UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR
15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of October 2022
Commission File Number: 001-35025
PERFORMANCE SHIPPING INC.
(Translation of registrant's name into English)
373 Syngrou Avenue
175 64 Palaio Faliro
Athens, Greece
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ___
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)7: ___
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in
which the registrant is incorporated, domiciled or legally organized (the registrant's "home country"), or under the rules of the home country exchange on which the registrant's securities are traded, as long as the report or other document is not a
press release, is not required to be and has not been distributed to the registrant's security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
INFORMATION CONTAINED IN THIS REPORT ON FORM 6-K
Stock Purchase Agreement
On October 17, 2022, Performance Shipping Inc., a Marshall Islands corporation (“we”,
“us”, “our”, or the “Company”) entered into a stock purchase agreement (the “SPA”) with Mango Shipping Corp. (“Mango”) pursuant to which we agreed to issue to Mango in a private placement 1,314,792 Series C Convertible Cumulative Redeemable
Perpetual Preferred Stock, par value $0.01 per share (the “Series C Preferred Shares”) in exchange for (i) all 657,396 Series B Convertible Cumulative Perpetual Preferred Shares (the “Series B Preferred Shares”) held by Mango and (ii) the agreement by Mango to apply $4,930,470 (an amount equal to the aggregate cash conversion price payable upon conversion of such Series B Preferred Shares into Series C
Preferred Shares pursuant to their terms) as a prepayment by us of an unsecured credit facility agreement dated March 2, 2022 and made between us as borrower and Mango as lender, maturing in March 2023 and bearing interest at 9.0% per annum. We
subsequently repaid the remaining amounts due and terminated the credit facility with Mango. The transaction was approved by a special independent committee of our Board of Directors (the “Board”).
Series C Preferred Shares
On October 17, 2022 (the “Original Issuance Date”), we filed a Certificate of Designation (the “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 1,314,792 Series C Preferred Shares have been issued pursuant to the SPA as described above.
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
Certificate of Designation attached hereto as Exhibit 99.2.
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 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.
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 stock and (b) all Junior
Securities (as such terms is defined in the Certificate of Designation), (ii) pari passu with the Parity Securities (as such term is defined in the Certificate of Designation), including the Series B Preferred Shares, and (iii) junior to Senior
Securities (as such term is defined in the 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 any time on or after the date that is the date immediately following the six-month anniversary of the Original Issuance Date (the “Series C Conversion Period”) 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 $0.50, 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 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.
Dividends. Dividends on each Series C Preferred Share (the “Series C Dividends”) 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. 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.
Risk Factors
The following should be read in conjunction with the risk factors previously disclosed in our Annual Report on Form 20-F for the fiscal year ended
December 31, 2021 (the “Annual Report”).
Aliki Paliou, the Chairperson of the Board, controls a significant percentage 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 controls
approximately 91.6% of the vote over any matter submitted to a vote of our shareholders. The Series C Preferred Shares bear superior voting rights to our common shares and are entitled to vote on all matters on which our shareholders are entitled to
vote, and further are convertible into our common shares under certain conditions. 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 issued and outstanding Series B Preferred Shares, our issued and
outstanding Series C Preferred Shares and the Series C Preferred Shares, which may be issued pursuant to the terms of our Series B Preferred Shares, please see “Item 10. Additional Information—B. Memorandum and Articles of Association” of our Annual
Report and the Certificate of Designation attached hereto as Exhibit 99.2.
Future sales of our common stock, including through the exercise of conversion rights under our outstanding convertible preferred
shares, could cause the market price of our common stock to decline.
Our amended and restated articles of incorporation authorize us to issue up to 500,000,000 shares of common stock, of which 60,728,363 shares were issued and outstanding
as of the date of this Report on Form 6-K (this “Report”).
As of the date of this Report, 136,261 of our Series B Preferred Shares and 1,314,792 of our Series C Preferred Shares are currently issued and outstanding. Each Series
B Preferred Share is convertible, subject to payment of a conversion price of $7.50 per Series B Preferred Share converted, into two Series C Preferred Shares, with a liquidation preference of $25.00 per share, during the conversion period for the
Series B Preferred Shares, which will begin no earlier than February 3, 2023. 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 at a rate equal to the Series C liquidation preference, plus the amount of any accrued and unpaid dividends thereon to and including the conversion date, divided by $0.50. For additional
information regarding the terms of our issued and outstanding Series B Preferred Shares, our issued and outstanding Series C Preferred Shares and the Series C Preferred Shares which may be issued pursuant to the terms of our Series B Preferred
Shares, please see “Item 10. Additional Information—B. Memorandum and Articles of Association” of our Annual Report and the Certificate of Designation attached hereto as Exhibit 99.2.
We may offer and sell our common stock or securities convertible into our common stock 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 stock 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 stock 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 stock. The issuance of such additional shares of common stock would also result in the dilution of the ownership interests of our existing shareholders.
Our Series B Preferred Shares are convertible under certain circumstances into preferred shares with superior voting rights, which
may limit the ability of our common shareholders to control or influence corporate matters, and the interests of the holders of such shares could conflict with the interests of common shareholders.
As of the date of this Report, 136,261 of our Series B Preferred Shares are currently issued and outstanding. Each Series B Preferred Share is convertible, subject to
payment of a conversion price of $7.50 per Series B Preferred Share converted, into two Series C Preferred Shares during the conversion period for the Series B Preferred Shares, which will begin no earlier than February 3, 2023. Upon such conversion
and issuance, our Series C Preferred Shares will bear superior voting rights to our common shares and will be entitled to vote on all matters on which our shareholders are entitled to vote, and are further convertible into our common shares under
certain conditions. Assuming all issued and outstanding Series B Preferred Shares are converted into Series C Preferred Shares (and assuming no other changes to our capitalization and no adjustments to the conversion price of the Series C Preferred
Shares), holders of our Series C Preferred Shares will control the vote over any matter submitted to a vote of our shareholders. 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 issued and
outstanding Series B Preferred Shares and the Series C Preferred Shares which may be issued pursuant to the terms of our Series B Preferred Shares, please see “Item 10. Additional Information—B. Memorandum and Articles of Association” of our Annual
Report and the Certificate of Designation attached hereto as Exhibit 99.2.
Update on Outstanding Capital Stock
As of the date of this Form 6-K, the Company’s outstanding capital stock consists of 60,728,363
issued and outstanding common shares, 136,261 Series B Preferred Shares and 1,314,792 Series C Preferred Shares.
Special Meeting of Shareholders
Attached to this Report as Exhibit 99.4 is the Notice of Special Meeting of Shareholders and Proxy Statement of the Company, which was mailed to shareholders of the
Company on or around October 21, 2022.
Attached to this Report as Exhibit 99.5 is the Proxy Card of the Company, which was mailed to shareholders of the Company on or around October 21, 2022.
Forward-Looking Statements
Matters discussed in this report 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, and underlying assumptions and other statements, which are other than statements of historical facts, including with respect to the delivery of the vessels we have agreed to acquire.
The words “believe,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” “plan,” “potential,” “will,” “may,” “should,” “expect,” “targets,”
“likely,” “would,” “could,” “seeks,” “continue,” “possible,” “might,” “pending” and similar expressions, terms or phrases may identify forward-looking statements.
The forward-looking statements in this 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 our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these
assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs, or
projections.
In addition to these important factors, other important factors that, in our 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, general market conditions, including fluctuations in charter rates and vessel values, changes in demand
in the tanker shipping industry, changes in the supply of vessels, changes in worldwide oil production and 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 including with respect to the vessels we have agreed to acquire, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability
from pending or future litigation, general domestic and international political conditions, the length and severity of epidemics and pandemics, including the ongoing outbreak of the novel coronavirus (COVID-19) and its impact on the demand for
seaborne transportation of petroleum and other types of products, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international
political conditions or events, including “trade wars”, armed conflicts including the war in Ukraine, the imposition of new international sanctions, acts by terrorists or acts of piracy on ocean-going vessels, potential disruption of shipping routes
due to accidents, labor disputes or political events, vessel breakdowns and instances of off-hires and other important factors. Please see our filings with the U.S. Securities and Exchange Commission for a more complete discussion of these and other
risks and uncertainties.
EXHIBIT INDEX
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Press release dated October 21, 2022 entitled “Performance Shipping Inc. Announces Restructuring of Related-Party Debt and Date of Special
Meeting of Shareholders”
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Certificate of Designation of Series C Preferred Shares dated October 17, 2022
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Stock Purchase Agreement dated October 17, 2022
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Notice of Special Meeting of Shareholders and Proxy Statement
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The information contained in this Report on Form 6-K is hereby incorporated by reference into the Company's registration statement on Form F-3 (File No. 333-197740), filed
with the U.S. Securities and Exchange Commission (the “SEC”) with an effective date of August 13, 2014, and the Company’s registration statement on Form F-3 (File No. 333-237637), filed with the SEC with an effective date of April 23, 2020.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: October 21, 2022
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PERFORMANCE SHIPPING INC.
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By: |
/s/ Andreas Michalopoulos
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Name: |
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Title: |
Chief Executive Officer
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6
Exhibit 99.2
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF
SERIES C CONVERTIBLE CUMULATIVE REDEEMABLE PERPETUAL PREFERRED STOCK
OF
PERFORMANCE SHIPPING INC.
The undersigned, Mr. Andreas Michalopoulos, does hereby certify:
1. That he is the duly elected and acting Chief Executive Officer of Performance Shipping Inc., a Marshall Islands corporation (the “Company”);
2. That, pursuant to the authority conferred by the Company’s Amended and Restated Articles of Incorporation, as amended (the “
Articles of Incorporation”), the Company’s Board of
Directors (the “
Board of Directors”), by written consent of said Board of Directors on October 17, 2022 (the “
Resolutions”), established a series of preferred shares of the Company
designated as “Series C
Convertible Cumulative Redeemable Perpetual Preferred Stock” (the “
Series C Preferred Shares”); and
3. That, pursuant to and in accordance with the Resolutions, the designation, preferences and rights of the Series C Preferred Stock are hereby fixed as
follows:
Section 1. Designation and Amount.
The shares of such series of preferred stock created hereby shall be designated the “Series C Convertible Cumulative Redeemable Perpetual Preferred Stock”, par value $0.01 per share. The authorized
number of Series C Preferred Shares shall initially be
1,587,314, which number the Board of Directors may from time to time increase or decrease (but not below the number then outstanding). Series C Preferred Shares that
are repurchased, converted or otherwise acquired by the Company shall be canceled and shall revert to the status of authorized but unissued preferred shares of the Company, undesignated as to series.
Section 2. Liquidation.
(a) Upon the occurrence of any Liquidation Event, holders of Series C Preferred Shares shall be entitled to receive out of the assets of the Company or proceeds thereof legally available for
distribution to stockholders of the Company, (i) after satisfaction of all liabilities, if any, to creditors of the Company, (ii) after all applicable distributions of such assets or proceeds being made to or set aside for the holders of any Senior
Securities then outstanding in respect of such Liquidation Event, (iii) concurrently with any applicable distributions of such assets or proceeds being made to or set aside for holders of any Parity Securities then outstanding in respect of such
Liquidation Event and (iv) before any distribution of such assets or proceeds is made to or set aside for the holders of Common Stock and any other classes or series of Junior Securities as to such distribution, a 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 (whether or not such dividends have been declared) (the “Series C Liquidation Preference”).
For purposes of clarity, upon the occurrence of any Liquidation Event, (x) the holders of then outstanding Senior Securities shall be entitled to receive the applicable Liquidation Preference, plus the
amount of any accumulated and unpaid dividends thereon (whether or not such dividends shall have been declared), on such Senior Securities before any distribution shall be made to the holders of Series C Preferred Shares or any Parity Securities and
(y) the holders of Series C Preferred Shares shall be entitled to the Series C Liquidation Preference, 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 any distribution shall be made to the holders of Common Stock or any other Junior Securities. Holders of Series C Preferred Shares shall not be
entitled to any other amounts from the Company, in their capacity as holders of Series C Preferred Shares, after they have received the Series C Liquidation Preference, plus the amount of any accumulated and unpaid dividends thereon (whether or not
such dividends shall have been declared). The payment of the Series C Liquidation Preference shall be a payment in redemption of the Series C Preferred Shares such that, from and after payment of the full Series C Liquidation Preference, plus the
amount of any accumulated and unpaid dividends thereon (whether or not such dividends shall have been declared), any such Series C Preferred Shares shall thereafter be canceled and no longer be outstanding.
(b) In the event of any distribution or payment described in Section 2(a) above where the Company’s assets available for distribution to holders of the outstanding Series C Preferred Shares
and any Parity Securities are insufficient to satisfy the applicable Liquidation Preference, plus the amount of any accumulated and unpaid dividends thereon (whether or not such dividends shall have been declared), for such Series C Preferred Shares
and Parity Securities, the Company’s then remaining assets or proceeds thereof legally available for distribution to shareholders of the Company shall be distributed among the holders of outstanding Series C Preferred Shares and such Parity Securities,
as applicable, ratably on the basis of their relative aggregate Liquidation Preferences, plus the amount of any accumulated and unpaid dividends thereon (whether or not such dividends shall have been declared).
(c) After payment of the applicable Liquidation Preference, plus the amount of any accumulated and unpaid dividends thereon (whether or not such dividends shall have been declared) to the
holders of the outstanding Series C Preferred Shares and any Parity Securities, the Company’s remaining assets and funds shall be distributed among the holders of the Common Stock and any other Junior Securities then outstanding according to their
respective rights and preferences.
Section 3. Dividends.
(a) Dividends on each Series C Preferred Share (the “Series C Dividends”) shall be cumulative and shall accrue at the Series C Dividend Rate from and including the latest date
preceding the issuance date of such Series C Preferred Share up to which full cumulative Series C Dividends have been paid or declared and set aside for payment (or, if no Series C Dividends have been paid, the Dividend Payment Date immediately
preceding the issuance date of such Series C Preferred Share) to, but excluding, the next Dividend Payment Date (or earlier redemption date) (such period and each subsequent period from and including a Dividend Payment Date to, but excluding, the next
Dividend Payment Date or earlier redemption date, a “Dividend Period”), whether or not such Series C Dividends shall have been declared and whether or not there are profits, surplus, or other funds legally available for the payment of dividends.
(b) When, as, and if declared by the Board of Directors, the Series C Dividends shall be payable quarterly in arrears on each of March 15, June 15, September 15 and December 15 of each year,
commencing on December 15, 2022 (each such date, a “Dividend Payment Date,”) provided that if any such Dividend Payment Date is a day that is not a Business Day, the dividend with respect to such
Dividend Payment Date shall instead be payable on the immediately succeeding Business Day, without interest or other payment in respect of such delayed payment. Series C Dividends that are payable on any Dividend Payment Date will be payable to holders
of record of Series C Preferred Shares as they appear on the stock register of the Company on the applicable record date, which shall be the 5th Business Day before such Dividend Payment Date or such other record date fixed by the Board of
Directors that is not more than 60 days prior to such Dividend Payment Date (each, a “Dividend Record Date”). Any such day that is a Dividend Record Date shall be a Dividend Record Date whether or not such day is a Business Day. Series C
Dividends shall be computed based on a 360-day year consisting of twelve 30-day months.
(c) Series C Dividends shall be paid in cash, or at the Company’s election, shares of Common Stock valued at the volume-weighted average price of the Common Stock for the 10 trading days
prior to the Dividend Payment Date.
(d) Not later than 5:00 p.m., New York City time, on each Dividend Payment Date, the Company shall pay those Series C Dividends, if any, that shall have been declared by the Board of
Directors to the Paying Agent or, if there is no Paying Agent at the relevant time, to the holders of Series C Preferred Shares as such holders’ names appear on the Company’s share transfer books maintained by the Company’s registrar and transfer agent
on the Dividend Record Date.
(e) No dividend shall be declared or paid or set apart for payment on any Junior Securities (other than a dividend payable solely in Junior Securities) unless full cumulative Series C
Dividends have been or contemporaneously are being paid or declared and set aside for payment on all outstanding Series C Preferred Shares and any Parity Securities through the most recent respective Dividend Payment Dates.
(f) Accumulated Series C Dividends in arrears for any past Dividend Period may be declared by the Board of Directors and paid on any date fixed by the Board of Directors, whether or not a
Dividend Payment Date, to holders on the record date for such payment, which may not be more than 60 days before such payment date. Subject to the next succeeding sentence, if all accumulated Series C Dividends in arrears on all outstanding Series C
Preferred Shares and any Parity Securities shall not have been declared and paid, or if sufficient funds for the payment thereof shall not have been declared and set apart, payment of accumulated dividends in arrears on the Series C Preferred Shares
and any such Parity Securities shall be made in order of their respective dividend payment dates, commencing with the oldest. If less than all dividends payable with respect to all holders of Series C Preferred Shares and any Parity Securities are
paid, any partial payment shall be made pro rata with respect to the Series C Preferred Shares and any Parity Securities entitled to a dividend payment at such time in proportion to the aggregate dividend amounts remaining due in respect of such shares
at such time. Holders of Series C Preferred Shares shall not be entitled to any dividend, whether payable in cash, property or shares, in excess of full cumulative Series C Dividends. No interest or sum of money in lieu of interest shall be payable in
respect of any dividend payment which may be in arrears on the Series C Preferred Shares. Declared Series C Dividends shall be paid to the Paying Agent in same-day funds on each Dividend Payment Date. The Paying Agent shall be responsible for holding
or disbursing such payments to the holders of Series C Preferred Shares in accordance with the instructions of such holders of Series C Preferred Shares. In certain circumstances, dividends may be paid by check mailed to the registered address of the
holder of Series C Preferred Shares, unless, in any particular case, the Company elects to pay by wire transfer.
Section 4. Voting Rights.
(a) Each holder of Series C Preferred Shares shall be entitled to a number of votes equal to the number of shares of Common Stock into which such holder’s
Series C Preferred Shares are then convertible pursuant to Section 5(a) (or would be convertible but for the Series C Conversion Period) multiplied by 10. Except as otherwise provided herein or by law, the holders of Series C Preferred Shares and
the holders of shares of Common Stock shall vote together as one class on all matters submitted to a vote of stockholders of the Company.
(b) Without the prior written consent of holders of not less than a majority of the then outstanding Series C Preferred Shares, voting separately as a class, the Company shall not take any
action described below:
(1) create any additional class or series of capital stock (or any security convertible into or exercisable for any class or series of capital stock ) that ranks superior to or in parity with
the Series C Preferred Shares in rights, preferences, or privileges (including with respect to dividends, liquidation, redemption, or voting);
(2) increase or decrease the number of authorized shares of any series of preferred stock or authorize the issuance of or issue any shares of preferred stock (except for the Series B Preferred
Stock and the Series C Preferred Stock);
(3) amend, alter, modify, or repeal the Articles of Incorporation or the Bylaws of the Company, or amend the organizational documents of any subsidiary;
(4) issue, or permit any subsidiary to issue, any indebtedness that by its terms restricts the Company’s ability to pay the stated dividend on the Series C Preferred Stock (or amend any
existing indebtedness to do so);
(5) declare bankruptcy, dissolve, liquidate, or wind up the affairs of the Company or any subsidiary of the Company;
(6) effect, or enter into any agreement to effect, a change of control or sale of all or substantially all of the Company’s consolidated assets;
(7) modify or change the nature of the Company’s or any subsidiary’s business; or
(8) enter into, or become subject to, any agreement or instrument or other obligation which by its terms restricts the Company’s ability to perform its obligations under the Series C Preferred
Stock, including the ability of the Company to pay dividends or make any required liquidation payment.
Section 5. Conversion Rights.
The holders of the Series C Preferred Shares shall have the following rights with respect to the conversion of such Series C Preferred Shares into shares of Common Stock (the “Conversion Rights”):
(a) Optional Conversion Right of the Holders. Subject to the terms and conditions of this Section 5 (including the conversion procedures set forth below), at any time and from time
to time on or after the date that is the date immediately following the six-month anniversary of the Original Issuance Date (the “Series C Conversion Period”), each holder of Series C Preferred Shares may elect to convert, in whole or in part,
its Series C Preferred Shares into shares of Common Stock (the “Optional Conversion Right”) at a rate equal to the Series C Liquidation Preference, plus the amount of any accrued and unpaid dividends thereon to and including the Optional
Conversion Date, divided by a conversion price of $0.50, subject to adjustment from time to time in accordance with Section 5(c) hereof (the “Conversion Price”).
(b) Mandatory Conversion. 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 Stock 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 shares of Common Stock 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 (a “Mandatory Conversion”).
Such Series C Preferred Shares subject to Mandatory Conversion shall be deemed to have been converted immediately prior to the close of business on the date of such Mandatory Conversion.
If the Company elects that less than all of the outstanding Series C Preferred Shares shall be subject to a Mandatory Conversion, the number of shares to be converted shall be determined by the
Company, and such Series C Preferred Shares shall be selected for conversion as follows: (i) in accordance with applicable rules and procedures of DTC and any relevant securities exchange; or (ii) if there are no such requirements of DTC or any
relevant securities exchange, on a pro rata basis, in each case, with adjustments to avoid redemption of fractional shares. The Series C Preferred Shares not so converted shall remain outstanding and entitled to all the rights and preferences provided
in this Certificate of Designation.
As promptly as practicable on or after the date of such Mandatory Conversion, the Company shall issue and shall deliver a certificate or certificates for the number of full shares of
Common Stock issuable upon conversion or such shares shall be issued in book-entry form and deposited at an account in the name of the holder of record maintained at the Company’s transfer agent.
(c) Adjustments to Conversion Price. The Conversion Price shall be subject to adjustment from time to time as follows:
(1) Upon Capital Reorganization or Reclassification. If the shares of Common Stock issuable upon the conversion of the Series C Preferred Shares shall be changed into the same or
different number of shares of any class or classes of stock, whether by capital reorganization, reclassification or otherwise (other than a reorganization, merger, or consolidation or sale provided for elsewhere in this Section 5(c), then and in each
such event the holder of each share of Series C Preferred Shares shall have the right thereafter to convert such share into the kind and amount of shares of stock and other securities and property receivable upon such reorganization, reclassification
or other change by holders of the number of shares of Common Stock into which such Series C Preferred Shares might have been converted, as the case may be, immediately prior to such reorganization, reclassification or change, all subject to further
adjustment as provided herein.
(2) Upon Reclassification, Merger or Sale of Assets. If, at any time or from time to time, there shall be a capital reorganization of the Common Stock (other than a subdivision,
combination, reclassification, or exchange of shares provided for elsewhere in this Section 5(c) or a merger or consolidation of the Company with or into another corporation, or the sale of all or substantially all of the Company’s properties and
assets to any other person, then, as a part of such reorganization, merger, or consolidation or sale, provision shall be made so that holders of Series C Preferred Shares, as the case may be, shall thereafter be entitled to receive upon conversion of
the Series C Preferred Shares, the number of shares of stock or other securities or property of the Company, or of the successor corporation resulting from such merger, consolidation or sale, to which such holder would have been entitled if such holder
had converted its Series C Preferred Shares immediately prior to such capital reorganization, merger, consolidation or sale. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 5(c) with respect
to the rights of the holders of the Series C Preferred Shares after the reorganization, merger, consolidation or sale to the end that the provisions of this Section 5(c), including adjustment of the Conversion Price then in effect for the Series C
Preferred Shares and the number of shares issuable upon conversion of the Series C Preferred Shares shall be applicable after that event in as nearly equivalent a manner as may be practicable.
(3) Upon Stock Dividend, Subdivision, Split or Combination. If the Company shall, at any time or from time to time, pay a stock dividend or otherwise makes a distribution or
distributions on its shares of Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock, or effect a subdivision or split of the outstanding Common Shares, the Conversion Price in effect immediately before such
stock dividend or distribution, subdivision or split shall be proportionately decreased and, conversely, if the Company shall, at any time or from time to time, effect a combination (including by means of a reverse stock split) of the outstanding
shares of Common Stock, the Conversion Price in effect immediately before such combination shall be proportionately increased. Any adjustment under this Section 5(c)(3) shall become effective at the close of business on the effective date of the
applicable stock dividend or distribution, subdivision, split or combination.
(4) Upon a Registered Offering. In the event that the Company shall, at any time or from time to time, issue or sell shares of Common Stock (other than Excluded Shares) in an offering
registered under the Securities Act of 1933, as amended, in which the Common Stock is sold (or deemed to be sold pursuant to this Section 5(c)(4)) for consideration per share of Common Stock less than the Conversion Price then in effect, then the
Conversion Price shall be reduced (but not increased) to an amount equal to the greater of (i) such consideration per share and (ii) $0.50. Notwithstanding anything to the contrary contained herein, the Conversion Price may not be reduced pursuant to
this Section 5(c)(4) below $0.50.
For the purpose of making any adjustment required under this Section 5(c)(4), the aggregate consideration received by the Company for any issue or sale of securities (the “Aggregate Consideration”)
shall be computed as: (A) to the extent it consists of cash, the gross amount of cash received by the Company before deduction of any underwriting or similar commissions, compensation or concessions paid or allowed by the Company in connection with
such issue or sale and without deduction of any expenses payable by the Company, (B) to the extent it consists of property other than cash, the fair value of that property as determined in good faith by the Board of Directors; provided, however, that
to the extent the Board of Directors determines the fair value of property other than cash is equal to or exceeds $1,000,000, then the Company shall have such property appraised by a qualified independent appraiser, whose valuation shall conclusively
determine the value, and (C) if shares of Common Stock, Convertible Securities or rights or options to purchase either shares of Common Stock or Convertible Securities are issued or sold together with other stock or securities or other assets of the
Company for a consideration which covers both, the portion of the consideration so received that may be reasonably determined in good faith by the Board of Directors to be allocable to such shares of Common Stock, Convertible Securities or rights or
options.
For the purpose of the adjustment required under this Section 5(c)(4), if the Company issues or sells (x) preferred shares or other stock, options, warrants, purchase rights or other securities
convertible into, shares of Common Stock other than Excluded Shares (such convertible stock or securities being herein referred to as “Convertible Securities”) or (y) rights or options for the purchase of shares of Common Stock or Convertible
Securities (other than Excluded Shares) and if the Effective Price of such shares of Common Stock is less than the Conversion Price, the Company shall be deemed to have issued at the time of the issuance of such rights or options or Convertible
Securities the maximum number of shares of Common Stock issuable upon exercise or conversion thereof and to have received as consideration for the issuance of such shares an amount equal to the total amount of the consideration, if any, received by the
Company for the issuance of such rights or options or Convertible Securities plus: (A) in the case of such rights or options, the minimum amounts of consideration, if any, payable to the Company upon the exercise of such rights or options; and (B) in
the case of Convertible Securities, the minimum amounts of consideration, if any, payable to the Company upon the conversion thereof (other than by cancellation of liabilities or obligations evidenced by such Convertible Securities); provided that if
the minimum amounts of such consideration cannot be ascertained, but are a function of anti-dilution or similar protective clauses, the Company shall be deemed to have received the minimum amounts of consideration without reference to such clauses. If
the minimum amount of consideration payable to the Company upon the exercise or conversion of rights, options or Convertible Securities is reduced over time or on the occurrence or non-occurrence of specified events, including by reason of
anti-dilution adjustments, the Effective Price shall be recalculated using the figure to which such minimum amount of consideration is reduced, and such Convertible Security and the Common Stock deemed issuable upon exercise, conversion or exchange
thereof shall be deemed to have been issued as of the date of such decrease. An adjustment made pursuant to this Section 5(c)(4) shall be made on the next Business Day following the date on which any such issuance or sale, or deemed issuance or sale,
is made and shall be effective retroactively to the close of business on the date of such issuance or sale.
(5) Other Events. If any event occurs of the type contemplated by the foregoing provisions of this Section 5(c) but not expressly provided for by such provisions, then the Board of
Directors will make an appropriate adjustment to the Conversion Price so as to maintain the conversion rights of the holders of the Series C Preferred Shares; provided, however, that no such adjustment will increase the Conversion Price as otherwise
determined pursuant to this Section 5.
(6) Notice of Adjustment to Exercise Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 5(c), the Company shall promptly deliver to the record
holders of Series C Preferred Shares a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.
(d) Exercise of Optional Conversion Right.
(1) In order for a holder of Series C Preferred Shares to exercise the Optional Conversion Right during the Series C Conversion Period, such holder must (A) submit a copy of a fully executed
notice of conversion, substantially in the form attached hereto as Annex A and (B) surrender the certificate or certificates evidencing such holder’s Series C Preferred Shares (to the extent they were issued in certificated form) to be
converted and duly endorsed in a form satisfactory to the Company, at the office of the Company or, if held electronically, cause the transfer of such shares to the Company through the facilities of DTC.
(2) Series C Preferred Shares shall be deemed to have been converted immediately prior to the close of business on the day (the “Optional Conversion
Date”) of surrender of such Series C Preferred Shares for conversion in accordance with the foregoing provisions. Upon the conversion of the Series C Preferred Shares, the Series C Preferred Shares so converted
shall not be transferred on the books of the Company or be deemed to be outstanding for any purpose whatsoever and shall constitute only the right to receive such number of shares of Common Stock as may be issuable upon such conversion. As promptly
as practicable on or after the Optional Conversion Date, the Company shall issue and shall deliver a certificate or certificates for the number of full shares of Common Stock issuable upon conversion or such shares shall be issued in book-entry form
and deposited at an account in the name of the holder of record maintained at the Company’s transfer agent.
(3) In the case of any certificate evidencing Series C Preferred Shares which is converted in part only, upon such conversion the Company shall execute and deliver a new certificate
representing an aggregate number of Series C Preferred Shares equal to the unconverted portion of such certificate.
(4) Notwithstanding anything to the contrary contained herein, no fractional shares of Common Stock shall be issued upon conversion of Series C Preferred Shares pursuant to either the Optional
Conversion Right or a Mandatory Conversion, and the number of shares of Common Stock issuable upon conversion will be rounded down to avoid issuance of fractional shares.
(5) Notwithstanding anything to the contrary contained herein, if any Common Stock underlying the Series C Preferred Shares is issued prior to one year after the Original Issuance Date for such
Series C Preferred Shares and there is no effective registration statement covering the issuance of such Common Stock, such shares of Common Stock shall be issued in certificated form with an appropriate legend to the effect that it can only be sold in
a transaction registered under the Securities Act of 1933, as amended, or in a transaction exempt from such registration.
(e) Cancelation of Converted Series C Preferred Shares. All Series C Preferred Shares delivered for conversion shall be delivered to the Company to be canceled.
(f) Legal Method of Conversion. Any conversion of Series C Preferred Shares to shares of Common Stock may be effected by way of variation of rights, share repurchase and issue, share
consolidation, share subdivision and/or any other manner permitted by applicable law.
(g) Reservation of Stock Issuable Upon Conversion. The Company shall at all times after the Original Issue Date, reserve and keep available out of its authorized but unissued shares
of Common Stock solely for the purpose of effecting the conversion of the Series C Preferred Shares, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all then outstanding Series C Preferred
Shares; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding Series C Preferred Shares, the Company will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose, including engaging in best efforts to obtain the requisite stockholder approval of any
necessary amendment to the Articles of Incorporation of the Company.
Section 6. Optional Redemption.
(a) The Company shall have the right at any time, and from time to 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 pursuant to this Section 6 for cash, less than 25% of the authorized number of
Series C Preferred Shares are outstanding. Any such optional redemption shall be effected only out of funds legally available for such purpose. The Company may undertake multiple partial redemptions. Subject to the first sentence of this paragraph, any
such redemption shall occur on a date set by the Company (the “Series C Redemption Date”).
(b) The Company shall effect any such redemption by paying, on such Series C Redemption Date, cash or, at the Company’s election, shares of Common Stock valued at the volume-weighted average
price of the Common Stock for the 10 trading days prior to the Series C Redemption Date, for each Series C Preferred Share to be redeemed in an amount equal to the Series C Liquidation Preference, plus the amount of any accrued and unpaid dividends
thereon to and including the Series C Redemption Date (the “Series C Redemption Price”). The Series C Redemption Price shall be paid by the Paying Agent to the holders of Series C Preferred Shares.
(c) The Company shall give notice of any redemption not less than 30 days and not more than 60 days before the scheduled Series C Redemption Date, to the holders of Series C Preferred Shares to
be redeemed, as such holders’ names appear on the Company’s share transfer books maintained by its registrar and transfer agent, at the address of such holders shown therein, as of 5:00 p.m. New York City time on the 5th Business Day
preceding the day on which notice is given or such other record date fixed by the Board of Directors that is not more than 60 days prior to such date on which notice is given. Such notice (the “Series C Redemption Notice”) shall state: (1) the
Series C Redemption Date, (2) the number of Series C Preferred Shares to be redeemed and, if less than all outstanding Series C Preferred Shares are to be redeemed, the number (and the identification) of shares to be redeemed from such holder of Series
C Preferred Shares, (3) the Series C Redemption Price, (4) the place where the Series C Preferred Shares are to be redeemed and shall be presented and surrendered for payment of the Series C Redemption Price therefor and (5) that dividends on the
Series C Preferred Shares to be redeemed shall cease to accrue from and after such Series C Redemption Date. Any holder may elect to convert any or all Series C Preferred Shares pursuant to Section 5 after receipt of the Redemption Notice, but prior to
the Redemption Date.
(d) If the Company elects to redeem less than all of the outstanding Series C Preferred Shares, the number of shares to be redeemed shall be determined by the Company, and such Series C
Preferred Shares shall be selected for redemption as follows: (i) in accordance with applicable rules and procedures of DTC and any relevant securities exchange; or (ii) if there are no such requirements of DTC or any relevant securities exchange, on a
pro rata basis, in each case, with adjustments to avoid redemption of fractional shares. The Series C Redemption Price will be paid by the Paying Agent to the holders of Series C Preferred Shares on the Series C Redemption Date. The aggregate Series C
Redemption Price for any such partial redemption of the outstanding Series C Preferred Shares shall be allocated correspondingly among the redeemed Series C Preferred Shares. The Series C Preferred Shares not redeemed shall remain outstanding and
entitled to all the rights and preferences provided in this Certificate of Designation (including the Company’s right, if it elects so, to redeem all or part of the Series C Preferred Shares outstanding at any relevant time in accordance with this
Section 6 (including this paragraph (d)).
(e) If the Company gives or causes to be given a Series C Redemption Notice, then the Company shall deposit with the Paying Agent funds sufficient to redeem the Series C Preferred Shares as
to which such Series C Redemption Notice shall have been given no later than 10:00 a.m., New York City time, on the Series C Redemption Date, and shall give the Paying Agent irrevocable instructions and authority to pay the Series C Redemption Price to
the holders of Series C Preferred Shares thereof upon surrender or deemed surrender of such Series C Preferred Shares. If the Series C Redemption Notice shall have been given, then from and after the Series C Redemption Date, unless the Company
defaults in providing funds sufficient for such redemption at the time and place specified for payment pursuant to the Series C Redemption Notice, all Series C Dividends on such shares shall cease to accrue, and all rights of holders of such Series C
Preferred Shares as holders of Series C Preferred Shares with respect to such Series C Preferred Shares shall cease, except the right to receive the Series C Redemption Price, and such Series C Preferred Shares shall not thereafter be transferred on
the books of the transfer agent or be deemed to be outstanding for any purpose whatsoever. The Company shall be entitled to receive from the Paying Agent the interest income, if any, earned on such funds deposited with the Paying Agent (to the extent
that such interest income is not required to pay the Series C Redemption Price of the shares to be redeemed), and the holders of any Series C Preferred Shares so redeemed shall have no claim to any such interest income. Any funds deposited with the
Paying Agent hereunder by the Company for any reason, including, but not limited to, redemption of Series C Preferred Shares, that remain unclaimed or unpaid after two years after the applicable Series C Redemption Date or other payment date, shall be,
to the extent permitted by law, repaid to the Company upon its written request, after which repayment, the holders of Series C Preferred Shares entitled to such redemption or other payment shall have recourse only to the Company.
(f) Any Series C Preferred Shares that are redeemed or otherwise acquired by the Company shall be canceled and shall constitute preferred shares subject to designation by the Board of
Directors as set forth in the Articles of Incorporation. If only a portion of the Series C Preferred Shares shall have been called for redemption, upon surrender of any certificate representing Series C Preferred Shares to the Paying Agent, the Paying
Agent shall issue to the holders of Series C Preferred Shares a new certificate (or adjust the applicable book-entry account) representing the number of Series C Preferred Shares represented by the surrendered certificate that have not been called for
redemption. Notwithstanding any Series C Redemption Notice, there shall be no redemption of any Series C Preferred Shares called for redemption until funds sufficient to pay the full Series C Redemption Price of such shares shall have been deposited by
the Company with the Paying Agent.
(g) Notwithstanding anything to the contrary in this Certificate of Designation, in the event that full accrued dividends on the Series C Preferred Shares and any Parity Securities shall not
have been paid or declared and set apart for payment to the most recent Dividend Payment Date, the Company may not repurchase, redeem or otherwise acquire, (1) any Series C Preferred Shares or Parity Securities, except
pursuant to a purchase or exchange offer made on the same terms to all holders of Series C Preferred Shares and Parity Securities, an exchange for or conversion or reclassification into other Parity Securities or Junior Securities or with proceeds of
a substantially contemporaneous sale of Parity Securities or Junior Securities, or (2) any Common Stock and any other Junior Securities, except pursuant to an exchange for or, conversion or reclassification into other Junior Securities or with
proceeds of a substantially contemporaneous sale of Junior Securities.
Section 7. Rank.
The Series C Preferred Shares shall be deemed to rank:
(a) Senior to (i) the Common Stock and (ii) each other class or series of capital stock established after the Original Issuance Date, the terms of which class or series do not expressly
provide that it is made senior to or on parity with the Series C Preferred Shares as to the payment of dividends and amounts payable upon any Liquidation Event (collectively referred to with the Common Stock as “Junior Securities”);
(b) On a parity with the Series B Preferred Stock and any class or series of capital stock established after the Original Issuance Date with terms expressly providing that such class or
series ranks on a parity with the Series C Preferred Shares as to dividends and distributions upon any Liquidation Event (collectively referred to as “Parity Securities”); and
(c) Junior to each other class or series of capital stock made senior to the Series C Preferred Shares as to the payment of dividends and amounts payable upon any Liquidation Event
(collectively referred to as “Senior Securities”).
The Company may issue Junior Securities and Parity Securities and, subject to any approvals required by the holders of Series C Preferred Shares pursuant to Section 4, any Senior Securities from time
to time in one or more classes or series without the consent of the holders of Series C Preferred Shares. The Board of Directors has the authority to determine the preferences, powers, qualifications, limitations, restrictions and special or relative
rights or privileges, if any, of any such class or series before the issuance of any shares of such class or series.
Section 8. Certain Definitions. The following terms shall have the following respective meanings herein:
“Business Day” means any day that is not a Saturday or Sunday or a day on which banks are required or permitted to be closed in the State of New York.
“Common Stock” means the common stock of the Company, par value $0.01 per share.
“DTC” means The Depository Trust Company or any successor thereto.
“Effective Price” of shares of Common Stock shall mean the quotient determined by dividing the total number of shares of Common Stock issued or sold, or deemed to have been issued or sold by the
Company under Section 5(c)(4) hereof, into the Aggregate Consideration received, or deemed to have been received by the Company for such issue under Section 5(c)(4) hereof, for such shares of Common Stock. In the event that the number of shares of
Common Stock or the Effective Price cannot be ascertained at the time of issuance, such shares of Common Stock shall be deemed issued immediately upon the occurrence of the first event that makes such number of shares or the Effective Price, as
applicable, ascertainable.
“Excluded Shares” means any shares of Common Stock: (A) issued to directors, officers, employees and consultants under any stock incentive plan or similar plan or arrangement approved by the
Board of Directors; (B) issued or issuable pursuant to a conversion of the Series C Preferred Shares in accordance herewith; (C) issued pursuant to a stock split, stock dividend, reorganization or recapitalization applicable to all of the shares of
Common Stock of the Corporation; (D) offered pursuant to a resale registration statement on behalf of a selling shareholder of the Company or (E) issued pursuant to a transaction that holders of a majority of the Series C Preferred Shares agree shall
be deemed to be an issuance of Excluded Shares.
“Liquidation Event” means the occurrence of a liquidation, dissolution, winding up of the affairs of the Company, whether voluntary or involuntary. The term “Liquidation Event” is deemed to
include the sale, lease or conveyance of all or substantially all of the Company’s assets, on a consolidated basis, other than in the usual or regular course of its business, a merger or consolidation of the Company, or a change in control of the
Company.
“Liquidation Preference” means, in connection with any distribution in connection with a Liquidation Event pursuant to Section 2(a) of this Certificate of Designation and with respect to any
holder of any class or series of capital stock of the Company, the amount otherwise payable to such holder in such distribution with respect to such class or series of capital stock (assuming no limitation on the assets of the Company available for
such distribution). For avoidance of doubt, for the foregoing purposes the Series C Liquidation Preference is the Liquidation Preference with respect to the Series C Preferred Shares.
“Original Issuance Date” means the date on which any Series C Preferred Shares are first issued, on or about October 17, 2022.
“Paying Agent” shall mean the payment agent appointed by the Company, acting in the capacity of paying agent for the Series C Preferred Shares.
“
Series B Preferred Stock” means the
Series B Convertible Cumulative Perpetual Preferred Stock, par value $0.01 per share and $25.00 liquidation preference per
share, established by the Company pursuant to the Amended and Restated Certificate of Designations, Preferences and Rights filed with the Registrar of Corporation of the Republic of the Marshall Islands on January 12, 2022.
“Series C Dividend Rate” means a rate equal to 5.00% per annum of the Series C Liquidation Preference per Series C Preferred Share.
Section 9. Limited Right to Amend. The Board of Directors or a duly authorized committee thereof may amend and restate this Certificate of Designation from time to time to
increase the number of Series C Preferred Shares available for issuance without the approval of the holders of the Series C Preferred Shares.
[Remainder of page intentionally left blank. Signature page to follow.]
I further declare under penalty of perjury that the matters set forth in this Certificate of Designation are true and correct of my own knowledge.
Executed in Athens, Greece, on October 17, 2022
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/s/ Andreas Michalopoulos
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Andreas Michalopoulos
Chief Executive Officer
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FORM OF
NOTICE TO EXERCISE CONVERSION RIGHT
Reference is made to the Certificate of Designation, Preferences and Rights of Series C Convertible Cumulative Redeemable Perpetual Preferred Stock (the “Series C Preferred Shares”) of
Performance Shipping Inc. (the “Certificate of Designation”). In accordance with and pursuant to the Certificate of Designation, the undersigned hereby elects to convert the number of Series C Preferred Shares indicated below into shares of the
Company’s Common Stock (the “Common Stock”), by tendering the stock certificate(s), if applicable, representing such Series C Preferred Shares specified below as of the date specified below.
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Date:
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Date of Conversion (not less than three Business Days after the date of this notice):
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Number of Series C Preferred Shares to be Converted:
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Conversion Price:
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Number of Shares of Common Stock to be Issued:
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Please issue the share of Common Stock in accordance with the terms of the Certificate of Designation as follows:
☐ Deposit/Withdrawal At Custodian (“DWAC”) system; or
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Issue to:
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Address (for physical certificate):
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E-mail:
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DTC Participant Number and Name (if through DWAC):
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Account Number (if through DWAC):
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Name
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Address
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Please print name and address, including postal code number
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(Signature)
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12
Exhibit 99.4
October 21, 2022
TO THE SHAREHOLDERS OF PERFORMANCE SHIPPING INC.
Enclosed is a Notice of the Special Meeting of Shareholders (the “Special Meeting”) of Performance Shipping Inc. (the “Company”) which will be held at
373 Syngrou Avenue, 175 64 Palaio Faliro, Athens, Greece on November 7, 2022 at 15:00 local time in Athens, Greece.
At the Special Meeting, holders of shares of (i) the Company’s common stock par value $0.01 per share (the “Common Shares”) and (ii) the Company’s
Series C Convertible Cumulative Redeemable Perpetual Preferred Stock par value $0.01 per share (the “Series C Preferred Shares”) will consider and vote upon the following proposal (the “Proposal”):
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To approve one or more amendments to the Company’s Amended and Restated Articles of Incorporation to effect one or more reverse stock splits of the issued and
outstanding Common Shares at a ratio of not less than one-for-two and in the aggregate at a ratio of not more than one-for-250, with the exact ratio to be set at a whole number within this range to be determined by the Company’s board of
directors (the “Board”), or any duly constituted committee thereof, at any time after approval of each amendment in its discretion, and to authorize the Board to implement any such reverse stock split by filing any such amendment to the
Company’s Amended and Restated Articles of Incorporation with the Registrar of Corporations of the Republic of the Marshall Islands.
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2.
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To transact such other business as may properly come before the Special Meeting or any adjournment thereof.
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Only holders of record of our Common Shares and holders of record of our Series C Preferred Shares at the close of business on October 17, 2022 (the
“Shareholders”) will be entitled to vote at the Special Meeting. The Shareholders will vote as a single class at the Special Meeting.
Provided that a quorum is present, adoption of the Proposal requires the affirmative vote of Shareholders representing a majority of the total voting
rights of the Company. One or more Shareholders representing at least one third of the total voting rights of the Company present in person or by proxy at the Special Meeting shall constitute a quorum for the purposes of the Special Meeting. If less
than a quorum is present, Shareholders representing a majority of the voting rights present either in person or by proxy will have the power to adjourn the Special Meeting until a quorum is present.
Consenting to electronic delivery of future proxy materials.
You can help us save significant printing and mailing expenses by consenting to access proxy materials, including the notice of the meeting, proxy statement and annual report electronically via e-mail or the internet. You can choose this option by
following the instructions at www.proxyvote.com. If you choose to receive your proxy materials and annual report electronically, then prior to next year’s shareholders’ meeting you will receive notification when the proxy materials and annual report
are available for online review over the internet, as well as instructions for voting electronically over the internet. Your choice for electronic distribution will remain in effect for subsequent meetings unless you revoke such choice prior to
future meetings by revoking your request online.
You are cordially invited to attend the Special Meeting in person. If you attend the Special Meeting, you may revoke your proxy and vote your Common
Shares or Series C Preferred Shares, as applicable, in person.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, IT IS IMPORTANT THAT YOUR COMMON SHARES AND SERIES C PREFERRED SHARES, AS
APPLICABLE, BE REPRESENTED AND VOTED AT THE SPECIAL MEETING. ACCORDINGLY, IF YOU HAVE ELECTED TO RECEIVE YOUR PROXY MATERIALS BY MAIL, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE PROXY CARD TO BE MAILED TO YOU ON OR ABOUT OCTOBER 21, 2022, WHICH DOES NOT REQUIRE POSTAGE IF MAILED IN THE UNITED STATES. ANY SIGNED PROXY RETURNED AND NOT COMPLETED WILL BE VOTED IN FAVOR OF THE PROPOSAL PRESENTED IN THE PROXY
STATEMENT. IF YOU RECEIVED YOUR PROXY MATERIALS OVER THE INTERNET, PLEASE VOTE BY INTERNET OR BY TELEPHONE IN ACCORDANCE WITH THE INSTRUCTIONS PROVIDED IN THE NOTICE OF
INTERNET AVAILABILITY OF PROXY MATERIALS THAT YOU WILL RECEIVE IN THE MAIL. THE VOTE OF EVERY SHAREHOLDER IS IMPORTANT AND YOUR COOPERATION WILL BE APPRECIATED.
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Very truly yours,
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Andreas Michalopoulos
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Chief Executive Officer
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373 Syngrou Avenue, 175 64 Palaio Faliro, Athens, Greece
Tel: + (30) (216) 6002-400, Fax: + (30) (216) 6002-599
e-mail: ir@pshipping.com – www.pshipping.com
PERFORMANCE SHIPPING INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
October 21, 2022
NOTICE IS HEREBY given that a special meeting (the “Special Meeting”) of the holders (the “Shareholders”) of shares of (i) the Company’s common stock
par value $0.01 per share (the “Common Shares”) and (ii) the Company’s Series C Convertible Cumulative Redeemable Perpetual Preferred Stock par value $0.01 per share (the “Series C Preferred Shares”) of Performance Shipping Inc. (the “Company”) will
be held on November 7, 2022 at 15:00 local time at 373 Syngrou Avenue, 175 64 Palaio Faliro, Athens, Greece for the following purposes, which are more completely set forth in the accompanying Proxy Statement:
1. To consider and vote upon a proposal to approve one or more amendments to the Company’s Amended and Restated Articles of Incorporation to effect
one or more reverse stock splits of the issued and outstanding Common Shares at a ratio of not less than one-for-two and in the aggregate at a ratio of not more than one-for-250, with the exact ratio to be set at a whole number within this range to
be determined by the Company’s board of directors (the “Board”), or any duly constituted committee thereof, at any time after approval of each amendment in its discretion, and to authorize the Board to implement any such reverse stock split by filing
any such amendment to the Company’s Amended and Restated Articles of Incorporation with the Registrar of Corporations of the Republic of the Marshall Islands.
2. To transact such other business as may properly come before the Special Meeting or any adjournment thereof.
The board of directors has fixed the close of business on October 17, 2022 as the record date for the determination of the shareholders entitled to
receive notice and to vote at the Special Meeting or any adjournment thereof.
Only holders of record of our Common Shares and holders of record of our Series C Preferred Shares at the close of business on October 17, 2022 will
be entitled to vote at the Special Meeting. The holders of the Common Shares and the Series C Preferred Shares will vote as a single class at the Special Meeting.
IT IS IMPORTANT TO VOTE. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE
ENCLOSED ENVELOPE, WHICH DOES NOT REQUIRE POSTAGE IF MAILED IN THE UNITED STATES. THE VOTE OF EVERY SHAREHOLDER IS IMPORTANT AND YOUR COOPERATION IN RETURNING YOUR EXECUTED PROXY PROMPTLY WILL BE APPRECIATED. ANY SIGNED PROXY RETURNED AND NOT
COMPLETED WILL BE VOTED IN FAVOR OF THE PROPOSAL PRESENTED IN THE PROXY STATEMENT.
All Shareholders must present a form of personal photo identification in order to be admitted to the Special Meeting. In addition, if your Common
Shares or Series C Preferred Shares, as applicable, are held in the name of your broker, bank or other nominee and you wish to attend the Special Meeting, you must bring an account statement or letter from the broker, bank or other nominee indicating
that you were the owner of the Common Shares or the Series C Preferred Shares, as applicable, on October 17, 2022.
If you attend the Special Meeting, you may revoke your proxy and vote in person.
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BY ORDER OF THE BOARD OF DIRECTORS
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Andreas Michalopoulos
Chief Executive Officer
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October 21, 2022
Athens, Greece
PERFORMANCE SHIPPING INC.
373 SYNGROU AVENUE
175 64 PALAIO FALIRO
ATHENS GREECE
PROXY STATEMENT FOR
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 7, 2022
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the board of directors (the “Board”) of Performance Shipping Inc., a Marshall Islands corporation (the
“Company”), for use at the Special Meeting of holders (the “Shareholders”) of (i) shares of common stock par value $0.01 per share (the “Common Shares”) and (ii) Series C Convertible Cumulative Redeemable Perpetual Preferred Stock par value $0.01 per
share of the Company (the “Series C Preferred Shares”) of the Company to be held at 373 Syngrou Avenue, 175 64 Palaio Faliro, Athens, Greece on November 7, 2022 at 15:00 local time in Athens, or at any adjournment or postponement thereof (the
“Special Meeting”), for the purposes set forth herein and in the accompanying Notice of Special Meeting of Shareholders. This Proxy Statement and the accompanying form of proxy are expected to be mailed to the Shareholders of the Company entitled to
vote at the Special Meeting on or about October 21, 2022.
VOTING RIGHTS AND OUTSTANDING SHARES
The Board has fixed the close of business on October 17, 2022 as the record date (the “Record Date”) for the determination of the shareholders
entitled to receive notice and to vote at the Special Meeting or any adjournment thereof. The Company has issued and outstanding 60,728,363 Common Shares and 1,314,792 Series C Preferred Shares. Each holder of record of Common Shares on the Record
Date at the close of business is entitled to one (1) vote for each Common Share held. Each holder of record of Series C Preferred Shares on the Record Date 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 their initial issuance), multiplied by 10, or approximately 502 votes for each
Series C Preferred Share then held. The Shareholders shall vote on the Proposal as a single class. One or more Shareholders representing at least one-third of the total voting rights of the Company present in person or by proxy at the Special Meeting
shall constitute a quorum for the purposes of the Special Meeting. The Common Shares and the Series C Preferred Shares represented by any proxy in the enclosed form will be voted in accordance with the instructions given on the proxy if the proxy is
properly executed and is received by the Company prior to the close of voting at the Special Meeting or any adjournment or postponement thereof. Any proxies returned without instructions will be voted FOR the Proposal set forth on the Notice of
Special Meeting of Shareholders.
In the event that a quorum is not present at the Special Meeting or, even if a quorum is so present, in the event that sufficient votes in favor of
the positions recommended by the Board on the Proposal described in this Proxy Statement are not timely received, Shareholders representing a majority of the voting rights present either in person or by proxy will have the power to adjourn the
Special Meeting. If the Special Meeting is adjourned for reasons other than a lack of quorum, no further notice of the adjourned Special Meeting will be required other than announcement at the Special Meeting in order to permit further solicitation
of proxies.
The Common Shares are listed on the NASDAQ Capital Market under the symbol “PSHG.”
REVOCABILITY OF PROXIES
A Shareholder giving a proxy may revoke it at any time before it is exercised. If you do not hold your shares through an account with a brokerage
firm, bank or other nominee, a proxy may be revoked by filing with the Secretary of the Company at the Company’s registered office, 373 Syngrou Avenue, 175 64
Palaio Faliro, Athens, Greece, a written notice of revocation by a duly executed proxy bearing a later date, or by attending the Special Meeting and voting in person. If you hold Common Shares or Series C Preferred Shares, as applicable, in street
name, through a brokerage firm, bank or other nominee, please contact the brokerage firm, bank or other nominee to revoke your proxy.
PROPOSAL
APPROVAL OF AN AMENDMENT TO THE COMPANY’S AMENDED AND RESTATED ARTICLES OF INCORPORATION TO EFFECT A REVERSE STOCK SPLIT
General
The Board believes that it is in the best interest of the Company and the shareholders and has approved, and is hereby soliciting shareholder approval
of, of one or more amendments to the Company’s Amended and Restated Articles of Incorporation, substantially in the form attached hereto as Exhibit I, to effect one or more reverse stock splits of the Company’s issued Common Shares at a ratio of not
less than one-for-two and in the aggregate at a ratio of not more than one-for-250 (the “Amendment”). A vote FOR the Proposal will constitute approval of the
Amendment, providing for the combination, except as explained below with respect to fractional shares, of any number of the Company’s issued Common Shares between and including two and 250 into one Common Share and will grant the Board, or any duly
constituted committee thereof, the authority to determine whether to implement the reverse stock split and, if so, to select which of the approved exchange ratios within that range will be implemented. If the shareholders approve this Proposal, the
Board or any duly constituted committee thereof, will have the authority, but not the obligation, in its sole discretion, and without further action on the part of the shareholders, to select a reverse stock split ratio within the approved range and
effect the approved reverse stock split by filing the Amendment with the Registrar of Corporations of the Republic of the Marshall Islands at any time after the approval of this Proposal. If implemented, the reverse stock split will become effective
as of the beginning of the business day after the filing of the Amendment with the Registrar of Corporations of the Republic of the Marshall Islands. The Amendment will not change the number of authorized shares or par value of the Company’s Common
Shares. After the reverse stock split, if implemented, the number of authorized Common Shares will remain at 500,000,000 Common Shares and the par value will remain at one United States cent ($0.01) per Common Share.
The Board believes that shareholder approval of an exchange ratio range (rather than an exact exchange ratio) provides the Board with
maximum flexibility to achieve the purposes of the reverse stock split. If shareholders approve this Proposal, the reverse stock split will be effected, if at all, only upon a determination by the Board that the reverse stock split is in the
Company’s and the shareholders’ best interests at that time. In connection with any determination to effect the reverse stock split, the Board, or any duly constituted committee thereof, will set the time for such a split and select a specific
exchange ratio within the range approved by the shareholders. The determination will be made by the Board with the intention to create the greatest marketability of the Company’s Common Shares based upon prevailing market conditions at that time.
The Board reserves its right to elect not to proceed, and abandon, the reverse stock split contemplated in this Proposal if it
determines, in its sole discretion, that implementing the reverse stock split is not in the best interests of the Company and its shareholders.
Purpose and Background of Reverse Stock Split
The purpose for seeking approval to effect the reverse stock split is to increase the per share trading value of the Company’s Common
Shares. The Board may effect the reverse stock split only if it believes that a decrease in the number of Common Shares outstanding is likely to improve the trading price for the Company’s Common Shares, and only if the implementation of the reverse
stock split is determined by the Board to be in the best interests of the Company and its shareholders.
The Company received written notification from The Nasdaq Stock Market
(“NASDAQ”) dated -July 13, 2022, indicating that the Company was not in
compliance with a minimum bid price of greater than or equal to $1.00 per share (the “Minimum Bid Price Requirement”) for continued listing on NASDAQ. Pursuant to NASDAQ Listing Rules, the applicable grace period to regain compliance is 180 days,
or until January 9, 2023. The Company has not yet regained compliance with this requirement.
The Company and the Board believe that maintaining the listing of the Common Shares on NASDAQ is in the best interest of the Company
and its shareholders. NASDAQ has several listing criteria that a listed company must satisfy in order to maintain its listing. In addition to the Minimum Bid Price requirement, pursuant to its rules, NASDAQ may initiate delisting procedures under
certain circumstances when a listed company’s shares trade at or below $0.10. The Company believes that effecting the reverse stock split will help it regain or maintain compliance with the Minimum Bid Price Requirement and other NASDAQ continued
listing requirements.
There can be no assurance that the reverse stock split, if implemented, will achieve any of the desired results. There also can be no
assurance that the price per share of the Company’s Common Shares immediately after the reverse stock split, if implemented, will increase proportionately with the reverse stock split, or that any increase will be sustained for any period of time.
Fractional Shares
No fractional shares will be created or issued in connection with the reverse stock split. Shareholders who otherwise would be
entitled to receive fractional shares because they hold a number of pre-split shares not evenly divisible by the number of pre-split shares for which each post-split share is to be exchanged, will be entitled, upon surrender to the exchange agent of
certificates representing such shares or, in the case of non-certificated shares, such proof of ownership as required by the exchange agent, to a cash payment in lieu thereof at a price equal to the fraction to which the stockholder would otherwise
be entitled multiplied by the closing price of the Common Shares on the NASDAQ Capital Market on the last trading day prior to the effective date of the reverse stock split as adjusted for the reverse stock split as appropriate or, if such price is
not available, a price determined by the Board. The ownership of a fractional interest will not give the holder thereof any voting, dividend or other rights except to receive payment thereof as described herein.
Procedure for Exchange of Stock Certificates
As soon as practicable after the effective date of the reverse stock split, shareholders holding Common Shares in physical certificate
form will be sent a letter of transmittal from the exchange agent, on behalf of the Company, notifying them that the reverse stock split has been effected. The letter of transmittal will contain instructions on how shareholders should surrender to
the Company’s exchange agent certificates representing pre-split shares in exchange for certificates representing post-split shares. The Company expects that its transfer agent will act as its exchange agent for purposes of implementing the exchange
of share certificates. No new certificates will be issued to a shareholder until such shareholder has surrendered such shareholder’s outstanding certificate(s) together with the properly completed and executed letter of transmittal to the exchange
agent. Any pre-split shares submitted for transfer, whether pursuant to a sale or other disposition, or otherwise, will automatically be exchanged for post-split shares. SHAREHOLDERS SHOULD NOT DESTROY ANY SHARE CERTIFICATE(S) AND SHOULD NOT SUBMIT ANY CERTIFICATE(S) UNTIL REQUESTED TO DO SO.
Shareholders holding shares in book-entry form with the transfer agent need not take any action to receive post-split shares or cash
payment in lieu of any fractional share interest, if applicable. If a shareholder is entitled to post-split shares, a transaction statement will automatically be sent to the shareholder’s address of record indicating the number of Common Shares held
following the reverse stock split.
Upon the reverse stock split, the Company intends to treat shares held by shareholders in “street name” through a bank, broker or
other nominee in the same manner as registered shareholders whose shares are registered in their names. Banks, brokers or other nominees will be instructed to effect the reverse stock split for their beneficial holders holding shares in “street
name.” However, these banks, brokers or other nominees may have different procedures than registered shareholders for processing the reverse stock split and making payment for fractional shares. If a shareholder holds shares with a bank, broker or
other nominee and has any questions in this regard, shareholders are encouraged to contact their bank, broker or other nominee.
Required Vote. Adoption of the Proposal requires the
affirmative vote of Shareholders representing a majority of the total voting rights of the Company.
Effect of abstentions. Abstentions will have the effect of
voting AGAINST the Proposal.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF AN AMENDMENT TO THE COMPANY’S AMENDED AND RESTATED ARTICLES OF INCORPORATION TO EFFECT A
REVERSE STOCK SPLIT. UNLESS REVOKED AS PROVIDED ABOVE, PROXIES RECEIVED BY MANAGEMENT WILL BE VOTED IN FAVOR OF SUCH APPROVAL UNLESS A CONTRARY VOTE IS SPECIFIED.
OTHER MATTERS
No other matters are expected to be presented for action at the Special Meeting. Should any additional matter come before the Special Meeting, it is
intended that proxies in the accompanying form will be voted in accordance with the judgment of the person or persons named in the proxy.
REPORTS TO SHAREHOLDERS
The Company’s latest annual report to shareholders (the “Annual Report”) and this Proxy Statement are available on the Company’s website at www.pshipping.com. Upon request, and
without charge, the Company will furnish each person to whom this Proxy Statement is delivered with a copy of the Company’s Annual Report. To request a copy, please call Performance Shipping Inc. at +30-216-600-2400, or write to Performance Shipping
Inc., 373 Syngrou Avenue, 175 64 Palaio Faliro, Athens, Greece.
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By Order of the Board of Directors
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Andreas Michalopoulos
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Chief Executive Officer
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October 21, 2022
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Athens, Greece
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Exhibit I
If the Proposal is adopted at the Special Meeting, the Company’s Amended and Restated Articles of Incorporation may be amended to include the following
language in order to give effect to any reverse split of the Company’s Common Shares.
“Effective with the commencement of business on [___________] [the first business day after filing or such other date as the Registrar of Corporations
of the Republic of the Marshall Islands shall determine], the Corporation has effected a one-for-[whole number between two and 250 to be determined at the discretion of the Board of Directors] reverse stock split as to its issued common stock,
pursuant to which the number of issued shares of common stock shall decrease from [________] to [________] as adjusted for the cancellation of fractional shares and which may be further adjusted for the cancellation of fractional shares. The
reverse stock split shall not change the par value of the common stock. The stated capital of the Corporation is hereby reduced from $[__________] to $[__________], as adjusted for the cancellation of the fractional shares and which may be further
adjusted for the cancellation of fractional shares, and the amount of $[___________] as adjusted for the cancellation of fractional shares, and which may be further adjusted for the cancellation of fractional shares, is allocated to surplus.”
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