20-F

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 20-F

(Mark One)

o Registration statement pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934

x Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2014

o Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

o Shell Company Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number 001-34077

SAFE BULKERS, INC.

(Exact name of Registrant as specified in its charter)

Not Applicable
(Translation of Registrant’s name into English)

Republic of the Marshall Islands
(Jurisdiction of incorporation or organization)

Apt. D11,
Les Acanthes
6, Avenue des Citronniers
MC98000 Monaco
(Address of principal executive office)

30-32 Avenue Karamanli
16673 Voula
Athens, Greece
(Address of representation office in Greece)

Dr. Loukas Barmparis
President
30-32 Avenue Karamanli
16673 Voula
Athens, Greece
Telephone : +30 2 111 888 400
Facsimile : +30 2 111 878 500
(Name, Address, Telephone Number and Facsimile Number of Company contact person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, $0.001 par value per share	New York Stock Exchange
Preferred stock purchase rights	New York Stock Exchange
8.00% Series B Cumulative Redeemable Perpetual Preferred Shares, par value $0.01 per share, liquidation preference $25.00 per share	New York Stock Exchange
8.00% Series C Cumulative Redeemable Perpetual Preferred Shares, par value $0.01 per share, liquidation preference $25.00 per share	New York Stock Exchange
8.00% Series D Cumulative Redeemable Perpetual Preferred Shares, par value $0.01 per share, liquidation preference $25.00 per share	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report. As of December 31, 2014, there were 83,450,266 shares of the registrant’s common stock, 1,600,000 shares of 8.00% Series B Cumulative Redeemable Perpetual Preferred Shares, $0.01 par value per share, liquidation preference $25.00 per share, 2,300,000 shares of 8.00% Series C Cumulative Redeemable Perpetual Preferred Shares, $0.01 par value per share, liquidation preference $25.00 per share, and 3,200,000 shares of 8.00% Series D Cumulative Redeemable Perpetual Preferred Shares, $0.01 par value per share, liquidation preference $25.00 per share, outstanding.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes o No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer x Non-accelerated filer o

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing.

U.S. GAAP International Financial Reporting Standards as issued by the International Accounting Standards Board x Other o

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 o Item 18 o

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

TABLE OF CONTENTS

		PAGE
ITEM 1.	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS	1
ITEM 2.	OFFER STATISTICS AND EXPECTED TIMETABLE	1
ITEM 3.	KEY INFORMATION	1
ITEM 4.	INFORMATION ON THE COMPANY	22
ITEM 4A	UNRESOLVED STAFF COMMENTS	36
ITEM 5.	OPERATING AND FINANCIAL REVIEW AND PROSPECTS	36
ITEM 6.	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	53
ITEM 7.	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	57
ITEM 8.	FINANCIAL INFORMATION	63
ITEM 9.	THE OFFER AND LISTING	64
ITEM 10.	ADDITIONAL INFORMATION	66
ITEM 11.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	79
ITEM 12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	80
ITEM 13.	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	81
ITEM 14.	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	81
ITEM 15.	CONTROLS AND PROCEDURES	81
ITEM 16.	[RESERVED]	82
ITEM 16A	AUDIT COMMITTEE FINANCIAL EXPERT	82
ITEM 16B	CODE OF ETHICS	82
ITEM 16C	PRINCIPAL ACCOUNTANT FEES AND SERVICES	83
ITEM 16D	EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES	83
ITEM 16E	PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS	83
ITEM 16F	CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT	84
ITEM 16G	CORPORATE GOVERNANCE	84
ITEM 16H	MINE SAFETY DISCLOSURE	85
ITEM 17.	FINANCIAL STATEMENTS	85
ITEM 18.	FINANCIAL STATEMENTS	85
ITEM 19.	EXHIBITS	85

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ABOUT THIS REPORT

In this annual report, “Safe Bulkers,” “the Company,” “we,” “us” and “our” are sometimes used for convenience where references are made to Safe Bulkers, Inc. and its subsidiaries (as well as the predecessors of the foregoing). These expressions are also used where no useful purpose is served by identifying the particular company or companies. Our affiliated management company, Safety Management Overseas S.A., a company incorporated under the laws of the Republic of Panama, is sometimes referred to in this annual report as “Safety Management” or our “Manager.”

FORWARD-LOOKING STATEMENTS

All statements in this annual report that are not statements of historical fact are “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995. The disclosure and analysis set forth in this annual report includes assumptions, expectations, projections, intentions and beliefs about future events in a number of places, particularly in relation to our operations, cash flows, financial position, plans, strategies, business prospects, changes and trends in our business and the markets in which we operate. These statements are intended as forward-looking statements. In some cases, predictive, future-tense or forward-looking words such as “believe,” “intend,” “anticipate,” “estimate,” “project,” “forecast,” “plan,” “potential,” “may,” “will,” “likely to,” “could,” “should” and “expect” and other similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. In addition, we and our representatives may from time to time make other oral or written statements which are forward-looking statements, including in our periodic reports that we file with the Securities and Exchange Commission (“SEC”), other information sent to our security holders, and other written materials.

Forward-looking statements include, but are not limited to, such matters as:

· future operating or financial results and future revenues and expenses;

· future, pending or recent acquisitions, business strategy, areas of possible expansion and expected capital spending or operating expenses;

· availability of key employees, crew, length and number of off-hire days, drydocking requirements and fuel and insurance costs;

· general market conditions and shipping industry trends, including charter rates, vessel values and factors affecting supply and demand;

· our financial condition and liquidity, including our ability to make required payments under our credit facilities, comply with our loan covenants and obtain additional financing in the future to fund capital expenditures, acquisitions and other corporate activities;

· the overall health and condition of the U.S. and global financial markets, including the value of the U.S. dollar relative to other currencies;

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

· our continued ability to enter into period time charters with our customers and secure profitable employment for our vessels in the spot market;

· our future capital expenditures and investments in the construction, acquisition and refurbishment of our vessels (including the amount and nature thereof and the timing of completion thereof, the delivery and commencement of operations dates, expected downtime and lost revenue);

· our expectations relating to dividend payments and ability to make such payments;

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· our ability to leverage our Manager’s relationships and reputation within the drybulk shipping industry to our advantage;

· our anticipated general and administrative expenses;

· environmental and regulatory conditions, including changes in laws and regulations or actions taken by regulatory authorities;

· risks inherent in vessel operation, including terrorism (including cyber terrorism), piracy and discharge of pollutants;

· potential liability from future litigation; and

· other factors discussed in “Item 3. Key Information — D. Risk Factors” of this annual report.

We caution that the forward-looking statements included in this annual report represent our estimates and assumptions only as of the date of this annual report and are not intended to give any assurance as to future results. Assumptions, expectations, projections, intentions and beliefs about future events may, and often do, vary from actual results and these differences can be material. The reasons for this include the risks, uncertainties and factors described under “Item 3. Key Information — D. Risk Factors.” As a result, the forward-looking events discussed in this annual report might not occur and our actual results may differ materially from those anticipated in the forward-looking statements. Accordingly, you should not unduly rely on any forward-looking statements.

We undertake no obligation to update or revise any forward-looking statements contained in this annual report, whether as a result of new information, future events, a change in our views or expectations or otherwise. New factors emerge from time to time, and it is not possible for us to predict all of these factors. Further, we cannot assess the impact of each such factor on our business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward-looking statement.

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PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

(i) Selected Financial Data

The following table presents selected consolidated financial and other data of Safe Bulkers, Inc. for each of the five years in the five year period ended December 31, 2014. The table should be read together with “Item 5. Operating and Financial Review and Prospects.” The selected consolidated financial data of Safe Bulkers, Inc. is a summary of, is derived from, and is qualified by reference to, our audited consolidated financial statements and notes thereto, which have been prepared in accordance with U.S. generally accepted accounting principles, or “U.S. GAAP.”

Our audited consolidated statements of income, shareholders’ equity and cash flows for the years ended December 31, 2012, 2013 and 2014 and the consolidated balance sheets at December 31, 2013 and 2014, together with the notes thereto, are included in “Item 18. Financial Statements” and should be read in their entirety.

	Year Ended December 31,
	2010			2011			2012			2013			2014
	(In thousands of U.S. dollars except share data)
STATEMENT OF INCOME
Revenues	$	159,698		$	172,036		$	187,557		$	191,520		$	159,900
Commissions		(2,678	)		(3,128	)		(3,261	)		(4,799	)		(5,806	)
Net revenues		157,020			168,908			184,296			186,721			154,094
Voyage expenses		(610	)		(1,987	)		(7,286	)		(10,207	)		(19,429	)
Vessel operating expenses		(23,128	)		(26,066	)		(34,540	)		(41,964	)		(50,634	)
Depreciation		(19,673	)		(23,637	)		(32,250	)		(37,394	)		(43,084	)
General and administrative expenses
Management fee to related party		(4,880	)		(6,026	)		(7,726	)		(8,379	)		(8,962	)
Public company expenses		(2,138	)		(2,463	)		(2,220	)		(2,981	)		(4,369	)
Early redelivery income/(cost), net		132			207			11,677			7,050			(532	)
Loss on inventory valuation		—			—			—			—			(4,001	)
Gain on asset purchase cancellation		—			—			—			—			3,633
Gain on sale of assets		15,199			—			—			—			—
Operating income		121,922			108,936			111,951			92,846			26,716
Interest expense		(6,423	)		(5,250	)		(9,072	)		(9,086	)		(8,335	)
Other finance costs		(330	)		(1,055	)		(1,268	)		(1,032	)		(1,132	)
Interest income		2,627			1,046			1,122			1,008			821
(Loss)/Gain on derivatives		(8,164	)		(12,491	)		(5,384	)		813			(1,977	)
Foreign currency gain/(loss)		281			(799	)		(3	)		(40	)		13
Amortization and write-off of deferred finance charges		(266	)		(653	)		(1,226	)		(1,252	)		(1,472	)
Net income	$	109,647		$	89,734		$	96,120		$	83,257		$	14,634
Earnings per share of Common Stock (as defined below), basic and diluted	$	1.73		$	1.29		$	1.27		$	1.05		$	0.06

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	Year Ended December 31,
	2010		2011		2012		2013		2014
	(In thousands of U.S. dollars except share data)
Cash dividends declared per share of Common Stock	$	0.60	$	0.60	$	0.50	$	0.21	$	0.22
Cash dividends declared per share of Preferred B Shares (as defined below)		—		—		—	$	0.77222	$	2.00
Cash dividends declared per share of Preferred C Shares (as defined below)		—		—		—		—	$	0.96667
Cash dividends declared per share of Preferred D Shares (as defined below)		—		—		—		—	$	0.66667
Weighted average number of shares of Common Stock outstanding, basic and diluted		63,300,466		69,463,093		75,468,465		77,495,029		83,446,970

	Year Ended December 31,
	2010			2011			2012			2013			2014
	(In thousands of U.S. dollars except share data)
OTHER FINANCIAL DATA
Net cash provided by operating activities	$	118,147		$	107,189		$	105,065		$	100,594		$	43,732
Net cash used in investing activities		(131,709	)		(125,889	)		(158,145	)		(100,344	)		(67,009	)
Net cash provided by/(used in) financing activities		60,136			(18,514	)		127,683			(38,303	)		65,917
Net increase/(decrease) in cash and cash equivalents		46,574			(37,214	)		74,603			(38,053	)		42,640

	Year Ended December 31,
	2010		2011		2012		2013		2014
	(In thousands of U.S. dollars except share data)
BALANCE SHEET DATA
Total current assets	$	104,276	$	37,959	$	171,829	$	173,185	$	135,892
Total fixed assets		640,258		777,663		849,903		931,499		1,034,666
Other non-current assets		60,838		61,649		60,482		7,532		11,771
Total assets		805,372		877,271		1,082,214		1,112,216		1,182,329
Total current liabilities		52,983		51,673		47,493		57,304		28,718
Derivative liabilities—Long-term		9,787		10,130		8,978		3,270		1,065
Long-term debt, net of current portion		467,070		465,805		596,468		473,110		452,447
Unearned revenue—Long-term		31,399		17,821		3,419		196		—
Total shareholders’ equity		244,133		331,842		425,856		578,336		700,099
Total liabilities and shareholders’ equity		805,372		877,271		1,082,214		1,112,216		1,182,329

(ii) Capitalization and Indebtedness

Not applicable.

(iii) Reasons For the Offer and Use of Proceeds

Not applicable.

(iv) Risk Factors

SOME OF THE FOLLOWING RISKS RELATE PRINCIPALLY TO THE INDUSTRY IN WHICH WE OPERATE AND OUR BUSINESS IN GENERAL. OTHER RISKS RELATE PRINCIPALLY TO THE SECURITIES MARKET AND OWNERSHIP OF OUR COMMON STOCK, $0.001 par value per share (“COMMON STOCK”), Series B Cumulative Redeemable Perpetual Preferred Shares, par value $0.01 per share, liquidation preference $25.00 per share (“SERIES B PREFERRED SHARES”), Series C Cumulative Redeemable Perpetual Preferred Shares, par value $0.01 per share, liquidation preference $25.00 per share (“SERIES C PREFERRED SHARES”) AND Series D Cumulative Redeemable Perpetual Preferred Shares, par value $0.01 per share, liquidation preference $25.00 per share (“SERIES D PREFERRED SHARES,” together with the Series B Preferred Shares and the Series C Preferred Shares, the “Preferred Shares”), INCLUDING THE TAX CONSEQUENCES OF

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OWNERSHIP OF OUR COMMON STOCK and PREFERRED SHARES. THE OCCURRENCE OF ANY OF THE EVENTS DESCRIBED IN THIS SECTION COULD SIGNIFICANTLY AND NEGATIVELY AFFECT OUR BUSINESS, FINANCIAL CONDITION OR OPERATING RESULTS OR THE TRADING PRICE OF OUR COMMON STOCK OR Preferred Shares.

Risks Inherent in Our Industry and Our Business

The international drybulk shipping industry is cyclical and volatile, and charter rates during 2014 were significantly lower than their highs in the middle of 2008 reaching recently all time lows; these factors may lead to further reductions and volatility in our charter rates, vessel values and results of operations.

The drybulk shipping industry is cyclical with attendant volatility in charter rates, vessel values and profitability. Because we charter some of our vessels pursuant to short-term time charters, and we expect that the number of vessels in our fleet that we charter pursuant to short-term time charters will increase during 2015 as period time charter remains weak, we are exposed to changes in spot market and short-term time charter rates for drybulk carriers and such changes may affect our earnings and the value of our drybulk carriers at any given time. The spot market is highly competitive and volatile, while period time charter contracts of longer duration provide income at pre-determined rates over more extended periods of time. We may be unable to keep our vessels fully employed in these short-term markets. Charter rates available in the spot market may be insufficient to enable our vessels to be operated profitably. A significant decrease in charter rates would affect asset values and adversely affect our profitability, cash flows and ability to pay dividends.

During 2014, the Baltic Dry Index, or “BDI,” remained volatile, reaching a low of 723 on July 22, 2014 and a high of 2,113 on January 2, 2014. Recently, BDI reached an all-time low.

As of February 24, 2015, 14 of our 33 drybulk vessels were deployed or scheduled to be deployed on period time charters of more than three months remaining term. In addition, we have contracted to acquire 11 newbuild vessels scheduled to be delivered through 2018, 10 of which do not currently have contracted charters. As more vessels become available for employment, we may have difficulty entering into additional multi-year, fixed-rate time charters for our vessels, and as a result, our cash flows may be subject to instability in the long-term. We may be required to enter into additional variable rate charters, as opposed to contracts based on fixed rates, which could result in a decrease in our cash flows and net income in periods when the market for drybulk shipping is depressed. If low charter rates in the drybulk market prevail during periods when we must replace our existing charters, it will have an adverse effect on our revenues, profitability, cash flows and our ability to comply with the financial covenants in our loan and credit facilities.

The factors affecting the supply and demand for drybulk vessels are outside of our control and are difficult to predict with confidence. As a result, the nature, timing, direction and degree of changes in industry conditions are also unpredictable.

Factors that influence demand for vessel capacity include:

· demand for and production of drybulk products;

· global and regional economic and political conditions;

· environmental and other regulatory developments;

· the distance drybulk cargoes are to be moved by sea; and

· changes in seaborne and other transportation patterns.

Factors that influence the supply of vessel capacity include:

· the size of the newbuilding orderbook;

· the number of newbuild deliveries, which among other factors relates to the ability of shipyards to deliver newbuilds by contracted delivery dates and the ability of purchasers to finance such newbuilds;

· the scrapping rate of older vessels;

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· port and canal congestion;

· the number of vessels that are in or out of service, including due to vessel casualties; and

· changes in environmental and other regulations that may limit the useful lives of vessels.

We anticipate that the future demand for our drybulk vessels and, in turn, drybulk charter rates, will be dependent, among other things, upon economic growth in the world’s developing economies, seasonal and regional changes in demand, changes in the capacity of the global drybulk vessel fleet and the sources and supply of drybulk cargo to be transported by sea. A decline in demand for commodities transported in drybulk vessels or an increase in supply of drybulk vessels could cause a significant decline in charter rates, which could materially adversely affect our business, financial condition and results of operations.

A negative change in global economic or regulatory conditions, especially in the Asian region, which includes countries like China, Japan and India, could reduce drybulk trade and demand, which could reduce charter rates and have a material adverse effect on our business, financial condition and results of operations.

We expect that a significant number of the port calls made by our vessels will involve the loading or discharging of raw materials in ports in the Asian region, particularly China, Japan and India. As a result, a negative change in economic or regulatory conditions in any Asian country, particularly China, Japan or, to some extent, India, can have a material adverse effect on our business, financial position and results of operations, as well as our future prospects, by reducing demand and, as a result, charter rates and affecting our ability to charter our vessels. If economic growth declines in China, Japan, India and other countries in the Asian region, or if the regulatory environment in these countries changes adversely for our industry, we may face decreases in such drybulk trade and demand. Moreover, a slowdown in the United States economy or the economies of countries within the European Union will likely adversely affect economic growth in China, Japan, India and other countries in the Asian region. Such an economic downturn in any of these countries could have a material adverse effect on our business, financial condition and results of operations.

An oversupply of drybulk vessel capacity may lead to reductions in charter rates and profitability.

The market supply of drybulk vessels has been increasing, and the number of drybulk vessels on order as of December 31, 2014, was approximately 19% for Panamax class vessels, 8% for Post-Panamax class vessels and 24% for Capesize class vessels of the then-existing global drybulk fleet in terms of deadweight tons (“dwt”), with the majority of new deliveries expected during 2015 and 2016. As a result, the drybulk fleet continues to grow. An oversupply of drybulk vessel capacity will likely result in a reduction of charter hire rates. We will be exposed to changes in charter rates with respect to our existing fleet and our remaining newbuilds and secondhand vessels, depending on the ultimate growth of the global drybulk fleet. If we cannot enter into period time charters on acceptable terms, we may have to secure charters in the spot market, where charter rates are more volatile and revenues are, therefore, less predictable, or we may not be able to charter our vessels at all. In our current fleet as of February 24, 2015, 26 vessels will be available for employment in the first half of 2015. Additionally, we have arranged charter for only one out of three of our remaining newbuild vessels scheduled to be delivered to us during 2015. A material increase in the net supply of drybulk vessel capacity without corresponding growth in drybulk vessel demand could have a material adverse effect on our fleet utilization and our charter rates generally, and could, accordingly, materially adversely affect our business, financial condition and results of operations.

The market values of our vessels have significantly decreased and may decrease further, which could cause us to breach covenants in our credit and loan facilities, and could have a material adverse effect on our business, financial condition and results of operations.

Our credit and loan facilities, which are secured by mortgages on our vessels, require us to comply with collateral coverage ratios and satisfy certain financial and other covenants, including those that are affected by the market value of our vessels. The market value of drybulk vessels has generally experienced a significant decrease. The market prices for secondhand and newbuild drybulk vessels in the recent past have declined from higher to very low levels within a short period of time. The market value of our vessels fluctuates depending on a number of factors, including:

· general economic and market conditions affecting the shipping industry;

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· prevailing level of charter rates;

· distressed asset sales, including newbuild contract sales below acquisition costs due to lack of financing;

· sale of vessels by Japanese owners at lower prices due to the strong JPY to USD exchange rate;

· competition from other shipping companies;

· configurations, sizes and ages of vessels;

· cost of newbuilds;

· governmental or other regulations; and

· technological advances.

We were in compliance with our covenants in our credit and loan facilities as of December 31, 2013 and December 31, 2014. If the market value of our vessels or newbuilds declines upon their delivery to us, we may breach some of the covenants contained in our credit and loan facilities. If we do breach such covenants and we are unable to remedy or our lenders refuse to waive the relevant breach, our lenders could accelerate our indebtedness and foreclose on the vessels in our fleet securing those loan and credit facilities. As a result of cross-default provisions contained in our loan and credit facility agreements, this could in turn lead to additional defaults under our loan agreements and the consequent acceleration of the indebtedness thereunder and the commencement of similar foreclosure proceedings by other lenders. If our indebtedness were accelerated in full or in part, it would be difficult for us to refinance our debt or obtain additional financing and we could lose our vessels if our lenders foreclose their liens, which would adversely affect our ability to continue our business.

The international drybulk shipping industry is highly competitive, and we may not be able to compete successfully for charters with new entrants or established companies with greater resources.

We employ our vessels in a highly competitive market that is capital intensive and highly fragmented. Competition arises primarily from other vessel owners, some of which have substantially greater resources than we do. Competition for the transportation of drybulk cargo by sea is intense and depends on price, customer relationships, operating expertise, professional reputation and size, age, location and condition of the vessel. Due in part to the highly fragmented market, additional competitors with greater resources could enter the drybulk shipping industry and operate larger fleets through consolidations or acquisitions and may be able to offer lower charter rates than we are able to offer, which could have a material adverse effect on our fleet utilization and, accordingly, our profitability.

Increases in crew costs may adversely affect our profits.

Crew costs are a significant expense for us under our charters. There is a limited supply of well-qualified crew. We generally bear crewing costs under our charters. Increases in crew costs may adversely affect our profitability.

We are subject to regulation and liability under environmental laws that could require significant expenditures and affect our cash flow and net income.

Our business and the operation of our vessels are regulated under international conventions, national, state and local laws and regulations in force in the jurisdictions in which our vessels operate, as well as in the country or countries of their registration, in order to protect against potential environmental impacts. Government regulation of vessels, particularly in the area of environmental requirements, can be expected to become more stringent in the future and could require us to incur significant capital expenditures on our vessels to keep them in compliance, or even to scrap or sell certain vessels altogether. For example, various jurisdictions that do not already regulate management of ballast waters are considering regulating the management of ballast waters to prevent the introduction of non-indigenous species that are considered invasive. Such regulations could, if implemented, require us to make changes to the ballast water management plans we currently have in place and to install new equipment on board. Various jurisdictions are also regulating or considering the regulation of

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emissions of sulfur oxides, nitrogen oxides and greenhouse gases from vessels. Additional conventions, laws and regulations may be adopted which could limit our ability to do business or increase the cost of our doing business and which may materially adversely affect our business, financial condition and results of operations. Because such conventions, laws and regulations are often revised, or the required additional measures for compliance are still under development, we cannot predict the ultimate cost of complying with such conventions, laws and regulations or the impact thereof on the resale prices or useful lives of our vessels. We are also required by various governmental and quasi-governmental agencies to obtain certain permits, licenses, certificates and financial assurances with respect to our operations.

These requirements can also affect the resale prices or useful lives of our vessels or require reductions in cargo capacity, ship modifications or operational changes or restrictions. Failure to comply with these requirements could lead to decreased availability of or more costly insurance coverage for environmental matters or result in the denial of access to certain jurisdictional waters or ports, or detention in certain ports. Under local, national and foreign laws, as well as international treaties and conventions, we could incur material liabilities, including cleanup obligations and claims for natural resource, personal injury and property damages in the event that there is a release of petroleum or other hazardous materials from our vessels or otherwise in connection with our operations. Violations of, or liabilities under, environmental regulations can result in substantial penalties, fines and other sanctions, including, in certain instances, seizure or detention of our vessels. Events of this nature would have a material adverse effect on our business, financial condition and results of operations.

The operation of our vessels is affected by the requirements set forth in the United Nations’ International Maritime Organization’s International Management Code for the Safe Operation of Ships and for Pollution Prevention, or “ISM Code.” Under the ISM Code we are required to develop and maintain an extensive Safety Management System (“SMS”) that includes the adoption of a safety and environmental protection policy. Failure to comply with the ISM Code may subject us to increased liability, invalidate existing insurance or decrease available insurance coverage for the affected vessels and result in a denial of access to, or detention in, certain ports. Currently, each of the vessels in our current fleet is ISM Code- certified. If we fail to maintain ISM Code certification for our vessels, we may also breach covenants in certain of our credit and loan facilities that require that our vessels be ISM Code-certified. If we breach such covenants due to failure to maintain ISM Code certification and are unable to remedy the relevant breach, our lenders could accelerate our indebtedness and foreclose on the vessels in our fleet securing those credit or loan facilities.

Increased inspection procedures, tighter import and export controls and survey requirements could increase costs and disrupt our business.

International shipping is subject to various security and customs inspections and related procedures in countries of origin and destination. Inspection procedures can result in the seizure of the contents of our vessels, delays in the loading, offloading or delivery and the levying of customs duties, fines and other penalties against us.

It is possible that changes to inspection procedures could impose additional financial and legal obligations on us. Furthermore, changes to inspection procedures could also impose additional costs and obligations on our customers and may, in certain cases, render the shipment of certain types of cargo impractical. Any such changes or developments may have a material adverse effect on our business, financial condition and results of operations.

The hull and machinery of every commercial vessel must be certified as safe and seaworthy in accordance with applicable rules and regulations, and accordingly vessels must undergo regular surveys. If any vessel does not maintain its class and/or fails any annual survey, intermediate survey or special survey, the vessel will be unable to trade between ports and will be unemployable and we would be in violation of certain covenants in our credit and loan facilities. This would also negatively impact our revenues.

Our vessels are exposed to operational risks, including terrorism and piracy, that may not be adequately covered by our insurance.

The operation of any vessel includes risks such as weather conditions, mechanical failure, collision, fire, contact with floating objects, cargo or property loss or damage and business interruption due to political circumstances in countries, piracy, terrorist attacks, armed hostilities and labor strikes. Such occurrences could result in death or injury to persons, loss, damage or destruction of property or environmental damage, delays in the delivery of cargo, loss of revenues from or termination of charter contracts, governmental fines, penalties or restrictions on conducting business, higher insurance rates and damage to our reputation and customer relationships generally.

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In the past, political conflicts have also resulted in attacks on vessels, mining of waterways and other efforts to disrupt international shipping, particularly in the Arabian Gulf region. Acts of terrorism and piracy have also affected vessels trading in regions such as the South China Sea, the Gulf of Aden and parts of the Indian Ocean and West Africa. If these attacks and other disruptions result in areas where our vessels are deployed being characterized by insurers as “war risk” zones or Joint War Committee “war, strikes, terrorism and related perils” listed areas, as parts of the Indian Ocean currently are, premiums payable for such coverage could increase significantly and such insurance coverage may be more difficult or impossible to obtain. In addition, there is always the possibility of a marine disaster, including oil spills and other environmental damage. Although our vessels carry a relatively small amount of oil used for fuel (“bunkers”), a spill of oil from one of our vessels or losses as a result of fire or explosion could be catastrophic under certain circumstances.

We may not be adequately insured against all risks, and our insurers may not pay particular claims. With respect to war risks insurance, which we usually obtain for certain of our vessels making port calls in designated war zone areas, such insurance may not be obtained prior to one of our vessels entering into an actual war zone, which could result in that vessel not being insured. Even if our insurance coverage is adequate to cover our losses, we may not be able to timely obtain a replacement vessel in the event of a loss. Under the terms of our credit facilities, we will be subject to restrictions on the use of any proceeds we may receive from claims under our insurance policies. Furthermore, in the future, we may not be able to maintain or obtain adequate insurance coverage at reasonable rates for our fleet. We may also be subject to calls, or premiums, in amounts based not only on our own claim records but also the claim records of all other members of the protection and indemnity associations through which we receive indemnity insurance coverage for tort liability. Our insurance policies also contain deductibles, limitations and exclusions which, although we believe are standard in the shipping industry, may nevertheless increase our costs in the event of a claim or decrease any recovery in the event of a loss. If the damages from a catastrophic oil spill or other marine disaster exceeded our insurance coverage, the payment of those damages could have a material adverse effect on our business and could possibly result in our insolvency.

In general, we do not carry loss of hire insurance. Occasionally, we may decide to carry loss of hire insurance when our vessels are trading in areas where a history of piracy has been reported. Loss of hire insurance covers the loss of revenue during extended vessel off-hire periods, such as those that occur during an unscheduled drydocking or unscheduled repairs due to damage to the vessel. Accordingly, any loss of a vessel or any extended period of vessel off- hire, due to an accident or otherwise, could have a material adverse effect on our business, financial condition and results of operations.

The operation of drybulk vessels has certain unique operational risks; failure to adequately maintain our vessels could have a material adverse effect on our business, financial condition and results of operations.

With a drybulk vessel, the cargo itself and its interaction with the vessel may create operational risks. By their nature, drybulk cargoes are often heavy, dense and easily shifted, and they may react badly to water exposure. In addition, drybulk vessels are often subjected to battering treatment during unloading operations with grabs, jackhammers (to pry encrusted cargoes out of the hold) and small bulldozers. This treatment may cause damage to the vessel. Vessels damaged due to treatment during unloading procedures may be more susceptible to breach while at sea. Breaches of a drybulk vessel’s hull may lead to the flooding of the vessel’s holds. If a drybulk vessel suffers flooding in its forward holds, the bulk cargo may become so dense and waterlogged that its pressure may buckle the vessel’s bulkheads, leading to the loss of a vessel. If we do not adequately maintain our vessels, we may be unable to prevent these events. The occurrence of any of these events could have a material adverse effect on our business, financial condition and results of operations.

Maritime claimants could arrest one or more of our vessels, which could interrupt our cash flow.

Crew members, suppliers of goods and services to a vessel, shippers of cargo and other parties may be entitled to a maritime lien against a vessel, or other assets of the relevant vessel-owning company, for unsatisfied debts, claims or damages. In many jurisdictions, a claimant may seek to obtain security for its claim by arresting a vessel through foreclosure proceedings. The arrest or attachment of one or more of our vessels, or other assets of the relevant vessel-owning company or companies, could cause us to default on a charter, breach covenants in certain of our credit facilities, interrupt our cash flow and require us to pay large sums of money to have the arrest or attachment lifted. In addition, in some jurisdictions, such as South Africa, under the “sister ship” theory of liability, a claimant may arrest both the vessel which is subject to the claimant’s maritime lien and any “associated” vessel, which is any vessel owned or controlled by the same owner. Claimants could attempt to assert “sister ship” liability against one vessel in our fleet for claims relating to another of our vessels.

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Governments could requisition our vessels during a period of war or emergency, resulting in a loss of earnings.

A government could requisition one or more of our vessels for title or for hire. Requisition for title occurs when a government takes control of a vessel and becomes its owner, while requisition for hire occurs when a government takes control of a vessel and effectively becomes its charterer at dictated charter rates. Generally, requisitions occur during periods of war or emergency, although governments may elect to requisition vessels in other circumstances. Even if we would be entitled to compensation in the event of a requisition of one or more of our vessels, the amount and timing of payment would be uncertain. Government requisition of one or more of our vessels may cause us to breach covenants in certain of our credit facilities, and could have a material adverse effect on our business, financial condition and results of operations.

The ongoing uncertainty related to the Greek sovereign debt crisis may adversely affect our operating results.

Greece has experienced a macroeconomic downturn the recent years, including as a result of the sovereign debt crisis and the related austerity measures implemented by the Greek government. Our operations in Greece may be subjected to new regulations or regulatory action that may require us to incur new or additional compliance or other administrative costs and may require that we or our Manager pay to the Greek government new taxes or other fees. We and our Manager also face the risk that strikes, work stoppages, civil unrest and violence within Greece may disrupt our and our Manager’s shoreside operations located in Greece. The Greek government’s taxation authorities have increased their scrutinization of individuals and companies to secure tax law compliance. If economic and financial market conditions remain uncertain, persist or deteriorate further, the Greek government may impose further changes to tax and other laws to which we and our Manager may be subject or change the ways they are enforced, which may adversely affect our business, operating results, and financial condition.

Changes in fuel prices may adversely affect our profits.

Upon redelivery of vessels at the end of a time charter, we may be obligated to repurchase bunkers on board at prevailing market prices, which could be materially higher than fuel prices at the inception of the charter period. In addition, although we rarely deploy our vessels on voyage charters, fuel is a significant, if not the largest, expense that we would incur with respect to vessels operating on voyage charter. As a result, an increase in the price of fuel may adversely affect our profitability. In addition in case of a sudden significant drop in fuel prices we might incur a loss from the valuation of our inventory resulting from the valuation of the bunkers remaining on board of our vessels, which might be affected by a sudden decline of bunker market price. As a result, a sudden decrease in the price of fuel may adversely affect our profitability. The price and supply of fuel is volatile and fluctuates based on events outside our control, including geopolitical developments, supply and demand for oil and gas, actions by OPEC and other oil and gas producers, war and unrest in oil producing countries and regions, regional production patterns and environmental concerns and regulations.

Seasonal fluctuations in industry demand could have a material adverse effect on our business, financial condition and results of operations and the amount of available cash with which we can pay dividends.

We operate our vessels in markets that have historically exhibited seasonal variations in demand and, as a result, in charter rates. This seasonality may result in quarter-to-quarter volatility in our results of operations, which could affect the amount of dividends, if any, that we pay to our stockholders. The market for marine drybulk transportation services is typically stronger in the fall and winter months in anticipation of increased consumption of coal and other raw materials in the northern hemisphere during the winter months. In addition, unpredictable weather patterns in these months tend to disrupt vessel scheduling and supplies of certain commodities. This seasonality could have a material adverse effect on our business, financial condition and results of operations.

Charterers may renegotiate or default on period time charters, which could reduce our revenues and have a material adverse effect on our business, financial condition and results of operations.

The ability and willingness of each of our counterparties to perform its obligations under a period time charter agreement with us will depend on a number of factors that are beyond our control and may include, among other things, general economic conditions, the condition of the drybulk shipping industry and the overall financial

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condition of the counterparties. If we enter into period time charters with charterers when charter rates are high and charter rates subsequently fall significantly, charterers may seek to renegotiate financial terms or may default on their obligations. Additionally, charterers may attempt to bring claims against us based on vessel performance or cargo loading or unloading operations, seeking to renegotiate financial terms or avoid payments. Also, our charterers may experience financial difficulties due to prevailing economic conditions or for other reasons, and as a result may default on their obligations. In recent years the industry has experienced numerous incidents of charterers renegotiating their charters or defaulting on their obligations thereunder. We have agreed to certain early redeliveries at the request of charterers. See “Operating and Financial Review and Prospects.” If a charterer defaults on a charter, we will, to the extent commercially reasonable, seek the remedies available to us, which may include arbitration or litigation to enforce the contract, although such efforts may not be successful. Should a charterer default on a period time charter, we may have to enter into a charter at a lower charter rate, which would reduce our revenues. If we cannot enter into a new period time charter, we may have to secure a charter in the spot market, where charter rates are volatile and revenues are less predictable. It is also possible that we would be unable to secure a charter at all, which would also reduce our revenues, and could have a material adverse effect on our business, financial condition, results of operations, loan and credit facility covenants and cash flows.

We depend upon a limited number of customers for a large part of our revenues and the loss of one or more of these customers could have a material adverse effect on our business, financial condition and results of operations.

We expect to derive a significant part of our revenues from a limited number of customers. Although during the year ended December 31, 2014, none of our charterers accounted for more than 10% of our revenues, in previous periods some of our charterers accounted for more than 10% of our revenues. We could lose a customer for many different reasons, including:

· a failure of the customer to make charter payments because of its financial inability, disagreements with us or otherwise;

· the customer’s termination of its charters because of our non-performance, including serious deficiencies with the vessels we provide to that customer or prolonged periods of off-hire;

· a prolonged force majeure event that affects the customer may prevent us from performing services for that customer, i.e. damage to or destruction of relevant production facilities and war or political unrest; and

· the other reasons discussed in this section.

If we lose a key customer, we may be unable to obtain period time charters on comparable terms with charterers of comparable standing or may have increased exposure to the volatile spot market, which is highly competitive and subject to significant price fluctuations. We would not receive any revenues from such a vessel while it remained unchartered, but we may be required to pay expenses necessary to maintain the vessel in proper operating condition, insure it and service any indebtedness secured by such vessel. The loss of any of our key customers, a decline in payments under our charters or the failure of a key customer to perform under its charters with us could have a material adverse effect on our business, financial condition and results of operations.

We may have difficulty properly managing our planned growth through acquisitions of additional vessels.

We intend to grow our business through the acquisition of our 11 contracted newbuild vessels as of February 24, 2015, scheduled to be delivered through 2018. We may contract additional newbuild vessels or make selective acquisitions of additional secondhand vessels. Our future growth will primarily depend on our ability to locate and acquire suitable vessels, enlarge our customer base, operate and supervise any newbuilds we may order and obtain required debt or equity financing on acceptable terms.

A delay in the delivery to us of any such vessel, or the failure of the shipyard to deliver a vessel at all, could cause us to breach our obligations under a related charter and could adversely affect our earnings. In addition, the delivery of any of these vessels with substantial defects could have similar consequences.

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A shipyard could fail to deliver a newbuild on time or at all because of:

· work stoppages or other hostilities, political or economic disturbances that disrupt the operations of the shipyard;

· quality or engineering problems;

· bankruptcy or other financial crisis of the shipyard;

· a backlog of orders at the shipyard;

· disputes between the Company and the shipyard regarding contractual obligations;

· weather interference or catastrophic events, such as major earthquakes or fires;

· our requests for changes to the original vessel specifications; or

· shortages of or delays in the receipt of necessary construction materials, such as steel, or equipment, such as main engines, electricity generators and propellers.

A third-party seller could fail to deliver a secondhand vessel on time or at all because of:

· bankruptcy or other financial crisis of the third-party seller;

· quality or engineering problems;

· disputes between the Company and the third-party seller regarding contractual obligations; or

· weather interference or catastrophic events, such as major earthquakes or fires.

In addition, we may seek to terminate a vessel acquisition contract due to market conditions, financing limitations or other reasons. The outcome of contract termination negotiations may require us to forego deposits on construction or acquisition, as applicable, and pay additional cancellation fees. In addition, where we have already arranged a future charter with respect to the terminated contract, we may incur liabilities to such charter counterparty depending on the terms of such charter.

During periods in which charter rates are high, vessel values generally are high as well, and it may be difficult to consummate vessel acquisitions or enter into newbuild contracts at favorable prices. During periods when charter rates are low, we may be unable to fund the acquisition of vessels, whether through lending or cash on hand. For these reasons, we may be unable to execute our growth plans or avoid significant expenses and losses in connection with our future growth efforts.

As we expand our business, we will need to improve or expand our operations and financial systems, staff and crew; if we cannot improve these systems or recruit suitable employees, our performance may be adversely affected.

Our current operating and financial systems may not be adequate as we implement our plan to expand the size of our fleet, and our Manager’s attempts to improve those systems may be ineffective. In addition, as we expand our fleet, we will have to rely on our Manager to recruit additional seafarers and shoreside administrative and management personnel. Our Manager may not be able to continue to hire suitable employees or a sufficient number of employees as we expand our fleet. If our Manager’s unaffiliated crewing agents encounter business or financial difficulties, we may not be able to adequately staff our vessels. We may also have to increase our customer base to provide continued employment for most of our new vessels. If we are unable to operate our financial system, our Manager is unable to operate our operations systems effectively or to recruit suitable employees in sufficient numbers or we are unable to increase our customer base as we expand our fleet, our performance may be adversely affected.

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Unless we set aside reserves for vessel replacement, at the end of a vessel’s useful life, our revenue will decline, which would adversely affect our cash flows and income.

As of February 24, 2015, the vessels in our current fleet had an average age of 5.8 years. Unless we maintain cash reserves for vessel replacement, we may be unable to replace the vessels in our fleet upon the expiration of their useful lives. We estimate the useful life of our vessels to be 25 years from the date of initial delivery from the shipyard. Secondhand vessels are depreciated from the date of their acquisition through their remaining estimated useful life. Our cash flows and income are dependent on the revenues we earn by chartering our vessels to customers. If we are unable to replace the vessels in our fleet upon the expiration of their useful lives, our business, financial condition and results of operations will be materially adversely affected. Any reserves set aside for vessel replacement would not be available for other cash needs or dividends.

If we are unable to obtain additional secured indebtedness, we may default on our commitments relating to our contracted newbuilds, and we may not be able to finance our future fleet expansion program, which would have a material adverse effect on our business, financial condition and results of operations.

The net remaining unpaid balance of the contract prices for our 11 newbuild vessels was $277.7 million as of February 24, 2015. We anticipate that our primary sources of funds to satisfy these commitments will be from existing cash and time deposits, operating cash surplus and available borrowings under our existing credit facilities and our floating rate note facility. As of February 24, 2015, the Company has no existing vessels unencumbered and $158.7 million in cash and restricted cash, $119.9 million available under existing revolving credit facilities and $204.0 million available under new loan and credit facilities. Our ability to obtain bank financing or to access the capital markets for future offerings may be limited by our financial condition at the time of any such financing or offering, including the actual or perceived credit quality of our charterers and the market value of our fleet, as well as by adverse market conditions resulting from, among other things, general economic conditions, weakness in the financial markets and contingencies and uncertainties that are beyond our control. To the extent that we are unable to enter into new credit facilities and obtain such additional secured indebtedness on terms acceptable to us, we will need to find alternative financing. If we are unable to find alternative financing, we will not be capable of funding all of our commitments for capital expenditures relating to our contracted newbuilds. A failure to fulfill our commitments generally results in a forfeiture of the advance we paid to the shipyard or the third-party seller with respect to the contracted newbuild vessels and a write-off of expenses capitalized. In addition, we may also be liable for other damages for breach of contract. Examples of such liabilities could include payments to the shipyard or the third-party seller for the difference between the forfeited advance and the amount that remains to be paid by us if the shipyard or the third-party seller cannot locate a third-party buyer that is willing to pay an amount equal to the difference or compensatory payments by us to charter parties with whom we have entered into charters with respect to such vessels. Such events, if they occurred, would adversely affect our business, financial condition and results of operation.

The aging of our fleet and our acquisitions of secondhand vessels may result in increased operating costs in the future, which could adversely affect our ability to operate our vessels profitably.

In general, the costs to maintain a vessel in good operating condition increase with the age of the vessel. As of February 24, 2015, the average age of the vessels in our current fleet was 5.8 years. As our vessels age, they may become less fuel efficient and more costly to maintain and will not be as advanced as more recently constructed vessels due to improvements in design and engine technology. Rates for cargo insurance, paid by charterers, also increase with the age of a vessel, making older vessels less desirable to charterers. Governmental regulations, safety or other equipment standards related to the age of vessels may require expenditures for alterations, or the addition of new equipment, to our vessels and may restrict the type of activities in which our vessels may engage. As our vessels age, market conditions may not justify those expenditures or enable us to operate our vessels profitably during the remainder of their useful lives.

In recent years we have taken delivery of some secondhand vessels. We may encounter higher operating and maintenance costs due to the age and condition of those vessels. Secondhand vessels may also develop unexpected mechanical and operational problems despite adherence to regular survey schedules and proper maintenance. We cannot obtain the same knowledge about the condition of a secondhand vessel compared to a newbuild through the performed inspection prior to the purchase of such secondhand vessel nor about the cost of any required (or anticipated) repairs that we would have had if this vessel had been built for and operated exclusively by us. We will have the benefit of warranties on newly constructed vessels; we may not receive the benefit of warranties on secondhand vessels.

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Because we generate substantially all of our revenues in U.S. dollars but incur a material portion of our expenses in other currencies, and may, in the future, also incur a material portion of our indebtedness and our capital expenditure requirements in other currencies, exchange rate fluctuations could have a material adverse effect on our business, financial condition and results of operations.

We generate substantially all of our revenues in U.S. dollars, but in 2014 we incurred approximately 29.81% of our vessel operating expenses in currencies other than the U.S. dollar, of which 69.27% was denominated in euro amounts. Although as of December 31, 2014, all of our indebtedness and the amounts due under our newbuild contracts were denominated in U.S. Dollars, we have also historically entered into shipbuilding contracts whereby part of the contract price is payable in Japanese yen. Also, in the future, we may enter into new credit facilities or newbuild contracts that are denominated in or permit conversion into currencies other than the U.S. dollar. The use of different currencies could lead to fluctuations in our net income due to changes in the value of the U.S. dollar relative to other currencies, in particular the euro and the Japanese yen. We have not hedged our currency exposure, and, as a result, our results of operations and financial condition, denominated in U.S. dollars, and our ability to pay dividends, could suffer.

Restrictive covenants in our existing credit facilities impose, and any future credit facilities will impose, financial and other restrictions on us, and any breach of these covenants could result in the acceleration of our indebtedness and foreclosure on our vessels.

Our existing credit facilities impose, and any future credit facility will impose, operating and financial restrictions on us. These restrictions in our existing credit facilities generally limit our ability to, among other things, and subject to exceptions set forth in such credit facility:

· pay dividends if an event of default has occurred and is continuing or would occur as a result of the payment of such dividend;

· enter into certain long-term charters;

· incur additional indebtedness, including through the issuance of guarantees;

· change the flag, class or management of the vessel mortgaged under such facility or terminate or materially amend the management agreement relating to such vessel;

· create liens on their assets;

· make loans;

· make investments;

· make capital expenditures;

· undergo a change in ownership or control or permit a change in ownership and control of our Manager;

· sell the vessel mortgaged under such facility; and

· permit our chief executive officer to change.

Therefore, we may need to seek permission from our lenders in order to engage in some corporate actions. Our lenders’ interests may be different from ours, and we cannot guarantee that we will be able to obtain our lenders’ permission when needed. This may limit our ability to pay dividends to our stockholders, finance our future operations or pursue business opportunities.

Certain of our existing credit facilities require our subsidiaries to maintain financial ratios and satisfy financial covenants. Depending on the credit facility, certain of our subsidiaries are subject to financial ratios and covenants requiring that these subsidiaries:

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· ensure that the market value of the vessel mortgaged under the applicable credit facility, determined in accordance with the terms of that facility, does not fall below 105% to 120%, as applicable, of the outstanding amount of the loan (the “Minimum Value Covenant”);

· maintain a minimum cash balance per vessel with the respective lender; and

· ensure that we comply with certain financial covenants under the guarantees described below.

In addition, under guarantees we have entered into with respect to certain of our subsidiaries’ existing credit facilities, we are subject to financial covenants. Depending on the guarantee, these financial covenants include the following:

· our total liabilities (on a consolidated basis, including those of our subsidiaries) divided by our total consolidated assets (based on the market value of all vessels owned by our subsidiaries, and the book value of all other assets, on an adjusted basis as set out in the relevant guarantee) must not exceed 80% or 85% (depending on the relevant guarantee);

· the ratio of our aggregate debt after deducting cash to EBITDA must not at any time exceed or 8.5:1 on a trailing 12 months’ basis. EBITDA is not a recognized measurement under US GAAP and represents net income before net interest expense, income tax expense, depreciation and amortization.

· our consolidated net worth (consolidated total assets less consolidated total liabilities) must not at any time be less than $150.0 million, as adjusted to reflect, among other things, the market value of our vessels as set out in the relevant guarantee;

· our consolidated debt must not exceed $514,000,000 on December 31, 2014;

· the ratio of our EBITDA over consolidated interest expense must not at any time be less than 2.0:1, applicable on a trailing 12 month basis;

· maintenance of minimum free liquidity of $500,000 on deposit with the relevant lender; and

· payment of dividends is subject to no event of default having occurred.

In connection with these guarantees, we have also undertaken to ensure that a minimum of 35% or 51% as the case may be of our shares shall remain directly or indirectly beneficially owned by the Hajioannou family for the duration of the relevant credit facilities.

A failure to meet our payment and other obligations or to maintain compliance with the applicable financial covenants could lead to defaults under our secured credit facilities. Our lenders could then accelerate our indebtedness and foreclose on the vessels in our fleet securing those credit facilities. The loss of these vessels would have a material adverse effect on our business, financial condition, and results of operations.

The declaration and payment of dividends will always be subject to the discretion of our board of directors and will depend on a number of factors. Our board of directors may not declare dividends in the future.

The declaration and payment of dividends, if any, will always be subject to the discretion of our board of directors. The timing and amount of any dividends declared will depend on, among other things: (i) our earnings, financial condition and cash requirements and available sources of liquidity, (ii) decisions in relation to our growth strategies, (iii) provisions of Marshall Islands and Liberian law governing the payment of dividends, (iv) restrictive covenants in our existing and future debt instruments, and (v) global financial conditions. Dividends might be reduced or not be paid in the future.

There may be a high degree of variability from period to period in the amount of cash, if any, that is available for the payment of dividends based upon, among other things:

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· the rates we obtain from our charters as well as the rates obtained upon the expiration of our existing charters;

· the level of our operating costs;

· the level of our general and administrative costs;

· the number of unscheduled off-hire days and the timing of, and number of days required for, scheduled drydocking of our ships;

· vessel acquisitions and related financings;

· restrictions in our loan and credit facilities and in any future debt facilities;

· prevailing global and regional economic and political conditions;

· the effect of governmental regulations and maritime self-regulatory organization standards on the conduct of our business;

· the amount of cash reserves established by our board of directors; and

· restrictions under Marshall Islands and Liberian law.

We may incur expenses or liabilities or be subject to other circumstances in the future that reduce or eliminate the amount of cash that we have available for distribution as dividends, if any. Our growth strategy contemplates that we will finance the acquisition of our newbuilds or selective acquisitions of additional vessels in addition to our contracted newbuilds through a combination of our operating cash flow and debt financing or equity financing. If financing is not available to us on acceptable terms, our board of directors may decide to finance or refinance such acquisitions with a greater percentage of cash from operations to the extent available, which would reduce or even eliminate the amount of cash available for the payment of dividends. We may also enter into other agreements that will restrict our ability to pay dividends.

Under the terms of certain of our existing credit facilities, we are not permitted to pay dividends if an event of default has occurred and is continuing or would occur as a result of the payment of such dividend. We expect that any future credit facilities will also have restrictions on the payment of dividends. In addition, cash dividends on our common stock are subject to the priority of dividends on our 1,600,000 outstanding shares of Series B Preferred Shares issued June 2013, 2,300,000 outstanding shares of Series C Preferred Shares issued May 2014 and 3,200,000 outstanding shares of Series D Preferred Shares issued June 2014.

The laws of the Republic of Liberia and of the Republic of the Marshall Islands, where our vessel-owning subsidiaries are incorporated, generally prohibit the payment of dividends other than from surplus or net profits, or while a company is insolvent or would be rendered insolvent by the payment of such a dividend. Our subsidiaries may not have sufficient funds, surplus or net profits to make distributions to us. In addition, under guarantees we have entered into with respect to certain of our subsidiaries’ existing credit and loan facilities, we are subject to financial and other covenants, which may limit our ability to pay dividends. We also may not have sufficient surplus or net profits in the future to pay dividends.

The amount of cash we generate from our operations may differ materially from our net income or loss for the period, which will be affected by non-cash items. We may incur other expenses or liabilities that could reduce or eliminate the cash available for distribution as dividends. As a result of these and the other factors mentioned above, we may pay dividends during periods when we record losses and may not pay dividends during periods when we record net income.

We are a holding company, and we depend on the ability of our subsidiaries to distribute funds to us in order to make dividend payments.

We are a holding company and our subsidiaries, which are all wholly-owned by us, conduct all of our operations and own all of our operating assets. We have no significant assets other than the equity interests in our wholly-owned subsidiaries and cash and cash equivalents held by us. As a result, our ability to

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make dividend payments depends on our subsidiaries and their ability to distribute funds to us. The ability of a subsidiary to make these distributions could be affected by a claim or other action by a third party, including a creditor, and the laws of the Republic of Liberia and of the Republic of the Marshall Islands, where our vessel-owning subsidiaries are incorporated, which regulate the payment of dividends by companies. If we are unable to obtain funds from our subsidiaries, our board of directors may exercise its discretion not to declare or pay dividends.

We depend on our Manager to operate our business and our business could be harmed if our Manager failed to perform its services satisfactorily.

Pursuant to our management agreement, as amended, (the “Management Agreement”) our Manager provides us with technical, administrative and commercial services (including vessel maintenance, crewing, purchasing, shipyard supervision, insurance, assistance with regulatory compliance, financial services and office space). Our operational success depends significantly upon our Manager’s satisfactory performance of these services. Our business would be harmed if our Manager failed to perform these services satisfactorily. In addition, if the Management Agreement were to be terminated or if its terms were to be altered, our business could be adversely affected, as we may not be able to immediately replace such services, and even if replacement services were immediately available, the terms offered could be less favorable than those under our Management Agreement.

Our ability to compete for and enter into charters and to expand our relationships with our existing charterers will depend largely on our relationship with our Manager and its reputation and relationships in the shipping industry. If our Manager suffers material damage to its reputation or relationships, it may harm our ability to:

· renew existing charters upon their expiration;

· obtain new charters;

· successfully interact with shipyards during periods of shipyard construction constraints;

· obtain financing on commercially acceptable terms;

· maintain satisfactory relationships with our charterers and suppliers; and

· successfully execute our business strategies.

If our ability to do any of the things described above is impaired, it could have a material adverse effect on our business, financial condition and results of operations.

Although we may have rights against our Manager if it defaults on its obligations to us, investors in us will have no recourse against our Manager.

Our Manager is permitted to provide certain management services to affiliates and third parties under the specific restrictions of our Management Agreement. Although our Manager is required to provide preferential treatment to our vessels with respect to chartering arrangements under the Management Agreement, our Manager’s time and attention may be diverted from the management of our vessels in such circumstances.

Further, we will need to seek approval from our lenders to change our Manager.

Management fees are payable to our Manager regardless of our profitability, which could have a material adverse effect on our business, financial condition and results of operations.

Pursuant to our Management Agreement, we pay our Manager a fixed fee of $800 per day per vessel for providing commercial, technical and administrative services (subject to adjustment for compensation expenses payable by us) and a variable fee of 1.25% on gross freight, charter hire, ballast bonus and demurrage (See the section entitled “Item 5. Operating and Financial Review and Prospects—General and Administrative Expenses”). In addition, we pay our Manager certain commissions and fees with respect to vessel purchases, sales and newbuilds. The management fees do not cover expenses such as voyage expenses, vessel operating expenses, maintenance expenses, crewing costs, insurance premiums, commissions and certain public company expenses such as directors’ and officers’ liability insurance, legal and accounting fees and other similar public

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company expenses, which are reimbursed by us. The management fees can be adjusted annually on May 29 of each year, the anniversary of our entry into the Management Agreement. The management fees are payable whether or not our vessels are employed, and regardless of our profitability, and we have no ability to require our Manager to reduce the management fees if our profitability decreases, which could have a material adverse effect on our business, financial condition and results of operations.

Our Manager is a privately held company, and there is little or no publicly available information about it; an investor could have little advance warning of problems affecting our Manager that could have a material adverse effect on us.

The ability of our Manager to continue providing services for our benefit will depend in part on its own financial strength. Circumstances beyond our control could impair our Manager’s financial strength. Because our Manager is privately held, it is unlikely that information about its financial strength would become public or available to us prior to any default by our Manager under the Management Agreement. As a result, we may, and our investors might, have little advance warning of problems that affect our Manager, even though those problems could have a material adverse effect on us.

Our chief executive officer also controls our Manager, which could create conflicts of interest between us and our Manager.

Our chief executive officer, Polys Hajioannou, controls our Manager. The Hajioannou family (including Polys Hajioannou) owns approximately 58.02% of our outstanding common stock. These relationships could create conflicts of interest between us, on the one hand, and our Manager, on the other hand. These conflicts may arise in connection with the chartering, purchase, sale and operation of the vessels in our fleet versus vessels owned or chartered-in by other companies affiliated with our Manager or our chief executive officer. To the extent we elect not to exercise our right of first refusal with respect to any drybulk vessel that may be acquired by companies affiliated with our chief executive officer, such companies could acquire and operate such drybulk vessels in competition with us. In addition, although under our Management Agreement our Manager will be required to first provide us any chartering opportunities in the drybulk sector, our Manager is not prohibited from giving preferential treatment in other areas of its management to vessels that are beneficially owned by related parties. These conflicts of interest may have an adverse effect on our business, financial condition and results of operations.

Our business depends upon certain employees who may not necessarily continue to work for us; if such employees were no longer to be affiliated with us, our business, financial condition and results of operation could suffer.

Our future success depends, to a significant extent, upon our chief executive officer, Polys Hajioannou, and certain other members of our senior management and of our Manager. Polys Hajioannou has substantial experience in the drybulk shipping industry and for 28 years has worked with us, our Manager and its predecessor. He and other members of our senior management and of our Manager manage our business and their performance is crucial to the execution of our business strategies and to the growth and development of our business. If these individuals were no longer to be affiliated with us or our Manager, or if we were to otherwise cease to receive advisory services from them, we may be unable to recruit other employees with equivalent talent and experience, and our business and financial condition could suffer. We do not maintain, and do not intend to maintain, “key man” life insurance on any of our executive officers.

The provisions in our restrictive covenant arrangement with our chief executive officer restricting his ability to compete with us, like restrictive covenants generally, may not be enforceable.

Our chief executive officer, Polys Hajioannou, has entered into a restrictive covenant agreement with us under which he is precluded from competing with us during the term of his service with us as executive and director and for one year thereafter, subject to certain exceptions. Courts generally do not favor the enforcement of such restrictions, particularly when they involve individuals and could be construed as infringing on such individuals ability to be employed or to earn a livelihood. Our ability to enforce these restrictions, should it ever become necessary, will depend upon the circumstances that exist at the time enforcement is sought. A court may not enforce the restrictions as written by way of an injunction and we may not necessarily be able to establish a case for damages as a result of a violation of the restrictive covenants.

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Our vessels call on ports located in Iran and Syria, which are identified by the United States government as state sponsors of terrorism and are subject to United States economic sanctions, which could be viewed negatively by investors and adversely affect the trading price of our common stock and Preferred Shares.

From time to time, vessels in our fleet have called and/or may call on ports located in countries identified by the United States government as state sponsors of terrorism and subject to United States economic sanctions. From January 1, 2005 through December 31, 2011, vessels in our fleet made 20 calls on ports in Iran and three calls on ports in Syria out of a total of 2,327 calls on worldwide ports. From January 1, 2012 through December 31, 2014, vessels in our fleet did not make any calls on ports in Iran or Syria. Iran and Syria are identified by the United States government as state sponsors of terrorism. Although these designations and controls do not prevent our vessels from making calls on ports in these countries, potential investors could view such port calls negatively, which could adversely affect our reputation and the market for our common stock. Investor perception of the value of our common stock may be adversely affected by the consequences of war, the effects of terrorism, civil unrest and governmental actions in these and surrounding countries.

Additionally, the United States government imposes economic sanctions that may be applied in certain circumstances to non-United States entities conducting transactions involving targeted countries and their governments. United States sanctions have been imposed on Iran and Syria, among other countries in which our vessels may make port calls. On January 2, 2013, President Obama signed the National Defense Authorization Act for Fiscal Year 2013 (the “NDAA”), which, among other things, expands U.S. sanctions on non-U.S. business with Iran. In particular, Section 1244 of the NDAA targets, among other businesses, those determined, after July 1, 2013, to be part of the shipping sector of Iran and those providing goods or services in support of any activity or transaction on behalf of or for the benefit of, among others, persons determined to be part of the shipping sector of Iran or certain Iranian persons designated by the U.S. Department of the Treasury, Office of Foreign Assets Control (“OFAC”). Section 1244 also includes a humanitarian exception that prohibits the imposition of sanctions with respect to any person for conducting or facilitating a transaction for the sale of agricultural commodities, food, medicine, or medical devices to Iran or the provision of humanitarian assistance to the people of Iran.

Our policy going forward is for our vessels to avoid making calls on ports in Iran or Syria unless the charterer provides information certifying that its cargo is licensed by OFAC.

We are incorporated in the Republic of the Marshall Islands, which does not have a well-developed body of corporate law; therefore, you may have more difficulty protecting your interests than stockholders of a U.S. corporation.

Our corporate affairs are governed by our articles of incorporation, our bylaws and by the Marshall Islands Business Corporations Act (“BCA”). The provisions of the BCA resemble provisions of the corporation laws of a number of states in the United States. However, there have been few judicial cases in the Republic of the Marshall Islands interpreting the BCA. The rights and fiduciary responsibilities of directors under the laws of the Republic of the Marshall Islands are not as clearly established as the rights and fiduciary responsibilities of directors under statutes or judicial precedent in existence in certain United States jurisdictions. The rights of stockholders of companies incorporated in the Republic of the Marshall Islands may differ from the rights of stockholders of companies incorporated in the United States. While the BCA provides that it is to be interpreted according to the laws of the State of Delaware and other states with substantially similar legislative provisions, there have been few, if any, court cases interpreting the BCA in the Republic of the Marshall Islands and we cannot predict whether Marshall Islands courts would reach the same conclusions as United States courts. Thus, you may have more difficulty in protecting your interests in the face of actions by our management, directors or controlling stockholders than would stockholders of a corporation incorporated in a United States jurisdiction which has developed a more substantial body of case law in the corporate law area.

It may be difficult to serve us with legal process or enforce judgments against us, our directors or our management.

We are incorporated under the laws of the Republic of the Marshall Islands, and our Manager’s business is operated primarily from their offices in Athens, Greece. In addition, a majority of our directors and officers are or will be nonresidents of the United States, and all of our assets and a substantial portion of the assets of these non-residents are located outside the United States. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States if you believe that your rights have been infringed under the securities laws or otherwise. You may also have difficulty enforcing, both within and

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outside of the United States, judgments you may obtain in the United States courts against us or these persons in any action, including actions based upon the civil liability provisions of United States federal or state securities laws. There is also substantial doubt that the courts of the Republic of the Marshall Islands or Greece would enter judgments in original actions brought in those courts predicated on United States federal or state securities laws.

We may be subject to lawsuits for damages and penalties.

The nature of our business exposes us to the risk of lawsuits for damages or penalties relating to, among other things, personal injury, property casualty and environmental contamination. From time to time, we may be subject to legal proceedings and claims in the ordinary course of business, principally personal injury and property casualty claims. We expect that these claims would be covered by insurance, subject to customary deductibles. However, such claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources.

Risks Relating to Our Common Stock and Preferred Shares

The Hajioannou family controls the outcome of matters on which our stockholders are entitled to vote and its interests may be different from yours.

The Hajioannou family (including our chief executive officer, Polys Hajioannou), owns approximately 58.02% of our outstanding common stock. The Hajioannou family is able to control the outcome of matters on which our stockholders are entitled to vote, including the election of our entire board of directors and other significant corporate actions. The interests of the Hajioannou family may be different from yours.

We are a “controlled company” under the New York Stock Exchange rules, and as such we are entitled to exemption from certain New York Stock Exchange corporate governance standards, and you may not have the same protections afforded to stockholders of companies that are subject to all of the New York Stock Exchange corporate governance requirements.

We are a “controlled company” within the meaning of the New York Stock Exchange corporate governance standards. Under the New York Stock Exchange rules, a company of which more than 50% of the voting power is held by another company or group is a “controlled company” and may elect not to comply with certain New York Stock Exchange corporate governance requirements, including: (a) the requirement that a majority of the board of directors consist of independent directors, (b) the requirement that the nominating committee be composed entirely of independent directors and have a written charter addressing the committee’s purpose and responsibilities, (c) the requirement that the compensation committee be composed entirely of independent directors and have a written charter addressing the committee’s purpose and responsibilities and (d) the requirement of an annual performance evaluation of the corporate governance, nominating and compensation committees. We may utilize these exemptions. As a result, non-independent directors, including members of our management who also serve on our board of directors, will comprise the majority of our board of directors and may serve on the corporate governance, nominating and compensation committee of our board of directors which, among other things, reviews the compensation of certain members of our management and resolves governance issues regarding our company. Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of the New York Stock Exchange corporate governance requirements.

Future sales of our common stock could cause the market price of our common stock to decline and our existing stockholders may experience significant dilution.

We may issue additional shares of our common stock in the future and our stockholders may elect to sell large numbers of shares held by them from time to time.

In April 2011, we issued and sold 5,000,000 shares of common stock in a public offering. The gross proceeds of the April 2011 public offering were $42 million. In March 2012, we issued and sold 5,750,000 shares of common stock in a public offering. The gross proceeds of the March 2012 public offering were approximately $37.4 million. In November 2013, we issued and sold 5,750,000 shares of common stock in a public offering. Concurrently with that public offering, we issued and sold 1,000,000 shares of common stock to Bellapais Maritime Inc., an entity associated with our chief executive officer, Polys Hajioannou, in a private placement. The gross proceeds of the November 2013 public offering and private placement were $50.2 million.

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Sales of a substantial number of shares of our common stock in the public market, or the perception that these sales could occur, may depress the market price for our common stock. These sales could also impair our ability to raise additional capital through the sale of our equity securities in the future.

Our existing stockholders may also experience significant dilution in the future as a result of any future offering.

We also entered into a registration rights agreement in connection with our initial public offering with Vorini Holdings Inc., one of our principal stockholders, pursuant to which we have granted it and certain of its transferees the right, under certain circumstances and subject to certain restrictions, to require us to register under the Securities Act of 1933, as amended (the “Securities Act”), shares of our common stock held by them. Under the registration rights agreement, Vorini Holdings Inc. and certain of its transferees have the right to request us to register the sale of shares held by them on their behalf and may require us to make available shelf registration statements permitting sales of shares into the market from time to time over an extended period. In addition, those persons have the ability to exercise certain piggyback registration rights in connection with registered offerings initiated by us. Registration of such shares under the Securities Act would, except for shares purchased by affiliates, result in such shares becoming freely tradable without restriction under the Securities Act immediately upon the effectiveness of such registration.

Anti-takeover provisions in our organizational documents could make it difficult for our stockholders to replace or remove our current board of directors and together with our adoption of a stockholder rights plan could have the effect of discouraging, delaying or preventing a merger or acquisition, which could adversely affect the market price of the shares of our common stock.

Several provisions of our articles of incorporation and bylaws could make it difficult for our stockholders to change the composition of our board of directors in any one year, preventing them from changing the composition of our management. In addition, the same provisions may discourage, delay or prevent a merger or acquisition that stockholders may consider favorable. These provisions:

· authorize our board of directors to issue “blank check” preferred stock without stockholder approval;

· provide for a classified board of directors with staggered, three-year terms;

· prohibit cumulative voting in the election of directors;

· authorize the removal of directors only for cause;

· prohibit stockholder action by written consent unless the written consent is signed by all stockholders entitled to vote on the action;

· establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted on by stockholders at stockholder meetings; and

· provide that special meetings of our stockholders may only be called by the chairman of our board of directors, chief executive officer or a majority of our board of directors.

We have adopted a stockholder rights plan pursuant to which our board of directors may cause the substantial dilution of the holdings of any person that attempts to acquire us without the approval of our board of directors.

These anti-takeover provisions, including the provisions of our prospective stockholder rights plan, could substantially impede the ability of public stockholders to benefit from a change in control and, as a result, may adversely affect the market price of our common stock and your ability to realize any potential change of control premium.

We may not have sufficient cash from our operations to enable us to pay dividends on or to redeem our Preferred Shares following the payment of expenses and the establishment of any reserves.

We pay quarterly dividends on our Preferred Shares only from funds legally available for such purpose when, as and if declared by our board of directors. We may not have sufficient cash available each quarter to pay dividends. In addition, we may have insufficient cash available to redeem our Preferred Shares. The amount of

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dividends we can pay or use to redeem Preferred Shares depends upon the amount of cash we generate from our operations, which may fluctuate.

The amount of cash we have available for dividends on or to redeem our Preferred Shares will not depend solely on our profitability.

The actual amount of cash we will have available for dividends or to redeem our Preferred Shares will depend on many factors, including the following:

· changes in our operating cash flow, capital expenditure requirements, working capital requirements and other cash needs;

· restrictions under our existing or future credit facilities or any future debt securities, including existing restrictions under our existing credit facilities on our ability to pay dividends if an event of default has occurred and is continuing or if the payment of the dividend would result in an event of default and restrictions on our ability to redeem securities;

· the amount of any cash reserves established by our board of directors; and

· restrictions under the laws of the Republic of the Marshall Islands, which generally prohibits the payment of dividends other than from surplus (retained earnings and the excess of consideration received for the sale of shares above the par value of the shares) or while a company is insolvent or would be rendered insolvent by the payment of such a dividend.

The amount of cash we generate from our operations may differ materially from our net income or loss for the period, which will be affected by non-cash items, and our board of directors in its discretion may elect not to declare any dividends. As a result of these and the other factors mentioned above, we may pay dividends during periods when we record losses and may not pay dividends during periods when we record net income.

The Preferred Shares represent perpetual equity interests.

The Preferred Shares represent perpetual equity interests in us and, unlike our indebtedness, will not give rise to a claim for payment of a principal amount at a particular date. As a result, holders of the Preferred Shares may be required to bear the financial risks of an investment in the Preferred Shares for an indefinite period of time. In addition, the Preferred Shares rank junior to all our indebtedness and other liabilities, and to any other senior securities we may issue in the future with respect to assets available to satisfy claims against us. Each series of our Preferred Shares rank pari passu with one another and any class or series of capital stock established after the original issue date of such preferred shares that is not expressly subordinated or senior to such preferred shares as to the payment

Our Preferred Shares are subordinate to our debt, and your interests could be diluted by the issuance of additional preferred shares, including additional Preferred Shares, and by other transactions.

Our Preferred Shares are subordinate to all of our existing and future indebtedness. As of December 31, 2014, we had aggregate debt outstanding of $469.6 million, of which $17.1 million was payable within the next 12 months. Our existing indebtedness restricts, and our future indebtedness may include restrictions on, our ability to pay dividends on or redeem preferred shares. Our articles of incorporation currently authorize the issuance of up to 20,000,000 shares of blank check preferred stock, par value $0.01 per share, of which, as of December 31, 2014, 1,600,000 shares of Series B Preferred Shares, 2,300,000 shares of Series C Preferred Shares and 3,200,000 shares of Series D Preferred Shares were issued and outstanding. Of this blank check preferred stock, 1,000,000 shares have been designated Series A Participating Preferred Stock in connection with our adoption of a stockholder rights plan as described under “Item 10. Additional Information—B. Memorandum and Articles of Association—Stockholder Rights Plan”. The issuance of additional preferred shares on a parity with or senior to the Preferred Shares would dilute the interests of holders of such shares, and any issuance of preferred shares senior to such preferred shares or of additional indebtedness could affect our ability to pay dividends on, redeem or pay the liquidation preference on our Preferred Shares.

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Holders of Preferred Shares have extremely limited voting rights.

The voting rights of holders of Preferred Shares are extremely limited. Our common shares are the only class or series of our shares carrying full voting rights. Holders of Preferred Shares have no voting rights other than the ability (voting together as a class with all other classes or series of preferred stock upon which like voting rights have been conferred and are exercisable, including all of the Preferred Shares), subject to certain exceptions, to elect one director if dividends for six quarterly dividend periods (whether or not consecutive) payable on our Preferred Shares are in arrears and certain other limited protective voting rights.

Our ability to pay dividends on and to redeem our Preferred Shares is limited by the requirements of the laws of the Republic of the Marshall Islands, the laws of the Republic of Liberia and existing and future agreements.

The laws of the Republic of Liberia and of the Republic of the Marshall Islands, where our vessel-owning subsidiaries are incorporated, generally prohibit the payment of dividends other than from surplus or net profits, or while a company is insolvent or would be rendered insolvent by the payment of such a dividend. Our subsidiaries may not have sufficient funds, surplus or net profits to make distributions to us. In addition, under guarantees we have entered into with respect to certain of our subsidiaries’ existing credit facilities, we are subject to financial and other covenants, which may limit our ability to pay dividends and redeem the Preferred Shares. These and future agreements may limit our ability to pay dividends on and to redeem the Preferred Shares. We also may not have sufficient surplus or net profits in the future to pay dividends.

Tax Risks

In addition to the following risk factors, you should read “Item 10. Additional Information—E. Tax Considerations—Marshall Islands Tax Considerations,” “Item 10. Additional Information—E. Tax Considerations—Liberian Tax Considerations,” and “Item 10. Additional Information —E. Tax Considerations—United States Federal Income Tax Considerations” for a more complete discussion of expected material Marshall Islands, Liberian and United States federal income tax consequences of owning and disposing of our common stock and Preferred Shares.

We may earn shipping income that will be subject to United States income tax, thereby reducing our cash available for distributions to you.

Under United States tax rules, 50% of our gross income attributable to shipping that begins or ends in the United States will be subject to a 4% United States federal income tax (without allowance for deductions). The amount of this income may fluctuate, and we will not qualify for any exemption from this United States tax. Many of our charters contain provisions that obligate the charterers to reimburse us for this 4% United States tax. To the extent we are not reimbursed by our charterers, the 4% United States tax will decrease our cash that is available for dividends.

For a more complete discussion, see the section entitled “Item 10. Additional Information—Tax Considerations—E. United States Federal Income Tax Considerations—Taxation of Our Shipping Income.”

United States tax authorities could treat us as a “passive foreign investment company,” which could have adverse United States federal income tax consequences to United States holders.

A non-United States corporation will be treated as a “passive foreign investment company,” or PFIC, for United States federal income tax purposes if either (a) at least 75% of its gross income for any taxable year consists of certain types of “passive income” or (b) at least 50% of the average value of the corporation’s assets produce or are held for the production of those types of “passive income.” For purposes of these tests, “passive income” includes dividends, interest, gains from the sale or exchange of investment property, and rents and royalties other than rents and royalties that are received from unrelated parties in connection with the active conduct of a trade or business. For purposes of these tests, income derived from the performance of services does not constitute “passive income.” United States stockholders of a PFIC are subject to a disadvantageous United States federal income tax regime with respect to the income derived by the PFIC, the distributions they receive from the PFIC, and the gain, if any, they derive from the sale or other disposition of their shares in the PFIC. In particular, United States holders who are individuals would not be eligible for preferential tax rates otherwise applicable to qualified dividends.

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Based on our current operations and anticipated future operations, we believe that it is more likely than not that we currently will not be treated as a PFIC. In this regard, we intend to treat gross income we derive or are deemed to derive from our period time chartering activities as services income, rather than rental income. Accordingly, we believe that our income from our period time chartering activities should not constitute “passive income,” and that the assets we own and operate in connection with the production of that income should not constitute passive assets.

There are legal uncertainties involved in this determination. A recent case decided by the United States Court of Appeals for the Fifth Circuit held that, contrary to the position of the United States Internal Revenue Service, or the “IRS,” in that case, and for purposes of a different set of rules under the Internal Revenue Code of 1986, or the “Code,” income received under a period time charter of vessels should be treated as rental income rather than services income. If the reasoning of this case were extended to the PFIC context, the gross income we derive or are deemed to derive from our period time chartering activities would be treated as rental income, and we would probably be a PFIC. In recent guidance, however, the IRS stated that it disagreed with the holding in the Fifth Circuit case, and specified that income from period time charters should be treated as services income. In light of these authorities, the IRS or a United States court may not accept the position that we are not a PFIC, and there is a risk that the IRS or a United States court could determine that we are a PFIC. Moreover, we may constitute a PFIC for a future taxable year if there were to be changes in our assets, income or operations.

If the IRS were to find that we are or have been a PFIC for any taxable year, our United States stockholders will face adverse United States tax consequences. See “Item 10. Additional Information—E. “Tax Considerations—United States Federal Income Tax Considerations—United States Federal Income Taxation of United States Holders” for a more comprehensive discussion of the United States federal income tax consequences to United States stockholders if we are treated as a PFIC.

ITEM 4. INFORMATION ON THE COMPANY

A. History and Development of the Company

Safe Bulkers, Inc. was incorporated in the Republic of the Marshall Islands on December 11, 2007, under the BCA, for the purpose of acquiring ownership of various subsidiaries that either owned or were scheduled to own vessels. We are controlled by the Hajioannou family, which has a long history of operating and investing in the international shipping industry, including a long history of vessel ownership. Vassos Hajioannou, the late father of Polys Hajioannou, our chief executive officer, first invested in shipping in 1958. Polys Hajioannou has been actively involved in the industry since 1987, when he joined the predecessor of Safety Management.

Over the past 20 years under the leadership of Polys Hajioannou, we have renewed our fleet by selling 11 drybulk vessels during periods of what we viewed as favorable secondhand market conditions and contracting to acquire 53 drybulk newbuilds and four drybulk secondhand vessels. Also under his leadership, we have expanded the classes of drybulk vessels in our fleet and the aggregate carrying capacity of our fleet has grown from 887,900 deadweight tons prior to our initial public offering in May 28, 2008 to 3,019,700 dwt as of February 24, 2015. Information on our capital expenditure requirements are discussed below in ‘Item 5B. Liquidity and Capital Resources’. The quality and size of our current fleet, together with our long-term relationships with several of our charter customers, are, we believe, the results of our long-term strategy of maintaining a young, high quality fleet, our broad knowledge of the drybulk industry and our strong management team. In addition to benefiting from the experience and leadership of Polys Hajioannou, we also benefit from the expertise of our Manager which, along with its predecessor, has specialized in drybulk shipping since 1965, providing services to over 49 drybulk vessels. In June 2008, we completed an initial public offering of our common stock in the United States and our common stock began trading on the New York Stock Exchange. Our principal executive office is located at Apt. D11, Les Acanthes, 6, Avenue des Citronniers MC 98 000 Monaco. Our representation office in Greece is at 30-32 Avenue Karamanli, 16673 Voula, Athens, Greece. Our registered address in the Republic of the Marshall Islands is Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Republic of the Marshall Islands MH96960. The name of our registered agent at such address is The Trust Company of the Marshall Islands, Inc.

B. Business Overview

We are an international provider of marine drybulk transportation services, transporting bulk cargoes, particularly coal, grain and iron ore, along worldwide shipping routes for some of the world’s largest consumers of marine drybulk transportation services. As of February 24, 2015, we had a fleet of 33 drybulk vessels, with an

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aggregate carrying capacity of 3,019,700 dwt and an average age of 5.8 years, making us one of the world’s youngest fleets of Panamax, Kamsarmax, Post-Panamax and Capesize class vessels. Our fleet is expected to grow through 2018 as the result of the delivery of 11 further contracted newbuild vessels, comprised of four Panamax class vessels, four Kamsarmax class vessels and three Post-Panamax class vessels. Upon delivery of the last of our contracted newbuilds, assuming we do not acquire any additional vessels or dispose of any of our vessels, our fleet will be comprised of 44 vessels, having an aggregate carrying capacity of 3,906,400 dwt.

We employ our vessels on both period time charters and spot time charters, according to our assessment of market conditions, with some of the world’s largest consumers of marine drybulk transportation services. The vessels we deploy on period time charters provide us with relatively stable cash flow and high utilization rates, while the vessels we deploy in the spot market allow us to maintain our flexibility in low charter market conditions.

General

As of February 24, 2015 our fleet comprised 33 vessels, of which 12 are Panamax class vessels, seven are Kamsarmax class vessels, 11 are Post-Panamax class vessels and three are Capesize class vessels, with an aggregate carrying capacity of 3,019,700 dwt and an average age of 5.8 years. Assuming delivery of the last of our contracted vessels in 2018, our fleet will be comprised of 16 Panamax class vessels, 11 Kamsarmax class vessels, 14 Post-Panamax class vessels and three Capesize class vessels, and the aggregate carrying capacity of our 44 vessels will be 3,906,400 dwt. As of February 24, 2015, the average remaining duration of the charters for our existing fleet was 1.12 years.

The majority of vessels in our fleet have sister ships with similar specifications in our existing or newbuild fleet. We believe using sister ships provides cost savings because it facilitates efficient inventory management and allows for the substitution of sister ships to fulfill our period time charter obligations.

Our Fleet and Newbuilds

The table below presents additional information with respect to our drybulk vessel fleet, including our newbuilds, and its deployment as of February 24, 2015.

Vessel Name	Dwt	Year Built (1)	Country of Construction	Charter Type	Charter Rate (2)		Commissions (3)			Charter Period (4)	Sister Ship (5)
CURRENT FLEET
Panamax
Maria	76,000	2003	Japan	Period	$	7,464		5.00	%	Feb. 2015 – Aug. 2015	A
Koulitsa	76,900	2003	Japan	Period	$	13,250		5.00	%	Jun. 2014 – Jun 2015
Paraskevi	74,300	2003	Japan	Period	$	8,500		5.00	%	Jul 2014 – Mar. 2015
Vassos	76,000	2004	Japan	Spot	$	7,000		5.00	%	Jan. 2015 – Mar. 2015	A
Katerina	76,000	2004	Japan	Spot	$	5,250		5.00	%	Feb. 2015 – Apr. 2015	A
Maritsa	76,000	2005	Japan	Period	$	5,565		5.00	%	Feb. 2015 – May 2015	A
Efrossini	75,000	2012	Japan	Period	$	10,400		4.75	%	Jul. 2014 – May 2015	B
Zoe	75,000	2013	Japan								B
Kypros Land	77,100	2014	Japan	Period	$	11,500		5.00	%	Feb. 2015 – May 2015	H
Kyprox Sea	77,100	2014	Japan	Period	$	12,350		5.00	%	Jan. 2015 – Apr. 2015	H
Kypros Unity	78,000	2014	Japan	Period	$	8,000		5.00	%	Feb. 2015 – Jun. 2015	I
Kypros Bravery	78,000	2015	Japan	Period	$	7,800		5.00	%	Jan. 2015 – May 2015	I
Kamsarmax
Pedhoulas Merchant	82,300	2006	Japan	Period (6)		BPI + 9.5%		3.75	%	Jul. 2013– Jul. 2015	C
Pedhoulas Trader	82,300	2006	Japan	Period (7)		BPI + 6.5%		3.50	%	Aug. 2013 – Aug. 2015	C
Pedhoulas Leader	82,300	2007	Japan	Period	$	10,600		4.75	%	Jul. 2014 – Apr. 2015	C
Pedhoulas Commander	83,700	2008	Japan	Period	$	10,500		4.75	%	Jul. 2014 – Apr. 2015
Pedhoulas Builder	81,600	2012	China	Period	$	10,000		4.75	%	Nov. 2014 – Mar. 2015	D
Pedhoulas Fighter	81,600	2012	China	Spot	$	8,250		5.00	%	Jan. 2015 – Mar. 2015	D
Pedhoulas Farmer	81,600	2012	China	Period	$	11,000		4.75	%	Sep. 2014 – Aug. 2015	D
Post-Panamax
Stalo	87,000	2006	Japan	Spot	$	6,000		5.00	%	Feb. 2015 – Apr. 2015	E
Marina	87,000	2006	Japan	Spot	$	5,250		5.00	%	Feb. 2015 – Mar. 2015	E
Xenia	87,000	2006	Japan								E
Sophia	87,000	2007	Japan	Spot	$	5,250		5.00	%	Feb. 2015 – Apr. 2015	E
Eleni	87,000	2008	Japan	Spot	$	7,000		5.00	%	Jan. 2015 – Feb. 2015	E
Martine	87,000	2009	Japan	Period	$	9,100		5.00	%	Dec. 2014 – Apr. 2015	E
Andreas K	92,000	2009	South Korea	Spot	$	12,200		5.00	%	Dec. 2014 – Mar. 2015	F
Panayiota K	92,000	2010	South Korea								F
Venus Heritage	95,800	2010	Japan	Period	$	11,400		5.00	%	Nov. 2014 – Mar. 2015	G
Venus History	95,800	2011	Japan	Period	$	9,833		5.00	%	Sep. 2014 – Jun. 2015	G

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Vessel Name	Dwt	Year Built (1)	Country of Construction	Charter Type	Charter Rate (2)		Commissions (3)			Charter Period (4)	Sister Ship (5)
Venus Horizon	95,800	2012	Japan	Period	$	13,000		5.00	%	Oct. 2013 – Mar. 2015	G
Capesize
Kanaris	178,100	2010	China	Period	$	25,928		2.50	%	Sep. 2011 – Jun. 2031
Pelopidas	176,000	2011	China	Period	$	38,000		1.00	%	Feb. 2012 – Dec. 2021
Lake Despina	181,400	2014	Japan	Period (8)	$ $	23,100 24,810		1.25 1.25	% %	Jan. 2014 – Jul. 2016 Jul. 2016 – Jan. 2024
Subtotal	3,019,700
NEW BUILDS
Panamax
Hull No. 1689	76,500	1H 2015	Japan	Period	$ $	15,800 15,000				Apr. 2015 – Apr. 2020 Apr. 2020 – Apr.2025	H
Hull No. 827	77,000	2H 2015	Japan								I
Hull No. 828	77,000	1H 2016	Japan								I
Hull No. 835	77,000	(9)1H 2017	Japan								I
Kamsarmax
Hull No.1148	82,000	1H 2015	China								K
Hull No. 1146	82,000	(9)1H 2017	China								K
Hull No. 1551	81,600	(9)1H 2017	Japan								L
Hull No. 1552	81,600	(9)1H 2018	Japan								L
Post-Panamax
Hull No. 1685	84,000	(9)1H 2016	Japan								J
Hull No. 1686	84,000	(9)1H 2016	Japan								J
Hull No. 1718	84,000	1H 2016	Japan
Subtotal	886,700
TOTAL	3,906,400

(1) For newbuilds, the dates shown reflect the expected delivery dates.

(2) Quoted charter rates are gross charter rates. Gross charter rates are inclusive of commissions. Net charter rates are charter rates after the payment of commissions. Charter agreements may provide for additional payments, namely ballast bonus, to compensate for vessel repositioning.

(3) Commissions reflect payments made to third-party brokers or our charterers, and do not include the 1.25% fee payable on gross freight, charter hire, ballast bonus and demurrage to our Manager pursuant to our vessel management agreements with our Manager.

(4) The start dates listed reflect either actual start dates or, in the case of contracted charters that had not commenced as of February 24, 2015, scheduled start dates. Actual start dates and redelivery dates may differ from the scheduled start and redelivery dates depending on the terms of the charter and market conditions.

(5) Each vessel with the same letter is a “sister ship” of each other vessel that has the same letter, and under certain of our charter contracts, may be substituted with its “sister ships.”

(6) A period time charter at a gross daily charter rate linked to the Baltic Panamax Index (“BPI”) plus a premium of 9.5%.

(7) A period time charter at a gross daily charter rate linked to the BPI plus a premium of 6.5%.

(8) A period time charter of 10 years at a gross daily charter rate of $23,100 for the first two and a half years and of $24,810 for the remaining period. The charter agreement grants the charterer the option to extend the period time charter for an additional 12 months at a time, at a gross daily charter rate of $26,330, less 1.25% total commissions, which option may be exercised by the charterer a maximum of two times. The charter agreement also grants the charterer an option to purchase the vessel at any time beginning at the end of the seventh year of the period time charter period, at a price of $39 million less 1.00% commission, decreasing thereafter on a pro-rated basis by $1.5 million per year. The Company holds a right of first refusal to buy back the vessel in the event that the charterer exercises its option to purchase the vessel and subsequently offers to sell such vessel to a third party.

(9) New scheduled delivery date following recapitulation agreement entered by the Company in February 2015. Refer to Note 24 of the consolidated financial statements which are included elsewhere in this annual report. In relation to such delay the Company will incur additional minor adjustments in the capital expenditure requirement for shipyard’s relevant costs.

From the beginning of 1995 through February 24, 2015, we have taken delivery of 39 newbuilds and four secondhand vessels. As of February 24, 2015, we were contracted to take delivery of nine Japanese-built newbuild vessels, comprised of four Panamax class vessels, two Kamsarmax class vessels and three Post-Panamax class vessels and of two Chinese-built newbuild vessels, comprised of two Kamsarmax class vessels. As of February 24, 2015, our remaining capital expenditure requirements were $277.7 million, of which $95.8 million is payable in 2015, $91.7 million is payable in 2016, $69.9 million is payable in 2017 and $20.3 million in 2018.

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Chartering of Our Fleet

Our vessels are used to transport bulk cargoes, particularly coal, grain and iron ore, along worldwide shipping routes. We may employ our vessels in time charters or in voyage charters.

A time charter is a contract to charter a vessel for a fixed period of time at a set daily rate and can last from a few days up to several years, where the vessel performs one or more voyages between load port(s) and discharge port(s). Based on the duration of vessel’s employment, a time charter can be either a long-term, or period, time charter with duration of more than three months, or a short-term, or spot, time charter with duration of up to three months. Under our time charters, the charterer pays for most voyage expenses, such as port, canal and fuel costs, agents’ fees, extra war risks insurance and any other expenses related to the cargoes, and we pay for vessel operating expenses, which include, among other costs, costs for crewing, provisions, stores, lubricants, insurance, maintenance and repairs, tonnage taxes, drydocking and intermediate and special surveys.

Voyage charters are generally contracts to carry a specific cargo from a load port to a discharge port, including positioning the vessel at the load port. Under a voyage charter, the charterer pays an agreed upon total amount or on a per cargo ton basis, and we pay for both vessel operating expenses and voyage expenses. We infrequently enter into voyage charters. Voyage charters together with spot time charters are referred to in our industry as employment in the spot market.

We intend to employ our vessels on both period time charters and spot time charters, according to our assessment of market conditions, with some of the world’s largest consumers of marine drybulk transportation services. The vessels we deploy on period time charters provide us with relatively stable cash flow and high utilization rates, while the vessels we deploy in the spot market allow us to maintain our flexibility in low charter market conditions.

Our Customers

Since 2005 our customers have included over 30 national, regional and international companies, including Bunge, Cargill, Daiichi, Intermare Transport G.m.b.H., Eastern Energy Pte. Ltd., NYK, NS United Kaiun Kaisha, Kawasaki Kisen Kaisha, Oldendorff G.M.B.H and co. KG, Louis Dreyfus, ArcelorMittal or their affiliates. During 2013, two of our charterers accounted for 45.7% of our revenues, namely Daiichi and Kawasaki Kisen Kaisha, with each one accounting for more than 10% of total revenues. During 2012, two of our charterers accounted for 62.9% of our revenues, namely Daiichi and Kawasaki Kisen Kaisha, with each one accounting for more than 10% of total revenues. We seek to charter our vessels primarily to charterers who intend to use our vessels without sub-chartering them to third parties. A prospective charterer’s financial condition and reliability are also important factors in negotiating employment for our vessels.

Management of Our Fleet

We have a Management Agreement pursuant to which our Manager provides us with technical, administrative, commercial and certain other services for an initial term of two years with automatic one-year renewals for an additional eight years, during which the management fees can be adjusted every year upon agreement between us and our Manager. The Management Agreement can be terminated if we provide notice of non-renewal 12 months prior to the end of the then-current term. The initial two year term expired on May 28, 2010. We have not provided notice of termination to our Manager. Our arrangements with our Manager and its performance are reviewed by our board of directors. Our chief executive officer, president, chief financial officer and chief operating officer, collectively referred to in this annual report as our “executive officers,” provide strategic management for our company and also supervise the management of our day-to-day operations by our Manager. Our Manager reports to us and our board of directors through our executive officers.

In return for providing such services our Manager receives a fixed management fee of $800 per day per vessel. In return for chartering services rendered to us, our Manager also receives a variable fee of 1.25% on all freight, charter hire, ballast bonus and demurrage for each vessel. Our Manager also receives a sales fee of 1.0% based on the contract price of any vessel sold by it on our behalf, and an acquisition fee of 1.0% based on the contract price of any vessel bought by it on our behalf, including the acquisition of each of our contracted newbuilds. We also pay our Manager a supervision fee of $550,000 per newbuild, of which 50% is payable upon the signing of the relevant supervision agreement, and 50% upon successful completion of the sea trials of each newbuild, which we capitalize, for the on-premises supervision by selected engineers and others on the Manager’s staff of newbuilds we have agreed to acquire pursuant to shipbuilding contracts, memoranda of agreement, or otherwise.

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Pursuant to the terms of the Management Agreement, the Manager provides to us executive officers at no cost. To the extent that the Manager does not provide executive officers to us but instead such executive officers are employed by us directly, the management fee payable by us to the Manager shall be reduced by an amount equal to the aggregate costs of compensation and benefits and other incidental costs borne by us as a result of such employment.

Our Manager has agreed that, during the term of our Management Agreement and for a period of one year following its termination, our Manager will not provide management services to, or with respect to, any drybulk vessels other than (a) on our behalf or (b) with respect to drybulk vessels that are owned or operated by companies affiliated with our chief executive officer, his children or his brother Nicolaos Hadjioannou, and drybulk vessels that are acquired, invested in or controlled by companies affiliated with our chief executive officer, his children or Nicolaos Hadjioannou subject in each case to compliance with, or waivers of, the restrictive covenant agreements entered into between us and such companies. Our Manager has also agreed that if one of our drybulk vessels and a drybulk vessel owned or operated by any such company are both available and meet the criteria for a charter being arranged by our Manager, our drybulk vessel will receive such charter.

Competition

We operate in highly competitive markets that are based primarily on supply and demand. Our business fluctuates in line with the main patterns of trade of the major drybulk cargoes and varies according to changes in the supply and demand for these items. We believe we differentiate ourselves from our competition by providing young, modern vessels with advanced designs and technological specifications. As of February 24, 2015 our fleet had an average age of 5.8 years compared to an industry average of approximately 8.9 years. Upon delivery of our contracted newbuilds vessel, the majority of our fleet will have been built in Japanese shipyards, which we believe provides us with an advantage in attracting large, well-established customers, including Japanese customers.

The drybulk sector is characterized by relatively low barriers to entry, and ownership of drybulk vessels is highly fragmented. In general, we compete with other owners of Panamax class or larger drybulk vessels for charters based upon price, customer relationships, operating expertise, professional reputation and size, age, location and condition of the vessel.

Crewing and Shore Employees

Our management team consists of our chief executive officer, president, chief financial officer and chief operating officer. We directly employ five officers including our legal representative in Greece, our president, chief financial officer and chief operating officer. Our Manager is responsible for the technical management of our fleet and therefore also handles the recruiting, either directly or through crewing agents, of the senior officers and all other crew members for our vessels. As of December 31, 2014, approximately 692 people served on board the vessels in our fleet, and our Manager employed approximately 64 people on shore.

Permits and Authorizations

We are required by various governmental and other agencies to obtain certain permits, licenses, certificates and financial assurances with respect to each of our vessels. The kinds of permits, licenses, certificates and financial assurances required by governmental and other agencies depend upon several factors, including the commodity being transported, the waters in which the vessel operates, the nationality of the vessel’s crew and the type and age of the vessel. All permits, licenses, certificates and financial assurances currently required to operate our vessels have been obtained. Additional laws and regulations, environmental or otherwise, may be adopted which could limit our ability to do business or increase the cost of doing business.

Risk of Loss and Liability Insurance

General

The operation of our fleet involves risks such as mechanical failure, collision, property loss, cargo loss or damage as well as personal injury, illness and loss of life. In addition, the operation of any oceangoing vessel is subject to the inherent possibility of marine disaster, including oil spills and other environmental mishaps, the risk of piracy and the liabilities arising from owning and operating vessels in international trade. The U.S. Oil Pollution Act of 1990 (“OPA 90”), which imposes virtually unlimited liability upon owners, operators and

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demise charterers of vessels trading in the United States exclusive economic zone for certain oil pollution accidents in the United States, has made liability insurance more expensive for vessel owners and operators trading in the United States market.

Our Manager is responsible for arranging insurance for all our vessels on terms specified in our Management Agreement, which we believe are in line with standard industry practice. In accordance with our Management Agreement, our Manager procures and maintains hull and machinery insurance, war risks insurance, freight, demurrage and defense coverage and protection and indemnity coverage with mutual assurance associations. Due to our low incident rate and the young age of our fleet, we are generally able to procure relatively low rates for all types of insurance.

While our insurance coverage for our drybulk vessel fleet is in amounts that we believe to be prudent to protect us against normal risks involved in the conduct of our business and consistent with standard industry practice, our Manager may not be able to maintain this level of coverage throughout a vessel’s useful life. Furthermore, all risks may not be adequately insured against, any particular claim may not be paid and adequate insurance coverage may not always be obtainable at reasonable rates.

Hull and machinery insurance

Our marine hull and machinery insurance covers risks of partial loss or actual or constructive total loss from collision, fire, grounding, engine breakdown and other insured risks up to an agreed amount per vessel. Our vessels will each be covered up to at least their fair market value after meeting certain deductibles per incident per vessel. We also maintain increased value coverage for each of our vessels. Under this increased value coverage, in the event of the total loss of a vessel, we are entitled to recover amounts in excess of the total loss amount recoverable under our hull and machinery policy.

Protection and indemnity insurance

Protection and indemnity insurance is a form of mutual indemnity insurance provided by mutual marine protection and indemnity associations, or “P&I Associations,” formed by vessel owners to provide protection from large financial loss to one club member by contribution towards that loss by all members.

Protection and indemnity insurance covers our third-party liabilities in connection with our shipping activities. This includes third-party liability and other related expenses of injury or death of crew members, passengers and other third parties, loss or damage to cargo, claims arising from collisions with other vessels, damage to other third party property, pollution arising from oil or other substances, and salvage, towing and other related costs, including wreck removal. Our coverage, except for pollution, will be unlimited. Furthermore, within this aggregate limit, club coverage is also limited to the amount of the member’s legal liability.

Our protection and indemnity insurance coverage for pollution is limited to $1.0 billion per vessel per incident. Our protection and indemnity insurance coverage in respect of passengers is limited to $2.0 billion and in respect of passengers and seamen is limited to $3.0 billion per vessel per incident. The 13 P&I Associations that comprise the International Group of P&I Clubs (the “International Group”) insure approximately 90% of the world’s commercial blue-water tonnage and have entered into a pooling agreement to reinsure each P&I Association’s liabilities. As a member of a P&I Association that is a member of the International Group, we are subject to calls payable to the P&I Association based on the International Group’s claim records, as well as the claim records of all other members of the individual associations.

Although the P&I Associations compete with each other for business, they have found it beneficial to mutualise their larger risks among themselves through the International Group. This is known as the “Pool.” This pooling is regulated by a contractual agreement which defines the risks that are to be covered and how claims falling on the Pool are to be shared among the participants in the International Group. The Pool provides a mechanism for sharing all claims in excess of $9.0 million up to $80.0 million. For claims in excess of $80.0 million, the International Group purchases reinsurance from the commercial market of up to $3.07 billion per vessel per incident, comprising of reinsurance of up to $2.0 billion per vessel per incident in excess of $80.0 million insured by the Pool and an additional $1.0 billion in excess of the aforesaid $2.07 billion in respect of overspill protection per vessel per incident.

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War risks insurance

Our war risk insurance covers risks of partial loss or actual or constructive total loss from confiscations, seizure, capture, vandalism, sabotage and other war related risks and is limited to each vessel’s hull and machinery and increased value insured value plus $500.0 million per vessel per incident in respect of conflicts risks and P&I liabilities, including crew.

Inspection by Classification Societies

Every oceangoing vessel must be “classed” by a classification society. The classification society certifies that the vessel is “in class,” signifying that the vessel has been built and maintained in accordance with the rules and regulations of the classification society. In addition, each vessel must comply with all applicable laws, rules and regulations of the vessel’s country of registry, or “flag state,” as well as the international conventions of which that flag state is a member. A vessel’s compliance with international conventions and corresponding laws and ordinances of its flag state can be confirmed by the applicable flag state, port state control or, upon application or by official order, the classification society, acting on behalf of the authorities concerned.

The classification society also undertakes, upon request, other surveys and checks that are required by regulations and requirements of the flag state. These surveys are subject to agreements made in each individual case or to the regulations of the country concerned.

All areas subject to survey as defined by the classification society are required to be surveyed at least once per class period, unless shorter intervals between surveys are prescribed elsewhere. The period between two subsequent surveys of each area must not exceed five years. The maintenance of class, regular and extraordinary surveys of a vessel’s hull and machinery, including the electrical plant, and any special equipment classed are required to be performed as follows:

· Annual Surveys. For oceangoing vessels, annual surveys are conducted for their hulls and machinery, including the electrical plants, and for any special equipment classed, at intervals of 12 months from the date of commencement of the class period indicated in the certificate.

· Intermediate Surveys. Extended annual surveys are referred to as “intermediate surveys” and typically are conducted on the occasion of the second or third annual survey after commissioning and after each class renewal.

· Class Renewal / Special Surveys. Class renewal surveys, also known as “special surveys,” are more extensive than intermediate surveys and are carried out at the end of each five-year period. During the special survey the vessel is thoroughly examined, including thickness-gauging to determine any diminution in the steel structures. Should the thickness be found to be less than class requirements, the classification society would prescribe steel renewals. It may be expensive to have steel renewals pass a special survey if the vessel is aged or experiences excessive wear and tear. A vessel owner has the option of arranging with the classification society for the vessel’s machinery to be on a continuous survey cycle, according to which all machinery would be surveyed within a five-year cycle. At an owner’s application, the surveys required for class renewal may be split according to an agreed schedule to extend over the entire period of class.

Vessels are drydocked during intermediate and special surveys for repairs of their underwater parts. If “in water survey” notation is assigned by class, as is the case for our vessels, the vessel owner has the option of carrying out an underwater inspection of the vessel in lieu of drydocking, subject to certain conditions. In the event that an “in water survey” notation is assigned as part of a particular intermediate survey, drydocking would be required for the following special survey thereby generally achieving a higher utilization for the relevant vessel. Drydocking can be undertaken as part of a special survey if the drydocking occurs within 15 months prior to the special survey deadline. The following table lists the dates by which we expect to carry out the next drydockings and special surveys for the vessels in our current drybulk vessel fleet:

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Vessel Name	Drydocking	Special Survey
Maria	January 2017	April 2018
Vassos	November 2017	February 2019
Katerina	February 2018	May 2019
Maritsa	October 2018	January 2020
Efrossini	November 2015	February 2017
Koulitsa	January 2017	April 2018
Paraskevi	October 2016	January 2018
Pedhoulas Merchant	May 2015	March 2016
Pedhoulas Trader	July 2015	May 2016
Pedhoulas Leader	November 2015	February 2017
Pedhoulas Builder	December 2015	May 2017
Pedhoulas Fighter	May 2016	August 2017
Pedhoulas Farmer	June 2016	September 2017
Stalo	April 2015	January 2016
Marina	April 2015	January 2016
Sophia	December 2015	June 2017
Eleni	August 2017	November 2018
Martine	November 2017	February 2019
Andreas K	May 2018	August 2019
Kanaris	November 2018	February 2020
Panayiota K	January 2019	April 2015
Venus Heritage	September 2015	December 2015
Venus History	October 2015	September 2016
Venus Horizon	December 2015	February 2017
Pelopidas	October 2015	November 2016
Pedhoulas Commander	February 2017	May 2018
Zoe	April 2017	July 2018
Xenia	February 2020	August 2016
Lake Despina	October 2018	January 2019
Kypros Land	November 2017	February 2019
Kypros Sea	January 2018	March 2019
Kypros Unity	June 2018	September 2019
Kypros Bravery	October 2018	January 2020

Following an incident or a scheduled survey, if any defects are found, the classification surveyor will issue a “recommendation or condition of class” which must be rectified by the vessel owner within the prescribed time limits.

In general, insurance underwriters make it a condition for insurance coverage that a vessel be certified as “in class” by a classification society which is a member of the International Association of Classification Societies (“IACS”). All of our vessels are certified as being “in class” by either Lloyd’s Register of Shipping or the American Bureau of Shipping, each of which is a member of IACS.

Environmental and Other Regulations

General

Government regulation significantly affects the ownership and operation of our vessels. Our vessels are subject to international conventions and national, state and local laws and regulations in force in international waters and the countries in which they operate or are registered, including environmental protection requirements governing the management and disposal of hazardous substances and wastes, the cleanup of oil spills and the management of other contamination, air emissions, water discharges and ballast water. These laws and regulations include the International Convention for Prevention of Pollution from Ships, the International Convention for Safety of Life at Sea (“SOLAS”) and implementing regulations adopted by the International Maritime Organization (“IMO”), the European Union (“EU”) and other international, national and local regulatory bodies. They also include laws and regulations in the jurisdictions where our vessels travel and in the ports where our vessels call. In the U.S., the requirements include OPA 90, the U.S. Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), the U.S. Clean Water Act (“CWA”)

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and U.S. Clean Air Act (“CAA”). Compliance with these environmental protection requirements can impose significant cost and expense, including the cost of vessel modifications and implementation of certain operating procedures. Our fleet is young and modern and complies with all current requirements and we do not anticipate incurring significant vessel modification expenditures in the current or subsequent fiscal year to comply with such requirements. Under our Management Agreement, our Manager has assumed technical management responsibility for our fleet, including compliance with all applicable government and other regulations. If the Management Agreement with our Manager terminates, we would attempt to hire another party to assume this responsibility. In the event of termination, we might be unable to hire another party to perform these and other services for the present fee structure and related costs. However, due to the nature of our relationship with our Manager, we do not expect our Management Agreement to be terminated early.

A variety of governmental and private entities subject our vessels to both scheduled and unscheduled inspections. These entities include the local port authorities (such as the U.S. Coast Guard, harbor master or equivalent), classification societies, flag state administration (country of registry), charterers and terminal operators. Certain of these entities require us to obtain permits, licenses, financial assurances and certificates for the operation of our vessels. Failure to maintain necessary permits or approvals could require us to incur substantial costs or result in the temporary suspension of the operation of one or more of our vessels.

We believe that the heightened level of environmental and quality concerns among insurance underwriters, regulators and charterers is leading to greater inspection and safety requirements on all vessels and may accelerate the scrapping of older vessels throughout the drybulk shipping industry. Increasing environmental concerns have created a demand for vessels that conform to the stricter environmental standards. We are required to maintain operating standards for all of our vessels that emphasize operational safety, quality maintenance, continuous training of our officers and crews and compliance with U.S. and international regulations. Our manager and our vessels are certified in accordance with ISO 14001:2004 and ISO 50001:2011 relating to environmental standards and energy efficiency. Moreover we are in process to obtain additional class notation for our fleet for the prevention of sea and air pollution. We believe that the operation of our vessels is in substantial compliance with all environmental laws and regulations applicable to us as of the date of this annual report. However, because such laws and regulations are subject to frequent change and may impose increasingly stricter requirements, such future requirements could limit our ability to do business, increase our operating costs, force the early retirement of our vessels and/or affect their resale value, all of which could have a material adverse effect on our financial condition and results of operations. However, we believe that because our fleet is young and modern, we will not be exposed to the same level of risk faced by owners of older, less modern vessels.

The International Maritime Organization

Our vessels are subject to standards imposed by the IMO, the United Nations agency for maritime safety and the prevention of pollution by ships. The IMO has adopted regulations to reduce pollution in international waters, both from accidents and routine operations, and has negotiated international conventions that impose liability for oil pollution in international waters and a signatory’s territorial waters. For example, Annex III of the International Convention for the Prevention of Pollution from Ships (“MARPOL”) regulates the transportation of marine pollutants and imposes standards on packing, marking, labeling, documentation, stowage, quantity limitations and pollution prevention. These requirements have been expanded by the International Maritime Dangerous Goods Code, which imposes additional standards for all aspects of the transportation of dangerous goods and marine pollutants by sea.

In 1997, the IMO adopted Annex VI to MARPOL to address air pollution from vessels. Annex VI became effective in 2005, and sets limits on sulfur oxide and nitrogen oxide emissions from vessel exhausts and prohibits deliberate emissions of ozone depleting substances, such as chlorofluorocarbons. Annex VI also includes a global cap on the sulfur content of marine fuels and allows for the establishment of Emission Control Areas (“ECAs”) with more stringent controls on sulfur emissions. An ECA for North America took effect in 2012 and an ECA for the Caribbean took effect in 2014. In 2008, the IMO Marine Environment Protection Committee adopted amendments to Annex VI regarding particulate matter, nitrogen oxides and sulfur oxide emissions. These amendments, which entered into force in 2010, are designed to reduce air pollution from vessels by, among other things, (i) implementing a progressive reduction of sulfur oxide emissions from ships; and (ii) establishing new tiers of stringent nitrogen oxide emissions standards for new marine engines, depending on their date of installation. In addition, the European Union has established separate limitations on the sulfur content of marine fuels, and some European Union countries may be declared Emission Control Areas in the future, pursuant to Annex VI and its amendments. Starting January 1, 2015 reduced limits of sulfur

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content of fuel oil were introduced resulting to the use of lighter fuels, namely low sulfur Marine Gas Oil (“MGO”) for ECA passage. We have obtained International Air Pollution Prevention Certificates for all our vessels, and believe that maintaining compliance with the existing and known future Annex VI requirements will not have an adverse financial impact on the operation of our vessels. However, additional or new requirements, conventions, laws or regulations, including the adoption of additional ECAs, or other new or more stringent emissions requirements adopted by the IMO, the European Union, the United States or individual states, or other jurisdictions in which we operate, could require vessel modifications or otherwise increase the costs of our operations. Our vessels have the capacity to use low sulfur MGO.

The IMO adopted vessel energy efficient requirements, which took effect in January 2013. The requirements impose energy efficiency design on new vessels and require energy efficiency management plans for existing vessels. These requirements have not had and we do not expect they will have a material effect on our operations.

The IMO adopted new guidelines in 2012 under the revised Annex V to MARPOL, which prohibit discharge of garbage into the open sea, with certain exceptions, and require vessels to dispose of garbage at port garbage reception facilities. These guidelines became effective in January 2013. These requirements have not had and we do not expect they will have a material effect on our operations.

In 2001, the IMO adopted the International Convention on Civil Liability for Bunker Oil Pollution Damage, or the “Bunker Convention,” which imposes strict liability on ship owners for pollution damage in jurisdictional waters of ratifying states caused by discharges of bunker fuel. The Bunker Convention also requires registered owners of ships over 1,000 gross tons to maintain insurance in specified amounts to cover their liability for relevant pollution damage. The Bunker Convention became effective on November 21, 2008. The IMO also adopted a requirement which became effective in 2011 that vessels traveling through the Antarctic region (waters south of latitude 60 degrees south) must use lower density fuel. This requirement has not had and we do not expect that it will have a material effect on our operations, which do not involve Antarctic travel.

The operation of our vessels is also affected by the requirements set forth in the IMO’s International Safety Management (“ISM”) Code. The ISM Code requires vessel owners or any other person, such as a manager or bareboat charterer, who has assumed responsibility for the operation of a vessel from the vessel owner and on assuming such responsibility has agreed to take over all the duties and responsibilities imposed by the ISM Code, to develop and maintain an extensive SMS that includes the adoption of a safety and environmental protection policy setting forth instructions and procedures for safe operation and describing procedures for dealing with emergencies. The ISM Code requires that vessel operators obtain a “Safety Management Certificate” for each vessel they operate from the government of the vessel’s flag state. The certificate verifies that the vessel operates in compliance with its approved SMS. Currently, our Manager has the requisite documents of compliance and safety management certificates for each of the vessels in our fleet for which the certificates are required by the IMO. Our Manager is required to renew these documents of compliance and safety management certificates every five years. Compliance is externally verified on an annual basis for the Manager and between the second and third years for each vessel by the applicable flag state.

Although all our vessels are currently ISM Code-certified, such certification may not be maintained by all our vessels at all times. Non compliance with the ISM Code may subject such party to increased liability, invalidate existing insurance or decrease available insurance coverage for the affected vessels and result in a denial of access to, or detention in, certain ports. For example, the U.S. Coast Guard and EU authorities have indicated that vessels not in compliance with the ISM Code will be prohibited from trading in U.S. and EU ports.

The Maritime Labour Convention

The International Labour Organization’s Maritime Labour Convention was adopted in 2006 (“MLC 2006”). The basic aims of the MLC 2006 are to ensure comprehensive worldwide protection of the rights of seafarers (the Convention is sometimes called the Seafarers’ Bill of Rights) and, to establish a level playing field for countries and ship owners committed to providing decent working and living conditions for seafarers, protecting them from unfair competition on the part of substandard ships. The Convention was ratified on August 20, 2012, and all our vessels had been certified by August 2013, as required. The MLC 2006 requirements have not had, and we do not expect that the MLC 2006 requirements will have, a material effect on our operations.

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The U.S. Oil Pollution Act of 1990

The OPA 90 established an extensive regulatory and liability regime for the protection of the environment from oil spills and cleanup of oil spills. OPA 90 applies to discharges of any oil from a vessel, including discharges of fuel and lubricants. OPA 90 affects all owners and operators whose vessels trade in the United States, its territories and possessions or whose vessels operate in U.S. waters, which includes the United States’ territorial sea and its two hundred nautical mile exclusive economic zone. While our vessels do not carry oil as cargo, they do carry lubricants and fuel oil, or “bunkers,” which subjects our vessels to the requirements of OPA 90.

Under OPA 90, vessel owners, operators and bareboat charterers are “responsible parties” and are jointly, severally and strictly liable (unless the discharge of pollutants results solely from the act or omission of a third party, an act of God or an act of war) for all containment and clean-up costs and other damages arising from discharges, or threatened discharges, of pollutants from their vessels, including bunkers.

OPA 90 preserves the right to recover damages under other existing laws, including maritime tort law.

Effective July 31, 2009, the U.S. Coast Guard adopted regulations that adjust the limits of liability of responsible parties under OPA 90 to the greater of $1,000 per gross ton or $854,400 per non-tank vessel and established a procedure for adjusting the limits for inflation every three years. These limits of liability do not apply if an incident was directly caused by violation of applicable U.S. safety, construction or operating regulations or by a responsible party’s gross negligence or willful misconduct, or if the responsible party fails or refuses to report the incident or to cooperate and assist in connection with oil removal activities. As a result of the oil spill in the Gulf of Mexico resulting from the explosion of the Deepwater Horizon drilling rig, bills have been introduced in the U.S. Congress to increase the limits of OPA liability for all vessels, including tanker vessels. In August 2014, the U.S. Coast Guard also proposed regulations that would increase offshore spill liability limits under the OPA 90 to reflect increases in the Consumer Price Index.

All owners and operators of vessels over 300 gross tons are required to establish and maintain with the U.S. Coast Guard evidence of financial responsibility sufficient to meet their potential aggregate liabilities under OPA 90 and CERCLA, which is discussed below. An owner or operator of a fleet of vessels is required only to demonstrate evidence of financial responsibility in an amount sufficient to cover the vessel in the fleet having the greatest maximum liability under OPA 90 and CERCLA. We have complied with these requirements by providing a financial guarantee evidencing sufficient self-insurance. We have satisfied these requirements and obtained a U.S. Coast Guard certificate of financial responsibility for all of our vessels.

The U.S. Coast Guard’s regulations concerning certificates of financial responsibility provide, in accordance with OPA 90, that claimants may bring suit directly against an insurer or guarantor that furnishes certificates of financial responsibility and that the insurer or guarantor may only assert limited defenses. Certain organizations that had typically provided certificates of financial responsibility under pre-OPA 90 laws, including the major protection and indemnity organizations, have declined to furnish evidence of insurance for vessel owners and operators if they are subject to direct actions or required to waive insurance policy defenses. This requirement may limit the availability of coverage required by the U.S. Coast Guard and could increase our costs of obtaining this insurance for our fleet, as well as the costs of our competitors that also require such coverage.

We currently maintain, for each of our vessels, oil pollution liability coverage insurance in the amount of $1.0 billion per incident. Although our vessels carry a relatively small amount of bunkers, a spill of oil from one of our vessels could be catastrophic under certain circumstances. We also carry hull and machinery protection and indemnity insurance to cover the risks of fire and explosion. Losses as a result of fire or explosion could be catastrophic under some conditions. While we believe that our existing insurance coverage is adequate, not all risks can be insured and there can be no guarantee that any specific claim will be paid, or that we will always be able to obtain adequate insurance coverage at reasonable rates. If the damages from a catastrophic spill exceed our insurance coverage, the payment of those damages could have a severe, adverse effect on us and could possibly result in our insolvency.

OPA 90 requires the owner or operator of any non-tank vessel of 400 gross tons or more that carries oil of any kind as a fuel for main propulsion, including bunkers, to prepare and submit a response plan for each vessel. These vessel response plans include detailed information on actions to be taken by vessel personnel to prevent or mitigate any discharge or substantial threat of such a discharge of ore from the vessel due to operational activities or casualties. All of our vessels have U.S. Coast Guard-approved response plans.

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OPA 90 specifically permits individual states to impose their own liability regimes with regard to oil pollution incidents occurring within their boundaries, and some states have enacted legislation providing for unlimited liability for oil spills. In some cases, states which have enacted such legislation have not yet issued implementing regulations defining vessels owners’ responsibilities under these laws. We intend to comply with all applicable state regulations in the ports where our vessels call.

The U.S. Comprehensive Environmental Response, Compensation, and Liability Act

CERCLA applies to spills or releases of hazardous substances other than petroleum or petroleum products, whether on land or at sea. CERCLA imposes joint and several liability, without regard to fault, on the owner or operator of a ship, vehicle or facility from which there has been a release, and on other specified parties. Liability under CERCLA is generally limited to the greater of $300 per gross ton or $0.5 million per vessel carrying non-hazardous substances ($5.0 million for vessels carrying hazardous substances), unless the incident is caused by gross negligence, willful misconduct or a violation of certain regulations, in which case liability is unlimited. As described above, owners and operators of vessels must establish and maintain with the U.S. Coast Guard evidence of financial responsibility sufficient to meet their potential liabilities under CERCLA.

The U.S. Clean Water Act

The CWA prohibits the discharge of oil or hazardous substances in navigable waters and imposes strict liability in the form of penalties for any unauthorized discharges. It also imposes substantial liability for the costs of removal, remediation and damages and complements the remedies available under the more recently enacted OPA 90 and CERCLA, discussed above. The U.S. Environmental Protection Agency (“EPA”) regulates the discharge in U.S. ports of ballast water and other substances incidental to the normal operation of vessels. Under EPA regulations, commercial vessels greater than 79 feet in length are required to obtain coverage under the National Pollutant Discharge Elimination System (“NPDES”) Vessel General Permit, or “VGP,” to discharge ballast water and other wastewater into U.S. waters by submitting a Notice of Intent, or “NOI.” The VGP requires vessel owners and operators to comply with a range of best management practices and reporting and other requirements for a number of incidental discharge types and incorporates current U.S. Coast Guard requirements for ballast water management, as well as supplemental ballast water requirements. We have submitted NOIs for our vessels operating in U.S. waters and anticipate incurring costs to meet the requirements of the VGP. In addition, various states have enacted legislation restricting ballast water discharges and the introduction of non-indigenous species considered to be invasive. These and any similar ballast water discharge restrictions enacted in the future could increase the costs of operating in the relevant waters.

The EPA finalized the 2013 VGP in March 2013 which became effective in December 2013. The 2013 VGP requires most vessels to meet numeric ballast water discharge limits on a staggered schedule based on the first dry docking after January 1, 2014, or January 1, 2016 (depending on vessel ballast capacity). The 2013 VGP also imposes more strict technology-based limits in the form of best management practices for discharges related to oil-to-sea interfaces and requires routine inspections, monitoring, reporting, and recordkeeping. The 2013 VGP also requires vessel modifications and the installation of ballast treatment equipment which will significantly increase the cost of investments to comply with such requirements.

For the first time, the 2013 VGP contains numeric ballast water discharge limits for most vessels. The 2013 VGP also contains more stringent effluent limits for oil to sea interfaces and exhaust gas scrubber washwater, which will improve environmental protection of U.S. waters. EPA has also improved the efficiency of several of the VGP’s administrative requirements, including allowing electronic recordkeeping, requiring an annual report in lieu of the one-time report and annual noncompliance report, and requiring small vessel owners and/or operators to obtain coverage under the VGP by completing and agreeing to the terms of a Permit Authorization and Record of Inspection form. The 2013 vessel general permit requires the use of an environmentally acceptable lubricant for all oil to sea interfaces for vessels or alternative seal systems, unless technically infeasible. The intent of this new requirement is to reduce the environmental impact of lubricant discharges on the aquatic ecosystem by increasing the use of environmentally acceptable lubricants for vessels operating in waters of the United States.

The potential impact of lubricant discharges – those not from accidental spills -- to the aquatic ecosystem is substantial. Supply of environmentally acceptable lubricants could otherwise increase our investment and operating costs.

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U.S. Air Emission Requirements

In 2008, the U.S. ratified the amended Annex VI to the MARPOL Convention, addressing air pollution from ships, which went into effect in 2009. In December 2009, the EPA announced its intention to publish final amendments to the emission standards for new marine diesel engines installed on ships flagged or registered in the United States that are consistent with standards required under recent amendments to Annex VI of MARPOL. The new regulations include near-term standards that began in 2011 for newly built engines requiring more efficient use of engine technologies in use today and long-term standards beginning in 2016 requiring an 80 percent reduction in nitrogen oxide emissions below current standards. The CAA also requires states to adopt State Implementation Plans, or “SIPs,” designed to attain air quality standards. Several SIPs regulate emissions resulting from vessel loading and unloading operations by requiring the installation of vapor control equipment. In addition, some individual states, including California, have attempted to regulate vessel emissions within state waters. The California Air Resources Board recently adopted Ocean-Going Vessel (“OGV”) fuel content regulations that would apply to all vessels sailing within 24 nautical miles off the California coast and whose itineraries call for them to enter California ports, terminal facilities or estuarine waters. Changes to the OGV rule in 2012 included more stringent sulfur limits on marine gas oil used by commercial vessels in California waters. We do expect current U.S. requirements to have a significant effect on our operations for certain of our vessels.

New or more stringent air emission regulations which may be adopted could require significant capital expenditures to retrofit vessels and could otherwise increase our investment and operating costs.

Other environmental initiatives

The EU adopted legislation that (1) requires member states to refuse access to their ports by certain substandard vessels, according to vessel type, flag and number of previous detentions; (2) obliges member states to inspect at least 25% of vessels using their ports annually and increase surveillance of vessels posing a high risk to maritime safety or the marine environment; (3) provides the EU with greater authority and control over classification societies, including the ability to seek to suspend or revoke the authority of negligent societies; and (4) requires member states to impose criminal sanctions for certain pollution events, such as the unauthorized discharge of tank washings. It is also considering legislation that will affect the operation of vessels and the liability of owners for oil pollution. While we do not believe that the costs associated with our compliance with these adopted and proposed EU initiatives will be material, it is difficult to predict what additional legislation, if any, may be promulgated by the EU or any other country or authority.

The U.S. National Invasive Species Act (“NISA”) was enacted in 1996 in response to growing reports of harmful organisms being released into U.S. ports through ballast water taken on by vessels in foreign ports. Under NISA, the U.S. Coast Guard adopted regulations in July 2004 imposing mandatory ballast water management practices for all vessels equipped with ballast water tanks entering U.S. waters. These requirements can be met by performing mid-ocean ballast exchange, by retaining ballast water on board the vessel or by using environmentally sound alternative ballast water management methods approved by the U.S. Coast Guard. Mid-ocean ballast exchange is the primary method for compliance with the U.S.Coast Guard regulations, since holding ballast water can prevent vessels from performing cargo operations and alternative methods are still under development.

In 2012, the U.S. Coast Guard finalized amendments to its ballast water management regulations that impose stricter discharge limits for allowable concentrations of various invasive species and include approval process requirements for ballast water management systems. The regulations require ships calling at U.S. ports to treat ballast water, and regularly remove hull fouling. In particular, it is required for existing vessels to be equipped with approved ballast water treatment systems by their first dry-docking after January 2016 and for newbuilds with a keel laying date after December 2013 to be equipped upon their delivery. These regulations require modifications and installation of ballast water treatment equipment to our current vessels that call in U.S. ports, resulting in significant capital expenditures and an increase in our operational costs to call in U.S. ports.

Several U.S. states, such as California, adopted more stringent legislation or regulations relating to the permitting and management of ballast water discharges compared to EPA regulations. These requirements do not currently impact our operational costs, as such technologies are not currently available. However if a decision is made to comply with such requirements, we could incur additional investment during the installation of any such ballast water treatment plants.

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In 2004, the IMO adopted an International Convention for the Control and Management of Ships’ Ballast Water and Sediments (the “BWM Convention”). The BWM Convention’s implementing regulations call for a phased introduction of mandatory ballast water exchange requirements, to be replaced in time with mandatory concentration limits. The BWM Convention will not enter into force until 12 months after it has been adopted by 30 states, the combined merchant fleets of which represent not less than 35% of the gross tonnage of the world’s merchant shipping. As of January 2015, the BWM Convention had been adopted by 44 states, representing approximately 32.86% of the world’s tonnage. Each vessel in our current fleet has been issued a BWM plan Statement of Compliance by the classification society with respect to the applicable IMO regulations and guidelines.

If mid-ocean ballast exchange is made mandatory at the international level or if additional ballast water treatment requirements or options are instituted, significant capital expenditures to retrofit vessels and install ballast treatment equipment will be needed and our operating costs could increase.

Greenhouse Gas Regulation

In February 2005, the Kyoto Protocol to the United Nations Framework Convention on Climate Change entered into force. Pursuant to the Protocol, adopting countries are required to implement national programs to reduce emissions of certain gases, generally referred to as greenhouse gases, which are suspected of contributing to global warming. Currently, the emissions of greenhouse gases from international shipping are not subject to the Kyoto Protocol. However, a new treaty may be adopted in the future that includes restrictions on shipping emissions. International and multinational bodies or individual countries also may adopt their own climate change regulatory initiatives. The IMO recently announced its intention to develop reduction measures for greenhouse gases from international shipping. The European Union has indicated that it intends to propose an expansion of the existing European Union emissions trading scheme to include emissions of greenhouse gases from vessels, and the European Commission has recently ratified a regulation that would require ships over 5,000 gross tons docking in EU ports to monitor, report and verify greenhouse gas emissions. The proposed regulation would go into effect in 2018, pending approval by the European Parliament, which is expected in 2015. In the United States, the EPA is considering a 2007 petition from the California Attorney General and a coalition of environmental groups to regulate greenhouse gas emissions from ocean-going vessels under the Clean Air Act. These or other developments may result in regulations relating to the control of greenhouse gas emissions. Any passage of climate control legislation or other regulatory initiatives in the jurisdictions where we operate could result in financial impacts on our operations that we cannot predict with certainty at this time.

Vessel security regulations

Several initiatives have been introduced in recent years intended to enhance vessel security. On November 25, 2002, the Maritime Transportation Security Act of 2002 (the “MTSA”) came into effect. To implement certain portions of the MTSA, the U.S. Coast Guard issued regulations in July 2003 requiring the implementation of certain security requirements aboard vessels operating in waters subject to the jurisdiction of the United States. Similarly, in December 2002, amendments to SOLAS created a new chapter of the convention dealing specifically with maritime security. This new chapter came into effect in July 2004 and imposes various detailed security obligations on vessels and port authorities, most of which are contained in the newly created International Ship and Port Facilities Security Code, or “ISPS Code.” Among the various requirements are:

· on-board installation of automatic information systems to enhance vessel-to-vessel and vessel-to-shore communications;

· on-board installation of ship security alert systems;

· the development of vessel security plans; and

· compliance with flag state security certification requirements.

The U.S. Coast Guard regulations, intended to align with international maritime security standards, exempt non-U.S. vessels from MTSA vessel security measures, provided such vessels have on board a valid “International Ship Security Certificate” that attests to the vessel’s compliance with SOLAS security requirements and the ISPS Code. We have implemented the various security measures addressed by the IMO, SOLAS and the ISPS Code, and we have approved ISPS certificates and plans on board all our vessels, which have been certified by the applicable flag state.

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Seasonality

We operate our vessels in markets that have historically exhibited seasonal variations in demand and, as a result, in charter rates. This seasonality may result in quarter-to-quarter volatility in our results of operations. The market for marine drybulk transportation services is typically stronger in the fall and winter months in anticipation of increased consumption of coal and other raw materials in the northern hemisphere during the winter months. In addition, unpredictable weather patterns in these months tend to disrupt vessel scheduling and supplies of certain commodities. This seasonality could materially affect our business, financial condition, results of operations and ability to pay dividends.

C. Organizational Structure

Safe Bulkers, Inc. is a holding company with 45 subsidiaries, 24 of which are incorporated in Liberia, and 21 in the Republic of the Marshall Islands. Our subsidiaries are wholly-owned by us. A list of our subsidiaries as of February 24, 2015 is set forth in Exhibit 8.1 to this annual report.

D. Property, Plant and Equipment

We have no freehold or material leasehold interest in any real property. We occupy office space at Apt. D11, Les Acanthes, 6, Avenue des Citronniers, MC98000 Monaco, where our principal executive office is established. We have also established a representation office in Greece at 30-32 Avenue Karamanli, 16673 Voula, Athens, Greece. Other than our vessels, we do not have any material property. Our vessels are subject to priority mortgages, which secure our obligations under our various credit facilities. For further details regarding our credit facilities, refer to “Item 5. Operating and Financial Review and Prospects — B. Liquidity and Capital Resources — Credit Facilities.”

ITEM 4A UNRESOLVED STAFF COMMENTS

None.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and the notes to those statements included elsewhere in this annual report. This discussion includes forward-looking statements that involve risks and uncertainties. As a result of many factors, such as those set forth under “Item 3. Key Information—D. Risk Factors” and elsewhere in this annual report, our actual results may differ materially from those anticipated in these forward-looking statements. Please see the section “Forward-Looking Statements” at the beginning of this annual report.

Overview

Our business is to provide international marine drybulk transportation services by operating vessels in the drybulk sector of the shipping industry. As of February 24, 2015 our fleet consisted of 33 drybulk vessels with an aggregate capacity of 3,019,700 dwt and we had contracts for an additional 11 newbuild vessels. We deploy our vessels on a mix of period time and spot time charters according to our assessment of market conditions, adjusting the mix of these charters to take advantage of the relatively stable cash flow and high utilization rates associated with period time charters, or to profit from attractive spot time charter rates during periods of strong charter market conditions, or to maintain employment flexibility that the spot market offers during periods of weak time charter market conditions. As of February 24, 2015, 20 out of 33 vessels in our fleet were employed on period time charters and the remainder on spot time charters. We believe our customers, some of which have been chartering our vessels for over 25 years, enter into period time and spot time charters with us because of the quality of our young and modern vessels and our record of safe and efficient operations.

The average number of vessels in our fleet for the years ended December 31, 2012, 2013 and 2014 was 21.1, 26.6 and 31.0, respectively.

After delivery of our contracted newbuild vessels, our drybulk fleet will consist of 44 vessels and will have an aggregate carrying capacity of 3,906,400 dwt, assuming we do not acquire any additional vessels or dispose of any of our vessels.

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Our Manager

Our operations are managed by our Manager, Safety Management Overseas S.A., under the supervision of our executive officers and our board of directors. Under our Management Agreement, our Manager provides us with technical, administrative and commercial services for an initial term that expired on May 28, 2010, with automatic one-year renewals for an additional eight years, at our option. Our Manager is controlled by Polys Hajioannou.

A. Operating Results

Our operating results are largely driven by the following factors:

· Ownership days. We define ownership days as the aggregate number of days in a period during which each vessel in our fleet has been owned by us. Ownership days are an indicator of the size of our fleet over a period and affect both the amount of revenues and the amount of expenses that we record during a period.

· Available days. We define available days (also referred to as voyage days) as the total number of days in a period during which each vessel in our fleet was in our possession net of off-hire days associated with scheduled maintenance, which includes major repairs, drydockings, vessel upgrades or special or intermediate surveys. Available days are used to measure the number of days in a period during which vessels should be capable of generating revenues.

· Operating days. We define operating days as the number of our available days in a period less the aggregate number of days that our vessels are off-hire due to any reason, excluding scheduled maintenance. Operating days are used to measure the aggregate number of days in a period during which vessels actually generate revenues.

· Fleet utilization. We calculate fleet utilization by dividing the number of our operating days during a period by the number of our ownership days during that period. Fleet utilization is used to measure a company’s ability to efficiently find suitable employment for its vessels and minimize the number of days that its vessels are off-hire for reasons such as scheduled repairs, vessel upgrades, drydockings or special surveys. During the three years ended December 31, 2014, our average annual fleet utilization rate was approximately 98.97%. However, an increase in annual off-hire days could reduce our operating days, and therefore, our fleet utilization.

· Time charter equivalent rates. We define time charter equivalent rates, or “TCE rates,” as our charter revenues less commissions and voyage expenses during a period divided by the number of our available days during the period. TCE rate is a standard shipping industry performance measure used primarily to compare daily earnings generated by vessels on period time charters and spot time charters with daily earnings generated by vessels on voyage charters, because charter rates for vessels on voyage charters are generally not expressed in per day amounts, while charter rates for vessels on period time charters and spot time charters generally are expressed in such amounts. We have only rarely employed our vessels on voyage charters and, as a result, generally our TCE rates approximate our time charter rates.

The following table reflects our time charter revenues, commissions, voyage expenses, time charter equivalent revenue, available days and time charter equivalent rate for the periods indicated:

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		Year Ended December 31,
		2012		2013		2014
		(In thousands of U.S. dollars except available days and time charter equivalent rate)
Time charter revenues	$	187,557	$	191,520	$	159,900
Less commissions		3,261		4,799		5,806
Less voyage expenses		7,286		10,207		19,429
Time charter equivalent revenue	$	177,010	$	176,514	$	134,665
Available days		7,703		9,647		11,216
Time charter equivalent rate	$	22,979	$	18,297	$	12,007

· Daily vessel operating expenses. We define daily vessel operating expenses to include the costs for crewing, insurance, lubricants, spare parts, provisions, stores, repairs, maintenance, statutory and classification expense, drydocking, intermediate and special surveys, tonnage taxes and other miscellaneous items. Daily vessel operating expenses are calculated by dividing vessel operating expenses by ownership days for the relevant period. Our ability to control our fixed and variable expenses, including our daily vessel operating expenses, also affects our financial results. In addition, factors beyond our control, such as developments relating to market premiums for insurance and the value of the U.S. dollar compared to currencies in which certain of our expenses, including certain crew wages, are denominated can cause our vessel operating expenses to increase.

· Daily general and administrative expenses. We define daily general and administrative expenses to include daily management fees and daily public company expenses as defined below. Daily vessel general and administrative expenses are calculated by dividing general and administrative expenses by ownership days for the relevant period.

· Daily management fees. We define daily management fees to include the fixed and the variable fees payable to our Manager. Daily management fees are calculated by dividing management fees by ownership days for the relevant period.

· Daily public company expenses. We define daily public company expenses to include expenses incurred related to our operation as a public company such as professional fees, compensation paid to our directors and officers, listing fees and other miscellaneous expenses. Daily public company expenses are calculated by dividing public company expenses by ownership days for the relevant period.

The following table reflects our ownership days, available days, operating days, fleet utilization, TCE rates, daily vessel operating expenses, daily general and administrative expenses and daily management fees for the periods indicated:

	Year Ended December 31,
	2012			2013			2014
Ownership days		7,716			9,713			11,309
Available days		7,703			9,647			11,216
Operating days		7,654			9,615			11,174
Fleet utilization		99.20	%		98.99	%		98.81	%
TCE rates	$	22,979		$	18,297		$	12,007
Daily vessel operating expenses	$	4,476		$	4,320		$	4,477
Daily general and administrative expenses(1)	$	1,289		$	1,170		$	1,179
Daily management fees	$	1,001		$	863		$	793
Daily public company expenses	$	288		$	307		$	386

(1) Aggregate of daily management fees and daily public company expenses.

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Revenues

Our revenues are driven primarily by the number of vessels in our fleet, the number of days during which our vessels operate and the amount of daily charter rates that our vessels earn under our charters, which, in turn, are affected by a number of factors, including:

· levels of demand and supply in the drybulk shipping industry;

· the age, condition and specifications of our vessels;

· the duration of our charters;

· our decisions relating to vessel acquisitions and disposals;

· the amount of time that we spend positioning our vessels;

· the availability of our vessels, which is related to the amount of time that our vessels spend in drydock undergoing repairs and the amount of time required to perform necessary maintenance or upgrade work; and

· other factors affecting charter rates for drybulk vessels.

Revenue is recognized as earned on a straight-line basis over the charter period in respect of charter agreements that provide for varying rates. The difference between the revenue recognized and the actual charter rate is recorded either as unearned revenue or accrued revenue (see “—Unearned Revenue / Accrued Revenue” below). Commissions (address and brokerage), regardless of charter type, are always charged to us and are deferred and amortized over the related charter period and are presented as a separate line item in revenues to arrive at net revenues in the accompanying consolidated statements of income.

Revenues from our period time charters comprised 88.1%, 87.3% and 77.2% respectively, of our charter revenues for the years ended December 31, 2012, 2013 and 2014. The revenues from our spot time charters comprised 11.9%, 12.7 % and 22.8%, respectively, of our charter revenues for the years ended December 31, 2012, 2013 and 2014.

Unearned Revenue / Accrued Revenue

Unearned revenue as of December 31, 2014 includes: (i) cash received prior to the balance sheet date relating to services to be rendered after the balance sheet date amounting to $3.3 million as of December 31, 2014 and (ii) deferred revenue resulting from straight-line revenue recognition in respect of charter agreements that provide for variable charter rates amounting to $0.3 million, all of which will be recognized as revenue during 2015.

Unearned revenue as of December 31, 2013 includes: (i) cash received prior to the balance sheet date relating to services to be rendered after the balance sheet date amounting to $3.0 million as of December 31, 2013 and (ii) deferred revenue resulting from straight-line revenue recognition in respect of charter agreements that provide for variable charter rates amounting to $10.3 million, all of which was recognized as revenue during the period from January 1, 2014 until January 10, 2015.

Accrued revenue as of December 31, 2014 includes: (i) accrued revenue of $0.2 million that represents revenue earned prior to cash being received and (ii) accrued revenue of $0.5 million that represents revenue earned prior to cash being received in respect of charter agreements that provide for variable charter rates.

No accrued revenue was recognized during the year ended December 31, 2013.

Commissions

We pay commissions currently ranging up to 5.0% on our period time and spot time charters, to unaffiliated ship brokers, other brokers associated with our charterers and to our charterers. These commissions are directly related to our revenues, from which they are deducted. The amount of our total commissions to unaffiliated ship brokers and other brokers associated with our charterers and to our charterers might grow, as revenues increase

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due to improving market conditions and delivery of our 11 remaining contracted newbuild vessels, or decrease as a result of deteriorating market conditions. These commissions do not include fees we pay to our Manager, which are described under “Item 4. Information on the Company—B. Business Overview—Management of Our Fleet.”

Voyage Expenses

We charter our vessels primarily through period time charters and spot time charters under which the charterer is responsible for most voyage expenses, such as the cost of bunkers, port expenses, agents’ fees, canal dues, extra war risks insurance and any other expenses related to the cargo. We are responsible for the remaining voyage expenses such as draft surveys, hold cleaning, bunkers during ballast period or for vessel repositioning, postage and other minor miscellaneous expenses related to the voyage. As our past period time charter contracts expire we expect that our voyage expenses will continue to increase in the future due to the increased number of vessels operated in the spot market, which involves increased vessel repositioning costs. We generally do not employ our vessels on voyage charters under which we would be responsible for all voyage expenses, although during 2014 two of our vessels were employed under an equal number of voyage charters. We also record within voyage expenses the 4% United States federal tax we pay in respect of our U.S. source shipping income (imposed on gross income without the allowance for any deductions). In many cases, we recover these taxes from the charterers, and we record such recovered amounts within revenues.

Vessel Operating Expenses

Vessel operating expenses include costs for crewing, insurance, lubricants, spare parts, provisions, stores, repairs, maintenance, statutory and classification expense, drydocking, intermediate and special surveys, tonnage taxes and other minor miscellaneous items. We expect that our vessel operating expenses will continue to increase in the future as our fleet grows. Additionally, our crewing costs, which are a significant part of our vessel operating expenses, are expected to continue to increase in the future due to the limited supply and increase in demand for well-qualified crew. Furthermore, we expect that insurance costs, drydocking and maintenance costs will increase as our vessels age. A portion of our vessel operating expenses including crew wages paid to our Greek crew members are in currencies other than the U.S. dollar. These expenses may increase or decrease as a result of fluctuation of the U.S. dollar against these currencies.

Depreciation

We depreciate our drybulk vessels on a straight-line basis over the expected useful life of each vessel. Depreciation is based on the cost of the vessel less its estimated residual value. We estimate the useful life of our vessels to be 25 years from the date of initial delivery from the shipyard. Secondhand vessels are depreciated from the date of their acquisition through their remaining estimated useful life. Furthermore, we estimate the residual value of our vessels is equal to the product of its lightweight tonnage and estimated scrap rate, which is estimated to be $182 per light-weight ton.

Vessels, Net

Vessels are stated at their historical cost, which consists of the contracted purchase price and any direct material expenses incurred upon acquisition (including improvements, on-site supervision expenses incurred during the construction period if the vessels are newbuilds, commissions paid, delivery expenses and other expenditures to prepare the vessel for her initial voyage), less accumulated depreciation. Financing costs incurred during the construction period of the vessels if the vessels are newbuilds are also capitalized and included in the vessels’ cost. Certain subsequent expenditures for conversions and major improvements are also capitalized if it is determined that they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels.

As of December 31, 2013 and 2014, we capitalized interest amounting to $467,019 and $263,748 respectively.

Under our Management Agreement with our Manager, for purchases of vessels including with respect to each of our 12 remaining contracted newbuild vessels as of December 31, 2014, we will pay our Manager an acquisition fee of 1.0% on the contract price of the relevant vessel for our Manager’s services in connection with finalizing the contract and arranging for various regulatory approvals. In addition, according to an agreement between us and our Manager, we pay our Manager a supervision fee in respect of each newbuild, of which 50% is payable upon the signing of the relevant supervision agreement, and 50% upon successful completion of the sea trials of

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each newbuild, for the on-premises supervision of all newbuilds we have agreed to acquire pursuant to shipbuilding contracts, memoranda of agreement, or otherwise. As of May 28, 2008 the supervision fee was $375,000, and as of May 29, 2011 the supervision fee was adjusted to $550,000. These amounts charged by our Manager are included as part of the vessel cost.

General and Administrative Expenses

General and administrative expenses consist of management fees paid to our Manager, which is a related party, in relation to management services offered, and expenses incurred relating to us being a public company, which include the preparation of disclosure documents, legal and accounting costs, including costs related to compliance with the Sarbanes-Oxley Act of 2002, director and officer compensation and director and officer liability insurance costs.

In connection with our initial public offering which was completed in June 2008, we entered into a two year initial term Management Agreement with our Manager, with automatic one-year renewals for an additional eight years. The fees were fixed for the initial two-year period; the fixed fee at $575 per day per vessel and the variable fee at 1.0% on gross freight, charter hire, ballast bonus and demurrage and were to be adjusted thereafter every year by agreement between us and our Manager. The initial term of two years expired on May 28, 2010 and as of May 29, 2010, pursuant to an agreement between us and our Manager, the variable fee on gross freight, charter hire, ballast bonus and demurrage was adjusted to 1.25%. As of May 29, 2011, pursuant to an agreement between us and our Manager, the fixed fee was adjusted to $700 per day per vessel from $575 per day. As of May 29, 2014, pursuant to an agreement between us and our Manager, the fixed fee was adjusted to $800 per day per vessel from $700 per day. No other readjustment has been made to any other of the fees paid by us to our Manager under the Management Agreement.

Pursuant to the terms of the Management Agreement, the Manager provides executive officers at no cost. To the extent that the Manager does not provide executive officers, but instead we employ executive officers directly, the management fee is reduced by an amount equal to the aggregate cost of compensation and benefits and other incidental costs borne as a result of employing the executive officers directly.

In addition to the fees described above, we pay our Manager the acquisition fees with respect to vessel purchases and newbuilds described above in “— Vessels, Net” and sales fees with respect to vessel sales equal to 1% of the sale price of each vessel. Such fees remained unchanged.

Although we have not, within the past 10 years, deployed our vessels on bareboat charters and do not currently have any plans to deploy our vessels on bareboat charters, under our Management Agreement, we will also provide our Manager with a fee of $250 per day per vessel deployed on bareboat charters for providing commercial, technical and administrative services.

We expect that the amount of our total management fees will increase following the delivery of our 11 contracted newbuild vessels as of February 24, 2015, and as a result of potential fleet expansion in the future.

Interest Expense and Other Finance Costs

We incur interest expense on outstanding indebtedness under our existing loan and credit facilities, which we include in interest expense. We also incurred financing costs in connection with establishing those facilities, which are deferred and amortized over the period of the facility. The amortization of the finance costs is included in amortization and write-off of deferred finance charges. We will incur additional interest expense in the future on our outstanding borrowings and under future borrowings.

Inflation

Inflation has only a moderate effect on our expenses given current economic conditions. In the event that significant global inflationary pressures appear, these pressures would increase our operating, voyage, administrative and financing expenses.

Early Redelivery Income/(Cost), Net

Early redelivery cost reflects amounts payable to charterers for early termination of a period time charter resulting from our request for early redelivery of a vessel. We generally request such early redelivery when we

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would like to take advantage of a strong period time charter market environment and believe that an opportunity to enter into a similarly priced period time charter is not likely to be available when the relevant vessel is scheduled to be redelivered.

Early redelivery income reflects amounts payable to us for early termination of a period time charter resulting from a charterer’s request for early redelivery of a vessel. We may accept such requests from charterers when we believe that we are compensated by a substantial portion of the contracted revenue, reduce our third party risk or maintain the opportunity to re-employ the vessel either in the spot market or in the period time charter market at adequate levels.

We have entered into such arrangements for early redelivery, and incurred such costs or earned such income in the past and we may continue to do so in the future, depending on market conditions.

On April 22, 2013, we took early redelivery of the Sofia in advance of the contracted earliest redelivery date of September 19, 2013. In connection with this early redelivery, we recognized early redelivery income of $3.0 million, comprised of cash compensation paid by the relevant charterer. No replacement charter contract had been secured at the time of conclusion of the early redelivery agreement. The vessel was subsequently fixed in the spot market at a gross daily charter rate of $11,000.

On May 3, 2013, we took early redelivery of the Vassos in advance of the contracted earliest redelivery date of October 1, 2013. In connection with this early redelivery, we recognized early redelivery income of $2.3 million, comprised of cash compensation paid by the relevant charterer of $2.6 million, net of commissions, less accrued revenue of $0.3 million. No replacement charter contract had been secured at the time of conclusion of the early redelivery agreement. The vessel was subsequently fixed in the spot market at a gross daily charter rate of $9,300.

On May 16, 2013, we took early redelivery of the Katerina in advance of the contracted earliest redelivery date of January 1, 2014. In connection with this early redelivery, we recognized early redelivery income of $1.8 million, comprised of cash compensation paid by the relevant charterer of $2.1 million, net of commissions, less accrued revenue of $0.3 million. No replacement charter contract had been secured at the time of conclusion of the early redelivery agreement. The vessel was subsequently fixed in the spot market at a gross daily charter rate of $9,500.

Critical Accounting Policies

We prepared our consolidated financial statements in accordance with U.S. GAAP, which requires us to make estimates in the application of our accounting policies based on our best assumptions, judgments and opinions. We base these estimates on the information currently available to us and on various other assumptions we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. Following is a discussion of the accounting policies that involve a high degree of judgment and the methods of their application. For a further description of our material accounting policies, please read Note 2 to our financial statements included elsewhere in this annual report.

Impairment of Long-lived Assets

The Company reviews for impairment its long-lived assets held and used whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. When the estimate of undiscounted cash flows, excluding interest charges, expected to be generated by the use of the asset is less than its carrying amount, we are required to evaluate the asset for an impairment loss. Measurement of the impairment loss is based on the fair value of the asset.

The carrying values of our vessels may not represent their fair market value at any point in time since the market prices of secondhand vessels tend to fluctuate with changes in charter rates and the cost of newbuilds. Historically, both charter rates and vessel values tend to be cyclical. Declines in the fair market value of vessels, prevailing market charter rates, vessel sale and purchase considerations, and regulatory changes in drybulk shipping industry, changes in business plans or changes in overall market conditions that may adversely affect cash flows are considered as potential impairment indicators. In the event the independent market value of a vessel is lower than its carrying value, we determine undiscounted projected net operating cash flow for such vessel and compare it to the vessel carrying value.

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The undiscounted projected net operating cash flows for each vessel are determined by considering the charter revenues from existing time charters for the fixed vessel days and an estimated daily time charter equivalent for the unfixed days (based on our company budgeted charter rate for the first 12 months and the most recent 10 year historical average of similar size vessels for the period thereafter) over the remaining estimated life of the vessel, net of brokerage commissions, expected outflows for vessels’ maintenance, vessel operating expenses, assuming an average annual inflation rate and management fees. The undiscounted cash flows incorporate various factors such as estimated future charter rates, future drydocking costs, estimated vessel operating costs assuming an average annual inflation rate of 3%, estimated vessel utilization rates, estimated remaining lives of the vessels, assumed to be 25 years from the initial delivery of the vessel from the shipyard and estimated salvage value of the vessels at $182 per light-weight ton. These assumptions are based on historical trends as well as future expectations. Although management believes that the assumptions used to evaluate potential impairment are reasonable and appropriate, such assumptions are highly subjective.

Our analysis of the impairment test performed for the year ended December 31, 2013, indicated a variance of plus 9%, between actual net receipts during 2014 and net receipts forecast by the Company for the same period. Our analysis of the impairment test performed for the year ended December 31, 2014, which also involved sensitivity tests on the future time charter rates (which is the input that is most sensitive to variations), allowing for variances of up to 26% depending on vessel type on time charter rates from the Company’s base scenario, indicated no impairment on any of our vessels.

No impairment loss was recorded for any of the periods presented.

Recent Accounting Pronouncements

Refer to Note 2 of the consolidated financial statements included elsewhere in this annual report.

Results of Operations

Year ended December 31, 2014 compared to year ended December 31, 2013

During the year ended December 31, 2014, we had an average of 31.0 drybulk vessels in our fleet. During the year ended December 31, 2013, we had an average of 26.6 drybulk vessels in our fleet.

During the year ended December 31, 2014, we acquired Lake Despina, a Capesize class newbuild vessel, Kypros Land , Kypros Sea and Kypros Unity, all three Panamax class newbuild vessels.

During the year ended December 31, 2013, we acquired the newbuild vessel Zoe and the secondhand vessel Paraskevi both Panamax class vessels, Xenia, a Post-Panamax class vessel, and Pedhoulas Commander, a Kamsarmax class vessel.

Revenues

Revenues decreased by 16.5%, or $31.6 million, to $159.9 million during the year ended December 31, 2014 from $191.5 million during the year ended December 31, 2013, as result of the net effect of the following factors: (i) a decrease in the TCE rate for 2014 by 34.4% to $12,007, compared to $18,297 for 2013 due to the decrease in prevailing charter rates, and (ii) an increase in operating days for the year ended December 31, 2014 by 16.2% to 11,174 days, compared to 9,615 days for the year ended December 31, 2013, due to deliveries of the vessels Lake Despina, Kypros Land, Kypros Sea and Kypros Unity.

Commissions

Commissions to unaffiliated ship brokers, other brokers associated with our charterers and our charterers during the year ended December 31, 2014 amounted to $5.8 million, an increase of $1.0 million, or 20.8%, compared to $4.8 million during the year ended December 31, 2013, due to the increase in spot charters (which generally bear higher commissions), during the year ended December 31, 2014.

Vessel operating expenses

Vessel operating expenses increased by 21% to $50.6 million during the year ended December 31, 2014 from $42.0 million during the year ended December 31, 2013 as a consequence of the increase in ownership days by

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16% from 9,713 in 2013 to 11,309 in 2014. Vessel operating expenses increase is primarily due to the effect of the following factors:

(i) the increase in crewing cost by 19% to $26.2 million in 2014, compared to $22.0 million in 2013, primarily due to the increased number of ownership days;

(ii) the increase in cost for spares, stores and provisions by 21% to $9.1 million in 2014, compared to $7.5 million in 2013, attributed to increased use of spares for repairs;

(iii) the increase in cost for lubricants by 25% to $3.5 million in 2014, compared to $2.8 million in 2013 due to the increased number of ownership days in 2014 compared to 2013;

(iv) the increase in cost for insurances by 17% to $4.1 million, compared to $3.5 million mainly due to the increased number of ownership days; and

(v) the increase in repairs and dry-docking costs by 34% to $4.3 million in 2014, compared to $3.2 million in 2013, due to the increased number of dry-dockings of vessels in 2014 compared to 2013.

Consequently, daily operating expenses, which are defined as operating expenses per vessel per ownership day, increased by 3.6% to $4,477 during the year ended December 31, 2014 from $4,320 during the year ended December 31, 2013.

Depreciation

Depreciation expense increased by 15% to $43.1 million during the year ended December 31, 2014, compared to $37.4 million during the year ended December 31, 2013, due to the increase in the average number of vessels from 26.6 during the year ended December 31, 2013 to 31.0 during the year ended December 31, 2014.

General and administrative expenses

General and administrative expenses increased by 17% to $13.3 million during the year ended December 31, 2014, compared to $11.4 million during the year ended December 31, 2013. The increase of $1.9 million is due to the effect of: (i) the increase in the management fees charged by our Manager to $9.0 million in 2014 from $8.4 million in 2013 mainly as a result of the increased ownership days of 11,309 in 2014, from 9,713 in 2013; and (ii) the increase in expenses incurred related to our operation as a public company of $4.4 million in 2014, from $3.0 million in 2013.

Daily general and administrative expenses increased by 1% to $1,179, during the year ended December 31, 2014 from $1,170, during the year ended December 31, 2013.

Daily management fees, which are the part of daily general and administrative expenses payable to our Manager, decreased by 8% to $793 during the year ended December 31, 2014, from $863 during the year ended December 31, 2013.

Daily public company expenses, which are the part of daily general and administrative expenses payable for our operations as a public company increased by 26% to $386 during the year ended December 31, 2014, from $307 during the year ended December 31, 2013.

Interest expense

Interest expense decreased by 9% to $8.3 million during the year ended December 31, 2014, compared to $9.1 million, during the year ended December 31, 2013. This is the result of the combination of: (i) the decrease in average loans outstanding of $499.0 million during the year ended December 31, 2014, compared to the average loans outstanding of $542.1 million during the year ended December 31, 2013 and (ii) the decrease in the weighted average interest rate of our outstanding indebtedness of 1.698% per annum (“p.a.”) for the year ended December 31, 2014 compared to the weighted average interest rate of our outstanding indebtedness of 1.737% p.a. for the year ended December 31, 2013, due to lower prevailing LIBOR rates; and (iii) lower capitalized interest expenses of $0.3 million during the year ended December 31, 2014 compared to $0.5 million during the

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year ended December 31, 2013. The total principal amount of loans outstanding as of December 31, 2014 was $469.6 million, compared to $508.3 million as of December 31, 2013.

(Loss)/Gain on derivatives

Loss on derivatives of $2.0 million during the year ended December 31, 2014 compared to gain of $0.8 million during the year ended December 31, 2013, resulted from (i) a decrease in the realized loss of interest rate derivatives of $4.1 million during the year ended December 31, 2014 from $5.5 million during the same period of 2013, and (ii) a decrease in the gain from the mark-to-market valuation of interest rate swap transactions of $2.1 million for the year ended December 31, 2014 compared to $6.3 million for the year ended December 31, 2013.

As of December 31, 2014, the aggregate notional amount of interest rate swap transactions outstanding was $263.8 million, compared to $382.2 million as of December 31, 2013. These swaps economically hedged the interest rate exposure of 64.7% of the Company’s aggregate loans outstanding as of December 31, 2014 that bear interest at LIBOR. The mark-to-market valuation of these interest rate swap transactions at the end of each period is affected by the prevailing comparable interest rates at that time.

Early redelivery income/(cost), net

During the year ended December 31, 2014, we recorded early redelivery cost, relating to the early termination of period time charters of our vessels, of $0.5 million compared to $7.1 million early redelivery income during the year ended December 31, 2013. Early redelivery cost during the year ended December 31, 2014 resulted from various minor early redelivery agreements. Early redelivery income during the year ended December 31, 2013 resulted from (i) on April 22, 2013, we took early redelivery of the Sofia, instead of on September 19, 2013, and in connection with this early redelivery, we recognized early redelivery income of $3.0 million, comprised of cash compensation paid by the relevant charterer, (ii) on May 3, 2013, we took early redelivery of the Vassos, instead of on October 1, 2013, and in connection with this early redelivery, we recognized early redelivery income of $2.3 million, comprised of cash compensation paid by the relevant charterer of $2.6 million, net of commissions, less accrued revenue of $0.3 million, and (iii) on May 16, 2013, we took early redelivery of the Katerina, instead of January 1, 2014, and in connection with this early redelivery, we recognized early redelivery income of $1.8 million, comprised of cash compensation paid by the relevant charterer of $2.1 million, net of commissions, less accrued revenue of $0.3 million.

Voyage expenses

During the year ended December 31, 2014, we recorded voyage expenses of $19.4 million, compared to $10.2 million during the year ended December 31, 2013, as a result of increased vessel repositioning expenses as more vessels were employed on the spot charter market.

Loss from inventory valuation

During the year ended December 31, 2014, we recorded a loss of $4.0 million from the valuation of the bunkers remaining on board our vessels, as a result of the decline of bunker market prices during this period. No loss from inventory valuation was recorded during the year ended December 31, 2013.

Year ended December 31, 2013 compared to year ended December 31, 2012

During the year ended December 31, 2013, we had an average of 26.6 drybulk vessels in our fleet. During the year ended December 31, 2012, we had an average of 21.1 drybulk vessels in our fleet.

During the year ended December 31, 2013, we acquired the newbuild vessel Zoe and the secondhand vessel Paraskevi both Panamax class vessels, Xenia, a Post-Panamax class vessel, and Pedhoulas Commander, a Kamsarmax class vessel.

During the year ended December 31, 2012, we acquired the newbuild vessels Efrossini, a Panamax class vessel, Venus Horizon, a Post-Panamax class vessel, and Pedhoulas Builder, Pedhoulas Fighter, and Pedhoulas

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Farmer, all Kamsarmax class vessels. Additionally, during November 2012 we acquired the Koulitsa, a secondhand Panamax class vessel.

Revenues

Revenues increased by 2%, or $3.9 million, to $191.5 million during the year ended December 31, 2013 from $187.6 million during the year ended December 31, 2012, as result of the net effect of the following factors: (i) an increase in operating days for the year ended December 31, 2013 by 26% to 9,615 days, compared to 7,654 days for the year ended December 31, 2012, due to deliveries of the vessels Paraskevi in January 2013, Pedhoulas Commander in March 2013 and Zoe and Xenia in July 2013, (ii) a decrease in the TCE rate for 2013 by 20.4% to $18,297, compared to $22,979 for 2012 due to the decrease in prevailing charter rates, and (iii) due to the amortization of $16.7 million of cash compensation net of commissions, accrued and deferred revenue in relation to the agreements concluded with the charterers of the Stalo and Eleni.

Commissions

Commissions to unaffiliated ship brokers, other brokers associated with our charterers and our charterers during the year ended December 31, 2013 amounted to $4.8 million, an increase of $1.5 million, or 45%, compared to $3.3 million during the year ended December 31, 2012, due to the increase in our revenues and an increase in our average contracted commissions, which were increased to 2.5% from 1.74% for the years ended December 31, 2013 and 2012, respectively.

Vessel operating expenses

Vessel operating expenses increased by 22% to $42.0 million during the year ended December 31, 2013 from $34.5 million during the year ended December 31, 2012 as a consequence of the increase in ownership days by 26% from 7,716 in 2012 to 9,713 in 2013. Vessel operating expenses increase is primarily due to the net effect of the following factors:

(i) the increase in crewing cost by 28% to $22.0 million in 2013, compared to $17.2 million in 2012, primarily due to the increased number of ownership days;

(ii) the increase in cost for spares, stores and provisions by 9% to $7.5 million in 2013, compared to $6.9 million in 2012, attributed to increased use of spares for repairs and the increased number of initial supplies for four vessels delivered in 2013 compared to the six delivered in 2012;

(iii) the decrease in cost for lubricants to $2.8 million in 2013, compared to $3.3 million in 2012 as the net effect of the increased number of ownership days and the lower costs for lubricants in 2013 compared to 2012;

(iv) the increase in cost for insurances by 25% to $3.5 million, compared to $2.8 million mainly due to the increased number of ownership days; and

(v) the increase in repairs and dry-docking costs by 28% to $3.2 million in 2013, compared to $2.5 million in 2012, as a net effect of the reduced repairs costs and the increased dry-docking costs of vessels in 2013 compared to 2012.

Consequently, daily operating expenses, which are defined as operating expenses per vessel per ownership day, decreased by 3.5% to $4,320 during the year ended December 31, 2013 from $4,476 during the year ended December 31, 2012.

Depreciation

Depreciation expense increased by 16% to $37.4 million during the year ended December 31, 2013, compared to $32.3 million during the year ended December 31, 2012, due to the increase in the average number of vessels from 21.1 during the year ended December 31, 2012 to 26.6 during the year ended December 31, 2013.

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General and administrative expenses

General and administrative expenses increased by 15% to $11.4 million during the year ended December 31, 2013, compared to $9.9 million during the year ended December 31, 2012. The increase of $1.5 million is due to the net effect of: (i) the increase in the management fees charged by our Manager to $8.4 million in 2013 from $7.7 million in 2012 mainly as a result of the increased ownership days of 9,713 in 2013, from 7,716 in 2012; and (ii) the increase in expenses incurred related to our operation as a public company of $3.0 million in 2013, from $2.2 million in 2012.

Daily general and administrative expenses decreased by 9% to $1,170, during the year ended December 31, 2013 from $1,289, during the year ended December 31, 2012.

Daily management fees, which are the part of daily general and administrative expenses payable to our Manager, decreased by 14% to $863 during the year ended December 31, 2013, from $1,001 during the year ended December 31, 2012.

Daily public company expenses, which are the part of daily general and administrative expenses payable for our operations as a public company increased by 7% to $307 during the year ended December 31, 2013, from $288 during the year ended December 31, 2012.

Interest expense

Interest expense remained almost unchanged during the year ended December 31, 2013 at $9.1 million, compared to the year ended December 31, 2012. This is the result of the combination of: (i) the slight increase in average loans outstanding of $542.1 million during the year ended December 31, 2013, compared to the average loans outstanding of $533.7 million during the year ended December 31, 2012 and (ii) the decrease in the weighted average interest rate of our outstanding indebtedness of 1.737% per annum (“p.a.”) for the year ended December 31, 2013 compared to the weighted average interest rate of our outstanding indebtedness of 1.850% p.a. for the year ended December 31, 2012, due to lower prevailing LIBOR rates; and (iii) lower capitalized interest expenses of $0.5 million during the year ended December 31, 2013 compared to $1.0 million during the year ended December 31, 2012. The total principal amount of loans outstanding as of December 31, 2013 was $508.3 million, compared to $615.7 million as of December 31, 2012.

(Loss)/Gain on derivatives

Gain on derivatives of $0.8 million during the year ended December 31, 2013 compared to loss of $5.4 million during the year ended December 31, 2012, resulted from (i) a decrease in the realized loss of interest rate derivatives of $5.5 million during the year ended December 31, 2013 from $8.2 million during the same period of 2012, and (ii) an increase in the gain from the mark-to-market valuation of interest rate swap transactions of $6.3 million for the year ended December 31, 2013 compared to $2.8 million for the year ended December 31, 2012.

As of December 31, 2013, the aggregate notional amount of interest rate swap transactions outstanding was $382.2 million, compared to $505.8 million as of December 31, 2012. These swaps economically hedged the interest rate exposure of 86.6% of the Company’s aggregate loans outstanding as of December 31, 2013 that bear interest at LIBOR. The mark-to-market valuation of these interest rate swap transactions at the end of each period is affected by the prevailing comparable interest rates at that time.

Early redelivery income/(cost), net

During the year ended December 31, 2013, we recorded early redelivery income, relating to the early termination of period time charters of our vessels, of $7.1 million compared to $11.7 million early redelivery income during the year ended December 31, 2012. Early redelivery income during the year ended December 31, 2013 resulted from the following: (i) on April 22, 2013, we took early redelivery of the Sofia, instead of on September 19, 2013, and in connection with this early redelivery, we recognized early redelivery income of $3.0 million, comprised of cash compensation paid by the relevant charterer, (ii) on May 3, 2013, we took early redelivery of the Vassos, instead of on October 1, 2013, and in connection with this early redelivery, we recognized early redelivery income of $2.3 million, comprised of cash compensation paid by the relevant charterer of $2.6 million, net of commissions, less accrued revenue of $0.3 million, and (iii) on May 16, 2013, we took early redelivery of the Katerina, instead of January 1, 2014, and in connection with this early

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redelivery, we recognized early redelivery income of $1.8 million, comprised of cash compensation paid by the relevant charterer of $2.1 million, net of commissions, less accrued revenue of $0.3 million.

Voyage expenses

During the year ended December 31, 2013, we recorded voyage expenses of $10.2 million, compared to $7.3 million during the year ended December 31, 2012, as a result of increased vessel repositioning expenses.

B. Liquidity and Capital Resources

As of December 31, 2014, we had $122.5 million in cash and restricted cash, of which $107.3 million consisted of cash and cash equivalents, $10.9 million consisted of short-term restricted cash and $4.3 million was long-term restricted cash.

As of February 24, 2015, we had $158.7 million in cash, time deposits and restricted cash of which $118.1 million consisted of cash and cash equivalents, $36.3 million was short-term restricted cash and $4.3 million was long-term restricted cash.

As of December 31, 2014, we had aggregate debt outstanding of $469.6 million, of which $17.1 million was payable within the next 12 months. As of December 31, 2014, we had an aggregate additional borrowing capacity of $154.7 million available under existing revolving credit facilities as well as $220.0 million available under committed loan facilities for 12 newbuild vessels.

As of February 24, 2015, we had an aggregate additional borrowing capacity of $119.9 million available under existing revolving credit facilities, as well as $204.0 million available under committed loan facilities for 12 newbuild vessels.

As of December 31, 2014, our commitments for vessel acquisitions were $304.6 million, consisting of $156.9 million payable in 2015, $127.4 million payable in 2016, and $20.3 million payable in 2017. As of December 31, 2014 the existing fleet consisted of 32 vessels and we had contracted to acquire 12 newbuilds, six of which were scheduled to be delivered in 2015, five in 2016 and one in 2017.

As of February 24, 2015, our commitments for vessel acquisitions, before minor adjustments for shipyards’ costs related to delayed deliveries of six newbuild vessels, were $277.7 million, consisting of $95.8 million payable in 2015, $91.7 million payable in 2016, $69.9 million payable in 2017 and $20.3 million payable in 2018. As of February 24, 2015, the existing fleet consisted of 33 vessels and we had contracted to acquire 11 newbuild vessels, three of which were scheduled to be delivered in 2015, four in 2016, three in 2017 and one in 2018.

Our primary liquidity needs are to fund capital expenditures in relation to newbuild contracts, financing expenses, debt repayment, vessel operating expenses, general and administrative expenses and dividend payments to our stockholders. We anticipate that our primary sources of funds will be existing cash and cash equivalents as of December 31, 2014 of $107.3 million, short-term restricted cash of $10.9 million, long-term restricted cash of $4.3 million, additional undrawn borrowing capacity of $154.7 million, cash from operations and possibly, additional indebtedness available under committed loan facilities of $220.0 million for 12 newbuild vessels upon their delivery to us, and equity financing.

We currently estimate that the contracted cash flow from operations, existing cash and cash equivalents, existing undrawn loan and revolving credit facilities and commitments and additional indebtedness secured by committed loan facilities for 11 remaining newbuild vessels, will be sufficient to fund the operations of our fleet, including our working capital requirements, and the capital expenditure requirements through the end of 2015. However, during 2016 or 2017, we may seek additional indebtedness to partially fund our capital expenditure requirements in order to maintain a strong cash position. To the extent that market conditions deteriorate, charterers may default or seek to renegotiate charter contracts, and vessel valuations may decrease, resulting in a breach of our debt covenants. In such case our contracted revenues may decrease and we may be required to make additional prepayments under existing loan facilities, resulting in additional financing needs. If we acquire additional vessels, our capital expenditure requirements will increase and we will need to rely on existing cash and time deposits, operating cash surplus and existing undrawn loan commitments. If we are unable to obtain additional indebtedness, or to find alternative financing, we will not be capable of funding our commitments for capital expenditures relating to our contracted newbuild vessels. A failure to fulfill our

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commitment would generally result in a forfeiture of the advances we paid to the shipyard with respect to the contracted newbuild vessels. In addition, we may also be liable for other damages for breach of contract. Examples of such liabilities could include payments to the shipyard or the third party seller for the difference between the forfeited advance and the amount that remains to be paid by us if the shipyard or the third party seller cannot locate a third-party buyer that is willing to pay an amount equal to the difference or compensatory payments by us to charter parties with whom we have entered into charters with respect to the contracted newbuilds. Such events could adversely impact the dividends we intend to pay, and could have a material adverse effect on our business, financial condition and results of operation.

We have paid dividends to our stockholders each quarter since our initial public offering in June 2008, including an aggregate amount of $18.4 million over three consecutive quarterly dividends, each in the amount of $0.06 per share, followed by one consecutive quarterly dividend in the amount of $0.04 per share, paid during 2014. We also declared a dividend of $0.02 per share, payable on or about March 17, 2015, to our shareholders of record on March 10, 2015. Also during 2014, we paid four consecutive quarterly dividends of $0.50 per share of Series B Preferred Shares, one quarterly dividend of $0.46667 per share followed by one quarterly dividend of $0.50 per share of Series C Preferred Shares, and one quarterly dividend of $0.66667 per share of Series D Preferred Shares . Our future liquidity needs will impact our dividend policy. We currently intend to use a portion of our free cash to pay dividends to our stockholders. The declaration and payment of dividends, if any, will always be subject to the discretion of our board of directors. The timing and amount of any dividends declared will depend on, among other things: (i) our earnings, financial condition and cash requirements and available sources of liquidity; (ii) decisions in relation to our growth strategies; (iii) provisions of Marshall Islands and Liberian law governing the payment of dividends; (iv) restrictive covenants in our existing and future debt instruments; and (v) global financial conditions. Dividends might be reduced or not be paid in the future. In addition, cash dividends on our common stock are subject to the priority of dividends on our Preferred Shares.

Cash Flows

Cash and cash equivalents increased to $107.3 million as of December 31, 2014, compared to $64.7 million as of December 31, 2013. We consider highly liquid investments such as time deposits and certificates of deposit with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents are primarily held in U.S. dollars.

Net Cash Provided by Operating Activities

Net cash provided by operating activities amounted to $43.7 million in 2014, consisting of net income after non-cash items of $57.5 million less an increase in working capital of $13.8 million.

Net cash provided by operating activities amounted to $100.6 million in 2013, consisting of net income after non-cash items of $115.7 million less an increase in working capital of $15.1 million.

Net Cash Used in Investing Activities

Net cash flows used in investing activities were $67.0 million for the year ended December 31, 2014 compared to $100.3 million for the year ended December 31, 2013. The decrease in cash flows used in investing activities of $33.3 million from 2013 is mainly attributable to the following factors: (i) an increase of $27.4 million in payments for vessel acquisitions and advances for vessels under construction during the year ended December 31, 2014 compared to the same period of 2013; (ii) an increase in restricted cash of $7.0 million during the year ended December 31, 2014, compared to a decrease of $18.6 million during the year ended December 31, 2013; (iii) proceeds from asset purchase cancellation of $36.3 million during the year ended December 31, 2014, and (iv) an increase in long term investments of $50.0 million, due to the maturity of the floating rate note.

Net cash flows used in investing activities were $100.3 million for the year ended December 31, 2013 compared to $158.1 million for the year ended December 31, 2012. The decrease in cash flows used in investing activities of $57.8 million from 2012 is mainly attributable to the following factors: (i) a decrease of $18.0 million in payments for vessel acquisitions and advances for vessels under construction during the year ended December 31, 2013 compared to the same period of 2012; and (ii) a decrease in restricted cash of $18.6 million during the year ended December 31, 2013, compared to an increase of $21.3 million during the year ended December 31, 2012, due to a decrease in the restricted cash maintained in relation to the loan and credit facilities.

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Net Cash Provided by/(Used in) Financing Activities

Net cash flows provided by financing activities were $65.9 million for the year ended December 31, 2014, compared to net cash flows used in financing activities of $38.3 million for the year ended December 31, 2013. This increase of $104.2 million, compared to the year ended December 31, 2013, resulted from the combined effect of an increase of $9.3 million in long term debt principal payments, an increase in long-term debt proceeds of $77.9 million, an increase in dividends paid of $8.2 million, an increase of $46.0 million in net proceeds from the issuance of common and preferred stock and an increase in payments of deferred financing costs of $2.2 million.

Net cash flows used in financing activities were $38.3 million for the year ended December 31, 2013, compared to net cash flows provided by financing activities of $127.7 million for the year ended December 31, 2012. This decrease of $166.0 million, compared to the year ended December 31, 2012, resulted from the combined effect of a decrease of $57.9 million in long term debt principal payments, a decrease in long-term debt proceeds of $296.6 million, a decrease in dividends paid of $19.7 million, an increase of $51.7 million in net proceeds from the issuance of common and preferred stock and a decrease in payments of deferred financing costs of $1.3 million.

Credit Facilities

We operate in a capital intensive industry which requires significant amounts of investment, and we fund a portion of this investment through long-term bank debt. Our subsidiaries have generally entered into individual credit facilities in order to finance the acquisition of the vessels owned by these subsidiaries and for general corporate purposes. In 2014, we entered into a new credit facility which was used to fully refinance the outstanding balances under a credit facility previously entered into by eight of our subsidiaries. Also in 2014, four of our subsidiaries entered into a credit facility which was used to partly refinance the purchase price of two newbuild vessels that were delivered to us during 2014 and provide financing for general corporate purposes. The durations from drawdown of our 16 credit facilities outstanding on December 31, 2014, ranged from two to 15 years, and they are generally repaid by semiannual principal installments and a balloon payment due on maturity, for 12 of them, and by semi-annual principal installments for four of them. We generally pay interest on these facilities at LIBOR plus a margin, except for four facilities, under which a portion of the principal amounts bear interest at the Commercial Interest Reference Rate published by the Organization for Economic Co-operation and Development (“OECD”) applicable on the date of signing of the relevant loan agreements. The obligations under our credit facilities are secured by, among other types of security, first priority mortgages over the vessels owned by the respective borrower subsidiaries, first priority assignments of all insurances and earnings of the mortgaged vessels and guarantees by us.

During 2014, we drew down loans totaling $93.9 million and we repaid $132.7 million of our indebtedness. As of December 31, 2014, we had 16 outstanding credit facilities with a combined outstanding balance of $469.6 million. These debt facilities had maturity dates between 2017 and 2024. For a description of our debt facilities as of December 31, 2014, please see Note 8 to our financial statements included elsewhere in this annual report. During 2015, we are scheduled to repay approximately $17.1 million of our long-term debt outstanding as of December 31, 2014.

Covenants under Credit Facilities

The credit facilities impose operating and financial restrictions on us. These restrictions in our existing credit facilities generally limit our subsidiaries’ ability to, among other things, and subject to exceptions set forth in such credit facilities:

· pay dividends if an event of default has occurred and is continuing or would occur as a result of the payment of such dividends;

· enter into certain long-term charters;

· incur additional indebtedness, including through the issuance of guarantees;

· change the flag, class or management of the vessel mortgaged under such facility or terminate or materially amend the management agreement relating to such vessel;

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· create liens on their assets;

· make loans;

· make investments;

· make capital expenditures;

· undergo a change in ownership or control or permit a change in ownership and control of our Manager;

· sell the vessel mortgaged under such facility; and

· permit our chief executive officer to change.

Our existing credit facilities also require certain of our subsidiaries to maintain financial ratios and satisfy financial covenants. Depending on the credit facility, certain of our subsidiaries are subject to financial ratios and covenants requiring that these subsidiaries:

· meets the Minimum Value Covenant;

· ensure that outstanding amounts in currencies other than the U.S. dollar do not exceed 100% or 110%, as applicable, of the U.S. dollar equivalent amount specified in the relevant credit agreement for the applicable period by, if necessary, providing cash collateral security in an amount necessary for the outstanding amounts to meet this threshold; and

· ensure that we comply with certain financial covenants under the guarantees described below.

In addition, under guarantees we have entered into with respect to certain of our subsidiaries’ existing credit facilities, we are subject to financial covenants. Depending on the guarantee, these financial covenants include the following:

· our total consolidated liabilities with the relevant bank divided by our total consolidated assets must not exceed 80% or 85% as the case may be (“Consolidated Leverage Covenant”). The total consolidated assets are based on the market value of our vessels and the book values of all other assets, on an adjusted basis as set out in the relevant guarantee;

· the ratio of our aggregate debt after deducting cash to EBITDA must not at any time exceed 8.5:1 on a trailing 12 months’ basis (“EBITDA Covenant”). EBITDA is not a recognized measurement under US GAAP and represents net income before net interest expense, income tax expense, depreciation and amortization;

· our net consolidated worth (total consolidated assets less total consolidated liabilities) (“Consolidated Net Worth Covenant”) must not at any time be less than $150.0 million;

· the ratio of our EBITDA over consolidated interest expense must not at any time be less than 2.0:1, applicable on a trailing 12 month basis;

· our consolidated debt must not exceed $514.0 million on December 31, 2014;

· payment of dividends is subject to no event of default having occurred;

· maintenance of minimum free liquidity of $500,000 is required on deposit; and

· a minimum of 35% to 51%, as the case may be, of the Company’s shares shall remain directly or indirectly beneficially owned by the Hajioannou family for the duration of the relevant credit facilities.

As of December 31, 2014, the Company was in compliance with all debt covenants with respect to its loan and credit facilities.

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Interest Rate Swaps

We have entered into interest rate swap agreements converting floating interest rate exposure into fixed interest rates in order to economically hedge our exposure to fluctuations in prevailing market interest rates. For more information on our interest rate swap agreements, refer to Note 16 to our financial statements included elsewhere in this annual report.

C. Research and Development, Patents and Licenses

We incur from time to time expenditures relating to inspections for acquiring new vessels that meet our standards. Such expenditures are insignificant and they are expensed as they are incurred.

D. Trend Information

Our results of operations depend primarily on the charter hire rates that we are able to realize, and the demand for drybulk vessel services. During 2014, the Baltic Dry Index, or “BDI,” experienced significant volatility, reaching a high of 2,113 on January 2, 2014 and a low of 723 on July 22, 2014.

As of February 24, 2015, the BDI was 516.

The decline and volatility in charter rates in the drybulk market reflects in part the fact that the supply of drybulk vessels in the market has been increasing. Demand for drybulk vessel services is influenced by global financial conditions. Global financial conditions remain volatile and demand for drybulk services may decrease in the future. There has been a pattern of volatility in recent years. For example, after reaching historical highs in mid-2008, charter hire rates for Panamax and Capesize drybulk vessels reached near historically low levels. For example, the Baltic Drybulk Index, or “BDI,” declined from a high of 11,793 in May 2008 to a low of 663 in December 2008, which represents a decline of 94% within a single calendar year. See also “Item 3. Key Information—D. Risks Inherent in Our Industry and Our Business—The international drybulk shipping industry is cyclical and volatile, and charter rates during 2014 were significantly lower than their highs in the middle of 2008 reaching recently all time lows; these factors may lead to further reductions and volatility in our charter rates, vessel values and results of operations.”

In response to the volatile market conditions, we seek to strengthen our charter coverage. Currently, 21 of our 33 vessels are employed or scheduled to be employed in period time charters of more than three months. Additionally, we believe we have structured our capital expenditure requirements, debt commitments and liquidity resources is a way that will provide us with financial flexibility (see “Item 5. Operating and Financial Review and Prospects — B. Liquidity and Capital Resources” for more information).

E. Off-Balance Sheet Arrangements

As of December 31, 2014, we did not have any off-balance sheet arrangements.

F. Contractual Obligations

Our contractual obligations as of December 31, 2014 were:

	Total		Less than 1 year (2015)		1-3 years (2016-2017)		3-5 years (2018-2019)		More than 5 years (After January 1, 2020)
	(Dollars in thousands)
Long-term debt obligations	$	469,568	$	17,121	$	67,063	$	218,341	$	167,043
Interest payments (1)	$	45,762	$	11,195	$	18,918	$	11,673	$	3,976
Payments to our Manager (2)	$	23,230	$	15,404	$	7,826		—		—
Newbuild contracts	$	304,571	$	156,874	$	147,697		—		—
Total	$	843,131	$	200,594	$	241,504	$	230,014	$	171,019

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(1) Amounts shown reflect estimated interest payments we expect to make with respect to our long-term debt obligations and interest rate swaps. The interest payments reflect an assumed LIBOR-based applicable interest rate of 0.3628% (the six-month LIBOR rate as of December 31, 2014), plus the relevant margin of the applicable credit facility and the estimated net settlement of our interest rate swaps. See “Item 5. Operating and Financial Review and Prospects — B. Liquidity and Capital Resources—Interest Rate Swaps.”

(2) Represents the fixed fee of $800 per vessel per day and the variable fee of 1.25% of estimated charter hire based on charter agreements in place as of December 31, 2014, based on the management fees effective as of May 29, 2014. In addition, it includes amounts payable to our Manager under the Management Agreement in respect of the acquisition fees for each of the 12 newbuilds vessels and the supervision fees for each of the 12 newbuild vessels, which are described elsewhere herein. The levels of the above mentioned fees are subject to adjustment every year and will be agreed upon between us and our Manager. The fees shown in the table above do not take into account any potential future changes to the fees. Pursuant to the terms of the Management Agreement, the Manager provides executive officers at no cost. To the extent that the manager does not provide executive officers, but instead we employ executive officers directly, the management fee is reduced by an amount equal to the aggregate cost of compensation and benefits and other incidental costs borne as a result of employing the executive officers directly. The fees shown in the table above do not take into account any such reductions.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. Directors and Senior Management

The following table sets forth, as of February 24, 2015, information regarding our directors and executive officers.

Name	Age	Position
Polys Hajioannou	48	Chief Executive Officer, Chairman of the Board and Class I Director
Dr. Loukas Barmparis	52	President, Secretary and Class II Director
Konstantinos Adamopoulos	52	Chief Financial Officer and Class III Director
Ioannis Foteinos	56	Chief Operating Officer and Class I Director
John Gaffney	54	Class II Director
Frank Sica	64	Class III Director
Ole Wikborg	59	Class I Director

Certain biographical information about each of these individuals is set forth below. The term of our Class I directors expires in 2018, the term of our Class II directors expires in 2016 and the term of our Class III directors expires in 2017.

Polys Hajioannou is our Chief Executive Officer and has been Chairman of our board of directors since 2008. Mr. Hajioannou also serves with our Manager and prior to its inception, our Manager’s predecessor Alassia Steamship Co., Ltd., which he joined in 1987. Mr. Hajioannou was elected as a member of the board of directors of the Union of Greek Shipowners in 2006 and served on the board until February 2009. Mr. Hajioannou is also a founding member of the Union of Cyprus Shipowners. Mr. Hajioannou is a member of the Lloyd’s Register Hellenic Advisory Committee. In 2011, Mr. Hajioannou was appointed to the board of directors of the Hellenic Mutual War Risks Association (Bermuda) Limited and in 2013 he was elected at the board of directors of the UK Mutual Steam Ship Assurance Association (Bermuda) Limited. Mr. Hajioannou holds a Bachelor of Science degree in nautical studies from Sunderland University.

Dr. Loukas Barmparis is our President and Secretary and has been a member of our board of directors since 2008. Dr. Barmparis also serves as the technical manager of our Manager, which he joined in February 2006. Until 2009 he was the project development manager of the affiliated Alassia Development S.A., responsible for renewable energy projects. Prior to joining our Manager and Alassia Development S.A., from 1999 to 2005 and from 1993 to 1995, Dr. Barmparis was employed at N. Daskalantonakis Group, Grecotel, one of the largest hotel chains in Greece, as technical manager and project development general manager. During the interim period between 1995 and 1999, Dr. Barmparis was employed at Exergia S.A. as an energy consultant. Dr. Barmparis holds a master of business administration (“M.B.A.”) from the Athens Laboratory of Business Administration, a doctorate from the Imperial College of Science Technology and Medicine, a master of applied

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science from the University of Toronto and a diploma in mechanical engineering from the Aristotle University of Thessaloniki.

Konstantinos Adamopoulos is our Chief Financial Officer and has been a member of our board of directors since 2008. Prior to joining us, Mr. Adamopoulos was employed at Calyon, a financial institution, as a senior relationship manager in shipping finance for 14 years. Prior to this, from 1990 to 1993, Mr. Adamopoulos was employed by the National Bank of Greece in London as an account officer for shipping finance and in Athens as deputy head of the export finance department. Prior to this, from 1987 to 1989, Mr. Adamopoulos served as a finance officer in the Greek Air Force. Mr. Adamopoulos holds an M.B.A. in finance from the City University Business School and a Bachelor of Science degree in business administration from the Athens School of Economics and Business Science.

Ioannis Foteinos is our Chief Operating Officer and has been a member of our board of directors since February 2009. Mr. Foteinos has 26 years of experience in the shipping industry. After obtaining a bachelor’s degree in nautical studies from Sunderland University, he joined the predecessor of our Manager, Safety Management Overseas, in 1984, where he presently serves and will continue to serve as Chartering Manager.

Frank Sica has been a member of our board of directors and of our corporate governance, nominating and compensation committee, and a member and chairman of our audit committee, since 2008. Mr. Sica has served as a Managing Partner at Tailwind Capital, a private equity firm since 2006. From 2004 to 2005, Mr. Sica was a Senior Advisor to Soros Private Funds Management. From 1998 to 2003, Mr. Sica worked at Soros Fund Management where he oversaw the direct real estate and private equity investment activities of Soros. From 1988 to 1998, Mr. Sica was a Managing Director at Morgan Stanley. Mr. Sica is a graduate of Wesleyan University, where he received a B.A. degree, and of the Amos Tuck School of Business at Dartmouth College, where he received his M.B.A. Mr. Sica is also director of CSG Systems International, an account management and billing software company for communication industries, JetBlue Airways Corporation, a commercial airline, and Kohl’s Corporation, an owner and operator of department stores.

Ole Wikborg has been a member of our board of directors and of our audit committee and corporate governance, nominating and compensation committee since 2008. Mr. Wikborg has been involved in the marine and shipping industry in various capacities for over 30 years. Since 2002, Mr. Wikborg has served as a director, senior underwriter and member of the management team of the Norwegian Hull Club, based in Oslo, Norway. From 2002 to 2006, Mr. Wikborg also served as a member and chairman of the Ocean Hull Committee of the International Union of Marine Insurance (“IUMI”). Since 2006, he has served as Vice President and a member of the Executive Board of the IUMI and, he was elected as President of IUMI from 2010 to 2014. Since 1997, Mr. Wikborg has served as a board member of the Central Union of Marine Insurers, based in Oslo, and was that organization’s Chairman from 2009 to 2013. From 1997 until 2002, Mr. Wikborg served as the senior vice president and manager of the marine and energy division of the Zurich Protector Insurance Company ASA. Prior to his carrier in marine insurance, Mr. Wikborg served in the Royal Norwegian Navy, attaining the rank of Lieutenant Commander.

John Gaffney has been a member of our board of directors and of our audit committee since October 2009, and a member and chairman of our corporate governance, nominating and compensation committee, since October 2011. Mr. Gaffney joined the law firm of Gibson, Dunn & Crutcher LLP as a partner in November 2011. From January 2010 through September 2011, Mr. Gaffney was a Senior Vice President of Corporate Affairs and General Counsel of Solyndra, Inc., where he led Solyndra’s corporate affairs and legal activities. From January 2008 through December 2009, Mr. Gaffney was an Executive Vice President at First Solar, where he led First Solar’s corporate development, government affairs, legal and sustainable development activities. Prior to joining First Solar, Mr. Gaffney practiced law at the firm of Cravath, Swaine & Moore LLP, where he was a partner from 1993 to 2008. Mr. Gaffney is a graduate of The George Washington University, where he received a B.A degree, and New York University, where he received his J.D. and M.B.A. degrees.

B. Compensation of Directors and Senior Management

Our Manager, pursuant to the terms of management agreement, has historically provided to us our executive officers at no cost. For the year ended December 31, 2014, certain executive officers and senior management were employed directly by us, in which case the management fee payable by us to the Manager is reduced by an amount equal to the aggregate costs of compensation and benefits and other incidental costs borne by us as a result of such employment. The aggregate costs of compensation and benefits and other incidental costs of executive officers and senior management employed directly by the Company for the year ended December 31,

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2014, was $1.8 million. For a discussion of the fees payable to our Manager, refer to “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Management Agreement”. Also, we do not have any service contracts with any of our non-executive directors that provide for benefits upon termination of their services.

Non-executive independent directors of the Company are paid an annual fee in the amount of $40,000 plus reimbursement for their out-of-pocket expenses.

In addition, the chairman of the audit committee, Frank Sica, receives the annual equivalent of $60,000 in the form of shares of our common stock. John Gaffney and Ole Wikborg receive the annual equivalent of $30,000 in the form of shares of our common stock.

No amounts are set aside or accrued by us to provide pension, retirement or similar benefits.

C. Board Practices

As of December 31, 2014, we had seven members on our board of directors. The board of directors may change the number of directors to not less than three, nor more than 15, by a vote of a majority of the entire board. Each director shall be elected to serve until the third succeeding annual meeting of stockholders and until his or her successor shall have been duly elected and qualified, except in the event of death, resignation or removal. A vacancy on the board created by death, resignation, removal (which may only be for cause), or failure of the stockholders to elect the entire class of directors to be elected at any election of directors or for any other reason, may be filled only by an affirmative vote of a majority of the remaining directors then in office, even if less than a quorum, at any special meeting called for that purpose or at any regular meeting of the board of directors. None of our directors is a party to service contracts with us providing for benefits upon termination of employment. Information regarding the period which each director served and the date of expiration of each director’s current term is available in “Item 6. Directors, Senior Management and Employees—A. Directors and Senior Management.”

During the fiscal year ended December 31, 2014, the full board of directors held four meetings. Each director attended all of the meetings of committees of which the director was a member in person or electronically. Our board of directors has determined that each of Messrs. Sica, Gaffney and Wikborg are independent within the current meanings of independence employed by the corporate governance rules of the New York Stock Exchange and the SEC. Stockholders who wish to send communications on any topic to the board of directors or to the independent directors as a group, or to the chairman of the audit committee, Mr. Frank Sica, or to the chairman of the corporate governance, nominating and compensation committee, Mr. John Gaffney, may do so by writing to our Secretary, Dr. Loukas Barmparis, Safe Bulkers, Inc., 30-32 Avenue Karamanli, 16673, Voula, Athens, Greece.

Corporate Governance

The board of directors and our Company’s management have engaged in an ongoing review of our corporate governance practices in order to oversee our compliance with the applicable corporate governance rules of the New York Stock Exchange and the SEC.

We have adopted a number of key documents that are the foundation of the Company’s corporate governance, including:

· a Code of Business Conduct and Ethics for all officers and employees, which incorporates a Code of Ethics for directors and a Code of Conduct for corporate officers;

· a Corporate Governance, Nominating and Compensation Committee Charter; and

· an Audit Committee Charter.

These documents and other important information on our governance are posted on our website and may be viewed at http://www.safebulkers.com. We will also provide a paper copy of any of these documents upon the written request of a stockholder. Stockholders may direct their requests to the attention of our Secretary, Dr. Loukas Barmparis, Safe Bulkers, Inc., 30-32 Avenue Karamanli, 16673, Voula, Athens, Greece.

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Committees of the Board of Directors

Audit committee

Our audit committee consists of Ole Wikborg, John Gaffney and Frank Sica, as chairman. Our board of directors has determined that Frank Sica qualifies as an audit committee “financial expert,” as such term is defined in Regulation S-K promulgated by the SEC. The audit committee is responsible for:

· the appointment, compensation, retention and oversight of independent auditors and approving any non-audit services performed by such auditor;

· assisting the board in monitoring the integrity of our financial statements, the independent auditors’ qualifications and independence, the performance of the independent accountants and our internal audit function and our compliance with legal and regulatory requirements;

· annually reviewing an independent auditors’ report describing the auditing firm’s internal quality-control procedures, and any material issues raised by the most recent internal quality control review, or peer review, of the auditing firm;

· discussing the annual audited financial and quarterly statements with management and the independent auditors;

· discussing earnings press releases, as well as financial information and earnings guidance provided to analysts and rating agencies;

· discussing policies with respect to risk assessment and risk management;

· meeting separately, and periodically, with management, internal auditors and the independent auditor;

· reviewing with the independent auditor any audit problems or difficulties and management’s responses;

· setting clear hiring policies for employees or former employees of the independent auditors;

· annually reviewing the adequacy of the audit committee’s written charter, the internal audit charter, the scope of the annual internal audit plan and the results of internal audits;

· reporting regularly to the full board of directors; and

· handling such other matters that are specifically delegated to the audit committee by the board of directors from time to time.

Our corporate governance, nominating and compensation committee consists of Ole Wikborg, Frank Sica and John Gaffney, as chairman. The corporate governance, nominating and compensation committee is responsible for:

· nominating candidates, consistent with criteria approved by the full board of directors, for the approval of the full board of directors to fill board vacancies as and when they arise, as well as putting in place plans for succession, in particular, of the chairman of the board of directors and executive officers;

· selecting, or recommending that the full board of directors select, the director nominees for the next annual meeting of shareholders;

· developing and recommending to the full board of directors corporate governance guidelines applicable to us and keeping such guidelines under review;

· overseeing the evaluation of the board and management; and

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· handling such other matters that are specifically delegated to the corporate governance, nominating and compensation committee by the board of directors from time to time.

D. Employees

We directly employ our president, Dr. Loukas Barmparis, our chief financial officer, Konstantinos Adamopoulos, our chief operating officer, Ioannis Foteinos, our internal auditor and an employee who serves as our legal representative at our representation office in Greece. As of December 31, 2014, approximately 692 people served on board the vessels in our fleet, and our Manager employed approximately 64 people on shore.

E. Share Ownership

The Common Stock and Preferred Shares beneficially owned by our directors and executive officers and/or companies affiliated with these individuals is disclosed in “Item 7. Major Shareholders and Related Party Transactions—A. Major Shareholders” below.

Equity Compensation Plans

We have agreed to provide the chairman of the audit committee, Mr. Frank Sica, as part of his remuneration, the annual equivalent of $60,000 in the form of shares of our common stock, and our non-executive independent directors, Mr. John Gaffney and Mr. Ole Wikborg, as part of their remuneration, the annual equivalent of $30,000 each, in the form of shares of our common stock.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. Major Shareholders

The following table sets forth certain information regarding the beneficial ownership of our outstanding common stock and Preferred Shares as of February 24, 2015 held by:

· each person or entity that we know beneficially owns 5% or more of our common stock;

· each of our officers and directors; and

· all our directors and officers as a group.

Beneficial ownership is determined in accordance with the rules of the SEC. In general, a person who has voting power or investment power with respect to securities is treated as a beneficial owner of those securities.

Beneficial ownership does not necessarily imply that the named person has the economic or other benefits of ownership. For purposes of this table, shares subject to options, warrants or rights or shares exercisable within 60 days of February 24, 2015 are considered as beneficially owned by the person holding those options, warrants or rights. Each stockholder is entitled to one vote for each share held. The applicable percentage of ownership for each stockholder is based on 83,457,938 shares of common stock outstanding as of February 24, 2015. Information for certain holders is based on their latest filings with the SEC or information delivered to us. Except as noted below, the address of all stockholders, officers and directors identified in the table and the accompanying footnotes below is in care of our principal executive offices.

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Identity of Person or Group	Number of Shares of Common Stock Owned	Percentage of Common Stock		Number of Shares of Series B Preferred Shares		Percentage of Series B Preferred Shares		Number of Shares of Series C Preferred Shares	Percentage of Series C Preferred Shares		Number of Shares of Series D Preferred Shares	Percentage of Series D Preferred Shares
5% Beneficial Owners:
Vorini Holdings Inc.(1)	19,426,015	23.28	%	—		—		—	—		—	—
Bellapais Maritime Inc.(2)	5,000,000	5.99	%	—		—		—	—		—	—
Kyperounta Maritime Inc.(2)	5,000,000	5.99	%	30,000		1.88	%	—	—		—	—
Lefkoniko Maritime Inc.(2)	5,000,000	5.99	%	50,000		3.13	%	—	—		150,000	4.69	%
Akamas Maritime Inc.(2)	6,000,000	7.19	%	—		—		—	—		—	—
Chalkoessa Maritime Inc.(2)	5,000,000	5.99	%	200,000		12.50	%	72,000	3.13	%	—	—
Nicolaos Hadjioannou(3)	22,426,015	26.87	%	—		—		—	—		—	—
Officers and Directors:											—	—
Polys Hajioannou(4)	45,426,015	54.43	%	280,000		17.50	%	72,000	3.13	%	150,000	4.69	%
Dr. Loukas Barmparis	—	—		*		*		*	*		*	*
Konstantinos Adamopoulos	—	—		*		*		*	*		*	*
Ioannis Foteinos	*	*		—		—		*	*		*	*
Frank Sica	79,574	*		*	(5)	*		*	*		*	*
Ole Wikborg	23,323	*		—		—		—	—		—	—
John Gaffney	23,323	*		20,000		1.25	%	—	—		*	*
All executive officers and directors as a group (7 persons)	45,552,235	54.58	%	328,000		20.50	%	88,000	3.83	%	204,000	6.38	%

* Less than 1%

(1) Controlled by Polys Hajioannou and his family.

(2) Controlled by Polys Hajioannou.

(3) By virtue of shares owned indirectly through Vorini Holdings, Inc. and other entities he controls.

(4) By virtue of shares owned indirectly through Vorini Holdings, Inc., Bellapais Maritime Inc., Kyperounta Maritime Inc., Lefkoniko Maritime Inc., Akamas Maritime Inc. and Chalkoessa Maritime Inc.

(5) Held in a trust controlled by Frank Sica for the benefit of his family members.

In June 2008, we completed a registered public offering of our shares of common stock in which the selling stockholder was Vorini Holdings Inc., and our common stock began trading on the New York Stock Exchange. Our major stockholders have the same voting rights as our other stockholders. As of February 24, 2015, we had 12 stockholders of record, three of these stockholders of record were located in the United States and held an aggregate 36,934,614 shares of common stock, representing approximately 44.26% of our outstanding shares of common stock. However, one of the United States stockholders of record is Cede & Co., a nominee of The Depository Trust Company, which holds 36,883,271 shares of our common stock. Accordingly, we believe that the shares held by Cede & Co. include shares of common stock beneficially owned by both holders in the United States and non-United States beneficial owners. We are not aware of any arrangements the operation of which may at a subsequent date result in our change of control. We are not aware of any significant changes in the percentage ownership held by any major stockholders since our initial public offering.

The Hajioannou family owns approximately 58.02% of our outstanding common stock. They are able to control the outcome of matters on which our stockholders are entitled to vote, including the election of our entire board of directors and other significant corporate actions. Shares of our common stock held by the Hajioannou family do not have different or unique voting rights.

B. Related Party Transactions

Management Affiliations

Our chief executive officer, Polys Hajioannou controls our Manager and other companies which lease office space to us. Our Manager, along with its predecessor, has provided services to our vessels since 1965 and continues to provide technical, administrative, commercial and certain other services which support our business, as well as comprehensive ship management services such as technical supervision and commercial management, including chartering our vessels, pursuant to our Management Agreement described below.

Management Agreement

Under our Management Agreement, our Manager is responsible for providing us with technical, administrative commercial and certain other services, which include the following:

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Technical Services

These services include managing day-to-day vessel operations, performing general vessel maintenance, ensuring regulatory compliance and compliance with the law of the flag state of each vessel and of the places where the vessel operates, ensuring classification society compliance, supervising the maintenance and general efficiency of vessels, arranging the hire of qualified officers and crew, training, transportation and lodging, insurance (including handling and processing all claims) of, and appropriate investigation of any charterer concerns with respect to, the crew, conducting union negotiations concerning the crew, performing normally scheduled drydocking and general and routine repairs, arranging insurance for vessels (including marine hull and machinery, protection and indemnity and risks insurance), purchasing stores, supplies, spares, lubricating oil and maintenance capital expenditures for vessels, appointing supervisors and technical consultants, providing technical support, shoreside support and shipyard supervision, and attending to all other technical matters necessary to run our business.

Commercial Services

These services include chartering the vessels that we own, assisting in our chartering, locating, purchasing, financing and negotiating the purchase and sale of our vessels, supervising the design and construction of newbuilds, and such other commercial services as we may reasonably request from time to time.

Administrative Services

These services include administering payroll services, assistance with the preparation of our tax returns and financial statements, assistance with corporate and regulatory compliance matters not related to our vessels, procuring legal and accounting services, assistance in complying with U.S. and other relevant securities laws, human resources (including provision of our executive officers and directors of our subsidiaries), cash management and bookkeeping services, development and monitoring of internal audit controls, disclosure controls and information technology, assistance with all regulatory and reporting functions and obligations, furnishing any reports or financial information that might be requested by us and other non-vessel related administrative services, assistance with office space, providing legal and financial compliance services, overseeing banking services (including the opening, closing, operation and management of all of our accounts, including making deposits and withdrawals reasonably necessary for the management of our business and day-to-day operations), arranging general insurance and director and officer liability insurance (at our expense), providing all administrative services required for any subsequent debt and equity financings and attending to all other administrative matters necessary to ensure the professional management of our business.

Reporting Structure

Our Manager reports to us and to our board of directors through our executive officers.

Compensation of Our Manager

Under our Management Agreement, in return for providing technical, commercial and administrative services, our Manager receives a fixed fee of $800 per vessel for vessels in our fleet, prorated for the number of calendar days that we own or charter-in each vessel and $250 per vessel per day, for bareboat charters. Such fee is subject to reduction for any compensation and benefits paid by us. Our Manager also receives a variable fee of 1.25% on all gross freight, charter hire, ballast bonus and demurrage with respect to each vessel in our fleet. Further, our Manager receives an acquisition fee of 1.0% based on the contract price of any vessel bought and a sales fee of 1.0% based on the contract price of any vessel sold by it on our behalf, including each of our contracted newbuilds. We also pay our Manager a supervision fee of $550,000 per newbuild, of which 50% is payable upon the signing of the relevant supervision agreement, and 50% upon successful completion of the sea trials of each newbuild, for the on-premises supervision of all newbuilds we have agreed to acquire pursuant to shipbuilding contracts, memoranda of agreement, or otherwise. The management fees were constant for the 2 year initial period of the Management Agreement, which ended on May 28, 2010. On May 29, 2010, pursuant to an agreement between us and our Manager, the variable fee on gross freight, charter hire, ballast bonus and demurrage was adjusted to 1.25% from 1.0%. On May 29, 2011, the fixed fee per vessel was adjusted to $700 from $575 per day, and the supervision fee per newbuild was adjusted to $550,000 from $375,000, while all other management fees remained constant. On May 29, 2014, the fixed fee per vessel was adjusted to $800 from $700 per day, while all other management fees remained constant. Since then all management fees have remained constant. Pursuant to the terms of management agreement, the Manager provides to us executive

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officers at no cost. To the extent that the Manager does not provide executive officers to us but instead such executive officers are employed by us directly, the management fee payable by us to the Manager shall be reduced by an amount equal to the aggregate costs of compensation and benefits and other incidental costs borne by us as a result of such employment.

The management fees do not cover capital expenditure, financial costs and operating expenses for our vessels and our general and administrative expenses such as directors, and officers’ liability insurance, legal and accounting fees and other similar third party expenses. More specifically, we reimburse expenses of the Manager or its personnel directly related to the operation and management of our vessels, such as:

· interest, principal and other financial costs;

· voyage expenses;

· vessel operating expenses including crewing costs, surveyor’s attendance fees, bunkers, lubricant oils, spares, survey fees, classification society fees, maintenance and repair costs, tonnage taxes and vetting expenses;

· commissions, remuneration or disbursements due to lawyers, brokers, agents, surveyors, consultants, financial advisors, investment bankers, insurance advisors;

· deductibles, insurance premiums and/or P&I calls; and

· postage, communication, traveling, victualing and other out of pocket expenses.

Each year, our Manager prepares and submits to us a detailed draft budget for the next calendar year, which includes a statement of estimated revenue, estimated general and administrative expenses and a proposed budget for capital expenditures, repairs or alterations. Once approved by us, this draft budget becomes the approved budget.

Term and Termination Rights

Subject to the termination rights described below, the initial term of our Management Agreement expired on May 28, 2010. Since then our Management Agreement has been automatically renewed for four one-year periods, expiring May 28, 2014. Upon expiration of the renewal term, our Management Agreement automatically renews for one-year periods until May 28, 2018, at which point the agreement will expire. In addition to the termination provisions outlined below, we are able to terminate our Management Agreement at any point after the initial term upon 12 months’ notice to our Manager. Such notice of termination has not been provided to our Manager by us.

Our Manager’s Termination Rights

Our Manager may terminate our Management Agreement prior to the end of its term if:

· any money payable by us is not paid when due or if due on demand, within 10 business days following demand by our Manager;

· we default in the performance of any other material obligation under the Management Agreement and the matter is unresolved within 20 business days after we receive written notice of such default from our Manager;

· the management fee determined by arbitration in respect of any annual period following the initial term is unsatisfactory to our Manager, in which case the Manager may terminate upon 12 months’ written notice to us;

· any acquisition of our shares or a merger, consolidation or similar transaction results in any “person” or “group” acquiring 40% or more of the total voting power of our or the resulting entity’s outstanding voting securities, and such percentage represents a higher percentage of such voting power than that held directly or indirectly by Polys Hajioannou and Nicolaos Hadjioannou, collectively; or

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· there is a change in directors after which a majority of the members of our board of directors are not continuing directors.

“Continuing directors” means, as of any date of determination, any member of our board of directors who was:

· a member of our board of directors on June 4, 2008; or

· nominated for election or elected to our board of directors with the approval of a majority of the directors then in office who were either directors on June 4, 2008 or whose nomination or election was previously so approved.

Our Termination Rights

In addition to certain standard termination rights, we may terminate our Management Agreement prior to the end of its term if:

· our Manager defaults in the performance of any material obligation under our Management Agreement and the matter is not resolved;

· within 20 business days after our Manager receives from us written notice of such default; or

· any money payable by our Manager to us or third parties under our Management Agreement is not paid or accounted for within 10 business days following written notice by us.

Non-Competition

Our Manager has agreed that, during the term of our Management Agreement and for one year after its termination, our Manager will not provide any management services to, or with respect to, any drybulk vessels, other than in the following circumstances:

(a) pursuant to its involvement with us; or

(b) with respect to drybulk vessels that are owned or operated by companies affiliated with our chief executive officer, his children or Nicolaos Hadjioannou, subject in each case to compliance with, or waivers of, the restrictive covenant agreements entered into between us and companies affiliated with our chief executive officer or Nicolaos Hadjioannou.

Our Manager has also agreed that if one of our drybulk vessels and a drybulk vessel owned or operated by a company affiliated with our chief executive officer or Nicolaos Hadjioannou are both available and meet the criteria for a charter being fixed by our Manager, our drybulk vessel will receive such charter.

Sale of Our Manager

Our Manager has agreed that, during the term of the Management Agreement and for one year after its termination, our Manager will not transfer, assign, sell or dispose of all or substantially all of its business that is necessary for the performance of its services under the Management Agreement without the prior written consent of our board of directors. Furthermore, during such period, in the event of any proposed change in control of our Manager, we have a 30-day right of first offer to purchase our Manager. In December 2011, the Management Agreement was amended to define a “proposed change in control of our Manager” to mean (a) the approval by the board of directors of the Manager or the shareholders of the Manager of a proposed sale of all or substantially all of the assets or property of the Manager necessary for the performance of its services under the Management Agreement; or (b) the approval of any transaction that would result in: (i) Polys Hajioannou or Vorini Holdings Inc., or any entity controlled by, or under common control with, any of the above, beneficially owning, directly or indirectly, less than 60% of the outstanding voting securities or voting power of the Manager or Machairiotissa Holdings Inc. (the sole shareholder of the Manager), respectively, or (ii) Polys Hajioannou or Vorini Holdings Inc., or any entity controlled by, or under common control with, any of the above, together with all directors, officers and employees of the Manager beneficially owning, directly or indirectly, less than 80% of the outstanding voting securities or voting power of the Manager or Machairiotissa Holdings Inc., respectively.

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The Management Agreement was also amended to provide us the right to obtain certain information about the ownership of the Manager.

Restrictive Covenant Agreements

Under the restrictive covenant agreements entered into with us, Polys Hajioannou, Vorini Holdings Inc., Machairiotissa Holdings Inc., or any entity controlled by, or under common control with, any of the above (together, the “Hajioannou Entities”), have agreed to restrictions on their ownership or operation of any drybulk vessels or the acquisition, investment in or control of any business involved in the ownership or operation of drybulk vessels, subject to the exceptions described below.

In the case of Polys Hajioannou, the restricted period continues until the later of (a) one year following the termination of the Management Agreement and (b) one year following the termination of his services and employment with us. In the case of the Hajioannou Entities, the restricted period continues until one year following the termination of the Management Agreement. Notwithstanding these restrictions, Polys Hajioannou and the Hajioannou Entities are permitted to engage in the restricted activities during the restricted periods in the following circumstances:

(a) pursuant to their involvement with us;

(b) pursuant to their involvement with our Manager, subject to compliance with, or waivers of, the Management Agreement;

(c) with respect to certain permitted acquisitions (as defined below), provided that (i) any commercial management of drybulk vessels controlled by the restricted individuals and entities in connection with such permitted acquisition is performed by our Manager and (ii) the restricted individuals and entities comply with the requirements for permitted acquisitions described below;

(d) with respect to the direct or indirect ownership, operation or financing by our chief executive officer of a maximum of four drybulk vessels on the water at any one time and with respect to contracts with shipyards for newbuild drybulk vessels, as part of his estate planning for the benefit of one or more of his children, provided that (i) such drybulk vessels or newbuilding contracts have been first offered to us and refused by the majority of our independent directors and (ii) such vessels have been acquired on pricing terms and conditions that are not more favorable than those offered to us; and

(e) pursuant to their passive ownership of up to 9.99% of the outstanding voting securities of any publicly traded company that is engaged in the drybulk vessel business.

As noted above, Polys Hajioannou and the Hajioannou Entities are permitted to engage in restricted activities with respect to two types of permitted acquisitions. One such permitted acquisition is an acquisition of a drybulk vessel or an acquisition or investment in a drybulk vessel business on terms and conditions as to price that are not more favorable, and on such other terms and conditions that are not materially more favorable, than those first offered to us and refused by a majority of our independent directors. The second type of permitted acquisition is an acquisition of a group of vessels or a business that includes non-drybulk vessels and non-drybulk vessel businesses, provided that less than 50% of the fair market value of the acquisition is attributable to drybulk vessels or drybulk vessel businesses. Under this second type of permitted acquisition, we must be promptly given the opportunity to buy the drybulk vessels or drybulk vessel businesses included in the acquisition for their fair market value plus certain break-up costs.

Polys Hajioannou and the Hajioannou Entities have also agreed that if one of our drybulk vessels and a drybulk vessel owned or operated by any of the Hajioannou Entities are both available and meet the criteria for a charter being fixed by our Manager, our drybulk vessels will receive such charter.

Registration Rights Agreement

In connection with the closing of our initial public offering, we entered into a registration rights agreement with Vorini Holdings Inc., one of our principal stockholders, pursuant to which we have granted it and certain of its transferees the right, under certain circumstances and subject to certain restrictions, to require us to register

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under the Securities Act shares of our common stock held by those persons. Under the registration rights agreement, Vorini Holdings Inc. and certain of its transferees have the right to request us to register the sale of shares held by them on their behalf and may require us to make available shelf registration statements permitting sales of shares into the market from time to time over an extended period. In addition, those persons have the ability to exercise certain piggyback registration rights in connection with registered offerings initiated by us. Vorini Holdings Inc. currently owns 19,426,015 shares entitled to these registration rights.

C. Interests of Experts and Counsel

Not applicable.

ITEM 8. FINANCIAL INFORMATION

A. Consolidated Statements and Other Financial Information

See “Item 18. Financial Statements” below.

Legal Proceedings

We were involved in an arbitration dispute in London, England, with Zhoushan Jinhaiwan Shipyard Co (the “Shipyard”). We had entered into an agreement with the Shipyard for the construction, sale and delivery by the Shipyard to us of one 180,000 dwt Capesize class newbuild vessel (Hull No. J0131) in exchange for USD $53 million. In December 2012, after having paid $31.8 million in advances during construction, we exercised our termination right under the agreement due to the Shipyard’s excessive construction delays and delivered demands to each of the Shipyard and the refund guarantor, The Export Import Bank of China (a bank rated Aa3 by Moody’s Investor Services), pursuant to the agreement and the refund guarantees, respectively, for a refund of the full amount of advances paid, with interest. In response, in January 2013, the Company received a notice of arbitration, and arbitration proceedings with the Shipyard were initiated in London, England. The Shipyard alleged that the Company’s termination constituted a breach of the agreement and argued that the Company was not entitled to a refund of the advances paid or interest. In September, 2013 a hearing was held in London with respect to certain preliminary issues related to the case. In January 2014, an arbitration award in our favor was issued, which provided that the Company had lawfully cancelled the shipbuilding contract and ordered the Shipyard to refund to the Company the full amount of the advances paid, with interest. We received the full amount of the advances paid, with interest, on March 25, 2014. Subsequently, in June 2014, in order to recover the legal expenses associated with the refund claim, we applied to the arbitration Tribunal for an Award of Costs in our favor. In December 2014, an Award of Costs was issued in which we were awarded our costs of the arbitration and the application for costs in the amount of Euros 366,014.37 and GBP 11,980, with interest. As we have utilized our insurance arrangements to cover the costs of the case, our share in this award is one fourth of the awarded amounts. We have served demands for payment of all awarded amounts to the Shipyard and will continue to vigorously pursue their recovery from the Shipyard.

We are not otherwise involved in any legal proceedings which may have, or have had, a significant effect on our business, financial position, results of operations or liquidity, nor are we aware of any other proceedings that are pending or threatened which may have a significant effect on our business, financial position, results of operations or liquidity.

The nature of our business exposes us to the risk of lawsuits for damages or penalties relating to, among other things, personal injury, property casualty and environmental contamination. From time to time, we may be subject to legal proceedings and claims in the ordinary course of business, principally personal injury and property casualty claims. We expect that these claims would be covered by insurance, subject to customary deductibles. However, such claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources.

Dividend Policy

We paid our first quarterly dividend as a public company of $0.1461 per share of Common Stock in August 2008 and subsequent dividends of $0.475 per share of Common Stock in November 2008, $0.15 per share in February 2009, May 2009, August 2009, November 2009, February 2010, May 2010, August 2010, November 2010, February 2011, May 2011, August 2011, November 2011, February 2012, May 2012 and August 2012, and $0.05 per share of Common Stock in November 2012, March 2013, June 2013, September 2013 and $0.06

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per share of Common Stock in December 2013. During 2014, we paid an aggregate amount of $18.4 million over three consecutive quarterly dividends, each in the amount of $0.06 per share of Common Stock, followed by one consecutive quarterly dividend in the amount of $0.04 per share of Common Stock.

We paid our first dividend of $0.26111 per share of Series B Preferred Shares in July 2013, and a subsequent dividend of $0.5111 per share of Series B Preferred Shares in October 2013. During 2014, we paid an aggregate amount of $3.2 million over four consecutive quarterly dividends, each in the amount of $0.50 per share of Series B Preferred Shares. During 2014, we paid an aggregate amount of $2.2 million over two consecutive quarterly dividends of $0.46667 and $0.50 per share of Series C Preferred Shares. During 2014, we paid an aggregate amount of $2.1 million over one quarterly dividend of $0.66667 per share of Series D Preferred Shares.

We currently intend to use a portion of our free cash to pay dividends to our shareholders. The declaration and payment of dividends, if any, will always be subject to the discretion of our board of directors. The timing and amount of any dividends declared will depend on, among other things: (a) our earnings, financial condition and cash requirements and available sources of liquidity, (b) decisions in relation to our growth strategies, (c) provisions of Marshall Islands and Liberian law governing the payment of dividends, (d) restrictive covenants in our existing and future debt instruments and (e) global financial conditions. Dividends might be reduced or not be paid by us. Our ability to pay dividends may be limited by the amount of cash we can generate from operations following the payment of fees and expenses and the establishment of any reserves, as well as additional factors unrelated to our profitability. In addition, cash dividends on our common stock are subject to the priority of dividends on our Preferred Shares. We are a holding company, and we depend on the ability of our subsidiaries to distribute funds to us in order to satisfy our financial obligations and to make dividend payments. See “Item 3. Key Information—D. Risk Factors—Risks Inherent in Our Industry and Our Business” for a discussion of the risks related to our ability to pay dividends.

B. Significant Changes

No significant change has occurred since the date of the annual financial statements included in this annual report on Form 20-F.

ITEM 9. THE OFFER AND LISTING

Trading on the New York Stock Exchange

Since our initial public offering in the United States on May 29, 2008, our common stock has been listed on the New York Stock Exchange under the symbol “SB.” Since June 18, 2013 our Series B Preferred Shares have been listed on the New York Stock Exchange under the symbol “SB PR B.” Since May 7, 2014 our Series C Preferred Shares have been listed on the New York Stock Exchange under the symbol “SB PR C.” Since June 30, 2014 our Series D Preferred Shares have been listed on the New York Stock Exchange under the symbol “SB PR D.” The following table shows the high and low sales prices for our common stock during the indicated periods.

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	Price Range
	High		Low
2010	$	9.18	$	6.50
2011		9.78		5.28
2012		7.73		3.12
2013		10.95		3.40
2014		11.48		3.77
First Quarter 2013		5.19		3.40
Second Quarter 2013		5.75		4.59
Third Quarter 2013		7.65		4.78
Fourth Quarter 2013		10.95		6.21
First Quarter 2014		11.48		8.65
Second Quarter 2014		10.18		7.76
Third Quarter 2014		9.92		6.65
Fourth Quarter 2014		6.77		3.77
August 2014		8.87		6.75
September 2014		8.80		6.65
October 2014		6.77		4.90
November 2014		5.73		4.56
December 2014		4.92		3.77
January 2015		4.01		3.43
February 2015(1)		4.07		3.44

(1) For the period through February 24, 2015.

The following table shows the high and low sales prices for our Series B Preferred Shares during the indicated periods.

	Price Range
	High		Low
2013 (1)	$	27.78	$	24.29
2014		27.79		25.01
First Quarter 2014		26.56		25.01
Second Quarter 2014		26.68		25.69
Third Quarter 2014		27.79		25.12
Fourth Quarter 2014		27.24		25.10
August 2014		27.79		25.12
September 2014		27.50		25.75
October 2014		27.24		25.10
November 2014		26.85		25.10
December 2014		25.85		25.20
January 2015		25.50		22.74
February 2015(2)		24.50		24.00

(1) For the period from June 18, 2013, the date on which our Series B Preferred Shares began trading on the New York Stock Exchange, until the end of the period.

(2) For the period through February 24, 2015.

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The following table shows the high and low sales prices for our Series C Preferred Shares during the indicated periods.

	Price Range
	High		Low
2014 (1)	$	25.46	$	16.03
Second Quarter (1)		25.46		25.01
Third Quarter 2014		25.28		23.36
Fourth Quarter 2014		24.44		16.03
August 2014		24.79		23.36
September 2014		24.91		23.80
October 2014		24.44		22.29
November 2014		23.43		19.68
December 2014		20.12		16.03
January 2015		19.98		16.80
February 2015(2)		20.59		19.00

(1) For the period from May 2, 2014, the date on which our Series C Preferred Shares began trading on the New York Stock Exchange, until the end of the period.

(2) For the period through February 24, 2015.

The following table shows the high and low sales prices for our Series D Preferred Shares during the indicated periods.

	Price Range
	High		Low
2014 (1)	$	24.90	$	15.52
Second Quarter (1)		24.90		23.64
Third Quarter 2014		24.44		15.52
Fourth Quarter 2014		24.42		16.90
August 2014		24.69		23.64
September 2014		24.69		23.65
October 2014		24.44		22.35
November 2014		22.85		19.58
December 2014		20.25		15.52
January 2015		19.76		16.75
February 2015(2)		20.44		18.70

(1) For the period from June 30, 2014, the date on which our Series D Preferred Shares began trading on the New York Stock Exchange, until the end of the period.

(2) For the period through February 24, 2015.

ITEM 10. ADDITIONAL INFORMATION

A. Share Capital

Under our articles of incorporation, our authorized capital stock consists of 200,000,000 shares of common stock, par value $0.001 per share, of which, as of December 31, 2014 and February 24, 2015, 83,450,266 and 83,457,938 shares were issued and outstanding, respectively, and 20,000,000 shares of blank check preferred stock, par value $0.01 per share, of which, as of December 31, 2014 and February 24, 2015, 1,600,000 shares of Series B Preferred Shares, 2,300,000 shares of Series C Preferred Shares and 3,200,000 shares of Series D Preferred Shares were issued and outstanding. Of this blank check preferred stock, 1,000,000 shares have been designated Series A Participating Preferred Stock in connection with our adoption of a stockholder rights plan as described below under “—Stockholder Rights Plan.” All of our shares of stock are in registered form.

Please see Note 10 to our financial statements included elsewhere in this annual report for a discussion of the history of our share capital.

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B. Memorandum and Articles of Association

Our purpose, as stated in our articles of incorporation, is to engage in any lawful act or activity for which corporations may now or hereafter be organized under the BCA. Our articles of incorporation and bylaws do not impose any limitations on the ownership rights of our stockholders.

The rights of our stockholders are set forth in our articles of incorporation and bylaws. Amendments to our articles of incorporation require the affirmative vote of the holders of a majority of all outstanding shares entitled to vote, except that amendments to certain provisions of our articles of incorporation dealing with the rights of stockholders, the board of directors, our bylaws and amendments to the articles of incorporation require the affirmative vote of at least 75% of all outstanding shares entitled to vote. Amendments to our bylaws require the affirmative vote of at least 75% of all outstanding shares entitled to vote.

Under our bylaws, annual stockholder meetings will be held at a time and place selected by our board of directors. The meetings may be held inside or outside of the Republic of the Marshall Islands. Special meetings may be called by the chairman of the board of directors, the chief executive officer or a majority of the board of directors. Our board of directors may set a record date between 15 and 60 days before the date of any meeting to determine the stockholders that will be eligible to receive notice and vote at the meeting. Our bylaws permit stockholder action by unanimous written consent.

We are registered at The Trust Company of the Marshall Islands, Inc. under registration number 27394.

Directors

Under our bylaws, our directors are elected by a plurality of the votes cast at each annual meeting of the stockholders by the holders of shares entitled to vote in the election. There is no provision for cumulative voting.

Pursuant to the provisions of our bylaws, the board of directors may change the number of directors to not less than three, nor more than 15, by a vote of a majority of the entire board. Each director shall be elected to serve until the third succeeding annual meeting of stockholders and until his or her successor shall have been duly elected and qualified, except in the event of death, resignation or removal. A vacancy on the board created by death, resignation, removal (which may only be for cause), or failure of the stockholders to elect the entire class of directors to be elected at any election of directors or for any other reason may be filled only by an affirmative vote of a majority of the remaining directors then in office, even if less than a quorum, at any special meeting called for that purpose or at any regular meeting of the board of directors. The board of directors has the authority to fix the amounts which shall be payable to the non-employee members of our board of directors for attendance at any meeting or for services rendered to us.

Common Stock

Each outstanding share of common stock entitles the holder to one vote on all matters submitted to a vote of stockholders. Subject to preferences that may be applicable to any outstanding shares of preferred stock, holders of shares of common stock are entitled to receive ratably all dividends, if any, declared by our board of directors out of funds legally available for dividends. Upon our dissolution or liquidation or the sale of all or substantially all of our assets, after payment in full of all amounts required to be paid to creditors and to the holders of preferred stock having liquidation preferences, if any, the holders of our common stock will be entitled to receive pro rata our remaining assets available for distribution. Holders of common stock do not have conversion, redemption or preemptive rights to subscribe to any of our securities. All outstanding shares of common stock are fully paid and nonassessable. The rights, preferences and privileges of holders of common stock are subject to the rights of the holders of any shares of preferred stock which we may issue in the future. Our common stock is not subject to any sinking fund provisions and no holder of any shares will be required to make additional contributions of capital with respect to our shares in the future. There are no provisions in our articles of incorporation or bylaws discriminating against a shareholder because of his or her ownership of a particular number of shares.

We are not aware of any limitations on the rights to own our common stock, including rights of non-resident or foreign stockholders to hold or exercise voting rights on our common stock, imposed by foreign law or by our articles of incorporation or bylaws.

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Preferred Stock

Our articles of incorporation authorize our board of directors, without any further vote or action by our stockholders, to issue up to 20,000,000 shares of blank check preferred stock, of which 1,000,000 shares have been designated Series A Participating Preferred Stock, in connection with our adoption of a stockholder rights plan as described below under “—Stockholder Rights Plan,” and 1,600,000 have been designated as Series B Preferred Shares, 2,300,000 have been designated as Series C Preferred Shares and 3,200,000 have been designated as Series D Preferred Shares, and to determine, with respect to any series of preferred stock established by our board of directors, the terms and rights of that series, including:

· the designation of the series;

· the number of shares of the series;

· the preferences and relative, participating, option or other special rights, if any, and any qualifications, limitations or restrictions of such series; and

· the voting rights, if any, of the holders of the series.

Stockholder Rights Plan

Each share of our common stock includes a right that entitles the holder to purchase from us a unit consisting of one-thousandth of a share of our Series A participating preferred stock at a purchase price of $25.00 per unit, subject to specified adjustments. The rights are issued pursuant to a stockholder rights agreement between us and American Stock Transfer & Trust Company, as rights agent. Until a right is exercised, the holder of a right will have no rights to vote or receive dividends or any other stockholder rights.

The rights may have anti-takeover effects. The rights will cause substantial dilution to any person or group that attempts to acquire us without the approval of our board of directors. As a result, the overall effect of the rights may be to render more difficult or discourage any attempt to acquire us. Because our board of directors can approve a redemption of the rights or a permitted offer, the rights should not interfere with a merger or other business combination approved by our board of directors. The adoption of the rights agreement was approved by our existing stockholder prior to our initial public offering in May 2008.

We have summarized the material terms and conditions of the rights agreement and the rights below. For a complete description of the rights, we encourage you to read the stockholder rights agreement, which we have filed as an exhibit to this annual report.

Detachment of rights

The rights are attached to all certificates representing our outstanding common stock and will attach to all common stock certificates we issue prior to the rights distribution date that we describe below. The rights are not exercisable until after the rights distribution date and will expire at the close of business on the tenth anniversary date of the adoption of the rights plan, unless we redeem or exchange them earlier as described below. The rights will separate from the common stock and a rights distribution date will occur, subject to specified exceptions, on the earlier of the following two dates:

· 10 days following the first public announcement that a person or group of affiliated or associated persons or an “acquiring person” has acquired or obtained the right to acquire beneficial ownership of 15% or more of our outstanding common stock; or

· 10 business days following the start of a tender or exchange offer that would result, if closed, in a person becoming an “acquiring person.”

One of our principal stockholders, Vorini Holdings Inc., and its affiliates are excluded from the definition of “acquiring person” for purposes of the rights, and therefore their ownership or future share acquisitions cannot trigger the rights. Specified “inadvertent” owners that would otherwise become an acquiring person, including those who would have this designation as a result of repurchases of common stock by us, will not become acquiring persons as a result of those transactions.

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Our board of directors may defer the rights distribution date in some circumstances, and some inadvertent acquisitions will not result in a person becoming an acquiring person if the person promptly divests itself of a sufficient number of shares of common stock.

Until the rights distribution date:

· our common stock certificates will evidence the rights, and the rights will be transferable only with those certificates; and

· any new shares of common stock will be issued with rights, and new certificates will contain a notation incorporating the rights agreement by reference.

As soon as practicable after the rights distribution date, the rights agent will mail certificates representing the rights to holders of record of common stock at the close of business on that date. As of the rights distribution date, only separate rights certificates will represent the rights.

We will not issue rights with any shares of common stock we issue after the rights distribution date, except as our board of directors may otherwise determine.

Flip-in event

A “flip-in event” will occur under the rights agreement when a person becomes an acquiring person. If a flip-in event occurs and we do not redeem the rights as described under the heading “—Redemption of rights” below, each right, other than any right that has become void, as described below, will become exercisable at the time it is no longer redeemable for the number of shares of common stock, or, in some cases, cash, property or other of our securities, having a current market price equal to two times the exercise price of such right.

If a flip-in event occurs, all rights that then are, or in some circumstances that were, beneficially owned by or transferred to an acquiring person or specified related parties will become void in the circumstances which the rights agreement specifies.

Flip-over event

A “flip-over event” will occur under the rights agreement when, at any time after a person has become an acquiring person:

· we are acquired in a merger or other business combination transaction; or

· 50% or more of our assets, cash flows or earning power is sold or transferred.

If a flip-over event occurs, each holder of a right, other than any right that has become void as we describe under the heading “—Flip-in event” above, will have the right to receive the number of shares of common stock of the acquiring company having a current market price equal to two times the exercise price of such right.

Antidilution

The number of outstanding rights associated with our common stock is subject to adjustment for any stock split, stock dividend or subdivision, combination or reclassification of our common stock occurring prior to the rights distribution date. With some exceptions, the rights agreement does not require us to adjust the exercise price of the rights until cumulative adjustments amount to at least 1% of the exercise price. It also does not require us to issue fractional shares of our preferred stock that are not integral multiples of one one-hundredth of a share, and, instead, we may make a cash adjustment based on the market price of the common stock on the last trading date prior to the date of exercise. The rights agreement reserves us the right to require, prior to the occurrence of any flip-in event or flip-over event, that, on any exercise of rights, a number of rights must be exercised so that we will issue only whole shares of stock.

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Redemption of rights

At any time until 10 days after the date on which the occurrence of a flip-in event is first publicly announced, we may redeem the rights in whole, but not in part, at a redemption price of $0.01 per right. The redemption price is subject to adjustment for any stock split, stock dividend or similar transaction occurring before the date of redemption. At our option, we may pay that redemption price in cash, shares of common stock or any other consideration our board of directors may select. The rights are not exercisable after a flip-in event until they are no longer redeemable. If our board of directors timely orders the redemption of the rights, the rights will terminate on the effectiveness of that action.

Exchange of rights

We may, at our option, exchange the rights (other than rights owned by an acquiring person or an affiliate or an associate of an acquiring person, which have become void), in whole or in part. The exchange must be at an exchange ratio of one share of common stock per right, subject to specified adjustments at any time after the occurrence of a flip-in event and prior to:

· any person other than our existing stockholder becoming the beneficial owner of common stock with voting power equal to 50% or more of the total voting power of all shares of common stock entitled to vote in the election of directors; or

· the occurrence of a flip-over event.

Amendment of terms of rights

While the rights are outstanding, we may amend the provisions of the rights agreement only as follows:

· to cure any ambiguity, omission, defect or inconsistency;

· to make changes that do not adversely affect the interests of holders of rights, excluding the interests of any acquiring person; or

· to shorten or lengthen any time period under the rights agreement, except that we cannot change the time period when rights may be redeemed or lengthen any time period, unless such lengthening protects, enhances or clarifies the benefits of holders of rights other than an acquiring person.

At any time when no rights are outstanding, we may amend any of the provisions of the rights agreement, other than decreasing the redemption price.

Dissenters’ Rights of Appraisal and Payment

Under the BCA, our stockholders have the right to dissent from various corporate actions, including any merger or sale of all, or substantially all, of our assets not made in the usual course of our business, and receive payment of the fair value of their shares. In the event of any amendment of our articles of incorporation, a stockholder also has the right to dissent and receive payment for his or her shares if the amendment alters certain rights in respect of those shares. The dissenting stockholder must follow the procedures set forth in the BCA to receive payment. In the event that we and any dissenting stockholder fail to agree on a price for the shares, the BCA procedures involve, among other things, the institution of proceedings in the high court of the Republic of the Marshall Islands or in any appropriate court in any jurisdiction in which our shares are primarily traded on a local or national securities exchange. The value of the shares of the dissenting stockholder is fixed by the court after reference, if the court so elects, to the recommendations of a court-appointed appraiser.

Stockholders’ Derivative Actions

Under the BCA, any of our stockholders may bring an action in our name to procure a judgment in our favor, also known as a derivative action, provided that the stockholder bringing the action is a holder of common stock both at the time the derivative action is commenced and at the time of the transaction to which the action relates.

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Limitations on Liability and Indemnification of Officers and Directors

The BCA authorizes corporations to limit or eliminate the personal liability of directors and officers to corporations and their stockholders for monetary damages for breaches of directors’ fiduciary duties. Our articles of incorporation include a provision that eliminates the personal liability of directors for monetary damages for actions taken as a director to the fullest extent permitted by law.

Our bylaws provide that we must indemnify our directors and officers to the fullest extent authorized by law. We are also expressly authorized to advance certain expenses (including attorneys’ fees and disbursements and court costs) to our directors and officers and carry directors’ and officers’ insurance providing indemnification for our directors, officers and certain employees for some liabilities. We believe that these indemnification provisions and insurance are useful to attract and retain qualified directors and executive officers.

The limitation of liability and indemnification provisions in our articles of incorporation and bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duty. These provisions may also have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our stockholders. In addition, stockholders’ investments may be adversely affected to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.

There is currently no pending material litigation or proceeding involving any of our directors, officers or employees for which indemnification is sought.

Anti-Takeover Effect of Certain Provisions of our Articles of Incorporation and Bylaws

Several provisions of our articles of incorporation and bylaws, which are summarized in the following paragraphs, may have anti-takeover effects. These provisions are intended to avoid costly takeover battles, lessen our vulnerability to a hostile change of control and enhance the ability of our board of directors to maximize stockholder value in connection with any unsolicited offer to acquire us. However, these anti-takeover provisions could also delay, defer or prevent (a) the merger or acquisition of our company by means of a tender offer, a proxy contest or otherwise that a stockholder might consider in its best interest, including attempts that may result in a premium over the market price for the shares held by the stockholders, and (b) the removal of incumbent officers and directors.

Blank check preferred stock

Under the terms of our articles of incorporation, our board of directors has authority, without any further vote or action by our stockholders, to issue up to 20,000,000 shares of blank check preferred stock, of which 1,000,000 shares have been designated Series A Participating Preferred Stock, in connection with our adoption of a stockholder rights plan as described above under “—Stockholder Rights Plan” and 1,600,000 have been designated as Series B Preferred Shares, 2,300,000 have been designated as Series C Preferred Shares and 3,200,000 have been designated as Series D Preferred Shares. Our board of directors may issue shares of preferred stock on terms calculated to discourage, delay or prevent a change of control of our company or the removal of our management.

Classified board of directors

Our articles of incorporation provide for a board of directors serving staggered, three-year terms. Approximately one-third of our board of directors will be elected each year. This classified board provision could discourage a third party from making a tender offer for our shares or attempting to obtain control of our company. It could also delay stockholders who do not agree with the policies of the board of directors from removing a majority of the board of directors for two years.

Election and removal of directors

Our articles of incorporation prohibit cumulative voting in the election of directors. Our bylaws require parties other than the board of directors to give advance written notice of nominations for the election of directors. Our articles of incorporation and bylaws also provide that our directors may be removed only for cause. These provisions may discourage, delay or prevent the removal of incumbent officers and directors.

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Calling of special meeting of stockholders

Our articles of incorporation and bylaws provide that special meetings of our stockholders may only be called by our Chairman of the board of directors, chief executive officer or by either, at the request of a majority of our board of directors.

Advance notice requirements for stockholder proposals and director nominations

Our bylaws provide that stockholders seeking to nominate candidates for election as directors or to bring business before an annual meeting of stockholders must provide timely notice of their proposal in writing to the corporate secretary.

Generally, to be timely, a stockholder’s notice must be received at our offices not less than 90 days nor more than 120 days prior to the first anniversary date of the previous year’s annual meeting. Our bylaws also specify requirements as to the form and content of a stockholder’s notice. These provisions may impede stockholders’ ability to bring matters before an annual meeting of stockholders or to make nominations for directors at an annual meeting of stockholders.

C. Material Contracts

Not applicable.

D. Exchange Controls and Other Limitations Affecting Security Holders

Under Marshall Islands law, there are currently no restrictions on the export or import of capital, including foreign exchange controls or restrictions that affect the remittance of dividends, interest or other payments to non-resident holders of our common stock.

E. Tax Considerations

Marshall Islands Tax Considerations

We are a non-resident domestic Marshall Islands corporation. Because we do not, and we do not expect that we will, conduct business or operations in the Republic of the Marshall Islands, under current Marshall Islands law we are not subject to tax on income or capital gains and our stockholders (so long as they are not citizens or residents of the Republic of the Marshall Islands) will not be subject to Marshall Islands taxation or withholding on dividends and other distributions (including upon a return of capital) we make to our stockholders. In addition, so long as our stockholders are not citizens or residents of the Republic of the Marshall Islands, our stockholders will not be subject to Marshall Islands stamp, capital gains or other taxes on the purchase, holding or disposition of our common stock, and our stockholders will not be required by the Republic of the Marshall Islands to file a tax return relating to our common stock or Preferred Shares.

Each stockholder is urged to consult its tax counselor or other advisor with regard to the legal and tax consequences, under the laws of pertinent jurisdictions, including the Republic of the Marshall Islands, of its investment in us. Further, it is the responsibility of each stockholder to file all state, local and non-U.S., as well as U.S. federal tax returns that may be required of it.

Liberian Tax Considerations

Some of our vessel-owning subsidiaries are incorporated under the laws of the Republic of Liberia. The Republic of Liberia enacted a new income tax act effective as of January 1, 2001 (the “New Act”) which did not distinguish between the taxation of “non-resident” Liberian corporations, such as our subsidiaries, which conduct no business in Liberia and were wholly exempt from taxation under the income tax law previously in effect since 1977, and “resident” Liberian corporations which conduct business in Liberia and are, and were under the prior law, subject to taxation. The New Act was amended by the Consolidated Tax Amendments Act of 2011 which was published and became effective on November 1, 2011 (the “Amended Act”). The Amended Act specifically exempts from taxation non-resident Liberian corporations such as our Liberian subsidiaries that engage in international shipping (and not exclusively in Liberia) and that do not engage in other business or activities in Liberia other than as specifically enumerated in the Amended Act. In addition, the Amended Act made such exemption from taxation retroactive to the effective date of the New Act.

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United States Federal Income Tax Considerations

The following discussion of United States federal income tax matters is based on the Internal Revenue Code of 1986, as amended (the “Code”), judicial decisions, administrative pronouncements, and existing and proposed regulations issued by the United States Department of the Treasury as of the date hereof, all of which are subject to change, possibly with retroactive effect. This discussion does not address any United States state or local taxes, any United States federal tax other than federal income tax or the tax on net investment income imposed by Section 1411 of the Code. This discussion does not purport to address the tax consequences of owning our stock to all categories of investors, some of which (such as financial institutions, regulated investment companies, real estate investment trusts, tax-exempt organizations, insurance companies, United States expatriates, persons holding our stock as part of a hedging, integrated, conversion or constructive sale transaction or a straddle, persons liable for alternative minimum tax, pass-through entities and investors therein, persons who own, actually or under applicable constructive ownership rules, 10% or more of our stock, traders or dealers in securities or currencies and United States holders whose functional currency is not the United States dollar) may be subject to special rules. This discussion only addresses holders that hold the stock as a capital asset. This discussion is based upon our beliefs and expectations concerning our past, current and anticipated activities, income and assets and those of our subsidiaries, the direct, indirect and constructive ownership of our stock and the trading and quotation of our stock. Should any such beliefs or expectations prove to be incorrect, the conclusions described herein could be adversely affected. You are encouraged to consult your own tax advisors concerning the overall tax consequences of the ownership of our stock arising in your own particular situation under United States federal, state, local or foreign law.

If a partnership holds our stock, the tax treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership. Partners in a partnership holding our stock are encouraged to consult their tax advisors.

Taxation of Our Shipping Income

For purposes of the following discussion, “shipping income” means income that is derived by a non-United States corporation from:

(a) the use of vessels;

(b) the hiring or leasing of vessels for use on a time, operating or bareboat charter basis;

(c) the participation in a pool, partnership, strategic alliance, joint operating agreement or other joint venture it directly or indirectly owns or participates in that generates such income; or

(d) the performance of services directly related to those uses.

Shipping income attributable to transportation exclusively between non-United States ports is generally not subject to United States income tax. However, unless exempt from United States income tax under the rules contained in Section 883 of the Code, a non-United States corporation is, under the rules of Section 887 of the Code, subject to a 4% United States income tax in respect of its “United States source gross transportation income” (without the allowance for deductions). United States source gross transportation income includes 50% of shipping income that is attributable to transportation that begins or ends (but that does not both begin and end) in the United States. Under Section 883 of the Code, a non-United States corporation will be exempt from United States income tax on its United States source gross transportation income if:

(a) it is organized in a foreign country (its “country of organization”) that grants an “equivalent exemption” to United States corporations; and

(b) either more than 50% of the value of its stock is owned, directly or indirectly, by individuals who are “residents” of its country of organization or of another foreign country that grants an “equivalent exemption” to United States corporations or its stock is “primarily and regularly traded on an established securities market” in its country of organization, in another country that grants an “equivalent exemption” to United States corporations, or in the United States.

We believe that we will not satisfy the requirements of Section 883 of the Code. As a result, we will be subject to the 4% United States income tax on United States source gross transportation income. Since 50% of our gross

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shipping income for transportation that begins or ends in the United States would be treated as United States source gross transportation income, we expect that the effective rate of United States income tax on our gross shipping income for such transportation would equal 2%. Many of our charters contain a provision that obligates the charterer to reimburse us for the 4% United States income tax that we are required to pay in respect of the vessel subject to the relevant charter.

In lieu of the foregoing rules, since the exemption of Section 883 of the Code will not apply to us, our United States source gross transportation income that is considered to be “effectively connected” with the conduct of a United States trade or business would be subject to the United States corporate income tax currently imposed at rates of up to 35% (net of applicable deductions). In addition, we may be subject to the 30% United States “branch profits” taxes on earnings effectively connected with the conduct of such trade or business, as determined after allowance for certain adjustments, and on certain interest paid or deemed paid attributable to the conduct of our United States trade or business.

We expect that none of our United States source gross transportation income will be “effectively connected” with the conduct of a United States trade or business. Such income would be considered “effectively connected” only if:

(a) we had, or were considered to have, a fixed place of business in the United States involved in the earning of our United States source gross transportation income; and

(b) substantially all of our United States source gross transportation income was attributable to regularly scheduled transportation, such as the operation of a vessel that followed a published schedule with repeated sailings at regular intervals between the same points for voyages that begin or end in the United States.

We believe that we will not meet these conditions because we will not have, or permit circumstances that would result in our having, any vessel sailing to or from the United States on a regularly scheduled basis. In addition, income attributable to transportation that both begins and ends in the United States is not subject to the tax rules described above. Such income is subject to either a 30% gross-basis tax or to United States corporate income tax on net income at rates of up to 35% (and the branch profits tax discussed above). Although there can be no assurance, we do not expect to engage in transportation that produces shipping income of this type.

Taxation of Gain on Sale of Assets

Regardless of whether we qualify for the exemption under Section 883 of the Code, we will not be subject to United States income taxation with respect to gain realized on a sale of a vessel, provided the sale is considered to occur outside of the United States (as determined under United States tax principles). In general, a sale of a vessel will be considered to occur outside of the United States for this purpose if title to the vessel (and risk of loss with respect to the vessel) passes to the buyer outside of the United States. We expect that any sale of a vessel will be so structured that it will be considered to occur outside of the United States.

United States Federal Income Taxation of United States Holders

You are a “United States holder” if you are a beneficial owner of our stock and you are a United States citizen or resident, a United States corporation (or other United States entity taxable as a corporation), an estate the income of which is subject to United States federal income taxation regardless of its source, or a trust if a court within the United States is able to exercise primary jurisdiction over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of that trust.

Distributions on Our Stock

Subject to the discussion of PFICs below, any distributions with respect to our stock that you receive from us, other than distributions in liquidation and distributions in redemption of our stock that are treated as exchanges, will generally constitute dividends, which may be taxable as ordinary income or “qualified dividend income” as described below, to the extent of our current or accumulated earnings and profits (as determined under United States tax principles). Distributions in excess of our earnings and profits will be treated first as a nontaxable return of capital to the extent of your tax basis in our stock (on a dollar-for-dollar basis) and thereafter as capital gain. Because we do not intend to determine our earnings and profits on the basis of United States federal

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income tax principles, any distribution paid will generally be reported as a “dividend” for United States federal income tax purposes.

Because we are not a United States corporation, if you are a United States corporation (or a United States entity taxable as a corporation), you will not be entitled to claim a dividends-received deduction with respect to any distributions you receive from us.

Dividends paid with respect to our stock will generally be treated as “passive category income” for purposes of computing allowable foreign tax credits for United States foreign tax credit purposes.

If you are an individual, trust or estate, dividends you receive from us should be treated as “qualified dividend income” taxed at preferential rates, provided that:

(a) the common stock or Preferred Shares on which the dividends are paid are readily tradable on an established securities market in the United States (such as the NYSE);

(b) we are not a PFIC for the taxable year during which the dividend is paid or the immediately preceding taxable year (see the discussion below under “—PFIC Status”);

(c) you own our stock for more than (x) in the cases where the dividends on the Preferred Shares are attributable to a period or periods aggregating in excess of 366 days, 90 days in the 181-day period beginning 90 days before the date on which the Preferred Shares become ex-dividend or (y) in all other cases, 60 days in the 121-day period beginning 60 days before the date on which the stock becomes ex-dividend;

(d) you are not under an obligation to make related payments with respect to positions in substantially similar or related property; and

(e) certain other conditions are met.

Special rules may apply to any “extraordinary dividend.” Generally, an extraordinary dividend is: (1) a dividend in an amount that is equal to (or in excess of) (x) 10%, in the case of common stock, or (y) 5%, in the case of the Preferred Shares, of your adjusted tax basis in (or the fair market value of, in certain circumstances) a share of our stock or (2) dividends received within a one year period that, in the aggregate, equal or exceed 20% of your adjusted tax basis in (or fair market value of in certain circumstances) a share of our stock. If we pay an “extraordinary dividend” on our stock that is treated as “qualified dividend income” and if you are an individual, estate or trust, then any loss you derive from a subsequent sale or exchange of such stock will be treated as long-term capital loss to the extent of such dividend.

There is no assurance that dividends you receive from us will be eligible for preferential rates. Dividends you receive from us that are not eligible for any preferential rate will be taxed at the ordinary income rates.

Sale, Exchange or Other Disposition of Stock

Provided that we are not a PFIC for any taxable year and except as provided in the discussion under “Redemption of Stock”, you generally will recognize taxable gain or loss upon a sale, exchange or other disposition of our stock, in an amount equal to the difference between the amount realized by you from such sale, exchange or other disposition and your tax basis in such stock. Such gain or loss will be treated as long-term capital gain or loss if your holding period is greater than one year at the time of the sale, exchange or other disposition. Such capital gain or loss will generally be treated as United States source income or loss, as applicable, for United States foreign tax credit purposes. Your ability to deduct capital losses against ordinary income is subject to limitations.

Redemption of Stock

In the case of a redemption of stock (including a disposition of stock to us or persons related to us), unless the redemption satisfies one of the tests set forth in Section 302(b) of the Code for treating the redemption as a sale or exchange, the redemption will be treated under Section 302 of the Code as a distribution. If the redemption is treated as a sale or exchange of the United States holder’s stock, the United States holder’s treatment will be as discussed above in “—Sale, Exchange or Other Disposition of Stock.” The redemption will be treated as a sale

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or exchange only if it (i) is “substantially disproportionate,” (ii) constitutes a “complete termination of the holder’s stock interest” in us or (iii) is not “essentially equivalent to a dividend,” each within the meaning of Section 302(b). In determining whether any of the alternative tests of Section 302(b) is met, shares of our capital stock actually owned, as well as shares considered to be owned by the United States holder by reason of certain constructive ownership rules, must be taken into account. Because the determination as to whether any of the alternative tests of Section 302(b) is satisfied with respect to a particular holder of the stock will depend on that holder’s particular facts and circumstances as of the time the determination is made, United States holders should consult their own tax advisors to determine their tax treatment of a redemption of stock in light of their own particular investment circumstances.

PFIC Status

Special United States income tax rules apply to you if you hold stock in a non-United States corporation that is classified as a “passive foreign investment company” (or “PFIC”) for United States income tax purposes. In general, we will be treated as a PFIC in any taxable year in which, after applying certain look-through rules, either:

(a) at least 75% of our gross income for such taxable year consists of “passive income” (e.g., dividends, interest, capital gains and rents derived other than in the active conduct of a rental business); or

(b) at least 50% of the average value of our assets during such taxable year consists of “passive assets” (i.e., assets that produce, or are held for the production of, passive income).

For purposes of determining whether we are a PFIC, we will be treated as earning and owning our proportionate share of the income and assets, respectively, of any of our subsidiary corporations in which we own at least 25% of the value of the subsidiary’s stock. Income we earn, or are deemed to earn, in connection with the performance of services will not constitute passive income. By contrast, rental income will generally constitute passive income (unless we are treated under certain special rules as deriving our rental income in the active conduct of a trade or business).

Because we have chartered all our vessels to unrelated charterers on the basis of period time and spot time charter contracts (and not on the basis of bareboat charters) and because we expect to continue to do so, we believe that currently we should not be treated as being and should not become a PFIC. We believe it is more likely than not that our gross income derived from our time charter activities constitutes active service income (as opposed to passive rental income) and, as a result, our vessels constitute active assets (as opposed to passive assets) for purposes of determining whether we are a PFIC. We believe there is legal authority supporting this position, consisting of case law and United States Internal Revenue Service (“IRS”) pronouncements concerning the characterization of income derived from time charters as service income for other tax purposes. However, there is no legal authority specifically relating to the statutory provisions governing PFICs or relating to circumstances substantially similar to ours. Moreover, a recent case by the United States Court of Appeals for the Fifth Circuit held that, contrary to the position of the IRS in that case, and for purposes of a different set of rules under the Code, income received under a time charter of vessels should be treated as rental income rather than services income. If the reasoning of the Fifth Circuit case were extended to the PFIC context, the gross income we derive or are deemed to derive from our time chartering activities would be treated as rental income, and we would probably be a PFIC.

We have not sought, and we do not expect to seek, an IRS ruling on this matter. As a result, the IRS or a court could disagree with our position that we are not currently a PFIC. No assurance can be given that this result will not occur. In addition, although we intend to conduct our affairs in a manner to avoid, to the extent possible, being classified as a PFIC with respect to any taxable year, we cannot assure you that the nature of our operations will not change in the future, or that we can avoid PFIC status in the future.

As discussed below, if we were to be treated as a PFIC for any taxable year, you generally would be subject to one of three different United States income tax regimes, depending on whether or not you make certain elections. Additionally, you would be required to file annual information returns with the IRS.

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Taxation of United States Holders That Make a Timely QEF Election

If we were treated as a PFIC, and if you make a timely election to treat us as a “Qualified Electing Fund” for United States tax purposes (a “QEF Election”), you would be required to report each year your allocable share of our ordinary earnings and our net capital gain for our taxable year that ends with or within your taxable year, regardless of whether we make any distributions to you. Such income inclusions would not be eligible for the preferential tax rates applicable to “qualified dividend income.” Your adjusted tax basis in our stock would be increased to reflect such taxed but undistributed earnings and profits. Distributions of earnings and profits that had previously been taxed would result in a corresponding reduction in your adjusted tax basis in our stock and would not be taxed again once distributed. You would generally recognize capital gain or loss on the sale, exchange or other disposition of our stock. Even if you make a QEF Election for one of our taxable years, if we were a PFIC for a prior taxable year during which you held our stock and for which you did not make a timely QEF Election, you would also be subject to the more adverse rules described below under “—Taxation of United States Holders That Make No Election.”

You would make a QEF Election with respect to any year that our company is treated as a PFIC by completing and filing IRS Form 8621 with your United States income tax return in accordance with the relevant instructions. If we were to become aware that we were to be treated as a PFIC for any taxable year, we would notify all United States holders of such treatment and would provide all necessary information to any United States holder who requests such information in order to make the QEF election described above.

Taxation of United States Holders That Make a Timely “Mark-to-Market” Election

Alternatively, if we were to be treated as a PFIC for any taxable year and, as we expect, our stock is treated as “marketable stock,” you would be allowed to make a “mark-to-market” election with respect to our stock, provided that you complete and file IRS Form 8621 in accordance with the relevant instructions. If that election is made, you generally would include as ordinary income in each taxable year the excess, if any, of the fair market value of our stock at the end of the taxable year over your adjusted tax basis in our stock. You also would be permitted an ordinary loss in respect of the excess, if any, of your adjusted tax basis in our stock over its fair market value at the end of the taxable year (but only to the extent of the net amount previously included in income as a result of the mark-to-market election). Your tax basis in our stock would be adjusted to reflect any such income or loss amount. Gain realized on the sale, exchange or other disposition of our stock would be treated as ordinary income, and any loss realized on the sale, exchange or other disposition of the stock would be treated as ordinary loss to the extent that such loss does not exceed the net mark-to-market gains previously included by you.

Taxation of United States Holders That Make No Election

Finally, if we were treated as a PFIC for any taxable year and if you did not make either a QEF Election or a “mark-to-market” election for that year, you would be subject to special rules with respect to (a) any excess distribution (that is, the portion of any distributions received by you on our stock in a taxable year in excess of 125% of the average annual distributions received by you in the three preceding taxable years, or, if shorter, your holding period for our stock) and (b) any gain realized on the sale, exchange or other disposition of our stock. Under these special rules:

(1) the excess distribution or gain would be allocated ratably over your aggregate holding period for our common stock;

(2) the amount allocated to the current taxable year would be taxed as ordinary income; and

(3) the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year.

If an individual dies while owning our stock, the individual’s successor generally would not receive a step-up in tax basis with respect to such stock for United States tax purposes.

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United States Federal Income Taxation of Non-United States Holders

You are a “non-United States holder” if you are a beneficial owner of our stock (other than a partnership for United States tax purposes) and you are not a United States holder.

Distributions on Our Stock

You generally will not be subject to United States income or withholding taxes on dividends you receive from us with respect to our stock, unless that income is effectively connected with your conduct of a trade or business in the United States. If you are entitled to the benefits of an applicable income tax treaty with respect to those dividends, that income generally is taxable in the United States only if it is attributable to a permanent establishment maintained by you in the United States.

Sale, Exchange or Other Disposition of Our Stock

You generally will not be subject to United States income tax or withholding tax on any gain realized upon the sale, exchange or other disposition of our stock, unless:

(a) the gain is effectively connected with your conduct of a trade or business in the United States. If you are entitled to the benefits of an applicable income tax treaty with respect to that gain, that gain generally is taxable in the United States only if it is attributable to a permanent establishment maintained by you in the United States; or

(b) you are an individual who is present in the United States for 183 days or more during the taxable year of disposition and certain other conditions are met.

If you are engaged in a United States trade or business for United States tax purposes, you will be subject to United States tax with respect to your income from our stock (including dividends and the gain from the sale, exchange or other disposition of the stock) that is effectively connected with the conduct of that trade or business in the same manner as if you were a United States holder. In addition, if you are a corporate non-United States holder, your earnings and profits that are attributable to the effectively connected income (subject to certain adjustments) may be subject to an additional United States branch profits tax at a rate of 30%, or at a lower rate as may be specified by an applicable income tax treaty.

United States Backup Withholding and Information Reporting

In general, if you are a non-corporate United States holder, dividend payments (or other taxable distributions) made within the United States will be subject to information reporting requirements and backup withholding tax if you:

(1) fail to provide us with an accurate taxpayer identification number;

(2) are notified by the IRS that you have failed to report all interest or dividends required to be shown on your federal income tax returns; or

(3) in certain circumstances, fail to comply with applicable certification requirements.

Under legislation enacted in 2010, United States holders who are individuals generally will be required to report certain information with respect to an interest in our stock, including our name, address and such information as is necessary to identify the class or issue of which the shares of stock are a part. These requirements are subject to exceptions, including an exception for shares held in accounts maintained by certain financial institutions and an exception applicable if the aggregate value of all “specified foreign financial assets” (as defined in the Code) held by the United States holder (and, as applicable, by his or her spouse) does not exceed a specified minimum amount.

If you are a non-United States holder, you may be required to establish your exemption from information reporting and backup withholding by certifying your status on IRS Form W-8BEN, W-8BEN-E, W-8ECI or W-8IMY, as applicable. If you sell our stock to or through a United States office or broker, the payment of the sales proceeds is subject to both United States backup withholding and information reporting unless you certify that you are a non-United States person, under penalties of perjury, or you otherwise establish an exemption. If you

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sell our stock through a non-United States office of a non-United States broker and the sales proceeds are paid to you outside the United States, then information reporting and backup withholding generally will not apply to that payment. However, United States information reporting requirements (but not backup withholding) will apply to a payment of sales proceeds, even if that payment is made outside the United States, if you sell our stock through a non-United States office of a broker that is a United States person or has certain other connections with the United States.

Backup withholding tax is not an additional tax. Rather, you generally may obtain a refund of any amounts withheld under backup withholding rules that exceed your income tax liability by accurately completing and timely filing a refund claim with the IRS. You should consult your own tax advisor regarding the application of the backup withholding and information reporting rules.

F. Dividends and Paying Agents

Not applicable.

G. Statement by Experts

Not applicable.

H. Documents on Display

We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In accordance with these requirements, we file reports and other information as a foreign private issuer with the SEC. You may inspect and copy our public filings without charge at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information about the public reference room. You may obtain copies of all or any part of such materials from the SEC upon payment of prescribed fees. You may also inspect reports and other information regarding registrants, such as us, that file electronically with the SEC without charge at a web site maintained by the SEC at http://www.sec.gov.

I. Subsidiary Information

Not applicable.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

A. Quantitative Information About Market Risk

Interest Rate Risk

We are subject to market risks relating to changes in interest rates because we have floating rate debt outstanding, which is based on U.S. dollar LIBOR plus, in the case of each credit facility, a specified margin. Our objective is to manage the impact of interest rate changes on our earnings and cash flow in relation to our borrowings and to this effect, when we deem appropriate, we use derivative financial instruments. We had entered into 12 interest rate swap agreements as of December 31, 2014, compared to 15 interest rate swap agreements as of December 31, 2013, in order to manage future interest costs and the risk associated with changing interest rates.

The total notional principal amount of these swaps as of December 31, 2014 was $263.8 million. The swaps have specified rates and durations. Refer to the table in Note 16 of our financial statements included elsewhere in this annual report which summarizes the interest rate swaps in place as of December 31, 2014 and December 31, 2013. Under our interest rate swap transactions, the bank effects quarterly or semiannual floating-rate payments to us for the relevant amount based either on the three- or six-month U.S. dollar LIBOR and we make quarterly or semiannual payments to the bank on the relevant amount at the respective fixed rates.

We entered into these interest rate swap agreements to mitigate our exposure to interest rate fluctuations and at a time when we believed long-term interest rates were reasonably low. None of our interest rate swap meets hedge

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accounting criteria under accounting guidance relating to Derivatives and Hedging. Although we are exposed to credit-related losses in the event of non-performance in connection with such swap agreements, because the counterparties are major financial institutions, we consider the risk of loss due to their nonperformance to be minimal.

Through these swap transactions, we effectively hedged the interest rate exposure of 64.7% of our loans outstanding as of December 31, 2014, which bear interest at LIBOR.

The following table sets forth the sensitivity of our existing loans as of December 31, 2014 as to a 100 basis point increase in LIBOR taking into account our interest rate swap agreements that are currently in place, during the next five years, and reflects the additional interest expense.

Year	Amount
2015	$2.1 million
2016	$2.5 million
2017	$2.6 million
2018	$2.9 million
2019	$2.1 million

Foreign Currency Exchange Risk

We generate all of our revenues in U.S. dollars, but for the year ended December 31, 2014 we incurred approximately 29.81% of our vessel operating expenses in currencies other than the U.S. dollar. As of December 31, 2014, approximately 45.81% of our outstanding accounts payable were denominated in currencies other than the U.S. dollar and were subject to exchange rate risk, as their value fluctuates with changes in exchange rates.

A hypothetical 10% immediate and uniform adverse move in all currency exchange rates from the rates in effect as of December 31, 2014, would have increased our vessel operating expenses by approximately $1,509,630 and the fair value of our outstanding accounts payable by approximately $77,158.

While, from time to time, we have in the past used financial derivatives in the form of foreign exchange forward agreements to mitigate the risk associated with exchange rate fluctuations, currently, no such instruments are in place.

There have been no material quantitative changes in market risk exposures between 2014 and 2013.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

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PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

A. Material Modifications to the Rights of Security Holders

We adopted a stockholder rights plan on May 13, 2008 that authorizes the issuance to our existing stockholders of preferred share rights and additional shares of common stock if any third party seeks to acquire control of a substantial block of our common stock. See “Item 10. Additional Information —B. Memorandum and Articles of Association—Stockholder Rights Plan” included in this annual report for a description of the stockholder rights plan.

ITEM 15. CONTROLS AND PROCEDURES

A. Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of December 31, 2014. Disclosure controls and procedures are defined under SEC rules as controls and other procedures that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within required time periods. Disclosure controls and procedures include without limitations controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based on our evaluation, the chief executive officer and the chief financial officer have concluded that our disclosure controls and procedures were effective as of December 31, 2014.

B. Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act and for the assessment of the effectiveness of internal control over financial reporting. Our internal control over financial reporting is a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”).

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit the preparation of financial statements in accordance with U.S. GAAP, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In making its assessment of our internal control over financial reporting as of December 31, 2014, management, including the chief executive officer and chief financial officer, used the criteria set forth in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission of 2013 (“COSO”).

Management concluded that, as of December 31, 2014, our internal control over financial reporting was effective. Deloitte Hadjipavlou, Sofianos & Cambanis S.A. (“Deloitte”), our independent registered public accounting firm, has audited the financial statements included herein and our internal control over financial reporting and has issued an attestation report on the effectiveness of our internal control over financial reporting as of December 31, 2014 which is reproduced in its entirety in Item 15(c) below.

C. Attestation Report of the Registered Public Accounting Firm

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Safe Bulkers, Inc., Majuro, Republic of the Marshall Islands:

We have audited the internal control over financial reporting of Safe Bulkers, Inc. and its subsidiaries (the “Company”) as of December 31, 2014, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Management’s Annual Report on Internal Control over Financial Reporting.” Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based on the criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended December 31, 2014 of the Company and our report dated March 10, 2015 expressed an unqualified opinion on those financial statements.

/s/ Deloitte Hadjipavlou, Sofianos & Cambanis S.A.

Athens, Greece

March 10, 2015

D. Changes in Internal Control over Financial Reporting

During the period covered by this annual report, we have made no changes to our internal control over financial reporting that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

ITEM 16.	[RESERVED]
ITEM 16A	AUDIT COMMITTEE FINANCIAL EXPERT

Our Audit Committee consists of three independent directors, John Gaffney, Ole Wikborg and Frank Sica, who is the chairman of the committee. Our board of directors has determined that Frank Sica, whose biographical details are included in “Item 6. Directors, Senior Management and Employees—A. Directors and Senior Management”, qualifies as an audit committee financial expert as defined under current SEC regulations.

ITEM 16B CODE OF ETHICS

We have adopted a Code of Business Conduct and Ethics for all officers and employees of our company, which incorporates a Code of Ethics for directors and a Code of Conduct for corporate officers, a copy of which is posted on our website, and may be viewed at http://www.safebulkers.com/corp_ethics.htm. We will also provide a paper copy of this document free of charge upon written request by our stockholders. Stockholders may direct their requests to the attention of Dr. Loukas Barmparis, Secretary, Safe Bulkers, Inc., 30-32 Avenue Karamanli, 16673, Voula, Athens, Greece. No waivers of the Code of Business Conduct and Ethics have been granted to any person during the fiscal year ended December 31, 2014.

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ITEM 16C PRINCIPAL ACCOUNTANT FEES AND SERVICES

Aggregate fees billed to the Company for the fiscal years ended December 31, 2014 and 2013 by the Company’s principal accounting firm, Deloitte, Hadjipavlou, Sofianos & Cambanis S.A., an independent registered public accounting firm and member of Deloitte Touche Tohmatsu, Limited, by the category of service, were as follows:

	2013		2014
	(In Thousands)
Audit fees	$	464	$	463
Total fees	$	464	$	463

Audit fees represent compensation for professional services rendered for the integrated audit of the consolidated financial statements of the Company and for the review of the quarterly financial information as well as in connection with the review of registration statements and related consents and comfort letters and any other audit services required for SEC or other regulatory filings.

Pre-approval Policies and Procedures

The audit committee charter sets forth our policy regarding retention of the independent auditors, giving the audit committee responsibility for the appointment, compensation, retention and oversight of the work of the independent auditors. The audit committee charter provides that the committee is responsible for reviewing and approving in advance the retention of the independent auditors for the performance of all audit and lawfully permitted non-audit services. The chairman of the audit committee or in the absence of the chairman, any member of the audit committee designated by the chairman, has authority to approve in advance any lawfully permitted non-audit services and fees. The audit committee is authorized to establish other policies and procedures for the pre-approval of such services and fees. Where non-audit services and fees are approved under delegated authority, the action must be reported to the full audit committee at its next regularly scheduled meeting.

ITEM 16D	EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not Applicable.
ITEM 16E	PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

On June 10, 2009, the Company announced that Vorini Holdings Inc. authorized a program under which it may from time to time purchase shares of the Company’s common stock on the open market. The maximum number of shares of common stock that can be purchased annually under the program and any private placement is approximately 2% of the Company’s shares outstanding. The program is still in effect and details on the shares purchased in 2014 are set forth in the table below. As of February 24, 2015, the Company had 83,457,938 shares of common stock outstanding. Approximately 48,426,015 of those shares, or 58.02% of common stock outstanding, were held by the Company’s affiliates, according to information provided to the Company by such affiliates. The remaining 35,031,923 shares, or 41.98% of common stock outstanding, represented the public float.

Period 2014	Total Number of Shares (or Units) Purchased		Average Price Paid per Share (or Units)		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs
January	—		—		—
February		—		—		—
March		—		—		—

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April	—	—	—
May	—	—	—
June	—	—	—
July	—	—	—
August	—	—	—
September	—	—	—
October	—	—	—
November	27,118	4.78	27,118
December	972,882	4.31	972,882
2015
January	—	—	—
February	—	—	—

(a) All purchases have been made on the open market within the safe harbor provisions of Regulation 10b-18 under the Exchange Act.

ITEM 16F CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

Not Applicable.

ITEM 16G CORPORATE GOVERNANCE

Statement of Significant Differences Between our Corporate Governance Practices and the New York Stock Exchange Corporate Governance Standards for U.S. Non-Controlled Issuers

Overview

Pursuant to certain exceptions for foreign private issuers and controlled companies, we are not required to comply with certain of the corporate governance practices followed by U.S. and non-controlled companies under the New York Stock Exchange listing standards. However, pursuant to Section 303.A.11 of the New York Stock Exchange Listed Company Manual and the requirements of Form 20-F, we are required to state any significant differences between our corporate governance practices and the practices required by the New York Stock Exchange. We believe that our established practices in the area of corporate governance are in line with the spirit of the New York Stock Exchange standards and provide adequate protection to our shareholders. For example, our audit committee consists solely of independent directors. The significant differences between our corporate governance practices and the New York Stock Exchange standards applicable to listed U.S. companies are set forth below.

Independent Directors

The New York Stock Exchange requires that listed companies have a majority of independent directors. As permitted under Marshall Islands law and our bylaws, our board of directors consists of a majority of non-independent directors.

Executive Sessions

The New York Stock Exchange requires that non-management directors meet regularly in executive sessions without management. The New York Stock Exchange also requires that all independent directors meet in an executive session at least once a year. As permitted under Marshall Islands law and our bylaws, our non-management directors do not regularly hold executive sessions without management and we do not expect them to do so.

Corporate Governance, Nominating and Compensation Committee

The New York Stock Exchange requires that a listed U.S. company have a nominating/corporate governance committee and a compensation committee, each composed of independent directors. As permitted under Marshall

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Islands law and our bylaws, we have a combined corporate governance, nominating and compensation committee, which at present is composed wholly of independent directors.

ITEM 16H	MINE SAFETY DISCLOSURE
Not applicable.

ITEM 17.	FINANCIAL STATEMENTS
Not Applicable.

ITEM 18. FINANCIAL STATEMENTS

Reference is made to pages F-1 through F-27 included herein by reference.

ITEM 19. EXHIBITS

Exhibit	Description
1.1	Amended and Restated Articles of Incorporation*
1.2	Articles of Amendment to Amended and Restated Articles of Incorporation**
1.3	Amended and Restated Bylaws*
2.1	Form of Registration Rights Agreement between Safe Bulkers, Inc. and Vorini Holdings Inc.*
2.2	Stockholder Rights Agreement*
2.3	Specimen Share Certificate*
3.1	Statement of Designation of the 8.00% Series B Cumulative Redeemable Perpetual Preferred Shares (Par Value $0.01 Per Share) (Incorporated by reference to the Company’s Form 8-A12B filed with the SEC on June 18, 2013)
3.2	Statement of Designation of the 8.00% Series C Cumulative Redeemable Perpetual Preferred Shares (Par Value $0.01 Per Share) (Incorporated by reference to Exhibit 3.4 on the Company’s Form 8-A12B filed with the SEC on May 7, 2014)
3.3	Statement of Designation of the 8.00% Series D Cumulative Redeemable Perpetual Preferred Shares (Par Value $0.01 Per Share) (Incorporated by reference to Exhibit 3.4 on the Company’s Form 8-A12B filed with the SEC on June 30, 2014)
4.1	Form of Management Agreement between Safety Management Overseas S.A. and Safe Bulkers, Inc. ***
4.2	Amendment No. 1 to Management Agreement between Safety Management Overseas S.A. and Safe Bulkers, Inc. ***
4.3	Amendment No. 2 to Management Agreement between Safety Management Overseas S.A. and Safe Bulkers, Inc. ***
4.4	Amendment No. 3 to Management Agreement between Safety Management Overseas S.A. and Safe Bulkers, Inc. ***
4.5	Form of Restrictive Covenant Agreement among Safe Bulkers, Inc., Polys Hajioannou, Vorini Holdings Inc., SafeFixing Corp and Machairiotissa Holdings Inc. ***
4.6	Amendment No. 1 to Restrictive Covenant Agreement among Safe Bulkers, Inc., Polys Hajioannou, Vorini Holdings Inc., SafeFixing Corp and Machairiotissa Holdings Inc. ***
4.7	Amendment No. 2 to Restrictive Covenant Agreement among Safe Bulkers, Inc., Polys Hajioannou, Vorini Holdings Inc., SafeFixing Corp and Machairiotissa Holdings Inc. ***
4.8	Form of Restrictive Covenant Agreement between Safe Bulkers, Inc. and Polys Hajioannou***
4.9	Amendment No. 1 to Restrictive Covenant Agreement between Safe Bulkers, Inc. and Polys Hajioannou***
4.10	Secured Loan Agreement, dated September 22, 2014, by and among Safe Bulkers, Inc., the Financial Institutions listed in Schedule 1 thereto, DNB Bank ASA, as Mandated Lead Arranger, DNB Bank ASA, as Agent, DNB Bank ASA, as Swap Provider, and DNB Bank ASA, as Security Agent.
8.1	List of Subsidiaries
12.1	Certification of principal executive officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended
12.2	Exchange Act of 1934, as amended

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Exhibit	Description
13.1	Certification of principal executive officer pursuant to 18 U.S.C. Section 1350 as added by Section 906 of the Sarbanes-Oxley Act of 2002
13.2	Certification of principal financial officer pursuant to 18 U.S.C. Section 1350 as added by Section 906 of the Sarbanes-Oxley Act of 2002
15.1	Consent of Deloitte Hadjipavlou, Sofianos & Cambanis S.A.
*	Previously filed as an exhibit to the Company’s Registration Statement on Form F-1 (Reg. No. 333-150995) filed with the SEC and hereby incorporated by reference to such Registration Statement.
**	Previously filed as an exhibit to the Company’s Form 6-K filed with the SEC on October 8, 2009 and hereby incorporated by reference to such Form 6-K.
***	Previously filed as an exhibit to the Company’s Annual Report on Form 20-F filed with the SEC on March 5, 2014 and hereby incorporated by reference to such Form 20-F.

86

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

March 10, 2015
	By
	/s/ KONSTANTINOS ADAMOPOULOS
	Name:	Konstantinos Adamopoulos
	Title:	Chief Financial Officer and Director

87

INDEX TO FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of December 31, 2013 and 2014	F-3
Consolidated Statements of Income for the Years Ended December 31, 2012, 2013 and 2014	F-4
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2012, 2013 and 2014	F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2012, 2013 and 2014	F-6
Notes to Consolidated Financial Statements	F-7

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Safe Bulkers, Inc.

Majuro, Republic of the Marshall Islands.

We have audited the accompanying consolidated balance sheets of Safe Bulkers, Inc. and subsidiaries (the “Company”) as of December 31, 2014 and 2013, and the related consolidated statements of income, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2014. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Safe Bulkers, Inc. and subsidiaries as of December 31, 2014 and 2013, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2014, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2014, based on the criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 10, 2015 expressed an unqualified opinion on the Company’s internal control over financial reporting.

/s/ Deloitte Hadjipavlou, Sofianos & Cambanis S.A.

Athens, Greece

March 10, 2015

F-2

SAFE BULKERS, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2013 AND 2014
(In thousands of U.S. Dollars, except for share and per share data)

		December 31,
	Notes	2013		2014
ASSETS
CURRENT ASSETS:
Cash and cash equivalents			64,671		107,311
Accounts receivable	4		36,372		4,530
Inventories			12,600		11,185
Accrued revenue	21		—		212
Restricted cash			6,750		10,939
Prepaid expenses and other current assets			2,792		1,715
Investment	9		50,000		—
Total current assets			173,185		135,892
FIXED ASSETS:
Vessels, net	5		855,200		960,423
Advances for vessel acquisitions and vessels under construction	6		76,299		74,243
Total fixed assets			931,499		1,034,666
OTHER NON CURRENT ASSETS:
Deferred finance charges, net	7		5,347		6,601
Restricted cash			1,423		4,263
Derivative assets	16		762		455
Accrued revenue			—		452
Total assets			1,112,216		1,182,329
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt	8		35,185		17,121
Unearned revenue	21		13,106		3,599
Trade accounts payable			4,109		3,014
Accrued liabilities	17		3,865		4,467
Derivative liabilities	16		732		493
Due to Manager	3		307		24
Total current liabilities			57,304		28,718
Derivative liabilities – Long-term	16		3,270		1,065
Long-term debt, net of current portion	8		473,110		452,447
Unearned revenue – Long-term	21		196		—
Total liabilities			533,880		482,230
COMMITMENTS AND CONTINGENCIES	11		—		—
SHAREHOLDERS’ EQUITY:
Shareholders’ equity:
Common stock, $0.001 par value; 200,000,000 authorized, 83,436,484 and 83,450,266 issued and outstanding at December 31, 2013 and 2014, respectively	10		83		83
Preferred stock, $0.01 par value; 20,000,000 authorized, 1,600,000 Series B Preferred Shares and 1,600,000 Series B Preferred Shares, 2,300,000 Series C Preferred Shares, 3,200,000 Series D Preferred Shares, issued and outstanding at December 31, 2013 and 2014, respectively			16		71
Additional paid in capital			237,212		370,201
Retained earnings			341,025		329,744
Total shareholders’ equity			578,336		700,099
Total liabilities and shareholders’ equity			1,112,216		1,182,329

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

F-3

SAFE BULKERS, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2012, 2013 AND 2014
(In thousands of U.S. Dollars, except for share and per share data)

		Year Ended December 31,
	Notes	2012			2013			2014
REVENUES:
Revenues	14		187,557			191,520			159,900
Commissions			(3,261	)		(4,799	)		(5,806	)
Net revenues			184,296			186,721			154,094
EXPENSES:
Voyage expenses			(7,286	)		(10,207	)		(19,429	)
Vessel operating expenses	15		(34,540	)		(41,964	)		(50,634	)
Depreciation	5		(32,250	)		(37,394	)		(43,084	)
General and administrative expenses
-Management fee to related party	3,20		(7,726	)		(8,379	)		(8,962	)
-Public company expenses	20		(2,220	)		(2,981	)		(4,369	)
Early redelivery income/(cost), net	18		11,677			7,050			(532	)
Loss from inventory valuation	12		—			—			(4,001	)
Gain on asset purchase cancellation	13		—			—			3,633
Operating income			111,951			92,846			26,716
OTHER (EXPENSE)/INCOME:
Interest expense	8		(9,072	)		(9,086	)		(8,335	)
Other finance costs			(1,268	)		(1,032	)		(1,132	)
Interest income			1,122			1,008			821
(Loss)/gain on derivatives	16		(5,384	)		813			(1,977	)
Foreign currency (loss)/gain			(3	)		(40	)		13
Amortization and write-off of deferred finance charges	7		(1,226	)		(1,252	)		(1,472	)
Net income			96,120			83,257			14,634
Less preferred dividend			—			1,787			9,390
Net income available to common shareholders			96,120			81,470			5,244
Earnings per share in U.S. Dollars, basic and diluted	23		1.27			1.05			0.06
Weighted average number of shares, basic and diluted			75,468,465			77,495,029			83,446,970

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

F-4

SAFE BULKERS, INC. CONSOLIDATED STATEMENTS
OF SHAREHOLDERS’ EQUITY FOR THE YEARS
ENDED DECEMBER 31, 2012, 2013 AND 2014
(In thousands of U.S. Dollars, except for per share data)

	Common Stock		Preferred Stock		Additional Paid in Capital		Retained Earnings			Total
Balance as of January 1, 2012		71		—		114,918		216,853			331,842
Net income		—		—		—		96,120			96,120
Issuance of common stock		6		—		35,231		—			35,237
Share based compensation		—		—		120		—			120
Common share dividends ($0.50 per share)		—		—		—		(37,463	)		(37,463	)
Balance as of December 31, 2012		77				150,269		275,510			425,856
Net income		—		—		—		83,257			83,257
Issuance of common stock		6		—		47,974		—			47,980
Issuance of preferred stock		—		16		38,849		—			38,865
Share based compensation		—		—		120		—			120
Preferred share dividends		—		—		—		(1,235	)		(1,235	)
Common share dividends ($0.21 per share)		—		—		—		(16,507	)		(16,507	)
Balance as of December 31, 2013		83		16		237,212		341,025			578,336
Net income		—		—		—		14,634			14,634
Issuance of preferred stock		—		55		132,869		—			132,924
Share based compensation		—		—		120		—			120
Preferred share dividends		—		—		—		(7,557	)		(7,557	)
Common share dividends ($0.22 per share)		—		—		—		(18,358	)		(18,358	)
Balance as of December 31, 2014		83		71		370,201		329,744			700,099

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

F-5

SAFE BULKERS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2012, 2013 AND 2014
(In thousands of U.S. Dollars)

	December 31,
	2012			2013			2014
Cash Flows from Operating Activities:
Net income		96,120			83,257			14,634
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		32,250			37,394			43,084
Gain on asset purchase cancellation		—			—			(3,633	)
Loss from inventory valuation		—			—			4,001
Amortization and write-off of deferred finance charges		1,226			1,252			1,472
Unrealized gain on derivatives		(2,798	)		(6,329	)		(2,137	)
Share based compensation		120			120			120
Change in:
Accounts receivable		303			675			42
Due from Manager		24			—			—
Inventories		(3,247	)		(6,700	)		(2,586	)
Accrued revenue		(646	)		646			(664	)
Prepaid expenses and other current assets		(575	)		12			190
Due to Manager		73			234			(283	)
Trade accounts payable		1,878			950			(997	)
Accrued liabilities		(255	)		(2,595	)		192
Unearned revenue		(19,408	)		(8,322	)		(9,703	)
Net Cash Provided by Operating Activities		105,065			100,594			43,732
Cash Flows from Investing Activities:
Vessel acquisitions including advances for vessels under construction		(136,845	)		(118,894	)		(146,300	)
Proceeds from the asset purchase cancellation		—			—			36,320
Maturity of investment		—			—			50,000
Increase in restricted cash		(23,300	)		(6,250	)		(13,779	)
Restricted cash released		2,000			24,800			6,750
Net Cash Used in Investing Activities		(158,145	)		(100,344	)		(67,009	)
Cash Flows from Financing Activities:
Proceeds from long-term debt		312,630			16,000			93,925
Principal payments of long-term debt		(181,254	)		(123,372	)		(132,652	)
Dividends paid		(37,463	)		(17,742	)		(25,915	)
Payment of deferred financing costs		(1,467	)		(132	)		(2,267	)
Proceeds on issuance of common stock		35,505			48,255			—
Payment of common stock offering expenses		(268	)		(177	)		(98	)
Proceeds on issuance of preferred stock		—			39,328			133,387
Payment of preferred stock offering expenses		—			(463	)		(463	)
Net Cash Provided by/ (Used in) Financing Activities		127,683			(38,303	)		65,917
Net increase/ (decrease) in cash and cash equivalents		74,603			(38,053	)		42,640
Cash and cash equivalents at beginning of year		28,121			102,724			64,671
Cash and cash equivalents at end of year		102,724			64,671			107,311
Supplemental cash flow information:
Cash paid for interest (excluding capitalized interest):		8,534			9,263			8,594
Non cash Investing and Financing activities (represent advances and capitalized interest for newbuild Hull J0131 for 2012 and other minor non- cash items for 2013 and 2014):		32,412			194			506

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

F-6

SAFE BULKERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of United States Dollars—except for share and per share data, unless otherwise stated)

1. Basis of Presentation and General Information:

Safe Bulkers, Inc. (“Safe Bulkers” or the “Company”) was formed on December 11, 2007, under the laws of the Republic of the Marshall Islands for the purpose of acquiring an ownership interest in 19 companies. Each of the 19 companies were under the common control of Polys Hajioannou and his family and owned or were scheduled to acquire a newbuild drybulk vessel. The shares of the 19 companies were contributed to Safe Bulkers by Vorini Holdings, Inc. (“Vorini Holdings”), a Marshall Islands corporation, controlled by Polys Hajioannou and his family. Safe Bulkers became the owner of 100% of each of the 19 companies, and Vorini Holdings became the sole shareholder of Safe Bulkers.

Safe Bulkers successfully completed its initial public offering on June 3, 2008 (the “IPO”). Safe Bulkers common stock trades on the New York Stock Exchange (“NYSE”) under the symbol “SB.” Following the IPO, Vorini Holdings became the controlling shareholder of Safe Bulkers.

On December 18, 2013, Bellapais Maritime Inc. (“Bellapais”) a Marshall Islands corporation, Kyperounta Maritime Inc. (“Kyperounta”) a British Virgin Islands corporation, Lefkoniko Maritime Inc. (“Lefkoniko”) a British Virgin Islands corporation, Akamas Maritime Inc. (“Akamas”) a Cayman Islands corporation, Chalkoessa Maritime Inc. (“Chalkoessa”) a Marshall Islands corporation, all wholly owned by Polys Hajioannou, and Kition Holdings Corp. (“Kition Holdings”) a British Virgin Islands corporation wholly owned by Nicolaos Hajioannou, Polys Hajioannou’s brother, entered into a stock transfer agreement with Vorini Holdings, through which shares of Safe Bulkers owned by Vorini Holdings were sold for no consideration to the above entities.

By virtue of shares owned indirectly through Vorini Holdings, Bellapais, Kyperounta, Lefkoniko, Akamas, Chalkoessa and Kition Holdings, Polys Hajioannou and his family continue to be the controlling shareholders of Safe Bulkers, and accordingly control the outcome of matters on which shareholders are entitled to vote, including the election of the entire board of directors and other significant corporate actions.

Since the IPO, Safe Bulkers successfully completed four additional public common stock offerings and three preferred stock offerings.

As of December 31, 2014, Safe Bulkers held 45 wholly-owned companies (which are referred to herein as “Subsidiaries”) which together owned and operated a fleet of 32 drybulk vessels and were scheduled to acquire an additional 12 newbuild (the “Newbuilds”) vessels.

Safe Bulkers and the Subsidiaries are collectively referred to in the notes to the consolidated financial statements as the “Company.”

The Company’s principal business is the acquisition, ownership and operation of drybulk vessels. The Company’s vessels operate worldwide, carrying drybulk cargo for the world’s largest consumers of marine drybulk transportation services. Safety Management Overseas S.A., a company incorporated under the laws of the Republic of Panama (“Safety Management” or the “Manager”), a related party controlled by Polys Hajioannou, provides technical, commercial and administrative management services to the Company.

F-7

The accompanying consolidated financial statements include the operations, assets and liabilities of the Company, and of the Subsidiaries listed below.

Subsidiary	Vessel Name	Type	Built
Maxeikosiepta Shipping Corporation (“Maxeikosiepta”)(1)	Paraskevi	Panamax	January 2003
Marindou Shipping Corporation (“Marindou”)(1)	Maria	Panamax	April 2003
Maxeikosiexi Shipping Corporation (“Maxeikosiexi”)(1)	Koulitsa	Panamax	April 2003
Avstes Shipping Corporation (“Avstes”)(1)	Vassos	Panamax	February 2004
Kerasies Shipping Corporation (“Kerasies”)(1)	Katerina	Panamax	May 2004
Marathassa Shipping Corporation (“Marathassa”)(1)	Maritsa	Panamax	January 2005
Maxeikositessera Shipping Corporation (“Maxeikositessera”)(1)	Efrossini	Panamax	February 2012
Glovertwo Shipping Corporation (“Glovertwo”)(3)	Zoe	Panamax	July 2013
Shikokutessera Shipping Inc. (“Shikokutessera”)(3)	Kypros Land	Panamax	January 2014
Shikokupente Shipping Inc. (“Shikokupente”)(3)	Kypros Sea	Panamax	March 2014
Gloverthree Shipping Corporation (“Gloverthree”)(3)	Kypros Unity	Panamax	September 2014
Gloverfour Shipping Corporation (“Gloverfour”)(2)(3)	Kypros Bravery (H 822)	Panamax	January 2015
Pemer Shipping Ltd. (“Pemer”)(1)	Pedhoulas Merchant	Kamsarmax	March 2006
Petra Shipping Ltd. (“Petra”)(1)	Pedhoulas Trader	Kamsarmax	May 2006
Pelea Shipping Ltd. (“Pelea”)(1)	Pedhoulas Leader	Kamsarmax	March 2007
Vassone Shipping Corporation (“Vassone”)(3)	Pedhoulas Commander	Kamsarmax	May 2008
Maxeikosi Shipping Corporation (“Maxeikosi”)(1)	Pedhoulas Builder	Kamsarmax	May 2012
Maxeikositria Shipping Corporation (“Maxeikositria”)(1)	Pedhoulas Fighter	Kamsarmax	August 2012
Maxeikosiena Shipping Corporation (“Maxeikosiena”)(1)	Pedhoulas Farmer	Kamsarmax	September 2012
Staloudi Shipping Corporation (“Staloudi”)(1)	Stalo	Post-Panamax	January 2006
Marinouki Shipping Corporation (“Marinouki”)(1)	Marina	Post-Panamax	January 2006
Soffive Shipping Corporation (“Soffive”)(1)	Sophia	Post-Panamax	June 2007
Vasstwo Shipping Corporation (“Vasstwo”)(1)	Xenia	Post-Panamax	August 2006
Eniaprohi Shipping Corporation (“Eniaprohi”)(1)	Eleni	Post-Panamax	November 2008
Eniadefhi Shipping Corporation (“Eniadefhi”)(1)	Martine	Post-Panamax	February 2009
Maxdodeka Shipping Corporation (“Maxdodeka”)(1)	Andreas K	Post-Panamax	September 2009
Maxdekatria Shipping Corporation (“Maxdekatria”)(1)	Panayiota K	Post-Panamax	April 2010
Maxdeka Shipping Corporation (“Maxdeka”)(3)	Venus Heritage	Post-Panamax	December 2010
Shikoku Friendship Shipping Company (“Shikoku”)(3)	Venus History	Post-Panamax	September 2011
Maxenteka Shipping Corporation (“Maxenteka”)(3)	Venus Horizon	Post-Panamax	February 2012
Maxpente Shipping Corporation (“Maxpente”)(1)	Kanaris	Capesize	March 2010
Eptaprohi Shipping Corporation (“Eptaprohi”)(1)	Pelopidas	Capesize	November 2011
Maxtessera Shipping Corporation (“Maxtessera”)(3)	Lake Despina	Capesize	January 2014
Shikokuokto Shipping Inc. (“Shikokuokto”)(3)	TBN - H 1689	Panamax	1H 2015 (4)
Youngone Shipping Inc. (“Youngone”)(3)	TBN - H 1148	Kamsarmax	1H 2015 (4)
Gloverfive Shipping Corporation (“Gloverfive”)(3)	TBN - H 827	Panamax	2H 2015 (4)
Shikokuexi Shipping Inc. (“Shikokuexi”)(3)	TBN - H 1685	Post-Panamax	2H 2015 (4) (5)
Shikokuepta Shipping Inc. (“Shikokuepta”)(3)	TBN - H 1686	Post-Panamax	2H 2015 (4) (5)

F-8

Subsidiary	Vessel Name	Type	Built
Gloversix Shipping Corporation (“Gloversix”)(3)	TBN - H 828	Panamax	1H 2016 (4)
Youngtwo Shipping Inc. (“Youngtwo”)(3)	TBN - H 1146	Kamsarmax	1H 2016 (4) (5)
Shikokuennia Shipping Inc. (“Shikokuennia”)(3)	TBN - H 1718	Post-Panamax	1H 2016 (4)
Gloverseven Shipping Corporation (“Gloverseven”)(3)	TBN - H 835	Panamax	2H 2016 (4) (5)
Kyotofrendo One Shipping Inc. (“Kyotofrendo One”)(3)	TBN - H 1551	Kamsarmax	1H 2016 (4) (5)
Kyotofrendo Two Shipping Inc. (“Kyotofrendo Two”)(3)	TBN - H 1552	Kamsarmax	1H 2017 (4) (5)
Maxeikosipente Shipping Corporation (“Maxeikosipente”)(1)(6)	—	—	—
Efragel Shipping Corporation (“Efragel”)(1)(7)	—	—	—
S.B. Sea Venture Company Ltd (8)	—	—	—

(1) Incorporated under the laws of the Republic of Liberia.

(2) Newbuild vessel acquisition. Refer to Note 24.

(3) Incorporated under the laws of the Republic of the Marshall Islands.

(4) Estimated completion date for newbuild vessels as of December 31, 2014.

(5) Refer to Note 24 for rescheduled delivery date.

(6) Cancellation of Newbuild. Refer to Notes 4 and 11.

(7) Company dissolved in October 2012.

(8) Incorporated under the laws of the Republic of Cyprus, dissolved in September 2014.

For the years ended December 31, 2012, 2013 and 2014, the following charterers individually accounted for more than 10% of the Company’s charter revenues as follows:

	December 31,
	2012		2013		2014
Daiichi Chuo Kisen Kaisha		46.48%		30.30%		—
Kawasaki Kisen Kaisha		16.39%		15.39%		—

2. Significant Accounting Policies:

Principles of Consolidation: The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include all accounts of the Company. All intra-group and intercompany balances and transactions have been eliminated upon consolidation.

Use of Estimates: The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include vessel valuations, the valuation of amounts due from charterers, residual value of vessels, useful life of vessels and the fair value of derivative instruments. Actual results may differ from these estimates.

Other Comprehensive Income / (Loss): The Company follows the accounting guidance relating to Statement of Comprehensive Income, which requires separate presentation of certain transactions that are recorded directly as components of shareholders’ equity. The Company has no other comprehensive income/(loss) and accordingly comprehensive income/(loss) equals net income for the periods presented.

Foreign Currency Translation: The reporting and functional currency of the Company is the U.S. dollar (“USD”). Transactions incurred in other currencies are translated into USD using the exchange rates in effect at the time of the transaction. On the balance sheet date, monetary assets and liabilities that are denominated in other currencies are translated into USD to reflect the end-of-period exchange rates. Resulting gains or losses from foreign currency transactions are recorded within Foreign currency loss/(gain) in the accompanying consolidated statements of income in the period in which they arise.

F-9

Cash and Cash Equivalents: Cash and cash equivalents consist of current, call, time deposits and certificates of deposit with original maturities of three months or less and which are not restricted for use or withdrawal.

Time Deposits: Time deposits are held with banks with original maturities longer than three months. In the event original maturities are shorter than 12 months, such deposits are classified as current assets; if original maturities are longer than 12 months, such deposits are classified as non-current assets.

Restricted Cash: Restricted cash represents minimum cash deposits or cash collateral deposits required to be maintained with certain banks under the Company’s borrowing arrangements or in relation to bank guarantees issued on behalf of the Company. In the event that the obligation relating to such deposits is expected to be terminated within the next 12 months, these deposits are classified as current assets; otherwise they are classified as non-current assets.

Accounts Receivable: Accounts receivable reflects trade receivables from time or voyage charters and other receivables from operational activities, net of an allowance for doubtful accounts. On each balance sheet date, all potentially uncollectible accounts are assessed individually for purposes of determining the appropriate provision for doubtful accounts. No allowance for doubtful accounts was recorded for any of the periods presented.

Inventories: Inventories consist of bunkers and lubricants owned by the Company remaining on board the vessels at the end of each reporting period, which are stated at the lower of cost or market value. Cost is determined using the first–in, first-out method.

Vessels, Net: Vessels are stated at their historical cost, which consists of the contracted purchase price and any direct material expenses incurred upon acquisition (including improvements, on-site supervision expenses incurred during the construction period if the vessels are newbuilds, commissions paid, delivery expenses and other expenditures to prepare the vessel for her initial voyage), less accumulated depreciation. Financing costs incurred during the construction period of the vessels if the vessels are newbuilds are also capitalized and included in the vessels’ cost. Certain subsequent expenditures for conversions and major improvements are also capitalized if it is determined that they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels.

Vessels’ Depreciation: Depreciation is computed using the straight-line method over the estimated useful life of the vessels, after considering the estimated residual value. We estimate the useful life of the Company’s vessels to be 25 years from the date of initial delivery from the shipyard. Secondhand vessels are depreciated from the date of their acquisition through their remaining estimated useful life.

Accounting for Special Survey and Drydocking Costs: Special survey and drydocking costs are expensed in the period incurred and are included in vessel operating expenses in the accompanying consolidated statements of income.

Repairs and Maintenance: All repair and maintenance expenses, including major overhauling and underwater inspection expenses, are expensed when incurred and are included in vessel operating expenses in the accompanying consolidated statements of income.

Impairment of Long-lived Assets: The Company follows the Accounting Standards Codification (“ASC”) Subtopic 360-10, “Property, Plant and Equipment” (“ASC 360-10”), which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than their carrying amounts. If indicators of impairment are present, the Company performs an analysis of the anticipated undiscounted future net cash flows of the related long-lived assets. If the carrying value of the related asset exceeds the undiscounted cash flows, the carrying value is reduced to its fair value and the difference is recorded as an impairment loss in the consolidated statements of income. Various factors including anticipated future charter rates, estimated scrap values, future drydocking costs and estimated vessel operating costs are included in this analysis. No impairment loss was recorded during the years ended December 31, 2012, 2013 and 2014.

Assets Held for Sale: The Company may dispose of certain of its vessels when suitable opportunities occur, including prior to the end of their useful lives. The Company classifies assets as being held for sale when the following criteria are met: (i) management is committed to sell the asset; (ii) the asset is available for immediate sale in its present condition; (iii) an active program to locate a buyer and other actions required to complete the

F-10

plan to sell the asset have been initiated; (iv) the sale of the asset is probable, and transfer of the asset is expected to qualify for recognition as a completed sale within one year; (v) the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and (vi) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

Long-lived assets classified as held for sale are measured at the lower of their carrying amount or fair value less the cost to sell the asset. These assets are no longer depreciated once they meet the criteria of being held for sale. There were no assets held for sale as of December 31, 2013 and 2014.

Deferred Financing Costs: Financing fees incurred for obtaining new loans and credit facilities are deferred and amortized over the term of the respective loan or credit facility using the effective interest rate method. Any unamortized balance of costs relating to loans repaid or refinanced is expensed in the period in which the repayment or refinancing is made, subject to the guidance regarding Debt Extinguishment. Any unamortized balance of costs related to credit facilities repaid is expensed in the period. Any unamortized balance of costs relating to the credit facilities refinanced is deferred and amortized over the term of the respective credit facility in the period in which the refinancing occurs, subject to the provisions of the accounting guidance relating to Changes in Line-of-Credit or Revolving-Debt Arrangements.

Derivative Instruments: The Company may enter into foreign exchange forward contracts to create economic hedges for its exposure to currency exchange risk on payments relating to the acquisition of vessels and on certain loan obligations. The Company also enters into interest rate derivatives to create economic hedges for its exposure to interest rate risk of its loan obligations (see also Notes 8 and 16). When such derivatives do not qualify for hedge accounting the Company records these financial instruments in the consolidated balance sheet at their fair value as either a derivative asset or a liability, and recognizes the fair value changes thereto in the consolidated statements of income. When the derivatives do qualify for hedge accounting, depending upon the nature of the hedge, changes in fair value of the derivatives are either offset against the fair value of assets, liabilities or firm commitments through income, or recognized in other comprehensive income/(loss) (effective portion) until the hedged item is recognized in the consolidated statements of income. For the years ended December 31, 2012, 2013 and 2014, no derivatives were accounted for as accounting hedges.

Financial Instruments: Over-the-counter foreign exchange forward contracts and interest rate derivatives are recorded at fair value. Other financial instruments, including cash equivalents and debt are recorded at amortized cost.

(a) Interest rate risk: The Company’s interest rates and long-term loan repayment terms are described in Note 8. The Company manages its interest rate risk by entering into interest rate derivative instruments which are described in Note 16.

(b) Concentration of credit risk: Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist principally of trade accounts receivable, cash and cash equivalents, time deposits and derivative instruments. The Company limits its credit risk with accounts receivable by performing ongoing credit evaluations of its customers’ financial condition and generally does not require collateral for its trade accounts receivable. The Company places its cash and cash equivalents, time deposits and other investments with high credit quality financial institutions. The Company performs periodic evaluations of the relative credit standing of those financial institutions. The Company is exposed to credit risk in the event of non-performance by its counterparties to derivative instruments; however, the Company limits its exposure by transacting with counterparties with high credit ratings.

(c) Fair value measurement: In accordance with the requirements of accounting guidance relating to Fair Value Measurement, the Company classifies and discloses assets and liabilities carried at fair value in one of the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

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Accounting for Revenues and Related Expenses: The Company generates its revenues from charterers for the charter hire of its vessels. Vessels are chartered under time charter, where a contract is entered into for the use of a vessel for a specific voyage or a specific period of time and at a specified daily charter rate. Time charter revenues are recognized as earned on the straight-line basis over the term of the charter as service is provided. Revenues from time charter may also include ballast bonus, which is an amount paid by the charterer for repositioning the vessel at the charterer’s disposal (delivery point), which is recognized as revenue over the term of the charter, and other miscellaneous revenues from vessel operations. Expenses relating to the Company’s time charters are vessel operating expenses and certain voyage expenses, which are paid by the Company and recognized as incurred. Vessel operating expenses that are paid by the Company include costs for crewing, insurance, lubricants, spare parts, provisions, stores, repairs, maintenance, statutory and classification expense, drydocking, intermediate and special surveys and other minor miscellaneous expenses. Voyage expenses which are also recognized as incurred and paid by the Company include costs for draft surveys, hold cleaning, postage, extra war risk insurance, bunkers during ballast period and other minor miscellaneous expenses related to the voyage. The charterer is responsible for paying the cost of bunkers and other voyage expenses (e.g., port expenses, agents’ fees, canal dues, extra war risks insurance and any other expenses related to the cargo).

Vessels are also chartered under voyage charters, where a contract is made for the use of a vessel under which the Company is paid freight on the basis of moving cargo from a loading port to a discharge port. During the years ended December 31, 2012, 2013 and 2014, there have been only two instances where a vessel was employed under a voyage charter. Under a voyage charter, the revenues are recognized on a pro-rata basis over the duration of the voyage from load port to discharge port. Probable losses on voyages are provided for in full at the time such losses can be estimated. Related expenses are operating expenses, bunkers and voyage expenses, which are recognized as incurred and are all paid for by the Company. Demurrage income represents payments by the charterer to the vessel owner when loading or discharging time exceeds the stipulated time in the voyage charter and is recognized when earned and collection is reasonably assured. Dispatch expense represents payments by the Company to the charterer when loading or discharging time is less than the stipulated time in the voyage charter and is recognized as incurred.

Revenue is recognized when a charter agreement exists, the vessel is made available to the charterer and collection of the related revenue is reasonably assured. Unearned revenue includes: (i) cash received prior to the balance sheet date relating to services to be rendered after the balance sheet date and (ii) deferred revenue resulting from straight-line revenue recognition in respect of charter agreements that provide for varying charter rates. Accrued revenue results from straight-line revenue recognition in respect of charter agreements that provide for varying charter rates. Commissions (address and brokerage), regardless of charter type, are always paid by the Company, are deferred and amortized over the related charter period and are presented as a separate line item in revenues to arrive at net revenues in the accompanying consolidated statements of income.

Pension and Retirement Benefit Obligations—Crew: The Subsidiaries included in the consolidated financial statements employ the crew on board under short-term contracts (usually up to nine months) and accordingly, they are not liable for any pension or post-retirement benefits.

Taxes: Entities within the group that are incorporated under the laws of either the Republic of Liberia or the Republic of the Marshall Islands are not subject to Liberian or Marshall Islands income taxes. However, each vessel-owning Subsidiary is subject to registration and tonnage taxes under the laws of the Republic of Cyprus or the Republic of the Marshall Islands depending on where each Company’s vessel is registered. As of January 1, 2013, each vessel managed in Greece is subject to tonnage tax, under the laws of the Republic of Greece. In addition, as of December 31, 2013, each vessel managed in Greece is also subject to an annual shipping community mandatory financial contribution for the years 2014, 2015 and 2016 under the laws of the Republic of Greece. These registration, tonnage taxes and financial contributions are recorded within Vessel operating expenses in the accompanying consolidated statements of income and none are considered income taxes.

Furthermore, the Subsidiaries are subject to a 4% U.S. federal tax in respect of its U.S. source shipping income (imposed on gross income without the allowance for any deductions), because none of the Subsidiaries meet the requirements for an exemption from such tax provided by Section 883 of the U.S. Internal Revenue Code of 1986. As a result, the Subsidiaries file U.S. federal tax returns and pay the relevant U.S. federal tax on their U.S. source shipping income, which is not considered an income tax. Such taxes have been recorded within Voyage expenses in the accompanying consolidated statements of income. In many cases, these taxes are recovered from the charterers; such amounts recovered are recorded within Revenues in the accompanying consolidated statements of income.

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Dividends: Dividends are recorded in the period in which they are approved by the Company’s Board of Directors.

Earnings Per Share: The computation of basic earnings per share is based on the weighted average number of common shares outstanding during the year and includes the shares issuable to the audit committee chairman and the independent directors at the end of the year for services rendered. Diluted earnings per share are the same as basic earnings per share. There are no other potentially dilutive shares. The computation of basic earnings per share is calculated after deducting the preferred stock dividend from net income.

Segment Reporting: The Company reports financial information and evaluates its operations by total charter revenue and not by the type of vessel or vessel employment for its customers. The Company’s vessels have similar operating and economic characteristics. As a result, management, including the chief operating decision makers, reviews operating results solely by revenue per day and operating results of the fleet, and thus the Company has determined that it operates under one reportable segment. Furthermore, when the Company charters a vessel to a charterer, the charterer is free to trade the vessel worldwide and, as a result, the disclosure of geographic information is impracticable.

Recent Accounting Pronouncements:

Revenue from Contracts with Customers: The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) (collectively, the Boards) jointly issued a standard that will supersede virtually all of the existing revenue recognition guidance in US GAAP and IFRS and is effective for annual periods beginning on or after January 1, 2017. The standard establishes a five-step model that will apply to revenue earned from a contract with a customer (with limited exceptions), regardless of the type of revenue transaction or the industry. The standard’s requirements will also apply to the recognition and measurement of gains and losses on the sale of some non-financial assets that are not an output of the entity’s ordinary activities (e.g., sales of property, plant and equipment or intangibles). Extensive disclosures will be required, including: disaggregation of total revenue; information about performance obligations; changes in contract asset and liability account balances between periods; and key judgments and estimates. Management is in the process of accessing the impact of the new standard on the Company’s financial position and performance.

3. Transactions with Related Parties

Safety Management Overseas S.A., Panama: On May 29, 2008, Safe Bulkers signed a management agreement (the “Management Agreement”) with Safety Management, a related party that is controlled by Polys Hajioannou. Under the Management Agreement, the Manager provides to Safe Bulkers executive officers at no cost and management services to vessel-owning Subsidiaries. Each vessel-owning Subsidiary has entered into, or in the case of vessels not yet delivered, will enter into, a management agreement with the Manager (the “Shipmanagement Agreements”). Under these Shipmanagement Agreements, chartering, operations, technical and accounting services are provided to the vessels by the Manager. In accordance with the Management Agreement and the Shipmanagement Agreements, the Manager receives a fixed fee per vessel calculated proportionally to the number of ownership days, (the “Fixed Fee”), plus, a variable fee calculated on gross freight, charter hire, ballast bonus and demurrage (the “Variable Fee”). Fixed Fees and Variable Fees are recorded in General and Administrative Expenses (refer to Note 20). In addition, under the supervision agreements with respect to newbuilds (the “Supervision Agreements”), the Manager receives a supervision fee in exchange for on-site supervision services with respect to all newbuilds, of which 50% is payable upon the signing of the relevant Supervision Agreement, and 50% upon successful completion of the sea trials of each newbuild (the “Supervision Fee”). Supervision Fees are recorded in Advances for vessel acquisition and vessels under construction (refer to Note 6). Furthermore under the Management Agreement, the Manager receives a sales fee calculated by the contract price for each vessel sold, (the “Sales Fee”) payable upon the conclusion of the vessel sale, and an acquisition fee calculated on the contract price of each vessel constructed or purchased, (the “Acquisition Fee”) payable upon the conclusion of the vessel acquisition, in exchange for services provided in relation to a sale or an acquisition of a vessel respectively. Sales Fees are recorded in Gain on sale of assets. Acquisition Fees are recorded in Advances for vessel acquisition and vessels under construction (refer to Note 6).

The management fees can be adjusted annually effective May 29 of each year, the anniversary of our entry into the Management Agreement. On May 29, 2011, the Fixed Fee was adjusted to $0.700 per day from $0.575 per day, and the Supervision Fee was adjusted to $550 per newbuild from $375 per newbuild. On May 29, 2014, the

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Fixed Fee was adjusted to $0.800 per day from $0.700 per day. No readjustment has been made on any of the other management fees.

Fees pursuant to the Management Agreement, the Shipmanagement Agreements and the Supervision Agreements are as follows:

	For the Years Ended May 29, (In thousands of U.S. Dollars, except for Variable, Sales and Acquisition Fees)
	2012			2013			2014
Fixed Fee	$	0.700		$	0.700		$	0.700
Variable Fee		1.25	%		1.25	%		1.25	%
Supervision Fee	$	550		$	550		$	550
Sales Fee		1.00	%		1.00	%		1.00	%
Acquisition Fee		1.00	%		1.00	%		1.00	%

On July 29, 2013, the Management Agreement was amended, to provide inter alia that to the extent the executive officers are not provided by the Manager but are instead employed by Safe Bulkers, the management fee payable by Safe Bulkers is reduced, in arrears, by an amount equal to the aggregate costs of compensation and benefits and other incidental costs borne by the Company as a result of such employment, and is recorded under Compensation for Directors and Officers within General and Administrative expenses (refer to Note 20).

Fees pursuant to the Management Agreement, the Shipmanagement Agreements and the Supervision Agreements are comprised of the following:

	Year Ended December 31, (In thousands of U.S. Dollars)
	2012		2013		2014
Fixed and Variable fees	$	7,726	$	8,379	$	8,962
Supervision Fees		1,375		1,925		2,200
Acquisition Fees		1,810		823		1,429

4. Accounts receivable

Accounts receivable are comprised of the following:

	December 31,
	2013		2014
Trade receivables	$	4,572	$	4,530
Other receivables		31,800		—
Total	$	36,372	$	4,530

Trade receivables reflect the current receivables from time or voyage charters.

Other receivables amounting to $31,800 as of December 31, 2013, reflect the receivables related to the cancellation of the acquisition agreement of newbuild Hull J0131. The capitalized expenses and legal expenses incurred in relation to newbuildHull J0131 as of December 31, 2013, amounted to $887 and $78, respectively. On March 25, 2014, the Company collected the full amount of advances paid to the Zhoushan Jinhaiwan Shipyard Co. of $31,800 and interest of $4,520, calculated with a rate of 5% from the receipt of the relevant installments by the shipyard until the refund of such installments, following an arbitration award issued in favor of the Company in January 2014. Refer also to Note 13.

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5. Vessels, Net

Vessels, net, are comprised of the following:

	Vessel Cost		Accumulated Depreciation			Net Book Value
Balance, January 1, 2013	$	930,011	$	(120,010	)	$	810,001
Transfer from Advances for vessel acquisitions and vessels under construction		82,593		—			82,593
Depreciation expense		—		(37,394	)		(37,394	)
Balance, December 31, 2013	$	1,012,604	$	(157,404	)	$	855,200
Transfer from Advances for vessel acquisitions and vessels under construction		148,307		—			148,307
Depreciation expense		—		(43,084	)		(43,084	)
Balance, December 31, 2014	$	1,160,911	$	(200,488	)	$	960,423

Transfer from Advances for vessel acquisitions and vessels under construction represents advances paid in respect of the acquisition of second hand vessels and newbuild vessels which were under construction and delivered to the Company. For the periods presented, the Company accepted delivery of the following vessels:

· During the year ended December 31, 2013: Paraskevi, Pedhoulas Commander, Zoe and Xenia; and

· During the year ended December 31, 2014: Lake Despina (ex Hull 8126), Kypros Land (ex Hull 1659), Kypros Sea (ex Hull 1660) and Kypros Unity (ex Hull 821).

As of December 31, 2014, all vessels with a carrying value of $960,423 have been provided as collateral to secure the Company’s bank loans as discussed in Note 8.

6. Advances for Vessel Acquisitions and Vessels under Construction

Advances for vessel acquisition and vessels under construction are comprised of the following:

Balance, January 1, 2013	$	39,902
Advances paid, including capitalized expenses and interest		118,990
Transferred to vessel cost		(82,593	)
Balance, December 31, 2013	$	76,299
Advances paid, including capitalized expenses and interest		146,251
Transferred to vessel cost		(148,307	)
Balance, December 31, 2014	$	74,243

Advances paid for vessel acquisitions and vessels under construction comprise payments of installments that were due to the respective shipyard or third-party sellers, capitalized interest and certain capitalized expenses. During 2013 and 2014 such payments were made for the following vessels:

· During the year ended December 31, 2013: Paraskevi, Pedhoulas Commander, Xenia, Zoe (Hull 814), Lake Despina (Hull 8126), Kypros Land (Hull 1659), Kypros Sea (Hull 1660),Kypros Unity (Hull 821), Kypros Bravery (Hull 822), Hull 827, Hull 828, Hull 1685, Hull 1686 and Hull1689; and

· During the year ended December 31, 2014: Lake Despina (Hull 8126), Kypros Land (Hull 1659), Kypros Sea (Hull 1660), Kypros Unity (Hull 821), Kypros Bravery (Hull 822), Hull 827, Hull 835, Hull 1146, Hull 1148, Hull 1551, Hull 1552, Hull 1685, Hull 1686, Hull1689 and Hull 1718.

Transfers to vessel cost relate to the delivery to the Company from the respective shipyard or third-party seller of the following vessels:

· During the year ended December 31,2013: Paraskevi, Pedhoulas Commander, Zoe, and Xenia; and

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· During the year ended December 31, 2014: Lake Despina (Hull 8126), Kypros Land (Hull 1659), Kypros Sea (Hull 1660) and Kypros Unity (Hull 821).

7. Deferred Finance Charges, Net

Deferred finance charges are comprised of the following:

Balance, January 1, 2013	$	6,467
Additions		132
Amortization expense		(1,252	)
Balance, December 31, 2013	$	5,347
Additions		2,726
Amortization expense		(1,472	)
Balance, December 31, 2014	$	6,601

8. Bank Debt

Bank debt is comprised of the following secured borrowings:

			December 31,
Borrower	Commencement	Maturity	2013		2014
Maxeikosi	August 2012	August 2014	$	16,668	$	—
Maxpente	December 2013	July 2014		30,838		—
Maxdodeka	December 2012	November 2014		—		—
Eniaprohi	December 2012	November 2014		24,000		—
Eniadefhi	December 2012	November 2014		33,750		—
Avstes	December 2012	November 2014		22,700		—
Marindou	December 2012	November 2014		28,400		—
Pelea	December 2012	November 2014		32,298		—
Vassone	January 2014	January 2017		—		2,437
Marathassa	December 2013	February 2017		10,208		8,415
Marinouki	December 2013	March 2018		20,963		19,035
Glovertwo	October 2013	December 2018		16,000		13,666
Petra	January 2007	January 2019		22,220		20,571
Pemer	March 2007	March 2019		22,218		20,568
Eptaprohi	April 2012	April 2019		—		—
Shikokupente	July 2014	June 2019		—		13,500
Maxtessera	July 2014	June 2019		—		—
Maxeikosiena	October 2012	October 2019		—		—
Soffive	December 2013	November 2019		27,840		25,200
Kerasies	December 2013	December 2019		24,744		22,396
Maxeikosi	December 2014	December 2019		—		9,100
Maxpente	December 2014	December 2019		—		20,000
Gloverthree	December 2014	December 2019		—		10,900
Shikokutessera	December 2014	December 2019		—		10,900
Maxdekatria	March 2012	March 2020		20,400		18,400
Safe Bulkers	November 2014	September 2020		—		118,527
Maxdeka	August 2011	December 2022		30,678		27,270
Staloudi	July 2008	July 2023		24,520		18,520
Shikoku	October 2011	August 2023		37,333		33,600
Maxeikositessera	September 2012	February 2024		31,017		28,063
Maxenteka	April 2012	April 2024		31,500		28,500
Total			$	508,295	$	469,568
Current portion			$	35,185	$	17,121
Long-term portion			$	473,110	$	452,447

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The above loans and credit facilities generally bear interest at LIBOR plus a margin, except for a portion of the principal amounts of the Maxdeka, Shikoku, Maxenteka and Maxeikositessera loan facilities, which bear interest at the Commercial Interest Reference Rate (“CIRR”)published by the Organization for Economic Co-operation and Development, as applicable on the date of the signing of the relevant loan agreements. The above loans and credit facilities are generally repayable in semi-annual installments and a balloon payment at maturity except for the Maxdeka, Shikoku, Maxenteka and Maxeikositessera loan facilities, which are repayable in semi-annual installments. The fair value of bank debt outstanding on December 31, 2014 amounted to $470,618 when valuing the respective portions of the Maxdeka, Shikoku, Maxenteka and Maxeikositessera loan facilities on the basis of the relevant CIRR, as applicable on December 31, 2014, which are considered to be Level 2 items in accordance with the fair value hierarchy.

As of December 31, 2014, an aggregate amount of $154,702 was available for drawing under certain of the above loan agreements and reducing revolving credit facilities. The estimated minimum annual principal payments required to be made after December 31, 2014, based on the bank loan and the credit facility agreements as amended, are as follows:

To December 31,
2015	$	17,121
2016		23,850
2017		43,213
2018		71,597
2019		146,744
2020 and thereafter		167,043
Total	$	469,568

Total interest incurred on long-term debt for the years ended December 31, 2012, 2013 and 2014 amounted to $10,038, $9,553 and $8,599, respectively, which includes interest capitalized of $966, $467 and $264 for the years ended December 31, 2012, 2013 and 2014, respectively. The average interest rate (including the margin) for all bank loan and credit facilities during the years 2012, 2013 and 2014 was 1.850% p.a., 1.737% p.a. and 1.698% p.a., respectively.

Certain of the above loans or credit facilities have a currency conversion option whereby the borrower may elect to convert the outstanding loan amount or any part thereof to certain currencies specified in each agreement, using the spot exchange rate applicable on the date of conversion. Specified currencies include Japanese Yen (“JPY”), Swiss Franc (“CHF”), Euro (“EUR”), Canadian dollar (“CAD”) or pound sterling (“GBP”), depending on the relevant agreement. In all the above loans and credit facilities with a currency conversion option, no consideration has been or will be paid by any of the borrowers to the respective lenders in connection with the conversion option since the parties did not ascribe value to the conversion option as the conversion options are always based on the market or spot rates at the time they are exercised. The exercise of the conversion option in any of the above loans or credit facilities results in a change in both the currency denomination of the loan and the basis of the interest rate (that is, a USD-denominated loan bears interest based on USD LIBOR and, upon conversion into a JPY-denominated loan, will bear interest based on JPY LIBOR). All other terms of the loans or credit facilities, including the margin (the interest rate spread over LIBOR) and the repayment terms, will remain the same upon exercise of the currency conversion option.

The Company considered the accounting guidance relating to Accounting for Derivative and Hedging, and concluded that the conversion options are embedded derivatives that would require bifurcation and separate accounting because of the following:

(i) The economic characteristics and risks of an instrument in which the underlying is both a foreign currency and the interest rate is not clearly and closely related to the economic characteristics and risks of a debt host;

(ii) The borrowing arrangement that embodies both the conversion option and the debt host is not remeasured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur; and

(iii) A separate instrument with the same terms as the conversion option would be a derivative instrument subject to the requirements of this accounting guidance.

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However, the Company believes that the conversion option under the borrowing arrangements has no fair value due to the fact that the conversion into a different currency, and, accordingly, into a corresponding LIBOR interest rate, will always be at the prevailing foreign currency exchange rate (spot rate) and prevailing interest rate at the time of the conversion. Furthermore, both the Company and the bank did not ascribe value to the currency conversion options as no consideration was sought by the bank and no value was paid by the Company, as noted above.

As of December 31, 2013 and 2014 all loans were denominated in US Dollars.

The foregoing loan and credit facilities are secured as follows:

· First priority mortgages over the vessels owned by the respective borrowers;

· For the Safe Bulkers credit facility, first priority mortgages over the vessels Andreas K, Maria, Xenia, Vassos, Pedhoulas Leader, Pedhoulas Fighter, Martine, Eleni, Kypros Bravery and Hull 827 upon her delivery from the shipyard;

· First priority assignment of all insurances and earnings of the mortgaged vessels;

· Second priority mortgage over the Pedhoulas Merchant as security for the Petra loan;

· Second priority mortgage over the Pedhoulas Trader as security for the Pemer loan;

· Second priority mortgage over the Pedhoulas Commander as security for the Maxpente, Maxeikosi, Shikokutessera and Gloverthree credit facilities;

· Second priority mortgages over the Pedhoulas Builder, Kanaris, Kypros Unity and Kypros Land as security for the Vassone credit facility; and

· Corporate guarantee from Safe Bulkers (except for the Safe Bulkers credit facility where Safe Bulkers is the borrower).

The loan and credit facility agreements, as amended, contain debt covenants including restrictions as to changes in management and ownership of the vessels, additional indebtedness and mortgaging of vessels without the respective lender’s prior consent, minimum vessel insurance cover ratio requirements, as well as minimum fair vessel value ratio to outstanding loan principal requirements; the fair vessel value being determined according to the provisions of the individual loan or credit facility agreements with the relevant bank (the “Minimum Value Covenant”). The borrowers are permitted to pay dividends to their owners as long as no event of default under the respective loan has occurred or has not been remedied.

Certain of the loan and facility agreements require the respective borrowers to maintain at all times a minimum balance in each vessel operating account, from $150 to $500 as the case may be.

In addition, the corporate guarantees, as amended, by Safe Bulkers include the following financial covenants:

· its total consolidated liabilities divided by its total consolidated assets must not at any time exceed 80% or 85% as the case may be ( the “Consolidated Leverage Covenant”). The total consolidated assets are based on the fair market value of its vessels and the book values of all other assets, on an adjusted basis as set out in the relevant guarantee;

· the ratio of its aggregate debt after deducting cash to EBITDA must not at any time exceed 8.5:1 applicable on a trailing 12 month basis (“EBITDA Covenant”). EBITDA is not a recognized measurement under US GAAP and represents net income before net interest expense, income tax expense, depreciation and amortization;

· its consolidated debt must not exceed $514,000 on December 31, 2014 (“Consolidated Debt Covenant”)

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· the ratio of its EBITDA over consolidated interest expense must not at any time be less than 2.0:1, applicable on a trailing 12 month basis;

· its consolidated net worth (total consolidated assets less total consolidated liabilities) (“Consolidated Net Worth Covenant”) must not at any time be less than $150,000;

· payment of dividends is subject to no event of default having occurred;

· maintenance of minimum free liquidity of $500 is required on deposit with a relevant lender; and

· a minimum of 35% or 51%, as the case may be, of its shares shall remain directly or indirectly beneficially owned by the Hajioannou family for the duration of the relevant credit facilities.

As of December 31, 2014, the Company was in compliance with all debt covenants with respect to its loans and credit facilities.

9. Investment

During the year ended December 31, 2009, the Company invested $50,000 in a five-year Floating Rate Note (“FRN”) issued by HSBC Bank Middle East Limited, which was recorded in the consolidated balance sheet at amortized cost as the Company intended to hold the investment until its maturity on October 14, 2014. Subject to certain conditions, the Company could borrow up to 80% of the FRN amount. The Company received interest on a quarterly basis, based on the three-month USD LIBOR plus a margin of 1.5%. The FRN matured in October 14, 2014.

10. Share Capital

The Company was incorporated on December 11, 2007 with authorized share capital of 500 shares of common stock with a par value of $0.001 per share. On May 9, 2008, the Company’s Articles of Incorporation were amended. Under the amended Articles of Incorporation, the Company’s authorized capital stock consists of 200,000,000 shares of common stock with a par value of $0.001 per share, of which 54,500,000 shares were issued prior to the listing of the Company’s common stock on the NYSE, completed on June 3, 2008, and 20,000,000 shares of preferred stock with a par value of $0.01 per share. In connection with the IPO process, Vorini Holdings sold 10,000,000 shares of common stock of the Company with a par value of $0.001 per share at a price of $19 per share. No proceeds were paid to the Company.

In March 2010, the Company successfully completed a public offering, whereby 10,350,000 shares of Safe Bulkers common stock were issued and sold at a price of $7 per share, and a private placement, whereby 1,000,000 shares of Safe Bulkers common stock was issued and sold to Vorini Holdings. The net proceeds of the public offering and the private placement were $74,967, net of underwriting discount of $3,150 and offering expenses of $861.

In April 2011, the Company successfully completed a public offering, whereby 5,000,000 shares of Safe Bulkers common stock were issued and sold at a price of $8.4 per share. The net proceeds of the public offering were $39,637, net of underwriting discount of $2,100 and offering expenses of $263.

In March 2012, the Company successfully completed a public offering, whereby 5,750,000 shares of Safe Bulkers common stock were issued and sold at a price of $6.5 per share. The net proceeds of the public offering were $35,237, net of underwriting discount of $1,869 and offering expenses of $268.

In June 2013, the Company successfully completed a public offering, whereby 800,000 shares of Safe Bulkers series B cumulative redeemable perpetual preferred shares were issued and sold at a price of $25.00 per share, and a private placement, whereby 800,000 shares of Safe Bulkers series B cumulative redeemable perpetual preferred shares were issued and sold to Chalkoessa, at the public offering price. The net proceeds of the public offering and the private placement were $38,865 net of underwriting discount of $672 and offering expenses of $463.The Series B preferred shares were issued for cash and pay cumulative quarterly dividends at a rate of 8% per annum from their date of issuance, i.e. $2.00 per preferred share. At any time on or after July 30, 2016, the Series B preferred shares may be redeemed, at the option of the Company, in whole or in part at a redemption price of $25.00 per share plus unpaid dividends. If the Company fails to comply with certain covenants as these terms are defined in the applicable agreement, defaults on any of its credit facilities, fails to

F-19

pay four quarterly dividends payable in arrears or if the Series B preferred shares are not redeemed at the option of the Company, in whole by July 30, 2018, the dividend rate payable on the Series B preferred shares increases quarterly to a rate that is 1.25 times the dividend rate payable on the series B preferred shares , subject to an aggregate maximum rate per annum of 25% prior to July 30, 2016 and 30% thereafter. The Series B preferred shares are not convertible into common shares and are not redeemable at the option of the holder.

In November 2013, the Company successfully completed a public offering, whereby 5,750,000 shares of Safe Bulkers common stock were issued and sold at a price of $7.43 per share, and a private placement, whereby 1,000,000 shares of Safe Bulkers common stock were issued and sold to Bellapais, at the public offering price. The net proceeds of the public offering and the private placement were $47,980, net of underwriting discount of $1,898 and offering expenses of $275.

In May 2014, the Company successfully completed a public offering, whereby 2,300,000 shares of Safe Bulkers series C cumulative redeemable perpetual preferred shares were issued and sold at a price of $25.00 per share. The net proceeds of the public offering and the private placement were $55,504 net of underwriting discount of $1,744 and offering expenses of $252. The Series C preferred shares were issued for cash and pay cumulative quarterly dividends at a rate of 8% per annum from their date of issuance, i.e. $2.00 per preferred share. At any time on or after May 31, 2019, the Series C preferred shares may be redeemed, at the option of the Company, in whole or in part at a redemption price of $25.00 per share plus unpaid dividends. The Series C preferred shares are not convertible into common shares and are not redeemable at the option of the holder.

In June 2014, the Company successfully completed a public offering, whereby 3,200,000 shares of Safe Bulkers series D cumulative redeemable perpetual preferred shares were issued and sold at a price of $25.00 per share. The net proceeds of the public offering and the private placement were $77,420 net of underwriting discount of $2,369 and offering expenses of $211. The Series D preferred shares were issued for cash and pay cumulative quarterly dividends at a rate of 8% per annum from their date of issuance, i.e. $2.00 per preferred share. At any time on or after June 30, 2019, the Series D preferred shares may be redeemed, at the option of the Company, in whole or in part at a redemption price of $25.00 per share plus unpaid dividends. The Series D preferred shares are not convertible into common shares and are not redeemable at the option of the holder.

Pursuant to an arrangement approved by the Company’s shareholders’ and the nominating and compensation committee, effective July 1, 2008, the audit committee chairman receives the equivalent of $15 every quarter, payable in arrears in the form of newly issued Company common stock as part compensation for services rendered as audit committee chairman. The number of shares to be issued is determined based on the closing price of the Company’s common stock on the last trading day prior to the end of each quarter in which services were provided and the shares are issued as soon as practicable following the end of the quarter. During the years ended December 31, 2013 and 2014, 12,517 shares and 6,890 shares, respectively, were issued to the audit committee chairman.

Pursuant to an arrangement approved by the Company’s shareholders and the nominating and compensation committee, effective January 1, 2010, the independent directors of the Company, other than the audit committee chairman, each receive the equivalent of $7.5 every quarter, payable in arrears in the form of newly issued Company common stock as part compensation for services rendered as independent directors. The number of shares to be issued is determined as noted above. During the years ended December 31, 2013 and 2014, 12,516 shares and 6,892 shares, respectively were issued to the independent directors of the Company, other than the audit committee chairman.

11. Commitments and Contingencies

(a) Commitments under Shipbuilding Contracts and Memorandums of Agreement (“MoAs”)

As of December 31, 2014 the Company had commitments under eight shipbuilding contracts and four MoAs for the acquisition of 12 newbuilds. The Company expects to settle these commitments as follows:

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Year Ending December 31	Due to Shipyards/ Sellers		Due to Manager		Total
2015	$	156,874	$	5,429	$	162,303
2016		127,385		3,264		130,649
2017		20,311		613		20,924
Total	$	304,570	$	9,306	$	313,876

(b) Other contingent liabilities

The Company and its Subsidiaries have not been involved in any legal proceedings other than an arbitration legal proceeding in relation to the cancellation of the acquisition of newbuildHull J0131 under the acquisition agreement, as discussed in Note 4, that may have, or have had, a significant effect on their business, financial position, results of operations or liquidity, nor is the Company aware of any proceedings that are pending or threatened that may have a significant effect on its business, financial position, results of operations or liquidity. From time to time various claims, suits and complaints, including those involving government regulations and product liability, arise in the ordinary course of the shipping business. In addition, losses may arise from disputes with charterers, agents, shipyards, insurance providers and other claims relating to the operation of the Company’s vessels. Management is not aware of any material claims or contingent liabilities which should be disclosed, or for which a provision should be established in the accompanying consolidated financial statements.

The Company accrues for the cost of environmental liabilities when management becomes aware that a liability is probable and is able to reasonably estimate the probable exposure. Management is not aware of any such claims or contingent liabilities which should be disclosed, or for which a provision should be established in the accompanying consolidated financial statements. A maximum of $1,000,000 of the liabilities associated with the individual vessel actions, mainly for sea pollution, is covered by P&I Club insurance.

(c) Credit facilities

i. In June 2014, the Company accepted a commitment letter from a bank for a credit facility for up to $32,000, to be used to finance part of the purchase prices of Hull 1148 and Hull 1686 and also for general corporate purposes. The credit facility comprises a term loan tranche of up to $16,000 and a reducing revolving tranche of up to $16,000. The credit facility is repayable over seven years in 14 semi-annual consecutive installments commencing six months after drawdown and a balloon payment payable with the final installment.

ii. In June 2014, the Company accepted a commitment letter from a bank for a reducing revolving credit facility for up to $60,000, to be used to finance part of the purchase prices of Hull 828, Hull 835 and Hull 1718 and also for general corporate purposes. The credit facility is repayable over five years in 10 semi-annual consecutive installments commencing six months after drawdown and a balloon payment payable with the final installment.

iii. In July 2014, the Company accepted a commitment letter from a bank for a credit facility for up to $80,000, to be used to finance part of the purchase prices of Hull 1685, Hull 1146, Hull 1551 and Hull 1552 and also for general corporate purposes. The credit facility comprises a term loan tranche of up to $40,000 and a reducing revolving tranche of up to $40,000. The credit facility is repayable over five years in 10 semi-annual consecutive installments commencing six months after drawdown and a balloon payment payable with the final installment.

iv. In November 2014, the Company accepted a commitment letter from a bank for a term loan for up to $16,000, to be used to finance part of the purchase price of Hull 1689 and also for general corporate purposes. The term loan is repayable over seven years in 14 semi-annual consecutive installments commencing six months after drawdown and a balloon payment payable with the final installment.

12. Loss from inventory valuation

The amount of $4,001 recorded in the year ended December 31, 2014 represents loss from the valuation of the bunkers remaining on board our vessels, which were affected by the decline of bunker market prices during the year ended December 31, 2014.

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13. Gain on asset purchase cancellation

The amount of $3,633 recorded in the year ended December 31, 2014 represents interest of $4,520 received in connection with the cancellation of newbuild Hull J1031 discussed in Note 4, net of capitalized expenses of $887.

14. Revenues

Revenues are comprised of the following:

	Year Ended December 31,
	2012		2013		2014
Time charter revenue	$	179,653	$	177,077	$	142,461
Voyage charter revenue		—		—		914
Ballast bonus		6,397		10,878		13,375
Other income		1,507		3,565		3,150
Total	$	187,557	$	191,520	$	159,900

15. Vessel Operating Expenses

Vessel operating expenses are comprised of the following:

	Year Ended December 31,
	2012		2013		2014
Crew wages and related costs	$	17,202	$	22,015	$	26,169
Insurance		2,828		3,477		4,133
Repairs, maintenance and drydocking costs		2,493		3,240		4,344
Spares, stores and provisions		6,939		7,533		9,058
Lubricants		3,296		2,787		3,509
Taxes		303		669		1,282
Miscellaneous		1,479		2,243		2,139
Total	$	34,540	$	41,964	$	50,634

16. Fair Value of Financial Instruments and Derivatives Instruments

Cash and cash equivalents and restricted cash, over-the-counter foreign exchange forward contracts and interest rate derivatives are recorded at fair value. The carrying values of the current financial assets and current financial liabilities are reasonable estimates of their fair value due to the short-term nature of these financial instruments. Cash and cash equivalents and restricted cash are considered Level 1 items as they represent liquid assets with short-term maturities. The fair values of the variable interest long-term debt approximate the recorded values, due to their variable interest rates. The fair value of the fixed interest long-term debt is estimated using prevailing market rates as of the period end. The fair values of the long-term debt and long-term investment (the floating rate note) are disclosed in Note 8 and 9, respectively.

Derivative instruments

The Company enters into interest rate swap transactions to manage interest costs and the risk associated with changing interest rates with respect to its variable interest rate loans and credit facilities. The Company, from time to time, may also enter into foreign exchange forward contracts to create economic hedges for its exposure to currency exchange risk on payments relating to acquisition of vessels and on certain loan obligations or for trading purposes. Foreign exchange forward contracts are agreements entered into with a bank to exchange, at a specified future date, currencies of different countries at a specific rate. As of December 31, 2013 and 2014, the Company had no outstanding derivative instruments relating to currency exchange contracts.

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The Company’s interest rate swaps and foreign exchange forward contracts did not qualify for hedge accounting. The Company determines the fair market value of the interest rate swaps and foreign exchange forward contracts at the end of every period and accordingly records the resulting unrealized loss/gain during the period in the consolidated statement of income. Information on the location and amounts of derivative fair values in the consolidated balance sheets and derivative gains/losses in the consolidated statements of income are shown below:

Derivatives not designated as hedging instruments

		Asset Derivatives Fair Values				Liability Derivatives Fair Values
Type of		December 31,				December 31,
Contract	Balance sheet location	2013		2014		2013		2014
Interest Rate	Derivative assets /Non-current assets	$	762	$	455	$	—	$	—
Interest Rate	Derivative liabilities / Current liabilities		—		—		732		493
Interest Rate	Derivative liabilities / Non-current liabilities		—		—		3,270		1,065
	Total Derivatives	$	762	$	455	$	4,002	$	1,558

	Amount of Gain / (Loss) Recognized on Derivatives
	Year ended December 31,
	2013		2014
Interest Rate Contracts	$	813	$	(1,977	)
Net Gain / (Loss) Recognized	$	813	$	(1,977	)

The gain or loss is recognized in the consolidated statement of income and is presented in Other (Expense)/Income – (Loss) /gain on derivatives.

The Company’s interest rate derivative instruments are pay-fixed, receive-variable interest rate swaps based on the USD LIBOR swap rate. The fair value of the interest rate swaps is determined using a discounted cash flow approach based on market-based LIBOR swap yield curves and take into account the credit risk of the financial institutions that are counterparties in the interest rate swaps. LIBOR swap rates are observable at commonly quoted intervals for the full terms of the swaps and therefore are considered Level 2 items in accordance with the fair value hierarchy. The following table summarizes the valuation of the Company’s financial instruments as of December 31, 2013 and 2014.

	Significant Other Observable Inputs (Level 2)
	December 31,
	2013		2014
Derivative instruments – asset position	$	762	$	455
Derivative instruments – liability position		4,002		1,558

As of December 31, 2013 and 2014, no fair value measurements for assets or liabilities under Level 1 or Level 3 were recognized in the Company’s consolidated balance sheet.

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Interest Rate Derivatives

Details of interest rate swap transactions entered into with certain banks in respect of certain loans and credit facilities as of December 31, 2013 and 2014 are presented in the table below:

						Notional amount
Loan or Credit Facility	Inception	Expiry	Fixed Rate			December 31, 2013		December 31, 2014
Eniadefhi (1)	April 01, 2009	February 12, 2014		3.3500	%	$	34,875	$	—
Eniaprohi (2)	November 14, 2011	November 13, 2014		1.4000	%		33,328		—
Soffive (2)	November 20, 2011	November 20, 2014		1.3500	%		32,400		—
Staloudi (2)	January 09, 2012	January 07, 2015		1.4500	%		38,400		34,760
Marathassa(2)(3)	January 31, 2011	January 31, 2015		1.2200	%		33,900		31,400
Marathassa (2)	November 23, 2012	November 21, 2015		1.9500	%		13,305		11,675
Kerasies (2)	December 14, 2010	December 14, 2015		1.6500	%		28,798		26,664
Pelea (2)	December 15, 2011	December 14, 2016		2.0500	%		32,962		30,542
Maxdekatria (2)	September 28, 2012	September 28, 2017		0.9000	%		20,800		20,000
Marindou (2)	January 14, 2013	January 16, 2018		1.6000	%		28,500		27,427
Petra (2)	January 18, 2013	January 18, 2018		0.9800	%		14,000		14,000
Marinouki (2)	March 05, 2013	March 05, 2018		1.4800	%		24,297		22,543
Pemer (2)	June 07, 2013	March 07, 2018		0.9475	%		14,000		14,000
Avstes (2)	July 18, 2013	April 18, 2018		1.3500	%		14,000		14,000
Shikoku (2)	August 28, 2013	August 28, 2018		1.2500	%		18,667		16,800
Total						$	382,232	$	263,811

(1)           Under these swap transactions, the bank effects semiannual floating-rate payments to the Company for the relevant amount based on the six-month
                USD LIBOR, and the Company effects semiannual payments to the bank on the relevant amount at the respective fixed rates.

(2)           Under these swap transactions, the bank effects quarterly floating-rate payments to the Company for the relevant amount based on the three-month
                USD LIBOR, and the Company effects quarterly payments to the bank on the relevant amount at the respective fixed rates.

(3)           The transaction was novated from Maxpente to Marathassa in August 2014.

The notional amounts of the above transactions are reduced during the term of the swap transactions based on the expected principal outstanding under the respective facility.

17. Accrued Liabilities

Accrued liabilities are comprised of the following:

	December 31,
	2013		2014
Interest on long-term debt	$	1,536	$	1,270
Vessels’ operating and voyage expenses		1,055		1,687
Commissions		92		109
Interest on derivatives and other finance expenses		1,006		1,098
General and administrative expenses		176		303
Total	$	3,865	$	4,467

18. Early Redelivery Income/(Cost), Net

From time to time, the Company enters into arrangements for early redelivery of its vessels from charterers and may continue to do so in the future, depending on market conditions. Early redelivery costs are incurred when the contracted daily fixed charter rates are substantially lower than the daily charter rates the vessels could potentially earn in the current market. Income is recognized in connection with early termination of a period time charter, resulting from a request of the respective vessel charterers for early redelivery and agreement to compensate the Company. Early redelivery costs for the periods presented represent costs incurred in connection with early termination of charters for which no replacement charter contract for the relevant vessel has been secured at the time of concluding the charter termination agreement, and are recognized at the time the charter termination agreement is concluded. Early redelivery income is recognized when a charter termination

F-24

agreement exists, the vessel is redelivered to the Company and collection of the related compensation is reasonably assured. If at the time of concluding the early redelivery agreement, a replacement charter contract had been secured, any costs incurred or income recognized would have been amortized over the term of the replacement charter contract.

			Year Ended December 31,
Company		Date	2012		2013		2014
Eniadefhi	(a)	December 15, 2012	$	8,475	$	—	$	—
Marindou	(b)	December 19, 2012		3,202		—		—
Soffive	(c)	April 22, 2013		—		2,965		—
Avstes	(d)	May 3, 2013		—		2,304		—
Kerasies	(e)	May 16, 2013		—		1,781		—
Other minor early redeliveries		Various		—		—		(532	)
Total			$	11,677	$	7,050	$	(532	)

Details of the transactions presented in the above table are as follows:

(a)           On December 15, 2012, Eniadefhi took early redelivery of the Martine, instead of on January 21, 2014. In connection with this early redelivery, we recognized early redelivery income of $8,475, comprising cash compensation paid by the relevant charterer of $8,644, net of commissions, less accrued revenue of $169.

(b)           On December 19, 2012, Marindou took early redelivery of the Maria, instead of on February 24, 2014. In connection with this early redelivery, we recognized early redelivery income of $3,202, comprising cash compensation paid by the relevant charterer of $3,375, net of commissions, less accrued revenue of $173.

(c)           On April 22, 2013, Soffive took early redelivery of the Sofia, instead of on September 19, 2013. In connection with this early redelivery, we recognized early redelivery income of $2,965, comprising of cash compensation paid by the relevant charterer.

(d)           On May 3, 2013, Avstes took early redelivery of the Vassos, instead of on October 1, 2013. In connection with this early redelivery, we recognized early redelivery income of $2,304, comprising cash compensation paid by the relevant charterer of $2,607, net of commissions, less accrued revenue of $303.

(e)           On May 16, 2013, Kerasies took early redelivery of the Katerina, instead of on January 1, 2014. In connection with this early redelivery, we recognized early redelivery income of $1,781, comprising cash compensation paid by the relevant charterer of $2,087, net of commissions, less accrued revenue of $306.

In all the cases presented above, no replacement charter contract had been secured at the time of the termination of the respective early redelivery agreement.

19. Future Minimum Time Charter Revenue

The future minimum time charter revenue, net of commissions, based on vessels committed to non-cancelable time charter contracts (including fixture recaps) as of December 31, 2014, is as follows:

December 31,
2015	$	50,471
2016		30,929
2017		31,744
2018		31,152
2019		31,167
Thereafter		164,024
Total	$	339,487

Future minimum time charter revenue excludes the future acquisitions of the vessels discussed in Note 11, since estimated delivery dates are not confirmed. Revenues from time charters are not generally received when a

F-25

vessel is off-hire, including time required for normal periodic maintenance. In arriving at the minimum future charter revenues, an estimated off-hire time of 12 days to perform any scheduled drydocking on each vessel has been deducted, and it has been assumed that no additional off-hire time is incurred, although such estimate may not be reflective of the actual off-hire in the future.

20. General and Administrative Expenses

General and administrative expenses include management fees payable to our Manager and costs in relation to our operation as a public company.

General and administrative expenses for the years ended December 31, 2012, 2013 and 2014 were as follows:

	December 31,
	2012		2013		2014
Management fees - related party	$	7,726	$	8,379	$	8,962
Professional fees (legal and accounting)		588		648		813
Compensation for Directors and Officers		240		1,120		2,004
Listing fees and expenses		53		75		87
Miscellaneous		1,339		1,138		1,465
Total	$	9,946	$	11,360	$	13,331

21. Unearned Revenue /Accrued Revenue

Unearned Revenue represents cash received in advance of it being earned, whereas Accrued Revenue represents revenue earned prior to cash being received. Revenue is recognized as earned on a straight-line basis at their average rates when charter agreements provide for varying annual charter rates over their term. Total Unearned Revenue /Accrued Revenue during the periods presented is as follows:

	December 31,
	2013		2014
Unearned Revenue
Cash received in advance of service provided – Current liability	$	2,966	$	3,265
Deferred revenue resulting from varying charter rates
Current liability		10,140		334
Non-current liability		196		—
Total Unearned Revenue	$	13,302	$	3,599
Accrued Revenue
Resulting from revenue earned prior to cash being received – Current asset	$	—	$	212
Resulting from varying charter rates – Non-Current asset		—		452
Total Accrued Revenue	$	—	$	664

22. Dividends

During 2014, the Company declared and paid three consecutive quarterly dividends of $0.06 per common share followed by one quarterly dividend of $0.04 per common share, totaling $18,358.

During 2014, the Company declared and paid four quarterly consecutive dividends of $0.50 per share of Series B Preferred Shares, totaling $3,200, one quarterly dividend of $0.46667 followed by one quarterly dividend of $0.50 per share of Series C Preferred Shares, totaling $2,223, and one quarterly dividend of $0.66667 per share of Series D Preferred Shares, totaling $2,134.

23. Earnings Per Share

The computation of basic earnings per share is based on the weighted average number of common shares outstanding during the year and includes the shares issuable to the audit committee chairman and the

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independent directors at the end of the year for services rendered. Diluted earnings per share are the same as basic earnings per share. There are no other potentially dilutive shares. The computation of basic earnings per share is calculated after deducting the preferred stock dividend from net income.

24. Subsequent Events

(a)           Dividend declaration: On January 9, 2015, the Board of Directors declared a dividend of $0.50 per preferred share, totaling $3,550, payable to all shareholders of record as of January 23, 2015, which was paid on January 30, 2015.

(b)           Newbuild deliveries: In January 2015, the Company took delivery of Kypros Bravery, a Japanese newbuild Panamax class vessel.

(c)           Dividend declaration: On February 23, 2015, the Board of Directors declared a dividend of $0.02 per common share, totaling $1,669, payable to all shareholders of record as of March 10, 2015, on March 17, 2015.

(d)           Delay of newbuild deliveries: In February 2015, the Company entered into recapitulation agreements to delay the deliveries of six newbuild vessels as follows: Vessels with Hull No. 1685 and Hull No. 1686 which were initially scheduled for delivery in the second half of 2015 were delayed until the first half of 2016; vessel with Hull No. 835 which was initially scheduled for delivery in the second half of 2016 were delayed until the first half of 2017; vessel with Hull No. 1146 which was initially scheduled for delivery in the first half of 2016 was delayed until the first half of 2017; vessel with Hull No. 1551 which was initially scheduled for delivery in the first half of 2016 was delayed until the first half of 2017; and vessel with Hull No. 1552 which was initially scheduled for delivery in the of first half of 2017 was delayed until the first half of 2018.

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EX-4.10

EXHIBIT 4.10

$210,000,000

Secured Loan Agreement

Dated 22 SEPTEMBER 2014

(1) SAFE BULKERS INC.
(as Borrower)

(2) The Financial Institutions
listed in Schedule 1
(as Original Lenders)

(3) DNB BANK ASA
(as Mandated Lead Arranger)

(4) DNB BANK ASA
(as Agent)

(5) DNB BANK ASA
(as Swap Provider)

(6) DNB BANK ASA
(as Security Agent)

Contents

		Page
Section 1	Interpretation	2
1	Definitions and Interpretation	2
Section 2	The Loan	26
2	The Loan	26
3	Purposes	26
4	Conditions of Utilisation	26
Section 3	Utilisation	30
5	Advance	30
Section 4	Repayment, Prepayment and Cancellation	31
6	Repayment	31
7	Illegality, Prepayment and Cancellation	32
Section 5	Costs of Utilisation	36
8	Interest	36
9	Interest Periods	36
10	Changes to the Calculation of Interest	37
11	Fees	38
Section 6	Additional Payment Obligations	39
12	Tax Gross Up and Indemnities	39
13	Increased Costs	48
14	Other Indemnities	49
15	Mitigation by the Lenders	52
16	Costs and Expenses	52
Section 7	Security and Application of Moneys	54
17	Security Documents and Application of Moneys	54
Section 8	Representations, Undertakings and Events of Default	59
18	Representations	59
19	Information Undertakings	64

20	Financial Covenants	67
21	General Undertakings	68
22	Events of Default	74
Section 9	Changes to Parties	80
23	Changes to the Lenders	80
24	Changes to the Security Parties	84
Section 10	The Finance Parties	85
25	Role of the Agent, the Security Agent and the Arranger	85
26	Conduct of Business by the Finance Parties	97
27	Sharing among the Finance Parties	97
Section 11	Administration	100
28	Payment Mechanics	100
29	Set-Off	104
30	Notices	105
31	Calculations and Certificates	108
32	Partial Invalidity	108
33	Remedies and Waivers	108
34	Amendments and Waivers	109
35	Confidentiality	113
36	Disclosure of Lender Details by Agent	116
37	Counterparts	118
Section 12	Governing Law and Enforcement	119
38	Governing Law	119
39	Enforcement	119
Schedule 1	The Original Lenders	120
Schedule 2	Part I Conditions Precedent	121
	Part II Conditions Subsequent	125
	Part III Delivery Conditions Precedent	126
Schedule 3	Drawdown Request	130
Schedule 4	Form of Transfer Certificate	131

Schedule 5	Form of Assignment Agreement	134
Schedule 6	Form of Compliance Certificate	138

Loan Agreement

Dated   __ September 2014

Between:

(1) SAFE BULKERS INC., a company incorporated under the law of the Republic of the Marshall Islands, with its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 (the “Borrower”); and

(2) The Financial Institutions listed in Schedule 1 (The Original Lenders), each acting through its Facility Office (together the “Original Lenders” and each an “Original Lender”); and

(3) DNB BANK ASA, acting as mandated lead arranger through its office at 8^th Floor, The Walbrook Building, 25 Walbrook, London EC4N 8AF, England (in that capacity, the “Arranger”); and

(4) DNB BANK ASA, acting as agent through its office at 8^th Floor, The Walbrook Building, 25 Walbrook, London EC4N 8AF, England (in that capacity, the “Agent”); and

(5) DNB BANK ASA, acting as swap provider through its office at 8^th Floor, The Walbrook Building, 25 Walbrook, London EC4N 8AF, England (in that capacity, the “Swap Provider”); and

(6) DNB BANK ASA, acting as security agent through its office at 8^th Floor, The Walbrook Building, 25 Walbrook, London EC4N 8AF, England (in that capacity, the “Security Agent”).

Preliminary

(A) Each Collateral Owner is a wholly owned subsidiary of the Borrower and is the registered owner of, or intends to agree to purchase from the relevant Builder, the relevant Vessel on the terms of the relevant Building Contract and has registered or intends to register that Vessel on delivery under an Approved Flag.

(B) Each of the Original Lenders has agreed to advance to the Borrower its Commitment (aggregating, with all the other Commitments, a revolving credit facility of up to the Maximum Loan Amount) to provide post-delivery financing in respect of the Vessels and for general corporate purposes.

It is agreed as follows:

Page 1

Section 1 Interpretation

1 Definitions and Interpretation

1.1 Definitions In this Agreement:

“Acceptable Bank” means a bank or financial institution which has a rating for its long-term unsecured and non-credit-enhanced debt obligations of A- or higher by Standard & Poor’s Rating Services or Fitch Ratings Ltd or A3 or higher by Moody’s Investors Service Limited or a comparable rating from an internationally recognised credit rating agency.

“Acceptable Charter” means, in respect of a Vessel or any other Group Vessel, any time charter or other contract of employment which:-

(a) has an unexpired term of at least three (3) months’ duration; and

(b) has been entered into by and between the respective Collateral Owner or the respective owner of any other Group Vessel (as the case may be) and a charterer which has a minimum credit rating of “BBB-” or better according to Standard and Poor’s or “Baa3” or better according to Moody’s; and/or

(c) has not been terminated, repudiated, cancelled, suspended, rescinded, revoked or otherwise ceases to remain in full force and effect, at any time during the Facility Period,

or any other charter acceptable to the Agent.

“Account Holder” means DNB Bank ASA, acting through its office at 8^th Floor, The Walbrook Building, 25 Walbrook, London EC4N 8AF, England or any other bank or financial institution which at any time, with the Security Agent’s prior written consent (such consent not to be unreasonably withheld or delayed), holds the Earnings Accounts.

“Accounting Information” means the annual financial statements and/or quarterly financial statements to be provided by the Borrower to the Agent in accordance with Clause 19.1 (Financial Statements).

“Account Security Deed” means the account security deed referred to in Clause 17.1.5 (Security Documents).

“Administration” has the meaning given to it in paragraph 1.1.3 of the ISM Code.

“Affiliate” means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company.

“Annex VI” means Annex VI (Regulations for the Prevention of Air Pollution from Ships) to the International Convention for the Prevention of Pollution from Ships 1973 (as modified in 1978 and 1997).

“Approved Flag” means the flag of the Republic of Cyprus, the Republic of the Marshall Islands or any other flag acceptable to the Agent in its absolute discretion (such acceptance not to be unreasonably withheld or delayed).

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“Approved Shipbroker” means each of Arrow Chartering (UK), Braemar Seascope Group, Clarksons PLC and Fearnleys and any other reputable, independent and first class firm of ship brokers requested by the Borrower and accepted by the Agent in its absolute discretion (such acceptance not to be unreasonably withheld or delayed).

“Assignments” means all the forms of assignment referred to in Clause 17.1.2 (Security Documents).

“Assignment Agreement” means an agreement substantially in the form set out in Schedule 5 (Form of Assignment Agreement) or any other form agreed between the relevant assignor and assignee.

“Authorisation” means an authorisation, consent, approval, resolution, licence, exemption, filing, notarisation or registration.

“Availability Period” means the period from and including the date of this Agreement to and including the date falling no later than three months prior to the Termination Date.

“Break Costs” means the amount (if any) by which:

(a) the interest (excluding the Margin) which a Lender should have received for the period from the date of receipt of all or any part of its participation in a Drawing or an Unpaid Sum to the last day of the current Interest Period in respect of that Drawing or Unpaid Sum, had the principal amount or Unpaid Sum received been paid on the last day of that Interest Period;

exceeds:

(b) the amount which that Lender would be able to obtain by placing an amount equal to the principal amount or Unpaid Sum received by it on deposit with a leading bank in the Relevant Interbank Market for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period.

“Builders” means the persons specified as such in the definition of “Vessels” below and “Builder” means any one of them.

“Building Contract Assignments” means the deeds of assignment of the Building Contracts and the Refund Guarantees referred to in Clause 17.1.3 (Security Documents).

“Building Contracts” means the shipbuilding contract in respect of the Gloverfour Vessel dated 22 April 2013 (as amended by addendum no. 1 thereto dated 22 April 2013) and the shipbuilding contract in respect of the Gloverfive Vessel dated 24 October 2013 (as amended by addendum no. 1 dated 24 October 2013) on the terms and subject to the conditions of which the Builders have agreed to construct the Newbuilding Vessels for, and deliver the Newbuilding Vessels to, the Collateral Owners respectively and “Building Contract” means either of them.

“Business Day” means a day (other than a Saturday or Sunday) on which banks are open for general business in New York, Athens, London.

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“Cash” means, at any time, cash credited to a bank account in the name of any of the Borrower, the Collateral Owners or a member of the Group and to which the Borrower, the Collateral Owners or a member of the Group are beneficially entitled to.

“Charged Property” means all of the assets of the Security Parties which from time to time are, or are expressed to be, the subject of the Security Documents.

“Charter” means, in respect of a Vessel, any charter or contract of employment of a duration which is equal to or exceeds or (inclusive of any extension option) is capable of exceeding twenty four (24) months on the terms and subject to the conditions of which a Collateral Owner has chartered or will charter its Vessel to a charterer.

“Code” means the US Internal Revenue Code of 1986.

“Collateral Owners” means together Avstes Shipping Corporation (“Avstes”), Eniadefhi Shipping Corporation (“Eniadefhi”), Eniaprohi Shipping Corporation (“Eniaprohi”), Marindou Shipping Corporation (“Marindou”) Maxdodeka Shipping Corporation (“Maxdodeka”), Pelea Shipping Ltd. (“Pelea”), Vasstwo Shipping Corporation (“Vasstwo”) and Maxeikositria Shipping Corporation (“Maxeikositria”), each a company incorporated under the laws of the Republic of Liberia whose registered address is at 80 Broad Street, Monrovia, Liberia, Gloverfour Shipping Corporation (“Gloverfour”) and Gloverfive Shipping Corporation (“Gloverfive”) each a company incorporated under the laws of the Republic of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 and “Collateral Owner” means each one of them.

“Commitment” means:

(a) in relation to an Original Lender, the amount set opposite its name under the heading “Commitment” in Schedule 1 (The Original Lenders) and the amount of any other Commitment transferred to it under this Agreement; and

(b) in relation to any other Lender, the amount of any Commitment transferred to it under this Agreement,

to the extent not cancelled, reduced or transferred by it under this Agreement.

“Commitment Fee” means the commitment fee to be paid by the Borrower to the Agent under Clause 11.1 (Commitment Fee).

“Compliance Certificate” means a certificate substantially in the form set out in Schedule 6 (Form of Compliance Certificate).

“Confidential Information” means all information relating to any Security Party, the Finance Documents or the Loan of which a Finance Party becomes aware in its capacity as, or for the purpose of becoming, a Finance Party which is received by a Finance Party in relation to, or for the purpose of becoming a Finance Party under, the Finance Documents or the Loan from either:

(a) any Security Party or any of its advisers; or

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(b) another Finance Party, if the information was obtained by that Finance Party directly or indirectly from any Security Party or any of its advisers,

in whatever form, and includes information given orally and any document, electronic file or any other way of representing or recording information which contains or is derived or copied from such information but excludes information that:

(i) is or becomes public information other than as a direct or indirect result of any breach by that Finance Party of Clause 35 (Confidentiality); or

(ii) is identified in writing at the time of delivery as non-confidential by any Security Party or any of its advisers; or

(iii) is known by that Finance Party before the date the information is disclosed to it in accordance with (a) or (b) or is lawfully obtained by that Finance Party after that date, from a source which is, as far as that Finance Party is aware, unconnected with any Security Party and which, in either case, as far as that Finance Party is aware, has not been obtained in breach of, and is not otherwise subject to, any obligation of confidentiality.

“Confidentiality Undertaking” means a confidentiality undertaking substantially in a recommended form of the Loan Market Association at the relevant time.

“Confirmation” means a Confirmation exchanged or deemed to be exchanged between the Swap Provider and the Borrower as contemplated by the Master Agreement.

“Consolidated Group Leverage” means at any relevant time Consolidated Total Liabilities divided by Consolidated Total Assets.

“Consolidated Total Assets” means, at any date, the aggregate of:

(a) the then current Market Values of all Group Vessels (in the case of a Vessel and any Group Vessel, the Market Value shall be conclusively determined by reference only to the most recent valuation(s) of such Vessel and such Group Vessel (as the case may be);

(b) the then current aggregate amount of Cash, Marketable Securities (but excluding Marketable Securities accounted for in the definition of Consolidated Total Liabilities below) and receivables due to the Group (less provision for bad and doubtful debts) as shown in the latest financial statements of the Borrower; and

(c) the book values of all other assets (other than the assets referred to in sub-paragraphs (a) and (b) hereof) excluding amounts classified as “Accrued revenue resulting from varying charter rates” as shown in the latest financial statements of the Borrower.

“Consolidated Total Liabilities” means, at the relevant date and for a particular period, the aggregate of the consolidated Financial Indebtedness of the Group shown in the latest consolidated financial statements for the Group (excluding (i) amounts classified as “Deferred revenue resulting from varying charter rates” as shown in the

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latest relevant financial statements and (ii) liabilities to its shareholders, provided that they are subordinated on terms acceptable to the Agent in its discretion.

“Credit Support Document” means any document described as such in the Master Agreement and any other document referred to in any such document which has the effect of creating security in favour of any of the Finance Parties.

“Credit Support Provider” means any person (other than the Borrower) described as such in the Master Agreement.

“Current Shareholders” means the shareholders of the Borrower notified to the Agent in the Side Letter who beneficially hold directly or indirectly not less than thirty five cent (35%) of the shares in the Borrower on the date of this Agreement.

“CTA” means the Corporation Tax Act 2009.

“Debt” means the aggregate (as of the date of calculation) of all obligations of the Group then outstanding for the payment or repayment of Financial Indebtedness as stated in the Accounting Information then most recently required to be delivered pursuant to Clauses 19.1 (Financial Statements) including, without limitation:

(a) any amounts payable by the Group under leases, including, but not limited to, time chartering contracts, or similar arrangements over their respective periods;

(b) any credit to the Group from a supplier of goods or under any instalment purchase or other similar arrangement;

(c) the aggregate amount then outstanding of liabilities and obligations of third parties to the extent that they are guaranteed by the Group;

(d) any contingent liabilities (including any taxes or other payments under dispute or arbitration) which have been or, under GAAP, should be recorded in the notes to the Group’s financial statements; and

(e) any deferred tax liabilities.

“Deed of Covenants” means the deed of covenants referred to in Clause 17.1.1 (Security Documents).

“Default” means an Event of Default or any event or circumstance which would (with the expiry of a grace period, the giving of notice, the making of any determination under the Finance Documents or any combination of any of the foregoing) be an Event of Default.

“Defaulting Lender” means any Lender:

(a) which has failed to make its participation in a Drawing available (or has notified the Agent or the Borrower (which has notified the Agent) that it will not make its participation in a Drawing available) by the relevant Drawdown Date in accordance with Clause 5.3 (Lenders’ participation);

(b) which has otherwise rescinded or repudiated a Finance Document; or

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(c) with respect to which an Insolvency Event has occurred and is continuing,

unless, in the case of (a):

(i) its failure to pay is caused by:

(A) administrative or technical error; or

(B) a Disruption Event; and

payment is made within three Business Days of its due date; or

(ii) the Lender is disputing in good faith whether it is contractually obliged to make the payment in question.

“Delegate” means any delegate, agent, attorney or co-trustee appointed by the Security Agent.

“Delivery Date” means the date of actual delivery of a Newbuilding Vessel to the relevant Collateral Owner by the relevant Builder under the relevant Building Contract.

“Delivery Termination Date” means, in respect of the Gloverfour Vessel, 30 March 2015 and, in respect of the Gloverfive Vessel, 30 September 2015.

“Disruption Event” means either or both of:

(a) a material disruption to those payment or communications systems or to those financial markets which are, in each case, required to operate in order for payments to be made in connection with the Loan (or otherwise in order for the transactions contemplated by the Finance Documents to be carried out) which disruption is not caused by, and is beyond the control of, any of the Parties; or

(b) the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to the treasury or payments operations of a Party preventing that, or any other Party:

(i) from performing its payment obligations under the Finance Documents; or

(ii) from communicating with other Parties in accordance with the terms of the Finance Documents,

and which (in either such case) is not caused by, and is beyond the control of, the Party whose operations are disrupted.

“DOC” means, in relation to the ISM Company, a valid Document of Compliance issued for the ISM Company by the Administration under paragraph 13.2 of the ISM Code.

“Drawdown Date” means the date on which a Drawing is advanced under Clause 5 (Advance).

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“Drawdown Request” means a notice substantially in the form set out in Schedule 3 (Drawdown Request).

“Drawing” means any one amount advanced or to be advanced pursuant to a Drawdown Request or, where the context permits, the amount advanced and for the time being outstanding and “Drawings” means more than one of them.

“EBITDA” on a consolidated basis of the Group means the earnings before interest, expenses and other financial charges, taxes, depreciation and amortization (for the previous period of twelve months) as shown in the relevant consolidated financial statements for the Group.

“Earnings” means (i) all hires, freights, pool income and other sums payable to or for the account of a Collateral Owner in respect of a Vessel including (without limitation) all remuneration for salvage and towage services, demurrage and detention moneys, contributions in general average, compensation in respect of any requisition for hire, and damages and other payments (whether awarded by any court or arbitral tribunal or by agreement or otherwise) for breach, termination or variation of any contract for the operation, employment or use of a Vessel.

“Earnings Accounts” means:-

(a) a bank account opened in the name of Avstes with the Account Holder and designated “Avstes Shipping Corporation - Earnings Account” with account number 63628002;

(b) a bank account opened in the name of Eniadefhi with the Account Holder and designated “Eniadefhi Shipping Corporation - Earnings Account” with account number 63646001;

(c) a bank account opened in the name of Eniaprohi with the Account Holder and designated “Eniaprohi Shipping Corporation - Earnings Account” with account number 63647001;

(d) a bank account opened in the name of Marindou with the Account Holder and designated “Marindou Shipping Corporation - Earnings Account” with account number 62597005;

(e) a bank account opened in the name of Maxdodeka with the Account Holder and designated “Maxdodeka Shipping Corporation - Earnings Account” with account number 63940001;

(f) a bank account opened in the name of Pelea with the Account Holder and designated “Pelea Shipping Ltd. - Earnings Account” with account number 63397003;

(g) a bank account opened or to be opened in the name of Vasstwo with the Account Holder and designated “Vasstwo Shipping Corporation - Earnings Account” with account number 65179001;

(h) a bank account opened in the name of Maxeikositria with the Account Holder and designated “Maxeikositria Shipping Corporation - Earnings Account” with account number 65178001;

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(i) a bank account opened or to be opened in the name of Gloverfour with the Account Holder and designated “Gloverfour Shipping Corporation - Earnings Account” with account number 65422001; and

(j) a bank account opened or to be opened in the name of Gloverfive with the Account Holder and designated “Gloverfive Shipping Corporation - Earnings Account” with account number 65423001,

and “Earnings Account”, means any one of them.

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

“Environmental Approval” means any present or future permit, ruling, variance or other Authorisation required under Environmental Laws.

“Environmental Claim” means any claim, proceeding, formal notice or investigation by any governmental, judicial or regulatory authority or any other person which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law and, for this purpose, “claim” includes a claim for damages, compensation, contribution, injury, fines, losses and penalties or any other payment of any kind, including in relation to clean-up and removal, whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset.

“Environmental Incident” means:

(a) any release, emission, spill or discharge into a Vessel or into or upon the air, sea, land or soils (including the seabed) or surface water of Environmentally Sensitive Material within or from a Vessel; or

(b) any incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, sea, land or soils (including the seabed) or surface water from a vessel other than a Vessel and which involves a collision between a Vessel and such other vessel or some other incident of navigation or operation, in either case, in connection with which a Vessel is actually or potentially liable to be arrested, attached, detained or injuncted and/or a Vessel and/or any Security Party and/or any operator or manager of a Vessel is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or

(c) any other incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, sea, land or soils (including the seabed) or surface water otherwise than from a Vessel and in connection with which a Vessel is actually or potentially liable to be arrested and/or where any Security Party and/or any operator or manager of a Vessel is at fault or allegedly at fault or otherwise liable to any legal or administrative action, other than in accordance with an Environmental Approval.

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“Environmental Law” means any present or future law or regulation relating to pollution or protection of human health or the environment, to conditions in the workplace, to the carriage, generation, handling, storage, use, release or spillage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material.

“Environmentally Sensitive Material” means and includes all contaminants, oil, oil products, toxic substances and any other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous.

“Event of Default” means any event or circumstance specified as such in Clause 22 (Events of Default).

“Existing Indebtedness” means the Indebtedness, as defined in a loan agreement dated 27 December 2012, as amended and supplemented by a first supplemental agreement dated 28 November 2013, each made by and between DNB Bank ASA, as lender and Avstes, Eniadefhi, Eniaprohi, Marindou, Maxeikositria, Maxdodeka and Pelea, as joint and several borrowers.

“Existing Vessels” means the following dry bulk carrier vessels with the deadweight tonnage and IMO numbers set out below and built in the year set out below and everything now or in the future belonging to them on board and ashore, each currently registered under the laws and flag of the Republic of Cyprus in the ownership of the respective Collateral Owners set out below and “Existing Vessel” means any one of them:

Name of Vessel	Collateral Owner	Dwt	IMO number	Year of build
VASSOS	Avstes	76,015	9256872	2004
MARTINE	Eniadefhi	87,000	9411537	2009
ELENI	Eniaprohi	87,000	9411525	2008
MARIA	Marindou	76,015	9252424	2003
ANDREAS K	Maxdodeka	91,800	9438121	2009
PEDHOULAS FIGHTER	Maxeikositria	81,600	9610286	2012
PEDHOULAS LEADER	Pelea	82,000	9323065	2007
XENIA	Vasstwo	92,000	9317834	2006

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“Facility Office” means the office or offices notified by a Lender to the Agent in writing on or before the date it becomes a Lender (or, following that date, by not less than five Business Days’ written notice) as the office or offices through which it will perform its obligations under this Agreement.

“Facility Period” means the period beginning on the date of this Agreement and ending on the date when the whole of the Indebtedness has been paid in full and the Security Parties have ceased to be under any further actual or contingent liability to the Finance Parties under or in connection with the Finance Documents.

“FATCA” means:

(a) sections 1471 to 1474 of the Code or any associated regulations;

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

(c) any agreement pursuant to the implementation of any treaty, law or regulation referred to in (a) or (b) with the US Internal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction.

“FATCA Application Date” means:

(a) in relation to a “withholdable payment” described in section 1473(1)(A)(i) of the Code (which relates to payments of interest and certain other payments from sources within the US), 1 July 2014;

(b) in relation to a “withholdable payment” described in section 1473(1)(A)(ii) of the Code (which relates to “gross proceeds” from the disposition of property of a type that can produce interest from sources within the US), 1 January 2017; or

(c) in relation to a “passthru payment” described in section 1471(d)(7) of the Code not falling within (a) or (b), 1 January 2017,

or, in each case, such other date from which such payment may become subject to a deduction or withholding required by FATCA as a result of any change in FATCA after the date of this Agreement.

“FATCA Deduction” means a deduction or withholding from a payment under a Finance Document required by FATCA.

“FATCA Exempt Party” means a Party that is entitled to receive payments free from any FATCA Deduction.

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“Fee Letter” means any letter or letters dated on or about the date of this Agreement between the Arranger and the Borrower (or the Agent and the Borrower or the Security Agent and the Borrower) setting out any of the fees referred to in Clause 11 (Fees).

“Finance Documents” means this Agreement, Master Agreement, the Security Documents, the Fee Letter and any other document designated as such by the Agent and the Borrower together and “Finance Document” means any one of them.

“Finance Parties” means the Arranger, the Agent, the Security Agent, the Swap Provider and the Lenders and “Finance Party” means any one of them.

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

(a) moneys borrowed and debit balances at banks or other financial institutions;

(b) any acceptance under any acceptance credit or bill discounting facility (or dematerialised equivalent);

(c) any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument;

(d) the amount of any liability in respect of any finance or capital lease;

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

(f) any actual amount which is due as a result of the termination or close-out of any Treasury Transaction;

(g) any counter-indemnity obligation in respect of a guarantee, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution in respect of (i) an underlying liability of an entity which is not a Security Party or a member of the Group which liability would fall within one of the other sections of this definition or (ii) any liabilities of any Security Party or any other member of the Group relating to any post-retirement benefit scheme;

(h) any amount classified as borrowings under GAAP;

(i) any amount of any liability under an advance or deferred purchase agreement if (i) one of the primary reasons behind entering into the agreement is to raise finance or to finance the acquisition or construction of the asset or service in question or (ii) the agreement is in respect of the supply of assets or services and payment is due more than 120 days after the date of supply;

(j) any amount raised under any other transaction (including any forward sale or purchase, sale and sale back or sale and leaseback agreement) having the commercial effect of a borrowing or otherwise classified as borrowings under GAAP; and

(k) the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in (a) to (j).

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“GAAP” means generally accepted accounting principles in the United States of America.

“Group” means the Borrower and each of the Subsidiaries for the time being.

“Group Vessel” means any vessel owned by, leased by under a financial lease or constructed for (in the case of a new building under construction) the account of any member of the Group.

“Guarantee” means the guarantee and indemnity of each Guarantor referred to in Clause 17.1.4 (Security Documents).

“Guarantor” means each Collateral Owner and/or (where the context permits) any other person who shall at any time during the Facility Period give to the Lenders or to the Security Agent on their behalf a guarantee and/or indemnity for the payment of all or part of the Indebtedness.

“Holding Company” means, in relation to a person, any other person in respect of which it is a Subsidiary.

“IAPPC” means a valid international air pollution prevention certificate for a Vessel issued under Annex VI.

“Impaired Agent” means the Agent at any time when:

(a) it has failed to make (or has notified a Party that it will not make) a payment required to be made by it under the Finance Documents by the due date for payment;

(b) the Agent otherwise rescinds or repudiates a Finance Document;

(c) (if the Agent is also a Lender) it is a Defaulting Lender under (a) or (b) of the definition of “Defaulting Lender”; or

(d) an Insolvency Event has occurred and is continuing with respect to the Agent;

unless, in the case of (a):

(i) its failure to pay is caused by:

(A) administrative or technical error; or

(B) a Disruption Event; and

payment is made within three Business Days of its due date; or

(ii) the Agent is disputing in good faith whether it is contractually obliged to make the payment in question.

“Indebtedness” means the aggregate from time to time of: the amount of the Loan outstanding; all accrued and unpaid interest on the Loan; and all other sums of any nature (together with all accrued and unpaid interest on any of those sums) payable to any of the Finance Parties under all or any of the Finance Documents.

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“Initial Maximum Loan Amount” means an amount of the Loan of up to one hundred and seventy eight million dollars, ($178,000,000).

“Insolvency Event” in relation to an entity means that the entity:

(a) is dissolved (other than pursuant to a consolidation, amalgamation or merger);

(b) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due;

(c) makes a general assignment, arrangement or composition with or for the benefit of its creditors;

(d) institutes or has instituted against it, by a regulator, supervisor or any similar official with primary insolvency, rehabilitative or regulatory jurisdiction over it in the jurisdiction of its incorporation or organisation or the jurisdiction of its head or home office, a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation by it or such regulator, supervisor or similar official;

(e) has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition is instituted or presented by a person or entity not described in (d) and:

(i) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation; or

(ii) is not dismissed, discharged, stayed or restrained in each case within 30 days of the institution or presentation thereof;

(f) has exercised in respect of it one or more of the stabilisation powers pursuant to Part 1 of the Banking Act 2009 and/or has instituted against it a bank insolvency proceeding pursuant to Part 2 of the Banking Act 2009 or a bank administration proceeding pursuant to Part 3 of the Banking Act 2009;

(g) has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger);

(h) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets (other than, for so long as it is required by law or regulation not to be publicly disclosed, any such appointment which is to be made, or is made, by a person or entity described in (d));

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(i) has a secured party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 30 days thereafter;

(j) causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in (a) to (i); or

takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the events specified in (a) to (j).

“Insurances” means all policies and contracts of insurance (including all entries in protection and indemnity or war risks associations) which are from time to time taken out or entered into in respect of or in connection with a Vessel or her increased value or the Earnings and (where the context permits) all benefits under such contracts and policies, including all claims of any nature and returns of premium.

“Interest Expense” means all paid or payable interest, charges and expenses in the nature of interest (whether paid, payable or capitalised) incurred by the Group and as stated in the financial statements then most recently required to be delivered pursuant to Clause 19.1 (Financial statements).

“Interest Payment Date” means each date for the payment of interest in accordance with Clause 8.2 (Payment of interest).

“Interest Period” means each period determined in accordance with Clause 9 (Interest Periods) and, in relation to an Unpaid Sum, each period determined in accordance with Clause 8.3 (Default interest).

“ISM Code” means the International Management Code for the Safe Operation of Ships and for Pollution Prevention.

“ISM Company” means, at any given time, the company responsible for each Vessel’s compliance with the ISM Code under paragraph 1.1.2 of the ISM Code.

“ISPS Code” means the International Ship and Port Facility Security Code.

“ISSC” means a valid international ship security certificate for each Vessel issued under the ISPS Code.

“ITA” means the Income Tax Act 2007.

“Joint Venture” means any joint venture entity, whether a company, unincorporated firm, undertaking, association, joint venture or partnership or any other entity.

“Legal Opinion” means any legal opinion delivered to the Agent under Clause 4.1 (Initial conditions precedent) or Clause 4.5 (Conditions subsequent).

“Legal Reservations” means:

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(a) the principle that equitable remedies may be granted or refused at the discretion of a court and the limitation of enforcement by laws relating to insolvency, reorganisation and other laws generally affecting the rights of creditors;

(b) the time barring of claims under the Limitation Acts, the possibility that an undertaking to assume liability for or indemnify a person against non-payment of UK stamp duty may be void and defences of set-off or counterclaim;

(c) similar principles, rights and defences under the laws of any Relevant Jurisdiction; and

(d) any qualifications contained in any Legal Opinion.

“Lender” means:

(a) any Original Lender; and

(b) any bank, financial institution, trust, fund or other entity which has become a Party as a Lender in accordance with Clause 23 (Changes to the Lenders),

which in each case has not ceased to be a Lender in accordance with the terms of this Agreement.

“LIBOR” means, in relation to any Drawing:

(a) the applicable Screen Rate; or

(b) (if (i) no Screen Rate is available for the currency of that Drawing or (ii) no Screen Rate is available for the relevant Interest Period) the Reference Bank Rate,

as of 11.00 a.m. on the Quotation Day for dollars and for a period equal in length to the relevant Interest Period and, if that rate is less than zero, LIBOR shall be deemed to be zero.

“Loan” means the aggregate amount advanced or to be advanced by the Lenders to the Borrower under Clause 2 (The Loan) or, where the context permits, the principal amount advanced and for the time being outstanding.

“Loan Increase Amount” means, in respect of each Newbuilding Vessel, an amount of the Loan equal to the lesser of (i) $16,000,000 and (ii) 50% of the Market Value of the relevant Newbuilding Vessel evidenced by the valuation received by the Agent under Clause 4.6 (Delivery conditions precedent).

“Majority Lenders” means a Lender or Lenders whose Commitments aggregate more than 66²/₃% of the Total Commitments (or, if the Total Commitments have been reduced to zero, aggregated more than 66²/₃% of the Total Commitments immediately prior to the reduction).

“Management Agreements” means, the agreements for the commercial and/or technical management of the Collateral Vessels between the Collateral Owners and the Managers and “Management Agreement” means any one of them.

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“Managers” means Safety Management Overseas S.A., of the Republic of Panama, whose registered office is at Edificio Torre Universal, Piso 12, Avenida Federico Boyd, P.O. Box 8807, Panama, Republic of Panama or such other commercial and/or technical managers of the Vessels and the Collateral Vessel nominated by the Collateral Owner respectively as the Agent may approve (such approval not to be unreasonably withheld or delayed).

“Managers’ Undertakings” means the written undertakings of the Managers whereby, throughout the Facility Period unless otherwise agreed by the Agent:

(a) they will remain the commercial or technical managers of each Vessel (as the case may be);

(b) they will not, without the prior written consent of the Agent, such consent not to be unreasonably withheld or delayed, subcontract or delegate the commercial or technical management of each Vessel (as the case may be) to any third party;

(c) the interests of the Managers in the Insurances will be assigned to the Security Agent with first priority; and

(d) (following the occurrence of an Event of Default) all claims of the Managers against the relevant Collateral Owner shall be subordinated to the claims of the Finance Parties under the Finance Documents.

“Mandatory Cost” means, for each Lender to which it applies, the cost imputed to that Lender of compliance with the mandatory liquid asset requirements and/or the banking supervision or other costs imposed by national or international regulations).

“Margin” means one point forty per cent (1.40%) per annum.

“Market Value” means the value of a Vessel or any other Group Vessel conclusively determined in accordance with clause 17.11 (Market Value determination).

“Marketable Securities” means any bonds, stocks, notes or bills payable in a freely convertible and transferable currency and which are listed on a stock exchange acceptable to the Agent.

“Master Agreement” means the Novated Master Agreement and any ISDA Master Agreement (or any other form of master agreement relating to interest or currency exchange transactions) entered into between the Swap Provider and the Borrower during the Facility Period, including each Schedule to any Master Agreement and each Confirmation exchanged under any Master Agreement.

“Master Agreement Benefits” means all benefits whatsoever of the Borrower under or in connection with the Master Agreement including, without limitation, all moneys payable to the Borrower under the Master Agreement and all claims for damages in respect of any breach by the Swap Provider of the Master Agreement.

“Master Agreement Charge” means the deed of charge referred to in Clause 17.1.6 (Security Documents).

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“Material Adverse Effect” means in the reasonable opinion of the Majority Lenders a material adverse effect on:

(a) the business and the financial condition of the Group taken as a whole; or

(b) the ability of any Security Party to perform its obligations under any Finance Document; or

(c) the validity or enforceability of, or the effectiveness or ranking of any Encumbrance granted or purporting to be granted pursuant to any of, the Finance Documents or the rights or remedies of any Finance Party under any of the Finance Documents.

“Maximum Loan Amount” means an amount not exceeding the Initial Maximum Loan Amount, such amount to be (subject to Clause 4.6 (Delivery conditions precedent) increased on each Delivery Date by the relevant Loan Increase Amount, subject to the Delivery Date falling no later that the Delivery Termination Date and to be reduced from time to time in accordance with Schedule 7.

“Mortgage” means the first preferred or priority statutory mortgage referred to in Clause 17.1.1 (Security Documents), together with the Deed of Covenants, if applicable.

“Mortgagees’ Insurances” means all policies and contracts of mortgagees’ interest insurance, mortgagees’ additional perils (oil pollution) insurance and, in the event that an Event of Default has occurred, any other insurance from time to time taken out by the Security Agent in relation to a Vessel.

“Net Worth” means Consolidated Total Assets less Consolidated Total Liabilities.

“New Lender” has the meaning given to that term in Clause 23.1 (Assignments and transfers by the Lenders).

“Newbuilding Vessels” means the following vessels currently under construction by the respective Builders set out below with the Builders’ hull numbers set out below on the terms of the Building Contracts and, on delivery to the respective Collateral Owners set out below, intended to be registered under an Approved Flag and “Newbuilding Vessel” means any one of them:

Type of Vessel	Builder	dwt	Hull Number	Collateral Owner
Bulk carrier	Sasebo Heavy Industies Co., Ltd.	77,000	822 “Gloverfour Vessel”	Gloverfour
Bulk carrier	Sasebo Heavy Industies Co., Ltd.	77,000	827 “Gloverfive Vessel”	Gloverfive

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“Novated Master Agreement” means the master agreement (on the ISDA 1992 form) and schedule thereto both dated 27 December 2012 made between each of Avstes, Eniadefhi, Maxdodeka, Eniaprohi, Pelea and Marindou (as joint and several co-obligors) and the Swap Provider (as swap provider), as amended, supplemented and novated pursuant to a novation agreement made or to be made on or around the date of this Agreement between Avstes, Eniadefhi, Maxdodeka, Eniaprohi, Pelea and Marindou (as transferor), the Borrower (as transferee) and the Swap Provider (as remaining party), pursuant to which each of Avstes, Eniadefhi, Maxdodeka, Eniaprohi, Pelea and Marindou would novate their rights and obligations thereunder to the Borrower on the terms and subject to the conditions contained therein.

“Original Financial Statements” means the audited consolidated financial statements of the Borrower for the financial year ended 31 December 2013.

“Original Jurisdiction” means, in relation to a Security Party, the jurisdiction under whose laws that Security Party is incorporated as at the date of this Agreement.

“Party” means a party to this Agreement.

“Permitted Disposal” means any sale, lease, licence, transfer or other disposal which, except in the case of (b), is on arm’s length terms:

(a) of trading stock or cash made by any Security Party;

(b) of any asset by any Security Party (the “Disposing Company”) to any other Security Party (the “Acquiring Company”), but if:

(i) the Disposing Company had given any Encumbrance over the asset, the Acquiring Company must give an equivalent Encumbrance over that asset; and

(iii) the Disposing Company is a Guarantor, the Acquiring Company must guarantee at all times an amount no less than that guaranteed by the Disposing Company;

(c) of assets in exchange for other assets comparable or superior as to type, value and quality;

(d) of obsolete or redundant vehicles, plant and equipment for cash or asset s in accordance with (c);

(e) arising as a result of any Permitted Encumbrance; and

(f) of assets (other than shares) for cash where the higher of the market value and net consideration receivable (when aggregated with the higher of the market value and net consideration receivable for any other sale, lease, licence, transfer or other disposal not allowed under (a) to (f) or as a Permitted Transaction) does not exceed $3,000,000 (or its equivalent) in total during the term of this Agreement and does not exceed $500,000 (or its equivalent) in any financial year of the Borrower.

“Permitted Encumbrance” means:

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(a) any Encumbrance which has the prior written approval of the Agent;

(b) any Encumbrance arising by operation of law and in the ordinary course of trading and not as a result of any default or omission by a Security Party;

(c) any Quasi-Security arising as a result of a disposal which is a Permitted Disposal; or

(d) any liens for current crews’ wages and salvage and liens incurred in the ordinary course of trading the Vessel up to an aggregate amount at any time no more than 30 days overdue.

“Permitted Transaction” means:

(a) any disposal required, Financial Indebtedness incurred, guarantee, indemnity or Encumbrance or Quasi-Security given, or other transaction arising, under the Finance Documents; or

(b) transactions (other than (i) any sale, lease, license, transfer or other disposal and (ii) the granting or creation of any Encumbrance or the incurring or permitting to subsist of Financial Indebtedness) conducted in the ordinary course of trading on arm’s length terms.

“Quasi-Security” has the meaning given to that term in Clause 21.9 (Negative pledge).

“Quotation Day” means, in relation to any period for which an interest rate is to be determined two Business Days before the first day of that period, unless market practice differs in the Relevant Interbank Market, in which case the Quotation Day will be determined by the Agent in accordance with market practice in the Relevant Interbank Market (and if quotations would normally be given by leading banks in the Relevant Interbank Market on more than one day, the Quotation Day will be the last of those days).

“Receiver” means a receiver or receiver and manager or administrative receiver of the whole or any part of the Charged Property.

“Reduction Date” means the dates on which the Maximum Loan Amount shall be reduced as stipulated in Schedule 7.

“Reference Bank Rate” means the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Agent at its request by the Reference Banks, in relation to LIBOR, as the rate at which the relevant Reference Bank could borrow funds in the London interbank market and in dollars and for the relevant period, were it to do so by asking for and then accepting interbank offers for deposits in reasonable market size in dollars and for that period.

“Reference Banks” means, in relation to LIBOR and Mandatory Cost, the principal London office of DNB Bank ASA or such other bank or banks as may be appointed by the Agent in prior consultation and agreement with the Borrower).

“Refund Guarantees” means refund guarantees numbered No.811BND00002, and No.811BND00003 respectively issued by the Refund Guarantor in favour of

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Gloverfour and Gloverfive respectively pursuant to the Building Contracts on 22 April 2013 and 27 November 2013 and “Refund Guarantee” means any one of them.

“Refund Guarantor” means The Bank of Fukuoka, Ltd., a company incorporated under the laws of Japan with its registered office at 1-Chome, Chuo-ku, Fukuoka, 810-8693, Japan or any other financial institution acceptable to the Agent in its absolute discretion.

“Related Fund” in relation to a fund (the “first fund”), means a fund which is managed or advised by the same investment manager or investment adviser as the first fund or, if it is managed by a different investment manager or investment adviser, a fund whose investment manager or investment adviser is an Affiliate of the investment manager or investment adviser of the first fund.

“Relevant Documents” means the Finance Documents, the Management Agreements, the Building Contracts and the Refund Guarantees.

“Relevant Interbank Market” means the London interbank market.

“Relevant Jurisdiction” means, in relation to a Security Party:

(a) its Original Jurisdiction;

(b) any jurisdiction where any asset subject to or intended to be subject to a Security Document to be executed by it is situated;

(c) any jurisdiction where it conducts its business; and

the jurisdiction whose laws govern the perfection of any of the Security Documents entered into by it.

“Repeating Representations” means each of the representations set out in Clause 18.1 (other than Clauses 18.1.7, 18.1.9, 18.1.10, 18.1.12, 18.1.12(e), 18.1.14, 18.1.15, 18.1.16, 18.1.17).

“Representative” means any delegate, agent, manager, administrator, nominee, attorney, trustee or custodian.

“Requisition Compensation” means all compensation or other money which may from time to time be payable to a Collateral Owner as a result of a Vessel being requisitioned for title or in any other way compulsorily acquired (other than by way of requisition for hire).

“Restricted Party” means a person:

(a) that is listed on any Sanctions List (whether designated by name or by reason of being included in a class of person);

(b) that is domiciled, registered as located or having its main place of business in, or is incorporated under the laws of, a country which is subject to Sanctions Laws; or

(c) that is directly or indirectly owned or controlled by a person referred to in (a) and/or (b) above; or

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(d) with which any Lender is prohibited from dealing or otherwise engaging in a transaction with by any Sanctions Laws.

“Rollover Drawing” means one or more Drawings:

(a) made or to be made on the same day that a maturing Drawing is due to be repaid;

(b) the aggregate amount of which is equal to or less than the amount of the maturing Drawing; and

(c) made or to be made to the Borrower for the purpose of refinancing that maturing Drawing.

“Sanctions Authority” means the Norwegian State, the United Nations, the European Union, the member states of the European Union, the United States of America, the Monetary Authority of Singapore and the Hong Kong Monetary Authority and any authority acting on behalf of any of them in connection with Sanctions Laws.

“Sanctions Laws” means the economic or financial sanctions laws and/or regulations, trade embargoes, prohibitions, restrictive measures, decisions, Executive Orders or notices from regulators implemented, adapted, imposed, administered, enacted and/or enforced by any Sanctions Authority.

“Sanctions List” means any list of persons or entities published in connection with Sanctions Laws by or on behalf of any Sanctions Authority.

“Screen Rate” means, in relation to LIBOR, the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for the relevant currency and period displayed on pages LIBOR01 or LIBOR02 of the Reuters screen (or any replacement Reuters page which displays that rate) or on the appropriate page of such other information service which publishes that rate from time to time in place of Reuters. If such page or the service ceases to be available, the Agent may specify another page or service displaying the relevant rate after consultation with the Borrower.

“Secured Parties” means each Finance Party from time to time party to this Agreement and any Receiver or Delegate.

“Security Documents” means the Mortgage, the Assignments, each Guarantee, the Account Security Deed, the Building Contract Assignment, the Managers’ Undertakings, the Master Agreement Charge and any other Credit Support Documents or (where the context permits) any one or more of them, and any other agreement or document which may at any time be executed by any person as security for the payment of all or any part of the Indebtedness and “Security Document” means any one of them.

“Security Parties” means the Borrower, the Guarantors, the Managers, any other Credit Support Provider, and any other person who may at any time during the Facility Period be liable for, or provide security for, all or any part of the Indebtedness, and “Security Party” means any one of them.

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“Side Letter” means the side letter evidencing the Current Shareholders of the Borrower on the Signing Date issued by the Borrower in favour of the Agent in such form as the Agent may require.

“SMC” means a valid safety management certificate issued for a Vessel by or on behalf of the Administration under paragraph 13.7 of the ISM Code.

“Subsidiary” means a subsidiary undertaking within the meaning of section 1162 of the Companies Act 2006.

“Tax” means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same).

“Termination Date” means the date falling on the earlier of (a) six (6) years after the first Drawdown Date to occur, and (b) 30 September 2020.

“Total Commitments” means the aggregate of all the Commitments.

“Total Loss” means:

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

(b) the requisition for title or compulsory acquisition of a Vessel by any government or other competent authority (other than by way of requisition for hire); or

(c) the capture, seizure, arrest, detention, hijacking, piracy, theft, condemnation as prize, confiscation or forfeiture of a Vessel (not falling within (b)), unless the Vessel in question is released and returned to the possession of the relevant Collateral Owner within 1 month (but in the case of piracy one hundred and eighty (180) days) after the capture, seizure, arrest, detention, hijacking, piracy, theft, condemnation as prize, confiscation or forfeiture in question.

“Transaction” means a transaction entered into between the Swap Provider and the Borrower governed by the Master Agreement.

“Transfer Certificate” means a certificate substantially in the form set out in Schedule 4 (Form of Transfer Certificate) or any other form agreed between the Agent and the Borrower.

“Transfer Date” means, in relation to an assignment or a transfer, the later of:

(a) the proposed Transfer Date specified in the relevant Assignment Agreement or Transfer Certificate; and

(b) the date on which the Agent executes the relevant Assignment Agreement or Transfer Certificate.

“Treasury Transactions” means any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price.

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“Trust Property” means:

(a) all benefits derived by the Security Agent from Clause 17 (Security and Application of Moneys); and

(b) all benefits arising under (including, without limitation, all proceeds of the enforcement of) each of the Security Documents,

with the exception of any benefits arising solely for the benefit of the Security Agent.

“Unpaid Sum” means any sum due and payable but unpaid by any Security Party under the Finance Documents.

“US” means the United States of America.

“US Tax Obligor” means:

(a) a Security Party which is resident for tax purposes in the US; or

(b) a Security Party some or all of whose payments under the Finance Documents are from sources within the US for US federal income tax purposes.

“VAT” means:

(a) any tax imposed in compliance with the Council Directive of 28 November 2006 on the common system of value added tax (EC Directive 2006/112); and

(b) any other tax of a similar nature, whether imposed in a member state of the European Union in substitution for, or levied in addition to, such tax referred to in (a), or imposed elsewhere.

“Vessels” means the Existing Vessels and the Newbuilding Vessels and “Vessel” means any one of them.

1.2 Construction Unless a contrary indication appears, any reference in this Agreement to:

1.2.1 any “Lender”, the “Borrower”, any “Security Party” the “Arranger”, the “Agent”, the “Swap Provider”, any “Secured Party”, the “Security Agent”, any “Finance Party” or any “Party” shall be construed so as to include its successors in title, permitted assignees and permitted transferees;

1.2.2 a document in “agreed form” is a document which is previously agreed in writing by or on behalf of the Borrower and the Agent;

1.2.3 “assets” includes present and future properties, revenues and rights of every description;

1.2.4 a “Finance Document”, a “Security Document”, a “Relevant Document” or any other document is a reference to that Finance Document, Security Document, Relevant Document or other

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document as amended, novated, supplemented, extended or restated from time to time in accordance with its terms;

1.2.5 a “group of Lenders” includes all the Lenders;

1.2.6 “indebtedness” includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;

1.2.7 a “person” includes any individual, firm, company, corporation, government, state or agency of a state or any association, trust, joint venture, consortium or partnership or other entity (whether or not having separate legal personality);

1.2.8 a “regulation” includes any regulation, rule, official directive, request or guideline (whether or not having the force of law, but which the Finance Party applying the same is required to comply with) of any governmental, intergovernmental or supranational body, agency, department or of any regulatory, self-regulatory or other authority or organisation;

1.2.9 a provision of law is a reference to that provision as amended or re-enacted from time to time; and

1.2.10 a time of day (unless otherwise specified) is a reference to London time.

1.3 Headings Section, Clause and Schedule headings are for ease of reference only.

1.4 Defined terms Unless a contrary indication appears, a term used in any other Finance Document or in any notice given under or in connection with any Finance Document has the same meaning in that Finance Document or notice as in this Agreement.

1.5 Default A Default (other than an Event of Default) is “continuing” if it has not been remedied or waived and an Event of Default is “continuing” if it has not been remedied or waived.

1.6 Currency symbols and definitions “$”, “USD” and “dollars” denote the lawful currency of the United States of America.

1.7 Third party rights A person who is not a Party has no right under the Contracts (Rights of Third Parties) Act 1999 (the “Third Parties Act”) to enforce or to enjoy the benefit of any term of this Agreement.

1.8 Offer letter This Agreement supersedes the terms and conditions contained in any correspondence relating to the subject matter of this Agreement exchanged between any Finance Party and the Borrower or their respective representatives before the date of this Agreement.

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Section 2 The Loan

2 The Loan

2.1 Amount Subject to the terms of this Agreement, the Lenders agree to make available to the Borrower a reducing revolving credit facility in an aggregate amount not exceeding the Maximum Loan Amount at any one time.

2.2 Finance Parties’ rights and obligations

2.2.1 The obligations of each Finance Party under the Finance Documents are several. Failure by a Finance Party to perform its obligations under the Finance Documents does not affect the obligations of any other Party under the Finance Documents. No Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents.

2.2.2 The rights of each Finance Party under or in connection with the Finance Documents are separate and independent rights and any debt arising under the Finance Documents to a Finance Party from a Security Party shall be a separate and independent debt.

2.2.3 A Finance Party may, except as otherwise stated in the Finance Documents, separately enforce its rights under the Finance Documents.

3 Purposes

3.1 Purposes The Borrower shall apply the Loan for the purposes referred to in Preliminary (B).

3.2 Monitoring No Finance Party is bound to monitor or verify the application of any amount borrowed under this Agreement.

4 Conditions of Utilisation

4.1 Initial conditions precedent

4.1.1 The Lenders will only be obliged to comply with Clause 5.3 (Lenders’ participation) in relation to the advance of a Drawing if on or before the first Drawdown Date, the Agent has received all of the documents and other evidence listed in Part I of Schedule 2 (Conditions Precedent) in form and substance satisfactory to the Agent. The Agent shall notify the Borrower and the Lenders promptly upon being so satisfied.

4.1.2 Other than to the extent that the Majority Lenders notify the Agent in writing to the contrary before the Agent gives the notification described in Clause 4.1.1, the Lenders authorise the Agent to give that notification. The Agent shall not be liable for any damages, costs or losses whatsoever as a result of giving any such notification.

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4.2 Further conditions precedent The Lenders will only be obliged to advance a Drawing if on the date of the relevant Drawdown Request and on the proposed Drawdown Date:

4.2.1 in the case of a Rollover Drawing, no Event of Default is continuing and no notice has been issued pursuant to Clause 22.2 (Acceleration) in respect thereof, and in the case of any other Drawing, no Default is continuing or would result from the advance of that Drawing; and

4.2.2 the representations made by the Borrower under Clause 18 (Representations) are true.

4.3 Drawing limit The Lenders will only be obliged to advance a Drawing if:

4.3.1 no other Drawing has been made on the same Business Day;

4.3.2 that Drawing will not result in there being more than five (5) Drawings outstanding at any one time;

4.3.3 that Drawing is not less than $1,000,000;

4.3.4 that Drawing, if in excess of $1,000,000, is in integral multiples of $500,000;

4.3.5 that Drawing will not increase the outstanding amount of the Loan to a sum in excess of the Maximum Loan Amount;

4.3.6 prior to the first Delivery Date to occur, that Drawing will not increase the outstanding amount of the Loan to a sum in excess of the Initial Maximum Loan Amount; and

4.3.7 that Drawing, if it is in relation to a Loan Increase Amount, falls before the relevant Delivery Termination Date for the relevant Newbuilding Vessel.

4.4 Reduction of Maximum Loan Amount The Maximum Loan Amount:

4.4.1 shall be reduced in accordance with Schedule 7 (but in any event and for the avoidance of any doubt to provide a maximum seventeen year amortisation profile for the facility) as follows:-

(a) on each Reduction Date by either (i) eight million six hundred and eighty two thousand nine hundred and twenty seven dollars ($8,682,927) or, after the delivery of both Newbuilding Vessels, by (ii) one reduction of nine million one hundred and fifty three thousand five hundred and fifteen dollars ($9,153,515) and equal reductions of nine million six hundred and twenty four thousand one hundred and three dollars ($9,624,103) thereafter;

(b) on the Termination Date by a balloon amount of ninety five million nine hundred and twenty two thousand five hundred and twenty five dollars ($95,922,525); and

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(c) on the Termination Date the Maximum Loan Amount shall be reduced to zero,

4.4.2 may (in addition to any reduction under Clause 4.4.1) be reduced by the Borrower by $1,000,000 or an integral multiple of that amount with effect from any Business Day by written notice to the Agent given not fewer than 5 days prior to that Business Day, which notice shall be irrevocable.

4.5 Conditions subsequent The Borrower undertakes to deliver or to cause to be delivered to the Agent within 7 days after the first Drawdown Date the additional documents and other evidence listed in Part II of Schedule 2 (Conditions Subsequent).

4.6 Delivery conditions precedent The Maximum Loan Amount will not be increased by the Loan Increase Amount on each Delivery Date unless the Agent has received the additional documents and other evidence listed in Part III of Schedule 2 (Delivery conditions precedent), save that references in that Part III to “the Vessel” or to any person or document relating to a Vessel shall be deemed to relate solely to the Vessel being delivered on that Delivery Date.

4.7 Delivery conditions subsequent The Borrower undertakes to deliver or to cause to be delivered to the Agent within 7 days after the relevant Delivery Date the additional documents and other evidence listed in Part IV of Schedule 2 (Delivery conditions subsequent), save that references in that Part IV to “the Vessel” or to any person or document relating to a Vessel shall be deemed to relate solely to the Vessel delivered on that Delivery Date. If the Borrower does not deliver or to cause to be delivered to the Agent within 7 days after the relevant Delivery Date the additional documents and other evidence listed in Part IV of Schedule 2 (Delivery conditions subsequent), then the Loan will be reduced again by the Loan Amount Increase relevant to that Newbuilding Vessel and any part of the Loan advanced in excess of the Initial Maximum Loan Amount and any part of the Loan advanced in excess of such reduced amount shall be prepaid.

4.8 No waiver If the Lenders in their sole discretion agree to advance a Drawing to the Borrower before all of the documents and evidence required by Clause 4.1 (Initial conditions precedent) or 4.6 (Delivery conditions precedent) have been delivered to or to the order of the Agent, the Borrower undertakes to deliver all outstanding documents and evidence to or to the order of the Agent no later than 21 days after the relevant Drawdown Date or such other date specified by the Agent (acting on the instructions of all the Lenders).

The advance of a Drawing under this Clause 4.8 shall not be taken as a waiver of the Lenders’ right to require production of all the documents and evidence required by Clauses 4.1 (Initial conditions precedent) and 4.6 (Delivery conditions precedent).

4.9 Form and content All documents and evidence delivered to the Agent under this Clause shall:

4.9.1 be in form and substance acceptable to the Agent; and

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4.9.2 if required by the Agent, be certified, notarised, legalised or attested in a manner acceptable to the Agent.

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Section 3 Utilisation

5 Advance

5.1 Delivery of a Drawdown Request The Borrower may request a Drawing to be advanced by delivery to the Agent of a duly completed Drawdown Request not more than ten and not fewer than two Business Days before the proposed Drawdown Date.

5.2 Completion of a Drawdown Request A Drawdown Request is irrevocable and will not be regarded as having been duly completed unless:

5.2.1 it is signed by an authorised signatory of the Borrower;

5.2.2 the proposed Drawdown Date is a Business Day within the Availability Period; and

5.2.3 the proposed Interest Period complies with Clause 9 (Interest Periods).

5.3 Lenders’ participation

5.3.1 Subject to Clauses 2 (The Loan), 3 (Purpose) and 4 (Conditions of Utilisation), each Lender shall make its participation in each Drawing available by the Drawdown Date through its Facility Office.

5.3.2 The amount of each Lender’s participation in each Drawing will be equal to the proportion borne by its Commitment to the Total Commitments.

5.4 Cancellation of Commitment The whole or any part of the Total Commitments shall be cancelled at the end of the Availability Period to the extent that they are unutilised at that time.

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Section 4 Repayment, Prepayment and Cancellation

6 Repayment

6.1 Repayment of each Drawing The Borrower agrees to repay each Drawing to the Agent for the account of the Lenders on the last day of the Interest Period in respect of that Drawing and any outstanding Indebtedness on the Termination Date.

6.2 Application of new Drawings Without prejudice to the Borrower’s obligation under Clause 6.1 (Repayment of each Drawing), if:

6.2.1 one or more Drawings are to be made available to the Borrower:

(a) on the same day that a maturing Drawing is due to be repaid by the Borrower; and

(b) in whole or in part for the purpose of refinancing the maturing Drawing; and

6.2.2 the proportion borne by each Lender’s participation in the maturing Drawing to the amount of that maturing Drawing is the same as the proportion borne by that Lender’s participation in the new Drawings to the aggregate amount of those new Drawings,

the aggregate amount of the new Drawings shall, unless the Borrower notifies the Agent to the contrary in the relevant Drawdown Request, be treated as if applied in or towards repayment of the maturing Drawing so that:

(a) if the amount of the maturing Drawing exceeds the aggregate amount of the new Drawings:

(i) the Borrower will only be required to make a payment under Clause 6.1 (Repayment of each drawing) in an amount in the relevant currency equal to that excess; and

(ii) each Lender’s participation in the new Drawings shall be treated as having been made available and applied by the Borrower in or towards repayment of that Lender’s participation in the maturing Drawing and that Lender will not be required to make a payment under Clause 28.1 (Payments to the Agent) in respect of its participation in the new Drawing; and

(b) if the amount of the maturing Drawing is equal to or less than the aggregate amount of the new Drawings:

(i) the Borrower will not be required to make a payment under Clause 6.1 (Repayment of each drawing); and

(ii) each Lender will be required to make a payment under Clause 6.1 (Repayment of each drawing) in respect of its participation in the new Drawings only to the extent that its participation in the new Drawings exceeds that Lender’s

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participation in the maturing Drawing and the remainder of that Lender’s participation in the new Drawings shall be treated as having been made available and applied by the Borrower in or towards repayment of that Lender’s participation in the maturing Drawing.

6.3 Reborrowing Amounts of the Loan which are repaid or prepaid shall be available for reborrowing in accordance with Clause 4 (Conditions of Utilisation) prior to the end of the Availability Period.

7 Illegality, Prepayment and Cancellation

7.1 Illegality If it becomes unlawful in any jurisdiction (other than by reason of Sanctions Laws) for a Lender to perform any of its obligations as contemplated by this Agreement or to fund or maintain its participation in the Loan or it becomes unlawful for any Affiliate of a Lender for that Lender to do so:

7.1.1 without limitation to the Agent’s right under Clause 7.1.2 to cancel immediately, that Lender shall promptly notify the Agent upon becoming aware of that event and shall use its reasonable endeavours to change its lending office within ten (10) Business Days from the date thereof;

7.1.2 upon the expiry of ten (10) Business Days from the time the Agent is notified by the Lender of the relevant Illegality and provided the Lender has been unable to change its lending office and/or otherwise to remedy such Illegality, the Agent shall notify the Borrower in writing that the Commitment of that Lender will be immediately cancelled; and

7.1.3 the Borrower shall repay that Lender’s participation in any Drawing on the last day of its current Interest Period or, if earlier, the date specified by that Lender in the notice delivered to the Agent and notified by the Agent to the Borrower (being no earlier than the last day of any applicable grace period permitted by law) and the Maximum Loan Amount shall be reduced by the amount of that Lender’s Commitment in the Loan.

7.2 Voluntary cancellation The Borrower may, if it gives the Agent not less than three (3) Business Days’ (or such shorter period as the Majority Lenders may agree) prior notice, cancel the whole or any part (being a minimum amount of one million dollars ($1,000,000) of the undrawn amount of the Loan. Any cancellation under this Clause 7.2 shall reduce the Commitments of the Lenders rateably and will be applied in order of maturity.

7.3 Voluntary prepayment of Drawings The Borrower may prepay the whole or any part of a Drawing (but, if in part, being an amount that reduces that Drawing by an amount which is an integral multiple of one million dollars ($1,000,000) subject to giving the Agent not less than five (5) Business Days’ (or such shorter period as the Majority Lenders may agree) prior notice.

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7.4 Right of cancellation and prepayment in relation to a single Lender

7.4.1 If:

(a) any sum payable to any Lender by the Borrower is required to be increased under Clause 12.2.2 (Tax gross-up); or

(b) any Lender claims indemnification from the Borrower under Clause 12.3 (Tax indemnity) or Clause 13.1 (Increased costs),

the Borrower may, whilst the circumstance giving rise to the requirement for that increase or indemnification continues, give the Agent notice of cancellation of the Commitment(s) of that Lender (“Cancellation Notice”) and/or its intention to procure the repayment of that Lender’s participation in each Drawing (“Repayment Notice”).

7.4.2 On receipt of a cancellation notice referred to in Clause 7.4.1 in relation to a Lender, the Commitment(s) of that Lender shall immediately be reduced to zero.

7.4.3 On the last day of the Interest Period in respect of each Drawing which ends after the Borrower has given a repayment notice under Clause 7.4.1 in relation to a Lender (or, if earlier, the date specified by the Borrower in that repayment notice), the Borrower shall repay that Lender’s participation in that Drawing together with all interest and other amounts accrued under the Finance Documents.

7.4.4 For the avoidance of doubt, the Borrower has the right to send its Cancellation Notice and its Repayment Notice in one notice.

7.5 Mandatory prepayment on sale or Total Loss If a Vessel is sold by a Collateral Owner (subject to Clause 7.6 (Vessel substitution)) or becomes a Total Loss, the Borrower shall, simultaneously with any such sale or on the earlier of the date falling 150 days after any such Total Loss and the date on which the proceeds of any such Total Loss are realised, prepay the Loan in an amount which equals the Market Value of that Vessel, divided by the aggregate Market Value of all Vessels multiplied by the Maximum Loan Amount (the “Prepayment Amount”) and the Maximum Loan Amount shall be reduced by such Prepayment Amount and an amount of the Maximum Loan Amount equal to that Prepayment Amount shall be cancelled and shall not be available for reborrowing unless Clause 7.6 (Vessel Substitution) applies. The calculation of the Market Value for the purpose of this Clause will be based on valuations not older than thirty days prior to the date of such prepayment.

Following such prepayment and reduction, the Collateral Owner which owns that Vessel, at the cost of and on the request of the Borrower, will be released from its obligations under the Loan Agreement the Security Documents to which it is a party, unless an Event of Default has occurred and is continuing.

Any prepayment under this Clause will be applied in order of maturity.

7.6 Vessel Substitution If a Vessel is sold by a Collateral Owner or becomes a Total Loss (the “Disposed Vessel”), the Borrower may (and, if the Borrower

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decides to provide a Replacement Vessel, it shall procure that the Replacement Collateral Owner and each other Security Party shall) on the date falling no later than 150 days after any such sale or Total Loss (the “Substitution Period”), without any requirement for cancellation:-

(a) replace the Disposed Vessel with a Replacement Vessel;

(b) promptly do all such acts or execute all such documents (including agreements, assignments, transfers, mortgages, charges, notices and instructions) as the Security Agent may reasonably specify (and in such form as the Security Agent may reasonably require in favour of the Security Agent); and

(c) provide to the Agent such applicable documents and other evidence listed in Schedule 2 in relation to that Replacement Collateral Owner, each in form and substance reasonably satisfactory to the Agent.

During the Substitution Period the Maximum Loan Amount shall be temporarily reduced in accordance with clause 7.5 (Mandatory prepayment on sale or Total Loss).

For the purposes of this Clause:-

“Replacement Collateral Owner” means a company within the direct or indirect ownership and control of the Borrower which shall be acceptable to the Agent subject to receipt by the Agent beforehand of a satisfactory legal opinion provided by the Agent’s legal counsel in the country of incorporation of that Replacement Collateral Owner and confirming its due incorporation capacity and its continuing existence.

“Replacement Vessel” means a vessel registered under an Approved Flag under the ownership of a Replacement Collateral Owner, acceptable to the Agent in its absolute discretion.

7.7 Mandatory prepayment on reduction of Maximum Loan Amount If the Maximum Loan Amount is reduced in accordance with Clause 4.4 (Reduction of Maximum Loan Amount) to an amount which is less than the aggregate amount of the Drawings then outstanding, the Borrower shall, simultaneously with that reduction, prepay one or more outstanding Drawings to the extent required to ensure that the aggregate amount of the Drawings outstanding does not exceed the reduced Maximum Loan Amount.

7.8 Right of cancellation in relation to a Defaulting Lender If any Lender becomes a Defaulting Lender, the Borrower may, at any time whilst the Lender continues to be a Defaulting Lender, give the Agent 5 Business Days’ notice of cancellation of the Commitment of that Lender. On that notice becoming effective, the Commitment of the Defaulting Lender shall immediately be reduced to zero. The Agent shall as soon as practicable after receipt of that notice notify all the Lenders.

7.9 Restrictions Any notice of prepayment or cancellation given under this Clause 7 shall be irrevocable and, unless a contrary indication appears in this

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Agreement, shall specify the date or dates upon which the relevant prepayment or cancellation is to be made and the amount of that prepayment or cancellation.

Any prepayment under this Agreement shall be made together with accrued interest on the amount prepaid and, subject to any Break Costs, without premium or penalty.

The Borrower shall not repay, prepay or cancel all or any part of the Loan except at the times and in the manner expressly provided for in this Agreement.

No amount of the Total Commitments cancelled under this Agreement may be subsequently reinstated.

If the Agent receives a notice under this Clause 7 it shall promptly forward a copy of that notice to the Borrower or the affected Lender, as appropriate.

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Section 5 Costs of Utilisation

8 Interest

8.1 Calculation of interest The rate of interest on each Drawing for the Interest Period in respect of that Drawing is the percentage rate per annum which is the aggregate of the applicable:

8.1.1 Margin;

8.1.2 LIBOR; and

8.1.3 Mandatory Cost, if any.

8.2 Payment of interest The Borrower shall pay accrued interest on each Drawing on the last day of the Interest Period in respect of that Drawing (and, if the Interest Period is longer than six months, on the dates falling at six monthly intervals after the first day of the Interest Period).

8.3 Default interest If the Borrower fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on the overdue amount from the due date up to the date of actual payment (both before and after judgment) at a rate which is two per cent higher than the rate which would have been payable if the overdue amount had, during the period of non-payment, constituted a Drawing in the currency of the overdue amount for successive Interest Periods, each of a duration selected by the Agent (acting reasonably). Any interest accruing under this Clause 8.3 shall be immediately payable by the Borrower on demand by the Agent.

Default interest (if unpaid) arising on an overdue amount will be compounded with the overdue amount at the end of each Interest Period applicable to that overdue amount but will remain immediately due and payable.

8.4 Notification of rates of interest The Agent shall promptly notify the Borrower of the determination of a rate of interest under this Agreement.

9 Interest Periods

9.1 Selection of Interest Periods The Borrower may select in a written notice to the Agent the duration of the Interest Period for each Drawing subject as follows:

9.1.1 each notice is irrevocable and must be delivered to the Agent by the Borrower not later than 11.00 a.m. on the Quotation Day;

9.1.2 if the Borrower fails to give a notice in accordance with Clause 9.1.1, the relevant Interest Period will, subject to Clause 9.2 (Non-Business Days), be three months;

9.1.3 subject to this Clause 9, the Borrower may select an Interest Period of 3, 6 or 12 months or any other period agreed between the Borrower and the Agent (acting on the instructions of all the Lenders);

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9.1.4 an Interest Period shall not extend beyond the Termination Date; and

9.1.5 each Interest Period shall start on the Drawdown Date in respect of the Drawing and end on the date which numerically corresponds to the Drawdown Date in the relevant calendar month except that, if there is no numerically corresponding date in that calendar month, the Interest Period shall end on the last Business Day in that month.

9.2 Non-Business Days If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).

10 Changes to the Calculation of Interest

10.1 Absence of quotations Subject to Clause 10.2 (Market disruption), if LIBOR is to be determined by reference to the Reference Banks but a Reference Bank does not supply a quotation by 11.00 am on the Quotation Day, the applicable LIBOR shall be determined on the basis of the quotations of the remaining Reference Banks.

10.2 Market disruption If a Market Disruption Event occurs for any Interest Period, then the rate of interest on each Lender’s share of the relevant Drawing for that Interest Period shall be the percentage rate per annum which is the sum of:

10.2.1 the Margin;

10.2.2 the rate notified to the Agent by that Lender as soon as practicable, and in any event by close of business on the date falling three Business Days after the Quotation Day (or, if earlier, on the date falling three Business Days prior to the date on which interest is due to be paid in respect of that Interest Period), to be that which expresses as a percentage rate per annum the cost to that Lender of funding its participation in the relevant Drawing from whatever source it may reasonably select; and

10.2.3 the Mandatory Cost, if any, applicable to that Lender’s participation in the relevant Drawing.

In this Agreement “Market Disruption Event” means:

(a) at or about noon on the Quotation Day for the relevant Interest Period LIBOR is to be determined by reference to the Reference Banks and none of the Reference Banks supplies a rate to the Agent to determine LIBOR for dollars and the relevant Interest Period; or

(b) before close of business in London on the Quotation Day for the relevant Interest Period, the Agent receives notifications from a Lender or Lenders (whose participations in the relevant Drawing exceed fifty per cent (50%) of that Drawing) that the cost to it of

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funding its participation in that Drawing from whatever source it may reasonably select would be in excess of LIBOR.

10.3 Alternative basis of interest or funding

10.3.1 If a Market Disruption Event occurs and the Agent or the Borrower so requires, the Agent and the Borrower shall enter into negotiations (for a period of not more than thirty days) with a view to agreeing a substitute basis for determining the rate of interest.

10.3.2 Any alternative basis agreed pursuant to Clause 10.3.1 shall, with the prior consent of all the Lenders and the Borrower, be binding on all Parties.

10.4 Break Costs The Borrower shall, within three Business Days of demand by a Finance Party, pay to that Finance Party its Break Costs attributable to all or any part of a Drawing or Unpaid Sum being paid by the Borrower on a day other than the last day of an Interest Period for that Drawing or Unpaid Sum.

Each Lender shall, as soon as reasonably practicable after a demand by the Agent, provide a certificate confirming the amount of its Break Costs for any Interest Period in which they accrue in reasonable detail.

11 Fees

11.1 Commitment Fee The Borrower shall pay to the Agent (for the account of the Lenders in proportion to their Commitments) a fee computed at the rate of zero point sixty per cent (0.60%) per annum on the undrawn amount of the Maximum Loan Amount for the Availability Period.

The accrued commitment fee is payable on the last day of each successive period of three months which ends during the Availability Period, on the last day of the Availability Period and (on the cancelled amount of the relevant Lender’s Commitment) at the time the cancellation is effective.

11.2 Structuring fee The Borrower shall pay to the Arranger a structuring fee in the amount and at the times agreed in the Fee Letter.

11.3 Agency fee The Borrower shall pay to the Agent (for its own account) an agency fee in the amount and at the times agreed in the Fee Letter.

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Section 6 Additional Payment Obligations

12 Tax Gross Up and Indemnities

12.1 Definitions In this Agreement:

“Borrower DTTP Filing” means an HM Revenue & Customs’ Form DTTP2 duly completed and filed by the Borrower, which:

(a) where it relates to a Treaty Lender that is an Original Lender, contains the scheme reference number and jurisdiction of tax residence stated opposite that Lender’s name in Part I of Schedule 1 (The Original Lenders) and is filed with HM Revenue & Customs within 30 days of the date of this Agreement; or

(b) where it relates to a Treaty Lender that is a New Lender, contains the scheme reference number and jurisdiction of tax residence stated in respect of that Lender in the relevant Transfer Certificate or Assignment Agreement, and is filed with HM Revenue & Customs within 30 days of that Transfer Date.

“Protected Party” means a Finance Party which is or will be subject to any liability or required to make any payment for or on account of Tax in relation to a sum received or receivable (or any sum deemed for the purposes of Tax to be received or receivable) under a Finance Document.

“Qualifying Lender” means a Lender which is beneficially entitled to interest payable to that Lender in respect of an advance under a Finance Document and:

(a) which is a bank (as defined for the purpose of section 879 of the ITA) making an advance under a Finance Document and is within the charge to United Kingdom corporation tax as respects any payments of interest made in respect of that advance or would be within such charge as respects such payments apart from section 18A of the CTA; or in respect of an advance made under a Finance Document by a person that was a bank (as defined for the purpose of section 879 of the ITA) at the time that that advance was made and within the charge to United Kingdom corporation tax as respects any payments of interest made in respect of that advance; or

(b) which is:

(i) a company resident in the United Kingdom for United Kingdom tax purposes;

(ii) a partnership each member of which is:

(A) a company so resident in the United Kingdom; or

(B) a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account in computing its chargeable profits (within the meaning of section 19 of the CTA) the whole of any share of interest

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payable in respect of that advance that falls to it by reason of Part 17 of the CTA; or

(iii) a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account interest payable in respect of that advance in computing the chargeable profits (within the meaning of section 19 of the CTA) of that company; or

(c) which is a Treaty Lender.

“Tax Confirmation” means a confirmation by a Lender that the person beneficially entitled to interest payable to that Lender in respect of an advance under a Finance Document is either:

(a) a company resident in the United Kingdom for United Kingdom tax purposes;

(b) a partnership each member of which is:

(iv) a company so resident in the United Kingdom; or

(v) a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account in computing its chargeable profits (within the meaning of section 19 of the CTA) the whole of any share of interest payable in respect of that advance that falls to it by reason of Part 17 of the CTA; or

(c) a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account interest payable in respect of that advance in computing the chargeable profits (within the meaning of section 19 of the CTA) of that company.

“Tax Credit” means a credit against, relief or remission for, or repayment of any Tax.

“Tax Deduction” means a deduction or withholding for or on account of Tax from a payment under a Finance Document, other than a FATCA Deduction.

“Tax Payment” means either the increase in a payment made by a Security Party to a Finance Party under Clause 12.2 (Tax gross-up) or a payment by the Borrower under Clause 12.3 (Tax indemnity).

“Treaty Lender” means a Lender which:

(a) is treated as a resident of a Treaty State for the purposes of the Treaty;

(b) does not carry on a business in the United Kingdom through a permanent establishment with which that Lender’s participation in the Loan is effectively connected.

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“Treaty State” means a jurisdiction having a double taxation agreement (a “Treaty”) with the United Kingdom which makes provision for full exemption from tax imposed by the United Kingdom on interest.

“UK Non-Bank Lender” means:

(a) where a Lender becomes a Party on the day on which this Agreement is entered into, a Lender listed in Part II of Schedule 1 (The Original Lenders); and

(b) where a Lender becomes a Party after the day on which this Agreement is entered into, a Lender which gives a Tax Confirmation in the Transfer Certificate which it executes on becoming a Party.

Unless a contrary indication appears, in this Clause 12 a reference to “determines” or “determined” means a determination made in the absolute discretion of the person making the determination.

12.2 Tax gross-up The Borrower shall (and shall procure that each other Security Party shall) make all payments to be made by it without any Tax Deduction, unless a Tax Deduction is required by law, subject as follows:

12.2.1 the Borrower shall promptly upon becoming aware that it or any other Security Party must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Agent accordingly. Similarly, a Lender shall notify the Agent on becoming so aware in respect of a payment payable to that Lender. If the Agent receives such notification from a Lender it shall notify the Borrower and any such other Security Party;

12.2.2 if a Tax Deduction is required by law to be made by the Borrower or any other Security Party, the amount of the payment due from the Borrower or that other Security Party shall be increased to an amount which (after making any Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required;

12.2.3 a payment shall not be increased under Clause 12.2.2 by reason of a Tax Deduction on account of Tax imposed by the United Kingdom, if on the date on which the payment falls due:

(a) the payment could have been made to the relevant Lender without a Tax Deduction if the Lender had been a Qualifying Lender, but on that date that Lender is not or has ceased to be a Qualifying Lender other than as a result of any change after the date it became a Lender under this Agreement in (or in the interpretation, administration, or application of) any law or Treaty or any published practice or published concession of any relevant taxing authority; or

(b) the relevant Lender is a Qualifying Lender solely by virtue of (b) of the definition of Qualifying Lender and:

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(i) an officer of H.M. Revenue & Customs has given (and not revoked) a direction (a “Direction”) under section 931 of the ITA which relates to the payment and that Lender has received from the Borrower or from the other Security Party making the payment a certified copy of that Direction; and

(ii) the payment could have been made to the Lender without any Tax Deduction if that Direction had not been made; or

(c) the relevant Lender is a Qualifying Lender solely by virtue of (b) of the definition of Qualifying Lender and:

(i) the relevant Lender has not given a Tax Confirmation to the Borrower; and

(ii) the payment could have been made to the Lender without any Tax Deduction if the Lender had given a Tax Confirmation to the Borrower, on the basis that the Tax Confirmation would have enabled the Borrower to have formed a reasonable belief that the payment was an “excepted payment” for the purpose of section 930 of the ITA; or

(d) the relevant Lender is a Treaty Lender and the Borrower or the other Security Party making the payment is able to demonstrate that the payment could have been made to that Lender without the Tax Deduction had that Lender complied with its obligations under Clause 12.2.6 or Clause 12.2.7 (as applicable);

12.2.4 if the Borrower or any other Security Party is required to make a Tax Deduction, the Borrower shall (and shall procure that such other Security Party shall) make that Tax Deduction and any payment required in connection with that Tax Deduction within the time allowed and in the minimum amount required by law;

12.2.5 within 30 days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Borrower shall (and shall procure that such other Security Party shall) deliver to the Agent for the Finance Party entitled to the payment a statement under section 975 of the ITA or other evidence reasonably satisfactory to that Finance Party that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority;

12.2.6     (a) Subject to (b), a Treaty Lender and the Borrower shall co-operate (and the Borrower shall procure that each other Security Party which makes a payment to which that Treaty Lender is entitled shall co-operate) in completing any procedural formalities necessary for the Borrower or that other Security Party to obtain authorisation to make that payment without a Tax Deduction.

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(b) (i) A Treaty Lender which becomes a Party on the day on which this Agreement is entered into that holds a passport under the HMRC DT Treaty Passport scheme, and which wishes that scheme to apply to this Agreement, shall confirm its scheme reference number and its jurisdiction of tax residence opposite its name in Part I of Schedule 1 (The Original Lenders); and

(ii) a New Lender that is a Treaty Lender that holds a passport under the HMRC DT Treaty Passport scheme, and which wishes that scheme to apply to this Agreement, shall confirm its scheme reference number and its jurisdiction of tax residence in the Transfer Certificate or Assignment Agreement which it executes,

and, having done so, that Lender shall be under no obligation pursuant to (a).

12.2.7 If a Lender has confirmed its scheme reference number and its jurisdiction of tax residence in accordance with Clause 12.2.6(b) and:

(a) the Borrower making a payment to that Lender has not made a Borrower DTTP Filing in respect of that Lender; or

(b) the Borrower making a payment to that Lender has made a Borrower DTTP Filing in respect of that Lender but:

(i) that Borrower DTTP Filing has been rejected by HM Revenue & Customs; or

(ii) HM Revenue & Customs has not given the Borrower authority to make payments to that Lender without a Tax Deduction within 60 days of the date of the Borrower DTTP Filing,

and in each case, the Borrower has notified that Lender in writing, that Lender and the Borrower shall co-operate in completing any additional procedural formalities necessary for the Borrower to obtain authorisation to make that payment without a Tax Deduction.

12.2.8 If a Lender has not confirmed its scheme reference number and jurisdiction of tax residence in accordance with Clause 12.2.6(b), the Borrower shall not make a Borrower DTTP Filing or file any other form relating to the HMRC DT Treaty Passport scheme in respect of that Lender’s Commitment(s) or its participation in the Loan unless the Lender otherwise agrees.

12.2.9 The Borrower shall, promptly on making a Borrower DTTP Filing, deliver a copy of that Borrower DTTP Filing to the Agent for delivery to the relevant Lender.

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12.2.10 A UK Non-Bank Lender which becomes a Party on the day on which this Agreement is entered into gives a Tax Confirmation to the Borrower by entering into this Agreement.

12.2.11 A UK Non-Bank Lender shall promptly notify the Borrower and the Agent if there is any change in the position from that set out in the Tax Confirmation.

12.3 Tax indemnity

12.3.1 The Borrower shall (within three Business Days of demand by the Agent) pay to a Protected Party an amount equal to the loss, liability or cost which that Protected Party determines will be or has been (directly or indirectly) suffered for or on account of Tax by that Protected Party in respect of a Finance Document.

12.3.2 Clause 12.3.1 shall not apply:

(a) with respect to any Tax assessed on a Finance Party:

(i) under the law of the jurisdiction in which that Finance Party is incorporated or, if different, the jurisdiction (or jurisdictions) in which that Finance Party is treated as resident for tax purposes; or

(ii) under the law of the jurisdiction in which that Finance Party’s Facility Office is located in respect of amounts received or receivable in that jurisdiction,

if that Tax is imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or receivable) by that Finance Party; or

(b) to the extent a loss, liability or cost:

(i) is compensated for by an increased payment under Clause 12.2 (Tax gross-up);

(ii) would have been compensated for by an increased payment under Clause 12.2 (Tax gross-up) but was not so compensated solely because one of the exclusions in Clause 12.2.3 (Tax gross-up) applied; or

(iii) relates to a FATCA Deduction required to be made by a Party.

12.3.3 A Protected Party making, or intending to make a claim under Clause 12.3.1 shall promptly notify the Agent of the event which will give, or has given, rise to the claim, following which the Agent shall notify the Borrower.

12.3.4 A Protected Party shall, on receiving a payment from the Borrower under this Clause 12.3, notify the Agent.

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12.4 Tax Credit If the Borrower or any other Security Party makes a Tax Payment and the relevant Finance Party determines that:

12.4.1 a Tax Credit is attributable to an increased payment of which that Tax Payment forms part, to that Tax Payment or to a Tax Deduction in consequence of which that Tax Payment was required; and

12.4.2 that Finance Party has obtained and utilised that Tax Credit,

that Finance Party shall pay an amount to the Borrower or to that other Security Party which that Finance Party determines will leave it (after that payment) in the same after-Tax position as it would have been in had the Tax Payment not been made by the Borrower or that other Security Party.

12.5 Lender status confirmation Each Lender which becomes a Party to this Agreement after the date of this Agreement shall indicate, in the Transfer Certificate or Assignment Agreement which it executes on becoming a Party, and for the benefit of the Agent and without liability to any Security Party, which of the following categories it falls in:

12.5.1 not a Qualifying Lender;

12.5.2 a Qualifying Lender (other than a Treaty Lender); or

12.5.3 a Treaty Lender.

If a New Lender fails to indicate its status in accordance with this Clause 12.5 then such New Lender shall be treated for the purposes of this Agreement (including by each Security Party) as if it is not a Qualifying Lender until such time as it notifies the Agent which category applies (and the Agent, upon receipt of such notification, shall inform the Borrower). For the avoidance of doubt, a Transfer Certificate or Assignment Agreement shall not be invalidated by any failure of a Lender to comply with this Clause 12.5.

12.6 Stamp taxes The Borrower shall pay and, within three Business Days of demand, indemnify each Finance Party against any cost, loss or liability that Finance Party incurs in relation to all stamp duty, registration and other similar Taxes payable in respect of any Finance Document.

12.7 VAT

12.7.1 All amounts expressed to be payable under a Finance Document by any Party or any Security Party to a Finance Party which (in whole or in part) constitute the consideration for any supply for VAT purposes are deemed to be exclusive of any VAT which is chargeable on that supply, and accordingly, subject to Clause 12.7.2, if VAT is or becomes chargeable on any supply made by any Finance Party to any Party or any Security Party under a Finance Document and such Finance Party is required to account to the relevant tax authority for the VAT, that Party or Security Party must pay to such Finance Party (in addition to and at the same time as paying any other consideration for such supply) an amount equal to

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the amount of the VAT (and such Finance Party must promptly provide an appropriate VAT invoice to the Borrower).

12.7.2 If VAT is or becomes chargeable on any supply made by any Finance Party (the “Supplier”) to any other Finance Party (the “Recipient”) under a Finance Document, and any Party other than the Recipient (the “Relevant Party”) is required by the terms of any Finance Document to pay an amount equal to the consideration for that supply to the Supplier (rather than being required to reimburse or indemnify the Recipient in respect of that consideration):

(a) (where the Supplier is the person required to account to the relevant tax authority for the VAT) the Relevant Party must also pay to the Supplier (at the same time as paying that amount) an additional amount equal to the amount of the VAT. The Recipient must (where this Clause 12.7.2(a) applies) promptly pay to the Relevant Party an amount equal to any credit or repayment the Recipient receives from the relevant tax authority which the Recipient reasonably determines relates to the VAT chargeable on that supply; and

(b) (where the Recipient is the person required to account to the relevant tax authority for the VAT) the Relevant Party must promptly, following demand from the Recipient, pay to the Recipient an amount equal to the VAT chargeable on that supply but only to the extent that the Recipient reasonably determines that it is not entitled to credit or repayment from the relevant tax authority in respect of that VAT.

12.7.3 Where a Finance Document requires any Party to reimburse or indemnify a Finance Party for any cost or expense, that Party shall reimburse or indemnify (as the case may be) such Finance Party for the full amount of such cost or expense, including such part thereof as represents VAT, save to the extent that such Finance Party reasonably determines that it is entitled to credit or repayment in respect of such VAT from the relevant tax authority.

12.7.4 Any reference in this Clause 12.7 to any Party shall, at any time when such Party is treated as a member of a group for VAT purposes, include (where appropriate and unless the context otherwise requires) a reference to the representative member of such group at such time (the term “representative member” to have the same meaning as in the Value Added Tax Act 1994).

12.7.5 In relation to any supply made by a Finance Party to any Party under a Finance Document, if reasonably requested by such Finance Party, that Party must promptly provide such Finance Party with details of that Party’s VAT registration and such other information as is reasonably requested in connection with such Finance Party’s VAT reporting requirements in relation to such supply.

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12.8 FATCA information

12.8.1 Subject to Clause 12.8.3, each Party shall, within ten Business Days of a reasonable request by another Party:

(a) confirm to that other Party whether it is:

(i) a FATCA Exempt Party; or

(ii) not a FATCA Exempt Party;

(b) supply to that other Party such forms, documentation and other information relating to its status under FATCA as that other Party reasonably requests for the purposes of that other Party’s compliance with FATCA; and

(c) supply to that other Party such forms, documentation and other information relating to its status as that other Party reasonably requests for the purposes of that other Party’s compliance with any other law, regulation, or exchange of information regime.

12.8.2 If a Party confirms to another Party pursuant to Clause 12.8.1(a)(i) that it is a FATCA Exempt Party and it subsequently becomes aware that it is not or has ceased to be a FATCA Exempt Party, that Party shall notify that other Party reasonably promptly.

12.8.3 Clause 12.8.1 shall not oblige any Finance Party to do anything, and Clause 12.8.1(c) shall not oblige any other Party to do anything, which would or might in its reasonable opinion constitute a breach of:

(a) any law or regulation;

(b) any fiduciary duty; or

(c) any duty of confidentiality.

12.8.4 If a Party fails to confirm whether or not it is a FATCA Exempt Party or to supply forms, documentation or other information requested in accordance with Clause 12.8.1(a) or Clause 12.8.1(b) (including, for the avoidance of doubt, where Clause 12.8.3 applies), then such Party shall be treated for the purposes of the Finance Documents (and payments under them) as if it is not a FATCA Exempt Party until such time as the Party in question provides the requested confirmation, forms, documentation or other information.

12.9 FATCA Deduction

12.9.1 Each Party may make any FATCA Deduction it is required to make by FATCA, and any payment required in connection with that FATCA Deduction, and no Party shall be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction.

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12.9.2 Each Party shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction) notify the Party to whom it is making the payment and, in addition, shall notify the Borrower and the Agent and the Agent shall notifythe other Finance Parties.

13 Increased Costs

13.1 Increased costs Subject to Clause 13.3 (Exceptions) the Borrower shall, within three Business Days of a demand by the Agent, pay to the Agent for the account of a Finance Party the amount of any Increased Costs incurred by that Finance Party or any of its Affiliates as a result of (i) the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation or (ii) compliance with any law or regulation or any request from or requirement of any central bank or other fiscal, monetary or other authority, in each case, made after the date of this Agreement (including Basel III (as defined in Clause 13.3) and any other which relates to capital adequacy or liquidity controls or which affects the manner in which that Finance Party allocates capital resources to obligations under this Agreement and/or the Master Agreement) or (iii) any change in the risk weight allocated by that Finance Party to the Borrower after the date of this Agreement.

In this Agreement “Increased Costs” means:

(a) a reduction in the rate of return from the Loan or on a Finance Party’s (or its Affiliate’s) overall capital;

(b) an additional or increased cost; or

(c) a reduction of any amount due and payable under any Finance Document,

which is incurred or suffered by a Finance Party or any of its Affiliates to the extent that it is attributable to that Finance Party having entered into any Finance Document or funding or performing its obligations under any Finance Document.

13.2 Increased cost claims

13.2.1 A Finance Party intending to make a claim pursuant to Clause 13.1 (Increased costs) shall notify the Agent of the event giving rise to the claim, following which the Agent shall promptly notify the Borrower.

13.2.2 Each Finance Party shall, as soon as practicable after a demand by the Agent, provide a certificate confirming the amount of its Increased Costs in reasonable detail, provided that the relevant Finance Party shall be under no obligation to disclose any information which it in its absolute discretion deems to be confidential to its business.

13.3 Exceptions Clause 13.1 (Increased costs) does not apply to the extent any Increased Cost is:

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13.3.1 attributable to a Tax Deduction required by law to be made by the Borrower;

13.3.2 attributable to a FATCA Deduction required to be made by a Party;

13.3.3 compensated for by Clause 12.3 (Tax indemnity) (or would have been compensated for under Clause 12.3 but was not so compensated solely because any of the exclusions in Clause 12.3 applied);

13.3.4 compensated for by the payment of the Mandatory Cost;

13.3.5 attributable to the wilful breach by the relevant Finance Party or its Affiliates of any law or regulation; or

13.3.6 attributable to an election made by the relevant Finance Party voluntarily.

In this Clause 13.3, a reference to a “Tax Deduction” has the same meaning given to the term in Clause 12.1 (Definitions) and “Basel III” means (a) the agreements on capital requirements, a leverage ratio and liquidity standards contained in “Basel III: A global regulatory framework for more resilient banks and banking systems”, “Basel III: International framework for liquidity risk measurement, standards and monitoring” and “Guidance for national authorities operating the countercyclical capital buffer” published by the Basel Committee on Banking Supervision in December 2010, each as amended, supplemented or restated, (b) the rules for global systemically important banks contained in “Global systemically important banks: assessment methodology and the additional loss absorbency requirement – Rules text” published by the Basel Committee on Banking Supervision in November 2011 and (c) any further guidance or standards published by the Basel Committee on Banking Supervision relating to “Basel III”.

14 Other Indemnities

14.1 Currency indemnity If any sum due from the Borrower under the Finance Documents (a “Sum”), or any order, judgment or award given or made in relation to a Sum, has to be converted from the currency (the “First Currency”) in which that Sum is payable into another currency (the “Second Currency”) for the purpose of:

14.1.1 making or filing a claim or proof against the Borrower, or

14.1.2 obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,

the Borrower shall as an independent obligation, within three Business Days of demand, indemnify each Finance Party to whom that Sum is due against any cost, loss or liability arising out of or as a result of the conversion including any discrepancy between 0 the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (b) the rate or rates of exchange available to that Finance Party at the time of its receipt of that Sum.

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The Borrower waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currency unit other than that in which it is expressed to be payable.

14.2 Other indemnities

14.2.1 The Borrower shall, within three Business Days of demand, indemnify each Finance Party against any documented cost, loss or liability incurred by that Finance Party as a result of:

(a) the occurrence of any Event of Default;

(b) a failure by the Borrower to pay any amount due under a Finance Document on its due date( after taking into account any applicable grace period), including without limitation, any documented cost, loss or liability arising as a result of Clause 27 (Sharing among the Finance Parties);

(c) funding, or making arrangements to fund, a Drawing following delivery by the Borrower of a Drawdown Request but that Drawing not being advanced by reason of the operation of any one or more of the provisions of this Agreement (other than by reason of default or negligence by a Finance Party alone); or

(d) a Drawing (or part of a Drawing) not being prepaid in accordance with a notice of prepayment given by the Borrower.

14.2.2 The Borrower shall promptly indemnify each Finance Party, each Affiliate of a Finance Party and each officer or employee of a Finance Party or its Affiliate (each such person for the purposes of this Clause 14.2 an “Indemnified Person”) against any documented cost, loss or liability incurred by that Indemnified Person pursuant to or in connection with any litigation, arbitration or administrative proceedings or regulatory enquiry, in connection with or arising out of the entry into and the transactions contemplated by the Finance Documents, having the benefit of any Encumbrance constituted by the Finance Documents or which relates to the condition or operation of, or any incident occurring in relation to, a Vessel, unless such cost, loss or liability is caused by the gross negligence or wilful misconduct of that Indemnified Person.

14.2.3 Subject to any limitations set out in Clause 14.2.2, the indemnity in that Clause shall cover any cost, loss or liability incurred by each Indemnified Person in any jurisdiction:

(a) arising or asserted under or in connection with any law relating to safety at sea, the ISM Code, any Environmental Law or any Sanctions Laws; or

(b) in connection with any Environmental Claim.

14.3 Indemnity to the Agent The Borrower shall promptly indemnify the Agent against:

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14.3.1 Any documented cost, loss or liability incurred by the Agent (acting reasonably) as a result of:

(a) investigating any event which it reasonably believes is a Default; or

(b) acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised; or

(c) instructing lawyers, accountants, tax advisers, surveyors or other professional advisers or experts as permitted under this Agreement; and

14.3.2 any documented cost, loss or liability (including, without limitation, for negligence or any other category of liability whatsoever) incurred by the Agent reasonably (otherwise than by reason of the Agent’s gross negligence or wilful misconduct) (or, in the case of any cost, loss or liability pursuant to Clause 28.12 (Disruption to Payment Systems etc.) notwithstanding the Agent’s negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Agent) in acting as Agent under the Finance Documents.

14.4 Indemnity to the Security Agent The Borrower shall promptly indemnify the Security Agent and every Receiver and Delegate against any cost, loss or liability incurred by any of them as a result of:

14.4.1 any failure by the Borrower to comply with its obligations under Clause 16 (Costs and Expenses);

14.4.2 acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised;

14.4.3 the taking, holding, protection or enforcement of the Security Documents;

14.4.4 the exercise of any of the rights, powers, discretions, authorities and remedies vested in the Security Agent and each Receiver and Delegate by the Finance Documents or by law;

14.4.5 any default by any Security Party in the performance of any of the obligations expressed to be assumed by it in the Finance Documents; or

14.4.6 acting as Security Agent, Receiver or Delegate under the Finance Documents or which otherwise relates to any of the Charged Property (otherwise, in each case, than by reason of the relevant Security Agent’s, Receiver’s or Delegate’s gross negligence or wilful misconduct).

14.5 Indemnity survival The indemnities contained in this Agreement shall survive repayment of the Loan.

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15 Mitigation by the Lenders

15.1 Mitigation Each Finance Party shall, in consultation with the Borrower, take all reasonable steps to mitigate any circumstances which arise and which would result in all or any part of the Loan ceasing to be available or any amount becoming payable under or pursuant to any of Clause 7.1 (Illegality), Clause 12 (Tax Gross Up and Indemnities) or Clause 13 (Increased Costs) including (but not limited to) transferring its rights and obligations under the Finance Documents to another Affiliate or Facility Office. The above does not in any way limit the obligations of any Security Party under the Finance Documents.

15.2 Limitation of liability The Borrower shall promptly indemnify each Finance Party for all costs and expenses reasonably incurred by that Finance Party as a result of steps taken by it under Clause 15.1 (Mitigation). A Finance Party is not obliged to take any steps under Clause 15.1 if, in its opinion (acting reasonably), to do so might be prejudicial to it.

16 Costs and Expenses

16.1 Transaction expenses The Borrower, whether or not a Drawing has been advanced to the Borrower, shall promptly on demand pay the Agent, the Security Agent and the Arranger the amount of all documented costs and expenses (including, but not limited to external legal fees) reasonably incurred by any of them (and, in the case of the Security Agent, by any Receiver or Delegate) in connection with:

16.1.1 the negotiation, preparation, printing, execution and perfection of this Agreement and any other documents referred to in this Agreement;

16.1.2 the negotiation, preparation, printing, execution and perfection of any other Finance Documents executed after the date of this Agreement and any amendments to the Finance Documents;

16.1.3 any other document which may at any time be required by a Finance Party to give effect to any Finance Document or which a Finance Party is entitled to call for or obtain under any Finance Document (including, without limitation, any valuation of a Vessel and all premiums and other sums from time to time payable by the Security Agent in relation to the Mortgagee’s Insurances); and

16.1.4 any discharge, release or reassignment of any of the Security Documents.

16.2 Amendment costs If (a) a Security Party requests an amendment, waiver or consent or (b) an amendment is required under Clause 28.11 (Change of currency), the Borrower shall, within three Business Days of demand, reimburse each of the Agent and the Security Agent for the amount of all costs and expenses (including legal fees) reasonably incurred by the Agent and the Security Agent (and, in the case of the Security Agent, by any Receiver or Delegate) in responding to, evaluating, negotiating or complying with that request or requirement.

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16.3 Enforcement and preservation costs The Borrower shall, promptly upon demand, pay to each Finance Party and each other Secured Party the amount of all documented costs and expenses (including, but not limited to external legal fees) incurred by that Finance Party in connection with the enforcement of, or the preservation of any rights under, any Finance Document and any proceedings instituted by or against the Security Agent as a consequence of taking or holding the Security Documents or enforcing those rights including (without limitation) any losses, costs and expenses which that Finance Party or other Secured Party may from time to time sustain, incur or become liable for by reason of that Finance Party or other Secured Party being mortgagee of a Vessel and/or a lender to the Borrower, or by reason of that Finance Party or other Secured Party being deemed by any court or authority to be an operator or controller, or in any way concerned in the operation or control, of a Vessel.

16.4 Other costs The Borrower shall, within three Business Days of demand, pay to each Finance Party and each other Secured Party the amount of all sums which that Finance Party or other Secured Party may pay or become actually or contingently liable for on account of the Borrower in connection with a Vessel (whether alone or jointly or jointly and severally with any other person) including (without limitation) all sums which that Finance Party or other Secured Party may pay or guarantees which it may give in respect of the Insurances, any expenses incurred by that Finance Party or other Secured Party in connection with the maintenance or repair of a Vessel or in discharging any lien, bond or other claim relating in any way to a Vessel, and any sums which that Finance Party or other Secured Party may pay or guarantees which it may give to procure the release of a Vessel from arrest or detention.

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Section 7 Security and Application of Moneys

17 Security Documents and Application of Moneys

17.1 Security Documents As security for the payment of the Indebtedness, the Borrower shall execute and deliver to the Security Agent or cause to be executed and delivered to the Security Agent the following documents in such forms and containing such terms and conditions as the Security Agent shall require:

17.1.1 a first preferred or priority statutory mortgage over each Vessel together with a collateral deed of covenants (if applicable);

17.1.2 a first priority deed or deeds of assignment of the Insurances, Earnings and Requisition Compensation of each Vessel; and the first priority assignment of Insurances from the Managers contained in the Managers’ Undertakings;

17.1.3 first priority deeds of assignment of the Building Contracts and the Refund Guarantees;

17.1.4 a guarantee and indemnity from each Guarantor;

17.1.5 a first priority account security deed in respect of all amounts from time to time standing to the credit of the Earnings Accounts; and

17.1.6 a first priority deed of charge over the Master Agreement Benefits.

17.2 Earnings Accounts The Borrower shall procure that each Collateral Owner maintains its Earnings Account with the Account Holder for the duration of the Facility Period, (unless the relevant Collateral Owner is released earlier in accordance with Clause 7.5 (Mandatory prepayment on sale or Total Loss) or in accordance with the other terms of Agreement or in accordance with any terms of the Security Documents), free of Encumbrances and rights of set off other than those created by or under the Finance Documents or the standard terms of the Account Holder or any Permitted Encumbrance.

17.3 Earnings The Borrower shall procure that all Earnings and any Requisition Compensation are credited to the Earnings Account.

17.4 Relocation of Accounts At any time following the occurrence and during the continuation of a Default, the Security Agent may without the consent of the Collateral Owners instruct the Account Holder to relocate any or all of the Earnings Accounts to any other branch of the Account Holder, without prejudice to the continued application of this Clause 17 and the rights of the Finance Parties under the Finance Documents.

17.5 Access to information The Borrower agrees and shall procure that each Collateral Owner agrees that the Security Agent (and its nominees) may from time to time during the Facility Period review the records held by the Account Holder (whether in written or electronic form) in relation to the Earnings Accounts, and irrevocably waives any right of confidentiality which may exist in relation to those records.

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17.6 Statements Without prejudice to the rights of the Security Agent under Clause 17.5 (Access to information), the Borrower shall procure that the Account Holder provides to the Security Agent, no less frequently than each calendar month during the Facility Period, written statements of account showing all entries made to the credit and debit of any of the Earnings Accounts during the immediately preceding calendar month.

17.7 Application after acceleration From and after the giving of notice to the Borrower by the Agent under Clause 22.2 (Acceleration), the Borrower shall procure that all sums from time to time standing to the credit of any of the Earnings Accounts are immediately transferred to the Security Agent or any Receiver or Delegate for application in accordance with Clause 17.8 (Application of moneys by Security Agent) and the Borrower irrevocably authorises the Security Agent to instruct the Account Holder to make those transfers.

17.8 Application of moneys by Security Agent The Borrower and the Finance Parties irrevocably authorise the Security Agent or any Receiver or Delegate to apply all moneys which it receives and is entitled to receive:

17.8.1 pursuant to a sale or other disposition of a Vessel or any right, title or interest in a Vessel; or

17.8.2 by way of payment of any sum in respect of the Insurances, Earnings or Requisition Compensation; or

17.8.3 by way of transfer of any sum from any of the Earnings Accounts; or

17.8.4 otherwise under or in connection with any Security Document,

in or towards satisfaction of the Indebtedness in the following order:

17.8.5 first, any unpaid fees, costs, expenses and default interest due to the Agent and the Security Agent (and, in the case of the Security Agent, to any Receiver or Delegate) under all or any of the Finance Documents, such application to be apportioned between the Agent and the Security Agent pro rata to the aggregate amount of such items due to each of them;

17.8.6 second, any unpaid fees, costs, expenses (including any sums paid by the Lenders under Clause 25.11 (Indemnity)) of the Lenders due under this Agreement, such application to be apportioned between the Lenders pro rata to the aggregate amount of such items due to each of them;

17.8.7 third, any accrued but unpaid default interest due to the Lenders under this Agreement, such application to be apportioned between the Lenders pro rata to the aggregate amount of such default interest due to each of them;

17.8.8 fourth, any other accrued but unpaid interest due to the Lenders under this Agreement, such application to be apportioned between the Lenders pro rata to the aggregate amount of such interest due to each of them;

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17.8.9 fifth, any principal of the Loan due and payable but unpaid under this Agreement, such application to be apportioned between the Lenders pro rata to the aggregate amount of such principal due to each of them; and

17.8.10 sixth, any other sum due and payable to any Finance Party but unpaid under all or any of the Finance Documents, such application to be apportioned between the Finance Parties pro rata to the aggregate amount of any such sum due to each of them;

Provided that any part of the Indebtedness arising out of the Master Agreement shall be satisfied on a pari passu basis with any repayment of the principal of the Loan; and

Provided that the balance (if any) of the moneys received shall be paid to the Security Parties from whom or from whose assets those sums were received or recovered or to any other person entitled to them.

17.9 Retention on account Moneys to be applied by the Security Agent or any Receiver or Delegate under Clause 17.8 (Application of moneys by Security Agent) shall be applied as soon as practicable after the relevant moneys are received by it, or otherwise become available to it, save that (without prejudice to any other provisions contained in any of the Security Documents) the Security Agent or any Receiver or Delegate may retain any such moneys by crediting them to a suspense account for so long and in such manner as the Security Agent or such Receiver or Delegate may from time to time determine with a view to preserving the rights of the Finance Parties or any of them to prove for the whole of the Indebtedness (or any relevant part) against the Borrower or any other person liable.

17.10 Additional security If at any time the aggregate of the Market Value of the Vessels and the value of any additional security (such value to be the face amount of the deposit (in the case of cash) and determined conclusively by appropriate advisers appointed by the Agent, in the case of other additional security provided under Clause 17.10.2), for the time being provided to the Security Agent under this Clause 17.10 is less than 120% of the aggregate of the amount of the Loan then outstanding and the amount certified by the Swap Provider to be the negative mark-to-market at the time for any derivative products entered into by the Borrower with the Swap Provider (the “VTL Coverage”), the Borrower shall, within 30 days of the Agent’s request, at the Borrower’s option do one or more of the following:

17.10.1 pay to the Security Agent or to its nominee a cash deposit to be secured in favour of the Security Agent as additional security for the payment of the Indebtedness; or

17.10.2 give to the Security Agent other additional security in amount and form acceptable to the Security Agent in its discretion; or

17.10.3 prepay one or more outstanding Drawings, in each case or when aggregated with each other,

to the extent required to eliminate the shortfall.

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Clause 7.9 (Restrictions) shall apply, mutatis mutandis, to any prepayment made under this Clause 17.10.

If, at any time after the Borrower has provided additional security in accordance with the Agent’s request under this Clause 17.10 and the Agent has determined, when testing compliance with the VTL Coverage, that all or any part of that additional security may be released without resulting in a shortfall in the VTL Coverage (after the Agent has tested such VTL Coverage compliance by excluding such additional security from such calculation), and provided that such compliance has been sustained continuously for a period of three months, then the Security Agent shall effect a release of all or any part of that additional security in accordance with the Agent’s instructions, but this shall be without prejudice to the Agent’s right to make a further request under this Clause 17.10 should the value of the remaining security subsequently merit it.

17.11 Market Value Determination For the purpose of the Security Documents, the aggregate market value of the Vessels or, as the context may require, a Group Vessel, shall be the value certified by one Approved Shipbroker, or, if the Agent requires, the average value certified by two Approved Shipbrokers. If there is a difference between the two valuations in excess of ten per cent, then the Agent shall select a third firm of Approved Shipbrokers and the market value of a Vessel or a Group Vessel shall be determined by the average of the three valuations.

Each Approved Shipbroker appointed under this Agreement shall report directly to the Agent (on behalf of the Lenders) and shall be appointed by the Borrower not later than five (5) days after the Agent’s request for the Borrower to appoint such Approved Shipbrokers. In the event that the Borrower fails to appoint such Approved Shipbrokers within five (5) days after the Agent’s request to do so or if a broker appointed by the Borrower is not approved by the Agent and the Borrower fails to appoint an alternative broker who is approved by the Agent within such five (5) day period, the Borrower irrevocably authorises the Agent to appoint brokers in its discretion to conduct such valuations, with such brokers to be subsequently considered as Approved Shipbrokers.

All valuations pursuant to this Clause 17.11 (Market Value determination) shall be made for the purposes of Clause 17.10 (Additional Security) on the basis of a sale of a Vessel or a Group Vessel (as applicable) for prompt delivery for cash at arm’s length on normal commercial terms by a willing seller to a willing buyer free of the value of any existing charter or of any other contract of employment.

For the purposes of assessing compliance with the Financial Covenants of Clause 20 (Financial Covenants), the valuations of a Vessel or a Group Vessel shall be on the basis of a sale for prompt delivery for cash at arm’s length on normal commercial terms by a willing seller to a willing buyer and shall include the value of an Acceptable Charter, if an Acceptable Charter is in full force and effect at the relevant time and provided that evidence thereof is provided to the Agent upon such Acceptable Charter coming in to force and in form and substance acceptable to the Agent. If an Acceptable Charter is not in force, any valuations for the purposes of Clause 20 (Financial Covenants) shall be made on a charter-free basis.

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For the purpose of the Security Documents, the Borrower irrevocably and unconditionally agrees to accept any and all valuations determining the market value of a Vessel or any other Group Vessel obtained pursuant to this Clause 17.11 (Market Value determination) and such determination shall be conclusive evidence of a Vessel’s or any other Group Vessel’s (as the case may be) market value at the date of such valuation.

17.12 Cost of valuation The Borrower shall be liable for all costs and expenses incurred by the Agent in obtaining (a) up to six valuations in each calendar year of the Facility Period, three such valuations to be provided by the Borrower semi-annually and another three annually throughout the Facility Period and within fifteen calendar days after the end of the months of December and June of each calendar year required for the purposes of determining the Market Value of the Vessels pursuant to Clause 17.11 (Market Value determination), (b) any and all valuations required for the purposes of Clause 17.10.2 (Additional Security), if the additional security comprises a Vessel (c) any valuations required pursuant to Schedule 2, Part I clause 2(e) and Part III clause 2 (f), and (d) for any additional valuations required by the Agent in its discretion following the occurrence and during the continuation of an Event of Default. All such valuations issued in respect of the Vessels shall be addressed to, and obtained by, the Agent (on behalf of the Lenders). Valuations issued in respect of a Group Vessel which is encumbered with a mortgage, shall be addressed to the mortgagee or relevant lender of that Group Vessel, and in respect of a Group Vessel which is not encumbered with a mortgage, shall be addressed to the relevant owner or managers of that Group Vessel.

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Section 8 Representations, Undertakings and Events of Default

18 Representations

18.1 Representations Subject to the Legal Reservations, the Borrower makes the representations and warranties set out in this Clause 18 to each Finance Party.

18.1.1 Status Each of the Security Parties:

(a) is a limited liability corporation, duly incorporated and validly existing under the law of its jurisdiction of incorporation; and

(b) has the power to own its assets and carry on its business as it is being conducted.

18.1.2 Binding obligations

(a) the obligations expressed to be assumed by each of the Security Parties in each of the Relevant Documents to which it is a party are legal, valid, binding and enforceable obligations; and

(b) (without limiting the generality of Clause 18.1.2(a)) each Security Document to which it is a party creates the security interests which that Security Document purports to create and those security interests are valid and effective.

18.1.3 Non-conflict with other obligations The entry into and performance by each of the Security Parties of, and the transactions contemplated by, the Relevant Documents do not conflict with:

(a) any law or regulation applicable to such Security Party;

(b) the constitutional documents of such Security Party; or

(c) any agreement or instrument binding upon such Security Party or any of such Security Party’s assets or constitute a default or termination event (however described) under any such agreement or instrument.

18.1.4 Power and authority

(a) Each of the Security Parties has the power to enter into, perform and deliver, and has taken all necessary action to authorise its entry into, performance and delivery of, the Relevant Documents to which it is or will be a party and the transactions contemplated by those Relevant Documents.

(b) No limit on the powers of any Security Party will be exceeded as a result of the borrowing, grant of security or giving of guarantees or indemnities contemplated by the Relevant Documents to which it is a party.

18.1.5 Validity and admissibility in evidence All Authorisations required or desirable:

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(a) to enable each of the Security Parties lawfully to enter into, exercise its rights and comply with its obligations in the Relevant Documents to which it is a party or to enable each Finance Party to enforce and exercise all its rights under the Relevant Documents; and

(b) to make the Relevant Documents to which any Security Party is a party admissible in evidence in its Relevant Jurisdictions,

have been obtained or effected and are in full force and effect, with the exception only of the registrations referred to in Part II of Schedule 2 (Conditions Subsequent).

18.1.6 Governing law and enforcement

(a) The choice of governing law of any Finance Document will be recognised and enforced in the Relevant Jurisdictions of each relevant Security Party.

(b) Any judgment obtained in relation to any Finance Document in the jurisdiction of the governing law of that Finance Document will be recognised and enforced in the Relevant Jurisdictions of each relevant Security Party.

18.1.7 Insolvency No corporate action, legal proceeding or other procedure or step described in Clause 22.1.7 (Insolvency proceedings) or creditors’ process described in Clause 22.1.8 (Creditors’ process) has been taken or, to the knowledge of the Borrower, threatened in relation to a Security Party; and none of the circumstances described in Clause 22.1.6 (Insolvency) applies to a Security Party.

18.1.8 No filing or stamp taxes Under the laws of the Relevant Jurisdictions of each relevant Security Party it is not necessary that the Finance Documents be filed, recorded or enrolled with any court or other authority in any of those jurisdictions or that any stamp, registration, notarial or similar tax or fees be paid on or in relation to the Finance Documents or the transactions contemplated by the Finance Documents except registration of each Mortgage at the Ships Registry where title to the relevant Vessel is registered in the ownership of the relevant Collateral Owner and payment of associated fees, which registrations, filings, taxes and fees will be made and paid promptly after the date of the relevant Finance Document.

18.1.9 Deduction of Tax None of the Security Parties is required under the law of its jurisdiction of incorporation to make any deduction for or on account of Tax from any payment it may make under any Finance Document to a Lender which is:

(a) a Qualifying Lender falling within 0 of the definition of Qualifying Lender; or, except where a Direction has been given under section

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931 of the ITA in relation to the payment concerned, a Qualifying Lender falling within (b) of the definition of Qualifying Lender; or

(b) a Treaty Lender and the payment is one specified in a direction given by the Commissioners of Revenue & Customs under Regulation 2 of the Double Taxation Relief (Taxes on Income) (General) Regulations 1970 (SI 1970/488).

18.1.10 No default

On the date of this Agreement and on each Drawdown Date in respect of a Rollover Drawing, no Event of Default is continuing or would result from the advance of that Rollover Drawing and in respect of any other Drawing, no Default is continuing or would result from the advance of that Drawing or, in each case, from the entry into, the performance of, or any transaction contemplated by, any of the Relevant Documents.

18.1.11 No misleading information Save as disclosed in writing to the Agent and the Arranger prior to the date of this Agreement:

(a) all material information provided to a Finance Party by or on behalf of any of the Security Parties on or before the date of this Agreement and not superseded before that date is accurate and not misleading in any material respect and all projections provided to any Finance Party on or before the date of this Agreement have been prepared in good faith on the basis of assumptions which were reasonable at the time at which they were prepared and supplied; and

(b) all other written information provided by any of the Security Parties (including its advisers) to a Finance Party was true, complete and accurate in all material respects as at the date it was provided and is not misleading in any respect.

18.1.12 Financial statements

(a) The Original Financial Statements were prepared in accordance with GAAP consistently applied.

(b) The Original Financial Statements and the unaudited quarterly financial statements provided under Clause 19.1 (Financial Statements) fairly represent the Group’s financial condition and results of operations for the relevant financial quarter.

(c) The Original Financial Statements give a true and fair view of the Group’s financial condition and results of operations during the relevant financial year.

(d) There has been no material adverse change in the financial condition or consolidated financial condition of the Group since the date of the Original Financial Statements.

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(e) Each Security Party’s (other than the Manager) most recent financial statements delivered pursuant to Clause 19.1 (Financial statements):

(i) have been prepared in accordance with GAAP as applied to the Original Financial Statements; and

(ii) give a true and fair view of (if audited) or fairly represent (if unaudited) its consolidated financial condition as at the end of, and consolidated results of operations for, the period to which they relate.

(f) Since the date of the most recent financial statements delivered pursuant to Clause 19.1 (Financial statements) there has been no material adverse change in the business, assets or financial condition of any of the Security Parties.

18.1.13 No proceedings pending or threatened No litigation, arbitration or administrative proceedings of or before any court, arbitral body or agency which, if adversely determined, are to have a Material Adverse Effect have (to the best of its knowledge and belief) been started or threatened against any of the Security Parties or any other member of the Group.

18.1.14 No breach of laws None of the Security Parties or any other member of the Group has breached any law or regulation which breach has or is reasonably likely to have a Material Adverse Effect.

18.1.15 Environmental laws

(a) Each of the Security Parties and each other member of the Group is in compliance with Clause 21.3 (Environmental compliance) and to the best of its knowledge and belief (having made due and careful enquiry) no circumstances have occurred which would prevent such compliance in a manner or to an extent which has or is reasonably likely to have a Material Adverse Effect.

(b) No Environmental Claim has been commenced or (to the best of its knowledge and belief (having made due and careful enquiry)) is threatened against any of the Security Parties or any other member of the Group where that claim has or is reasonably likely, if determined against that Security Party or other member of the Group, to have a Material Adverse Effect.

18.1.16 Taxation

(a) None of the Security Parties nor any other member of the Group is materially overdue in the filing of any Tax returns or is overdue in the payment of any amount in respect of Tax which may have a Material Adverse Effect.

(b) No claims or investigations are being, or are reasonably likely to be, made or conducted against any of the Security Parties or any

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other member of the Group with respect to Taxes such that a liability of, or claim against, any of the Security Parties or any other member of the Group which may have a Material Adverse Effect.

(c) Each of the Security Parties and each other member of the Group is resident for Tax purposes outside its Original Jurisdiction.

18.1.17 Anti-corruption law Each of the Security Parties and each other member of the Group and each Affiliate of any of them has conducted its businesses in compliance with applicable anti-corruption laws and has instituted and maintained policies and procedures designed to promote and achieve compliance with such laws.

18.1.18 No Encumbrance or Financial Indebtedness

(a) No Encumbrance exists over all or any of the present or future assets of any of the Security Parties (other than the Borrower or the Manager).

(b) None of the Security Parties (other than the Borrower or the Manager) has any Financial Indebtedness outstanding other than as permitted by this Agreement.

18.1.19 Pari passu ranking The payment obligations of each of the Security Parties under the Finance Documents to which it is a party rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally.

18.1.20 Disclosure of material facts The Borrower is not aware of any material facts or circumstances in relation to a Security Party which have not been disclosed to the Agent and which might, if disclosed, have adversely affected the decision of a person considering whether or not to make loan facilities of the nature contemplated by this Agreement available to the Borrower.

18.1.21 Completeness of Relevant Documents The copies of any Relevant Documents provided or to be provided by the Borrower to the Agent in accordance with Clause 4 (Conditions of Utilisation) are, or will be, true and accurate copies of the originals and represent, or will represent, the full agreement between the parties to those Relevant Documents in relation to the subject matter of those Relevant Documents and there are no commissions, rebates, premiums or other payments due or to become due in connection with the subject matter of those Relevant Documents other than in the ordinary course of business or as disclosed to, and approved in writing by, the Agent.

18.1.22 Money laundering Any borrowing by the Borrower under this Agreement, and the performance of its obligations under this Agreement and under the other Finance Documents, will be for its

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own account and will not involve any breach by it of any law or regulatory measure relating to “money laundering” as defined in Article 1 of the Directive (2005/EC/60) of the European Parliament and of the Council of the European Communities.

18.1.23 Sanctions

(a) Each Security Party, each Affiliate of any of them or other member of the Group, their joint ventures, and their respective directors, officers, employees, agents or representatives has been and is in compliance with Sanctions Laws;

(b) No Security Party, nor any Affiliate of any of them or other member of the Group, their joint ventures, and their respective directors, officers, employees, agents or representatives:

(i) is a Restricted Party, or is involved in any transaction through which it is likely to become a Restricted Party; or

(ii) is subject to or involved in any inquiry, claim, action, suit, proceeding or investigation against it with respect to Sanctions Laws by any Sanctions Authority.

18.1.24 Ownership and control of Collateral Owners Each Collateral Owner is a wholly owned subsidiary of the Borrower and is controlled by the Borrower.

18.2 Repetition Each Repeating Representation is deemed to be repeated by the Borrower by reference to the facts and circumstances then existing on the date of each Drawdown Request, on each Drawdown Date, on the first day of each Interest Period and, in the case or those contained in Clauses 18.1.12(d) and 18.1.12(f) (Financial statements) and for so long as any amount is outstanding under the Finance Documents or any Commitment is in force, on each day.

19 Information Undertakings

The undertakings in this Clause 19 remain in force for the duration of the Facility Period.

19.1 Financial statements The Borrower shall supply to the Agent in sufficient copies for all of the Lenders:

19.1.1 as soon as the same become available, but in any event within 180 days after the end of each of its financial years its audited consolidated financial statements for that financial year; and

19.1.2 as soon as the same become available, but in any event within 90 days after the end of each quarter during each of its financial years its unaudited consolidated quarterly financial statements for that quarter; and

19.1.3 if requested by the Agent, as soon as the same become available, but in any event within 90 days after the end of each quarter during

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each of the Collateral Owner’s financial years, the unaudited financial statements of the Collateral Owners for that quarter.

19.2 Compliance Certificate

19.2.1 The Borrower shall supply to the Agent, with each set of its annual financial statements delivered pursuant to Clause 19.1.1 (Financial statements) and each set of its quarterly financial statements in respect of the financial quarters ending in June and December of each calendar year pursuant to Clause 19.1.2 (Financial statements), a Compliance Certificate setting out (in reasonable detail) computations as to compliance with Clause 20 (Financial Covenants) as at the date as at which those financial statements were drawn up.

19.2.2 Each Compliance Certificate shall be signed by two directors of the Borrower.

19.3 Requirements as to financial statements

Each set of financial statements delivered by the Borrower under Clause 19.1 (Financial statements):

19.3.1 shall be certified by a director of the relevant company as giving a true and fair view of (in the case of annual financial statements), or fairly representing (in other cases), its financial condition as at the date as at which those financial statements were drawn up; and

19.3.2 shall be prepared using GAAP, accounting practices and financial reference periods consistent with those applied in the preparation of the Original Financial Statements unless, in relation to any set of financial statements, it notifies the Agent that there has been a change in GAAP, the accounting practices or reference periods and its auditors deliver to the Agent:

(a) a description of any change necessary for those financial statements to reflect the GAAP, accounting practices and reference periods upon which the Original Financial Statements were prepared; and

(b) sufficient information, in form and substance as may be reasonably required by the Agent, to enable the Agent to determine whether Clause 20 (Financial Covenants) has been complied with and make an accurate comparison between the financial position indicated in those financial statements and the Original Financial Statements.

Any reference in this Agreement to those financial statements shall be construed as a reference to those financial statements as adjusted to reflect the basis upon which the Original Financial Statements were prepared.

19.4 Information: miscellaneous The Borrower shall supply to the Agent (in sufficient copies for all the Lenders, if the Agent so requests):

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19.4.1 promptly upon becoming aware of them, the details of any litigation, arbitration or administrative proceedings which are current, threatened or pending against any Security Party, and which, if adversely determined, are reasonably likely to have a Material Adverse Effect;

19.4.2 promptly, such information as the Security Agent may reasonably require about the Charged Property and compliance of the Security Parties with the terms of any Security Documents including without limitation cash flow analyses and details of the operating costs of the Vessels;

19.4.3 promptly on request, such further information regarding the financial condition, assets and operations of any Security Party (including any requested amplification or explanation of any item in the financial statements, budgets or other material provided by any Security Party under this Agreement as any Finance Party through the Agent may reasonably request;

19.4.4 promptly upon becoming aware of them, the details of any inquiry, claim, action, suit, proceeding or investigation pursuant to Sanctions Laws by any Sanctions Authority against it, any of its direct or indirect owners, Subsidiaries or other member of the Group, any of their joint ventures or any of their respective directors, officers, employees, agents or representatives, as well as information on what steps are being taken with regards to answer or oppose such; and

19.4.5 promptly upon becoming aware that it, any of its direct or indirect owners, Subsidiaries or other member of the Group, any of their joint ventures or any of their respective directors, officers, employees, agents or representatives has become or is likely to become a Restricted Party.

19.5 Notification of default

The Borrower shall notify the Agent of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence.

19.6 “Know your customer” checks

19.6.1 If:

(a) the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;

(b) any change in the status of a Security Party after the date of this Agreement; or

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(c) an assignment or transfer by a Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,

obliges the Agent or any Lender (or, in the case of Clause 19.6.1(c), any prospective new Lender) to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already available to it, the Borrower shall promptly upon the request of the Agent or any Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself or on behalf of any Lender) or any Lender (for itself or, in the case of the event described in Clause 19.6.1(c), on behalf of any prospective new Lender) in order for the Agent, such Lender or, in the case of the event described in Clause 19.6.1(c), any prospective new Lender to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.

19.6.2 Each Lender shall promptly upon the request of the Agent supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself) in order for the Agent to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.

19.7 Provision of information The Borrower undertakes promptly to supply the Agent with such information concerning each Vessel’s condition, location and employment as the Agent may reasonably require.

20 Financial Covenants

The Borrower shall on a consolidated basis comply with the following financial covenants to be assessed on a semi-annual basis based on the Accounting Information received by the Lender in accordance with Clauses 19.1 (Financial Statements):-

20.1 Consolidated Group Leverage The Consolidated Group Leverage shall be not more than eighty five per cent (85%);

20.2 EBITDA to Interest Expense The ratio of EBITDA to Interest Expense on a trailing twelve (12) month’s basis shall not at any time be less than 2:1, unless the Borrower pledges cash, equivalent to the amount that would be required to restore the accrued shortfall in the said ratio, for the benefit of the Group’s respective lenders (whether under this Facility Agreement or under other similar financial arrangements) at respective bank accounts, as each such lender designates, proportionately to each Group lender’s participation in the Group’s total outstanding indebtedness; and

20.3 Net Worth The Net Worth shall not at any time be less than one hundred and fifty million dollars ($150,000,000).

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21 General Undertakings

The undertakings in this Clause 21 remain in force for the duration of the Facility Period.

21.1 Authorisations The Borrower shall promptly:

21.1.1 obtain, comply with and do all that is necessary to maintain in full force and effect; and

21.1.2 supply certified copies to the Agent of,

any Authorisation required under any law or regulation of a Relevant Jurisdiction to:

(a) enable any Security Party to perform its obligations under the Finance Documents to which it is a party;

(b) ensure the legality, validity, enforceability or admissibility in evidence of any Finance Document; and

(c) enable any Security Party to carry on its business where failure to do so has or is reasonably likely to have a Material Adverse Effect.

21.2 Compliance with laws

21.2.1 The Borrower shall comply (and shall procure that each other Security Party and each Affiliate of any of them shall comply), in all respects with all laws.

In this Clause 21.1, “laws” means any law, statute, treaty, convention, regulation, instrument or other subordinate legislation or other legislative or quasi-legislative rule or measure, or any order or decree of any government, judicial or public or other body or authority, or any directive, code of practice, circular, guidance note or other direction issued by any competent authority or agency (whether or not having the force of law).

21.2.2 The Borrower shall comply (and shall procure that each other Security Party, each other member of the Group and each Affiliate of any of them shall comply) in all respects with all Sanctions Laws.

21.3 Environmental compliance

The Borrower shall procure that that each Collateral Owner and the Managers shall:

21.3.1 comply with all Environmental Laws;

21.3.2 obtain, maintain and ensure compliance with all requisite Environmental Approvals; and

21.3.3 implement procedures to monitor compliance with and to prevent liability under any Environmental Law,

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where failure to do so has or is reasonably likely to have a Material Adverse Effect.

21.4 Environmental Claims

The Borrower shall, and shall procure that each of the Collateral Owners and the Managers shall, promptly upon becoming aware of the same, inform the Agent in writing of:

21.4.1 any Environmental Claim against any of the Security Parties which is current, pending or threatened; and

21.4.2 any facts or circumstances which are reasonably likely to result in any Environmental Claim being commenced or threatened against any of the Security Parties,

where the claim, if determined against that Security Party, has or is reasonably likely to have a Material Adverse Effect.

21.5 Anti-corruption law

21.5.1 The Borrower shall not (and shall procure that no other Security Party will) directly or indirectly use the proceeds of the Loan for any purpose which would breach the Bribery Act 2010, the United States Foreign Corrupt Practices Act of 1977 or other similar legislation in other jurisdictions.

21.5.2 The Borrower shall (and shall procure that each other Security Party shall):

(a) conduct its businesses in compliance with applicable anti-corruption laws; and

(b) maintain policies and procedures designed to promote and achieve compliance with such laws.

21.6 Taxation

21.6.1 The Borrower shall (and shall procure that each other Security Party shall) pay and discharge all Taxes imposed upon it or its assets within the time period allowed without incurring penalties unless and only to the extent that:

(a) such payment is being contested in good faith;

(b) adequate reserves are being maintained for those Taxes and the costs required to contest them which have been disclosed in its latest financial statements delivered to the Agent under Clause 19.1 (Financial statements); and

(c) such payment can be lawfully withheld.

21.6.2 The Borrower may not (and no other Security Party may) change its residence for Tax purposes.

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21.7 Evidence of good standing The Borrower will from time to time if requested by the Agent provide the Agent with evidence in form and substance satisfactory to the Agent that the Borrower and each of the Collateral Owners remain in good standing.

21.8 Pari passu ranking The Borrower shall ensure that at all times any unsecured and unsubordinated claims of a Finance Party against it under the Finance Documents rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors except those creditors whose claims are mandatorily preferred by laws of general application to companies.

21.9 Negative pledge

In this Clause 21.9 “Quasi-Security” means an arrangement or transaction described in Clause 21.9.2.

Except as permitted under Clause 21.9.3:

21.9.1 The Borrower shall procure that no Collateral Owner will create nor permit to subsist any Encumbrance over any of its present or future assets

21.9.2 The Borrower shall procure that no Collateral Owner will:

(a) sell, transfer or otherwise dispose of any of its assets on terms whereby they are or may be leased to or re-acquired by a Security Party;

(b) sell, transfer or otherwise dispose of any of its receivables on recourse terms;

(c) enter into any arrangement under which money or the benefit of a bank or other account may be applied, set-off or made subject to a combination of accounts; or

(d) enter into any other preferential arrangement having a similar effect,

in circumstances where the arrangement or transaction is entered into primarily as a method of raising Financial Indebtedness or of financing the acquisition of an asset.

21.9.3 Clauses 21.9.1 and 21.9.2 do not apply to any Encumbrance or (as the case may be) Quasi-Security, which is a Permitted Encumbrance or a Permitted Transaction.

21.10 Disposals

21.10.1 Except as permitted under Clause 21.10.1, or for the sale of a Vessel provided the relevant prepayment is made in accordance with Clause 7.5 (Mandatory prepayment on sale or Total Loss), the Borrower shall procure that no other Security Party (other than the Manager) will enter into a single transaction or a series of

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transactions (whether related or not) and whether voluntary or involuntary to sell, lease, transfer or otherwise dispose of any asset.

21.10.2 Clause 21.10.1 does not apply to any sale, lease, transfer or other disposal which is a Permitted Disposal or a Permitted Transaction.

21.11 Arm’s length basis

21.11.1 Except as permitted under Clause 21.11.3, the Borrower shall not (and shall procure that no other Security Party will) enter into any transaction with any third party except on arm’s length terms and for full market value.

21.11.2 The Borrower shall not (and shall procure that no Collateral Owner will) enter into transactions that are not on arm’s length basis with any associated companies, unless any off-market terms agreed are to the benefit of the Borrower or the relevant Collateral Owner.

21.11.3 The following transactions shall not be a breach of this Clause 21.11:

(a) fees, costs and expenses payable under the Relevant Documents in the amounts set out in the Relevant Documents delivered to the Agent under Clause 4.1 (Initial conditions precedent) or agreed by the Agent; and

(b) any Permitted Transaction.

21.12 Merger The Borrower shall procure that no other Security Party (other than the Manager) will enter into any amalgamation, demerger, merger, consolidation or corporate reconstruction.

21.13 Change of business The Borrower shall not (and shall procure that no other Security Party will) make any substantial change to its corporate structure or the general nature of its business from that carried on at the date of this Agreement without the prior written consent of the Agent, such consent not to be unreasonably withheld or delayed. Any investments in shipping assets other than bulk carriers will not be considered to be a change of business for the purpose of this Clause.

21.14 No other business The Borrower shall procure that no Collateral Owner will engage in any business other than the ownership, operation, chartering and management of its Vessel.

21.15 No acquisitions The Borrower shall procure that no Collateral Owner will make any investment or acquire a company or any shares or securities or a business or undertaking (or, in each case, any interest in any of them) or incorporate a company.

21.16 No Joint Ventures The Borrower shall procure that no other Security Party will:

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21.16.1 enter into, invest in or acquire (or agree to acquire) any shares, stocks, securities or other interest in any Joint Venture; or

21.16.2 transfer any assets or lend to or guarantee or give an indemnity for or give security for the obligations of a Joint Venture or maintain the solvency of or provide working capital to any Joint Venture (or agree to do any of the foregoing).

21.17 No borrowings The Borrower shall procure that no Collateral Owner will incur or allow to remain outstanding any Financial Indebtedness, except for:

21.17.1 the Loan;

21.17.2 any normal trade credits in the ordinary course of business and loans from shareholders and loans from other members of the Group, which are fully subordinated to the Loan and for such trade credits or loans there shall be no payment of principal or interest if an Event of Default has occurred and is continuing.

21.18 No loans or credit The Borrower shall procure that no Collateral Owner will be a creditor in respect of any Financial Indebtedness unless it is a loan made in the ordinary course of business in connection with the chartering, operation or repair of a Vessel.

21.19 No guarantees or indemnities The Borrower shall procure that no Collateral Owner will incur or allow to remain outstanding any guarantee or provide any other form of financial support in respect of any obligation of any person unless it is a Permitted Transaction.

21.20 Inspection of records The Borrower will permit the inspection of its financial records and accounts from time to time by the Agent or its nominee.

21.21 No change in Relevant Documents The Borrower shall not (and shall procure that no other Security Party will) materially amend, vary, novate, supplement, supersede, waive or terminate any term of, any of the Relevant Documents which are not Finance Documents, or any other document delivered to the Agent pursuant to Clause 4.1 (Initial conditions precedent) or Clause 4.2 (Further conditions precedent) or Clause 4.5 (Conditions subsequent).

In this Clause, in respect of a Newbuilding Vessel, “materially” means any change, variation or modification relating to the purchase price, payment terms, date of delivery (unless any change of the date of delivery is in accordance with the relevant provisions of the Building Contract, including Permissible Delays (as defined therein)) and/or the identity of the vessel, the type of vessel or the vessel’s characteristics.

21.22 Further assurance

21.22.1 The Borrower shall (and shall procure that each other Security Party shall) promptly do all such acts or execute all such documents (including assignments, transfers, mortgages, charges, notices and instructions) as the Security Agent may reasonably specify (and in

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such form as the Security Agent may reasonably require in favour of the Security Agent or its nominee(s)):

(a) to perfect any Encumbrance created or intended to be created under or evidenced by the Security Documents (which may include the execution of a mortgage, charge, assignment or other Encumbrance over all or any of the assets which are, or are intended to be, the subject of the Security Documents) or for the exercise of any rights, powers and remedies of the Security Agent or the Finance Parties provided by or pursuant to the Finance Documents or by law;

(b) to confer on the Security Agent or confer on the Finance Parties an Encumbrance over any property and assets of the Borrower (or that other Security Party as the case may be) located in any jurisdiction equivalent or similar to the Encumbrance intended to be conferred by or pursuant to the Security Documents; and/or

(c) to facilitate the realisation of the assets which are, or are intended to be, the subject of the Security Documents.

21.22.2 The Borrower shall (and shall procure that each other Security Party shall) take all such action as is available to it (including making all filings and registrations) as may be necessary for the purpose of the creation, perfection, protection or maintenance of any Encumbrance conferred or intended to be conferred on the Security Agent or the Finance Parties by or pursuant to the Finance Documents.

21.23 No dealings with Master Agreement The Borrower shall not assign, novate or encumber or in any other way transfer any of its rights or obligations under the Master Agreement, nor enter into any interest rate exchange or hedging agreement with anyone other than the Swap Provider.

21.24 Liquidity The Borrower shall procure that each Collateral Owner will throughout the Facility Period maintain in its Earnings Account at all times a minimum positive account balance free of any Encumbrances (other than in favour of the Security Agent) of not less than one hundred and fifty thousand dollars ($150,000).

21.25 Subordination of shareholder loans The Borrower shall procure that each Collateral Owner shall subordinate any shareholder loans or inter company borrowings to the Indebtedness.

21.26 No Subsidiaries The Borrower shall procure that no Collateral Owner shall form or acquire any other Subsidiaries than those known to the Agent prior to the Signing Date.

21.27 No transfer of shares The Borrower shall procure that no Collateral Owner shall transfer any of its shares to another person or corporate entity (other than an entity wholly owned by the Borrower) and shall not create any Encumbrances on such shares.

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21.28 Ownership The Borrower shall procure that:

21.28.1 its voting shares shall remain directly or indirectly beneficially owned by its Current Shareholders or any of them at a minimum of thirty five per cent (35%) and that the Current Shareholders shall remain the major beneficial owner of the Borrower; and

21.28.2 each Collateral Owner shall remain a wholly owned direct or indirect Subsidiary of the Borrower; and

21.28.3 there shall be no change in the legal ownership and control of a Collateral Owner (which change would result in that Collateral Owner ceasing to be a wholly owned direct or indirect Subsidiary of the Borrower) or the beneficial ownership and control of the Managers without the prior written consent of the Agent such consent not to be unreasonably withheld or delayed.

21.29 Master Agreement The Borrower shall give the Swap Provider at all times throughout the Facility Period, the right of first refusal to enter into one or more hedging of interest rate risk of the Loan or other derivative products on competitive terms.

21.30 Use of proceeds The Borrower shall ensure that no proceeds of any Drawing are made available directly or indirectly, to or for the benefit of a Restricted Party nor shall they otherwise be applied in a manner or for a purpose prohibited by Sanctions Laws.

21.30.1 Sanctions The Borrower shall ensure that no Security Party or Affiliate of any of them or other member of the Group, respective directors, officers, employees, agents or representatives or any other persons acting on any of their behalf becomes a Restricted Party.

22 Events of Default

22.1 Events of Default Each of the events or circumstances set out in this Clause 22.1 is an Event of Default.

22.1.1 Non-payment A Security Party does not pay on the due date any amount payable by it under a Finance Document at the place at and in the currency in which it is expressed to be payable unless payment is made within three days of its due date.

22.1.2 Other specific obligations

(a) Any requirement of Clause 20 (Financial Covenants) is not satisfied.

(b) A Security Party does not comply with any obligation in a Finance Document relating to the Insurances or with Clause 17.10 (Additional security).

22.1.3 Other obligations

A Security Party does not comply with any provision of a Finance Document (other than those referred to in Clause 22.1.1 (Non-

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payment) and Clause 22.1.2 (Other specific obligations) and such non-compliance is not remedied within 15 Business Days of the Agent giving notice to the Borrower to this effect.

22.1.4 Misrepresentation Any representation or statement made or deemed to be repeated by a Security Party in any Finance Document or any other document delivered by or on behalf of a Security Party under or in connection with any Finance Document is or proves to have been incorrect or misleading when made or deemed to be made.

22.1.5 Cross default Any Financial Indebtedness of a Security Party or of any other member of the Group:

(a) is not paid when due nor within any originally applicable grace period; or

(b) is declared to be, or otherwise becomes, due and payable prior to its specified maturity as a result of an event of default (however described).

No Event of Default will occur under this Clause 22.1.5 if the aggregate amount of Financial Indebtedness or commitment for Financial Indebtedness falling within (a) to (b) is less than five hundred thousand dollars ($500,000) in respect of a Collateral Owner or five million dollars ($5,000,000) in respect of the Borrower (or its equivalent in any other currency or currencies).

22.1.6 Insolvency

(a) A Security Party is unable or admits inability to pay its debts as they fall due, is deemed to, or is declared to, be unable to pay its debts under applicable law, suspends or threatens to suspend making payments on any of its debts.

(b) The value of the assets of a Security Party is less than its liabilities (taking into account contingent and prospective liabilities).

(c) A moratorium is declared in respect of any indebtedness of a Security Party.

22.1.7 Insolvency proceedings Any corporate action, legal proceedings or other procedure or step is taken for:

(a) the suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, administration, bankruptcy or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) of a Security Party;

(b) a composition, compromise, assignment or arrangement with any creditor of a Security Party;

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(c) the appointment of a liquidator, receiver, administrative receiver, administrator, compulsory manager, or trustee or other similar officer in respect of a Security Party or any of its assets; or

(d) enforcement of any Encumbrance over a substantial portion of the Borrower’s assets which has not been remedied within 15 days,

or any analogous procedure or step is taken in any jurisdiction.

This Clause 22.1.7 shall not apply to any winding-up petition which is frivolous or vexatious and is discharged, stayed or dismissed within 60 days of commencement.

22.1.8 Creditors’ process Any expropriation, attachment, sequestration, distress or execution affects any asset or assets of a Security Party and is not discharged within 14 days.

22.1.9 Unlawfulness and invalidity

(a) It is or becomes unlawful for a Security Party to perform any of its obligations under the Finance Documents or any Encumbrance created or expressed to be created or evidenced by the Security Documents ceases to be effective.

(b) Any obligation or obligations of any Security Party under any Finance Documents are not (subject to the Legal Reservations) or cease to be legal, valid, binding or enforceable and the cessation individually or cumulatively materially and adversely affects the interests of the Lenders under the Finance Documents.

(c) Any Finance Document ceases to be in full force and effect or any Encumbrance created or expressed to be created or evidenced by the Security Documents ceases to be legal, valid, binding, enforceable or effective or is alleged by a party to it (other than a Finance Party) to be ineffective.

22.1.10 Cessation of business A Security Party ceases, or threatens to cease, to carry on all or a substantial part of its business.

22.1.11 Change in ownership or control of a Collateral Owner There is any change in the beneficial ownership or control of a Collateral Owner from that advised to the Agent by the Borrower at the date of this Agreement.

22.1.12 Expropriation The authority or ability of a Security Party to conduct its business is limited or wholly or substantially curtailed by any seizure, expropriation, nationalisation, intervention, restriction or other action by or on behalf of any governmental, regulatory or other authority or other person in relation to a Security Party or any of its assets.

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22.1.13 Repudiation and rescission of agreements

(a) A Security Party rescinds or purports to rescind or repudiates or purports to repudiate a Finance Document or evidences an intention to rescind or repudiate a Finance Document.

(b) Subject to Clause 22.1.13(c), any party to any of the Relevant Documents that is not a Finance Document rescinds or purports to rescind or repudiates or purports to repudiate that Relevant Document in whole or in part where to do so has or is, in the reasonable opinion of the Majority Lenders, likely to have a material adverse effect on the interests of the Lenders under the Finance Documents.

(c) Any of the Management Agreements is terminated, cancelled or otherwise ceases to remain in full force and effect at any time prior to its contractual expiry date and is not immediately replaced by a similar agreement in form and substance satisfactory to the Majority Lenders.

22.1.14 Conditions precedent and subsequent Any of the conditions referred to in Clauses 4.5 (Conditions subsequent), 4.6 (Delivery conditions precedent), 4.8 (in the case where a waiver has been provided pursuant to Clause 4.8 (No Waiver) and is not satisfied within the time specified in such waiver) and 4.7 (Delivery conditions subsequent) is not satisfied within the time required by the relevant provisions thereof.

22.1.15 Revocation or modification of Authorisation Any Authorisation of any governmental, judicial or other public body or authority which is now, or which at any time during the Facility Period becomes, necessary to enable any of the Security Parties or any other person (except a Finance Party) to comply with any of their obligations under any Finance Document is not obtained, is revoked, suspended, withdrawn or withheld, or is modified in a manner which the Agent considers is, or may be, prejudicial to the interests of any Finance Party, or ceases to remain in full force and effect unless a waiver has been obtained from a competent authority.

22.1.16 Reduction of capital A Security Party (other than the Manager) reduces its authorised or issued or subscribed capital, save that the redemption of any redeemable shares shall not constitute an Event of Default pursuant to this Clause 22.

22.1.17 Loss of Vessel A Vessel suffers a Total Loss or is otherwise destroyed or abandoned, or a similar event occurs in relation to any other vessel which may from time to time be mortgaged to the Security Agent as security for the payment of all or any part of the Indebtedness, except that a Total Loss (which term shall for the purposes of the remainder of this Clause 22.1.17 include an event similar to a Total Loss in relation to any other vessel) shall not be an Event of Default if:

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(a) the relevant prepayment is made in accordance with Clause 7.5 (Mandatory prepayment on sale or Total Loss); or

(b) that Vessel or other vessel is insured in accordance with the Security Documents and a claim for Total Loss is available under the terms of the relevant insurances; and

(c) no insurer has refused to meet or has disputed the claim for Total Loss and it is not apparent to the Agent that any such refusal or dispute is likely to occur; and

(d) payment of all insurance proceeds in respect of the Total Loss is made in full to the Security Agent within 150 days of the occurrence of the casualty giving rise to the Total Loss in question or such longer period as the Agent may in its discretion agree.

22.1.18 Challenge to registration The registration of a Vessel or the Mortgage is contested or becomes void or voidable or liable to cancellation or termination, or the validity or priority of the Mortgage is contested.

22.1.19 War The country of registration of a Vessel becomes involved in war (whether or not declared) or civil war or is occupied by any other power and the Agent in its discretion considers that, as a result, the security conferred by any of the Security Documents is materially prejudiced.

22.1.20 Notice of determination A Guarantor gives notice to the Security Agent to determine any obligations under the relevant Guarantee.

22.1.21 Litigation Any litigation, arbitration, administrative, governmental, regulatory or other investigations, proceedings or disputes are commenced against a Security Party or its assets which have or are reasonably likely to have a Material Adverse Effect.

22.1.22 Material adverse change Any event or circumstance occurs which the Majority Lenders reasonably believe has or is reasonably likely to have a Material Adverse Effect.

22.1.23 Sanctions

(a) Any of the Security Parties or any Affiliate of any of them becomes a Restricted Party or becomes owned or controlled by, or acts directly or indirectly on behalf of, a Restricted Party or any of such persons becomes the owner or controller of a Restricted Party.

(b) Any proceeds of the Loan are made available, directly or indirectly, to or for the benefit of a Restricted Party or otherwise is, directly or indirectly, applied in a manner or for a purpose prohibited under Sanctions Laws.

(c) Any of the Security Parties or any Affiliate of any of them is not in compliance with all Sanctions Laws.

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22.2 Acceleration On and at any time after the occurrence of an Event of Default which is continuing the Agent shall, if so directed by the Majority Lenders:

22.2.1 by notice to the Borrower cancel the Total Commitments, at which time they shall immediately be cancelled;

22.2.2 by notice to the Borrower declare that the Loan, together with accrued interest, and all other amounts accrued or outstanding under the Finance Documents are immediately due and payable, at which time they shall become immediately due and payable;

22.2.3 by notice to the Borrower declare that the Loan is payable on demand, at which time it shall immediately become payable on demand by the Agent on the instructions of the Majority Lenders; and/or

22.2.4 exercise or direct the Security Agent to exercise any or all of its rights, remedies, powers or discretions under the Finance Documents.

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Section 9 Changes to Parties

23 Changes to the Lenders

23.1 Assignments and transfers by the Lenders Subject to this Clause 23, a Lender (the “Existing Lender”) may:

23.1.1 assign any of its rights; or

23.1.2 transfer by novation any of its rights and obligations,

under any Finance Document to another bank or financial institution or to a trust, fund or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets (the “New Lender”).

23.2 Conditions of assignment or transfer

23.2.1 No assignment or transfer in accordance with Clause 23.1 (Assignments and transfers by the Lenders) can be made without the Borrower’s prior written consent unless it is:

(a) to an Affiliate of the Original Lender; or

(b) to a bank or financial institution and is made 60 days after the occurrence of an Event of Default pursuant to Clause 22.1.1 (Non-payment) which is continuing; or

(c) to a trust or fund and is made 270 days after the occurrence of an Event of Default pursuant to Clause 22.1.1 (Non-payment) which is continuing.

23.2.2 In the cases where the prior written consent of the Borrower is required for an assignment or transfer under Clause 23.2.1, the consent of the Borrower must not be unreasonably withheld or delayed if such assignment or transfer is to a bank or financial institution which has experience in providing financing to the shipping industry.

23.2.3 An assignment will only be effective on:

(a) receipt by the Agent of written confirmation from the New Lender (in form and substance satisfactory to the Agent) that the New Lender will assume the same obligations to the other Finance Parties as it would have been under if it was an Original Lender; and

(b) performance by the Agent of all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to such assignment to a New Lender, the completion of which the Agent shall promptly notify to the Existing Lender and the New Lender.

23.2.4 A transfer will only be effective if the procedure set out in Clause 23.5 (Procedure for transfer) is complied with.

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23.2.5 If:

(a) a Lender assigns or transfers any of its rights or obligations under the Finance Documents or changes its Facility Office; and

(b) as a result of circumstances existing at the date the assignment, transfer or change occurs, the Borrower would be obliged to make a payment to the New Lender or Lender acting through its new Facility Office under Clause 12 (Tax Gross Up and Indemnities) or Clause 13 (Increased Costs),

then the New Lender or Lender acting through its new Facility Office is only entitled to receive payment under those Clauses to the same extent as the Existing Lender or Lender acting through its previous Facility Office would have been if the assignment, transfer or change had not occurred. This Clause 23.2.5 shall not apply:

(c) in relation to Clause 12.2 (Tax gross-up), to a Treaty Lender that has included a confirmation of its scheme reference number and its jurisdiction of tax residence in accordance with Clause 12.2.6(b)(ii) (Tax gross-up) if the Borrower making the payment has not made a Borrower DTTP Filing in respect of that Treaty Lender.

23.2.6 Each New Lender confirms, for the avoidance of doubt, that the Agent has authority to execute on its behalf any amendment or waiver that has been approved by or on behalf of the requisite Lender or Lenders in accordance with this Agreement on or prior to the date on which the transfer or assignment becomes effective in accordance with this Agreement and that it is bound by that decision to the same extent as the Existing Lender would have been had it remained a Lender.

23.3 Assignment or transfer fee Unless the Agent otherwise agrees and excluding an assignment or transfer (i) to an Affiliate of a Lender, (ii) to a Related Fund or (iii) made in connection with primary syndication of the Loan, the New Lender shall, on the date upon which an assignment or transfer takes effect, pay to the Agent (for its own account) a fee of $3,000.

23.4 Limitation of responsibility of Existing Lenders

23.4.1 Unless expressly agreed to the contrary, an Existing Lender makes no representation or warranty and assumes no responsibility to a New Lender for:

(a) the legality, validity, effectiveness, adequacy or enforceability of the Relevant Documents or any other documents;

(b) the financial condition of any Security Party;

(c) the performance and observance by any Security Party or any other member of the Group of its obligations under the Relevant Documents or any other documents; or

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(d) the accuracy of any statements (whether written or oral) made in or in connection with any of the Relevant Documents or any other document,

and any representations or warranties implied by law are excluded.

23.4.2 Each New Lender confirms to the Existing Lender and the other Finance Parties that it:

(a) has made (and shall continue to make) its own independent investigation and assessment of the financial condition and affairs of each Security Party and its related entities in connection with its participation in this Agreement and has not relied exclusively on any information provided to it by the Existing Lender in connection with any of the Relevant Documents; and

(b) will continue to make its own independent appraisal of the creditworthiness of each Security Party and its related entities whilst any amount is or may be outstanding under the Finance Documents or any Commitment is in force.

23.4.3 Nothing in any Finance Document obliges an Existing Lender to:

(a) accept a re-transfer or re-assignment from a New Lender of any of the rights and obligations assigned or transferred under this Clause 23; or

(b) support any losses directly or indirectly incurred by the New Lender by reason of the non-performance by any Security Party of its obligations under the Relevant Documents or otherwise.

23.5 Procedure for transfer

23.5.1 Subject to the conditions set out in Clause 23.2 (Conditions of assignment or transfer) a transfer is effected in accordance with Clause 23.5.3 when the Agent executes an otherwise duly completed Transfer Certificate delivered to it by the Existing Lender and the New Lender. The Agent shall, subject to Clause 23.2.3(b), as soon as reasonably practicable after receipt by it of a duly completed Transfer Certificate appearing on its face to comply with the terms of this Agreement and delivered in accordance with the terms of this Agreement, execute that Transfer Certificate.

23.5.2 The Agent shall only be obliged to execute a Transfer Certificate delivered to it by the Existing Lender and the New Lender once it is satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to the transfer to such New Lender.

23.5.3 On the Transfer Date:

(a) to the extent that in the Transfer Certificate the Existing Lender seeks to transfer by novation its rights and obligations under the

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Finance Documents the Borrower and the Existing Lender shall be released from further obligations towards one another under the Finance Documents and their respective rights against one another shall be cancelled (being the “Discharged Rights and Obligations”);

(b) the Borrower and the New Lender shall assume obligations towards one another and/or acquire rights against one another which differ from the Discharged Rights and Obligations only insofar as the Borrower and the New Lender have assumed and/or acquired the same in place of the Borrower and the Existing Lender;

(c) the Agent, the Security Agent, the Arranger, the New Lender and other Lenders shall acquire the same rights and assume the same obligations between themselves as they would have acquired and assumed had the New Lender been an Original Lender with the rights and/or obligations acquired or assumed by it as a result of the transfer and to that extent the Agent, the Security Agent, the Arranger and the Existing Lender shall each be released from further obligations to each other under this Agreement; and

(d) the New Lender shall become a Party as a “Lender”.

23.6 Procedure for assignment

23.6.1 Subject to the conditions set out in Clause 23.2 (Conditions of assignment or transfer) an assignment may be effected in accordance with Clause 23.6.3 when the Agent executes an otherwise duly completed Assignment Agreement delivered to it by the Existing Lender and the New Lender. The Agent shall, subject to Clause 23.6.2, as soon as reasonably practicable after receipt by it of a duly completed Assignment Agreement appearing on its face to comply with the terms of this Agreement and delivered in accordance with the terms of this Agreement, execute that Assignment Agreement.

23.6.2 The Agent shall only be obliged to execute an Assignment Agreement delivered to it by the Existing Lender and the New Lender once it is satisfied it has complied with all necessary “know your customer” or similar checks under all applicable laws and regulations in relation to the assignment to such New Lender.

23.6.3 On the Transfer Date:

(a) the Existing Lender will assign absolutely to the New Lender its rights under the Finance Documents and in respect of any Encumbrance created or expressed to be created or evidenced by the Security Documents and expressed to be the subject of the assignment in the Assignment Agreement;

(b) the Existing Lender will be released from the obligations (the “Relevant Obligations”) expressed to be the subject of the

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release in the Assignment Agreement (and any corresponding obligations by which it is bound in respect of any Encumbrance created or expressed to be created or evidenced by the Security Documents); and

(c) the New Lender shall become a Party as a “Lender” and will be bound by obligations equivalent to the Relevant Obligations.

23.6.4 Lenders may utilise procedures other than those set out in this Clause 23.6 to assign their rights under the Finance Documents (but not, without the consent of the relevant Security Party or unless in accordance with Clause 23.5 (Procedure for transfer), to obtain a release by that Security Party from the obligations owed to that Security Party by the Lenders nor the assumption of equivalent obligations by a New Lender) provided that they comply with the conditions set out in Clause 23.2 (Conditions of assignment or transfer).

23.7 Copy of Transfer Certificate or Assignment Agreement to Borrower The Agent shall, as soon as reasonably practicable after it has executed a Transfer Certificate or an Assignment Agreement, send to the Borrower a copy of that Transfer Certificate or Assignment Agreement.

24 Changes to the Security Parties

24.1 No assignment or transfer by Security Parties No Security Party may assign any of its rights or transfer any of its rights or obligations under the Finance Documents.

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Section 10 The Finance Parties

25 Role of the Agent, the Security Agent and the Arranger

25.1 Appointment of the Agent

25.1.1 Each of the Arranger and the Lenders appoints the Agent to act as its agent under and in connection with the Finance Documents and each of the Arranger, the Lenders and the Agent appoints the Security Agent to act as its security agent for the purpose of the Security Documents.

25.1.2 Each of the Arranger and the Lenders authorises the Agent and each of the Arranger, the Lenders and the Agent authorises the Security Agent to perform the duties, obligations and responsibilities and to exercise the rights, powers, authorities and discretions specifically given to the Agent or the Security Agent (as the case may be) under or in connection with the Finance Documents together with any other incidental rights, powers, authorities and discretions.

25.1.3 The Swap Provider appoints the Security Agent to act as its security agent for the purpose of the Security Documents and authorises the Security Agent to exercise the rights, powers, authorities and discretions specifically given to the Security Agent under or in connection with the Security Documents together with any other incidental rights, powers, authorities and discretions.

25.1.4 Except in Clause 25.14 (Replacement of the Agent) or where the context otherwise requires, references in this Clause 25 to the “Agent” shall mean the Agent and the Security Agent individually and collectively and references in this Clause 25 to the “Finance Documents” or to any “Finance Document” shall not include the Master Agreement.

25.2 Instructions

25.2.1 The Agent shall:

(a) unless a contrary indication appears in a Finance Document, exercise or refrain from exercising any right, power, authority or discretion vested in it as Agent in accordance with any instructions given to it by:

(i) all Lenders if the relevant Finance Document stipulates the matter is an all Lender decision; and

(ii) in all other cases, the Majority Lenders; and

(b) not be liable for any act (or omission) if it acts (or refrains from acting) in accordance with Clause 25.2.1(a).

25.2.2 The Agent shall be entitled to request instructions, or clarification of any instruction, from the Majority Lenders (or, if the relevant

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Finance Document stipulates the matter is a decision for any other Lender or group of Lenders, from that Lender or group of Lenders) as to whether, and in what manner, it should exercise or refrain from exercising any right, power, authority or discretion and the Agent may refrain from acting unless and until it receives any such instructions or clarification that it has requested.

25.2.3 Save in the case of decisions stipulated to be a matter for any other Lender or group of Lenders under the relevant Finance Document and unless a contrary indication appears in a Finance Document, any instructions given to the Agent by the Majority Lenders shall override any conflicting instructions given by any other Parties and will be binding on all Finance Parties save for the Security Agent.

25.2.4 The Agent may refrain from acting in accordance with any instructions of any Lender or group of Lenders until it has received any indemnification and/or security that it may in its discretion require (which may be greater in extent than that contained in the Finance Documents and which may include payment in advance) for any cost, loss or liability which it may incur in complying with those instructions.

25.2.5 In the absence of instructions, the Agent may act (or refrain from acting) as it considers to be in the best interest of the Lenders.

25.2.6 The Agent is not authorised to act on behalf of a Lender (without first obtaining that Lender’s consent) in any legal or arbitration proceedings relating to any Finance Document. This Clause 25.2.6 shall not apply to any legal or arbitration proceeding relating to the perfection, preservation or protection of rights under the Finance Documents or the enforcement of the Finance Documents.

25.3 Duties of the Agent

25.3.1 The Agent’s duties under the Finance Documents are solely mechanical and administrative in nature.

25.3.2 Subject to Clause 25.3.3, the Agent shall promptly forward to a Party the original or a copy of any document which is delivered to the Agent for that Party by any other Party.

25.3.3 Without prejudice to Clause 23.7 (Copy of Transfer Certificate or Assignment Agreement to Borrower), Clause 25.3.1 shall not apply to any Transfer Certificate or any Assignment Agreement.

25.3.4 Except where a Finance Document specifically provides otherwise, the Agent is not obliged to review or check the adequacy, accuracy or completeness of any document it forwards to another Party.

25.3.5 If the Agent receives notice from a Party referring to this Agreement, describing a Default and stating that the circumstance described is a Default, it shall promptly notify the Finance Parties.

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25.3.6 If the Agent is aware of the non-payment of any principal, interest, commitment fee or other fee payable to a Finance Party (other than the Agent, the Arranger or the Security Agent) under this Agreement it shall promptly notify the other Finance Parties.

25.3.7 The Agent shall have only those duties, obligations and responsibilities expressly specified in the Finance Documents to which it is expressed to be a party (and no others shall be implied).

25.4 Role of the Arranger Except as specifically provided in the Finance Documents, the Arranger has no obligations of any kind to any other Party under or in connection with any Finance Document.

25.5 No fiduciary duties

25.5.1 Subject to Clause 25.12 (Trust) which relates to the Security Agent only, nothing in any Finance Document constitutes the Agent or the Arranger as a trustee or fiduciary of any other person.

25.5.2 Neither the Agent nor the Arranger shall be bound to account to any Lender for any sum or the profit element of any sum received by it for its own account.

25.6 Business with Security Parties The Agent and the Arranger may accept deposits from, lend money to and generally engage in any kind of banking or other business with the Borrower, any other Security Party or its Affiliate.

25.7 Rights and discretions of the Agent

25.7.1 The Agent may:

(a) rely on any representation, communication, notice or document believed by it to be genuine, correct and appropriately authorised;

(b) assume that:

(i) any instructions received by it from the Majority Lenders, any Lenders or any group of Lenders are duly given in accordance with the terms of the Finance Documents; and

(ii) unless it has received notice of revocation, that those instructions have not been revoked; and

(iii) rely on a certificate from any person:

(A) as to any matter of fact or circumstance which might reasonably be expected to be within the knowledge of that person; or

(B) to the effect that such person approves of any particular dealing, transaction, step, action or thing,

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as sufficient evidence that that is the case and, in the case of (A), may assume the truth and accuracy of that certificate.

25.7.2 The Agent may assume (unless it has received notice to the contrary in its capacity as agent for the Lenders or security agent for the Finance Parties (as the case may be)) that:

(a) no Default has occurred (unless it has actual knowledge of a Default arising under Clause 22.1 (Events of Default));

(b) any right, power, authority or discretion vested in any Party or the Majority Lenders has not been exercised; and

(c) any notice or request made by the Borrower (other than a Drawdown Request) is made on behalf of and with the consent and knowledge of all the Security Parties.

25.7.3 The Agent may engage and pay for the advice or services of any lawyers, accountants, surveyors or other experts.

25.7.4 Without prejudice to the generality of Clause 25.7.3 or Clause 25.7.5, the Agent may at any time engage and pay for the services of any lawyers to act as independent counsel to the Agent (and so separate from any lawyers instructed by the Lenders) if the Agent in its reasonable opinion deems this to be desirable.

25.7.5 The Agent may rely on the advice or services of any lawyers, accountants, tax advisers, surveyors or other professional advisers or experts (whether obtained by the Agent or by any other Party) and shall not be liable for any damages, costs or losses to any person, any diminution in value or any liability whatsoever arising as a result of its so relying.

25.7.6 The Agent may act in relation to the Finance Documents through its officers, employees and agents and the Agent shall not:

(a) be liable for any error of judgment made by any such person; or

(b) be bound to supervise, or be in any way responsible for any loss incurred by reason of misconduct, omission or default on the part, of any such person,

unless such error or such loss was directly caused by the Agent’s gross negligence or wilful misconduct.

25.7.7 Unless a Finance Document expressly provides otherwise the Agent may disclose to any other Party any information it reasonably believes it has received as agent under this Agreement.

25.7.8 Without prejudice to the generality of Clause 25.7.7, the Agent:

(a) may disclose; and

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(b) on the written request of the Borrower or the Majority Lenders shall, as soon as reasonably practicable, disclose,

the identity of a Defaulting Lender to the Borrower and to the other Finance Parties.

25.7.9 Notwithstanding any other provision of any Finance Document to the contrary, neither the Agent nor the Arranger is obliged to do or omit to do anything if it would or might in its reasonable opinion constitute a breach of any law or regulation or a breach of a fiduciary duty or duty of confidentiality.

25.7.10 The Agent is not obliged to disclose to any Finance Party any details of the rate notified to the Agent by any Lender or the identity of any such Lender for the purpose of Clause 10.2.2 (Market Disruption).

25.7.11 Notwithstanding any provision of any Finance Document to the contrary, the Agent is not obliged to expend or risk its own funds or otherwise incur any financial liability in the performance of its duties, obligations or responsibilities or the exercise of any right, power, authority or discretion if it has grounds for believing the repayment of such funds or adequate indemnity against, or security for, such risk or liability is not reasonably assured to it.

25.8 Responsibility for documentation Neither the Agent nor the Arranger is responsible or liable for:

25.8.1 the adequacy, accuracy and/or completeness of any information (whether oral or written) supplied by the Agent, the Arranger, a Security Party or any other person given in or in connection with any Relevant Document or the transactions contemplated in the Finance Documents; or

25.8.2 the legality, validity, effectiveness, adequacy or enforceability of any Relevant Document or any other agreement, arrangement or document entered into, made or executed in anticipation of or in connection with any Relevant Document; or

25.8.3 any determination as to whether any information provided or to be provided to any Finance Party is non-public information the use of which may be regulated or prohibited by applicable law or regulation relating to insider dealing or otherwise.

25.9 No duty to monitor The Agent shall not be bound to enquire:

25.9.1 whether or not any Default has occurred;

25.9.2 as to the performance, default or any breach by any Party of its obligations under any Finance Document; or

25.9.3 whether any other event specified in any Finance Document has occurred.

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25.10 Exclusion of liability

25.10.1 Without limiting Clause 25.10.2 (and without prejudice to any other provision of any Finance Document excluding or limiting the liability of the Agent) the Agent shall not be liable (including, without limitation, for negligence or any other category of liability whatsoever) for:

(a) any damages, costs or losses to any person, any diminution in value, or any liability whatsoever arising as a result of taking or not taking any action under or in connection with any Finance Document or any Encumbrance created or expressed to be created or evidenced by the Security Documents, unless caused by its gross negligence or wilful misconduct;

(b) exercising, or not exercising, any right, power, authority or discretion given to it by, or in connection with, any Finance Document, any Encumbrance created or expressed to be created or evidenced by the Security Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with, any Finance Document or any Encumbrance created or expressed to be created or evidenced by the Security Documents;

(c) any shortfall which arises on the enforcement or realisation of the Trust Property; or

(d) without prejudice to the generality of Clauses 25.10.1(a), 25.10.1(b) and 25.10.1(c), any damages, costs or losses to any person, any diminution in value or any liability whatsoever arising as a result of:

(i) any act, event or circumstance not reasonably within its control; or

(ii) the general risks of investment in, or the holding of assets in, any jurisdiction,

including (in each case and without limitation) such damages, costs, losses, diminution in value or liability arising as a result of: nationalisation, expropriation or other governmental actions; any regulation, currency restriction, devaluation or fluctuation; market conditions affecting the execution or settlement of transactions or the value of assets (including any Disruption Event); breakdown, failure or malfunction of any third party transport, telecommunications, computer services or systems; natural disasters or acts of God; war, terrorism, insurrection or revolution; or strikes or industrial action.

25.10.2 No Party (other than the Agent) may take any proceedings against any officer, employee or agent of the Agent in respect of any claim it might have against the Agent or in respect of any act or omission of any kind by that officer, employee or agent in relation to any

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Relevant Document and any officer, employee or agent of the Agent may rely on this Clause subject to Clause 1.7 (Third Party Rights) and the provisions of the Third Parties Act.

25.10.3 The Agent will not be liable for any delay (or any related consequences) in crediting an account with an amount required under the Finance Documents to be paid by the Agent if the Agent has taken all necessary steps as soon as reasonably practicable to comply with the regulations or operating procedures of any recognised clearing or settlement system used by the Agent for that purpose.

25.10.4 Nothing in this Agreement shall oblige the Agent or the Arranger to carry out:

(a) any “know your customer” or other checks in relation to any person;

(b) any check on the extent to which any transaction contemplated by this Agreement might be unlawful for any Lender,

on behalf of any Lender and each Lender confirms to the Agent and the Arranger that it is solely responsible for any such checks it is required to carry out and that it may not rely on any statement in relation to such checks made by the Agent or the Arranger.

25.10.5 Without prejudice to any provision of any Finance Document excluding or limiting the Agent’s liability, any liability of the Agent arising under or in connection with any Finance Document or any Encumbrance created or expressed to be created or evidenced by the Security Documents shall be limited to the amount of actual loss which has been finally judicially determined to have been suffered (as determined by reference to the date of default of the Agent or, if later, the date on which the loss arises as a result of such default) but without reference to any special conditions or circumstances known to the Agent at any time which increase the amount of that loss. In no event shall the Agent be liable for any loss of profits, goodwill, reputation, business opportunity or anticipated saving, or for special, punitive, indirect or consequential damages, whether or not the Agent has been advised of the possibility of such loss or damages.

25.11 Lenders’ indemnity to the Agent

25.11.1 Each Lender shall (in proportion to its share of the Total Commitments or, if the Total Commitments are then zero, to its share of the Total Commitments immediately prior to their reduction to zero) indemnify the Agent and every Receiver and Delegate, within three Business Days of demand, against any cost, loss or liability (including, without limitation, for negligence or any other category of liability whatsoever) incurred by any of them (otherwise than by reason of the relevant Agent’s, Receiver’s or Delegate’s

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gross negligence or wilful misconduct) (or, in the case of any cost, loss or liability pursuant to Clause 28.12 (Disruption to payment systems etc.) notwithstanding the Agent’s negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Agent) in acting as Agent, Receiver or Delegate under, or exercising any authority conferred under, the Finance Documents (unless the relevant Agent, Receiver or Delegate has been reimbursed by a Security Party pursuant to a Finance Document).

25.11.2 Subject to Clause 25.11.3, the Borrower shall immediately on demand reimburse any Lender for any payment that Lender makes to the Agent pursuant to Clause 25.11.1

25.11.3 Clause 25.11.2 shall not apply to the extent that the indemnity payment in respect of which the Lender claims reimbursement relates to a liability of the Agent to a Security Party.

25.12 Trust The Security Agent agrees and declares, and each of the other Finance Parties acknowledges, that, subject to the terms and conditions of this Clause 25.12, the Security Agent holds the Trust Property on trust for the Finance Parties absolutely. Each of the other Finance Parties agrees that the obligations, rights and benefits vested in the Security Agent shall be performed and exercised in accordance with this Clause 25.12. The Security Agent shall have the benefit of all of the provisions of this Agreement benefiting it in its capacity as security agent for the Finance Parties, and all the powers and discretions conferred on trustees by the Trustee Act 1925 (to the extent not inconsistent with this Agreement). In addition:

25.12.1 the Security Agent and any Delegate may indemnify itself or himself out of the Trust Property against all liabilities, costs, fees, damages, charges, losses and expenses sustained or incurred by it or him in relation to the taking or holding of any of the Trust Property or in connection with the exercise or purported exercise of the rights, trusts, powers and discretions vested in the Security Agent or any Delegate by or pursuant to the Security Documents or in respect of anything else done or omitted to be done in any way relating to the Security Documents;

25.12.2 the other Finance Parties acknowledge that the Security Agent shall be under no obligation to insure any property nor to require any other person to insure any property and shall not be responsible for any loss which may be suffered by any person as a result of the lack or insufficiency of any insurance;

25.12.3 the Finance Parties agree that the perpetuity period applicable to the trusts declared by this Agreement shall be the period of 125 years from the date of this Agreement;

25.12.4 the Security Agent shall not be liable for any failure, omission, or defect in perfecting the security constituted or created by any Finance Document including, without limitation, any failure to

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register the same in accordance with the provisions of any of the documents of title of any Security Party to any of the assets thereby charged or effect or procure registration of or otherwise protect the security created by any Security Document under any registration laws in any jurisdiction and may accept without enquiry such title as any Security Party may have to any asset;

25.12.5 the Security Agent shall not be under any obligation to hold any title deed, Finance Document or any other documents in connection with the Finance Documents or any other documents in connection with the property charged by any Finance Document or any other such security in its own possession or to take any steps to protect or preserve the same, and may permit any Security Party to retain all such title deeds, Finance Documents and other documents in its possession; and

25.12.6 save as otherwise provided in the Finance Documents, all moneys which under the trusts therein contained are received by the Security Agent may be invested in the name of or under the control of the Security Agent in any investment for the time being authorised by English law for the investment by trustees of trust money or in any other investments which may be selected by the Security Agent, and the same may be placed on deposit in the name of or under the control of the Security Agent at such bank or institution (including the Security Agent) and upon such terms as the Security Agent may think fit.

The provisions of Part I of the Trustee Act 2000 shall not apply to the Security Agent or the Trust Property.

25.13 Resignation of the Agent

25.13.1 The Agent may resign and appoint one of its Affiliates acting through an office in the United Kingdom as successor by giving 30 days’ prior written notice to the other Finance Parties and the Borrower.

25.13.2 Alternatively the Agent may resign by giving 30 days’ prior written notice to the other Finance Parties and the Borrower, in which case the Majority Lenders (after prior consultation and agreement with the Borrower) may appoint a successor Agent.

25.13.3 If the Majority Lenders have not appointed a successor Agent in accordance with Clause 25.13.1 within 20 days after notice of resignation was given, the retiring Agent (after consultation with the Borrower) may appoint a successor Agent (acting through an office in the United Kingdom).

25.13.4 If the Agent wishes to resign because (acting reasonably) it has concluded that it is no longer appropriate for it to remain as agent and the Agent is entitled to appoint a successor Agent under Clause 25.13.2, the Agent may (if it concludes (acting reasonably) that it is

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necessary to do so in order to persuade the proposed successor Agent to become a party to this Agreement as Agent) agree with the proposed successor Agent amendments to this Clause 25 and any other term of this Agreement dealing with the rights or obligations of the Agent consistent with then current market practice for the appointment and protection of corporate trustees together with any reasonable amendments to the agency fee payable under this Agreement which are consistent with the successor Agent’s normal fee rates and those amendments will bind the Parties.

25.13.5 The retiring Agent shall, make available to the successor Agent such documents and records and provide such assistance as the successor Agent may reasonably request for the purposes of performing its functions as Agent under the Finance Documents. The Borrower shall, within three Business Days of demand, reimburse the retiring Agent for the amount of all costs and expenses (including legal fees) properly incurred by it in making available such documents and records and providing such assistance.

25.13.6 The Agent’s resignation notice shall only take effect upon the appointment of a successor and (in the case of the Security Agent) the transfer of all the Trust Property to that successor.

25.13.7 Upon the appointment of a successor, the retiring Agent shall be discharged from any further obligation in respect of the Finance Documents (other than its obligations under Clause 25.13.5) but shall remain entitled to the benefit of Clause 14.3 (Indemnity to the Agent) and this Clause 25 (and any agency fees for the account of the retiring Agent shall cease to accrue from (and shall be payable on) that date). Any successor and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party.

25.13.8 The Agent shall resign in accordance with Clause 25.13.1 (and, to the extent applicable, shall use reasonable endeavours to appoint a successor Agent pursuant to Clause 25.13.2) if on or after the date which is three months before the earliest FATCA Application Date relating to any payment to the Agent under the Finance Documents, either:

(a) the Agent fails to respond to a request under Clause 12.8 (FATCA information) and the Borrower or a Lender reasonably believes that the Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCA Application Date;

(b) the information supplied by the Agent pursuant to Clause 12.8 (FATCA information) indicates that the Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCA Application Date; or

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(c) the Agent notifies the Borrower and the Lenders that the Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCA Application Date;

and (in each case) the Borrower or a Lender reasonably believes that a Party will be required to make a FATCA Deduction that would not be required if the Agent were a FATCA Exempt Party, and the Borrower or that Lender, by notice to the Agent, requires it to resign.

25.14 Replacement of the Agent

25.14.1 After consultation with the Borrower, the Majority Lenders may, by giving 30 days’ notice to the Agent (or, at any time the Agent is an Impaired Agent, by giving any shorter notice determined by the Majority lenders) replace the Agent by appointing a successor Agent (acting through an office in the United Kingdom).

25.14.2 The retiring Agent shall (at its own cost if it is an Impaired Agent and otherwise at the expense of the Lenders) make available to the successor Agent such documents and records and provide such assistance as the successor Agent may reasonably request for the purposes of performing its function as Agent under the Finance Documents.

25.14.3 The appointment of the successor Agent shall take effect on the date specified in the notice from the Majority Lenders to the retiring Agent. As from this date, the retiring Agent shall be discharged from any further obligation in respect of the Finance Documents (other than its obligations under Clause 25.14.2 but shall remain entitled to the benefit of Clause 14.3 (Indemnity to the Agent) and this Clause 25 (and any agency fees for the account of the retiring Agent shall cease to accrue from (and shall be payable on) that date).

25.14.4 Any successor Agent and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party.

25.15 Confidentiality

25.15.1 In acting as agent for the Finance Parties, the Agent shall be regarded as acting through its agency division which shall be treated as a separate entity from any other of its divisions or departments.

25.15.2 If information is received by another division or department of the Agent, it may be treated as confidential to that division or department and the Agent shall not be deemed to have notice of it.

25.16 Relationship with the Lenders

25.16.1 The Agent may treat the person shown in its records as Lender at the opening of business (in the place of the Agent’s principal office

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as notified to the Finance Parties from time to time) as the Lender acting through its Facility Office:

(a) entitled to or liable for any payment due under any Finance Document on that day; and

(b) entitled to receive and act upon any notice, request, document or communication or make any decision or determination under any Finance Document made or delivered on that day,

unless it has received not less than five Business Days’ prior notice from that Lender to the contrary in accordance with the terms of this Agreement.

25.16.2 Any Lender may by notice to the Agent appoint a person to receive on its behalf all notices, communications, information and documents to be made or dispatched to that Lender under the Finance Documents. Such notice shall contain the address, fax number and (where communication by electronic mail or other electronic means is permitted under Clause 30.6 (Electronic communication)) electronic mail address and/or any other information required to enable the sending and receipt of information by that means (and, in each case, the department or officer, if any, for whose attention communication is to be made) and be treated as a notification of a substitute address, fax number, electronic mail address, department and officer by that Lender for the purposes of Clause 30.2 (Addresses) and Clause 30.6.1(b) (Electronic communication) and the Agent shall be entitled to treat such person as the person entitled to receive all such notices, communications, information and documents as though that person were that Lender.

25.17 Credit appraisal by the Lenders Without affecting the responsibility of any Security Party for information supplied by it or on its behalf in connection with any Relevant Document, each Lender confirms to the Agent and the Arranger that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with any Relevant Document including but not limited to:

25.17.1 the financial condition, status and nature of each Security Party and each other member of the Group;

25.17.2 the legality, validity, effectiveness, adequacy or enforceability of any Relevant Document and any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Relevant Document;

25.17.3 whether that Lender has recourse, and the nature and extent of that recourse, against any Party or any of its respective assets under or in connection with any Relevant Document, the transactions contemplated by the Relevant Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of under or in connection with any Relevant Document;

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25.17.4 the right or title of any person in or to, or the value or sufficiency of any part of the Charged Property, the priority of any Encumbrance created or expressed to be created or evidenced by the Security Documents or the existence of any Encumbrance affecting the Charged Property.

25.18 Reference Banks If a Reference Bank (or, if a Reference Bank is not a Lender, the Lender of which it is an Affiliate) ceases to be a Lender, the Agent shall (in consultation with the Borrower) appoint another Lender or an Affiliate of a Lender to replace that Reference Bank.

25.19 Deduction from amounts payable by the Agent If any Party owes an amount to the Agent under the Finance Documents the Agent may, after giving notice to that Party, deduct an amount not exceeding that amount from any payment to that Party which the Agent would otherwise be obliged to make under the Finance Documents and apply the amount deducted in or towards satisfaction of the amount owed. For the purposes of the Finance Documents that Party shall be regarded as having received any amount so deducted.

26 Conduct of Business by the Finance Parties

No provision of this Agreement will:

26.1 interfere with the right of any Finance Party to arrange its affairs (tax or otherwise) in whatever manner it thinks fit;

26.2 oblige any Finance Party to investigate or claim any credit, relief, remission or repayment available to it or the extent, order and manner of any claim; or

26.3 other than where expressly provided for, oblige any Finance Party to disclose any information relating to its affairs (tax or otherwise) or any computations in respect of Tax.

27 Sharing among the Finance Parties

27.1 Payments to Finance Parties If a Finance Party (a “Recovering Finance Party”) receives or recovers any amount from a Security Party other than in accordance with Clause 28 (Payment Mechanics) (a “Recovered Amount”) and applies that amount to a payment due under the Finance Documents then:

27.1.1 the Recovering Finance Party shall, within three Business Days, notify details of the receipt or recovery, to the Agent;

27.1.2 the Agent shall determine whether the receipt or recovery is in excess of the amount the Recovering Finance Party would have been paid had the receipt or recovery been received or made by the Agent and distributed in accordance with Clause 28 (Payment Mechanics), without taking account of any Tax which would be imposed on the Agent in relation to the receipt, recovery or distribution; and

27.1.3 the Recovering Finance Party shall, within three Business Days of demand by the Agent, pay to the Agent an amount (the “Sharing

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Payment”) equal to such receipt or recovery less any amount which the Agent determines may be retained by the Recovering Finance Party as its share of any payment to be made, in accordance with Clause 28.6 (Partial payments).

27.2 Redistribution of payments The Agent shall treat the Sharing Payment as if it had been paid by the relevant Security Party and distribute it between the Finance Parties (other than the Recovering Finance Party) (the “Sharing Finance Parties”) in accordance with Clause 28.6 (Partial payments) towards the obligations of that Security Party to the Sharing Finance Parties.

27.3 Recovering Finance Party’s rights On a distribution by the Agent under Clause 27.2 (Redistribution of payments) of a payment received by a Recovering Finance Party from a Security Party, as between the relevant Security Party and the Recovering Finance Party, an amount of the Recovered Amount equal to the Sharing Payment will be treated as not having been paid by that Security Party.

27.4 Reversal of redistribution If any part of the Sharing Payment received or recovered by a Recovering Finance Party becomes repayable and is repaid by that Recovering Finance Party, then:

27.4.1 each Sharing Finance Party shall, upon request of the Agent, pay to the Agent for the account of that Recovering Finance Party an amount equal to the appropriate part of its share of the Sharing Payment (together with an amount as is necessary to reimburse that Recovering Finance Party for its proportion of any interest on the Sharing Payment which that Recovering Finance Party is required to pay) (the “Redistributed Amount”); and

27.4.2 as between the relevant Security Party and each relevant Sharing Finance Party, an amount equal to the relevant Redistributed Amount will be treated as not having been paid by that Security Party.

27.5 Exceptions

27.5.1 This Clause 27 shall not apply to the extent that the Recovering Finance Party would not, after making any payment pursuant to this Clause, have a valid and enforceable claim against the relevant Security Party.

27.5.2 A Recovering Finance Party is not obliged to share with any other Finance Party any amount which the Recovering Finance Party has received or recovered as a result of taking legal or arbitration proceedings, if:

(a) it notified that other Finance Party of the legal or arbitration proceedings; and

(b) that other Finance Party had an opportunity to participate in those legal or arbitration proceedings but did not do so as soon as

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reasonably practicable having received notice and did not take separate legal or arbitration proceedings.

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Section 11 Administration

28 Payment Mechanics

28.1 Payments to the Agent On each date on which a Security Party or a Lender is required to make a payment under a Finance Document , that Security Party or that Lender shall make the same available to the Agent for value on the due date at the time and in such funds specified by the Agent as being customary at the time for settlement of transactions in the relevant currency in the place of payment.

Payment shall be made to such account in the principal financial centre of the country of that currency with such bank as the Agent specifies.

28.2 Distributions by the Agent Each payment received by the Agent under the Finance Documents for another Party shall, subject to Clause 28.3 (Distributions to a Security Party) and Clause 28.4 (Clawback and pre-funding) be made available by the Agent as soon as practicable after receipt to the Party entitled to receive payment in accordance with this Agreement (in the case of a Lender, for the account of its Facility Office), to such account as that Party may notify to the Agent by not less than five Business Days’ notice with a bank specified by that Party in the principal financial centre of the country of that currency.

28.3 Distributions to a Security Party The Agent may (with the consent of a Security Party or in accordance with Clause 29 (Set-Off)) apply any amount received by it for that Security Party in or towards payment (on the date and in the currency and funds of receipt) of any amount due from that Security Party under the Finance Documents or in or towards purchase of any amount of any currency to be so applied.

28.4 Clawback and pre-funding

28.4.1 Where a sum is to be paid to the Agent under the Finance Documents for another Party, the Agent is not obliged to pay that sum to that other Party (or to enter into or perform any related exchange contract) until it has been able to establish to its satisfaction that it has actually received that sum.

28.4.2 Unless Clause 28.4.3 applies, if the Agent pays an amount to another Party and it proves to be the case that the Agent had not actually received that amount, then the Party to whom that amount (or the proceeds of any related exchange contract) was paid by the Agent shall on demand refund the same to the Agent together with interest on that amount from the date of payment to the date of receipt by the Agent, calculated by the Agent to reflect its cost of funds.

28.4.3 If the Agent has notified the Lenders that it is willing to make available amounts for the account of the Borrower before receiving funds from the Lenders then if and to the extent that the Agent does so but it proves to be the case that it does not then receive

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funds from a Lender in respect of a sum which it paid to the Borrower:

(a) the Agent shall notify the Borrower of that Lender’s identity and the Borrower shall on demand refund it to the Agent; and

(b) the Lender by whom those funds should have been made available or, if that Lender fails to do so, the Borrower, shall on demand pay to the Agent the amount (as certified by the Agent) which will indemnify the Agent against any funding cost incurred by it as a result of paying out that sum before receiving those funds from that Lender.

28.5 Impaired Agent

28.5.1 If, at any time, the Agent becomes an Impaired Agent, a Security Party or a Lender which is required to make a payment under the Finance Documents to the Agent in accordance with Clause 28.1 (Payments to the Agent) may instead either:

(a) pay that amount direct to the required recipient(s); or

(b) if in its absolute discretion it considers that it is not reasonably practicable to pay that amount direct to the required recipient(s), pay that amount or the relevant part of that amount to an interest-bearing account held with an Acceptable Bank in relation to which no Insolvency Event has occurred and is continuing, in the name of the Security Party or the Lender making the payment (the “Paying Party”) and designated as a trust account for the benefit of the Party or Parties beneficially entitled to that payment under the Finance Documents (the “Recipient Party” or “Recipient Parties”).

In each case such payments must be made on the due date for payment under the Finance Documents.

28.5.2 All interest accrued on the amount standing to the credit of the trust account shall be for the benefit of the Recipient Party or the Recipient Parties pro rata to their respective entitlements.

28.5.3 A Party which has made a payment in accordance with this Clause 28.5 shall be discharged of the relevant payment obligation under the Finance Documents and shall not take any credit risk with respect to the amounts standing to the credit of the trust account.

28.5.4 Promptly upon the appointment of a successor Agent in accordance with Clause 25.14 (Replacement of the Agent), each Paying Party shall (other than to the extent that that Party has given an instruction pursuant to Clause 28.5.5) give all requisite instructions to the bank with whom the trust account is held to transfer the amount (together with any accrued interest) to the successor Agent

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for distribution to the relevant Recipient Party or Recipient Parties in accordance with Clause 28.2 (Distributions by the Agent).

28.5.5 A Paying Party shall, promptly upon request by a Recipient Party and to the extent:

(a) that it has not given an instruction pursuant to Clause 28.5.4; and

(b) that it has been provided with the necessary information by that Recipient Party,

give all requisite instructions to the bank with whom the trust account is held to transfer the relevant amount (together with any accrued interest) to that Recipient Party.

28.6 Partial payments

28.6.1 If the Agent receives a payment that is insufficient to discharge all the amounts then due and payable by a Security Party under the Finance Documents, the Agent shall apply that payment towards the obligations of that Security Party under the Finance Documents in the following order:

(a) first, in or towards payment pro rata of any unpaid fees, costs and expenses of the Agent or the Security Agent under the Finance Documents;

(b) secondly, in or towards payment pro rata of any accrued interest, fee or commission due but unpaid under this Agreement;

(c) thirdly, in or towards payment pro rata of any principal due but unpaid under this Agreement; and

(d) fourthly, in or towards payment pro rata of any other sum due but unpaid under the Finance Documents.

28.6.2 The Agent shall, if so directed by the Majority Lenders, vary the order set out in Clauses 28.6.1(b) to 28.6.1(d).

28.6.3 Clauses 28.6.1 and 28.6.2 will override any appropriation made by a Security Party.

28.7 No set-off by Security Parties All payments to be made by a Security Party under the Finance Documents shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim.

28.8 Business Days Any payment which is due to be made on a day that is not a Business Day shall be made on the next Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not).

During any extension of the due date for payment of any principal or Unpaid Sum under this Agreement interest is payable on the principal or Unpaid Sum at the rate payable on the original due date.

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28.9 Currency of account

28.9.1 Subject to Clauses 28.9.2 to 28.9.5, dollars is the currency of account and payment for any sum due from a Security Party under any Finance Document.

28.9.2 A repayment or payment of all or part of a Drawing or an Unpaid Sum shall be made in the currency in which that Drawing or Unpaid Sum is denominated on its due date.

28.9.3 Each payment of interest shall be made in the currency in which the sum in respect of which the interest is payable was denominated when that interest accrued.

28.9.4 Each payment in respect of costs, expenses or Taxes shall be made in the currency in which the costs, expenses or Taxes are incurred.

28.9.5 Any amount expressed to be payable in a currency other than dollars shall be paid in that other currency.

28.10 Control account The Agent shall open and maintain on its books a control account in the name of the Borrower showing the advance of each Drawing and the computation and payment of interest and all other sums due under this Agreement. The Borrower’s obligations to repay each Drawing and to pay interest and all other sums due under this Agreement shall be evidenced by the entries from time to time made in the control account opened and maintained under this Clause 28.10 and those entries will, in the absence of error, be conclusive and binding.

28.11 Change of currency

28.11.1 Unless otherwise prohibited by law, if more than one currency or currency unit are at the same time recognised by the central bank of any country as the lawful currency of that country, then:

(a) any reference in the Finance Documents to, and any obligations arising under the Finance Documents in, the currency of that country shall be translated into, or paid in, the currency or currency unit of that country designated by the Agent (after consultation with the Borrower); and

(b) any translation from one currency or currency unit to another shall be at the official rate of exchange recognised by the central bank for the conversion of that currency or currency unit into the other, rounded up or down by the Agent (acting reasonably).

28.11.2 If a change in any currency of a country occurs, this Agreement will, to the extent the Agent (acting reasonably and after consultation with the Borrower) specifies to be necessary, be amended to comply with any generally accepted conventions and market practice in the Relevant Interbank Market and otherwise to reflect the change in currency.

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28.12 Disruption to payment systems etc. If either the Agent determines in its discretion that a Disruption Event has occurred or the Agent is notified by the Borrower that a Disruption Event has occurred:

28.12.1 the Agent may, and shall if requested to do so by the Borrower, consult with the Borrower with a view to agreeing with the Borrower such changes to the operation or administration of the Loan as the Agent may deem necessary in the circumstances;

28.12.2 the Agent shall not be obliged to consult with the Borrower in relation to any changes mentioned in Clause 28.12.1 if, in its opinion, it is not practicable to do so in the circumstances and, in any event, shall have no obligation to agree to any such changes;

28.12.3 the Agent may consult with the Finance Parties in relation to any changes mentioned in Clause 28.12.1 but shall not be obliged to do so if, in its opinion, it is not practicable to do so in the circumstances;

28.12.4 any such changes agreed upon by the Agent and the Borrower shall (whether or not it is finally determined that a Disruption Event has occurred) be binding upon the Parties as an amendment to (or, as the case may be, waiver of) the terms of the Finance Documents notwithstanding the provisions of Clause 34 (Amendments and Waivers);

28.12.5 the Agent shall not be liable for any damages, costs or losses whatsoever (including, without limitation, for negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Agent) arising as a result of its taking, or failing to take, any actions pursuant to or in connection with this Clause 28.12; and

28.12.6 the Agent shall notify the Finance Parties of all changes agreed pursuant to Clause 28.12.4.

29 Set-Off

29.1 Set-off A Finance Party may, while an Event of Default is continuing, set off any matured obligation due from a Security Party under the Finance Documents (to the extent beneficially owned by that Finance Party) against any matured obligation owed by that Finance Party to that Security Party, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Finance Party may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.

29.2 Master Agreement rights The rights conferred on the Swap Provider by this Clause 29 shall be in addition to, and without prejudice to or limitation of, the rights of netting and set off conferred on the Swap Provider by the Master Agreement.

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30 Notices

30.1 Communications in writing Any communication to be made under or in connection with the Finance Documents shall be made in writing and, unless otherwise stated, may be made by fax or letter.

30.2 Addresses The address and fax number (and the department or officer, if any, for whose attention the communication is to be made) of each Party for any communication or document to be made or delivered under or in connection with the Finance Documents is:

30.2.1 in the case of the Borrower, that identified with its name below;

30.2.2 in the case of each Lender, that notified in writing to the Agent on or prior to the date on which it becomes a Party;

30.2.3 in the case of the Swap Provider, that identified with its name below; and

30.2.4 in the case of the Agent or the Security Agent, that identified with its name below,

or any substitute address, fax number, or department or officer as the Party may notify to the Agent (or the Agent may notify to the other Parties, if a change is made by the Agent) by not less than five Business Days’ notice.

30.3 Delivery Any communication or document made or delivered by one Party to another under or in connection with the Finance Documents will only be effective:

30.3.1 if by way of fax, when received in legible form; or

30.3.2 if by way of letter, when it has been left at the relevant address or five Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that address;

and, if a particular department or officer is specified as part of its address details provided under Clause 30.2 (Addresses), if addressed to that department or officer.

Any communication or document to be made or delivered to the Agent or the Security Agent will be effective only when actually received by the Agent or the Security Agent and then only if it is expressly marked for the attention of the department or officer identified with the Agent’s or the Security Agent’s signature below (or any substitute department or officer as the Agent or the Security Agent shall specify for this purpose).

All notices from or to a Security Party (save in respect of the Master Agreement) shall be sent through the Agent.

Any communication or document which becomes effective, in accordance with this Clause 30.3, after 5.00 p.m. in the place of receipt shall be deemed only to become effective on the following day.

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30.4 Notification of address and fax number Promptly upon changing its address or fax number, the Agent shall notify the other Parties.

30.5 Communication when Agent is Impaired Agent If the Agent is an Impaired Agent the Parties may, instead of communicating with each other through the Agent, communicate with each other directly and (while the Agent is an Impaired Agent) all the provisions of the Finance Documents which require communications to be made or notices to be given to or by the Agent shall be varied so that communications may be made and notices given to or by the relevant Parties directly. This provision shall not operate after a replacement Agent has been appointed.

30.6 Electronic communication

30.6.1 Any communication to be made between any two Parties under or in connection with the Finance Documents may be made by electronic mail or other electronic means to the extent that those two Parties agree that, unless and until notified to the contrary, this is to be an accepted form of communication and if those two Parties:

(a) notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and

(b) notify each other of any change to their address or any other such information supplied by them by not less than five Business Days’ notice.

30.6.2 Any electronic communication made between those two Parties will be effective only when actually received in readable form and in the case of any electronic communication made by a Party to the Agent or the Security Agent only if it is addressed in such a manner as the Agent or the Security Agent shall specify for this purpose.

30.6.3 Any electronic communication which becomes effective, in accordance with Clause 30.6.2, after 5.00 p.m. in the place of receipt shall be deemed only to become effective on the following day.

30.7 Use of websites

30.7.1 The Borrower may satisfy its obligations under this Agreement to deliver any information in relation to those Lenders (the “Website Lenders”) who accept this method of communication by posting this information onto an electronic website designated by the Borrower and the Agent (the “Designated Website”) if:

(a) the Agent expressly agrees (after consultation with each of the Lenders) that it will accept communication of the information by this method;

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(b) both the Borrower and the Agent are aware of the address of and any relevant password specifications for the Designated Website; and

(c) the information is in a format previously agreed between the Borrower and the Agent.

If any Lender (a “Paper Form Lender”) does not agree to the delivery of information electronically then the Agent shall notify the Borrower accordingly and the Borrower shall supply the information to the Agent (in sufficient copies for each Paper Form Lender) in paper form. In any event the Borrower shall supply the Agent with at least one copy in paper form of any information required to be provided by it.

30.7.2 The Agent shall supply each Website Lender with the address of and any relevant password specifications for the Designated Website following designation of that website by the Borrower and the Agent.

30.7.3 The Borrower shall promptly upon becoming aware of its occurrence notify the Agent if:

(a) the Designated Website cannot be accessed due to technical failure;

(b) the password specifications for the Designated Website change;

(c) any new information which is required to be provided under this Agreement is posted onto the Designated Website;

(d) any existing information which has been provided under this Agreement and posted onto the Designated Website is amended; or

(e) the Borrower becomes aware that the Designated Website or any information posted onto the Designated Website is or has been infected by any electronic virus or similar software.

If the Borrower notifies the Agent under Clause 30.7.3(a) or Clause 30.7.3(e), all information to be provided by the Borrower under this Agreement after the date of that notice shall be supplied in paper form unless and until the Agent and each Website Lender is satisfied that the circumstances giving rise to the notification are no longer continuing.

30.7.4 Any Website Lender may request, through the Agent, one paper copy of any information required to be provided under this Agreement which is posted onto the Designated Website. The Borrower shall comply with any such request within ten Business Days.

30.7.5 The Borrower shall be liable for any cost incurred by the Agent or any Website Lender under this Clause.

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30.8 English language Any notice given under or in connection with any Finance Document must be in English. All other documents provided under or in connection with any Finance Document must be:

30.8.1 in English; or

30.8.2 if not in English, and if so required by the Agent, accompanied by a certified English translation and, in this case, the English translation will prevail unless the document is a constitutional, statutory or other official document.

31 Calculations and Certificates

31.1 Accounts In any litigation or arbitration proceedings arising out of or in connection with a Finance Document, the entries made in the accounts maintained by the Agent pursuant to Clause 28.10 (Control account) are prima facie evidence of the matters to which they relate.

31.2 Certificates and determinations Any certification or determination by the Agent of a rate or amount under any Finance Document is, in the absence of error, conclusive evidence of the matters to which it relates.

31.3 Day count convention Any interest, commission or fee accruing under a Finance Document will accrue from day to day and is calculated on the basis of the actual number of days elapsed and a year of 360 days or, in any case where the practice in the Relevant Interbank Market differs, in accordance with that market practice.

32 Partial Invalidity

If, at any time, any provision of the Finance Documents is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.

33 Remedies and Waivers

No failure to exercise, nor any delay in exercising, on the part of any Finance Party or Secured Party, any right or remedy under a Finance Document shall operate as a waiver of any such right or remedy or constitute an election to affirm any Finance Document. No election to affirm any Finance Document on the part of any Finance Party or Secured Party shall be effective unless it is in writing. No single or partial exercise of any right or remedy shall prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in this Agreement are cumulative and not exclusive of any rights or remedies provided by law.

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34 Amendments and Waivers

34.1 Required consents

34.1.1 Subject to Clause 34.2 (Exceptions) any term of the Finance Documents may be amended or waived only with the consent of the Majority Lenders and the Borrower and any such amendment or waiver will be binding on all Parties.

34.1.2 The Agent may effect, on behalf of any Finance Party, any amendment or waiver permitted by this Clause 34.

34.1.3 Without prejudice to the generality of Clauses 25.7.3, 25.7.4 and 25.7.5 (Rights and discretions of the Agent), the Agent may engage, pay for and rely on the services of lawyers in determining the consent level required for and effecting any amendment, waiver or consent under this Agreement.

34.2 Exceptions

34.2.1 An amendment, waiver or (in the case of a Security Document) a consent of, or in relation to, any term of any Finance Document that has the effect of changing or which relates to:

(a) the definition of “Majority Lenders” in Clause 1.1 (Definitions);

(b) an extension to the date of payment of any amount under the Finance Documents;

(c) a reduction in the Margin or a reduction in the amount of any payment of principal, interest, fees or commission payable;

(d) a change in currency of payment of any amount under the Finance Documents;

(e) an increase in any Commitment, an extension of the Availability Period or any requirement that a cancellation of Commitments reduces the Commitments of the Lenders rateably;

(f) any provision which expressly requires the consent of all the Lenders;

(g) Clause 2.2 (Finance Parties’ rights and obligations), Clause 23 (Changes to the Lenders), this Clause 34, Clause 38 (Governing Law) or Clause 39.1 (Jurisdiction of English courts);

(h) (other than as expressly permitted by the provisions of any Finance Document) the nature or scope of:

(i) any Guarantee;

(ii) the Charged Property; or

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(iii) the manner in which the proceeds of enforcement of the Security Documents are distributed; or

(i) the release of any Guarantee or of any Encumbrance created or expressed to be created or evidenced by the Security Documents unless permitted under this Agreement or any other Finance Document or relating to a sale or disposal of an asset which is the subject of any Encumbrance created or expressed to be created or evidenced by the Security Documents where such sale or disposal is expressly permitted under this Agreement or any other Finance Document;

shall not be made, or given, without the prior consent of all the Lenders.

34.2.2 An amendment or waiver which relates to the rights or obligations of the Agent, the Security Agent or the Arranger (each in their capacity as such) may not be effected without the consent of the Agent, the Security Agent or, as the case may be, the Arranger.

34.3 Replacement of Lender

34.3.1 If the Borrower or any other Security Party becomes obliged to repay any amount in accordance with Clause 7.1 (Illegality) or to pay additional amounts pursuant to Clause 12.2 (Tax gross-up), Clause 12.3 (Tax Indemnity) or Clause 13.1 (Increased costs) to any Lender: then the Borrower may, on five Business Days’ prior written notice to the Agent and such Lender, replace such Lender by requiring such Lender to (and, to the extent permitted by law, such Lender shall) transfer pursuant to Clause 23 (Changes to the Lenders) all (and not part only) of its rights and obligations under this Agreement to a Lender or other bank, financial institution, trust, fund or other entity (a “Replacement Lender”) selected by the Borrower, which confirms its willingness to assume and does assume all the obligations of the transferring Lender in accordance with Clause 23 (Changes to the Lenders) for a purchase price in cash payable at the time of transfer in an amount equal to the outstanding principal amount of such Lender’s participation in the outstanding Loan and all accrued interest, Break Costs and other amounts payable in relation thereto under the Finance Documents.

34.3.2 The replacement of a Lender pursuant to this Clause 34.3 shall be subject to the following conditions:

(a) the Borrower shall have no right to replace the Agent or Security Agent;

(b) neither the Agent nor the Lender shall have any obligation to the Borrower to find a Replacement Lender;

(c) in no event shall the Lender replaced under this Clause 34.3 be required to pay or surrender to such Replacement Lender any of

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the fees received by such Lender pursuant to the Finance Documents; and

(d) the Lender shall only be obliged to transfer its rights and obligations pursuant to Clause 34.3 once it is satisfied that it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to that transfer.

34.3.3 A Lender shall perform the checks described in Clause 34.3.2(d) as soon as reasonably practicable following delivery of a notice referred to in Clause 34.3 and shall notify the Agent and the Borrower when it is satisfied that it has complied with those checks.

34.4 Disenfranchisement of Defaulting Lenders

34.4.1 For so long as a Defaulting Lender has any Commitment, in ascertaining:

(a) the Majority Lenders; or

(b) whether:

(i) any given percentage (including, for the avoidance of doubt, unanimity) of the Total Commitments; or

(ii) the agreement of any specified group of Lenders,

has been obtained to approve any request for a consent, waiver, amendment or other vote of Lenders under the Finance Documents, that Defaulting Lender’s Commitment will be reduced by the amount of its participation in the Loan it has failed to make available and, to the extent that that reduction results in that Defaulting Lender’s Commitment being zero, that Defaulting Lender shall be deemed not to be a Lender for the purposes of (i) and (ii).

34.4.2 For the purposes of this Clause 34.4, the Agent may assume that the following Lenders are Defaulting Lenders:

(a) any Lender which has notified the Agent that it has become a Defaulting Lender;

(b) any Lender in relation to which it is aware that any of the events or circumstances referred to in (a), (b) or (c) of the definition of “Defaulting Lender” has occurred,

unless it has received notice to the contrary from the Lender concerned (together with any supporting evidence reasonably requested by the Agent) or the Agent is otherwise aware that the Lender has ceased to be a Defaulting Lender.

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34.5 Replacement of a Defaulting Lender

34.5.1 The Borrower may, at any time a Lender has become and continues to be a Defaulting Lender, by giving ten Business Days’ prior written notice to the Agent and such Lender, replace such Lender by requiring such Lender to (and, to the extent permitted by law, such Lender shall) transfer pursuant to Clause 23 (Changes to the Lenders) all (and not part only) of its rights and obligations under this Agreement to a Lender or other bank, financial institution, trust, fund or other entity (a “Replacement Lender”) selected by the Borrower which confirms its willingness to assume and does assume all the obligations, or all the relevant obligations, of the transferring Lender in accordance with Clause 23 (Changes to the Lenders) for a purchase price in cash payable at the time of transfer which is either:

(a) in an amount equal to the outstanding principal amount of such Lender’s participation in the outstanding Loan and all accrued interest, Break Costs and other amounts payable in relation thereto under the Finance Documents; or

(b) in an amount agreed between that Defaulting Lender, the Replacement Lender and the Borrower and which does not exceed the amount described in (a).

34.5.2 Any transfer of rights and obligations of a Defaulting Lender pursuant to this Clause 34.5 shall be subject to the following conditions:

(a) the Borrower shall have no right to replace the Agent or Security Agent;

(b) neither the Agent nor the Defaulting Lender shall have any obligation to the Borrower to find a Replacement Lender;

(c) the transfer must take place no later than 7 days after the notice referred to in Clause 34.5.1;

(d) in no event shall the Defaulting Lender be required to pay or surrender to the Replacement Lender any of the fees received by the Defaulting Lender pursuant to the Finance Documents; and

(e) the Defaulting Lender shall only be obliged to transfer its rights and obligations pursuant to 34.5.1 once it is satisfied that it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to that transfer to the Replacement Lender.

34.5.3 The Defaulting Lender shall perform the checks described in Clause 34.5.2(e) as soon as reasonably practicable following delivery of a notice referred to in Clause 34.5.1 and shall notify the Agent and

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the Borrower when it is satisfied that it has complied with those checks.

35 Confidentiality

35.1 Confidential Information Each Finance Party agrees to keep all Confidential Information confidential and not to disclose it to anyone, save to the extent permitted by Clause 35.2 (Disclosure of Confidential Information) and Clause 35.3 (Disclosure to numbering service providers), and to ensure that all Confidential Information is protected with security measures and a degree of care that would apply to its own confidential information.

35.2 Disclosure of Confidential Information Any Finance Party may disclose:

35.2.1 to any of its Affiliates and Related Funds and any of its or their officers, directors, employees, professional advisers, auditors, partners and Representatives such Confidential Information as that Finance Party shall consider appropriate if any person to whom the Confidential Information is to be given pursuant to this Clause 35.2.1 is informed in writing of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no such requirement to so inform if the recipient is subject to professional obligations to maintain the confidentiality of the information or is otherwise bound by requirements of confidentiality in relation to the Confidential Information;

35.2.2 to any person:

(a) to (or through) whom it assigns or transfers (or may potentially assign or transfer) all or any of its rights and/or obligations under one or more Finance Documents or which succeeds (or which may potentially succeed) it as Agent or Security Agent and, in each case, to any of that person’s Affiliates, Related Funds, Representatives and professional advisers;

(b) with (or through) whom it enters into (or may potentially enter into), whether directly or indirectly, any sub-participation in relation to, or any other transaction under which payments are to be made or may be made by reference to, one or more Finance Documents and/or one or more Security Parties and to any of that person’s Affiliates, Related Funds, Representatives and professional advisers;

(c) appointed by any Finance Party or by a person to whom Clause 35.2.2(a) or 35.2.2(b) applies to receive communications, notices, information or documents delivered pursuant to the Finance Documents on its behalf (including, without limitation, any person appointed under Clause 25.16.2 (Relationship with the Lenders));

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(d) who invests in or otherwise finances (or may potentially invest in or otherwise finance), directly or indirectly, any transaction referred to in Clause 35.2.2(a) or 35.2.2(b);

(e) to whom information is required or requested to be disclosed by any court of competent jurisdiction or any governmental, banking, taxation or other regulatory authority or similar body, the rules of any relevant stock exchange or pursuant to any applicable law or regulation;

(f) to whom information is required to be disclosed in connection with, and for the purposes of, any litigation, arbitration, administrative or other investigations, proceedings or disputes;

(g) who is a Party; or

(h) with the consent of the Borrower;

in each case, such Confidential Information as that Finance Party shall consider appropriate if:

(i) in relation to Clauses 35.2.2(a), 35.2.2(b) and 35.2.2(c), the person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking except that there shall be no requirement for a Confidentiality Undertaking if the recipient is a professional adviser and is subject to professional obligations to maintain the confidentiality of the Confidential Information;

(ii) in relation to Clause 35.2.2(d), the person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking or is otherwise bound by requirements of confidentiality in relation to the Confidential Information they receive and is informed that some or all of such Confidential Information may be price-sensitive information;

(iii) in relation to Clauses 35.2.2(e), 35.2.2(f), the person to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no requirement to so inform if, in the opinion of that Finance Party, it is not practicable so to do in the circumstances; and

35.2.3 to any person appointed by that Finance Party or by a person to whom Clause 35.2.2(a) or 35.2.2(b) applies to provide administration or settlement services in respect of one or more of the Finance Documents including without limitation, in relation to the trading of participations in respect of the Finance Documents, such Confidential Information as may be required to be disclosed to

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enable such service provider to provide any of the services referred to in this Clause 35.2.3 if the service provider to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking; and

35.2.4 to any rating agency (including its professional advisers) such Confidential Information as may be required to be disclosed to enable such rating agency to carry out its normal rating activities in relation to the Finance Documents and/or the Security Parties and/or the Group.

35.3 Disclosure to numbering service providers

35.3.1 Any Finance Party may disclose to any national or international numbering service provider appointed by that Finance Party to provide identification numbering services in respect of this Agreement, the Loan and/or one or more Security Parties the following information:

(a) names of Security Parties;

(b) country of domicile of Security Parties;

(c) place of incorporation of Security Parties;

(d) date of this Agreement;

(e) Clause 38 (Governing law);

(f) the names of the Agent and the Arranger;

(g) date of each amendment and restatement of this Agreement;

(h) amount of Total Commitments;

(i) currencies of the Loan;

(j) type of Loan;

(k) ranking of the Loan;

(l) Termination Date;

(m) changes to any of the information previously supplied pursuant to (a) to (l); and

(n) such other information agreed between such Finance Party and that Security Party,

to enable such numbering service provider to provide its usual syndicated loan numbering identification services.

35.3.2 The Parties acknowledge and agree that each identification number assigned to this Agreement, the Loan and/or one or more Security Parties by a numbering service provider and the information

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associated with each such number may be disclosed to users of its services in accordance with the standard terms and conditions of that numbering service provider.

35.3.3 The Borrower represents that none of the information set out in Clauses 35.3.1(a) to 35.3.1(n) is, nor will at any time be, unpublished price-sensitive information.

35.3.4 The Agent shall notify the Borrower and the other Finance Parties of:

(a) the name of any numbering service provider appointed by the Agent in respect of this Agreement, the Loan and/or one or more Security Parties; and

(b) the number or, as the case may be, numbers assigned to this Agreement, the Loan and/or one or more Security Parties by such numbering service provider.

35.4 Entire agreement This Clause 35 constitutes the entire agreement between the Parties in relation to the obligations of the Finance Parties under the Finance Documents regarding Confidential Information and supersedes any previous agreement, whether express or implied, regarding Confidential Information.

35.5 Inside information Each of the Finance Parties acknowledges that some or all of the Confidential Information is or may be price-sensitive information and that the use of such information may be regulated or prohibited by applicable legislation including securities law relating to insider dealing and market abuse and each of the Finance Parties undertakes not to use any Confidential Information for any unlawful purpose.

35.6 Notification of disclosure Each of the Finance Parties agrees (to the extent permitted by law and regulation) to inform the Borrower:

35.6.1 of the circumstances of any disclosure of Confidential Information made pursuant to Clause 35.2.2(e) (Disclosure of Confidential Information) except where such disclosure is made to any of the persons referred to in that Clause during the ordinary course of its supervisory or regulatory function; and

35.6.2 upon becoming aware that Confidential Information has been disclosed in breach of this Clause 35.

35.7 Continuing obligations The obligations in this Clause 35 are continuing.

36 Disclosure of Lender Details by Agent

36.1 Supply of Lender details to Borrower The Agent shall provide to the Borrower within seven Business Days of a request by the Borrower (but no more frequently than once per calendar month) a list (which may be in electronic form) setting out the names of the Lenders as at the date of that request, their respective Commitments, the address and fax number (and the department or officer, if any, for whose attention any communication is to be made) of each

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Lender for any communication to be made or document to be delivered under or in connection with the Finance Documents, the electronic mail address and/or any other information required to enable the sending and receipt of information by electronic mail or other electronic means to and by each Lender to whom any communication under or in connection with the Finance Documents may be made by that means and the account details of each Lender for any payment to be distributed by the Agent to that Lender under the Finance Documents.

36.2 Supply of Lender details at Borrower’s direction

36.2.1 The Agent shall, at the request of the Borrower, disclose the identity of the Lenders and the details of the Lenders’ Commitments to any:

(a) other Party or any other person if that disclosure is made to facilitate, in each case, a refinancing of the Financial Indebtedness arising under the Finance Documents or a material waiver or amendment of any term of any Finance Document; and

(b) Security Party.

36.2.2 Subject to Clause 36.2.3, the Borrower shall procure that the recipient of information disclosed pursuant to Clause 36.2.1 shall keep such information confidential and shall not disclose it to anyone and shall ensure that all such information is protected with security measures and a degree of care that would apply to the recipient’s own confidential information.

36.2.3 The recipient may disclose such information to any of its officers, directors, employees, professional advisers, auditors and partners as it shall consider appropriate if any such person is informed in writing of its confidential nature, except that there shall be no such requirement to so inform if that person is subject to professional obligations to maintain the confidentiality of the information or is otherwise bound by duties of confidentiality in relation to the information.

36.3 Supply of Lender details to other Lenders

36.3.1 If a Lender (a “Disclosing Lender”) indicates to the Agent that the Agent may do so, the Agent shall disclose that Lender’s name and Commitment to any other Lender that is, or becomes, a Disclosing Lender.

36.3.2 The Agent shall, if so directed by the Requisite Lenders, request each Lender to indicate to it whether it is a Disclosing Lender.

36.4 Lender enquiry If any Lender believes that any entity is, or may be, a Lender and:

36.4.1 that entity ceases to have an Investment Grade Rating; or

36.4.2 an Insolvency Event occurs in relation to that entity,

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the Agent shall, at the request of that Lender, indicate to that Lender the extent to which that entity has a Commitment.

36.5 Lender details definitions In this Clause 36:

“Investment Grade Rating” means, in relation to an entity, a rating for its long-term unsecured and non-credit-enhanced debt obligations of BBB- or higher by Standard & Poor’s Rating Services or Fitch Ratings Ltd or Baa3 or higher by Moody’s Investors Service Limited or a comparable rating from an internationally recognised credit rating agency.

“Requisite Lenders” means a Lender or Lenders whose Commitments aggregate 15 per cent (or more) of the Total Commitments (or if the Total Commitments have been reduced to zero, aggregated 15 per cent (or more) of the Total Commitments immediately prior to that reduction).

36.6 Consent to publication Subject to the Borrower’s written consent, such consent not to be unreasonably withheld, the Agent and/or the Arranger reserve the right, at their expense, to publish information in connection with their participation in and the agency and arrangements contained in the Finance Documents, in internal and external publications and for such purpose, the Agent or the Arranger may use the Borrower’s or the Collateral Owners’ logos or trademarks in connection with any such publication.

37 Counterparts

Each Finance Document may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of the Finance Document.

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Section 12 Governing Law and Enforcement

38 Governing Law

This Agreement and any non-contractual obligations arising out of or in connection with it are governed by English law.

39 Enforcement

39.1 Jurisdiction of English courts The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement (including a dispute relating to the existence, validity or termination of this Agreement or any non-contractual obligation arising out of or in connection with this Agreement) (a “Dispute”). Each Party agrees that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary.

This Clause 39.1 is for the benefit of the Finance Parties only. As a result, no Finance Party shall be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, any Finance Party may take concurrent proceedings in any number of jurisdictions.

39.2 Service of process

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

(a) irrevocably appoints Mr. John Georgiou, 42 Marble Drive, London, NW21XA, England (tel/fax: +44 208 361 2606) as its agent for service of process in relation to any proceedings before the English courts in connection with any Finance Document; and

(b) agrees that failure by a process agent to notify the Borrower of the process will not invalidate the proceedings concerned.

39.2.2 If any person appointed as an agent for service of process is unable for any reason to act as agent for service of process or terminates its appointment as agent for service of process, the Borrower must immediately (and in any event within five days of such event taking place) appoint another agent on terms acceptable to the Agent. Failing this, the Agent may appoint another agent for this purpose.

This Agreement has been entered into on the date stated at the beginning of this Agreement.

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Schedule 1

The Original Lenders

Name of Original Lender	Commitment	Treaty Passport scheme reference number and jurisdiction of residence
DNB BANK ASA, 8th Floor The Walbrook Building 25 Walbrook London EC4N 8AF, England	100%	DDTP NUMBER: 58/D/305668/DTTP England

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Schedule 2

Part I

Conditions Precedent

1 Security Parties

(a) Constitutional documents Copies of the constitutional documents of each Security Party together with such other evidence as the Agent may reasonably require that each Security Party is duly incorporated in its country of incorporation and remains in existence with power to enter into, and perform its obligations under, the Relevant Documents to which it is or is to become a party.

(b) Certificates of good standing A certificate of good standing in respect of each Security Party (if such a certificate can be obtained).

(c) Board resolutions A copy of a resolution of the board of directors of each Security Party:

(i) approving the terms of, and the transactions contemplated by, the Finance Documents to which it is a party and resolving that it execute those Finance Documents; and

(ii) authorising a specified person or persons to execute those Relevant Documents (and all documents and notices to be signed and/or dispatched under those documents) on its behalf.

(d) Copy passports A copy of the passport of each person authorised by the resolutions referred to in (c).

(e) Shareholder resolutions If required by law, a copy of a resolution signed by all the holders of the issued shares in each Security Party (other than the Borrower), approving the terms of, and the transactions contemplated by, the Relevant Documents to which that Security Party is a party.

(f) Officer’s certificates An original certificate of a duly authorised officer of each Security Party:

(i) certifying that each copy document relating to it specified in this Part I of Schedule 2 is correct, complete and in full force and effect;

(ii) setting out the names of the directors, officers and shareholders of that Security Party and the proportion of shares held by each shareholder; and

(iii) confirming that borrowing or guaranteeing or securing, as appropriate, the Loan would not cause any borrowing, guarantee, security or similar limit binding on that Security Party to be exceeded.

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(g) Evidence of registration Where such registration is required or permitted under the laws of the relevant jurisdiction, evidence that the names of the directors, officers and shareholders of each Security Party are duly registered in the companies registry or other registry in the country of incorporation of that Security Party.

(h) Powers of attorney The original notarially attested and legalised power of attorney of each of the Security Parties under which the Relevant Documents to which it is or is to become a party are to be executed or transactions undertaken by that Security Party.

2 Security and related documents

(a) Vessel documents Photocopies, certified as true, accurate and complete by a director or the secretary of the Borrower, of:

(i) the Building Contracts in form and substance acceptable to the Agent and its legal advisors;

(ii) such documents as the Agent may reasonably require to evidence the nomination of the relevant Collateral Owner as purchaser of each Newbuilding Vessel pursuant to the relevant Building Contract;

(iii) the Refund Guarantees in form and substance acceptable to the Agent and its legal advisors; and

(iv) any charterparty or other contract of employment of the Existing Vessels which will be in force on the Drawdown Date;

(v) the Management Agreements in respect of the Existing Vessels;

(vi) the Existing Vessels’ current Safety Construction, Safety Equipment, Safety Radio Oil Pollution Prevention and Load Line Certificates;

(viii) evidence of the Existing Vessel’s current Certificate of Financial Responsibility issued pursuant to the United States Oil Pollution Act 1990;

(ix) the Existing Vessels’ current SMC;

(x) the ISM Company’s current DOC;

(xi) the Existing Vessels’ current ISSC;

(xii) the Existing Vessels’ current IAPPC;

(xiii) the Existing Vessels’ current Tonnage Certificate;

in each case together with all addenda, amendments or supplements.

(b) Evidence of Collateral Owner’s title Certificate of ownership and encumbrance (or equivalent) issued by the Registrar of Ships (or equivalent

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official) of the Approved Flag confirming that 0 each Existing Vessel is permanently registered under that flag in the ownership of the relevant Collateral Owner, (b) each Mortgage has been registered with first priority against each Existing Vessel and (c) there are no further Encumbrances registered against any Existing Vessel.

(c) Evidence of insurance Evidence that the Existing Vessels are insured in the manner required by the Security Documents and that letters of undertaking will be issued in the manner required by the Security Documents, together with (if required by the Agent) the written approval of the Insurances by an insurance adviser appointed by the Agent.

(d) Confirmation of class A Certificate of Confirmation of Class for hull and machinery confirming that each Existing Vessel is classed with the highest class applicable to vessels of her type with Lloyd’s Register or such other classification society as may be acceptable to the Agent free of recommendations affecting class.

(e) Valuation Not later than 30 days prior to the date of this Agreement, one or more valuation(s) of each Existing Vessel addressed to the Agent from an Approved Shipbroker certifying the Market Value for each Exising Vessel, acceptable to the Agent.

(f) Security Documents The Security Documents, duly executed and, where applicable, registered, together with all other documents required by any of them, including, without limitation, all notices of assignment and/or charge and evidence that those notices will be duly acknowledged by the recipients.

(g) Mandates Such duly signed forms of mandate, and/or other evidence of the opening of the Earnings Accounts, as the Security Agent may require.

(h) No disputes The written confirmation of the Borrower that there is no dispute under any of the Relevant Documents as between the parties to any such document.

(i) Account Holder’s confirmation The written confirmation of the Account Holder that the relevant Earnings Accounts have been opened with the Account Holder and to its actual knowledge are free from Encumbrances other than as created by or pursuant to the Security Documents and rights of set off in favour of the Account Holder as account holder.

(j) Master Agreement The Master Agreement.

(k) Other Relevant Documents Copies of each of the Relevant Documents not otherwise comprised in the documents listed in this Part I of Schedule 2.

3 Legal opinions

The following legal opinions, each addressed to the Agent, the Security Agent, the Swap Provider and the Lenders and capable of being relied upon by any persons who become Lenders pursuant to the primary syndication of the Loan or confirmation satisfactory to the Agent that such opinions will be given:

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(a) a legal opinion of Stephenson Harwood LLP, legal advisers to the Agent as to English law substantially in the form distributed to the Lenders prior to signing this Agreement;

(b) a legal opinion of the following legal advisers to the Agent:

(i) Seward & Kissel LLP, as to Liberian law; and

(ii) Seward & Kissel LLP, as to Marshall Islands law;

(iii) Chrysses Demetriades & Co. Inc, as to Cypriot law;

(iv) Arias B. & Associates, as to Panamanian law; and

4 Other documents and evidence

(a) Drawdown Request A duly completed Drawdown Request.

(b) Process agent Evidence that any process agent referred to in Clause 39.2 (Service of process) and any process agent appointed under any other Finance Document has accepted its appointment.

(c) Other Authorisations A copy of any other Authorisation or other document, opinion or assurance which the Agent considers to be necessary (if it has notified the Borrower accordingly) in connection with the entry into and performance of the transactions contemplated by any Relevant Document or for the validity and enforceability of any Relevant Document.

(d) Financial statements A copy of the Original Financial Statements of the Borrower.

(e) Fees The Fee Letter and evidence that the fees, costs and expenses then due from the Borrower under Clause 11 (Fees) and Clause 16 (Costs and Expenses) have been paid or will be paid by the Drawdown Date.

(f) “Know your customer” documents Such documentation and other evidence as is reasonably requested by the Agent in order for the Lenders to comply with all necessary “know your customer” or similar identification procedures in relation to the transactions contemplated in the Finance Documents, including any specimen signatures required by Agent.

(g) Side Letter The side letter evidencing the Current Shareholders of the Borrower issued by the Borrower in favour of the Agent in such form as the Agent may require.

(h) Amount in Earnings Accounts Evidence that the amount of one hundred and fifty thousand dollars ($150,000) is credited to each Earnings Account.

(i) Evidence of prepayment of Existing Indebtedness Evidence in form and substance acceptable to the Agent that the Existing Indebtedness has been prepaid in full by the Collateral Owners, or will be prepaid on the first Drawdown Date from the proceeds of the first Drawing(s) and that any security securing the Existing Indebtedness has been released or cancelled.

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Part II

Conditions Subsequent

1 Letters of undertaking Letters of undertaking in respect of the Insurances as required by the Security Documents together with copies of the relevant policies or cover notes or entry certificates duly endorsed with the interest of the Finance Parties.

2 Acknowledgements of notices Acknowledgements of all notices of assignment and/or charge given pursuant to the Security Documents.

3 Legal opinions Such of the legal opinions specified in Part I of this Schedule 2 as have not already been provided to the Agent.

4 Companies Act registrations If applicable, evidence that the prescribed particulars of the Security Documents have been delivered to any relevant the Registry of Companies/Corporations within the statutory time limit.

5 Master’s receipt If applicable, the master’s receipt for the Mortgage.

6 Mortgagee’s Insurances fees Payment to the Agent of all fees in relation to inspections, valuations, legal fees and premiums for Mortgagee’s Insurances, once notified by the Agent to the Borrower.

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Part III

Delivery Conditions Precedent

1 Officer’s certificate A certificate signed by a duly authorised officer of each Security Party confirming that none of the documents and evidence delivered to the Agent pursuant to Clauses 4.1 (Initial conditions precedent) and 4.5 (Conditions subsequent) has been amended, modified or revoked in any way since its delivery to the Agent.

2 Security and related documents

(a) Vessel documents Photocopies, certified as true, accurate and complete by a director or the secretary of the Borrower, of:

(i) the builder’s certificate and/or bill of sale transferring title in the Newbuilding Vessel to the Collateral Owner free of all encumbrances, maritime liens or other debts;

(ii) the protocol of delivery and acceptance evidencing the unconditional physical delivery of the Newbuilding Vessel by the Builder to the Collateral Owner pursuant to the Building Contract;

(iii) the commercial invoice issued by the Builder in respect of the final contract price of the Newbuilding Vessel;

(iv) the declaration of warranty issued by the Builder to the Collateral Owner pursuant to the Building Contract;

(v) any charterparty or other contract of employment of the Newbuilding Vessel which will be in force on the Delivery Date;

(vi) the Management Agreements;

(vii) the Vessel’s current Safety Construction, Safety Equipment, Safety Radio and Load Line Certificates;

(viii) evidence of the Vessel’s current Certificate of Financial Responsibility issued pursuant to the United States Oil Pollution Act 1990;

(ix) the Vessel’s current SMC, or an application form submitted by the Borrower;

(x) the ISM Company’s current DOC;

(xi) the Vessel’s current ISSC, or an application form submitted by the Borrower;

(xii) the Vessel’s current IAPPC, or any application form submitted by the Borrower;

(xiii) the Vessel’s current Tonnage Certificate;

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in each case together with all addenda, amendments or supplements.

(b) Evidence of Collateral Owner’s title Evidence that any prior registration of the Newbuilding Vessel in the ownership of the Builder and any Encumbrance registered against that ownership have been cancelled (or confirmation from the Builder that there was no such prior registration) and evidence that on the Delivery Date (i) the Newbuilding Vessel will be at least provisionally registered under an Approved Flag in the ownership of the Collateral Owner and (ii) the Mortgage will be capable of being registered against the Newbuilding Vessel with first priority.

(c) Evidence of insurance Evidence that the Newbuilding Vessel is insured in the manner required by the Security Documents and that letters of undertaking will be issued in the manner required by the Security Documents, together with (if required by the Agent) the written approval of the Insurances by an insurance adviser appointed by the Agent.

(d) Confirmation of class An interim Certificate of Confirmation of Class for hull and machinery confirming that the Newbuilding Vessel is classed with the highest class applicable to Newbuilding Vessels of her type with Lloyd’s Register or such other classification society as may be acceptable to the Agent.

(e) Survey report If requested by the Agent, a report by a surveyor [instructed by the relevant Collateral Owner] and acceptable to the Agent to inspect the Newbuilding Vessel confirming to the Agent that the condition of the Newbuilding Vessel is in all respects acceptable to the Agent.

(f) Valuation Not later than 30 days prior to the date of this Agreement, one or more valuation(s) of the Newbuilding Vessel addressed to the Agent from an Approved Shipbroker certifying the Market Value for the Newbuilding Vessel, acceptable to the Agent.

(g) Security Documents The Mortgage, the Assignments, the Account Security Deed, the Managers’ Undertakings and any other Credit Support Documents, together with all other documents required by any of them, including, without limitation, all notices of assignment and/or charge and evidence that those notices will be duly acknowledged by the recipients.

(h) Mandates Such duly signed forms of mandate, and/or other evidence of the opening of the Earnings Accounts, as the Security Agent may require.

(i) Account Holder’s confirmation The written confirmation of the Account Holder that the relevant Earnings Accounts have been opened with the Account Holder and to its actual knowledge are free from Encumbrances other than as created by or pursuant to the Security Documents and rights of set off in favour of the Account Holder as account holder.

(j) Other Relevant Documents Copies of each of the Relevant Documents not otherwise comprised in the documents listed in Parts I to III of this Schedule 2

Page 127

3 Legal opinions

The following legal opinions, each addressed to the Agent, the Security Agent, the Swap Provider and the Lenders and capable of being relied upon by any persons who become Lenders pursuant to the primary syndication of the Loan or confirmation satisfactory to the Agent that such opinions will be given:

(k) a legal opinion of Stephenson Harwood LLP, legal advisers to the Agent as to English law substantially in the form distributed to the Lenders prior to signing this Agreement;

(l) a legal opinion of the following legal advisers to the Agent:

(i) Seward & Kissel LLP, as to Liberian law; and

(ii) Seward & Kissel LLP, as to Marshall Islands law;

(iii) Chrysses Demetriades & Co. Inc, as to Cypriot law;

(iv) Arias B. & Associates, as to Panamanian law; and

4 Other documents and evidence

(a) Process agent Evidence that any process agent referred to in Clause 39.2 (Service of process) and any process agent appointed under any other Finance Document has accepted its appointment.

(b) Other Authorisations A copy of any other Authorisation or other document, opinion or assurance which the Agent considers to be necessary or desirable (if it has notified the Borrower accordingly) in connection with the entry into and performance of the transactions contemplated by any Relevant Document or for the validity and enforceability of any Relevant Document.

(c) Fees The Fee Letter and evidence that the fees, costs and expenses then due from the Borrower under Clause 11 (Fees) and Clause 16 (Costs and Expenses) have been paid or will be paid by the Drawdown Date.

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Part IV

Delivery Conditions Subsequent

1 Evidence of Collateral Owner’s title Certificate of ownership and encumbrance (or equivalent) issued by the Registrar of Ships (or equivalent official) of an Approved Flag confirming that (a) the Vessel is permanently registered under that flag in the ownership of the Collateral Owner, (b) the Mortgage has been registered with first priority against the Vessel and (c) there are no further Encumbrances registered against the Vessel.

2 Letters of undertaking Letters of undertaking in respect of the Insurances as required by the Security Documents together with copies of the relevant policies or cover notes or entry certificates duly endorsed with the interest of the Finance Parties.

3 Acknowledgements of notices Acknowledgements of all notices of assignment and/or charge given pursuant to any Security Documents received by the Agent pursuant to Part III of this Schedule 2.

4 Legal opinions Such of the legal opinions specified in Part III of this Schedule 2 as have not already been provided to the Agent.

5 Companies Act registrations If applicable, evidence that the prescribed particulars of any Security Documents received by the Agent pursuant to Part III of this Schedule 2 have been delivered to any relevant Registry of Companies/Corporations within the statutory time limit.

6 Master’s receipt If applicable, the master’s receipt for the Mortgage.

7 Mortgagee’s Insurances fees Payment to the Agent of all fees in relation to inspections, valuations, legal fees and premiums for Mortgagee’s Insurances, once notified by the Agent to the Borrower.

8 Safety Management Certificate The Vessel’s current SMC.

9 International Ship Security Certificate The Vessel’s current ISSC.

10 International Air Pollution Prevention Certificate The Vessel’s current IAPPC.

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Schedule 3

Drawdown Request

From: SAFE BULKERS INC.

To: DNB BANK ASA

Dated:

Dear Sirs

SAFE BULKERS INC. – USD210,000,000 Loan Agreement dated [                   ] 2014 (the “Agreement”)

1 We refer to the Agreement. This is a Drawdown Request. Terms defined in the Agreement have the same meaning in this Drawdown Request unless given a different meaning in this Drawdown Request.

2 We wish to make a Drawing on the following terms:

Proposed Drawdown Date:	[               ] (or, if that is not a Business Day, the next Business Day)
Amount:	[               ]
Interest Period:	[               ]

3 We confirm that each condition specified in Clause 4.2 (Further conditions precedent) is satisfied on the date of this Drawdown Request.

4 The proceeds of the Drawing should be credited to [account] [towards repayment in full of the [             .].

5 This Drawdown Request is irrevocable.

Yours faithfully

authorised signatory for 

SAFE BULKERS INC.

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Schedule 4

Form of Transfer Certificate

To: [                   ] as Agent

From: [The Existing Lender] (the “Existing Lender”) and [The New Lender] (the “New Lender”)

Dated:

SAFE BULKERS INC. – [                   ] Loan Agreement dated [                   ] (the “Loan Agreement”)

1 We refer to the Loan Agreement. This agreement (the “Agreement”) shall take effect as a Transfer Certificate for the purposes of the Loan Agreement. Terms defined in the Loan Agreement have the same meaning in this Agreement unless given a different meaning in this Agreement.

2 We refer to Clause 23.5 (Procedure for transfer) of the Loan Agreement:

(a) The Existing Lender and the New Lender agree to the Existing Lender transferring to the New Lender by novation and in accordance with Clause 23.5 (Procedure for transfer) all of the Existing Lender’s rights and obligations under the Loan Agreement and the other Finance Documents which relate to that portion of the Existing Lender’s Commitment(s) and participations in the Loan under the Loan Agreement as specified in the Schedule.

(b) The proposed Transfer Date is [                        ].

(c) The Facility Office and address, fax number and attention details for notices of the New Lender for the purposes of Clause 30.2 (Addresses) are set out in the Schedule.

3 The New Lender expressly acknowledges the limitations on the Existing Lender’s obligations set out in Clause 23.4.1(c) (Limitation of responsibility of Existing Lenders).

4 The New Lender confirms, for the benefit of the Agent and without liability to any Security Party, that it is:

(a) [a Qualifying Lender other than a Treaty Lender;]

(b) [a Treaty Lender;]

(c) [not a Qualifying Lender].

[5] [The New Lender confirms that the person beneficially entitled to interest payable to that Lender in respect of an advance under a Finance Document is either:

(a) a company resident in the United Kingdom for United Kingdom tax purposes;

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(b) a partnership each member of which is:

(i) a company so resident in the United Kingdom; or

(ii) a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account in computing its chargeable profits (within the meaning of section 19 of the CTA) the whole of any share of interest payable in respect of that advance that falls to it by reason of Part 17 of the CTA; or

(c) a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account interest payable in respect of that advance in computing the chargeable profits (within the meaning of section 19 of the CTA) of that company.]

[5] [The New Lender confirms that it holds a passport under the HMRC DT Treaty Passport scheme (reference number [                          ]) and is tax resident in [                    ], so that interest payable to it by borrowers is generally subject to full exemption from UK withholding tax, and requests that the Agent notify the Borrower that it wishes that scheme to apply to the Agreement.]

[6] This Agreement may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Agreement.

[7] This Agreement and any non-contractual obligations arising out of or in connection with it are governed by English law.

[8] This Agreement has been entered into on the date stated at the beginning of this Agreement.

Note: The execution of this Transfer Certificate may not transfer a proportionate share of the Existing Lender’s interest in any Encumbrance created or expressed to be created or evidenced by the Security Documents in all jurisdictions. It is the responsibility of the New Lender to ascertain whether any other documents or other formalities are required to perfect a transfer of such a share in any jurisdiction and, if so, to arrange for execution of those documents and completion of those formalities.

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The Schedule

Commitment/rights and obligations to be transferred

[insert relevant details]

[Facility Office address, fax number and attention details for notices and account details for payments,]

[Existing Lender]	[New Lender]
By:	By:

This Agreement is accepted as a Transfer Certificate for the purposes of the Loan Agreement by the Agent and the Transfer Date is confirmed as [                           ].

DNB BANK ASA

By:

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Schedule 5

Form of Assignment Agreement

To: [         ] as Agent and [         ] and [         ] as Borrower, for and on behalf of each Security Party

From: [the Existing Lender] (the “Existing Lender”) and [the New Lender] (the “New Lender”)

Dated:

SAFE BULKERS INC. - [      ] Loan Agreement dated [      ] (the “Loan Agreement”)

1 We refer to the Loan Agreement. This is an Assignment Agreement. This agreement (the “Agreement”) shall take effect as an Assignment Agreement for the purpose of the Loan Agreement. Terms defined in the Loan Agreement have the same meaning in this Agreement unless given a different meaning in this Agreement.

2 We refer to Clause 23.6 (Procedure for assignment) of the Loan Agreement:

(a) The Existing Lender assigns absolutely to the New Lender all the rights of the Existing Lender under the Loan Agreement, the other Finance Documents and in respect of any Encumbrance created or expressed to be created or evidenced by the Security Documents which correspond to that portion of the Existing Lender’s Commitment(s) and participations in the Loan under the Loan Agreement as specified in the Schedule.

(b) The Existing Lender is released from all the obligations of the Existing Lender which correspond to that portion of the Existing Lender’s Commitment(s) and participations in the Loan under the Loan Agreement specified in the Schedule.

(c) The New Lender becomes a Party as a Lender and is bound by obligations equivalent to those from which the Existing Lender is released under paragraph (b).

3 The proposed Transfer Date is [       ].

4 On the Transfer Date the New Lender becomes:

(a) Party to the relevant Finance Documents as a Lender.

5 The Facility Office and address, fax number and attention details for notices of the New Lender for the purposes of Clause 30.2 (Addresses) are set out in the Schedule.

6 The New Lender expressly acknowledges the limitations on the Existing Lender’s obligations set out in Clause 23.4.3 (Limitation of responsibility of Existing Lenders).

7 The New Lender confirms, for the benefit of the Agent and without liability to any Security Party, that it is:

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(a) [a Qualifying Lender (other than a Treaty Lender);]

(b) [a Treaty Lender;]

(c) [not a Qualifying Lender].

8 [The New Lender confirms that the person beneficially entitled to interest payable to that Lender in respect of an advance under a Finance Document is either:

(a) a company resident in the United Kingdom for United Kingdom tax purposes;

(b) a partnership each member of which is:

(xiv) a company so resident in the United Kingdom; or

(xv) a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account in computing its chargeable profits (within the meaning of section 19 of the CTA) the whole of any share of interest payable in respect of that advance that falls to it by reason of Part 17 of the CTA; or

(c) a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account interest payable in respect of that advance in computing the chargeable profits (within the meaning of section 19 of the CTA) of that company.]

9 [The New Lender confirms that it holds a passport under the HMRC DT Treaty Passport scheme (reference number [    ]) and is tax resident in [     ], so that interest payable to it by borrowers is generally subject to full exemption from UK withholding tax and hereby notifies the Borrower that it wishes that scheme to apply to the Loan Agreement.]

10 This Agreement acts as notice to the Agent (on behalf of each Finance Party) and, upon delivery in accordance with Clause 23.7 (Copy of Transfer Certificate or Assignment Agreement to Borrower), to the Borrower (on behalf of each Security Party) of the assignment referred to in this Agreement.

11 This Agreement may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Agreement.

12 This Agreement [and any non-contractual obligations arising out of or in connection with it] [is/are] governed by English law.

13 This Agreement has been entered into on the date stated at the beginning of this Agreement.

Note: The execution of this Assignment Agreement may not transfer a proportionate share of the Existing Lender’s interest in any Encumbrance created or expressed to be created or evidenced by the Security Documents in all jurisdictions. It is the responsibility of the New Lender to

Page 135

ascertain whether any other documents or other formalities are required to perfect a transfer of such a share in any jurisdiction and, if so, to arrange for execution of those documents and completion of those formalities.

Page 136

The Schedule

Commitment/rights and obligations to be transferred by assignment, release and accession

[insert relevant details]

[Facility office address, fax number and attention details for notices and account details for payments]

[Existing Lender]	[New Lender]
By:	By:

This Agreement is accepted as an Assignment Agreement for the purposes of the Loan Agreement by the Agent and the Transfer Date is confirmed as [                    ].

Signature of this Agreement by the Agent constitutes confirmation by the Agent of receipt of notice of the assignment referred to in this Agreement, which notice the Agent receives on behalf of each Finance Party.

DNB BANK ASA

By:

Page 137

Schedule 6

Form of Compliance Certificate

To: DNB BANK ASA

From: SAFE BULKERS INC.

Dated:

Dear Sirs

SAFE BULKERS INC. – [                         ] Loan Agreement dated [                     ] (the “Agreement”)

1 We refer to the Agreement. This is a Compliance Certificate. Terms defined in the Agreement have the same meaning when used in this Compliance Certificate unless given a different meaning in this Compliance Certificate.

2 We confirm that:

Agreement Clause	Covenant determination/Calculation compliance		(min/max amount)
13.2.25 (a)	Consolidated Group Leverage
	Consolidated Total Liabilities	USD[            ]
	÷ Consolidated Total Assets	USD[            ]
	= Consolidated Group Leverage	[            %]	[minimum 85%]
13.2.25 (b)	EBITDA to Interest Expense ratio
	EBITDA	USD[            ]
	÷ Interest Expense	USD[            ]
	= EBITDA to Interest Expense ratio	[             ]	[maximum 2:1]
13.2.25 (c)	Net Worth
	Consolidated Total Assets	USD[            ]
	(minus) Consolidated Total Liabilities	USD[            ]
	= Net Worth	[            %]	[min. USD150,000,000]

3

4 [We confirm that no Default is continuing.]^*

Signed:

^* If this statement cannot be made, the certificate should identify any Default that is continuing and the steps, if any, being taken to remedy it.

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Director	Director
of	of
SAFE BULKERS INC.	SAFE BULKERS INC.

[insert applicable certification language]^**

[for and on behalf of

[name of auditors of the Borrower]^***                                     ]

^** To be agreed with the Borrower’s auditors and the Lenders prior to signing the Agreement.

^*** Only applicable if the Compliance Certificate accompanies the audited financial statements and is to be signed by the auditors. To be agreed with the Borrower’s auditors prior to signing the Agreement.

Page 139

Schedule 7

Reduction	Reduction instalments	Maximum Loan Amount
Dates	$	$
-	-	178,000,000
March 30, 2015	8,682,927	185,317.073
-	-	201,317,073
September 30, 2015	9,153,515	192,163,558
March 30, 2016	9,624,103	182,539,455
September 30, 2016	9,624,103	172,915,352
March 30, 2017	9,624,103	163,291,248
September 30, 2017	9,624,103	153,667,145
March 30, 2018	9,624,103	144,043,042
September 30, 2018	9,624,103	134,418,938
March 30, 2019	9,624,103	124,794,835
September 30, 2019	9,624,103	115,170,732
March 30, 2020	9,624,103	105,546,628
September 30, 2020	9,624,103	95,922,525
September 30, 2020	95,922,525	0

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Signatures

The Borrower
SAFE BULKERS INC.	)
	)
By: Konstantinos Adamopoulos	)
	)
Address: c/o Safety Management	)	/s/ Konstantinos Adamopoulos
Overseas S.A., 32 Avenue Karamanli	)
GR- 166 05 Voula, Athens, Greece	)
Fax no.: +30 210 895 6900	)
Department/Officer: Konstantinos	)
Adamopoulos	)
The Arranger
DNB BANK ASA	)
	)
By: N. V. Bowen-Morris	)
	)
Address: 8th Floor, The Walbrook Building	)	/s/ N. V. Bowen-Morris
25 Walbrook, London EC4N 8AF, England	)
Fax no.: +44 207 626 5956	)
Department/Officer: Shipping,	)
Offshore & Logistics	)
The Agent
DNB BANK ASA	)
	)
By: N. V. Bowen-Morris	)
	)
Address: 8th Floor, The Walbrook Building	)	/s/ N. V. Bowen-Morris
25 Walbrook, London EC4N 8AF, England	)
Fax no.: +44 207 626 5956	)
Department/Officer: Shipping,	)
Offshore & Logistics	)

Page 141

The Security Agent
DNB BANK ASA	)
	)
By: N. V. Bowen-Morris	)
	)
Address: 8th Floor, The Walbrook Building	)	/s/ N. V. Bowen-Morris
25 Walbrook, London EC4N 8AF, England	)
Fax no.: +44 207 626 5956	)
Department/Officer: Shipping,	)
Offshore & Logistics	)
The Original Lenders
DNB BANK ASA	)
	)
By: N. V. Bowen-Morris	)
	)
Address: 8th Floor, The Walbrook Building	)	/s/ N. V. Bowen-Morris
25 Walbrook, London EC4N 8AF, England	)
Fax no.: +44 207 626 5956	)
Department/Officer: Shipping,	)
Offshore & Logistics	)
The Swap Provider
DNB BANK ASA	)
	)
By: N. V. Bowen-Morris	)
	)
Address: 8th Floor, The Walbrook Building	)	/s/ N. V. Bowen-Morris
25 Walbrook, London EC4N 8AF, England	)
Fax no.: +44 207 626 5956	)
Department/Officer: Shipping,	)
Offshore & Logistics	)

Page 142

EX-8.1

Exhibit 8.1

SUBSIDIARIES OF SAFE BULKERS, INC.

The following companies are subsidiaries of Safe Bulkers, Inc. as of February 24, 2015.

Subsidiary	Jurisdiction of Incorporation
Avstes Shipping Corporation	Liberia
Eniadefhi Shipping Corporation	Liberia
Eniaprohi Shipping Corporation	Liberia
Eptaprohi Shipping Corporation	Liberia
Glovertwo Shipping Corporation	Marshall Islands
Gloverthree Shipping Corporation	Marshall Islands
Gloverfour Shipping Corporation	Marshall Islands
Gloverfive Shipping Corporation	Marshall Islands
Gloversix Shipping Corporation	Marshall Islands
Gloverseven Shipping Corporation	Marshall Islands
Kerasies Shipping Corporation	Liberia
Marathassa Shipping Corporation	Liberia
Marindou Shipping Corporation	Liberia
Marinouki Shipping Corporation	Liberia
Maxdeka Shipping Corporation	Marshall Islands
Maxdekatria Shipping Corporation	Liberia
Maxdodeka Shipping Corporation	Liberia
Maxeikosi Shipping Corporation	Liberia
Maxeikosiena Shipping Corporation	Liberia
Maxeikositria Shipping Corporation	Liberia
Maxeikositessera Shipping Corporation	Liberia
Maxeikosipente Shipping Corporation	Liberia
Maxeikosiexi Shipping Corporation	Liberia
Maxeikosiepta Shipping Corporation	Liberia
Maxenteka Shipping Corporation	Marshall Islands
Maxpente Shipping Corporation	Liberia
Maxtessera Shipping Corporation	Marshall Islands
Pelea Shipping Ltd.	Liberia
Pemer Shipping Ltd.	Liberia
Petra Shipping Ltd.	Liberia
Shikoku Friendship Shipping Company	Marshall Islands
Soffive Shipping Corporation	Liberia
Staloudi Shipping Corporation	Liberia
Shikokutessera Shipping Inc	Marshall Islands
Shikokupente Shipping Inc	Marshall Islands
Shikokuexi Shipping Inc	Marshall Islands
Shikokuepta Shipping Inc.	Marshall Islands
Shikokuokto Shipping Inc	Marshall Islands
Vassone Shipping Corporation	Marshall Islands
Vasstwo Shipping Corporation	Liberia
Youngone Shipping Inc	Marshall Islands
Youngtwo Shipping Inc	Marshall Islands
Kyotofriendo One Shipping Inc	Marshall Islands
Kyotofriendo Two Shipping Inc	Marshall Islands
Shikokuennia Shipping Inc	Marshall Islands

EX-12.1

Exhibit 12.1

CERTIFICATION

I, POLYS HAJIOANNOU, certify that:

1. I have reviewed this annual report on Form 20-F of Safe Bulkers, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The Company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15(d)-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

a.          Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.          Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.          Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and

d.          Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5. The Company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):

a.          All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

b.          Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

Date: March 10, 2015	/s/ POLYS HAJIOANNOU
	Polys Hajioannou
	Chairman and Chief Executive Officer
	(Principal Executive Officer)

EX-12.2

Exhibit 12.2

CERTIFICATION

I, KONSTANTINOS ADAMOPOULOS, certify that:

2. I have reviewed this annual report on Form 20-F of Safe Bulkers, Inc.;

3. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

4. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

5. The Company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15(d)-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and

d. Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

6. The Company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

Date: March 10, 2015	/s/ KONSTANTINOS ADAMOPOULOS
	Konstantinos Adamopoulos
	Chief Financial Officer and Director

EX-13.1

Exhibit 13.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 20-F of Safe Bulkers, Inc. (the “Company”) for the fiscal year ending December 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officer of the Company certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of, and for, the periods presented in the report.

The foregoing certification is provided solely for purposes of complying with the provisions of Section 906 of the Sarbanes-Oxley Act of 2002 and is not intended to be used or relied upon for any other purpose.

Date: March 10, 2015	/s/ POLYS HAJIOANNOU
	Polys Hajioannou
	Chairman and Chief Executive Officer
	(Principal Executive Officer)

EX-13.2

Exhibit 13.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 20-F of Safe Bulkers, Inc. (the “Company”) for the fiscal year ending December 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officer of the Company certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of, and for, the periods presented in the report.

The foregoing certification is provided solely for purposes of complying with the provisions of Section 906 of the Sarbanes-Oxley Act of 2002 and is not intended to be used or relied upon for any other purpose.

Date: March 10, 2015	/s/ KONSTANTINOS ADAMOPOULOS
	Konstantinos Adamopoulos
	Chief Financial Officer and Director

EX-15.1

Exhibit 15.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement No. 333-186977 on Form F-3 of our reports dated March 10, 2015, relating to the consolidated financial statements of Safe Bulkers, Inc. and its subsidiaries (the “Company”), and the effectiveness of the Company’s internal control over financial reporting, appearing in this Annual Report on Form 20-F of the Company for the year ended December 31, 2014.

/s/ Deloitte Hadjipavlou, Sofianos & Cambanis S.A.

Athens, Greece

March 10, 2015

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Bank Debt (Tables)

12 Months Ended

Dec. 31, 2014

Debt Disclosure

Bank Debt Borrowings Schedule

Bank debt is comprised of the following secured borrowings:
			December 31,
Borrower	Commencement	Maturity	2013		2014
Maxeikosi	August 2012	August 2014	$	16,668	$	-
Maxpente	December 2013	July 2014		30,838		-
Maxdodeka	December 2012	November 2014		-		-
Eniaprohi	December 2012	November 2014		24,000		-
Eniadefhi	December 2012	November 2014		33,750		-
Avstes	December 2012	November 2014		22,700		-
Marindou	December 2012	November 2014		28,400		-
Pelea	December 2012	November 2014		32,298		-
Vassone	January 2014	January 2017		-		2,437
Marathassa	December 2013	February 2017		10,208		8,415
Marinouki	December 2013	March 2018		20,963		19,035
Glovertwo	October 2013	December 2018		16,000		13,666
Petra	January 2007	January 2019		22,220		20,571
Pemer	March 2007	March 2019		22,218		20,568
Eptaprohi	April 2012	April 2019		-		-
Shikokupente	July 2014	June 2019		-		13,500
Maxtessera	July 2014	June 2019		-		-
Maxeikosiena	October 2012	October 2019		-		-
Soffive	December 2013	November 2019		27,840		25,200
Kerasies	December 2013	December 2019		24,744		22,396
Maxeikosi	December 2014	December 2019		-		9,100
Maxpente	December 2014	December 2019		-		20,000
Gloverthree	December 2014	December 2019		-		10,900
Shikokutessera	December 2014	December 2019		-		10,900
Maxdekatria	March 2012	March 2020		20,400		18,400
Safe Bulkers	November 2014	September 2020		-		118,527
Maxdeka	August 2011	December 2022		30,678		27,270
Staloudi	July 2008	July 2023		24,520		18,520
Shikoku	October 2011	August 2023		37,333		33,600
Maxeikositessera	September 2012	February 2024		31,017		28,063
Maxenteka	April 2012	April 2024		31,500		28,500
Total			$	508,295	$	469,568
Current portion			$	35,185	$	17,121
Long-term portion			$	473,110	$	452,447

Bank Debt Maturities Schedule

To December 31,
2015	.	$	17,121
2016	.		23,850
2017	.		43,213
2018	.		71,597
2019	.		146,744
2020	and thereafter		167,043
Total	..	$	469,568

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Accounts Receivable, detail (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Receivables
Trade receivables	$ 4,530	$ 4,572
Other Receivables	0	31,800
Total	$ 4,530	$ 36,372

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Unearned Revenue/ Accrued revenue (Tables)

12 Months Ended

Dec. 31, 2014

Deferred Received In Advance And Unearned Revenue

Unearned Revenue And Cash Received In Advance

	December 31,
	2013		2014
Unearned Revenue
Cash received in advance of service provided – Current liability	$	2,966	$	3,265
Deferred revenue resulting from varying charter rates
Current liability		10,140		334
Non-current liability		196		-
Total Unearned Revenue	$	13,302	$	3,599
Accrued Revenue
Resulting from revenue earned prior to cash being received – Current asset	$	-	$	212
Resulting from varying charter rates –Non Current asset		-		452
Total Accrued Revenue	$	-	$	664

XML

Commitments and Contingencies, textual1 (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014
Credit facility June 2014 to finance part of the purchase prices of Hull 1148 and Hull 1686
Line of Credit Facility [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 32,000
Line Of Credit Facility Repayment Period	7 years
Line of Credit Facility, Frequency of Payment and Payment Terms	in 14 semi-annual consecutive installments commencing six months after drawdown and a balloon payment payable with the final installment
Line Of Credit Facility Duration First Required Payment	commencing six months after drawdown
Credit facility June 2014 to finance part of the purchase prices of Hull 1148 and Hull 1686 | Term loan tranche
Line of Credit Facility [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	16,000
Credit facility June 2014 to finance part of the purchase prices of Hull 1148 and Hull 1686 | Reducing revolving tranche
Line of Credit Facility [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	16,000
Credit facility June 2014 to finance part of the purchase prices of Hull 828, Hull 835 and Hull 1718
Line of Credit Facility [Line Items]
Line Of Credit Facility Repayment Period	5 years
Line of Credit Facility, Frequency of Payment and Payment Terms	in 10 semi-annual consecutive installments commencing six months after drawdown and a balloon payment payable with the final installment
Line Of Credit Facility Duration First Required Payment	commencing six months after drawdown
Credit facility June 2014 to finance part of the purchase prices of Hull 828, Hull 835 and Hull 1718 | Reducing revolving tranche
Line of Credit Facility [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	60,000
Credit facility July 2014 to finance part of the purchase prices of Hull 1685, Hull 1146, Hull 1551 and Hull 1552
Line of Credit Facility [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	80,000
Line Of Credit Facility Repayment Period	5 years
Line of Credit Facility, Frequency of Payment and Payment Terms	in 10 semi-annual consecutive installments commencing six months after drawdown and a balloon payment payable with the final installment
Line Of Credit Facility Duration First Required Payment	commencing six months after drawdown
Credit facility July 2014 to finance part of the purchase prices of Hull 1685, Hull 1146, Hull 1551 and Hull 1552 | Term loan tranche
Line of Credit Facility [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	40,000
Credit facility July 2014 to finance part of the purchase prices of Hull 1685, Hull 1146, Hull 1551 and Hull 1552 | Reducing revolving tranche
Line of Credit Facility [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	40,000
Term loan November 2014 to finance part of the purchase price of Hull 1689
Line of Credit Facility [Line Items]
Line Of Credit Facility Repayment Period	7 years
Line of Credit Facility, Frequency of Payment and Payment Terms	in 14 semi-annual consecutive installments commencing six months after drawdown and a balloon payment payable with the final installment
Line Of Credit Facility Duration First Required Payment	commencing six months after drawdown
Term loan November 2014 to finance part of the purchase price of Hull 1689 | Term loan tranche
Line of Credit Facility [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 16,000

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Accounts Receivable, textual (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2014
Contract Cancellation [Line Items]
Other Receivables	$ 31,800	$ 0
Contract for Hull No J0131
Contract Cancellation [Line Items]
Other Receivables	31,800
Installments Paid For Vessel Consruction		31,800
Accrued Interest Earned Related To Asset Puchase Cancellations		4,520
Capitalized expense	887
Legal expense	$ 78
Interest rate percentage on advances paid		5.00%

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Fair Value of Financial Instruments and Derivatives Instuments, detail 4 (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013
Derivative [Line Items]
Notional Amount of Derivatives	$ 263,811		$ 382,232
Eniadefhi | Finished Interest Rate Swap
Derivative [Line Items]
Derivative, Inception Date	Apr. 01, 2009
Derivative, Maturity Date	Feb. 12, 2014
Derivative, Fixed Interest Rate	3.35%	[1]
Notional Amount of Derivatives	0		34,875
Eniaprohi | Finished Interest Rate Swap
Derivative [Line Items]
Derivative, Inception Date	Nov. 14, 2011
Derivative, Maturity Date	Nov. 13, 2014
Derivative, Fixed Interest Rate	1.40%	[2]
Notional Amount of Derivatives	0		33,328
Soffive | Finished Interest Rate Swap
Derivative [Line Items]
Derivative, Inception Date	Nov. 20, 2011
Derivative, Maturity Date	Nov. 20, 2014
Derivative, Fixed Interest Rate	1.35%	[2]
Notional Amount of Derivatives	0		32,400
Staloudi | Current Interest Rate Swap
Derivative [Line Items]
Derivative, Inception Date	Jan. 09, 2012
Derivative, Maturity Date	Jan. 07, 2015
Derivative, Fixed Interest Rate	1.45%	[2]
Notional Amount of Derivatives	34,760		38,400
Marathassa | Current Interest Rate Swap
Derivative [Line Items]
Derivative, Inception Date	Nov. 23, 2012
Derivative, Maturity Date	Nov. 21, 2015
Derivative, Fixed Interest Rate	1.95%	[2]
Notional Amount of Derivatives	11,675		13,305
Marathassa | Novated Interest Rate Swaps
Derivative [Line Items]
Derivative, Inception Date	Jan. 31, 2011
Derivative, Maturity Date	Jan. 31, 2015
Derivative, Fixed Interest Rate	1.22%	[2],[3]
Notional Amount of Derivatives	31,400		33,900
Kerasies | Current Interest Rate Swap
Derivative [Line Items]
Derivative, Inception Date	Dec. 14, 2010
Derivative, Maturity Date	Dec. 14, 2015
Derivative, Fixed Interest Rate	1.65%	[2]
Notional Amount of Derivatives	26,664		28,798
Pelea | Current Interest Rate Swap
Derivative [Line Items]
Derivative, Inception Date	Dec. 15, 2011
Derivative, Maturity Date	Dec. 14, 2016
Derivative, Fixed Interest Rate	2.05%	[2]
Notional Amount of Derivatives	30,542		32,962
Maxdekatria | Current Interest Rate Swap
Derivative [Line Items]
Derivative, Inception Date	Sep. 28, 2012
Derivative, Maturity Date	Sep. 28, 2017
Derivative, Fixed Interest Rate	0.90%	[2]
Notional Amount of Derivatives	20,000		20,800
Marindou | Current Interest Rate Swap
Derivative [Line Items]
Derivative, Inception Date	Jan. 14, 2013
Derivative, Maturity Date	Jan. 16, 2018
Derivative, Fixed Interest Rate	1.60%	[2]
Notional Amount of Derivatives	27,427		28,500
Petra | Current Interest Rate Swap
Derivative [Line Items]
Derivative, Inception Date	Jan. 18, 2013
Derivative, Maturity Date	Jan. 18, 2018
Derivative, Fixed Interest Rate	0.98%	[2]
Notional Amount of Derivatives	14,000		14,000
Marinouki | Current Interest Rate Swap
Derivative [Line Items]
Derivative, Inception Date	Mar. 05, 2013
Derivative, Maturity Date	Mar. 05, 2018
Derivative, Fixed Interest Rate	1.48%	[2]
Notional Amount of Derivatives	22,543		24,297
Pemer | Current Interest Rate Swap
Derivative [Line Items]
Derivative, Inception Date	Jun. 07, 2013
Derivative, Maturity Date	Mar. 07, 2018
Derivative, Fixed Interest Rate	0.9475%	[2]
Notional Amount of Derivatives	14,000		14,000
Avstes | Current Interest Rate Swap
Derivative [Line Items]
Derivative, Inception Date	Jul. 18, 2013
Derivative, Maturity Date	Apr. 18, 2018
Derivative, Fixed Interest Rate	1.35%	[2]
Notional Amount of Derivatives	14,000		14,000
Shikoku | Current Interest Rate Swap
Derivative [Line Items]
Derivative, Inception Date	Aug. 28, 2013
Derivative, Maturity Date	Aug. 28, 2018
Derivative, Fixed Interest Rate	1.25%	[2]
Notional Amount of Derivatives	$ 16,800		$ 18,667

[1] Under these swap transactions, the bank effects semi-annual floating-rate payments to the Company for the relevant amount based on the six-month USD LIBOR, and the Company effects semi-annual payments to the bank on the relevant amount at the respective fixed rates.

[2] Under these swap transactions, the bank effects quarterly floating-rate payments to the Company for the relevant amount based on the three-month U.S. USD LIBOR, and the Company effects quarterly payments to the bank on the relevant amount at the respective fixed rates.

[3] The transaction was novated from Maxpente to Marathassa in August 2014.

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Future Minimum Time Charter Revenue (Tables)

12 Months Ended

Dec. 31, 2014

Future Minimum Time Charter Revenue

Future Minimum Time Charter Revenue

December 31,
2015	$	50,471
2016		30,929
2017		31,744
2018		31,152
2019		31,167
Thereafter		164,024
Total	$	339,487

XML

General Information (Tables)

12 Months Ended

Dec. 31, 2014

General Information

Schedule of Subsidiaries

Subsidiary	Vessel Name	Type	Built
Maxeikosiepta Shipping Corporation (“Maxeikosiepta”)(1)	Paraskevi	Panamax	January 2003
Marindou Shipping Corporation (“Marindou”)(1)	Maria	Panamax	April 2003
Maxeikosiexi Shipping Corporation (“Maxeikosiexi”)(1)	Koulitsa	Panamax	April 2003
Avstes Shipping Corporation (“Avstes”)(1)	Vassos	Panamax	February 2004
Kerasies Shipping Corporation (“Kerasies”)(1)	Katerina	Panamax	May 2004
Marathassa Shipping Corporation (“Marathassa”)(1)	Maritsa	Panamax	January 2005
Maxeikositessera Shipping Corporation (“Maxeikositessera”)(1)	Efrossini	Panamax	February 2012
Glovertwo Shipping Corporation (“Glovertwo”)(3)	Zoe	Panamax	July 2013
Shikokutessera Shipping Inc. (“Shikokutessera”)(3)	Kypros Land	Panamax	January 2014
Shikokupente Shipping Inc. (“Shikokupente”)(3)	Kypros Sea	Panamax	March 2014
Gloverthree Shipping Corporation (“Gloverthree”)(3)	Kypros Unity	Panamax	September 2014
Gloverfour Shipping Corporation (“Gloverfour”)(2)(3)	Kypros Bravery (H 822)	Panamax	January 2015
Pemer Shipping Ltd. (“Pemer”)(1)	Pedhoulas Merchant	Kamsarmax	March 2006
Petra Shipping Ltd. (“Petra”)(1)	Pedhoulas Trader	Kamsarmax	May 2006
Pelea Shipping Ltd. (“Pelea”)(1)	Pedhoulas Leader	Kamsarmax	March 2007
Vassone Shipping Corporation (“Vassone”)(3)	Pedhoulas Commander	Kamsarmax	May 2008
Maxeikosi Shipping Corporation (“Maxeikosi”)(1)	Pedhoulas Builder	Kamsarmax	May 2012
Maxeikositria Shipping Corporation (“Maxeikositria”)(1)	Pedhoulas Fighter	Kamsarmax	August 2012
Maxeikosiena Shipping Corporation (“Maxeikosiena”)(1)	Pedhoulas Farmer	Kamsarmax	September 2012
Staloudi Shipping Corporation (“Staloudi”)(1)	Stalo	Post-Panamax	January 2006
Marinouki Shipping Corporation (“Marinouki”)(1)	Marina	Post-Panamax	January 2006
Soffive Shipping Corporation (“Soffive”)(1)	Sophia	Post-Panamax	June 2007
Vasstwo Shipping Corporation (“Vasstwo”)(1)	Xenia	Post-Panamax	August 2006
Eniaprohi Shipping Corporation (“Eniaprohi”)(1)	Eleni	Post-Panamax	November 2008
Eniadefhi Shipping Corporation (“Eniadefhi”)(1)	Martine	Post-Panamax	February 2009
Maxdodeka Shipping Corporation (“Maxdodeka”)(1)	Andreas K	Post-Panamax	September 2009
Maxdekatria Shipping Corporation (“Maxdekatria”)(1)	Panayiota K	Post-Panamax	April 2010
Maxdeka Shipping Corporation (“Maxdeka”)(3)	Venus Heritage	Post-Panamax	December 2010
Shikoku Friendship Shipping Company (“Shikoku”)(3)	Venus History	Post-Panamax	September 2011
Maxenteka Shipping Corporation (“Maxenteka”)(3)	Venus Horizon	Post-Panamax	February 2012
Maxpente Shipping Corporation (“Maxpente”)(1)	Kanaris	Capesize	March 2010
Eptaprohi Shipping Corporation (“Eptaprohi”)(1)	Pelopidas	Capesize	November 2011
Maxtessera Shipping Corporation (“Maxtessera”)(3)	Lake Despina	Capesize	January 2014
Shikokuokto Shipping Inc. (“Shikokuokto”)(3)	TBN - H 1689	Panamax	1H 2015 (4)
Youngone Shipping Inc. (“Youngone”)(3)	TBN - H 1148	Kamsarmax	1H 2015 (4)
Gloverfive Shipping Corporation (“Gloverfive”)(3)	TBN - H 827	Panamax	2H 2015 (4)
Shikokuexi Shipping Inc. (“Shikokuexi”)(3)	TBN - H 1685	Post-Panamax	2H 2015 (4) (5)
Shikokuepta Shipping Inc. (“Shikokuepta”)(3)	TBN - H 1686	Post-Panamax	2H 2015 (4) (5)
Gloversix Shipping Corporation (“Gloversix”)(3)	TBN - H 828	Panamax	1H 2016 (4)
Youngtwo Shipping Inc. (“Youngtwo”)(3)	TBN - H 1146	Kamsarmax	1H 2016 (4) (5)
Shikokuennia Shipping Inc. (“Shikokuennia”)(3)	TBN - H 1718	Post-Panamax	1H 2016 (4)
Gloverseven Shipping Corporation (“Gloverseven”)(3)	TBN - H 835	Panamax	2H 2016 (4) (5)
Kyotofrendo One Shipping Inc. (“Kyotofrendo One”)(3)	TBN - H 1551	Kamsarmax	1H 2016 (4) (5)
Kyotofrendo Two Shipping Inc. (“Kyotofrendo Two”)(3)	TBN - H 1552	Kamsarmax	1H 2017 (4) (5)
Maxeikosipente Shipping Corporation (“Maxeikosipente”)(1)(6)	—	—	—
Efragel Shipping Corporation (“Efragel”)(1)(7)	—	—	—
S.B. Sea Venture Company Ltd (8)	—	—	—
(1) Incorporated under the laws of the Republic of Liberia
(2) Newbuild vessel acquisition. Refer to Note 24.
(3) Incorporated under the laws of the Republic of the Marshall Islands
(4) Estimated completion date for newbuild vessels as of December 31, 2014.
(5) Refer to Note 24 for rescheduled delivery date.
(6) Cancellation of Newbuild. Refer to Notes 4 and 11.
(7) Company dissolved in October 2012
(8) Incorporated under the laws of the Republic of Cyprus, dissolved in September 2014.

Charterers Concentration

	December 31,
	2012		2013		2014
Daiichi Chuo Kisen Kaisha	46.48	%	30.30	%	-
Kawasaki Kisen Kaisha	16.39	%	15.39	%	-

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Accrued Liabilities, detail (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Accrued Liabilities
Interest on long-term debt	$ 1,270	$ 1,536
Vessels' operating and voyage expenses	1,687	1,055
Commissions	109	92
Interest on derivatives and other finance expenses	1,098	1,006
General and administrative expenses	303	176
Total	$ 4,467	$ 3,865

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Revenues, detail (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
REVENUES:
Time charter revenue	$ 142,461	$ 177,077	$ 179,653
Voyage charter revenue	914	0	0
Ballast bonus	13,375	10,878	6,397
Other income	3,150	3,565	1,507
Total	$ 159,900	$ 191,520	$ 187,557

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Advances for Vessel Acquisition and Vessels under Construction, detail (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Advances For Assets Acquisition And Assets Under Construction
Advances for vessel acquisition and vessels under construction, Beginning balance	$ 76,299	$ 39,902
Advances paid, including capitalized expense and interest	146,251	118,990
Transferred to vessel cost	(148,307)	(82,593)
Advances for vessel acquisition and vessels under construction, Closing balance	$ 74,243	$ 76,299

XML

Fair Value of Financial Instruments and Derivatives Instruments, detail 2(Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Derivative [Line Items]
Net Gain/(Loss) Recognized	$ (1,977)	$ 813	$ (5,384)
Derivatives not designated as hedging instruments | Other (Expense)/Income- Gain/(Loss) on Derivatives
Derivative [Line Items]
Interst Rate Contracts	$ (1,977)	$ 813

XML

Dividends, textual (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended	9 Months Ended	12 Months Ended
	Dec. 31, 2014 item	Sep. 30, 2014 item	Dec. 31, 2014
Common Stock
Class of Stock [Line Items]
Common Stock Dividends Per Share Cash Paid Quarterly	$ 0.04	$ 0.06
Number Of Quarters Of Dividend Payments	1	3
Dividends paid common shares			$ 18,358
Series B cumulative redeemable perpetual preferred shares
Class of Stock [Line Items]
Preferred Stock Dividends Per Share Cash Paid Quarterly			$ 0.5
Number Of Quarters Of Dividend Payments			4
Dividends paid preferred shares			3,200
Series C cumulative redeemable perpetual preferred shares
Class of Stock [Line Items]
Preferred Stock Dividends Per Share Cash Paid Quarterly	$ 0.5	$ 0.46667
Number Of Quarters Of Dividend Payments	1	1
Dividends paid preferred shares			2,223
Series D cumulative redeemable perpetual preferred shares
Class of Stock [Line Items]
Preferred Stock Dividends Per Share Cash Paid Quarterly			$ 0.66667
Number Of Quarters Of Dividend Payments			1
Dividends paid preferred shares			$ 2,134

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Early Delivery Income/(Cost), Net, textual (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Contract Termination [Line Items]
Gain (Loss) on Contract Termination	$ (532)	$ 7,050	$ 11,677
Eniadefhi
Contract Termination [Line Items]
Cash Compensation Received On Contract Termination Net			8,644
Accrued Revenue Recorded From Time Charter Contract Termination			169
Gain (Loss) on Contract Termination	0	0	8,475
Marindou
Contract Termination [Line Items]
Cash Compensation Received On Contract Termination Net			3,375
Accrued Revenue Recorded From Time Charter Contract Termination			173
Gain (Loss) on Contract Termination	0	0	3,202
Soffive
Contract Termination [Line Items]
Cash Compensation Received On Contract Termination Net		2,965
Gain (Loss) on Contract Termination	0	2,965	0
Avstes
Contract Termination [Line Items]
Cash Compensation Received On Contract Termination Net		2,607
Accrued Revenue Recorded From Time Charter Contract Termination		303
Gain (Loss) on Contract Termination	0	2,304	0
Kerasies
Contract Termination [Line Items]
Cash Compensation Received On Contract Termination Net		2,087
Accrued Revenue Recorded From Time Charter Contract Termination		306
Gain (Loss) on Contract Termination	$ 0	$ 1,781	$ 0

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Subsequent Events, textual (Details) (Dividend declaration, USD $) In Thousands, except Per Share data, unless otherwise specified	1 Months Ended	0 Months Ended
	Feb. 23, 2015	Jan. 09, 2015
Common Stock
Dividend declaration
Dividends Payable, Amount Per Share	$ 0.02
Dividends Payable	$ 1,669
Dividends Payable, Date Of Record	Mar. 10, 2015
Dividends Payable, Date to be Paid	Mar. 17, 2015
Preferred Shares
Dividend declaration
Dividends Payable, Amount Per Share		$ 0.5
Dividends Payable		$ 3,550
Dividends Payable, Date Of Record		Jan. 23, 2015
Dividends Payable, Date to be Paid		Jan. 30, 2015

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Fair Value of Financial Instruments and Derivatives Instruments, detail 3(Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Level 1
Derivative [Line Items]
Derivative instruments- asset position	$ 0	$ 0
Derivative instruments- liability position	0	0
Significant Other Observable Inputs (Level 2)
Derivative [Line Items]
Derivative instruments- asset position	455	762
Derivative instruments- liability position	1,558	4,002
Level 3
Derivative [Line Items]
Derivative instruments- asset position	0	0
Derivative instruments- liability position	$ 0	$ 0

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Loss from Inventory Valuation, textual (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Inventory valuation
Loss from inventory valuation	$ 4,001	$ 0	$ 0

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Early Redelivery Income/(Cost), Net

12 Months Ended

Dec. 31, 2014

Notes To Consolidated Financial Statements

Gain Loss On Contract Termination

18. Early Redelivery Income/(Cost), Net

From time to time, the Company enters into arrangements for early redelivery of its vessels from charterers and may continue to do so in the future, depending on market conditions. Early redelivery costs are incurred when the contracted daily fixed charter rates are substantially lower than the daily charter rates the vessels could potentially earn in the current market. Income is recognized in connection with early termination of a period time charter, resulting from a request of the respective vessel charterers for early redelivery and agreement to compensate the Company. Early redelivery costs for the periods presented represent costs incurred in connection with early termination of charters for which no replacement charter contract for the relevant vessel has been secured at the time of concluding the charter termination agreement, and are recognized at the time the charter termination agreement is concluded. Early redelivery income is recognized when a charter termination agreement exists, the vessel is redelivered to the Company and collection of the related compensation is reasonably assured.If at the time of concluding the early redelivery agreement, a replacement charter contract had been secured, any costs incurred or income recognized would have been amortized over the term of the replacement charter contract.

			Year Ended
			December 31,
Company		Date	2012		2013		2014
Eniadefhi	(a)	December 15, 2012	$	8,475	$	-	$	-
Marindou	(b)	December 19, 2012		3,202		-		-
Soffive	(c)	April 22, 2013		-		2,965		-
Avstes	(d)	May 3, 2013		-		2,304		-
Kerasies	(e)	May 16, 2013		-		1,781		-
Other minor early redeliveries		Various		-		-		(532)
Total			$	11,677	$	7,050	$	(532)

Details of the transactions presented in the above table are as follows:

(a) On December 15, 2012, Eniadefhi took early redelivery of the Martine, instead of on January 21, 2014. In connection with this early redelivery, we recognized early redelivery income of $8,475, comprising cash compensation paid by the relevant charterer of $8,644, net of commissions, less accrued revenue of $169.

(b) On December 19, 2012, Marindou took early redelivery of the Maria, instead of on February 24, 2014. In connection with this early redelivery, we recognized early redelivery income of $3,202, comprising cash compensation paid by the relevant charterer of $3,375, net of commissions, less accrued revenue of $173.

(c) On April 22, 2013, Soffive took early redelivery of the Sofia, instead of on September 19, 2013. In connection with this early redelivery, we recognized early redelivery income of $2,965, comprising of cash compensation paid by the relevant charterer.

(d) On May 3, 2013, Avstes took early redelivery of the Vassos, instead of on October 1, 2013. In connection with this early redelivery, we recognized early redelivery income of $2,304, comprising cash compensation paid by the relevant charterer of $2,607, net of commissions, less accrued revenue of $303.

(e) On May 16, 2013, Kerasies took early redelivery of the Katerina, instead of on January 1, 2014. In connection with this early redelivery, we recognized early redelivery income of $1,781, comprising cash compensation paid by the relevant charterer of $2,087, net of commissions, less accrued revenue of $306.

In all the cases presented above, no replacement charter contract had been secured at the time of the terminationof the respective early redelivery agreement.

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Basis of Presentation and General Information, detail (Details) (Charter Revenues)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Minimum
Concentration Risk [Line Items]
Charterer percentage in total revenue	10.00%	10.00%	10.00%
Daiichi Chuo Kisen Kaisha
Concentration Risk [Line Items]
Charterer percentage in total revenue	0.00%	30.30%	46.48%
Kawasaki Kisen Kaisha
Concentration Risk [Line Items]
Charterer percentage in total revenue	0.00%	15.39%	16.39%

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Vessel Operating Expenses (Tables)

12 Months Ended

Dec. 31, 2014

Operating Expense

Vessel Operating Expenses

	Year Ended
	December 31,
	2012		2013		2014
Crew wages and related costs	$	17,202	$	22,015	$	26,169
Insurance		2,828		3,477		4,133
Repairs, maintenance and drydocking costs		2,493		3,240		4,344
Spares, stores and provisions		6,939		7,533		9,058
Lubricants		3,296		2,787		3,509
Taxes		303		669		1,282
Miscellaneous		1,479		2,243		2,139
Total	$	34,540	$	41,964	$	50,634

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Fair Value of Financial Instruments and Derivatives Instruments, detail (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Derivative [Line Items]
Derivative assets	$ 455	$ 762
Derivative liabilities	493	732
Derivatives liabities - Long-term	1,065	3,270
Derivatives not designated as hedging instruments
Derivative [Line Items]
Total Derivatives	455	762
Total Derivatives	1,558	4,002
Derivatives not designated as hedging instruments | Interest Rare Swap | Noncurrent assets
Derivative [Line Items]
Derivative assets	455	762
Derivatives not designated as hedging instruments | Interest Rare Swap | Current liabilities
Derivative [Line Items]
Derivative liabilities	493	732
Derivatives not designated as hedging instruments | Interest Rare Swap | Noncurrent liabilities
Derivative [Line Items]
Derivatives liabities - Long-term	$ 1,065	$ 3,270

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Advances for Vessel Acquisitions and Vessels under Construction (Tables)

12 Months Ended

Dec. 31, 2014

Advances For Assets Acquisition And Assets Under Construction

Advances for Vessel Acquisition and Vessls under Construction

Advances for vessel acquisition and vessels under construction are comprised of the following:
Balance, January 1, 2013	$	39,902
Advances paid, including capitalized expenses and interest		118,990
Transferred to vessel cost		(82,593)
Balance, December 31, 2013	$	76,299
Advances paid, including capitalized expenses and interest		146,251
Transferred to vessel cost		(148,307)
Balance, December 31, 2014	$	74,243

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Transactions with Related Parties, detail 1 (Details) (USD $)	7 Months Ended	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2014	May 29, 2014	May 29, 2013	May 29, 2012	May 29, 2011
Related Party Transactions
Fixed Fee	$ 800		$ 700	$ 700	$ 700	$ 575
Variable Fee			1.25%	1.25%	1.25%
Supervision Fee			$ 550,000	$ 550,000	$ 550,000	$ 375,000
Sales Fee			1.00%	1.00%	1.00%
Acquisition Fee			1.00%	1.00%	1.00%
Supervision Fee, Description of Transaction		50% is payable upon the signing of the relevant Supervision Agreement, and 50% upon successful completion of the sea trials of each newbuild

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Share Capital, textual 4 (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Audit Committee Chairman
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Shares Issued in Period	6,890	12,517
Share-based Compensation Arrangement by Share-based Payment Award, Description	Pursuant to an arrangement approved by the Company’s shareholders’ and the corporate governance, nominating and compensation committee effective July 1, 2008, the audit committee chairman receives the equivalent of $15 every quarter, payable in arrears in the form of newly issued common stock of the Company as part compensation for services rendered as audit committee chairman. The number of shares to be issued is determined based on the closing price of the Company’s common stock on the last trading day prior to the end of each quarter in which services were provided and are issued as soon as practicable following the end of the quarter.
Share Based Compensation Value Of Transaction	$ 15,000
Independent directors
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Shares Issued in Period	6,892	12,516
Share-based Compensation Arrangement by Share-based Payment Award, Description	Pursuant to an arrangement approved by the Company’s shareholders and the corporate governance, nominating and compensation committee, effective January 1, 2010, the independent directors of the Company other than the audit committee chairman each receive the equivalent of $7.5 every quarter, payable in arrears in the form of newly issued common stock of the Company as part compensation for services rendered as independent directors. The number of shares to be issued is determined as noted above.
Share Based Compensation Value Of Transaction	$ 7,500

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Bank Debt, detail 2 (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Debt Disclosure
2015	$ 17,121
2016	23,850
2017	43,213
2018	71,597
2019	146,744
2020 and thereafter	167,043
Total	$ 469,568	$ 508,295

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General and Administrative Expense (Tables)

12 Months Ended

Dec. 31, 2014

General and administrative expenses

General And Administrative Expense

	December 31,
	2012		2013		2014
Management fees - related party	$	7,726	$	8,379	$	8,962
Professional fees (legal and accounting)		588		648		813
Compensation for Directors and Officers		240		1,120		2,004
Listing fees and expenses		53		75		87
Miscellaneous		1,339		1,138		1,465
Total	$	9,946	$	11,360	$	13,331

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Significant Accounting Policies

12 Months Ended

Dec. 31, 2014

Notes To Consolidated Financial Statements

Significant Accounting Policies

2. Significant Accounting Policies:

Principles of Consolidation:The accompanying consolidated financial statements have been prepared in accordance with accounting principles generallyaccepted in the United States of America (“U.S. GAAP”) and include allaccounts of the Company. All intra-group and intercompanybalances and transactions have been eliminated upon consolidation.

Use of Estimates: The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include vessel valuations, the valuation of amounts due from charterers, residual value of vessels, useful life of vessels and the fair value of derivative instruments.Actual results maydiffer from these estimates.

Other Comprehensive Income / (Loss): The Company follows the accounting guidance relating to Statement of Comprehensive Income, which requires separate presentation of certain transactions that are recorded directly as components of shareholders' equity. The Company has no other comprehensive income/(loss) and accordingly comprehensive income/(loss) equals net income for the periods presented.

Foreign Currency Translation: The reporting and functional currency of the Company is the U.S. dollar (“USD”). Transactions incurred in other currencies are translated into USD using the exchange rates in effect at the time of the transaction. Onthe balance sheet date, monetary assets and liabilities that are denominated in other currencies are translated into USD to reflect the end-of-period exchange rates. Resulting gains or losses from foreign currency transactions are recorded within Foreign currency loss/(gain) in the accompanying consolidated statements of income in the period in which they arise.

Cash and Cash Equivalents: Cash and cash equivalents consist of current, call, time deposits and certificates of deposit with original maturities of three months or less and which are not restricted for use or withdrawal.

Time Deposits: Time deposits are held with banks with original maturities longer than three months. In the event original maturities are shorter than 12 months, such deposits are classified as current assets; if original maturities are longer than 12 months, such deposits are classified as non-current assets.

Restricted Cash: Restricted cash represents minimum cash deposits or cash collateral deposits required to be maintained with certain banks under the Company's borrowing arrangements or in relation to bank guarantees issued on behalf of the Company. In the event that the obligation relating to such deposits is expected to be terminated within the next 12 months, these deposits are classified as current assets; otherwise they are classified as non-current assets.

Accounts Receivable: Accounts receivable reflects trade receivables from time or voyage charters and other receivables from operational activities, net of an allowance for doubtful accounts. Oneach balance sheet date, all potentially uncollectible accounts are assessed individually for purposes of determining the appropriate provision for doubtful accounts. No allowance for doubtful accounts was recorded for any of the periods presented.

Inventories: Inventories consist of bunkers and lubricants owned by the Company remaining on board the vessels at the end of each reporting period, which are stated at the lower of cost or market value. Cost is determined using the first–in, first-out method.

Vessels, Net: Vessels are stated at their historical cost, which consists of the contracted purchase price and any direct material expenses incurred upon acquisition (including improvements, on-site supervision expenses incurred during the construction period if the vessels are newbuilds, commissions paid, delivery expenses and other expenditures to prepare the vessel for her initial voyage), less accumulated depreciation. Financing costs incurred during the construction period of the vesselsif the vessels are newbuildsare also capitalized and included in the vessels' cost. Certain subsequent expenditures for conversions and major improvements are also capitalized if it is determined that they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels.

Vessels' Depreciation: Depreciation is computed using the straight-line method over the estimated useful life of the vessels, after considering the estimated residual value. We estimate the useful life of the Company's vessels to be 25 years from the date of initial delivery from the shipyard.Secondhand vessels are depreciated from the date of their acquisition through their remaining estimated useful life.

Accounting for Special Survey and Drydocking Costs: Special survey and drydocking costs are expensed in the period incurred and are included in vessel operating expenses in the accompanying consolidated statements of income.

Repairs and Maintenance: All repair and maintenance expenses, including major overhauling and underwater inspection expenses, are expensed when incurred and are included in vessel operating expenses in the accompanying consolidated statements of income.

Impairment of Long-lived Assets:The Company follows the Accounting Standards Codification (“ASC”) Subtopic 360-10, “Property, Plant andEquipment” (“ASC 360-10”), which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment arepresent and the undiscounted cash flows estimated to be generated by those assets are less than their carrying amounts. If indicators of impairment are present,the Company performs an analysis of the anticipated undiscounted future net cash flows of the related long-lived assets. If the carrying value of the relatedasset exceeds the undiscounted cash flows, the carrying value is reduced to its fair value and the difference is recorded as an impairment loss in theconsolidated statements of income. Various factors including anticipated future charter rates, estimated scrap values, future drydocking costs and estimatedvessel operating costs are included in this analysis. No impairment loss was recorded during the years ended December 31, 2012, 2013and 2014.

Assets Held for Sale: The Company may dispose of certain of its vessels when suitable opportunities occur, including prior to the end of their useful lives. The Company classifies assets as being held for sale when the following criteria are met: (i) management is committed to sell the asset; (ii) the asset is available for immediate sale in its present condition; (iii) an active program to locate a buyer and other actions required to complete the plan to sell the asset have been initiated; (iv) the sale of the asset is probable, and transfer of the asset is expected to qualify for recognition as a completed sale within one year; (v) the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and (vi) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

Long-lived assets classified as held for sale are measured at the lower of their carrying amount or fair value less the cost to sell the asset. These assets are no longer depreciated once they meet the criteria of being held for sale. There were no assets held for sale as of December 31, 2013 and 2014.

Deferred Financing Costs:Financing fees incurred for obtaining new loans and credit facilities are deferred and amortized over the term of the respective loan or credit facility using the effective interest rate method. Any unamortized balance of costs relating to loans repaid or refinanced is expensed in the period in which the repayment or refinancing is made, subject to the guidance regarding Debt Extinguishment. Any unamortized balance of costs related to credit facilities repaid is expensed in the period. Any unamortized balance of costs relating to the credit facilities refinanced is deferred and amortized over the term of the respective credit facility in the period in which the refinancing occurs, subject to the provisions of the accounting guidance relating to Changes in Line-of-Credit or Revolving-Debt Arrangements.

Derivative Instruments: The Company may enter into foreign exchange forward contracts to create economic hedges for its exposure to currency exchange risk on payments relating to the acquisition of vessels and on certain loan obligations. The Company also enters into interest rate derivatives to create economic hedges for its exposure to interest rate risk of its loan obligations (see also Notes 8 and 16). When such derivatives do not qualify for hedge accounting the Company records these financial instruments in the consolidated balance sheet at their fair value as either a derivative asset or a liability, and recognizes the fair value changes thereto in the consolidated statements of income. When the derivatives do qualify for hedge accounting, depending upon the nature of the hedge, changes in fair value of the derivatives are either offset against the fair value of assets, liabilities or firm commitments through income, or recognized in other comprehensive income/(loss) (effective portion) until the hedged item is recognized in the consolidated statements of income. For the years ended December 31, 2012, 2013and 2014, no derivatives were accounted for as accounting hedges.

Financial Instruments: Over-the-counter foreign exchange forward contracts and interest rate derivatives are recorded at fair value. Other financial instruments, including cash equivalents and debt are recorded at amortized cost.

(a) Interest rate risk: The Company's interest rates and long-term loan repayment terms are described in Note 8.The Company manages its interest rate risk by entering into interest rate derivative instruments which are described in Note 16.

(b) Concentration of credit risk: Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist principally of trade accounts receivable, cash and cash equivalents, time deposits and derivative instruments. The Company limits its credit risk with accounts receivable by performing ongoing credit evaluations of its customers' financial condition and generally does not require collateral for its trade accounts receivable. The Company places its cash and cash equivalents, time deposits and other investments with high credit quality financial institutions. The Company performs periodic evaluations of the relative credit standing of those financial institutions. The Company is exposed to credit risk in the event of non-performance by its counterparties to derivative instruments; however, the Company limits its exposure by transacting with counterparties with high credit ratings.

(c) Fair value measurement: In accordance with the requirements of accounting guidance relating to Fair Value Measurement, the Company classifies and discloses assets and liabilities carried at fair value in one of the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

Accounting for Revenues and Related Expenses:The Company generates its revenues from charterers for the charter hire of its vessels. Vessels are chartered under time charter, where a contract is entered into for the use of a vessel for a specific voyage or a specific period of time and at a specified daily charter rate. Time charter revenues are recognized as earned on the straight-line basis over the term of the charter as service is provided. Revenues from time charter may also include ballast bonus, which is an amount paid by the charterer for repositioning the vessel at the charterer's disposal (delivery point), which is recognized as revenue over the term of the charter, and other miscellaneous revenues from vessel operations. Expenses relating to the Company's time charters are vessel operating expenses and certain voyage expenses, which are paid by the Company and recognized as incurred. Vessel operating expenses that are paid by the Company include costs for crewing, insurance, lubricants, spare parts, provisions, stores, repairs, maintenance, statutory and classification expense, drydocking, intermediate and special surveys and other minor miscellaneous expenses. Voyage expenses which are also recognized as incurred and paid by the Company include costs for draft surveys, hold cleaning, postage, extra war risk insurance, bunkers during ballast period and other minor miscellaneous expenses related to the voyage. The charterer is responsible for paying the cost of bunkers and other voyage expenses (e.g., port expenses, agents' fees, canal dues, extra war risks insurance and any other expenses related to the cargo).

Vessels are also chartered under voyage charters, where a contract is made for the use of a vessel under which the Company is paid freight on the basis of moving cargo from a loading port to a discharge port. During the years ended December 31, 2012, 2013 and 2014, there have been only two instances where a vessel was employed under a voyage charter. Under a voyage charter, the revenues are recognized on a pro-rata basis over the duration of the voyage from load port to discharge port. Probable losses on voyages are provided for in full at the time such losses can be estimated. Related expenses are operating expenses, bunkers and voyage expenses, which are recognized as incurred and are all paid for by the Company. Demurrage income represents payments by the charterer to the vessel owner when loading or discharging time exceeds the stipulated time in the voyage charter and is recognized when earned and collection is reasonably assured. Dispatch expense represents payments by the Company to the charterer when loading or discharging time is less than the stipulated time in the voyage charter and is recognized as incurred.

Revenue is recognized when a charter agreement exists, the vessel is made available to the charterer and collection of the related revenue is reasonably assured. Unearned revenue includes: (i) cash received prior to the balance sheet date relating to services to be rendered after the balance sheet date and (ii) deferred revenue resulting from straight-line revenue recognition in respect of charter agreements that provide for varying charter rates. Accrued revenue results from straight-line revenue recognition in respect of charter agreements that provide for varying charter rates. Commissions (address and brokerage), regardless of charter type, are always paid by the Company, are deferred and amortized over the related charter period and are presented as a separate line item in revenues to arrive at net revenues in the accompanying consolidated statements of income.

Pension and Retirement Benefit Obligations—Crew: The Subsidiaries included in the consolidated financial statements employ the crew on board under short-term contracts (usually up to nine months) and accordingly, they are not liable for any pension or post-retirement benefits.

Taxes:Entities within the group that are incorporated under the laws of either the Republic of Liberia or the Republic of the Marshall Islands are not subject to Liberian or Marshall Islands income taxes. However, each vessel-owning Subsidiary is subject to registration and tonnage taxes under the laws of the Republic of Cyprus or the Republic of the Marshall Islands depending on where each Company's vessel is registered. As of January 1, 2013, each vessel managed in Greece is subject to tonnage tax, under the laws of the Republic of Greece.In addition, as of December 31, 2013, each vessel managed in Greece is also subject to an annual shipping community mandatory financial contribution for the years 2014, 2015 and 2016 under the laws of the Republic of Greece. These registration, tonnage taxes and financial contributions are recorded within Vessel operating expenses in the accompanying consolidated statements of income and none are considered income taxes.

Furthermore, the Subsidiaries are subject to a 4% U.S. federal tax in respect of its U.S. source shipping income (imposed on gross income without the allowance for any deductions), because none of the Subsidiaries meet the requirements for an exemption from such tax provided by Section 883 of the U.S. Internal Revenue Code of 1986. As a result, the Subsidiaries file U.S. federal tax returns and pay the relevant U.S. federal tax on their U.S. source shipping income, which isnot considered an income tax. Such taxes have been recorded within Voyage expenses in the accompanying consolidated statements of income. In many cases, thesetaxes are recovered from the charterers; such amounts recovered are recorded within Revenues in the accompanying consolidated statements of income.

Dividends: Dividends are recorded in the period in which they are approved by the Company's Board of Directors.

Earnings Per Share: The computation of basic earnings per share is based on the weighted average number of common shares outstanding during the year and includes the shares issuable to the audit committee chairman and the independent directors at the end of the year for services rendered. Diluted earnings per share are the same as basic earnings per share. There are no other potentially dilutive shares. The computation of basic earnings per share is calculated after deducting the preferred stock dividend from net income.

Segment Reporting: The Company reports financial information and evaluates its operations by total charter revenue and not by the type of vessel or vessel employment for its customers. The Company's vessels have similar operating and economic characteristics. As a result, management, including the chief operating decision makers, reviews operating results solely by revenue per day and operating results of the fleet, and thus the Company has determined that it operates under one reportable segment. Furthermore, when the Company charters a vessel to a charterer, the charterer is free to trade the vessel worldwide and, as a result, the disclosure of geographic information is impracticable.

Recent Accounting Pronouncements:

Revenue from Contracts with Customers: The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) (collectively, the Boards) jointly issued a standard that will supersede virtually all of the existing revenue recognition guidance in US GAAP and IFRS and  is effective for annual periods beginning on or after January 1, 2017. The standard establishes a five-step model that will apply to revenue earned from a contract with a customer (with limited exceptions), regardless of the type of revenue transaction or the industry. The standard's requirements will also apply to the recognition and measurement of gains and losses on the sale of some non-financial assets that are not an output of the entity's ordinary activities (e.g., sales of property, plant and equipment or intangibles). Extensive disclosures will be required, including disaggregation of total revenue; information about performance obligations; changes in contract asset and liability account balances between periods; and key judgments and estimates. Management is in the process of accessing the impact of the new standard on the Company's financial position and performance.

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Bank Debt, textual 2 (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Debt Instrument [Line Items]
Interest Costs Incurred	$ 8,599	$ 9,553	$ 10,038
Interest Costs, Capitalized During Period	264	467	966
All loans and credit facilities
Debt Instrument [Line Items]
Debt, Weighted Average Interest Rate	1.698%	1.737%	1.85%
Debt Instrument, Priority	• First priority mortgages over the vessels owned by the respective borrowers; • For the Safe Bulkers credit facility, first priority mortgages over the vessels Andreas K, Maria, Xenia, Vassos, Pedhoulas Leader, Pedhoulas Fighter, Martine, Eleni, Kypros Bravery and Hull 827 upon her delivery from the shipyard; • First priority assignment of all insurances and earnings of the mortgaged vessels; • Second priority mortgage over the Pedhoulas Merchant as security for the Petra loan; • Second priority mortgage over the Pedhoulas Trader as security for the Pemer loan; • Second priority mortgage over the Pedhoulas Commander as security for the Maxpente, Maxeikosi, Shikokutessera and Gloverthree credit facilities; • Second priority mortgages over the Pedhoulas Builder, Kanaris, Kypros Unity and Kypros Land as security for the Vassone credit facility; and • Corporate guarantee from Safe Bulkers (except for the Safe Bulkers credit facility where Safe Bulkers is the borrower).
Ebitda To Interest Covenant	2.0:1 applicable on a trailing 12 month basis
Ebitda After Deducting Cash Covenant	8.5:1 applicable on a trailing 12 month basis
Consolidated Debt Convenant	514,000
Net Worth Covenant	150,000
Mininum Free Liquidity On Deposit	500
Debt Instrument, Covenant Description	• its total consolidated liabilities divided by its total consolidated assets must not at any time exceed 80% or 85% as the case may be ( the “Consolidated Leverage Covenant”). The total consolidated assets are based on the fair market value of its vessels and the book values of all other assets, on an adjusted basis as set out in the relevant guarantee; • the ratio of its aggregate debt after deducting cash to EBITDA must not at any time exceed 8.5:1 applicable on a trailing 12 month basis (“EBITDA Covenant”). EBITDA is not a recognized measurement under US GAAP and represents net income before net interest expense, income tax expense, depreciation and amortization; • its consolidated debt must not exceed $514,000 on December 31, 2014 (“Consolidated Debt Covenant”) • the ratio of its EBITDA over consolidated interest expense must not at any time be less than 2.0:1, applicable on a trailing 12 month basis; • its consolidated net worth (total consolidated assets less total consolidated liabilities) (“Consolidated Net Worth Covenant”) must not at any time be less than $150,000; • payment of dividends is subject to no event of default having occurred; • maintenance of minimum free liquidity of $500 is required on deposit with a relevant lender; and • a minimum of 35% or 51%, as the case may be, of its shares shall remain directly or indirectly beneficially owned by the Hajioannou family for the duration of the relevant credit facilities.
Debt Instrument, Covenant Compliance	As of December 31, 2014, the Company was in compliance with all debt covenants with respect to its loans and credit facilities.
Minimum | All loans and credit facilities
Debt Instrument [Line Items]
Mininum cash balance of loan with restrictive liquidity covenant	150
Consolidated Leverage Covenant	80.00%
Minimum Percentage Of Ownership	35.00%
Maximum | All loans and credit facilities
Debt Instrument [Line Items]
Mininum cash balance of loan with restrictive liquidity covenant	$ 500
Consolidated Leverage Covenant	85.00%
Minimum Percentage Of Ownership	51.00%

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Fair Value of Financial Instrumets and Derivatives Instruments (Tables)

12 Months Ended

Dec. 31, 2014

Fair Value Financial Instruments And Derivative Insturments

Fair value of derivatives not designed as hedging instruments

Derivatives not designated as hedging instruments
		Asset Derivatives				Liability Derivatives
		Fair Values				Fair Values
Type of Contract	Balance sheet location	December 31,		December 31,		December 31,		December 31,
		2013		2014		2013		2014
Interest Rate	Derivative assets /Non-current assets	$	762	$	455	$	—	$	—
Interest Rate	Derivative liabilities / Current liabilities		—		—		732		493
Interest Rate	Derivative liabilities / Non-current liabilities		—		—		3,270		1,065
	Total Derivatives	$	762	$	455	$	4,002	$	1,558

Gain or loss recognized on derivatives not designed as hedging instruments

	Amount of Gain / (Loss) Recognized on Derivatives
	Year ended December 31,
	2013		2014
Interest Rate Contracts	$	813	$	(1,977)
Net Gain / (Loss) Recognized	$	813	$	(1,977)

Location and amounts of fair value of derivatives not designed as hedging instruments

	Significant Other Observable Inputs
	(Level 2)
	December 31,
	2013		2014
Derivative instruments – asset position	$	762	$	455
Derivative instruments – liability position		4,002		1,558

Interest rate derivatives schedule

					Notional amount
Loan or Credit	Inception	Expiry	Fixed		December 31,		December 31,
Facility			Rate		2013		2014
Eniadefhi (1)	April 01, 2009	February 12, 2014		3.3500%	$	34,875	$	-
Eniaprohi (2)	November 14, 2011	November 13, 2014		1.4000%		33,328		-
Soffive (2)	November 20, 2011	November 20, 2014		1.3500%		32,400		-
Staloudi (2)	January 09, 2012	January 07, 2015		1.4500%		38,400		34,760
Marathassa (2)(3)	January 31, 2011	January 31, 2015		1.2200%		33,900		31,400
Marathassa (2)	November 23, 2012	November 21, 2015		1.9500%		13,305		11,675
Kerasies (2)	December 14, 2010	December 14, 2015		1.6500%		28,798		26,664
Pelea (2)	December 15, 2011	December 14, 2016		2.0500%		32,962		30,542
Maxdekatria (2)	September 28, 2012	September 28, 2017		0.9000%		20,800		20,000
Marindou (2)	January 14, 2013	January 16, 2018		1.6000%		28,500		27,427
Petra (2)	January 18, 2013	January 18, 2018		0.9800%		14,000		14,000
Marinouki (2)	March 05, 2013	March 05, 2018		1.4800%		24,297		22,543
Pemer (2)	June 07, 2013	March 07, 2018		0.9475%		14,000		14,000
Avstes (2)	July 18, 2013	April 18, 2018		1.3500%		14,000		14,000
Shikoku (2)	August 28, 2013	August 28, 2018		1.2500%		18,667		16,800
Total					$	382,232	$	263,811

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Dividends

12 Months Ended

Dec. 31, 2014

Notes To Consolidated Financial Statements

Dividends

22. Dividends

During 2014, the Company declared and paid threeconsecutive quarterly dividends of $0.06 per common share followed by one quarterly dividend of $0.04 per common share, totaling $18,358.

During 2014, the Company declared and paid four quarterly consecutive dividends of $0.50 per share of Series B Preferred Shares, totaling $3,200, one quarterly dividend of $0.46667 followed by one quarterly dividend of $0.50 per share of Series C Preferred Shares, totaling $2,223, and one quarterly dividend of $0.66667 per share of Series D Preferred Shares, totaling $2,134.

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Unearned Revenue/ Accrued Revenue

12 Months Ended

Dec. 31, 2014

Notes To Consolidated Financial Statements

Unearned Revenue/Accrued Revenue

21. Unearned Revenue /Accrued Revenue

Unearned Revenue represents cash received in advance of it being earned, whereas Accrued Revenue represents revenue earned prior to cash being received. Revenue is recognized as earned on a straight-line basis at their average rates whencharter agreements provide for varying annual charter rates over their term. Total Unearned Revenue /Accrued Revenue during the periods presented is as follows:

	December 31,
	2013		2014
Unearned Revenue
Cash received in advance of service provided – Current liability	$	2,966	$	3,265
Deferred revenue resulting from varying charter rates
Current liability		10,140		334
Non-current liability		196		-
Total Unearned Revenue	$	13,302	$	3,599
Accrued Revenue
Resulting from revenue earned prior to cash being received – Current asset	$	-	$	212
Resulting from varying charter rates –Non Current asset		-		452
Total Accrued Revenue	$	-	$	664

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Vessels, Net, detail (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Vessel Cost
Vessel Cost, Beginning Balance	$ 1,012,604	$ 930,011
Transfers from Advances for vessel acquisitions and vessel under construction	148,307	82,593
Vessel Cost,Ending Balance	1,160,911	1,012,604	930,011
Accumulated Depreciation
Accumulated Depreciation, Beginning Balance	(157,404)	(120,010)
Depreciation	(43,084)	(37,394)	(32,250)
Accumulated Depreciation, Ending Balance	(200,488)	(157,404)	(120,010)
Net Book Value
Net Book Value, Beginning Balance	855,200	810,001
Transfers from Advances for vessel acquisitions and vessel under construction	148,307	82,593
Depreciation	(43,084)	(37,394)	(32,250)
Net Book Value, Ending Balance	960,423	855,200	810,001
Property Plant And Equipment Collateral For Debt	$ 960,423

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Accrued Liabilities (Tables)

12 Months Ended

Dec. 31, 2014

Accrued Liabilities

Acrrued Liabilities

	December 31,
	2013		2014
Interest on long-term debt	$	1,536	$	1,270
Vessels’ operating and voyage expenses		1,055		1,687
Commissions		92		109
Interest on derivatives and other finance expenses		1,006		1,098
General and administrative expenses		176		303
Total	$	3,865	$	4,467

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Earnings per Share

12 Months Ended

Dec. 31, 2014

Notes To Consolidated Financial Statements

Earnings Per Share

23. Earnings Per Share

The computation of basic earnings per share is based on the weighted average number of common shares outstanding during the year and includes the shares issuable to the audit committee chairman and the independent directors at the end of the year for services rendered. Diluted earnings per share are the same as basic earnings per share. There are no other potentially dilutive shares. The computation of basic earnings per share is calculated after deducting the preferred stock dividend from net income.

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Subsequent events

12 Months Ended

Dec. 31, 2014

Notes To Consolidated Financial Statements

Subsequent Events

24. Subsequent Events

(a)Dividend declaration:On January 9, 2015, the Board of Directors declared a dividend of $0.50 per preferred share, totaling $3,550, payable to all shareholders of record as of January 23, 2015, which was paid on January 30, 2015.

(b)Newbuild deliveries:In January 2015, the Company took delivery of Kypros Bravery, a Japanese newbuild Panamax class vessel.

(c)Dividend declaration:On February 23, 2015, the Board of Directors declared a dividend of $0.02 per common share, totaling $1,669, payable to all shareholders of record as of March 10, 2015, on March 17, 2015.

(d)       Delay of newbuild deliveries: In February 2015, the Company entered into recapitulation agreements to delay the deliveries of six newbuild vessels as follows: Vessels with Hull No.1685 and Hull No. 1686 which were initially scheduled for delivery in the second half of 2015 were delayed until the first half of 2016; vessel with Hull No. 835 which was initially scheduled for delivery in the second half of 2016 were delayed until the first half of 2017; vessel with Hull No. 1146 which was initially scheduled for delivery in the first half of 2016 was delayed until the first half of 2017; vessel with Hull No. 1551 which was initially scheduled for delivery in the first half of 2016 was delayed until the first half of 2017; and vessel with Hull No. 1552 which was initially scheduled for delivery in the of first half of 2017 was delayed until the first half of 2018.

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Basis of Presentation and General Information

12 Months Ended

Dec. 31, 2014

Notes To Consolidated Financial Statements

Basis of Presentation and General Information

1. Basis of Presentation and General Information:

Safe Bulkers, Inc. (“Safe Bulkers” or the ''Company'') was formed on December 11, 2007, under the laws of the Republic of the Marshall Islands for the purpose of acquiring an ownership interest in 19 companies.Each of the 19 companies were under the common control of Polys Hajioannou and his family and owned or were scheduled to acquire a newbuilddrybulk vessel. The shares of the 19 companies were contributed to Safe Bulkers by Vorini Holdings, Inc. (“Vorini Holdings”), a Marshall Islands corporation, controlled by Polys Hajioannou and his family. Safe Bulkers became the owner of 100% of each of the 19 companies, and Vorini Holdings became the sole shareholder of Safe Bulkers.

Safe Bulkers successfully completed its initial public offering on June 3, 2008(the “IPO”).Safe Bulkers common stock trades on the New York Stock Exchange (“NYSE”) under the symbol “SB.” Following the IPO, Vorini Holdings became the controlling shareholder of Safe Bulkers.

On December 18, 2013, Bellapais Maritime Inc. (“Bellapais”) a Marshall Islands corporation, Kyperounta Maritime Inc. (“Kyperounta”) a British Virgin Islands corporation, Lefkoniko Maritime Inc. (“Lefkoniko”) a British Virgin Islands corporation, Akamas Maritime Inc. (“Akamas”) a Cayman Islands corporation, Chalkoessa Maritime Inc. (“Chalkoessa”) a Marshall Islands corporation, all wholly owned by Polys Hajioannou, and Kition Holdings Corp. (“Kition Holdings”) a British Virgin Islands corporation wholly owned by NicolaosHajioannou, Polys Hajioannou's brother, entered into a stock transfer agreement with Vorini Holdings, through which shares of Safe Bulkers owned by Vorini Holdings were sold for no consideration to the above entities.

By virtue of shares owned indirectly through Vorini Holdings, Bellapais, Kyperounta, Lefkoniko, Akamas, Chalkoessa and Kition Holdings, Polys Hajioannou and his family continue to be the controlling shareholders of Safe Bulkers, and accordingly control the outcome of matters on which shareholders are entitled to vote, including the election of the entire board of directors and other significant corporate actions.

Since the IPO, Safe Bulkers successfully completed four additional public common stock offerings and three preferred stock offerings.

As of December 31, 2014,Safe Bulkers held45wholly-owned companies(which are referred to herein as “Subsidiaries”) which together owned and operated a fleet of 32drybulk vesselsand were scheduled to acquire an additional 12newbuild (the “Newbuilds”) vessels.

Safe Bulkers and the Subsidiaries are collectively referred to in the notes to the consolidated financial statements as the “Company.”

The Company's principal business is the acquisition, ownership and operation of drybulk vessels. The Company's vessels operate worldwide, carrying drybulk cargo for the world's largest consumers of marine drybulk transportation services. Safety Management Overseas S.A., a company incorporated under the laws of the Republic of Panama (“Safety Management” or the “Manager”), a related party controlled by Polys Hajioannou, provides technical, commercial and administrative management services to the Company.

The accompanying consolidated financial statements include the operations, assets and liabilitiesof the Company, and of the Subsidiaries listed below.

Subsidiary	Vessel Name	Type	Built
Maxeikosiepta Shipping Corporation (“Maxeikosiepta”)(1)	Paraskevi	Panamax	January 2003
Marindou Shipping Corporation (“Marindou”)(1)	Maria	Panamax	April 2003
Maxeikosiexi Shipping Corporation (“Maxeikosiexi”)(1)	Koulitsa	Panamax	April 2003
Avstes Shipping Corporation (“Avstes”)(1)	Vassos	Panamax	February 2004
Kerasies Shipping Corporation (“Kerasies”)(1)	Katerina	Panamax	May 2004
Marathassa Shipping Corporation (“Marathassa”)(1)	Maritsa	Panamax	January 2005
Maxeikositessera Shipping Corporation (“Maxeikositessera”)(1)	Efrossini	Panamax	February 2012
Glovertwo Shipping Corporation (“Glovertwo”)(3)	Zoe	Panamax	July 2013
Shikokutessera Shipping Inc. (“Shikokutessera”)(3)	Kypros Land	Panamax	January 2014
Shikokupente Shipping Inc. (“Shikokupente”)(3)	Kypros Sea	Panamax	March 2014
Gloverthree Shipping Corporation (“Gloverthree”)(3)	Kypros Unity	Panamax	September 2014
Gloverfour Shipping Corporation (“Gloverfour”)(2)(3)	Kypros Bravery (H 822)	Panamax	January 2015
Pemer Shipping Ltd. (“Pemer”)(1)	Pedhoulas Merchant	Kamsarmax	March 2006
Petra Shipping Ltd. (“Petra”)(1)	Pedhoulas Trader	Kamsarmax	May 2006
Pelea Shipping Ltd. (“Pelea”)(1)	Pedhoulas Leader	Kamsarmax	March 2007
Vassone Shipping Corporation (“Vassone”)(3)	Pedhoulas Commander	Kamsarmax	May 2008
Maxeikosi Shipping Corporation (“Maxeikosi”)(1)	Pedhoulas Builder	Kamsarmax	May 2012
Maxeikositria Shipping Corporation (“Maxeikositria”)(1)	Pedhoulas Fighter	Kamsarmax	August 2012
Maxeikosiena Shipping Corporation (“Maxeikosiena”)(1)	Pedhoulas Farmer	Kamsarmax	September 2012
Staloudi Shipping Corporation (“Staloudi”)(1)	Stalo	Post-Panamax	January 2006
Marinouki Shipping Corporation (“Marinouki”)(1)	Marina	Post-Panamax	January 2006
Soffive Shipping Corporation (“Soffive”)(1)	Sophia	Post-Panamax	June 2007
Vasstwo Shipping Corporation (“Vasstwo”)(1)	Xenia	Post-Panamax	August 2006
Eniaprohi Shipping Corporation (“Eniaprohi”)(1)	Eleni	Post-Panamax	November 2008
Eniadefhi Shipping Corporation (“Eniadefhi”)(1)	Martine	Post-Panamax	February 2009
Maxdodeka Shipping Corporation (“Maxdodeka”)(1)	Andreas K	Post-Panamax	September 2009
Maxdekatria Shipping Corporation (“Maxdekatria”)(1)	Panayiota K	Post-Panamax	April 2010
Maxdeka Shipping Corporation (“Maxdeka”)(3)	Venus Heritage	Post-Panamax	December 2010
Shikoku Friendship Shipping Company (“Shikoku”)(3)	Venus History	Post-Panamax	September 2011
Maxenteka Shipping Corporation (“Maxenteka”)(3)	Venus Horizon	Post-Panamax	February 2012
Maxpente Shipping Corporation (“Maxpente”)(1)	Kanaris	Capesize	March 2010
Eptaprohi Shipping Corporation (“Eptaprohi”)(1)	Pelopidas	Capesize	November 2011
Maxtessera Shipping Corporation (“Maxtessera”)(3)	Lake Despina	Capesize	January 2014
Shikokuokto Shipping Inc. (“Shikokuokto”)(3)	TBN - H 1689	Panamax	1H 2015 (4)
Youngone Shipping Inc. (“Youngone”)(3)	TBN - H 1148	Kamsarmax	1H 2015 (4)
Gloverfive Shipping Corporation (“Gloverfive”)(3)	TBN - H 827	Panamax	2H 2015 (4)
Shikokuexi Shipping Inc. (“Shikokuexi”)(3)	TBN - H 1685	Post-Panamax	2H 2015 (4) (5)
Shikokuepta Shipping Inc. (“Shikokuepta”)(3)	TBN - H 1686	Post-Panamax	2H 2015 (4) (5)
Gloversix Shipping Corporation (“Gloversix”)(3)	TBN - H 828	Panamax	1H 2016 (4)
Youngtwo Shipping Inc. (“Youngtwo”)(3)	TBN - H 1146	Kamsarmax	1H 2016 (4) (5)
Shikokuennia Shipping Inc. (“Shikokuennia”)(3)	TBN - H 1718	Post-Panamax	1H 2016 (4)
Gloverseven Shipping Corporation (“Gloverseven”)(3)	TBN - H 835	Panamax	2H 2016 (4) (5)
Kyotofrendo One Shipping Inc. (“Kyotofrendo One”)(3)	TBN - H 1551	Kamsarmax	1H 2016 (4) (5)
Kyotofrendo Two Shipping Inc. (“Kyotofrendo Two”)(3)	TBN - H 1552	Kamsarmax	1H 2017 (4) (5)
Maxeikosipente Shipping Corporation (“Maxeikosipente”)(1)(6)	—	—	—
Efragel Shipping Corporation (“Efragel”)(1)(7)	—	—	—
S.B. Sea Venture Company Ltd (8)	—	—	—
(1) Incorporated under the laws of the Republic of Liberia
(2) Newbuild vessel acquisition. Refer to Note 24.
(3) Incorporated under the laws of the Republic of the Marshall Islands
(4) Estimated completion date for newbuild vessels as of December 31, 2014.
(5) Refer to Note 24 for rescheduled delivery date.
(6) Cancellation of Newbuild. Refer to Notes 4 and 11.
(7) Company dissolved in October 2012
(8) Incorporated under the laws of the Republic of Cyprus, dissolved in September 2014.

For the years ended December 31, 2012, 2013 and 2014, the following charterers individually accounted for more than 10% of the Company's charter revenues as follows:

	December 31,
	2012		2013		2014
Daiichi Chuo Kisen Kaisha	46.48	%	30.30	%	-
Kawasaki Kisen Kaisha	16.39	%	15.39	%	-

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Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2014

Accounting Policies

Principles of Consolidation

Principles of Consolidation:The accompanying consolidated financial statements have been prepared in accordance with accounting principles generallyaccepted in the United States of America (“U.S. GAAP”) and include allaccounts of the Company. All intra-group and intercompanybalances and transactions have been eliminated upon consolidation.

Use of Estimates

Use of Estimates: The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include vessel valuations, the valuation of amounts due from charterers, residual value of vessels, useful life of vessels and the fair value of derivative instruments.Actual results maydiffer from these estimates.

Other Comprehensive Income/ (Loss) And Dividends

Other Comprehensive Income / (Loss): The Company follows the accounting guidance relating to Statement of Comprehensive Income, which requires separate presentation of certain transactions that are recorded directly as components of shareholders' equity. The Company has no other comprehensive income/(loss) and accordingly comprehensive income/(loss) equals net income for the periods presented.

Dividends: Dividends are recorded in the period in which they are approved by the Company's Board of Directors.

Foreign Currency Translation

Foreign Currency Translation: The reporting and functional currency of the Company is the U.S. dollar (“USD”). Transactions incurred in other currencies are translated into USD using the exchange rates in effect at the time of the transaction. Onthe balance sheet date, monetary assets and liabilities that are denominated in other currencies are translated into USD to reflect the end-of-period exchange rates. Resulting gains or losses from foreign currency transactions are recorded within Foreign currency loss/(gain) in the accompanying consolidated statements of income in the period in which they arise.

Cash and Cash Equivalents

Cash and Cash Equivalents: Cash and cash equivalents consist of current, call, time deposits and certificates of deposit with original maturities of three months or less and which are not restricted for use or withdrawal.

Time Deposits

Time Deposits: Time deposits are held with banks with original maturities longer than three months. In the event original maturities are shorter than 12 months, such deposits are classified as current assets; if original maturities are longer than 12 months, such deposits are classified as non-current assets.

Restricted Cash

Restricted Cash: Restricted cash represents minimum cash deposits or cash collateral deposits required to be maintained with certain banks under the Company's borrowing arrangements or in relation to bank guarantees issued on behalf of the Company. In the event that the obligation relating to such deposits is expected to be terminated within the next 12 months, these deposits are classified as current assets; otherwise they are classified as non-current assets.

Accounts Receivable

Accounts Receivable: Accounts receivable reflects trade receivables from time or voyage charters and other receivables from operational activities, net of an allowance for doubtful accounts. Oneach balance sheet date, all potentially uncollectible accounts are assessed individually for purposes of determining the appropriate provision for doubtful accounts. No allowance for doubtful accounts was recorded for any of the periods presented.

Inventories

Inventories: Inventories consist of bunkers and lubricants owned by the Company remaining on board the vessels at the end of each reporting period, which are stated at the lower of cost or market value. Cost is determined using the first–in, first-out method.

Vessels Net, Depreciation, Special Survey and Drydocking Costs, Repairs and Maintenance

Vessels, Net: Vessels are stated at their historical cost, which consists of the contracted purchase price and any direct material expenses incurred upon acquisition (including improvements, on-site supervision expenses incurred during the construction period if the vessels are newbuilds, commissions paid, delivery expenses and other expenditures to prepare the vessel for her initial voyage), less accumulated depreciation. Financing costs incurred during the construction period of the vesselsif the vessels are newbuildsare also capitalized and included in the vessels' cost. Certain subsequent expenditures for conversions and major improvements are also capitalized if it is determined that they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels.

Vessels' Depreciation: Depreciation is computed using the straight-line method over the estimated useful life of the vessels, after considering the estimated residual value. We estimate the useful life of the Company's vessels to be 25 years from the date of initial delivery from the shipyard.Secondhand vessels are depreciated from the date of their acquisition through their remaining estimated useful life.

Accounting for Special Survey and Drydocking Costs: Special survey and drydocking costs are expensed in the period incurred and are included in vessel operating expenses in the accompanying consolidated statements of income.

Repairs and Maintenance: All repair and maintenance expenses, including major overhauling and underwater inspection expenses, are expensed when incurred and are included in vessel operating expenses in the accompanying consolidated statements of income.

Impairment and Disposal of Long-lived Assets

Impairment of Long-lived Assets:The Company follows the Accounting Standards Codification (“ASC”) Subtopic 360-10, “Property, Plant andEquipment” (“ASC 360-10”), which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment arepresent and the undiscounted cash flows estimated to be generated by those assets are less than their carrying amounts. If indicators of impairment are present,the Company performs an analysis of the anticipated undiscounted future net cash flows of the related long-lived assets. If the carrying value of the relatedasset exceeds the undiscounted cash flows, the carrying value is reduced to its fair value and the difference is recorded as an impairment loss in theconsolidated statements of income. Various factors including anticipated future charter rates, estimated scrap values, future drydocking costs and estimatedvessel operating costs are included in this analysis. No impairment loss was recorded during the years ended December 31, 2012, 2013and 2014.

Assets Held for Sale: The Company may dispose of certain of its vessels when suitable opportunities occur, including prior to the end of their useful lives. The Company classifies assets as being held for sale when the following criteria are met: (i) management is committed to sell the asset; (ii) the asset is available for immediate sale in its present condition; (iii) an active program to locate a buyer and other actions required to complete the plan to sell the asset have been initiated; (iv) the sale of the asset is probable, and transfer of the asset is expected to qualify for recognition as a completed sale within one year; (v) the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and (vi) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

Long-lived assets classified as held for sale are measured at the lower of their carrying amount or fair value less the cost to sell the asset. These assets are no longer depreciated once they meet the criteria of being held for sale. There were no assets held for sale as of December 31, 2013 and 2014.

Deferred Financing Costs

Deferred Financing Costs:Financing fees incurred for obtaining new loans and credit facilities are deferred and amortized over the term of the respective loan or credit facility using the effective interest rate method. Any unamortized balance of costs relating to loans repaid or refinanced is expensed in the period in which the repayment or refinancing is made, subject to the guidance regarding Debt Extinguishment. Any unamortized balance of costs related to credit facilities repaid is expensed in the period. Any unamortized balance of costs relating to the credit facilities refinanced is deferred and amortized over the term of the respective credit facility in the period in which the refinancing occurs, subject to the provisions of the accounting guidance relating to Changes in Line-of-Credit or Revolving-Debt Arrangements.

Derivative And Financial Instruments

Derivative Instruments: The Company may enter into foreign exchange forward contracts to create economic hedges for its exposure to currency exchange risk on payments relating to the acquisition of vessels and on certain loan obligations. The Company also enters into interest rate derivatives to create economic hedges for its exposure to interest rate risk of its loan obligations (see also Notes 8 and 16). When such derivatives do not qualify for hedge accounting the Company records these financial instruments in the consolidated balance sheet at their fair value as either a derivative asset or a liability, and recognizes the fair value changes thereto in the consolidated statements of income. When the derivatives do qualify for hedge accounting, depending upon the nature of the hedge, changes in fair value of the derivatives are either offset against the fair value of assets, liabilities or firm commitments through income, or recognized in other comprehensive income/(loss) (effective portion) until the hedged item is recognized in the consolidated statements of income. For the years ended December 31, 2012, 2013and 2014, no derivatives were accounted for as accounting hedges.

Financial Instruments: Over-the-counter foreign exchange forward contracts and interest rate derivatives are recorded at fair value. Other financial instruments, including cash equivalents and debt are recorded at amortized cost.

(a) Interest rate risk: The Company's interest rates and long-term loan repayment terms are described in Note 8.The Company manages its interest rate risk by entering into interest rate derivative instruments which are described in Note 16.

(b) Concentration of credit risk: Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist principally of trade accounts receivable, cash and cash equivalents, time deposits and derivative instruments. The Company limits its credit risk with accounts receivable by performing ongoing credit evaluations of its customers' financial condition and generally does not require collateral for its trade accounts receivable. The Company places its cash and cash equivalents, time deposits and other investments with high credit quality financial institutions. The Company performs periodic evaluations of the relative credit standing of those financial institutions. The Company is exposed to credit risk in the event of non-performance by its counterparties to derivative instruments; however, the Company limits its exposure by transacting with counterparties with high credit ratings.

(c) Fair value measurement: In accordance with the requirements of accounting guidance relating to Fair Value Measurement, the Company classifies and discloses assets and liabilities carried at fair value in one of the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

Accounting for Revenues and Related Expenses

Accounting for Revenues and Related Expenses:The Company generates its revenues from charterers for the charter hire of its vessels. Vessels are chartered under time charter, where a contract is entered into for the use of a vessel for a specific voyage or a specific period of time and at a specified daily charter rate. Time charter revenues are recognized as earned on the straight-line basis over the term of the charter as service is provided. Revenues from time charter may also include ballast bonus, which is an amount paid by the charterer for repositioning the vessel at the charterer's disposal (delivery point), which is recognized as revenue over the term of the charter, and other miscellaneous revenues from vessel operations. Expenses relating to the Company's time charters are vessel operating expenses and certain voyage expenses, which are paid by the Company and recognized as incurred. Vessel operating expenses that are paid by the Company include costs for crewing, insurance, lubricants, spare parts, provisions, stores, repairs, maintenance, statutory and classification expense, drydocking, intermediate and special surveys and other minor miscellaneous expenses. Voyage expenses which are also recognized as incurred and paid by the Company include costs for draft surveys, hold cleaning, postage, extra war risk insurance, bunkers during ballast period and other minor miscellaneous expenses related to the voyage. The charterer is responsible for paying the cost of bunkers and other voyage expenses (e.g., port expenses, agents' fees, canal dues, extra war risks insurance and any other expenses related to the cargo).

Vessels are also chartered under voyage charters, where a contract is made for the use of a vessel under which the Company is paid freight on the basis of moving cargo from a loading port to a discharge port. During the years ended December 31, 2012, 2013 and 2014, there have been only two instances where a vessel was employed under a voyage charter. Under a voyage charter, the revenues are recognized on a pro-rata basis over the duration of the voyage from load port to discharge port. Probable losses on voyages are provided for in full at the time such losses can be estimated. Related expenses are operating expenses, bunkers and voyage expenses, which are recognized as incurred and are all paid for by the Company. Demurrage income represents payments by the charterer to the vessel owner when loading or discharging time exceeds the stipulated time in the voyage charter and is recognized when earned and collection is reasonably assured. Dispatch expense represents payments by the Company to the charterer when loading or discharging time is less than the stipulated time in the voyage charter and is recognized as incurred.

Revenue is recognized when a charter agreement exists, the vessel is made available to the charterer and collection of the related revenue is reasonably assured. Unearned revenue includes: (i) cash received prior to the balance sheet date relating to services to be rendered after the balance sheet date and (ii) deferred revenue resulting from straight-line revenue recognition in respect of charter agreements that provide for varying charter rates. Accrued revenue results from straight-line revenue recognition in respect of charter agreements that provide for varying charter rates. Commissions (address and brokerage), regardless of charter type, are always paid by the Company, are deferred and amortized over the related charter period and are presented as a separate line item in revenues to arrive at net revenues in the accompanying consolidated statements of income.

Pension and Retirment Benefit Obligations- Crew

Pension and Retirement Benefit Obligations—Crew: The Subsidiaries included in the consolidated financial statements employ the crew on board under short-term contracts (usually up to nine months) and accordingly, they are not liable for any pension or post-retirement benefits.

Taxes

Taxes:Entities within the group that are incorporated under the laws of either the Republic of Liberia or the Republic of the Marshall Islands are not subject to Liberian or Marshall Islands income taxes. However, each vessel-owning Subsidiary is subject to registration and tonnage taxes under the laws of the Republic of Cyprus or the Republic of the Marshall Islands depending on where each Company's vessel is registered. As of January 1, 2013, each vessel managed in Greece is subject to tonnage tax, under the laws of the Republic of Greece.In addition, as of December 31, 2013, each vessel managed in Greece is also subject to an annual shipping community mandatory financial contribution for the years 2014, 2015 and 2016 under the laws of the Republic of Greece. These registration, tonnage taxes and financial contributions are recorded within Vessel operating expenses in the accompanying consolidated statements of income and none are considered income taxes.

Furthermore, the Subsidiaries are subject to a 4% U.S. federal tax in respect of its U.S. source shipping income (imposed on gross income without the allowance for any deductions), because none of the Subsidiaries meet the requirements for an exemption from such tax provided by Section 883 of the U.S. Internal Revenue Code of 1986. As a result, the Subsidiaries file U.S. federal tax returns and pay the relevant U.S. federal tax on their U.S. source shipping income, which isnot considered an income tax. Such taxes have been recorded within Voyage expenses in the accompanying consolidated statements of income. In many cases, thesetaxes are recovered from the charterers; such amounts recovered are recorded within Revenues in the accompanying consolidated statements of income.

Earnings Per Share

Earnings Per Share: The computation of basic earnings per share is based on the weighted average number of common shares outstanding during the year and includes the shares issuable to the audit committee chairman and the independent directors at the end of the year for services rendered. Diluted earnings per share are the same as basic earnings per share. There are no other potentially dilutive shares. The computation of basic earnings per share is calculated after deducting the preferred stock dividend from net income.

Segment Reporting

Segment Reporting: The Company reports financial information and evaluates its operations by total charter revenue and not by the type of vessel or vessel employment for its customers. The Company's vessels have similar operating and economic characteristics. As a result, management, including the chief operating decision makers, reviews operating results solely by revenue per day and operating results of the fleet, and thus the Company has determined that it operates under one reportable segment. Furthermore, when the Company charters a vessel to a charterer, the charterer is free to trade the vessel worldwide and, as a result, the disclosure of geographic information is impracticable.

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Future Minimum Time Charter Revenue, textual (Details)	12 Months Ended
	Dec. 31, 2014
Future Minimum Time Charter Revenue
Estimated Offhire Days	12 days

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2014

Commitments And Contingencies Disclosure

Commitments under Shipbuilding Contracts and Memorandums of Agreement

		Due to Shipyards /		Due to
Year Ending December 31		Sellers		Manager		Total
	2015	$	156,874	$	5,429	$	162,303
	2016		127,385		3,264		130,649
	2017		20,311		613		20,924
	Total	$	304,570	$	9,306	$	313,876

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Transactions with Related Parties, detail 2 (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Related Party Transactions
Fixed and Variable fees	$ 8,962	$ 8,379	$ 7,726
Supervision Fees	2,200	1,925	1,375
Acquisition Fees	$ 1,429	$ 823	$ 1,810

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Gain on Asset Purchase Cancelation, textual (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Contract Cancellation [Line Items]
(Loss) Gain on asset purchase cancellations	$ 3,633	$ 0	$ 0
Contract for Hull No J0131
Contract Cancellation [Line Items]
Installments Paid For Vessel Consruction	31,800
Accrued Interest Earned Related To Asset Puchase Cancellations	4,520
Interest and expenses capitalized	$ 887

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
CURRENT ASSETS:
Cash and cash equivalents	$ 107,311	$ 64,671
Accounts receivable	4,530	36,372
Inventories	11,185	12,600
Accrued revenue	212	0
Restricted cash	10,939	6,750
Prepaid expenses and other current assets	1,715	2,792
Investment	0	50,000
Total current assets	135,892	173,185
FIXED ASSETS:
Vessels, net	960,423	855,200
Advances for vessel acquisitions and vessels under construction	74,243	76,299
Total fixed assets	1,034,666	931,499
OTHER NON CURRENT ASSETS:
Deferred finance charges, net	6,601	5,347
Restricted cash	4,263	1,423
Derivative assets	455	762
Accrued revenue	452	0
Total assets	1,182,329	1,112,216
CURRENT LIABILITIES:
Current portion of long-term debt	17,121	35,185
Unearned revenue	3,599	13,106
Trade accounts payable	3,014	4,109
Accrued liabilities	4,467	3,865
Derivative liabilities	493	732
Due to Manager	24	307
Total current liabilities	28,718	57,304
Derivatives liabities - Long-term	1,065	3,270
Long-term debt, net of current portion	452,447	473,110
Unearned revenue - Long-term	0	196
Total liabilities	482,230	533,880
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock, $0.001 par value; 200,000,000 authorized, 83,436,484 and 83,450,266 issued and outstanding at December 31, 2013 and 2014, respectively	83	83
Preferred stock, $0.01 par value; 20,000,000 authorized, 1,600,000 Series B Preferred Shares and 1,600,000 Series B Preferred Shares, 2,300,000 Series C Preferred Shares, 3,200,000 Series D Preferred Shares, issued and outstanding at December 31, 2013 and 2014, respectively	71	16
Additional paid in capital	370,201	237,212
Retained earnings	329,744	341,025
Total shareholders' equity	700,099	578,336
Total liabilities and shareholders' equity	$ 1,182,329	$ 1,112,216

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Early Redelivery Income, Net (Tables)

12 Months Ended

Dec. 31, 2014

Early Redelivery Income Net

Early redelivery Income, Net

			Year Ended
			December 31,
Company		Date	2012		2013		2014
Eniadefhi	(a)	December 15, 2012	$	8,475	$	-	$	-
Marindou	(b)	December 19, 2012		3,202		-		-
Soffive	(c)	April 22, 2013		-		2,965		-
Avstes	(d)	May 3, 2013		-		2,304		-
Kerasies	(e)	May 16, 2013		-		1,781		-
Other minor early redeliveries		Various		-		-		(532)
Total			$	11,677	$	7,050	$	(532)

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Consolidated Statements of Shareholders' Equity (Parantheticals) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Statement of Stockholders' Equity [Abstract]
Common Stock Dividends Per Share Declared	$ 0.22	$ 0.21	$ 0.50

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Bank Debt, detail (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Debt Instrument [Line Items]
Total	$ 469,568	$ 508,295
Curent portion	17,121	35,185
Long-term portion	452,447	473,110
Maxeikosi | Terminated loan agreement
Debt Instrument [Line Items]
Total	0	16,668
Commencement	Aug. 01, 2012
Maturity	Aug. 01, 2014
Maxeikosi | Current loan agreement
Debt Instrument [Line Items]
Total	9,100	0
Commencement	Dec. 01, 2014
Maturity	Dec. 01, 2019
Maxpente | Terminated loan agreement
Debt Instrument [Line Items]
Total	0	30,838
Commencement	Dec. 01, 2013
Maturity	Jul. 01, 2014
Maxpente | Current loan agreement
Debt Instrument [Line Items]
Total	20,000	0
Commencement	Dec. 01, 2014
Maturity	Dec. 01, 2019
Maxdodeka | Terminated loan agreement
Debt Instrument [Line Items]
Total	0	0
Commencement	Dec. 01, 2012
Maturity	Nov. 01, 2014
Eniaprohi | Terminated loan agreement
Debt Instrument [Line Items]
Total	0	24,000
Commencement	Dec. 01, 2012
Maturity	Nov. 01, 2014
Eniadefhi | Terminated loan agreement
Debt Instrument [Line Items]
Total	0	33,750
Commencement	Dec. 01, 2012
Maturity	Nov. 01, 2014
Avstes | Terminated loan agreement
Debt Instrument [Line Items]
Total	0	22,700
Commencement	Dec. 01, 2012
Maturity	Nov. 01, 2014
Marindou | Terminated loan agreement
Debt Instrument [Line Items]
Total	0	28,400
Commencement	Dec. 01, 2012
Maturity	Nov. 01, 2014
Pelea | Terminated loan agreement
Debt Instrument [Line Items]
Total	0	32,298
Commencement	Dec. 01, 2012
Maturity	Nov. 01, 2014
Vassone | Current loan agreement
Debt Instrument [Line Items]
Total	2,437	0
Commencement	Jan. 01, 2014
Maturity	Jan. 01, 2017
Marathassa | Current loan agreement
Debt Instrument [Line Items]
Total	8,415	10,208
Commencement	Dec. 01, 2013
Maturity	Feb. 01, 2017
Marinouki | Current loan agreement
Debt Instrument [Line Items]
Total	19,035	20,963
Commencement	Dec. 01, 2013
Maturity	Mar. 01, 2018
Glovertwo | Current loan agreement
Debt Instrument [Line Items]
Total	13,666	16,000
Commencement	Oct. 01, 2013
Maturity	Dec. 01, 2018
Petra | Current loan agreement
Debt Instrument [Line Items]
Total	20,571	22,220
Commencement	Jan. 01, 2007
Maturity	Jan. 01, 2019
Pemer | Current loan agreement
Debt Instrument [Line Items]
Total	20,568	22,218
Commencement	Mar. 01, 2007
Maturity	Mar. 01, 2019
Eptaprohi | Current loan agreement
Debt Instrument [Line Items]
Total	0	0
Commencement	Apr. 01, 2012
Maturity	Apr. 01, 2019
Shikokupente | Current loan agreement
Debt Instrument [Line Items]
Total	13,500	0
Commencement	Jul. 01, 2014
Maturity	Jun. 01, 2019
Maxtessera | Current loan agreement
Debt Instrument [Line Items]
Total	0	0
Commencement	Jul. 01, 2014
Maturity	Jun. 01, 2019
Maxeikosiena | Current loan agreement
Debt Instrument [Line Items]
Total	0	0
Commencement	Oct. 01, 2012
Maturity	Oct. 01, 2019
Soffive | Current loan agreement
Debt Instrument [Line Items]
Total	25,200	27,840
Commencement	Dec. 01, 2013
Maturity	Nov. 01, 2019
Kerasies | Current loan agreement
Debt Instrument [Line Items]
Total	22,396	24,744
Commencement	Dec. 01, 2013
Maturity	Dec. 01, 2019
Maxdekatria | Current loan agreement
Debt Instrument [Line Items]
Total	18,400	20,400
Commencement	Mar. 01, 2012
Maturity	Mar. 01, 2020
Gloverthree | Current loan agreement
Debt Instrument [Line Items]
Total	10,900	0
Commencement	Dec. 01, 2014
Maturity	Dec. 01, 2019
Shikokutessera | Current loan agreement
Debt Instrument [Line Items]
Total	10,900	0
Commencement	Dec. 01, 2014
Maturity	Dec. 01, 2019
Safe Bulkers | Current loan agreement
Debt Instrument [Line Items]
Total	118,527	0
Commencement	Nov. 01, 2014
Maturity	Sep. 01, 2020
Maxdeka | Current loan agreement
Debt Instrument [Line Items]
Total	27,270	30,678
Commencement	Aug. 01, 2011
Maturity	Dec. 01, 2022
Staloudi | Current loan agreement
Debt Instrument [Line Items]
Total	18,520	24,520
Commencement	Jul. 01, 2008
Maturity	Jul. 01, 2023
Shikoku | Current loan agreement
Debt Instrument [Line Items]
Total	33,600	37,333
Commencement	Oct. 01, 2011
Maturity	Aug. 01, 2023
Maxeikositessera | Current loan agreement
Debt Instrument [Line Items]
Total	28,063	31,017
Commencement	Sep. 01, 2012
Maturity	Feb. 01, 2024
Maxenteka | Current loan agreement
Debt Instrument [Line Items]
Total	$ 28,500	$ 31,500
Commencement	Apr. 01, 2012
Maturity	Apr. 01, 2024

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Account Receivable (Tables)

12 Months Ended

Dec. 31, 2014

Receivables

Schedule of Accounts Receivable

Accounts receivable are comprised of the following:
		December 31,
		2013		2014
Trade receivables	$	4,572	$	4,530
Other receivables		31,800		-
Total	$	36,372	$	4,530

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Share Capital, textual 2(Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013	May 09, 2008	Dec. 11, 2007	Jun. 03, 2008
Class of Stock [Line Items]
Ordinary shares issued	83,450,266	83,436,484
Ordinary shares par value	$ 0.001	$ 0.001	$ 0.001	$ 0.001
IPO
Class of Stock [Line Items]
Sale Of Stock Number Of Shares Sold In Transaction					10,000,000
Share Price					$ 19
Ordinary shares issued					54,500,000
Ordinary shares par value					$ 0.001

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Vessel Operating Expenses

12 Months Ended

Dec. 31, 2014

Notes To Consolidated Financial Statements

Vessel Operating Expenses

15. Vessel Operating Expenses

Vessel operating expenses are comprised of the following:

	Year Ended
	December 31,
	2012		2013		2014
Crew wages and related costs	$	17,202	$	22,015	$	26,169
Insurance		2,828		3,477		4,133
Repairs, maintenance and drydocking costs		2,493		3,240		4,344
Spares, stores and provisions		6,939		7,533		9,058
Lubricants		3,296		2,787		3,509
Taxes		303		669		1,282
Miscellaneous		1,479		2,243		2,139
Total	$	34,540	$	41,964	$	50,634

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Vessels, Net (Tables)

12 Months Ended

Dec. 31, 2014

Property, Plant and Equipment [Abstract]

Schedule of Vessels, Net

Vessels, net, are comprised of the following:
	Vessel		Accumulated		Net Book
	Cost		Depreciation		Value
Balance, January 1, 2013	$	930,011	$	(120,010)	$	810,001
Transfer from Advances for vessel acquisitions and vessels under construction		82,593		—		82,593
Depreciation expense		—		(37,394)		(37,394)
Balance, December 31, 2013	$	1,012,604	$	(157,404)	$	855,200
Transfer from Advances for vessel acquisitions and vessels under construction		148,307		—		148,307
Depreciation expense		—		(43,084)		(43,084)
Balance, December 31, 2014	$	1,160,911	$	(200,488)	$	960,423

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Accrued Liabilities

12 Months Ended

Dec. 31, 2014

Notes To Consolidated Financial Statements

Accrued Liabilities

17. Accrued Liabilities

Accrued liabilities are comprised of the following:

	December 31,
	2013		2014
Interest on long-term debt	$	1,536	$	1,270
Vessels’ operating and voyage expenses		1,055		1,687
Commissions		92		109
Interest on derivatives and other finance expenses		1,006		1,098
General and administrative expenses		176		303
Total	$	3,865	$	4,467

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Commitments and Contingencies, detail (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014 item
Commitments And Contingencies Disclosure
Number Of Moas	4
Number Of Shipbuilding Contracts	8
Number Of Newbuild Vessels	12
Unrecorded Unconditional Purchase Obligation [Line Items]
2015	$ 162,303
2016	130,649
2017	20,924
Total	313,876
Due To Shipyards Sellers
Unrecorded Unconditional Purchase Obligation [Line Items]
2015	156,874
2016	127,385
2017	20,311
Total	304,570
Due To Manager
Unrecorded Unconditional Purchase Obligation [Line Items]
2015	5,429
2016	3,264
2017	613
Total	$ 9,306

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Consolidated Statemenets of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Cash Flows from Operating Activities:
Net income	$ 14,634	$ 83,257	$ 96,120
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	43,084	37,394	32,250
Gain on asset purchase cancellation	(3,633)	0	0
Loss from inventory valuation	4,001	0	0
Amortization and write-off of deferred finance charges	1,472	1,252	1,226
Unrealized gain on derivatives	(2,137)	(6,329)	(2,798)
Share based compensation	120	120	120
Change in:
Accounts receivable	42	675	303
Due from Manager	0	0	24
Inventories	(2,586)	(6,700)	(3,247)
Accrued revenue	(664)	646	(646)
Prepaid expenses and other current assets	190	12	(575)
Due to Manager	(283)	234	73
Trade accounts payable	(997)	950	1,878
Accrued liabilities	192	(2,595)	(255)
Unearned revenue	(9,703)	(8,322)	(19,408)
Net Cash Provided by Operating Activities	43,732	100,594	105,065
Cash Flows from Investing Activities:
Vessel acquisitions including advances for vessels under construction	(146,300)	(118,894)	(136,845)
Proceeds from the asset purchase cancellation	36,320	0	0
Maturity of investment	50,000	0	0
Increase in restricted cash	(13,779)	(6,250)	(23,300)
Restricted cash released	6,750	24,800	2,000
Net Cash Used in Investing Activities	(67,009)	(100,344)	(158,145)
Cash Flows from Financing Activities:
Proceeds from long-term debt	93,925	16,000	312,630
Principal payments of long-term debt	(132,652)	(123,372)	(181,254)
Dividends paid	(25,915)	(17,742)	(37,463)
Payment of deferred financing costs	(2,267)	(132)	(1,467)
Proceeds on issuance of common stock	0	48,255	35,505
Payment of common stock offering expenses	(98)	(177)	(268)
Proceeds on issuance of preferred stock	133,387	39,328	0
Payment of preferred stock offering expenses	(463)	(463)	0
Net Cash Provided by/(Used in) Financing Activities	65,917	(38,303)	127,683
Net increase/(decrease) in cash and cash equivalents	42,640	(38,053)	74,603
Cash and cash equivalents at beginning of year	64,671	102,724	28,121
Cash and cash equivalents at end of year	107,311	64,671	102,724
Supplemental cash flow information:
Cash paid for interest (excluding capitalized interest):	8,594	9,263	8,534
Non cash Investing and Financing activities(represent advances and capitalized interest for newbuild Hull J0131 for 2012 and other minor non cash items for 2013 and 2014)	$ 506	$ 194	$ 32,412

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Consolidated Balance Sheets (Parentheticals) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Class of Stock [Line Items]
Ordinary shares par value	$ 0.001	$ 0.001
Ordinary shares authorized	200,000,000	200,000,000
Ordinary shares issued	83,450,266	83,436,484
Ordinary shares outstanding	83,450,266	83,436,484
Preference shares par value	$ 0.01	$ 0.01
Preference shares authorized	20,000,000	20,000,000
Series B cumulative redeemable perpetual preferred shares
Class of Stock [Line Items]
Preference shares issued	1,600,000	1,600,000
Preference shares outstanding	1,600,000	1,600,000
Series C cumulative redeemable perpetual preferred shares
Class of Stock [Line Items]
Preference shares issued	2,300,000	0
Preference shares outstanding	2,300,000	0
Series D cumulative redeemable perpetual preferred shares
Class of Stock [Line Items]
Preference shares issued	3,200,000	0
Preference shares outstanding	3,200,000	0

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Share Capital

12 Months Ended

Dec. 31, 2014

Notes To Consolidated Financial Statements

Share Capital

10. Share Capital

The Company was incorporated on December 11, 2007 with authorized share capital of 500 shares of common stock with a par value of $0.001 per share. On May 9, 2008, the Company's Articles of Incorporation were amended. Under the amended Articles of Incorporation, the Company's authorized capital stock consists of 200,000,000 shares of common stock with a par value of $0.001 per share, of which 54,500,000 shares were issued prior to the listing of the Company's common stock on the NYSE, completed on June 3, 2008, and 20,000,000 shares of preferred stock with a par value of $0.01 per share. In connection with the IPO process, Vorini Holdings sold 10,000,000 shares of common stock of the Company with a par value of $0.001 per share at a price of $19 per share. No proceeds were paid to the Company.

In March 2010, the Company successfully completed a public offering, whereby 10,350,000 shares of Safe Bulkers common stock were issued and sold at a price of $7 per share, and a private placement, whereby 1,000,000 shares of Safe Bulkers common stock was issued and sold to Vorini Holdings. The net proceeds of the public offering and the private placement were $74,967, net of underwriting discount of $3,150 and offering expenses of $861.

In April 2011, the Company successfully completed a public offering, whereby 5,000,000 shares of Safe Bulkers common stock were issued and sold at a price of $8.4 per share. The net proceeds of the public offering were $39,637, net of underwriting discount of $2,100 and offering expenses of $263.

In March 2012, the Company successfully completed a public offering, whereby 5,750,000 shares of Safe Bulkers common stock were issued and sold at a price of $6.5 per share. The net proceeds of the public offering were $35,237, net of underwriting discount of $1,869 and offering expenses of $268.

In June 2013, the Company successfully completed a public offering, whereby 800,000 shares of Safe Bulkers series B cumulative redeemable perpetual preferred shareswere issued and sold at a price of $25.00 per share, and a private placement, whereby 800,000 shares of Safe Bulkers series B cumulative redeemable perpetual preferred shareswere issued and sold to Chalkoessa, at the public offering price. The net proceeds of the public offering and the private placement were $38,865 net of underwriting discount of $672 and offering expenses of $463. The Series B preferred shares were issued for cash and pay cumulative quarterly dividends at a rate of 8% per annum from their date of issuance, i.e. $2.00 per preferred share. At any time on or after July 30, 2016, the Series B preferred shares may be redeemed, at the option of the Company, in whole or in part at a redemption price of $25.00 per share plus unpaid dividends. If the Company fails to comply with certain covenants as these terms are defined in the applicable agreement, defaults on any of its credit facilities, fails to pay four quarterly dividends payable in arrears or if the Series B preferred shares are not redeemed at the option of the Company, in whole by July 30, 2018, the dividend rate payable on the Series B preferred shares increases quarterly to a rate that is 1.25 times the dividend rate payable on the series B preferred shares , subject to an aggregate maximum rate per annum of 25% prior to July 30, 2016 and 30% thereafter. The Series B preferred shares are not convertible into common shares and are not redeemable at the option of the holder.

In November 2013, the Company successfully completed a public offering, whereby 5,750,000 shares of Safe Bulkers common stock were issued and sold at a price of $7.43 per share, and a private placement, whereby 1,000,000 shares of Safe Bulkers common stock were issued and sold to Bellapais, at the public offering price. The net proceeds of the public offering and the private placement were $47,980, net of underwriting discount of $1,898 and offering expenses of $275.

In May 2014, the Company successfully completed a public offering, whereby 2,300,000 shares of Safe Bulkers series C cumulative redeemable perpetual preferred shares were issued and sold at a price of $25.00 per share. The net proceeds of the public offering and the private placement were $55,504 net of underwriting discount of $1,744 and offering expenses of $252.The Series C preferred shares were issued for cash and pay cumulative quarterly dividends at a rate of 8% per annum from their date of issuance, i.e. $2.00 per preferred share. At any time on or after May 31, 2019, the Series C preferred shares may be redeemed, at the option of the Company, in whole or in part at a redemption price of $25.00 per share plus unpaid dividends. The Series C preferred shares are not convertible into common shares and are not redeemable at the option of the holder.

In June 2014, the Company successfully completed a public offering, whereby 3,200,000 shares of Safe Bulkers series D cumulative redeemable perpetual preferred shares were issued and sold at a price of $25.00 per share. The net proceeds of the public offering and the private placement were $77,420 net of underwriting discount of $2,369 and offering expenses of $211.The Series D preferred shares were issued for cash and pay cumulative quarterly dividends at a rate of 8% per annum from their date of issuance, i.e. $2.00 per preferred share. At any time on or after June 30, 2019, the Series D preferred shares may be redeemed, at the option of the Company, in whole or in part at a redemption price of $25.00 per share plus unpaid dividends. The Series D preferred shares are not convertible into common shares and are not redeemable at the option of the holder.

Pursuant to an arrangement approved by the Company's shareholders' and the nominating and compensation committee, effective July 1, 2008, the audit committee chairman receives the equivalent of $15 every quarter, payable in arrears in the form of newly issued Company common stock as part compensation for services rendered as audit committee chairman. The number of shares to be issued is determined based on the closing price of the Company's common stock on the last trading day prior to the end of each quarter in which services were provided and the shares are issued as soon as practicable following the end of the quarter. During the years ended December 31, 2013 and 2014, 12,517 shares and 6,890 shares, respectively, were issued to the audit committee chairman.

Pursuant to an arrangement approved by the Company's shareholders and the nominating and compensation committee, effective January 1, 2010, the independent directors of the Company, other than the audit committee chairman, each receive the equivalent of $7.5 every quarter, payable in arrears in the form of newly issued Company common stock as part compensation for services rendered as independent directors. The number of shares to be issued is determined as noted above. During the years ended December 31, 2013 and 2014, 12,516 shares and 6,892 shares, respectively were issued to the independent directors of the Company, other than the audit committee chairman.

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Document and entity information	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Document Information [Abstract]
Document Type	20-F
Document period end date	Dec. 31, 2014
Amendment flag	false
Document Period Focus	2014
Document Fiscal Period Focus	FY
Entity Information [Abstract]
Current fiscal year end date	--12-31
Entity central index key	0001434754
Entity current reporting status	Yes
Entity filer category	Accelerated Filer
Entity registrant name	SAFE BULKERS, INC.
Trading symbol	SB
Entity voluntary filers	No
Entity well known seasoned issuer	No
Class of Stock [Line Items]
Entity common stock shares outstanding	83,450,266
Series B cumulative redeemable perpetual preferred shares
Class of Stock [Line Items]
Entity preferred shares outstanding	1,600,000	1,600,000
Series C cumulative redeemable perpetual preferred shares
Class of Stock [Line Items]
Entity preferred shares outstanding	2,300,000	0
Series D cumulative redeemable perpetual preferred shares
Class of Stock [Line Items]
Entity preferred shares outstanding	3,200,000	0

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2014

Notes To Consolidated Financial Statements

Commitments and Contingencies Disclosure

11. Commitments and Contingencies

(a)       Commitments under Shipbuilding Contracts and Memorandums of Agreement (“MoAs”)

As of December 31, 2014 the Company had commitments under eight shipbuilding contracts and four MoAs for the acquisition of 12newbuilds. The Company expects to settle these commitments as follows:

		Due to Shipyards /		Due to
Year Ending December 31		Sellers		Manager		Total
	2015	$	156,874	$	5,429	$	162,303
	2016		127,385		3,264		130,649
	2017		20,311		613		20,924
	Total	$	304,570	$	9,306	$	313,876

(b)Other contingent liabilities

The Company and its Subsidiaries have not been involved in any legal proceedings other than an arbitration legal proceeding in relation to the cancellation of the acquisition of newbuildHull J0131under the acquisition agreement,as discussed in Note 4, that may have, or have had, a significant effect on their business, financial position, results of operations or liquidity, nor is the Company aware of any proceedings that are pending or threatened that may have a significant effect on its business, financial position, results of operations or liquidity. From time to time various claims, suits and complaints, including those involving government regulations and product liability, arise in the ordinary course of the shipping business. In addition, losses may arise from disputes with charterers, agents, shipyards, insurance providers and other claims relating to the operation of the Company's vessels. Management is not aware of any material claims or contingent liabilities which should be disclosed, or for which a provision should be established in the accompanying consolidated financial statements.

The Company accrues for the cost of environmental liabilities when management becomes aware that a liability is probable and is able to reasonably estimate the probable exposure. Management is not aware of any such claims or contingent liabilities which should be disclosed, or for which a provision should be established in the accompanying consolidated financial statements. A maximum of $1,000,000 of the liabilities associated with the individual vessel actions, mainly for sea pollution, is covered by P&I Club insurance.

(c)Credit facilities

i. In June 2014, the Company accepted a commitment letter from a bank for a credit facility for up to $32,000, to be used to finance part of the purchase prices of Hull 1148 and Hull 1686 and also for general corporate purposes. The credit facility comprises a term loan tranche of up to $16,000 and a reducing revolving tranche of up to $16,000. The credit facility is repayable over seven years in 14 semi-annual consecutive installments commencing six months after drawdown and a balloon payment payable with the final installment.

ii.In June 2014, the Company accepted a commitment letter from a bank for a reducing revolving credit facility for up to $60,000, to be used to finance part of the purchase prices of Hull 828,Hull 835 and Hull 1718 and also for general corporate purposes. The credit facility is repayable over five years in 10 semi-annual consecutive installments commencing six months after drawdown and a balloon payment payable with the final installment.

iii.In July 2014, the Company accepted a commitment letter from a bank for a credit facility for up to $80,000, to be used to finance part of the purchase prices of Hull 1685, Hull 1146, Hull 1551 and Hull 1552 and also for general corporate purposes. The credit facility comprises a term loan tranche of up to $40,000 and a reducing revolving tranche of up to $40,000. The credit facility is repayable over five years in 10 semi-annual consecutive installments commencing six months after drawdown and a balloon payment payable with the final installment.

iv.In November 2014, the Company accepted a commitment letter from a bank for a term loan for up to $16,000, to be used to finance part of the purchase price of Hull 1689 and also for general corporate purposes. The term loan is repayable over seven years in 14 semi-annual consecutive installments commencing six months after drawdown and a balloon payment payable with the final installment.

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Early Delivery Income/(Cost), Net, detail (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Contract Termination [Line Items]
Gain (Loss) on Contract Termination	$ (532)	$ 7,050	$ 11,677
Eniadefhi
Contract Termination [Line Items]
Gain (Loss) on Contract Termination	0	0	8,475
Marindou
Contract Termination [Line Items]
Gain (Loss) on Contract Termination	0	0	3,202
Soffive
Contract Termination [Line Items]
Gain (Loss) on Contract Termination	0	2,965	0
Avstes
Contract Termination [Line Items]
Gain (Loss) on Contract Termination	0	2,304	0
Kerasies
Contract Termination [Line Items]
Gain (Loss) on Contract Termination	0	1,781	0
Other Minor early redeliveries
Contract Termination [Line Items]
Gain (Loss) on Contract Termination	$ (532)	$ 0	$ 0

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Consolidated Statemenets of Income (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
REVENUES:
Revenues	$ 159,900	$ 191,520	$ 187,557
Commissions	(5,806)	(4,799)	(3,261)
Net revenues	154,094	186,721	184,296
EXPENSES:
Voyage expenses	(19,429)	(10,207)	(7,286)
Vessel operating expenses	(50,634)	(41,964)	(34,540)
Depreciation	(43,084)	(37,394)	(32,250)
General and administrative expenses
-Management fee to related party	(8,962)	(8,379)	(7,726)
-Public company expenses	(4,369)	(2,981)	(2,220)
Early redelivery income/(cost), net	(532)	7,050	11,677
Loss from inventory valuation	(4,001)	0	0
Gain on asset purchase cancellation	3,633	0	0
Operating income	26,716	92,846	111,951
OTHER (EXPENSE)/INCOME:
Interest expense	(8,335)	(9,086)	(9,072)
Other finance costs	(1,132)	(1,032)	(1,268)
Interest income	821	1,008	1,122
(Loss)/gain on derivatives	(1,977)	813	(5,384)
Foreign currency (loss)/gain	13	(40)	(3)
Amortization and write-off of deferred finance charges	(1,472)	(1,252)	(1,226)
Net income	14,634	83,257	96,120
Less preferred dividend	9,390	1,787	0
Net income available to common shareholders	$ 5,244	$ 81,470	$ 96,120
Earnings per share in U.S.Dollars, basic and diluted	$ 0.06	$ 1.05	$ 1.27
Weighted average number of shares, basic and diluted	83,446,970	77,495,029	75,468,465

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Vessels, Net

12 Months Ended

Dec. 31, 2014

Notes To Consolidated Financial Statements

Vessel, Net

5. Vessels, Net

Vessels, net, are comprised of the following:
	Vessel		Accumulated		Net Book
	Cost		Depreciation		Value
Balance, January 1, 2013	$	930,011	$	(120,010)	$	810,001
Transfer from Advances for vessel acquisitions and vessels under construction		82,593		—		82,593
Depreciation expense		—		(37,394)		(37,394)
Balance, December 31, 2013	$	1,012,604	$	(157,404)	$	855,200
Transfer from Advances for vessel acquisitions and vessels under construction		148,307		—		148,307
Depreciation expense		—		(43,084)		(43,084)
Balance, December 31, 2014	$	1,160,911	$	(200,488)	$	960,423

Transfer from Advances for vessel acquisitions and vessels under construction represents advances paid in respect of the acquisition of second hand vessels and newbuild vessels which were under construction and delivered to the Company. For the periods presented, the Company accepted delivery of the following vessels:

• During the year ended December 31, 2013: Paraskevi, Pedhoulas Commander, Zoe and Xenia; and
• During the year ended December 31, 2014: Lake Despina(ex Hull 8126),Kypros Land (ex Hull 1659),Kypros Sea (ex Hull 1660) and Kypros Unity (ex Hull 821).

As of December 31, 2014, all vessels with a carrying value of $960,423 have been provided as collateral to secure the Company's bank loans as discussed in Note 8.

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Accounts Receivable

12 Months Ended

Dec. 31, 2014

Notes To Consolidated Financial Statements

Accounts receivable trade disclosure

4.       Accounts receivable

Accounts receivable are comprised of the following:
		December 31,
		2013		2014
Trade receivables	$	4,572	$	4,530
Other receivables		31,800		-
Total	$	36,372	$	4,530

Trade receivables reflect the current receivables from time or voyage charters.

Other receivables amounting to $31,800 as of December 31, 2013, reflect the receivables related to the cancellation of the acquisition agreement of newbuildHull J0131. The capitalized expenses and legal expenses incurred in relation to newbuildHull J0131 as of December 31, 2013, amounted to $887 and $78, respectively. On March 25, 2014, the Company collected the full amount of advances paid to the ZhoushanJinhaiwan Shipyard Co. of $31,800 and interest of $4,520, calculated with a rate of 5% from the receipt of the relevant installments by the shipyard until the refund of such installments, following an arbitration award issued in favor of the Company in January 2014. Refer also to Note 13.

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Fair Value of Financial Instruments and Derivative Instruments

12 Months Ended

Dec. 31, 2014

Notes To Consolidated Financial Statements

Fair Value of Financial Instruments and Derivative Instruments

16. Fair Value of Financial Instruments and Derivatives Instruments

Cash and cash equivalents and restricted cash, over-the-counter foreign exchange forward contracts and interest rate derivatives are recorded at fair value. The carrying values of the current financial assets and current financial liabilities are reasonable estimates of their fair value due to the short-term nature of these financial instruments. Cash and cash equivalents and restricted cash are considered Level 1 items as they represent liquid assets with short-term maturities. The fair values of the variable interest long-term debt approximate the recorded values, due to their variable interest rates. The fair value of the fixed interest long-term debt is estimated using prevailing market rates as of the period end. The fair values of the long-term debt and long-term investment (the floating rate note) are disclosed in Note 8 and 9, respectively.

Derivative instruments

The Company enters into interest rate swap transactions to manage interest costs and the risk associated with changing interest rates with respect to its variable interest rate loans and credit facilities. The Company, from time to time, may also enter into foreign exchange forward contracts to create economic hedges for its exposure to currency exchange risk on payments relating to acquisition of vessels and on certain loan obligations or for trading purposes. Foreign exchange forward contracts are agreements entered into with a bank to exchange, at a specified future date, currencies of different countries at a specific rate. As of December 31, 2013and 2014, the Company had no outstanding derivative instruments relating to currency exchange contracts.

The Company's interest rate swaps and foreign exchange forward contracts did not qualify for hedge accounting. The Company determines the fair market value of the interest rate swaps and foreign exchange forward contracts at the end of every period and accordingly records the resulting unrealized loss/gain during the period in the consolidated statement of income. Information on the location and amounts of derivative fair values in the consolidated balance sheets and derivative gains/losses in the consolidated statements of income are shown below:

Derivatives not designated as hedging instruments
		Asset Derivatives				Liability Derivatives
		Fair Values				Fair Values
Type of Contract	Balance sheet location	December 31,		December 31,		December 31,		December 31,
		2013		2014		2013		2014
Interest Rate	Derivative assets /Non-current assets	$	762	$	455	$	—	$	—
Interest Rate	Derivative liabilities / Current liabilities		—		—		732		493
Interest Rate	Derivative liabilities / Non-current liabilities		—		—		3,270		1,065
	Total Derivatives	$	762	$	455	$	4,002	$	1,558

	Amount of Gain / (Loss) Recognized on Derivatives
	Year ended December 31,
	2013		2014
Interest Rate Contracts	$	813	$	(1,977)
Net Gain / (Loss) Recognized	$	813	$	(1,977)

The gain or loss is recognized in the consolidated statement of income and is presented in Other (Expense)/Income – (Loss) /gain on derivatives.

The Company's interest rate derivative instruments are pay-fixed, receive-variable interest rate swaps based on the USD LIBOR swap rate. The fair value of the interest rate swaps is determined using a discounted cash flow approach based on market-based LIBOR swap yield curvesand take into account the credit risk of the financial institutions that are counterparties in the interest rate swaps. LIBOR swap rates are observable at commonly quoted intervals for the full terms of the swaps and therefore are considered Level 2 items in accordance with the fair value hierarchy. The following table summarizes the valuation of the Company's financial instruments as of December 31, 2013and 2014.

	Significant Other Observable Inputs
	(Level 2)
	December 31,
	2013		2014
Derivative instruments – asset position	$	762	$	455
Derivative instruments – liability position		4,002		1,558

As of December 31, 2013 and 2014, no fair value measurements for assets or liabilities under Level 1 or Level 3 were recognized in the Company's consolidated balance sheet.

Interest Rate Derivatives

Details of interest rate swap transactions entered into with certain banks in respect of certain loans and credit facilities as of December 31, 2013 and 2014 are presented in the table below:

					Notional amount
Loan or Credit	Inception	Expiry	Fixed		December 31,		December 31,
Facility			Rate		2013		2014
Eniadefhi (1)	April 01, 2009	February 12, 2014		3.3500%	$	34,875	$	-
Eniaprohi (2)	November 14, 2011	November 13, 2014		1.4000%		33,328		-
Soffive (2)	November 20, 2011	November 20, 2014		1.3500%		32,400		-
Staloudi (2)	January 09, 2012	January 07, 2015		1.4500%		38,400		34,760
Marathassa (2)(3)	January 31, 2011	January 31, 2015		1.2200%		33,900		31,400
Marathassa (2)	November 23, 2012	November 21, 2015		1.9500%		13,305		11,675
Kerasies (2)	December 14, 2010	December 14, 2015		1.6500%		28,798		26,664
Pelea (2)	December 15, 2011	December 14, 2016		2.0500%		32,962		30,542
Maxdekatria (2)	September 28, 2012	September 28, 2017		0.9000%		20,800		20,000
Marindou (2)	January 14, 2013	January 16, 2018		1.6000%		28,500		27,427
Petra (2)	January 18, 2013	January 18, 2018		0.9800%		14,000		14,000
Marinouki (2)	March 05, 2013	March 05, 2018		1.4800%		24,297		22,543
Pemer (2)	June 07, 2013	March 07, 2018		0.9475%		14,000		14,000
Avstes (2)	July 18, 2013	April 18, 2018		1.3500%		14,000		14,000
Shikoku (2)	August 28, 2013	August 28, 2018		1.2500%		18,667		16,800
Total					$	382,232	$	263,811

(1)       Under these swap transactions, the bank effects semiannual floating-rate payments to the Company for the relevant amount based on the six-month USD LIBOR, and the Company effects semiannual payments to the bank on the relevant amount at the respective fixed rates.

(2)       Under these swap transactions, the bank effects quarterly floating-rate payments to the Company for the relevant amount based on the three-month USD LIBOR, and the Company effects quarterly payments to the bank on the relevant amount at the respective fixed rates.

(3)       The transaction was novated from Maxpente to Marathassa in August 2014.

The notional amounts of the above transactions are reduced during the term of the swap transactions based on the expected principal outstanding under the respective facility.

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Loss from Inventory Valuation

12 Months Ended

Dec. 31, 2014

Notes To Consolidated Financial Statements

Loss from inventory valuation

12. Loss from inventory valuation

The amount of $4,001 recorded in the year ended December 31, 2014 represents loss from the valuation of the bunkers remaining on board our vessels, which were affected by the decline of bunker market prices during the year ended December 31, 2014.

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General and Administrative Expense, detail (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
General and administrative expenses
Management fee - related party	$ 8,962	$ 8,379	$ 7,726
Professional fees (legal and accounting)	813	648	588
Compensation for Directors and Officers	2,004	1,120	240
Listing fees and expenses	87	75	53
Miscellaneous	1,465	1,138	1,339
Total	$ 13,331	$ 11,360	$ 9,946

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Bank Debt

12 Months Ended

Dec. 31, 2014

Notes To Consolidated Financial Statements

Debt Disclosure

8. Bank Debt

Bank debt is comprised of the following secured borrowings:
			December 31,
Borrower	Commencement	Maturity	2013		2014
Maxeikosi	August 2012	August 2014	$	16,668	$	-
Maxpente	December 2013	July 2014		30,838		-
Maxdodeka	December 2012	November 2014		-		-
Eniaprohi	December 2012	November 2014		24,000		-
Eniadefhi	December 2012	November 2014		33,750		-
Avstes	December 2012	November 2014		22,700		-
Marindou	December 2012	November 2014		28,400		-
Pelea	December 2012	November 2014		32,298		-
Vassone	January 2014	January 2017		-		2,437
Marathassa	December 2013	February 2017		10,208		8,415
Marinouki	December 2013	March 2018		20,963		19,035
Glovertwo	October 2013	December 2018		16,000		13,666
Petra	January 2007	January 2019		22,220		20,571
Pemer	March 2007	March 2019		22,218		20,568
Eptaprohi	April 2012	April 2019		-		-
Shikokupente	July 2014	June 2019		-		13,500
Maxtessera	July 2014	June 2019		-		-
Maxeikosiena	October 2012	October 2019		-		-
Soffive	December 2013	November 2019		27,840		25,200
Kerasies	December 2013	December 2019		24,744		22,396
Maxeikosi	December 2014	December 2019		-		9,100
Maxpente	December 2014	December 2019		-		20,000
Gloverthree	December 2014	December 2019		-		10,900
Shikokutessera	December 2014	December 2019		-		10,900
Maxdekatria	March 2012	March 2020		20,400		18,400
Safe Bulkers	November 2014	September 2020		-		118,527
Maxdeka	August 2011	December 2022		30,678		27,270
Staloudi	July 2008	July 2023		24,520		18,520
Shikoku	October 2011	August 2023		37,333		33,600
Maxeikositessera	September 2012	February 2024		31,017		28,063
Maxenteka	April 2012	April 2024		31,500		28,500
Total			$	508,295	$	469,568
Current portion			$	35,185	$	17,121
Long-term portion			$	473,110	$	452,447

The above loans and credit facilities generally bear interest at LIBOR plus a margin, except for a portion of the principal amounts of theMaxdeka, Shikoku, Maxenteka and Maxeikositessera loan facilities, which bear interest at the Commercial Interest Reference Rate (“CIRR”)published by the Organization for Economic Co-operation and Development, as applicable on the date of the signing of the relevant loan agreements. The above loans and credit facilities are generally repayable in semi-annual installments and a balloon payment at maturity except for the Maxdeka, Shikoku, Maxenteka and Maxeikositessera loan facilities, which are repayable in semi-annual installments. The fair value of bank debt outstanding on December 31, 2014 amounted to $470,618 when valuing the respective portions of the Maxdeka, Shikoku, Maxenteka and Maxeikositessera loan facilities on the basis of the relevant CIRR, as applicable on December 31, 2014, which are considered to be Level 2 items in accordance with the fair value hierarchy.

As of December 31, 2014, an aggregate amount of $154,702,was available for drawing under certain of the above loan agreements and reducing revolving credit facilities. The estimated minimum annual principal payments required to be made after December 31, 2014, based on the bank loan and the credit facility agreements as amended, are as follows:

To December 31,
2015	.	$	17,121
2016	.		23,850
2017	.		43,213
2018	.		71,597
2019	.		146,744
2020	and thereafter		167,043
Total	..	$	469,568

Total interest incurred on long-term debt for the years ended December 31, 2012, 2013and 2014amounted to $10,038, $9,553 and $8,599, respectively, which includes interest capitalized of $966, $467 and $264for the years ended December 31, 2012, 2013and 2014, respectively. The average interest rate (including the margin) for all bank loan and credit facilities during the years 2012, 2013and 2014was 1.850% p.a., 1.737% p.a. and 1.698% p.a., respectively.

Certain of the above loans or credit facilities have a currency conversion option whereby the borrower may elect to convert the outstanding loan amount or any part thereof to certain currencies specified in each agreement, using the spot exchange rate applicable on the date of conversion. Specified currencies include Japanese Yen (“JPY”), Swiss Franc (“CHF”), Euro (“EUR”), Canadian dollar (“CAD”) or pound sterling (“GBP”), depending on the relevant agreement. In all the above loans and credit facilities with a currency conversion option, no consideration has been or will be paid by any of the borrowers to the respective lenders in connection with the conversion option since the parties did not ascribe value to the conversion option as the conversion options are always based on the market or spot rates at the time they are exercised. The exercise of the conversion option in any of the above loans or credit facilities results in a change in both the currency denomination of the loan and the basis of the interest rate (that is, a USD-denominated loan bears interest based on USD LIBOR and, upon conversion into a JPY-denominated loan, will bear interest based on JPY LIBOR). All other terms of the loans or credit facilities, including the margin (the interest rate spread over LIBOR) and the repayment terms, will remain the same upon exercise of the currency conversion option.

The Company considered the accounting guidance relating to Accounting for Derivative and Hedging, and concluded that the conversion options are embedded derivatives that would require bifurcation and separate accounting because of the following:

(i)       The economic characteristics and risks of an instrument in which the underlying is both a foreign currency and the interest rate isnot clearly and closely related to the economic characteristics and risks of a debt host;

(ii)       The borrowing arrangement that embodies both the conversion option and the debt host is not remeasured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur; and

(iii)       A separate instrument with the same terms as the conversion option would be a derivative instrument subject to the requirements of this accounting guidance.

However, the Company believes that the conversion option under the borrowing arrangements has no fair value due to the fact that the conversion into a different currency, and, accordingly, into a corresponding LIBOR interest rate, will always be at the prevailing foreign currency exchange rate (spot rate) and prevailing interest rate at the time of the conversion. Furthermore, both the Company and the bank did not ascribe value to the currency conversion options as no consideration was sought by the bank and no value was paid by the Company, as noted above.

As of December 31, 2013and 2014all loans were denominated in US Dollars.

The foregoing loan and credit facilities are secured as follows:

•       First priority mortgages over the vessels owned by the respective borrowers;

•For the Safe Bulkers credit facility, first priority mortgages over the vessels Andreas K, Maria, Xenia, Vassos, Pedhoulas Leader, Pedhoulas Fighter, Martine, Eleni, Kypros Bravery and Hull 827 upon her delivery from the shipyard;

•       First priority assignment of all insurances and earnings of the mortgaged vessels;

•       Second priority mortgage over the Pedhoulas Merchantas security for the Petra loan;

•       Second priority mortgage over the Pedhoulas Trader as security for the Pemer loan;

• Second priority mortgage over thePedhoulas Commander as security for the Maxpente, Maxeikosi, Shikokutessera and Gloverthree credit facilities;

•Second priority mortgages over the Pedhoulas Builder,Kanaris, Kypros Unity and Kypros Land as security for the Vassone credit facility; and

•       Corporate guarantee from Safe Bulkers(except for the Safe Bulkers credit facility where Safe Bulkers is the borrower).

The loan and credit facility agreements, as amended, contain debt covenants including restrictions as to changes in management and ownership of the vessels, additional indebtedness and mortgaging of vessels without the respective lender's prior consent, minimum vessel insurance cover ratio requirements, as well as minimum fair vessel value ratio to outstanding loan principal requirements; the fair vessel value being determined according to the provisions of the individual loan or credit facility agreements with the relevant bank (the “Minimum Value Covenant”). The borrowers are permitted to pay dividends to their owners as long as no event of default under the respective loan has occurred or has not been remedied.

Certain of the loan and facility agreements require the respective borrowers to maintain at all times a minimum balance in each vessel operating account, from $150 to $500 as the case may be.

In addition, the corporate guarantees, as amended, by Safe Bulkers include the following financial covenants:

•       its total consolidated liabilities divided by its total consolidated assets must not at any time exceed 80% or 85% as the case may be ( the “Consolidated Leverage Covenant”). The total consolidated assets are based on the fair market value of its vessels and the book values of all other assets, on an adjusted basis as set out in the relevant guarantee;

•       the ratio of its aggregate debt after deducting cash to EBITDA must not at any time exceed 8.5:1 applicable on a trailing 12 month basis(“EBITDA Covenant”). EBITDA is not a recognized measurement under US GAAP and represents net income before net interest expense, income tax expense, depreciation and amortization;

•its consolidated debt must not exceed $514,000 on December 31, 2014 (“Consolidated Debt Covenant”)

•the ratio of its EBITDA over consolidated interest expense must not at any time be less than 2.0:1, applicable on a trailing 12 month basis;

•its consolidated net worth (total consolidated assets less total consolidated liabilities) (“Consolidated Net Worth Covenant”) must not at any time be less than $150,000;

•payment of dividends is subject to no event of default having occurred;

•maintenance of minimum free liquidity of $500 is required on deposit with a relevant lender; and

•a minimum of 35% or 51%, as the case may be, of its shares shall remain directly or indirectly beneficially owned by the Hajioannou family for the duration of the relevant credit facilities.

As of December 31, 2014, the Company was in compliance with all debt covenants with respect to its loans and credit facilities.

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Bank Debt, textuals (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014
Debt Instrument [Line Items]
Long-term Debt, Fair Value	470,618
Line of Credit Facility, Remaining Borrowing Capacity	154,702
All loans and credit facilities
Debt Instrument [Line Items]
Debt Instrument, Description of Variable Rate Basis	loans and credit facilities generally bear interest at LIBOR plus a margin, except for a portion of the principal amounts of the Maxdeka, Shikoku, Maxenteka and Maxeikositessera loan facilities, which bear interest at the Commercial Interest Reference Rate (“CIRR”)published by the Organization for Economic Co-operation and Development, as applicable on the date of the signing of the relevant loan agreements
Debt Instrument, Frequency of Periodic Payment	loans and credit facilities are generally repayable in semi-annual installments and a balloon payment at maturity, except for the Maxdeka, Shikoku, Maxenteka and Maxeikositessera loan facilities, which are repayable in semi-annual installments

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Advances for Vessel Acquistions and Vessel under Construction

12 Months Ended

Dec. 31, 2014

Notes To Consolidated Financial Statements

Advances For Assets Acquisitions And Assets Under Construction

6. Advances for Vessel Acquisitions and Vessels under Construction

Advances for vessel acquisition and vessels under construction are comprised of the following:
Balance, January 1, 2013	$	39,902
Advances paid, including capitalized expenses and interest		118,990
Transferred to vessel cost		(82,593)
Balance, December 31, 2013	$	76,299
Advances paid, including capitalized expenses and interest		146,251
Transferred to vessel cost		(148,307)
Balance, December 31, 2014	$	74,243

Advances paid for vessel acquisitions and vessels under construction comprise payments of installments that were due to the respective shipyard or third-party sellers, capitalized interest and certain capitalized expenses. During 2013 and 2014such payments were made for the following vessels:

•        During the year ended December 31, ,2013: Paraskevi, Pedhoulas Commander, Xenia, Zoe (Hull 814), Lake Despina (Hull 8126), Kypros Land (Hull 1659), Kypros Sea (Hull 1660),Kypros Unity (Hull 821), Kypros Bravery (Hull 822), Hull 827, Hull 828, Hull 1685, Hull 1686 and Hull1689; and

•        During the year ended December 31, 2014: Lake Despina(Hull 8126), Kypros Land (Hull 1659), Kypros Sea (Hull 1660), Kypros Unity (Hull 821), Kypros Bravery (Hull 822), Hull 827, Hull 835, Hull 1146, Hull 1148, Hull 1551, Hull 1552, Hull 1685, Hull 1686,Hull1689 and Hull 1718.

Transfers to vessel cost relate to the delivery to the Company from the respective shipyard or third-party seller of the following vessels:

• During the year ended December 31,2013: Paraskevi, Pedhoulas Commander, Zoe, and Xenia; and
• During the year ended December 31, 2014: Lake Despina (Hull 8126), Kypros Land (Hull 1659), Kypros Sea (Hull 1660) andKypros Unity (Hull 821).

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Deferred Finace Charges, Net

12 Months Ended

Dec. 31, 2014

Notes To Consolidated Financial Statements

Deferred Finace Charges Net

7. Deferred Finance Charges, Net

Deferred finance charges are comprised of the following:
Balance, January 1, 2013	$	6,467
Additions		132
Amortization expense		(1,252)
Balance, December 31, 2013	$	5,347
Additions		2,726
Amortization expense		(1,472)
Balance, December 31, 2014	$	6,601

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Investment

12 Months Ended

Dec. 31, 2014

Notes To Consolidated Financial Statements

Investment

9. Investment

During the year ended December 31, 2009, the Company invested $50,000 in a five-year Floating Rate Note (“FRN”) issued by HSBC Bank Middle East Limited, which was recorded in the consolidated balance sheet at amortized cost as the Company intended to hold the investment until its maturity on October 14, 2014. Subject to certain conditions, the Company could borrow up to 80% of the FRN amount. The Company received interest on a quarterly basis, based on the three-month USD LIBOR plus a margin of 1.5%. The FRN matured in October 14, 2014.

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Share Capital, textual (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013	May 09, 2008	Dec. 11, 2007
Equity
Ordinary shares authorized	200,000,000	200,000,000	200,000,000	500
Ordinary shares par value	$ 0.001	$ 0.001	$ 0.001	$ 0.001
Preference shares authorized	20,000,000	20,000,000	20,000,000
Preference shares par value	$ 0.01	$ 0.01	$ 0.01

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Unearned Revenue/Accrued Revenue, detail (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Deferred Revenue Arrangement [Line Items]
Current liability	$ 3,599	$ 13,106
Non-current liability	0	196
Total Unearned Revenue	3,599	13,302
Accrued Revenue [Abstract]
Resulting from revenue earned prior to cash being received - Current asset	212	0
Resulting from varying charter rates - Non Current asset	452	0
Total Accrued Revenue	664	0
Cash received in advance of service provided
Deferred Revenue Arrangement [Line Items]
Current liability	3,265	2,966
Deferred revenue resulting from varying charter rates
Deferred Revenue Arrangement [Line Items]
Current liability	334	10,140
Non-current liability	$ 0	$ 196

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Share Capital, textual 3 (Details) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2010	Dec. 31, 2011	Dec. 31, 2012	Dec. 31, 2014
Private Placement | Common Stock
Class of Stock [Line Items]
Stock Issued During Period, Shares, New Issues	1,000,000	1,000,000
Private Placement | Series B cumulative redeemable perpetual preferred shares
Class of Stock [Line Items]
Stock Issued During Period, Shares, New Issues	800,000
March 2010 public offering
Class of Stock [Line Items]
Common Stock, Discount on Shares		3,150
Payments of Stock Issuance Costs		861
Proceeds on issuance of common stock, net		74,967
March 2010 public offering | Common Stock
Class of Stock [Line Items]
Stock Issued During Period, Shares, New Issues		10,350,000
Share Price		7
April 2011 public offering
Class of Stock [Line Items]
Common Stock, Discount on Shares			2,100
Payments of Stock Issuance Costs			263
Proceeds on issuance of common stock, net			39,637
April 2011 public offering | Common Stock
Class of Stock [Line Items]
Stock Issued During Period, Shares, New Issues			5,000,000
Share Price			$ 8.4
March 2012 public offering
Class of Stock [Line Items]
Common Stock, Discount on Shares				1,869
Payments of Stock Issuance Costs				268
Proceeds on issuance of common stock, net				35,237
March 2012 public offering | Common Stock
Class of Stock [Line Items]
Stock Issued During Period, Shares, New Issues				5,750,000
Share Price				$ 6.5
June 2013 public offering
Class of Stock [Line Items]
Preferred Stock, Discount On Shares	672
Payments of Stock Issuance Costs	463
Proceeds on issuance of preferred stock, net	38,865
June 2013 public offering | Series B cumulative redeemable perpetual preferred shares
Class of Stock [Line Items]
Stock Issued During Period, Shares, New Issues	800,000
Share Price	25
Preferred Shares, Dividend Rate Percentage	8.00%
Preferred Shares, Per Share Amounts Of Preferred Dividends In Arrears	2
Preferred Shares, Redemption Date	Jun. 30, 2016
Preferred Shares, Redemption Price Per Share	25
Preferred Shares Conditions For Dividend Rate Increase					If the Company fails to comply with certain covenants as these terms are defined in the applicable agreement, defaults on any of its credit facilities, fails to pay four quarterly dividends payable in arrears or if the Series B preferred shares are not redeemed at the option of the Company, in whole by July 30, 2018, the dividend rate payable on the Series B preferred shares increases quarterly to a rate that is 1.25 times the dividend rate payable on the series B preferred shares , subject to an aggregate maximum rate per annum of 25% prior to July 30, 2016 and 30% thereafter.
November 2013 public offering
Class of Stock [Line Items]
Common Stock, Discount on Shares	1,898
Payments of Stock Issuance Costs	275
Proceeds on issuance of common stock, net	47,980
November 2013 public offering | Common Stock
Class of Stock [Line Items]
Stock Issued During Period, Shares, New Issues	5,750,000
Share Price	7.43
May 2014 public offering
Class of Stock [Line Items]
Preferred Stock, Discount On Shares					1,744
Payments of Stock Issuance Costs					252
Proceeds on issuance of preferred stock, net					55,504
May 2014 public offering | Series C cumulative redeemable perpetual preferred shares
Class of Stock [Line Items]
Stock Issued During Period, Shares, New Issues					2,300,000
Share Price					$ 25
Preferred Shares, Dividend Rate Percentage					8.00%
Preferred Shares, Per Share Amounts Of Preferred Dividends In Arrears					$ 2
Preferred Shares, Redemption Date					May 31, 2019
Preferred Shares, Redemption Price Per Share					$ 25
June 2014 public offering
Class of Stock [Line Items]
Preferred Stock, Discount On Shares					2,369
Payments of Stock Issuance Costs					211
Proceeds on issuance of preferred stock, net					$ 77,420
June 2014 public offering | Series D cumulative redeemable perpetual preferred shares
Class of Stock [Line Items]
Stock Issued During Period, Shares, New Issues					3,200,000
Share Price					$ 25
Preferred Shares, Dividend Rate Percentage					8.00%
Preferred Shares, Per Share Amounts Of Preferred Dividends In Arrears					$ 2
Preferred Shares, Redemption Date					Jun. 30, 2019
Preferred Shares, Redemption Price Per Share					$ 25

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Investment, textual (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Investments
Investment	$ 0	$ 50,000
Investment Maturity Date	Oct. 14, 2014
Investment Interest Rate Type	The Company received interest on a quarterly basis, based on the three-month U.S. dollar LIBOR plus a margin of 1.5%.
Investment Interest Rate Margin	1.50%
Line of Floating Rate Note, Maximum Borrowing Capacity Percentage	80.00%

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Transactions with Related Parties (Tables)

12 Months Ended

Dec. 31, 2014

Related Party Transactions

Schedule of Related Party Transactions Basis

	For the Years Ended May 29,
	(In thousands of U.S. Dollars, except for Variable, Sales and Acquisition Fees)
	2012		2013		2014
Fixed Fee	$	0.700	$	0.700	$	0.700
Variable Fee		1.25%		1.25%		1.25%
Supervision Fee	$	550	$	550	$	550
Sales Fee		1.00%		1.00%		1.00%
Acquisition Fee		1.00%		1.00%		1.00%

Fees pursuant to the Management Agreement, the Shipmanagement Agreements and the Supervision Agreements

	Year Ended December 31,
	(In thousands of U.S. Dollars)
	2012		2013		2014
Fixed and Variable fees	$	7,726	$	8,379	$	8,962
Supervision Fees		1,375		1,925		2,200
Acquisition Fees		1,810		823		1,429

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Significant Accounting Policies, textual (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Accounting Policies
Other comprehensive income/(loss)	$ 0	$ 0	$ 0
Provision for Doubtful Accounts	0	0	0
Property, Plant and Equipment, Useful Life	25 years
Impairment of Long-Lived Assets Held-for-use	0	0	0
Assets held for sale	$ 0	$ 0	$ 0
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate	4.00%

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Revenues

12 Months Ended

Dec. 31, 2014

Notes To Consolidated Financial Statements

Time Charter And Voyage Revenue

14. Revenues

Revenues are comprised of the following:

	Year Ended
	December 31,
	2012		2013		2014
Time charter revenue	$	179,653	$	177,077	$	142,461
Voyage charter revenue		-		-		914
Ballast bonus		6,397		10,878		13,375
Other income		1,507		3,565		3,150
Total	$	187,557	$	191,520	$	159,900

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Future Minimum Time Charter Revenue

12 Months Ended

Dec. 31, 2014

Notes To Consolidated Financial Statements

Future Minimum Time Charters

19. Future Minimum Time Charter Revenue

The future minimum time charter revenue, net of commissions, based on vessels committed to non-cancelable time charter contracts (including fixture recaps) as of December 31, 2014, is as follows:

December 31,
2015	$	50,471
2016		30,929
2017		31,744
2018		31,152
2019		31,167
Thereafter		164,024
Total	$	339,487

Future minimum time charter revenue excludes the future acquisitions of the vessels discussed in Note 11, since estimated delivery dates are not confirmed. Revenues from time charters are not generally received when a vessel is off-hire, including time required for normal periodic maintenance. In arriving at the minimum future charter revenues, an estimated off-hire time of 12 days to perform any scheduled drydocking on each vessel has been deducted, and it has been assumed that no additional off-hire time is incurred, although such estimate may not be reflective of the actual off-hire in the future.

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Basis of Presentation and General Information, textuals (Details)	12 Months Ended
	Dec. 31, 2014 item	Dec. 11, 2007 item
General Information
Entity Incorporation, Date of Incorporation	Dec. 11, 2007
Entity Incorporation, State Country Name	Republic of the Marshall Islands
Percentage Of Ownership In Subsidiaries		100.00%
Number of subsidiaries owned by the entity	45	19
Number of drybulk vessels	32
Number Of Newbuild Vessels	12
Number of additional public common stock offerings	4
Number of additional public preferred stock offerings	3

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Revenues (Tables)

12 Months Ended

Dec. 31, 2014

Revenues Tables

Revenues

	Year Ended
	December 31,
	2012		2013		2014
Time charter revenue	$	179,653	$	177,077	$	142,461
Voyage charter revenue		-		-		914
Ballast bonus		6,397		10,878		13,375
Other income		1,507		3,565		3,150
Total	$	187,557	$	191,520	$	159,900

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Consolidated Statements of Shareholders' Equity (USD $) In Thousands	Total	Common Stock	Preferred Stock	Additional Paid in Capital	Retained Earnings
Balance at Dec. 31, 2011	$ 331,842	$ 71		$ 114,918	$ 216,853
Net income	96,120				96,120
Issuance of common stock	35,237	6		35,231
Share based compensation	120			120
Common share dividends	(37,463)				(37,463)
Balance at Dec. 31, 2012	425,856	77		150,269	275,510
Net income	83,257				83,257
Issuance of common stock	47,980	6		47,974
Issuance of preferred stock	38,865		16	38,849
Share based compensation	120			120
Preferred share dividends	(1,235)				(1,235)
Common share dividends	(16,507)				(16,507)
Balance at Dec. 31, 2013	578,336	83	16	237,212	341,025
Net income	14,634				14,634
Issuance of preferred stock	132,924		55	132,869
Share based compensation	120			120
Preferred share dividends	(7,557)				(7,557)
Common share dividends	(18,358)				(18,358)
Balance at Dec. 31, 2014	$ 700,099	$ 83	$ 71	$ 370,201	$ 329,744

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Transactions with Related Parties

12 Months Ended

Dec. 31, 2014

Notes To Consolidated Financial Statements

Related Party Transactions Disclosure

3. Transactions with Related Parties

Safety Management Overseas S.A., Panama:On May 29, 2008, Safe Bulkers signed a management agreement (the “ManagementAgreement”) with Safety Management, a related party that is controlled by Polys Hajioannou. Under theManagement Agreement, the Manager provides to Safe Bulkers executive officers at no cost and management services to vessel-owning Subsidiaries.Each vessel-owningSubsidiary has entered into, or in the case of vessels not yet delivered, will enter into, a management agreement with the Manager (the “ShipmanagementAgreements”). Under these Shipmanagement Agreements, chartering, operations, technical and accounting services are provided to the vessels by theManager. In accordance with the Management Agreement and the Shipmanagement Agreements, the Manager receives a fixed fee per vessel calculated proportionally to the number of ownership days, (the “Fixed Fee”), plus, a variable fee calculated on gross freight, charter hire, ballast bonus and demurrage (the “Variable Fee”). Fixed Fees and Variable Fees are recorded in General and Administrative Expenses (refer to Note 20).In addition, under the supervision agreements with respect to newbuilds(the “Supervision Agreements”), the Manager receives a supervision fee in exchange for on-site supervision services with respect to all newbuilds, of which 50% is payable upon the signing of the relevant Supervision Agreement, and 50% upon successful completion of the sea trials of each newbuild (the “Supervision Fee”). Supervision Fees are recorded in Advances for vessel acquisition and vessels under construction (refer to Note 6). Furthermore under the Management Agreement, the Manager receives a sales fee calculated by the contract price for each vessel sold, (the “Sales Fee”) payable upon the conclusion of the vessel sale, and an acquisition fee calculated on the contract price of each vessel constructed or purchased, (the “Acquisition Fee”)payable upon the conclusion of the vessel acquisition, in exchange for services provided in relation to a sale or an acquisition of a vessel respectively.Sales Fees are recorded in Gain on sale of assets. Acquisition Fees are recorded in Advances for vessel acquisition and vessels under construction (refer to Note 6).

The management fees can be adjusted annually effective May 29 of each year, the anniversary of our entry into the Management Agreement. On May 29, 2011, the Fixed Fee was adjusted to $0.700per dayfrom $0.575per day, and the Supervision Fee was adjusted to $550 per newbuildfrom $375per newbuild. On May 29, 2014, the Fixed Fee was adjusted to $0.800 per day from $0.700 per day. No readjustment has been made on any of the other management fees.

Fees pursuant to the Management Agreement, the Shipmanagement Agreements and the Supervision Agreements are as follows:

	For the Years Ended May 29,
	(In thousands of U.S. Dollars, except for Variable, Sales and Acquisition Fees)
	2012		2013		2014
Fixed Fee	$	0.700	$	0.700	$	0.700
Variable Fee		1.25%		1.25%		1.25%
Supervision Fee	$	550	$	550	$	550
Sales Fee		1.00%		1.00%		1.00%
Acquisition Fee		1.00%		1.00%		1.00%

On July 29, 2013, the Management Agreement was amended, to provide inter alia that to the extent the executive officers are not provided by the Manager but are instead employed by Safe Bulkers, the management fee payable by Safe Bulkers is reduced, in arrears, by an amount equal to the aggregate costs of compensation and benefits and other incidental costs borne by the Company as a result of such employment, and is recorded under Compensation for Directors and Officers within General and Administrative expenses (refer to Note 20).

Fees pursuant to the Management Agreement, the Shipmanagement Agreements and the Supervision Agreements are comprised of the following:

	Year Ended December 31,
	(In thousands of U.S. Dollars)
	2012		2013		2014
Fixed and Variable fees	$	7,726	$	8,379	$	8,962
Supervision Fees		1,375		1,925		2,200
Acquisition Fees		1,810		823		1,429

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Deferred Finance Charges, Net, detail (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Deferred Costs
Deferred Finance Costs, Noncurrent, Net , Beginning balance	$ 5,347	$ 6,467
Additions	2,726	132
Amortization expense	(1,472)	(1,252)
Deferred Finance Costs, Noncurrent, Net , Closing balance	$ 6,601	$ 5,347

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Future Minimum Time Charter Revenue, detail (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014
Future Minimum Time Charter Revenue
2015	$ 50,471
2016	30,929
2017	31,744
2018	31,152
2019	31,167
Thereafter	164,024
Total	$ 339,487

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Commitments and Contingencies, textual (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014
Commitments And Contingencies Disclosure
Insurance Maximum Amount	$ 1,000,000

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General and Administrative Expenses

12 Months Ended

Dec. 31, 2014

Notes To Consolidated Financial Statements

General And Administrative Expenses

20. General and Administrative Expenses

General and administrative expenses include management fees payable to our Manager and costs in relation to our operation as a public company.

General and administrative expenses for the years ended December 31, 2012, 2013 and 2014 were as follows:

	December 31,
	2012		2013		2014
Management fees - related party	$	7,726	$	8,379	$	8,962
Professional fees (legal and accounting)		588		648		813
Compensation for Directors and Officers		240		1,120		2,004
Listing fees and expenses		53		75		87
Miscellaneous		1,339		1,138		1,465
Total	$	9,946	$	11,360	$	13,331

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Vessel Operating Expenses, detail (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Operating Expense
Crew wages and related costs	$ 26,169	$ 22,015	$ 17,202
Insurance	4,133	3,477	2,828
Repairs, maintenance and drydocking costs	4,344	3,240	2,493
Spares, stores and provisions	9,058	7,533	6,939
Lubricants	3,509	2,787	3,296
Taxes	1,282	669	303
Miscellaneous	2,139	2,243	1,479
Total	$ 50,634	$ 41,964	$ 34,540

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Deferred Finance Charges, Net (Tables)

12 Months Ended

Dec. 31, 2014

Deferred Costs

Deferred Finance Charges, Net

Deferred finance charges are comprised of the following:
Balance, January 1, 2013	$	6,467
Additions		132
Amortization expense		(1,252)
Balance, December 31, 2013	$	5,347
Additions		2,726
Amortization expense		(1,472)
Balance, December 31, 2014	$	6,601

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Gain on Asset Purchase Cancellation

12 Months Ended

Dec. 31, 2014

Notes To Consolidated Financial Statements

Gain On Asset Purchase Cancellations

13. Gainon asset purchase cancellation

The amount of $3,633 recorded in the year ended December 31, 2014 represents interest of $4,520 received in connection with the cancellation of newbuildHull J1031 discussed in Note 4, net of capitalized expenses of $887.