plus profit-sharing.

87
On December 18, 2023, we entered into two shipbuilding contracts with China Shipbuilding Trading Co. Ltd. and Shanghai Waigaoqiao Shipbuilding Co. Ltd. for the construction 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. Hull 1596 was delivered on September 1, 2025 and named P. Tokyo. Hull 1597 was delivered on January 13, 2026 and named the P. Marseille. The purchase price for each newbuilding was payable in instalments as follows: 15% of the purchase price was payable upon receipt of a refund guarantee; 10% of the purchase price was payable at each of the milestones of steel cutting, keel laying, and launching of the vessels, and the remaining 55% of the purchase price was payable upon the delivery of the vessels. Following delivery to the Company, each vessel was delivered to its respective charterer and commenced operations under its five-year time charter contract, with options for a sixth and seventh year at a base rate plus profit-sharing.

On April 30, 2024, we entered into a shipbuilding contract with Jiangsu Yangzijiang Shipbuilding Group Co., Ltd., Jiangsu New Yangzi Shipbuilding Co., Ltd., and Jiangsu Yangzi Xinfu Shipbuilding Co., Ltd. for the construction of a scrubber fitted 75,000 DWT LR1 chemical/product oil tanker for a gross contract price of $56.5 million. We expect to take delivery of the vessel (Hull 1624) in the first quarter of 2027. The gross purchase price of the newbuilding is payable in five instalments, with the first one at the signing of the contract at $8.4 million, the second, third and fourth at $5.7 million each at each of the milestones of steel cutting, keel laying, and launching of the vessel, and the final instalment for the balance of the amount or $31.0 million at the delivery of the vessel. The final purchase price may be reduced to $54.1 million, should certain technical conditions exist at delivery.

Furthermore, on October 7, 2025, we signed two Memoranda of Agreement with an unaffiliated third party for the purchase of two 157,286 dwt Suezmax tankers, whose purchase price was $77.78 million per vessel. In December 2025 we took delivery of the vessels, which were renamed P. Bel Air and P. Beverly Hills.

Finally, on March 2, 2026, we signed two shipbuilding contracts with China Shipbuilding Trading Co. Ltd. and Shanghai Waigaoqiao Shipbuilding Co. Ltd. for the construction of two 158,000 DWT newbuilding Suezmax tanker vessels. The vessels, Hull 1627 and Hull 1628, are expected to be delivered to us in October 2028 and May 2029, respectively, at a contract price of $81.5 million per vessel. We paid $12.23 million (or 15% of the purchase price) for each vessel on April 16, 2026, and will pay 10% of the purchase price at each of the milestones of steel cutting, keel laying, and launching of the vessels, and the remaining 55% of the purchase price 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 a discharge 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 the capital 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, etc.

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 such vessel’s acquisition or expensed, if the vessel is not acquired, however, historically, such expenses were not material.

D.
Trend Information

Tanker Shipping Market

Global oil demand increased by 0.7% in 2025. While initial expectations pointed to a similar rate of growth in 2026, at approximately 0.7% (104.2 million barrels per day), this outlook has become increasingly uncertain following the sharp reduction in oil flows through the Strait of Hormuz and resulting supply disruptions. As a result, downward revisions to demand expectations are likely in the near term.

88
Seaborne total oil trade is expected to decline by approximately 0.6% in terms of tonne-miles in 2026, reflecting reduced export volumes from the Middle East and broader trade disruptions. However, trade is expected to rebound in 2027, increasing by approximately 2.5%, supported by an assumed normalization in market conditions.

Market conditions across the crude oil tanker sector have become highly volatile in 2026.  While underlying fundamentals indicate limited demand growth (with crude tanker dwt demand projected to decline marginally by 0.2%) against a projected crude tanker trading fleet expansion of 3.7%, recent geopolitical developments have materially tightened effective supply. The escalation of conflict in the Middle East and the sharp reduction in vessel transits through the Strait of Hormuz have led to significant dislocations in global oil flows. These disruptions have resulted in a shift towards longer-haul trade routes. As a result, tanker earnings have surged to historically elevated levels in the short term, despite relatively weak underlying supply-demand fundamentals.  Nevertheless, the recent geopolitical events, combined with tightening sanctions and ongoing disruptions to Middle East trade flows, continue to create a highly uncertain market environment, while their long-term impact on the tanker markets remains dependent on the duration of current disruptions and any normalization in global oil trade routes.

According 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 2025 was a daily TCE rate of $43,806. This compares to an estimated daily TCE rate of $44,487 in 2024. In the Aframax tanker segment, it is expected that the trading Aframax crude tanker fleet will grow by 0.6% in 2026, while demand for transportation via crude Aframax tankers is projected to remain unchanged over the same period.

Similarly, the average spot earnings for Suezmax tankers in 2025 stood at $54,313 per day, compared to $47,188 per day in 2024. In the Suezmax segment, the trading fleet is expected to expand by 6.5% in 2026, while demand for transportation via Suezmax tankers is projected to increase marginally by 0.1% over 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 or that 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 be generally 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 actual results, performance and outcomes to differ materially from those expressed herein.

Impact of 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 global economy. The United States and the European Union, among other countries, announced sanctions against Russia, including sanctions targeting the Russian oil sector, among those a prohibition 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 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’s contracts have been affected by the events in Russia 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 uncertain given 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, 2025, and during the year ended December 31, 2025, the Company’s financial results have not been adversely affected from 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 such events. 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.

89
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 market has 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 the course 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 conflict involving several Middle Eastern nations would possibly result in higher inflation and possibly slower economic growth, which could potentially have an adverse effect on the demand for 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 heavy damage being sustained due to successful missile strikes.

On February 28, 2026, the United States and Israel launched strikes against Iran, killing Iran’s supreme leader Ayatollah Khamenei. In retaliation, Iranian missiles and drones targeted Israel and a number of countries that host US military bases—including Bahrain, the United Arab Emirates, Kuwait, Qatar and Saudi Arabia—and Hezbollah fired projectiles at Israel. While there is significant uncertainty about the duration of the war in Iran, the White House has stated that it may be a protracted engagement. These events have destabilized the region and may lead to significant disruptions across all sectors of the shipping industry. Further, shipping through the Strait of Hormuz, a waterway essential to the shipment of crude oil and refined petroleum, may experience prolonged disruption. Iran’s Islamic Revolutionary Guard Corps has warned vessels to avoid the passage. Increased electronic interference may affect navigational and tracking systems, which would heighten the risk of vessel collisions. Although it is impossible to predict exactly how this conflict will affect the tanker industry, it is very likely that a prolonged war will have significant impacts across the sector.

In general, war and global conflicts can have direct and indirect impact on the trade of crude oil and refined petroleum products. The effect, if any, of any particular war or conflict is hard to predict in consequences, severity and length of time, but could have an impact on shipping and the tanker market.

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 prices pressures 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 our operating expenses. Interest rates have increased rapidly and substantially as central banks in developed countries raise interest rates in an effort to subdue inflation. The eventual implications 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 critical accounting 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 consists of five members elected annually on a staggered basis, and each director elected 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 earlier termination 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.

90
Name
Age
  
Position
Andreas Michalopoulos
55
  
Class I Director, Chief Executive Officer and Secretary
Loïsa Ranunkel
48
  
Class I Director
Aliki Paliou
50
  
Class II Director and Chairperson of the Board
Alex Papageorgiou
54
  
Class III Director
Mihalis Boutaris
51
  
Class III Director
Anthony Argyropoulos
61
  
Chief Financial Officer

The term of the Class I directors expires in 2026, the term of the Class II directors expires in 2027, and the term of the Class III directors expires in 2028.

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 to October 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 as Chief 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 February 2020. 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 an Associate 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 the Executive 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 from Paris 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 a master’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 current Chairperson 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 Political Risks 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 a certified Political and Trade Credit Risks Insurance Broker in Greece with clients based in Greece and abroad, focusing on the construction industry, defense industry, renewable energies, 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 Risks program. 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 at Egis 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. Aliki Paliou 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. In 2005 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 and Secretary.

91
Alex 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 has over 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 real estate 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, a real 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. He served 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-executive Director 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 shipping company 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 equities group 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 Nordic region. 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 for Portfolio 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. Morgan Securities Ltd. in the Fixed Income and Investment Banking divisions. Alex Papageorgiou holds an MSC in Shipping, Trade and Finance from City University Business School in London, 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 2022 annual meeting of shareholders. As a 5th-generation winemaker, he is the vice-president of Kir-Yianni and the secretary of the Yiannis Boutaris Foundation. He has worked for wineries in California, Chile, France, and Greece. In 2006 Mihalis joined BCG as an associate and grew his track record by managing clean-tech joint ventures including eco-friendly biopesticides, hydroelectric energy, and a pilot project of Motor Oil Hellas in concentrated solar power. In 2011 he moved to Shanghai to establish XiGu, a pioneering fine wine estate in Northwest China, while growing Greek exports in Asia Pacific. In 2019 he became an advisor to the Innovation Office of NCSR “Demokritos” in Athens. A year later he also founded Athroa, a venture studio backed by private investors & BigPi, one of the leading deep-tech VCs in Greece, that commercialized several patents by inventors in Greece and beyond. He graduated from Harvard with a BA in philosophy and from UCDavis with a MSc in horticulture. He has served in the Greek Marine Corps and co-founded Arcturos, a wildlife NGO.

Anthony Argyropoulos has served as our Chief Financial Officer since October 2020. Anthony Argyropoulos is the founder and Managing Director of Seaborne Capital Advisors, a financial advisory firm based in Athens, Greece, with a focus on the shipping and maritime industries. Prior to Seaborne Capital Advisors, Anthony Argyropoulos was a Partner at Cantor Fitzgerald & Co. until September 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. in Economics 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 a frequent speaker in global shipping events, contributor to several publications and recipient of a number of awards.

B.
Compensation

Effective March 1, 2020, our senior management is remunerated based on their consultancy or employment agreements, as applicable. Pursuant to the consultancy agreement we have in place with Anthony Argyropoulos, our Chief Financial Officer, we have agreed to pay Anthony Argyropoulos additional cash compensation in the amount of 0.50% of the consideration paid or received by us in connection with certain capital raising and other transactions.

For 2025, the aggregate fees and bonuses of our executive officers amounted to $3.3 million.

During 2025, our non-executive directors received annual compensation in the aggregate amount of $30,000 plus reimbursement of their out-of-pocket expenses incurred while attending 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 chairman received 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 in connection with the tender offer commenced by Sphinx Investments Corp. and any related matters, the members of which receive $10,000 annually and the chairman $20,000 annually. We do not have a retirement plan for our officers or directors. For 2025, fees, bonuses and expenses to non-executive directors amounted to $0.3 million.

92
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 were exercisable at a price range between $150.00 and $450.00 per share, for a term of five years and expired on December 31, 2025. No stock options were exercised.

In 2025, compensation costs relating to the aggregate amount of stock option awards amounted to $Nil. In addition, in 2025, compensation costs relating to restricted stock awards that were issued in prior years were $Nil.

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, restricted stock, 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 increase the 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 to 35,922 (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 amended and restated) unless terminated earlier by our board of directors.

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 to administer 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 the market 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 under conditions 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 as determined 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 the number 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 common shares 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 a change in capitalization or any other extraordinary event. In the event of a “change in control” (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 would materially impair any rights, or materially increase any obligations, of a grantee under an outstanding award without the consent of such grantee. Shareholder approval of plan amendments will be required under certain circumstances. The plan administrator may cancel any award and amend any outstanding award agreement, except no such amendment shall be made without shareholder approval if such approval is necessary to comply with any tax or regulatory requirement applicable to the outstanding award.

93
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 a related 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 the approval of a majority of the independent members of the board of directors.

Committees 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 the engagement 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 for potential conflicts of interest and all related party transactions are subject to the approval of the Audit Committee. Alex Papageorgiou serves as the Chairman of the Audit Committee. We believe 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 executive officers’ compensation and benefits. Loïsa Ranunkel serves as the Chairman of the Compensation Committee and Mihalis Boutaris serves as a member of our Compensation Committee.

Our Executive Committee is responsible for the overall management of our business. Our Executive Committee is comprised of Aliki Paliou, our Director and 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 be subject, 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 training and payroll. We ensure that all our seafarers have the qualifications and licenses required to comply with international regulations and shipping conventions. We typically crew our vessels 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-owning subsidiaries as of December 31, 2025, 2024, and 2023.

   
As of
December 31,
2025
    
As of
December
31, 2024
    
As of
December
31, 2023
  
Shoreside
    
36
      
34
      
30
  
Seafaring
    
256
      
177
      
179
  
Total
    
292
      
211
      
209
  

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 Party Transactions—A. Major Shareholders.”

F.
Disclosure of a registrant’s action to recover erroneously awarded compensation

None.

94
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 April 22, 2026, for (i) beneficial owners of five percent 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 entitled to one vote for each common share held.

Name
  
Number of
Common Shares
    
Percentage
Owned (1)
  
Aliki Paliou (2)(4)
    
24,339,761
      
66.2
%
Andreas Michalopoulos (3)(4)
    
1,043,425
      
7.7
%
Sphinx Investment Corp.(5)
    
1,033,859
      
8.3
%
Loïsa Ranunkel
    
-
      
-
  
Alex Papageorgiou
    
-
       -
  
Mihalis Boutaris
    
-
       -
  
Anthony Argyropoulos
    
-
       -
  
All officers and directors as a group
    
25,383,186
      
73.9
%

(1) Percentages based on 12,432,158 common shares outstanding as of April 22, 2026.

(2) This information is derived from Amendment No. 3 to Schedule 13D jointly filed with the SEC on March 20, 2024 by Mango Shipping Corp. and Aliki Paliou. Aliki Paliou, the Chairperson 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. Aliki Paliou may be deemed to beneficially own the Common Shares issuable upon conversion of 1,314,792 Series C Preferred Shares held directly by Mango Shipping. The Series C Preferred Shares carry superior voting 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 the risk 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 our shareholders 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.”

(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 Chief Executive 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. Mitzela Corp. beneficially owns 56,342 Series C Preferred Shares, or approximately 4% of the outstanding Series C Preferred Shares as of the date of this report.

(4) The Series C Preferred Shares are convertible at a rate equal to the Series C Liquidation Preference of $25.00 per Series C Preferred Share, 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.  As of April 22, 2026, Aliki Paliou may be deemed to beneficially own 24,339,481 common shares through Mango Shipping Corp. issuable upon conversion of Series C Preferred Shares. As of April 22, 2026, Andreas Michalopoulos may be deemed to beneficially own 1,043,005 common shares through Mitzela Corp. issuable upon conversion of Series C Preferred Shares. Additionally, Aliki Paliou may be deemed to beneficially own 280 restricted common shares through Mango Shipping Corp. Andreas Michalopoulos may be deemed to beneficially own 420 restricted common shares through Mitzela Corp. All other officers and directors each own 0% of our outstanding common shares.

(5) This information is derived from an Amendment No. 17 to Schedule 13D jointly filed with the SEC on March 16, 2026 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.

95
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 investors has occurred, as reflected in beneficial ownership reports filed with the SEC.

As of April 24, 2026, we had 8 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 12,430,363 of our common shares, representing 99.9% of our outstanding common shares. CEDE & CO. is the sole record shareholder 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 the United 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 affiliated entity, 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 also receive sale and purchase brokerage commissions of 1.0% per transaction. For 2025, commissions and brokerage fees paid to Pure Brokerage amounted to $1.0 million and $0.4 million, respectively.


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 asserting claims under Sections 9, 10(b) and/or 20(a) of the Securities Exchange Act of 1934.were filed against the Company and three of its executive officers. On October 23, 2017, a complaint 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 (“Eastern District”). 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. 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. In April 2018, the Court consolidated the three lawsuits into the first-filed Robinson lawsuit, appointed lead plaintiffs and approved lead plaintiffs’ selection of lead plaintiffs’ counsel. On July 13, 2018, lead plaintiffs filed a consolidated amended complaint (superseding the three initial complaints). This lawsuit was voluntarily dismissed by the plaintiffs in November 2024.

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 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, by a purported shareholder of the Company, Sphinx Investment Corp., the plaintiff. The complaint alleged, among other things, violations of fiduciary duties by the named defendants in connection with an exchange offer commenced by the Company in December 2021. In January 2024, the defendants filed motions to dismiss the lawsuit. In August 2024, the Supreme Court of the State of New York granted the Company’s motions to dismiss the litigation filed by Sphinx on October 27, 2023, on the basis that New York lacked personal jurisdiction over the defendants. Subsequently, in August 2024, Sphinx initiated legal proceedings in the High Court of the Republic of the Marshall Islands against the same defendants that had been named in the New York lawsuit. The complaint filed in the High Court is substantially similar to the complaint previously filed in New York.  On March 27, 2026, Sphinx voluntarily dismissed the lawsuit, thus concluding the matter.

96
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 of operations 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 operations or 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 expect that 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 significant financial and managerial resources.

Dividend 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 common shareholders. 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 payments on 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 replacement of our vessels, scheduled dry-dockings, 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 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 the requirements 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 any other 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 into consideration 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 directors and 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 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 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. In times 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 been able 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 quarterly dividends, 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 that we 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 dividends will 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.

97
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 Capital Market 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 Capital Market 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.

Item 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 with our 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 stock split, (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 connection with 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 our reports 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 November 14, 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 Convertible Preferred 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 an Amended 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 amended on 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 and restated articles of incorporation is filed as an exhibit to this annual report and the information contained in such exhibit is incorporated by reference herein.

98
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 and incorporated 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 any outstanding 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 our 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. Holders of our common 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 are subject 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 any series 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.

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 Rights Agreement, 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 at an 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 become exercisable 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, each holder 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 of Series 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 are acquired 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 to purchase, 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 December 20, 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.

99
C.
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 to be 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 than these 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 and sale and leaseback agreements, “Item 4. Information on the Company—B. Business Overview” 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 affect the remittance of dividends, interest or other payments to non-resident holders of our securities.

E.
Taxation

The following represents the opinion of our United States and Marshall Islands tax counsel, Watson Farley & Williams LLP, and is a summary 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, who may 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 the alternative 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 not the 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 vote or value of the Company’s equity. 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 tax consequences 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 the ownership 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 current Marshall 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 to its 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, administrative pronouncements, 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.

100
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 is derived 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 arrangement or other joint venture it directly or indirectly owns or participates in that generates such income, or from the performance of services 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 these purposes, 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 sources within 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 not permitted 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 transportation exclusively 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 will not be subject to any U.S. federal income tax.

Exemption 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 or in 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 subsidiaries will 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 under Section 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 of shares of each class of stock 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 traded during 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 established securities 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 representing more than 50% of the outstanding stock, by both total combined voting power of all classes of stock 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 stock is traded on the market, other than in minimal quantities, 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 of shares of such class of stock 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 as appropriately 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 trading frequency 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 in the United States and such shares are regularly quoted by dealers making a market in such shares.

101
Notwithstanding the foregoing, the regulations provide, in pertinent part, that a class of stock will not be considered to be “regularly traded” on an established securities market 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 attribution rules, 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 Percent Override 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,” the regulations 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 regulations further 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 within the 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 of our 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 2025 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 are residents of foreign countries that grant “equivalent exemption” to corporations organized in the United States and (ii) the foreign corporation satisfies certain substantiation and reporting requirements with respect to such shareholders.

We believe that we satisfied the 50% Ownership Test for our 2025 taxable year, and expect to satisfy the substantiation and reporting requirements to claim the benefits of the 50% 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 2025 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 onerous and 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 maximum effective 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%. In addition, 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 for certain adjustments, and on certain interest paid or deemed paid attributable to the conduct of such U.S. trade or business.

102
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 published schedule 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 the bareboat 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 of our 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 or business.

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 a vessel, 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 of the 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 vessel by 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 defined below, 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 as a 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 primary jurisdiction 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 are a 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 in more 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 and accumulated 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-received deduction 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 United States 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 tax credits for U.S. foreign tax credit purposes.

103
Dividends 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 “qualified dividend 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 in the 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 the immediately 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 before the 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 in substantially 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 out of 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 adjusted tax 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 in an 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 gain or 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, as applicable, 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 will be 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 active conduct 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 earning and 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 or other 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 would generally constitute “passive income” unless we were treated under specific rules as deriving our rental income in the active conduct of a trade or business.

104
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. In making 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 of us 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 IRS pronouncements concerning the characterization of income derived from time charters and voyage charters as services income for other tax purposes. However, there is also authority which 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 statutory provisions 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 passive income 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 2025, 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. In addition, if we are a PFIC, a U.S. Holder will be required to file IRS Form 8621 with the IRS.

Taxation 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 tax purposes 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 taxed but 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 the common 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 common shares. 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 of each 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 provide each 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. Holder would 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 relevant instructions 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 market value 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 in respect 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 net amount 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 income or 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 other disposition 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 such holder 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 excess distribution (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 distributions received 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 the sale, exchange or other disposition of our common shares. Under these special rules:

105

 •
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, and an 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 in connection 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 successor generally 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) such U.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’s modified 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’s circumstances). 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 such dividends 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). Net investment 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. Failure to 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 are urged 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.

U.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 to herein 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 that income 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 common shares, 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 the benefits 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

106

 •
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 from the 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 in the 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 the effectively 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 applicable U.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 will also 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 you certify 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. broker and 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. information reporting 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 common shares 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 of perjury, 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 defined in 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 $75,000 at 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 foreign financial 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. Substantial penalties 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. Holder who 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 on the 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.

F.
Dividends and paying agents

Not Applicable.

107
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.gov as 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 does not form part of this annual report.

I.
Subsidiary information

Not Applicable.

J.
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 2025 interest rates would have resulted in interest expenses of $1.4 million. As of December 31, 2025, we had $228.7 million of aggregate debt outstanding. In the future, we expect to manage any exposure in interest rates through our regular operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. Global financial markets and economic conditions have been, and continue to be, volatile. Specifically, due to the global epidemic and pandemic outbreak and the 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 to credit 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 weak economic conditions, have made, and will likely continue to make, it difficult to obtain additional financing.

As of December 31, 2025, and 2024 we did not and have not designated any financial instruments as accounting hedging instruments.

Currency and Exchange Rates

We generate all of our revenues in U.S. dollars, but currently incur more than half of our general and administrative expenses (around 74% in 2025 and 60% in 2024) and have historically incurred a significant portion of our operating expenses (around 13% in 2025 and 14% in 2024) in currencies other than the U.S. dollar, primarily the Euro. For accounting purposes, 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 these expenses, such as vessel repairs, supplies and stores, may fluctuate from period to period. 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 other currencies could increase in the future, which could expand our exposure to losses arising from currency fluctuations.

108
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 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 the nominal 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 could have an adverse effect on our results. Because during 2025 and 2024, our Euro expenses represented 14% and 9%, respectively of our revenues, we do not consider the risk from exchange rate 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.
PART 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 purchase from 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 the approval 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 of Securities,” 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, the Chairperson 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 and may 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, as defined 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 Chief Financial 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 submit to 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 assurance regarding 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 that our internal control over financial reporting as of December 31, 2025, is effective.

109
c) Attestation Report of the 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 was not 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 Act of 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 reporting will 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’s objectives 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 or fraud 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 in decision-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, by collusion 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 future events, 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 controls effectiveness 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 with policies or procedures.

Item 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 financial expert” 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 by reference 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 & Young (Hellas) Certified Auditors Accountants S.A., have billed us for audit services.

In 2025 and 2024, audit fees amounted to €189,000 or about $205,000 and €189,000 or about $205,254, respectively, at the then-prevailing exchange rates, and related to audit services provided in connection with the audit and AS 4105 interim reviews of our consolidated financial statements.

110
b) Audit-Related Fees

In 2025 and 2024, no fees under this category existed.

c) Tax Fees

In 2025 and 2024, Ernst &Young LLP, have also billed us for tax services provided for the Company’s earnings and profits calculations, which amounted to $9,250 and $9,250 in each of the 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 this responsibility, 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’s independence 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 performed by 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.

Item 16E.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Not applicable.

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 a listing 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 Listing Rule 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 a nominations committee, nor have we adopted a board resolution addressing the nominations process;

111

 •
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 Corporations Act, 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 Marshall Islands 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 the meeting. This notification will contain, among other things, information regarding business to be transacted at the meeting. In addition, our bylaws provide that shareholders 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.

112
Item 16J.
Insider Trading Policies

We have adopted an insider trading policy governing the purchase, sale, and other dispositions of our securities by directors, senior management, and employees. Our insider trading 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 Insider Trading Policy has been filed as Exhibit 11.1 to this annual report.

Item 16K.
Cybersecurity


We believe that cybersecurity is fundamental to our operations and, as such, we are committed to maintaining robust governance and oversight of cybersecurity risks and implementing comprehensive processes and procedures for identifying, assessing, and managing material risks from cybersecurity threats as part of our broader risk management system and processes. Our cybersecurity risk management strategy prioritizes detection, analysis, and response to known, anticipated or unexpected threats; effective management of security risks; and resiliency against incidents. With the ever‐changing cybersecurity landscape and continual emergence of new cybersecurity threats, our senior management team ensures that significant resources are devoted to cybersecurity risk management and the technologies, processes and people that support it. We implement risk‐based controls to protect our information, our information systems, our business operations, and our vessels.

Risk Management and Strategy


The safe and efficient operation of our business—including, but not limited to, billing, disbursements, accounting, vessel scheduling, and vessel operations—depends on computer hardware and software systems. These information systems are vulnerable to security breaches by computer hackers and cyber terrorists. We rely on industry‐accepted security measures and technology to securely maintain confidential and proprietary information on our information systems.


Our processes for assessing, identifying, and managing material risks from cybersecurity threats include:


•
Periodic discussion and assessment of perceived material cybersecurity risks.

•
Internal and external system assessments, such as penetration and vulnerability testing.

•
System protection measures, such as email filtering and access management.

•
Regular threat monitoring, both against the Company and against other companies in the industry.

•
Incident response procedures, for identification, reporting, and remediation.

•
Analysis of cybersecurity incidents and results of security operations monitoring.

•
Regular employee training.

•
Procedures designed to assist in complying with mandatory data protection legislation.

•
The existence and periodic review of internal cybersecurity policies.


We also have processes to oversee and identify cybersecurity risks from threats associated with our use of other service providers. More specifically, we periodically discuss with our key third‐party managers the technical and organizational measures in place for cybersecurity. In terms of Software as a Service providers, we monitor the relevant IT security measures through receiving and assessing third‐party assurance reports as well as protect against potential risk factors from them. The results of these processes are taken into consideration in our annual risk assessment process, during which we identify mitigating actions and new security initiatives.

114
Governance


Our Audit Committee has ultimate responsibility for the oversight of cybersecurity risks and responses to cybersecurity incidents, should they arise. The Audit Committee is informed periodically regarding the status of initiatives undertaken by the IT department and internal auditors and other relevant functions to further reduce cybersecurity risk.


The key individuals responsible for the overall assessment and management of material risks from cybersecurity threats include the head of our IT (who possesses approximately 20 years of experience with informational technology and cybersecurity risk management) and our or internal auditor, who brings extensive regulatory, risk assessment, and organizational experience to the oversight of our internal processes.


This leadership team receives information regarding the monitoring, prevention, detection, mitigation, and remediation of cybersecurity incidents and proceeds with necessary actions such as:


•
Updating relevant policies and procedures.

•
Implementing additional technical and organizational measures to reduce the level of cyber risk.

•
Engaging specialized third‐party service providers.

•
Assessing the materiality and determining disclosure obligations in the event of a cybersecurity incident.

•
Reporting to senior management.

Incident Management and Reporting


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 or potentially becoming material is immediately escalated for further assessment, and then reported to our senior management, who then consult with our Audit Committee. We consult with our outside counsel as appropriate, including on materiality analysis and disclosure matters, and our senior management makes the final materiality determinations and disclosure and other compliance decisions. Our senior management apprises our independent public accounting firm of matters and any relevant developments.


Where events occur that do not escalate to cybersecurity incidents, the details of the relevant assessments are communicated to senior management on an as‐needed basis. However, if we were to become the subject of a cybersecurity incident, according to our policies, the key management would take the following steps:


1.
Conduct an incident investigation.

2.
Conduct an incident evaluation and classification.

3.
Undertake internal escalation to our executives.

4.
Pursue containment of the incident and recovery of any affected infrastructure.

5.
Conduct a materiality assessment.

6.
Determine reporting obligations.

7.
Report to the Audit Committee.

Training and Awareness


We have various information technology policies relating to cybersecurity. We also provide mandatory employee training on a periodic basis that reinforces our information technology policies, standards, and practices, as well as the expectation that employees comply with these policies and identify and report potential cybersecurity risks. We also require all employees, directors and officers to sign the company’s Privacy Policy for Personal Data protection.

Ongoing Investment and Potential Impact


We continue to invest in our cybersecurity systems and to enhance our internal controls and processes. Our business strategy, results of operations, and financial condition have not been materially affected by risks from cybersecurity threats to date, but we cannot provide assurance that they will not be materially affected in the future by such risks or any future material incidents. While we have dedicated significant resources to identifying, assessing, and managing these risks, our efforts may not be adequate, may fail 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 such failure could harm our business, reputation, results of operations, and financial condition.


For further information regarding the risks associated with cybersecurity, see the risk factor under “Item 3. Key Information—D. Risk Factors” entitled “A cyber‐attack could materially disrupt our business”.
114
PART 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

Exhibit
Number
Description
Amended and Restated Articles of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form F-4 (File No. 333-169974), filed with the SEC on October 15, 2010).
Articles of Amendment to the Amended and Restated Articles of Incorporation of the Company, dated June 8, 2016 (incorporated by reference to Exhibit 3.3 to the Company’s report on Form 6-K, filed with the SEC on June 9, 2016).
Articles of Amendment to the Amended and Restated Articles of Incorporation of the Company, dated July 3, 2017 (incorporated by reference to Exhibit 3.1 to the Company’s report on Form 6-K, filed with the SEC on July 6, 2017).
Articles of Amendment to the Amended and Restated Articles of Incorporation of the Company, dated July 26, 2017 (incorporated by reference to Exhibit 3.1 to the Company’s report on Form 6-K, filed with the SEC on July 28, 2017).
Articles of Amendment to the Amended and Restated Articles of Incorporation of the Company, dated August 23, 2017 (incorporated by reference to Exhibit 3.1 to the Company’s report on Form 6-K, filed with the SEC on August 28, 2017).
Articles of Amendment to the Amended and Restated Articles of Incorporation of the Company, dated September 22, 2017 (incorporated by reference to Exhibit 3.1 to the Company’s report on Form 6-K, filed with the SEC on September 26, 2017).
Articles of Amendment to the Amended and Restated Articles of Incorporation of the Company, dated November 1, 2017 (incorporated by reference to Exhibit 3.1 to the Company’s report on Form 6-K, filed with the SEC on November 3, 2017).
Articles of Amendment to the Amended and Restated Articles of Incorporation of the Company, dated February 25, 2019 (incorporated by reference to Exhibit 1.8 to the Company’s Annual Report on Form 20-F, filed with the SEC on March 18, 2019).
Articles of Amendment to the Amended and Restated Articles of Incorporation of the Company, dated October 30, 2020 (incorporated by reference to Exhibit 3.1 to the Company’s report on Form 6K, filed with the SEC on November 2, 2020).
Articles of Amendment to the Amended and Restated Articles of Incorporation of the Company, dated November 15, 2022 (incorporated by reference to Exhibit 1.10 to the Company’s report on Form 6-K, filed with the SEC on March 28, 2024).
Amended 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).
Form 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).
Statement 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).
Amended and Restated Certificate of Designation, Preferences and Rights of the Series B Convertible Cumulative Perpetual Preferred Stock of Performance Shipping 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).

115
Certificate of Designation of Series C Convertible Cumulative Redeemable Perpetual Preferred Shares dated October 17, 2022 (incorporated by reference to Exhibit 99.2 to the Company’s report on Form 6-K, filed with the SEC on October 21, 2022).
Description of Securities*
Registration 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).
Stockholders’ 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 SEC on December 21, 2021).
Amended 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 on December 31, 2020).
Administrative 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 on March 26, 2014).
Form 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 the SEC on March 26, 2014).
Secured Loan Agreement dated August 4, 2023 among Taburao Shipping Company Inc. and Tarawa Shipping Company Inc. as borrowers, Performance Shipping 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 (incorporated by reference to Exhibit 4.6 to the Company’s report on Form 20-F, filed with the SEC on March 28, 2024).
First Supplemental Agreement to Secured Loan Facility Agreement dated July 24, 2019 (incorporated by reference to Exhibit 4.8 to the Company’s Registration Statement on Form F-1/A (File No. 333-255100), filed with the SEC on April 20, 2021).
Credit Facility dated March 2, 2022 between Mango Shipping Corp. and the Company (incorporated by reference to Exhibit 4.10 to the Company’s Annual Report on Form 20-F, filed with the SEC on March 11, 2022).
Warrant Agency Agreement dated as of June 1, 2022 among the Company, Computershare Inc., and Computershare Trust Company, N.A. (incorporated by reference to Exhibit 4.1 to the Company’s report on Form 6-K, filed with the SEC on June 2, 2022).
Form 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 June 2, 2022).
Form of Securities Purchase Agreement between the Company and the purchasers thereto (incorporated by reference to Exhibit 4.2 to the Company’s report on Form 6-K, filed with the SEC on July 20, 2022).
Form 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).
Form of Securities Purchase Agreement between the Company and the purchasers thereto (incorporated by reference to Exhibit 4.2 to the Company’s report on Form 6-K, filed with the SEC on August 17, 2022).
Form 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).
Stock Purchase Agreement dated October 17, 2022 between Mango Shipping Corp. and the Company (incorporated by reference to Exhibit 99.3 to the Company’s report on Form 6-K, filed with the SEC on October 21, 2022).
Form of Securities Purchase Agreement dated as of February 28, 2023 between the Company and the purchasers thereto (incorporated by reference to Exhibit 4.2 to the Company’s report on Form 6-K, filed with the SEC on March 3, 2023).
Form 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 on March 3, 2023).
Form 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 on March 3, 2023).
Loan Agreement dated July 23, 2025 between Alpha Bank S.A., as lender and Arbar Shipping Company Inc. And Garu Shipping Company Inc., as borrowers*
Shipbuilding Contract for the construction of Hull No. YZJ2024-1624 dated April 30, 2024 among Saint Barth Shipping Company Inc., Jiangsu Yangzijiang Shipbuilding Group Co., Ltd., Jiangsu New Yangzi Shipbuilding Co., Ltd., and Jiangsu Yangzi Xinfu Shipbuilding Co., Ltd (incorporated by reference to Exhibit 4.24 to the Company’s report on Form 20-F, filed with the SEC on March 28, 2024).

116
Shipbuilding Contract for the construction of Hull No. H1627 dated March 2, 2026 among Saint Lucia Shipping Company Inc., China Shipbuilding Trading Co., Ltd., and Shanghai Waigaoqiao Shipbuilding Co., Ltd.*
Shipbuilding Contract for the construction of Hull No. H1628 dated March 2, 2026 among Martinique Shipping Company Inc., China Shipbuilding Trading Co., Ltd., and Shanghai Waigaoqiao Shipbuilding Co., Ltd.*
Bareboat Charterparty dated July 16, 2024, among Kenzan Kaiun Co., Limited, Azalea Line, S.A. and Nakaza Shipping Company Inc. for the P. Massport (incorporated by reference to Exhibit 4.25 to the Company’s report on Form 20-F, filed with the SEC on April 16, 2025).
Memorandum of Agreement, dated July 16, 2024 among Nakaza Shipping Company Inc., Kenzan Kaiun Co., and Azalea Line, S.A. in respect of the P. Massport (incorporated by reference to Exhibit 4.26 to the Company’s report on Form 20-F, filed with the SEC on April 16, 2025).
Guarantee in respect of the P. Massport dated July 16, 2024, among the registrant, Kenzan Kaiun Co., Limited and Azalea Line, S.A. (incorporated by reference to Exhibit 4.27 to the Company’s report on Form 20-F, filed with the SEC on April 16, 2025).
Guarantee in respect of the P. Massport dated July 16, 2024, between the  Yano Kaiun Co., Ltd and Nakaza Shipping Company Inc. (incorporated by reference to Exhibit 4.28 to the Company’s report on Form 20-F, filed with the SEC on April 16, 2025).
Bareboat Charterparty dated October 24, 2024, between Huican (Tianjin) Shipping Leasing Co., Ltd. and Sri Lanka Shipping Company Inc. for the P. Tokyo (incorporated by reference to Exhibit 4.29 to the Company’s report on Form 20-F, filed with the SEC on April 16, 2025).
Guarantee in respect of the P. Tokyo dated March 4, 2025, between the registrant and Huican (Tianjin) Shipping Leasing Co., Ltd. (incorporated by reference to Exhibit 4.30 to the Company’s report on Form 20-F, filed with the SEC on April 16, 2025).
Bareboat Charterparty dated March 5, 2025, between T.A.C.K Shipping S.A. and Guadeloupe Shipping Company Inc. for the P. Marsaille (incorporated by reference to Exhibit 4.31 to the Company’s report on Form 20-F, filed with the SEC on April 16, 2025).
Memorandum of Agreement, dated October 24, 2024 between Mustique Shipping Company Inc. and Huican (Tianjin) Shipping Leasing Co., Ltd. in respect of the P. Tokyo (incorporated by reference to Exhibit 4.32 to the Company’s report on Form 20-F, filed with the SEC on April 16, 2025).
Memorandum of Agreement, dated March 5, 2025 between Guadeloupe Shipping Company Inc. and T.A.C.K Shipping S.A. in respect of the P. Marsaille (incorporated by reference to Exhibit 4.33 to the Company’s report on Form 20-F, filed with the SEC on April 16, 2025).
Guarantee in respect of the P. Marsaille dated March 5, 2025, between the registrant and T.A.C.K Shipping S.A. (incorporated by reference to Exhibit 4.34 to the Company’s report on Form 20-F, filed with the SEC on April 16, 2025).
Guarantee in respect of the P. Marsaille dated March 5, 2025, between the Guadeloupe Shipping Company Inc. and Kowa Kaiun Co., Ltd. (incorporated by reference to Exhibit 4.35 to the Company’s report on Form 20-F, filed with the SEC on April 16, 2025).
Memorandum of Agreement, dated February 17, 2025 between Maloelap Shipping Company Inc. and MTC Engineering SDN BHD. in respect of the P. Sophia (incorporated by reference to Exhibit 4.36 to the Company’s report on Form 20-F, filed with the SEC on April 16, 2025).
Memorandum of Agreement, dated March 13, 2025, between Arno Shipping Company Inc. and Concord Voyage Limited in respect of the P. Yanbu (incorporated by reference to Exhibit 4.37 to the Company’s report on Form 20-F, filed with the SEC on April 16, 2025).
Bareboat Charterparty dated March 16, 2026, between Salter Shipping, S.A. and Saint Barth Shipping Company Inc. for the P. San Francisco.*
Guarantee in respect of the P. San Francisco dated March 16, 2026, Saint Barth Shipping Company Inc. and Salter Shipping, S.A.*
Memorandum of Agreement, dated March 16, 2026, between Saint Barth Shipping Company Inc. and Salter Shipping, S.A.in respect of the P. San Francisco.*
Memorandum of Agreement, dated February 9, 2026, between Maloelap Shipping Company Inc. and Sohon Shipping Limited in respect of the P. Sophia.*

117
Memorandum of Agreement, dated April 2, 2026, between Garu Shipping Company Inc. and Trafigura Maritime Logistics Pte. Ltd in respect of the P. Aliki.*
Bond Terms for 9.875% Senior Secured Bonds due 2029, dated July 15, 2025, by and between the registrant  and  Nordic  Trustee  AS,  as  bond  trustee  and  security  agent.*
Tap Issue Addendum to the Bond Terms for 9.875% Senior Secured Bonds due 2029, dated January 23, 2026.*
List of Subsidiaries*
Insider Trading Policy (incorporated by reference to Exhibit 11.1 to the Company’s report on Form 20-F, filed with the SEC on March 28, 2024).
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer*
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer*
Certification 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*
Certification 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*
Consent of independent registered public accounting firm*
Consent of Watson Farley & Williams LLP*
Policy for the Recovery of Erroneously Awarded Compensation (incorporated by reference to Exhibit 97.1 to the Company’s report on Form 20-F, filed with the SEC on March 28, 2024).
101
The following financial information from Performance Shipping Inc.’s Annual Report on Form 20-F for the fiscal year ended December 31, 2025, formatted as Inline eXtensible Business Reporting Language (iXBRL): (1) Consolidated Balance Sheets as of December 31, 2025 and 2024; (2) Consolidated Statements of Operations for the years ended December 31, 2025, 2024, and 2023; (3) Consolidated Statements of Comprehensive Income / (Loss) for the years ended December 31, 2025, 2024, and 2023; (4) Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2025, 2024, and 2023; (5) Consolidated Statements of Cash Flows for the years ended December 31, 2025, 2024, and 2023; and (6) Notes to Consolidated Financial Statements.
104
Cover Page Interactive Data File (formatted as Inline eXtensible Business Reporting Language (iXBRL) and contained in Exhibit 101)

* Filed herewith.

118
SIGNATURES

The 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 its behalf.

PERFORMANCE SHIPPING INC.
   
By:
/s/ Andreas Michalopoulos
  
 
Andreas Michalopoulos
 
Chief Executive Officer, Director and Secretary
   
Dated: April 27, 2026

119
PERFORMANCE SHIPPING INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
Pages
   
Report of Independent Registered Public Accounting Firm (PCAOB ID 1457)
 F-2
   
F-4
   
F-5
   
F-6
   
F-7
   
F-8
   
F-9

F-1


Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Performance Shipping Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Performance Shipping Inc. (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These 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 the Company 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 the financial 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 control over 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 on the 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 respond to 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 the accounting 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 a reasonable basis for our opinion.

F-2
Critical audit matter

The 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 the audit 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 the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

   
Impairment indicators for vessels held and used
     
Description of the matter
  
As of December 31, 2025, the carrying value of the Company’s vessels, plus unamortized dry-dock costs was $451,904. As discussed in Note 2(l) to the consolidated financial statements, the Company evaluates each vessel for impairment whenever events or changes in circumstances indicate that the carrying amount of a vessel plus unamortized dry-dock costs may not be recoverable, in accordance with the guidance in ASC 360 – Property, Plant and Equipment (“ASC 360”).

Auditing the Company’s impairment indicator assessment was complex due to the judgment required to evaluate events or changes in circumstances affecting the market and economic conditions in a cyclical and volatile industry, as well as the subjectivity involved in assessing potential indicators of impairment.
     
How we addressed the matter in our audit
  
We analyzed management’s assessment of vessel impairment indicators against the accounting guidance in ASC 360. In order to test management’s assessment of the developments in market conditions, our procedures included, among others, performing an analysis over the market charter rates and market prices, recent sales and purchase activity for second-hand tanker vessels, as well as changes in third-party valuations using market information derived from external industry data. Our procedures also included sensitivity analyses to evaluate the impact from potential sales. We assessed the Company’s disclosures in Note 2(l) to the consolidated financial statements.


/s/ Ernst & Young (Hellas) Certified Auditors Accountants S.A.

We have served as the Company’s auditor since 2010.

Athens, Greece

April 27, 2026

F-3
PERFORMANCE SHIPPING INC.
Consolidated Balance Sheets as at December 31, 2025 and 2024
(Expressed in thousands of U.S. Dollars, except for share and per share data)

ASSETS
  
December 31, 2025
    
December 31, 2024
  
CURRENT ASSETS:
            
Cash and cash equivalents   $ 48,172     $ 70,314  
Accounts receivable, net (Note 3)     6,293       5,810  
Inventories
     949       549  
EU allowances (Note 3)
     198       -  
Prepaid expenses and other assets
     2,398       1,979  
Total current assets
     58,010       78,652  
                 
FIXED ASSETS:
                
Advances for vessels under construction and other vessels’ costs (Note 5)
    48,725       58,468  
Vessels, net (Note 6)
     449,689       189,577  
Property and equipment, net
     58       34  
Total fixed assets
     498,472       248,079  
                 
NON-CURRENT ASSETS:
                
Restricted cash, non-current (Note 7)     1,089       1,000  
Right of use asset under operating leases     67       50  
Deferred charges, net     2,215       2,386  
Other non-current assets
     -       226  
Total non-current assets
     3,371       3,662  
Total assets
   $ 559,853     $ 330,393  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
                
CURRENT LIABILITIES:
                
Current portion of long-term debt, net of unamortized deferred financing costs (Note 7)
   $ 12,391     $ 7,443  
Accounts payable, trade and other
     3,408       2,214  
Due to related parties (Note 4)
     17       615  
Accrued liabilities (Note 7)
     9,226       2,820  
Deferred revenue (Note 3)     -       930  
Lease liabilities, current     67       50  
EU allowances liability (Note 3)     1,077       789  
Total current liabilities
     26,186       14,861  
                 
LONG-TERM LIABILITIES:
                
Long-term debt, net of unamortized deferred financing costs (Note 7)
     114,799       40,016  
Bonds, net of unamortized discounts and deferred financing costs (Note 7)
     95,142
      -
 
Other liabilities, non-current
     262       246  
Commitments and contingencies (Note 8)     -       -  
Fair value of warrants’ liability (Note 9)
    30       27
  
Total long-term liabilities
     210,233       40,289  
                 
STOCKHOLDERS’ EQUITY:
                
Preferred stock, $0.01 par value; 25,000,000 shares authorized, 50,726 and 50,726 Series B, and 1,423,912 and 1,423,912 Series C issued and outstanding as at December 31, 2025 and 2024, respectively (Note 9)
     15       15  
Common stock, $0.01 par value; 500,000,000 shares authorized; 12,432,158 and 12,432,158 issued and outstanding as at December 31, 2025 and 2024, respectively (Note 9)
     124       124  
Additional paid-in capital (Note 9)
     534,269       534,269  
Other comprehensive income
     102       53  
Accumulated deficit
     (211,076 )     (259,218 )
Total stockholders’ equity
     323,434       275,243  
Total liabilities and stockholders’ equity
   $ 559,853     $ 330,393  

The accompanying notes are an integral part of these consolidated financial statements.
F-4
PERFORMANCE SHIPPING INC.
Consolidated Statements of Operations
For the years ended December 31, 2025, 2024 and 2023
(Expressed in thousands of U.S. Dollars – except for share and per share data)

   
2025
    
2024
    
2023
  
REVENUE:
                  
Revenue (Note 3)
   $ 84,172     $ 87,445     $ 108,938  
                         
EXPENSES:
                        
Voyage expenses
     5,181       4,237       4,358  
Vessel operating expenses
     21,605       19,758       21,866  
Depreciation and amortization of deferred charges (Note 6)
     15,077       13,336       14,793  
General and administrative expenses (Notes 4, 8 and 9)
     9,702       8,306       8,042  
Gain on vessel’s sale (Note 6)
     (19,456 )     -       (15,683 )
Provision for / (Reversal of) credit losses (Note 3)     27       (7 )     (37 )
Foreign currency losses
     100       1       64  
    Operating income
   $ 51,936     $ 41,814     $ 75,535  
                         
OTHER INCOME / (EXPENSES)
                        
Interest and finance costs (Notes 5, 7 and 10)     (6,793 )     (1,345 )     (9,598 )
Loss from debt extinguishment
    -       -       (387 )
Interest income
     4,834       3,255       3,302  
Changes in fair value of warrants’ liability (Note 9)     (4 )     6       561  
    Total other income / (expenses), net
   $ (1,963 )   $ 1,916     $ (6,122 )
                         
Net income
   $ 49,973     $ 43,730     $ 69,413  
                         
Income allocated to participating securities (Note 11)
   $
-     $
-     $
(2 )
Deemed dividend to the Series C preferred stockholders due to triggering of a down-round feature (Notes 9 and 11)
     -       -       (9,809 )
Deemed dividend to the July and August 2022 warrants’ holders due to triggering of a down-round feature (Notes 9 and 11)
     -       -       (789 )
Dividends on preferred stock (Note 11)
     (1,831 )     (1,833 )     (1,889 )
                         
Net income attributable to common stockholders
   $ 48,142     $ 41,897     $ 56,924  
 
                        
Earnings per common share, basic (Note 11)
   $ 3.87     $ 3.39     $ 5.43  
 
                        
Earnings per common share, diluted (Note 11)
   $ 1.28     $ 1.11     $ 1.91  
 
                        
Weighted average number of common shares, basic (Note 11)
     12,432,158       12,365,418       10,491,316  
 
                        
Weighted average number of common shares, diluted (Note 11)
     38,925,391       39,201,865       35,539,671  

The accompanying notes are an integral part of these consolidated financial statements.
F-5
PERFORMANCE SHIPPING INC.
Consolidated Statements of Comprehensive Income
For the years ended December 31, 2025,  2024 and 2023
(Expressed in thousands of U.S. Dollars)

 
2025
  
2024
  
2023
  
             
Net income
   $ 49,973     $ 43,730     $ 69,413  
Other comprehensive income / (loss) (Actuarial gain / (loss))
     49       4       (17 )
Comprehensive income
   $ 50,022     $ 43,734     $ 69,396  

The accompanying notes are an integral part of these consolidated financial statements.
F-6
PERFORMANCE SHIPPING INC.
Consolidated Statements of Stockholders’ Equity
For the years ended December 31, 2025, 2024 and 2023
(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
   
Deficit
     Total  
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 and stock option awards (Note 9)
     -       -       -       -       -       52       -       -       52  
 - Issuance of common stock under ATM program, net of issuance costs (Note 9)
     224,817       2       -       -       -       671       -       -       673  
 - Actuarial loss
     -       -       -       -       -       -       (17 )     -       (17 )
 - Issuance of common stock and Series B warrants, net of issuance costs (Note 9)
     5,556,000       56       -       -       -       7,713       -       -       7,769  
 - Alternative cashless exercise of Series A warrants (Note 9)
    3,597,100       36       -       -       -       3,379       -       -       3,415  
 - Series B preferred shares exchanged for Series C preferred shares (Note 9)
     -       -       (85,535 )     171,070       -       482       -       -       482  
 - Series C preferred shares converted to common shares (Note 9)
     1,064,207       11       -       (57,490 )     -       (11 )     -       -       -  
 - Repurchase and retirement of common stock, including expenses (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  
 - Deemed dividend to the July 2022 warrants holders due to triggering of a down-round feature (Note 9)
    -       -       -       -       -       256       -       (256 )     -  
 - Deemed dividend to the August 2022 warrants holders due to triggering of a down-round feature (Note 9)
    -       -       -       -       -       533       -       (533 )     -  
 - Deemed dividend to the Series C stockholders due to triggering of a down-round feature (Note 9)
    -       -       -       -       -       9,809       -       (9,809 )     -  
 - Dividends declared and paid on Series B preferred shares (at $1.00 per share) (Note 9)
    -       -       -       -       -       -       -       (55 )     (55 )
 - Dividends declared and paid on Series C preferred shares (at $1.25 per share) (Note 11)
     -       -       -       -       -       -       -       (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  
 - Net income
     -       -       -       -       -       -       -       43,730       43,730  
 - Exercise of Series B warrants (Note 9)
     70,000       1       -       -       -       157       -       -       158  
 - Actuarial gain
     -       -       -       -       -       -       4       -       4  
 - Series C preferred shares converted to common shares (Note 9)
    82,482       -       -       (4,460 )     -       -       -       -       -  
 - Dividends declared and paid on Series B preferred shares (at $1.00 per share) (Note 9)
    -       -       -       -       -       -       -       (52 )     (52 )
 - Dividends declared and paid on Series C preferred shares (at $1.25 per share) (Note 11)
    -       -       -       -       -       -       -       (1,781 )     (1,781 )
Balance, December 31, 2024
    12,432,158     $ 124       50,726       1,423,912     $ 15     $ 534,269     $ 53     $ (259,218 )   $ 275,243  
 - Net income     -       -       -       -       -       -       -       49,973       49,973  
 - Actuarial gain     -       -       -       -       -       -       49       -       49  
 - Dividends declared on Series B preferred shares (at $1.00 per share) (Note 9)
     -       -       -       -       -       -       -       (51 )     (51 )
 - Dividends declared and paid on Series C preferred shares (at $1.25 per share) (Note 9)
     -       -       -       -       -       -       -       (1,780 )     (1,780 )
Balance, December 31, 2025
     12,432,158     $
 124       50,726       1,423,912     $
 15     $
 534,269     $
 102     $
 (211,076 )   $
 323,434  

The accompanying notes are an integral part of these consolidated financial statements.
F-7
PERFORMANCE SHIPPING INC.
Consolidated Statements of Cash Flows
For the years ended December 31, 2025, 2024 and 2023
(Expressed in thousands of U.S. Dollars)

    2025     2024    
2023
  
Cash Flows provided by Operating Activities:
                  
Net income
   $ 49,973     $ 43,730     $ 69,413  
Adjustments to reconcile net income to net cash provided by operating activities:
                        
Depreciation and amortization of deferred charges (Note 6)
     15,077       13,336       14,793  
Amortization of deferred financing costs and bonds discounts (Note 10)
     809       107       244  
Financing costs     -       -       340  
Changes in fair value of warrants’ liability
     4       (6 )     (561 )
Amortization of prepaid charter revenue
    -       -       54  
Gain on vessel’s sale (Note 6)
     (19,456 )     -       (15,683 )
Compensation cost on restricted stock and stock option awards (Note 9)
     -       -       52  
Loss from debt extinguishment     -       -       387  
Actuarial gain / (loss)
     49       4       (17 )
(Increase) / Decrease in:
                        
Accounts receivable
     (293 )     3,232       830  
Deferred voyage expenses
     -       -       20  
Inventories
     (400 )     1,654       834  
EU allowances
     (86 )     -       -  
Prepaid expenses and other assets
     (419 )     413       406  
Right of use asset under operating leases
     (17 )     49       64  
Other non-current assets
     -       (226 )     72  
Increase / (Decrease) in:
                        
Accounts payable, trade and other
     934       (2,667 )     16  
Due to related parties
     (598 )     370       (90 )
Accrued liabilities
     6,284       (244 )     87  
Deferred revenue
     (930 )     930       (1,378 )
Other liabilities, non-current
     16       32       58  
Lease liabilities under operating leases
     17       (49 )     (64 )
Drydock costs
     (888 )     (769 )     (1,922 )
Net Cash provided by Operating Activities
   $ 50,076     $ 59,896     $ 67,955  
Cash Flows (used in) / provided by Investing Activities:                        
Advances for vessels under construction and other vessel costs (Note 5)
     (26,917 )     (47,167 )     (11,303 )
Vessel acquisitions and other vessels’ costs (Note 6)
     (254,566 )     -       (64 )
Proceeds from sale of vessels, net of expenses (Note 6)
     36,948       -       37,636  
Payments for vessels’ improvements (Note 6)
     -       (231 )     (510 )
Property and equipment additions
     (54 )     (17 )     (38 )
Net Cash (used in) / provided by Investing Activities
   $ (244,589 )   $ (47,415 )   $ 25,721  
Cash Flows provided by / (used in) Financing Activities:
                        
Proceeds from long-term debt (Note 7)
     119,392       -       2,141  
Proceeds from bonds, net of discounts (Note 7)
     97,000       -       -  
Repayments / Prepayments of long-term debt (Note 7)
     (38,391 )     (7,533 )     (75,421 )
Issuance of common stock and warrants, net of issuance costs (Note 9)
     -       -       11,438  
Proceeds from exercise of Series A and B warrants (Note 9)
     -       158       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  
Payments of financing costs (Note 7)
     (3,710 )     (226 )     (140 )
Cash dividends (Note 11)
     (1,831 )     (1,833 )     (1,889 )
 Net Cash provided by / (used in) Financing Activities
   $ 172,460     $ (9,434 )   $ (65,135 )
Net (decrease) / increase in cash, cash equivalents and restricted cash
   $ (22,053 )   $ 3,047     $ 28,541  
Cash, cash equivalents and restricted cash at beginning of the year
   $ 71,314     $ 68,267     $ 39,726  
Cash, cash equivalents and restricted cash at end of the year
   $ 49,261     $ 71,314     $ 68,267  
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
                        
Cash and cash equivalents at the end of the year
   $ 48,172     $ 70,314     $ 67,267  
Restricted cash at the end of the year
     1,089       1,000       1,000  
Cash, cash equivalents and restricted cash at the end of the year
   $ 49,261     $ 71,314     $ 68,267  
SUPPLEMENTAL CASH FLOW INFORMATION
                        
Alternative cashless exercise of Series A warrants
   $ -     $ -     $ 3,415  
Non-cash investing activities
   $ 368     $ -     $ -  
Interest payments, net of capitalized amounts
   $ 4,225     $ 3,528     $ 9,135  

The accompanying notes are an integral part of these consolidated financial statements.

F-8
PERFORMANCE SHIPPING INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2025, 2024 and 2023
(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)


1.
General Information



Company’s identity



The 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 any lawful 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 the Company’s Amended and Restated Articles of Incorporation to change the name of the Company from “Diana Containerships Inc.” to “Performance Shipping Inc.”, which was effected on 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 August 2020. The Company operates its fleet through Performance Shipping Management Inc. (ex “Unitized Ocean Transport Limited”, or the “Manager”), a wholly-owned subsidiary. The fees payable to Performance Shipping Management Inc. are eliminated in consolidation as intercompany transactions.

Other matters

Various macroeconomic factors, including inflation, higher interest rates, global supply chain constraints, and broader economic uncertainty, could adversely affect the Company’s results of operations, financial condition, cash flows, and the ability to pay dividends. Additionally, fluctuations in tankers’ spot charter rates may also impact the Company’s revenues.

Global economic conditions remain uncertain due to geopolitical tensions, armed conflicts, such as those involving Russia and Ukraine, Israel and Iran, the U.S. and Iran, the instability in the Middle East, the Red Sea, Venezuela and other regions, as well as strategic tensions among major economies such as the U.S., China, and their allies. Potentially prolonged disruption of shipping through the Strait of Hormuz, a waterway essential to the shipment of crude oil and refined petroleum, may disrupt the global tanker industry.  Currently, neither the Company’s contracts nor its financial results have been adversely affected by these challenges and conflicts. However, it is possible that third parties with whom the Company has or will have future contracts may be impacted.

The world economy faces also other challenges including tariffs, trade wars, global public health threats such as the outbreak of pandemics and epidemics. The Company monitors inflation in the United States, Eurozone, and other regions, which are impacted by global geo-political conditions and the likely shift in policy following numerous elections around the world. Additionally, the Company monitors changes in tariffs, trade barriers, and embargos, including recently imposed or announced tariffs by the U.S. and the effects of retaliatory tariffs from affected countries.

The extent and duration of these geopolitical and economic developments remain uncertain. Prolonged disruptions or conflicts could decrease worldwide demand for goods and seaborne trade, making the overall impact on the tanker market and the Company’s business difficult to predict.

F-9

PERFORMANCE SHIPPING INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2025, 2024 and 2023
(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)
2.
Recent Accounting Pronouncements and Significant Accounting Policies

Recent Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses”. The standard is intended to require more detailed disclosure about specified categories of expenses (including employee compensation, depreciation, and amortization) included in certain expense captions presented on the face of the income statement. This ASU is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to all prior periods presented in the financial statements. The Company is currently assessing the impact this standard will have on its consolidated financial statements.

In July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments allow entities to elect a practical expedient to assume that the current conditions as of the balance sheet date will remain unchanged for the remaining life of the asset when developing a reasonable and supportable forecast as part of estimating expected credit losses on these assets. The amendments in this ASU are effective for all entities for annual reporting periods beginning after 15 December 2025, and interim reporting periods within those annual reporting periods. The Company is currently assessing the impact this standard will have on its consolidated financial statements.

In December 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2025-11, Financial Instruments – Interim Reporting (Topic 270): Narrow Scope Improvements, which creates a comprehensive list of interim disclosures required under US GAAP and incorporates a disclosure principle that requires disclosures at interim periods when an event or change that has a material effect on an entity has occurred since the previous year end. For public business entities, the amendments in this ASU are effective for interim reporting periods within annual reporting periods beginning after 15 December 2027. The Company is currently assessing the impact this standard will have on its consolidated financial statements. Early adoption is permitted in an interim reporting period in which financial statements have not yet been issued (or made available for issuance). The Company is currently assessing the impact this standard will have on its consolidated financial statements.

In December 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2025-12, Codification Improvements, to clarify, correct errors in or make other improvements to a variety of topics in the Codification that are intended to make it easier to understand and apply. The amendments apply to all reporting entities in the scope of the affected accounting guidance. The amendments, among other things, clarify the guidance in ASC 260 on how to calculate diluted earnings per share when an entity has a loss from continuing operations and a contract that may be settled in stock or cash that is reported as an asset or liability for accounting purposes. The guidance is effective for annual reporting periods beginning after 15 December 2026, and interim periods within those annual periods. Entities are required to apply the amendments to ASC 260 retrospectively. All other amendments may be applied prospectively or retrospectively. Early adoption is permitted. The Company is currently assessing the impact this standard will have on its consolidated financial statements.

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 include the accounts of Performance Shipping Inc. and its wholly-owned subsidiaries. During 2024, the Company acquired four newly established subsidiaries named Nakaza Shipping Company Inc., Sri Lanka Shipping Company Inc., Guadeloupe Shipping Company Inc. and Saint Barth Shipping Company Inc., in connection with the four shipbuilding contracts signed (Notes 5 and 8). During 2025, the Company acquired two newly established subsidiaries named Grenada Shipping Company Inc. and Barbados Shipping Company Inc., in connection with the acquisition of the two Suezmax tanker vessels (Note 6). Furthermore, in 2025 the Company’s subsidiaries Rongerik Shipping Company Inc., Utirik Shipping Company Inc. and Oruk Shipping Company Inc. were dissolved. All significant intercompany balances and transactions have been eliminated upon consolidation. Under Accounting Standards Codification (“ASC”) 810 “Consolidation”, the Company 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 the Company 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. The Company evaluates financial instruments, service contracts, and other arrangements to determine if any variable interests relating to an entity exist. The Company’s evaluation did not result in an identification of variable interest entities as of December 31, 2025 and 2024.

(b) Use of Estimates: The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions 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 the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

(c) Other Comprehensive Income: The Company follows the provisions of Accounting Standard Codification (ASC) 220, “Comprehensive Income”, which requires separate presentation of certain transactions, which are recorded directly as components of stockholders’ equity. The Company presents Other Comprehensive Income in a separate statement.

F-10

PERFORMANCE SHIPPING INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2025, 2024 and 2023
(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)
(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, and therefore, primarily transacts business in U.S. Dollars. The Company’s accounting records are maintained in U.S. Dollars. Transactions involving other currencies during the years presented 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 are denominated 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 consolidated statements 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 three months 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 line Interest 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 mainly includes receivables from pool charterers, charterers for hire, freight and demurrage, net of provision for credit losses and allowances for doubtful accounts – (refer to paragraphs (h) and (n), and to Note 3). Furthermore, effective January 1, 2024 and in accordance with the new applicable EU legislation, the account also includes receivables for EU allowances (“EUAs”), being carbon credits used in the EU Emissions Trading Scheme, in relation with time charterers and pool voyages in EU ports.

(h) Allowance for Doubtful Accounts and 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. The Company also assesses collectability for receivables outside the scope of ASC 326 (i.e. accounts receivable from time and pool charter contracts accounted for in accordance with ASC 842, refer to paragraph (n)), by reviewing them on a collective basis where similar characteristics exist, and on an individual basis when the Company identifies specific charterers with known disputes or collectability concerns. The Company recognizes allowance for doubtful accounts deriving from the collectability assessment as direct reduction to lease income.

As of December 31, 2025 and 2024, the balance of the Company’s allowance for estimated credit losses on its outstanding freight and demurrage receivables and allowances for doubtful accounts were in aggregate $66 and $131, respectively, and is included in Accounts receivable, net in the accompanying consolidated balance sheets.

For 2025, 2024 and 2023, the Provision for credit losses and write offs in the accompanying consolidated statements of operations includes changes in the provision of estimated losses of $(6), $(7) and $(85), respectively, and it also includes an amount of $0, $0 and $48, respectively, representing demurrages write offs. No allowance was recorded on insurance claims as of December 31, 2025 and 2024, as their balances were immaterial. In addition, no allowance was recorded for cash 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 the relative credit standing of those financial institutions are performed. Allowances for doubtful accounts amounted to $55, $114 and $147, for the years ended December 31, 2025, 2024 and 2023, respectively.

(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 a vessel 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 may be 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 cost is 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 of completion, disposal and transportation.

F-11

PERFORMANCE SHIPPING INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2025, 2024 and 2023
(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)
(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 vessel from a shipyard. All pre-delivery costs incurred during the construction of newbuildings, including interest, supervision and technical costs, are capitalized. Subsequent expenditures for conversions 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 the installation of their ballast water treatment system, improvement costs of the period under consideration are capitalized in Other non-current assets in the accompanying consolidated balance sheets. No such vessels existed for the Company as at December 31, 2025, and 2024.

(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’s salvage 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 the useful 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 acquisition through 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 date such 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 the impairment or disposal of long-lived assets. The Company reviews vessels for impairment whenever events or changes in circumstances (such as market conditions, the economic outlook, technological, regulatory and environmental developments, 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 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 plus unamortized drydock-costs, the Company evaluates the vessel for impairment loss. The measurement of the impairment loss is based on the fair 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. The Company evaluates the carrying amounts and periods over which vessels are depreciated 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-lived assets, management reviews certain indicators of potential impairment, such as undiscounted projected operating cash flows, vessel sales and purchases, business plans and overall market conditions. In developing estimates of future undiscounted cash flows, the Company makes assumptions and estimates about the vessels’ future performance, with the significant assumptions being related to charter rates, while other assumptions include vessels’ operating expenses, vessels’ residual value, dry-dock costs, fleet utilization and the estimated remaining 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. The Company also takes into account factors such as the vessels’ age and employment prospects under the then current market conditions and determines the future undiscounted cash flows considering its 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 charter revenues from existing time charters for the 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 remaining estimated 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 expected to 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 2025, 2024 and 2023, the Company assessed that there were no indications for potential impairment of any of its vessels, including vessels under construction.

F-12

PERFORMANCE SHIPPING INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2025, 2024 and 2023
(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)
(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 Held for 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 been initiated; (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 is unlikely 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, by abandonment, 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 to classify 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 less cost 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, 2025 and 2024 did not result in held for sale 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 contracts with 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 charter revenues 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 the charterer, 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, canal tolls, 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 have the 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 vessel regarding 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 are recognized 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 rates include 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 practical expedient 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 are met. 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 been provided.

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 to complete. 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 not contain 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 the voyage 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 available for 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 recognized as 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 original expected 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 each pool 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 the pool 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 basis and 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 the period 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.

F-13

PERFORMANCE SHIPPING INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2025, 2024 and 2023
(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)
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 spot charter 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 as contract 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, provided that 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 ratably over 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 when incurred.

Moreover, commencing January 1, 2024, the European Union’s Emissions Trading System (“EU ETS”) was extended to cover Carbon dioxide (“CO2”) emissions from ships over 5,000 gross tons entering EU ports. The EU ETS covers (a) 50% of emissions from voyages either starting in or ending in an EU port, and (b) 100% of emissions from voyages between two EU ports or emissions generated while a ship is within an EU port. Shipping companies will have to surrender EU ETS emissions allowances (“EUA”) for each ton of reported CO2 emissions in the scope of the EU ETS. EUAs relating to 2024 and 2025 emissions were/are required to be surrendered to the EU authorities in September 2025 and September 2026, respectively. The EUAs obligations are measured at the estimated cost of purchasing credits from the EUA market, based on the voyage completion date. The Company recognizes EU ETS surcharges billed to customers in Revenue and the corresponding cost of purchasing allowances in Voyage expenses in the accompanying consolidated statement of operations, as the Company acts as the principal in the transportation arrangement, controlling the vessel and bearing the risk of emissions compliance, rather than acting as an agent for the customer. EUA obligations that cannot be passed on to or reimbursed by the charterer, are accounted for as liability on the balance sheet, and as the price of EUAs fluctuates, these outstanding liabilities are marked-to-market using current EUA index prices. EUAs held by the Company are intended to be used to settle its EUA obligations and are accounted for as intangible assets (Note 3).

(o) Earnings per Common Share: Basic earnings per common share are computed by dividing net income attributable to common stockholders by the weighted average 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 and participating securities, according to dividends declared and participation rights in undistributed earnings. Under this method, net earnings is reduced by the amount of dividends declared in the current period for common shareholders and participating security holders. The remaining earnings or “undistributed earnings” are allocated between common stock and participating 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 share is computed by dividing the net earnings attributable to common shareholders by the weighted average number of common shares outstanding during each year presented. Diluted earnings per common share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised. Diluted earnings attributable to common shareholders per common share is computed by dividing the net earnings attributable to common shareholders by the weighted average number of common shares outstanding plus the dilutive effect of restricted shares, warrants and options outstanding during the applicable periods computed using the treasury method and the dilutive effect of convertible securities during the applicable periods computed using the “if converted” method. The two-class method is used for diluted earnings per common share 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 convertible securities is anti-dilutive, such are not included in the diluted earnings per common share calculation. For purposes of the if-converted calculation, the fixed conversion price of preferred 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).

(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 basis over 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 the calculation 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 when these vessels’ carrying values are impaired as a result of their classification. The unamortized dry-docking cost as of December 31, 2025, and 2024 was $2,215 and $2,386, respectively. Amortization of dry-docking costs for 2025, 2024 and 2023 amounted to $1,059, $548 and $571, respectively, and is included in Depreciation and amortization of deferred charges in the accompanying consolidated statement of operations. For 2025, 2024 and 2023, deferred dry-dock costs which were written off in Gain on vessels’ sale in the accompanying consolidated statement of operations amounted to $Nil, $Nil and $651.

(q) Financing Costs, Discounts and Liabilities: Fees paid to lenders for obtaining new loans, or for refinancing existing ones which are determined as debt modifications, are deferred and recorded as a contra to debt. As of December 31, 2024, the Company had paid an amount $226 in connection with the sale and lease-back agreement of its Hull 1597, which is classified in Other non-current assets in the accompanying 2024 consolidated balance sheets, and in Payments of financing costs in the accompanying consolidated statements of cash flows. In 2025, the amount of $226 has been reclassified to Deferred financing costs. Other fees paid for obtaining financing not used at the balance sheet date are capitalized as deferred financing costs. Moreover, debt may be issued either at par, at discount or at premium. A discount or premium is not an asset or liability separable from the associated debt instrument, but it is reported in the balance sheet as an adjustment to the carrying amount of the debt liability. Debt issuance costs and discounts or premiums are amortized into interest expense using the effective interest method pursuant to ASC 835-30-35-2 through 35-3.

A loan liability is derecognized when the Company 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 the settlement 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 of operations. 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 been recognized as Loss from debt extinguishment and is separately presented in the accompanying 2023 consolidated statement of operations.

F-14

PERFORMANCE SHIPPING INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2025, 2024 and 2023
(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)
During 2023, the Company has elected one of the optional expedients provided in ASU No. 2020 04 Reference Rate Reform (Topic 848), that allows entities with contract modifications (within the scope of Topic 470), relating directly to the replacement of a reference rate with another interest rate index, to account for the modification as if the modification was 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 not be accounted for in the same manner as debt extinguishment. Also, in 2023, the Company’s loans’ transition from LIBOR to SOFR was completed.

(r) Repairs and Maintenance: All repair and maintenance expenses including underwater inspection expenses are expensed in the period incurred and included in Vessel operating expenses 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 recognized under 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 vesting period). 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 the service 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 the grant 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 an amount equal to the excess of the fair value of the modified award over the fair value of the original award immediately before the modification.

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-based compensation 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 to equity 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 consolidated statement 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 using fair 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 paid to 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 accounting guidance 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 instrument classified in shareholders’ equity assumes that the instrument would remain outstanding, and the market participant takes on the rights and responsibilities associated with the instrument.

F-15

PERFORMANCE SHIPPING INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2025, 2024 and 2023
(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)
(u) Concentration of Credit Risk: Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist principally of cash and trade accounts receivable. The Company places its temporary cash investments, consisting mostly of deposits, with various qualified financial institutions and performs periodic evaluations of 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 by performing ongoing credit evaluations of its customers’ financial condition and generally does not require collateral for its accounts receivable and does not have any agreements to mitigate 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 the consolidated 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 continue as 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 its consolidated financial statements.

(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 is accordingly 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 capital is 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 stock represents 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 the consideration 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), the difference 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 carrying amount of the shares surrendered is reflected as gain which should be added to the net income to arrive at the net income available to common stockholders (Note 11).

(y) Segmental Reporting: The operation of the vessels is the main source of revenue generation, the services provided by the vessels are similar and they all operate under the same economic environment. The Company’s Chief Executive Officer, who is identified as the chief operating decision maker (“CODM”) in accordance with ASC 280, Segment Reporting, reviews operating results solely based on revenues of the fleet, without differentiating by type of vessel or by the length of ship employment for its customers, i.e. spot or time charters. Additionally, the vessels do not operate in specific geographic areas, as they trade worldwide. The CODM uses consolidated net income as presented in the Company’s consolidated statements of operations to assess performance and allocate resources. Such resources allocation is relied not only upon the reported segment’s results but also on CODM’s view and estimates as to the future prospected of the segment. In addition, the CODM is provided on a regular basis with the consolidated operating expenses, deemed as significant and included in the segment profit, presented in the Company’s consolidated statements of operations. As a result, the Company has determined that it operates under one reportable segment, that of operating tanker vessels and the assets of such segment are presented under the caption Total assets in the consolidated balance sheets. The accounting policies applied to the reportable segment are the same as those used in the preparation of the Company’s consolidated financial statements.

F-16

PERFORMANCE SHIPPING INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2025, 2024 and 2023
(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)
(z) Preferred Shares and Warrants Accounting: The Company follows the provision of ASC 480 “Distinguishing Liabilities from Equity” and ASC 815 “Derivatives and Hedging” to determine 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 key features 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, the Company identifies any embedded features, examines whether these fall under the definition of a derivative according to ASC 815 applicable guidance or whether certain of these features affect the classification. In cases when derivative accounting is deemed inappropriate, no bifurcation of these features is performed. For those warrants meeting the classification 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 warrant liabilities 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 settlement date and then the liability settled (refer to Note 9).

(aa) Accounting of Down-Round Features: For preferred stock and warrants bearing down-round features, the Company evaluates whether there are circumstances that trigger the down-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 the feature 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 to the 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 the Company 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 value represents a deemed dividend to the preferred or to the warrant holders (as applicable), which should be deducted from the net income to arrive at the net income available to common stockholders.

(ab) Sale and Lease back transactions: In accordance with ASC 842, the Company, as seller-lessee, determines whether the transfer of an asset should be accounted as a sale in accordance with ASC 606. The existence of an option for the seller-lessee to repurchase the asset precludes the accounting for the transfer of the asset as a sale unless both of the following criteria are met: (1) the exercise price of the option is the fair value of the asset at the time the option is exercised and (2) there are alternative assets, substantially the same as the transferred asset, readily available in the marketplace; and the classification of the leaseback as a finance lease or a sales-type lease, precludes the buyer-lessor from obtaining control of the asset. The existence of an obligation for the Company, as seller-lessee, to repurchase the asset precludes accounting for the transfer of the asset as sale as the transaction would be classified as a financing arrangement by the Company as it effectively retains control of the underlying asset. If the transfer does not meet the criteria of sale, the Company does not derecognize the transferred asset, accounts for any amounts received as a financing arrangement and recognizes the difference between the amount of consideration received and the amount of consideration to be paid as interest. If the transfer of the asset meets the criteria of sale, the Company, as seller-lessee recognizes the proceeds from the sale when the buyer-lessor obtains control of the asset, derecognizes the carrying amount of the underlying asset and accounts for the lease in accordance with ASC 842. As of December 31, 2025, the Company has recognized its two sale and lease-back agreements with unaffiliated parties for the vessels “P. Massport” and “P. Tokyo” as financing arrangements (Note 7).

F-17

PERFORMANCE SHIPPING INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2025, 2024 and 2023
(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)
3.
Revenue, Accounts Receivable, net and Deferred Revenue

The 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 of charter (time charters, spot charters and pool charters).

Below are presented, per type of charter, the Company’s revenues for the years ended December 31, 2025, 2024 and 2023 and also the balance of Accounts receivable, net, for the years ended December 31, 2025 and 2024.

Charter type
  
2025
    
2024
    
2023
  
Time charters
  
$
70,607
    
$
63,085
    
$
57,975
  
Pool arrangements
    
11,211
      
23,378
      
48,332
  
Voyage charters
    
2,354
      
982
      
2,631
  
Total Revenue
  
$
84,172
    
$
87,445
    
$
108,938
  


 
As of December 31,
  
Charter type
  
2025
    
2024
  
Time charters
  
$
5,220
    
$
2,063
  
Pool arrangements
    
923
      
2,845
  
Voyage charters
    
150
      
902
  
Total Acc. Receivable, net
  
$
6,293
    
$
5,810
  

There were no contract assets included in the receivable balances from spot voyages as of December 31, 2025 and 2024, respectively.

Moreover, the charterers that accounted for more than 10% of the Company’s revenue are presented below:

Charterer
  
2025
    
2024
    
2023
  
A
     18 %     16 %     11 %
B
     14 %     26 %     28 %
C
     16 %     16 %     -  
D
     11 %     -
    -
E
     -
    -
    13 %
F
     12 %     -
       -
  
G
     13 %     22 %     32 %

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 perform according to the terms of the relevant charter parties, amounted to $2,126 and to $1,108 as of December 31, 2025 and 2024, respectively.

Deferred Revenue relates solely to cash received up-front from the Company’s time-charter contracts and as of December 31, 2025 and 2024, it amounted to $nil and $930, respectively, and is separately presented in the accompanying consolidated balance sheets.

As of December 31, 2025 and 2024, the value of the EUAs the Company was obligated to surrender to the EU authorities amounted to $1,077 and $789, respectively, and are shown as EU allowances liability, current, in the accompanying consolidated balance sheets. The amounts of $952 and $762, to be collected from charterers in the form of EUAs, are included in Accounts receivable, net in the accompanying consolidated balance sheets as of December 31, 2025 and 2024, respectively. EUAs amounting to $198 have been purchased ($86) or received from charterers and included in EU allowances in the accompanying consolidated balance sheets as of December 31, 2025. The Company did not hold any EUAs as of December 31, 2024.

For 2025 and 2024, the value of EUAs included in Revenues amounted to $1,077 and $762, respectively, while the value of EUAs included in voyage expenses amounted to $1,077 and $789, respectively.

F-18

PERFORMANCE SHIPPING INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2025, 2024 and 2023
(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)
4.
Transactions with Related Parties

Pure Brokerage and Shipping Corp. (“Pure Brokerage”): Pure Brokerage, a company controlled by the Company’s Chairperson of the Board and controlling shareholder Aliki Paliou, 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 the Company. 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 on the respective charter parties’ terms.

For 2025, 2024 and 2023, commissions to Pure Brokerage amounted to $1,027, $1,079 and $1,345, respectively, and are included in Voyage expenses in the accompanying consolidated statements of operations. Also, for 2025, 2024 and 2023, brokerage fees to Pure Brokerage amounted to $369, $340 and $286, respectively, and are included in General and administrative expenses in the accompanying consolidated statements of operations. As at December 31, 2025 and December 31, 2024 an amount of $17 and $485 respectively, was payable to Pure Brokerage and is reflected in Due to related parties in the accompanying consolidated balance sheets.

Mango Shipping Corp (“Mango”):

The Company’s Series C Preferred stock (Note 9) is entitled to an annual dividend of 5.00%, and part of this stock is held by Aliki Paliou, through Mango, and by Andreas Michalopoulos, the Company’s Chief Executive Officer. As of December 31, 2025 and 2024, Mango held 1,314,792 Series C preferred shares, and Andreas Michalopoulos held 56,342 Series C preferred shares. For 2025, 2024 and 2023, dividends declared and paid to Mango on its Series C preferred shares amounted $1,643, $1,643 and $1,643 respectively (or $1.25 per each Series C preferred share). On December 31, 2025 and 2024, accrued and not paid dividends on the Series C preferred shares held by Mango, amounted to $78 and $77, respectively. For the details of the terms of the Series C preferred stock, please refer to Note 9.

F-19

PERFORMANCE SHIPPING INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2025, 2024 and 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’ Costs

From March 2023 to April 2024, the Company, through its newly established subsidiaries named Nakaza Shipping Company Inc., Sri Lanka Shipping Company Inc., Guadeloupe Shipping Company Inc., and Saint Barth Shipping Company Inc. entered into four shipbuilding contracts with Chinese shipyards for the construction of three product/crude oil tankers of approximately 114,000 dwt each, and one product oil/chemical tanker of approximately 75,000 dwt. The newbuildings (named H1515, H1596, H1597 and H1624) have gross contract prices of $63,250, $64,845, $64,845 and $56,533, respectively. The shipbuilding contracts provide that the purchase price of each newbuilding will be paid in five installments, each falling at the contract signing, steel cutting, keel laying, launching, and at the delivery of each vessel. The Company took delivery of the hulls H1515 and H1596 during 2025 (Note 6), of the hull H1597 in January 2026 (Note 14) and expects to take delivery of the hull H1624 in the first quarter 2027.

During 2023, the Company paid the first installment for the Hull H1515, being $9,488, which was capitalized in Advances for Vessels Under Construction and Other Vessels’ Costs, along with interest amounting to $540 and other paid costs of $1,275. During 2024, the Company paid the first installments for the  Hulls H1596, H1597 and H1624, and the second installments for the Hulls H1515 and H1596, being $40,742 in aggregate, which were capitalized in Advances for Vessels Under Construction and Other Vessels’ Costs in the accompanying consolidated balance sheet of December 31, 2024, along with interest amounting to $2,435 and other paid costs of $3,989.

During 2025, with respect to the hulls H1515 and H1596, the Company paid $96,072 being the third, fourth and fifth installments for each, and capitalized interest amounting to $1,358 and other paid costs of $1,350. The Company took delivery of the two newbuilding vessels, which were renamed “P. Massport” and “P. Tokyo”, in July and September 2025, respectively. Upon their delivery, their aggregate costs of $135,617 were transferred from Advances for Vessels Under Construction and Other Vessels’ Costs to vessels’ costs (Note 6). Also, during 2025, with respect to the hulls H1597 and H1624, the Company paid $25,107 being the second, third and fourth installment for H1597 and the second installment for hull H1624, which were capitalized in Advances for Vessels Under Construction and Other Vessels’ Costs in the accompanying consolidated balance sheet of December 31, 2025, along with interest amounting to $1,626 and other paid costs of $361.

The movement of the advances for vessels under construction and other vessels’ costs for 2024 and 2025 is as follows:

   
Predelivery
Installments
    
Capitalized
costs
    
Total
  
Balance, December 31, 2023
  
$
9,488
    
$
1,815
    
$
11,303
  
 - predelivery installments to shipyard
    
40,742
      
-
      
40,742
  
 - predelivery capitalized costs
    
-
      
6,423
      
6,423
  
Balance, December 31, 2024
  
$
50,230
    
$
8,238
    
$
58,468
  
 - predelivery installments to shipyard
    
121,179
      
-
      
121,179
  
 - predelivery capitalized costs
    
-
      
4,695
      
4,695
  
 - transfer to Vessels, net
    
(128,095
)
    
(7,522
)
    
(135,617
)
Balance, December 31, 2025
  
$
43,314
    
$
5,411
    
$
48,725
  

6.
Vessels, net

Newbuilding Vessels’ Delivery and Vessels’ Acquisitions

In July and September 2025, the Company took delivery of the newbuilding vessels H1515 and H1596, renamed “P. Massport” and “P. Tokyo” respectively, and their aggregate cost of $135,617 (Note 5) were transferred to Vessels, net.

Furthermore, on October 7, 2025, the Company signed two Memoranda of Agreement with an unaffiliated third party for the purchase of two 157,286 dwt Suezmax tankers, whose purchase price was $77,775 per vessel. In December 2025 the Company took delivery of the vessels, which were renamed “P. Bel Air” and “P. Beverly Hills”. Additional capitalized costs amounted to $427, representing predelivery expenses.

Vessels’ Disposals
In February 2025, the Company, through its subsidiary Arno Shipping Company Inc., entered into a memorandum of agreement to sell the Aframax tanker vessel “P. Yanbu” to an unrelated party for an aggregate gross price of $39,000. The vessel was delivered to her new owners in March 2025, and the Company received the sale proceeds in accordance with the terms of the contract. For the years ended December 31, 2025, the gain on sale of vessel, net of direct to sale expenses, amounted to $19,456 and is reflected in Gain on vessel’s sale in the accompanying consolidated statement of operations.

F-20

PERFORMANCE SHIPPING INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2025, 2024 and 2023
(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)
The amounts of Vessels, net, in the accompanying consolidated balance sheets are analyzed as follows:

 
Vessels’ Cost
    
Accumulated
Depreciation
    
Net Book Value
  
Balance, December 31, 2023
  
$
228,158
    
$
(26,050
)
  
$
202,108
  
- Vessels’ improvements
     231       -       231  
- Depreciation
    
-
      
(12,762
)
    
(12,762
)
Balance, December 31, 2024
  
$
228,389
    
$
(38,812
)
  
$
189,577
  
- Vessels’ acquisitions transferred from advances
     135,617       -       135,617  
- Vessels’ acquisitions
     155,977       -       155,977  
- Vessel’s disposals
    (22,145 )     4,652       (17,493 )
- Depreciation
    -       (13,989 )     (13,989 )
Balance, December 31, 2025   $ 497,838     $ (48,149 )   $ 449,689  

7.
Long-Term Debt and Bonds

The amounts of long-term debt and bonds shown in the accompanying consolidated balance sheets are analyzed as follows:

   
December 31,
2025
    
Current
    
Non-current
    
December 31,
 2024
    
Current
    
Non-current
  
                                     
Nordea Bank secured term loan
  
$
12,500
    
$
3,333
    
$
9,167
    
$
15,833
    
$
3,333
    
$
12,500
  
Alpha Bank secured term loans
    
28,700
      
4,200
      
24,500
      
31,850
      
4,200
      
27,650
  
Huican sale and lease back financing
    
44,545
      
2,538
      
42,007
      
-
      
-
      
-
  
Kenzan Kaiun sale and lease back financing
    
42,938
      
2,603
      
40,335
      
-
      
-
      
-
  
less unamortized deferred financing costs
    
(1,493
)
    
(283
)
    
(1,210
)
    
(224
)
    
(90
)
    
(134
)
Total debt, net of deferred financing costs
  
$
127,190
    
$
12,391
    
$
114,799
    
$
47,459
    
$
7,443
    
$
40,016
  

 
  
December 31,
2025
    
Current
    
Non-current
    
December 31,
 2024
    
Current
    
Non-current
  
Bonds, net of discounts
  
$
97,000
    
$
-
    
$
97,000
    
$
-
    
$
-
    
$
-
  
less unamortized deferred financing costs
    
(1,858
)
    
-
      
(1,858
)
    
-
      
-
      
-
  
Total bond, net of deferred financing costs
  
$
95,142
    
$
-
    
$
95,142
    
$
-
    
$
-
    
$
-
  

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 bank loans are repayable in quarterly installments plus one balloon installment per loan agreement to be paid together with the last installment. The Company’s loans bear variable interest at SOFR plus a fixed margin, which during the years ended December 31, 2025 ranged from 0.50% to 2.50%. The loan maturities fall due from August 2028 to July 2030, and at each utilization date, arrangement fees ranging from 0.50% to 0.70% were paid. As of December 31, 2025, the term loans were collateralized by four of the Company’s tanker vessels, whose aggregate net book value was $109,558.

Nordea Bank Abp, Filial i Norge (“Nordea Bank”)

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 the acquisition 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 an amount of $2,141. The new loan has a duration of 5 years from the signing date 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 occurs during the life of the facility, then the accounting guidance for revolving credit facilities would apply.

F-21

PERFORMANCE SHIPPING INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2025, 2024 and 2023
(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)
Alpha Bank S.A (“Alpha Bank”)
In November 2022, the Company, through the vessel-owning subsidiary of the vessel “P. Aliki” signed a loan agreement with Alpha Bank, to support the acquisition 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.

Furthermore, 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 acquisition of 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.
In April 2024, the Company agreed with Alpha Bank to amend the interest rate clauses of the two loan agreements discussed above. The Company can, at its option, place in collateral accounts amounts equal, or less, to each outstanding loan principal for the benefit of lowering the margin of the loans from 2.35% and 2.60% to 0.65%. The amounts placed in the collateral accounts are not legally restricted as long as the Company has not received from the lenders any notice for an event of default, and may, at the Company’s option, be withdrawn from the respective collateral accounts on the last day of an interest period with prior written notice to the Lender. Upon such withdrawal, the initial margin (2.35% for the “P. Long Beach” loan, and 2.60% for the “P. Aliki” loan) shall reinstate on such part of the loan. Accordingly, as of December 31, 2025 and December 31, 2024, the Company had placed in Alpha Bank’s collateral accounts the aggregate amount of $28,700 and $31,850, respectively, being equal to the loans’ outstanding principal amounts, and these cash amounts are included in Cash and cash equivalents in the accompanying consolidated balance sheets.


On July 23, 2025, the Company, through the vessel-owning subsidiaries of the vessels “P. Aliki” and “P. Long Beach”, signed a new loan agreement with Alpha Bank for an aggregate amount of $29,750, with the purpose of refinancing their existing indebtedness with the lenders. The new loan agreement extends the maturity of the loan to five years from drawing, reduces the applicable margin to 1.90% and includes financial and informational covenants similar to the two previously existing loan agreements with Alpha Bank. On July 24, 2025, the Company drew down in full the amount of $29,750 and repaid an equal amount in respect of the indebtedness of the old loan agreements with Alpha Bank, which were consequently terminated. The refinancing was accounted for as a debt modification under ASC 470.

Sale and Lease-Back Financing:

On July 29, 2025 and September 1, 2025 the Company took delivery of its newbuilding vessels Hull 1515 and H1596, which were renamed “P. Massport” and “P. Tokyo”, respectively. At the time of the vessels’ delivery from the shipyard, as part of two previously signed sale and lease back agreements with unaffiliated third parties, the Company delivered the vessels to the new buyers collecting the financing amount of $44,250 and $45,392, respectively, and chartered back the vessels for eight and ten years, respectively, on a bareboat basis.  The Company has continuous options to repurchase the vessels at predetermined rates following the second anniversary of the bareboat charter. The Company has a purchase obligation for “P. Tokyo” at the end of the lease term, while for “P. Massport” in case the Company does not exercise its call option by the end of the lease term, then the owners can exercise their put option according to which the Company will be obliged to purchase the vessel. The Company concluded that both sale and lease-back agreements were financing arrangements. The agreements are repayable in monthly installments plus one balloon installment per agreement to be paid together with the last installment. The agreements also bear variable interest at SOFR plus a fixed margin, which during the years ended December 31, 2025 ranged from 2.1% to 2.425%. The maturities fall due in June 2033 and August 2035, and at each utilization date, arrangement fees of 0.80% and 1.60% were paid.

Nordic Trustee Bond (“the Bonds”)

On July 2, 2025, the Company announced that it has successfully placed $100,000 of bonds in the Nordic bond market. The new bonds are due to mature in July 2029 and pay a fixed coupon of 9.875% per annum, payable semi-annually in arrears and were priced at 97% of par. The bonds are partially secured by first priority mortgages over the Company’s two oldest tanker vessels, the “P. Monterey” and the “P. Sophia” (Note 14), whose aggregate net book value as of December 31, 2025 was $50,656. The offering closed on July 17, 2025, and the Company received net proceeds of $94,748, which shall be used for tanker acquisitions or bond repurchases. The bond proceeds were blocked and restricted, until their utilization in December 2025 for the acquisition of the two Suezmax vessels “P. Beverly Hills” and “P. Bel Air”. In case any collateral vessel is sold (Note 14), then the Company has the option to use the sale proceeds to repay similar part of the bond, or to keep the sale proceeds for the purpose of buying additional tanker vessels. The bond agreement also includes customary informational and financial covenants and requires a minimum cash liquidity of $20,000 at all times during the bond period. The Company is permitted to make dividend distributions, provided that no events of default exist, and up to a certain percentage of the Company’s net profits.
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 of any charters exceeding durations of certain length of time, pledge over the borrowers’ shares and over their earnings accounts, and vessels’ managers’ undertakings. The loan agreements 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 in shareholding, include customary financial covenants and require at all times during the facility period a minimum cash liquidity. As at December 31, 2025 and December 31, 2024, the maximum compensating cash balance required under the Company’s loan agreements and bond amounted to $20,000 and $10,000, respectively, and is included in Cash and cash equivalents in the accompanying consolidated balance sheets. Also, as at December 31, 2025 and December 31, 2024, the restricted cash, being pledged deposits, required under the Company’s loan agreements amounted to $1,089 and $1,000, respectively, and is included in Restricted cash, non-current in the accompanying consolidated balance sheets. As at December 31, 2025 and December 31, 2024, the Company was in compliance with all of its loan covenants.

The weighted average interest rate of the Company’s long-term debt for 2025, 2024 and 2023 was 6.82%, 6.91% and 7.60%, respectively.

For 2025, 2024 and 2023, total interest expense on long-term debt amounted to $8,626, $3,614 and $9,039 and is included in Interest and finance costs in the accompanying consolidated statement of operations. Accrued interest on long term debt as of December 31, 2025 and December 31, 2024, amounted to $4,781 and $380, respectively, and is included in Accrued liabilities in the accompanying consolidated balance sheets.

As at December 31, 2025, the maturities of the drawn portions of the debt facilities (bank loans, sale and lease back financing and the bond financing), as described above, are as follows:

   
Principal Repayment
  
Year 1
   $ 12,675  
Year 2
     12,675  
Year 3
     15,175  
Year 4
     109,341  
Year 5 and thereafter
     78,817  
Total
   $ 228,683  

F-22

PERFORMANCE SHIPPING INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2025, 2024 and 2023
(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)
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 not aware 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 financial statements.

The Company accrues for the cost of environmental liabilities when management becomes aware that a liability is probable and is able to reasonably estimate the probable exposure. Currently, management is not aware of any such claims or contingent liabilities, which should be disclosed, or for which a provision should be established in the accompanying consolidated financial statements.

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 the Company’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 of premium 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.

(b)  As of December 31, 2025, the Company has entered into two shipbuilding contracts for the construction of two product/crude oil tankers (Note 5). As of December 31, 2025, the remaining aggregate instalments under the contracts for the construction of Hulls H1597 and H1624 amount to $78,065.

(c)  As of December 31, 2025, part of the Company’s fleet was operating under time-charters. The minimum contractual annual charter revenues, net of related commissions to third parties (including related parties), to be generated from the existing as of December 31, 2025, non-cancelable time charter contract for the operating fleet are estimated at $85,311 until December 31, 2026, at $58,124 until December 31, 2027, at $45,150 until December 31, 2028, at $22,064 until December 31, 2029 and at $11,093 until December 31, 2030.

(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 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, by the attorneys of a purported shareholder of the Company, Sphinx Investment Corp., the plaintiff. The complaint alleged, among other things, violations of fiduciary duties by the named defendants in connection with an exchange offer commenced by the Company in December 2021.  The plaintiff purported to seek, among other things, a declaration that the Series 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 the Company 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 would have been in had the Series C Preferred Shares issued to the defendants not been issued; and unspecified damages in an amount, if any, to be proven at trial. In January 2024, the defendants filed motions to dismiss the lawsuit. In August 2024, the Supreme Court of the State of New York granted the Company’s motions to dismiss the lawsuit, on the basis that New York lacked personal jurisdiction over the defendants.

Subsequently, in August 2024, Sphinx initiated legal proceedings in the High Court of the Republic of the Marshall Islands against the same defendants that had been named in the New York lawsuit. The complaint filed in the High Court of the Republic of the Marshall Islands was substantially similar to the complaint previously filed in New York. The defendants filed motions to dismiss the complaint in the High Court of the Republic of the Marshall Islands.  On March 27, 2026, Sphinx executed a stipulation with defendants, agreeing to dismiss all of Sphinx’s claims in the lawsuit with prejudice.  Based on that stipulation, on March 27, 2026, the High Court of the Republic of the Marshall Islands dismissed Sphinx’s lawsuit with prejudice.  As a result, the matter is now concluded.

F-23

PERFORMANCE SHIPPING INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2025, 2024 and 2023
(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)
9.
Changes in Capital Accounts

(a) Company’s Preferred Stock: As of December 31, 2025 and 2024, 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 as Series C Preferred Shares.

As of December 31, 2025 and 2024, 50,726 Series B preferred shares (of liquidation preference $1,268) and 1,423,912 Series C Preferred Shares (of liquidation preference $35,598), were issued and outstanding. As of December 31, 2025 and 2024, Aliki Paliou held through Mango (Note 4) 1,314,792 Series C Preferred Shares and nil Series B Preferred Shares, and Andreas Michalopoulos held 56,342 Series C Preferred Shares and nil Series B Preferred Shares.
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, either in 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 prior to 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 of the 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 two Series 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 B Preferred 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 is the 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 of redemption. 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 of such 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 rank senior to common shares with respect to dividend distributions and distributions upon any liquidation, winding up or dissolution of the Company.

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 the Company’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 C Preferred 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 the requirement 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 shall vote 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: The Series 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 the six-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 including the 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 the authorized 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 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 stock splits, reverse stock splits or stock dividends, and shall also be adjusted to the lowest price of issuance of common stock by the Company 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 adjustment clause 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 not subject 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 the issuance 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 such redemption 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 a liquidation 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 amount equal 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 Series B Preferred Stock, with respect to dividend distributions and distributions upon any liquidation.

F-24

PERFORMANCE SHIPPING INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2025, 2024 and 2023
(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)
During 2023, a number of 85,535 Series B preferred shares were converted to 171,070 Series C preferred shares, and a number of  12,224  Series C preferred shares were converted to 225,447 common shares. During 2024, a number of 4,460 Series C preferred shares were converted to 82,482 common shares.

For 2025, 2024 and 2023, declared and paid dividends on Series B preferred shares amounted to $51, $52 and $55 (or $1.00, $1.00 and $0.75 per each Series B preferred share), respectively. As of December 31, 2025 and 2024, accrued and not paid dividends on the Series B preferred shares amounted to $2 and $2, respectively.

For 2025, 2024 and 2023, declared and paid dividends on the Series C preferred shares amounted to $1,780, $1,781 and $1,834 (or $1.25, $1.25 and $1.25 per each Series C preferred share), respectively, out of which $1,643, $1,643 and $1,643 respectively, were paid to Mango (Note 4). As of December 31, 2025 and 2024, accrued and not paid dividends on the Series C preferred shares, amounted to $79 and $84, respectively.

The Company, when assessing the accounting of the Series B and Series C preferred stock, has taken into consideration the provisions of ASC 480 “Distinguishing Liabilities from Equity” and ASC 815 “Derivatives and Hedging” and determined that the Series B and Series C preferred shares should be classified as permanent equity rather than temporary equity or liability.

F-25

PERFORMANCE SHIPPING INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2025, 2024 and 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, 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 at prices 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 in promising 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 feature constitutes a down round feature. From October 17, 2022, to January 26, 2023, because of the issuance of common shares through the ATM offering (as discussed below), the conversion price was eight times adjusted, and was gradually 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 effect of the down-round feature the Company performed fair value measurements as determined through Level 3 inputs of the fair value hierarchy. As such, 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’s valuation used the following assumptions: (a) stated dividend yield for the Series C preferred stock, (b) cost of equity based on the CAPM theory; (c) expected volatility, (d) risk free rate determined by management using the applicable 5-year treasury yield as of the measurement date, (e) market value of common stock (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.

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. The Company applied moneyness scenarios and determined the aforementioned assumptions of volatility and expected life of the convertibility option, which are considered highly interdependent. 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 be deducted from the net income to arrive to the net income available to common stockholders (Note 11).

The fair value of the Series C Preferred Shares that were assessed on the dates of triggering 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 they are 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.

F-26

PERFORMANCE SHIPPING INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2025, 2024 and 2023
(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)
(b) Class A, July, August 2022 Warrants: 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 common share (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. Each Class 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 physically settled 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 amount and 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 cashless exercise 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 each warrants’ 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.

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 immediately exercisable 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 July 2022 Warrants have similar terms to the June Warrants, with the only significant difference being the existence of an exercise price adjustment clause, which was assessed by the Company as a down-round feature. On March 1, 2023, their exercise price was 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 and warrants 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 August Warrants are immediately exercisable, expire five years from the date of issuance, and had an initial exercise price of $6.75 per common share. The August 2022 Warrants have similar terms to the July 2022 Warrants, including the exercise price adjustment clause that constitutes a down-round feature. On March 1, 2023, their exercise price was reduced to their floor price of $1.65.

During 2023, the down-round features were triggered on eight different dates, leading to a combined effect of an approximate value of $256 and $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-valuation of 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, that were 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 guidance for Fair Value Measurements, as they are derived by using significant unobservable inputs such as historical volatility.

F-27

PERFORMANCE SHIPPING INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2025, 2024 and 2023
(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)
As of December 31, 2024 and December 31, 2025, there were 567,366 outstanding June 2022 warrants, 1,033,333 outstanding July 2022 warrants, and 2,122,222 outstanding August 2022 warrants.

(c) Series A and Series B Warrants: 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. Each Series 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 the issuance 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 the Offering 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 in this 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 for equity 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 this respect, the Company recorded the Series A warrants as non-current liabilities under Fair value of warrants’ liability on the accompanying consolidated balance sheet, with subsequent changes 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 of liability-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 and external 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, the Company 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 issuance costs 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 the portion of the liability recorded at inception included in Interest and finance costs in the accompanying consolidated statements of operations.

During 2023, the Company received 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 date and then settling the warrant liability. The outstanding Series A warrants as of December 31, 2025 and 2024, were 14,300 and 14,300, respectively. The value of the outstanding Series A warrants as of December 31, 2025 and 2024 were $30 and $27, respectively, and are reflected in “Fair value of warrant’s liability” in the accompanying consolidated balance sheets.

During 2024, 70,000 Series B warrants were exercised, and the Company received proceeds of $157. The outstanding Series B warrants as of December 31, 2025, and December 31, 2024, were 4,097,000 and 4,097,000, respectively.

As of December 31, 2023 and December 31, 2024 the Company re-valued the outstanding Series A warrants. For 2023, a gain 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, for 2024 a gain of $6, and for 2025 a loss of $4 representing changes in the fair value of the liability for the unexercised warrants are presented in “Change in fair value of the warrant’s liability” in the accompanying consolidated statements of operations. The Series A warrants fair value as of settlement and measurement dates per discussion above, was determined through Level 2 inputs of the fair value hierarchy 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 common shares, 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 current market 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.

F-28

PERFORMANCE SHIPPING INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2025, 2024 and 2023
(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)
(d) At The Market (“ATM”) Offering:  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 the Company 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 issued as 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 and up 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 ATM offering, and the net proceeds received, after deducting underwriting commissions and other expenses, amounted to $673.
 
(e) 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’s outstanding 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.

(f) Compensation Cost on Stock Option Awards: On January 1, 2021, the Company granted its Chief Financial Officer stock options to purchase 8,000 of the Company’s common shares 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 the Company’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 an exercise 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. Until December 31, 2025, 8,000 options were outstanding. Subsequent to the balance sheet date, the stock options expired as per the terms of the stock option agreement.

(g) Compensation Cost on Restricted Common Stock: On December 30, 2020, the Company’s Board of Directors approved 4,481 restricted common shares, whose fair value was $320, to be issued on the same date as an award to the Company’s directors. One fourth of the shares vested on December 30, 2020, and the remainder three fourths vested ratably over three years from the issuance date. During 2023, the aggregate compensation cost on restricted common stock amounted to $52 and is included in General and administrative expenses in the accompanying consolidated statements of operations. As at December 31, 2025 and 2024, 31,441 restricted common shares remained reserved for issuance under the Plan. During 2023, 2024 and 2025 the movement of the restricted stock cost was as follows:

   
Number of Shares
    
Weighted Average
Grant Date Price
  
Outstanding at December 31, 2022
     350
     $ 71.40
  
Granted
     -
       -
  
Vested
     (350
 )
     71.40
  
Forfeited or expired
     -
       -
  
Outstanding at December 31, 2023
     -
     $ -
  
Granted
     -
       -
  
Vested
     -
    -
  
Forfeited or expired
     -
       -
  
Outstanding at December 31, 2024
     -
     $ -
  
Granted
     -
       -
  
Vested
     -
       -
  
Forfeited or expired
     -
       -
  
Outstanding at December 31, 2025
     -
     $ -
  

F-29

PERFORMANCE SHIPPING INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2025, 2024 and 2023
(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)
10.
Interest and Finance Costs

The amounts in the accompanying consolidated statements of operations are analyzed as follows:

   
2025
    
2024
    
2023
  
Interest expense on long term debt and bonds (Note 7)
  
$
5,642
    
$
1,179
    
$
8,499
  
Amortization of deferred financing costs on long term debt and bonds, including their discount
    
809
      
107
      
244
  
Other financial expenses
     -       -       759  
Commitment fees and other
    
342
      
59
      
96
  
Total
  
$
6,793
    
$
1,345
    
$
9,598
  

11.
Earnings per Share

All 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 participate in dividends, subject to forfeiture provisions set forth in the applicable award agreements. For 2025, 2024 and 2023, the Company declared and paid aggregate dividends to its Series B and Series C preferred stockholders amounting to $1,831, $1,833 and $1,889, respectively. For 2023, net income is further adjusted by a deemed dividend to the Series C preferred stockholders due to triggering of a down-round feature of $9,809 (Note 9) and by a deemed dividend to the holders of the July and August 2022 Warrants of $789 (Note 9), to arrive at the net income attributable to common equity holders. 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 is computed 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 to be 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 2025, the computation of diluted earnings per share reflects: i) the potential dilution from conversion of outstanding preferred convertible Series C stock (as conversion from Series B preferred stock to Series C preferred stock was not applicable anymore) calculated with the “if converted” method and resulted in 26,221,126 shares, and ii) the potential dilution from the exercise of the July and August warrants and the Series A warrants (either exercised during the period end, or outstanding) using the treasury stock method which resulted in 257,807 shares, and the addition of $4, related to the changes in fair value of Series A warrants’ liability, to net income attributable to common stockholders. For 2024, the computation of diluted earnings per share reflects: i) the potential dilution from conversion of outstanding preferred convertible Series C stock (as conversion from Series B preferred stock to Series C preferred stock was not applicable anymore) calculated with the “if converted” method and resulted in 26,278,338 shares, and ii) the potential dilution from the exercise of the July and August warrants and the Series A warrants (either exercised during the period end, or outstanding) using the treasury stock method which resulted in 558,109 shares, and the deduction of $6, related to the changes in fair value of Series A warrants’ liability, from net income attributable to common stockholders. The computation of diluted earnings per share for 2023, reflects i) the potential dilution from conversion of outstanding preferred convertible Series B and C stock, calculated with the “if converted” method which resulted in 24,596,069 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 which resulted 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.

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 would have anti-dilutive effect, for 2023,  are any incremental shares resulting from the non-vested restricted share awards, all outstanding warrants considered to be out of the money (Class A Warrants, July Warrants, August Warrants and Series B Warrants) and the non-exercised stock options calculated with the treasury stock method. For 2024 and 2025, 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 would have anti-dilutive effect, are all outstanding warrants considered to be out of the money (Class A Warrants and Series B Warrants) and the non-exercised stock options calculated with the treasury stock method.

F-30

PERFORMANCE SHIPPING INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2025, 2024 and 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 per share:

   
2025
    
2024
    
2023
  
   
Basic EPS
    
Diluted EPS
    
Basic EPS
    
Diluted EPS
    
Basic EPS
    
Diluted EPS
  
Net income
   $ 49,973     $ 49,973     $ 43,730     $ 43,730     $ 69,413     $ 69,413  
less income allocated to participating securities
     -       -       -       -       (2 )     (2 )
less deemed dividend to the Series C preferred stockholders due to triggering of a down-round feature
     -       -
       -       -       (9,809 )     -  
less deemed dividend to the July and August warrants’ holders due to triggering of a down-round feature
     -       -       -       -       (789 )     (789 )
less dividends on preferred stock
     (1,831 )     (52 )     (1,833 )     -       (1,889 )     (40 )
less changes in value of warrants’ liability
     -       4       -       (6 )     -       (561 )
Net income attributable to common stockholders
  
48,142    
49,925    
41,897    
43,724    
56,924    
68,021  
 
                                                
Weighted average number of common shares, basic
     12,432,158       12,432,158       12,365,418       12,365,418       10,491,316       10,491,316  
Effect of dilutive shares
     -       26,493,233       -       26,836,447       -       25,048,355  
Weighted average number of common shares, diluted
     12,432,158       38,925,391       12,365,418       39,201,865       10,491,316       35,539,671  
 
                                                
Earnings per common share
   $ 3.87     $ 1.28     $ 3.39     $ 1.11     $ 5.43     $ 1.91  

F-31

PERFORMANCE SHIPPING INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2025, 2024 and 2023
(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)
12.
Income Taxes

Under 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 are subject to registration and tonnage taxes, which are included in Vessel operating expenses in the accompanying consolidated statements of operations.

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, under Section 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 is organized 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 and regularly 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 the Publicly-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 2025 taxable year and intends to take this position on its 2025 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, 2025.

13.
Financial Instruments and Fair Value Disclosures

The 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 reporting period end and at each settlement date, as discussed above (Note 9). The Company is exposed to interest rate fluctuations 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, the Company does not have any derivative instruments to manage such fluctuations.

As of December 31, 2025, the Company’s Bonds (Note 7) had a fair value of $103,000. The fair value was determined based on Level 2 inputs using quoted market prices for similar instruments.

During 2023, the Company measured on a non-recurring basis the fair values (excluding the down round feature) of the Series C Preferred Shares (as discussed above Note 9 (b)), July 2022 and August 2022 Warrants using Level 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-32

PERFORMANCE SHIPPING INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2025, 2024 and 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 round features of July 2022 and August 2022 Warrants amounted to $256 and $533, respectively, both triggered similarly to Series C Preferred Shares above (Note 9).

During 2023, the Company recorded a 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 date amounting to $317. The Series A Warrants fair value as of settlement and measurement dates was determined through Level 2 inputs of the fair value hierarchy as determined by management. As of December 31, 2025, and December 31, 2024, the Company measured on recurring basis the fair value of the outstanding Series A Warrants at each measurement date of 14,300 Series A warrants at both dates, in the amount of $30 and $27, respectively. The Company measured 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.

No exercises of the Series A warrants occurred during the years ended December 31, 2025, 2024 and 2023.

F-33

PERFORMANCE SHIPPING INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2025, 2024 and 2023
(Expressed in thousands of US Dollars – except for share and per share and warrants data, unless otherwise stated)
14.
Subsequent Events


(a)
Bond Tap Issue and Listing of Bonds in the Oslo Stock Exchange: On January 13, 2026, the Company announced that it had successfully placed a $50,000 tap issue in Bonds, paying a fixed coupon of 9.875% per annum, payable semi-annually in arrears. The tap issue was priced at a premium, 103.00% of par value, and the amount received, net of expenses was $50,724. Following the tap issue, the total outstanding amount under the Company’s Bonds is $150,000 (Note 7). The tap issue was closed on 27 January 2026. The regulation of use of proceeds under the tap issue is for general corporate purposes according to the terms of the Tap Issue. On April 1, 2026, the Company completed the listing of the $150,000 Bonds in the Oslo Stock Exchange.


(b)
Naming and Delivery of Newbuilding Vessel: On January 14, 2026, the Company announced the successful delivery of the of the newbuilding vessel H1597, which was named “P. Marseille”, constructed at Shanghai Waigaoqiao Shipbuilding Co. Ltd. in the People’s Republic of China (Note 5). The vessel was partially financed through a sale-and-leaseback agreement with unaffiliated parties, under which $45,000 was provided upon delivery of the vessel from shipyard.


(c)
Memorandum of Agreement to Sell Aframax 2009-built Tanker Vessel: On February 17, 2026, the Company announced that it had signed a Memorandum of Agreement to sell its 2009-built, 105,071 dwt Aframax tanker vessel “P. Sophia” to an unaffiliated third party for a gross sale price of $35,650. The vessel is expected to be delivered to her new owners in mid-2026, subject to customary closing conditions. The sale proceeds will be applied, at the Company’s option, either for bond repayment or will be used for the acquisition of additional tanker vessel that will replace the “P. Sophia” as bond collateral (Note 7).


(d)
Signing of Shipbuilding Contracts for Two Suezmax Tanker Vessels: On March 2, 2026, the Company announced that it has signed two shipbuilding contracts with China Shipbuilding Trading Co. Ltd. and Shanghai Waigaoqiao Shipbuilding Co. Ltd. for the construction of two 158,000 DWT newbuilding Suezmax tanker vessels. The vessels, Hull 1627 and Hull 1628, are expected to be delivered in October 2028 and May 2029, respectively, at a contract price of $81,500 per vessel. The Company paid $12,225 (or 15% of the purchase price) for each vessel on April 16, 2026, and will pay 10% of the purchase price at each of the milestones of steel cutting, keel laying, and launching of the vessels, and the remaining 55% of the purchase price upon the delivery of the vessels.


(e)
Dividend Payment to the Series B and Series C Preferred Stockholders: On March 16, 2026, the Company paid cash dividends to its Series B and Series C preferred stockholders amounting to $13 (or $0.25 per share) and $445 (or $0.3125 per share), respectively, according to the terms of each preferred stock, out of which $411 were paid to Mango (Note 4).


(f)
Signing of Sale-and-Leaseback Agreement for Newbuilding Vessel: On March 16, 2026 the Company entered into a sale-and-leaseback agreement with an unaffiliated third party for its LR1 tanker newbuilding vessel Hull 1624, to be named “P. San Francisco”, currently under construction at Jiangsu New Yangzi Shipbuilding Co., Ltd. and scheduled for delivery in early 2027. The bareboat financing amount totals $37,800. As part of this agreement, the vessel will be sold and then chartered back to the Company on a bareboat basis for a ten-year period starting from delivery from the shipyard. The bareboat charter includes 120 monthly installments equivalent to $5,451 per day, with an implied interest rate of Term SOFR plus 2.00% per annum. Additionally, a balloon payment of $18,072 will be due together with the last installment. The Company has continuous options to repurchase the vessel at predetermined rates following the second anniversary of the bareboat charter.


(g)
Memorandum of Agreement to Sell Aframax 2010-built Tanker Vessel: On April 14, 2026, the Company announced that it had signed a Memorandum of Agreement to sell its 2010-built, 105,304 dwt Aframax tanker vessel “P. Aliki” to an unaffiliated third party for a gross sale price of $42,650. The vessel is expected to be delivered to her new owners by the end of the third quarter 2026, subject to customary closing conditions. Part of the sale proceeds will be applied for the partial repayment of the Alpha Bank loan (Note 7), to which the vessel serves as collateral.


F-34
Exhibit 2.5
 
DESCRIPTION OF THE REGISTRANT’S SECURITIES REGISTERED PURSUANT
TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934
 
As of December 31, 2025, 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 its entirety 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) the Company’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. We encourage 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.
 
Purpose

Our 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 our shareholders.

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 12,432,158 shares were issued and outstanding as of December 31, 2025 and April 24, 2026, respectively, and 25,000,000 preferred shares, par value $0.01 per share, of which 50,726 of our Series B Preferred Shares and 1,423,912 of our Series C Preferred Shares were issued and outstanding as of December 31, 2025 and April 24, 2026, 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 attached or 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 any outstanding 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 our 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. Holders of our common 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 are subject 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 shareholders where 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 the Articles 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 least one 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 shares present 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 our board 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 of our 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 classes of 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 to hold 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 any series 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 Cumulative Perpetual 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 offer expired 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 B Preferred 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 their repurchase 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 the Amended 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 as otherwise 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 Preferred Shares. 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 Parity Securities, 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 Original Issue 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 any accumulated 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 the Series 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). The Series 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 shall have 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 the holders 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 the Company.

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, into two 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) the date 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 Shares that 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 the Securities 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 Preferred Shares 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 B Preferred 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 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 of the common shares for the 10 trading 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 trading market.

Description of the Series C Convertible Cumulative Redeemable Perpetual Preferred Stock

On 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 the Republic 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, of which 1,423,912 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 Certificate of 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 Shares would then be convertible (notwithstanding the requirement that the Series C Preferred Shares are convertible only after six months following the Original Issuance Date), multiplied by 10. 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, the holders 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-month anniversary 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, except with 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 be equal 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 the volume-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 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 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 the Series 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). The Series 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 shall have 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 the holders 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 the Company.

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 liquidation preference, 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, subject to 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 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 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 stock splits, 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 the Original 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 be exempt 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 C Preferred 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 June 15, 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 of the 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 trading market.

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 Rights Agreement, 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 A Participating Preferred Stock at an exercise price of $750.00, subject to specified adjustments. The Rights will separate from the common stock and become exercisable only if a person or group 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 the acquiring 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 stock having 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% or more 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 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 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 of directors. 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 of the 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 Shares registered 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 also constitute 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 10th calendar 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 “Acquiring Person”) 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 a person 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 Rights Agreement, 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 entry accounts 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 Rights certificates 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 terms similar 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 one Common 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 the aggregate 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 the outstanding 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, a number 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, the Rights 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 beneficially owned 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 entitle the 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 the Exercise 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 of directors) 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 Person has 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 the only 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% of the 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 at an 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 the Company 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 as described 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 lengthen any 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 affiliate or 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 a stock 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 the Rights, stockholders may recognize taxable income.
 
DESCRIPTION OF WARRANTS

Class A Warrants

On 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 common share 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 common shares.

As of April 24, 2026, Class A Warrants to purchase up to 567,366 common shares are 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 of Class 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. The Class 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 registering the 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 available funds 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 under the 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 would receive 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 liquidated damages 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 common shares 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 of 4.99% (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 the exercise, 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 other percentage 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 of common 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, stock combinations, 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 (as adjusted 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 Class A 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. The warrants 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) and registered 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, any reorganization, 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 or merger 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 voting power 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 or other 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 fundamental transaction, 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 accordance with 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 not have 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 Warrants

On 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 to purchase 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 common share 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 of July 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 the terms 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 July 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 available funds for the 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 the Securities 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 to exercise 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 the formula 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 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 beneficial ownership 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 any increase will not 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, stock splits, stock combinations, reclassifications or similar events affecting our common shares and also upon any distributions of assets, including cash, stock or other property to our stockholders. 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 floor 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 are deemed 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 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 the listing 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 power that 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 holders 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 to the consideration 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 be obligated 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 2022 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.

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 July 2022 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 investor owns 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 Warrants

On 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 a registered 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. This issuance 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 form of 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 to the 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. The August 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 available funds 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 Warrants under 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 determined according 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 in excess 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 beneficial ownership 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 any increase 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, stock splits, stock combinations, reclassifications or similar events affecting our common shares and also upon any distributions of assets, including cash, stock or other property to our stockholders. 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 a floor 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 are deemed 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 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 August 2022 Warrants and we do not expect a market to develop. In addition, we do not intend to apply for the listing 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 power that 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. If holders 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 to the 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 August 2022 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 Warrants

On 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 4,167,000 common 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 a purchase 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 February 28, 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 of Series 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 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 for the number of common shares purchased upon such 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 time after 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 holder would 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 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 beneficial ownership is 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 any increase 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, stock splits, stock combinations, reclassifications or similar events affecting our common shares and also upon any distributions of assets, including cash, stock or other property to our stockholders. 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 the listing 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 power that 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. If holders 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 to the 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 A Warrant 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 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 or exchange of the Series A Warrant.

Series B Warrants

On 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 4,167,000 common 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 a purchase 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 February 28, 2023.

Series B Warrants to purchase up to 4,097,000 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 of Series 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 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 for the number of common shares purchased upon such 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 time after 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 holder would 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 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 beneficial ownership is 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 any increase 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, stock splits, stock combinations, reclassifications or similar events affecting our common shares and also upon any distributions of assets, including cash, stock or other property to our stockholders. 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 the listing 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 power that 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. If holders 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 to the 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 Warrant holders, 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 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 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 the number 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 his successor 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 the authority 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 outside the 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 officer of 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 be eligible 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 in person 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 or consolidation 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 further amendment 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 certain rights 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 shareholder fail 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 any appropriate 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 shareholder bringing 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 or proceeding, 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 or criminal proceeding, subject to certain conditions. We believe that these indemnification provisions and insurance are useful to attract and retain qualified directors and executive officers.
 
13
The limitation of liability and indemnification provisions in our amended and restated bylaws may discourage shareholders from bringing a lawsuit against our directors for breach 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 an action, 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 damage awards 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 are summarized 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 maximize shareholder 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 of our 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 up to 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 of our 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 as possible, 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 from making 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 a majority 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 board of 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 be removed 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 may discourage, 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 shareholders must 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 and amended 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 the Company 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 shareholder consideration 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 of shareholders 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 executive offices 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 specify requirements 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 make nominations 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 shares of 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 to shareholders’ rights.
 
Marshall Islands
  
Delaware
Shareholder Meetings
Held 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 the bylaws, 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 such person 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 such person or persons as may be authorized by the certificate of incorporation or by the bylaws.
   
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 the meeting 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 the person calling the meeting. Notice of a special meeting shall also state the purpose for which the meeting is called.
  
Whenever shareholders are required to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, if any, date and hour of the meeting, and the means of remote communication, if any.
   
A copy of the notice of any meeting shall be given personally, sent by mail or by electronic mail 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.

15
 
 
Marshall Islands
  
Delaware
Shareholders’ Voting Rights
Unless otherwise provided in the articles of incorporation, any action required to be taken at a meeting of shareholders may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, is signed by all the shareholders entitled to vote with respect to the subject matter thereof, or if the articles of incorporation so provide, by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting 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 a meeting if a consent for such action is in writing and is signed by shareholders having not fewer than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.
 
   
Any person authorized to vote may authorize another person or persons to act for him by proxy.
  
Any person authorized to vote may authorize another person or persons to act for him by proxy.
 
Unless otherwise provided in the articles of incorporation or bylaws, a majority of shares entitled to vote constitutes a quorum. In no event shall a quorum consist of fewer than one-third of the shares entitled to vote at a meeting.
  
For stock corporations, the certificate of incorporation or bylaws may specify the number of shares required to constitute a quorum but in no event shall a quorum consist of less than one-third of shares entitled to vote at a meeting. In the absence of such specifications, 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 subsequent withdrawal of any shareholders.
  
When a quorum is once present to organize a meeting, it is not broken by the subsequent withdrawal 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 of directors.
 
Merger or Consolidation
Any two or more domestic corporations may merge into a single corporation if approved by the board and if authorized by a majority vote of the holders of outstanding shares at a shareholder meeting.
  
Any two or more corporations existing under the laws of the state may merge into a single corporation pursuant to a board resolution and upon the majority vote by shareholders of each constituent corporation at an annual or special meeting.
   
Any sale, lease, exchange or other disposition of all or substantially all the assets of a corporation, if not made in the corporation’s usual or regular course of business, once approved by the board, shall be authorized by the affirmative vote of two-thirds of the shares of those entitled to vote at a shareholder meeting.
  
Every corporation may at any meeting of the board sell, lease or exchange all or substantially all of its property and assets as its board deems expedient and for the best interests of the corporation when so authorized by a resolution adopted by the holders of a 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 of another domestic corporation may merge such other corporation into itself without the authorization of the shareholders of any corporation.
  
Any corporation owning at least 90% of the outstanding shares of each class of another corporation may merge the other corporation into itself and assume all of its obligations without the vote or consent of shareholders; however, in case the parent corporation is not the surviving corporation, the proposed merger shall be approved by a majority of the outstanding stock of the parent corporation entitled to vote at a duly called shareholder meeting.
   
Any mortgage, pledge of or creation of a security interest in all or any part of the corporate property may be authorized without the vote or consent of the shareholders, unless otherwise provided for in the articles of incorporation.
  
Any mortgage or pledge of a corporation’s property and assets may be authorized without the vote or consent of shareholders, except to the extent that the certificate of incorporation otherwise provides.

16
     
     
Marshall Islands
  
Delaware
 
Directors
The 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 the shareholders, 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 change in 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 majority of the entire board and so long as no decrease in the number shall shorten the term of any incumbent director.
  
If the number of directors is fixed by the certificate of incorporation, a change in the number 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 a majority of the shares entitled to vote unless the certificate of incorporation otherwise provides.
   
If the articles of incorporation or the bylaws so provide, any or all of the directors may be removed without cause by vote of the shareholders.
  
In the case of a classified board, shareholders may effect removal of any or all directors only for cause.
 
Dissenters’ Rights of Appraisal
Shareholders have a right to dissent from any plan of merger, consolidation or sale of all or substantially all assets not made in the usual course of business, and receive payment of the fair value of their shares. However, the right of a dissenting shareholder under the BCA to receive payment of the appraised fair value of his shares shall not be available for the shares of any class or series of stock, which shares or depository receipts in respect thereof, at the record date fixed to determine the shareholders entitled to receive notice of and to vote at the meeting of the shareholders to act upon the agreement of merger or consolidation, were either (i) listed on a securities exchange or admitted for trading on an interdealer quotation system or (ii) held of record by more than 2,000 holders. The right of a dissenting shareholder to receive payment of the fair value of his or her shares shall not be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the shareholders of the surviving corporation.
  
Appraisal rights shall be available for the shares of any class or series of stock of a corporation in a merger or consolidation, subject to limited exceptions, such as a merger or consolidation of corporations listed on a national securities exchange in which listed stock is offered for consideration is (i) listed on a national securities exchange or (ii) held of record by more than 2,000 holders.
   
A holder of any adversely affected shares who does not vote on or consent in writing to an amendment to the articles of incorporation has the right to dissent and to receive payment 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 any existing or new class.

Shareholder’s Derivative Actions
An 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 shares or certificates. It shall be made to appear that the plaintiff is such a holder at the time of bringing the action and that he was such a holder at the time of the transaction of which he complains, 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 the complaint that the plaintiff was a shareholder of the corporation at the time of the transaction of which he complains or that such shareholder’s stock thereafter devolved upon such shareholder by operation of law.
   
A complaint shall set forth with particularity the efforts of the plaintiff to secure the initiation 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 demands that the corporation sue on its own behalf and that demand is refused (unless it is shown that such demand would have been futile).
Such action shall not be discontinued, compromised or settled, without the approval of the High 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 for reasonable expenses if the plaintiff owns less than 5% of any class of outstanding shares or 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 of such plaintiff has a fair value of  $50,000 or less.
    


18
Exhibit 4.22

Dated: 23 July, 2025
 
ALPHA BANK S.A.
 
(as lender)
 
- and -
 
ARBAR SHIPPING COMPANY INC.  and
 
GARU SHIPPING COMPANY INC.
 
(as joint and several borrowers)
 

LOAN AGREEMENT

for a secured floating interest rate loan facility of up to US$29,750,000

THEO V. SIOUFAS & CO.
LAW OFFICES
Piraeus
 
TABLE OF CONTENTS
 
CLAUSE
HEADINGS
PAGE
     
1.
PURPOSE, DEFINITIONS AND INTERPRETATION
1
     
2.
THE LOAN
24
     
3.
INTEREST
26
     
4.
REPAYMENT - PREPAYMENT
33
     
5.
PAYMENTS, TAXES AND COMPUTATION
36
     
6.
REPRESENTATIONS AND WARRANTIES
38
     
7.
CONDITIONS PRECEDENT
44
     
8.
UNDERTAKINGS
50
     
9.
EVENTS OF DEFAULT
66
     
10.
INDEMNITIES - EXPENSES – FEES
71
     
11.
SECURITY, APPLICATION, SET-OFF
77
     
12.
UNLAWFULNESS, INCREASED COST AND BAIL-IN
80
     
13.
OPERATING ACCOUNT
82
     
14.
ASSIGNMENT, TRANSFER, PARTICIPATION, LENDING OFFICE
85
     
15.
MISCELLANEOUS
87
     
16.
JOINT AND SEVERAL LIABILITY
 90
     
17.
NOTICES AND COMMUNICATIONS
92
     
18.
LAW AND JURISDICTION
95

SCHEDULES
 
(1)
Form of Drawdown Notice


(2)
Form of Insurance Letter


(3)
Form of Compliance Certifcate

THIS AGREEMENT is dated the 23rd      day of July, 2025 and made BETWEEN:
 
(1)
ALPHA BANK S.A., a banking société anonyme incorporated in and pursuant to the laws of the Hellenic Republic with its head office at 40 Stadiou Street, Athens, Greece with General Commercial Register Number: 00223701000 και Tax Registration Number 094014249, acting, except as otherwise herein provided, through its office at 93 Akti Miaouli, Piraeus, Greece, as lender (hereinafter called the “Lender”, which expression shall include its successors and assigns); and
 
(2)
 (a) ARBAR SHIPPING COMPANY INC., a corporation duly incorporated in the Republic of the Marshall Islands, whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960, (hereinafter called the “Arbar Borrower”, which expression shall include its successors); and


(b)
GARU SHIPPING COMPANY INC., a corporation duly incorporated in the Republic of the Marshall Islands, whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960, (hereinafter called the “Garu Borrower”, which expression shall include its successors which expression shall include its successors and together with the Arbar Borrower hereinafter called the “Borrowers”).
 
AND IT IS HEREBY AGREED as follows:
 
1.
PURPOSE, DEFINITIONS AND INTERPRETATION

1.1
Amount and Purpose
 

 (a)
Amount: This Agreement sets out the terms and conditions upon and subject to which it is agreed that the Lender will make available to the Borrowers, on a joint and several basis a secured term loan facility in the amount of up to the lesser of:
 

 (i)
Dollars Twenty nine million seven hundred fifty thousand ($29,750,000); and
 

 (ii)
an amount which is fifty per cent (50%) of the aggregate Market Value of the Vessels as determined in accordance with Clause 8.5( b) (Valuation of Vessels),
 

 (b)
Purpose: The Loan proceeds shall be used for the purpose of refinancing in full the Existing Loan Indebtedness.
 
1.2
Definitions
 
Subject to Clause 1.3 (Interpretation) and Clause 1.4 (Construction of certain terms), in this Agreement (unless otherwise defined in the relevant Finance Document and unless the context otherwise requires) and the other Finance Documents each term or expression defined in the recital of the parties and in this Clause shall have the meaning given to it in the recital of the parties and in this Clause:
 
“Accounts Pledge Agreement” means an agreement to be entered into between the Borrowers and the Lender for the creation of a pledge over the Operating Accounts in favour of the Lender, in form and substance as the Lender may approve or require, as the same may from time to time be amended and/or supplemented;
 
“Advance” means each borrowing of the Commitment by the Borrowers or (as the context may require) the principal amount of such borrowing;
 
1
“Affiliate” means, in relation to any person, a subsidiary of that person or a parent company of that person or any other subsidiary of that parent company;
 
“Approved Auditor” means Ernst & Young, KPMG, PwC, Deloitte, Moore Stephens  and any other independent and reputable auditor having requisite experience acceptable to the Lender;
 
“Applicable Margin” means:
 

 (a)
in respect of the Loan less any Cash-collateralised Part of the Loan, one point nine zero per centum (1.90%) per annum (the “Margin A”); and
 

 (b)
in respect of any Cash-collateralised Part of the Loan, zero point five zero per cent (0.50%) per annum (the “Margin B”);”;
 
“Approved Auditor” means Ernst & Young, KPMG, PwC, Deloitte, Moore Stephens and any other independent and reputable auditor having requisite experience acceptable to the Lender;
 
“Approved Manager” for the time being in relation to a Vessel, means PERFORMANCE SHIPPING MANAGEMENT INC., a corporation lawfully incorporated in, and validly existing under the laws of, the Republic of the Marshall Islands, and having a licensed office established in Greece pursuant to the Greek laws 378/68, 27/75, 2234/94, 3752/09 and 4150/13 (as amended and in force at the date hereof) at 373 Syngrou Avenue, 17564, Palaio Faliro, Athens, Greece or any other person appointed by the Owner of the relevant Vessel with the consent of the Lender (such consent not to be unreasonably withheld), as the commercial manager and/or the technical manager of such Vessel, and includes its successors in title;
 
“Approved Manager’s Undertaking” means the letters of undertaking and subordination to be executed by the Approved Manager, as manager of the relevant Vessel, in favour of the Lender, the Approved Manager’s Undertaking to be in form and substance as the Lender may approve or require, as the same may from time to time be amended and/or supplemented;
 
“Approved Shipbroker” means Intermodal Shipbrokers Co., Xcklusiv Shipbrokers, Allied Shipbroking Inc., Optima Shipping Services S.A., Clarksons, Fearnleys, Braemar, Arrows, Maersk Broker, www.vesselsvalue.com or any other first-class independent firm of internationally known shipbrokers, acceptable to  the Lender, and includes their respective successors in title and “Approved Shipbrokers” means all of them
 
“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;
 
“Assignable Charterparty” in relation to a Vessel means any bareboat charterparty (irrespective of the duration of such bareboat charterparty), or any time or consecutive voyage charter or contract of affreightment or related document in respect of the employment of that Vessel having a fixed duration of more than 12 months (excluding any optional extensions) whether now existing or hereinafter entered or to be entered into by the Owner thereof or any person, firm or company on its behalf and a charterer, at a daily rate and on terms and conditions acceptable to the Lender (and shall include any addenda thereto) together the “Assignable Charterparties”);
 
2
“Assignee” has the meaning ascribed thereto in Clause 14.3 (Assignment by the Lender);
 
“Availability Period” means the period starting on the date hereof and ending on:
 

 (a)
31st July 2025 or until such later date as the Lender may agree in writing; or
 

 (b)
such earlier date (if any): (i) on which the whole Commitment has been advanced by the Lender to the Borrowers, or (ii) on which the Commitment is reduced to zero pursuant to Clauses 3.6 (Market disruption), 9.2 (Consequences of Default – Acceleration), 12.1 (Unlawfulness) or any other Clause of this Agreement;
 
“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 of Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms, the relevant implementing law or regulation as described in the EU Bail-In Legislation Schedule from time to time; and
 

 (b)
in relation to any other state, any analogous law or regulation from time to time which requires contractual recognition of any Write-down and Conversion Powers contained in that law or regulation;
 
“Balloon Instalment” has the meaning given in Clause 4.1 (Repayment);
 
“Basel II Accord” means the ”International Convergence of Capital Measurement and Capital Standards, a Revised Framework” published by the Basel Committee on Banking Supervision in July 2004 in the form existing on the date of this Agreement;
 
“Basel II Approach” means either the Standardised Approach or the relevant Internal Ratings Based Approach (each as defined in the Basel II Accord) adopted by the Lender (or its holding company) for the purposes of implementing or complying with the Basel II Accord;
 
“Basel II Regulation” means (a) any law or regulation implementing the Basel II Accord (including the relevant provisions of CRD IV and CRR) to the extent only such law or regulation re-enacts and/or implements the requirement of the Basel II Accord but excluding any provision of such law or regulation implementing the Basel III Accord or (b) any Basel II Approach adopted by the Lender(s);
 
“Basel III Accord” means:
 

 (a)
the agreements on capital requirements, leverage ratio and liquidity standards contained in "Basel III: A global regulatory framework for more resilient banks and banking systems", "Basel III: International framework for liquidity risk measurement, standards and monitoring" and "Guidance for national authorities 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 loss absorbency requirement – Rules text" published by the Basel Committee on Banking Supervision in November 2011, as amended, supplemented or restated; and
 
3

 (c)
any further guidance or standards published by the Basel Committee on Banking Supervision relating to Basel III;
 
“Basel III Regulation” means any law or regulation implementing the Basel III Accord save and to the extent that it re-enacts a Basel II Regulation;
 
“Borrowed Money” means Financial Indebtedness incurred in respect of (i) money borrowed or raised, (ii) any bond, note, loan stock, debenture or similar instrument, (iii) acceptance of documentary credit facilities, (iv) deferred payments for assets or services acquired, (v) rental payments under leases (whether in respect of land, machinery, equipment or otherwise) entered into primarily as a method of raising finance or of financing the acquisition of the asset leased, (vi) guarantees, bonds, stand-by letters of credit or other instruments issued in connection with the performance of contracts and (vii) guarantees or other assurances against financial loss in respect of Financial Indebtedness of any person falling within any of sub-paragraphs (i) to (vi) above;
 
“Borrowers” means jointly and severally the Arbar Borrower and the Garu Borrower, as specified at the beginning of this Agreement and “Borrower” means either of them as the context may require;
 
“Break Costs” has the meaning given in Clause 10.3 (Break Costs);
 
“Business Day” means:
 

 (a)
a day (other than a Saturday or Sunday) on which banks are open for general business in Athens and Piraeus;
 

 (b)
in New York; and
 
(in relation to the fixing of any interest rate which is required to be determined under this Agreement or any Finance Document), a US Government Securities Business Day;
 
“Cash-Collateral Account” means an account opened or to be opened and maintained in the name of the Cash Collateral Account Holder or any other entity acceptable to the Lender with the branch of the Lender at 93 Akti Miaouli, Piraeus, Greece, or with any other branch or office of the Lender (either in Greece or abroad), as may be required by and from time to time be determined by the Lender at its sole discretion and notified to the Cash Collateral Account Holder and shall include any sub-accounts or call accounts  opened under the same designation or any revised designation or number from time to time notified by the Lender to the Cash Collateral Account Holder to which the Cash Collateral Amount shall be deposited and pledged in favour of the Lender;
 
“Cash Collateral Account Holder” means the Arbar Borrower or any other entity acceptable to the Lender;
 
“Cash-collateral Account Pledge Agreement” means the first priority pledge executed or (as the context may require) to be entered into between the Cash Collateral Account Holder or any other entity acceptable to the Lender, and the Lender for the creation of a pledge in favour of the Lender over the Cash-Collateral Account, in such form as the Lender may approve or require, as the same may from time to time be amended and/or supplemented;
 
“Cash-Collateral Amount” means the amount which is  deposited in  the Cash-Collateral Account and which:
 
4

 (a)
is at least United States Dollars One million ($1,000,000) (for the avoidance of doubt, this amount is over and above the amount of the Pledged Deposit as defined in Clause 8.1 (k) of the Principal Agreement;
 

 (b)
may be released at the option of the Cash Collateral Account Holder at any time the Cash Collateral Account Holder so determines, provided that (i) no Event of Default has occurred and is continuing, (ii) the Cash Collateral Account Holder has given to the Lender three (3) Business Days prior advance written notice and (iii) the Cash Collateral Account Holder pays all the relevant costs, including any Break Costs; and
 

 (c)
shall bear interest at a rate to be agreed at the relevant time between the Lender and the Cash Collateral Account Holder depending on the Cash-Collateral Amount and other relevant circumstances at the time;
 
“Cash-Collateralised part of the Loan” means the part of the Loan equal to one or more multiples of the amount of the Repayment Instalments as they become due or any other amount to be agreed between the Cash Collateral Account Holder and the Lender but in any case not less than  United States Dollars One million ($1,000,000), which corresponds to the Cash-Collateral Amount deposited in the Cash-Collateral Account, which shall be placed on the first day of an Interest Period in the Cash-Collateral Account, with not less than 10 Business Days prior written notice of the Cash Collateral Account Holder to the Lender and on which interest shall accrue at the rate per annum determined by the Lender to be the aggregate of (i) the Margin B (ii) and the Reference Rate for that Interest Period or in the case of paragraph (b)(ii) of Clause 3.1 (Normal Interest Rate) the Cash Collateral Amount shall bear no interest, provided always that the Cash Collateral Account Holder shall be permitted to make use of the Cash-Collateral Amount only (a) after the end of the current Interest Period for the Loan and (b) after the Cash Collateral Account Holder by a notice received by the Lender not later than 10 a.m. (Athens time) on the 2nd  Business Day before the beginning of the following Interest Period, have notified the Lender that they/it wishes to make use in whole or in part of the Cash-Collateral Amount;
 
“Charterparty Assignment” , in relation to a Vessel means an assignment of the rights of its Owner under any Assignable Charterparty executed or to be executed by its Owner in favour of the Lender and the acknowledgement of notice of the assignment in respect of such Assignable Charterparty to be obtained only in case of an Event of Default which has occurred and is continuing in form and substance as the Lender may approve or require, as the same may from time to time be amended and/or supplemented, and “Charterparty Assignments” means all of them;
 
“Classification” in relation to a Vessel means the classification referred to in the Mortgage registered thereon with the Classification Society or such other classification society as the Lender shall, at the request of the Borrowers, have agreed in writing, shall be treated as the Classification Society for the purposes of the Finance Documents;
 
“Classification Society” means such classification society which is a member of IACS (other than the China Classification Society and the Russian Maritime Registry of Shipping) and which the Lender shall, at the request of the Borrower, have agreed in writing to be treated as the Classification Society for the purposes of the Finance Documents;
 
“Commitment” means the amount which the Lender agreed to lend to the Borrowers under Clause 2.1 (Commitment to Lend) as reduced by any relevant term of this Agreement;
 
5
“Commitment Letter” means the Commitment Letter dated 23 June 2025  and endorsed by the Borrower on   same date, addressed by the Lender to the Borrowers and accepted by them on the same date, and shall include any amendments or addenda thereto;
 
“Compliance Certificate” means a certificate substantially in the form set out in Schedule 3 (Form of Compliance Certificate) signed by the chief executive officer (“CEO”) of the Parent Company or, if the CEO is not available, the chief financial officer of the Parent Company;
 
“Compulsory Acquisition” in relation to a Vessel means requisition for title or other compulsory acquisition, requisition, appropriation, expropriation, deprivation, forfeiture or confiscation for any reason of that Vessel, whether for full or part consideration, a consideration less than its proper value, a nominal consideration or without any consideration, which is effected by any Government Entity or other competent authority, by any person or persons claiming to be or to represent any Government Entity, whether de jure or de facto, but shall exclude requisition for use or hire not involving requisition of title;
 
“Corporate Guarantee” means an irrevocable and unconditional guarantee given or, as the context may require, to be given by the Parent Company in form and substance satisfactory to the Lender as security for the Outstanding Indebtedness and any and all other obligations of the Borrowers under this Agreement and the Security Documents, as the same may from time to time be amended and/or supplemented;
 
“Corporate Guarantor” means the Parent Company and/or (where the context permits) any other person nominated by the Borrowers and acceptable to the Lender who may give a Corporate Guarantee, and includes its successors in title;
 
“CRD IV” means:
 

 (d)
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 prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC, as amended, supplemented or restated; and
 

 (e)
any other law or regulation which implements Basel III;
 
“CRR” means Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending regulation (EU) No. 648/2012, as amended, supplemented or restated;
 
“Default” means any Event of Default or any event or circumstance which with the giving of notice or expiry of any grace period or the satisfaction of any other condition (or any combination thereof) would constitute an Event of Default;
 
“Default Rate” means that rate of interest per annum which is determined in accordance with the provisions of Clause 3.4 (Default Interest);
 
“DOC” means a document of compliance issued to an Operator in accordance with rule 13 of the ISM Code;
 
“Dollars” (and the sign “$”) means the lawful currency for the time being of the United States of America;
 
6
“Drawdown Date” means the date, being a Business Day, requested by the Borrowers for the Loan to be made available, or (as the context requires) the date on which the Loan is actually borrowed;
 
“Drawdown Notice” means a notice substantially in the terms of Schedule 1 (Form of Drawdown Notice) (or in any other form which the Lender approves);
 
“Earnings” in relation to a Vessel means all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Owner thereof and which arise out of the use or operation of that Vessel, including (but not limited to) all freight, hire and passage moneys, compensation payable to the Owner thereof in the event of requisition of that Vessel for hire, remuneration for salvage and towage services, demurrage and detention moneys, contributions of any nature whatsoever in respect of general average, damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of a Vessel and any other earnings whatsoever due or to become due to the Owner thereof in respect of its Vessel and all sums recoverable under the Insurances in respect of loss of Earnings and includes, if and whenever a Vessel is employed on terms whereby any and all such moneys as aforesaid are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing agreement which is attributable to that Vessel;
 
“EEA Member Country” means any member state of the European Union, Iceland, Liechtenstein and Norway;
 
“Environmental Affiliate” means any agent or employee of the Borrowers or any other Relevant Party or any person having a contractual relationship with the Borrowers or any other Relevant Party in connection with any Relevant Ship or her operation or the carriage of cargo thereon;
 
“Environmental Approval” means any consent, authorisation, licence or approval of any governmental or public body or authorities or courts applicable to any Relevant Ship or her operation or the carriage of cargo thereon and/or passengers therein and/or provisions of goods and/or services on or from the Relevant Ship required under any Environmental Law;
 
“Environmental Claim” means:
 

 (a)
any claim by any governmental, judicial or regulatory authority which arises out of an Environmental Incident or which relates to any Environmental Law; or
 

 (b)
any claim by any other person which relates to an Environmental Incident,
 
in each case being for an amount in excess of $500,000 (or the equivalent in any other currency), and “claim” means a claim for damages, compensation, fines, penalties or any other payment of any kind whether or not similar to the foregoing; 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, including the arrest or attachment of any asset;
 
“Environmental Incident” means (i) any release of Material of Environmental Concern from any Vessel, (ii) any incident in which Material of Environmental Concern is released from a vessel other than the Vessels and which involves collision between the Vessel and such other vessel or some other incident of navigation or operation, in either case, where a Vessel, a Borrower or the Approved Manager is actually or allegedly at fault or otherwise liable (in whole or in part) or (iii) any incident in which Material of Environmental Concern is released from a vessel other than the Vessels and where ta Vessel is actually or potentially liable to be arrested as a result and/or where a Borrower or the Approved Manager is actually or allegedly at fault or otherwise liable;
 
7
“Environmental Laws” means all national, international and state laws, rules, regulations, treaties and conventions applicable to any Relevant Ship pertaining to the pollution or protection of human health or the environment including, without limitation, the carriage of Materials of Environmental Concern and actual or threatened emissions, spills, releases or discharges of Materials of Environmental Concern and actual or threatened emissions, spills, releases or discharges of Materials of Environmental Concern from any Relevant Ship  (including, without limitation, the United States Oil Pollution Act of 1990 and any comparable laws of the individual States of the United States of America);
 
“EU Bail-In Legislation Schedule” means the document described as such and published by the Loan Market Association (or any successor person) from time to time;
 
“Event of Default” means any event or circumstance set out in Clause 9.1 (Events) or described as such in any other of the Finance Documents;
 
“Existing Loan Agreements” means:
 

 (a)
the loan agreement dated 7 December 2022 and made between (1) the Lender, as lender and (2) the Arbar Borrower, as borrower, in respect of a term loan facility of (initially) $22,000,000, as amended from time to time; and
 

 (b)
the loan agreement dated 1 November 2022 and made between (1) the Lender, as lender and (2) the Garu Borrower, as borrower, in respect of a term loan facility of (initially) $18,250,000, as amended from time to time
 
"Existing Loan Indebtedness" means, at any relevant date, the aggregate principal amount of the loans owed by the Borrowers on that date under the Existing Loan Agreements;
 
"Existing Security" means any Security Interests created to secure the Existing Loan Indebtedness including the mortgages registered on the Vessels;
 
“Expenses” means the aggregate at any relevant time (to the extent that the same have not been received or recovered by the Lender) of:
 

 (a)
all losses, liabilities, costs, charges, expenses, damages and outgoings of whatever nature, (including, without limitation, Taxes, repair costs, registration fees and insurance premiums, crew wages, repatriation expenses and seamen’s pension fund dues) suffered, incurred, charged to or paid or committed to be paid by the Lender in connection with the exercise of the powers referred to in or granted by any of the Finance Documents or otherwise payable by the Borrowers in accordance with the terms of any of the Finance Documents;
 

 (b)
the expenses referred to in Clause 10.2 (Expenses); and
 

 (c)
interest on all such losses, liabilities, costs, charges, expenses, damages and outgoings from, in the case of Expenses referred to in sub-paragraph (b) above, the date on which such Expenses were demanded by the Lender from the Borrowers and in all other cases, the date on which the same were suffered, incurred or paid by the Lender until the date of receipt or recovery thereof (whether before or after judgement) at the Default Rate (as conclusively certified by the Lender) but always absent manifest error;
 
8
“FATCA” means:
 

 (a)
sections 1471 to 1474 of the US Internal Revenue Code of 1986 (the “Code”) or any associated regulations or other associated official guidance;
 

 (b)
any treaty, law, regulation or other official guidance enacted in any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of paragraph (a) above; or
 

 (c)
any agreement pursuant to the implementation of paragraphs (a) or (b) above with the US Internal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction;
 
“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;
 
“Final Maturity Date” means the date falling on the fifth (5th) anniversary of the Drawdown Date;
 
“Finance Documents” means, together, this Agreement, the Security Documents, the Insurance Letters, any Compliance Certificate, any Drawdown Notice,  the Side Letter, any document which is executed for the purpose of establishing any priority or subordination arrangement in relation to the Outstanding Indebtedness and any other document designated as such by the Lender and the Borrowers;
 
“Financial Indebtedness” means, in relation to a person (the “debtor”), a liability of the debtor:


 (a)
for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the debtor;
 

 (b)
under any loan stock, bond, note or other security issued by the debtor;
 

 (c)
under any acceptance credit, guarantee or letter of credit facility made available to the debtor;
 

 (d)
under a financial lease, a deferred purchase consideration arrangement or any other agreement having the commercial effect of a borrowing or raising of money by the debtor;
 

 (e)
under any interest or currency swap or any other kind of derivative transaction entered into by the debtor or, if the agreement under which any such transaction is entered into requires netting of mutual liabilities, the liability of the debtor for the net amount; or
 

 (f)
under a guarantee, indemnity or similar obligation entered into by the debtor in respect of a liability of another person which would fall within (a) to (e) if the references to the debtor referred to the other person;
 
9
“Financial Year” means, in relation to each of the Borrowers and the Parent Company, each period of one (1) year commencing on 1st January thereof in respect of which financial statements referred to in Clause 8.1(f) (Financial statements) are or ought to be prepared;
 
“Flag State” in relation to a Vessel means the Republic of the Marshall Islands or such other state or territory proposed in writing by the Borrowers to the Lender and approved by the Lender (such approval not to be unreasonably withheld, especially when requested for trading purposes), as being the “Flag State” of the Vessels for the purposes of the Security Documents;
 
“General Assignment” in relation to a Vessel means the first priority assignment of the Earnings, Insurances and Requisition Compensation collateral to the respective Mortgage, executed or (as the context may require) to be executed by the Owner thereof  in favour of the Lender, in form and substance as the Lender may approve or require, as the same may from time to time be amended and/or supplemented;
 
“Government Entity” means and includes (whether having a distinct legal personality or not) any national or local government authority, board, commission, department, division, organ, instrumentality, court or agency and any association, organisation or institution of which any of the foregoing is a member or to whose jurisdiction any of the foregoing is subject or in whose activities any of the foregoing is a participant;
 
“Governmental Withholdings” means withholdings and any restrictions or conditions resulting in any charge whatsoever imposed, either now or hereafter, by any sovereign state or by any political sub-division or taxing authority of any sovereign state;
 
“Group” means, together, the Borrowers, the Parent Company and its Subsidiaries, and “Group Member” means any member of the Group;
 
"Historic Term SOFR" means, in relation to the Loan or any part of the Loan, the most recent applicable Term SOFR for a period equal in length to the Interest Period of the Loan or that part of the Loan and which is as of a day which is no more than three US Government Securities Business Days before the Quotation Day;
 
“Insurance Letter” means a letter from the Borrowers in the form of Schedule 2 (Form of Insurance Letter), and “Insurance Letters” means any or all of them, as the context may require;
 
“Insurances” in relation to a Vessel means:
 

 (a)
all policies and contracts of insurance and reinsurance, policies or contracts, including entries of that Vessel in any protection and indemnity or war risks association, effected in respect of a Vessel, its Earnings or otherwise in relation to it whether before, on or after the date of this Agreement; and
 

 (b)
all rights (including, without limitation, any and all rights or claims which a Borrower may have under or in connection with any cut-through clause relative to any reinsurance contract relating to the aforesaid policies or contracts of insurance) and other assets relating to, or derived from, any of the foregoing, including any rights to a return of a premium and any rights in respect of any claim whether or not the relevant policy, contract of insurance or entry has expired on or before the date of this Agreement;
 
10
“Interest Payment Date” means in respect of the Loan or any part thereof in respect of which a separate Interest Period is fixed the last day of the relevant Interest Period and in case of any Interest Period longer than three (3) months the date(s) falling at successive three (3) monthly intervals during such longer Interest Period and the last day of such Interest Period, provided, however, that if any of the aforesaid dates falls on a day which is not a Business Day the Borrowers shall pay the accrued interest on the first Business Day thereafter unless the result of such extension would be to carry such Interest Payment Date over into another calendar month in which event such Interest Payment Date shall be the immediately preceding Business Day;
 
“Interest Period” means in relation to the Loan or any part thereof, each period for the calculation of interest in respect of the Loan or such part ascertained in accordance with Clauses 3.2 (Selection of Interest Period) and 3.3 (Determination of Interest Periods);
 
“Interpolated Historic Term SOFR” means, in relation to the Loan or any part of the Loan, the rate (rounded to the same number of decimal places as Term SOFR) which results from interpolating on a linear basis between:
 

 (a)
either:
 

 (i)
the most recent applicable Term SOFR (as of a day which is not more than three US Government Securities Business Days before the Quotation Day) for the longest period (for which Term SOFR is available) which is less than the Interest Period of the Loan or that part of the Loan; or
 

 (ii)
if no such Term SOFR is available for a period which is less than the Interest Period of the Loan or that part of the Loan, SOFR for a day which is no more than five US Government Securities Business Days (and no less than two US Government Securities Business Days) before the Quotation Day; and
 

 (b)
the most recent applicable Term SOFR (as of a day which is not more than three US Government Securities Business Days before the Quotation Day) for the shortest period (for which Term SOFR is available) which exceeds the Interest Period of the Loan or that part of the Loan;
 
"Interpolated Term SOFR" means, in relation to the Loan or any part of the Loan, the rate (rounded to the same number of decimal places as Term SOFR) which results from interpolating on a linear basis between:
 

 (a)
either
 

 (i)
the applicable Term SOFR (as of the Quotation Date) for the longest period (for which Term SOFR is available) which is less than the Interest Period of the Loan or that part of the Loan; or
 

 (ii)
if no such Term SOFR is available for a period which is less than the Interest Period of the Loan or that part of the Loan, SOFR for the day which is two (2) US Government Securities Business Days before the Quotation Day; and
 

 (b)
the applicable Term SOFR (as of the Quotation Date) for the shortest period (for which Term SOFR is available) which exceeds the Interest Period of the Loan or that part of the Loan;
 
11
“ISM Code” means in relation to its application to the Borrower, any Vessel and her operation:
 

 (a)
“The International Management Code for the Safe Operation of Ships and for Pollution Prevention”, currently known or referred to as the “ISM Code”, adopted by the Assembly of the International Maritime Organisation by Resolution A. 741(18) on 4th November, 1993 and incorporated on 19th May, 1994 into chapter IX of the International Convention for the Safety of Life at Sea 1974 (SOLAS 1974); and
 

 (b)
all further resolutions, circulars, codes, guidelines, regulations and recommendations which are now or in the future issued by or on behalf of the International Maritime Organisation or any other entity with responsibility for implementing the ISM Code, including without limitation, the “Guidelines on implementation or administering of the International Safety Management (ISM) Code by Administrations” produced by the International Maritime Organisation pursuant to Resolution A. 788(19) adopted on 25th November, 1995;
 
as the same may be amended, supplemented or replaced from time to time;
 
“ISM Code Documentation” includes:
 

 (a)
the DOC and SMC issued by a classification society in all respects acceptable to the Lender in its absolute discretion pursuant to the ISM Code in relation to any Vessel within the period specified by the ISM Code;
 

 (b)
all other documents and data which are relevant to the ISM SMS and its implementation and verification which the Lender may require by request; and
 

 (c)
any other documents which are prepared or which are otherwise relevant to establish and maintain a Vessel’s or a Borrower’s compliance with the ISM Code which the Lender may require by request;
 
“ISM SMS” means the safety management system which is required to be developed, implemented and maintained under the ISM Code;
 
“ISPS Code” means the International Ship and Port Security Code of the International Maritime Organization and includes any amendments or extensions thereto and any regulation issued pursuant thereto;
 
“ISSC” means an International Ship Security Certificate issued in respect of any Vessel pursuant to the ISPS Code;
 
“Lender” means the Lender as specified in the beginning of this Agreement, and includes its successors in title and transferees;
 
“Lending Office” means the office of the Lender appearing at the beginning of this Agreement or any other office of the Lender designated by the Lender as the Lending Office by notice to the Borrowers;
 
“Loan” means the aggregate principal amount borrowed by the Borrowers in respect of the Commitment or (as the context may require) the principal amount thereof owing to the Lender under this Agreement at any relevant time;
 
12
“Major Casualty” in relation to a Vessel means any casualty to that Vessel in respect whereof the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds the Major Casualty Amount;
 
“Major Casualty Amount” means Five hundred thousand Dollars ($500.000) or the equivalent in any other currency;
 
“Management Agreement” in relation to a Vessel means the agreement made between the Owner thereof and the Approved Manager providing (inter alia) for the Approved Manager to manage that Vessel, as amended and/or supplemented from time to time(together, the “Management Agreements”);
 
“MAPI” has the meaning given in Clause 10.9 (MII and MAPI costs);
 
"Market Disruption Rate" means the Reference Rate;
 
“Market Value” in relation to a Vessel means the market value of that Vessel as determined in accordance with Clause 8.5(b) (Valuation of Vessels);
 
“Material of Environmental Concern” means and includes pollutants, contaminants, toxic substances, oil as defined in the United States Oil Pollution Act of 1990 and all hazardous substances as defined in the United States Comprehensive Environmental Response, Compensation and Liability Act 1980;
 
“Material Adverse Change” means any event or series of events which, in the reasonable opinion of the Lender, is likely to have a Material Adverse Effect;
 
“Material Adverse Effect” means a material, in the reasonable opinion of the Lender, adverse effect on:
 

 (a)
the business, property, assets, liabilities, operations or financial condition of the Borrowers and/or any other Security Party taken as a whole;
 

 (b)
the ability of the Borrowers and/or any other Security Party to (i) comply with or perform any of its obligations or (ii) discharge any of its liabilities, under any Finance Document as they fall due; or
 

 (c)
the validity, legality or enforceability of any Finance Document or the rights and remedies of the Lender under any Finance Document;
 
Provided that the Total Loss of any Vessel shall not be considered as an event having a Material Adverse Effect on (a), (b) or (c) hereinabove so long as the Borrowers comply with Clause 4.3 (Mandatory Prepayment in case of Total Loss or sale or refinancing of the Vessels);
 
“MII and MAPI” has the meaning given in Clause 10.9 (MII and MAPI costs);
 
“month” means a period beginning in one calendar month and ending in the next calendar month on the day numerically corresponding to the day of the calendar month on which it started, provided that (i) if the period started on the last Business Day in a calendar month or if there is no such numerically corresponding day, it shall end on the last Business Day in such next calendar month and (ii) if such numerically corresponding day is not a Business Day, the period shall end on the next following Business Day in the same calendar month but if there is no such Business Day it shall end on the preceding Business Day and “months” and “monthly” shall be construed accordingly;
 
13
“Mortgage” in relation to a Vessel means the first preferred ship mortgage on that Vessel to be executed by the Owner thereof in favour of the Lender in form and substance satisfactory to the Lender, as the same may from time to time be amended and/or supplemented;
 
“Mortgaged Vessel(s)” means the Vessel(s) which remain mortgaged in favour of the Lender pursuant to this Agreement at any relevant time hereunder;
 
“Operating Account” means the account to be opened and maintained in the name of a Borrower with the Lending Office or with any other branch of the Lender or any other office of the Lender or with such other bank as may be required by and at the discretion of the Lender pursuant to Clause 13.7 (Relocation of Operating Account) and shall include any sub-accounts or call accounts (whether in Dollars or any other currency) opened under the same designation or any revised designation or number from time to time notified by the Lender to that Borrower, to which (inter alia) all Earnings of each Vessel and/or any other moneys are to be paid in accordance with the provisions of this Agreement and/or the respective General Assignment and/or any of the other Finance Documents;
 
“Operating Expenses” means the voyage and operating expenses of the Vessels, including, but not limited to, the expenses for operating, crewing, victualing, insuring, maintaining, repairing and generally trading the Vessels (and if applicable, voyage expenses), the expenses for spares, administration and management of the Vessel (inclusive of the management fees) as well as the reserves that the Borrowers, acting reasonably, consider necessary for the commercial operation of the Vessels and the costs of intermediate and special surveys and dry docking of the Vessels and any other relevant expenses necessary for the Vessels’ commercial operation and/or in accordance with any international/ environmental regulations which are reasonably incurred for ships of the size and type of the Vessels;
 
“Operator” means any person who is from time to time during the Security Period concerned in the operation of any Vessel and falls within the definition of “Company” set out in rule 1.1.2. of the ISM Code;
 
“Outstanding Indebtedness” means the aggregate of (a) the Loan and interest accrued and accruing thereon, (b) the Expenses and (c) all other sums of any nature (together with all interest on any of those sums) which from time to time may be payable by the Borrowers to the Lender pursuant to the Finance Documents, whether actually or contingently and (d) any damages payable as a result of any breach by the Borrowers of any of the Finance Documents and (e) any damages or other sums payable as a result of any of the obligations of the Borrower under or pursuant to any of the Finance Documents being disclaimed by a liquidator or any other person, or, where the context permits, the amount thereof for the time being outstanding;
 
“Parent Company” means Performance Shipping Inc., a corporation incorporated under the laws of the Republic of the Marshall Islands, whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960;
 
“Party” means a party to this Agreement, and “Parties” means any or all of them, as the context may require;
 
“Permitted Security Interest” means:
 

 (a)
Security Interests created by the Finance Documents;
 

 (b)
liens for unpaid crew’s wages in accordance with usual maritime practice;
 
14

 (c)
liens for salvage;
 

 (d)
liens arising by operation of law for not more than 2 months’ prepaid hire under any charter in relation to the Vessels not prohibited by this Agreement;
 

 (e)
liens for master’s disbursements incurred in the ordinary course of trading and any other lien arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of the Vessels, provided such liens do not secure amounts more than 60 days overdue (unless the overdue amount is being contested in good faith by appropriate steps) and, in the case of liens for repair or maintenance, if a Vessel is put in the possession of any person for the purpose of work being done upon her in an amount not exceeding or likely to exceed the Major Casualty Amount or in an amount exceeding or likely to exceed the Major Casualty Amount provided in the latter case that (i) either that person has first given to the Lender and in terms satisfactory to it a written undertaking not to exercise any lien on that Vessel or her earnings for the cost of such work or (ii) the previous consent of the Lender shall have been obtained (which consent shall not be unreasonably withheld);
 

 (f)
any Security Interest created in favour of a plaintiff or defendant in any action of the court or tribunal before whom such action is brought as security for costs and expenses where a Borrower is prosecuting or defending such action in good faith by appropriate steps; and
 

 (g)
Security Interests arising by operation of law in respect of taxes which are not overdue for payment other than taxes being contested in good faith by appropriate steps and in respect of which appropriate reserves have been made;
 
“Pledged Deposit” has the meaning ascribed thereto in Clause 8.1(k) (Pledged Deposit);
 
“Quotation Day” means, in relation to any period for which an interest rate is to be determined, two US Government Securities Business before the first day of that period unless market practice differs in the relevant syndicated loan market in which case the Quotation Date will be determined by the Lender in accordance with market practice (and if quotations would normally be given on more than one day, the Quotation Date will be the last of those days);
 
"Reference Rate" means, in relation to the Loan or any part of the Loan:
 

 (a)
the applicable Term SOFR as of the Quotation Day and for a period equal in length to the Interest Period of the Loan or that part of the Loan; or
 

 (b)
as otherwise determined pursuant to Clause 3.8 (Unavailability of Term SOFR),
 
and if, in either case, that rate is less than zero, the Reference Rate shall be deemed to be zero;
 
“Registry” means the offices of such registrar, commissioner or representative of the relevant Flag State who is duly authorised to register any Vessel, a Borrower’s title thereto and the Mortgage over each Vessel under the laws and flag of the relevant Flag State;
 
“Regulatory Agency” means the Government Entity or other organization in the relevant Flag State which has been designated by the government of the relevant Flag State to implement and/or administer and/or enforce the provisions of the ISM Code;
 
15
“Related Company” means any company which is a Subsidiary of a Borrower or a Subsidiary of the Parent Company and any Subsidiary of any such company (together, the “Related Companies”);
 
“Relevant Jurisdiction” means any jurisdiction in which or where any Security Party is incorporated, resident, domiciled, has a permanent establishment, carries on, or has a place of business or is otherwise effectively connected;
 
"Relevant Market" means the market for overnight cash borrowing collateralised by US Government Securities;
 
“Relevant Nominating Body” means any applicable central bank, regulator or other supervisory authority or a group of them, or any working group or committee sponsored or chaired by, or constituted at the request of, any of them or the Financial Stability Board;
 
“Relevant Party” means the Borrowers, each Borrower’s Related Companies, the other corporate Security Parties and their respective Related Companies, and “Relevant Parties” means any or all of them, as the context may require;
 
“Relevant Ship” means each of the Vessels and any other vessel from time to time (whether before or after the date of this Agreement) owned, managed or crewed by, or chartered to, by any Relevant Party, and “Relevant Ships” means any or all of them, as the context may require;
 
“Repayment Date” means each of the dates specified in Clause 4.1 (Repayment) on which the Repayment Instalments shall be payable by the Borrowers to the Lender, and “Repayment Dates” means any or all of them, as the context may require;
 
“Repayment Instalment” means each instalment of the Loan which becomes due for repayment by the Borrowers to the Lender on a Repayment Date pursuant to Clause 4.1 (Repayment) (together, the “Repayment Instalments”);
 
“Requisition Compensation” means all sums of money or other compensation from time to time payable during the Security Period by reason of the Compulsory Acquisition of any Vessel;
 
“Resolution Authority” means any body which has authority to exercise any Write-down and Conversion Powers;
 
“Sanctions” means any economic, financial or trade sanctions laws, regulations, embargoes or other restrictive measures adopted, administered, enacted or enforced by any Sanctions Authority, or otherwise imposed by any law or regulation to which the Borrowers or any of them),, any other Security Party and the Lender are subject (which shall include without limitation, any extra-territorial sanctions imposed by law or regulation of the United States of America);
 
“Sanctions Authority” means:
 

 (a)
the government of the United States of America;
 

 (b)
the United Nations;
 

 (c)
the European Union (or the governments of any of its member states);
 

 (d)
the United Kingdom;
 
16

 (e)
the Flag State; or
 

 (f)
the respective governmental institutions and agencies of any of the foregoing including the Office of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”), the United States Department of State, the United States Department of Commerce and His Majesty’s Treasury;
 
“Sanctions Restricted Jurisdiction” means any country or territory which is the subject of country-wide or territory-wide Sanctions;
 
“Sanctions Restricted Person” means a person that is, or is directly or indirectly, owned or controlled (as such terms are defined by the relevant Sanctions Authority) by, or acting on behalf of, one or more persons or entities on any list (each as amended, supplemented or substituted from time to time) of restricted entities, persons or organisations (or equivalent) published by a Sanctions Authority;
 
“Security Cover Ratio” means, at any relevant time, the aggregate of the Security Value expressed as a percentage of the outstanding principal amount of the Loan at the relevant time;
 
“Security Documents” means:
 

 (a)
the Accounts Pledge Agreement;
 
 
(b)
the Approved Manager’s Undertakings;
 

 (a)
the Cash Collateral Account Pledge Agreement;
 

 (b)
the General Assignments;
 

 (c)
the Mortgages;
 

 (d)
the Charterparty Assignment in respect of any Assignable Charterparty;
 

 (e)
the Corporate Guarantee; and
 

 (g)
any other agreement or document (whether creating a Security Interest or not) that may have been or shall from time to time after the date of this Agreement be executed to guarantee and/or secure all or any part of the Outstanding Indebtedness and/or any and all other obligations of the Borrowers to the Lender pursuant to this Agreement and any other moneys from time to time owing or payable by the Borrowers under or in connection with this Agreement and/or any of the other documents referred to in this definition, as each such document may from time to time be amended and/or supplemented, and “Security Document” means any of them as the context may require;
 
“Security Interest” means:
 

 (a)
a mortgage, charge (whether fixed or floating), pledge, hypothecation, assignment or any maritime or other lien or any other security interest of any kind;
 

 (b)
the security rights of a plaintiff under an action in rem; and
 

 (c)
any trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention, arrest, seizure, garnishee order (whether nisi or absolute) or any other order or judgementarrangements having a similar effect);
 
17
“Security Party” means the Borrowers, the Corporate Guarantor and any other person (other than the Lender, a third-party Approved Manager and any charterer) who, as a surety or mortgagor, as a party to any subordination or priorities arrangement, or in any similar capacity, executes a document falling within the last paragraph of the definition of “Finance Documents”, and “Security Parties” means any or all of them, as the context may require;
 
“Security Period” means the period commencing on the Drawdown Date and ending on the date on which:
 

 (a)
all amounts which have become due for payment by the Borrowers or any other Security Party under the Finance Documents have been paid;
 

 (b)
no amount is owing or has accrued (without yet having become due for payment) under any Finance Document; and
 

 (c)
neither the Borrowers nor any other Security Party has any future or contingent liability under Clauses 11 (Indemnities- Expenses-Fees) or 5 (Payments, Taxes and Computation) or any other provision of this Agreement or another Finance Document;
 
“Security Requirement” means the amount in Dollars (as certified by the Lender whose certificate shall, in the absence of manifest error, be conclusively binding on the Borrowers) which is at any relevant time equal to one hundred and twenty five (125%) of the Loan outstanding at the relevant time;
 
“Security Value” means the amount in Dollars (as certified by the Lender whose certificate shall, in the absence of manifest error, be conclusive and binding on the Borrowers) which, at any relevant time is the aggregate of (i) the Market Value of the Vessels as most recently determined in accordance with Clause 8.5(b) (Valuation of Vessels),  (ii) the market value of any additional security provided under Clause 8.5(a) (Security shortfall-Additional Security) and accepted by the Lender (if any) and (iii) the Pledged Deposit.
 
“Side Letter” means a letter to be executed by the persons referred to therein and addressed to the Lender, setting out each Borrower’s and the Corporate Guarantor’s shareholding structure, in form and substance satisfactory to the Lender;
 
“SMC” means a safety management certificate issued in respect of any Vessel in accordance with rule 13 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 administration of 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 takes over the publication of that rate);
 
“Subsidiary” of a person means any company or entity directly or indirectly controlled by such person;
 
“Taxes” includes all present and future taxes, levies, imposts, duties, fees or charges of whatever nature together with interest thereon and penalties in respect thereof (except taxes concerning the Lender and imposed on the net income of the Lender) and “Taxation” shall be construed accordingly;
 
18
"Term SOFR" means the term SOFR reference rate administered by CME Group Benchmark Administration Limited (or any other person which takes over the administration of that rate) for the relevant period published (before any correction, recalculation or republication by the administrator) by CME Group Benchmark Administration Limited (or any other person which takes over the publication of that rate);
 
“Total Loss” means , in relation to a Vessel:
 

 (a)
actual, constructive, compromised or arranged total loss of that Vessel; or
 

 (b)
the Compulsory Acquisition of that Vessel unless it is within sixty (60)  days from the date of such occurrence redelivered to the full control of the Owner thereof; or
 

 (c)
the condemnation, capture, seizure, confiscation, arrest or detention of a Vessel (other than where the same amounts to the Compulsory Acquisition of that Vessel) by any Government Entity, or by persons acting on behalf of any Government Entity, unless that Vessel be released and restored to the Owner thereof from such condemnation, capture, seizure, confiscation arrest or detention within   one hundred and twenty (120) days after the occurrence thereof; and
 

 (d)
the hijacking, capture, seizure or confiscation of a Vessel arising as a result of a piracy or related incident unless that Vessel be released and restored to the Owner thereof from such hijacking, capture, seizure or confiscation within one hundred  fifty (150) days after the occurrence thereof;
 
“Total Loss Date” means in relation to a Vessel:
 

 (a)
in the case of an actual loss of any 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, compromised, agreed or arranged total loss of that Vessel, the earliest of:
 

 (i)
the date on which a notice of abandonment is given to the insurers; and
 

 (ii)
the date of any compromise, arrangement or agreement made by or on behalf of the Owner thereof with that Vessel's insurers in which the insurers agree to treat that Vessel as a total loss;
 

 (c)
in the case of the Compulsory Acquisition of a Vessel, on the date upon which the relevant requisition of title or other compulsory acquisition occurs;
 

 (d)
in the case of, any condemnation, capture, seizure, confiscation, arrest, or detention of a Vessel (other than where the same amounts to Compulsory Acquisition of that Vessel) by any Government Entity, or by persons acting on behalf of any Government Entity, which deprives a Borrower of the use of its Vessel for more than ninety (90) days, upon the expiry of the period of ninety (90) days after the date upon which the relevant, condemnation, capture, seizure or confiscation, arrest or detention occurred; and
 
19

 (e)
in the case of hijacking, capture, seizure or confiscation of a Vessel arising as a result of a piracy or related incident upon the expiry of the period of one hundred fifty (150) days after the occurrence thereof;
 
“Transferee” has the meaning ascribed thereto in Clause 14.3 (Assignment by the Lender);
 
“UK Bail-In Legislation” means Part 1 of the United Kingdom Banking Act 2009 and any other law or regulation applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutes or their Affiliates (otherwise than through liquidation, administration or other insolvency proceedings);
 
“Underlying Documents” means, any Assignable Charterparty and the Management Agreements, and in the singular means any of them as the context requires;
 
"Unpaid Sum" means any sum due and payable but unpaid by a Security Party under the Finance Documents;
 
“US” means the United States of America;
 
"US Government Securities Business Day" means any day other than:
 

 (a)
a Saturday or a 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 its members 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)
a Security Party some or all whose payments under the Finance Documents are from sources within the US for US federal income tax purposes;
 
“Vessels” means :
 
(a)    the crude oil/product carrier motor vessel “P. LONG BEACH ”, of about 57,219 gt and 32,780 nt built in the year 2013 in S. Korea by Hyundai Heavy Industries Co., Ltd., having IMO No. 9656890, registered under the laws and flag of the Republic of the Marshall Islands, at the Ships Registry of the port of Majuro under Official Number: 5201 in the ownership of the  Arbar Borrower (the “Arbar Vessel”); and
 
(b)    the crude oil/product carrier motor vessel “P. ALIKI”, of about 57,237 gt and 32,943 nt built in the year 2010 in S. Korea by Hyundai Heavy Industries Co., Ltd., having IMO No. 9460136, registered under the laws and flag of the Republic of the Marshall Islands, at the Ships Registry of the port of Majuro under Official Number: 10229 in the ownership of the Garu Borrower (the “Garu Vessel”);
 
in each case, together with all her boats, engines, machinery tackle outfit spare gear fuel consumable and other stores belongings and appurtenances whether on board or ashore and whether now owned or hereafter acquired and all the additions, improvements and replacements in or on the above described vessel,
 
20
(c)      and “Vessel” means any of them, as the context may require);
 
“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 that Bail-In Legislation in the EU Bail-In Legislation Schedule; and
 

 (b)
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 other financial institution or Affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change 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 into shares, 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 been exercised under 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 or ancillary to any of those powers; and
 

 (ii)
any similar or analogous powers under that Bail-In Legislation; and
 

 (c)
in relation to any UK Bail-In Legislation:
 

 (i)
any powers under that UK Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or Affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change 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 into shares, 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 been exercised 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 or ancillary to any of those powers; and
 

 (ii)
any similar or analogous powers under that UK Bail-In Legislation.
 
1.3
Interpretation
 
In this Agreement:
 

 (a)
Clause headings and the table of contents are inserted for convenience of reference only and shall be ignored in the interpretation of this Agreement;
 

 (b)
subject to any specific provision of this Agreement or of any assignment and/or participation or syndication agreement of any nature whatsoever, reference to each of the parties hereto and to the other Finance Documents shall be deemed to be reference to and/or to include, as appropriate, their respective successors and permitted assigns;
 

 (c)
where the context so admits, words in the singular include the plural and vice versa;
 

 (d)
the words “including” and “in particular” shall not be construed as limiting the generality of any foregoing words;
 
21

 (e)
references to (or to any specified provisions of) a Finance Document or any other agreement or instrument is a reference to that Finance Document or other agreement or instrument as it may from time to time be amended, restated, novated or replaced, however fundamentally, whether before the date of this Agreement or otherwise;
 

 (f)
references to Clauses and Schedules are to be construed as references to the Clauses of, and the Schedules to, the relevant Finance Document and references to a Finance Document include all the terms of that Finance Document and any Schedules, Annexes or Appendices thereto, which form an integral part of same;
 

 (g)
references to the opinion of the Lender or a determination or acceptance by the Lender or to documents, acts, or persons acceptable or satisfactory to the Lender or the like shall be construed as reference to opinion, determination, acceptance or satisfaction of the Lender at the sole discretion of the Lender, and such opinion, determination, acceptance or satisfaction of the Lender shall be conclusive and binding on the Borrowers;
 

 (h)
references to a “regulation” include any present or future regulation, rule, directive, requirement, request or guideline (whether or not having the force of law) of any governmental or intergovernmental body, agency, authority, central bank or government department or any self-regulatory or other national or supra-national authority or organisation and includes (without limitation) any Basel II Regulation or Basel III Regulation;
 

 (i)
references to any person include such person’s assignees and successors in title; and
 

 (j)
references to or to a provision of, any law include any amendment, extension, re-enactment or replacement, whether made before the date of this Agreement or otherwise.
 
1.4
Construction of certain terms
 
In this Agreement:
 
“asset” includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment;
 
“company” includes any partnership, joint venture and unincorporated association;
 
“consent” includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration, notarisation and legalisation;
 
“contingent liability” means a liability which is not certain to arise and/or the amount of which remains unascertained;
 
"continuing", in relation to any Default or any Event of Default, means that the Default or the Event of Default has not been remedied or waived;
 
“control” of an entity means:
 

 (a)
the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to:
 
22

 (i)
cast, or control the casting of, more than 50 per cent of the maximum number of votes that might be cast at a general meeting of that entity; or
 

 (ii)
appoint or remove all, or the majority, of the directors or other equivalent officers of that entity; or
 

 (iii)
give directions with respect to the operating and financial policies of that entity with which the directors or other equivalent officers of that entity are obliged to comply; and/or
 

 (b)
the holding beneficially of more than 50 per cent of the issued share capital of that entity (excluding any part of that issued share capital that carries no right to participate beyond a specified amount in a distribution of either profits or capital) (and, for this purpose, any Security Interest over the share capital shall be disregarded in determining the beneficial ownership of such share capital);
 
and “controlled” shall be construed accordingly;
 
“document” includes a deed; also a letter or fax;
 
“guarantee” means any guarantee, letter of credit, bond, indemnity or similar assurance against loss, or any obligation, 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 to purchase 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 and “guaranteed” shall be construed accordingly;
 
“law” includes any form of delegated legislation, any order or decree, any treaty or international convention and any regulation or resolution of the Council of the European Union, the European Commission, the United Nations or its Security Council;
 
“liability” includes every kind of debt or liability (present or future, certain or contingent), whether incurred as principal or surety or otherwise;
 
“person” includes any individual, firm, company, corporation, unincorporated body of persons or any state, political sub-division or any agency thereof and local or municipal authority and any international organisation;
 
“policy”, in relation to any insurance, includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms;
 
“regulation” includes any regulation, rule, official directive, request or guideline whether or not having the force of law of any governmental, intergovernmental or supranational body, agency, department or regulatory, self‑regulatory or other authority or organisation;
 
“right” means any right, privilege, power or remedy, any proprietary interest in any asset and any other interest or remedy of any kind, whether actual or contingent, present or future, arising under contract or law, or in equity;
 
“successor” includes any person who is entitled (by assignment, novation, merger or otherwise) to any other person’s rights under this Agreement or any other Finance Document (or any interest in those rights) or who, as administrator, liquidator or otherwise, is entitled to exercise those rights; and in particular references to a successor include a person to whom those rights (or any interest in those rights) are transferred or pass as a result of a merger, division, reconstruction or other reorganisation of it or any other person;
 
23
“liquidation”, “winding up”, “dissolution”, or “administration” of person or a “receiver” or “administrative receiver” or “administrator” in the context of insolvency proceedings or security enforcement actions in respect of a person shall be construed so as to include any equivalent or analogous proceedings or any equivalent and analogous person or appointee (respectively) under the law of the jurisdiction in which such person is established or incorporated or any jurisdiction in which such person carries on business including (in respect of proceedings) the seeking or occurrences of liquidation, winding-up, reorganisation, dissolution, administration, arrangement, adjustment, protection or relief of debtors.
 
1.5
Same meaning
 
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 Document has the same meaning in that Finance Document or notice as in this Agreement.
 
1.6
Inconsistency
 
Unless a contrary indication appears, in the event of any inconsistency between the terms of this Agreement and the terms of any other Finance Document when dealing with the same or similar subject matter (other than as relates to the creation and/or perfection of security) are subject to the terms of this Agreement and, in the event of any conflict between any provision of this Agreement and any provision of any Finance Document (other than in relation to the creation and/or perfection of security) the provisions of this Agreement shall prevail.
 
1.7
Finance Documents
 
Where any other Finance Document provides that Clause 1.3 (Interpretation) and Clause 1.4 (Construction of certain terms), shall apply to that Finance Document, any other provision of this Agreement which, by its terms, purports to apply to all or any of the Finance Documents and/or any Security Party shall apply to that Finance Document as if set out in it but with all necessary changes.
 
2.
THE LOAN

2.1
Commitment to lend
 
The Lender, relying upon (inter alia) each of the representations and warranties set forth in Clause 6 (Representations and warranties) and in each of the Security Documents, agrees to lend to the Borrowers in one (1) Advance and upon and subject to the terms of this Agreement, the amount specified in Clause 1.1 (Amount and Purpose) and the Borrowers shall apply all amounts borrowed under the Commitment in accordance with Clause 1.1 (Amount and Purpose).
 
2.2
Drawdown Notice irrevocable
 
A Drawdown Notice must be signed by a director or a duly authorised attorney-in-fact of the Borrower and shall be effective on actual receipt thereof by the Lender and, once served, it, subject as provided in Clause 3.6 (Market disruption), cannot be revoked without the prior consent of the Lender.
 
24
2.3
Drawdown Notice and commitment to borrow
 
Subject to the terms and conditions of this Agreement, the Loan shall be advanced to the Borrowers following receipt by the Lender from the Borrowers of a Drawdown Notice not later than 10:00 a.m. (New York time) on the second Business Day before the date on which the drawdown is intended to be made unless the Lender otherwise approves.
 
2.4
Number of Advances agreed
 
The Commitment shall be advanced to the Borrowers, subject to the terms and conditions of this Agreement, by one (1) Advance and any amount undrawn under the Commitment shall be cancelled and may not be borrowed by the Borrowers at a later date.
 
2.5
Disbursement
 
Upon receipt of the Drawdown Notice complying with the terms of this Agreement the Lender shall, subject to the provisions of Clause 7 (Conditions precedent), on the date specified in the Drawdown Notice, make the Commitment available to the Borrowers, and payment to the Borrower shall be made to the account which the Borrowers specify in the Drawdown Notice.
 
2.6
Application of proceeds
 
Without prejudice to the Borrowers’ obligations under Clause 8.1(d) (Use of Loan proceeds), the Lender is not bound to monitor or verify the application of any amount borrowed pursuant to this Agreement and shall have no responsibility for the application of the proceeds of the Loan (or any part thereof) by the Borrowers.
 
2.7
Termination date of the Commitment
 
Any part of the Commitment undrawn and uncancelled at the end of the Availability Period shall thereupon be automatically cancelled.
 
2.8
Evidence
 
It is hereby expressly agreed and admitted by the Borrowers that abstracts or photocopies of the books of the Lender as well as statements of accounts or a certificate signed by an authorised officer of the Lender shall be conclusive, binding and full evidence, save for manifest error, on the Borrowers as to the existence and/or the amount of the at any time Outstanding Indebtedness, of any amount due under this Agreement, of the applicable interest rate or Default Rate or any other rate provided for or referred to in this Agreement, the Interest Period, the value of additional securities under Clause 8.5(a) (Security shortfall Additional Security), the payment or non-payment of any amount and the Borrowers may rebut such evidence with any other means of evidence save for witnesses.. Nevertheless, enforcement procedures or any other court or out-of-court procedure can be commenced by the Lender on the basis of the above mentioned means of evidence including written statements or certificates of the Lender.
 
25
2.9
Cancellation
 
The Borrowers shall be entitled to cancel any undrawn part of the Commitment under this Agreement upon giving the Lender not less than five (5) Business Days’ notice in writing to that effect, provided that no Drawdown Notice has been given to the Lender under Clause 2.3 (Drawdown Notice and commitment to borrow) for the full amount of the Commitment or in respect of the portion thereof in respect of which cancellation is required by the Borrowers.  Any such notice of cancellation, once given, shall be irrevocable.  Any amount cancelled may not be drawn. Notwithstanding any such cancellation pursuant to this Clause 2.9 the Borrowers shall continue to be liable for any and all amounts due to the Lender under this Agreement including without limitation any amounts due to the Lender under Clause 10 (Indemnities - Expenses – Fees).
 
2.10
No security or lien from other person
 
Neither of the Borrowers has taken or received, and each of the Borrowers undertakes that until all moneys, obligations and liabilities due, owing or incurred by the Borrowers under this Agreement and the Security Documents have been paid in full, none of the Borrowers will take or receive, any security or lien from any other person liable or for any liability whatsoever.
 
2.11
Interest to co-borrow
 
The Borrowers have an interest in borrowing jointly and severally in that they are companies which have close financial co-operation and mutual assistance and in that the Commitment would not have been available to each one of the Borrowers separately.
 
3.
INTEREST

3.1
Normal Interest Rate
 
The Borrowers shall pay interest on the Loan (or as the case may be, each portion thereof to which a different Interest Period relates) in respect of each Interest Period (or part thereof) on each Interest Payment Date.  The interest rate for the calculation of interest shall be the rate per annum determined by the Lender to be the aggregate of:
 
(a)
the Margin A; And
 
(b)
the Reference Rate for that Interest Period.
 
It is hereby agreed that the interest rate for the calculation of interest on the Cash-collateralised Part of the Loan shall be the rate per annum determined by the Lender to be the aggregate of (i) the Margin B and (ii) the Reference Rate for that Interest Period
 
provided however that the Cash Collateral Amount may be placed, on and from the date of this Agreement and until the Lender notifies the Borrowers otherwise, in the Cash Collateral Account which:
 
 
(i)
shall bear interest as agreed with the Lender; and
 

 (ii)
upon the Lender's confirmation that such option is available, shall bear no interest, in which case the Cash-Collateralised Part of the Loan shall bear interest at a rate equal to Margin B;
 
provided however that the aforesaid option shall not be available if an Event of Default has occurred which is continuing
 
and further provided always that the Cash Collateral Account Holder shall be permitted to make use of the Cash- Collateral Amount subject to the following conditions:
 
26

 (i)
after the end of the current Interest Period for the Loan;
 

 (ii)
after the Cash Collateral Account Holder, by notice received by the Lender not later than 11:30 a.m. (Athens time) on the second Business Day before the beginning of the following Interest Period, have notified the Lender that it wishes to make use in whole or in part of the Cash-Collateral Amount;
 

 (iii)
no Event of Default has occurred at the time of the giving of the notice under (ii) above and which is continuing;
 

 (iv)
after such use, the aggregate amount of the Cash-Collateral Amount shall meet the requirements of the definition of “Cash- Collateralised Part of the Loan”; and
 

 (v)
after such use of the Cash-Collateral Amount, the Security Value shall be no less than the Security Requirement and any part of  the Cash-Collateral Amount which cannot be withdrawn shall be immediately remitted into the Operating Account pledged in favour of the Lender in order to constitute further security for the Loan for the purpose of  Clause 8.5(a)(ii);
 
and provided further that if and whenever, during the Security Period, the Lender, following the Borrowers’ written request, determines (in its absolute discretion), that the credit risk of the Loan has been substantially reduced, the Lender shall at its absolute discretion (but without being obliged) consider the said Borrowers’ written request for reduction of the Margin A, taking also the general shipping finance market conditions prevailing at such time, provided however that in case such request has not been accepted by the Lender, the Lender shall be under no obligation to render any reasons of such refusal.
 
3.2
Selection of Interest Period
 

 (a)
Notice:  The Borrowers may by notice received by the Lender not later than 10:00 a.m. (Athens time) on the second Business Day before the beginning of each Interest Period specify (subject to Clause 3.3 (Determination of Interest Periods) below) whether such Interest Period shall have a duration of one (1) or three (3) months (or such other period as may be requested by the Borrowers and as the Lender, in its sole discretion, may agree to).
 

 (b)
Non-availability of matching deposits for Interest Period selected:  If, after the Borrowers by notice to the Lender  have selected an Interest Period longer that three (3) months, the Lender notifies the Borrowers on the same Business Day before the commencement of that Interest Period that it is not satisfied that deposits in Dollars for a period equal to that Interest Period will be available to it in the Relevant Market when that Interest Period commences, that Interest Period shall be of such duration as the Lender may advise the Borrowers in writing.
 
3.3
Determination of Interest Periods
 
Every Interest Period shall, subject to market availability to be conclusively determined by the Lender, be of the duration specified by the Borrowers pursuant to Clause 3.2 (Selection of Interest Periods) but so that:
 
27

 (a)
Initial Interest Period: the initial Interest Period applicable to the Loan will commence on the Drawdown Date and each subsequent Interest Period will commence forthwith upon the expiry of the preceding Interest Period;
 

 (b)
Interest Period overrunning Repayment Date(s): if any Interest Period would otherwise overrun one or more Repayment Dates, then, in the case of the last Repayment Date, such Interest Period shall end on such Repayment Date, and in the case of any other Repayment Date or Dates the Loan shall be divided into parts so that there is one part equal to the amount(s) of the Repayment Instalment(s) due on each Repayment Date falling during that Interest Period and having an Interest Period ending on the relevant Repayment Date and another part equal to the amount of the balance of the Loan having an Interest Period determined in accordance with Clause 3.2 (Selection of Interest Period) and the other provisions of this Clause 3.3 and the expression “Interest Period in respect of the Loan” when used in this Agreement refers to the Interest Period in respect of the balance of the Loan;
 

 (c)
Last Interest Period: the last Interest Period in respect of the Loan will terminate on the Final Maturity Date;
 

 (d)
Failure to notify: if the Borrowers fail to specify the duration of an Interest Period in accordance with the provisions of Clause 3.2 (Selection of Interest Period) and this Clause 3.3, such Interest Period shall have a duration of three (3) months unless another period shall be agreed between the Lender and the Borrowers provided, always, that such period (whether of three (3) months or of different duration) shall comply with this Clause 3.3;
 

 (e)
Interest Period not readily available: if the Lender determines that the duration of an Interest Period specified by the Borrowers in accordance with Clause 3.2 (Selection of Interest Period) is not readily available, then that Interest Period shall have such duration as the Lender, may determine;
 

 (f)
No Interest Period to extend beyond Final Maturity Date:  No Interest Period for the Loan shall end after the Final Maturity Date and any such Interest Period which would otherwise extend beyond the Final Maturity Date shall instead end on the Final Maturity Date,
 
provided, always, that:
 

 (i)
any Interest Period which commences on the last day of a calendar month, and any Interest Period which commences on the day on which there is no numerically corresponding day in the calendar month during which such Interest Period is due to end, shall end on the last Business Day of the calendar month during which such Interest Period is due to end; and
 

 (ii)
if the last day of an Interest Period is not a Business Day the Interest Period shall be extended until the next following Business Day unless such next following Business Day falls in the next calendar month in which case such Interest Period shall be shortened to expire on the preceding Business Day.
 
28
3.4
Default Interest
 

 (a)
Default interest: If a Security Party fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on the Unpaid Sum from the due date up to the date of actual payment (both before and after judgment) at a rate which, subject to paragraph (b) below, is 2%  per annum higher than the rate which would have been payable if the Unpaid Sum had, during the period of non-payment, constituted part of the Loan in the currency of the Unpaid Sum for successive Interest Periods, each of a duration selected by the Lender. Any interest accruing under this Clause 3.4 (Default interest) shall be immediately payable by the Security Party on demand by the Lender.
 

 (b)
If an Unpaid Sum consists of all or part of the Loan which became due on a day which was not the last day of an Interest Period relating to the Loan or that part of the Loan:
 

 (i)
the first Interest Period for that Unpaid Sum shall have a duration equal to the unexpired portion of the current Interest Period relating to the Loan or that part of the Loan; and
 

 (ii)
the rate of interest applying to that Unpaid Sum during that first Interest Period shall be 2.00% per annum higher than the rate which would have applied if that Unpaid Sum had not become due.
 

 (c)
Payment of accrued default interest: Subject to the other provisions of this Agreement, any interest due under this Clause shall be paid on the last day of the period by reference to which it was determined.
 

 (d)
Compounding of default interest:  Any such interest which is not paid at the end of the period by reference to which it was determined shall be compounded every six (6) months and shall be payable on demand.
 
3.5
Notification of duration of Interest Periods and interest rate
 
The Lender shall notify the Borrowers promptly of the duration of each Interest Period and of each rate of interest determined by it under this Clause 3 without prejudice to the right of the Lender to make determinations at its sole discretion, but this shall not be taken to imply that each Borrower is liable to pay such interest only with effect from the date of the Lender's notification. However, omission of the Lender to make such notification (without the application of the Borrowers) will not constitute and will not be interpreted as if to constitute a breach of obligation of the Lender except in case of wilful misconduct.
 
3.6
Market disruption
 
If before close of business in London on the Quotation Day for the relevant Interest Period, the Lender determines (in its sole discretion) that its cost of funds relating to the Loan would be in excess of the Market Disruption Rate, then Clause 3.7 (Cost of funds) shall apply to the Loan for the relevant Interest Period.
 
3.7
Cost of funds
 

 (a)
If this Clause 3.7 (Cost of funds) applies, the rate of interest on the Loan or the relevant part of the Loan for the relevant Interest Period shall be the percentage rate per annum which is the sum of:
 
 
(i)
the Applicable Margin; and
 
29

 (ii)
the rate notified by Lender to the Borrowers, which expresses as a percentage rate per annum the Lender’s cost of funds relating to the Loan or the relevant part thereof.
 

 (b)
If this Clause 3.7 (Cost of funds) applies and the Lender or the Borrowers so require the Lender and the Borrowers shall enter into negotiations (for a period of not more than 20 days) with a view to agreeing a substitute basis for determining the rate of interest or (as the case may be) an alternative basis for funding.
 

 (c)
Subject to Clause 3.9 (Changes to reference rates), any substitute or alternative basis agreed pursuant to paragraph (b) above shall, with the prior consent of all the Lender and the Borrowers, be binding on all Parties.
 

 (d)
If any rate notified to the Lender under sub-paragraph (ii) of paragraph (a) above is less than zero, the relevant rate shall be deemed to be zero.
 

 (e)
If no substitute or alternative basis agreed pursuant to paragraph (b) above, the Borrowers may give the Lender not less than 5 days’ notice of its intention to prepay the Loan at the end of the interest period set by the Lender.
 

 (f)
A notice under paragraph (e) above shall be irrevocable; and on the last Business Day of the interest period set by the Lender the Borrowers shall prepay (without premium or penalty) the Loan, together with accrued interest thereon at the applicable interest rate and the balance of the Outstanding Indebtedness.
 

 (g)
The provisions of Clause 4 (Repayment-Prepayment) shall apply in relation to the prepayment made hereunder.
 
3.8
Unavailability of Term SOFR
 

 (a)
Interpolated Term SOFR:  If no Term SOFR is available for the Interest Period of the Loan or any part of the Loan, the applicable Reference Rate shall be the Interpolated Term SOFR for a period equal in length to the Interest Period of the Loan or that part of the Loan.
 

 (b)
Historic Term SOFR: If no Term SOFR is available for the Interest Period of the Loan or any part of the Loan and it is not possible to calculate the Interpolated Term SOFR, the applicable Reference Rate shall be the Historic Term SOFR for the Loan or that part of the Loan.
 

 (c)
Interpolated Historic Term SOFR: If paragraph (b) above applies but no Historic Term SOFR is available for the Interest Period of the Loan or any part of the Loan, the applicable Reference Rate shall be the Interpolated Historic Term SOFR for a period equal in length to the Interest Period of the Loan or that part of the Loan.
 

 (d)
Cost of funds:  If paragraph (c) above applies but it is not possible to calculate the Interpolated Historic Term SOFR, there shall be no Reference Rate for the Loan or that part of the Loan (as applicable) and Clause 3.7 (Cost of Funds) shall apply to the Loan or that part of the Loan for that Interest Period.
 
30
3.9
Changes to Reference Rates
 

 (a)
If a Published Rate Replacement Event has occurred in relation to any Published Rate, any amendment or waiver which relates to:
 
 
(i)
providing for the use of a Replacement Reference Rate; and
 

 (ii)
 

 (A)
aligning any provision of any Finance Document to the use of that Replacement Reference Rate;
 

 (B)
enabling that Replacement Reference Rate to be used for the calculation of interest under this Agreement (including, without limitation, any consequential changes required to enable that Replacement Reference Rate to be used for the purposes of this Agreement);
 

 (C)
implementing market conventions applicable to that Replacement Reference Rate;
 

 (D)
providing for appropriate fallback (and market disruption) provisions for that Replacement Reference Rate; or
 

 (E)
adjusting the pricing to reduce or eliminate, to the extent reasonably practicable, any transfer of economic value from one Party to another as a result of the application of that Replacement Reference Rate (and if any adjustment or method for calculating any adjustment has been formally designated, nominated or recommended by the Relevant Nominating Body, the adjustment shall be determined on the basis of that designation, nomination or recommendation),
 
may be made with the consent of the Lender and the Borrowers.
 
 
(c)
In this Clause 3.9 (Changes to reference rates):
 
"Published Rate" means:
 

 (a)
SOFR; or
 

 (b)
Term SOFR for any Quoted Tenor.
 
"Published Rate Contingency Period" means, in relation to:
 

 (a)
Term SOFR (all Quoted Tenors), 10 US Government Securities Business Days; and
 

 (b)
SOFR, 10 US Government Securities Business Days.
 
"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 Lender and the Borrowers, materially changed;
 
31
(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 that Published Rate is insolvent,
 
provided that, in each case, at that time, there is no successor administrator to continue to provide that Published Rate;
 

 (i)
the administrator of that Published Rate publicly announces that it has ceased or will cease to provide that Published Rate permanently or indefinitely and, at that time, there is no successor administrator to continue to provide that Published Rate;
 

 (ii)
the supervisor of the administrator of that Published Rate publicly announces that such Published Rate has been or will be permanently or indefinitely discontinued; or
 

 (iii)
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 that that Published Rate should be calculated in accordance with its reduced submissions or other contingency or fallback policies or arrangements and either:
 

 (i)
the circumstance(s) or event(s) leading to such determination are not (in the opinion of the Lender and the Borrowers) temporary; or
 

 (ii)
that Published Rate is calculated in accordance with any such policy or arrangement for a period no less than the applicable Published Rate Contingency Period; or
 

 (d)
in the opinion of the Lender and the Borrowers, that Published Rate is otherwise no longer appropriate for the purposes of calculating interest under 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 committee sponsored or chaired by, or constituted at the request of, any of them or the Financial Stability Board.
 
32
"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; or
 
 
(ii)
any Relevant Nominating Body,
 
and if replacements have, at the relevant time, been formally designated, nominated or recommended under both paragraphs, the "Replacement Reference Rate" will be the replacement under paragraph (ii) above;
 

 (b)
in the opinion of the Lender and the Borrowers, generally accepted in the international or any relevant domestic syndicated loan markets as the appropriate successor or alternative to a Published Rate; or
 

 (c)
in the opinion of the Lender and the Borrowers, an appropriate successor or alternative to a Published Rate.
 
4.
REPAYMENT - PREPAYMENT

4.1
Repayment
 
The Borrowers shall and it is expressly undertaken by the Borrowers to repay the Loan jointly and severally by twenty (20) consecutive quarterly equal repayment instalments (the “Repayment Instalments”) to be repaid on each of the Repayment Dates so that the first Repayment Instalment is repaid on the date falling three (3) months from the Drawdown Date and each of the subsequent ones consecutively falling due for payment on each of the dates falling three (3) months after the immediately preceding Repayment Date with the last (the 20th) of such Repayment Instalments falling due for payment on the Final Maturity Date and (b) a balloon installment in the amount of Eight million seven hundred fifty thousand Dollars ($8,750,000) (the “Balloon Installment”), such Balloon Installment to be repaid together with the last (the 20th) Repayment Instalment on the Final Maturity Date; subject to the provisions of this Agreement the amount of each of such Repayment Instalments shall be Dollars One million fifty thousand ($1,050,000) each;
 
provided that (a) if the last Repayment Date would otherwise fall after the Final Maturity Date, the last Repayment Date shall be the Final Maturity Date, (b) there shall be no Repayment Dates after the Final Maturity Date, (c) on the Final Maturity Date the Borrowers shall also pay to the Lender any and all other monies then due and payable under this Agreement and the other Finance Documents, (d) if any part of the Commitment is not advanced to the Borrowers the amounts of the Repayment Instalments and the Balloon Instalment shall be reduced pro-rata, and (e) if any of the Repayment Instalments shall become due on a day which is not a Business Day, the due date therefor shall be extended to the next succeeding Business Day unless such Business Day falls in the next calendar month, in which event such due date shall be the immediately preceding Business Day.
 
4.2
Voluntary Prepayment
 
The Borrowers shall have the right, to prepay without premium or penalty, part or all of the Loan in each case together with all unpaid interest accrued thereon and all other sums of money whatsoever due and owing from the Borrowers to the Lender hereunder or pursuant to the other Finance Documents and all interest accrued thereon, provided that:
 
33

 (a)
the Lender shall have received from the Borrowers not less than seven (7) Business Days’ prior notice in writing (which shall be irrevocable) of their intention to make such prepayment and specify the account and the date on which such prepayment is to be made;
 

 (b)
any prepayment relating to the whole of the Loan may take place only on the last day of an Interest Period;
 

 (c)
each prepayment shall be equal to One hundred thousand Dollars ($100,000) or a whole multiple thereof or the balance of the Loan;
 

 (d)
any prepayment of less than the whole of the Loan will be applied in or towards pro-rata reduction of the Balloon Instalment and the remaining Repayment Instalments;
 

 (e)
every notice of prepayment shall be effective only on actual receipt by the Lender, shall be irrevocable and shall oblige the Borrowers to make such prepayment on the date specified;
 

 (f)
the Borrowers have provided evidence satisfactory to the Lender that any consent required by the Borrower or any Security Party in connection with the prepayment has been obtained and remains in force, and that any regulation relevant to this Agreement which affects the Borrowers or any Security Party has been complied with;
 

 (g)
no amount prepaid may be re-borrowed; and
 

 (h)
the Borrowers may not prepay the Loan or any part thereof save as expressly provided in this Agreement or as otherwise agreed by the Lender;
 
Provided always that if the Borrowers shall, subject always to Clause 4.2(a), make a prepayment on a Business Day other than the last day of an Interest Period in respect of the whole of the Loan, it shall, in addition to the amount prepaid and accrued interest, pay to the Lender any amount which the Lender may certify is necessary to compensate the Lender for any Break Costs incurred by the Lender as a result of the making of the prepayment in question.
 
4.3
Mandatory Prepayment in case of Total Loss or sale or refinancing of a Vessel
 

 (a)
Total Loss of a Vessel: On a Mortgaged Vessel becoming a Total Loss:
 

 (i)
prior to the advancing of the Commitment, the obligation of the Lender to make available the Commitment shall immediately cease and the Commitment shall be reduced to zero; or
 

 (b)
in case the Commitment or, as the case may be, any part thereof has been already advanced, the amount of the Loan shall, on the earlier of: the date falling one hundred and eighty (180) days after the Total Loss Date and the date of receipt by the Lender of the insurance proceeds relating to such Total Loss, be reduced by an amount equal to the Relevant Percentage (as hereinafter defined) of the Loan and the Borrowers shall thereupon be obliged to make such repayment of the Relevant Percentage of the Loan.
 
34

 (c)
Sale or refinancing of a Mortgaged Vessel:  In the event of a sale or other disposal of any Mortgaged Vessel or in case of refinancing of a Mortgaged Vessel by another bank or financial institution or if the Borrowers request the Lender’s consent for the discharge of the Mortgage registered on a Mortgaged Vessel, the amount of the Loan shall be reduced by an amount equal to the Relevant Percentage (as hereinafter defined) and the Borrowers shall thereupon be obliged to make such repayment of the Relevant Percentage of the Loan;
 
AND for the purpose of this Clause 4.3 “Relevant Percentage” in relation to any Mortgaged Vessel, means an amount equal to the higher of:
 

 (i)
an amount equal to the proportion which the Market Value of such Mortgaged Vessel bears to the aggregate of the Market Values of all Mortgaged Vessels based on the valuations of such Vessels carried out under Clause 8.5(b) (Valuation of Vessels) immediately before the Total Loss occurred or the sale or other disposal of the relevant Mortgaged Vessel, as the case may be occurs; and
 

 (ii)
the amount which is required to be repaid to the Lender so that, after the payment to the Lender of the amount referred to in paragraph (i), the aggregate of the Market Value of the Vessel remaining mortgaged to the Lender determined in accordance with Clause 8.5(b) (Valuation of Vessels) immediately after the Total Loss or the sale or other disposal of the relevant Vessel, as the case may be, is at least equal to 125% of the amount of the Loan;
 

 (d)
provided, however, that if the relevant Mortgaged Vessel so lost or sold or otherwise disposed of is the last Mortgaged Vessel, then the full amount of the insurance or, as the case may be, the sale proceeds shall apply against repayment of the Outstanding Indebtedness and additionally the Borrowers shall pay to the Lender the balance (if any) of the Outstanding Indebtedness;
 
4.4
Amounts payable on prepayment
 
Any prepayment of all or part of the Loan under this Agreement shall be made together with:
 

 (a)
accrued interest on the amount of the Loan to the date of such prepayment (calculated, in the case of a prepayment pursuant to Clause 3.6 (Market disruption) at a rate equal to the aggregate of the Margin and the cost to the Lender of funding the Loan);
 

 (b)
any additional amount payable under Clause 5.3 (Gross Up);
 

 (c)
all other sums payable by the Borrowers to the Lender under this Agreement or any of the other Finance Documents including, without limitation, any amounts payable under Clause 10 (Indemnities - Expenses – Fees); and
 

 (d)
in relation to any prepayment made on a date other than an Interest Payment Date in respect of the whole of the Loan, it shall, in addition to the amount prepaid and accrued interest, pay to the Lender any amount which the Lender may certify is necessary to compensate the Lender for any Break Costs incurred by the Lender as a result of the making of the prepayment in question.
 
35
4.5
Application by the Lender in case of compulsory prepayment
 
Any amount prepaid in accordance with Clause 4.3(a) (Total Loss of a Mortgaged Vessel), and Clause 4.3(b) (Sale of a Mortgaged Vessel) which is less than the whole of the Outstanding Indebtedness will be applied by the Lender in or towards pro rata satisfaction of the outstanding Repayment Instalments and the Balloon Instalment
 
5.
PAYMENTS, TAXES AND COMPUTATION

5.1
Payments - No set-off or Counterclaims
 

 (a)
Each Borrower hereby acknowledges that, in performing its obligations under this Agreement, the Lender will be incurring liabilities to third parties in relation to the funding of amounts to the Borrowers, such liabilities matching the liabilities of the Borrowers to the Lender and that it is reasonable for the Lender to be entitled to receive payments from the Borrowers gross on the due date in order that the Lender is put in a position to perform its matching obligations to the relevant third parties.  Accordingly, all payments to be made by the Borrowers under this Agreement and/or any of the other Finance Documents shall be made in full, without any set-off or counterclaim whatsoever and, subject as provided in Clause 5.3 (Gross Up), free and clear of any deductions or withholdings or Governmental Withholdings whatsoever, as follows:
 

 (i)
in Dollars (except for charges or expenses which shall be paid in the currency in which they are incurred), not later than 10:00 a.m. (New York time) on the Business Day (in Piraeus, Athens, London and New York City) on which the relevant payment is due under the terms of this Agreement; and
 

 (ii)
to such account and at such bank as the Lender may from time to time specify for this purpose by written notice to the Borrowers, reference: ARBAR SHIPPING COMPANY INC/GARU SHIPPING COMPANY INC. /Loan Agreement dated:  23 july, 2025 ” provided, however, that the Lender shall have the right to change the place of account for payment, upon ten (10) Business Days’ prior written notice to the Borrower.
 

 (b)
If at any time it shall become unlawful or impracticable for the Borrowers to make payment under this Agreement to the relevant account or bank referred to in Clause 5.1(a), the Borrowers may request and the Lender may agree to alternative arrangements for the payment of the amounts due by the Borrowers to the Lender under this Agreement or the other Finance Documents.
 
5.2
Payments on Business Days
 
All payments due shall be made on a Business Day.  If the due date for payment falls on a day which is not a Business Day, that payment due shall be made on the immediately following Business Day unless such Business Day falls in the next calendar month, in which case payments shall fall due and be made on the immediately preceding Business Day.
 
36
5.3
Gross Up
 
If at any time any law, regulation, regulatory requirement or requirement of any governmental authority, monetary agency, central bank or the like compels the Borrowers to make payment subject to Governmental Withholdings (other than a FATCA Deduction), the Borrowers shall pay to the Lender such additional amounts as may be necessary to ensure that there will be received by the Lender a net amount equal to the full amount which would have been received had payment not been made subject to such Governmental Withholdings (other than a FATCA Deduction). The Borrowers shall indemnify the Lender against any losses or costs incurred by the Lender by reason of any failure of the Borrowers to make any such deduction or withholding or by reason of any increased payment not being made on the due date for such payment. The Borrowers shall, not later than thirty (30) days after each deduction, withholding or payment of any Governmental Withholdings (other than a FATCA Deduction), forward to the Lender official receipts and any other documentary receipts and any other documentary evidence reasonably required by the Lender in respect of the payment made or to be made of any deduction or withholding or Governmental Withholding (other than a FATCA Deduction). The obligations of the Borrowers under this provision shall, subject to applicable law, remain in force notwithstanding the repayment of the Loan and the payment of all interest due thereon pursuant to the provisions of this Agreement.
 
5.4
Mitigation
 
If circumstances arise which would result in an increased amount being payable by the Borrowers under Clause 5.3 (Gross up) then, without in any way limiting the rights of the Lender under Clause 5.3 (Gross up), the Lender shall use reasonable endeavours to transfer the obligations, liabilities and rights under this Agreement and the Security Documents to another office or financial institution not affected by the circumstances, but the Lender shall be under no obligation to take any such action if in its opinion, to do so would or might:
 

 (a)
have an adverse effect on its business, operations or financial condition on the Lender; or
 

 (b)
involve it in any activity which is unlawful or prohibited or any activity that is contrary to, or inconsistent, with any regulation of the Lender; or
 

 (c)
involve the Lender in any expense (unless indemnified to its satisfaction) or tax disadvantage.
 
5.5
Claw-back of Tax benefit
 
If, following any such deduction or withholding as is referred to in Clause 5.3 (Gross-up) from any payment by the Borrowers, the Lender shall receive or be granted a credit against or remission for any Taxes payable by it, the Lender shall, subject to the Borrower shaving made any increased payment in accordance with Clause 5.3 (Gross-up) and to the extent that the Lender can do so without prejudicing its retention of the amount of such credit or remission and without prejudice to the right of the Lender to obtain any other relief or allowance which may be available to it, reimburse the Borrowers with such amount as the Lender shall in its absolute discretion certify to be the proportion of such credit or remission as will leave the Lender (after such reimbursement) in no worse position than it would have been in had there been no such deduction or withholding from the payment by the Borrowers. Such reimbursement shall be made forthwith upon the Lender certifying that the amount of the credit or remission has been received by it, provided, always, that:
 

 (a)
the Lender shall not be obliged to allocate this transaction any part of a tax repayment or credit which is referable to a number of transactions;
 
37

 (b)
nothing in this Clause shall oblige the Lender to rearrange its tax affairs in any particular manner, to claim any type of relief, credit, allowance or deduction instead of, or in priority to, another or to make any such claim within any particular time or to disclose any information regarding its tax affairs and computations;
 

 (c)
nothing in this Clause shall oblige the Lender to make a payment which exceeds any repayment or credit in respect of tax on account of which the Borrower have made an increased payment under this Clause;
 

 (d)
any allocation or determination made by the Lender under or in connection with this Clause shall be binding on the Borrowers; and
 

 (e)
without prejudice to the generality of the foregoing, the Borrowers shall not, by virtue of this Clause 5.5, be entitled to enquire about the Lender’s tax affairs.
 
5.6
Loan Account
 
All sums advanced by the Lender to the Borrowers under this Agreement and all interest accrued thereon and all other amounts due under this Agreement from time to time and all repayments and/or payments thereof shall be debited and credited respectively to a separate loan account maintained by the Lender in accordance with its usual practices in the name of the Borrowers. The Lender may, however, in accordance with its usual practices or for its accounting needs, maintain more than one account, consolidate or separate them but all such accounts shall be considered parts of one single loan account maintained under this Agreement.  In case that a ship mortgage in the form of Account Current is granted as security under this Agreement, the account(s) referred to in this Clause shall be the Account Current referred to in such mortgage.
 
5.7
Computation
 
All interest and other payments payable by reference to a rate per annum under this Agreement shall accrue from day to day and be calculated on the basis of actual days elapsed and a 360 day year.
 
6.
REPRESENTATIONS AND WARRANTIES

6.1
Continuing representations and warranties
 
Each Borrower represents and warrants to the Lender that;
 

 (a)
Due Incorporation/Valid Existence:  Each of the Borrowers and the other corporate Security Parties is duly incorporated and validly existing and in good standing under the laws of their respective countries of incorporation, and have power to own their respective property and assets, to carry on their respective business as the same are now being lawfully conducted and to purchase, own, finance and operate their respective Vessel, or, as the case may be, manage that Vessel, as well as to undertake the obligations which such Security Party has undertaken or shall undertake pursuant to the Finance Documents and does not have a place of business in the United Kingdom or the United States of America;
 
38

 (b)
Due Corporate Authority:  Each of the Borrowers and the other corporate Security Parties has power to execute, deliver and perform its obligations under the Finance Documents and each of the Underlying Documents to which is or is to be a party and for the Borrowers to borrow the Commitment and each of the Security Parties has power to execute and deliver and perform its/his obligations under the Finance Documents to which it/he is or is to be a party; all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same and no limitation on the powers of the Borrowers to borrow will be exceeded as a result of borrowing the Loan;
 

 (c)
No litigation etc.: no litigation or arbitration, tax claim or administrative proceeding (including action relating to any alleged or actual breach of the ISM Code and the ISPS Code in relation to sums exceeding Five hundred thousand Dollars ($500,000) involving a potential liability of the Borrowers or any other Security Party (and in the case of the Corporate Guarantor exceeding $5,000,000) is current or pending or (to its or its officers’ knowledge) threatened against the Borrowers or any other Security Party, which, if adversely determined, would have a Material Adverse Effect on any of them;
 

 (d)
No conflict with other obligations:  the execution and delivery by the Borrowers and each other Security Party of, the performance of its obligations under, and compliance with the provisions of, the Finance Documents and each of the Underlying Documents to which it is a party will not (i) contravene any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which the Borrowers or any other Security Party is subject, (ii) conflict with, or result in any breach of any of the terms of, or constitute a default under, any agreement or other instrument to which the Borrowers or any other Security Party is a party or is subject to or by which it or any of its property is bound, (iii) contravene or conflict with any provision of the memorandum and articles of association/articles of incorporation/by-laws/statutes or other constitutional documents of the Borrowers or any other Security Party or (iv) result in the creation or imposition of or oblige the Borrowers or any other Security Party to create any Security Interest (other than a Permitted Security Interest) on any of the undertakings, assets, rights or revenues of the Borrowers or any other Security Party;
 

 (e)
Financial Condition:  the financial condition of the Borrowers and of the other Security Parties has not suffered any material deterioration since that condition was last disclosed to the Lender;
 

 (f)
No Immunity:  neither the Borrowers nor any other Security Party nor any of their respective assets are entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgement, execution or other enforcement);
 

 (g)
Shipping Company:  each of the Borrowers and the Approved Manager is a shipping company involved in the owning or, as the case may be, managing of ships engaged in international voyages and earning profits in free foreign currency;
 

 (h)
Licences/Authorisation:  every consent, authorisation, license or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by any Security Party to authorise, or required by any Security Party in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of each of the Finance Documents or the performance by each Security Party of its obligations under the Finance Documents to which such Security Party is or is to be a party has been obtained or made and is in full force and effect and there has been no default in the observance of any of the conditions or restrictions (if any) imposed in, or in connection with, any of the same so far as a Borrower is aware;
 
39

 (i)
Perfected Securities: the Finance Documents and each of the Underlying Documents do now or, as the case may be, will, upon execution and delivery (and, where applicable, registration as provided for in the Finance Documents):
 

 (i)
constitute the relevant Security Party's legal, valid and binding obligations enforceable against that Security Party in accordance with their respective terms (having the requisite corporate benefit which is legally and economically sufficient); and
 

 (ii)
create legal, valid and binding Security Interests (having the priority specified in the relevant Finance Document) enforceable in accordance with their respective terms over all the assets and revenues intended to be covered to which they, by their terms, relate, subject to any relevant insolvency laws affecting creditors' rights generally;
 

 (j)
No third party Security Interests: without limiting the generality of Clause 6.1(i) (Perfected Securities), at the time of the execution and delivery of each Finance Document to which a Borrower is a party:
 

 (i)
the Borrowers will have the right to create all the Security Interests which that Finance Document purports to create; and
 

 (ii)
no third party will have any Security Interests (except for Permitted Security Interests) or any other interest, right or claim over, in or in relation to any asset to which any such Security Interest, by its terms, relates;
 

 (k)
No Notarisation/Filing/Recording:  save for the registration of the Mortgage in the appropriate shipping Registry, it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of this Agreement or any of the other Finance Documents that it or they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere or that any stamp, registration or similar tax or charge be paid on or in relation to this Agreement or the other Finance Documents;
 

 (l)
No conflict: there are no other agreements or arrangements which may adversely affect or conflict with the Finance Documents or the security thereby created;
 

 (m)
Taxes paid: each Borrower has paid all taxes applicable to, or imposed on or in relation to that Borrower, its business or its Vessel; and
 

 (n)
Valid Choice of Law:  the choice of law agreed to govern this Agreement and/or any other Finance Document and the submission to the jurisdiction of the courts agreed in each of the Finance Documents are or will be, on execution of the respective Finance Documents, valid and binding on the Borrowesr and any other Security Party which is or is to be a party thereto.
 
6.2
Initial representations and warranties
 
The Borrower further represents and warrants to the Lender that:
 

 (a)
Direct obligations - Pari Passu: the obligations of the Borrowers under this Agreement are direct, general and unconditional obligations of the Borrowers and rank at least pari passu with all other present and future unsecured and unsubordinated Financial Indebtedness of the Borrowers with the exception of any obligations which are mandatorily preferred by law;
 
40

 (b)
Information:  all information, accounts, statements of financial position, exhibits and reports furnished by or on behalf of any Security Party to the Lender in connection with the negotiation and preparation of this Agreement and each of the other Finance Documents are true and accurate in all material respects and not misleading, do not omit material facts and all reasonable enquiries have been made to verify the facts and statements contained therein; to the best knowledge of the Directors/Officers or shareholders of each Borrower there are no other facts the omission of which would make any fact or statement therein misleading and, in the case of accounts and statements of financial position, they have been prepared in accordance with generally accepted international accounting principles, standards and practices which have been consistently applied;
 

 (c)
No Event of Default:  no Event of Default has occurred and is continuing;
 

 (d)
No Taxes:  no Taxes are imposed by deduction, withholding or otherwise on any payment to be made by the Borrowers under this Agreement and/or any other of the Finance Documents or are imposed on or by virtue of the execution or delivery of this Agreement and/or any other of the Finance Documents or any document or instrument to be executed or delivered hereunder or thereunder.  In case that any Tax exists now or will be imposed in the future, it will be borne by the Borrowers;
 

 (e)
No Default under other Financial Indebtedness:  none of the Borrowers and the Corporate Guarantor is in default under any agreement relating to Financial Indebtedness in relation to sums exceeding, in the case of each Borrower, Five hundred thousand Dollars ($500,000) and in the case of the Corporate Guarantor exceeding $5,000,000, to which it is a party or by which it is or may be bound;
 

 (f)
Ownership/Flag/Seaworthiness/Class/Insurance of each Vessel: each Vessel on the Drawdown Date will be:
 

 (i)
in the absolute and free from Security Interests (other than Permitted Security Interests) ownership of its Owner who is the sole legal and beneficial owner of that Vessel;
 

 (ii)
registered in the name of its Owner through the relevant Registry of the port of registry of the Flag State under the laws and flag of the Flag State;
 

 (iii)
operationally seaworthy and in every way fit for service;
 

 (iv)
classed with a Classification Society member of IACS, which has been approved by the Lender in writing and such classification is and will be free of any overdue recommendations of such Classification Society;
 

 (v)
insured in accordance with the provisions of this Agreement and the relevant Mortgage;
 

 (vi)
managed by the Approved Manager; and
 

 (vii)
in full compliance with the ISM and the ISPS Code;
 
41

 (g)
No Charter: save for any Assignable Charterparty and unless otherwise permitted in writing by the Lender, the Vessels will not on or before the Drawdown Date be subject to any charter or contract nor to any agreement to enter into any charter or contract which, if entered into after the Drawdown Date would have required the consent of the Lender under any of the Finance Documents and there will not on or before the Drawdown Date be any agreement or arrangement whereby the Earnings of any Vessel may be shared with any other person;
 

 (h)
No Security Interests: neither the Vessels, nor their Earnings, Requisition Compensation or Insurances nor any other properties or rights which are, or are to be, the subject of any of the Security Documents nor any part thereof will, on the Drawdown Date, be subject to any Security Interests other than Permitted Security Interests or otherwise permitted by the Finance Documents;
 

 (i)
Compliance with Environmental Laws and Approvals: except as may already have been disclosed by the Borrower in writing to, and acknowledged in writing by, the Lender:
 

 (i)
each Borrower and its Related Companies have complied with the provisions of all Environmental Laws;
 

 (ii)
each Borrower and its Related Companies have obtained all Environmental Approvals and are in compliance with all such Environmental Approvals; and
 

 (iii)
neither the Borrowers nor any of their Related Companies have received notice of any Environmental Claim in excess of $500,000 that each Borrower or any of its Related Companies are not in compliance with any Environmental Law or any Environmental Approval;
 

 (j)
No Environmental Claims: except as may already have been disclosed by the Borrowers in writing to, and acknowledged in writing by, the Lender:
 

 (i)
there is no Environmental Claim in excess of $500,000 pending or, to the best of each Borrower’s knowledge and belief, threatened against the Borrowers or the Vessels or each Borrower’s Related Companies or any other Relevant Ship; and
 

 (ii)
there has been no emission, spill, release or discharge of a Material of Environmental Concern from the Vessels or any other Relevant Ship or the Vessels owned by, managed or crewed by or chartered to a Borrower which could give rise to an Environmental Claim in excess of $500,000;
 

 (k)
Copies true and complete: the copies of the Underlying Documents delivered or to be delivered to the Lender pursuant to Clause 7.1 (Conditions precedent to the execution of this Agreement) are, or will when delivered be, true and complete copies of such documents; such documents will when delivered constitute valid and binding obligations of the parties thereto enforceable in accordance with their respective terms and there will have been no amendments or variations thereof or defaults thereunder;
 
42

 (l)
Application made for DOC and SMC: in relation to any Vessel, the DOC applicable to the Approved Manager is  presently in full effect, and the Operator has applied or, as the case may be, prior to her Delivery shall apply, to the appropriate Regulatory Agency for a DOC for itself and an SMC in respect of any Vessel to be issued pursuant to the ISM Code within any time limit required or recommended by such Regulatory Agency and that neither the Borrowers nor any Operator is aware of any reason why such application may be refused;
 

 (m)
Compliance with ISM Code: any Vessel complies and the Operator complies with the requirements of the ISM Code and the SMC which has been or, as the case may be, shall be issued in respect of any Vessel shall remain valid throughout the Security Period;
 

 (n)
Compliance with ISPS Code:  the Borrowers have a valid and current ISSC in respect thereof and comply and the Operator complies, with the requirements of the ISPS Code and the ISSC which shall be issued in respect of each Vessel shall remain valid throughout the Security Period;
 

 (o)
Shareholdings:
 

 (i)
all of the issued shares in each Borrower are held directly by the Parent Company (being as of the date of this Agreement the sole shareholder of the Borrowers);
 

 (ii)
the Parent Company is a company listed in the Nasdaq Capital Market and  the Corporate Guarantor is and will continue to be managed by the Chief Executive Officer disclosed to the Lender at the negotiation of this Agreement ;
 

 (iii)
no change of control has been made directly or indirectly in the  ownership of each Borrower as a Subsidiary of the Parent Company or the management of each Borrower or any share therein or of each Vessel and 100% of the shares and voting rights in the Borrowers will remain throughout the Security Period in the legal ownership of the Parent Company;
 

 (p)
No US Tax Obligor: (other than as disclosed to the Lender) none of the Security Parties is a US Tax Obligor;
 

 (q)
Sanctions: none of the Security Parties:
 

 (i)
is a Sanctions Restricted Person;
 

 (ii)
owns or controls directly or indirectly a Sanctions Restricted Person; or
 

 (iii)
has a Sanctions Restricted Person serving as a director, officer or, to the best of its knowledge, employee; and
 

 (iv)
no proceeds of the Loan shall be made available, directly or to the knowledge of the Borrowers indirectly, to or for the benefit of a Sanctions Restricted Person contrary to Sanctions or for transactions in a Sanctions Restricted Jurisdiction nor shall they be otherwise directly or indirectly, applied in a manner or for a purpose prohibited by Sanctions;
 

 (r)
Taxes paid: each Borrower has paid all taxes applicable to, or imposed on or in relation to itself, its business or its Vessel;
 
43

 (s)
Compliance with laws and regulations: each Borrower is in compliance in all material respects with any law or regulation applicable to it and pertaining to the labor and employment conditions, the occupational health and safety and the public health, safety and security.
 
6.3
Money laundering - acting for own account
 
Each Borrower further represents and warrants and confirms to the Lender that it is the beneficiary for each part of the Loan made or to be made available to it and it will promptly inform the Lender by written notice if it is not, or ceases to be, the beneficiary and notify the Lender in writing of the name and the address of the new beneficiary/beneficiaries; each Borrower is aware that under applicable money laundering provisions, it has an obligation to state for whose account the Loan is obtained; each Borrower confirms that, by entering into this Agreement and the other Finance Documents, it is acting on its own behalf and for its own account and it is obtaining the Loan for its own account. In relation to the borrowing by the Borrowers of the Loan, the performance and discharge of its obligations and liabilities under this Agreement or any of the other Finance Documents and the transactions and other arrangements effected or contemplated by this Agreement or any of the Documents to which each Borrower is a party, it is acting for its own account and that the foregoing will not involve or lead to a contravention of any law, official requirement or other regulatory measure or procedure which has been implemented to combat “money laundering” (as defined in Article 1 of the Directive (91/308/EEC) of the Council of the European Community).
 
6.4
Representations Correct
 
At the time of entering into this Agreement all above representations and warranties or any other information given by the Borrowers and/or the Corporate Guarantor to the Lender are true and accurate.
 
6.5
Repetition of Representations and Warranties
 
The representations and warranties in this Clause 6 (except in relation to the representations and warranties in Clause 6.2 (Initial representations and warranties)) shall be deemed to be repeated by the Borrowers:
 

 (a)
on the date of service of the Drawdown Notice;
 

 (b)
on the Drawdown Date; and
 

 (c)
on each Interest Payment Date throughout the Security Period,
 
as if made with reference to the facts and circumstances existing on each such day.
 
7.
CONDITIONS PRECEDENT

7.1
Conditions precedent to the execution of this Agreement
 
The obligation of the Lender to make the Commitment or any part thereof available shall be subject to the condition that the Lender, shall have received, not later than two (2) Business Days before the day on which the Drawdown Notice in respect of the Commitment or such part thereof is given, the following documents and evidence in form and substance satisfactory to the Lender:
 
44

 (a)
Constitutional Documents: a duly certified true copy of the Articles of Incorporation and By-Laws or the Memorandum and Articles of Association, or of any other constitutional documents, as the case may be, of each corporate Security Party;
 

 (b)
Certificates of incumbency: a recent certificate of incumbency of each corporate Security Party issued by the appropriate authority or, as appropriate, signed by the secretary or a director thereof:
 

 (i)
certifying that each copy document relating to it referred to in paragraph (a) of this Clause 7.1 is correct, complete and in full force and effect;
 

 (ii)
setting out the names of (A) the directors and officers of that Security Party and (B) the shareholders of that Security Party (other than the Parent Company) and the proportion of shares held by each shareholder thereof; and
 

 (iii)
confirming that borrowing or guaranteeing or securing, as appropriate, the Loan would not cause any borrowing, guarantee, security or similar limit binding on that Security Party to be exceeded;
 

 (c)
Shareholding: such documentation and other evidence, including the Side Letter, as is reasonably requested by the Lender in order for the Lender to comply with all necessary "know your customer" or similar identification procedures in relation to the transactions contemplated in the Finance Documents;
 

 (d)
Resolutions: minutes of separate meetings of (i) the directors of each corporate Security Party and (ii) the shareholders of each corporate Security Party (other than the Parent Company) at which there was approved (inter alia) the entry into, execution, delivery and performance of this Agreement, the other Finance Documents and any other documents executed or to be executed pursuant hereto or thereto to which the relevant corporate Security Party is or is to be a party;
 

 (e)
Powers of Attorney: the original of any power(s) of attorney and any further evidence of the due authority of any person signing this Agreement, the other Finance Documents, and any other documents executed or to be executed pursuant hereto or thereto on behalf of any corporate person;
 

 (f)
Consents: evidence that all necessary licences, consents, permits and authorisations (including exchange control ones) have been obtained by any Security Party for the execution, delivery, validity, enforceability, admissibility in evidence and the due performance of the respective obligations under or pursuant to this Agreement and the other Finance Documents;
 

 (g)
DOC:  a copy of the DOC applicable to the Approved Manager certified as true and in effect;
 

 (h)
Other documents: any other documents or recent certificates or other evidence which would be required by the Lender in relation to each Security Party evidencing that the relevant Security Party has been properly established, continues to exist validly and is in good standing;
 

 (i)
Management Agreements - Assignable Charterparty: a copy of each of the following documents certified as true and complete by the legal counsel of the Borrowers:
 
45

 (i)
the Management Agreement evidencing that each Vessel is managed by the Approved Manager on terms acceptable to the Lender; and
 

 (ii)
any Assignable Charterparty; and
 

 (j)
Operating Account: evidence that each Operating Account has been duly opened and all mandate forms and other legal documents required for the opening of an account under any applicable law, as well as signature cards and properly adopted authorizations have been duly delivered to and have been accepted by the compliance department of the Lender.
 
7.2
Conditions precedent to the making of the Commitment
 
The obligation of the Lender to advance the Commitment (or any part thereof) is subject to the further condition that the Lender shall have received prior to the drawdown or, where this is not possible, simultaneously with or immediately following the drawdown of the Loan or the relevant part thereof:
 

 (a)
Conditions precedent: evidence that the conditions precedent set out in Clause 7.1 (Conditions precedent to the execution of this Agreement) remain fully satisfied;
 

 (b)
Drawdown Notice: the Drawdown Notice for the Loan duly executed, issued and delivered to the Lender as provided in Clause 2.2 (Drawdown Notice and commitment to borrow);
 

 (c)
Finance Documents:  the originals of the Accounts Pledge Agreement, Cash Collateral Account Pledge Agreement, Corporate Guarantee, Mortgages, General Assignments, Approved Manager’s Undertakings, Charterparty Assignments, Side Letter, any Compliance Certificate and Insurance Letters (and of each document to be delivered by each of them) and each duly executed and where appropriate duly registered with the Registry or any other competent authority (as required);
 

 (d)
Title and no Security Interests:  evidence that each Vessel is registered in the ownership of the Owner thereof with the Registry and under the laws and flag of the Flag State free from any Security Interests save for those in favour of the Lender and otherwise as contemplated herein;
 

 (e)
Insurances: evidence in form and substance satisfactory to the Lender that each Vessel will be insured in accordance with the insurance requirements provided for in this Agreement and the Security Documents, including a MII and a MAPI, together with an opinion from insurance consultants (appointed by the Lender at the Borrowers’ expense) as to the adequacy of the insurances effected or to be effected in respect of the Vessels, to be followed by full copies of cover notes, policies, certificates of entry or other contracts of insurance and irrevocable authority is hereby given to the Lender at any time at its discretion to obtain copies of the policies, certificates of entry or other contracts of insurance from the insurers and/or obtain any information in relation to the Insurances relating to the Vessels;
 

 (f)
Insurers’ confirmations - Letters of Undertaking:  all necessary confirmations by insurers of the Vessels that they will issue letters of undertaking and endorse notice of assignment and loss payable clauses on the Insurances, in market standard form and - in the event of fleet cover - accompanied by waivers for liens for unpaid premium of other Vessels managed by the Approved Manager and which are not subject to any mortgage in favour of the Lender;
 
46

 (g)
MII-MAPI:  the MII and the MAPI shall have been reimbursed by the Borrowers as provided in Clause 10.9 (MII and MAPI costs);
 

 (h)
Access to class records: due authorisation in form and substance satisfactory to the Lender authorising the Lender to have access and/or obtain any copies of class records or other information at its discretion from the Classification Society of the Vessels, provided however, that the Lender shall not exercise such right unless and until an Event of Default has occurred and is continuing;
 

 (i)
Notices of assignment:  duly executed notices of assignment in the form prescribed by the Security Documents;
 

 (j)
Mortgage registration; evidence that the Mortgages on or before the Drawdown Date will be registered against the respective Vessel through the Registry under the laws and flag of the Flag State;
 

 (k)
Trading certificates: copies of the trading certificates of the Vessels evidencing the same to be valid and in force;
 

 (l)
Class confirmation:  evidence from the Classification Society that each Vessel is be classed with the class notation (referred to in the relevant Mortgage), with the Classification Society or to a similar standard with another classification society of like standing to be specifically approved by the Lender and remains free from any overdue requirements or recommendations affecting her class;
 

 (m)
Trim and stability booklet: an extract of the trim and stability booklet certifying the lightweight of the Vessels;
 

 (n)
DOC and SMC: (i) a certified copy of the DOC issued to the Operator of the Vessels and (ii) a certified copy of the SMC for each Vessel;
 

 (o)
ISM Code Documentation: copies of all ISM Code Documentation certified as true and complete in all material respects by the Borrowers and the Approved Manager;
 

 (p)
ISPS Code compliance:
 

 (i)
evidence satisfactory to the Lender that each Vessel is subject to a ship security plan which complies with the ISPS Code (such as proof that a security plan has been submitted to the recognized organisation for approval); and
 

 (ii)
a copy, certified as a true and complete copy of the ISSC for the Vessels delivered to the Lender upon its issuance;
 

 (q)
Valuation: charter free valuation of the Vessels satisfactory to the Lender, to be obtained by the Lender, at the Borrowers’ expense, made on the basis and in the manner specified in Clause 8.5(b) (Valuation of Vessels);
 

 (r)
Security Parties’ process agent: a letter from each Security Party’s agent for receipt of service of proceedings referred to in each Security Document to which the relevant Security Party is a party, accepting its appointment under each of the relevant Security Documents;
 
47

 (s)
No Security Interests: evidence that no Security Interests are registered against the Vessels;
 

 (t)
Acknowledgement of Receipt: a receipt in writing in form and substance satisfactory to the Lender including an acknowledgement and admission of the Borrowers and the Corporate Guarantor to the effect that the Commitment or relevant part thereof (as the case may be) was drawn by the Borrowers and a declaration by the Borrowers and the Corporate Guarantor that all conditions precedent have been fulfilled, that there is no Event of Default and that all the representations and warranties are true and correct;
 

 (u)
Legal opinions: draft opinion from lawyers appointed by the Lender as to all the matters referred to in Clause 6.1(a) (Due Incorporation/Valid Existence) and Clause 6.1(b) (Due Corporate Authority) and all such aspects of law as the Lender shall deem relevant to this Agreement and the other Finance Documents and any other documents executed pursuant hereto or thereto and any further legal or other expert opinion as the Lender at its sole discretion may require;
 

 (v)
Flag State opinion:  draft opinion of legal advisers to the Lender on matters of the laws of the Flag State of the Vessels;
 

 (w)
Pledged Deposit: deposit in the Operating Account the Pledged Deposit referred to in Clause 8.1(k) (Pledged Deposit)on or prior to the Drawdown Date;
 

 (x)
Fees:  evidence that the fees referred to in Clause 10.15 (Arrangement Fee) have been paid in full;
 

 (y)
Condition survey report: if the Lender so requires, a satisfactory to the Lender physical condition survey report on any Vessel together with a comprehensive record inspection from a surveyor appointed by the Lender, at the Borrowers’ expense;
 

 (z)
Financial covenants: evidence satisfactory to the Lender in the form of annual audited financial statements of the Parent Company for the period ending on December 31, 2024, including, without limitation the Compliance Certificate, that the Parent Company complies fully with the requirements of Clause 8.10 (Financial Covenants).
 
7.3
No change of circumstances
 
The obligation of the Lender to advance the Commitment or any part thereof is subject to the further condition that at the time of the giving of the Drawdown Notice and on advancing the Commitment:
 

 (a)
Representations and warranties: the representations and warranties set out in Clause 6 (Representations and warranties) and in each of the other Finance Documents are true and correct on and as of each such time as if each was made with respect to the facts and circumstances existing at such time;
 

 (b)
No Event of Default:  no Event of Default shall have occurred and be continuing or would result from the drawdown;
 

 (c)
No change of control: the Lender shall be satisfied that:
 
48

 (i)
the Corporate Guarantor remains listed in the NASDAQ Capital Market;
 

 (ii)
there has been no change in control directly or indirectly in the legal ownership, or management of the Borrowers of any of them or any share in the Borrowers or of the Vessels; and
 

 (iii)
there has been no Material Adverse Change in the financial condition of any Security Party which (change) might, in the reasonable opinion of the Lender, be detrimental to the interests of the Lender; and
 

 (d)
No Market Disruption Event:  none of the circumstances contemplated by Clause 3.6 (Market disruption) has occurred and is continuing.
 
7.4
Know your customer and money laundering compliance
 
The obligation of the Lender to advance the Commitment or any part thereof is subject to the further condition that the Lender, prior to or simultaneously with the drawdown, shall have received, to the extent required by any change in applicable law and regulation or any changes in the Lender’s own internal guidelines since the date on which the applicable documents and evidence were delivered to the Lender pursuant to Clause 8.9 (Know your customer and money laundering compliance), such further documents and evidence as the Lender shall require to identify the Borrowers and the other Security Parties and any other persons involved or affected by the transaction(s) contemplated by this Agreement.
 
7.5
Further documents
 
Without prejudice to the provisions of this Clause 7 each Borrower hereby undertakes with the Lender to make or procure to be made such amendments and/or additions to any of the documents delivered to the Lender in accordance with this Clause 7 and to execute and/or deliver to the Lender or procure to be executed and/or delivered to the Lender such further documents as the Lender and its legal advisors may reasonably require to satisfy themselves that all the terms and requirements of this Agreement have been complied with.
 
7.6
Waiver of conditions precedent
 
The conditions specified in this Clause 7 are inserted solely for the benefit of the Lender and may be waived by the Lender in whole or in part and with or without conditions. Without prejudice to any of the other provisions of this Agreement, in the event that the Lender, in its sole and absolute discretion, makes the Commitment available to the Borrowers prior to the satisfaction of all or any of the conditions referred to in Clauses 7.1 (Conditions precedent to the execution of this Agreement), 7.2 (Conditions precedent to the making of the Commitment) and 7.3 (No change of circumstances), each Borrower hereby covenants and undertakes to satisfy or procure the satisfaction of such condition or conditions by no later than fourteen (14) days after the Drawdown Date or within such longer period as the Lender may, in its sole and absolute discretion, agree to or specify.
 
49
8.
UNDERTAKINGS

8.1
General
 
Each Borrower undertakes with the Lender that, from the date of this Agreement and until the full and complete payment and discharge of the Outstanding Indebtedness, it will:
 

 (a)
Notice on Material Adverse Change or Event of Default: promptly inform the Lender upon becoming aware of any occurrence which might have a Material Adverse Effect on the ability of any Security Party to perform its obligations under any of the Finance Documents and, without limiting the generality of the foregoing, will inform the Lender of any Event of Default forthwith upon becoming aware thereof and will from time to time, if so requested by the Lender, confirm to the Lender in writing that, save as otherwise stated in such confirmation, no Event of Default has occurred and is continuing;
 

 (b)
Notification of litigation: provide the Lender with details of any legal or administrative action relating to an amount exceeding Five hundred thousand Dollars ($500,000) involving a Borrower, a Vessel, her Earnings or the Insurances in respect of that Vessel or the Corporate Guarantor relating to an amount exceeding Five million Dollars ($5,000,000) , as soon as such action is instituted, unless it is clear that the legal or administrative action cannot be considered material in the context of any Finance Document, and the Borrowers shall procure that all appropriate measures are taken to defend any such legal or administrative action;
 

 (c)
Consents and licenses: without prejudice to Clauses 6 (Representations and warranties) and 7 (Conditions precedent), obtain or cause to be obtained, maintain in full force and effect and comply in all material respects with the conditions and restrictions (if any) imposed in, or in connection with, every consent, authorisation, license or approval of governmental or public bodies or authorities or courts and do or cause to be done, all other acts and things which may from time to time be necessary or desirable under applicable law for the continued due performance of all the obligations of the Security Parties under each of the Finance Documents and the Underlying Documents to which it is a party;
 

 (d)
Use of Loan proceeds: use the Loan exclusively for the purposes specified in Clause 1.1 (Amount and Purpose);
 

 (e)
Pari passu: ensure that its obligations under this Agreement shall, without prejudice to the provisions of this Clause 8.1, at all times rank at least pari passu with all its other present and future unsecured and unsubordinated Financial Indebtedness with the exception of any obligations which are mandatorily preferred by law and not by contract;
 

 (f)
Financial statements:
 

 (i)
furnish the Lender, as soon as become available, but in any event within 180 days after the end of each of the Parent Company's Financial Years, the audited consolidated financial statements of the Parent Company (including the Borrowers) for that financial year, commencing with the financial statements for the Financial Year ending on 31 December 2025;
 
50

 (ii)
simultaneously with each of the financial statements to be sent to the Lender under paragraph (i) of this Clause 8.1(f), a Compliance Certificate, duly completed and supported by calculations setting out in reasonable detail the materials underling the statements made in such Compliance Certificate; and
 

 (iii)
promptly, after each request by the Lender, such further financial or other information and accounts relating to the business, undertaking, assets, liabilities, revenues, financial condition or affairs in respect of the Borrowers, the Vessels, the Parent Company, the other Security Parties and the Group as the Lender from time to time may reasonably require;
 

 (g)
Compliance Certificate: procure that the Parent Company supplies to the Lender with each set of financial statements delivered pursuant to sub-paragraph (i) of Clause 8.1(f) (Financial statements), a Compliance Certificate setting out (in reasonable detail) computations as to compliance with Clause 8.10 (Financial Covenants) as at the date as at which those financial statements were drawn up, such Compliance Certificate shall be signed by the chief executive officer or the chief financial officer of the Parent Company;
 

 (h)
Requirements as to financial statements:  each set of financial statements delivered by the Borrowers pursuant to Clause 8.1(f) (Financial Statements) will:
 

 (i)
be prepared in accordance with internationally accepted accounting principles and practices consistently applied (IFRS or US-GAAP) and be certified by an Approved Auditor;
 

 (ii)
fairly represent the financial condition of the Borrowers, the Parent Company and the Group at the date of those accounts and of their profit for the period to which those accounts relate; and
 

 (iii)
fully disclose or provide for all significant liabilities of the Borrowers, the Parent Company and the Group;
 

 (h)
Provision of further information: promptly, when requested, provide the Lender with such financial and other information and accounts relating to the business, undertaking, assets, liabilities, revenues, financial condition or affairs of the Borrowers and each Security Party as the Lender from time to time may reasonably require;
 

 (i)
Financial Information: provide the Lender from time to time as the Lender may reasonably request with information on the financial conditions, cash flow position, commitments and operations of the Borrowers including cash flow analysis and voyage accounts of the Vessels with a breakdown of income and running expenses showing net trading profit, trade payables and trade receivables, such financial details to be certified by an authorized signatory of the Borrowers as to their correctness;
 

 (j)
Information on the employment of the Vessels:  provide the Lender from time to time as the Lender may request with information on the employment of the Vessels, as well as on the terms and conditions of any charterparty, contract of affreightment, agreement or related document in respect of the employment of the Vessels, such information to be certified by one of the directors of the Borrowers as to their correctness;
 
51

 (k)
Pledged Deposit: procure that, upon drawdown and at all times during the Security Period, each Borrower shall maintain in its Operating Account the amount of Dollars Five hundred thousand Dollars ($500,000), which amount shall remain pledged in favour of the Lender throughout the Security Period (such amount for the purpose of this Agreement shall be called herein the “Pledged Deposit”);
 

 (l)
Banking operations: ensure that all banking operations in connection with the Vessels are carried out through the Lending Office of the Lender;
 

 (m)
Subordination: ensure that all Financial Indebtedness of each Borrower to its shareholders is fully subordinated to the rights of the Lender under the Finance Documents, all in a form acceptable to the Lender, and to subordinate to the rights of the Lender under the Finance Documents any Financial Indebtedness issued to it by its shareholders, all in a form acceptable to the Lender;
 

 (n)
Obligations under Finance Documents: duly and punctually perform each of the obligations expressed to be assumed by it under the Finance Documents;
 

 (o)
Payment on demand: pay to the Lender on demand any sum of money which is due and payable by the Borrowers to the Lender under this Agreement but in respect of which it is not specified in any other Clause when it is due and payable;
 

 (p)
Compliance with Laws and Regulations: comply, or procure compliance with all laws or regulations relating to it and/or each Vessel, its ownership, operation and management or to the business of the Borrowers and cause this Agreement and the other Finance Documents to comply with and satisfy all the requirements and formalities established by the applicable laws to perfect this Agreement and the other Finance Documents as valid and enforceable Finance Documents;
 

 (r)
Maintenance of Security Interests:
 

 (i)
at its own cost, do all that it reasonably can to ensure that any Finance Document validly creates the obligations and the Security Interests which it purports to create; and
 

 (ii)
without limiting the generality of paragraph (p)) above, at its own cost, promptly register, file, record or enrol any Finance Document with any court or authority in all Relevant Jurisdictions, pay any stamp, registration or similar tax in all Relevant Jurisdictions in respect of any Finance Document, give any notice or take any other step which may be or has become necessary or desirable for any Finance Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which it creates;
 

 (s)
Registered Office: maintain its registered office at the address referred to in the Recitals; and will not establish, or do anything as a result of which it would be deemed to have, a place of business in the United Kingdom or the United States of America;
 

 (t)
Parent Company’s CEO: procure that the CEO of the Parent Company to be a person acceptable to the Lender throughout the Security Period; and
 

 (u)
Compliance with Covenants: duly and punctually perform all obligations under this Agreement and the other Finance Documents.
 
52
8.2
Negative undertakings
 
Each Borrower undertakes with the Lender that, from the date of this Agreement and until the full and complete payment and discharge of the Outstanding Indebtedness it will not, without the prior written consent of the Lender:
 

 (a)
Negative pledge:
 

 (i)
create or permit any Security Interest (other than a Permitted Security Interest) to subsist, arise or be created or extended over all or any part of its present or future undertakings, assets, rights or revenues to secure or prefer any present or future Financial Indebtedness or other liability or obligation of the Borrowers other than in the normal course of its business of owning, financing, maintaining and operating any Vessel and owning or acquiring ship-owning companies; and
 

 (ii)
cease to hold the legal title to, and own the entire beneficial interest in any Vessel, its Insurances and Earnings, free from all Security Interests (other than a Permitted Security Interest) and other interests and rights of every kind, except for those created by the Finance Documents and the effect of the assignments contained in the General Assignment and any other Finance Documents;
 

 (b)
No further Financial Indebtedness: incur any further Financial Indebtedness in excess of $500,000 nor authorise or accept any capital commitments (other than that normally associated with the day to day operations of the Borrowers and the Vessels, and the operation, maintenance and trading of the Vessels) nor enter into any agreement for payment on deferred terms or hire agreement;
 

 (c)
No merger:  merge or consolidate with any other person;
 

 (d)
No disposals:
 

 (i)
sell, transfer, abandon, lend, lease or otherwise dispose of or cease to exercise direct control over any part (being either alone or when aggregated with all other disposals falling to be taken into account pursuant to this Clause 8.2(d) material in the reasonable opinion of the Lender in relation to the undertakings, assets, rights and revenues of the Borrowers) of its present or future undertaking, assets, rights or revenues (otherwise than by transfers, sales or disposals for full consideration in the ordinary course of operations and trading) whether by one or a series of transactions related or not; and
 

 (ii)
transfer, lease or otherwise dispose of any debt payable to it or any other right (present, future or contingent right) to receive a payment, including any right to damages or compensation;
 
but paragraphs (i) and (ii) do not apply to:
 

 (aa)
any charter of any Vessel; and
 
53

 (bb)
any sale of any Vessel to a bona fide third party on arm’s length terms, otherwise than as provided in Clause 4.3(b) (Sale or refinancing of the Vessels);
 

 (e)
No acquisitions: not acquire any further assets other than the Vessels and rights arising under contracts entered into by or on behalf of the Borrowers other than in the ordinary course of its business of owning, operating and chartering the Vessels;
 

 (f)
No other business: not undertake any type of business other than its current business of owning, financing and operating any Vessel and the chartering of any Vessel to third parties;
 

 (g)
No investments: make any investments in any person, asset, firm, corporation, joint venture or other entity;
 

 (h)
No other liabilities or obligations to be incurred:  incur any liability or obligation (including, without limitation, any Financial Indebtedness or any obligations under a guarantee or sale and leaseback transaction) except:
 

 (i)
liabilities and obligations under the Finance Documents to which it is or, as the case may be, will be a party; and
 

 (ii)
liabilities or obligations reasonably incurred in the normal course of its business of trading, operating and chartering, maintaining and repairing the Vessel owned by it (and for the purposes of this Clause 8.2(h) fees to be paid pursuant to the Management Agreement in respect of the Vessel owned by it shall be considered as permitted obligations under the Finance Documents) (including, without limitation, any Financial Indebtedness owing to its shareholder(s) or the Approved Manager, subject to the Borrowers ensuring on or prior to the Drawdown Date, that the rights of the Lender thereunder are fully subordinated in writing pursuant to a subordination agreement acceptable to the Lender);
 

 (i)
No borrowing: incur any Financial Indebtedness except for Financial Indebtedness pursuant to the Finance Documents or in the ordinary course of business of operating, maintaining and repairing any Vessel;
 

 (j)
No repayment of borrowings: repay the principal of, or pay interest on or any other sum in connection with, any of Financial Indebtedness except for Financial Indebtedness pursuant to the Finance Documents or in the ordinary course of business of operating, maintaining and repairing the Vessels;
 

 (k)
No Payments: unless otherwise provided in this Agreement and the other Finance Documents (and then only to the extent expressly permitted by the same) not pay out any funds (whether out of the Earnings or out of moneys collected under the General Assignment and/or the other Finance Documents or not) to any person except in connection with the administration of the Borrowers and the operation and/or maintenance and/or repair and/or trading of the Vessels;
 

 (l)
No guarantees: issue any guarantees or indemnities or otherwise become directly or contingently liable for the obligations of any person, firm, or corporation except pursuant to the Finance Documents and except for, in the case of the Borrowers, guarantees or indemnities from time to time required in the ordinary course of its business, the operation, maintenance and repair of the Vessels or by any protection and indemnity or war risks association with which a Vessel is entered, guarantees required to procure the release of that Vessel from any arrest, detention, attachment or levy or guarantees or undertakings required for the salvage of that Vessel;
 
54

 (m)
No loans:  make any loans or advances to, including (without limitation) any loan or advance or grant any credit (save for normal trade credit in the ordinary course of business) to any officer, director, stockholder or employee or any other company managed by the Approved Manager directly or through the Approved Manager of the Vessels or agree to do so, provided, always, that any loans of its shareholders to the Borrower shall be fully subordinated to the Borrowers' obligations under this Agreement and the other Finance Documents;
 

 (n)
No securities: permit any Financial Indebtedness of the Borrowers to any person (other than the Lender) to be guaranteed by any person (save, in the case of the Borrowers, for guarantees or indemnities from time to time required in the ordinary course of business, the operation, maintenance and repair of the Vessels or by any protection and indemnity or war risks association with which a Vessel is entered, guarantees required to procure the release of that Vessel from any arrest, detention, attachment or levy or guarantees or undertakings required for the salvage of that Vessel);
 

 (o)
No dividends or distributions: if an Event of Default has occurred and is continuing declare or pay any dividends or make other distribution under any name or description or effect any form of redemption, purchase or return of share capital or otherwise dispose  any of the issued shares or otherwise dispose of any of its present or future assets, undertakings, rights or revenues (which are all assigned to the Lender) to any of the shareholders of the Borrowers without the prior written consent of the Lender, such consent not to be unreasonably withheld;
 

 (p)
No Subsidiaries: form or acquire any Subsidiaries;
 

 (q)
No change of business structure: change the nature, organisation and conduct of the business of a Borrower as owner of its Vessel, or carry on any business other than the business carried on at the date of this Agreement;
 

 (r)
No change of legal structure: (such consent not be unreasonably withheld) ensure that none of the documents defining the constitution of a Borrower shall be materially (in the Lender’s reasonable opinion) altered in any manner whatsoever;
 

 (s)
No Security Interest on assets: other than Permitted Security Interests, not allow any part of its undertaking, property, assets or rights, whether present or future, to be mortgaged, charged, pledged, used as a lien or otherwise encumbered without the prior written consent of the Lender;
 

 (t)
No amendment to Assignable Charterparty: not waive or fail to enforce, any Assignable Charterparty to which it is a party or any of its provisions, unless that waiver or failure to enforce does not create a Material Adverse Effect, and will promptly notify the Lender of any amendment or supplement to any Assignable Charterparty;
 

 (u)
Change of control: ensure that:
 

 (i)
no change shall be made directly or indirectly in the ownership, and management of any Borrower or any share in a Borrower or a Vessel;
 
55

 (ii)
the Guarantor shall remain listed in the NASDAQ Capital Market;
 

 (iii)
each Borrower shall remain wholly owned and controlled Subsidiary of the Guarantor;
 

 (iv)
the Guarantor shall remain holding company of shipowning, all being engaged in activities acceptable to the Lender; and
 

 (v)
each of the Relevant Executives holds such executive position within the management structure of the Parent Company as more particularly described in the Side Letter.
 

 (v)
Marshall Islands Economic Substance Regulations 2018: shall (and shall procure that each of the other Security Parties will) comply with the Marshall Islands Economic Substance Regulations 2018 (as the same may be amended from time to time);
 

 (w)
No US Tax Obligor:  procure that, unless otherwise agreed by the Lender, no Security Party shall become a US Tax Obligor; and
 

 (x)
No Master Agreement Derivatives:  not enter into any transaction in a derivative of any description whatsoever.
 
8.3
Undertakings concerning the Vessels
 
Each Borrower undertakes with the Lender that, from the date of this Agreement and until the full and complete payment and discharge of the Outstanding Indebtedness, it will:
 

 (a)
Conveyance on default: where a Vessel is (or is to be) sold in exercise of any power conferred on the Lender, execute, forthwith upon request by the Lender, such form of conveyance of that Vessel as the Lender may require;
 

 (b)
Mortgage: it will execute, and procure the registration of the respective Mortgage over the Vessel owned by it under the laws and flag of the Flag State;
 

 (c)
Chartering: not without the prior written consent of the Lender which shall not be unreasonably withheld (and then only subject to such conditions as the Lender may impose) let or agree to let its Vessel:
 

 (i)
on demise charter for any period; or
 

 (ii)
by any Assignable Charterparty; or
 

 (iii)
other than on an arms’ length basis;
 

 (d)
Laid-up: not de-activate or lay up its Vessel;
 

 (e)
Approved Manager: not without the prior written consent of the Lender (such consent not to be unreasonably withheld) agree or appoint a manager of its Vessel other than the Approved Manager;
 

 (f)
Ownership/Management/Control: ensure that its Vessel is registered on the Dtawdown Date in the ownership of its Owner under the laws of the Flag State and thereafter ensure that such Vessel will maintain her registration, ownership, management, control and beneficial ownership;
 
56

 (g)
Class: ensure that the Vessels will remain in class free of overdue recommendations or average damage affecting class or permitted by the Classification Society and provide the Lender on demand with copies of all class and trading certificates of the Vessels;
 

 (h)
Insurances:
 

 (i)
ensure that all Insurances (as defined in the relevant Mortgage/General Assignment) of each Vessel is maintained and comply with all insurance requirements specified in this Agreement and in the relevant Mortgage and in case of failure to maintain either Vessel is maintained and comply with all insurance requirements specified in this Agreement and in the relevant Mortgage and in case of failure to maintain the Vessels so insured, authorise the Lender (and such authorisation is hereby expressly given to the Lender) to have the right but not the obligation to effect such Insurances on behalf of the Borrowers (and in case that a Vessel remains in port for an extended period) to effect port risks insurances at the cost of the Borrowers which, if paid by the Lender, shall be Expenses;
 

 (ii)
if (aa) an Event of Default has occurred and is continuing or (bb) there has been any change in the insurance placement within such year or (cc) there has been a Material Adverse Change of the financial condition of any of the insurers of any of the Vessels at the Lender’s reasonable opinion, the Lender shall be entitled to obtain once per year at Borrowers’ expense such opinion from such insurance consultants (appointed by the  Lender at the Borrowers’ expense) as to the adequacy of the insurances effected or to be effected in respect of the Vessels;
 

 (i)
Transfer/Security Interests:  not without the prior written consent of the Lender agrees each Vessel or any share therein to be sold or otherwise disposed of or create or agree to create or permit to subsist any Security Interest over that Vessel (or any of them) (or any share or interest therein) other than Permitted Security Interests;
 

 (j)
Not imperil Flag, Ownership, Insurances: ensure that each Vessel is maintained and trades in conformity with the laws of the Flag State, of its owning company or of the nationality of the officers, the requirements of the Insurances and nothing is done or permitted to be done which could endanger the flag of that Vessel or its unencumbered (other than Security Interests in favour of the Lender and other Permitted Security Interests) ownership or its Insurances;
 

 (k)
Mortgage Covenants: ensure that each Borrower always complies with all the covenants provided for in the relevant Mortgage registered over its Vessel;
 

 (l)
No assignment of Earnings:  ensure that each Borrower will not assign or agree to assign otherwise than to the Lender the Earnings or any part thereof;
 

 (m)
No sharing of Earnings: ensure that each Borrower:
 

 (i)
will not enter into any agreement or arrangement for the sharing of any Earnings; and/or
 

 (ii)
will not enter into any agreement or arrangement for the postponement of any date on which any Earnings are due or the reduction of the amount of any Earnings or otherwise for the release or adverse alteration of any right of the Borrower to any Earnings; and/or
 
57

 (iii)
will not enter into any agreement or arrangement for the release of, or adverse alteration to, any guarantee or Security Interest relating to any Earnings.
 

 (n)
No amendment to Assignable Charterparty: not waive or fail to enforce, any Assignable Charterparty to which it is a party or any of its provisions, and will promptly notify the Lender of any material, in the reasonable opinion of the Lender, amendment or supplement to any Assignable Charterparty;
 

 (o)
Assignable Charterparty:  ensure and procure that in the event of a Vessel being employed under an Assignable Charterparty:
 

 (i)
execute and deliver to the Lender within fifteen (15) days from the Lender’s relevant request a specific assignment of all its rights, title and interest in and to such charter in the form of a Charterparty Assignment and a notice of such assignment addressed to the relevant charterer;
 

 (ii)
in case an Event of Default has occurred and is continuing, ensure (on a best effort basis) that the relevant charterer agree to acknowledge to the Lender the specific assignment of such charter and charter guarantee by executing an acknowledgement substantially in the form included in the relevant Charterparty Assignment;
 

 (iii)
in the case where such charter is a demise charter, ensure (on a best effort basis) that the relevant charterer shall (1)  comply with all of the Borrowers' undertakings with regard to the employment, insurances, operation, repairs and maintenance of the Vessels contained in this Agreement, the Mortgages and the General Assignments and (2) provide (inter alia) an assignment of its interest in the insurances of that Vessel in the form of a tripartite agreement in form and substance acceptable to the Lender, to be made between the Lender, the Borrowers and such charterer;
 

 (p)
No freight derivatives: not enter into or agree to enter into any freight derivatives or any other instruments which have the effect of hedging forward exposures to freight derivatives without the Lender’s consent;
 

 (q)
Vessels’ inspection: permit the Lender (i) by surveyors or other persons appointed by it in its behalf to board each Vessel once per year or in case an Event of Default has occurred and is continuing at any time that the Lender might consider to be necessary or useful (but in any event without interfering with the daily operations and the ordinary trading of that Vessel and upon 10 day prior notice to the relevant Borrower) for the purpose of inspecting her condition or for the purpose of satisfying itself with regard to proposed or executed repairs and to afford all proper facilities for such inspections and (ii) at any time but upon 10 day prior notice to the Borrowers by financial or insurance advisors or other persons appointed by the Lender to review the operating and insurance records of the Vessels and the Borrowers hereby duly authorise the Lender to review the insurance and operating records of the Borrowers and the costs (as supported by vouchers) of any and all such inspections shall be borne by the Borrowers;
 
58

 (r)
Trading: use any Vessel only for civil merchant trading;
 

 (s)
Compliance with ISM Code:  procure that the Approved Manager and any Operator will:
 

 (i)
will comply with and ensure that any Vessel and any Operator complies with the requirements of the ISM Code, including (but not limited to) the maintenance and renewal of valid certificates pursuant thereto throughout the Security Period;
 

 (ii)
immediately inform the Lender if there is any threatened or actual withdrawal of a Borrower’s, the Approved Manager’s or an Operator’s DOC or the SMC in respect of a Vessel; and
 

 (iii)
promptly inform the Lender upon the issue to a Borrower, the Approved Manager or any Operator of a DOC and to a Vessel of an SMC or the receipt by a Borrower, the Approved Manager or any Operator of notification that its application for the same has been realised;
 

 (t)
Compliance with ISPS Code:  procure that the Approved Manager or any Operator will:
 

 (i)
maintain at all times a valid and current ISSC in respect of the Vessels;
 

 (ii)
immediately notify the Lender in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC in respect of a Vessel; and
 

 (iii)
procure that the Vessels will comply at all times with the ISPS Code;
 

 (u)
Compliance with Environmental Laws: comply with, and procure that all Environmental Affiliates of any Relevant Party comply with, all Environmental Laws including without limitation, requirements relating to manning and establishment of financial responsibility and to obtain and comply with, and procure that all Environmental Affiliates of such Relevant Party obtain and comply with, all Environmental Approvals and to notify the Lender forthwith:
 

 (i)
of any Environmental Claim for an amount exceeding Five hundred thousand Dollars ($500,000) per incident made against a Vessel, any Relevant Ship and/or their respective owners; and
 

 (ii)
upon becoming aware of any incident which may give rise to an Environmental Claim for an amount exceeding Five hundred thousand Dollars ($500,000) and to keep the Lender advised in writing of the relevant Borrower’s response to such Environmental Claim on such regular basis and in such detail as the Lender shall require.
 

 (v)
War Risk Insurance cover: in the event of hostilities in any part of the world (whether war is declared or not), it will not cause or permit a Vessel to enter or trade to any zone which is declared a war zone by any government or by that Vessel’s war risks insurers unless first obtaining the consent to such employment or trade of the insurers and complying with such requirements as to extra premium or otherwise as the insurers may prescribe.
 
59
8.4
Validity of Securities – Earnings – Taxes etc.
 
Each Borrower undertakes with the Lender that, from the date of this Agreement and until the full and complete payment and discharge of the Outstanding Indebtedness, it will:
 

 (a)
Validity: ensure and procure that all governmental or other consents required by law and/or any other steps required for the validity, enforceability and legality of this Agreement and the other Finance Documents are maintained in full force and effect and/or appropriately taken;
 

 (b)
Earnings: ensure and procure that, unless and until directed by the Lender otherwise (i) all the Earnings of each Vessel shall be paid to the respective Operating Account and (ii) the persons from whom the Earnings are from time to time due are irrevocably instructed to pay them to an Operating Account or to such account in the name of the relevant Borrower as shall be from time to time determined by the Lender in accordance with the provisions hereof and of the relevant Security Documents;
 

 (c)
Taxes:  pay all Taxes, assessments and other governmental charges imposed on the Borrowers when the same fall due, except to the extent that the same are being contested in good faith by appropriate proceedings and adequate reserves have been set aside for their payment if such proceedings fail;
 

 (d)
Additional Documents: from time to time and within fifteen (15) days after the request of the Lender, execute and deliver to the Lender or procure the execution and delivery to the Lender of all such documents as shall be deemed desirable at the discretion of the Lender for giving full effect to this Agreement, and for perfecting, protecting the value of or enforcing any rights or securities granted to the Lender under any one or more of this Agreement, the other Finance Documents and any other documents executed pursuant hereto or thereto and in case that any conditions precedent (with the Lender’s consent) have not been fulfilled prior to the Drawdown Date, such conditions shall be complied with within fifteen (15) days after the Lender’s written request (unless the Lender agrees otherwise in writing) and failure to comply with this covenant shall be an Event of Default.
 
8.5
Secured Value to Security Requirement ratio – Valuation of the Vessels
 

 (a)
Security shortfall – Additional Security: If at any time during the Security Period, the Security Value shall be less than the Security Requirement, the Lender may give notice to the Borrowers requiring that such deficiency be remedied and then the Borrowers shall (unless the sole cause of such deficiency is the Total Loss of any Vessel and the Borrowers in full compliance with its obligations in relation to such Total Loss) either:
 

 (i)
prepay (in accordance with Clause 4.2 (Voluntary prepayment) (but without regard to the requirement for five (5) days’ notice) within a period of thirty (30) days of the date of receipt by the Borrowers of the Lender’s said notice (the “Prepayment Date”) such sum in Dollars as will result in the Security Requirement after such prepayment (taking into account any other repayment of the Loan made between the date of the notice and the date of such prepayment) being at least equal to the Security Value; or
 
60

 (ii)
on or before the Prepayment Date constitute to the satisfaction of the Lender such further security for the Loan as shall be acceptable to the Lender having a value for security purposes (as determined by the Lender in its absolute discretion) at the date upon which such further security shall be constituted which, when added to the Security Value, shall not be less than the Security Requirement as at such date. Such additional security shall be constituted by:
 

 aa)
additional pledged cash deposits in favor of the Lender in an amount equal to such shortfall with the Lender and in an account and manner to be determined by the Lender; and/or
 

 bb)
any other security acceptable to the Lender at its absolute discretion to be provided in a manner determined by the Lender.
 
Any such additional security provided by the Lender shall be promptly released by the Lender once the Security Requirement ratio has been restored. The provisions of Clauses 4.3 (Mandatory Prepayment in case of Total Loss or sale or refinancing of the Vessels) and 4.4 (Amounts payable on prepayment) shall apply to prepayments under Clause 8.5(a)(i).
 

 (b)
Valuation of the Vessels: The Vessels shall, for the purposes of this Clause 8.5, be valued in Dollars once a year or, if an Event of Default has occurred and is continuing at any other time that the Lender shall reasonably require by an Approved Shipbroker, appointed by the Borrowers and addressed to the Lender (such valuation to be made without, unless required by the Lender, physical inspection, and on the basis of a sale for prompt delivery for cash at arm’s length on normal commercial terms as between a willing buyer and a willing seller, without taking into account the benefit of any charterparty or other engagement concerning the Vessels. The Lender and the Borrowers agree to accept such valuation made by such Approved Shipbroker appointed as aforesaid as conclusive evidence of the Market Value of the Vessels at the date of such valuation and such valuation shall constitute the Market Value of the Vessels for the purposes of this Clause 8.5.
 
The value of each Vessel determined in accordance with the provisions of this Clause 8.5 shall be binding upon the Borrowers and the Lender until such time as any further such valuation shall be obtained.
 

 (c)
Information: The Borrower undertake to the Lender to provide the Lender and any such Approved Shipbrokers such information concerning the Vessels and their condition as such Approved Shipbrokers may reasonably require for the purpose of making any such valuation.
 

 (d)
Costs:  All costs in connection with:
 

 (i)
the Lender obtaining any valuation of each Vessel referred to in Clause 8.5(b) (Valuation of Vessel); and
 

 (ii)
any valuation of any additional security for the purposes of ascertaining the Security Value at any time or necessitated by the Borrowers electing to constitute additional security pursuant to Clause 8.5(a)(ii): and
 

 (iii)
all legal and other expenses incurred by the Lender in connection with any matter arising out of this Clause 8.5,
 
shall be borne by the Borrowers.
 
61

 (e)
Valuation of additional security: For the purpose of this Clause 8.5, the market value of any additional security provided or to be provided to the Lender shall be determined by the Lender in its absolute discretion without any necessity for the Lender assigning any reason thereto and if such security consists of a vessel shall be that shown by a valuation complying with the requirements of Clause 8.5(b) (Valuation of Vessel) (whereas the costs shall be borne by the Borrowers in accordance with Clause 8.5(d) (Costs)) or if the additional security is in the form of a cash deposit full credit shall be given for such cash deposit on a Dollar for Dollar basis.
 

 (f)
Documents and evidence: In connection with any additional security provided in accordance with this Clause 8.5, the Lender shall be entitled to receive such evidence and documents of the kind referred to in Clause 7.1 (Conditions precedent to the execution of this Agreement) as may in the Lender’s opinion be appropriate and such favourable legal opinions as the Lender shall in its absolute discretion require.
 
8.6
Sanctions
 

 (a)
Without limiting Clause 8.7 (Compliance with laws etc.), each Borrower hereby undertakes with the Lender that, from the date of this Agreement and until the date that the Outstanding Indebtedness is paid in full, it shall ensure that any Vessel:
 

 (i)
will not be used by or for the benefit of a Sanctions Restricted Person contrary to Sanctions; and/or
 

 (ii)
will not be used in trading in any Sanctions Restricted Jurisdiction or in any manner contrary to Sanctions; and/or
 

 (iii)
will not be traded in any manner which would trigger the operation of any sanctions limitation or exclusion clause (or similar) in the Insurances.
 

 (b)
Each Borrower shall:
 

 (i)
not directly or to its knowledge (after reasonable enquiry) indirectly use or permit to be used all or any part of the proceeds of the Loan, or lend, contribute or otherwise make available such proceeds directly or to its knowledge (after reasonable enquiry) indirectly, to any person or entity (i) to finance or facilitate any activity or transaction of or with any Sanctions Restricted Person contrary to Sanctions or in any Sanctions Restricted Jurisdiction, or (ii) in any other manner that would result in a violation of any Sanctions by any Party;
 

 (ii)
shall not fund all or part of any payment under the Loan out of proceeds derived directly or to its knowledge (after reasonable enquiry) indirectly from any activity or transaction with a Sanctions Restricted Person contrary to Sanctions or in a Sanctions Restricted Jurisdiction or which would otherwise cause any party to be in breach of any Sanctions; and
 

 (iii)
procure that no proceeds to its knowledge (after reasonable enquiry) from activities or business with a Sanctions Restricted Person contrary to Sanctions or in a Sanctions Restricted Jurisdiction are credited to any of the Accounts.
 
62
8.7
Compliance with laws etc.
 
Each Borrower shall:
 

 (a)
comply, or procure compliance with all laws or regulations by the relevant Security Party:
 

 (i)
relating to its respective business generally; and
 

 (ii)
relating to any Vessel, its ownership, employment, operation, management and registration including, but not limited to, the ISM Code, the ISPS Code, all Environmental Laws and the laws of the Flag State; and
 

 (iii)
all Sanctions;
 

 (b)
obtain, comply with and do all that is necessary to maintain in full force and effect any Environmental Approvals; and
 

 (c)
without limiting paragraph (i) above, not employ any Vessel nor allow its employment, operation or management in any manner contrary to any law or regulation including, but not limited to, the ISM Code, the ISPS Code and all Environmental Laws which has or is likely to have a Material Adverse Effect on any of the Security Parties.
 
8.8
Covenants for the Securities Parties
 
Each Borrower undertakes with the Lender that, from the date of this Agreement and until the full and complete payment and discharge of the Outstanding Indebtedness, it will ensure and procure that all other Security Parties (other than the Approved Manager, except where appropriate in its capacity as Approved Manager) and each of them duly and punctually comply, with the covenants in Clauses 8.1 (General), 8.3 (Undertakings concerning the Vessels), 8.4 (Validity of Securities - Earnings - Taxes etc.), 8.5 (Secured Value to Security Requirement ratio - Valuation of the Vessels), 8.6 (Sanctions) and 8.7 (Compliance with laws etc.) which are applicable to them mutatis mutandis.
 
8.9
Know your customer and money laundering compliance
 
Each Borrower undertakes with the Lender that, from the date of this Agreement and until the full and complete payment and discharge of the Outstanding Indebtedness, it will provide the Lender, or procure the provision of, such documentation and other evidence as the Lender shall from time to time require, based on applicable law and regulations from time to time and the Lender’s own internal guidelines from time to time to identify the each of the Borrowers and the other Security Parties, including the disclosure in writing of the ultimate legal and beneficial owner or owners of such entities, and any other persons involved or affected by the transaction(s) contemplated by this Agreement in order for the Lender to carry 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 the transactions contemplated in the Finance Documents.
 
63
8.10
Financial Covenants
 

 (a)
Financial covenants-Compliance Certificate:  each Borrower will ensure that:
 

 (i)
for the duration of the Security Period, the Parent Company’s consolidated financial position, based on the most recent Accounting Information to comply with the financial covenants set out below:
 

 aa)
Corporate Liquidity: maintain an aggregate amount of (a) Cash and (b) Cash Equivalents not less than the higher of:
 

 1.
an amount equal to the aggregate of (a) $9,000,000 in respect of the Fleet Vessels owned by members of the Group (including the Vessels) on the date of this Agreement plus (b) $500,000 per Fleet Vessel (including the Vessels), acquired by a member of the Group after the date of this Agreement, if any; and
 

 2.
7.5% of the Total Debt; and
 

 bb)
Working Capital: maintain Working Capital greater than zero Dollars throughout the Security Period; and
 

 cc)
Value Adjusted Equity Ratio: maintain a Value Adjusted Equity Ratio at a minimum of 35%.
 

 (ii)
Compliance Certificate: a Compliance Certificate for each Accounting Period of the Parent Company, is delivered to the Lender together with each set of financial statements delivered pursuant to sub-paragraph (i) of Clause 8.1(f) (Financial statements), duly completed and supported by calculations setting out in reasonable detail the materials underling the statements made in such Compliance Certificate.
 

 (b)
Construction: The expressions used in this Clause 8.10 shall be construed in accordance with law and accounting principles internationally accepted as used in the Accounting Information produced in accordance with Clause 8.1(f) (Financial statements-Compliance Certificate).
 

 (c)
Definitions: For the purposes of this Agreement:
 
“Accounting Information” means the annual audited consolidated financial statements of the Parent Company, to be provided by the Borrowers to the Lender in accordance with Clause 8.1(f) (Financial Statements);
 
“Accounting Period” means each Financial Year falling during the Security Period for which the Accounting Information is required to be delivered to the Lender pursuant to Clause 8.1(f) (Financial Statements);
 
“Bond” means the bond issue of an amount up to $150,000,000 by the Parent Company to be listed in the Oslo Stock Exchange and secured over assets of the Group ;
 
64
“Cash” means, at any date of determination under this Agreement, the aggregate value of the Parent and its Subsidiaries credit balances on any deposit, savings or current account and cash in hand (including, without limitation, short term cash deposits held by the Parent and/or its Subsidiaries with any bank or financial institution  to which the Parent and/or its Subsidiaries (as applicable) have free, immediate and direct access but excluding any such credit balances and cash standing at any time to a pledged account of the Parent and/or its Subsidiaries  which has become blocked provided however that the Pledged Deposit and any cash deposit pledged or held in escrow under the Bond shall be included in the calculation of the Cash;
 
“Cash Equivalents” means, at any date of determination under this Agreement and the Guarantee, the aggregate value of the 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 and Poor'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,
 
provided that the Parent and/or its Subsidiaries (as applicable) have free, immediate and direct access but excluding any of those assets of the Parent and/or its Subsidiaries standing at any time to a pledged account of the Parent and/or its Subsidiaries which has become blocked provided however provided however that the Pledged Deposit and any cash deposit pledged or held in escrow under the Bond shall be included in the calculation of the Cash Equivalents;
 
“Fleet Market Value” in relation to a Fleet Vessel means, as of the date of calculation, the Market Value of that Fleet Vessel as determined in accordance with the provisions (mutatis-mutandis) of Clause 8.5(b) (Valuation of Vessel) of this Agreement;
 
“Fleet Vessel” means any vessels (including, but not limited to, the Vessels) from time to time owned by a member of the Group (directly) but excluding, for the avoidance of doubt, any newbuilding vessels not delivered to the relevant member of the Group at the relevant time, which, at the relevant time, are included within the Total Assets of the Parent Company in the balance sheet of the Accounting Information and "Fleet Vessels" means any or all of them as the context may require;
 
“Total Assets” means, in respect of an Accounting Period, the aggregate, on a consolidated basis, value of all assets of the Parent Company included in the Accounting Information as “current assets” and the value of all investments and all other tangible and intangible assets of the Parent Company properly included in the Accounting Information as “fixed assets” in accordance with IFRS or US GAAP; and
 
“Total Debt” means, in respect of an Accounting Period, the aggregate amount of the Financial Indebtedness all the members of the Group at that time as shown in the Parent's latest financial statements delivered to the Lender pursuant to Clause 8.1(f) (Financial statements).
 
65
“Value Adjusted Equity Ratio” means the amount of the Parent's  total shareholders' equity as reflected in the most recent Accounting Information adjusted by the difference 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 financial statements.
 
“Working Capital” means the consolidated current assets minus the consolidated current liabilities (next year's instalment on long-term debt and subordinated shareholder loans shall be excluded from the current liabilities and any cash standing to an account of the Group which has been or, as the case may be, shall be pledged as security under the Bond shall be excluded from the current assets) .
 
9.
EVENTS OF DEFAULT

9.1
Events
 
There shall be an Event of Default if:
 

 (a)
Non‑payment: any Security Party fails to pay any sum payable by it under any of the Finance Documents at the time, in the currency and in the manner stipulated in the Finance Documents (and so that, for this purpose, sums payable on demand shall be treated as having been paid at the stipulated time if paid within five (5) Business Days of demand and other sums due shall be treated as having been paid at the stipulated time if paid within five (5) Business Days of its falling due); or
 

 (b)
Breach of Insurance and certain other obligations: a Borrower fails to obtain and/or maintain the Insurances (as defined in, and in accordance with the requirements of, the Finance Documents) or if any insurer in respect of such Insurances cancels the Insurances or disclaims liability by reason, in either case, of mis‑statement in any proposal for the Insurances or for any other failure or default on the part of a Borrower or any other person or a Borrower commits any breach of or omit to observe any of the obligations or undertakings expressed to be assumed by them under Clause 8 (Undertakings) and, in respect of any such failure, cancellation, disclaim, breach or omission which in the opinion of the Lender is capable of remedy, such action as the Lender may require shall not have been taken within fifteen (15) days of the Lender notifying in writing the relevant Security Party of such default and of such required action; or
 

 (c)
Breach of other obligations: any Security Party commits any breach of or omits to observe any of its obligations or undertakings expressed to be assumed by it under any of the Finance Documents (other than those referred to in Clauses 9.1(a) (Non‑payment) and 9.1(b) (Breach of Insurance and certain other obligations) above) and, in respect of any such breach or omission which in the opinion of the Lender is capable of remedy, such action as the Lender may require shall not have been taken within twenty (20) days of the Lender notifying in writing the relevant Security Party of such default and of such required action; or
 

 (d)
Misrepresentation: any representation or warranty made or deemed to be made or repeated by or in respect of any Security Party in or pursuant to any of the Finance Documents or to an Underlying Document or in any notice, certificate or statement referred to in or delivered under any of the Finance Documents is or proves to have been incorrect or misleading in any material respect; or
 
66

 (e)
Cross‑default:
 

 (i)
any Financial Indebtedness of (aa) a Borrower related to an amount exceeding the amount of Five hundred thousand Dollars ($500,000) and (bb) the Corporate Guarantor related to an amount exceeding the amount of Five million Dollars ($5,000,000) (in each case herein, the “Permitted Amount”) is not paid when due (unless contested in good faith); or
 

 (i)
any Financial Indebtedness of any of the Borrowers and the Corporate Guarantor relating to an amount exceeding the Permitted Amount (by declaration in accordance with the relevant agreement or instrument constituting the same) due and payable prior to the date when it would otherwise have become due (unless as a result of the exercise by the relevant Security Party of a voluntary right of prepayment), or
 

 (ii)
any creditor of any of the Borrowerss and the Corporate Guarantor becomes entitled to declare any such Financial Indebtedness relating to an amount exceeding the Permitted Amount due and payable, or
 

 (iii)
any facility or commitment available to any of the Borrowers and the Corporate Guarantor relating to Financial Indebtedness relating to an amount exceeding the Permitted Amount is withdrawn, suspended or cancelled by reason of any default (however described) of the person concerned unless the relevant Security Party shall have satisfied the Lender that such withdrawal, suspension or cancellation will not affect or prejudice in any way the relevant Security Party’s (as the case may be) ability to pay its debts as they fall due, or
 

 (iv)
any guarantee given by any of the Borrowers and the Corporate Guarantor in respect of Financial Indebtedness relating to an amount exceeding the Permitted Amount is not honoured when due and called upon; or
 

 (f)
Legal process: any judgment or order made or commenced in good faith by a person against any of the Borrowers and the Corporate Guarantor relating to an amount exceeding the Permitted Amount is not stayed or complied with within thirty (30) Business Days or a good faith creditor attaches or takes possession of, or a distress, execution, sequestration or other bonafide process is levied or enforced upon or sued out against, any of the undertakings, assets, rights or revenues of any of the Borrowers and the Corporate Guarantor and is not discharged , or bail is lodged in respect thereof, within thirty (30) Business Days; or
 

 (g)
Insolvency: any Security Party becomes insolvent or stops or suspends making payments (whether of principal or interest) with respect to all or any class of its debts or announces an intention to do so; or
 

 (h)
Reduction or loss of capital: a meeting is convened by any of the Borrowers for the purpose of passing any resolution to purchase, reduce or redeem any of its share capital; or
 

 (i)
Winding up: any petition is presented or other step is taken for the purpose of winding up any of the Borrowers and the Corporate Guarantor or an order is made or resolution passed for the winding up of any of the Borrowers and the Corporate Guarantor or a notice is issued convening a meeting for the purpose of passing any such resolution; or
 
67

 (j)
Administration: any bonafide petition is presented or other step is taken for the purpose of the appointment of an administrator of any of the Borrowers and the Corporate Guarantor or the Lender believes that any such petition or other step is imminent or an administration order is made in relation to any of the Borrowers and the Corporate Guarantor; or
 

 (k)
Appointment of receivers and managers: any administrative or other receiver is appointed of any of the Borrowers and the Corporate Guarantor or any part of its assets and/or undertaking or any other steps are taken to enforce any Security Interest over all or any part of the assets of any such Security Party; or
 

 (l)
Compositions: any steps are taken, or negotiations commenced, by any of the Borrowers and the Corporate Guarantor or by any of its creditors with a view to the general readjustment or rescheduling of all or part of its indebtedness or to proposing any kind of composition, compromise or arrangement involving such company and any of its creditors provided, however, that if any Borrower is able to provide such evidence as is satisfactory in all respects to the Lender that such rescheduling will not relate to any payment default or anticipated default the same shall not constitute an Event of Default; or
 

 (m)
Analogous proceedings: there occurs, in relation to any Security Party, in any country or territory in which any of them carries on business or to the jurisdiction of whose courts any part of their assets is subject, any event which, in the reasonable opinion of the Lender, appears in that country or territory to correspond with, or have an effect equivalent or similar to, any of those mentioned in Clauses 9.1(f) (Legal process) to (l) (Compositions) (inclusive) or any Security Party otherwise becomes subject, in any such country or territory, to the operation of any law relating to insolvency, bankruptcy or liquidation; or
 

 (n)
Cessation of business: any Security Party suspends or ceases or threatens to suspend or cease to carry on its business; or
 

 (o)
Seizure: all or a material part of the undertaking, assets, rights or revenues of, or shares or other ownership interests in, any Security Party are seized, nationalised, expropriated or compulsorily acquired by or under the authority of any government; and the respective Security Party fails to procure for its release within a period of sixth (60) days; or
 

 (p)
Invalidity: any of the Finance Documents shall at any time and for any reason become invalid or unenforceable or otherwise cease to remain in full force and effect, or if the validity or enforceability of any of the Finance Documents shall at any time and for any reason be contested by any Security Party which is a party thereto, or if any such Security Party shall deny that it has any, or any further, liability thereunder; or
 

 (q)
Unlawfulness: it becomes impossible or unlawful at any time for any Security Party, to fulfil any of the covenants, undertakings and obligations expressed to be assumed by it in any of the Finance Documents or for the Lender to exercise the rights or any of them vested in it under any of the Finance Documents or otherwise; or
 

 (r)
Repudiation: any Security Party repudiates any of the Finance Documents or does or causes or permits to be done any act or thing evidencing an intention to repudiate any of the Finance Documents; or
 

 (s)
Security Interests enforceable: any Security Interest (other than Permitted Security Interest) in respect of any of the property (or part thereof) which is the subject of any of the Finance Documents becomes enforceable; or
 
68

 (t)
Arrest: any Vessel is arrested, confiscated, seized, taken in execution, impounded, forfeited, detained in exercise or purported exercise of any possessory lien or other claim or otherwise taken from the possession of a Borrower and that Borrower shall fail to procure the release of its Vessel within a period of sixty (60) days thereafter; or
 

 (u)
Registration:  the registration of a Vessel under the laws and flag of the relevant Flag State is cancelled or terminated without the prior written consent of the Lender; if a Vessel is only provisionally registered and is not permanently registered under the laws and flag of the Flag State at least thirty (30) days prior to the deadline for completing such permanent registration; or
 

 (v)
Unrest: the Flag State of any of the Vessels becomes involved in hostilities or civil war or there is a seizure of power in such Flag State by unconstitutional means if, in any such case, (a) such event could in the opinion of the Lender reasonably be expected to have a Material Adverse Effect on the security constituted by any of the Finance Documents and (b) any of the Borrowers has failed within forty five (45) days from receiving notice from the Lender to this effect to (i) delete any Vessel from its Flag State and (ii) re-register any Vessel under another Flag State approved by the Lender in its sole discretion through a relevant Registry, in each case, at the Borrowers’ cost and expense; or
 

 (w)
Environment: any Relevant Party and/or the Approved Manager and/or any of their respective Environmental Affiliates fails to comply with any Environmental Law or any Environmental Approval in respect of any Vessel or any Relevant Ship, or any Vessel or any Relevant Ship is involved in any incident which gives rise or which may give rise to any Environmental Claim, if in any such case, such non-compliance or incident or the consequences thereof could (in the opinion of the Lender) be expected to have a Material Adverse Change as described hereinbelow under paragraph (ff); or
 

 (x)
P&I: any Security Party or any other person fails or omits to comply with any requirements of the protection and indemnity association or other insurer with which any Vessel is entered for insurance or insured against protection and indemnity risks (including oil pollution risks) to the effect that any cover in relation to any Vessel (including without limitation, liability for Environmental Claims arising in jurisdictions where any Vessel operates or trades) is or may be liable to cancellation, qualification or exclusion at any time; or
 

 (y)
Change of Management: any of the Vessels ceases to be managed by the Approved Manager (for any reason other than the reason of a Total Loss or sale of a Vessel) without the approval of the Lender (which shall not be unreasonably withheld) and any of the Borrowers fails to appoint another Approved Manager prior to the termination of the mandate with the previous Approved Manager; or
 

 (z)
Deviation of Earnings: any Earnings of any Vessel are not paid to the respective Operating Account for any reason whatsoever (other than with the Lender’s prior written consent); or
 

 (aa)
ISM Code and ISPS Code: (without prejudice to the generality of Clause 9.1(c) (Breach of other obligations)) for any reason whatsoever the provisions of Clause 8.3(s) (Compliance with ISM Code) and Clause 8.3(t) (Compliance with ISPS Code) are not complied with and any Vessel ceases to comply with the ISM Code or, as the case may be, the ISPS Code; or
 
69

 (bb)
Sanctions: (without prejudice to the generality of sub-Clause 9.1(c) (Breach of other obligations)) for any reason whatsoever the provisions of Clause 8.6 (Sanctions) and Clause 8.7 (Compliance with laws etc.) are not complied with; or
 

 (cc)
Material Adverse Change: there occurs, in the reasonable opinion of the Lender, a Material Adverse Change in the financial condition of any of the Borrowers and the Corporate Guarantor as described by the Borrowers or any other Security Party to the Lender in the negotiation of this Agreement, which might, in the reasonable opinion of the Lender, materially impair the ability of the above Security Parties (or any of them) to perform their respective obligations under this Agreement and the Finance Documents to which is or is to be a party; or
 

 (dd)
Finance Documents: any other event of default (as howsoever described or defined therein) occurs under the Finance Documents (or any of them).
 
9.2
Consequences of Default – Acceleration
 
The Lender may without prejudice to any other rights of the Lender (which will continue to be in force concurrently with the following), at any time after the happening of an Event of Default:
 

 (a)
by notice to the Borrowers declare that the obligation of the Lender to make the Commitment (or any part thereof) available shall be terminated, whereupon the Commitment shall be reduced to zero forthwith; and/or
 

 (b)
by notice to the Borrowers declare that the Loan and all interest accrued and all other sums payable under the Finance Documents have become due and payable, whereupon the same shall, immediately or in accordance with the terms of such notice, become due and payable without any further diligence, presentment, demand of payment, protest or notice or any other procedure from the Lender which are expressly waived by the Borrowers; and/or
 

 (c)
put into force and exercise all or any of the rights, powers and remedies possessed by the Lender under this Agreement and/or under any other Finance Document and/or as mortgagee of the Vessels, mortgagee, chargee or assignee or as the beneficiary of any other property right or any other security (as the case may be) of the assets charged or assigned to it under the Finance Documents or otherwise (whether at law, by virtue of any of the Finance Documents or otherwise).
 
9.3
Multiple notices; action without notice
 
The Lender may serve notices under sub-Clauses (a) and (b) of Clause 9.2 (Consequences of Default – Acceleration) simultaneously or on different dates and it may take any action referred to in that Clause if no such notice is served or simultaneously with or at any time after service of both or either of such notices, it being understood and agreed that the non-service of a notice in respect of an Event of Default hereunder, or under any of the Finance Documents (whether known to the Lender or not), shall not be construed to mean that the Event of Default shall cease to exist and bring about its lawful consequences.
 
9.4
Demand basis
 
If, pursuant to Clause 9.2(b), the Lender declares the Loan to be due and payable on demand, the Lender may by written notice to the Borrowers (a) call for repayment of the Loan on such date as may be specified whereupon the Loan shall become due and payable on the date so specified together with all interest accrued and all other sums payable under this Agreement or (b) withdraw such declaration with effect from the date specified in such notice.
 
70
9.5
Proof of Default
 
It is agreed that (i) the non-payment of any sum of money in time will be proved conclusively by mere passage of time and (ii) the occurrence of this (non-payment) shall be proved conclusively by a mere written statement of the Lender (save for manifest error and in absence of willful misconduct).
 
9.6
Exclusion of Lender’s liability
 
Neither the Lender nor any receiver or manager appointed by the Lender, shall have any liability to a Borrowers or a Security Party:
 

 (a)
for any loss caused by an exercise of rights under, or enforcement of a Security Interest created by, a Finance Document or by any failure or delay to exercise such a right or to enforce such a Security Interest; or
 

 (b)
as mortgagee in possession or otherwise, for any income or principal amount which might have been produced by or realised from any asset comprised in such a Security Interest or for any reduction (however caused) in the value of such an asset,
 
except that this does not exempt the Lender or a receiver or manager from liability for losses shown to have been caused by the wilful misconduct of the Lender’s own officers and employees or (as the case may be) such receiver’s or manager’s own partners or employees.
 
10.
INDEMNITIES - EXPENSES – FEES

10.1
Miscellaneous indemnities
 
The Borrowers shall on demand (and it is hereby expressly undertaken by the Borrowers to) indemnify the Lender, without prejudice to any of the other rights of the Lender under any of the Finance Documents, against any loss (excluding loss of the applicable Margin but including any Break Costs) or expense which the Lender shall certify as sustained or incurred as a consequence of:
 

 (a)
any default in payment by any of the Security Parties of any sum under any of the Finance Documents when due;
 

 (b)
the occurrence of any Event of Default which is continuing;
 

 (c)
any prepayment of the Loan or part thereof being made under Clauses 4.2 (Voluntary Prepayment) and 4.3 (Mandatory Prepayment in case of Total Loss or sale or refinancing of the Vessels), 8.5(a) (Security shortfall-Additional Security), Clause 12.1 (Unlawfulness) or Clause 12.5 (Option to prepay) or any other repayment of the Loan or part thereof being made otherwise than on an Interest Payment Date relating to the part of the Loan prepaid or repaid; or
 

 (d)
the Commitment or the relevant part thereof not being advanced for any reason (excluding any default by the Lender and any reason specified in Clauses 3.6 (Market disruption), 4.3(a) (Total Loss of Vessel) or 12.1 (Unlawfulness) after the Drawdown Notice has been given, including, in any such case, but not limited to, any loss or expense sustained or incurred in maintaining or funding the Loan or any part thereof or in liquidating or re-employing deposits from third parties acquired to effect or maintain the Loan or any part thereof.
 
71
10.2
Expenses
 
The Borrowers shall (and it is hereby expressly undertaken by the Borrowers to) pay to the Lender on demand:
 

 (a)
Initial and Amendment expenses:  all expenses (including legal, printing and out-of-pocket expenses) reasonably incurred by the Lender and properly documented in connection with the negotiation, preparation and execution of this Agreement and the other Finance Documents and of any amendment or extension of or the granting of any waiver or consent under this Agreement and/or any of the Finance Documents and/or in connection with any proposal by the Borrowers to constitute additional security pursuant to Clause 8.5(a) (Security shortfall - Additional Security), whether any such security shall in fact be constituted or not;
 

 (b)
Enforcement expenses:  all expenses (including legal and out-of-pocket expenses) incurred by the Lender and properly documented in contemplation of, or otherwise in connection with, the enforcement of, or preservation of any rights under, this Agreement and/or any of the other Finance Documents, or otherwise in respect of the moneys owing under this Agreement and/or any of the other Finance Documents or the contemplation or preparation of the above, whether they have been effected or not;
 

 (c)
Legal costs:  the legal costs of the Lender’s appointed lawyers, in respect of the preparation of this Agreement and the other Finance Documents as well as the legal costs of the foreign lawyers (if these are available) in respect of the registration of the Finance Documents or any search or opinion given to the Lender in respect of the Security Parties or the Vessels or the Finance Documents. The said legal costs shall be supported by relevant invoices and due and payable on the Drawdown Date; and
 

 (d)
Other expenses:  any and all other Expenses.
 
10.3
Break Costs
 
If as a consequence of receipt or recovery of all or any part of the Loan (a “Payment”) on a day other than the last day of an Interest Period applicable to the sum received or recovered the Lender has or will, with effect from a specified date, incur Break Costs:
 

 (a)
the Lender shall promptly notify the Borrowers;
 

 (b)
the Borrowers shall, within five Business Days of the Lender's demand, pay to the Lender the amount of such Break Costs; and
 

 (c)
the Lender shall, as soon as reasonably practicable, following a request by the Borrowers, provide a certificate confirming the amount of the Lender's Break Costs for the Interest Period in which they accrue, such certificate to be, in the absence of manifest error, conclusive and binding on the Borrowers.
 
In this Clause 10.3, “Break Costs” means, in relation to a Payment the amount (if any) by which:
 

 (i)
the interest which the Lender, should have received in accordance with Clause 3 (Interest) in respect of the sum received or recovered from the date of receipt or recovery of such Payment to the last day of the then current Interest Period applicable to the sum received or recovered had such Payment been made on the last day of such Interest Period;
 
72
exceeds
 

 (ii)
the amount which the Lender, would be able to obtain by placing an amount equal to such Payment on deposit with a leading bank for a period commencing on the Business Day following receipt or recovery of such Payment (as the case may be) and ending on the last day of the then current Interest Period applicable to the sum received or recovered.
 
10.4
Value Added Tax
 
All fees and expenses payable pursuant to this Clause 10 shall be paid together with value added tax (if applicable) or any similar tax (if any) properly chargeable thereon. Any value added tax chargeable in respect of any services supplied by the Lender under this Agreement shall, on delivery of the value added tax invoice, be paid in addition to any sum agreed to be paid hereunder.
 
10.5
Stamp duty etc.
 
The Borrowers shall pay any and all stamp, registration and similar taxes or charges (including those payable by the Lender) imposed by governmental authorities in relation to this Agreement and any of the other Finance Documents, and shall indemnify the Lender against any and all liabilities with respect to, or resulting from delay or omission on the part of the Borrowers to pay such stamp taxes or charges.
 
10.6
Environmental Indemnity
 
The Borrower sshall indemnify the Lender on demand and hold the Lender harmless from and against all costs, expenses, payments, charges, losses, demands, liabilities, actions, proceedings (whether civil or criminal) penalties, fines, damages, judgements, orders, sanctions or other outgoings of whatever nature which may be suffered, incurred or paid by, or made or asserted against the Lender at any time, whether before or after the repayment in full of principal and interest under this Agreement, relating to, or arising directly or indirectly in any manner or for any cause or reason out of an Environmental Claim made or asserted against the Lender if such Environmental Claim would not have been, or been capable of being, made or asserted against the Lender if it had not entered into any of the Finance Documents and/or exercised any of its rights, powers and discretions thereby conferred and/or performed any of its obligations thereunder and/or been involved in any of the transactions contemplated by the Finance Documents.
 
10.7
Currency Indemnity
 
If any sum due from the Borrowers under any of the Finance Documents or any order or judgement given or made in relation hereto has to be converted from the currency (the “first currency”) in which the same is payable under the relevant Finance Document or under such order or judgement into another currency (the “second currency”) for the purpose of (i) making or filing a claim or proof against the Borrowers or any other Security Party, as the case may be or (ii) obtaining an order or judgement in any court or other tribunal or (iii) enforcing any order or judgement given or made in relation to any of the Finance Documents, the Borrower shall (and it is hereby expressly undertaken by the Borrowers to) indemnify and hold harmless the Lender from and against any loss suffered as a result of any difference between (a) the rate of exchange used for such purpose to convert the sum in question from the first currency into the second currency and (b) the rate or rates of exchange at which the Lender may in the ordinary course of business purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgement, claim or proof. The term “rate of exchange” includes any premium and costs of exchange payable in connection with the purchase of the first currency with the second currency.
 
73
10.8
Maintenance of the Indemnities
 
The indemnities contained in this Clause 10 shall apply irrespective of any indulgence granted to the Borrowers or any other party from time to time and shall continue to be in full force and effect notwithstanding any payment in favour of the Lender and any sum due from the Borrowers under this Clause 10 will be due as a separate debt and shall not be affected by judgement being obtained for any other sums due under any one or more of this Agreement, the other Finance Documents and any other documents executed pursuant hereto or thereto.
 
10.9
MII costs and MAPI costs
 
The Borrower sshall reimburse the Lender on demand for any and all costs incurred by the Lender (as conclusively certified by the Lender) in effecting and keeping effected (a) a Mortgagee’s Interest Insurance (herein “MII”) and (b) a Mortgagee’s Interest Additional Perils (Pollution) Insurance policy (herein “MAPI”), each of which the Lender may at any time effect for an amount equal to 120% of the Loan and on such terms and with such insurers as shall from time to time be determined by the Lender, provided, however, that the Lender shall in its absolute discretion appoint and instruct in respect of any such MII and MAPI policy the insurance brokers in respect of such Insurance and provided, further, that in the event that the Lender effects any such Insurance on the basis of any mortgagee’s open cover, the Borrowers shall pay on demand to the Lender its proportion of premium due in respect of the Vessels for which such insurance cover has been effected by the Lender, and any certificate of the Lender in respect of any such premium due by the Borrowers shall (save for manifest error) be conclusive and binding upon the Borrowers.
 
10.10
Central Bank or European Central Bank reserve requirements indemnity
 
The Borrowers shall on demand promptly indemnify the Lender against any cost incurred or loss suffered by the Lender as a result of its complying with the minimum reserve requirements of the European Central Bank and/or with respect to maintaining required reserves with the relevant national Central Bank to the extent that such compliance relates to the Commitment or deposits obtained by it to fund the whole or part of the Loan and to the extent such cost or loss is not recoverable by such Lender under Clause 12.2 (Increased cost).
 
10.11
Communications Indemnity
 
It is hereby agreed in connection with communications that:
 

 (a)
Express authority is hereby given by the Borrowesr to the Lender to accept all tested or untested communications given by facsimile, or electronic mail or otherwise, regarding any or all of the notices (as defined in Clause 16.8 (Meaning of “notice”), requests, instructions or other communications under this Agreement, subject to any restrictions imposed by the Lender relating to such communications including, without limitation (if so required by the Lender), the obligation to confirm such communications by letter.
 
74

 (b)
The Borrowers shall recognise any and all of the said notices, requests, instructions or other communications as legal, valid and binding, when these notices, requests, instructions or communications come from the fax number or electronic address mentioned in Clause 16.1 (Notices) or any other fax or electronic address usually used by it or the Approved Manager and are duly signed or in case of emails are duly sent by the person appearing to be sending such notice, request, instruction or other communication.
 

 (c)
The Borrowers hereby assume full responsibility for the execution of the said notices, requests, instructions or communications and promise and recognise that the Lender shall not be held responsible for any loss, liability or expense that may result from such notices, requests, instructions or other communications. It is hereby undertaken by the Borrowers to indemnify in full the Lender from and against all actions, proceedings, damages, costs, claims, demands, expenses and any and all direct and/or indirect losses which the Lender may suffer, incur or sustain by reason of the Lender following such notices, requests, instructions or communications.
 

 (d)
With regard to notices, requests, instructions or communications issued by electronic and/or mechanical processes (e.g. by facsimile or electronic mail), the risk of equipment malfunction, including, without limitation, paper shortage, transmission errors, omissions and distortions is assumed fully and accepted by the Borrowers, save in case of Lender’s gross misconduct.
 

 (e)
The risks of misunderstandings and errors resulting from notices, requests, instructions or communications being given as mentioned above, are for the Borrowers and the Lender will be indemnified in full pursuant to this Clause save in case of Lender’s wilful misconduct.
 

 (f)
The Lender shall have the right to ask the Borrowers to furnish any information the Lender may require to establish the authority of any person purporting to act on behalf of the Borrowers for these notices, requests, instructions or communications but it is expressly agreed that there is no obligation for the Lender to do so.  The Lender shall be fully protected in, and the Lender shall incur no liability to the Borrowers for acting upon the said notices, requests, instructions or communications which were believed by the Lender in good faith to have been given by any Borrower or by any of its authorised representative(s).
 

 (g)
It is undertaken by the Borrowers to use its best endeavours to safeguard the function and the security of the electronic and mechanical appliance(s) such as fax(es) etc., as well as the code word list, if any, and to take adequate precautions to protect such code word list from loss and to prevent its terms becoming known to any persons not directly concerned with its use. The Borrowers shall hold the Lender harmless and indemnified from all claims, losses, damages and expenses which the Lender may incur by reason of the failure of the Borrowers to comply with the obligations under this Clause 10.11.
 
10.12
Electronic communication
 
Any communication from the Lender made by electronic means will be sent unsecured and without electronic signature, however, the Borrowers may request the Lender at any time in writing to change the method of electronic communication from unsecured to secured electronic mail communication.
 
75

 (a)
Each   Borrower hereby acknowledges and accepts the risks associated with the use of unsecured electronic mail communication including, without limitation, risk of delay, loss of data, confidentiality breach, forgery, falsification and malicious software.  The Lender shall not be liable in any way for any loss or damage or any other disadvantage suffered by a Borrower resulting from such unsecured electronic mail communication.
 

 (b)
If the Borrowers or any other Security Party wish to cease all electronic communication, they shall give written notice to the Lender accordingly after receipt of which notice the Parties shall cease all electronic communication.
 

 (c)
For as long as electronic communication is an accepted form of communication, the Parties shall:
 

 (i)
notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and
 

 (ii)
notify each other of any change to their respective addresses or any other such information supplied to them; and
 

 (iii)
in case electronic communication is sent to recipients with the domain <@unitizedocean.com>, the parties shall without undue delay inform each other if there are changes to the said domain or if electronic communication shall thereafter be sent to individual e-mail addresses.
 
10.13
FATCA Deduction
 

 (a)
Each 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 Party shall 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 that FATCA Deduction.
 

 (b)
Each 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 FATCA Deduction), notify the Party to whom it is making the payment.
 
10.14
FATCA status
 

 (a)
Subject to Clause 10.14(c) below, each party shall, within ten (10) Business Days of a reasonable request by another party:
 

 (i)
confirm to that other party whether it is:
 

 (aa)
a FATCA Exempt Party; or
 

 (bb)
not a FATCA Exempt Party; and
 

 (ii)
supply to that other party such forms, documentation and other information relating to its status under FATCA (including its applicable passthru percentage or other information required under the Treasury Regulations or other official guidance including intergovernmental agreements) as that other party reasonably requests for the purposes of that other party's compliance with FATCA.
 
76

 (b)
If a party confirms to another party pursuant to Clause 10.14(a)(i) above that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, that party shall notify that other party reasonably promptly.
 

 (c)
Clause 10.14(a)(i) above shall not oblige the Lender to do anything which would or might in its opinion constitute a breach of:
 

 (i)
any law or regulation;
 

 (ii)
any fiduciary duty; or
 

 (iii)
any duty of confidentiality.
 

 (d)
If a party fails to confirm its status or to supply forms, documentation or other information requested in accordance with Clause10.14(a) above (including, for the avoidance of doubt, where Clause 10.14(c) above applies), then:
 

 (i)
if that party failed to confirm whether it is (and/or remains) a FATCA Exempt Party then such party shall be treated for the purposes of the Finance Documents as if it is not a FATCA Exempt Party; and
 

 (ii)
if that party failed to confirm its applicable passthru percentage then such party shall be treated for the purposes of the Finance Documents (and payments made thereunder) as if its applicable passthru percentage is 100%,
 
until (in each case) such time as the party in question provides the requested confirmation, forms, documentation or other information.
 
10.15
Arrangement fee
 

 (a)
Arrangement fee: The Borrowers shall pay to the Lender an arrangement fee in an amount of Dollars equal to zero point five zero per cent. (0.50%) of the amount of the Loan.
 

 (b)
Non-refundable: The Arrangement Fee shall be payable by the Borrowers to the Lender irrespective of utilisation/cancellation in part or in whole of the Commitment and shall be non-refundable.
 
11.
SECURITY, APPLICATION, SET-OFF

11.1
Securities
 
As security for the due and punctual repayment of the Loan and payment of interest thereon as provided in this Agreement and of all other Outstanding Indebtedness, the Borrowers shall ensure and procure that the Security Documents are duly executed and, where required, registered in favour of the Lender in form and substance satisfactory to the Lender at the time specified herein or otherwise as required by the Lender and ensure that such security consists, on the Drawdown Date of the Security Documents as provided in Clause 7 (Conditions Precedent).
 
11.2
Maintenance of Securities
 
It is hereby undertaken by the Borrowers that the Finance Documents shall both at the date of execution and delivery thereof and so long as any moneys are owing and/or due under this Agreement and/or under the other Finance Documents be valid and binding obligations of the respective Security Parties thereto and rights of the Lender enforceable in accordance with their respective terms and that they will, at the expense of the Borrowers, execute, sign, perfect and do any and every such further assurance, document, act, omission or thing as in the opinion of the Lender may be necessary or desirable for perfecting the security contemplated or constituted by the Finance Documents.
 
77
11.3
Application of receipts
 

 (a)
Order of application:  Except as any Finance Document may otherwise provide, any sums which are received or recovered by the Lender under or pursuant to or by virtue of any of the Finance Documents and expressed to be applicable in accordance with this Clause 11.3 shall be applied by the Lender in the following manner:
 

 (i)
FIRST: in or towards satisfaction of any amounts then due and payable under the Finance Documents in the following order and proportions:
 

 aa)
Firstly, in or towards satisfaction of all amounts then due and payable to the Lender under the Finance Documents other than those amounts referred to at paragraphs b) and c) below (including, but without limitation, all amounts payable by the Borrowers under Clauses 10 (Indemnities- Expenses-Fees), 5.1 (Payments – No set-off or counterclaims) or 5.3 (Gross Up) of this Agreement or by the Borrowers or any other Security Party under any corresponding or similar provision in any other Finance Document);
 

 bb)
Secondly, in or towards payment of any default interest then due and payable to the Lender;
 

 cc)
Thirdly, in or towards payment of any arrears of interest (other than default interest) due and payable in respect of the Loan or any part thereof payable to the Lender under the Finance Documents;
 

 dd)
Fourthly, in or towards repayment of the Loan (whether the same is due and payable or not);
 

 (ii)
SECOND the surplus (if any), after the full and complete payment of the Outstanding Indebtedness, shall be paid to the Borrowers or to any other person appearing to be entitled to it.
 

 (b)
Notice of variation of order of application:  The Lender may, by notice to the Borrowers and the Security Parties, provide, at its sole discretion, for a different order of application from that set out in Clause 11.3(a) (Order of application) either as regards a specified sum or sums or as regards sums in a specified category or categories, without affecting the obligations of the Borrowers to the Lender.
 

 (c)
Effect of variation notice:  The Lender may give notices under Clause 11.3(b) (Notice of variation of order of application) from time to time; and such a notice may be stated to apply not only to sums which may be received or recovered in the future, but also to any sum which has been received or recovered on or after the third Business Day before the date on which the notice is served.
 

 (d)
Insufficient balance: For the avoidance of doubt, in the event that such balance is insufficient to pay in full the whole of the Outstanding Indebtedness, the Lender shall be entitled to collect the shortfall from the Borrowers or any other person liable therefor.
 
78

 (e)
Appropriation rights overridden:  This Clause 11.3 and any notice which the Lender gives under Clause 11.3(b) (Notice of variation of order of application) shall override any right of appropriation possessed, and any appropriation made, by the Borrowers or any other Security Party.
 
11.4
Set off
 

 (a)
Application of credit balances: Express authority is hereby given by the Borrower sto the Lender without prejudice to any of the rights of the Lender at law, contractually or otherwise, at any time after an Event of Default has occurred and is continuing, and without prior notice to the Borrowers:
 

 (i)
to apply any credit balance standing upon any account of the Borrowers with any branch of the Lender (including, without limitation, the Operating Account and in whatever currency in or towards satisfaction of any sum due to the Lender from the Borrowers under this Agreement, the General Assignment and/or any of the other Finance Documents;
 

 (ii)
in the name of each Borrower and/or the Lender to do all such acts and execute all such documents as may be necessary or expedient to effect such application; and
 

 (iii)
to combine and/or consolidate all or any accounts in the name of each Borrower with the Lender; and
 
for that purpose:
 

 aa)
to break, or alter the maturity of, all or any part of a deposit of any Borrower;
 

 bb)
to convert or translate all or any part of a deposit or other credit balance into Dollars, such conversion or translation to be made at the Lender’s market rate of exchange in its usual course of business for the purpose of the set-off; and
 

 cc)
to enter into any other transaction or make any entry with regard to the credit balance which the Lender considers appropriate.
 

 (b)
Existing rights unaffected: The Lender shall not be obliged to exercise any right given by this Clause; and those rights shall be without prejudice and in addition to any right of set-off, combination of accounts, charge, lien or other right or remedy to which the Lender is entitled (whether under the general law or any document). For all or any of the above purposes authority is hereby given to the Lender to purchase with the moneys standing to the credit of any such account or accounts such other currencies as may be necessary to effect such application. The Lender shall notify the Borrower forthwith upon the exercise of any right of set‑off giving full details in relation thereto.
 
79
12.
UNLAWFULNESS, INCREASED COST AND BAIL-IN

12.1
Unlawfulness
 
If any change in, or introduction of, any law, regulation or regulatory requirement or any request of any central bank, monetary, regulatory or other authority or any order of any court renders it unlawful or contrary to any such regulation, requirement, request or order for the Lender to advance the Commitment or the relevant part thereof (as the case may be) or to maintain or fund the Loan, notice shall be given promptly by the Lender to the Borrowers whereupon the Commitment shall be reduced to zero and the Borrowers shall be obliged to prepay the Loan or to determine or charge interest rates based upon Term SOFR either (i) forthwith or (ii) on a future specified date not being earlier than the latest date permitted by the relevant law or regulation, together with accrued interest thereon to the date of prepayment and all other sums payable by the Borrowers under this Agreement.
 
12.2
Increased Cost
 
If the result of any change in, or in the interpretation, implementation or application of, or the introduction of, any law or any regulation (whether or not having the force of law, but, if not having the force of law, with which the Lender or, as the case may be, its holding company habitually complies), including (without limitation) those relating to Taxation, capital adequacy, liquidity, reserve assets, cash ratio deposits and special deposits or other banking or monetary controls or requirements which affect the manner in which the Lender allocates capital resources to its obligations hereunder (including, without limitation, those resulting from the implementation or application of or compliance with the Basel II Accord or the Basel III Accord or any Basel II Regulation or the Basel III Accord or any Basel III Regulation or any subsequent accord, approach or regulation thereto) (collectively, “Capital Adequacy Law”) or compliance by the Lender with any such Capital Adequacy Law or , is to:
 

 (a)
increase the cost to, or impose an additional cost on, the Lender or its holding company in making or keeping the Commitment available or maintaining or funding all or part of the Loan; and/or
 

 (b)
subject the Lender to Taxes or change the basis of Taxation of the Lender with respect to any payment under any of the Finance Documents (other than Taxes or Taxation on the overall net income, profits or gains of the Lender imposed in the jurisdiction in which its principal or lending office under this Agreement is located); and/or
 

 (c)
reduce the amount payable or the effective return to the Lender under any of the Finance Documents; and/or
 

 (d)
reduce the Lender’s or its holding company rate of return on its overall capital by reason of a change in the manner in which it is required to allocate capital resources to the Lender’s obligations under any of the Finance Document; and/or
 

 (e)
require the Lender or its holding company to make a payment or forgo a return on or calculated by references to any amount received or receivable by it under any of the Finance Documents is required; and/or
 

 (f)
require the Lender or its holding company to incur or sustain a loss (including a loss of future potential profits) by reason of being obliged to deduct all or part of the Commitment or the Loan from its capital for regulatory purposes,
 
80
then and in each case (subject to Clause 12.6 (Exception)):
 

 (i)
the Lender shall notify the Borrowers in writing of such event promptly upon it becoming aware of the same; and
 

 (ii)
the Borrowers shall on demand pay to the Lender the amount which the Lender specifies (in a certificate and supporting documents setting forth and evidencing the basis of the computation of such amount but not including any matters which the Lender or its holding company regards as confidential) is required to compensate the Lender and/or (as the case may be) its holding company for such liability to Taxes, cost, reduction, payment, foregone return or loss whatsoever.
 
For the purposes of this Clause 12 “holding company” means the company or entity (if any) within the consolidated supervision of which the Lender is included.
 
12.3
Mitigation
 
If circumstances arise which would result in a notification under Clause 12.1 (Unlawfulness) or Clause 12.2 (Increased Cost), then, without in any way limiting the rights of the Lender under this Clause, the Lender shall use reasonable endeavours to transfer all the Lender’s obligations, liabilities and rights under this agreement and the Finance Documents to another office or financial institution not affected by the circumstances, but the Lender shall not be under any obligation to take any such action if, in its opinion, to do so would or might: (a) have an adverse effect on its business, operations or financial condition; or (b) involve it in any activity which is unlawful or prohibited or any activity that is contrary to, or inconsistent with, any regulation; or involve it in any expense (unless indemnified to its satisfaction) or tax disadvantage.
 
12.4
Claim for increased cost
 
The Lender will promptly notify the Borrowers of any intention to claim indemnification pursuant to Clause 12.2 (Increased Cost) and such notification will be a conclusive and full evidence binding on the Borrowers as to the amount of any increased cost or reduction and the method of calculating the same and the Borrowers shall be allowed to rebut such evidence by any means of evidence save for witness.  A claim under Clause 12.2 (Increased Cost) and must be discharged by the Borrowers on the next Interest Payment Date or alternatively within seven (7) days of demand by the Lender.  It shall not be a defence to a claim by the Lender under this Clause 12.4 that any increased cost or reduction could have been avoided by the Lender.  Any amount due from the Borrowers under Clause 12.2 (Increased Cost) shall be due as a separate debt and shall not be affected by judgement being obtained for any other sums due under or in respect of this Agreement.
 
12.5
Option to prepay
 

 (a)
Prepayment: If any additional amounts are required to be paid by the Borrowers to the Lender by virtue of Clause 12.2 (Increased Cost), the Borrowers shall be entitled, on giving the Lender not less than seven (7) days prior notice in writing, to prepay (without premium or penalty) the Loan and accrued interest thereon, together with all other Outstanding Indebtedness, on the next Repayment Date. Any such notice, once given, shall be irrevocable.
 

 (b)
Application of prepayment:  Clause 4 (Repayment-Prepayment) shall apply in relation to the prepayment.
 
81
12.6
Exception
 
Nothing in Clause 12.2 (Increased Cost) shall entitle the Lender to receive any amount in respect of compensation for any such liability to Taxes, increased or additional cost, reduction, payment, foregone return or loss to the extent that the same is subject of an additional payment under Clause 5.3 (Gross Up).
 
12.7
Contractual recognition of bail-in
 
Notwithstanding any other term of any Finance Document or any other agreement, arrangement or understanding between the Parties, each Party acknowledges and 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 relevant Resolution 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 any such 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.
 
13.
OPERATING ACCOUNT

13.1
General
 
Each Borrower undertakes with the Lender that it will:
 

 (a)
on or before the Drawdown Date open its respective Operating Account; and
 

 (b)
ensure and procure that all moneys payable to the Borrowers in respect of the Earnings of the Vessel owned by it and the Insurances thereon shall, unless and until the Lender directs to the contrary pursuant to the relevant General Assignment, be paid to the respective Operating Account, free from Security Interests and rights of set off other than those created by or under the Finance Documents and, shall be held there on trust for the Lender and shall be applied as provided in Clause 13.2 (Application of Earnings),
 
provided, always, that any moneys received in a currency other than Dollars, may be converted in Dollars by the Lender at the Lender’s spot rate of exchange.
 
13.2
Application of Earnings
 
Unless and until an Event of Default shall occur (whereupon the provisions of Clause 11.3 (Application of receipts) shall be applicable) and subject to the terms and conditions of the Accounts Pledge Agreement no monies shall be withdrawn from the Operating Account save as hereinafter provided. Subject to no Event of Default having occurred and being continuing, all monies paid to the Operating Account (whether being Earnings or not) after discharging the costs (if any) incurred by the Lender, in collecting such monies, shall be applied by the Lender as follows:
 
82

 (a)
First: in or towards payment of any arrears of interest and principal of the Loan due and payable and any and all other sums whatsoever which from time to time become due and payable to the Lender hereunder (such sums to be paid in such order as the Lender may in its sole discretion elect);
 

 (b)
Second: in or towards payment of the Operating Expenses; and
 

 (c)
Third: any credit balance shall be, subject to the provisions of this Agreement (including dividends restriction, as provided in Clause 8.2(o) (No dividends or distributions)) and the Accounts Pledge Agreement, available to the Borrowers to be used for any purpose not inconsistent with the Borrowers’ other obligations under this Agreement.
 
13.3
Interest
 
Any amounts for the time being standing to the credit of an Operating Account shall bear interest at the rate from time to time offered by the Lender to its customers for Dollar deposits of similar amounts and for periods similar to those for which such amounts are likely to remain standing to the credit of that Operating Account. Such interest shall, provided that (a) the foregoing provisions of this Clause 13 shall have been complied with and (b) no Event of Default shall have occurred and is continuing, be released to the respective Borrower.
 
13.4
Drawings from Operating Accounts
 
After the occurrence of an Event of Default which is continuing the Lender shall not permit the Borrowers to make any drawings from their respective Operating Account.
 
13.5
Authorisation
 
The Lender shall be entitled (but not obliged) at any time, and to this respect the Lender is hereby authorised by the Borrowers from time to time to debit the Operating Accounts, without notice to the Borrowers, in order to discharge any amount due and payable to the Lender under the terms of this Agreement and the Security Documents or otherwise howsoever in connection with the Loan, including, without limitation, any payment of which the Lender has become entitled to demand under Clause 10 (Indemnities - Expenses – Fees). The Lender shall notify the Borrowers following any such discharge of any amount due and payable to the Lender giving the necessary details in relation thereto.
 
13.6
Obligations unaffected
 
Nothing in this Clause 13 contained shall be deemed to affect:
 

 (a)
the liability and absolute obligation of the Borrowers to pay interest on and to repay the Loan as provided in Clauses 3 (Interest) and 4 (Repayment-Prepayment) nor shall they constitute or be construed as constituting a manner of postponement thereof; or
 

 (b)
any other liability or obligation of the Borrowers or any other Security Party under any Finance Document.
 
83
13.7
Relocation of Operating Account and Cash Collateral Account
 
Each Borrower, at its own costs and expenses, undertakes with the Lender to comply with or cause to be complied with any written requirement of the Lender from time to time as to the location or re-location of the Operating Accounts and Cash Collateral Account and will from time to time enter into such documentation as the Lender may require in order to create or maintain a security interest in the Operating Accounts and the Cash Collateral Account.
 
13.8
Application on Event of Default
 
Upon the occurrence of an Event of Default which is continuing or at any time thereafter (whether or not notice of default has been given to the Borrowers) when an Event of Default continues the Lender shall be entitled to set off and apply all sums standing to the credit of the Operating Account and accrued interest (if any) without notice to the Borrowers in the manner specified in Clause 11.3 (Application of receipts) (and express and irrevocable authority is hereby given by the Borrowers to the Lender so to set off by debiting the Operating Accounts accordingly by the same and the Borrowers shall be released to the extent of such set off and application.
 
13.9
No Security Interests
 
Each Borrower hereby covenants with the Lender that its Operating Account and any moneys therein shall not be charged, assigned, transferred or pledged nor shall there be granted by any Borrower or suffered to arise any third party rights over or against the whole or any part of its respective  Operating Account other than in favour of the Lender as promised herein and in the relevant General Assignment.
 
13.10
Operation of Operating Account and the Cash Collateral Account
 
Each Operating Account and the Cash Collateral Account shall be operated by the respective Borrower , or as the case may be, the Cash Collateral Account Holder to the degree permitted by this Agreement and the General Assignment in accordance with the Lender’s usual terms and conditions (full knowledge of which each Borrower hereby acknowledges) and subject to the Lender’s usual charges levied on such accounts and/or transactions conducted on such accounts (as from time to time notified by the Lender to the Borrowers).
 
13.11
Release
 
Upon payment in full of all the Outstanding Indebtedness in full, any balance then standing to the credit of the Operating Accounts shall be released and paid to the Borrowers or to whomsoever else may be entitled to receive such balance.
 
84
14.
ASSIGNMENT, TRANSFER, PARTICIPATION, LENDING OFFICE

14.1
Binding Effect
 
This Agreement shall be binding upon and inure to the benefit of the Lender and the Borrower and their respective successors and assigns.
 
14.2
No Assignment by the Borrowers and other Security Parties
 
Neither the Borrowers nor any other Security Parties may assign or transfer any of its rights and/or obligations under this Agreement or any of the other Finance Documents or any documents executed pursuant to this Agreement and/or the other Finance Documents.
 
14.3
Assignment by the Lender
 
The Lender may at any time without the consent of, or consultation with, the Borrowers and the other Security Parties but with thirty (30) days prior notice to the Borrowers, cause all or any part of its rights, benefits and/or obligations under this Agreement and the other Finance Documents to be assigned or transferred to:
 

 (a)
another branch, any Subsidiary or Affiliate of, or company controlled by, the Lender,
 

 (b)
another first class international bank or financial institution, insurer, social security fund, pension fund, capital investment company, financial intermediary or special purpose vehicle associated to any of them or any other person, or
 

 (c)
a trust corporation, fund or other person which regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets of which are managed or serviced by the Lender
 
(in each case an “Assignee” or a “Transferee”),
 
provided that the Assignee or Transferee, shall deliver to the Lender such undertaking as the Lender may approve, whereby it becomes bound by the terms of this Agreement and agrees to perform all or, as the case may be, part of the Lender’s obligations under this Agreement; and
 
provided further that the liabilities of the Borrowers and/or of any other Security Party under this Agreement and any other Finance Document shall not be increased as a result of any such assignment or transfer and that in the event that the liabilities (actual or contingent) of the Borrowers and/or of any other Security Party are increased, neither the Borrowers nor any other Security Party shall be liable for any such excess.
 
14.4
Participation
 
The Lender may at any time without the consent of, or consultation with, or notice to the Borrowers sub-participate all or any part of its rights, benefits and/or obligations under this Agreement and the other Finance Documents without the consent of, or consultation with or notice to the Borrowers and the other Security Parties, provided that the liabilities of the Borrowers under this Agreement and any other Finance Document shall not be increased as a result of any such sub-participation and that in the event that the Borrowers’ liabilities (actual or contingent) are increased, the Borrowers shall not be liable for any such excess.
 
85
14.5
Cost
 
Any cost of such assignment or transfer or granting sub-participation shall be for the account of the Lender and/or the Assignee, Transferee or sub-participant unless any such assignment, transfer or sub-participation is undertaken at the request of the Borrowers, in which case any cost arising therefrom shall be for the account of the Borrowers.
 
14.6
Documenting assignments and transfers
 
If the Lender assigns, transfers or in any other manner grants participation in respect of all or any part of its rights or benefits or transfers all or any of its obligations as provided in this Clause 14.6 each Borrower undertakes, immediately on being requested to do so by the Lender, to enter at the expense of the Lender into and procure that each Security Party enters into such documents as may be necessary or desirable to transfer to the Assignee, Transferee or participant all or the relevant part of the interest of the Lender in the Finance Documents and all relevant references in this Agreement to the Lender shall thereafter be construed as a reference to the Lender and/or assignee, transferee or participant of the Lender to the extent of their respective interests and, in the case of a transfer of all or part of the obligations of the Lender, the Borrowers shall thereafter look only to the Assignee, Transferee or participant in respect of that proportion of the obligations of the Lender under this Agreement assumed by such assignee, transferee or participant. Subject to the provisions of Clause 14.3 (Assignment by the Lender), each Borrower subject to Clause 14.3 (Assignment by the Lender) hereby expressly consents to any subsequent transfer of the rights and obligations of the Lender and undertakes that it shall join in and execute such supplemental or substitute agreements as may be necessary to enable the Lender to assign and/or transfer and/or grant participation in respect of its rights and obligations to another branch or to one or more banks or financial institutions in a syndicate or otherwise. The cost of any such assignment shall be borne by the Lender and/or the relevant Assignee or Transferee.
 
14.7
Disclosure of information
 
The Lender may disclose to a prospective assignee, substitute or transferee such information about the Borrowers as the Lender shall consider appropriate if the Lender first procures that the relevant prospective assignee, substitute or transferee (such person together with any prospective assignee, substitute or transferee being hereinafter described as the “Prospective Assignee”) shall undertake to the Lender by way of a non disclosure agreement to keep secret and confidential and shall not, without the consent of the Borrowers, disclose to any third party any of the information, reports or documents supplied by the Lender provided, however, that the Prospective Assignee shall be entitled to disclose such information, reports or documents in the following situations:
 

 (a)
in relation to any proceedings arising out of this Agreement or the other Finance Documents to the extent considered necessary by the Prospective Assignee to protect its interest; or
 

 (b)
pursuant to a court order relating to discovery or otherwise; or
 

 (c)
pursuant to any law or regulation or to any fiscal, monetary, tax, governmental or other competent authority; or
 

 (d)
to its auditors, legal or other professional advisers.
 
In addition, the Prospective Assignee shall be entitled to disclose or use any such information, reports or documents if the information contained therein shall have emanated in conditions free from confidentiality, bona fide from some person other than the Lender or the Borrowers.
 
86
14.8
Changes in constitution or reorganisation of the Lender
 
For the avoidance of doubt and without prejudice to the provisions of Clause 14.1 (Binding Effect), this Agreement shall remain binding on the Borrowers and the other Security Parties notwithstanding any change in the constitution of the Lender or its absorption in, or amalgamation with, or the acquisition of all or part of its undertaking or assets by, any other person, or any reconstruction or reorganisation of any kind, to the intent that this Agreement shall remain valid and effective in all respects in favour of any Assignee, Transferee or other successor in title of the Lender in the same manner as if such Assignee, Transferee or other successor in title had been named in this Agreement as a party instead of, or in addition to, the Lender.
 
14.9
Securitisation
 
The Lender may include all or any part of the Loan in a securitisation (or similar transaction) pursuant to Law 3156/2003, or any other relevant legislation introduced or enacted after the date of this Agreement, without the consent of, or consultation with, but with notice to the Borrowers. The Borrowers will assist the Lender as necessary to achieve a successful securitisation (or similar transaction) provided that the Borrowers shall not be required to bear any third party costs related to any such securitisation (or similar transaction) and that such securitisation (or similar transaction) shall not result in an increase of the Borrowers’ obligations under this Agreement and the other Security Documents and need only provide any such information which any third parties may reasonably require.
 
14.10
Lending Office
 
The Lender shall lend through its office at the address specified in the preamble of this Agreement or through any other office of the Lender selected from time to time by it through which the Lender wishes to lend for the purposes of this Agreement.  If the office through which the Lender is lending is changed pursuant to this Clause 14.10, the Lender shall notify the Borrowers promptly of such change and upon notification of any such transfer, the word “Lender” in this Agreement and in the other Finance Documents shall mean the Lender, acting through such branch or branches and the terms and provisions of this Agreement and of the other Finance Documents shall be construed accordingly.
 
15.
MISCELLANEOUS

15.1
Time of essence
 
Time is of the essence as regards every obligation of the Borrowers under this Agreement.
 
15.2
Cumulative Remedies
 
The rights and remedies of the Lender contained in this Agreement and the other Finance Documents are cumulative and neither exclusive of each other nor of any other rights or remedies conferred by law.
 
87
15.3
No implied waivers
 
No failure, delay or omission by the Lender to exercise any right, remedy or power vested in the Lender under this Agreement and/or the other Finance Documents or by law shall impair such right or power, or be construed as a waiver of, or as an acquiescence in any default by the Borrowers, nor shall any single or partial exercise by the Lender of any power, right or remedy preclude any other or further exercise thereof or the exercise of any other power, right or remedy.  In the event of the Lender on any occasion agreeing to waive any such right, remedy or power, or consenting to any departure from the strict application of the provisions of this Agreement or of any other Finance Document, such waiver shall not in any way prejudice or affect the powers conferred upon the Lender under this Agreement and the other Finance Documents or the right of the Lender thereafter to act strictly in accordance with the terms of this Agreement and the other Finance Documents.  No modification or waiver by the Lender of any provision of this Agreement or of any of the other Finance Documents nor any consent by the Lender to any departure therefrom by any Security Party shall be effective unless the same shall be in writing and then shall only be effective in the specific case and for the specific purpose for which given.  No notice to or demand on any such party in any such case shall entitle such party to any other or further notice or demand in similar or other circumstances.
 
15.4
Integration of Terms
 
This Agreement contains the entire agreement of the parties and its provisions supersede the provisions of the Commitment Letter (save for the provisions thereof which relate to fees) and any and all other prior correspondence and oral negotiation by the parties in respect of the matters regulated by this Agreement.
 
15.5
Recourse to other security
 
The Lender shall not be obliged to make any claim or demand or to resort to any Finance Document or other means of payment now or hereafter held by or available to it for enforcing this Agreement or any of the other Finance Documents against the Security Parties (or any of them) or any other person liable and no action taken or omitted by the Lender in connection with any such Finance Document or other means of payment will discharge, reduce, prejudice or affect the liability of any Security Party under this Agreement and the other Finance Documents to which it is, or is to be, a party.
 
15.6
Amendments - No modification, waiver etc. unless in writing
 

 (a)
This Agreement and any other Finance Documents shall not be amended or varied in their respective terms by any oral agreement or representation or in any other manner other than by an instrument in writing of even date herewith or subsequent hereto executed by or on behalf of the parties hereto or thereto.
 

 (b)
No modification or waiver by the Lender of any provision of this Agreement or of any of the other Finance Documents nor any consent by the Lender to any departure therefrom by any Security Party shall be effective unless the same shall be in writing and then shall only be effective in the specific case and for the specific purpose for which given.  No notice to or demand on any such party in any such case shall entitle such party to any other or further notice or demand in similar or other circumstances.
 
15.7
Severability of provisions
 
In the event of any provision contained in one or more of this Agreement, the other Finance Documents and any other documents executed pursuant hereto or thereto being invalid, illegal or unenforceable in any respect under any applicable law in any jurisdiction whatsoever, such provision shall be ineffective as to that jurisdiction only without affecting the remaining provisions hereof or thereof.  If, however, this event becomes known to the Lender prior to the drawdown of the Commitment or of any part thereof the Lender shall be entitled to refuse drawdown until this discrepancy is remedied. In case that the invalidity of a part results in the invalidity of the whole Agreement, it is hereby agreed that there will exist a separate obligation of the Borrowers for the prompt payment to the Lender of all the Outstanding Indebtedness. Where, however, the provisions of any such applicable law may be waived, they are hereby waived by the parties hereto to the full extent permitted by the law to the intent that this Agreement, the other Finance Documents and any other documents executed pursuant hereto or thereto shall be deemed to be valid binding and enforceable in accordance with their respective terms.
 
88
15.8
Language and genuineness of documents
 

 (a)
Language:  All certificates, instruments and other documents to be delivered under or supplied in connection with this Agreement or any of the other Finance Documents shall be in the Greek or the English language (or such other language as the Lender shall agree) or shall be accompanied by a certified Greek translation upon which the Lender shall be entitled to rely.
 

 (b)
Certification of documents:  Any copies of documents delivered to the Lender shall be duly certified as true, complete and accurate copies by appropriate authorities or legal counsel practicing in Greece or otherwise as will be acceptable to the Lender at the sole discretion of the Lender.
 

 (c)
Certification of signature:  Signatures on Board or shareholder resolutions, Secretary’s certificates and any other documents are, at the discretion of the Lender, to be verified for their genuineness by appropriate Consul or other competent authority.
 
15.9
Further assurances
 
Each Borrower undertakes that the Finance Documents shall both at the date of execution and delivery thereof and so long as any moneys are owing under any of the Finance Documents be valid and binding obligations of the respective parties thereto and enforceable in accordance with their respective terms and that it will, at its expense, execute, sign, perfect and do, and will procure the execution, signing, perfecting and doing by each of the other Security Parties of, any and every such further assurance, document, act or thing as in the opinion of the Lender may be necessary or desirable for perfecting the security contemplated or constituted by the Finance Documents.
 
15.10
Counterparts
 
This Agreement may be executed in any number of counterparts and all such counterparts taken together shall be deemed to constitute but one and the same instrument.
 
15.11
Confidentiality
 

 (a)
Each of the parties hereto agree and undertake to keep confidential any documentation and any confidential information concerning the business, affairs, directors or employees of the other which comes into its possession in connection with this Agreement and not to use any such documentation, information for any purpose other than for which it was provided.
 

 (b)
Each Borrower acknowledges and accepts that the Lender may be required by law regulation or regulatory requirement or any request of any central bank or any court order to disclose information and deliver documentation relating to the Borrowers and the transactions and matters in relation to this Agreement and/or the other Finance Documents to governmental or regulatory agencies and authorities.
 
89

 (c)
Each Borrower acknowledges and accepts that in case of occurrence of any of the Events of Default which is continuing the Lender may disclose information and deliver documentation relating to the Borrowers and the transactions and matters in relation to this Agreement and/or the other Finance Documents to third parties to the extent that this is necessary for the enforcement or the contemplation of enforcement of the Lender’s rights or for any other purpose for which in the opinion of the Lender, such disclosure would be useful or appropriate for the interests of the Lender or otherwise and each Borrower expressly authorises any such disclosure and delivery.
 

 (d)
Each Borrower acknowledges and accepts that the Lender may be prohibited from disclosing information to the Borrowers by reason of law or duties of confidentiality owed or to be owed to other persons.
 

 (e)
This Clause 15.11 shall be: (i) in addition to all other duties of confidentiality imposed on the Lender and its professional advisers under applicable law; and (ii) subject to any other applicable provisions contained in this Agreement and the other Finance Documents.
 
15.12
Personal data
 

 (a)
Process of personal data: Each of the Borrowers hereby confirms that it has been informed that its personal data and/or the personal data of its director(s), officer(s) and legal representative(s) (together the “personal data”) contained in this Agreement or the personal data that have been or will be lawfully received by the Lender in relation to this Agreement and the Finance Documents will be included at the personal data database maintained by the Lender as processing agent (Υπεύθυνη Επεξεργασίας) and will be processed by the Lender in accordance with the European Regulation 679/2016 and the Hellenic Law 4684/2019 for the purpose of properly serving, supporting and monitoring their current business relationship. The Borrowers hereby declares that it has taken knowledge of the Privacy Notice on Procession of Data «Ενημέρωση για την Επεξεργασία Δεδομένων Προσωπικού Χαρακτήρα»), located on the Lender’s website.
 

 (b)
Process of personal data to Teiresias: The Borrowers hereby further confirms that it has been informed by the Lender that its personal data contained in this Agreement, the Finance Documents and in the Operating Accounts shall be onwards communicated for process to an inter-banking database record called “Teiresias” kept and solely used by banks and financial institutions in the context of bank credit and banking transactions.
 

 (c)
Duration of the process: The personal data process shall survive the termination of this Agreement for such period as it is required by the applicable law.
 
16.
JOINT AND SEVERAL LIABILITY OF THE BORROWERS

16.1
Joint and several liability
 
All liabilities and obligations of the Borrowers under this Agreement shall, whether expressed to be so or not, be joint and several.
 
16.2
No impairment of Borrowers’ obligations
 
The liabilities and obligations of a Borrower shall not be impaired by:
 
90

 (a)
this Agreement being or later becoming void, unenforceable or illegal as regards the other Borrower;
 

 (b)
the Lender entering into any rescheduling, refinancing or other arrangement of any kind with the other Borrower;
 

 (c)
the Lender releasing the other Borrower or any Security Interest created by a Finance Document; or
 

 (d)
any time, waiver or consent granted to, or composition with the other Borrower or other person;
 

 (e)
the release of the other Borrower or any other person under the terms of any composition or arrangement with any creditor thereof;
 

 (f)
the 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, the other Borrower 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 realise the full value of any security;
 

 (g)
any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of the other Borrower or any other person;
 

 (h)
any amendment, novation, supplement, extension, restatement (however fundamental, and whether or not more onerous) or replacement of a Finance Document or any other document or security including, without limitation, any change in the purpose of, any extension of or any increase in any facility or the addition of any new facility under any Finance Document or other document or security;
 

 (i)
any unenforceability, illegality or invalidity of any obligation or any person under any Finance Document or any other document or security;
 

 (j)
any insolvency or similar proceedings; or
 

 (k)
any combination of the foregoing.
 
16.3
Principal debtor
 
Each Borrower declares that it is and will, throughout the Security Period, remain a principal debtor for all amounts owing under this Agreement and the Finance Documents and none of the Borrowers shall in any circumstances be construed to be a surety for the obligations of the other Borrower under this Agreement.
 
16.4
Subordination
 
Subject to Clause 16.5 (Borrowers’ required action), during the Security Period, none of the Borrowers shall:
 

 (a)
claim any amount which may be due to it from the other Borrower whether in respect of a payment made, or matter arising out of, this Agreement or any Finance Document, or any matter unconnected with this Agreement or any Finance Document; or
 
91

 (b)
take or enforce any form of security from the other Borrower for such an amount, or in any other way seek to have recourse in respect of such an amount against any asset of the other Borrower; or
 

 (c)
set off such an amount against any sum due from it to the other Borrower; or
 

 (d)
prove or claim for such an amount in any liquidation, administration, arrangement or similar procedure involving the other Borrower or other Security Party; or
 

 (e)
exercise or assert any combination of the foregoing.
 
16.5
Borrowers’ required action
 
If during the Security Period, the Lender, by notice to the Borrowers, requires it to take any action referred to in paragraphs (a) to (d) of Clause 16.4 (Subordination), in relation to the other Borrower, that Borrower shall take that action as soon as practicable after receiving the Lender's notice.
 
16.6
Deferral of Borrowers' rights
 
Until all amounts which may be or become payable by the Borrowers under or in connection with the Finance Documents have been irrevocably paid in full and unless the Lender otherwise directs, no Borrower will exercise any rights which it may have by reason of performance by it of its obligations under the Finance Documents:
 

 (a)
to be indemnified by the other Borrower; or
 

 (b)
to claim any contribution from the other Borrower in relation to any payment made by it under the Finance Documents.
 
17.
NOTICES AND COMMUNICATIONS

17.1
Notices
 
Every notice, request, demand or other communication under the Agreement or, unless otherwise provided therein, any of the other Finance Documents shall:
 

 (a)
be in writing delivered personally or by first-class prepaid letter (airmail if available), or shall be served through a process server or subject to Clauses 10.11 (Communications Indemnity), and Clause 10.12 (Electronic Communication) and 17.6 (Effect of electronic communication) by fax or electronic mail;
 

 (b)
be deemed to have been received, subject as otherwise provided in this Agreement or the relevant Finance Document, in the case of fax or electronic mail, at the time of dispatch as per transmission report (provided, in either case, that if the date of despatch is not a business day in the country of the addressee it shall be deemed to have been received at the opening of business on the next such business day), and in the case of a letter when delivered or served personally or five (5) days after it has been put into the post; and
 
92

 (c)
be sent:
 

 (i)
if to be sent to any Security Party, to:
 
c/o PERFORMANCE SHIPMANAGEMENT INC.,
373 Syngrou Ave. & 2-4 Ymittou Str.,
175 64 Palaio Faliro, Athens, Greece
Facsimile No: +
Attention:  Mr. Andreas Nikolaos Michalopoulos
E-mail:
 
and
 

 (ii)
if to be sent to the Lender, to
 
Alpha Bank S.A.
93 Akti Miaouli
185 38 Piraeus, Greece
Fax No.:
Attention: The Manager
E-mail:
 
or to such other person, address fax number or electronic address as is notified by the relevant Security Party or the Lender (as the case may be) to the other parties to this Agreement and, in the case of any such change of address, or fax number or electronic address notified to the Lender, the same shall not become effective until notice of such change is actually received by the Lender and a copy of the notice of such change is signed by the Lender.
 
17.2
Effective date of notices
 
Subject to Clauses 17.3 (Service outside business hours) and 17.4 (Illegible notices):
 

 (a)
a notice which is delivered personally or posted shall be deemed to be served, and shall take effect, at the time when it is delivered; and
 

 (b)
a notice which is sent by fax or electronic mail shall be deemed to be served, and shall take effect, two hours after its transmission is completed.
 
17.3
Service outside business hours
 
However, if under Clause 17.2 (Effective date of notices) a notice would be deemed to be served:
 

 (a)
on a day which is not a Business Day in the place of receipt; or
 

 (b)
on such a Business Day, but after 5 p.m. local time,
 
the notice shall (subject to Clause 17.4 (Illegible notices)) be deemed to be served, and shall take effect, at 9 a.m. on the next day which is such a Business Day.
 
17.4
Illegible notices
 
Clauses 17.2 (Effective date of notices) and 17.3 (Service outside business hours) do not apply if the recipient of a notice notifies the sender within one hour after the time at which the notice would otherwise be deemed to be served that the notice has been received in a form which is illegible in a material respect.
 
93
17.5
Valid notices
 
A notice under or in connection with a Finance Document shall not be invalid by reason that its contents or the manner of serving it do not comply with the requirements of this Agreement or, where appropriate, any other Finance Document under which it is served if:
 

 (a)
the failure to serve it in accordance with the requirements of this Agreement or other Finance Document, as the case may be, has not caused any party to suffer any significant loss or prejudice; or
 

 (b)
in the case of incorrect and/or incomplete contents, it should have been reasonably clear to the party on which the notice was served what the correct or missing particulars should have been.
 
17.6
Effect of electronic communication
 

 (a)
Any communication to be made between any two Parties under or in connection with the Finance Documents may be made by electronic mail or other electronic means (including, without limitation, by way of posting to a secure website) if those two Parties:
 

 (i)
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
 

 (ii)
notify each other of any change to their address or any other such information supplied by them by not less than five (5) Business Days' notice.
 

 (b)
Any such electronic communication as specified in paragraph (a) above to be made between a Security Party and the Lender may only be made in that way to the extent that those two Parties agree that, unless and until notified to the contrary, this is to be an accepted form of communication.
 

 (c)
Any such electronic communication as specified in paragraph (a) above made between any two Parties will be effective only when actually received (or made available) in readable form and in the case of any electronic communication made by a Party to the Lender only if it is addressed in such a manner as the Lender shall specify for this purpose.
 

 (d)
Any electronic communication which becomes effective, in accordance with paragraph (c) above, after 5.00 p.m. in the place in which the Party to whom the relevant communication is sent or made available has its address for the purpose of this Agreement shall be deemed only to become effective on the following Business Day.
 

 (e)
Any reference in a Finance Document to a communication being sent or received shall be construed to include that communication being made available in accordance with this Clause 16.6.
 
17.7
Language
 
Any notice under or in connection with a Finance Document shall be in English.
 
94
17.8
Meaning of “notice”
 
In this Clause 16, “notice” includes any demand, consent, authorisation, approval, instruction, waiver or other communication.
 
18.
LAW AND JURISDICTION

18.1
Governing Law
 

 (a)
This Agreement and any non-contractual obligations connected with it shall be governed by and construed in accordance with English Law.
 

 (b)
For the purposes of enforcement in Greece, it is hereby expressly agreed that English law as the governing law of this Agreement will be proved by an affidavit of a solicitor from an English law firm to be appointed by the Lender and the said affidavit shall constitute full and conclusive evidence binding on the Borrowers but the Borrowers shall be allowed to rebut such evidence save for witness.
 
18.2
Jurisdiction
 

 (a)
The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement or any non-contractual obligations connected with it (including a dispute regarding the existence, validity or termination of this Agreement and including claims arising out of tort or delict) (a “Dispute”). Each Borrower irrevocably and unconditionally submits to the jurisdiction of such courts.
 

 (b)
The Parties agree that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary and waives any objections to the inconvenience of England as a forum.
 

 (c)
This Clause 17.2 is for the benefit of the Lender only.  As a result, the Lender shall not be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Lender may take concurrent proceedings in any number of jurisdictions.
 
18.3
Process Agent for English Proceedings
 
Without prejudice to any other mode of service allowed under any relevant law each Borrower irrevocably designates, appoints and empowers Messrs. Hill Dickinson Services (London) Ltd, currently of The Broadgate Tower, 20 Primrose Street, London EC2A 2EW, United Kingdom (hereinafter called the “Process Agent for English Proceedings”), to receive for it and on its behalf, service of process issued out of the English courts in relation to any proceedings before the English courts in connection with any Finance Document, provided, however, that:
 

 (a)
each Borrower hereby agrees and undertakes to maintain a Process Agent for English Proceedings throughout the Security Period and hereby agrees that in the event that if any Process Agent for English Proceedings is unable for any reason to act as agent for service of process, each Borrower must immediately (and in any event within ten (10) days of such event taking place) appoint another agent on terms acceptable to the Lender. Failing this, the Lender may appoint for this purpose a substitute Process Agent for English Proceedings and the Lender is hereby irrevocably authorised to effect such appointment on that Borrower’s behalf. The appointment of such Process Agent for English Proceedings shall be valid and binding from the date notice of such appointment is given by the Lender to each Borrower in accordance with Clause 16 (Notices and communications); and
 
95

 (b)
each Borrower hereby agrees that failure by a Process Agent for English Proceedings to notify the Borrower of the process will not invalidate the proceedings concerned.
 
18.4
Proceedings in any other country
 
If it is decided by the Lender that any such proceedings should be commenced in any other country, then any objections as to the jurisdiction or any claim as to the inconvenience of the forum is hereby waived by the Borrower and it is agreed and undertaken by each Borrower to instruct lawyers in that country to accept service of legal process and not to contest the validity of such proceedings as far as the jurisdiction of the court or courts involved is concerned and each Borrower agrees that any judgment or order obtained in an English court shall be conclusive and binding on the Borrowers and shall be enforceable without review in the courts of any other jurisdiction.
 
18.5
Process Agent (antiklitos) in Greece
 
Mrs. Aikaterini Oikonomea, an Attorney-at-Law, currently c/o Unitized Ocean Transport limited, 373 Syngrou Ave. & 2-4 Ymittou Str. 175 64 Palaio Faliro, Athens, Greece (hereinafter called the “Process Agent for Greek Proceedings”) is hereby appointed by the Borrowers as agent to accept service, upon whom any judicial process in respect of proceedings in Greece may be served and any process notice, judicial or extra-judicial request, demand for payment, payment order, foreclosure proceedings, notarial announcement of claim, notice, request, demand or other communication under this Agreement or any of the Finance Documents. In the event that the Process Agent for Greek Proceedings (or any substitute process agent notified to the Lender in accordance with the foregoing) cannot be found at the address specified above (or, as the case may be, notified to the Lender), which will be conclusively proved by a deed of a process server to the effect that the Process Agent  for Greek Proceedings was not found at such address, any process notice, judicial or extra-judicial request, demand for payment, payment order, foreclosure proceedings, notarial announcement of claim or other communication to be sent to any Security Party may be validly served/notified in accordance with the relevant provisions of the Hellenic Code on Civil Procedure.
 
18.6
Third Party Rights
 
A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement.
 
96
18.7
Meaning of “proceedings”
 
In this Clause 17 “proceedings” means proceedings of any kind, including an application for a provisional or protective measure.
 
[Remainder of page intentionally left blank]
 
97
SCHEDULE 1
 
Form of Drawdown Notice
(referred to in Clause 2.2)
 
To:
ALPHA BANK S.A.
93 Akti Miaouli
185 38 Piraeus, Greece
[●] December, 2022
 
Re:
US$29,750,000 Loan Agreement (the “Loan Agreement”) dated [●] July 2025 made between (1) the Lender, as lender and (2) ARBAR SHIPPING COMPANY INC. and GARU SHIPPING COMPANY INC. each a maritime company incorporated under the laws of the Marshall Islands (the “Borrowers”), as joint and several borrowers.

1.
We refer to the Loan Agreement (terms defined in the Loan Agreement have their defined meanings when used in this Drawdown Notice) and hereby give you notice that we wish to draw the Commitment as follows:
 

 (a)
Loan: in the amount of Dollars Twenty nine million seven hundred fifty thousand ($29,750,000);
 

 (b)
Drawdown Date: [●] July, 2025;
 

 (c)
duration of first Interest Period: duration of the first Interest Period in respect of the Loan shall be [●] months; and
 

 (d)
Payment instructions: [funds to be paid to the Operating Account numbered  […………………….] as per our instructions under separate cover for the purposes set out in Clause 1.1 (Amount and purpose) of the Loan Agreement].
 
2.
We confirm, represent and warrant that:
 

 (a)
no event or circumstance has occurred and is continuing which constitutes a Default or will result from the borrowing of the Loan;
 

 (b)
the representations and warranties contained in Clause 6 (Representations and warranties) of the Loan Agreement and the representations and warranties contained in each of the other Finance Documents are true and correct at the date hereof as if made with respect to the facts and circumstances existing at such date;
 

 (c)
the borrowing to be effected by the drawing of the Loan will be within our corporate powers, has been validly authorised by appropriate corporate action and will not cause any limit on our borrowings (whether imposed by statute, regulation, agreement or otherwise) to be exceeded;
 

 (d)
there has been no change in the ownership, management, operations and no Material Adverse Change in our financial position or in the consolidated financial position of ourselves and the other Security Parties from that described by us to the Lender in the negotiation of the Loan Agreement.
 
98
3.
This Drawdown Notice cannot be revoked without the prior consent of the Lender.
 
SIGNED by
)
    
Mr
)
    
for and on behalf of
)
    
ARBAR SHIPPING COMPANY INC.,
)
    
of the Marshall Islands,
)
 
in the presence of:
)
Attorney-in-fact
  
       
SIGNED by
)
    
Mr. Andreas Nikolaos Michalopoulos
)
    
for and on behalf of
)
    
GARU SHIPPING COMPANY INC.,
)
    
of the Marshall Islands,
)
 
in the presence of:
)
Attorney-in-fact
  

Witness:
    
Name:
Aikaterini Oikonomea
  
Title:
Attorney-at-Law
  
Address:
[●],
  
 
Piraeus, Greece
  

99
Schedule 2

        Form of Insurance Letter

To:
[P&I Club]
[●]
[●]

From:
[●]
[●],
[●]

[●] 20[●]
 
Dear Sirs
 
m.v. “[●]” (the “Vessel”)
 
We are obtaining loan finance from ALPHA BANK S.A. (the “Lender”) secured (inter alia) by a first ship mortgage over the Vessel.  The Vessel's insurances will also be assigned to the Lender.
 
You are hereby authorised to send a copy of the Certificate of Entry for the Vessel to the Lender, c/o their lawyers, namely, Theo V. Sioufas & Co. Law Offices, of 13 Defteras Merarchias Street, 185 35 Piraeus, Greece.  Further, you are also irrevocably authorised to provide the Lender from time to time with any other information whatsoever which they may require relating to the entry of the Vessel in the association.
 
This letter is governed by, and shall be construed in accordance with, English law.
 


For and on behalf of
[●]

100
Schedule 3
 
Form of Compliance Certificate
(referred to in Clauses 8.1(f) and 8.8
 
To:
ALPHA BANK S.A.,
93 Akti Miaouli, Piraeus, Greece
(the “Lender”)
 
From:
PERFORMANCE SHIPPING INC., of the Marshall Islands
(the “Parent Company”)
 

 Dated: [●], 20[●]

RE:
 US$29,750,000 Loan Agreement dated [●] July 2025 made between (1) the Lender, as lender and (2) ARBAR SHIPPING COMPANY INC. and GARU SHIPPING COMPANY INC. each a maritime company incorporated under the laws of the Marshall Islands (the “Borrowers”), as joint and several borrowers (the “Loan Agreement”).

We refer to the Loan Agreement. This is a Compliance Certificate. Terms defined in the Loan Agreement have the same meaning when used in this Compliance Certificate unless given a different meaning in this Compliance Certificate.
 
I/We [●], [●] and [●], [each] being  the Chief Financial Officer of the Parent Company, refer to Clause 8.1(e)(ii) of the Loan Agreement and hereby confirm that, during the Accounting Period 01.01.20[…] to 31.12.20[…] and on the date hereof the Financial Covenants (Clause 8.10 (Financial Covenants) of the Loan Agreement), are fully complied with:
 
1.
Financial Covenants:
 

 (a)
Corporate Liquidity: is US$ [●];
 

 (b)
Working Capital: is US$ [●]; and
 

 (c)
Value Adjusted Equity Ratio: is [●]%.
 
2.
Default: [No Default has occurred and is continuing]
 
or
 
[The following Default has occurred and in continuing: [provide details of Default].  [The following steps are being taken to remedy it: [provide details of steps being taken to remedy Default]].
 
We attach hereto the necessary documents supported by calculations setting out in reasonable detail the materials underling the statements made in this Compliance Certificate.
 
Signed:

Name:
[………………………….]
  
Title:
Chief Executive Officer/Chief Financial Officer

101
EXECUTION PAGE

IN WITNESS whereof the parties hereto have caused this Agreement to be duly executed on the date first above written.
 
SIGNED by
)
    
Mrs. Aikaterini Oikonomea
)
    
for and on behalf of
 )    
ARBAR SHIPPING COMPANY INC.,
)
    
of the Marshall Islands,
)
/s/ Aikaterini Oikonomea
  
in the presence of:
)
Attorney-in-fact
  
       
       
SIGNED by
)
    
Mrs. Aikaterini Oikonomea
)
    
for and on behalf of
)
    
GARU SHIPPING COMPANY INC.,
)
    
of the Marshall Islands,
)
/s/ Aikaterini Oikonomea
  
in the presence of:
)
Attorney-in-fact
  

Witness:
/s/ Maria Chryssa Papastrati
  
Name:
Maria Chryssa Papastrati
  
Address:
13 Defteras Merarchias
  
 
Piraeus, Greece
  
Occupation:
t. Attorney-at-Law
  

SIGNED by
)
    
Mr. Konstantinos Flokas
)
/s/ C.V. Flokos
  
and Mr. Nikolaos Kagkarakis
)
Attorney-in-fact
  
for and on behalf of
)
    
ALPHA BANK S.A.,
)
    
of Greece,
)
    
in the presence of:
)
/s/ N.D. Kagkarakis
  
   
Attorney-in-fact
  

Witness:
/s/ Maria Chryssa Papastrati
  
Name:
Maria Chryssa Papastrati
  
Address:
13 Defteras Merarchias
  
 
Piraeus, Greece
  
Occupation:
t. Attorney-at-Law
  


102
Exhibit 4.24

SHIPBUILDING CONTRACT

FOR

CONSTRUCTION OF ONE 158,000 DWT CRUDE OIL TANKER

(HULL NO. H1627)

BETWEEN

 SAINT LUCIA SHIPPING COMPANY INC.

as BUYER

and

CHINA SHIPBUILDING TRADING CO., LTD.

and

SHANGHAI WAIGAOQIAO SHIPBUILDING CO., LTD.

Collectively as SELLER

Shipbuilding Contract
Hull No.H1627
CONTENTS
 
ARTICLE
PAGE NO.
   
ARTICLE I DESCRIPTION AND CLASS
2
   
 
1. DESCRIPTION:
2
 
2. CLASS AND RULES
2
 
3. PRINCIPAL PARTICULARS AND DIMENSIONS OF THE VESSEL
3
 
4. GUARANTEED SPEED
4
 
5. GUARANTEED FUEL CONSUMPTION
4
 
6. GUARANTEED DEADWEIGHT
4
 
7. SUBCONTRACTING:
5
 
8. REGISTRATION:
5
     
ARTICLE II CONTRACT PRICE & TERMS OF PAYMENT
6
   
 
1. CONTRACT PRICE:
6
 
2. CURRENCY:
6
 
3. TERMS OF PAYMENT:
6
 
4. METHOD OF PAYMENT:
7
 
5.  PREPAYMENT:
9
 
6. SECURITY FOR PAYMENT OF INSTALMENTS BEFORE DELIVERY:
9
 
7. REFUNDS
10
     
ARTICLE III ADJUSTMENT OF THE CONTRACT PRICE
11
   
 
1. DELIVERY
11
 
2. INSUFFICIENT SPEED
12
 
3. EXCESSIVE FUEL CONSUMPTION
13
 
4. DEADWEIGHT
14
 
5. EFFECT OF RESCISSION
15
     
ARTICLE IV SUPERVISION AND INSPECTION
16
   
 
1. APPOINTMENT OF THE BUYER'S SUPERVISOR
16
 
2. COMMENTS TO PLANS AND DRAWINGS
16
 
3. SUPERVISION AND INSPECTION BY THE SUPERVISOR
17
 
4. LIABILITY OF THE SELLER
18
 
5. SALARIES AND EXPENSES
18
 
6. REPLACEMENT OF SUPERVISOR
19
     
ARTICLE V MODIFICATION, CHANGES AND EXTRAS
20
   
 
1. HOW EFFECTED
20
 
2. CHANGES IN RULES AND REGULATIONS, ETC.
21
 
3. SUBSTITUTION OF MATERIALS AND/OR EQUIPMENT
22
 
4. BUYER'S SUPPLIED ITEMS
22
     
ARTICLE VI TRIALS
24
   
 
1. NOTICE
24
 
2. HOW CONDUCTED
25
 
3. TRIAL LOAD DRAFT
25
 
4. METHOD OF ACCEPTANCE OR REJECTION
26
 
5. DISPOSITION OF SURPLUS CONSUMABLE STORES
26
 
6. EFFECT OF ACCEPTANCE
27
     
ARTICLE VII DELIVERY
28
   
 
1. TIME AND PLACE
28
 
2. WHEN AND HOW EFFECTED
28
 
3. DOCUMENTS TO BE DELIVERED TO THE BUYER
28
 
4. TITLE AND RISK
30

I
Shipbuilding Contract
Hull No.H1627
 
5. REMOVAL OF VESSEL
30
 
6. TENDER OF THE VESSEL
30
     
ARTICLE VIII DELAYS & EXTENSION OF TIME FOR DELIVERY
31
   
 
1. CAUSE OF DELAY
31
 
2. NOTICE OF DELAY
31
 
3. RIGHT TO CANCEL FOR EXCESSIVE DELAY
32
 
4. DEFINITION OF PERMISSIBLE DELAY
32
     
ARTICLE IX WARRANTY OF QUALITY
33
   
 
1. 1. GUARANTEE OF MATERIAL AND WORKMANSHIP
33
 
2. NOTICE OF DEFECTS
33
 
3. REMEDY OF DEFECTS
33
 
4. Extent of SELLER's Responsibility:
35
     
ARTICLE X CANCELLATION, REJECTION AND RESCISSION BY THE BUYER
36
   
ARTICLE XI BUYER'S DEFAULT
38
   
 
1. DEFINITION OF DEFAULT
38
 
2. NOTICE OF DEFAULT
38
 
3. INTEREST AND CHARGE
38
 
4. DEFAULT BEFORE DELIVERY OF THE VESSEL
39
 
5. SALE OF THE VESSEL
40
     
ARTICLE XII INSURANCE
42
   
 
1. EXTENT OF INSURANCE COVERAGE
42
 
2. APPLICATION OF RECOVERED AMOUNT
42
 
3. TERMINATION OF THE SELLER'S OBLIGATION TO INSURE
43
     
ARTICLE XIII DISPUTES AND ARBITRATION
44
   
 
1. PROCEEDINGS
44
 
2. ALTERNATIVE ARBITRATION BY AGREEMENT
44
 
3. NOTICE OF AWARD
45
 
4. EXPENSES
45
 
5. AWARD OF ARBITRATION
45
 
6. ENTRY IN COURT
45
 
7. ALTERATION OF DELIVERY DATE
45
     
ARTICLE XIV RIGHT OF ASSIGNMENT
46
   
ARTICLE XV TAXES AND DUTIES
47
   
 
1. TAXES
47
 
2. DUTIES
47
     
ARTICLE XVI PATENTS, TRADEMARKS AND COPYRIGHTS
48
   
ARTICLE XVII NOTICE
49
   
ARTICLE XVIII EFFECTIVE DATE OF CONTRACT
51
   
ARTICLE XIX INTERPRETATION
52
   
 
1. LAW APPLICABLE
52
 
2. DISCREPANCIES
52
 
3. DEFINITION
52
 
4. ENTIRE AGREEMENT
52
     
ARTICLE XX     SANCTIONS
53
   
EXHIBIT "A" : IRREVOCABLE LETTER OF GUARANTEE NO.
56
   
EXHIBIT "B" IRREVOCABLE LETTER OF GUARANTEE
58

II
Shipbuilding Contract
Hull No.H1627
SHIPBUILDING CONTRACT

FOR

CONSTRUCTION OF ONE 158,000 DWT CRUDE OIL TANKER (HULL NO. H1627)

This CONTRACT, entered into this 2nd day of March 2026 by and between  SAINT LUCIA SHIPPING COMPANY INC., a corporation organized and existing under the Laws of the Republic of the Republic 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 CO., LTD., 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 WAIGAOQIAO SHIPBUILDING CO., LTD., 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”.

WITNESSETH

in 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 after completion and successful trial one (1) Diesel Driven 158,000 DWT CRUDE OIL TANKER as more fully described in Article I hereof, to be registered under the flag of the Republic 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 terms and conditions hereinafter set forth.

1/61
Shipbuilding Contract
Hull No.H1627
ARTICLE I DESCRIPTION AND CLASS
 
1. DESCRIPTION:
 
The VESSEL is a Steel-Hulled, Single Screw, Diesel Driven Crude Oil Tanker of 158,000 metric tons deadweight, at scantling draft moulded of 17.20 meters (hereinafter called the "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. H1617, hereinafter called “H1617”), the VESSEL shall have the BUILDER's Hull No. H1627 and shall be constructed, equipped and completed in accordance with the provisions of this Contract and H1617’s following "Specifications":

(1) Specification (Drawing No. 158TK-18204-CS-R1.2 dated 28 Feb 2020)
(2) General Arrangement (Drawing No. 158TK-18204-GA-R0)
(3) Midship Section (Drawing No. 158TK-18204-MS-R0)
(4) Makers list (Drawing No. 158TK-18204-ML-R0 dated 28 February, 2020)
(5) Technical Memorandum including EPS Oil Majors requirements checklist (ExxonMobil-2017) on the 158,000DWT Crude Oil Tanker Specifications, both dated February 28th 2020
(6) Technical Proposal for the 158,000DWT Crude Oil Tanker dated on 31st October, 2025

    attached hereto and signed by each of the Parties to this Contract (hereinafter collectively called the "Specifications"), making an integral part hereof.

The (6) Technical Proposal for the 158,000DWT Crude Oil Tanker dated on 31st October, 2025 is the supplement to the (1) Specification  (Drawing No. 158TK-18204-CS-R1.2 dated 28 Feb 2020).

In the case of any conflict between the (1) Specification and (5) Technical Memorandum, the (5) Technical Memorandum shall prevail. In the case of any conflict between the (5) Technical Memorandum and (6) Technical Proposal, the (6) Technical Proposal shall prevail.

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 of signing 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:

2/61
Shipbuilding Contract
Hull No.H1627
+100A1, Double Hull Oil Tanker, CSR, ESP, ShipRight (ACS(B, C), CM), *IWS, LI, DSPM4, ECO (P, VECS-L), +LMC, UMS, BWTS, IGS, EGCN (SCR), EGCS(OPEN,PARTIAL) With descriptive notes: “ShipRight (BWMP (S, T), IHM, SCM, SERS), LAC”, 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 and become effective up to and on the date of signing this Contract.

The SELLER shall arrange with the Classification Society to assign a representative or representatives (hereinafter called the "Classification Surveyor") to the BUILDER's Shipyard for 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 effective up 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 otherwise provided 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 in accordance 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 overall
abt. 274.20m
  
 
Length between perpendiculars
267.00m
  
 
 Breadth moulded
48.00m
  
 
Depth moulded
23.40m
  
 
Design Draft moulded
16.00m
  
 
Scantling Draft moulded
17.20m
  

(b) Propelling Machinery:

3/61
Shipbuilding Contract
Hull No.H1627
The VESSEL shall be equipped, in accordance with the Specifications, with (1) set of EVERLLENCE 6G70ME – C10.5 Tier III HPSCR type Main Engine, developing a specified maximum continuous rating of 13903  kW at 70.2 RPM and a normal continuous service rating of 11200 kW at 65.3 RPM.

4. GUARANTEED SPEED
 
The SELLER guarantees that the service speed at design draught 16.00 m on even keel and NCR of main engine with 15% sea margin without PTO output 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. The correction 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 159.2 grams/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 reference condition 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 trial would 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 the specific fuel oil consumption shall be adjusted accordingly based on the conversion formula issued by EVERLLENCE. 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 158,000 metric tons at the scantling draft moulded of 17.20 meters in sea water of 1.025 specific gravity.

4/61
Shipbuilding Contract
Hull No.H1627
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 for such 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.

7. 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 final assembly 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 and subcontractors’ liabilities.

The performance of the works by SHANGHAI WAIGAOQIAO SHIPBUILDING AND OFFSHORE COMPANY LIMITED (subsidiary of the BUILDER), SWS-SUNHEL ENGINEERING EQUIPMENT (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 its aforementioned subsidiary and Branch.

8. REGISTRATION:
 
The vessel shall be registered by the BUYER at its own cost and expenses under the laws of the Republic of the Marshall Islands at the time of delivery and acceptance thereof.

5/61
Shipbuilding Contract
Hull No.H1627
ARTICLE II CONTRACT PRICE & TERMS OF PAYMENT
 
1. CONTRACT PRICE:
 
The purchase price of the VESSEL is United States Dollars Eighty One Million Five Hundred Thousand only (US$ 81,500,000), net receivable by the SELLER (hereinafter called 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 Twelve Million Two Hundred and Twenty Five Thousand only (US$ 12,225,000) representing Fifteen percent (15%) of the Contract 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 in paragraph 7 of this Article.

(b)
2nd Instalment:

The sum of United States Dollars Eight Million One Hundred and Fifty Thousand only (US$ 8,150,000), representing Ten percent (10%) of the Contract Price, shall become 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 and confirming 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 the BUYER an e-mail demand for payment of this instalment along with a PDF proforma invoice.

6/61
Shipbuilding Contract
Hull No.H1627
(c)
3rd Instalment:

The sum of United States Dollars Eight Million One Hundred and Fifty Thousand only (US$ 8,150,000), representing Ten percent (10%) of the Contract Price, shall become 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 and confirming 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 an e-mail demand for payment of this instalment, along with a PDF proforma invoice.

(d)
4th Instalment:

The sum of United States Dollars Eight Million One Hundred and Fifty Thousand only (US$ 8,150,000), representing Ten percent (10%) of the Contract Price, shall become 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 the launching of the VESSEL has been carried out. The SELLER shall then send to the BUYER an e-mail demand for payment of this installment, along with a PDF proforma invoice.

(e)
5th Installment (Payment upon Delivery of the VESSEL):

The sum of United States Dollars Forty Four Million Eight Hundred and Twenty Five Thousand only (US$ 44,825,000), representing Fifty-Five percent (55%) of the 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 Articles hereof, 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. The SELLER 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 of the VESSEL to the BUYER.

4. 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 Bank of China Ltd., Beijing Branch, address at No.2 Chaoyangmennei Ave., Dongcheng Dist., Beijing, China (SWIFT Code:   ) (hereinafter called the “SELLER’s Bank”) as receiving bank nominated by the SELLER for A/C    Beneficiary: China Shipbuilding Trading Co., Ltd., or through other receiving bank to be nominated by the SELLER from time to time and such nomination shall be notified to the BUYER at least ten (10) days prior to the due date for payment.

7/61
Shipbuilding Contract
Hull No.H1627
(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 the SELLER for A/C    Beneficiary: China Shipbuilding Trading Co., Ltd., or through other receiving bank to be nominated by the SELLER from time to time and such nomination shall 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 the SELLER for A/C    Beneficiary: China Shipbuilding Trading Co., Ltd., or through other receiving bank to be nominated by the SELLER from time to time and such nomination shall 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 the SELLER for A/C   Beneficiary: China Shipbuilding Trading Co., Ltd., or through other receiving bank to be nominated by the SELLER from time to time and such nomination shall be notified to the BUYER at least ten (10) days prior to the due date for payment.

8/61
Shipbuilding Contract
Hull No.H1627
(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 by swift message MT199 with conditions of payment to the SELLER’s Bank, namely  Bank of China Ltd., Beijing Branch, address at No.2 Chaoyangmennei Ave., Dongcheng Dist., Beijing, China, Account Number: 3480 6318 1842, or other bank to be nominated by the SELLER with at least ten (10) days’ notice to the BUYER prior to 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 which shall 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 the provisions 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 against presentation by the SELLER to the said Bank of China Ltd., Beijing Branch, address at No.2 Chaoyangmennei Ave., Dongcheng Dist., 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’s authorised 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 the benefit 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 the right 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 the BUYER 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 written notice, 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 called the “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 Contract
Hull No.H1627
7. 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 the BUYER, 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 full amount 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 of receipt 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 Bank of China Ltd., Beijing Branch, address at No.2 Chaoyangmennei Ave., Dongcheng Dist., Beijing, China, or any other Chinese Bank, securing the 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" annexed hereto. 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 to the 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 in accordance 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 the SELLER’s bank shall refund to the extent the final arbitration award orders.

10/61
Shipbuilding Contract
Hull No.H1627
ARTICLE 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 of liquidated 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 in 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'clock midnight 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 Eighteen Thousand only (US$ 18,000) 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 the event 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 in Paragraph 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 Three Million Two Hundred and Forty Thousand  (US$ 3,240,000) 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 of the 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 upon which 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 agreed future 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 cancellation upon the same terms, as hereinabove provided.

11/61
Shipbuilding Contract
Hull No.H1627
(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 is extended 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 delayed by 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 such notification 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 date after 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's right 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 any way 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 this Contract 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 as defined 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 the VESSEL.

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 Contract
Hull No.H1627
(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 the Specifications) 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$ 70,000.00
at or above 0.40 but below 0.50 knot US$ 140,000.00
at or above 0.50 but below 0.60 knot US$ 210,000.00
at or above 0.60 but below 0.70 knot US$ 280,000.00
at or above 0.70 but below 0.80 knot US$ 350,000.00
at or above 0.80 but below 0.90 knot US$ 420,000.00
at or above 0.90 but below 1.00 knot US$ 490,000.00

(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 the guaranteed 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 may accept the VESSEL at a reduction in the Contract Price as above provided, by United States Dollars Four Hundred and Ninety Thousand only (US$490,000) 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 per the 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 is equal 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 reduced by the sum of United States Dollars Eighty Thousand Only (US$80,000) 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 Contract
Hull No.H1627
(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 fuel consumption exceeds 175.12 gram/KW/hour, the BUYER may, subject to the BUILDER’s right to effect replacement of  a substitute engine or alterations of corrections as specified in 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 the VESSEL at a reduction in the Contract Price by United States Dollars Three Hundred and Twenty Thousand (US$320,000) 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 fuel consumption exceeds 175.12 gram/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 to make 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 completion of 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 the fuel 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 of such 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 or rejection 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 such deficiency is One Thousand Five Hundred (1500) metric tons or less below the guaranteed deadweight of 158,000 metric tons at assigned scantling draft moulded.

(b)
However, the Contract Price shall be decreased by the sum of United States Dollars Eight Hundred (US$800) for each full metric ton of such deficiency being more than One Thousand Five Hundred (1,500) metric tons.

14/61
Shipbuilding Contract
Hull No.H1627
(c)
In the event that there should be a deficiency in the VESSEL's actual deadweight which exceeds Five Thousand (5,000) metric tons below the guaranteed deadweight, the BUYER may, 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 the Contract Price in the maximum amount of United States Dollars Two Million Eight Hundred Thousand only (US$2,800,000).

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, the BUYER, 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 Contract
Hull No.H1627
ARTICLE 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 in writing by the BUYER (such representative(s) being hereinafter collectively and individually called the "Supervisor") to supervise and survey the construction by the BUILDER of the 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’s regulations, 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 with the 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 the BUYER 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 same specification 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 shall have, 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 to the 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 with comments, 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 Contract
Hull No.H1627
3. 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 BUILDER throughout 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 the VESSEL, 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 the VESSEL. 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 the Specifications, the Supervisor shall promptly give the BUILDER a notice in writing as to such nonconformity, upon receipt of which the BUILDER shall correct such nonconformity if 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 the opinion 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 arbitration in 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 the discrepancy 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 the agreed 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 not have to be repeated, provided it has been carried out in compliance with the requirements of the classification society and Specifications.

17/61
Shipbuilding Contract
Hull No.H1627
The 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 the BUILDER'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 place where 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 the BUILDER, 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 the said 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 the BUYER. 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 carry out 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 the BUYER, 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 the premises 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 liability whatsoever 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 Contract
Hull No.H1627
6. 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's construction together with reasons. The BUYER shall investigate the situation by sending its representative to the BUILDER's Shipyard, if necessary, and if the BUYER considers that such SELLER's request is justified, the BUYER shall effect the replacement as soon as conveniently arrangeable.

19/61
Shipbuilding Contract
Hull No.H1627
ARTICLE 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 and provided 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 may be 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 an agreement 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 to the SELLER additional securities satisfactory to the SELLER, or any other alterations in this Contract, or the Specifications occasioned by such modifications and/or changes. The aforementioned 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-mails exchanged 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 shall be 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 the Specifications, 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 connection with 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 additional security 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 to comply 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 the BUILDER shall first obtain the BUYER’s approval which shall not be unreasonably withheld.

20/61
Shipbuilding Contract
Hull No.H1627
2. 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 the VESSEL 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 SELLER and/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 after receipt 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 the VESSEL 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, fuel consumption 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 Specifications and/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 or changes 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, the terms of this Contract and Specifications without making any such alterations or changes.

21/61
Shipbuilding Contract
Hull No.H1627
If 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 the Contract 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 its 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 of mutual 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 accordance with 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 in time 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/or equipment of the equivalent quality, capable of meeting the requirements of the Classification Society and of the rules, regulations, requirements and recommendations with which the 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 of such 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 and damages 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 Contract
Hull No.H1627
Furthermore, 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 the VESSEL 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 so completed.

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 shall install 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 BUYER shall furnish the BUILDER with the necessary specifications, plans, drawings, instruction books, manuals, test reports and certificates required by the rules and regulations of the Specifications. 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 Supplied Items 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 for installation.

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 Contract
Hull No.H1627
ARTICLE 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 or by 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 shall promptly 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 the performance 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 Supervisor as 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 than seven (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 be deemed 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's representatives 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 Classification Society 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 and Specifications. 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 to apply 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 otherwise the 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 permissible delay 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 with its 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, effect replacement 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 of unfavorable 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 hereto recognize 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, the Trial 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 on the 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, such delay shall be regarded as a permissible delay, as specified in Article VIII hereof.

24/61
Shipbuilding Contract
Hull No.H1627
2. 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 to provide, 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 and shall 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 be supplied 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 and hydraulic 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 and greases 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 the required 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) to bring the VESSEL to the trial load draft as specified in the Specifications, shall be for the BUILDER's account.

25/61
Shipbuilding Contract
Hull No.H1627
4. 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 the BUILDER 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 and Specifications, 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 whatever corrections 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 such alterations 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 the rejection 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 provided for 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 arbitration as 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 the SELLER 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 before effecting 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 of 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 the corresponding 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 Contract
Hull No.H1627
The 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 of lubricating 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 invoices 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 as conformity 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, as hereinafter 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 do 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 and the 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, or


ii)
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 with 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 Contract
Hull No.H1627
ARTICLE 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 Statutory Certificates 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 or before October 31, 2028 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 of 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 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 forthwith by 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 and acceptance 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 shall accompany the aforementioned Protocol of Delivery and Acceptance:

 
(a)
PROTOCOL OF TRIALS of the VESSEL made by the BUILDER pursuant to the Specifications.

28/61
Shipbuilding Contract
Hull No.H1627
 
(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 qualifications whatsoever (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 of signing 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 provisional certificate 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 after delivery 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 encumbrances upon 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 of the 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 Run or Trial Runs, or otherwise, prior to delivery.

29/61
Shipbuilding Contract
Hull No.H1627
 
(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 the VESSEL, 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)  calendar days, 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 SELLER the 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 right to tender the VESSEL for delivery after compliance with all procedural requirements as above provided.

30/61
Shipbuilding Contract
Hull No.H1627
ARTICLE 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 public enemy, 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), as the 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 its sub‑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 the SELLER 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 material supplier 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 the 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 this Contract 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 to 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 time of 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 time for 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 Contract
Hull No.H1627
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 specify the 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 of any 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 to 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 total accumulated 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 Two Hundred 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 the BUYER, 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 or postponement 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 this Contract 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, 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 intention to cancel, or consent to an extension 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 justifying cancellation 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 permit postponement 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 of which the Contract Price of the VESSEL is subject to adjustment as provided for in Article III hereof.

32/61
Shipbuilding Contract
Hull No.H1627
ARTICLE 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 materials including 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 the date 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 of the 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 of the 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's written 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 of such 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 the Shipyard 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 as provided 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 the VESSEL ready for such repairing and replacing.

33/61
Shipbuilding Contract
Hull No.H1627
Any 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 repair or 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 is deemed 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 the VESSEL, 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 to cause 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 the time 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 to verify 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 advise the 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 the SELLER'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 a sum 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 replacements including 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 respects for 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 Contract
Hull No.H1627
4. 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 shall neither 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 any loss 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 the aforesaid 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 works done 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 other contractor not appointed by the SELLER, or for any defects which have been caused or aggravated by mismanagement, accident, negligence, omission, willful neglect or improper use and 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 and tear 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 Article replaces 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 sale of 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 duly authorized 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 Contract and/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 to remedy defects in accordance with this Article).
 
35/61
Shipbuilding Contract
Hull No.H1627
ARTICLE 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 cancellation and/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 SELLER in 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 full amount 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 rescission by 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 arbitration as 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 arbitration award 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 in favour 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 is obligated 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 is exercised 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 the respective 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 such refund 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) of Article 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 SELLER shall 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.

36/61
Shipbuilding Contract
Hull No.H1627
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 completely discharged.

37/61
Shipbuilding Contract
Hull No.H1627
ARTICLE 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 and 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 accordance with 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 hereof provided 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 under the 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 date of 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. In case 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 duly received by the BUYER.

3. INTEREST AND CHARGE
 
38/61
Shipbuilding Contract
Hull No.H1627
 
(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 rate of 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 when required 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 rate as 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 the SELLER 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 period of 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, the SELLER 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, by giving 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 shall forthwith 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 BUYER to the SELLER on account of this Contract; and

39/61
Shipbuilding Contract
Hull No.H1627

(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 to declare 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 the payment 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 and conditions 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 it deems 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 to 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 such sale 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 and interest 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 and otherwise 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 herein mentioned, 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/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 be incurred 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 or rescission of this Contract.

40/61
Shipbuilding Contract
Hull No.H1627

(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 pay 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 installments already 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.

41/61
Shipbuilding Contract
Hull No.H1627
ARTICLE 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 by the BUYER to the SELLER including the value of maximum amount of US$ 600, 000.00 of the BUYER's Supplied Items. The policy referred to hereinabove shall be taken out in the name of 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 damage shall 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 this Article to the repair of such damage satisfactory to the Classification Society and other institutions or authorities as described in the Specifications without additional expenses 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 for any 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:

42/61
Shipbuilding Contract
Hull No.H1627
 
(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 shall 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 first agreed 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 for the 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 this Contract 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 shall terminate 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 SELLER by 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 disagreement on 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.

43/61
Shipbuilding Contract
Hull No.H1627
ARTICLE 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 be settled by the Parties themselves, such dispute shall be resolved by arbitration in London Maritime Arbitrators Association (“LMAA”) in London, England in accordance with English 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 arbitration rules. 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 of the 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 after receipt 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 is agreed 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 arbitration shall 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 appointed respectively 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 the second 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 the arbitration, 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 written agreement of the Parties hereto. In such case, the opinion of the Classification Society shall be final and binding on the Parties hereto.

44/61
Shipbuilding Contract
Hull No.H1627
3. 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 the Parties 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 as defined 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 the VESSEL 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 as defined 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.

45/61
Shipbuilding Contract
Hull No.H1627
ARTICLE 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 written consent not to be unreasonably withheld.

46/61
Shipbuilding Contract
Hull No.H1627
ARTICLE 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 duties imposed 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 Shipyard and 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 for taxes, 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 of this Contract and the Specifications.

Any tax or duty other than those described hereinabove, if any, shall be borne by the BUYER.

47/61
Shipbuilding Contract
Hull No.H1627
ARTICLE 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 from patent 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 the performance 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 expressly reserved 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 by the 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.

48/61
Shipbuilding Contract
Hull No.H1627
ARTICLE XVII NOTICE
 
Any and all notices and communications in connection with this Contract shall be addressed as follows:

To the BUYER : SAINT LUCIA SHIPPING COMPANY INC.

Address : c/o PERFORMANCE SHIPPING MANAGEMENT INC.
373 Syngrou Ave. & 2-4 Ymittou str., 17564, Palaio Faliro,
Athens, Greece

Technical contact information: Mr. Argyris Chachalis
Telephone: +30 216600 2400
Email: achachalis@pshipping.com

Commercial Contact information: Mr. Andreas Michalopoulos
Telephone: +30 216600 2400
Email: amichalopoulos@pshipping.com

To the SELLER:

CSTC : China Shipbuilding Trading Co., Ltd.

Contacts: Mr. Chen Zhencheng/Mr. Jiang Binbin
Address :
23rd floor, Marine Tower,
No.1 Pudong Dadao,
Shanghai 200120
the People's Republic of China
 
   
Telephone: +86 21 68821907
E-mail : chenzc@mail.chinaships.com/ jiangbinbin@mail.chinaships.com

BUILDER : Shanghai Waigaoqiao Shipbuilding Co., Ltd.

Contacts: Mr.Qiu Hongming/Ms. Xiong Wei  
Address:
3001 Zhouhai Road, Pudong New District,
Shanghai 200137, P.R. China
 

Telephone: +86 21 31575063
E-mail :  qiuhongming@chinasws.com/ xiongwei@chinasws.com

49/61
Shipbuilding Contract
Hull No.H1627
Any 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 notice of 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 for the 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 this Article.

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, the time 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 of delivery 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 no obligation 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.

50/61
Shipbuilding Contract
Hull No.H1627
ARTICLE XVIII EFFECTIVE DATE OF CONTRACT
 
This Contract shall become effective upon being signed by all Parties.
Upon signing of this Contract, all Parties hereto shall do the following:

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 of this 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 to pay the 2nd, 3rd and 4th instalments as stipulated in Article II, paragraph 6 of this Contract.

51/61
Shipbuilding Contract
Hull No.H1627
ARTICLE 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 any language or requirements so embodied in the Specifications permit an interpretation inconsistent with any provision of this Contract, then in each and every such event the applicable 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 the Specifications 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 the Specifications 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 agreed upon 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.

52/61
Shipbuilding Contract
Hull No.H1627
ARTICLE 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 the BUYER 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 financial sanctions maintained by the European Commission of European Union and / or the Consolidated List of Financial Sanctions Targets in the UK maintained by UK HM Treasury 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 mutually acceptable 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 to such 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 be automatically 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 all instalment or instalments paid by the BUYER to the SELLER on account of the VESSEL.
 
53/61
Shipbuilding Contract
Hull No.H1627
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 by 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 the SELLER.

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 the SELLER’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 Party towards 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 be forthwith completely discharged and waived.

54/61
Shipbuilding Contract
Hull No.H1627
In WITNESS WHEREOF, the Parties hereto have caused this Contract to be duly executed on the day and year first above written.

THE BUYER : SAINT LUCIA SHIPPING COMPANY INC.

By :
/s/ Andreas Nikolaos Michalopoulos
  
 
Name : Andreas Nikolaos Michalopoulos
 
Title : Attorney-in-fact
 
Witness : Aikaterini Oikonomea
               /s/ Aikaterini Oikonomea

THE SELLER:
 
CSTC : China Shipbuilding Trading Co., Ltd.
 
By :
/s/ Jiang Binbin
  
 
Name : Jiang Binbin
 
Title : Attorney in fact
 
Witness :

THE BUILDER: Shanghai Waigaoqiao Shipbuilding Co., Ltd.
 
By :
/s/ Liu Jzz
  
 
Name : Liu Jzz
 
Title : Attorney in fact
 
Witness : Qiu Hongming

55/61
Shipbuilding Contract
Hull No.H1627
Exhibit "A" : IRREVOCABLE LETTER OF GUARANTEE NO.
 
To:  SAINT LUCIA SHIPPING COMPANY INC.

Date:
Dear Sirs,
Irrevocable Letter of Guarantee No.

At the request of China Shipbuilding Trading Co., Ltd., address at 56(Yi), Zhongguancun Nandajie, Beijing 100044, China, and in consideration of your agreeing to pay China Shipbuilding Trading Co., Ltd. and Shanghai Waigaoqiao Shipbuilding Co., Ltd., 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 dated March 2nd, 2026 (hereinafter called the “Contract”) for the construction of one (1) 158,000 DWT Crude Oil Tanker to be designated as Hull No. H1627 (hereinafter called the "VESSEL"), we, Bank of China Ltd., Beijing Branch, address at No.2 Chaoyangmennei Ave., Dongcheng Dist., Beijing, China, do hereby irrevocably guarantee repayment to you by the SELLER of an amount up to but not exceeding a total amount of United States Dollars Thirty Six Million Six Hundred and Seventy Five Thousand Only (USD 36,675,000) representing the first instalment of the Contract Price of the VESSEL of United States Dollars Twelve Million Two Hundred and Twenty Five Thousand only (US$ 12,225,000), plus the second instalment of the Contract Price of the VESSEL, of United States Dollars Eight Million One Hundred and Fifty Thousand only (US$ 8,150,000), plus the third instalment of the Contract Price of the VESSEL, of United States Dollars Eight Million One Hundred and Fifty Thousand only (US$ 8,150,000), plus the fourth instalment of the Contract Price of the VESSEL, of United States Dollars Eight Million One Hundred and Fifty Thousand only (US$ 8,150,000), 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 thereof becomes 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 you for 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 the cancellation 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 our receipt of the relevant written demand from you for repayment.

56/61
Shipbuilding Contract
Hull No.H1627
However, 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 the arbitration 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 honour the 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 interest described 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 SELLER from you to the SELLER’s a/c No.   held by China Shipbuilding Trading Co., Ltd. with Bank of China Ltd., Beijing Branch and the amounts effective under this Letter of Guarantee shall correspond to the total payment actually received 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 Guarantee shall 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%) per annum, 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: ).

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 of Delivery and Acceptance of the VESSEL under the Contract or refund has been made by the SELLER or ourselves, or until August 27th, 2029, whichever occurs the earliest. After which, this guarantee shall be null and void whether or not it is returned to us for cancellation.

This Letter of Guarantee is governed by the Laws of England.

For and on behalf of Bank of China Ltd., Beijing Branch

57/61
Shipbuilding Contract
Hull No.H1627
Exhibit "B" IRREVOCABLE LETTER OF GUARANTEE
 
FOR THE 2ND, 3RD AND 4TH INSTALLMENTS

From: PERFORMANCE SHIPPING INC.

To:
China Shipbuilding Trading Co., Ltd.
   

56(Yi) Zhongguancun Nan Da Jie, Beijing  100044, China
And
Shanghai Waigaoqiao Shipbuilding Co., Ltd.
3001 Zhouhai Road, Pudong New District, Shanghai 200137, China
 
  
 
Dear Sirs,

(1)
In consideration of your entering into a Shipbuilding Contract dated 2nd March, 2026 ("the Shipbuilding Contract") with SAINT LUCIA SHIPPING COMPANY INC., address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960, Marshall Islands, as the buyer (hereinafter called "the BUYER") for the construction of one (1) 158,000 DWT Crude Oil Tanker known as Shanghai Waigaoqiao Shipbuilding Co., Ltd.'s Hull No. H1627 (hereinafter called "the VESSEL"), we, PERFORMANCE SHIPPING INC., address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH 96960, hereby IRREVOCABLY, ABSOLUTELY and UNCONDITIONALLY 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 Contract Price amounting to a total sum of United States Dollars Twenty Four Million Four Hundred and Fifty Thousand only (USD 24,450,000) 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 Eight Million One Hundred and Fifty Thousand only (US$ 8,150,000) payable by the BUYER within five (5) Banking Days after cutting of the first steel plate in your BUILDER's Shipyard workshop and the third installment in the amount of United States Dollars Eight Million One Hundred and Fifty Thousand only (US$ 8,150,000) 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 Eight Million One Hundred and Fifty Thousand only (US$ 8,150,000) payable by the BUYER within five (5) Banking Days after launching of the VESSEL .

58/61
Shipbuilding Contract
Hull No.H1627
(3)
We also IRREVOCABLY, ABSOLUTELY and UNCONDITIONALLY guarantee, as primary obligor and not merely as surety, the due and punctual payment by the BUYER of interest 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 of 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 such default 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 the unpaid 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 assigned shall 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 Bank of China Ltd., Beijing Branch, address at No.2 Chaoyangmennei Ave., Dongcheng Dist., Beijing, China (SWIFT Code:  ) as receiving bank nominated by you for A/C   Beneficiary: China Shipbuilding Trading Co., Ltd. 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 the BUILDER'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 other indemnity 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 or unenforceability 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 obligations under 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 Ocean Transport 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-mail Address: legal@unitizedocean.com), with confirmation in writing.

59/61
Shipbuilding Contract
Hull No.H1627
(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 and accepted 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 with the 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 Twenty Four Million Six Hundred and Fifty Thousand Nine Hundred and Fifty Nine only (US$ 24,650,959) 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 United States Dollars Twenty Four Million Four Hundred and Fifty Thousand only (USD 24,450,000); 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 Two Hundred Thousand Nine Hundred and Fifty Nine only (US$ 200,959).

(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, or charges 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 withholding permitted 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 amount which 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 the purposes 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 Contract
Hull No.H1627
IN 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
Addendum No. 1 to Shipbuilding Contract for Construction of One (1) 158,000 DWT Crude Oil Tanker H1627

This Addendum No. 1 to Shipbuilding Contract dated 2nd March, 2026 (the “Shipbuilding Contract”) for Construction of One (1) 158,000 DWT Crude Oil Tanker with hull no. H1627 (hereinafter called the “VESSEL”) is made and entered into this 2nd day of March, 2026 by and between:

(A) SAINT LUCIA SHIPPING COMPANY INC., a corporation organized and existing under the laws of the Republic of the Marshall Islands, having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960, Marshall Islands (hereinafter called the “BUYER”);

(B) CHINA SHIPBUILDING TRADING CO., LTD., a corporation organized and existing under the laws of the People's Republic of China, having its registered office at 56(Yi) Zhongguancun Nandajie, Beijing 100044, the People's Republic of China (hereinafter called “CSTC”); and

(C) SHANGHAI WAIGAOQIAO SHIPBUILDING CO., LTD., 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") (CSTC and the BUILDER hereinafter are collectively called the "SELLER").

The BUYER and the SELLER hereinafter are collectively called the “Parties”.

NOW THEREFORE, for various considerations, receipt and sufficiency thereof being hereby expressly acknowledged by each of the Parties hereto, the Parties hereto do mutually agree and confirm to each other as follows:

1. Specifications

The VESSEL shall be built on identical basis as the repeat VESSEL to prototype vessel bearing the BUILDER’s hull number H1617 save for any amendments that may be agreed between the BUYER and the SELLER. The Scrubber and the shaft generator including the ESD and cyber security will be applied.

It is mutually agreed between the BUYER and the SELLER that all the drawings and technical documents as those used for construction of H1617 shall be used for construction of the VESSEL without approval by the BUYER, and also without re-approval by the Class except for the drawing relating to CSR-H rules that will be updated correspondently and be submitted for Class's approval.

1
The BUILDER will provide the Finished Drawings of H1617 to the BUYER for reference before steel cutting of the VESSEL. In case there is any conflict between “Specifications” (1) - (6) in the SHIPBUILDING CONTRACT and the Finished Drawings of H1617, the Finished Drawings of H1617 shall prevail.

It is mutually agreed between the BUYER and the SELLER that the construction of the VESSEL shall technically follow H1617 and all the modifications made to H1617 on or before January 31st, 2026 in relation to the specification and drawings of H1617 shall be automatically applied for the VESSEL. Modifications without extra cost made for H1617 after January 31st, 2026 shall also be automatically applied for the VESSEL, modifications or changes with extra cost made for H1617 after January 31st, 2026 shall be applied for the VESSEL subject to the BUYER agrees the same extra cost. If the BUYER doesn’t agree to pay the extra cost or no response from the BUYER within three (3) Business Days after receipt by the BUYER of SELLER’s notice, the SELLER shall have the right not to apply such modifications and changes to the VESSEL. For any modification followed by H1617 that applied to the VESSEL, the agreement between the SELLER and the owner of H1617 on adjustment of the deadweight, speed, fuel consumption and or extension of the delivery, if any, resulting from such modifications and changes shall be fully accepted by the BUYER automatically.

2. Makers List

In principle, the same makers as those selected for H1617 shall be applied to the VESSEL. Documents/drawings of the equipment of the VESSEL shall not be submitted for BUYER’s approval. The SELLER shall inform the BUYER if any maker(s) become impossible to supply the same equipment as used for H1617 and, in this case, the SELLER shall have the right to select other maker(s) in the Makers List (Drawing No.158TK-18204-ML-R0) other than that used for H1617, subject to the approval of the BUYER which is not to be unreasonably withheld. In this case the SELLER shall submit to the BUYER the documents/drawings of the selected equipment for BUYER’s approval. However, the below 3 equipment’s maker shall be changed as follow:

1)    the maker of Water Mist System (for engine room local fire fighting) shall be chosen as VTI;

2)    the maker of CO2 Fire Extinguishing System shall be chosen as VTI;

3)    the maker of Deck Foam Fire Extinguishing System shall be chosen as VTI.

In addition, the BUYER has the option to choose Alfa Laval as the maker of Purifiers subject to the BUYER’s acceptance of the cost difference between Alfa Laval and MKK if any.

2
3. This Addendum No. 1 constitutes an integral part of the Shipbuilding Contract. If the terms of the Shipbuilding Contract and/or the Specifications are in conflict with this Addendum No. 1, the terms of this Addendum No. 1 shall prevail. Save as amended by this Addendum No.1, all other terms and/or conditions of the Shipbuilding Contract shall remain unaltered and in full force and effect.

4. This Addendum No.1 shall become effective after due execution by authorized representatives of Parties hereto.

5. The Parties hereto agree that this Addendum No.1 shall be governed by and interpreted in accordance with the laws of England and ARTICLE XIII of the Shipbuilding Contract shall apply.

IN WITNESS WHEREOF the Parties hereto have caused this Addendum No.1 duly executed by their duly authorized officers or attorneys-in-fact on the day and year first above written.

THE BUYER
THE SELLER
   
For and on behalf of
For and on behalf of
   
SAINT LUCIA
CHINA SHIPBUILDING
   
SHIPPING COMPANY INC.
TRADING CO., LTD.

By:
/s/ Andreas Nikolaos Michalopoulos
  
By:
/s/ Jiang Binbin
  
       
Name: Andreas Nikolaos Michalopoulos
  
Name: Jiang Binbin
  
       
Title: Attorneys-in-fact
  
Title: Attorneys-in-fact
  

 
For and on behalf of

 

SHANGHAI WAIGAOQIAO

 

SHIPBUILDING CO., LTD.

 
By:
/s/ Liu Jzz
  
   
 
Name: Liu Jzz
   
 
Title: Attorneys-in-fact


3
Exhibit 4.25

SHIPBUILDING CONTRACT

FOR

CONSTRUCTION OF ONE 158,000 DWT CRUDE OIL TANKER

(HULL NO. H1628)

BETWEEN

 MARTINIQUE SHIPPING COMPANY INC.

as BUYER

and

CHINA SHIPBUILDING TRADING CO., LTD.

and

SHANGHAI WAIGAOQIAO SHIPBUILDING CO., LTD.

Collectively as SELLER

Shipbuilding Contract Hull No.H1628
CONTENTS

ARTICLE
PAGE NO.

ARTICLE I DESCRIPTION AND CLASS
2
   
1. DESCRIPTION:
2
2. CLASS AND RULES
2
3. PRINCIPAL PARTICULARS AND DIMENSIONS OF THE VESSEL
3
4. GUARANTEED SPEED
4
5. GUARANTEED FUEL CONSUMPTION
4
6. GUARANTEED DEADWEIGHT
4
7. SUBCONTRACTING:
5
8. REGISTRATION:
5
   
ARTICLE II CONTRACT PRICE & TERMS OF PAYMENT
6
   
1. CONTRACT PRICE:
6
2. CURRENCY:
6
3. TERMS OF PAYMENT:
6
4. METHOD OF PAYMENT:
7
5.  PREPAYMENT:
9
6. SECURITY FOR PAYMENT OF INSTALMENTS BEFORE DELIVERY:
9
7. REFUNDS
10
   
ARTICLE III ADJUSTMENT OF THE CONTRACT PRICE
11
   
1. DELIVERY
11
2. INSUFFICIENT SPEED
12
3. EXCESSIVE FUEL CONSUMPTION
13
4. DEADWEIGHT
14
5. EFFECT OF RESCISSION
15
   
ARTICLE IV SUPERVISION AND INSPECTION
16
   
1. APPOINTMENT OF THE BUYER'S SUPERVISOR
16
2. COMMENTS TO PLANS AND DRAWINGS
16
3. SUPERVISION AND INSPECTION BY THE SUPERVISOR
17
4. LIABILITY OF THE SELLER
18
5. SALARIES AND EXPENSES
18
6. REPLACEMENT OF SUPERVISOR
19
   
ARTICLE V MODIFICATION, CHANGES AND EXTRAS
20
   
1. HOW EFFECTED
20
2. CHANGES IN RULES AND REGULATIONS, ETC.
21
3. SUBSTITUTION OF MATERIALS AND/OR EQUIPMENT
22
4. BUYER'S SUPPLIED ITEMS
22
   
ARTICLE VI TRIALS
24
   
1. NOTICE
24
2. HOW CONDUCTED
25
3. TRIAL LOAD DRAFT
25
4. METHOD OF ACCEPTANCE OR REJECTION
26
5. DISPOSITION OF SURPLUS CONSUMABLE STORES
26
6. EFFECT OF ACCEPTANCE
27
   
ARTICLE VII DELIVERY
28
   
1. TIME AND PLACE
28
2. WHEN AND HOW EFFECTED
28
3. DOCUMENTS TO BE DELIVERED TO THE BUYER
28
4. TITLE AND RISK
30

I
Shipbuilding Contract Hull No.H1628
5. REMOVAL OF VESSEL
30
6. TENDER OF THE VESSEL
30
   
ARTICLE VIII DELAYS & EXTENSION OF TIME FOR DELIVERY
31
 
  
1. CAUSE OF DELAY
31
2. NOTICE OF DELAY
31
3. RIGHT TO CANCEL FOR EXCESSIVE DELAY
32
4. DEFINITION OF PERMISSIBLE DELAY
32
   
ARTICLE IX WARRANTY OF QUALITY
33
   
1. 1. GUARANTEE OF MATERIAL AND WORKMANSHIP
33
2. NOTICE OF DEFECTS
33
3. REMEDY OF DEFECTS
33
4. Extent of SELLER's Responsibility:
35
   
ARTICLE X CANCELLATION, REJECTION AND RESCISSION BY THE BUYER
36
   
ARTICLE XI BUYER'S DEFAULT
38
   
1. DEFINITION OF DEFAULT
38
2. NOTICE OF DEFAULT
38
3. INTEREST AND CHARGE
38
4. DEFAULT BEFORE DELIVERY OF THE VESSEL
39
5. SALE OF THE VESSEL
40
   
ARTICLE XII INSURANCE
42
   
1. EXTENT OF INSURANCE COVERAGE
42
2. APPLICATION OF RECOVERED AMOUNT
42
3. TERMINATION OF THE SELLER'S OBLIGATION TO INSURE
43
   
ARTICLE XIII DISPUTES AND ARBITRATION
44
   
1. PROCEEDINGS
44
2. ALTERNATIVE ARBITRATION BY AGREEMENT
44
3. NOTICE OF AWARD
45
4. EXPENSES
45
5. AWARD OF ARBITRATION
45
6. ENTRY IN COURT
45
7. ALTERATION OF DELIVERY DATE
45
   
ARTICLE XIV RIGHT OF ASSIGNMENT
46
   
ARTICLE XV TAXES AND DUTIES
47
   
1. TAXES
47
2. DUTIES
47
   
ARTICLE XVI PATENTS, TRADEMARKS AND COPYRIGHTS
48
   
ARTICLE XVII NOTICE
49
   
ARTICLE XVIII EFFECTIVE DATE OF CONTRACT
51
   
ARTICLE XIX INTERPRETATION
52
   
1. LAW APPLICABLE
52
2. DISCREPANCIES
52
3. DEFINITION
52
4. ENTIRE AGREEMENT
52
   
ARTICLE XX     SANCTIONS
53
   
EXHIBIT "A" : IRREVOCABLE LETTER OF GUARANTEE NO.
56
   
EXHIBIT "B" IRREVOCABLE LETTER OF GUARANTEE
58

II
Shipbuilding Contract Hull No.H1628
SHIPBUILDING CONTRACT

FOR

CONSTRUCTION OF ONE 158,000 DWT CRUDE OIL TANKER (HULL NO. H1628)

This CONTRACT, entered into this 2nd day of March 2026 by and between  MARTINIQUE SHIPPING COMPANY INC., a corporation organized and existing under the Laws of the Republic of the Republic 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 CO., LTD., 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 WAIGAOQIAO SHIPBUILDING CO., LTD., 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”.

WITNESSETH

in 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 after completion and successful trial one (1) Diesel Driven 158,000 DWT CRUDE OIL TANKER as more fully described in Article I hereof, to be registered under the flag of the Republic 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 terms and conditions hereinafter set forth.

1/61
Shipbuilding Contract Hull No.H1628
ARTICLE I DESCRIPTION AND CLASS
 
1.    DESCRIPTION:
 
The VESSEL is a Steel-Hulled, Single Screw, Diesel Driven Crude Oil Tanker of 158,000 metric tons deadweight, at scantling draft moulded of 17.20 meters (hereinafter called the "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. H1617, hereinafter called “H1617”), the VESSEL shall have the BUILDER's Hull No. H1628 and shall be constructed, equipped and completed in accordance with the provisions of this Contract and H1617’s following "Specifications":

(1) Specification (Drawing No. 158TK-18204-CS-R1.2 dated 28 Feb 2020)
(2) General Arrangement (Drawing No. 158TK-18204-GA-R0)
(3) Midship Section (Drawing No. 158TK-18204-MS-R0)
(4) Makers list (Drawing No. 158TK-18204-ML-R0 dated 28 February, 2020)
(5) Technical Memorandum including EPS Oil Majors requirements checklist (ExxonMobil-2017) on the 158,000DWT Crude Oil Tanker Specifications, both dated February 28th 2020
(6) Technical Proposal for the 158,000DWT Crude Oil Tanker dated on 31st October, 2025

attached hereto and signed by each of the Parties to this Contract (hereinafter collectively called the "Specifications"), making an integral part hereof.

The (6) Technical Proposal for the 158,000DWT Crude Oil Tanker dated on 31st October, 2025 is the supplement to the (1) Specification  (Drawing No. 158TK-18204-CS-R1.2 dated 28 Feb 2020).

In the case of any conflict between the (1) Specification and (5) Technical Memorandum, the (5) Technical Memorandum shall prevail. In the case of any conflict between the (5) Technical Memorandum and (6) Technical Proposal, the (6) Technical Proposal shall prevail.

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 of signing 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:

2/61
Shipbuilding Contract Hull No.H1628
+100A1, Double Hull Oil Tanker, CSR, ESP, ShipRight (ACS(B, C), CM), *IWS, LI, DSPM4, ECO (P, VECS-L), +LMC, UMS, BWTS, IGS, EGCN (SCR), EGCS(OPEN,PARTIAL) With descriptive notes: “ShipRight (BWMP (S, T), IHM, SCM, SERS), LAC”, 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 and become effective up to and on the date of signing this Contract.

The SELLER shall arrange with the Classification Society to assign a representative or representatives (hereinafter called the "Classification Surveyor") to the BUILDER's Shipyard for 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 effective up 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 otherwise provided 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 in accordance 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 overall
abt. 274.20m
Length between perpendiculars
267.00m
 Breadth moulded
48.00m
Depth moulded
23.40m
Design Draft moulded
16.00m
Scantling Draft moulded
17.20m

3/61
Shipbuilding Contract Hull No.H1628
(b) Propelling Machinery:

The VESSEL shall be equipped, in accordance with the Specifications, with (1) set of EVERLLENCE 6G70ME – C10.5 Tier III HPSCR type Main Engine, developing a specified maximum continuous rating of 13903  kW at 70.2 RPM and a normal continuous service rating of 11200 kW at 65.3 RPM.

4.    GUARANTEED SPEED
 
The SELLER guarantees that the service speed at design draught 16.00 m on even keel and NCR of main engine with 15% sea margin without PTO output 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. The correction 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 159.2 grams/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 reference condition 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 trial would 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 the specific fuel oil consumption shall be adjusted accordingly based on the conversion formula issued by EVERLLENCE. 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 158,000 metric tons at the scantling draft moulded of 17.20 meters in sea water of 1.025 specific gravity.

4/61
Shipbuilding Contract Hull No.H1628
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 for such 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.

7.    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 final assembly 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 and subcontractors’ liabilities.

The performance of the works by SHANGHAI WAIGAOQIAO SHIPBUILDING AND OFFSHORE COMPANY LIMITED (subsidiary of the BUILDER), SWS-SUNHEL ENGINEERING EQUIPMENT (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 its aforementioned subsidiary and Branch.

8.    REGISTRATION:
 
The vessel shall be registered by the BUYER at its own cost and expenses under the laws of the Republic of the Marshall Islands at the time of delivery and acceptance thereof.

5/61
Shipbuilding Contract Hull No.H1628
ARTICLE II CONTRACT PRICE & TERMS OF PAYMENT
 
1.    CONTRACT PRICE:
 
The purchase price of the VESSEL is United States Dollars Eighty One Million Five Hundred Thousand only (US$ 81,500,000), net receivable by the SELLER (hereinafter called 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 Twelve Million Two Hundred and Twenty Five Thousand only (US$ 12,225,000) representing Fifteen percent (15%) of the Contract 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 in paragraph 7 of this Article.

(b)  2nd Instalment:

The sum of United States Dollars Eight Million One Hundred and Fifty Thousand only (US$ 8,150,000), representing Ten percent (10%) of the Contract Price, shall become 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 and confirming 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 the BUYER an e-mail demand for payment of this instalment along with a PDF proforma invoice.

6/61
Shipbuilding Contract Hull No.H1628
(c)  3rd Instalment:

The sum of United States Dollars Eight Million One Hundred and Fifty Thousand only (US$ 8,150,000), representing Ten percent (10%) of the Contract Price, shall become 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 and confirming 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 an e-mail demand for payment of this instalment, along with a PDF proforma invoice.

(d)  4th Instalment:

The sum of United States Dollars Eight Million One Hundred and Fifty Thousand only (US$ 8,150,000), representing Ten percent (10%) of the Contract Price, shall become 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 the launching 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 Forty Four Million Eight Hundred and Twenty Five Thousand only (US$ 44,825,000), representing Fifty-Five percent (55%) of the 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 Articles hereof, 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. The SELLER 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 of the VESSEL to the BUYER.

4.    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 Bank of China Ltd., Beijing Branch, address at No.2 Chaoyangmennei Ave., Dongcheng Dist., Beijing, China (SWIFT Code:   ) (hereinafter called the “SELLER’s Bank”) as receiving bank nominated by the SELLER for A/C    Beneficiary: China Shipbuilding Trading Co., Ltd., or through other receiving bank to be nominated by the SELLER from time to time and such nomination shall be notified to the BUYER at least ten (10) days prior to the due date for payment.

7/61
Shipbuilding Contract Hull No.H1628
(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 the SELLER for A/C    Beneficiary: China Shipbuilding Trading Co., Ltd., or through other receiving bank to be nominated by the SELLER from time to time and such nomination shall 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 the SELLER for A/C    Beneficiary: China Shipbuilding Trading Co., Ltd., or through other receiving bank to be nominated by the SELLER from time to time and such nomination shall 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 the SELLER for A/C    Beneficiary: China Shipbuilding Trading Co., Ltd., or through other receiving bank to be nominated by the SELLER from time to time and such nomination shall be notified to the BUYER at least ten (10) days prior to the due date for payment.

8/61
Shipbuilding Contract Hull No.H1628
(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 by swift message MT199 with conditions of payment to the SELLER’s Bank, namely  Bank of China Ltd., Beijing Branch, address at No.2 Chaoyangmennei Ave., Dongcheng Dist., Beijing, China, Account Number:   , or other bank to be nominated by the SELLER with at least ten (10) days’ notice to the BUYER prior to 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 which shall 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 the provisions 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 against presentation by the SELLER to the said Bank of China Ltd., Beijing Branch, address at No.2 Chaoyangmennei Ave., Dongcheng Dist., 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’s authorised 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 the benefit 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 the right 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 the BUYER 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 written notice, 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 called the “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 Contract Hull No.H1628
7.    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 the BUYER, 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 full amount 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 of receipt 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 Bank of China Ltd., Beijing Branch, address at No.2 Chaoyangmennei Ave., Dongcheng Dist., Beijing, China, or any other Chinese Bank, securing the 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" annexed hereto. 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 to the 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 in accordance 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 the SELLER’s bank shall refund to the extent the final arbitration award orders.

10/61
Shipbuilding Contract Hull No.H1628
ARTICLE 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 of liquidated 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 in 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'clock midnight 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 Eighteen Thousand only (US$ 18,000) 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 the event 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 in Paragraph 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 Three Million Two Hundred and Forty Thousand  (US$ 3,240,000) 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 of the 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 upon which 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 agreed future date, it being understood and agreed by the Parties hereto that, if the VESSEL is not deliv-ered by such future date, the BUYER shall have the same right of cancellation upon the same terms, as hereinabove provided.

11/61
Shipbuilding Contract Hull No.H1628
(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 is extended 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 delayed by 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 such notification 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 date after 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's right 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 any way 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 this Contract 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 as defined 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 the VESSEL.

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 Contract Hull No.H1628
(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 the Specifications) 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$ 70,000.00
at or above 0.40 but below 0.50 knot US$ 140,000.00
at or above 0.50 but below 0.60 knot US$ 210,000.00
at or above 0.60 but below 0.70 knot US$ 280,000.00
at or above 0.70 but below 0.80 knot US$ 350,000.00
at or above 0.80 but below 0.90 knot US$ 420,000.00
at or above 0.90 but below 1.00 knot US$ 490,000.00

(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 the guaranteed 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 may accept the VESSEL at a reduction in the Contract Price as above provided, by United States Dollars Four Hundred and Ninety Thousand only (US$490,000) 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 per the 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 is equal 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 reduced by the sum of United States Dollars Eighty Thousand Only (US$80,000) 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 Contract Hull No.H1628
(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 fuel consumption exceeds 175.12 gram/KW/hour, the BUYER may, subject to the BUILDER’s right to effect replacement of  a substitute engine or alterations of corrections as specified in 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 the VESSEL at a reduction in the Contract Price by United States Dollars Three Hundred and Twenty Thousand (US$320,000) 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 fuel consumption exceeds 175.12 gram/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 to make 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 completion of 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 the fuel 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 of such 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 or rejection 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 such deficiency is One Thousand Five Hundred (1500) metric tons or less below the guaranteed deadweight of 158,000 metric tons at assigned scantling draft moulded.

(b)
However, the Contract Price shall be decreased by the sum of United States Dollars Eight Hundred (US$800) for each full metric ton of such deficiency being more than One Thousand Five Hundred (1,500) metric tons.

14/61
Shipbuilding Contract Hull No.H1628
(c)
In the event that there should be a deficiency in the VESSEL's actual deadweight which exceeds Five Thousand (5,000) metric tons below the guaranteed deadweight, the BUYER may, 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 the Contract Price in the maximum amount of United States Dollars Two Million Eight Hundred Thousand only (US$2,800,000).

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, the BUYER, 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 Contract Hull No.H1628
ARTICLE 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 in writing by the BUYER (such representative(s) being hereinafter collectively and individually called the "Supervisor") to supervise and survey the construction by the BUILDER of the 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’s regulations, 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 with the 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 speci-fied in the LIST shall be sent to the BUYER, and the BUYER 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 same specification 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 shall have, 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 to the BUYER, nevertheless in line with the Supervisor's authori-ty. The Supervisor shall, within five (5) calendar days after receipt thereof, return those plans and drawings with comments, 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 Contract Hull No.H1628
3.    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 BUILDER throughout 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 the VESSEL, 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 the VESSEL. 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 the Specifications, the Supervisor shall promptly give the BUILDER a notice in writing as to such nonconformity, upon receipt of which the BUILDER shall correct such nonconformity if 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 the opinion 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 arbitration in 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 the discrepancy 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 the agreed 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 not have to be repeated, provided it has been carried out in compliance with the requirements of the classification society and Specifications.

17/61
Shipbuilding Contract Hull No.H1628
The 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 the BUILDER'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 place where 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 the BUILDER, 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 the said access to SELLER's subcontractors outside of Shanghai shall be at BUYER's account. The transpor-tation, of any nature whatsoever, shall be provided to the Supervisor by the BUYER. 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 carry out 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 the BUYER, 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 the premises 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 liability whatsoever 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 Contract Hull No.H1628
6.    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's construction together with reasons. The BUYER shall investigate the situation by sending its representative to the BUILDER's Shipyard, if necessary, and if the BUYER considers that such SELLER's request is justified, the BUYER shall effect the replacement as soon as conveniently arrangeable.

19/61
Shipbuilding Contract Hull No.H1628
ARTICLE 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 and provided 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 may be 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 an agreement 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 to the SELLER additional securities satisfactory to the SELLER, or any other alterations in this Contract, or the Specifications occasioned by such modifications and/or changes. The aforementioned 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-mails exchanged 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 shall be 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 the Specifications, 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 connection with 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 additional security 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 to comply 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 the BUILDER shall first obtain the BUYER’s approval which shall not be unreasonably withheld.

20/61
Shipbuilding Contract Hull No.H1628
2.    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 the VESSEL 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 SELLER and/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 after receipt 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 the VESSEL 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, fuel consumption 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 Specifications and/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 or changes 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, the terms of this Contract and Specifications without making any such alterations or changes.

21/61
Shipbuilding Contract Hull No.H1628
If 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 the Contract 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 its 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 of mutual 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 accordance with 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 in time 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/or equipment of the equivalent quality, capable of meeting the requirements of the Classification Society and of the rules, regulations, requirements and recommendations with which the 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 of such 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 and damages 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.

Furthermore, 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 the VESSEL 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 so completed.

22/61
Shipbuilding Contract Hull No.H1628
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 shall install 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 BUYER shall furnish the BUILDER with the necessary specifications, plans, drawings, instruction books, manuals, test reports and certificates required by the rules and regulations of the Specifications. 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 Supplied Items 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 for installation.

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 Contract Hull No.H1628
ARTICLE 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 or by 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 shall promptly 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 the performance 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 Supervisor as 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 than seven (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 be deemed 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's representatives 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 Classification Society 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 and Specifications. 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 to apply 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 otherwise the 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 permissible delay 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 with its 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, effect replacement 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 of unfavorable 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 hereto recognize 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, the Trial 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 on the 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, such delay shall be regarded as a permissible delay, as specified in Article VIII hereof.

24/61
Shipbuilding Contract Hull No.H1628
2.    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 to provide, 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 and shall 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 be supplied 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 and hydraulic 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 and greases 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 the required 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) to bring the VESSEL to the trial load draft as specified in the Specifications, shall be for the BUILDER's account.

25/61
Shipbuilding Contract Hull No.H1628
4.    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 the BUILDER 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 and Specifications, 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 whatever corrections 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 such alterations 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 the rejection 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 provided for 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 arbitration as 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 the SELLER 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 before effecting 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 of 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 the corresponding 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 Contract Hull No.H1628
The 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 of lubricating 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 invoices 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 as conformity 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, as hereinafter 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 do 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 and the 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, or


ii)
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 with 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 Contract Hull No.H1628
ARTICLE 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 Statutory Certificates 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 or before May 31, 2029 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 of 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 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 forthwith by 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 and acceptance 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 shall accompany 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 Contract Hull No.H1628
 
(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 qualifications whatsoever (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 of signing 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 provisional certificate 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 after delivery 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 encumbrances upon 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 of the 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 Run or 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 Contract Hull No.H1628
 
(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 the VESSEL, 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)  calendar days, 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 SELLER the 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 right to tender the VESSEL for delivery after compliance with all procedural requirements as above provided.

30/61
Shipbuilding Contract Hull No.H1628
ARTICLE 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 public enemy, 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), as the 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 its sub‑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 the SELLER 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 material supplier 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 the 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 this Contract 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 neverthe-less to 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 time of 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 time for 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 Contract Hull No.H1628
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 specify the 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 of any 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 to 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 total accumulated 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 Two Hundred 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 the BUYER, 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 or postponement 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 this Contract by serving upon the SELLER notice of cancel-lation 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, 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 intention to cancel, or consent to an extension 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 justifying cancellation 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 permit postponement of the Delivery Date, shall be understood to be (and are herein referred to as) permissible delays, and are to be distin-guished from non‑permissible delays on account of which the Contract Price of the VESSEL is subject to adjustment as provided for in Article III hereof.

32/61
Shipbuilding Contract Hull No.H1628
ARTICLE IX WARRANTY OF QUALITY
 
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 materials including 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 the date 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 of the 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 of the 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's written 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 of such 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 the Shipyard 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 as provided 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 the VESSEL ready for such repairing and replacing.

33/61
Shipbuilding Contract Hull No.H1628
Any 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 repair or 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 is deemed 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 the VESSEL, 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 to cause 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 the time 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 to verify 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 advise the 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 the SELLER'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 a sum 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 replacements including 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 respects for 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 Contract Hull No.H1628
4.    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 shall neither 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 any loss 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 the aforesaid 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 works done 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 other contractor not appointed by the SELLER, or for any defects which have been caused or aggravated by mismanagement, accident, negligence, omission, willful neglect or improper use and 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 and tear 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 Article replaces 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 sale of 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 duly authorized 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 Contract and/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 to remedy defects in accordance with this Article).
 
35/61
Shipbuilding Contract Hull No.H1628
ARTICLE 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 cancellation and/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 SELLER in 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 full amount 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 rescission by 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 arbitration as afore-said, 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 arbitration award 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 in favour of the BUYER, declaring the BUYER's cancellation and/or rescission justi-fied, is made and delivered to the SELLER by the arbitration tribunal. In the event of the SELLER is obligated 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 is exercised 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 the respective 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 such refund 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) of Article 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 SELLER shall 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.

36/61
Shipbuilding Contract Hull No.H1628
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 completely discharged.

37/61
Shipbuilding Contract Hull No.H1628
ARTICLE 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 and 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 accordance with 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 hereof provided 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 under the 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 date of 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. In case 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 duly received by the BUYER.

3.    INTEREST AND CHARGE
 
38/61
Shipbuilding Contract Hull No.H1628
 
(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 Arti-cle, the BUYER shall pay interest on such installment at the rate of 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 when required 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 rate as 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 the SELLER 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 period of 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, the SELLER 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, by giving 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 shall forthwith 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 BUYER to the SELLER on account of this Contract; and

39/61
Shipbuilding Contract Hull No.H1628

(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 to declare 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 the payment 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 and conditions 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 it deems 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 to 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 such sale 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 and interest 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 and otherwise 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 herein mentioned, 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/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 be incurred 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 or rescission of this Contract.

40/61
Shipbuilding Contract Hull No.H1628

(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 pay 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 installments already 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.

41/61
Shipbuilding Contract Hull No.H1628
ARTICLE 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 by the BUYER to the SELLER including the value of maximum amount of US$ 600, 000.00 of the BUYER's Supplied Items. The policy referred to hereinabove shall be taken out in the name of 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 damage shall 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 this Article to the repair of such damage satisfactory to the Classification Society and other institutions or authorities as described in the Specifications without additional expenses 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 for any 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:

42/61
Shipbuilding Contract Hull No.H1628
 
(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 shall 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 first agreed 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 for the 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 this Contract without interest, whereupon this Con-tract shall be deemed to be canceled and all rights, duties, liabilities and obligations of each of the Parties to the other shall terminate 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 SELLER by 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 disagreement on 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.

43/61
Shipbuilding Contract Hull No.H1628
ARTICLE 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 be settled by the Parties themselves, such dispute shall be resolved by arbitration in London Maritime Arbitrators Association (“LMAA”) in London, England in accordance with English 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 arbitration rules. 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 of the 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 after receipt 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 is agreed 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 arbitration shall 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 appointed respectively 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 the second 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 the arbitration, 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 written agreement of the Parties hereto. In such case, the opinion of the Classification Society shall be final and binding on the Parties hereto.

44/61
Shipbuilding Contract Hull No.H1628
3.    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 the Parties 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 as defined 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 the VESSEL 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 as defined 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.

45/61
Shipbuilding Contract Hull No.H1628
ARTICLE 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 written consent not to be unreasonably withheld.

46/61
Shipbuilding Contract Hull No.H1628
ARTICLE 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 duties imposed 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 Shipyard and 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 for taxes, 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 of this Contract and the Specifications.

Any tax or duty other than those described hereinabove, if any, shall be borne by the BUYER.

47/61
Shipbuilding Contract Hull No.H1628
ARTICLE 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 from patent 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 the performance 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 expressly reserved 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 by the 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.

48/61
Shipbuilding Contract Hull No.H1628
ARTICLE XVII NOTICE
 
Any and all notices and communications in connection with this Contract shall be addressed as follows:

To the BUYER : MARTINIQUE SHIPPING COMPANY INC.

Address : c/o PERFORMANCE SHIPPING MANAGEMENT INC.
373 Syngrou Ave. & 2-4 Ymittou str., 17564, Palaio Faliro,
Athens, Greece

Technical contact information: Mr. Argyris Chachalis
Telephone:
Email:

Commercial Contact information: Mr. Andreas Michalopoulos
Telephone:
Email:

To the SELLER:

CSTC : China Shipbuilding Trading Co., Ltd.

Contacts: Mr. Chen Zhencheng/Mr. Jiang Binbin
Address :   23rd floor, Marine Tower,
No.1 Pudong Dadao,
Shanghai 200120
the People's Republic of China

Telephone:
E-mail :

BUILDER : Shanghai Waigaoqiao Shipbuilding Co., Ltd.

Contacts: Mr.Qiu Hongming/Ms. Xiong Wei
Address: 3001 Zhouhai Road, Pudong New District,
Shanghai 200137, P.R. China

Telephone:
E-mail :

49/61
Shipbuilding Contract Hull No.H1628
Any 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 notice of 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 for the 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 this Article.

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, the time 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 of delivery 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 no obligation 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.

50/61
Shipbuilding Contract Hull No.H1628
ARTICLE XVIII EFFECTIVE DATE OF CONTRACT
 
This Contract shall become effective upon being signed by all Parties.
Upon signing of this Contract, all Parties hereto shall do the following:

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 of this 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 to pay the 2nd, 3rd and 4th instalments as stipulated in Article II, paragraph 6 of this Contract.

51/61
Shipbuilding Contract Hull No.H1628
ARTICLE 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 any language or requirements so embodied in the Specifications permit an interpretation inconsistent with any provision of this Contract, then in each and every such event the applicable 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 the Specifications 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 the Specifications 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 agreed upon 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.

52/61
Shipbuilding Contract Hull No.H1628
ARTICLE 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 the BUYER 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 financial sanctions maintained by the European Commission of European Union and / or the Consolidated List of Financial Sanctions Targets in the UK maintained by UK HM Treasury 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 mutually acceptable 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 to such 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 be automatically 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 all instalment or instalments paid by the BUYER to the SELLER on account of the VESSEL.
 
53/61
Shipbuilding Contract Hull No.H1628
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 by 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 the SELLER.

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 the SELLER’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 Party towards 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 be forthwith completely discharged and waived.

54/61
Shipbuilding Contract Hull No.H1628
In WITNESS WHEREOF, the Parties hereto have caused this Contract to be duly executed on the day and year first above written.

THE BUYER : MARTINIQUE SHIPPING COMPANY INC.
  
   
By :
/s/ Andreas Nikolaos Michalopoulos
  

   
Name : Andreas Nikolaos Michalopoulos
  
   
Title : Attorney-in-fact
  
   
Witness : Aikaterini Oikonomea
                /s/ Aikaterini Oikonomea
  
   
THE SELLER:
  
   
CSTC : China Shipbuilding Trading Co., Ltd.
  
   
By :
/s/ Jiang Binbin
  

   
Name : Jiang Binbin
  
   
Title : Attorney in fact
  
   
Witness :
  
   
THE BUILDER: Shanghai Waigaoqiao Shipbuilding Co., Ltd.
  
   
By :
/s/ Liu Jzz
  

   
Name : Liu Jzz
  
   
Title : Attorney in fact
  
   
Witness : /s/ Qiu Hongming
  

55/61
Shipbuilding Contract Hull No.H1628
Exhibit "A" : IRREVOCABLE LETTER OF GUARANTEE NO.
 
To:  MARTINIQUE SHIPPING COMPANY INC.

Date:
Dear Sirs,
Irrevocable Letter of Guarantee No.

At the request of China Shipbuilding Trading Co., Ltd., address at 56(Yi), Zhongguancun Nandajie, Beijing 100044, China, and in consideration of your agreeing to pay China Shipbuilding Trading Co., Ltd. and Shanghai Waigaoqiao Shipbuilding Co., Ltd., 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 dated March 2nd, 2026 (hereinafter called the “Contract”) for the construction of one (1) 158,000 DWT Crude Oil Tanker to be designated as Hull No. H1628 (hereinafter called the "VESSEL"), we, Bank of China Ltd., Beijing Branch, address at No.2 Chaoyangmennei Ave., Dongcheng Dist., Beijing, China, do hereby irrevocably guarantee repayment to you by the SELLER of an amount up to but not exceeding a total amount of United States Dollars Thirty Six Million Six Hundred and Seventy Five Thousand Only (USD 36,675,000) representing the first instalment of the Contract Price of the VESSEL of United States Dollars Twelve Million Two Hundred and Twenty Five Thousand only (US$ 12,225,000), plus the second instalment of the Contract Price of the VESSEL, of United States Dollars Eight Million One Hundred and Fifty Thousand only (US$ 8,150,000), plus the third instalment of the Contract Price of the VESSEL, of United States Dollars Eight Million One Hundred and Fifty Thousand only (US$ 8,150,000), plus the fourth instalment of the Contract Price of the VESSEL, of United States Dollars Eight Million One Hundred and Fifty Thousand only (US$ 8,150,000), 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 thereof becomes 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 you for 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 the cancellation 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 our receipt of the relevant written demand from you for repayment.

56/61
Shipbuilding Contract Hull No.H1628
However, 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 the arbitration 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 honour the 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 interest described 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 SELLER from you to the SELLER’s a/c No. 3480 6318 1842 held by China Shipbuilding Trading Co., Ltd. with Bank of China Ltd., Beijing Branch and the amounts effective under this Letter of Guarantee shall correspond to the total payment actually received 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 Guarantee shall 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%) per annum, 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:   ).

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 of Delivery and Acceptance of the VESSEL under the Contract or refund has been made by the SELLER or ourselves, or until March 27th, 2030, whichever occurs the earliest. After which, this guarantee shall be null and void whether or not it is returned to us for cancellation.

This Letter of Guarantee is governed by the Laws of England.

For and on behalf of Bank of China Ltd., Beijing Branch

57/61
Shipbuilding Contract Hull No.H1628
Exhibit "B" IRREVOCABLE LETTER OF GUARANTEE
 
FOR THE 2ND, 3RD AND 4TH INSTALLMENTS

From: PERFORMANCE SHIPPING INC.

To:  China Shipbuilding Trading Co., Ltd.                          __________
56(Yi) Zhongguancun Nan Da Jie, Beijing 100044, China
And
Shanghai Waigaoqiao Shipbuilding Co., Ltd.
3001 Zhouhai Road, Pudong New District, Shanghai 200137, China

Dear Sirs,

(1)
In consideration of your entering into a Shipbuilding Contract dated 2nd March, 2026 ("the Shipbuilding Contract") with MARTINIQUE SHIPPING COMPANY INC., address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960, Marshall Islands, as the buyer (hereinafter called "the BUYER") for the construction of one (1) 158,000 DWT Crude Oil Tanker known as Shanghai Waigaoqiao Shipbuilding Co., Ltd.'s Hull No. H1628 (hereinafter called "the VESSEL"), we, PERFORMANCE SHIPPING INC., address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH 96960, hereby IRREVOCABLY, ABSOLUTELY and UNCONDITIONALLY 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 Contract Price amounting to a total sum of United States Dollars Twenty Four Million Four Hundred and Fifty Thousand only (USD 24,450,000) 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 Eight Million One Hundred and Fifty Thousand only (US$ 8,150,000) payable by the BUYER within five (5) Banking Days after cutting of the first steel plate in your BUILDER's Shipyard workshop and the third installment in the amount of United States Dollars Eight Million One Hundred and Fifty Thousand only (US$ 8,150,000) 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 Eight Million One Hundred and Fifty Thousand only (US$ 8,150,000) payable by the BUYER within five (5) Banking Days after launching of the VESSEL .

58/61
Shipbuilding Contract Hull No.H1628
(3)
We also IRREVOCABLY, ABSOLUTELY and UNCONDITIONALLY guarantee, as primary obligor and not merely as surety, the due and punctual payment by the BUYER of interest 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 of 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 such default 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 the unpaid 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 assigned shall 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 Bank of China Ltd., Beijing Branch, address at No.2 Chaoyangmennei Ave., Dongcheng Dist., Beijing, China (SWIFT Code:   ) as receiving bank nominated by you for A/C    Beneficiary: China Shipbuilding Trading Co., Ltd. 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 the BUILDER'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 other indemnity 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 or unenforceability 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 obligations under 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 Ocean Transport 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-mail Address:   ), with confirmation in writing.

59/61
Shipbuilding Contract Hull No.H1628
(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 and accepted 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 with the 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 Twenty Four Million Six Hundred and Fifty Thousand Nine Hundred and Fifty Nine only (US$ 24,650,959) 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 United States Dollars Twenty Four Million Four Hundred and Fifty Thousand only (USD 24,450,000); 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 Two Hundred Thousand Nine Hundred and Fifty Nine only (US$ 200,959).

(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, or charges 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 withholding permitted 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 amount which 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 the purposes 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 Contract Hull No.H1628
IN 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
Addendum No. 1 to Shipbuilding Contract for Construction of
One (1) 158,000 DWT Crude Oil Tanker H1628

This Addendum No. 1 to Shipbuilding Contract dated 2nd March, 2026 (the “Shipbuilding Contract”) for Construction of One (1) 158,000 DWT Crude Oil Tanker with hull no. H1628 (hereinafter called the “VESSEL”) is made and entered into this 2nd day of March, 2026 by and between:

(A)  MARTINIQUE SHIPPING COMPANY INC., a corporation organized and existing under the laws of the Republic of the Marshall Islands, having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960, Marshall Islands (hereinafter called the “BUYER”);

(B)  CHINA SHIPBUILDING TRADING CO., LTD., a corporation organized and existing under the laws of the People's Republic of China, having its registered office at 56(Yi) Zhongguancun Nandajie, Beijing 100044, the People's Republic of China (hereinafter called “CSTC”); and

(C)  SHANGHAI WAIGAOQIAO SHIPBUILDING CO., LTD., 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") (CSTC and the BUILDER hereinafter are collectively called the "SELLER").

The BUYER and the SELLER hereinafter are collectively called the “Parties”.

NOW THEREFORE, for various considerations, receipt and sufficiency thereof being hereby expressly acknowledged by each of the Parties hereto, the Parties hereto do mutually agree and confirm to each other as follows:

1. Specifications

The VESSEL shall be built on identical basis as the repeat VESSEL to prototype vessel bearing the BUILDER’s hull number H1617 save for any amendments that may be agreed between the BUYER and the SELLER. The Scrubber and the shaft generator including the ESD and cyber security will be applied.

It is mutually agreed between the BUYER and the SELLER that all the drawings and technical documents as those used for construction of H1617 shall be used for construction of the VESSEL without approval by the BUYER, and also without re-approval by the Class except for the drawing relating to CSR-H rules that will be updated correspondently and be submitted for Class's approval.

1
The BUILDER will provide the Finished Drawings of H1617 to the BUYER for reference before steel cutting of the VESSEL. In case there is any conflict between “Specifications” (1) - (6) in the SHIPBUILDING CONTRACT and the Finished Drawings of H1617, the Finished Drawings of H1617 shall prevail.

It is mutually agreed between the BUYER and the SELLER that the construction of the VESSEL shall technically follow H1617 and all the modifications made to H1617 on or before January 31st, 2026 in relation to the specification and drawings of H1617 shall be automatically applied for the VESSEL. Modifications without extra cost made for H1617 after January 31st, 2026 shall also be automatically applied for the VESSEL, modifications or changes with extra cost made for H1617 after January 31st, 2026 shall be applied for the VESSEL subject to the BUYER agrees the same extra cost. If the BUYER doesn’t agree to pay the extra cost or no response from the BUYER within three (3) Business Days after receipt by the BUYER of SELLER’s notice, the SELLER shall have the right not to apply such modifications and changes to the VESSEL. For any modification followed by H1617 that applied to the VESSEL, the agreement between the SELLER and the owner of H1617 on adjustment of the deadweight, speed, fuel consumption and or extension of the delivery, if any, resulting from such modifications and changes shall be fully accepted by the BUYER automatically.

2. Makers List

In principle, the same makers as those selected for H1617 shall be applied to the VESSEL. Documents/drawings of the equipment of the VESSEL shall not be submitted for BUYER’s approval. The SELLER shall inform the BUYER if any maker(s) become impossible to supply the same equipment as used for H1617 and, in this case, the SELLER shall have the right to select other maker(s) in the Makers List (Drawing No.158TK-18204-ML-R0) other than that used for H1617, subject to the approval of the BUYER which is not to be unreasonably withheld. In this case the SELLER shall submit to the BUYER the documents/drawings of the selected equipment for BUYER’s approval. However, the below 3 equipment’s maker shall be changed as follow:
1)      the maker of Water Mist System (for engine room local fire fighting) shall be chosen as VTI;
2)      the maker of CO2 Fire Extinguishing System shall be chosen as VTI;
3)      the maker of Deck Foam Fire Extinguishing System shall be chosen as VTI.
In addition, the BUYER has the option to choose Alfa Laval as the maker of Purifiers subject to the BUYER’s acceptance of the cost difference between Alfa Laval and MKK if any.

2
3. This Addendum No. 1 constitutes an integral part of the Shipbuilding Contract. If the terms of the Shipbuilding Contract and/or the Specifications are in conflict with this Addendum No. 1, the terms of this Addendum No. 1 shall prevail. Save as amended by this Addendum No.1, all other terms and/or conditions of the Shipbuilding Contract shall remain unaltered and in full force and effect.

4. This Addendum No.1 shall become effective after due execution by authorized representatives of Parties hereto.

5. The Parties hereto agree that this Addendum No.1 shall be governed by and interpreted in accordance with the laws of England and ARTICLE XIII of the Shipbuilding Contract shall apply.

IN WITNESS WHEREOF the Parties hereto have caused this Addendum No.1 duly executed by their duly authorized officers or attorneys-in-fact on the day and year first above written.

THE BUYER
THE SELLER
   
For and on behalf of
For and on behalf of
   
MARTINIQUE
CHINA SHIPBUILDING
   
SHIPPING COMPANY INC.
TRADING CO., LTD.
   
By:
/s/ Andreas Nikolaos Michalopoulos
  
By:
/s/ Jiang Binbin
  
   
Name: Andreas Nikolaos Michalopoulos
Name: Jiang Binbin
   
Title: Attorneys-in-fact
Title: Attorneys-in-fact

 
For and on behalf of
   
 
SHANGHAI WAIGAOQIAO
   
 
SHIPBUILDING CO., LTD.
   
 
By:
/s/ Liu Jzz
  
   
 
Name: Liu Jzz
   
 
Title: Attorneys-in-fact


3
Exhibit 4.39
BARECON 2017
STANDARD BAREBOAT CHARTER PARTY   PART I


1.   Place and date
16 March 2026

        
.
2.      Owners (Cl. 1)
(i)     Name: Salter Shipping, S.A. guaranteed by Yawatahama Kisen Co., Ltd.
 
(ii)  Place of registered office:
No.20, Federico Boyd Avenue and 51st Street, P.O. Box 4493, Panama 5, Republic of Panama
 
(iii)   Law of registry: Panama
 
    
3.      Charterers (Cl. 1)
(i)  Name: SAINT BARTH SHIPPING COMPANY INC. guaranteed by Performance Shipping Inc.
 
(ii)  Place of registered office: Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, The Marshall Islands MH 96960
 
 
(iii)  Law of registry: The Republic of the Marshall Islands
 
  
 
4.    Vessel (Cl. 1 and 3)
(i)    Name: Hull No. YZJ2024-1624 «P. SAN FRANCISCO »
(ii)   IMO Number: 1065708
(iii) Flag State: Marshall Islands or Liberia
(iv)  Type: LR1 Tanker
 
    
(v)    GT/NT:
(vi)   Summer DWT:
(vii)  When/where built: 2027 / Jiangsu New Yangzi Shipbuilding Co., Ltd
(viii) Classification Society: IACS classification society in Charterer’s option

  
 
5.      Date of last special survey by the Vessel`s Classification Society
  N/A
    
6.     Validity of class certificate (state number of months to apply)
(i)     Delivery (Cl. 3): N/A
(ii)    Redelivery (Cl. 10): minimum 3 months
 
  
 
7.      Latent Defects (state number of months to apply) (Cl. 1,3)
  N/A
 
    
8.     Port or place of delivery (Cl. 3)
 As per MOA Clause 5
 
  
 
9.      Delivery notices (Cl. 4)
  N/A
 
    
10.   Time for delivery (Cl. 4)
 As per MOA Clause 5
 
  
 
11.    Cancelling date (Cl. 4,5)
  31 October 2027
    
12.   Port or place of redelivery (Cl.10)
 Worldwide range, safely afloat at an accessible safe berth or anchorage at a safe port or place (excluding war risk areas in accordance with the terms of the Vessel’s insurances), in Charterers’ option.
 
  
 
13.    Redelivery notices (Cl. 10)
Thirty (30) and twenty (20), fifteen (15), seven (7), and three running days` approximate notices and two (2) running days’ definite notice
    
14.   Trading limits (Cl. 11)
 World Wide trading within institute Warranty Limits (IWL), provided that, Charterers shall be permitted to trade outside of IWL if they pay any applicable premium and/or expenses. North Korea, Russia and any other states or regions sanctioned by UN, USA, EU, UK or Japan shall be excluded. If Charterers call at a state which results in a breach of sanctions applicable to the Charterers and/or the Vessel then Charterers to undertake to indemnify Owners in accordance with Clause 22 and Clause 51.
  

 
STANDARD BAREBOAT CHARTER PARTY   PART I
 
15.    Bunker fuels, unused oils and greases (optional, state if (a) (actual net price), or (b) (current net market price) to apply) (Cl. 9)
  N/A
 
    
16.   Charter period (Cl. 2)
 Fixed term of 7 years
 
 
  
 
17.          Charter hire (state currency and amount) (Cl. 2,10 and 15)
(i) Charter hire:
A: Fixed part: USD 5,451 per day; plus
B: Floating part: (1M CME TERM SOFR + 2.00% Margin) x No of days/360 x Loan Outstanding
Margin as per line 44
Loan Outstanding as per Clause 49
 
(ii)    Charter hire for optional period: N/A
 
(iii)   Administration fee: USD500/month payable together with Charter Hire after delivery.
 
    
18.    Optional period and notice (Cl. 2)
(i)     State extension period in months: N/A
(ii)    State when declarable: N/A
 
 
 
  
 
19.    Rate of interest payable (Cl. 15(g))
1 month CME TERM SOFR plus 2.00 percentage points per annum
    
20.   Owners` bank details (state beneficiary and bank account) (Cl. 15)
 The San-in Godo Bank, Ltd. / Hiroshima Branch
 1-22, Takemachi Naka-ku, Hiroshima-shi, Hiroshima  Prefecture, Japan
 SWIFT Code: SGBKJPJT
 Account Number: 1000083
 Account Name: Salter Shipping, S.A.
  
 
21.    New class and other regulatory requirements (Cl. 13(b))
(i)     State if 13(b)(i) or (ii) to apply: Clause 13(b)(i) to apply
(ii)    Threshold amount (AMT): N/A
(iii)  Vessel`s expected remaining life in years on the Delivery Date: N/A
        
 
22.   Mortgage(s), if any (state if 16(a) or (b) to apply; if 16(b) applies state date of Financial Instrument and name of Mortgagee(s)/Place of business) (Cl. 1, 16)
 First priority ship mortgage in favor of the San-in Godo Bank, Ltd. Japan
  

 
23.    Insured Total Loss value (Cl. 17)
  See Clause 46
    
24.   Insuring party (state if Cl. 17(b) (Charterers to insure) or Cl. 17(c)  (Owners to insure) to apply)
Clause 17(b)
And See Clause 46
  
 
25.    Performance guarantee (state amount and entity) (Cl. 27) (optional)
See Clause 43
  
 
26.   Dispute Resolution (state 33(a), 33(b), 33(c) or 33(d); if 33(c) is agreed, state Singapore or English law; if 33(d) is agreed, state governing law and place of arbitration) (Cl. 33)
  (a) English law, London arbitration
  

 
STANDARD BAREBOAT CHARTER PARTY   PART I
 
27.    Newbuilding Vessel (indicate with “yes” or “no” whether PART III applies and if “yes”, complete details below) (optional)
 No
(i)     Name of Builders:
(ii)    Hull number:
(iii)   Date of newbuilding contract:
(iv)   Liquidated damages for physical defects or deficiencies (state party):
(v)    Liquidated damages for delay in delivery (state party):
 
 
28.   Purchase Option (indicate with “yes” or “no” whether PART IV  applies) (optional)
 
 No, see however Clause 45
    
29. Bareboat Charter Registry (indicate with “yes” or “no” whether PART V applies and if “yes”, complete details below) (optional) No
(i)   Underlying Registry: N/A
(ii)  Bareboat Charter Registry: N/A
  
 
30.   Notice to Owners (state full style details for serving notices) (Cl. 34)
  Salter Shipping, S.A.
  c/o Yawatahama Kisen Co., Ltd.
  Salter Shipping, S.A.
  5F Center Point Building 3-3-6, Ichiban-cho, Matsuyama City, Ehime, 790-0001, Japan
 
  Email:
 
  Attention: Yukina Yamamoto /
Matthew Yamamasu
    
31.   Notice to Charterers (state full style details for serving notices) (Cl. 34)
 SAINT BARTH SHIPPING COMPANY INC.
 c/o PERFORMANCE SHIPPING MANAGEMENT INC.
 373 Syngrou Ave. & 2-4 Ymittou str.,
 17564, Palaio Faliro, Athens,
 Greece
 
     Email:
 
     Attention: Mr. Andreas Nikolaos Michalopoulos
  

It is mutually agreed that this Charter Party shall be performed subject to the conditions contained in this Charter Party which shall include PART I, and PART II and Rider Clauses 39-54. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II and Rider Clauses 39-54 to the extent of such conflict but no further. It is further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and only form part of this Charter Party if expressly agreed and stated in BOX 27, 28 and 29. If PART III and/or PART IV and/or PART V applies, it is further agreed that in the event of a conflict of conditions, the provisions of PART I and PART II shall prevail over those of PART III and/or PART IV and/or PART V to the extent of such conflict but nor further.

 
Salter Shipping, S.A.
Signature (Owners)
/s/ Yoshihide Yamamoto
 
Name: Yoshihide Yamamoto
Title: Director/President
  
SAINT BARTH SHIPPING COMPANY INC.
Signature (Charterers)
/s/ Andreas Nikolaos Michalopoulos

Name: Andreas Nikolaos Michalopoulos
Title: Director / Attorney-in-fact

  
 
Yawatahama Kisen Co., Ltd.
Signature (Guarantor)
/s/ Yoshihide Yamamoto
 
Name: Yoshihide Yamamoto
Title: Representative Director
  
PERFORMANCE SHIPPING INC.
Signature (Guarantor)
/s/ Andreas Nikolaos Michalopoulos
 
Name: Andreas Nikolaos Michalopoulos
Title: Director / Chief Executive Officer

  

PART II
BARECON 2017 STANDARD BAREBOAT CHARTER PARTY
0
 1.
Definitions
1

2
In this Charter Party:
3

4
“Banking Day” means a day on which banks are open in the places stated in Boxes 30 and 31, New York, 
5
Tokyo, London, Shanghai and Athens.
6

7
“Builder” means Jiangsu New Yangzi Shipbuilding Co., Ltd., a corporation organized and existing under the
8
laws of the People’s Republic of China, having its registered office at Jingjiang Park of Jiangyin Economic
9
Development Zone, Jingjiang City, Jiangsu Province, the People’s Republic of China.
10

11
"Building Contract" means the ship building contract dated 30th April 2024 made between the Construction
12
Seller and the Sellers as buyer.
13

14
“Charterers” means the party identified in Box 3.
15

16
"Charterers’ Event of Default" has the meaning given to it in Clause 31(a) and a Charterers’ Event of Default
17
is "continuing" if such Charterers’ Event of Default has not been remedied by the Charterers or waived by the
18
Owners.
19

20
“Compulsory Acquisition” has the meaning given to it in Clause 30(b).
21

22
“Construction Seller” means together (i) the Builder (ii) Jiangsu Yangzijiang Shipbuilding Group Co., Ltd., a
23
corporation organized and existing under the Laws of the People’s Republic of China, having its registered
24
office at No.1 Lianyi Road, Jingjiang Park of Jiangyin Economic Development Zone, Jingjiang City, Jiangsu
25
Province, the People’s Republic of China (hereinafter called “JYS”), and (iii) Jiangsu Yangzi Xinfu
26
Shipbuilding Co., Ltd., a corporation organized and existing under the Laws of the People’s Republic of China,
27
having its registered office at Hongqiao Industrial Park, Taixing City, Jiangsu Province, , the People’s Republic
28
of China.
29

30
“Crew” means the Master, officers and ratings and any other personnel employed on board the Vessel.
31

32
“Delivery Date" means the date of delivery of the Vessel by the Owners to the Charterers under this Charter
33
Party.
34

35
“Financial Instrument” means the mortgage, deed of covenant or other such financial security instrument as
36
identified in Box 22.
37

38
“Fixed Hire” means the fixed part of the Charter Hire identified in Box 17(i)(A).
39

40
“Flag State” means the flag state in Box 4 or such other flag state to which the Charterers may have re-
41
registered the Vessel with the Owners’ consent during the Charter Period.
42

43
“Guarantees” has the meaning ascribed to it in Clause 43
44

45
“Latent Defect” means a defect which could not be discovered on such an examination as a reasonably
46
careful skilled person would make.
47

48
“Margin” means 2.00% per annum.
49

50
“MOA” means the Memorandum of Agreement entered into between the Owners (as buyers) and the
51
Charterers (as sellers) dated __ March 2026.
52

53
“Mortgagee” means The San-in Godo Bank, Ltd.

PART II
BARECON 2017 STANDARD BAREBOAT CHARTER PARTY
54

55
"Outstanding Principal" means at any relevant time the aggregate of the amount of $37,800,000 less the
56
aggregate Fixed Hire which has at any relevant time been received by the Owners in accordance with this
57
Charter Party.
58

59
“Owners” means the party identified in Box 2.
60

61
“Parties” means the Owners and the Charterers and “Party” each one of them.
62

63
“Permitted Liens” means:
64

65
(i)    any liens for unpaid master’s and crew’s wages in accordance with first class ship ownership and
66
management practice and not being enforced through arrest; or
67

68
(ii)   general average and salvage not being enforced through arrest; or
69

70
(iii)  liens in favour of suppliers, necessaries and other similar liens arising by operation of law or in the ordinary
71
 course of trading, operation, repair or maintenance of the Vessel, such liens not being enforced through
72
 arrest and not as a result of failure of payment by the Charterers, their agents or any sub-charterers of
73
 the Vessel; or
74

75
(iv)   any security interest created by any security documents granted by the Charterers in relation to the
76
 Vessel; or
77

78
(v)   any liens created by or on the instructions or with the prior consent of the Owners.
79

80
“Purchase Option” has the meaning ascribed to it in Clause 45
81

82

83

84
“QEL” has the meaning ascribed to it in Clause 43
85

86
“Total Loss” means an actual, constructive, compromised, agreed or arranged total loss of the Vessel under
87
the insurances.
88

89
“Variable Hire” means the floating part of the Charter Hire identified in Box 17(i)(B).
90

91
“Vessel” means the vessel described in Box 4 including its equipment, machinery, boilers, fixtures and fittings.
92

93 2.
Charter Period
94

95
The Owners have agreed to let and the Charterers have agreed to hire the Vessel for the period stated in
96
Box 16 (“Charter Period”). The Charter Period shall commence simultaneously with delivery of the Vessel by
97
the Charterers as sellers to the Owners as buyers under the MOA and subject to the terms and conditions of
98
this Charter Party shall end on the date falling seven (7) years from the Delivery Date.
99

100
The Charterers shall have the option to extend the Charter Period by the period stated in Box 18(i) at the rate
101
stated in Box 17(ii), which option shall be exercised by written notice to the Owners latest as stated in Box
102
18(ii).
103

104
Subject to the terms and conditions herein provided, during the Charter Period the Vessel shall be in the full
105
possession and at the absolute disposal for all purposes of the Charterers and under their complete control
106
in every respect.
107


PART II
BARECON 2017 STANDARD BAREBOAT CHARTER PARTY
108 3.
Delivery See Clause 39, 40 and 41
109

110

111
(not applicable when Part III applies, as stated in Box 27).
112

113 (a)  
The Owners shall deliver the Vessel in a seaworthy condition and in every respect ready for service under
114
this Charter Party and in accordance with the particulars stated in Boxes 4 to 6.
115

116
If the Charterers have inspected the Vessel prior to delivery, the Vessel shall be delivered by the Owners in
117
the same condition as at the time of inspection, fair wear and tear excepted.
118

119
The Vessel shall be delivered by the Owners and taken over by the Charterers at the port or place stated in
120
Box 8 at such readily accessible safe berth or mooring as the Charterers may direct.
121

122 (b) 
The Vessel shall be properly documented on delivery in accordance with the laws and regulations of the Flag
123
State and the requirements of the Classification Society stated in Box 4. The Vessel upon delivery shall have
124
her survey cycles up to date and class certificates valid and unextended for at least the number of months
125
stated in Box 6(i) free of any conditions or recommendations. If Box 6(i) is not filled in, then six (6) months
126
shall apply.
127

128 (c)
Without prejudice to the Charterers’ rights with respect to any breach by the Owners of (i) this Charter Party
129
or (ii) any laws and/or sanctions, the delivery of the Vessel by the Owners and the taking over of the Vessel
130
by the Charterers shall constitute a full performance by the Owners of all the Owners’ obligations under this
131
Clause, and thereafter the Charterers shall not be entitled to make or assert any claim against the Owners on
132
account of any conditions, representations or warranties expressed or implied with respect to the Vessel but
133
the Owners shall be liable for the cost of but not the time for repairs or renewals arising out of Latent Defects
134
in the Vessel existing at the time of delivery under this Charter Party, provided such Latent Defects manifest
135
themselves within the number of months after delivery stated in Box 7. If Box 7 is not filled in, then twelve (12)
136
months shall apply.
137

138 4.
Time for Delivery See Clause 39
139

140
(not applicable when Part III applies, as stated in Box 27)
141

142
The Vessel shall not be delivered before the date stated in Box 10 without the Charterers’ consent and the
143
Owners shall exercise due diligence to deliver the Vessel not later than the date stated in Box 11.
144

145
The Owners shall keep the Charterers informed of the Vessel’s itinerary for voyage leading up to delivery
146
and shall serve the Charterers with the number of days approximate/definite notices of the Vessel’s delivery
147
stated in Box 9. Following the tender of any such notices the Owners shall give or allow to be given to the
148
Vessel only such further employment orders as are reasonably expected when given to allow delivery to
149
occur by the date notified.
150

151 5.
Cancelling See Clause 39
152

153
(not applicable when Part III applies, as stated in Box 27)
154

155 (a)  
Should the Vessel not be delivered by the cancelling date stated in Box 11, the Charterers shall have the
156
option of cancelling this Charter Party.
157

158 (b)  
If it appears that the Vessel will be delayed beyond the cancelling date, the Owners may, as soon as they are
159
in a position to state with reasonable certainty the day on which the Vessel should be ready, give notice thereof
160
to the Charterers asking whether they will exercise their option of cancelling, and the option must then be
161
declared within three (3) Banking Days of the receipt by the Charterers of such notice. If the Charterers do

PART II
BARECON 2017 STANDARD BAREBOAT CHARTER PARTY
162
not then exercise their option of cancelling, the readiness date stated in the Owners’ notice shall be substituted
163
for the cancelling date stated in Box 11 for the purpose of this Clause 5 (Cancelling).
164

165 (c)  
Cancellation under this Clause 5 (Cancelling) shall be without prejudice to any claim the Charterers may
166
otherwise have against the Owners under this Charter Party.
167

168 6.
Familiarisation
169

170 (a)  
The Charterers shall have the right to place a maximum of two (2) representatives on board the Vessel at
171
their sole risk and expense for a reasonable period prior to the delivery of the Vessel.
172

173
The Charterers and the Charterers’ representatives shall sign the Owners’ usual letter of indemnity prior to
174
embarkation.
175

176 (b)
The Owners shall have the right to place a maximum of two (2) representatives on board the Vessel at their
177
sole risk and expense for a reasonable period at a convenient port for a maximum of (60) days prior to
178
expected date of redelivery of the Vessel subject to not causing any disruption to the Vessel’s itinerary or
179
operations.
180

181
The Owners and the Owners’ representatives shall sign the Charterers’ usual letter of indemnity prior to
182
embarkation.
183

184 (c)
Such representatives shall be on board for the purpose of familiarisation and in the capacity of observers only,
185
and they shall not interfere in any respect with the operation of the Vessel and follow the Master’s instructions.
186
The Owners representatives while onboard shall be allowed use of the Vessel’s communication systems while
187
on board but such use shall never interfere with the Vessel’s operation. Charterer shall cooperate with Owners
188
representatives reasonable comments, requests and questions which they may have for familiarisation
189
purpose. Costs for communication to be settled by Owners upon redelivery. This clause shall not apply if the
190
Charterers exercise their Purchase Option as set out in Clause 45.
191

192 7.
Surveys on Delivery and Redelivery See Clause 42
193

194
(a)
The Owners and Charterers shall each appoint and pay for their respective surveyors for the purpose of
195
determining and agreeing in writing the condition of the Vessel at the time of delivery and redelivery hereunder.
196
The Owners shall bear all the Vessel’s expenses related to the on-hire survey including loss of time, if any.
197
The Charterers shall bear all the Vessel’s expenses related to the off-hire survey including loss of time, if any.
198

199
(b)
Divers inspection on delivery/re-delivery
200

201
The Charterers shall have the option at delivery and the Owners shall have the option at redelivery, at their
202
respective time, cost and expense, to arrange for an underwater inspection by a diver approved by the
203
Classification Society, in the presence of a Classification Society surveyor, to determine the condition of the
204
rudder, propeller, bottom and other underwater parts of the Vessel. Not earlier than 45 days or later than 30
205
days or if not possible then as soon as the Vessel becomes available before re-delivery of the Vessel, the
206
Owners and the Charterers shall jointly agree upon the appointment of a surveyor for the purpose of
207
determining the condition of the Vessel at the time of re-delivery hereunder. The surveyor, whose decision
208
shall be final and binding on both parties, shall report in writing, specifying all items, if any, which have not
209
been properly maintained in accordance with the terms and conditions of the Charter and the work required
210
to correct such deficiencies. The costs of such a surveyor shall be equally shared between the parties. In the
211
event that the parties are not able to agree upon a single surveyor, each shall appoint their own and the two
212
surveyors so appointed shall conduct a joint survey of the Vessel. In such an event each party shall pay their
213
own appointed surveyor’s costs. The survey shall be carried out at the point of re-delivery and in Charterers
214
time. Any works required as a result of such survey shall be carried out by Charterers prior to their re-delivery
215
of the Vessel. Charterers shall have the option to pay a compensation based on the surveyors’ assessment

PART II
BARECON 2017 STANDARD BAREBOAT CHARTER PARTY
216
to the Owners for any works required instead of performing the required works before redelivery (unless the
217
required works are class affecting). In the event that two surveyors so appointed disagree, the matter shall
218
be referred to arbitration in accordance with Clause 33. This clause shall not apply if the Charterers exercise
219
their Purchase Option as set out in Clause 45.
220

221
8.     
Inventories
222

223

A complete inventory of the Vessel’s equipment, outfit, spare parts and consumable stores on board the
224

Vessel shall be made by the parties on delivery and redelivery of the Vessel.
225

226 9.
Bunker fuels, oils and greases
227

228
On redelivery, Owners to pay for all bunkers, fuels and unused lubrication and hydraulic oils and greases in
229
storage tanks and unopened drums in accordance with, either:
230

231
(a)   Charterers’ last invoice price paid (not to be older than 6 months); or otherwise
232

233
(b)   if such invoices are not available on account of the Vessel being employed on sub time charter, the sub-
234
time charter prices; or otherwise
235

236
(c)  the current market price prevailing at the port of redelivery (or, if unavailable, at the nearest bunkering
237
port).
238

239

The Charterers and the Owners, respectively, shall at the time of delivery and redelivery take over and pay
240

for all bunker fuels and unused lubricating and hydraulic oils and greases in storage tanks and unopened
241

drums at:  
242

243
(a)* 
The actual price paid (excluding barging expenses) as evidenced by invoices or vouchers.
244

245
(b)* 
The current market price (excluding barging expenses) at the port and date of delivery/redelivery of the Vessel
246
or, if unavailable, at the nearest bunkering port.
247

248
*Subclauses(a)and(b)are alternatives; state alternative agreed in Box 15. If Box 15 is not filled in, then
249
subclause(a)shall apply.
250

251 10.
Redelivery
252

253
At the expiration of the Charter Period the Vessel shall be redelivered by the Charterers and taken over by
254
the Owners at the port or place stated in Box 12 at such readily accessible safe berth or mooring as the
255
Owners Charterers may direct (acting reasonably).
256

257
The Charterers shall keep the Owners informed of the Vessel’s itinerary for the voyage leading up to
258
redelivery and shall serve the Owners with the number of days approximate/definite notices of the Vessel’s
259
redelivery stated in Box 13.
260

261
The Charterers warrant that they will not permit the Vessel to commence a voyage (including any preceding
262
ballast voyage) which cannot reasonably be expected to be completed in time to allow redelivery of the
263
Vessel within the Charter Period and in accordance with the notices given. Notwithstanding the above, should
264
the Charterers fail to redeliver the Vessel within the Charter Period, the Charterers shall pay the daily
265
equivalent to the rate of hire stated in Box 17(i) applicable at the time plus ten (10) per cent or the market
266
rate, whichever is the higher, for the number of days by which the Charter Period is exceeded. Such payment
267
of enhanced hire rate shall be without prejudice to any claims the Owners may have against the Charterers
268
in this respect.
269
All other terms, conditions and provisions of this Charter Party shall continue to apply.

PART II
BARECON 2017 STANDARD BAREBOAT CHARTER PARTY
270

271
Subject to the provisions of Clause 13 (Maintenance and Operation), the Vessel shall be redelivered to the
272
Owners in the same condition and class as that in which it was delivered, fair wear and tear not affecting
273
class excepted.
274

275
The Vessel upon redelivery shall have her survey cycles up to date and class certificates valid and
276
unextended for at least the number of months agreed in Box 6(ii) free of any conditions or recommendations
277
by the Classification Society or the relevant authorities at the time of redelivery. If Box 6(1) is not filled in,
278
then six (6) months shall apply.
279

280
All plans, drawings and manuals (excluding ISM/ISPS manuals) and maintenance records shall remain on
281
board and accessible to the Owners upon redelivery. Any other technical documentation regarding the Vessel
282
which may be in the Charterers’ possession shall promptly after redelivery be forwarded to the Owners at
283
their expense, if they so request. The Charterers may keep the Vessel’s log books but the Owners shall have
284
the right to make copies of the same.
285

286
This clause shall not apply if the Charterers exercise their Purchase Option in Clause 45 of this Charter Party
287
in which event a Protocol of Delivery and Acceptance will be signed.
288

289
 11.
Trading Restrictions
290

291
The Vessel shall be employed in lawful trades for the carriage of lawful merchandise within the trading limits
292
stated in Box 14.
293

294
The Charterers undertake not to employ the Vessel or allow the Vessel to be employed otherwise than in
295
conformity with the terms of the contracts of insurance (including any warranties expressed or implied therein)
296
without first obtaining the consent of the insurers to such employment and complying with such requirements
297
as to additional premium or otherwise as the insurers may require. In case insurers’ consent is required,
298
Charterers will notify the Owners in writing, which notification may be by way of copying in the Owners in the
299
Charterers’ relevant notice to the insurers prior to the intended entry into such area, and, upon reasonable
300
request by the Owners, furnishing the Owners with the proof of extension of the insurance coverages
301
practically obtainable within a reasonable period from such request.
302

303
The Charterers will not do or permit to be done anything which might cause any breach or infringement of
304
the laws and regulations of the Flag State, or of the places where the Vessel trades.
305

306
Notwithstanding any other provisions contained in this Charter Party it is agreed that nuclear fuels or
307
radioactive products or waste are specifically excluded from the cargo permitted to be loaded or carried under
308
this Charter Party. This exclusion does not apply to radio-isotopes used or intended to be used for any
309
Industrial, commercial, agricultural, medical or scientific purposes provided the Owners’ prior approval has
310
been obtained to loading thereof.
311

312
 12.
Contracts of Carriage
313

314
(a)   The Charterers are shall use reasonable commercial efforts to procure that all documents issued during
315
the Charter Period evidencing the terms and conditions agreed in respect of carriage of goods shall contain
316
a paramount clause which shall incorporate the Hague or Hague-Visby Rules unless any other legislation
317
relating to carrier’s liability for cargo is compulsorily applicable in the trade. The documents shall also
318
contain the New Jason Clause and the Both-to-Blame Collision Clause.
319

320
(b)   The Charterers are to procure that all passenger tickets issued during the Charter Period for the carriage
321
of passengers and their luggage under this Charter Party shall contain a paramount clause which shall
322
incorporate the Athens Convention Relating to the Carriage of Passengers and their Luggage by sea, 1974,
323
and any protocol thereto, unless any other legislation relating to carrier’s liability for passengers and their

PART II
BARECON 2017 STANDARD BAREBOAT CHARTER PARTY
324
luggage is compulsorily applicable in the trade.
325

326
 13.
Maintenance and Operation
327

328
 (a)
Maintenance
329

330
During the Charter Period the Vessel shall be in full possession and at absolute disposal for all purposes of
331
the Charterers and under their complete control in every respect. The Charterers shall properly maintain the
332
Vessel in a good state of repair, in efficient operating condition and in accordance with good commercial
333
maintenance practice and, at their own expense, maintain the Vessel’s Class with the Classification Society
334
stated in Box 4 and all necessary certificates. The Charterers shall have the option to change the Vessel’s
335
Classification Society to any IACS classification society but time and cost to be for Charterers’ account.
336

337
 (b)
New Class and Other Regulatory Requirements
338

339

(i)*  In the event of any structural changes or new equipment becoming necessary for the continued
340
operation of the Vessel by reason of new class requirements or by compulsory legislation (“Required
341
Modification”), all such costs shall be for the Charterers’ account.
342
In the event of any improvement deemed necessary by the Charterers in connection with the operation
343
of the Vessel, or structural changes or new equipment being necessary for the continued operation of
344
the Vessel by reason of new class requirements or by compulsory legislation, the cost of compliance
345
shall be for the Charterers’ account. Notwithstanding the foregoing, Charterers are allowed to make
346
improvements to the Vessel provided cost of the same to be for Charterers account.
347

348
(ii)* In the event of any structural changes or new equipment becoming necessary for the continued
349
operation of the Vessel by reason of a Required Modification, the costs shall be apportioned as follows:
350

351
(1)      if the costs of the Required Modification are less than the amount stated in Box 21(ii), such
352
costs shall be for the Charterers’ account;
353

354
(2)      if the costs of the Required Modification are greater than the amount stated in Box 21(ii), the
355
Charterers’ portion of costs shall be apportioned using the formula below; all costs other than
356
the Charterers’ portion of costs shall be for the Owners’ account.
357

358
AMT=agreed amount stated in Box 21(ii)
359

360
CRM=cost of Required Modification  
361

362
MEL=modification’s expected life in years
363

364
VEL=the Vessel’s expected remaining life in years stated in Box 21(iii)  
365

366
RPY=remaining charter period in years
367

368
(i) If the Required Modification is expected to last for the remaining life of the Vessel, then:
369

370
Charterers’ portion of costs = CRM/VEL x RPY
371

372
(ii) If the Required Modification is not expected to last for the remaining life of the Vessel, then:
373

374
Charterers’ portion of costs = CRM/MEL x RPY
375

376
*Subclauses 13(b)(i) and 13(b)(ii) are alternatives, state alternative agreed in Box 21(i). If Box 21(i) is not
377
filled in, then subclause 13(b)(i) shall apply.

PART II
BARECON 2017 STANDARD BAREBOAT CHARTER PARTY
378

379
 (c)
Financial Security
380

381
The Charterers shall maintain financial security or responsibility in respect of third party liabilities as required
382
by any government, including federal, state or municipal or other division or authority thereof, to enable the
383
Vessel, without penalty or charge, lawfully to enter, remain at, or leave any port, place, territorial or contiguous
384
waters of any country, state or municipality in performance of this Charter Party without any delay. This
385
obligation shall apply whether or not such requirements have been lawfully imposed by such government or
386
division or authority thereof. The Charterers shall make and maintain all arrangements by bond or otherwise
387
as may be reasonably necessary to satisfy such requirements at the Charterers’ sole expense and the
388
Charterers shall indemnify the Owners against all direct consequences whatsoever (including loss of time)
389
for any failure or inability to do so.
390

391
 (d)
Operation of the Vessel
392

393
The Charterers shall at their own expense crew, victual, navigate, operate, supply, fuel, maintain and repair
394
the Vessel during the Charter Period and they shall be responsible for all costs and expenses whatsoever
395
relating to their use and operation of the Vessel, including any taxes and fees. The Crew shall be the servants
396
of the Charterers for all purposes whatsoever, even if for any reason appointed by the Owners.
397

398
 (e)
Information to Owners
399

400
The Charterers shall keep the Owners advised of the intended employment, planned dry-docking and major
401
repairs of the Vessel, as reasonably required by the Owners.
402

403
 (f)
Flag and Name of Vessel
404

405
The Owners have no right to change the name or flag of the Vessel during the Charter Period. During the
406
Charter Period, the Charterers shall have the liberty to paint the Vessel in their own colours, install and display
407
their funnel insignia and fly their own house flag. The Charterers shall also have the liberty, with the Owners’
408
prior written consent, which shall not be unreasonably withheld or delayed, to change the flag and/or the name
409
of the Vessel during the Charter Period by providing 30 days prior notice to the Owners and such expense
410
shall be for Charterer’s account. In case Charterers do not exercise their Purchase Option as set out in Clause
411
45, painting and re-painting, instalment and re-instalment, registration and re-registration at re-delivery, if
412
required by the Owners, shall be at the Charterers’ expense and time. Any annual tonnage tax plus Agency
413
fee and tonnage tax arising as a result of a flag change undertaken by the Charterers shall be for the account
414
of the Charterers during the Charter period. Change of flag (including Bareboat flag registration) during charter
415
period to be accepted/agreed by Owners and Charterers which to be Charterers’ Account (which agreement
416
not to be unreasonably withheld or delayed).
417
Any cost and fee for initial registration of title to the Vessel and legal documentation cost for documenting the
418
lease and security to be Charterers’ account; however such cost not to exceed USD15,000.
419

420
 (g)
Changes to the Vessel
421

422
Subject to subclause 13(b) (New Class and Other Regulatory Requirements), the Charterers shall make no
423
structural or substantial changes to the Vessel without the Owners’ prior written approval. If the Owners agree
424
to such changes, the Charterers shall, if the Owners so require, restore the Vessel, prior to redelivery of the
425
Vessel, to its former condition.
426

427
Subclause 13(b) notwithstanding, Charterers are permitted to make improvements to the Vessel provided
428
cost of same to be for Charterers’ account.
429

430
Charterers to inform to the Owners any changes or improvement occurred and to provide any documents or
431
certificate for such changes or improvement.

PART II
BARECON 2017 STANDARD BAREBOAT CHARTER PARTY
432

433
 (h)
Use of the Vessel’s Outfit and Equipment
434

435
The Charterers shall have the use of all outfit, equipment and spare parts on board the Vessel at the time of
436
delivery, provided the same or their substantial equivalent shall be returned to the Owners on redelivery in
437
the same good order and condition as on delivery as per the inventory (see Clause 8 (inventories)), ordinary
438
wear and tear excepted. The Charterers shall from time to time during the Charter Period replace such
439
equipment that become becomes unfit for use. The Charterers shall procure that all repairs to or replacement
440
of any damaged, worn or lost parts or equipment will be effected in such manner (both as regards
441
workmanship and quality of materials, including spare parts) as not to materially diminish the value of the
442
Vessel.
443

444
The Charterers have the right to fit additional equipment at their expense and risk but the Charterers shall
445
remove such equipment at the end of the Charter Period if requested by the Owners (acting reasonably). Any
446
hired equipment on board the Vessel at the time of delivery shall be kept and maintained by the Charterers.
447
and the Charterers shall assume the obligations and liabilities of the Owners under any lease contracts in
448
connection therewith and shall reimburse the Owners for all expenses incurred in connection therewith, also
449
for any new hired equipment required in order to comply with any regulations.
450

451
 (i)
Periodical Dry-Docking
452

453
The Charterers shall dry-dock the Vessel and clean and paint her underwater parts whenever the same may
454
be necessary, but not less than once every sixty (60) calendar months or such other period as may be required
455
by the Classification Society or Flag State.
456

457
 14.
Inspection during the Charter Period
458

459
Not more than once in each calendar year during the Charter Period, the Owners shall have the right at any
460
time after giving reasonable notice to the Charterers (provided that such inspection shall not delay or interfere
461
with the Vessel's operation and/or trading and/or loading or unloading) to inspect the Vessel or instruct a duly
462
authorised surveyor to carry out such inspection on their behalf to ascertain its condition and satisfy
463
themselves that the Vessel is being properly repaired and maintained or for any other reasonable commercial
464
reason they consider necessary (provided it does not unduly interfere with the commercial operation of the
465
Vessel). The Owners’ representative and the surveyor shall sign the Charterers usual letter of indemnity prior
466
to embarkation
467

468
The fees for such inspections shall be paid for by the Owners. All time used in respect of inspection shall be
469
for the Charterers’ account and form part of the Charter Period.
470

471
The Charterers shall also permit the Owners to inspect the Vessel’s class records, log books, certificates,
472
maintenance and other records whenever requested and shall whenever required by the Owners when
473
reasonably required upon the Owners’ request and shall furnish them the Owners with full information
474
regarding any casualties or other accidents or damage to the Vessel as may be requested by the Owners.
475

476
 15.
Hire
477

478
 (a)
The Charterers shall pay hire and administration fee due to the Owners punctually in accordance with the
479
terms of this Charter Party.
480

481
 (b)
The Charterers shall pay to the Owners for the hire and the administration fee of the Vessel a lump sum in
482
the amount the rate stated in Box 17(i) and (iii) which shall be payable not later than monthly every thirty (30)
483
running days in advance, the first lump sum being payable on the Delivery Date and hour of the Vessel’s
484
delivery to the Charterers subsequent sums falling due at consecutive monthly periods on the corresponding
485
calendar day thereafter (each such day the “Hire Payment Date”). Hire shall be paid continuously throughout

PART II
BARECON 2017 STANDARD BAREBOAT CHARTER PARTY
486
the Charter Period, subject to the terms of this Charter Party. Each payment of Fixed Hire shall be deemed to
487
have been applied on receipt by the Owners towards reducing the Outstanding Principal.
488

489
 (c)
Payment of hire and the administration fee shall be made to the Owners’ bank account stated in Box 20.
490

491
 (d)
All payments of Charter hire, the administration fee and any other payments due under this Charter shall be
492
made without any set-off whatsoever and free and clear of any withholding or deduction for, or on account of,
493
any present or future income, freight, stamp or other taxes, levies, imposts, duties, fees, charges, restrictions
494
or conditions of any nature unless required by law. If the Charterers are required by any authority in any
495
country to make any withholding or deduction from any such payment, the sum due from the Charterers in
496
respect of such payment will be increased to the extent necessary to ensure that, after the making of such
497
withholding or deduction the Owners receive a net sum equal to the amount which it would have received had
498
no such deduction or withholding been required to be made. If tax regulations change during the Charter
499
Period, the Owners shall notify the Charterers as soon as they become aware and will provide reasonable
500
co-operation in order to avoid any additional expenses to Charterers. However, where there is a failure to
501
make punctual payment of hire due to oversight, negligence, errors or omissions on the part of the Charterers
502
or their bank, the Owners shall give written notice to the Charterers to rectify the failure, and when so rectified
503
within five (5) Banking Days following the Owners’ notice, the payment shall stand as regular and punctual.
504
Failure by the Charterers to pay hire and the administration fee within five (5) Banking Days of their receiving
505
the Owners’ notice as provided herein, shall entitle the Owners to withdraw the Vessel from the service of the
506
Charterers and terminate the Charter without further notice.
507

508
 (e)
If the Charterers fail to make punctual payment of hire and/or the administration fee due, the Owners shall
509
give the Charterers threefive (35) Banking Days written notice to rectify the failure, and when so rectified
510
within those threefive (35) Banking Days following the Owners’ notice, the payment shall stand as punctual.
511

512
Failure by the Charterers to pay hire and/or the administration fee due in full within threefive (35) Banking
513
Days of their receiving a written notice from Owners shall entitle the Owners, without prejudice to any other
514
rights or claims the Owners may have against the Charterers, to terminate this Charter Party at any time
515
thereafter, as long as hire remains outstanding.
516

517
 (f)
If the Owners choose not to exercise any of the rights afforded to them by this Clause in respect of any
518
particular late payment of hire and/or the administration fee, or a series of late payments of hire and/or
519
administration fess, under the Charter Party, this shall not be construed as a waiver of their right to terminate
520
the Charter Party.
521

522
 (g)
Any delay in payment of hire and/or the administration fee shall entitle the Owners to interest at the rate per
523
annum as agreed in Box 19. If Box 19 has not been filled in, the one month Interbank offered rate in London
524
(LIBOR or its successor) for the currency state in Box 17, as quoted on the date when the hire fell due,
525
increased by three (3) per cent, shall apply.
526

527
 (h)
Payment of interest due under Subclause 15(g) shall be made within seven (7) running days of the date of
528
the Owners’ invoice specifying the amount payable or, in the absence of an invoice, at the time of the next
529
Hire Payment Date.
530

531
 (i)
Final payment of hire, if for a period of less than thirty (30) running days one calendar month, shall be
532
calculated proportionally according to the number of days and hours remaining before redelivery to the
533
Owners or delivery by the Owners to the Charters should Charterers exercise the Purchase Option and
534
advance payment to be effected accordingly.
535

536
 (j)
Any moneys required under this Agreement to be paid by the Charterers to the Owners or any of them shall
537
be validly paid, if paid to the Owners’ bank account stated in Box 20, and by such payment to the Owners’
538
bank account stated in Box 20 any payor shall be validly released from its obligation to make such payment.
539


PART II
BARECON 2017 STANDARD BAREBOAT CHARTER PARTY
540
 16.
Mortgage
541

542
(only to apply if Box 22 has been appropriately filled in)
543

544
 (a)* 
The Owners warrant that they have not effected any mortgage(s) of the Vessel and that they shall not effect
545
any mortgage(s) without the prior consent of the charterers, which shall not be unreasonably withheld.
546

547
(b)*
Subject to the provisions of any quiet enjoyment letter (including, for the avoidance of doubt, the QEL), the
548
Vessel chartered under this Charter Party is financed by a mortgage according to the Financial Instrument.
549
The Charterers undertake upon the written request of the Owners to comply, and provide such customary
550
information and documents relating to the Vessel and/or the Charterers as may be reasonably required to
551
enable the Owners to comply with all such instructions or directions in regard to the employment, insurances,
552
operation, repairs and maintenance of the Vessel as laid down in the Financial Instrument (which Owners
553
warrant are always in conformity with, and shall not impose any additional obligations on Charterers, with
554
regards to employment, insurance, operation, repairs and maintenance provisions of this Charter Party) or
555
as may be directed from time to time during the currency of the Charter Party by the mortgagee(s) in
556
conformity with the Financial Instrument, including the display or posting of such notices as the Mortgagees
557
may require. The Charterers confirm that, for this purpose, they have acquainted themselves with all relevant
558
terms, conditions and provisions of the Financial Instrument and agree to acknowledge this in writing in any
559
form that may be required by the mortgagee(s). The Financial Instrument shall secure an amount equal to
560
the higher of (i) the Outstanding Principal that remains unpaid when due, and (ii) the Purchase Option Price
561
as calculated pro rata per diem basis in accordance with Clause 45, and shall be enforceable by the
562
Mortgagee only if there has occurred and is continuing a Charterers’ Event of Default under this Charter Party.
563
The Owners warrant that they have not effected any mortgage(s) other than stated in Box 22 and that they
564
shall not agree to any amendment of the mortgage(s) referred to in Box 22 or effect any other mortgage(s)
565
without the prior consent of the Charterers, which shall not be unreasonably withheld.
566

567
*(Optional, Subclauses 16(a) and 16(b) are alternatives; indicate alternative agreed in Box 22)
568

569
 17.
Insurance See also Clause 46
570

571

572
 (a)
General
573
(i) The value of the Vessel for hull and machinery (including increased value) and war risks insurance is the
574
sum stated in Box 23, or such other sum as the parties may from time to time agree in writing. The party
575
insuring the Vessel shall do so on such terms and conditions and with such insurers as the other party shall
576
approve in writing, which approve shall not be unreasonably withheld, and shall name the other party as co-
577
assured.
578

579
(ii) [Notwithstanding that the pParties are co-assured], these insurance provisions shall neither exclude nor
580
discharge liability between the Owners and the Charterers under this Charter Party, but are intended to secure
581
payment of the loss insurance proceeds as a first resort to make good the Owners’ loss. If such payment is
582
made to the Owners it shall be treated as satisfaction (but not exclusion or discharge) of the Charterers’
583
liability towards the Owners. For the avoidance of doubt, such payment is no bar to a claim by the Owners
584
and/or their insurers against the Charterers to seek indemnity by way of subrogation.
585

586
(iii) Nothing herein shall prejudice any right of recovery of the Owners or the Charterers (or their insurers)
587
against third parties.
588

589
(b)*
Charterers to Insure
590

591
(i) During the Charter Period the Vessel shall be kept insured by the Charterers at their expense against hull
592
and machinery, war, and protection and indemnity risks (and any risks against which it is compulsory to insure
593
for the operation of the Vessel, including maintaining financial security in accordance with subclause 13(c)

PART II
BARECON 2017 STANDARD BAREBOAT CHARTER PARTY
594
(Financial Security)).
595

596
(ii) Such insurances shall be arranged by the Charterers to protect the interests of the Owners and the
597
Charterers and the mortgagee(s) (if any), and the Charterers shall be at liberty to protect under such
598
insurances the interests of any managers manager they may appoint.
599

600
(iii) The Charterers shall upon the written request of the Owners, provide information and promptly execute
601
such customary documents as may be reasonably required to enable the Owners to comply with the insurance
602
provisions of the Financial Instrument, provided that such documents are not prejudicial to the Charterers’
603
interests.
604

605
(c)* 
Owners to Insure
606

607
(i) During the Charter Period the Vessel shall be kept insured by the Owners at their expense against hull and
608
machinery and war risks. The Charterers shall progress claims for recovery against any third parties for the
609
benefit of the Owners’ and the Charterers’ respective interests.
610

611
(ii) During the Charter Period the Vessel shall be kept insured by the Charterers at their expense against
612
Protection and Indemnity risk (and any risks against which it is compulsory to insure for the operation of the
613
Vessel, including maintaining financial security in accordance with subclause 13(c) (Financial Security)).
614

615
(iii) In the event that any act or negligence of the Charterers prejudices any of the insurances herein provided,
616
the Charterers shall pay to the Owners all losses and indemnify the Owners against all claims and demands
617
which would otherwise have been covered by such insurances.   
618

619
*Subclauses 17(b) and 17(c) are alternatives, state alternative agreed in Box 24. If Box 24 is not filled in, then
620
subclause 17(b) (Charterers to Insure) shall apply.
621

622
18.   
Repairs
623

624
(a)   
Subject to the provisions of any Financial Instrument, and the approval of the Owners, the Charterers shall
625
effect all insured repairs, and undertake settlement of all miscellaneous expenses in connection with such
626
repairs as well as all insured charges, expenses and liabilities.  
627

628
To the extent of coverage under the insurances provided for under the provisions of subclause 17(c) (Owners
629
to Insure), the Charterers shall be reimbursed under the Owners’ insurances for such expenditures upon
630
presentation of accounts.
631

632
(b)   
The Charterers shall remain responsible for and effect repairs and settlement of costs and expenses incurred
633
thereby in respect of repairs not covered by the insurances and/o not exceeding any deductibles provided for
634
in the insurances.
635

636
(c)   
All time used for repairs under the provisions of subclauses 18(a) and 18(b) and for repairs of Latent Defects
637
according to Clause 3 (Delivery) above, including any deviation, shall be for the Charterer’s account and shall
638
form part of the Charter Period.
639

640
 19.
Total loss
641

642
 (a)
The Charterers shall be liable to the Owners by way of damages if the Vessel becomes a Total Loss. Subject
643
to the provisions of any Financial Instrument, if the Vessel becomes a Total Loss, all insurance payments for
644
such loss shall be paid in accordance with Clause 47 to the Owners (or the Mortgagees as assignees thereof)
645
who shall distribute the monies between the Owners (or the Mortgagees as assignees thereof) and the
646
Charterers in accordance with Clause 47according to their respective interests, which (distribution) shall
647
satisfy and discharge the Charterers’ liability to the Owners under the terms hereof. The Charterers undertake

PART II
BARECON 2017 STANDARD BAREBOAT CHARTER PARTY
648
to notify the Owners and the mortgagee(s), if any, of any occurrences in consequence of which the Vessel is
649
likely to become a Total Loss.
650

651
 (b)
Notwithstanding any other clause herein, it is recognised that the Charterers have a continuing obligation to
652
protect and preserve the Vessel as an asset of the Owners. The Charterers shall have a continuing duty after
653
the termination of the Charter Party to preserve and present claims on behalf of Owners and Charterers and/or
654
any subrogated insurers against any third party held responsible for the Total Loss during the Charter Period
655
and account for any recovery achieved.
656

657
 (c)
The Owners or the Charterers, as the case may be, shall upon the request of the other pParty (acting
658
reasonably), promptly execute such documents as may be required to enable the other pParty to abandon
659
the Vessel to the insurers and claim a constructive total loss.
660

661 20.
Lien
662

663
The Owners shall have a lien upon all cargoes, hires and freights (including deadfreight and demurrage)
664
belonging or due to the Charterers or any sub-charterers, or to the extent permitted by law or equity, for any
665
amounts due under this Charter Party and the Charterers shall have a lien on the Vessel for all monies paid
666
in advance and not earned. The Owners and the Charterers shall provide the amount of any such lien upon
667
the other pParty’s reasonable request, provided that such request shall not be made by either pParty more
668
than twice in any calendar year during the Charter Period
669

670
 21.
Non-Lien
671

672
The Charterers will not suffer, nor permit to be continued, any lien or encumbrance incurred by them or their
673
agents, which might have priority over the title and interest of Owners in the Vessel (other than any Permitted
674
Liens).
675

676
 22.
Indemnity
677

678
 (a)
The Charterers shall indemnify the Owners against any direct and proven loss, damage or expense arising
679
out of or in relation to the operation of the Vessel by the Charterers, and against any lien of whatsoever nature
680
arising out of an event occurring during the Charter Period (other than a Permitted Lien). This shall include
681
indemnity for any direct and proven loss, damage or expense arising out of or in relation to any international
682
convention which may impose liability upon the Owners or sanctions implemented by the United Nations,
683
European Union, United States of America or United Kingdom or Japan.
684

685
 (b)
Without prejudice to the generality of the foregoing, the Charterers agree to indemnify the Owners against all
686
direct and proven consequences or liabilities arising from the Master, officers or agents signing bills of lading
687
or other documents.
688

689
 (c)
If the Vessel is arrested or otherwise detained for any reason whatsoever other than those covered in
690
subclause (d), the Charterers shall at their own expense take all reasonable steps to secure that within a
691
reasonable time the Vessel is released, including the provision of bail.
692

693
 (d)
If the Vessel is arrested or otherwise detained by reason of a claim or claims against the Owners and/or any
694
other company or other entity which belongs to the same group of companies of which the Owners are part,
695
or which is otherwise associated or related to, or affiliated with, the Owners, the Owners shall at their own
696
expense take all reasonable steps to secure that within a reasonable time the Vessel is released, including
697
the provision of bail. If within a 45 days period after such arrest or detainment, the Vessel is not so released,
698
the Charterers may, at their option but without obligation to do so, take all necessary steps to obtain such
699
release, and all expenses of the Charterers in connection therewith shall be reimbursed by the Owners on
700
demand, and the Owners shall take reasonable steps to minimise any costs to the Charterer arising out of
701
any such arrest.

PART II
BARECON 2017 STANDARD BAREBOAT CHARTER PARTY
702

703
In such circumstances the Owners shall indemnify the Charterers against any loss, damage or expense
704
incurred by the Charterers (including hire paid under this Charter Party) as a direct consequence of such
705
arrest or detention.
706

707
 (e)
The indemnities of the Charterers under this Clause 22 shall not extend to events occurring after the end of
708
Charter Period, but as to any event occurring before the end of the Charter Period shall continue in full force
709
and effect notwithstanding the termination of the chartering of the Vessel under this Charter Party for any
710
reason until four (4) years from the early termination of this Charter or the end of the Charter Period or the
711
sale of the Vessel by the Owners to any person, provided that if, prior to the expiry of the aforesaid period of
712
four (4) years, any event or dispute arises in respect of which the Owners are to be indemnified under this
713
Clause 22, the indemnities of the Charterers under this Clause 22 shall continue in full force and effect until
714
the Owners have been fully indemnified in accordance with this Clause 22.
715

716
 (f)
The Owners will notify the Charterers as soon as they become aware of any claim against the Owners which
717
may give rise to indemnification under this Clause 22. The Owners will not settle any claims or discharge any
718
court judgments in respect of any claim unless it has first negotiated with the Charterers in good faith for a
719
reasonable period of time, provided that the Owners may settle any claim or discharge any court judgment if
720
failure so to do would give rise to substantial losses or damages for, or reputational damage to, the Owners.
721

722
 (g)
The Owners will not, and the Charterers will, be responsible for the conduct of any claim or potential claim that
723
may give rise to an indemnity liability of the Charterers under this Clause 22 and the Charterers may be entitled
724
(at their own cost and expense) to take such actions as they may reasonably deem fit to defend or avoid
725
liability under any such claim or take action against any third party in respect of liability under any such claim.
726

727
 (h)
The Charterer to undertake to the Owner and the Owner’s Financiers to protect, cover, compensate for any
728
claim, damage and loss caused by oil pollution and any cargo claim (clean or dirty).
729

730
 23.
Salvage
731

732
All salvage and towage performed by the Vessel shall be for the Charterers’ benefit and the cost of repairing
733
damage occasioned thereby shall be borne by the Charterers.
734

735
 24.
Wreck Removal
736

737
If the Vessel becomes a wreck, or any part of the Vessel is lost or abandoned, and is an obstruction to
738
navigation or poses a hazard and has to be raised, removed, destroyed, marked or lit by order of any lawful
739
authority having jurisdiction over the area or as a result of any applicable law, the Charterers shall be liable
740
for any and all direct and documented expenses in connection with raising, removal, destruction, lighting or
741
making of the Vessel and shall indemnify the Owners against any direct and proven sums whatsoever, which
742
the Owners become liable to pay as a consequence.
743

744
 25.
General Average
745

746
The Owners shall not contribute to General Average.
747

748
 26.
Assignment, Novation, Sub-Charter and Sale See also Clauses 43 and 44
749

750
 (a)
The Charterers shall not assign or novate this Charter Party nor sub-charter the Vessel on a bareboat basis
751
except with the prior consent in writing of the Owners, which shall not be unreasonably withheld or delayed,
752
and subject to such terms and conditions as the Owners shall approve.
753

754
 (b)
See also Clauses 43 and 44 The Owners shall not sell the Vessel during the currency of this Charter Party
755
except with the prior written consent of the Charterers, which shall not be unreasonably withheld, and subject

PART II
BARECON 2017 STANDARD BAREBOAT CHARTER PARTY
756
to the buyer accepting a novation of this Charter Party.
757

758
(c)
The Owners shall be entitled to assign their rights under this Charter Party.
759

760
 27.
Performance Guarantee See Clause 43
761

762
(Optional, to apply only if Box 25 filled in)
763

764
The Charterers undertake to furnish, before delivery of the Vessel, a guarantee or bond in the amount of and
765
from the entity stated in Box 25 in a form acceptable to the Owners as guarantee for full performance of their
766
obligations under this Charter Party.
767

768
 28.
Anti-Corruption
769

770
 (a)
The pParties agree that in connection with the performance of this Charter Party they shall each:
771

772
(i) comply at all times with all applicable anti-corruption legislation and have procedures in place that are, to
773
the best of its knowledge and belief, designed to prevent the commission of any offence under such legislation
774
by any member of its organisation and/or by any person providing services for it or on its behalf; and
775

776
(ii) make and keep books, records, and accounts which in reasonable detail accurately and fairly reflect the
777
transactions in connection with this Charter Party.
778

779
 (b)
If either pParty fails to comply with any applicable anti-corruption legislation, it shall defend and indemnify the
780
other pParty against any fine, penalty, liability, loss or damage and for any related costs (including, without
781
limitation, court costs and legal fees) arising from such breach.
782

783
 (c)
Without prejudice to any of its other rights under this Charter Party, either pParty may terminate this Charter
784
Party without incurring any liability to the other pParty if:
785

786
(i) at any time the other pParty or any member of its organisation has committed a breach of any applicable
787
anti-corruption legislation in connection with this Charter Party; and
788

789
(ii) such breach causes the non-breaching pParty to be in breach of any applicable anti-corruption legislation.
790

791
Any such right to terminate must be exercised without undue delay.
792

793
 (d)
Each pParty represents and warrants that in connection with the negotiation of this Charter Party neither it
794
nor any member of its organisation has committed any breach of applicable anti-corruption legislation. Breach
795
of this subclause (d) shall entitle the other pParty to terminate the Charter Party without incurring any liability
796
to the other.
797

798
 29.
Sanctions and Designated Entitles
799

800
 (a)
The provisions of this clause shall apply in relation to any applicable sanction, prohibition or restriction
801
imposed on any specified persons, entitles or bodies including the designation of specified vessels or fleets
802
and Owners or Charterers under United Nations Resolutions or trade or economic applicable sanctions, laws
803
or regulations of the European Union or the United States of America or the United Kingdom or Japan.
804

805
 (b)
The Owners and Charterers respectively warrant for themselves (and in respect of any sub-charterer or
806
manager which belongs to the same group of companies of which the Charterers are part, the Charterers
807
hereby undertake to take necessary steps to ensure) (and in the case of any sub-charter, the Charterers
808
further warrant in respect of any sub-charterers, shippers, receivers, or cargo interests) that at the date of this
809
fixture and throughout the duration of this Charter Party they are not subject to any of the sanctions,

PART II
BARECON 2017 STANDARD BAREBOAT CHARTER PARTY
810
prohibitions, restrictions or designation referred to in subclause (a) which prohibit or render unlawful any
811
performance under this Charter Party. The Owners further warrant that the Vessel is not a designated vessel.
812

813
 (c)
If at any time during the performance of this Charter Party either pParty becomes aware that the other pParty
814
is in breach of warranty in this Clause, the pParty not in breach shall comply with the laws and regulations of
815
any Government to which that pParty or the Vessel is subject, and follow any orders or directions which may
816
be given by any body acting with powers to compel compliance, including where applicable the Owners’ Flag
817
State. In the absence of any such orders, directions, law or regulations, the pParty not in breach may, in its
818
option, terminate the Charter Party forthwith in accordance with Clause 31 (Termination).
819

820
 (d)
If, in compliance with the provisions of this Clause, anything is done or is not done, such shall not be deemed
821
a deviation but shall be considered sue fulfilment of this Charter Party.
822

823
 (e)
Notwithstanding anything in this Clause to the contrary, the Owners or the Charterers shall not be required to
824
do anything which constitutes a violation of the laws and regulations of any state to which either of them is
825
subject.
826

827
 (f)
The Owners or the Charterers shall be liable to indemnify the other pParty against any and all direct and
828
proven claims, losses, damage, costs and fines whatsoever suffered by the other pParty resulting from any
829
breach of warranty in this Clause.
830

831
 30.
Requisition/Acquisition
832

833
 (a)
In the event of the requisition for hire of the Vessel by any governmental or other competent authority at any
834
time during the Charter Period, this Charter Party shall not be deemed to be frustrated or otherwise terminated.
835
The Charterers shall continue to pay hire according to the Charter Party until the time when the Charter Party
836
would have expired or terminated pursuant to any of the provisions hereof. However, if any requisition hire or
837
compensation is received by the Owners for the remainder of the Charter Period or the period of the requisition,
838
whichever is shorter, it shall be payable by the Owners to the Charterers.
839

840
 (b)
In the event of the Owners being deprived of their ownership in the Vessel by any compulsory acquisition of
841
the Vessel or requisition for title by any governmental or other competent authority (hereinafter referred to as
842
“Compulsory Acquisition”), then, irrespective of the date during the Charter Period when Compulsory
843
Acquisition may occur, this Charter Party shall be deemed terminated as of the date of such Compulsory
844
Acquisition. In such event hire to be considered as earned and to be paid up to the date and time of such
845
Compulsory Acquisition. The Owners shall be entitled to any compensation received for such Compulsory
846
Acquisition, which shall be applied towards reducing the Outstanding Principal.
847

848
 31.
Termination
849

850
 (a)
Charterers’ Default
851

852
The Owners shall be entitled to terminate this Charter Party by written notice to the Charterers and to claim
853
damages including, but not limited to, for the loss of the reminder remainder of the Charter Party under the
854
following circumstances, each of which shall be a “Charterers’ Event of Default” for the purposes of this
855
Charter Partyand to claim damages including, but not limited to, for the loss of the reminder remainder of the
856
Charter Party:
857

858
(i) Non-payment of hire and/or the administration fee (see Clause15 (Hire)), subject to all applicable grace
859
periods.
860

861
(ii) Charterers’ failure to comply with the requirements of:
862

863
(1)  Clause 11 (Trading Restrictions); or

PART II
BARECON 2017 STANDARD BAREBOAT CHARTER PARTY
864

865
(2)   Subclause 17(b) (Charterers to Insure)
866

867
and, if capable of remedy, such requirement is not remedied within 30 days of the earlier of the date on which
868
(A) the Charterers became aware of the failure to comply and (B) the Charterers’ received the Owners’ written
869
notification to do so.
870

871
(iii) The Charterers do not rectify any failure to comply with the requirements of subclause 13(a) (Maintenance)
872
as soon as practically possible after the Owners have notified them to do so, unless and in any event so that
873
the Vessel’s insurance cover is not prejudiced by such failure.
874

875
(iv) If the Charterers are in breach of any material provisions of this Charter Party other than those referred
876
to in Clause 31 (a)(i), (ii) and (iii) above, and if capable of remedy, such breach is not rectified by the Charterers
877
within 30 days of the earlier of the date on which (A) the Charterers became aware of the failure to comply
878
and (B) the Charterers’ received the Owners’ written notification do to so.
879

880
 (b)
Owners’ Default
881

882
The Charterers shall be entitled to terminate this Charter Party with immediate effect by written notice to the
883
Owners and to claim damages including, but not limited to, for the loss of the remainder of the Charter Party:
884

885
(i) If the Owners shall by any act or omission be in breach of their obligations under this Charter Party to the
886
extent that the Charterers are deprived of the use, operation, possession or enjoyment of the Vessel and such
887
breach continues for a period of fourteen thirty (1430) running days after written notice thereof has been given
888
by the Charterers to the Owners; or
889

890
(ii) if the Owners fail to arrange or maintain the insurances in accordance with subclause17(c) (Owners to
891
Insure).
892

893
 (c)
Loss of Vessel
894

895
This Charter Party shall be deemed to be terminated, without prejudice to any accrued rights or obligations,
896
if the Vessel becomes lost either when it has become an actual total loss or agreement has been reached
897
with the Vessel’s underwriters in respect of its constructive total loss or if such agreement with the Vessel’s
898
underwriters is not reached it is adjudged by a competent tribunal that a constructive loss of the Vessel has
899
occurred, or has been declared missing. The date upon which the Vessel is to be treated as declared missing
900
shall be ten (10) days after the Vessel was last reported or when the Vessel is recorded as missing by the
901
Vessel’s underwriters, whichever occurs first.
902

903 (d)
Bankruptcy
904

905
Either pParties shall be entitled to terminate this Charter Party with immediate effect by written notice to the
906
other pParties if that other pParties has a petition presented for its winding up or administration or any other
907
action is taken with a view to its winding up (otherwise than for the purpose of solvent reconstruction or
908
amalgamation), or becomes bankrupt or commits an act of bankruptcy, or makes any arrangement or
909
composition for the benefit or creditors, or has a receiver or manager or administrative receiver or
910
administrator or liquidator appointed in respect of any of its assets, or suspends payments, or anything
911
analogous to any of the foregoing under the law of any jurisdiction happens to it, or ceases or threatens to
912
cease to carry on business.
913

914 (e)
The termination of this Charter Party shall be without prejudice to all rights accrued due between the pParties
915
prior to the date of termination and to any claim that pParty might have.
916

917 32.
Repossession

PART II
BARECON 2017 STANDARD BAREBOAT CHARTER PARTY
918

919
In the event of the early termination of this Charter Party in accordance with the applicable provisions of this
920
Charter Party, the Owners shall have the right to repossess the Vessel from the Charterers at its current or
921
next port of call, or at a port or place convenient to them without hindrance or interference by the Charterers,
922
courts or local authorities. Pending physical repossession of the Vessel, the Charterers shall hold the Vessel
923
as gratuitous bailee only to the Owners. The Owners shall arrange for an authorised representative to board
924
the deemed to be repossessed by the Owners from the Charterers upon the boarding of the Vessel by the
925
Owners’ representative. All arrangements and expenses relating to the settling of wages, disembarkation and
926
repatriation of the Crew shall be the sole responsibility of the Charterers.
927

928 33.
BIMCO Dispute Resolution Clause 2017
929

930 (a)*
This Charter Party shall be governed by and construed in accordance with English law and any dispute arising
931
out of or in connection with this Charter Party shall be referred to arbitration in London in accordance with
932
the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to
933
give effect to the provisions of this Clause.
934

935
The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA)
936
Terms current at the time when the arbitration proceedings are commenced.
937

938
The reference shall be to three arbitrators. A pParty wishing to refer a dispute to arbitration shall appoint its
939
arbitrator and send notice of such appointment in writing to the other pParty requiring the other pParty to
940
appoint its own arbitrator within fourteen (14) calendar days of that notice and stating that it will appoint its
941
arbitrator as sole arbitrator unless the other pParty appoints its own arbitrator and gives notice that it has done
942
so within the fourteen (14) days specified. If the other pParty does not appoint its own arbitrator and give
943
notice that it has done so within the fourteen (14) days specified, the pParty referring a dispute to arbitration
944
may, without the requirement of any further prior notice to the other pParty, appoint its arbitrator as sole
945
arbitrator and shall advise the other pParty accordingly. The award of the sole arbitrator shall be binding on
946
both pParties as if he had been appointed by agreement.
947

948
Nothing herein shall prevent the pParties agreeing in writing to vary these provisions to provide for the
949
appointment of a sole arbitrator.
950

951
In cases where neither the claim nor any counterclaim exceeds the sum of USD 100,000 (or such other sum
952
as the pParties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims
953
Procedure current at the time when the arbitration proceedings are commenced.
954

955
In cases where the claim or any counterclaim exceeds the sum agreed for the LMAA Small Claims Procedure
956
and neither the claim nor any counterclaim exceeds the sum of USD 400,000 (or such other sum as the
957
pParties may agree) the arbitration shall be conducted in accordance with the LMAA Intermediate Claims
958
Procedure current at the time when the arbitration proceedings are commenced.
959

960
(b)*
This Charter Party shall be governed by U.S. maritime law or, if this Charter Party is not a maritime contract
961
under U.S. law, by the laws of the state of New York. Any dispute arising out of or in connection with this
962
Charter Party shall be referred to three (3) persons at New York, one to be appointed by each of the parties
963
hereto, and the third by the two so chosen. The decision of the arbitrators or any two of them shall be final,
964
and for the purposes of enforcing any award, judgment may be entered on an award by any court of
965
competent jurisdiction. The proceedings shall be conducted in accordance with the SMA Rules current as of
966
the date of this Charter Party.
967

968
In cases where neither the claim nor any counterclaim exceeds the sum of USD 100,000 (or such other sum
969
as the parties may agree) the arbitration shall be conducted in accordance with the SMA Rules for Shortened
970
Arbitration Procedure current as of the date of this Charter Party.
971


PART II
BARECON 2017 STANDARD BAREBOAT CHARTER PARTY
972
(c)*
This Charter Party shall be governed by and construed in accordance with Singapore**/English**law.
973

974
Any dispute arising out of or in connection with this Charter Party, including any question regarding its
975
existence, validity or termination shall be referred to and finally resolved by arbitration in Singapore in
976
accordance with the Singapore International Arbitration Act (Chapter 143A) and any statutory modification or
977
re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause.
978

979
The arbitration shall be conducted in accordance with the Arbitration Rules of the Singapore Chamber of
980
Maritime Arbitration (SCMA) current at the time when the arbitration proceedings are commenced.
981

982
The reference to arbitration of disputes under this Clause shall be to three arbitrators. A party wishing to refer
983
a dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other
984
party requiring the other party to appoint its own arbitrator and give notice that it has done so within fourteen
985
(14) calendar days of that notice and stating that it will appoint its own arbitrator as sole arbitrator unless the
986
other party appoints its own arbitrator and gives notice that it has done so within the fourteen (14) days
987
specified. If the other party does not give notice that it has done so within the fourteen (14) days specified,
988
the party referring a dispute to arbitration may, without the requirement of any further prior notice to the other
989
party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly. The award of a sole
990
arbitrator shall be binding on both parties as if he had been appointed by agreement.
991

992
Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the
993
appointment of a sole arbitrator.
994

995
In cases where neither the claim nor any counterclaim exceeds the sum of USD 150,000 (or such other sum
996
as the parties may agree) the arbitration shall be conducted before a single arbitrator in accordance with the
997
SCMA Small Claims Procedure current at the time when the arbitration proceedings are commenced.
998

999
**Delete whichever does not apply. If neither or both are deleted, then English law shall apply by default
1000

1001
(d)*
This Charter Party shall be governed by and construed in accordance with the laws of the place mutually
1002
agreed by the Parties and any dispute arising out of or in connection with this Charter Party shall be referred
1003
to arbitration at a mutually agreed place, subject to the procedures applicable there.
1004

1005
 (e)
The pParties may agree at any time to refer to mediation any difference and/or dispute arising out of or in
1006
connection with this Charter Party. In the case of any dispute in respect of which arbitration has been
1007
commenced under subclause (a), (c) or (d), the following shall apply:
1008

1009
(i) Either pParty may at any time and from time to time elect to refer the dispute or part of the dispute to
1010
meditation by service on the other pParty of a written notice (the “Mediation Notice”) calling on the other
1011
pParty to agree to mediation.
1012

1013
(ii) The other pParty shall thereupon within fourteen (14) calendar days of receipt of the Mediation Notice
1014
confirm that they agree to mediation, in which case the pParties shall thereafter agree a mediator within a
1015
further fourteen (14) calendar days, falling which on the application of either pParty a mediator will be
1016
appointed promptly by the Arbitration Tribunal (“ the Tribunal”) or such person as the Tribunal may designate
1017
for that purpose. The mediation shall be conducted in such place and in accordance with such procedure and
1018
on such terms as the pParties may agree or, in the event of disagreement, as may be set by the mediator.
1019

1020
(iii) If the other pParty does not agree to mediate, that fact may be brought to the attention of the Tribunal and
1021
may be taken into account by the Tribunal when allocating the costs of the arbitration as between the pParties.
1022

1023
(iv) The mediation shall not affect the right of either pParty to seek such relief or take such steps as it considers
1024
necessary to protect its interest.
1025


PART II
BARECON 2017 STANDARD BAREBOAT CHARTER PARTY
1026
(v) Either pParty may advise the Tribunal that they have agreed to mediation. The arbitration procedure shall
1027
continue during the conduct of the mediation but the Tribunal may take the mediation timetable into account
1028
when setting the timetable for steps in the arbitration.
1029

1030
(vi) Unless otherwise agreed or specified in the mediation terms, each pParty shall bear its own costs incurred
1031
in the mediation and the pParties shall share equally the mediator’s costs and expenses.
1032

1033
(vii) The mediation process shall be without prejudice and confidential and no information or documents
1034
disclosed during it shall be revealed to the Tribunal except to the extent that they are disclosable under the
1035
law and procedure governing the arbitration.
1036

1037
(Note: The pParties should be aware that the mediation process may not necessarily interrupt time limits.)
1038

1039
*Subclauses (a), (b), (c) and (d) are alternatives; indicate alternative agreed in Box 26.
1040

1041
If Box 26 in Part I is not appropriately filled in, subclause (a) of this Clause shall apply. Subclause (e) shall
1042
apply in all cases except for alternative (b)
1043

1044
 34.
Notice
1045

1046
All notices, requests and other communications required or permitted by any clause of this Charter Party
1047
shall be given in writing and shall be sufficiently given or transmitted if delivered by hand, email, express
1048
courier service or registered mail and addressed if to the Owners as stated in Box 30 or such other address
1049
or email address as the Owners may hereafter designate in writing, and if to the Charterers as stated in Box
1050
31 or such other address or email address as the Charterers may hereafter designate in writing. Any such
1051
communication shall be deemed to have been given on the date of actual receipt by the pParty to which it is
1052
addressed.
1053

1054
 35.
Partial Validity
1055

1056
If by reason of any enactment or judgment any provision of this Charter Party shall be deemed or held to be
1057
illegal, void or unenforceable in whole or in part, all other provisions of this Charter Party shall be unaffected
1058
thereby and shall remain in full force and effect.
1059

1060
 36.
Entire Agreement
1061

1062
This Charter Party is the entire agreement of the parties, which supersedes all previsions written or oral
1063
understandings and which may not be modified except by a written amendment signed by both parties.
1064

1065
 37.
Headings
1066

1067
The headings of this Charter Party are for identification only and shall not be deemed to be part hereof or be
1068
taken into consideration in the interpretation or construction of this Charter Party.
1069

1070
 38.
Singular/Plural
1071

1072
The singular includes the plural and vice versa as the context admits or requires.

PART III
BARECON 2017 STANDARD BAREBOAT CHARTER PARTY
PROVISIONS TO APPLY FOR NEWBUILDING VESSELS ONLY
(OPTINAL, only applicable if 27 has been completed)
1073
 1.
Specifications and Building Contract
1074

1075
(a)
The Vessel shall be constructed in accordance with the building contract between the Builders and the Owners
1076
including the specifications and plans incorporated therein (“Building Contract”). The Owners shall provide
1077
the Charterers with a copy of the Building Contract to the extent relevant to this Charter Party.
1078

1079
(b)
No variations shall be made to the Building Contract without the Charterers’ prior written consent. The
1080
Charterers shall be entitled to request change orders in accordance with the Building Contract. Any additional
1081
costs or consequences due to Charterers’ change orders shall be borne by the Charterers.
1082

1083
(c)
The Owners and the Charterers will liaise and cooperate in all matters regarding the construction of the Vessel
1084
and the Building Contract. The Charterers shall have the right to send their representative to the Builders’
1085
yard to inspect the Vessel during its construction.
1086

1087
(d)
The Owners shall assign their guarantee rights under the Building Contract to the Charterers, if permitted. If
1088
not permitted, the Owners shall exercise their guarantee rights against the Builders for the benefit of the
1089
Charterers. The Charterers shall be obliged to accept such sums as the Owners are reasonably able to
1090
recover under the guarantee provisions of the Building Contract.
1091

1092
 2.
Delivery and Cancellation
1093

1094
(a)
(i) Subject to the provisions of Clause 3 (Liquidated Damages) hereunder, the Charterers shall be obliged to
1095
accept the Vessel from the Owners, constructed and delivered in accordance with the Building Contract and
1096
including buyers’ supplies, on the date of delivery by the Builders. The Charterers undertake that having
1097
accepted the Vessel they will not thereafter raise any claims against the Owners in respect of the Vessel’s
1098
performance or specification or defects, if any.
1099

1100
(ii) The date of delivery for purpose of this Charter shall be the date (the “Delivery Date”) when the Vessel is
1101
in fact delivered by the Builders to the Owners in accordance with the Building Contract, whether that is before
1102
or after the scheduled delivery date under the Building Contract. The Owners shall be under no responsibility
1103
for any delay whatsoever in delivery of the Vessel to the Charterers under this Charter Party, except to the
1104
extent caused solely by the Owners’ acts or omissions resulting in a default by the Owners under the Building
1105
Contract. The Owners shall be responsible to the Charterers for any direct losses incurred by the Charterers,
1106
if the Vessel is not delivered to the Owners due solely to the Owners’ acts or omissions resulting in a default
1107
by the Owners under the Building Contract.
1108
-
1109
(iii)
The Owners and the Charterers shall on the Delivery Date sign a Protocol of Delivery and Acceptance
1110
evidencing delivery of the Vessel hereunder.
1111

1112
(b)
(i) The Owners’ obligation to charter the Vessel to the Charterers hereunder is conditional upon delivery of
1113
the Vessel to the Owners by the Builders in accordance with the Building Contract.
1114

1115
(ii) If for any reason other than a default by the Owners under the Building Contract, the Builders become
1116
entitled under that Contract not to deliver the Vessel and exercise that right, the Owners shall be entitled to
1117
cancel this Charter Party by written notice to the Charterers.
1118

1119
(iii) If for any reason the Owners become entitled to cancel the Building Contract and exercise that right, the
1120
Owners shall be entitled to cancel this Charter Party by written notice to the Charterers. If, however, the
1121
Owners do not exercise their right to cancel the Building Contract, the Charterers shall be entitled to cancel
1122
this Charter Party by written notice to the Owners.
1123

1124
3.
Liquidated Damages
1125

1126
(a)
Any liquidated damages for physical defects or deficiencies and any costs incurred in pursuing a claim therefor

PART III
BARECON 2017 STANDARD BAREBOAT CHARTER PARTY
PROVISIONS TO APPLY FOR NEWBUILDING VESSELS ONLY
(OPTINAL, only applicable if 27 has been completed)
1127
shall be credited to the party stated in Box 27(iv) or if not filled in shall be shared equally between the parties.
1128

1129
 (b)
Any liquidated damages for delay in delivery under the Building Contract and any costs incurred in pursuing
1130
a claim therefor shall be credited to the party stated in Box 27(v) or if not filled in shall be shared equally
1131
between the parties.

PART IV
BARECON 2017 STANDARD BAREBOAT CHARTER PARTY
PURCHASE OPTION
(OPTINAL, only applicable if Box 28 has been completed)
1132
See Clause 45
1133
1.
The Charterers shall have an option to purchase the Vessel (the “Purchase Option”) exercisable on each of
1134
the dates stated below as follows:
1135
    
Date (state number of months after delivery of the Vessel)
 
  
Purchase Price (the “Purchase Option Price”)
     
    (months)
 
  
   (amount and currency)
           
           
1136

1137
2.
To exercise their Purchase Option, the Charterers shall notify the Owners in writing not later than six (6)
1138
months prior to the relevant date stated in the table above. Such notification shall not be withdrawn or
1139
cancelled.
1140

1141
3.
If the Charterers exercise their Purchase Option, the ownership of the Vessel shall be transferred to them on
1142
the relevant date. If such date is not Banking Day, the ownership of the Vessel shall be transferred on the
1143
next Banking Day, on a strictly “as is/where is” basis, at the Charterers’ sole cost and expense.
1144

1145
4.
The Owners shall obtain and provide the Charterers with such documents and take such actions as the
1146
Charterers may reasonably request to facilitate the sale and the registration of the Vessel under the flag
1147
designated by the Charterers.
1148

1149
5.
The Owners warrant that the Vessel at the time of transfer of ownership shall be free of any of Owners’
1150
encumbrance or mortgage and that they have not committed any act or omission which would impair title to
1151
the Vessel.
1152

1153
6.
The Owners make no representation or warranty as to the seaworthiness, value, condition, design,
1154
merchantability or operation of the Vessel, or as to the quality of the material, equipment or workmanship in
1155
the Vessels, or as to the fitness of the Vessel for any particular trade.
1156

1157
7.
In exchange for the transfer of ownership of the Vessel, the Charterers shall pay the Purchase Option Price
1158
to the bank account nominated by the Owners together with any unpaid charter hire and other amounts due
1159
and payable under this Charter Party.
1160

1161
8.
Upon payment and transfer of ownership in accordance with Clause 7 above, this Charter Party and all rights
1162
and obligations of the parties shall terminate without prejudice to all rights accrued due between the parties
1163
prior to the date of termination and any claim that either party might have.

PART V
BARECON 2017 STANDARD BAREBOAT CHARTER PARTY
PROVISIONS TO APPLY FOR VESSELS REGISTERED IN A BAREBOAT CHARTER REGISTRY
(OPTIONAL, only to apply if expressly agreed and stated in Box 29)
1164
1.
Definitions
1165

1166
“Bareboat Charter Registry” shall mean the registry stated in Box 29(ii) whose flag the Vessel will fly and in
1167
which the Charterers are registered as the bareboat charterers during the period of this Charter Party.
1168

1169
Underlying Registry” shall mean the registry stated in Box 29(i) in which the Owners of the Vessel are
1170
registered as Owners and to which jurisdiction and control of the Vessel will revert upon termination of the
1171
Bareboat Charter registration.
1172

1173
2.
The Owners have agreed to and the Charterers shall arrange for the Vessel to be registered under the
1174
Bareboat Charter Registry. The Charterers shall be responsible for all costs thereof.
1175

1176
3.
Upon termination of this Charter Party for any reason whatsoever the Charterers shall immediately arrange
1177
for the deletion of the Vessel from the Bareboat Registry.
1178

1179
4.
In the event of the Vessel being deleted from the Bareboat Charter Registry due to any default by the Owners,
1180
the Charterers shall have the right to terminate this Charter forthwith and without prejudice to any other claim
1181
they may have against the Owners under this Charter Party.

Rider Clauses 39 to 54
to be deemed incorporated to the
Bareboat Charter Party
Dated 16 March 2026
(the "Charter")
Between

SAINT BARTH SHIPPING COMPANY INC. of the Republic of the Marshall Islands as Charterers,
and
SALTER SHIPPING, S.A. of the Republic of Panama as Owners
in respect of the vessel

MT “HULL YZJ2024-1624” tbn “P. SAN FRANCISCO”


39.
Delivery
 
(a)  This Charter Party constitutes the lease of the Vessel which is currently under construction under the Building Contract for the account of the Charterers, and to be sold to the Owners as lessor under the MOA.

The Owners' obligations to charter the Vessel to the Charterers hereunder are conditional upon (i) delivery of the Vessel to the Charterers by the Construction Seller under the Building Contract and (ii) delivery of the Vessel by the Charterers to the Owners under the MOA.

If the Building Contract is cancelled, rescinded or otherwise terminated for any reason whatsoever or the Vessel is not delivered by the Construction Seller to the Charterers under the Building Contract or is rejected by the Charterers under the Building Contract for any reason whatsoever, then the Charterers shall give written notice thereof to the Owners and upon Owners’ receipt of such notice,  the MOA and this Charter Party shall, save as hereafter provided, cease to have effect without any liability on the parties hereto and the parties shall be released from all obligations, liabilities and responsibilities hereunder, save that initial registration of title to the Vessel and legal documentation cost for documenting the lease and security to be Charterer`s account such cost not to exceed USD15,000.

The Charterers shall take delivery of the Vessel under this Charter Party immediately after delivery by the Charterers as sellers to the Owners as buyers under the MOA, and the Owners shall deliver the Vessel to the Charterers under this Charter Party immediately after the Owners take delivery of the Vessel under the MOA.

In the event that the Vessel is not delivered under the MOA or the MOA is cancelled, terminated or rescinded for any reason, this Charter shall automatically terminate without any liability between the parties hereunder and initial registration of title to the Vessel and legal documentation cost for documenting the lease and security to be Charterer`s account such cost not to exceed USD15,000.

(b) It is acknowledged that the Charterers shall, by way of purchase from the Owners or otherwise, at the time of delivery of the Vessel under this Clause 39, own any bunkers, unused lubricating and hydraulic oils and greases in storage tanks and unopened drums and unused stores and provisions (hereinafter referred to as the “Bunkers”) remaining on board the Vessel on the Delivery Date and as a result the Owners and the Charterers will not settle the Bunkers at the time of delivery of the Vessel under this Charter Party.

(c) (USD37,800,000*(1 month CME TERM SOFR at the time of remittance + 2.0%)/360) (the “Remittance Interest Cost”) from the day of remittance of the fund till the closing date to be covered by Charterers provided that no Remittance Interest Cost shall be payable if the delay is due to Owners’ default, negligence or wilful misconduct.

The extra interest cost, if any, shall be paid together with the second hire payment due under the terms of this Charter Party.

40.
Conditions for delivery
 
  a)
Prior to delivery of the Vessel under this Charter Party, each of the Parties shall exchange the following documents:

  (i)
a copy of this Charter Party executed by each Party;


(ii)
a copy of the memorandum and articles of association (or equivalent documents) (and all amendments thereto) of the Owners and the Charterers;


(iii)
a copy of certificate of good standing or equivalent, stating all directors of the Owners and the Charterers dated not earlier than thirty (30) Banking Days prior to the date of delivery of the Vessel to the Owners, with the original to follow as soon as possible after delivery of the Vessel, to the Owners;


(iv)
A PDF copy of one (1) Resolutions of the Board of Directors of the Charterers, authorising, approving and ratifying the BBCP and the MOA and any further addenda thereto, authorising nominated individuals as signatories of and empowering these and/or other individuals to execute the Power of Attorney referred to below, the Bill of Sale and all other documents required for the sale and delivery of the Vessel to the Owners, duly executed on behalf of the Charterers;


(v)
A PDF copy of one (1) Resolutions of the Board of Directors of the Charterers` Guarantor, authorising, approving and ratifying (i) the MOA any further addenda thereto, (ii) the BBCP and any further addenda thereto, (iii) the Performance Guarantee, authorising nominated individuals as signatories of and empowering these and/or other individuals to execute the Power of Attorney duly executed on behalf of the Charterers` Guarantor;


(vi)
A PDF copy of one (1) Resolutions of the Board of Directors of the Owners, authorising, approving and ratifying the BBCP and the MOA and any further addenda thereto, authorising nominated individuals as signatories of and empowering these and/or other individuals to execute the Power of Attorney referred to below, the Bill of Sale and all other documents required for the sale and delivery of the Vessel to the Owners, duly executed on behalf of the Owners;


(vii)
A PDF copy of one (1) Resolutions of the Board of Directors of the Owners` Guarantor, authorising, approving and ratifying (i) the MOA and any further addenda thereto, (ii) the BBCP and any further addenda thereto, (iii) the Performance Guarantee, authorising nominated individuals as signatories of and empowering these and/or other individuals to execute the Power of Attorney duly executed on behalf of the Owners` Guarantor;


(viii)
A PDF copy of one (1) Power of Attorney in favor of the persons who are to act on behalf of Charterers and Charterers` Guarantors in connection with above (iv) and (v), with the original to follow as soon as possible after delivery of the Vessel to the Owners;


(ix)
A PDF copy of one (1) Power of Attorney in favor of the persons who are to act on behalf of Owners and Owners` Guarantors in connection with above (vi) and (vii), with the original to follow as soon as possible after delivery of the Vessel to the Owners;


(x)
the Guarantees and QEL referred to in Clause 43, duly executed; and


(xi)
a copy of the protocol of delivery and acceptance in relation to the Vessel executed by the Owners and the Charterers;


(xii)
such other documents as each of the Owner and Charterer may reasonably require.

41.
Vessel’s condition on delivery
 
The Vessel shall be delivered under this Charter Party in the same condition and with the same equipment, inventory and spare parts as she is delivered to the Owners under the MOA. The Charterers know the Vessel’s condition at the time of delivery, and expressly agree that the Vessel's condition as delivered under the MOA is acceptable and in accordance with the provisions of this Charter Party. The Vessel shall be delivered to the Charterers under this Charter Party strictly "as is/where is". The Owners neither make nor shall be deemed to have made or given any representation or warranty whether statutory or otherwise and whether express or implied as to the seaworthiness, value, condition, quality, merchantability, design, description, operation, suitability or fitness for use for any purpose of the Vessel (with everything belonging to her), or as to the absence of any latent or other defects, whether or not discoverable, or as to the absence of any obligations based on strict liability in tort, which are hereby excluded (hereinafter collectively, referred to as the “Vessel’s Conditions”).

The Charterers hereby acknowledge and agree that they have not relied upon any representation, condition or warranty, whether statutory or otherwise and whether express or implied as to any Vessel’s Conditions, in entering into this Charter Party, and accordingly the Charterers shall have no claim against the Owners under this Charter Party or otherwise whatsoever in relation to the Vessel’s Conditions.

42.
Survey and Inspection on re-delivery of the Vessel
 
(a) Condition of Vessel

The Vessel with everything belonging to her shall be at the Charterers’ risk and expense until she is re-delivered to the Owners, but subject to the terms and conditions of this Charter Party she shall be re-delivered and taken over as she was at the time of the survey(s) in accordance with this Clause 42, fair wear and tear excepted.

(b) Survey:

Not earlier than 45 days or later than 30 days (or if not possible then as soon as the Vessel becomes available) before re-delivery of the Vessel, the Owners and the Charterers shall jointly agree upon the appointment of a surveyor for the purpose of determining the condition of the Vessel at the time of re-delivery hereunder.

The surveyor, whose decision shall be final and binding on both Parties, shall report in writing, specifying all items, if any, which have not been properly maintained in accordance with the terms and conditions of the Charter and the work required to repair such deficiencies.

The costs of such a surveyor shall be equally shared between the Parties. In the event that the parties are not able to agree upon a single surveyor, each shall appoint their own and the two surveyors so appointed shall conduct a joint survey of the Vessel. In such an event, each Party shall pay their own appointed surveyor’s costs.

The survey shall be carried out at the point of re-delivery and in Charterers time and shall not interfere with the operation of the Vessel. Any works required as a result of such survey shall be carried out by Charterers prior to their re-delivery of the Vessel. In the event that two surveyors so appointed disagree, the matter shall be referred to arbitration in accordance with Clause 33.

This clause shall not apply if Charterers exercise their purchase option as set out in Clause 45.

(c) Underwater Inspection:

In connection with the redelivery of the Vessel under the Charter, the Vessel shall not be dry-docked unless required by the Classification Society. In lieu of dry-docking, Owners shall have the right to appoint a diver acceptable to the Classification Society to undertake an underwater inspection at a convenient port with due consultation between Owners and Charterers. Such divers’ inspection shall be carried out at Owners’ expense (unless damage affecting the class is found, in which case the Charterers shall bear the cost) and without interference to the Vessel’s normal operation.

Should such underwater inspection reveal damages that affect the class of the Vessel whereby such damage repairs cannot be made to the Vessel without dry-docking and the Classification Society will not grant an extension, then Vessel is to be dry-docked as soon as possible by Charterers to repair such damages to the Classification Society’s satisfaction at Charterers’ time and expense.

If in the opinion of the Classification Society the damages do not necessitate immediate dry-docking, then the Classification Society shall issue a certificate showing the extent and place of damage and Charterers shall repair same to the satisfaction of the Classification Society at next dry-docking, provided that such dry-docking is within the Charter Period. If the next Classification Society dry-docking is after the re-delivery of the Vessel under this Charter Party, the Charterers shall in their option (i) repair such damages before redelivery of the Vessel hereunder or (ii) provide the Owners with an agreed lump sum, (the Charterers and the Owners shall each select a reputable shipyard in the redelivery range and obtain from such shipyard a quotation for the cost of repairs of the damage. The estimated cost of repairs shall be refined as the average of the two quotations obtained from the two shipyards), a first class bank guarantee or sum a cash deposit to be provided, in the Charterers’ option, covering the expected costs of such repairs.

This Clause 42 shall not apply if the Charterers exercise their Purchase Option as set out in Clause 45.

43.
Owners’ Assignment, Performance Guarantee and Quiet Enjoyment Letter
 
The Owners may not assign, transfer or novate their rights and in the case of a novation, obligations under this Charter without the prior written consent of the Charterers. Subject to the Mortgagee providing a quiet enjoyment letter, the Owners may assign their rights under this Charter Party to the Mortgagee, including but not limited to assignments of earnings and assignment of this Charter.

The Charterers are entitled to require a quiet enjoyment letter (the “QEL”) from the Mortgagee or such other financiers of the Owners, substantially in the form attached hereto as Appendix C, which confirms that the Charterers shall have free use of the Vessel under this Charter Party (including the right to exercise the Purchase Option) while there has occurred no Charterers’ Event of Default which is continuing under this Charter Party. The Owners shall procure that the Mortgagee or (as the case may be) such other financiers will provide the quiet enjoyment letter to the Charterers as a condition precedent to the Owners' entry into the Financial Instrument on or before the Delivery Date.

The performance of the Charterers hereunder shall be guaranteed by Performance Shipping Inc. whereas the performance of the Owners shall be guaranteed by Yawatahama Kisen Co., Ltd. (each, a “Guarantee”) The guarantees shall be in the format attached hereto as appendix A.

Upon delivery of the Vessel under this Charter Party, the Owners and the Charterers shall execute an assignment of insurances with the Owners’ financier in a form and substance acceptable to each party thereto (but each acting reasonably), under which (inter alia) the Owners and the Charterers assign and agree to assign any and all their respective interests on insurance proceeds in respect of the Vessel to the extent as required by this Charter Party.

44.
Transfer of the Vessel
 

 (a)
Any change of ownership of the Vessel or of the legal and/or beneficial ownership of the Owners during the Charter Period shall require the Charterers' prior written approval which Charterers shall be at full discretion whether to grant or decline.


(b)
Each of the Owners and Charterers shall during the Charter Period be entitled to assign their position under the Charter Party to another third party entity. Such right shall be subject to (i) the prior written consent of the other Party, such consent not be unreasonable withheld, and (ii) that the guarantees granted by Performance Shipping Inc. and Yawatahama Kisen Co., Ltd. shall continue to remain in full force and effect irrespective of the said assignment(s) under the Charter. Each Party shall bear their own costs related to such assignment.


(c)
If, as a result of a change in law relating specifically to the circumstances of the Charterers and/or the Owners after the date of this Charter Party there would be material adverse economic consequences to the Charterers of them continuing to perform their obligations under this Charter Party the Charterers shall have the option, to novate this Charter Party to an affiliate provided always that, notwithstanding such novation, this Charter Party would continue on identical terms (save for logical, consequential or mutually agreed amendments) and Performance Shipping Inc. shall remain jointly and severally liable with such affiliate to the Owners for performance of all obligations by such affiliate pursuant to this Charter Party after such novation.

The Charterers agree and undertake to enter into (and procure that such affiliate and Performance Shipping Inc.  enter into) or deliver to the Owners any such documents as the Owners (at their sole discretion) shall reasonably require in connection with such novation, including but not limited to such additional security documents and legal opinions as the Owners may reasonably require. Any reasonable and properly documented costs or expenses (including but not limited to legal costs) in relation to such novation and any conditions imposed by the Owners in giving their consent shall be borne by the Charterers.


 (d)
In the event of the early termination of this Charter Party by the Owners due to a Charterers’ Event of Default which is continuing or due to any of the circumstances described in Clause 31(d) occurring to the Charterers, unless the Charterers have paid to the Owners the full amount of the higher of (i) the Outstanding Principal that remains unpaid when due, and (ii) the Purchase Option Price as calculated pro rata per diem basis in accordance with Clause 45, plus (iii) any other sums due from the Charterers to the Owners under this Charter Party, the Owners shall be entitled to sell the Vessel, whereupon they shall retain from the relevant proceeds an amount equal to the then Outstanding Principal plus any other sums then due from the Charterers to the Owners under this Charter Party and, thereafter, pay the excess to the Charterers.

45.
Charterers’ Purchase Option
 
The Charterers or its nominee shall have an option to purchase the Vessel from the Owners commencing from the date falling twenty-four months after the Delivery Date (the “Purchase Option Commencement Date”) for the duration of the Charter Period (the "Purchase Option") at the following prices (the "Purchase Option Price") or pro rata for the current year:

The Purchase Option Price to be paid to the Owners upon delivery of the Vessel:
The Purchase Option Price = A – [ (A-B) / 365 x C]

Where:
A:  the amount indicated below of the end of the year immediately prior to the applicable delivery date;
B:  the amount indicated below of the end of the year of such delivery date; and

C:  the actual number of days from the beginning of the year to which the delivery date belongs:


 (i)
at a price of the Outstanding Principal x 102.00% at the end of year 2 of the Charter Period;

(ii)
at a price of the Outstanding Principal x 101.65% at the end of year 3 of the Charter Period;

(iii)
at a price of the Outstanding Principal x 101.20% at the end of year 4 of the Charter Period;

(iv)
at a price of the Outstanding Principal x 100.80% at the end of year 5 of the Charter Period;

(v)
at a price of the Outstanding Principal x 100.40% at the end of year 6 of the Charter Period;

(vi)
at a price of the Outstanding Principal plus USD40,000 at the end of year 7 of the Charter Period;

If a breach by the Owners in the performance of any of their obligations under this Charter Party occurs and is continuing, then the Charterers may exercise their Purchase Option earlier than the Purchase Option Commencement Date, provided that in the event the Charterers exercise their Purchase Option and the relevant breach is subsequently remedied, such remedy shall not affect the exercise of the Purchase Option. The Purchase Option Price shall in such event be set at as follows or pro-rata for the current year:

at a price of USD 37,800,000.00 at the end of year 0 of the Charter Period;
at a price of USD 35,810,526.00 at the end of year 1 of the Charter Period;

Registration cost, and bank related costs including lifting charge and escrow agent fees, if any, shall be for the Charterer’s account; however such cost not to exceed USD 10,000.

The Charterers must give a minimum of 75 (seventy-five) calendar days’ notice to the Owners of their intention to buy the Vessel. The Purchase Option Price to be paid to the Owners upon delivery of the Vessel is in accordance with this Clause 45 of the Charter and the memorandum of agreement to be entered into by the Charterers and the Owners at the time of the Purchase Option. The Vessel shall be delivered as soon as possible after expiry of the 75 (seventy-five) days’ notice and Owners undertake to render all necessary assistance in order to achieve this. Once the Purchase Option has been exercised by Charterers, they may not withdraw same.

The Charterers or its nominee shall accept the Vessel on an "AS IS, WHERE IS" basis and the Owners shall take such steps to obtain and furnish such documents as may reasonably be required by the Charterers (or their nominee) in order to transfer the legal and beneficial title and interest in the Vessel to the Charterers (or their nominee) (including without limitation a bill of sale in respect of the Vessel executed and (if required) notarized) and take such other actions as the Charterers may reasonably request in order to facilitate the sale and re-registration of the Vessel under such flag as the Charterers may designate.

With respect to such sale, the Owners warrant that the Vessel at such sale shall be free of any encumbrances, mortgages, charters, maritime liens and any other debts whatsoever (in each case, created by the Owners) created or incurred by the Owners and that the Owners have not committed any act or omission which would impair title to the Vessel and Owners hereby agree to indemnify and hold harmless Charterers in respect of any and all damages, costs and expenses whatsoever resulting from any breach of such warranty.

Upon completion of such purchase of the Vessel as set out in this Clause 45 or in the subsequent Clause 46, this Charter Party and all further rights and obligations of the Parties hereunder (except for indemnities and other obligations that by their nature should survive the termination of this Charter Party) shall terminate.

46.
Insurance
 
(a)
The Charterers undertake with the Owners that throughout the Charter Period:

 
(i)
without prejudice to their obligations under Clause 17 hereof, they will keep the Vessel insured on  such terms as widely accepted in the commercial shipping market and shall be reasonably acceptable to the Owners and the Mortgagee with such insurers (including P&I and war risks associations) as shall be reasonably acceptable to the Owners with deductibles reasonably acceptable to the Owners and that any P&I association which is a member of the International Group of P&I Clubs and H&M underwriters with security rating A. The Charterers shall advise the Owners of their current H&M underwriters for the Owners’ approval, such approval not to be unreasonably withheld or delayed (it being agreed and understood by the Charterers that there shall be no element of self-insurance or insurance through captive insurance companies without the prior written consent of the Owners);


(ii)
the policies in respect of the insurances against fire and usual marine risks and the policies or entries in respect of the insurances against war risks shall, in each case, be endorsed to the effect that payment of a claim for a Total Loss will be made to the Owners (or the Mortgagees as assignees thereof) (who shall upon the receipt thereof apply the same in the manner described in Clause 47(e) hereof);


(iii)
the Charterers shall procure that duplicates of all cover notes, policies and certificates of entry shall be furnished to the Owners for their custody, upon request;

 
(iv)
the Charterers shall procure that the insurers and the war risk and protection and indemnity associations with which the Vessel is entered shall:

 
(A)
provide the Owners and (if applicable) the Mortgagee with a letter or letter of undertaking in standard market form, and
  (B)
supply to the Owners such information in relation to the insurances effected, or to be effected, with them as the Owners may from time to time reasonably require; and


(v)
the Charterers shall procure that the policies, entries or other instruments evidencing the insurances are endorsed to the effect that the insurers shall give to the Owners not less than fourteen (14) days prior written notification of any amendment, suspension, cancellation or termination of the insurances, unless subject to any automatic termination/cancellation of cover provisions in the relevant insurances, in which event, if such insurances are automatically terminated/cancelled, Owners shall be advised promptly and Charterers shall immediately procure re-instatement or replacement insurances of those terminated/cancelled insurances.

(b)
Notwithstanding anything to the contrary contained in Clauses 17 and 47 (b) hereof, the Vessel shall be kept insured during the Charter Period in respect of marine and war risks on hull and machinery basis  for not less than the total insured value (H&M value, Hull Interest and freight interest) specified in column (b) in the table set out below in respect of the one-yearly period during the Charter Period specified in column (a) (on the assumption that the first such period commenced on the Delivery Date) against such amount (hereinafter referred to as the "Minimum Insured Value"):

 
(a)
  
(b)
 
Year
  
Minimum Insured Value
 
1
  
 USD 41,580,000
 
2
  
 USD 39,391,579
 
3
  
 USD 37,203,158
 
4
  
 USD 35,014,737
 
5
  
 USD 32,826,316
 
6
  
 USD 30,637,895
 
7
  
 USD 28,449,474

(c)
If the Vessel becomes a Total Loss or becomes subject to Compulsory Acquisition, the chartering of the Vessel to the Charterers hereunder shall cease and the Charterers shall:-

 
(i)
immediately pay to the Owners all hire, and any other amounts, which have fallen due for payment under this Charter Party and have not been paid as at up to the date on which the Total Loss or Compulsory Acquisition occurred as described below (the "Date of Loss") together with interest thereon as set out in Clause 15 (g) and shall cease to be under any liability to pay any hire, but not any other amounts, thereafter becoming due and payable under this Charter Party. All hire and any other amounts prepaid by the Charterers relating to the period after the Date of Loss, and any insurance proceeds received by the Owners and/or their mortgagee after payment by the Charterers as aforesaid, shall be forthwith refunded by the Owners and any hire paid in advance to be adjusted/reimbursed.

 
(ii)
For the purpose of ascertaining the Date of Loss:-

  (A)
an actual total loss of the Vessel shall be deemed to have occurred at noon (London time) on the actual date the Vessel was lost but in the event of the date of the loss being unknown the actual total loss shall be deemed to have occurred at noon (London time) on the date on which it is acknowledged by the insurers to have occurred;


(B)
a constructive, compromised, agreed, or arranged total loss of the Vessel shall be deemed to have occurred at noon (London time) on the date that notice claiming such a total loss of the Vessel is given to the insurers, or, if the insurers do not admit such a claim, at the date and time at which a total loss is subsequently admitted by the insurers or the date and time adjudged by a competent court of law or arbitration tribunal to have occurred. Either the Owners or, with the prior written consent of the Owners (such consent not to be unreasonably withheld), the Charterers shall be entitled to give notice claiming a constructive total lose but prior to the giving of such notice there shall be consultation between the Charterers and the Owners and the Party proposing to give such notice shall be supplied with all such information as such Party may request; and


(C)
Compulsory Acquisition shall be deemed to have occurred at the time of occurrence of the relevant circumstances described in Clause 30(b) hereof.

(d)
(i) All moneys up to the Minimum Insured Value payable under the insurances effected by the Charterers pursuant to Clauses 17 and 47, or other compensation, in respect of a Total Loss or pursuant to Compulsory Acquisition of the Vessel shall be received in full by the Owners (or the mortgagees as assignees thereof) and applied by the Owners (or, as the case may be, the mortgagees) as follows:

FIRSTLY, in payment of all the Owners’ or the Charterers’ reasonable and properly incurred costs incidental to the collection thereof,

SECONDLY, in or towards payment to the Owners (to the extent that the Owners have not already received the same in full) of a sum equal to the Purchase Option Price as per the table in Clause 45 immediately above, for the year in which the Date of Loss occurs and which shall be calculated pro rata per diem,

THIRDLY, towards any other applicable sums due from the Charterers to the Owners under this Charter Party, and

FORTHLY, in payment of any surplus to the Charterers by way of a rebate of hire and compensation for early termination.

If, in accordance with the terms of the relevant Loss Payable Clause, any part of the insurance proceeds or compensation payable under this sub-clause (d)(i) is received and applied by the mortgagees as assignees toward payment of the indebtedness due to such mortgagees by the Owners pursuant to the Financial Instrument, then the remainder of such insurance proceeds shall be distributed between the Owners and the Charterers in accordance with the order set out in this sub-clause (d)(i) above and, for the purposes of such distribution, the afore-mentioned part of the insurance proceeds received by the mortgagees shall reduce the afore-mentioned sums payable to the Owners accordingly. Under no circumstances will the sum of the insurance proceeds or compensation received under this sub-clause (d)(i) and applied by the mortgagees as assignees toward payment of the indebtedness due to such mortgagees by the Owners pursuant to the Financial Instrument, exceed the aggregate sum payable to the Owners in accordance with this sub-clause (d)(i) above.

(ii) Any moneys in excess of the Minimum Insured Value payable under the insurances effected by the Charterers pursuant to Clauses 17 and 47, or other compensation, in respect of a Total Loss or pursuant to Compulsory Acquisition of the Vessel shall be received in full by the Charterers.

(e)
In respect of partial losses, any payment by underwriters not exceeding USD 500,000 shall be paid directly to the Charterers who shall apply the same for the repair, salvage or other charges involved or as a reimbursement if the Charterers fully repaired the damage to the satisfaction of the Owners and paid all of the salvage or other charges in respect of which payment is made. Any moneys in excess of USD 500,000 payable under such insurance (other than in respect of a Total Loss) shall be paid to the Charterers subject to the prior written consent of the Owners or the Owners’ mortgagee but such consent shall not be unreasonably withheld or delayed. In the absence of such prior written consent the money shall be paid to the Owners or the Owners’ mortgagee.

(f)
The provisions of Clauses 17 and 47 hereof shall not apply in any way to the proceeds of any additional insurance cover effected by the Owners and / or the Charterers for their own account and benefit.

(g)
The Charterers shall promptly notify the Owners of:

 
(i)
any accident to the Vessel involving repairs the cost of which exceeds USD500,000 or the equivalent in any other currencies; or

 
(ii)
any occurrence in consequence whereof the Vessel has become a Total Loss or Compulsory Acquisition.

47.
Inconsistency
 
In case of any inconsistency between (i) the standard terms of this Charter Party and (ii) the amendments and Rider 39 to 54 (inclusive), the latter shall prevail.

48.
Charterers’ Down Payment
 
In consideration of achieving reduced monthly charter hire payments for the duration of the Charter Period (subject to the terms of this Charter Party), the Charterers shall, at the time of delivery of the Vessel, pay to the Owners as prepayment of hire the sum of USD16,300,000 (the "Charterers' Down Payment"). The Charterers' Down Payment is an advance payment and will be applied towards monthly charter hire payments. For the avoidance of doubt, the charter hire rate referred to in Box 17 is the net amount after the Charterers’ Down Payment is applied.

The Charterers, acting as Sellers under the MOA, hereby undertake to procure that they shall pay to the Owners the Charterers’ Down Payment at the time of delivery of the Vessel under the MOA. Accordingly, the Charterers’ Down Payment shall be set-off against the Purchase Price (defined in the MOA) under the MOA and shall be deemed as fully settled by the Charterers. The payment of the Charterers’ Down Payment is subject to the delivery of the Vessel to the Owners as “buyers” from the Sellers under the MOA and also delivery of the Vessel by the Owners to the Charterers under this Charter Party.

The Charterers' Down Payment shall be non-refundable except:

on the occurrence of a breach by the Owners leading to the Charterers being permanently deprived of the usage, possession or enjoyment of the Vessel (irrespective of whether this Charter Party is formally terminated or not);

in which case the Owners shall refund to the Charterers the amount of USD194,047.62 (84 months) per calendar month for each month, counting from the date of the Charterers being deprived of the Vessel’s use, possession or enjoyment up to what would have been, but for the deprivation, the end of the 7th year of this Charter Party. Such refund shall be without prejudice to any right or claim the Charterers may have against the Owners as a result of such deprivation of use, possession or enjoyment and/or default or termination.

49.
Loan Outstanding for Interest Portion
 
In the charter hire structure set out in Box 17, the Variable Hire shall be calculated as follows:

(X)  x  (Y)  x  (Z) ÷ (A)

Where:
X
 =
Amount of the loan outstanding (as set out in the table below)
Y
 = (Margin) + (1-month CME TERM SOFR)
Z
 = Number of days during the hire period in question
A
 = 360 days.

The 1-month CME TERM SOFR to be used is the one published by CME GROUP five (5) Banking Days prior to the hire payment due date. Should the 3-month CME TERM SOFR published by CME GROUP turn negative, then zero (0) to be applied in calculation of hire payment.

In case that CME TERM SOFR ceases to be available, the Owners shall reasonably designate the alternative interest rate after consultation with the Charterers but such rate shall not exceed the cost to the Mortgagee of funding the outstanding loan balance on the Vessel from any reasonable source and such rate so applied shall only apply for so long as CME TERM SOFR remains unavailable.

Loan Oustanding
(USD)
      
(USD)
1st Year
1st Month
37,800,000
  
2nd Year
13th Month
35,810,526
1st Year
2nd Month
37,634,211
  
2nd Year
14th Month
35,644,737
1st Year
3rd Month
37,468,421
  
2nd Year
15th Month
35,478,947
1st Year
4th Month
37,302,632
  
2nd Year
16th Month
35,313,158
1st Year
5th Month
37,136,842
  
2nd Year
17th Month
35,147,368
1st Year
6th Month
36,971,053
  
2nd Year
18th Month
34,981,579
1st Year
7th Month
36,805,263
  
2nd Year
19th Month
34,815,789
1st Year
8th Month
36,639,474
  
2nd Year
20th Month
34,650,000
1st Year
9th Month
36,473,684
  
2nd Year
21st Month
34,484,211
1st Year
10th Month
36,307,895
  
2nd Year
22nd Month
34,318,421
1st Year
11th Month
36,142,105
  
2nd Year
23rd Month
34,152,632
1st Year
12th Month
35,976,316
  
2nd Year
24th Month
33,986,842
3rd Year
25th Month
33,821,053
  
4th Year
37th Month
31,831,579
3rd Year
26th Month
33,655,263
  
4th Year
38th Month
31,665,789
3rd Year
27th Month
33,489,474
  
4th Year
39th Month
31,500,000
3rd Year
28th Month
33,323,684
  
4th Year
40th Month
31,334,211
3rd Year
29th Month
33,157,895
  
4th Year
41st Month
31,168,421
3rd Year
30th Month
32,992,105
  
4th Year
42nd Month
31,002,632
3rd Year
31st Month
32,826,316
  
4th Year
43rd Month
30,836,842
3rd Year
32nd Month
32,660,526
  
4th Year
44th Month
30,671,053
3rd Year
33rd Month
32,494,737
  
4th Year
45th Month
30,505,263
3rd Year
34th Month
32,328,947
  
4th Year
46th Month
30,339,474
3rd Year
35th Month
32,163,158
  
4th Year
47th Month
30,173,684
3rd Year
36th Month
31,997,368
  
4th Year
48th Month
30,007,895
5th Year
49th Month
29,842,105
  
6th Year
61st Month
27,852,632
5th Year
50th Month
29,676,316
  
6th Year
62nd Month
27,686,842

5th Year
51st Month
29,510,526
  
6th Year
63rd Month
27,521,053
5th Year
52nd Month
29,344,737
  
6th Year
64th Month
27,355,263
5th Year
53rd Month
29,178,947
  
6th Year
65th Month
27,189,474
5th Year
54th Month
29,013,158
  
6th Year
66th Month
27,023,684
5th Year
55th Month
28,847,368
  
6th Year
67th Month
26,857,895
5th Year
56th Month
28,681,579
  
6th Year
68th Month
26,692,105
5th Year
57th Month
28,515,789
  
6th Year
69th Month
26,526,316
5th Year
58th Month
28,350,000
  
6th Year
70th Month
26,360,526
5th Year
59th Month
28,184,211
  
6th Year
71st Month
26,194,737
5th Year
60th Month
28,018,421
  
6th Year
72nd Month
26,028,947
7th Year
73rd Month
25,863,158
        
7th Year
74th Month
25,697,368
        
7th Year
75th Month
25,531,579
        
7th Year
76th Month
25,365,789
        
7th Year
77th Month
25,200,000
        
7th Year
78th Month
25,034,211
        
7th Year
79th Month
24,868,421
        
7th Year
80th Month
24,702,632
        
7th Year
81st Month
24,536,842
        
7th Year
82nd Month
24,371,053
        
7th Year
83rd Month
24,205,263
        
7th Year
84th Month
24,039,474
        

50.
Disclosure

The Charterers shall supply the Owners as soon as reasonably practicable, but in any event i) within one hundred and eighty (180) days after the end of each of its financial years, the audited financial statements of Performance Shipping Inc. for that financial year.

51.
Money laundering, sanctions, anti-corruption:
 
Notwithstanding any other clause in this Charter, each Party warrants, represents and undertakes to the other Party on a continuing basis:


(Money laundering):

that it, and parties acting on its behalf in relation to this Charter, shall observe and abide with, including but not limited any law, official requirement or other regulatory measure or procedure implemented to combat money laundering as defined in any laws or regulations applicable to such Party, and


(Sanctions):

that it, nor any of their directors and, executive managers and ultimate owners, are or will become sanctioned by USA, the UK, Japan, the European union or the United Nations or any other nation or governmental body or organization relevant to the trading of the Vessel under this Charter to the extent that non-compliance by it would result in an actual breach of any applicable sanctions, and


that it, its directors and executive managers, has not been a party, directly, to any contract or conduct in contravention of any applicable sanctions legislation or directives of either the USA, the UK, Japan, the European union or the United Nations or any other nation or governmental body or organization relevant to the trading of the Vessel under this Charter to the extent that non-compliance by it would result in an actual breach of any applicable sanctions. Moreover, the Party is acting for itself only and is not acting on behalf of any other individual or corporation, and


(Anti-corruption):

that it, its directors, performance guarantors, executive managers and ultimate owners of the Charterers; shall comply with all applicable anti-corruption laws, regulations and contractual provisions, including without limitation the US Foreign Corrupt Practices Act and the UK Bribery Act, and


that it, its directors, performance guarantors, executive managers and ultimate owners of the Charterers; shall not, directly or through third parties, in relation to the Charter, give, promise or attempt to give, or approve or authorize the giving of, anything of value to any person, any public official or any entity for the purpose of:

-
securing any improper advantage for either Party;

-
inducing or influencing anyone improperly to take action or refrain from taking action in order for either Party to obtain or retain business, or to secure the direction of business to either Party;

-
inducing or influencing anyone to use his/her influence with any Government or public international organization for such purpose; and

that:

 -
to the best of its knowledge, none of its directors, executive managers or owners nor the directors, executive managers and owners of affiliated companies; have carried out any of the actions described above;

-
all remuneration received under this Charter is solely intended as compensation for the services expressly provided under this Charter, including the Parties’ related documented costs and expenses, and that it is not receiving remuneration for any other purpose; and,

-
neither the Party, nor any of its affiliated companies, directors, executive managers or owners shall use any part of said remuneration for any purpose prohibited under this Clause 51.

(Indemnification):
if such calling constitute a breach of sanctions, then Charterers to undertake to indemnify Owners against all direct and proven loss and costs sustained as a result of such violation. Charterers shall indemnify the Owners and hold the Owners harmless in respect of any direct and proven liability, loss, damage or expenses of whatsoever nature which the Owners may sustain resulting from the operation of the Vessel (including but not limited to hereunder those arising from Vessel entering/operating in war area or warlike area).

(Others):
that neither it, its directors, executive managers and owners, nor the directors, executive managers and owners of affiliated companies; have been suspended from doing business in any form subject to investigation or charged with or sentenced for relevant criminal behaviour, fraud, false statements, corruption or other related activities;

52.
Confidentiality
 
The discussions between the Parties shall be kept strictly confidential by both Parties and may only be disclosed to each Party's advisors and financiers on a need to know basis, and as may be required to be disclosed under applicable law, regulatory rules and regulations, government authorities or relevant stock exchange rules.

53.
Counterparts
 
This Charter Party may be executed in any number of counterparts and any single counterpart or set of counterparts signed, in either case, by all the parties hereto shall be deemed to constitute a full and original agreement for all purposes.

54.
EU ETS
 
"Emission Allowances" means an allowance, credit, quota, permit or equivalent, representing a right of a vessel to emit a specified quantity of greenhouse gas emissions recognized by the Emission Scheme, or generally in connection with emissions, carbon reduction or other environmental or sustainability measures relating to the operation of the Vessel.

"Emission Scheme" means a greenhouse gas emissions trading scheme and any emissions, carbon reduction or other environmental or sustainability measures relating to the Vessel, which for the purposes of this Clause shall include (without limitation) the European Union Emissions Trading System and any other similar systems imposed by any similar or equivalent international, regional, national or local scheme implemented by the IMO or any other authority that regulate the issuance, allocation, trading or surrendering of Emission Allowances.


 (i)
The Charterer shall be the sole responsible party for compliance of all Emission Scheme obligations in relation to the Vessel, and whether or not such obligations are, pursuant to any domestic or international law or regulation, directed to the Owner as registered or beneficial owner of the Vessel.


(ii)
Notwithstanding sub-paragraph (i) above, the Charterer shall be permitted to sub-delegate such Emission Scheme responsibility on to any entity, including without limitation to the relevant holder of Document of Compliance under the ISM Code in respect of the Vessel. Such sub-delegation shall be documented and copy of such documentation shall be made available to the Owner.


(iii)
The Charterers shall co-operate with the Owner and assist the Owner to deliver all such forms as are required to be filed to any relevant authorities in relation to the delegation and assumption of any Emission Scheme responsibilities.


(iv)
Without limiting the foregoing, throughout the Charter Period the Charterer, or any mandated by the Charterer entity, shall provide and pay for the Emission Allowances corresponding to the Vessel’s emissions under the scope of the applicable Emission Scheme without any delay whatsoever.


(v)
Emission Allowances, taxes, charges, levies, fees, fines, costs or expenses incurred or imposed in connection with any Emissions Scheme, shall be for the Charterers' account and are to be settled directly by them or their mandated entity.


(vi)
The Charterer shall ensure that the Charterer, or any mandated by the Charterer entity, shall comply, acknowledge in writing in any form that may be reasonably required, and provide all such information and documents to the Owner as necessary to enable the Owners and any Emission Scheme obligor to document and evidence to any authority their delegation/mandating of all Emission Scheme obligations in relation to the Vessel (and the assumption of same by the relevant mandated entity), as may be required from time to time during the Charter Period by the Owner, any manager or other mandated entity, and any relevant Emission Scheme authority, in conformity with the provisions of this Clause. In relation to the Emission Scheme being the European Union Emissions Trading System, the Owner and the Charterer, or any mandated by the Charterer entity, shall complete and sign a mandate form in form and substance as required (from time to time) by the EU Commission Implementing Regulation (EU) 2023/2599, the Directive 2003/87/EC, currently and indicatively in form as appended hereto (Appendix B) (the "Mandate Form").


(vii)
The Owner undertake to relay to the Charterer, without delay, any information that might be received by the Owner for any reason whatsoever, including by error of any authority, and which might relate to compliance with any Emission Scheme.

IN WITNESS HEREOF the Owners and the Charterers have signed and executed TWO COPIES of this Agreement the day and year first written.

 
SALTER SHIPPING, S.A.
Signature (Owners)
/s/ Yoshihide Yamamoto
Name: Yoshihide Yamamoto
Title: Director / President
  
SAINT BARTH SHIPPING COMPANY INC.
Signature (Charterers)
/s/ Andreas Nikolaos Michalopoulos
Name: Andreas Nikolaos Michalopoulos
Title: Director / Attorney-in-fact

 
Yawatahama Kisen Co., Ltd.
Signature (Guarantor)
/s/ Yoshihide Yamamoto
Name: Yoshihide Yamamoto
Title: Representative Director
  
Performance Shipping Inc.
Signature (Guarantor)
/s/ Andreas Nikolaos Michalopoulos
Name: Andreas Nikolaos Michalopoulos
Title: Director / Chief Executive Officer

List of Appendices:
Appendix A: 
Form of performance guarantees
Appendix B: 
Mandate Form of EU-ETS Obligation
Appendix C:   
Form of Quiet Enjoyment Letter

Addendum No. 1
to the
Bareboat Charter Party
Dated 16 March 2026
(the "Charter")
Between

SAINT BARTH SHIPPING COMPANY INC. of the Republic of the Marshall Islands as Charterers, and
SALTER SHIPPING, S.A. of the Republic of Panama as Owners
in respect of the vessel

MT “HULL YZJ2024-1624” tbn “P. SAN FRANCISCO”

Pursuant to a Bareboat Charter Party (on BIMCO BARECON 2017 terms as amended) dated ___ March  2026 made between the Owners and the Charterers (as amended or supplemented from time to time, the “BBCP”), the Parties hereby agree that the BBCP shall be amended as set out in this Addendum, including an extension of the bareboat charter period by an additional three (3) years (the “Extended Charter Period”), upon and subject to the terms and conditions set out herein.

Bareboat Hire:

During the Extended Charter Period, the hire shall remain unchanged and the Charterers shall pay hire at the rate specified in Box 17.

Charter Period (Clause 2)

The following wording shall be added at the end of clause 2 of the Charter:

“The Charter Period shall be extended by an additional three (3) years and shall end on the date falling ten (10) years from the Delivery Date or (if earlier) the date on which the Charterers or their nominee purchase the Vessel from the Owners.”

Redelivery (Clause 10)

The following wording shall be added at the end of clause 10 of the Charter:

This clause shall not apply if the Owners exercise their Put Option, in which event a Protocol of Delivery and Acceptance will be signed.

Flag and Name of Vessel (Subclause 13 (f))

The following wording shall be added at the end of clause 13(f) of the Charter:

In case the Owners do not exercise their Put Option, painting and re-painting, instalment and re-instalment, registration and re-registration at re-delivery, if required by the Owners, shall be at the Charters’ expense and time.

Hire (Clause 15)

The following wording shall be added at the end of clause 15 of the Charter:

(k)
The Charterer may prepay the BBC Hire at any time but maximum once per annum from the Purchase Option Commencement Date with at least 60 days’ prior written notice to the Owners, provided, however that the date of such prepayment shall be subject to mutual agreement between the Charterers and the Owners. Such prepayment (the “Prepayment Amount”) shall be in multiples of USD1,000,000 (United States Dollars one million). The prepayment fee applicable to such prepayment shall be calculated as set out below and paid together with the Prepayment Amount.


(i)
at a price of the Prepayment Amount x 102.00% during the year 3 of the Charter Period;

(ii)
at a price of the Prepayment Amount x 101.65% during the year 4 of the Charter Period;

(iii)
at a price of the Prepayment Amount x 101.20% during the year 5 of the Charter Period;

(iv)
at a price of the Prepayment Amount x 100.80% during the year 6 of the Charter Period;

(v)
at a price of the Prepayment Amount x 100.40% during the year 7 of the Charter Period;

(vi)
at a price of the Prepayment Amount plus [USD40,000 x (the Prepayment Amount / the Outstanding Principal for the month of the Charter Period (85th to 96th) in which such prepayment is exercised)] during the year 8 of the Charter Period;

(vii)
at a price of the Prepayment Amount plus [USD40,000 x (the Prepayment Amount / the Outstanding Principal for the month of the Charter Period (97th to 108th) in which such prepayment is exercised)] during the year 9 of the Charter Period; and

(viii)
at a price of the Prepayment Amount plus [USD40,000 x (the Prepayment Amount / the Outstanding Principal for the month of the Charter Period (109th to 120th) in which such prepayment is exercised)] during the year 10 of the Charter Period.

Any legal fees and bank related costs including lifting charge and escrow agent fees, if any, shall be for the Charterer’s account.

Any such prepayments shall be applied against the Outstanding Charter Hire Principal under this Charter Party and fixed portion of BBC Hire (as referred as “Fixed Rate” in Box 17 of Part I hereof) shall be recalculated (and reduced pro rate over the remaining BBC Period) with effect from the next month. The amounts of the Purchase Option Prices, Owners Put Option prices and Minimum Insured Value shall be correspondingly recalculated (and reduced) according to the Outstanding Charter Hire Principal after application of such Prepayment Amount. Each such prepayment of the Charter Hire shall be permitted only if the Owner/Mortgagee and the Charterer shall mutually agree to the amount of the remaining Charter Hire, Purchase Option Price, Owners Put Option Price and Minimum Insured Value so recalculated.

Survey (Subclause 42 (b))

This clause shall not extend the Charter Period, and shall not apply if Owners exercise their Put Option as set out in this Addendum No. 1.

Underwater Inspection (Subclause 42 (c))

The following wording shall be added at the end of clause 42(b) of the Charter:

This Clause 42 shall not apply if the Owners exercise their Put Option.

Charterers’ Purchase Option (Clause 45)
 
The following paragraphs shall be added at the end of clause 45 of the Charter:

Charterers’ option to purchase the Vessel at any time during the Extended Charter Period at following prices or pro rata of the current year or earlier if an event of default occurs:


 (i)
at a price of the Outstanding Principal plus USD40,000 at the end of year 8 of the Charter Period;

(ii)
at a price of the Outstanding Principal plus USD40,000 at the end of year 9 of the Charter Period; and

(iii)
at a price of the Outstanding Principal plus USD40,000 at the end of year 10 of the Charter Period.

Charterers' Down Payment （Clause 48）

the Parties hereby agree that:

(a)
the reference to “USD 194,047.62 (84months) per calendar month” in the Charter shall be deleted and replaced with USD 135,833.33 (120months) per calendar month; and

(b)
the reference to “up to what would have been, but for the deprivation, the end of the 7th year of this Charter” shall be deleted and replaced with “up to what would have been, but for the deprivation, the end of the 10th year of this Charter”.

Owners’ Put Option  (Clause 55)

The following clause 55 shall be added to the Charter:

The Owners have the option to sell the Vessel back to the Charterers or its nominee at the end of the tenth (10th) year of this Charter. In case Charterers have not exercised their Purchase Option 75 (seventy-five) calendar days before the end of the Charter Period at the latest, the Owners may exercise their Put Option, in which case the Charterer shall purchase the Vessel for the Outstanding Principal plus USD 40,000 (“Put Option Price”). The Owners must give a minimum of 60 (sixty) days’ notice of their intention to sell the Vessel. The Put Option Price shall be paid to the Owners upon delivery of the Vessel, which shall take place on the last day of the Charter Period.

The Charterers or its nominee shall accept the Vessel on an "AS IS, WHERE IS" basis and the Owners shall, take such steps to obtain and furnish such documents as may reasonably be required by the Charterers (or their nominee) in order to transfer the legal and beneficial title and interest in the Vessel to the Charterers (or their nominee) (including without limitation a bill of sale in respect of the Vessel executed and (if required) notarized) and take such other actions as the Charterers may reasonably request in order to facilitate the sale and re-registration of the Vessel under such flag as the Charterers may designate.

With respect to such sale, the Owners warrant that the Vessel at such sale shall be free of any encumbrances, mortgages, charters, maritime liens and any other debts whatsoever (in each case, created by the Owners) created or incurred by the Owners and that the Owners have not committed any act or omission which would impair title to the Vessel and Owners hereby agree to indemnify and hold harmless Charterers in respect of any and all damages, costs and expenses whatsoever resulting from any breach of such warranty.

Registration cost, and bank related costs including lifting charge and escrow agent fees, if any, shall be for the Charterer’s account; however such cost not to exceed USD 10,000.

Insurance (Clause 46)
 
The following paragraphs shall be added at the end of clause 46(b) of the Charter Party:

The Charterers undertake with the Owners  to keep the Vessel insured throughout the Extended Charter Period as follows:

 
(a)
  
(b)
 
Year
  
Minimum Insured Value
 
8
  
 USD 26,261,053
 
9
  
 USD 24,072,632
 
10
  
 USD 21,884,211

Loan Outstanding Table (Clause 49)

The following shall be added at the end of the existing table included in clause 49 of the Charter Party:

Year
Month
USD
  
Year
Month
USD
8th Year
85th Month
23,873,684
  
9th Year
97th Month
21,884,211
8th Year
86th Month
23,707,895
  
9th Year
98th Month
21,718,421
8th Year
87th Month
23,542,105
  
9th Year
99th Month
21,552,632
8th Year
88th Month
23,376,316
  
9th Year
100th Month
21,386,842
8th Year
89th Month
23,210,526
  
9th Year
101st Month
21,221,053
8th Year
90th Month
23,044,737
  
9th Year
102nd Month
21,055,263
8th Year
91st Month
22,878,947
  
9th Year
103rd Month
20,889,474
8th Year
92nd Month
22,713,158
  
9th Year
104th Month
20,723,684
8th Year
93rd Month
22,547,368
  
9th Year
105th Month
20,557,895
8th Year
94th Month
22,381,579
  
9th Year
106th Month
20,392,105
8th Year
95th Month
22,215,789
  
9th Year
107th Month
20,226,316
8th Year
96th Month
22,050,000
  
9th Year
108th Month
20,060,526
10th Year
109th Month
19,894,737
        
10th Year
110th Month
19,728,947
        
10th Year
111th Month
19,563,158
        
10th Year
112th Month
19,397,368
        
10th Year
113th Month
19,231,579
        
10th Year
114th Month
19,065,789
        
10th Year
115th Month
18,900,000
        
10th Year
116th Month
18,734,211
        
10th Year
117th Month
18,568,421
        
10th Year
118th Month
18,402,632
        
10th Year
119th Month
18,236,842
        
10th Year
120th Month
18,071,053
        

Agreement the day and year first written.

Otherwise all other terms and conditions of the BBCP shall remain unaltered and in full force and effect.

 
SALTER SHIPPING, S.A.
  
SAINT BARTH SHIPPING COMPANY INC.
  Signature (Owners)   Signature (Charterers)
  /s/ Yoshihide Yamamoto   /s/ Andreas Nikolaos Michalopoulos
 
Name: Yoshihide Yamamoto
  
Name: Andreas Nikolaos Michalopoulos
 
Title: Director / President
  
Title: Director / Attorney-in-fact
 
Yawatahama Kisen Co., Ltd.
  
PERFORMANCE SHIPPING INC.
  Signature (Guarantor)  
Signature (Guarantor)
  /s/ Yoshihide Yamamoto   /s/ Andreas Nikolaos Michalopoulos
 
Name: Yoshihide Yamamoto
  
Name: Andreas Nikolaos Michalopoulos
 
Title: Representative Director
  
Title: Director / Chief Executive Officer


Exhibit 4.40

CHARTERER PERFORMANCE GUARANTEE
IN RESPECT OF THE BAREBOAT CHARTER PARTY (BARECON 2017)
DATED    March 2026
MV HULL YZJ2024-1624 tbn “P. SAN FRANCISCO”

16 March 2026

To: SALTER SHIPPING, S.A.
From: PERFORMANCE SHIPPING INC. ("Guarantor")

Reference is made to Barecon 2017 Bareboat Charter Party and the rider clauses and annexures thereto, dated 16 March 2026 (as amended from time to time, hereinafter referred to as the "Bareboat Charter Party"), between SAINT BARTH SHIPPING COMPANY INC. (hereinafter referred to as “Charterers”) and SALTER SHIPPING, S.A. (hereinafter referred to as “Owners”).

1.
In consideration of the Owners entering into the Bareboat Charter Party with the Charterers, we, Performance Shipping Inc., a company organized and existing under the laws of the Marshall Islands having our registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, The Marshall Islands MH 96960, and being the parent company of the Charterers, irrevocably and unconditionally guarantee to the Owners and their successors, transferees and assigns the due and punctual performance of all present and future obligations of the Charterers under the Bareboat Charter Party.

2.
If at any time, the Charterers default in the performance of any terms, provisions, conditions and obligations under the Bareboat Charter Party, we, Performance Shipping Inc. will as primary obligor and not merely as a surety perform or cause to be performed each and every one of the terms, provisions, conditions and obligations of the Charterer under the Bareboat Charter Party and will pay on demand any sum in connection with non-performance by the Charterers of any of the terms, provisions, conditions and obligations under the Bareboat Charter Party that is not paid when it is due and payable.

3.
Any demand made by the Owners under this Performance Guarantee shall be made in writing signed by an authorized signatory of the Owners and shall specify the default of the Charterers and shall be accompanied by a copy of the notice of such default served on the Charterers by the Owners together with a statement (if any) that the Charterers have failed to remedy such default within any applicable grace period.

4.
The Owners may make more than one demand under this Performance Guarantee

5.
Our obligations under this Performance Guarantee shall not be affected by any act, omission, matter or thing, which, but for this paragraph would reduce, release or prejudice any of our obligations under this Performance Guarantee (without limitation and whether or not known to it or to ourselves), including:

  (a)
any waiver, release or consent granted to, or composition with the Charterers or any other person;


(b)
any incapacity or lack of power, authority or legal personality of or dissolution or change in the legal or beneficial ownership, the members or status of the Charterers or any other person;


(c)
any amendment or variation, however fundamental, to the terms and conditions of the Bareboat Charter Party;

- 1 -

 (d)
any unenforceability, illegality or invalidity of any obligation under the Bareboat Charter Party; or


(e)
any insolvency, bankruptcy, reorganization, reconstruction, rehabilitation, liquidation or amalgamation of the Charterers, or appointment of any receiver, administrative receiver or administrator of any of the Charterers’ assets, or any other similar proceedings.

We hereby waive (a) any right we may have of first requiring the Owners to take any action, obtain any judgment or enforce any other rights against the Charterers before claiming from us under this Performance Guarantee, save that a demand must first be made against the Charterers and (b) to the extent permitted by law, all defences of a surety to which we may be entitled by statute or otherwise, including, protest, presentment, demand for performance, notice of default or non-performance and notice of dishonour.

6.
All payments under this Performance Guarantee shall be made in full without set off or deduction. If any tax or other sum must be deducted from any amount payable by ourselves under this Performance Guarantee, we shall pay such additional amounts as are necessary to ensure that the Owners receive a net amount equal to the full amount they would have received before such deductions.

7.
The provisions of Clause 34 (Notices) of the Bareboat Charter Party shall apply (mutatis mutandis) to this Performance Guarantee as if it were set out in full with references to this Performance Guarantee substituted for references to the Bareboat Charter Party and with references to us as Guarantor substituted for references to the Charterers.

8.
This Performance Guarantee shall be binding upon the undersigned, its successors and assignees and shall inure to the benefit of and be enforceable by the Owners, their successors and assignees. We shall have no right to delegate nor assign any of the obligations or liabilities undertaken in this Performance Guarantee without the prior written consent of the Owners.

9.
If, at any time, any provision of this Performance Guarantee 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 of this Performance Guarantee under the law of that jurisdiction nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.

10.
This Performance Guarantee is intended to create legal relations between us.

11.
We make the following representations and warranties:


(a)
we are a corporation, duly incorporated or formed and validly existing under the laws of our jurisdiction of incorporation or formation;


(b)
the obligations expressed to be assumed by us in this Performance Guarantee are, subject to any general principles of law or equity limiting our obligations which are applicable to creditors generally, legal, valid, binding and enforceable obligations;


(c)
the entry into and performance by us of this Performance Guarantee do not and will not:


(i)
conflict with any law or regulation applicable to us, our constitutional documents or any agreement or instrument binding upon us or any of our assets, subject to any general principles of law limiting our obligations which are applicable to creditors generally; or

- 2 -

 (ii)
constitute a default or termination event (however described) under any agreement or instrument binding on us or any of our assets which would have a material adverse effect on our ability to perform our payment obligations under this Performance Guarantee; and


(d)
subject to any general principles of law limiting our obligations which are applicable to creditors generally, all authorisations necessary for us to enter into and perform this Performance Guarantee have been obtained and are in full force and effect.

12.
Subject to the provisions of this Performance Guarantee, in no circumstances whatsoever shall our liability hereunder exceed the liability of the Charterers under the Bareboat Charter Party.

13.
This Performance Guarantee and any non-contractual obligations arising from or in connection with it shall be governed by and construed in accordance with English law.

14.
Clause 33 (Bimco Dispute Resolution Clause 2017) of the Bareboat Charter Party shall apply to this Performance Guarantee as if it was expressly incorporated in this Performance Guarantee with any necessary modifications.

- 3 -
Yours faithfully,
  
   
PERFORMANCE SHIPPING INC.
  
   
By:
 /s/ Andreas Nikolaos Michalopoulos  
Name: Andreas Nikolaos Michalopoulos
Title: Director / Chief Executive Officer


By our execution of this Performance Guarantee we agree to the terms of this Performance Guarantee and to be bound by it.

Dated:
16 March 2026
  
   
Acknowledged and agreed by:
  
   
SALTER SHIPPING, S.A.
  
   
By:
 /s/ Yoshihide Yamamoto  
Name: Yoshihide Yamamoto
Title: Director / President
 
Dated:
16 March 2026

- 4 -
OWNER PERFORMANCE GUARANTEE
IN RESPECT OF THE BAREBOAT CHARTER PARTY (BARECON 2017)
DATED   March 2026
MV HULL YZJ2024-1624 tbn “P. SAN FRANCISCO”

 16 March 2026

To: SAINT BARTH SHIPPING COMPANY INC.
From: Yawatahama Kisen Co., Ltd. ("Guarantor")

Reference is made to Barecon 2017 Bareboat Charter Party and the rider clauses and annexures thereto, dated 16 March 2026 (as amended from time to time, hereinafter referred to as the "Bareboat Charter Party"), between SAINT BARTH SHIPPING COMPANY INC. (hereinafter referred to as “Charterers”) and SALTER SHIPPING, S.A. (hereinafter referred to as “Owners”).

1.
In consideration of the Charterers entering into the Bareboat Charter Party with the Owners, we, Yawatahama Kisen Co., Ltd. a company organized and existing under the laws of Japan having our registered office at Center Point Building 5F, 3-3-6 Ichibancho , Matuyama-city, Ehime, Japan and being the parent company of the Owners, hereby irrevocably and unconditionally guarantee to the Charterers and their successors, transferees and assigns the due and punctual performance of all present and future obligations of the Owners under the Bareboat Charter Party.

2.
If at any time, the Owners or any of them default in the performance of any terms, provisions, conditions and obligations under the Bareboat Charter Party, we Yawatahama Kisen Co., Ltd. will as primary obligor and not merely a surety perform or cause to be performed each and every one of the terms, provisions, conditions and obligations of the Owners or any of them under the Bareboat Charter Party and will pay on demand any sum in connection with non-performance by the Owners or any of them of any of the terms, provisions, conditions and obligations under the Bareboat Charter Party that is not paid when it is due and payable.

3.
Any demand made by the Charterers under this Performance Guarantee shall be made in writing signed by an authorized signatory of the Charterers and shall specify the default of the Owners and shall be accompanied by a copy of the notice of such default served on the Owners by the Charterers together with a statement (if any) that the Owners have failed to remedy such default within any applicable grace period.

4.
The Charterers may make more than one demand under this Performance Guarantee.

5.
Our obligations under this Performance Guarantee shall not be affected by any act, omission, matter or thing, which, but for this paragraph would reduce, release or prejudice any of our obligations under this Performance Guarantee (without limitation and whether or not known to it or to ourselves), including:


(a)
any waiver, release or consent granted to, or composition with the Owners or any of them or any other person;


(b)
any incapacity or lack of power, authority or legal personality of or dissolution or change in the legal or beneficial ownership, the members or status of the Owners or any of them or any other person;


(c)
any amendment or variation, however fundamental, to the terms and conditions of the Bareboat Charter Party;

- 1 -

 (d)
any unenforceability, illegality or invalidity of any obligation under the Bareboat Charter Party; or


(e)
any insolvency, bankruptcy, reorganization, reconstruction, rehabilitation, liquidation or amalgamation of the Owners or any of them, or appointment of any receiver, administrative receiver or administrator of any of the Owners’ assets, or any other similar proceedings.

We hereby waive (a) any right we may have of first requiring the Charterers to take any action, obtain any judgment or enforce any other rights against the Owners before claiming from us under this Performance Guarantee, save that a demand must first be made against the Owners and (b) to the extent permitted by law, all defences of a surety to which we may be entitled by statute or otherwise, including, protest, presentment, demand for performance, notice of default or non-performance and notice of dishonour.

6.
All payments under this Performance Guarantee shall be made in full without set off or deduction. If any tax or other sum must be deducted from any amount payable by ourselves under this Performance Guarantee, we shall pay such additional amounts as are necessary to ensure that the Charterers receive a net amount equal to the full amount they would have received before such deductions.

7.
The provisions of Clause 34 (Notices) of the Bareboat Charter Party shall apply (mutatis mutandis) to this Performance Guarantee as if it were set out in full with references to this Performance Guarantee substituted for references to the Bareboat Charter Party and with references to us as Guarantor substituted for references to the Owners.

8.
This Performance Guarantee shall be binding upon the undersigned, its successors and assignees and shall inure to the benefit of and be enforceable by the Charterers, their successors and assignees. We shall have no right to delegate nor assign any of the obligations or liabilities undertaken in this Performance Guarantee without the prior written consent of the Charterers.

9.
If, at any time, any provision of this Performance Guarantee 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 of this Performance Guarantee under the law of that jurisdiction nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.

10.
This Performance Guarantee is intended to create legal relations between us.

11.
We make the following representations and warranties:


(a)
we are a corporation, duly incorporated or formed and validly existing under the laws of our jurisdiction of incorporation or formation;


(b)
the obligations expressed to be assumed by us in this Performance Guarantee are, subject to any general principles of law or equity limiting our obligations which are applicable to creditors generally, legal, valid, binding and enforceable obligations;


(c)
the entry into and performance by us of this Performance Guarantee do not and will not:


(i)
conflict with any law or regulation applicable to us, our constitutional documents or any agreement or instrument binding upon us or any of our assets, subject to any general principles of law limiting our obligations which are applicable to creditors generally; or

- 2 -

 (ii)
constitute a default or termination event (however described) under any agreement or instrument binding on us or any of our assets which would have a material adverse effect on our ability to perform our payment obligations under this Performance Guarantee; and


(d)
subject to any general principles of law limiting our obligations which are applicable to creditors generally, all authorisations necessary for us to enter into and perform this Performance Guarantee have been obtained and are in full force and effect.

12.
Subject to the provisions of this Performance Guarantee, in no circumstances whatsoever shall our liability hereunder exceed the liability of the Owners under the Bareboat Charter Party.

13.
This Performance Guarantee and any non-contractual obligations arising from or in connection with it shall be governed by, and construed in accordance with, English law.

14.
Clause 33 (Bimco Dispute Resolution Clause 2017) of the Bareboat Charter Party shall apply to this Performance Guarantee as if it was expressly incorporated in this Performance Guarantee with any necessary modifications.

- 3 -
Yours faithfully,
  
   
Yawatahama Kisen Co., Ltd.
  
   
By:
 /s/ Yoshihide Yamamoto  
Name: Yoshihide Yamamoto
Title: Representative Director


By our execution of this Performance Guarantee we agree to the terms of this Performance Guarantee and to be bound by it.

Dated:
16 March 2026
  
   
Acknowledged and agreed by:
  
   
SAINT BARTH SHIPPING COMPANY INC.
  
   
By:
 /s/ Andreas Nikolaos Michalopoulos  
Name: Andreas Nikolaos Michalopoulos
  
Title: Director / Attorney-in-fact
  
   
Dated:
16 March 2026
  


- 4 -
Exhibit 4.41


1
Dated: 16 March 2026
2
3
SAINT BARTH SHIPPING COMPANY INC. of the Republic of the Marshall Islands guaranteed by
4
Performance Shipping Inc., of the Republic of the Marshall Islands, hereinafter called the “Sellers”, have
5
agreed to sell, and
6
7
SALTER SHIPPING, S.A. of the Republic of Panama, guaranteed by Yawatahama Kisen Co., Ltd. of Japan,
8
hereinafter called the “Buyers”, have agreed to buy:
9
10
Name of vessel: MT “P. SAN FRANCISCO (New building LR1 Tanker “Hull YZJ2024-1624”)
11
12
IMO Number: 1065708
13
14
Classification Society: Lloyds Register
15
16
Class Notation:
17
+100A1, Double Hull Oil and Chemical Tanker, Ship Type 3, CSR, ESP,  S
18
hipRight(CM,ACS(B)),LI,*IWS,SPM4,ECO(P,VECS-L),
19
+LMC,UMS,BWTS,IGS, EGCN(SCR), EGCS(Open, Partial)
20
21
Year of Build: _______________ 2027
22
23
Builder/Yard: Jiangsu New Yangzi Shipbuilding Co., Ltd.
24
25
Flag: Marshall Islands or Liberia or Malta or Portugal if acceptable to the Buyers and their financiers, to
26
be mutually agreed, or any other jurisdiction proposed by the Sellers and approved by the Buyers, such
27
approval not to be unreasonably denied or delayed.
28
29
Place of Registration: __________________
30
31
GT/NT: __________________
32
33
hereinafter called the “Vessel”, on the following terms and conditions:
34
35
This Agreement is subject to, and forms part of, a transaction involving the sale, purchase and the lease financing
36
of the Vessel, pursuant to the BBCP.
37
38
The Vessel is currently under construction under the Building Contract. The Sellers’ obligation to sell and deliver
39
the Vessel to the Buyers under this Agreement is conditional upon the delivery of the Vessel to the Sellers by the
40
Construction Seller pursuant to the terms of the Building Contract.
41
42
Definitions
43
“Banking Days” are days on which banks are open both in the country of the currency stipulated for the Purchase
44
Price in Clause 1 (Purchase Price) and in the place of closing stipulated in Clause 8 (Documentation) and New
45
York, London, Tokyo, Shanghai and Athens.

46
“BBCP” means Bareboat Charter Party dated ___ March 2026 made between the Sellers as the Charterers and
47
the Buyers as the Owners together with any addenda thereto.
48
49
“Builder” means Jiangsu New Yangzi Shipbuilding Co., Ltd., a corporation organized and existing under the laws
50
of the People’s Republic of China, having its registered office at Jingjiang Park of Jiangyin Economic Development
51
Zone, Jingjiang City, Jiangsu Province, the People’s Republic of China.
52
53
“Construction Sellers’ Bank” (or “Builder’s Bank”) means an account (state details of bank account) at the
54
Builder’s Bank.

Copyright © 2012 Norwegian Shipbrokers` Association.  All rights reserved.

55
56
Bank Name:
57
Branch Name:
58
Bank Address:
59
Account name:
60
Account Number:
61
Swift Code:
62
Intermediary Bank:
63
Swift Code:
64
65
"Building Contract" means the ship building contract dated 30th April 2024 made between the Construction Seller
66
and the Sellers as buyer.
67
68
“Buyers’ Bank” means The San-in Godo Bank., Ltd.
69
“Buyers’ Nominated Flag State” means Marshall Islands, Liberian, or Malta flag

70
“Class” means the class notation referred to above.

71
“Classification Society” means the Classification Society referred to above.
72
73
“Charterers” means Charterers as defined in the BBCP.
74
75
“Construction Seller” means together (i) the Builder,  (ii) Jiangsu Yangzijiang Shipbuilding Group Co., Ltd., a
76
corporation organized and existing under the Laws of the People’s Republic of China, having its registered office
77
at No.1 Lianyi Road, Jingjiang Park of Jiangyin Economic Development Zone, Jingjiang City, Jiangsu Province,
78
the People’s Republic of China (hereinafter called “JYS”), and (iii) Jiangsu Yangzi Xinfu Shipbuilding Co., Ltd., a
79
corporation organized and existing under the Laws of the People’s Republic of China, having its registered office
80
at Hongqiao Industrial Park, Taixing City, Jiangsu Province, the People’s Republic of China.
81
82
“Delivery Date” means that date on which the Vessel is delivered by the Sellers to the Buyers under this
83
Agreement.
84
85
“Deposit” shall have the meaning given in Clause 2 (Deposit).

86
“Deposit Holder” means      (state name and location of Deposit Holder) or, if left blank, the Sellers’ Bank,
87
which shall hold and release the Deposit in accordance with this Agreement.

88
“In writing” or “written” means a letter handed over from the Sellers to the Buyers or vice versa, a registered
89
letter, email or telefax.
90
91
"Net Finance Amount” means USD 37,800,000.00 (United States Dollars Thirty-Seven Million Eight-Hundred
92
Thousand).
93
94
“Charterers’ Down Payment” has the meaning ascribed to it in the BBCP.
95
96
“Owners” means Owners as defined in the BBCP.

97
“Parties” means the Sellers and the Buyers.

98
“Purchase Price” means the price for the Vessel as stated in Clause 1 (Purchase Price).

99
“Sellers’ Account” means an account (state details of bank account) at the Sellers’ Bank.
100
101
Bank Name: PIRAEUS BANK S.A.
102
Branch Name: CIB SHIPPING BRANCH(2304)
103
Bank Address: FILONOS 137 & FILELLINON, 18536, PIRAEUS- GREECE

Copyright © 2012 Norwegian Shipbrokers` Association.  All rights reserved.

104
Account name: SAINT BARTH SHIPPING COMPANY INC.
105
Account Number:
106
USD IBAN:
107
Swift Code:
108
Intermediary Bank: BANK OF NEW YORK MELLON U.S.A.
109
Swift Code:
110
111
“Sellers’ Bank” means PIRAEUS BANK S.A.
112
113
 1.
Purchase Price
114
115
The Purchase Price is USD 54,100,000.00 (state currency and amount both in words and figures) (United
116
States Dollars Fifty-Four Million One-Hundred Thousand), of which the amount of USD 16,300,000 shall be
117
set-off at the time of Delivery and shall be deemed as fully satisfying the Charterers’ Down Payment obligation
118
under the BBCP.
119
120
2.
Deposit (clause not applicable)
121
122
As security for the correct fulfilment of this Agreement the Buyers shall lodge a deposit of  % (per cent) or,
123
if left blank,10% (ten per cent), of the Purchase Price (the “Deposit”) in an interest bearing account for the
124
Parties with the Deposit Holder within three (3) Banking Days after the date that:
125
126
(i) this Agreement has been signed by the Parties and exchanged in original or by e-mail or telefax; and
127
128
(ii) the Deposit Holder has confirmed in writing to the Parties that the account has been opened.
129
130
The Deposit shall be released in accordance with joint written instructions of the Parties. Interest, if any,
131
shall be credited to the Buyers. Any fee charged for holding and releasing the Deposit shall be borne
132
equally by the Parties. The Parties shall provide to the Deposit Holder all necessary documentation to open
133
and maintain the account without delay.
134
135
 3.
Payment
136
137
Please see Additional Clause 22 (Payment).
138
139
On delivery of the Vessel, but not later than three (3) Banking Days after the date that Notice of Readiness
140
has been given in accordance with Clause 5 (Time and place of delivery and notices):
141
142
(i)the Deposit shall be released to the Sellers; and
143
144
(ii)the balance of The Purchase Price (less Charterers’ Down Payment as per BBCP clause 49) and all other
145
sums payable on delivery by the Buyers to the Sellers under this Agreement shall be paid in full free of bank
146
charges to the Sellers’ Account. Purchase Price shall be paid into a suspense account with the Sellers’ Bank
147
with conditional payment method set out in a MT 199 SWIFT message not later than two (2) Banking Days
148
prior to Delivery with irrevocable and unconditional instruction to be released to Sellers upon presentation of
149
a fixed copy of the Protocol of Delivery and Acceptance signed by both the Sellers and the Buyers.
150
and all other sums payable on delivery by the Buyers to the Sellers under this Agreement shall be paid in
151
full free of bank charges to the Sellers’ Account.
152
153
 4.
Inspection
154
155
The Buyers confirm that prior to the date of this Agreement they have received (i) a copy of the Building
156
Contract, (ii) full specifications and drawings (including makers list), (iii) up-to-date photographs of the Vessel
157
and (iv) any other information which they requested to enable the Buyers and their advisors to assess the
158
condition of the Vessel, and the Buyers confirm that they hereby accept the technical condition of the Vessel.
159
Therefore,

Copyright © 2012 Norwegian Shipbrokers` Association.  All rights reserved.

160
161
(a)* The Buyers have inspected and accepted the Vessel's classification records. The Buyers have also
162
inspected the Vessel at/in         (state place) on          (state date) and have accepted the Vessel
163
following this inspection and the sale is outright and definite, subject only to the terms and conditions of this
164
Agreement.
165
166
(b)* (i) The Buyers shall have the right to inspect the Vessel’s classification records and declare whether same
167
are accepted or not within              (state date/period).
168
169
(ii) The Sellers shall make the Vessel available for inspection at/in           (state place/range) within
170
(state date/period).
171
172
The Buyers shall undertake the inspection without undue delay to the Vessel. Should the Buyers cause
173
undue delay they shall compensate the Sellers for the losses thereby incurred.
174
175
The Buyers shall inspect the Vessel without opening up and without cost to the Sellers.
176
177
During the inspection, the Vessel’s deck and engine log books shall be made available for examination by
178
the Buyers.
179
180
The sale shall become outright and definite, subject only to the terms and conditions of this Agreement,
181
provided that the Sellers receive written notice of acceptance of the Vessel from the Buyers within seventy-
182
two (72) hours after completion of such inspection or after the date/last day of the period stated in Clause
183
4(b)(ii), whichever is earlier.
184
185
Should the Buyers fail to undertake the inspection as scheduled and/or notice of acceptance of the Vessel’s
186
classification records and/or of the Vessel not be received by the Sellers as aforesaid, the Deposit together
187
with interest earned, if any, shall be released immediately to the Buyers, whereafter this Agreement shall be
188
null and void.
189
190
*4(a) and 4(b) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative
191
4(a) shall apply.
192
193
 5.
Time and place of delivery and notices
194
195
 (a)
The Vessel shall be delivered and taken over as is where is safely afloat alongside a quay or pier at a safe 
196
and accessible berth or anchorage at the shipyard of the Builder in the Sellers’ option.
197
198
Expected time of delivery: the expected date of delivery of the Vessel under the Building Contract tNotice of
199
Readiness shall not be tendered before: XX XXX 2025
200
201
Cancelling Date (see Clauses 5(d) 6(a)(i), and 14): 31 October 2027
202
203 (b)
The Sellers shall keep the Buyers well informed with regards to the actual delivery date of the Vessel of the 
204
Vessel’s itinerary and shall provide the Buyers with twenty (20), fifteen (15), seven (7) and three (3) and
205
three (3) days’ approximate notice and three (3) two (2) Banking Days’ definite notice of the date of delivery.
206
Timing of delivery to be mutually agreed by Sellers and Buyers.
207
When the Vessel is at the place of delivery and physically ready for delivery in accordance with this
208
Agreement, the Sellers shall give the Buyers a written Notice of Readiness for delivery.
209
210
The Buyers hereby confirm that, in accordance with the terms and conditions provided herein, the delivery
211
of the Vessel by the Sellers under this Agreement will take place simultaneously with the delivery of the
212
Vessel to the Sellers under the Building Contract.
213
214
 6.
Divers Inspection / Drydocking (clause not applicable)
215
216
(a)* (i) The Buyers shall have the option at their cost and expense to arrange for an underwater inspection by a

Copyright © 2012 Norwegian Shipbrokers` Association.  All rights reserved.

217
diver approved by the Classification Society prior to the delivery of the Vessel. Such option shall be
218
declared latest nine (9) days prior to the Vessel’s intended date of readiness for delivery as notified by the
219
Sellers pursuant to Clause 5(b) of this Agreement. The Sellers shall at their cost and expense make the
220
Vessel available for such inspection. This inspection shall be carried out without undue delay and in the
221
presence of a Classification Society surveyor arranged for by the Sellers and paid for by the
222
Buyers. The Buyers’ representative(s) shall have the right to be present at the diver’s inspection as observer(s) only
223
without interfering with the work or decisions of the Classification Society surveyor. The extent of the
224
inspection and the conditions under which it is performed shall be to the satisfaction of the Classification
225
Society. If the conditions at the place of delivery are unsuitable for such inspection, the Sellers shall at their
226
cost and expense make the Vessel available at a suitable alternative place near to the delivery port, in
227
which event the Cancelling Date shall be extended by the additional time required for such positioning and
228
the subsequent re-positioning. The Sellers may not tender Notice of Readiness prior to completion of the
229
underwater inspection.
230
231
(ii) If the rudder, propeller, bottom or other underwater parts below the deepest load line are found broken,
232
damaged or defective so as to affect the Vessel’s class, then (1) unless repairs can be carried out afloat to
233
the satisfaction of the Classification Society, the Sellers shall arrange for the Vessel to be drydocked at their
234
expense for inspection by the Classification Society of the Vessel’s underwater parts below the deepest load
235
line, the extent of the inspection being in accordance with the Classification Society’s rules (2) such defects
236
shall be made good by the Sellers at their cost and expense to the satisfaction of the Classification Society
237
without condition/recommendation** and (3) the Sellers shall pay for the underwater inspection and the
238
Classification Society’s attendance.
239
240
Notwithstanding anything to the contrary in this Agreement, if the Classification Society do not require the
241
aforementioned defects to be rectified before the next class drydocking survey, the Sellers shall be entitled
242
to deliver the Vessel with these defects against a deduction from the Purchase Price of the estimated direct
243
cost (of labour and materials) of carrying out the repairs to the satisfaction of the Classification Society,
244
whereafter the Buyers shall have no further rights whatsoever in respect of the defects and/or repairs. The
245
estimated direct cost of the repairs shall be the average of quotes for the repair work obtained from two
246
reputable independent shipyards at or in the vicinity of the port of delivery, one to be obtained by each of the
247
Parties within two (2) Banking Days from the date of the imposition of the condition/recommendation, unless
248
the Parties agree otherwise. Should either of the Parties fail to obtain such a quote within the stipulated time
249
then the quote duly obtained by the other Party shall be the sole basis for the estimate of the direct repair
250
costs. The Sellers may not tender Notice of Readiness prior to such estimate having been established.
251
252
(iii) If the Vessel is to be drydocked pursuant to Clause 6(a)(ii) and no suitable dry-docking facilities are
253
available at the port of delivery, the Sellers shall take the Vessel to a port where suitable drydocking facilities
254
are available, whether within or outside the delivery range as per Clause 5(a). Once drydocking has taken
255
place the Sellers shall deliver the Vessel at a port within the delivery range as per Clause 5(a) which shall,
256
for the purpose of this Clause, become the new port of delivery. In such event the Cancelling Date shall be
257
extended by the additional time required for the drydocking and extra steaming, but limited to a maximum of
258
fourteen (14) days.
259
260
(b)* The Sellers shall place the Vessel in drydock at the port of delivery for inspection by the Classification
261
Society of the Vessel’s underwater parts below the deepest load line, the extent of the inspection being in
262
accordance with the Classification Society’s rules. If the rudder, propeller, bottom or other underwater parts
263
below the deepest load line are found broken, damaged or defective so as to affect the Vessel’s class, such
264
defects shall be made good at the Sellers’ cost and expense to the satisfaction of the Classification Society
265
without condition/recommendation**. In such event the Sellers are also to pay for the costs and expenses in
266
connection with putting the Vessel in and taking her out of drydock, including the drydock dues and the
267
Classification Society’s fees. The Sellers shall also pay for these costs and expenses if parts of the tailshaft
268
system are condemned or found defective or broken so as to affect the Vessel’s class. In all other cases,
269
the Buyers shall pay the aforesaid costs and expenses, due and fees.
270
271
(c)　If the Vessel is drydocked pursuant to Clause 6(a)(ii) or 6(b) above:
272
273
(i) The Classification Society may require survey of the tailshaft system, the extent of the survey being to the

Copyright © 2012 Norwegian Shipbrokers` Association.  All rights reserved.

274
satisfaction of the Classification surveyor. If such survey is not required by the Classification Society, the
275
Buyers shall have the option to require the tailshaft to be drawn and surveyed by the Classification Society,
276
the extent of the survey being in accordance with the Classification Society’s rules for tailshaft survey and
277
consistent with the current stage of the Vessel’s survey cycle. The Buyers shall declare whether they require
278
the tailshaft to be drawn and surveyed not later than by the completion of the inspection by the
279
Classification Society. The drawing and refitting of the tailshaft shall be arranged by the Sellers. Should any
280
parts of the tailshaft system be condemned or found defective so as to affect the Vessel’s class, those parts
281
shall be renewed or made good at the Sellers’ cost and expense to the satisfaction of Classification Society
282
without condition/recommendation**.
283
284
(ii) The costs and expenses relating to the survey of the tailshaft system shall be borne by the Buyers
285
unless the Classification Society requires such survey to be carried out or if parts of the system are
286
condemned or found defective or broken so as to affect the Vessel’s class, in which case the Sellers shall
287
pay these costs and expenses.
288
289
(iii) The Buyers’ representative(s) shall have the right to be present in the drydock, as observer(s) only
290
without interfering with the work or decisions of the Classification Society surveyor.
291
292
(iv) The Buyers shall have the right to have the underwater parts of the Vessel cleaned and painted at their
293
risk, cost and expense without interfering with the Sellers’ or the Classification Society surveyor’s work, if
294
any, and without affecting the Vessel’s timely delivery. If, however, the Buyers’ work in drydock is still in
294
progress when the Sellers have completed the work which the Sellers are required to do, the additional
296
docking time needed to complete the Buyers’ work shall be for the Buyers’ risk, cost and expense. In the
297
event that the Buyers’ work requires such additional time, the Sellers may upon completion of the Sellers’
298
work tender Notice of Readiness for delivery whilst the Vessel is still in drydock and, notwithstanding Clause
299
5(a), the Buyers shall be obliged to take delivery in accordance with Clause 3 (Payment), whether the
300
Vessel is in drydock or not.
301
302
*6(a) and 6(b) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative
303
6(a) shall apply.
304
305
**Notes or memoranda, if any, in the surveyor’s report which are accepted by the Classification Society
306
without condition/recommendation are not to be taken into account.
307
308
 7.    Spares, bunkers and other items
309
310
The Sellers shall deliver the Vessel to the Buyers with everything belonging to her on board and on shore.
311
All spare parts and spare equipment including spare tail-end shaft(s) and/or spare propeller(s)/propeller
312
blade(s), if any, belonging to the Vessel at the time of inspection delivery used or unused, whether on board
313
or not shall become remain the Buyers’ Sellers’ property. but spares on order are excluded. Forwarding
314
charges, if any, shall be for the Buyers’ account. The Sellers are not required to replace spare parts
315
including spare tail-end shaft(s) and spare propeller(s)/propeller blade(s) which are taken out of spare and
316
used as replacement prior to delivery, but the replaced items shall be the property of the Buyers. Unused
317
stores and provisions shall be included in the sale and be taken over by the Buyers without extra payment.
318
319
Library and forms exclusively for use in the Sellers’ vessel(s) and captain’s, officers’ and crew’s personal
320
belongings including the slop chest are excluded from the sale without compensation, as well as the
321
following additional items:     (include list)
322
323
Items on board which are on hire or owned by third parties, listed as follows, are excluded from the sale
324
without compensation:    (include list)
325
326
Items on board at the time of inspection delivery which are on hire or owned by third parties, not listed
327
above, shall be replaced or procured by remain with the Sellers prior to delivery at their cost and expense.
328
Any remaining bunkers and unused lubricating and hydraulic oils and greases in storage tanks and
329
unopened drums shall remain the property of the Sellers and shall not form part of the sale.
330

Copyright © 2012 Norwegian Shipbrokers` Association.  All rights reserved.

331
The Buyers shall take over remaining bunkers and unused lubricating and hydraulic oils and greases in storage tanks and unopened drums and pay either:
332
storage tanks and unopened drums and pay either:
333
334
(a)* the actual net price (excluding barging expenses) as evidenced by invoices or vouchers; or
335
336
(b)* the current net market price (excluding barging expenses) at the port and date of delivery of Vessel or, if
337
unavailable, at the nearest bunkering port,
338
339
for the quantities taken over.
340
341
Payment under this Clause shall be made at the same time and place and in the same currency as the
342
Purchase Price.
343
344
“inspection” in this Clause 7, shall mean the Buyers’ inspection according to Clause 4(a) or 4(b)
345
(inspection), if applicable. If the Vessel is taken over without inspection, the date of this Agreement shall be
346
the relevant date.
347
348
*(a) and (b) are alternatives, delete whichever is not applicable. In the absence of deletions alternative (a)
349
shall apply.
350
351
 8.    Documentation
352
353
The place of closing: Virtual closing or physically at the Builder, to be confirmed.
354
355
In exchange for payment of the Purchase Price, Sellers shall furnish the Buyers with delivery documents
356
reasonably required by the Buyers. These documents shall be listed in an addendum hereto, namely
357
“Addendum no 1: List of delivery documents”, and regarding such documents that are not available prior to
358
the closing, Sellers shall furnish the Buyers with the final draft of such documents no later than three (3)
359
Banking Days prior to the date of closing for the purpose of carrying out the closing smoothly.
360
361
(a)* In exchange for payment of the Purchase Price the Sellers shall provide the Buyers with the following
362
 delivery documents:
363
364
(i) Legal Bill(s) of Sale in a form recordable in the Buyers’ Nominated Flag State, transferring title of the
365
Vessel and stating that the Vessel is free from all mortgages, encumbrances and maritime liens or any other
366
debts whatsoever, duly notarially attested and legalized or apostilled, as required by the Buyers’ Nominated
367
Flag State;
368
369
(ii) Evidence that all necessary corporate, shareholder and other action has been taken by the Sellers to
370
authorise the execution, delivery and performance of this Agreement;
371
372
(iii) Power of Attorney of the Sellers appointing one or more representatives to act on behalf of the Sellers in
373
the performance of this Agreement, duly notarially attested and legalized or apostilled (as appropriate);
374
375
(iv) Certificate or Transcript of Registry issued by the competent authorities of the flag state on the date of
376
delivery evidencing the Sellers’ ownership of the Vessel and that the Vessel is free from registered
377
encumbrances and mortgages, to be faxed or e-mailed by such authority to the closing meeting with the
378
original to be sent to the Buyers as soon as possible after delivery of the Vessel;
379
380
(v) Declaration of Class or (depending on the Classification Society) a Class Maintenance Certificate issued
381
within three (3) Banking Days prior to delivery confirming that the Vessel is in Class free of
382
condition/recommendation;
383
384
(vi) Certificate of Deletion of the Vessel from the Vessel’s registry or other official evidence of deletion
385
appropriate to the Vessel’s registry at the time of delivery, or, in the event that the registry does not as a
386
matter of practice issue such documentation immediately, a written undertaking by the Sellers to effect
387
deletion from the Vessel’s registry forthwith and provide a certificate or other official evidence of deletion to

Copyright © 2012 Norwegian Shipbrokers` Association.  All rights reserved.

388
the Buyers promptly and latest within four(4) weeks after the Purchase Price has been paid and the Vessel
389
has been delivered;
390

391
(vii) A copy of the Vessel’s Continuous Synopsis Record certifying the date on which the Vessel ceased to
392
be registered with the Vessel’s registry, or, in the event that the registry does not as a matter of practice
393
issue such certificate immediately, a written undertaking from the Sellers to provide the copy of this
394
certificate promptly upon it being issued together with evidence of submission by the Sellers of a duly
395
executed Form 2 stating the date on which the Vessel shall cease to be registered with the Vessel’s registry;
396

397
(viii) Commercial Invoice for the Vessel;
398

399
(ix) Commercial Invoice(s) for bunkers, lubricating and hydraulic oils and greases;
400

401
(x) A copy of the Sellers’ letter to their satellite communication provider cancelling the Vessel’s
402
communications contract which is to be sent immediately after delivery of the Vessel;
403

404
(xi) Any additional documents as may reasonably be required by the competent authorities of the Buyers’
405
Nominated Flag State for the purpose of registering the Vessel, provided the Buyers notify the Sellers of any
406
such documents as soon as possible after the date of this Agreement; and
407

408
(xii) The Sellers’ letter of confirmation that to the best of their knowledge, the Vessel is not black listed by
409
 any nation or international organisation.
410

411 (b)
At the time of delivery the Buyers shall provide the Sellers with:
412

413
(i) Evidence that all necessary corporate, shareholder and other action has been taken by the Buyers to
414
authorise the execution, delivery and performance of this Agreement; and
415

416
ii) Power of Attorney of the Buyers appointing one or more representatives to act on behalf of the Buyers in
417
( the performance of this Agreement, duly notarially attested and legalised or apostilled (as appropriate).
418

419
 (c)
If any of the documents listed in Sub-clauses (a) and (b) above are not in the English language they shall be 
420
accompanied by an English translation by an authorised translator or certified by a lawyer qualified to
421
practice in the country of the translated language.
422

423
 (d)
The Parties shall to the extent possible exchange copies, drafts or samples of the documents listed in Sub-clause (a) and Sub-
424
clause (b) above for review and comment by the other party not later than (state number
425
of days), or if left blank, nine (9) days prior to the Vessel’s intended date of readiness for delivery as notified
426
by the Sellers pursuant to Clause 5(b) of this Agreement.
427

428 (e)
Concurrent with the exchange of documents in Sub-clause (a) and Sub-clause (b) above, the Sellers shall
429
also hand to the Buyers the classification certificate(s) as well as all plans, drawings and manuals,
430
(excluding ISM/ISPS manuals), which are on board the Vessel. Other certificates which are on board the
431
Vessel shall also be handed over to the Buyers unless the Sellers are required to retain same, in which case
432
the Buyers have the right to take copies.
433

434 (f)
Other technical documentation which may be in the Sellers’ possession shall promptly after delivery be
435
forwarded to the Buyers at their expense, if they so request. The Sellers may keep the Vessel’s log books
436
but the Buyers have the right to take copies of same.
437

438 (g)
The Parties shall sign and deliver to each other a Protocol of Delivery and Acceptance confirming the date
439
and time of delivery of the Vessel from the Sellers to the Buyers.
440

441 9.
Encumbrances
442

443
The Sellers warrant that the Vessel, at the time of delivery, is free from all charters, encumbrances,
444
mortgages and maritime liens or any other debts whatsoever, and is not subject to Port State or other

Copyright © 2012 Norwegian Shipbrokers` Association.  All rights reserved.

445
administrative detentions. The Sellers hereby undertake to indemnify the Buyers against all consequences
446
of claims made against the Vessel which have been incurred prior to the time of delivery.
447

448 10.
Taxes, fees and expenses
449

450
Any cost and fee for initial registration of title to the Vessel and legal documentation cost for documenting
451
the lease and security to be Charterer`s account; however such cost not to exceed USD15,000.
452
Any tonnages taxes for Owners` flag and Charterers` flag to be Charterers account.
453
Any taxes, fees and expenses in connection with the purchase and registration in the Buyers’ Nominated
454
Flag State shall be for the Buyers’ account, whereas similar charges in connection with the closing of the
455
Sellers’ register shall be for the Sellers’ account.
456

457
 11.
Condition of delivery
458

459
The Vessel with everything belonging to her shall be at the Sellers’ risk and expense until she is delivered to
460
the Buyers, but subject to the terms and conditions of this Agreement she shall be delivered and taken over
461
“as is where is” she was at the time of inspection delivery, fair wear and tear excepted. The Vessel shall be
462
delivered to the Buyers only once she is in all respects ready in accordance with the Building Contract.
463

464
However, the Vessel shall be delivered free of cargo and free of stowaways with her Class maintained
465
without condition/recommendation*, free of average damage affecting the Vessel’s class, and with her
466
classification certificates and national certificates, as well as all other certificates the Vessel had at the time
467
of inspection, valid and unextended without condition/recommendation* by the Classification Society or the
468
relevant authorities at the time of delivery.
469

470
“Inspection” in this Clause 11, shall mean the Buyers’ inspection according to Clause 4(a) or 4(b)
471
(Inspections), if applicable. If the Vessel is taken over without inspection, the date of this Agreement shall be
472
the relevant date.
473

474
*Notes and memoranda, if any, in the surveyor’s report which are accepted by the Classification Society
475
 without condition/recommendation are not to be taken into account.
476

477
 12.
Name/markings (clause not applicable)
478

479
Upon delivery the Buyers undertake to change the name of the Vessel and alter funnel markings.
480

481 13.
Buyers’ default
482

483
Should the Deposit not be lodged in accordance with Clause 2 (Deposit), the Sellers have the right to
484
cancel this Agreement, and they shall be entitled to claim compensation for their losses and for all expenses
485
incurred together with interest.
486

487
Should the Purchase Price not be paid in accordance with Additional Clause 322 (Payment), the Sellers
488
have the right to cancel this Agreement, and the Buyers shall make due compensation to the Sellers for
489
their direct and documented losses and expenses.in which case the Deposit together with interest earned, if
490
any, shall be released to the Sellers. If the Deposit does not cover their loss, the Sellers shall be entitled to
491
claim further compensation for their losses and for all expenses incurred together with interest.
492

493
 14.
Sellers’ default
494

495
Should the Sellers fail to give Notice of Readiness in accordance with Clause 5(b) or fail to be ready to
496
validly complete a legal transfer by the Cancelling Date the Buyers shall have the option of cancelling this
497
Agreement. To this purpose, the Sellers shall advise Buyers the relevant extension of the Cancelling Date
498
and request them to declare within three (3) Banking Days whether they accept such extension or cancel
499
this Agreement. Failure of the Buyers to reply to the said notice of the Sellers shall be deemed an
500
acceptance by the Buyers of the extension of the Cancelling Date as proposed by Sellers. If after Notice of
501
Readiness has been given but before the Buyers have taken delivery, the Vessel ceases to be physically

Copyright © 2012 Norwegian Shipbrokers` Association.  All rights reserved.

502
ready for delivery and is not made physically ready again by the Cancelling Date and new Notice of
503
Readiness given, the Buyers shall retain their option to cancel. In the event that the Buyers elect to cancel
504
this Agreement, the Deposit together with interest earned, if any, shall be released to them immediately.
505

506
Should the Sellers fail to give Notice of Readiness by the Cancelling Date as may be extended or fail to be
507
ready to validly complete a legal transfer as aforesaid they shall make due compensation to the Buyers in
508
the amount of USD 30,000 plus any documented reasonable legal costs (if any) of the Buyers for the initial
509
registration of title to the Vessel and legal documentation cost for documenting the lease and security such
510
costs not to exceed USD15,000 for their loss and for all expenses together with interest if their failure is due
511
to proven negligence and whether or not the Buyers cancel this Agreement.
512

513
If the Building Contract is cancelled, rescinded or otherwise terminated for any reason whatsoever or the
514
Vessel is not delivered by the Construction Seller to the Sellers under the Building Contractor is rejected by
515
the Sellers for any reason whatsoever, then the Sellers shall give written notice thereof to the Buyers and
516
upon Buyers’ receipt of such notice, this Agreement shall cease to have effect without any liability on the
517
parties hereto and the parties shall be released from all obligations, liabilities and responsibilities hereunder,
518
save for the obligation of the Sellers to pay to the Buyers a termination fee in the sum of USD30,000 plus any
519
documented reasonable legal costs (if any) of the Buyers for the initial registration of title to the Vessel and
520
legal documentation cost for documenting the lease and security such costs not to exceed USD15,000.
521

522

523
 15.
Buyers’ representatives (clause not applicable)
524

525
After this Agreement has been signed by the Parties and the Deposit has been lodged, the Buyers have the
526
right to place two (2) representatives on board the Vessel at their sole risk and expense.
527

528
These representatives are on board for the purpose of familiarization and in the capacity of observers only,
529
and they shall not interfere in any respect with the operation of the Vessel. The Buyers and the Buyers’
530
representatives shall sign the Sellers’ P&I Club’s standard letter of indemnity prior to their embarkation.
531

532
 16.
Law and Arbitration
533

534
 (a)*
This Agreement and all non contractual obligations arising out of or in connection with it shall be governed
535
by and construed in accordance with English law and any dispute arising out of or in connection with this
536
Agreement shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any
537
statutory modification or re- enactment thereof save to the extent necessary to give effect to the provisions
538
of this Clause.
539

540
The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA)
541
Terms current at the time when the arbitration proceedings are commenced.
542

543
The reference shall be to three arbitrators. A party wishing to refer a dispute to arbitration shall appoint its
544
arbitrator and send notice of such appointment in writing to the other party requiring the other party to
545
appoint its own arbitrator within fourteen (14) calendar days of that notice and stating that it will appoint its
546
arbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has
547
done so within the fourteen (14) days specified. If the other party does not appoint its own arbitrator and
548
give notice that it has done so within the fourteen (14) days specified, the party referring a dispute to
549
arbitration may, without the requirement of any further prior notice to the other party, appoint its arbitrator as
550
sole arbitrator and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on
551
both Parties as if the sole arbitrator had been appointed by agreement.
552

553
In case where neither the claim nor any counterclaim exceeds the sum of US$100,000 the arbitration shall
554
be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration
555
proceedings are commenced.
556

557
 (b)*
This Agreement shall be governed by and construed in accordance with Title 9 of the United States Code
558
and the substantive law (not including the choice of law rules) of the State of New York and any dispute

Copyright © 2012 Norwegian Shipbrokers` Association.  All rights reserved.

559
arising out of or in connection with this Agreement shall be referred to three (3) persons at New York, one to
560
be appointed by each of the parties hereto, and the third by the two so chosen; their decision or that of any
561
two of them shall be final, and for the purposes of enforcing any award, judgment may be entered on an
562
award by any court of competent jurisdiction. The proceedings shall be conducted in accordance with the
563
rules of the Society of Maritime Arbitrators, Inc.
564

565
In cases where neither the claim nor any counterclaim exceeds the sum of US$100,000 the arbitration shall
566
be conducted in accordance with the Shortened Arbitration Procedure of the Society of Maritime Arbitrators,
567
Inc.
568

569
 (C)
This Agreement shall be governed by and construed in accordance with the laws of         (state place)
570
and any dispute arising out of or in connection with this Agreement shall be referred to arbitration at (state
571
place), subject to the procedures applicable there.
572

573
*16(a), 16(b) and 16(c) are alternatives; delete whichever is not applicable. In the absence of deletions,
574
alternative 16(a) shall apply.
575

576
 17.
Notices
577

578
All notices to be provided under this Agreement shall be in writing.
579

580
Contact details for recipients of notices are as follows:
581

582
For the Buyers:
583
Yawatahama Kisen Co., Ltd.
584
3-3-6 Ichibancho, 5 FL, Matuyama-shi, Ehime, Japan
585
Email: yu
586
Attention: Yukina Yamamoto / Matthew Yamamasu
587

588
For the Sellers:
589
SAINT BARTH SHIPPING COMPANY INC.
590
c/o PERFORMANCE SHIPPING MANAGEMENT INC.
591
373 Syngrou Ave. & 2-4 Ymittou str.,
592
17564, Palaio Faliro, Athens,
593
Greece
594
Email:
595
Attention: Mr. Andreas Nikolaos Michalopoulos
596

597
 18.
Entire Agreement
598
599
The terms of this Agreement and the terms of the BBCP comprise the entire agreement between the Buyers
600
and the Sellers in relation to the sale and purchase of the Vessel and supersede all previous agreements
601
whether oral or written between the Buyers and the Sellers in relation hereto.
602
The written terms of this Agreement comprise the entire agreement between the Buyers and the Sellers in
603
relation to the sale and purchase of the Vessel and supersede all previous agreements whether oral or
604
written between the Parties in relation thereto.
605

606
Each of the Parties acknowledges that in entering into this Agreement it has not relied on and shall have no
607
right or remedy in respect of any statement, representation, assurance or warranty (whether or not made
608
  negligently) other than as is expressly set out in this Agreement.
609

610
Any terms implied into this Agreement by any applicable statute or law are hereby excluded to the extent
611
 that such exclusion can legally be made. Nothing in this Clause shall limit or exclude any liability for fraud.
612

613
 19.
Delivery under BBCP
614

615
The Buyers (as Owners) and the Sellers (as Charterers) have entered into the BBCP whereby the Vessel is

Copyright © 2012 Norwegian Shipbrokers` Association.  All rights reserved.

616
to be chartered on delivery for such period and on such terms and conditions more particularly described in
617
the BBCP. The Parties acknowledge that the Sellers’ obligation to sell and the Buyers’ obligation to
618
purchase the Vessel under this Agreement is conditional upon the delivery of the Vessel under and pursuant
619
to the MOA and the simultaneous delivery of the Vessel by the Buyers (as Owners) to the Sellers (as
620
Charterers) under the BBCP. If any event occurs before delivery of the Vessel under this Agreement that
621
renders the MOA or the BBCP null and void or to be terminated for any reason whatsoever, this Agreement
622
shall be null and void and each Party shall be discharged and released from any and all of its respective
623
obligations under this Agreement.
624

625
 20.
Assignment
626

627
Neither party shall be entitled to assign or transfer its rights under this Agreement without the prior written
628
consent of the other.
629

630
 21.
Sanctions
631

632
 (a)
In this Agreement, the following provisions shall apply where any applicable sanction, prohibition or 
633
restriction is imposed on any specified persons, entities or bodies including the designation of any specified
634
vessels or fleets under United Nations Resolutions or trade or economic applicable sanctions, laws or
635
regulations of the European Union or United States of America or the United Kingdom or Japan.
636

637
 (b)
The Sellers hereby warrant that at the date of entering into this Agreement and continuing until the Vessel
638
has been delivered from the Sellers to the Buyers in accordance with this Agreement:
639

640
(i) none of the Sellers, their directors, officers, and employees is subject to any of the sanctions,
641
prohibitions, restrictions or designation referred to in sub-clause (a);
642

643
(ii) the Sellers are selling as principals and not as agent, trustee or nominee of any person with whom
644
transactions are prohibited or restricted under sub-clause (a);
645

646
(iii) the Vessel is not a designated vessel under any of the sanctions, prohibitions, restrictions or designation
647
referred to in sub-clause (a);
648

649
 (c)
The Buyers hereby warrant that at the date of entering into this Agreement and continuing until the Vessel
650
has been delivered from the Sellers to the Buyers in accordance with this Agreement:
651

652
(i) none of the Buyers, their directors, officers, employees and agents is subject to any of the sanctions,
653
prohibitions, restrictions or designation referred to in sub-clause (a);
654

655
(ii) the Buyers are purchasing as principals and not as agent, trustee or nominee of any person with whom
656
transactions are prohibited or restricted under sub-clause (a).
657

658
(iii) The Buyers warrant that the proceeds of the Purchase Price have not been derived from any activities
659
which are in breach of sanctions or from a person or entity subject to or targeted by sanctions.
660

661
 22.
Payment
662

663
 (a)
At least two (2) Banking Days (Japan, USA, New York, United Kingdom, Athens time) prior to the scheduled
664
Delivery Date, the Net Finance Amount ("USD 37,800,000") (following the set-off of the Purchase Price
665
against the Charterers’ Down Payment) shall be remitted to the account of the Sellers, or the Construction
666
Seller (or the Builder) as the case may be, as notified in writing by the Sellers to the Buyers. The method of
667
payment the Net Finance Amount shall be agreed among the Buyers, Sellers, Sellers’ Bank and Buyer`s
668
Bank, or as the case may be the Builder’s bank, by using corresponding MT103 accompanied by MT199
669
SWIFT with quadripartite agreement or a similar mutually agreed method (e.g. an Escrow Agreement with an
670
international or Japanese law firm acting as Escrow Agent on behalf of Buyers and Sellers, in which case
671
the Escrow Agent’s costs not to exceed USD 10,000 and to be split 50/50 between the Sellers and
672
the Buyers).

Copyright © 2012 Norwegian Shipbrokers` Association.  All rights reserved.

673
674 (b)
The Sellers shall provide remittance notice (which shall be sent by email and shall detail the delivery date,
675
the amount to be remitted and request remittance in accordance with this Clause 22) to the Buyers five (5)
676
Banking Days prior to the scheduled delivery date. The Buyers to request their financier to remit the fund
677
only after the remittance notice has been
678

679
 (c)
In case of using a suspense account or Escrow Account, the Buyers shall remit the Net Finance Amount two
680
(2) Banking Days prior to the scheduled Delivery Date and such funds to be released only by instruction
681
from the Buyers after confirming Protocol of Delivery and Acceptance has been signed by the Sellers and
682
Buyers.
683

684
 (d)
USD 37,800,000*(1 month CME TERM SOFR at the time of remittance + 2.0%)/360) per day (the
685
“Remittance Interest Cost”) from the day of remittance of the fund till the actual Delivery Date to be covered
686
by Sellers/Charterers.
687

688
Any charge from the Buyers` Bank including intermediate bank(s), if any, incurred for remitting shall be for
689
Buyers` account.
690

691
Any fees including holding/lifting charges requested by the Sellers` Bank including intermediate bank(s),
692
shall be for Sellers` account.
693

694
Any fees including holding/lifting charges requested by the Builders` Bank including intermediate bank(s),
695
shall be for Builders` account.
696

697
 23.
Warranty of Quality
698
On the delivery of the Vessel under this Agreement, the Sellers undertake to assign to the Buyers all their
699
rights, interest and title under the relevant article of the Building Contract dealing with the Vessel's so called
700
warranty of quality, such assignment being subject to the consent of the Construction Seller.
701

702
 24.
Counterparts
703
This Agreement may be executed in any number of counterparts and any single
704
counterpart or set of counterparts signed, in either case, by all the parties hereto shall be deemed to constitute a full and original
705
agreement for all purposes.
706

707


 
SALTER SHIPPING, S.A.
Signature (Buyers)
/s/ Yoshihide Yamamoto
 
Name: Yoshihide Yamamoto
Title: Director/ President
  
SAINT BARTH SHIPPING COMPANY INC.
Signature (Sellers)
/s/ Andreas Nikolaos Michalopoulos
 
Name: Andreas Nikolaos Michalopoulos
Title: Director/ Attorney-in-fact
 
Yawatahama Kisen Co., Ltd.
Signature (Guarantor)
/s/ Yoshihide Yamamoto
 
Name: Yoshihide Yamamoto
Title: Representative Director
  
PERFORMANCE SHIPPING INC.
Signature (Guarantor)
/s/ Andreas Nikolaos Michalopoulos
 
Name: Andreas Nikolaos Michalopoulos
Title: Director/ Chief Executive Officer

Copyright © 2012 Norwegian Shipbrokers` Association.  All rights reserved.


Exhibit 4.42

1
Dated: 9th February 2026

2
Maloelap Shipping Company Inc., incorporated in the Marshall Islands with its registered office at: Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 (Name of sellers), hereinafter called the “Sellers”, have agreed to sell, and

3
Sohon Shipping Limited, incorporated in the Marshall Islands with its registered office at: Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH 96960 (Name of buyers), or its guaranteed nominee hereinafter called collectively the “Buyers”, who are to remain at all times jointly and severally fully responsible for the prompt and timely fulfillment of all Buyers’ responsibilities, undertakings, obligations and liabilities hereunder have agreed to buy:

4
Name of vessel: P. Sophia

5
IMO Number: 9414034

6
Classification Society: ABS

7
Class Notation: (+)A1, Oil Carrier, ESP, (E.), (+)AMS, (+)ACCU, CSR, AB-CM, RW, VEC-L, BWT, GP, RES, TCM, CRC. Service Restriction: Unrestricted Service.

8
Year of Build: 2009 Builder/Yard: Hyundai Heavy Industries Co Ltd, South Korea

9
Flag: Marshall Islands Place of Registration: Majuro GT/NT: 57,017 / 32,411

10
hereinafter called the “Vessel”, on the following terms and conditions:

11
Definitions

12
“Agreement” means this Memorandum of Agreement, as it may be amended, annexed, varied or supplemented from time to time.
“Banking Days" are days on which banks are open both in the country of the currency stipulated for
13
the Purchase Price in Clause 1 (Purchase Price) and in the place of closing stipulated in Clause 8
14
(Documentation) and the place where the Deposit is being held, the place of delivery and Greece, Singapore, China, Marshall Islands and Buyers’ Nominated Flag State. (add additional jurisdictions as appropriate).

15
“Buyers’ Nominated Flag State” means to be advised (state flag state).

16
“Class" means the class notation referred to above.

17
“Classification Society" means the Society referred to above.

18
"Deposit" shall have the meaning given in Clause 2 (Deposit)

19
“Deposit Holder” "Escrow Agent" means Cambell Johnston Clark, Singapore, 83 Amoy Street 03-01 Singapore 069902 (state name and location of Deposit Holder) or, if left blank, the
20
Sellers’ Bank, which shall hold and release the Deposit the balance of the Purchase Price and any other charges and money and sums whatsoever payable on delivery by the Buyers (including but not limited to bunkers, lub oils and greases) in accordance with this Agreement and the Escrow Agreement. "Escrow Agreement" means an escrow agreement in respect of the payment of the Purchase Price and any other amounts payable in accordance with this Agreement, and their release from the Escrow Agent Account to be made between the Escrow Agent, the Sellers and the Buyers. "Escrow Agent Account" means the account indicated in the Escrow Agreement held by the Escrow Agent with the Escrow Agent Bank.

"Escrow Agent Bank" means the bank indicated in the Escrow Agreement. 
.

Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.

21
“In writing" or "written" means a letter handed over from the Sellers to the Buyers or vice versa, a
22
registered letter,or e-mail or telefax.

23
“Parties” means the Sellers and the Buyers.

24
“Purchase Price” means the price for the Vessel as stated in Clause 1 (Purchase Price).

25
“Sellers’ Account” means an account in the name of the Sellers or in the name of Sellers’ parent company (Performance Shipping Inc.) (state details of bank account) at the Sellers’ Bank.

26
“Sellers’ Bank” means (state name of bank, branch and details) or, if left blank, the bank
27
notified by the Sellers to the Buyers and the Escrow Agent for receipt of the Deposit, the  balance of the Purchase Price and any money and sums whatsoever payable on delivery by the Buyers in accordance with this Agreement.

28
 1.
Purchase Price

29
The Purchase Price is $35,650,000 (United States Dollars thirty-five million six hundred fifty thousand)state currency and amount both in words and figures).

30
 2.
Deposit

31
As security for the correct fulfilment of this Agreement the Buyers shall lodge a deposit of
32
15 % (fifteen per cent) or, if left blank, 10% (ten per cent), of the Purchase Price (the
33
“Deposit”) in an interest bearing interest-bearing (if available) escrow  account for the Parties with the Escrow Agent Deposit Holder within three (3)
34
Banking Days after the date that:

35
(i) this Agreement has been signed by the Parties and exchanged in original or by 36e-mail or telefax; and

37
(ii) the Escrow Agreement has been signed by the Parties and the Escrow Agent and exchanged in original or by email, and Escrow Agent Agent has confirmed Deposit Holder has confirmed in writing to all the Parties that the Escrow Agent account has been opened and is ready to receive the funds. has been
38          opened.

39
The Deposit shall be released in accordance with joint written instructions of the Parties.
40
Interest, if any, shall be credited to the Buyers. Any fee charged for holding and releasing the
41
Deposit shall be borne equally by the Parties. The Parties shall provide to the Escrow Agent Deposit Holder
42
all necessary documentation that may be requested by the latter, (including but not limited to KYC
requirements), promptly and in any case within five (5) Banking Days after completion of signing of and exchanging this Agreement by PDF form.. to open and maintain the account without delay.

43 3. Payment

44
On delivery of the Vessel, but not later than three (3) Banking Days after the date that Notice of
45
Readiness has been given in accordance with Clause 5 (Time and place of delivery and
46
notices):

47
(i) the Deposit shall be released to the Sellers; and credited to the Sellers' Account as per this Agreement and the Escrow Agreement in immediately available funds, net, free of any bank charges;
 
48
(ii) the balance of the Purchase Price and all other sums charges and money whatsoever  payable on delivery by the Buyers
49
to the Sellers under this Agreement including but not limited to the bunkers and lubricating oils and greases remaining on board at the time of Vessel’s delivery (collectively the "Balance"), held in the Escrow Agent’s Account shall be released in full in immediately available funds, net,
 shall be paid in full free of bank charges to the
50
Sellers’ Account in accordance with this Agreement and the Escrow Agreement.

Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.

The Buyers shall remit the Balance to the Sellers in accordance with this Agreement and the Escrow Agreement by telegraphic transfer to the Escrow Agent’s Account held by the Escrow Agent at least two (2) Banking Days prior to the intended date of delivery of the Vessel as per the three (3) days approximate Notice of Readiness (see Clause 5b). The Balance shall remain in the name and to the order of the Buyers or, after the execution of an addendum, in the name and to the order of Buyers' financiers and will be released in accordance with the terms of this Agreement and the Escrow Agreement.

The Deposit and the Balance shall be irrevocably and unconditionally released to the Sellers’ account in accordance with the terms of this Agreement and the Escrow Agreement against the Seller’s presentation and handing over to the Escrow Agent of:

(a) Protocol of Delivery and Acceptance executed but not timed, by both Sellers’ and Buyers’ authorised representatives; and

(b) duly executed written irrevocable instructions of the Buyers’ authorised representatives to proceed to the Deposit and Balancerelease.Anysurplus money afterthereleaseof the Deposit and the Balanceshallbe remitted back to the Buyers in accordance with the provisions of the Escrow Agreement. In exchange of the delivery documents as agreed in the Addendum and as per Clause 8 of this Agreement, and upon:

1. Execution and submission to the Escrow Agent of the duly executed irrevocable and unconditional release instructions for the Deposit and the Balance; and

2. Confirmation from the Escrow Agent that the Deposit and Balance have been remitted to the Sellers Account accompanied by the SWIFT copy (or copies, as the case may be) issued by the Escrow Agent’s Bank concerning the payment of the Deposit and the Balance, the Protocol of Delivery and Acceptance will be timed and dated and the Vessel will immediately be legally and physically delivered to the Buyers; relevant procedure to be described in a closing memo which to be agreed by the Sellers, the Buyers and the Deposit Holder not later than five (5) Banking Days prior to the intended date of delivery of the Vessel.

Notice of Readiness can be serviced anytime, including non-Banking Days.

The Escrow Agent’s fee for holding and releasing the Deposit and the Balance according to this Agreement and the Escrow Agreement shall be equally shared between the Sellers and the Buyers.

Any charges or fees requested by the Escrow Agent for amending the Escrow Agreement shall be borne by the Party that requested such amendment.

51 4. Inspection
 
52
(a)* The Buyers have inspected and accepted the Vessel's classification records . The Buyers waived the Vessel's physical inspection and have thus accepted the Vessel, therefore the sale is outright and definite, subject only to the terms and conditions of this Agreement.
53
have also inspected the Vessel at/in (state place) on (state date) and have
54          accepted the Vessel following this inspection and the sale is outright and definite, subject only
55          to the terms and conditions of this Agreement.

56          (b)* The Buyers shall have the right to inspect the Vessel's classification records and declare
57          whether same are accepted or not within (state date/period).

58          The Sellers shall make the Vessel available for inspection at/in (state place/range) within
59          (state date/period).

60          The Buyers shall undertake the inspection without undue delay to the Vessel. Should the
61          Buyers cause undue delay they shall compensate the Sellers for the losses thereby incurred.

62          The Buyers shall inspect the Vessel without opening up and without cost to the Sellers.

63          During the inspection, the Vessel's deck and engine log books shall be made available for

Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.

64          examination by the Buyers.

65          The sale shall become outright and definite, subject only to the terms and conditions of this
66          Agreement, provided that the Sellers receive written notice of acceptance of the Vessel from
67          the Buyers within seventy-two (72) hours after completion of such inspection or after the
68          date/last day of the period stated in Line 59, whichever is earlier.

69          Should the Buyers fail to undertake the inspection as scheduled and/or notice of acceptance of
70          the Vessel's classification records and/or of the Vessel not be received by the Sellers as
71          aforesaid, the Deposit together with interest earned, if any, shall be released immediately to the
72          Buyers, whereafter this Agreement shall be null and void.

73          *4(a) and 4(b) are alternatives; delete whichever is not applicable. In the absence of deletions,
74          alternative 4(a) shall apply.

75 5. Time and place of delivery and notices
 
76
(a) The Vessel shall be delivered and taken over safely afloat at a safe and accessible berth or
77
anchorage at/in arriving, passing or DLOSP 1 SP AG/JAPAN RGE (excluding India) , UKC, EUROMED NOT EAST OF BUT INCL MALTA, PANAMA (EAST AND WEST), CARIBS INCL. BAHAMAS in the Seller's option.

But in case current charterers redeliver arriving and passing or DLSOP 1 USWC, USG, ECC, USAC (according to current Charterparty redelivery range) to let Sellers relocate the Vessel ballast to bring Vessel to the delivery range place mutually agreed by the Sellers and the Buyers. In such case the cancelling date shall be extended accordingly and any and all relocation expenses (such as bunkers and port costs) shall be borne equally by Sellers and Buyers. Vessel's operating expenses for relocation shall remain on Sellers' account. (state place/range) in the Sellers' option.

78
Notice of Readiness ("NOR") shall not be tendered before: 15th May 2026 (date)

79
Cancelling Date (see Clauses 5(c), 6 (a)(i), 6 (a) (iii) and 14): 13th July 2026. According to redelivery communication and notices by the current Charterers and immediately upon redelivery from them.

Sellers will make best endeavors to deliver the Vessel within laycan in the delivery range without any further delays.
 
80
(b) The Sellers shall keep the Buyers well informed of the Vessel's itinerary and shall
81
provide the Buyers with twenty (20), ten (10), five (5) and three (3) days’ approximate notice and one (1) day definite notice of the date the
82
Sellers intend to tender Notice of Readiness and of the intended place of delivery.

83
When the Vessel is at the place of delivery and physically ready for delivery in accordance with
84
this Agreement, the Sellers shall give the Buyers a written Notice of Readiness for delivery.Delivery shall take place on a Banking Day. The Buyers shall take over the Vessel latest within three (3) Banking Days from the day of receipt of such Notice of Readiness.

85
(c) If the Sellers anticipate that, notwithstanding the exercise of due diligence by them, the
86
Vessel will not be ready for delivery by the Cancelling Date they may notify the Buyers in writing
87
stating the date when they anticipate that the Vessel will be ready for delivery and proposing a
88
new Cancelling Date. Upon receipt of such notification the Buyers shall have the option of
89
either cancelling this Agreement in accordance with Clause 14 (Sellers’ Default) within three (3)
90
Banking Days of receipt of the notice or of accepting the new date as the new Cancelling Date.
91
If the Buyers have not declared their option within three (3) Banking Days of receipt of the
92
Sellers' notification or if the Buyers accept the new date, the date proposed in the Sellers'
93
notification shall be deemed to be the new Cancelling Date and shall be substituted for the
94
Cancelling Date stipulated in line 79.

95
If this Agreement is maintained with the new Cancelling Date all other terms and conditions
96
hereof including those contained in Clauses 5(b) and 5(d) shall remain unaltered and in full
97
force and effect.

98
(d) Cancellation, failure to cancel or acceptance of the new Cancelling Date shall be entirely

Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.

99
without prejudice to any claim for direct costs and damages the Buyers may have under Clause 14 (Sellers’
100
Default) for the Vessel not being ready by the original Cancelling Date.

101
(e) Should the Vessel become an actual, constructive or compromised total loss or not be able to be delivered through outbreak of war, political reasons, restraint of Governments, Princes or people or any other cause which either Party hereto cannot prevent or control  before delivery
102
the Deposit together with interest earned, if any, shall be released immediately to the Buyers
103
whereafter this Agreement shall be null and void and neither Party shall have an obligation or liability of any nature whatsoever to the other Party.
 
104 6. Divers Inspection / Drydocking
          
105
(a)*
106
(i) The Buyers shall have the option at their cost and expense to arrange for an underwater
107
inspection by a diver approved by the Classification Society prior to the delivery of the
108
Vessel. Such option shall be declared latest nine (9) days prior to the Vessel’s intended
109
date of readiness for delivery as notified by the Sellers pursuant to Clause 5(b) of this
110
Agreement. The Sellers shall at their cost and expense make the Vessel available for
111
such inspection. This inspection shall be carried out without undue delay ,and in any case latest within 48 hours after notification by the Sellers that the Vessel has arrived at the delivery port and is available for an underwater inspection, and in the
112
presence of a Classification Society surveyor arranged for by the Sellers and paid for by
113
the Buyers. The Buyers’ representative(s) shall have the right to be present at the diver’s
114
inspection as observer(s) only without interfering with the work or decisions of the
115
Classification Society surveyor. The extent of the inspection and the conditions under
116
which it is performed shall be to the satisfaction of the Classification Society. If the
117
conditions at the place of delivery are unsuitable for such inspection, the Sellers shall at
118
their cost and expense make the Vessel available at a suitable alternative place near to
119
the delivery port, in which event the Cancelling Date shall be extended by the additional
120
time required for such positioning and the subsequent re-positioning.  In such event, the Sellers have the right to choose this alternative port as the new port of delivery mutually agreed by the Sellers and Buyers. The Sellers may
121
not tender Notice of Readiness prior to completion of the underwater inspection.After arrival of the Vessel at the place of delivery, the time taken waiting for that the underwater inspection and conducting it shall extend the Cancelling Date if necessary.

122
(ii) If the rudder, propeller, bottom or other underwater parts below the deepest load line are
123
found broken, damaged or defective so as to affect the Vessel's class, then (1) unless
124
repairs can be carried out afloat to the satisfaction of the Classification Society, the
125
Sellers shall arrange for the Vessel to be drydocked at their expense for inspection by
126
the Classification Society of the Vessel's underwater parts below the deepest load line,
127
the extent of the inspection being in accordance with the Classification Society's rules (2)
128
such defects shall be made good by the Sellers at their cost and expense to the
129
satisfaction of the Classification Society without condition/recommendation** and (3) the
130
Sellers shall pay for the underwater inspection and the Classification Society's
131
attendance.

132
Notwithstanding anything to the contrary in this Agreement, if the Classification Society
133
do not require the aforementioned defects to be rectified before the next class
134
drydocking survey, the Sellers shall be entitled to deliver the Vessel with these defects
135
against a deduction from the Purchase Price of the estimated direct cost (of labour and
136
materials) of carrying out the repairs to the satisfaction of the Classification Society,
137
whereafter the Buyers shall have no further rights whatsoever in respect of the defects
138
and/or repairs. The estimated direct cost of the repairs shall be the average of quotes
139
for the repair work obtained from two reputable independent shipyards at or in the
140
vicinity of the port of delivery, one to be obtained by each of the Parties within two (2)
141
Banking Days from the date of the imposition of the condition/recommendation, unless
142
the Parties agree otherwise. Should either of the Parties fail to obtain such a quote within
143
the stipulated time then the quote duly obtained by the other Party shall be the sole basis

Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.

144
for the estimate of the direct repair costs. The Sellers may not tender Notice of
145
Readiness prior to such estimate having been established.

146
(iii) If the Vessel is to be drydocked pursuant to Clause 6(a)(ii) and no suitable dry-docking
147
facilities are available at the port of delivery, the Sellers shall take the Vessel to a port
148
where suitable drydocking facilities are available, whether within or outside the delivery
149
range as per Clause 5(a). Once drydocking has taken place the Sellers shall deliver the
150
Vessel at a port within the delivery range as per Clause 5(a) which shall, for the purpose
151
of this Clause, become the new port of delivery. In such event the Cancelling Date shall
152
be extended by the additional time required for the drydocking and extra steaming, but
153
limited to a maximum  of fourteen (14) days.

154
(b)* The Sellers shall place the Vessel in drydock at the port of delivery for inspection by the
155        Classification Society of the Vessel's underwater parts below the deepest load line, the extent
156        of the inspection being in accordance with the Classification Society's rules. If the rudder,
157        propeller, bottom or other underwater parts below the deepest load line are found broken,
158        damaged or defective so as to affect the Vessel's class, such defects shall be made good at the
159        Sellers' cost and expense to the satisfaction of the Classification Society without
160        condition/recommendation**. In such event the Sellers are also to pay for the costs and
161        expenses in connection with putting the Vessel in and taking her out of drydock, including the
162        drydock dues and the Classification Society's fees. The Sellers shall also pay for these costs
163        and expenses if parts of the tailshaft system are condemned or found defective or broken so as
164        to affect the Vessel's class. In all other cases, the Buyers shall pay the aforesaid costs and
165        expenses, dues and fees.

166
(c) If the Vessel is drydocked pursuant to Clause 6 (a)(ii) or 6 (b) above:

167
(i) The Classification Society may require survey of the tailshaft system, the extent of the
168
survey being to the satisfaction of the Classification surveyor. If such survey is
169
not required by the Classification Society, the Buyers shall have the option to require the
170
tailshaft to be drawn and surveyed by the Classification Society, the extent of the survey
171
being in accordance with the Classification Society's rules for tailshaft survey and
172
consistent with the current stage of the Vessel's survey cycle. The Buyers shall declare
173
whether they require the tailshaft to be drawn and surveyed not later than by the
174
completion of the inspection by the Classification Society. The drawing and refitting of
175
the tailshaft shall be arranged by the Sellers. Should any parts of the tailshaft system be
176
condemned or found defective so as to affect the Vessel's class, those parts shall be
177
renewed or made good at the Sellers' cost and expense to the satisfaction of
178
Classification Society without condition/recommendation**.

179
(ii) The costs and expenses relating to the survey of the tailshaft system shall be borne by
180
the Buyers unless the Classification Society requires such survey to be carried out or if
181
parts of the system are condemned or found defective or broken so as to affect the
182
Vessel's class, in which case the Sellers shall pay these costs and expenses.

183
(iii) The Buyers' representative(s) shall have the right to be present in the drydock, as
184
observer(s) only without interfering with the work or decisions of the Classification
185
Society surveyor.

186
(iv) The Buyers shall have the right to have the underwater parts of the Vessel cleaned
187
and painted at their risk, cost and expense without interfering with the Sellers' or the
188
Classification Society surveyor's work, if any, and without affecting the Vessel's timely
189
delivery. If, however, the Buyers' work in drydock is still in progress when the
190
Sellers have completed the work which the Sellers are required to do, the additional
191
docking time needed to complete the Buyers' work shall be for the Buyers' risk, cost and
192
expense. In the event that the Buyers' work requires such additional time, the Sellers
193
may upon completion of the Sellers' work tender Notice of Readiness for delivery whilst
194
the Vessel is still in drydock and, notwithstanding Clause 5(a), the Buyers shall be
195
obliged to take delivery in accordance with Clause 3 (Payment), whether the Vessel is in

Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.

196
drydock or not.

197
*6 (a) and 6 (b) are alternatives; delete whichever is not applicable. In the absence of deletions, 
198        alternative 6 (a) shall apply.

199
**Notes or memoranda, if any, in the surveyor's report which are accepted by the Classification
200
Society without condition/recommendation are not to be taken into account.

201 7. Spares, bunkers and other items

202
The Sellers shall deliver the Vessel to the Buyers with everything belonging to her on board
203
and on shore. All spare parts and spare equipment including spare tail-end shaft(s) and/or
204
spare propeller(s)/propeller blade(s), if any, belonging to the Vessel at the time of this Agreement inspection
205
used or unused, whether on board or not shall become the Buyers' property, but spares on
206
order are excluded. Forwarding charges, if any, shall be for the Buyers' account. The Sellers
207
are not required to replace spare parts including spare tail-end shaft(s) and spare
208
propeller(s)/propeller blade(s) which are taken out of spare and used as replacement prior to
209
delivery, but the replaced items shall be the property of the Buyers. Unused stores and
210
provisions shall be included in the sale and be taken over by the Buyers without extra payment.

211
Library and forms exclusively for use in the Sellers' vessel(s) and captain's, officers’ and crew's
212
personal belongings including the slop chest are excluded from the sale without compensation,
213
as well as the following additional items: (include list)
1 Gas CYLINDERS (OX/AC/FREON/NITROGEN) 
2 St. Nicholas Icon
3 Ship Security Plan and forms
4 Original Log and Record books (Bridge, &Engine ORB PART I&II, Ballast water record Book, Garbage record book). - Copies of six (6) months can remain onboard
5 Seal Log Book and seals 
6 Ships article
7 Hard copies of the Company's MS, Forms, Folders
8 Bell books port and engine - Copies of six (6) months can remain onboard 
9 Camera System (CCTV)
10 1pc. HUB
11 1pc. UNIFI / APLR 802.11 WIFI Point 
12 1pc. Switch Series 1820
13 1pc. Security camera rack 
14 3pcs. IP Camera model 
15 9pcs. IP Camera model
16 10pcs. Camera Mount model 
17 1 Navbox & Navstick
18 Original Company’s Issued Plans (SEEMP, STS, VOC Garbage management plan, Mooring system management plan, Biofouling Management plan & VGP plan)
19 ISM/ISPS manuals, Vessel Response Plan for OPA 90 and SOPEP (Copy of SOPEP will remain on board the vessel)
20 Sellers’ Training Manuals but shipyard originals to remain on board

214
Items on board which are on hire or owned by third parties, listed as follows, are excluded from
215
the sale without compensation: (include list)

1 Life rafts (leased item by Viking).
2 Intellian Antenna 1,0 meter KA-band 
3 Infinity Server (Navarino)
4 Cisco CBS250 
5 FBB 500
6 Sailor ACU
7 Sailor GX Modem

Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.

8 UPS
9 Smart 16-port GE
10 1 V-Cell Rack containing 2x Server HP-DL 380G8, Switch 24 Port, UPS 1000VA 
11 8 Thin Client V-Cell
12 5 MPS MFP Epson Printers 
13 1 V-Talos USB protection
14 1 x Talos USB Sanitizer appliance

A list with items belonging to the Vessel that the Buyers shall take over and pay for extra to the Sellers shall be incorporated into this Agreement by way of an appendix (Appendix A) that shall form and be considered an integral part of this Agreement.

216
Items on board at the time of inspection which are on hire or owned by third parties, not listed
217        above, shall be replaced or procured by the Sellers prior to delivery at their cost and expense.
218
The Buyers shall take over remaining bunkers and unused lubricating and hydraulic oils and
219
greases in storage tanks and unopened drums and pay either:

220
(a) *the actual net price basis FIFO calculation (excluding barging expenses) at Sellers’/ Time Charterers’ last net purchase prices  as evidenced by respective  invoices or vouchers; or by bunkers suppliers / traders.

221
(b) *the current net market price (excluding barging expenses) at the port and date of delivery
222        of the Vessel or, if unavailable, at the nearest bunkering port,

223
for the quantities taken over.

Latest one (1) calendar day prior to the anticipated date of delivery of the Vessel, the quantities of bunkers, lubricating and hydraulic oils and greases remaining on board shall be measured jointly by the Seller's representative and the Buyer's familiarisation crew on board (acting as Buyers’ representative) with an agreed allowance of reasonable consumption up to the actual physical delivery and a relevant statement to be agreed and signed by both Parties’ aforementioned representatives. Agreed allowance for consumption for the period between the joint survey and the time of physical delivery will be subtracted from the figures agreed in said survey and shall be included in the above statement. The Buyers shall pay for the quantities mentioned in the aforesaid duly executed statement in United States Dollars according to Clause 3 of this Agreement.

224
Payment under this Clause shall be made at the same time and place and in the same
225
currency as the Purchase Price.

226
"inspection" in this Clause 7, shall mean the Buyers' inspection according to Clause 4(a) or 4(b)
227
(Inspection), if applicable. If the Vessel is taken over without inspection, the date of this
228
Agreement shall be the relevant date.

229        *(a) and (b) are alternatives, delete whichever is not applicable. In the absence of deletions
230         alternative (a) shall apply.

231 8. Documentation

232
The place of closing: in the premises of the Escrow Agent with the physical presence of the Parties, or by virtual/ electronic attendance of the Parties’ authorised representatives

233
(a) In exchange for payment of the Purchase Price and any and all other sums payable on delivery by the Buyers to the Sellers under this Agreement the Sellers shall provide the Buyers with the documents reasonably required for the deletion and registration of the Vessel in the Buyers’ name, and the Buyers shall provide the Sellers with all documents (indicatively corporate, shareholding etc.) evidencing Buyers’ lawful actions to authorise the execution, delivery and performance of this Agreement. These documents to be mutually agreed between Buyers and Sellers as promptly as possible and to form an addendum to this Agreement (the “Addendum”), but the agreement and execution of such Addendum and any disputes thereof shall not prejudice this Agreement nor shall delay the lodging of the Deposit. Should the Parties fail to agree such Addendum timely before the Vessel’s anticipated delivery, the below Clause 8 will be reinstated and apply the

Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.

234        following delivery documents:

235
(i) Legal Bill(s) of Sale in a form recordable in the Buyers’ Nominated Flag State,
236        transferring title of the Vessel and stating that the Vessel is free from all mortgages,
237        encumbrances and maritime liens or any other debts whatsoever, duly notarially attested
238        and legalised or apostilled, as required by the Buyers’ Nominated Flag State;

239        (ii) Evidence that all necessary corporate, shareholder and other action has been taken by
240        the Sellers to authorise the execution, delivery and performance of this Agreement;

241        (iii) Power of Attorney of the Sellers appointing one or more representatives to act on behalf
242        of the Sellers in the performance of this Agreement, duly notarially attested and legalised
243        or apostilled (as appropriate);

244        (iv) Certificate or Transcript of Registry issued by the competent authorities of the flag state
245        on the date of delivery evidencing the Sellers’ ownership of the Vessel and that the
246        Vessel is free from registered encumbrances and mortgages, to be faxed or e-mailed by
247        such authority to the closing meeting with the original to be sent to the Buyers as soon as
248        possible after delivery of the Vessel;

249        (v) Declaration of Class or (depending on the Classification Society) a Class Maintenance
250        Certificate issued within three (3) Banking Days prior to delivery confirming that the
251        Vessel is in Class free of condition/recommendation;

252        (vi) Certificate of Deletion of the Vessel from the Vessel's registry or other official evidence of
253        deletion appropriate to the Vessel's registry at the time of delivery, or, in the event that
254        the registry does not as a matter of practice issue such documentation immediately, a
255        written undertaking by the Sellers to effect deletion from the Vessel's registry forthwith
256        and provide a certificate or other official evidence of deletion to the Buyers promptly and
257        latest within four (4) weeks after the Purchase Price has been paid and the Vessel has
258        been delivered;

259        (vii) A copy of the Vessel's Continuous Synopsis Record certifying the date on which the
260        Vessel ceased to be registered with the Vessel's registry, or, in the event that the registry
261        does not as a matter of practice issue such certificate immediately, a written undertaking
262        from the Sellers to provide the copy of this certificate promptly upon it being issued
263        together with evidence of submission by the Sellers of a duly executed Form 2 stating
264        the date on which the Vessel shall cease to be registered with the Vessel's registry;

265        (viii) Commercial Invoice for the Vessel;

266        (ix) Commercial Invoice(s) for bunkers, lubricating and hydraulic oils and greases;

267        (x) A copy of the Sellers’ letter to their satellite communication provider cancelling the
268        Vessel’s communications contract which is to be sent immediately after delivery of the
269        Vessel;

270        (xi) Any additional documents as may reasonably be required by the competent authorities of
271        the Buyers’ Nominated Flag State for the purpose of registering the Vessel, provided the
272        Buyers notify the Sellers of any such documents as soon as possible after the date of
273        this Agreement; and

274        (xii) The Sellers’ letter of confirmation that to the best of their knowledge, the Vessel is not
275        black listed by any nation or international organisation.

276        (b) At the time of delivery the Buyers shall provide the Sellers with:

277        (i) Evidence that all necessary corporate, shareholder and other action has been taken by
278        the Buyers to authorise the execution, delivery and performance of this Agreement; and

279        (ii) Power of Attorney of the Buyers appointing one or more representatives to act on behalf
280        of the Buyers in the performance of this Agreement, duly notarially attested and legalised

Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.

281        or apostilled (as appropriate).

282        (c) If any of the documents listed in Sub-clauses (a) and (b) above the Addendum are not in the English
283
language they shall be accompanied by an English translation by an authorised translator or
284
certified by a lawyer qualified to practice in the country of the translated language.

285        (d) The Parties shall to the extent possible exchange copies, drafts or samples of the
286        documents listed in Sub-clause (a) and Sub-clause (b) above for review and comment by the
287        other party not later than (state number of days), or if left blank, nine (9) days prior to the
288        Vessel’s intended date of readiness for delivery as notified by the Sellers pursuant to
289        Clause 5(b) of this Agreement.

290
(e) Concurrent with the exchange of documents in the "Addendum" above Sub-clause (a) and Sub-clause (b) above,
291
the Sellers shall also hand to the Buyers the classification certificate(s) as well as all plans,
292
drawings and manuals, (excluding ISM/ISPS manuals), , Vessel Response Plan for OPA 90) which are on board the Vessel. Other
293
certificates which are on board the Vessel shall also be handed over to the Buyers unless
294
the Sellers are required to retain same, in which case the Buyers have the right to take copies.

295
(f) Other technical documentation which may be in the Sellers' possession shall promptly after
296
delivery be forwarded to the Buyers at their expense, if they so request. The Sellers may keep
297
the Vessel's log books but the Buyers have the right to take copies of same. up to six (6) months back counting as from the date the Sellers tender Notice of Readiness with all relevant personal data protected by EU GDPR regulation erased. The Buyers undertake that the copies of the log books are solely for their internal reference and shall not share same with any external person or entity.

298
(g) The Parties shall sign and deliver to each other a Protocol of Delivery and Acceptance
299
confirming the date and time of delivery of the Vessel from the Sellers to the Buyers.

300
9. Encumbrances

301
The Sellers warrant that the Vessel, at the time of delivery, is free from all charters,
302
encumbrances, mortgages and maritime liens or any other debts whatsoever, and is not subject
303
to Port State or other administrative detentions. The Sellers hereby undertake to indemnify the
304
Buyers against all consequences of claims made against the Vessel which have been incurred
305
prior to the time of delivery.

306
10. Taxes, fees and expenses

307
Any taxes, fees and expenses in connection with the purchase and registration in the Buyers'
308
Nominated Flag State shall be for the Buyers' account, whereas similar charges in connection
309
with the closing of the Sellers' register shall be for the Sellers' account.

310
11. Condition on delivery

311
The Vessel shall be delivered to the Buyers in substantially the same condition as she was at the time of this Agreement, fair wear and tear excepted and with everything belonging to her shall be at the Sellers' risk and expense until she is
312
delivered to the Buyers, but subject to the terms and conditions of this Agreement she shall be
313        delivered and taken over as she was at the time of inspection, fair wear and tear excepted.

314
However, the Vessel shall be delivered free of cargo and free of stowaways with her Class
315
maintained without condition/recommendation*, free of average damage affecting the Vessel's
316
class, and with her classification certificates and national certificates, to be clean as well as all other

317        certificates the Vessel had at the time of inspection, valid and unextended without
318
condition/recommendation* by the Classification Society or the relevant authorities for minimum 3 months from the time of delivery at the time
319         of delivery.

320
"inspection" in this Clause 11, shall mean the Buyers' inspection according to Clause 4(a) or

Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.

321        4(b) (Inspections), if applicable. If the Vessel is taken over without inspection, the date of this 
322        Agreement shall be the relevant date.

323        *Notes and memoranda, if any, in the surveyor's report which are accepted by the Classification 
324        Society without condition/recommendation are not to be taken into account.

325 12. Name/markings

326
Upon delivery the Buyers undertake to change the name of the Vessel and alter funnel
327
markings.

328 13. Buyers' default
 
329
Should the Deposit not be lodged in accordance with Clause 2 (Deposit), the Sellers have the
330
right to cancel this Agreement, and they shall be entitled to claim compensation for their losses
331
and for all expenses incurred together with interest.
332
Should the Purchase Price not be paid in accordance with Clause 3 (Payment), the Sellers
333
have the right to cancel this Agreement, in which case the Deposit together with interest
334
earned, if any, shall be released to the Sellers. If the Deposit does not cover their loss, the
335
Sellers shall be entitled to claim further compensation for their losses and for all expenses
336
incurred together with interest.

337 14.
Sellers' default

338
Should the Sellers fail to give Notice of Readiness in accordance with Clause 5(b) or fail to be
339
ready to validly complete a legal transfer by the Cancelling Date the Buyers shall have the
340
option of cancelling this Agreement. If after Notice of Readiness has been given but before
341
the Buyers have taken delivery, the Vessel ceases to be physically ready for delivery and is not
342
made physically ready again by the Cancelling Date and new Notice of Readiness given, the
343
Buyers shall retain their option to cancel. In the event that the Buyers elect to cancel this
344
Agreement, the Deposit together with interest earned, if any, shall be released to them
345
immediately.

346
Should the Sellers fail to give Notice of Readiness by the Cancelling Date or fail to be ready to
347
validly complete a legal transfer as aforesaid they shall make due compensation to the Buyers
348
for their loss and for all expenses together with interest if their failure is due to proven
349
negligence and whether or not the Buyers cancel this Agreement.

350 15. Buyers' representatives
 
351
After this Agreement has been signed by the Parties and the Deposit has been confirmed as  lodged, the
352
Buyers have the right to place two (2) representatives on board the Vessel for maximum thirty (30) days prior Vessel's intended delivery  at their sole risk and
353
expense and subject to the Vessel’s safe manning requirements and those of the Sellers and/or Ship Manager in relation to infectious diseases / epidemics (including Covid-19) or any other safety precautions.

354
These representatives are on board for the purpose of familiarisation and in the capacity of
355
observers only, and they shall not interfere in any respect with the operation of the Vessel. The
356
Buyers and the Buyers’ representatives shall sign the Sellers' P&I Club’s standard letter of
357
indemnity prior to their embarkation and the Buyers shall pay US$20 per day per representative for victualling, plus any communication expenses at cost as presented by the Seller at the time of delivery. All Buyers’ representatives that are due to board the Vessel shall a) be seamen and members of the Buyers’ crew. The Buyers’ representatives while on board the Vessel shall at all times comply and follow all Sellers’ safety procedures.
.

358 16.
Law and Arbitration

359
(a) *This Agreement shall be governed by and construed in accordance with English law and
360
any dispute arising out of or in connection with this Agreement shall be referred to arbitration in
361
London in accordance with the Arbitration Act 1996 or any statutory modification or re-

Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.

362
enactment thereof save to the extent necessary to give effect to the provisions of this Clause.

363
The arbitration shall be conducted in accordance with the London Maritime Arbitrators
364
Association (LMAA) Terms current at the time when the arbitration proceedings are
365
commenced.

366
The reference shall be to three arbitrators. A party wishing to refer a dispute to arbitration shall
367
appoint its arbitrator and send notice of such appointment in writing to the other party requiring
368
the other party to appoint its own arbitrator within fourteen (14) calendar days of that notice and
369
stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own
370
arbitrator and gives notice that it has done so within the fourteen (14) days specified. If the
371
other party does not appoint its own arbitrator and give notice that it has done so within the
372
fourteen (14) days specified, the party referring a dispute to arbitration may, without the
373
requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator
374
and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on
375
both Parties as if the sole arbitrator had been appointed by agreement.

376
In cases where neither the claim nor any counterclaim exceeds the sum of US$100,000 the
377
arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at
378
the time when the arbitration proceedings are commenced.

379
(b) *This Agreement shall be governed by and construed in accordance with Title 9 of the
380        United States Code and the substantive law (not including the choice of law rules) of the State
381        of New York and any dispute arising out of or in connection with this Agreement shall be
382        referred to three (3) persons at New York, one to be appointed by each of the parties hereto,
383        and the third by the two so chosen; their decision or that of any two of them shall be final, and
384        for the purposes of enforcing any award, judgment may be entered on an award by any court of
385        competent jurisdiction. The proceedings shall be conducted in accordance with the rules of the
386        Society of Maritime Arbitrators, Inc.

387        In cases where neither the claim nor any counterclaim exceeds the sum of US$ 100,000 the
388        arbitration shall be conducted in accordance with the Shortened Arbitration Procedure of the
389        Society of Maritime Arbitrators, Inc.

390        (c) This Agreement shall be governed by and construed in accordance with the laws of
391        (state place) and any dispute arising out of or in connection with this Agreement shall be
392        referred to arbitration at (state place), subject to the procedures applicable there.

393        *16(a), 16(b) and 16(c) are alternatives; delete whichever is not applicable. In the absence of
394        deletions, alternative 16(a) shall apply.

395 17.
Notices

396
All notices to be provided under this Agreement shall be in writing.

397
Contact details for recipients of notices are as follows:

398
For the Buyers:
 c/o Clarksons Hong Kong Limited Shanghai office
Room 1901, Tower C, ONE EAST | No. 768 Zhongshan Nanyi Road, Huangpu district | Shanghai | 200023 | China
T:
Email:

399
For the Sellers: c/o PERFORMANCE SHIPPING MANAGEMENT INC.
373 Syngrou Ave. & 2-4 Ymittou str.
17564, Palaio Faliro, Athens, Greece
Tel:
Email:

Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.

Any commercial exchanges between the Parties to take place via the broking channel.

400 18.
Entire Agreement

401
The written terms of this Agreement comprise the entire agreement between the Buyers and
402
the Sellers in relation to the sale and purchase of the Vessel and supersede all previous
403
agreements whether oral or written between the Parties in relation thereto.

404
Each of the Parties acknowledges that in entering into this Agreement it has not relied on and
405
shall have no right or remedy in respect of any condition, covenant, promise, term,  statement, representation, assurance or
406
warranty (whether or not made negligently) other than as is expressly set out in this Agreement.

407
Any terms condition, covenant, promise, terms, statement, representation, assurance or warranty capable of being  implied into this Agreement by any applicable custom, practice,  statute (including without limitation, the Sale of Goods Act or any statutory modification or re-enactment thereof), or law are hereby excluded to
408
the extent that such exclusion can legally be made. Nothing in this Clause shall limit or exclude
409
any liability for fraud.

19. Confidentiality

All details of this transaction to be kept strictly private and confidential. This Agreement and its negotiation and terms (the “Confidential Information”) are private and confidential between the Buyers, the Sellers and their affiliates, and the Parties or their affiliates shall not disclose Confidential Information to any other person without the prior written consent of the disclosing Party, provided that nothing in this clause shall preclude a Party from disclosing Confidential Information:

1. to the ultimate shareholders of such Party, its affiliates and co-investors and its and their members, advisory committee members, directors, officers, employees, consultants, agents, representatives, professional advisers, insurers, auditors, financiers and to the Vessel’s technical and commercial managers (collectively, the “Nominated Representatives”);

2. to the extent required in connection with the employment of the Vessel, to the Vessel’s actual or potential charterers;

3. to the extent required by law or regulation or any governmental or other authority, or the rules of any relevant stock exchange, indicatively the US SEC and NASDAQ;

4. for financing and registration purposes of the Vessel; or

5. which is in the public domain, other than as a result of breach of this clause by or through such party. Should however details of the sale become known or reported on the market, neither the Buyers nor the Sellers shall have the right to withdraw from the sale or to fail to fulfil their obligations under this Agreement.

20. Trade and Economic Compliance

Notwithstanding any other clause in this Agreement:-

a) The Buyers, for themselves and their holding companies, affiliates, associates, directors, senior executives and officers, and shareholders warrant, represent and undertake to the Sellers, that at the date of entering into this Agreement and continuing until the Buyers have paid the Purchase Price and any other sums payable under this Agreement in full and taken ownership and possession of the Vessel on delivery by the Sellers, neither the Buyers nor any person or entity on whose behalf or under whose direction the Buyers act or assist, nor any person or entity who the Buyers may nominate to take delivery and transfer of title of the Vessel, or to facilitate any aspect of this transaction are designated pursuant to any trade and economic sanctions, prohibitions or restrictions imposed by a Sanctions Authority, are 25% or more owned or controlled by any such person or

Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.

entity, or based, organized or resident in a country or territory whose government is the target of sanctions or that is the subject of comprehensive (i.e., country-wide or territory-wide) Sanctions (including, as of the date of signature of this contract, Russia, the Donetsk People’s Republic, Luhansk People’s Republic and Crimea regions of Ukraine, Cuba, Iran, North Korea, Venezuela, Belarus and Syria) (a “Sanctioned Entity”) and that entry into and performance of this Agreement is not prohibited or restricted by, and will not expose the Sellers, their managers, the Vessel or their employees to sanctions, prohibitions or restrictions under any trade or economic sanctions, prohibitions or restrictions (“Sanctions”). For this purpose, a “Sanctions Authority” means the US, UN, EU, UK, Switzerland, any governmental agencies or departments of the foregoing and any other applicable sanctions authority.

b) The Sellers, for themselves and their holding companies, affiliates, associates, directors, senior executives and officers, and shareholders warrant, represent and undertake to the Buyers, that at the date of entering into this Agreement and continuing until the Buyers have paid the Purchase Price and any other sums payable under this Agreement and taken ownership and possession of the Vessel on delivery by the Sellers, neither the Sellers nor any person or entity on whose behalf or under whose direction the Sellers act or assist, nor the Vessel are a Sanctioned Entity and that entry into and performance of this Agreement is not prohibited or restricted by, and will not expose the Buyers to Sanctions.

c) The Vessel is sold on condition that it, and its components, shall not be sold, transferred, released, exported, chartered, provided or used by the Buyers, or any person deriving title or access to the Vessel under them, for any purpose or in any activity which would expose the Sellers, their managers, the Vessel or their employees to Sanctions. The Buyers undertake that such provision will apply in case of the sale of the Vessel to the next purchaser. In the event the sale by the Buyers to the next purchaser becomes subject to, or in violation of Sanctions, the Buyers shall notify the Sellers immediately upon receipt of such info.

d) If at any time before delivery the Sellers become aware of any actual breach of the warranty, representation, undertaking and condition contained in paragraph (a) or (c), the Sellers may cancel this Agreement by written notice to the Buyers, without liability towards the Buyers, and shall be entitled to compensation for their proven losses and all expenses they have incurred. The Buyers shall indemnify the Sellers, their managers and employees on demand against any and all sanctions, prohibitions, restrictions, claims, loss or liability whatsoever and howsoever arising directly as a result of breach of the warranty, representation and undertaking and condition contained in paragraph (a) or (c), whether or not the Sellers cancel this Agreement. The Sellers shall be under no obligation to procure the return of the Deposit (or any interest thereon) to the Buyers; and the Deposit together with interest earned shall be released to the Sellers if and to the extent that release of the Deposit is permitted under Sanctions.

e) If at any time before delivery the Buyers become aware of any actual breach of the warranty, representation, undertaking and condition contained in paragraph (b), the Buyers shall comply with Sanctions to which the Buyers or the Vessel are subject and follow any orders or directions which may be given by any Sanctions Authority, acting with powers to compel compliance and irrespective of any such orders, directions, laws or regulations, the Buyers are entitled to compensation for their proven direct losses and expenses they have incurred due to such a breach whether or not they cancel this Agreement.

f) No act or omission of the Sellers shall at any time constitute a waiver of this Clause 20; and the warranties, representations and undertakings contained in this Clause 20 are deemed repeated and remain in effect before and after delivery, whether or not delivery occurs.

g) Notwithstanding anything in this clause to the contrary, Buyers and Sellers shall not be required to do anything which constitutes a violation of the Sanctions laws and regulations to which either of them is subject. The Buyers shall complete the Ship Sale Questionnaire and the Counterparty Questionnaire which will be sent by the Sellers to Buyers’ e-mail address as provided in Clause 17 of this Agreement as soon as practicable after the date of this Agreement and in any event before delivery of the Vessel, failing which the Sellers shall have the right to terminate this Agreement by written notice to the Buyers, without any liability to the Buyers, and shall be entitled to compensation for their proven losses and all expenses they have incurred. Buyers’ response and warranties therein are deemed correct, valid and repeated at the time of Delivery.

Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.

21. Anti-Corruption Obligation

(a)    Buyers and Sellers each agree, undertake and warrant to the other on a continuing basis that:

(i) that they comply with the Bribery Act 2010 of the United Kingdom, the United States Foreign Corrupt Practices Act of 1977 and any anti-corruption laws and statutes, rules or regulations issued, administered or enforced by Greece, United Kingdom, the United States of America, or any other jurisdiction in which the Sellers or Buyers conduct business or operations and any related or similar rules, regulations or guidelines, issued, administered or enforced by any applicable government entity or proceeding by or before any applicable court or government entity.

(ii)    in connection with the MOA each Party will comply with all applicable anti-corruption legislation and have procedures in place that are, to the best of its knowledge and belief, designed to prevent the commission of any offence under such legislation by any member of its organisation or by any person or entity providing services for it or on its behalf in connection with this MOA; and

(iii) in connection with the negotiation of this MOA neither it nor any member of its organisation has committed any breach of applicable anti-corruption legislation.

(b) If at any time before delivery the Buyers have breached any applicable anti-corruption legislation in connection with this MOA, the Sellers may cancel this MOA by written notice to the Buyers, without liability to the Sellers, and shall be entitled to compensation for their proven losses and all expenses they have incurred. The Sellers shall be under no obligation to procure the return of the Deposit (or any interest thereon) to the Buyers; and the Deposit shall be released to the Sellers if and to the extent that release of the Deposit is permitted under the applicable national, international and supranational anti-corruption laws and regulations. The Buyers shall defend and indemnify Sellers against any and all fines, penalties, claims, proven losses, damages, costs (including, without limitation, court fees and legal costs), expenses and liabilities whatsoever and howsoever arising directly as a result of such breach, whether or not the Sellers cancel this MOA.

(c) If at any time before delivery the Sellers have breached any applicable anti-corruption legislation in connection with this MOA, the Buyers may cancel this MOA (as per lines 343-344) by written notice to the Sellers, without liability to the Buyers, and in addition to that they should be entitled to compensation for their proven direct losses and expenses they have incurred as a result of such breach.

(d) Any such right to terminate must be exercised without undue delay.

22. Sanctions Clause

The Buyers and Sellers each represent, warrant and undertake to each other that at the date of entering into this Agreement and continuing until the Buyers have paid the purchase price in full and taken possession of the Vessel on delivery by the Sellers neither they nor any of their holding companies, affiliates or directors, senior executives or officers, or to their knowledge, any person on whose behalf they are acting in connection with this Agreement, is an individual or entity (“Person”) that is, or is 25% or more owned or controlled by, a Person (or Persons) that is the subject of any economic or financial sanctions or trade embargoes administered or enforced by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) the U.S. Departments of State or Commerce, the United Nations Security Council (“UNSC”), the European Union (“EU”), Switzerland, the United Kingdom (“UK”) or other applicable sanctions authority (collectively, “Sanctions”) or based, organized or resident in a country or territory that is the subject of comprehensive (i.e., country-wide or territory-wide) Sanctions (including, as of the date of signature of this contract, Russia, Crimea, Cuba, Iran, North Korea, Venezuela, Belarus and Syria). If at any time during the performance of this Agreement either Party becomes aware that the other Party is in breach of warranty as aforesaid, the Party not in breach may terminate this Agreement forthwith. The Party in breach shall be liable to indemnify the other Party against any and all claims, losses, damage, costs and fines whatsoever suffered by the other party resulting from any breach of warranty as aforesaid and in accordance with this Agreement.

Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.

This Clause 22 to read in conjunction with Clause 20 above.

23. Trading of Vessel

a. The Buyers confirm, undertake and warrant that the Vessel:

i. Is purchased for the purpose of further trading for their own account;

ii. will not be sold by them for recycling or for any purpose other than trading and will not in fact be recycled by any person in the 12 months following delivery to the Buyers under this Agreement (unless the Vessel is declared a casualty by her insurers);

iii. if the Buyers remain the owners of the Vessel when it is recycled (scrapped), the Buyers and their successors undertake to ensure all then applicable national or internationals laws and regulations relating to scrapping are complied with.
 
b. If the Buyers are in in breach of the above provisions, they will compensate the Sellers for any loss or expense suffered by them or related companies in the Sellers’ group and/or the Vessel’s present managers.

24. No assignment and transfer

No Party shall assign or transfer any of its rights or obligations under this Agreement without the prior written consent of the other Party. Save as expressly provided elsewhere in this Agreement, no person who is not a party to this Agreement shall have any right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Agreement.

25. Anti- Money Laundering

Each Party warrants that from the date of this Agreement and on a continuing basis that it complies with any anti-money laundering and anti-corruption laws and statutes, rules or regulations issued, administered or enforced by Greece, United Kingdom, the United States of America, or any other jurisdiction in which the Sellers or Buyers conduct business or operations and any related or similar rules, regulations or guidelines, issued, administered or enforced by any applicable government entity or proceeding by or before any applicable court or government entity and ensure it has instituted and maintained procedures designed to promote and achieve compliance with such laws. In the event of breach of the aforesaid warranty, the non-breaching Party shall have the right to terminate this Agreement with no liability to the other Party.

26. Epidemics

For the purposes of this clause "Disease" means COVID-19, any mutation of COVID-19 and/or any other disease for which restrictions apply. "Restrictions" means any mandatory order of authorities or other circumstances that relate to the Disease that prevent either:

(i) the Sellers' master, officers or crew disembarking from the Vessel and travelling from the place of delivery to their country of residence; or

(ii) the Buyers' master, officers or crew travelling to the place of delivery from their country of residence or boarding the vessel at the time of delivery. Pursuant to Clause 5, the Sellers' nominated intended place of delivery shall be a port/place where, according to the information provided to the Sellers at/before

the time of its nomination, there are no restrictions as per above at the time of nomination.

Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.

(a) If, prior to the arrival of the Vessel at the intended place of delivery, the Sellers reasonably believe that they will be unable to deliver or the Buyers reasonably believe that they will be unable to take delivery of the Vessel at the intended place of delivery due to Restrictions, then the party affected shall notify the other party without delay, and in any event no later than the day the Sellers' give their three (3) day notice pursuant to Clause 5 of this Agreement. Then Sellers and Buyers shall discuss in good faith and cooperate in order to quickly find the best/nearest "Alternative Place of Delivery". In such event, the Cancelling Date shall be extended by the time taken for the Vessel to move from her location at the time of the new nomination until she arrives at the Alternative Place of Delivery.

(b) If, after the arrival of the Vessel at the intended place of delivery, such place suddenly becomes subject to Restrictions, the Sellers shall nominate, and move the Vessel to, an Alternative Place of Delivery, and the Sellers shall keep the Buyers advised about the expected new delivery date, but no new pre-delivery notices shall be required to be given by the Sellers. The Cancelling Date shall be extended by the additional time required for such repositioning of the Vessel (as advised by the Sellers, acting reasonably). In case the restrictions come into place after Sellers have tendered Notice of readiness, such Notice of Readiness shall not be considered valid until the vessel is moved to "Alternate Place of

Delivery" and Notice of Readiness tendered again.

(c) Any additional bunkers consumed arising from the Vessel proceeding to an Alternative Place of Delivery instead of the place of deliver originally nominated in accordance with Clause 5 shall be shared on a 50:50 basis, against presentation of reasonable supporting documentation.

(d) If the Vessel or its crew is/are quarantined at any place, then all time in connection with such quarantine shall automatically extend the Cancelling Date by the period required for the Vessel or the crew to be released from quarantine.

For and on behalf of the Sellers
For and on behalf of the Buyers
   
Name: Aikaterini Oikonomea
           /s/ Aikaterini Oikonomea
Name: Guo Hailong
            /s/ Guo Hailong
   
Title: Attorney-in-fact
Title: Attorney-in-fact

Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.


Exhibit 4.43
 
1
Dated: 2nd April 2026

2
Garu Shipping Company Inc., incorporated in the Marshall Islands with its registered office at: Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 (Name of sellers), hereinafter called the “Sellers”, have agreed to sell, and

3
Trafigura Maritime Logistics Pte. Ltd, incorporated 10 COLLYER QUAY, #29-01/05, OCEAN FINANCIAL CENTRE, SINGAPORE, 049315, Singapore or nominee to be guaranteed by Trafigura Group Pte. Ltd. (Name of buyers), hereinafter called the “Buyers”, have agreed to buy:

4
Name of vessel: P. Aliki

5
IMO Number: 9460136

6
Classification Society: LR

7
Class Notation: 100A1 DOUBLE HULL OIL TANKER, CSR, ESP, SHIPRIGHT (CM, ACS(B)), LI, SPM4,LMC, IGS, UMS, BWTS, EGCS(OPEN) Service Restriction: Unrestricted Service

8
Year of Build: 2010 Builder/Yard: Hyundai Heavy Industries Co Ltd, South Korea

9
Flag: Marshall Islands Place of Registration: Majuro GT/NT: 57,237 / 32,943

10
hereinafter called the “Vessel”, on the following terms and conditions:

11
Definitions
 
12
"Agreement" means this Memorandum of Agreement, as it may be amended, annexed, varied or supplemented from time to time.
“Banking Days" are days on which banks are open both in the country of the currency stipulated for
13
the Purchase Price in Clause 1 (Purchase Price) and in the place of closing stipulated in Clause 8
14
(Documentation) and the place where the Deposit and the Balance are being held, UK, US, Greece and Singapore (add additional jurisdictions as appropriate).

15
“Buyers’ Nominated Flag State” means Marshall Islands (state flag state).

16
“Class" means the class notation referred to above.

17
“Classification Society" means the Society referred to above.

18
"Deposit" shall have the meaning given in Clause 2 (Deposit)

19
“Escrow Agent" Deposit Holder” means Watson Farley & Williams Greece, 348 Syngrou Avenue, Kallithea, 176 74, Athens, Greece (state name and location of Deposit Holder) or, if left blank, the
20
Sellers’ Bank, which shall hold and release the Deposit, the Balance of the Purchase Price and any other charges and money and sums whatsoever payable on delivery by the Buyers (including but not limited to bunkers, lub oils and greases) in accordance with this Agreement and the Escrow Agreement. Total Escrow Agent fees not to exceed USD 10,000 and to be split equally by the Sellers and the Buyers.

"Escrow Agreement" means an escrow agreement in respect of the payment of the Purchase Price and any other amounts payable in accordance with this Agreement, and their release from the Escrow Agent Account to be made between the Escrow Agent, the Sellers and the Buyers.

"Escrow Agent Account" means the account indicated in the Escrow Agreement held by the Escrow Agent with the Escrow Agent Bank.

Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
"Escrow Agent Bank" means the bank indicated in the Escrow Agreement.

21
“In writing" or "written" means a letter handed over from the Sellers to the Buyers or vice versa, a 
22
registered letter,or e-mail or telefax.
23
“Parties” means the Sellers and the Buyers.

24
“Purchase Price” means the price for the Vessel as stated in Clause 1 (Purchase Price).

25
“Sellers’ Account” means an account in the name of the Sellers (state details of bank account) at the Sellers’ Bank.

26
“Sellers’ Bank” means (state name of bank, branch and details) or, if left blank, the bank
27
notified by the Sellers to the Buyers and the Escrow Agent for receipt of the Deposit, the balance of the Purchase Price and any money and sums whatsoever payable on delivery by the Buyers in accordance with this Agreement.

28 1.
Purchase Price

29
The Purchase Price is $42,650,000.00 (United States Dollars forty-two million six hundred fifty thousand only) (state currency and amount both in words and figures).

30 2.
Deposit

31
As security for the correct fulfilment of this Agreement the Buyers shall lodge a deposit of
32
10 % (ten per cent) or, if left blank, 10% (ten per cent), of the Purchase Price (the
33
“Deposit”) in an interest bearing(if available) escrow account for the Parties with the Deposit Holder Escrow Agent within three (3)
34
Banking Days after the date that:

35
(i) this Agreement has been signed by the Parties and exchanged in original or by
36
e-mail or telefax; and

37
(ii) the Escrow Agreement has been signed by the Parties and the Escrow Agent and exchanged in original or by email, and
(iii) the Escrow AgentDeposit Holder has confirmed in writing to all the Parties that the Escrow Agent aAccount has been
38
opened and is ready to receive funds.

39
The Deposit shall be released in accordance with joint written instructions of the Parties.
40
Interest, if any, shall be credited to the Buyers. Any fee charged for holding and releasing the
41
Deposit shall be borne equally by the Parties. The Parties shall provide to the Escrow AgentDeposit Holderwith 
42
all necessary documentation that may be requested by the latter (including but not limited to KYC requirements), promptly and in any case within seven(7) Banking Days after completion of signing of and exchanging this Agreement by PDF form.to open and maintain the account without delay.

43 3.
Payment

44
On delivery of the Vessel, but not later than three (3) Banking Days after the date that Notice of
45
Readiness has been given in accordance with Clause 5 (Time and place of delivery and
46
notices):

47
(i) the Deposit shall be released and paid to the Sellers Account as per this Agreement and Escrow Agreement in immediately available funds, net, free of any bank charges; and
 
48
(ii) the balance of the Purchase Price and all other sums charges and money whatsoever payable on delivery by the Buyers
49
to the Sellers under this Agreement, including but not limited to the bunkers and lubricating oils and greases remaining on board at the time of Vessel’s delivery (collectively the "Balance"), held in the Escrow Agent’s Account shall be paid released in full-in immediately available funds, net, free of bank charges to the

Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
50
Sellers’ Account in accordance with this Agreement and the Escrow Agreement.
The Buyers shall remit the Balance to the Sellers in accordance with this Agreement and the Escrow Agreement by telegraphic transfer to the Escrow Agent’s Account held by the Escrow Agent at least two (2) Banking Days prior to the intended date of delivery of the Vessel as per the three (3) days approximate Notice of Readiness see Clause 5b). The Balance shall remain in the name and to the order of the Buyers or, after the execution of an addendum, in the name and to the order of Buyers' financiers and will be released and paid to the Sellers in accordance with the terms of this Agreement and the Escrow Agreement.

The Deposit and the Balance shall be irrevocably and unconditionally released to the Sellers’ account in handing over to the Escrow Agent of:
(a) Protocol of Delivery and Acceptance executed but not timed, by both Sellers’ and Buyers’ authorised representatives; and
(b) duly executed written irrevocable instructions of the Buyers’ authorised representatives to proceed to the Deposit and Balance release.

Any surplus money after the release of the Deposit and the Balance shall be remitted back to the Buyers in accordance with the provisions of the Escrow Agreement.

In exchange of the delivery documents as agreed in the Addendum No. 1 and as per Clause 8 of this Agreement, and upon:

1. Execution and submission to the Escrow Agent of the duly executed irrevocable and unconditional release instructions for the Deposit and the Balance; and

2. Confirmation from the Escrow Agent that the Deposit and Balance have been remitted to the Sellers’ Account accompanied by the SWIFT copy (or copies, as the case may be) issued by the Escrow Agent’s Bank concerning the payment of the Deposit and the Balance, the Protocol of Delivery and Acceptance will be timed and dated and the Vessel will immediately be legally and physically delivered to the Buyers; relevant procedure to be described in a closing memo which to be agreed by the Sellers, the Buyers and the Deposit Holder not later than five (5) Banking Days prior to the intended date of delivery of the Vessel.

Notice of Readiness can be serviced anytime, including non-Banking Days.

The Escrow Agent’s fee for holding and releasing the Deposit and the Balance according to this Agreement and the Escrow Agreement shall be equally shared between the Sellers and the Buyers.
 
51 4.
Inspection

52
(a)* The Buyers have inspected and accepted the Vessel's classification records on 19th March 2026. The Buyers waived the Vessel's physical inspection and have thus accepted the Vessel, therefore the sale is outright and definite, subject only to the terms and conditions of this Agreement.
53
have also inspected the Vessel at/in (state place) on (state date) and have
54
accepted the Vessel following this inspection and the sale is outright and definite, subject only
55
to the terms and conditions of this Agreement.

56
(b)* The Buyers shall have the right to inspect the Vessel's classification records and declare 
57
whether same are accepted or not within (state date/period).
 
58
The Sellers shall make the Vessel available for inspection at/in (state place/range) within 
59
(state date/period).
 
60
The Buyers shall undertake the inspection without undue delay to the Vessel. Should the
61
Buyers cause undue delay they shall compensate the Sellers for the losses thereby incurred.

62
The Buyers shall inspect the Vessel without opening up and without cost to the Sellers.

63
During the inspection, the Vessel's deck and engine log books shall be made available for

Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
64
examination by the Buyers.

65
The sale shall become outright and definite, subject only to the terms and conditions of this 
66
Agreement, provided that the Sellers receive written notice of acceptance of the Vessel from
67
the Buyers within seventy-two (72) hours after completion of such inspection or after the
68
date/last day of the period stated in Line 59, whichever is earlier.

69
Should the Buyers fail to undertake the inspection as scheduled and/or notice of acceptance of 
70
the Vessel's classification records and/or of the Vessel not be received by the Sellers as
71
aforesaid, the Deposit together with interest earned, if any, shall be released immediately to the 
72
Buyers, whereafter this Agreement shall be null and void.
 
73
*4(a) and 4(b) are alternatives; delete whichever is not applicable. In the absence of deletions, 
74
alternative 4(a) shall apply.
 
75 5.
Time and place of delivery and notices

76
(a) The Vessel shall be delivered and taken over safely afloat at a safe and accessible berth or
77
anchorage at/in arriving, passing or UKC / MED / USAC / USG / CBS / AG or WCI – Galle range (state place/range) in the Sellers' option.

78
Notice of Readiness ("NOR") shall not be tendered before: 10th August 2026 (date)

79
Cancelling Date (see Clauses 5(c), 6 (a)(i), 6 (a) (iii) and 14): 10th October 2026 in Sellers’ option with 00:01 hrs local time 11th October 2026 cancelling in Buyers’ option. Owners confirm that upon redelivery of the vessel by the present Time Charterers, the vessel will be delivered directly to Buyers without performing any intermediate spot employment - or short TC employment. However, in the event that the Time Charterers’ last voyage exceeds the maximum agreed redelivery date due to operational delays, the cancelling date shall be adjusted accordingly until midnight local time 31st October 2026. From 00:01 hrs 01st November 2026 Buyers’ right, but not obligation, to cancel the Agreement as per Clause 5 (c) of NSF 2012 with Sellers to not give a notice of delay / propose new Cancelling date to Buyers before 1st October 2026 and not later than 31st October 2026.

80
(b) The Sellers shall keep the Buyers well informed of the Vessel's itinerary and shall
81
provide the Buyers with twenty (20), ten (10), five (5) and three (3) days’ approximate notice and one(1) day definite notice of the date the
82
Sellers intend to tender Notice of Readiness and of the intended place of delivery.
Delivery shall take place on a Banking Day. The Buyers shall take over the Vessel latest within three (3) Banking Days from the day of receipt of such Notice of Readiness.

83
When the Vessel is at the place of delivery and physically ready for delivery in accordance with
84
this Agreement, the Sellers shall give the Buyers a written Notice of Readiness for delivery.

85
(c) If the Sellers anticipate that, notwithstanding the exercise of due diligence by them, the
86
Vessel will not be ready for delivery by the Cancelling Date they may notify the Buyers in writing 
87
stating the date when they anticipate that the Vessel will be ready for delivery and proposing a
88
new Cancelling Date. Upon receipt of such notification the Buyers shall have the option of
89
either cancelling this Agreement in accordance with Clause 14 (Sellers’ Default) within three (3) 
90
Banking Days of receipt of the notice or of accepting the new date as the new Cancelling Date.
91
If the Buyers have not declared their option within three (3) Banking Days of receipt of the
92
Sellers' notification or if the Buyers accept the new date, the date proposed in the Sellers'
93
notification shall be deemed to be the new Cancelling Date and shall be substituted for the
94
Cancelling Date stipulated in line 79.

95
If this Agreement is maintained with the new Cancelling Date all other terms and conditions 
96
hereof including those contained in Clauses 5(b) and 5(d) shall remain unaltered and in full
97
force and effect.

98
(d) Cancellation, failure to cancel or acceptance of the new Cancelling Date shall be entirely
99
without prejudice to any claim for direct costs and damages the Buyers may have under Clause 14 (Sellers’
100
Default) for the Vessel not being ready by the original Cancelling Date.

Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
101
(e) Should the Vessel become an actual, constructive or compromised total loss or not be able to be delivered through outbreak of war, political reasons, restraint of Governments, Princes or people or any other cause which either Party hereto cannot prevent or control before delivery
102
the Deposit together with interest earned, if any, shall be released immediately to the Buyers
103
whereafter this Agreement shall be null and void and neither Party shall have an obligation or liability of any nature whatsoever to the other Party.

104     6.     Divers Inspection / Drydocking

105
(a)*
106
(i) The Buyers shall have the option at their cost and expense to arrange for an underwater
107
inspection by a diver approved by the Classification Society prior to the delivery of the
108
Vessel. Such option shall be declared latest nine (9) days prior to the Vessel’s intended
109
date of readiness for delivery as notified by the Sellers pursuant to Clause 5(b) of this
110
Agreement. The Sellers shall at their cost and expense make the Vessel available for
111
such inspection. This inspection shall be carried out without undue delay, and in any case latest within 48 hours after notification by the Sellers that the Vessel has arrived at the delivery port and weather permitting and in the
112
presence of a Classification Society surveyor arranged for by the Sellers and paid for by
113
the Buyers. The Buyers’ representative(s) shall have the right to be present at the diver’s
114
inspection as observer(s) only without interfering with the work or decisions of the
115
Classification Society surveyor. The extent of the inspection and the conditions under
116
which it is performed shall be to the satisfaction of the Classification Society. If the
117
conditions at the place of delivery are unsuitable for such inspection, the Sellers shall at
118
their cost and expense make the Vessel available at a suitable alternative place near to
119
the delivery port, in which event the Cancelling Date shall be extended by the additional
120
time required for such positioning and the subsequent re-positioning. The Sellers may
121
not tender Notice of Readiness prior to completion of the underwater inspection.

122
(ii) If the rudder, propeller, bottom or other underwater parts below the deepest load line are
123
found broken, damaged or defective so as to affect the Vessel's class, then (1) unless
124
repairs can be carried out afloat to the satisfaction of the Classification Society, the
125
Sellers shall arrange for the Vessel to be drydocked at their expense for inspection by
126
the Classification Society of the Vessel's underwater parts below the deepest load line,
127
the extent of the inspection being in accordance with the Classification Society's rules (2)
128
such defects shall be made good by the Sellers at their cost and expense to the
129
satisfaction of the Classification Society without condition/recommendation** and (3) the
130
Sellers shall pay for the underwater inspection and the Classification Society's
131
attendance.

132
Notwithstanding anything to the contrary in this Agreement, if the Classification Society
133
do not require the aforementioned defects to be rectified before the next class
134
drydocking survey, the Sellers shall be entitled to deliver the Vessel with these defects
135
against a deduction from the Purchase Price of the estimated direct cost (of labour and
136
materials) of carrying out the repairs to the satisfaction of the Classification Society,
137
whereafter the Buyers shall have no further rights whatsoever in respect of the defects
138
and/or repairs. The estimated direct cost of the repairs shall be the average of quotes
139
for the repair work obtained from two reputable independent shipyards at or in the
140
vicinity of the port of delivery, one to be obtained by each of the Parties within two (2)
141
Banking Days from the date of the imposition of the condition/recommendation, unless
142
the Parties agree otherwise. Should either of the Parties fail to obtain such a quote within
143
the stipulated time then the quote duly obtained by the other Party shall be the sole basis
144
for the estimate of the direct repair costs. The Sellers may not tender Notice of
145
Readiness prior to such estimate having been established.

146
(iii) If the Vessel is to be drydocked pursuant to Clause 6(a)(ii) and no suitable dry-docking
147
facilities are available at the port of delivery, the Sellers shall take the Vessel to a port
148
where suitable drydocking facilities are available, whether within or outside the delivery
149
range as per Clause 5(a). Once drydocking has taken place the Sellers shall deliver the

Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
150
Vessel at a port within the delivery range as per Clause 5(a) which shall, for the purpose
151
of this Clause, become the new port of delivery. In such event the Cancelling Date shall
152
be extended by the additional time required for the drydocking and extra steaming, but
153
limited to a maximum of fourteen (14) days.

154
(b)* The Sellers shall place the Vessel in drydock at the port of delivery for inspection by the
155
Classification Society of the Vessel's underwater parts below the deepest load line, the extent
156
of the inspection being in accordance with the Classification Society's rules. If the rudder,
157
propeller, bottom or other underwater parts below the deepest load line are found broken,
158
damaged or defective so as to affect the Vessel's class, such defects shall be made good at the
159
Sellers' cost and expense to the satisfaction of the Classification Society without
160
condition/recommendation**. In such event the Sellers are also to pay for the costs and
161
expenses in connection with putting the Vessel in and taking her out of drydock, including the
162
drydock dues and the Classification Society's fees. The Sellers shall also pay for these costs
163
and expenses if parts of the tailshaft system are condemned or found defective or broken so as
164
to affect the Vessel's class. In all other cases, the Buyers shall pay the aforesaid costs and
165
expenses, dues and fees.

166
(c) If the Vessel is drydocked pursuant to Clause 6 (a)(ii) or 6 (b) above:

167
(i) The Classification Society may require survey of the tailshaft system, the extent of the
168
survey being to the satisfaction of the Classification surveyor. If such survey is
169
not required by the Classification Society, the Buyers shall have the option to require the
170
tailshaft to be drawn and surveyed by the Classification Society, the extent of the survey
171
being in accordance with the Classification Society's rules for tailshaft survey and
172
consistent with the current stage of the Vessel's survey cycle. The Buyers shall declare
173
whether they require the tailshaft to be drawn and surveyed not later than by the
174
completion of the inspection by the Classification Society. The drawing and refitting of
175
the tailshaft shall be arranged by the Sellers. Should any parts of the tailshaft system be
176
condemned or found defective so as to affect the Vessel's class, those parts shall be
177
renewed or made good at the Sellers' cost and expense to the satisfaction of
178
Classification Society without condition/recommendation**.

179
(ii) The costs and expenses relating to the survey of the tailshaft system shall be borne by
180
the Buyers unless the Classification Society requires such survey to be carried out or if
181
parts of the system are condemned or found defective or broken so as to affect the
182
Vessel's class, in which case the Sellers shall pay these costs and expenses.

183
(iii) The Buyers' representative(s) shall have the right to be present in the drydock, as
184
observer(s) only without interfering with the work or decisions of the Classification
185
Society surveyor.

186
(iv) The Buyers shall have the right to have the underwater parts of the Vessel cleaned
187
and painted at their risk, cost and expense without interfering with the Sellers' or the
188
Classification Society surveyor's work, if any, and without affecting the Vessel's timely
189
delivery. If, however, the Buyers' work in drydock is still in progress when the
190
Sellers have completed the work which the Sellers are required to do, the additional
191
docking time needed to complete the Buyers' work shall be for the Buyers' risk, cost and
192
expense. In the event that the Buyers' work requires such additional time, the Sellers
193
may upon completion of the Sellers' work tender Notice of Readiness for delivery whilst
194
the Vessel is still in drydock and, notwithstanding Clause 5(a), the Buyers shall be
195
obliged to take delivery in accordance with Clause 3 (Payment), whether the Vessel is in
196
drydock or not.

197
*6 (a) and 6 (b) are alternatives; delete whichever is not applicable. In the absence of deletions,
198
alternative 6 (a) shall apply.

199
**Notes or memoranda, if any, in the surveyor's report which are accepted by the Classification 
200
Society without condition/recommendation are not to be taken into account.

Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
201
7.    Spares, bunkers and other items

202
The Sellers shall deliver the Vessel to the Buyers with everything belonging to her on board
203
and on shore at delivery. All spare parts and spare equipment including spare tail-end shaft(s) and/or
204
spare propeller(s)/propeller blade(s), if any, belonging to the Vessel at the time of signing this MOA
Agreementinspection
205
used or unused, whether on board or not shall become the Buyers' property, but spares on
206
order are excluded. Forwarding charges, if any, shall be for the Buyers' account. The Sellers
207
are not required to replace spare parts including spare tail-end shaft(s) and spare
208
propeller(s)/propeller blade(s) which are taken out of spare and used as replacement prior to
209
delivery, but the replaced items shall be the property of the Buyers. Unused stores and
210
provisions shall be included in the sale and be taken over by the Buyers without extra payment.

211
Library and forms exclusively for use in the Sellers' vessel(s) and captain's, officers’ and crew's
212
personal belongings including the slop chest are excluded from the sale without compensation,
213
as well as the following additional items: Such list to be incorporated into this Agreement through and Addendum (include list)

214
Items on board which are on hire or owned by third parties, listed as follows, are excluded from
215
the sale without compensation: Such list to be incorporated into this Agreement through and Addendum (include list)

216
Items on board at the time of inspection which are on hire or owned by third parties, not listed
217
above, shall be replaced or procured by the Sellers prior to delivery at their cost and expense.
218
The Buyers shall take over remaining bunkers and unused lubricating and hydraulic oils and
219
greases in storage tanks and unopened drums and pay either:

220
(a) *the actual net price basis FIFO calculation (excluding barging expenses) as evidenced by invoices or vouchers; or
Latest one (1) calendar day prior to the anticipated date of delivery of the Vessel, the quantities of bunkers, lubricating and hydraulic oils and greases remaining on board shall be measured jointly by the Seller's representative and the Buyer's familiarisation crew on board (acting as Buyers’ representative) with an agreed allowance of reasonable consumption up to the actual physical delivery and a relevant statement to be agreed and signed by both Parties’ aforementioned representatives. Agreed allowance for consumption for the period between the joint survey and the time of physical delivery will be subtracted from the figures agreed in said survey and shall be included in the above statement. The Buyers shall pay for the quantities mentioned in the aforesaid duly executed statement in United States Dollars according to Clause 3 of this Agreement.

221
(b) *the current net market price (excluding barging expenses) at the port and date of delivery
222
of the Vessel or, if unavailable, at the nearest bunkering port,

223
for the quantities taken over.

224
Payment under this Clause shall be made at the same time and place and in the same
225
currency as the Purchase Price.

226
"inspection" in this Clause 7, shall mean the Buyers' inspection according to Clause 4(a) or 4(b)
227
(Inspection), if applicable. If the Vessel is taken over without inspection, the date of this
228
Agreement shall be the relevant date.

229
*(a) and (b) are alternatives, delete whichever is not applicable. In the absence of deletions
230
alternative (a) shall apply.

231
8.    Documentation

232
The place of closing: in the premises of the Escrow Agent with the physical presence of the Parties, or by virtual/ electronic attendance of the Parties’ authorised representatives.

233
(a) In exchange for payment of the Purchase Price and any and all other sums payble on delivery by the Buyers to the Sellers under this Agreement the Sellers shall provide the Buyers with the the documents reasonably required for the registration of the Vessel in the Buyers’ name, and the Buyers shall provide the Sellers with all documents (indicatively corporate, shareholding etc.) evidencing Buyers’ lawful actions to authorise the

Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
execution, delivery and performance of this Agreement. These documents to be mutually agreed between Buyers and Sellers as promptly as possible and to form an addendum to this Agreement (the “Addendum”), but the agreement and execution of such Addendum and any disputes thereof shall not prejudice this Agreement nor shall delay the lodging of the Deposit. Should the Parties fail to agree such Addendum timely before the Vessel’s anticipated delivery, the below Clause 8 will be reinstated and apply.

234
following delivery documents:

235
(i) Legal Bill(s) of Sale in a form recordable in the Buyers’ Nominated Flag State,
236
transferring title of the Vessel and stating that the Vessel is free from all mortgages,
237
encumbrances and maritime liens or any other debts whatsoever, duly notarially attested
238
and legalised or apostilled, as required by the Buyers’ Nominated Flag State;

239
(ii) Evidence that all necessary corporate, shareholder and other action has been taken by
240
the Sellers to authorise the execution, delivery and performance of this Agreement;

241
(iii) Power of Attorney of the Sellers appointing one or more representatives to act on behalf
242
of the Sellers in the performance of this Agreement, duly notarially attested and legalised
243
or apostilled (as appropriate);

244
(iv) Certificate or Transcript of Registry issued by the competent authorities of the flag state
245
on the date of delivery evidencing the Sellers’ ownership of the Vessel and that the
246
Vessel is free from registered encumbrances and mortgages, to be faxed or e-mailed by
247
such authority to the closing meeting with the original to be sent to the Buyers as soon as
248
possible after delivery of the Vessel;

249
(v) Declaration of Class or (depending on the Classification Society) a Class Maintenance
250
Certificate issued within three (3) Banking Days prior to delivery confirming that the
251
Vessel is in Class free of condition/recommendation;

252
(vi) Certificate of Deletion of the Vessel from the Vessel's registry or other official evidence of
253
deletion appropriate to the Vessel's registry at the time of delivery, or, in the event that
254
the registry does not as a matter of practice issue such documentation immediately, a
255
written undertaking by the Sellers to effect deletion from the Vessel's registry forthwith
256
and provide a certificate or other official evidence of deletion to the Buyers promptly and
257
latest within four (4) weeks after the Purchase Price has been paid and the Vessel has
258
been delivered;

259
(vii) A copy of the Vessel's Continuous Synopsis Record certifying the date on which the
260
Vessel ceased to be registered with the Vessel's registry, or, in the event that the registry
261
does not as a matter of practice issue such certificate immediately, a written undertaking
262
from the Sellers to provide the copy of this certificate promptly upon it being issued
263
together with evidence of submission by the Sellers of a duly executed Form 2 stating
264
the date on which the Vessel shall cease to be registered with the Vessel's registry;

265
(viii) Commercial Invoice for the Vessel;

266
(ix) Commercial Invoice(s) for bunkers, lubricating and hydraulic oils and greases;

267
(x) A copy of the Sellers’ letter to their satellite communication provider cancelling the
268
Vessel’s communications contract which is to be sent immediately after delivery of the
269
Vessel;

270
(xi) Any additional documents as may reasonably be required by the competent authorities of
271
the Buyers’ Nominated Flag State for the purpose of registering the Vessel, provided the
272
Buyers notify the Sellers of any such documents as soon as possible after the date of
273
this Agreement; and

274
(xii) The Sellers’ letter of confirmation that to the best of their knowledge, the Vessel is not
275
black listed by any nation or international organisation.

276
(b) At the time of delivery the Buyers shall provide the Sellers with:

Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
277
(i) Evidence that all necessary corporate, shareholder and other action has been taken by
278
the Buyers to authorise the execution, delivery and performance of this Agreement; and

279
(ii) Power of Attorney of the Buyers appointing one or more representatives to act on behalf
280
of the Buyers in the performance of this Agreement, duly notarially attested and legalised
281
or apostilled (as appropriate).

282
(c) If any of the documents listed in the Addendum Sub-clauses (a) and (b) above are not in the English
283
language they shall be accompanied by an English translation by an authorised translator or
284
certified by a lawyer qualified to practice in the country of the translated language.

285
(d) The Parties shall to the extent possible exchange copies, drafts or samples of the
286
documents listed in Sub-clause (a) and Sub-clause (b) above for review and comment by the
287
other party not later than (state number of days), or if left blank, nine (9) days prior to the
288
Vessel’s intended date of readiness for delivery as notified by the Sellers pursuant to
289
Clause 5(b) of this Agreement.

290
(e) Concurrent with the exchange of documents in the "Addendum" Sub-clause (a) and Sub-clause (b) above,
291
the Sellers shall also hand to the Buyers the classification certificate(s) as well as all plans,

292
drawings and manuals, (excluding ISM/ISPS manuals, Vessel Response Plan for OPA 90 and SOPEP), which are on board the Vessel. Other
293
certificates which are on board the Vessel shall also be handed over to the Buyers unless
294
the Sellers are required to retain same, in which case the Buyers have the right to take copies.

295
(f) Other technical documentation which may be in the Sellers' possession shall promptly after
296
delivery be forwarded to the Buyers at their expense, if they so request. The Sellers may keep
297
the Vessel's log books but the Buyers have the right to take copies of same up to six (6) months back, counting as from the date the Sellers tender Notice of Readiness with all relevant personal data protected by EU GDPR regulation erased. The Buyers undertake that the copies of the log books are solely for their internal reference and shall not share same with any external person or entity.

298
(g) The Parties shall sign and deliver to each other a Protocol of Delivery and Acceptance
299
confirming the date and time of delivery of the Vessel from the Sellers to the Buyers.

300
9.    Encumbrances

301
The Sellers warrant that the Vessel, at the time of delivery, is free from all charters,
302
encumbrances, mortgages and maritime liens or any other debts whatsoever, and is not subject
303
to Port State or other administrative detentions. The Sellers hereby undertake to indemnify the
304
Buyers against all consequences of claims made against the Vessel which have been incurred
305
prior to the time of delivery.

306
10.  Taxes, fees and expenses

307
Any taxes, fees and expenses in connection with the purchase and registration in the Buyers'
308
Nominated Flag State shall be for the Buyers' account, whereas similar charges in connection
309
with the closing of the Sellers' register shall be for the Sellers' account.

310
11.  Condition on delivery

311
The Vessel shall be delivered to the Buyers in substantially the same condition as she was at the time of this Agreement, fair wear and tear excepted and with everything belonging to her shall be at the Sellers' risk and expense until she is
312
delivered to the Buyers, but subject to the terms and conditions of this Agreement. she shall be
313
delivered and taken over as she was at the time of inspection, fair wear and tear excepted.

314
However, the Vessel shall be delivered free of cargo and free of stowaways with her Class
315
maintained without condition/recommendation*, free of average damage affecting the Vessel's
316
class, and with her classification certificates and national certificates, as well as all other

317
certificates the Vessel had at the time of inspection, valid and unextended for a period of three (3) months after delivery, without

Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
318
condition/recommendation* by the Classification Society or the relevant authorities at the time
319
of delivery.

320
"inspection" in this Clause 11, shall mean the Buyers' inspection according to Clause 4(a) or
321
4(b) (Inspections), if applicable. If the Vessel is taken over without inspection, the date of this
322
Agreement shall be the relevant date.

323
*Notes and memoranda, if any, in the surveyor's report which are accepted by the Classification
324
Society without condition/recommendation are not to be taken into account.

325
12.  Name/markings

326
Upon delivery the Buyers undertake to change the name of the Vessel and alter funnel
327
markings.

328
13.  Buyers' default

329
Should the Deposit not be lodged in accordance with Clause 2 (Deposit), the Sellers have the
330
right to cancel this Agreement, and they shall be entitled to claim compensation for their losses
331
and for all expenses incurred together with interest.
332
Should the Purchase Price not be paid in accordance with Clause 3 (Payment), the Sellers
333
have the right to cancel this Agreement, in which case the Deposit together with interest
334
earned, if any, shall be released to the Sellers. If the Deposit does not cover their loss, the
335
Sellers shall be entitled to claim further compensation for their losses and for all expenses
336
incurred together with interest.

337
14.  Sellers' default

338
Should the Sellers fail to give Notice of Readiness in accordance with Clause 5(b) or fail to be
339
ready to validly complete a legal transfer by the Cancelling Date the Buyers shall have the
340
option of cancelling this Agreement. If after Notice of Readiness has been given but before
341
the Buyers have taken delivery, the Vessel ceases to be physically ready for delivery and is not
342
made physically ready again by the Cancelling Date and new Notice of Readiness given, the
343
Buyers shall retain their option to cancel. In the event that the Buyers elect to cancel this
344
Agreement, the Deposit together with interest earned, if any, shall be released to them
345
immediately.

346
Should the Sellers fail to give Notice of Readiness by the Cancelling Date or fail to be ready to
347
validly complete a legal transfer as aforesaid they shall make due compensation to the Buyers
348
for their loss and for all expenses together with interest if their failure is due to proven
349
negligence and whether or not the Buyers cancel this Agreement.

350
15.  Buyers' representatives

351
After this Agreement has been signed by the Parties and the Deposit has been confirmed as lodged, the
352
Buyers have the right to place two (2) representatives on board the Vessel for a maximum of thirty(30) days
prior Vessel's intended delivery at their sole risk and
353
expense and subject to the Vessel’s safe manning requirements and those of the Sellers and/or Ship Manager in relation to infectious diseases / epidemics (including Covid-19) or any other safety precautions.

354
These representatives are on board for the purpose of familiarisation and in the capacity of
355
observers only, and they shall not interfere in any respect with the operation of the Vessel. The
356
Buyers and the Buyers’ representatives shall sign the Sellers' P&I Club’s standard letter of
357
indemnity prior to their embarkation.and the Buyers shall pay US$20 per day per representative for victualling, plus any communication expenses at cost as presented by the Seller at the time of delivery. All Buyers’ representatives that are due to board the Vessel shall a) be seamen and members of the Buyers’ crew.
The Buyers’ representatives, while on board the Vessel, shall at all times comply and follow all Sellers’ safety procedures.

Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
358
16.  Law and Arbitration
 
359
(a) *This Agreement shall be governed by and construed in accordance with English law and
360
any dispute arising out of or in connection with this Agreement shall be referred to arbitration in
361
London in accordance with the Arbitration Act 1996 or any statutory modification or re-
362
enactment thereof save to the extent necessary to give effect to the provisions of this Clause.

363
The arbitration shall be conducted in accordance with the London Maritime Arbitrators
364
Association (LMAA) Terms current at the time when the arbitration proceedings are
365
commenced.

366
The reference shall be to three arbitrators. A party wishing to refer a dispute to arbitration shall
367
appoint its arbitrator and send notice of such appointment in writing to the other party requiring
368
the other party to appoint its own arbitrator within fourteen (14) calendar days of that notice and
369
stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own
370
arbitrator and gives notice that it has done so within the fourteen (14) days specified. If the
371
other party does not appoint its own arbitrator and give notice that it has done so within the
372
fourteen (14) days specified, the party referring a dispute to arbitration may, without the
373
requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator
374
and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on
375
both Parties as if the sole arbitrator had been appointed by agreement.

376
In cases where neither the claim nor any counterclaim exceeds the sum of US$100,000 the
377
arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at
378
the time when the arbitration proceedings are commenced.

379
(b) *This Agreement shall be governed by and construed in accordance with Title 9 of the
380
United States Code and the substantive law (not including the choice of law rules) of the State
381
of New York and any dispute arising out of or in connection with this Agreement shall be
382
referred to three (3) persons at New York, one to be appointed by each of the parties hereto,
383
and the third by the two so chosen; their decision or that of any two of them shall be final, and
384
for the purposes of enforcing any award, judgment may be entered on an award by any court of
385
competent jurisdiction. The proceedings shall be conducted in accordance with the rules of the
386
Society of Maritime Arbitrators, Inc.

387
In cases where neither the claim nor any counterclaim exceeds the sum of US$ 100,000 the
388
arbitration shall be conducted in accordance with the Shortened Arbitration Procedure of the
389
Society of Maritime Arbitrators, Inc.

390
(c) This Agreement shall be governed by and construed in accordance with the laws of
391
(state place) and any dispute arising out of or in connection with this Agreement shall be
392
referred to arbitration at (state place), subject to the procedures applicable there.

393
*16(a), 16(b) and 16(c) are alternatives; delete whichever is not applicable. In the absence of
394
deletions, alternative 16(a) shall apply.

395
17.  Notices

396
All notices to be provided under this Agreement shall be in writing.

397
Contact details for recipients of notices are as follows:

398
For the Buyers: Trafigura Maritime Logistics Pte. Ltd –
c/o Trafigura Ltd. Rue Jargonannt, 1, 1207 Geneva Switzerland

399
For the Sellers:
c/o PERFORMANCE SHIPPING MANAGEMENT INC.
373 Syngrou Ave. & 2-4   Ymittou str.
17564, Palaio Faliro, Athens, Greece

Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
Tel:
Email:

Any commercial exchanges between the Parties to take place via the broking channel.

400
18.  Entire Agreement

401
The written terms of this Agreement comprise the entire agreement between the Buyers and
402
the Sellers in relation to the sale and purchase of the Vessel and supersede all previous
403
agreements whether oral or written between the Parties in relation thereto.

404
Each of the Parties acknowledges that in entering into this Agreement it has not relied on and
405
shall have no right or remedy in respect of any condition, covenant, promise, term, statement, representation, assurance or
406
warranty (whether or not made negligently) other than as is expressly set out in this Agreement.

407
Any terms, conditions, covenant, promise, terms, statement, representation, assurance or warranty capable of being implied into this Agreement by any applicable custom, practice, statute(including without limitation, the Sale of Goods Act or any statutory modification or re-enactment thereof) or law are hereby excluded to
408
the extent that such exclusion can legally be made. Nothing in this Clause shall limit or exclude
409
any liability for fraud.

RIDER CLAUSES

19. Confidentiality
All details of this transaction to be kept strictly private and confidential. This Agreement and its negotiation and terms (the “Confidential Information”) are private and confidential between the Buyers, the Sellers and their affiliates, and the Parties or their affiliates shall not disclose Confidential Information to any other person without the prior written consent of the other Party, provided that nothing in this clause shall preclude a Party from disclosing Confidential Information:

1. to the ultimate shareholders of such Party, its affiliates and co-investors and its and their members, advisory committee members, directors, officers, employees, consultants, agents, representatives, professional advisers, insurers, auditors, financiers and to the Vessel’s technical and commercial managers (collectively, the “Nominated Representatives”);
2. to the extent required in connection with the employment of the Vessel, to the Vessel’s actual or potential charterers;
3. to the extent required by law or regulation or any governmental or other authority, or the rules of any relevant stock exchange, indicatively the US SEC and NASDAQ;
4. for insurance, financing and registration purposes of the Vessel; or
5. which is in the public domain, other than as a result of breach of this clause by or through such party. Should however details of the sale become known or reported on the market, neither the Buyers nor the Sellers shall have the right to withdraw from the sale or to fail to fulfil their obligations under this Agreement.

20. Anti-Corruption Obligation

(a) Each Party respectively warrants and undertakes to the other that in connection with this Agreement, on the date of this Agreement and on a continuing basis until Delivery:
(i) it has implemented adequate internal procedures designed to ensure compliance with the UK Bribery Act 2010, the United States Foreign Corrupt Practices Act of 1977 or any other applicable anti-money laundering and anti-corruption laws and regulations, and it shall not authorise the giving or offering of any financial or other advantage with the intention of inducing or rewarding an individual or entity to improperly perform an activity undertaken in the course of an individual’s employment or connected to an entity’s business activities (the “Anti-Corruption Controls”); and
(ii) it has not authorised and it will not authorise, in connection with the performance of this Agreement, any financial or other advantage to or for the benefit of any public official, civil servant, political party, political party official, candidate for office, or any other public or private individual or entity where such authorisation would

Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
violate the Anti-Corruption Controls and that neither it nor any of its affiliates has committed any breach of applicable anti-corruption or anti-money laundering legislation in connection with the negotiation or performance of this Agreement.

(b) In the event of any breach of the warranties and undertakings in this Clause, the non-breaching Party may terminate this Agreement with immediate effect upon written notice to the other Party.

21. Sanctions Clause

(1) In this Clause 21, “Sanctions” means the economic or financial sanctions laws and/or regulations, trade embargoes, prohibitions, restrictive measures, decisions, executive orders or notices from regulators implemented, adapted, imposed, administered, enacted and/or enforced by any of: (i) the United States of America; (ii) the United Nations; (iii) the European Union, the United Kingdom, Singapore; and/or (iv) any other applicable country or territory.

(2) The Parties warrant that as at the date of this Agreement they and their respective Affiliates are not the subject of Sanctions.
Sellers warrant that they and the Vessel are not: (a) the subject of Sanctions; or
(b) owned or controlled (whether individually or jointly) by a party or parties which is/are the subject of Sanctions.

(3) It is agreed that all activities contemplated by the Parties pursuant to this Agreement will be performed in conformity with and shall not be prohibited by Sanctions and/or any other laws if and to the extent applicable.

(4) Notwithstanding any other provision of this Clause 21 or any other clause or provision to the contrary in this Agreement, neither Party shall be required to do anything under this Agreement which constitutes a violation of, or would be in contravention of, or would expose it to the risk of designation pursuant to, any Sanction applicable to it. If at any time during this Agreement any Sanctions are changed, or new Sanctions are imposed or become effective, or there is a change in the interpretation of Sanctions which would affect a Party's performance of this Agreement (the “Notifying Party”), then notwithstanding any clause or provision to the contrary in this Agreement, the Notifying Party may, by written notice to the other Party:
(a) suspend performance until such time as the Notifying Party may lawfully perform this Agreement, provided that if suspension of performance continues for a period of twenty (20) days, the other Party shall be entitled to terminate this Agreement at any time thereafter by written notice to the Notifying Party with immediate effect; and/or
(b) terminate this Agreement.

(5) If, at any time after the execution of this Agreement but prior to the delivery of the Vessel to the Buyers, the Vessel becomes designated or subject to Sanctions which may be applicable from time to time by (i) the United States of America, (ii) the United Nations, (iii) the European Union, the United Kingdom, Singapore and/or (iv) any other applicable country or territory, and notwithstanding any other clause or provision to the contrary in this Agreement, then the Buyers shall be entitled to exercise the same remedies as provided for elsewhere in this Agreement upon giving written notice to the Sellers.

22. Trading of Vessel

a. The Buyers confirm, undertake and warrant that the Vessel:
i. is purchased for the purpose of further trading for their own account;
ii. in the 12 months following delivery to the Buyers under this Agreement, the Vessel will not be sold by Buyers for recycling and will not be recycled by Buyers(unless the Vessel is declared a casualty by her insurers).
iii. if the Buyers remain the owners of the Vessel when it is recycled (scrapped), the Buyers undertake to ensure all then applicable national or internationals laws and regulations relating to scrapping are complied with.

b. If the Buyers are in in breach of the above provisions, they will compensate the Sellers for any direct loss or expense suffered by them as a result of such breach. This is the Sellers’ sole remedy for the Buyers’ breach of

Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
this Clause.

23. No assignment and transfer /

No Party shall assign or transfer any of its rights or obligations under this Agreement without the prior written consent of the other Party, save that Buyer may, without consent, nominate an affiliate to take delivery of the Vessel. Save as expressly provided elsewhere in this Agreement, no person who is not a party to this Agreement shall have any right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Agreement.

24. Epidemics

For the purposes of this clause "Disease" means COVID-19, any mutation of COVID-19 and/or any other disease for which governmental restrictions apply. "Restrictions" means any mandatory order of the relevant authorities that relate to the Disease that prevent either:

(i) the Sellers' master, officers or crew disembarking from the Vessel and travelling from the place of delivery to their country of residence; or
(ii) the Buyers' master, officers or crew travelling to the place of delivery from their country of residence or boarding the vessel at the time of delivery.
Pursuant to Clause 5, the Sellers' nominated intended place of delivery shall be a port/place where, according to the information provided to the Sellers at/before the time of its nomination, there are no restrictions as per above at the time of nomination.

(a) If, prior to the arrival of the Vessel at the intended place of delivery, the Sellers will be unable to deliver, or the Buyers will be unable to take delivery of, the Vessel at the intended place of delivery due to Restrictions, then the party affected shall notify the other party without delay, and in any event no later than the day the Sellers' give their three (3) day notice pursuant to Clause 5 of this Agreement. Then Sellers and Buyers shall discuss in good faith and cooperate in order to quickly find the best/nearest "Alternative Place of Delivery". In such event, the Cancelling Date shall be extended by the time taken for the Vessel to move from her location at the time of the new nomination until she arrives at the Alternative Place of Delivery.

(b) If, after the arrival of the Vessel at the intended place of delivery, such place suddenly becomes subject to Restrictions, the Sellers (acting reasonably) shall nominate, and move the Vessel to, an Alternative Place of Delivery, and the Sellers shall keep the Buyers advised about the expected new delivery date, but no new pre-delivery notices shall be required to be given by the Sellers. The Cancelling Date shall be extended by the additional time required for such repositioning of the Vessel (as advised by the Sellers, acting reasonably). In case the restrictions come into place after Sellers have tendered Notice of readiness, such Notice of Readiness shall not be considered valid until the vessel is moved to "Alternate Place of Delivery" and Notice of Readiness tendered again.

(c) Any additional bunkers consumed arising from the Vessel proceeding to an Alternative Place of Delivery instead of the place of deliver originally nominated in accordance with Clause 5 shall be shared on a 50:50 basis, against presentation of reasonable supporting documentation.

(d) If the Vessel or its crew is/are quarantined at any place, then all time in connection with such quarantine shall automatically extend the Cancelling Date by the period required for the Vessel or the crew to be released from quarantine and any such costs shall be shared between the parties on a 50:50 basis.
 
25. EU ETS

a. The Sellers shall be fully responsible for and shall ensure that the Vessel complies with any in-scope emissions of any Reporting Period up to and including the date of delivery of the Vessel to Buyers under this Agreement in respect of any in-scope emissions and any respective obligations falling under the EU-ETS Directive (Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003) and the Regulation (EU) 2023/957 of the European Parliament and of the Council of 10 May 2023 concerning the EU Emissions Trading

Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
Scheme and the EU Monitoring, reporting and verification regulations, and Regulation 2023/1805 concerning Fuel EU Maritime, together with the IMO CII and EEXI Regulations, each as amended from time to time (“Regulatory Obligations”).The Buyers shall be fully responsible for any in-scope emissions and any respecting obligations falling under the Regulatory Obligations from the date of delivery onwards.

b. Sellers will on delivery, or as soon as practicable thereafter, provide or cause to be provided to Buyers the following:

i. The original Statement of Compliance, or any document of same effect, issued by relevant authorities as an evidence for Sellers’ and/or the Vessel’s compliance with MRV regulations which shall be kept on board the Vessel on delivery or couriered to Buyers immediately once issued.
ii. A Partial Emissions Report covering the reporting period from the 1st day of the year in which the Vessel is delivered to the Buyer up to and including the delivery date, which Partial Emissions Report will be duly verified and accepted by an independent verifier appointed by Buyers, at Sellers’ time and expense. Sellers and their ship managers shall ensure the data provided to the independent verifier is accurate and of good quality.

c. By no later than the date required by the Member States, administering Member States and/or administering authorities under the Regulations, Sellers shall surrender Emission Allowances for emissions incurred during the period the Vessel was under their possession and/or operation up to and including the date of delivery. Sellers shall provide Buyers with supporting evidence showing their surrender of Emission Allowances as per the regulation once available.
If, upon Buyers’ review there are corrections or adjustments to the MRV data that affect the number of Emission Allowances the Sellers are responsible for, Sellers shall be informed as soon as practicable and will not be released by Buyers until additional Emission Allowances are surrendered, as the case may be, or any further actions required are taken by them to clear the discrepancy.

d. If Sellers fail to surrender Emission Allowances in accordance with the Regulations, or fail to fulfil any of the Regulatory Obligations set out in this clause or under the Regulations, Sellers shall be liable for any and all direct and/or indirect loss and damages whatsoever Buyers suffer in that respect, including but not limited to loss and damages relating to the Vessel being denied entry to EU ports.

26. FuelEU Maritime

a. At Delivery, Sellers shall notify the Verifier and submit a FuelEU report covering the period of time responsible for the ship (so-called partial FuelEU report). No later than 1 month after the completion of the Delivery of the ship, the verifier should have completed its review of the report and entered into the FuelEU database the information for the ship.

b. At Delivery, Sellers shall notify Buyers in writing of the Vessel’s Compliance Balance (including any credits and/or penalties) accrued up to and including Delivery, and shall provide supporting documentation.

c. Any credits or penalties attributable to the Vessel’s operation prior to Delivery shall be for Sellers’ account, and any credits or penalties attributable to operation from Delivery onwards shall be for Buyers’ account.

d. Sellers shall reimburse Buyers for the value of, any Compliance Deficit (up to and including the date of delivery of the Vessel to Buyers under this Agreement) noting that the Buyers’ will be accountable for compliance on December 31 for the entire reporting period within which the Vessel’s delivery to the Buyers shall take place, at a FuelEU market (pooling) price of 195 EUR/mtCO2e.

  For and on behalf of the Sellers    For and on behalf of the Buyers
 
/s/ Andreas Nikolaos Michalopoulos
Name: Andreas Nikolaos Michalopoulos
  
/s/ Andrea Olivi
Name: Andrea Olivi

Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
  Title: Director / Attorney-in-fact
   Title: Director
 
 
       
       


Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
Exhibit 4.44
 
Execution version

BOND TERMS

FOR

Performance Shipping Inc. 9.875% senior secured USD 150,000,000 bonds 2025/2029
 
ISIN NO0013607028

1
Contents
Clause
Page
     
1.
INTERPRETATION
3
2.
THE BONDS
19
3.
THE BONDHOLDERS
21
4.
ADMISSION TO LISTING
22
5.
REGISTRATION OF THE BONDS
22
6.
CONDITIONS FOR DISBURSEMENT
22
7.
REPRESENTATIONS AND WARRANTIES
25
8.
PAYMENTS IN RESPECT OF THE BONDS
27
9.
INTEREST
30
10.
REDEMPTION AND REPURCHASE OF BONDS
30
11.
PURCHASE AND TRANSFER OF BONDS
32
12.
INFORMATION UNDERTAKINGS
33
13.
GENERAL AND FINANCIAL UNDERTAKINGS
34
14.
EVENTS OF DEFAULT AND ACCELERATION OF THE BONDS
38
15.
BONDHOLDERS’ DECISIONS
41
16.
THE BOND TRUSTEE
45
17.
AMENDMENTS AND WAIVERS
50
18.
MISCELLANEOUS
51
19.
GOVERNING LAW AND JURISDICTION
53
ATTACHMENT 2 RELEASE NOTICE – ESCROW ACCOUNT
56
 
ATTACHMENT 1 COMPLIANCE CERTIFICATE
ATTACHMENT 2 RELEASE NOTICE – ESCROW ACCOUNT

2
 
BOND TERMS between
      
         

ISSUER:
Performance Shipping Inc., a corporation duly incorporated and validly existing under the laws of the Republic Marshall Islands having its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960, with registration number 38911 and LEI-code 529900TDUX3CQLRVFO49; and
  
         

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

DATED:
15 July 2025
  
         
 
These Bond Terms shall remain in effect for so long as any Bonds remain outstanding.
  
     
 
1.
INTERPRETATION
 
1.1
Definitions
 
The following terms will have the following meanings:
 
“Accounting Standard” means GAAP.
 
“Additional Bonds” means the debt instruments issued under a Tap Issue, including any Temporary Bonds.
 
“Additional Vessel” means any new or second hand tanker vessel acquired by a Group Company with the proceeds of (a) the Bonds, including under any Tap Issue made for such purpose or (b) any Reinvestment.
 
“Additional Vessel Security” means any Security created pursuant to Clause 2.6 (Additional Security and Guarantees).
 
“Affiliate” means, in relation to any person:
 
  (a)
any person which is a Subsidiary of that person;
 

 (b)
any person with Decisive Influence over that person (directly or indirectly); and
 

 (c)
any person which is a Subsidiary of an entity with Decisive Influence over that person (directly or indirectly).
 
“Annual Financial Statements” means the audited unconsolidated and consolidated annual financial statements of the Issuer for any financial year, prepared in accordance with the Accounting Standard, such financial statements to include a profit and loss account, balance sheet, cash flow statement and management commentary or report of the board of directors.

3
“Approved Shipbroker” means any of Clarkson Plc, Fearnleys AS, Nordic Shipping AS, Arctic Shipping AS, MB Shipbrokers, Intermodal Shipbrokers, Associated Shipbroking SAM, Allied Shipbroking Inc., Optima Shipping Services S.A., or such other independent reputable ship broker nominated by the Issuer and approved by the Bond Trustee from time to time.
 
“Attachment” means any schedule, appendix or other attachment to these Bond Terms.
 
“Bond Currency” means the currency in which the Bonds are denominated, as set out in Clause 2.1 (Amount, denomination and ISIN of the Bonds).
 
“Bond Terms” means these terms and conditions, including all Attachments which form an integrated part of these Bond Terms, in each case as amended and/or supplemented from time to time.
 
“Bond Trustee” means the company designated as such in the preamble to these Bond Terms, or any successor, acting for and on behalf of the Bondholders in accordance with these Bond Terms.
 
“Bond Trustee Fee Agreement” means the agreement entered into between the Issuer and the Bond Trustee relating, among other things, to the fees to be paid by the Issuer to the Bond Trustee for the services provided by the Bond Trustee relating to the Bonds.
 
“Bondholder” means a person who is registered in the CSD as directly registered owner or nominee holder of a Bond, subject however to Clause 3.3 (Bondholders’ rights).
 
“Bondholders’ Meeting” means a meeting of Bondholders as set out in Clause 15 (Bondholders’ Decisions).
 
“Bonds” means (i) the debt instruments issued by the Issuer pursuant to these Bond Terms, including any Additional Bonds, and (ii) any overdue and unpaid principal which has been issued under a separate ISIN in accordance with the regulations of the CSD from time to time.
 
“Business Day” means a day on which both the relevant CSD settlement system and the relevant settlement system for the Bond Currency are open.
 
“Business Day Convention” means that if the last day of any Interest Period originally falls on a day that is not a Business Day, no adjustment will be made to the Interest Period.
 
“Call Option” has the meaning ascribed to such term in Clause 10.2 (Voluntary early redemption – Call Option).
 
“Call Option Repayment Date” means the settlement date for the Call Option determined by the Issuer pursuant to Clause 10.2 (Voluntary early redemption – Call Option), paragraph (d) of Clause 10.3 (Mandatory repurchase due to a Put Option Event) or a date agreed upon between the Bond Trustee and the Issuer in connection with such redemption of Bonds.
 
“Cash and Cash Equivalents” means, at any time, (on a consolidated basis for the Issuer and the Group), the aggregate amount of the Group’s:

4

 (a)
cash in hand or on deposit held by any Group Company with any bank or financial institution; and
 

 (b)
certificates of deposit issued, and bills of exchange accepted, and other cash equivalent assets of any Group Company (as such assets would be reported in the Financial Reports),
 
in each case to which a Group Company is beneficially entitled at the time and to which it has free and unrestricted access. Any amount standing to the credit of any pledged (but not blocked) account of the Group (a “Pledged Account”) shall be regarded as Cash and Cash Equivalent. However, if a Pledged Account becomes blocked, any amount standing to the credit of such Pledged Account shall not be included in the calculation of Cash and Cash Equivalents.
 
“Change of Control Event” means, where a person or group of persons acting in concert (other than Mango Shipping Corp. and/or Aliki Paliou and/or any direct descendant of Aliki Paliou) gaining Decisive Influence over the Issuer.
 
“Compliance Certificate” means a statement substantially in the form as set out in Attachment 1 hereto.
 
“Collateral Vessel” means:
 

 (a)
the vessel “P. Monterey” with IMO 9568172;
 

 (b)
the vessel “P. Sophia” with IMO 9414034; and
 

 (c)
any Additional Vessel(s) financed by a Reinvestment.

“Collateral Vessel Owners” means:


 (a)
Bock Shipping Company Inc., a corporation duly incorporated and validly existing under the laws of the Republic of Marshall Islands, having its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960, with registration number 116344;
 

 (b)
Maloelap Shipping Company Inc., a corporation duly incorporated and validly existing under the laws of the Republic of Marshall Islands, having its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960, with registration number 114826; and


(c)
any other Group Company being the owner of a Collateral Vessel.
 
“CSD” means the central securities depository in which the Bonds are registered, being Verdipapirsentralen ASA (VPS).
 
“Cure Amount” means cash proceeds actually received by the Issuer (i) in exchange for the issuance of common or preferred shares in the Issuer or (ii) as Subordinated Loans.
 
“Decisive Influence” means a person having, as a result of an agreement or through the ownership of shares or interests in another person (directly or indirectly):

5

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

 (b)
a right to elect or remove a majority of the members of the board of directors of that other person.
 
“Default Notice” has the meaning ascribed to such term in Clause 14.2 (Acceleration of the Bonds).
 
“Default Repayment Date” means the settlement date set out by the Bond Trustee in a Default Notice requesting early redemption of the Bonds.
 
“Distribution” means:
 

 (a)
payment of dividend or other distribution (whether in cash or in kind) on or in respect of share capital;


(b)
repayment or distribution of dividend or share premium reserve;
 

 (c)
redemption, repurchase or repayment of share capital or other restricted equity with repayment to shareholders;
 

 (d)
repayment or service of any Subordinated Loan; or
 

 (e)
other similar distributions or transfers of value to the direct and indirect shareholders of any Group Company or the Affiliates of such direct and indirect shareholders.
 
“Escrow Account” means an account in the name of the Issuer, blocked and pledged on first priority as security for the Issuer’s obligations under the Finance Documents.
 
“Escrow Account Pledge” means the pledge over the Escrow Account, where the bank operating the account has waived any set-off rights.
 
“Equity” means total equity, including share capital, Subordinated Loans (which shall count as equity), share premium, retained earnings, current year’s earnings, reserves and adjustments, attributable to the Group’s shareholders plus minority interests as shown in the Group’s most recent Financial Reports.
 
“Event of Default” means any of the events or circumstances specified in Clause 14.1 (Events of Default).
 
“Exchange” means:
 

 (a)
Oslo Børs (the Oslo Stock Exchange); or
 

 (b)
any regulated market as such term is understood in accordance with the Markets in Financial Instruments Directive 2014/65/EU (MiFID II) and Regulation (EU) No. 600/2014 on markets in financial instruments (MiFIR) or an equivalent third-country market (including the New York Stock Exchange, Nasdaq Stock Market and London Stock Exchange).
 
6
“Finance Documents” means these Bond Terms, the Bond Trustee Fee Agreement, any Transaction Security Document, any Security Agent Agreement any Tap Issue Addendum and any other document designated by the Issuer and the Bond Trustee as a Finance Document.
 
“Finance Lease” means any lease or hire purchase contract, a liability under which would, in accordance with the Accounting Standard, be treated as a balance sheet liability.
 
“Financial Covenants” means the financial covenants out in paragraph (a) of Clause 13.19 (Financial Covenants).
 
“Financial Indebtedness” means any indebtedness for or in respect of:


 (a)
moneys borrowed (and debit balances at banks or other financial institutions);
 

 (b)
any amount raised by acceptance under any acceptance credit facility or dematerialised equivalent;
 

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

 (d)
the amount of any liability in respect of any lease or hire purchase contract which would, in accordance with the Accounting Standard, be capitalised as an asset and booked as a corresponding liability in the balance sheet;


(e)
receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis provided that the requirements for de-recognition under the Accounting Standard are met);


(f)
any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price and, when calculating the value of any derivative transaction, only the mark to market value (or, if any actual amount is due as a result of the termination or close-out of that derivative 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 financial institution in respect of an underlying liability of a person which is not a Group Company which liability would fall within one of the other paragraphs of this definition;


(h)
any amount raised by the issue of redeemable shares which are redeemable (other than at the option of the Issuer) before the Maturity Date or are otherwise classified as borrowings under the Accounting Standard;


(i)
any amount of any liability under an advance or deferred purchase agreement, if (i) the primary reason behind entering into the agreement is to raise finance or (ii) the agreement is in respect of the supply of assets or services and payment is due more than 120 calendar days after the date of supply;
 
7

 (j)
any amount raised under any other transaction (including any forward sale or purchase agreement) having the commercial effect of a borrowing or otherwise being classified as a borrowing under the Accounting Standard; and
 

 (k)
without double counting, the amount of any liability in respect of any guarantee for any of the items referred to in paragraphs (a) to (j) above.
 
“Financial Reports” means the Annual Financial Statements and the Interim Accounts.

“First Call Date” means the Interest Payment Date falling in July 2027.

“Fleet Vessel” means any vessel from time to time wholly owned by a member of the Group (directly or indirectly) including chartered-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 the relevant member of the Group at the relevant time, and “Fleet Vessels” means more than one of them.
 
“GAAP” means generally accepted accounting practices and principles in the United States of America or in the country in which the Issuer is incorporated including, if applicable, IFRS.
 
“Group” means the Issuer and its Subsidiaries from time to time.

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

“Guarantee” means the unconditional Norwegian law guarantee and indemnity (Norwegian: “selvskyldnerkausjon”) issued by each of the Collateral Vessel Owners.
 
“IFRS” means the International Financial Reporting Standards and guidelines and interpretations issued by the International Accounting Standards Board (or any predecessor and successor thereof) in force from time to time and to the extent applicable to the relevant financial statement.
 
“Incurrence Test” has the meaning ascribed to such term in Clause 13.20 (Incurrence Test).
 
“Initial Bond Issue” means the amount to be issued on the Issue Date as set out in Clause 2.1 (Amount, denomination and ISIN of the Bonds).
 
“Initial Nominal Amount” means the Nominal Amount of each Bond on the Issue Date as set out in Clause 2.1 (Amount, denomination and ISIN of the Bonds).
 
“Insolvent” means that a person:
 

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

 (b)
suspends making payments on any of its debts generally; or
 

 (c)
is otherwise considered insolvent or bankrupt within the meaning of the relevant bankruptcy legislation of the jurisdiction which can be regarded as its centre of main interest as such term is understood pursuant to Regulation (EU) 2015/848 on insolvency proceedings (as amended from time to time).
 
8
“Interest Payment Date” means the last day of each Interest Period, the first Interest Payment Date being 17 January 2026 and the last Interest Payment Date being the Maturity Date.
 
“Interest Period” means, subject to adjustment in accordance with the Business Day Convention, the period between 17 January and 17 July each year, provided however that an Interest Period shall not extend beyond the Maturity Date.
 
“Interest Rate” means 9.875 per cent. per annum.
 
“Interim Accounts” means the unaudited consolidated quarterly financial statements of the Issuer for the quarterly period ending on each 31 March, 30 June and 30 September each year, prepared in accordance with the Accounting Standard. Such accounts to include a profit and loss account, balance sheet, cash flow statement and management commentary or report of the board of directors.
 
“ISIN” means International Securities Identification Number.

“Issue Date” means 17 July 2025.

“Issuer” means the company designated as such in the preamble to these Bond Terms.
 
“Issuer’s Bonds” means any Bonds which are owned by the Issuer or any Affiliate of the Issuer.
 
“Liquidity” means the sum of (i) any Cash and Cash Equivalents and (ii) any undrawn commitments under any revolving credit or working capital facility which is available for immediate drawing.
 
“Listing Deadline means” means 17 April 2026.

“Listing Failure Event” means:


 (a)
that the Bonds (save for any Temporary Bonds) have not been admitted to listing on Oslo Børs (the Oslo Stock Exchange) within the Listing Deadline;
 

 (b)
in the case of a successful admission to listing, that a period of 6 months has elapsed since the Bonds ceased to be admitted to listing on an Exchange; or


(c)
that the Temporary Bonds have not been admitted to listing on the Exchange where the other Bonds are listed within the later of (i) 6 months following the issue date for such Temporary Bonds and (ii) the Listing Deadline.
 
“Make Whole Amount” means an amount equal to the sum of the present value on the Repayment Date of:
 

 (a)
the Nominal Amount of the redeemed Bonds at the price as set out in paragraph (a) (ii) of Clause 10.2 (Voluntary early redemption – Call Option) as if such payment originally had taken place on the First Call Date; and


(b)
the remaining interest payments of the redeemed Bonds (less any accrued and unpaid interest on the redeemed Bonds as at the Repayment Date) to the First Call Date,

9
where the present value shall be calculated by using a discount rate of 4.03 per cent. per annum.

“Managers” means Clarksons Securities AS and Pareto Securities AS.
 
“Mandatory Redemption Event” means if the Issuer (directly or indirectly) sells or disposes of a Collateral Vessel.
 
“Mandatory Redemption Repayment Date” means the settlement date for the Mandatory Redemption Event pursuant to Clause 10.5 (Mandatory early redemption due to a Mandatory Redemption Event).
 
“Market Value” means the fair market value of the Group’s Vessels in USD, determined as the arithmetic mean of independent valuations of the Vessels obtained from two Approved Shipbrokers. Such valuations shall be made on the basis of a sale for prompt delivery for cash at arm’s length on normal commercial terms as between a willing seller and willing buyer, on an “as is where is” basis, free of any existing charters or other contracts for employment. The cost of such valuations shall be for the account of the Issuer.
 
“Material Adverse Effect” means a material adverse effect on:
 

 (a)
the ability of the Issuer to perform and comply with its obligations under any Finance Document; or


(b)
the validity or enforceability of any Finance Document.
 
“Maturity Date” means 17 July 2029, adjusted according to the Business Day Convention.
 
“Maximum Issue Amount” means the maximum amount that may be issued under these Bond Terms as set out in Clause 2.1 (Amount, denomination and ISIN of the Bonds).
 
“Net Disposal Proceeds” means the cash proceeds following a Mandatory Redemption Event less any taxes and reasonable and documented expenses in relation to that Mandatory Redemption Event which are incurred by any Group Company to persons who are not a Group Company.
 
“Net Insurance Proceeds” means the insurance proceeds received following a Total Loss Event less any reasonable and documented expenses in relation to that insurance claim which are incurred by any Group Company to persons who are not a Group Company.
 
“Net Proceeds” means the proceeds from the issuance of the Bonds (net of fees and legal cost of the Managers and, if required by the Bond Trustee, the Bond Trustee fee, and any other cost and expenses incurred in connection with the issuance of the Bonds).
 
“Nominal Amount” means the nominal value of each Bond at any time. The Nominal Amount may be amended pursuant to paragraph (j) of Clause 16.2 (The duties and authority of the Bond Trustee).
 
“Obligor” means the Issuer and any Collateral Vessel Owner.
 
“Outstanding Bonds” means any Bonds not redeemed or otherwise discharged.

10
“Overdue Amount” means any amount required to be paid by the Issuer under the Finance Documents but not made available to the Bondholders on the relevant Payment Date or otherwise not paid on its applicable due date.
 
“Partial Payment” means a payment that is insufficient to discharge all amounts then due and payable under the Finance Documents.
 
“Paying Agent” means the legal entity appointed by the Issuer to act as its paying agent with respect to the Bonds in the CSD.
 
“Payment Date” means any Interest Payment Date or any Repayment Date.

“Permitted Distribution” means any Distribution:


 (a)
by the Issuer, provided that no Event of Default has occurred and is continuing and subject to being in compliance with the Incurrence Test, up to 25.00 per cent. of net profit (excluding any loss or gain from sale of Vessels) of the Group in the previous calendar year, and where any unutilised portion of such net profit may not be carried forward;
 

 (b)
any Distribution made in respect of the Preference Shares in the Issuer made in accordance with the terms and conditions regulating such Preference Shares (at the Issue Date);


(c)
by a Group Company (other than the Issuer), if:
 
  (i)
such Distribution is made to another Group Company; or
 

 (ii)
made by a Group Company which is not wholly-owned, is made pro rata to its shareholders on the basis of their respective ownership at the time, provided that the shareholders not being Group Companies are Third Party Shareholders; or


(d)
in the form of repurchase of shares by the Issuer in connection with incentive schemes and/or option programs provided that no Event of Default has occurred and is continuing and such repurchase of shares shall not, in any financial year, exceed USD 3,000,000 (or the equivalent in any other currency) in aggregate.
 
“Permitted Financial Indebtedness” means any Financial Indebtedness:
 

 (a)
incurred under the issuance of the Bonds or arising under any other Finance Documents (including Additional Bonds issued under a Tap Issue);
 

 (b)
existing at the Issue Date;
 

 (c)
arising under any Unsecured Financial Indebtedness;
 

 (d)
arising under any Subordinated Loans;
 

 (e)
arising under any Permitted Loan or a Permitted Guarantee;

11

 (f)
of any person or entity acquired by a Group Company after the Issue Date which is incurred under arrangements in existence at the date of the acquisition, but not incurred or increased or having its maturity date extended in contemplation of, or since, that acquisition, and provided that the terms of such financing is on arm’s length basis;
 

 (g)
arising under any Vessel Financing;
 

 (h)
incurred by any Group Company in the ordinary course of business for working capital purposes;


(i)
any Finance Leases incurred in the ordinary course of business;
 

 (j)
existing and future bid-, payment and performance bonds, guarantees and letters of credit incurred by (including under any counterindemnity obligations in respect thereof) any Group Company in the ordinary course of business;


(k)
incurred by any Group Company under any interest rate and currency hedging agreements relating to any Permitted Financial Indebtedness and any other derivative transaction entered into (for non-speculative purposes) in connection with protection against or benefit from fluctuation in any rate or price in the ordinary course of business;
 

 (l)
arising under any unsecured intercompany loans between any Group Companies, whether or not such intercompany loans are subordinated to the obligations of any other Permitted Financial Indebtedness;


(m)
arising in the ordinary course of banking arrangements for the purposes of netting debt and credit balances (cash pool or otherwise) between Group Companies;
 

 (n)
any refinancing, extensions, amendment or replacement of any of (b) to (n) above from time to time; and


(o)
arising under any Financial Indebtedness not permitted by the preceding paragraphs and incurred by the Group in an aggregate outstanding principal amount which does not at any time exceed USD 10,000,000 (or its equivalent in other currencies).
 
“Permitted Guarantee” means:
 

 (a)
any guarantee made or granted under the Finance Documents;
 

 (b)
any guarantee which constitutes a guarantee issued in respect of a liability incurred by another Group Company in the ordinary course of business (including for the avoidance of doubt, any guarantee and/or indemnity issued in connection with such Group Company defending or contesting any claim (howsoever defined) made against it, any of its managers, agents or any other person acting on its behalf);


(c)
any guarantee in respect of, or constituted by, Permitted Financial Indebtedness;
 

 (d)
any guarantee in respect of, or constituted by, Permitted Financial Indebtedness (where Permitted Security is granted);

12

 (e)
any guarantee made in substitution for an extension of credit which is a Permitted Loan to the extent that the issuer of the relevant guarantee would have been entitled to make a loan in an equivalent amount pursuant to the definition of Permitted Loan to the person whose obligations are being guaranteed;
 

 (f)
any guarantee given or arising under legislation relating to tax or corporate law under which any Group Company assumes general liability for the obligations of another Group Company incorporated or tax resident in the same country;


(g)
guarantees granted by persons or undertakings acquired by a Group Company and existing at the time of completion of such acquisition provided that (i) the guarantee was not created in contemplation of the acquisition of the relevant person or undertaking and (ii) the amount guaranteed under the relevant guarantee has not increased in contemplation of or since the completion of the acquisition of the relevant person or undertaking;
 

 (h)
any customary representations and warranties granted in connection with a disposal not prohibited hereunder and any indemnity granted in the ordinary course of the documentation of an acquisition or disposal transaction not prohibited hereunder;
 

 (i)
any guarantee for Unsecured Financial Indebtedness provided that similar guarantee is granted in favour of the Bond Trustee (in respect of the Bonds); and


(j)
any guarantee not falling within any of the preceding sub-paragraphs, if the aggregate outstanding principal amount of which across the Group does not at any time exceed USD 10,000,000 (or its equivalent in other currencies).
 
“Permitted Loan” means:
 

 (a)
normal trade credit and prepayment of suppliers made or granted by any Group Company in the ordinary course of business;
 

 (b)
any loan in respect of deferred consideration for, or any vendor loan in connection with, any disposal not prohibited hereunder;
 

 (c)
any loan existing at the time of (but not incurred in contemplation of) the acquisition of any company acquired by a Group Company after the Issue Date and made by that company or its Subsidiaries provided that the amount of that loan is not increased after completion of the acquisition;
 

 (d)
any unsecured intercompany loan between any Group Companies;
 

 (e)
Financial Indebtedness which is referred to in the definition of, or otherwise constitutes Permitted Financial Indebtedness;


(f)
any loan granted by a Group Company in the ordinary course of documentation under a charter-in lease agreement to the counterparty (or an Affiliate of such counterparty) thereunder; and

13

 (g)
not falling within any of the preceding sub-paragraphs, the aggregate outstanding principal amount of which across the Group does not at any time exceed USD 5,000,000 (or its equivalent in other currencies).
 
“Permitted Security” means:
 

 (a)
Security granted in respect of Permitted Financial Indebtedness (other than in respect of paragraphs (c), (d), (l) and (o) of that definition);
 

 (b)
any lien arising by operation of law;
 

 (c)
any netting or set-off arrangement entered into by any Group Company in the ordinary course of its banking arrangements for the purpose of netting debit and credit balances of any Group Companies (if applicable);


(d)
any Security over rental deposits arising in the ordinary course of business in respect of any property leased or licensed by any Group Company;
 

 (e)
any Security arising under any retention of title, hire purchase or conditional sale arrangement or arrangements having similar effect in respect of goods supplied to any Group Company in the ordinary course of trading and on the supplier’s standard or usual terms and not arising as a result of any default or omission by any such Group Company; and


(f)
any Security not falling within any of the preceding sub-paragraphs, if the Security is granted over assets having an aggregate value, or which secure Financial Indebtedness in an aggregate amount of, up to USD 10,000,000 (or its equivalent in other currencies).
 
“Preference Shares” means any class of equity securities issued by the Issuer that entitles the holders thereof to receive preferential treatment in terms of dividends and/or liquidation proceeds, as specified in the Issuer’s articles of incorporation or bylaws and where the Preference Shares may have specific rights, preferences, and privileges, including, but not limited to, a fixed dividend rate, priority over common shares in the event of liquidation, and potential conversion rights into common shares, as well as any other rights as may be determined by the Issuer’s governing documents or applicable law.
 
“Put Option” has the meaning ascribed to such term in Clause 10.3 (Mandatory repurchase due to a Put Option Event).
 
“Put Option Event” means a Change of Control Event or a Share De-Listing Event.
 
“Put Option Repayment Date” means the settlement date for the Put Option pursuant to Clause 10.3 (Mandatory repurchase due to a Put Option Event).
 
“Quarter Date” means, in each financial year, 31 March, 30 June, 30 September and 31 December.
 
“Relevant Jurisdiction” means the country in which the Bonds are issued, being Norway.

14
“Reinvestment Account” an account pledged and blocked in favour of the Security Agent (on behalf of the Bondholders), and where the proceeds deposited on such account shall be applied in accordance with Clause 13.18 (Reinvestment and Reinvestment Account).
 
“Relevant Record Date” means the date on which a Bondholder’s ownership of Bonds shall be recorded in the CSD as follows:
 

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

 (b)
for the purpose of casting a vote with regard to Clause 15 (Bondholders’ Decisions), the date falling on the immediate preceding Business Day to the date of that Bondholders’ decision being made, or another date as accepted by the Bond Trustee.
 
“Repayment Date” means any Call Option Repayment Date, the Default Repayment Date, any Put Option Repayment Date, any Mandatory Redemption Repayment Date, any Total Loss Repayment Date, the Tax Event Repayment Date or the Maturity Date.
 
“Secured Obligations” means all present and future liabilities and obligations of the Obligors to any of the Secured Parties under the Finance Documents.
 
“Secured Parties” means the Security Agent and the Bond Trustee on behalf of itself and the Bondholders.
 
“Securities Trading Act” means the Securities Trading Act of 2007 no. 75 of the Relevant Jurisdiction.
 
“Security” means a mortgage, charge, pledge, lien, security assignment or other security interest securing any obligation of any person or any other agreement or arrangement having a similar effect.
 
“Security Agent” means the Bond Trustee or any successor Security Agent, acting for and on behalf of the Secured Parties in accordance with any Security Agent Agreement or any other Finance Document.
 
“Security Agent Agreement” means any agreement other than these Bond Terms whereby the Security Agent is appointed to act as such in the interest of the Bond Trustee (on behalf of itself and the Bondholders).
 
“Security Provider” means each Collateral Vessel Owner and each other person granting Transaction Security.
 
“Share De-Listing Event” means an event where the Issuer’s common shares are de-listed from NASDAQ and are not immediately thereafter listed on another Exchange.
 
“Subordinated Loan” means any unsecured loan granted to the Issuer which is fully subordinated to the Bonds and any other amounts due or to become due under the Finance Documents to the satisfaction of the Bond Trustee and where any servicing of interest or principal of such loan is subject to all present and future obligations and liabilities under the Finance Documents having been discharged in full provided that payments may be made by the Issuer in respect of any Subordinated Loan where such payment would constitute a Permitted Distribution.

15
“Subsidiary” means a person over which another person has Decisive Influence.

“Summons” means the call for a Bondholders’ Meeting or a Written Resolution as the case may be.
 
“Tap Issue” has the meaning ascribed to such term in Clause 2.1 (Amount, denomination and ISIN of the Bonds).
 
“Tap Issue Addendum” has the meaning ascribed to such term in Clause 2.1 (Amount, denomination and ISIN of the Bonds).
 
“Tax Event Repayment Date” means the date set out in a notice from the Issuer to the Bondholders pursuant to Clause 10.6 (Early redemption option due to a tax event).
 
“Temporary Bonds” has the meaning ascribed to such term in Clause 2.1 (Amount, denomination and ISIN of the Bonds).
 
“Transaction Security” means the Security created or expressed to be created in favour of the Security Agent (on behalf of the Secured Parties) pursuant to the Transaction Security Documents.
 
“Transaction Security Documents” means any Guarantee and each other document entered into by any Group Company creating or expressed to create any Transaction Security over all or any part of its assets in respect of the Secured Obligations.
 
“Third Party Shareholders” means any third party shareholders of Group Companies that are not wholly owned, always excluding direct and indirect shareholders of the Issuer.
 
“Total Assets” means the aggregate book value of all tangible and intangible assets of the Group, as evidenced by the balance sheet at the relevant Quarter Date, as set out in the relevant Financial Report.
 
“Total Net Debt” means, at any time, the aggregate amount of all interest bearing Financial Indebtedness of the Group but:
 

 (a)
excluding any such obligations to any other Group Company;
 

 (b)
excluding any such obligations in respect of any Subordinated Loan;
 

 (c)
including, in the case of Finance Leases only, their capitalised value; and
 
 
(d)
deducting the aggregate amount of Cash and Cash Equivalents at that time, and so that no amount shall be included or excluded more than once.

“Total Loss Event” means an actual, agreed, compromised or constructive total loss of a Collateral Vessel.

16
“Total Loss Repayment Date” means the settlement date for the Total Loss Event pursuant to Clause 10.4 (Mandatory early redemption due to a Total Loss Event).
 
“Unsecured Financial Indebtedness” means unsecured bonds, notes or similar instruments issued by the Issuer and unsecured credit facilities provided to the Issuer by commercial banks, export credit agencies or other financial institutions, in each case with no (i) financial support (loans, indemnities or guarantees) from any other Group Company (except as permitted under paragraph (i) of the definition of Permitted Guarantee), or (ii) amortization or maturity date falling earlier than 6 months after the Maturity Date.
 
“Value Adjusted Total Assets” means the Total Assets adjusted by the difference between the fleet Market Value and the book value of the fleet Vessels.
 
“Value Adjusted Equity” means Equity adjusted by the difference between the fleet Market Value and the book value of the fleet Vessels.
 
“Value Adjusted Equity Ratio” means the ratio of Value Adjusted Equity to Value Adjusted Total Assets.
 
“Vessel” means each vessel owned, operated, or leased by the Group that is specifically used or intended to be used in the transportation of cargo in connection with the Group’s business. This definition shall include any replacements, substitutions, or additions to such vessels, as well as any vessels that may be acquired by the Group during the term of the Bonds.
 
“Vessel LTV Ratio” means, at any time, the ratio, expressed as a percentage, of all interest bearing Financial Indebtedness which is secured by a vessel mortgage or the shares in any entity owning a Vessel (excluding the Bonds) to the aggregate Market Value of the Vessels.
 
“Vessel Financings” means any existing and future credit facilities (including sale and lease back arrangements) provided by commercial banks, export credit agencies or other financial institutions, in each case issued or incurred by the Issuer or any Group Company for the purpose of financing the acquisition of new vessels or assets (including newbuildings and/or second-hand vessels or the acquisition of shares in entities owning one or more newbuildings, second-hand vessels and/or assets) or upgrades to the existing Vessels, provided that:
 

 (a)
in respect of and at the time of any financings of a new vessel, the Vessel LTV Ratio does not exceed 60.00 per cent. in relation to that specific new vessel;
 

 (b)
in respect of any refinancing of Financial Indebtedness secured by a mortgage over an existing Vessel (including newbuilds) owned by the Group on the Issue Date (excluding the Collateral Vessels), the aggregate amount of debt incurred following such refinancing does not exceed the principal amount of debt (including accrued and unpaid interest, fees and costs) outstanding at the date of such refinancing,
 
provided that, in respect of both paragraphs (a) and (b) above, the Vessel LTV Ratio (for all Vessels of the Group) at that time does not exceed 50.00 per cent; or


 (c)
in respect of any financing of the existing newbuild “Hull 1624”, the Vessel LTV Ratio does not exceed 70.00 per cent.

17
When calculating the above ratios, the Market Value shall be based on valuations not older than 2 months. For the avoidance of doubt, debt already incurred or announced as 1 July 2025 on existing newbuildings and the fleet shall be permitted and not restricted by the above ratios.
 
“Voting Bonds” means the Outstanding Bonds less the Issuer’s Bonds.
 
“Working Capital” means (on a consolidated basis for the Group) the aggregate book value of those assets which according to the Accounting Standard should be included as current assets in the balance sheet, less (on a consolidated basis for the Group) the aggregate book value of those liabilities which according to the Accounting Standard should be included as current liabilities in the balance sheet, plus (on a consolidated basis for the Group) the aggregate book value of the scheduled instalments (including any balloons) on long term debt and Subordinated Loans to the Issuer from any of its direct or indirect shareholders which according to the Accounting Standard should be included as current liabilities in the balance sheet.
 
“Written Resolution” means a written (or electronic) solution for a decision making among the Bondholders, as set out in Clause 15.5 (Written Resolutions).
 
1.2
Construction
 
In these Bond Terms, unless the context otherwise requires:
 

 (a)
headings are for ease of reference only;
 

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

 (c)
references to Clauses are references to the Clauses of these Bond Terms;
 

 (d)
references to a time are references to Central European Time unless otherwise stated;
 

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


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

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


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


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


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

18

 (k)
an Event of Default is “continuing” if it has not been remedied or waived.
 
2.
THE BONDS
 
2.1
Amount, denomination and ISIN of the Bonds
 
  (a)
The Issuer has resolved to issue a series of Bonds up to USD 150,000,000 (the “Maximum Issue Amount”). The Bonds may be issued on different issue dates and the Initial Bond Issue will be in the amount of USD 100,000,000. The Issuer may, provided that the conditions set out in Clause 6.3 (Tap Issues) are met, at one or more occasions issue Additional Bonds (each a “Tap Issue”) until the Nominal Amount of all Additional Bonds equals in aggregate the Maximum Issue Amount less the Initial Bond Issue. Each Tap Issue will be subject to identical terms as the Bonds issued pursuant to the Initial Bond Issue in all respects as set out in these Bond Terms, except that Additional Bonds may be issued at a different price than for the Initial Bond Issue and which may be below or above the Nominal Amount. The Bond Trustee shall prepare an addendum to these Bond Terms evidencing the terms of each Tap Issue (a “Tap Issue Addendum”).
 
If the Bonds are listed on an Exchange and there is a requirement for a new prospectus in order for the Additional Bonds to be listed together with the Bonds, the Additional Bonds may be issued under a separate ISIN (such Bonds referred to as the “Temporary Bonds”). Upon the approval of the prospectus, the Issuer shall (i) notify the Bond Trustee, the Exchange and the Paying Agent and (ii) ensure that the Temporary Bonds are converted into the ISIN for the Bonds.
 

 (b)
The Bonds are denominated in US Dollars (USD), being the legal currency of the United States of America.
 

 (c)
The Initial Nominal Amount of each Bond is USD 125,000.
 

 (d)
The ISIN of the Bonds is set out on the front page. These Bond Terms apply with identical terms and conditions to (i) all Bonds issued under this ISIN, (ii) any Temporary Bonds and (iii) any Overdue Amounts issued under one or more separate ISIN in accordance with the regulations of the CSD from time to time.
 

 (e)
Holders of Overdue Amounts related to interest claims will not have any other rights under these Bond Terms than their claim for payment of such interest claim which claim shall be subject to paragraph (b) of Clause 15.1 (Authority of the Bondholders’ Meeting).
 
2.2
Tenor of the Bonds
 
The tenor of the Bonds is from and including the Issue Date to but excluding the Maturity Date.
 
2.3
Use of proceeds
 

 (a)
The Issuer will use the Net Proceeds from the Initial Bond Issue towards financing the acquisition of Additional Vessels.
 

 (b)
The Issuer will use the Net Proceeds from the issuance of any Additional Bonds for general corporate purposes of the Group, unless otherwise stated.
19
2.4
Status of the Bonds
 
The Bonds shall constitute senior debt obligations of the Issuer. The Bonds will rank pari passu between themselves and at least pari passu with all other senior obligations of the Issuer (save for such claims which are preferred by bankruptcy, insolvency, liquidation or other similar laws of general application).
 
2.5
Transaction Security
 

 (a)
Subject to mandatory limitations under applicable law, the Issuer shall procure that the following Transaction Security is in favour of the Security Agent on behalf of the Secured Parties within the times agreed in Clause 6 (Conditions for Disbursement):
 
Pre-settlement Security:
 

 (i)
the Escrow Account Pledge;
 
Pre-Disbursement Security:
 

 (ii)
a share pledge over the shares in each Collateral Vessel Owner;
 

 (iii)
a first preferred and/or priority (as the case may be)ship mortgage over each Collateral Vessel including all relevant equipment being legally part of the relevant Collateral Vessel under applicable law granted by the relevant Collateral Vessel Owner (including any deed of covenants supplemental to the mortgage, if applicable);
 

 (iv)
first priority assignment over the insurances in respect of each Collateral Vessel granted by the relevant Collateral Vessel Owner and any intra-group charterer; and
 

 (v)
a Guarantee from each Collateral Vessel Owner.
 

 (b)
The Transaction Security shall be granted in favour of the Security Agent (on behalf of the Secured Parties) as security for the due and punctual fulfilment of the Secured Obligations. Transaction Security shall be granted on customary terms in the applicable jurisdiction(s) and Transaction Security Documents shall operate to create Transaction Security rather than to impose any new commercial obligations and shall, accordingly, not contain additional or duplicate representations or undertakings to those contained in the relevant Finance Documents unless required for the creation, perfection, preservation or enforcement of the Transaction Security and shall not be unduly burdensome on the relevant Security Provider or interfere unreasonably with the operation of its business or operations. Transaction Security will not be enforceable until the occurrence of an acceleration event.
 

 (c)
The Pre-Disbursement Security shall be established in due time before the Issue Date. The Security Agent shall have the right (acting in its sole discretion) to release the Pre-Settlement Security in connection with the release of funds from the Escrow Account.


(d)
The Bond Trustee (in its capacity as Security Agent) shall be permitted to release any Transaction Security (1) over assets which are sold or otherwise disposed of in connection with any merger, de-merger, disposal or other transaction permitted by these Bond Terms, or (2) in connection with any enforcement or insolvency.

20
2.6
Additional Security and guarantees
 
Subject to any mandatory limitations under applicable law, the Issuer shall ensure that in the event that any Group Company becomes the owner of a Collateral Vessel through a Reinvestment, the Issuer shall promptly notify the Bond Trustee thereof in writing and shall procure no later than 30 Business Days of the relevant Group Company becoming the owner of such assets, that equivalent Transaction Security over those assets is granted, if applicable, subject to a closing procedure acceptable to the Bond Trustee and in accordance with Clause 2.5 (Transaction Security) above.
 
3.
THE BONDHOLDERS
 
3.1
Bond Terms binding on all Bondholders
 

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


(b)
The Bond Trustee is always acting with binding effect on behalf of all the Bondholders.
 
3.2
Limitation of rights of action
 

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

 (b)
Each Bondholder shall immediately upon request by the Bond Trustee provide the Bond Trustee with any such documents, including a written power of attorney (in form and substance satisfactory to the Bond Trustee), as the Bond Trustee deems necessary for the purpose of exercising its rights and/or carrying out its duties under the Finance Documents. The Bond Trustee is under no obligation to represent a Bondholder which does not comply with such request.
 
3.3
Bondholders’ rights
 

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


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

21
4.
ADMISSION TO LISTING
 
The Issuer shall ensure that:
 

 (a)
the Bonds are listed on the Oslo Stock Exchange (Oslo Børs) within the Listing Deadline and thereafter remain listed on an Exchange until the Bonds have been redeemed in full; and


(b)
any Temporary Bonds are listed on an Exchange where the other Bonds are listed within the later of (i) 6 months of the issue date for such Temporary Bonds and (ii) the Listing Deadline.
 
5.
REGISTRATION OF THE BONDS
 
5.1
Registration in the CSD
 
The Bonds shall be registered in dematerialised form in the CSD according to the relevant securities registration legislation and the requirements of the CSD.
 
5.2
Obligation to ensure correct registration
 
The Issuer will at all times ensure that the registration of the Bonds in the CSD is correct and shall immediately upon any amendment or variation of these Bond Terms give notice to the CSD of any such amendment or variation.
 
5.3
Country of issuance
 
The Bonds have not been issued under any other country’s legislation than that of the Relevant Jurisdiction. Save for the registration of the Bonds in the CSD, the Issuer is under no obligation to register, or cause the registration of, the Bonds in any other registry or under any other legislation than that of the Relevant Jurisdiction.
 
6.
CONDITIONS FOR DISBURSEMENT
 
6.1
Conditions precedent for disbursement to the Issuer
 

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


(i)
these Bond Terms duly executed by all parties hereto;
 

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

 (iii)
a copy of a power of attorney (unless included in the corporate resolutions) from the Issuer to relevant individuals for their execution of the Finance Documents to which it is a party;

22

 (iv)
copies of the Issuer’s articles of incorporation and bylaws and a certificate of goodstanding from the relevant company register in respect of the Issuer evidencing that the Issuer is validly existing;
 

 (v)
the Escrow Account Pledge duly executed by all parties thereto and perfected in accordance with applicable law (including all applicable acknowledgements and consents from the account bank);
 

 (vi)
copies of the Issuer’s latest Financial Reports (if any);
 

 (vii)
confirmation that the applicable prospectus requirements (ref. the EU prospectus regulation ((EU) 2017/1129)) concerning the issuance of the Bonds have been fulfilled;


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


(ix)
confirmation that the Bonds are registered in the CSD (by obtaining an ISIN for the Bonds);
 

 (x)
confirmation of acceptance from any process agent;
 

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

 (xii)
the Bond Trustee Fee Agreement duly executed by all parties thereto; and
 

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

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


(i)
a duly executed release notice from the Issuer, as set out in Attachment 2;
 

 (ii)
unless delivered under paragraph (a) above, as pre-settlement conditions precedent:
 

 (A)
copies of all necessary corporate resolutions of each Security Provider required to provide Transaction Security and execute the Finance Documents to which it is a party;


(B)
a copy of a power of attorney (unless included in the relevant corporate resolutions) from each Security Provider to relevant individuals for their execution of the Finance Documents to which it is a party;

23

 (C)
copies of each Security Provider’s articles of incorporation and bylaws and a certificate of goodstanding from the relevant company register in respect of each Security Provider evidencing that each Security Provider is validly existing;
 

 (D)
the Transaction Security Documents duly executed by all parties thereto and evidence of the establishment and perfection of the Transaction Security in accordance with the closing procedure;


(iii)
copies of insurance policies/cover notes documenting that insurance cover has been taken out in respect of the relevant Collateral Vessels in accordance with the insurance undertakings, and evidencing that the Bond Trustee’s (on behalf of the Secured Parties) Security have been noted in the insurance policies relating to the Collateral Vessels;
 

 (iv)
letters of undertaking from the insurance brokers or clubs (as relevant) in relation to the insurances taken out in respect of the Collateral Vessels inclusive confirmation of notices of assignment and loss payable clause acceptable to the Bond Trustee;
 

 (v)
an opinion from the Bond Trustee’s insurance consultants at the expense of the Issuer confirming that the required insurances in relation to the Collateral Vessels have been placed in accordance with the insurance undertaking and are acceptable to the Bond Trustee.


(vi)
transcripts from the relevant ship registry showing that each Collateral Vessel is duly registered in the name of the respective Collateral Vessel Owner and free and clear of any registered encumbrances other than the mortgage granted pursuant to Clause 2.5 (Transaction Security);
 

 (vii)
a copy of the class certificate for each Collateral Vessel from the relevant Approved Classification Society, confirming that the Collateral Vessel is classed with the highest class normally used for such vessels, free of material overdue recommendations, conditions and adverse notations;
 

 (viii)
a copy of the current SMC, ISSC and IAPPC for each Collateral Vessel;
 

 (ix)
the technical manager’s current document of compliance (DOC) issued under the ISM Code for the Collateral Vessels;


(x)
a copy of the Inventory of Hazardous Materials or the Collateral Vessels; and
 

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


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

24

 (d)
The proceeds deposited on the Escrow Account may be applied towards acquisitions of Additional Vessels and for redemption of Bonds at a price equal to the then applicable Call Price. If the proceeds on the Escrow Account is USD 1,000,000 (or less) it may be released to the Issuer for general corporate purposes.
 
6.2
Disbursement of the proceeds
 
Disbursement of the proceeds from the issuance of the Bonds is conditional on the Bond Trustee’s confirmation to the Paying Agent that the conditions in Clause 6.1 (Conditions precedent for disbursement to the Issuer) have been either satisfied in the Bond Trustee’s discretion or waived by the Bond Trustee pursuant to paragraph (b) of Clause 6.1 (Conditions precedent for disbursement to the Issuer).
 
6.3
Tap Issues
 

 (a)
The Issuer may issue Additional Bonds if:
 

 (i)
the Bond Trustee has received, in form and substance satisfactory to it:
 
  (A)
a Tap Issue Addendum, duly executed by all parties thereto;
 

 (B)
copies of corporate resolutions required for the Tap Issue and any power of attorney or other authorisation required for execution of the Tap Issue addendum and any other Finance Documents;
 

 (C)
legal opinions or other statements as may be required by the Bond Trustee (including in respect of corporate matters relating to the Issuer and the legality, validity and enforceability of the Tap Issue addendum and any other Finance Documents (if applicable)); and


(ii)
no Event of Default has occurred; and
 

 (iii)
the representations and warranties contained in Clause 7 (Representations and Warranties) of these Bond Terms are true and correct in all material respects and repeated by the Issuer as at the date of issuance of such Additional Bonds.
 

 (b)
The Bond Trustee may (at its sole discretion and in each case) waive or postpone the delivery of certain conditions precedent, and the Bond Trustee may (on behalf of the Bondholders) agree on a customary closing procedure with the Issuer.
 
7.
REPRESENTATIONS AND WARRANTIES
 
The Issuer makes the representations and warranties set out in this Clause 7, in respect of itself and in respect of each Group Company to the Bond Trustee (on behalf of the Bondholders) at the following times and with reference to the facts and circumstances then existing:


 (a)
on the date of these Bond Terms;
 

 (b)
on the Issue Date;
 
  (c)
on each date of disbursement of proceeds from the Escrow Account; and
 

 (d)
on the date of issuance of any Additional Bonds.

25
7.1
Status
 
It is a corporation, duly incorporated and validly existing and registered under the laws of its jurisdiction of incorporation, and has the power to own its assets and carry on its business as it is being conducted.
 
7.2
Power and authority
 
It has the power to enter into, perform and deliver, and has taken all necessary action to authorise its entry into, performance and delivery of, these Bond Terms and any other Finance Document to which it is a party and the transactions contemplated by those Finance Documents.
 
7.3
Valid, binding and enforceable obligations
 
These Bond Terms and each other Finance Document to which it is a party constitutes (or will constitute, when executed by the respective parties thereto) its legal, valid and binding obligations, enforceable in accordance with their respective terms, and (save as provided for therein) no further registration, filing, payment of tax or fees or other formalities are necessary or desirable to render the said documents enforceable against it.
 
7.4
Non-conflict with other obligations
 
The entry into and performance by it of these Bond Terms and any other Finance Document to which it is a party and the transactions contemplated thereby do not and will not conflict with (i) any law or regulation or judicial or official order; (ii) its constitutional documents; or (iii) any agreement or instrument which is binding upon it or any of its assets.
 
7.5
No Event of Default
 

 (a)
No Event of Default exists or is likely to result from the making of any disbursement of proceeds or the entry into, the performance of, or any transaction contemplated by, any Finance Document.


(b)
No other event or circumstance has occurred which constitutes (or with the expiry of any grace period, the giving of notice, the making of any determination or any combination of any of the foregoing, would constitute) a default or termination event (howsoever described) under any other agreement or instrument which is binding on it or any of its Subsidiaries or to which its (or any of its Subsidiaries’) assets are subject which has or is likely to have a Material Adverse Effect.
 
7.6
Authorisations and consents
 
All authorisations, consents, approvals, resolutions, licences, exemptions, filings, notarisations or registrations required:


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

 (b)
to carry on its business as presently conducted and as contemplated by these Bond Terms,
 
have been obtained or effected and are in full force and effect.

26
7.7
Litigation
 
No litigation, arbitration or administrative proceedings or investigations of or before any court, arbitral body or agency which, if adversely determined, is likely to have a Material Adverse Effect have (to the best of its knowledge and belief) been started or threatened against it or any of its Subsidiaries.
 
7.8
Financial Reports
 
Its most recent Financial Reports fairly and accurately represent the assets and liabilities and financial condition as at their respective dates, and have been prepared in accordance with the Accounting Standard, consistently applied.
 
7.9
No Material Adverse Effect
 
Since the date of the most recent Financial Reports, there has been no change in its business, assets or financial condition that is likely to have a Material Adverse Effect.
 
7.10
No misleading information
 
Any factual information provided by it to the Bondholders or the Bond Trustee for the purposes of the issuance of the Bonds was true and accurate in all material respects as at the date it was provided or as at the date (if any) at which it is stated.
 
7.11
No withholdings
 
The Issuer is not required to make any deduction or withholding from any payment which it may become obliged to make to the Bond Trustee or the Bondholders under the Finance Documents.
 
7.12
Pari passu ranking
 
Its payment obligations under these Bond Terms or any other Finance Document to which it is a party ranks as set out in Clause 2.4 (Status of the Bonds).
 
7.13
Security
 
No Security exists over any of the present assets of any Group Company in conflict with these Bond Terms.
 
8.
PAYMENTS IN RESPECT OF THE BONDS
 
8.1
Covenant to pay
 

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

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

27
  (c)
Payment constituting good discharge of the Issuer’s payment obligations to the Bondholders under these Bond Terms will be deemed to have been made to each Bondholder once the amount has been credited to the bank holding the bank account nominated by the Bondholder in connection with its securities account in the CSD. If the paying bank and the receiving bank are the same, payment shall be deemed to have been made once the amount has been credited to the bank account nominated by the Bondholder in question.


(d)
If a Payment Date or a date for other payments to the Bondholders pursuant to the Finance Documents falls on a day on which either of the relevant CSD settlement system or the relevant currency settlement system for the Bonds are not open, the payment shall be made on the first following possible day on which both of the said systems are open, unless any provision to the contrary has been set out for such payment in the relevant Finance Document.
 
8.2
Default interest
 

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

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


(c)
Upon the occurrence of a Listing Failure Event and for as long as such Listing Failure Event is continuing, the interest on any principal amount outstanding under these Bonds Terms will accrue at the Interest Rate plus 1 percentage point per annum. In the event the Listing Failure Event relates to Temporary Bonds, the Interest Rate will only be increased in respect of such Temporary Bonds. For the avoidance of doubt, a Listing Failure Event shall not constitute an Event of Default.
 
8.3
Partial Payments
 

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

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

 (ii)
secondly, towards accrued interest due but unpaid; and
 

 (iii)
thirdly, towards any other outstanding amounts due but unpaid under the Finance Documents.


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


(i)
if the Bond Trustee has served a Default Notice in accordance with Clause 14.2 (Acceleration of the Bonds); or
 
28

 (ii)
if a resolution according to Clause 15 (Bondholders’ Decisions) has been made.
 
8.4
Taxation
 

 (a)
The Issuer is responsible for withholding any withholding tax imposed by applicable law on any payments to be made by it in relation to the Finance Documents.


(b)
The Issuer shall, if any tax is withheld in respect of the Bonds under the Finance Documents:


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


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

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


(d)
The Bond Trustee shall not have any responsibility to obtain information about the Bondholders relevant for the tax obligations pursuant to these Bond Terms.
 
8.5
Currency
 

 (a)
All amounts payable under the Finance Documents shall be payable in the Bond Currency. If, however, the Bond Currency differs from the currency of the bank account connected to the Bondholder’s account in the CSD, any cash settlement may be exchanged and credited to this bank account.
 

 (b)
Any specific payment instructions, including foreign exchange bank account details, to be connected to the Bondholder’s account in the CSD must be provided by the relevant Bondholder to the Paying Agent (either directly or through its account manager in the CSD) within 5 Business Days prior to a Payment Date. Depending on any currency exchange settlement agreements between each Bondholder’s bank and the Paying Agent, and opening hours of the receiving bank, cash settlement may be delayed, and payment shall be deemed to have been made once the cash settlement has taken place, provided, however, that no default interest or other penalty shall accrue for the account of the Issuer for such delay.
 
8.6
Set-off and counterclaims
 
The Issuer may not apply or perform any counterclaims or set-off against any payment obligations pursuant to these Bond Terms or any other Finance Document.

29
9.
INTEREST
 
9.1
Calculation of interest
 

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


(b)
Any Additional Bond will accrue interest at the Interest Rate on the Nominal Amount commencing on the first date of the Interest Period in which the Additional Bonds are issued and thereafter in accordance with paragraph (a) above.


(c)
Interest shall be calculated on the basis of a 360-day year comprised of twelve months of 30 days each (30/360-days basis), unless:
 

 (i)
the last day in the relevant Interest Period is the 31st calendar day but the first day of that Interest Period is a day other than the 30th or the 31st day of a month, in which case the month that includes that last day shall not be shortened to a 30–day month; or


(ii)
the last day of the relevant Interest Period is the last calendar day in February, in which case February shall not be lengthened to a 30-day month.
 
9.2
Payment of interest
 
Interest shall fall due on each Interest Payment Date for the corresponding preceding Interest Period and, with respect to accrued interest on the principal amount then due and payable, on each Repayment Date.
 
10.
REDEMPTION AND REPURCHASE OF BONDS
 
10.1
Redemption of Bonds
 
The Outstanding Bonds will mature in full on the Maturity Date and shall be redeemed by the Issuer on the Maturity Date at a price equal to 100 per cent. of the Nominal Amount.
 
10.2
Voluntary early redemption - Call Option
 

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


(i)
the Issue Date to, but excluding, the First Call Date at a price equal to the Make Whole Amount;
 

 (ii)
the First Call Date to, but excluding, the Interest Payment Date in January 2028 at a price equal to 104.938 per cent. of the Nominal Amount for each redeemed Bond;
 

 (iii)
the Interest Payment Date in January 2028 to, but excluding, the Interest Payment Date in July 2028 at a price equal to 103.703 per cent. of the Nominal Amount for each redeemed Bond;

30

 (iv)
the Interest Payment Date in July 2028 to, but excluding, the Interest Payment Date in January 2029 at a price equal to 102.469 per cent. of the Nominal Amount for each redeemed Bond; and
 

 (v)
the Interest Payment Date in January 2029 to, but excluding, the Maturity Date at a price equal to 100.50 per cent. of the Nominal Amount for each redeemed Bond.
 

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

 (c)
The Call Option may be exercised by the Issuer by written notice to the Bond Trustee at least 10 Business Days prior to the proposed Call Option Repayment Date. Such notice sent by the Issuer is irrevocable and shall specify the Call Option Repayment Date. Unless the Make Whole Amount is set out in the written notice where the Issuer exercises the Call Option, the Issuer shall calculate the Make Whole Amount and provide such calculation by written notice to the Bond Trustee as soon as possible and at the latest within 3 Business Days from the date of the notice.
 

 (d)
Any redemption notice given in respect of the Call Option may, at the Issuer’s discretion, be subject to the satisfaction of one or more conditions precedent, in which case the exercise of the Call Option will be automatically cancelled unless such conditions precedent have been satisfied or waived no later than 3 Business Days prior to such Call Option Repayment Date.
 

 (e)
Any Call Option exercised in part will be used for pro rata payment to the Bondholders in accordance with the applicable regulations of the CSD.
 
10.3
Mandatory repurchase due to a Put Option Event
 

 (a)
Upon the occurrence of a Put Option Event, each Bondholder will have the right (the “Put Option”) to require that the Issuer purchases all or some of the Bonds held by that Bondholder at a price equal to 101.00 per cent. of the Nominal Amount.


(b)
The Put Option must be exercised within 15 Business Days after the Issuer has given notice to the Bond Trustee and the Bondholders that a Put Option Event has occurred pursuant to Clause 12.3 (Put Option Event). Once notified, the Bondholders’ right to exercise the Put Option is irrevocable.
 

 (c)
Each Bondholder may exercise its Put Option by written notice to its account manager for the CSD, who will notify the Paying Agent of the exercise of the Put Option. The Put Option Repayment Date will be the 5th Business Day after the end of 15 Business Days exercise period referred to in paragraph (b) above. However, the settlement of the Put Option will be based on each Bondholders holding of Bonds at the Put Option Repayment Date.
 

 (d)
If Bonds representing more than 90 per cent. of the Outstanding Bonds have been repurchased pursuant to this Clause 10.3, the Issuer is entitled to repurchase all the remaining Outstanding Bonds at the price stated in paragraph (a) above by notifying the remaining Bondholders of its intention to do so no later than 10 Business Days after the Put Option Repayment Date. Such notice sent by the Issuer is irrevocable and shall specify the Call Option Repayment Date.

31
10.4
Mandatory redemption due to a Total Loss Event
 

 (a)
Upon the occurrence of a Total Loss Event, the Issuer shall as soon as the net cash insurance proceeds are received by it and in any event no later than 180 days following the Total Loss Event apply the Net Insurance Proceeds towards (in the Issuer’s sole discretion) (A) the transfer of all of Net Insurance Proceeds to the Reinvestment Account, or (B) the redemption of an equivalent amount of Bonds (rounded down to the nearest whole Bond) at a price equal to 100.00 per cent. of the Nominal Amount of the Bonds being redeemed.
 

 (b)
The proceeds of any redemption of the Outstanding Bonds in part will be used for pro rata payment to the Bondholders in accordance with the applicable regulations of the CSD.
 
10.5
Mandatory redemption due to a Mandatory Redemption Event
 

 (a)
Upon a Mandatory Redemption Event, the Issuer shall, on the day the relevant Group Company receives the cash proceeds following a Mandatory Redemption Event, apply the Net Disposal Proceeds towards (in the Issuer’s sole discretion) (A) the transfer of all of such Net Disposal Proceeds to the Reinvestment Account and/or (B) the redemption of Bonds (rounded down to the nearest whole Bond) at a price equal to 101.00 per cent. of the Nominal Amount of the Bonds being redeemed.
 

 (b)
The proceeds of any redemption of the Outstanding Bonds in part will be used for pro rata payment to the Bondholders in accordance with the applicable regulations of the CSD.
 
10.6
Early redemption option due to a tax event
 
If the Issuer is or will be required to gross up any withheld tax imposed by law from any payment in respect of the Bonds under the Finance Documents pursuant to Clause 8.4 (Taxation) as a result of a change in applicable law implemented after the date of these Bond Terms, the Issuer will have the right to redeem all, but not only some, of the Outstanding Bonds at a price equal to 100.00 per cent. of the Nominal Amount. The Issuer shall give written notice of such redemption to the Bond Trustee and the Bondholders at least 20 Business Days prior to the Tax Event Repayment Date, provided that no such notice shall be given earlier than 40 Business Days prior to the earliest date on which the Issuer would be obliged to withhold such tax were a payment in respect of the Bonds then due.
 
11.
PURCHASE AND TRANSFER OF BONDS
 
11.1
Issuer’s purchase of Bonds
 
The Issuer may purchase and hold Bonds and such Bonds may be retained, or sold or cancelled in the Issuer’s sole discretion, including with respect to Bonds purchased pursuant to Clause 10.3 (Mandatory repurchase due to a Put Option Event).

11.2
Restrictions
 

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

32

 (b)
A Bondholder who has purchased Bonds in breach of applicable restrictions may, notwithstanding such breach, benefit from the rights attached to the Bonds pursuant to these Bond Terms (including, but not limited to, voting rights), provided that the Issuer shall not incur any additional liability by complying with its obligations to such Bondholder.
 
12.
INFORMATION UNDERTAKINGS
 
12.1
Financial Reports
 

 (a)
The Issuer shall prepare Annual Financial Statements in the English language and make them available on its website (alternatively on another relevant information platform) as soon as they become available, and not later than 4 months after the end of the financial year.


(b)
The Issuer shall prepare Interim Accounts in the English language and make them available on its website (alternatively on another relevant information platform) as soon as they become available, and not later than 3 months after the end of the relevant interim period (or earlier if required by the relevant Exchange).
 
12.2
Requirements as to Financial Reports
 

 (a)
The Issuer shall supply to the Bond Trustee, in connection with the publication of its Financial Reports pursuant to Clause 12.1 (Financial Reports), a Compliance Certificate with a copy of the Financial Reports attached thereto. The Compliance Certificate shall be duly signed by the chief executive officer or the chief financial officer of the Issuer, certifying inter alia that the Financial Reports fairly represent its financial condition as at the date of the relevant Financial Report and setting out (in reasonable detail) computations evidencing compliance with Clause 13.19 (Financial covenants) as at such date or, in respect of any event which is subject to the Incurrence Test, calculations and figures in respect of the Incurrence Test (with relevant supporting documentation acceptable to or as required by the Bond Trustee).
 

 (b)
The Issuer shall procure that the Financial Reports delivered pursuant to Clause 12.1 (Financial Reports) are prepared using the Accounting Standard consistently applied.
 
12.3
Put Option Event
 
The Issuer shall promptly inform the Bond Trustee in writing after becoming aware that a Put Option Event has occurred.
 
12.4
Listing Failure Event
 
The Issuer shall promptly inform the Bond Trustee in writing if a Listing Failure Event has occurred. However, no Event of Default shall occur if the Issuer fails (i) to list the Bonds in accordance with Clause 4 (Admission to listing) or (ii) to inform of such Listing Failure Event, and such failure shall result in the accrual of default interest in accordance with paragraph (c) of Clause 8.2 (Default interest) for as long as such Listing Failure Event is continuing.
 
12.5
Information: Miscellaneous
 
The Issuer shall:

33

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

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


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


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

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


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

 (g)
within a reasonable time, provide such information about the Issuer’s and the Group’s business, assets and financial condition as the Bond Trustee may reasonably request.
 
13.
GENERAL AND FINANCIAL UNDERTAKINGS
 
The Issuer undertakes to (and shall, where applicable, procure that the other Group Companies will) comply with the undertakings set forth in this Clause 13.
 
13.1
Authorisations
 
The Issuer shall, and shall procure that each other Group Company will, in all material respects obtain, maintain and comply with the terms of any authorisation, approval, licence and consent required for the conduct of its business as carried out from time to time.
 
13.2
Compliance with laws
 
The Issuer shall, and shall ensure that all other Group Companies shall comply in all material respects with all laws and regulations it or they may be subject to from time to time.
 
13.3
Continuation of business
 
The Issuer shall procure that no material change is made to the general nature of the business from that carried on by the Group at the Issue Date, provided that this shall not prevent investments and operations in other parts of the industry in which the Group operates.
 
13.4
Corporate status
 
The Issuer shall not change its type of organisation or jurisdiction of incorporation.
 
13.5
Mergers
 
The Issuer shall not, and shall procure that no other Group Company will, carry out any merger or other business combination or corporate reorganisation involving the consolidation of assets and obligations of the Issuer or any other Group Company with any other person, if such transaction would have a Material Adverse Effect and provided that in any merger or other business combination or corporate reorganisation involving a Group Company, the surviving entity shall be the Group Company (and if such merger involves the Issuer, the Issuer shall be the surviving entity).

34
13.6
De-mergers
 
The Issuer shall not, and shall procure that no other Group Company will, carry out any de-merger or other corporate reorganisation having the same effect as a de-merger, other than any de-merger or other corporate reorganisation of any Group Company (other than the Issuer) into two or more separate companies or entities which are wholly-owned by the Issuer (or, in the case of a Group Company that was not wholly-owned prior to such de-merger, owned with the same ownership percentage as the original Group Company), unless such de-merger or other corporate reorganisation is carried out at arm’s length terms and would not have a Material Adverse Effect.
 
13.7
Financial Indebtedness
 
The Issuer shall not, and shall procure that no other Group Company will, incur any additional Financial Indebtedness other than Permitted Financial Indebtedness.
 
13.8
Negative pledge
 
The Issuer shall not, and shall procure that no other Group Company will, create or allow to subsist, retain, provide, prolong or renew any Security over any of its/their assets (present or future) other than any Permitted Security.
 
13.9
Loans or credit
 
The Issuer shall not, and shall procure that no other Group Company will, be a creditor in respect of any Financial Indebtedness, other than any Permitted Loan.
 
13.10
No guarantees or indemnities
 
The Issuer shall not, and shall procure that no other Group Company will, incur or allow to remain outstanding any guarantee in respect of any obligation of any person, other than any Permitted Guarantee.
 
13.11
Disposals
 
The Issuer shall not, and shall procure that no other Group Company will, sell, transfer or otherwise dispose of all or a substantial part of the Group’s assets (including shares or other securities in any person) or operations (other than to the Issuer or a Group Company), unless such sale, transfer or disposal is carried out on arm’s length basis (or better from the perspective of the Issuer or, as the case may be, the relevant Group Company) and would not have a Material Adverse Effect, provided that any (direct or indirect) disposal of a Collateral Vessel is made in accordance with the provisions set out in Clause 10.5 (Mandatory Redemption due to a Mandatory Redemption Event).
 
13.12
Classification
 
The Issuer shall procure that each Group Company will maintain the Vessel owned by it with a classification issued by a classification society that is a member of International Association of Classification Societies.

35
13.13
Insurance
 
The Issuer shall, and shall procure that each Group Company will, maintain customary insurances on or in relation to their business and assets with reputable independent insurance companies and underwriters against those risks and to the extent as is usual for companies carrying on the same or substantially similar business.
 
13.14
Distributions
 
The Issuer shall not, and shall procure that no other Group Company shall make, any Distributions to the shareholders of the Issuer other than any Permitted Distribution.
 
13.15
Related party transactions
 
Without limiting Clause 13.2 (Compliance with laws), the Issuer shall not, and shall procure that no other Group Company will, enter into any transaction with any Affiliate except on arm’s length basis (or better from the perspective of the Issuer or, as the case may be, the relevant Group Company).
 
13.16
Subsidiary distribution
 
The Issuer shall procure that no Subsidiary creates or permits to exist any contractual obligation (or encumbrance) restricting the right to pay dividends or make other Distributions to its shareholders, other than where such obligation or encumbrance is not reasonably likely to prevent the Issuer from complying with its payment obligations under the Finance Documents.
 
13.17
Anti-corruption and sanctions
 
The Issuer shall, and shall ensure that all other Group Companies will (i) ensure that no proceeds from the Bonds are used directly or indirectly for any purpose which would breach any applicable acts, regulations or laws on bribery, corruption or similar, and (ii) conduct its businesses and maintain policies and procedures in compliance with applicable anti-corruption laws. The Issuer shall not, and shall ensure that no Group Company will, engage in any conduct prohibited by any sanctions.
 
13.18
Reinvestment and Reinvestment Account
 
  (a)
The Issuer may apply the Net Insurance Proceeds and/or Net Disposal Proceeds that have been transferred to the Reinvestment Account for the financing or refinancing (in whole or in part) of the acquisition of any Additional Vessel(s) over which Additional Vessel Security shall be granted (a “Reinvestment”). The Additional Vessel(s) acquired through a Reinvestment shall be subject to delivery of the Additional Vessel Security (in relation to such Additional Vessel(s) and any additional Collateral Vessel Owner(s)) in accordance with the terms hereof.
 

 (b)
The Issuer may not withdraw amounts held in the Reinvestment Account other than to apply them towards (a) a Reinvestment or (b) the redemption of Outstanding Bonds, in each case in accordance with and at the prices set out in the provisions of Clause 10.4 (Mandatory redemption due to a Total Loss Event) or Clause 10.5 (Mandatory Redemption due to a Mandatory Redemption Event) (as applicable).


(c)
From the date falling 6 months after the relevant Total Loss Event or Mandatory Redemption Event, the Issuer may apply any amounts held in the Reinvestment Account towards redemption of the relevant Bonds in accordance with paragraph (b) above. Any amounts held in the Reinvestment Account and not applied towards a Reinvestment on or prior to the date falling 12 months after the relevant Total Loss Event or Mandatory Redemption Event, shall be applied towards redemption of the relevant Bonds in accordance with paragraph (b) above.

36
13.19
Financial covenants
 

 (a)
The Issuer shall, and shall procure that each other Group Company will, comply with the following:


(i)
Minimum liquidity: The Issuer shall ensure that the Group maintains Liquidity not less than USD 20,000,000.


(ii)
Minimum working capital: The Issuer undertakes to ensure that Working Capital is positive; and
 

 (iii)
Minimum Value Adjusted Equity Ratio: The Issuer undertakes to ensure that the Group maintains a Value Adjusted Equity Ratio higher than 40.00 per cent.
 

 (b)
The Issuer undertakes to comply with the above Financial Covenants at all times, such compliance to be measured on each Quarter Date and certified by the Issuer in each Compliance Certificate. All financial covenants shall be calculated on a consolidated basis for the Group during the lifetime of the Bonds.
 
13.20
Incurrence Test
 

 (a)
The Incurrence Test shall be applied in respect of Distributions under paragraph (a) of the definition of Permitted Distribution and is met if:
 

 (i)
Value Adjusted Equity Ratio: is at least 50.00 per cent; and
 

 (ii)
Liquidity: is no less than USD 30,000,000 immediately after such Distribution is made.
 

 (b)
Calculation of the Incurrence Test shall be made on a consolidated basis for the Group using the defined terms and calculation principles applied to the calculation of Financial Covenants and the calculations and calculation adjustments set out in Clause 13.21 (Calculations and Calculation Adjustments).
 
13.21
Calculations and Calculation Adjustments
 

 (a)
The calculation of the Value Adjusted Equity Ratio shall be made on a testing date determined by the Issuer, falling no earlier than 1 month prior to the event relevant for the application of the Incurrence Test, and certified by the Issuer in a Compliance Certificate to be delivered to the Bond Trustee in relation to the application of the Incurrence Test.
 

 (b)
Calculation of the Value Adjusted Equity Ratio and Liquidity shall be made on a pro forma basis as if the Distribution had already been made.

37
13.22
Financial Covenants cure
 

 (a)
If the Issuer does not comply with any Financial Covenant and the Issuer receives or has received any Cure Amount during the period from the last Quarter Date up to the date on which it has delivered to the Bond Trustee the Compliance Certificate in respect of such time, then:
 

 (i)
the Value Adjusted Equity Ratio shall be recalculated on the basis that the Cure Amount so received shall be deemed to increase the Equity by an amount equal to such Cure Amount on the relevant testing date;


(ii)
Liquidity shall be recalculated on the basis that the Cure Amount so received shall be deemed to increase the Cash and Cash Equivalents by an amount equal to such Cure Amount on the relevant testing date; and


(iii)
Working Capital shall be recalculated on the basis that the Cure Amount so received shall be deemed to increase the current assets by an amount equal to such Cure Amount on the relevant testing date.


(b)
If, after the Financial Covenants are recalculated as set out above, the breach has been remedied, the relevant Financial Covenants shall be deemed to have been satisfied on the relevant reporting date with the same effect as though there had been no failure to comply with the Financial Covenants on such date and the applicable breach of the Financial Covenants that had occurred shall be deemed cured.
 

 (c)
The Issuer shall be limited to a maximum of 3 cures of actual failures to satisfy the Financial Covenants during the term of the Bonds, and no consecutive Financial Covenant cures are permitted.
 
14.
EVENTS OF DEFAULT AND ACCELERATION OF THE BONDS
 
14.1
Events of Default
 
Each of the events or circumstances set out in this Clause 14.1 shall constitute an Event of Default:
 

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

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


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

  (b)
Breach of other obligations

38
An Obligor does not comply with any provision of the Finance Documents other than set out under paragraph (a) (Non-payment) above, unless such failure is capable of being remedied and is remedied within 20 Business Days after the earlier of the Issuer’s actual knowledge thereof, or notice thereof is given to the Issuer by the Bond Trustee.
 

 (c)
Misrepresentation
 
Any representation, warranty or statement (including statements in Compliance Certificates) made by any Group Company under or in connection with any Finance Documents is or proves to have been incorrect, inaccurate or misleading in any material respect when made.


 (d)
Cross default
 
If for any Group Company:
 

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


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

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


(iv)
any creditor becomes entitled to declare any Financial Indebtedness due and payable prior to its specified maturity as a result of an event of default (however described),
 
provided however that the aggregate amount of such Financial Indebtedness or commitment for Financial Indebtedness falling within paragraphs (i) to (iv) above exceeds a total of USD 10,000,000 (or the equivalent thereof in any other currency) in aggregate for the Group.


 (e)
Insolvency and insolvency proceedings
 
Any Group Company:
 

 (i)
is Insolvent; or
 

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

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

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

39

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

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


(E)
for paragraphs (A) - (D) above, any analogous procedure or step is taken in any jurisdiction in respect of any such company.
 
However, this shall not apply to any petition which is frivolous or vexatious and is discharged, stayed or dismissed within 20 Business Days of commencement.


 (f)
Creditor’s process
 
Any expropriation, attachment, sequestration, distress or execution affects any asset or assets of any Group Company having an aggregate value exceeding the threshold amount set out in paragraph (d) (Cross default) above and is not discharged within 20 Business Days.


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

 (i)
the ability of an Obligor to perform its obligations under these Bond Terms; or
 

 (ii)
the ability of the Bond Trustee or the Security Agent to exercise any material right or power vested to it under the Finance Documents.
 
14.2
Acceleration of the Bonds
 
If an Event of Default has occurred and is continuing, the Bond Trustee may, in its discretion in order to protect the interests of the Bondholders, or upon instruction received from the Bondholders pursuant to Clause 14.3 (Bondholders’ instructions) below, by serving a Default Notice to the Issuer:
 

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


(b)
exercise (or direct the Security Agent to exercise) any or all of its rights, remedies, powers or discretions under the Finance Documents or take such further measures as are necessary to recover the amounts outstanding under the Finance Documents.
 
14.3
Bondholders’ instructions
 
The Bond Trustee shall serve a Default Notice pursuant to Clause 14.2 (Acceleration of the Bonds) if:

40

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

 (b)
the Bondholders’ Meeting, by a simple majority decision, has approved the declaration of an Event of Default.
 
14.4
Calculation of claim
 
The claim derived from the Outstanding Bonds due for payment as a result of the serving of a Default Notice will be calculated at the call prices set out in Clause 10.2 (Voluntary early redemption – Call Option), as applicable at the following dates (and regardless of the Default Repayment Date):


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


(b)
for any other Event of Default, the claim will be calculated at the call price applicable at the date when the Default Notice was served by the Bond Trustee.
 
However, if the situations described in paragraph (a) or (b) above takes place prior to the First Call Date, the calculation shall be based on the call price applicable on the First Call Date.
 
15.
BONDHOLDERS’ DECISIONS
 
15.1
Authority of the Bondholders’ Meeting
 

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

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


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


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


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

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

41

 (g)
Save for any amendments or waivers which can be made without resolution pursuant to paragraph (a) and (b) of Clause 17.1 (Procedure for amendments and waivers), a majority of at least 2/3 of the Voting Bonds represented at the Bondholders’ Meeting is required for approval of any waiver or amendment of these Bond Terms.
 
15.2
Procedure for arranging a Bondholders’ Meeting
 

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


(i)
the Issuer;
 

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

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

 (iv)
the Bond Trustee.
 
The request shall clearly state the matters to be discussed and resolved.


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

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

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

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


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


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

42

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

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

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

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

 (l)
The Issuer shall bear the costs and expenses incurred in connection with convening a Bondholders’ Meeting regardless of who has convened the Bondholders’ Meeting, including any reasonable costs and fees incurred by the Bond Trustee.
 
15.3
Voting rules
 

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

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

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

43

 (d)
Any of the Issuer, the Bond Trustee and any Bondholder has the right to demand a vote by ballot. In case of parity of votes, the Chairperson will have the deciding vote.
 
15.4
Repeated Bondholders’ Meeting
 

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

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

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

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

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


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


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

44

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


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

 
shall not apply to a Written Resolution.


(e)
The Summons for a Written Resolution shall include:
 

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


(ii)
the time limit within which the Bond Trustee must have received all votes necessary in order for the Written Resolution to be passed with the requisite majority, which shall be at least 10 Business Days but not more than 15 Business Days from the date of the Summons (the “Voting Period”).
 

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

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

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

 (i)
If no resolution is passed prior to the expiry of the Voting Period, the number of votes shall be calculated at the time specified in the summons on the last day of the Voting Period, and a decision will be made based on the quorum and majority requirements set out in paragraphs (e) to (g) of Clause 15.1 (Authority of Bondholders’ Meeting).
 
16.
THE BOND TRUSTEE
 
16.1
Power to represent the Bondholders
 

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

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

45
16.2
The duties and authority of the Bond Trustee
 

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


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

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

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

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


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

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


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


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

46

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


(j)
The Bond Trustee may instruct the CSD to split the Bonds to a lower nominal value in order to facilitate partial redemptions, write-downs or restructurings of the Bonds or in other situations where such split is deemed necessary.
 
16.3
Equality and conflicts of interest
 

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

 (b)
The Bond Trustee may act as agent, trustee, representative and/or security agent for several bond issues relating to the Issuer notwithstanding potential conflicts of interest. The Bond Trustee is entitled to delegate its duties to other professional parties.
 
16.4
Expenses, liability and indemnity
 

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

 (b)
The Bond Trustee will not be liable to the Issuer for damage or loss caused by any action taken or omitted by it under or in connection with any Finance Document, unless caused by its gross negligence or wilful misconduct. The Bond Trustee shall not be responsible for any indirect or consequential loss.


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

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

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


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

47

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

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

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

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

 (i)
As a condition to effecting any instruction from the Bondholders (including, but not limited to, instructions set out in Clause 14.3 (Bondholders’ instructions) or Clause 15.2 (Procedure for arranging a Bondholders’ Meeting)), the Bond Trustee may require satisfactory Security, guarantees and/or indemnities for any possible liability and anticipated costs and expenses from those Bondholders who have given that instruction and/or who voted in favour of the decision to instruct the Bond Trustee.
 
16.5
Replacement of the Bond Trustee
 

 (a)
The Bond Trustee may be replaced by a majority of 2/3 of Voting Bonds in accordance with the procedures set out in Clause 15 (Bondholders’ Decisions), and the Bondholders may resolve to replace the Bond Trustee without the Issuer’s approval.

48

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

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


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

 (e)
Upon change of Bond Trustee, the Issuer shall co-operate in all reasonable manners without delay to replace the retiring Bond Trustee with the successor Bond Trustee and release the retiring Bond Trustee from any future obligations under the Finance Documents and any other documents.
 
16.6
Security Agent
 

 (a)
The Bond Trustee is appointed to act as Security Agent for the Bonds, unless any other person is appointed. The main functions of the Security Agent may include holding Transaction Security on behalf of the Secured Parties and monitoring compliance by the Issuer and other relevant parties of their respective obligations under the Transaction Security Documents with respect to the Transaction Security on the basis of information made available to it pursuant to the Finance Documents.
 

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


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


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

49

 (e)
The provisions set out in Clause 16.4 (Expenses, liability and indemnity) shall apply mutatis mutandis to any expenses and liabilities of the Security Agent in connection with the Finance Documents.
 
17.
AMENDMENTS AND WAIVERS
 
17.1
Procedure for amendments and waivers
 

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


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

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


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


(b)
Any changes to these Bond Terms necessary or appropriate in connection with the appointment of a Security Agent other than the Bond Trustee shall be documented in an amendment to these Bond Terms, signed by the Bond Trustee (in its discretion). If so desired by the Bond Trustee, any or all of the Transaction Security Documents shall be amended, assigned or re-issued, so that the Security Agent is the holder of the relevant Security (on behalf of the Bondholders). The costs incurred in connection with such amendment, assignment or re-issue shall be for the account of the Issuer.
 
17.2
Authority with respect to documentation
 
If the Bondholders have resolved the substance of an amendment to any Finance Document, without resolving on the specific or final form of such amendment, the Bond Trustee shall be considered authorised to draft, approve and/or finalise (as applicable) any required documentation or any outstanding matters in such documentation without any further approvals or involvement from the Bondholders being required.
 
17.3
Notification of amendments or waivers
 

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

 (b)
Prior to agreeing to an amendment or granting a waiver in accordance with paragraph (a)(i) of Clause 17.1 (Procedure for amendments and waivers), the Bond Trustee may inform the Bondholders of such waiver or amendment at a relevant information platform.

50
18.
MISCELLANEOUS
 
18.1
Limitation of claims
 
All claims under the Finance Documents for payment, including interest and principal, will be subject to the legislation regarding time-bar provisions of the Relevant Jurisdiction.
 
18.2
Access to information
 

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

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


(c)
The information referred to in paragraph (b) above may only be used for the purposes of carrying out their duties and exercising their rights in accordance with the Finance Documents and shall not disclose such information to any Bondholder or third party unless necessary for such purposes.
 
18.3
Notices, contact information
 

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


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


(c)
Notwithstanding paragraph (a) above and provided that such written notification does not require the Bondholders to take any action under the Finance Documents, the Issuer’s written notifications to the Bondholders may be published by the Bond Trustee on a relevant information platform only.
 

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


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

 (ii)
if by e-mail, when received; and
 

 (iii)
if by publication on a relevant information platform, when published.
 

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

51

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

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


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

 (iii)
if a deadline ends on a day which is not a Business Day, the deadline is postponed to the next Business Day.
 
18.4
Defeasance
 

 (a)
Subject to paragraph (b) below and provided that:


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


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


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

 (A)
the Issuer will be relieved from its obligations under paragraph (a) of Clause 12.2 (Requirements as to Financial Reports), Clause 12.3 (Put Option Event), Clause 12.5 (Information: miscellaneous) and Clause 13 (General and Financial Undertakings);
 

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


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

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

52

 (c)
The Bond Trustee may, if the Defeasance Amount cannot be finally and conclusively determined, decide the amount to be deposited to the Defeasance Account in its discretion, applying such buffer amount as it deems necessary.
 
A defeasance established according to this Clause 18.4 may not be reversed.
 
19.
GOVERNING LAW AND JURISDICTION
 
19.1
Governing law
 
These Bond Terms are governed by the laws of the Relevant Jurisdiction, without regard to its conflict of law provisions.
 
19.2
Main jurisdiction
 
The Bond Trustee and the Issuer agree for the benefit of the Bond Trustee and the Bondholders that the City Court of the capital of the Relevant Jurisdiction shall have jurisdiction with respect to any dispute arising out of or in connection with these Bond Terms. The Issuer agrees for the benefit of the Bond Trustee and the Bondholders that any legal action or proceedings arising out of or in connection with these Bond Terms against the Issuer or any of its assets may be brought in such court.
 
19.3
Alternative jurisdiction
 
Clause 19 (Governing law and jurisdiction) is for the exclusive benefit of the Bond Trustee and the Bondholders and the Bond Trustee have the right:
 

 (a)
to commence proceedings against the Issuer or any of its assets in any court in any jurisdiction; and
 

 (b)
to commence such proceedings, including enforcement proceedings, in any competent jurisdiction concurrently.
 
19.4
Service of process
 

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

 (i)
irrevocably appoints CSC (Norway) AS as its agent for service of process in relation to any proceedings in connection with these Bond Terms; and


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

 (b)
If any person appointed as an agent for service of process is unable for any reason to act as agent for service of process, the Issuer must immediately (and in any event within 10 Business Days of such event taking place) appoint another agent on terms acceptable to the Bond Trustee. Failing this, the Bond Trustee may appoint another agent for this purpose.
 
-----000-----

53
These Bond Terms have been executed in two originals, of which the Issuer and the Bond Trustee shall retain one each.
 
SIGNATURES:
 
 
The Issuer:
  
As Bond Trustee and Security Agent:
       
 
PERFORMANCE SHIPPING INC.
  
NORDIC TRUSTEE AS
 
   
  /s/ Andreas Michalopoulos     /s/ Olav Slagsvold  
       
 
By: Andreas Michalopoulos
  
By: Olav Slagsvold
       
 
Position: Chief Executive Officer
  
Position: Authorised signatory (p.p.)
       

54
These Bond Terms have been executed in two originals, of which the Issuer and the Bond Trustee shall retain one each.
 
SIGNATURES:
 
 
The Issuer:

  
As Bond Trustee and Security Agent:
 
PERFORMANCE SHIPPING INC.
  
NORDIC TRUSTEE AS
 

 
        /s/ Olav Slagsvold  
       
 
By:
  
By: Olav Slagsvold
       
 
Position:
  
Position: Authorised signatory (p.p.)
       

55
ATTACHMENT 1
COMPLIANCE CERTIFICATE

[date]
 
Performance Shipping Inc. 9.875% bonds 2025/2029 ISIN NO0013607028
 
We refer to the Bond Terms for the above captioned Bonds made between Nordic Trustee AS as Bond Trustee on behalf of the Bondholders and the undersigned as Issuer. Pursuant to Clause 12.2 (Requirements as to Financial Reports) of the Bond Terms a Compliance Certificate shall be issued in connection with each delivery of Financial Reports to the Bond Trustee.
 
This letter constitutes the Compliance Certificate for the period [•].

Capitalised terms used herein will have the same meaning as in the Bond Terms.
 
With reference to Clause 12.2 (Requirements as to Financial Reports), we hereby certify that all information delivered under cover of this Compliance Certificate is true and accurate. Copies of our latest consolidated [Annual Financial Statements] / [Interim Accounts] are enclosed.
 
[The financial covenants set out in Clause 13.19 (Financial covenants) are met, please see the calculations and figures in respect of the ratios attached hereto.]
 
[The Issuer has made a Distribution subject to the Incurrence Test set out in Clause 13.19 (Incurrence Test). The Incurrence Test is met, please see the calculations and figures in respect of the Value Adjusted Equity Ratio and Liquidity attached hereto.]
 
We confirm that, to the best of our knowledge, no Event of Default has occurred or is likely to occur.

Yours faithfully,
Performance Shipping Inc.


Name of authorised person
 
Enclosure: Annual Financial Statements / Interim Accounts; [and any other written documentation]

56
ATTACHMENT 2
RELEASE NOTICE – ESCROW ACCOUNT
 
[date]
Dear Sirs,

Performance Shipping Inc. 9.875% bonds 2025/2029 ISIN NO0013607028
 
We refer to the Bond Terms for the above captioned Bonds made between Nordic Trustee AS as Bond Trustee on behalf of the Bondholders and the undersigned as Issuer.
 
Capitalised terms used herein will have the same meaning as in the Bond Terms.
 
We hereby give you notice that we on [date] wish to draw [the amount specified in Enclosure I (Flow of Funds)]/[all amounts] from the Escrow Account to be applied pursuant to the purpose set out in the Bond Terms, and request you to instruct the bank to release the above mentioned amount.
 
We hereby represent and warrant that (i) no Event of Default has occurred and is continuing or is likely to occur as a result of the release from the Escrow Account, and (ii) we confirm that the representations and warranties set out in the Bond Terms are true and accurate in all material respects at the date hereof.

Yours faithfully,

Performance Shipping Inc.



Name of authorised person
 
Enclosure I: Flow of Funds


57
Exhibit 4.45

Tap Issue Addendum
 
1.
Pursuant to the bond terms dated 15 July 2025 (the “Bond Terms”) related to the below Bonds, the Issuer and the Bond Trustee enter into this tap issue addendum (the ”Addendum”) in connection with a Tap Issue under the Bond Terms:
 
 
Issuer:
  
Performance Shipping Inc.
 
Bond Trustee:
  
Nordic Trustee AS
 
ISIN:
  
NO0013607028
 
Maximum Issue Amount:
  
USD 150,000,000
 
Amount of Additional Bonds:
  
USD 50,000,000
 
Amount Outstanding Bonds after the increase:
  
USD 150,000,000
 
Date of Addendum:
  
23 January 2026
 
Tap Issue Date:
  
27 January 2026

2.
Terms defined in the Bond Terms have, unless expressly defined herein or otherwise required by the context, the same meaning in this Addendum. This Addendum is a Finance Document and  after the date hereof all references to the Bond Terms in the other Finance Documents shall be construed as references to the Bond Terms as amended and supplemented by this Addendum.
 
3.
Pursuant to the Bond Terms the Issuer may issue Additional Bonds until the aggregate Nominal Amount of the Initial Bonds and all Additional Bonds equals the Maximum Issue Amount and the provisions of the Bond Terms will apply to all such Additional Bonds.
 
4.
With reference to clause 2.3 (b) of the Bond Terms, the Issuer will use the Net Proceeds from the issuance of the Additional Bonds for general corporate purposes.
 
5.
The Additional Bonds are contemplated to be listed on the Oslo Stock Exchange (Oslo Børs), together with the Bonds in the Initial Bond Issue, such listing which is conditional upon the preparation and approval of a prospectus. The Issuer shall promptly notify the Bond Trustee, the Exchange and the Paying Agent upon such prospectus being approved.
 
6.
The issuance of Additional Bonds and disbursement of the Net Proceeds of the Tap Issue to the Issuer shall be conditional on the Bond Trustee having received in due time (as determined by the Bond Trustee) prior to the date of the Tap Issue each of the following documents, in form and substance satisfactory to the Bond Trustee:
 

 (i)
this Addendum duly executed by all parties hereto;
 

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

 (iii)
copies of the Issuer’s articles of incorporation and bylaws and a certificate of good standing from the relevant company register in respect of the Issuer evidencing that the Issuer is validly existing;
 

 (iv)
any amendment or security and guarantee confirmation required in respect of any Finance Documents in relation to the Tap Issue;
 

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


(vi)
legal opinions or other statements as may be required by the Bond Trustee (including in respect of corporate matters relating to the Issuer and the legality, validity and enforceability of this Addendum and any other Finance Documents (if applicable)).
 
7.
The Bond Trustee may (at its sole discretion and in each case) waive or postpone the delivery of certain conditions precedent, and the Bond Trustee may (on behalf of the Bondholders) agree on a customary closing procedure with the Issuer.

8.
By signing this Addendum, the Issuer confirms that no Event of Default has occurred and that the representations and warranties contained in Clause 7 (Representations and Warranties) of the Bond Terms are true and correct in all material respects and repeated by the Issuer as at the date hereof and at the Tap Issue Date.
 
9.
The Issuer represents and warrants that no circumstances have occurred including any litigation pending or threatening which would have an adverse material effect on the Issuer's financial situation or ability to fulfill its obligations under the Bond Terms or which would otherwise constitute an Event of Default under the Bond Terms.
 
10.
Clause 19 (Governing law and jurisdiction) of the Bond Terms shall apply to this Addendum mutatis mutandis and as if references in that clause to "these Bond Terms" were to this Addendum.
 
-----000-----

SIGNATURES:

The Issuer:
 
Performance Shipping Inc.
  
The Bond Trustee:
 
Nordic Trustee AS
  /s/ Andreas Nikolaos Michalopoulos
  
/s/ Merete Vatsendvik

 
 
By: Andreas Nikolaos Michalopoulos
Title: Authorised signatory
  
By: Merete Vatsendvik
Title: Authorised signatory


Exhibit 8.1
List of Subsidiaries as at December 31, 2025

Name of Subsidiary
Place of Incorporation
Performance Shipping Management Inc.
Marshall Islands
   
Taburao Shipping Company Inc.
Marshall Islands
   
Tarawa 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
   
Toka Shipping Company Inc.
Marshall Islands
   
Saint Barth Shipping Company Inc.
Marshall Islands
   
Mustique Shipping Company Inc.
Marshall Islands
   
Grenada Shipping Company Inc.
Marshall Islands
   
Barbados Shipping Company Inc.
Marshall Islands
   
Martinique Shipping Company Inc.
Marshall Islands
   
Saint Lucia Shipping Company Inc.
Marshall Islands
   
Performance Shipping USA LLC
Delaware, USA


Exhibit 12.1

CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER

I, 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 the circumstances 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 of operations 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 material information 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 is being prepared;

(b)         Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)         Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure 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 has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and

5.           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 and the 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 affect the 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: April 27, 2026

/s/ Andreas Michalopoulos
Andreas Michalopoulos
Chief Executive Officer, Director and Secretary (Principal Executive Officer)


Exhibit 12.2

CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER

I, 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 the circumstances 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 of operations 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 material information 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 is being prepared;

(b)         Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)         Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure 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 has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and

5.            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 and the 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 affect the 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: April 27, 2026

/s/ Anthony Argyropoulos
Anthony Argyropoulos
Chief 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, 2025 as filed with the Securities and Exchange Commission (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 18 U.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: April 27, 2026

/s/Andreas Michalopoulos
Andreas Michalopoulos
Chief Executive Officer, Director and Secretary (Principal Executive Officer)


Exhibit 13.2
 
PRINCIPAL 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, 2025 as filed with the Securities and Exchange Commission (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, 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: April 27, 2026

/s/ Anthony Argyropoulos
Anthony Argyropoulos
Chief Financial Officer (Principal Financial Officer)



Exhibit 15.1

Consent of Independent Registered Public Accounting Firm

We 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., and
(3)
Registration Statement (Form F-3 No. 333-197740) of Performance Shipping Inc.;

of our report dated April 27, 2026, with respect to the consolidated financial statements of Performance Shipping Inc. included in this Annual Report (Form 20-F) of Performance Shipping Inc. for the year ended December 31, 2025.

/s/ Ernst & Young (Hellas) Certified Auditors Accountants S.A.

Athens, Greece
April 27, 2026


Exhibit 15.2

CONSENT OF WATSON FARLEY & WILLIAMS LLP

Reference is made to the annual report on Form 20-F of Performance Shipping Inc. (the “Company”) for the year ended December 31, 2025 (the “Annual Report”) and the registration statements on Form F-3 (Registration No. 333-271398, Registration No. 333-266946 and Registration No. 333-197740) of the Company, including the prospectuses 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 reference into 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 of 1933, 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
April 27, 2026