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, 2018

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)

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

Dr. Loukas Barmparis
President
Telephone: +30 2 111 888 400
Telephone: +357 25 887 200
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 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, 2018, there were 103,005,748 shares of the registrant’s common stock, 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 o No o

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

Large accelerated filer o Accelerated filer x Non-accelerated filer o Emerging growth company o

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. o

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

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

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

ITEM 1.	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS	2
ITEM 2.	OFFER STATISTICS AND EXPECTED TIMETABLE	3
ITEM 3.	KEY INFORMATION	3
ITEM 4.	INFORMATION ON THE COMPANY	32
ITEM 4A.	UNRESOLVED STAFF COMMENTS	50
ITEM 5.	OPERATING AND FINANCIAL REVIEW AND PROSPECTS	50
ITEM 6.	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	68
ITEM 7.	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	72
ITEM 8.	FINANCIAL INFORMATION	80
ITEM 9.	THE OFFER AND LISTING	82
ITEM 10.	ADDITIONAL INFORMATION	82
ITEM 11.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	95
ITEM 12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	96
ITEM 13.	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	96
ITEM 14.	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	96
ITEM 15.	CONTROLS AND PROCEDURES	97
ITEM 16.	[RESERVED]	98
ITEM 16A.	AUDIT COMMITTEE FINANCIAL EXPERT	98
ITEM 16B.	CODE OF ETHICS	98
ITEM 16C.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	99
ITEM 16D.	EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES	99
ITEM 16E.	PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS	99
ITEM 16F.	CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT	99
ITEM 16G.	CORPORATE GOVERNANCE	100
ITEM 16H.	MINE SAFETY DISCLOSURE	100
ITEM 17.	FINANCIAL STATEMENTS	100
ITEM 18.	FINANCIAL STATEMENTS	100
ITEM 19.	EXHIBITS	101

-i-

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 companies, Safety Management Overseas S.A., a company incorporated under the laws of the Republic of Panama (“Safety Management”), and Safe Bulkers Management Limited, a company organized and existing under the laws of the Republic of Cyprus (“Safe Bulkers Management”), are each sometimes referred to as a “Manager,” and together as our “Managers.”

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,” “hope,” “estimate,” “project,” “forecast,” “plan,” “target,” “seek,” “potential,” “may,” “will,” “likely to,” “would,” “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 and other plans and objectives for growth and future operations, 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;

· competition within our industry;

· reputational risks;

· 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 and to comply with the restrictive and other covenants in our financing arrangements;

· the strength of world economies and currencies;

· general domestic and international political conditions;

· potential disruption of shipping routes due to accidents or political events;

· 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;

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· 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;

· vessel breakdowns and instances of off-hire;

· our future capital expenditures (including our ability to successfully install ballast water treatment systems in all of our vessels and sulfur oxide exhaust gas cleaning systems in about half of our fleet) 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, delays, cost overruns and lost revenue);

· our ability to realize the expected benefits from sulfur oxide exhaust gas cleaning systems;

· availability of financing and refinancing, our level of indebtedness and our need for cash to meet our debt service obligations;

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

· our ability to leverage our Managers’ 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, corruption, militant activities, political instability, terrorism and ethnic unrest in locations where we may operate and discharge of pollutants;

· potential liability from pending or future litigation; and

· other factors discussed in “Item 3. Key Information—iv. 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—iv. 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, except as required by law, 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.

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

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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, 2018. 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 United States (the “U.S.”) generally accepted accounting principles (“U.S. GAAP”).

Our audited consolidated statements of operations, shareholders’ equity and cash flows for the years ended December 31, 2016, 2017 and 2018 and the consolidated balance sheets at December 31, 2017 and 2018, together with the notes thereto, are included in “Item 18. Financial Statements” and should be read in their entirety.

	Year Ended December
	2014			2015			2016			2017			2018
	(in thousands of U.S. dollars except share data)
STATEMENT OF OPERATIONS
Revenues		$159,900			$132,375			$113,959			$154,040			$201,548
Commissions		(5,806	)		(5,058	)		(4,187	)		(6,008	)		(8,357	)
Net revenues		154,094			127,317			109,772			148,032			193,191
Voyage expenses		(19,429	)		(17,856	)		(7,679	)		(3,932	)		(6,378	)
Vessel operating expenses		(50,634	)		(55,469	)		(49,519	)		(52,794	)		(63,512	)
Depreciation		(43,084	)		(47,133	)		(49,485	)		(51,424	)		(48,067	)
General and administrative expenses
Management fee to related parties		(8,962	)		(10,764	)		(11,611	)		(13,511	)		(16,536	)
Company administration expenses		(4,369	)		(3,853	)		(3,770	)		(2,607	)		(2,706	)
Early redelivery cost, net		(532	)		—			—			(1,263	)		(105	)
Loss on inventory valuation		(4,001	)		(1,432	)		—			—			—
Other operating income/(cost)		—			—			794			(390	)		—
Gain on asset purchase cancellation		3,633			—			—			—			—
Loss on sale of assets		—			—			(2,750	)		(120	)		—
Impairment loss		—			(22,826	)		(17,163	)		(91,293	)		—
Operating income/(loss)		26,716			(32,016	)		(31,411	)		(69,302	)		55,887
Interest expense		(8,335	)		(11,650	)		(19,576	)		(23,224	)		(25,713	)
Other finance (costs)/income		(1,132	)		(242	)		(1,735	)		7,651			(973	)
Interest income		821			86			515			799			929
(Loss)/gain on derivatives		(1,977	)		(1,676	)		(620	)		72			18
Foreign currency gain/(loss)		13			347			(76	)		1,782			(670	)
Amortization and write-off of deferred finance charges		(1,472	)		(2,793	)		(3,063	)		(2,457	)		(1,794	)
Net income/(loss)		$14,634			$(47,944	)		$(55,966	)		$(84,679	)		$27,684
Earnings/(loss) per share of Common Stock, basic and diluted		$0.06			$(0.74	)		$(0.83	)		$(0.98	)		$0.16
Cash dividends declared per share of Common Stock		$0.22			$0.04			—			—			—
Cash dividends declared per share of Preferred B Shares		$2.00			$2.00			$2.00			$2.00			$0.62
Cash dividends declared per share of Preferred C Shares		$0.96667			$2.00			$2.00			$2.00			$2.00
Cash dividends declared per share of Preferred D Shares		$0.66667			$2.00			$2.00			$2.00			$2.00

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	Year Ended December
	2014		2015		2016		2017		2018
	(in thousands of U.S. dollars except share data)
STATEMENT OF OPERATIONS
Weighted average number of shares of Common Stock outstanding, basic and diluted		83,446,970		83,479,636		84,526,411		100,932,876		101,604,339

	Year Ended December
	2014			2015			2016			2017			2018
	(in thousands of U.S. dollars)
OTHER FINANCIAL DATA
Net cash provided by operating activities		$43,732			$25,523			$13,478			$50,101			$85,449
Net cash used in investing activities(1)		(59,980	)		(125,041	)		(39,873	)		(39,590	)		(63,670	)
Net cash provided by/(used in) financing activities		65,917			180,090			(83,875	)		(47,060	)		(15,580	)
Net increase/(decrease) in cash and cash equivalents and restricted cash(1)		49,669			80,572			(110,270	)		(36,549	)		6,199

⁽¹⁾ Effective December 31, 2017, the Company adopted the new standard Accounting Standards Update ASU 2016-18 – Restricted Cash. The implementation of this update affected the presentation in the statement of cash flows relating to changes in restricted cash which are presented as part of Cash whereas the Company previously presented these within investing activities. This standard was retrospectively applied to all periods presented.

	Year Ended December
	2014		2015		2016		2017		2018
	(in thousands of U.S. dollars)
BALANCE SHEET DATA
Total current assets		135,892		243,162		111,008		79,086		101,262
Total fixed assets		1,034,666		1,056,517		1,051,726		946,529		963,887
Other non-current assets(1)		5,871		9,952		11,019		9,482		11,050
Total assets(1)		1,176,429		1,309,631		1,173,753		1,035,097		1,076,199
Total current liabilities		27,329		105,726		23,779		36,933		54,606
Long-term debt, net of current portion and of deferred finance charges(1)		447,936		569,399		569,781		541,816		538,508
Total liabilities		476,330		675,485		595,217		578,749		593,367
Mezzanine equity		—		—		—		—		16,998
Common stock, $0.001 par value		83		83		99		102		103
Total shareholders’ equity		700,099		634,146		578,536		456,348		465,834
Total liabilities and shareholders’ equity(1)		1,176,429		1,309,631		1,173,753		1,035,097		1,076,199

⁽¹⁾ We adopted the Accounting Standards Update (“ASU”) 2015-03, Interest-Imputation of Interest (Subtopic 835-30), Simplifying the Presentation of Debt Issuance Costs, retrospectively during the fourth quarter of 2015. The guidance simplifies the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding liability, consistent with debt discounts, instead of presenting debt issuance costs as long-term assets on the consolidated balance sheets. The recognition and measurement guidance for debt issuance costs is not affected. Therefore, these costs will continue to be amortized as interest expense using the effective interest method. This standard was retrospectively applied to all periods presented.

(ii) Capitalization and Indebtedness

Not applicable.

(iii) Reasons for the Offer and Use of Proceeds

Not applicable.

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(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 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,” AND TOGETHER WITH THE SERIES C PREFERRED SHARES, THE “PREFERRED SHARES”), INCLUDING THE TAX CONSEQUENCES OF OWNERSHIP OF OUR COMMON STOCK AND PREFERRED SHARES. THE OCCURRENCE OF ANY OF THE RISKS OR 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, having reached historical highs in 2008 and historical lows in 2016. Charter rates have improved in 2018, but have been volatile in the start of 2019. Cyclicality and volatility may lead to reductions 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. In 2008, the Baltic Dry Index (the “BDI”), had reached an all-time high of 11,793, while in 2016, BDI had reached an all-time low of 290. During 2018, the BDI remained volatile, reaching an annual low of 948 on April 6, 2018 and an annual high of 1,774 on July 24, 2018.

We charter some of our vessels in the spot charter market for periods up to three months and in the period charter market for longer periods. 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 are exposed to changes in spot charter market each time one of our vessels is completing a previously contracted charter, and we may not be able to secure period time charters at profitable levels. Furthermore, we may be unable to keep our vessels fully employed. Charter rates available in the market may be insufficient to enable our vessels to be operated profitably. A significant decrease in charter rates would adversely affect our profitability, cash flows, asset values and ability to pay dividends.

As of March 8, 2019, 16 of our 41 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 one resale newbuild vessel scheduled to be delivered in 2020, which does not currently have any contracted charter. As more vessels become available for employment, we may have difficulty entering into 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 variable rate charters or charters linked to the Baltic Panamax Index, 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;

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· global and regional economic and political conditions, including armed conflicts, terrorist activities and strikes;

· environmental and other regulatory developments;

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

· changes in seaborne and other transportation patterns, including shifts in transportation demand for dry bulk transportation services;

· weather and natural disasters;

· international sanctions, embargoes, import and export restrictions, nationalizations and wars; and

· tariffs on imports and exports that could affect the international trade.

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, depending, amongst other things, on scrapping rates and international scrapping regulations;

· 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 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 (the “E.U.”) 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.

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

The market supply of drybulk vessels has been increasing in terms of deadweight tons (“dwt”), and the number of drybulk vessels on order as of December 31, 2018 was approximately 11.8% for Panamax to Post-Panamax class vessels (65,000 dwt to 100,000 dwt) and 12.2% for Capesize class vessels (over 100,000 dwt), as compared to the then-existing global drybulk fleet in terms of dwt, with the majority of new deliveries expected during 2019 and 2020. As a result, the drybulk fleet continues to grow. In addition, during periods when there are high expectations for charter market recovery, a large number of orders may be placed in shipyards, resulting in a further increase of newbuild orders and accordingly in the size of the global drybulk fleet. 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 newbuild, 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 March 8, 2019, 29 vessels will be available for employment in the first half of 2019. 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 value of drybulk vessels is highly volatile, being related to charter market conditions, aging and environmental regulations. The market values of our vessels may significantly decrease 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 values of drybulk vessels have generally experienced significant volatility within a short period of time. The market prices for secondhand and newbuild drybulk vessels have experienced a small increase in 2018 following a significant increase in 2017, compared to the very low levels experienced in 2016 when vessel values were reduced in a short period of time due to depressed market conditions. The market value of our vessels fluctuates depending on a number of factors, including:

· general economic and market conditions affecting the shipping industry;

· prevailing level of charter rates;

· distressed asset sales, including newbuild contract sales during weak charter market conditions;

· lack of financing and limitations imposed by financial covenants in our credit and loan facilities;

· competition from other shipping companies;

· configurations, sizes and ages of vessels;

· cost of newbuilds;

· governmental, environmental or other regulations; and

· technological advances.

We were in compliance with our covenants in our credit and loan facilities in effect as of December 31, 2017 and December 31, 2018. If the market value of our vessels, or our newbuild upon its delivery to us, declines, 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 under those agreements and the commencement of similar foreclosure proceedings by other lenders. If our indebtedness were accelerated in full or in part, it would be

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difficult for us to refinance our debt or obtain additional financing on favorable terms or at all and we could lose our vessels if our lenders foreclose their liens, which would adversely affect our ability to continue our business.

A significant decrease of the market values of our vessels could cause us to incur an impairment loss and could have a material adverse effect on our business, financial condition and results of operations.

We review for impairment our vessels held and used whenever events or changes in circumstances indicate that the carrying amount of the vessels may not be recoverable. Such indicators include declines in the fair market value of vessels, decreases in market charter rates, vessel sale and purchase considerations, fleet utilization, environmental and other regulatory changes in the drybulk shipping industry or changes in business plans or overall market conditions that may adversely affect cash flows. We may be required to record an impairment charge with respect to our vessels and any such impairment charge resulting from a decline in the market value of our vessels or a decrease in charter rates may have a material adverse effect on our business, financial condition and results of operations.

See “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Critical Accounting Policies—Impairment of long-lived assets” for more information.

Technological innovation could reduce our charter hire income and the value of our vessels.

The charter hire rates and the value and operational life of a vessel are determined by a number of factors including the vessel’s efficiency, operational flexibility and physical life. Efficiency includes speed, fuel economy and the ability to load and discharge cargo quickly. Flexibility includes the ability to enter harbors, utilize related docking facilities and pass through canals and straits. The length of a vessel’s physical life is related to its original design and construction, its maintenance and the impact of the stress of operations. If new vessels are built that are more efficient or more flexible or have longer physical lives than our vessels, competition from these more technologically advanced vessels could adversely affect the amount of charter hire payments we receive for our vessels and the resale value of our vessels could significantly decrease. As a result, our results of operations and financial condition could be adversely affected.

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 whom 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 results of operations.

Changes in labor laws and regulations, collective bargaining negotiations and labor disputes could increase our crew costs and have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.

Crew costs are a significant expense for us under our charters. There is a limited supply of well-qualified crew. We bear crewing costs under our charters. Increases in crew costs may adversely affect our results of operations. In addition, labor disputes or unrest, including work stoppages, strikes and/or work disruptions or increases imposed by collective bargaining agreements covering the majority of our officers on board our vessels could result in higher personnel costs and significantly affect our financial performance.

We are subject to regulations and liability under environmental laws that require significant expenditures, including ballast water treatment systems (“BWTS”) and sulfur oxide exhaust gas cleaning systems (“Scrubbers”), which can affect our results of operations and financial condition.

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

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countries of their registration, in order to protect against potential environmental impacts. Government regulation of vessels, particularly environmental regulations, have become more stringent and require us to incur significant capital expenditures on our vessels to keep them in compliance. As a result, we may decide to scrap or sell certain vessels altogether. In addition, more stringent regulations may gradually be adopted in the future.

For example, various jurisdictions have regulated management of ballast waters to prevent the introduction of non-indigenous species that are considered invasive. Such regulations require us to make changes to the ballast water management plans we currently have in place and to install new equipment on board our vessels. In response to such regulations, we entered into an agreement to install BWTS in all of our vessels. The installation on all our vessels and related capital expenditure is expected to expand to 2022. Investments in the installation of BWTS are both time consuming and costly. If we fail to install or timely operate the BWTS in our vessels, then we may be unable to operate those vessels, which could have a material adverse effect on our results of operations, cash flows and financial position.

Various jurisdictions have also regulated or are considering the further regulation of greenhouse gases from vessels and emissions of sulfur and nitrogen oxides. Greenhouse gas regulations presently require the monitoring of greenhouse gas emissions. Nitrogen oxides emission regulations require the installation of advanced Tier III engines in newbuilds and modifications are not expected to be required in existing vessels. Regulation for sulfur oxides emissions may involve retrofitting of Scrubbers.

More specifically, regulation of sulfur oxides emissions provide for 0.5% (lowered from 3.5%) sulfur cap on marine fuel consumed by a vessel by January 1, 2020, unless the vessel is equipped with a Scrubber. The most commonly used marine fuel with lower than 0.5% sulfur content is marine gas oil (“MGO”), which presently is substantially more expensive compared to the currently widely used 3.5% sulfur content heavy fuel oil (“HFO”). During 2019, additional marine fuels which will comply with the 0.5% sulfur cap are expected to be developed; however, their cost, worldwide availability, compatibility with the existing fuels on board when a vessel is refueled, stability over a long period of time suitable for storage in the vessel’s fuel tanks and other technical considerations are not yet known. The excessive demand for MGO or other compliant marine fuels after January 1, 2020, may lead to a wide price differential between such compliant fuels and HFO, shortages in worldwide availability, problems with compatibility, fuel stability and other technical considerations which may affect the operations of vessels using such compliant fuels and their competitiveness compared to vessels that will continue to use HFO following the installation of Scrubbers. On the other hand, vessels that will be equipped with Scrubbers may also face shortage of HFO worldwide and price distortions, as only a small percentage of the global fleet is expected to be equipped with Scrubbers by 2020 and the trading of HFO may not be economical to fuel suppliers. In addition, restrictions of effluents from Scrubbers may be imposed in various jurisdictions, affecting the viability of investments required to equip vessels with Scrubbers. In response to sulfur oxides emissions regulations, we entered into an agreement to install Scrubbers in about half of our vessels.

The installation of Scrubbers in about half of our vessels and related capital expenditure is expected to expand over 2019 and 2020. The installation of Scrubbers is expected to be both time consuming and costly. If we fail to timely install the Scrubbers in the vessels that we have scheduled to, and/or if the price differential between compliant fuels and HFO is narrower than expected, then we may not realize any return, or we may realize a reduced return on our investment in Scrubbers than that which we expected, which could have a material adverse effect on our results of operations, cash flows and financial position. Conversely, if the price differential between compliant fuels and HFO is wider than expected, about half of our vessels that will not be equipped with Scrubbers may face difficulties to compete with vessels equipped with Scrubbers which could have a material adverse effect on our results of operations, cash flows and financial position.

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

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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. In addition, we are subject to the risk that we, our affiliated entities, or our or their respective officers, directors, shore employees, crew on board and agents may take actions determined to be in violation of such environmental regulations and laws and our environmental policies. Any such actual or alleged environmental laws regulations and policies violation, under negligence, willful misconduct or fault, could result in substantial fines, civil and/or criminal penalties or curtailment of operations in certain jurisdictions, and might adversely affect our business, results of operations or financial condition. In addition, actual or alleged violations could damage our reputation and ability to do business. Furthermore, detecting, investigating and resolving actual or alleged violations is expensive and can consume significant time and attention of our senior management. Events of this nature would have a material adverse effect on our business, financial condition and results of operations.

We are subject to international safety regulations and requirements imposed by our classification societies and the failure to comply with these regulations and requirements may subject us to increased liability, may adversely affect our insurance coverage and may result in a denial of access to, or detention in, certain ports.

The operation of our vessels is affected by the requirements set forth in the United Nations’ International Maritime Organization (“IMO”) International Management Code for the Safe Operation of Ships and for Pollution Prevention (“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 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 and cyber-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

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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.

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.

World events, including terrorist attacks and international hostilities, could negatively affect our results of operations and financial condition.

We conduct most of our operations outside of the U.S. and our business, results of operations, cash flows, financial condition and ability to pay dividends, if any, in the future may be adversely affected by changing economic, political and government conditions in the countries and regions where our vessels are employed or registered. Moreover, we operate in a sector of the economy that is likely to be adversely impacted by the effects of political conflicts, including the current political instability in the Middle East, North Africa and other geographic countries and areas, terrorist or other attacks, war or international hostilities. Terrorist attacks and the continuing response of the U.S. and others to these attacks, as well as the threat of future terrorist attacks around the world, continues to cause uncertainty in the world’s financial markets and may affect our business, operating results and financial condition. Continuing conflicts and recent developments in the Middle East and North Africa, and the presence of U.S. or other armed forces in Iraq, Syria, Afghanistan and various other regions, may lead to additional acts of terrorism and armed conflict around the world, which may contribute to further economic instability in the global financial markets. These uncertainties could also adversely affect our ability to obtain additional financing on terms acceptable to us or at all. 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. These types of attacks have also affected vessels trading in regions such as the South China Sea and the Gulf of Aden off the coast of Somalia. Any of these occurrences could have a material adverse impact on our operating results, revenues and costs.

Acts of piracy on ocean-going vessels may increase in frequency, which could adversely affect our business.

Acts of piracy have historically affected ocean-going vessels trading in regions of the world such as the South China Sea, the Indian Ocean and in the Gulf of Aden off the coast of Somalia. Although the frequency of sea piracy worldwide has generally decreased since 2013, sea piracy incidents continue to occur, particularly in the Gulf of Aden off the coast of Somalia and increasingly in the Sulu Sea and the Gulf of Guinea, with dry bulk vessels and tankers particularly vulnerable to such attacks. Acts of piracy could result in harm or danger to the crews that man our vessels.

If these piracy attacks occur in regions in which our vessels are deployed that insurers characterized as “war risk” zones or Joint War Committee “war and strikes” listed areas, premiums payable for such coverage could increase significantly and such insurance coverage may be more difficult to obtain. In addition, crew costs, including the employment of onboard security guards, could increase in such circumstances. Furthermore, while we believe the

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charterer remains liable for charter payments when a vessel is seized by pirates, the charterer may dispute this and withhold charterhire until the vessel is released. A charterer may also claim that a vessel seized by pirates was not “on-hire” for a certain number of days and is therefore entitled to cancel the charter party, a claim that we would dispute. We may not be adequately insured to cover losses from these incidents, which could have a material adverse effect on us. In addition, any detention hijacking as a result of an act of piracy against our vessels, or an increase in cost, or unavailability, of insurance for our vessels, could have a material adverse impact on our business, financial condition and earnings.

The operation of drybulk vessels has certain unique operational and technical risks which include mechanical failure, collision, property loss, cargo loss or damage as well as personal injury, illness and loss of life and could lead to an environmental disaster; failure to adequately maintain our vessels or address such risks could have a material adverse effect on our business, financial condition and results of operations.

The operation of a drybulk vessel has certain unique operational and technical risks which include mechanical failure, collision, property loss, cargo loss or damage as well as personal injury, illness and loss of life and could lead to an environmental disaster. Drybulk vessels may develop unexpected mechanical and operational problems due to several reasons including improper maintenance and weather conditions. The compliant fuels with 0.5% sulfur content, some of which are currently under development, have not yet been adequately tested on board our vessels and under certain conditions may cause loss of the vessel’s main engine power with severe results that can lead to collision and loss of a vessel.

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 or with steel plate diminution 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 or address such operational and technical risks, 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.

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.

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We rely on information technology, and if we are unable to protect against service interruptions, data corruption, cyber-based attacks or network security breaches, our operations could be disrupted and our business could be negatively affected.

We rely on information technology networks and systems to process, transmit and store electronic and financial information; to capture knowledge of our business; to coordinate our business across our operation bases; and to communicate internally with our vessels, customers, suppliers, partners and other third-parties. In addition, our vessels use electronically transmitted maps and navigational systems. These information technology systems, some of which are managed by third parties, may be susceptible to damage, disruptions or shutdowns, hardware or software failures, power outages, computer viruses, cyber-attacks, telecommunication failures, user errors or catastrophic events. Our information technology systems are becoming increasingly integrated, so damage, disruption or shutdown to the system could result in a more widespread impact. If our information technology systems suffer severe damage, disruption or shutdown, and our business continuity plans do not effectively resolve the issues in a timely manner, our operations could be disrupted and our business could be negatively affected. In addition, cyber-attacks could lead to potential unauthorized access and disclosure of confidential information, personal data and data loss and corruption. Cyber-attacks on our vessels may also lead to potential unauthorized access to the navigational systems of our vessels, which could result in hazardous accidents. There is no assurance that we will not experience these service interruptions or cyber-attacks in the future. Furthermore, as of May 25, 2018, data breaches on personal data, as defined in the European General Data Protection Regulation, could lead to administrative fines up to €20 million or up to 4% of the total worldwide annual turnover of the company, whichever is higher. Further, as the methods of cyber-attacks continue to evolve, we may be required to expend additional resources to continue to modify or enhance our protective measures, or to investigate and remediate any vulnerabilities to cyber-attacks. Moreover, we do not carry cyber-attack insurance to cover the aforementioned risks to our information technology.

The vote by the United Kingdom to leave the European Union could adversely affect us.

The United Kingdom (the “U.K.”) referendum on June 23, 2016 on its membership in the E.U. resulted in a majority of U.K. voters voting to exit the E.U. (“Brexit”). On February 1, 2017, the U.K. Parliament voted in favor of allowing the U.K. government to begin the formal process of Brexit. The U.K. is currently in negotiations to determine the terms of Brexit and of the U.K.’s relationship with the E.U. going forward, with the U.K. due to exit the E.U. on March 29, 2019. In November 2018, the U.K. and the E.U. agreed upon a draft Withdrawal Agreement setting out the terms of Brexit. However, on January 15, 2019, the draft Withdrawal Agreement was rejected by the U.K. Parliament, creating significant uncertainty about the terms and timing of Brexit. We have operations in the E.U., and as a result, we face risks associated with the potential uncertainty and disruptions that may follow Brexit, including volatility in exchange rates and interest rates and potential material changes to the regulatory regime applicable to our business or global trading parties. Brexit could adversely affect European or worldwide political, regulatory, economic or market conditions and could contribute to instability in global political institutions, regulatory agencies and financial markets as the U.K. determines which E.U. treaties, laws and regulations to replace or replicate, including those governing maritime, labor, environmental, competition, international trade and other matters applicable to our business. Any of these effects of Brexit, and others we cannot anticipate or that may evolve over time, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

An increase in trade protectionism could have a material adverse impact on our charterers’ business and, in turn, could cause a material adverse impact on our results of operations, financial condition and cash flows.

Our operations expose us to the risk that increased trade protectionism from China, other countries in the Asian region, the United States or other nations will adversely affect our business. If the global recovery is undermined by downside risks and the economic downturn returns, or if the regulatory environment otherwise dictates, governments may turn to trade barriers to protect their domestic industries against foreign imports, thereby depressing the demand for shipping. Specifically, increasing trade protectionism affecting the markets that our charterers serve may cause (i) a decrease in cargoes available to our charterers in favor of domestic charterers and domestically owned ships and (ii) an increase in the risks associated with importing goods to such markets. For instance, the government of China has implemented economic policies aimed at increasing domestic consumption of Chinese-made goods and restricting currency exchanges within China. Further, on January 23, 2017, President Trump signed an executive order withdrawing the United States from the Trans-Pacific Partnership, a global trade agreement intended to include the United States, Canada, Mexico, Peru and a number of Asian countries. President Trump has also called for substantial changes to foreign trade policy with China and has recently raised, and has proposed to further raise in the future,

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tariffs on several Chinese goods in order to reverse what he perceives as unfair trade practices that have negatively impacted U.S. businesses. The announcement of such tariffs has triggered retaliatory actions from foreign governments, including China, and may trigger retaliatory actions by other foreign governments, potentially resulting in a “trade war.” This may have the effect of reducing the supply of goods available for import or export and may, in turn, result in a decrease of demand for shipping. Any increased trade barriers or restrictions on trade, or the perception that they may occur, may have an adverse effect on global market conditions, may have an adverse impact on global trade and our charterers’ business, operating results and financial condition and could thereby affect their ability to make timely charter hire payments to us and to renew and increase the number of their time charters with us. This could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Changes in fuel prices may adversely affect our profits.

Changes in fuel prices may adversely affect our profits under certain circumstances. If the price differential between 0.5% sulfur content compliant fuels and HFO is narrow, then we may not realize any return, or we may realize a reduced return on our investment in Scrubbers than that which we expected, which could have a material adverse effect on our results of operations, cash flows and financial position. Conversely, if the price differential between 0.5% sulfur content compliant fuels and HFO is wide, the other half of our fleet that will not be equipped with Scrubbers may face difficulties to compete with vessels equipped with Scrubbers which could have a material adverse effect on our results of operations, cash flows and financial position.

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. Seasonality is related to several factors and may result in quarter-to-quarter volatility in our results of operations, which could affect the amount of dividends, if any, that we may pay to our stockholders. For example, the market for marine drybulk transportation services is typically stronger in the fall months in anticipation of increased consumption of coal in the northern hemisphere during the winter months and the grain export season from North America. Similarly, the market for marine drybulk transportation services is typically stronger in the spring months in anticipation of the South American grain export season due to increased distance traveled by vessels to their end destination known as ton mile effect, as well as increased coal imports in parts of Asia due to additional electricity demand for cooling during the summer months. Demand for marine drybulk transportation services is typically weaker at the beginning of the calendar year and during the summer months. In addition, unpredictable weather patterns during these periods 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 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 past years, the industry experienced numerous incidents of charterers renegotiating their charters or defaulting on their obligations thereunder. 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.

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We depend on 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. During the year ended December 31, 2018, two of our charterers accounted for more than 10.0% of our revenues and in previous periods some of our charterers each accounted for more than 10.0% 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 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 have adopted an anti-bribery policy consistent with the provisions of the U.S. Foreign Corrupt Practices Act (the “FCPA”) and anti-bribery legislation in other jurisdictions. Actual or alleged violations of these policies could result in damage of our reputation, sanctions, criminal penalties, imprisonment, civil action and fines, which could have an adverse effect on our business.

We operate in a number of countries throughout the world, including countries known to have a reputation for corruption. We are committed to doing business in accordance with applicable anti-corruption laws and have adopted policies consistent and in full compliance with the FCPA and anti-bribery legislation in other jurisdictions. We are subject, however, to the risk that we, our affiliated entities or our or their respective officers, directors, employees and agents may take actions determined to be in violation of such anti-corruption laws, including the FCPA. Any such violation could result in substantial fines, sanctions, civil and/or criminal penalties or curtailment of operations in certain jurisdictions, and might adversely affect our business, results of operations or financial condition. In addition, actual or alleged violations could damage our reputation and ability to do business. Furthermore, detecting, investigating and resolving actual or alleged violations is expensive and can consume significant time and attention of our senior management.

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

As of March 8, 2019, we intend to grow our business through the acquisition of one contracted newbuild vessel, which is scheduled to be delivered in 2020. 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 or novate a vessel acquisition contract due to market conditions, financing limitations or other reasons. The outcome of contract termination or novation 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.

We may have difficulty properly managing our planned environmental investments, including Scrubbers and BWTS.

Environmental investments in Scrubbers and BWTS currently represent the largest investment of the Company. The retrofit of Scrubbers and BWTS is a demanding job, involving the selection of equipment, detailed engineering studies and high quality of installation. During 2019, we expect to install BWTS in 12 vessels and Scrubbers in 19 vessels, in most cases concurrently with their drydocking. A delay in the delivery to us of BWTS or Scrubber equipment, or a delay in the installation of such equipment on board each vessel could increase the down time of the relevant vessel. In addition, if the installation of Scrubbers on the vessels is delayed, then we may realize reduced returns on the relevant investments. Furthermore, if we fail to successfully install, commission and operate a Scrubber, we may not realize any return on such investment. All such difficulties could have material adverse effect on our results of operations, cash flows and financial position.

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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 Managers’ attempts to improve those systems may be ineffective. In addition, as we expand our fleet, we will have to rely on our Managers to recruit additional seafarers and shoreside administrative and management personnel. Our Managers may not be able to continue to hire suitable employees or a sufficient number of employees as we expand our fleet. If our Managers’ 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 systems, our Managers are unable to operate our operations systems effectively or 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.

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 March 8, 2019, the vessels in our current fleet had an average age of 8.5 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 they become available for use 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.

Our ability to obtain financing on favorable terms and the deterioration of the global banking markets may adversely impact our business. If economic conditions globally continue to be volatile, it could impede our operations.

Although capital markets have improved since 2008, when banks and other financial institutions active in the shipping industry became increasingly unwilling to provide credit, they remain volatile. The shipping industry remains negatively affected by the scarcity of credit and the cost of financing has increased. Financing institutions have increased interest rates or even ceased funding for certain shipping companies. Furthermore, vessels older than 15 years old may not be financed by banks and other financial institutions at all. Any further deterioration of the global banking markets may decrease the availability of financing or refinancing on acceptable terms when needed, and we may be unable to meet our debt obligations as they become due.

The continuing instability and conflicts in Syria, the turmoil in Venezuela and other geographic areas, the stabilization of growth in China and the economic weakness in the E.U. may affect credit markets globally, reduce liquidity, disrupt economic conditions and may have a material adverse effect on our results of operations and financial condition.

If we are unable to obtain additional secured indebtedness, we may be unable to refinance our existing indebtedness and may not be able to finance a fleet replacement and expansion program in the future, any of which would have a material adverse effect on our business, financial condition and results of operations.

Global financial markets and economic conditions continue to be volatile. This volatility has negatively affected the general willingness of banks and other financial institutions to extend credit, particularly in the shipping industry, due to the historically volatile asset values of vessels. As the shipping industry is highly dependent on the availability of credit to finance and expand operations, it has been and may continue to be negatively affected by this decline in lending. The current state of global financial markets might adversely impact our ability to issue additional equity at prices which will not be dilutive to our existing shareholders or preclude us from issuing equity at all.

Future financing and investing activities may involve refinancing of certain existing debt near or upon maturity and the financing of future fleet replacement and expansion. Our ability to refinance existing indebtedness, 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

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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. In addition, we may also be liable for other damages for breach of contract. A failure to satisfy our financial commitments could result in the acceleration of our indebtedness and foreclosure on our 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 March 8, 2019, the average age of the vessels in our current fleet was 8.5 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.

Fourteen vessels in our fleet were over ten years old as of December 31, 2018. We may encounter higher operating and maintenance costs due to the age and condition of those vessels. In addition, if in the future we acquire additional secondhand vessels, such vessels may 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.

Uncertainty regarding the London Interbank Offered Rate (“LIBOR”) may adversely impact our indebtedness under our credit and loan facilities, which would have a material adverse effect on our business, financial condition and results of operations.

In July 2017, the U.K. Financial Conduct Authority announced that it would phase out LIBOR as a benchmark by the end of 2021. It is unclear whether new methods of calculating LIBOR will be established such that it continues to exist after 2021. Proposed alternative reference interest rates so far are based on overnight tenors only, while the most frequently used LIBOR rates are for one, three and six month tenors. Most of our credit and loan facilities are linked to LIBOR. When LIBOR ceases to exist, we may need to amend our credit and loan facilities based on a new standard that is established, if any. The basis of calculation of such standard is not yet agreed upon amongst market participants and as a result the cost of our borrowings may increase. In addition, any resulting differences in interest rate standards among our assets and our financing arrangements may result in interest rate mismatches between our assets and the borrowings used to fund such assets. There is no guarantee that a transition from LIBOR to an alternative reference interest rate will not result in financial market disruptions or significant increases in benchmark rates, or borrowing costs to borrowers, any of which could have an adverse effect on our business, financial condition and results of operations.

We are and will be exposed to floating interest rates and may selectively enter into interest rate derivative contracts, which can result in higher than market interest rates and charges against our income.

The loans under our credit facilities are generally advanced at a floating rate based on LIBOR, which was volatile prior to 2008 and can affect the amount of interest payable on our debt, and which, in turn, could have an adverse effect on our earnings and cash flow. Historically, LIBOR has been at relatively low levels, but has increased during recent periods. Our financial condition could be materially adversely affected at any time that we have not entered into interest rate hedging arrangements to hedge our exposure to the interest rates applicable to our credit facilities and any other financing arrangements we may enter into in the future. Moreover, even if we have entered into interest rate swaps or other derivative instruments for purposes of managing our interest rate exposure, our hedging strategies may not be effective and we may incur substantial losses.

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We have in the past selectively entered into derivative contracts to hedge our overall exposure to interest rate risk, and although we currently have no interest rate derivatives, we may enter into derivative contracts in the future. Entering into swaps and derivatives transactions is inherently risky and presents various possibilities for incurring significant losses. The derivatives strategies that we employ in the future may not be successful or effective, and we could, as a result, incur substantial additional interest costs.

Because we generate substantially all of our revenues in U.S. dollars but incur a material portion of our expenses in other currencies, including our investments in Scrubbers and BWTS, 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 2018 we incurred approximately 28.0% of our vessel operating expenses in currencies other than the U.S. dollar, of which 58.4% was denominated in Euros. In addition, we incurred approximately 66.0% of our management fees in Euros., and the majority of our management fee expenses in the future will be incurred in Euros. A significant part of our commitments for the acquisition of the Scrubber and BWTS equipment is also denominated in Euros. As of December 31, 2018, all of our indebtedness was denominated in U.S. dollars, as well as the amounts due under the memorandum of agreement for the acquisition of the resale newbuild vessel in our orderbook. We have historically entered into shipbuilding contracts and purchase of vessels whereby part of the contract price was payable in Japanese yen and Singapore dollars. Also, new credit facilities and financing agreements, purchase of vessels or newbuild contracts may be 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 and financing agreements impose, and any future credit facilities and financing agreements 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.

We have substantial indebtedness. As of December 31, 2018, we had $579.6 million outstanding under our credit facilities and financing agreements.

Our existing credit facilities and financing agreements impose, and any future credit facility and financing agreement will impose, operating and financial restrictions on us. These restrictions generally limit our ability to, among other things:

· 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 without the lenders’ consent;

· 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 Managers;

· sell the vessel mortgaged under such facility; and

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· 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:

· 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 120% for credit facilities outstanding both with commercial financing institutions and with governmental owned export credit institutions (the “Minimum Value Covenant”);

· maintain at all times a minimum cash balance per vessel with the respective lender from $150,000 to $1,000,000 as the case may be; 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 as of March 8, 2019:

· our total consolidated liabilities divided by our total consolidated assets (based on the market value of all vessels owned or leased on a finance lease taking into account their employment and the book value of all other assets) must not exceed 85% for credit facilities outstanding with commercial financing institutions and 80% for credit facilities outstanding with government owned export credit institutions (the “Consolidated Leverage Covenant”);

· our total consolidated assets (based on the market value of all vessels owned or leased on a finance lease taking into account their employment and the book value of all other assets) less our total consolidated liabilities must not be less than $150,000,000, for credit facilities outstanding both with commercial financing institutions and with government owned export credit institutions (the “Net Worth Covenant”);

· the ratio of our EBITDA over consolidated interest expense must not be less than 2.0:1, on a trailing 12 months’ basis, for credit facilities outstanding with commercial financing institutions (the “EBITDA Covenant”);

· the ratio of our aggregate debt to EBITDA must not exceed 5.5:1 on a trailing 12 months’ basis, applicable as of June 30, 2020 (our next testing date), onwards for credit facilities outstanding with government owned export credit institutions;

· our consolidated debt must not exceed $580,000,000 on June 30, 2019 and on December 31, 2019 for credit facilities outstanding with government owned export credit institutions;

· payment of dividends is subject to no event of default having occurred and continuing and is prohibited if the payment of such dividends would lead to an event of default; and

· a minimum of 30% or 35%, 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 and, in the case of one facility, Polys Hajioannou shall beneficially hold a minimum of 20% of the voting and ownership rights.

The Minimum Value Covenant, Consolidated Leverage Covenant, EBITDA Covenant and Net Worth Covenant do not apply to the loan facility with our subsidiary Shikokuepta Shipping Inc., and the Minimum Value Covenant

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and EBITDA Covenant do not apply to financing agreements entered into by our subsidiaries Maxeikosiena Shipping Corporation and Youngtwo Shipping Inc.

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.

We have not paid any dividends on our shares of Common Stock since August 2015. 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 and leverage 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. Therefore, we might continue not paying dividends on our shares of Common Stock 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:

· 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;

· level of indebtedness;

· 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 newbuild or selective acquisitions of second hand vessels in addition to our contracted newbuild through a combination of cash on hand, 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

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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 the 2,300,000 shares of Series C Preferred Shares issued May 2014 and 3,200,000 shares of Series D Preferred Shares issued June 2014, in each case outstanding as of December 31, 2018.

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 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 Managers to operate our business and our business could be harmed if our Managers fail to perform their services satisfactorily.

Pursuant to our management agreement with Safety Management (the “SMO Management Agreement”) and our management agreement with Safe Bulkers Management (the “SBM Management Agreement” and, together with the SMO Management Agreement, the “Management Agreements”), our Managers provide us with technical, administrative and commercial services (including vessel maintenance, crewing, purchasing, shipyard supervision, insurance, assistance with regulatory compliance, financial services and office space) and our executive officers. Our operational success depends significantly upon our Managers’ satisfactory performance of these services. Our business would be harmed if our Managers failed to perform these services satisfactorily. In addition, if either of the Management Agreements were to be terminated, expire or if their 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 Agreements.

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 Managers and their reputation and relationships in the shipping industry. If our Managers suffer material damage to their 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;

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· 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 Managers if they default on their obligations to us, investors in us will have no recourse against our Managers.

Our Managers are permitted to provide certain management services to affiliates and third parties under the specific restrictions of our Management Agreements. Although our Managers are required to provide preferential treatment to our vessels with respect to chartering arrangements under the Management Agreements, our Managers’ 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 Managers.

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

Pursuant to our Management Agreements, we pay our Managers a daily ship management fee of €875 per vessel and Safe Bulkers Management an annual ship management fee of €3 million for providing commercial, technical and administrative services (see the section entitled “Item 5. Operating and Financial Review and Prospects—A. Operating Results—General and Administrative Expenses” for more information). In addition, we pay our Managers 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 company administration expenses such as directors’ and officers’ liability insurance, legal and accounting fees and other similar company administration expenses, which are reimbursed or paid by us. 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 Managers 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. The maximum expiration date of the Management Agreements with our Managers is May 2027. We expect to enter into new agreements with the Managers upon their expiration; however, the terms upon which the new management agreements will be entered into are unknown at this time and may be less favorable to the Company than those currently in place.

Both of our Managers are privately held companies, and there is little or no publicly available information about them; an investor could have little advance warning of problems affecting our Managers that could have a material adverse effect on us.

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

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

Our chief executive officer, Polys Hajioannou, controls both of our Managers. The Hajioannou family (including Polys Hajioannou), directly and through entities controlled by the Hajioannou family, owns approximately 50.95% of our outstanding Common Stock as of March 8, 2019 (see “Item 7. Major Shareholders and Related Party Transactions—A. Major Shareholders” for more information). These relationships could create conflicts of interest between us, on the one hand, and our Managers, 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 Managers 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

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officer, such companies could acquire and operate such drybulk vessels in competition with us. In addition, although under our Management Agreements our Managers will be required to first provide us any chartering opportunities in the drybulk sector, our Managers are not prohibited from giving preferential treatment in other areas of its management to vessels that are beneficially owned by related parties. In addition, under our restrictive covenant arrangements with Mr. Hajioannou and certain entities affiliated with him, he and such entities may own, operate or finance a maximum of eight drybulk vessels on the water at any one time or enter into an unlimited number of contracts with shipyards for newbuild drybulk vessels as part of his estate or family planning. Any such drybulk vessels are not required to be managed by either of our Managers, and Mr. Hajioannou and his related entities are not required to first provide chartering opportunities to us with respect to such vessels. These conflicts of interest may have an adverse effect on our business, financial condition and results of operations.

While we adhere to high standards of evaluating related party transactions, agreements between us and other affiliated entities may be challenged as less favorable than agreements that we could obtain from unaffiliated third parties.

We have entered into various transactions with Mr. Hajioannou, our Chairman and chief executive officer, and entities controlled by and/or affiliated with Mr. Hajioannou. For example, in 2017, we sold one drybulk vessel to an entity owned by Mr. Hajioannou. While we believe this transaction was properly evaluated and approved by an independent special committee of our board of directors, certain terms related to the transaction, including price, may be challenged to be on terms that are less favorable to us than terms that would have otherwise been agreed upon with unaffiliated third-parties. Future transactions with Mr. Hajioannou and entities controlled by and/or affiliated with Mr. Hajioannou may undergo scrutiny by our shareholders, the media or others and result in a challenge of the terms associated with any such transaction.

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 Managers. Polys Hajioannou has substantial experience in the drybulk shipping industry and for 30 years has worked with us, our Managers and their predecessor. He and other members of our senior management and of our Managers 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 Managers, 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 arrangements with our chief executive officer and certain entities affiliated with him restricting their ability to compete with us, like restrictive covenants generally, may not be enforceable.

Our chief executive officer, Polys Hajioannou, and certain entities affiliated with him have entered into restrictive covenant agreements with us under which they are precluded from competing with us during either (i) with respect to Polys Hajioannou, the term of his service with us as executive and director and for one year thereafter, or (ii) with respect to entities affiliated with Polys Hajioannou, during the term of the Management Agreements and for one year following the termination of both Management Agreements, in each case 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, 2015, vessels in our fleet did not make any calls on ports in Iran or Syria. From January 1, 2016 through December 31, 2016, vessels in our fleet made three calls on ports in Iran and no calls on ports in Syria out of a total of 750 calls on worldwide ports. From January 1, 2017 through December 31, 2017, vessels in our fleet made four calls on ports in Iran and no calls on ports in Syria out of a total of 712 calls on worldwide ports. From January 1, 2018 through December 31, 2018, vessels in our fleet made five calls on ports in Iran and no calls on ports in Syria out of a total of 731 calls on worldwide ports. 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.

Our policy is for our vessels to avoid making calls on ports in Iran and Syria unless, in the case of Iran, the charterer represents to us that the cargo is not in contravention with any E.U., U.S. or United Nation sanctions and the export of such cargo has been authorized by the Office of Foreign Assets Control of the U.S. Department of the Treasury.

See “Item 4. Information on the Company—B. Business Overview—Disclosure of activities pursuant to Section 13(r) of the U.S. Securities Exchange Act of 1934” for more information.

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 non-statutory 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 Managers’ business is operated primarily from their offices in Limassol, Cyprus and Athens, Greece. In addition, a majority of our directors and officers are or will be non-residents 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 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

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also substantial doubt that the courts of the Republic of the Marshall Islands, the Republic of Cyprus 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.

Regulatory and legal risks as a result of our global operations could have a material adverse effect on our business, results of operations and financial conditions.

Our global operations increase both the number and the level of complexity of U.S. or foreign laws and regulations applicable to us. These laws and regulations include international labor laws; U.S. laws such as the FCPA and other laws and regulations established by the Office of Foreign Assets Control; local laws such as the U.K. Bribery Act 2010; data privacy requirements like the European General Data Protection Regulation, enforceable as of May 25, 2018; and the E.U.-U.S. Privacy Shield Framework, adopted by the European Commission on July 12, 2016. We may inadvertently breach some provisions of those laws and regulations which could result in cease of business activities, criminal sanctions against us, our officers or our employees, fines and materially damage our reputation. In addition such cases of investigating actual or alleged violations may be expensive and time consuming for our senior management.

Our costs of operating as a public company are significant, and our management is required to devote substantial time to complying with public company regulations.

We have significant legal, accounting and compliance expenses in order to comply with the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Securities Act of 1933, as amended, and the other rules and regulations of the SEC, including the Sarbanes-Oxley Act of 2002. Compliance with certain corporate governance requirements and financial reporting obligations, such as the systems and processes evaluation and testing of our internal control over financial reporting, which allow management to report on the effectiveness of our internal control over financial reporting, as required by Section 404 of Sarbanes-Oxley Act of 2002, is time consuming for our management and increases legal and compliance costs.

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.

As of March 8, 2019, the Hajioannou family (including our chief executive officer, Polys Hajioannou) owns approximately 50.95% of our outstanding Common Stock (see “Item 7. Major Shareholders and Related Party Transactions – A. Major Shareholders” for more information). 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.

Our status as a foreign private issuer within the rules promulgated under the Exchange Act exempts us from certain requirements of the SEC and New York Stock Exchange (“NYSE”).

We are a “foreign private issuer” within the rules promulgated under the Exchange Act. Under the NYSE listing rules, a foreign private issuer may elect to comply with the practice of its home country and to not comply with certain NYSE corporate governance requirements, including the requirements that (a) a majority of the board of directors consist of independent directors, (b) a nominating and corporate governance committee be established that is composed entirely of independent directors and has a written charter addressing the committee’s purpose and responsibilities, (c) a compensation committee be established that is composed entirely of independent directors and has a written charter addressing the committee’s purpose and responsibilities, (d) an annual performance evaluation of the nominating and corporate governance and compensation committees be undertaken and (e) the obligation to

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obtain shareholder approval in connection with certain issuances of authorized stock or the approval of, and material revisions to, equity compensation plans. Moreover, we are not required to comply with certain requirements of the SEC that domestic issuers are required to comply with, including (a) the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K, (b) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act, (c) the provisions of Regulation FD aimed at preventing issuers from making selective disclosures of material information and (d) the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and establishing insider liability for profits realized from any “short-swing” trading transaction (i.e., a purchase and sale, or sale and purchase, of the issuer’s equity securities within less than six months). Therefore, you will not have the same protections afforded to shareholders of companies that are subject to all NYSE corporate governance requirements or SEC requirements.

For example, in reliance on the foreign private issuer exemption to the NYSE listing rules, a majority of our board of directors may not consist of independent directors; our board’s approach may therefore be different from that of a board with a majority of independent directors, and as a result, the management oversight of our Company may be more limited than if we were subject to the NYSE listing rules.

See “Item 16G. Corporate Governance” for more information.

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 approximately $42.0 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 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 approximately $50.2 million. In December 2016, we issued and sold 15,640,000 shares of Common Stock in a public offering, in which an entity associated with Polys Hajioannou purchased 2,727,272 shares of Common Stock. The gross proceeds of the December 2016 public offering were approximately $17.2 million. In April 2017, we completed an exchange offer (the “Exchange Offer”) for our Series B Cumulative Redeemable Perpetual Preferred Shares, par value $0.01 per share, liquidation preference $25.00 per share (“Series B Preferred Shares”), in which we issued an additional 2,212,508 shares of Common Stock to holders of Series B Preferred Shares who tendered such preferred shares in the Exchange Offer.

In November 2018, one of our subsidiaries entered into a memorandum of agreement with an unaffiliated seller to acquire a Japanese-built, dry-bulk Post-Panamax class resale newbuild vessel, expected to be delivered within the first half of 2020. We have the option to finance up to 50% of the purchase price of the vessel through the periodic issuance of our Common Stock to the seller. In November 2018, we exercised our option and issued 1,441,048 shares of our Common Stock to the seller, to finance the first installment of $3.3 million of the purchase price of the vessel. We have the option to finance up to $13.2 million of the remaining capital expenditure of the vessel through the periodic issuance of our Common Stock to the seller. Any such Common Stock issued by us is subject to a restriction on transfer for a period of six months from the date of such issuance.

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

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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.

Our share repurchase programs may affect the market for our Common Stock and Preferred Shares, including affecting our share price or increasing share price volatility.

The Company may, from time to time, repurchase Common Stock or Preferred Shares in the open market, in privately negotiated transactions or otherwise, depending upon several factors, including market and business conditions, the trading price of our Common Stock and other investment opportunities. The repurchase programs may be limited, suspended or discontinued at any time without prior notice. On November 24, 2015, we announced a preferred share repurchase program under which we may, from time to time, purchase Preferred Shares for up to $20.0 million in the aggregate on the open market. On June 22, 2016, we announced a share repurchase program under which we may, from time to time, purchase up to 2,000,000 shares of Common Stock in the aggregate on the open market. On December 19, 2018, we announced a share repurchase program under which we may, from time to time, purchase up to 3,000,000 shares of Common Stock in the aggregate on the open market. Repurchases of our Common Stock pursuant to these or any newly announced repurchase programs could affect our stock price and increase trading volatility.

There is no guarantee of a continuing public market for you to resell our common or preferred stock.

Our Common Stock and Preferred Shares trade on the NYSE. We cannot assure you that an active and liquid public market for our Common Stock or Preferred Shares will continue, which would likely have a negative effect on the price of our Common Stock or Preferred Shares, as applicable, and impair your ability to sell or purchase our Common Stock or Preferred Shares, as applicable, when you wish to do so. In January 2016, we announced that we received notice from the NYSE indicating that the trading price of our Common Stock was not in compliance with the NYSE’s continuing listing standard that requires a minimum average closing price of $1.00 per share over a period of 30 consecutive trading days. On June 1, 2016, the NYSE notified us that our average stock price for the 30-trading days ended May 31, 2016 was above the NYSE’s minimum requirement of $1.00 based on a 30-trading day average and, accordingly, that the Company was no longer considered below the NYSE’s $1.00 continued listing standard.

In the future, if our Common Stock falls below the continued listing standard of $1.00 per share again or otherwise fails to satisfy any of the NYSE continued listing requirements, and if we are unable to cure such deficiency during any subsequent cure period, our Common Stock could be delisted from the NYSE. If our Common Stock ultimately were to be delisted for any reason, we could face significant material adverse consequences, including:

· limited availability of market quotations for our Common Stock;

· a limited amount of news and analyst coverage for us;

· a decreased ability for us to issue additional securities or obtain additional financing in the future;

· limited liquidity for our shareholders due to thin trading; and

· loss of preferential tax rates for dividends received by certain non-corporate United States holders, loss of “mark-to-market” election by United States holders in the event we are treated as a passive foreign investment company (“PFIC”), and loss of our tax exemption under Section 883 of the Internal Revenue Code of 1986, as amended (the “Code”) (although we believe that we will not satisfy the requirements for this exemption).

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Anti-takeover provisions in our organizational documents and Management Agreements 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.

Each Manager may terminate the applicable Management Agreement prior to the end of its term if there is a change in directors after which at least one of the members of our board of directors is not a continuing director. “Continuing directors” means, as of any date of determination, any member of our board of directors who was (a) a member of our board of directors on May 29, 2018 or (b) 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 May 29, 2018 or whose nomination or election was previously so approved. In the event that either Management Agreement is so terminated, the Company shall pay to Safe Bulkers Management an amount in cash equal to the Management Fees paid or payable to either Manager, in the aggregate, during the 36 months preceding the applicable termination.

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. On February 20, 2018 (the “Redemption Date”), we completed the redemption of the outstanding 379,514 Series B Preferred Shares at a redemption price of $25.00 per Series B Preferred Share plus all accumulated and unpaid dividends to, but excluding, the Redemption Date. From and after the Redemption Date, all distributions on the Series B Preferred Shares ceased to accumulate, such Series B Preferred Shares are no longer outstanding, and all rights of the holders of such shares terminated. However, in the future, we may have insufficient cash available to redeem other series of our Preferred Shares. The amount of dividends we can pay or use to redeem Preferred Shares depends upon the amount of cash we generate from our operations, which may fluctuate.

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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 of dividends and amounts payable upon liquidation, dissolution or winding up.

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, 2018, we had aggregate debt outstanding of $579.6 million, of which $37.4 million was the current portion of long term debt 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, 2018, 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. Articles of Incorporation and Bylaws—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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The liquidation preference amount on our Preferred Shares is fixed and you will have no right to receive any greater payment regardless of the circumstances.

The payment due upon a liquidation to holders of any series of our Preferred Shares is fixed at the redemption preference of $25.00 per share plus accumulated and unpaid dividends to the date of liquidation. If, in the case of our liquidation, there are remaining assets to be distributed after payment of this amount, you will have no right to receive or to participate in these amounts. Furthermore, if the market price for our Preferred Shares is greater than the liquidation preference, you will have no right to receive the market price from us upon our liquidation.

Holders of Preferred Shares have extremely limited voting rights.

The voting rights of holders of Preferred Shares are extremely limited. Our Common Stock is 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 may be subject to a 4% United States federal income tax (without allowance for deductions). The amount of this income may fluctuate, and we may 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,

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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.

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. In Tidewater Inc. v. United States, 565 F.3d 299 (5th Cir. 2009), 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. The IRS has stated that it disagrees with the holding in Tidewater and has specified that income from period time charters should be treated as services income. However, the IRS’ statement with respect to the Tidewater decision was an administrative action that cannot be relied upon or otherwise cited as precedent by taxpayers. 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 25 years under the leadership of Polys Hajioannou, we have sold 17 drybulk vessels during periods of what we viewed as favorable secondhand market conditions and have contracted to acquire 53 drybulk newbuilds and six 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 3,777,000 dwt as of March 8, 2019. Information on our capital expenditure requirements are discussed in “Item 5. Operating and Financial Review and Prospects—B. 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 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 Managers which, along with their predecessor, have specialized in drybulk shipping since 1965, providing services to over 50 drybulk vessels. In June 2008, we completed an initial public offering of our Common Stock in the U.S. and our Common Stock began

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trading on the NYSE. Our principal executive office is located at Apt. D11, Les Acanthes, 6, Avenue des Citronniers MC 98000 Monaco. 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 March 8, 2019, we had a fleet of 41 drybulk vessels, with an aggregate carrying capacity of 3,777,000 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.

During 2019 and 2020, we are focused on implementing our environmental investments, namely BWTS in all of our fleet and Scrubbers in about half of our fleet, in order to increase our competitiveness. We cooperate with key market players, shipyards, charterers, financial institutions and others to advance our business and create value for our shareholders.

General

As of March 8, 2019, our fleet comprised 41 vessels, of which 14 are Panamax class vessels, 10 are Kamsarmax class vessels, 13 are Post-Panamax class vessels and four are Capesize class vessels, with an aggregate carrying capacity of 3,777,000 dwt and an average age of 8.5 years. Assuming delivery of the last of our contracted vessels in 2020, our fleet will be comprised of 14 Panamax class vessels, 10 Kamsarmax class vessels, 14 Post-Panamax class vessels and four Capesize class vessels, and the aggregate carrying capacity of our 42 vessels will be 3,862,000 dwt. As of March 8, 2019, the average remaining duration of the charters for our existing fleet was 0.8 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 Newbuild

The table below presents additional information with respect to our drybulk vessel fleet, including our newbuild, and its deployment as of March 8, 2019.

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	$10,650	5.00%	Mar 2019 – Jul 2019	A
Koulitsa	76,900	2003	Japan	Period	$12,500	5.00%	Jan 2019 – May 2019
Paraskevi	74,300	2003	Japan	Period	$12,750	3.75%	Dec 2018 – Apr 2019
Vassos	76,000	2004	Japan	Period	$8,378	5.00%	Feb 2019 – Oct 2019	A
Katerina	76,000	2004	Japan	Period	$9,000	5.00%	May 2018 – Mar 2019	A
Maritsa	76,000	2005	Japan	Spot	$4,034	5.00%	Jan 2019 – Mar 2019	A
				Period	$10,325	5.00%	Mar 2019 – Oct 2019
Efrossini	75,000	2012	Japan	Period	$8,750	5.00%	Feb 2019 – Apr 2019	B
Zoe	75,000	2013	Japan	Period	$9,477	5.00%	Feb 2019 – Oct 2019	B
Kypros Land	77,100	2014	Japan	Spot	$5,365	5.00%	Feb 2019 – Mar 2019	H
Kypros Sea	77,100	2014	Japan	Period	$13,900	5.00%	Aug 2018 – Apr 2019	H
				Period	$13,850	5.00%	Apr 2019 – Dec 2019
Kypros Bravery	78,000	2015	Japan	Period	$14,200	5.00%	Sep 2018 – May 2019	I
Kypros Sky	77,100	2015	Japan	Spot	$11,400	5.00%	Feb 2019 – Apr 2019	H
Kypros Loyalty	78,000	2015	Japan	Period	$12,850	5.00%	Jan 2018 – Mar 2019	I
				Period	$13,850	5.00%	Mar 2019 – Nov 2019
Kypros Spirit	78,000	2016	Japan	Spot	$10,436	5.00%	Feb 2019 – Apr 2019	I
Kamsarmax
Pedhoulas Merchant	82,300	2006	Japan	Period	$14,500	5.00%	Apr 2018 – Mar 2019	C
				Period	$11,350	5.00%	Mar 2019 – Feb 2020
Pedhoulas Trader	82,300	2006	Japan	Spot	$9,400	5.00%	Feb 2019 – Apr 2019	C
Pedhoulas Leader	82,300	2007	Japan	Period	$9,696	5.00%	Feb 2019 – Oct 2019	C
Pedhoulas Commander	83,700	2008	Japan	Period	$14,150	5.00%	Jun 2018 – Apr 2019

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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)
Pedhoulas Builder	81,600	2012	China	Period	$9,900		5.00%	Jun 2018 – Aug 2019	D
Pedhoulas Fighter	81,600	2012	China	Period	$13,000		5.00%	Jul 2018 – Mar 2019	D
Pedhoulas Farmer(6)	81,600	2012	China	Period	$12,750		5.00%	Dec 2018 – Apr 2019	D
Pedhoulas Cherry	82,000	2015	China	Spot	$8,000		5.00%	Feb 2019 – Apr 2019	K
Pedhoulas Rose(6)	82,000	2017	China	Period	$10,000		5.00%	Mar 2018 – May 2019	K
Pedhoulas Cedrus	81,800	2018	Japan	Period	$15,500		5.00%	Jun 2018 – Apr 2019
Post-Panamax
Marina	87,000	2006	Japan	Period	$14,500		5.00%	Nov 2018 – Jun 2019	E
Xenia	87,000	2006	Japan	Period	$12,500		5.00%	Jun 2018 – Jun 2019	E
Sophia	87,000	2007	Japan	Period	$14,400		5.00%	Nov 2018 – Apr 2019	E
Eleni	87,000	2008	Japan	Period	$14,950		5.00%	Jan 2019 – Jun 2019	E
Martine	87,000	2009	Japan	Spot	$6,324		5.00%	Feb 2019 – Apr 2019	E
Andreas K	92,000	2009	South Korea	Spot	$3,823		5.00%	Feb 2019 – Mar 2019	F
Panayiota K	92,000	2010	South Korea	Period	$13,750		5.00%	Aug 2018 – May 2019	F
Agios Spyridonas	92,000	2010	South Korea	Spot	$7,500		3.75%	Feb 2019 – Apr 2019	F
Venus Heritage	95,800	2010	Japan	Period	$13,200		5.00%	Nov 2017 – May 2019	G
Venus History	95,800	2011	Japan	Period	$14,750		5.00%	Jan 2018 – Apr 2019	G
Venus Horizon	95,800	2012	Japan	Period	$14,500		5.00%	Jan 2019 – May 2019	G
Troodos Sun	85,000	2016	Japan	Period	$15,950		5.00%	Mar 2018 – Mar 2019	J
Troodos Air	85,000	2016	Japan	Period	$12,500		5.00%	May 2018 – Mar 2019	J
Capesize
Mount Troodos	181,400	2009	Japan	Period(7)	BCI+3.5	%	5.00%	Nov 2018 – Sep 2019
Kanaris	178,100	2010	China	Period(8)	$26,562		2.50%	Sep 2011 – Jun 2031
Pelopidas	176,000	2011	China	Period	$38,000		1.00%	Feb 2012 – Jan 2022
Lake Despina	181,400	2014	Japan	Period(9)	$24,376		1.25%	Jan 2014 – Jan 2024
Subtotal	3,777,000
NEW BUILD Post-Panamax
1772TBN	85,000	1H 2020	Japan						J
Subtotal	85,000
TOTAL	3,862,000

(1) For existing vessels, the year represents the year built. For our newbuild, the date shown reflects the expected delivery dates.

(2) Quoted charter rates are gross charter rates. For charter parties with variable rates among periods or consecutive charter parties with the same charterer, the recognized gross daily charter rate represents the weighted average gross daily charter rate over the duration of the applicable charter period or series of charter periods, as applicable. In the case of a charter agreement that provides for additional payments, namely ballast bonus to compensate for vessel repositioning, the gross daily charter rate presented has been adjusted to reflect estimated vessel repositioning expenses. Gross charter rates are inclusive of commissions. Net charter rates are charter rates after the payment of commissions. In the case of voyage charters, the charter rate represents revenue recognized on a pro rata basis over the duration of the voyage from load to discharge port less related voyage expenses.

(3) Commissions reflect payments made to third-party brokers or our charterers.

(4) The start dates listed reflect either actual start dates or, in the case of contracted charters that had not commenced as of March 8, 2019, the scheduled start dates. Actual start dates and redelivery dates may differ from the referenced scheduled start and redelivery dates depending on the terms of the charter and market conditions and does not reflect the options to extend the period time charter.

(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) Vessel sold and leased back on a net daily bareboat charter rate of $6,500 for a period of 10 years, with a purchase obligation at the end of the 10^th year and purchase options in favor of the Company after the second year of the bareboat charter, at annual intervals and predetermined purchase prices.

(7) A period time charter at a gross daily charter rate linked to the Baltic Capesize Index (“BCI”) plus a premium.

(8) Charterer agreed to reimburse us for part of the cost of the Scrubbers and BWTS to be installed on the vessel, which is recorded by increasing the recognized daily charter rate by $634 over the remaining tenor of the time charter party.

(9) 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. In January 2017, the period time charter was amended to reflect substitution of the initial charterer with its subsidiary guaranteed by the initial charterer and changes in payment terms; all other period charter terms remained unchanged. The charter agreement grants the charterer the 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 $39.0 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

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that the charterer exercises its option to purchase the vessel and subsequently offers to sell such vessel to a third party. The charter agreement also grants the charterer an option to extend the period time charter for an additional twelve 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.

From the beginning of 1995 through March 8, 2019, we have taken delivery of 48 newbuilds and six secondhand vessels. As of March 8, 2019, we were contracted to take delivery of one Japanese-built Post-Panamax class resale, newbuild vessel. As of March 8, 2019, our remaining capital expenditure requirements to shipyards or sellers with respect to our newbuild amounted to $30.4 million of which the amount of $7.0 million is due in 2019 and $23.4 million is due in 2020. The Company has the option to finance up to $13.2 million of the remaining capital expenditure of the vessel through the periodic issuance of our Common Stock to the seller.

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 trips 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., Energy Eastern Pte. Ltd., NYK, NS United Kaiun Kaisha, Kawasaki Kisen Kaisha, Oldendorff GmbH and Co. KG, Louis Dreyfus Armateurs, Louis Dreyfus Commodities, ArcelorMittal or their affiliates. During 2018, two of our charterers, namely Glencore Agriculture B.V. and Bunge S.A., accounted for 28.49% of our revenues, with each one accounting for more than 10.0% of total revenues. During 2017, one of our charterers, namely Bunge S.A., accounted for 12.72% of our revenues. During 2016, two of our charterers, namely Glencore Agriculture B.V. and Global Chartering Ltd., an affiliate of ArcelorMittal, accounted for 22.54% of our revenues, with each one accounting for more than 10.0% 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

In May 2008, we entered into a management agreement with Safety Management and in May 2015, we entered into a management agreement with Safe Bulkers Management, pursuant to which our Managers provided us with our executive officers, technical, administrative, commercial and certain other services. Each of these management agreements expired on May 28, 2018. In May 2018, we entered into new Management Agreements, pursuant to which our Managers continue to provide us with technical, administrative, commercial and certain other services. Each of

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the Management Agreements was effective as of May 29, 2018 and has an initial three-year term which may be extended on a three-year basis up to two times. Our arrangements with our Managers and their 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 Managers. Our Managers report to us and our board of directors through our executive officers. The Management Agreements with our Managers have a maximum expiration date in May 2027 and we expect to enter into new agreements with the Managers upon their expiration. The terms of any such new agreements have not yet been determined.

Pursuant to the Management Agreements, in return for providing such services our Managers receive a ship management fee of €875 per day per vessel and one of our Managers receives an annual ship management fee of €3 million. Our Managers also receive a commission of 1.0% based on the contract price of any vessel sold by it on our behalf, and a commission 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 Managers 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 Managers’ staff of newbuilds we have agreed to acquire pursuant to shipbuilding contracts, memoranda of agreement, or otherwise.

Our Managers have agreed that, during the term of our Management Agreements and for a period of one year following their termination, our Managers 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 or his family members, and drybulk vessels that are acquired, invested in or controlled by companies affiliated with our chief executive officer or his family members, subject in each case to compliance with, or waivers of, the restrictive covenant agreements entered into between us and such companies. Our Managers have 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 Managers, our drybulk vessel will receive such charter.

The foregoing description of the Management Agreements does not purport to be complete and is qualified in its entirety by reference to the Management Agreements, copies of which are attached as Exhibit 4.1 and Exhibit 4.2 and incorporated herein by reference.

See “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Management Agreements” for more information.

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 modern vessels with advanced designs and technological specifications. As of March 8, 2019 our fleet had an average age of 8.5 years. Upon delivery of our contracted newbuild 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, chief operating officer, chief financial controller, chief compliance officer and our internal auditor. Our Managers are responsible for the technical management of our fleet and therefore also handle the recruiting, either directly or through crewing

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agents, of the senior officers and all other crew members for our vessels. As of December 31, 2018, approximately 844 people served on board the vessels in our fleet, and our Managers employed approximately 104 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 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 Managers are responsible for arranging insurance for all our vessels on the terms specified in our Management Agreements, which we believe are in line with standard industry practice. In accordance with our Management Agreements, our Managers procure and maintain 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 relatively 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 Managers 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 (“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

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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 90.0% 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 mutualize 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 $10.0 million up to, currently, approximately $8.2 billion. On that basis, all claims up to $10.0 million will be covered by each Club’s Individual Retention and all claims in excess of $10.0 million up to $100.0 million will be covered by the Pool. Effective as of February 20, 2018, the lower pool layer ceiling/upper pool attachment point was lifted from $45.0 million to US $50.0 million and the layer from $80.0 million to the GXL attachment ($100.0 million) was absorbed into the pool and merged with the upper pool layer which attaches from $50.0 million to $100.0 million with an individual club retention of 7.5% across the layer. For the 2018/19 policy year, the International Group maintained a three layer GXL reinsurance program, together with an additional Collective Overspill layer, which combine to provide commercial reinsurance cover of up to $3.1 billion per vessel per incident, comprising of reinsurance for all claims of up to $2.1 billion per vessel per incident in excess of the $100.0 million insured by the Pool and an additional $1.0 billion in excess of the aforesaid $2.1 billion per vessel per incident in respect of claims for overspill.

War Risks Insurance

Our war risk insurance covers hull or freight damage, detention or diversions risks and P&I liabilities (including crew) arising out of confiscations, seizure, capture, vandalism, sabotage and/or other war risks and is subject to separate limits of:

(i) each vessel’s hull and machinery value and each vessel’s corresponding increased value insured up to $400.0 million per vessel per incident, and

(ii) for war risks P&I liabilities including crew up to $400.0 million per vessel per incident.

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

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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. Intermediate surveys may not be required for vessels under the age of 15 years. 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 due date. Special survey may be extended under certain provisions for a period of up to three months from their due date. In some vessels, BWTS will be undertaken concurrently with the scheduled drydocking. Scrubber retrofit may be undertaken either as a stand-alone retrofit or concurrently with the scheduled drydocking. The following table lists the dates by which we expect to start the next drydocking, BWTS retrofit and/or Scrubber retrofit and the special survey for the vessels in our current drybulk vessel fleet:

Vessel Name	Drydocking/BWTS/Scrubber (1)	Special Survey (2)
Katerina (3), (4)	April 2019	May 2019
Martine (3), (4), (5)	April 2019	May 2019
Kypros Sea (3), (4)	April 2019	April 2019
Andreas K (3), (4), (5)	June 2019	August 2019
Pedhoulas Cherry (3), (5)	June 2019	July 2020
Venus History (5)	June 2019	September 2021
Venus Horizon (5)	July 2019	February 2022
Sophia (5)	July 2019	June 2022
Venus Heritage (3), (4), (5)	August 2019	December 2020
Eleni (5)	August 2019	November 2023
Panayiota K (3), (4), (5)	August 2019	April 2020
Agios Spyridonas (3), (4), (5)	August 2019	January 2020
Pedhoulas Farmer (5)	September 2019	September 2022
Pedhoulas Fighter (5)	September 2019	August 2022
Pedhoulas Builder (5)	September 2019	May 2022
Pedhoulas Rose (5)	October 2019	January 2022
Marina (3), (4), (5)	October 2019	January 2021
Troodos Sun (3), (4), (5)	November 2019	January 2021
Troodos Air (3), (4), (5)	November 2019	March 2021
Xenia (3), (4), (5)	December 2019	April 2021
Mount Troodos (3), (4), (5)	December 2019	December 2019
Maritsa (3), (4)	January 2020	January 2020
Paraskevi (3), (4)	January 2020	January 2023
Kypros Bravery (3), (4)	January 2020	January 2020

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Vessel Name	Drydocking/BWTS/Scrubber (1)	Special Survey (2)
Kanaris (3), (4), (5)	March 2020	March 2020
Kypros Sky (3), (4)	March 2020	April 2020
Kypros Loyalty (3), (4)	April 2020	June 2020
Pedhoulas Merchant (3), (4)	September 2020	March 2021
Pedhoulas Trader (3), (4)	November 2020	May 2021
Pelopidas (3), (4)	November 2020	November 2021
Efrossini (3), (4)	March 2021	February 2022
Kypros Spirit (3), (4)	April 2021	July 2021
Koulitsa (3)	June 2021	April 2023
Maria (3)	June 2021	April 2023
Vassos (3)	October 2021	February 2024
Pedhoulas Leader (3), (4)	November 2021	February 2022
Venus History (4)	September 2021
Venus Horizon (4)	December 2021
Sophia (4)	December 2021
Pedhoulas Builder (4)	December 2021
Pedhoulas Farmer (4)	March 2022
Pedhoulas Fighter (4)	March 2022
Pedhoulas Commander (3)	May 2022	May 2023
Pedhoulas Cedrus (3)	June 2022	June 2023
Lake Despina (3)	December 2022	January 2024
Kypros Land (3)	December 2022	January 2024
Zoe (3)	July 2023	July 2023

(1) Scheduled date for initiation of a drydocking, BWTS retrofit and/or Scrubber retrofit.

(2) Special survey date.

(3) Drydocking.

(4) BWTS retrofit.

(5) Scrubber retrofit.

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, the American Bureau of Shipping or Bureau Veritas, 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 IMO, the E.U. 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”) 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 complies with all current requirements. However, we anticipate incurring significant vessel modification expenditures in the current or subsequent fiscal years to comply with certain requirements, including mainly the installation of BWTS and Scrubbers. Under our Management Agreements, our Managers have assumed technical management responsibility for our fleet, including compliance with all applicable government and other regulations. If the Management Agreements with our Managers terminate, 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

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structure and related costs. However, due to the nature of our relationship with our Managers, we do not expect our Management Agreements 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 Managers and our vessels are certified in accordance with ISO 14001 and ISO 50001 relating to environmental standards and energy efficiency. Moreover we have obtained additional class notation for most of our fleet for the prevention of sea and air pollution while we are in the process of obtaining such class notation for the remaining vessels. 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.

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. Presently, designated ECAs include North America, the Caribbean, the North Sea and Baltic Sea. In 2008, the IMO Marine Environment Protection Committee (“MEPC”) 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 E.U. has established separate limitations on the sulfur content of marine fuels, and some E.U. countries may be declared ECAs in the future, pursuant to Annex VI and its amendments. Starting January 1, 2015 reduced limits of sulfur content of fuel oil were introduced resulting to the use of lighter fuels, namely low sulfur MGO with a maximum sulfur content of 0.1%, for ECA passage. Presently, vessels mainly use HFO with a maximum global sulfur content of 3.5%.

In 2015, China designated the Pearl River Delta, the Yangtze River Delta and the Bohai-Rim Area (Beijing, Tianjin and Hebei) as Domestic Emission Control Areas (“DECAs”). Vessels navigating, berthing and operating within this area are required to use fuel oil with a maximum sulfur content of 0.5%. As of January 1, 2019, China expanded the scope of the DECAs to include all coastal waters within 12 nautical miles of the mainland.

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The IMO confirmed in October 2016 that a global 0.5% sulfur cap on marine fuels will come into force on January 1, 2020, as agreed in amendments adopted in 2008 for Annex VI to MARPOL, unless vessels are equipped with Scrubbers, in which case HFO with a maximum sulfur content of 3.5% may be used. The 0.5% sulfur cap marks a significant reduction from the current global sulfur cap of 3.5%, which had been implemented since January 1, 2012. When the 2020 sulfur cap was decided upon in 2008, it was also agreed that a review should be undertaken to assess whether there was sufficient compliant fuel available to meet the 2020 date, failing which, the date could be deferred to 2025. That review was completed in July 2016 by a consortium of consultants led by CE Delft and submitted to the IMO’s MEPC during their 70^th session (“MEPC 70”). The review concluded that sufficient compliant fuel would be available to meet the new requirement. However, there have been competing studies, that hold the opposing view that refining capacity will not be sufficient in 2020, with an estimated 60.0 to 70.0% additional sulfur plant capacity required by 2020. There have also been questions as to how the sulfur cap will be enforced, as it is up to individual parties to MARPOL to enforce fines and sanctions. Global approved limits from Scrubber effluents are in place; however, certain questions have been raised by EU which has requested from IMO to do further studies.

All our ships have the capacity to use 0.1% sulfur content MGO or 0.5% sulfur content compliant fuels. Furthermore, in response to the implementation of 0.5% sulfur cap by January 1, 2020, we have entered into an agreement to install Scrubbers in approximately half of our vessels. The installation of Scrubbers is both time consuming and costly, but we expect to achieve increased revenue on the basis of price differential between the 0.5% sulfur cap compliant fuels and the 3.5% sulfur content HFO that these vessels will continue to use. For the other half of our fleet will use 0.5% sulfur content compliant fuels, the use of such fuels may reduce our competitiveness in the market particularly if such fuels are sold at prices substantially higher compared to the cost of the 3.5% sulfur content HFO that is primarily used today.

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 E.U., the U.S. or individual states, or other jurisdictions in which we operate, could require vessel modifications or otherwise increase the costs of our operations.

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. By 2025, all new ships built must be 30% more energy efficient than those built in 2014. 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 (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. Liability limits under the Bunker Convention were increased as of June 2015. With respect to non-ratifying states, including the United States, liability for spills and releases of oil carried as bunker in ship’s bunkers typically is determined by the national or other domestic laws in the jurisdiction where the events or damages occur. 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 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

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verifies that the vessel operates in compliance with its approved SMS. Currently, our Managers have 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 Managers are required to renew these documents of compliance and safety management certificates every five years. Compliance is externally verified on an annual basis for the Managers 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 E.U. authorities have indicated that vessels not in compliance with the ISM Code will be prohibited from trading in U.S. and E.U. 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 MLC 2006 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 MLC 2006 was ratified on August 20, 2012, and all our vessels were 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.

The U.S. Oil Pollution Act of 1990

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 U.S., its territories and possessions or whose vessels operate in U.S. waters, which includes the U.S.’ 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 (“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 December 21, 2015, the U.S. Coast Guard adopted regulations that adjust the limits of liability of responsible parties under OPA 90 to the greater of $1,100 per gross ton or $939,800 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.

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

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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.

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 (the “VGP”) to discharge ballast water and other wastewater into U.S. waters by submitting a Notice of Intent (a “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.

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The 2013 VGP became effective in December 2013 and remains in effect during the implementation of the 2018 Vessel Incident Discharge Act (the “VIDA”), as discussed below. 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. The 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 U.S. We believe all our vessels are in compliance with the 2013 VGP.

On December 4, 2018, the VIDA was signed into law, establishing a new framework for the regulation of vessel incidental discharges under the CWA. The VIDA requires the EPA to develop performance standards for those discharges within two years of enactment and requires the U.S. Coast Guard to develop implementation, compliance and enforcement regulations within two years of the EPA’s promulgation of standards. Under the VIDA, all provisions of the 2013 VGP will remain in force and effect until the U.S. Coast Guard’s regulations are finalized.

U.S. Air Emission Requirements

In 2008, the U.S. ratified the amended Annex VI of MARPOL, 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 U.S. 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 that began in 2016 requiring an 80 percent reduction in nitrogen oxide emissions below current standards. The CAA also requires states to adopt State Implementation Plans (“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.

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 E.U. 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 25.0% 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 E.U. 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 E.U. initiatives will be material, it is difficult to predict what additional legislation, if any, may be promulgated by the E.U. 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

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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 BWTS. 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 BWTS by their first drydocking 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.

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 took effect in September 2017. Many of the implementation dates in the BWM Convention had already passed prior to its effectiveness, so that the period of installation of mandatory ballast water exchange requirements would be extremely short, with several thousand ships a year needing to install BWTS. For this reason, on December 4, 2013, the IMO Assembly passed a resolution revising the application dates of the BWM Convention so that they are triggered by the entry into force date and not the dates originally in the BWM Convention. This, in effect, makes all vessels constructed before September 8, 2017 “existing vessels” and allows for the installation of a BWTS on such vessels at the first renewal survey following entry into force of the convention. In July 2017, the implementation scheme was further changed to require vessels with International Oil Pollution Prevention (“IOPP”) certificates expiring between September 8, 2017 and September 8, 2019 to comply at their second IOPP renewal. Each vessel in our current fleet has been issued a Ballast Water Management Plan Statement of Compliance by the classification society with respect to the applicable IMO regulations and guidelines. In addition, we are required to install BWTS in each vessel in our fleet during the next drydocking, which is expected to cause us to incur additional expenditures and operating costs.

In November 2014 and May 2015, the IMO’s Maritime Safety Committee and MEPC, respectively, each adopted relevant parts of the International Code for Ships Operating in Polar Water (the “Polar Code”). The Polar Code entered into force on January 1, 2017. The Polar Code covers design, construction, equipment, operational, training, search and rescue as well as environmental protection matters relevant to ships operating in the waters surrounding the two poles. It also includes mandatory measures regarding safety and pollution prevention as well as recommendatory provisions. Ships intending to operate in the applicable areas must have a Polar Ship Certificate. This requires an assessment of operating in said waters and includes operational limitations, additional safety equipment and plans or procedures, necessary to respond to incidents involving possible safety or environmental consequences. A Polar Water Operational Manual is also needed on board the ship for the owner, operator, master, and crew to have sufficient information regarding the ship to assist in their decision-making process. The Polar Code applies to new ships constructed after January 1, 2017. After January 1, 2018, ships constructed before January 1, 2017 are required to meet the relevant requirements by the earlier of their first intermediate, or renewal survey.

On June 29, 2017, the Global Industry Alliance (the “GIA”) was officially inaugurated. The GIA is a program, under the Global Environmental Facility-United Nations Development Program-IMO project, which supports shipping, and related industries, as they move towards a low carbon future. Organizations including, but not limited to, ship owners, operators, classification societies, and oil companies, signed to launch the GIA.

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In addition, the United States is currently experiencing changes in its environmental policy, the results of which have yet to be fully determined. For example, in April 2017, the U.S. President signed an executive order regarding the environment that targets the United States’ offshore energy strategy, which affects parts of the maritime industry and may affect our business operations. Additional legislation or regulation applicable to the operation of our ships that may be implemented in the future could negatively affect our profitability. Furthermore, recent action by the IMO’s Maritime Safety Committee and U.S. agencies indicate that cybersecurity regulations for the maritime industry are likely to be further developed in the near future in an attempt to combat cybersecurity threats. For example, cyber-risk management systems must be incorporated by ship owners and managers by 2021. This might cause companies to cultivate additional procedures for monitoring cybersecurity, which could require additional expenses and/or capital expenditures. However, the impact of such regulations is difficult to predict at this time.

Greenhouse Gas Regulation – United Nations Framework Convention on Climate Change

In February 2005, the Kyoto Protocol to the United Nations Framework Convention on Climate Change entered into force. Pursuant to the Kyoto 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. The Paris Agreement adopted under the United Nations Framework Convention on Climate Change in December 2015 contemplates commitments from each nation party thereto to take action to reduce greenhouse gas emissions and limit increases in global temperatures but did not include any restrictions or other measures specific to shipping emissions. 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 E.U. recently enacted a regulation requiring ships over 5,000 gross tons docking in E.U. ports to monitor, report and verify greenhouse gas emissions which went into effect in 2018. See “Item 4. Information on the Company—B. Business Overview—European Monitoring, Reporting and Verification Regulation” for more information. The United States or individual U.S. states could also enact environmental regulations that could affect our operations. For example, California has introduced a cap-and-trade program for greenhouse gas emissions, aiming to reduce emissions by 40% by 2030. 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. Even in the absence of climate control legislation, our business may be indirectly affected to the extent that climate change may result in sea level changes or more intense weather events.

European Monitoring, Reporting and Verification Regulation

The European Parliament and the Council of the E.U. have adopted regulation 2015/757 on the monitoring, reporting and verification (the “EU-MRV”) of CO2 emissions from maritime transport. It entered into force on July 1, 2015 and monitoring began January 1, 2018.

The maritime EU-MRV regulation applies to all merchant ships of 5,000 gross tons or above on voyages from, to and between ports under jurisdiction of E.U. member states. Ships above 5,000 gross tons account for around 55.0% of the number of ships calling into E.U. ports and represent around 90.0% of the related emissions. Companies operating the vessels will have to monitor the CO2 emissions released while in port and for any voyages to or from a port under the jurisdiction of an E.U. member state and to keep records on CO2 emissions on both per-voyage and annual bases.

As of January 1, 2018, our vessels began monitoring and reporting CO2 emissions pursuant to this regulation. This monitoring and reporting process adopted by the EU-MRV regulation may be a precursor to a market-based mechanism to be adopted in the future. This or other developments may result in financial impacts on our operations that we cannot predict with certainty at this time.

IMO Data Collection System

MARPOL Annex VI, as amended on November 6, 2016, requires mandatory fuel oil consumption data collection and reporting. The requirement is effective as of March 1, 2018 and requires ships above 5,000 gross tons to collect

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and report annual data on fuel oil consumption to an IMO database with the first reporting period being in effect for the 2019 calendar year.

Countermeasures against greenhouse gas emissions from international shipping have been deliberated at IMO, and so far, the Energy Efficiency Design Index (“EEDI”) and the Ship Energy Efficiency Management Plan (“SEEMP”) have been implemented.

Ship’s Energy Consumption Data Reporting

The China Maritime Safety Administration (the “China MSA”) issued the Regulation on Data Collection of Energy Consumption for Ships in November 2018. This regulation is effective as of January 1, 2019 and requires ships calling on Chinese ports to report fuel consumption and transport work details directly to the China MSA. This regulation also contains additional requirements for Chinese-flagged vessels (domestic and international) and other non-Chinese-flagged international navigating vessels.

Vessel Security Regulations

Several initiatives have been implemented 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 U.S. 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 (the “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.

Inventory of Hazardous Materials

Hong Kong Convention

On May 15, 2009, the IMO adopted the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships, 2009 (the “Hong Kong Convention”). The Hong Kong Convention will enter into force two years after it has been ratified by 15 states representing 40% of the world fleet. The Hong Kong Convention has not yet entered into force. One of the key requirements of the Hong Kong Convention will be for ships over 500 gross tonnes operating in international waters to maintain an Inventory of Hazardous Materials (an “IHM”). Only warships, naval auxiliary and governmental, non-commercial vessels are exempt from the requirements of the Hong Kong Convention. The IHM has three parts:

· Part I – hazardous materials inherent in the ship’s structure and fitted equipment;

· Part II – operationally generated wastes; and

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· Part III – stores.

Once the Hong Kong Convention has entered into force, each new and existing ship will be required to maintain Part I of IHM.

E.U. Ship Recycling Regulation

On November 20, 2013, the E.U. adopted Regulation (EU) No 1257/2013 (the “E.U. Ship Recycling Regulation”), which seeks to facilitate the ratification of the Hong Kong Convention and sets forth rules relating to vessel recycling and management of hazardous materials on vessels. In addition to new requirements for the recycling of vessels, the E.U. Ship Recycling Regulation contains rules for the control and proper management of hazardous materials on vessels and prohibits or restricts the installation or use of certain hazardous materials on vessels. The E.U. Ship Recycling Regulation applies to vessels flying the flag of an E.U. member state and certain of its provisions apply to vessels flying the flag of a third country calling at a port or anchorage of a member state. For example, when calling at a port or anchorage of a member state, a vessel flying the flag of a third country will be required, among other things, to have on board an IHM that complies with the requirements of the E.U. Ship Recycling Regulation and the vessel must be able to submit to the relevant authorities of that member state a copy of a statement of compliance issued by the relevant authorities of the country of the vessel’s flag verifying the inventory. The E.U. Ship Recycling Regulation will take effect on non-E.U.-flagged vessels calling on E.U. ports of call beginning on December 31, 2020.

Disclosure of Activities Pursuant to Section 13(r) of the U.S. Securities Exchange Act of 1934

Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 added Section 13(r) to the Exchange Act. Section 13(r) requires an issuer to disclose whether it or any of its affiliates knowingly engaged in certain activities, transactions or dealings relating to Iran. Disclosure is required even where the activities, transactions or dealings are conducted in compliance with applicable law. Provided in this section is information concerning the activities of us and our affiliates that occurred in 2018 and which we believe may be required to be disclosed pursuant to Section 13(r) of the Exchange Act.

In 2018, our vessels made five port calls to Iran to discharge corn and soybeans.

The vessel Troodos Air made a call to the port of Bandar Imam Khomeini on February 13, 2018, discharging corn, and remained in the port of Bandar Imam Khomeini during 2018 for seven days. During this time, the Troodos Air was on time charter to Bunge S.A. at a gross rate of $11,350 per day.

The vessel Troodos Sun made a call to the port of Bandar Imam Khomeini on October 11, 2018, discharging corn, and remained in the port of Bandar Imam Khomeini during 2018 for 26 days. During this time, the Troodos Sun was on time charter to Bunge S.A. at a gross rate of $15,950 per day.

The vessel Pedhoulas Leader made a call to the port of Bandar Imam Khomeini on October, 5, 2018, discharging soybeans, and remained in the port of Bandar Imam Khomeini during 2018 for 34 days. During this time, the Pedhoulas Leader was on time charter to Cargill at a gross rate of $12,500 per day.

The vessel Pedhoulas Commander made a call to the port of Bandar Imam Khomeini on October, 20, 2018, discharging corn, and remained in the port of Bandar Imam Khomeini during 2018 for 23 days. During this time, the Pedhoulas Commander was on time charter to Bunge S.A. at a gross rate of $14,150 per day.

The vessel Xenia made a call to the port of Bandar Imam Khomeini on October, 24, 2018, discharging corn, and remained in the port of Bandar Imam Khomeini during 2018 for 29 days. During this time, the Xenia was on time charter to Bunge S.A. at a gross rate of $12,500 per day.

These port calls represented approximately 0.68% of the total port calls made by all the vessels owned by us in 2018. As the vessel owner, we earned revenues at the agreed daily charter rates from the charterers. The aggregate gross revenue attributable to these 119 days that our vessels remained in the port of Bandar Imam Khomeini was approximately $1.6 million. As we do not attribute profits to specific voyages under a time charter, we have not attributed any profits to the voyages which included these port calls. Our charter party agreements for our vessels restrict the charterers from calling in Iran in violation of E.U., U.S. or United Nation sanctions and that has not been

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authorized by the Office of Foreign Assets Control of the U.S. Department of the Treasury. There can be no assurance that the vessels referenced above or another of our vessels will not, from time to time in the future on charterer’s instructions, perform voyages which would require disclosure pursuant to Exchange Act Section 13(r).

We do not believe that any of these transactions or activities are sanctionable. On January 16, 2016, the U.S. and the E.U. lifted nuclear-related sanctions on Iran through the implementation of the Joint Comprehensive Plan of Action (“JCPOA”) among the P5+1 (China, France, Germany, Russia, the U.K. and the U.S.), the E.U. and Iran to ensure that Iran’s nuclear program will be exclusively peaceful. All activities, transactions and dealings reported in this section occurred after the implementation of the JCPOA. However, U.S. nuclear-related sanctions have been re-imposed effective August 7, 2018 and November 5, 2018 as a result of the withdrawal of the U.S. from the JCPOA. We intend to continue to charter our respective vessels to charterers and sub-charterers, including, as the case may be, Iran-related parties, who may make, or may sublet the vessels to sub-charterers who may make, port calls to Iran, so long as the activities continue to be permissible and not sanctionable under applicable U.S. and E.U. and other applicable laws.

Seasonality

We operate our vessels in markets that have historically exhibited seasonal variations in demand and, as a result, in charter rates. Seasonality is related to several factors and 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. For example the market for marine drybulk transportation services is typically stronger in the fall months in anticipation of increased consumption of coal in the northern hemisphere during the winter months and the grain export season from North America. Similarly, the market for marine drybulk transportation services is typically stronger in the spring months in anticipation of the South American grain export season due to increased distance traveled known as ton mile effect, as well as increased coal imports in parts of Asia due to additional electricity demand for cooling during the summer months. Demand for marine drybulk transportation services is typically weaker at the beginning of the calendar year and during the summer months. In addition, unpredictable weather patterns during these periods tend to disrupt vessel scheduling and supplies of certain commodities.

C. Organizational Structure

Safe Bulkers, Inc. is a holding company with 48 subsidiaries, 23 of which are incorporated in Liberia, and 25 in the Republic of the Marshall Islands, each as of March 8, 2019. Our subsidiaries are wholly-owned by us. A list of our subsidiaries as of March 8, 2019 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. 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, see “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.

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Overview

Our business is to provide international marine drybulk transportation services by operating vessels in the drybulk sector of the shipping industry. As of March 8, 2019 our fleet consisted of 41 drybulk vessels with an aggregate capacity of 3,777,000 dwt and we had a memorandum of agreement for the purchase of one additional resale newbuild vessel. 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 March 8, 2019, 16 out of 41 drybulk vessels of the Company were employed under period time charters of more than three months outstanding charter duration. 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 modern vessels and our record of safe and efficient operations.

The average number of vessels in our fleet for the years ended December 31, 2016, 2017 and 2018 was 36.6, 38.0 and 39.9 respectively. After delivery of our last contracted newbuild vessel, our drybulk fleet will consist of 42 vessels and will have an aggregate carrying capacity of 3,862,000 dwt, assuming we do not acquire any additional vessels or dispose of any of our vessels.

Our Managers

Our operations are managed by our Managers, Safety Management and Safe Bulkers Management, under the supervision of our executive officers and our board of directors. Under our Management Agreements, our Managers provide us with technical, administrative and commercial services and our executive management. Both of our Managers are controlled by Polys Hajioannou. See “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Management Agreements” for more information.

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, 2018, our average annual fleet utilization rate was approximately 97.50%. 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 (“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

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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 use TCE to compare period-to-period changes in our performance despite changes in the mix of charter types and it assists investors and our management in evaluating our financial performance. 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:

	Year Ended December 31,
	2016		2017		2018
	(in thousands of U.S. dollars except available days and time charter equivalent rate)
Time charter revenues		$113,959		$154,040		$201,548
Less commissions		4,187		6,008		8,357
Less voyage expenses		7,679		3,932		6,378
Time charter equivalent revenue		$102,093		$144,100		$186,813
Available days		13,329		13,788		14,258
Time charter equivalent rate		$7,659		$10,451		$13,102

· Daily vessel operating expenses. We define 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 can cause our vessel operating expenses to increase, including developments relating to market premiums for insurance, cost of lubricants and changes in the value of the U.S. dollar compared to currencies in which certain of our expenses are denominated, such as certain crew wages.

· Daily vessel operating expenses excluding drydocking and pre-delivery expenses. We calculate daily vessel operating expenses excluding drydocking and pre-delivery expenses by dividing vessel operating expenses excluding drydocking and pre-delivery expenses for the relevant period by ownership days for such period. This measure assists our management and investors by increasing the comparability of our performance from period to period. Drydocking expenses include costs of shipyard, paints and agent expenses, and pre-delivery expenses include initially supplied spare parts, stores, provisions and other miscellaneous items provided to a newbuild or secondhand acquisition prior to their operation, which costs may vary from period to period.

· Daily general and administrative expenses. We define general and administrative expenses to include daily management fees and daily company administration 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 management fees to include the fees payable to our Managers for managing our fleet. Daily management fees are calculated by dividing management fees by ownership days for the relevant period.

· Daily company administration expenses. We define company administration expenses to include expenses incurred related to the administration of our company such as legal costs, audit fees, independent directors’ compensation, listing fees to NYSE and other miscellaneous expenses. Daily company administration expenses are calculated by dividing company administration expenses by ownership days for the relevant period.

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

	Year Ended December 31,
	2016			2017			2018
Ownership days		13,390			13,858			14,568
Available days		13,329			13,788			14,258
Operating days		13,024			13,673			14,075
Fleet utilization		97.27	%		98.67	%		96.62	%
TCE rates	$	7,659		$	10,451		$	13,102
Daily vessel operating expenses	$	3,698		$	3,810		$	4,360
Daily vessel operating expenses excluding drydocking and pre-delivery expenses	$	3,574		$	3,731		$	4,141
Daily general and administrative expenses consisting of:	$	1,149		$	1,163		$	1,321
(a) Daily management fees	$	867		$	975		$	1,135
(b) Daily company administration expenses	$	282		$	188		$	186

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 operations.

Revenues from our period time charters comprised 81.2%, 82.2% and 80.2%, respectively, of our charter revenues for the years ended December 31, 2016, 2017 and 2018. The revenues from our spot time charters and voyage charters comprised 18.8%, 17.8% and 19.8%, respectively, of our charter revenues for the years ended December 31, 2016, 2017 and 2018.

Unearned Revenue / Accrued Revenue

Unearned revenue as of December 31, 2018 includes: (i) cash received prior to the balance sheet date relating to services to be rendered after the balance sheet date amounting to $4.9 million and (ii) deferred revenue resulting from straight-line revenue recognition in respect of charter agreements that provide for variable charter rates amounting to $0.7 million.

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Unearned revenue as of December 31, 2017 includes cash received prior to the balance sheet date relating to services to be rendered after the balance sheet date amounting to $3.5 million.

Accrued revenue as of December 31, 2018 includes accrued revenue of $1.1 million that represents revenue earned prior to cash being received in respect of charter agreements that provide for variable charter rates.

Accrued revenue as of December 31, 2017 includes: (i) accrued revenue of $2.0 million that represents revenue earned prior to cash being received and (ii) accrued revenue of $0.8 million that represents revenue earned prior to cash being received in respect of charter agreements that provide for variable charter rates.

Commissions

We pay commissions currently ranging up to 5.0% on our period time and spot time charters, to unaffiliated ship brokers, to 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 due to improving market conditions and delivery of our one remaining contracted newbuild vessel, or decrease as a result of deteriorating market conditions. These commissions do not include fees we pay to our Managers, 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, courier and other minor miscellaneous expenses related to the voyage. We expect that our voyage expenses will decrease in the future if fewer vessels are employed in the spot market, in which case vessel repositioning costs should decrease. We generally do not employ our vessels on voyage charters under which we would be responsible for all voyage expenses. We also record within voyage expenses the 4% U.S. 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 slowly increase in the future as our fleet grows. Our crewing costs, which are a significant part of our vessel operating expenses, may increase in the future due to the limited supply and increase in demand for well-qualified crew. Furthermore, we expect that insurance costs, drydocking, maintenance, spare parts and stores costs will increase from the levels achieved in 2018 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.

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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 and impairment charges, if any. 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, 2017 and 2018, we capitalized interest amounting to $41,694 and $0 respectively.

General and Administrative Expenses

General and administrative expenses consist of management fees paid to our Managers and expenses incurred relating to the administration of the Company.

Management fees paid to our Managers include services offered to us for managing our vessels (i.e., chartering, operations, technical, supply, crewing and accounting services), the services provided to us by our executive officers as well as the preparation of disclosure documents and the preparation for compliance with the Sarbanes-Oxley Act. Pursuant to the terms of the Management Agreements with our Managers, for the provision of such services, we pay a daily ship management fee of €875 per vessel and pay Safe Bulkers Management an annual ship management fee of €3 million.

Expenses related to the administration of our company primarily include legal costs, audit fees, independent directors’ compensation, listing fees to the NYSE and other miscellaneous expenses such as director and officer liability insurance costs and public relations expenses.

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 would like to take advantage of a favorable 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.

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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 of the consolidated 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 fair 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.

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, using the twelve month budgeted rates for the unchartered period of the first twelve months, the Forward Freight Agreement (“FFA”) rates for the unchartered period of the second twelve months and the most recent historical 10-year average daily rates of similar size vessels thereafter, until the end of the remaining estimated useful life of the asset, net of brokerage commissions, expected outflows for vessel operating expenses which include drydocking costs, contracted installation costs for Scrubbers and BWTS for those vessels under such contracts, voyage expenses and management fees. The undiscounted cash flows incorporate various factors, such as estimated future charter rates, estimated vessel operating costs assuming an average annual inflation rate of 2.0%, estimated vessel utilization rates, estimated remaining lives of the vessels (assumed to be 25 years from the initial delivery of each vessel from the shipyard) and estimated salvage value of the vessels based on period end ten-year historical average demolition prices per light-weight ton.

Historically, a full shipping cycle has variable duration. Since 2008, when we identified impairment indications for the first time, we have used the ten-year average of the one-year time charter rate for the computation of an estimated daily time charter rate for the unfixed days for each of our vessel types. We used the historical ten-year average, as we believed it captures on average the highs and lows of a full shipping cycle, and therefore, was considered a reasonable estimation of expected future time charter rates over the remaining useful life of our vessels.

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 impairment test as of December 31, 2018 on our vessels held and used, 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 7.2%, depending on the vessel type on time charter rates from our base scenario, indicated no impairment on any of our vessels that were held and used. It should be noted that although management believes that those vessels with Scrubbers installed should confer a premium on future daily charter rates, which may be substantial, due to lack of existing Scrubber-installed charter contracts supporting such estimation, no such premium was incorporated in the estimated future rates of such vessels.

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Our analysis for the year ended December 31, 2017 indicated an impairment charge of $91.3 million recorded in the statement of operations, relating to the write down to the estimated fair value of the carrying amount of four of our vessels, namely the M/V Panayiota K, the M/V Efrossini, the M/V Venus History, and the M/V Andreas K. These four vessels were purchased at the high end of the market and did not have long term period time charters at favorable rates compared to our other vessels purchased at the same time. The review of the carrying amount for each of our remaining vessels held and used as of December 31, 2017, indicated that such carrying amounts were recoverable.

Our comparison of the actual 2018 net receipts to the forecast net receipts used in the impairment test performed for the year ended December 31, 2017 indicated a favorable variance of 18.7%, between actual net receipts during 2018 and net receipts forecast by the Company for the same period, due to improvements in the dry bulk market rates during 2018, which were not anticipated.

To assist investors in evaluating the possible impact on future results of operations, the following table shows the effect on the Company’s impairment analysis of using the 3-year, 5-year and 15-year historical average daily rates as of December 31, 2018, as opposed to using the 10-year historical average daily rates.

	3-Year		Impairment Charge		5-Year		Impairment Charge		15-Year		Impairment Charge
	Historical Average Daily Rates		(in USD million)		Historical Average Daily Rates		(in USD million)		Historical Average Daily Rates		(in USD million)
Panamax Class Vessels	$	9,986		10.5	$	9,897		10.9	$	21,161		0.0
Kamsarmax Class Vessels	$	10,585		8.8	$	10,491		8.8	$	22,431		0.0
Post Panamax Class Vessels	$	11,184		43.3	$	11,085		43.3	$	23,701		0.0
Capesize Class Vessels	$	13,159		33.0	$	14,247		0.0	$	37,323		0.0
Total				95.6				63.0				0.0

At each quarter-end, the Company assesses the assumptions used for performing its impairment analysis, and considers the appropriate duration of historical average charter rates to be used.

While the Company intends to continue to hold and operate its vessels, the following table presents the carrying values of the Company’s vessels and indicates whether their estimated fair market values, were below their carrying values as of December 31, 2017 and 2018. The carrying value of each of the Company’s vessels does not necessarily represent its fair market value or the amount that could be obtained if the vessel was sold. The Company’s estimates of basic market values assume that the vessels are all in good and seaworthy condition without need for repair and, if inspected, would be certified as being in class without recommendations of any kind and are based on the estimated market values for our vessels received from third-party independent shipbrokers approved by our banks. In addition, because vessel market values are highly volatile, these estimates may not be indicative of either the current or future prices that the Company could achieve if it were to sell any of the vessels. The Company would not record impairment for any of the vessels for which the fair market value is below its carrying value unless and until the Company either determines to sell the vessel for a loss or determines that the vessel’s carrying value is not recoverable.

To assist investors in evaluating the possible impact on future results of operations, the following table shows the number of vessels whose estimated basic market value, exceeded their carrying value and their aggregate carrying value in each case, as of December 31, 2017 and December 31, 2018, respectively. For purposes of this calculation, we have assumed that the vessels would be sold at a price that reflects our estimate of their current basic market values.

	As of December 31, 2017					As of December 31, 2018
	Number of vessels			Aggregate Carrying Value		Number of vessels			Aggregate Carrying Value
					($ US Million)					($ US Million)
Vessels whose fair market value was below their carrying value		20	(1)		629.4		21	(2)		616.6
Vessels whose carrying value was written down to their estimated fair market value		4			87.2		–			–
Vessels whose fair market value, exceeded their carrying value		15			226.3		20			338.7
Total		39			942.9		41			955.3

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(1)	As of December 31, 2017, the aggregate carrying value of these 20 vessels was $141.8 million more than their fair market value, based on broker quotes.
(2)	As of December 31, 2018, the aggregate carrying value of these 21 vessels was $120.6 million more than their fair market value, based on broker quotes.

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, 2018 compared to year ended December 31, 2017

During the year ended December 31, 2018, we had an average of 39.9 drybulk vessels in our fleet. During the year ended December 31, 2017, we had an average of 38.0 drybulk vessels in our fleet.

During the year ended December 31, 2018, we acquired Pedhoulas Cedrus, a Kamsarmax newbuild vessel, and Mount Troodos, a secondhand Capesize class vessel.

During the year ended December 31, 2017, we acquired Agios Spyridonas, a secondhand Post-Panamax class vessel, and Pedhoulas Rose, a Kamsarmax class newbuild vessel.

Revenues

Revenues increased by 30.8%, or $47.5 million, to $201.5 million during the year ended December 31, 2018 from $154.0 million during the year ended December 31, 2017, due to the following factors: (i) an increase in the TCE rate for 2018 by 25.4% to $13,102 compared to $10,451 for 2017 due to increase in prevailing charter rates, and (ii) an increase in operating days for the year ended December 31, 2018 by 2.9% to 14,075 days compared to 13,673 days for the year ended December 31, 2017, mainly due to the delivery of the vessels Pedhoulas Cedrus and Mount Troodos.

Commissions

Commissions to unaffiliated ship brokers, other brokers associated with our charterers and our charterers during the year ended December 31, 2018 amounted to $8.4 million, an increase of $2.4 million, or 40.0%, compared to $6.0 million during the year ended December 31, 2017. Commissions as a percentage of revenues remained rather stable at 4.2% of revenues during the year ended December 31, 2018 compared to 3.9% of revenues during the year ended December 31, 2017.

Voyage expenses

During the year ended December 31, 2018, we recorded voyage expenses of $6.4 million, compared to $3.9 million during the year ended December 31, 2017, a 64.1% increased mainly due to an increase in vessel repositioning expenses affected by higher fuel prices.

Vessel operating expenses

Vessel operating expenses increased by 20.3% to $63.5 million during the year ended December 31, 2018 from $52.8 million during the year ended December 31, 2017, with the contribution of the 5.1% increase of ownership days from 13,858 in 2017 to 14,568 in 2018. Daily operating expenses increased by 14.4% to $4,360 during the year ended December 31, 2018 from $3,810 during the year ended December 31, 2017.

The increase in vessel operating expenses was primarily attributed to:

(i) the increase in cost for spares, stores and provisions by 49.5% to $13.9 million in 2018, compared to $9.3 million in 2017;

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(ii) the increase in crew wages and related costs by 7.8% to $33.3 million in 2018, compared to $30.9 million in 2017, primarily due to currency fluctuation and increased ownership days;

(iii) the increase in repairs, maintenance and drydocking costs by 78.4% to $6.6 million in 2018, compared to $3.7 million in 2017, primarily due to the nine drydockings performed during 2018, compared to five completed during 2017; and

(iv) the increase in lubricant costs by 21.9% to $3.9 million in 2018, compared to $3.2 million in 2017, primarily due to higher prices.

Other factors influencing vessel operating expenses such as costs for insurance, taxes and other miscellaneous expenses had a minor increased effect on operating expenses.

The Company expenses drydocking and pre-delivery costs as incurred, which costs may vary from period to period. Vessel operating expenses excluding vessel drydocking and pre-delivery costs increased by 16.6% to $60.3 million in 2018, compared to $51.7 million in 2017. Drydocking expense is related to the number of drydockings in each period and pre-delivery expense is related to the number of vessel deliveries and secondhand acquisitions in each period. Certain other shipping companies may defer and amortize drydocking expense. Consequently, daily operating expenses, excluding vessel drydocking and pre-delivery costs, increased by 11.0% to $4,141 during the year ended December 31, 2018 from $3,731 during the year ended December 31, 2017.

Depreciation

Depreciation expense decreased by 6.4% to $48.1 million during the year ended December 31, 2018, compared to $51.4 million during the year ended December 31, 2017, due to impairment loss of $91.3 million recorded during the year ended December 31, 2017, which reduced the carrying value of four of our vessels.

General and administrative expenses

General and administrative expenses increased by 19.3% to $19.2 million during the year ended December 31, 2018, compared to $16.1 million during the year ended December 31, 2017. The increase of $3.1 million is mainly due to the increase in the management fees charged by our Managers of $16.5 million in 2018 from $13.5 million in 2017. Management fees in 2018 compared to 2017 were increased due to: (i) increase of ownership days from 13,858 in 2017 to 14,568 in 2018 and (ii) increase of the fees paid to our Managers.

As a result:

· Daily general and administrative expenses increased by 13.6% at $1,321 during the year ended December 31, 2018, from $1,163 during the year ended December 31, 2017;

· Daily management fees which are part of daily general and administrative expenses increased by 16.4% to $1,135 during the year ended December 31, 2018, from $975 during the year ended December 31, 2017; and

· Daily company administration expenses, which are part of daily general and administrative expenses, decreased by 1.1% to $186 during the year ended December 31, 2018, from $188 during the year ended December 31, 2017.

Interest expense

Interest expense increased by 10.8% to $25.7 million during the year ended December 31, 2018, compared to $23.2 million, during the year ended December 31, 2017. This was the result of the increase in the weighted average interest rate of our outstanding indebtedness of 4.428% per annum (“p.a.”) for the year ended December 31, 2018 as a result of the increased USD LIBOR, compared to the weighted average interest rate of our outstanding indebtedness of 3.838% p.a. for the year ended December 31, 2017, partly offset by the decrease in average loans outstanding of $572.2 million during the year ended December 31, 2018, compared to the average loans outstanding of $594.6 million during the year ended December 31, 2017. The total principal amount of loans outstanding as of December 31, 2018 was $579.6 million, compared to $571.8 million as of December 31, 2017.

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Impairment loss

We did not incur any impairment loss for the year ended December 31, 2018, compared to $91.3 million for the year ended December 31, 2017. The impairment loss recorded in December 31, 2017 related to the write down of the carrying value of four of our vessels to their estimated fair market value as our impairment test indicated that the carrying amount of these vessels may not be recoverable.

Year ended December 31, 2017 compared to year ended December 31, 2016

During the year ended December 31, 2017, we had an average of 38.0 drybulk vessels in our fleet. During the year ended December 31, 2016, we had an average of 36.6 drybulk vessels in our fleet.

During the year ended December 31, 2017, we acquired Agios Spyridonas, a secondhand Post-Panamax class vessel, and Pedhoulas Rose, a Kamsarmax class newbuild vessel, and we completed the sale of Hull No. 1551, a Kamsarmax newbuild vessel.

During the year ended December 31, 2016, we acquired Troodos Air and Troodos Sun, both Post-Panamax class newbuild vessels, and Kypros Spirit, a Panamax class newbuild vessel, and we sold Stalo and Kypros Unity, a Post-Panamax and a Panamax vessel, respectively.

Revenues

Revenues increased by 35.1%, or $40.0 million, to $154.0 million during the year ended December 31, 2017 from $114.0 million during the year ended December 31, 2016, due to the following factors: (i) an increase in the TCE rate for 2017 by 36.5% to $10,451 compared to $7,659 for 2016 due to increase in prevailing charter rates, and (ii) an increase in operating days for the year ended December 31, 2017 by 5.0% to 13,673 days compared to 13,024 days for the year ended December 31, 2016, mainly due to the delivery of the vessel Pedhoulas Rose.

Commissions

Commissions to unaffiliated ship brokers, other brokers associated with our charterers and our charterers during the year ended December 31, 2017 amounted to $6.0 million, an increase of $1.8 million, or 42.9%, compared to $4.2 million during the year ended December 31, 2016. Commissions as a percentage of revenues remained rather stable at 3.9% of revenues during the year ended December 31, 2017 compared to 3.7% of revenues during the year ended December 31, 2016.

Voyage expenses

During the year ended December 31, 2017, we recorded voyage expenses of $3.9 million, compared to $7.7 million during the year ended December 31, 2016, a 49.4% decline mainly due to a decrease in vessel repositioning expenses affected by lower fuel prices.

Vessel operating expenses

Vessel operating expenses increased by 6.7% to $52.8 million during the year ended December 31, 2017 from $49.5 million during the year ended December 31, 2016, with the contribution of the 3.5% increase of ownership days from 13,390 in 2016 to 13,858 in 2017. Consequently, daily operating expenses, which are defined as operating expenses per vessel per ownership day, increased by 3.0% to $3,810 during the year ended December 31, 2017 from $3,698 during the year ended December 31, 2016.

The increase in vessel operating expenses was primarily attributed to:

(i)   the increase in cost for spares, stores and provisions by 32.9% to $9.3 million in 2017, compared to $7.0 million in 2016;

(ii)   the increase in crew wages and related costs by 4.4% to $30.9 million in 2017, compared to $29.6 million in 2016, primarily due to currency fluctuation; and

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(iii)   the increase in repairs, maintenance and drydocking costs by 32.1% to $3.7 million in 2017, compared to $2.8 million in 2016.

Other factors influencing vessel operating expenses such as costs for insurance, lubricants, taxes and other miscellaneous expenses were reduced.

Depreciation

Depreciation expense increased by 3.8% to $51.4 million during the year ended December 31, 2017, compared to $49.5 million during the year ended December 31, 2016, due to the increase in the average number of vessels from 36.6 during the year ended December 31, 2016 to 38.0 during the year ended December 31, 2017.

General and administrative expenses

General and administrative expenses increased by 4.5% to $16.1 million during the year ended December 31, 2017, compared to $15.4 million during the year ended December 31, 2016. The increase of $0.7 million is mainly due to the net effect of: (i) the increase in the management fees charged by our Managers of $13.5 million in 2017 from $11.7 million in 2016 and (ii) the decrease in compensation of directors and officers from $1.9 million in 2016, to $0.5 million in 2017. Management fees in 2017 compared to 2016 were increased due to: (i) increase of ownership days from 13,390 in 2016 to 13,858 in 2017 and (ii) the fact that the services of our executive officers were provided and paid for by our Managers in 2017, whereas in 2016 our executive officers were employed and paid directly by us and, according to our Management Agreements, such compensation was deducted from the management fee.

As a result:

· Daily general and administrative expenses remained largely unchanged at $1,163 during the year ended December 31, 2017, from $1,149 during the year ended December 31, 2016;

· Daily management fees which are part of daily general and administrative expenses increased by 12.5% to $975 during the year ended December 31, 2017, from $867 during the year ended December 31, 2016; and

· Daily company administration expenses, which are part of daily general and administrative expenses, decreased by 33.33% to $188 during the year ended December 31, 2017, from $282 during the year ended December 31, 2016.

Interest expense

Interest expense increased by 18.4% to $23.2 million during the year ended December 31, 2017, compared to $19.6 million, during the year ended December 31, 2016. This was the result of the increase in the weighted average interest rate of our outstanding indebtedness of 3.838% p.a. for the year ended December 31, 2017 as a result of the increased USD LIBOR, compared to the weighted average interest rate of our outstanding indebtedness of 3.290% p.a. for the year ended December 31, 2016, partly offset by the decrease in average loans outstanding of $594.6 million during the year ended December 31, 2017, compared to the average loans outstanding of $609.6 million during the year ended December 31, 2016. The total principal amount of loans outstanding as of December 31, 2017 was $571.8 million, compared to $587.7 million as of December 31, 2016.

Gain/(Loss) on derivatives

Gain on derivatives of $0.1 million during the year ended December 31, 2017, compared to loss of $0.6 million during the year ended December 31, 2016, resulted from (i) a decrease in the realized loss of interest rate derivatives of $0.1 million during the year ended December 31, 2017 from $1.0 million during the same period of 2016, and (ii) a marginal change in the gain from the mark-to-market valuation of interest rate swap transactions of $0.2 million for the year ended December 31, 2017 compared to $0.4 million for the year ended December 31, 2016.

As of December 31, 2017, the aggregate notional amount of interest rate swap transactions outstanding was $71.3 million, compared to $112.1 million as of December 31, 2016. These swaps economically hedged the interest rate exposure of 14.7% of the Company’s aggregate loans outstanding as of December 31, 2017 that bear interest at

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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.

Impairment loss

Impairment loss amounted to $91.3 million for the year ended December 31, 2017, compared to $17.2 million for the year ended December 31, 2016. The impairment loss recorded in December 31, 2017 related to the write down of the carrying value of four of our vessels to their estimated fair market value as our impairment test indicated that the carrying amount of these vessels may not be recoverable. During the year ended December 31, 2016, the impairment loss of $17.2 million related to the write-off of the advances paid with respect Hull No. 835 and Hull No. 1551, following the agreed novation of Hull No. 835 and sale upon delivery of Hull No. 1551.

B. Liquidity and Capital Resources

As of December 31, 2018, we had liquidity of $92.5 million consisting of cash, cash equivalents and bank time deposits of $81.8 million and $10.7 million in restricted cash; aggregate additional financing capacity of $13.2 million under an agreement of our Company to issue common equity to an unaffiliated third party in respect of our contracted newbuild with Hull No. 1772 scheduled to be delivered to us in first half of 2020; ability to draw additional indebtedness for one unencumbered vessel; existing fleet of 41 vessels and one vessel in our orderbook; remaining capital expenditure requirements, relating to the purchase consideration of the newbuild, of $30.4 million, with scheduled payments of $7.0 million in 2019 and $23.4 million in 2020; and remaining vessel upgrades and improvements, relating to the Scrubbers and BWTS investments, of $26.7 million, with scheduled payments of $22.5 million in 2019, $1.7 million in 2020, $2.1 million in 2021 and $0.4 million in 2022. As of December 31, 2018, our aggregate debt outstanding was $579.6 million of which $37.4 million was the current portion of long term debt payable within the next 12 months.

As of March 8, 2019, we had liquidity of $90.9 million consisting of cash, cash equivalents and bank time deposits of $80.5 million and $10.4 million in restricted cash; aggregate additional financing capacity of $13.2 million under an agreement of our Company to issue common equity to an unaffiliated third party in respect of our contracted newbuild with Hull No. 1772 scheduled to be delivered to us in 2020; ability to draw additional indebtedness for one unencumbered vessel; existing fleet of 41 vessels and one vessel in our orderbook; remaining capital expenditure requirements, relating to the purchase consideration of the newbuild, of $30.4 million, with scheduled payments of $7.0 million in 2019 and $23.4 million in 2020; and remaining vessel upgrades and improvements, relating to the Scrubbers and BWTS investments, of $26.7 million, with scheduled payments of $22.5 million in 2019, $1.7 million in 2020, $2.1 million in 2021 and $0.4 million in 2022.

Our primary liquidity needs are to fund financing expenses, debt refinancing or repayment, vessel operating expenses, general and administrative expenses, capital expenditures in relation to vessel acquisitions and vessel improvements, 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, 2018 of $81.8 million, restricted cash of $10.7 million, cash generated from operations, equity financing under our agreement to issue common shares to an unrelated third party of $13.2 million, additional indebtedness against one unencumbered vessel and, possibly, other equity financing.

In our opinion, the contracted cash flow from operations, the issuance of common equity, and the existing cash and cash equivalents will be sufficient to fund the operations of our fleet and any other present financial requirements of the Company, including our working capital requirements, and our capital expenditure requirements at least through the end of the first quarter of 2020. However, we may seek additional indebtedness to refinance our debt and to maintain a strong cash position. Future needs in relation to financing and investing activities may involve refinancing of existing debt and financing of any future fleet replacement and expansion program or fleet upgrades and improvements. 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 and equity markets and contingencies and uncertainties that are beyond our control. 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 addition, refinancing of our existing debt in the future may be difficult. In such case our contracted revenues may decrease and we may be required to make additional prepayments under existing loan facilities, resulting in additional

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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, debt financing and operating cash surplus.

A failure to fulfill our capital expenditures commitments generally results in a forfeiture of advances paid with respect to the contracted newbuild vessel and a write-off of capitalized expenses. In addition, we may also be liable for other damages for breach of contract. A failure to satisfy our financial commitments could result in the acceleration of our indebtedness and foreclosure on our vessels. 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 paid dividends to our common stockholders each quarter between the date of our initial public offering in June 2008 and the second quarter of 2015. We have not paid any dividends to our common stockholders since the second quarter of 2015. During 2018, we declared and paid four quarterly consecutive dividends of $0.50 per share for each, of Series C Preferred Shares, totaling $4.6 million, and of Series D Preferred Shares, totaling $6.4 million. In addition, we declared and paid one quarterly dividend of $0.50 per share and one final dividend of $0.11667 per share of Series B Preferred Shares, totaling $234. On February 20, 2018, we completed the redemption of the outstanding 379,514 Series B Preferred Shares at a redemption price of $25.00 per Series B Preferred Share plus all accumulated and unpaid dividends to, but excluding, the Redemption Date. The aggregate amount paid to redeem the Series B Preferred Shares was $9.5 million. In January 2019, we declared and paid a quarterly dividend of $0.50 per share for each of Series C Preferred Shares, totaling $1.1 million, and of Series D Preferred Shares, totaling $1.6 million.

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 leverage and 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 on our Common Stock might continue not to 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 $51.9 million as of December 31, 2018, compared to $46.2 million as of December 31, 2017. 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 and Euros.

Net Cash Provided by Operating Activities

Net cash provided by operating activities amounted to $85.4 million in 2018, $50.1 million in 2017 and $13.5 million in 2016, consisting of net income after non-cash items of $77.8 million, $52.5 million and $16.2 million plus a decrease in working capital of $7.6 million, and less an increase in working capital of $2.4 million and $2.7 million in 2018, 2017 and 2016 respectively. The major drivers of the change of net cash provided by operating activities are the increased net revenues we earned from chartering our vessels of $45.2 million in 2018 compared to 2017 and $38.2 million in 2017 compared to 2016 reduced by the increased cash outflows related to operating expenses of $10.7 million in 2018 compared to 2017 and $3.3 million in 2017 compared to 2016.

Net Cash Used in Investing Activities

Net cash flows used in investing activities were $63.7 million for the year ended December 31, 2018 compared to $39.6 million for the year ended December 31, 2017. The net increase in cash flows used in investing activities of $24.1 million from 2017 is mainly attributable to the following factors: (i) a decrease of $14.0 million in payments for vessel acquisitions, advances for vessels under construction and major improvements during the year ended December 31, 2018 compared to the same period of 2017; (ii) zero proceeds from asset sales during the year ended December 31, 2018, compared to $20.5 million proceeds during the year ended December 31, 2017 and (iii) a net increase of $17.8 million in time deposits during the year ended December 31, 2018, compared to a net increase of $0.2 million during the same period of 2017.

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Net cash flows used in investing activities were $39.6 million for the year ended December 31, 2017 compared to $39.9 million for the year ended December 31, 2016. The net decrease in cash flows used in investing activities of $0.3 million from 2016 is mainly attributable to the following factors: (i) an increase of $1.5 million in payments for vessel acquisitions, advances for vessels under construction and major improvements during the year ended December 31, 2017 compared to the same period of 2016; (ii) $20.5 million proceeds from asset sales during the year ended December 31, 2017, compared to $29.0 million proceeds during the year ended December 31, 2016 and (iii) a net increase of $0.2 million in time deposits during the year ended December 31, 2017, compared to a net increase of $10.5 million during the same period of 2016.

Net Cash Used in Financing Activities

Net cash flows used in financing activities were $15.6 million for the year ended December 31, 2018, compared to net cash flows used in financing activities of $47.1 million for the year ended December 31, 2017. This decrease in cash flows used in financing activities of $31.5 million, compared to the year ended December 31, 2017, is mainly attributable to an increase in proceeds from long-term debt by $72.3 million compared to the year ended December 31, 2017, zero payment for Tender offer redemption of preferred shares and tender offer expenses during the year ended December 31, 2018, compared to $25.2 million during the same period of 2017 and a decrease in dividends paid of $0.9 million offset by an increase of $56.9 million in long term debt principal payments, an increase in repurchases of common and preferred stock by $10.0 million compared to the same period ended December 31, 2017.

Net cash flows used in financing activities were $47.1 million for the year ended December 31, 2017, compared to net cash flows used in financing activities of $83.9 million for the year ended December 31, 2016. This decrease in cash flows used in financing activities of $36.8 million, compared to the year ended December 31, 2016, is mainly attributable to an increase in payments of deferred financing costs of $1.8 million, no proceeds from issuance of Common Stock during the year ended December 31, 2017, compared to $16.1 million net proceeds during the year ended December 31, 2016 and an increase of $23.5 million in repurchase of common and preferred shares and redemption of preferred shares, offset by a decrease of $25.7 million in long term debt principal payments, an increase in long-term debt proceeds of $50.8 million and a decrease in dividends paid of $1.7 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. We or our subsidiaries have generally entered into credit facilities in order to finance the acquisition of our vessels, to refinance existing indebtedness and for general corporate purposes. In 2018, (a) four of our subsidiaries entered into a credit facility which was used to refinance an existing credit facility and part of the purchase price of a secondhand vessel that was acquired in 2018, (b) four of our subsidiaries entered into a credit facility which was used to refinance an existing credit facility and part of the purchase price of a secondhand vessel that was acquired in 2017, (c) three of our subsidiaries entered into a credit facility which was used to refinance two existing credit facilities, (d) one of our subsidiaries entered into a credit facility which was used to refinance an existing credit facility, (e) four of our subsidiaries entered into a credit facility which was used to partially refinance an existing credit facility and (f) we entered into a credit facility for general corporate purposes and made a drawing under such credit facility in 2018.

The term of our 15 credit facilities outstanding on December 31, 2018, ranged from three to 12 years. They are generally repaid by quarterly or semi-annual principal installments and a balloon payment due on maturity, with the exception of two credit facilities which are repaid by semi-annual principal installments without balloon payments and two that are payable by principal installments every 45 days and a balloon payment due on maturity. We generally pay interest at LIBOR plus a margin, except for four facilities, under two of which principal amounts bear a fixed interest and under two of 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 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 2018, we incurred an additional $187.5 million of indebtedness under our credit facilities and we repaid $179.7 million of our indebtedness. As of December 31, 2018, we had 15 outstanding credit facilities with a combined outstanding balance of $579.6 million. These debt facilities had maturity dates between 2021 and 2027. For a

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description of our debt facilities as of December 31, 2018, please see Note 6 of the consolidated financial statements included elsewhere in this annual report. During 2019, we are scheduled to repay $37.4 million of our long-term debt outstanding as of December 31, 2018.

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 without the lenders’ consent;

· 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 Managers;

· 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:

· meet the Minimum Value Covenant of 120% for credit facilities outstanding;

· maintain a minimum cash balance per vessel with the respective lender from $150,000 to $1,000,000 as the case may be; 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:

· under the Consolidated Leverage Covenant, our total consolidated liabilities divided by our total consolidated assets (based on the market value of all vessels owned or leased on a finance lease taking into account their employment, and the book value of all other assets) must not exceed 85% for credit facilities outstanding with commercial financing institutions and 80% for credit facilities outstanding with government owned export credit institutions;

· under the Net Worth Covenant, our total consolidated assets (based on the market value of all vessels owned or leased on a finance lease taking into account their employment, and the book value of all other assets) less

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	our total consolidated liabilities must not be less than $150,000,000, for credit facilities outstanding with government owned export credit institutions and for credit facilities outstanding with commercial financing institutions;
·	under the EBITDA Covenant, the ratio of our EBITDA over consolidated interest expense must not be less than 2.0:1, on a trailing 12 months’ basis, applicable as of January 1, 2018 onwards, for credit facilities outstanding with commercial financing institutions;
·	the ratio of our aggregate debt to EBITDA must not exceed 5.5:1 on a trailing 12 months’ basis, applicable as of June 30, 2020 (our next testing date) onwards for credit facilities outstanding with government owned export credit institutions;
·	our consolidated debt must not exceed $580,000,000 on June 30, 2019 and December 31, 2019 for credit facilities outstanding with government owned export credit institutions;
·	payment of dividends is subject to no event of default having occurred and be continuing or would occur as a result of the payment of such dividends; and
·	a minimum of 30% or 35.0%, 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 and, in the case of one facility, Polys Hajioannou beneficially holds a minimum of 20% of the voting and ownership rights.

The Minimum Value Covenant, Consolidated Leverage Covenant, EBITDA Covenant and Net Worth Covenant do not apply to the loan facility with our subsidiary Shikokuepta Shipping Inc., and the Minimum Value Covenant and EBITDA Covenant do not apply to financing agreements entered into by our subsidiaries Maxeikosiena Shipping Corporation, and Youngtwo Shipping Inc.

As of December 31, 2018, the Company was in compliance with all debt covenants that were in effect with respect to its loan and credit facilities.

C. Research and Development, Patents and Licenses

We have not incurred expenditures relating to research and development, patents or licenses for the last three years.

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 2017, the BDI experienced significant volatility, reaching an annual low of 685 on February 14, 2017 and an annual high of 1,743 on December 12, 2017. During 2018, the BDI remained volatile, reaching an annual low of 948 on April 6, 2018 and an annual high of 1,774 on July 24, 2018.

As of March 8, 2019, the BDI was 649.

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 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, having reached historical highs in 2008 and historical lows in 2016. Charter rates have improved in 2018, but have been volatile in the start of 2019. Cyclicality and volatility may lead to reductions in our charter rates, vessel values and results of operations.”

As of March 8, 2019, 16 of our 41 vessels are employed or scheduled to be employed in period time charters with outstanding duration of more than three months. Additionally, we believe we have structured our capital expenditure

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requirements, debt commitments and liquidity resources in 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).

Our TCE rate for the periods ended December 31, 2016, 2017 and 2018 was $7,659, $10,451 and $13,102 respectively, as a result of our increasing exposure to prevailing spot market conditions. During 2018, Glencore Grain B.V. accounted for 14.73% and Bunge S.A. accounted for 13.76% of our revenues.

During 2018, 15.8% of our revenue was derived from three vessels with long period time charters, contracted in previous years with original durations of 10 to 20 years and with a weighted average TCE rate of $29,115. The remaining 84.2% of our revenue was derived from the employment of 38 vessels, under voyage, spot and period time charters with original durations up to 3 years with a TCE rate of $11,596.

During 2017, 21.1% of our revenue was derived from three vessels with long period time charters, contracted in previous years with original durations of 10 to 20 years and with a weighted average TCE rate of $28,921. The remaining 78.9% of our revenue was derived from the employment of 36 vessels, under spot and period time charters with original durations up to 3 years with a TCE rate of $8,858.

As of March 8, 2019, we had a total of 41 vessels in our fleet and expected to take delivery of one additional newbuild vessel in 2020. As of March 8, 2019, we have contracted 39% of our expected ownership days for the remainder of 2019. Our contracted TCE rate for the remainder of 2019, calculated on the basis of all existing contracts and customary assumptions in relation to voyage expenses, as of March 8, 2019, was $14,055.

Our employment profile as of March 8, 2019, included three period time charterer contracts contracted in previous years with original durations of 10 to 20 years, with an average expected remaining charter duration of 6.8 years and with an expected TCE rate for the remainder of 2019 of $28,790, and 38 spot and period time charters with an expected average remaining charter duration of 3.5 months, and an expected TCE rate of $10,612. Vessels whose charters expire or are early redelivered or terminated within 2019 will be chartered at prevailing charter market conditions, which may substantially influence our revenues, the valuation of our vessels, our results of operations and our dividend distributions.

As of March 8, 2019, we had not received any notice of early redelivery or termination for any of our charters.

E. Off-Balance Sheet Arrangements

As of December 31, 2018, we did not have any off-balance sheet arrangements.

F. Contractual Obligations

Our contractual obligations as of December 31, 2018 were:

	Total		Less than 1 year (2019)		1-3 years (2020-2021)		3-5 years (2022-2023)		More than 5 years (after January 1, 2024)
	(in thousands of U.S. dollars)
Long-term debt obligations	$	579,579	$	37,431	$	144,380	$	155,398	$	242,370
Interest payments(1)		128,729		27,322		50,673		35,552		15,182
Payments to our Managers(2) (3)		45,253		18,684		26,569		—		—
Newbuild contracts(3)		29,535		6,600		22,935		—		—
Scrubbers and BWTS(4)		26,740		22,475		3,905		360		—
Total		809,836		112,512		248,462		191,310		257,552

(1)

Amounts shown reflect estimated interest payments we expect to make with respect to our long-term debt obligations. The interest payments reflect an assumed LIBOR-based applicable interest rate of 2.876% (the six-month LIBOR rate as of December 31, 2018), plus the relevant margin of the applicable credit facility. See “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Interest Rate Swaps” for more information.

(2)

Represents the daily ship management fee of €875 per vessel and the annual ship management fee of €3,000,000 prorated to the actual days based on the management fees currently in effect calculated based on the exchange rate of €/US$ as of December 31, 2018. In addition, it includes amounts payable to our Managers under the Management Agreements in respect of the acquisition fee for the one

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	newbuild vessel and the supervision fee for the one newbuild vessel which is described elsewhere herein. The initial term of the Management Agreements with our Managers expires in May 2021 and we expect to enter into new agreements with the Managers upon their expiration.
(3)	Represents outstanding contractual payments under the memorandum of agreement for the acquisition of Hull No. 1772. It does not include the amounts payable to our Managers for supervision fees and commissions, under such memorandum of agreement, which are included under “Payments to our Managers” on the above table.
(4)	Amounts shown reflect estimated payments we expect to make with respect to our Scrubbers and BWTS obligations calculated based on the exchange rate of €/US$ as of December 31, 2018, according to contracts with the relevant equipment suppliers. It does not include payments we expect to make to the relevant shipyards.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. Directors and Senior Management

The following table sets forth, as of March 8, 2019, information regarding our directors and executive officers.

Name	Age	Position
Polys Hajioannou	52	Chief Executive Officer, Chairman of the Board and Class I Director
Dr. Loukas Barmparis	56	President, Secretary and Class II Director
Konstantinos Adamopoulos	56	Chief Financial Officer and Class III Director
Ioannis Foteinos	60	Chief Operating Officer and Class I Director
Christos Megalou	59	Class II Director
Frank Sica	68	Class III Director
Ole Wikborg	63	Class I Director

Certain biographical information about each of these individuals is set forth below. The term of our Class I directors expires in 2021, the term of our Class II directors expires in 2019 and the term of our Class III directors expires in 2020.

Polys Hajioannou is our Chief Executive Officer and has been Chairman of our board of directors since 2008. Mr. Hajioannou also serves with Safe Bulkers Management Ltd. in Cyprus, which provides technical, commercial and administrative management services to the Company, and prior to the inception of Safe Bulkers Management and Safety Management, with its 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 a founding member and Vice-President 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 where he served until 2016. In that year, he was elected member to the newly established UK Club Bermuda Members’ Committee. 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 Safe Bulkers Management Ltd., which he joined in December 2016. Between 2009 and 2016, he was the technical manager of Safety Management Overseas S.A. 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 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. Mr. Adamopoulos also serves as the finance manager of Safe Bulkers Management Ltd., which he joined in December 2016. 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

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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 a Bachelor of Science degree in business administration from the Athens School of Economics and Business Science and an M.B.A. in finance from the Cass Business School, City University of London.

Ioannis Foteinos is our Chief Operating Officer and has been a member of our board of directors since February 2009. Mr. Foteinos has 30 years of experience in the shipping industry. After obtaining a bachelor’s degree in nautical studies from Sunderland University, he joined the predecessor of Safety Management in 1987, where he served as Chartering Manager until 2017. Presently he serves as Chartering Manager with Safe Bulkers Management Ltd. in Cyprus, which he joined in May 2017.

Christos Megalou has been a member of our Board of Directors since 2016 and serves as a member of our audit and our corporate governance, nominating and compensation committee. Mr. Megalou has been the Chief Executive Officer of Piraeus Bank SA since 2017. Mr. Megalou has been a Distinguished Fellow of the Global Federation Of Competitiveness Councils in Washington, D.C. since 2016. From 2015 to 2016, Mr. Megalou served as senior advisor to Fairfax Financial Holdings. From 2013 to 2015, Mr. Megalou served as the Chief Executive Officer and Chairman of the Executive Board of Eurobank Ergasias SA and was the Deputy Chairman of the Hellenic Bank Association in Greece. From 2010 to 2013, Mr. Megalou served as Chairman of the Hellenic Bankers Association in the U.K. From 1997 to 2013, he was Vice-Chairman of Southern Europe, Co-head of Investment Banking for Southern Europe and Managing Director in the Investment Banking Division of Credit Suisse in London. From 1991 to 1997, he was a Director at Barclays de Zoete Wedd. From 1991 to 1996, he was Deputy Chairman of the British Hellenic Chamber of Commerce. He started his career in 1984 as an auditor in Arthur Andersen in Athens. Mr. Megalou holds a Bachelor of Science degree in economics from the University of Athens and an M.B.A. in finance from Aston University in Birmingham, United Kingdom.

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 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. Mr. Sica has served as a 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 holds a bachelor’s degree from Wesleyan University and an M.B.A. from the Tuck School of Business at Dartmouth College.

Ole Wikborg has been a member of our board of directors and of our audit committee and chairman and member of our corporate governance, nominating and compensation committee since 2008. Mr. Wikborg has been involved in the marine and shipping industry in various capacities for over 35 years. From 2002 to 2016, Mr. Wikborg has served as a member of the management team, a director and a senior underwriter of the Norwegian Hull Club, based in Oslo, Norway. In 2016, he moved to London to take up the position as the head of the London branch of Norwegian Hull Club, established that year. 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 career in marine insurance, Mr. Wikborg served in the Royal Norwegian Navy, attaining the rank of Lieutenant Commander.

B. Compensation of Directors and Senior Management

Our Managers, pursuant to the terms of the applicable Management Agreements, have historically provided to us our executive officers. For the year ended December 31, 2018, none of the executive officers and senior management were employed directly by us. For a discussion of the fees payable to our Managers, refer to “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Management Agreements.” Also, we

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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. Ole Wikborg and Christos Megalou 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, 2018, 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 included in “Item 6. Directors, Senior Management and Employees—A. Directors and Senior Management.”

During the fiscal year ended December 31, 2018, 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, with the exception of one meeting not attended by the chairman of the audit committee. Our board of directors has determined that each of Messrs. Sica, Megalou and Wikborg are independent within the current meanings of independence employed by the corporate governance rules of the NYSE 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. Ole Wikborg, may do so by writing to our Secretary, Dr. Loukas Barmparis, Safe Bulkers, Inc., e-mail: directors@safebulkers.com.

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 NYSE 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., e-mail: directors@safebulkers.com. Our website, and the information contained on, or

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hyperlinked from, our website are not part of this Annual Report, other than the documents that we file with the SEC that are expressly incorporated herein or therein by reference.

Committees of the Board of Directors

Audit Committee

Our audit committee consists of Ole Wikborg, Christos Megalou 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;

· 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.

Corporate Governance, Nominating and Compensation Committee

Our corporate governance, nominating and compensation committee consists of Christos Megalou, Frank Sica and Ole Wikborg, 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

Our executive officers are provided by our Managers. As of December 31, 2018, approximately 844 people served on board the vessels in our fleet, and our Managers employed approximately 104 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 included 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. Ole Wikborg and Mr. Christos Megalou, 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 March 8, 2019 held by:

· each person or entity that we know beneficially owns 5.0% or more of our Common Stock;

· 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 March 8, 2019 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 101,232,719 shares of Common Stock outstanding as of March 8, 2019. 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 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			19.19	%		—		—	%		—		—	%
Bellapais Maritime Inc.(2)		5,000,000			4.94	%		—		—	%		—		—	%
Kyperounta Maritime Inc.(2)		5,000,000			4.94	%		—		—	%		—		—	%
Lefkoniko Maritime Inc.(2)		5,000,000			4.94	%		—		—	%		—		—	%
Akamas Maritime Inc.(2)		8,555,412			8.45	%		—		—	%		—		—	%
Chalkoessa Maritime Inc.(2)		5,400,000			5.33	%		—		—	%		—		—	%
Nicolaos Hadjioannou(3)		21,426,015			21.17	%		—		—	%		—		—	%
Officers and Directors:		—			—	%
Polys Hajioannou(4)		48,381,427			47.79	%		67,399		2.93	%		150,700		4.71	%
Dr. Loukas Barmparis		*			*			*		*			*		*
Konstantinos Adamopoulos		*			*			*		*			*		*
Ioannis Foteinos		*			*			*		*			*		*
Frank Sica		*	(5)		*			*		*			*		*
Ole Wikborg		*			*			—		—	%		—		—	%
Christos Megalou		*			*			—		—	%		—		—	%
All executive officers and directors as a group (7 persons)		48,794,600			48.20	%		92,399		4.02	%		187,700		5.87	%

* 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., Chalkoessa Maritime Inc. and other entities he controls.
(5)	Partly 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 NYSE. Our major stockholders have the same voting rights as our other stockholders. As of March 8, 2019, we had 16 stockholders of record; three of these stockholders of record were located in the U.S. and held an aggregate 58,575,631 shares of Common Stock, representing approximately 57.86% of our outstanding shares of Common Stock. However, one of the U.S. stockholders of record is Cede & Co., a nominee of The Depository Trust Company, which holds 58,350,511 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 U.S. and non-U.S. beneficial owners. We are not aware of any arrangements the operation of which may at a subsequent date result in our change of control. 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 50.95% 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 Managers and other companies which lease office space to us. Our Managers, along with the predecessor to Safety Management, have provided services to our vessels since 1965 and continue 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 Agreements described below.

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Management Agreements

Under our Management Agreements, our Managers are responsible for providing us with executive, technical, administrative commercial and certain other services, which include the following:

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 providing or arranging for all services necessary to the engagement, employment and compensation of our employees, officers, consultants and directors, 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 Managers report to us and to our board of directors through our executive officers.

Compensation of Our Managers

On May 29, 2008, Safe Bulkers signed a management agreement with Safety Management and on May 29, 2015, Safe Bulkers signed a management agreement with Safe Bulkers Management (collectively the “Old Management Agreements”). Under the Old Management Agreements, the Managers provided to Safe Bulkers executive officers and management services to vessel-owning subsidiaries. Each vessel-owning subsidiary had entered into, or in the case of vessels not yet delivered, would enter into, a management agreement with either one of the Managers (the “Old Ship Management Agreements”). Under these Old Ship Management Agreements, chartering, operations, technical and accounting services were provided to the vessels by the Manager. In accordance with the Old Management Agreements and the Old Ship Management Agreements, the Manager received a fixed fee per vessel calculated proportionally by the number of ownership days (the “Old Fixed Fee”), a fixed bareboat fee of $250 per managed vessel per day for bareboat charters (the “Old Bareboat Fee”) and a variable fee calculated on gross freight,

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charter hire, ballast bonus and demurrage (the “Old Variable Fee”). In addition, under the supervision agreements with respect to newbuilds (the “Old Supervision Agreements”), the Manager received a supervision fee of $550,000 in exchange for on-site supervision services with respect to all newbuilds, of which 50% was payable upon the signing of the relevant Supervision Agreement, and 50% was payable upon successful completion of the sea trials of each newbuild (the “Old Supervision Fee”). Furthermore, under the Old Management Agreements, the Manager received a sales fee of 1.00% calculated on the contract price for each vessel sold (the “Old Sale Fee”), payable upon the conclusion of the vessel sale, and an acquisition fee of 1.00% calculated on the contract price of each vessel constructed or purchased (the “Old 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.

The Old Management Agreements provided inter alia that to the extent the executive officers were not provided by the Manager but were instead employed by Safe Bulkers, the management fee payable by Safe Bulkers was 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.

The management fees could be adjusted annually effective May 29 of each year, the anniversary of our entry into the Old Management Agreements. During the years ended December 31, 2015, 2016 and 2017 and from January 1, 2018 until May 28, 2018, the Old Supervision Fee, the Old Sale Fee, the Old Bareboat Fee and the Old Acquisition Fee remained unchanged as per above. On May 29, 2015, the Old Fixed Fee was adjusted to $975 per day from $800 per day and the Old Variable Fee was adjusted to 0.00% from 1.25%.

On May 29, 2018, following the expiration of the Old Management Agreements, the Company signed the Management Agreements with the Managers, which have an initial term of three years expiring on May 28, 2021 and can be extended for two additional terms of three years each. The fees provided by the Management Agreements are fixed until May 29, 2021 and upon mutual agreement with the Managers, can be adjusted for a subsequent term of three years each time in May 29, 2021 and May 29, 2024.

Under our Management Agreements, in return for providing executive officers and technical, commercial and administrative services, our Managers receive a ship management fee of €875 per day per managed vessel for vessels in our fleet and $250 per managed vessel per day for bareboat charters and one of our Managers receives an annual ship management fee of €3 million. Further, our Managers receive a commission of 1.0% based on the contract price of any vessel bought and a commission of 1.0% based on the contract price of any vessel sold by it on our behalf, including any contracted newbuild. We also pay our Managers a supervision fee of $550,000 per newbuild, of which 50.0% is payable upon the signing of the relevant supervision agreement, and 50.0% is payable 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 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 incurred on our behalf by our Managers or their 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.

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Each year, our Managers prepare and submit 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 the Management Agreements will expire three years after the effective date (May 29, 2018) and is renewable for up to two additional three-year periods. After the expiration of the initial term, each Management Agreement will be automatically extended on a three-year basis up to two times, subject to our ability to terminate each Management Agreement upon written notice at least 24 months prior to the end of the current term. Each Management Agreement will expire on May 29, 2027 and we expect to enter into new agreements with the Managers upon their expiration. The terms of any such new agreements have not yet been determined.

Our Managers’ Termination Rights

Each Manager may terminate the applicable Management Agreement prior to the end of its term if:

· an aggregate amount in excess of $100,000 payable by us is not paid when due or if due on demand, within 20 business days following demand by the 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 the Manager;

· the management fee determined by arbitration in respect of any three-year period following the initial term is unsatisfactory to the Manager, in which case the Manager may terminate the Management Agreement effective at the end of such term;

· any acquisition of our shares or a merger, consolidation or similar transaction results in any “person” or “group” acquiring 40.0% 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;

· the approval by our shareholders of a proposed merger, consolidation, recapitalization or similar transaction, as a result of which any person acquiring our shares of Common Stock becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 40.0% or more of the total voting power of the outstanding voting securities of the resulting entity following such transaction, and such percentage represents a higher percentage of such voting power than that held directly or indirectly by Polys Hajioannou; or

· there is a change in directors after which at least one of the members of our board of directors is not a continuing director.

“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 May 29, 2018; 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 May 29, 2018 or whose nomination or election was previously so approved.

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Our Termination Rights

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

· the Manager commits a willful and material breach in the performance of any material obligation under our Management Agreement and the matter is not resolved within 40 business days after the Manager receives from us written notice of such default;

· an aggregate amount in excess of $100,000 payable by the 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; or

· any time after May 29, 2024, upon our delivery of 12 months’ written notice to the Manager (a “Third Term Termination Notice”).

A “willful and material breach” means, a material breach of the applicable Management Agreement, as determined by a final, non-appealable judgment of a court or independent tribunal of competent jurisdiction, that is a consequence of a deliberate act undertaken by the breaching party, with knowledge that the taking of such act would cause a breach of the applicable Management Agreement, and which act has subjected the Company and its subsidiaries, taken as a whole, to uninsured liability, individually or in the aggregate, in an amount in excess of $100,000,000.

Termination Fees

In the event that either Management Agreement is terminated prior to the fully-extended expiration date other than pursuant to (a) the Company’s termination of the applicable Management Agreement due to the Manager’s ceasing to conduct business, insolvency or force majeure, (b) a termination resulting from the Manager’s willful and material breach of the applicable Management Agreement or (c) a termination pursuant to a validly-delivered termination notice by the Company to the Manager (other than a Third Term Termination Notice), then, within three business days of such termination, the Company shall pay to Safe Bulkers Management an amount in cash equal to the Management Fees paid or payable to each Manager, in the aggregate, during the 36 months preceding the applicable termination.

Non-Competition

Each Manager has agreed that, during the term of our Management Agreement and for one year after its termination, such 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 or his family members, 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.

Each 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 are both available and meet the criteria for a charter being fixed by such Manager, our drybulk vessel will receive such charter.

Sale of Our Manager

Each Manager has agreed that, during the term of the Management Agreement and for one year after its termination, each 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 the Manager, we have a 30-day right of first offer to purchase such Manager. Each Management Agreement defines a “proposed

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change in control of the 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 60.0% 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 80.0% of the outstanding voting securities or voting power of the Manager or Machairiotissa Holdings Inc., respectively.

Each Management Agreement also provides us the right to obtain certain information about the ownership of the Manager.

The foregoing description of the Management Agreements does not purport to be complete and is qualified in its entirety by reference to the Management Agreements, copies of which are attached as Exhibit 4.1 and Exhibit 4.2 and incorporated herein by reference.

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 his service as our director and (b) one year following the termination of his employment with us. In the case of the Hajioannou Entities, the restricted period continues until one year following the termination of both Management Agreements. 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 a Manager, subject to compliance with, or waivers of, the applicable 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 either of the Managers 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 eight drybulk vessels on the water at any one time and an unlimited number of contracts with shipyards for newbuild drybulk vessels as part of his estate or family planning, 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 business of owning or operating drybulk vessels.

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

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of a group of vessels or a business that includes non-drybulk vessels and non-drybulk vessel businesses, provided that less than 50.0% 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. Both types of permitted acquisitions require that the commercial management of any drybulk vessels acquired as permitted acquisitions be performed by either of our Managers. The commercial management of any drybulk vessel or contract for a newbuild drybulk vessel owned, operated or financed by Polys Hajioannou and entities affiliated with him for his estate or family planning purposes is not required to be managed by either of our Managers.

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 either of our Managers, our drybulk vessels will receive such charter.

The restrictive covenant agreements further provide that for each drybulk vessel or contract for a newbuild drybulk vessel owned, operated or financed by Polys Hajioannou or a Hajioannou Entity other than through us, Polys Hajioannou or the applicable Hajioannou entity is required to deliver to us a written report with respect to such vessel or newbuild within the first quarter of each fiscal year. The report for any drybulk vessel is required to include certain information, such as charter information with respect to charters arranged or in place during the period between the first day of the previous fiscal year and the date of the report, including the type of charter employment (e.g., time or voyage charters), the charter rate, commissions paid to brokers or other third parties, the charter period and the total revenues earned with respect to charters conducted during such period, running costs with respect to such drybulk vessel in the previous fiscal year, expected date of next drydocking and the estimated cost of such drydocking, and date of the next special survey. The report for any contracted newbuild drybulk vessel is required to include charter information, if any, with respect to charters arranged as of the date of the report, including the type of charter employment, the charter rate, commissions paid to brokers or other third parties and the charter period.

The foregoing description of the restrictive covenant agreements does not purport to be complete and is qualified in its entirety by reference to the restrictive covenant agreements, copies of which are attached as Exhibit 4.3 and Exhibit 4.4 and incorporated herein by reference.

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 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.

Sale of Vessels and Novation of Shipbuilding Contracts

In December 2015, following the Company’s decision to improve its liquidity position, Polys Hajioannou submitted a proposal to the Company’s board of directors, pursuant to which companies controlled by Polys Hajioannou would (a) purchase two vessels of the Company’s operating fleet, the Stalo and the Kypros Unity and (b) accept the novation from the Company of the newbuild contracts for Hull No. 1718 and Hull No. 1552, respectively. Upon receipt of this proposal, a special committee consisting of the Company’s three independent directors was formed and authorized by the board of directors of the Company to evaluate the proposal. The special committee was advised by independent counsel. The special committee obtained two appraisals from independent third parties for each of the two vessels and for each of the two newbuildings, and negotiated the terms of the sale of the vessels and the newbuild contract novations. In February 2016, the special committee approved the sale of the Stalo and the Kypros Unity and the novation of the contracts of Hull No. 1718 and Hull No. 1552 to companies controlled by Polys Hajioannou.

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In February 2016, our subsidiary Shikokuennia Shipping Corporation signed a novation agreement for newbuild Hull No. 1718, scheduled for delivery in 2019, and novated the newbuild to a company controlled by Polys Hajioannou. The remaining commitment under the newbuild contract for Hull No. 1718 as of December 31, 2016 and as of the day of signing the novation agreement was $28.4 million, compared to $26.5 million, which represented the higher of the two appraisals obtained by the special committee for such newbuild. The sale commission of 1.0% on $28.4 million for the novation of Hull No. 1718 payable to our Managers pursuant to the Management Agreements was waived in our favor.

In March 2016, our subsidiary, Staloudi Shipping Corporation, disposed of the vessel Stalo at a sale price of $9.0 million, and our subsidiary Gloverthree Shipping Corporation disposed of the vessel Kypros Unity at a sale price of $20.0 million, and in each case delivered the vessels to entities owned by Polys Hajioannou. The sale price for both vessels represented the higher of the two appraisals obtained by the special committee. We recorded an aggregate loss of $2.75 million in connection with the sale of these two vessels in the first quarter of 2016. The sale commission of 1.0% on $9.0 million for the sale of Stalo and on $20.0 million for the sale of Kypros Unity payable to our Managers pursuant to the Management Agreements was waived in our favor.

In August 2016, following the Company’s decision to further improve its liquidity position, Polys Hajioannou submitted a proposal to the Company’s board of directors, pursuant to which companies controlled by Polys Hajioannou would (a) accept the novation from the Company of the newbuild contract for Hull No. 835 and (b) purchase Hull No. 1551 upon delivery from the shipyard. Upon receipt of this proposal, a special committee consisting of the Company’s three independent directors was formed and authorized by the board of directors of the Company in order to evaluate the proposal. The special committee was advised by independent counsel, obtained two appraisals from independent third party brokers for each newbuild vessel and negotiated the terms of each transaction.

The two transactions were approved by the special committee in September 2016. In October 2016, our subsidiary, Gloverseven Shipping Corporation, signed a novation agreement for newbuild Hull No. 835 and our subsidiary, Kyotofriendo One Shipping Corporation, signed a memorandum of agreement for the sale upon delivery of newbuild Hull No. 1551, in each case, to entities owned by Polys Hajioannou. Our remaining capital expenditure requirements in respect of Hull No. 835 and Hull No. 1551 were $48.15 million in the aggregate. The higher of the two appraisals obtained from the independent third party brokers was $21.5 million for Hull No. 835 and $24.5 million for Hull No. 1551; or $46.0 million in the aggregate. The sale commission of 1.0% on $48.15 million for the novation of Hull No. 835 and the sale of Hull No. 1551 payable to our Managers pursuant to the Management Agreements was waived in our favor.

The sale of Hull No. 1551 was consummated in January 2017, immediately upon delivery of the newbuild vessel from the shipyard.

The sales fees, as well as the acquisition fee related to Hull No. 1551, due to the Managers pursuant to the Management Agreements arising from all of the above transactions, have been waived.

No related party transactions in relation to the sale of vessels or the novation of newbuild contracts occurred during 2018.

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 for more information.

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Legal Proceedings

We are not 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 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. During 2015, the Company declared and paid one quarterly dividend of $0.02 per share of Common Stock followed by two quarterly dividends of $0.01 per share of Common Stock, totaling $3.3 million. The Company did not declare dividends on its Common Stock during 2016, 2017 or 2018.

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. During 2015, the Company declared and paid four quarterly consecutive dividends of $0.50 per share, of Series B Preferred Shares, totaling $3.2 million, of Series C Preferred Shares, totaling $4.6 million, and of Series D Preferred Shares, totaling $6.4 million. During 2016, the Company declared and paid four quarterly consecutive dividends of $0.50 per share, of Series B Preferred Shares, totaling $3.1 million, of Series C Preferred Shares, totaling $4.6 million, and of Series D Preferred Shares, totaling $6.4 million. During 2017, the Company declared and paid four quarterly consecutive dividends of $0.50 per share, of Series B Preferred Shares, totaling $1.3 million, of Series C Preferred Shares, totaling $4.6 million, and of Series D Preferred Shares, totaling $6.4 million. During 2018, we declared and paid one quarterly dividend of $0.50 per share of Series B Preferred Shares, totaling $0.2 million, and four quarterly consecutive dividends of $0.50 per share, of Series C Preferred Shares, totaling $4.6 million, and of Series D Preferred Shares, totaling $6.4 million. In January 2019, we declared and paid a quarterly dividend of $0.50 per share, of Series C Preferred Shares, totaling $1.1 million, and of Series D Preferred Shares, totaling $1.6 million.

On February 20, 2018, we completed the redemption of the outstanding 379,514 Series B Preferred Shares at a redemption price of $25.00 per Series B Preferred Share plus all accumulated and unpaid dividends to, but excluding, the Redemption Date. From and after the Redemption Date, all distributions on the Series B Preferred Shares ceased to accumulate, such Series B Preferred Shares are no longer outstanding, and all rights of the holders of such shares terminated, except for the right to receive the redemption amount.

We currently do not intend to pay dividends on shares of our Common Stock. 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 and leverage 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. We may continue not to pay dividends in the future. 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.

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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 Relating to Our Common Stock and Preferred Shares” 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 NYSE

Since our initial public offering in the U.S. on May 29, 2008, our Common Stock has been listed on the NYSE under the symbol “SB.” Since June 18, 2013 our Series B Preferred Shares have been listed on the NYSE under the symbol “SB PR B.” As a result of the redemption of all of our remaining outstanding Series B Shares on the Redemption Date, a Form 25 was filed by the NYSE with the SEC on February 21, 2018, and, accordingly, our Series B Preferred Shares were delisted from the NYSE on March 5, 2018. Since May 7, 2014, our Series C Preferred Shares have been listed on the NYSE under the symbol “SB PR C.” Since June 30, 2014, our Series D Preferred Shares have been listed on the NYSE under the symbol “SB PR D.”

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, 2018 and March 8, 2019, 103,005,748 and 101,232,719 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, 2018 and March 8, 2019, 2,300,000 shares of Series C Preferred Shares and 3,200,000 shares of Series D Preferred Shares were issued and outstanding. Following the redemption of all outstanding Series B Preferred Shares on the Redemption Date, no shares of Series B Preferred Shares remained 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 7 of the consolidated financial statements included elsewhere in this annual report for a discussion of the history of our share capital.

B. Articles of Incorporation and Bylaws

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, as well as the BCA. 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 75.0% of all outstanding shares entitled to vote. Amendments to our bylaws require the affirmative vote of at least 75.0% 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 by the chief executive officer or secretary at the request of a majority of the board of directors. Our board of directors may set a record date between 15 and 60

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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 with the Registrar of Corporations of the Marshall Islands under registration number 27394.

Directors

Under our articles of incorporation and 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. Our articles of incorporation and bylaws provide for a staggered board of directors whereby directors shall be divided into three classes: Class I, Class II and Class III. The term of our Class I directors expires in 2021, the term of our Class II directors expires in 2019 and the term of our Class III directors expires in 2020. At each annual meeting, individuals elected as directors are elected to hold office until the third succeeding annual meeting.

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 non-assessable. 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.

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 as of March 8, 2019, 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;

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· 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, LLC 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:

(i) 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 15.0% or more of our outstanding Common Stock; or

(ii) 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.

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

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· 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

· 50.0% 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 1.0% 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.

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.

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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 50.0% 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. The action must set forth with particularity the stockholder’s efforts to have the Board initiate such action or the reason for not making any such effort.

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.

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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 as of March 8, 2019, 2,300,000 have been designated as Series C Preferred Shares and 3,200,000 have been designated as Series D Preferred Shares. As of the Redemption Date, no shares of Series B Preferred Shares remained outstanding. 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.

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.

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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 and non-Marshall Islands citizen 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 the vote or value 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 (i) 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 (ii) 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.

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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 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 21% (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 by us or our subsidiaries.

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 21% (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 (as defined 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

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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 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: (i) 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 (ii) 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

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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 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) of the Code. In determining whether any of the alternative tests of Section 302(b) of the Code 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) of the Code 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 of 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, in Tidewater Inc. v. United States, 565 F.3d 299 (5th Cir. 2009), 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. The IRS has stated that it disagrees with the holding in Tidewater and has specified that income from period time charters should be treated as services income. However, the IRS’ statement with respect to the Tidewater decision was an administrative action that cannot be relied upon or otherwise cited as precedent by taxpayers.

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.

United States holders who are individuals generally will be required to report certain information with respect to an interest in our stock by attaching a completed IRS Form 8938, Statement of Specified Foreign Financial Assets, with their tax return for each year in which they hold an interest in our stock. 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-

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United States person, under penalties of perjury, or you otherwise establish an exemption. If you 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 Exchange Act. In accordance with these requirements, we file reports and other information as a foreign private issuer with the SEC. You may 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 did not have any interest rate swap agreements outstanding as of December 31, 2018, although as of December 31, 2017 we had five interest rate swap agreements. From time to time we may enter into interest rate swap agreements in order to manage future interest costs and the risk associated with changing interest rates. Under our interest rate swap transactions that expired during 2018, the bank effected quarterly floating-rate payments to us for the relevant amount based on the three-month U.S. dollar LIBOR and we made quarterly payments to the bank on the relevant amount at the respective fixed rates. Refer to the table in Note 12 of the consolidated financial statements included elsewhere in this annual report which summarizes the interest rate swaps in place as of December 31, 2018 and December 31, 2017.

The following table sets forth the sensitivity of our existing loans as of December 31, 2018 as to a 100 basis point increase in LIBOR during the next five years, and reflects the additional interest expense.

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Year	Amount
2019	$	4.9 million
2020		4.8 million
2021		4.2 million
2022		3.4 million
2023		2.6 million

Foreign Currency Exchange Risk

We generate all of our revenues in U.S. dollars, but for the year ended December 31, 2018 we incurred approximately 28.0% of our vessel operating expenses in currencies other than the U.S. dollar and approximately 66.0% of our management fee to our Managers in currencies other than the U.S. dollar. As of December 31, 2018, approximately 44.4% 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 10.0% immediate and uniform adverse move in all currency exchange rates from the rates in effect as of December 31, 2018, would have increased our vessel operating expenses by approximately $1.8 million, our management fee to our Managers by approximately $1.1 million and the fair value of our outstanding accounts payable by approximately $0.3 million.

As of December 31, 2018, the majority of our outstanding contractual obligations to our Managers as well as all our outstanding commitments for vessel upgrades and improvements related to Scrubbers and BWTS investments were denominated in Euros, equivalent to $44.4 million and $26.7 million, respectively. A hypothetical 10% immediate adverse move in the Euro exchange rate from the rate in effect as of December 31, 2018, would have increased our outstanding contractual obligations to our Managers by approximately $4.4 million and our outstanding commitments for vessel upgrades and improvements related to Scrubbers and BWTS investments by approximately $2.7 million. 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, although we may enter into foreign exchange forward agreements in the future in relation to the remaining expenditures denominated in Euros.

There have been no material quantitative changes in market risk exposures between 2018 and 2017.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.

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

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. Articles of Incorporation and Bylaws—Stockholder Rights Plan” included in this annual report for a description of the stockholder rights plan.

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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, 2018. 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 limitation 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, 2018.

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 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.

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, 2018, 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, 2018, our internal control over financial reporting was effective. Deloitte Certified Public Accountants 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, 2018 which is reproduced in its entirety in Item 15(c) below.

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C. Attestation Report of the Registered Public Accounting Firm

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Safe Bulkers, Inc. and its subsidiaries (the “Company”) as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2018, of the Company and our report dated March 20, 2019, expressed an unqualified opinion on those financial statements.

Basis for Opinion

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 are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. 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.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed 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 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. 

/s/ Deloitte Certified Public Accountants S.A.
Athens, Greece
March 20, 2019

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, Ole Wikborg, Christos Megalou 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 such term is defined in Regulation S-K promulgated by the SEC.

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., e-mail: directors@safebulkers.com, telephone: +30 2111 888 400, +357 25 887 200. No waivers of the Code of Business Conduct and Ethics have been granted to any person during the fiscal year ended December 31, 2018.

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ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Aggregate fees billed to the Company for the fiscal years ended December 31, 2018 and 2017 by the Company’s principal accounting firm, Deloitte Certified Public Accountants S.A., an independent registered public accounting firm and member of Deloitte Touche Tohmatsu, Limited, by the category of service, were as follows:

	2017		2018
	(in thousands)
Audit fees	$	306	$	330
Total fees	$	306	$	330

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 November 24, 2015, the Company announced a share repurchase program in the aggregate of up to $20.0 million under which it may from time to time purchase Series B Preferred Shares, Series C Preferred Shares and Series D Preferred Shares on the open market. No shares were purchased under the program in 2018. The Company’s share repurchase program does not obligate it to purchase any of its Preferred Shares, and the share repurchase program may be modified or terminated at any time without prior notice. Any such purchases will be made in the open market in compliance with applicable laws and regulations.

On June 22, 2016, the Company announced a share repurchase program under which it may from time to time in the future purchase up to 2,000,000 shares of the Company’s Common Stock. The Company did not make any purchases of its Common Stock under the program in 2018.

On February 20, 2018, the Company completed the redemption of all remaining outstanding 379,514 Series B Preferred Shares at a redemption price of $25.00 per Series B Preferred Share plus all accumulated and unpaid dividends to, but excluding, the Redemption Date. From and after the Redemption Date, all distributions on the Series B Preferred Shares ceased to accumulate, such Series B Preferred Shares are no longer outstanding, and all rights of the holders of such shares terminated.

On December 19, 2018, the Company announced a share repurchase program under which it may from time to time in the future purchase up to 3,000,000 shares of the Company’s Common Stock. Details on the shares purchased under the program are set forth in the table below:

Period	Total Number of Common Shares Purchased(a)		Average Price Paid per Common Share		Total Number of Common Shares Purchased as Part of Publicly Announced Plans or Programs
December 2018		345,012		1.76		345,012
January 2019		921,957		1.87		921,957
February 2019		410,225		1.60		410,225
Total		1,677,194		1.78		1,677,194

(a) All purchases were made on the open market in accordance with Rule 10b-18 and Rule 10b5-1 under the Exchange Act.

ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

Not Applicable.

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ITEM 16G. CORPORATE GOVERNANCE

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

Overview

Pursuant to certain exceptions for foreign private issuers, we are not required to comply with certain of the corporate governance practices followed by U.S. companies under the NYSE listing standards. However, pursuant to Section 303.A.11 of the NYSE 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 NYSE. We believe that our established practices in the area of corporate governance are in line with the spirit of the NYSE 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 NYSE standards applicable to listed U.S. companies are set forth below.

Independent Directors

The NYSE 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 NYSE requires that non-management directors meet regularly in executive sessions without management. The NYSE 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 NYSE 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 Islands law and our bylaws, we have a combined corporate governance, nominating and compensation committee, which at present is comprised solely of independent directors.

Shareholder Approval Requirements

The NYSE requires that a listed U.S. company obtain prior shareholder approval for certain issuances of authorized stock or the approval of, and material revisions to, equity compensation plans. However, as permitted under Marshall Islands law, we do not need to obtain prior shareholder approval in connection with such issuances or equity compensation plans.

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 incorporated herein by reference.

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ITEM 19. EXHIBITS

Exhibit	Description
1.1	First Amended and Restated Articles of Incorporation (Incorporated by reference to Exhibit 3.1 on the Company’s Registration Statement on Form F-1 (Reg. No. 333-150995))
1.2	Articles of Amendment of First Amended and Restated Articles of Incorporation (Incorporated by reference to Exhibit 99.1 on the Company’s Form 6-K, filed on October 8, 2009)
1.3	First Amended and Restated Bylaws (Incorporated by reference to Exhibit 3.2 on the Company’s Registration Statement on Form F-1 (Reg. No. 333-150995))
2.1	Form of Registration Rights Agreement between Safe Bulkers, Inc. and Vorini Holdings Inc. (Incorporated by reference to Exhibit 4.2 on the Company’s Registration Statement on Form F-1 (Reg. No. 333-150995))
2.2	Stockholder Rights Agreement (Incorporated by reference to Exhibit 10.5 on the Company’s Registration Statement on Form F-1 (Reg. No. 333-150995))
2.3	Specimen Share Certificate (Incorporated by reference to Exhibit 4.1 on the Company’s Registration Statement on Form F-1 (Reg. No. 333-150995))
2.4	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 on May 7, 2014)
2.5	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 on June 30, 2014)
4.1	Management Agreement, dated May 29, 2018, between Safety Management Overseas S.A. and Safe Bulkers, Inc.
4.2	Management Agreement, dated May 29, 2018, between Safe Bulkers Management Limited and Safe Bulkers, Inc.
4.3	Second Amended and Restated Restrictive Covenant Agreement, dated August 2, 2017, among Safe Bulkers, Inc., Polys Hajioannou, Vorini Holdings Inc. and Machairiotissa Holdings Inc. (Incorporated by reference to Exhibit 4.3 on the Company’s Form 20-F, filed on March 2, 2018)
4.4	Second Amended and Restated Restrictive Covenant Agreement, dated August 2, 2017, between Safe Bulkers, Inc. and Polys Hajioannou (Incorporated by reference to Exhibit 4.4 on the Company’s Form 20-F, filed on March 2, 2018)
4.5	Amended and Restated Loan Agreement, dated October 3, 2018, by and among Safe Bulkers, Inc., 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	Certification of principal financial officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended
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 Certified Public Accountants S.A.
101	The following materials from the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2018, formatted in eXtensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets as of December 31, 2017 and 2018; (ii) Consolidated Statements of Operations for the years ended December 31, 2016, 2017 and 2018; (iii) Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2016, 2017 and 2018; (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2016, 2017 and 2018; and (v) Notes to Consolidated Financial Statements

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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 20, 2019

By:	/s/ KONSTANTINOS ADAMOPOULOS
	Name:  Konstantinos Adamopoulos
	Title:  Chief Financial Officer and Director

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INDEX TO FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of December 31, 2017 and 2018	F-3
Consolidated Statements of Operations for the Years Ended December 31, 2016, 2017 and 2018	F-4
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2016, 2017 and 2018	F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2016, 2017 and 2018	F-6
Notes to Consolidated Financial Statements	F-7

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Safe Bulkers, Inc. and subsidiaries (the “Company”) as of December 31, 2018 and 2017, the related consolidated statements of operations, shareholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2018, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018, 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) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 20, 2019 expressed an unqualified opinion on the Company’s internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Deloitte Certified Public Accountants S.A.
Athens, Greece
March 20, 2019

We have served as the Company’s auditor since 2007.

F-2

SAFE BULKERS, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2017 AND 2018
(In thousands of U.S. Dollars, except for share and per share data)

			December 31,
	Notes		2017			2018
ASSETS
CURRENT ASSETS:
Cash and cash equivalents				$46,199			$51,879
Time deposits				12,157			29,895
Accounts receivable				10,608			11,142
Due from Manager		3		418			599
Inventories				4,227			4,139
Derivative assets		12		62			—
Accrued revenue		16		2,029			475
Restricted cash				1,660			310
Prepaid expenses and other current assets				1,726			2,823
Total current assets				79,086			101,262
FIXED ASSETS:
Vessels, net		4		942,876			955,291
Advances for vessels		5		3,653			8,596
Total fixed assets				946,529			963,887
OTHER NON CURRENT ASSETS:
Deferred financing costs				—			35
Restricted cash				8,651			10,401
Accrued revenue		16		831			614
Total assets				1,035,097			1,076,199
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt, net		6		25,588			36,185
Unearned revenue		16		3,540			5,409
Trade accounts payable				4,137			6,106
Accrued liabilities		13		3,666			6,883
Derivative liabilities		12		2			—
Due to Manager				—			23
Total current liabilities				36,933			54,606
Long-term debt, net		6		541,816			538,508
Unearned revenue - Long-term		16		—			253
Total liabilities				578,749			593,367
COMMITMENTS AND CONTINGENCIES		9
MEZZANINE EQUITY
Redeemable non-controlling interest		8		—			16,998
SHAREHOLDERS’ EQUITY:
Common stock, $0.001 par value; 200,000,000 authorized, 101,526,708 and 103,005,748 issued and outstanding at December 31, 2017 and 2018, respectively		7		102			103
Preferred stock, $0.01 par value; 20,000,000 authorized, 379,514 and 0 Series B Preferred Shares, 2,300,000 and 2,300,000 Series C Preferred Shares, 3,200,000 and 3,200,000 Series D Preferred Shares, issued and outstanding at December 31, 2017 and 2018, respectively		7		59			55
Treasury stock, $0.001 par value; 113,076 and 458,088 Common Stock shares repurchased at December 31, 2017 and December 31, 2018, respectively		7		(120	)		(737	)
Additional paid in capital				361,202			355,134
Retained earnings				95,105			111,279
Total shareholders’ equity				456,348			465,834
Total liabilities, mezzanine equity and shareholders’ equity				$1,035,097			$1,076,199

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

F-3

SAFE BULKERS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2017 AND 2018
(In thousands of U.S. Dollars, except for share and per share data)

			Years Ended December 31,
	Notes		2016			2017			2018
REVENUES:
Revenues		10		$113,959			$154,040			$201,548
Commissions				(4,187	)		(6,008	)		(8,357	)
Net revenues				109,772			148,032			193,191
EXPENSES:
Voyage expenses				(7,679	)		(3,932	)		(6,378	)
Vessel operating expenses		11		(49,519	)		(52,794	)		(63,512	)
Depreciation		4		(49,485	)		(51,424	)		(48,067	)
General and administrative expenses
- Management fee to related parties		3,15		(11,611	)		(13,511	)		(16,536	)
- Company administration expenses		15		(3,770	)		(2,607	)		(2,706	)
Early redelivery cost, net				—			(1,263	)		(105	)
Other operating income/(expense)				794			(390	)		—
Loss on sale of assets		17		(2,750	)		(120	)		—
Impairment loss		4,12		(17,163	)		(91,293	)		—
Operating (loss)/income				(31,411	)		(69,302	)		55,887
OTHER (EXPENSE)/INCOME:
Interest expense		6		(19,576	)		(23,224	)		(25,713	)
Other finance (cost)/income				(1,735	)		7,651			(973	)
Interest income				515			799			929
(Loss)/gain on derivatives		12		(620	)		72			18
Foreign currency (loss)/gain				(76	)		1,782			(670	)
Amortization and write-off of deferred finance charges				(3,063	)		(2,457	)		(1,794	)
Net (loss)/income				(55,966	)		(84,679	)		27,684
Less preferred dividend				14,025			12,316			11,384
Less preferred deemed dividend				—			2,146			—
Net (loss)/income available to common shareholders				$(69,991	)		$(99,141	)		$16,300
(Loss)/earnings per share in U.S. Dollars, basic and diluted		19		$(0.83	)		$(0.98	)		$0.16
Weighted average number of shares, basic and diluted				84,526,411			100,932,876			101,604,339

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, 2016, 2017 AND 2018
(In thousands of U.S. Dollars)

	Common Stock		Treasury Stock			Preferred Stock			Additional Paid in Capital			Retained Earnings			Total
Balance as of January 1, 2016		$83		$—			$71			$369,731			$264,261			$634,146
Net loss		—		—			—			—			(55,966	)		(55,966	)
Issuance of common stock		16		—			—			16,099			—			16,115
Repurchase of common stock		—		(120	)		—			—			—			(120	)
Repurchase and cancellation of preferred stock		—		—			(1	)		(1,709	)		—			(1,710	)
Share based compensation		—		—			—			120			—			120
Preferred share dividends declared		—		—			—			—			(14,049	)		(14,049	)
Balance as of December 31, 2016		$99		$(120	)		$70			$384,241			$194,246			$578,536
Net loss		—		—			—			—			(84,679	)		(84,679	)
Repurchase and cancellation of preferred stock		—		—			—			(114	)		—			(114	)
Tender offer-redemption of preferred stock		3		—			(11	)		(23,045	)		(2,146	)		(25,199	)
Share based compensation		—		—			—			120			—			120
Preferred share dividends declared		—		—			—			—			(12,316	)		(12,316	)
Balance as of December 31, 2017		$102		$(120	)		$59			$361,202			$95,105			$456,348
Net income		—		—			—			—			27,684			27,684
Issuance of common stock		1		—			—			3,296			—			3,297
Repurchase of common stock		—		(617	)		—			—			—			(617	)
Repurchase and cancellation of preferred stock		—		—			(4	)		(9,484	)		—			(9,488	)
Share based compensation		—		—			—			120			—			120
Preferred share dividends declared		—		—			—			—			(11,510	)		(11,510	)
Balance as of December 31, 2018		$103		$(737	)		$55			$355,134			$111,279			$465,834

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, 2016, 2017 AND 2018
(In thousands of U.S. Dollars)

	December 31,
	2016			2017			2018
Cash Flows from Operating Activities:
Net (loss)/income		(55,966	)		(84,679	)		27,684
Adjustments to reconcile (net loss)/income to net cash provided by operating activities:
Depreciation		49,485			51,424			48,067
Loss on sale of assets		2,750			120			—
Impairment loss		17,163			91,293			—
Gain on debt extinguishment		—			(8,189	)		—
Other non-cash items		—			373			—
Amortization and write-off of deferred finance charges		3,063			2,457			1,794
Unrealized (gain)/loss on derivatives		(411	)		(146	)		60
Unrealized foreign exchange (gain)/loss		—			(244	)		119
Share based compensation		120			120			120
Change in:
Accounts receivable		(1,695	)		(2,373	)		(534	)
Due from Manager		345			25			(23	)
Inventories		238			947			88
Accrued revenue		(90	)		(1,765	)		1,771
Prepaid expenses and other current assets		(340	)		293			(1,097	)
Due to Manager		—			—			23
Trade accounts payable		(1,679	)		(486	)		2,630
Accrued liabilities		411			(569	)		2,625
Unearned revenue		84			1,500			2,122
Net Cash Provided by Operating Activities		13,478			50,101			85,449
Cash Flows from Investing Activities:
Vessel advances		(58,373	)		(59,943	)		(45,932	)
Proceeds from sale of assets		29,000			20,510			—
Increase in bank time deposits		(51,452	)		(37,635	)		(60,795	)
Maturity of bank time deposits		40,952			37,478			43,057
Net Cash Used in Investing Activities		(39,873	)		(39,590	)		(63,670	)
Cash Flows from Financing Activities:
Proceeds from long-term debt		64,500			115,260			187,513
Principal payments of long-term debt		(148,529	)		(122,805	)		(179,725	)
Dividends paid		(14,049	)		(12,316	)		(11,387	)
Payment of deferred financing costs		(100	)		(1,868	)		(1,873	)
Proceeds on issuance of common stock		16,494			—			—
Payment of common stock offering expenses		(361	)		(18	)		(3	)
Repurchase of common stock		(120	)		—			(617	)
Repurchase of preferred stock		(1,710	)		(114	)		(9,488	)
Tender offer-redemption of preferred stock		—			(24,890	)		—
Payment of tender offer expenses		—			(309	)		—
Net Cash Used in Financing Activities		(83,875	)		(47,060	)		(15,580	)
Net (decrease)/increase in cash, cash equivalents and restricted cash		(110,270	)		(36,549	)		6,199
Effect of exchange rate changes on cash, cash equivalents and restricted cash		—			244			(119	)
Cash, cash equivalents and restricted cash at beginning of year		203,085			92,815			56,510
Cash, cash equivalents and restricted cash at end of year		92,815			56,510			62,590
Supplemental cash flow information:
Cash paid for interest (excluding capitalized interest):		19,829			22,682			23,849
Non Cash Investing and Financing Activities:
Unpaid financing fees		18			85			540
Part payment of vessel advances through issuance of common stock and preferred stock requirements		—			—			20,175
Unpaid dividend on preferred stock		—			—			123
Unpaid capital expenditure		3,500			210			1,028
Reconciliation of Cash, Cash Equivalents and Restricted Cash:
Cash and cash equivalents		81,618			46,199			51,879
Restricted cash – Current assets		1,195			1,660			310
Restricted cash – Non-current assets		10,002			8,651			10,401
Cash, cash equivalents and restricted cash shown in the statement of cash flows		92,815			56,510			62,590

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”) was formed on December 11, 2007, under the laws of the Republic of the Marshall Islands. Safe Bulkers’ common stock trades on the New York Stock Exchange (“NYSE”) under the symbol “SB.”

Polys Hajioannou and his family, by virtue of shares owned indirectly through various private entities are the controlling shareholders of Safe Bulkers and as a result 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 Safe Bulkers’ initial public offering, Safe Bulkers has successfully completed five additional public common stock offerings and three preferred stock offerings.

As of December 31, 2018, Safe Bulkers held 48 wholly-owned companies (which are referred to herein as “Subsidiaries”) which together owned and operated a fleet of 41 drybulk vessels and were scheduled to acquire one additional newbuild vessel (the “Newbuild”).

Safe Bulkers and its Subsidiaries are collectively referred to in the notes to the consolidated financial statements as the “Company.”

The Company’s principal business is the 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”) and Safe Bulkers Management Limited, a company incorporated under the laws of the Republic of Cyprus (“Safe Bulkers Management,” and, together with Safety Management, the “Managers,” and either of them “the Manager”), related parties both controlled by Polys Hajioannou, provide technical, commercial and administrative management services to the Company.

The accompanying consolidated financial statements include the operations, assets and liabilities of the Company, and of its 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”)(2)	Efrossini	Panamax	February 2012
Glovertwo Shipping Corporation (“Glovertwo”)(2)	Zoe	Panamax	July 2013
Shikokutessera Shipping Inc. (“Shikokutessera”)(2)	Kypros Land	Panamax	January 2014
Shikokupente Shipping Inc. (“Shikokupente”)(2)	Kypros Sea	Panamax	March 2014
Gloverfour Shipping Corporation (“Gloverfour”)(2)	Kypros Bravery	Panamax	January 2015
Shikokuokto Shipping Inc. (“Shikokuokto”)(2)	Kypros Sky	Panamax	March 2015
Gloverfive Shipping Corporation (“Gloverfive”)(2)	Kypros Loyalty	Panamax	June 2015
Gloversix Shipping Corporation (“Gloversix”)(2)	Kypros Spirit	Panamax	July 2016
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”)(2)	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

F-7

Subsidiary	Vessel Name	Type	Built
Maxeikosiena Shipping Corporation (“Maxeikosiena”)(1)	Pedhoulas Farmer	Kamsarmax	September 2012
Youngone Shipping Inc. (“Youngone”)(2)	Pedhoulas Cherry	Kamsarmax	July 2015
Youngtwo Shipping Inc. (“Youngtwo”)(2)	Pedhoulas Rose	Kamsarmax	January 2017
Pinewood Shipping Corporation (“Pinewood”)(2)(7)	Pedhoulas Cedrus	Kamsarmax	June 2018
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
Pentakomo Shipping Corporation (“Pentakomo”)(2)	Agios Spyridonas	Post-Panamax	January 2010
Maxdekatria Shipping Corporation (“Maxdekatria”)(1)	Panayiota K	Post-Panamax	April 2010
Maxdeka Shipping Corporation (“Maxdeka”)(2)	Venus Heritage	Post-Panamax	December 2010
Shikoku Friendship Shipping Company (“Shikoku”)(2)	Venus History	Post-Panamax	September 2011
Maxenteka Shipping Corporation (“Maxenteka”)(2)	Venus Horizon	Post-Panamax	February 2012
Shikokuepta Shipping Inc. (“Shikokuepta”)(2)	Troodos Sun	Post-Panamax	January 2016
Shikokuexi Shipping Inc. (“Shikokuexi”)(2)	Troodos Air	Post-Panamax	March 2016
Maxpente Shipping Corporation (“Maxpente”)(1)	Kanaris	Capesize	March 2010
Eptaprohi Shipping Corporation (“Eptaprohi”)(1)	Pelopidas	Capesize	November 2011
Maxtessera Shipping Corporation (“Maxtessera”)(2)	Lake Despina	Capesize	January 2014
Shikokuennia Shipping Corporation (“Shikokuennia”)(2)(6)	Mount Troodos	Capesize	November 2009
Monagrouli Shipping Corporation (“Monagrouli”)(2)(9)	TBN - S 1772	Post-Panamax	February 2020
Gloverthree Shipping Corporation (“Gloverthree”)(2)(3)	—	—	—
Staloudi Shipping Corporation (“Staloudi”)(1)(4)	—	—	—
Gloverseven Shipping Corporation (“Gloverseven”)(2)(5)	—	—	—
Kyotofriendo One Shipping Inc. (“Kyotofriendo One”)(2)(8)	—	—	—
Kyotofriendo Two Shipping Inc. (“Kyotofriendo Two”)(2)(7)	—	—	—
Maxeikosipente Shipping Corporation (“Maxeikosipente”)(1)	—	—	—

(1)	Incorporated under the laws of the Republic of Liberia.
(2)	Incorporated under the laws of the Republic of the Marshall Islands.
(3)	Gloverthree owned the Panamax class vessel Kypros Unity which was sold in March 2016. Refer to Notes 3 and 17.
(4)	Staloudi owned the post-Panamax class vessel Stalo which was sold in March 2016. Refer to Notes 3 and 17.
(5)	Gloverseven had contracted to acquire the Panamax class newbuild vessel with Hull No. 835. The contract was novated in October 2016. Refer to Note 3.
(6)	Shikokuennia had contracted to acquire the post-Panamax class newbuild vessel with Hull No. 1718. The contract was novated in February 2016. Refer to Note 3. Shikokuennia subsequently acquired the secondhand Capesize class vessel Mount Troodos in August 2018.
(7)	On July 29, 2016, the Shipsales Contract relating to Hull No. 1552, initially contracted by Kyotofriendo Two, was novated to Pinewood. Under an agreement with an unaffiliated third party, upon delivery of the vessel, named Pedhoulas Cedrus, to Pinewood in June 2018, 100 shares of Series A Preferred Stock of Pinewood were issued to the unaffiliated third party for proceeds in the equivalent of $16,875 which were used to finance part of the cost of such vessel. Such shares have preference over shares of common stock of Pinewood with respect to distributions by, and liquidation of, Pinewood. Furthermore, under this agreement, Pinewood agreed to (i) pay its own expenses out of its own funds, (ii) keep its assets and funds separate from the assets and funds of the Company, (iii) refrain from holding its assets and/or creditworthiness as being available to satisfy any of the obligations of the Company and (iv) take, or refrain from taking, certain other actions designed to ensure that the assets of Pinewood are not available to creditors of Safe Bulkers or its other subsidiaries.
(8)	Kyotofriendo One had contracted to acquire the Kamsarmax class newbuild vessel with Hull No. 1551, which upon her delivery from the shipyard in January 2017 was sold. Refer to Notes 3 and 17.
(9)	Estimated completion date for newbuild vessel as of December 31, 2018.

F-8

For the years ended December 31, 2016, 2017 and 2018, the following charterers individually accounted for more than 10% of the Company’s time charter, voyage charter and ballast bonus revenues as follows:

	December 31,
	2016			2017			2018
Glencore Agriculture B.V		10.05	%		—	%		14.73	%
Bunge S.A.		—	%		12.72	%		13.76	%
Global Chartering Ltd		12.49	%		—	%		—	%

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 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 may include vessel valuations, the valuation of amounts due from charterers, residual value of vessels and the useful life of vessels. 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/(loss) 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 operations 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 remaining 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 reflect 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 and net realizable value. Cost is determined using the first–in, first-out method. Inventories consist of $724 and $0 of bunkers and of $3,503 and $4,139 of lubricants as of December 31, 2017 and 2018, respectively.

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 and

F-9

financing costs incurred during the construction period for vessels under construction, commissions paid, delivery expenses and other expenditures to prepare the vessel for her initial voyage), less accumulated depreciation and impairment, if any. Certain subsequent expenditures for conversions, major improvements and regulatory requirements 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. The Company estimates the useful life of its vessels to be 25 years from the date of initial delivery from the shipyard. Secondhand vessels are depreciated from the date they become available for use 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 operations.

Repairs and Maintenance: 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 operations.

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. Various factors including anticipated future charter rates, estimated scrap values, future drydocking costs and estimated vessel operating costs are included in this analysis. If the carrying value of the related asset exceeds the undiscounted cash flows, the carrying value is reduced to its estimated fair value and the difference is recorded as an impairment loss in the consolidated statements of operations.

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, 2017 and 2018.

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. The unamortized deferred financing costs are presented as a direct deduction from the carrying amount of the related loan and credit facility in the consolidated balance sheet. Deferred financing costs relating to undrawn facilities are presented under non-current assets in the consolidated balance sheet. 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 and terminated is expensed in the same period. Any unamortized balance of costs relating to the credit facilities refinanced is deferred and amortized over the term of the respective refinanced 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

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interest rate risk of its loan obligations. 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 operations. 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 operations. For the years ended December 31, 2016, 2017 and 2018, no derivatives were accounted for as accounting hedges.

Financial Instruments: Over-the-counter foreign exchange forward contracts, interest rate derivatives and cash equivalents are recorded at fair value. Other financial instruments, including 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 6. The Company may manage its interest rate risk by entering into interest rate derivative instruments which are described in Note 12. As of December 31, 2018, the Company did not have any interest rate swap agreements in place.

(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 interest rate 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 may be exposed to credit risk in the event of non-performance by its counterparties to derivative instruments; however, the Company may limit 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.

Treasury stock: The Company records the repurchase of its shares at cost based on the settlement dates of repurchase transactions. These shares are classified as treasury stock, which is a reduction to shareholders’ equity. Treasury shares are included in authorized and issued shares but excluded from outstanding shares.

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 trip or a specific period of time and at a specified daily charter rate. Time charter 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. 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. Time charter hire is typically payable 15 or 30 days in advance as determined in the charter party agreement. 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 by the Company include costs for draft surveys, hold cleaning, postage, extra war risk insurance, bunkers during

F-11

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). Certain voyage expenses paid by the Company, such as extra war risk insurance may be recovered from the charterer; such amounts recovered are recorded as Other Income within Revenues.

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. The Company accounts for a voyage charter when all the following criteria are met: (i) the parties to the contract have approved the contract in the form of a written charter agreement or fixture recap and are committed to perform their respective obligations, (ii) the Company can identify each party’s rights regarding the services to be transferred, (iii) the Company can identify the payment terms for the services to be transferred, (iv) the charter agreement has commercial substance (that is, the risk, timing, or amount of the future cash flows is expected to change as a result of the contract) and (v) it is probable that the Company will collect substantially all of the consideration to which it will be entitled in exchange for the services that will be transferred to the charterer. The Company determined that its voyage charters consist of a single performance obligation which is met evenly as the voyage progresses and hence, the voyage 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, and are all paid for by the Company. Costs incurred prior to loading which are directly related to the voyage may be deferred if they meet certain conditions, and are amortized over the duration of the voyage from load port to discharge port. Costs incurred during the voyage are expensed as incurred. 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. Voyage hire is typically paid upon completion of the performance obligation. During the years ended December 31, 2016, 2017 and 2018, there has only been one instance in each of 2017 and 2018 where a vessel was employed under a voyage charter and in both cases the voyage had began and ended in the same period.

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 operations.

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, under the laws of the Republic of Greece, each vessel managed in Greece is also subject to an annual shipping community mandatory financial contribution. These registration, tonnage taxes and financial contributions are recorded within Vessel operating expenses in the accompanying consolidated statements of operations and none are considered income taxes.

Furthermore, each Subsidiary may be subject to a 4.00% U.S. federal tax in respect of its U.S. source shipping income (imposed on gross income without the allowance for any deductions). Such taxes have been recorded within Voyage expenses in the accompanying consolidated statements of operations. If such taxes are recovered; such amounts recovered are recorded within Revenues in the accompanying consolidated statements of operations.

Dividends: Dividends are recorded in the period in which they are declared by the Company’s Board of Directors.

Earnings/(Loss) Per Share: The computation of basic earnings/(loss) per share is based on the weighted average number of common stock outstanding during the year and includes the shares issuable to the audit committee chairman and the independent directors at the end of each year for services rendered. The computation of basic earnings/(loss)

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per share is calculated after deducting the preferred stock dividends paid and accrued (including any deemed dividend) from net income/(loss) divided by the weighted average number of shares.

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: On May 28, 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2014-09, as amended by ASU 2015-14, which was issued on August 12, 2015, Revenue From Contracts With Customers, which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. This standard is effective for public entities with reporting periods beginning after December 15, 2017 and interim periods therein, and shall be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. The Company adopted this ASU for its Voyage Revenues for its reporting period commencing January 1, 2018 and elected to use the modified retrospective transition method for the implementation of this standard. The implementation of this standard did not have an impact on the Company’s financial statements, as the Company has always recognized voyage revenues on a pro rata basis over the duration of the voyage from load port to discharge port and also did not have any voyages in progress over the year ended December 31, 2017 and 2018. Voyage Revenues represent less than 1% of total revenues.

Leases: In February 2016, the FASB issued ASU 2016-2 (codified as ASC 842), which amends the existing accounting standard for lease accounting and adds additional disclosures about leasing arrangements. ASC 842 requires lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by most leases, while lessor accounting remains largely unchanged. ASC 842, as amended, subject to certain transition relief options, requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, or allows entities to elect not to recast the comparative periods presented when transitioning to ASC 842 and to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. . ASC 842 also provides a practical expedient to lessors by class of underlying asset, to not separate non lease components from the associated lease component, similar to the expedient provided for lessees, when the following criteria are met i) the timing and pattern of transfer for the lease component is the same as those for the non-lease component associated with that lease component and (ii) the lease component, if accounted for separately, would be classified as an operating lease. ASC 842 is effective for public entities with reporting periods beginning after December 15, 2018, including interim periods within those fiscal periods. Early adoption is permitted for all entities. The Company will adopt ASC 842 for its reporting period commencing January 1, 2019 and has elected not to recast the comparative periods presented when transitioning to ASC 842. The nature of the lease component and non-lease component that were combined as a result of applying the practical expedient are the contract for the hire of a vessel and the fees for operating and maintaining the vessel respectively. The Company has elected not to separate the lease and non-lease components. The lease component is the predominant component and the Company accounts for the combined component as an operating lease in accordance with Topic 842. Since lessor accounting remains largely unchanged from current U.S. GAAP and the Company’s office operating leases are immaterial, the implementation of this standard will not have a significant impact on the Company’s financial statements , however it will increase the disclosures relating to the Company’s leasing arrangements.

3.	Transactions with Related Parties
A.	The Managers

The Company enters from time to time into management agreements with the Managers for the provision of executive officers and management services to vessel-owning Subsidiaries. Pursuant to the management agreements,

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the vessel-owning Subsidiaries enter into separate ship management agreements with either one of the Managers under which chartering, operations, technical and accounting services are provided to the vessels. Pursuant to the management agreements, the Subsidiaries that have entered into agreements to acquire newbuild vessels are required to enter into supervision agreements with either one of the Managers. The Managers under these agreements receive fees (the “Fees”), comprised of ship management fees (the “Ship Management Fees”), supervision fees (the “Supervision Fees”) and sale and purchase commissions (the “Commissions”). The Managers are both related parties that are controlled by Polys Hajioannou.

On May 29, 2018, following the expiration of the old management agreements, Safe Bulkers signed new management agreements with the Managers (the “Management Agreements”). The Management Agreements have an initial term of three years expiring on May 28, 2021 and can be extended for two additional terms of three years each. The fees provided by the Management Agreements are fixed until May 29, 2021 and upon mutual agreement with the Managers, can be adjusted for a subsequent term of three years each time on May 29, 2021 and May 29, 2024.

In accordance with the Management Agreements, the Managers receive:

· Ship Management Fees comprised of a daily ship management fee of €875 per vessel, payable monthly in arrears to the respective Manager and an annual ship management fee of €3,000,000 payable quarterly in arrears to only one of the Managers;

· Supervision Fees of $550 with respect to each newbuild for the services rendered by one of the Managers under the supervision agreement, of which 50% is payable upon the signing of the relevant supervision agreement, and 50% is payable upon successful completion of the sea trials of each newbuild; and

· Commissions equal to 1.00% calculated on the price set forth in the memorandum of agreement or other sale and purchase newbuild contract, or any other vessel bought or sold by the Company, payable upon final delivery of such vessel to the relevant purchaser.

For the period starting January 1, 2016 to May 28, 2018, the old management agreements provided for Ship Management Fees of $975 per day per vessel. Both old and new management agreements provided for the same Supervision Fees and Commissions.

The Ship Management Fees are recorded in General and Administrative Expenses (refer to Note 15). The Commissions on purchase and the Supervision Fees are recorded in Advances for vessels (refer to Note 5). The Commissions on sale are recorded in Gain or Loss on sale of assets as the case may be.

The Management Agreements do not include the provision which was included in the old management agreements that to the extent the executive officers are not provided by the Managers but are instead employed by Safe Bulkers, the management fees payable by Safe Bulkers will be 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. Such costs for the year ended December 31, 2016, amounted to $1,445 and were recorded under Compensation for Directors and Officers within General and Administrative Expenses (refer to Note 15). No such costs were incurred for the years ended December 31, 2017 and 2018, as the executive officers were provided by the Managers.

Amounts due from Manager under the management agreements were $418 and $599 as of December 31, 2017 and 2018, respectively. Amounts due to Manager under the management agreements were $0 and $23 as of December 31, 2017 and 2018, respectively.

The Fees to our Managers comprised the following:

	Year Ended December 31, (In thousands of U.S. Dollars)
	2016	2017	2018
Ship Management Fees	$11,611	$13,511	$16,536
Supervision Fees	1,925	550	275
Commissions	972	700	586

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B. Sale of Vessels and Novation of Newbuild Contracts

In December 2015, following the Company’s decision to reduce its capital commitments and improve its liquidity, Polys Hajioannou submitted a proposal to the Company’s Board of Directors, pursuant to which companies controlled by Polys Hajioannou would (a) purchase two vessels of the Company’s operating fleet, the Stalo and the Kypros Unity and (b) novate the contracts of two of the Company’s newbuilds, Hull No. 1718 and Hull No. 1552, respectively. Upon receipt of this proposal, a special committee consisting of the Company’s three independent directors was formed and authorized by the Board of Directors of the Company in order to evaluate the proposal. The special committee was advised by independent counsel. During January 2016, the special committee obtained two appraisals from independent third parties for each of the two vessels and for each of the two newbuildings, and negotiated the terms of the sale of the vessels and the newbuild contract novations. In February 2016, the special committee approved the sale of the Stalo and the Kypros Unity and the novation of the contracts of Hull No. 1718 and Hull No. 1552 to companies controlled by Polys Hajioannou.

The agreed sale price for the Stalo was $9,000 in cash, representing the higher of the two appraisals for that vessel, and the agreed sale price for the Kypros Unity was $20,000 in cash, likewise representing the higher of the two appraisals for that vessel that the special committee had obtained. The sales of the Stalo and Kypros Unity were consummated in March 2016.

The remaining commitment under the newbuild contract for Hull No. 1718 as of December 31, 2016 and as of the day of signing the novation agreement was $28,400, compared to $26,500, representing the higher of the two appraisals obtained by the special committee for such newbuild. The novation of the contract of Hull No. 1718 was executed in February 2016. The novation of the newbuild contract of Hull No. 1552 was not completed. Instead, the Company entered into an agreement to issue to an unaffiliated investor cumulative redeemable preferred shares of Pinewood in connection with the delivery of Pedhoulas Cedrus (Hull No. 1552) in 2018.

In August 2016, following the Company’s decision to further reduce its capital commitments and improve its liquidity, Polys Hajioannou submitted a proposal to the Company’s Board of Directors, pursuant to which companies controlled by Polys Hajioannou would (a) novate the contract of newbuild Hull No. 835 and (b) purchase Hull No. 1551 upon delivery from the shipyard. Upon receipt of this proposal, the Company’s Board of Directors formed a special committee consisting of the Company’s three independent directors in order to evaluate the proposal. The special committee was advised by an independent counsel, obtained two appraisals from independent third party brokers for each newbuild vessel and negotiated the terms of each transaction. The fair value of each vessel was based on the Company’s best estimate of the fair value of each vessel on a charter free basis, and was supported by vessel valuations obtained from independent third party shipbrokers.

The remaining commitments under the newbuild contracts for Hull No. 835 and Hull No. 1551 were $48,155 in the aggregate. The higher of the two appraisals obtained by the special committee from independent third party brokers was $21,500 for Hull No. 835 and $24,500 for Hull No. 1551, or $46,000 in the aggregate.

In September 2016, the special committee approved the novation of contract of Hull No. 835 and the sale of newbuild Hull No. 1551 upon delivery from the shipyard to companies controlled by Polys Hajioannou. The novation agreement for Hull No. 835 and the sale agreement for Hull No. 1551 were both signed in October 2016. The sale of Hull No. 1551 was consummated in January 2017, immediately upon delivery of the newbuild vessel from the shipyard.

The Commission due to the Managers pursuant to the Management Agreements arising from all above transactions were waived. No related party transactions in relation to the sale of vessels or the novation of newbuild contracts occurred during 2018.

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4. Vessels, Net

Vessels, net are comprised of the following:

	Vessel Cost			Accumulated Depreciation			Net Book Value
Balance, January 1, 2017		$1,324,800			$(286,081	)		$1,038,719
Transfer from Advances for vessels		67,504			—			67,504
Disposal		(20,630	)		—			(20,630	)
Impairment loss		(159,805	)		68,512			(91,293	)
Depreciation expense		—			(51,424	)		(51,424	)
Balance, December 31, 2017		$1,211,869			$(268,993	)		$942,876
Transfer from Advances for vessels		60,482			—			60,482
Depreciation expense		—			(48,067	)		(48,067	)
Balance, December 31, 2018		$1,272,351			$(317,060	)		$955,291

Transfer from Advances for vessels represents advances paid for vessels acquisitions, vessels under construction and vessel improvements 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, 2017: Pedhoulas Rose, Hull No. 1551 and Agios Spyridonas; and

· During the year ended December 31, 2018: Pedhoulas Cedrus (ex-Hull No. 1552) and Mount Troodos.

Disposal during the year ended December 31, 2017 relates to Hull No. 1551 (refer to Notes 3 and 17).

At December 31, 2017, the Company identified and recorded an impairment loss of $91,293 in relation to four of its vessels, for which the undiscounted net operating cash flows did not exceed each vessel’s carrying value. The impairment loss is presented under the caption “Impairment loss” in the consolidated statements of operations. Consistent with prior practices, we reviewed all our vessels for impairment and none were found to be impaired at December 31, 2018.

As of December 31, 2018, 39 vessels with a carrying value of $914,804 have been provided as collateral to secure the Company’s bank loans as discussed in Note 6.

5. Advances for Vessels

Advances for vessels are comprised of the following:

Balance, January 1, 2017	$13,007
Additions for advances, including capitalized expenses and interest	58,150
Transferred to vessel cost (refer to Note 4)	(67,504	)
Balance, December 31, 2017	3,653
Additions for advances, including capitalized expenses and interest	65,425
Transferred to vessel cost (refer to Note 4)	(60,482	)
Balance, December 31, 2018	$8,596

Advances paid for vessels represent advances paid for vessels acquisitions, vessels under construction and vessel improvements and comprise payments of installments that were due to the respective shipyard or third-party sellers, capitalized interest, certain capitalized expenses and expenditures for major improvements and regulatory compliance. During 2017 and 2018, such payments were made for the following vessels:

· During the year ended December 31, 2017 acquisition of the vessels: Pedhoulas Rose, Hull No. 1551, Pedhoulas Cedrus (ex-Hull No. 1552), Agios Spyridonas and costs relating to improvements of several vessels.

· During the year ended December 31, 2018 acquisition of the vessels: Pedhoulas Cedrus (ex-Hull No. 1552), Mount Troodos, Hull No. 1772 and improvements to several vessels.

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6. Bank Debt

Bank debt is comprised of the following secured borrowings:

	December 31,
Borrower	Commencement	Maturity	2017		2018
Maxdekatria	February 2016	July 2018		$9,167		$—
Glovertwo	February 2016	July 2018		12,833		—
Shikokutessera	February 2016	July 2018		14,667		—
Youngone	September 2015	August 2018		22,733		—
Petra	June 2015	December 2018		18,024		—
Pemer	June 2015	December 2018		18,024		—
Maxtessera	July 2014	November 2018		28,000		—
Shikokuokto	June 2015	December 2018		15,018		—
Safe Bulkers	November 2018	October 2021		—		30,000
Maxtessera	November 2018	October 2022		—		26,000
Maxdeka	August 2011	December 2022		17,044		13,635
Shikokupente	August 2018	August 2023		—		14,930
Shikoku	October 2011	August 2023		22,400		18,667
Shikokuennia	October 2018	October 2023		—		17,730
Petra	November 2018	November 2023		—		9,075
Pemer	November 2018	November 2023		—		9,075
Maxeikosiepta	December 2018	December 2023		—		5,000
Shikokuepta	February 2016	February 2024		22,050		20,417
Maxdekatria	July 2018	February 2024		—		11,750
Glovertwo	July 2018	February 2024		—		13,420
Shikokutessera	July 2018	February 2024		—		14,430
Pentakomo	July 2018	February 2024		—		11,750
Maxeikositria	September 2017	August 2024		12,968		11,930
Maxeikosi	September 2017	August 2024		12,968		11,930
Maxpente	September 2017	August 2024		20,000		17,400
Maxeikositessera	September 2017	August 2024		13,650		12,090
Maxenteka	September 2017	August 2024		15,925		14,332
Maxeikosiexi	September 2015	September 2024		6,063		5,248
Marathassa	September 2015	September 2024		6,545		5,690
Marinouki	September 2015	September 2024		9,904		8,590
Kerasies	September 2015	September 2024		6,918		6,014
Soffive	September 2015	September 2024		10,757		9,305
Eptaprohi	September 2015	September 2024		50,518		43,818
Safe Bulkers	November 2014	September 2024		160,527		118,925
Pelea – Vasstwo	December 2018	December 2024		—		20,075
Maxeikosiena	September 2015	September 2025		21,271		20,314
Gloversix – Shikokuokto	December 2018	December 2025		—		35,000
Youngtwo	January 2017	January 2027		23,817		23,039
Total				571,791		579,579
Current portion of Long-term debt				26,583		37,431
Long-term debt				545,208		542,148
Total debt				571,791		579,579
Current portion of deferred financing costs				995		1,246
Deferred financing costs non-current				3,392		3,640
Total deferred financing costs				4,387		4,886
Total debt				571,791		579,579
Less: Total deferred financing costs				4,387		4,886
Total debt, net of deferred financing costs				567,404		574,693
Less: Current portion of long-term debt, net of current portion of deferred financing costs				25,588		36,185
Long-term debt, net of deferred financing costs, non-current				$541,816		$538,508

Each of Maxeikosiena, Youngone and Youngtwo had entered into a sale and leaseback agreement with third party companies, subsidiaries of a financial institution, regarding the respective vessel owned by the relevant subsidiary. Under these agreements, each vessel was sold and leased back for a period of 10 years, on a net daily bareboat charter rate of $6.50, with a purchase obligation at the end of the 10^th year. Furthermore, each Subsidiary holds an option to purchase back the respective vessel after the second year of the bareboat charter, at annual intervals and predetermined purchase prices. In view of the obligation of the Subsidiaries to purchase the respective vessels at the end of the bareboat charter, the Company has assessed that this transaction be recorded as a financing transaction. During the year ended December 31, 2018, the Company exercised the option to purchase back the vessel owned by Youngone.

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The above loans and credit facilities bear interest at LIBOR plus a margin, except for each of Maxeikosiena and Youngtwo and for a portion of each of the Maxdeka and Shikoku loan facilities. Maxdeka and Shikoku have entered into loan facilities with government owned export credit institutions, each bearing 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. Each of the Maxeikosiena and Youngtwo loan facilities are deemed to incur interest at a fixed rate calculated so that the initial facility amount be amortized to maturity down to the purchase obligation price of each vessel. The above loans and credit facilities are generally repayable by quarterly principal installments and a balloon payment due on maturity, with the exception of the Maxdeka and Shikoku loan facilities, which are repaid by semi-annual principal installments without a balloon payment due on maturity, and the Maxeikosiena and Youngtwo loan facilities, that are repayable by principal installments every 45 days out of a portion of the bareboat hire payment and a balloon payment due on maturity equal to the purchase obligation. The fair value of debt outstanding on December 31, 2018 amounted to $577,517 when valuing the respective portions of the Maxdeka and Shikoku loan facilities on the basis of the CIRR as of December 2018 and of the Maxeikosiena, Youngone and Youngtwo loan facilities on the basis of the deemed equivalent fixed rate, as applicable on December 31, 2018, which are considered to be Level 2 items in accordance with the fair value hierarchy.

As of December 31, 2018, there was no amount available for drawdown under the above loan agreements. The estimated minimum annual principal payments required to be made after December 31, 2018, based on the loan and credit facility agreements as amended, are as follows:

To December 31,
2019	$37,431
2020	62,864
2021	81,516
2022	83,118
2023	72,280
2024 and thereafter	242,370
Total	$579,579

Total interest incurred on long-term debt for the years ended December 31, 2016, 2017 and 2018 amounted to $20,397, $23,266 and $25,713, respectively, which includes interest capitalized of $821, $42 and $0 for the years ended December 31, 2016, 2017 and 2018, respectively. The average interest rate (including the margin) for all bank loan and credit facilities during the years 2016, 2017 and 2018 was 3.290% p.a., 3.838% p.a. and 4.428% p.a., respectively.

As of December 31, 2018, the foregoing loan and credit facilities were secured as follows:

· First priority mortgages over the vessels owned by the respective borrowers;

· For one of the Safe Bulkers credit facilities, first priority mortgages over the vessels Andreas K, Pedhoulas Cherry, Pedhoulas Commander, Martine, Eleni, Kypros Bravery, Kypros Loyalty and Troodos Air;

· For the other Safe Bulkers credit facility, first priority mortgage over the vessel Maria and second priority mortgages over the vessels Kanaris, Efrossini, Venus Horizon, Pedhoulas Builder and Pedhoulas Fighter;

· First priority assignment of all insurances and earnings of the mortgaged vessels; and

· Corporate guarantee from Safe Bulkers in respect of facilities entered into by the Subsidiaries.

Loan and credit facility agreements contain debt covenants including restrictions as to changes in management and ownership of the vessels, entering into certain long-term charters, 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 “Minimum Value Covenant”). The Minimum Value Covenant must not fall below 120%. 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 or would occur as a result of the payment of such dividends.

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Certain of the loan and credit facility agreements require the respective borrowers to maintain at all times a minimum balance in each vessel operating account, from $150 to $1,000.

The corporate guarantees of the Company include the following financial covenants:

· its total consolidated liabilities divided by its total consolidated assets (based on the market value of all vessels owned or leased on a finance lease taking into account their employment, and the book value of all other assets), must not exceed 85% for credit facilities outstanding with commercial financing institutions and 80% for credit facilities outstanding with government owned export credit institutions (the “Consolidated Leverage Covenant”);

· its total consolidated assets (based on the market value of all vessels owned or leased on a finance lease taking into account their employment, and the book value of all other assets) less its total consolidated liabilities must not be less than $150,000 for credit facilities outstanding with government owned export credit institutions and for credit facilities outstanding with commercial financing institutions (the “Net Worth Covenant”);

· the ratio of its EBITDA over consolidated interest expense must not be less than 2.0:1, on a trailing 12 months’ basis, for credit facilities, outstanding with commercial financing institutions (the “EBITDA Covenant”);

· the ratio of its aggregate debt to EBITDA must not exceed 5.5:1 on a trailing 12 months’ basis, applicable as of June 30, 2020 (our next testing date) onwards for credit facilities outstanding with government owned export credit institutions;

· its consolidated debt must not exceed $580,000 on December 31, 2018, June 30, 2019 and December 31, 2019 for credit facilities outstanding with government owned export credit institutions;

· payment of dividends is subject to no event of default having occurred and be continuing or would occur as a result of the payment of such dividends; and

· a minimum of 30% or 35%, as the case may be, of its voting and ownership rights shall remain directly or indirectly beneficially owned by the Hajioannou family for the duration of the relevant credit facilities and, in the case of one facility, Polys Hajioannou beneficially holds a minimum of 20% of the voting and ownership rights.

The Minimum Value Covenant, Consolidated Leverage Covenant, EBITDA Covenant and Net Worth Covenant do not apply to the Shikokuepta loan facility, and the Minimum Value Covenant and EBITDA Covenant do not apply to the Maxeikosiena and Youngtwo financing agreements.

As of December 31, 2018, the Company was in compliance with all debt covenants in effect with respect to its loans and credit facilities.

7. Share Capital

As of December 31, 2017 and 2018, the Company had 200,000,000 authorized common stock of $0.001 par value, of which 101,526,708 and 103,005,748 were issued and outstanding respectively.

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 the Company’s board of directors out of funds legally available for dividends. Upon the Company’s dissolution or liquidation or the sale of all or substantially all of the Company’s 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 the common stock will be entitled to receive pro rata the remaining assets available for distribution. Holders of common stock do not have conversion, redemption or preemptive rights to subscribe to any of the Company’s securities. All outstanding shares of common stock are fully paid and non-assessable. The rights, preferences and privileges of holders of common stock are subject

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to the rights of the holders of any shares of preferred stock which may be issued. The Company’s 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 the Company’s shares in the future. There are no provisions in the Company’s articles of incorporation or bylaws discriminating against a shareholder because of his or her ownership of a particular number of shares.

As of December 31, 2017 and 2018, the Company had 20,000,000 authorized preferred stock of $0.01 par value; of which 379,514 and zero Series B Cumulative Redeemable Perpetual Preferred Shares (the “Series B Preferred Shares”), respectively, 2,300,000 and 2,300,000 Series C Cumulative Redeemable Perpetual Preferred Shares (the “Series C Preferred Shares”), respectively, 3,200,000 and 3,200,000 Series D Cumulative Redeemable Perpetual Preferred Shares (the “Series D Preferred Shares,” and, together with the Series B Preferred Shares and the Series C Preferred Shares, the “Preferred Shares”), respectively, were issued and outstanding respectively. In addition, 1,000,000 shares have been designated Series A Participating Preferred Stock in connection with our adoption of a shareholder rights plan.

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 the Company’s Preferred Shares are in arrears and certain other limited protective voting rights. The Company’s Preferred Shares are subordinate to all of existing and future indebtedness.

Common stock

In June 2016, the Company implemented a program for the repurchase of an amount of up to 2,000,000 shares of its common stock. As of December 31, 2017 and 2018, the Company had repurchased 113,076 shares of common stock under this repurchase program, which were held as treasury shares.

In December 2016, the Company successfully completed a public offering, whereby 15,640,000 shares of common stock were issued and sold at a price of $1.10 per share. An entity controlled by Polys Hajioannou purchased 2,727,272 shares of common stock in the public offering. The gross proceeds of the public offering were $17,204, net of underwriting discount of $710 and offering expenses of $379.

In November 2018, the Company issued to an unaffiliated third party 1,441,048 shares of common stock to pay the first installment of $3,300 for the purchase price of Hull No. S 1772.

In December 2018, the Company implemented a new program for the repurchase of an amount of up to 3,000,000 of its common stock. As of December 31, 2018, the Company had repurchased 345,012 shares of common stock under the repurchase program, which were held as treasury shares. An additional 1,332,182 shares of common stock were repurchased until February 5, 2019. All 1,790,270 repurchased shares of common stock have been subsequently cancelled in February 2019.

Pursuant to arrangements approved by the Company’s shareholders and the nominating and compensation committee, effective July 1, 2008, in respect of the audit committee chairman and effective January 1, 2010, in respect of the other independent directors of the Company, the audit committee chairman receives the equivalent of $15 every quarter, and the other independent directors each receive the equivalent of $7.50, all payable in arrears in the form of newly-issued Company common stock as part compensation for services rendered as audit committee chairman and independent directors, respectively. 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, 2016, 2017 and 2018, 62,717 shares, 31,286 shares and 18,996 shares, respectively, were issued to the audit committee chairman and 62,717 shares, 31,286 shares and 18,996 shares, respectively, were issued in aggregate to the two other independent directors of the Company.

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Preferred stock

In June 2013, the Company successfully completed a public offering, whereby 800,000 shares of Series B Preferred Shares were issued and sold at a price of $25.00 per share, and a private placement, whereby 800,000 shares of Series B Preferred Shares were issued and sold to an entity controlled by Polys Hajioannou, 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 paid 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, 2016, the Series B Preferred Shares could 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 failed to comply with certain covenants as these terms were defined in the applicable agreement, defaulted on any of its credit facilities, failed to pay four quarterly dividends payable in arrears or if the Series B Preferred Shares were not redeemed at the option of the Company, in whole by July 30, 2018, the dividend rate payable on the Series B Preferred Shares would increase 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 were not convertible into common stock and were not redeemable at the option of the holder.

In May 2014, the Company successfully completed a public offering, whereby 2,300,000 shares of Series C 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 stock 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 Series D 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 stock and are not redeemable at the option of the holder.

In December 2015, the Company implemented a program for the repurchase of an amount of up to $20,000 in aggregate of its Series B Preferred Shares, Series C Preferred Shares and Series D Preferred Shares. Under the statement of designation of the respective series of preferred shares, any such shares repurchased by the Company are cancelled. As of December 31, 2018, the Company had repurchased and cancelled 114,232 Series B Preferred Shares under this repurchase program.

In April 2017, the Company completed an exchange offer for its outstanding Series B Preferred Shares, which had commenced in March 2017. Holders who elected to exchange their Series B Preferred Shares in the exchange offer received, for each such Series B Preferred Share (i) $22.50 in cash and (ii) two newly issued shares of common stock of the Company. Pursuant to the exchange offer, a total of $1,106,254 Series B Preferred Shares were validly tendered and accepted by the Company. The Series B Preferred Shares validly tendered and accepted by the Company represented 74.46% of the 1,485,768 Series B Preferred Shares outstanding at the commencement of the exchange offer. The exchange offer resulted in a cash payment of $24,891 and the issuance of 2,212,508 shares of common stock to holders of validly tendered and accepted Series B Preferred Shares. The difference between (1) the fair value of the consideration transferred to the holders of the Series B Preferred Shares (comprising the fair value of the shares of common stock and the cash payment offered) and (2) the carrying amount of the Series B Preferred Shares before the modification or exchange (net of issuance costs) amounted to $2,146, and was recorded as preferred deemed dividend.

In February 2018, the Company redeemed all 379,514 outstanding Series B Preferred Shares, pursuant to a redemption notice it had issued in January 2018. The Series B Preferred Shares were redeemed at a redemption price of $25.00 per share, plus all accumulated and unpaid dividends to, but excluding the date of redemption (the

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“Redemption Price”). As a result of the completion of the Redemption, Series B Preferred Shares are no longer deemed outstanding and all rights of the holders of such Series B Preferred Shares have been terminated. Furthermore, the Series B Preferred Shares were delisted from trading on the New York Stock Exchange.

The payment due upon liquidation to holders of any series of the Company’s preferred shares is fixed at the redemption preference of $25.00 per share plus accumulated and unpaid dividends to the date of liquidation. The liquidation price of the Series C Preferred Shares and Series D Preferred Shares as of December 31, 2018 was $58,305 and $81,120, respectively.

8. Mezzanine equity

Mezzanine equity represents the USD equivalent of 100 shares of Series A Cumulative Redeemable Perpetual Preferred Stock (the “Series A Preferred Shares”) of our subsidiary Pinewood issued in June 2018 to an unaffiliated third party investor (the “Investor”) in the amount of JPY1,854,900,000 equivalent to $16,875, plus accrued dividend as of December 31, 2018 of JPY13,792,325 equivalent to $123. These shares were issued as part payment of the cost of the vessel Pedhoulas Cedrus owned by Pinewood.

Such shares have preference over shares of common stock of Pinewood with respect to distributions by, and liquidation of, Pinewood. The Series A Preferred Shares do not entitle the Investor to any voting rights (other than in limited circumstances in the case of certain events of default under the terms of their issuance), and they may be redeemed at the option of Pinewood at any time or at the option of the Investor upon the third anniversary of the issuance date. Such option to redeem the Series A Preferred Shares by the Investor meets the criteria for classification as mezzanine equity. The Investor is entitled to a dividend of 2.95% p.a. from the Series A Preferred Shares. The declaration of such dividend is subject to the discretion of Pinewood’s board of directors and dividends accrue and cumulate irrespective of such declaration. The Investor is entitled to nominate one director to the board of Pinewood, representing a minority of Pinewood’s board of directors.

The payment due upon liquidation to the Investor of Series A Preferred Shares is fixed at the redemption preference of JPY1,854,900,000 plus accumulated and unpaid dividends to the date of liquidation. The liquidation price of the Series A Preferred Shares as of December 31, 2018 was JPY1,868,692,325, equivalent to $16,984.

9. Commitments and Contingencies

(a) Capital expenditure commitments relating to our vessels and vessels under construction are as follows:

Year Ended December 31,	Due to Shipyards/Sellers	Due to Manager	Other Commitments	Total
2019	$6,600	$275	$22,475	$29,350
2020	22,935	605	1,753	25,293
2021	—	—	2,152	2,152
2022	—	—	360	360
Total	29,535	880	26,740	57,155

Other commitments represent contracted costs related to the purchase of ballast water treatment systems and sulfur oxide exhaust gas cleaning systems to be installed on a number of our vessels.

(b) Other contingent liabilities

The Company and its Subsidiaries have not been involved in any legal proceedings, 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.

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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.

10. Revenues

Revenues are comprised of the following:

	Year Ended December 31,
	2016	2017	2018
Time charter revenue	$108,487	$146,533	$191,977
Voyage charter revenue	—	1,095	1,113
Other income	5,472	6,412	8,458
Total	113,959	154,040	201,548

11. Vessel Operating Expenses

Vessel operating expenses are comprised of the following:

	Year Ended December 31,
	2016	2017	2018
Crew wages and related costs	$29,581	$30,948	$33,340
Insurance	3,452	3,148	3,163
Repairs, maintenance and drydocking costs	2,752	3,729	6,606
Spares, stores and provisions	7,015	9,345	13,855
Lubricants	3,754	3,220	3,901
Taxes	1,347	941	842
Miscellaneous	1,618	1,463	1,805
Total	$49,519	$52,794	$63,512

12. Fair Value of Financial Instruments and Derivatives Instruments

Cash and cash equivalents and restricted cash, 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 Company believes the terms of its loans are similar to those that could be procured as of December 31, 2018. The fair value of the long-term debt is disclosed in Note 6.

Derivative instruments

The Company, from time to time, may 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, 2017 and 2018, the Company had no outstanding derivative instruments relating to currency exchange contracts.

The Company enters, from time to time, 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’s interest rate swaps did not qualify for hedge accounting. The Company determines the fair market value of the interest rate swaps at the end of every period and accordingly records the resulting unrealized loss/gain during the period in the consolidated statement of operations. As of December 31, 2018 the Company had no outstanding derivative instruments relating to interest rate swaps. Information on the location and amounts of derivative fair values

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in the consolidated balance sheets and derivative gains/losses in the consolidated statements of operations are shown below:

Derivatives not designated as hedging instruments

		Asset Derivatives Fair Values		Liability Derivatives Fair Values
Type of Contract	Balance sheet location	December 31, 2017	December 31, 2018	December 31, 2017	December 31, 2018
Interest Rate	Derivative assets / Current assets	$62	$—	$—	$—
Interest Rate	Derivative liabilities / Current liabilities	—	—	2	—
	Total Derivatives	$62	$—	$2	$—

	Amount of (Loss)/Gain Recognized on Derivatives Year Ended December 31,
	2016		2017	2018
Interest Rate Contracts	$(620	)	$72	$18
Net (Loss)/Gain Recognized	$(620	)	$72	$18

The gain or loss is recognized in the consolidated statement of operations and is presented in Other (Expense)/Income – (Loss)/gain on derivatives.

The Company’s interest rate derivative instruments were 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, 2017 and 2018.

	Significant Other Observable Inputs (Level 2)
	2017	2018
Derivative instruments – asset position	$62	$—
Derivative instruments – liability position	2	—

As of December 31, 2017 and 2018, no fair value measurements for assets or liabilities under Level 3 were recognized in the Company’s consolidated balance sheets.

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, 2017 and 2018 are presented in the table below:

					Notional amount
Loan or Credit
Facility (1)	Inception	Expiry	Fixed Rate		December 31, 2017	December 31, 2018
Marindou	January 14, 2013	January 16, 2018	1.6000	%	$18,109	$—
Petra	January 18, 2013	January 18, 2018	0.9800	%	14,000	—
Pemer	June 7, 2013	March 7, 2018	0.9475	%	14,000	—
Avstes	July 18, 2013	April 18, 2018	1.3500	%	14,000	—
Shikoku	August 28, 2013	August 28, 2018	1.2500	%	11,200	—
Total					$71,309	$—

(1) Under the above swap transactions, the relevant bank effected quarterly floating-rate payments to the Company for the relevant amount based on the three-month USD LIBOR, and the Company effected quarterly payments to the bank on the relevant amount at the respective fixed rates.

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Asset Measured at Fair Value on a Non-Recurring Basis

The following tables summarize the valuation of assets measured at fair value on a non-recurring basis during the year ended December 31, 2017.

	Significant Other Observable Inputs (Level 2)	Loss
	December 31, 2017	December 31, 2017
M/V Panayiota K	$21,600	$29,892
M/V Efrossini	21,375	12,959
M/V Venus History	23,750	19,705
M/V Andreas K	20,450	28,737
Total	$87,175	$91,293

As a result of the impairment analysis performed for the year ended December 31, 2017, four of the Company’s vessels with a carrying amount of $178,468 were written down to their estimated fair value as of December 31, 2017 as determined by the Company based on vessel valuations for the vessels, obtained from independent third party shipbrokers, resulting in an impairment charge of $91,293. This impairment charge is presented in the accompanying consolidated statement of operations under the caption “Impairment loss” for the year ended December 31, 2017. No impairment charge was recorded and no assets were measured at fair value on a non-recurring basis for the year ended December 31, 2018.

13. Accrued Liabilities

Accrued liabilities are comprised of the following:

	December 31,
	2017	2018
Interest on long-term debt	$2,361	$4,225
Vessels’ operating and voyage expenses	1,009	1,808
Commissions	143	139
Interest on derivatives and other finance expenses	65	566
General and administrative expenses	88	145
Total	$3,666	$6,883

14. 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, 2018, is as follows:

December 31,
2019	$89,240
2020	31,151
2021	31,293
2022	19,405
2023	17,805
Thereafter	69,517
Total	$258,411

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 has been deducted, although such estimate may not be reflective of the actual off-hire in the future.

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15. General and Administrative Expenses

General and administrative expenses include management fees payable to our Managers and costs in relation to the administration of our company. General and administrative expenses for the years ended December 31, 2016, 2017 and 2018 were as follows:

	December 31,
	2016	2017	2018
Management fees – related parties	$11,611	$13,511	$16,536
Professional fees (legal and accounting)	528	687	833
Compensation for Directors and Officers	1,907	468	477
Listing fees and expenses	107	96	115
Miscellaneous	1,228	1,356	1,281
Total	$15,381	$16,118	$19,242

16. 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,
	2017	2018
Unearned Revenue
Cash received in advance of service provided – Current liability	$3,540	$4,925
Deferred revenue resulting from varying charter rates – Current liability	—	484
Deferred revenue resulting from varying charter rates – Non-Current liability	—	253
Total Unearned Revenue	3,540	5,662
Accrued Revenue
Resulting from revenue earned prior to cash being received – Current asset	2,029	475
Resulting from varying charter rates – Non-Current asset	831	614
Total Accrued Revenue	2,860	1,089

17. Loss on Sale of Assets

During March 2016, the Company concluded the sale of the vessels Stalo and Kypros Unity to companies controlled by Polys Hajioannou for an aggregate gross consideration of $29,000 in cash, realizing a net loss of $2,750. During January 2017, the Company concluded the sale of the Hull No. 1551 to a company controlled by Polys Hajioannou for an aggregate gross consideration of $20,510 in cash, realizing a net loss of $120. There was no sale of assets for the period ended December 31, 2018.

18. Dividends

During 2017, the Company declared and paid four quarterly consecutive dividends of $0.50 per share of Series B Preferred Shares, totaling $1,316, of Series C Preferred Shares, totaling $4,600 and of Series D Preferred Shares, totaling $6,400.

During 2018, the Company declared and paid one quarterly dividend of $0.50 per share and one final portion dividend of $0.11667 per share of Series B Preferred Shares, totaling $234, and four quarterly consecutive dividends of $0.50 per share of Series C Preferred Shares, totaling $4,600, and of Series D Preferred Shares, totaling $6,400.

During 2018, the Company’s subsidiary Pinewood declared and paid preferred dividends totaling JPY17,090,489.00 equivalent to $153 comprising of its first dividend of JPY32,981.64 per share equivalent to $298.52 per share for the period June 8, 2018 to June 30, 2018, followed by one dividend of JPY137,923.25 per share equivalent to $1,231.37 per share of Series A Preferred Shares for the quarter ended September 30, 2018. In addition

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during 2018, Pinewood declared a dividend of JPY137,923.25 per share equivalent to $1,226.52 per share of Series A Preferred Shares totaling JPY13,792,325.00 equivalent to $123 for the quarter ended December 31, 2018, presented under the caption “Mezzanine Equity” in the consolidated balance sheets, which was paid in January 2019.

19. (Loss)/earnings Per Share

Diluted (loss)/earnings per share is the same as basic (loss)/earnings per share. There are no other potentially dilutive shares. The computation of basic (loss)/earnings per share is presented as follows:

	December 31,
	2016		2017		2018
Net (loss)/income	$(55,966	)	$(84,679	)	$27,684
Less preferred dividend paid and accrued	14,025		12,316		11,384
Less preferred deemed dividend	—		2,146		—
Net (loss)/income available to common shareholders	(69,991	)	(99,141	)	16,300
Weighted average number of shares, basic and diluted	84,526,411		100,932,876		101,604,339
(Loss)/earnings per share in U.S. Dollars, basic and diluted	(0.83	)	(0.98	)	0.16

20. Subsequent Events

(a) Dividend declaration: On January 11, 2019, the Board of Directors declared a dividend of $0.50 per all classes of preferred shares, totaling $2,750, payable to all shareholders of record as of January 23, 2019, which was paid on January 30, 2019.

F-27

EX-4.1

Exhibit 4.1

SAFE BULKERS, INC.

- and -

SAFETY MANAGEMENT OVERSEAS S.A.

MANAGEMENT AGREEMENT

TABLE OF CONTENTS

ARTICLE I INTERPRETATION	1
ARTICLE II APPOINTMENT	6
ARTICLE III THE PARENT’S GENERAL OBLIGATIONS	7
ARTICLE IV THE MANAGER’S GENERAL OBLIGATIONS	8
ARTICLE V ADMINISTRATIVE SERVICES	10
ARTICLE VI COMMERCIAL SERVICES	12
ARTICLE VII INSURANCE	13
ARTICLE VIII AVAILABILITY OF OFFICERS	13
ARTICLE IX MANAGEMENT FEES AND EXPENSES	14
ARTICLE X BUDGETS, CORPORATE PLANNING AND EXPENSES	16
ARTICLE XI LIABILITY AND INDEMNITY	17
ARTICLE XII RIGHTS OF THE MANAGER, RESTRICTIONS ON THE MANAGER’S AUTHORITY, AND NON-COMPETE PROVISIONS	19
ARTICLE XIII TERMINATION OF THIS AGREEMENT	20
ARTICLE XIV CHANGE IN CONTROL OF THE MANAGER AND RIGHT OF FIRST OFFER	23
ARTICLE XV NOTICES	25
ARTICLE XVI APPLICABLE LAW	25
ARTICLE XVII ARBITRATION	26
ARTICLE XVIII MISCELLANEOUS	27

APPENDIX I	Form of Hajioannou Entities Restrictive Covenant Agreement
APPENDIX II	Form of Polys Hajioannou Restrictive Covenant Agreement
APPENDIX III	Form of Shipmanagement Agreement
APPENDIX IV	Form of Supervision Agreement

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THIS MANAGEMENT AGREEMENT (this “Agreement”) is made on the 29 day of May, 2018 (the “Effective Date”),

BY AND BETWEEN:

(1)     SAFE BULKERS, INC., a company organized and existing under the laws of the Republic of the Marshall Islands (the “Parent”); and

(2)     SAFETY MANAGEMENT OVERSEAS S.A., a company organized and existing under the laws of the Republic of Panama (the “Manager”).

WHEREAS:

(A)     The Original Agreement is scheduled to terminate on its terms at the end of the day on May 28, 2018.

(B)     The Parent directly or indirectly wholly owns or will wholly own (i) the corporations identified on Schedule A hereto, as such Schedule A may be amended from time to time (the “Shipowning Subsidiaries”), each of which owns or charters in or will own or charter in one or more Drybulk Vessels (as defined below) (the “Vessels”) and (ii) the corporations identified on Schedule B hereto, as such Schedule B may be amended from time to time (together with the Shipowning Subsidiaries, the “Subsidiaries”).

(C)     The Manager has the benefit of expertise in the technical and commercial management of Drybulk Vessels and administration of shipowning companies generally.

(D)     The Parent and the Manager desire to enter into and adopt this Agreement, pursuant to which the Manager shall represent the Group (as defined below) in its dealings with third parties and provide either directly or through a Submanager (as defined below) technical, commercial, administrative and certain other services to the Group as specified herein in connection with the management and administration of the business of the Group, in each case, to the extent the Parent elects to have the Manager provide such services.

NOW, THEREFORE, THE PARTIES HEREBY AGREE:

Article I

INTERPRETATION

Section 1.1     In this Agreement, unless the context otherwise requires:

“Affirmative Response” shall have the meaning set forth in Section 14.4(b).

“Affiliates” means, with respect to any Person as at any particular date, any other Persons that directly or indirectly, through one or more intermediaries, are Controlled by, Control or are under common Control with the Person in question, and “Affiliate” means any one of them.

“Agreement” shall have the meaning set forth in the preamble.

“Approved Budget” shall have the meaning set forth in Section 10.3.

“Board of Directors” means the board of directors of the Parent as the same may be constituted from time to time.

“Business Days” means a day (excluding Saturdays and Sundays) on which banks are open for business in Athens, Greece; Cyprus; and New York, New York.

“Change in Control of the Parent” means the occurrence of any of the following events: (a) if any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act or any successor provisions to either of the foregoing), including any group acting for the purpose of acquiring, holding, voting or disposing of securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act (other than one or more Hajioannou Entities) (collectively, an “Acquiring Person”), becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 40% or more of the total voting power of the outstanding voting securities of the Parent, and such percentage represents a higher percentage of such voting power than the Hajioannou Entities, collectively; or (b) the approval by the shareholders of the Parent of a proposed merger, consolidation, recapitalization or similar transaction, as a result of which any Acquiring Person becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 40% or more of the total voting power of the outstanding voting securities of the resulting entity following such transaction, and such percentage represents a higher percentage of such voting power than the Hajioannou Entities, collectively; or (c) a change in directors after which at least one of the members of the Board of Directors is not a Continuing Director (as defined below). For purposes of this definition, such person or group shall be deemed to beneficially own any outstanding voting securities of a corporation held by any other corporation (the “parent corporation”) so long as such person or group beneficially owns, directly or indirectly, in the aggregate a majority of the total voting power of the outstanding voting securities of such parent corporation.

“Control” or “Controlled” means, with respect to any Person, the right to elect or appoint, directly or indirectly, a majority of the directors of such Person or a majority of the Persons who have the right, including any contractual right, to manage and direct the business, affairs and operations of such Person, or the possession of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract, or otherwise.

“Consent of the Parent” means the prior written consent of a majority of the Independent Directors of the Parent.

“Continuing Directors” means, as of any date of determination, any member of the Board of Directors who (i) was a member of the Board of Directors immediately after the Effective Date, or (ii) was nominated for election or elected to the Board of Directors with the approval of a majority of the directors then still in office who were either directors immediately after the Effective Date or whose nomination or election was previously so approved.

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“Crew” shall have the meaning set forth in clause 1 of each Shipmanagement Agreement.

“Draft Budget” shall have the meaning set forth in Section 10.1.

“Drybulk Vessel” means any ocean-going vessel (including any Newbuild) that is intended to be used primarily to transport non-liquid cargoes of commodities shipped in an unpackaged state.

“Drybulk Vessel Business” means any business involved in the ownership or operation of Drybulk Vessels.

“Effective Date” shall have the meaning set forth in the preamble.

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

“Executive Officers” means the Chief Executive Officer, the President, the Chief Operating Officer and the Chief Financial Officer of the Parent, and/or such other officers that may be agreed by the parties hereto after the date of this Agreement from time to time.

“First Offer Notice” shall have the meaning set forth in Section 14.4(a).

“First Offer Period” shall have the meaning set forth in Section 14.4(b).

“Force Majeure” shall have the meaning set forth in Section 11.1.

“Group” means, at any time, the Parent and the Subsidiaries at such time taking into account the Schedule A and Schedule B in effect at such time and “member of the Group” shall be construed accordingly.

“Hajioannou Entities” means Polys Hajioannou, Vorini Holdings Inc. and Machairiotissa Holdings Inc. and any entity controlled by, or under common control with, any such individual or entity or any trust established for the benefit thereof.

“Hajioannou Restrictive Covenant Agreement” means the Second Amended and Restated Restrictive Covenant Agreement, dated as of August 2, 2017, among Polys Hajioannou, Vorini Holdings Inc., Machairiotissa Holdings Inc. and the Parent.

“Independent Directors” means those members of the Board of Directors that qualify as independent directors within the meaning of Rule 10A-3 promulgated under the Exchange Act and the rules adopted thereunder and the listing criteria of the New York Stock Exchange.

“Initial Term” shall have the meaning set forth in Section 13.1.

“Machairiotissa” means Machairiotissa Holdings Inc., a company organized and existing under the laws of the Republic of the Marshall Islands.

“Management Fee” shall have the meaning set forth in Section 9.1.

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“Management Services” shall have, in relation to a Vessel, the meaning set forth in clause 1 of the Shipmanagement Agreement applicable to such Vessel.

“Manager” shall have the meaning set forth in the preamble.

“Manager Substitution” shall have the meaning set forth in Section 2.6.

“Manager Competitive Activities” shall have the meaning set forth in Section 12.4(a).

“Manager Related Parties” shall have the meaning set forth in Section 11.2.

“Manager Restricted Period” shall have the meaning set forth in Section 12.4(a).

“Negative Response” shall have the meaning set forth in Section 14.4(b).

“Newbuild” means a new vessel to be or which has just been constructed, or is under construction, which a member of the Group has agreed to acquire pursuant to a shipbuilding contract, memorandum of agreement or otherwise.

“Original Agreement” means the Management Agreement between the Parent and the Manager, dated May 29, 2008, as amended by that certain Amendment No. 1 to Management Agreement, dated December 7, 2011, that certain Amendment No. 2 to Management Agreement, dated July 29, 2013, that certain Amendment No. 3 to Management Agreement, dated February 25, 2014, that certain Amended and Restated Management Agreement, dated May 29, 2015, and that certain Second Amended and Restated Management Agreement, dated August 2, 2017.

“Other Management Agreement” means the Management Agreement between the Parent and the Other Manager, dated as of the date hereof.

“Other Manager” means Safe Bulkers Management Limited, a Cypriot private limited company.

“Other Restrictive Covenant Agreement” means the Second Amended and Restated Restrictive Covenant Agreement, dated August 2, 2017, between the Parent and Polys Hajioannou.

“Parent” shall have the meaning set forth in the preamble.

“Person” means an individual, corporation, limited liability company, partnership, joint venture, trust or trustee, unincorporated organization, association, governmental authority or other entity.

“Proposed Change in Control of the Manager” means:

(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

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the Manager necessary for the performance of its services under this Agreement; or

(b) the approval of any transaction that would result in:

(i) the Hajioannou Entities beneficially owning, directly or indirectly, less than 60% of the outstanding voting securities or voting power of the Manager or Machairiotissa, respectively; or

(ii) the Hajioannou Entities 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, respectively.

For purposes of this definition, the term Hajioannou Entities shall exclude reference to Machairiotissa.

“Questioned Items” shall have the meaning set forth in Section 10.2.

“Services” shall have the meaning set forth in Section 2.3.

“Shipmanagement Agreement” shall have the meaning set forth in Section 3.2.

“Shipowning Subsidiaries” shall have the meaning set forth in the recitals.

“Submanager” shall have the meaning set forth in Section 2.4.

“Subsequent Term” shall have the meaning set forth in Section 13.1.

“Subsidiaries” shall have the meaning set forth in the recitals.

“Supervision Agreement” shall have the meaning set forth in Section 3.3.

“Term” shall have the meaning set forth in Section 13.1.

“Termination Fee” means an amount in cash equal to the Management Fees paid or payable to the Manager and the other Manager, in the aggregate, during the 36 months preceding the applicable termination.

“Termination Notice” shall have the meaning set forth in Section 13.1.

“Third Term Termination Notice” shall have the meaning set forth in Section 13.2(c).

“Vessels” shall have the meaning set forth in the recitals.

“Willful and Material Breach” means a material breach of this Agreement, as determined by a final, non-appealable judgment of a court or independent tribunal of competent jurisdiction, that is a consequence of a deliberate act undertaken by the breaching party, with

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knowledge that the taking of such act would cause a breach of this Agreement, and which act has subjected the Company and its Subsidiaries, taken as a whole, to uninsured liability, individually or in the aggregate, in an amount in excess of $100,000,000.

Section 1.2     This Agreement shall become automatically effective without any further action on the Effective Date, immediately following expiration of the Original Agreement.

Section 1.3     The headings of this Agreement are for ease of reference and do not limit or otherwise affect the meaning hereof.

Section 1.4     All the terms of this Agreement, whether so expressed or not, shall be binding upon the parties hereto and their respective successors and assigns.

Section 1.5     In the event of any conflict between this Agreement, any Shipmanagement Agreement or any Supervision Agreement, the provisions of this Agreement shall prevail.

Section 1.6     Unless otherwise specified, all references to money refer to the legal currency of the United States of America.

Section 1.7     Unless the context otherwise requires, words in the singular include the plural and vice versa.

Article II

APPOINTMENT

Section 2.1     As of the date hereof, the Manager is hereby appointed as the manager of each member of the Group listed in Schedule C. To the extent the Manager acts as a manager in respect of a member of the Group, the Manager is hereby appointed by the Parent as the administrative manager of the Group and the Manager hereby accepts any such appointment on the terms and conditions of this Agreement. Either the Manager or the Other Manager (in the sole discretion of the Manager and the Other Manager) shall act as the manager of each member of the Group.

Section 2.2     To the extent the Manager acts as manager in respect of a member of the Group, the Manager shall be appointed by (a) such Shipowning Subsidiary pursuant to the provisions of Section 3.2 hereof as the technical and commercial manager of each such Shipowning Subsidiary’s Vessel on the terms and conditions of the relevant Shipmanagement Agreement and this Agreement and (b) such member of the Group acquiring a Newbuild, as the supervisor of the construction thereof on the terms and conditions of the relevant Supervision Agreement and this Agreement.

Section 2.3     To the extent the Manager acts as manager in respect of a member of the Group, the Manager undertakes to use its best endeavors to provide:

(a)     the services specified in Articles V, VI, VII and VIII of this Agreement;

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(b)     the services specified in each Supervision Agreement; and

(c)     the Management Services in respect of each Vessel specified in each Shipmanagement Agreement (the services to be provided under Sections 2.3(a), 2.3(b) and 2.3(c) collectively the “Services”).

Section 2.4     The Manager may upon notice to the Parent appoint any Person (a “Submanager”) at any time throughout the duration of this Agreement to discharge any of the Manager’s duties under this Agreement; provided that if such Person is not an Affiliate of the Manager, the Manager shall obtain the Consent of the Parent prior to such appointment (such Consent of the Parent not to be unreasonably withheld or delayed).

Section 2.5     The Manager’s power to delegate performance of any provision of this Agreement hereunder is without prejudice to the Manager’s liability to the Parent to perform this Agreement with the intention that the Manager shall remain responsible to the Parent for the due and timely performance of all duties and responsibilities of the Manager hereunder; provided, however, that to the extent that any Submanager has performed any such duty, the Manager shall not be under any obligation to perform again the same duty.

Section 2.6     The Manager and the Other Manager may mutually elect at any time to replace the Manager with the Other Manager in respect of any or all members of the Group for services provided hereunder (any such replacement, a “Manager Substitution”). The Parent and the Manager shall reasonably cooperate with each other to facilitate the transfer of such services (including the transfer of any prepaid costs to the Other Manager) without disruption to the business of the Group or the Manager or the incurrence of any additional costs or expenses to the Group or the Manager. A Manager Substitution shall not result in an increase to, or duplication of, the aggregate management fees payable to the Manager and the Other Manager. Upon a Manager Substitution, Schedule C shall automatically be updated to reflect such Manager Substitution and the Other Management Agreement shall govern the management services to be provided to the applicable member of the Group by the Other Manager.

Article III

THE PARENT’S GENERAL OBLIGATIONS

Section 3.1     The Parent shall notify the Manager as soon as possible of any purchase of any vessel (whether the same is a second-hand vessel or a Newbuild), the delivery of any Newbuild from the relevant builder or intermediate seller to the relevant member of the Group to take ownership of such Newbuild, the agreement to acquire any Newbuild, the sale of any vessels, Newbuilds or Subsidiaries, the purchase or creation of any direct or indirect subsidiary of the Parent or the sale or divestiture of any Subsidiary, and Schedule A and Schedule B hereto, as applicable, shall be automatically amended to be reflective of any such development. Such amended Schedule A or Schedule B shall be effective on any such day as mutually agreed by the Parent and the Manager. To the extent any member of the Group comes into possession of a Vessel or agrees to acquire a Newbuild, the Manager and the Other Manager shall inform the Parent as to whether the Manager or the Other Manager shall be appointed the manager in respect of such Vessel or Newbuild.

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Section 3.2     For each Vessel for which the Manager is appointed manager, the Parent shall cause the Shipowning Subsidiary that owns such Vessel to enter with the Manager into a contract substantially in the form attached hereto as Appendix III (each a “Shipmanagement Agreement” and, collectively, the “Shipmanagement Agreements”), with such alterations and additions as are agreed by the Manager and such Shipowning Subsidiary to be appropriate; provided that any alterations or additions which materially vary from such form shall require the approval of the Board of Directors. In the event of a Manager Substitution in respect of a Vessel, Parent shall cause the applicable Shipowning Subsidiary to enter into a Shipmanagement Agreement with the Other Manager.

Section 3.3     To the extent the Manager acts as manager in respect of a Newbuild, for each Newbuild the Parent shall, or shall procure that the relevant member of the Group that owns or has agreed to acquire such Newbuild shall, enter with the Manager into a contract substantially in the form attached hereto as Appendix IV (each a “Supervision Agreement” and, collectively, the “Supervision Agreements”), with such alterations and additions as are agreed by the Manager and such member of the Group to be appropriate, having regard to the terms and conditions of the particular shipbuilding contract, memorandum of agreement or other agreement relating to the acquisition of the relevant Newbuild; provided that any alterations or additions which materially vary from such form shall require the approval of the Board of Directors. In the event of a Manager Substitution in respect of a Newbuild, Parent shall cause the applicable member of the Group to enter into a Supervision Agreement with the Other Manager.

Section 3.4     The Parent shall pay, or shall cause another member of the Group to pay, all sums due to the Manager punctually in accordance with the terms of this Agreement, any Shipmanagement Agreement and/or any Supervision Agreement.

Section 3.5     The Parent shall procure that each other member of the Group (a) performs its obligations under any Shipmanagement Agreement or any Supervision Agreement to which it is a party and (b) does not take any action or omits to take any action the effect of which is to cause the Parent or the Manager or any Submanager to be in breach of this Agreement, any Shipmanagement Agreement and/or any Supervision Agreement.

Article IV

THE MANAGER’S GENERAL OBLIGATIONS

Section 4.1     In the exercise of its duties hereunder, the Manager shall act fully in accordance with the reasonable policies, guidelines and instructions from time to time communicated to it in writing by any member of the Group, exercising skill and diligence to carry out its duties under this Agreement according to sound technical and commercial shipmanagement standards.

Section 4.2     The Manager shall act and do all and/or any of the following acts or things described in this Agreement and the relevant Shipmanagement Agreement or, as the case may be, Supervision Agreement applicable to each Vessel in the name and/or on behalf of the Parent and/or, as the context may require, the relevant Subsidiary.

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Section 4.3     The Manager acknowledges that the services it will provide pursuant to the Shipmanagement Agreements and the Supervision Agreements are not limited to the services described in such agreements and include those set forth in this Agreement.

Section 4.4     The Manager shall ensure that all material property of any member of the Group is clearly identified as such, held separately from the property of the Manager and, where applicable, held in safe custody.

Section 4.5     The Manager shall ensure that adequate manpower is employed by it to perform its obligations under this Agreement; provided, however, that the Manager, in the performance of its responsibilities under this Agreement, shall be entitled to have regard to its overall responsibilities in relation to the management of its clients and in particular, without prejudice to the generality of the foregoing, the Manager shall be entitled to allocate available resources and services in such manner as in the prevailing circumstances the Manager considers to be fair and reasonable.

Section 4.6     Notwithstanding anything to the contrary contained in this Agreement, any Shipmanagement Agreement or any Supervision Agreement, the Manager agrees that any and all decisions of a material nature relating to the Parent, any Subsidiary, or any Vessel shall be reserved to the Parent, such decisions including, but not being limited to:

(a)     the purchase and/or sale of shares in any entity or other assets of a material nature;

(b)     the purchase or formation of subsidiaries;

(c)     the entry into guarantees or loans or other forms of financing and any and all financial undertakings and commitments connected therewith;

(d)     the entry into and/or termination or amendment of any contractual relationships between any member of the Group and a third party or another member of the Group; and

(e)     the presentation, negotiation, settlement, prosecution or defense of any claim, demand or petition for an amount exceeding $100,000 or its equivalent.

Section 4.7     During the Term, the Manager shall promote the business of the Group in accordance with the directions of the authorized representative of the respective member of the Group and shall at all times use its best efforts to conform to and comply with the lawful and reasonable directions, regulations or recommendations made by such authorized representative, and in the absence of any specific directions or recommendations as aforesaid and, subject to the terms and conditions of this Agreement, shall provide general administrative and advisory services in connection with the management of the business of the Group.

Section 4.8     The Manager, in the performance of its responsibilities under this Agreement, any Supervision Agreement or any Shipmanagement Agreement, shall ensure that any purchases of products or services from any of its affiliates or any other related entity

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shall be on terms no less favorable to the Manager than the market prices for products or services that the Manager could obtain on an arm’s-length basis from unrelated third parties.

Section 4.9     During the term hereof, the Manager agrees that, except as provided in Section 12.4(b), it will provide the services in this Agreement to the Group on an exclusive basis and, without receiving the Consent of the Parent, it will not provide any Services or other services contemplated herein to any entity other than the Parent, as applicable, and each Subsidiary.

Section 4.10     If a Vessel and a Drybulk Vessel directly or indirectly owned or operated by any of the Hajioannou Entities (other than through the Parent or to the extent that such Hajioannou Entity is no longer subject to a Restrictive Covenant Agreement) are both available and meet the criteria for a charter being fixed by the Manager, then the Vessel shall receive such charter. For the avoidance of doubt, this Section 4.10 shall apply only to Drybulk Vessels owned or operated, directly or indirectly, by any Hajioannou Entity that is under the commercial management of the Manager, and shall not apply to any Drybulk Vessel owned or operated, directly or indirectly, by any Hajioannou Entity that is not under the commercial management of the Manager.

Section 4.11     The Manager shall at all times maintain and keep true and correct accounts as regards the Services and shall make the same available for inspection and auditing by the Parent at such times as may be mutually agreed by the Manager, on the one hand, and the Parent, on the other hand.

Article V

ADMINISTRATIVE SERVICES

Section 5.1     To the extent the Manager acts as manager of a member of the Group, the Manager shall provide certain general administrative services to such member of the Group, including, but not limited to, the following:

(a)     keeping all books and records of things done and transactions performed on behalf of any member of the Group as it may require from time to time, including, but not limited to, liaising with accountants, lawyers and other professional advisors;

(b)     except as otherwise contemplated herein, representing any member of the Group generally in its dealings and relations with third parties;

(c)     maintaining the general ledgers of the Group, reconciliation of the Group’s bank accounts, preparation of periodic financial statements, including, but not limited to, those required for governmental and regulatory or self-regulatory agency filings and reports to shareholders, arranging for the audit of any such financial statements and the provision of related data processing services;

(d)     providing assistance in the preparation of periodic and other reports, proxy statements, registration statements and other documents and reports required by applicable law

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or the rules of any securities exchange or inter-dealer quotation system on which the securities of the Parent or any member of the Group may be listed or quoted;

(e)     preparing and providing all tax returns required by any law or regulatory authority and developing, maintaining and monitoring internal audit controls, disclosure controls and information technology for the Group;

(f)     appointing lawyers, at the Parent’s cost, for providing all legal services to ensure that each member of the Group is in compliance with all applicable laws, including all relevant securities laws, and owns or possesses all licenses, patents, copyrights and trademarks which are necessary and used in the operation of its business;

(g)     appointing lawyers, at the Parent’s cost, for providing for the presentation, negotiation, settlement, prosecution or defense of any claim, demand or petition on behalf of any member of the Group arising in connection with the business of any member of the Group for an amount not exceeding $100,000 or its equivalent, including the pursuit by any member of the Group of any rights of indemnification or reimbursement;

(h)     providing advice to the Group with respect to financing, including entering into negotiations with banks or other financial institutions for the purpose of arranging financing for the Parent and its Subsidiaries and the monitoring and administration of compliance with any applicable financing terms and conditions in effect with investors, banks or other financial institutions;

(i)     assisting with arranging board meetings, director accommodation and travel for board meetings and preparing meeting materials and detailed papers and agendas for scheduled meetings of the Board of Directors or the board of directors of any other member of the Group (and any and all committees thereof) that, where applicable, contain such information as is reasonably available to the Manager to enable the Board of Directors or such other board of directors (and any such committees) to base their opinion;

(j)     preparing or causing to be prepared reports to be considered by the Board of Directors (or any applicable committee thereof) in accordance with the Parent’s internal policies and procedures on any acquisition, investment or sale of any part of the business;

(k)     providing or arranging for all services necessary to the engagement, employment and compensation of all employees, officers, consultants and directors of any member of the Group, including, without limitation, (i) administering payroll services, benefits and director’s or consultant’s fees, (ii) establishing and maintaining procedures and systems to comply with tax, labor and employment and worker’s compensation laws, rules and regulations applicable to any member of the Group and (iii) administering compensation and benefit programs of any member of the Group;

(l)     at the request of the Parent, negotiating and arranging for cash management services, financing and hedging arrangements relating to interest rates, currency exchange rates and commodity prices;

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(m)     handling general and administrative expenses of the Parent, which are related to its operation as public company and, upon being provided by the Parent with funds in accordance with the terms of Article X of this Agreement, arranging for the payment of the same;

(n)     appointing lawyers, at the Parent’s cost, for handling all administrative and clerical matters in respect of (i) the calling and arrangement of all annual and/or special meetings of shareholders of the Parent, (ii) the preparation of all materials (including notices of meetings and information circulars) in respect thereof and (iii) the submission of all such materials to the Parent in sufficient time prior to the dates upon which they must be mailed, filed or otherwise relied upon so that the Parent has full opportunity to review, approve, execute and return them to the Manager for filing or mailing or other disposition as the Parent may require or direct;

(o)     providing, at the request and under the direction of the Parent, such communications to the transfer agent for the Parent as may be necessary or desirable; and

(p)     providing any such other administrative services as the Parent, the authorized Executive Officers or any other representative of the Parent may request and the Manager may agree to provide from time to time.

Article VI

COMMERCIAL SERVICES

Section 6.1     To the extent the Manager acts as manager of any member of the Group, the Manager shall provide the following commercial services to such member of the Group:

(a)     performing class records review and physical inspections in connection with any vessel to be purchased by a member of the Group;

(b)     at the request and under the direction of the Parent, providing administrative services in connection with the purchase of a second-hand vessel or the acquisition or sale of a Newbuild, in either case by any member of the Group, including, if specifically instructed by the Parent in writing, signing any agreed form of memorandum of agreement, shipbuilding contract or other similar contract for and on behalf of the relevant member of the Group; and

(c)     at the request of the Parent, providing certain services in connection with a member of the Group taking physical delivery of a Vessel or registering a Vessel or deleting a Vessel from the applicable port of registry on behalf of the relevant member of the Group.

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Article VII

INSURANCE

Section 7.1     To the extent the Manager acts as manager of any member of the Group, in addition to any duties of the Manager to insure the Vessels as provided in clause 3.4 of each Shipmanagement Agreement, the Manager shall:

(a)     arrange either directly or, through insurance brokers appointed by the Manager, to effect Director’s & Officers Liability insurance for the Board of Directors and Executive Officers with such insurance companies, at such rates and otherwise on such other terms as the Parent shall have instructed and/or agreed upon;

(b)     on request, provide the Parent with a copy of any insurance claims and any reports prepared by the relevant insurers; and

(c)     subject to having been provided with funds by the Parent in accordance with Article X ensure that all premiums on the Parent’s D&O insurance are paid in a timely fashion.

Article VIII

AVAILABILITY OF OFFICERS

Section 8.1     The Manager shall provide the Group with the services of those Executive Officers from time to time agreed with the Parent.

Section 8.2     The Executive Officers are entitled to direct the Manager to remove and replace any individual made available to any member of the Group by the Manager serving as an officer or any senior manager serving as head of a business unit, in either case, of that member of the Group other than any Executive Officer, from such position. The Board of Directors, in its sole discretion, shall be entitled to direct the Manager to remove any individual made available to the Parent by the Manager serving as an Executive Officer from such position and to appoint such other individual to serve as successor as the Board of Directors shall approve. Furthermore, the Manager agrees that it will not remove any individual made available to any member of the Group by the Manager serving as an officer or senior manager of that member of the Group from his or her position without the consent of the Executive Officers and, in the case of any Executive Officer, the Board of Directors. If any officer or senior manager who is made available to the Parent by the Manager resigns, is terminated or otherwise vacates his or her office, the Manager shall, as soon as practicable after acceptance of any resignation or after termination, use reasonable best efforts to identify suitable candidates for replacement of such officer.

Section 8.3     The Parent may employ directly, at its sole cost, any other officers, senior managers or employees as it may deem necessary, and such individuals will not be subject to this Agreement.

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Section 8.4     The Manager will report to the Parent and the Board of Directors through any one of more of the Executive Officers who are made available to the Parent by the Manager or by the Chief Executive Officer of the Manager.

Article IX

MANAGEMENT FEES AND EXPENSES

Section 9.1     In consideration of the Manager providing the Services to the Group, during the current Term (which shall begin on May 29, 2018), the Parent shall pay the Manager ship management fees comprised of: (a) variable fees on the basis of the number of days that the Parent (or any Subsidiary) owns or charters in each such Vessel during the applicable month; (b) variable fees on a per day per Vessel basis for vessels chartered-out to a third party on a bareboat charter; (c) variable fees on the basis of a percentage calculated on the aggregate gross freight, demurrage, charter hire and ballast bonus obtained for the employment of each Vessel; (d) commissions for the purchase or sale of vessels; and (e) a supervision fee for the construction of newbuilds (together, the “Management Fees” and, on a per Vessel basis, the “Management Fee”), in each case, as set forth on Schedule E.

Section 9.2     The Manager shall have the right to demand the Management Fee payable in relation to each Vessel from either the Parent or the relevant member of the Group owning such Vessel under the terms of the relevant Shipmanagement Agreement or Supervision Agreement, as applicable.

Section 9.3     In the event that a Shipmanagement Agreement is terminated, other than by reason of default by the Manager or in connection with a Manager Substitution, the Management Fee payable to the Manager under subclauses (a) through (c) of Schedule E or, as the case may be, for the Vessel subject to such Shipmanagement Agreement shall be payable in respect of such Vessel for a further period of three calendar months from the termination date. In addition, in the event that a Shipmanagement Agreement is terminated (except in the case of a default by the Manager or a Manager Substitution):

(a)     The relevant member of the Group shall continue to pay Crew Support Costs (as such term is defined in the relevant Shipmanagement Agreement) for the relevant Vessel during the said further period of three calendar months; and

(b)     the relevant member of the Group shall pay any Severance Costs (as such term is defined in the relevant Shipmanagement Agreement) for the relevant Vessel which may materialize.

All amounts payable to the Manager under this Section 9.3 shall be paid promptly by the Parent to the Manager following receipt by the Parent of a final accounting of funds due from the Parent or any other member of the Group in accordance with Section 13.8.

Section 9.4     

(a)     [INTENTIONALLY LEFT BLANK].

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(b)     For each Subsequent Term (as defined below), the Management Fee for each Vessel will be set at a mutually agreed-upon rate between the Parent and the Manager no later than 30 days prior to the commencement of the relevant Subsequent Term.

(c)     If the Parent and the Manager are unable to agree on the Management Fee for any Subsequent Term pursuant to Section 9.4(b) hereof, the Management Fee for such Subsequent Term will be determined by arbitration pursuant to the terms of Article XVII hereof.

Section 9.5     The Manager shall, at no additional cost to any member of the Group, provide the Group with office accommodation, office staff (including secretarial, accounting and administrative assistance), facilities and stationery, and shall, subject to Section 9.6 and Section 10.8, pay for all printing, postage, domestic telephone and all other usual office expenses incurred by it as the Manager (it being understood that the services of the Executive Officers shall be provided pursuant to Section 8.1).

Section 9.6     The Parent hereby acknowledges that no capital expenditures, financial costs, operating expenses for each Vessel or general and administrative expenses of the Group are covered by the Management Fees and any such costs, expenditure and expenses shall be paid fully by the Parent or, as the case may be, the applicable member of the Group, whether directly to third parties or by payment to such third parties through the Manager and, without prejudice to Section 10.8, to the extent incurred by the Manager, shall be reimbursed to it by the Parent and/or any member of the Group from which the Manager, in its discretion, seeks reimbursement. Such capital expenditures, financial costs, operating expenses for each Vessel and general and administrative expenses of the Group include, without limiting the generality of the foregoing, items such as:

(a)     fees, interest, principal and any other costs due to the Group’s financiers and their respective advisors;

(b)     all voyage expenses and vessel operating expenses directly relating to the operation and management of the Vessels (including Crew costs, surveyor’s attendance fees, bunkers, lubricant oils, spares, survey fees, classification society fees, maintenance and repair costs, vetting expenses, etc.);

(c)     any commissions, fees, remuneration or disbursements due to lawyers, brokers, agents, surveyors, consultants, financial advisors, investment bankers, insurance advisors or any other third parties whatsoever appointed by the Manager whether in its own name or on behalf and/or in the name of any member of the Group;

(d)     any commissions, fees, remuneration or disbursements due to lawyers, brokers, agents, surveyors, consultants, financial advisors, investment bankers, insurance advisors or any other third parties whatsoever sub-contracted to the Manager in the normal and reasonable course of meeting the Manager’s duties and obligations under this Agreement including, without limiting the generality of the foregoing, the duties provided in Articles V, VI and VII of this Agreement;

(e)     deductibles, insurance premiums (including D&O insurance) and/or P&I calls; and

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(f)     postage, communication, traveling, victualing and other out-of-pocket expenses of the Manager and/or its personnel, incurred in providing the Services, save for any such expenses incurred by the Manager under a Supervision Agreement.

Article X

BUDGETS, CORPORATE PLANNING AND EXPENSES

Section 10.1     On or before October 20 of each calendar year, the Manager shall prepare and submit to the Executive Officers and Board of Directors a detailed draft budget for the next calendar year in a format acceptable to the Executive Officers and Board of Directors and generally used by the Manager which shall include a statement of estimated revenue, estimated general and administrative expenses of the Group, to the extent the Parent has elected for the Manager to provide such services to the Group, and a proposed budget for capital expenditures, repairs or alterations, including proposed expenditures in respect of dry-docking, together with an analysis as to when and why such replacements, improvements, renovations or expenditures may be required (collectively, the “Draft Budget”).

Section 10.2     For a period of 15 days after receipt of the Draft Budget, the Executive Officers or Board of Directors from time to time, may request further details and submit written comments on the Draft Budget. If the Executive Officers or Board of Directors do not agree with any item of the Draft Budget, they will, within the same 15-day period, give the Manager notice of any inquiries to the Draft Budget, which notice will include the list of items under consideration (the “Questioned Items”) and a proposal for the resolution of each such Questioned Item. The Executive Officers, the Board of Directors and the Manager will endeavor to resolve any such differences between them with respect to the Questioned Items, and any such differences that are not resolved within 15 days after notice of such difference being given to the Manager will be settled by arbitration pursuant to the terms of Article XVII hereof. If the Executive Officers or Board of Directors do not present any Questioned Items within such 15-day period, they will be deemed to have accepted the Draft Budget and such Draft Budget shall be deemed to be the Approved Budget (as defined in Section 10.3 below).

Section 10.3     By November 20 of the relevant calendar year the Manager will prepare and deliver to the Parent a revised budget that has been approved by the Board of Directors, in consultation with the Executive Officers (the “Approved Budget”).

Section 10.4     The Manager may, from time to time, in any calendar year propose amendments to the Approved Budget upon 15 days’ notice to the Parent, in which event the Executive Officers (or, in the case of a change of 7.5% or more, the Board of Directors) will have the right to approve the amendments in accordance with the process set out in Section 10.2 with the relevant time periods being amended accordingly and provided that any Questioned Items are resolved within 45 days of receipt of the notice by the Parent.

Section 10.5     Once the Approved Budget has been delivered, the Manager shall prepare and present to the Parent its estimate of the working capital requirements of the Vessels and the Group and the Manager shall each month update this estimate. Based on such estimate, the Manager shall each month make a request to the Parent and/or, as the case may be,

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the relevant members of the Group, in writing for the funds required to provide the Services to the applicable members of the Group and to operate each applicable Vessel for the ensuing month, including the payment of any occasional or extraordinary item of expenditure, such as emergency repair costs, additional insurance premiums, bunkers or provisions. Such funds shall be received by the Manager within ten calendar days after the receipt by the Parent or, as the case may be, the relevant member of the Group of the Manager’s written request and shall be held to the credit of the Parent or, in the Manager’s discretion, the relevant member of the Group in a separate bank account. At the end of each quarter or, if the Manager from time to time so requires, at the end of each month, the Manager shall preliminarily reconcile the amounts advanced to it by the Parent or, as the case may be, the relevant member of the Group with the amounts actually expended by it for the operation of each of the Vessels, and (a) the Manager shall remit to the Parent, or credit to the Parent amounts to be advanced to it hereunder for future months, any unused portion of the amounts previously advanced by the Parent or, as the case may be, any member of the Group, or (b) the Parent shall pay to the Manager any amounts properly expended by the Manager in excess of the amounts previously advanced by the Parent or, as the case may be, any member of the Group. The Parent and the Manager shall reconcile any amounts due to the Parent by the Manager or due to the Manager by the Parent for each fiscal year of the Parent as promptly as practicable following the close of each such fiscal year. Without prejudice to Section 10.8, any expenses incurred by the Manager under the terms of this Agreement on behalf of any member of the Group may be debited against the account of the respective member of the Group, but shall in any event remain payable by the Parent and the relevant member of the Group to the Manager on demand.

Section 10.6     The Manager shall produce a monthly comparison between budgeted and actual expenditures to the Executive Officers. The Manager shall also maintain the records of all costs and expenses incurred, including any invoices, receipts and supplementary materials as are necessary or proper for the settlement of accounts.

Section 10.7     Insofar as any moneys are collected by the Manager under the terms of this Agreement, any Shipmanagement Agreement and/or any Supervision Agreement (other than moneys payable by a member of the Group to the Manager), such moneys and any interest thereon shall be held to the credit of the relevant member of the Group in a separate bank account in the name thereof, but operated by the Manager and the Parent jointly. Interest on any such bank account shall be for the benefit of the relevant member of the Group.

Section 10.8     Notwithstanding anything contained herein to the contrary, the Manager shall in no circumstances be required to use or commit its own funds to finance the provision of the Services, other than (i) as contemplated by Section 8.1 hereof or (ii) with respect to the employees employed by the Manager in the ordinary course of business.

Article XI

LIABILITY AND INDEMNITY

Section 11.1     Save for the obligation of the Parent to pay any moneys due to the Manager hereunder, neither any member of the Group nor the Manager shall be under any liability to the other for any failure to perform any of their obligations hereunder by reason of

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Force Majeure. “Force Majeure” shall mean any cause whatsoever of any nature or kind beyond the reasonable control of the relevant member of the Group or the Manager, including, without limitation, acts of God, acts of civil or military authorities, acts of war or public enemy, acts of any court, regulatory agency or administrative body having jurisdiction, insurrections, riots, strikes or other labor disturbances, embargoes or other causes of a similar nature.

Section 11.2     The Manager, including its officers, directors, employees, shareholders, agents, sub-contractors and any Submanager (the “Manager Related Parties”), shall be under no liability whatsoever to any member of the Group or to any third party (including the Crew) for any loss, damage, delay or expense of whatsoever nature, whether direct or indirect (including but not limited to loss of profit arising out of or in connection with detention of or delay to a Vessel), and howsoever arising in the course of the performance of this Agreement, any Shipmanagement Agreement or any Supervision Agreement, unless and to the extent that the same is proved to have resulted solely from the gross negligence or willful misconduct of the Manager, its officers, employees, agents, sub-contractors or any Submanager.

Section 11.3     The Parent shall indemnify and hold harmless the Manager Related Parties against all actions, proceedings, claims, demands or liabilities whatsoever or howsoever arising which may be brought against them or incurred or suffered by them arising out of or in connection with the performance of this Agreement, any Shipmanagement Agreement or any Supervision Agreement and against and in respect of any loss, damage, delay or expense of whatsoever nature (including legal costs and expenses on a full indemnity basis), whether direct or indirect, incurred or suffered by any Manager Related Party arising out of or in connection with the performance of this Agreement, any Shipmanagement Agreement and any Supervision Agreement, unless incurred or suffered due to the gross negligence or willful misconduct of any Manager Related Party.

Section 11.4     It is hereby expressly agreed that no employee or agent of the Manager (including any sub-contractor from time to time employed by the Manager) shall in any circumstances whatsoever be under any liability whatsoever to any member of the Group or any third party for any loss, damage or delay of whatsoever kind arising or resulting directly or indirectly from any act, neglect or default on his part while acting in the course of or in connection with his employment and, without prejudice to the generality of the foregoing provisions in this Article XI, every exemption, limitation, condition and liberty herein contained and every right, exemption from liability, defense and immunity of whatsoever nature applicable to the Manager or to which the Manager is entitled hereunder shall also be available and shall extend to protect every such employee or agent of the Manager acting as aforesaid, and for the purpose of all the foregoing provisions of this Article XI, the Manager is or shall be deemed to be acting as agent or trustee on behalf of and for the benefit of all Persons who are or might be their servants or agents from time to time (including sub-contractors as aforesaid) and all such Persons shall to this extent be or be deemed to be parties to this Agreement. Nothing in this Section 11.4 shall be construed so as to further limit any liability the Manager may have to the Group under Section 11.2 hereof.

Section 11.5     The provisions of this Article XI shell survive any termination of this Agreement.

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Article XII

RIGHTS OF THE MANAGER, RESTRICTIONS ON THE MANAGER’S
AUTHORITY, AND NON-COMPETE PROVISIONS

Section 12.1     Except as may be provided in this Agreement or in any separate written agreement between the Parent or any other member of the Group and the Manager, the Manager shall be an independent contractor and not the agent of the Parent or any other member of the Group and shall have no right or authority to incur any obligation on behalf of any member of the Group or to bind any member of the Group in any way whatsoever. Nothing in this Agreement shall be deemed to make the Manager or any of its subsidiaries or employees an employee, joint venturer or partner of any member of the Group.

Section 12.2     The Parent acknowledges that the Manager shall have no responsibility hereunder, direct or indirect, with regard to the formulation of the business plans, policies, management or strategies (financial, tax, legal or otherwise) of any member of the Group, which is solely the responsibility of each respective member of the Group. Each member of the Group shall set its corporate policies independently through its respective board of directors and executive officers and nothing contained herein shall be construed to relieve such directors or officers of each respective member of the Group from the performance of their duties or to limit the exercise of their powers.

Section 12.3     Notwithstanding the other provisions of this Agreement:

(a)     the Manager may act with respect to a member of the Group upon any advice, resolutions, requests, instructions, recommendations, direction or information obtained from such member of the Group or any banker, accountant, broker, lawyer or other Person acting as agent of or adviser to such member of the Group and the Manager shall incur no liability to such member of the Group for anything done or omitted or suffered in good faith in reliance upon such advice, instruction, resolution, recommendation, direction or information made or given by such member of the Group or its agents, in the absence of gross negligence or willful misconduct by the Manager or its servants, and shall not be responsible for any misconduct, mistake, oversight, error of judgment, neglect, default, omission, forgetfulness or want of prudence on the part of any such banker, accountant, broker, lawyer, agent or adviser or other Person as aforesaid;

(b)     the Manager shall not be under any obligation to carry out any request, resolution, instruction, direction or recommendation of any member of the Group or its agents if the performance thereof is or would be illegal or unlawful; and

(c)     the Manager shall incur no liability to any member of the Group for doing or failing to do any act or thing which it shall be required to do or perform or forebear from doing or performing by reason of any provision of any law or any regulation or resolution made pursuant thereto or any decision, order or judgment of any court or any lawful request, announcement or similar action of any Person or body exercising or purporting to exercise the legitimate authority of any government or of any central or local governmental institution in each case where the above entity has jurisdiction.

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Section 12.4     

(a)     During the period commencing on the Effective Date and ending one year following termination of the Management Agreement (the “Manager Restricted Period”), the Manager shall be prohibited from, directly or indirectly, providing management services to, or with respect to, any Drybulk Vessels (such activities, the “Manager Competitive Activities”), other than as set forth in Section 12.4(b).

(b)     Subject to Section 4.10, the Manager may engage in Manager Competitive Activities pursuant to its involvement with the Parent and with respect to the following: (i) Drybulk Vessels that are owned or operated (which includes chartering—in activities) by one or more of the Hajioannou Entities or a family member of Polys Hajioannou and (ii) Drybulk Vessel Businesses that are acquired, invested in or controlled by one or more of the Hajioannou Entities or a family member of Polys Hajioannou, in the case of each of clauses (i) and (ii), subject to compliance with, or waivers of, the Hajioannou Restrictive Covenant Agreement and the Other Restrictive Covenant Agreement, as applicable.

Article XIII

TERMINATION OF THIS AGREEMENT

Section 13.1     This Agreement shall be effective as of the Effective Date and, subject to Sections 13.2, 13.3, 13.4, 13.5 and 13.6, shall continue until the date falling three years after the Effective Date (the “Initial Term”). Thereafter, the term of this Agreement shall be automatically extended for an additional three-year period up to two times (each a “Subsequent Term”) unless the Parent, at least 24 months prior to the end of the then current term, gives written notice to the Manager (a “Termination Notice”) that it wishes to terminate this Agreement at the end of the then current term. In no event will the term of this Agreement (the “Term”) extend beyond the date falling 9 years after the Effective Date (such date, the “Fully-Extended Expiration Date”).

Section 13.2     The Parent shall be entitled to terminate this Agreement upon notice in writing to the Manager if:

(a)     the Manager commits a Willful and Material Breach in the performance of its duties under this Agreement, subject to a cure right of 40 Business Days following written notice by the Parent; provided that any default of the Manager to perform any of its obligations under a relevant Shipmanagement Agreement or any Supervision Agreement shall not, in itself, entitle the Parent to terminate this Agreement pursuant to this Section 13.2(a); provided, further, that if a Submanager was performing services under a Shipmanagement Agreement that was terminated due to the default of that Submanager, the Parent shall be entitled to direct the Manager to remove and replace such Submanager with respect to any other Shipmanagement Agreement under which such Submanager is then performing services;

(b)     an aggregate amount in excess of 100,000 USD that is due and payable to the Parent or third parties by the Manager under this Agreement is not paid or accounted for within 20 Business Days following written notice by the Parent; or

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(c)     at any time after May 29, 2024, the Parent delivers 12 months written notice to the Manager (a “Third Term Termination Notice”).

Section 13.3     The Manager shall be entitled to terminate this Agreement by notice in writing to the Parent if:

(a)     an aggregate amount in excess of 100,000 USD that is due and payable by the Parent under this Agreement is not paid when due or if due on demand within 20 Business Days following demand by the Manager;

(b)     the Parent defaults in the performance of any other material obligations under this Agreement, subject to a cure right of 20 Business Days following written notice by the Manager;

(c)     there is a Change in Control of the Parent; or

(d)     the Management Fee for any Subsequent Term is determined by arbitration pursuant to the terms of Article XVII hereof and the arbitrators accept the Parent’s proposal, with such termination being effective at the end of that Subsequent Term.

Section 13.4     Either party shall be entitled to terminate this Agreement immediately if:

(a)     the other party ceases to conduct business, or all or substantially all of the equity-interests, properties or assets of either such party is sold, seized or appropriated;

(b)     (i) the other party files a petition under any bankruptcy law, makes an assignment for the benefit of its creditors, seeks relief under any law for the protection of debtors or adopts a plan of liquidation; (ii) a petition is filed against the other party seeking to have it declared insolvent or bankrupt and such petition is not dismissed or stayed within 40 Business Days of its filing; (iii) the other party shall admit in writing its insolvency or its inability to pay its debts as they mature; (iv) an order is made for the appointment of a liquidator, manager, receiver or trustee of the other party of all or a substantial part of its assets; (v) or if an encumbrancer takes possession of or a receiver or trustee is appointed over the whole or any part of the other party’s undertaking, property or assets; or (vi) if an order is made or a resolution is passed for the other party’s winding up;

(c)     a distress, execution, sequestration or other process is levied or enforced upon or sued out against a material amount of the other party’s property which is not discharged within 20 Business Days;

(d)     the other party ceases or threatens to cease wholly or substantially to carry on its business otherwise than for the purpose of a reconstruction or amalgamation without insolvency previously approved by the terminating party;

(e)     the other party is prevented from performing its obligations in any material respect hereunder by reasons of Force Majeure for a period of two or more consecutive months; or

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(f)     All Supervision Agreements and all Shipmanagement Agreements are terminated in accordance with the respective terms thereof;

provided that, in the event of a termination of this Agreement by the Parent pursuant to this Section 13.4, if the Other Management Agreement remains in effect at such time, a Manager Substitution shall be deemed to have occurred in respect of each member of the Group for which the Manager is acting as manager immediately prior to such termination.

Section 13.5     Notwithstanding anything to the contrary set forth herein, if the Manager has requested a Manager Substitution with respect of any member of the Group prior to any termination of this Agreement by the Parent, such termination shall not be effective until such Manager Substitution has been completed.

Section 13.6     

(a)     In the event that this Agreement is terminated prior to the Fully-Extended Expiration Date (including, without limitation, pursuant to a Third Term Termination Notice), other than pursuant to (i) Parent’s termination of this Agreement pursuant to Section 13.4(a) through (e), (ii) a termination resulting from Manager’s Willful and Material Breach of this Agreement or (iii) a termination pursuant to a Termination Notice delivered by Parent to the Manager in accordance with Section 13.1, then, Parent shall pay to the Other Manager the Termination Fee, which amount shall be payable by wire transfer of immediately available funds, within three (3) business days of such termination to an account designated in writing by Manager.

(b)     Notwithstanding anything to the contrary in this Agreement, Parent, on behalf of itself and any other member of the Group, on the one hand, and the Manager, on the other hand, acknowledge and agree that the Termination Fee is not a penalty, but rather is liquidated damages in a reasonable amount that will compensate the Manager and the Other Manager in the circumstances in which the Termination Fee is payable for the investments, efforts, expenses and resources expended and opportunity forgone in reliance on this Agreement and on the expectation of completing the services contemplated hereby, which amount would otherwise be impossible to calculate with precision.

(c)     If Parent fails to pay in a timely manner the Termination Fee due pursuant to Section 13.6(a), Parent shall pay interest on the Termination Fee at the prime rate of Bank of America, N.A. in effect from time to time from the date such payment was required to be made hereunder.

(d)     Notwithstanding the foregoing, no Termination Fee shall be payable by Parent if the Termination Fee (as defined in the Other Management Agreement) has been paid to the Manager pursuant to the Other Management Agreement.

(e)     Notwithstanding the foregoing, no Termination Fee shall be payable in the event that (i) the Manager has terminated this Agreement pursuant to Section 13.3(c) or Section 13.4(f) (as a result of a Manager Substitution), (ii) the Other Agreement remains in effect and (iii) each of the Vessels and/or Newbuilds managed pursuant to this Agreement immediately prior to termination thereof are managed by the Other Manager pursuant to the Other Agreement.

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(f)     The Other Manager shall be a third party beneficiary to any rights to which the Other Manager is entitled pursuant to this Section 13.6.

Section 13.7     Upon the effective date of termination pursuant to this Article XIII, the Manager shall promptly terminate its service hereunder, ensuring that such termination occurs in a manner that minimizes any interruption to the business of the members of the Group.

Section 13.8     Upon termination, the Manager shall, as promptly as possible, submit a final accounting of funds received and disbursed under this Agreement, any Supervision Agreement and/or any. Shipmanagement Agreement and of any remaining Management Fees and/or any other funds due from the Parent or any other member of the Group, calculated pro rata to the date of termination (except for those amounts payable in respect of the three months following the termination date under Section 9.3, which shall be payable by the Parent in accordance with that Section), and any non-disbursed funds of any member of the Group in the Manager’s possession or control will be paid by the Manager as directed by such member of the Group promptly upon the Manager’s receipt of all sums then due it under this Agreement, any Supervision Agreement and/or any Management Agreement, if any.

Section 13.9     Upon termination of this Agreement, the Manager shall release to the Parent the originals where possible, or otherwise certified copies, of all such accounts and all documents specifically relating to each Vessel or the provision of the Services.

Section 13.10     The provisions of this Article XIII shall survive any termination of this Agreement.

Article XIV

CHANGE IN CONTROL OF THE MANAGER AND RIGHT OF FIRST OFFER

Section 14.1     During the Manager Restricted Period, the Manager is prohibited from transferring, assigning, selling or disposing of substantially all or all of its assets or property that is necessary for the performance of its services under this Agreement, any Supervision Agreement or any Shipmanagement Agreement to any other party without the Consent of the Parent except in the event that at the same time as or within three months after such disposition takes place the Manager is set to replace the same with equivalent assets or property.

Section 14.2     During the Manager Restricted Period, in the event of a Proposed Change in Control of the Manager, the Parent shall have a right of first offer to purchase the Manager pursuant to the procedures set forth in Section 14.4.

Section 14.3     The Parent and the Manager acknowledge that all potential transfers pursuant to this Article XIV are subject to obtaining any and all written consents of governmental authorities and other non-affiliated third parties.

Section 14.4     Set forth below are the procedures for the Parent’s right of first offer to purchase the Manager under Section 14.2:

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(a)     Prior to engaging in any negotiations or otherwise offering to consummate a Proposed Change in Control of the Manager with any third party, the Manager shall provide written notice of its intent to engage in a Proposed Change in Control of the Manager (a “First Offer Notice”) and shall specify in such First Offer Notice the material terms and conditions (including the consideration to be paid, which shall be in cash) on which it would be willing to consummate a Proposed Change in Control of the Manager with the Parent, including any liabilities to be assumed by the Parent.

(b)     The Parent shall notify the Manager within 30 days after receiving a First Offer Notice (the “First Offer Period”) that either (i) the Parent does not wish to participate in a Proposed Change in Control of the Manager (a “Negative Response”) or (ii) the Parent does wish to participate in a Proposed Change in Control of the Manager, subject to the negotiation of the terms and conditions of the Proposed Change in Control of the Manager in accordance with the provisions of this Article XIV (an “Affirmative Response”).

(c)     In the event of an Affirmative Response, the Parent and the Manager shall negotiate in good faith during the First Offer Period the terms and conditions of an agreement for the consummation of a Proposed Change in Control of the Manager with the Parent and such terms and conditions are to be based on the terms and conditions set forth in the First Offer Notice.

(d)     In the event of a Negative Response or in the event the Parent and the Manager are unable to agree on the terms and conditions of an agreement for the consummation of a Proposed Change in Control of the Manager during the First Offer Period, then the Manager may consummate a Proposed Change in Control of the Manager within 120 days after the earlier of the date the Manager receives a Negative Response and the end of the First Offer Period with a third party 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, to the proposed purchaser than the terms and conditions specified in the First Offer Notice.

(e)     If the Manager does not consummate a Proposed Change in Control of the Manager to a third party within 120 days after the earlier of the date the Manager receives a Negative Response from the Parent and the end of the First Offer Period in accordance with Section 14.4(d) then the Manager shall not thereafter consummate a Proposed Change in Control of the Manager without first offering to consummate a Proposed Change in Control of the Manager with the Parent in the manner provided above.

Section 14.5     Upon request of the Parent, the Manager shall promptly disclose to the Parent the respective ownership, both record and beneficial, interests in the Manager of (a) the Hajioannou Entities, (b) directors, officers and employees of the Manager as a group, and (e) any other persons who are record or beneficial owners of the Manager, together with the identities of such other persons.

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Article XV

NOTICES

Section 15.1     All notices, consents and other communications hereunder, or necessary to exercise any rights granted hereunder, shall be in writing, sent by prepaid registered mail, and will be validly given if delivered on a Business Day to an individual at the following address:

If to the Parent:

Safe Bulkers, Inc.
Apt. D11

Les Acanthes

6, Avenue des Citronniers

MC98000 Monaco

Attention: President

If to the Manager:

Safety Management Overseas S.A.
32 Avenue K. Karamanli
P.O. Box 70837
16605 Voula
Athens, Greece

Attention: Managing Director

Section 15.2     Parent and Manager shall deliver written notice to the other party of any change in their respective address from that which is set forth in this Section 15.1.

Article XVI

APPLICABLE LAW

Section 16.1     This Agreement shall be governed by, and construed in accordance with, the laws of England.

Section 16.2     Except for Section 3.5 and Article XI which can be relied upon by a Submanager, no other term of this Agreement is enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Agreement.

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Article XVII

ARBITRATION

Section 17.1     Any dispute arising out of or in connection with this Agreement shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Article XVII. The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the arbitration proceedings are commenced.

Section 17.2     The reference shall be to three arbitrators. A party wishing to refer a dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other party requiring the other party to appoint its own arbitrator within 14 calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the 14 days specified. If the other party does not appoint its own arbitrator and give notice that it has done so within the 14 days specified, the party referring a dispute to arbitration may, without the requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on both parties as if he had been appointed by agreement. Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator.

Section 17.3     In the case of (i) any failure of the parties to agree on the Management Fee for any Subsequent Term within 30 days prior to the commencement of that Subsequent Term or (ii) any failure of the parties to agree upon the resolution of any Questioned Items in a Draft Budget prior to the 20th of November of a calendar year, the terms of this Section 17.3 shall be applicable. Notwithstanding any contrary provisions of this Article XVII (but otherwise subject to such provisions), the following “Baseball Arbitration” provisions shall apply to the matters referred to in clauses (i) and (ii) above:

(a)     Each party shall designate one arbitrator within 5 business days following the relevant date specified in clause (i) or (ii) above; and the two arbitrators so designated shall designate a third within 10 Business Days thereafter; provided, however, that the parties may agree to a single arbitrator. If either party fails to designate an arbitrator within such 5 Business Day period, the other arbitrator can render an award hereunder.

(b)     Each party shall propose an amount for each item in dispute that is subject to this Section 17.3, which shall be provided in writing to the arbitrators, together with any supporting documentation. Such proposed amounts may differ from the amounts proposed by the parties in their negotiations prior to triggering the implementation of this Section 17.3. The arbitrators may, but shall not be required to, accept oral testimony in addition to supporting documentation.

(c)     Within 20 Business Days following the selection of the arbitrators hereunder, they shall, by majority vote, accept the proposal of one party or the other for each item that is the subject of arbitration pursuant to this Section 17.3.

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(d)     Awards under this Section 17.3 shall not include costs, but may include interest if the payment date for any amount shall have passed. The fees and expenses of the arbitrators under this Section 17.3 shall be borne by the losing party (and may be apportioned by the arbitrators if more than one item is the subject of an arbitration).

(e)     Awards under this Section 17.3 shall be final and binding on the parties.

Article XVIII

MISCELLANEOUS

Section 18.1     This Agreement (which includes the Annex) constitutes the sole understanding and agreement of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements or understandings, written or oral, with respect thereto. This Agreement may not be amended, waived or discharged except by an instrument in writing executed by the party against whom enforcement of such amendment, waiver or discharge is sought.

Section 18.2     During the term hereof, the Manager will not provide services hereunder through, or otherwise cause any member of the Group to have, an office or fixed place of business in the United States.

Section 18.3     This Agreement may be executed in one or more written counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument.

Section 18.4     

(a)     When a reference is made to an Article, Section or Schedule, such reference shall be to an Article, Section or Schedule of this Agreement unless otherwise indicated.

(b)     Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”.

(c)     Unless the context requires otherwise, words using the singular or plural number also include the plural or singular number, respectively, the use of any gender herein shall be deemed to include the other genders, words denoting natural persons shall be deemed to include business entities and vice versa and references to a Person are also to its permitted successors and assigns.

(d)     References to “Euro” or “€” are to the currency of the European Monetary Union.

(e)     References to “Dollar” or “$” are to the currency of the United States.

(f)     References to any statute shall be deemed to refer to such statute as amended from time to time and to any rules or regulations promulgated thereunder.

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Section 18.5     For the avoidance of doubt, the Shipmanagement Agreements and Supervision Agreements in effect immediately prior to the Effective Date remain in full force and effect; provided, however, that, in the event of a conflict between a Shipmanagement Agreement or a Supervision Agreement, on the one hand, and this Agreement, on the other hand, this Agreement shall control.

[Signature Page Follows]

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IN WITNESS WHEREOF the undersigned have executed this Agreement as of the date first above written.

Safe Bulkers, Inc.
By:	/s/ Loukas Barmparis
Name:	Loukas Barmparis
Title:	President
SAFETY MANAGEMENT OVERSEAS S.A.
By:	/s/ Michael Michael
Name:	Michael Michael
Title:	General Manager

[Signature Page to Management Agreement]

APPENDIX I

Form of Hajioannou Entities Restrictive Covenant Agreement

APPENDIX II

Form of Polys Hajioannou Restrictive Covenant Agreement

APPENDIX III

Form of Shipmanagement Agreement

APPENDIX IV

Form of Supervision Agreement

SCHEDULE A

Shipowning Subsidiaries

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
Gloverfour Shipping Corporation	Marshall Islands
Gloverfive Shipping Corporation	Marshall Islands
Gloversix 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	Marshall Islands
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
Pentakomo Shipping Corporation	Marshall Islands
Petra Shipping Ltd.	Liberia
Shikoku Friendship Shipping Company	Marshall Islands
Soffive 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

SCHEDULE B

Non-Shipowning Subsidiaries

Subsidiary	Jurisdiction of Incorporation
Gloverthree Shipping Corporation	Marshall Islands
Gloverseven Shipping Corporation	Marshall Islands
Kyotofriendo One Shipping Inc.	Marshall Islands
Kyotofriendo Two Shipping Inc.	Marshall Islands
Maxeikosipente Shipping Corporation	Liberia
Staloudi Shipping Corporation	Liberia
Shikokuennia Shipping Inc.	Marshall Islands

SCHEDULE C

Group Members Managed by Manager

Company	Jurisdiction of Incorporation
Safe Bulkers Inc.	Marshall Islands
Eptaprohi Shipping Corporation	Liberia
Gloverthree Shipping Corporation	Marshall Islands
Gloverseven Shipping Corporation	Marshall Islands
Kyotofriendo One Shipping Inc.	Marshall Islands
Kyotofriendo Two Shipping Inc.	Marshall Islands
Maxeikosi Shipping Corporation	Liberia
Maxeikosiena Shipping Corporation	Liberia
Maxeikositria Shipping Corporation	Liberia
Maxeikosipente Shipping Corporation	Liberia
Maxpente Shipping Corporation	Liberia
Maxtessera Shipping Corporation	Marshall Islands
Staloudi Shipping Corporation	Liberia
Shikokuennia Shipping Inc.	Marshall Islands
Youngone Shipping Inc.	Marshall Islands
Youngtwo Shipping Inc.	Marshall Islands

SCHEDULE D

Newbuilds

Subsidiary	Jurisdiction of Incorporation	Vessel Name
Pinewood Shipping Corporation	Marshall Islands	TBN – H 1552

SCHEDULE E

Ship Management Fees, Commissions and Supervision Fees

In consideration of the Manager providing the Services to the Group, during the current Term (which shall begin on May 29, 2018), the Parent shall pay the Manager the following ship management fees:

(a)     a variable ship management fee of Euro 875 per day per Vessel, payable monthly in arrears (pro rated to reflect the number of days that the Parent (or any Subsidiary) owns or charters in each such Vessel during the applicable month);

(b)     a variable ship management fee of Euro 250 per day per Vessel chartered-out to a third party on a bareboat charter basis, payable monthly in arrears;

(c)     a variable fee equal to 0.0% calculated on the aggregate of the gross freight, demurrage, charter hire and ballast bonus obtained for the employment of each Vessel during the Term, payable to the Manager monthly in arrears, but only to the extent such freight, demurrage, charter hire or ballast bonus, as the case may be, is recognized as revenue;

(d)     a commission equal to 1% calculated on the price set forth in the memorandum of agreement or other sale and purchase contract of (i) the Newbuilds set forth on Schedule D hereto, payable upon delivery of the Newbuilds to the relevant member of the Group; and (ii) any other Vessel bought or sold by the Parent or any Subsidiary, payable upon final delivery of such vessel to the relevant member of the Group or the relevant purchaser, as applicable; and

(e)     a supervision fee of $550,000 per Newbuild for the services rendered by the Manager under the Supervision Agreement in respect of such Newbuild, payable in accordance with the terms of such Supervision Agreement.

EX-4.2

Exhibit 4.2

SAFE BULKERS, INC.

- and -

SAFE BULKERS MANAGEMENT LIMITED

MANAGEMENT AGREEMENT

TABLE OF CONTENTS

Article I INTERPRETATION	1
Article II APPOINTMENT	6
Article III THE PARENT’S GENERAL OBLIGATIONS	7
Article IV THE MANAGER’S GENERAL OBLIGATIONS	8
Article V ADMINISTRATIVE SERVICES	10
Article VI COMMERCIAL SERVICES	12
Article VII INSURANCE	13
Article VIII AVAILABILITY OF OFFICERS	13
Article IX MANAGEMENT FEES AND EXPENSES	14
Article X BUDGETS, CORPORATE PLANNING AND EXPENSES	16
Article XI LIABILITY AND INDEMNITY	17
Article XII RIGHTS OF THE MANAGER, RESTRICTIONS ON THE MANAGER’S AUTHORITY, AND NON-COMPETE PROVISIONS	19
Article XIII TERMINATION OF THIS AGREEMENT	20
Article XIV CHANGE IN CONTROL OF THE MANAGER AND RIGHT OF FIRST OFFER	23
Article XV NOTICES	24
Article XVI APPLICABLE LAW	25
Article XVII ARBITRATION	25
Article XVIII MISCELLANEOUS	27

APPENDIX I	Form of Hajioannou Entities Restrictive Covenant Agreement
APPENDIX II	Form of Polys Hajioannou Restrictive Covenant Agreement
APPENDIX III	Form of Shipmanagement Agreement
APPENDIX IV	Form of Supervision Agreement

THIS MANAGEMENT AGREEMENT (this “Agreement”) is made on the 29 day of May, 2018 (the “Effective Date”),

BY AND BETWEEN:

(1)     SAFE BULKERS, INC., a company organized and existing under the laws of the Republic of the Marshall Islands (the “Parent”); and

(2)     SAFE BULKERS MANAGEMENT LIMITED, a company organized and existing under the laws of the Republic of Cyprus (the “Manager”).

WHEREAS:

(A)     The Original Agreement is scheduled to terminate on its terms at the end of the day on May 28, 2018.

(B)     The Parent directly or indirectly wholly owns or will wholly own (i) the corporations identified on Schedule A hereto, as such Schedule A may be amended from time to time (the “Shipowning Subsidiaries”), each of which owns or charters in or will own or charter in one or more Drybulk Vessels (as defined below) (the “Vessels”) and (ii) the corporations identified on Schedule B hereto, as such Schedule B may be amended from time to time (together with the Shipowning Subsidiaries, the “Subsidiaries”).

(C)     The Manager has the benefit of expertise in the technical and commercial management of Drybulk Vessels and administration of shipowning companies generally.

(D)     The Parent and the Manager desire to enter into and adopt this Agreement, pursuant to which the Manager shall represent the Group (as defined below) in its dealings with third parties and provide either directly or through a Submanager (as defined below) technical, commercial, administrative and certain other services to the Group as specified herein in connection with the management and administration of the business of the Group, in each case, to the extent the Parent elects to have the Manager provide such services.

NOW, THEREFORE, THE PARTIES HEREBY AGREE:

Article I

INTERPRETATION

Section 1.1     In this Agreement, unless the context otherwise requires:

“Affirmative Response” shall have the meaning set forth in Section 14.4(b).

“Affiliates” means, with respect to any Person as at any particular date, any other Persons that directly or indirectly, through one or more intermediaries, are Controlled by, Control or are under common Control with the Person in question, and “Affiliate” means any one of them.

“Agreement” shall have the meaning set forth in the preamble.

“Approved Budget” shall have the meaning set forth in Section 10.3.

“Board of Directors” means the board of directors of the Parent as the same may be constituted from time to time.

“Business Days” means a day (excluding Saturdays and Sundays) on which banks are open for business in Athens, Greece; Cyprus; and New York, New York.

“Change in Control of the Parent” means the occurrence of any of the following events: (a) if any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act or any successor provisions to either of the foregoing), including any group acting for the purpose of acquiring, holding, voting or disposing of securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act (other than one or more Hajioannou Entities) (collectively, an “Acquiring Person”), becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 40% or more of the total voting power of the outstanding voting securities of the Parent, and such percentage represents a higher percentage of such voting power than the Hajioannou Entities, collectively; or (b) the approval by the shareholders of the Parent of a proposed merger, consolidation, recapitalization or similar transaction, as a result of which any Acquiring Person becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 40% or more of the total voting power of the outstanding voting securities of the resulting entity following such transaction, and such percentage represents a higher percentage of such voting power than the Hajioannou Entities, collectively; or (c) a change in directors after which at least one of the members of the Board of Directors is not a Continuing Director (as defined below). For purposes of this definition, such person or group shall be deemed to beneficially own any outstanding voting securities of a corporation held by any other corporation (the “parent corporation”) so long as such person or group beneficially owns, directly or indirectly, in the aggregate a majority of the total voting power of the outstanding voting securities of such parent corporation.

“Control” or “Controlled” means, with respect to any Person, the right to elect or appoint, directly or indirectly, a majority of the directors of such Person or a majority of the Persons who have the right, including any contractual right, to manage and direct the business, affairs and operations of such Person, or the possession of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract, or otherwise.

“Consent of the Parent” means the prior written consent of a majority of the Independent Directors of the Parent.

“Continuing Directors” means, as of any date of determination, any member of the Board of Directors who (i) was a member of the Board of Directors immediately after the Effective Date, or (ii) was nominated for election or elected to the Board of Directors with the approval of a majority of the directors then still in office who were either directors immediately after the Effective Date or whose nomination or election was previously so approved.

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“Crew” shall have the meaning set forth in clause 1 of each Shipmanagement Agreement.

“Draft Budget” shall have the meaning set forth in Section 10.1.

“Drybulk Vessel” means any ocean-going vessel (including any Newbuild) that is intended to be used primarily to transport non-liquid cargoes of commodities shipped in an unpackaged state.

“Drybulk Vessel Business” means any business involved in the ownership or operation of Drybulk Vessels.

“Effective Date” shall have the meaning set forth in the preamble.

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

“Executive Officers” means the Chief Executive Officer, the President, the Chief Operating Officer and the Chief Financial Officer of the Parent, and/or such other officers that may be agreed by the parties hereto after the date of this Agreement from time to time.

“First Offer Notice” shall have the meaning set forth in Section 14.4(a).

“First Offer Period” shall have the meaning set forth in Section 14.4(b).

“Force Majeure” shall have the meaning set forth in Section 11.1.

“Group” means, at any time, the Parent and the Subsidiaries at such time taking into account the Schedule A and Schedule B in effect at such time and “member of the Group” shall be construed accordingly.

“Hajioannou Entities” means Polys Hajioannou, Vorini Holdings Inc. and Machairiotissa Holdings Inc. and any entity controlled by, or under common control with, any such individual or entity or any trust established for the benefit thereof.

“Hajioannou Restrictive Covenant Agreement” means the Second Amended and Restated Restrictive Covenant Agreement, dated as of August 2, 2017, among Polys Hajioannou, Vorini Holdings Inc., Machairiotissa Holdings Inc. and the Parent.

“Independent Directors” means those members of the Board of Directors that qualify as independent directors within the meaning of Rule 10A-3 promulgated under the Exchange Act and the rules adopted thereunder and the listing criteria of the New York Stock Exchange.

“Initial Term” shall have the meaning set forth in Section 13.1.

“Machairiotissa” means Machairiotissa Holdings Inc., a company organized and existing under the laws of the Republic of the Marshall Islands.

“Management Fee” shall have the meaning set forth in Section 9.1.

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“Management Services” shall have, in relation to a Vessel, the meaning set forth in clause 1 of the Shipmanagement Agreement applicable to such Vessel.

“Manager” shall have the meaning set forth in the preamble.

“Manager Substitution” shall have the meaning set forth in Section 2.6.

“Manager Competitive Activities” shall have the meaning set forth in Section 12.4(a).

“Manager Related Parties” shall have the meaning set forth in Section 11.2.

“Manager Restricted Period” shall have the meaning set forth in Section 12.4(a).

“Negative Response” shall have the meaning set forth in Section 14.4(b).

“Newbuild” means a new vessel to be or which has just been constructed, or is under construction, which a member of the Group has agreed to acquire pursuant to a shipbuilding contract, memorandum of agreement or otherwise.

“Original Agreement” means the Management Agreement between the Parent and the Manager, dated May 29, 2015, as amended and restated on August 2, 2017.

“Other Management Agreement” means the Management Agreement between the Parent and the Other Manager, dated as of the date hereof.

“Other Manager” means Safety Management Overseas S.A., a company organized and existing under the laws of the Republic of Panama.

“Other Restrictive Covenant Agreement” means the Second Amended and Restated Restrictive Covenant Agreement, dated August 2, 2017, between the Parent and Polys Hajioannou.

“Parent” shall have the meaning set forth in the preamble.

“Person” means an individual, corporation, limited liability company, partnership, joint venture, trust or trustee, unincorporated organization, association, governmental authority or other entity.

“Proposed Change in Control of the Manager” means:

(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 this Agreement; or

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(b)the approval of any transaction that would result in:

(i)        the Hajioannou Entities beneficially owning, directly or indirectly, less than 60% of the outstanding voting securities or voting power of the Manager or Machairiotissa, respectively; or

(ii)       the Hajioannou Entities 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, respectively.

For purposes of this definition, the term Hajioannou Entities shall exclude reference to Machairiotissa.

“Questioned Items” shall have the meaning set forth in Section 10.2.

“Services” shall have the meaning set forth in Section 2.3.

“Shipmanagement Agreement” shall have the meaning set forth in Section 3.2.

“Shipowning Subsidiaries” shall have the meaning set forth in the recitals.

“Submanager” shall have the meaning set forth in Section 2.4.

“Subsequent Term” shall have the meaning set forth in Section 13.1.

“Subsidiaries” shall have the meaning set forth in the recitals.

“Supervision Agreement” shall have the meaning set forth in Section 3.3.

“Term” shall have the meaning set forth in Section 13.1.

“Termination Fee” means an amount in cash equal to the Management Fees paid or payable to the Manager and the other Manager, in the aggregate, during the 36 months preceding the applicable termination.

“Termination Notice” shall have the meaning set forth in Section 13.1.

“Third Term Termination Notice” shall have the meaning set forth in Section 13.2(c).

“Vessels” shall have the meaning set forth in the recitals.

“Willful and Material Breach” means a material breach of this Agreement, as determined by a final, non-appealable judgment of a court or independent tribunal of competent jurisdiction, that is a consequence of a deliberate act undertaken by the breaching party, with knowledge that the taking of such act would cause a breach of this Agreement, and which act has subjected the Company and its Subsidiaries, taken as a whole, to uninsured liability, individually or in the aggregate, in an amount in excess of $100,000,000.

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Section 1.2     This Agreement shall become automatically effective without any further action on the Effective Date, immediately following expiration of the Original Agreement.

Section 1.3     The headings of this Agreement are for ease of reference and do not limit or otherwise affect the meaning hereof.

Section 1.4     All the terms of this Agreement, whether so expressed or not, shall be binding upon the parties hereto and their respective successors and assigns.

Section 1.5     In the event of any conflict between this Agreement, any Shipmanagement Agreement or any Supervision Agreement, the provisions of this Agreement shall prevail.

Section 1.6     Unless otherwise specified, all references to money refer to the legal currency of the United States of America.

Section 1.7     Unless the context otherwise requires, words in the singular include the plural and vice versa.

Article II

APPOINTMENT

Section 2.1     As of the date hereof, the Manager is hereby appointed as the manager of each member of the Group listed in Schedule C. To the extent the Manager acts as a manager in respect of a member of the Group, the Manager is hereby appointed by the Parent as the administrative manager of the Group and the Manager hereby accepts any such appointment on the terms and conditions of this Agreement. Either the Manager or the Other Manager (in the sole discretion of the Manager and the Other Manager) shall act as the manager of each member of the Group.

Section 2.2     To the extent the Manager acts as manager in respect of a member of the Group, the Manager shall be appointed by (a) such Shipowning Subsidiary pursuant to the provisions of Section 3.2 hereof as the technical and commercial manager of each such Shipowning Subsidiary’s Vessel on the terms and conditions of the relevant Shipmanagement Agreement and this Agreement and (b) such member of the Group acquiring a Newbuild, as the supervisor of the construction thereof on the terms and conditions of the relevant Supervision Agreement and this Agreement.

Section 2.3     To the extent the Manager acts as manager in respect of a member of the Group, the Manager undertakes to use its best endeavors to provide:

(a)     the services specified in Articles V, VI, VII and VIII of this Agreement;

(b)     the services specified in each Supervision Agreement; and

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(c)     the Management Services in respect of each Vessel specified in each Shipmanagement Agreement (the services to be provided under Sections 2.3(a), 2.3(b) and 2.3(c) collectively the “Services”).

Section 2.4     The Manager may upon notice to the Parent appoint any Person (a “Submanager”) at any time throughout the duration of this Agreement to discharge any of the Manager’s duties under this Agreement; provided that if such Person is not an Affiliate of the Manager, the Manager shall obtain the Consent of the Parent prior to such appointment (such Consent of the Parent not to be unreasonably withheld or delayed).

Section 2.5     The Manager’s power to delegate performance of any provision of this Agreement hereunder is without prejudice to the Manager’s liability to the Parent to perform this Agreement with the intention that the Manager shall remain responsible to the Parent for the due and timely performance of all duties and responsibilities of the Manager hereunder; provided, however, that to the extent that any Submanager has performed any such duty, the Manager shall not be under any obligation to perform again the same duty.

Section 2.6     The Manager and the Other Manager may mutually elect at any time to replace the Manager with the Other Manager in respect of any or all members of the Group for services provided hereunder (any such replacement, a “Manager Substitution”). The Parent and the Manager shall reasonably cooperate with each other to facilitate the transfer of such services (including the transfer of any prepaid costs to the Other Manager) without disruption to the business of the Group or the Manager or the incurrence of any additional costs or expenses to the Group or the Manager. A Manager Substitution shall not result in an increase to, or duplication of, the aggregate management fees payable to the Manager and the Other Manager. Upon a Manager Substitution, Schedule C shall automatically be updated to reflect such Manager Substitution and the Other Management Agreement shall govern the management services to be provided to the applicable member of the Group by the Other Manager.

Article III

THE PARENT’S GENERAL OBLIGATIONS

Section 3.1     The Parent shall notify the Manager as soon as possible of any purchase of any vessel (whether the same is a second-hand vessel or a Newbuild), the delivery of any Newbuild from the relevant builder or intermediate seller to the relevant member of the Group to take ownership of such Newbuild, the agreement to acquire any Newbuild, the sale of any vessels, Newbuilds or Subsidiaries, the purchase or creation of any direct or indirect subsidiary of the Parent or the sale or divestiture of any Subsidiary, and Schedule A and Schedule B hereto, as applicable, shall be automatically amended to be reflective of any such development. Such amended Schedule A or Schedule B shall be effective on any such day as mutually agreed by the Parent and the Manager. To the extent any member of the Group comes into possession of a Vessel or agrees to acquire a Newbuild, the Manager and the Other Manager shall inform the Parent as to whether the Manager or the Other Manager shall be appointed the manager in respect of such Vessel or Newbuild.

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Section 3.2     For each Vessel for which the Manager is appointed manager, the Parent shall cause the Shipowning Subsidiary that owns such Vessel to enter with the Manager into a contract substantially in the form attached hereto as Appendix III (each a “Shipmanagement Agreement” and, collectively, the “Shipmanagement Agreements”), with such alterations and additions as are agreed by the Manager and such Shipowning Subsidiary to be appropriate; provided that any alterations or additions which materially vary from such form shall require the approval of the Board of Directors. In the event of a Manager Substitution in respect of a Vessel, Parent shall cause the applicable Shipowning Subsidiary to enter into a Shipmanagement Agreement with the Other Manager.

Section 3.3     To the extent the Manager acts as manager in respect of a Newbuild, for each Newbuild the Parent shall, or shall procure that the relevant member of the Group that owns or has agreed to acquire such Newbuild shall, enter with the Manager into a contract substantially in the form attached hereto as Appendix IV (each a “Supervision Agreement” and, collectively, the “Supervision Agreements”), with such alterations and additions as are agreed by the Manager and such member of the Group to be appropriate, having regard to the terms and conditions of the particular shipbuilding contract, memorandum of agreement or other agreement relating to the acquisition of the relevant Newbuild; provided that any alterations or additions which materially vary from such form shall require the approval of the Board of Directors. In the event of a Manager Substitution in respect of a Newbuild, Parent shall cause the applicable member of the Group to enter into a Supervision Agreement with the Other Manager.

Section 3.4     The Parent shall pay, or shall cause another member of the Group to pay, all sums due to the Manager punctually in accordance with the terms of this Agreement, any Shipmanagement Agreement and/or any Supervision Agreement.

Section 3.5     The Parent shall procure that each other member of the Group (a) performs its obligations under any Shipmanagement Agreement or any Supervision Agreement to which it is a party and (b) does not take any action or omits to take any action the effect of which is to cause the Parent or the Manager or any Submanager to be in breach of this Agreement, any Shipmanagement Agreement and/or any Supervision Agreement.

Article IV

THE MANAGER’S GENERAL OBLIGATIONS

Section 4.1     In the exercise of its duties hereunder, the Manager shall act fully in accordance with the reasonable policies, guidelines and instructions from time to time communicated to it in writing by any member of the Group, exercising skill and diligence to carry out its duties under this Agreement according to sound technical and commercial shipmanagement standards.

Section 4.2     The Manager shall act and do all and/or any of the following acts or things described in this Agreement and the relevant Shipmanagement Agreement or, as the case may be, Supervision Agreement applicable to each Vessel in the name and/or on behalf of the Parent and/or, as the context may require, the relevant Subsidiary.

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Section 4.3     The Manager acknowledges that the services it will provide pursuant to the Shipmanagement Agreements and the Supervision Agreements are not limited to the services described in such agreements and include those set forth in this Agreement.

Section 4.4     The Manager shall ensure that all material property of any member of the Group is clearly identified as such, held separately from the property of the Manager and, where applicable, held in safe custody.

Section 4.5     The Manager shall ensure that adequate manpower is employed by it to perform its obligations under this Agreement; provided, however, that the Manager, in the performance of its responsibilities under this Agreement, shall be entitled to have regard to its overall responsibilities in relation to the management of its clients and in particular, without prejudice to the generality of the foregoing, the Manager shall be entitled to allocate available resources and services in such manner as in the prevailing circumstances the Manager considers to be fair and reasonable.

Section 4.6     Notwithstanding anything to the contrary contained in this Agreement, any Shipmanagement Agreement or any Supervision Agreement, the Manager agrees that any and all decisions of a material nature relating to the Parent, any Subsidiary, or any Vessel shall be reserved to the Parent, such decisions including, but not being limited to:

(a)     the purchase and/or sale of shares in any entity or other assets of a material nature;

(b)     the purchase or formation of subsidiaries;

(c)     the entry into guarantees or loans or other forms of financing and any and all financial undertakings and commitments connected therewith;

(d)     the entry into and/or termination or amendment of any contractual relationships between any member of the Group and a third party or another member of the Group; and

(e)     the presentation, negotiation, settlement, prosecution or defense of any claim, demand or petition for an amount exceeding $100,000 or its equivalent.

Section 4.7     During the Term, the Manager shall promote the business of the Group in accordance with the directions of the authorized representative of the respective member of the Group and shall at all times use its best efforts to conform to and comply with the lawful and reasonable directions, regulations or recommendations made by such authorized representative, and in the absence of any specific directions or recommendations as aforesaid and, subject to the terms and conditions of this Agreement, shall provide general administrative and advisory services in connection with the management of the business of the Group.

Section 4.8     The Manager, in the performance of its responsibilities under this Agreement, any Supervision Agreement or any Shipmanagement Agreement, shall ensure that any purchases of products or services from any of its affiliates or any other related entity

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shall be on terms no less favorable to the Manager than the market prices for products or services that the Manager could obtain on an arm’s-length basis from unrelated third parties.

Section 4.9     During the term hereof, the Manager agrees that, except as provided in Section 12.4(b), it will provide the services in this Agreement to the Group on an exclusive basis and, without receiving the Consent of the Parent, it will not provide any Services or other services contemplated herein to any entity other than the Parent, as applicable, and each Subsidiary.

Section 4.10   If a Vessel and a Drybulk Vessel directly or indirectly owned or operated by any of the Hajioannou Entities (other than through the Parent or to the extent that such Hajioannou Entity is no longer subject to a Restrictive Covenant Agreement) are both available and meet the criteria for a charter being fixed by the Manager, then the Vessel shall receive such charter. For the avoidance of doubt, this Section 4.10 shall apply only to Drybulk Vessels owned or operated, directly or indirectly, by any Hajioannou Entity that is under the commercial management of the Manager, and shall not apply to any Drybulk Vessel owned or operated, directly or indirectly, by any Hajioannou Entity that is not under the commercial management of the Manager.

Section 4.11   The Manager shall at all times maintain and keep true and correct accounts as regards the Services and shall make the same available for inspection and auditing by the Parent at such times as may be mutually agreed by the Manager, on the one hand, and the Parent, on the other hand.

Article V

ADMINISTRATIVE SERVICES

Section 5.1     To the extent the Manager acts as manager of a member of the Group, the Manager shall provide certain general administrative services to such member of the Group, including, but not limited to, the following:

(a)     keeping all books and records of things done and transactions performed on behalf of any member of the Group as it may require from time to time, including, but not limited to, liaising with accountants, lawyers and other professional advisors;

(b)     except as otherwise contemplated herein, representing any member of the Group generally in its dealings and relations with third parties;

(c)     maintaining the general ledgers of the Group, reconciliation of the Group’s bank accounts, preparation of periodic financial statements, including, but not limited to, those required for governmental and regulatory or self-regulatory agency filings and reports to shareholders, arranging for the audit of any such financial statements and the provision of related data processing services;

(d)     providing assistance in the preparation of periodic and other reports, proxy statements, registration statements and other documents and reports required by applicable law

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or the rules of any securities exchange or inter-dealer quotation system on which the securities of the Parent or any member of the Group may be listed or quoted;

(e)     preparing and providing all tax returns required by any law or regulatory authority and developing, maintaining and monitoring internal audit controls, disclosure controls and information technology for the Group;

(f)     appointing lawyers, at the Parent’s cost, for providing all legal services to ensure that each member of the Group is in compliance with all applicable laws, including all relevant securities laws, and owns or possesses all licenses, patents, copyrights and trademarks which are necessary and used in the operation of its business;

(g)     appointing lawyers, at the Parent’s cost, for providing for the presentation, negotiation, settlement, prosecution or defense of any claim, demand or petition on behalf of any member of the Group arising in connection with the business of any member of the Group for an amount not exceeding $100,000 or its equivalent, including the pursuit by any member of the Group of any rights of indemnification or reimbursement;

(h)     providing advice to the Group with respect to financing, including entering into negotiations with banks or other financial institutions for the purpose of arranging financing for the Parent and its Subsidiaries and the monitoring and administration of compliance with any applicable financing terms and conditions in effect with investors, banks or other financial institutions;

(i)     assisting with arranging board meetings, director accommodation and travel for board meetings and preparing meeting materials and detailed papers and agendas for scheduled meetings of the Board of Directors or the board of directors of any other member of the Group (and any and all committees thereof) that, where applicable, contain such information as is reasonably available to the Manager to enable the Board of Directors or such other board of directors (and any such committees) to base their opinion;

(j)     preparing or causing to be prepared reports to be considered by the Board of Directors (or any applicable committee thereof) in accordance with the Parent’s internal policies and procedures on any acquisition, investment or sale of any part of the business;

(k)     providing or arranging for all services necessary to the engagement, employment and compensation of all employees, officers, consultants and directors of any member of the Group, including, without limitation, (i) administering payroll services, benefits and director’s or consultant’s fees, (ii) establishing and maintaining procedures and systems to comply with tax, labor and employment and worker’s compensation laws, rules and regulations applicable to any member of the Group and (iii) administering compensation and benefit programs of any member of the Group;

(l)     at the request of the Parent, negotiating and arranging for cash management services, financing and hedging arrangements relating to interest rates, currency exchange rates and commodity prices;

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(m)     handling general and administrative expenses of the Parent, which are related to its operation as public company and, upon being provided by the Parent with funds in accordance with the terms of Article X of this Agreement, arranging for the payment of the same;

(n)     appointing lawyers, at the Parent’s cost, for handling all administrative and clerical matters in respect of (i) the calling and arrangement of all annual and/or special meetings of shareholders of the Parent, (ii) the preparation of all materials (including notices of meetings and information circulars) in respect thereof and (iii) the submission of all such materials to the Parent in sufficient time prior to the dates upon which they must be mailed, filed or otherwise relied upon so that the Parent has full opportunity to review, approve, execute and return them to the Manager for filing or mailing or other disposition as the Parent may require or direct;

(o)     providing, at the request and under the direction of the Parent, such communications to the transfer agent for the Parent as may be necessary or desirable; and

(p)     providing any such other administrative services as the Parent, the authorized Executive Officers or any other representative of the Parent may request and the Manager may agree to provide from time to time.

Article VI

COMMERCIAL SERVICES

Section 6.1     To the extent the Manager acts as manager of any member of the Group, the Manager shall provide the following commercial services to such member of the Group:

(a)     performing class records review and physical inspections in connection with any vessel to be purchased by a member of the Group;

(b)     at the request and under the direction of the Parent, providing administrative services in connection with the purchase of a second-hand vessel or the acquisition or sale of a Newbuild, in either case by any member of the Group, including, if specifically instructed by the Parent in writing, signing any agreed form of memorandum of agreement, shipbuilding contract or other similar contract for and on behalf of the relevant member of the Group; and

(c)     at the request of the Parent, providing certain services in connection with a member of the Group taking physical delivery of a Vessel or registering a Vessel or deleting a Vessel from the applicable port of registry on behalf of the relevant member of the Group.

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Article VII

INSURANCE

Section 7.1     To the extent the Manager acts as manager of any member of the Group, in addition to any duties of the Manager to insure the Vessels as provided in clause 3.4 of each Shipmanagement Agreement, the Manager shall:

(a)     arrange either directly or, through insurance brokers appointed by the Manager, to effect Director’s & Officers Liability insurance for the Board of Directors and Executive Officers with such insurance companies, at such rates and otherwise on such other terms as the Parent shall have instructed and/or agreed upon;

(b)     on request, provide the Parent with a copy of any insurance claims and any reports prepared by the relevant insurers; and

(c)     subject to having been provided with funds by the Parent in accordance with Article X ensure that all premiums on the Parent’s D&O insurance are paid in a timely fashion.

Article VIII

AVAILABILITY OF OFFICERS

Section 8.1     The Manager shall provide the Group with the services of those Executive Officers from time to time agreed with the Parent.

Section 8.2     The Executive Officers are entitled to direct the Manager to remove and replace any individual made available to any member of the Group by the Manager serving as an officer or any senior manager serving as head of a business unit, in either case, of that member of the Group other than any Executive Officer, from such position. The Board of Directors, in its sole discretion, shall be entitled to direct the Manager to remove any individual made available to the Parent by the Manager serving as an Executive Officer from such position and to appoint such other individual to serve as successor as the Board of Directors shall approve. Furthermore, the Manager agrees that it will not remove any individual made available to any member of the Group by the Manager serving as an officer or senior manager of that member of the Group from his or her position without the consent of the Executive Officers and, in the case of any Executive Officer, the Board of Directors. If any officer or senior manager who is made available to the Parent by the Manager resigns, is terminated or otherwise vacates his or her office, the Manager shall, as soon as practicable after acceptance of any resignation or after termination, use reasonable best efforts to identify suitable candidates for replacement of such officer.

Section 8.3     The Parent may employ directly, at its sole cost, any other officers, senior managers or employees as it may deem necessary, and such individuals will not be subject to this Agreement.

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Section 8.4     The Manager will report to the Parent and the Board of Directors through any one of more of the Executive Officers who are made available to the Parent by the Manager or by the Chief Executive Officer of the Manager.

Article IX

MANAGEMENT FEES AND EXPENSES

Section 9.1     In consideration of the Manager providing the Services to the Group, during the current Term (which shall begin on May 29, 2018), the Parent shall pay the Manager ship management fees comprised of: (a) variable fees on the basis of the number of days that the Parent (or any Subsidiary) owns or charters in each such Vessel during the applicable month; (b) variable fees on a per day per Vessel basis for vessels chartered-out to a third party on a bareboat charter; (c) variable fees on the basis of a percentage calculated on the aggregate gross freight, demurrage, charter hire and ballast bonus obtained for the employment of each Vessel; (d) commissions for the purchase or sale of vessels; (e) a supervision fee for the construction of newbuilds; and (f) a flat fee on an annual basis (the “Annual Fee”) (together, the “Management Fees” and, on a per Vessel basis, the “Management Fee”), in each case, as set forth on Schedule E.

Section 9.2     The Manager shall have the right to demand the Management Fee payable in relation to each Vessel from either the Parent or the relevant member of the Group owning such Vessel under the terms of the relevant Shipmanagement Agreement or Supervision Agreement, as applicable.

Section 9.3     In the event that a Shipmanagement Agreement is terminated, other than by reason of default by the Manager or in connection with a Manager Substitution, the Management Fee payable to the Manager under subclauses (a) through (c) of Schedule E or, as the case may be, for the Vessel subject to such Shipmanagement Agreement shall be payable in respect of such Vessel for a further period of three calendar months from the termination date. In addition, in the event that a Shipmanagement Agreement is terminated (except in the case of a default by the Manager or a Manager Substitution):

(a)     The relevant member of the Group shall continue to pay Crew Support Costs (as such term is defined in the relevant Shipmanagement Agreement) for the relevant Vessel during the said further period of three calendar months; and

(b)     the relevant member of the Group shall pay any Severance Costs (as such term is defined in the relevant Shipmanagement Agreement) for the relevant Vessel which may materialize.

All amounts payable to the Manager under this Section 9.3 shall be paid promptly by the Parent to the Manager following receipt by the Parent of a final accounting of funds due from the Parent or any other member of the Group in accordance with Section 13.8.

Section 9.4     

(a)     [INTENTIONALLY LEFT BLANK].

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(b)     For each Subsequent Term (as defined below), the Management Fee for each Vessel will be set at a mutually agreed-upon rate between the Parent and the Manager no later than 30 days prior to the commencement of the relevant Subsequent Term.

(c)     If the Parent and the Manager are unable to agree on the Management Fee for any Subsequent Term pursuant to Section 9.4(b) hereof, the Management Fee for such Subsequent Term will be determined by arbitration pursuant to the terms of Article XVII hereof.

Section 9.5     The Manager shall, at no additional cost to any member of the Group, provide the Group with office accommodation, office staff (including secretarial, accounting and administrative assistance), facilities and stationery, and shall, subject to Section 9.6 and Section 10.8, pay for all printing, postage, domestic telephone and all other usual office expenses incurred by it as the Manager (it being understood that the services of the Executive Officers shall be provided pursuant to Section 8.1).

Section 9.6     The Parent hereby acknowledges that no capital expenditures, financial costs, operating expenses for each Vessel or general and administrative expenses of the Group are covered by the Management Fees and any such costs, expenditure and expenses shall be paid fully by the Parent or, as the case may be, the applicable member of the Group, whether directly to third parties or by payment to such third parties through the Manager and, without prejudice to Section 10.8, to the extent incurred by the Manager, shall be reimbursed to it by the Parent and/or any member of the Group from which the Manager, in its discretion, seeks reimbursement. Such capital expenditures, financial costs, operating expenses for each Vessel and general and administrative expenses of the Group include, without limiting the generality of the foregoing, items such as:

(a)     fees, interest, principal and any other costs due to the Group’s financiers and their respective advisors;

(b)     all voyage expenses and vessel operating expenses directly relating to the operation and management of the Vessels (including Crew costs, surveyor’s attendance fees, bunkers, lubricant oils, spares, survey fees, classification society fees, maintenance and repair costs, vetting expenses, etc.);

(c)     any commissions, fees, remuneration or disbursements due to lawyers, brokers, agents, surveyors, consultants, financial advisors, investment bankers, insurance advisors or any other third parties whatsoever appointed by the Manager whether in its own name or on behalf and/or in the name of any member of the Group;

(d)     any commissions, fees, remuneration or disbursements due to lawyers, brokers, agents, surveyors, consultants, financial advisors, investment bankers, insurance advisors or any other third parties whatsoever sub-contracted to the Manager in the normal and reasonable course of meeting the Manager’s duties and obligations under this Agreement including, without limiting the generality of the foregoing, the duties provided in Articles V, VI and VII of this Agreement;

(e)     deductibles, insurance premiums (including D&O insurance) and/or P&I calls; and

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(f)     postage, communication, traveling, victualing and other out-of-pocket expenses of the Manager and/or its personnel, incurred in providing the Services, save for any such expenses incurred by the Manager under a Supervision Agreement.

Article X

BUDGETS, CORPORATE PLANNING AND EXPENSES

Section 10.1   On or before October 20 of each calendar year, the Manager shall prepare and submit to the Executive Officers and Board of Directors a detailed draft budget for the next calendar year in a format acceptable to the Executive Officers and Board of Directors and generally used by the Manager which shall include a statement of estimated revenue, estimated general and administrative expenses of the Group, to the extent the Parent has elected for the Manager to provide such services to the Group, and a proposed budget for capital expenditures, repairs or alterations, including proposed expenditures in respect of dry-docking, together with an analysis as to when and why such replacements, improvements, renovations or expenditures may be required (collectively, the “Draft Budget”).

Section 10.2   For a period of 15 days after receipt of the Draft Budget, the Executive Officers or Board of Directors from time to time, may request further details and submit written comments on the Draft Budget. If the Executive Officers or Board of Directors do not agree with any item of the Draft Budget, they will, within the same 15-day period, give the Manager notice of any inquiries to the Draft Budget, which notice will include the list of items under consideration (the “Questioned Items”) and a proposal for the resolution of each such Questioned Item. The Executive Officers, the Board of Directors and the Manager will endeavor to resolve any such differences between them with respect to the Questioned Items, and any such differences that are not resolved within 15 days after notice of such difference being given to the Manager will be settled by arbitration pursuant to the terms of Article XVII hereof. If the Executive Officers or Board of Directors do not present any Questioned Items within such 15-day period, they will be deemed to have accepted the Draft Budget and such Draft Budget shall be deemed to be the Approved Budget (as defined in Section 10.3 below).

Section 10.3   By November 20 of the relevant calendar year the Manager will prepare and deliver to the Parent a revised budget that has been approved by the Board of Directors, in consultation with the Executive Officers (the “Approved Budget”).

Section 10.4   The Manager may, from time to time, in any calendar year propose amendments to the Approved Budget upon 15 days’ notice to the Parent, in which event the Executive Officers (or, in the case of a change of 7.5% or more, the Board of Directors) will have the right to approve the amendments in accordance with the process set out in Section 10.2 with the relevant time periods being amended accordingly and provided that any Questioned Items are resolved within 45 days of receipt of the notice by the Parent.

Section 10.5   Once the Approved Budget has been delivered, the Manager shall prepare and present to the Parent its estimate of the working capital requirements of the Vessels and the Group and the Manager shall each month update this estimate. Based on such estimate, the Manager shall each month make a request to the Parent and/or, as the case may be,

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the relevant members of the Group, in writing for the funds required to provide the Services to the applicable members of the Group and to operate each applicable Vessel for the ensuing month, including the payment of any occasional or extraordinary item of expenditure, such as emergency repair costs, additional insurance premiums, bunkers or provisions. Such funds shall be received by the Manager within ten calendar days after the receipt by the Parent or, as the case may be, the relevant member of the Group of the Manager’s written request and shall be held to the credit of the Parent or, in the Manager’s discretion, the relevant member of the Group in a separate bank account. At the end of each quarter or, if the Manager from time to time so requires, at the end of each month, the Manager shall preliminarily reconcile the amounts advanced to it by the Parent or, as the case may be, the relevant member of the Group with the amounts actually expended by it for the operation of each of the Vessels, and (a) the Manager shall remit to the Parent, or credit to the Parent amounts to be advanced to it hereunder for future months, any unused portion of the amounts previously advanced by the Parent or, as the case may be, any member of the Group, or (b) the Parent shall pay to the Manager any amounts properly expended by the Manager in excess of the amounts previously advanced by the Parent or, as the case may be, any member of the Group. The Parent and the Manager shall reconcile any amounts due to the Parent by the Manager or due to the Manager by the Parent for each fiscal year of the Parent as promptly as practicable following the close of each such fiscal year. Without prejudice to Section 10.8, any expenses incurred by the Manager under the terms of this Agreement on behalf of any member of the Group may be debited against the account of the respective member of the Group, but shall in any event remain payable by the Parent and the relevant member of the Group to the Manager on demand.

Section 10.6     The Manager shall produce a monthly comparison between budgeted and actual expenditures to the Executive Officers. The Manager shall also maintain the records of all costs and expenses incurred, including any invoices, receipts and supplementary materials as are necessary or proper for the settlement of accounts.

Section 10.7     Insofar as any moneys are collected by the Manager under the terms of this Agreement, any Shipmanagement Agreement and/or any Supervision Agreement (other than moneys payable by a member of the Group to the Manager), such moneys and any interest thereon shall be held to the credit of the relevant member of the Group in a separate bank account in the name thereof, but operated by the Manager and the Parent jointly. Interest on any such bank account shall be for the benefit of the relevant member of the Group.

Section 10.8     Notwithstanding anything contained herein to the contrary, the Manager shall in no circumstances be required to use or commit its own funds to finance the provision of the Services, other than (i) as contemplated by Section 8.1 hereof or (ii) with respect to the employees employed by the Manager in the ordinary course of business.

Article XI

LIABILITY AND INDEMNITY

Section 11.1     Save for the obligation of the Parent to pay any moneys due to the Manager hereunder, neither any member of the Group nor the Manager shall be under any liability to the other for any failure to perform any of their obligations hereunder by reason of

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Force Majeure. “Force Majeure” shall mean any cause whatsoever of any nature or kind beyond the reasonable control of the relevant member of the Group or the Manager, including, without limitation, acts of God, acts of civil or military authorities, acts of war or public enemy, acts of any court, regulatory agency or administrative body having jurisdiction, insurrections, riots, strikes or other labor disturbances, embargoes or other causes of a similar nature.

Section 11.2     The Manager, including its officers, directors, employees, shareholders, agents, sub-contractors and any Submanager (the “Manager Related Parties”), shall be under no liability whatsoever to any member of the Group or to any third party (including the Crew) for any loss, damage, delay or expense of whatsoever nature, whether direct or indirect (including but not limited to loss of profit arising out of or in connection with detention of or delay to a Vessel), and howsoever arising in the course of the performance of this Agreement, any Shipmanagement Agreement or any Supervision Agreement, unless and to the extent that the same is proved to have resulted solely from the gross negligence or willful misconduct of the Manager, its officers, employees, agents, sub-contractors or any Submanager.

Section 11.3     The Parent shall indemnify and hold harmless the Manager Related Parties against all actions, proceedings, claims, demands or liabilities whatsoever or howsoever arising which may be brought against them or incurred or suffered by them arising out of or in connection with the performance of this Agreement, any Shipmanagement Agreement or any Supervision Agreement and against and in respect of any loss, damage, delay or expense of whatsoever nature (including legal costs and expenses on a full indemnity basis), whether direct or indirect, incurred or suffered by any Manager Related Party arising out of or in connection with the performance of this Agreement, any Shipmanagement Agreement and any Supervision Agreement, unless incurred or suffered due to the gross negligence or willful misconduct of any Manager Related Party.

Section 11.4     It is hereby expressly agreed that no employee or agent of the Manager (including any sub-contractor from time to time employed by the Manager) shall in any circumstances whatsoever be under any liability whatsoever to any member of the Group or any third party for any loss, damage or delay of whatsoever kind arising or resulting directly or indirectly from any act, neglect or default on his part while acting in the course of or in connection with his employment and, without prejudice to the generality of the foregoing provisions in this Article XI, every exemption, limitation, condition and liberty herein contained and every right, exemption from liability, defense and immunity of whatsoever nature applicable to the Manager or to which the Manager is entitled hereunder shall also be available and shall extend to protect every such employee or agent of the Manager acting as aforesaid, and for the purpose of all the foregoing provisions of this Article XI, the Manager is or shall be deemed to be acting as agent or trustee on behalf of and for the benefit of all Persons who are or might be their servants or agents from time to time (including sub-contractors as aforesaid) and all such Persons shall to this extent be or be deemed to be parties to this Agreement. Nothing in this Section 11.4 shall be construed so as to further limit any liability the Manager may have to the Group under Section 11.2 hereof.

Section 11.5     The provisions of this Article XI shell survive any termination of this Agreement.

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Article XII

RIGHTS OF THE MANAGER, RESTRICTIONS ON THE MANAGER’S
AUTHORITY, AND NON-COMPETE PROVISIONS

Section 12.1     Except as may be provided in this Agreement or in any separate written agreement between the Parent or any other member of the Group and the Manager, the Manager shall be an independent contractor and not the agent of the Parent or any other member of the Group and shall have no right or authority to incur any obligation on behalf of any member of the Group or to bind any member of the Group in any way whatsoever. Nothing in this Agreement shall be deemed to make the Manager or any of its subsidiaries or employees an employee, joint venturer or partner of any member of the Group.

Section 12.2     The Parent acknowledges that the Manager shall have no responsibility hereunder, direct or indirect, with regard to the formulation of the business plans, policies, management or strategies (financial, tax, legal or otherwise) of any member of the Group, which is solely the responsibility of each respective member of the Group. Each member of the Group shall set its corporate policies independently through its respective board of directors and executive officers and nothing contained herein shall be construed to relieve such directors or officers of each respective member of the Group from the performance of their duties or to limit the exercise of their powers.

Section 12.3     Notwithstanding the other provisions of this Agreement:

(a)     the Manager may act with respect to a member of the Group upon any advice, resolutions, requests, instructions, recommendations, direction or information obtained from such member of the Group or any banker, accountant, broker, lawyer or other Person acting as agent of or adviser to such member of the Group and the Manager shall incur no liability to such member of the Group for anything done or omitted or suffered in good faith in reliance upon such advice, instruction, resolution, recommendation, direction or information made or given by such member of the Group or its agents, in the absence of gross negligence or willful misconduct by the Manager or its servants, and shall not be responsible for any misconduct, mistake, oversight, error of judgment, neglect, default, omission, forgetfulness or want of prudence on the part of any such banker, accountant, broker, lawyer, agent or adviser or other Person as aforesaid;

(b)     the Manager shall not be under any obligation to carry out any request, resolution, instruction, direction or recommendation of any member of the Group or its agents if the performance thereof is or would be illegal or unlawful; and

(c)     the Manager shall incur no liability to any member of the Group for doing or failing to do any act or thing which it shall be required to do or perform or forebear from doing or performing by reason of any provision of any law or any regulation or resolution made pursuant thereto or any decision, order or judgment of any court or any lawful request, announcement or similar action of any Person or body exercising or purporting to exercise the legitimate authority of any government or of any central or local governmental institution in each case where the above entity has jurisdiction.

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Section 12.4

(a)     During the period commencing on the Effective Date and ending one year following termination of the Management Agreement (the “Manager Restricted Period”), the Manager shall be prohibited from, directly or indirectly, providing management services to, or with respect to, any Drybulk Vessels (such activities, the “Manager Competitive Activities”), other than as set forth in Section 12.4(b).

(b)     Subject to Section 4.10, the Manager may engage in Manager Competitive Activities pursuant to its involvement with the Parent and with respect to the following: (i) Drybulk Vessels that are owned or operated (which includes chartering—in activities) by one or more of the Hajioannou Entities or a family member of Polys Hajioannou and (ii) Drybulk Vessel Businesses that are acquired, invested in or controlled by one or more of the Hajioannou Entities or a family member of Polys Hajioannou, in the case of each of clauses (i) and (ii), subject to compliance with, or waivers of, the Hajioannou Restrictive Covenant Agreement and the Other Restrictive Covenant Agreement, as applicable.

Article XIII

TERMINATION OF THIS AGREEMENT

Section 13.1     This Agreement shall be effective as of the Effective Date and, subject to Sections 13.2, 13.2(c), 13.4, 13.5 and 13.6, shall continue until the date falling three years after the Effective Date (the “Initial Term”). Thereafter, the term of this Agreement shall be automatically extended for an additional three-year period up to two times (each a “Subsequent Term”) unless the Parent, at least 24 months prior to the end of the then current term, gives written notice to the Manager (a “Termination Notice”) that it wishes to terminate this Agreement at the end of the then current term. In no event will the term of this Agreement (the “Term”) extend beyond the date falling 9 years after the Effective Date (such date, the “Fully-Extended Expiration Date”).

Section 13.2     The Parent shall be entitled to terminate this Agreement upon notice in writing to the Manager if:

(a)     the Manager commits a Willful and Material Breach in the performance of its duties under this Agreement, subject to a cure right of 40 Business Days following written notice by the Parent; provided that any default of the Manager to perform any of its obligations under a relevant Shipmanagement Agreement or any Supervision Agreement shall not, in itself, entitle the Parent to terminate this Agreement pursuant to this Section 13.2(a); provided, further, that if a Submanager was performing services under a Shipmanagement Agreement that was terminated due to the default of that Submanager, the Parent shall be entitled to direct the Manager to remove and replace such Submanager with respect to any other Shipmanagement Agreement under which such Submanager is then performing services;

(b)     an aggregate amount in excess of 100,000 USD that is due and payable to the Parent or third parties by the Manager under this Agreement is not paid or accounted for within 20 Business Days following written notice by the Parent; or

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(c)     at any time after May 29, 2024, the Parent delivers 12 months written notice to the Manager (a “Third Term Termination Notice”).

Section 13.3     The Manager shall be entitled to terminate this Agreement by notice in writing to the Parent if:

(a)     an aggregate amount in excess of 100,000 USD that is due and payable by the Parent under this Agreement is not paid when due or if due on demand within 20 Business Days following demand by the Manager;

(b)     the Parent defaults in the performance of any other material obligations under this Agreement, subject to a cure right of 20 Business Days following written notice by the Manager;

(c)     there is a Change in Control of the Parent; or

(d)     the Management Fee for any Subsequent Term is determined by arbitration pursuant to the terms of Article XVII hereof and the arbitrators accept the Parent’s proposal, with such termination being effective at the end of that Subsequent Term.

Section 13.4     Either party shall be entitled to terminate this Agreement immediately if:

(a)     the other party ceases to conduct business, or all or substantially all of the equity-interests, properties or assets of either such party is sold, seized or appropriated;

(b)     (i) the other party files a petition under any bankruptcy law, makes an assignment for the benefit of its creditors, seeks relief under any law for the protection of debtors or adopts a plan of liquidation; (ii) a petition is filed against the other party seeking to have it declared insolvent or bankrupt and such petition is not dismissed or stayed within 40 Business Days of its filing; (iii) the other party shall admit in writing its insolvency or its inability to pay its debts as they mature; (iv) an order is made for the appointment of a liquidator, manager, receiver or trustee of the other party of all or a substantial part of its assets; (v) or if an encumbrancer takes possession of or a receiver or trustee is appointed over the whole or any part of the other party’s undertaking, property or assets; or (vi) if an order is made or a resolution is passed for the other party’s winding up;

(c)     a distress, execution, sequestration or other process is levied or enforced upon or sued out against a material amount of the other party’s property which is not discharged within 20 Business Days;

(d)     the other party ceases or threatens to cease wholly or substantially to carry on its business otherwise than for the purpose of a reconstruction or amalgamation without insolvency previously approved by the terminating party;

(e)     the other party is prevented from performing its obligations in any material respect hereunder by reasons of Force Majeure for a period of two or more consecutive months; or

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(f)     All Supervision Agreements and all Shipmanagement Agreements are terminated in accordance with the respective terms thereof;

provided that, in the event of a termination of this Agreement by the Parent pursuant to this Section 13.4, if the Other Management Agreement remains in effect at such time, a Manager Substitution shall be deemed to have occurred in respect of each member of the Group for which the Manager is acting as manager immediately prior to such termination.

Section 13.5     Notwithstanding anything to the contrary set forth herein, if the Manager has requested a Manager Substitution with respect of any member of the Group prior to any termination of this Agreement by the Parent, such termination shall not be effective until such Manager Substitution has been completed.

Section 13.6

(a)     In the event that this Agreement is terminated prior to the Fully-Extended Expiration Date (including, without limitation, pursuant to a Third Term Termination Notice), other than pursuant to (i) Parent’s termination of this Agreement pursuant to Section 13.4(a) through (e), (ii) a termination resulting from Manager’s Willful and Material Breach of this Agreement or (iii) a termination pursuant to a Termination Notice delivered by Parent to the Manager in accordance with Section 13.1, then, Parent shall pay to the Manager the Termination Fee, which amount shall be payable by wire transfer of immediately available funds, within three (3) business days of such termination to an account designated in writing by Manager.

(b)     Notwithstanding anything to the contrary in this Agreement, Parent, on behalf of itself and any other member of the Group, on the one hand, and the Manager, on the other hand, acknowledge and agree that the Termination Fee is not a penalty, but rather is liquidated damages in a reasonable amount that will compensate the Manager in the circumstances in which the Termination Fee is payable for the investments, efforts, expenses and resources expended and opportunity forgone in reliance on this Agreement and on the expectation of completing the services contemplated hereby, which amount would otherwise be impossible to calculate with precision.

(c)     If Parent fails to pay in a timely manner the Termination Fee due pursuant to Section 13.6(a), Parent shall pay interest on the Termination Fee at the prime rate of Bank of America, N.A. in effect from time to time from the date such payment was required to be made hereunder.

(d)     Notwithstanding the foregoing, no Termination Fee shall be payable by Parent if the Termination Fee (as defined in the Other Management Agreement) has been paid to the Manager pursuant to the Other Management Agreement.

(e)     Notwithstanding the foregoing, no Termination Fee shall be payable in the event that (i) the Manager has terminated this Agreement pursuant to Section 13.3(c) or Section 13.4(f) (as a result of a Manager Substitution), (ii) the Other Agreement remains in effect and (iii) each of the Vessels and/or Newbuilds managed pursuant to this Agreement immediately prior to termination thereof are managed by the Other Manager pursuant to the Other Agreement.

22

Section 13.7     Upon the effective date of termination pursuant to this Article XIII, the Manager shall promptly terminate its service hereunder, ensuring that such termination occurs in a manner that minimizes any interruption to the business of the members of the Group.

Section 13.8     Upon termination, the Manager shall, as promptly as possible, submit a final accounting of funds received and disbursed under this Agreement, any Supervision Agreement and/or any. Shipmanagement Agreement and of any remaining Management Fees and/or any other funds due from the Parent or any other member of the Group, calculated pro rata to the date of termination (except for those amounts payable in respect of the three months following the termination date under Section 9.3, which shall be payable by the Parent in accordance with that Section), and any non-disbursed funds of any member of the Group in the Manager’s possession or control will be paid by the Manager as directed by such member of the Group promptly upon the Manager’s receipt of all sums then due it under this Agreement, any Supervision Agreement and/or any Management Agreement, if any.

Section 13.9     Upon termination of this Agreement, the Manager shall release to the Parent the originals where possible, or otherwise certified copies, of all such accounts and all documents specifically relating to each Vessel or the provision of the Services.

Section 13.10   The provisions of this Article XIII shall survive any termination of this Agreement.

Article XIV

CHANGE IN CONTROL OF THE MANAGER AND RIGHT OF FIRST OFFER

Section 14.1     During the Manager Restricted Period, the Manager is prohibited from transferring, assigning, selling or disposing of substantially all or all of its assets or property that is necessary for the performance of its services under this Agreement, any Supervision Agreement or any Shipmanagement Agreement to any other party without the Consent of the Parent except in the event that at the same time as or within three months after such disposition takes place the Manager is set to replace the same with equivalent assets or property.

Section 14.2     During the Manager Restricted Period, in the event of a Proposed Change in Control of the Manager, the Parent shall have a right of first offer to purchase the Manager pursuant to the procedures set forth in Section 14.4.

Section 14.3     The Parent and the Manager acknowledge that all potential transfers pursuant to this Article XIV are subject to obtaining any and all written consents of governmental authorities and other non-affiliated third parties.

Section 14.4     Set forth below are the procedures for the Parent’s right of first offer to purchase the Manager under Section 14.2:

(a)     Prior to engaging in any negotiations or otherwise offering to consummate a Proposed Change in Control of the Manager with any third party, the Manager shall provide written notice of its intent to engage in a Proposed Change in Control of the Manager (a “First

23

Offer Notice”) and shall specify in such First Offer Notice the material terms and conditions (including the consideration to be paid, which shall be in cash) on which it would be willing to consummate a Proposed Change in Control of the Manager with the Parent, including any liabilities to be assumed by the Parent.

(b)     The Parent shall notify the Manager within 30 days after receiving a First Offer Notice (the “First Offer Period”) that either (i) the Parent does not wish to participate in a Proposed Change in Control of the Manager (a “Negative Response”) or (ii) the Parent does wish to participate in a Proposed Change in Control of the Manager, subject to the negotiation of the terms and conditions of the Proposed Change in Control of the Manager in accordance with the provisions of this Article XIV (an “Affirmative Response”).

(c)     In the event of an Affirmative Response, the Parent and the Manager shall negotiate in good faith during the First Offer Period the terms and conditions of an agreement for the consummation of a Proposed Change in Control of the Manager with the Parent and such terms and conditions are to be based on the terms and conditions set forth in the First Offer Notice.

(d)     In the event of a Negative Response or in the event the Parent and the Manager are unable to agree on the terms and conditions of an agreement for the consummation of a Proposed Change in Control of the Manager during the First Offer Period, then the Manager may consummate a Proposed Change in Control of the Manager within 120 days after the earlier of the date the Manager receives a Negative Response and the end of the First Offer Period with a third party 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, to the proposed purchaser than the terms and conditions specified in the First Offer Notice.

(e)     If the Manager does not consummate a Proposed Change in Control of the Manager to a third party within 120 days after the earlier of the date the Manager receives a Negative Response from the Parent and the end of the First Offer Period in accordance with Section 14.4(d) then the Manager shall not thereafter consummate a Proposed Change in Control of the Manager without first offering to consummate a Proposed Change in Control of the Manager with the Parent in the manner provided above.

Section 14.5     Upon request of the Parent, the Manager shall promptly disclose to the Parent the respective ownership, both record and beneficial, interests in the Manager of (a) the Hajioannou Entities, (b) directors, officers and employees of the Manager as a group, and (e) any other persons who are record or beneficial owners of the Manager, together with the identities of such other persons.

Article XV

NOTICES

Section 15.1     All notices, consents and other communications hereunder, or necessary to exercise any rights granted hereunder, shall be in writing, sent by prepaid registered

24

mail, and will be validly given if delivered on a Business Day to an individual at the following address:

If to the Parent:

Safe Bulkers, Inc.
Apt.D11 Les Acanthes
6, Avenue des Citronniers
MC98000 Monaco

Attention: President

If to the Manager:

Safe Bulkers Management Limited
KPMG Building – Office G1B
Agias Fylaxeos 1
3025 Limassol
Cyprus

Attention: Director

Section 15.2     Parent and Manager shall deliver written notice to the other party of any change in their respective address from that which is set forth in this Section 15.1.

Article XVI

APPLICABLE LAW

Section 16.1     This Agreement shall be governed by, and construed in accordance with, the laws of England.

Section 16.2     Except for Section 3.5 and Article XI which can be relied upon by a Submanager, no other term of this Agreement is enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Agreement.

Article XVII

ARBITRATION

Section 17.1     Any dispute arising out of or in connection with this Agreement shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Article XVII. The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the arbitration proceedings are commenced.

25

Section 17.2     The reference shall be to three arbitrators. A party wishing to refer a dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other party requiring the other party to appoint its own arbitrator within 14 calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the 14 days specified. If the other party does not appoint its own arbitrator and give notice that it has done so within the 14 days specified, the party referring a dispute to arbitration may, without the requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on both parties as if he had been appointed by agreement. Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator.

Section 17.3     In the case of (i) any failure of the parties to agree on the Management Fee for any Subsequent Term within 30 days prior to the commencement of that Subsequent Term or (ii) any failure of the parties to agree upon the resolution of any Questioned Items in a Draft Budget prior to the 20th of November of a calendar year, the terms of this Section 17.3 shall be applicable. Notwithstanding any contrary provisions of this Article XVII (but otherwise subject to such provisions), the following “Baseball Arbitration” provisions shall apply to the matters referred to in clauses (i) and (ii) above:

(a)     Each party shall designate one arbitrator within 5 business days following the relevant date specified in clause (i) or (ii) above; and the two arbitrators so designated shall designate a third within 10 Business Days thereafter; provided, however, that the parties may agree to a single arbitrator. If either party fails to designate an arbitrator within such 5 Business Day period, the other arbitrator can render an award hereunder.

(b)     Each party shall propose an amount for each item in dispute that is subject to this Section 17.3, which shall be provided in writing to the arbitrators, together with any supporting documentation. Such proposed amounts may differ from the amounts proposed by the parties in their negotiations prior to triggering the implementation of this Section 17.3. The arbitrators may, but shall not be required to, accept oral testimony in addition to supporting documentation.

(c)     Within 20 Business Days following the selection of the arbitrators hereunder, they shall, by majority vote, accept the proposal of one party or the other for each item that is the subject of arbitration pursuant to this Section 17.3.

(d)     Awards under this Section 17.3 shall not include costs, but may include interest if the payment date for any amount shall have passed. The fees and expenses of the arbitrators under this Section 17.3 shall be borne by the losing party (and may be apportioned by the arbitrators if more than one item is the subject of an arbitration).

(e)     Awards under this Section 17.3 shall be final and binding on the parties.

26

Article XVIII

MISCELLANEOUS

Section 18.1     This Agreement (which includes the Annex) constitutes the sole understanding and agreement of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements or understandings, written or oral, with respect thereto. This Agreement may not be amended, waived or discharged except by an instrument in writing executed by the party against whom enforcement of such amendment, waiver or discharge is sought.

Section 18.2     During the term hereof, the Manager will not provide services hereunder through, or otherwise cause any member of the Group to have, an office or fixed place of business in the United States.

Section 18.3     This Agreement may be executed in one or more written counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument.

Section 18.4     

(a)     When a reference is made to an Article, Section or Schedule, such reference shall be to an Article, Section or Schedule of this Agreement unless otherwise indicated.

(b)     Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”.

(c)     Unless the context requires otherwise, words using the singular or plural number also include the plural or singular number, respectively, the use of any gender herein shall be deemed to include the other genders, words denoting natural persons shall be deemed to include business entities and vice versa and references to a Person are also to its permitted successors and assigns.

(d)     References to “Euro” or “€” are to the currency of the European Monetary Union.

(e)     References to “Dollar” or “$” are to the currency of the United States.

(f)     References to any statute shall be deemed to refer to such statute as amended from time to time and to any rules or regulations promulgated thereunder.

Section 18.5     For the avoidance of doubt, the Shipmanagement Agreements and Supervision Agreements in effect immediately prior to the Effective Date remain in full force and effect; provided, however, that, in the event of a conflict between a Shipmanagement Agreement or a Supervision Agreement, on the one hand, and this Agreement, on the other hand, this Agreement shall control.

27

[Signature Page Follows]

28

IN WITNESS WHEREOF the undersigned have executed this Agreement as of the date first above written.

Safe Bulkers, Inc.
By:	/s/  Loukas Barmparis
Name:	Loukas Barmparis
Title:	President
SAFE BULKERS MANAGEMENT LIMITED
By:	/s/  George Papadopoulos
Name:	George Papadopoulos
Title:	Director

[Signature Page to Management Agreement]

APPENDIX I

Form of Hajioannou Entities Restrictive Covenant Agreement

APPENDIX II

Form of Polys Hajioannou Restrictive Covenant Agreement

APPENDIX III

Form of Shipmanagement Agreement

APPENDIX IV

Form of Supervision Agreement

SCHEDULE A

Shipowning Subsidiaries

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
Gloverfour Shipping Corporation	Marshall Islands
Gloverfive Shipping Corporation	Marshall Islands
Gloversix 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	Marshall Islands
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
Pentakomo Shipping Corporation	Marshall Islands
Petra Shipping Ltd.	Liberia
Shikoku Friendship Shipping Company	Marshall Islands
Soffive 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

SCHEDULE B

Non-Shipowning Subsidiaries

Subsidiary	Jurisdiction of Incorporation
Gloverthree Shipping Corporation	Marshall Islands
Gloverseven Shipping Corporation	Marshall Islands
Kyotofriendo One Shipping Inc.	Marshall Islands
Kyotofriendo Two Shipping Inc.	Marshall Islands
Maxeikosipente Shipping Corporation	Liberia
Staloudi Shipping Corporation	Liberia
Shikokuennia Shipping Inc.	Marshall Islands

SCHEDULE C

Group Members Managed by Manager

Company	Jurisdiction of Incorporation
Safe Bulkers Inc.	Marshall Islands
Avstes Shipping Corporation	Liberia
Eniadefhi Shipping Corporation	Liberia
Eniaprohi Shipping Corporation	Liberia
Glovertwo Shipping Corporation	Marshall Islands
Gloverfour Shipping Corporation	Marshall Islands
Gloverfive Shipping Corporation	Marshall Islands
Gloversix 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
Maxeikositessera Shipping Corporation	Marshall Islands
Maxeikosiexi Shipping Corporation	Liberia
Maxeikosiepta Shipping Corporation	Liberia
Maxenteka Shipping Corporation	Marshall Islands
Pelea Shipping Ltd.	Liberia
Pemer Shipping Ltd.	Liberia
Pentakomo Shipping Corporation	Marshall Islands
Petra Shipping Ltd.	Liberia
Pinewood Shipping Corporation	Marshall Islands
Shikoku Friendship Shipping Company	Marshall Islands
Soffive 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

SCHEDULE D

Newbuilds

Subsidiary Jurisdiction of Incorporation Vessel Name

SCHEDULE E

Ship Management Fees, Commissions and Supervision Fees

In consideration of the Manager providing the Services to the Group, during the current Term (which shall begin on May 29, 2018), the Parent shall pay the Manager the following ship management fees:

(a)     a variable ship management fee of Euro 875 per day per Vessel, payable monthly in arrears (pro rated to reflect the number of days that the Parent (or any Subsidiary) owns or charters in each such Vessel during the applicable month);

(b)     a variable ship management fee of Euro 250 per day per Vessel chartered-out to a third party on a bareboat charter basis, payable monthly in arrears;

(c)     a variable fee equal to 0.0% calculated on the aggregate of the gross freight, demurrage, charter hire and ballast bonus obtained for the employment of each Vessel during the Term, payable to the Manager monthly in arrears, but only to the extent such freight, demurrage, charter hire or ballast bonus, as the case may be, is recognized as revenue;

(d)     a commission equal to 1% calculated on the price set forth in the memorandum of agreement or other sale and purchase contract of (i) the Newbuilds set forth on Schedule D hereto, payable upon delivery of the Newbuilds to the relevant member of the Group; and (ii) any other Vessel bought or sold by the Parent or any Subsidiary, payable upon final delivery of such vessel to the relevant member of the Group or the relevant purchaser, as applicable; and

(e)     a supervision fee of $550,000 per Newbuild for the services rendered by the Manager under the Supervision Agreement in respect of such Newbuild, payable in accordance with the terms of such Supervision Agreement.

(f)     A flat ship management fee (Annual Fee) of Euro 3,000,000 per annum, payable quarterly in arrears (pro-rated to reflect the number of days that such fee is payable during the applicable quarter).

Notwithstanding anything to the contrary set forth in this Agreement, Parent’s obligation to pay the Annual Fee shall survive the termination of this Agreement, and shall be payable by Parent to the Manager for so long as either this Agreement or the Other Management Agreement remains in effect.

EX-4.5

Exhibit 4.5

Dated 22 September 2014
as amended by supplemental agreements dated 20 February 2015
and 15 December 2015
as amended and restated on 22 February 2016
as further amended by supplemental agreements dated 1 June 2016
and 8 December 2016,
as further amended and restated on 26 July 2017
and as further amended and restated on 3 October 2018

SAFE BULKERS, INC.

as Borrower

and

THE FINANCIAL INSTITUTIONS
listed in Schedule 1

as Original Lenders

and

DNB BANK ASA

as Mandated Lead Arranger

and

DNB BANK ASA

as Agent

and

DNB BANK ASA

as Swap Provider

and

DNB BANK ASA

as Security Agent

AMENDED AND RESTATED LOAN AGREEMENT

relating to
$142,000,000 term loan facility

Index

Clause		Page
Section 1 Interpretation		2
1	Definitions and Interpretation	2
Section 2 The Loan		28
2	The Loan	28
3	Purposes	28
4	Conditions of Utilisation	28
Section 3 Utilisation		30
5	Advance	30
Section 4 Repayment, Prepayment and Cancellation		31
6	Repayment	31
7	Illegality, Prepayment and Cancellation	31
Section 5 Costs of Utilisation		37
8	Interest	37
9	Interest Periods	38
10	Changes to the Calculation of Interest	38
11	Fees	39
Section 6 Additional Payment Obligations		41
12	Tax Gross Up and Indemnities	41
13	Increased Costs	49
14	Other Indemnities	50
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	66
21	General Undertakings	67
22	Events of Default	74
Section 9 Changes to Parties		79
23	Changes to the Lenders	79
24	Changes to the Security Parties	82
Section 10 The Finance Parties		83
25	Role of the Agent, the Security Agent and the Arranger	83
26	Conduct of Business by the Finance Parties	93
27	Sharing among the Finance Parties	93
Section 11 Administration		95
28	Payment Mechanics	95
29	Set-Off	99
30	Notices	99
31	Calculations and Certificates	102
32	Partial Invalidity	102
33	Remedies and Waivers	102
34	Amendments and Waivers	103
35	Confidentiality	106
36	Disclosure of Lender Details by Agent	109

37	Counterparts	111
Section 12 Governing Law and Enforcement		112
38	Governing Law	112
39	Enforcement	112
40	Bail-In	112
Schedules
Schedule 1 The Original Lenders		114
Schedule 2		115
	Part A Conditions Precedent	115
	Part B Conditions Subsequent	120
	Part C Delivery Conditions Precedent	121
	Part D Delivery Conditions Subsequent	124
Schedule 3 Drawdown Request		125
Schedule 4 Form of Transfer Certificate		126
Schedule 5 Form of Assignment Agreement		129
Schedule 6 Form of Compliance Certificate		132
Schedule 7		134
Execution
Execution Page		134

THIS AGREEMENT is made on 22 September 2014 as amended by supplemental agreements dated 20 February 2015 and 15 December 2015, as further amended and restated by an amending and restating agreement dated 22 February 2016, as further amended by supplemental agreements dated 1 June 2016 and 8 December 2016, as further amended and restated by an amending and restating agreement dated 26 July 2017 and is further amended and restated by the Deed of Amendment, Restatement, Release and Confirmation.

Parties

(1) SAFE BULKERS, INC., a corporation 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”)

(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”)

(3) DNB BANK ASA, acting as mandated lead arranger through its office at 8th Floor, The Walbrook Building, 25 Walbrook, London EC4N 8AF, England (in that capacity, the “Arranger”)

(4) DNB BANK ASA, acting as agent through its office at 8th Floor, The Walbrook Building, 25 Walbrook, London EC4N 8AF, England (in that capacity, the “Agent”)

(5) DNB BANK ASA, acting as swap provider through its office at 8th Floor, The Walbrook Building, 25 Walbrook, London EC4N 8AF, England (in that capacity, the “Swap Provider”)

(6) DNB BANK ASA, acting as security agent through its office at 8th Floor, The Walbrook Building, 25 Walbrook, London EC4N 8AF, England (in that capacity, the “Security Agent”)

Background

(A) Each Collateral Owner is a wholly owned subsidiary of the Borrower and is the registered owner of the relevant Vessel and has registered that Vessel under an Approved Flag.

(B) Each of the Original Lenders had agreed to advance a secured term loan of originally up to $210,000,000 to provide post-delivery financing in respect of the Vessels and for general corporate purposes.

(C) By the Deed of Amendment, Restatement, Release and Confirmation, the Borrower, the other Security Parties and the Finance Parties agreed, amongst other things, to:

(i) split the Term Loan Facility, currently outstanding, into two separate Tranches;

(ii) extend the maturity date of the Loan; and

(iii) amend the applicable Margin for each Tranche.

(D) This Agreement sets out the terms and conditions of the Loan Agreement as amended and restated by the Deed of Amendment, Restatement, Release and Confirmation.

Operative Provisions

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:

(a) each Existing Charter Provided that:

(i) it has an unexpired term of at least three (3) months’ duration;

(ii) it remains secured by the Existing Charter Performance Guarantee relevant thereto;

(iii) in the opinion of the Agent (at its absolute discretion) the financial condition of the charterer who is a party thereto has not deteriorated; and

(iv) it has not been terminated, repudiated, cancelled, suspended, rescinded, revoked or otherwise ceases to remain in full force and effect other than by effluxion of time; and

(b) any other time charter or other contract of employment which:

(i) has an unexpired term of at least three (3) months’ duration; and

(ii) 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

(iii) 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 8th 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.

2

“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(d) (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).

“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(b) (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 in relation to the Term Loan Facility the period which ended on 8 February 2016.

“Bail-In Action” means the exercise of any Write-down and Conversion Powers.

“Bail-In Legislation” means:

(a) in relation to an EEA Member Country which has implemented, or which at any time implements, Article 55 of Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms, the relevant implementing law or regulation as described in the EU Bail-In Legislation Schedule from time to time; and

(b) in relation to any other state, any analogous law or regulation from time to time which requires contractual recognition of any Write-down and Conversion Powers contained in that law or regulation.

“Balloon Instalment” means Tranche A Balloon Instalment or Tranche B Balloon Instalment.

3

“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 the Loan or an Unpaid Sum to the last day of the current Interest Period in respect of the Loan or Unpaid Sum, had the principal amount or Unpaid Sum received been paid on the 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.

“Builder” means the person specified as such in the definition of “Newbuilding Vessel” below.

“Building Contract” means the memorandum of agreement in respect of the Newbuilding Vessel dated 7 December 2011 (as amended and/or supplemented) on the terms and subject to the conditions of which the Seller has agreed to sell and deliver the Newbuilding Vessel to be constructed by the Builder to Shikokuexi.

“Business Day” means a day (other than a Saturday or Sunday) on which banks are open for general business in New York, Athens and London.

“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 twelve (12) 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 Eniadefhi Shipping Corporation (“Eniadefhi”), Eniaprohi Shipping Corporation (“Eniaprohi”), Maxdodeka Shipping Corporation (“Maxdodeka”), Pelea Shipping Ltd. (“Pelea”) and Vasstwo Shipping Corporation (“Vasstwo”), each a corporation incorporated under the laws of the Republic of Liberia whose registered address is at 80 Broad Street, Monrovia, Liberia, Vassone Shipping Corporation (“Vassone”) a corporation domesticated 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, Gloverfour Shipping Corporation (“Gloverfour”), Gloverfive Shipping Corporation (“Gloverfive”) and Shikokuexi Shipping Inc. (“Shikokuexi”), Youngone Shipping Corporation (“Youngone”), each a corporation incorporated under the laws of the Republic of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 and “Collateral Owner” means each one of them.

“Commitment” means:

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(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 paid or to be paid by the Borrower to the Agent under Clause 11.2 (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

(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:

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(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 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” has the meaning given in the Side Letter.

“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 Clause 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.

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“Deed of Covenants” means the deed of covenants referred to in Clause 17.1(a) (Security Documents).

“Deed of Amendment, Restatement, Release and Confirmation” means the deed of amendment, restatement, release and confirmation dated 3 October 2018 and made between (i) the Borrower, (ii) the Collateral Owners, (iii) the Original Lender, (iv) the Mandated Lead Arranger, (v) the Agent, (vi) the Swap Provider and (vii) the Security Agent setting out the terms and conditions upon which this Agreement and certain other Finance Documents have been amended, restated and/or supplemented.

“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

(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.

“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:

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(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).

“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” means, as of the last day of each semi-annual period ending on 30 June or 31 December, the consolidated net pre-taxation profits of the Group ending on such day, as stated in the then most recent and relevant Accounting Information, as such profits are adjusted by:

(a) adding back Interest Expense;

(b) taking no account of any exceptional or extraordinary item;

(c) adding back depreciation and amortisation;

(d) deducting any non-cash income and non-cash gains; and

(e) taking no account of any revaluation of an asset or any loss or gain over book value arising on the disposal of an asset (otherwise than in the ordinary course of trading) by a member of 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 Eniadefhi with the Account Holder and designated “Eniadefhi Shipping Corporation - Earnings Account” with account number 63646001;

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(b) a bank account opened in the name of Eniaprohi with the Account Holder and designated “Eniaprohi Shipping Corporation - Earnings Account” with account number 63647001;

(c) a bank account opened in the name of Maxdodeka with the Account Holder and designated “Maxdodeka Shipping Corporation - Earnings Account” with account number 63940001;

(d) a bank account opened in the name of Pelea with the Account Holder and designated “Pelea Shipping Ltd. - Earnings Account” with account number 63397003;

(e) 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;

(f) 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;

(g) 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;

(h) a bank account opened or to be opened in the name of Vassone with the Account Holder and designated “Vassone Shipping Corporation - Earnings Account” with account number 65422001;

(i) a bank account opened or to be opened in the name of Shikokuexi with the Account Holder and designated “Shikokuexi Shipping Inc. - Earnings Account” with account number 65846001; and

(j) a bank account opened in the name of Youngone with the Account Holder and designated “Youngone Shipping Corporation - Earnings Account” with account number 66491001,

and “Earnings Account”, means any one of them.

“EEA Member Country” means any member state of the European Union, Iceland, Liechtenstein and Norway.

“Effective Date” means the date on which the Agent confirms in writing to the Borrower that the conditions precedent listed in clause 3.2 of the Deed of Amendment, Restatement, Release and Confirmation are satisfied.

“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

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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.

“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.

“EU Bail-In Legislation Schedule” means the document described as such and published by the LMA from time to time.

“Event of Default” means any event or circumstance specified as such in Clause 22 (Events of Default).

“Existing Charter” means, in respect of:

(a) m.v. “KANARIS”, a capesize bulk carrier vessel registered in the ownership of Maxpente Shipping Corporation (the “Kanaris Owner”) under the laws and flag of the Marshall Islands, a time charter dated 7 February 2008 as amended and/or supplemented from time to time and made between the Kanaris Owner as owner and Energy Eastern Pte. Ltd. as charterer for a daily charter hire of $25,928 with a termination date not earlier than June 2031;

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(b) m.v. “PELOPIDAS”, a capesize bulk carrier vessel registered in the ownership of Eptaprohi Shipping Corporation (the “Pelopidas Owner”) under the laws and flag of the Marshall Islands, a time charter dated 25 June 2008 as amended and/or supplemented from time to time and made between the Pelopidas Owner as owner and Global Chartering Limited as charterer for a daily charter hire of $38,000 with a termination date not earlier than December 2021; and

(c) m.v. “LAKE DESPINA”, a capesize bulk carrier vessel registered in the ownership of Maxtessera Shipping Corporation (the “Lake Despina Owner”) under the laws and flag of Cyprus, a time charter dated 23 November 2010 as amended and/or supplemented from time to time and made between the Lake Despina Owner as owner and Louis Dreyfus as charterer for a daily charter hire of $24,810 with a termination date not earlier than January 2024,

and, in the plural, means all of them.

“Existing Charter Performance Guarantee” means, in respect of each Existing Charter, the guarantee of the obligations of the charterer who is a party thereto granted by the parent company of such charterer in favour of the relevant owner.

“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 2019; or

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(c) in relation to a “passthru payment” described in section 1471(d)(7) of the Code not falling within (a) or (b), 1 January 2019,

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.

“Fee Letter” means any letter or letters 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, the Deed of Amendment, Restatement, Release and Confirmation, the Master Agreement, the Security Documents, any 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;

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(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).

“GAAP” means generally accepted accounting principles in the United States of America.

“Group” means the Borrower and its Subsidiaries for the time being, including without limitation the Collateral Owners.

“Group Lender” means each lender that is party to a Group Loan Agreement, and in the plural means all of them.

“Group Loan Agreement” means each loan agreement entered into between a Group Lender and the Borrower and/ or any Subsidiaries of the Borrower, and in the plural means all of them.

“Group Obligor” means each of the Borrower and any other direct or indirect Subsidiaries of the Borrower who have given security to any Group Lender in respect of any financial indebtedness of the Borrower or any of its subsidiaries;

“Group Vessel” means any vessel owned by, leased by under a financial lease or constructed for (in the case of a newbuilding 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(c) (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.

“Hadjioannou Family” means the members outlined in paragraphs (b) and (c) of the definition of the “Current Shareholders”.

“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;

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(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.

“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

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(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));

(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.

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“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 4.3 (Conditions subsequent).

“Legal Reservations” means:

(a) the principle that equitable remedies may be granted or refused at the discretion of a court and the limitation of enforcement by laws relating to insolvency, reorganisation and other laws generally affecting the rights of creditors;

(b) the time barring of claims under the Limitation Acts, the possibility that an undertaking to assume liability for or indemnify a person against non-payment of 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:

(a) the applicable Screen Rate; or

(b) (if (i) no Screen Rate is available for the currency of the Loan 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.

“LMA” means the Loan Market Association or any successor organisation.

“Loan” means the loan made available under the Term Loan Facility or the aggregate principal amount outstanding for the time being of the borrowings under the Term Loan Facility and a “part of the Loan” means a Tranche, a part of a Tranche or any other part of the Loan as the context may require.

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“Majority Lenders” means a Lender or Lenders whose Commitments aggregate more than 66 2/3% of the Total Commitments (or, if the Total Commitments have been reduced to zero, aggregated more than 66 2/3% of the Total Commitments immediately prior to the reduction).

“Management Agreements” means, the agreements for the commercial and/or technical management of the Vessels between the Collateral Owners and the Managers and “Management Agreement” means any one of them.

“Managers” means either (i) Safety Management Overseas S.A. (“SMO”), 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 (ii) Safe Bulkers Management Limited (“SBM”), of the Republic of Cyprus, whose registered office is at Panteli Katelari 16, Diagoras House, 7^th Floor, 1097 Nicosia, Cyprus or (iii) such other commercial and/or technical managers of the Vessels nominated by a 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.

“Margin” means in relation to:

(a) Tranche A:

(i) 2.15 per cent. (2.15%) per annum, for the period commencing on the Effective Date and ending on 30 March 2019;

(ii) 2.40 per cent. (2.40%) per annum, for the period commencing on 31 March 2019 and ending on 30 March 2020; and

(iii) 2.65 per cent. (2.65%) per annum, for the period commencing on 31 March 2020 and throughout the remainder of the Facility Period; and

(b) Tranche B:

(i) 2.10 per cent. (2.10%) per annum, for the period commencing on the Effective Date and ending on 30 March 2022; and

(ii) 2.30 per cent. (2.30%) per annum, for the period commencing on 31 March 2022 and throughout the remainder of the Facility Period.

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“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(d) (Security Documents).

“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.

“Mortgage” means the first preferred or priority statutory mortgage referred to in Clause 17.1(a) (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.

“MVC” means, in respect of each Group Loan Agreement, the minimum security cover ratio required to be maintained under the terms of that Group Loan Agreement pursuant to provisions equivalent to the terms of Clause 17.10.

“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).

“Novated Master Agreement” means the master agreement (on the ISDA 1992 form) and schedule thereto both dated 27 December 2012 made between each of Eniadefhi, Maxdodeka, Eniaprohi, Pelea, Avstes Shipping Corporation (“Avstes”) and Marindou Shipping Corporation (“Marindou)” (as joint and several co-obligors) and the Swap Provider (as swap provider), as

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amended, supplemented and novated pursuant to a novation agreement dated 4 November 2014 and made between Eniadefhi, Maxdodeka, Eniaprohi, Pelea, Avstes 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 novated 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

(ii) 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:

(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

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(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.

“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, 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.

“Refinancing Market Value” has the meaning given to it in clause 1.2 of the Deed of Amendment, Restatement, Release and Confirmation.

“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 and the Management Agreements.

“Relevant Interbank Market” means the London interbank market.

“Relevant Jurisdiction” means, in relation to a Security Party:

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(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.

“Relevant Percentage” means, in respect of each Group Loan Agreement, a fraction (expressed as a percentage) where (a) the numerator is the market value of any additional security or the amount of the prepayment provided to a Group Lender and (b) the denominator is the principal amount of the loan outstanding under that Group Loan Agreement immediately prior to the application of any prepayment or provision of additional security under paragraph (a).

“Repayment Date” means the date for payment of any Repayment Instalment in accordance with Clause 6 (Repayment).

“Repayment Instalment” means any instalment of the Term Loan Facility to be repaid by the Borrower under Clause 6 (Repayment).

“Repeating Representations” means each of the representations set out in Clause 18.1 (Representations) (other than Clauses 18.1(g), 18.1(i), 18.1(j), 18.1(l), 18.1(l)(v), 18.1(n), 18.1(o), 18.1(p), 18.1(q)).

“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 confirming its due incorporation, capacity and its continuing existence.

“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 Cash Account” means a bank account opened in the name of Borrower with the Account Holder and designated “Safe Bulkers, Inc. - Restricted Cash Account” with account number 63666022.

“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.

“Resolution Authority” means any body which has authority to exercise any Write-down and Conversion Powers.

“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 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.

“Side Letter” means the side letter evidencing the Current Shareholders of the Borrower on the Effective 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.

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“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).

“Term Loan Facility” means, the term loan facility made available under this Agreement as described in Clause 2.1 (Amount).

“Termination Date” means, in relation to:

(a) Tranche A, 30 September 2022; and

(b) Tranche B, 30 September 2024.

“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.

“Tranche” means Tranche A or Tranche B.

“Tranche A” means that part of the Loan made or to be made available to the Borrower in relation to the Tranche A Vessels in a principal amount equal to the lesser of (a) $47,750,000 and (b) 75 per cent. of the Refinancing Market Value of the Tranche A Vessels.

“Tranche A Balloon Instalment” has the meaning ascribed to it in Clause 6.1 (Repayment of Term Loan Facility).

“Tranche A 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 “Tranche A Vessel” means any one of them:

Name of Vessel	Collateral Owner	Dwt	IMO number	Year of build
ELENI	Eniaprohi	87,000	9411525	2008
PEDHOULAS LEADER	Pelea	82,000	9323065	2007
XENIA	Vasstwo	92,000	9317834	2006
PEDHOULAS COMMANDER	Vassone	83,685	9381524	2008

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“Tranche B” means that part of the Loan made or to be made available to the Borrower in relation to the Tranche B Vessels in a principal amount equal to the lesser of (a) $94,250,000 and (b) 66.2 per cent. of the Refinancing Market Value of the Tranche B Vessels.

“Tranche B Balloon Instalment” has the meaning ascribed to it in Clause 6.1 (Repayment of Term Loan Facility).

“Tranche B 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 “Tranche B Vessel” means any one of them:

Name of Vessel	Collateral Owner	Dwt	IMO number	Year of build
MARTINE	Eniadefhi	87,000	9411537	2009
ANDREAS K	Maxdodeka	91,800	9438121	2009
KYPROS BRAVERY	Gloverfour	77,078	9694490	2015
KYPROS LOYALTY	Gloverfive	77,078	9717424	2015
TROODOS AIR	Shikokuexi	80,000	9698226	2016
PEDHOULAS CHERRY	Youngone	82,000	973804	2015

“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.

“Trust Property” means:

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(a) all benefits derived by the Security Agent from Clause 17 (Security Documents 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, together, the Tranche A Vessels and the Tranche B Vessels and “Vessel” means any one of them.

“VTL Coverage” has the meaning given to it in Clause 17.10 (Additional security).

“Write-down and Conversion Powers” means:

(a) in relation to any Bail-In Legislation described in the EU Bail-In Legislation Schedule from time to time, the powers described as such in relation to that Bail-In Legislation in the EU Bail-In Legislation Schedule; and

(b) in relation to any other applicable Bail-In Legislation:

(i) any powers under that Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers; and

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

1.2 Construction

Unless a contrary indication appears, any reference in this Agreement to:

(a) 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;

(b) a document in “agreed form” is a document which is previously agreed in writing by or on behalf of the Borrower and the Agent;

(c) “assets” includes present and future properties, revenues and rights of every description;

(d) 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 document as amended, novated, supplemented, extended or restated from time to time in accordance with its terms;

(e) a “group of Lenders” includes all the Lenders;

(f) “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;

(g) 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);

(h) 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;

(i) a provision of law is a reference to that provision as amended or re-enacted from time to time; and

(j) 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.

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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 continue to make available to the Borrower a secured term loan in an aggregate amount not exceeding $142,000,000 at any one time.

2.2 Finance Parties’ rights and obligations

(a) 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.

(b) 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.

(c) 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 has applied or, as the case may be, 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

(a) 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 relevant 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.

(b) 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(a), 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:

(a) no Event of Default is continuing and no notice has been issued pursuant to Clause 22.2 (Acceleration) in respect thereof; and

(b) the representations made by the Borrower under Clause 18 (Representations) are true.

4.3 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 B of Schedule 2 (Conditions Subsequent).

4.4 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) 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 4.4 (No waiver) 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 4.3 (Conditions subsequent).

4.5 Form and content

All documents and evidence delivered to the Agent under this Clause shall:

(a) be in form and substance acceptable to the Agent; and

(b) 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:

(a) it is signed by an authorised signatory of the Borrower;

(b) the proposed Drawdown Date is a Business Day within the Availability Period; and

(c) the proposed Interest Period complies with Clause 9 (Interest Periods).

5.3 Lenders’ participation

(a) Subject to Clauses 2 (The Loan), 3 (Purposes) and 4 (Conditions of Utilisation), each Lender shall make its participation in any Drawing available by the Drawdown Date through its Facility Office.

(b) The amount of each Lender’s participation in any 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 Term Loan Facility

Save as previously repaid or prepaid, the Borrower agrees to repay the Loan to the Agent for the account of the Lenders as follows:

(a) Tranche A shall be repaid by 8 equal consecutive semi-annual instalments each in an amount equal to $3,820,000, the first instalment falling due on the date falling six calendar months after the earlier of (i) 29 September 2018 and (ii) Effective Date, and each subsequent instalment falling due at consecutive intervals of six calendar months thereafter, and the final instalment falling due, together with a balloon instalment (the “Tranche A Balloon Instalment”) in the amount of $17,190,000, on the Termination Date applicable to Tranche A.

(b) Tranche B shall be repaid by 12 equal consecutive semi-annual instalments each in an amount equal to $3,873,000, the first instalment falling due on the date falling six calendar months after the earlier of (i) 29 September 2018 and (ii) Effective Date, and each subsequent instalment falling due at consecutive intervals of six calendar months thereafter, and the final instalment falling due, together with a balloon instalment (the “Tranche B Balloon Instalment”) in the amount of $47,774,000, on the Termination Date applicable to Tranche B,

Provided that, if the Borrower is required to make a prepayment pursuant to clause 8.1(b) of the Amending and Restating Agreement, the aggregate amount of the Repayment Instalments and the Balloon Instalment in respect of the Tranche for which the prepayment was made shall be reduced on a pro rata basis by an amount equal to the prepayment amount.

6.2 Termination Date

On each Termination Date, the Borrower shall additionally pay to the Agent for the account of the Finance Parties all other sums then accrued and owing under the Finance Documents.

6.3 Reborrowing

The Borrower may not reborrow any part of Term Loan Facility which is repaid or prepaid.

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:

(a) without limitation to the Agent’s right under Clause 7.1(b) 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;

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(b) 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

(c) the Borrower shall repay that Lender’s participation in the Loan 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).

7.2 Voluntary prepayment of Loan

(a) The Borrower may prepay the whole or any part of the Loan (but, if in part, being an amount that reduces the Loan 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. Any prepayment under this Clause 7.2 (Voluntary prepayment of Loan) shall reduce (at the selection of the Borrower), in inverse chronological order of maturity or in direct chronological order or pro rata, the amount of the Repayment Instalments for the relevant Tranche for each Repayment Date falling after that repayment or prepayment.

(b) Following the prepayment by the Borrower under this Clause 7.2 of a Tranche and an additional amount (if any) equal to the greater of:

(i) an amount which when applied against the Loan results in the VTL Coverage being at least equal to 120 per cent; and

(ii) an amount which when applied against the Loan results in the VTL Coverage being equal to the VTL Coverage maintained immediately prior to such prepayment,

the Collateral Owners owning the Vessels applicable to the Tranche being fully prepaid, at the cost of and on the request of the Borrower, will be released from their obligations under the Loan Agreement and the Security Documents to which each is a party, unless an Event of Default has occurred and is continuing.

7.3 Right of cancellation and prepayment in relation to a single Lender

(a) If:

(i) any sum payable to any Lender by the Borrower is required to be increased under Clause 12.2(b) (Tax gross-up); or

(ii) 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 the Loan (“Repayment Notice”).

(b) On receipt of a cancellation notice referred to in Clause 7.3(a) in relation to a Lender, the Commitment(s) of that Lender shall immediately be reduced to zero.

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(c) On the last day of the Interest Period in respect of the Loan which ends after the Borrower has given a repayment notice under Clause 7.3(a) 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 the Loan together with all interest and other amounts accrued under the Finance Documents.

(d) For the avoidance of doubt, the Borrower has the right to send its Cancellation Notice and its Repayment Notice in one notice.

7.4 Mandatory prepayment on sale or Total Loss

(a) If a Vessel is sold by a Collateral Owner (subject to Clause 7.5 (Vessel Substitution Option)) or becomes a Total Loss, the Borrower shall, simultaneously with any such sale (the “Sale Mandatory Prepayment Date”) 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 (the “Total Loss Prepayment Date”) prepay the Loan in an amount equal to the higher of:

(i) an amount which equals the Market Value of that Vessel, divided by the aggregate Market Value of all Vessels multiplied by the Loan; and

(ii) an amount which when applied against the Loan results in the VTL Coverage being at least equal to 120 per cent.,

(the “Prepayment Amount”).

(b) The Prepayment Amount or, as the case may be, the Deposit (if the same is not released in accordance with the terms of Clause 7.5(a) (Vessel Substitution Option)) shall be applied proportionately against the Repayment Instalments (including the Balloon Instalments) of the relevant Tranche.

(c) Following such prepayment, 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 and the Security Documents to which it is a party, unless an Event of Default has occurred and is continuing.

7.5 Vessel Substitution Option

(a) As an alternative to paying the Prepayment Amount if a Vessel is sold by a Collateral Owner, the Borrower may, on the Sale Mandatory Prepayment Date, transfer to the Restricted Cash Account an amount equal to the Prepayment Amount (a “Deposit”). The Deposit shall be released to the Borrower on the date on which the Agent is satisfied that the conditions in Clause 7.5(b) (Vessel Substitution) have been met (so long as this occurs during the Substitution Period). If the Deposit has not been released by the last day (inclusive) of the Substitution Period, it shall be applied in prepayment of the Loan in accordance with Clause 7.4 (Mandatory Prepayment on sale or Total Loss).

(b) If a Vessel is sold by a Collateral Owner (and the Borrower has opted to pay a Deposit in accordance with Clause 7.5(a)) or becomes a Total Loss (the “Disposed Vessel”), the Borrower may (and, if the Borrower 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, in the case of a Total Loss, the Total Loss Prepayment Date (the “Substitution Period”):

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(i) replace the Disposed Vessel with a Replacement Vessel;

(ii) 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

(iii) 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; and

(iv) the Replacement Vessel must be a vessel registered under an Approved Flag in the ownership of a Replacement Collateral Owner, acceptable to the Agent in its absolute discretion (each, a “Replacement Vessel”) having a Market Value which, when aggregated with the Market Value of the other Collateral Vessels and any additional security provided by the Borrower, including without limitation, any part of the Deposit referred to in Clause 7.5(a) (and taking into account any prepayment made pursuant to Clause 7.5(b)) results in the VTL Coverage being at least equal to the VTL Coverage maintained immediately prior to the sale or Total Loss of the Disposed Vessel.

7.6 Ownership and control

(a) If:

(i) If the Borrower’s shares are quoted on the New York Stock Exchange or Nasdaq National Market in New York or any other internationally recognised stock exchange acceptable to the Lenders:

(A) the Current Shareholders:

(1) hold directly or indirectly less than thirty per cent (30%) of the voting and ownership rights in the shares of the Borrower; or

(2) own or Control less shares in the Borrower than any other person or group of persons, acting alone or in consent, without the prior written concent of the Majority Lenders; and

(B) Mr. Polys Hadjioannou beneficially holds directly or indirectly less than twenty per cent (20%) of the voting and ownership rights in the shares of the Borrower; and/or

(ii) If the Borrower’s shares cease to be quoted on the New York Stock Exchange or Nasdaq National Market in New York or any other internationally recognised stock exchange acceptable to the Lender:

(A) Mr. Polys Hadjioannou beneficially holds, directly or indirectly, less than fifty one per cent (51%) of the voting and ownership rights in the shares of the Borrower; and

(B) the total share capital of the Borrower is not beneficially held directly or indirectly by:

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(1) the Current Shareholders; or

(2) such shareholders as may be approved by the Agent pursuant to the terms of a shareholders’ agreement on terms acceptable to the Agent (at its absolute discretion); and/or

(iii) any person or group of persons, other than the Current Shareholders, acting alone or in concert gains Control of the Borrower; and/or

(iv) Mr. Polys Hadjioannou or any other member of the Hadjioannou Family appointed by the Current Shareholders ceases to be the chief executive officer (CEO) or Chairman of the Borrower,

the Borrower shall promptly notify the Agent upon becoming aware of that event and if the Majority Lenders so require, the Agent shall, by not less than 5 days’ notice to the Borrower, cancel the Term Loan Facility and declare the Loan, together with accrued interest, and all other amounts accrued under the Finance Documents immediately due and payable, whereupon the Term Loan Facility will be cancelled and the Loan and all such outstanding interest and other amounts will become immediately due and payable.

(b) For the purpose of this Clause:

“acting in concert” means a group of persons who, pursuant to an agreement or understanding (whether formal or informal), actively co-operate, through the acquisition (directly or indirectly) of shares in the Borrower by any of them, either directly or indirectly, to obtain or consolidate Control of the Guarantor.

“Control” means, in relation to the Borrower:

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

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

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

(iii) give directions with respect to the operating and financial policies of the Borrower; and/or

(b) the holding beneficially of more than 50 per cent. of the issued share capital of the Borrower (excluding any part of that issued share capital that carries no right to participate beyond a specified amount in a distribution of either profits or capital).

7.7 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.

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7.8 Restrictions

Any notice of prepayment or cancellation given under this Clause 7 (Illegality, Prepayment and Cancellation) shall be irrevocable and, unless a contrary indication appears in this 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 (Illegality, Prepayment and Cancellation) 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 Loan for each Interest Period in respect of that Loan is the percentage rate per annum which is the aggregate of the applicable:

(a) Margin; and

(b) LIBOR.

8.2 Payment of interest

The Borrower shall pay accrued interest on each Loan on the last day of each Interest Period (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

(a) If the Borrower fails to pay any amount payable by it under a Finance Document other than a Master Agreement on its due date, interest shall accrue on the Unpaid Sum from the due date up to the date of actual payment (both before and after judgment) at a rate which, subject to paragraph (b) below, is 2 per cent. per annum higher than the rate which would have been payable if the Unpaid Sum had, during the period of non-payment, constituted part of the Loan in the currency of the Unpaid Sum for successive Interest Periods, each of a duration selected by the Agent (acting reasonably). Any interest accruing under this Clause 8.3 (Default interest) shall be immediately payable by the Borrower on demand by the Agent.

(b) Without prejudice to the rights of the Finance Parties under Clause 22.2 (Acceleration), if the Agent (acting on the instructions of the Majority Lenders) gives written notice to the Borrower of the occurrence of an Event of Default (other than an Event of Default referred to in Clause 22.1(a) (Non-payment)) and demands payment of interest under this paragraph (b) of Clause 8.3 (Default interest), interest shall accrue on the amount of the Loan from the date of such notice up to the date on which the Agent (acting on the instructions of the Majority Lenders) gives notice to the Borrower that such Event of Default is no longer continuing. Interest shall accrue at a rate which is 2 per cent per annum higher than the applicable rate for each part of the Loan.

(c) Default interest (if unpaid) arising on an Unpaid Sum or, in the case of paragraph (b), the Loan will be compounded with the Unpaid Sum or, as the case may be, the Loan at the end of each Interest Period applicable to that Unpaid Sum or, as the case may be, the Loan 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.

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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 Loan subject as follows:

(a) 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;

(b) if the Borrower fails to give a notice in accordance with Clause 9.1(a), the relevant Interest Period will, subject to Clause 9.2 (Non-Business Days) and Clause 9.3 (Interest Periods to meet Repayment Dates), be three months;

(c) subject to this Clause 9 (Interest Periods), 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);

(d) an Interest Period shall not extend beyond the Termination Date; and

(e) each Interest Period shall start on the Drawdown Date in respect of the first 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).

9.3 Interest Periods to meet Repayment Dates

If an Interest Period will expire after the next Repayment Date there shall be a separate Interest Period for a part of that Loan equal to the Repayment Instalment or, as the case may be the amount due and payable on the next Repayment Date and that separate Interest Period shall expire on that next Repayment Date.

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 that Loan for that Interest Period shall be the percentage rate per annum which is the sum of:

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(a) the Margin; and

(b) 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 Loan from whatever source it may reasonably select.

In this Agreement “Market Disruption Event” means:

(i) 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

(ii) 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 Loan exceed fifty per cent (50%) of the Loan) that the cost to it of funding its participation in the Loan from whatever source it may reasonably select would be in excess of LIBOR.

10.3 Alternative basis of interest or funding

(a) 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.

(b) Any alternative basis agreed pursuant to Clause 10.3(a) 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 the Loan or Unpaid Sum being paid by the Borrower on a day other than the last day of an Interest Period for the Loan 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 Upfront Fee

The Borrower shall pay an upfront fee in the amount and at the times agreed in a Fee Letter.

11.2 Commitment Fee

(a) The Borrower has paid 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 Term Loan Facility for the Availability Period.

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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.

11.3 Structuring fee

The Borrower has paid to the Arranger a structuring fee in the amount and at the times agreed in a Fee Letter.

11.4 Agency fee

The Borrower has paid to the Agent (for its own account) an agency fee in the amount and at the times agreed in a Fee Letter.

11.5 Amendment fee

The Borrower has paid to the Agent (for its own account) an amendment fee in the amount and at the times agreed in a 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 A 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

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interest 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:

(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.

“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.

“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:

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(a) where a Lender becomes a Party on the day on which this Agreement is entered into, a Lender listed in Part B 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 (Tax Gross Up and Indemnities) 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:

(a) 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;

(b) 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;

(c) a payment shall not be increased under Clause 12.2(b) 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:

(i) 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

(ii) the relevant Lender is a Qualifying Lender solely by virtue of (b) of the definition of Qualifying Lender and:

(A) 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

(B) the payment could have been made to the Lender without any Tax Deduction if that Direction had not been made; or

(iii) the relevant Lender is a Qualifying Lender solely by virtue of (b) of the definition of Qualifying Lender and:

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(A) the relevant Lender has not given a Tax Confirmation to the Borrower; and

(B) 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

(iv) 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(f) or Clause 12.2(g) (as applicable);

(d) 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;

(e) 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;

(f)

(i) Subject to (ii), 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.

(ii)

(A) 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 A of Schedule 1 (The Original Lenders); and

(B) 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 (i).

(g) If a Lender has confirmed its scheme reference number and its jurisdiction of tax residence in accordance with Clause 12.2(f)(ii) and:

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(i) the Borrower making a payment to that Lender has not made a Borrower DTTP Filing in respect of that Lender; or

(ii) the Borrower making a payment to that Lender has made a Borrower DTTP Filing in respect of that Lender but:

(A) that Borrower DTTP Filing has been rejected by HM Revenue & Customs; or

(B) 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.

(h) If a Lender has not confirmed its scheme reference number and jurisdiction of tax residence in accordance with Clause 12.2(f)(ii), 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.

(i) 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.

(j) 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.

(k) 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

(a) 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.

(b) Clause 12.3(a) shall not apply:

(i) with respect to any Tax assessed on a Finance Party:

(A) 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

(B) 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

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(ii) to the extent a loss, liability or cost:

(A) is compensated for by an increased payment under Clause 12.2 (Tax gross-up);

(B) 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(c) (Tax gross-up) applied; or

(C) relates to a FATCA Deduction required to be made by a Party.

(c) A Protected Party making, or intending to make a claim under Clause 12.3(a) 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.

(d) A Protected Party shall, on receiving a payment from the Borrower under this Clause 12.3 (Tax indemnity), notify the Agent.

12.4 Tax Credit

If the Borrower or any other Security Party makes a Tax Payment and the relevant Finance Party determines that:

(a) 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

(b) 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:

(a) not a Qualifying Lender;

(b) a Qualifying Lender (other than a Treaty Lender); or

(c) a Treaty Lender.

If a New Lender fails to indicate its status in accordance with this Clause 12.5 (Lender status confirmation) 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 (Lender status confirmation).

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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

(a) 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(b), 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 the amount of the VAT (and such Finance Party must promptly provide an appropriate VAT invoice to the Borrower).

(b) 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):

(i) (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(b)(i) 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

(ii) (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.

(c) 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.

(d) Any reference in this Clause 12.7 (VAT) 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).

(e) 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

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requested in connection with such Finance Party’s VAT reporting requirements in relation to such supply.

12.8 FATCA information

(a) Subject to Clause 12.8(c), each Party shall, within ten Business Days of a reasonable request by another Party:

(i) confirm to that other Party whether it is:

(A) a FATCA Exempt Party; or

(B) not a FATCA Exempt Party;

(ii) 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

(iii) 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.

(b) If a Party confirms to another Party pursuant to Clause 12.3(b)(i)(A) that it is a FATCA Exempt Party and it subsequently becomes aware that it is not or has ceased to be a FATCA Exempt Party, that Party shall notify that other Party reasonably promptly.

(c) Clause 12.8(a) shall not oblige any Finance Party to do anything, and Clause 12.8(a)(iii) shall not oblige any other Party to do anything, which would or might in its reasonable opinion constitute a breach of:

(i) any law or regulation;

(ii) any fiduciary duty; or

(iii) any duty of confidentiality.

(d) If a Party fails to confirm whether or not it is a FATCA Exempt Party or to supply forms, documentation or other information requested in accordance with Clause 12.8(a)(i) or Clause 12.8(a)(ii) (including, for the avoidance of doubt, where Clause 12.8(c) 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

(a) Each Party may make any FATCA Deduction it is required to make by FATCA, and any payment required in connection with that FATCA Deduction, and no Party shall be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction.

(b) Each Party shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction) notify the Party to whom

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it is making the payment and, in addition, shall notify the Borrower and the Agent and the Agent shall notify the 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 (Exceptions)) 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

(a) 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.

(b) 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:

(a) attributable to a Tax Deduction required by law to be made by the Borrower;

(b) attributable to a FATCA Deduction required to be made by a Party;

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(c) compensated for by Clause 12.3 (Tax indemnity) (or would have been compensated for under Clause 12.3 (Tax indemnity) but was not so compensated solely because any of the exclusions in Clause 12.3 (Tax indemnity) applied);

(d) attributable to the wilful breach by the relevant Finance Party or its Affiliates of any law or regulation; or

(e) attributable to an election made by the relevant Finance Party voluntarily.

In this Clause 13.3 (Exceptions), 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:

(a) making or filing a claim or proof against the Borrower, or

(b) 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 (a) 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.

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

(a) 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:

(i) the occurrence of any Event of Default;

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(ii) 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);

(iii) 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

(iv) the Loan (or part of the Loan) not being prepaid in accordance with a notice of prepayment given by the Borrower.

(b) 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 (Other indemnities) 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.

(c) Subject to any limitations set out in Clause 14.2(b), the indemnity in that Clause shall cover any cost, loss or liability incurred by each Indemnified Person in any jurisdiction:

(i) 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

(ii) in connection with any Environmental Claim.

14.3 Indemnity to the Agent

The Borrower shall promptly indemnify the Agent against:

(a) Any documented cost, loss or liability incurred by the Agent (acting reasonably) as a result of:

(i) investigating any event which it reasonably believes is a Default; or

(ii) acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised; or

(iii) instructing lawyers, accountants, tax advisers, surveyors or other professional advisers or experts as permitted under this Agreement; and

(b) 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.

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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:

(a) any failure by the Borrower to comply with its obligations under Clause 16 (Costs and Expenses);

(b) acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised;

(c) the taking, holding, protection or enforcement of the Security Documents;

(d) 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;

(e) 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

(f) 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.

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 (Mitigation) 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 the Loan (or any part thereof) 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)

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reasonably incurred by any of them (and, in the case of the Security Agent, by any Receiver or Delegate) in connection with:

(a) the negotiation, preparation, printing, execution and perfection of this Agreement and any other documents referred to in this Agreement;

(b) 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;

(c) 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

(d) 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.

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:

(a)	in relation to each Vessel, a first preferred or priority statutory mortgage over each Vessel together with a collateral deed of covenants (if applicable);
(b)	in relation to each Vessel 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;
(c)	a guarantee and indemnity from each Guarantor;
(d)	a first priority account security deed in respect of all amounts from time to time standing to the credit of the Earnings Accounts; and
(e)	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 7.4 (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 (Security Documents and Application of Moneys) and the rights of the Finance Parties under the Finance Documents.

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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.

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:

(a)	pursuant to a sale or other disposition of a Vessel or any right, title or interest in a Vessel; or
(b)	by way of payment of any sum in respect of the Insurances, Earnings or Requisition Compensation; or
(c)	by way of transfer of any sum from any of the Earnings Accounts; or
(d)	otherwise under or in connection with any Security Document,
	in or towards satisfaction of the Indebtedness in the following order:
(e)	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;
(f)	second, any unpaid fees, costs, expenses (including any sums paid by the Lenders under Clause 25.11 (Lenders’ indemnity to the Agent)) 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;

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(g)	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;
(h)	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;
(i)	fifth, any principal of the Term Loan Facility 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;
(j)	seventh, 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(b)), for the time being provided to the Security Agent under this Clause 17.10 (Additional security) 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:

(a)	make a cash deposit to the Restricted Cash Account secured in favour of the Security Agent as additional security for the payment of the Indebtedness; or
(b)	give to the Security Agent other additional security in amount and form acceptable to the Security Agent in its discretion; or

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(c) prepay the Loan,

to the extent required to eliminate the shortfall.

Clause 7.8 (Restrictions) shall apply, mutatis mutandis, to any prepayment made under this Clause 17.10 (Additional security).

Any prepayment made under this Clause 17.10 (Additional security), shall be applied proportionately between the Tranches and within the Tranches against the Repayment Instalments in order of maturity.

If, at any time after the Borrower has provided additional security in accordance with the Agent’s request under this Clause 17.10 (Additional security) 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 (Additional security) 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 average value certified by two Approved Shipbrokers.

If there is a difference between the two valuations obtained either pursuant to sub-paragraph (a) or (b) in excess of ten per cent of the lowest valuation, 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

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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.

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) semi-annual valuations throughout the Facility Period, as of 28 September and 28 March 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(b) (Additional security), if the additional security comprises security over a Vessel, (c) any valuations required pursuant to Schedule 2, Part A clause Schedule 22.5 and Part C clause Schedule 22.6 and (d) 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 (Representations) to each Finance Party.

(a) Status

Each of the Security Parties:

(i)	is a limited liability corporation, duly incorporated and validly existing under the law of its jurisdiction of incorporation; and
(ii)	has the power to own its assets and carry on its business as it is being conducted.

(b) Binding obligations

(i)	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
(ii)	(without limiting the generality of Clause 18.1(b)(i)), 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.

(c) 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:

(i)	any law or regulation applicable to such Security Party;
(ii)	the constitutional documents of such Security Party; or
(iii)	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.

(d) Power and authority

(i)	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.
(ii)	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.

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(e) Validity and admissibility in evidence

All Authorisations required or desirable:

(i)	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
(ii)	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).

(f) Governing law and enforcement

(i)	The choice of governing law of any Finance Document will be recognised and enforced in the Relevant Jurisdictions of each relevant Security Party.
(ii)	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.

(g) Insolvency

No corporate action, legal proceeding or other procedure or step described in Clause 22.1(g) (Insolvency proceedings) or creditors’ process described in Clause 22.1(h) (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(f) (Insolvency) applies to a Security Party.

(h) 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.

(i) 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:

(i) a Qualifying Lender falling within (a) of the definition of Qualifying Lender; or, except where a Direction has been given under section 931 of the ITA in relation to the payment concerned, a Qualifying Lender falling within (b) of the definition of Qualifying Lender; or

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(ii) 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).

(j) No default

On the date of this Agreement and on any Drawdown Date, no Event of Default is continuing or would result from the advance of the Loan (or any part thereof) or from the entry into, the performance of, or any transaction contemplated by, any of the Relevant Documents.

(k) No misleading information

Save as disclosed in writing to the Agent and the Arranger prior to the date of this Agreement:

(i)

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

(ii)

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.

(l) Financial statements

(i)	The Original Financial Statements were prepared in accordance with GAAP consistently applied.
(ii)	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.
(iii)	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.
(iv)	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.
(v)	Each Security Party’s (other than the Manager) most recent financial statements delivered pursuant to Clause 19.1 (Financial statements):

(A)	have been prepared in accordance with GAAP as applied to the Original Financial Statements; and
(B)	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.

(vi) 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.

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(m) 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.

(n) 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.

(o) Environmental laws

(i)	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.
(ii)	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.

(p) Taxation

(i)	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.
(ii)	No claims or investigations are being, or are reasonably likely to be, made or conducted against any of the Security Parties or any 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.
(iii)	Each of the Security Parties and each other member of the Group is resident for Tax purposes outside its Original Jurisdiction.

(q) 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.

(r) No Encumbrance or Financial Indebtedness

(i) 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).

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(ii) None of the Security Parties (other than the Borrower or the Manager) has any Financial Indebtedness outstanding other than as permitted by this Agreement.

(s) 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.

(t) 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.

(u) 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.

(v) 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 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.

(w) Sanctions

(i)	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;
(ii)	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:

(A)	is a Restricted Party, or is involved in any transaction through which it is likely to become a Restricted Party; or
(B)	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.

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(x) 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(l)(iv) and 18.1(l)(vi) (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 (Information Undertakings) 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:

(a)	as soon as the same become available, but in any event within 150 days after the end of each of its financial years its audited consolidated financial statements for that financial year; and
(b)	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;
(c)	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 each of the Collateral Owner’s financial years, the unaudited financial statements of the Collateral Owners for that quarter; and
(d)	as soon as the same become available, but in any event within 30 days after the end of each semi-annual period ending on 30 June and 31 December in each calendar year, commencing from 31 December 2017, condensed cash flow statements of the Borrower for that semi-annual period.

19.2 Compliance Certificate

(a)

The Borrower shall supply to the Agent, with each set of its annual financial statements delivered pursuant to Clause 19.1(a) (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(b) (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.

(b)

Each Compliance Certificate shall be signed by two officers of the Borrower, one being the Chief Financial Officer.

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19.3 Requirements as to financial statements

Each set of financial statements delivered by the Borrower under Clause 19.1 (Financial statements):

(a)	shall be certified by an officer 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
(b)	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:

(i)	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
(ii)	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):

(a)	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;
(b)	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;
(c)	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);
(d)	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

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(e) 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

(a) If:

(i)	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;
(ii)	any change in the status of a Security Party after the date of this Agreement; or
(iii)	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(a)(iii), 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(a)(iii), 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(a)(iii), 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.

(b)

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):

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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.

20.3 Net Worth

The Net Worth shall not be less than one hundred and fifty million dollars ($150,000,000).

21 General Undertakings

The undertakings in this Clause 21 (General Undertakings) remain in force for the duration of the Facility Period.

21.1 Authorisations

The Borrower shall promptly:

(a)	obtain, comply with and do all that is necessary to maintain in full force and effect; and
(b)	supply certified copies to the Agent of,

any Authorisation required under any law or regulation of a Relevant Jurisdiction to:

(i)	enable any Security Party to perform its obligations under the Finance Documents to which it is a party;
(ii)	ensure the legality, validity, enforceability or admissibility in evidence of any Finance Document; and
(iii)	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

(a) 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 (Authorisations), “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).

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(b) 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:

(a)	comply with all Environmental Laws;
(b)	obtain, maintain and ensure compliance with all requisite Environmental Approvals; and
(c)	implement procedures to monitor compliance with and to prevent liability under any Environmental Law,

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:

(a)	any Environmental Claim against any of the Security Parties which is current, pending or threatened; and
(b)	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

(a)	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.
(b)	The Borrower shall (and shall procure that each other Security Party shall):

(i)	conduct its businesses in compliance with applicable anti-corruption laws; and
(ii)	maintain policies and procedures designed to promote and achieve compliance with such laws.

21.6	Taxation
(a)	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:

(i) such payment is being contested in good faith;

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(ii)	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
(iii)	such payment can be lawfully withheld.

(b) The Borrower may not (and no other Security Party may) change its residence for Tax purposes.

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 (Negative pledge) “Quasi-Security” means an arrangement or transaction described in Clause 21.9(b).

Except as permitted under Clause 21.9(c):

(a)	The Borrower shall procure that no Collateral Owner will create nor permit to subsist any Encumbrance over any of its present or future assets
(b)	The Borrower shall procure that no Collateral Owner will:

(i)	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;
(ii)	sell, transfer or otherwise dispose of any of its receivables on recourse terms;
(iii)	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
(iv)	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.

(c) Clauses 21.9(a) and 21.9(b) 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
(a)	Except as permitted under Clause 21.10(a), or for the sale of a Vessel provided the relevant prepayment is made in accordance with Clause 7.4 (Mandatory prepayment on sale or Total Loss), the Borrower shall procure that no other Security Party (other than the Manager) will

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enter into a single transaction or a series of transactions (whether related or not) and whether voluntary or involuntary to sell, lease, transfer or otherwise dispose of any asset.

(b) Clause 21.10(a) 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

(a)	Except as permitted under Clause 21.11(c), 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.
(b)	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.
(c)	The following transactions shall not be a breach of this Clause 21.11 (Arm’s length basis):

(i)	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
(ii)	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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(a)	enter into, invest in or acquire (or agree to acquire) any shares, stocks, securities or other interest in any Joint Venture; or
(b)	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:

(a)	the Loan;
(b)	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 4.3 (Conditions subsequent).

In this Clause 21 (No change in Relevant Documents), “materially” means any change, variation or modification relating to the purchase price, payment terms, date of delivery and/or the identity of the vessel, the type of vessel or the vessel’s characteristics.

21.22	Further assurance
(a)	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,

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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 or its nominee(s)):

(i)	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;
(ii)	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
(iii)	to facilitate the realisation of the assets which are, or are intended to be, the subject of the Security Documents.

(b) 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 Effective 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 of Collateral Owners

The Borrower shall procure that:

(a)	each Collateral Owner shall remain a wholly owned direct or indirect Subsidiary of the Borrower; and
(b)	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 the Loan (or any part thereof) 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.

21.31 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.

21.32 Stock exchange requirements

At all times when the Borrower’s shares are quoted on the New York Stock Exchange or any other prime stock exchange acceptable to the Lenders, the Borrower shall comply with all regulatory and listing requirements of such stock exchange.

21.33 Dividends

The Borrower shall not declare or pay any dividend or make any other form of distribution in respect of any financial year during the Facility Period if:

(a)	at the relevant time an Event of Default has occurred and remains continuing or would result from the making of such dividend or distribution; and
(b)	the Borrower cannot demonstrate compliance with the requirements of Clause 20 (Financial Covenants) both before and after the making of such dividend or distribution.

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22	Events of Default
22.1	Events of Default

Each of the events or circumstances set out in this Clause 22.1 (Events of Default) is an Event of Default.

(a) 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.

(b) Other specific obligations

(i)	Any requirement of Clause 20 (Financial Covenants) is not satisfied.
(ii)	A Security Party does not comply with any obligation in a Finance Document relating to the Insurances, with Clause 17.10 (Additional security) and Clause 21.28 (Ownership of Collateral Owners)).

(c) Other obligations

A Security Party does not comply with any provision of a Finance Document (other than those referred to in Clause 22.1(a) (Non-payment) and Clause 22.1(b) (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.

(d) 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.

(e) Cross default

Any Financial Indebtedness of a Security Party or of any other member of the Group:

(i)	is not paid when due nor within any originally applicable grace period; or
(ii)	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(e) 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).

(f) Insolvency

(i) 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.

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(ii)	The value of the assets of a Security Party is less than its liabilities (taking into account contingent and prospective liabilities).
(iii)	A moratorium is declared in respect of any indebtedness of a Security Party.

(g) Insolvency proceedings

Any corporate action, legal proceedings or other procedure or step is taken for:

(i)	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;
(ii)	a composition, compromise, assignment or arrangement with any creditor of a Security Party;
(iii)	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
(iv)	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(g) shall not apply to any winding-up petition which is frivolous or vexatious and is discharged, stayed or dismissed within 60 days of commencement.

(h) 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.

(i) Unlawfulness and invalidity

(i)	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.
(ii)	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.
(iii)	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.

(j) Cessation of business

A Security Party ceases, or threatens to cease, to carry on all or a substantial part of its business.

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(k) 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.

(l) 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.

(m) Repudiation and rescission of agreements

(i)	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.
(ii)	Subject to Clause 22.1(m)(iii), 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.
(iii)	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.

(n) Conditions precedent and subsequent

Any of the conditions referred to in Clauses 4.3 (Conditions subsequent), 4.4 (No waiver) (in the case where a waiver has been provided pursuant to Clause 4.4 (No waiver) and is not satisfied within the time specified in such waiver) is not satisfied within the time required by the relevant provisions thereof.

(o) 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.

(p) 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, or the buyback of any ordinary shares to preserve its due listing shall not constitute an Event of Default pursuant to this Clause 22 (Events of Default).

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(q) 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(q) include an event similar to a Total Loss in relation to any other vessel) shall not be an Event of Default if:

(i)	the relevant prepayment is made in accordance with Clause 7.4 (Mandatory prepayment on sale or Total Loss); or
(ii)	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
(iii)	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
(iv)	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.

(r) 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.

(s) 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.

(t) Notice of determination

A Guarantor gives notice to the Security Agent to determine any obligations under the relevant Guarantee.

(u) 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.

(v) 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.

(w) Sanctions

(i) 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

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	Restricted Party or any of such persons becomes the owner or controller of a Restricted Party.
(ii)	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.
(iii)	Any of the Security Parties or any Affiliate of any of them is not in compliance with all Sanctions Laws.

(x) Arrest

Any arrest of a Vessel or its detention in the exercise or the purported exercise of any lien or claim unless it is redelivered to the full control of the relevant Collateral Owner within 30 Business Days of such arrest or detention.

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:

(a)	by notice to the Borrower cancel the Total Commitments, at which time they shall immediately be cancelled;
(b)	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;
(c)	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
(d)	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 (Changes to the Lenders), a Lender (the “Existing Lender”) may:

(a) assign any of its rights; or

(b) 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

(a) 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:

(i) to an Affiliate of the Original Lender; or

(ii) to a bank or financial institution and is made 60 days after the occurrence of an Event of Default which is continuing; or

(iii) to a trust or fund and is made 270 days after the occurrence of an Event of Default which is continuing.

(b) In the cases where the prior written consent of the Borrower is required for an assignment or transfer under Clause 23.2(a), 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.

(c) An assignment will only be effective on:

(i) 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

(ii) 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.

(d) A transfer will only be effective if the procedure set out in Clause 23.5 (Procedure for transfer) is complied with.

(e) If:

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(i) a Lender assigns or transfers any of its rights or obligations under the Finance Documents or changes its Facility Office; and

(ii) 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(e) shall not apply:

(iii) 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(f)(ii)(B) (Tax gross-up) if the Borrower making the payment has not made a Borrower DTTP Filing in respect of that Treaty Lender.

(f) 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

(a) Unless expressly agreed to the contrary, an Existing Lender makes no representation or warranty and assumes no responsibility to a New Lender for:

(i) the legality, validity, effectiveness, adequacy or enforceability of the Relevant Documents or any other documents;

(ii) the financial condition of any Security Party;

(iii) 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

(iv) 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.

(b) Each New Lender confirms to the Existing Lender and the other Finance Parties that it:

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(i) 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

(ii) 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.

(c) Nothing in any Finance Document obliges an Existing Lender to:

(i) 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 (Changes to the Lenders); or

(ii) 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

(a) 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(c) 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(c)(ii), 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.

(b) 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.

(c) On the Transfer Date:

(i) to the extent that in the Transfer Certificate the Existing Lender seeks to transfer by novation its rights and obligations under the 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”);

(ii) 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;

(iii) 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

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(iv) the New Lender shall become a Party as a “Lender”.

23.6 Procedure for assignment

(a) 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(c) 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(b), 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.

(b) 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.

(c) On the Transfer Date:

(i) 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;

(ii) the Existing Lender will be released from the obligations (the “Relevant Obligations”) expressed to be the subject of the 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

(iii) the New Lender shall become a Party as a “Lender” and will be bound by obligations equivalent to the Relevant Obligations.

(d) Lenders may utilise procedures other than those set out in this Clause 23.6 (Procedure for assignment) 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

(a) 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.

^(b) 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.

^(c) 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.

(d) Except in Clause 25.14 (Replacement of the Agent) or where the context otherwise requires, references in this Clause 25 (Role of the Agent, the Security Agent and the Arranger) to the “Agent” shall mean the Agent and the Security Agent individually and collectively and references in this Clause 25 (Role of the Agent, the Security Agent and the Arranger) to the “Finance Documents” or to any “Finance Document” shall not include the Master Agreement.

25.2 Instructions

(a) The Agent shall:

(i) 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:

(A) all Lenders if the relevant Finance Document stipulates the matter is an all Lender decision; and

(B) in all other cases, the Majority Lenders; and

(ii) not be liable for any act (or omission) if it acts (or refrains from acting) in accordance with Clause 25.2(a)(i).

(b) The Agent shall be entitled to request instructions, or clarification of any instruction, from the Majority Lenders (or, if the relevant 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.

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(c) 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.

(d) 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.

(e) 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.

(f) 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(f) 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

(a) The Agent’s duties under the Finance Documents are solely mechanical and administrative in nature.

(b) Subject to Clause 25.3(c), 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.

(c) Without prejudice to Clause 23.7 (Copy of Transfer Certificate or Assignment Agreement to Borrower), Clause 25.3(a) shall not apply to any Transfer Certificate or any Assignment Agreement.

(d) 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.

(e) 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.

(f) 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.

(g) 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.

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25.5 No fiduciary duties

(a) 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.

(b) 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

(a) The Agent may:

(i) rely on any representation, communication, notice or document believed by it to be genuine, correct and appropriately authorised;

(ii) assume that:

(A) 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

(B) unless it has received notice of revocation, that those instructions have not been revoked; and

(C) rely on a certificate from any person:

(1) as to any matter of fact or circumstance which might reasonably be expected to be within the knowledge of that person; or

(2) to the effect that such person approves of any particular dealing, transaction, step, action or thing,

as sufficient evidence that that is the case and, in the case of (A), may assume the truth and accuracy of that certificate.

(b) 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:

(i) no Default has occurred (unless it has actual knowledge of a Default arising under Clause 22.1 (Events of Default));

(ii) any right, power, authority or discretion vested in any Party or the Majority Lenders has not been exercised; and

(iii) 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.

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(c) The Agent may engage and pay for the advice or services of any lawyers, accountants, surveyors or other experts.

(d) Without prejudice to the generality of Clause 25.7(c) or Clause 25.7(e), 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.

(e) 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.

(f) The Agent may act in relation to the Finance Documents through its officers, employees and agents and the Agent shall not:

(i) be liable for any error of judgment made by any such person; or

(ii) 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.

(g) 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.

(h) Without prejudice to the generality of Clause 25.7(g), the Agent:

(i) may disclose; and

(ii) 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.

(i) 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.

(j) 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(b) (Market Disruption).

(k) 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.

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25.8 Responsibility for documentation

Neither the Agent nor the Arranger is responsible or liable for:

(a) 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

(b) 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

(c) 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:

(a) whether or not any Default has occurred;

(b) as to the performance, default or any breach by any Party of its obligations under any Finance Document; or

(c) whether any other event specified in any Finance Document has occurred.

25.10 Exclusion of liability

(a) Without limiting Clause 25.10(b) (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:

(i) 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;

(ii) 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;

(iii) any shortfall which arises on the enforcement or realisation of the Trust Property; or

(iv) without prejudice to the generality of Clauses 25.10(a)(i), 25.10(a)(ii) and 25.10(a)(iii), any damages, costs or losses to any person, any diminution in value or any liability whatsoever arising as a result of:

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(A) any act, event or circumstance not reasonably within its control; or

(B) 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.

(b) 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 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.

(c) 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.

(d) Nothing in this Agreement shall oblige the Agent or the Arranger to carry out:

(i) any “know your customer” or other checks in relation to any person;

(ii) 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.

(e) 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

(a) 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

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reason of the relevant Agent’s, Receiver’s or Delegate’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, 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).

(b) Subject to Clause 25.11(c), the Borrower shall immediately on demand reimburse any Lender for any payment that Lender makes to the Agent pursuant to Clause 25.11(a)

(c) Clause 25.11(b) 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 (Trust), 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 (Trust). 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:

(a) 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;

(b) 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;

(c) 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;

(d) 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 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;

(e) 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

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Security Party to retain all such title deeds, Finance Documents and other documents in its possession; and

(f)

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

(a) 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.

(b) 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.

(c) If the Majority Lenders have not appointed a successor Agent in accordance with Clause 25.13(a) 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).

(d) 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(b), the Agent may (if it concludes (acting reasonably) that it is 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 (Role of the Agent, the Security Agent and the Arranger) 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.

(e) 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.

(f) 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.

(g) 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(e)) but shall remain entitled to the benefit of Clause 14.3 (Indemnity to the Agent) and

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	this Clause 25 (Role of the Agent, the Security Agent and the Arranger) (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.
(h)	The Agent shall resign in accordance with Clause 25.13(a) (and, to the extent applicable, shall use reasonable endeavours to appoint a successor Agent pursuant to Clause 25.13(b)) 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:

(i) 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;

(ii) 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

(iii) 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

(a) 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).

(b) 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.

(c) 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(b)) but shall remain entitled to the benefit of Clause 14.3 (Indemnity to the Agent) and this Clause 25 (Role of the Agent, the Security Agent and the Arranger) (and any agency fees for the account of the retiring Agent shall cease to accrue from (and shall be payable on) that date).

(d) 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

(a) 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.

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(b) 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

(a) 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 as notified to the Finance Parties from time to time) as the Lender acting through its Facility Office:

(i) entitled to or liable for any payment due under any Finance Document on that day; and

(ii) 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.

(b) 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(a)(ii) (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:

(a) the financial condition, status and nature of each Security Party and each other member of the Group;

(b) 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;

(c) 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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(d) 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:

(a) interfere with the right of any Finance Party to arrange its affairs (tax or otherwise) in whatever manner it thinks fit;

(b) 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

(c) 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:

(a) the Recovering Finance Party shall, within three Business Days, notify details of the receipt or recovery, to the Agent;

(b) 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

(c) the Recovering Finance Party shall, within three Business Days of demand by the Agent, pay to the Agent an amount (the “Sharing 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).

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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:

(a) 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

(b) 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

(a) This Clause 27 (Sharing among the Finance Parties) 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.

(b) 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:

(i) it notified that other Finance Party of the legal or arbitration proceedings; and

(ii) that other Finance Party had an opportunity to participate in those legal or arbitration proceedings but did not do so as soon as 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

(a) 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.

(b) Unless Clause 28.4(c) 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.

(c) 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 funds from a Lender in respect of a sum which it paid to the Borrower:

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(i) the Agent shall notify the Borrower of that Lender’s identity and the Borrower shall on demand refund it to the Agent; and

(ii) 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

(a) 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:

(i) pay that amount direct to the required recipient(s); or

(ii) 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.

(b) 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.

(c) A Party which has made a payment in accordance with this Clause 28.5 (Impaired Agent) 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.

(d) 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(e)) 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 for distribution to the relevant Recipient Party or Recipient Parties in accordance with Clause 28.2 (Distributions by the Agent).

(e) A Paying Party shall, promptly upon request by a Recipient Party and to the extent:

(i) that it has not given an instruction pursuant to Clause 28.5(d); and

(ii) 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.

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28.6 Partial payments

(a) 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:

(i) 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;

(ii) secondly, in or towards payment pro rata of any accrued interest, fee or commission due but unpaid under this Agreement;

(iii) thirdly, in or towards payment pro rata of any principal due but unpaid under this Agreement; and

(iv) fourthly, in or towards payment pro rata of any other sum due but unpaid under the Finance Documents.

(b) The Agent shall, if so directed by the Majority Lenders, vary the order set out in Clauses 28.6(a)(ii) to 28.6(a)(iv).

(c) Clauses 28.6(a) and 28.6(b) 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.

28.9 Currency of account

^(a) Subject to Clauses 28.9(b) to 28.9(e), dollars is the currency of account and payment for any sum due from a Security Party under any Finance Document.

(b) A repayment or payment of all or part of a Loan or an Unpaid Sum shall be made in the currency in which that Loan or Unpaid Sum is denominated on its due date.

(c) 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.

(d) Each payment in respect of costs, expenses or Taxes shall be made in the currency in which the costs, expenses or Taxes are incurred.

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^(e) 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 the Loan and the computation and payment of interest and all other sums due under this Agreement. The Borrower’s obligations to repay the Loan 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 (Control account) and those entries will, in the absence of error, be conclusive and binding.

28.11 Change of currency

(a) 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:

(i) 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

(ii) 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).

(b) 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.

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:

(a) 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;

(b) the Agent shall not be obliged to consult with the Borrower in relation to any changes mentioned in Clause 28.12(a) 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;

(c) the Agent may consult with the Finance Parties in relation to any changes mentioned in Clause 28.12(a) but shall not be obliged to do so if, in its opinion, it is not practicable to do so in the circumstances;

(d) 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);

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(e) 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 (Disruption to payment systems etc.); and

(f) the Agent shall notify the Finance Parties of all changes agreed pursuant to Clause 28.12(d)

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 (Set-Off) 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.

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:

(a) in the case of the Borrower, that identified with its name below;

(b) 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;

^(c) in the case of the Swap Provider, that identified with its name below; and

(d) 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.

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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:

(a) if by way of fax, when received in legible form; or

(b) 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 (Delivery), after 5.00 p.m. in the place of receipt shall be deemed only to become effective on the following day.

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

(a) Any communication to be made between any two Parties under or in connection with the Finance Documents may be made by electronic mail or other electronic means 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:

(i) notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and

(ii) notify each other of any change to their address or any other such information supplied by them by not less than five Business Days’ notice.

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(b) 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.

(c) Any electronic communication which becomes effective, in accordance with Clause 30.6(b), 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

(a) 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:

(i) the Agent expressly agrees (after consultation with each of the Lenders) that it will accept communication of the information by this method;

(ii) both the Borrower and the Agent are aware of the address of and any relevant password specifications for the Designated Website; and

(iii) 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.

(b) 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.

(c) The Borrower shall promptly upon becoming aware of its occurrence notify the Agent if:

(i) the Designated Website cannot be accessed due to technical failure;

(ii) the password specifications for the Designated Website change;

(iii) any new information which is required to be provided under this Agreement is posted onto the Designated Website;

(iv) any existing information which has been provided under this Agreement and posted onto the Designated Website is amended; or

(v) 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(c)(i) or Clause 30.7(c)(v), all information to be provided by the Borrower under this Agreement after the date of that notice shall be

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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.

(d) 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.

(e) The Borrower shall be liable for any cost incurred by the Agent or any Website Lender under this Clause.

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:

(a) in English; or

(b) 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

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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.

34 Amendments and Waivers

34.1 Required consents

(a) 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.

(b) The Agent may effect, on behalf of any Finance Party, any amendment or waiver permitted by this Clause 34 (Amendments and Waivers).

(c) Without prejudice to the generality of Clauses 25.7(c), 25.7(d) and 25.7(e) (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

(a) 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:

(i) the definition of “Majority Lenders” in Clause 1.1 (Definitions);

(ii) an extension to the date of payment of any amount under the Finance Documents;

(iii) a reduction in the Margin or a reduction in the amount of any payment of principal, interest, fees or commission payable;

(iv) a change in currency of payment of any amount under the Finance Documents;

(v) 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;

(vi) any provision which expressly requires the consent of all the Lenders;

(vii) Clause 2.2 (Finance Parties’ rights and obligations), Clause 23 (Changes to the Lenders), this Clause 34 (Amendments and Waivers), Clause 38 (Governing Law) or Clause 39.1 (Jurisdiction of English courts);

(viii) (other than as expressly permitted by the provisions of any Finance Document) the nature or scope of:

(A) any Guarantee;

(B) the Charged Property; or

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(C) the manner in which the proceeds of enforcement of the Security Documents are distributed; or

(ix) 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.

(b) 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

(a) 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.

(b) The replacement of a Lender pursuant to this Clause 34.3 (Replacement of Lender) shall be subject to the following conditions:

(i) the Borrower shall have no right to replace the Agent or Security Agent;

(ii) neither the Agent nor the Lender shall have any obligation to the Borrower to find a Replacement Lender;

(iii) in no event shall the Lender replaced under this Clause 34.3 (Replacement of Lender) be required to pay or surrender to such Replacement Lender any of the fees received by such Lender pursuant to the Finance Documents; and

(iv) the Lender shall only be obliged to transfer its rights and obligations pursuant to Clause 34.3 (Replacement of Lender) 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.

(c) A Lender shall perform the checks described in Clause 34.3(b)(iv) as soon as reasonably practicable following delivery of a notice referred to in Clause 34.3 (Replacement of Lender) and shall notify the Agent and the Borrower when it is satisfied that it has complied with those checks.

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34.4 Disenfranchisement of Defaulting Lenders

(a) For so long as a Defaulting Lender has any Commitment, in ascertaining:

(i) the Majority Lenders; or

(ii) whether:

(A) any given percentage (including, for the avoidance of doubt, unanimity) of the Total Commitments; or

(B) 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).

(b) For the purposes of this Clause 34.4 (Disenfranchisement of Defaulting Lenders), the Agent may assume that the following Lenders are Defaulting Lenders:

(i) any Lender which has notified the Agent that it has become a Defaulting Lender;

(ii) 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.

34.5 Replacement of a Defaulting Lender

(a) 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:

(i) 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

(ii) in an amount agreed between that Defaulting Lender, the Replacement Lender and the Borrower and which does not exceed the amount described in (a).

(b) Any transfer of rights and obligations of a Defaulting Lender pursuant to this Clause 34.5 (Replacement of a Defaulting Lender) shall be subject to the following conditions:

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(i) the Borrower shall have no right to replace the Agent or Security Agent;

(ii) neither the Agent nor the Defaulting Lender shall have any obligation to the Borrower to find a Replacement Lender;

(iii) the transfer must take place no later than 7 days after the notice referred to in Clause 34.5(a);

(iv) 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

(v) the Defaulting Lender shall only be obliged to transfer its rights and obligations pursuant to Clause 34.5(a) 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.

(c) The Defaulting Lender shall perform the checks described in Clause 34.5(b)(v) as soon as reasonably practicable following delivery of a notice referred to in Clause 34.5(a) and shall notify the Agent and 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:

(a) 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(a) 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;

(b) to any person:

(i) to (or through) whom it assigns or transfers (or may potentially assign or transfer) all or any of its rights and/or obligations under one or 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;

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(ii) 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;

(iii) appointed by any Finance Party or by a person to whom Clause 35.2(b)(i) or 35.2(b)(ii) 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(b) (Relationship with the Lenders));

(iv) 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(b)(i) or 35.2(b)(ii);

(v) 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;

(vi) 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;

(vii) who is a Party; or

(viii) with the consent of the Borrower;

in each case, such Confidential Information as that Finance Party shall consider appropriate if:

(A) in relation to Clauses 35.2(b)(i), 35.2(b)(ii) and 35.2(b)(iii), 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;

(B) in relation to Clause 35.2(b)(iv), 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;

(C) in relation to Clauses 35.2(b)(v), 35.2(b)(vi), 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

(c) to any person appointed by that Finance Party or by a person to whom Clause 35.2(b)(i) or 35.2(b)(ii) 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

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	participations in respect of the Finance Documents, such Confidential Information as may be required to be disclosed to enable such service provider to provide any of the services referred to in this Clause 35.2(c) if the service provider to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking; and
(d)	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

(a) 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:

(i) names of Security Parties;

(ii) country of domicile of Security Parties;

(iii) place of incorporation of Security Parties;

(iv) date of this Agreement;

(v) Clause 38 (Governing Law);

(vi) the names of the Agent and the Arranger;

(vii) date of each amendment and restatement of this Agreement;

(viii) amount of Total Commitments;

(ix) currencies of the Loan;

(x) type of Loan;

(xi) ranking of the Loan;

(xii) Termination Date;

(xiii) changes to any of the information previously supplied pursuant to (i) to (xii); and

(xiv) 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.

(b) 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 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.

(c) The Borrower represents that none of the information set out in Clauses 35.3(a)(i) to 35.3(a)(xiv) is, nor will at any time be, unpublished price-sensitive information.

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(d) The Agent shall notify the Borrower and the other Finance Parties of:

(i) 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

(ii) 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 (Confidentiality) 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:

(a) of the circumstances of any disclosure of Confidential Information made pursuant to Clause 35.2(b)(v) (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

(b) upon becoming aware that Confidential Information has been disclosed in breach of this Clause 35 (Confidentiality).

35.7 Continuing obligations

The obligations in this Clause 35 (Confidentiality) 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 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

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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

(a) The Agent shall, at the request of the Borrower, disclose the identity of the Lenders and the details of the Lenders’ Commitments to any:

(i) 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

(ii) Security Party.

(b) Subject to Clause 36.2(c), the Borrower shall procure that the recipient of information disclosed pursuant to Clause 36.2(a) 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.

(c) 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

(a) 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.

(b) 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:

(a) that entity ceases to have an Investment Grade Rating; or

(b) an Insolvency Event occurs in relation to that entity,

the Agent shall, at the request of that Lender, indicate to that Lender the extent to which that entity has a Commitment.

36.5 Lender details definitions

In this Clause 36 (Disclosure of Lender Details by Agent):

“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

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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 (Jurisdiction of English courts) 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

(a) Without prejudice to any other mode of service allowed under any relevant law, the Borrower:

(i) irrevocably appoints Mr. John Georgiou, 42 Marble Drive, London, NW2 1XA, 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

(ii) agrees that failure by a process agent to notify the Borrower of the process will not invalidate the proceedings concerned.

(b) If any person appointed as an agent for service of process is unable for any reason to act as agent for service of process 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.

40 Bail-In

Notwithstanding any other term of any Finance Document or any other agreement, arrangement or understanding between the parties to a Finance Document, each Party acknowledges and accepts that any liability of any party to a Finance Document under or in connection with the Finance Documents may be subject to Bail-In Action by the relevant Resolution Authority and acknowledges and accepts to be bound by the effect of:

(a) any Bail-In Action in relation to any such liability, including (without limitation):

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(i) a reduction, in full or in part, in the principal amount, or outstanding amount due (including any accrued but unpaid interest) in respect of any such liability;

(ii) a conversion of all, or part of, any such liability into shares or other instruments of ownership that may be issued to, or conferred on, it; and

(iii) a cancellation of any such liability; and

(b) a variation of any term of any Finance Document to the extent necessary to give effect to any Bail-In Action in relation to any such liability.

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 (UK) Limited 8th Floor The Walbrook Building 25 Walbrook London EC4N 8AF, England	100%	DDTP NUMBER: 58/D/305668/DTTP England

114

Schedule 2

Part A

Conditions Precedent

1 SECURITY PARTIES

1.1 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.

1.2 Certificates of good standing

A certificate of good standing in respect of each Security Party (if such a certificate can be obtained).

1.3 Board resolutions

A copy of a resolution of the board of directors of each Security Party:

(a) 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

(b) 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.

1.4 Copy passports

A copy of the passport of each person authorised by the resolutions referred to in clause 1.3 above.

1.5 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.

1.6 Officer’s certificates

An original certificate of a duly authorised officer of each Security Party:

(a) 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;

(b) setting out the names of the directors, officers and shareholders of that Security Party and the proportion of shares held by each shareholder; and

(c) 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.

115

1.7 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.

1.8 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

2.1 Vessel documents

Photocopies, certified as true, accurate and complete by a director or the secretary of the Borrower, of:

(a) any charterparty or other contract of employment of the Vessels which will be in force on the Drawdown Date;

(b) the Management Agreements in respect of the Vessels;

(c) the Vessels’ current Safety Construction, Safety Equipment, Safety Radio Oil Pollution Prevention and Load Line Certificates;

(d) evidence of the Vessel’s current Certificate of Financial Responsibility issued pursuant to the United States Oil Pollution Act 1990;

(e) the Vessels’ current SMC;

(f) the ISM Company’s current DOC;

(g) the Vessels’ current ISSC;

(h) the Vessels’ current IAPPC;

(i) the Vessels’ current Tonnage Certificate;

in each case together with all addenda, amendments or supplements.

2.2 Evidence of Collateral Owner’s title

Certificate of ownership and encumbrance (or equivalent) issued by the Registrar of Ships (or equivalent official) of the Approved Flag confirming that each 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 Vessel and (c) there are no further Encumbrances registered against any Vessel.

116

2.3 Evidence of insurance

Evidence that the 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.

2.4 Confirmation of class

A Certificate of Confirmation of Class for hull and machinery confirming that each 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.

2.5 Valuation

Not later than 30 days prior to the date of this Agreement, one or more valuation(s) of each Vessel addressed to the Agent from an Approved Shipbroker certifying the Market Value for each Vessel, acceptable to the Agent.

2.6 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.

2.7 Mandates

Such duly signed forms of mandate, and/or other evidence of the opening of the Earnings Accounts, as the Security Agent may require.

2.8 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.

2.9 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.

2.10 Master Agreement

The Master Agreement.

2.11 Other Relevant Documents

Copies of each of the Relevant Documents not otherwise comprised in the documents listed in this Part I of Schedule 2.

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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:

3.1 a legal opinion of Watson Farley & Williams, legal advisers to the Agent as to English law substantially in the form distributed to the Lenders prior to signing this Agreement;

3.2 a legal opinion of the following legal advisers to the Agent:

(a) Watson Farley & Williams, as to Liberian law; and

(b) Watson Farley & Williams, as to Marshall Islands law;

(c) Chrysses Demetriades & Co. LLC, as to Cypriot law;

(d) Arias B. & Associates, as to Panamanian law; and

4 OTHER DOCUMENTS AND EVIDENCE

4.1 Drawdown Request

A duly completed Drawdown Request.

4.2 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.

4.3 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.

4.4 Financial statements

A copy of the Original Financial Statements of the Borrower.

4.5 Fees

A 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.

4.6 “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.

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4.7 Side LetterF

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.

4.8 Amount in the Earnings Accounts

Evidence that the amount of three hundred thousand dollars ($300,000) is credited to the Earnings Account.

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Part B

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 A 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 C

Delivery Conditions Precedent

7 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 4.3 (Conditions subsequent) has been amended, modified or revoked in any way since its delivery to the Agent.

8 SECURITY AND RELATED DOCUMENTS

8.1 Vessel documents

Photocopies, certified as true, accurate and complete by a director or the secretary of the Borrower, of:

(a) 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;

(b) 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;

(c) the commercial invoice issued by the Builder in respect of the final contract price of the Newbuilding Vessel;

(d) the declaration of warranty issued by the Builder to the Collateral Owner pursuant to the Building Contract;

(e) any charterparty or other contract of employment of the Newbuilding Vessel which will be in force on the Delivery Date;

(f) the Management Agreements;

(g) the Vessel’s current Safety Construction, Safety Equipment, Safety Radio and Load Line Certificates;

(h) evidence of the Vessel’s current Certificate of Financial Responsibility issued pursuant to the United States Oil Pollution Act 1990;

(i) the Vessel’s current SMC, or an application form submitted by the Borrower;

(j) the ISM Company’s current DOC;

(k) the Vessel’s current ISSC, or an application form submitted by the Borrower;

(l) the Vessel’s current IAPPC, or any application form submitted by the Borrower;

(m) the Vessel’s current Tonnage Certificate;

in each case together with all addenda, amendments or supplements.

121

8.2 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.

8.3 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.

8.4 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.

8.5 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.

8.6 Valuation

Not later than 30 days, or such shorter period as the Agent may agree to, 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.

8.7 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.

8.8 Mandates

Such duly signed forms of mandate, and/or other evidence of the opening of the Earnings Accounts, as the Security Agent may require.

8.9 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

122

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.

8.10 Other Relevant Documents

Copies of each of the Relevant Documents not otherwise comprised in the documents listed in Parts A to C of this Schedule 2.

9 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:

9.1 a legal opinion of Watson Farley & Williams, legal advisers to the Agent as to English law substantially in the form distributed to the Lenders prior to signing this Agreement;

9.2 a legal opinion of the following legal advisers to the Agent:

(a) Watson Farley & Williams, as to Liberian law; and

(b) Watson Farley & Williams, as to Marshall Islands law;

(c) Chrysses Demetriades & Co. LLC, as to Cypriot law;

(d) Arias B. & Associates, as to Panamanian law; and

10 OTHER DOCUMENTS AND EVIDENCE

10.1 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.

10.2 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.

10.3 Fees

A 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.

123

Part D

Delivery Conditions Subsequent

11 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.

12 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.

13 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 C of this Schedule 2.

14 LEGAL OPINIONS

Such of the legal opinions specified in Part C of this Schedule 2 as have not already been provided to the Agent.

15 COMPANIES ACT REGISTRATIONS

If applicable, evidence that the prescribed particulars of any Security Documents received by the Agent pursuant to Part C of this Schedule 2 have been delivered to any relevant Registry of Companies/Corporations within the statutory time limit.

16 MASTER’S RECEIPT

If applicable, the master’s receipt for the Mortgage.

17 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.

18 SAFETY MANAGEMENT CERTIFICATE

The Vessel’s current SMC.

19 INTERNATIONAL SHIP SECURITY CERTIFICATE

The Vessel’s current ISSC.

20 INTERNATIONAL AIR POLLUTION PREVENTION CERTIFICATE

The Vessel’s current IAPPC.

124

Schedule 3

Drawdown Request

From: SAFE BULKERS, INC.

To: DNB BANK ASA

Dated:

Dear Sirs

Safe Bulkers, Inc. - Loan Agreement relating to a $142,000,000 term loan facility as supplemented by supplemental agreements dated 20 February 2015 and 15 December 2015, as amended and restated on 22 February 2016, as further supplemented by supplemental agreements dated 1 June 2016 and 8 December 2016, as further amended and restated on 26 July 2017 and as further amended and restated on [l] 2018 (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 under the Term Loan Facility] [draw down the Loan] on the following terms:

Proposed Drawdown Date:	[l] (or, if that is not a Business Day, the next Business Day)
Amount:	[l]
Interest Period:	[l]

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][Loan] should be credited to [account] [towards repayment in full of the [l].

5 This Drawdown Request is irrevocable.

Yours faithfully

authorised signatory for

SAFE BULKERS, INC.

125

Schedule 4

Form of Transfer Certificate

To: [l] as Agent

From: [The Existing Lender] (the “Existing Lender”) and [The New Lender] (the “New Lender”)

Dated:

Safe Bulkers, Inc. - Loan Agreement relating to a $142,000,000 term loan facility as supplemented by supplemental agreements dated 20 February 2015 and 15 December 2015, as amended and restated on 22 February 2016, as further supplemented by supplemental agreements dated 1 June 2016 and 8 December 2016 as further amended and restated on 26 July 2017 and as further amended and restated on [l] Septeber 2018 (the “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 [l].

(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(a)(iii) (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:

(d) a company resident in the United Kingdom for United Kingdom tax purposes;

(e) a partnership each member of which is:

(i) a company so resident in the United Kingdom; or

126

(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

(f) 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 [l]) and is tax resident in [l], 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.

127

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 [l].

DNB BANK ASA

By:

128

Schedule 5

Form of Assignment Agreement

To:	[l] as Agent and [l] and [l] 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. - USD142,000,000 Loan Agreement dated 22 September 2014 as supplemented by supplemental agreements dated 20 February 2015 and 15 December 2015, as amended and restated on 22 February 2016, as further supplemented by supplemental agreements dated 1 June 2016 and 8 December 2016 as further amended and restated on 26 July 2017 and as further amended and restated on [l] 2018 (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 [l].

4 On the Transfer Date the New Lender becomes:

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(c) (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:

(a) [a Qualifying Lender (other than a Treaty Lender);]

129

(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:

(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.]

9 [The New Lender confirms that it holds a passport under the HMRC DT Treaty Passport scheme (reference number [l]) and is tax resident in [l], 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 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.

130

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 [l].

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:

131

Schedule 6

Form of Compliance Certificate

To: DNB BANK ASA

From: SAFE BULKERS, INC.

Dated:

Dear Sirs

Safe Bulkers, Inc. - USD142,000,000 Loan Agreement dated 22 September 2014 as supplemented by supplemental agreements dated 20 February 2015 and 15 December 2015, as amended and restated on 22 February 2016, as further supplemented by supplemental agreements dated 1 June 2016 and 8 December 2016 as further amended and restated on 26 July 2017 and as further amended and restated on [l] 2018 (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 We confirm that the VTL Coverage as at the date hereof is [l] per cent.

4 [We confirm that no Default is continuing.]¹*

¹ * 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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Signed:
	Officer	Officer
	of	of
	SAFE BULKERS, INC.	SAFE BULKERS, INC.

[insert applicable certification language]²**

[for and on behalf of

[name of auditors of the Borrower]³*** ]

² ** To be agreed with the Borrower’s auditors and the Lenders prior to signing the Agreement.

³ *** 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.

133

Execution Page

THE BORROWER

SAFE BULKERS, INC.	)
	)
By:	)
	)
Address: c/o Safe Bulkers Management	)
Limited, 1 Aghias Fylaxeos	)
Limassol, Cyprus	)
Fax no.: +357 25887220	)
Department/Officer: Konstantinos	)
Adamopoulos	)

THE ARRANGER

DNB BANK ASA	)
	)
By:	)
	)
Address: 8th Floor, The Walbrook Building	)
25 Walbrook, London EC4N 8AF, England	)
Fax no.: +44 207 283 5935	)
Department/Officer: Shipping,	)
Offshore & Logistics	)

THE AGENT

DNB BANK ASA	)
	)
By:	)
	)
Address: 8th Floor, The Walbrook Building	)
25 Walbrook, London EC4N 8AF, England	)
Fax no.: +44 207 283 5935	)
Department/Officer: Shipping,	)
Offshore & Logistics	)

THE SECURITY AGENT

DNB BANK ASA	)
	)
By:	)
	)
Address: 8th Floor, The Walbrook Building	)
25 Walbrook, London EC4N 8AF, England	)
Fax no.: +44 207 283 5935	)
Department/Officer: Shipping,	)
Offshore & Logistics	)

134

THE ORIGINAL LENDERS

DNB (UK) LIMITED	)
	)
By:	)
	)
Address: 8th Floor, The Walbrook Building	)
25 Walbrook, London EC4N 8AF, England	)
Fax no.: +44 207 626 5956	)
Department/Officer: Shipping,	)
Offshore & Logistics	)

THE SWAP PROVIDER

DNB BANK ASA	)
	)
By:	)
	)
Address: 8th Floor, The Walbrook Building	)
25 Walbrook, London EC4N 8AF, England	)
Fax no.: +44 207 283 5935	)
Department/Officer: Shipping,	)
Offshore & Logistics	)

135

EX-8.1

Exhibit 8.1

SUBSIDIARIES OF SAFE BULKERS, INC.

The following companies are subsidiaries of Safe Bulkers, Inc. as of March 6, 2019.

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
Kyotofriendo One Shipping Inc.	Marshall Islands
Kyotofriendo Two Shipping Inc.	Marshall Islands
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	Marshall Islands
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
Monagrouli Shipping Corporation	Marshall Islands
Pelea Shipping Ltd.	Liberia
Pemer Shipping Ltd.	Liberia
Pentakomo Shipping Corporation	Marshall Islands
Petra Shipping Ltd.	Liberia
Pinewood Shipping Corporation	Marshall Islands
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
Shikokuennia Shipping Corporation	Marshall Islands
Vassone Shipping Corporation	Marshall Islands
Vasstwo Shipping Corporation	Liberia
Youngone Shipping Inc.	Marshall Islands
Youngtwo 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. (the “Company”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4. The Company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 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 20, 2019	/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:

1. I have reviewed this annual report on Form 20-F of Safe Bulkers, Inc. (the “Company”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4. The Company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 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 20, 2019	/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, 2018 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 20, 2019	/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, 2018 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 20, 2019	/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. 333-214145 on Form F-3 of our reports dated March 20, 2019, relating to the consolidated financial statements of Safe Bulkers Inc. and, the effectiveness of Safe Bulkers Inc.’s internal control over financial reporting, appearing in this Annual Report on Form 20-F of Safe Bulkers Inc. for the year ended December 31, 2018.

/s/ Deloitte Certified Public Accountants S.A.
Athens, Greece
March 20, 2019

XML

Document and entity information	12 Months Ended
	Dec. 31, 2018 shares
Document and Entity information [Abstract]
Document Type	20-F
Document period end date	Dec. 31, 2018
Amendment flag	false
Document Period Focus	2018
Document Fiscal Period Focus	FY
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
Entity common stock shares outstanding	103,005,748

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
CURRENT ASSETS:
Cash and cash equivalents	$ 51,879	$ 46,199
Time deposits	29,895	12,157
Accounts receivable	11,142	10,608
Due from Manager	599	418
Inventories	4,139	4,227
Derivative assets	0	62
Accrued revenue	475	2,029
Restricted cash	310	1,660
Prepaid expenses and other current assets	2,823	1,726
Total current assets	101,262	79,086
FIXED ASSETS:
Vessels, net	955,291	942,876
Advances for vessels	8,596	3,653
Total fixed assets	963,887	946,529
OTHER NON CURRENT ASSETS:
Deferred financing costs	35	0
Restricted cash	10,401	8,651
Accrued revenue	614	831
Total assets	1,076,199	1,035,097
CURRENT LIABILITIES:
Current portion of long-term debt, net	36,185	25,588
Unearned revenue	5,409	3,540
Trade accounts payable	6,106	4,137
Accrued liabilities	6,883	3,666
Derivative liabilities	0	2
Due to Manager	23	0
Total current liabilities	54,606	36,933
Long-term debt, net	538,508	541,816
Unearned revenue Long-term	253	0
Total liabilities	593,367	578,749
COMMITMENTS AND CONTINGENCIES
MEZZANINE EQUITY - Redeemable non controlling interest	16,998	0
SHAREHOLDERS’ EQUITY:
Common stock, $0.001 par value; 200,000,000 authorized, 101,526,708 and 103,005,748 issued and outstanding at December 31, 2017 and 2018, respectively	103	102
Preferred stock, $0.01 par value; 20,000,000 authorized, 379,514 and 0 Series B Preferred Shares, 2,300,000 and 2,300,000 Series C Preferred Shares, 3,200,000 and 3,200,000 Series D Preferred Shares, issued and outstanding at December 31, 2017 and 2018, respectively	55	59
Treasury stock, $0.001 par value; 113,076 and 458,088 common shares repurchased at December 31, 2017 and December 31, 2018, respectively	(737)	(120)
Additional paid in capital	355,134	361,202
Retained earnings	111,279	95,105
Total shareholders’ equity	465,834	456,348
Total liabilities, mezzanine equity and shareholders’ equity	$ 1,076,199	$ 1,035,097

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2018	Dec. 31, 2017
Class of Stock [Line Items]
Common stock, par value (in USD per share)	$ 0.001	$ 0.001
Common stock, authorized (in shares)	200,000,000	200,000,000
Common stock, shares issued (in shares)	103,005,748	101,526,708
Common stock, shares outstanding (in shares)	103,005,748	101,526,708
Preferred stock, par value (in USD per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	20,000,000	20,000,000
Treasury stock, par value (USD per share)	$ 0.001	$ 0.001
Treasury stock, shares repurchased (in shares)	458,088	113,076
Series B Preferred Stock
Class of Stock [Line Items]
Preferred stock, issued (in shares)	0	379,514
Preferred stock, shares outstanding (in shares)	0	379,514
Series C Preferred Stock
Class of Stock [Line Items]
Preferred stock, issued (in shares)	2,300,000	2,300,000
Preferred stock, shares outstanding (in shares)	2,300,000	2,300,000
Series D Preferred Stock
Class of Stock [Line Items]
Preferred stock, issued (in shares)	3,200,000	3,200,000
Preferred stock, shares outstanding (in shares)	3,200,000	3,200,000

XML

Consolidated Statemenets of Operations - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
REVENUES:
Revenues	$ 201,548	$ 154,040	$ 113,959
Commissions	(8,357)	(6,008)	(4,187)
Net revenues	193,191	148,032	109,772
EXPENSES:
Voyage expenses	(6,378)	(3,932)	(7,679)
Vessel operating expenses	(63,512)	(52,794)	(49,519)
Depreciation	(48,067)	(51,424)	(49,485)
General and administrative expenses
Management fee to related parties	(16,536)	(13,511)	(11,611)
Company administration expenses	(2,706)	(2,607)	(3,770)
Early redelivery cost, net	(105)	(1,263)	0
Other operating income/(expense)	0	(390)	794
Loss on sale of assets	0	(120)	(2,750)
Impairment loss	0	(91,293)	(17,163)
Operating (loss)/income	55,887	(69,302)	(31,411)
OTHER (EXPENSE)/INCOME:
Interest expense	(25,713)	(23,224)	(19,576)
Other finance (cost)/income	(973)	7,651	(1,735)
Interest income	929	799	515
(Loss)/gain on derivatives	18	72	(620)
Foreign currency (loss)/gain	(670)	1,782	(76)
Amortization and write-off of deferred finance charges	(1,794)	(2,457)	(3,063)
Net (loss)/income	27,684	(84,679)	(55,966)
Less preferred dividend	11,384	12,316	14,025
Less preferred deemed dividend	0	2,146	0
Net (loss)/income available to common shareholders	$ 16,300	$ (99,141)	$ (69,991)
(Loss)/earnings per share in U.S. Dollars, basic and diluted (in USD per share)	$ 0.16	$ (0.98)	$ (0.83)
Weighted average number of shares, basic and diluted (in shares)	101,604,339	100,932,876	84,526,411

XML

Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands	Total	Common Stock	Treasury Stock	Preferred Stock	Additional Paid in Capital	Retained Earnings
Beginning Balance at Dec. 31, 2015	$ 634,146	$ 83	$ 0	$ 71	$ 369,731	$ 264,261
Net loss	(55,966)					(55,966)
Issuance of common stock	16,115	16			16,099
Repurchase of common stock	(120)		(120)
Repurchase and cancellation of preferred stock	(1,710)			(1)	(1,709)
Share based compensation	120				120
Preferred share dividends declared	(14,049)					(14,049)
Ending Balance at Dec. 31, 2016	578,536	99	(120)	70	384,241	194,246
Net loss	(84,679)					(84,679)
Repurchase and cancellation of preferred stock	(114)			0	(114)
Tender offer-redemption of preferred stock	(25,199)	3		(11)	(23,045)	(2,146)
Share based compensation	120				120
Preferred share dividends declared	(12,316)					(12,316)
Ending Balance at Dec. 31, 2017	456,348	102	(120)	59	361,202	95,105
Net loss	27,684					27,684
Issuance of common stock	3,297	1			3,296
Repurchase of common stock	(617)		(617)
Repurchase and cancellation of preferred stock	(9,488)			(4)	(9,484)
Share based compensation	120				120
Preferred share dividends declared	(11,510)					(11,510)
Ending Balance at Dec. 31, 2018	$ 465,834	$ 103	$ (737)	$ 55	$ 355,134	$ 111,279

XML

Consolidated Statemenets of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Cash Flows from Operating Activities:
Net (loss)/income	$ 27,684	$ (84,679)	$ (55,966)
Adjustments to reconcile (net loss)/income to net cash provided by operating activities:
Depreciation	48,067	51,424	49,485
Loss on sale of assets	0	120	2,750
Impairment loss	0	91,293	17,163
Gain on debt extinguishment	0	(8,189)	0
Other non cash items	0	373	0
Amortization and write-off of deferred finance charges	1,794	2,457	3,063
Unrealized (gain)/loss on derivatives	60	(146)	(411)
Unrealized foreign exchange (gain)/loss	119	(244)	0
Share based compensation	120	120	120
Change in:
Accounts receivable	(534)	(2,373)	(1,695)
Due from Manager	(23)	25	345
Inventories	88	947	238
Accrued revenue	1,771	(1,765)	(90)
Prepaid expenses and other current assets	(1,097)	293	(340)
Due to Manager	23	0	0
Trade accounts payable	2,630	(486)	(1,679)
Accrued liabilities	2,625	(569)	411
Unearned revenue	2,122	1,500	84
Net Cash Provided by Operating Activities	85,449	50,101	13,478
Cash Flows from Investing Activities:
Vessel advances	(45,932)	(59,943)	(58,373)
Proceeds from sale of assets	0	20,510	29,000
Increase in bank time deposits	(60,795)	(37,635)	(51,452)
Maturity of bank time deposits	43,057	37,478	40,952
Net Cash Used in Investing Activities	(63,670)	(39,590)	(39,873)
Cash Flows from Financing Activities:
Proceeds from long-term debt	187,513	115,260	64,500
Principal payments of long-term debt	(179,725)	(122,805)	(148,529)
Dividends paid	(11,387)	(12,316)	(14,049)
Payment of deferred financing costs	(1,873)	(1,868)	(100)
Proceeds on issuance of common stock	0	0	16,494
Payment of common stock offering expenses	(3)	(18)	(361)
Repurchase of common stock	(617)	0	(120)
Repurchase of preferred stock	(9,488)	(114)	(1,710)
Tender offer-redemption of preferred stock	0	(24,890)	0
Payment of tender offer expenses	0	(309)	0
Net Cash Used in Financing Activities	(15,580)	(47,060)	(83,875)
Net (decrease)/increase in cash, cash equivalents and restricted cash	6,199	(36,549)	(110,270)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(119)	244	0
Cash, cash equivalents and restricted cash at beginning of year	56,510	92,815	203,085
Cash, cash equivalents and restricted cash at end of year	62,590	56,510	92,815
Supplemental cash flow information:
Cash paid for interest (excluding capitalized interest)	23,849	22,682	19,829
Non Cash Investing and Financing Activities:
Unpaid financing fees	540	85	18
Part payment of vessel advances through issuance of common stock and preferred stock	20,175	0	0
Unpaid capital expenditure	1,028	210	3,500
Reconciliation of Cash, Cash Equivalents and Restricted Cash:
Cash, cash equivalents and restricted cash shown in the statement of cash flows	$ 56,510	$ 92,815	$ 203,085

XML

Basis of Presentation and General Information

12 Months Ended

Dec. 31, 2018

General Information

Basis of Presentation and General Information

Basis of Presentation and General Information

Safe Bulkers, Inc. (“Safe Bulkers”) was formed on December 11, 2007, under the laws of the Republic of the Marshall Islands. Safe Bulkers’ common stock trades on the New York Stock Exchange (“NYSE”) under the symbol “SB.”

Polys Hajioannou and his family, by virtue of shares owned indirectly through various private entities are the controlling shareholders of Safe Bulkers and as a result 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 Company’s initial public offering, Safe Bulkers has successfully completed five additional public common stock offerings and three preferred stock offerings.

As of December 31, 2018, Safe Bulkers held 48 wholly-owned companies (which are referred to herein as “Subsidiaries”) which together owned and operated a fleet of 41 drybulk vessels and were scheduled to acquire one additional newbuild vessel (the “Newbuild”).

Safe Bulkers and its Subsidiaries are collectively referred to in the notes to the consolidated financial statements as the “Company.”

The Company’s principal business is the 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”) and Safe Bulkers Management Limited, a company incorporated under the laws of the Republic of Cyprus (“Safe Bulkers Management,” and, together with Safety Management, the “Managers,” and either of them “the Manager”), related parties both controlled by Polys Hajioannou, provide technical, commercial and administrative management services to the Company.

The accompanying consolidated financial statements include the operations, assets and liabilities of the Company, and of its 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”)(2)	Efrossini	Panamax	February 2012
Glovertwo Shipping Corporation (“Glovertwo”)(2)	Zoe	Panamax	July 2013
Shikokutessera Shipping Inc. (“Shikokutessera”)(2)	Kypros Land	Panamax	January 2014
Shikokupente Shipping Inc. (“Shikokupente”)(2)	Kypros Sea	Panamax	March 2014
Gloverfour Shipping Corporation (“Gloverfour”)(2)	Kypros Bravery	Panamax	January 2015
Shikokuokto Shipping Inc. (“Shikokuokto”)(2)	Kypros Sky	Panamax	March 2015

Subsidiary	Vessel Name	Type	Built
Gloverfive Shipping Corporation (“Gloverfive”)(2)	Kypros Loyalty	Panamax	June 2015
Gloversix Shipping Corporation (“Gloversix”)(2)	Kypros Spirit	Panamax	July 2016
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”)(2)	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
Youngone Shipping Inc. (“Youngone”)(2)	Pedhoulas Cherry	Kamsarmax	July 2015
Youngtwo Shipping Inc. (“Youngtwo”)(2)	Pedhoulas Rose	Kamsarmax	January 2017
Pinewood Shipping Corporation (“Pinewood”)(2)(7)	Pedhoulas Cedrus	Kamsarmax	June 2018
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
Pentakomo Shipping Corporation (“Pentakomo”)(2)	Agios Spyridonas	Post-Panamax	January 2010
Maxdekatria Shipping Corporation (“Maxdekatria”)(1)	Panayiota K	Post-Panamax	April 2010
Maxdeka Shipping Corporation (“Maxdeka”)(2)	Venus Heritage	Post-Panamax	December 2010
Shikoku Friendship Shipping Company (“Shikoku”)(2)	Venus History	Post-Panamax	September 2011
Maxenteka Shipping Corporation (“Maxenteka”)(2)	Venus Horizon	Post-Panamax	February 2012
Shikokuepta Shipping Inc. (“Shikokuepta”)(2)	Troodos Sun	Post-Panamax	January 2016
Shikokuexi Shipping Inc. (“Shikokuexi”)(2)	Troodos Air	Post-Panamax	March 2016
Maxpente Shipping Corporation (“Maxpente”)(1)	Kanaris	Capesize	March 2010
Eptaprohi Shipping Corporation (“Eptaprohi”)(1)	Pelopidas	Capesize	November 2011
Maxtessera Shipping Corporation (“Maxtessera”)(2)	Lake Despina	Capesize	January 2014
Shikokuennia Shipping Corporation (“Shikokuennia”)(2)(6)	Mount Troodos	Capesize	November 2009
Monagrouli Shipping Corporation ("Monagrouli")(2)(9)	TBN - S 1772	Post-Panamax	February 2020
Gloverthree Shipping Corporation (“Gloverthree”)(2)(3)	—	—	—
Staloudi Shipping Corporation (“Staloudi”)(1)(4)	—	—	—
Gloverseven Shipping Corporation (“Gloverseven”)(2)(5)	—	—	—
Kyotofriendo One Shipping Inc. (“Kyotofriendo One”)(2)(8)	—	—	—
Kyotofriendo Two Shipping Inc. (“Kyotofriendo Two”)(2)(7)	—	—	—
Maxeikosipente Shipping Corporation (“Maxeikosipente”)(1)	—	—	—

(1) Incorporated under the laws of the Republic of Liberia.

(2) Incorporated under the laws of the Republic of the Marshall Islands.

(3) Gloverthree owned the Panamax class vessel Kypros Unity which was sold in March 2016. Refer to Notes 3 and 17.

(4) Staloudi owned the post-Panamax class vessel Stalo which was sold in March 2016. Refer to Notes 3 and 17.

(5) Gloverseven had contracted to acquire the Panamax class newbuild vessel with Hull No. 835. The contract was novated in October 2016. Refer to Note 3.

(6) Shikokuennia had contracted to acquire the post-Panamax class newbuild vessel with Hull No. 1718. The contract was novated in February 2016. Refer to Note 3. Shikokuennia subsequently acquired the secondhand Capesize class vessel Mount Troodos in August 2018.

(7) On July 29, 2016, the Shipsales Contract relating to Hull No. 1552, initially contracted by Kyotofriendo Two, was novated to Pinewood. Under an agreement with an unaffiliated third party, upon delivery of the vessel, named Pedhoulas Cedrus, to Pinewood in June 2018, 100 shares of Series A Preferred Stock of Pinewood were issued to the unaffiliated third party for proceeds in the equivalent of $16,875 which were used to finance part of the cost of such vessel. Such shares have preference over shares of common stock of Pinewood with respect to distributions by, and liquidation of, Pinewood. Furthermore, under this agreement, Pinewood agreed to (i) pay its own expenses out of its own funds, (ii) keep its assets and funds separate from the assets and funds of the Company, (iii) refrain from holding its assets and/or creditworthiness as being available to satisfy any of the obligations of the Company and (iv) take, or refrain from taking, certain other actions designed to ensure that the assets of Pinewood are not available to creditors of Safe Bulkers or its other subsidiaries.

(8) Kyotofriendo One had contracted to acquire the Kamsarmax class newbuild vessel with Hull No. 1551, which upon her deliveryfrom the shipyard in January 2017 was sold. Refer to Notes 3 and 17.

(9) Estimated completion date for newbuild vessel as of December 31, 2018.

For the years ended December 31, 2016, 2017 and 2018, the following charterers individually accounted for more than 10% of the Company’s time charter, voyage charter and ballast bonus revenues as follows:

	December 31,
	2016		2017		2018
Glencore Agriculture B.V	10.05	%	—	%	14.73	%
Bunge S.A.	—	%	12.72	%	13.76	%
Global Chartering Ltd	12.49	%	—	%	—	%

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Significant Accounting Policies

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Significant Accounting Policies

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 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 may include vessel valuations, the valuation of amounts due from charterers, residual value of vessels and the useful life of vessels. 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/(loss) 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 operations 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 remaining 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 reflect 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 and net realizable value. Cost is determined using the first–in, first-out method. Inventories consist of $724 and $0 of bunkers and of $3,503 and $4,139 of lubricants as of December 31, 2017 and 2018, respectively.

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 and financing costs incurred during the construction period for vessels under construction, commissions paid, delivery expenses and other expenditures to prepare the vessel for her initial voyage), less accumulated depreciation and impairment, if any. Certain subsequent expenditures for conversions, major improvements and regulatory requirements 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. The Company estimates the useful life of its vessels to be 25 years from the date of initial delivery from the shipyard. Secondhand vessels are depreciated from the date they become available for use 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 operations.

Repairs and Maintenance: 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 operations.

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. Various factors including anticipated future charter rates, estimated scrap values, future drydocking costs and estimated vessel operating costs are included in this analysis. If the carrying value of the related asset exceeds the undiscounted cash flows, the carrying value is reduced to its estimated fair value and the difference is recorded as an impairment loss in the consolidated statements of operations.

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, 2017 and 2018.

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. The unamortized deferred financing costs are presented as a direct deduction from the carrying amount of the related loan and credit facility in the consolidated balance sheet. Deferred financing costs relating to undrawn facilities are presented under non-current assets in the consolidated balance sheet. 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 and terminated is expensed in the same period. Any unamortized balance of costs relating to the credit facilities refinanced is deferred and amortized over the term of the respective refinanced 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. 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 operations. 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 operations. For the years ended December 31, 2016, 2017 and 2018, no derivatives were accounted for as accounting hedges.

Financial Instruments: Over-the-counter foreign exchange forward contracts, interest rate derivatives and cash equivalents are recorded at fair value. Other financial instruments, including 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 6. The Company may manage its interest rate risk by entering into interest rate derivative instruments which are described in Note 12. As of December 31, 2018 the Company did not have any interest rate swap agreements in place.

(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 interest rate 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 may be exposed to credit risk in the event of non-performance by its counterparties to derivative instruments; however, the Company may limit 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.

Treasury stock: The Company records the repurchase of its shares at cost based on the settlement dates of repurchase transactions. These shares are classified as treasury stock, which is a reduction to shareholders’ equity. Treasury shares are included in authorized and issued shares but excluded from outstanding shares.

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 trip or a specific period of time and at a specified daily charter rate. Time charter 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. 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. Time charter hire is typically payable 15 or 30 days in advance as determined in the charter party agreement. 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 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). Certain voyage expenses paid by the Company such as extra war risk insurance may be recovered from the charterer; such amounts recovered are recorded as Other Income within Revenues.

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. The Company accounts for a voyage charter when all the following criteria are met: (1) the parties to the contract have approved the contract in the form of a written charter agreement or fixture recap and are committed to perform their respective obligations, (2) the Company can identify each party’s rights regarding the services to be transferred, (3) the Company can identify the payment terms for the services to be transferred, (4) the charter agreement has commercial substance (that is, the risk, timing, or amount of the future cash flows is expected to change as a result of the contract) and (5) it is probable that the Company will collect substantially all of the consideration to which it will be entitled in exchange for the services that will be transferred to the charterer. The Company determined that its voyage charters consist of a single performance obligation which is met evenly as the voyage progresses and hence, the voyage 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 and are all paid for by the Company. Costs incurred prior to loading which are directly related to the voyage may be deferred if they meet certain conditions, and are amortized over the duration of the voyage from load port to discharge port. Costs incurred during the voyage are expensed as incurred.

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. Voyage hire is typically paid upon completion of the performance obligation. During the years ended December 31, 2016, 2017 and 2018, there has only been one instance in each of 2017 and 2018 where a vessel was employed under a voyage charter and in both cases the voyage had began and ended in the same period.

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 operations.

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, under the laws of the Republic of Greece, each vessel managed in Greece is also subject to an annual shipping community mandatory financial contribution. These registration, tonnage taxes and financial contributions are recorded within Vessel operating expenses in the accompanying consolidated statements of operations and none are considered income taxes.

Furthermore, each Subsidiary may be subject to a 4.00% U.S. federal tax in respect of its U.S. source shipping income (imposed on gross income without the allowance for any deductions). Such taxes have been recorded within Voyage expenses in the accompanying consolidated statements of operations. If such taxes are recovered; such amounts recovered are recorded within Revenues in the accompanying consolidated statements of operations.

Dividends: Dividends are recorded in the period in which they are declared by the Company’s Board of Directors.

Earnings/(Loss) Per Share: The computation of basic earnings/(loss) per share is based on the weighted average number of common stock outstanding during the year and includes the shares issuable to the audit committee chairman and the independent directors at the end of each year for services rendered. The computation of basic earnings/(loss) per share is calculated after deducting the preferred stock dividends paid and accrued (including any deemed dividend) from net income/(loss) divided by the weighted average number of shares.

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: On May 28, 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2014-09, as amended by ASU 2015-14, which was issued on August 12, 2015, Revenue From Contracts With Customers, which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. This standard is effective for public entities with reporting periods beginning after December 15, 2017 and interim periods therein, and shall be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. The Company adopted this ASU for its Voyage Revenues, for its reporting period commencing January 1, 2018 and elected to use the modified retrospective transition method for the implementation of this standard. The implementation of this standard did not have an impact on the Company’s financial statements as the Company has always recognized voyage revenues on a pro rata basis over the duration of the voyage from load port to discharge port and in addition did not have any voyages in progress over the year ended December 31, 2017 and 2018. Voyage Revenues represent less than 1% of total revenues.

Leases: In February 2016, the FASB issued ASU 2016-2 (codified as ASC 842), which amends the existing accounting standard for lease accounting and adds additional disclosures about leasing arrangements. ASC 842 requires lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by most leases, while lessor accounting remains largely unchanged. ASC 842, as amended, subject to certain transition relief options, requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, or allows entities to elect not to recast the comparative periods presented when transitioning to ASC 842 and to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. ASC 842 also provides a practical expedient to lessors by class of underlying asset, to not separate non lease components from the associated lease component, similar to the expedient provided for lessees, when the following criteria are met i) the timing and pattern of transfer for the lease component is the same as those for the non-lease component associated with that lease component and (ii) the lease component, if accounted for separately, would be classified as an operating lease. ASC 842 is effective for public entities with reporting periods beginning after December 15, 2018, including interim periods within those fiscal periods. Early adoption is permitted for all entities. The Company will adopt ASC 842 for its reporting period commencing January 1, 2019 and has elected not to recast the comparative periods presented when transitioning to ASC 842. The nature of the lease component and non-lease component that were combined as a result of applying the practical expedient are the contract for the hire of a vessel and the fees for operating and maintaining the vessel respectively. The Company has elected not to separate the lease and non-lease components. The lease component is the predominant component and the Company accounts for the combined component as an operating lease in accordance with Topic 842. Since lessor accounting remains largely unchanged from current U.S. GAAP and the Company’s office operating leases are immaterial, the implementation of this standard will not have a significant impact on the Company’s financial statements, however it will increase the disclosures relating to the Company’s leasing arrangements.

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Transactions with Related Parties

12 Months Ended

Dec. 31, 2018

Related Party Transactions [Abstract]

Related Party Transactions Disclosure

Transactions with Related Parties

A. The Managers

The Company enters from time to time into management agreements with the Managers for the provision of executive officers and management services to vessel-owning Subsidiaries. On specified terms provided by the management agreements, the vessel-owning Subsidiaries enter into separate ship management agreements with either one of the Managers under which chartering, operations, technical and accounting services are provided to the vessels. On specified terms provided by the management agreements, the Subsidiaries that have entered into agreements to acquire newbuild vessels are required to enter into supervision agreements with either one of the Managers. The Managers under these agreements receive fees, (the "Fees"), comprised of ship management fees, (the "Ship Management Fees"), supervision fees, (the "Supervision Fees") and sale and purchase commissions, (the "Commissions"). The Managers are both related parties that are controlled by Polys Hajioannou.

On May 29, 2018, Safe Bulkers following the expiration of the old management agreements signed new management agreements with the Managers (the “Management Agreements”). The Management Agreements have an initial term of three years expiring on May 28, 2021 and can be extended for two additional terms of three years each. The fees provided by the Management Agreements are fixed until May 29, 2021 and upon mutual agreement with the Managers, can be adjusted for a subsequent term of three years each time on May 29, 2021 and May 29, 2024.

In accordance with the Management Agreements, the Managers receive:

•Ship Management Fees comprising of a daily ship management fee of Euro (“€”) €875 per vessel, payable monthly in arrears to the respective Manager and an annual ship management fee of €3,000,000 payable quarterly in arrears to only one of the Managers;

•Supervision Fees of $550 with respect to each newbuild for the services rendered by one of the Managers under the supervision agreement 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; and

•Commissions equal to 1.00% calculated on the price set forth in the memorandum of agreement or other sale and purchase newbuild contract, or any other vessel bought or sold by the Company, payable upon final delivery of such vessel to the relevant purchaser.

For the period starting January 1, 2016 to May 28, 2018 the old management agreements provided for Ship Management Fees of $975 per day per vessel. Both old and new management agreements provided for the same Supervision Fees and Commissions.

The Ship Management Fees are recorded in General and Administrative Expenses (refer to Note 15). The Commissions on purchase and the Supervision Fees are recorded in Advances for vessels (refer to Note 5). The Commissions on sale are recorded in Gain or Loss on sale of assets as the case may be.

The Management Agreements do not include the provision which was included in the old management agreements that to the extent the executive officers are not provided by the Managers but are instead employed by Safe Bulkers, the management fees payable by Safe Bulkers will be 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. Such costs for the year ended December 31, 2016, amounted to $1,445 and were recorded under Compensation for Directors and Officers within General and Administrative Expenses (refer to Note 15). No such costs were incurred for the years ended December 31, 2017 and 2018, as the executive officers were provided by the Managers.

Amounts due from Manager under the management agreements were $418 and $599 as of December 31, 2017 and 2018, respectively. Amounts due to Manager under the management agreements were $0 and $23 as of December 31, 2017 and 2018, respectively.

The Fees to our Managers comprised the following:

	Year Ended December 31,
	(In thousands of U.S. Dollars)
	2016		2017		2018
Ship Management Fees	$	11,611	$	13,511	$	16,536
Supervision Fees	1,925		550		275
Commissions	972		700		586

B. Sale of Vessels and Novation of Newbuild Contracts

In December 2015, following the Company’s decision to reduce its capital commitments and improve its liquidity, Polys Hajioannou submitted a proposal to the Company’s Board of Directors, pursuant to which companies controlled by Polys Hajioannou would (a) purchase two vessels of the Company’s operating fleet, the Stalo and the Kypros Unity and (b) novate the contracts of two of the Company’s newbuilds, Hull No. 1718 and Hull No. 1552, respectively. Upon receipt of this proposal, a special committee consisting of the Company’s three independent directors was formed and authorized by the Board of Directors of the Company in order to evaluate the proposal. The special committee was advised by independent counsel. During January 2016, the special committee obtained two appraisals from independent third parties for each of the two vessels and for each of the two newbuildings, and negotiated the terms of the sale of the vessels and the newbuild contract novations. In February 2016, the special committee approved the sale of the Stalo and the Kypros Unity and the novation of the contracts of Hull No. 1718 and Hull No. 1552 to companies controlled by Polys Hajioannou.

The agreed sale price for the Stalo was $9,000 in cash, representing the higher of the two appraisals for that vessel, and the agreed sale price for the Kypros Unity was $20,000 in cash, likewise representing the higher of the two appraisals for that vessel that the special committee had obtained. The sales of the Stalo and Kypros Unity were consummated in March 2016.

The remaining commitment under the newbuild contract for Hull No. 1718 as of December 31, 2016 and as of the day of signing the novation agreement was $28,400, compared to $26,500, representing the higher of the two appraisals obtained by the special committee for such newbuild. The novation of the contract of Hull No. 1718 was executed in February 2016. The novation of the newbuild contract of Hull No. 1552 was not completed. Instead, the Company entered into an agreement to issue to an unaffiliated investor cumulative redeemable preferred shares of Pinewood in connection with the delivery of Pedhoulas Cedrus (Hull No. 1552) in 2018.

In August 2016, following the Company’s decision to further reduce its capital commitments and improve its liquidity, Polys Hajioannou submitted a proposal to the Company’s Board of Directors, pursuant to which companies controlled by Polys Hajioannou would (a) novate the contract of newbuild Hull No. 835 and (b) purchase Hull No. 1551 upon delivery from the shipyard. Upon receipt of this proposal, the Company’s Board of Directors formed a special committee consisting of the Company’s three independent directors in order to evaluate the proposal. The special committee was advised by an independent counsel, obtained two appraisals from independent third party brokers for each newbuild vessel and negotiated the terms of each transaction. The fair value of each vessel was based on the Company’s best estimate of the fair value of each vessel on a charter free basis, and was supported by vessel valuations obtained from independent third party shipbrokers.

The remaining commitments under the newbuild contracts for Hull No. 835 and Hull No. 1551 were $48,155 in the aggregate. The higher of the two appraisals obtained by the special committee from independent third party brokers was $21,500 for Hull No. 835 and $24,500 for Hull No. 1551, or $46,000 in the aggregate.

In September 2016, the special committee approved the novation of contract of Hull No. 835 and the sale of newbuild Hull No. 1551 upon delivery from the shipyard to companies controlled by Polys Hajioannou. The novation agreement for Hull No. 835 and the sale agreement for Hull No. 1551 were both signed in October 2016. The sale of Hull No. 1551 was consummated in January 2017, immediately upon delivery of the newbuild vessel from the shipyard.

The Commission due to the Managers pursuant to the Management Agreements arising from all above transactions were waived. No related party transactions in relation to the sale of vessels or the novation of newbuild contracts occurred during 2018.

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Vessels, Net

12 Months Ended

Dec. 31, 2018

Property, Plant and Equipment [Abstract]

Vessels, Net

Vessels, Net

Vessels, net are comprised of the following:

	Vessel Cost			Accumulated Depreciation			Net Book Value
Balance, January 1, 2017	$	1,324,800		$	(286,081	)	$	1,038,719
Transfer from Advances for vessels	67,504			—			67,504
Disposal	(20,630		)	—			(20,630		)
Impairment loss	(159,805		)	68,512			(91,293		)
Depreciation expense	—			(51,424		)	(51,424		)
Balance, December 31, 2017	$	1,211,869		$	(268,993	)	$	942,876
Transfer from Advances for vessels	60,482			—			60,482
Depreciation expense	—			(48,067		)	(48,067		)
Balance, December 31, 2018	$	1,272,351		$	(317,060	)	$	955,291

Transfer from Advances for vessels represents advances paid for vessels acquisitions, vessels under construction and vessel improvements 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, 2017: Pedhoulas Rose, Hull No. 1551 and Agios Spyridonas.; and

• During the year ended December 31, 2018: Pedhoulas Cedrus(ex-Hull No. 1552) and Mount Troodos.

Disposal during the year ended December 31, 2017 relates to Hull No. 1551 (refer to Notes 3 and 17).

At December 31, 2017, the Company identified and recorded an impairment loss of $91,293 in relation to four of its vessels, for which the undiscounted net operating cash flows did not exceed each vessel’s carrying value. The impairment loss is presented under the caption “Impairment loss” in the consolidated statements of operations. Consistent with prior practices, we reviewed all our vessels for impairment and none were found to be impaired at December 31, 2018.

As of December 31, 2018, 39 vessels with a carrying value of $914,804 have been provided as collateral to secure the Company’s bank loans as discussed in Note 6.

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Advances for Vessels

12 Months Ended

Dec. 31, 2018

Advances For Assets Acquisition And Assets Under Construction

Advances For Assets Acquisitions And Assets Under Construction

Advances for Vessels

Advances for vessels are comprised of the following:

Balance, January 1, 2017	$	13,007
Additions for advances, including capitalized expenses and interest	58,150
Transferred to vessel cost (refer to Note 4)	(67,504		)
Balance, December 31, 2017	3,653
Additions for advances, including capitalized expenses and interest	65,425
Transferred to vessel cost (refer to Note 4)	(60,482		)
Balance, December 31, 2018	$	8,596

Advances paid for vessels represent advances paid for vessels acquisitions, vessels under construction and vessel improvements and comprise payments of installments that were due to the respective shipyard or third-party sellers, capitalized interest, certain capitalized expenses and expenditures for major improvements and regulatory compliance. During 2017 and 2018, such payments were made for the following vessels:

•During the year ended December 31, 2017 acquisition of the vessels: Pedhoulas Rose, Hull No 1551, Pedhoulas Cedrus (ex-Hull No. 1552), Agios Spyridonas and costs relating to improvements of several vessels.

•During the year ended December 31, 2018 acquisition of the vessels: Pedhoulas Cedrus (ex-Hull No. 1552), Mount Troodos, Hull No. 1772 and improvements to several vessels.

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Bank Debt

12 Months Ended

Dec. 31, 2018

Debt Disclosure [Abstract]

Bank Debt

Bank Debt

Bank debt is comprised of the following secured borrowings:

			December 31,
Borrower	Commencement	Maturity	2017		2018
Maxdekatria	February 2016	July 2018	$	9,167	$	—
Glovertwo	February 2016	July 2018	12,833		—
Shikokutessera	February 2016	July 2018	14,667		—
Youngone	September 2015	August 2018	22,733		—
Petra	June 2015	December 2018	18,024		—
Pemer	June 2015	December 2018	18,024		—
Maxtessera	July 2014	November 2018	28,000		—
Shikokuokto	June 2015	December 2018	15,018		—
Safe Bulkers	November 2018	October 2021	—		30,000
Maxtessera	November 2018	October 2022	—		26,000
Maxdeka	August 2011	December 2022	17,044		13,635
Shikokupente	August 2018	August 2023	—		14,930
Shikoku	October 2011	August 2023	22,400		18,667
Shikokuennia	October 2018	October 2023	—		17,730
Petra	November 2018	November 2023	—		9,075
Pemer	November 2018	November 2023	—		9,075
Maxeikosiepta	December 2018	December 2023	—		5,000
Shikokuepta	February 2016	February 2024	22,050		20,417
Maxdekatria	July 2018	February 2024	—		11,750
Glovertwo	July 2018	February 2024	—		13,420
Shikokutessera	July 2018	February 2024	—		14,430
Pentakomo	July 2018	February 2024	—		11,750
Maxeikositria	September 2017	August 2024	12,968		11,930
Maxeikosi	September 2017	August 2024	12,968		11,930
Maxpente	September 2017	August 2024	20,000		17,400
Maxeikositessera	September 2017	August 2024	13,650		12,090
Maxenteka	September 2017	August 2024	15,925		14,332
Maxeikosiexi	September 2015	September 2024	6,063		5,248
Marathassa	September 2015	September 2024	6,545		5,690
Marinouki	September 2015	September 2024	9,904		8,590
Kerasies	September 2015	September 2024	6,918		6,014
Soffive	September 2015	September 2024	10,757		9,305
Eptaprohi	September 2015	September 2024	50,518		43,818
Safe Bulkers	November 2014	September 2024	160,527		118,925
Pelea - Vasstwo	December 2018	December 2024	—		20,075
Maxeikosiena	September 2015	September 2025	21,271		20,314
Gloversix - Shikokuokto	December 2018	December 2025	—		35,000
Youngtwo	January 2017	January 2027	23,817		23,039
Total			571,791		579,579
Current portion of Long-term debt			26,583		37,431
Long-term debt			545,208		542,148

Total debt	571,791	579,579
Current portion of deferred financing costs	995	1,246
Deferred financing costs non-current	3,392	3,640
Total deferred financing costs	4,387	4,886
Total debt	571,791	579,579
Less:  Total deferred financing costs	4,387	4,886
Total debt, net of deferred financing costs	567,404	574,693
Less:  Current portion of long-term debt, net of current portion of deferred financing costs	25,588	36,185
Long-term debt, net of deferred financing costs, non-current	541,816	538,508

Each of Maxeikosiena,Youngone and Youngtwo had entered into a sale and leaseback agreement with third party companies, subsidiaries of a financial institution, regarding the respective vessel owned by the relevant subsidiary. Under these agreements, each vessel was sold and leased back for a period of 10 years, on a net daily bareboat charter rate of $6.50, with a purchase obligation at the end of the 10^th year. Furthermore, each Subsidiary holds an option to purchase back the respective vessel after the second year of the bareboat charter, at annual intervals and predetermined purchase prices. In view of the obligation of the Subsidiaries to purchase the respective vessels at the end of the bareboat charter, the Company has assessed that this transaction be recorded as a financing transaction. During the year ended December 31, 2018, the Company exercised the option to purchase back the vessel owned by Youngone.

The above loans and credit facilities bear interest at LIBOR plus a margin, except for each of Maxeikosiena and Youngtwo and for a portion of each of the Maxdeka and Shikoku loan facilities. Maxdeka and Shikoku have entered into loan facilities with government owned export credit institutions, each bearing 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. Each of the Maxeikosiena and Youngtwo loan facilities are deemed to incur interest at a fixed rate calculated so that the initial facility amount be amortised to maturity down to the purchase obligation price of each vessel. The above loans and credit facilities are generally repayable by quarterly principal installments and a balloon payment due on maturity, with the exception of the Maxdeka and Shikoku loan facilities which are repaid by semi-annual principal instalments without a balloon payment due on maturity and the Maxeikosiena and Youngtwo loan facilities, that are repayable by principal installments every 45 days out of a portion of the bareboat hire payment and a balloon payment due on maturity equal to the purchase obligation. The fair value of debt outstanding on December 31, 2018 amounted to $577,517 when valuing the respective portions of the Maxdeka and Shikoku loan facilities on the basis of the CIRR as of December 2018 and of the Maxeikosiena, Youngone and Youngtwo loan facilities on the basis of the deemed equivalent fixed rate, as applicable on December 31, 2018, which are considered to be Level 2 items in accordance with the fair value hierarchy.

As of December 31, 2018, there was no amount available for drawdown under the above loan agreements. The estimated minimum annual principal payments required to be made after December 31, 2018, based on the loan and credit facility agreements as amended, are as follows:

To December 31,
2019	$	37,431
2020	62,864
2021	81,516
2022	83,118
2023	72,280
2024 and thereafter	242,370
Total	$	579,579

Total interest incurred on long-term debt for the years ended December 31, 2016, 2017 and 2018 amounted to $20,397, $23,266 and $25,713, respectively, which includes interest capitalized of $821, $42 and $0 for the years ended December 31, 2016, 2017 and 2018, respectively. The average interest rate (including the margin) for all bank loan and credit facilities during the years 2016, 2017 and 2018 was 3.290% p.a., 3.838% p.a. and 4.428% p.a., respectively.

As of December 31, 2018, the foregoing loan and credit facilities were secured as follows :

• First priority mortgages over the vessels owned by the respective borrowers;

• For one of the Safe Bulkers credit facilities, first priority mortgages over the vessels Andreas K, Pedhoulas Cherry, Pedhoulas Commander, Martine, Eleni, Kypros Bravery, Kypros Loyalty and Troodos Air;

• For the other Safe Bulkers credit facility, first priority mortgage over the vessel Maria and second priority mortgages over the vessels Kanaris, Efrossini, Venus Horizon, PedhoulasBuilder and Pedhoulas Fighter;

• First priority assignment of all insurances and earnings of the mortgaged vessels; and

• Corporate guarantee from Safe Bulkers in respect of facilities entered into by the Subsidiaries.

Loan and credit facility agreements contain debt covenants including restrictions as to changes in management and ownership of the vessels, entering into certain long-term charters, 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 “Minimum Value Covenant”). The Minimum Value Covenant must not fall below 120%. 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 or would occur as a result of the payment of such dividends.

Certain of the loan and credit facility agreements require the respective borrowers to maintain at all times a minimum balance in each vessel operating account, from $150 to $1,000.

The corporate guarantees of the Company include the following financial covenants:

• its total consolidated liabilities divided by its total consolidated assets (based on the market value of all vessels owned or leased on a finance lease taking into account their employment, and the book value of all other assets), must not exceed 85% for credit facilities outstanding with commercial financing institutions and 80% for credit facilities outstanding with government owned export credit institutions (the “Consolidated Leverage Covenant”);

• its total consolidated assets (based on the market value of all vessels owned or leased on a finance lease taking into account their employment, and the book value of all other assets) less its total consolidated liabilities must not be less than $150,000 for credit facilities outstanding with government owned export credit institutions and for credit facilities outstanding with commercial financing institutions (the “Net Worth Covenant”);

• the ratio of its EBITDA over consolidated interest expense must not be less than 2.0:1, on a trailing 12 months’ basis, for credit facilities, outstanding with commercial financing institutions (the “EBITDA Covenant”);

• the ratio of its aggregate debt to EBITDA must not exceed 5.5:1 on a trailing 12 months’ basis, applicable as of June 30, 2020 (our next testing date) onwards for credit facilities outstanding with government owned export credit institutions;

• its consolidated debt must not exceed $580,000 on December 31, 2018, June 30, 2019 and December 31, 2019 for credit facilities outstanding with government owned export credit institutions;

• payment of dividends is subject to no event of default having occurred and be continuing or would occur as a result of the payment of such dividends; and

• a minimum of 30% or 35%, as the case may be, of its voting and ownership rights shall remain directly or indirectly beneficially owned by the Hajioannou family for the duration of the relevant credit facilities and in the case of one facility Polys Hajioannou beneficially holds a minimum of 20% of the voting and ownership rights.

The Minimum Value Covenant, Consolidated Leverage Covenant, EBITDA Covenant and Net Worth Covenant do not apply to the Shikokuepta loan facility, and the Minimum Value Covenant and EBITDA Covenant do not apply to the Maxeikosiena and Youngtwo financing agreements.

As of December 31, 2018, the Company was in compliance with all debt covenants in effect, with respect to its loans and credit facilities.

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Share Capital

12 Months Ended

Dec. 31, 2018

Equity [Abstract]

Share Capital

Share Capital

As of December 31, 2017 and 2018, the Company had 200,000,000 authorized common stock of $0.001 par value, of which 101,526,708 and 103,005,748 were issued and outstanding respectively.

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 the Company’s board of directors out of funds legally available for dividends. Upon the Company’s dissolution or liquidation or the sale of all or substantially all of the Company’s 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 the common stock will be entitled to receive pro rata the remaining assets available for distribution. Holders of common stock do not have conversion, redemption or preemptive rights to subscribe to any of the Company’s securities. All outstanding shares of common stock are fully paid and non-assessable. 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 may be issued. The Company’s 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 the Company’s shares in the future. There are no provisions in the Company’s articles of incorporation or bylaws discriminating against a shareholder because of his or her ownership of a particular number of shares.

As of December 31, 2017 and 2018, the Company had 20,000,000 authorized preferred stock of $0.01 par value; of which 379,514 and zero Series B Cumulative Redeemable Perpetual Preferred Shares (the “Series B Preferred Shares”), respectively, 2,300,000 and 2,300,000 Series C Cumulative Redeemable Perpetual Preferred Shares (the “Series C Preferred Shares”), respectively, 3,200,000 and 3,200,000 Series D Cumulative Redeemable Perpetual Preferred Shares (the “Series D Preferred Shares,” and, together with the Series B Preferred Shares and the Series C Preferred Shares, the “Preferred Shares”), respectively, were issued and outstanding respectively. In addition, 1,000,000 shares have been designated Series A Participating Preferred Stock in connection with our adoption of a shareholder rights plan.

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 the Company’s Preferred Shares are in arrears and certain other limited protective voting rights. The Company’s Preferred Shares are subordinate to all of existing and future indebtedness.

Common stock

In June 2016, the Company implemented a program for the repurchase of an amount of up to 2,000,000 shares of its common stock. As of December 31, 2017 and 2018, the Company had repurchased 113,076 shares of common stock under this repurchase program, which were held as treasury shares.

In December 2016, the Company successfully completed a public offering, whereby 15,640,000 shares of common stock were issued and sold at a price of $1.10 per share. An entity controlled by Polys Hajioannou purchased 2,727,272 shares of common stock in the public offering. The gross proceeds of the public offering were $17,204, net of underwriting discount of $710 and offering expenses of $379.

In November 2018, the Company issued to an unaffiliated third party 1,441,048 shares of common stock to pay the first installment of $3,300 for the purchase price of Hull No. S 1772.

In December 2018, the Company implemented a new program for the repurchase of an amount of up to 3,000,000 of its common stock. As of December 31, 2018, the Company had repurchased 345,012 shares of common stock under the repurchase program, which were held as treasury shares. An additional 1,332,182 shares of common stock were repurchased until February 5, 2019. All 1,790,270 repurchased shares of common stock have been subsequently canceled in February 2019.

Pursuant to arrangements approved by the Company’s shareholders and the nominating and compensation committee, effective July 1, 2008, in respect of the audit committee chairman and effective January 1, 2010, in respect of the other independent directors of the Company, the audit committee chairman receives the equivalent of $15 every quarter, and the other independent directors each receive the equivalent of $7.50, all payable in arrears in the form of newly-issued Company common stock as part compensation for services rendered as audit committee chairman and independent directors, respectively. 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, 2016, 2017 and 2018, 62,717 shares, 31,286 shares and 18,996 shares, respectively, were issued to the audit committee chairman and 62,717 shares, 31,286 shares and 18,996 shares, respectively, were issued in aggregate to the two other independent directors of the Company.

Preferred stock

In June 2013, the Company successfully completed a public offering, whereby 800,000 shares of Series B Preferred Shares were issued and sold at a price of $25.00 per share, and a private placement, whereby 800,000 shares of Series B Preferred Shares were issued and sold to an entity controlled by Polys Hajioannou, 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 paid 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, 2016, the Series B Preferred Shares could 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 failed to comply with certain covenants as these terms were defined in the applicable agreement, defaulted on any of its credit facilities, failed to pay four quarterly dividends payable in arrears or if the Series B Preferred Shares were not redeemed at the option of the Company, in whole by July 30, 2018, the dividend rate payable on the Series B Preferred Shares would increase 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 were not convertible into common stock and were not redeemable at the option of the holder.

In May 2014, the Company successfully completed a public offering, whereby 2,300,000 shares of Series C 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 stock 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 Series D 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 stock and are not redeemable at the option of the holder.

In December 2015, the Company implemented a program for the repurchase of an amount of up to $20,000 in aggregate of its Series B Preferred Shares, Series C Preferred Shares and Series D Preferred Shares. Under the statement of designation of the respective series of preferred shares, any such shares repurchased by the Company are canceled. As of December 31, 2018, the Company had repurchased and canceled 114,232 Series B Preferred Shares under this repurchase program.

In April 2017, the Company completed an exchange offer for its outstanding Series B Preferred Shares, which had commenced in March 2017. Holders who elected to exchange their Series B Preferred Shares in the exchange offer received, for each such Series B Preferred Share (i) $22.50 in cash and (ii) two newly issued shares of common stock of the Company. Pursuant to the exchange offer, a total of $1,106,254 Series B Preferred Shares were validly tendered and accepted by the Company. The Series B Preferred Shares validly tendered and accepted by the Company represented 74.46% of the 1,485,768 Series B Preferred Shares outstanding at the commencement of the exchange offer. The exchange offer resulted in a cash payment of $24,891 and the issuance of 2,212,508 shares of common stock to holders of validly tendered and accepted Series B Preferred Shares. The difference between (1) the fair value of the consideration transferred to the holders of the Series B Preferred Shares (comprising the fair value of the shares of common stock and the cash payment offered) and (2) the carrying amount of the Series B Preferred Shares before the modification or exchange (net of issuance costs) amounted to $2,146, and was recorded as preferred deemed dividend.

In February 2018, the Company redeemed all 379,514 outstanding Series B Preferred Shares, pursuant to a redemption notice it had issued in January 2018. The Series B Preferred Shares were redeemed at a redemption price of $25.00 per share, plus all accumulated and unpaid dividends to, but excluding the date of redemption (the “Redemption Price”). As a result of the completion of the Redemption, Series B Preferred Shares are no longer deemed outstanding and all rights of the holders of such Series B Preferred Shares have been terminated. Furthermore, the Series B Preferred Shares were delisted from trading on the New York Stock Exchange.

The payment due upon liquidation to holders of any series of the Company’s preferred shares is fixed at the redemption preference of $25.00 per share plus accumulated and unpaid dividends to the date of liquidation. The liquidation price of the Series C Preferred Shares and Series D Preferred Shares as of December 31, 2018 was $58,305 and $81,120, respectively.

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Mezzanine Equity (Notes)

12 Months Ended

Dec. 31, 2018

Temporary Equity Disclosure [Abstract]

Mezzanine equity

Mezzanine equity

Mezzanine equity represents the USD equivalent of 100 shares of Series A Cumulative Redeemable Perpetual Preferred Stock (the "Series A Preferred Shares") of our subsidiary Pinewood issued in June 2018 to an unaffiliated third party investor (the "Investor") in the amount of JPY1,854,900,000 equivalent to $16,875, plus accrued dividend as of December 31, 2018 of JPY13,792,325 equivalent to $123. These shares were issued as part payment of the cost of the vessel Pedhoulas Cedrus owned by Pinewood.

Such shares have preference over shares of common stock of Pinewood with respect to distributions by, and liquidation of, Pinewood. The Series A Preferred Shares do not entitle the Investor to any voting rights (other than in limited circumstances in the case of certain events of default under the terms of their issuance), and they may be redeemed at the option of Pinewood at any time or at the option of the Investor upon the third anniversary of the issuance date. Such option to redeem the Series A Preferred Shares by the Investor meets the criteria for classification as mezzanine equity. The Investor is entitled to a dividend of 2.95% p.a. from the Series A Preferred Shares. The declaration of such dividend is subject to the discretion of Pinewood's board of directors and dividends accrue and cumulate irrespective of such declaration. The Investor is entitled to nominate one director to the board of Pinewood, representing a minority of Pinewood’s board of directors.

The payment due upon liquidation to the Investor of Series A Preferred Shares is fixed at the redemption preference of JPY1,854,900,000 plus accumulated and unpaid dividends to the date of liquidation. The liquidation price of the Series A Preferred Shares as of December 31, 2018 was JPY1,868,692,325, equivalent to $16,984.

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

(a) Capital expenditure commitments relating to our vessels and vessels under construction are as follows:

Year Ended December 31,	Due to Shipyards/Sellers		Due to Manager		Other Commitments		Total
2019	$	6,600	$	275	$	22,475	$	29,350
2020	22,935		605		1,753		25,293
2021	—		—		2,152		2,152
2022	—		—		360		360
Total	29,535		880		26,740		57,155

Other commitments represent contracted costs related to the purchase of ballast water treatment systems and sulfur oxide exhaust gas cleaning systems to be installed on a number of our vessels.

(b) Other contingent liabilities

The Company and its Subsidiaries have not been involved in any legal proceedings, 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.

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Revenues

12 Months Ended

Dec. 31, 2018

Revenues [Abstract]

Time Charter And Voyage Revenue

Revenues

Revenues are comprised of the following:

	Year Ended December 31
	2016		2017		2018
Time charter revenue	$	108,487	$	146,533	$	191,977
Voyage charter revenue	—		1,095		1,113
Other income	5,472		6,412		8,458
Total	113,959		154,040		201,548

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Vessel Operating Expenses

12 Months Ended

Dec. 31, 2018

Operating Expenses [Abstract]

Vessel Operating Expenses

Vessel Operating Expenses

Vessel operating expenses are comprised of the following:

	Year Ended December 31,
	2016		2017		2018
Crew wages and related costs	$	29,581	$	30,948	$	33,340
Insurance	3,452		3,148		3,163
Repairs, maintenance and drydocking costs	2,752		3,729		6,606
Spares, stores and provisions	7,015		9,345		13,855
Lubricants	3,754		3,220		3,901
Taxes	1,347		941		842
Miscellaneous	1,618		1,463		1,805
Total	$	49,519	$	52,794	$	63,512

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Fair Value of Financial Instruments and Derivative Instruments

12 Months Ended

Dec. 31, 2018

Fair Value Financial Instruments And Derivative Insturments

Derivative Instruments and Hedging Activities Disclosure

Fair Value of Financial Instruments and Derivatives Instruments

Cash and cash equivalents and restricted cash 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 Company believes the terms of its loans are similar to those that could be procured as of December 31, 2018. The fair value of the long-term debt is disclosed in Note 6.

Derivative instruments

The Company, from time to time, may 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, 2017 and 2018, the Company had no outstanding derivative instruments relating to currency exchange contracts.

The Company enters, from time to time, 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’s interest rate swaps did not qualify for hedge accounting. The Company determines the fair market value of the interest rate swaps at the end of every period and accordingly records the resulting unrealized loss/gain during the period in the consolidated statement of operations. As of December 31, 2018 the Company had no outstanding derivative instruments relating to interest rate swaps. Information on the location and amounts of derivative fair values in the consolidated balance sheets and derivative gains/losses in the consolidated statements of operations are shown below:

Derivatives not designated as hedging instruments

		Asset Derivatives Fair Values				Liability Derivatives Fair Values
Type of Contract	Balance sheet location	December 31, 2017		December 31, 2018		December 31, 2017		December 31, 2018
Interest Rate	Derivative assets / Current assets	$	62	$	—	$	—	$	—
Interest Rate	Derivative liabilities / Current liabilities	—		—		2		—
	Total Derivatives	$	62	$	—	$	2	$	—

	Amount of (Loss)/Gain Recognized on Derivatives Year ended December 31,
		2016			2017		2018
Interest Rate Contracts		$	(620	)	$	72	$	18
Net (Loss)/Gain Recognized		$	(620	)	$	72	$	18

The gain or loss is recognized in the consolidated statement of operations and is presented in Other (Expense)/Income – (Loss)/gain on derivatives.

The Company’s interest rate derivative instruments were 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, 2017 and 2018.

	Significant Other Observable Inputs (Level 2)
	December 31,
	2017		2018
Derivative instruments – asset position	$	62	$	—
Derivative instruments – liability position	2		—

As of December 31, 2017 and 2018, no fair value measurements for assets or liabilities under Level 3 were recognized in the Company’s consolidated balance sheets.

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, 2017 and 2018 are presented in the table below:

					Notional amount
Loan or Credit Facility (1)	Inception	Expiry	Fixed Rate		December 31, 2017		December 31, 2018
Marindou	January 14, 2013	January 16, 2018	1.6000	%	$	18,109	$	—
Petra	January 18, 2013	January 18, 2018	0.9800	%	14,000		—
Pemer	June 7, 2013	March 7, 2018	0.9475	%	14,000		—
Avstes	July 18, 2013	April 18, 2018	1.3500	%	14,000		—
Shikoku	August 28, 2013	August 28, 2018	1.2500	%	11,200		—
Total					$	71,309	$	—

(1) Under the above swap transactions, the relevant bank effected quarterly floating-rate payments to the Company for the relevant amount based on the three-month USD LIBOR, and the Company effected quarterly payments to the bank on the relevant amount at the respective fixed rates.

Asset Measured at Fair Value on a Non-Recurring Basis

The following tables summarize the valuation of assets measured at fair value on a non-recurring basis during the year ended December 31, 2017.

	Significant Other Observable Inputs (Level 2)		Loss
	December 31, 2017		December 31, 2017
M/V Panayiota K	$	21,600	$	29,892
M/V Efrossini	21,375		12,959
M/V Venus History	23,750		19,705
M/V Andreas K	20,450		28,737
Total	$	87,175	$	91,293

As a result of the impairment analysis performed for the year ended December 31, 2017, four of the Company’s vessels with a carrying amount of $178,468 were written down to their estimated fair value as of December 31, 2017 as determined by the Company based on vessel valuations for the vessels, obtained from independent third party shipbrokers, resulting in an impairment charge of $91,293. This impairment charge is presented in the accompanying consolidated statement of operations under the caption “Impairment loss” for the year ended December 31, 2017. No impairment charge was recorded and no assets were measured at fair value on a non-recurring basis for the year ended December 31, 2018.

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Accrued Liabilities

12 Months Ended

Dec. 31, 2018

Accrued Liabilities [Abstract]

Accrued Liabilities

Accrued Liabilities

Accrued liabilities are comprised of the following:

	December 31,
	2017		2018
Interest on long-term debt	$	2,361	$	4,225
Vessels’ operating and voyage expenses	1,009		1,808
Commissions	143		139
Interest on derivatives and other finance expenses	65		566
General and administrative expenses	88		145
Total	$	3,666	$	6,883

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Future Minimum Time Charter Revenue

12 Months Ended

Dec. 31, 2018

Future Minimum Time Charter Revenue

Future Minimum Time Charters

Future Minimum Time Charter Revenue

The future minimum time charter revenue, net of commissions, based on vessels committed to non-cancellable time charter contracts (including fixture recaps) as of December 31, 2018, is as follows:

December 31,
2019	$	89,240
2020	31,151
2021	31,293
2022	19,405
2023	17,805
Thereafter	69,517
Total	$	258,411

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 has been deducted, although such estimate may not be reflective of the actual off-hire in the future.

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General and Administrative Expenses

12 Months Ended

Dec. 31, 2018

General and Administrative Expense [Abstract]

General and Administrative Expenses

General and Administrative Expenses

General and administrative expenses include management fees payable to our Managers and costs in relation to the administration of our company. General and administrative expenses for the years ended December 31, 2016, 2017 and 2018 were as follows:

	December 31,
	2016		2017		2018
Management fees – related parties	$	11,611	$	13,511	$	16,536
Professional fees (legal and accounting)	528		687		833
Compensation for Directors and Officers	1,907		468		477
Listing fees and expenses	107		96		115
Miscellaneous	1,228		1,356		1,281
Total	$	15,381	$	16,118	$	19,242

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Unearned Revenue / Accrued Revenue

12 Months Ended

Dec. 31, 2018

Deferred Received In Advance And Unearned Revenue

Unearned Revenue/Accrued Revenue

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,
	2017		2018
Unearned Revenue
Cash received in advance of service provided – Current liability	$	3,540	$	4,925
Deferred revenue resulting from varying charter rates – Current liability	—		484
Deferred revenue resulting from varying charter rates – Non-Current liability	—		253
Total Unearned Revenue	3,540		5,662
Accrued Revenue
Resulting from revenue earned prior to cash being received – Current asset	2,029		475
Resulting from varying charter rates – Non-Current asset	831		614
Total Accrued Revenue	2,860		1,089

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Loss on Sale of Assets

12 Months Ended

Dec. 31, 2018

Proceeds from Sale of Productive Assets [Abstract]

Loss on Sale Of Assets

Loss on Sale of Assets

During March 2016, the Company concluded the sale of the vessels Stalo and Kypros Unity to companies controlled by Polys Hajioannou for an aggregate gross consideration of $29,000 in cash, realizing a net loss of $2,750. During January 2017, the Company concluded the sale of the Hull No. 1551 to a company controlled by Polys Hajioannou for an aggregate gross consideration of $20,510 in cash, realizing a net loss of $120. There was no sale of assets for the period ended December 31, 2018.

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Dividends

12 Months Ended

Dec. 31, 2018

Earnings Per Share [Abstract]

Dividends

Dividends

During 2017, the Company declared and paid four quarterly consecutive dividends of $0.50 per share of Series B Preferred Shares, totaling $1,316, of Series C Preferred Shares, totaling $4,600 and of Series D Preferred Shares, totaling $6,400.

During 2018, the Company declared and paid one quarterly dividend of $0.50 per share and one final portion dividend of $0.11667 per share of Series B Preferred Shares, totaling $234, and four quarterly consecutive dividends of $0.50 per share of Series C Preferred Shares, totaling $4,600, and of Series D Preferred Shares, totaling $6,400.

During 2018, the Company's subsidiary Pinewood declared and paid preferred dividends totaling JPY17,090,489.00 equivalent to $153 comprising of its first dividend of JPY32,981.64 per share equivalent to $298.52 per share for the period June 8, 2018 to June 30, 2018, followed by one dividend of JPY137,923.25 per share equivalent to $1,231.37 per share of Series A Preferred Shares for the quarter ended September 30, 2018. In addition during 2018, Pinewood declared a dividend of JPY137,923.25 per share equivalent to $1,226.52 per share of Series A Preferred Shares totaling JPY13,792,325.00 equivalent to $123 for the quarter ended December 31, 2018, presented under the caption “Mezzanine Equity” in the consolidated balance sheets, which was paid in January 2019.

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(Loss)/earnings Per Share

12 Months Ended

Dec. 31, 2018

Earnings Per Share, Basic and Diluted [Abstract]

(Loss)/earnings per Share

(Loss)/earnings Per Share

Diluted (loss)/earnings per share is the same as basic (loss)/earnings per share. There are no other potentially dilutive shares. The computation of basic (loss)/earnings per share is presented as follows:

	December 31,
	2016			2017			2018
Net (loss)/income	$	(55,966	)	$	(84,679	)	$	27,684
Less preferred dividend paid and accrued	14,025			12,316			11,384
Less preferred deemed dividend	—			2,146			—
Net (loss)/income available to common shareholders	(69,991		)	(99,141		)	16,300
Weighted average number of shares, basic and diluted	84,526,411			100,932,876			101,604,339
(Loss)/earnings per share in U.S. Dollars, basic and diluted	(0.83		)	(0.98		)	0.16

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Subsequent events

12 Months Ended

Dec. 31, 2018

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

(a) Dividend declaration: On January 11, 2019, the Board of Directors declared a dividend of $0.50 per all classes of preferred shares, totaling $2,750, payable to all shareholders of record as of January 23, 2019, which was paid on January 30, 2019.

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Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Principles of Consolidation

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 intercompany balances 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 may include vessel valuations, the valuation of amounts due from charterers, residual value of vessels and the useful life of vessels. Actual results may differ from these estimates.

Stockholders' Equity

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/(loss) for the periods presented.

Treasury stock: The Company records the repurchase of its shares at cost based on the settlement dates of repurchase transactions. These shares are classified as treasury stock, which is a reduction to shareholders’ equity. Treasury shares are included in authorized and issued shares but excluded from outstanding shares.

Dividends: Dividends are recorded in the period in which they are declared 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. 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 operations 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 remaining 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 reflect 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.

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 and net realizable 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 and financing costs incurred during the construction period for vessels under construction, commissions paid, delivery expenses and other expenditures to prepare the vessel for her initial voyage), less accumulated depreciation and impairment, if any. Certain subsequent expenditures for conversions, major improvements and regulatory requirements 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. The Company estimates the useful life of its vessels to be 25 years from the date of initial delivery from the shipyard. Secondhand vessels are depreciated from the date they become available for use 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 operations.

Repairs and Maintenance: 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 operations.

Impairment of Long-lived Assets and Assets Held for Sale

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. Various factors including anticipated future charter rates, estimated scrap values, future drydocking costs and estimated vessel operating costs are included in this analysis. If the carrying value of the related asset exceeds the undiscounted cash flows, the carrying value is reduced to its estimated fair value and the difference is recorded as an impairment loss in the consolidated statements of operations.

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.

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. The unamortized deferred financing costs are presented as a direct deduction from the carrying amount of the related loan and credit facility in the consolidated balance sheet. Deferred financing costs relating to undrawn facilities are presented under non-current assets in the consolidated balance sheet. 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 and terminated is expensed in the same period. Any unamortized balance of costs relating to the credit facilities refinanced is deferred and amortized over the term of the respective refinanced 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

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. 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 operations. 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 operations. For the years ended December 31, 2016, 2017 and 2018, no derivatives were accounted for as accounting hedges.

Financial Instruments: Over-the-counter foreign exchange forward contracts, interest rate derivatives and cash equivalents are recorded at fair value. Other financial instruments, including 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 6. The Company may manage its interest rate risk by entering into interest rate derivative instruments which are described in Note 12. As of December 31, 2018 the Company did not have any interest rate swap agreements in place.

(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 interest rate 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 may be exposed to credit risk in the event of non-performance by its counterparties to derivative instruments; however, the Company may limit 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 trip or a specific period of time and at a specified daily charter rate. Time charter 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. 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. Time charter hire is typically payable 15 or 30 days in advance as determined in the charter party agreement. 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 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). Certain voyage expenses paid by the Company such as extra war risk insurance may be recovered from the charterer; such amounts recovered are recorded as Other Income within Revenues.

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. The Company accounts for a voyage charter when all the following criteria are met: (1) the parties to the contract have approved the contract in the form of a written charter agreement or fixture recap and are committed to perform their respective obligations, (2) the Company can identify each party’s rights regarding the services to be transferred, (3) the Company can identify the payment terms for the services to be transferred, (4) the charter agreement has commercial substance (that is, the risk, timing, or amount of the future cash flows is expected to change as a result of the contract) and (5) it is probable that the Company will collect substantially all of the consideration to which it will be entitled in exchange for the services that will be transferred to the charterer. The Company determined that its voyage charters consist of a single performance obligation which is met evenly as the voyage progresses and hence, the voyage 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 and are all paid for by the Company. Costs incurred prior to loading which are directly related to the voyage may be deferred if they meet certain conditions, and are amortized over the duration of the voyage from load port to discharge port. Costs incurred during the voyage are expensed as incurred.

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. Voyage hire is typically paid upon completion of the performance obligation. During the years ended December 31, 2016, 2017 and 2018, there has only been one instance in each of 2017 and 2018 where a vessel was employed under a voyage charter and in both cases the voyage had began and ended in the same period.

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 operations.

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, under the laws of the Republic of Greece, each vessel managed in Greece is also subject to an annual shipping community mandatory financial contribution. These registration, tonnage taxes and financial contributions are recorded within Vessel operating expenses in the accompanying consolidated statements of operations and none are considered income taxes.

Furthermore, each Subsidiary may be subject to a 4.00% U.S. federal tax in respect of its U.S. source shipping income (imposed on gross income without the allowance for any deductions). Such taxes have been recorded within Voyage expenses in the accompanying consolidated statements of operations. If such taxes are recovered; such amounts recovered are recorded within Revenues in the accompanying consolidated statements of operations.

Earnings/(Loss) Per Share

Earnings/(Loss) Per Share: The computation of basic earnings/(loss) per share is based on the weighted average number of common stock outstanding during the year and includes the shares issuable to the audit committee chairman and the independent directors at the end of each year for services rendered. The computation of basic earnings/(loss) per share is calculated after deducting the preferred stock dividends paid and accrued (including any deemed dividend) from net income/(loss) divided by the weighted average number of shares.

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.

Recent Accounting Pronouncements

Recent Accounting Pronouncements:

Revenue from Contracts with Customers: On May 28, 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2014-09, as amended by ASU 2015-14, which was issued on August 12, 2015, Revenue From Contracts With Customers, which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. This standard is effective for public entities with reporting periods beginning after December 15, 2017 and interim periods therein, and shall be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. The Company adopted this ASU for its Voyage Revenues, for its reporting period commencing January 1, 2018 and elected to use the modified retrospective transition method for the implementation of this standard. The implementation of this standard did not have an impact on the Company’s financial statements as the Company has always recognized voyage revenues on a pro rata basis over the duration of the voyage from load port to discharge port and in addition did not have any voyages in progress over the year ended December 31, 2017 and 2018. Voyage Revenues represent less than 1% of total revenues.

Leases: In February 2016, the FASB issued ASU 2016-2 (codified as ASC 842), which amends the existing accounting standard for lease accounting and adds additional disclosures about leasing arrangements. ASC 842 requires lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by most leases, while lessor accounting remains largely unchanged. ASC 842, as amended, subject to certain transition relief options, requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, or allows entities to elect not to recast the comparative periods presented when transitioning to ASC 842 and to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. ASC 842 also provides a practical expedient to lessors by class of underlying asset, to not separate non lease components from the associated lease component, similar to the expedient provided for lessees, when the following criteria are met i) the timing and pattern of transfer for the lease component is the same as those for the non-lease component associated with that lease component and (ii) the lease component, if accounted for separately, would be classified as an operating lease. ASC 842 is effective for public entities with reporting periods beginning after December 15, 2018, including interim periods within those fiscal periods. Early adoption is permitted for all entities. The Company will adopt ASC 842 for its reporting period commencing January 1, 2019 and has elected not to recast the comparative periods presented when transitioning to ASC 842. The nature of the lease component and non-lease component that were combined as a result of applying the practical expedient are the contract for the hire of a vessel and the fees for operating and maintaining the vessel respectively. The Company has elected not to separate the lease and non-lease components. The lease component is the predominant component and the Company accounts for the combined component as an operating lease in accordance with Topic 842. Since lessor accounting remains largely unchanged from current U.S. GAAP and the Company’s office operating leases are immaterial, the implementation of this standard will not have a significant impact on the Company’s financial statements, however it will increase the disclosures relating to the Company’s leasing arrangements.

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Basis of Presentation and General Information (Tables)

12 Months Ended

Dec. 31, 2018

General Information

Schedule of Subsidiaries

The accompanying consolidated financial statements include the operations, assets and liabilities of the Company, and of its 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”)(2)	Efrossini	Panamax	February 2012
Glovertwo Shipping Corporation (“Glovertwo”)(2)	Zoe	Panamax	July 2013
Shikokutessera Shipping Inc. (“Shikokutessera”)(2)	Kypros Land	Panamax	January 2014
Shikokupente Shipping Inc. (“Shikokupente”)(2)	Kypros Sea	Panamax	March 2014
Gloverfour Shipping Corporation (“Gloverfour”)(2)	Kypros Bravery	Panamax	January 2015
Shikokuokto Shipping Inc. (“Shikokuokto”)(2)	Kypros Sky	Panamax	March 2015

Subsidiary	Vessel Name	Type	Built
Gloverfive Shipping Corporation (“Gloverfive”)(2)	Kypros Loyalty	Panamax	June 2015
Gloversix Shipping Corporation (“Gloversix”)(2)	Kypros Spirit	Panamax	July 2016
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”)(2)	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
Youngone Shipping Inc. (“Youngone”)(2)	Pedhoulas Cherry	Kamsarmax	July 2015
Youngtwo Shipping Inc. (“Youngtwo”)(2)	Pedhoulas Rose	Kamsarmax	January 2017
Pinewood Shipping Corporation (“Pinewood”)(2)(7)	Pedhoulas Cedrus	Kamsarmax	June 2018
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
Pentakomo Shipping Corporation (“Pentakomo”)(2)	Agios Spyridonas	Post-Panamax	January 2010
Maxdekatria Shipping Corporation (“Maxdekatria”)(1)	Panayiota K	Post-Panamax	April 2010
Maxdeka Shipping Corporation (“Maxdeka”)(2)	Venus Heritage	Post-Panamax	December 2010
Shikoku Friendship Shipping Company (“Shikoku”)(2)	Venus History	Post-Panamax	September 2011
Maxenteka Shipping Corporation (“Maxenteka”)(2)	Venus Horizon	Post-Panamax	February 2012
Shikokuepta Shipping Inc. (“Shikokuepta”)(2)	Troodos Sun	Post-Panamax	January 2016
Shikokuexi Shipping Inc. (“Shikokuexi”)(2)	Troodos Air	Post-Panamax	March 2016
Maxpente Shipping Corporation (“Maxpente”)(1)	Kanaris	Capesize	March 2010
Eptaprohi Shipping Corporation (“Eptaprohi”)(1)	Pelopidas	Capesize	November 2011
Maxtessera Shipping Corporation (“Maxtessera”)(2)	Lake Despina	Capesize	January 2014
Shikokuennia Shipping Corporation (“Shikokuennia”)(2)(6)	Mount Troodos	Capesize	November 2009
Monagrouli Shipping Corporation ("Monagrouli")(2)(9)	TBN - S 1772	Post-Panamax	February 2020
Gloverthree Shipping Corporation (“Gloverthree”)(2)(3)	—	—	—
Staloudi Shipping Corporation (“Staloudi”)(1)(4)	—	—	—
Gloverseven Shipping Corporation (“Gloverseven”)(2)(5)	—	—	—
Kyotofriendo One Shipping Inc. (“Kyotofriendo One”)(2)(8)	—	—	—
Kyotofriendo Two Shipping Inc. (“Kyotofriendo Two”)(2)(7)	—	—	—
Maxeikosipente Shipping Corporation (“Maxeikosipente”)(1)	—	—	—

(1) Incorporated under the laws of the Republic of Liberia.

(2) Incorporated under the laws of the Republic of the Marshall Islands.

(3) Gloverthree owned the Panamax class vessel Kypros Unity which was sold in March 2016. Refer to Notes 3 and 17.

(4) Staloudi owned the post-Panamax class vessel Stalo which was sold in March 2016. Refer to Notes 3 and 17.

(5) Gloverseven had contracted to acquire the Panamax class newbuild vessel with Hull No. 835. The contract was novated in October 2016. Refer to Note 3.

(6) Shikokuennia had contracted to acquire the post-Panamax class newbuild vessel with Hull No. 1718. The contract was novated in February 2016. Refer to Note 3. Shikokuennia subsequently acquired the secondhand Capesize class vessel Mount Troodos in August 2018.

(7) On July 29, 2016, the Shipsales Contract relating to Hull No. 1552, initially contracted by Kyotofriendo Two, was novated to Pinewood. Under an agreement with an unaffiliated third party, upon delivery of the vessel, named Pedhoulas Cedrus, to Pinewood in June 2018, 100 shares of Series A Preferred Stock of Pinewood were issued to the unaffiliated third party for proceeds in the equivalent of $16,875 which were used to finance part of the cost of such vessel. Such shares have preference over shares of common stock of Pinewood with respect to distributions by, and liquidation of, Pinewood. Furthermore, under this agreement, Pinewood agreed to (i) pay its own expenses out of its own funds, (ii) keep its assets and funds separate from the assets and funds of the Company, (iii) refrain from holding its assets and/or creditworthiness as being available to satisfy any of the obligations of the Company and (iv) take, or refrain from taking, certain other actions designed to ensure that the assets of Pinewood are not available to creditors of Safe Bulkers or its other subsidiaries.

(8) Kyotofriendo One had contracted to acquire the Kamsarmax class newbuild vessel with Hull No. 1551, which upon her deliveryfrom the shipyard in January 2017 was sold. Refer to Notes 3 and 17.

(9) Estimated completion date for newbuild vessel as of December 31, 2018.

Charterers Concentration

For the years ended December 31, 2016, 2017 and 2018, the following charterers individually accounted for more than 10% of the Company’s time charter, voyage charter and ballast bonus revenues as follows:

	December 31,
	2016		2017		2018
Glencore Agriculture B.V	10.05	%	—	%	14.73	%
Bunge S.A.	—	%	12.72	%	13.76	%
Global Chartering Ltd	12.49	%	—	%	—	%

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Transactions with Related Parties (Tables)

12 Months Ended

Dec. 31, 2018

Related Party Transactions [Abstract]

Schedule of Related Party Transactions

The Fees to our Managers comprised the following:

	Year Ended December 31,
	(In thousands of U.S. Dollars)
	2016		2017		2018
Ship Management Fees	$	11,611	$	13,511	$	16,536
Supervision Fees	1,925		550		275
Commissions	972		700		586

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Vessels, Net (Tables)

12 Months Ended

Dec. 31, 2018

Property, Plant and Equipment [Abstract]

Schedule of Vessels, Net

Vessels, net are comprised of the following:

	Vessel Cost			Accumulated Depreciation			Net Book Value
Balance, January 1, 2017	$	1,324,800		$	(286,081	)	$	1,038,719
Transfer from Advances for vessels	67,504			—			67,504
Disposal	(20,630		)	—			(20,630		)
Impairment loss	(159,805		)	68,512			(91,293		)
Depreciation expense	—			(51,424		)	(51,424		)
Balance, December 31, 2017	$	1,211,869		$	(268,993	)	$	942,876
Transfer from Advances for vessels	60,482			—			60,482
Depreciation expense	—			(48,067		)	(48,067		)
Balance, December 31, 2018	$	1,272,351		$	(317,060	)	$	955,291

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Advances for Vessels (Tables)

12 Months Ended

Dec. 31, 2018

Advances For Assets Acquisition And Assets Under Construction

Advances for Vessel Acquisition and Vessels under Construction

Advances for vessels are comprised of the following:

Balance, January 1, 2017	$	13,007
Additions for advances, including capitalized expenses and interest	58,150
Transferred to vessel cost (refer to Note 4)	(67,504		)
Balance, December 31, 2017	3,653
Additions for advances, including capitalized expenses and interest	65,425
Transferred to vessel cost (refer to Note 4)	(60,482		)
Balance, December 31, 2018	$	8,596

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Bank Debt (Tables)

12 Months Ended

Dec. 31, 2018

Debt Disclosure [Abstract]

Schedule of Debt

Bank debt is comprised of the following secured borrowings:

			December 31,
Borrower	Commencement	Maturity	2017		2018
Maxdekatria	February 2016	July 2018	$	9,167	$	—
Glovertwo	February 2016	July 2018	12,833		—
Shikokutessera	February 2016	July 2018	14,667		—
Youngone	September 2015	August 2018	22,733		—
Petra	June 2015	December 2018	18,024		—
Pemer	June 2015	December 2018	18,024		—
Maxtessera	July 2014	November 2018	28,000		—
Shikokuokto	June 2015	December 2018	15,018		—
Safe Bulkers	November 2018	October 2021	—		30,000
Maxtessera	November 2018	October 2022	—		26,000
Maxdeka	August 2011	December 2022	17,044		13,635
Shikokupente	August 2018	August 2023	—		14,930
Shikoku	October 2011	August 2023	22,400		18,667
Shikokuennia	October 2018	October 2023	—		17,730
Petra	November 2018	November 2023	—		9,075
Pemer	November 2018	November 2023	—		9,075
Maxeikosiepta	December 2018	December 2023	—		5,000
Shikokuepta	February 2016	February 2024	22,050		20,417
Maxdekatria	July 2018	February 2024	—		11,750
Glovertwo	July 2018	February 2024	—		13,420
Shikokutessera	July 2018	February 2024	—		14,430
Pentakomo	July 2018	February 2024	—		11,750
Maxeikositria	September 2017	August 2024	12,968		11,930
Maxeikosi	September 2017	August 2024	12,968		11,930
Maxpente	September 2017	August 2024	20,000		17,400
Maxeikositessera	September 2017	August 2024	13,650		12,090
Maxenteka	September 2017	August 2024	15,925		14,332
Maxeikosiexi	September 2015	September 2024	6,063		5,248
Marathassa	September 2015	September 2024	6,545		5,690
Marinouki	September 2015	September 2024	9,904		8,590
Kerasies	September 2015	September 2024	6,918		6,014
Soffive	September 2015	September 2024	10,757		9,305
Eptaprohi	September 2015	September 2024	50,518		43,818
Safe Bulkers	November 2014	September 2024	160,527		118,925
Pelea - Vasstwo	December 2018	December 2024	—		20,075
Maxeikosiena	September 2015	September 2025	21,271		20,314
Gloversix - Shikokuokto	December 2018	December 2025	—		35,000
Youngtwo	January 2017	January 2027	23,817		23,039
Total			571,791		579,579
Current portion of Long-term debt			26,583		37,431
Long-term debt			545,208		542,148

Total debt	571,791	579,579
Current portion of deferred financing costs	995	1,246
Deferred financing costs non-current	3,392	3,640
Total deferred financing costs	4,387	4,886
Total debt	571,791	579,579
Less:  Total deferred financing costs	4,387	4,886
Total debt, net of deferred financing costs	567,404	574,693
Less:  Current portion of long-term debt, net of current portion of deferred financing costs	25,588	36,185
Long-term debt, net of deferred financing costs, non-current	541,816	538,508

Schedule of Maturities of Long-term Debt

The estimated minimum annual principal payments required to be made after December 31, 2018, based on the loan and credit facility agreements as amended, are as follows:

To December 31,
2019	$	37,431
2020	62,864
2021	81,516
2022	83,118
2023	72,280
2024 and thereafter	242,370
Total	$	579,579

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments under Shipbuilding Contracts and Memorandums of Agreement

Capital expenditure commitments relating to our vessels and vessels under construction are as follows:

Year Ended December 31,	Due to Shipyards/Sellers		Due to Manager		Other Commitments		Total
2019	$	6,600	$	275	$	22,475	$	29,350
2020	22,935		605		1,753		25,293
2021	—		—		2,152		2,152
2022	—		—		360		360
Total	29,535		880		26,740		57,155

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Revenues (Tables)

12 Months Ended

Dec. 31, 2018

Revenues [Abstract]

Revenues

Revenues are comprised of the following:

	Year Ended December 31
	2016		2017		2018
Time charter revenue	$	108,487	$	146,533	$	191,977
Voyage charter revenue	—		1,095		1,113
Other income	5,472		6,412		8,458
Total	113,959		154,040		201,548

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Vessel Operating Expenses (Tables)

12 Months Ended

Dec. 31, 2018

Operating Expenses [Abstract]

Vessel Operating Expenses

Vessel operating expenses are comprised of the following:

	Year Ended December 31,
	2016		2017		2018
Crew wages and related costs	$	29,581	$	30,948	$	33,340
Insurance	3,452		3,148		3,163
Repairs, maintenance and drydocking costs	2,752		3,729		6,606
Spares, stores and provisions	7,015		9,345		13,855
Lubricants	3,754		3,220		3,901
Taxes	1,347		941		842
Miscellaneous	1,618		1,463		1,805
Total	$	49,519	$	52,794	$	63,512

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Fair Value of Financial Instruments and Derivatives Instruments (Tables)

12 Months Ended

Dec. 31, 2018

Fair Value Financial Instruments And Derivative Insturments

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

Derivatives not designated as hedging instruments

		Asset Derivatives Fair Values				Liability Derivatives Fair Values
Type of Contract	Balance sheet location	December 31, 2017		December 31, 2018		December 31, 2017		December 31, 2018
Interest Rate	Derivative assets / Current assets	$	62	$	—	$	—	$	—
Interest Rate	Derivative liabilities / Current liabilities	—		—		2		—
	Total Derivatives	$	62	$	—	$	2	$	—

Derivative Instruments, Gain (Loss)

	Amount of (Loss)/Gain Recognized on Derivatives Year ended December 31,
		2016			2017		2018
Interest Rate Contracts		$	(620	)	$	72	$	18
Net (Loss)/Gain Recognized		$	(620	)	$	72	$	18

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The following table summarizes the valuation of the Company’s financial instruments as of December 31, 2017 and 2018.

	Significant Other Observable Inputs (Level 2)
	December 31,
	2017		2018
Derivative instruments – asset position	$	62	$	—
Derivative instruments – liability position	2		—

Schedule of Derivative Instruments

Details of interest rate swap transactions entered into with certain banks in respect of certain loans and credit facilities as of December 31, 2017 and 2018 are presented in the table below:

					Notional amount
Loan or Credit Facility (1)	Inception	Expiry	Fixed Rate		December 31, 2017		December 31, 2018
Marindou	January 14, 2013	January 16, 2018	1.6000	%	$	18,109	$	—
Petra	January 18, 2013	January 18, 2018	0.9800	%	14,000		—
Pemer	June 7, 2013	March 7, 2018	0.9475	%	14,000		—
Avstes	July 18, 2013	April 18, 2018	1.3500	%	14,000		—
Shikoku	August 28, 2013	August 28, 2018	1.2500	%	11,200		—
Total					$	71,309	$	—

(1) Under the above swap transactions, the relevant bank effected quarterly floating-rate payments to the Company for the relevant amount based on the three-month USD LIBOR, and the Company effected quarterly payments to the bank on the relevant amount at the respective fixed rates.

Assets Measured at Fair Value on Non-Recurring Basis

The following tables summarize the valuation of assets measured at fair value on a non-recurring basis during the year ended December 31, 2017.

	Significant Other Observable Inputs (Level 2)		Loss
	December 31, 2017		December 31, 2017
M/V Panayiota K	$	21,600	$	29,892
M/V Efrossini	21,375		12,959
M/V Venus History	23,750		19,705
M/V Andreas K	20,450		28,737
Total	$	87,175	$	91,293

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Accrued Liabilities (Tables)

12 Months Ended

Dec. 31, 2018

Accrued Liabilities [Abstract]

Acrrued Liabilities

Accrued liabilities are comprised of the following:

	December 31,
	2017		2018
Interest on long-term debt	$	2,361	$	4,225
Vessels’ operating and voyage expenses	1,009		1,808
Commissions	143		139
Interest on derivatives and other finance expenses	65		566
General and administrative expenses	88		145
Total	$	3,666	$	6,883

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Future Minimum Time Charter Revenue (Tables)

12 Months Ended

Dec. 31, 2018

Future Minimum Time Charter Revenue

Future Minimum Time Charter Revenue

The future minimum time charter revenue, net of commissions, based on vessels committed to non-cancellable time charter contracts (including fixture recaps) as of December 31, 2018, is as follows:

December 31,
2019	$	89,240
2020	31,151
2021	31,293
2022	19,405
2023	17,805
Thereafter	69,517
Total	$	258,411

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General and Administrative Expense (Tables)

12 Months Ended

Dec. 31, 2018

General and Administrative Expense [Abstract]

General and Administrative Expense

General and administrative expenses for the years ended December 31, 2016, 2017 and 2018 were as follows:

	December 31,
	2016		2017		2018
Management fees – related parties	$	11,611	$	13,511	$	16,536
Professional fees (legal and accounting)	528		687		833
Compensation for Directors and Officers	1,907		468		477
Listing fees and expenses	107		96		115
Miscellaneous	1,228		1,356		1,281
Total	$	15,381	$	16,118	$	19,242

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Unearned Revenue / Accrued revenue (Tables)

12 Months Ended

Dec. 31, 2018

Deferred Received In Advance And Unearned Revenue

Unearned Revenue And Cash Received In Advance

Total Unearned Revenue/Accrued Revenue during the periods presented is as follows:

	December 31,
	2017		2018
Unearned Revenue
Cash received in advance of service provided – Current liability	$	3,540	$	4,925
Deferred revenue resulting from varying charter rates – Current liability	—		484
Deferred revenue resulting from varying charter rates – Non-Current liability	—		253
Total Unearned Revenue	3,540		5,662
Accrued Revenue
Resulting from revenue earned prior to cash being received – Current asset	2,029		475
Resulting from varying charter rates – Non-Current asset	831		614
Total Accrued Revenue	2,860		1,089

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(Loss)/earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2018

Earnings Per Share, Basic and Diluted [Abstract]

Computation of Basic (Loss)/Earnings Per Share

The computation of basic (loss)/earnings per share is presented as follows:

	December 31,
	2016			2017			2018
Net (loss)/income	$	(55,966	)	$	(84,679	)	$	27,684
Less preferred dividend paid and accrued	14,025			12,316			11,384
Less preferred deemed dividend	—			2,146			—
Net (loss)/income available to common shareholders	(69,991		)	(99,141		)	16,300
Weighted average number of shares, basic and diluted	84,526,411			100,932,876			101,604,339
(Loss)/earnings per share in U.S. Dollars, basic and diluted	(0.83		)	(0.98		)	0.16

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Basis of Presentation and General Information, textuals (Details) $ in Thousands	1 Months Ended
	Jun. 30, 2018 USD ($) shares	Dec. 31, 2018 item
Subsidiary, Sale of Stock [Line Items]
Number of additional public common stock offerings		5
Number of additional public preferred stock offerings		3
Number of subsidiaries		48
Number of drybulk vessels		41
Number of newbuild vessels		1
Cumulative redeemable perpetual preferred equity | $	$ 16,875
Series A Preferred Stock | Private Placement
Subsidiary, Sale of Stock [Line Items]
Number of shares issued in transaction | shares	100

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Basis of Presentation and General Information, Charter Revenue (Details) - Charter Revenues	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Glencore Agriculture B.V.
Concentration Risk [Line Items]
Charterer percentage in total revenue	14.73%	0.00%	10.05%
Bunge S.A
Concentration Risk [Line Items]
Charterer percentage in total revenue	13.76%	12.72%	0.00%
Global Chartering Ltd
Concentration Risk [Line Items]
Charterer percentage in total revenue	0.00%	0.00%	12.49%

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Significant Accounting Policies, textual (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Accounting Policies [Abstract]
Other comprehensive income/(loss)	$ 0	$ 0	$ 0
Provision for doubtful accounts	$ 0	0
Vessels, useful life	25 years
Assets held for sale	$ 0	0
Derivatives	$ 0	0	$ 0
Effective income tax rate	4.00%
Inventory [Line Items]
Inventories	$ 4,139,000	4,227,000
Bunkers
Inventory [Line Items]
Inventories	0	724,000
Lubricants
Inventory [Line Items]
Inventories	$ 4,139,000	$ 3,503,000

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Transactions with Related Parties, textual (Details)			12 Months Ended	29 Months Ended
	May 29, 2018 USD ($)	May 29, 2018 EUR (€)	Dec. 31, 2018 USD ($)	May 28, 2018 USD ($)	Dec. 31, 2017 USD ($)
Related Party Transactions [Abstract]
Flat ship management fee | €		€ 3,000,000
Supervision fee	$ 550,000
Description of related party transaction			50% is payable upon the signing of the relevant supervision agreement, and 50% upon successful completion of the sea trials of each newbuild
Sales fee			1.00%
Management Agreement Ship Management Fee Per Day Per Vessel		€ 875		$ 975
Related Party Transaction, Due from (to) Related Party, Current [Abstract]
Due from manager			$ 599,000		$ 418,000
Due to manager			$ 23,000		$ 0

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Transactions with Related Parties, detail 2 (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Related Party Transactions [Abstract]
Ship Management Fees	$ 16,536	$ 13,511	$ 11,611
Supervision Fees	275	550	1,925
Commissions	$ 586	$ 700	$ 972

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Transactions with Related Parties, textual 2 (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Mar. 31, 2016
Property, Plant and Equipment [Line Items]
Remaining commitment for new build	$ 48,155
Fair value of newbuild	46,000
Stalo
Property, Plant and Equipment [Line Items]
Vessel agreed sale price		$ 9,000
Kypros Unity
Property, Plant and Equipment [Line Items]
Vessel agreed sale price		$ 20,000
Asset under Construction
Property, Plant and Equipment [Line Items]
Remaining commitment for new build	28,400
Fair value of newbuild	26,500
Hull No. 835
Property, Plant and Equipment [Line Items]
Fair value of newbuild	21,500
Hull No. 1551
Property, Plant and Equipment [Line Items]
Fair value of newbuild	$ 24,500

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Vessels, Net, detail (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2018 USD ($) item	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)
Vessel Cost
Beginning Balance	$ 1,211,869	$ 1,324,800
Transfer from Advances for vessels	60,482	67,504
Disposal		(20,630)
Impairment loss		(159,805)
Ending Balance	1,272,351	1,211,869	$ 1,324,800
Accumulated Depreciation
Beginning Balance	(268,993)	(286,081)
Impairment loss		68,512
Depreciation	(48,067)	(51,424)	(49,485)
Ending Balance	(317,060)	(268,993)	(286,081)
Net Book Value
Beginning Balance	942,876	1,038,719
Transfer from Advances for vessels	60,482	67,504
Disposal		(20,630)
Impairment loss		(91,293)
Depreciation	(48,067)	(51,424)	(49,485)
Ending Balance	$ 955,291	$ 942,876	$ 1,038,719
Number of vessels provided as collateral | item	39
Vessels provided as collateral	$ 914,804

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Advances for Vessels, detail (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Advances For Assets Acquisition And Assets Under Construction
Advances for vessels, beginning balance	$ 3,653	$ 13,007
Additions for advances, including capitalized expenses and interest	65,425	58,150
Transferred to vessel cost	(60,482)	(67,504)
Advances for vessels, ending balance	$ 8,596	$ 3,653

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Secured borrowing (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Debt Instrument [Line Items]
Long-term debt	$ 579,579	$ 571,791
Current portion of Long-term debt	37,431	26,583
Long-term debt	542,148	545,208
Total debt	579,579	571,791
Current portion of deferred financing costs	1,246	995
Deferred financing costs non-current	3,640	3,392
Total deferred financing costs	4,886	4,387
Total debt	579,579	571,791
Less: Total deferred financing costs	4,886	4,387
Total debt, net of deferred financing costs	574,693	567,404
Less: Current portion of long-term debt, net of current portion of deferred financing costs	36,185	25,588
Long-term debt, net of deferrred financing costs, non-current	538,508	541,816
Long-term debt	579,579	571,791
2015 Loan
Debt Instrument [Line Items]
Long-term debt	5,690	6,545
Total debt	5,690	6,545
Total debt	5,690	6,545
Long-term debt	5,690	6,545
2014 Loan
Debt Instrument [Line Items]
Long-term debt	118,925	160,527
Total debt	118,925	160,527
Total debt	118,925	160,527
Long-term debt	118,925	160,527
2018 Loan
Debt Instrument [Line Items]
Long-term debt	30,000	0
Total debt	30,000	0
Total debt	30,000	0
Long-term debt	30,000	0
Maxdekatria | 2016 Loan
Debt Instrument [Line Items]
Long-term debt	0	9,167
Total debt	0	9,167
Total debt	0	9,167
Long-term debt	0	9,167
Maxdekatria | 2018 Loan
Debt Instrument [Line Items]
Long-term debt	11,750	0
Total debt	11,750	0
Total debt	11,750	0
Long-term debt	11,750	0
Glovertwo | 2016 Loan
Debt Instrument [Line Items]
Long-term debt	0	12,833
Total debt	0	12,833
Total debt	0	12,833
Long-term debt	0	12,833
Glovertwo | 2018 Loan
Debt Instrument [Line Items]
Long-term debt	13,420	0
Total debt	13,420	0
Total debt	13,420	0
Long-term debt	13,420	0
Shikokutessera | 2016 Loan
Debt Instrument [Line Items]
Long-term debt	0	14,667
Total debt	0	14,667
Total debt	0	14,667
Long-term debt	0	14,667
Shikokutessera | 2018 Loan
Debt Instrument [Line Items]
Long-term debt	14,430	0
Total debt	14,430	0
Total debt	14,430	0
Long-term debt	14,430	0
Youngone | 2015 Loan
Debt Instrument [Line Items]
Long-term debt	0	22,733
Total debt	0	22,733
Total debt	0	22,733
Long-term debt	0	22,733
Petra | 2015 Loan
Debt Instrument [Line Items]
Long-term debt	0	18,024
Total debt	0	18,024
Total debt	0	18,024
Long-term debt	0	18,024
Petra | 2018 Loan
Debt Instrument [Line Items]
Long-term debt	9,075	0
Total debt	9,075	0
Total debt	9,075	0
Long-term debt	9,075	0
Pemer | 2015 Loan
Debt Instrument [Line Items]
Long-term debt	0	18,024
Total debt	0	18,024
Total debt	0	18,024
Long-term debt	0	18,024
Pemer | 2018 Loan
Debt Instrument [Line Items]
Long-term debt	9,075	0
Total debt	9,075	0
Total debt	9,075	0
Long-term debt	9,075	0
Maxtessera | 2014 Loan
Debt Instrument [Line Items]
Long-term debt	0	28,000
Total debt	0	28,000
Total debt	0	28,000
Long-term debt	0	28,000
Maxtessera | 2018 Loan
Debt Instrument [Line Items]
Long-term debt	26,000	0
Total debt	26,000	0
Total debt	26,000	0
Long-term debt	26,000	0
Shikokuokto | 2015 Loan
Debt Instrument [Line Items]
Long-term debt	0	15,018
Total debt	0	15,018
Total debt	0	15,018
Long-term debt	0	15,018
Maxdeka | 2011 Loan
Debt Instrument [Line Items]
Long-term debt	13,635	17,044
Total debt	13,635	17,044
Total debt	13,635	17,044
Long-term debt	13,635	17,044
Shikokupente | 2018 Loan
Debt Instrument [Line Items]
Long-term debt	14,930	0
Total debt	14,930	0
Total debt	14,930	0
Long-term debt	14,930	0
Shikoku | 2011 Loan
Debt Instrument [Line Items]
Long-term debt	18,667	22,400
Total debt	18,667	22,400
Total debt	18,667	22,400
Long-term debt	18,667	22,400
Shikokuennia | 2018 Loan
Debt Instrument [Line Items]
Long-term debt	17,730	0
Total debt	17,730	0
Total debt	17,730	0
Long-term debt	17,730	0
Maxeikosiepta | 2018 Loan
Debt Instrument [Line Items]
Long-term debt	5,000	0
Total debt	5,000	0
Total debt	5,000	0
Long-term debt	5,000	0
Shikokuepta | 2016 Loan
Debt Instrument [Line Items]
Long-term debt	20,417	22,050
Total debt	20,417	22,050
Total debt	20,417	22,050
Long-term debt	20,417	22,050
Pentakomo | 2018 Loan
Debt Instrument [Line Items]
Long-term debt	11,750	0
Total debt	11,750	0
Total debt	11,750	0
Long-term debt	11,750	0
Maxeikositria | 2017 Loan
Debt Instrument [Line Items]
Long-term debt	11,930	12,968
Total debt	11,930	12,968
Total debt	11,930	12,968
Long-term debt	11,930	12,968
Maxeikosi | 2017 Loan
Debt Instrument [Line Items]
Long-term debt	11,930	12,968
Total debt	11,930	12,968
Total debt	11,930	12,968
Long-term debt	11,930	12,968
Maxpente | 2017 Loan
Debt Instrument [Line Items]
Long-term debt	17,400	20,000
Total debt	17,400	20,000
Total debt	17,400	20,000
Long-term debt	17,400	20,000
Maxeikositessera | 2017 Loan
Debt Instrument [Line Items]
Long-term debt	12,090	13,650
Total debt	12,090	13,650
Total debt	12,090	13,650
Long-term debt	12,090	13,650
Maxenteka | 2017 Loan
Debt Instrument [Line Items]
Long-term debt	14,332	15,925
Total debt	14,332	15,925
Total debt	14,332	15,925
Long-term debt	14,332	15,925
Maxeikosiexi | 2015 Loan
Debt Instrument [Line Items]
Long-term debt	5,248	6,063
Total debt	5,248	6,063
Total debt	5,248	6,063
Long-term debt	5,248	6,063
Marinouki | 2015 Loan
Debt Instrument [Line Items]
Long-term debt	8,590	9,904
Total debt	8,590	9,904
Total debt	8,590	9,904
Long-term debt	8,590	9,904
Kerasies | 2015 Loan
Debt Instrument [Line Items]
Long-term debt	6,014	6,918
Total debt	6,014	6,918
Total debt	6,014	6,918
Long-term debt	6,014	6,918
Soffive | 2015 Loan
Debt Instrument [Line Items]
Long-term debt	9,305	10,757
Total debt	9,305	10,757
Total debt	9,305	10,757
Long-term debt	9,305	10,757
Eptaprohi | 2015 Loan
Debt Instrument [Line Items]
Long-term debt	43,818	50,518
Total debt	43,818	50,518
Total debt	43,818	50,518
Long-term debt	43,818	50,518
Pelea - Vasstwo | 2018 Loan
Debt Instrument [Line Items]
Long-term debt	20,075	0
Total debt	20,075	0
Total debt	20,075	0
Long-term debt	20,075	0
Maxeikosiena | 2015 Loan
Debt Instrument [Line Items]
Long-term debt	20,314	21,271
Total debt	20,314	21,271
Total debt	20,314	21,271
Long-term debt	20,314	21,271
Gloversix - Shikokuokto | 2018 Loan
Debt Instrument [Line Items]
Long-term debt	35,000	0
Total debt	35,000	0
Total debt	35,000	0
Long-term debt	35,000	0
Youngtwo | 2017 Loan
Debt Instrument [Line Items]
Long-term debt	23,039	23,817
Total debt	23,039	23,817
Total debt	23,039	23,817
Long-term debt	$ 23,039	$ 23,817

XML

Bank Debt, textuals (Details)	12 Months Ended
	Dec. 31, 2018 USD ($)
Debt Instrument [Line Items]
Fair value of debt outstanding	$ 577,517,000
Borrowing capacity outstanding	$ 0
Sale and leaseback agreement
Debt Instrument [Line Items]
Sale and leaseback period	10 years
Daily bareboat charter rate	$ 6,500
All Debt Instruments
Debt Instrument [Line Items]
Frequency of periodic payment	P45D

XML

Annual principal payments (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Debt Disclosure [Abstract]
2019	$ 37,431
2020	62,864
2021	81,516
2022	83,118
2023	72,280
2024 and thereafter	242,370
Total debt	$ 579,579	$ 571,791

XML

Bank Debt, textual 2 (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Debt Instrument [Line Items]
Interest costs incurred	$ 25,713	$ 23,266	$ 20,397
Interest costs capitalized	$ 0	$ 42	$ 821
All loans and credit facilities
Debt Instrument [Line Items]
Weighted average interest rate	4.428%	3.838%	3.29%
Minimum value covenant 2018	1.2
Debt covenant, minimum net worth	$ 150,000
Debt covenant, minimum EBITDA to consolidated interest expense	2.0
Debt covenant, maximum debt to EBITDA ratio	5.5
Commercial financing institutions
Debt Instrument [Line Items]
Debt covenant, maximum consolidated leverage	85.00%
Government owned export credit institutions
Debt Instrument [Line Items]
Debt covenant, maximum consolidated leverage	80.00%
Debt covenant, maximum consolidated debt	$ 580,000
Minimum | All loans and credit facilities
Debt Instrument [Line Items]
Mininum cash balance of loan and credit facility agrrements as collateral deposit with restrictive liquidity covenant	150
Maximum | All loans and credit facilities
Debt Instrument [Line Items]
Mininum cash balance of loan and credit facility agrrements as collateral deposit with restrictive liquidity covenant	$ 1,000
Hajioannou family | All loans and credit facilities
Debt Instrument [Line Items]
Debt covenant, minimum percentage of ownership	30.00%
Hajioannou family | Maximum | All loans and credit facilities
Debt Instrument [Line Items]
Debt covenant, minimum percentage of ownership	35.00%
Polys Hajioannou | All loans and credit facilities
Debt Instrument [Line Items]
Debt covenant, minimum percentage of ownership	20.00%

XML

Share Capital, textual (Details) - $ / shares	Dec. 31, 2018	Dec. 31, 2017
Subsidiary, Sale of Stock [Line Items]
Ordinary shares authorized (in shares)	200,000,000	200,000,000
Ordinary shares par value (in USD per share)	$ 0.001	$ 0.001
Common stock, shares issued (in shares)	103,005,748	101,526,708
Common stock, shares outstanding (in shares)	103,005,748	101,526,708
Preference shares authorized (in shares)	20,000,000	20,000,000
Preference shares par value (in USD per share)	$ 0.01	$ 0.01
Series B Preferred Stock
Subsidiary, Sale of Stock [Line Items]
Preferred stock, shares outstanding (in shares)	0	379,514
Series C Preferred Stock
Subsidiary, Sale of Stock [Line Items]
Preferred stock, shares outstanding (in shares)	2,300,000	2,300,000
Series D Preferred Stock
Subsidiary, Sale of Stock [Line Items]
Preferred stock, shares outstanding (in shares)	3,200,000	3,200,000
Series A Preferred Stock
Subsidiary, Sale of Stock [Line Items]
Preference shares authorized (in shares)	1,000,000

XML

Share Capital, Common Stock (Details) - USD ($)			1 Months Ended					12 Months Ended
	Jan. 01, 2010	Jul. 01, 2008	Feb. 28, 2019	Feb. 05, 2019	Dec. 31, 2018	Nov. 30, 2018	Dec. 31, 2016	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Jun. 30, 2016
Class of Stock [Line Items]
Treasury shares (in shares)					458,088			458,088	113,076
Ordinary shares issued (in shares)						1,441,048
Private Placement | Common Stock
Class of Stock [Line Items]
Stock issued (in shares)							2,727,272
December 2016 public offering
Class of Stock [Line Items]
Gross proceeds							$ 17,204,000			$ 17,204,000
Underwriting discount							710,000			$ 710,000
Offering expenses							$ 379,000
December 2016 public offering | Common Stock
Class of Stock [Line Items]
Stock issued (in shares)							15,640,000
Share price (in USD per share)							$ 1.1			$ 1.1
Audit Committee Chairman
Class of Stock [Line Items]
Share based compensation value of transaction		$ 15,000
Share-based payment (in shares)								18,996	31,286	62,717
Independent directors
Class of Stock [Line Items]
Share based compensation value of transaction	$ 7,500
Share-based payment (in shares)								18,996	31,286	62,717
2016 Share Repurchase Program
Class of Stock [Line Items]
Treasury shares (in shares)					113,076			113,076
2016 Share Repurchase Program | Common Stock
Class of Stock [Line Items]
Stock repurchase program, number of shares authorized to be repurchased											2,000,000
2018 Share Repurchase Program | Common Stock
Class of Stock [Line Items]
Stock repurchase program, number of shares authorized to be repurchased					3,000,000			3,000,000
Share repurchased (in shares)					345,012
2018 Share Repurchase Program | Subsequent Event | Common Stock
Class of Stock [Line Items]
Share repurchased (in shares)				1,332,182
Repurchased shares canceled (in shares)			1,790,270
Hull No. S 1772
Class of Stock [Line Items]
Installment payment						$ 3,300,000

XML

Share Capital, Preferred Stock (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended						12 Months Ended			36 Months Ended
	Feb. 28, 2018	Apr. 30, 2017	Dec. 31, 2016	Jun. 30, 2014	May 31, 2014	Jun. 30, 2013	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2018	Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Tender offer preferred stock redemption							$ 0	$ 24,890	$ 0
Preferred deemed dividend							$ 0	$ 2,146	$ 0
Series B Preferred Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Redemption price (in USD per share)	$ 25.00
Stock repurchased and retired (in shares)										114,232
Preferred stock, shares outstanding (in shares)							0	379,514		0
Stock redeemed (in shares)	379,514
Preferred Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Redemption price (in USD per share)							$ 25			$ 25
Stock repurchase program, authorized amount											$ 20,000
Series C Preferred Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Future redeemable securities							$ 58,305			$ 58,305
Preferred stock, shares outstanding (in shares)							2,300,000	2,300,000		2,300,000
Series D Preferred Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Future redeemable securities							$ 81,120			$ 81,120
Preferred stock, shares outstanding (in shares)							3,200,000	3,200,000		3,200,000
June 2013 Public Offering
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Net proceeds from public offering and private placement						$ 38,865
Underwriting discount						672
Offering expenses						$ 463
June 2013 Public Offering | Series B Preferred Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock issued (in shares)						800,000
Share price (in USD per share)						$ 25
Preferred stock, dividend rate						8.00%
Dividends in arrears (in USD per share)						$ 2
Redemption date						Jun. 30, 2016
Redemption price (in USD per share)						$ 25
Private Placement | Series B Preferred Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock issued (in shares)						800,000
Private Placement | Common Class A
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock issued (in shares)			2,727,272
May 2014 Public Offering
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Net proceeds from public offering and private placement					$ 55,504
Underwriting discount					1,744
Offering expenses					$ 252
May 2014 Public Offering | Series C Preferred Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock issued (in shares)					2,300,000
Share price (in USD per share)					$ 25
Preferred stock, dividend rate					8.00%
Dividends in arrears (in USD per share)					$ 2
Redemption price (in USD per share)					$ 25
June 2014 Public Offering
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Net proceeds from public offering and private placement				$ 77,420
Underwriting discount				2,369
Offering expenses				$ 211
June 2014 Public Offering | Series D Preferred Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock issued (in shares)				3,200,000
Share price (in USD per share)				$ 25
Preferred stock, dividend rate				8.00%
Dividends in arrears (in USD per share)				$ 2
Redemption price (in USD per share)				$ 25
April 2017 tender offer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Tender offer preferred stock redemption		$ 24,891
Preferred deemed dividend		$ 2,146
April 2017 tender offer | Series B Preferred Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Redemption price (in USD per share)		$ 22.50
Stock repurchased and retired (in shares)		1,106,254
Percentage of tender acceptance		74.46%
Preferred stock, shares outstanding (in shares)		1,485,768
April 2017 tender offer | Common Class A
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock issued (in shares)		2,212,508
Maximum | Series B Preferred Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Preferred stock, dividend rate						25.00%	30.00%

XML

Mezzanine Equity (Details) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2018 JPY (¥)	Mar. 31, 2018 USD ($)	Dec. 31, 2018 JPY (¥) shares	Dec. 31, 2018 USD ($) shares	Dec. 31, 2017 USD ($)
Temporary Equity [Line Items]
Mezzanine equity | $				$ 16,998	$ 0
Series A Cumulative Redeemable Perpetual Preferred Stock
Temporary Equity [Line Items]
Mezzanine equity shares issued (in shares) | shares			100	100
Mezzanine equity			¥ 1,854,900,000	$ 16,875
Mezzanine dividends	¥ 13,792,325	$ 123
Preferred stock, dividend rate			2.95%
Liquidation value of mezzanine equity			¥ 1,868,692,325	$ 16,984

XML

Commitments and Contingencies, detail (Details) $ in Thousands	Dec. 31, 2018 USD ($)
Unrecorded Unconditional Purchase Obligation [Line Items]
2019	$ 29,350
2020	25,293
2021	2,152
2022	360
Total	57,155
Due To Shipyards Sellers
Unrecorded Unconditional Purchase Obligation [Line Items]
2019	6,600
2020	22,935
Total	29,535
Due To Manager
Unrecorded Unconditional Purchase Obligation [Line Items]
2019	275
2020	605
Total	880
Other Commitments
Unrecorded Unconditional Purchase Obligation [Line Items]
2019	22,475
2020	1,753
2021	2,152
2022	360
Total	$ 26,740

XML

Commitments and Contingencies, textual (Details) $ in Thousands	Dec. 31, 2018 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Maximum covered by insurance	$ 1,000,000

XML

Revenues, detail (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Revenues [Abstract]
Time charter revenue	$ 191,977	$ 146,533	$ 108,487
Voyage charter revenue	1,113	1,095	0
Other income	8,458	6,412	5,472
Total	$ 201,548	$ 154,040	$ 113,959

XML

Vessel Operating Expenses (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Operating Expenses [Abstract]
Crew wages and related costs	$ 33,340	$ 30,948	$ 29,581
Insurance	3,163	3,148	3,452
Repairs, maintenance and drydocking costs	6,606	3,729	2,752
Spares, stores and provisions	13,855	9,345	7,015
Lubricants	3,901	3,220	3,754
Taxes	842	941	1,347
Miscellaneous	1,805	1,463	1,618
Total	$ 63,512	$ 52,794	$ 49,519

XML

Fair Value of Financial Instruments and Derivative Instruments Derivatives Not Designated as Hedging Instruments (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Derivative [Line Items]
Derivative assets / Current assets	$ 0	$ 62
Derivative liabilities / Current liabilities	0	2
Not Designated as Hedging Instrument
Derivative [Line Items]
Total Derivative Assets	0	62
Total Derivative Liabilities	0	2
Not Designated as Hedging Instrument | Interest Rate Swap | Current assets
Derivative [Line Items]
Derivative assets / Current assets	0	62
Not Designated as Hedging Instrument | Interest Rate Swap | Current liabilities
Derivative [Line Items]
Derivative liabilities / Current liabilities	$ 0	$ 2

XML

Fair Value of Financial Instruments and Derivative Instruments (Loss) / Gain Recognized on Derivatives (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Derivative [Line Items]
Net (Loss)/Gain Recognized	$ 18	$ 72	$ (620)
Not Designated as Hedging Instrument | (Loss)/Gain Recognized on Derivatives
Derivative [Line Items]
Interest Rate Contracts	$ 18	$ 72	$ (620)

XML

Fair Value of Financial Instruments and Derivative Instruments Derivative Instruments - Asset and Liability Position (Details) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Fair Value, Inputs, Level 2
Derivative [Line Items]
Derivative instruments – asset position	$ 0	$ 62,000
Derivative instruments – liability position	0	2,000
Fair Value, Inputs, Level 3
Derivative [Line Items]
Derivative instruments – asset position	0	0
Derivative instruments – liability position	$ 0	$ 0

XML

Fair Value of Financial Instruments and Derivative Instruments Interest Rate Derivatives (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Derivative [Line Items]
Notional amount	$ 0	$ 71,309
Marindou | Interest Rate Swap
Derivative [Line Items]
Fixed interest rate	1.60%
Notional amount	$ 0	18,109
Petra | Interest Rate Swap
Derivative [Line Items]
Fixed interest rate	0.98%
Notional amount	$ 0	14,000
Pemer | Interest Rate Swap
Derivative [Line Items]
Fixed interest rate	0.9475%
Notional amount	$ 0	14,000
Avstes | Interest Rate Swap
Derivative [Line Items]
Fixed interest rate	1.35%
Notional amount	$ 0	14,000
Shikoku | Interest Rate Swap
Derivative [Line Items]
Fixed interest rate	1.25%
Notional amount	$ 0	$ 11,200

XML

Fair Value of Financial Instruments and Derivative Instruments Asset Measured at Fair Value on a Non-Recurring Basis (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Vessels, net	$ 955,291,000	$ 942,876,000	$ 1,038,719,000
Fair Value, Measurements, Nonrecurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impairment charge	0	91,293,000
Fair Value, Measurements, Nonrecurring | Fair Value, Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Vessels, net			$ 178,468,000
Assets, fair value	$ 0	87,175,000
Fair Value, Measurements, Nonrecurring | M/V Panayiota K
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impairment charge		29,892,000
Fair Value, Measurements, Nonrecurring | M/V Panayiota K | Fair Value, Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value		21,600,000
Fair Value, Measurements, Nonrecurring | M/V Efrossini
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impairment charge		12,959,000
Fair Value, Measurements, Nonrecurring | M/V Efrossini | Fair Value, Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value		21,375,000
Fair Value, Measurements, Nonrecurring | M/V Venus History
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impairment charge		19,705,000
Fair Value, Measurements, Nonrecurring | M/V Venus History | Fair Value, Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value		23,750,000
Fair Value, Measurements, Nonrecurring | M/V Andreas K
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impairment charge		28,737,000
Fair Value, Measurements, Nonrecurring | M/V Andreas K | Fair Value, Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value		$ 20,450,000

XML

Accrued Liabilities, detail (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Accrued Liabilities [Abstract]
Interest on long-term debt	$ 4,225	$ 2,361
Vessels’ operating and voyage expenses	1,808	1,009
Commissions	139	143
Interest on derivatives and other finance expenses	566	65
General and administrative expenses	145	88
Total	$ 6,883	$ 3,666

XML

Future Minimum Time Charter Revenue, detail (Details)	Dec. 31, 2018 USD ($)
Future Minimum Time Charter Revenue
2019	$ 89,240
2020	31,151
2021	31,293
2022	19,405
2023	17,805
Thereafter	69,517
Total	$ 258,411

XML

General and Administrative Expense, detail (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
General and Administrative Expense [Abstract]
Management fees – related parties	$ 16,536	$ 13,511	$ 11,611
Professional fees (legal and accounting)	833	687	528
Compensation for Directors and Officers	477	468	1,907
Listing fees and expenses	115	96	107
Miscellaneous	1,281	1,356	1,228
Total	$ 19,242	$ 16,118	$ 15,381

XML

Unearned Revenue/Accrued Revenue, detail (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Deferred Revenue Arrangement [Line Items]
Cash received in advance of service provided – Current liability	$ 5,409	$ 3,540
Deferred revenue resulting from varying charter rates – Non-Current liability	253	0
Total Unearned Revenue	5,662	3,540
Accrued Revenue
Resulting from revenue earned prior to cash being received – Current asset	475	2,029
Resulting from varying charter rates – Non-Current asset	614	831
Total Accrued Revenue	1,089	2,860
Cash received in advance
Deferred Revenue Arrangement [Line Items]
Cash received in advance of service provided – Current liability	4,925	3,540
Deferred revenue resulting from varying charter rates
Deferred Revenue Arrangement [Line Items]
Cash received in advance of service provided – Current liability	484	0
Deferred revenue resulting from varying charter rates – Non-Current liability	$ 253	$ 0

XML

Loss on Sale of Assets, textual (Details) - USD ($) $ in Thousands	1 Months Ended		12 Months Ended
	Jan. 31, 2017	Mar. 31, 2016	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Proceeds from Sale of Productive Assets [Abstract]
Gross proceeds from sale of property plant and equipment	$ 20,510	$ 29,000
Loss on sale of assets	$ 120	$ 2,750	$ 0	$ 120	$ 2,750

XML

Dividends, textual (Details) ¥ / shares in Units, $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2018 JPY (¥) dividend ¥ / shares	Dec. 31, 2018 USD ($) dividend $ / shares	Dec. 31, 2017 USD ($) dividend $ / shares
Class of Stock [Line Items]
Preferred stock dividend, final portion (in USD per share) | $ / shares		$ 0.11667
Series B Preferred Stock
Class of Stock [Line Items]
Number of quarters, dividend payments | dividend	4	4	4
Preferred stock dividends, cash paid quarterly (per share) | $ / shares		$ 0.5	$ 0.5
Payments of ordinary dividends, preferred stock and preference stock		$ 234	$ 1,316
Series C Preferred Stock
Class of Stock [Line Items]
Payments of ordinary dividends, preferred stock and preference stock		4,600	4,600
Series D Preferred Stock
Class of Stock [Line Items]
Payments of ordinary dividends, preferred stock and preference stock		$ 6,400	$ 6,400
Quarterly Dividend One | Pinewood | Series A Preferred Stock
Class of Stock [Line Items]
Preferred stock dividends, cash paid quarterly (per share) | (per share)	¥ 32,981.64	$ 298.52
Quarterly Dividend Two | Pinewood | Series A Preferred Stock
Class of Stock [Line Items]
Preferred stock dividends, cash paid quarterly (per share) | (per share)	¥ 137,923.25	$ 1,231.37
Payments of ordinary dividends, preferred stock and preference stock	¥ 17,090,489.00	$ 153
Quarterly Dividend Three | Pinewood | Series A Preferred Stock
Class of Stock [Line Items]
Preferred stock, per share, dividends declared (per share) | (per share)	¥ 137,923.25	$ 1,226.52
Dividends	¥ 13,792,325.00	$ 123

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(Loss)/earnings Per Share, detail (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Earnings Per Share, Basic and Diluted [Abstract]
Net (loss)/income	$ 27,684	$ (84,679)	$ (55,966)
Less preferred dividend	11,384	12,316	14,025
Less preferred deemed dividend	0	2,146	0
Net (loss)/income available to common shareholders	$ 16,300	$ (99,141)	$ (69,991)
Weighted average number of shares, basic and diluted (in shares)	101,604,339	100,932,876	84,526,411
(Loss)/income per share in U.S. Dollars, basic and diluted (in USD per share)	$ 0.16	$ (0.98)	$ (0.83)

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Subsequent Events, textual (Details) - USD ($) $ / shares in Units, $ in Thousands	Jan. 11, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Dividend declaration
Dividends payable		$ 0	$ 0	$ 123
Subsequent Event | Cumulative Preferred Stock
Dividend declaration
Dividends payable (in USD per share)	$ 0.50
Dividends payable	$ 2,750
Date of record	Jan. 23, 2019
Date to be paid	Jan. 30, 2019