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TABLE OF CONTENTS
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
FORM 20-F

			

o	
 	
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934	

OR	

ý	
 	
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2015	

OR	

o	
 	
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	

For the transition period from                to	

OR	

o	
 	
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	
           Date of event requiring this shell company report
Commission file number 001-33060
DANAOS CORPORATION
 (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)
c/o Danaos Shipping Co. Ltd
14 Akti Kondyli
185 45 Piraeus
Greece 
(Address of principal executive offices)
Evangelos Chatzis
Chief Financial Officer
c/o Danaos Shipping Co. Ltd
14 Akti Kondyli
185 45 Piraeus
Greece
Telephone: +30 210 419 6480
Facsimile: +30 210 419 6489 
(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, $0.01 par value per share
Preferred stock purchase rights	 	New York Stock Exchange
New York Stock Exchange	
           Securities registered or to be 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.
           As of December 31, 2015, there were 109,781,744 shares of the registrant's common stock outstanding.
           Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
o  Yes     ý  No
           If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
o  Yes     ý  No
           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.
ý  Yes     o  No
           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).
ý  Yes     o  No
           Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):

					
Large accelerated filer o	 	Accelerated filer ý	 	Non-accelerated filer o	
           Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

					
U.S. GAAP ý	 	International Financial
Reporting Standards 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.
o  Item 17     o  Item 18
           If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
o  Yes     ý  No

Table of Contents

 TABLE OF CONTENTS

							
 	 	 	 	Page	 	
FORWARD-LOOKING INFORMATION	 	 	1	 	
PART I	 	 	2	 	
Item 1.	 	Identity of Directors, Senior Management and Advisers	 	 	2	 	
Item 2.	 	Offer Statistics and Expected Timetable	 	 	2	 	
Item 3.	 	Key Information	 	 	2	 	
RISK FACTORS	 	 	5	 	
Item 4.	 	Information on the Company	 	 	34	 	
Item 4A.	 	Unresolved Staff Comments	 	 	52	 	
Item 5.	 	Operating and Financial Review and Prospects	 	 	52	 	
Item 6.	 	Directors, Senior Management and Employees	 	 	89	 	
Item 7.	 	Major Shareholders and Related Party Transactions	 	 	96	 	
Item 8.	 	Financial Information	 	 	104	 	
Item 9.	 	The Offer and Listing	 	 	104	 	
Item 10.	 	Additional Information	 	 	105	 	
Item 11.	 	Quantitative and Qualitative Disclosures About Market Risk	 	 	125	 	
Item 12.	 	Description of Securities Other than Equity Securities	 	 	128	 	
PART II	 	 	129	 	
Item 13.	 	Defaults, Dividend Arrearages and Delinquencies	 	 	129	 	
Item 14.	 	Material Modifications to the Rights of Security Holders and Use of Proceeds	 	 	129	 	
Item 15.	 	Controls and Procedures	 	 	129	 	
Item 16A.	 	Audit Committee Financial Expert	 	 	130	 	
Item 16B.	 	Code of Ethics	 	 	130	 	
Item 16C.	 	Principal Accountant Fees and Services	 	 	130	 	
Item 16D.	 	Exemptions from the Listing Standards for Audit Committees	 	 	131	 	
Item 16E.	 	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	 	 	131	 	
Item 16F.	 	Change in Registrant's Certifying Accountant	 	 	132	 	
Item 16G.	 	Corporate Governance	 	 	132	 	
Item 16H.	 	Mine Safety Disclosure	 	 	132	 	
PART III	 	 	133	 	
Item 17.	 	Financial Statements	 	 	133	 	
Item 18.	 	Financial Statements	 	 	133	 	
Item 19.	 	Exhibits	 	 	133	 	
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 FORWARD-LOOKING INFORMATION
        This annual report contains forward-looking statements based on beliefs of our management. Any statements contained in this annual report that are not historical facts are forward-looking statements as defined in Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended. We have based these forward-looking statements on our current expectations and projections about future events, including:
•
future operating or financial results; 

•
pending acquisitions and dispositions, business strategies and expected capital spending; 

•
operating expenses, availability of crew, number of off-hire days, drydocking requirements and insurance costs; 

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

•
our financial condition and liquidity, including our ability to comply with covenants in our financing arrangements and to service our outstanding indebtedness; 

•
performance by our charterers of their obligations; 

•
the availability of ships to purchase, the time that it may take to construct new ships, or the useful lives of our ships; 

•
our ability to obtain financing in the future to fund acquisitions and other general corporate activities; 

•
our continued ability to enter into multi-year, fixed-rate period charters with our customers; 

•
our ability to leverage to our advantage our manager's relationships and reputation in the containership shipping sector of the international shipping industry; 

•
changes in governmental rules and regulations or actions taken by regulatory authorities; 

•
potential liability from future litigation; and 

•
other factors discussed in "Item 3. Key Information—Risk Factors" of this annual report.
        The words "anticipate," "believe," "estimate," "expect," "forecast," "intend," "potential," "may," "plan," "project," "predict," and "should" and similar expressions as they relate to us are intended to identify such forward-looking statements, but are not the exclusive means of identifying such statements. We may also from time to time make forward-looking statements in our periodic reports that we file with the U.S. Securities and Exchange Commission ("SEC") other information sent to our security holders, and other written materials. Such statements reflect our current views and assumptions and all forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. The factors that could affect our future financial results are discussed more fully in "Item 3. Key Information—Risk Factors" and in our other filings with the SEC. We caution readers of this annual report not to place undue reliance on these forward-looking statements, which speak only as of their dates. We undertake no obligation to publicly update or revise any forward-looking statements.
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 PART I
        Danaos Corporation is a corporation domesticated in the Republic of The Marshall Islands that is referred to in this Annual Report on Form 20-F, together with its subsidiaries, as "Danaos Corporation," "the Company," "we," "us," or "our." This report should be read in conjunction with our consolidated financial statements and the accompanying notes thereto, which are included in Item 18 to this annual report.
        We use the term "Panamax" to refer to vessels capable of transiting the Panama Canal and "Post-Panamax" to refer to vessels with a beam of more than 32.31 meters that cannot transit the Panama Canal. We use the term "twenty foot equivalent unit," or "TEU," the international standard measure of containers, in describing the capacity of our containerships. Unless otherwise indicated, all references to currency amounts in this annual report are in U.S. dollars.
        All data regarding our fleet and the terms of our charters is as of February 29, 2016. As of February 29, 2016, we owned 55 containerships aggregating 329,588 TEU in capacity. Gemini Shipholdings Corporation ("Gemini"), a Marshall Islands company incorporated in August 2015 and beneficially owned 49% by Danaos Corporation and 51% by Virage International Ltd. ("Virage"), a company controlled by Danaos Corporation's largest stockholder, owned an additional four containerships of 23,998 TEU aggregate capacity as of February 29, 2016. We do not consolidate Gemini's results of operations and account for our minority equity interest in Gemini under the equity method of accounting. See "Item 4. Information on the Company—Business Overview—Our Fleet".
Item 1.    Identity of Directors, Senior Management and Advisers
        Not Applicable.
Item 2.    Offer Statistics and Expected Timetable
        Not Applicable.
Item 3.    Key Information
 Selected Financial Data
        The following table presents selected consolidated financial and other data of Danaos Corporation and its consolidated subsidiaries for each of the five years in the five year period ended December 31, 2015. The table should be read together with "Item 5. Operating and Financial Review and Prospects." The selected consolidated financial data of Danaos Corporation is derived from our consolidated financial statements and notes thereto, which have been prepared in accordance with U.S. generally accepted accounting principles, or "U.S. GAAP", and have been audited for the years ended December 31, 2015, 2014, 2013, 2012 and 2011 by PricewaterhouseCoopers S.A., an independent registered public accounting firm.
        Our audited consolidated statements of operations, statements of comprehensive income, changes in stockholders' equity and cash flows for the years ended December 31, 2015, 2014 and 2013, and the
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consolidated balance sheets at December 31, 2015 and 2014, together with the notes thereto, are included in "Item 18. Financial Statements" and should be read in their entirety.

																	
 	 	Year Ended December 31,	 	
 	 	2015	 	2014	 	2013	 	2012	 	2011	 	
 	 	In thousands, except per share amounts and other data	 	
STATEMENT OF OPERATIONS	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating revenues	 	 $	567,936	 	 $	552,091	 	 $	588,117	 	 $	589,009	 	 $	468,101	 	
Voyage expenses	 	 	(12,284	)	 	(12,974	)	 	(11,770	)	 	(13,503	)	 	(10,765	)	
Vessel operating expenses	 	 	(112,736	)	 	(113,755	)	 	(122,074	)	 	(123,356	)	 	(119,127	)	
Depreciation	 	 	(131,783	)	 	(137,061	)	 	(137,414	)	 	(143,938	)	 	(106,178	)	
Amortization of deferred drydocking and special survey costs	 	 	(3,845	)	 	(4,387	)	 	(5,482	)	 	(6,070	)	 	(5,800	)	
Impairment loss	 	 	(41,080	)	 	(75,776	)	 	(19,004	)	 	(129,630	)	 	—	 	
General and administrative expenses	 	 	(21,831	)	 	(21,442	)	 	(19,458	)	 	(20,379	)	 	(21,028	)	
Gain/(loss) on sale of vessels	 	 	—	 	 	5,709	 	 	(449	)	 	830	 	 	—	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
Income from operations	 	 	244,377	 	 	192,405	 	 	272,466	 	 	152,963	 	 	205,203	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
Interest income	 	 	3,419	 	 	1,703	 	 	2,210	 	 	1,642	 	 	1,304	 	
Interest expense	 	 	(70,397	)	 	(79,980	)	 	(91,185	)	 	(87,340	)	 	(55,124	)	
Other finance expenses	 	 	(18,696	)	 	(19,757	)	 	(20,120	)	 	(18,107	)	 	(14,581	)	
Equity loss on investments	 	 	(1,941	)	 	 	 	 	 	 	 	 	 	 	 	 	
Other (expenses)/income, net	 	 	111	 	 	422	 	 	302	 	 	811	 	 	(1,986	)	
Unrealized and realized losses on derivatives	 	 	(39,857	)	 	(98,713	)	 	(126,150	)	 	(155,173	)	 	(121,379	)	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
Total other expenses, net	 	 	(127,361	)	 	(196,325	)	 	(234,943	)	 	(258,167	)	 	(191,766	)	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
Net income/(loss)	 	 $	117,016	 	 $	(3,920	)	 $	37,523	 	 $	(105,204	)	 $	13,437	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
PER SHARE DATA	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic and diluted net income/(loss) per share of common stock	 	 $	1.07	 	 $	(0.04	)	 $	0.34	 	 $	(0.96	)	 $	0.12	 	
Basic and diluted weighted average number of shares	 	 	109,785	 	 	109,676	 	 	109,654	 	 	109,613	 	 	109,045	 	
CASH FLOW DATA	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by operating activities	 	 $	271,676	 	 $	192,181	 	 $	189,025	 	 $	166,558	 	 $	59,492	 	
Net cash (used in)/provided by investing activities	 	 	(13,292	)	 	11,437	 	 	6,087	 	 	(369,789	)	 	(644,593	)	
Net cash (used in)/provided by financing activities	 	 	(243,861	)	 	(214,041	)	 	(182,587	)	 	207,497	 	 	406,628	 	
Net increase/(decrease) in cash and cash equivalents	 	 	14,523	 	 	(10,423	)	 	12,525	 	 	4,266	 	 	(178,473	)	
BALANCE SHEET DATA (at year end)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total current assets	 	 $	127,570	 	 $	103,073	 	 $	126,866	 	 $	98,673	 	 $	93,291	 	
Total assets	 	 	3,697,103	 	 	3,851,192	 	 	4,066,552	 	 	4,212,045	 	 	3,988,104	 	
Total current liabilities, including current portion of long-term debt	 	 	312,145	 	 	328,082	 	 	369,888	 	 	365,252	 	 	231,693	 	
Current portion of long-term debt	 	 	269,979	 	 	178,116	 	 	146,462	 	 	125,076	 	 	41,959	 	
Current portion of Vendor financing	 	 	—	 	 	46,530	 	 	57,388	 	 	57,388	 	 	10,857	 	
Long-term debt, net of current portion	 	 	2,505,399	 	 	2,773,004	 	 	2,965,641	 	 	3,097,472	 	 	2,960,288	 	
Vendor financing, net of current portion           	 	 	—	 	 	17,837	 	 	64,367	 	 	121,754	 	 	54,288	 	
Total stockholders' equity	 	 	841,914	 	 	688,149	 	 	598,476	 	 	440,304	 	 	442,535	 	
Common stock (shares outstanding)	 	 	109,782	 	 	109,669	 	 	109,653	 	 	109,604	 	 	109,564	 	
Common stock at par value	 	 	1,098	 	 	1,097	 	 	1,097	 	 	1,096	 	 	1,096	 	
OTHER DATA	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Number of vessels at period end	 	 	56	 	 	56	 	 	59	 	 	64	 	 	59	 	
TEU capacity at period end	 	 	334,239	 	 	334,239	 	 	345,179	 	 	363,049	 	 	291,149	 	
Ownership days	 	 	20,440	 	 	20,406	 	 	22,257	 	 	22,910	 	 	20,053	 	
Operating days	 	 	20,239	 	 	19,905	 	 	20,784	 	 	21,297	 	 	19,576	 	
        In the first quarter of 2009, our board of directors decided to suspend the payment of further cash dividends as a result of market conditions in the international shipping industry. Our payment of dividends is subject to the discretion of our Board of Directors. Our loan agreements and the
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provisions of Marshall Islands law also contain restrictions that affect our ability to pay dividends and we generally will not be permitted to pay cash dividends under the terms of the bank agreement ("Bank Agreement") and new financing agreements which we entered into in 2011. See "Item 3. Key Information—Risk Factors—Risks Inherent in Our Business—We are generally not permitted to pay cash dividends under our financing arrangements." See "Item 8. Financial Information—Dividend Policy."
 Capitalization and Indebtedness
        The table below sets forth our consolidated capitalization as of December 31, 2015:
•
on an actual basis; and 

•
on an as adjusted basis to reflect, in the period from January 1, 2016 to February 29, 2016, scheduled debt repayments of $40.9 million, of which $37.5 million relates to our Bank Agreement and $3.4 million relates to our Sinosure-CEXIM-Citi-ABN Amro credit facility.
        Other than these adjustments, there have been no material changes to our capitalization from debt or equity issuances, re-capitalizations, special dividends, or debt repayments as adjusted in the table below between January 1, 2016 and February 29, 2016.

								
 	 	As of December 31, 2015	 	
 	 	Actual	 	As Adjusted	 	
 	 	(US Dollars in thousands)	 	
Debt:	 	 	 	 	 	 	 	
Total debt(1)	 	 $	2,775,378	 	 $	2,734,437	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	
Stockholders' equity:	 	 	 	 	 	 	 	
Preferred stock, par value $0.01, 100,000,000 preferred shares authorized and none issued; actual and as adjusted	 	 	—	 	 	—	 	
Common stock, par value $0.01 per share; 750,000,000 shares authorized; 109,781,744 shares issued and outstanding; actual and as adjusted(2)	 	 	1,098	 	 	1,098	 	
Additional paid-in capital	 	 	546,822	 	 	546,822	 	
Accumulated other comprehensive loss	 	 	(103,081	)	 	(103,081	)	
Retained earnings	 	 	397,075	 	 	397,075	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	
Total stockholders' equity	 	 	841,914	 	 	841,914	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	
Total capitalization	 	 $	3,617,292	 	 $	3,576,351	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	
 ​	​	​ 	​ 	​	​ 	​ 	​	

(1)
All of our indebtedness is secured.

(2)
Does not include 15 million warrants issued in 2011 to purchase shares of common stock, at an exercise price of $7.00 per share, which we issued to the lenders participating in our comprehensive financing plan. The warrants, which will expire on January 31, 2019, are exercisable solely on a cashless exercise basis.
 Reasons for the Offer and Use of Proceeds
        Not Applicable.
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 RISK FACTORS
 Risks Inherent in Our Business
 Our business, and an investment in our securities, involves a high degree of risk, including risks relating to the downturn in the container shipping market, which continues to adversely affect the major liner companies which charter our vessels and may, as it has in the past, have an adverse effect on our earnings and affect our compliance with our loan covenants.
        The downturn in the containership market, from which we derive all of our revenues, has severely affected the container shipping industry, particularly the large liner companies to which we charter our vessels, and has adversely affected our business. The containership market has declined sharply since mid-2015, reaching the lowest levels since the historically low levels of 2008 and 2009, after a mild upturn in the first half of 2015 from the generally low levels experienced since the third quarter of 2011. The benchmark rates have declined in all quoted size sectors, with the deepest decline in the benchmark one-year daily rate of a 4,400 TEU Panamax containership, which was $36,000 in May 2008 and, after reaching $15,000 in the first half of 2015, $6,000 in December 2015. The decline in charter rates is due to various factors, including the level of global trade, including exports from China to Europe and the United States, and increases in containership capacity. The decline in the containership market has affected the major liner companies which charter our vessels, some of which have reported large losses again in 2015 and announced the intention to restructure their obligations, including some of our charterers. For instance, as part of its announced efforts to restructure its obligations with various parties, including finance providers and owners of its chartered-in fleet, Hyundai Merchant Marine ("Hyundai"), which currently charters 13 of our vessels, has initiated discussions with containership charter-owners, such as us, regarding its charter obligations for which it is seeking concessions. It also affects the value of our vessels, which follow the trends of freight rates and containership charter rates, and the earnings on our charters, and similarly, affects our cash flows and liquidity. Before the covenant levels in our financing arrangements were reset in the first quarter of 2011 at levels at which we are now in compliance, we had to obtain waivers from the lenders under all but one of our credit facilities because we had not been in compliance with the covenants contained in our loan agreements. The further decline in the containership charter market in recent months may continue to have additional adverse consequences for our industry including limited financing for vessel acquisitions and newbuildings, a less active secondhand market for the sale of vessels, charterers not performing under, or requesting modifications of, existing time charters and loan covenant defaults in the container shipping industry. This significant downturn in the container shipping industry could adversely affect our ability to service our debt and other obligations and adversely affect our results of operations and financial condition.
 Low containership charter rates and containership vessel values and any future declines in these rates and values can affect our ability to comply with various covenants in our credit facilities.
        Our credit facilities, which are secured by mortgages on our vessels, require us to maintain specified collateral coverage ratios and satisfy financial covenants, including requirements based on the market value of our containerships, our net worth and consolidated debt to EBITDA. Persistently low containership charter rates, or the failure of our charterers to fulfill their obligations under their charters for our vessels, due to the financial pressure on these liner companies from the significant decreases in demand for the seaborne transport of containerized cargo or otherwise, could adversely affect our ability to comply with covenants in our financing arrangements. The market value of containerships is sensitive to, among other things, changes in the charter markets with vessel values deteriorating in times when charter rates are falling and improving when charter rates are anticipated to rise. The depressed state of the containership charter market coupled with the prevailing difficulty in obtaining financing for vessel purchases has generally adversely affected containership values. Under the agreement ("Bank Agreement") we entered into in the first quarter of 2011 for the restructuring of
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our then existing credit facilities and certain credit facilities we entered into in January 2011 ("January 2011 Credit Facilities"), the financial covenants in our financing arrangements were reset to levels that gradually tighten over the period through the maturity of these financing arrangements in late 2018.
        If we are unable to comply with the financial and other covenants under our credit facilities, our lenders could accelerate our indebtedness and foreclose on the vessels in our fleet, which would impair our ability to continue to conduct our business. Any such acceleration, because of the cross-default provisions in our loan agreements, could in turn lead to additional defaults under our other loan agreements and the consequent acceleration of the indebtedness thereunder and the commencement of similar foreclosure proceedings by our other lenders. If our indebtedness were accelerated in full or in part, it would be difficult in the current financing environment for us to refinance our debt or obtain additional financing and we could lose our vessels if our lenders foreclose upon their liens, which would adversely affect our ability to continue our business.
 We may have difficulty securing profitable employment for our vessels in the currently depressed containership market.
        Of our 55 vessels, as of February 29, 2016, nine are employed on time charters expiring between March 2016 and October 2016. Two of the vessels owned by Gemini are unemployed as of February 29, 2016. Given the current depressed state of the containership charter market, we may be unable to secure employment for these vessels at attractive rates, or at all, when, if applicable, their charters expire. Although we do not receive any revenues from our vessels while not employed, as was also the case for certain of our vessels for periods in recent years, we are required to pay expenses necessary to maintain the vessel in proper operating condition, insure it and service any indebtedness secured by such vessel. If we cannot re-charter our vessels profitably, our results of operations and operating cash flow will be adversely affected.
 We are dependent on the ability and willingness of our charterers to honor their commitments to us for all of our revenues and the failure of our counterparties to meet their obligations under our charter agreements could cause us to suffer losses or otherwise adversely affect our business.
        We derive all of our revenues from the payment of charter hire by our charterers. Each of our 55 containerships are currently employed under time or bareboat charters with eleven liner companies, with 99% of our revenues in 2015 generated from six such companies. We could lose a charterer or the benefits of a time charter if:
•
the charterer fails to make charter payments to us because of its financial inability, disagreements with us, defaults on a payment or otherwise; 

•
the charterer exercises certain specific limited rights to terminate the charter; 

•
we do not take delivery of any newbuilding containership we may contract for at the agreed time; or 

•
the charterer terminates the charter because the ship fails to meet certain guaranteed speed and fuel consumption requirements and we are unable to rectify the situation or otherwise reach a mutually acceptable settlement.
        In recent years, a number of major liner companies, including some of our charterers, have announced significant losses, efforts to obtain third party aid and to restructure their obligations, including charter modifications, as well as an intention to reduce the number of vessels they charter-in, which circumstances may increase the likelihood of losing a charterer or the benefits of a time charter. Hyundai, which currently charters 13 of our vessels, has announced that it is undertaking efforts to restructure its obligations with various parties, including finance providers and owners of its
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chartered-in fleet, and has initiated discussions with containership charter-owners, including us, regarding its charter obligations for which it is seeking concessions.
        We contributed to ZIM's past restructurings by agreeing to receive a portion of the charter hire payable under time charters for six of our vessels in the form of long-term notes and ZIM's 2014 agreement with its creditors included a significant reduction in the charter rates payable by ZIM under its time charters, expiring in 2020 or 2021, for six of our vessels and we received unsecured, non-amortizing, interest bearing ZIM notes maturing in 2023 and ZIM shares in exchange for such reductions and cancellation of ZIM's other obligations to us which relate to the previously deferred charter hire.
        If we lose a time charter, we may be unable to re-deploy the related vessel on terms as favorable to us or at all. We would not receive any revenues from such a vessel while it remained unchartered, but we may be required to pay expenses necessary to maintain the vessel in proper operating condition, insure it and service any indebtedness secured by such vessel.
        Many of the time charters on which we deploy our containerships, including those with Hyundai for a number of our vessels, provide for charter rates that are significantly above current market rates. The ability and willingness of each of our counterparties to perform its obligations under their time charters 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 container shipping industry, which has generally experienced sharp declines since mid-2015 from the already weaker levels generally experienced during the limited recovery from the 2008-2009 economic crisis, and the overall financial condition of the counterparty. Furthermore, the combination of a reduction in cash flow resulting from declines in world trade, a reduction in borrowing bases under credit facilities and the reduced availability of debt and equity financing may result in a significant reduction in the ability of our charterers to make charter payments to us, with a number of large liner companies announcing efforts to obtain third party aid and restructure their obligations, including some of our charterers. The likelihood of a charterer seeking to renegotiate or defaulting on its charter with us may be heightened to the extent such customers are not able to utilize the vessels under charter from us, and instead leave such chartered vessels idle. Should a counterparty fail to honor its obligations under agreements with us, it may be difficult to secure substitute employment for such vessel, and any new charter arrangements we secure may be at lower rates given currently depressed situation in the charter market. Gemini, in which we have minority equity investment, faces the same risks with respect to its vessels that it employs on time charters.
        If Hyundai or our other charterers fail to meet their obligations to us or attempt to renegotiate our charter agreements, as part of a court-led restructuring or otherwise, we could sustain significant reductions in revenue and earnings which could have a material adverse effect on our business, financial condition, results of operations and cash flows, as well as our ability to pay dividends, if any, in the future, and comply with the covenants in our credit facilities. In such an event, we could be unable to service our debt and other obligations and could ourselves have to restructure our obligations.
 We depend upon a limited number of customers for a large part of our revenues. The loss of these customers could adversely affect us.
        Our customers in the containership sector consist of a limited number of liner operators. The percentage of our revenues derived from these customers has varied in past years. In the past several years, CMA CGM, Hanjin, Hyundai Merchant Marine,Yang Ming, China Shipping and ZIM have represented substantial amounts of our revenue. In 2015, approximately 99% of our operating revenues were generated by these six customers, while in 2014, approximately 97% of our operating revenues were derived from these customers. As of the date of this report, we have charters for four of our
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vessels with China Shipping, for twelve of our vessels with CMA CGM, for thirteen of our vessels with Hyundai, for eight of our vessels with Hanjin, for six of our vessels with Yang Ming and for seven of our vessels with ZIM. We expect that a limited number of liner companies may continue to generate a substantial portion of our revenues. Some of these liner companies, including our largest customer by revenues in 2015, have publicly acknowledged the financial difficulties facing them, reported substantial losses again in 2015 and announced the intention to restructure their obligations, including charter contracts. Hyundai, from which 28% of our revenues were generated in 2015, has initiated discussions with containership charter-owners, including us, regarding its charter obligations for which it is seeking concessions. ZIM's 2014 restructuring agreement with its creditors included a significant reduction in the charter rates payable by ZIM under its time charters, expiring in 2020 or 2021, for six of our vessels. If any of these liner operators cease doing business or do not fulfill their obligations under their charters for our vessels, due to the financial pressure on these liner companies from the significant decreases in demand for the seaborne transport of containerized cargo or otherwise, our results of operations and cash flows, and ability to comply with covenants in our financing arrangements, could be adversely affected. Further, if we encounter any difficulties in our relationships with these charterers, our results of operations, cash flows and financial condition could be adversely affected.
 Our profitability and growth depend on the demand for containerships and the current global economic weakness, and the impact on consumer confidence and consumer spending may continue to result in a decrease in containerized shipping volume and adversely affect charter rates. Charter hire rates for containerships may continue to experience volatility or settle at depressed levels, which would, in turn, adversely affect our profitability.
        Demand for our vessels depends on demand for the shipment of cargoes in containers and, in turn, containerships. The ocean-going container shipping industry is both cyclical and volatile in terms of charter hire rates and profitability. Containership charter rates peaked in 2005 and generally stayed strong until the middle of 2008, when the effects of the economic crisis began to affect global container trade, and in 2008 and 2009 the ocean-going container shipping industry experienced severe declines, with charter rates at significantly lower levels than the historic highs of the prior few years. Containership charter rates again declined sharply beginning in the third quarter of 2011, after limited improvement in 2010 and 2011, before recovering somewhat in the first half of 2015. Since mid-2015 rates have declined sharply, remain well below long-term averages and could remain at depressed levels for an extended period. Variations in containership charter rates result from changes in the supply and demand for ship capacity and changes in the supply and demand for the major products transported by containerships. The factors affecting the supply and demand for containerships and supply and demand for products shipped in containers are outside of our control, and the nature, timing and degree of changes in industry conditions are unpredictable. The slowdown in the global economy and disruptions in the credit markets may continue to reduce demand for products shipped in containers and, in turn, containership capacity.
        Factors that influence demand for containership capacity include:
•
supply and demand for products suitable for shipping in containers; 

•
changes in global production of products transported by containerships; 

•
the distance that container cargo products are to be moved by sea; 

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the globalization of manufacturing; 

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global and regional economic and political conditions; 

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developments in international trade;
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•
changes in seaborne and other transportation patterns, including changes in the distances over which containerized cargoes are transported and steaming speed of vessels; 

•
environmental and other regulatory developments; and 

•
currency exchange rates.
        Factors that influence the supply of containership capacity include:
•
the number of new building deliveries; 

•
the scrapping rate of older containerships; 

•
the price of steel and other raw materials; 

•
changes in environmental and other regulations that may limit the useful life of containerships; 

•
the number of containerships that are out of service; and 

•
port congestion.
        Consumer confidence and consumer spending remain relatively weak and uncertain. Consumer purchases of discretionary items, many of which are transported by sea in containers, generally decline during periods where disposable income is adversely affected or there is economic uncertainty and, as a result, liner company customers may ship fewer containers or may ship containers only at reduced rates. Any such decrease in shipping volume could adversely impact our liner company customers and, in turn, demand for containerships. As a result, charter rates and vessel values in the containership sector have decreased significantly and the counterparty risk associated with the charters for our vessels has increased.
        Our ability to recharter our containerships upon the expiration or termination of their current charters and the charter rates payable under any renewal or replacement charters will depend upon, among other things, the prevailing state of the charter market for containerships. As of February 29, 2016, two vessels owned by Gemini were not employed and the charters for nine of our existing vessels expire between March 2016 and October 2016. If the charter market, which has experienced sharp declines since mid-2015 from already low levels, is depressed when our vessels' charters expire, we may be forced to recharter the containerships, if we were able to recharter such vessels at all, at sharply reduced rates and possibly at rates whereby we incur a loss. If we were unable to recharter our vessels on favorable terms, we may potentially scrap certain of such vessels, which may reduce our earnings or make our earnings volatile. The same issues will exist if we acquire additional containerships, if we are able to recharter such vessels at all, and attempt to obtain multi-year charter arrangements as part of an acquisition and financing plan.
 The Bank Agreement in respect of our financing arrangements imposes stringent operating and financial restrictions on us which may, among other things, limit our ability to grow our business and currently effectively prevent us from pursuing opportunities to acquire newbuilding and other recently built containerships that meet the needs of our liner company customers.
        Under the terms of the Bank Agreement, our credit facilities and financing arrangements impose more stringent operating and financial restrictions on us than those previously contained in our credit facilities. These restrictions, as described in "Item 5. Operating and Financial Review and Prospects," generally preclude us from:
•
incurring additional indebtedness without the consent of our lenders, except to the extent the proceeds of such additional indebtedness is used to repay existing indebtedness; 

•
creating liens on our assets, generally, unless for the equitable and ratable benefit of our existing lenders;
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•
selling capital stock of our subsidiaries; 

•
disposing of assets without the consent of the lenders with loans collateralized by such assets and, in case of such approval, using the proceeds thereof to repay indebtedness; 

•
using a significant portion of the proceeds from equity issuances for any purpose other than to repay indebtedness; 

•
using more than a minimal amount of our free cash from operations for purposes other than repayment of indebtedness; 

•
engaging in transactions that would constitute a change of control, as defined in such financing agreement, without repaying all of our indebtedness in full; 

•
paying dividends, absent a substantial reduction in our leverage; or 

•
changing our manager or certain members of our management.
        As a result we have reduced discretion in operating our business and may have difficulty growing our business. In particular, the conditions on the use of equity proceeds and incurrence of indebtedness effectively prevent us from pursuing opportunities to acquire newbuildings and other recently built containerships that meet the needs of our liner company customers with the resulting risks of a deterioration in our reputation and standing with our customers and a loss of competitive position among other containership owners.
        In addition, our respective lenders under these financing arrangements will, at their option, be able to require us to repay in full amounts outstanding under such respective credit facilities, upon a "Change of Control" of our company, which for these purposes and as further described in "Item 5. Operating and Financial Review and Prospects—Bank Agreement", includes Dr. Coustas ceasing to be our Chief Executive Officer, Dr. Coustas and members of his family ceasing to collectively own over one-third of the voting interest in our outstanding capital stock or any other person or group controlling more than 20% of the voting power of our outstanding capital stock.
        The Bank Agreement and our financing arrangements contain financial covenants requiring us to:
•
maintain a ratio of (i) the market value of all of the vessels in our fleet, on a charter-inclusive basis, plus the net realizable value of any additional collateral, to (ii) our consolidated total debt above specified minimum levels gradually increasing from 90% through December 31, 2011 to 130% from September 30, 2017 through September 30, 2018. This ratio was required to be 115% as of December 31, 2015; 

•
maintain a minimum ratio of (i) the market value of the nine vessels (Hyundai Smart, Hyundai Speed, Hyundai Ambition, Hyundai Together, Hyundai Tenacity, Hanjin Greece, Hanjin Italy, Hanjin Germany and CMA CGM Rabelais) collateralizing the January 2011 Credit Facilities, calculated on a charter-free basis, plus the net realizable value of any additional collateral, to (ii) our aggregate debt outstanding under the January 2011 Credit Facilities of 100% from September 30, 2012 through September 30, 2018; 

•
maintain minimum free consolidated unrestricted cash and cash equivalents, less the amount of the aggregate variable principal amortization amounts, described above, of $30.0 million at the end of each calendar quarter; 

•
ensure that our (i) consolidated total debt less unrestricted cash and cash equivalents to (ii) consolidated EBITDA (defined as net income before interest, gains or losses under any hedging arrangements, tax, depreciation, amortization and any other non-cash item, capital gains or losses realized from the sale of any vessel, finance charges and capital losses on vessel cancellations and before any non-recurring items and excluding any accrued interest due to us
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but not received on or before the end of the relevant period; provided that non-recurring items excluded from this calculation shall not exceed 5% of EBITDA calculated in this manner) for the last twelve months does not exceed a maximum ratio gradually decreasing from 12:1 on December 31, 2010 to 4.75:1 on September 30, 2018. This ratio was required to be 7.0:1 as of December 31, 2015;
•
ensure that the ratio of our (i) consolidated EBITDA for the last twelve months to (ii) net interest expense (defined as interest expense (excluding capitalized interest), less interest income, less realized gains on interest rate swaps (excluding capitalized gains) and plus realized losses on interest rate swaps (excluding capitalized losses)) exceeds a minimum level of 1.50:1 through September 30, 2013 and thereafter gradually increasing to 2.80:1 by September 30, 2018. This ratio was required to be 2.0:1 as of December 31, 2015; and 

•
maintain a consolidated market value adjusted net worth (defined as the amount by which our total consolidated assets adjusted for the market value of our vessels in the water less cash and cash equivalents in excess of our debt service requirements exceeds our total consolidated liabilities after excluding the net asset or liability relating to the fair value of derivatives as reflected in our financial statements for the relevant period) of at least $400 million.
        The provisions of our KEXIM-ABN Amro credit facility, which is not covered by the Bank Agreement, have been aligned with the above covenants through November 20, 2018 and our Sinosure-CEXIM credit facility has similar financial covenants and a collateral coverage covenant of 125% per tranche as described in "Item 5. Operating and Financial Review and Prospects." In addition, under our KEXIM credit facility, we must comply with a collateral coverage covenant of 130%.
        If we fail to meet our payment or covenant compliance obligations under the terms of the Bank Agreement covering our credit facilities or our other financing arrangements, our lenders could then accelerate our indebtedness and foreclose on the vessels in our fleet securing those credit facilities, which could result in cross-defaults under our other credit facilities, and the consequent acceleration of the indebtedness thereunder and the commencement of similar foreclosure proceedings by other lenders. The loss of any of these vessels would have a material adverse effect on our operating results and financial condition.
 Substantial debt levels could limit our flexibility to obtain additional financing and pursue other business opportunities and our ability to service our outstanding indebtedness will depend on our future operating performance, including the charter rates we receive under charters for our vessels.
        As of December 31, 2015, we had outstanding indebtedness of $2.8 billion and, while we have no remaining borrowing availability under our existing loan agreements, we may incur substantial additional indebtedness, as market conditions warrant over the medium to long-term and to the extent permitted by our existing lenders, further grow our fleet. This level of debt could have important consequences to us, including the following:
•
our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes may be impaired or such financing may be unavailable on favorable terms; 

•
we will need to use substantially all of our free cash from operations, as required under the terms of our Bank Agreement, to make principal and interest payments on our debt, reducing the funds that would otherwise be available for future business opportunities and, if permitted by our lenders and reinstated, dividends to our stockholders; 

•
our debt level could make us more vulnerable than our competitors with less debt to competitive pressures or a downturn in our business or the economy generally; and
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•
our debt level may limit our flexibility in responding to changing business and economic conditions.
        Our ability to service our debt will depend upon, among other things, our future financial and operating performance, which will be affected by prevailing economic conditions and financial, business, regulatory and other factors, some of which are beyond our control. In particular, the charter rates we obtain for our vessels, including the nine vessels with charters expiring between March 2016 and October 2016, and any reductions in contracted charter rates for our vessels and other concessions, such as we agreed in 2014 with ZIM for six of our vessels and such as Hyundai is currently seeking from containership charter-owners, will have a significant impact on our ability to service our indebtedness. Due to the restrictions on the use of cash from operations and other sources for purposes other than the repayment of indebtedness, even if we otherwise generate sufficient cash flow to service our debt, we may still be forced to take actions such as reducing or delaying our business activities, acquisitions, investments or capital expenditures, selling assets, restructuring or refinancing our debt or seeking additional equity capital. We may not be able to effect any of these remedies on satisfactory terms, or at all. In addition, restrictions in the Bank Agreement in respect of our credit facilities and a relative lack of liquidity in the debt and equity markets could hinder our ability to refinance our debt or obtain additional financing on favorable terms in the future.
 Disruptions in world financial markets and the resulting governmental action could have a further material adverse impact on our results of operations, financial condition and cash flows, and could cause the market price of our common stock to decline further.
        Europe, the United States and other parts of the world continue to exhibit weak economic trends. For example, the credit markets in Europe and, to a lesser extent, the United States have experienced significant contraction, de-leveraging and reduced liquidity, and European Union and international organizations, as well as the United States federal government and state governments, have implemented and are considering a broad variety of governmental action and/or new regulation of the financial markets. Securities and futures markets and the credit markets are subject to comprehensive statutes, regulations and other requirements. The U.S. Securities and Exchange Commission, or the SEC, other regulators, self-regulatory organizations and securities exchanges are authorized to take extraordinary actions in the event of market emergencies, and may effect changes in law or interpretations of existing laws.
        Credit markets and the debt and equity capital markets have been distressed at times since the severe disruptions and volatility of 2008 and 2009. These issues, along with the re-pricing of credit risk and the difficulties being experienced by financial institutions have made, and will likely continue to make, it difficult to obtain financing. As a result of the disruptions in the credit markets, the cost of obtaining bank financing has increased as many lenders have increased interest rates, enacted tighter lending standards, required more restrictive terms, including higher collateral ratios for advances, shorter maturities and smaller loan amounts, refused to refinance existing debt at maturity at all or on terms similar to our current debt. Furthermore, certain banks that have historically been significant lenders to the shipping industry have announced an intention to reduce or cease lending activities in the shipping industry. We cannot be certain that financing will be available on acceptable terms or at all. If financing is not available when needed, or is available only on unfavorable terms, we may be unable to meet our obligations as they come due. In the absence of available financing, we may be unable to take advantage of business opportunities or respond to competitive pressures, any of which could have a material adverse effect on our revenues and results of operations.
        We face risks attendant to changes in economic environments, changes in interest rates, and instability in the banking and securities markets around the world, among other factors. Major market disruptions and the current adverse changes in market conditions and the regulatory climate in the United States and worldwide may adversely affect our business or impair our ability to borrow amounts
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under any future financial arrangements. We cannot predict how long the current market conditions will last. However, these recent and developing economic and governmental factors, together with the concurrent decline in charter rates and vessel values, may have a material adverse effect on our results of operations, financial condition or cash flows, have caused the price of our common stock to decline and could cause the price of our common stock to decline further.
        In addition, as a result of the ongoing economic slump in Greece resulting from the sovereign debt crisis and the related austerity measures implemented by the Greek government, our operations in Greece may be subjected to new regulations that may require us to incur new or additional compliance or other administrative costs and may require that we pay to the Greek government new taxes or other fees. Furthermore, the change in the Greek government and potential shift in its policies may undermine Greece's political and economic stability, which may adversely affect our operations and those of our manager located in Greece. We also face the risk that strikes, work stoppages, civil unrest and violence within Greece, as well as the capital controls in effect in Greece since mid-2015, may disrupt our shoreside operations and those of our manager located in Greece.
 Weak economic conditions throughout the world, particularly in Europe and in the Asia Pacific region, could have a material adverse effect on our business, financial condition and results of operations.
        Economic conditions have remained relatively weak since the 2008-2009 economic crisis and renewed concerns about the pace of the recovery in different parts of the world, including China, have emerged in recent months. Continuing concerns regarding the possibility of sovereign debt defaults by European Union member countries, including Greece, and the potential for recession in Europe have resulted in devaluation of the Euro and have led to concerns regarding consumer demand both in Europe and other parts of the world, including the United States. The deterioration in the global economy has caused, and may continue to cause, a decrease in worldwide demand for certain goods and, thus, container shipping. Continuing economic instability could have a material adverse effect on our financial condition and results of operations. In particular, we anticipate a significant number of the port calls made by our vessels will continue to involve the loading or unloading of containers in ports in the Asia Pacific region. As a result, negative changes in economic conditions in any Asia Pacific country, and particularly in China, may exacerbate the effect of the significant downturns in the economies of the United States and the European Union and may have a material adverse effect on our business, financial position and results of operations, as well as our future prospects. In recent years, China has been one of the world's fastest growing economies in terms of gross domestic product, which has had a significant impact on shipping demand. Recently, however, significant concerns have arisen over slowing growth in China and other countries in the Asia Pacific region and regarding how long such countries may experience slowed or even negative economic growth in the future. Moreover, the current relative weakness in the economies of the United States, the European Union and other Asian countries may further adversely affect economic growth in China and elsewhere. In particular, the possibility of sovereign debt defaults by European Union member countries, including Greece, and any resulting weakness of the Euro, including against the Chinese renminbi, could adversely affect European consumer demand, particularly for goods imported, many of which are shipped in containerized form, from China and elsewhere in Asia, and reduce the availability of trade financing which is vital to the conduct of international shipping. In addition, the charters that we enter into with Chinese customers, including the charters we currently have with China Shipping for four of our vessels, may be subject to new regulations in China that may require us to incur new or additional compliance or other administrative costs and may require that we pay to the Chinese government new taxes or other fees. Changes in laws and regulations, including with regards to tax matters, and their implementation by local authorities could affect our vessels chartered to Chinese customers as well as our vessels calling to Chinese ports and could have a material adverse effect on our business, results of operations and financial condition. Our business, financial condition, results of operations, ability to pay
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dividends, if any, as well as our future prospects, will likely be materially and adversely affected by a further economic downturn in any of these countries.
 Demand for the seaborne transport of products in containers, which has declined sharply since mid-2015, has a significant impact on the financial performance of liner companies and, in turn, demand for containerships and our charter counterparty risk.
        Demand for the seaborne transportation of products in containers, which is significantly impacted by global economic activity, has declined sharply since mid-2015, reaching the lowest levels since the historically low levels of 2008 and 2009. Consequently, the cargo volumes and freight rates achieved by liner companies, with which all of the existing vessels in our fleet are chartered, have declined sharply, reducing liner company profitability and, at times, failing to cover the costs of liner companies operating vessels on their shipping lines. In response to such reduced cargo volume and freight rates, the number of vessels being actively deployed by liner companies decreased, with approximately 7% of the world containership fleet estimated to be out of service at the end of 2015, which was below the 12% high of December 2009 but up significantly from 1.3% at the end of 2014. Moreover, newbuilding containerships with an aggregate capacity of approximately 3.8 million TEUs, representing approximately 19% of the existing global fleet capacity at the end of 2015, were under construction, which may exacerbate the surplus of containership capacity further reducing charterhire rates or increasing the number of unemployed vessels. Many liner companies, including some of our customers, reported substantial losses in 2015 and other recent years, as well as having announced plans to reduce the number of vessels they charter-in and form cooperative alliances as part of efforts to reduce the size of their fleets to better align fleet capacity with the reduced demand for marine transportation of containerized cargo.
        The reduced demand and resulting financial challenges faced by our liner company customers has significantly reduced demand for containerships and may increase the likelihood of one or more of our customers being unable or unwilling to pay us the contracted charterhire rates, such as we agreed with ZIM in 2014, which are generally significantly above prevailing charter rates, under the charters for our vessels, including our charters with Hyundai for which it is currently seeking concessions. We generate all of our revenues from these charters and if our charterers fail to meet their obligations to us, we would sustain significant reductions in revenue and earnings, which could materially adversely affect our business and results of operations, as well as our ability to comply with covenants in our credit facilities.
 An over-supply of containership capacity may prolong or further depress the current low charter rates and adversely affect our ability to recharter our containerships at profitable rates or at all and, in turn, reduce our profitability.
        While the size of the containership order book has declined from the historic highs reached in mid-2008, at the end of 2015 newbuilding containerships with an aggregate capacity of approximately 3.8 million TEUs were under construction, representing approximately 19% of the existing global fleet capacity. The size of the orderbook is large relative to historic levels and, notwithstanding that some orders may be cancelled or delayed, will likely result in a significant increase in the size of the world containership fleet over the next few years. An over-supply of containership capacity, particularly in conjunction with the currently low level of demand for the seaborne transport of containers, which proposed liner company alliances may accentuate, could exacerbate the recent decrease in charter rates or prolong the period during which low charter rates prevail. We do not hedge against our exposure to changes in charter rates, due to increased supply of containerships or otherwise. As such, if the current low charter rate environment persists, or a further reduction occurs, during a period when the current charters for our containerships expire or are terminated, we may only be able to recharter those containerships at reduced or unprofitable rates or we may not be able to charter those vessels at all. As
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of February 29, 2016, two vessels owned by Gemini are not employed and the charters for nine of our vessels expire between March 2016 and October 2016.
 Our profitability and growth depends on our ability to expand relationships with existing charterers and to obtain new time charters, for which we will face substantial competition from established companies with significant resources as well as new entrants.
        One of our objectives over the mid- to long-term is, when market conditions warrant and it is feasible, given the restrictions currently contained in our Bank Agreement, to acquire additional containerships in conjunction with entering into additional multi-year, fixed-rate time charters for these vessels. We employ our vessels in highly competitive markets that are capital intensive and highly fragmented, with a highly competitive process for obtaining new multi-year time charters that generally involves an intensive screening process and competitive bids, and often extends for several months. Generally, we compete for charters based on price, customer relationship, operating expertise, professional reputation and the size, age and condition of our vessels. Recently, in light of the dramatic downturn in the containership charter market, other containership owners, including many of the KG-model shipping entities, have chartered their vessels to liner companies at extremely low rates, including at unprofitable levels, increasing the price pressure when competing to secure employment for our containerships. Container shipping charters are awarded based upon a variety of factors relating to the vessel operator, including:
•
shipping industry relationships and reputation for customer service and safety; 

•
container shipping experience and quality of ship operations (including cost effectiveness); 

•
quality and experience of seafaring crew; 

•
the ability to finance containerships at competitive rates and financial stability in general; 

•
relationships with shipyards and the ability to get suitable berths; 

•
construction management experience, including the ability to obtain on-time delivery of new ships according to customer specifications; 

•
willingness to accept operational risks pursuant to the charter, such as allowing termination of the charter for force majeure events; and 

•
competitiveness of the bid in terms of overall price.
        We face substantial competition from a number of experienced companies, including state-sponsored entities and major shipping companies. Some of these competitors have significantly greater financial resources than we do, and can therefore operate larger fleets and may be able to offer better charter rates. We anticipate that other marine transportation companies may also enter the containership sector, including many with strong reputations and extensive resources and experience. This increased competition may cause greater price competition for time charters and, in stronger market conditions, for secondhand vessels and newbuildings.
        In addition, a number of our competitors in the containership sector, including several that are among the largest charter owners of containerships in the world, have been established in the form of a German KG (Kommanditgesellschaft), which provides tax benefits to private investors. Although the German tax law was amended to significantly restrict the tax benefits to taxpayers who invest in these entities after November 10, 2005, the tax benefits afforded to all investors in the KG-model shipping entities continue to be significant, and such entities may continue to be attractive investments. Their focus on these tax benefits allows the KG-model shipping entities more flexibility in offering lower charter rates to liner companies. Further, since the charter rate is generally considered to be one of the principal factors in a charterer's decision to charter a vessel, the rates offered by these sizeable competitors can have a depressing effect throughout the charter market.
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        As a result of these factors, we may be unable to compete successfully with established companies with greater resources or new entrants for charters at a profitable level, or at all, which would have a material adverse effect on our business, results of operations and financial condition.
 We may have more difficulty entering into multi-year, fixed-rate time charters if a more active short-term or spot container shipping market develops.
        One of our principal strategies is to enter into multi-year, fixed-rate containership time charters particularly in strong charter rate environments, although in weaker charter rate environments, such as the one that currently exists, we would generally expect to target somewhat shorter charter terms of three to six years or even shorter periods, particularly for smaller vessels. As more vessels become available for the spot or short-term market, we may have difficulty entering into additional multi-year, fixed-rate time charters for our containerships due to the increased supply of containerships and the possibility of lower rates in the spot market and, as a result, our cash flows may be subject to instability in the long-term. A more active short-term or spot market may require us to enter into charters based on changing market rates, as opposed to contracts based on a fixed rate, which could result in a decrease in our cash flows and net income in periods when the market for container shipping is depressed, as it is currently, or insufficient funds are available to cover our financing costs for related containerships.
 Delays in deliveries of any newbuilding vessels we may order or any secondhand vessels we may agree to acquire could harm our business.
        Delays in the delivery of any newbuilding containerships we may order or any secondhand vessels we may agree to acquire, would delay our receipt of revenues under any arranged time charters and could result in the cancellation of such time charters or other liabilities under such charters, and therefore adversely affect our anticipated results of operations. The delivery of any newbuilding containership could also be delayed because of, among other things:
•
work stoppages or other labor disturbances or other events that disrupt the operations of the shipyard building the vessels; 

•
quality or engineering problems; 

•
changes in governmental regulations or maritime self-regulatory organization standards; 

•
lack of raw materials; 

•
bankruptcy or other financial crisis of the shipyard building the vessel; 

•
our inability to obtain requisite financing or make timely payments; 

•
a backlog of orders at the shipyard building the vessel; 

•
hostilities or political or economic disturbances in the countries where the containerships are being built; 

•
weather interference or catastrophic event, such as a major earthquake or fire; 

•
our requests for changes to the original vessel specifications; 

•
requests from the liner companies, with which we have arranged charters for such vessels, to delay construction and delivery of such vessels due to weak economic conditions and container shipping demand; 

•
shortages of or delays in the receipt of necessary construction materials, such as steel; 

•
our inability to obtain requisite permits or approvals; or 

•
a dispute with the shipyard building the vessel.
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        The shipbuilders with which we contract for any newbuilding may be affected by the ongoing instability of the financial markets and other market conditions, including with respect to the fluctuating price of commodities and currency exchange rates. In addition, the refund guarantors under any newbuilding contracts we enter into, which would be banks, financial institutions and other credit agencies, may also be affected by financial market conditions in the same manner as our lenders and, as a result, may be unable or unwilling to meet their obligations under their refund guarantees. If shipbuilders or refund guarantors are unable or unwilling to meet their obligations to us, this will impact our acquisition of vessels and may materially and adversely affect our operations and our obligations under our credit facilities.
        The delivery of any secondhand containership we may agree to acquire could be delayed because of, among other things, hostilities or political disturbances, non-performance of the purchase agreement with respect to the vessels by the seller, our inability to obtain requisite permits, approvals or financing or damage to or destruction of the vessels while being operated by the seller prior to the delivery date.
 Certain of the containerships in our fleet are subject to purchase options held by the charterers of the respective vessels, which, if exercised, could reduce the size of our containership fleet and reduce our future revenues.
        The chartering arrangements with respect to the CMA CGM Moliere , the CMA CGM Musset , the CMA CGM Nerval , the CMA CGM Rabelais and the CMA CGM Racine include options for the charterer, CMA CGM, to purchase the vessels eight years after the commencement of their respective charters, which will fall in September 2017, March 2018, May 2018, July 2018 and August 2018, respectively, each for $78.0 million. The option exercise prices with respect to these vessels reflect an estimate, made at the time of entry into the applicable charter, of market prices, which are in excess of the vessels' book values net of depreciation, at the time the options become exercisable. If CMA-CGM were to exercise these options with respect to any or all of these vessels, the expected size of our containership fleet would be reduced and, if there were a scarcity of secondhand containerships available for acquisition at such time and because of the delay in delivery associated with commissioning newbuilding containerships, we could be unable to replace these vessels with other comparable vessels, or any other vessels, quickly or, if containership values were higher than currently anticipated at the time we were required to sell these vessels, at a cost equal to the purchase price paid by CMA-CGM. Consequently, if these purchase options were to be exercised, the expected size of our containership fleet would be reduced, and as a result our anticipated level of revenues would be reduced.
 Containership values have recently decreased significantly, and may remain at these depressed levels, or decrease further, and over time may fluctuate substantially. Depressed vessel values could cause us to incur impairment charges, such as the $41.1 million and $75.8 million impairment losses we recorded as of December 31, 2015 and December 31, 2014, respectively, for our older vessels, or to incur a loss if these values are low at a time we are attempting to dispose of a vessel.
        Due to the sharp decline in world trade and containership charter rates, the market values of the containerships in our fleet are currently significantly lower than prior to the downturn that began in the second half of 2008. Containership values may remain at current low, or lower, levels for a prolonged period of time and can fluctuate substantially over time due to a number of different factors, including:
•
prevailing economic conditions in the markets in which containerships operate; 

•
changes in and the level of world trade; 

•
the supply of containership capacity; 

•
prevailing charter rates; and
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•
the cost of retrofitting or modifying existing ships, as a result of technological advances in vessel design or equipment, changes in applicable environmental or other regulations or standards, or otherwise.
        We review our vessels for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. As of December 31, 2015 and December 31, 2014, we concluded that events occurred and circumstances had changed, which may trigger the existence of potential impairment of our long-lived assets and we performed impairment testing and we recorded an impairment loss of $41.1 million and $75.8 million, respectively for our older vessels, and we have incurred impairment charges in prior years as well. In the future, if the market values of our vessels experience further deterioration or we lose the benefits of the existing charter arrangements for any of our vessels and cannot replace such arrangements with charters at comparable rates, we may be required to record additional impairment charges in our financial statements, which could adversely affect our results of operations. Any impairment charges incurred as a result of declines in charter rates could negatively affect our financial condition and results of operations. In addition, if we sell any vessel at a time when vessel prices have fallen and before we have recorded an impairment adjustment to our financial statements, the sale may be at less than the vessel's carrying amount on our financial statements, resulting in a loss and a reduction in earnings.
 We are generally not permitted to pay cash dividends under our financing arrangements.
        Prior to 2009, we paid regular cash dividends on a quarterly basis. In the first quarter of 2009, our board of directors suspended the payment of cash dividends as a result of market conditions in the international shipping industry and in particular the sharp decline in charter rates and vessel values in the containership sector. Until such market conditions significantly improve, it is unlikely that we will reinstate the payment of dividends and if reinstated, it is likely that any dividend payments would be at reduced levels. The Bank Agreement, which restructured our credit facilities and provides new financing arrangements, does not permit us to pay cash dividends or repurchase shares of our common stock until the termination of such agreements in late 2018, absent a significant decrease in our leverage.
 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.
        We are a holding company and our subsidiaries conduct all of our operations and own all of our operating assets. We have no significant assets other than the equity interests in our subsidiaries and our equity investment in Gemini. As a result, our ability to pay our contractual obligations and, if permitted by our lenders and reinstated, to make any dividend payments in the future 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, or by the law of their respective jurisdictions of incorporation which regulates the payment of dividends by companies. If we are unable to obtain funds from our subsidiaries, even if our lenders agreed to allow dividend payments, our board of directors may exercise its discretion not to declare or pay dividends. If we reinstate dividend payments in the future, we do not intend to seek to obtain funds from other sources to make such dividend payments, if any.
 If we are unable to fund our capital expenditures for additional vessels, we may not be able to grow our fleet.
        We would have to make substantial capital expenditures to grow our fleet. We have no remaining borrowing availability under our existing credit facilities. In order to fund capital expenditures for future fleet growth to the extent feasible given the current restrictions in our Bank Agreement and other financing arrangements, we generally plan to use equity financing given the restrictions that are contained in our restructured credit facilities and other financing arrangements on the use of cash from
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our operations, debt financings and asset sales for purposes other than debt repayment. Our ability to access the capital markets through future offerings may be limited by our financial condition at the time of any such offering as well as by adverse market conditions resulting from, among other things, general economic conditions and contingencies and uncertainties that are beyond our control. Moreover, only a portion of the proceeds from any equity financings that we are able to complete will be permitted to be used for purposes other than debt repayment under our restructured and other financing arrangements, which could also adversely affect our ability to complete an equity financing on favorable terms. Our failure to obtain funds for future capital expenditures could limit our ability to grow our fleet.
 We must make substantial capital expenditures to maintain the operating capacity of our fleet, which may reduce the amount of cash available for other purposes.
        Maintenance capital expenditures include capital expenditures associated with modifying an existing vessel or acquiring a new vessel to the extent these expenditures are incurred to maintain the operating capacity of our existing fleet. These expenditures could increase as a result of changes in the cost of labor and materials; customer requirements; increases in our fleet size or the cost of replacement vessels; governmental regulations and maritime self-regulatory organization standards relating to safety, security or the environment; and competitive standards. Significant capital expenditures, including to maintain the operating capacity of our fleet, may reduce the cash available for other purposes.
 Our ability to obtain additional debt financing for future acquisitions of vessels may be dependent on the performance of our then existing charters and the creditworthiness of our charterers.
        We have no remaining borrowing availability under our existing credit facilities. We intend, however, to borrow against vessels we may acquire in the future as part of our medium to long term growth plan to the extent permitted under our existing financing arrangements. The actual or perceived credit quality of our charterers, and any defaults by them, may materially affect our ability to obtain the additional capital resources that we will require to purchase additional vessels or may significantly increase our costs of obtaining such capital. Our inability to obtain additional financing or committing to financing on unattractive terms could have a material adverse effect on our business, results of operations and financial condition.
 The derivative contracts we have entered into to hedge our exposure to fluctuations in interest rates could result in higher than market interest rates and charges against our income.
        We have entered into interest rate swaps, in an aggregate notional amount of $775 million as of December 31, 2015 (two of which with an aggregate notional amount of approximately $575 million are forward starting), generally for purposes of managing our exposure to fluctuations in interest rates applicable to indebtedness under our credit facilities, which were advanced at floating rates based on LIBOR, as well as two interest rate swap agreements, in an aggregate notional amount of $8.2 million as of December 31, 2015, converting fixed interest rate exposure under our credit facilities advanced at a fixed rate of interest to floating rates based on LIBOR. Our hedging strategies, however, may not be effective and we may again incur substantial losses, as we did in 2015 and prior years. In addition, interest rates have been at historically low levels and if such rates rise at times when our interest rate exposure is not hedged, we could have increased interest expense.
        Since our discontinuation of hedge accounting for interest rate swaps and any other derivative instruments from July 1, 2012, we recognize all fluctuations in the fair value of such contracts in our consolidated Statements of Operations. Recognition of such fluctuations in our statement of operations may increase the volatility of our earnings.
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        Our financial condition could also be materially adversely affected to the extent we do not hedge our exposure to interest rate fluctuations under our financing arrangements under which loans have been advanced at a floating rate based on LIBOR. Although relatively stable from 2009 through 2015, LIBOR was volatile in prior years, during which the spread between LIBOR and the prime lending rate widened, at times significantly.
        In recent years, there have been proposals to increase government oversight of, and change the method for, the calculation of LIBOR. We cannot predict what changes, if any, will be implemented and what effect any such changes would have on LIBOR.
        Any hedging activities we engage in may not effectively manage our interest rate exposure or have the desired impact on our financial conditions or results of operations.
 Because we generate all of our revenues in United States dollars but incur a portion of our expenses in other currencies, exchange rate fluctuations could hurt our results of operations.
        We generate all of our revenues in United States dollars and for the year ended December 31, 2015, we incurred approximately 28.2% of our vessels' expenses in currencies other than United States dollars, mainly Euros. This difference could lead to fluctuations in net income due to changes in the value of the United States dollar relative to the other currencies, in particular the Euro. Expenses incurred in foreign currencies against which the United States dollar falls in value could increase, thereby decreasing our net income. We have not hedged our currency exposure and, as a result, our U.S. dollar-denominated results of operations and financial condition could suffer. In addition, to the extent charter hire rates with respect to any port calls our vessels may make in Iran must be paid in a currency other than the U.S. dollar, due to continuing U.S. primary sanctions applicable to U.S. dollar transfers, we would be exposed to fluctuations in the value of that currency.
 Due to our lack of diversification, adverse developments in the containership transportation business could reduce our ability to meet our payment obligations and our profitability.
        We rely exclusively on the cash flows generated from charters for our vessels that operate in the containership sector of the shipping industry. Due to our lack of diversification, adverse developments in the container shipping industry have a significantly greater impact on our financial condition and results of operations than if we maintained more diverse assets or lines of business.
 We may have difficulty properly managing our growth through acquisitions of additional vessels and we may not realize the expected benefits from these acquisitions, which may have an adverse effect on our financial condition and performance.
        To the extent market conditions warrant and we are able to obtain sufficient financing for such purposes in compliance with the restrictions in our financing arrangements, we intend to grow our business over the medium to long-term by ordering newbuilding containerships and through selective acquisitions of additional vessels, including through our investment in Gemini. Future growth will primarily depend on:
•
locating and acquiring suitable vessels; 

•
identifying and consummating vessel acquisitions or joint ventures relating to vessel acquisitions; 

•
enlarging our customer base; 

•
developments in the charter markets in which we operate that make it attractive for us to expand our fleet; 

•
managing any expansion; 

•
the operations of the shipyard building any newbuilding containerships we may order; and
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•
obtaining required financing, within the restrictions placed on the use of funds by our existing financing arrangements, on acceptable terms.
        Although charter rates and vessel values currently are at relatively low levels, during periods in which charter rates are high, vessel values generally are high as well, and it may be difficult to acquire vessels at favorable prices. Moreover, our financing arrangements impose significant restrictions in our ability to use debt financing, or cash from operations, asset sales or equity financing, for purposes, such as vessel acquisitions, other than debt repayment without the consent of our lenders. In addition, growing any business by acquisition presents numerous risks, such as managing relationships with customers and integrating newly acquired assets into existing infrastructure. We cannot give any assurance that we will be successful in executing our growth plans or that we will not incur significant expenses and losses in connection with our future growth efforts.
 We are subject to regulation and liability under environmental laws that could require significant expenditures and affect our cash flows and net income.
        Our business and the operation of our vessels are materially affected by environmental regulation in the form of international, national, state and local laws, regulations, conventions and standards in force in international waters and the jurisdictions in which our vessels operate, as well as in the country or countries of their registration, including those governing the management and disposal of hazardous substances and wastes, the cleanup of oil spills and other contamination, air emissions, wastewater discharges and ballast water management. Because such conventions, laws, and regulations are often revised, we cannot predict the ultimate cost of complying with such requirements or their impact on the resale price or useful life of our vessels. We are required by various governmental and quasi-governmental agencies to obtain certain permits, licenses, certificates and financial assurances with respect to our operations. Many environmental requirements are designed to reduce the risk of pollution, such as from oil spills, and our compliance with these requirements could be costly. Additional conventions, laws and regulations may be adopted that could limit our ability to do business or increase the cost of doing business and which may materially and adversely affect our operations.
        Environmental requirements can also affect the resale value or useful lives of our vessels, could require a reduction in cargo capacity, ship modifications or operational changes or restrictions, could lead to decreased availability of insurance coverage for environmental matters or could 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 natural resource damages liability, in the event that there is a release of petroleum or hazardous materials from our vessels or otherwise in connection with our operations. Environmental laws often impose strict liability for remediation of spills and releases of oil and hazardous substances, which could subject us to liability without regard to whether we were negligent or at fault. The 2010 explosion of the Deepwater Horizon and the subsequent release of oil into the Gulf of Mexico may result in further regulation of the shipping industry, including modifications to liability schemes. We could also become subject to personal injury or property damage claims relating to the release of hazardous substances associated with our existing or historic operations. Violations of, or liabilities under, environmental requirements can result in substantial penalties, fines and other sanctions, including, in certain instances, seizure or detention of our vessels.
        The operation of our vessels is also affected by the requirements set forth in the International Maritime Organization's, or IMO's, International Management Code for the Safe Operation of Ships and Pollution Prevention, or the ISM Code. The ISM Code requires shipowners and bareboat charterers to develop and maintain an extensive "Safety Management System" 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. Failure to comply with the ISM
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Code may subject us to increased liability, may decrease available insurance coverage for the affected ships, and may result in denial of access to, or detention in, certain ports.
        In connection with a 2001 incident involving the presence of oil on the water on the starboard side of one of our former vessels, the Henry (ex CMA CGM Passiflore ) in Long Beach, California, our manager pled guilty to one count of negligent discharge of oil and one count of obstruction of justice, based on a charge of attempted concealment of the source of the discharge. Consistent with the government's practice in similar cases, our manager agreed, among other things, to develop and implement an approved third party consultant monitored environmental compliance plan. Any violation of this environmental compliance plan or any penalties, restitution or heightened environmental compliance plan requirements that are imposed relating to alleged discharges in any other action involving our fleet or our manager could negatively affect our operations and business.
 Climate change and greenhouse gas restrictions may adversely impact our operations.
        Due to concern over the risks of climate change, a number of countries and the International Maritime Organization, or "IMO", have adopted, or are considering the adoption of, regulatory frameworks to reduce greenhouse gas emission from ships. These regulatory measures may include adoption of cap and trade regimes, carbon taxes, increased efficiency standards and incentives or mandates for renewable energy. Emissions of greenhouse gases from international shipping currently are not subject to the Kyoto Protocol to the United Nations Framework Convention on Climate Change, or the "Kyoto Protocol", or any amendments or successor agreements. The Paris Agreement adopted under the United Nations Framework Convention on Climate Change in December 2015, which 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, restrictions on shipping emissions are likely to continue to be considered and a new treaty may be adopted in the future that includes additional restrictions on shipping emissions to those already adopted under the International Convention for the Prevention of Marine Pollution from Ships, or the "MARPOL Convention". Compliance with future changes in laws and regulations relating to climate change could increase the costs of operating and maintaining our ships and could require us to install new emission controls, as well as acquire allowances, pay taxes related to our greenhouse gas emissions or administer and manage a greenhouse gas emissions program.
 Increased inspection procedures, tighter import and export controls and new security regulations could cause disruption of our containership business.
        International container shipping is subject to security and customs inspection and related procedures in countries of origin, destination, and certain trans- shipment points. These inspection procedures can result in cargo seizure, delays in the loading, offloading, trans-shipment, or delivery of containers, and the levying of customs duties, fines or other penalties against exporters or importers and, in some cases, charterers and charter owners.
        Since the events of September 11, 2001, U.S. authorities have more than doubled container inspection rates to over 5% of all imported containers. Government investment in non-intrusive container scanning technology has grown and there is interest in electronic monitoring technology, including so-called "e-seals" and "smart" containers, that would enable remote, centralized monitoring of containers during shipment to identify tampering with or opening of the containers, along with potentially measuring other characteristics such as temperature, air pressure, motion, chemicals, biological agents and radiation. Also, as a response to the events of September 11, 2001, additional vessel security requirements have been imposed including the installation of security alert and automatic information systems on board vessels.
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        It is further unclear what changes, if any, to the existing inspection and security procedures will ultimately be proposed or implemented, or how any such changes will affect the industry. It is possible that such changes could impose additional financial and legal obligations, including additional responsibility for inspecting and recording the contents of containers and complying with additional security procedures on board vessels, such as those imposed under the ISPS Code. Changes to the inspection and security procedures and container security could result in additional costs and obligations on carriers and may, in certain cases, render the shipment of certain types of goods by container uneconomical or impractical. Additional costs that may arise from current inspection or security procedures or future proposals that may not be fully recoverable from customers through higher rates or security surcharges.
 Our vessels may call on ports located in countries that are subject to restrictions imposed by the United States government, which could negatively affect the trading price of our shares of common stock.
        From time to time on charterers' instructions, our vessels have called and may again call on ports located in countries subject to sanctions and embargoes imposed by the United States government and countries identified by the United States government as state sponsors of terrorism. The U.S. sanctions and embargo laws and regulations vary in their application, as they do not all apply to the same covered persons or proscribe the same activities, and such sanctions and embargo laws and regulations may be amended or strengthened over time.
        On January 16, 2016, "Implementation Day" for the Iran Joint Comprehensive Plan of Action (JCPOA), the United States lifted its secondary sanctions against Iran which prohibited certain conduct by non-U.S. companies and individuals that occurred entirely outside of U.S. jurisdiction involving specified industry sectors in Iran, including the energy, petrochemical, automotive, financial, banking, mining, shipbuilding and shipping sectors. By lifting the secondary sanctions against Iran, the U.S. government effectively removed U.S. imposed restraints on dealings by non-U.S. companies, such as our Company, and individuals with these formerly targeted Iranian business sectors. Non-U.S. companies continue to be prohibited under U.S. sanctions from (i) knowingly engaging in conduct that seeks to evade U.S. restrictions on transactions or dealings with Iran or that causes the export of goods or services from the United States to Iran, (ii) exporting, reexporting or transferring to Iran any goods, technology, or services originally exported from the U.S. and / or subject to U.S. export jurisdiction and (iii) conducting transactions with the Iranian or Iran-related individuals and entities that remain or are placed in the future on OFAC's list of Specially Designated Nationals and Blocked Persons (SDN List), notwithstanding the lifting of secondary sanctions. The U.S. has the ability to reimpose sanctions against Iran, including if, in the future, Iran does not comply with its obligations under the nuclear agreement.
        The U.S. government's primary Iran sanctions remain largely unchanged after Implementation Day and as a consequence, U.S. persons continue to be broadly prohibited from engaging in transactions or dealings in or with Iran or its government. In addition, U.S. persons continue to be broadly prohibited from engaging in transactions or dealings with the Government of Iran and Iranian financial institutions, which effectively impacts the transfer of funds to, from, or through the U.S. financial system whether denominated in US dollars or any other currency.
        In 2015, 2014 and 2013, no vessels operated by us made any calls to ports in Cuba, Iran, Syria or Sudan. Certain vessels in our fleet, however, are operated by liner companies under long-term bareboat charters, pursuant to which the liner company does not notify us of its ports of call and controls all aspects of these vessels' operation including technical management, manning with its own officers and crew as well as its ports of call, cargoes and routes within the limits set forth in the charters, which include compliance with applicable law. Although we believe that we are in compliance with all applicable sanctions and embargo laws and regulations, and intend to maintain such compliance, there can be no assurance that we will be in compliance in the future, particularly as the scope of certain
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laws may be unclear and may be subject to changing interpretations. Any such violation could result in fines or other penalties and could result in some investors deciding, or being required, to divest their interest, or not to invest, in the Company. Additionally, some investors may decide to divest their interest, or not to invest, in the Company simply because we do business with companies that do lawful business in sanctioned countries. Moreover, our charterers may violate applicable sanctions and embargo laws and regulations as a result of actions that do not involve us or our vessels, and those violations could in turn negatively affect our reputation. As a result of the lifting of U.S. secondary sanctions (and relevant EU sanctions) relating to Iran, we can anticipate that some of our charterers may direct our vessels to carry containers to or from Iran. This could have various effects on us, such as affecting our reputation and our relationships with our investors and financing sources, affecting the cost of our insurance with respect to such voyages, and potentially increase our exposure to foreign currency fluctuations. Investor perception of the value of our common stock may also be adversely affected by the consequences of war, the effects of terrorism, civil unrest and governmental actions in these and surrounding countries.
 Governments could requisition our vessels during a period of war or emergency, resulting in loss of earnings.
        A government of a ship's registry could requisition for title or seize our vessels. Requisition for title occurs when a government takes control of a ship and becomes the owner. Also, a government could requisition our containerships for hire. Requisition for hire occurs when a government takes control of a ship and effectively becomes the charterer at dictated charter rates. Generally, requisitions occur during a period of war or emergency. Government requisition of one or more of our vessels may negatively impact our revenues and results of operations.
 Terrorist attacks and international hostilities could affect our results of operations and financial condition.
        Terrorist attacks such as the attacks on the United States on September 11, 2001 and more recent attacks in other parts of the world, and the continuing response of the United States and other countries to these attacks, as well as the threat of future terrorist attacks, continue to cause uncertainty in the world financial markets and may affect our business, results of operations and financial condition. Events in the Middle East and North Africa, including Egypt and Syria, and the conflicts in Iraq and Afghanistan may lead to additional acts of terrorism, regional conflict and other armed conflicts 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.
        Terrorist attacks targeted at sea vessels, such as the October 2002 attack in Yemen on the VLCC Limburg, a ship not related to us, may in the future also negatively affect our operations and financial condition and directly impact our containerships or our customers. Future terrorist attacks could result in increased volatility of the financial markets in the United States and globally and could result in an economic recession affecting the United States or the entire world. Any of these occurrences could have a material adverse impact on our operating results, revenue and costs.
        Changing economic, political and governmental conditions in the countries where we are engaged in business or where our vessels are registered could affect us. In addition, future hostilities or other political instability in regions where our vessels trade could also affect our trade patterns and adversely affect our operations and performance.
 Acts of piracy on ocean-going vessels have recently increased 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 and in the Gulf of Aden off the coast of Somalia. Despite leveling off somewhat in the last few years, the frequency of piracy incidents has increased significantly since 2008, particularly
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in the Gulf of Aden off the coast of Somalia. For example, in January 2010, the Maran Centaurus, a tanker vessel not affiliated with us, was captured by pirates in the Indian Ocean while carrying crude oil estimated to be worth $20 million, and was released in January 2010 upon a ransom payment of over $5 million. In addition, crew costs, including costs due to employing onboard security guards, could increase in such circumstances. 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 or 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, results of operations and ability to pay dividends.
 Risks inherent in the operation of ocean-going vessels could affect our business and reputation, which could adversely affect our expenses, net income and stock price.
        The operation of ocean-going vessels carries inherent risks. These risks include the possibility of:
•
marine disaster; 

•
environmental accidents; 

•
grounding, fire, explosions and collisions; 

•
cargo and property losses or damage; 

•
business interruptions caused by mechanical failure, human error, war, terrorism, political action in various countries, or adverse weather conditions; 

•
work stoppages or other labor problems with crew members serving on our vessels, substantially all of whom are unionized and covered by collective bargaining agreements; and 

•
piracy.
        Such occurrences could result in death or injury to persons, loss of property or environmental damage, delays in the delivery of cargo, loss of revenues from or termination of charter contracts, governmental fines, penalties or restrictions on conducting business, higher insurance rates, and damage to our reputation and customer relationships generally. Any of these circumstances or events could increase our costs or lower our revenues, which could result in reduction in the market price of our shares of common stock. The involvement of our vessels in an environmental disaster may harm our reputation as a safe and reliable vessel owner and operator.
 Our insurance may be insufficient to cover losses that may occur to our property or result from our operations due to the inherent operational risks of the shipping industry.
        The operation of any vessel includes risks such as mechanical failure, collision, fire, contact with floating objects, property loss, cargo loss or damage and business interruption due to political circumstances in foreign countries, hostilities and labor strikes. In addition, there is always an inherent possibility of a marine disaster, including oil spills and other environmental mishaps. There are also liabilities arising from owning and operating vessels in international trade. We procure insurance for our fleet against risks commonly insured against by vessel owners and operators. Our current insurance includes (i) hull and machinery insurance covering damage to our vessels' hull and machinery from, among other things, contact with free and floating objects, (ii) war risks insurance covering losses associated with the outbreak or escalation of hostilities and (iii) protection and indemnity insurance (which includes environmental damage and pollution insurance) covering third-party and crew liabilities such as expenses resulting from the injury or death of crew members, passengers and other third parties, the loss or damage to cargo, third-party 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 and (iv) loss of hire insurance for the CSCL Europe , the CSCL America , the CSCL Pusan and the CSCL Le Havre .
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        We can give no assurance that we are adequately insured against all risks or that our insurers will pay a particular claim. Even if our insurance coverage is adequate to cover our losses, we may not be able to obtain a timely 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 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 addition, we do not carry loss of hire insurance (other than for the CSCL Europe , the CSCL America , the CSCL Pusan and the CSCL Le Havre to satisfy our loan agreement requirements). Loss of hire insurance covers the loss of revenue during extended vessel off-hire periods, such as those that occur during an unscheduled drydocking due to damage to the vessel from accidents. 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, results of operations and financial condition and our ability to pay dividends, if any, to our stockholders.
 Maritime claimants could arrest our vessels, which could interrupt our cash flows.
        Crew members, suppliers of goods and services to a vessel, shippers of cargo and other parties may be entitled to a maritime lien against that vessel for unsatisfied debts, claims or damages. In many jurisdictions, a maritime lien holder may enforce its lien by arresting a vessel through foreclosure proceedings. The arrest or attachment of one or more of our vessels could interrupt our cash flows and require us to pay large sums of money to have the arrest lifted.
        In addition, in some jurisdictions, such as South Africa, under the "sister ship" theory of liability, a claimant may arrest both the vessel that is subject to the claimant's maritime lien and any "associated" vessel, which is any vessel owned or controlled by the same owner. Claimants could try to assert "sister ship" liability against one vessel in our fleet for claims relating to another of our ships.
 The aging of our fleet may result in increased operating costs in the future, which could adversely affect our earnings.
        In general, the cost of maintaining a vessel in good operating condition increases with the age of the vessel. As our fleet ages, we may incur increased costs. Older vessels are typically less fuel efficient and more costly to maintain than more recently constructed vessels due to improvements in engine technology. Cargo insurance rates also increase with the age of a vessel, making older vessels less desirable to charterers. Governmental regulations and safety or other equipment standards related to the age of a vessel may also 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. Although our current fleet of 55 containerships had an average age (weighted by TEU capacity) of approximately 7.4 years as of February 29, 2016, we cannot assure you that, as our vessels age, market conditions will justify such expenditures or will enable us to profitably operate our vessels during the remainder of their expected useful lives.
 Increased competition in technology and innovation could reduce our charter hire income and the value of our vessels.
        The charter rates and the value and operational life of a vessel are determined by a number of factors, including the vessel's efficiency, operational flexibility and physical life. Efficiency includes speed and fuel economy. Flexibility includes the ability to enter harbors, utilize related docking facilities and pass through canals and straits. Physical life is related to the original design and construction,
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maintenance and the impact of the stress of operations. If new ship designs currently promoted by shipyards as more fuel efficient perform as promoted or containerships are built that are more efficient or flexible or have longer physical lives than our vessels, competition from these more technologically advanced containerships could adversely affect the amount of charter-hire payments that we receive for our containerships once their current time charters expire and the resale value of our containerships. This could adversely affect our ability to service our debt or pay dividends, if any, to our stockholders.
 Compliance with safety and other requirements imposed by classification societies may be very costly and may adversely affect our business.
        The hull and machinery of every commercial vessel must be classed by a classification society authorized by its country of registry. The classification society certifies that a vessel is safe and seaworthy in accordance with the applicable rules and regulations of the country of registry of the vessel and the Safety of Life at Sea Convention, and all vessels must be awarded ISM certification.
        A vessel must undergo annual surveys, intermediate surveys and special surveys. In lieu of a special survey, a vessel's machinery may be on a continuous survey cycle, under which the machinery would be surveyed periodically over a five-year period. Each of the vessels in our fleet is on a special survey cycle for hull inspection and a continuous survey cycle for machinery inspection.
        If any vessel does not maintain its class or fails any annual, intermediate or special survey, and/or loses its certification, the vessel will be unable to trade between ports and will be unemployable, and we could be in violation of certain covenants in our loan agreements. This would negatively impact our operating results and financial condition.
 Our business depends upon certain employees who may not necessarily continue to work for us.
        Our future success depends to a significant extent upon our chief executive officer, Dr. John Coustas, and certain members of our senior management and that of our manager. Dr. Coustas has substantial experience in the container shipping industry and has worked with us and our manager for many years. He and others employed by us and our manager are crucial to the execution of our business strategies and to the growth and development of our business. In addition, under the terms of the Bank Agreement, Dr. Coustas ceasing to serve as our Chief Executive Officer, absent a successor acceptable to our lenders, would constitute an event of default under these agreements. If these certain individuals were no longer to be affiliated with us or our manager, or if we were to otherwise cease to receive advisory services from them, we may be unable to recruit other employees with equivalent talent and experience, and our business and financial condition may suffer as a result.
 The provisions in our restrictive covenant agreement with our chief executive officer restricting his ability to compete with us, like restrictive covenants generally, may not be enforceable and, subject to certain limitations, will not apply to vessels acquired during the period existing restrictions in our Bank Agreement apply in their current form and companies affiliated with our Chief Executive Officer, Dr. Coustas, may acquire vessels that compete with our fleet.
        Dr. Coustas, our chief executive officer, has entered into a restrictive covenant agreement with us under which he is precluded during the term of our management agreement with our manager, Danaos Shipping, and for one year thereafter from owning and operating drybulk ships or containerships larger than 2,500 TEUs and from acquiring or investing in a business that owns or operates such vessels. Courts generally do not favor the enforcement of such restrictions, particularly when they involve individuals and could be construed as infringing on their 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. We cannot be assured that a court would enforce the restrictions as written by way of an injunction or that we could necessarily establish a case for damages as a result of a violation of the restrictive covenants.
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        In connection with our investment in Gemini in 2015, these restrictions were waived, with the approval of our independent directors, with respect to vessels acquired by Gemini. In addition, a committee of independent directors previously determined that the restrictions in the restrictive covenant agreement will not apply, subject to certain limitations, until certain restrictions in the Bank Agreement cease to apply in their current form. Consequently, companies, other than Gemini, that are affiliated with our Chief Executive Officer, Dr. John Coustas, may directly or indirectly acquire, own and operate, and Danaos Shipping, our manager, may manage, vessels that compete directly with ours, subject to a chartering priority in favor of our containerships of similar TEU capacity instituted to protect our containerships from competition for chartering opportunities. In addition, our manager would be permitted to manage any such vessels acquired by entities affiliated with Dr. Coustas and Dr. Coustas and our other executive officers would be permitted to provide services with respect to such vessels and the entities owning, operating and managing such vessels. In such cases, these entities and individuals could compete with our fleet and may face conflicts between their own interests and their obligations to us, and such individuals may not devote all of their time to our business.
 We depend on our manager to operate our business.
        Pursuant to the management agreement and the individual ship management agreements, our manager and its affiliates provides us with technical, administrative and certain commercial services (including vessel maintenance, crewing, purchasing, shipyard supervision, insurance, assistance with regulatory compliance and financial services). Our operational success will depend significantly upon our manager's satisfactory performance of these services. Our business would be harmed if our manager failed to perform these services satisfactorily. In addition, if the management agreement were to be terminated or if its terms were to be altered, our business could be adversely affected, as we may not be able to immediately replace such services, and even if replacement services were immediately available, the terms offered could be less favorable than the ones currently offered by our manager. Our management agreement with any new manager may not be as favorable.
        Our ability to compete for and enter into new time charters and to expand our relationships with our existing charterers depends largely on our relationship with our manager and its reputation and relationships in the shipping industry. If our manager suffers material damage to its reputation or relationships, it may harm our ability to:
•
renew existing charters upon their expiration; 

•
obtain new charters; 

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successfully interact with shipyards during periods of shipyard construction constraints; 

•
obtain financing on commercially acceptable terms or at all; 

•
maintain satisfactory relationships with our charterers and suppliers; or 

•
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 and affect our profitability.
 Our manager is a privately held company and there is little or no publicly available information about it.
        The ability of our manager to continue providing services for our benefit will depend in part on its own financial strength. Circumstances beyond our control could impair our manager's financial strength, and because it is a privately held company, information about its financial strength is not available. As a result, our stockholders might have little advance warning of problems affecting our manager, even though these problems could have a material adverse effect on us. As part of our
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reporting obligations as a public company, we will disclose information regarding our manager that has a material impact on us to the extent that we become aware of such information.
 We are a Marshall Islands corporation, and the Marshall Islands does not have a well developed body of corporate law.
        Our corporate affairs are governed by our articles of incorporation and bylaws and by the Marshall Islands Business Corporations Act, or BCA. The provisions of the BCA are similar to 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 law of the Republic of The Marshall Islands are not as clearly established as the rights and fiduciary responsibilities of directors under statutes or judicial precedent in existence in certain U.S. jurisdictions. Stockholder rights may differ as well. While the BCA does specifically incorporate the non-statutory law, or judicial case law, of the State of Delaware and other states with substantially similar legislative provisions, our public stockholders may have more difficulty in protecting their interests in the face of actions by the management, directors or controlling stockholders than would stockholders of a corporation incorporated in a U.S. jurisdiction.
 It may be difficult to enforce service of process and enforcement of judgments against us and our officers and directors.
        We are a Marshall Islands corporation, and our registered office is located outside of the United States in the Marshall Islands. A majority of our directors and officers reside outside of the United States, and a substantial portion of our assets and the assets of our officers and directors are located outside of the United States. As a result, you may have difficulty serving legal process within the United States upon us or any of these persons. You may also have difficulty enforcing, both in and outside of the United States, judgments you may obtain in the U.S. courts against us or these persons in any action, including actions based upon the civil liability provisions of U.S. federal or state securities laws.
        There is also substantial doubt that the courts of the Marshall Islands would enter judgments in original actions brought in those courts predicated on U.S. federal or state securities laws. Even if you were successful in bringing an action of this kind, the laws of the Marshall Islands may prevent or restrict you from enforcing a judgment against our assets or our directors and officers.
 We maintain cash with a limited number of financial institutions including financial institutions that may be located in Greece, which will subject us to credit risk.
        We maintain all of our cash with a limited number of financial institutions, including institutions that are located in Greece. These financial institutions located in Greece may be subsidiaries of international banks or Greek financial institutions. Economic conditions in Greece have been, and continue to be, severely disrupted and volatile, and as a result of sovereign weakness, Moody's Investor Services Inc. has downgraded the bank financial strength ratings, as well as the deposit and debt ratings, of several Greek banks to reflect their weakening stand-alone financial strength and the anticipated additional pressures stemming from the country's challenged economic prospects. In addition, in 2015, Greece implemented capital controls restricting the transfer of funds out of Greece, which could restrict our uses of the limited amount of cash we hold in Greece.
        We do not expect that any of our balances held with Greek financial institutions will be covered by insurance in the event of default by these financial institutions. The occurrence of such a default could therefore have a material adverse effect on our business, financial condition, results of operations and cash flows. If we are unable to fund our capital expenditures, we may not be able to continue to operate some of our vessels, which would have a material adverse effect on our business.
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 Risks Relating to Our Common Stock
 The market price of our common stock has fluctuated widely and the market price of our common stock may fluctuate in the future.
        The market price of our common stock has fluctuated widely since our initial public offering in October 2006, reaching a high of $40.26 per share in 2007 and a low of $2.44 per share, most recently in the fourth quarter of 2012, and may continue to do so as a result of many factors, including our actual results of operations and perceived prospects, the prospects of our competition and of the shipping industry in general and in particular the containership sector, differences between our actual financial and operating results and those expected by investors and analysts, changes in analysts' recommendations or projections, changes in general valuations for companies in the shipping industry, particularly the containership sector, changes in general economic or market conditions and broad market fluctuations.
        If the market price of our common stock remains below $5.00 per share our stockholders will not be able to use such shares as collateral for borrowing in margin accounts. This inability to use shares of our common stock as collateral may depress demand and certain institutional investors are restricted from investing in shares priced below $5.00, which may also lead to sales of such shares creating downward pressure on and increased volatility in the market price of our common stock.
 Future issuances of equity, including upon exercise of outstanding warrants, or equity- linked securities, or future sales of our common stock by existing stockholders, may result in significant dilution and adversely affect the market price of our common stock.
        We issued 15 million warrants, for no additional consideration, to our existing lenders participating in the Bank Agreement covering our then existing credit facilities and certain new credit facilities, entitling such lenders to purchase, solely on a cashless exercise basis, additional shares of our common stock, at an initial exercise price of $7.00 per share. We have also agreed to register the warrants and underlying common stock for resale under the Securities Act, and have registered 8,044,176 warrants and underlying shares.
        We may have to attempt to sell additional shares in the future to satisfy our capital and operating needs, however, under our debt agreements we are prohibited from using a significant portion of the proceeds from equity issuances for purposes other than the repayment of indebtedness. In addition, lenders may be unwilling to provide future financing or may provide future financing only on unfavorable terms. In light of the restrictions on our use of cash from operations, debt financings, equity proceeds and asset sales contained in our Bank Agreement governing our credit facilities, to finance further growth we would likely have to issue additional shares of common stock or other equity securities. If we sell shares in the future, the prices at which we sell these future shares will vary, and these variations may be significant. If made at currently prevailing prices, these sales would be significantly dilutive of existing stockholders.
        Subsequent resales of substantial numbers of such shares in the public market, moreover, could adversely affect the market price of our shares. We filed with the SEC a shelf registration statements on Form F-3 registering under the Securities Act an aggregate of 88,222,555 shares of our common stock for resale on behalf of selling stockholders, including our executive officers, and granted registration rights in respect of additional shares of our common stock held by certain other investors in our August 2010 equity offering. In the aggregate these 98,372,555 registered shares represent approximately 89.6% of our outstanding shares of common stock as of February 29, 2016. These shares may be sold in registered transactions and may also be resold subject to the requirements of Rule 144 under the Securities Act. Sales or the possibility of sales of substantial amounts of our common stock by these shareholders in the public markets could adversely affect the market price of our common stock.
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        We cannot predict the effect that future sales of our common stock or other equity related securities would have on the market price of our common stock.
 The Coustas Family Trust, our principal existing stockholder, controls the outcome of matters on which our stockholders are entitled to vote and its interests may be different from yours.
        The Coustas Family Trust, under which our chief executive officer is a beneficiary, together with other members of the Coustas Family, owned approximately 61.8% of our outstanding common stock as of February 29, 2016. This stockholder 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 this stockholder may be different from yours. Under the terms of the Bank Agreement governing our credit facilities, Dr. Coustas, together with the Coustas Family Trust and his family, ceasing to own over one-third of our outstanding common stock will constitute an event of default in certain circumstances.
 We are a "controlled company" under the New York Stock Exchange rules, and as such we are entitled to exemptions from certain New York Stock Exchange corporate governance standards, and you may not have the same protections afforded to stockholders of companies that are subject to all of the New York Stock Exchange corporate governance requirements.
        We are a "controlled company" within the meaning of the New York Stock Exchange corporate governance standards. Under the New York Stock Exchange rules, a company of which more than 50% of the voting power is held by another company or group is a "controlled company" and may elect not to comply with certain New York Stock Exchange corporate governance requirements, including (1) the requirement that a majority of the board of directors consist of independent directors, (2) the requirement that the nominating committee be composed entirely of independent directors and have a written charter addressing the committee's purpose and responsibilities, (3) the requirement that the compensation committee be composed entirely of independent directors and have a written charter addressing the committee's purpose and responsibilities and (4) the requirement of an annual performance evaluation of the nominating and corporate governance and compensation committees. We may utilize these exemptions, and currently a non-independent director serves on our compensation committee and on our nominating and corporate governance committee. As a result, non-independent directors, including members of our management who also serve on our board of directors, may serve on the compensation or the nominating and corporate governance committees of our board of directors which, among other things, fix the compensation of our management, make stock and option awards and resolve governance issues regarding us. Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of the New York Stock Exchange corporate governance requirements.
 Anti-takeover provisions in our organizational documents could make it difficult for our stockholders to replace or remove our current board of directors or 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:
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authorize our board of directors to issue "blank check" preferred stock without stockholder approval;
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•
provide for a classified board of directors with staggered, three- year terms; 

•
prohibit cumulative voting in the election of directors; 

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authorize the removal of directors only for cause and only upon the affirmative vote of the holders of at least 66 2 / 3 % of the outstanding stock entitled to vote for those directors; 

•
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 

•
restrict business combinations with interested stockholders.
        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. In addition, our respective lenders under our existing credit facilities covered by the Bank Agreement for the restructuring thereof and the new credit facilities will be entitled to require us to repay in full amounts outstanding under such credit facilities, if Dr. Coustas ceases to be our Chief Executive Officer or, together with members of his family and trusts for the benefit thereof, ceases to collectively own over one-third of the voting interest in our outstanding capital stock or any other person or group controls more than 20.0% of the voting power of our outstanding capital stock.
        These anti-takeover provisions, including the provisions of our 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.

 Tax Risks
 We may have to pay tax on U.S.-source income, which would reduce our earnings.
        Under the United States Internal Revenue Code of 1986, as amended, or the Code, 50% of the gross shipping income of a ship owning or chartering corporation, such as ourselves, that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States is characterized as U.S.-source shipping income and as such is subject to a 4% U.S. federal income tax without allowance for deduction, unless that corporation qualifies for exemption from tax under Section 883 of the Code and the Treasury Regulations promulgated thereunder.
        Other than with respect to four of our vessel-owning subsidiaries, as to which we are uncertain whether they qualify for this statutory tax exemption, we believe that we and our subsidiaries currently qualify for this statutory tax exemption and we currently intend to take that position for U.S. federal income tax reporting purposes. However, there are factual circumstances beyond our control that could cause us or our subsidiaries to fail to qualify for the benefit of this tax exemption and thus to be subject to U.S. federal income tax on U.S.-source shipping income. There can be no assurance that we or any of our subsidiaries will qualify for this tax exemption for any year. For example, even assuming, as we expect will be the case, that our shares are regularly and primarily traded on an established securities market in the United States, if shareholders each of whom owns, actually or under applicable attribution rules, 5% or more of our shares own, in the aggregate, 50% or more of our shares, then we and our subsidiaries will generally not be eligible for the Section 883 exemption unless we can establish, in accordance with specified ownership certification procedures, either (i) that a sufficient number of the shares in the closely-held block are owned, directly or under the applicable attribution rules, by "qualified shareholders" (generally, individuals resident in certain non-U.S. jurisdictions) so that the shares in the closely-held block that are not so owned could not constitute 50% or more of our shares for more than half of the days in the relevant tax year or (ii) that qualified shareholders owned more
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than 50% of our shares for at least half of the days in the relevant taxable year. There can be no assurance that we will be able to establish such ownership by qualified shareholders for any tax year. In connection with the four vessel-owning subsidiaries referred to above, we note that qualification under Section 883 will depend in part upon the ownership, directly or under the applicable attribution rules, of preferred shares issued by such subsidiaries as to which we are not the direct or indirect owner of record.
        If we or our subsidiaries are not entitled to the exemption under Section 883 for any taxable year, we or our subsidiaries would be subject for those years to a 4% U.S. federal income tax on our gross U.S. source shipping income. The imposition of this taxation could have a negative effect on our business and would result in decreased earnings available for distribution to our stockholders. A number of our charters contain provisions that obligate the charterers to reimburse us for the 4% gross basis tax on our U.S. source shipping income.
 If we were treated as a "passive foreign investment company," certain adverse U.S. federal income tax consequences could result to U.S. stockholders.
        A foreign corporation will be treated as a "passive foreign investment company," or PFIC, for U.S. federal income tax purposes if at least 75% of its gross income for any taxable year consists of certain types of "passive income," or at least 50% of the average value of the corporation's assets produce or are held for the production of those types of "passive income." For purposes of these tests, "passive income" includes dividends, interest, and 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." In general, U.S. stockholders of a PFIC are subject to a disadvantageous U.S. federal income tax regime with respect to 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. If we are treated as a PFIC for any taxable year, we will provide information to U.S. stockholders to enable them to make certain elections to alleviate certain of the adverse U.S. federal income tax consequences that would arise as a result of holding an interest in a PFIC.
        While there are legal uncertainties involved in this determination, including as a result of a decision of the United States Court of Appeals for the Fifth Circuit in Tidewater Inc. and Subsidiaries v. United States , 565 F.3d 299 (5th Cir. 2009) which held that income derived from certain time chartering activities should be treated as rental income rather than services income for purposes of the foreign sales corporation rules under the U.S. Internal Revenue Code, we believe we should not be treated as a PFIC for the taxable year ended December 31, 2015. However, if the principles of the Tidewater decision were applicable to our time charters, we would likely be treated as a PFIC. Moreover, there is no assurance that the nature of our assets, income and operations will not change or that we can avoid being treated as a PFIC for subsequent years.
 The enactment of proposed legislation could affect whether dividends paid by us constitute qualified dividend income eligible for the preferential rate.
        Legislation has been previously introduced that would deny the preferential rate of federal income tax currently imposed on qualified dividend income with respect to dividends received from a non-U.S. corporation, unless the non-U.S. corporation either is eligible for benefits of a comprehensive income tax treaty with the United States or is created or organized under the laws of a foreign country which has a comprehensive income tax system. Because the Marshall Islands has not entered into a comprehensive income tax treaty with the United States and imposes only limited taxes on corporations organized under its laws, it is unlikely that we could satisfy either of these requirements. It is not possible at this time to predict with certainty whether or in what form legislation of this sort might be proposed, or enacted.
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 If we became subject to Liberian taxation, the net income and cash flows of our Liberian subsidiaries and therefore our net income and cash flows, would be materially reduced.
        A number of our 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 does not distinguish between the taxation of "non-resident" Liberian corporations, such as our Liberian 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 are not engaged in shipping exclusively within Liberia) and that do not engage in other business or activities in Liberia other than those 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.
        If, however, our Liberian subsidiaries were subject to Liberian income tax under the Amended Act, they would be subject to tax at a rate of 35% on their worldwide income. As a result, their, and subsequently our, net income and cash flows would be materially reduced. In addition, as the ultimate stockholder of the Liberian subsidiaries, we would be subject to Liberian withholding tax on dividends paid by our Liberian subsidiaries at rates ranging from 15% to 20%, which would limit our access to funds generated by the operations of our subsidiaries and further reduce our income and cash flows.
Item 4.    Information on the Company
 History and Development of the Company
        Danaos Corporation is an international owner of containerships, chartering its vessels to many of the world's largest liner companies. We are a corporation domesticated in the Republic of The Marshall Islands on October 7, 2005, under the Marshall Islands Business Corporations Act, after having been incorporated as a Liberian company in 1998 in connection with the consolidation of our assets under Danaos Holdings Limited. In connection with our domestication in the Marshall Islands we changed our name from Danaos Holdings Limited to Danaos Corporation. Our manager, Danaos Shipping Company Limited, or Danaos Shipping, was founded by Dimitris Coustas in 1972 and since that time it has continuously provided seaborne transportation services under the management of the Coustas family. Dr. John Coustas, our chief executive officer, assumed responsibility for our management in 1987. Dr. Coustas has focused our business on chartering containerships to liner companies and has overseen the expansion of our fleet from three multi-purpose vessels in 1987 to the 55 containerships comprising our fleet as of February 29, 2016. In 2015, we formed a joint venture, Gemini Shipholdings Corporation, in which we have 49% minority equity interest, with our largest stockholder, Danaos Investments Limited as Trustee of the 883 Trust, which we refer to as the Coustas Family Trust, to acquire, own and operate containerships. As of February 29, 2016, Gemini had acquired a fleet of four containerships aggregating 23,998 TEU in capacity.
        In October 2006, we completed an initial public offering of our common stock in the United States and our common stock began trading on the New York Stock Exchange. In August 2010, we completed a common stock sale of 54,054,055 shares for $200 million and in 2011 we issued warrants to purchase 15 million shares of our common stock.
        Our company operates through a number of subsidiaries incorporated in Liberia, Cyprus, Malta and Marshall Islands, all of which are wholly-owned by us and either directly or indirectly owns the
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vessels in our fleet. A list of our active subsidiaries as of February 29, 2016, and their jurisdictions of incorporation, is set forth in Exhibit 8 to this Annual Report on Form 20-F.
        Our principal executive offices are c/o Danaos Shipping Co. Ltd., 14 Akti Kondyli, 185 45 Piraeus, Greece. Our telephone number at that address is +30 210 419 6480.
 Business Overview
        We are an international owner of containerships, chartering our vessels to many of the world's largest liner companies. As of February 29, 2016, we had a fleet of 55 containerships aggregating 329,588 TEUs, making us among the largest containership charter owners in the world, based on total TEU capacity. Gemini, in which we have a 49% minority equity interest, had a fleet of four containerships of 23,998 TEU aggregate capacity as of February 29, 2016.
        Our strategy is to charter our containerships under multi-year, fixed-rate period charters to a diverse group of liner companies, including many of the largest companies globally, as measured by TEU capacity. As of February 29, 2016, these customers included China Shipping, CMA-CGM, Hanjin, Hyundai Merchant Marine, Niledutch, MSC, Yang Ming, ZIM Israel Integrated Shipping Services, Nippon Yusen Kaisha Line (NYK), Hapag Lloyd and Maersk Line and, for Gemini, NYK. We believe our containerships provide us with contracted stable cash flows as they are deployed under multi-year, fixed-rate charters with initial terms that range from less than one to 18 years.
 Our Fleet
 General
        Following the completion of our extensive new-building program, Danaos has been established as one of the largest containership operating lessors in the world. Since going public in 2006, we have almost tripled our TEU carrying capacity. Today, our fleet is one of the most modern in the industry and includes some of the largest containerships in the world, which are designed with certain technological advances and customized modifications that make them efficient with respect to both voyage speed and loading capability when compared to many existing vessels operating in the containership sector. On January 8, 2016 we completed the sale of the vessel Federal, which was held for sale as of December 31, 2015. During 2014, we sold five of our older vessels, the Marathonas , the Messologi , the Mytilini , the Commodore and the Duka, and we acquired two secondhand 6,402 TEU containerships built in 2002, the Performance and the Priority .
        We deploy our containership fleet principally under multi-year charters with major liner companies that operate regularly scheduled routes between large commercial ports. As of February 29, 2016, our containership fleet was comprised of 53 containerships deployed on time charters and two containerships deployed on bareboat charter. The average age (weighted by TEU) of the 55 vessels in our containership fleet was approximately 7.4 years as of February 29, 2016. As of December 31, 2015, the average remaining duration of the charters for our containership fleet was 7.2 years (weighted by aggregate contracted charter hire).
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 Characteristics
        The table below provides additional information, as of February 29, 2016, about our fleet of 55 cellular containerships and the four cellular containerships owned by Gemini, in which we have a 49% equity interest.

													
Vessel Name 	 	Year
Built	 	Vessel
Size
(TEU)	 	Time
Charter
Term(1)	 	Expiration
of Charter(1)	 	Charterer	
Post-Panamax	 	 	 	 	 	 	 	 	 	 	 	 	
Hyundai Ambition	 	 	2012	 	 	13,100	 	12 years	 	June 2024	 	Hyundai	
Hyundai Speed	 	 	2012	 	 	13,100	 	12 years	 	June 2024	 	Hyundai	
Hyundai Smart	 	 	2012	 	 	13,100	 	12 years	 	May 2024	 	Hyundai	
Hyundai Tenacity	 	 	2012	 	 	13,100	 	12 years	 	March 2024	 	Hyundai	
Hyundai Together	 	 	2012	 	 	13,100	 	12 years	 	February 2024	 	Hyundai	
Hanjin Italy	 	 	2011	 	 	10,100	 	12 years	 	April 2023	 	Hanjin	
Hanjin Germany	 	 	2011	 	 	10,100	 	12 years	 	March 2023	 	Hanjin	
Hanjin Greece	 	 	2011	 	 	10,100	 	12 years	 	May 2023	 	Hanjin	
CSCL Le Havre	 	 	2006	 	 	9,580	 	12 years	 	September 2018	 	China Shipping	
CSCL Pusan	 	 	2006	 	 	9,580	 	12 years	 	July 2018	 	China Shipping	
CMA CGM Melisande	 	 	2012	 	 	8,530	 	12 years	 	November 2023	 	CMA-CGM	
CMA CGM Attila	 	 	2011	 	 	8,530	 	12 years	 	April 2023	 	CMA-CGM	
CMA CGM Tancredi	 	 	2011	 	 	8,530	 	12 years	 	May 2023	 	CMA-CGM	
CMA CGM Bianca	 	 	2011	 	 	8,530	 	12 years	 	July 2023	 	CMA-CGM	
CMA CGM Samson	 	 	2011	 	 	8,530	 	12 years	 	September 2023	 	CMA-CGM	
CSCL America	 	 	2004	 	 	8,468	 	12 years	 	September 2016	 	China Shipping	
CSCL Europe	 	 	2004	 	 	8,468	 	12 years	 	June 2016	 	China Shipping	
CMA CGM Moliere(2)	 	 	2009	 	 	6,500	 	12 years	 	August 2021	 	CMA-CGM	
CMA CGM Musset(2)	 	 	2010	 	 	6,500	 	12 years	 	February 2022	 	CMA-CGM	
CMA CGM Nerval(2)	 	 	2010	 	 	6,500	 	12 years	 	April 2022	 	CMA-CGM	
CMA CGM Rabelais(2)	 	 	2010	 	 	6,500	 	12 years	 	June 2022	 	CMA-CGM	
CMA CGM Racine(2)	 	 	2010	 	 	6,500	 	12 years	 	July 2022	 	CMA-CGM	
Priority	 	 	2002	 	 	6,402	 	0.5 years	 	October 2016	 	NYK	
Performance	 	 	2002	 	 	6,402	 	0.2 years	 	May 2016	 	Maersk Line	
Panamax	 	 	 	 	 	 	 	 	 	 	 	 	
SNL Colombo	 	 	2004	 	 	4,300	 	12 years	 	March 2019	 	Yang Ming	
YM Singapore	 	 	2004	 	 	4,300	 	12 years	 	October 2019	 	Yang Ming	
YM Seattle	 	 	2007	 	 	4,253	 	12 years	 	July 2019	 	Yang Ming	
YM Vancouver	 	 	2007	 	 	4,253	 	12 years	 	September 2019	 	Yang Ming	
ZIM Rio Grande	 	 	2008	 	 	4,253	 	12 years	 	May 2020	 	ZIM	
ZIM Sao Paolo	 	 	2008	 	 	4,253	 	12 years	 	August 2020	 	ZIM	
OOCL Istanbul	 	 	2008	 	 	4,253	 	12 years	 	September 2020	 	ZIM	
ZIM Monaco	 	 	2009	 	 	4,253	 	12 years	 	November 2020	 	ZIM	
OOCL Novorossiysk	 	 	2009	 	 	4,253	 	12 years	 	February 2021	 	ZIM	
ZIM Luanda	 	 	2009	 	 	4,253	 	12 years	 	May 2021	 	ZIM	
Derby D	 	 	2004	 	 	4,253	 	1 year	 	April 2016	 	CMA CGM	
Deva	 	 	2004	 	 	4,253	 	0.4 year	 	March 2016	 	ZIM	
Dimitris C	 	 	2001	 	 	3,430	 	0.3 years	 	July 2016	 	Niledutch	
Hanjin Constantza	 	 	2011	 	 	3,400	 	10 years	 	February 2021	 	Hanjin	
Hanjin Algeciras	 	 	2011	 	 	3,400	 	10 years	 	November 2020	 	Hanjin	
Hanjin Buenos Aires	 	 	2010	 	 	3,400	 	10 years	 	March 2020	 	Hanjin	
Hanjin Santos	 	 	2010	 	 	3,400	 	10 years	 	May 2020	 	Hanjin	
Hanjin Versailles	 	 	2010	 	 	3,400	 	10 years	 	August 2020	 	Hanjin	
Danae C (ex Niledutch Palanca)(3)	 	 	2001	 	 	2,524	 	0.3 years	 	July 2016	 	Hapag Lloyd	
MSC Zebra (ex Niledutch Zebra)(4)	 	 	2001	 	 	2,602	 	3 years	 	October 2017	 	MSC	
Amalia C	 	 	1998	 	 	2,452	 	2.7 years	 	March 2016	 	CMA CGM	
Hyundai Advance	 	 	1997	 	 	2,200	 	10 years	 	June 2017	 	Hyundai	
Hyundai Future	 	 	1997	 	 	2,200	 	10 years	 	August 2017	 	Hyundai	
Hyundai Sprinter	 	 	1997	 	 	2,200	 	10 years	 	August 2017	 	Hyundai	
Hyundai Stride	 	 	1997	 	 	2,200	 	10 years	 	July 2017	 	Hyundai	
Hyundai Progress	 	 	1998	 	 	2,200	 	10 years	 	December 2017	 	Hyundai	
Hyundai Bridge	 	 	1998	 	 	2,200	 	10 years	 	January 2018	 	Hyundai	
Hyundai Highway	 	 	1998	 	 	2,200	 	10 years	 	January 2018	 	Hyundai	
Hyundai Vladivostok	 	 	1997	 	 	2,200	 	10 years	 	May 2017	 	Hyundai	
	 	 	Gemini Vessels	 	 	 	 	 	 	
NYK Lodestar(5)	 	 	2001	 	 	6,422	 	2 years	 	September 2017	 	NYK	
NYK Leo(5)	 	 	2002	 	 	6,422	 	3 years	 	February 2019	 	NYK	
Suez Canal(5)(6)	 	 	2002	 	 	5,610	 	—	 	—	 	—	
Genoa(5)(6)	 	 	2002	 	 	5,544	 	—	 	—	 	—	

													
 	 	 	 	 	 	Bareboat
Charter
Term(1)	 	 	 	 	
YM Mandate	 	 	2010	 	 	6,500	 	18 years	 	January 2028	 	Yang Ming	
YM Maturity	 	 	2010	 	 	6,500	 	18 years	 	April 2028	 	Yang Ming	

(1)
Earliest date charters could expire. Most charters include options for the charterers to extend their terms.
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(2)
The charters with respect to the CMA CGM Moliere , the CMA CGM Musset , the CMA CGM Nerval , the CMA CGM Rabelais and the CMA CGM Racine include an option for the charterer, CMA-CGM, to purchase the vessels eight years after the commencement of the respective charters, which will fall in September 2017, March 2018, May 2018, July 2018 and August 2018, respectively, each for $78.0 million.

(3)
The Danae C was renamed to Niledutch Palanca at the request of the charterer of this vessel from March 25, 2014 to June 8, 2015.

(4)
On September 14, 2014, the Niledutch Zebra was renamed to MSC Zebra at the request of the charterer of this vessel.

(5)
Vessels acquired by Gemini, in which Danaos holds a 49% equity interest.

(6)
A subsidiary of Gemini holds a leasehold bareboat charter interest in such vessel, which was financed by and is subject to a capital lease pursuant to which such subsidiary will acquire all rights to such vessel at the end of such lease.
 Gemini Shipholdings Corporation
        On August 5, 2015, we entered into a Shareholders Agreement (the "Gemini Shareholders Agreement"), with Gemini Shipholdings Corporation ("Gemini") and Virage International Ltd. ("Virage"), a company controlled by our largest stockholder Danaos Investments Limited as Trustee of the 883 Trust, in connection with the formation of Gemini to acquire and operate containerships. We and Virage own 49% and 51%, respectively, of Gemini's issued and outstanding share capital. Under the Gemini Shareholders Agreement, we and Virage have preemptive rights with respect to issuances of Gemini capital stock as well as tag-along rights, drag-along rights and certain rights of first refusal with respect to proposed transfers of Gemini equity interests. In addition, certain actions by Gemini, including acquisitions or dispositions of vessels and newbuilding contracts, require the unanimous approval of the Gemini board of directors including the director designated by the Company, who is currently our Chief Operating Officer Iraklis Prokopakis. Mr. Prokopakis also serves as Chief Operating Officer of Gemini, and our Chief Financial Officer, Evangelos Chatzis, serves as Chief Financial Officer of Gemini, for which services Messrs. Prokopakis and Chatzis do not receive any additional compensation. We also have the right to purchase all of the equity interests in Gemini that we do not own for fair market value at any time after December 31, 2018, or earlier if permitted under our credit facilities, provided that such fair market value is not below the net book value of such equity interests.
 Charterers
        As the container shipping industry has grown, the major liner companies have increasingly contracted for containership capacity. As of February 29, 2016, our diverse group of customers in the containership sector included China Shipping, CMA-CGM, Hanjin, Hyundai Merchant Marine, MSC, Niledutch, Yang Ming, ZIM Israel Integrated Shipping Services, NYK, Hapag Lloyd and Maersk Line. Gemini has chartered two of its containerships to NYK, while two of its containerships under leasehold bareboat charters-in are currently not employed.
        The containerships in our fleet are primarily deployed under multi-year, fixed-rate time charters having initial terms that range from less than one to 18 years. These charters expire at staggered dates ranging from March 2016 to the second quarter of 2028. The staggered expiration of the multi-year, fixed-rate charters for our vessels is both a strategy pursued by our management and a result of the growth in our fleet over the past several years. Under our time charters, the charterer pays voyage expenses such as port, canal and fuel costs, other than brokerage and address commissions paid by us, and we pay for vessel operating expenses, which include crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs. We are also responsible for each vessel's intermediate and special survey costs.
        Under the time charters, when a vessel is "off-hire" or not available for service, the charterer is generally not required to pay the hire rate, and we are responsible for all costs. A vessel generally will be deemed to be off-hire if there is an occurrence preventing the full working of the vessel due to, among other things, operational deficiencies, drydockings for repairs, maintenance or inspection, equipment breakdown, delays due to accidents, crewing strikes, labor boycotts, noncompliance with government water pollution regulations or alleged oil spills, arrests or seizures by creditors or our
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failure to maintain the vessel in compliance with required specifications and standards. In addition, under our time charters, if any vessel is off-hire for more than a certain amount of time (generally between 10-20 days), the charterer has a right to terminate the charter agreement for that vessel. Charterers also have the right to terminate the time charters in various other circumstances, including but not limited to, outbreaks of war or a change in ownership of the vessel's owner or manager without the charterer's approval.
 Purchase Options
        The charters with respect to the CMA CGM Moliere , the CMA CGM Musset , the CMA CGM Nerval , the CMA CGM Rabelais and the CMA CGM Racine include an option for the charterer, CMA-CGM, to purchase the vessels eight years after the commencement of the respective charters, which will fall in September 2017, March 2018, May 2018, July 2018 and August 2018, respectively, each for $78.0 million. In each case, the option to purchase the vessel must be exercised 15 months prior to the dates noted in the preceding sentence. The $78.0 million option prices reflect an estimate, made at the time of entry into the applicable charter, of the fair market value of the vessels at the time we would be required to sell the vessels upon exercise of the options. If CMA-CGM were to exercise these options with respect to any or all of these vessels, the expected size of our containership fleet would be reduced, and as a result our anticipated level of revenues after such sale would be reduced.
 Management of Our Fleet
        Our chief executive officer, chief operating officer, chief financial officer and deputy chief operating officer provide strategic management for our company while these officers also supervise, in conjunction with our board of directors, the management of these operations by Danaos Shipping, our manager. We have a management agreement pursuant to which our manager and its affiliates provide us and our subsidiaries with technical, administrative and certain commercial services for an initial term that expired on December 31, 2008, with automatic one year renewals for an additional 12 years at our option. Our manager reports to us and our board of directors through our chief executive officer, chief operating officer and chief financial officer, each of which is appointed by our board of directors.
        Our manager is regarded as an innovator in operational and technological aspects in the international shipping community. Danaos Shipping's strong technological capabilities derive from employing highly educated professionals, its participation and assumption of a leading role in European Community research projects related to shipping, and its close affiliation to Danaos Management Consultants, a leading ship-management software and services company.
        Danaos Shipping achieved early ISM certification of its container fleet in 1995, well ahead of the deadline, and was the first Greek company to receive such certification from Det Norske Veritas, a leading classification society. In 2004, Danaos Shipping received the Lloyd's List Technical Innovation Award for advances in internet-based telecommunication methods for vessels. In 2015, Danaos Shipping received the Lloyd's List Intelligence Big Data Award for their "Waves"fleet performance system, which provides advanced performance monitoring, close bunkers control, emissions monitoring, energy management, safety performance monitoring, risk management and advance superintendence for the vessels.
        Danaos Shipping maintains the quality of its service by controlling directly the selection and employment of seafarers through its crewing offices in Piraeus, Greece, Russia, as well as in Odessa and Mariupol in Ukraine and in Zanzibar, Tanzania. Investments in new facilities in Greece by Danaos Shipping enable enhanced training of seafarers and highly reliable infrastructure and services to the vessels.
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        Danaos Shipping provides vessel management services to Gemini at the same rates we pay under our management agreement with Danaos Shipping. Historically, Danaos Shipping only infrequently managed vessels other than those in our fleet and currently it does not actively manage any other company's vessels, other than vessels owned by Gemini. Danaos Shipping also does not arrange the employment of other vessels and has agreed that, during the term of our management agreement, it will not provide any management services to any other entity without our prior written approval, other than with respect to other entities controlled by Dr. Coustas, our chief executive officer, which do not operate within the containership (larger than 2,500 TEUs) or drybulk sectors of the shipping industry or in the circumstances described below. In connection with our investment in Gemini in 2015, these restrictions were waived, with the approval of our independent directors, with respect to containerships acquired by Gemini. Other than with respect to Gemini and a participation in a vessel-owning company through Raven International Corporation, Dr. Coustas does not currently control any such vessel-owning entity. We believe we have and will derive significant benefits from our relationship with Danaos Shipping.
        Dr. Coustas has also personally agreed to the same restrictions on the provision, directly or indirectly, of management services during the term of our management agreement. In addition, our chief executive officer (other than in his capacities with us) and our manager have separately agreed not, during the term of our management agreement and for one year thereafter, to engage, directly or indirectly, in (i) the ownership or operation of containerships of larger than 2,500 TEUs or (ii) the ownership or operation of any drybulk carriers or (iii) the acquisition of or investment in any business involved in the ownership or operation of containerships of larger than 2,500 TEUs or any drybulk carriers. Notwithstanding these restrictions, if our independent directors decline the opportunity to acquire any such containerships or to acquire or invest in any such business, our chief executive officer will have the right to make, directly or indirectly, any such acquisition or investment during the four-month period following such decision by our independent directors, so long as such acquisition or investment is made on terms no more favorable than those offered to us. In this case, our chief executive officer and our manager will be permitted to provide management services to such vessels. In connection with our investment in Gemini in 2015, these restrictions were waived, with the approval of our independent directors, with respect to containerships acquired by Gemini. The arrangement approved by a committee of independent directors in 2014, described in "Item 7. Major Shareholders and Related Party Transactions—Related Party Transactions—Non-Competition", which lifted these restrictions, subject to certain limitations, while the restrictions in our Bank Agreement continue to apply to us in their current form, also remains in effect.
        Danaos Shipping provides us with administrative, technical and certain commercial management services under a management agreement whose initial term expired at the end of 2008. The management agreement automatically renews for a one-year period if we do not provide 12 months' notice of termination and the fees payable for each renewal period are adjusted by agreement between us and our manager. For 2016 our manager will receive the following fees (i) a fee of $850 per day, (ii) a fee of $425 per vessel per day for vessels on bareboat charter, pro rated for the number of calendar days we own each vessel, (iii) a fee of $850 per vessel per day for vessels other than those on bareboat charter, pro rated for the number of calendar days we own each vessel, (iv) a fee of 1.25% on all freight, charter hire, ballast bonus and demurrage for each vessel, (v) a fee of 0.5% based on the contract price of any vessel bought or sold by it on our behalf, excluding newbuilding contracts, and (vi) a flat fee of $725,000 per newbuilding vessel, if any, which is capitalized, for the on premises supervision of any newbuilding contracts by selected engineers and others of its staff. In addition, from January 1, 2013 to April 30, 2015, our Manager provided us with the services of our Chief Executive Officer, Chief Operating Officer, Chief Financial Officer and Deputy Chief Operating Officer for an annual fee. We have directly employed our executive officers from May 1, 2015.
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 Competition
        We operate in markets that are highly competitive and based primarily on supply and demand. Generally, we compete for charters based upon price, customer relationships, operating expertise, professional reputation and size, age and condition of the vessel. Competition for providing containership services comes from a number of experienced shipping companies. In the containership sector, these companies include Zodiac Maritime, Seaspan Corporation and Costamare Inc. A number of our competitors in the containership sector have been financed by the German KG (Kommanditgesellschaft) system, which was based on tax benefits provided to private investors. While the German tax law has been amended to significantly restrict the tax benefits available to taxpayers who invest in such entities after November 10, 2005, the tax benefits afforded to all investors in the KG-financed entities will continue to be significant and such entities may continue to be attractive investments. These tax benefits allow these KG-financed entities to be more flexible in offering lower charter rates to liner companies.
        The containership sector of the international shipping industry is characterized by the significant time necessary to develop the operating expertise and professional reputation necessary to obtain and retain customers and, in the past, a relative scarcity of secondhand containerships, which necessitated reliance on newbuildings which can take a number of years to complete. We focus on larger TEU capacity containerships, which we believe have fared better than smaller vessels during global downturns in the containership sector. We believe larger containerships, even older containerships if well maintained, provide us with increased flexibility and more stable cash flows than smaller TEU capacity containerships.
 Crewing and Employees
        Since May 1, 2015, we have directly employed our Chief Executive Officer, our Chief Operating Officer, our Chief Financial Officer and our Deputy Chief Operating Officer, whose services had been provided to us under our Management Agreement with our Manager, Danaos Shipping, from January 1, 2013 to April 30, 2015. As of December 31, 2015, 1,223 people served on board the vessels in our fleet and Danaos Shipping, our manager, employed 147 people, all of whom were shore-based. In addition, our manager is responsible for recruiting, either directly or through a crewing agent, the senior officers and all other crew members for our vessels and is reimbursed by us for all crew wages and other crew relating expenses. We believe the streamlining of crewing arrangements through our manager ensures that all of our vessels will be crewed with experienced crews that have the qualifications and licenses required by international regulations and shipping conventions.
 Permits and Authorizations
        We are required by various governmental and other agencies to obtain certain permits, licenses and certificates with respect to our vessels. The kinds of permits, licenses and certificates 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 age of a vessel. All permits, licenses and certificates currently required to permit our vessels to operate 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.
 Inspection by Classification Societies
        Every seagoing 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 of the classification society and complies with applicable rules and regulations of the vessel's country of registry and the international conventions of which that country is a member.
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In addition, where surveys are required by international conventions and corresponding laws and ordinances of a flag state, the classification society will undertake them on application or by official order, acting on behalf of the authorities concerned.
        The classification society also undertakes on 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 and/or to the regulations of the country concerned.
        For maintenance of the class, regular and extraordinary surveys of hull and machinery, including the electrical plant, and any special equipment classed are required to be performed as follows:
        Annual Surveys.     For seagoing ships, annual surveys are conducted for the hull and the machinery, including the electrical plant, and where applicable, on 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 two and one-half years after commissioning and each class renewal. Intermediate surveys may be carried out on the occasion of the second or third annual survey.
        Class Renewal Surveys.     Class renewal surveys, also known as special surveys, are carried out on the ship's hull and machinery, including the electrical plant, and on any special equipment classed at the intervals indicated by the character of classification for the hull. During the special survey, the vessel is thoroughly examined, including audio-gauging to determine the thickness of the steel structures. Should the thickness be found to be less than class requirements, the classification society would prescribe steel renewals. The classification society may grant an one-year grace period for completion of the special survey. Substantial amounts of funds may have to be spent for steel renewals to pass a special survey if the vessel experiences excessive wear and tear. In lieu of the special survey every four or five years, depending on whether a grace period is granted, a shipowner has the option of arranging with the classification society for the vessel's hull or machinery to be on a continuous survey cycle, in which every part of the vessel 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. This process is referred to as continuous class renewal.
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        The following table lists the next drydockings and special surveys scheduled for the vessels in our current containership fleet:

					
Vessel Name* 	 	Next Survey	 	Next Drydocking	
Amalia C	 	March 2018	 	March 2018	
Danae C (ex Niledutch Palanca)	 	January 2021	 	August 2018	
Dimitris C	 	March 2016	 	March 2016	
MSC Zebra	 	November 2016	 	October 2019	
Hyundai Progress	 	February 2018	 	February 2018	
Hyundai Highway	 	March 2018	 	March 2018	
Hyundai Bridge	 	March 2018	 	March 2018	
CMA CGM Musset	 	March 2020	 	September 2017	
CMA CGM Nerval	 	May 2020	 	November 2017	
Hanjin Buenos Aires	 	February 2020	 	November 2017	
Zim Rio Grande	 	December 2020	 	December 2020	
Zim Sao Paolo	 	September 2018	 	March 2016	
CMA CGM Rabelais	 	July 2020	 	June 2018	
Hanjin Santos	 	April 2020	 	January 2018	
CMA CGM Racine	 	August 2020	 	February 2018	
OOCL Istanbul	 	May 2018	 	May 2016	
CSCL Pusan	 	August 2021	 	September 2019	
Hanjin Versailles	 	February 2018	 	February 2018	
Zim Monaco	 	January 2019	 	July 2016	
CSCL Le Havre	 	March 2019	 	March 2019	
Deva	 	March 2019	 	March 2019	
SNL Colombo	 	September 2019	 	September 2016	
OOCL Novorossiysk	 	March 2019	 	September 2016	
Derby D	 	April 2019	 	October 2016	
Hanjin Algeciras	 	August 2018	 	August 2018	
Zim Luanda	 	June 2019	 	December 2016	
CSCL Europe	 	August 2019	 	August 2016	
CSCL America	 	November 2019	 	March 2016	
CMA CGM Moliere	 	September 2019	 	July 2022	
YM Singapore	 	September 2019	 	July 2017	
Hanjin Germany	 	March 2016	 	September 2018	
Hanjin Italy	 	April 2016	 	October 2018	
Hanjin Constantza	 	April 2016	 	October 2018	
Hanjin Greece	 	May 2016	 	November 2018	
CMA CGM Attila	 	July 2016	 	January 2019	
CMA CGM Tancredi	 	August 2016	 	February 2019	
CMA CGM Bianca	 	October 2016	 	April 2019	
CMA CGM Samson	 	December 2016	 	June 2019	
CMA CGM Melisande	 	February 2017	 	August 2019	
Hyundai Smart	 	May 2017	 	November 2019	
Hyundai Together	 	February 2017	 	August 2019	
Hyundai Tenacity	 	March 2017	 	September 2019	
Priority	 	June 2017	 	September 2019	
Performance	 	March 2017	 	December 2019	
Hyundai Speed	 	June 2017	 	December 2019	
Hyundai Ambition	 	June 2017	 	January 2020	
Hyundai Vladivostok	 	July 2017	 	July 2017	
Hyundai Advance	 	October 2017	 	October 2017	
YM Seattle	 	September 2017	 	June 2019	
Hyundai Stride	 	September 2017	 	September 2017	
Hyundai Future	 	September 2017	 	September 2017	
YM Vancouver	 	November 2017	 	November 2020	
Hyundai Sprinter	 	December 2017	 	December 2017	

*
Does not include vessels owned by Gemini
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        All areas subject to surveys as defined by the classification society are required to be surveyed at least once per class period, unless shorter intervals between surveys are otherwise prescribed. The period between two subsequent surveys of each area must not exceed five years. Vessels under bareboat charter, such as the YM Mandate , and YM Maturity , are drydocked by their charterers.
        Most vessels are also drydocked every 30 to 36 months for inspection of their underwater parts and for repairs related to such inspections. If any defects are found, the classification surveyor will issue a "recommendation" which must be rectified by the ship-owner within prescribed time limits.
        Most 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. All of our vessels are certified as being "in class" by Lloyd's Register of Shipping, Bureau Veritas, NKK, Det Norske Veritas & Germanischer Lloyd and the Korean Register of Shipping.
 Risk of Loss and Liability Insurance
 General
        The operation of any vessel includes risks such as mechanical failure, collision, property loss, cargo loss or damage and business interruption due to political circumstances in foreign countries, hostilities and labor strikes. In addition, there is always an inherent possibility of marine disaster, including oil spills and other environmental mishaps, and the liabilities arising from owning and operating vessels in international trade. The U.S. Oil Pollution Act of 1990, or 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 shipowners and operators trading in the United States market.
        While we maintain hull and machinery insurance, war risks insurance, protection and indemnity coverage for our containership fleet in amounts that we believe to be prudent to cover normal risks in our operations, we may not be able to maintain this level of coverage throughout a vessel's useful life. Furthermore, while we believe that our insurance coverage will be 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.
        Dr. John Coustas, our chief executive officer, is the Deputy Chairman of the Board of Directors of The Swedish Club, our primary provider of insurance, including a substantial portion of our hull & machinery, war risk and protection and indemnity insurance.
 Hull & Machinery, Loss of Hire and War Risks Insurance
        We maintain marine hull and machinery and war risks insurance, which covers the risk of particular average, general average, 4/4ths collision liability, contact with fixed and floating objects (FFO) and actual or constructive total loss in accordance with the Nordic Plan for all of our vessels. Our vessels will each be covered up to at least their fair market value after meeting certain deductibles per incident per vessel.
        We carry a minimum loss of hire coverage only with respect to the CSCL America and the CSCL Europe , to cover standard requirements of KEXIM and the CSCL Pusan and CSCL Le Havre , to cover standard requirements of KEXIM and ABN Amro, the banks providing financing for our acquisition of these vessels. We do not and will not obtain loss of hire insurance covering the loss of revenue during extended off-hire periods for the other vessels in our fleet, other than with respect to any period during which our vessels are detained due to incidents of piracy, because we believe that this type of coverage is not economical and is of limited value to us, in part because historically our fleet has had a limited number of off-hire days.
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 Protection and Indemnity Insurance
        Protection and indemnity ("P&I") insurance provides insurance cover to its Members in respect of liabilities, costs or expenses incurred by them in their capacity as owner or operator of the respective entered ship and arising out of an event during the period of insurance as a direct consequence of the operation of the ship. This includes third-party liability, crew liability and other related expenses resulting from the injury or death of crew, passengers and other third parties, the loss or damage to cargo, and except where the cover is provided in the hull and machinery policy, also third-party claims arising from collision with other vessels and damage to other third-party property. Indemnity cover is also provided for liability for the discharge or escape of oil or other substance, or threat of escape of such substances. Other liabilities which include salvage, towing, wreck removal and an omnibus provision are also included. Our protection and indemnity insurance, is provided by mutual protection and indemnity associations, or P&I associations entered in the International Group of P&I Associations, who together provide poolable cover to almost unlimited capacity (about US$4.3 billion per event) except where otherwise limited by International Convention or the relevant domestic law.
        Our protection and indemnity insurance coverage in accordance with the International Group of P&I Club Agreement for pollution will be US$1.0 billion per event. Our P&I Excess war risk coverage limit is US$500.0 million and in respect of certain war and terrorist risks the liabilities arising from Bio-Chemical etc., the limit is US$30.0 million. For passengers and seaman risks, the limit is US$3.0 billion, with a sub- limit of US$2.0 billion for passenger claims only. The thirteen P&I associations that comprise the International Group insure approximately 90% of the world's commercial blue-water tonnage and have entered into a pooling agreement to reinsure each association's liabilities. As a member of a P&I association, that is a member of the International Group, we will be subject to calls payable to the associations based inter-alia on the International Group's claim records, as well as the individual claims' records of all other members of the analogous individual associations and their performance. If our insurance providers are not able to obtain reinsurance for port calls in Iran, due to continuing U.S. primary sanctions applicable to U.S. persons facilitating transactions involving Iran, we may have to pay additional premiums with respect to any port calls that our charterers direct our vessels to make in Iran.
 Environmental and Other Regulations
        Government regulation significantly affects the ownership and operation of our vessels. They are subject to international conventions, national, state and local laws, regulations and standards in force in international waters and the countries in which our vessels may operate or are registered, including those governing the management and disposal of hazardous substances and wastes, the cleanup of oil spills and other contamination, air emissions, wastewater discharges and ballast water management. These laws and regulations include OPA, the U.S. Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), the U.S. Clean Water Act, the International Convention for Prevention of Pollution from Ships, regulations adopted by the IMO and the European Union, various volatile organic compound air emission requirements and various Safety of Life at Sea ("SOLAS") amendments, as well as other regulations described below. Compliance with these laws, regulations and other requirements entails significant expense, including vessel modifications and implementation of certain operating procedures.
        A variety of governmental and private entities subject our vessels to both scheduled and unscheduled inspections. These entities include the local port authorities (U.S. Coast Guard, harbor master or equivalent), classification societies, flag state administration (country of registry), charterers and, particularly, terminal operators. Certain of these entities require us to obtain permits, licenses, certificates and financial assurances 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 operation of one or more of our vessels.
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        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 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. We believe that the operation of our vessels is in substantial compliance with applicable environmental laws and regulations. Because such laws and regulations are frequently changed and may impose increasingly stricter requirements, any future requirements may limit our ability to do business, increase our operating costs, force the early retirement of some 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. In addition, a future serious marine incident that causes significant adverse environmental impact, such as the 2010 Deepwater Horizon oil spill, could result in additional legislation or regulation that could negatively affect our profitability.
 Environmental Regulation—International Maritime Organization ("IMO")
        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 that are designed to reduce pollution in international waters, both from accidents and from routine operations. These regulations address oil discharges, ballasting and unloading operations, sewage, garbage, and air emissions. For example, Annex III of the International Convention for the Prevention of Pollution from Ships, or 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 September 1997, the IMO adopted Annex VI to the International Convention for the Prevention of Pollution from Ships to address air pollution from vessels. Annex VI, which came into effect on May 19, 2005, set limits on sulfur oxide ("SOx") and NOx emissions from vessels and prohibited deliberate emissions of ozone depleting substances, such as chlorofluorocarbons. Annex VI also included a global cap on the sulfur content of fuel oil and allowed for special areas to be established with more stringent controls on sulfur emissions. Annex VI has been ratified by some, but not all IMO member states, including the Marshall Islands. Pursuant to a Marine Notice issued by the Marshall Islands Maritime Administrator as revised in March 2005, vessels flagged by the Marshall Islands that are subject to Annex VI must, if built before the effective date, obtain an International Air Pollution Prevention Certificate evidencing compliance with Annex VI by the first dry docking after May 19, 2005, but no later than May 19, 2008. All vessels subject to Annex VI and built after May 19, 2005 must also have this Certificate. We have obtained International Air Pollution Prevention certificates for all of our vessels. Amendments to Annex VI regarding particulate matter, NOx and SOx emission standards entered into force in July 2010. The amendments provide for a progressive reduction in SOx emissions from ships, with the global sulfur cap reduced initially to 3.50% (from the current 4.50%), effective from 1 January 2012; then progressively to 0.50%, effective from 1 January 2020, subject to a feasibility review to be completed no later than 2018. The Annex VI amendments also establish tiers of stringent NOx emissions standards for new marine engines, depending on their dates of installation. The United States ratified the amendments, and all vessels subject to Annex VI must comply with the amended requirements when entering U.S. ports or operating in U.S. waters. Additionally, more stringent emission standards apply in coastal areas designated by MEPC as Emission Control Areas (ECAs). The North American ECA, which includes the area extending 200 nautical miles from the Atlantic/Gulf and Pacific Coasts of the United States and Canada, the Hawaiian Islands, and the French territories of St. Pierre and Miquelon, has been enforceable since August 1, 2012. Fuel
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used by vessels operating in the ECA cannot contain more than 1.0% sulfur, dropping to no more than 0.1% sulfur in 2015. NOx after- treatment requirements will apply in 2016. The U.S. Caribbean ECA, which includes the waters of Puerto Rico and the Virgin Islands, became enforceable on January 1, 2014. We may incur costs to install control equipment on our engines in order to comply with the new requirements. Other ECAs may be designated, and the jurisdictions in which our vessels operate may adopt more stringent emission standards independent of IMO.
        The operation of our vessels is also affected by the requirements set forth in the IMO's International Management Code for the Safe Operation of Ships and Pollution Prevention, or the ISM Code, which was adopted in July 1998. The ISM Code requires shipowners and bareboat charterers to develop and maintain an extensive "Safety Management System" 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. This certificate evidences compliance by a vessel's management with code requirements for a Safety Management System. No vessel can obtain a certificate unless its operator has been awarded a document of compliance, issued by each flag state, under the ISM Code. The failure of a shipowner or bareboat charterer to comply with the ISM Code may subject such party to increased liability, decrease available insurance coverage for the affected vessels or result in a denial of access to, or detention in, certain ports. Currently, each of the vessels in our fleet is ISM code-certified. However, there can be no assurance that such certifications will be maintained indefinitely.
        In 2001, the IMO adopted the International Convention on Civil Liability for Bunker Oil Pollution Damage, or the Bunker Convention, which imposes strict liability on ship owners for pollution damage in jurisdictional waters of ratifying states caused by discharges of bunker oil. The Bunker Convention also requires registered owners of ships over a certain size to maintain insurance for pollution damage in an amount equal to the limits of liability under the applicable national or international limitation regime (but not exceeding the amount calculated in accordance with the Convention on Limitation of Liability for Maritime Claims of 1976, as amended). The Bunker Convention entered into force on November 21, 2008. Our entire fleet has been issued a certificate attesting that insurance is in force in accordance with the insurance provisions of the Convention. In jurisdictions where the Bunkers Convention has not been adopted, such as the United States, various legislative schemes or common law govern, and liability is either strict or imposed on the basis of fault.
 Environmental Regulation—The U.S. Oil Pollution Act of 1990 ("OPA")
        OPA established an extensive regulatory and liability regime for the protection and cleanup of the environment from oil spills. It applies to discharges of any oil from a vessel, including discharges of fuel oil and lubricants. OPA affects all owners and operators whose vessels trade in the United States, its territories and possessions or whose vessels operate in U.S. waters, which include the United States' territorial sea and its two hundred nautical mile exclusive economic zone. While we do not carry oil as cargo, we do carry fuel oil (or bunkers) in our vessels, making our vessels subject to the OPA requirements.
        Under OPA, vessel owners, operators and bareboat charterers are "responsible parties" and are jointly, severally and strictly liable (unless the discharge of oil results solely from the act or omission of a third party, an act of God or an act of war) for all containment and clean-up costs and other damages arising from discharges or threatened discharges of oil from their vessels. OPA defines these other damages broadly to include:
•
natural resources damage and the costs of assessment thereof; 

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real and personal property damage;
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•
net loss of taxes, royalties, rents, fees and other lost revenues; 

•
lost profits or impairment of earning capacity due to property or natural resources damage; and 

•
net cost of public services necessitated by a spill response, such as protection from fire, safety or health hazards, and loss of subsistence use of natural resources.
        OPA preserves the right to recover damages under existing law, including maritime tort law.
        OPA liability is limited to the greater of $1,100 per gross ton or $939,800 for non-tank vessels, subject to periodic adjustment by the U.S. Coast Guard (USCG). These limits of liability do not apply if an incident was directly caused by violation of applicable U.S. federal 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.
        OPA requires owners and operators of vessels to establish and maintain with the USCG evidence of financial responsibility sufficient to meet their potential liabilities under the OPA. Under the regulations, vessel owners and operators may evidence their financial responsibility by providing proof of insurance, surety bond, self-insurance, or guaranty, and 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 vessels in the fleet having the greatest maximum liability under OPA. Under the self-insurance provisions, the shipowner or operator must have a net worth and working capital, measured in assets located in the United States against liabilities located anywhere in the world, that exceeds the applicable amount of financial responsibility. We have complied with the USCG regulations by providing a financial guaranty in the required amount.
        OPA 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.
        We currently maintain, for each of our vessels, oil pollution liability coverage insurance in the amount of $1 billion per incident. In addition, we carry hull and machinery and protection and indemnity insurance to cover the risks of fire and explosion. Given the relatively small amount of bunkers our vessels carry, we believe that a spill of oil from the vessels would not be catastrophic. However, under certain circumstances, fire and explosion could result in a catastrophic loss. While we believe that our present 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 exceeded our insurance coverage, it would have a severe effect on us and could possibly result in our insolvency.
        In response to the BP Deepwater Horizon oil spill, a number of bills that could potentially increase or even eliminate the limits of liability under OPA have been introduced in the U.S. Congress. Compliance with any new OPA requirements could substantially impact our costs of operation or require us to incur additional expenses.
        Title VII of the Coast Guard and Maritime Transportation Act of 2004, or the CGMTA, amended OPA to require 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 have an approved response plan for each vessel. The 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 oil from the vessel due to operational activities or casualties. We have approved response plans for each of our vessels.
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 Environmental Regulation—CERCLA
        CERCLA governs spills or releases of hazardous substances other than petroleum or petroleum products. The owner or operator of a ship, vehicle or facility from which there has been a release is liable without regard to fault for the release, and along with other specified parties may be jointly and severally liable for remedial costs. Costs recoverable under CERCLA include cleanup and removal costs, natural resource damages and governmental oversight costs. 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. The USCG's financial responsibility regulations under OPA also require vessels to provide evidence of financial responsibility for CERCLA liability in the amount of $300 per gross ton. As noted above, we have provided a financial guaranty in the required amount to the USCG.
 Environmental Regulation—The Clean Water Act
        The U.S. Clean Water Act, or 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. The CWA also imposes substantial liability for the costs of removal, remediation and damages and complements the remedies available under the more recent OPA and CERCLA, discussed above. Under U.S. Environmental Protection Agency, or EPA, regulations we are required to obtain a CWA permit regulating and authorizing any discharges of ballast water or other wastewaters incidental to our normal vessel operations if we operate within the three-mile territorial waters or inland waters of the United States. The permit, which EPA has designated as the Vessel General Permit for Discharges Incidental to the Normal Operation of Vessels, or VGP, incorporated the then-current U.S. Coast Guard requirements for ballast water management, as well as supplemental ballast water requirements and limits for 26 other specific discharges. Regulated vessels cannot operate in U.S. waters unless they are covered by the VGP. To do so, vessel owners must submit a Notice of Intent, or NOI, at least 30 days before the vessel operates in U.S. waters. To comply with the VGP vessel owners and operators may have to install equipment on their vessels to treat ballast water before it is discharged or implement port facility disposal arrangements or procedures at potentially substantial cost. The VGP also requires states to certify the permit, and certain states have imposed more stringent discharge standards as a condition of their certification. Many of the VGP requirements have already been addressed in our vessels' current ISM Code SMS Plan. As part of a settlement of a lawsuit challenging the VGP, EPA issued a new VGP (2013 VGP) that became effective on December 19, 2013. The 2013 VGP contains numeric effluent limits for ballast water discharges that are expressed as maximum concentrations of living organisms per unit of ballast water volume discharged. These requirements correspond with the IMO's requirements under the International Convention for the Control and Management of Ships' Ballast Water and Sediments, or the BWM Convention, discussed below, and are consistent with the USCG's 2012 ballast water discharge standards described below. The 2013 VGP also includes additional management requirements for non-ballast water discharges and requires the submission of annual reports by all vessels covered by the 2013 VGP. EPA is implementing the 2013 VGP on a staggered basis, depending on the size of a vessel and its first drydocking between January 1, 2014 and January 1, 2016. Vessels that are constructed after December 1, 2013 are immediately subject to the requirements of the 2013 VGP. The ballast water management standards of the 2013 VGP were challenged by the Canadian Shipowners' Association in the U.S. Second Circuit Court of Appeals. The U.S. Second Circuit Court of Appeals ruled on October 5, 2015 that EPA had acted arbitrarily and capriciously with respect to certain of the ballast water provisions in the 2013 VGP. The Court remanded the issue to EPA to either justify its approach in the 2013 VGP or redraft the ballast water sections of the VGP consistent with the Court's ruling. In the meantime, the 2013 VGP will remain in effect. Although there are no USCG-approved ballast water management systems, EPA to date has refused to extend or waive the date for compliance with the ballast water management requirements in
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the 2013 VGP. Instead, EPA will consider why a vessel does not have compliant ballast water management technology if it takes action to enforce the new requirements. We have submitted NOIs for all of our vessels that operate or potentially operate in U.S. waters and have submitted annual reports for all of our covered vessels.
 Environmental Regulation—The Clean Air Act
        The Federal Clean Air Act (CAA) requires the EPA to promulgate standards applicable to emissions of volatile organic compounds and other air contaminants. Our vessels are subject to CAA vapor control and recovery standards for cleaning fuel tanks and conducting other operations in regulated port areas and emissions standards for so-called "Category 3" marine diesel engines operating in U.S. waters. The marine diesel engine emission standards are currently limited to new engines beginning with the 2004 model year. However, on April 30, 2010, EPA adopted more stringent standards for emissions of particulate matter, sulfur oxides, and nitrogen oxides and other related provisions for new Category 3 marine diesel engines installed on vessels registered or flagged in the U.S. We may incur costs to install control equipment on our vessels to comply with the new standards. Several states regulate emissions from vessel vapor control and recovery operations under federally-approved State Implementation Plans. The California Air Resources Board has adopted clean fuel regulations applicable to all vessels sailing within 24 miles of the California coast whose itineraries call for them to enter any California ports, terminal facilities or internal or estuarine waters. Only marine gas oil or marine diesel oil fuels with 0.1% sulfur will be allowed. If new or more stringent requirements relating to marine fuels or emissions from marine diesel engines or port operations by vessels are adopted by EPA or the states, compliance with these regulations could entail significant capital expenditures or otherwise increase the costs of our operations.
 Environmental Regulation—Other Environmental Initiatives
        The EU has also adopted legislation that: requires member states to impose criminal sanctions for certain pollution events, such as the unauthorized discharge of tank washings. The European Parliament recently endorsed a European Commission proposal to criminalize certain pollution discharges from ships. If the proposal becomes formal EU law, it will affect the operation of vessels and the liability of owners for oil and other pollutant discharges. It is difficult to predict what legislation, if any, may be promulgated by the European Union or any other country or authority.
        The Paris Memorandum of Understanding on Port State Control (Paris MoU) to which 27 nations are party adopted the "New Inspection Regime" (NIR) to replace the existing Port State Control system, effective January 1, 2011. The NIR is a significant departure from the previous system, as it is a risk based targeting mechanism that will reward quality vessels with a smaller inspection burden and subject high-risk ships to more in-depth and frequent inspections. The inspection record of a vessel, its age and type, the Voluntary IMO Member State Audit Scheme, and the performance of the flag State and recognized organizations are used to develop the risk profile of a vessel.
        The U.S. National Invasive Species Act, or 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 ships in foreign ports. Under NISA, the USCG 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 ship, or by using environmentally sound alternative ballast water management methods approved by the USCG. (However, mid-ocean ballast exchange is mandatory for ships heading to the Great Lakes or Hudson Bay, or vessels engaged in the foreign export of Alaskan North Slope crude oil.) Mid-ocean ballast exchange is the primary method for compliance with the USCG regulations, since holding ballast water can prevent ships from performing cargo operations upon arrival in the United States, and alternative methods are still under development. Vessels that are unable to conduct
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mid-ocean ballast exchange due to voyage or safety concerns may discharge minimum amounts of ballast water (in areas other than the Great Lakes and the Hudson River), provided that they comply with record keeping requirements and document the reasons they could not follow the required ballast water management requirements. On March 23, 2012 the USCG adopted ballast water discharge standards that set maximum acceptable discharge limits for living organisms and established standards for ballast water management systems. The regulations became effective on June 21, 2012 and were phased in between January 1, 2014 and January 1, 2016 for existing vessels, depending on the size of their ballast water tanks and their next drydocking date. Since no ballast water treatment systems have been approved by the USCG, the agency has, upon request, waived compliance for vessels subject to the yet-to-be established standards for ballast water management systems; we have requested and obtained such a waiver from the USCG for all our vessels, which are scheduled for dry-docking in 2016. Additionally, we have requested and not yet obtained such a waiver from the USCG for our vessels, which are scheduled for dry-docking in 2017. Although the USCG ballast water management requirements are consistent with the requirements in EPA's 2013 VGP, the USCG intends to review the practicability of implementing even more stringent ballast water discharge standards. In the past absence of federal standards, states enacted legislation or regulations to address invasive species through ballast water and hull cleaning management and permitting requirements. Michigan's ballast water management legislation was upheld by the Sixth Circuit Court of Appeals and California enacted legislation extending its ballast water management program to regulate the management of "hull fouling" organisms attached to vessels and adopted regulations limiting the number of organisms in ballast water discharges. Other states may proceed with the enactment of requirements similar to those of California and Michigan or the adoption of requirements that are more stringent than the EPA and USCG requirements. We could incur additional costs to comply with additional USCG or state ballast water management requirements.
        At the international level, the IMO adopted the BWM Convention in February 2004. The Convention's implementing regulations call for a phased introduction of mandatory ballast water exchange requirements, to be replaced in time with mandatory concentration limits. The BWM Convention will not enter into force until 12 months after it has been adopted by 30 states, the combined merchant fleets of which represent not less than 35% of the gross tonnage of the world's merchant shipping. The Convention has not yet entered into force because a sufficient number of states have failed to adopt it. However, in March 2010 MEPC passed a resolution urging the ratification of the Convention and calling upon those countries that have already ratified it to encourage the installation of ballast water management systems. Many of the implementation dates originally contained in the BWM Convention have already passed, so that once the convention enters into force, the period for installation of mandatory ballast water exchange requirements would be very short, with several thousand ships per year needing to install the systems. Consequently, the IMO Assembly passed a resolution in December 2013 revising the dates for implementation of the ballast water management requirements so that they are triggered by the entry into force date. In effect, this makes all vessels constructed before the entry into force date "existing" vessels, allowing for the installation of ballast water management systems on such vessels at the first renewal survey following entry into force of the BWM Convention.
        If the mid-ocean ballast exchange is made mandatory throughout the United States or at the international level, or if ballast water treatment requirements or options are instituted, the cost of compliance could increase for ocean carriers. Although we do not believe that the costs of compliance with a mandatory mid-ocean ballast exchange would be material, it is difficult to predict the overall impact of such a requirement on our business.
        The 2005 Kyoto Protocol to the United Nations Framework Convention on Climate Change required adopting countries to implement national programs to reduce emissions of certain greenhouse gases, but emissions from international shipping are not subject to the soon to expire Kyoto Protocol.
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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, restrictions on shipping emissions are likely to continue to be considered and a new treaty may be adopted in the future that includes restrictions on shipping emissions. The IMO's MEPC adopted two new sets of mandatory requirements to address greenhouse gas emissions from vessels at its July 2011 meeting. The EEDI establishes a minimum energy efficiency level per capacity mile and will be applicable to new vessels. The Ship Energy Efficiency Management Plan is applicable to currently operating vessels of 400 metric tons and above and we are in compliance. These requirements entered into force in January 2013 and could cause us to incur additional compliance costs in the future. The IMO is also considering the development of market based mechanisms to reduce greenhouse gas emissions from vessels, as well as sustainable development goals for marine transportation, but it is impossible to predict the likelihood that such measures might be adopted or their potential impacts on our operations at this time. In 2015, the EU adopted a regulation requiring large vessels (over 5,000 gross tons) calling at EU ports to monitor, report and verify their carbon dioxide emissions, beginning in January 2018. Negotiators from the European Parliament and the European Union Council provisionally adopted rules to implement this strategy in November 2014 and the European Parliament and Council of Ministers are expected to adopt the regulations. The U.S. EPA Administrator issued a finding that greenhouse gases threaten the public health and safety and has adopted regulations relating to the control of greenhouse gas emissions from certain mobile sources and proposed regulations that would restrict greenhouse gas emissions from certain large stationary sources. Although the EPA findings and regulations do not extend to vessels and vessel engines, the EPA is separately considering a petition from the California Attorney General and environmental groups to regulate greenhouse gas emissions from ocean-going vessels under the CAA. Any passage of climate control legislation or other regulatory initiatives by the IMO, the EU or individual countries in which we operate or any international treaty adopted to succeed the Kyoto Protocol could require us to make significant financial expenditures or otherwise limit our operations that we cannot predict with certainty at this time.
 Vessel Security Regulations
        Since the terrorist attacks of September 11, 2001, there have been a variety of initiatives intended to enhance vessel security. On November 25, 2002, the U.S. Maritime Transportation Security Act of 2002 (MTSA) came into effect. To implement certain portions of the MTSA, in July 2003, the U.S. Coast Guard issued regulations requiring the implementation of certain security requirements aboard vessels operating in waters subject to the jurisdiction of the United States. Similarly, in December 2002, amendments to SOLAS created a new chapter of the convention dealing specifically with maritime security. The new chapter went 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 (ISPS) Code.
        The ISPS Code is designed to protect ports and international shipping against terrorism. To trade internationally a vessel must obtain an International Ship Security Certificate, or ISSC, from a recognized security organization approved by the vessel's flag state. To obtain an ISSC a vessel must meet certain requirements, including:
•
on-board installation of automatic identification systems to enhance vessel-to-vessel and vessel-to-shore communications; 

•
on-board installation of ship security alert systems that do not sound on the vessel but alert the authorities on shore; 

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the development of vessel security plans;
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identification numbers to be permanently marked on a vessel's hull; 

•
a continuous synopsis record to be maintained on board showing the vessel's history, including the vessel ownership, flag state registration, and port registrations; and 

•
compliance with flag state security certification requirements.
        In addition, as of January 1, 2009, every company and/or registered owner is required to have an identification number which conforms to the IMO Unique Company and Registered Owner Identification Number Scheme. Our Manager has also complied with this amendment to SOLAS XI-1/3-1.
        The U.S. Coast Guard regulations are intended to align with international maritime security standards and exempt non-U.S. vessels that have a valid ISSC attesting to the vessel's compliance with SOLAS security requirements and the ISPS Code from the requirement to have a U.S. Coast Guard approved vessel security plan. We have implemented the various security measures addressed by the MTSA, SOLAS and the ISPS Code and have ensured that our vessels are compliant with all applicable security requirements. Our fleet, as part of our continuous improvement cycle, is reviewing vessels SSPs and is maintaining best Management practices during passage through security risk areas.
 Seasonality
        Our containerships primarily operate under multi-year charters and therefore are not subject to the effect of seasonal variations in demand.
 Properties
        We have no freehold or leasehold interest in any real property. We occupy space at 14 Akti Kondyli, 185-45 Piraeus, Greece that is owned by our manager, Danaos Shipping, and which is provided to us as part of the services we receive under our management agreement.
Item 4A.    Unresolved Staff Comments
        Not applicable.
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—Risk Factors" and elsewhere in this annual report, our actual results may differ materially from those anticipated in these forward-looking statements.
 Overview
        Our business is to provide international seaborne transportation services by operating vessels in the containership sector of the shipping industry. As of February 29, 2016, we had a fleet of 55 containerships aggregating 329,588 TEU, making us among the largest containership charter owners in the world, based on total TEU capacity. Gemini, in which we hold a 49% minority equity interest, owned four additional containerships aggregating 23,998 TEU in capacity, as of February 29, 2016. We do not consolidate Gemini's results of operations and account for our minority equity interest under the equity method of accounting, which is recorded under "Equity loss on investment" in our consolidated statements of operations.
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        We primarily deploy our containerships on multi-year, fixed-rate charters to take advantage of the stable cash flows and high utilization rates typically associated with multi-year charters. As of February 29, 2016, 53 containerships in our fleet were employed on time charters and two containerships were employed on bareboat charters. Gemini has employed two of its containerships on time charters, while two of its containerships are currently not employed. Our containerships are generally employed on multi-year charters to large liner companies that charter-in vessels on a multi-year basis as part of their business strategies. As of February 29, 2016, our diverse group of customers in the containership sector included China Shipping, CMA-CGM, Hanjin, Hyundai, MSC, Niledutch, Yang Ming, ZIM Israel Integrated Shipping Services, NYK, Hapag Lloyd and Maersk Line and, for Gemini, NYK.
        The average number of containerships in our fleet for the years ended December 31, 2015, 2014 and 2013 was 56.0, 55.9 and 61.0, respectively.
 Purchase Options
        The charters with respect to the CMA CGM Moliere , the CMA CGM Musset , the CMA CGM Nerval , the CMA CGM Rabelais and the CMA CGM Racine include an option for the charterer, CMA-CGM, to purchase the vessels eight years after the commencement of the respective charters, which will fall in September 2017, March 2018, May 2018, July 2018 and August 2018, respectively, each for $78.0 million. In each case, the option to purchase the vessel must be exercised 15 months prior to the acquisition dates described in the preceding sentence. The $78.0 million option prices reflect an estimate, made at the time of entry into the applicable charter, of the fair market value of the vessels at the time we would be required to sell the vessels upon exercise of the options. If CMA-CGM were to exercise these options with respect to any or all of these vessels, the expected size of our containership fleet would be reduced, and as a result our anticipated level of revenues would be reduced.
 Our Manager
        Our operations are managed by Danaos Shipping, our manager, under the supervision of our officers and our board of directors. We believe our manager has built a strong reputation in the shipping community by providing customized, high-quality operational services in an efficient manner for both new and older vessels. We have a management agreement pursuant to which our manager and its affiliates provide us and our subsidiaries with technical, administrative and certain commercial services. The initial term of this agreement expired on December 31, 2008, and the agreement now renews each year for a one-year term for the next 12 years thereafter unless we give a one-year notice of non-renewal (subject to certain termination rights described in "Item 7. Major Shareholders and Related Party Transactions"). Our manager is ultimately owned by Danaos Investments Limited as Trustee of the 883 Trust, which we refer to as the Coustas Family Trust. Danaos Investments Limited is the trustee of the Coustas Family Trust, of which Dr. Coustas and other members of the Coustas family are beneficiaries. The Coustas Family Trust is also our largest stockholder.
 Factors Affecting Our Results of Operations
        Our financial results are largely driven by the following factors:
•
Number of Vessels in Our Fleet.   The number of vessels in our fleet, and their TEU capacity, is the primary factor in determining the level of our revenues. Aggregate expenses also increase as the size of our fleet increases. Vessel acquisitions and dispositions will have a direct impact on the number of vessels in our fleet. From time to time we have sold, generally older, vessels in our fleet. For example, in January 2016 we sold one of our older vessels, the Federal, and in 2014 we entered into an agreement with the lenders under the HSH Nordbank AG-Aegean
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Baltic Bank-Piraeus Bank credit facility, under which we sold five of our older vessels, the Marathonas , the Messologi , the Mytilini , the Commodore and the Duka and we acquired two secondhand 6,402 TEU containerships built in 2002, the Priority and the Performance . Five of our vessels, which have an aggregate capacity of 32,500 TEUs, are subject to arrangements pursuant to which the charterer has options to purchase the vessels at stipulated prices on the eighth anniversaries of the charters which fall in September 2017, March 2018, May 2018, July 2018 and August 2018, respectively. If any of these purchase options were to be exercised, the expected size of our containership fleet would be reduced, and as a result our anticipated level of revenues would be reduced.
•
Charter Rates.   Aside from the number of vessels in our fleet, the charter rates we obtain for these vessels are the principal drivers of our revenues. Charter rates are based primarily on demand for capacity as well as the available supply of containership capacity at the time we enter into the charters for our vessels. As a result of macroeconomic conditions affecting trade flow between ports served by liner companies and economic conditions in the industries which use liner shipping services, charter rates can fluctuate significantly. Although the multi-year charters on which we deploy our containerships make us less susceptible to cyclical containership charter rates than vessels operated on shorter-term charters, we are exposed to varying charter rate environments when our chartering arrangements expire and we seek to deploy our containerships under new charters. The staggered maturities of our containership charters also reduce our exposure to any stage in the shipping cycle. As of February 29, 2016, two vessels owned by Gemini were not employed and the charters for nine of our existing vessels are scheduled to expire between March 2016 and October 2016. With the prevailing low charter rate levels, we expect that we will have to re-charter some of these vessels at the existing low spot charter rates. 

•
Utilization of Our Fleet.   Due to the multi-year charters under which they are operated, our containerships have consistently been deployed at or near full utilization. During 2015, our fleet utilization increased to 99.0% compared to 97.5% in 2014. In addition, the amount of time our vessels spend in drydock undergoing repairs or undergoing maintenance and upgrade work affects our results of operations. Historically, our fleet has had a limited number of off-hire days. For example, there were 153 total off-hire days for our entire fleet during 2015 other than for scheduled drydockings and special surveys and excluding laid up vessels compared to 181 total off-hire days for our entire fleet during 2014 other than for scheduled drydockings and special surveys and excluding laid up vessels. However, an increase in annual off-hire days could reduce our utilization. The efficiency with which suitable employment is secured, the ability to minimize off-hire days and the amount of time spent positioning vessels also affects our results of operations. If the utilization patterns of our containership fleet changes our financial results would be affected. 

•
Expenses.   Our ability to control our fixed and variable expenses, including those for commission expenses, crew wages and related costs, the cost of insurance, expenses for repairs and maintenance, the cost of spares and consumable stores, tonnage taxes and other miscellaneous expenses also affects our financial results. In addition, factors beyond our control, such as developments relating to market premiums for insurance and the value of the U.S. dollar compared to currencies in which certain of our expenses, primarily crew wages, are denominated can cause our vessel operating expenses to increase.
        In addition to those factors described above affecting our operating results, our net income is significantly affected by our financing arrangements, including our interest rate swap arrangements, and, accordingly, prevailing interest rates and the interest rates and other financing terms we may obtain in the future.
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        The following table presents the contracted utilization of our operating fleet as of December 31, 2015.

																				
 	 	2016	 	2017 - 2018	 	2019 - 2020	 	2021 - 2025	 	2026 - 2028	 	Total	 	
Contracted revenue (in millions)(1)	 	 $	524.7	 	 $	936.5	 	 $	785.8	 	 $	870.6	 	 $	42.5	 	 $	3,160.1	 	
Number of vessels whose charters are set to expire in the respective period(2)	 	 	9	 	 	11	 	 	12	 	 	21	 	 	2	 	 	55	 	
TEUs on expiring charters in the respective period	 	 	46,652	 	 	39,362	 	 	47,718	 	 	182,856	 	 	13,000	 	 	329,588	 	
Contracted Operating(3) days	 	 	17,646	 	 	28,763	 	 	22,060	 	 	19,234	 	 	1,583	 	 	89,286	 	
Total Operating(3) days	 	 	19,920	 	 	39,670	 	 	39,694	 	 	98,824	 	 	55,380	 	 	253,488	 	
Contracted Operating days/Total Operating days	 	 	88.6	%	 	72.5	%	 	55.6	%	 	19.5	%	 	2.9	%	 	35.2	%	

(1)
Annual revenue calculations are based on an assumed 364 revenue days per annum, based on contracted charter rates from our current charter agreements. Additionally, the revenues above reflect an estimate of off-hire days to perform periodic maintenance. If actual off-hire days are greater than estimated, these would decrease the level of revenues above. Although these revenues are based on contractual charter rates, any contract is subject to performance by our counterparties and us. See "—Operating Revenues," including the contracted revenue table presented therein, for more information regarding our contracted revenues.

(2)
Refers to the incremental number of vessels with charters expiring within the respective period.

(3)
Operating days calculations are based on an assumed 364 operating days per annum. Additionally, the operating days above reflect an estimate of off-hire days to perform periodic maintenance. If actual off-hire days are greater than estimated, these would decrease the amount of operating days above.
 Operating Revenues
        Our operating revenues are driven primarily by the number of vessels in our fleet, the number of operating days during which our vessels generate revenues and the amount of daily charter hire that our vessels earn under time charters which, in turn, are affected by a number of factors, including our decisions relating to vessel acquisitions and dispositions, the amount of time that we spend positioning our vessels, the amount of time that our vessels spend in drydock undergoing repairs, maintenance and upgrade work, the age, condition and specifications of our vessels and the levels of supply and demand in the containership charter market. Vessels operating in the spot market generate revenues that are less predictable but can allow increased profit margins to be captured during periods of improving charter rates.
        Revenues from multi-year period charters comprised substantially all of our revenues for the years ended December 31, 2015, 2014 and 2013. The revenues relating to our multi-year charters will be affected by any additional vessels subject to multi-year charters we may acquire in the future, as well as by the disposition of any such vessel in our fleet. Our revenues will also be affected if any of our charterers cancel a multi-year charter or fail to perform at existing contracted rates. Our multi-year charter agreements have been contracted in varying rate environments and expire at different times. Generally, we do not employ our vessels under voyage charters under which a shipowner, in return for a fixed sum, agrees to transport cargo from one or more loading ports to one or more destinations and assumes all vessel operating costs and voyage expenses.
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        Our expected revenues as of December 31, 2015, based on contracted charter rates, from our charter arrangements for our containerships is shown in the table below. Although these expected revenues are based on contracted charter rates, any contract is subject to performance by the counterparties. If the charterers, some of which are currently facing substantial financial pressure, are unable or unwilling to make charter payments to us, our results of operations and financial condition will be materially adversely affected. See "Item 3. Key Information—Risk Factors—We are dependent on the ability and willingness of our charterers to honor their commitments to us for all of our revenues and the failure of our counterparties to meet their obligations under our charter agreements could cause us to suffer losses or otherwise adversely affect our business."

 Contracted Revenue from Multi-Year Charters as of December 31, 2015(1)
(Amounts in millions of U.S. dollars)

																				
Number of Vessels(2) 	 	2016	 	2017 - 2018	 	2019 - 2020	 	2021 - 2025	 	2026 - 2028	 	Total	 	
55	 	 $	524.7	 	 $	936.5	 	 $	785.8	 	 $	870.6	(3)	 $	42.5	 	 $	3,160.1	 	

(1)
Annual revenue calculations are based on an assumed 364 revenue days per annum representing contracted revenues, based on contracted charter rates from our current charter agreements. Although these revenues are based on contractual charter rates, any contract is subject to performance by the counter parties and us. Additionally, the revenues above reflect an estimate of off-hire days to perform periodic maintenance. If actual off-hire days are greater than estimated, these would decrease the level of revenues above.

(2)
Includes the CMA CGM Moliere delivered to us in 2009 and the CMA CGM Musset , the CMA CGM Nerval , the CMA CGM Rabelais and the CMA CGM Racine , delivered to us in 2010, which are each subject to options for the charterer to purchase the vessels eight years after the commencement of the respective charters, which fall in September 2017, March 2018, May 2018, July 2018 and August 2018, respectively, each for $78.0 million. The $78.0 million option prices reflected, at the time we entered into the applicable charter, an estimate of the fair market value of the vessels at the time we would be required to sell the vessels upon exercise of the options.

(3)
An aggregate of $242.5 million ($48.5 million with respect to each vessel) of revenue with respect to the CMA CGM Moliere , the CMA CGM Musset , the CMA CGM Nerval , the CMA CGM Rabelais and the CMA CGM Racine , following September 2017, March 2018, May 2018, July 2018 and August 2018, respectively, is included in the table because we cannot predict the likelihood of these options being exercised.
        We generally do not charter our containerships in the spot market. Vessels operating in the spot market generate revenues that are less predictable than vessels on period charters, although this chartering strategy can enable vessel owners to capture increased profit margins during periods of improvements in charter rates. Deployment of vessels in the spot market creates exposure, however, to the risk of declining charter rates, as spot rates may be higher or lower than those rates at which a vessel could have been time chartered for a longer period.
 Voyage Expenses
        Voyage expenses include port and canal charges, bunker (fuel) expenses (bunker costs are normally covered by our charterers, except in certain cases such as vessel re-positioning), address commissions and brokerage commissions. Under multi-year time charters and bareboat charters, such as those on which we charter our containerships and under short-term time charters, the charterers bear the voyage expenses other than brokerage and address commissions and fees. As such, voyage expenses represent a relatively small portion of our vessels' overall expenses.
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        From time to time, in accordance with industry practice and in respect of the charters for our containerships we pay brokerage commissions of approximately 0.75% to 2.5% of the total daily charter hire rate under the charters to unaffiliated ship brokers associated with the charterers, depending on the number of brokers involved with arranging the charter. We also pay address commissions of 1.25% up to 3.5% to a limited number of our charterers. Our manager will also receive a fee of 0.5% based on the contract price of any vessel bought or sold by it on our behalf, excluding newbuilding contracts. In 2015 and 2014 we paid a fee to our manager of 1.25% on all freight, charter hire, ballast bonus and demurrage for each vessel. In 2013, this fee was 1.00%. In 2016, this fee will remain at 1.25%.
 Vessel Operating Expenses
        Vessel operating expenses include crew wages and related costs, the cost of insurance, expenses for repairs and maintenance, the cost of spares and consumable stores, tonnage taxes and other miscellaneous expenses. Aggregate expenses increase as the size of our fleet increases. Factors beyond our control, some of which may affect the shipping industry in general, including, for instance, developments relating to market premiums for insurance, may also cause these expenses to increase. In addition, a substantial portion of our vessel operating expenses, primarily crew wages, are in currencies other than the U.S. dollar and any gain or loss we incur as a result of the U.S. dollar fluctuating in value against these currencies is included in vessel operating expenses. We fund our manager monthly in advance with amounts it will need to pay our fleet's vessel operating expenses.
        Under time charters, such as those on which we charter all but two of the containerships in our fleet as of February 29, 2016, we pay for vessel operating expenses. Under bareboat charters, such as those on which we chartered the remaining two containerships in our fleet, our charterers bear substantially all vessel operating expenses, including the costs of crewing, insurance, surveys, drydockings, maintenance and repairs.
 Amortization of Deferred Drydocking and Special Survey Costs
        We follow the deferral method of accounting for special survey and drydocking costs, whereby actual costs incurred are deferred and are amortized on a straight-line basis over the period until the next scheduled survey and drydocking, which is two and a half years. If special survey or drydocking is performed prior to the scheduled date, the remaining unamortized balances are immediately written off. The amortization periods reflect the estimated useful economic life of the deferred charge, which is the period between each special survey and drydocking.
        Major overhaul performed during drydocking is differentiated from normal operating repairs and maintenance. The related costs for inspections that are required for the vessel's certification under the requirement of the classification society are categorized as drydock costs. A vessel at drydock performs certain assessments, inspections, refurbishments, replacements and alterations within a safe non-operational environment that allows for complete shutdown of certain machinery and equipment, navigational, ballast (keep the vessel upright) and safety systems, access to major underwater components of vessel (rudder, propeller, thrusters and anti-corrosion systems), which are not accessible during vessel operations, as well as hull treatment and paints. In addition, specialized equipment is required to access and maneuver vessel components, which are not available at regular ports.
        Repairs and maintenance normally performed during operation either at port or at sea have the purpose of minimizing wear and tear to the vessel caused by a particular incident or normal wear and tear. Repair and maintenance costs are expensed as incurred.
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 Depreciation
        We depreciate our containerships on a straight-line basis over their estimated remaining useful economic lives. We estimated the useful lives of our containerships to be 30 years from the year built. Depreciation is based on cost, less the estimated scrap value of $300 per ton for all vessels.
 General and Administrative Expenses
        We paid our manager the following fees for 2015: (i) a fee of $850 per day, (ii) a fee of $425 per vessel per day for vessels on bareboat charter, pro rated for the number of calendar days we own each vessel, (iii) a fee of $850 per vessel per day for vessels other than those on bareboat charter, pro rated for the number of calendar days we own each vessel, (iv) a flat fee of $725,000 per newbuilding vessel, if any, which we capitalize, for the on premises supervision of newbuilding contracts by selected engineers and others of its staff and a fee of €0.51 million ($0.56 million) for the services of our executive officers for the period from January 1, 2015 to April 30, 2015, after which date we have directly employed our executive officers. Our executive officers received an aggregate of €1.02 million ($1.14 million) in compensation for the period from May 1, 2015 to December 31, 2015. For the year ended December 31, 2014, we paid our manager: (i) a fee of $800 per day, (ii) a fee of $400 per vessel per day for vessels on bareboat charter, pro rated for the number of calendar days we own each vessel, (iii) a fee of $800 per vessel per day for vessels other than those on bareboat charter, pro rated for the number of calendar days we own each vessel, (iv) a flat fee of $725,000 per newbuilding vessel, if any, which we capitalize, for the on premises supervision of newbuilding contracts by selected engineers and others of its staff and an annual fee of €1.47 million ($1.92 million) for the services of our executive officers. For the year ended December 31, 2013, we paid to our manager: (i) a fee of $675 per day, (ii) a fee of $340 per vessel per day for vessels on bareboat charter, pro rated for the number of calendar days we own each vessel, (iii) a fee of $675 per vessel per day for vessels other than those on bareboat charter, pro rated for the number of calendar days we own each vessel, (iv) a flat fee of $725,000 per newbuilding vessel, if any, which we capitalize, for the on premises supervision of newbuilding contracts by selected engineers and others of its staff and an annual fee of €1.4 million ($1.86 million) for the services of our executive officers.
        For 2016, we will pay $850 per day, a fee of $425 per vessel per day for vessels on bareboat charter and $850 per vessel per day for vessels on time charter.
        Furthermore, general and administrative expenses include audit fees, legal fees, board remuneration, executive officers compensation, directors & officers insurance, stock exchange fees and other general and administrative expenses.
 Other Income/(Expenses), Net
        In 2015, we recorded income of $0.1 million for various non-operating items. In 2014 and 2013, we recorded income of $0.4 million and $0.3 million respectively for various non-operating items.
 Interest Expense, Interest Income and Other finance expenses
        We incur interest expense on outstanding indebtedness under our credit facilities which we include in interest expense. We also incurred financing costs in connection with establishing those facilities, which is included in our finance expenses. Further, we earn interest on cash deposits in interest bearing accounts and on interest bearing securities, which we include in interest income. We will incur additional interest expense in the future on our outstanding borrowings and under future borrowings.
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 Unrealized and Realized Loss on Derivatives
        The interest rate swap arrangements we entered into were generally based on the forecasted delivery of vessels we contracted for and our debt financing needs associated therewith. All changes in the fair value of our cash flow interest rate swap agreements are recorded in earnings under "Unrealized and Realized Losses on Derivatives". Recognition of non-cash fair value movements of our interest rate swaps directly in our earnings creates potential volatility in our reported earnings. We recorded in our earnings gross unrealized gains from changes in the fair value of the cash flow interest rate swaps of $48.9 million for the year ended December 31, 2015.
        We evaluated whether it is probable that the previously hedged forecasted interest payments prior to June 30, 2012 are probable to not occur in the originally specified time period. We have concluded that the previously hedged forecasted interest payments are probable of occurring. Therefore, unrealized gains or losses in accumulated other comprehensive loss associated with the previously designated cash flow interest rate swaps will remain frozen in accumulated other comprehensive loss and recognized in earnings when the interest payments will be recognized. If such interest payments were to be identified as being probable of not occurring, the accumulated other comprehensive loss balance pertaining to these amounts would be reversed through earnings immediately. We reclassified from Accumulated Other Comprehensive Loss to our earnings unrealized losses of $32.6 million, resulting in net unrealized gains of $16.2 million for the year ended December 31, 2015.
        As of December 31, 2015, the total notional amount of our cash flow interest rate swap arrangements was $775 million and are all scheduled to terminate in 2016.
 Results of Operations
 Year ended December 31, 2015 compared to the year ended December 31, 2014
        During the year ended December 31, 2015, we had an average of 56.0 containerships compared to 55.9 containerships for the year ended December 31, 2014. Our fleet utilization increased to 99.0% in the year ended December 31, 2015 compared to 97.5% in the year ended December 31, 2014. We did not sell or acquire any vessels in 2015. During the year ended December 31, 2014, we sold five of our older vessels, the Marathonas , the Commodore , the Mytilini , the Duka and the Messologi, and we acquired two 6,402 TEU secondhand containerships built in 2002, the Performance and the Priority .
 Operating Revenues
        Operating revenues increased by 2.9%, or $15.8 million, to $567.9 million in the year ended December 31, 2015, from $552.1 million in the year ended December 31, 2014.
        Operating revenues for the year ended December 31, 2015 reflect:
•
$10.5 million of additional revenues in the year ended December 31, 2015 compared to the year ended December 31, 2014, related to the Priority and the Performance , which were added to our fleet on November 5, 2014. 

•
$4.6 million increase in revenues in the year ended December 31, 2015 compared to the year ended December 31, 2014, related to revenue recognition accounting of the Zim restructuring that became effective on July 16, 2014. 

•
$2.3 million increase in revenues in the year ended December 31, 2015 compared to the year ended December 31, 2014 due to improved re-chartering of some of our vessels at higher rates. 

•
$2.1 million decrease in revenues in the year ended December 31, 2015 compared to the year ended December 31, 2014, related to the Commodore, the Marathonas, the Duka, the Messologi
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and the Mytilini, which were generating revenues in the year ended December 31, 2014 and were sold within 2014.
•
$0.5 million of additional revenues due to improved fleet utilization in the year ended December 31, 2015 compared to the year ended December 31, 2014.
 Voyage Expenses
        Voyage expenses decreased by $0.7 million, to $12.3 million in the year ended December 31, 2015, from $13.0 million in the year ended December 31, 2014.
 Vessel Operating Expenses
        Vessel operating expenses decreased by 1.0%, or $1.1 million, to $112.7 million in the year ended December 31, 2015, from $113.8 million in the year ended December 31, 2014. The reduction is attributable to a 2% improvement in the average daily operating cost per vessel between the two periods, which decreased to $5,720 per day for the year ended December 31, 2015, from $5,838 per day for the year ended December 31, 2014. We believe that our daily operating cost ranks as one of the most competitive in the industry.
 Depreciation
        Depreciation expense decreased by 3.9%, or $5.3 million, to $131.8 million in the year ended December 31, 2015 from $137.1 million in the year ended December 31, 2014, mainly due to the lower depreciation expense on the eight 2,200 TEU vessels with respect to which we recorded an impairment charge on December 31, 2014.
 Amortization of Deferred Drydocking and Special Survey Costs
        Amortization of deferred dry-docking and special survey costs decreased by $0.6 million, to $3.8 million in the year ended December 31, 2015, from $4.4 million in the year ended December 31, 2014. The decrease is mainly due to the expiration of the amortization periods related to certain vessels during the year ended December 31, 2015 compared to the year ended December 31, 2014.
 General and Administrative Expenses
        General and administrative expenses increased by $0.4 million, to $21.8 million in the year ended December 31, 2015, from $21.4 million the year ended December 31, 2014. Effective January 1, 2015, our management fees were adjusted to a fee of $850 per day, a fee of $425 per vessel per day for vessels on bareboat charter and a fee of $850 per vessel per day for vessels on time charter.
 Gain on Sale of Vessels
        There were no vessel sales in the year ended December 31, 2015. Gain on sale of vessels amounted to $5.7 million in the year ended December 31, 2014 as a result of sale of the Marathonas , the Commodore , the Mytilini , the Duka and the Messologi (on February 26, 2014, April 25, 2014, May 15, 2014, May 15, 2014 and May 20, 2014, respectively).
 Impairment Loss
        As of December 31, 2015, we recognized an impairment loss of $39.0 million in relation to twelve of our older vessels held and used and $2.1 million in relation to the Federal, which was held for sale as of December 31, 2015. As of December 31, 2014, we recognized an impairment loss of $75.8 million in relation to eight 2,200 TEU vessels. See "Critical Accounting Policies—Impairment of Long-lived Assets."
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 Interest Expense, Interest Income, and Other Finance Expenses
        Interest expense decreased by 12.0%, or $9.6 million, to $70.4 million in the year ended December 31, 2015, from $80.0 million in the year ended December 31, 2014. The change in interest expense was mainly due to the decrease in our average debt by $221.8 million, to $2,894.7 million in the year ended December 31, 2015, from $3,116.5 million in the year ended December 31, 2014, as well as the decrease in the cost of debt servicing in the year ended December 31, 2015 compared to the year ended December 31, 2014, mainly driven by the accelerated amortization of our fixed rate debt, which bears a higher cost compared to our floating rate debt.
        As of December 31, 2015, the debt outstanding was $2,775.4 million compared to $3,015.5 million as of December 31, 2014.
        Interest income amounted to $3.4 million in the year ended December 31, 2015 compared to $1.7 million in the year ended December 31, 2014. This increase is attributed to the interest income related to the ZIM securities we received in the ZIM restructuring that became effective on July 16, 2014.
        Other finance costs, net, decreased by $1.1 million, to $18.7 million in the year ended December 31, 2015, from $19.8 million in the year ended December 31, 2014. This decrease was mainly due to the $1.0 million decrease in amortization of finance fees (which have been deferred and are being amortized over the term of the respective credit facilities) in the year ended December 31, 2015 compared to the year ended December 31, 2014.
 Equity loss on investments
        Equity loss on investments of $1.9 million in the year ended December 31, 2015 relates to the investment in Gemini where the Company has a 49% shareholding interest. This loss reflects operating losses of two out of the four vessels that have been acquired by Gemini that have not yet entered into long-term charter arrangements. We did not have any equity investments accounted for under the equity method of accounting in the year ended December 31, 2014.
 Unrealized and Realized Loss on Derivatives
        Unrealized gain on interest rate swaps amounted to $16.2 million in the year ended December 31, 2015 compared to a gain of $24.9 million in the year ended December 31, 2014. The unrealized gains were attributable to mark to market valuation of our swaps, as well as reclassification of unrealized losses from Accumulated Other Comprehensive Loss to our earnings due to the discontinuation of hedge accounting since July 1, 2012.
        Realized loss on interest rate swaps decreased by $67.4 million, to $56.2 million in the year ended December 31, 2015, from $123.6 million in the year ended December 31, 2014. This decrease is attributable to a $1,402.9 million lower average notional amount of swaps during the year ended December 31, 2015 compared to the year ended December 31, 2014 as a result of swap expirations.
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        The table below provides an analysis of the items discussed above, and which were recorded in the years ended December 31, 2015 and 2014:

								
 	 	Year ended
December 31,
2015	 	Year ended
December 31,
2014	 	
 	 	(in millions)	 	
Cash flow interest rate swaps	 	 	 	 	 	 	 	
Realized losses expensed in consolidated Statements of Operations	 	 $	(52.7	)	 $	(120.6	)	
Unrealized gains	 	 	16.2	 	 	25.2	 	
Amortization of deferred realized losses	 	 	(4.0	)	 	(4.0	)	
 ​	​	​ 	​ 	​	​ 	​ 	​	
Unrealized and realized losses on cash flow interest rate swaps	 	 $	(40.5	)	 $	(99.4	)	
 ​	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	
 ​	​	​ 	​ 	​	​ 	​ 	​	
Fair value interest rate swaps	 	 	 	 	 	 	 	
Unrealized losses on swap asset	 	 $	(0.5	)	 $	(0.9	)	
Reclassification of fair value hedged debt to earnings	 	 	0.6	 	 	0.6	 	
Realized gains	 	 	0.5	 	 	1.0	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	
Unrealized and realized gains on fair value interest rate swaps	 	 $	0.6	 	 $	0.7	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	
 ​	​	​ 	​ 	​	​ 	​ 	​	
Unrealized and realized losses on derivatives	 	 $	(39.9	)	 $	(98.7	)	
 ​	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	
 ​	​	​ 	​ 	​	​ 	​ 	​	
 Year ended December 31, 2014 compared to the year ended December 31, 2013
        During the year ended December 31, 2014, we had an average of 55.9 containerships compared to 61.0 containerships for the year ended December 31, 2013. Our fleet utilization increased to 97.5% in the year ended December 31, 2014 compared to 93.4% in the year ended December 31, 2013. During the year ended December 31, 2014, we sold five of our older vessels, the Marathonas , the Commodore , the Mytilini , the Duka and the Messologi, and we acquired two 6,402 TEU secondhand containerships built in 2002, the Performance and the Priority . During the year ended December 31, 2014, our fleet utilization for the fleet under employment was 98.5% (which excludes the laid up vessels).
 Operating Revenues
        Operating revenues decreased by 6.1%, or $36.0 million, to $552.1 million in the year ended December 31, 2014, from $588.1 million in the year ended December 31, 2013.
        Operating revenues for the year ended December 31, 2014 reflect:
•
$9.1 million of additional revenues in the year ended December 31, 2014 compared to the year ended December 31, 2013, $0.9 million of which related to the Performance and Priority which were added to our fleet on November 5, 2014 and $8.2 million related to Amalia C , MSC Zebra , Danae C (ex Niledutch Palanca) and the Dimitris C which were added to our fleet on May 14, 2013, June 25, 2013, November 13, 2013 and November 21, 2013 respectively. 

•
$20.2 million decrease in revenues in the year ended December 31, 2014 compared to the year ended December 31, 2013, related to the agreement we entered into with ZIM for a reduction in the charter rates payable by ZIM under the time charters for six of our vessels. 

•
$12.6 million decrease in revenues in the year ended December 31, 2014 compared to the year ended December 31, 2013, related to the Hope , the Kalamata , the Elbe , the Komodo , the Lotus , the Commodore , the Messologi and the Mytilini , which were generating revenues in the year ended December 31, 2013, but were sold within 2013 and 2014.
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•
$12.3 million decrease in revenues in the year ended December 31, 2014 compared to the year ended December 31, 2013, which was mainly attributable to the re-chartering of certain vessels at lower rates than what they had previously been earning as a result of the soft charter market.
 Voyage Expenses
        Voyage expenses increased by $1.2 million, to $13.0 million in the year ended December 31, 2014, from $11.8 million in the year ended December 31, 2013, mainly attributed to the increase of the fee on gross freight, charter hire, ballast bonus and demurrage payable to our manager with respect to each vessel in the fleet from 1.00% to 1.25% effective January 1, 2014.
 Vessel Operating Expenses
        Vessel operating expenses decreased by 6.8%, or $8.3 million, to $113.8 million in the year ended December 31, 2014, from $122.1 million in the year ended December 31, 2013. The reduction is mainly attributable to the decrease in the average number of vessels in our fleet during the year ended December 31, 2014 compared to the year ended December 31, 2013.
        The average daily operating cost per vessel decreased to $5,838 per day for the year ended December 31, 2014, from $5,987 per day for the year ended December 31, 2013 mainly as a result of the sale of the older vessels in our fleet whose contribution in daily operating expenses was higher than the fleet average. We believe our daily operating cost ranks as one of the most competitive in the industry.
 Depreciation
        Depreciation expense decreased by 0.2%, or $0.3 million, to $137.1 million in the year ended December 31, 2014, from $137.4 million in the year ended December 31, 2013. The decrease in depreciation expense was due to the lower average number of vessels in our fleet during the year ended December 31, 2014 compared to the year ended December 31, 2013.
 Amortization of Deferred Drydocking and Special Survey Costs
        Amortization of deferred dry-docking and special survey costs decreased by 20.0%, or $1.1 million, to $4.4 million in the year ended December 31, 2014, from $5.5 million in the year ended December 31, 2013. The decrease reflects reduced dry-docking costs amortized during the year ended December 31, 2014 compared to the year ended December 31, 2013.
 General and Administrative Expenses
        General and administrative expenses increased by 9.7%, or $1.9 million, to $21.4 million in the year ended December 31, 2014, from $19.5 million in the year ended December 31, 2013. The increase was mainly due to increased fees of $1.3 million paid to our Manager in the year ended December 31, 2014 compared to the year ended December 31, 2013, due to an increase in the per day fee payable to our Manager since January 1, 2014, together with an increase of $0.6 million in stock compensation.
 Gain/(loss) on sale of vessels
        Gain on sale of vessels, was $5.7 million in the year ended December 31, 2014 compared to a loss of $0.4 million in the year ended December 31, 2013. During the year ended December 31, 2014, we sold the Marathonas , the Commodore , the Mytilini , the Duka and the Messologi (on February 26, 2014, April 25, 2014, May 15, 2014, May 15, 2014 and May 20, 2014, respectively) and we realized a net gain on these sales of $5.7 million in aggregate. During the year ended December 31, 2013, we sold the Independence , the Henry , the Pride , the Honour , the Elbe , the Hope , the Kalamata , the Lotus and the
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Komodo (on February 13, 2013, February 28, 2013, March 25, 2013, May 14, 2013, June 13, 2013, October 3, 2013, October 22, 2013, October 25, 2013 and November 12, 2013, respectively) and we realized a net loss on these sales of $0.4 million in aggregate.
 Impairment Loss
        As of December 31, 2014 we recorded an impairment loss of $75.8 million in relation to eight 2,200 TEU vessels built in 1997 and 1998. See "Critical Accounting Policies—Impairment of Long-lived Assets." In July 2014, ZIM and its creditors entered into definitive documentation effecting ZIM's restructuring with its creditors on substantially the same terms, as described below under "—Liquidity and Capital Resources," as the agreement in principle previously announced by ZIM in January 2014. Based on these anticipated terms, we had written down our long-term receivables from ZIM of $44.8 million as of December 31, 2013 and recognized a $19.0 million impairment charge with respect thereto in 2013. There was no impairment loss on vessels for the year ended December 31, 2013.
 Interest Expense, Interest Income, and Other Finance Expenses
        Interest expense decreased by 12.3%, or $11.2 million, to $80.0 million in the year ended December 31, 2014, from $91.2 million in the year ended December 31, 2013. The change in interest expense was mainly due to the decrease in our average debt by $205.4 million, to $3,116.5 million in the year ended December 31, 2014, from $3,321.9 million in the year ended December 31, 2013, as well as the decrease in the cost of debt servicing in the year ended December 31, 2014 compared to the year ended December 31, 2013, mainly driven by the accelerated amortization of our fixed rate debt, which bears a higher cost compared to our floating rate debt.
        Interest income was $1.7 million in the year ended December 31, 2014 compared to $2.2 million in the year ended December 31, 2013.
        Other finance costs, net, decreased by $0.3 million, to $19.8 million in the year ended December 31, 2014, from $20.1 million in the year ended December 31, 2013. This decrease was due to the $0.3 million decrease in amortizing finance fees (which were deferred and are amortized over the term of the respective credit facilities) in the year ended December 31, 2014 compared to the year ended December 31, 2013.
 Unrealized and Realized Loss on Derivatives
        Unrealized gain/(loss) on interest rate swap hedges was a gain of $24.9 million in the year ended December 31, 2014 compared to a gain of $22.1 million in the year ended December 31, 2013. The unrealized gains were attributable to mark to market valuation of our swaps, as well as reclassification of unrealized losses from Accumulated Other Comprehensive Loss to our earnings due to the discontinuation of hedge accounting since July 1, 2012.
        Realized loss on interest rate swap hedges, decreased by $24.7 million, to $123.6 million in the year ended December 31, 2014, from $148.3 million in the year ended December 31, 2013. This decrease is mainly attributable to the $558.8 million lower average notional amount of swaps during the year ended December 31, 2014 compared to the year ended December 31, 2013.
        With all our newbuildings having been delivered no realized losses on cash flow hedges were deferred during the year ended December 31, 2014 and the year ended December 31, 2013.
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        The table below provides an analysis of the items discussed above, and which were recorded in the years ended December 31, 2014 and 2013:

								
 	 	Year ended
December 31,
2014	 	Year ended
December 31,
2013	 	
 	 	(in millions)	 	
Cash flow interest rate swaps	 	 	 	 	 	 	 	
Realized losses expensed in consolidated Statements of Operations	 	 $	(120.6	)	 $	(145.6	)	
Unrealized gains	 	 	25.2	 	 	22.8	 	
Amortization of deferred realized losses	 	 	(4.0	)	 	(4.0	)	
 ​	​	​ 	​ 	​	​ 	​ 	​	
Unrealized and realized losses on cash flow interest rate swaps	 	 $	(99.4	)	 $	(126.8	)	
 ​	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	
 ​	​	​ 	​ 	​	​ 	​ 	​	
Fair value interest rate swaps	 	 	 	 	 	 	 	
Unrealized losses on swap asset	 	 $	(0.9	)	 $	(1.3	)	
Reclassification of fair value hedged debt to earnings	 	 	0.6	 	 	0.6	 	
Realized gains	 	 	1.0	 	 	1.4	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	
Unrealized and realized gains on fair value interest rate swaps	 	 $	0.7	 	 $	0.7	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	
 ​	​	​ 	​ 	​	​ 	​ 	​	
Unrealized and realized losses on derivatives	 	 $	(98.7	)	 $	(126.1	)	
 ​	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	
 ​	​	​ 	​ 	​	​ 	​ 	​	
 Liquidity and Capital Resources
        Our principal source of funds has been equity provided by our stockholders from our initial public offering in October 2006 and common stock sale in August 2010, operating cash flows, vessel sales, and long-term bank borrowings. Our principal uses of funds have been capital expenditures to establish, grow and maintain our fleet, comply with international shipping standards, environmental laws and regulations and to fund working capital requirements.
        Our short-term liquidity needs primarily relate to the funding of our vessel operating expenses, debt interest payments and servicing the current portion of our debt obligations and cash flow interest rate swaps liabilities. Our long-term liquidity needs primarily relate to debt repayment and capital expenditures related to any further growth of our fleet.
        We anticipate that our primary sources of funds will be cash from operations and equity or capital markets debt financings, subject to restrictions on uses of such funds contained in our Bank Agreement.
        As of December 31, 2015, we were in compliance with the financial and collateral coverage covenants under our debt arrangements. We believe that continued future compliance with the terms of these agreements will allow us to satisfy our liquidity needs. We anticipate that our primary sources of funds described above, including future equity or debt financings in the case of any further growth of our fleet beyond our currently contracted vessels to the extent permitted under our credit facilities, will be sufficient to satisfy all of the short-term and long-term liquidity needs described above, up to the 2018 maturity of the credit facilities under our Bank Agreement, which we expect to refinance at such time. See "—Credit Facilities" below.
        Under our existing multi-year charters as of December 31, 2015, we had contracted revenues of $524.7 million for 2016, $491.0 million for 2017 and, thereafter, approximately $2.14 billion. Although these contracted revenues are based on contracted charter rates, we are dependent on the ability and willingness of our charterers, some of which are facing substantial financial pressure, to meet their obligations under these charters. See "Risk Factors."
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        As of December 31, 2015, we had cash and cash equivalents of $72.3 million and restricted cash of $2.8 million. As of December 31, 2015, we had no remaining borrowing availability under our credit facilities. As of December 31, 2015, we had $2,775.4 million of outstanding indebtedness, of which $270.0 million is payable within the next twelve months. Furthermore, cash flow interest rate swaps with a notional amount of $775.0 million outstanding as of December 31, 2015, are scheduled to terminate in 2016. See "Item 11. Quantitative and Qualitative Disclosures About Market Risk."
        Under the Bank Agreement, from May 15, 2013, we are required to apply a substantial portion of our cash from operations to the repayment of principal under our financing arrangements. We currently expect that the remaining portion of our cash from operations will be sufficient to fund all of our other obligations. The Bank Agreement also contains requirements for the application of proceeds from any future vessel sales or financings, as well as other transactions. See "—Bank Agreement" and "—Credit Facilities" below.
        Our board of directors determined in 2009 to suspend the payment of further cash dividends as a result of market conditions in the international shipping industry and in order to conserve cash to be applied toward the financing of our extensive new building program. In addition, under the Bank Agreement relating to our existing credit facilities and various new financing arrangements and the Sinosure-CEXIM credit facility, we are not permitted to pay cash dividends or repurchase shares of our capital stock unless (i) our consolidated net leverage is below 6:1 for four consecutive quarters and (ii) the ratio of the aggregate market value of our vessels to our outstanding indebtedness exceeds 125% for four consecutive quarters and provided that an event of default has not occurred and we are not, and after giving effect to the payment of the dividend, in breach of any covenant.
        We will not receive any cash upon any exercise of the 15 million warrants to purchase shares of our common stock issued to our lenders participating in our comprehensive financing plan contemplated by our Bank Agreement described herein, as such warrants are only exercisable on a cashless basis.
        In July 2014, ZIM and its creditors entered into definitive documentation effecting ZIM's restructuring with its creditors on substantially the same terms as the agreement in principle previously announced by ZIM in January 2014. The terms of the restructuring include a reduction in the charter rates payable by ZIM under its time charters, expiring in 2020 or 2021, for six of our vessels. The terms also include our receipt of approximately $49.9 million aggregate principal amount of unsecured, interest bearing ZIM notes maturing in 2023 (consisting of $8.8 million of 3% Series 1 Notes due 2023 amortizing subject to available cash flow in accordance with a corporate cash sweep mechanism, and $41.1 million of 5% Series 2 Notes due 2023 non-amortizing (of the 5% interest rate, 3% is payable quarterly in cash and 2% is payable in kind, accrued quarterly with deferred cash payment on maturity)) and ZIM shares representing approximately 7.4% of the outstanding ZIM shares immediately after the restructuring, in exchange for such charter rate reductions and cancellation of ZIM's other obligations to us, which relate to the outstanding long term receivable as of December 31, 2013. ZIM's charter-owner creditors designated two of the nine members of ZIM's initial Board of Directors following the restructuring, including one director nominated by us, Dimitris Chatzis, the father of our Chief Financial Officer.
 Cash Flows

											
 	 	Year ended
December 31,
2015	 	Year ended
December 31,
2014	 	Year ended
December 31,
2013	 	
 	 	(In thousands)	 	
Net cash provided by operating activities	 	 $	271,676	 	 $	192,181	 	 $	189,025	 	
Net cash (used in)/provided by investing activities	 	 	(13,292	)	 	11,437	 	 	6,087	 	
Net cash used in financing activities	 	 	(243,861	)	 	(214,041	)	 	(182,587	)	
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 Net Cash Provided by Operating Activities
        Net cash flows provided by operating activities increased by 41.4%, or $79.5 million, to $271.7 million in the year ended December 31, 2015 compared to $192.2 million in the year ended December 31, 2014. The increase was primarily the result of a reduction in realized losses from derivatives of $67.4 million, reduced interest expenses by $9.6 million, and lower payments for drydocking and special survey costs by $4.6 million, in the year ended December 31, 2015 compared to the year ended December 31, 2014.
        Net cash flows provided by operating activities increased by 1.7%, or $3.2 million, to $192.2 million in the year ended December 31, 2014 compared to $189.0 million in the year ended December 31, 2013. The increase was primarily the result of lower net financing expenses of $35.4 million that offset increased payments for drydocking of $6.6 million and a $25.6 million decrease in cash from operations in the year ended December 31, 2014 compared to the year ended December 31, 2013. Lower cash from operations is attributed to a $36 million reduction in operating revenues, partially offset by $10.4 million improvement in net operating costs and working capital position between the two periods.
 Net Cash (Used in)/Provided by Investing Activities
        Net cash flows (used in)/provided by investing activities decreased by $24.7 million, to $13.3 million used in investing activities in the year ended December 31, 2015 compared to $11.4 million provided by investing activities in the year ended December 31, 2014. The difference is attributed to a $49.5 million decrease in net proceeds from sale of vessels, cash used for investments in affiliates of $13.2 million in the year ended December 31, 2015 compared to no investments in the year ended December 31, 2014, which were partially offset by a $38.0 million decrease in amounts used in vessel purchases and other related capital expenditures in the year ended December 31, 2015 compared to the year ended December 31, 2014.
        Net cash flows provided by investing activities increased by $5.3 million, to $11.4 million in the year ended December 31, 2014 compared to $6.1 million in the year ended December 31, 2013. The difference is attributed to vessel purchases and other related capital expenditures of $39.2 million in 2014 mainly in relation to the acquisition of Performance and Priority , as opposed to $46.8 million of vessel purchases and other related capital expenditures during 2013, mainly in relation to the acquisition of Dimitris C , MSC Zebra , Amalia C and Danae C . In addition, during the year ended December 31, 2014 we received net proceeds from the sales of the Messologi , the Marathonas , the Mytilini , the Commodore and the Duka of $50.6 million, whereas during the year ended December 31, 2013 we received net proceeds from the sales of the Henry , the Pride , the Independence , the Honour , the Elbe , the Hope , the Lotus , the Kalamata and the Komodo of $52.9 million.
 Net Cash Used in Financing Activities
        Net cash flows used in financing activities increased by $29.9 million, to $243.9 million in the year ended December 31, 2015 compared to $214.0 million in the year ended December 31, 2014, as a result of a $21.7 million increase in repayments of long-term debt, which amounted to $243.2 million in the year ended December 31, 2015 compared to $221.5 million in the year ended December 31, 2014. Additionally, the decrease is due to a $11.9 million movement in restricted cash, which was offset partially by a $3.7 million decrease in deferred finance costs.
        Net cash flows used in financing activities increased by $31.4 million, to $214.0 million in the year ended December 31, 2014 compared to $182.6 million in the year ended December 31, 2013, as a result of $50.5 million of higher repayments of long-term debt, which amounted to $221.5 million in the year ended December 31, 2014 compared to $171.0 million in the year ended December 31, 2013, partially offset by a $23.4 million positive movement in restricted cash related to release of restricted funds derived from vessel sales that had been earmarked to reduced indebtedness. In addition, during 2014
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we paid $4.4 million in full and final settlement of the amendment fee related to the 2011 restructuring that had been deferred and was payable on December 31, 2014, compared to $0.1 million in finance expenses paid during the year ended December 31, 2013.
 Non-GAAP Financial Measures
        We report our financial results in accordance with U.S. generally accepted accounting principles (GAAP). Management believes, however, that certain non-GAAP financial measures used in managing the business may provide users of this financial information additional meaningful comparisons between current results and results in prior operating periods. Management believes that these non-GAAP financial measures can provide additional meaningful reflection of underlying trends of the business because they provide a comparison of historical information that excludes certain items that impact the overall comparability. Management also uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating our performance. See the table below for supplemental financial data and corresponding reconciliation to GAAP financial measures. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, our reported results prepared in accordance with GAAP.
 EBITDA and Adjusted EBITDA
        EBITDA represents net income before interest income and expense, taxes, depreciation, as well as amortization of deferred drydocking & special survey costs, amortization of deferred realized losses of cash flow interest rate swaps, amortization of finance costs and finance costs accrued. Adjusted EBITDA represents net income before interest income and expense, taxes, depreciation, amortization of deferred drydocking & special survey costs, amortization of deferred realized losses of cash flow interest rate swaps, amortization of finance costs and finance costs accrued, impairment loss, stock based compensation, (gain)/loss on sale of vessels, unrealized (gain)/loss on derivatives, realized loss on derivatives. We believe that EBITDA and Adjusted EBITDA assist investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. EBITDA and Adjusted EBITDA are also used: (i) by prospective and current customers as well as potential lenders to evaluate potential transactions; and (ii) to evaluate and price potential acquisition candidates. Our EBITDA and Adjusted EBITDA may not be comparable to that reported by other companies due to differences in methods of calculation.
        EBITDA and Adjusted EBITDA have limitations as analytical tools, and should not be considered in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Some of these limitations are: (i) EBITDA/Adjusted EBITDA does not reflect changes in, or cash requirements for, working capital needs; and (ii) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and EBITDA/Adjusted EBITDA do not reflect any cash requirements for such capital expenditures. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Because of these limitations, EBITDA/Adjusted EBITDA should not be considered as principal indicators of our performance.
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 Net Income/(loss) Reconciliation to EBITDA and Adjusted EBITDA

											
 	 	Year ended
December 31,
2015	 	Year ended
December 31,
2014	 	Year ended
December 31,
2013	 	
 	 	(In thousands)	 	
Net income/(loss)	 	 $	117,016	 	 $	(3,920	)	 $	37,523	 	
Depreciation	 	 	131,783	 	 	137,061	 	 	137,414	 	
Amortization of deferred drydocking & special survey costs	 	 	3,845	 	 	4,387	 	 	5,482	 	
Amortization of deferred realized losses of cash flow interest rate swaps	 	 	4,017	 	 	4,016	 	 	4,017	 	
Amortization of finance costs	 	 	14,038	 	 	15,070	 	 	15,431	 	
Finance costs accrued (Exit Fees under our Bank Agreement)	 	 	3,639	 	 	3,745	 	 	3,763	 	
Interest income	 	 	(3,419	)	 	(1,703	)	 	(2,210	)	
Interest expense	 	 	70,397	 	 	79,980	 	 	91,185	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
EBITDA	 	 $	341,316	 	 $	238,636	 	 $	292,605	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
(Gain)/loss on sale of vessel	 	 	—	 	 	(5,709	)	 	449	 	
Impairment loss	 	 	41,080	 	 	75,776	 	 	19,004	 	
Stock based compensation	 	 	88	 	 	638	 	 	75	 	
Realized loss on derivatives	 	 	52,125	 	 	119,612	 	 	144,254	 	
Unrealized gain on derivatives	 	 	(16,285	)	 	(24,915	)	 	(22,121	)	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
Adjusted EBITDA	 	 $	418,324	 	 $	404,038	 	 $	434,266	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	​	​	​	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
        EBITDA increased by $102.7 million, to $341.3 million in the year ended December 31, 2015, from $238.6 million in the year ended December 31, 2014. The increase was mainly attributable to a $58.9 million decrease in unrealized and realized losses on derivatives, a decreased impairment loss by $34.7 million, a $15.8 million increase in operating revenues, in the year ended December 31, 2015 compared to the year ended December 31, 2014. The increase was partially offset by a $1.9 million loss on equity investments incurred in the year ended December 31, 2015 and a $5.7 million gain on sale of vessels incurred in the year ended December 31, 2014 compared to a nil gain in the year ended December 31, 2015.
        Adjusted EBITDA increased by $14.3 million, to $418.3 million in the year ended December 31, 2015, from $404.0 million in the year ended December 31, 2014. The increase was attributed to a $15.8 million increase in operating revenues, an improvement of 0.4 million in operating costs in the year ended December 31, 2015 compared to the year ended December 31, 2014, which was offset by a $1.9 million loss on equity investments incurred in the year ended December 31, 2015.
        EBITDA decreased by $54.0 million, to $238.6 million in the year ended December 31, 2014, from $292.6 million in the year ended December 31, 2013. The decrease was mainly attributable to an impairment loss of $75.8 million recorded in the year ended December 31, 2014 compared to an impairment loss of $19.0 million recorded in the year ended December 31, 2013, a $36.0 million decrease in operating revenues in the year ended December 31, 2014 compared to the year ended December 31, 2013 and a $2.0 million increase in general and administrative expenses in the year ended December 31, 2014 compared to the year ended December 31, 2013, which were partially offset by a $27.4 million improvement in unrealized and realized losses on derivatives in the year ended December 31, 2014 compared to the year ended December 31, 2013, a $7.1 million improvement in total operating expenses in the year ended December 31, 2014 compared to the year ended December 31, 2013 and a $5.7 million gain on sale of vessels recorded in the year ended December 31, 2014 compared to $0.4 million loss on sale of vessel recorded in the year ended December 31, 2013.
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        Adjusted EBITDA decreased $30.3 million, to $404.0 million in the year ended December 31, 2014, from $434.3 million in the year ended December 31, 2013. The decrease was mainly attributable to a $36.0 million decrease in operating revenues in the year ended December 31, 2014 compared to the year ended December 31, 2013, which were partially offset by a $7.2 million improvement in total operating expenses in the year ended December 31, 2014 compared to the year ended December 31, 2013.
 Bank Agreement
        As noted above, on January 24, 2011, we entered into an agreement, which is referred to as the Bank Agreement, that, upon its effectiveness on March 4, 2011, superseded, amended and supplemented the terms of each of our then- existing credit facilities ("Pre-existing Credit Facilities") (other than our credit facilities with KEXIM and KEXIM-ABN Amro which are not covered thereby), and provides for, among other things, revised amortization schedules, maturities, interest rates, financial covenants, events of defaults, guarantee and security packages. As of December 31, 2015, we were in compliance with the financial covenants of the Bank Agreement. For additional details, please see Note 12, Long-term Debt, to our consolidated financial statements included elsewhere herein.
 Interest
        Under the terms of the Bank Agreement, borrowings under each of our pre-existing Credit Facilities, which excludes the KEXIM and KEXIM-ABN Amro credit facilities which were not covered by the Bank Agreement, bear interest at an annual interest rate of LIBOR plus a margin of 1.85%.
 Principal Payments
        Under the terms of the Bank Agreement we are required to make quarterly principal payments in fixed amounts, in relation to our total debt commitments from our lenders under the Bank Agreement and the January 2011 Credit Facilities (see "—January 2011 Credit Facilities" below), as specified in the table below (in thousands):

																				
 	 	February 15,	 	May 15,	 	August 15,	 	November 15,	 	December 31,	 	Total	 	
2016	 	 	30,973	 	 	36,278	 	 	32,276	 	 	43,852	 	 	—	 	 	143,379	 	
2017	 	 	44,939	 	 	36,691	 	 	35,338	 	 	31,872	 	 	—	 	 	148,840	 	
2018	 	 	34,152	 	 	37,585	 	 	44,399	 	 	45,334	 	 	65,969	 	 	227,439	 	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​ 	​ 	​	
Total	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	519,658	 	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​ 	​ 	​	

*
The Company may elect to make the scheduled payments shown in the above table three months earlier.
        Furthermore, an additional variable payment in such amount that, together with the fixed principal payment (as disclosed above), equals 92.5% of Actual Free Cash Flow for such quarter until the earlier of (x) the date on which our consolidated net leverage is below 6:1 and (y) May 15, 2015; and thereafter through maturity, which will be December 31, 2018 for each covered credit facility, we will be required to make quarterly principal payments in fixed amounts as specified in the Bank Agreement and described above plus an additional payment in such amount that, together with the fixed principal payment, equals 89.5% of Actual Free Cash Flow for such quarter. In addition, any additional amounts of cash and cash equivalents from January 1, 2015 until maturity in excess of the greater of (1) $50 million of accumulated unrestricted cash and cash equivalents and (2) 2% of our consolidated debt), would be applied first to the prepayment of the January 2011 Credit Facilities and after the January 2011 Credit Facilities are repaid, to the Pre-existing Credit Facilities. Under the Bank Agreement, "Actual Free Cash Flow" with respect to each credit facility covered thereby would be equal to revenue from the vessels collateralizing such facility, less the sum of (a) interest expense under such credit facility, (b) pro-rata portion of
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payments under our interest rate swap arrangements, (c) interest expense and scheduled amortization under the Hyundai Samho Vendor Financing and (d) per vessel operating expenses and pro-rata per vessel allocation of general and administrative expenses (which are not permitted to exceed the relevant budget by more than 20%), plus (e) the pro-rata share of operating cash flow of any Applicable Second Lien Vessel (which will mean, with respect to a Pre-existing Credit Facility, a vessel with respect to which the participating lenders under such credit facility have a second lien security interest and the first lien credit facility has been repaid in full). The last payment due on December 31, 2018, will also include the unamortized remaining principal debt balances, as such amounts will be determinable following the fixed and variable amortization.
        Under the terms of the Bank Agreement, we will continue to be required to make any mandatory prepayments provided for under the terms of our existing credit facilities and will be required to make additional prepayments as follows:
•
50% of the first $300 million of net equity proceeds, including convertible debt and hybrid instruments (excluding the $200 million of net equity proceeds which were a condition to the Bank Agreement and which were received in August 2010), after entering into the Bank Agreement and 25% of any additional net equity proceeds thereafter until December 31, 2018; and 

•
any debt proceeds (after repayment of any underlying secured debt covered by vessels collateralizing the new borrowings) (excluding the January 2011 Credit Facilities, the Sinosure-CEXIM Credit Facility and the Hyundai Samho Vendor Financing), which amounts would first be applied to repayment of amounts outstanding under the January 2011 Credit Facilities and then to the Pre- existing Credit Facilities.
        Any equity proceeds retained by us and not used within 12 months for certain specified purposes would be applied for prepayment of the January 2011 Credit Facilities and then to the Pre-existing Credit Facilities. We would also be required to prepay the portion of a credit facility attributable to a particular vessel upon the sale or total loss of such vessel; the termination or loss of an existing charter for a vessel, unless replaced within a specified period by a similar charter acceptable to the lenders; or the termination of a newbuilding contract. Our respective lenders under our Pre-existing Credit Facilities covered by the Bank Agreement and the January 2011 Credit Facilities may, at their option, require us to repay in full amounts outstanding under such respective credit facilities, upon a "Change of Control" of the Company, which for these purposes is defined as (i) Dr. Coustas ceasing to be our Chief Executive Officer, (ii) our common stock ceasing to be listed on the NYSE (or other recognized stock exchange), (iii) a change in the ultimate beneficial ownership of the capital stock of any of our subsidiaries or ultimate control of the voting rights of those shares, (iv) Dr. Coustas and members of his family ceasing to collectively own over one-third of the voting interest in our outstanding capital stock or (v) any other person or group controlling more than 20% of the voting power of our outstanding capital stock.
 Covenants and Events of Defaults
        Under the Bank Agreement, the financial covenants under each of our credit facilities (other than under the KEXIM-ABN Amro credit facility which is not covered thereby, but which, respectively, has been aligned with those covenants below through November 20, 2018 (the maturity of the respective credit facility) under the supplemental letter signed on September 12, 2013, amendment thereto and the KEXIM credit facility, which contains only a collateral coverage covenant of 130%), have been reset to require us to:
•
maintain a ratio of (i) the market value of all of the vessels in our fleet, on a charter-inclusive basis, plus the net realizable value of any additional collateral, to (ii) our consolidated total debt above specified minimum levels gradually increasing from 90% through December 31, 2011 to 130% from September 30, 2017 through September 30, 2018;
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•
maintain a minimum ratio of (i) the market value of the nine vessels ( Hyundai Smart, Hyundai Speed, Hyundai Ambition, Hyundai Together, Hyundai Tenacity, Hanjin Greece, Hanjin Italy, Hanjin Germany and the CMA CGM Rabelais ) collateralizing the 2011 January Credit Facilities, calculated on a charter-free basis, plus the net realizable value of any additional collateral, to (ii) our aggregate debt outstanding under the January 2011 Credit Facilities of 100% from September 30, 2012 through September 30, 2018; 

•
maintain minimum free consolidated unrestricted cash and cash equivalents, less the amount of the aggregate variable principal amortization amounts, described above, of $30.0 million at the end of each calendar quarter; 

•
ensure that our (i) consolidated total debt less unrestricted cash and cash equivalents to (ii) consolidated EBITDA (defined as net income before interest, gains or losses under any hedging arrangements, tax, depreciation, amortization and any other non-cash item, capital gains or losses realized from the sale of any vessel, finance charges and capital losses on vessel cancellations and before any non-recurring items and excluding any accrued interest due to us but not received on or before the end of the relevant period; provided that non-recurring items excluded from this calculation shall not exceed 5% of EBITDA calculated in this manner) for the last twelve months does not exceed a maximum ratio gradually decreasing from 12:1 on December 31, 2010 to 4.75:1 on September 30, 2018; 

•
ensure that the ratio of our (i) consolidated EBITDA for the last twelve months to (ii) net interest expense (defined as interest expense (excluding capitalized interest), less interest income, less realized gains on interest rate swaps (excluding capitalized gains) and plus realized losses on interest rate swaps (excluding capitalized losses)) exceeds a minimum level of 1.50:1 through September 30, 2013 and thereafter gradually increasing to 2.80:1 by September 30, 2018; and 

•
maintain a consolidated market value adjusted net worth (defined as the amount by which our total consolidated assets adjusted for the market value of our vessels in the water less cash and cash equivalents in excess of our debt service requirements exceeds our total consolidated liabilities after excluding the net asset or liability relating to the fair value of derivatives as reflected in our financial statements for the relevant period) of at least $400 million.
        We were in compliance with these covenants as of December 31, 2015.
        For the purpose of these covenants, the market value of our vessels will be calculated, except as otherwise indicated above, on a charter-inclusive basis (using the present value of the "bareboat-equivalent" time charter income from such charter) so long as a vessel's charter has a remaining duration at the time of valuation of more than 12 months plus the present value of the residual value of the relevant vessel (generally equivalent to the charter free value of an equivalent a vessel today at the age such vessel would be at the expiration of the existing time charter). The market value of any newbuilding vessels would equal the lesser of such amount and the newbuilding vessel's book value.
        Under the terms of the Bank Agreement, the covered credit facilities also contain customary events of default, including those relating to cross-defaults to other indebtedness, defaults under our swap agreements, non-compliance with security documents, material adverse changes to our business, a Change of Control as described above, a change in our Chief Executive Officer, our common stock ceasing to be listed on the NYSE (or another recognized stock exchange), a change in any material respect, or breach of the management agreement by, the manager for the vessels securing the respective credit facilities and cancellation or amendment of the time charters (unless replaced with a similar time charter with a charterer acceptable to the lenders) for the vessels securing the respective credit facilities.
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        Under the terms of the Bank Agreement, we generally will not be permitted to incur any further financial indebtedness or provide any new liens or security interests, unless such security is provided for the equal and ratable benefit of each of the lenders party to the intercreditor agreement we entered into with each of the lenders participating under the Bank Agreement, other than security arising by operation of law or in connection with the refinancing of outstanding indebtedness, with the consent, not to be unreasonably withheld, of all lenders with a lien on the security pledged against such outstanding indebtedness. In addition, we would not be permitted to pay cash dividends or repurchase shares of our capital stock unless (i) our consolidated net leverage is below 6:1 for four consecutive quarters and (ii) the ratio of the aggregate market value of our vessels to our outstanding indebtedness exceeds 125% for four consecutive quarters and provided that an event of default has not occurred and we are not, and after giving effect to the payment of the dividend, in breach of any covenant.
 Collateral and Guarantees
        Each of our Pre-existing Credit Facilities and swap arrangements, to the extent applicable, covered by the Bank Agreement continued to be secured by their previous collateral on the same basis, and received, to the extent not previously provided, pledges of the shares of our subsidiaries owning the vessels collateralizing the applicable facilities, cross-guarantees from each subsidiary owning the vessels collateralizing such facilities, assignment of the refund guarantees in relation to any newbuildings funded by such facilities and other customary shipping industry collateral.
 January 2011 Credit Facilities (Aegean Baltic Bank—HSH Nordbank—Piraeus Bank, RBS, ABN Amro Club facility, Club Facility and Citi-Eurobank)
        On January 24, 2011, as contemplated by the Bank Agreement, we entered into agreements for the following new term loan credit facilities ("January 2011 Credit Facilities") to finance newbuildings which were delivered in 2011 and 2012:
(i)
a $123.8 million credit facility provided by HSH, which is secured by the Hyundai Speed, the Hanjin Italy and the CMA CGM Rabelais and customary shipping industry collateral related thereto;

(ii)
a $100.0 million credit facility provided by RBS, which is secured by the Hyundai Smart and the Hanjin Greece and customary shipping industry collateral related thereto;

(iii)
a $37.1 million credit facility with ABN Amro and lenders participating under the Bank Agreement which is secured by Hanjin Germany and customary shipping industry collateral related thereto;

(iv)
a $83.9 million new club credit facility provided, on a pro- rata basis, by the other existing lenders participating under the Bank Agreement, which is secured by Hyundai Together and Hyundai Tenacity and customary shipping industry collateral related thereto; and

(v)
a $80.0 million credit facility with Citibank and Eurobank, which is secured by the Hyundai Ambition and customary shipping industry collateral related thereto ((i)-(v), collectively, the "New Credit Facilities").
        As of December 31, 2015, $274.3 million was outstanding under the above January 2011 Credit Facilities and there was no remaining borrowing availability under the respective credit facilities.
 Interest
        Borrowings under each of the January 2011 Credit Facilities bear interest at an annual interest rate of LIBOR plus a margin of 1.85%, subject, on and after January 1, 2013, to increases in the applicable margin to: (i) 2.50% if the outstanding indebtedness thereunder exceeds $276 million, (ii) 3.00% if the
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outstanding indebtedness thereunder exceeds $326 million and (iii) 3.50% if the outstanding indebtedness thereunder exceeds $376 million.
 Principal Payments
        Under the Bank Agreement, we were not required to repay any outstanding principal amounts under our January 2011 Credit Facilities until May 15, 2013 and thereafter we are required to make quarterly principal payments in fixed amounts as specified in the Bank Agreement plus an additional quarterly variable amortization payment, all as described above under "—Bank Agreement—Principal Payments."
 Covenants, Events of Default and Other Terms
        The January 2011 Credit Facilities contain substantially the same financial and operating covenants, events of default, dividend restrictions and other terms and conditions as applicable to our Pre-existing Credit Facilities as revised under the Bank Agreement described above.
 Collateral and Guarantees
        The collateral described above relating to the newbuildings financed by the respective credit facilities, will be (other than in respect of the CMA CGM Rabelais ) subject to a limited participation by Hyundai Samho in any enforcement thereof until repayment of the related Hyundai Samho Vendor financing (described below) for such vessels. In addition, the lenders participating in the $83.9 million club credit facility described above received a lien on Hyundai Together and Hyundai Tenacity as additional security in respect of the pre-existing credit facilities the Company had with such lenders. The lenders under the other January 2011 Credit Facilities also received a lien on the respective vessels securing such credit facilities as additional collateral in respect of its pre-existing credit facilities and interest rate swap arrangements with such lenders and Citibank and Eurobank also received a second lien on Hyundai Ambition as collateral in respect of its previously unsecured interest rate arrangements with them.
        In addition, Aegean Baltic—HSH Nordbank—Piraeus Bank also received a second lien on the Deva , the CSCL Europe and the CSCL Pusan as collateral in respect of all borrowings from Aegean Baltic—HSH Nordbank—Piraeus Bank and RBS also received a second lien on the Derby D , the CSCL America and the CSCL Le Havre as collateral in respect of all borrowings from RBS.
        Our obligations under the January 2011 Credit Facilities are guaranteed by our subsidiaries owning the vessels collateralizing the respective credit facilities. Our Manager has also provided an undertaking to continue to provide us with management services and to subordinate its rights to the rights of its lenders, the security trustee and applicable hedge counterparties.
 Sinosure-CEXIM-Citi-ABN Amro Credit Facility
        On February 21, 2011, we entered into a bank agreement with Citibank, acting as agent, ABN Amro and the Export-Import Bank of China ("CEXIM") for a senior secured credit facility (the "Sinosure-CEXIM Credit Facility") of $203.4 million for the newbuilding vessels, the CMA CGM Tancredi , the CMA CGM Bianca and the CMA CGM Samson , securing such tranche for post-delivery financing of these vessels. We took delivery of the respective vessels in 2011. The China Export & Credit Insurance Corporation, or Sinosure, covers a number of political and commercial risks associated with each tranche of the credit facility.
        As of December 31, 2015, $122.0 million was outstanding under the credit facility and there was no remaining borrowing availability under the facility.
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 Principal and Interest Payments
        Borrowings under the Sinosure-CEXIM Credit Facility bear interest at an annual interest rate of LIBOR plus a margin of 2.85% payable semi-annually in arrears. We are required to repay principal amounts drawn in consecutive semi-annual installments over a ten-year period commencing from the delivery of the respective newbuilding.
 Covenants, Events of Default and Other Terms
        The Sinosure-CEXIM credit facility was amended and restated, effective on June 30, 2013, to align its financial covenants with our Bank Agreement (except for the minimum ratio of the charter free market value of certain vessels, as described in the Bank Agreement, which is not applicable) described above and continues to require us to maintain a minimum ratio of the market value of the vessel collateralizing a tranche of the facility to debt outstanding under such tranche of 125%.
        The Sinosure-CEXIM credit facility also contains customary events of default, including those relating to cross-defaults to other indebtedness, defaults under its swap agreements, non-compliance with security documents, material adverse changes to its business, a Change of Control as described above, a change in our Chief Executive Officer, its common stock ceasing to be listed on the NYSE (or Nasdaq or another recognized stock exchange), a change in any material respect, or breach of the management agreement by, the manager for the mortgaged vessels and cancellation or amendment of the time charters (unless replaced with a similar time charter with a charterer acceptable to the lenders) for the mortgaged vessels.
        We will not be permitted to pay cash dividends or repurchase shares of our capital stock unless (i) our consolidated net leverage is below 6:1 for four consecutive quarters and (ii) the ratio of the aggregate market value of our vessels to our outstanding indebtedness exceeds 125% for four consecutive quarters and provided that an event of default has not occurred and we are not, and after giving effect to the payment of the dividend are not, in breach of any covenant.
 Collateral
        The Sinosure-CEXIM Credit Facility is secured by customary shipping industry collateral relating to the financed vessels, the CMA CGM Tancredi , the CMA CGM Bianca and the CMA CGM Samson .
 Hyundai Samho Vendor Financing
        We entered into an agreement with Hyundai Samho Heavy Industries ("Hyundai Samho") for a financing facility of $190.0 million in respect of eight of our newbuilding containerships being built by Hyundai Samho, the Hyundai Speed , the Hyundai Smart , the Hyundai Ambition , the Hyundai Together , the Hyundai Tenacity , the Hanjin Greece , the Hanjin Italy and the Hanjin Germany , in the form of delayed payment of a portion of the final construction installment for each such vessel.
        Borrowings under this facility bore interest at a fixed interest rate of 8%. We were required to repay principal amounts under this financing facility in six consecutive semi-annual installments commencing one and a half years, in the case of the Hanjin Greece , the Hanjin Italy and the Hanjin Germany being financed, and in seven consecutive semi- annual installments commencing one year, in the case of the Hyundai Speed , the Hyundai Smart , the Hyundai Ambition , the Hyundai Together , the Hyundai Tenacity , after the delivery of the respective newbuilding being financed. This financing facility was secured by second priority collateral related to the vessels financed. This credit facility was fully repaid during the year ended December 31, 2015.
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 Exit Fees
        We will be required to pay an Initial Exit Fee of $15.0 million. Furthermore, we are required to pay an Additional Exit Fee of $10.0 million, as we did not repay at least $150.0 million in the aggregate with equity proceeds by December 31, 2013. Both Exit Fees, in the respective proportion to Existing Facilities and New Money Facilities, are payable the earlier of (a) December 31, 2018 and (b) the date on which the respective facilities are repaid in full. The Exit Fees will accrete in the consolidated Statements of Operations over the life of the respective facilities (with the effective interest method) and are reported under "Long-term debt, net of current portion" in the consolidated Balance Sheets. We had recognized an amount of $15.5 million and $11.9 million as of December 31, 2015 and December 31, 2014, respectively.
 Warrants
        In 2011, we issued an aggregate of 15,000,000 warrants to our lenders under the Bank Agreement and the January 2011 Credit Facilities to purchase, solely on a cash-less exercise basis, an aggregate of 15,000,000 shares of our common stock, which warrants have an exercise price of $7.00 per share. All of these warrants will expire on January 31, 2019.
 Credit Facilities
        We, as borrower, and certain of our subsidiaries, as guarantors, have entered into a number of credit facilities in connection with financing the acquisition of certain vessels in our fleet, which are
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described in Note 12 to our consolidated financial statements included in this annual report. The following summarizes certain terms of our credit facilities:

						
Lender 	 	Outstanding
Principal
Amount
(in millions)(1)	 	Collateral Vessels	
The Royal Bank of Scotland(2)	 	 $	667.1	 	The Hyundai Progress , the Hyundai Highway , the Hyundai Bridge , the Federal , the Zim Monaco , the Hanjin Buenos Aires , the Hanjin Versailles , the Hanjin Algeciras , the CMA CGM Racine and the CMA CGM Melisande	
Aegean Baltic Bank-HSH Nordbank-Piraeus Bank(3)	 	 $	627.8	 	The Hyundai Vladivostok , the Hyundai Advance , the Hyundai Stride , the Hyundai Future , the Hyundai Sprinter , the Amalia C , the MSC Zebra , the Danae C ( ex Niledutch Palanca) , the Dimitris C, the Performance and the Priority	
Canyon Capital Finance	 	 $	136.7	 	The CMA CGM Moliere and the CMA CGM Musset	
Deutsche Bank	 	 $	169.9	 	The Zim Rio Grande , the Zim Sao Paolo and the OOCL Istanbul	
Credit Suisse	 	 $	199.4	 	The Zim Luanda , the CMA CGM Nerval and the YM Mandate	
ABN Amro-Bank of America Merrill Lynch-Burlington-Sequoia-National Bank of Greece	 	 $	229.0	 	The SNL Colombo , the YM Seattle , the YM Vancouver and the YM Singapore	
Commerzbank-Credit Suisse-Golden Tree	 	 $	258.1	 	The OOCL Novorossiysk , the Hanjin Santos, the YM Maturity , the Hanjin Constantza and the CMA CGM Attila	
HSH Nordbank	 	 $	21.2	 	The Deva and the Derby D	
KEXIM	 	 $	8.2	 	The CSCL Europe and the CSCL America	
KEXIM-ABN Amro	 	 $	45.6	 	The CSCL Pusan and the CSCL Le Havre	
January 2011 Credit Facilities	
Aegean Baltic-HSH Nordbank-Piraeus Bank(3)	 	 $	69.6	 	The Hyundai Speed , the Hanjin Italy and the CMA CGM Rabelais	
RBS(2)	 	 $	69.9	 	The Hyundai Smart and the Hanjin Germany	
ABN Amro Club Facility	 	 $	20.6	 	The Hanjin Greece	
Club Facility	 	 $	50.4	 	The Hyundai Together and the Hyundai Tenacity	
Citi-Eurobank	 	 $	63.8	 	The Hyundai Ambition	
Sinosure-CEXIM-Citi-ABN Amro	 	 $	122.0	 	The CMA CGM Tancredi , the CMA CGM Bianca and the CMA CGM Samson	

(1)
As of December 31, 2015.
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(2)
Pursuant to the Bank Agreement, this credit facility is also secured by a second priority lien on the Derby D , the CSCL America and the CSCL Le Havre .

(3)
Pursuant to the Bank Agreement, this credit facility is also secured by a second priority lien on the Deva , the CSCL Europe and the CSCL Pusan .
        Outstanding indebtedness under each of our credit facilities, other than our KEXIM and KEXIM-ABN Amro credit facilities, as well as our Hyundai Samho Vendor Financing, which was fully repaid in 2015, bears interest at a rate of LIBOR plus an applicable margin. The weighted average interest rate margin over LIBOR in respect of our credit facilities was 1.97% and 2.03% for the years ended December 31, 2015 and 2014, respectively.
        As described above, the interest rate, amortization profile and certain other terms of each of our previously existing credit facilities were adjusted to provide for consistent terms under each facility pursuant to the terms of the Bank Agreement, other than with respect to our KEXIM and KEXIM-ABN Amro credit facilities which are not covered by the Bank Agreement, but were amended through a separate supplemental agreement signed on September 12, 2013. Our KEXIM credit facility, under which outstanding indebtedness bears interest at a fixed rate of 5.0125%, and our KEXIM-ABN Amro credit facility, under which $36.6 million of the outstanding indebtedness, as of December 31, 2015, bears interest at a fixed rate of 5.52% and $9.0 million of the outstanding indebtedness, as of December 31, 2015, bears interest at a rate of LIBOR plus a margin, have maturity dates of November 2018 and September 2018 (in respect of the fixed rate tranche) and November 2018 and September 2018 (in respect of the floating rate tranche), respectively.
 Interest Rate Swaps
        We have entered into interest rate swap agreements converting floating interest rate exposure into fixed interest rates in order to hedge our exposure to fluctuations in prevailing market interest rates, as well as interest rate swap agreements converting the fixed rate we pay in connection with certain of our credit facilities into floating interest rates in order to economically hedge the fair value of the fixed rate credit facilities against fluctuations in prevailing market interest rates. See "Item 11. Quantitative and Qualitative Disclosures About Market Risk" and "—Factors Affecting our Results of Operations—Unrealized and realized loss on derivatives."
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 Contractual Obligations
        Our contractual obligations as of December 31, 2015 were:

																	
 	 	Payments Due by Period	 	
 	 	Total	 	Less than
1 year
(2016)	 	1 - 3 years
(2017 - 2018)	 	3 - 5 years
(2019 - 2020)	 	More than
5 years (After
January 1,
2021)	 	
 	 	in thousands of Dollars	 	
Long-term debt obligations of contractual fixed debt principal repayments(1)	 	 $	2,759,444	 	 	183,173	 	 	2,515,251	 	 	40,680	 	 	20,340	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
Long-term debt obligations including both contractual fixed and estimated variable debt principal repayments(2)	 	 $	2,759,444	 	 	269,546	 	 	2,428,878	 	 	40,680	 	 	20,340	 	
Interest on long-term debt obligations(3)	 	 $	228,076	 	 	72,851	 	 	150,461	 	 	4,167	 	 	597	 	
Payments to our manager(4)	 	 $	25,837	 	 	25,837	 	 	—	 	 	—	 	 	—	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
Total	 	 $	3,013,357	 	 $	368,234	 	 $	2,579,339	 	 $	44,847	 	 $	20,937	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	

(1)
These long-term debt obligations reflect our existing debt obligations as of December 31, 2015 giving effect to the Bank Agreement under which we are required to make quarterly principal payments in fixed amounts and additional principal payments in such amounts that, together with the fixed principal payment, equals a certain percentage of our Actual Free Cash Flow each quarter (refer to "—Bank Agreement—Principal Payments" above). These amounts include only the contractually fixed principal payments, and no variable amortization amounts. The last payment, due on December 31, 2018, will also include the unamortized remaining principal debt balances, as such amounts will be determinable following the fixed and variable amortization. These long-term debt obligations also include contractual amortization payments of our Sinosure-CEXIM, KEXIM and KEXIM-ABN Amro credit facilities.

(2)
These long-term debt obligations reflect our existing debt obligations as of December 31, 2015 giving effect to the Bank Agreement under which we are required to make quarterly principal payments in fixed amounts and additional principal payments in such amounts that, together with the fixed principal payment, equals a certain percentage of our Actual Free Cash Flow each quarter (refer to "—Bank Agreement—Principal Payments" above). These amounts include both the contractually fixed principal payments, as well as management's estimate of the future Actual Free Cash Flows and resulting variable amortization. The last payment due on December 31, 2018, will also include the unamortized remaining principal debt balances, as such amounts will be determinable following the fixed and variable amortization. These long-term debt obligations also include contractual amortization payments of our Sinosure-CEXIM, KEXIM and KEXIM-ABN Amro credit facilities.

(3)
The interest payments in this table reflect our existing debt obligations as of December 31, 2015 giving effect to the Bank Agreement under which we are required to make quarterly principal payments in fixed amounts and additional principal payments in such amounts that, together with the fixed principal payment, equals a certain percentage of our Actual Free Cash Flow each quarter. The calculation of interest is based on outstanding debt balances as of December 31, 2015 amortized by both the contractual fixed and variable amortization payments, with such variable amortization payments based on management estimates as described in footnote 2 to this table
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above. The interest payments in this table are based on an assumed LIBOR rate of 0.82% in 2016, 1.38% in 2017 and up to a maximum of 2.38% thereafter. The actual variable amortization we pay may differ from management's estimates, which would result in different interest payment obligations. This table, including the interest payments, does not reflect the terms of our interest rate swap agreements which are described in "Item 11. Quantitative and Qualitative Disclosures About Market Risk."
(4)
Under our management agreement with Danaos Shipping, effective January 1, 2015, the management fees are a fee of $850 per day, a fee of $425 per vessel per day for vessels on bareboat charter and $850 per vessel per day for vessels on time charter. As of December 31, 2015, we had a fleet of 56 containerships (one of which we sold in January 2016), out of which 51 were on time charter and two on bareboat charter. These management fees will be adjusted annually by agreement between us and our manager. In addition, we also will pay our manager a fee of 1.25% of the gross freight, demurrage and charter hire collected from the employment of our ships, 0.5% of the contract price of any vessels bought or sold on our behalf and $725,000 per newbuilding vessel, if any, for the supervision of any newbuilding contracts. We expect to be obligated to make the payments set forth in the above table under our management agreement in the year ending December 31, 2016, based on our revenue, as reflected above under "—Factors Affecting Our Results of Operations—Operating Revenues," and our currently anticipated vessel acquisitions and dispositions and chartering arrangements described in this annual report. No interest is payable with respect to these obligations if paid on a timely basis, therefore no interest payments are included in these amounts.
 Research and Development, Patents and Licenses
        We incur from time to time expenditures relating to inspections for acquiring new vessels that meet our standards. Such expenditures are insignificant and they are expensed as they are incurred.
 Trend Information
        Our results of operations depend primarily on the charter hire rates that we are able to realize. Charter hire rates paid for containerships are primarily a function of the underlying balance between vessel supply and demand and respective charter-party details. The demand for containerships is determined by the underlying demand for goods which are transported in containerships.
        After improving in 2010 and early 2011 from the historic lows in late 2008 and 2009, since the third quarter of 2011 freight rates obtained by liner companies have declined and charter rates for containerships have decreased sharply, with significant further declines since the middle of 2015 after a mild uptick in the first half of 2015, in many cases to a level below operating costs. Although global demand for seaborne transportation of containerized cargoes is estimated to have increased modestly overall in 2015, the second half of 2015 experienced a significant decline in demand. As such, container freight rates and containership charter rates are expected to remain under pressure, including due to the significant amount of newbuildings scheduled to be delivered in 2016, which may be offset part by the potential for higher scrapping activity, until global economic demand strengthens thereby absorbing capacity. Global demand is expected to be impacted by continued economic weakness in Europe and the resulting impact on consumer demand in Europe, the impact of low commodity prices on imports into commodity-exporting developing economies and slower Chinese economic activity. Global containership demand is, however, expected to balance supply growth in 2016, while differing across different trade lanes and vessel sizes. In particular, the relative weakness of the main trade lanes, which utilize larger vessels, has resulted in cascading of larger containerships for use on shorter trades, with such cascading expected to continue.
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        The idle containership fleet at the end of 2015 stood at approximately 7% of global fleet capacity, well above the 1.3% level at the end of 2014, and the highest level since early 2010. Earnings fell sharply with the guideline rate for a 4,400 TEU Panamax reaching a record low of $6,000 per day at the end of 2015. After limited containership newbuilding orders since 2009, other than some ordering in early 2011, containership newbuilding orders increased significantly in 2013 through 2015. The size of the order book compared to global fleet capacity was approximately 19% as of the end of 2015, down from record high levels in 2008 but still relatively high compared to historical averages. In particular, larger containerships of greater than 10,000 TEU represent a significant majority of the order book with approximately 4,300,000 TEU of vessels of over 10,000 TEU scheduled to be delivered between 2016 and 2018. The "slow-steaming" of services since 2009, particularly on longer trade routes, enabled containership operators to both moderate the impact of high bunker costs, while absorbing additional capacity. This has proved to be an effective approach and it currently appears likely that this will remain in place in the coming year. A number of liner companies, including some of our customers, reported substantial losses in 2015 and other recent years, as well as having announced plans to reduce the number of vessels they charter-in and enter into consolidating mergers or form cooperative alliances as part of efforts to reduce the size of their fleets to better align fleet capacity with the reduced demand for marine transportation of containerized cargo, all of which may decrease the demand for chartered-in containership tonnage.
 Off-Balance Sheet Arrangements
        We do not have any other transactions, obligations or relationships that could be considered material off-balance sheet arrangements.
 Critical Accounting Policies
        We prepare 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 refer to Note 2, Significant Accounting Policies, to our consolidated financial statements included elsewhere in this annual report.
 Purchase of Vessels
        Vessels are stated at cost, which consists of the contract purchase price and any material expenses incurred upon acquisition (improvements and delivery expenses), less accumulated depreciation. Subsequent expenditures for conversions and major improvements are also capitalized when they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels. Otherwise we charge these expenditures to expenses as incurred. Our financing costs incurred during the construction period of the vessels are included in vessels' cost.
        The vessels that we acquire in the secondhand market are treated as a business combination to the extent that such acquisitions include continuing operations and business characteristics, such as management agreements, employees and customer base, otherwise we treat an acquisition of a secondhand vessel as a purchase of assets which has been the case for all of our vessel acquisitions. Where we identify any intangible assets or liabilities associated with the acquisition of a vessel purchased on the secondhand market, we record all identified tangible and intangible assets or liabilities at fair value. Fair value is determined by reference to market data and the discounted amount of expected future cash flows. We have in the past acquired certain vessels in the secondhand market. These acquisitions were considered to be acquisitions of assets, which were also recorded at fair value.
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Certain vessels in our fleet that were purchased in the secondhand market were acquired with existing charters. We determined that the existing charter contracts for these vessels did not have a material separate fair value and, therefore, we recorded such vessels at their fair value, which equaled the consideration paid.
        The determination of the fair value of acquired assets and assumed liabilities requires us to make significant assumptions and estimates of many variables, including market charter rates, expected future charter rates, future vessel operating expenses, the level of utilization of our vessels and our weighted average cost of capital. The use of different assumptions could result in a material change in the fair value of these items, which could have a material impact on our financial position and results of operations.
 Revenue Recognition
        Our revenues and expenses are recognized on the accrual basis. Revenues are generated from bareboat hire and time charters. Bareboat hire revenues are recorded over the term of the hire on a straight-line basis. Time charter revenues are recorded over the term of the charter as service is provided. Unearned revenue includes revenue received in advance, and the amount recorded for an existing time charter acquired in conjunction with an asset purchase.
 Special Survey and Drydocking Costs
        We follow the deferral method of accounting for special survey and drydocking costs. Actual costs incurred are deferred and are amortized on a straight- line basis over the period until the next scheduled survey, which is two and a half years. If special survey or drydocking is performed prior to the scheduled date, the remaining unamortized balances are immediately written-off.
        Major overhauls performed during drydocking are differentiated from normal operating repairs and maintenance. The related costs for inspections that are required for the vessel's certification under the requirement of the classification society are categorized as drydock costs. A vessel at drydock performs certain assessments, inspections, refurbishments, replacements and alterations within a safe non-operational environment that allows for complete shutdown of certain machinery and equipment, navigational, ballast (keep the vessel upright) and safety systems, access to major underwater components of vessel (rudder, propeller, thrusters anti-corrosion systems), which are not accessible during vessel operations, as well as hull treatment and paints. In addition, specialized equipment is required to access and maneuver vessel components, which are not available at regular ports.
 Vessel Lives and Estimated Scrap Values
        Our vessels represent our most significant assets and we state them at our historical cost, which includes capitalized interest during construction and other construction, design, supervision and predelivery costs, less accumulated depreciation. We depreciate our containerships, and for the periods prior to their sale, our drybulk carriers, on a straight-line basis over their estimated remaining useful economic lives. We estimate the useful lives of our containerships to be 30 years in line with the industry practice. Depreciation is based on cost less the estimated scrap value of the vessels. Should certain factors or circumstances cause us to revise our estimate of vessel service lives in the future or of estimated scrap values, depreciation expense could be materially lower or higher. Such factors include, but are not limited to, the extent of cash flows generated from future charter arrangements, changes in international shipping requirements, and other factors many of which are outside of our control.
        We have calculated the residual value of the vessels taking into consideration the 10 year average and the five year average of the scrap. We have applied uniformly the scrap value of $300 per ton for all vessels. We believe that $300 per ton is a reasonable estimate of future scrap prices, taking into consideration the cyclicality of the nature of future demand for scrap steel. Although we believe that the assumptions used to determine the scrap rate are reasonable and appropriate, such assumptions are highly subjective, in part, because of the cyclical nature of future demand for scrap steel.
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 Impairment of Long-lived Assets
        We evaluate the net carrying value of our vessels for possible impairment when events or conditions exist that cause us to question whether the carrying value of the vessels will be recovered from future undiscounted net cash flows. An impairment charge would be recognized in a period if the fair value of the vessels was less than their carrying value and the carrying value was not recoverable from future undiscounted cash flows. Considerations in making such an impairment evaluation would include comparison of current carrying value to anticipated future operating cash flows, expectations with respect to future operations, and other relevant factors.
        As of December 31, 2015, we concluded that events occurred and circumstances had changed, which may trigger the existence of potential impairment of our long-lived assets. These indicators included volatility in the charter market and decline in the vessels' market values, as well as the potential impact the current marketplace may have on our future operations. As a result, we performed an impairment assessment of our long-lived assets by comparing the undiscounted projected net operating cash flows for each vessel to their carrying value. Our strategy is to charter our vessels under multi- year, fixed rate period charters that range from less than one to 18 years for our current vessels, providing us with contracted stable cash flows. The significant factors and assumptions we used in our undiscounted projected net operating cash flow analysis included operating revenues, off-hire revenues, dry docking costs, operating expenses and management fees estimates.
        Revenue assumptions were based on contracted time charter rates up to the end of life of the current contract of each vessel as well as the estimated average time charter equivalent rates for the remaining life of the vessel after the completion of its current contract. The estimated daily time charter equivalent rates used for non-contracted revenue days are based on a combination of (i) recent charter market rates, (ii) conditions existing in the containership market as of December 31, 2015, (iii) historical average time charter rates, based on publications by independent third party maritime research services, and (iv) estimated future time charter rates, based on publications by independent third party maritime research services that provide such forecasts. We have five 2012-built 13,100 TEU vessels currently employed on 12-year charters, with breakeven rechartering rates of about $14,364 per day on average. Vessels of this size are recent entrants into the containership market and, accordingly, historical data as to their re-chartering rates is episodic. We estimated rechartering rates for these 13,100 TEU vessels for step one of the impairment analysis based on forecasts of independent third party maritime research services, which took into account recent chartering rates for newbuilding vessels of this size and estimates based on historical charter rates for other larger sized containerships. Recognizing that the container transportation is cyclical and subject to significant volatility based on factors beyond our control we believe that the appropriate historical average time charter rates to use as a benchmark for impairment testing of our vessels are the most recent 10 year averages, to the extent available, as such averages take into account the volatility and cyclicality of the market. Management believes the use of revenue estimates, based on the combination of factors (i) to (iv) above, to be reasonable as of the reporting date.
        In addition, we used annual operating expenses escalation factors and estimations of scheduled and unscheduled off-hire revenues based on historical experience. All estimates used and assumptions made were in accordance with our internal budgets and historical experience of the shipping industry.
        The more significant factors that could impact management's assumptions regarding time charter equivalent rates include (i) loss or reduction in business from significant customers, (ii) unanticipated changes in demand for transportation of containers, (iii) greater than anticipated levels of containership newbuilding orders or lower than anticipated levels of containership scrappings, and (iv) changes in rules and regulations applicable to the shipping industry, including legislation adopted by international organizations such as IMO and the EU or by individual countries. Although management believes that the assumptions used to evaluate potential impairment are reasonable and appropriate at the time they
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were made, such assumptions are highly subjective and likely to change, possibly materially, in the future. There can be no assurance as to how long charter rates and vessel values will remain at their current low levels or whether they will improve by a significant degree.
        As of December 31, 2015, our assessment concluded that step two of the impairment analysis was required for twelve of our older vessels held and used, as their undiscounted projected net operating cash flows did not exceed their carrying value. The fair values of these vessels were determined with assistance from valuations obtained from third party independent shipbrokers. As of December 31, 2015 we recorded an impairment loss of $39.0 million for twelve of our older vessels held and used and an impairment loss of $2.1 million for the vessel Federal , which was held for sale as of December 31, 2015.
 Impairment Sensitivity Analysis
        For the 43 vessels for which our assessment concluded that step two of the impairment analysis was not required, an internal analysis, which used a discounted cash flow model utilizing inputs and assumptions based on market observations as of December 31, 2015, and is also in accordance with our vessels' market valuation as described in our credit facilities and accepted by our lenders, suggests that 19 vessels have current market values that exceed their carrying values and 24 vessels may have current market values below their carrying values. We believe that each of the 24 vessels identified as having estimated market values less than their carrying value, 20 of which are currently under long-term time charters expiring from March 2019 through July 2022 and 4 of which are currently under time charters expiring from March 2016 through September 2016, will recover their carrying values through the end of their useful lives, based on their undiscounted net cash flows calculated in accordance with our impairment assessment.
        While the Company intends to hold and operate its vessels, the following table presents information with respect to the carrying amount of the Company's vessels and indicates whether their estimated market values are below their carrying values. The carrying value of each of the Company's vessels does not represent its market value or the amount that could be obtained if the vessel were sold. The Company's estimates of market values are based on an internal analysis, which used a discounted cash flow model utilizing inputs and assumptions based on market observations, and is also in accordance with its vessels' market valuation, determined as of the dates indicated, following the methodology as described in its credit facilities and accepted by its lenders. In addition, because vessel 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 a loss for any of the vessels for which the market value is below its carrying value unless and until the
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Company either determines to sell the vessel for a loss or determines that the vessel's carrying value is not recoverable as discussed above.

														
Vessel 	 	TEU	 	Year
Built	 	Net Book Value
December 31, 2015
(In thousands
of Dollars)	 	Net Book Value
December 31, 2014
(In thousands
of Dollars)	 	
Hyundai Together	 	 	13,100	 	 	2012	 	 	158,008	 	 	163,535	 	
Hyundai Tenacity	 	 	13,100	 	 	2012	 	 	157,848	 	 	163,356	 	
Hyundai Speed	 	 	13,100	 	 	2012	 	 	160,005	 	 	165,551	 	
Hyundai Smart	 	 	13,100	 	 	2012	 	 	159,433	 	 	164,972	 	
Hyundai Ambition	 	 	13,100	 	 	2012	 	 	160,555	 	 	166,110	 	
Hanjin Germany	 	 	10,100	 	 	2011	 	 	132,260	 	 	137,028	 	
Hanjin Italy	 	 	10,100	 	 	2011	 	 	132,714	 	 	137,488	 	
Hanjin Greece	 	 	10,100	 	 	2011	 	 	132,872	 	 	137,639	 	
CSCL Le Havre	 	 	9,580	 	 	2006	 	 	60,843	 	 	63,241	 	
CSCL Pusan	 	 	9,580	 	 	2006	 	 	59,750	 	 	62,120	 	
CMA CGM Melisande	 	 	8,530	 	 	2012	 	 	109,441	 	 	113,206	 	
CMA CGM Attila	 	 	8,530	 	 	2011	 	 	104,174	 	 	107,832	 	
CMA CGM Tancredi	 	 	8,530	 	 	2011	 	 	106,421	 	 	110,148	 	
CMA CGM Bianca	 	 	8,530	 	 	2011	 	 	106,837	 	 	110,555	 	
CMA CGM Samson	 	 	8,530	 	 	2011	 	 	106,958	 	 	110,695	 	
CSCL America(3)	 	 	8,468	 	 	2004	 	 	47,352	 	 	49,223	 	
CSCL Europe(3)	 	 	8,468	 	 	2004	 	 	46,470	 	 	48,307	 	
CMA CGM Moliere(3)	 	 	6,500	 	 	2009	 	 	79,092	 	 	82,037	 	
CMA CGM Musset(3)	 	 	6,500	 	 	2010	 	 	80,443	 	 	83,431	 	
CMA CGM Nerval(3)	 	 	6,500	 	 	2010	 	 	80,951	 	 	83,938	 	
CMA CGM Rabelais(3)	 	 	6,500	 	 	2010	 	 	81,740	 	 	84,747	 	
CMA CGM Racine(3)	 	 	6,500	 	 	2010	 	 	81,627	 	 	84,609	 	
YM Mandate	 	 	6,500	 	 	2010	 	 	85,957	 	 	89,178	 	
YM Maturity	 	 	6,500	 	 	2010	 	 	86,988	 	 	90,220	 	
Performance	 	 	6,402	 	 	2002	 	 	17,897	 	 	18,404	 	
Priority	 	 	6,402	 	 	2002	 	 	17,907	 	 	18,385	 	
Federal(2)	 	 	4,651	 	 	1994	 	 	0	 	 	8,533	 	
SNL Colombo(3)	 	 	4,300	 	 	2004	 	 	43,382	 	 	45,479	 	
YM Singapore(3)	 	 	4,300	 	 	2004	 	 	44,545	 	 	46,641	 	
YM Seattle(3)	 	 	4,253	 	 	2007	 	 	53,507	 	 	55,745	 	
YM Vancouver(3)	 	 	4,253	 	 	2007	 	 	54,145	 	 	56,370	 	
ZIM Rio Grande(3)	 	 	4,253	 	 	2008	 	 	50,187	 	 	52,195	 	
ZIM Sao Paolo(3)	 	 	4,253	 	 	2008	 	 	50,780	 	 	52,779	 	
OOCL Istanbul(3)	 	 	4,253	 	 	2008	 	 	51,008	 	 	53,005	 	
ZIM Monaco(3)	 	 	4,253	 	 	2009	 	 	51,666	 	 	53,685	 	
OOCL Novorossiysk(3)	 	 	4,253	 	 	2009	 	 	51,785	 	 	53,780	 	
ZIM Luanda(3)	 	 	4,253	 	 	2009	 	 	52,533	 	 	54,552	 	
Derby D(3)	 	 	4,253	 	 	2004	 	 	23,193	 	 	24,167	 	
Deva(3)	 	 	4,253	 	 	2004	 	 	22,776	 	 	23,721	 	
Dimitris C(1)	 	 	3,430	 	 	2001	 	 	10,583	 	 	14,517	 	
Hanjin Santos(3)	 	 	3,400	 	 	2010	 	 	49,661	 	 	51,481	 	
Hanjin Versailles(3)	 	 	3,400	 	 	2010	 	 	50,052	 	 	51,868	 	
Hanjin Algeciras(3)	 	 	3,400	 	 	2011	 	 	50,795	 	 	52,629	 	
Hanjin Buenos Aires(3)	 	 	3,400	 	 	2010	 	 	49,381	 	 	51,202	 	
Hanjin Constantza(3)	 	 	3,400	 	 	2011	 	 	51,594	 	 	53,453	 	
MSC Zebra(1)	 	 	2,602	 	 	2001	 	 	7,871	 	 	11,564	 	
Danae C(1)	 	 	2,524	 	 	2001	 	 	8,086	 	 	11,892	 	
Amalia C(1)	 	 	2,452	 	 	1998	 	 	6,200	 	 	7,129	 	
Hyundai Advance(1)	 	 	2,200	 	 	1997	 	 	6,650	 	 	11,050	 	
Hyundai Future(1)	 	 	2,200	 	 	1997	 	 	7,000	 	 	11,219	 	
Hyundai Sprinter(1)	 	 	2,200	 	 	1997	 	 	7,000	 	 	11,229	 	
Hyundai Stride(1)	 	 	2,200	 	 	1997	 	 	6,750	 	 	11,050	 	
Hyundai Progress(1)	 	 	2,200	 	 	1998	 	 	7,900	 	 	12,183	 	
Hyundai Bridge(1)	 	 	2,200	 	 	1998	 	 	8,150	 	 	12,260	 	
Hyundai Highway(1)	 	 	2,200	 	 	1998	 	 	8,150	 	 	12,240	 	
Hyundai Vladivostok(1)	 	 	2,200	 	 	1997	 	 	6,450	 	 	10,765	 	
 ​	​	​	​	​	​	​	​	​ 	​ 	​	​ 	​ 	​	
Total	 	 	 	 	 	 	 	 $	3,446,323	 	 $	3,624,338	 	
 ​	​	​	​	​	​	​	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	
 ​	​	​	​	​	​	​	​	​ 	​ 	​	​ 	​ 	​	

(1)
As of December 31, 2015, we recorded an impairment loss of $39.0 million in aggregate for these twelve vessels, with each vessel written down to its fair value.
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(2)
The vessel Federal was held for sale as of December 31, 2015, for which an impairment loss of $2.1 million was recognized.

(3)
Indicates vessels for which, as of December 31, 2015, the estimated market value is lower than the vessel's carrying value. The aggregate carrying value of these 24 vessels exceeded their aggregate estimated market value by approximately $252.6 million as of December 31, 2015 and by approximately $171.9 million as of December 31, 2014 in relation to 17 vessels, excluding the CMA CGM Moliere, CMA CGM Musset, CMA CGM Nerval, CMA CGM Rabelais, CMA CGM Racine, CSCL America and CSCL Europe, which had estimated market values in excess of their carrying values as of such date. The aggregate increase in the amount by which the carrying values exceeded the estimated market values for these 24 vessels as of December 31, 2015 as compared to December 31, 2014 is attributable to the deterioration of containership values as a consequence of reduced demand for seaborne transportation of containerized cargoes due to the weak global economic environment. We believe, however, that each of these 24 vessels, 20 of which are currently under long-term time charters expiring from March 2019 through July 2022 and 4 of which are currently under time charters expiring from March 2016 through September 2016, will recover their carrying values through the end of their useful lives, based on their undiscounted net cash flows calculated in accordance with management's impairment assessment. We currently do not expect to sell any of these vessels, or otherwise dispose of them, significantly before the end of their estimated useful life. Other than 21 vessels which had aggregate carrying values that were $182.0 million in excess of their aggregate estimated market values as of December 31, 2014, which included four vessels, Dimitris C, MSC Zebra, Danae C and Amalia C, for which we recognized an impairment charge as of December 31, 2015 as detailed in the above table, no other vessels had carrying values in excess of their estimated market values as of December 31, 2014.
        As discussed above, we believe that the appropriate historical period to use as a benchmark for impairment testing of our vessels is the most recent 10 years, to the extent available, as such averages take into account the volatility and cyclicality of the market and we generally do not consider charter market rates over a short historical period to be a reliable indicator of the future revenues to be earned by our vessels or their potential impairment. Charter rates are, however, subject to change based on a variety of factors that we cannot control and we note that charter rates over the last few years have been, on average, below their ten year historical average.
        In connection with the impairment testing of our vessels as of December 31, 2015, for the 24 vessels that our internal analysis suggests that may have current market values below their carrying values, we performed a sensitivity analysis on the most sensitive and/or subjective assumption that has the potential to affect the outcome of the test, the projected charter rate used to forecast future cash flows for non-contracted days. The following table summarizes information about these 24 vessels, including the breakeven charter rates and the one-year charter rate historical average for the last 1, 3, 5, 10 and 15 years, respectively.

																						
Vessel/Year Built 	 	Break Even
re-chartering
rate(5)
($ per day)	 	Assumed
Rechartering
Rate(6)/Percentage
difference between
break even and
assumed
re-chartering
rates(7)
($ per day)/(%)	 	1 year
charter rate
historical
average of
last 1 year
($ per day)	 	1 year
charter rate
historical
average of
last 3 years
($ per day)	 	1 year
charter rate
historical
average of
last 5 years
($ per day)	 	1 year
charter rate
historical
average of
last 10 years
($ per day)	 	1 year
charter rate
historical
average of
last 15 years
($ per day)	 	
2 × 8,468 TEU vessels (2004)(1)	 	 $	15,556	 	$27,200 / 42.8%	 	 $	25,764	 	 $	27,745	 	 $	31,367	 	 $	34,873	 	 $	40,179	 	
5 × 6,500 TEU vessels (2009 - 2010)(2)	 	 $	12,741	 	$22,500 / 43.4%	 	 $	14,525	 	 $	17,525	 	 $	20,545	 	 $	25,518	 	 $	30,913	 	
10 × 4,253 & 2 × 4,300 TEU vessels (2004 - 2009)(3)	 	 $	13,943	 	$17,330 / 19.5%	 	 $	11,469	 	 $	9,648	 	 $	11,824	 	 $	17,455	 	 $	22,035	 	
5 × 3,400 TEU vessels (2010 - 2011)(4)	 	 $	12,481	 	$15,000 / 16.8%	 	 $	10,009	 	 $	8,562	 	 $	10,062	 	 $	14,621	 	 $	18,539	 	

(1)
Our two 8,468 TEU vessels are under long-term time charter contracts, which will expire within the next twelve months with CSCL with the earliest expiration dates of the charters being as follows: the CSCL Europe, on June 27, 2016 and the CSCL America, on September 2, 2016.

(2)
Our five 6,500 TEU vessels are under long-term time charter contracts with CMA CGM with the earliest expiration dates of the charters being as follows: the CMA CGM Moliere, on August 28, 2021, the CMA CGM Musset, on February 12, 2022, the CMA CGM Nerval, on April 17, 2022, the CMA CGM Rabelais , on June 2, 2022 and the CMA CGM Racine, on July 16, 2022.
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(3)
Six of our 4,253 TEU vessels are under long-term time charter contracts with ZIM Integrated Shipping Services with the earliest expiration dates of the charters being as follows: the ZIM Rio Grande , on May 20, 2020, the ZIM Sao Paolo, on August 8, 2020, the OOCL Istanbul , on September 19, 2020, the ZIM Monaco , on November 18, 2020, the OOCL Novorossiysk , on February 14, 2021 and the ZIM Luanda , on May 12, 2021. Two of our 4,253 vessels are under long-term time charter contracts with Yang Ming with the earliest expiration dates of the charters being as follows: the YM Seattle , on July 10, 2019 and the Vancouver , on September 27, 2019. One of our 4,253 TEU vessels is under short-term time charter contract with CMA CGM with the earliest expiration date of the Derby D , on April 2, 2016. One of our 4,253 TEU containerships is under short-term time charter contract with ZIM with the earliest expiration date of the Deva , on March 31, 2016. Two of our 4,300 TEU vessels are under long-term time charter contracts with Yang Ming with the earliest expiration dates of the charters being as follows: the SNL Colombo , on March 5, 2019 and the YM Singapore , on October 28, 2019.

(4)
Our five 3,400 TEU vessels are under long-term time charter contracts with Hanjin with the earliest expiration dates of the charters being as follows: the Hanjin Buenos Aires , on March 27, 2020, the Hanjin Santos, on May 6, 2020, the Hanjin Versailles , on August 11, 2020, the Hanjin Algeciras , on November 28, 2020, the Hanjin Constantza , on February 15, 2021.

(5)
The breakeven re-chartering rate is the charter rate that if used in step one of the impairment testing will result in the undiscounted total cash flows being equal to the carrying value of the vessel. The use of charter rates below the breakeven re-chartering rate would trigger step two of the impairment testing that would result in the recording of an aggregate impairment loss of $252.6 million as of December 31, 2015.

(6)
Re-chartering rate used in our impairment testing as of December 31, 2015, to estimate the revenues for the remaining life of the respective vessels after the expiration of their existing charter contracts.

(7)
The variance in percentage points of the breakeven re-chartering rate per day compared to the per day re-chartering assumption used in Step 1 of the Company's impairment testing analysis.
        If we had used the historical average one-year charter rates for the last 10 or 15 years, the results of our 2015 impairment testing on all vessel categories discussed on the above table would not have been impacted, as the cash flow forecasts would still result in each vessel's carrying cost being recovered. If, however, historical average one-year charter rates for the last 1, 3, or 5 years had been used in the cash flow forecasts of our two 8,468 TEU vessels, five 6,500 TEU vessels, ten 4,253 TEU vessels, two 4,300 TEU vessels, and five 3,400 TEU vessels, then the carrying values of the respective vessels, which are currently under time charters expiring from March 2016 through July 2022, would not have been recovered. As noted above, we believe that the appropriate historical period to be used as a reference for the purposes of impairment testing of these vessels should be over 10 years as such averages take into account the volatility and cyclicality of the market. Additionally, on the premise of a 30 year useful life, given that these vessels will have a remaining life above 10 years when they come off charter, the historical 10 year average is considered by the management as the most reasonable reference point when assessing the earnings generation potential of these vessels during their remaining life after expiry of their current charters.
        We also performed a sensitivity analysis on the other 19 vessels identified as having current market values exceeding their carrying values, which indicated that if we had used the historical average one-year charter rates for corresponding size vessels (for our five 13,100 TEU vessels, rates for 9,500 to 10,100 TEU vessels were used for purposes of this sensitivity analysis) for the most recent 1, 3 or 5 year periods, the cash flow forecasts would still have resulted in each vessel's carrying cost being recovered for all vessels. The breakeven re-chartering rates for all 19 vessels ranged from zero, in two cases, and otherwise, from $11,422 to $15,252 per day. We believe that each of these 19 vessels, which had an average remaining useful life of 24.2 years, an average remaining charter duration of 6.9 years and an average useful life after the end of their current charters of 17.2 years, can be reasonably anticipated to recover their carrying values through the end of their useful lives. Furthermore, as discussed above, the Company's internal analysis suggested that each of these vessels had a market value in excess of its carrying value as of December 31, 2015.
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 Recent Accounting Pronouncements
        In May 2014, the FASB issued Accounting Standards Update No. 2014-9 "Revenue from Contracts with Customers" ("ASU 2014-09"), which will supersede the current revenue recognition guidance and outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The ASU 2014-09 was amended by ASU 2015-14 "Revenue from Contracts with Customers: Deferral of the Effective Date" ("ASU 2015-014"), which was issued in August 2015. Public entities can now elect to defer implementation of ASU 2014-09 to interim and annual periods beginning after December 15, 2017. Additionally, ASU 2015-14 permits early adoption of the standard but not before the original effective date, i.e. annual period beginning after December 15, 2016. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is currently evaluating the impact that ASU 2014-09 will have on its consolidated financial statements and associated disclosures, and have not yet selected a transition method.
        In February 2015, the FASB issued Accounting Standards Update No. 2015-02, "Consolidation (Topic 810)—Amendments to the Consolidation Analysis", ("ASU 2015-02"). ASU 2015-02 amends the criteria for determining which entities are considered variable interest entities ("VIEs"), amends the criteria for determining if a service provider possesses a variable interest in a VIE and ends the deferral granted to investment companies for application of the VIE consolidation model. The ASU is effective for interim and annual periods beginning after December 15, 2015. Early application is permitted. The Company does not expect the adoption of this ASU to have a material impact on the Company's results of operations, financial position or cash flows.
        In April 2015, the FASB issued Accounting Standards Update No. 2015-03 "Simplifying the Presentation of Debt Issuance Costs", ("ASU 2015-03"). ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The amendments are effective for annual periods ending after December 15, 2015, and interim periods within annual periods beginning after December 15, 2015. Early application is permitted. The Company is not early adopting this standard. After its adoption in 2016, this change will result in a reclassification of $35.0 million from Deferred charges, net to Long-term debt in the consolidated balance sheet as of December 31, 2015. Additionally, amortization of deferred finance costs amounting to $14.0 million will be reclassified from Other finance expenses to Interest expense in the consolidated statement of operations for the year ended December 31, 2015.
        In January 2016, the FASB issued Accounting Standards Update No. 2016-01, "Recognition and Measurement of Financial Assets and Financial Liabilities" ("ASU 2016-01"). ASU 2016-01 requires all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under equity method of accounting or those that result in consolidation of the investee).The amendments in this Update also require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. In addition the amendments in this Update eliminate the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities and the requirement for to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet for public business entities. The amendments are effective for annual periods ending after December 15, 2017, including interim periods within those fiscal years. Early application is not permitted. The Company is currently evaluating the new guidance to determine the impact it will have on its consolidated financial statements and notes disclosures.
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        In February 2016, the FASB issued Accounting Standards Update No. 2016-02, "Leases (Topic 842)" ("ASU 2016-02"). ASU 2016-02 will apply to both types of leases—capital (or finance) leases and operating leases. According to the new Accounting Standard, lessees will be required to recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases with terms of more than 12 months. ASU 2016—02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. The Company is currently assessing the impact that adopting this new accounting guidance will have on its consolidated financial statements and notes disclosures.
Item 6.    Directors, Senior Management and Employees
        The following table sets forth, as of February 29, 2016, information for each of our directors and executive officers.

						
Name 	 	Age	 	Position	
Dr. John Coustas	 	 	60	 	President and CEO and Class I Director	
Iraklis Prokopakis	 	 	65	 	Senior Vice President, Chief Operating Officer and Treasurer and Class II Director	
Evangelos Chatzis	 	 	43	 	Chief Financial Officer and Secretary	
Dimitris Vastarouchas	 	 	48	 	Deputy Chief Operating Officer	
George Economou	 	 	63	 	Class II Director	
Myles R. Itkin	 	 	68	 	Class I Director	
Miklós Konkoly-Thege	 	 	73	 	Class III Director	
William Repko	 	 	66	 	Class II Director	
        The term of our Class I directors expires in 2018, the term of our Class II directors expires in 2017 and the term of our Class III directors expires in 2016. Certain biographical information about each of these individuals is set forth below.
         Dr. John Coustas is our President, Chief Executive Officer and a member of our board of directors. Dr. Coustas has over 30 years of experience in the shipping industry. Dr. Coustas assumed management of our company in 1987 from his father, Dimitris Coustas, who founded Danaos Shipping in 1972, and has been responsible for our corporate strategy and the management of our affairs since that time. Dr. Coustas is also a member of the board of directors of the Union of Greek Shipowners and the Cyprus Union of Shipowners, President of HELMEPA (Hellenic Maritime Protection Agency), as well as Deputy Chairman of the board of directors of The Swedish Club. Dr. Coustas holds a degree in Marine Engineering from National Technical University of Athens as well as a Master's degree in Computer Science and a Ph.D. in Computer Controls from Imperial College, London.
         Iraklis Prokopakis is our Senior Vice President, Treasurer, Chief Operating Officer and a member of our board of directors. Mr. Prokopakis joined us in 1998 and has over 38 years of experience in the shipping industry. Prior to entering the shipping industry, Mr. Prokopakis was a captain in the Hellenic Navy. He holds a Bachelor of Science in Mechanical Engineering from Portsmouth University in the United Kingdom, a Master's degree in Naval Architecture and a Ship Risk Management Diploma from the Massachusetts Institute of Technology in the United States and a post-graduate diploma in business studies from the London School of Economics. Mr. Prokopakis also has a Certificate in Operational Audit of Banks from the Management Center Europe in Brussels and a Safety Risk Management Certificate from Det Norske Veritas. He is a member of the Board of the Hellenic Chamber of Shipping and the Owners' Committee of the Korean Register of Shipping.
         Evangelos Chatzis is our Chief Financial Officer and Secretary. Mr. Chatzis has been with Danaos Corporation since 2005 and has over 21 years of experience in corporate finance and the shipping industry. During his years with Danaos he has been actively engaged in the company's initial public
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offering in the United States and has led a variety of projects, the latest being the successfully concluded comprehensive financing plan of the company. Throughout his career he has developed considerable experience in operations, corporate finance, treasury and risk management and international business structuring. Prior to joining Danaos, Evangelos was the Chief Financial Officer of Globe Group of Companies, a public company in Greece engaged in a diverse scope of activities including dry bulk shipping, the textile industry, food production & distribution and real estate. During his years with Globe Group, he was involved in mergers and acquisitions, corporate restructurings and privatizations. He holds a Bachelor of Science degree in Economics from the London School of Economics, a Master's of Science degree in Shipping & Finance from City University Cass Business School, as well as a post-graduate diploma in Shipping Risk Management from IMD Business School.
         Dimitris Vastarouchas is our Deputy Chief Operating Officer. Mr. Vastarouchas has been the Technical Manager of our Manager since 2005 and has over 20 years of experience in the shipping industry. Mr. Vastarouchas initially joined our Manager in 1995 and prior to becoming Technical Manager he was the New Buildings Projects and Site Manager, under which capacity he supervised newbuilding projects in Korea for 4,250, 5,500 and 8,500 TEU containerships. He holds a degree in Naval Architecture & Marine Engineering from the National Technical University of Athens, Certificates & Licenses of expertise in the fields of Aerodynamics (C.I.T.), Welding (CSWIP), Marine Coating (FROSIO) and Insurance (North of England P&I). He is also a qualified auditor by Det Norske Veritas and Certified Negotiator by Schranner Negotiations Institute (SNI).
         George Economou has been a member of our board of directors since 2010. Mr. Economou has over 39 years of experience in the maritime industry. Mr. Economou began his career in 1976 and worked in shipping companies mostly in New York before starting his own company in 1986. Between 1986 and 1991, he invested and participated in the formation of numerous individual shipping companies. He has served as Chairman, President and Chief Executive Officer of Dryships Inc. since its incorporation in 2004. He successfully took the company public in February 2005, on NASDAQ under the trading symbol: DRYS. Mr. Economou oversaw the company's growth into the largest US listed dry bulk company in fleet size and revenue and the second largest Panamax owner in the world. The company subsequently invested and developed Ocean Rig UDW, an owner of rigs and ships involved in ultra deep water drilling, which is also trading on NASDAQ under the trading symbol: ORIG. Mr. Economou is a graduate of the Massachusetts Institute of Technology and holds both a Bachelor of Science and a Master of Science degree in Naval Architecture and Marine Engineering and a Master of Science in Shipping and Shipbuilding Management.
         Myles R. Itkin has been a member of our board of directors since 2006. Mr. Itkin was the Executive Vice President, Chief Financial Officer and Treasurer of Overseas Shipholding Group, Inc. ("OSG"), in which capacities he served, with the exception of a promotion from Senior Vice President to Executive Vice President in 2006, from 1995 to 2013. Prior to joining OSG in June 1995, Mr. Itkin was employed by Alliance Capital Management L.P. as Senior Vice President of Finance. Prior to that, he was Vice President of Finance at Northwest Airlines, Inc. On November 14, 2012, OSG filed voluntary petitions for reorganization for itself and 180 of its subsidiaries under Chapter 11 of Title 11 of the United States Code in the U.S. Bankruptcy Court for the District of Delaware. Mr. Itkin served on the board of directors of the U.K. P&I Club from 2006 to 2013. Mr. Itkin holds a Bachelor's degree from Cornell University and an MBA from New York University.
         Miklós Konkoly-Thege has been a member of our board of directors since 2006. Mr. Konkoly-Thege began at Det Norske Veritas ("DNV"), a ship classification society, in 1984. From 1984 through 2002, Mr. Konkoly-Thege served in various capacities with DNV including Chief Operating Officer, Chief Financial Officer and Corporate Controller, Head of Corporate Management Staff and Head of Business Areas. Mr. Konkoly-Thege became President and Chairman of the Executive Board of DNV in 2002 and served in that capacity until his retirement in May 2006. Mr. Konkoly-Thege is a member of the board of directors of Wilhelmsen Technical Solutions AS, Callenberg Technology Group AB and
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Stena Hungary Holding KFT. Mr. Konkoly-Thege holds a Master of Science degree in civil engineering from Technische Universität Hannover, Germany and an MBA from the University of Minnesota.
         William Repko has been a member of our board of directors since July 2014. Mr. Repko has nearly 40 years of investing, finance and restructuring experience. Mr. Repko retired from Evercore Partners in February 2014 where he had served as a senior advisor, senior managing director and was a co-founder of the firm's Restructuring and Debt Capital Markets Group since September 2005. Prior to joining Evercore Partners Inc., Mr. Repko served as chairman and head of the Restructuring Group at J.P. Morgan Chase, a leading investment banking firm, where he focused on providing comprehensive solutions to clients' liquidity and reorganization challenges. In 1973, Mr. Repko joined Manufacturers Hanover Trust Company, a commercial bank, which after a series of mergers became part of J.P. Morgan Chase. Mr. Repko has been named to the Turnaround Management Association (TMA)-sponsored Turnaround, Restructuring and Distressed Investing Industry Hall of Fame. Mr. Repko has served on the Board of Directors of Stellus Capital Investment Corporation (SCM:NYSE) since 2012 and is Chairman of its Compensation Committee and serves on the Audit Committee. Mr. Repko received his B.S. in Finance from Lehigh University.
 Compensation of Directors and Senior Management
        Non-executive directors receive annual fees of $70,000 per annum beginning January 1, 2015 (previously $62,500 per annum), plus reimbursement for their out-of-pocket expenses, which amounts are payable at the election of each non-executive director in cash or stock as described below under "—Equity Compensation Plan." We do not have service contracts with any of our non-employee directors. We have employment agreements with two directors who are also executive officers of our company, as well as with our other two executive officers.
        Since May 1, 2015, we have directly employed our Chief Executive Officer, Chief Operating Officer, Chief Financial Officer and Deputy Chief Operating Officer, who received aggregate compensation of €1.02 million ($1.14 million) for the period from May 1, 2015 to December 31, 2015. From January 1, 2013 to April 30, 2015, our manager provided us with the services of these officers. In 2015 (for the period from January 1, 2015 to April 30, 2015), 2014 and 2013 we paid our manager a fee of €0.51 million ($0.56 million), €1.47 million ($1.92 million) and €1.4 million ($1.86 million), respectively, for such services. Our executive officers are eligible, in the discretion of our board of directors and compensation committee, for incentive compensation and restricted stock, stock options or other awards under our equity compensation plan, which is described below under "—Equity Compensation Plan."
        Our executive officers are entitled to severance payments for termination without "cause" or for "good reason" generally equal (i) two times the executive officer's annual salary plus bonus (based on an average of the prior three years), including the value on the date of grant of any equity grants made under our equity compensation plan during that three-year period (which, for stock options, will be the Black- Scholes value), as well as continued benefits, if any, for 24 months or (ii) if such termination without cause or for good reason occurs within two years of a "change of control" of our company the greater of (a) the amount calculated as described in clause (i) but changing the multiple from two to three and (b) a specified dollar amount for each executive officer (approximately €4.6 million in the aggregate for all executive officers), as well as continued benefits, if any, for 36 months.
 Employees
        From May 1, 2015, we directly employ our Chief Executive Officer, Chief Operating Officer, Chief Financial Officer and Deputy Chief Operating Officer, whose services had been provided to us under our Management Agreement from January 1, 2013 to April 30, 2015. Approximately 1,223 officers and crew members served on board the vessels we own as of December 31, 2015, but are employed by our
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manager. Crew wages and other related expenses are paid by our manager and our manager is reimbursed by us.
 Share Ownership
        The common stock beneficially owned by our directors and executive officers and/or companies affiliated with these individuals is disclosed in "Item 7. Major Shareholders and Related Party Transactions" below.
 Board of Directors
        At December 31, 2015 and February 29, 2016, we had six members on our board of directors. The board of directors may change the number of directors to not less than two, nor more than 15, by a vote of a majority of the entire board. Each director is 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.
        In accordance with the terms of the August 6, 2010 common stock subscription agreement between Sphinx Investments Corp. and us, we have agreed to nominate Mr. Economou or such other person, in each case who shall be acceptable to us, designated by Sphinx Investments Corp., for election by our stockholders to the Board of Directors at each annual meeting of stockholders at which the term of Mr. Economou or such other director so designated expires, so long as such investor beneficially owns a specified minimum amount of our common stock. We have been informed that our largest stockholder, a family trust established by Dr. John Coustas, and Dr. John Coustas have agreed to vote all of the shares of common stock they own, or over which they have voting control, in favor of any such nominee standing for election.
        During the year ended December 31, 2015, the board of directors held five meetings. Each director attended all of the meetings of the board of directors and of the committees of which the director was a member, other than Dr. Robert Mundell who did not attend the meetings of the Board and the nominating and corporate committee meetings of the Board that took place prior to his departure from the Board, Mr. Repko who did not attend one of the meetings and Mr. Economou who did not attend any of the five meetings of the Board. Our board of directors has determined that each of Messrs. Economou, Itkin, Konkoly-Thege, and Repko were independent (within the requirements of the NYSE and SEC). Dr. Mundell departed the board of directors after not standing for re-election at our July 2015 annual shareholders meeting.
        To promote open discussion among the independent directors, those directors met, in 2015, four times in regularly scheduled and twice in an ad hoc executive session without participation of our company's management and will continue to do so in 2016. Mr. Myles Itkin served as the presiding director for purposes of these meetings. 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 presiding director, Mr. Myles Itkin, may do so by writing to our Secretary, Mr. Evangelos Chatzis, Danaos Corporation, c/o Danaos Shipping Co. Ltd., 14 Akti Kondyli, 185 45 Piraeus, Greece.
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 Corporate Governance
        The board of directors and our company's management has engaged in an ongoing review of our corporate governance practices in order to oversee our compliance with the applicable corporate governance rules of the New York Stock Exchange and the SEC.
        We have adopted a number of key documents that are the foundation of its corporate governance, including:
•
a Code of Business Conduct and Ethics for officers and employees; 

•
a Code of Conduct for the chief executive officer and senior financial officers; 

•
a Code of Ethics for directors; 

•
a Nominating and Corporate Governance Committee Charter; 

•
a Compensation Committee Charter; and 

•
an Audit Committee Charter.
        These documents and other important information on our governance, including the board of director's Corporate Governance Guidelines, are posted on the Danaos Corporation website, and may be viewed at http://www.danaos.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, Mr. Evangelos Chatzis, Danaos Corporation, c/o Danaos Shipping Co. Ltd., 14 Akti Kondyli, 185 45 Piraeus, Greece.
 Committees of the Board of Directors
        We are a "controlled company" within the meaning of the New York Stock Exchange corporate governance standards. Pursuant to certain exceptions for foreign private issuers and controlled companies, we are not required to comply with certain of the corporate governance practices followed by U.S. and non-controlled companies under the New York Stock Exchange listing standards. We comply fully with the New York Stock Exchange corporate governance rules applicable to both U.S. and foreign private issuers that are "controlled companies," however, as permitted for controlled companies, one member of the compensation committee and one member of the nominating and corporate governance committee is a non-independent director and, in accordance with Marshall Islands law, we obtained board of director approval but not shareholder approval for our August 2010 common stock sale. See "Item 16G. Corporate Governance."
 Audit Committee
        Our audit committee consists of Myles R. Itkin (chairman), Miklós Konkoly-Thege and William Repko. Our board of directors has determined that Mr. Itkin qualifies as an audit committee "financial expert," as such term is defined in Regulation S-K. The audit committee is responsible for (1) the hiring, termination and compensation of the independent auditors and approving any non-audit work performed by such auditor, (2) approving the overall scope of the audit, (3) assisting the board in monitoring the integrity of our financial statements, the independent accountant's qualifications and independence, the performance of the independent accountants and our internal audit function and our compliance with legal and regulatory requirements, (4) annually reviewing an independent auditors' report describing the auditing firms' internal quality-control procedures, any material issues raised by the most recent internal quality-control review, or peer review, of the auditing firm, (5) discussing the annual audited financial and quarterly statements with management and the independent auditor, (6) discussing earnings press releases, as well as financial information and earning guidance, (7) discussing policies with respect to risk assessment and risk management, (8) meeting separately,
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periodically, with management, internal auditors and the independent auditor, (9) reviewing with the independent auditor any audit problems or difficulties and management's response, (10) setting clear hiring policies for employees or former employees of the independent auditors, (11) annually reviewing the adequacy of the audit committee's written charter, (12) handling such other matters that are specifically delegated to the audit committee by the board of directors from time to time, (13) reporting regularly to the full board of directors and (14) evaluating the board of directors' performance. During 2015, there were five meetings of the audit committee.
 Compensation Committee
        Our compensation committee consists of Miklós Konkoly-Thege (chairman), Iraklis Prokopakis and William Repko. The compensation committee is responsible for (1) reviewing key employee compensation policies, plans and programs, (2) reviewing and approving the compensation of our chief executive officer and other executive officers, (3) developing and recommending to the board of directors compensation for board members, (4) reviewing and approving employment contracts and other similar arrangements between us and our executive officers, (5) reviewing and consulting with the chief executive officer on the selection of officers and evaluation of executive performance and other related matters, (6) administration of stock plans and other incentive compensation plans, (7) overseeing compliance with any applicable compensation reporting requirements of the SEC, (8) retaining consultants to advise the committee on executive compensation practices and policies and (9) handling such other matters that are specifically delegated to the compensation committee by the board of directors from time to time. During 2015, there were five meetings of the compensation committee.
 Nominating and Corporate Governance Committee
        Our nominating and corporate governance committee consists of Myles R. Itkin (chairman), Iraklis Prokopakis and William Repko. The nominating and corporate governance committee is responsible for (1) developing and recommending criteria for selecting new directors, (2) screening and recommending to the board of directors individuals qualified to become executive officers, (3) overseeing evaluations of the board of directors, its members and committees of the board of directors and (4) handling such other matters that are specifically delegated to the nominating and corporate governance committee by the board of directors from time to time. During 2015, there were five meetings of the nominating and corporate governance committee.
 Equity Compensation Plan
        We have adopted an equity compensation plan, which we refer to as the Plan. The Plan is generally administered by the compensation committee of our board of directors, except that the full board may act at any time to administer the Plan, and authority to administer any aspect of the Plan may be delegated by our board of directors or by the compensation committee to an executive officer or to any other person. The Plan allows the plan administrator to grant awards of shares of our common stock or the right to receive or purchase shares of our common stock (including options to purchase common stock, restricted stock and stock units, bonus stock, performance stock, and stock appreciation rights) to our employees, directors or other persons or entities providing significant services to us or our subsidiaries, including employees of our manager, and also provides the plan administrator with the authority to reprice outstanding stock options or other awards. The actual terms of an award, including the number of shares of common stock relating to the award, any exercise or purchase price, any vesting, forfeiture or transfer restrictions, the time or times of exercisability for, or delivery of, shares of common stock, will be determined by the plan administrator and set forth in a written award agreement with the participant. Any options granted under the Plan will be accounted for in accordance with accounting guidance for share-based compensation.
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        The aggregate number of shares of our common stock for which awards may be granted under the Plan cannot exceed 6% of the number of shares of our common stock issued and outstanding at the time any award is granted. Awards made under the Plan that have been forfeited (including our repurchase of shares of common stock subject to an award for the price, if any, paid to us for such shares of common stock, or for their par value) or cancelled or have expired, will not be treated as having been granted for purposes of the preceding sentence.
        The Plan requires that the plan administrator make an equitable adjustment to the number, kind and exercise price per share of awards in the event of our recapitalization, reorganization, merger, spin-off, share exchange, dividend of common stock, liquidation, dissolution or other similar transaction or event. In addition, the plan administrator will be permitted to make adjustments to the terms and conditions of any awards in recognition of any unusual or nonrecurring events. Unless otherwise set forth in an award agreement, any awards outstanding under the Plan will vest upon a "change of control," as defined in the Plan. Our board of directors may, at any time, alter, amend, suspend, discontinue or terminate the Plan, except that any amendment will be subject to the approval of our stockholders if required by applicable law, regulation or stock exchange rule and that, without the consent of the affected participant under the Plan, no action may materially impair the rights of such participant under any awards outstanding under the Plan. The Plan will automatically terminate ten years after it has been most recently approved by our stockholders.
        As of April 18, 2008, the Board of Directors and the Compensation Committee approved incentive compensation of the Manager's employees with its shares from time to time, after specific for each such time, decision by the compensation committee and the Board of Directors in order to provide a means of compensation in the form of free shares under its 2006 equity compensation plan to certain employees of the Manager of the Company's common stock. The plan was effective as of December 31, 2008. Pursuant to the terms of the plan, employees of the Manager may receive (from time to time) shares of the Company's common stock as additional compensation for their services offered during the preceding period. The stock will have no vesting period and the employee will own the stock immediately after grant. The total amount of stock to be granted to employees of the Manager will be at the Company's Board of Directors' discretion only and there will be no contractual obligation for any stock to be granted as part of the employees' compensation package in future periods. As of December 11, 2015, the Company granted 15,879 shares, which will be issued in 2016 to be distributed to the employees of the Manager and recorded an expense of $0.1 million, representing the fair value of the stock granted as at the date of the grant. As of December 10, 2014, the Company granted 115,185 shares to certain employees of the Manager, out of which 112,315 shares were issued and distributed to the employees of the Manager in 2015 and recorded in "General and Administrative Expenses" an expense of $0.6 million representing the fair value of the stock granted as at the date of grant. As of December 12, 2013, the Company granted 16,066 shares to certain employees of the Manager and recorded in "General and Administrative Expenses" an expense of $0.75 million representing the fair value of the stock granted as at the date of grant, which were issued in 2014 and distributed to the employees of the Manager in settlement of the shares granted in 2013. Refer to Note 20, Stock Based Compensation, in the notes to our consolidated financial statements included elsewhere herein.
        The Company has also established the Directors Share Payment Plan under its 2006 equity compensation plan. The purpose of the plan is to provide a means of payment of all or a portion of compensation payable to directors of the Company in the form of Company's Common Stock. The plan was effective as of April 18, 2008. Each member of the Board of Directors of the Company may participate in the plan. Pursuant to the terms of the plan, Directors may elect to receive in Common Stock all or a portion of their compensation. During 2015, 2014 and 2013, none of the directors elected to receive in Company shares his compensation. Refer to Note 20, Stock Based Compensation, in the notes to our consolidated financial statements included elsewhere herein.
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Item 7.    Major Shareholders and Related Party Transactions
 Related Party Transactions
 Management Affiliations
        Danaos Shipping Co. Ltd., which we refer to as our Manager, is ultimately owned by Danaos Investments Limited as Trustee of the 883 Trust, which we refer to as the Coustas Family Trust. Danaos Investments Limited is the trustee of the Coustas Family Trust, of which Dr. Coustas and other members of the Coustas family are beneficiaries. Dr. Coustas has certain powers to remove and replace Danaos Investments Limited as Trustee of the 883 Trust. The Coustas Family Trust is also our largest stockholder, owning approximately 61.8% of our outstanding common stock as of February 29, 2016. Our Manager has provided services to our vessels since 1972 and continues to provide technical, administrative and certain commercial 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 a management agreement which was amended and restated as of May 1, 2015. From January 1, 2013 to April 30, 2015, when we resumed directly employing our executive officers, our Manager also provided us with the services of our executive officers.
        Management fees in respect of continuing operations under our management agreement amounted to approximately $17.4 million in 2015, $16.3 million in 2014 and $15.0 million in 2013. The related expenses are presented under "General and administrative expenses" on the Statement of Operations. We pay monthly advances in regard to the next month vessels' operating expenses. These prepaid monthly expenses are presented in our consolidated balance sheet under "Due from related parties" and totaled $19.0 million and $10.6 million as of December 31, 2015 and 2014, respectively.
 Management Agreement
        Under our management agreement, our Manager is responsible for providing us with technical, administrative and certain commercial services, which include the following:
•
technical services , which include managing day-to-day vessel operations, performing general vessel maintenance, ensuring regulatory compliance and compliance with the law of the flag 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, insurance of the crew (including processing all claims), 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 and providing technical support, shoreside support, shipyard supervision, and attending to all other technical matters necessary to run our business; 

•
administrative services , which include, in each direction of our Chief Executive Officer, Chief Operating Officer and Chief Financial Officer, assistance with the maintenance of our corporate books and records, 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 (including the preparation of all necessary budgets for submission to us), assistance in complying with United States and other relevant securities laws, human resources, 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
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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 subsequent debt and equity financings and attending to all other administrative matters necessary to ensure the professional management of our business; and
•
commercial services , which include chartering our vessels, assisting in our chartering, locating, purchasing, financing and negotiating the purchase and sale of our vessels, supervising the design and construction of newbuildings, and such other commercial services as we may reasonably request from time to time.
 Reporting Structure
        Our Manager reports to us and our Board of Directors through our Chief Executive Officer, Chief Operating Officer and Chief Financial Officer, each of which is appointed by our board of directors. Under our management agreement, our Chief Executive Officer, Chief Operating Officer and Chief Financial Officer may direct the Manager to remove and replace any officer or any person who serves as the head of a business unit of our Manager. Furthermore, our Manager will not remove any person serving as an officer or senior manager without the prior written consent of our Chief Executive Officer, Chief Operating Officer and Chief Financial Officer.
 Compensation of Our Manager
        The fees payable to our manager for each renewal period under our management agreement are adjusted by agreement between us and our manager. For 2016 we will pay our manager the following fees: (i) a fee of $850 per day, (ii) a fee of $425 per vessel per day for vessels on bareboat charter, pro rated for the number of calendar days we own each vessel, (iii) a fee of $850 per vessel per day for vessels other than those on bareboat charter, pro rated for the number of calendar days we own each vessel, (iv) a fee of 1.25% on all freight, charter hire, ballast bonus and demurrage for each vessel, (v) a fee of 0.5% based on the contract price of any vessel bought or sold by it on our behalf, excluding newbuilding contracts, and (vi) a flat fee of $725,000 per newbuilding vessel, if any, which we capitalize, for the on premises supervision of any newbuilding contracts by selected engineers and others of its staff. We believe these fees are no more than the rates we would need to pay an unaffiliated third party to provide us with these management services.
        In addition, from January 1, 2013 to April 30, 2015 our manager provided us with the services of our Chief Executive Officer, Chief Operating Officer, Chief Financial Officer and Deputy Chief Operating Officer. We paid our manager fees of €0.51 million ($0.56 million), for the period from January 1, 2015 to April 30, 2015, €1.47 million ($1.92 million) in 2014 and €1.4 million ($1.86 million) in 2013 for such services. From May 1, 2015, we have directly employed our executive officers.
        We also advance, on a monthly basis, all technical vessel operating expenses with respect to each vessel in our fleet to enable our Manager to arrange for the payment of such expenses on our behalf. To the extent the amounts advanced are greater or less than the actual vessel operating expenses of our fleet for a quarter, our Manager or us, as the case may be, will pay the other the difference at the end of such quarter, although our Manager may instead choose to credit such amount against future vessel operating expenses to be advanced for future quarters.
 Term and Termination Rights
        The initial term of the management agreement expired on December 31, 2008. The management agreement now automatically renews for one-year periods and will be extended, unless we give
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12-months' written notice of non-renewal and subject to the termination rights described below, in additional one-year increments until December 31, 2020, at which point the agreement will expire.
        Our Manager's Termination Rights.     Our Manager may terminate the management agreement prior to the end of its term in the two following circumstances:
•
if any moneys payable by us shall not have been paid within 60 business days of payment having been demanded in writing; or 

•
if at any time we materially breach the agreement and the matter is unresolved within 60 days after we are given written notice from our Manager.
        Our Termination Rights.     We may terminate the management agreement prior to the end of its term in the two following circumstances upon providing the respective notice:
•
if at any time our Manager neglects or fails to perform its principal duties and obligations in any material respect and the matter is unresolved within 20 days after our Manager receives written notice of such neglect or failure from us; or 

•
if any moneys payable by the Manager under or pursuant to the management agreement are not promptly paid or accounted for in full within 10 business days by the Manager in accordance with the provisions of the management agreement.
        We also may terminate the management agreement immediately under any of the following circumstances:
•
if either we or our Manager ceases to conduct business, or all or substantially all of the properties or assets of either such party is sold, seized or appropriated; 

•
if either we or our Manager 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, or if a petition is filed against us or our Manager seeking to declare us or it an insolvent or bankrupt and such petition is not dismissed or stayed within 40 business days of its filing, or if our Company or the Manager admits in writing its insolvency or its inability to pay its debts as they mature, or if an order is made for the appointment of a liquidator, manager, receiver or trustee of our Company or the Manager of all or a substantial part of its assets, or if an encumbrancer takes possession of or a receiver or trustee is appointed over the whole or any part of the Manager's or our Company's undertaking, property or assets or if an order is made or a resolution is passed for our Manager's or our winding up; 

•
if a distress, execution, sequestration or other process is levied or enforced upon or sued out against our Manager's property which is not discharged within 20 business days; 

•
if the Manager 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 us; or 

•
if either our Manager or we are prevented from performing any obligations under the management agreement by any cause whatsoever of any nature or kind beyond the reasonable control of us or our Manager respectively for a period of two consecutive months or more.
        In addition, we may terminate any applicable ship management agreement in any of the following circumstances:
•
if we or any subsidiary of ours ceases to be the owner of the vessel covered by such ship management agreement by reason of a sale thereof, or if we or any subsidiary of ours ceases to be registered as the owner of the vessel covered by such ship management agreement;
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•
if a vessel becomes an actual or constructive or compromised or arranged total loss or an agreement has been reached with the insurance underwriters in respect of the vessel's constructive, compromised or arranged total loss or if such agreement with the insurance underwriters is not reached or it is adjudged by a competent tribunal that a constructive loss of the vessel has occurred; 

•
if the vessel covered by such ship management agreement is requisitioned for title or any other compulsory acquisition of the vessel occurs, otherwise than by requisition by hire; or 

•
if the vessel covered by such ship management agreement is captured, seized, detained or confiscated by any government or persons acting or purporting to act on behalf of any government and is not released from such capture, seizure, detention or confiscation within 20 business days.
 Non-competition
        Our Manager has agreed that, during the term of the management agreement, it will not provide any management services to any other entity without our prior written approval, other than with respect to entities controlled by Dr. Coustas, our Chief Executive Officer, which do not operate within the containership (larger than 2,500 twenty foot equivalent units, or TEUs) or drybulk sectors of the shipping industry or in the circumstances described below. Dr. Coustas does not currently control any such vessel-owning entity or have an equity interest in any such entity, other than Raven International Corporation, owner of one 1,700 TEU vessel. Dr. Coustas has also personally agreed to the same restrictions on the provision, directly or indirectly, of management services during this period. In addition, our Chief Executive Officer (other than in his capacities with us) and our Manager have separately agreed not, during the term of our management agreement and for one year thereafter, to engage, directly or indirectly, in (i) the ownership or operation of containerships of larger than 2,500 TEUs or (ii) the ownership or operation of any drybulk carriers or (iii) the acquisition of or investment in any business involved in the ownership or operation of containerships larger than 2,500 TEUs or drybulk carriers. Notwithstanding these restrictions, if our independent directors decline the opportunity to acquire any such containerships or drybulk carriers or to acquire or invest in any such business, our Chief Executive Officer will have the right to make, directly or indirectly, any such acquisition or investment during the four-month period following such decision by our independent directors, so long as such acquisition or investment is made on terms no more favorable than those offered to us. In this case, our Chief Executive Officer and our Manager will be permitted to provide management services to such vessels. In connection with our investment in Gemini (see "—Gemini Shipholdings Corporation" below), these restrictions on our Chief Executive Officer and our Manager were waived, with the approval of our independent directors, with respect to vessels acquired by Gemini.
        Because the restrictions in the Bank Agreement dated January 24, 2011 among the Company, its subsidiaries, The Royal Bank of Scotland PLC and the other financial institutions named therein, effectively prevent us from acquiring additional containerships meeting the expressed preferences of our liner company clients for newbuildings and other recently built containerships which would employ the latest energy efficient design and technology and take full advantage of the economies offered by the widening of the Panama Canal, a committee of independent directors determined that these restrictions will not apply, subject to the limitations described below, to containerships or drybulk carriers acquired, or whose acquisition is funded solely with equity capital committed (together with debt whenever arranged), while the restrictions in the Bank Agreement continue to apply to us in their current form. Any such containership acquisitions may not in the aggregate exceed one-third of the total assets of the Company, determined on a book value basis. The Company's vessels will also have a chartering priority over any vessels of similar TEU capacity acquired by an entity in which Dr. Coustas has a direct or indirect investment during the period of the stated restrictions in the restrictive covenant agreement with Dr. Coustas and the management fees charged to the Company under its
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management agreement will be no higher than the fees charged in respect of any such vessels. As of the date of this report, no vessels have been acquired pursuant to the foregoing arrangement.
        The committee of independent directors also concluded that, given the restrictions in the Bank Agreement, the Company, during the term of the Bank Agreement, could not exercise any right of first refusal afforded it under the restrictive covenant agreement as described above and therefore the parties to that agreement could acquire, operate and, under our management agreement, manage without contractual restriction any number of containerships in competition with the Company, and that the limits on the aggregate amount of containership acquisitions, a requirement for management fee parity and a right of first refusal on chartering opportunities should afford a level of competitive protection to the Company not currently available in respect of vessel acquisition opportunities declined by the Company in accordance with the terms of the restrictive covenant agreement described above. The committee also concluded that the ownership, operation or management of drybulk carriers is not complementary to the Company's current or contemplated business. In coming to its conclusion, the committee believed that this arrangement should help preserve the manager's relationship with our liner company clients and forestall our competitors' ability to capitalize on the restrictions under which we are operating because of the Bank Agreement.
 Sale of Our Manager
        Our Manager has agreed that it will not transfer, assign, sell or dispose of all or a significant portion of its business that is necessary for the services our Manager performs for us without the prior written consent of our Board of Directors. Furthermore, in the event of any proposed sale of our Manager, we have a right of first refusal to purchase our Manager. This prohibition and right of first refusal is in effect throughout the term of the management agreement and for a period of one year following the expiry or termination of the management agreement. Our Chief Executive Officer, Dr. John Coustas, or any trust established for the Coustas family (under which Dr. Coustas and/or a member of his family is a beneficiary), is required, unless we expressly permit otherwise, to own 80% of our Manager's outstanding capital stock during the term of the management agreement and 80% of the voting power of our Manager's outstanding capital stock. In the event of any breach of these requirements, we would be entitled to purchase the capital stock of our Manager owned by Dr. Coustas or any trust established for the Coustas family (under which Dr. Coustas and/or a member of his family is a beneficiary). Under the terms of certain of our financing agreements, including the Bank Agreement, the failure of our Manager to continue managing our vessels securing such agreements would constitute an event of default thereunder.
 Gemini Shipholdings Corporation
        On August 5, 2015, we entered into a Shareholders Agreement (the "Gemini Shareholders Agreement"), with Gemini Shipholdings Corporation ("Gemini") and Virage International Ltd. ("Virage"), a company controlled by our largest stockholder, Danaos Investments Limited as Trustee of the 883 Trust, in connection with the formation of Gemini to acquire and operate containerships. We and Virage own 49% and 51%, respectively, of Gemini's issued and outstanding share capital. Under the Gemini Shareholders Agreement, we and Virage have preemptive rights with respect to issuances of Gemini capital stock as well as tag-along rights, drag-along rights and certain rights of first refusal with respect to proposed transfers of Gemini equity interests. In addition, certain actions by Gemini, including acquisitions or dispositions of vessels and newbuilding contracts, require the unanimous approval of the Gemini board of directors including the director designated by the Company, who is currently our Chief Operating Officer Iraklis Prokopakis. Mr. Prokopakis also serves as Chief Operating Officer of Gemini, and our Chief Financial Officer, Evangelos Chatzis, serves as Chief Financial Officer of Gemini, for which services Messrs. Prokopakis and Chatzis do not receive any additional compensation. We also have the right to purchase all of the equity interests in Gemini that
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we do not own for fair market value at any time after December 31, 2018, or earlier if permitted under our credit facilities, provided that such fair market value is not below the net book value of such equity interests.
        In 2015, prior to our equity investment, Gemini acquired a 100% interest in entities with capital leases for the containerships Suez Canal and Genoa and the entity with a memorandum of agreement to acquire the containership NYK Lodestar . In February 2016, Gemini acquired the containership NYK Leo . Gemini financed these acquisitions with the assumption of capital lease obligations, borrowings under a secured loan facility and an aggregate of $27.0 million of equity contributions from the Company and Virage. We do not guarantee any debt of Gemini or its subsidiaries.
        In connection with our investment in Gemini, the restrictions on the ownership, operation and management of containerships set forth in the restrictive covenant agreement with our Chief Executive Officer, the management agreement with our Manager and our executive officers' respective employment agreements were waived, with the approval of the independent directors of our board of directors, with respect to vessels acquired, owned and operated by Gemini. Danaos Shipping provides vessel management services to Gemini at the same rates as we pay pursuant to our management agreement with Danaos Shipping.
 The Swedish Club
        Dr. John Coustas, our Chief Executive Officer, is a Deputy Chairman of the Board of Directors of The Swedish Club, our primary provider of insurance, including a substantial portion of our hull & machinery, war risk and protection and indemnity insurance. During the years ended December 31, 2015, 2014 and 2013, we paid premiums of $6.3 million, $8.5 million and $9.6 million, respectively, to The Swedish Club under these insurance policies.
 Danaos Management Consultants
        Our Chief Executive Officer, Dr. John Coustas, co-founded and has a 50.0% ownership interest in Danaos Management Consultants, which provides the ship management software deployed on the vessels in our fleet to our Manager on a complementary basis. Dr. Coustas does not participate in the day-to-day management of Danaos Management Consultants.
 Offices
        We occupy office space that is owned by our Manager and which is provided to us as part of the services we receive under our management agreement.
 Sphinx Investments Corp. Director Nominee
        As described above under "Item 6. Directors, Senior Management and Employees—Board of Directors", following completion of our $200.0 million equity transaction on August 12, 2010, which satisfied a condition to the Bank Agreement and approximately $425 million of new debt financing, Mr. George Economou joined the Board of Directors of the Company as an independent director in accordance with the terms of the common stock subscription agreement between Sphinx Investments Corp. and the Company. We have agreed to nominate Mr. Economou or such other person, in each case who shall be acceptable to us, designated by Sphinx Investments Corp., for election by our stockholders to the Board of Directors at each annual meeting of stockholders at which the term of Mr. Economou or such other director so designated expires, so long as such investor beneficially owns a specified minimum amount of common stock. We have been informed that our largest stockholder, Danaos Investments Limited as Trustee of the 883 Trust, and Dr. John Coustas have agreed to vote all of the shares of our common stock owned by them, or over which they have voting control, in favor of any such nominee standing for election.
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 Major Stockholders
        The following table sets forth certain information regarding the beneficial ownership of our outstanding common stock as of February 29, 2016 held by:
•
each person or entity that we know beneficially owns 5% or more of our common stock; 

•
each of our officers and directors; and 

•
all our directors and officers as a group.
        Our major stockholders have the same voting rights as our other stockholders. Beneficial ownership is determined in accordance with the rules of the SEC. In general, a person who has voting power or investment power with respect to securities is treated as a beneficial owner of those securities.
        Beneficial ownership does not necessarily imply that the named person has the economic or other benefits of ownership. For purposes of this table, shares subject to options, warrants or rights or shares exercisable within 60 days of February 29, 2016 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 of each stockholder is based on 109,781,744 shares of common stock outstanding as of February 29, 2016. 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 accompanying footnotes below is in care of our principal executive offices.

								
 	 	Number
of Shares
of Common
Stock Owned	 	Percentage
of Common
Stock	 	
Executive Officers and Directors:	 	 	 	 	 	 	 	
 John Coustas(1)	 	 	67,828,140	 	 	61.8	%	
Chairman, President and Chief Executive Officer	 	 	 	 	 	 	 	
Iraklis Prokopakis	 	 	471,384	 	 	*	 	
Director, Senior Vice President and Chief Operating Officer	 	 	 	 	 	 	 	
 Evangelos Chatzis	 	 	125,000	 	 	*	 	
Chief Financial Officer and Secretary	 	 	 	 	 	 	 	
Dimitris Vastarouchas	 	 	89,931	 	 	*	 	
Deputy Chief Operating Officer	 	 	 	 	 	 	 	
 George Economou(2)	 	 	11,471,621	 	 	10.4	%	
Director	 	 	 	 	 	 	 	
Myles R. Itkin	 	 	—	 	 	—	 	
Director	 	 	 	 	 	 	 	
 Miklós Konkoly-Thege	 	 	86,966	 	 	*	 	
Director	 	 	 	 	 	 	 	
William Repko	 	 	—	 	 	—	 	
Director	 	 	 	 	 	 	 	
5% Beneficial Owners:	 	 	 	 	 	 	 	
Danaos Investments Limited as Trustee of the 883 Trust(2)	 	 	67,828,140	 	 	61.8	%	
 Sphinx Investments Corp.(3)	 	 	11,471,621	 	 	10.4	%	
All executive officers and directors as a group (8 persons)	 	 	80,073,042	 	 	72.9	%	

*
Less than 1%.

(1)
By virtue of shares owned indirectly through Danaos Investments Limited as Trustee of the 883 Trust, which is our principal stockholder. The beneficiaries of the trust are
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Dr. Coustas and members of his family. Dr. Coustas has certain powers to remove and replace Danaos Investments Limited as Trustee of the 883 Trust and, accordingly, he may be deemed to have shared voting and dispositive power over the shares of common stock owned by Danaos Investments Limited as Trustee of the 883 Trust. This does not necessarily imply economic ownership of the securities.
(2)
Includes 67,633,140 shares which, according to a Schedule 13D jointly filed with the SEC on August 16, 2010 by Danaos Investments Limited as Trustee of the 883 Trust and John Coustas, Danaos Investments Limited as Trustee of the 883 Trust owns and has sole voting power and sole dispositive power with respect to all such shares, and 195,000 shares held by Danaos Investments Limited as Trustee of the 883 Trust which were granted to Dr. Coustas as an equity award in December 2011. The beneficiaries of the trust are Dr. Coustas and members of his family. Dr. Coustas has certain powers to remove and replace Danaos Investments Limited as Trustee of the 883 Trust and, accordingly, he may be deemed to have shared voting and dispositive power over these shares of common stock. This does not necessarily imply economic ownership of the securities.

(3)
According to a Schedule 13D filed with the SEC on August 18, 2010, Sphinx Investments Corp. is a wholly-owned subsidiary of Maryport Navigation Corp., a Liberian company controlled by George Economou, a member of our Board of Directors. Mr. Economou may therefore be deemed the beneficial owner of the shares held by Sphinx Investments Corp. The address of Sphinx Investments Corp. is c/o Mare Services Limited, 5/1 Merchants Street, Valletta, Malta.
        As of February 29, 2016, we had approximately six stockholders of record, four of which were located in the United States and held an aggregate of 109,559,368 shares of common stock. However, one of the United States stockholders of record is CEDEFAST, a nominee of The Depository Trust Company, which held 109,557,118 shares of our common stock. Accordingly, we believe that the shares held by CEDEFAST include shares of common stock beneficially owned by both holders in the United States and non-United States beneficial owners, including 79,858,111 shares which may be deemed to be beneficially owned by our officers and directors resident outside the United States and no shares which may be deemed to be beneficially owned by directors resident in the United States as reflected in the above table. We are not aware of any arrangements the operation of which may at a subsequent date result in our change of control.
        The Coustas Family Trust, under which our chief executive officer is a beneficiary, together with other members of the Coustas Family, owns approximately 61.8% of our outstanding common stock. This stockholder 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. Our respective lenders under our existing credit facilities covered by the Bank Agreement and the January 2011 Credit Facilities will be entitled to require us to repay in full amounts outstanding under such respective credit facilities, if, among other circumstances, Dr. Coustas ceases to be our Chief Executive Officer or, together with members of his family and trusts for the benefit thereof, ceases to collectively own over one-third of the voting interest in our outstanding capital stock or any other person or group controls more than 20.0% of the voting power of our outstanding capital stock.
        In 2011, we issued, for no additional consideration, an aggregate of 15,000,000 warrants to our lenders under the Bank Agreement and January 2011 Credit Facilities to purchase, solely on a cashless exercise basis, an aggregate of 15,000,000 shares of our common stock, which warrants have an exercise price of $7.00 per share. All warrants will expire on January 31, 2019.
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Item 8.    Financial Information
        See "Item 18. Financial Statements" below.
        Significant Changes.     No significant change has occurred since the date of the annual financial statements included in this annual report on Form 20-F.
        Legal Proceedings.     We have not been involved in any legal proceedings that we believe would have a significant effect on our business, financial position, results of operations or liquidity, and we are not aware of any proceedings that are pending or threatened that may have a material effect on our business, financial position, results of operations or liquidity. From time to time, we may be subject to legal proceedings and claims in the ordinary course of business, principally personal injury and property casualty claims. We expect that these claims would be covered by insurance, subject to customary deductibles. However, those claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources.
        Dividend Policy.     Our board of directors has determined to suspend the payment of cash dividends as a result of market conditions in the international shipping industry. Declaration and payment of any future dividend is subject to the discretion of our board of directors. In addition, under the Bank Agreement relating to various of our credit facilities other, we generally will not be permitted to pay cash dividends or repurchase shares of our capital stock through December 31, 2018, absent a substantial reduction in our leverage. 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 any dividend payments. See "Item 3. Key Information—Risk Factors—Risks Inherent in Our Business" for a discussion of the risks related to dividend payments, if any.
        After our initial public offering, we paid regular quarterly dividends from February 2007 to November 19, 2008. We paid no dividends in 2006 and, prior to our initial public offering, in 2005 we paid dividends of $244.6 million to our stockholders from our retained earnings.
Item 9.    The Offer and Listing
        Our common stock is listed on the New York Stock Exchange under the symbol "DAC."
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 Trading on the New York Stock Exchange
        Since our initial public offering in the United States in October 2006, our common stock has been listed on the New York Stock Exchange under the symbol "DAC." The following table shows the high and low sales prices for our common stock during the indicated periods.

								
 	 	High	 	Low	 	
2011	 	 $	7.87	 	 $	2.65	 	
2012	 	 $	4.88	 	 $	2.44	 	
2013	 	 $	4.90	 	 $	2.76	 	
2014 (Annual)	 	 $	7.75	 	 $	3.96	 	
First Quarter	 	 	7.75	 	 	4.83	 	
Second Quarter	 	 	7.50	 	 	5.07	 	
Third Quarter	 	 	6.18	 	 	4.97	 	
Fourth Quarter	 	 	6.47	 	 	3.96	 	
2015 (Annual)	 	 $	6.70	 	 $	4.56	 	
First Quarter	 	 	6.55	 	 	4.56	 	
Second Quarter	 	 	6.70	 	 	5.82	 	
Third Quarter	 	 	6.49	 	 	4.94	 	
Fourth Quarter	 	 	6.64	 	 	4.70	 	
August 2015	 	 	6.30	 	 	5.60	 	
September 2015	 	 	6.49	 	 	5.69	 	
October 2015	 	 	6.64	 	 	5.95	 	
November 2015	 	 	6.40	 	 	5.52	 	
December 2015	 	 	5.99	 	 	4.70	 	
2016 First Quarter (through February 2016)	 	 $	6.14	 	 $	4.26	 	
January 2016	 	 	6.14	 	 	4.26	 	
February 2016	 	 	5.49	 	 	4.37	 	
Item 10.    Additional Information
 Share Capital
        Under our articles of incorporation, our authorized capital stock consists of 750,000,000 shares of common stock, $0.01 par value per share, of which, as of December 31, 2015 and February 29, 2016, 109,781,744 shares were issued and outstanding and fully paid, and 100,000,000 shares of blank check preferred stock, $0.01 par value per share, of which, as of December 31, 2015 and February 29, 2016, no shares were issued and outstanding and fully paid. One million shares of the blank check preferred stock 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.
 Warrants
        In 2011, we issued an aggregate of 15,000,000 warrants to our lenders under the Bank Agreement and January 2011 Credit Facilities to purchase, solely on a cash-less exercise basis, an aggregate of 15,000,000 shares of our common stock, which warrants have an exercise price of $7.00 per share. All warrants will expire on January 31, 2019.
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        As a result of the warrants being exercisable solely on a cash-less basis, the number of shares of common stock that would be issuable upon such an exercise will generally be reduced. For instance, in the event 100 warrants were exercised at the current exercise price of $7.00 per share at a time when the applicable fair market value (defined in the warrant agreement to be, generally, the average of the closing price of our common stock over the preceding five trading days) of our common stock was $10.00 per share, 30 shares of our common stock would be issuable rather than 100 shares of our common stock. We will not receive any cash proceeds upon the exercise of warrants.
        The number of shares of our common stock issuable upon exercise of a warrant will be adjusted upon the occurrence of certain events including, without limitation, the payment of a dividend on, or the making of any distribution in respect of, capital stock of the Company, payment of which is made in:
•
shares of the Company's common stock; or 

•
options, warrants or rights to purchase, or securities convertible into or convertible or exercisable for, shares of common stock of the Company at an exercise price below the then current market price per share of the common stock.
        An adjustment will also be made in the event of a combination, subdivision or reclassification of the common stock. Adjustments will be made whenever and as often as any specified event requires an adjustment to occur, provided that no adjustment will be required until such time as the adjustment would be at least one percent (1%). No adjustments will be made for issuances under the Company's equity compensation plan, as amended or supplemented, which provides for issuances of up to six percent (6%) of the Company's outstanding common stock.
 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. Holders of common stock do not have conversion, redemption or preemptive rights to subscribe to any of our securities. All outstanding shares of common stock are fully paid and nonassessable. The rights, preferences and privileges of holders of shares of common stock are subject to the rights of the holders of any shares of preferred stock which we may issue in the future.
 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 100,000,000 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." 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.
 Stockholder Rights Plan
 General
        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 rights agreement between us and American Stock Transfer & Trust Company, as rights agent, which expires
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on September 18, 2016. 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 stockholders prior to our initial public offering.
        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 rights agreement, which is an exhibit to this annual report.
 Detachment of the Rights
        The rights are attached to all shares of our outstanding common stock and will attach to all common stock that we issue prior to the rights distribution date that we describe below. The rights are not exercisable until after the rights distribution date and will expire at the close of business on the tenth anniversary date of the adoption of the rights plan, unless we redeem or exchange them earlier as described below. The rights will separate from the common stock and a rights distribution date will occur, subject to specified exceptions, on the earlier of the following two dates:
•
10 days following a public announcement that a person or group of affiliated or associated persons or an "acquiring person" has acquired or obtained the right to acquire beneficial ownership of 15% or more of our outstanding common stock; or 

•
10 business days following the start of a tender or exchange offer that would result, if closed, in a person becoming an "acquiring person."
        Existing stockholders prior to our initial public offering and their affiliates, as well as any person who would otherwise be an "acquiring person" solely as a result of acquiring shares of common stock pursuant to a subscription agreement with us dated as of August 6, 2010, 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 

•
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. After 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.
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 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 the rights agreement specifies.
 Flip-Over Event
        A "flip-over event" will occur under the rights agreement when, at any time after a person has become an acquiring person:
•
we are acquired in a merger or other business combination transaction; or 

•
50% or more of our assets, cash flows or earning power is sold or transferred.
        If a flip-over event occurs, each holder of a right, other than any right that has become void as we describe under the heading "—Flip-In Event" above, will have the right to receive the number of shares of common stock of the acquiring company having a current market price equal to two times the exercise price of such right.
 Antidilution
        The number of outstanding rights associated with our common stock is subject to adjustment for any stock split, stock dividend or subdivision, combination or reclassification of our common stock occurring prior to the rights distribution date. With some exceptions, the rights agreement does not require us to adjust the exercise price of the rights until cumulative adjustments amount to at least 1% of the exercise price. It also does not require us to issue fractional shares of our preferred stock that are not integral multiples of one one-hundredth of a share, and, instead we may make a cash adjustment based on the market price of the common stock on the last trading date prior to the date of exercise. The rights agreement reserves us the right to require, prior to the occurrence of any flip-in event or flip-over event that, on any exercise of rights, that 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.
 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
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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 stockholders becoming the beneficial owner of common stock with voting power equal to 50% or more of the total voting power of all shares of common stock entitled to vote in the election of directors; or 

•
the occurrence of a flip-over event.
 Amendment of Terms of Rights
        While the rights are outstanding, we may amend the provisions of the rights agreement only as follows:
•
to cure any ambiguity, omission, defect or inconsistency; 

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

•
to shorten or lengthen any time period under the rights agreement, except that we cannot change the time period when rights may be redeemed or lengthen any time period, unless such lengthening protects, enhances or clarifies the benefits of holders of rights other than an acquiring person.
        At any time when no rights are outstanding, we may amend any of the provisions of the rights agreement, other than decreasing the redemption price.
 Memorandum and Articles of Association
        Our purpose is to engage in any lawful act or activity relating to the business of chartering, rechartering or operating containerships, drybulk carriers or other vessels or any other lawful act or activity customarily conducted in conjunction with shipping, and any other lawful act or activity approved by the board of directors. Our articles of incorporation and bylaws do not impose any limitations on the ownership rights of our stockholders.
        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 in or outside of the Marshall Islands. Special meetings may be called by the board of directors or, at the request of the holders of a majority of our issued and outstanding stock entitled to vote on the matters proposed to be considered at such meeting, or by our secretary. Our board of directors may set a record date between 15 and 60 days before the date of any meeting to determine the stockholders that will be eligible to receive notice and vote at the meeting.
 Directors
        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.
        The board of directors may change the number of directors to not less than two, 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
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directors. The board of directors has the authority to fix the amounts which shall be payable to the members of our board of directors for attendance at any meeting or for services rendered to us.
 Dissenters' Rights of Appraisal and Payment
        Under the Marshall Islands Business Corporations Act, or 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 to receive payment of the fair value of their shares. However, the right of a dissenting stockholder under the BCA to receive payment of the fair value of his shares is not available for the shares of any class or series of stock, which shares or depository receipts in respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of and to vote at the meeting of the stockholders to act upon the agreement of merger or consolidation, were either (i) listed on a securities exchange or admitted for trading on an interdealer quotation system or (ii) held of record by more than 2,000 holders. The right of a dissenting stockholder to receive payment of the fair value of his or her shares shall not be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders of the surviving corporation. In the event of any further 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 in which our Marshall Islands office is situated or in any appropriate jurisdiction outside the Marshall Islands 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.
 Anti-takeover Provisions of our Charter Documents
        Several provisions of our articles of incorporation and bylaws 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, which are summarized below, could also discourage, delay or prevent (1) the merger or acquisition of our company by means of a tender offer, a proxy contest or otherwise, that a stockholder may consider in its best interest and (2) 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 5,000,000 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." 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.
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 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 and bylaws 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 bylaws also provide that our directors may be removed only for cause and only upon the affirmative vote of the holders of at least 66 2 / 3 % of the outstanding shares of our capital stock entitled to vote for those directors. These provisions may discourage, delay or prevent the removal of incumbent officers and directors.
 Calling of Special Meetings of Stockholders
        Our bylaws provide that special meetings of our stockholders may be called by our board of directors or, at the request of holders of a majority of the common stock entitled to vote at such meeting, by our secretary.
 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 principal executive offices not less than 90 days or 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.
 Business Combinations
        Although the BCA does not contain specific provisions regarding "business combinations" between companies organized under the laws of the Marshall Islands and "interested stockholders," we have included these provisions in our articles of incorporation. Specifically, our articles of incorporation prohibit us from engaging in a "business combination" with certain persons for three years following the date the person becomes an interested stockholder. Interested stockholders generally include:
•
any person who is the beneficial owner of 15% or more of our outstanding voting stock; or 

•
any person who is our affiliate or associate and who held 15% or more of our outstanding voting stock at any time within three years before the date on which the person's status as an interested stockholder is determined, and the affiliates and associates of such person.
        Subject to certain exceptions, a business combination includes, among other things:
•
certain mergers or consolidations of us or any direct or indirect majority-owned subsidiary of ours; 

•
any sale, lease, exchange, mortgage, pledge, transfer or other disposition of our assets or of any subsidiary of ours having an aggregate market value equal to 10% or more of either the
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aggregate market value of all assets of us, determined on a consolidated basis, or the aggregate value of all the outstanding stock of us;
•
certain transactions that result in the issuance or transfer by us of any stock of the corporation to the interested stockholder; 

•
any transaction involving us or any of our subsidiaries that has the effect of increasing the proportionate share of any class or series of stock, or securities convertible into any class or series of stock, of ours or any such subsidiary that is owned directly or indirectly by the interested stockholder or any affiliate or associate of the interested stockholder; and 

•
any receipt by the interested stockholder of the benefit directly or indirectly (except proportionately as a stockholder) of any loans, advances, guarantees, pledges or other financial benefits provided by or through us.
        These provisions of our articles of incorporation do not apply to a business combination if:
•
before a person became an interested stockholder, our board of directors approved either the business combination or the transaction in which the stockholder became an interested stockholder; 

•
upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, other than certain excluded shares; 

•
at or following the transaction in which the person became an interested stockholder, the business combination is approved by our board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of the holders of at least 66 2 / 3 % of our outstanding voting stock that is not owned by the interest stockholder; 

•
the stockholder was or became an interested stockholder prior to the consummation of the initial public offering of our common stock under the Securities Act; 

•
a stockholder became an interested stockholder inadvertently and (i) as soon as practicable divests itself of ownership of sufficient shares so that the stockholder ceases to be an interested stockholder; and (ii) would not, at any time within the three-year period immediately prior to a business combination between our company and such stockholder, have been an interested stockholder but for the inadvertent acquisition of ownership; or 

•
the business combination is proposed prior to the consummation or abandonment of and subsequent to the earlier of the public announcement or the notice required under our articles of incorporation which (i) constitutes one of the transactions described in the following sentence; (ii) is with or by a person who either was not an interested stockholder during the previous three years or who became an interested stockholder with the approval of the board; and (iii) is approved or not opposed by a majority of the members of the board of directors then in office (but not less than one) who were directors prior to any person becoming an interested stockholder during the previous three years or were recommended for election or elected to succeed such directors by a majority of such directors. The proposed transactions referred to in the preceding sentence are limited to:

(i)
a merger or consolidation of our company (except for a merger in respect of which, pursuant to the BCA, no vote of the stockholders of our company is required);

(ii)
a sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), whether as part of a dissolution or otherwise, of assets of our company or of any direct or indirect majority-owned subsidiary of our company (other
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than to any direct or indirect wholly-owned subsidiary or to our company) having an aggregate market value equal to 50% or more of either that aggregate market value of all of the assets of our company determined on a consolidated basis or the aggregate market value of all the outstanding shares; or
(iii)
a proposed tender or exchange offer for 50% or more of our outstanding voting stock.
 Material Contracts
        For a summary of the following agreements, please see the specified section of this Annual Report on Form 20-F. Such summaries are not intended to be complete and reference is made to the contracts themselves, which are exhibits to this Annual Report on Form 20-F.
        For a description of the Amended and Restated Management Agreement, dated as of May 1, 2015, between Danaos Shipping Company Limited and Danaos Corporation, please see "Item 7. Major Shareholders and Related Party Transactions—Management Agreement."
        For a description of the Restrictive Covenant Agreement, dated October 11, 2006, between Danaos Corporation and Dr. John Coustas, please see "Item 7. Major Shareholders and Related Party Transactions—Non-competition."
        For a description of the Stockholder Rights Agreement, dated September 18, 2006, between Danaos Corporation and American Stock Transfer & Trust Company, as Rights Agent, as amended, please see "Item 10. Additional Information—Share Capital—Stockholder Rights Plan."
        For a description of the Restructuring Agreement, dated January 24, 2011, between the Company, its subsidiaries and its lenders and swap- counterparties and lenders and the Company's credit facilities and financing arrangements, please see "Item 5. Operating and Financial Review and Prospects—Bank Agreement." For additional information regarding our credit facilities, including the financial covenants contained therein, see Note 12 to our consolidated financial statements included elsewhere in this annual report.
        For a description of the Shareholders Agreement, dated as of August 5, 2015, by and among Gemini Shipholdings Corporation, the Company and Virage International Ltd., please see "Item 7. Major Shareholders and Related Party Transactions—Related Party Transactions—Gemini Shipholdings Corporation."
 Exchange Controls and Other Limitations Affecting Stockholders
        Under Marshall Islands law, there are currently no restrictions on the export or import of capital, including foreign exchange controls or restrictions that affect the remittance of dividends, interest or other payments to non-resident holders of our common stock. In mid-2015, Greece implemented capital controls restricting the transfer of funds out of Greece, which would restrict our use of the limited amount of cash we hold in Greece for the remittance of dividends, interest or other payments to non- resident holders of our common stock outside of Greece.
        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.
 Tax Considerations
 Marshall Islands Tax Considerations
        We are a Marshall Islands corporation. Because we do not, and we do not expect that we will, conduct business or operations in the Marshall Islands, under current Marshall Islands law we are not
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subject to tax on income or capital gains and our stockholders 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, our stockholders, who do not reside in, maintain offices in or engage in business in the Marshall Islands, will not be subject to Marshall Islands stamp, capital gains or other taxes on the purchase, ownership or disposition of common stock, and such stockholders will not be required by the Republic of The Marshall Islands to file a tax return relating to the common stock.
        Each stockholder is urged to consult their tax counsel or other advisor with regard to the legal and tax consequences, under the laws of pertinent jurisdictions, including the Marshall Islands, of their 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 them.
 Liberian Tax Considerations
        The Republic of Liberia enacted a new income tax act effective as of January 1, 2001 (the "New Act"). In contrast to the income tax law previously in effect since 1977, the New Act does not distinguish between the taxation of "non-resident" Liberian corporations, such as our Liberian subsidiaries, which conduct no business in Liberia and were wholly exempt from taxation under the prior law, 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 are not engaged in shipping exclusively within Liberia) and that do not engage in other business or activities in Liberia other than those 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.
        If, however, our Liberian subsidiaries were subject to Liberian income tax under the Amended Act, they would be subject to tax at a rate of 35% on their worldwide income. As a result, their, and subsequently our, net income and cash flow would be materially reduced. In addition, as the ultimate shareholder of the Liberian subsidiaries we would be subject to Liberian withholding tax on dividends paid by our Liberian subsidiaries at rates ranging from 15% to 20%.
 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, or the Code, judicial decisions, administrative pronouncements, and existing and proposed regulations issued by the United States Department of the Treasury, all of which are in effect and available and subject to change, possibly with retroactive effect. Except as otherwise noted, this discussion is based on the assumption that we will not maintain an office or other fixed place of business within the United States. We have no current intention of maintaining such an office. References in this discussion to "we" and "us" are to Danaos Corporation and its subsidiaries on a consolidated basis, unless the context otherwise requires.
 United States Federal Income Taxation of Our Company
 Taxation of Operating Income: In General
        Unless exempt from United States federal income taxation under the rules discussed below, a foreign corporation is subject to United States federal income taxation in respect of any income that is derived from the use of vessels, from the hiring or leasing of vessels for use on a time, operating or
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bareboat charter basis, from 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 from the performance of services directly related to those uses, which we refer to as "shipping income," to the extent that the shipping income is derived from sources within the United States. For these purposes, 50% of shipping income that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States constitutes income from sources within the United States, which we refer to as "United States-source shipping income."
        Shipping income attributable to transportation that both begins and ends in the United States is generally considered to be 100% from sources within the United States. We do not expect to engage in transportation that produces income which is considered to be 100% from sources within the United States.
        Shipping income attributable to transportation exclusively between non- United States ports is generally considered to be 100% derived from sources outside the United States. Shipping income derived from sources outside the United States will not be subject to any United States federal income tax.
        In the absence of exemption from tax under Section 883 of the Code, our gross United States-source shipping income and that of our vessel-owning or vessel-operating subsidiaries, unless determined to be effectively connected with the conduct of a United States trade or business, as described below, would be subject to a 4% tax imposed without allowance for deductions as described below.
 Exemption of Operating Income from United States Federal Income Taxation
        Other than with respect to four of our vessel-owning subsidiaries which are discussed in greater detail below, under Section 883 of the Code, we and our vessel-owning or vessel-operating subsidiaries will be exempt from United States federal income taxation on United States-source shipping income if:
(1)
we and such subsidiaries are organized in foreign countries (our "countries of organization") that grant an "equivalent exemption" to corporations organized in the United States; and

(2)
either

(A)
more than 50% of the value of our stock is owned, directly or indirectly, by individuals who are "residents" of our country of organization or of another foreign country that grants an "equivalent exemption" to corporations organized in the United States, which we refer to as the "50% Ownership Test"; or

(B)
our stock is "primarily and regularly traded on an established securities market" in our country of organization, in another country that grants an "equivalent exemption" to United States corporations, or in the United States, which we refer to as the "Publicly-Traded Test."
        We believe, based on Revenue Ruling 2008-17, 2008-12 IRB 626, and, in the case of the Marshall Islands, an exchange of notes between the United States and the Marshall Islands, 1990-2 C.B. 321, in the case of Liberia, an exchange of notes between the United States and Liberia, 1988-1 C.B. 463, in the case of Cyprus, an exchange of notes between the United States and Cyprus, 1989-2 C.B. 332 and, in the case of Malta, an exchange of notes between the United States and Malta, 1997-1 C.B. 314, (each an "Exchange of Notes"), that the Marshall Islands, Liberia, Cyprus and Malta, the jurisdictions in which we and our vessel-owning and vessel-operating subsidiaries are incorporated, grant an "equivalent exemption" to United States corporations. Therefore, we believe that we and our vessel-owning and vessel-operating subsidiaries other than four vessel-owning subsidiaries discussed below will be exempt from United States federal income taxation with respect to United States-source shipping income if either the 50% Ownership Test or the Publicly-Traded Test is met. While we believe that we currently satisfy the 50% Ownership Test, we expect that, if the 883 Trust were to come to own 50% or
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less of our shares, it may be difficult for us to satisfy the 50% Ownership Test due to the public trading of our stock. Our ability to satisfy the Publicly-Traded Test is discussed below.
        The Section 883 regulations provide, in pertinent part, that stock of a foreign corporation will be considered to be "primarily traded" on an established securities market in a particular country if the number of shares of each class of stock that are traded during any taxable year on all established securities markets in that country exceeds the number of shares in each such class that are traded during that year on established securities markets in any other single country. For 2015, our common stock, which is the sole class of our issued and outstanding stock, was "primarily traded" on the New York Stock Exchange and we anticipate that that will also be the case for subsequent taxable years.
        Under the regulations, our common stock will be considered to be "regularly traded" on an established securities market if one or more classes of our stock representing more than 50% of our outstanding shares, by total combined voting power of all classes of stock entitled to vote and total value, is listed on the market. We refer to this as the "listing threshold". Since our common stock is our sole class of stock we satisfied the listing threshold for 2015 and expect to continue to do so for subsequent taxable years.
        It is further required that with respect to each class of stock relied upon to meet the listing threshold (i) such class of the stock is traded on the market, other than in minimal quantities, on at least 60 days during the taxable year or 1 / 6 of the days in a short taxable year; and (ii) the aggregate number of shares of such class of stock traded on such market is at least 10% of the average number of shares of such class of stock outstanding during such year or as appropriately adjusted in the case of a short taxable year. We believe that we satisfied the trading frequency and trading volume tests years for 2015 and we expect to continue to satisfy these requirements for subsequent taxable years. Even if this were not the case, the regulations provide that the trading frequency and trading volume tests will be deemed satisfied if, as was the case for 2015 and we expect to be the case with our common stock for subsequent taxable years, such class of stock is traded on an established market in the United States and such stock is regularly quoted by dealers making a market in such stock.
        Notwithstanding the foregoing, the regulations provide, in pertinent part, that a class of our stock will not be considered to be "regularly traded" on an established securities market for any taxable year in which 50% or more of such class of our outstanding shares of the stock is owned, actually or constructively under specified stock attribution rules, on more than half the days during the taxable year by persons who each own 5% or more of the value of such class of our outstanding stock, which we refer to as the "5 Percent Override Rule."
        For purposes of being able to determine the persons who own 5% or more of our stock, or "5% Stockholders," the regulations permit us to rely on those persons that are identified on Schedule 13G and Schedule 13D filings with the United States Securities and Exchange Commission, or the "SEC," as having a 5% or more beneficial interest in our common stock. The regulations further provide that an investment company which is registered under the Investment Company Act of 1940, as amended, will not be treated as a 5% Stockholder for such purposes.
        More than 50% of our shares of common stock are currently owned by 5% stockholders. Thus, we will be subject to the 5% Override Rule unless we can establish that among the shares included in the closely-held block of our shares of common stock there are a sufficient number of shares of common stock that are owned or treated as owned by "qualified stockholders" such that the shares of common stock included in such block that are not so treated could not constitute 50% or more of the shares of our common stock for more than half the number of days during the taxable year. In order to establish this, such qualified stockholders would have to comply with certain documentation and certification requirements designed to substantiate their identity as qualified stockholders. For these purposes, a "qualified stockholder" includes (i) an individual that owns or is treated as owning shares of our common stock and is a resident of a jurisdiction that provides an exemption that is equivalent to that
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provided by Section 883 of the Code and (ii) certain other persons. There can be no assurance that we will not be subject to the 5 Percent Override Rule with respect to any taxable year.
        Approximately 61.8% of our shares will be treated, under applicable attribution rules, as owned by the 883 Trust whose ownership of our shares will be attributed, during his lifetime, to John Coustas, our chief executive officer, for purposes of Section 883. Dr. Coustas has entered into an agreement with us regarding his compliance, and the compliance of certain entities that he controls and through which he owns our shares, with the certification requirements designed to substantiate status as qualified stockholders. In certain circumstances, including circumstances where Dr. Coustas ceases to be a "qualified stockholder" or where the 883 Trust transfers some or all of our shares that it holds, Dr. Coustas' compliance, and the compliance of certain entities that he controls or through which he owns our shares, with the terms of the agreement with us will not enable us to satisfy the requirements for the benefits of Section 883. Following Dr. Coustas' death, there can be no assurance that our shares that are treated, under applicable attribution rules, as owned by the 883 Trust will be treated as owned by a "qualified stockholder" or that any "qualified stockholder" to whom ownership of all or a portion of such ownership is attributed will comply with the ownership certification requirements under Section 883. As to the four vessel-owning subsidiaries referred to above, we believe that their qualification for the benefits of Section 883 for any taxable year will depend upon whether preferred shares issued by such subsidiaries, as to which we are not the direct or indirect shareholder of record, are owned, directly or under applicable ownership attribution rules, by "qualified shareholders" who comply with specified ownership certification procedures. There can be no assurance that such preferred shares will be treated as so owned with respect to any taxable year.
        Accordingly, there can be no assurance that we or any of our vessel-owning or vessel-operating subsidiaries will qualify for the benefits of Section 883 for any taxable year.
        To the extent the benefits of Section 883 are unavailable, our U.S.-source shipping income, to the extent not considered to be "effectively connected" with the conduct of a United States trade or business, as described below, would be subject to a 4% tax imposed by Section 887 of the Code on a gross basis, without the benefit of deductions. Since, under the sourcing rules described above, we expect that no more than 50% of our shipping income would be treated as being derived from United States sources, we expect that the maximum effective rate of United States federal income tax on our gross shipping income would never exceed 2% under the 4% gross basis tax regime. Many of our charters contain provisions obligating the charter to reimburse us for amounts paid in respect of the 4% tax with respect to the activities of the vessel subject to the charter.
        To the extent the benefits of the Section 883 exemption are unavailable and our United States-source shipping income is considered to be "effectively connected" with the conduct of a United States trade or business, as described below, any such "effectively connected" U.S.-source shipping income, net of applicable deductions, would be subject to the United States federal corporate income tax currently imposed at rates of up to 35%. In addition, we may be subject to the 30% "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.
        Our U.S.-source shipping income, other than leasing income, will be considered "effectively connected" with the conduct of a United States trade or business only if:
•
we have, or are considered to have, a fixed place of business in the United States involved in the earning of shipping income; and 

•
substantially all (at least 90%) of our U.S.-source shipping income, other than leasing income, is attributable to regularly scheduled transportation, such as the operation of a vessel that follows a published schedule with repeated sailings at regular intervals between the same points for operating that begin or end in the United States.
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        Our U.S.-source shipping income from leasing will be considered "effectively connected" with the conduct of a U.S. trade or business only if:
•
we have, or are considered to have a fixed place of business in the United States that is involved in the meaning of such leasing income; and 

•
substantially all (at least 90%) of our U.S.-source shipping income from leasing is attributable to such fixed place of business.
        For these purposes, leasing income is treated as attributable to a fixed place of business where such place of business is a material factor in the realization of such income and such income is realized in the ordinary course of business carried on through such fixed place of business. Based on the foregoing and on the expected mode of our shipping operations and other activities, we believe that none of our U.S.-source shipping income will be "effectively connected" with the conduct of a U.S. trade or business.
 United States Taxation of Gain on Sale of Vessels
        Regardless of whether we qualify for exemption under Section 883, we will not be subject to United States federal income taxation with respect to gain realized on a sale of a vessel, provided the sale is considered to occur outside of the United States under United States federal income tax principles. In general, a sale of a vessel will be considered to occur outside of the United States for this purpose if title to the vessel, and risk of loss with respect to the vessel, pass to the buyer outside of the United States. It is expected that any sale of a vessel will be so structured that it will be considered to occur outside of the United States unless any gain from such sale is expected to qualify for exemption under Section 883.
 United States Federal Income Taxation of United States Holders
        As used herein, the term "United States Holder" means a beneficial owner of common stock or warrants that is a United States citizen or resident, 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 the trust. The discussion that follows deals only with common stock or warrants that are held by a United States Holder as capital assets, and does not address the treatment of United States Holders that are subject to special tax rules, including a United States Holder, if any, that has received our warrants as compensation for services.
        If a partnership holds our common stock or warrants, 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 common stock or warrants are encouraged to consult their tax advisor.
 Distributions with Respect to Common Stock
        Subject to the discussion of passive foreign investment companies, or PFICs, below, any distributions made by us with respect to our common stock to a United States Holder will generally constitute dividends, which may be taxable as ordinary income or "qualified dividend income" as described in more detail below, to the extent of our current or accumulated earnings and profits, as determined under United States federal income tax principles. Distributions in excess of our earnings and profits will be treated first as a nontaxable return of capital to the extent of the United States Holder's tax basis in his common stock on a dollar for dollar basis and thereafter as capital gain. Because we are not a United States corporation, United States Holders that are corporations will not be entitled to claim a dividends received deduction with respect to any distributions they receive from
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us. Dividends paid with respect to our common stock will generally be treated as passive category income or, in the case of certain types of United States Holders, general category income for purposes of computing allowable foreign tax credits for United States foreign tax credit purposes. Dividends paid on our common stock to a United States Holder who is an individual, trust or estate (a "United States Individual Holder") should be treated as "qualified dividend income" that is taxable to such United States Individual Holders at preferential tax rates provided that (1) the common stock is readily tradable on an established securities market in the United States (such as the New York Stock Exchange); (2) 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 and Material U.S. Federal Tax Consequences"); and (3) the United States Individual Holder owns the common stock for more than 60 days in the 121- day period beginning 60 days before the date on which the common stock becomes ex-dividend. Special rules may apply to any "extraordinary dividend". Generally, an extraordinary dividend is a dividend in an amount which is equal to or in excess of ten percent of a stockholder's adjusted basis (or fair market value in certain circumstances) in a share of common stock paid by us. If we pay an "extraordinary dividend" on our common stock that is treated as "qualified dividend income," then any loss derived by a United States Individual Holder from the sale or exchange of such common stock will be treated as long-term capital loss to the extent of such dividend.
        There is no assurance that any dividends paid on our common stock will be eligible for these preferential rates in the hands of a United States Individual Holder. Any dividends paid by us which are not eligible for these preferential rates will be taxed to a United States Individual Holder at the standard ordinary income rates.
        Legislation has been previously introduced that would deny the preferential rate of federal income tax currently imposed on qualified dividend income with respect to dividends received from a non-U.S. corporation, unless the non-U.S. corporation either is eligible for the benefits of a comprehensive income tax treaty with the United States or is created or organized under the laws of a foreign country which has a comprehensive income tax system. Because the Marshall Islands has not entered into a comprehensive income tax treaty with the United States and imposes only limited taxes on corporations organized under its laws, it is unlikely that we could satisfy either of these requirements. Consequently, if this legislation were enacted in its current form the preferential rate of federal income tax described above may no longer be applicable to dividends received from us. As of the date hereof, it is not possible to predict with certainty whether or in what form legislation of this sort might be proposed, or enacted.
        The exercise price of our warrants, and the amount of common stock to be issued upon exercise, are subject to adjustment under certain circumstances. If such an adjustment increases a proportionate interest of a United States Holder of a warrant in the fully diluted common stock, or increases a proportionate interest of a United States Holder of common stock in the fully diluted common stock, the United States Holder of the warrants, or common stock, whose proportionate interest increased may be treated as having received a constructive distribution, which may be taxable to such United States Holder as a dividend. The warrants by their terms permit us to increase the amount of common stock issuable on an exercise of the warrants to prevent deemed dividend treatment with respect to holders of our common stock.
 Sale, Exchange or other Disposition of Common Stock or Warrants
        Assuming we do not constitute a PFIC for any taxable year, a United States Holder generally will recognize taxable gain or loss upon a sale, exchange or other disposition of our common stock or warrants in an amount equal to the difference between the amount realized by the United States Holder from such sale, exchange or other disposition and the United States Holder's tax basis in such stock or warrants. Such gain or loss will be treated as long-term capital gain or loss if the United States Holder's holding period is greater than one year at the time of the sale, exchange or other disposition.
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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. A United States Holder's ability to deduct capital losses is subject to certain limitations.
 Exercise or Expiration of Warrants
        Assuming we do not constitute a PFIC for any taxable year, the tax treatment of a cashless exercise of our warrants, which is the only form of exercise provided by their terms, is not free from doubt. A cashless exercise may be treated as a tax-free recapitalization of the warrant into our common stock, and as a result an exercising United States Holder would not recognize gain or loss on the exercise, and would have a tax basis and holding period in the common stock issued upon exercise reflecting the tax basis and holding period of the exercised warrant. It is conceivable, however, that a cashless exercise may be treated in the same manner as an exercise of the warrants for cash, generally resulting in neither gain nor loss for the exercising United States Holder, but the United States Holder would then be treated as having sold a portion of the stock received on exercise to us, reflecting common stock equal to the exercise price for the warrants, and as a result may recognize gain (or loss) reflecting the amount by which the fair market value of such common stock exceeds (or is less than) the United States Holder's tax basis in such common stock (reflecting, in turn, such United States Holder's tax basis in the warrants exercised in exchange for such common stock). United States Holders are urged to consult with their tax advisers regarding the tax treatment of a cashless exercise of the warrants.
        Assuming we do not constitute a PFIC for any taxable year, if a warrant expires unexercised, a United States Holder will recognize a capital loss, reflecting the United States Holder's tax basis in the expired warrant. A United States Holder's ability to deduct capital losses is subject to certain limitations.
 PFIC Status and Material U.S. Federal Tax Consequences
        Special United States federal income tax rules apply to a United States Holder that holds stock or warrants in a foreign corporation classified as a passive foreign investment company, or PFIC, for United States federal 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:
•
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 

•
at least 50% of the average value of our assets during such taxable year 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 earned, or deemed earned, by us 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 specific rules as deriving our rental income in the active conduct of a trade or business.
        We may hold, directly or indirectly, interests in other entities that are PFICs ("Subsidiary PFICs"). If we are a PFIC, each United States Holder will be treated as owning its pro-rata share by value of the stock of any such Subsidiary PFICs.
        While there are legal uncertainties involved in this determination, we believe that we should not be treated as a PFIC for the taxable year ended December 31, 2015. We believe that, although there is no legal authority directly on point, the gross income that we derive from time chartering activities of our
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subsidiaries should constitute services income rather than rental income. Consequently, such income should not constitute passive income and the vessels that we or our subsidiaries operate in connection with the production of such income should not constitute passive assets for purposes of determining whether we are a PFIC. The characterization of income from time charters, however, is uncertain. Although there is older legal authority supporting this position consisting of case law and Internal Revenue Service, or IRS, pronouncements concerning the characterization of income derived from time charters as services income for other tax purposes, the United States Court of Appeals for the Fifth Circuit held in Tidewater Inc. and Subsidiaries v. United States , 565 F.3d 299; (5th Cir. 2009), that income derived from certain time chartering activities should be treated as rental income rather than services income for purposes of the "foreign sales corporation" rules under the Code. The IRS has stated that it disagrees with and will not acquiesce to the Tidewater decision, and in its discussion stated that the time charters at issue in Tidewater would be treated as producing services income for PFIC purposes. However, the IRS's statement with respect to the Tidewater decision was an administrative action that cannot be relied upon or otherwise cited as precedent by taxpayers. Consequently, in the absence of any binding legal authority specifically relating to the statutory provisions governing PFICs, there can be no assurance that the IRS or a court would agree with the Tidewater decision. However, if the principles of the Tidewater decision were applicable to our time charters, we would likely be treated as a PFIC. Moreover, although we intend to conduct our affairs in a manner to avoid being classified as a PFIC, we cannot assure you that the nature of our assets, income and operations will not change, or that we can avoid being treated as a PFIC for any taxable year.
        If we were to be treated as a PFIC for any taxable year, a United States Holder would be required to file an annual report with the IRS for that year with respect to such holder's common stock or warrants. In addition, as discussed more fully below, if we were to be treated as a PFIC for any taxable year, a United States Holder of our common stock would be subject to different taxation rules depending on whether the United States Holder makes an election to treat us as a "Qualified Electing Fund," which election we refer to as a "QEF election." As an alternative to making a QEF election, a United States Holder should be able to make a "mark-to-market" election with respect to our common stock, as discussed below. Under the PFIC rules, a United States Holder of our warrants would not be permitted to make either a QEF election or a mark-to-market election with respect to our warrants.
 Taxation of United States Holders Making a Timely QEF Election
        If a United States Holder makes a timely QEF election with respect to our common stock, which United States Holder we refer to as an "Electing Holder," for United States federal income tax purposes each year the Electing Holder must report his, her or its pro-rata share of our ordinary earnings and our net capital gain, if any, for our taxable year that ends with or within the taxable year of the Electing Holder, regardless of whether or not distributions were received from us by the Electing Holder. Generally, a QEF election should be made on or before the due date for filing the electing United States Holder's U.S. federal income tax return for the first taxable year in which our common stock is held by such United States Holder and we are classified as a PFIC. The Electing Holder's adjusted tax basis in the common stock would be increased to reflect taxed but undistributed earnings and profits. Distributions of earnings and profits that had been previously taxed would result in a corresponding reduction in the adjusted tax basis in the common stock and would not be taxed again once distributed. An Electing Holder would generally recognize capital gain or loss on the sale, exchange or other disposition of our common stock. A United States Holder would make a QEF election with respect to any year that our company and any Subsidiary PFIC are treated as PFICs by filing one copy of IRS Form 8621 with his, her or its United States federal income tax return and a second copy in accordance with the instructions to such form. 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
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information in order to make the QEF election described above with respect to our common stock and the stock of any Subsidiary PFIC.
 Taxation of United States Holders Making a "Mark-to-Market" Election
        Alternatively, if we were to be treated as a PFIC for any taxable year and, as we anticipate, our common stock is treated as "marketable stock," a United States Holder of our common stock would be allowed to make a "mark-to- market" election with respect to our common stock, provided the United States Holder completes and files IRS Form 8621 in accordance with the relevant instructions and related Treasury Regulations. If that election is made, the United States Holder generally would include as ordinary income in each taxable year the excess, if any, of the fair market value of the common stock at the end of the taxable year over such holder's adjusted tax basis in the common stock. The United States Holder also would be permitted an ordinary loss in respect of the excess, if any, of the United States Holder's adjusted tax basis in the common 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. A United States Holder's tax basis in his, her or its common stock would be adjusted to reflect any such income or loss amount. Gain realized on the sale, exchange or other disposition of our common stock would be treated as ordinary income, and any loss realized on the sale, exchange or other disposition of the common 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 the United States Holder. A mark-to-market election under the PFIC rules with respect to our common stock would not apply to a Subsidiary PFIC, and a United States Holder would not be able to make such a mark-to-market election in respect of its indirect ownership interest in that Subsidiary PFIC. Consequently, United States Holders of our common stock could be subject to the PFIC rules with respect to income of the Subsidiary PFIC, the value of which already had been taken into account indirectly via mark-to-market adjustments.
 Taxation of United States Holders Not Making a Timely QEF or Mark- to-Market Election
        Finally, if we were treated as a PFIC for any taxable year, a United States Holder who does not make either a QEF election or a "mark-to-market" election for that year, whom we refer to as a "Non-Electing Holder," would be subject to special rules with respect to (1) any excess distribution (i.e., the portion of any distributions received by the Non-Electing Holder on our common stock in a taxable year in excess of 125% of the average annual distributions received by the Non-Electing Holder in the three preceding taxable years, or, if shorter, the Non-Electing Holder's holding period for the common stock) and (2) any gain realized on the sale, exchange or other disposition of our common stock or warrants. Under these special rules:
•
the excess distribution or gain would be allocated ratably over the Non-Electing Holder's aggregate holding period for the common stock or warrants; 

•
the amount allocated to the current taxable year or to any portion of the United States Holder's holding period prior to the first taxable year for which we were a PFIC would be taxed as ordinary income; and 

•
the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year.
        If we were treated as a PFIC for any taxable year, a U.S. Holder that owns our share or warrants would be required to file an annual information return with the IRS reflecting such ownership, regardless of whether a QEF election or a mark-to-market election had been made.
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        Although there is no governing authority as to the consequences of an exercise of warrants where the issuer is a PFIC, under proposed regulations, the exercise of warrants would not be treated as a disposition for PFIC purposes, and a United States Holder that exercises a warrant, consistent with these proposed regulations, would have a holding period in the resulting common stock that reflects the United States Holder's holding period in the warrants.
        If a United States Holder held our common stock or warrants during a period when we were treated as a PFIC but the United States Holder did not have a QEF election in effect with respect to us, then in the event that we failed to qualify as a PFIC for a subsequent taxable year, the United States Holder could elect to cease to be subject to the rules described above with respect to those shares by making a "deemed sale" or, in certain circumstances, a "deemed dividend" election with respect to our common stock or warrants. If the United States Holder makes a deemed sale election, the United States Holder will be treated, for purposes of applying the rules described in the preceding paragraph, as having disposed of our common stock or warrants for their fair market value on the last day of the last taxable year for which we qualified as a PFIC (the "termination date"). The United States Holder would increase his, her or its basis in such common stock or warrants by the amount of the gain on the deemed sale described in the preceding sentence. Following a deemed sale election, the United States Holder would not be treated, for purposes of the PFIC rules, as having owned the common stock or warrants during a period prior to the termination date when we qualified as a PFIC.
        If we were treated as a "controlled foreign corporation" for United States tax purposes for the taxable year that included the termination date, then a United States Holder could make a deemed dividend election with respect to our common stock. If a deemed dividend election is made, the United States Holder is required to include in income as a dividend his, her or its pro-rata share (based on all of our stock held by the United States Holder, directly or under applicable attribution rules, on the termination date) of our post-1986 earnings and profits as of the close of the taxable year that includes the termination date (taking only earnings and profits accumulated in taxable years in which we were a PFIC into account). The deemed dividend described in the preceding sentence is treated as an excess distribution for purposes of the rules described in the second preceding paragraph. The United States Holder would increase his, her or its basis in our common stock by the amount of the deemed dividend. Following a deemed dividend election, the United States Holder would not be treated, for purposes of the PFIC rules, as having owned the common stock during a period prior to the termination date when we qualified as a PFIC. For purposes of determining whether the deemed dividend election is available, we will generally be treated as a controlled foreign corporation for a taxable year when, at any time during that year, United States persons, each of whom owns, directly or under applicable attribution rules, common stock having 10% or more of the total voting power of our common stock, in the aggregate own, directly or under applicable attribution rules, shares representing more than 50% of the voting power or value of our common stock.
        A deemed sale or deemed dividend election must be made on the United States Holder's original or amended return for the shareholder's taxable year that includes the termination date and, if made on an amended return, such amended return must be filed not later than the date that is three years after the due date of the original return for such taxable year. Special rules apply where a person is treated, for purposes of the PFIC rules, as indirectly owning our common stock or warrants.
 United States Federal Income Taxation of "Non-United States Holders"
        A beneficial owner of common stock or warrants that is not a United States Holder and is not treated as a partnership for United States federal income tax purposes is referred to herein as a "Non-United States Holder."
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 Dividends on Common Stock
        Non-United States Holders generally will not be subject to United States federal income tax or withholding tax on dividends received from us with respect to our common stock, unless that income is effectively connected with the Non-United States Holder's conduct of a trade or business in the United States. If the Non-United States Holder is entitled to the benefits of a United States income tax treaty with respect to those dividends, that income generally is taxable only if it is attributable to a permanent establishment maintained by the Non-United States Holder in the United States.
 Sale, Exchange or Other Disposition of Common Stock or Warrants
        Non-United States Holders generally will not be subject to United States federal income tax or withholding tax on any gain realized upon the sale, exchange or other disposition of our common stock or warrants, or an exercise of warrants, unless:
•
the gain is effectively connected with the Non-United States Holder's conduct of a trade or business in the United States. If the Non- United States Holder is entitled to the benefits of an income tax treaty with respect to that gain, that gain generally is taxable only if it is attributable to a permanent establishment maintained by the Non-United States Holder in the United States; or 

•
the Non-United States Holder is an individual who is present in the United States for 183 days or more during the taxable year of disposition and other conditions are met.
        If the Non-United States Holder is engaged in a United States trade or business for United States federal income tax purposes, the income from the common stock or warrants, including dividends (with respect to the common stock) 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 (including deemed gain, if any, with respect to an exercise of the warrants, as described above in "—United States Federal Income Taxation of United States Holders—Exercise or Expiration of Warrants") will generally be subject to regular United States federal income tax in the same manner as discussed in the previous section relating to the taxation of United States Holders. In addition, in the case of a corporate Non-United States Holder, such holder's earnings and profits that are attributable to the effectively connected income, which are subject to certain adjustments, may be subject to an additional branch profits tax at a rate of 30%, or at a lower rate as may be specified by an applicable income tax treaty.
 Backup Withholding and Information Reporting
        In general, dividend payments, or other taxable distributions, made within the United States to a noncorporate United States holder will be subject to information reporting requirements and backup withholding tax if such holder:
•
fails to provide an accurate taxpayer identification number; 

•
is notified by the IRS that it has failed to report all interest or dividends required to be shown on its federal income tax returns; or 

•
in certain circumstances, fails to comply with applicable certification requirements.
        Non-United States Holders may be required to establish their exemption from information reporting and backup withholding by certifying their status on IRS Form W-8BEN, W-8ECI or W-8IMY, as applicable.
        If a holder sells our common stock or warrants to or through a United States office or broker, the payment of the proceeds is subject to both United States backup withholding and information reporting unless the holder certifies that it is a non-United States person, under penalties of perjury, or the
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holder otherwise establishes an exemption. If a holder sells our common stock through a non-United States office of a non-United States broker and the sales proceeds are paid outside the United States, 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 a holder sells our common stock through a non-United States office of a broker that is a United States person or has some other contacts with the United States.
        Backup withholding tax is not an additional tax. Rather, a holder generally may obtain a refund of any amounts withheld under backup withholding rules that exceed such stockholder's income tax liability by filing a refund claim with the IRS.
 Dividends and Paying Agents
        Not applicable.
 Statement by Experts
        Not applicable.
 Documents on Display
        We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended. In accordance with these requirements, we file reports and other information as a foreign private issuer with the SEC. You may inspect and copy our public filings without charge at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information about the public reference room. You may obtain copies of all or any part of such materials from the SEC upon payment of prescribed fees. You may also inspect reports and other information regarding registrants, such as us, that file electronically with the SEC without charge at a web site maintained by the SEC at http://www.sec.gov .
Item 11.    Quantitative and Qualitative Disclosures About Market Risk
 Interest Rate Risk
        In connection with certain of our credit facilities under which we pay a floating rate of interest, we entered into interest rate swap agreements designed to pro-actively and efficiently manage our floating rate exposure. We have recognized these derivative instruments on the consolidated balance sheet at their fair value. Pursuant to the adoption of our Risk Management Accounting Policy, and after putting in place the formal documentation required by the accounting guidance for derivatives and hedging in order to designate these swaps as hedging instruments, as of June 15, 2006, these interest rate swaps qualified for hedge accounting, and, accordingly, from that time until June 30, 2012, only hedge ineffectiveness amounts arising from the differences in the change in fair value of the hedging instrument and the hedged item were recognized in the Company's earnings. Assessment and measurement of prospective and retrospective effectiveness for these interest rate swaps were performed on a quarterly basis until June 30, 2012. For qualifying cash flow hedges, the fair value gain or loss associated with the effective portion of the cash flow hedge was recognized initially in stockholders' equity, and recognized to the Statement of Operations in the periods when the hedged item affects profit or loss. On July 1, 2012, we elected to prospectively de-designate cash flow interest rate swaps for which we were obtaining hedge accounting treatment due to the compliance burden associated with this accounting policy. As a result, all changes in the fair value of our cash flow interest rate swap agreements are recorded in earnings under "Unrealized and Realized Losses on Derivatives" from the de-designation date forward. We have not held or issued derivative financial instruments for trading or other speculative purposes.
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        The interest rate swap agreements converting floating interest rate exposure into fixed, as of December 31, 2015 and 2014 were as follows (in thousands):

																									
Counter-party 	 	Contract
Trade Date	 	Effective
Date	 	Termination
Date	 	Notional
Amount on
Effective
Date	 	Fixed Rate
(Danaos pays)	 	Floating Rate
(Danaos receives)	 	Fair Value
December 31,
2015	 	Fair Value
December 31,
2014	 	
RBS	 	 	03/09/2007	 	 	3/15/2010	 	 	3/15/2015	 	 $	200,000	 	 	5.07% p.a.	 	USD LIBOR 3M BBA	 	 	—	 	 $	(2,011	)	
RBS	 	 	11/15/2007	 	 	11/19/2010	 	 	11/19/2015	 	 $	100,000	 	 	5.12% p.a.	 	USD LIBOR 3M BBA	 	 	—	 	 	(4,246	)	
RBS	 	 	11/16/2007	 	 	11/22/2010	 	 	11/22/2015	 	 $	100,000	 	 	5.07% p.a.	 	USD LIBOR 3M BBA	 	 	—	 	 	(4,248	)	
CITI	 	 	04/17/2007	 	 	4/17/2008	 	 	4/17/2015	 	 $	200,000	 	 	5.124% p.a.	 	USD LIBOR 3M BBA	 	 	—	 	 	(2,895	)	
CITI	 	 	04/20/2007	 	 	4/20/2010	 	 	4/20/2015	 	 $	200,000	 	 	5.1775% p.a.	 	USD LIBOR 3M BBA	 	 	—	 	 	(3,008	)	
CITI	 	 	11/02/2007	 	 	11/6/2010	 	 	11/6/2015	 	 $	250,000	 	 	5.1% p.a.	 	USD LIBOR 3M BBA	 	 	—	 	 	(10,167	)	
CITI	 	 	11/26/2007	 	 	11/29/2010	 	 	11/30/2015	 	 $	100,000	 	 	4.98% p.a.	 	USD LIBOR 3M BBA	 	 	—	 	 	(4,249	)	
CITI	 	 	02/07/2008	 	 	2/11/2011	 	 	2/11/2016	 	 $	200,000	 	 	4.695% p.a.	 	USD LIBOR 3M BBA	 	 $	(1,012	)	 	(9,524	)	
Eurobank	 	 	12/06/2007	 	 	12/10/2010	 	 	12/10/2015	 	 $	200,000	 	 	4.8125% p.a.	 	USD LIBOR 3M BBA	 	 	—	 	 	(8,428	)	
Eurobank	 	 	02/11/2008	 	 	5/31/2011	 	 	5/31/2015	 	 $	200,000	 	 	4.755% p.a.	 	USD LIBOR 3M BBA	 	 	—	 	 	(3,763	)	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​ 	​ 	​	​ 	​ 	​	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 $	(1,012	)	 $	(52,539	)	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​ 	​ 	​	​ 	​ 	​	
ABN Amro	 	 	06/06/2013	 	 	1/4/2016	 	 	12/31/2016	 	 $	325,000	 	 	1.4975% p.a.	 	USD LIBOR 3M BBA	 	 $	(2,113	)	 $	(617	)	
ABN Amro	 	 	05/31/2013	 	 	1/4/2016	 	 	12/31/2016	 	 $	250,000	 	 	1.4125% p.a.	 	USD LIBOR 3M BBA	 	 	(1,413	)	 	(264	)	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​ 	​ 	​	​ 	​ 	​	
Total fair value of swap liabilities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 $	(4,538	)	 $	(53,420	)	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​ 	​ 	​	​ 	​ 	​	
        Accounting guidance for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities requires that an entity recognize all derivatives as either assets or liabilities in the consolidated balance sheet and measures those instruments at fair value. If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change.
 Fair Value Interest Rate Swap Hedges
        These interest rate swaps are designed to economically hedge the fair value of the fixed rate loan facilities against fluctuations in the market interest rates by converting our fixed rate loan facilities to floating rate debt. Pursuant to the adoption of our Risk Management Accounting Policy, and after putting in place the formal documentation required by hedge accounting in order to designate these swaps as hedging instruments, as of June 15, 2006, these interest rate swaps qualified for hedge accounting, and, accordingly, from that time until June 30, 2012, hedge ineffectiveness amounts arising from the differences in the change in fair value of the hedging instrument and the hedged item were recognized in our earnings. Assessment and measurement of prospective and retrospective effectiveness for these interest rate swaps was performed on a quarterly basis, on the financial statement and earnings reporting dates.
        On July 1, 2012, we elected to prospectively de-designate fair value interest rate swaps for which it was applying hedge accounting treatment due to the compliance burden associated with this accounting policy. All changes in the fair value of our fair value interest rate swap agreements will continue to be recorded in earnings under "Unrealized and Realized Losses on Derivatives" from the de-designation date forward.
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        The interest rate swap agreements converting fixed interest rate exposure into floating, as of December 31, 2015 and 2014 were as follows (in thousands):

																										
Counter party 	 	Contract
trade Date	 	Effective
Date	 	Termination
Date	 	Notional
Amount on
Effective
Date	 	Fixed Rate
(Danaos
receives)	 	Floating Rate
(Danaos pays)	 	Fair Value
December 31,
2015	 	Fair Value
December 31,
2014	 	
RBS	 	 	11/15/2004	 	 	12/15/2004	 	 	8/27/2016	 	 $	60,528	 	 	5.0125% p.a.	 	 	USD LIBOR 3M BBA + 0.835% p.a.	 	 $	55	 	 $	302	 	
RBS	 	 	11/15/2004	 	 	11/17/2004	 	 	11/2/2016	 	 $	62,342	 	 	5.0125% p.a.	 	 	USD LIBOR 3M BBA + 0.855% p.a.	 	 	83	 	 	362	 	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​ 	​ 	​	​ 	​ 	​	
Total fair value	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 $	138	 	 $	664	 	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​ 	​ 	​	​ 	​ 	​	
        The total fair value change of the interest rate swaps for the years ended December 31, 2015, 2014 and 2013, amounted to $(0.5) million, $(0.9) million and $(1.3) million, respectively, and is included in the consolidated Statement of Operations in "Unrealized and realized losses on derivatives". The related asset of $0.1 million and $0.7 million as of December 31, 2015 and 2014, respectively, are presented under "Other current assets" and under "Other non-current assets" in the consolidated balance sheet as of December 31, 2015 and 2014, respectively.
        We reclassified from "Long-term debt, net of current portion", where its fair value of hedged item is recorded, to our earnings unrealized losses an amount of $0.6 million and $0.6 million for the years ended December 31, 2015 and 2014, respectively. The related liability of the fair value hedged debt of $0.4 million and $1.0 million is presented under "Long-term Debt" in the consolidated balance sheet as of December 31, 2015 and 2014, respectively.
 Cash Flow Interest Rate Swap Hedges
        We, according to our long-term strategic plan to maintain relative stability in our interest rate exposure, have decided to swap part of our interest expenses from floating to fixed. To this effect, we entered into interest rate swap transactions with varying start and maturity dates, in order to pro- actively and efficiently manage our floating rate exposure.
        These interest rate swaps are designed to economically hedge the variability of interest cash flows arising from floating rate debt, attributable to movements in three-month USD$ LIBOR. According to our Risk Management Accounting Policy, and after putting in place the formal documentation required by hedge accounting in order to designate these swaps as hedging instruments, as from their inception, these interest rate swaps qualified for hedge accounting and, accordingly, from that time until June 30, 2012, only hedge ineffectiveness amounts arising from the differences in the change in fair value of the hedging instrument and the hedged item were recognized in our earnings. Assessment and measurement of prospective and retrospective effectiveness for these interest rate swaps were performed on a quarterly basis. For qualifying cash flow hedges, the fair value gain or loss associated with the effective portion of the cash flow hedge was recognized initially in stockholders' equity, and recognized to the Statement of Operations in the periods when the hedged item affects profit or loss.
        On July 1, 2012, we elected to prospectively de-designate cash flow interest rate swaps for which we were obtaining hedge accounting treatment due to the compliance burden associated with this accounting policy. As a result, all changes in the fair value of our cash flow interest rate swap agreements are recorded in earnings under "Unrealized and Realized Losses on Derivatives" from the de-designation date forward. We evaluated whether it is probable that the previously hedged forecasted interest payments are probable to not occur in the originally specified time period. We concluded that the previously hedged forecasted interest payments are probable of occurring. Therefore, unrealized gains or losses in accumulated other comprehensive loss associated with the previously designated cash flow interest rate swaps will remain in accumulated other comprehensive loss and recognized in earnings when the interest payments will be recognized. If such interest payments were to be identified
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as being probable of not occurring, the accumulated other comprehensive loss balance pertaining to these amounts would be reversed through earnings immediately.
        We recorded in the consolidated Statements of Operations unrealized gains of $48.9 million, $114.2 million and $139.4 million in relation to fair value changes of interest rate swaps for the years ended December 31, 2015, 2014 and 2013, respectively. Furthermore, $32.6 million, $88.9 million and $116.6 million of unrealized losses were reclassified from Accumulated Other Comprehensive Loss to earnings for year ended December 31, 2015, 2014 and 2013, respectively.
        The variable-rate interest on specific borrowings that was associated with vessels under construction was capitalized as a cost of the specific vessels. In accordance with the accounting guidance on derivatives and hedging, the amounts in accumulated other comprehensive income related to realized gains or losses on cash flow hedges that have been entered into and qualify for hedge accounting, in order to hedge the variability of that interest, are classified under other comprehensive income and are reclassified into earnings over the depreciable life of the constructed asset, since that depreciable life coincides with the amortization period for the capitalized interest cost on the debt. An amount of $4.0 million, $4.0 million and $4.0 million was reclassified into earnings for the years ended December 31, 2015, 2014 and 2013, respectively, representing amortization over the depreciable life of the vessels.
        Assuming no changes to our borrowings or hedging instruments after December 31, 2015, a 10 basis points increase in interest rates on our floating rate debt outstanding at December 31, 2015 would result in a decrease of approximately $2.1 million in our earnings in 2016. These amounts are determined by calculating the effect of a hypothetical interest rate change on our floating rate debt, after giving consideration to our interest rate swaps. These amounts do not include the effects of certain potential results of changing interest rates, such as a different level of overall economic activity, or other actions management may take to mitigate this risk. Furthermore, this sensitivity analysis does not assume alterations in our gross debt or other changes in our financial position.
 Foreign Currency Exchange Risk
        We generate all of our revenues in U.S. dollars, but for the year ended December 31, 2015 we incurred approximately 28.2% of our operating expenses in currencies other than U.S. dollars (mainly in Euros). As of December 31, 2015, approximately 33.5% of our outstanding accounts payable were denominated in currencies other than the U.S. dollar (mainly in Euro). We have not entered into derivative instruments to hedge the foreign currency translation of assets or liabilities or foreign currency transactions.
Item 12.    Description of Securities Other than Equity Securities
        Not Applicable.
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 PART II
Item 13.    Defaults, Dividend Arrearages and Delinquencies
        Not Applicable.
Item 14.    Material Modifications to the Rights of Security Holders and Use of Proceeds
        Not Applicable.
Item 15.    Controls and Procedures
 15A. 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 Securities Exchange Act of 1934, as of December 31, 2015. 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 Securities Exchange Act of 1934 is recorded, processed, summarized and reported within required time periods. Disclosure controls and procedures include 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 Securities Exchange Act of 1934 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, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of December 31, 2015.
 15B. 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 Securities Exchange Act of 1934, and for the assessment of the effectiveness of internal control over financial reporting. Our 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 in the United States ("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 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.
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        In making its assessment of our internal control over financial reporting as of December 31, 2015, management, including the Chief Executive Officer and Chief Financial Officer, used the criteria set forth in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO").
        Management concluded that, as of December 31, 2015, our internal control over financial reporting was effective.
 15C. Attestation Report of the Independent Registered Public Accounting Firm
        PricewaterhouseCoopers S.A, which has audited the consolidated financial statements of the Company for the year ended December 31, 2015, has also audited the effectiveness of the Company's internal control over financial reporting as stated in their audit report which is incorporated into Item 18 of this Form 20-F from page F-2 hereof.
 15D. Change in Internal Control over Financial Reporting
        During the period covered by this Annual Report on Form 20-F, 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 16A.    Audit Committee Financial Expert
        Our Audit Committee consists of three independent directors, Myles R. Itkin, who is the chairman of the committee, Miklos Konkoly-Thege and William Repko. Our board of directors has determined that Myles R. Itkin, whose biographical details are included in "Item 6. Directors, Senior Management and Employees," qualifies as an audit committee financial expert as defined under current SEC regulations. Mr. Itkin is a United States Certified Public Accountant and independent in accordance with the listing standards of the New York Stock Exchange and SEC rules.
Item 16B.    Code of Ethics
        We have adopted a Code of Business Conduct and Ethics for officers and employees of our company, a Code of Conduct for the chief executive officer and senior financial officers of our company and a Code of Ethics for directors of our company, copies of which are posted on our website, and may be viewed at http://www.danaos.com . We will also provide a paper copy of these documents free of charge upon written request by our stockholders. Stockholders may direct their requests to the attention of Mr. Evangelos Chatzis, Danaos Corporation, c/o Danaos Shipping Co. Ltd., 14 Akti Kondyli, 185 45 Piraeus, Greece. No waivers of the Code of Business Conduct and Ethics, the Code of Conduct or the Code of Ethics have been granted to any person during the year ended December 31, 2015.
Item 16C.    Principal Accountant Fees and Services
        PricewaterhouseCoopers S.A., an independent registered public accounting firm, has audited our annual financial statements acting as our independent auditor for the fiscal years ended December 31, 2015 and 2014.
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        The chart below sets forth the total amount billed and accrued for the PricewaterhouseCoopers S.A. services performed in 2015 and 2014 and breaks down these amounts by the category of service.

								
 	 	2015	 	2014	 	
 	 	(in thousands of
dollars)	 	
Audit fees	 	 $	352.4	 	 $	415.7	 	
 Audit Fees
        Audit fees paid were compensation for professional services rendered for the audits of our consolidated financial statements.
 Audit-related Fees; Tax Fees; All Other Fees
        PricewaterhouseCoopers S.A. did not provide any other services that would be classified in these categories in 2015 or 2014.
 Pre-approval Policies and Procedures
        The audit committee charter sets forth our policy regarding retention of the independent auditors, requiring the audit committee to review and approve in advance the retention of the independent auditors for the performance of all audit and lawfully permitted non-audit services and the fees related thereto. 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 25, 2008, we publicly announced that our Board of Directors had approved a share repurchase program and authorized the officers of the company to repurchase, from time to time, up to 1,000,000 shares of our common stock.

														
Period 	 	Total
Number of
Shares
Purchased
(a)	 	Average
Price
Paid Per
Share
(b)	 	Total Number
of Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs
(c)	 	Maximum
Number of Shares
that May Yet Be
Purchased Under
the Plans or
Programs
(d)	 	
December 2 to December 19, 2008	 	 	15,000	 	 $	5.90	 	 	15,000	 	 	985,000	 	
March 4, 2010	 	 	12,000	 	 $	4.14	 	 	27,000	 	 	973,000	 	
        We did not repurchase any shares of our common stock in any of the five years ended December 31, 2015.
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Item 16F.    Change in Registrant's Certifying Accountant
        Not Applicable.
Item 16G.    Corporate Governance
 Statement of Significant Differences between our Corporate Governance Practices and the New York Stock Exchange Corporate Governance Standards for U.S. Non-Controlled Issuers
        Pursuant to certain exceptions for foreign private issuers and controlled companies, we are not required to comply with certain of the corporate governance practices followed by U.S. and non-controlled companies under the New York Stock Exchange listing standards. However, pursuant to Section 303.A.11 of the New York Stock Exchange Listed Company Manual and the requirements of Form 20-F, we are required to state any significant differences between our corporate governance practices and the practices required by the New York Stock Exchange. We believe that our established practices in the area of corporate governance are in line with the spirit of the New York Stock Exchange standards and provide adequate protection to our stockholders. The significant differences between our corporate governance practices and the New York Stock Exchange standards applicable to listed U.S. companies are set forth below.
        The New York Stock Exchange requires that a listed U.S. company have a nominating/corporate governance committee and a compensation committee, each composed of independent directors. As permitted under Marshall Islands law and our bylaws, a non-independent director, who is a member of our management who also serves on our board of directors, serves on the compensation committee of our board of directors and on the nominating and corporate governance committee of our board of directors.
        As a foreign private issuer we are permitted to follow the corporate governance rules of our home country in lieu of complying with NYSE shareholder approval requirements applicable to certain share issuances, specifically NYSE Rules 312.03(b) and 312.03(c). If we believe that circumstances warrant, we may elect to comply with the provisions of the Marshall Islands Business Corporations Act which provide that the Board of Directors approve share issuances, without the need for stockholder approval, in lieu of the NYSE rules, as we did in respect of our $200.0 million equity transaction on August 12, 2010 in consideration of the circumstances described below. The receipt of $200 million in proceeds from equity issuances, including $100 million from affiliates of the Company's Chief Executive Officer and his family, was a condition to the arrangements with the Company's lenders under the Bank Agreement. After evaluating market conditions for a transaction that would satisfy this condition, the Company perceived that the terms on which the above described equity transaction could be executed were more favorable than those that would be available in a broader offering, which would have had no assurance of successful completion.
Item 16H.    Mine Safety Disclosure
        Not Applicable.
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 PART III
Item 17.    Financial Statements
        Not Applicable.
Item 18.    Financial Statements
        Reference is made to pages F-1 through F-49 included herein by reference.
Item 19.    Exhibits

				
Number	 	Description	
 	1.1	 	Restated Articles of Incorporation(6)	

1.2	
 	
Amended and Restated Bylaws(5)	

2.1	
 	
Amended and Restated Warrant Agreement, dated as of May 10, 2011, between Danaos Corporation and American Stock Transfer & Trust Company, LLC, as warrant agent(10)	

4.1	
 	
Amended and Restated Management Agreement between Danaos Shipping Company Limited and Danaos Corporation	

4.2	
 	
Form of Management Agreement between Danaos Shipping Company Limited and our vessel-owning subsidiaries (See Appendix I to Exhibit 4.1)	

4.3	
 	
Form of Restrictive Covenant Agreement between Danaos Corporation and Dr. John Coustas(1)	

4.4	
 	
Stockholder Rights Agreement and Amendment No. 1(8)	

4.5	
 	
2006 Equity Compensation Plan(1)	

4.5.1	
 	
Directors' Share Payment Plan(4)	

4.6	
 	
Loan Agreement and Supplemental Agreement, dated December 17, 2002 and April 21, 2005 respectively, with Aegean Baltic Bank S.A. and HSH Nordbank AG(1)	

4.7	
 	
Loan Agreement, dated May 13, 2003, with the Export-Import Bank of Korea(1)	

4.8	
 	
Loan Agreement, dated January 29, 2004, with the Export-Import Bank of Korea and ABN Amro Bank (formerly Fortis Capital Corp.)(1)	

4.9	
 	
Loan Agreement, dated November 14, 2006, with Aegean Baltic Bank S.A. and HSH Nordbank AG(2)	

4.10	
 	
Loan Agreement, dated February 20, 2007, with The Royal Bank of Scotland(2)	

4.11	
 	
Loan Agreement, dated February 15, 2008, with Credit Agricole (formerly Emporiki Bank of Greece S.A.)(3)	

4.12	
 	
Loan Agreement, dated May 9, 2008, with Credit Suisse(4)	

4.13	
 	
Loan Agreement, dated May 30, 2008, with Deutsche Bank(4)	

4.14	
 	
Loan Agreement, dated July 29, 2008, with ABN Amro Bank (formerly Fortis Bank) (acting as agent), Lloyds TSB and National Bank of Greece(4)	

4.15	
 	
Supplemental Agreement, dated August 13, 2009, with ABN Amro Bank (formerly Fortis Bank), Lloyds TSB and National Bank of Greece, in respect of Loan Agreement, dated July 29, 2008(7)	
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Number	 	Description	
 	4.16	 	Loan Agreement, dated February 2, 2009, with Commerzbank (formerly Deutsche Schiffsbank), Credit Suisse and Credit Agricole (formerly Emporiki Bank)(4)	

4.17	
 	
Supplemental Letters, dated August 6, 2009 and December 15, 2009, with Deutsche Bank AG Filiale Deutschlandgeschaft, as agent, in respect of Loan Agreement, dated May 30, 2008(7)	

4.18	
 	
Supplemental Agreement, dated August 13, 2009, with ABN Amro Bank (formerly Fortis Bank), Lloyds TSB and National Bank of Greece, in respect of Loan Agreement, dated July 29, 2008(7)	

4.19	
 	
Supplemental Letter Agreement, dated April 14, 2010, with Royal Bank of Scotland in respect of Loan Agreement dated February 20, 2007(7)	

4.20	
 	
Restructuring Agreement, dated January 24, 2011, with the Company's lenders and swap-counterparties named therein, including form of intercreditor agreement(8)	

4.21	
 	
Credit Facility, dated February 21, 2011, with Citi (acting as an agent), ABN Amro and CEXIM(8)	

4.21.1	
 	
Amended and Restated Facility Agreement with Citibank N.A. (acting as an agent), ABN Amro and CEXIM(13)	

4.22	
 	
Credit Facility, dated January 24, 2011, with Aegean Baltic Bank S.A., HSH Nordbank AG and Piraeus Bank A.E.(8)	

4.23	
 	
Credit Facility, dated January 24, 2011, with The Royal Bank of Scotland plc(8)	

4.24	
 	
Credit Facility, dated January 24, 2011, with ABN Amro Bank N.V. and Lloyds TSB Bank PLC(8)	

4.25	
 	
Credit Facility, dated January 24, 2011, with Credit Suisse AG, Deutsche Bank AG, Commerzbank (formerly Deutsche Schiffsbank Aktiengesellschaft) and Credit Agricole (formerly Emporiki Bank of Greece S.A.)(8)	

4.26	
 	
Credit Facility, dated January 24, 2011, with Citibank, N.A., EFG Eurobank Ergasias S.A., Citibank, N.A., London Branch and Citibank International Plc(8)	

4.27	
 	
Hyundai Vendor Financing Agreements(8)	

4.28	
 	
Registration Rights Agreement, dated as of March 2, 2011, between Danaos Corporation and the warrant holders identified on the signatures pages thereto(8)	

4.29	
 	
Form of Subscription Agreement, including the Form of Registration Rights Agreement attached thereto as Schedule B, for August 2010 common stock sale(9)	

4.30	
 	
Supplemental Agreement, dated August 12, 2010, with KEXIM and ABN Amro and amendment thereto, dated February 9, 2012(11)	

4.31	
 	
Shareholders Agreement, dated as of August 5, 2015, by and among Gemini Shipholdings Corporation, Virage International Ltd. and Danaos Corporation	

8	
 	
Subsidiaries	

11.1	
 	
Code of Business Conduct and Ethics(2)	

11.2	
 	
Code of Conduct(2)	

11.3	
 	
Code of Ethics(2)	
134

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Number	 	Description	
 	12.1	 	Certification of Chief Executive Officer pursuant to Rule 13a- 14(a) of the Securities Exchange Act of 1934, as amended	

12.2	
 	
Certification of Chief Financial Officer pursuant to Rule 13a- 14(a) of the Securities Exchange Act of 1934, as amended	

13.1	
 	
Certification of Chief Executive Officer pursuant to Rule 13a- 14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350 as added by Section 906 of the Sarbanes-Oxley Act of 2002	

13.2	
 	
Certification of Chief Financial Officer pursuant to Rule 13a- 14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350 as added by Section 906 of the Sarbanes-Oxley Act of 2002	

15	
 	
Consent of Independent Registered Public Accounting Firm	

101	
 	
Attached as Exhibit 101 to this report are the following Interactive Data Files, formatted in eXtensible Business Reporting Language (XBRL):	

101.INS	
 	
XBRL Instance Document	

101.SCH	
 	
XBRL Taxonomy Extension Schema	

101.CAL	
 	
XBRL Taxonomy Extension Calculation Linkbase	

101.LAB	
 	
XBRL Taxonomy Extension Label Linkbase	

101.PRE	
 	
XBRL Taxonomy Extension Presentation Linkbase	

101.DEF	
 	
XBRL Taxonomy Extension Definition Linkbase	

(1)
Previously filed as an exhibit to the Company's Registration Statement on Form F-1 (Reg. No. 333-137459) filed with the SEC and hereby incorporated by reference to such Registration Statement.

(2)
Previously filed as an exhibit to the Company's Annual Report on Form 20-F for the year ended December 31, 2006 and filed with the SEC on May 30, 2007.

(3)
Previously filed as an exhibit to the Company's Annual Report on Form 20-F/A for the year ended December 31, 2007 and filed with the SEC on April 7, 2008.

(4)
Previously filed as an exhibit to the Company's Annual Report on Form 20-F for the year ended December 31, 2008 and filed with the SEC on July 13, 2009.

(5)
Previously filed as an exhibit to the Company's Form 6-K with respect to the six months ended June 30, 2009 and filed with the SEC on September 23, 2009.

(6)
Previously filed as an exhibit to the Company's Form 6-K filed with the SEC on July 29, 2010.

(7)
Previously filed as an exhibit to the Company's Annual Report on Form 20-F for the year ended December 31, 2009 and filed with the SEC on June 18, 2010.

(8)
Previously filed as an exhibit to the Company's Annual Report on Form 20-F for the year ended December 31, 2010 filed with the SEC on April 8, 2011.

(9)
Previously filed as an exhibit to the Company's Report on Form 6-K filed with the SEC on August 27, 2010.

(10)
Previously filed as an exhibit to the Company's Report on Form 6-K filed with the SEC on May 10, 2011.
135

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(11)
Previously filed as an exhibit to the Company's Annual Report on Form 20-F filed with the SEC on March 30, 2012.

(12)
Previously filed as an exhibit to the Company's Annual Report on Form 20-F filed with the SEC on March 1, 2013.

(13)
Previously filed as an exhibit to the Company's Report on Form 6-K filed with the SEC on July 29, 2013.
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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.

					
	 	DANAOS CORPORATION	
	 	/s/ EVANGELOS CHATZIS
	
	 	Name:	 	Evangelos Chatzis	
	 	Title:	 	Chief Financial Officer	
Date: March 15, 2016
137

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 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

					
Report of Independent Registered Public Accounting Firm	 	 	F-2	 	
Consolidated Balance Sheets as of December 31, 2015 and 2014	 	 	F-3	 	
Consolidated Statements of Operations for the Years Ended December 31, 2015, 2014 and 2013	 	 	F-4	 	
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2015, 2014 and 2013	 	 	F-5	 	
Consolidated Statements of Changes in Stockholders' Equity for the Years Ended December 31, 2015, 2014 and 2013	 	 	F-6	 	
Consolidated Statements of Cash Flows for the Years Ended December 31, 2015, 2014 and 2013	 	 	F-7	 	
Notes to the Consolidated Financial Statements	 	 	F-8	 	
F-1

Table of Contents
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors
        In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, comprehensive income, changes in stockholders' equity and cash flows present fairly, in all material respects, the financial position of Danaos Corporation and its subsidiaries (the "Company") at December 31, 2015 and December 31, 2014, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2015, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in "Management's annual report on internal control over financial reporting", appearing in Item 15(b) of the Company's 2015 Annual Report on Form 20-F. Our responsibility is to express opinions on these financial statements and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
        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 (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 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 (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.
/s/ PricewaterhouseCoopers S.A.
Athens, Greece
March 15, 2016
F-2

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DANAOS CORPORATION
CONSOLIDATED BALANCE SHEETS
(Expressed in thousands of United States dollars, except share amounts)

										
 	 	 	 	As of December 31,	 	
 	 	Notes	 	2015	 	2014	 	
ASSETS	 	 	 	 	 	 	 	 	 	
CURRENT ASSETS	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	 	 	 $	72,253	 	 $	57,730	 	
Restricted cash	 	3	 	 	2,818	 	 	2,824	 	
Accounts receivable, net	 	 	 	 	10,652	 	 	7,904	 	
Inventories	 	 	 	 	11,040	 	 	11,665	 	
Prepaid expenses	 	 	 	 	1,079	 	 	713	 	
Due from related parties	 	13	 	 	19,007	 	 	10,597	 	
Vessels held for sale	 	4	 	 	6,264	 	 	—	 	
Other current assets	 	6	 	 	4,457	 	 	11,640	 	
 ​	​	​	​	​ 	​ 	​	​ 	​ 	​	
Total current assets	 	 	 	 	127,570	 	 	103,073	 	
 ​	​	​	​	​ 	​ 	​	​ 	​ 	​	
NON-CURRENT ASSETS	 	 	 	 	 	 	 	 	 	
Fixed assets at cost net of accumulated depreciation of $690,794 (2014: $669,394)	 	4	 	 	3,446,323	 	 	3,624,338	 	
Deferred charges, net	 	5	 	 	39,733	 	 	55,275	 	
Investments in affiliates	 	7	 	 	11,289	 	 	—	 	
Other non-current assets	 	8,15b	 	 	72,188	 	 	68,506	 	
 ​	​	​	​	​ 	​ 	​	​ 	​ 	​	
Total non-current assets	 	 	 	 	3,569,533	 	 	3,748,119	 	
 ​	​	​	​	​ 	​ 	​	​ 	​ 	​	
Total assets	 	 	 	 $	3,697,103	 	 $	3,851,192	 	
 ​	​	​	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	​	​	
 ​	​	​	​	​ 	​ 	​	​ 	​ 	​	
LIABILITIES AND STOCKHOLDERS' EQUITY	 	 	 	 	 	 	 	 	 	
CURRENT LIABILITIES	 	 	 	 	 	 	 	 	 	
Accounts payable	 	 	 	 $	12,971	 	 $	12,510	 	
Accrued liabilities	 	9	 	 	14,014	 	 	24,705	 	
Current portion of long-term debt	 	12	 	 	269,979	 	 	178,116	 	
Current portion of vendor financing	 	12	 	 	—	 	 	46,530	 	
Unearned revenue	 	8	 	 	9,853	 	 	13,719	 	
Other current liabilities	 	10,15a	 	 	5,328	 	 	52,502	 	
 ​	​	​	​	​ 	​ 	​	​ 	​ 	​	
Total current liabilities	 	 	 	 	312,145	 	 	328,082	 	
 ​	​	​	​	​ 	​ 	​	​ 	​ 	​	
LONG-TERM LIABILITIES	 	 	 	 	 	 	 	 	 	
Long-term debt, net of current portion	 	12	 	 	2,505,399	 	 	2,773,004	 	
Vendor financing, net of current portion	 	12	 	 	—	 	 	17,837	 	
Unearned revenue, net of current portion	 	8	 	 	24,426	 	 	30,412	 	
Other long-term liabilities	 	10,15a	 	 	13,219	 	 	13,708	 	
 ​	​	​	​	​ 	​ 	​	​ 	​ 	​	
Total long-term liabilities	 	 	 	 	2,543,044	 	 	2,834,961	 	
 ​	​	​	​	​ 	​ 	​	​ 	​ 	​	
Total liabilities	 	 	 	 	2,855,189	 	 	3,163,043	 	
 ​	​	​	​	​ 	​ 	​	​ 	​ 	​	
Commitments and Contingencies	 	18	 	 	—	 	 	—	 	
STOCKHOLDERS' EQUITY	 	 	 	 	 	 	 	 	 	
Preferred stock (par value $0.01, 100,000,000 preferred shares authorized and not issued as of December 31, 2015 and 2014)	 	21	 	 	—	 	 	—	 	
Common stock (par value $0.01, 750,000,000 common shares authorized as of December 31, 2015 and 2014. 109,781,744 and 109,669,429 issued and outstanding as of December 31, 2015 and 2014, respectively)	 	21	 	 	1,098	 	 	1,097	 	
Additional paid-in capital	 	 	 	 	546,822	 	 	546,735	 	
Accumulated other comprehensive loss	 	15a	 	 	(103,081	)	 	(139,742	)	
Retained earnings	 	 	 	 	397,075	 	 	280,059	 	
 ​	​	​	​	​ 	​ 	​	​ 	​ 	​	
Total stockholders' equity	 	 	 	 	841,914	 	 	688,149	 	
 ​	​	​	​	​ 	​ 	​	​ 	​ 	​	
Total liabilities and stockholders' equity	 	 	 	 $	3,697,103	 	 $	3,851,192	 	
 ​	​	​	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	​	​	
 ​	​	​	​	​ 	​ 	​	​ 	​ 	​	
    
The accompanying notes are an integral part of these consolidated financial statements
F-3

Table of Contents

DANAOS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in thousands of United States dollars, except share and per share amounts)

													
 	 	 	 	Year ended December 31,	 	
 	 	Notes	 	2015	 	2014	 	2013	 	
OPERATING REVENUES	 	17	 	 $	567,936	 	 $	552,091	 	 $	588,117	 	
OPERATING EXPENSES:	 	 	 	 	 	 	 	 	 	 	 	 	
Voyage expenses	 	 	 	 	(12,284	)	 	(12,974	)	 	(11,770	)	
Vessel operating expenses	 	 	 	 	(112,736	)	 	(113,755	)	 	(122,074	)	
Depreciation	 	4	 	 	(131,783	)	 	(137,061	)	 	(137,414	)	
Amortization of deferred drydocking and special survey costs	 	5	 	 	(3,845	)	 	(4,387	)	 	(5,482	)	
Impairment loss	 	23	 	 	(41,080	)	 	(75,776	)	 	(19,004	)	
General and administrative expenses	 	 	 	 	(21,831	)	 	(21,442	)	 	(19,458	)	
Gain/(loss) on sale of vessels	 	19	 	 	—	 	 	5,709	 	 	(449	)	
 ​	​	​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
Income from operations	 	 	 	 	244,377	 	 	192,405	 	 	272,466	 	
 ​	​	​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
OTHER INCOME (EXPENSES):	 	 	 	 	 	 	 	 	 	 	 	 	
Interest income	 	 	 	 	3,419	 	 	1,703	 	 	2,210	 	
Interest expense	 	 	 	 	(70,397	)	 	(79,980	)	 	(91,185	)	
Other finance expenses	 	 	 	 	(18,696	)	 	(19,757	)	 	(20,120	)	
Equity loss on investments	 	7	 	 	(1,941	)	 	—	 	 	—	 	
Other income/(expenses), net	 	 	 	 	111	 	 	422	 	 	302	 	
Net unrealized and realized losses on derivatives	 	15	 	 	(39,857	)	 	(98,713	)	 	(126,150	)	
 ​	​	​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
Total Other Expenses, net	 	 	 	 	(127,361	)	 	(196,325	)	 	(234,943	)	
 ​	​	​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	
 ​	​	​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
Net Income/(Loss)	 	 	 	 $	117,016	 	 $	(3,920	)	 $	37,523	 	
 ​	​	​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	
 ​	​	​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
EARNINGS/(LOSS) PER SHARE	 	 	 	 	 	 	 	 	 	 	 	 	
Basic and diluted net income/(loss) per share	 	22	 	 $	1.07	 	 $	(0.04	)	 $	0.34	 	
 ​	​	​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	
 ​	​	​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
Basic and diluted weighted average number of shares	 	 	 	 	109,785,484	 	 	109,676,056	 	 	109,654,199	 	
 ​	​	​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	
 ​	​	​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
    
The accompanying notes are an integral part of these consolidated financial statements
F-4

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DANAOS CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Expressed in thousands of United States dollars)

														
 	 	 	 	Year ended December 31,	 	
 	 	Notes	 	2015	 	2014	 	2013	 	
Net Income/(Loss)	 	 	 	 	 $	117,016	 	 $	(3,920	)	 $	37,523	 	
Other Comprehensive Income	 	 	 	 	 	 	 	 	 	 	 	 	 	
Amortization of deferred realized losses on cash flow hedges	 	 	 	 	 	4,017	 	 	4,016	 	 	4,017	 	
Reclassification of unrealized losses to earnings	 	 	 	 	 	32,644	 	 	88,939	 	 	116,557	 	
 ​	​	​	​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
Total Other Comprehensive Income	 	 	 	 	 	36,661	 	 	92,955	 	 	120,574	 	
 ​	​	​	​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
Comprehensive Income	 	 	 	 	 $	153,677	 	 $	89,035	 	 $	158,097	 	
 ​	​	​	​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	
 ​	​	​	​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
    
The accompanying notes are an integral part of these consolidated financial statements
F-5

Table of Contents

DANAOS CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Expressed in thousands of United States dollars)

																				
 	 	Common Stock	 	 	 	 	 	 	 	 	 	
 			 	 	 	Accumulated
other
comprehensive
loss	 	 	 	 	 	
 	 	Number
of shares	 	Par value	 	Additional
paid-in
capital			 	Retained
earnings	 	Total	 	
As of January 1, 2013	 	 	109,604	 	 $	1,096	 	 $	546,023	 	 $	(353,271	)	 $	246,456	 	 $	440,304	 	
Net Income	 	 	—	 	 	—	 	 	—	 	 	—	 	 	37,523	 	 	37,523	 	
Net movement in other comprehensive income	 	 	—	 	 	—	 	 	—	 	 	120,574	 	 	—	 	 	120,574	 	
Issuance of common stock	 	 	49	 	 	1	 	 	(1	)	 	—	 	 	—	 	 	—	 	
Stock compensation	 	 	—	 	 	—	 	 	75	 	 	—	 	 	—	 	 	75	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
As of December 31, 2013	 	 	109,653	 	 $	1,097	 	 $	546,097	 	 $	(232,697	)	 $	283,979	 	 $	598,476	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
Net Loss	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(3,920	)	 	(3,920	)	
Net movement in other comprehensive income	 	 	—	 	 	—	 	 	—	 	 	92,955	 	 	—	 	 	92,955	 	
Issuance of common stock	 	 	16	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	
Stock compensation	 	 	—	 	 	—	 	 	638	 	 	—	 	 	—	 	 	638	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
As of December 31, 2014	 	 	109,669	 	 	1,097	 	 $	546,735	 	 $	(139,742	)	 $	280,059	 	 $	688,149	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
Net Income	 	 	—	 	 	—	 	 	—	 	 	—	 	 	117,016	 	 	117,016	 	
Net movement in other comprehensive income	 	 	—	 	 	—	 	 	—	 	 	36,661	 	 	—	 	 	36,661	 	
Issuance of common stock	 	 	113	 	 	1	 	 	(1	)	 	—	 	 	—	 	 	—	 	
Stock compensation	 	 	—	 	 	—	 	 	88	 	 	—	 	 	—	 	 	88	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
As of December 31, 2015	 	 	109,782	 	 	1,098	 	 $	546,822	 	 $	(103,081	)	 $	397,075	 	 $	841,914	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
    
The accompanying notes are an integral part of these consolidated financial statements
F-6

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DANAOS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in thousands of United States dollars)

											
 	 	Year ended December 31,	 	
 	 	2015	 	2014	 	2013	 	
Cash Flows from operating activities:	 	 	 	 	 	 	 	 	 	 	
Net income/(loss)	 	 $	117,016	 	 $	(3,920	)	 $	37,523	 	
Adjustments to reconcile net income/(loss) to net cash provided by operating activities	 	 	 	 	 	 	 	 	 	 	
Depreciation	 	 	131,783	 	 	137,061	 	 	137,414	 	
Amortization of deferred drydocking and special survey costs	 	 	3,845	 	 	4,387	 	 	5,482	 	
Impairment loss	 	 	41,080	 	 	75,776	 	 	19,004	 	
Amortization of finance costs and written-off finance costs	 	 	14,038	 	 	15,070	 	 	15,431	 	
Exit fees accrued on debt	 	 	3,639	 	 	3,745	 	 	3,763	 	
Payments for drydocking and special survey costs deferred	 	 	(2,341	)	 	(6,887	)	 	(283	)	
(Gain)/loss on sale of vessels	 	 	—	 	 	(5,709	)	 	449	 	
Stock based compensation	 	 	88	 	 	638	 	 	75	 	
Amortization of deferred realized losses on interest rate swaps	 	 	4,017	 	 	4,016	 	 	4,017	 	
Unrealized gains on derivatives	 	 	(16,285	)	 	(24,915	)	 	(22,121	)	
Equity loss on investments	 	 	1,941	 	 	—	 	 	—	 	
(Increase)/decrease in:	 	 	 	 	 	 	 	 	 	 	
Accounts receivable	 	 	(2,748	)	 	134	 	 	(4,297	)	
Inventories	 	 	625	 	 	2,831	 	 	3,235	 	
Prepaid expenses	 	 	16	 	 	106	 	 	(113	)	
Due from related parties	 	 	(8,410	)	 	3,862	 	 	(1,795	)	
Other assets, current and non-current	 	 	2,975	 	 	(7,518	)	 	(11,379	)	
Increase/(decrease) in:	 	 	 	 	 	 	 	 	 	 	
Accounts payable	 	 	(971	)	 	(614	)	 	(858	)	
Accrued liabilities	 	 	(10,691	)	 	(6,206	)	 	(1,983	)	
Unearned revenue, current and long-term	 	 	(9,852	)	 	(2,306	)	 	1,858	 	
Other liabilities, current and long-term	 	 	1,911	 	 	2,630	 	 	3,603	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
Net cash provided by operating activities	 	 	271,676	 	 	192,181	 	 	189,025	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
Cash flows from investing activities:	 	 	 	 	 	 	 	 	 	 	
Vessels additions	 	 	(1,112	)	 	(39,165	)	 	(46,839	)	
Investments in affiliates	 	 	(13,230	)	 	—	 	 	—	 	
Net proceeds from sale of vessels	 	 	1,050	 	 	50,602	 	 	52,926	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
Net cash (used in)/provided by investing activities	 	 	(13,292	)	 	11,437	 	 	6,087	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
Cash flows from financing activities:	 	 	 	 	 	 	 	 	 	 	
Payments on long-term debt	 	 	(178,808	)	 	(164,154	)	 	(113,634	)	
Payments on Vendor financing	 	 	(64,367	)	 	(57,388	)	 	(57,387	)	
Deferred finance costs	 	 	(692	)	 	(4,392	)	 	(100	)	
Decrease/(increase) in restricted cash	 	 	6	 	 	11,893	 	 	(11,466	)	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
Net cash used in financing activities	 	 	(243,861	)	 	(214,041	)	 	(182,587	)	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
Net increase/(decrease) in cash and cash equivalents	 	 	14,523	 	 	(10,423	)	 	12,525	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
Cash and cash equivalents, beginning of year	 	 	57,730	 	 	68,153	 	 	55,628	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
Cash and cash equivalents, end of year	 	 $	72,253	 	 $	57,730	 	 $	68,153	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	​	​	​	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
Supplementary Cash Flow information	 	 	 	 	 	 	 	 	 	 	
Cash paid for interest	 	 $	71,795	 	 $	82,957	 	 $	92,887	 	
Non-cash investing and financing activities	 	 	 	 	 	 	 	 	 	 	
Acquisition of debt securities and equity investment	 	 $	—	 	 $	64,896	 	 $	—	 	
Non-cash deferred financing fees	 	 $	—	 	 $	90	 	 $	87	 	
    
The accompanying notes are an integral part of these consolidated financial statements
F-7

Table of Contents

DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. Basis of Presentation and General Information
        The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The reporting and functional currency of the Company is the United States Dollar.
        Danaos Corporation ("Danaos"), formerly Danaos Holdings Limited, was formed on December 7, 1998 under the laws of Liberia and is presently the sole owner of all outstanding shares of the companies listed below. Danaos Holdings Limited was redomiciled in the Marshall Islands on October 7, 2005. In connection with the redomiciliation, the Company changed its name to Danaos Corporation. On October 14, 2005, the Company filed and the Marshall Islands accepted Amended and Restated Articles of Incorporation. The authorized capital stock of Danaos Corporation is 750,000,000 shares of common stock with a par value of $0.01 and 100,000,000 shares of preferred stock with a par value of $0.01. Refer to Note 21, "Stockholders' Equity".
        The Company's vessels operate worldwide, carrying containers for many established charterers.
        The Company's principal business is the acquisition and operation of vessels. Danaos conducts its operations through the vessel owning companies whose principal activity is the ownership and operation of containerships (refer to Note 2, "Significant Accounting Policies") that are under the exclusive management of a related party of the Company (refer to Note 13, "Related Party Transactions").
        The consolidated financial statements have been prepared to reflect the consolidation of the companies listed below. The historical balance sheets and results of operations of the companies listed below have been reflected in the consolidated balance sheets and consolidated statements of operations, consolidated statements of comprehensive income, cash flows and stockholders' equity at and for each period since their respective incorporation dates.
        The consolidated companies are referred to as "Danaos," or "the Company."
F-8

Table of Contents

DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 1. Basis of Presentation and General Information (Continued)
        As of December 31, 2015, Danaos consolidated the vessel owning companies (the "Danaos Subsidiaries") listed below. All vessels are container vessels:

												
Company 	 	Date of Incorporation	 	Vessel Name	 	Year Built	 	TEU(2)	 	
Megacarrier (No. 1) Corp. 	 	September 10, 2007	 	Hyundai Together	 	 	2012	 	 	13,100	 	
Megacarrier (No. 2) Corp. 	 	September 10, 2007	 	Hyundai Tenacity	 	 	2012	 	 	13,100	 	
Megacarrier (No. 3) Corp. 	 	September 10, 2007	 	Hyundai Smart	 	 	2012	 	 	13,100	 	
Megacarrier (No. 4) Corp. 	 	September 10, 2007	 	Hyundai Speed	 	 	2012	 	 	13,100	 	
Megacarrier (No. 5) Corp. 	 	September 10, 2007	 	Hyundai Ambition	 	 	2012	 	 	13,100	 	
CellContainer (No. 6) Corp. 	 	October 31, 2007	 	Hanjin Germany	 	 	2011	 	 	10,100	 	
CellContainer (No. 7) Corp. 	 	October 31, 2007	 	Hanjin Italy	 	 	2011	 	 	10,100	 	
CellContainer (No. 8) Corp. 	 	October 31, 2007	 	Hanjin Greece	 	 	2011	 	 	10,100	 	
Karlita Shipping Co. Ltd. 	 	February 27, 2003	 	CSCL Pusan	 	 	2006	 	 	9,580	 	
Ramona Marine Co. Ltd. 	 	February 27, 2003	 	CSCL Le Havre	 	 	2006	 	 	9,580	 	
Teucarrier (No. 5) Corp. 	 	September 17, 2007	 	CMA CGM Melisande	 	 	2012	 	 	8,530	 	
Teucarrier (No. 1) Corp. 	 	January 31, 2007	 	CMA CGM Attila	 	 	2011	 	 	8,530	 	
Teucarrier (No. 2) Corp. 	 	January 31, 2007	 	CMA CGM Tancredi	 	 	2011	 	 	8,530	 	
Teucarrier (No. 3) Corp. 	 	January 31, 2007	 	CMA CGM Bianca	 	 	2011	 	 	8,530	 	
Teucarrier (No. 4) Corp. 	 	January 31, 2007	 	CMA CGM Samson	 	 	2011	 	 	8,530	 	
Oceanew Shipping Ltd. 	 	January 14, 2002	 	CSCL Europe	 	 	2004	 	 	8,468	 	
Oceanprize Navigation Ltd. 	 	January 21, 2003	 	CSCL America	 	 	2004	 	 	8,468	 	
Boxcarrier (No. 2) Corp. 	 	June 27, 2006	 	CMA CGM Musset(1)	 	 	2010	 	 	6,500	 	
Boxcarrier (No. 3) Corp. 	 	June 27, 2006	 	CMA CGM Nerval(1)	 	 	2010	 	 	6,500	 	
Boxcarrier (No. 4) Corp. 	 	June 27, 2006	 	CMA CGM Rabelais(1)	 	 	2010	 	 	6,500	 	
Boxcarrier (No. 5) Corp. 	 	June 27, 2006	 	CMA CGM Racine(1)	 	 	2010	 	 	6,500	 	
Boxcarrier (No. 1) Corp. 	 	June 27, 2006	 	CMA CGM Moliere(1)	 	 	2009	 	 	6,500	 	
Expresscarrier (No. 1) Corp. 	 	March 5, 2007	 	YM Mandate	 	 	2010	 	 	6,500	 	
Expresscarrier (No. 2) Corp. 	 	March 5, 2007	 	YM Maturity	 	 	2010	 	 	6,500	 	
Actaea Company Limited	 	October 14, 2014	 	Performance	 	 	2002	 	 	6,402	 	
Asteria Shipping Company Limited	 	October 14, 2014	 	Priority	 	 	2002	 	 	6,402	 	
Federal Marine Inc. 	 	February 14, 2006	 	Federal	 	 	1994	 	 	4,651	 	
Auckland Marine Inc. 	 	January 27, 2005	 	SNL Colombo	 	 	2004	 	 	4,300	 	
Wellington Marine Inc. 	 	January 27, 2005	 	YM Singapore	 	 	2004	 	 	4,300	 	
Continent Marine Inc. 	 	March 22, 2006	 	Zim Monaco	 	 	2009	 	 	4,253	 	
Medsea Marine Inc. 	 	May 8, 2006	 	OOCL Novorossiysk	 	 	2009	 	 	4,253	 	
Blacksea Marine Inc. 	 	May 8, 2006	 	Zim Luanda	 	 	2009	 	 	4,253	 	
Bayview Shipping Inc. 	 	March 22, 2006	 	Zim Rio Grande	 	 	2008	 	 	4,253	 	
Channelview Marine Inc. 	 	March 22, 2006	 	Zim Sao Paolo	 	 	2008	 	 	4,253	 	
Balticsea Marine Inc. 	 	March 22, 2006	 	OOCL Istanbul	 	 	2008	 	 	4,253	 	
Seacarriers Services Inc. 	 	June 28, 2005	 	YM Seattle	 	 	2007	 	 	4,253	 	
Seacarriers Lines Inc. 	 	June 28, 2005	 	YM Vancouver	 	 	2007	 	 	4,253	 	
Containers Services Inc. 	 	May 30, 2002	 	Deva	 	 	2004	 	 	4,253	 	
Containers Lines Inc. 	 	May 30, 2002	 	Derby D	 	 	2004	 	 	4,253	 	
Boulevard Shiptrade S.A	 	September 12, 2013	 	Dimitris C	 	 	2001	 	 	3,430	 	
CellContainer (No. 4) Corp. 	 	March 23, 2007	 	Hanjin Algeciras	 	 	2011	 	 	3,400	 	
CellContainer (No. 5) Corp. 	 	March 23, 2007	 	Hanjin Constantza	 	 	2011	 	 	3,400	 	
CellContainer (No. 1) Corp. 	 	March 23, 2007	 	Hanjin Buenos Aires	 	 	2010	 	 	3,400	 	
CellContainer (No. 2) Corp. 	 	March 23, 2007	 	Hanjin Santos	 	 	2010	 	 	3,400	 	
CellContainer (No. 3) Corp. 	 	March 23, 2007	 	Hanjin Versailles	 	 	2010	 	 	3,400	 	
Vilos Navigation Company Ltd. 	 	May 30, 2013	 	MSC Zebra	 	 	2001	 	 	2,602	 	
Trindade Maritime Company	 	April 10, 2013	 	Amalia C	 	 	1998	 	 	2,452	 	
Sarond Shipping Inc. 	 	January 18, 2013	 	Danae C (ex Niledutch Palanca)	 	 	2001	 	 	2,524	 	
Speedcarrier (No. 7) Corp. 	 	December 6, 2007	 	Hyundai Highway	 	 	1998	 	 	2,200	 	
Speedcarrier (No. 6) Corp. 	 	December 6, 2007	 	Hyundai Progress	 	 	1998	 	 	2,200	 	
Speedcarrier (No. 8) Corp. 	 	December 6, 2007	 	Hyundai Bridge	 	 	1998	 	 	2,200	 	
Speedcarrier (No. 1) Corp. 	 	June 28, 2007	 	Hyundai Vladivostok	 	 	1997	 	 	2,200	 	
Speedcarrier (No. 2) Corp. 	 	June 28, 2007	 	Hyundai Advance	 	 	1997	 	 	2,200	 	
Speedcarrier (No. 3) Corp. 	 	June 28, 2007	 	Hyundai Stride	 	 	1997	 	 	2,200	 	
Speedcarrier (No. 5) Corp. 	 	June 28, 2007	 	Hyundai Future	 	 	1997	 	 	2,200	 	
Speedcarrier (No. 4) Corp. 	 	June 28, 2007	 	Hyundai Sprinter	 	 	1997	 	 	2,200	 	
Vessels sold during 2014	 	 	 	 	 	 	 	 	 	 	 	
Boxcarrier (No. 6) Corp. 	 	June 27, 2006	 	Marathonas	 	 	1991	 	 	4,814	 	
Boxcarrier (No. 7) Corp. 	 	June 27, 2006	 	Messologi	 	 	1991	 	 	4,814	 	
Boxcarrier (No. 8) Corp. 	 	November 16, 2006	 	Mytilini	 	 	1991	 	 	4,814	 	
Duke Marine Inc. 	 	April 14, 2003	 	Duka	 	 	1992	 	 	4,651	 	
Commodore Marine Inc. 	 	April 14, 2003	 	Commodore	 	 	1992	 	 	4,651	 	

(1)
Vessel subject to charterer's option to purchase vessel after first eight years of time charter term for $78.0 million.

(2)
Twenty-foot equivalent unit, the international standard measure for containers and containership capacity.
F-9

Table of Contents

DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 2. Significant Accounting Policies
        Principles of Consolidation:     The accompanying consolidated financial statements represent the consolidation of the accounts of the Company and its wholly-owned subsidiaries. The subsidiaries are fully consolidated from the date on which control is obtained by the Company.
        The Company also consolidates entities that are determined to be variable interest entities, of which the Company is the primary beneficiary, as defined in the accounting guidance, if it determines that it is the primary beneficiary. A variable interest entity is defined as a legal entity where either (a) equity interest holders as a group lack the characteristics of a controlling financial interest, including decision making ability and an interest in the entity's residual risks and rewards, or (b) the equity holders have not provided sufficient equity investment to permit the entity to finance its activities without additional subordinated financial support, or (c) the voting rights of some investors are not proportional to their obligations to absorb the expected losses of the entity, their rights to receive the expected residual returns of the entity, or both and substantially all of the entity's activities either involve or are conducted on behalf of an investor that has disproportionately few voting rights. Refer to Note 12, "Long-Term Debt", which describes an arrangement under the credit facility with ABN Amro, Lloyds TSB and National Bank of Greece for a variable interest entity.
        Inter-company transaction balances and unrealized gains/(losses) on transactions between the companies are eliminated.
        Investments in affiliates:     The Company's investments in affiliates are accounted for using the equity method of accounting. Under the equity method of accounting, investments are stated at initial cost and are adjusted for subsequent additional investments and the Company's proportionate share of earnings or losses and distributions. The Company evaluates its investments in affiliates for impairment when events or circumstances indicate that the carrying value of such investments may have experienced other than temporary decline in value below their carrying value. If the estimated fair value is less than the carrying value and is considered an other than temporary decline, the carrying value is written down to its estimated fair value and the resulting impairment is recorded in the consolidated Statements of Operations.
        Use of Estimates:     The preparation of 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 and disclosure of contingent assets and liabilities as of the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. On an on-going basis, management evaluates the estimates and judgments, including those related to future drydock dates, the selection of useful lives for tangible assets, expected future cash flows from long-lived assets to support impairment tests, provisions necessary for accounts receivables, provisions for legal disputes, and contingencies. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates under different assumptions and/or conditions.
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DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 2. Significant Accounting Policies (Continued)
        Reclassifications in Other Comprehensive Income:     The Company had the following reclassifications out of Accumulated Other Comprehensive Loss as of December 31, 2015, 2014 and 2013, respectively (in thousands):

													
 	 	 	 	Year ended December 31,	 	
 	 	Location of Reclassification into Income			 	
 			 	2015	 	2014	 	2013	 	
Amortization of deferred realized losses on cash flow hedges	 	Net unrealized and realized losses on derivatives	 	 	4,017	 	 	4,016	 	 	4,017	 	
Reclassification of unrealized losses to earnings	 	Net unrealized and realized losses on derivatives	 	 	32,644	 	 	88,939	 	 	116,557	 	
 ​	​	​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
Total Reclassifications	 	 	 	 $	36,661	 	 $	92,955	 	 $	120,574	 	
 ​	​	​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	
 ​	​	​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
        Foreign Currency Translation:     The functional currency of the Company is the U.S. dollar. The Company engages in worldwide commerce with a variety of entities. Although its operations may expose it to certain levels of foreign currency risk, its transactions are predominantly U.S. dollar denominated. Additionally, the Company's wholly-owned vessel subsidiaries transacted a nominal amount of their operations in Euros; however, all of the subsidiaries' primary cash flows are U.S. dollar denominated. Transactions in currencies other than the functional currency are translated at the exchange rate in effect at the date of each transaction. Differences in exchange rates during the period between the date a transaction denominated in a foreign currency is consummated and the date on which it is either settled or translated, are recognized in the consolidated Statements of Operations. The foreign currency exchange gains recognized in the accompanying consolidated Statements of Operations for each of the years ended December 31, 2015, 2014 and 2013 were $0.1 million, $0.3 million and $0.04 million, respectively.
        Cash and Cash Equivalents:     Cash and cash equivalents consist of interest bearing call deposits, where the Company has instant access to its funds and withdrawals and deposits can be made at any time, as well as time deposits with original maturities of three months or less which are not restricted for use or withdrawal. Cash and cash equivalents of $72.3 million as of December 31, 2015 (December 31, 2014: $57.7 million) comprised cash balances and short-term deposits.
        Restricted Cash:     Cash restricted accounts include retention accounts. Certain of the Company's loan agreements require the Company to deposit one- third of quarterly and one-sixth of the semi-annual principal installments and interest installments, respectively, due on the outstanding loan balance monthly in a retention account. On the rollover settlement date, both principal and interest are paid from the retention account. Refer to Note 3, "Restricted Cash".
        Accounts Receivable, Net:     The amount shown as Accounts Receivable, net, at each balance sheet date includes estimated recoveries from charterers for hire and demurrage billings, net of a provision for doubtful accounts. At each balance sheet date, all potentially uncollectible accounts are assessed individually for purposes of determining the appropriate provision for doubtful accounts based on the Company's history of write-offs, level of past due accounts based on the contractual term of the
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DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 2. Significant Accounting Policies (Continued)
receivables and its relationships with and economic status of its customers. Bad debts are written off in the period in which they are identified.
        Insurance Claims:     Insurance claims represent the claimable expenses, net of deductibles, which are expected to be recovered from insurance companies. Any costs to complete the claims are included in accrued liabilities. The Company accounts for the cost of possible additional call amounts under its insurance arrangements in accordance with the accounting guidance for contingencies based on the Company's historical experience and the shipping industry practices. Insurance claims are included in the consolidated balance sheet line item "Other current assets".
        Prepaid Expenses and Inventories:     Prepaid expenses consist mainly of insurance expenses, and inventories consist of bunkers, lubricants and provisions remaining on board the vessels at each period end, which are valued at cost as determined using the first-in, first-out method. Costs of spare parts are expensed as incurred.
        Financing Costs:     Fees incurred for obtaining new loans and loans that have been accounted for as modified are deferred and amortized over the loans' respective repayment periods using the effective interest rate method. These charges are included in the consolidated balance sheet line item "Deferred Charges, net". The amortization expense associated with deferred financing fees is included under "Other finance expense" in the consolidated Statements of Operations.
        Fixed Assets:     Fixed assets consist of vessels. Vessels are stated at cost, less accumulated depreciation. The cost of vessels consists of the contract purchase price and any material expenses incurred upon acquisition (improvements and delivery expenses). Subsequent expenditures for conversions and major improvements are also capitalized when they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels. Otherwise, these expenditures are charged to expense as incurred. Interest costs while under construction are included in vessels' cost.
        Vessels acquired in the secondhand market are treated as a business combination to the extent that such acquisitions include continuing operations and business characteristics such as management agreements, employees and customer base. Otherwise, these are treated as purchase of assets. Where the Company identifies any intangible assets or liabilities associated with the acquisition of a vessel purchased in the secondhand market, the Company records all identified tangible and intangible assets or liabilities at fair value. Fair value is determined by reference to market data and the discounted amount of expected future cash flows. The Company has acquired certain vessels in the secondhand market, all of which were considered to be acquisitions of assets.
        Depreciation:     The cost of the Company's vessels is depreciated on a straight-line basis over the vessels' remaining economic useful lives after considering the estimated residual value (refer to Note 4, "Fixed Assets, net"). Management has estimated the useful life of the Company's vessels to be 30 years from the year built.
        Vessels held for sale:     Vessels are classified as "Vessels held for sale" when all of the following criteria are met: management has committed to a plan to sell the vessel; the vessel is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of vessels; an active program to locate a buyer and other actions required to complete the plan to sell the vessel have been initiated; the sale of the vessel is probable and transfer of the vessel is expected to
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DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 2. Significant Accounting Policies (Continued)
qualify for recognition as a completed sale within one year; the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value and actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Vessels classified as held for sale are measured at the lower of their carrying amount or fair value less cost to sell. These vessels are not depreciated once they meet the criteria to be held for sale. As of December 31, 2015, the Company recorded an impairment loss of $2.1 million for the vessel held for sale, which is included under "Impairment loss" in the consolidated Statements of Operations.
        Accounting for Special Survey and Drydocking Costs:     The Company follows the accounting guidance for planned major maintenance activities. Drydocking and special survey costs, which are reported in the balance sheet within "Deferred charges, net", include planned major maintenance and overhaul activities for ongoing certification including the inspection, refurbishment and replacement of steel, engine components, electrical, pipes and valves, and other parts of the vessel. The Company follows the deferral method of accounting for special survey and drydocking costs, whereby actual costs incurred are deferred and amortized on a straight-line basis over the period until the next scheduled survey and drydocking, which is two and a half years. If special survey or drydocking is performed prior to the scheduled date, the remaining unamortized balances are immediately written off.
        The amortization periods reflect the estimated useful economic life of the deferred charge, which is the period between each special survey and drydocking.
        Costs incurred during the drydocking period relating to routine repairs and maintenance are expensed. The unamortized portion of special survey and drydocking costs for vessels sold is included as part of the carrying amount of the vessel in determining the gain/(loss) on sale of the vessel.
        Impairment of Long-lived Assets:     The accounting standard for impairment of long-lived assets requires that long-lived assets and certain identifiable intangibles held and used or disposed of by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. In the case of long-lived assets held and used, if the future net undiscounted cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset's carrying value and fair value.
        As of December 31, 2015, December 31, 2014 and December 31, 2013, the Company concluded that events and circumstances triggered the existence of potential impairment of its long-lived assets. These indicators included volatility in the spot market and decline in the vessels' market values, as well as the potential impact the current marketplace may have on its future operations. As a result, the Company performed step one of the impairment assessment of the Company's long-lived assets by comparing the undiscounted projected net operating cash flows for each vessel to its carrying value. The Company's strategy is to charter its vessels under multi-year, fixed rate period charters that range from less than 1 to 18 years for vessels in its fleet, providing the Company with contracted stable cash flows. The significant factors and assumptions the Company used in its undiscounted projected net operating cash flow analysis included, among others, operating revenues, off-hire revenues, drydocking costs, operating expenses and management fees estimates. Revenue assumptions were based on contracted time charter rates up to the end of life of the current contract of each vessel as well as the estimated average time charter equivalent rates for the remaining life of the vessel after the completion of its current contract. The estimated daily time charter equivalent rates used for non-contracted revenue days are based on a combination of (i) recent charter market rates, (ii) conditions existing in
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DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 2. Significant Accounting Policies (Continued)
the containership market as of December 31, 2015, December 31, 2014 and December 31, 2013 in relation to laid up vessels; (iii) historical average time charter rates, based on publications by independent third party maritime research services, and (iv) estimated future time charter rates, based on publications by independent third party maritime research services that provide such forecasts. Recognizing that the container transportation is cyclical and subject to significant volatility based on factors beyond the Company's control, management believes the use of revenue estimates, based on the combination of factors (i) to (iv) above, to be reasonable as of the reporting date. In addition, the Company used an annual operating expenses escalation factor and estimates of scheduled and unscheduled off-hire revenues based on historical experience. All estimates used and assumptions made were in accordance with the Company's internal budgets and historical experience of the shipping industry.
        As of December 31, 2015 and December 31, 2014, the Company's assessment concluded that step two of the impairment analysis was required for certain of its vessels, as undiscounted projected net operating cash flows of certain vessels did not exceed the carrying value of the respective vessels. Fair value of each vessel was determined with the assistance from valuations obtained by third party independent shipbrokers (on the basis of a commercial transaction between a willing buyer and a willing seller). As of December 31, 2015 and December 31, 2014, the Company recorded an impairment loss of $39.0 million and $75.8 million, respectively for its older vessels mainly due to the decrease in the estimated average time charter equivalent rates for the remaining life of the vessels, after the completion of their current contracts. The impairment loss is included under "Impairment loss" in the consolidated Statements of Operations.
        No impairment of vessels existed as of December 31, 2013, as the undiscounted projected net operating cash flows per vessel exceeded the carrying value of each vessel.
        Investments in Debt Securities:     The Company classifies its debt securities as held-to-maturity based on management's positive intent and ability to hold to maturity. These securities are reported at amortized cost, subject to impairment. Management evaluates securities for other than temporary impairment on a quarterly basis. An investment is considered impaired if the fair value of the investment is less than its amortized cost. Consideration is given to: 1) if the Company intends to sell the security (that is, it has decided to sell the security); 2) it is more likely than not that the Company will be required to sell the security before the recovery of its (entire) amortized cost basis; or 3) a credit loss exists—that is, the Company does not expect to recover the entire amortized cost basis of the security (the present value of cash flows expected to be collected is less than the amortized cost basis of the security).
        Investments in Equity Securities:     The Company classifies its equity securities at cost as the Company does not have the ability to exercise significant influence. Management evaluates the equity security for other than temporary impairment on a quarterly basis. An investment is considered impaired if the fair value of the investment is less than its cost. Consideration is given to significant deterioration in the earnings performance, credit rating, asset quality, or business prospects of the investee, significant adverse change in the regulatory, economic, or technological environment of the investee, significant adverse change in the general market condition of either the geographic area or the industry in which the investee operates, as well as factors that raise significant concerns about the investee's ability to continue as a going concern, such as negative cash flows from operations, working capital deficiencies, or noncompliance with statutory capital requirements or debt covenants.
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DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 2. Significant Accounting Policies (Continued)
        Pension and Retirement Benefit Obligations-Crew:     The crew on board the companies' vessels serve in such capacity under short-term contracts (usually up to seven months) and accordingly, the vessel-owning companies are not liable for any pension or post-retirement benefits.
        Accounting for Revenue and Expenses:     Revenues from time chartering of vessels are accounted for as operating leases and are thus recognized on a straight line basis as the average revenue over the rental periods of such charter agreements, as service is performed. The Company earns revenue from bareboat and time charters. Bareboat and time charters involve placing a vessel at the charterers' disposal for a period of time during which the charterer uses the vessel in return for the payment of a specified daily hire rate. Under a time charter, the daily hire rate includes the crew, lubricants, insurance, spares and stores. Under a bareboat charter, the charterer is provided only with the vessel.
        Voyage Expenses:     Voyage expenses include port and canal charges, bunker (fuel) expenses (bunker costs are normally covered by the Company's charterers, except in certain cases such as vessel re-positioning), address commissions and brokerage commissions. Under multi-year time charters and bareboat charters, such as those on which the Company charters its containerships and under short-term time charters, the charterers bear the voyage expenses other than brokerage and address commissions. As such, voyage expenses represent a relatively small portion of the vessels' overall expenses.
        Vessel Operating Expenses:     Vessel operating expenses include crew wages and related costs, the cost of insurance, expenses for repairs and maintenance, the cost of spares and consumable stores, tonnage taxes and other miscellaneous expenses. Aggregate expenses increase as the size of the Company's fleet increases. Under multi-year time charters, the Company pays for vessel operating expenses. Under bareboat charters, such as those on which the Company chartered two of the containerships in its fleet as of December 31, 2015, 2014 and 2013, respectively, the Company's charterers bear most vessel operating expenses, including the costs of crewing, insurance, surveys, drydockings, maintenance and repairs.
        General and administrative expenses:     General and administrative expenses include management fees paid to the vessels' manager (refer to Note 13, "Related Party Transactions"), audit fees, legal fees, board remuneration, executive officers compensation, directors & officers insurance and stock exchange fees.
        Repairs and Maintenance:     All repair and maintenance expenses are charged against income when incurred and are included in vessel operating expenses in the accompanying consolidated Statements of Operations.
        Dividends:     Dividends, if any, are recorded in the Company's financial statements in the period in which they are declared by the Company's board of directors.
        Segment Reporting:     The Company reports financial information and evaluates its operations by total charter revenues. Although revenue can be identified for different types of charters, management does not identify expenses, profitability or other financial information for different charters. As a result, management, including the chief operating decision maker, reviews operating results solely by revenue per day and operating results of the fleet, and thus the Company has determined that it has only one operating and reportable segment.
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DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 2. Significant Accounting Policies (Continued)
        Derivative Instruments:     The Company entered into interest rate swap contracts to create economic hedges for its interest rate risks. The Company recorded these financial instruments at their fair value. When such derivatives do not qualify for hedge accounting, changes in their fair value are recorded in the consolidated Statement of Operations. When the derivatives do qualify for hedge accounting, depending upon the nature of the hedge, changes in the fair value of derivatives are either offset against the fair value of assets, liabilities or firm commitments through income, or recognized in other comprehensive income (effective portion) and are reclassified to earnings when the hedged transaction is reflected in earnings. The ineffective portion of a derivative's change in fair value is immediately recognized in income.
        At the inception of the transaction, the Company documents the relationship between hedging instruments and hedged items, as well as its risk management objective and the strategy for undertaking various hedging transactions. The Company also documents its assessment, both at the hedge inception and on an ongoing basis, of whether the derivative financial instruments that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.
        On July 1, 2012, the Company elected to prospectively de-designate fair value and cash flow interest rate swaps for which it was obtaining hedge accounting treatment due to the compliance burden associated with this accounting policy. As a result, all changes in the fair value of the Company's cash flow interest rate swap agreements were recorded in earnings under "Unrealized and Realized Losses on Derivatives" from the de-designation date forward.
        The Company evaluated whether it is probable that the previously hedged forecasted interest payments are probable to not occur in the originally specified time period. The Company has concluded that the previously hedged forecasted interest payments are probable of occurring. Therefore, unrealized gains or losses in accumulated other comprehensive loss associated with the previously designated cash flow interest rate swaps will remain frozen in accumulated other comprehensive loss and recognized in earnings when the interest payments will be recognized. If such interest payments were to be identified as being probable of not occurring, the accumulated other comprehensive loss balance pertaining to these amounts would be reversed through earnings immediately.
        The Company does not use financial instruments for trading or other speculative purposes.
        Earnings/(Loss) Per Share:     The Company has presented net income/(loss) per share for all years presented based on the weighted average number of outstanding shares of common stock of Danaos Corporation at the reported periods. The warrants issued in 2011 were excluded from the diluted (loss)/income per share for the year ended December 31, 2015, 2014 and 2013, because they were antidilutive. There are no other dilutive or potentially dilutive securities, accordingly there is no difference between basic and diluted net income per share.
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DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 2. Significant Accounting Policies (Continued)
        Equity Compensation Plan:     The Company has adopted an equity compensation plan (the "Plan"), which is generally administered by the compensation committee of the Board of Directors. The Plan allows the plan administrator to grant awards of shares of common stock or the right to receive or purchase shares of common stock to employees, directors or other persons or entities providing significant services to the Company or its subsidiaries. The actual terms of an award will be determined by the plan administrator and set forth in written award agreement with the participant. Any options granted under the Plan will be accounted for in accordance with the accounting guidance for share-based compensation arrangements.
        The aggregate number of shares of common stock for which awards may be granted under the Plan cannot exceed 6% of the number of shares of common stock issued and outstanding at the time any award is granted. Awards made under the Plan that have been forfeited, cancelled or have expired, will not be treated as having been granted for purposes of the preceding sentence. Unless otherwise set forth in an award agreement, any awards outstanding under the Plan will vest immediately upon a "change of control", as defined in the Plan. The Plan will automatically terminate ten years after it has been most recently approved by the Company's stockholders. Refer to Note 20, "Stock Based Compensation".
        As of April 18, 2008, the Company established the Directors Share Payment Plan ("Directors Plan") under the Plan. The purpose of the Directors Plan is to provide a means of payment of all or a portion of compensation payable to directors of the Company in the form of Company's Common Stock. Each member of the Board of Directors of the Company may participate in the Directors Plan. Pursuant to the terms of the Directors Plan, Directors may elect to receive in Common Stock all or a portion of their compensation. On the last business day of each quarter, the rights of common stock are credited to each Director's Share Payment Account. Following December 31st of each year, the Company will deliver to each Director the number of shares represented by the rights credited to their Share Payment Account during the preceding calendar year. Refer to Note 20, "Stock Based Compensation".
        As of April 18, 2008, the Board of Directors and the Compensation Committee approved the Company's ability to provide, from time to time, incentive compensation to the employees of Danaos Shipping Company Limited (the "Manager"), in the form of free shares of the Company's common stock under the Plan. Prior approval is required by the Compensation Committee and the Board of Directors. The plan was effective since December 31, 2008. Pursuant to the terms of the plan, employees of the Manager may receive (from time to time) shares of the Company's common stock as additional compensation for their services offered during the preceding period. The stock will have no vesting period and the employee will own the stock immediately after grant. The total amount of stock to be granted to employees of the Manager will be at the Company's Board of Directors' discretion only and there will be no contractual obligation for any stock to be granted as part of the employees' compensation package in future periods. Refer to Note 20, "Stock Based Compensation".
 Recent Accounting Pronouncements:
        In May 2014, the FASB issued Accounting Standards Update No. 2014-9 "Revenue from Contracts with Customers" ("ASU 2014-09"), which will supersede the current revenue recognition guidance and outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The ASU 2014-09 was amended by ASU 2015-14 "Revenue from Contracts
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DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 2. Significant Accounting Policies (Continued)
with Customers: Deferral of the Effective Date" ("ASU 2015-014"), which was issued in August 2015. Public entities can now elect to defer implementation of ASU 2014-09 to interim and annual periods beginning after December 15, 2017. Additionally, ASU 2015-14 permits early adoption of the standard but not before the original effective date, i.e. annual period beginning after December 15, 2016. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is currently evaluating the impact that ASU 2014-09 will have on its consolidated financial statements and associated disclosures, and have not yet selected a transition method.
        In February 2015, the FASB issued Accounting Standards Update No. 2015-02, "Consolidation (Topic 810)—Amendments to the Consolidation Analysis", ("ASU 2015-02"). ASU 2015-02 amends the criteria for determining which entities are considered variable interest entities ("VIEs"), amends the criteria for determining if a service provider possesses a variable interest in a VIE and ends the deferral granted to investment companies for application of the VIE consolidation model. The ASU is effective for interim and annual periods beginning after December 15, 2015. Early application is permitted. The Company does not expect the adoption of this ASU to have a material impact on the Company's results of operations, financial position or cash flows.
        In April 2015, the FASB issued Accounting Standards Update No. 2015-03 "Simplifying the Presentation of Debt Issuance Costs", ("ASU 2015-03"). ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The amendments are effective for annual periods ending after December 15, 2015, and interim periods within annual periods beginning after December 15, 2015. Early application is permitted. The Company is not early adopting this standard. After its adoption in 2016, this change will result in a reclassification of $35.0 million from Deferred charges, net to Long-term debt in the consolidated balance sheet as of December 31, 2015. Additionally, amortization of deferred finance costs amounting to $14.0 million will be reclassified from Other finance expenses to Interest expense in the consolidated Statements of Operations for the year ended December 31, 2015.
        In January 2016, the FASB issued Accounting Standards Update No. 2016-01, "Recognition and Measurement of Financial Assets and Financial Liabilities" ("ASU 2016-01"). ASU 2016-01 requires all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under equity method of accounting or those that result in consolidation of the investee).The amendments in this Update also require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. In addition the amendments in this Update eliminate the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities and the requirement for to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet for public business entities.The amendments are effective for annual periods ending after December 15, 2017, including interim periods within those fiscal years. Early application is not permitted. The Company is currently evaluating the new guidance to determine the impact it will have on its consolidated financial statements and notes disclosures.
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DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 2. Significant Accounting Policies (Continued)
        In February 2016, the FASB issued Accounting Standards Update No. 2016-02, "Leases (Topic 842)" ("ASU 2016-02"). ASU 2016-02 will apply to both types of leases—capital (or finance) leases and operating leases. According to the new Accounting Standard, lessees will be required to recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases with terms of more than 12 months. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. The Company is currently assessing the impact that adopting this new accounting guidance will have on its consolidated financial statements and notes disclosures.
 3. Restricted Cash
        The Company was required to maintain cash of $2.8 million as of December 31, 2015 and December 31, 2014 in a retention bank accounts as collateral for the upcoming scheduled debt payments of its KEXIM and KEXIM-ABN Amro credit facilities, which were recorded under current assets in the Company's Balance Sheets.
 4. Fixed Assets, Net
        On December 23, 2015, the Company entered into an agreement to sell the vessel Federal for gross sale consideration of $7.2 million, of which $1.4 million was received in advance during the year ended December 31, 2015. As of December 31, 2015, the vessel Federal is classified as vessel held for sale in the consolidated Balance Sheet, (refer to Note 24, "Subsequent Events") and is analyzed as follows (in thousands):

					
 	 	2015	 	
Carrying value	 	 $	8,364	 	
Impairment loss	 	 	(2,100	)	
 ​	​	​ 	​ 	​	
Fair value less cost to sell	 	 $	6,264	 	
 ​	​	​ 	​ 	​	
        During the year ended December 31, 2014, the Company sold and delivered five vessels: Marathonas, Commodore, Duka, Mytilini and Messologi for total gross sale consideration of $57.7 million. Refer to Note 19, "Sale of Vessels".
        On November 5, 2014, the Company acquired two 6,402 TEU containerships, Performance and Priority , both built in 2002 for total contract price of $36.5 million.
        As of December 31, 2015, the Company recorded an impairment loss of $39.0 million in relation to its twelve of the older vessels that are held and used. As of December 31, 2014, the Company recorded an impairment loss of $75.8 million in relation to eight of its older vessels. Fair value of each vessel was determined with the assistance from valuations obtained by third party independent shipbrokers. The Company's assessment concluded that no impairment of vessels existed as of December 31, 2013. Refer to Note 23 "Impairment Loss".
        The residual value (estimated scrap value at the end of the vessels' useful lives) of the fleet was estimated at $386.4 million as of December 31, 2015 and December 31, 2014. The Company has calculated the residual value of the vessels taking into consideration the 10 year average and the 5 year average of the scrap. The Company has applied uniformly the scrap value of $300 per ton for all
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DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 4. Fixed Assets, Net (Continued)
vessels. The Company believes that $300 per ton is a reasonable estimate of future scrap prices, taking into consideration the cyclicality of the nature of future demand for scrap steel. Although the Company believes that the assumptions used to determine the scrap rate are reasonable and appropriate, such assumptions are highly subjective, in part, because of the cyclical nature of future demand for scrap steel.
 5. Deferred Charges, Net
        Deferred charges consisted of the following (in thousands):

											
 	 	Drydocking and
Special Survey
Costs	 	Finance
and Other
Costs	 	Total
Deferred
Charges	 	
As of January 1, 2014	 	 $	4,041	 	 $	63,908	 	 $	67,949	 	
Additions	 	 	6,887	 	 	182	 	 	7,069	 	
Written-off amounts	 	 	(286	)	 	(55	)	 	(341	)	
Amortization	 	 	(4,387	)	 	(15,015	)	 	(19,402	)	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
As of December 31, 2014	 	 $	6,255	 	 $	49,020	 	 $	55,275	 	
Additions	 	 	2,341	 	 	—	 	 	2,341	 	
Amortization	 	 	(3,845	)	 	(14,038	)	 	(17,883	)	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
As of December 31, 2015	 	 $	4,751	 	 $	34,982	 	 $	39,733	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	​	​	​	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
        The Company follows the deferral method of accounting for drydocking and special survey costs in accordance with accounting for planned major maintenance activities, whereby actual costs incurred are deferred and amortized on a straight-line basis over the period until the next scheduled survey, which is two and a half years. If special survey or drydocking is performed prior to the scheduled date, the remaining unamortized balances are immediately written off. Furthermore, when a vessel is drydocked for more than one reporting period, the respective costs are identified and recorded in the period in which they were incurred and not at the conclusion of the drydocking.
 6. Other Current Assets
        Other current assets consisted of the following as at December 31 (in thousands):

								
 	 	2015	 	2014	 	
Fair value of swaps	 	 $	138	 	 	—	 	
Claims receivable	 	 	954	 	 $	7,856	 	
Advances to suppliers and other assets	 	 	3,365	 	 	3,784	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	
Total	 	 $	4,457	 	 $	11,640	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	
 ​	​	​ 	​ 	​	​ 	​ 	​	
        As of December 31, 2015 and December 31, 2014, claims receivable consist of insurance and other claims. As of December 31, 2015 and December 31, 2014, the claim receivable related to a collision incident of the Hanjin Italy outside Singapore amounted to $0.7 million and $7.0 million, respectively.
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DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 7. Investments in affiliates
        In August 2015, an affiliated company Gemini Shipholdings Corporation ("Gemini") was formed by the Company and Virage International Ltd. ("Virage"), a company controlled by the Company's largest shareholder. Gemini acquired a 100% interest in entities with capital leases for the Suez Canal and Genoa and that own the container vessel NYK Lodestar. Additionally, Gemini has agreed to acquire the container vessel NYK Leo, which was delivered on February 4, 2016. Gemini financed these acquisitions with the assumption of capital lease obligations of $35.4 million, $9.0 million of borrowings under a secured loan facility and an aggregate of $27.0 million from equity contributions from the Company and Virage, which subscribed in cash for 49% and 51%, respectively, of Gemini's issued and outstanding share capital. As of December 31, 2015, Gemini consolidated its wholly owned subsidiaries listed below:

											
Company 	 	Vessel Name	 	Year Built	 	TEU(1)	 	Date of vessel delivery	
Averto Shipping S.A. 	 	Suez Canal	 	 	2002	 	 	5,610	 	July 20, 2015	
Sinoi Marine Ltd. 	 	Genoa	 	 	2002	 	 	5,544	 	August 2, 2015	
Kingsland International Shipping Limited	 	NYK Lodestar	 	 	2001	 	 	6,422	 	September 21, 2015	
Leo Shipping and Trading S.A. 	 	NYK Leo	 	 	2002	 	 	6,422	 	February 4, 2016	

(1)
Twenty-foot equivalent unit, the international standard measure for containers and containership capacity.
        The Company has determined that Gemini is a variable interest entity of which the Company is not the primary beneficiary, and as such, this affiliated company is accounted for under the equity method and recorded under "Equity loss on investments" in the consolidated Statements of Operations. The Company does not guarantee the debt of Gemini and its subsidiaries and has the right to purchase all of the beneficial interest in Gemini that it does not own for fair market value at any time after December 31, 2018, or earlier if permitted under its credit facilities.The net assets of Gemini total $23.0 million as of December 31, 2015. The Company's exposure is limited to its share of the net assets of Gemini proportionate to its 49% equity interest in Gemini.
        A condensed summary of the financial information for equity accounted investments 49% owned by the Company shown on a 100% basis are as follows (in thousands):

					
 	 	2015	 	
Current assets	 	 $	12,578	 	
Non-current assets	 	 $	54,771	 	
Current liabilities	 	 $	5,552	 	
Non-current liabilities	 	 $	38,758	 	
Net operating revenues	 	 $	1,775	 	
Net loss	 	 $	3,961	 	
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DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 8. Other Non-current Assets
        Other non-current assets consisted of the following as at December 31 (in thousands):

								
 	 	2015	 	2014	 	
Fair value of swaps	 	 	—	 	 $	664	 	
Series 1 ZIM notes, net	 	 $	6,587	 	 	6,274	 	
Series 2 ZIM notes, net	 	 	32,507	 	 	30,923	 	
Equity participation ZIM	 	 	28,693	 	 	28,693	 	
Other assets	 	 	4,401	 	 	1,952	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	
Total	 	 $	72,188	 	 $	68,506	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	
 ​	​	​ 	​ 	​	​ 	​ 	​	
        As of July 16, 2014, ZIM and its creditors entered into definitive documentation effecting ZIM's restructuring with its creditors. The terms of the restructuring include a reduction in the charter rates payable by ZIM under its time charters, expiring in 2020 or 2021, for six of the Company's vessels, which had already been implemented beginning in January 2014. The terms also include the receipt of approximately $49.9 million aggregate principal amount of unsecured, interest bearing ZIM notes maturing in 2023 (consisting of $8.8 million of 3% Series 1 Notes due 2023 amortizing subject to available cash flow in accordance with a corporate cash sweep mechanism, and $41.1 million of 5% Series 2 Notes due 2023 non-amortizing (of the 5% interest rate, 3% is payable quarterly in cash and 2% is accrued quarterly with deferred cash payment on maturity)) and ZIM shares representing approximately 7.4% of the outstanding ZIM shares immediately after the restructuring, in exchange for such charter rate reductions and cancellation of ZIM's other obligations to the Company which related to the outstanding long term receivable as of December 31, 2013.
        As of July 16, 2014, the Company calculated the fair value of the instruments received from ZIM based on the agreement discussed above, other available information on ZIM, other contracts with similar terms, remaining maturities and interest rates and recorded at fair value an amount of $6.1 million in relation to the Series 1 Notes, $30.1 million in relation to the Series 2 Notes and $28.7 million in relation to its equity participation in ZIM. On a quarterly basis, the Company accounts for the fair value unwinding of the Series 1 Notes and Series 2 Notes until the value of the instruments equals their face values on maturity. As of December 31, 2015 and December 31, 2014, the Company recorded $6.6 million and $6.3 million in relation to the Series 1 Notes and $32.5 million and $30.9 million in relation to the Series 2 Notes, respectively and recognized $1.1 million and $0.6 million in relation to their fair value unwinding in the consolidated Statements of Operations in "Interest income" for the years ended December 31, 2015 and December 31, 2014, respectively. Furthermore, for the year ended December 31, 2015 and December 31, 2014, the Company recognized in the consolidated Statements of Operations in "Interest income", a non-cash interest income of $0.8 million and $0.4 million, respectively, in relation to the 2% interest of Series 2 Notes, which is accrued quarterly with deferred cash payment on maturity. The Company will test periodically for impairment of these investments based on the existence of triggering events that indicate ZIM's debt instruments and interest in equity may have been impaired.
        Furthermore, as of July 16, 2014, an amount of $39.1 million, which represents the additional compensation received from ZIM, was recorded as unearned revenue representing compensation to the Company for the future reductions in the daily charter rates payable by ZIM under its time charters, expiring in 2020 or 2021, for six of the Company's vessels. This amount is recognized in the consolidated Statements of Operations in "Operating revenues" over the remaining life of the
F-22

Table of Contents

DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 8. Other Non-current Assets (Continued)
respective time charters. For the years ended December 31, 2015 and December 31, 2014, the Company recognized $6.0 million and $2.7 million, respectively, of unearned revenue amortization in "Operating revenues". As of December 31, 2015, the outstanding balances of the current and non-current portion of unearned revenue in relation to ZIM amounted to $6 million and $24.4 million, respectively. As of December 31, 2014, the corresponding outstanding balance of the current and non-current portion of unearned revenue amounted to $6.0 million and $30.4 million, respectively. Refer to Notes 15c, Financial Instruments—Fair value of Financial Instruments and Note 23, "Impairment Loss".
        In respect to the fair value of swaps, refer to Note 15b, Financial Instruments—Fair Value Interest Rate Swap Hedges.
 9. Accrued Liabilities
        Accrued liabilities consisted of the following as at December 31 (in thousands):

								
 	 	2015	 	2014	 	
Accrued payroll	 	 $	1,162	 	 $	1,175	 	
Accrued interest	 	 	8,059	 	 	9,457	 	
Accrued expenses	 	 	4,793	 	 	14,073	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	
Total	 	 $	14,014	 	 $	24,705	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	
 ​	​	​ 	​ 	​	​ 	​ 	​	
        Accrued expenses mainly consisted of accrued realized losses on cash flow interest rate swaps of $1.2 million and $10.4 million as of December 31, 2015 and December 31, 2014, respectively, as well as other accruals related to the operation of the Company's fleet of $3.6 million and $3.7 million as of December 31, 2015 and 2014, respectively.
 10. Other Current and Long-term Liabilities
        Other current liabilities consisted of the following as at December 31 (in thousands):

								
 	 	2015	 	2014	 	
Fair value of swaps	 	 $	4,538	 	 $	51,022	 	
Other current liabilities	 	 	790	 	 	1,480	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	
Total	 	 $	5,328	 	 $	52,502	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	
 ​	​	​ 	​ 	​	​ 	​ 	​	
        As of December 31, 2014, other current liabilities include an amount of $0.7 million related to deferred fees accrued in accordance with the Bank Agreement (refer to Note 12, "Long-Term Debt"), which are recorded at amortized cost.
        Other long-term liabilities consisted of the following at December 31 (in thousands):

								
 	 	2015	 	2014	 	
Fair value of swaps	 	 	—	 	 $	2,398	 	
Other long-term liabilities	 	 $	13,219	 	 	11,310	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	
Total	 	 $	13,219	 	 $	13,708	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	
 ​	​	​ 	​ 	​	​ 	​ 	​	
        In respect to the fair value of swaps, refer to Note 15a, Financial Instruments—Cash Flow Interest Rate Swap Hedges.
F-23

Table of Contents

DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 11. Lease Arrangements
 Charters-out
        The future minimum revenue, expected to be earned on non-cancellable time charters consisted of the following as at December 31, 2015 (in thousands):

					
2016	 	 $	524,682	 	
2017	 	 	490,984	 	
2018	 	 	445,471	 	
2019	 	 	410,944	 	
2020	 	 	374,903	 	
2021 and thereafter	 	 	913,111	 	
 ​	​	​ 	​ 	​	
Total future revenue	 	 $	3,160,095	 	
 ​	​	​ 	​ 	​	
 ​	​	​	​	​	
 ​	​	​ 	​ 	​	
        Revenues from time charters are not generally received when a vessel is off-hire, including time required for normal periodic maintenance of the vessel. In arriving at the minimum future charter revenues, an estimated time off-hire to perform periodic maintenance on each vessel has been deducted, although there is no assurance that such estimate will be reflective of the actual off-hire in the future. The off-hire assumptions used relate mainly to drydocking and special survey maintenance carried out approximately every 2.5 years per vessel, or every 5 years for vessels less than 15-years old, and which may last approximately 10 to 15 days.
F-24

Table of Contents

DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 12. Long-Term Debt
        Long-term debt as of December 31, 2015 and 2014 consisted of the following (in thousands):

																				
Lender 	 	As of
December 31,
2015	 	Current
portion	 	Long-term
portion	 	As of
December 31,
2014	 	Current
portion	 	Long-term
portion	 	
The Royal Bank of Scotland	 	 $	667,134	 	 $	24,327	 	 $	642,807	 	 $	678,954	 	 $	12,657	 	 $	666,297	 	
HSH Nordbank AG-Aegean Baltic Bank-Piraeus Bank	 	 	627,818	 	 	50	 	 	627,768	 	 	628,513	 	 	—	 	 	628,513	 	
HSH Nordbank	 	 	21,208	 	 	9,006	 	 	12,202	 	 	28,843	 	 	7,633	 	 	21,210	 	
The Export-Import Bank of Korea ("KEXIM")	 	 	8,204	 	 	8,204	 	 	—	 	 	18,573	 	 	10,369	 	 	8,204	 	
The Export-Import Bank of Korea & ABN Amro	 	 	45,609	 	 	11,250	 	 	34,359	 	 	56,859	 	 	11,250	 	 	45,609	 	
Deutsche Bank	 	 	169,921	 	 	5,338	 	 	164,583	 	 	174,709	 	 	4,786	 	 	169,923	 	
Canyon Capital Finance	 	 	136,719	 	 	11,425	 	 	125,294	 	 	144,467	 	 	8,228	 	 	136,239	 	
Credit Suisse	 	 	199,373	 	 	11,978	 	 	187,395	 	 	208,585	 	 	9,328	 	 	199,257	 	
ABN Amro-Bank of America Merrill Lynch-Burlington Loan Management-National Bank of Greece-Sequoia	 	 	228,999	 	 	13,509	 	 	215,490	 	 	239,896	 	 	11,422	 	 	228,474	 	
Commerzbank-Credit Suisse-Golden Tree	 	 	258,089	 	 	20,139	 	 	237,950	 	 	274,984	 	 	17,327	 	 	257,657	 	
The Royal Bank of Scotland (January 2011 Credit Facility)	 	 	69,948	 	 	30,990	 	 	38,958	 	 	85,017	 	 	15,326	 	 	69,691	 	
HSH Nordbank AG-Aegean Baltic Bank-Piraeus Bank (January 2011 Credit Facility)	 	 	69,562	 	 	37,901	 	 	31,661	 	 	94,812	 	 	22,476	 	 	72,336	 	
ABN Amro-Bank of America Merrill Lynch-Burlington Loan Management -National Bank of Greece (January 2011 Credit Facility)	 	 	20,582	 	 	14,244	 	 	6,338	 	 	26,444	 	 	6,371	 	 	20,073	 	
Sinosure CEXIM-Citi-ABN Amro Credit Facility	 	 	122,040	 	 	20,340	 	 	101,700	 	 	142,380	 	 	20,340	 	 	122,040	 	
Club Facility (January 2011 Credit Facility)	 	 	50,404	 	 	32,665	 	 	17,739	 	 	65,457	 	 	14,773	 	 	50,684	 	
Citi-Eurobank Credit Facility (January 2011 Credit Facility)	 	 	63,834	 	 	18,180	 	 	45,654	 	 	69,759	 	 	5,830	 	 	63,929	 	
Comprehensive Financing Plan exit fees accrued	 	 	15,501	 	 	—	 	 	15,501	 	 	11,862	 	 	—	 	 	11,862	 	
Fair value hedged debt	 	 	433	 	 	433	 	 	—	 	 	1,006	 	 	—	 	 	1,006	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
Total long-term debt	 	 $	2,775,378	 	 $	269,979	 	 $	2,505,399	 	 $	2,951,120	 	 $	178,116	 	 $	2,773,004	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
Hyundai Samho Vendor Financing	 	 	—	 	 	—	 	 	—	 	 $	64,367	 	 $	46,530	 	 $	17,837	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
        All floating rate loans discussed above are collateralized by first and second preferred mortgages over the vessels financed, general assignment of all hire freights, income and earnings, the assignment of their insurance policies, as well as any proceeds from the sale of mortgaged vessels and the corporate guarantee of Danaos Corporation.
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Table of Contents

DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 12. Long-Term Debt (Continued)
        Maturities of long-term debt subsequent to December 31, 2015 are as follows (in thousands):

														
 	 	Fixed
principal
repayments	 	Variable
principal
payments	 	Final Payment
due on
December 31,
2018*	 	Total
principal
payments	 	
2016	 	 $	183,173	 	 $	86,373	 	 $	—	 	 $	269,546	 	
2017	 	 	180,430	 	 	133,032	 	 	—	 	 	313,462	 	
2018	 	 	204,919	 	 	77,048	 	 	1,833,449	 	 	2,115,416	 	
2019	 	 	20,340	 	 	—	 	 	—	 	 	20,340	 	
2020	 	 	20,340	 	 	—	 	 	—	 	 	20,340	 	
2021	 	 	20,340	 	 	—	 	 	—	 	 	20,340	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
Total long-term debt	 	 $	629,542	 	 $	296,453	 	 $	1,833,449	 	 $	2,759,444	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	

*
The last payment due on December 31, 2018, includes the unamortized remaining principal debt balances under the Bank Agreement, as such amount will be determinable following the fixed and variable amortization.
        The maturities of long term debt for the twelve month periods subsequent to December 31, 2015 are based on the terms of the Bank Agreement, under which the Company was not required to repay any outstanding principal amounts under its credit facilities, other than the KEXIM and KEXIM ABN Amro credit facilities which are not covered by the Bank Agreement, until May 15, 2013; thereafter until December 31, 2018 it is required to make quarterly principal payments in fixed amounts. In addition, the Company is required to make an additional payment in such amount that, together with the fixed principal payment, equals a certain percentage of its Actual Free Cash Flow of the preceding financial quarter. The table above includes both the fixed payments for which the Company has a contractual obligation, as well as the Company's estimate of the future Actual Free Cash Flows and resulting variable amortization. The last payment due on December 31, 2018, will also include the unamortized remaining principal debt balances, as such amount will be determinable following the fixed and variable amortization.
        On September 12, 2013, the Company signed a supplemental letter extending the terms of the February 9, 2012 supplemental letter through November 20, 2018 (the maturity of the respective credit facility), which amended the interest rate margin and the financial covenants of its KEXIM ABN Amro credit facility. More specifically, under the February 9, 2012 supplemental letter the financial covenants were aligned with those set forth in the Bank Agreement (see below), and the interest rate margin was increased by 0.5 percentage points.
 Bank Agreement
        On January 24, 2011, the Company entered into a definitive agreement, which became effective on March 4, 2011, referred to as the Bank Agreement, that superseded, amended and supplemented the terms of each of the Company's then existing credit facilities (other than its credit facilities with KEXIM and KEXIM ABN Amro which are not covered thereby), and provided for, among other things, revised amortization schedules, maturities, interest rates, financial covenants, events of defaults, guarantee and security packages and approximately $425 million of new debt financing. Subject to the terms of the Bank Agreement and the intercreditor agreement (the "Intercreditor Agreement"), which
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Table of Contents

DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 12. Long-Term Debt (Continued)
the Company entered into with each of the lenders participating under the Bank Agreement to govern the relationships between the lenders thereunder, under the January 2011 Credit Facilities (as described and defined below) and under the Hyundai Samho Vendor Financing described below, the lenders participating thereunder continued to provide the Company's then outstanding credit facilities and amended the covenants under such credit facilities in accordance with the terms of the Bank Agreement.
        In accordance with the accounting guidance for troubled debt restructuring, the Company's debt did not meet the conditions of troubled debt restructuring as the lenders have not granted a concession. The effective borrowing rate of the restructured debt was higher than the effective borrowing rate of the old debt.
 Interest and Fees
        Under the terms of the Bank Agreement, borrowings under each of the Company's existing credit facilities, other than the KEXIM and KEXIM-ABN Amro credit facilities which are not covered by the Bank Agreement, bear interest at an annual interest rate of LIBOR plus a margin of 1.85%.
        The Company was required to pay an amendment fee equal to 0.5% of the outstanding commitments under each existing financing arrangement, or $12.5 million in the aggregate, of which 20% was paid and deferred on the signing of a commitment letter for the Bank Agreement in August 2010, 40% was paid in January 2011 upon the signing of the Bank Agreement and the remaining 40% was due on December 31, 2014. The Company settled in full this amendment fee by paying $4.3 million on December 23, 2014 and $0.7 million on January 7, 2015. This amendment fee is deferred and amortized over the life of the respective credit facilities with the effective interest method. In addition, the Company is required to pay exit fees, which are discussed in detail below.
        The Company was also required to pay a fee of 0.25% of the total committed amount contemplated by the August 6, 2010 commitment letter for the Bank Agreement for the period starting from August 6, 2010 up until March 4, 2011 (the effective date of the agreement) and which commitment fee was amended to 0.75% for the period after March 4, 2011, which fees were capitalized in cost of vessels under construction as it related to undrawn committed debt designated for specific newbuildings, and a $4.38 million amendment fee (of which $1.22 million was paid in December 2010 and $3.16 million was paid in January 2011) relating to conditions in respect of the Sinosure-CEXIM credit facility. This amendment fee was deferred and is being amortized over the life of the new debt using the effective interest rate method.
 Principal Payments
        Under the terms of the Bank Agreement (other than the KEXIM and KEXIM ABN Amro credit facilities, which are not covered by the Bank Agreement), the Company is required to make quarterly principal payments in fixed amounts, in relation to the Company's total debt commitments from the
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Table of Contents

DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 12. Long-Term Debt (Continued)
Company's lenders under the Bank Agreement and the January 2011 Credit Facilities, as specified in the table below (in thousands):

																				
 	 	February 15,	 	May 15,	 	August 15,	 	November 15,	 	December 31,	 	Total	 	
2016	 	 	30,973	 	 	36,278	 	 	32,276	 	 	43,852	 	 	—	 	 	143,379	 	
2017	 	 	44,939	 	 	36,691	 	 	35,338	 	 	31,872	 	 	—	 	 	148,840	 	
2018	 	 	34,152	 	 	37,585	 	 	44,399	 	 	45,334	 	 	65,969	 	 	227,439	 	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​ 	​ 	​	
Total	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	519,658	 	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​ 	​ 	​	

*
The Company may elect to make the scheduled payments shown in the above table three months earlier.
        Furthermore, an additional variable payment in such amount that, together with the fixed principal payment (as disclosed above), equals 92.5% of Actual Free Cash Flow for such quarter until the earlier of (x) the date on which the Company's consolidated net leverage is below 6:1 and (y) May 15, 2015; and thereafter through maturity, which will be December 31, 2018 for each covered credit facility, it will be required to make fixed quarterly principal payments in fixed amounts as specified in the Bank Agreement and described above plus an additional payment in such amount that, together with the fixed principal payment, equals 89.5% of Actual Free Cash Flow for such quarter. In addition, any additional amounts of cash and cash equivalents from January 1, 2015 until maturity in excess of the greater of (1) $50 million of accumulated unrestricted cash and cash equivalents and (2) 2% of the Company's consolidated debt, would be applied first to the prepayment of the January 2011 Credit Facilities and after the January 2011 Credit Facilities are repaid, to the outstanding credit facilities covered by the Bank Agreement. The last payment due on December 31, 2018, will also include the unamortized remaining principal debt balances, as such amount will be determinable following the fixed and variable amortization.
        Under the Bank Agreement, "Actual Free Cash Flow" with respect to each credit facility covered thereby is equal to revenue from the vessels collateralizing such facility, less the sum of (a) interest expense under such credit facility, (b) pro rata portion of payments under its interest rate swap arrangements, (c) interest expense and scheduled amortization under the Hyundai Samho Vendor Financing and (d) per vessel operating expenses and pro rata per vessel allocation of general and administrative expenses (which are not permitted to exceed the relevant budget by more than 20%), plus (e) the pro rata share of operating cash flow of any Applicable Second Lien Vessel (which will mean, with respect to an existing facility, a vessel with respect to which the participating lenders under such facility have a second lien security interest and the first lien credit facility has been repaid in full).
        Under the terms of the Bank Agreement, the Company continues to be required to make any mandatory prepayments provided for under the terms of its existing credit facilities and is required to make additional prepayments as follows:
•
50% of the first $300 million of net equity proceeds (including convertible debt and hybrid instruments), after entering into the Bank Agreement and 25% of any additional net equity proceeds; and
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DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 12. Long-Term Debt (Continued)
•
any debt proceeds (after repayment of any underlying secured debt covered by vessels collateralizing the new borrowings) (excluding the January 2011 Credit Facilities, the Sinosure CEXIM Credit Facility and the Hyundai Samho Vendor Financing),
which amounts would first be applied to repayment of amounts outstanding under the January 2011 Credit Facilities and then to the existing credit facilities. Any equity proceeds retained by the Company and not used within 12 months for certain specified purposes would be applied for prepayment of the January 2011 Credit Facilities and then to the credit facilities covered by the Bank Agreement. The Company would also be required to prepay the portion of a credit facility attributable to a particular vessel upon the sale or total loss of such vessel; the termination or loss of an existing charter for a vessel, unless replaced within a specified period by a similar charter acceptable to the lenders; or the termination of a newbuilding contract. The Company's respective lenders under its credit facilities covered by the Bank Agreement and the January 2011 Credit Facilities may, at their option, require the Company to repay in full amounts outstanding under such respective credit facilities, upon a "Change of Control" of the Company, which for these purposes is defined as (i) Dr. Coustas ceasing to be its Chief Executive Officer, (ii) its common stock ceasing to be listed on the NYSE (or Nasdaq or other recognized stock exchange), (iii) whilst an event of default is continuing, a change in the ultimate beneficial ownership of the capital stock of any of its subsidiaries or ultimate control of the voting rights of those shares, (iv) Dr. Coustas and members of his family ceasing to collectively own over one third of the voting interest in its outstanding capital stock or (v) any other person or group controlling more than 20% of the voting power of its outstanding capital stock.
 Covenants and Events of Defaults
        On January 24, 2011, the Company entered into the Bank Agreement that superseded, amended and supplemented the terms of each of its existing credit facilities (other than its credit facilities with KEXIM and KEXIM-ABN Amro) and provided for, among other things, revised financial covenant levels under such existing credit facilities as described below, with which the Company was in compliance as of December 31, 2015 and 2014.
        Under the Bank Agreement, the financial covenants under each of the Company's existing credit facilities (other than under the KEXIM-ABN Amro credit facility which is not covered thereby, but which has been aligned with those covenants until maturity of the respective facility under the supplemental letter dated September 12, 2013 and our KEXIM credit facility, which contains only a collateral coverage covenant of 130%), have been reset to require the Company to:
•
maintain a ratio of (i) the market value of all of the vessels in the Company's fleet, on a charter-inclusive basis, plus the net realizable value of any additional collateral, to (ii) the Company's consolidated total debt above specified minimum levels gradually increasing from 90% through December 31, 2011 to 130% from September 30, 2017 through September 30, 2018; 

•
maintain a minimum ratio of (i) the market value of the nine vessels ( Hyundai Smart , Hyundai Speed , Hyundai Ambition , Hyundai Together , Hyundai Tenacity , Hanjin Greece , Hanjin Italy , Hanjin Germany and CMA CGM Rabelais ) collateralizing the New Credit Facilities, calculated on a charter-free basis, plus the net realizable value of any additional collateral, to (ii) the Company's aggregate debt outstanding under the New Credit Facilities of 100% from September 30, 2012 through September 30, 2018;
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DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 12. Long-Term Debt (Continued)
•
maintain minimum free consolidated unrestricted cash and cash equivalents, less the amount of the aggregate variable principal amortization amounts, described above, of $30.0 million at the end of each calendar quarter; 

•
ensure that the Company's (i) consolidated total debt less unrestricted cash and cash equivalents to (ii) consolidated EBITDA (defined as net income before interest, gains or losses under any hedging arrangements, tax, depreciation, amortization and any other non-cash item, capital gains or losses realized from the sale of any vessel, finance charges and capital losses on vessel cancellations and before any non-recurring items and excluding any accrued interest due to us but not received on or before the end of the relevant period; provided that non-recurring items excluded from this calculation shall not exceed 5% of EBITDA calculated in this manner) for the last twelve months does not exceed a maximum ratio gradually decreasing from 12:1 on December 31, 2010 to 4.75:1 on September 30, 2018; 

•
ensure that the ratio of the Company's (i) consolidated EBITDA for the last twelve months to (ii) net interest expense (defined as interest expense (excluding capitalized interest), less interest income, less realized gains on interest rate swaps (excluding capitalized gains) and plus realized losses on interest rate swaps (excluding capitalized losses)) exceeds a minimum level of 1.50:1 through September 30, 2013 and thereafter gradually increasing to 2.80:1 by September 30, 2018; and 

•
maintain a consolidated market value adjusted net worth (defined as the amount by which the Company's total consolidated assets adjusted for the market value of the Company's vessels in the water less cash and cash equivalents in excess of the Company's debt service requirements exceeds the Company's total consolidated liabilities after excluding the net asset or liability relating to the fair value of derivatives as reflected in the Company's financial statements for the relevant period) of at least $400 million.
        For the purpose of these covenants, the market value of the Company's vessels will be calculated, except as otherwise indicated above, on a charter-inclusive basis (using the present value of the "bareboat-equivalent" time charter income from such charter) so long as a vessel's charter has a remaining duration at the time of valuation of more than 12 months plus the present value of the residual value of the relevant vessel (generally equivalent to the charter free value of such a vessel at the age such vessel would be at the expiration of the existing time charter). The market value for newbuilding vessels, all of which currently have multi-year charters, would equal the lesser of such amount and the newbuilding vessel's book value.
        Under the terms of the Bank Agreement, the covered credit facilities also contain customary events of default, including those relating to cross-defaults to other indebtedness, defaults under its swap agreements, non-compliance with security documents, material adverse changes to its business, a Change of Control as described above, a change in its Chief Executive Officer, its common stock ceasing to be listed on the NYSE (or Nasdaq or another recognized stock exchange), a breach of the management agreement for the vessels securing the respective credit facilities and cancellation or amendment of the time charters (unless replaced with a similar time charter with a charterer acceptable to the lenders) for the vessels securing the respective credit facilities.
        Under the terms of the Bank Agreement, the Company generally will not be permitted to incur any further financial indebtedness or provide any new liens or security interests, unless such security is
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DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 12. Long-Term Debt (Continued)
provided for the equal and ratable benefit of each of the lenders party to the Intercreditor Agreement, other than security arising by operation of law or in connection with the refinancing of outstanding indebtedness, with the consent, not to be unreasonably withheld, of all lenders with a lien on the security pledged against such outstanding indebtedness. In addition, the Company would not be permitted to pay cash dividends or repurchase shares of its capital stock unless (i) its consolidated net leverage is below 6:1 for four consecutive quarters and (ii) the ratio of the aggregate market value of its vessels to its outstanding indebtedness exceeds 125% for four consecutive quarters and provided that an event of default has not occurred and the Company is not, and after giving effect to the payment of the dividend, in breach of any covenant.
 Collateral and Guarantees
        Each of the Company's existing credit facilities and swap arrangements, to the extent applicable, continue to be secured by their previous collateral on the same basis, and received, to the extent not previously provided, pledges of the shares of the Company's subsidiaries owning the vessels collateralizing the applicable facilities, cross-guarantees from each subsidiary owning the vessels collateralizing such facilities, assignment of the refund guarantees in relation to any newbuildings funded by such facilities and other customary shipping industry collateral.
 January 2011 Credit Facilities (Aegean Baltic Bank-HSH Nordbank-Piraeus Bank, RBS, ABN Amro Club facility, Club Facility and Citi-Eurobank)
        On January 24, 2011, the Company entered into agreements for the following new term loan credit facilities ("January 2011 Credit Facilities"):
(i)
a $123.8 million credit facility provided by HSH, which is secured by the Hyundai Speed , the Hanjin Italy and the CMA CGM Rabelais and customary shipping industry collateral related thereto (the $123.8 million amount includes principal commitment of $23.75 million under the Aegean Baltic Bank—HSH Nordbank—Piraeus Bank credit facility already drawn as of December 31, 2010, which was transferred to the new facility upon finalization of the agreement in 2011);

(ii)
a $100.0 million credit facility provided by RBS, which is secured by the Hyundai Smart and the Hanjin Germany and customary shipping industry collateral related thereto;

(iii)
a $37.1 million credit facility with ABN Amro and lenders participating under the Bank Agreement which is secured by Hanjin Greece and customary shipping industry collateral related thereto;

(iv)
a $83.9 million new club credit facility to be provided, on a pro rata basis, by the other existing lenders participating under the Bank Agreement, which is secured by Hyundai Together and Hyundai Tenacity and customary shipping industry collateral related thereto; and

(v)
a $80.0 million credit facility with Citibank and Eurobank, which is secured by the Hyundai Ambition and customary shipping industry collateral related thereto ((i)-(v), collectively, the "January 2011 Credit Facilities").
        As of December 31, 2015, $274.3 million was outstanding under the above January 2011 Facilities and there was no remaining borrowing availability under these credit facilities.
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DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 12. Long-Term Debt (Continued)
 Interest and Fees
        Borrowings under each of the January 2011 Credit Facilities bear interest at an annual interest rate of LIBOR plus a margin of 1.85%, subject, on and after January 1, 2013, to increases in the applicable margin to: (i) 2.50% if the outstanding indebtedness thereunder exceeds $276 million, (ii) 3.00% if the outstanding indebtedness thereunder exceeds $326 million and (iii) 3.50% if the outstanding indebtedness thereunder exceeds $376 million.
        The Company paid an arrangement fee of 2.00%, or $8.5 million in the aggregate, $3.3 million of which was paid in August 2010 (the date the commitment letter was entered into) and $5.2 million paid in January 2011, which was deferred and is being amortized through the Statement of Operations over the life of the respective facilities with the effective interest rate method. Furthermore, the Company paid a commitment fee of 0.75% per annum payable quarterly in arrears on the committed but undrawn portion of the respective loan.
        On October 22, 2014, the Company entered into a supplemental agreement with the lenders under the HSH Nordbank AG-Aegean Baltic Bank-Piraeus Bank credit facility in relation to the use of proceeds from the sale of 5 mortgaged vessels (the Marathonas , the Commodore , the Duka , the Mytilini and the Messologi ), all of which were sold during the year ended December 31, 2014 for an aggregate of $55.2 million gross sale proceeds less sale commissions, of which $18.2 million was applied against prepayment of the respective facility on August 18, 2014. The remaining $37.0 million were used to finance the acquisition of two secondhand containership vessels delivered on November 5, 2014. Refer to Note 4, "Fixed Assets, net". The Company paid the lenders a fee of $0.09 million for fully utilizing the remaining $37.0 million. This fee is deferred and amortized over the life of the respective credit facility with the effective interest method.
 Principal Payments
        Under the Bank Agreement, the Company was not required to repay any outstanding principal amounts under its January 2011 Credit Facilities until May 15, 2013 and thereafter it is required to make quarterly principal payments in fixed amounts as specified in the Bank Agreement plus an additional quarterly variable amortization payment, all as described above under "—Bank Agreement—Principal Payments."
 Covenants, Events of Default and Other Terms
        The January 2011 Credit Facilities contain substantially the same financial and operating covenants, events of default, dividend restrictions and other terms and conditions as applicable to the Company's then outstanding credit facilities as revised under the Bank Agreement described above.
 Collateral and Guarantees
        The collateral described above relating to the newbuildings financed by the respective credit facilities, was (other than in respect of the CMA CGM Rabelais ) subject to a limited participation by Hyundai Samho in any enforcement thereof until repayment of the related Hyundai Samho Vendor financing (described below) for such vessels. In addition lenders participating in the $83.9 million club credit facility described above received a lien on Hyundai Together and Hyundai Tenacity as additional security in respect of the pre-existing credit facilities the Company had with such lenders. The lenders
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DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 12. Long-Term Debt (Continued)
under the other January 2011 Credit Facilities also received a lien on the respective vessels securing such January 2011 Credit Facilities as additional collateral in respect of its pre-existing credit facilities and interest rate swap arrangements with such lenders and Citibank and Eurobank also received a second lien on Hyundai Ambition as collateral in respect of its previously unsecured interest rate arrangements with them.
        In addition, Aegean Baltic—HSH Nordbank—Piraeus Bank also received a second lien on the Deva , the CSCL Europe and the CSCL Pusan as collateral in respect of all borrowings from Aegean Baltic—HSH Nordbank—Piraeus Bank and RBS also received a second lien on the Derby D , CSCL America and the CSCL Le Havre as collateral in respect of all borrowings from RBS.
        The Company's obligations under the January 2011 Credit Facilities are guaranteed by its subsidiaries owning the vessels collateralizing the respective credit facilities. The Company's Manager has also provided an undertaking to continue to provide the Company with management services and to subordinate its rights to the rights of its lenders, the security trustee and applicable hedge counterparties.
 Sinosure-CEXIM-Citi-ABN Amro Credit Facility
        On February 21, 2011, the Company entered into a bank agreement with Citibank, acting as agent, ABN Amro and the Export-Import Bank of China ("CEXIM") for a senior secured credit facility (the "Sinosure-CEXIM Credit Facility") of up to $203.4 million, in three tranches each in an amount equal to the lesser of $67.8 million and 60.0% of the contract price for the newbuilding vessels, CMA CGM Tancredi , CMA CGM Bianca and CMA CGM Samson , securing such tranche for post-delivery financing of these vessels. The Company took delivery of the respective vessels in 2011. The China Export & Credit Insurance Corporation, or Sinosure, covers a number of political and commercial risks associated with each tranche of the credit facility.
        Borrowings under the Sinosure-CEXIM Credit Facility bear interest at an annual interest rate of LIBOR plus a margin of 2.85% payable semi-annually in arrears. The Company is required to repay principal amounts drawn under each tranche of the Sinosure-CEXIM Credit Facility in consecutive semi-annual installments over a ten-year period commencing after the delivery of the respective newbuilding being financed by such amount through the final maturity date of the respective tranches and repay the respective tranche in full upon the loss of the respective newbuilding.
        As of December 31, 2015, $122.0 million was outstanding under the credit facility and there was no remaining borrowing availability under the credit facility.
 Covenants, Events of Default and Other Terms
        The Sinosure-CEXIM credit facility was amended and restated, effective on June 30, 2013, to align its financial covenants with the Company's Bank Agreement (except for the minimum ratio of the charter free market value of certain vessels, as described in the Bank Agreement, which is not applicable) described above and continues to require the Company to maintain a minimum ratio of the market value of the vessel collateralizing a tranche of the facility to debt outstanding under such tranche of 125%.
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DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 12. Long-Term Debt (Continued)
        The Sinosure-CEXIM credit facility also contains customary events of default, including those relating to cross-defaults to other indebtedness, defaults under its swap agreements, non-compliance with security documents, material adverse changes to its business, a Change of Control as described above, a change in its Chief Executive Officer, its common stock ceasing to be listed on the NYSE (or Nasdaq or another recognized stock exchange), a breach of the management agreement for the mortgaged vessels and cancellation or amendment of the time charters (unless replaced with a similar time charter with a charterer acceptable to the lenders) for the mortgaged vessels.
        The Company will not be permitted to pay cash dividends or repurchase shares of its capital stock unless (i) its consolidated net leverage is below 6:1 for four consecutive quarters and (ii) the ratio of the aggregate market value of its vessels to its outstanding indebtedness exceeds 125% for four consecutive quarters and provided that an event of default has not occurred and the Company is not, and after giving effect to the payment of the dividend is not, in breach of any covenant.
 Collateral
        The Sinosure-CEXIM Credit Facility is secured by customary post-delivery shipping industry collateral with respect to the vessels, CMA CGM Tancredi , CMA CGM Bianca and CMA CGM Samson , securing the respective tranche.
 Hyundai Samho Vendor Financing
        The Company entered into an agreement with Hyundai Samho Heavy Industries ("Hyundai Samho") for a financing facility of $190.0 million in respect of eight of its newbuilding containerships built by Hyundai Samho, the Hyundai Speed , the Hyundai Smart , the Hyundai Ambition , the Hyundai Together , the Hyundai Tenacity , the Hanjin Greece , the Hanjin Italy and the Hanjin Germany , in the form of delayed payment of a portion of the final installment for each such newbuilding. As of December 31, 2015, the outstanding balance of this credit facility was nil.
        Borrowings under this facility bore interest at a fixed interest rate of 8%. The Company was required to repay principal amounts under this financing facility in six consecutive semi-annual installments commencing one and a half years, in the case of three of the newbuilding vessels being financed, and in seven consecutive semi-annual installments commencing one year, in the case of the other five newbuilding vessels, after the delivery of the respective newbuilding being financed. This financing facility was secured by second priority collateral related to the newbuilding vessels being financed.
 Exit Fees
        The Company is required to pay Exit Fees of $25.0 million and, in the respective proportion to facilities covered by the Bank Agreement and the January 2011 Credit Facilities, are payable the earlier of (a) December 31, 2018 and (b) the date on which the respective facilities are repaid in full. The Exit Fees will accrete in the consolidated Statement of Operations over the life of the respective facilities (with the effective interest rate method) and are reported under "Long-term debt, net of current portion" in the consolidated Balance Sheets. The Company has recognized an amount of $15.5 million and $11.9 million as of December 31, 2015 and December 31, 2014, respectively.
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DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 12. Long-Term Debt (Continued)
 Credit Facilities Summary Table

						
Lender 	 	Outstanding
Principal
Amount
(in millions)(1)	 	Collateral Vessels	
The Royal Bank of Scotland(2)	 	 $	667.1	 	The Hyundai Progress , the Hyundai Highway , the Hyundai Bridge , the Federal , the Zim Monaco , the Hanjin Buenos Aires , the Hanjin Versailles , the Hanjin Algeciras , the CMA CGM Racine and the CMA CGM Melisande	
Aegean Baltic Bank—HSH Nordbank—Piraeus Bank(3)	 	 $	627.8	 	The Hyundai Vladivostok , the Hyundai Advance , the Hyundai Stride , the Hyundai Future , the Hyundai Sprinter , the Amalia C , the MSC Zebra , the Danae C ( ex Niledutch Palanca) , the Dimitris C, the Performance and the Priority	
Canyon Capital Finance	 	 $	136.7	 	The CMA CGM Moliere and the CMA CGM Musset	
Deutsche Bank	 	 $	169.9	 	The Zim Rio Grande , the Zim Sao Paolo and the OOCL Istanbul	
Credit Suisse	 	 $	199.4	 	The Zim Luanda , the CMA CGM Nerval and the YM Mandate	
ABN Amro-Bank of America Merrill Lynch-Burlington-Sequoia-National Bank of Greece	 	 $	229.0	 	The SNL Colombo , the YM Seattle , the YM Vancouver and the YM Singapore	
Commerzbank-Credit Suisse-Golden Tree	 	 $	258.1	 	The OOCL Novorossiysk , the Hanjin Santos, the YM Maturity , the Hanjin Constantza and the CMA CGM Attila	
HSH Nordbank	 	 $	21.2	 	The Deva and the Derby D	
KEXIM	 	 $	8.2	 	The CSCL Europe and the CSCL America	
KEXIM-ABN Amro	 	 $	45.6	 	The CSCL Pusan and the CSCL Le Havre	
January 2011 Credit Facilities	
Aegean Baltic—HSH Nordbank—Piraeus Bank(3)	 	 $	69.6	 	The Hyundai Speed , the Hanjin Italy and the CMA CGM Rabelais	
RBS(2)	 	 $	69.9	 	The Hyundai Smart and the Hanjin Germany	
ABN Amro Club Facility	 	 $	20.6	 	The Hanjin Greece	
Club Facility	 	 $	50.4	 	The Hyundai Together and the Hyundai Tenacity	
Citi-Eurobank	 	 $	63.8	 	The Hyundai Ambition	
Sinosure-CEXIM-Citi-ABN Amro	 	 $	122.0	 	The CMA CGM Tancredi , the CMA CGM Bianca and the CMA CGM Samson	

(1)
As of December 31, 2015.

(2)
Pursuant to the Bank Agreement, this credit facility is also secured by a second priority lien on the Derby D , the CSCL America and the CSCL Le Havre .

(3)
Pursuant to the Bank Agreement, this credit facility is also secured by a second priority lien on the Deva , the CSCL Europe and the CSCL Pusan .
        As of December 31, 2015, there was no remaining borrowing availability under any of the Company's credit facilities.
        In 2008, the Company entered into a credit facility of $253.2 million with ABN Amro (acting as agent), Lloyds TSB and National Bank of Greece in relation to the financing of vessels SNL Colombo , YM Seattle , YM Vancouver and YM Singapore . The structure of this credit facility is such that the group of banks loaned funds of $253.2 million to the Company, which the Company then re-loaned to a newly
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DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 12. Long-Term Debt (Continued)
created entity of the group of banks ("Investor Bank"). With the proceeds, Investor Bank then subscribed for preference shares in Auckland Marine Inc., Seacarriers Services Inc., Seacarriers Lines Inc. and Wellington Marine Inc. (subsidiaries of Danaos Corporation). In addition, four of the Companies' subsidiaries issued a put option in respect of the preference shares. The effect of these transactions is that the Company's subsidiaries were required to pay out fixed preference dividends to the Investor Bank, the Investor Bank was required to pay fixed interest due on the loan from the Company to Investor Bank and finally the Investor Bank is required to pay put option premium on the put options issued in respect of the preference shares.
        The interest payments to the Company by Investor Bank were contingent upon receipt of these preference dividends. In the event these dividends were not paid, the preference dividends would accumulate until such time as there were sufficient cash proceeds to settle all outstanding arrearages. Applying variable interest accounting to this arrangement, the Company concluded that the Company was the primary beneficiary of Investor Bank and accordingly has consolidated it into the Company's group. On May 4, 2015, the preference shares of Auckland Marine Inc., Seacarriers Services Inc., Seacarriers Lines Inc. and Wellington Marine Inc. were redeemed and all agreements related to the arrangement with ABN Amro and Investor Bank were terminated at that date. Accordingly, as at December 31, 2015 and December 31, 2014, the Consolidated Balance Sheet and Consolidated Statement of Operations include Investor Bank's net assets of $nil and net income of $nil, respectively, due to elimination on consolidation, of accounts and transactions arising between the Company and the Investor Bank.
        As of December 31, 2015, the Company was in compliance with the covenants under its Bank Agreement and its other credit facilities.
        The weighted average interest rate on long-term borrowings for the years ended December 31, 2015, 2014 and 2013 was 2.4%, 2.5% and 2.7%, respectively.
        Total interest paid during the years ended December 31, 2015, 2014 and 2013 was $71.8 million, $83.0 million and $92.9 million, respectively.
        The total amount of interest cost incurred and expensed in 2015 was $70.4 million (2014: $80.0 million, 2013: $91.2 million).
 13. Related Party Transactions
        Management Services:     Pursuant to a ship management agreement between each of the vessel owning companies and Danaos Shipping Company Limited (the "Manager"), the Manager acts as the fleet's technical manager responsible for (i) recruiting qualified officers and crews, (ii) managing day to day vessel operations and relationships with charterers, (iii) purchasing of stores, supplies and new equipment for the vessels, (iv) performing general vessel maintenance, reconditioning and repair, including commissioning and supervision of shipyards and subcontractors of drydock facilities required for such work, (v) ensuring regulatory and classification society compliance, (vi) performing operational budgeting and evaluation, (vii) arranging financing for vessels, (viii) providing accounting, treasury and finance services and (ix) providing information technology software and hardware in the support of the Company's processes. The Company's controlling shareholder also controls the Manager.
        On February 8, 2010, the Company signed an addendum to the management contract adjusting the management fees, effective January 1, 2010, to a fee of $675 per day, a fee of $340 per vessel per day
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DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 13. Related Party Transactions (Continued)
for vessels on bareboat charter and $675 per vessel per day for vessels on time charter. During 2012, the management fee levels remained the same as the 2010 fee levels. Furthermore, the Manager received a flat fee of $0.725 million per newbuilding vessel for the supervision of newbuilding contracts in 2012. The Manager also receives a fee on gross freight, charter hire, ballast bonus and demurrage with respect to each vessel in the fleet.
        On December 16, 2011, the Company signed an addendum to the management contract adjusting the fee of 0.75% on gross freight, charter hire, ballast bonus and demurrage with respect to each vessel in the fleet, effective January 1, 2012, to a fee of 1.0%. In addition, the Manager receives a fee of 0.5% based on the contract price of any vessel bought or sold by the manager on its behalf (excluding newbuildings).
        On December 31, 2012, the Company signed an addendum to the management contract providing that from January 1, 2013, the Manager also provides the Company with the services of its executive officers for a fee of € 1.4 million per year. This fee was increased to €1.5 million for the year ended December 31, 2014 and amounted to €0.5 million for the period from January 1, 2015 to April 30, 2015, after which date the Company directly employed the executive officers. The executive officers received an aggregate €1.0 million in compensation for the period from May 1, 2015 to December 31, 2015.
        On December 16, 2013, the Company signed an addendum to the management contract adjusting the management fees, effective January 1, 2014, to a fee of $800 per day, a fee of $400 per vessel per day for vessels on bareboat charter and $800 per vessel per day for vessels on time charter, as well as adjusting the fee of 1.0% on gross freight, charter hire, ballast bonus and demurrage with respect to each vessel in the fleet, to a fee of 1.25%.
        On December 31, 2014, the Company signed an amended and restated management agreement to supersede the initial agreement signed in 2005 and incorporate all prior amendments. Pursuant to this agreement, effective January 1, 2015, the management fees are adjusted to a fee of $850 per day, a fee of $425 per vessel per day for vessels on bareboat charter and $850 per vessel per day for vessels on time charter. The fee of 1.25% on gross freight, charter hire, ballast bonus and demurrage with respect to each vessel in the fleet and the fee of 0.5% based on the contract price of any vessel bought and sold by the manager on the Company's behalf remains the same as per addendum signed in 2013.
        Management fees in 2015 amounted to approximately $17.4 million (2014: $16.3 million, 2013: $15.0 million), which are presented under "General and administrative expenses" on the consolidated Statements of Operations. Commissions to the Manager in 2015 amounted to approximately $6.9 million (2014: $7.0 million, 2013: $5.8 million), which are shown under "Voyage expenses" on the consolidated Statements of Operations.
        The Company pays monthly advances on account of the vessels' operating expenses. These prepaid amounts are presented in the consolidated balance sheet under "Due from related parties" totaling $19.0 million and $10.6 million as of December 31, 2015 and 2014, respectively.
        Dr. John Coustas, the Chief Executive Officer of the Company, is a member of the Board of Directors of The Swedish Club, the primary provider of insurance for the Company, including a substantial portion of its hull & machinery, war risk and protection and indemnity insurance. During the years ended December 31, 2015, 2014 and 2013 the Company paid premiums to The Swedish Club of $6.3 million, $8.5 million and $9.6 million, respectively, which are presented under Vessel operating
F-37

Table of Contents

DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 13. Related Party Transactions (Continued)
expenses in the consolidated Statements of Operations. As of December 31, 2015 and 2014, the Company did not have any outstanding balance to The Swedish Club.
 14. Taxes
        Under the laws of the countries of the Company's ship owning subsidiaries' incorporation and/or vessels' registration, the Company's ship operating subsidiaries are not subject to tax on international shipping income, however, they are subject to registration and tonnage taxes, which have been included in Vessel Operating Expenses in the accompanying consolidated Statements of Operations.
        Pursuant to the U.S. Internal Revenue Code (the "Code"), U.S.-source income from the international operation of ships is generally exempt from U.S. tax if the company operating the ships meets certain requirements. Among other things, in order to qualify for this exemption, the company operating the ships must be incorporated in a country which grants an equivalent exemption from income taxes to U.S. corporations.
        All of the Company's ship-operating subsidiaries satisfy these initial criteria. In addition, these companies must be more than 50% owned by individuals who are residents, as defined, in the countries of incorporation or another foreign country that grants an equivalent exemption to U.S. corporations. These companies also currently satisfy the more than 50% beneficial ownership requirement. In addition, should the beneficial ownership requirement not be met, the management of the Company believes that by virtue of a special rule applicable to situations where the ship operating companies are beneficially owned by a publicly traded company like the Company, the more than 50% beneficial ownership requirement can also be satisfied based on the trading volume and the anticipated widely-held ownership of the Company's shares, but no assurance can be given that this will remain so in the future, since continued compliance with this rule is subject to factors outside of the Company's control.
 15. Financial Instruments
        The principal financial assets of the Company consist of cash and cash equivalents, trade receivables and other assets. The principal financial liabilities of the Company consist of long-term bank loans, accounts payable and derivatives.
        Derivative Financial Instruments:     The Company only uses derivatives for economic hedging purposes. The following is a summary of the Company's risk management strategies and the effect of these strategies on the Company's consolidated financial statements.
        Interest Rate Risk:     Interest rate risk arises on bank borrowings. The Company monitors the interest rate on borrowings closely to ensure that the borrowings are maintained at favorable rates. The interest rates relating to the long-term loans are disclosed in Note 12, "Long-term Debt".
        Concentration of Credit Risk:     Financial instruments that are potentially subject the Company to significant concentrations of credit risk consist principally of cash, trade accounts receivable and derivatives. The Company places its temporary cash investments, consisting mostly of deposits, with established financial institutions. The Company performs periodic evaluations of the relative credit standing of those financial institutions that are considered in the Company's investment strategy. The Company is exposed to credit risk in the event of non-performance by counterparties to derivative
F-38

Table of Contents

DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 15. Financial Instruments (Continued)
instruments, however, the Company limits this exposure by diversifying among counterparties with high credit ratings. The Company depends upon a limited number of customers for a large part of its revenues. Refer to Note 16, "Operating Revenue", for further details on revenue from significant clients. Credit risk with respect to trade accounts receivable is generally managed by the selection of customers among the major liner companies in the world and their dispersion across many geographic areas. The Company's maximum exposure to credit risk is mainly limited to the carrying value of its derivative instruments. The Company is not a party to master netting arrangements.
        Fair Value:     The carrying amounts reflected in the accompanying consolidated balance sheets of financial assets and liabilities (excluding long-term bank loans and certain other non-current assets) approximate their respective fair values due to the short maturity of these instruments. The fair values of long-term floating rate bank loans approximate the recorded values, generally due to their variable interest rates. The fair value of the swap agreements equals the amount that would be paid by the Company to cancel the swaps.
        Interest Rate Swaps:     The off-balance sheet risk in outstanding swap agreements involves both the risk of a counter-party not performing under the terms of the contract and the risk associated with changes in market value. The Company monitors its positions, the credit ratings of counterparties and the level of contracts it enters into with any one party. The counterparties to these contracts are major financial institutions. The Company has a policy of entering into contracts with parties that meet stringent qualifications and, given the high level of credit quality of its derivative counter-parties, the Company does not believe it is necessary to obtain collateral arrangements.
 a. Cash Flow Interest Rate Swap Hedges
        The Company, according to its long-term strategic plan to maintain relative stability in its interest rate exposure, has decided to swap part of its interest expenses from floating to fixed. To this effect, the Company has entered into interest rate swap transactions with varying start and maturity dates, in order to pro-actively and efficiently manage its floating rate exposure.
        These interest rate swaps are designed to economically hedge the variability of interest cash flows arising from floating rate debt, attributable to movements in three-month USD$ LIBOR. According to the Company's Risk Management Accounting Policy, and after putting in place the formal documentation required by hedge accounting in order to designate these swaps as hedging instruments, as from their inception, these interest rate swaps qualified for hedge accounting, and, accordingly, from that time until June 30, 2012, only hedge ineffectiveness amounts arising from the differences in the change in fair value of the hedging instrument and the hedged item were recognized in the Company's earnings. Assessment and measurement of prospective and retrospective effectiveness for these interest rate swaps were performed on a quarterly basis. For qualifying cash flow hedges, the fair value gain or loss associated with the effective portion of the cash flow hedge was recognized initially in stockholders' equity, and recognized to the Statement of Operations in the periods when the hedged item affects profit or loss.
        On July 1, 2012, the Company elected to prospectively de-designate cash flow interest rate swaps for which it was obtaining hedge accounting treatment due to the compliance burden associated with this accounting policy. As a result, all changes in the fair value of the Company's cash flow interest rate swap agreements are recorded in earnings under "Unrealized and Realized Losses on Derivatives"
F-39

Table of Contents

DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 15. Financial Instruments (Continued)
from the de-designation date forward. The Company evaluated whether it is probable that the previously hedged forecasted interest payments are probable to not occur in the originally specified time period. The Company has concluded that the previously hedged forecasted interest payments are probable of occurring. Therefore, unrealized gains or losses in accumulated other comprehensive loss associated with the previously designated cash flow interest rate swaps will remain in accumulated other comprehensive loss and recognized in earnings when the interest payments will be recognized. If such interest payments were to be identified as being probable of not occurring, the accumulated other comprehensive loss balance pertaining to these amounts would be reversed through earnings immediately.
        The interest rate swap agreements converting floating interest rate exposure into fixed, as of December 31, 2015 and 2014 were as follows (in thousands):

																									
Counter-party 	 	Contract
Trade
Date	 	Effective
Date	 	Termination
Date	 	Notional
Amount on
Effective Date	 	Fixed Rate
(Danaos
pays)	 	Floating Rate
(Danaos receives)	 	Fair Value
December 31,
2015	 	Fair Value
December 31,
2014	 	
RBS	 	 	03/09/2007	 	 	3/15/2010	 	 	3/15/2015	 	 $	200,000	 	 	5.07% p.a.	 	USD LIBOR 3M BBA	 	 	—	 	 $	(2,011	)	
RBS	 	 	11/15/2007	 	 	11/19/2010	 	 	11/19/2015	 	 $	100,000	 	 	5.12% p.a.	 	USD LIBOR 3M BBA	 	 	—	 	 	(4,246	)	
RBS	 	 	11/16/2007	 	 	11/22/2010	 	 	11/22/2015	 	 $	100,000	 	 	5.07% p.a.	 	USD LIBOR 3M BBA	 	 	—	 	 	(4,248	)	
CITI	 	 	04/17/2007	 	 	4/17/2008	 	 	4/17/2015	 	 $	200,000	 	 	5.124% p.a.	 	USD LIBOR 3M BBA	 	 	—	 	 	(2,895	)	
CITI	 	 	04/20/2007	 	 	4/20/2010	 	 	4/20/2015	 	 $	200,000	 	 	5.1775% p.a.	 	USD LIBOR 3M BBA	 	 	—	 	 	(3,008	)	
CITI	 	 	11/02/2007	 	 	11/6/2010	 	 	11/6/2015	 	 $	250,000	 	 	5.1% p.a.	 	USD LIBOR 3M BBA	 	 	—	 	 	(10,167	)	
CITI	 	 	11/26/2007	 	 	11/29/2010	 	 	11/30/2015	 	 $	100,000	 	 	4.98% p.a.	 	USD LIBOR 3M BBA	 	 	—	 	 	(4,249	)	
CITI	 	 	02/07/2008	 	 	2/11/2011	 	 	2/11/2016	 	 $	200,000	 	 	4.695% p.a.	 	USD LIBOR 3M BBA	 	 $	(1,012	)	 	(9,524	)	
Eurobank	 	 	12/06/2007	 	 	12/10/2010	 	 	12/10/2015	 	 $	200,000	 	 	4.8125% p.a.	 	USD LIBOR 3M BBA	 	 	—	 	 	(8,428	)	
Eurobank	 	 	02/11/2008	 	 	5/31/2011	 	 	5/31/2015	 	 $	200,000	 	 	4.755% p.a.	 	USD LIBOR 3M BBA	 	 	—	 	 	(3,763	)	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​ 	​ 	​	​ 	​ 	​	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 $	(1,012	)	 $	(52,539	)	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​ 	​ 	​	​ 	​ 	​	
ABN Amro	 	 	06/06/2013	 	 	1/4/2016	 	 	12/31/2016	 	 $	325,000	 	 	1.4975% p.a.	 	USD LIBOR 3M BBA	 	 $	(2,113	)	 $	(617	)	
ABN Amro	 	 	05/31/2013	 	 	1/4/2016	 	 	12/31/2016	 	 $	250,000	 	 	1.4125% p.a.	 	USD LIBOR 3M BBA	 	 	(1,413	)	 	(264	)	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​ 	​ 	​	​ 	​ 	​	
Total fair value of swap liabilities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 $	(4,538	)	 $	(53,420	)	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​ 	​ 	​	​ 	​ 	​	
        The Company recorded in the consolidated Statements of Operations unrealized gains of $48.9 million, $114.2 million and $139.4 million in relation to fair value changes of interest rate swaps for the years ended December 31, 2015, 2014 and 2013, respectively. Furthermore, unrealized losses of $32.6 million, $88.9 million and $116.6 million were reclassified from Accumulated Other Comprehensive Loss to earnings for the years ended December 31, 2015, 2014 and 2013, respectively.
        The variable-rate interest on specific borrowings that was associated with vessels under construction was capitalized as a cost of the specific vessels. In accordance with the accounting guidance on derivatives and hedging, the amounts in accumulated other comprehensive income related to realized gains or losses on cash flow hedges that have been entered into and qualify for hedge accounting, in order to hedge the variability of that interest, were classified under other comprehensive income and are reclassified into earnings over the depreciable life of the constructed asset, since that depreciable life coincides with the amortization period for the capitalized interest cost on the debt. An amount of $4.0 million, $4.0 million and $4.0 million was reclassified into earnings for the years ended
F-40

Table of Contents

DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 15. Financial Instruments (Continued)
December 31, 2015, 2014 and 2013, respectively, representing amortization over the depreciable life of the vessels.

											
 	 	Year ended
December 31,
2015	 	Year ended
December 31,
2014	 	Year ended
December 31,
2013	 	
 	 	(in millions)	 	
Total realized losses	 	 $	(52.7	)	 $	(120.6	)	 $	(145.6	)	
Amortization of deferred realized losses	 	 	(4.0	)	 	(4.0	)	 	(4.0	)	
Unrealized gains	 	 	16.2	 	 	25.2	 	 	22.8	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
Unrealized and realized losses on cash flow interest rate swaps	 	 $	(40.5	)	 $	(99.4	)	 $	(126.8	)	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	​	​	​	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
 b. Fair Value Interest Rate Swap Hedges
        These interest rate swaps are designed to economically hedge the fair value of the fixed rate loan facilities against fluctuations in the market interest rates by converting the Company's fixed rate loan facilities to floating rate debt. Pursuant to the adoption of the Company's Risk Management Accounting Policy, and after putting in place the formal documentation required by hedge accounting in order to designate these swaps as hedging instruments, as of June 15, 2006, these interest rate swaps qualified for hedge accounting, and, accordingly, from that time until June 30, 2012, hedge ineffectiveness amounts arising from the differences in the change in fair value of the hedging instrument and the hedged item were recognized in the Company's earnings. The Company considered its strategic use of interest rate swaps to be a prudent method of managing interest rate sensitivity, as it prevented earnings from being exposed to undue risk posed by changes in interest rates. Assessment and measurement of prospective and retrospective effectiveness for these interest rate swaps was performed on a quarterly basis, on the financial statement and earnings reporting dates.
        On July 1, 2012, the Company elected to prospectively de-designate fair value interest rate swaps for which it was applying hedge accounting treatment due to the compliance burden associated with this accounting policy. All changes in the fair value of the Company's fair value interest rate swap agreements continue to be recorded in earnings under "Unrealized and Realized Losses on Derivatives" from the de-designation date forward.
        The Company evaluated whether it is probable that the previously hedged forecasted interest payments will not occur in the originally specified time period. The Company has concluded that the previously hedged forecasted interest payments continue to be probable of occurring. Therefore, the fair value of the hedged item associated with the previously designated fair value interest rate swaps will be frozen and recognized in earnings when the interest payments are recognized. If such interest payments were to be identified as being probable of not occurring, the fair value of hedged debt balance pertaining to these amounts would be reversed through earnings immediately.
F-41

Table of Contents

DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 15. Financial Instruments (Continued)
        The interest rate swap agreements converting fixed interest rate exposure into floating, as of December 31, 2015 and 2014, were as follows (in thousands):

																									
Counter party 	 	Contract
trade
Date	 	Effective
Date	 	Termination
Date	 	Notional
Amount
on
Effective
Date	 	Fixed Rate
(Danaos receives)	 	Floating Rate
(Danaos pays)	 	Fair Value
December 31,
2015	 	Fair Value
December 31,
2014	 	
RBS	 	 	11/15/2004	 	 	12/15/2004	 	 	8/27/2016	 	 $	60,528	 	 	5.0125% p.a.	 	USD LIBOR 3M BBA + 0.835% p.a.	 	 $	55	 	 $	302	 	
RBS	 	 	11/15/2004	 	 	11/17/2004	 	 	11/2/2016	 	 $	62,342	 	 	5.0125% p.a.	 	USD LIBOR 3M BBA + 0.855% p.a.	 	 	83	 	 	362	 	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​ 	​ 	​	​ 	​ 	​	
Total fair value	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 $	138	 	 $	664	 	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​ 	​ 	​	​ 	​ 	​	
        The total fair value change of the interest rate swaps for the years ended December 31, 2015, 2014 and 2013, amounted to $(0.5) million, $(0.9) million and $(1.3) million, respectively, and is included in the consolidated Statement of Operations in "Unrealized and realized losses on derivatives". The related assets of $0.1 million and $0.7 million are presented under "Other current assets" and under "Other non-current assets" in the consolidated balance sheet as of December 31, 2015 and 2014, respectively.
        The Company reclassified from "Long-term debt, net of current portion", where its fair value of hedged item is recorded, to its earnings unrealized losses of an amount of $0.6 million and $0.6 million for the years ended December 31, 2015 and 2014, respectively. The related liability of the fair value hedged debt of $0.4 million and $1.0 million is shown under "Long-term Debt" in the consolidated balance sheet as of December 31, 2015 and 2014, respectively.

											
 	 	Year ended
December 31,
2015	 	Year ended
December 31,
2014	 	Year ended
December 31,
2013	 	
 	 	(in millions)	 	
Unrealized losses on swap asset	 	 $	(0.5	)	 $	(0.9	)	 $	(1.3	)	
Reclassification of fair value of hedged debt to Statement of Operations	 	 	0.6	 	 	0.6	 	 	0.6	 	
Realized gains	 	 	0.5	 	 	1.0	 	 	1.4	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
Unrealized and realized gains on fair value interest rate swaps	 	 $	0.6	 	 $	0.7	 	 $	0.7	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	​	​	​	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
F-42

Table of Contents

DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 15. Financial Instruments (Continued)
 c. Fair Value of Financial Instruments
        The following tables present the Company's assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value.

														
 	 	Fair Value Measurements as of December 31, 2015	 	
 	 	Total	 	Quoted Prices in
Active Markets for
Identical
Assets
(Level 1)	 	Significant
Other
Observable
Inputs
(Level 2)	 	Significant
Unobservable
Inputs
(Level 3)	 	
 	 	(in thousands of $)	 	
Assets	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest rate swap contracts	 	 $	138	 	 $	—	 	 $	138	 	 $	—	 	
Liabilities	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest rate swap contracts	 	 $	4,538	 	 $	—	 	 $	4,538	 	 $	—	 	

														
 	 	Fair Value Measurements as of December 31, 2014	 	
 	 	Total	 	Quoted Prices in
Active Markets for
Identical
Assets
(Level 1)	 	Significant
Other
Observable
Inputs
(Level 2)	 	Significant
Unobservable
Inputs
(Level 3)	 	
 	 	(in thousands of $)	 	
Assets	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest rate swap contracts	 	 $	664	 	 $	—	 	 $	664	 	 $	—	 	
Liabilities	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest rate swap contracts	 	 $	53,420	 	 $	—	 	 $	53,420	 	 $	—	 	
        Interest rate swap contracts are measured at fair value on a recurring basis. Fair value is determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. Such instruments are typically classified within Level 2 of the fair value hierarchy. The fair values of the interest rate swap contracts have been calculated by discounting the projected future cash flows of both the fixed rate and variable rate interest payments. Projected interest payments are calculated using the appropriate prevailing market forward rates and are discounted using the zero-coupon curve derived from the swap yield curve. Refer to Note 15(a)-(b) above for further information on the Company's interest rate swap contracts.
        The Company is exposed to credit-related losses in the event of nonperformance of its counterparties in relation to these financial instruments. As of December 31, 2015 and 2014, these financial instruments are in the counterparties' favor. The Company has considered its risk of non-performance and of its counterparties in accordance with the relevant guidance of fair value accounting. The Company performs evaluations of its counterparties for credit risk through ongoing monitoring of their financial health and risk profiles to identify risk or changes in their credit ratings.
F-43

Table of Contents

DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 15. Financial Instruments (Continued)
        The estimated fair values of the Company's financial instruments are as follows:

														
 	 	As of December 31, 2015	 	As of December 31, 2014	 	
 	 	Book Value	 	Fair Value	 	Book Value	 	Fair Value	 	
 	 	(in thousands of $)	 	
Cash and cash equivalents	 	 $	72,253	 	 $	72,253	 	 $	57,730	 	 $	57,730	 	
Restricted cash	 	 $	2,818	 	 $	2,818	 	 $	2,824	 	 $	2,824	 	
Accounts receivable, net	 	 $	10,652	 	 $	10,652	 	 $	7,904	 	 $	7,904	 	
Due from related parties	 	 $	19,007	 	 $	19,007	 	 $	10,597	 	 $	10,597	 	
Series 1 ZIM notes	 	 $	6,587	 	 $	6,587	 	 $	6,274	 	 $	6,274	 	
Series 2 ZIM notes	 	 $	32,507	 	 $	32,507	 	 $	30,923	 	 $	30,923	 	
Equity investment in ZIM	 	 $	28,693	 	 $	35,831	 	 $	28,693	 	 $	32,873	 	
Accounts payable	 	 $	12,971	 	 $	12,971	 	 $	12,510	 	 $	12,510	 	
Accrued liabilities	 	 $	14,014	 	 $	14,014	 	 $	24,705	 	 $	24,705	 	
Long-term debt, including current portion	 	 $	2,775,378	 	 $	2,776,739	 	 $	2,951,120	 	 $	2,953,327	 	
Vendor financing, including current portion	 	 $	—	 	 $	—	 	 $	64,367	 	 $	64,026	 	
        The estimated fair value of the financial instruments that are not measured at fair value on a recurring basis, categorized based upon the fair value hierarchy, are as follows (in thousands):

														
 	 	Fair Value Measurements as of December 31, 2015	 	
 	 	Total	 	(Level I)	 	(Level II)	 	(Level III)	 	
 	 	(in thousands of $)	 	
Series 1 ZIM notes(1)	 	 $	6,587	 	 $	—	 	 $	6,587	 	 $	—	 	
Series 2 ZIM notes(1)	 	 $	32,507	 	 $	—	 	 $	32,507	 	 $	—	 	
Equity investment in ZIM(1)	 	 $	35,831	 	 $	—	 	 $	35,831	 	 $	—	 	
Long-term debt, including current portion(2)	 	 $	2,776,739	 	 $	—	 	 $	2,776,739	 	 $	—	 	
Accrued liabilities(4)	 	 $	14,014	 	 $	—	 	 $	14,014	 	 $	—	 	

														
 	 	Fair Value Measurements as of December 31, 2014	 	
 	 	Total	 	(Level I)	 	(Level II)	 	(Level III)	 	
 	 	(in thousands of $)	 	
Series 1 ZIM notes(1)	 	 $	6,274	 	 $	—	 	 $	6,274	 	 $	—	 	
Series 2 ZIM notes(1)	 	 $	30,923	 	 $	—	 	 $	30,923	 	 $	—	 	
Equity investment in ZIM(1)	 	 $	32,873	 	 $	—	 	 $	32,873	 	 $	—	 	
Long-term debt, including current portion(2)	 	 $	2,953,327	 	 $	—	 	 $	2,953,327	 	 $	—	 	
Vendor financing, including current portion(3)	 	 $	64,026	 	 $	—	 	 $	64,026	 	 $	—	 	
Accrued liabilities(4)	 	 $	24,705	 	 $	—	 	 $	24,705	 	 $	—	 	

(1)
The fair value is estimated based on currently available information on the Company's counterparty, other contracts with similar terms, remaining maturities and interest rates.

(2)
The fair value of the Company's debt is estimated based on currently available debt with similar contract terms, interest rate and remaining maturities, as well as taking into account its creditworthiness.
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DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 15. Financial Instruments (Continued)
(3)
The fair value of the Company's Vendor financing is estimated based on currently available financing with similar contract terms, interest rate and remaining maturities, as well as taking into account its creditworthiness.

(4)
The fair value of the Company's accrued liabilities, which mainly consists of accrued interest on its credit facilities and accrued realized losses on its cash flow interest rate swaps, is estimated based on currently available debt and swap agreements with similar contract terms, interest rates and remaining maturities, as well as taking into account its creditworthiness.
        As of December 31, 2013, the Company has written down the value of its long-term receivables from ZIM and recognized a $19.0 million impairment charge with respect to the agreement in principle for a restructuring of ZIM's obligations. This agreement includes a significant reduction in the charter rates payable by ZIM for the remaining life of its time charters, expiring in 2020 or 2021, for six of the Company's vessels and receipt of unsecured, interest bearing ZIM notes maturing in nine years and ZIM shares in exchange for such reductions and cancellation of ZIM's other obligations to the Company. Refer to Note 23 "Impairment Loss" and Note 8"Other Non-Current Assets".
        The Company's nonfinancial items measured at fair value on a non-recurring basis were:

														
 	 	Fair Value Measurements as of
December 31, 2015	 	
 	 	Total	 	(Level I)	 	(Level II)	 	(Level III)	 	
 	 	(in millions of $)	 	
Fixed Assets, net	 	 $	90.8	 	 $	—	 	 $	90.8	 	 $	—	 	
Vessels held for sale	 	 $	6.3	 	 $	—	 	 $	6.3	 	 $	—	 	
        The Company recorded an impairment loss of $39.0 million on twelve of its older vessels as of December 31, 2015, thus reducing the vessels' carrying value at December 31, 2015 from $129.8 million to $90.8 million. Fair value of each vessel was determined with the assistance from valuations obtained by third party independent shipbrokers. Additionally, impairment loss of $2.1 million was recorded for the vessel held for sale as of December 31, 2015. The vessel held for sale is presented at its selling price less cost to sell. Refer to Note 23, "Impairment Loss" and Note 24 "Subsequent Events".

														
 	 	Fair Value Measurements as of
December 31, 2014	 	
 	 	Total	 	(Level I)	 	(Level II)	 	(Level III)	 	
 	 	(in millions of $)	 	
Fixed Assets, net	 	 $	92.0	 	 $	—	 	 $	92.0	 	 $	—	 	
        The Company recorded an impairment loss of $75.8 million on eight of its older vessels as of December 31, 2014, thus reducing the vessels' carrying value at December 31, 2014 from $167.8 million to $92.0 million. Fair value of each vessel was determined with the assistance from valuations obtained by third party independent shipbrokers. Refer to Note 23, "Impairment Loss".
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DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 16. Operating Revenue
        Operating revenue from significant customers (constituting more than 10% of total revenue) for the years ended December 31, were as follows:

											
Charterer 	 	2015	 	2014	 	2013	 	
HMM Korea	 	 	28	%	 	28	%	 	27	%	
CMA CGM	 	 	26	%	 	27	%	 	24	%	
Hanjin	 	 	17	%	 	18	%	 	17	%	
YML	 	 	13	%	 	11	%	 	10	%	
 17. Operating Revenue by Geographic Location
        Operating revenue by geographic location for the years ended December 31, was as follows (in thousands):

											
Continent 	 	2015	 	2014	 	2013	 	
Australia—Asia	 	 $	410,827	 	 $	389,098	 	 $	413,662	 	
Europe	 	 	157,109	 	 	162,993	 	 	174,455	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
Total Revenue	 	 $	567,936	 	 $	552,091	 	 $	588,117	 	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
 ​	​	​	​	​	​	​	​	​	​	​	
 ​	​	​ 	​ 	​	​ 	​ 	​	​ 	​ 	​	
 18. Commitments and Contingencies
        There are no material legal proceedings to which the Company is a party or to which any of its properties are the subject, or other contingencies that the Company is aware of, other than routine litigation incidental to the Company's business. Furthermore, the Company does not have any commitments outstanding.
 19. Sale of Vessels
        During the year ended December 31, 2014, the Company sold five containerships Marathonas, Commodore, Duka , Mytilini and Messologi for gross sale consideration of $57.7 million. The Company realized a net gain on the sale of these vessels of $5.7 million and net sale proceeds of $50.6 million.
        During the year ended December 31, 2013, the Company sold nine containerships Komodo, Lotus, Kalamata, Hope, Elbe, Honour, Pride, Henry and Independence for gross sale consideration of $60.5 million. The Company realized a net loss on the sale of these vessels of $0.4 million and net sale proceeds of $52.9 million.
        The net gain/(loss) on sale of the vessels is separately reflected in the accompanying consolidated Statements of Operations. There were no vessel sales during the year ended December 31, 2015.
 20. Stock Based Compensation
        As of April 18, 2008, the Board of Directors and the Compensation Committee approved incentive compensation of the Manager's employees with its shares from time to time, after specific for each such time, decision by the compensation committee and the Board of Directors in order to provide a means of compensation in the form of free shares to certain employees of the Manager of the Company's common stock. The plan was effective as of December 31, 2008. Pursuant to the terms of
F-46

Table of Contents

DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 20. Stock Based Compensation (Continued)
the plan, employees of the Manager may receive (from time to time) shares of the Company's common stock as additional compensation for their services offered during the preceding period. The stock will have no vesting period and the employee will own the stock immediately after grant. The total amount of stock to be granted to employees of the Manager will be at the Company's Board of Directors' discretion only and there will be no contractual obligation for any stock to be granted as part of the employees' compensation package in future periods.
        As of December 11, 2015, the Company granted 15,879 shares to certain employees of the Manager and recorded in "General and Administrative Expenses" an expense of $0.1 million representing the fair value of the stock granted as at the date of grant. As of December 10, 2014, the Company granted 115,185 shares to certain employees of the Manager and recorded in "General and Administrative Expenses" an expense of $0.6 million representing the fair value of the stock granted as at the date of grant. In settlement of the shares granted in 2014, 112,315 shares were issued and distributed to the employees of the Manager in 2015. As of December 12, 2013, the Company granted 16,066 shares to certain employees of the Manager and recorded in "General and Administrative Expenses" an expense of $0.1 million representing the fair value of the stock granted as at the date of grant, which were issued in 2014 and distributed to the employees of the Manager in settlement of the shares granted in 2013.
        The Company has also established the Directors Share Payment Plan under its 2006 equity compensation plan. The purpose of the plan is to provide a means of payment of all or a portion of compensation payable to directors of the Company in the form of Company's Common Stock. The plan was effective as of April 18, 2008. Each member of the Board of Directors of the Company may participate in the plan. Pursuant to the terms of the plan, Directors may elect to receive in Common Stock all or a portion of their compensation. Following December 31 of each year, the Company delivers to each Director the number of shares represented by the rights credited to their Share Payment Account during the preceding calendar year. During2015, 2014 and 2013, none of the directors elected to receive in Company shares his compensation.
 21. Stockholders' Equity
        As of December 31, 2015 and 2014, the shares issued and outstanding were 109,781,744 and 109,669,429, respectively. Under the Articles of Incorporation as amended on September 18, 2009, the Company's authorized capital stock consists of 750,000,000 shares of common stock with a par value of $0.01 and 100,000,000 shares of preferred stock with a par value of $0.01.
        During 2015, the Company issued 112,315 shares of common stock, all of which were newly issued shares, to the employees of the Manager (refer to Note 20, "Stock Based Compensation") in settlement of 2014 grants. During 2014, the Company issued 16,066 shares of common stock, all of which were newly issued shares, to the employees of the Manager of the Company (refer to Note 20, Stock Based Compensation).
        During 2015 and 2014, the Company did not declare any dividends. In addition, under the terms of the Bank Agreement (Refer to Note 12, "Long-term Debt") the Company is not permitted to pay cash dividends or repurchase shares of its capital stock unless (i) its consolidated net leverage is below 6:1 for four consecutive quarters and (ii) the ratio of the aggregate market value of its vessels to its outstanding indebtedness exceeds 125% for four consecutive quarters and provided that an event of
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Table of Contents

DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 21. Stockholders' Equity (Continued)
default has not occurred and the Company is not, and after giving effect to the payment of the dividend, in breach of any covenant.
        In 2011, the Company issued an aggregate of 15,000,000 warrants to its lenders under the Bank Agreement and the January 2011 Credit Facilities to purchase, solely on a cashless exercise basis, an aggregate of 15,000,000 shares of its common stock, which warrants have an exercise price of $7.00 per share. All of these warrants will expire on January 31, 2019.
 22. Earnings/(Loss) per Share
        The following table sets forth the computation of basic and diluted earnings/(losses) per share for the years ended December 31 (in thousands):

											
 	 	2015	 	2014	 	2013	 	
Numerator:	 	 	 	 	 	 	 	 	 	 	
Net income/(loss)	 	 $	117,016	 	 $	(3,920	)	 $	37,523	 	
Denominator (number of shares):	 	 	 	 	 	 	 	 	 	 	
Basic and diluted weighted average ordinary shares outstanding	 	 	109,785.5	 	 	109,676.1	 	 	109,654.2	 	
        The warrants issued and outstanding amounting to 15,000,000 were excluded from the diluted earnings/(loss) per share for the years ended December 31, 2015, 2014 and 2013, because they were antidilutive.
 23. Impairment Loss
        As of December 31, 2015, December 31, 2014 and December 31, 2013 the Company concluded that events and circumstances triggered the existence of potential impairment of its long-lived assets. These indicators included volatility in the spot market and decline in the vessels' market values, as well as the potential impact the current marketplace may have on its future operations. As a result, the Company performed step one of the impairment assessment of the Company's long-lived assets by comparing the undiscounted projected net operating cash flows for each vessel to its carrying value. As at December 31, 2015 and December 31, 2014, the Company's assessment concluded that step two of the impairment analysis was required for certain of its vessels, as the undiscounted projected net operating cash flows of certain vessels did not exceed the carrying value of the respective vessels. Fair value of each vessel was determined with the assistance from valuations obtained by third party independent shipbrokers. As of December 31, 2015 and December 31, 2014, the Company recorded an impairment loss of $39.0 million and $75.8 million, respectively for its older vessels that are held and used. Additionally, impairment loss of $2.1 million was recorded for the vessel held for sale as of December 31, 2015. No impairment loss of vessels was recorded in 2013.
        Israel Corporation Ltd., the parent company of ZIM Integrated Shipping Services Ltd. ("ZIM"), announced that ZIM reached an agreement in principle with its creditors, including the Company, for a restructuring of its obligations. This agreement included a significant reduction in the charter rates payable by ZIM for the remaining life of its time charters, expiring in 2020 or 2021, for six of the Company's vessels and the Company's receipt of unsecured, interest bearing ZIM notes maturing in nine years and ZIM shares in exchange for such reductions and cancellation of ZIM's other obligations
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DANAOS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 23. Impairment Loss (Continued)
to the Company. Based on these anticipated terms, the Company wrote down the value of its long-term receivables from ZIM as of December 31, 2013 and recognized a $19.0 million impairment charge with respect thereto, resulting in an outstanding long-term receivable of $25.8 million as of December 31, 2013 (also refer to Note 8, "Other non-current assets").
 24. Subsequent Events
        On January 8, 2016, the Company completed the sale of the vessel Federal, which was held for sale as of December 31, 2015 (also refer to Note 4, "Fixed assets, net"). The gross proceeds amounted to $7.2 million, of which $1.4 million was received in advance during the year ended December 31, 2015.
        Gemini, in which Danaos holds a 49% equity interest, acquired a 6,422 TEU vessel built in 2002, which was delivered on February 4, 2016. On March 3, 2016, the Company subscribed 49% of newly issued share capital of Gemini for $1.47 million.
F-49

Exhibit 4.1
 
EXECUTION COPY
 
DANAOS CORPORATION
 
- and -
 
DANAOS SHIPPING COMPANY LIMITED

 
AMENDED AND RESTATED MANAGEMENT AGREEMENT

 

 
INDEX

Section	 	 	Page	
 	 	 	 	
1	 	INTERPRETATION	2	
 	 	 	 	
2	 	APPOINTMENT	3	
 	 	 	 	
3	 	THE OWNER’S GENERAL OBLIGATIONS	3	
 	 	 	 	
4	 	THE MANAGER’S GENERAL OBLIGATIONS	4	
 	 	 	 	
5	 	CREWING — TECHNICAL —ADMINISTRATIVE SERVICES	7	
 	 	 	 	
6	 	COMMERCIAL — CHARTERING — INSURANCE SERVICES	11	
 	 	 	 	
7	 	BUDGETS, CORPORATE PLANNING AND EXPENSES	15	
 	 	 	 	
8	 	LIABILITY AND INDEMNITY	17	
 	 	 	 	
9	 	RIGHTS OF THE MANAGER, RESTRICTIONS ON THE MANAGER’S AUTHORITY, AND NON-COMPETE PROVISIONS	18	
 	 	 	 	
10	 	AVAILABILITY OF OFFICERS	19	
 	 	 	 	
11	 	TERMINATION OF THE AGREEMENT	20	
 	 	 	 	
12	 	SALE AND RIGHT OF FIRST REFUSAL	22	
 	 	 	 	
13	 	NOTICES	23	
 	 	 	 	
14	 	APPLICABLE LAW AND JURISDICTION	23	
 	 	 	 	
15	 	ARBITRATION	23	
 	 	 	 	
16	 	MISCELLANEOUS	24	
 
i 

 
THIS AMENDED AND RESTATED MANAGEMENT AGREEMENT is made on the 1 st  day of May, 2015,
 
BY AND BETWEEN:
 
(1)                                  DANAOS CORPORATION , a company organized and existing under the laws of the Republic of the Marshall Islands (the “ Owner ”); and
 
(2)                                  DANAOS SHIPPING COMPANY LIMITED , a company organized and existing under the laws of the Republic of Cyprus (the “ Manager ”).
 
WHEREAS:
 
(A)                                The Owner has a number of wholly owned subsidiaries identified on Schedule A hereto, as such Schedule A may be amended from time to time (the “ Shipowning Subsidiaries ”), each of which owns either a containership or a drybulk carrier (the “ Vessels ”) and certain other direct and indirect subsidiaries identified on Schedule B hereto, as such Schedule B may be amended from time to time (together with the Shipowning Subsidiaries, the “ Subsidiaries ”).
 
(B)                                The Manager has the benefit of expertise in the containerized cargo vessel industry and in technical and commercial management of containerships and drybulk carriers and administration of shipping companies generally.
 
(C)                                The Owner and the Manager entered into a Management Agreement, made December 16, 2005 and effective July 1, 2005 which was amended on September 18, 2006, as further amended by Addendum No.1 thereto dated February 12, 2009 and as further amended by Addendum No.2 thereto dated February 8, 2010, Addendum No.3 dated December 16, 2011, Addendum No.4 dated December 31, 2012 and Addendum No.5 dated December 16, 2013 and amended and restated as of December 31, 2014 (hereinafter collectively referred to as the “2006 Management Agreement” ), pursuant to which the Manager has represented the Group (as defined below) in its dealings with third parties and provided technical, commercial, administrative and certain other services to the Group as specified therein in connection with the management and administration of the business of the Group.
 
(D)                                The Owner and the Manager desire to amend and restate the terms and conditions of the 2006 Management Agreement and to adopt this Agreement to supersede and replace the 2006 Management Agreement as the agreement pursuant to which the Manager represents the Group in its dealings with third parties and provides 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.
 
NOW, THEREFORE, THE PARTIES HEREBY AGREE:

 
1                       INTERPRETATION
 
1.1                                In this Agreement, unless the context otherwise requires:
 
“ Board of Directors ” means the board of directors of the Owner 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; London, United Kingdom; Cyprus; and New York, New York - United States.
 
“ Containership ” means any ocean-going vessel that is intended to be used primarily to transport containers or is being used to primarily transport containers.
 
“ Drybulk Carrier ” means any ocean-going vessel that is intended to be used primarily to transport non-liquid cargoes of commodities shipped in an unpackaged state.
 
“ Executive Officers ” means the Chief Executive Officer and the President, the Chief Operating Officer, the Chief Financial Officer and the Deputy Chief Operating Officer of the Owner and/or such other officers that may be agreed by the parties thereto after the date of this Agreement from time to time.
 
“ Group ” means, at any time, the Owner 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.
 
“ ISM Code ” means the International Management Code for the Safe Operation of Ships and for Pollution Prevention as adopted by the International Maritime Organization (IMO) by resolution A.741(18) or any subsequent amendment thereto.
 
“ Newbuilding ” means a new ship under construction or just completed.
 
“STCW 95” means the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers, 1978, as amended in 1995 or any subsequent amendment thereto.
 
1.2                                The headings of this Agreement are for ease of reference and do not limit or otherwise affect the meaning hereof.
 
1.3                                All the terms of this Agreement, whether so expressed or not, shall be binding upon the parties hereto and their respective successors and assigns.
 
1.4                                In the event of any conflict between this Agreement and any Shipmanagement Agreement (as defined below), the provisions of this Agreement shall prevail.
 
1.5                                Unless otherwise specified, all references to money refer to the legal currency of the United States of America.
 
2 

 
1.6                                Unless the context otherwise requires, words in the singular include the plural and vice versa.
 
2                       APPOINTMENT
 
2.1                                The Manager is hereby appointed by the Owner as the technical, commercial and administrative manager of the Group and hereby accepts such appointment on the terms and conditions of this Agreement.
 
2.2                                With effect from the date hereof and continuing unless and until terminated as provided herein, the Owner hereby appoints the Manager and the Manager hereby agrees to act as the Manager of each Vessel.
 
2.3                                The Manager undertakes to use its best endeavors to provide the Crewing & Technical Services specified in Section 5 of this Agreement and the Commercial Services specified in Section 6 of this Agreement, on behalf of the Owner in accordance with sound ship management practice.
 
2.4                                The Manager may, with the consent of the Owner, appoint any person or entity (a “ Submanager ”) at any time throughout the duration of this Agreement to discharge any of the Manager’s duties.
 
2.5                                The Manager covenants with the Owner to ensure that each Submanager shall at all times properly exercise and perform the powers, rights and duties so conferred on it.  The Manager’s power to delegate performance of any provision of the Agreement hereunder is without prejudice to the Manager’s liability to the Owner to perform such Agreement with the intention that the Manager shall remain responsible to the Owner for the due and timely performance of all duties and responsibilities of the Manager hereunder.
 
3                       THE OWNER’S GENERAL OBLIGATIONS
 
3.1                                The Owner shall notify the Manager as soon as possible of any change in the Group as a result of the purchase of any Vessel or Newbuilding, the sale of any Vessel, the purchase or sale of any direct or indirect subsidiary, the creation or divestiture of any subsidiary, or any other structural change and shall promptly amend Schedule A and Schedule B hereto, as applicable, to be reflective of any such change.  Such amended Schedule A or Schedule B shall be effective on any such day as mutually agreed by the Owner and the Manager, which date shall be no later than five calendar days after delivery of such amended Schedule A or Schedule B to the Manager by the Owner.
 
3 

 
4                       THE MANAGER’S GENERAL OBLIGATIONS
 
4.1                                The Manager shall, on behalf of the Group, attend to the day-to-day management of the Vessels in accordance with sound technical and commercial shipping industry standards.
 
4.2                                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 by the Group and serve the Group faithfully and diligently in the performance of this Agreement, exercising all due care, loyalty, skill and diligence to carry out its duties under this Agreement according to sound technical and commercial shipping industry standards.
 
4.3                                For each Vessel now or hereinafter owned by any member of the Group, the Owner shall cause each Subsidiary to enter with the Manager into a contract substantially in the form attached hereto as Appendix I (each a “ Shipmanagement Agreement ” and collectively the “ Shipmanagement Agreements ”), with such alterations and additions as are appropriate (provided, that any alterations or additions which materially vary from such form shall require the approval of the Board of Directors of the Owner), and the Manager shall act and do all and/or any of the following acts or things described in this Agreement and each Shipmanagement Agreement in the name and/or on behalf of the Owner and/or its Subsidiaries in all parts of the world directly or through its agents.
 
4.4                                For each Vessel sold or scrapped by any Subsidiary, the Owner shall cause each such Subsidiary to terminate promptly thereafter its applicable Shipmanagement Agreement with the Manager and the Manager agrees to terminate promptly such Shipmanagement Agreement accordingly.  Should the Owner decide not to extend the term of this Agreement pursuant to Section 11 hereof, the Manager shall continue to handle all outstanding matters relating to the sale or scrapping of the Group’s Vessels for as long as the Owner requires and in such case the management fee will be reduced by two-thirds (2/3) for the period following the expiration of the stated term of this Agreement.
 
4.5                                The Manager acknowledges that the services it will provide pursuant to the Shipmanagement Agreements are not limited to the services described in such agreements and are instead as set forth in this Agreement.
 
4.6                                In the performance of this Agreement, the Manager shall protect the interests of the Group in all matters directly or indirectly relating to the Vessels.
 
4.7                                The Manager shall ensure that all material property of the Group is clearly identified as such, held separately from the property of the Manager and, where applicable, in safe custody.
 
4.8                                The Manager shall ensure that adequate manpower is employed by it to perform its obligations under this Agreement.
 
4.9                                During the term hereof (as provided in Section 11.1 of this Agreement), the Manager shall provide the Crewing & Technical Services and the Commercial Services to the Group, subject always to the objectives and policies of the Owner and each
 
4 

 
applicable member of the Group, in each case, as established from time to time by their authorized representative and notified to the Manager.
 
4.10                         Notwithstanding anything to the contrary contained in this Agreement or the Shipmanagement Agreements, the Manager agrees that any and all decisions of a material nature relating to the Owner, any Subsidiary or any Vessel shall be reserved to the Owner, such decisions including, but not being limited to:
 
(a).                               the purchase and/or sale of shares in a company 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; and
 
(e).                                the presentation, negotiation, settlement, prosecution or defense of any claim, demand or petition for an amount exceeding $250,000 or its equivalent.
 
4.11                         During the term hereof, the Manager shall do all in its power to 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 in all respects to conform to and comply with the lawful directions, regulations and recommendations made by such authorized representative, and in the absence of any specific directions, regulations and 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.
 
4.12                         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, which shall be restricted to the Group, 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, subject always to the discretion of any Executive Officer or other authorized representative of the Owner.
 
4.13                         The Manager, in the performance of its responsibilities under this Agreement, shall ensure that any purchases of products or services from any affiliates, any Submanager or any other related entity 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.
 
4.14                         During the term hereof, the Manager agrees that, other than as provided in this Section 4.14, it will provide the services in this Agreement to the Group on an exclusive basis and it will not provide any Crewing & Technical Services, Commercial Services or
 
5 

 
other services contemplated herein to any entity without receiving the prior written approval of the Owner, other than:
 
(a).                               the Owner and each Subsidiary;
 
(b).                               any entity or vessel directly or indirectly owned or controlled, in whole or in part, or operated by John Coustas, Danaos Investments Limited as the Trustee for the 883 Trust (the “ Coustas Trust ”), Protector Holdings Inc. or Seasonal Maritime Corporation (collectively, the “ Coustas Entities ”) (or any (i) current or future beneficiaries of the Coustas Trust, (ii) entities beneficially owned by such beneficiaries or the Coustas Entities or (iii) other trusts established for the benefit of such beneficiaries or the Coustas Entities); provided, that, any such direct or indirect interest in any (x) Drybulk Carrier or Containership of larger than 2,500 TEU or (y) entity owning a Drybulk Carrier or a Containership of larger than 2,500 TEU, shall have been acquired in accordance with Section 3 of the Restrictive Covenant Agreement by and between the Owner and each of the Coustas Entities and attached hereto as Appendix III (the “ Restrictive Covenant Agreement ”); and
 
(c).                                Palmosa Shipping Corporation and its subsidiaries.
 
For the avoidance of doubt, nothing in this Section 4.14 shall be construed to restrict the Manager from providing any Crewing & Technical Services, Commercial Services or other services contemplated herein to any entity or vessel directly or indirectly owned or controlled, in whole or in part, or operated by any Coustas Entity (or any (i) current or future beneficiaries of the Coustas Family Trust, (ii) entities beneficially owned by such beneficiaries or the Coustas Entities or (iii) other trusts established for the benefit of such beneficiaries or the Coustas Entities), other than Containerships of larger than 2,500 TEUs or Drybulk Carriers or any entity or business involved in shipping sectors other than Containerships of larger than 2,500 TEUs or Drybulk Carriers (which can be provided services in accordance with the terms of this Section 4.14).
 
4.15                         The Manager shall at all times maintain and keep true and correct accounts and shall make the same available for inspection and auditing by the Owner or any Subsidiary at such times as may be mutually agreed.
 
4.16                         The Manager agrees that the Owner shall have the right at any time to inspect any Vessel for any reason the Owner considers necessary.
 
4.17                         Where the Manager is providing technical management services in accordance with Section 5.2, the Manager shall procure that the requirements of the law of the flag of each Vessel are satisfied and the Manager shall in particular be deemed to be the “Company” as defined by the ISM Code, assuming the responsibility for the operation of the Vessel and taking over the duties and responsibilities imposed by the ISM Code when applicable.
 
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5                       CREWING & TECHNICAL SERVICES
 
(Crew and Technical Services, collectively referred to herein as the “ Crewing & Technical Services ”)
 
5.1                                CREW SERVICES
 
The Manager shall provide a suitably qualified crew and related services for each of the Vessels as required by each applicable member of the Group in accordance with the STCW 95 requirements including the following:
 
(a).                               selecting and engaging the Vessel’s crew, including payroll arrangements, pension administration;
 
(b).                               ensuring that the laws of the flag of each Vessel and all places where each Vessel trades are satisfied in respect of manning levels, rank, qualification and certification of the crew and employment regulations, including statutory withholding tax requirements, social insurance requirements, discipline and other requirements;
 
(c).                                ensuring that all members of the crew have passed a medical examination with a qualified doctor certifying that they are fit for the duties for which they are engaged and are in possession of valid medical certificates issued in accordance with appropriate flag state requirements and, in the absence of applicable flag state requirements, the medical certificate shall be dated not more than three months prior to the respective crew members leaving their country of domicile and shall be maintained for the duration of their service on board the Vessel;
 
(d).                               ensuring that the crew shall have a command of the English language of a sufficient standard to enable them to perform their duties safely;
 
(e).                                arranging the transportation of the crew, including repatriation, board and lodging as and when required at rates and types of accommodations as customary in the industry;
 
(f).                                 training of the crew and supervising their efficiency;
 
(g).                                keeping and maintaining full and complete records of any labor agreements which may be entered into with the crew and reporting to the Owner reasonably promptly after notice or knowledge thereof is received of any change or proposed change in labor agreements or other regulations relating to the crew and conducting union negotiations;
 
(h).                               supervising discipline, discharge, and other terms of employment including administering the Owner’s and the Manager’s drug and alcohol policy in respect of the crew and enforcing appropriate standing orders;
 
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(i).                                   handling all details and negotiating the settlement of any and all claims of the crew, including but not limited to those arising out of accidents, sickness or death, loss of personal effects, disputes under articles or contracts of enlistment, covers and fines;
 
(j).                                  ensuring that any concerns of any customer with respect to the master or any of the officers or other crew are appropriately investigated in a timely manner, communicating the results of such investigations to the Owner and if appropriate the customer, and if such concerns are well-founded, ensuring that any appropriate remedial actions are taken without delay;
 
(k).                               keeping and maintaining all administrative and financial records relating to the crew as required by any law and any labor or collective agreements of the Owner, and rendering to the Owner any and all reports; and
 
(l).                                   performing any other function in connection with the crew as may be requested by the Owner or necessary for the management of the business.
 
5.2                                TECHNICAL SERVICES
 
The Manager shall provide for all technical management services necessary for the operation of each Vessel, which include, but are not limited to, the following functions:
 
(a).                               providing competent personnel to supervise the maintenance and general efficiency of each Vessel;
 
(b).                               arranging and supervising dry-dockings, repairs, alterations and upkeep of the Vessels to the standards required by the Group to ensure that each Vessel will comply with all requirements and recommendations of the classification society and with the laws and regulations of the country of registry of each Vessel and of the places where each Vessel trades;
 
(c).                                arranging and purchasing the supply of necessary provisions, stores, spares, lubricating oil supplies and equipment for each Vessel;
 
(d).                               appointing and paying surveyors and technical consultants and other support for each Vessel as the Manager may consider from time to time to be necessary and arranging surveys associated with the commercial operation of each Vessel;
 
(e).                                developing, implementing and maintaining a Safety Management System (SMS) in accordance with the ISM Code and system security in accordance with ISPS Code for both the Manager and each of the Vessels under management;
 
(f).                                 providing, at the request of the Owner, all documentation and records related to the Safety Management System (SMS) and/or the Crew, which the Owner needs in order to demonstrate compliance with the ISM Code and STCW 95 or to defend a claim against a third party;
 
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(g).           arranging for the payment of all ordinary charges incurred in connection with the management of each Vessel, including, but not limited to, all canal tolls, port charges, any amounts due to any governmental authority with respect to the crew and all duties and taxes in respect of cargo or freight (whether levied against the Vessel, the Owner or the Group) and arranging for, and arranging payment for, any and all material licenses, permits, franchises, registrations and similar authorizations of any governmental authority which are necessary and used in the operation of the Vessels;
 
(h).           procuring and arranging for port entrance and clearance, pilots, Vessel agents, consular approvals and other services necessary or desirable for the management and safe operation of each Vessel;
 
(i).            performing all usual and customary duties concerned with the loading and discharging of cargoes at all ports including providing technical and shore-side support for the Vessels, handling of each Vessel while in ports or transiting canals and arranging for the prompt dispatch of each Vessel from loading and discharge ports in accordance with any instructions and for transit through canals;
 
(j).            reporting to the Owner of each Vessel’s movement, position at sea, arrival and departure dates, major casualties and damages received or caused by each Vessel;
 
(k).           informing the Group promptly of any major release or discharge of oil or other hazardous material not in compliance with any laws;
 
(l).            maintaining each Vessel in such condition as to be acceptable to major charterers’ vetting standards, if required;
 
(m).          providing the Owner with a copy of any Vessel inspection reports, valuations, surveys, and other similar reports prepared by ship brokers, valuators, surveyors, and classification societies; and
 
(n).           arranging for employment of counsel and the investigation, follow-up and negotiating of the settlement of all claims arising in connection with the operation of each Vessel.
 
5.3           FEES AND EXPENSES FOR CREWING & TECHNICAL SERVICES
 
In consideration of the Manager providing the above Crewing & Technical Services to the Group, the Owner shall pay the Manager the following fees:
 
(a).           a fixed Vessel management fee of US$850 per day per Vessel other than those described in 5.3(b) below, payable monthly in arrears (pro-rated for the number of days that the Owner (or any Subsidiary) owns or charters-in each Vessel during each month);
 
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(b).           a fixed Vessel management fee of US$425 per day per Vessel on a bareboat charter, payable monthly in arrears (pro-rated for the number of days that the Owner (or any Subsidiary) owns or charters-in each Vessel during each month);
 
(c).           a fixed management fee of US$850 per day payable monthly in arrears;
 
(d).           a variable management fee equal to 0.5% calculated on the collected operating revenues of the Vessels during the term of this Agreement, payable to the Manager monthly in arrears; and
 
(e).           a flat fee of US$725,000 for the services by the Manager set forth in the form of Supervision Agreement attached in Appendix II hereto with respect to each Newbuilding of the Owner or any Subsidiary payable upon in four equal installments on the key event days in accordance with the applicable shipbuilding contract, namely steel cutting, keel laying, launching and delivery to the Owner or Subsidiary, as applicable.
 
(the fees in clauses (a) through (e) of this Section 5.3 being collectively referred to herein as the “ Crewing & Technical Management Fee ”)
 
(f).            The Crewing & Technical Management Fee does not include any out of pocket expenses (e.g. travelling, accommodation or other expenses of similar nature) of the Manager’s employees in relation to drydockings or other visits to Vessels related to repair and maintenance. Such costs will be paid and expensed by the Owner over and above the Crewing & Technical Management Fee.
 
(g).           The above Crewing & Technical Management Fee was fixed throughout the Initial Term. For each Subsequent Term (as defined in Section 10 below), the Crewing & Technical Management Fee will be set at a mutually agreed upon rate between the Owner and the Manager no later than 30 days prior to the commencement of the relevant Subsequent Term.
 
(h).           In addition to providing the Crewing & Technical Services in exchange for the Crewing & Technical Management Fee, the Manager shall, at no cost to any member of the Group, provide its office accommodation, office staff (including secretarial, accounting and administrative assistance), facilities and stationery, and shall pay for all printing, postage, domestic telephone and all other usual office expenses incurred by it as the Manager in or about the provision of the Crewing & Technical Services.
 
(i).            The Manager hereby acknowledges that it will provide the Crewing & Technical Services to the Group in Section 5 above at its own cost in exchange for the Crewing & Technical Management Fee and other fees it receives under this Section 5, and shall pay for all of its own expenses and costs incurred by it as the Manager in providing such Crewing & Technical Services (other than as set forth in Section 5.3(f) above).
 
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6               COMMERCIAL SERVICES
 
(Commercial, Chartering, Administrative & Insurance Services, collectively referred to herein as the “ Commercial Services”)
 
6.1           COMMERCIAL SERVICES
 
The Manager shall provide certain commercial services to the Group, which includes, but is not limited to, the following functions:
 
(a).                               performing class records review and physical inspections and, at the request of the Owner, making recommendations to the Owner with respect to any additional vessel being considered for purchase by the Owner;
 
(b).           at the request and under the direction of the Owner, certain administrative services in connection with the purchase or sale of a Vessel by the Owner or any member of the Group;
 
(c).           at the request of the Owner, certain services in connection with the Owner or any Subsidiary taking physical delivery of a Vessel; and
 
(d).           at the request of the Owner, performing any other functions necessary to assist the Owner with any Vessel sale or purchase or Newbuilding.
 
6.2           CHARTERING SERVICES
 
The Manager shall provide certain chartering services to the Group, including the following:
 
(a).           at the direction of the Owner, seeking and negotiating employment for each Vessel under voyage or period charters or under any other form of contract;
 
(b).           arranging of the proper payment to the Owner or its nominee of all hire and/or freight revenues or other moneys of whatsoever nature to which the Owner may be entitled arising out of the employment of or otherwise in connection with the Vessel;
 
(c).           providing voyage estimates and accounts and calculating of hire, freights, demurrage and/or dispatch moneys due from or due to the charterers of the Vessel;
 
(d).           furnishing the crew of each Vessel with appropriate voyage instructions and monitoring voyage performance while using best efforts to achieve the most economical, efficient and quick dispatch of each Vessel between ports and at ports and terminals;
 
(e).           appointing agents;
 
(f).            appointing stevedores;
 
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(g).           arranging surveys associated with the commercial operation of the Vessel;
 
(h).           using due diligence to ensure that each Vessel will be employed between safe ports, safe anchorages and safe berths, so far as this can be established by exercising due diligence;
 
(i).            arranging the scheduling of each Vessel according to the terms of the Vessel’s employment;
 
(j).            carrying out all necessary communications with shippers, charterers and others involved with the receiving and handling of each Vessel at the loading and discharging ports, including sending any notices required under the terms of the Vessels’ employment;
 
(k).           preparing, issuing or causing to be issued to shippers the customary freight contracts, cargo receipts, bills of lading, shippers’ customary bills or other documents required under the terms of the Vessels’ employment;
 
(l).            invoicing on behalf of the Owner all freights and other sums due to the Owner and accounts receivables arising from the operation of the Vessels, making any and all claims for moneys due to the Owner and issuing releases upon receipt of payment or settlement of such claims; and
 
(m).          preparing off-hire statements and/or hire statements including obtaining port documents and expense supports necessary for such calculation.
 
6.3           ADMINISTRATIVE SERVICES
 
The Manager shall provide certain general administrative services to the Group, including 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 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 those required for governmental and regulatory or self-regulatory agency filings and reports to shareholders, 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 or the rules of any securities exchange or inter-dealer quotation system on which the securities of the Owner or any member of the Group may be listed or quoted;
 
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(e).           preparing and providing all audited financial statements and 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).            preparing reports concerning the performance of the services hereunder and the performance of third parties with whom any member of the Group has contractual relationships and furnishing advice and recommendations with respect to all aspects of the business affairs of such member of the Group;
 
(g).           providing all legal services to ensure the Group is in compliance with all laws, including all relevant securities laws, and ensuring that the Group owns or possesses all licenses, patents, copyrights and trademarks which are necessary and used in the operation of its business;
 
(h).           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 $250,000 or its equivalent, including the pursuit by any member of the Group of any rights of indemnification or reimbursement;
 
(i).            providing assistance and advice to the Group with respect to financing, including the monitoring and administration of the compliance with any applicable financing terms and conditions in effect with investors, banks or other financial institutions;
 
(j).            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 any company in 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 (and any such committees) to base their opinion;
 
(k).           preparing or causing to be prepared reports to be considered by the Board of Directors (or any applicable committee thereof) in accordance with the Group’s internal policies and procedures on any acquisition, investment or sale of any part of the business;
 
(l).            administering payroll services, benefits and directors fees, as applicable, for any employee, officer or director of the Group;
 
(m).          handling all administrative and clerical matters in respect of (i) the calling and arrangement of all annual and/or special meetings of shareholders, (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 Owner in sufficient time prior to the dates upon which they must be mailed, filed or otherwise relied upon so that the Owner has full opportunity to review,
 
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approve, execute and return them to the Manager for filing or mailing or other disposition as the Owner may require or direct;
 
(n).           providing, at the request and under the direction of the Owner, such communications to the transfer agent for the Owner’s securities as may be necessary or desirable;
 
(o).           providing any such other administrative services as the Owner, the authorized Executive Officers or any other representative the Owner may request and the Manager may agree to provide from time to time.
 
6.4           INSURANCE
 
The Manager shall arrange such insurances as the Owner shall have instructed and agreed upon, including the following:
 
(a).           providing and purchasing hull and machinery insurance (including crew negligence), excess liabilities insurance, protection and indemnity insurance including pollution risk insurance (entered for each Vessel’s full gross tonnage), crew insurance and war insurance;
 
(b).           providing and purchasing all other insurances for each Vessel in accordance with the best practices of prudent owners of vessels of a similar type to each Vessel in amounts and on terms that are in accordance with industry practice;
 
(c).           providing the Owner with a copy of any Vessel insurance claims and any reports prepared by insurers; and
 
(d).           ensuring all premiums and calls on the Owner’s insurance are paid in a timely fashion.
 
6.5           FEES AND EXPENSES FOR COMMERCIAL SERVICES
 
In consideration of the Manager providing the above Commercial Services to the Group, the Owner shall pay the Manager the following fees:
 
(a).           a variable management fee equal to 0.75% calculated on the collected operating revenues of the Vessels during the term of this Agreement, payable to the Manager monthly in arrears;
 
(b).           a fee equal to 0.5% calculated on the price set forth in the memorandum of agreement of any Vessel bought or sold for or on behalf of the Owner or any Subsidiary, payable upon final delivery to the Owner or Subsidiary as applicable
 
(c).           The fees in clauses (a) and (b) of this Section 6.5 being collectively referred to herein as the “ Commercial Management Fee ”
 
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(d).           The Commercial Management Fee does not include any out of pocket expenses (e.g. travelling, accommodation or other expenses of similar nature) of the Manager’s employees in relation to the provision of the Commercial Services. Such costs will be paid and expensed by the Owner over and above the Commercial Management Fee.
 
(e).           The above Commercial Management Fee was fixed throughout the Initial Term. For each Subsequent Term (as defined in Section 11 below), the Commercial Management Fee will be set at a mutually agreed upon rate between the Owner and the Manager no later than 30 days prior to the commencement of the relevant Subsequent Term.
 
(f).            In addition to providing the Commercial Services in exchange for the Commercial Management Fee, the Manager shall, at no cost to any member of the Group, provide its office accommodation, office staff (including secretarial, accounting and administrative assistance), facilities and stationery, and shall pay for all printing, postage, domestic telephone and all other usual office expenses incurred by it as the Manager in or about the provision of the Commercial Services.
 
(g).           The Manager hereby acknowledges that it will provide the Commercial Services to the Group in this Section 6 at its own cost in exchange for the Commercial Management Fee it receives pursuant to this Section 6, and shall pay for all of its own expenses and costs incurred by it as the Manager in providing such Commercial Services other than as set forth in Section 6.5(e) above.
 
7        BUDGETS, CORPORATE PLANNING AND EXPENSES
 
7.1           On or before October 31 of each year the Manager will prepare and submit to the Executive Officers a detailed draft budget for the next fiscal year in a format acceptable to the Executive Officers which will include (i) a statement of estimated revenue and expenses in providing the Crewing & Technical Services and the Commercial Services to the Group and (ii) 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 ”).
 
7.2           For a period of thirty (30) days after receipt of the Draft Budget, the Executive Officers, from time to time, may request further details and submit written comments on the Draft Budget.  If the Executive Officers do not agree with any term thereof, they will, within the same thirty (30) 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 and the Manager will endeavor to resolve any such differences between them with respect to the Questioned Items.
 
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7.3           By December 10 of the relevant year, the Manager will prepare and deliver to the Owner a revised budget that has been approved by the Executive Officers (the “ Approved Budget ”).  All expenses incurred by the Manager under the terms of this Agreement on behalf of any member of the Group under the Approved Budget may be debited against the account of the respective member of the Group, but shall in any event remain payable by the Owner to the Manager on demand.
 
7.4           Any increase or change to the Approved Budget in excess of 7.5% shall require the written approval of two Executive Officers.  Any expenses incurred by the Manager in excess of the Approved Budget will not be reimbursed or payable to the Manager.
 
7.5           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.
 
7.6           In the event the Executive Officers and the Manager dispute any specific expense or invoice within the Approved Budget and are unable to resolve their dispute within ten (10) Business Days, then the dispute shall be referred for resolution by a firm of independent accountants of nationally recognized standing reasonably satisfactory to each of the Manager and the Executive Officers (the “ Accounting Referee ”) which shall determine the disputed amounts within thirty (30) days of the referral of such dispute to such Accounting Referee.  The determination of the Accounting Referee shall not require the Owner to pay more than the amount in dispute.  The fees and expenses of the Accounting Referee shall be borne equally by the Owner and the Manager.
 
7.7           Insofar as any moneys are collected by the Manager under the terms of this Agreement (other than moneys payable by the Owner 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.
 
7.8           On or before the first day of each month during the term of this Agreement, the Owner shall advance to the Manager all amounts budgeted for the operation of each of the Vessels for such month.  At the end of each calendar quarter, the Manager shall preliminarily reconcile the amounts advanced to it by the Owner with the amounts actually expended by it for the operation of each of the Vessels, and the Manager shall remit to the Owner, or credit to the Owner amounts to be advanced to it hereunder for future months, any unused portion of the amounts previously advanced by the Owner, or the Owner shall pay to the Manager any amounts properly expended by the Manager for the Vessels in excess of the amounts previously advanced by the Owner.  The Owner and Manager will reconcile any amounts due to the Owner by the Manager or amounts due to the Manager by the Owner for each fiscal year of the Owner as promptly as practicable following the close of each such fiscal year.
 
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8        LIABILITY AND INDEMNITY
 
8.1           Subject to Section 11.3(e), neither any member of the Group nor the Manager shall be under any liability for any failure to perform any of their obligations hereunder by reason of Force Majeure.  “Force Majeure” shall mean any cause whatsoever of any nature or kind beyond the reasonable control of any 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.
 
8.2           Subject to Section 8.1, the Manager shall be under no liability whatsoever to any member of the Group for any loss, damage, delay or expense of whatsoever nature, whether direct or indirect, and howsoever arising in the course of the performance of this Agreement, unless and to the extent that the same is proved to have resulted from (i) the gross negligence or wilful default of the Manager, its employees, agents or any Submanager or (ii) any breach of this Agreement by the Manager or any Submanager.
 
8.3           Except to the extent that the Manager would be liable under Section 8.2, the Owner hereby undertakes to keep the Manager and its employees, agents and the Submanager indemnified and to hold them harmless against all actions, proceedings, claims, demands or liabilities whatsoever and 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, and against and in respect of all costs, losses, damages and expenses (including legal costs and expenses on a full indemnity basis) which the Manager, its employees, agents or the Submanager may suffer or incur (either directly or indirectly) in the course of the performance of this Agreement.
 
8.4           The Manager will indemnify and save harmless the Owner and each other Subsidiary in the Group, and their respective current and former directors, officers, employees, subcontractors and current and future affiliates, from and against any and all costs, losses, damages and expenses (including legal costs and expenses on a full indemnity basis) which the Owner, any other company in the Group or any of their employees or agents may suffer as a result of (i) any losses incurred or suffered related to any liabilities or obligations that the Manager or any Submanager has agreed to pay or for which the Manager is otherwise responsible under this Agreement, (ii) the gross negligence or any willful default by the Manager, its employees, agents or any Submanager or (iii) any breach of this Agreement by the Manager or any Submanager.
 
8.5           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 for any loss, damage or delay 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 Section 8, 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
 
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as aforesaid and for the purpose of all the foregoing provisions of this Section 8 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 8.5 shall be construed so as to limit any liability the Manager may have to the Group under Section 8.2 hereof.
 
9        RIGHTS OF THE MANAGER, RESTRICTIONS ON THE MANAGER’S AUTHORITY, AND NON-COMPETE PROVISIONS
 
9.1           Except as may be expressly provided in this Agreement, the Manager shall be an independent contractor and not the agent of the Owner 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.
 
9.2           The Owner 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.
 
9.3           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 wilful misconduct by the Manager or its servants, and shall not be responsible for any misconduct, mistake, oversight, error or 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
 
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(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.
 
9.4           During the term of this Agreement and for a period of one year from the date of actual termination of this Agreement, the Manager and any affiliate of the Manager (other than a Coustas Entity (or any (i) current or future beneficiaries of the Coustas Trust, (ii) entities beneficially owned by such beneficiaries or the Coustas Entities or (iii) other trusts established for the benefit of such beneficiaries or the Coustas Entities) in accordance with Section 3 of the Restrictive Covenant Agreement) shall be prohibited from, directly or indirectly, engaging in (i) the ownership or operation of Containerships larger than 2,500 TEUs, (ii) the ownership or operation of any Drybulk Carriers and (iii) the acquisition of or investment in any business involved in the ownership or operation of Containerships larger than 2,500 TEUs or Drybulk Carriers.
 
10      AVAILABILITY OF OFFICERS
 
10.1         The Executive Officers will be directly employed by the Owner outside of this Agreement.
 
10.2         The Manager shall make available to the Owner all such other officers, managers or employees that the Owner and the Manager agree shall be made available.
 
10.3         The Executive Officers are entitled to direct the Manager to remove and replace any individual serving as an officer or any senior manager serving as head of a business unit from such position.  Furthermore, the Manager agrees that it will not remove any individuals serving as officers or senior managers from their respective positions without the prior written consent of the Executive Officers.  If any officer or senior manager who is made available to the Owner by the Manager resigns, is terminated or otherwise vacates his 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.
 
10.4         The Owner may employ directly any other officers, senior managers or employees as it may deem necessary that will not be subject to this Agreement.
 
10.5         The Manager will report to the Owner and the Board of Directors through the Executive Officers.
 
19 

 
11      TERMINATION OF THE AGREEMENT
 
11.1         This Agreement shall be effective as of the date hereof and, subject to Sections 11.2, 11.3, 11.4 and 11.5, shall continue until December 31, 2008 (the “ Initial Term ”).  Thereafter the term of this Agreement shall be extended on a year-to-year basis for twelve additional years (each a “ Subsequent Term ”) unless the Owner, at least twelve months prior to the end of the then current term, gives written notice to the Manager that it wishes to terminate this Agreement at the end of the then current term.  In no event will the term of this Agreement extend beyond December 31, 2020.
 
11.2         The Owner shall be entitled to terminate this Agreement by notice in writing to the Manager if:
 
(a).           the Manager neglects or fails to perform its principal duties and obligations under this Agreement in any material respect, and such neglect or failure is not remedied within twenty (20) Business Days after written notice of the same is given to the Manager by the Owner; or
 
(b).           any money payable by the Manager under or pursuant to this Agreement is not promptly paid or accounted for in full within ten (10) Business Days by the Manager in accordance with the provisions of this Agreement.
 
11.3         The Owner shall be entitled to terminate this Agreement immediately if:
 
(a).           the Owner or the Manager ceases to conduct business, or all or substantially all of the properties or assets of either such party is sold, seized or appropriated;
 
(b).           the Owner or the Manager 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, or if a petition is filed against the Owner or the Manager seeking to have it declared an insolvent or a bankrupt and such petition is not dismissed or stayed within forty (40) Business Days of its filing, or if the Owner or Manager shall admit in writing its insolvency or its inability to pay its debts as they mature, or if an order is made for the appointment of a liquidator, manager, receiver or trustee of the Owner or Manager of all or a substantial part of its assets, or if an encumbrancer takes possession of or a receiver or trustee is appointed over the whole or any part of the Manager’s or Owner’s undertaking, property or assets or if an order is made or a resolution is passed for the Manager’s or Owner’s winding up;
 
(c).           a distress, execution, sequestration or other process is levied or enforced upon or sued out against the Manager’s property which is not discharged within twenty (20) Business Days;
 
(d).           the Manager 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 Owner; or
 
20 

 
(e).           either the Manager or the Owner is prevented from performing its obligations hereunder by reasons of Force Majeure for a period of two (2) consecutive months or more.
 
11.4         In addition to the provisions in Section 11.2 and 11.3, the Owner shall also be entitled to terminate any applicable Shipmanagement Agreement if:
 
(a).           the Owner or any Subsidiary ceases to be the owner of a Vessel by reason of a sale thereof or the Owner or any Subsidiary ceases to be registered as the Owner of a Vessel;
 
(b).           a Vessel becomes an actual or constructive or compromised or arranged total loss or an agreement has been reached with the underwriters in respect of the Vessel’s constructive, compromised or arranged total loss or if such agreement with the underwriters is not reached or it is adjudged by a competent tribunal that a constructive loss of the Vessel has occurred;
 
(c).           a Vessel is requisitioned for title or any other compulsory acquisition of a Vessel occurs, otherwise than by requisition by hire; or
 
(d).           a Vessel is captured, seized, detained or confiscated by any government or persons acting or purporting to act on behalf of any government and is not released from such capture, seizure, detention or confiscation within twenty (20) Business Days.
 
11.5         The Manager shall be entitled to terminate this Agreement by notice in writing to the Owner:
 
(a).           if any moneys payable by the Owner under this Agreement shall not have been duly paid within sixty (60) Business Days of payment having been demanded by the Manager in writing; or
 
(b).           if the Owner defaults in the performance of any other of its material obligations under this Agreement and fails to remedy such default within sixty (60) Business Days after being given notice in writing by the Manager to remedy the same.
 
11.6         Upon the effective date of termination pursuant to this Section 11, the Manager shall promptly terminate its service hereunder as may be required in order to minimize any interruption to the business of the members of the Group.
 
11.7         Upon termination, the Manager shall, as promptly as possible, submit a final accounting of funds received and disbursed under this Agreement and of any remaining Crewing & Technical Management Fee and the Commercial Management Fee due from the Owner, calculated pro rata to the date of termination, and any undisbursed 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, if any.
 
21 

 
11.8         Upon termination of this Agreement, the Manager shall release to the Owner the originals where possible, or otherwise certified copies, of all such accounts and all documents specifically relating to each Vessel or the provision of Crewing & Technical Services and the Commercial Services for each Vessel.
 
11.9         The provisions of Section 8 shall survive any termination of this Agreement.
 
12      SALE AND RIGHT OF FIRST REFUSAL
 
12.1         Unless expressly permitted by the Board of Directors of the Owner pursuant to Sections 12.2 and 12.3 below, during the term of this Agreement, John Coustas and/or any trust established for the Coustas family, under which John Coustas and/or members of his family are beneficiaries will collectively (i) own at least 80% of the outstanding capital stock of the Manager and (ii) hold at least 80% of the voting power of the outstanding capital stock of the Manager, considered for this purpose as a single class; if this provision is breached, the Owner shall have the right to purchase the capital stock of the Manager owned by John Coustas or any trust established for the Coustas family, under which John Coustas and/or members of his family are beneficiaries, at its fair market value.
 
12.2         Throughout the duration of this Agreement and for one (1) year period following the expiry or termination of this Agreement, the Manager is prohibited from transferring, assigning, selling or disposing of a significant portion or all of its assets or property that is necessary for the performance of its services under this Agreement and under any Shipmanagement Agreement to any other party without the prior written consent of the Board of Directors.
 
12.3         In the event that the Board of Directors permits the Manager to transfer, assign, sell or dispose of any assets or property pursuant to Section 12.2 above, the Manager hereby grants to the Owner a right of first refusal on any such proposed transfer, assignment, sale or disposition.  The right of first refusal contained in this Section 12.3 is in effect during the term of this Agreement and shall extend for a one (1) year period following the expiry or termination of this Agreement.
 
12.4         The Owner and the Manager shall have a period of 30 days to reach an agreement for the proposed sale, transfer, assignment or disposition of all or part of the Manager’s assets pursuant to Section 12.3 above.  If no such agreement with respect to a sale is concluded within 30 days, then the Manager may transfer or sell such assets to any other third party provided that the sale is made on terms no less favorable than those last proposed by the Manager to the Owner.
 
12.5         The Owner and the Manager acknowledge that all potential transfers pursuant to this Section 12 are subject to obtaining any and all written consents of governmental authorities and other non-affiliated third parties.
 
22 

 
13      NOTICES
 
13.1         All notices, consents and other communications hereunder, or necessary to exercise any rights granted hereunder, shall be in writing, sent either by prepaid registered mail or telefax, and will be validly given if delivered on a Business Day to an individual at the following address:
 
Danaos Corporation
14 Akti Kondyli
185 45 Piraeus
Greece
Attention: Chief Executive Officer
 
Danaos Shipping Company Limited
14 Akti Kondyli
185 45 Piraeus
Greece
Attention: General Manager
 
14      APPLICABLE LAW AND JURISDICTION
 
14.1         This Agreement shall be governed by, and construed in accordance with, the laws of England. The parties hereto submit to the exclusive jurisdiction of the courts of England in connection with any claim arising out of or in connection with this Agreement.
 
15      ARBITRATION
 
15.1         All disputes arising out of this Agreement shall be arbitrated in London in the following manner.  One arbitrator is to be appointed by each of the parties hereto and a third by the two so chosen.  Their decision or that of any two of them shall be final and, for the purpose of enforcing any award, this Agreement may be made a rule of the court.  The arbitrators shall be commercial persons, conversant with shipping matters.  Such arbitration is to be conducted in accordance with the rules of the London Maritime Arbitrators Association terms current at the time when the arbitration proceedings are commenced and in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof.
 
15.2         In the event that the Owner or the Manager shall state a dispute and designate an arbitrator, in writing, the other party shall have twenty (20) Business Days to designate its own arbitrator.  Upon failure to do so, the arbitrator appointed by the other party can render an award hereunder.
 
15.3         Until such time as the arbitrators finally close the hearings, either party shall have the right by written notice served on the arbitrators and on the other party to specify further disputes or differences under this Agreement for hearing and determination.
 
23 

 
15.4         The arbitrators may grant any relief, and render an award, which they or a majority of them deem just and equitable and within the scope of the Agreement of the parties, including but not limited to the posting of security.  Awards pursuant to this Section 20 may include costs, including a reasonable allowance for attorneys’ fees, and judgments may be entered upon any award made herein in any court having jurisdiction.
 
16      MISCELLANEOUS
 
16.1         This Agreement 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.
 
16.2         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, and shall take reasonable steps not to cause income of any member of the Group to be subject to tax in any taxing jurisdiction, including the United States, the United Kingdom and Greece.
 
16.3         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.
 
24 

 
IN WITNESS whereof the undersigned have executed this Agreement as of the date first above written.

SIGNED by Dr. John Coustas, President & CEO	 	)	 	/s/ Dr. John Coustas	
for and on behalf of	 	)	 	 	
DANAOS CORPORATION	 	)	 	 	
in the presence of:	 	)	 	 	

SIGNED by Mr. Efstathios Sfyris	 	)	 	/s/ Efstathios Sfyris	
for and on behalf of	 	)	 	 	
DANAOS SHIPPING COMPANY LIMITED	 	)	 	 	
in the presence of:	 	)	 	 	
 
25 

SCHEDULE A
 
SHIPOWNING SUBSIDIARIES
 
as of 1 May 2015

Shipowning Subsidiary	 	Vessel Name	 	Jurisdiction	
 	 	 	 	 	
Actaea Company Limited	 	Performance	 	Malta	
 	 	 	 	 	
Asteria Shipping Company Limited	 	Priority	 	Malta	
 	 	 	 	 	
Auckland Marine Inc.	 	SNL Colombo	 	Liberia	
 	 	 	 	 	
Balticsea Marine Inc.	 	OOCL ISTANBUL	 	Liberia	
 	 	 	 	 	
Bayview Shipping Inc.	 	ZIM Rio Grande	 	Liberia	
 	 	 	 	 	
Blacksea Marine Inc.	 	ZIM Luanda	 	Liberia	
 	 	 	 	 	
Boulevard Shiptrade S.A.	 	DIMITRIS C	 	Marshall Islands	
 	 	 	 	 	
Boxcarrier (No.1) Corp.	 	CMA CGM Moliere	 	Liberia	
 	 	 	 	 	
Boxcarrier (No.2) Corp.	 	CMA CGM Musset	 	Liberia	
 	 	 	 	 	
Boxcarrier (No.3) Corp.	 	CMA CGM Nerval	 	Liberia	
 	 	 	 	 	
Boxcarrier (No.4) Corp.	 	CMA CGM Rabelais	 	Liberia	
 	 	 	 	 	
Boxcarrier (No.5) Corp.	 	CMA CGM Racine	 	Liberia	
 	 	 	 	 	
Cellcontainer (No.1) Corp.	 	HANJIN BUENOS AIRES	 	Liberia	
 	 	 	 	 	
Cellcontainer (No.2) Corp.	 	HANJIN SANTOS	 	Liberia	
 	 	 	 	 	
Cellcontainer (No.3) Corp.	 	HANJIN VERSAILLES	 	Liberia	
 	 	 	 	 	
Cellcontainer (No.4) Corp.	 	HANJIN ALGECIRAS	 	Liberia	
 	 	 	 	 	
Cellcontainer (No.5) Corp.	 	HANJIN CONSTANTZA	 	Liberia	
 	 	 	 	 	
Cellcontainer (No.6) Corp.	 	HANJIN GERMANY	 	Liberia	
 	 	 	 	 	
Cellcontainer (No.7) Corp.	 	HANJIN ITALY	 	Liberia	
 	 	 	 	 	
Cellcontainer (No.8) Corp.	 	HANJIN GREECE	 	Liberia	

 

Shipowning Subsidiary	 	Vessel Name	 	Jurisdiction	
 	 	 	 	 	
Channelview Marine Inc.	 	ZIM Sao Paolo	 	Liberia	
 	 	 	 	 	
Containers Lines Inc.	 	Derby D	 	Liberia	
 	 	 	 	 	
Containers Services Inc.	 	Deva	 	Liberia	
 	 	 	 	 	
Continent Maritime Inc.	 	ZIM Monaco	 	Liberia	
 	 	 	 	 	
Expresscarrier (No.1) Corp.	 	YM Mandate	 	Liberia	
 	 	 	 	 	
Expresscarrier (No.2) Corp.	 	YM Maturity	 	Liberia	
 	 	 	 	 	
Karlita Shipping Company Limited	 	CSCL Pusan	 	Cyprus	
 	 	 	 	 	
Federal Marine Inc.	 	Federal	 	Liberia	
 	 	 	 	 	
Medsea Marine Inc.	 	OOCL NOVOROSSIYSK	 	Liberia	
 	 	 	 	 	
Megacarrier (No.1) Corp.	 	HYUNDAI TOGETHER	 	Liberia	
 	 	 	 	 	
Megacarrier (No.2) Corp.	 	HYUNDAI TENACITY	 	Liberia	
 	 	 	 	 	
Megacarrier (No.3) Corp.	 	HYUNDAI SMART	 	Liberia	
 	 	 	 	 	
Megacarrier (No.4) Corp.	 	HYUNDAI SPEED	 	Liberia	
 	 	 	 	 	
Megacarrier (No.5) Corp.	 	HYUNDAI AMBITION	 	Liberia	
 	 	 	 	 	
Oceanew Shipping Limited	 	CSCL Europe	 	Cyprus	
 	 	 	 	 	
Oceanprize Navigation Limited	 	CSCL America	 	Cyprus	
 	 	 	 	 	
Ramona Marine Company Limited	 	CSCL Le Havre	 	Cyprus	
 	 	 	 	 	
Sarond Shipping Inc.	 	NILEDUTCH PALANCA	 	Marshall Islands	
 	 	 	 	 	
Seacarriers Lines Inc.	 	YM Vancouver	 	Liberia	
 	 	 	 	 	
Seacarriers Services Inc.	 	YM Seattle	 	Liberia	
 	 	 	 	 	
Speedcarrier (No.1) Corp.	 	HYUNDAI VLADIVOSTOK	 	Liberia	
 	 	 	 	 	
Speedcarrier (No.2) Corp.	 	HYUNDAI ADVANCE	 	Liberia	
 	 	 	 	 	
Speedcarrier (No.3) Corp.	 	HYUNDAI STRIDE	 	Liberia	
 	 	 	 	 	
Speedcarrier (No.4) Corp.	 	HYUNDAI SPRINTER	 	Liberia	

 

Shipowning Subsidiary	 	Vessel Name	 	Jurisdiction	
 	 	 	 	 	
Speedcarrier (No.5) Corp.	 	HYUNDAI FUTURE	 	Liberia	
 	 	 	 	 	
Speedcarrier (No.6) Corp.	 	HYUNDAI PROGRESS	 	Liberia	
 	 	 	 	 	
Speedcarrier (No.7) Corp.	 	HYUNDAI HIGHWAY	 	Liberia	
 	 	 	 	 	
Speedcarrier (No.8) Corp.	 	HYUNDAI BRIDGE	 	Liberia	
 	 	 	 	 	
Teucarrier (No.1) Corp.	 	CMA CGM ATTILA	 	Liberia	
 	 	 	 	 	
Teucarrier (No.2) Corp.	 	CMA CGM TANCREDI	 	Liberia	
 	 	 	 	 	
Teucarrier (No.3) Corp.	 	CMA CGM BIANCA	 	Liberia	
 	 	 	 	 	
Teucarrier (No.4) Corp.	 	CMA CGM SAMSON	 	Liberia	
 	 	 	 	 	
Teucarrier (No.5) Corp.	 	CMA CGM MELISANDE	 	Liberia	
 	 	 	 	 	
Trindade Maritime Company	 	AMALIA C	 	Marshall Islands	
 	 	 	 	 	
Vilos Navigation Company Ltd	 	MSC ZEBRA	 	Malta	
 	 	 	 	 	
Wellington Marine Inc.	 	YM Singapore	 	Liberia	

 
SCHEDULE B
 
NON-SHIPOWNING SUBSIDIARIES (1)
 
as of 1 May 2015

Non-Shipowning Subsidiary	 	Shipowning Subsidiaries Owned	 	Jurisdiction	
 	 	 	 	 	
Baker International S.A.	 	Boxcarrier (No.5) Corp.

Channelview Marine Inc.

Cellcontainer (No.4) Corp.

Seacarriers Services Inc.

Speedcarrier (No.4) Corp.

Speedcarrier (No.6) Corp.

Teucarrier (No.5) Corp.	 	Liberia	
 	 	 	 	 	
Bayard Maritime Ltd.	 	Cellcontainer (No.5) Corp.

Cellcontainer (No.7) Corp.

Megacarrier (No.5) Corp.

Oceanprize Navigation Limited

Speedcarrier (No.5) Corp.

Teucarrier (No.4) Corp.	 	Liberia	
 	 	 	 	 	
Bounty Investment Inc.	 	Boxcarrier (No.2) Corp.

Medsea Marine Inc.

Megacarrier (No.3) Corp.	 	Liberia	

(1)           To be updated by Danaos.

 

Non-Shipowning Subsidiary	 	Shipowning Subsidiaries Owned	 	Jurisdiction	
 	 	 	 	 	
 	 	Speedcarrier (No.8) Corp.

Teucarrier (No.2) Corp.	 	 	
 	 	 	 	 	
Erato Navigation Inc.	 	Actaea Company Limited

Federal Marine Inc.

Oceanew Shipping Limited

Trindade Maritime Company

Vilos Navigation Company Ltd	 	Liberia	
 	 	 	 	 	
Lito Navigation Inc.	 	Boxcarrier (No.4) Corp.

Cellcontainer (No.2) Corp.

Cellcontainer (No.8) Corp.

Expresscarrier (No.2) Corp.

Speedcarrier (No.2) Corp.

Teucarrier (No.3) Corp.	 	Liberia	
 	 	 	 	 	
Lydia Inc	 	Balticsea Marine Inc.

Boxcarrier (No.3) Corp.

Containers Lines Inc.

Megacarrier (No.1) Corp.

Speedcarrier (No.7) Corp.

Wellington Marine inc.	 	Liberia	

 

Non-Shipowning Subsidiary	 	Shipowning Subsidiaries Owned	 	Jurisdiction	
 	 	 	 	 	
Sapfo Navigation Inc.	 	Boxcarrier (No.1) Corp.

Cellcontainer (No.1) Corp.

Expresscarrier (No.1) Corp.

Megacarrier (No.2) Corp.

Ramona Marine Company Limited

Speedcarrier (No.1) Corp.

Teucarrier (No.1) Corp.	 	Liberia	
 	 	 	 	 	
Tully Enterprises S.A.	 	Asteria Shipping Company Limited

Boulevard Shiptrade S.A.

Continent Marine Inc.

Karlita Shipping Company Limited

Megacarrier (No.4) Corp.

Seacarriers Lines Inc.

Sarond Shipping Inc.	 	Liberia	
 	 	 	 	 	
Westwood Marine S.A.	 	Auckland Marine Inc.

Bayview Shipping Inc.

Blacksea Marine Inc.

Cellcontainer (No.3) Corp.

Cellcontainer (No.6) Corp.

Containers Services Inc.	 	Liberia	

 

Non-Shipowning Subsidiary	 	Shipowning Subsidiaries Owned	 	Jurisdiction	
 	 	 	 	 	
 	 	Speedcarrier (No.3) Corp.	 	 	

 
APPENDIX I
 
FORM OF SHIPMANAGEMENT AGREEMENT

1. Date of Agreement

2. Owners (name, place of registered office and law of registry)
 
ANNEX A // Subsidiary
Name
Liberia / Cyprus / Singapore
Place of registered office
Cyprus / Panama / Singapore / Greece / Bahamas
Law of registry	3. Managers (name and law of registry)
 
DANAOS SHIPPING CO. LTD
Name

 
Law of registry
 	
4. Day and year of commencement of Agreement (Section 11*)
 	
5. Crew Management (state “yes” or “no” as agreed) (Section 5.1*)
 
YES	6. Technical Management (state “yes” or “no” as agreed) (Section 5.2*)
YES	
7. Commercial Management (state “yes” or “no” as agreed) (Section 6.1*)
 
YES	8. Insurance Arrangements (state “yes” or “no” as agreed) (Section 6.4*)
YES	
9. Accounting Services (state “yes” or “no” as agreed) (Section 6.3*)
 
YES	10. Sale or purchase of the Vessel (state “yes” or “no” as agreed) (Section 6.5(b)*)
YES	
11. Provisions (state “yes” or “no” as agreed) (Section 5.2*)
 
YES	12. Bunkering (state “yes” or “no” as agreed)
 
YES (if applicable)	
13. Chartering Services Period (only to be filled in if “yes” stated in Box 7) (Section 6.5(a)*)
YES	14. Owner’s Insurance (Section 6.4*)
 
YES	
15. Crewing & Technical Management Fee, Commercial Management Fee (state annual amount) (Sections 5.3 & 6.5*)
 
 	16. Severance Costs (state maximum amount)
 
N/A	
17. Day and year of termination of Agreement ( Section  11*)
 
 	18. Law and Arbitration (Sections 14, 15*)
 
English Law; exclusive jurisdiction of the Courts of England	
19. Notices (state postal and cable address, telex and telefax number for serving notice and communication to the Owners) (Section 13*)
 
Subsidiary. Same as box 20.	20. Notices (state postal and cable address, telex and telefax number for serving notice and communication to the Managers) (Section 13*)
 
DANAOS SHIPPING CO. LTD.
14 Akti Kondyli, 185 45 Piraeus, Greece
Tel: 210 4196400 Fax: 210 4220855
Tlx: 212133 DECU GR
E-mail: danship@danaos.gr	

*References are to the Management Agreement, dated as of May 1 st , 2015 between Danaos Corporation and Danaos Shipping Company Limited, as amended from time to time.
 
It is mutually agreed between the party stated in Box 2 and the party stated in Box 3 that this Agreement consists of Part I (the foregoing) and Part I I (the Management Agreement, dated as of May 1 st , 2015, between Danaos Corporation and Danaos Shipping Company Limited, as amended from time to time) as well as Annex “A” (Details of Vessel) and each party agrees to be bound by both Part I and Part II hereto.

Signature(s) (Owners)	 	Signature(s) (Managers)	

 
ANNEX “A” (DETAILS OF VESSEL OR VESSELS) TO
SHIP MANAGEMENT AGREEMENT
 
Date of Agreement:
 
Name of Vessel(s):
 
Particulars of Vessel(s):
 
DETAILS                              Vessel
 
Owner
Type
Class
Port of Registry
Year Built
Builder                                                   Vessel’s details
LOA
Breadth Moulded
GRT
NRT
M/E Maker Type

 
APPENDIX II
 
FORM OF SUPERVISION AGREEMENT
 
THIS AGREEMENT is made the       day of             20  
 
BETWEEN :
 
(1)                            DANAOS CORPORATION ( or a subsidiary company to be nominated) a company incorporated under the laws of the Marshall Islands whose registered office is Trust Company Complex, Ajeltake Island, Ajeltake Road, Majuro, Marshall Islands MH96960 and whose principal place of business is at 14 Akti Kondyli, 185 45 Piraeus, Greece (the “ Owner ”) {if different from the Buyer under the Shipbuilding Contract otherwise Owner to be the same with the Buyer as herein defined}
 
(2)                            DANAOS SHIPPING CO. LTD.   a company incorporated under the laws of Cyprus whose registered office is at 3 Christaki Kompou Street, Peter’s House, Limassol 3300 and whose principal place of business is at 14 Akti Kondyli, 185 45 Piraeus, Greece (the “ Construction Supervisor ”).
 
WHEREAS :
 
By a shipbuilding contract dated            and made between              (the “ Builder ”) and                            (the “ Buyer ”) (the “ Shipbuilding Contract ”) the Builder agreed to construct, to the order of the Buyer, and sell to the Buyer, a         TEU container vessel, known during construction as Hull No.         and to be named                 (the “ Vessel ”);
 
IT IS NOW AGREED as follows:
 
1                       DEFINITIONS
 
1.1                                Except as otherwise defined herein, all terms defined in the Shipbuilding Contract shall have the same respective meanings when used herein.
 
1.2                                In this Agreement, unless the context otherwise requires, the following expressions shall have the following meanings:
 
“ Business Day ” means:
 
(i)                                           in relation to a payment which is to be made hereunder or under any other document, a day, other than a Saturday or Sunday or a public holiday, on which major retail banks in London and New York, and (in respect of any payments which are to be made to the Builder)           , are open for non-automated customer services; and

 
(ii)                                        in any other case, a day, other than a Saturday or Sunday or a public holiday, on which major retail banks in London and Athens are open for non-automated customer services.
 
“ Building Period ” means the period from the execution of this agreement to and including the date of delivery of the Vessel pursuant to the Shipbuilding Contract.
 
“ Buyer’s Supplies ” means all of the items to be furnished by the Buyer in accordance with Article        of the Shipbuilding Contract.
 
“ Spares ” means the items to be designated as spares by the parties hereto at the time of the delivery of the Vessel.
 
2                                    APPOINTMENT
 
2.1                                The Owner hereby appoint the Construction Supervisor and the Construction Supervisor hereby agrees to act as the Owner’s supervisor towards the Builder and as the “Owner’s Representative” under the Shipbuilding Contract for the duration of the Building Period and to perform the duties and rights which rest with the Owner regarding the construction and delivery of the Vessel in accordance with all of the provisions of the Shipbuilding Contract. The Owner shall be responsible for, inter alia , determining the general policy of supervision of construction of the Vessel and the scope of activities of the Construction Supervisor and, in the performance of its duties under this Agreement, the Construction Supervisor shall at all times act strictly in accordance with any instructions or directions given to it by the Owner regarding such general policy or, in the absence of such instructions or directions, in accordance with the standards of a prudent supervisor providing services of the type to be provided under this Agreement, having due regard to the Owner’s interest. Any instructions so given shall be consistent with the nature and scope of the supervision services required to be performed by the Construction Supervisor under this Agreement and shall not require the Construction Supervisor to do or omit to do anything which may be contrary to any applicable law of any jurisdiction or which is inconsistent or contrary to any of the rights and duties of the Owner under the Shipbuilding Contract.
 
2.2                          Specific powers and duties of the Construction Supervisor
 
Without prejudice to the generality of the appointment made under Clause 2.1, and (where applicable) by way of addition to the rights, powers and duties so conferred, the Construction Supervisor shall, subject to this Clause 2 and to

 
Clauses 3 and 4, have and be entrusted with the following rights, powers and duties in relation to the Shipbuilding Contract:
 
(a).                                    under Article     , to review, comment on, agree and approve the lists of plans and the drawings referred to; to attend the testing of the Vessel’s machinery, outfitting and equipment and to request any tests or inspections which the Construction Supervisor may consider appropriate or desirable and to review and comment on the results of all tests and inspections; to carry out such inspections and give such advice or suggestions to the Builder as the Construction Supervisor may consider appropriate or desirable; and to give notice to the Builder in the event that the Construction Supervisor discovers any construction, material or workmanship which the Construction Supervisor believes does not or will not conform to the requirements of the  Shipbuilding Contract and the specifications;
 
(b).                                    under Article      to appoint a representative of the Construction Supervisor for the purposes specified in that Article;
 
(c).                                     if any alteration or addition to the Shipbuilding Contract becomes obligatory or desirable, to consult with the Builder and make recommendations to the Owner as to whether or not acceptance should be given to any proposal notified to the Owner by the Builder;
 
(d).                                    under Article      to request and agree to any minor alterations, additions, or modifications to the Vessel or the specification and any substitute materials pursuant to Article     which the Construction Supervisor may consider appropriate or desirable, provided that if the cost of such variations or substitute materials would have the effect of altering the Contract Price (as defined in the Shipbuilding Contract) by more than five per cent (5%) from the Contract Price on the date hereof or the amount of any of the installments of the Contract Price due under the  Shipbuilding Contract, the Construction Supervisor shall notify the same to the Owner in writing; to receive from and transmit to the Builder information relating to the requirements of the classification society and to give instructions and agree with the Builder regarding alterations, additions, or changes in connection with such requirements; and to approve the substitution of materials as requested by the Builder;
 
(e).                                     under Article      , to attend and witness the trials of the Vessel;

 
(f).                                      to determine whether the Vessel has been designed, constructed, equipped and completed in accordance with, and complies with, the Shipbuilding Contract and the Specifications and Plans (as defined in the Shipbuilding Contract); under Article    , Paragraph    , to give the Builder a notice of acceptance or (as the case may be) rejection of the Vessel, to require or request any further test and inspection of the Vessel, and to give and receive any further or other notice relative to such matters and generally to advise the Owner in respect of all such matters;
 
(g).                                     to sign together with the Owner any protocols as to sea trials, consumable stores, delivery and acceptance or otherwise, having first ascertained the appropriateness of so doing;
 
(h).                                    to accept on behalf of the Owner the documents specified in Article      , Paragraph     to be delivered by the Builder at Delivery and to confirm receipt thereof to the Owner;
 
(i).                                        to give and receive on behalf of the Owner any notice contemplated by the  Shipbuilding Contract, provided that the Construction Supervisor shall not have authority to give on behalf of the Owner any notice which the Owner may be entitled to give to cancel, repudiate or rescind the Shipbuilding Contract without the prior written consent of the Owner; and
 
(j).                                       to purchase all Buyer’s Supplies as agent of the Owner and supply and deliver the same together with all necessary specifications, plans, drawings, instruction books, manuals, test reports and certificates to the Builder under Article     , and provide to the Owner a list of all such Buyer’s Supplies as soon as possible.
 
2.3                          The Construction Supervisor shall discharge its responsibilities under this Clause 2 as the Owner’s agent.
 
2.4                          The costs of supplying and delivering Buyer’s Supplies pursuant to Article      shall be reimbursed by the Owner on Delivery against supporting invoices from the Construction Supervisor which the Construction Supervisor shall supply to the Owner  at the same time as the notice to be given pursuant to Clause 3(c)(i).
 
3                                    CONSTRUCTION SUPERVISOR’S DUTIES REGARDING CONSTRUCTION
 
The Construction Supervisor undertakes with the Owner with respect to the Shipbuilding Contract:

 
(a).                                    to notify the Owner in writing promptly on becoming aware of any likely change to any of the dates on which any installment under the Shipbuilding Contract is expected to be due;
 
(b).                                    to (i) notify the Owner in writing of the expected date on which the launching or, as the case may be, sea trials of the Vessel is or are to take place and (ii) promptly on the same day as the launching or, as the case may be, sea trials of the Vessel takes or take place to confirm that the launching or, as the case may be, sea trials of the Vessel has or have taken place and, where relevant, that the amount specified in such confirmation is due and payable;
 
(c).                                     to (i) advise the Owner in writing, four (4) Business Days prior to the date on which the delivery installment under the Shipbuilding Contract is anticipated to become due, of the times and amounts of payments to be made to the Builder under the Shipbuilding Contract and the amount due to the Construction Supervisor for Buyer’s Supplies and (ii) promptly confirm the same on the day on which such installment becomes due (and being the date the same is required to be paid to the account referred to in Article      , Paragraph       of the Shipbuilding Contract);
 
(d).                                    not to accept the Vessel or delivery of the Vessel on the Owner’s behalf without the Owner’s prior written approval and unless the Construction Supervisor shall have previously certified to the Owner in writing, in the form of the certificate set out in Schedule 1 to this Agreement, that:
 
(i)       the Vessel has been duly completed and is ready for delivery to and acceptance by the Owner in or substantially in accordance with the Shipbuilding Contract and the Specifications and Plans;
 
(ii)      there is, to the best of the Construction Supervisor’s knowledge and belief having made due enquiry with the Builder, no lien or encumbrance on the Vessel other than the lien in favor of the Builder in respect of the delivery installment of the Contract Price due in accordance with Article    ;
 
(iii)     the Vessel is safe and undamaged; and
 
(iv)     the Vessel is recommended for classification by the             (and the Construction Supervisor shall attach to its certificate the provisional certificate of                recommending such classification of the Vessel or a duplicate or photocopy of such

 
                                  provisional certificate or otherwise provide evidence of such classification to the Owner);
 
(e).                                     on receipt thereof from the Builder promptly to deliver the documents specified in Article      , Paragraph      to the Owner or as the Owner may direct; and
 
(f).                                      not without the prior written approval of the Owner to request of or agree with the Builder any material alterations, additions or modifications to the Vessel.
 
4                                    CONSTRUCTION SUPERVISOR’S GENERAL OBLIGATIONS
 
4.1                          The Construction Supervisor undertakes to the Owner, with respect to the exercise and performance of its rights, powers and duties as the Owner’s representative under this Agreement, as follows:
 
(a).                                    it will well and faithfully serve the Owner as Owner’s agent and will at all times use its best endeavors to protect and promote all of the interests and the welfare of the Owner in relation to the Vessel including, without limitation, its design, construction, fitting out and purchase;
 
(b).                                    it will ensure the due and punctual observance and performance of all conditions, duties and obligations imposed on the Owner by the Shipbuilding Contract (other than to pay the Contract Price) and will not without the prior written consent of the Owner:
 
(i)                        exercise any rights of the Owner to cancel, repudiate or rescind the Shipbuilding Contract; or
 
(ii)        waive, modify or suspend any provision of the Shipbuilding Contract if as a result of such waiver, modification or suspension the Owner will or may suffer any adverse consequences;
 
(c).                                     it will use its best endeavors to ensure the observance and performance by the Builder of all conditions, duties and obligations imposed on the Builder by the Shipbuilding Contract;
 
(d).                                    it will at its own expense keep all necessary and proper books, accounts, records and correspondence files relating to its duties and activities under this Agreement and shall send quarterly reports to the Owner concerning the progress of the design and construction of the Vessel and keep the

 
                                                     Owner promptly informed of any deviations from the building program; and
 
(e).                                     it will ensure that any employee(s) of the Construction Supervisor appointed by the Construction Supervisor as representative(s) of the Construction Supervisor for the purpose of Article      shall have appropriate technical qualifications and experience in relation to the construction of ships of the same type as the Vessel and shall be familiar with good international shipbuilding practices.
 
5                                    INSURANCE
 
The Construction Supervisor undertakes to keep its representatives at the Builder’s premises or on board the Vessel fully insured against all loss, damages or injuries incurred or suffered by any of them and agrees that the Owner shall not in any respect be liable or responsible for any loss or damage caused by any such persons to the Builder or the Builder’s equipment and the Construction Supervisor undertakes to keep its representatives, the Builder and the Owner fully and effectively indemnified against any liability, loss or claim for any such damage or injuries even to the extent that the same are not fully recovered under the terms of any policy or proceeds of insurance or were not caused by the gross negligence of the Builder or its employees, agents or sub-contractors.
 
6                                    FEES
 
In consideration of the performance of the duties assigned to the Construction Supervisor in this Agreement the Owner shall pay to the Construction Supervisor the sum of USD$725,000 for its total supervision costs in connection with the supervision of the construction of the Vessel, and any expenses incurred under the Shipbuilding Contract against presentation of supporting invoices from the Construction Supervisor which the Construction Supervisor shall supply to the Owner at the same time as the notice to be given pursuant to Clause 3(c)(i).  The construction supervision fee shall include all costs which are incurred by the Construction Supervisor in connection with the ordinary exercise and performance by the Construction Supervisor of the rights, powers and duties entrusted to it pursuant to this Agreement.
 
7                                    COMMENCEMENT - TERMINATION
 
This Agreement shall come into effect on                       and shall continue until delivery of the Vessel to the Owner by the Builder.
 
This Agreement may, however, be terminated with immediate effect by the Owner in the event that the Construction Supervisor is in material default of its obligations hereunder

 
and/or in the event that the Shipbuilding Contract is cancelled or terminated.  The Construction Supervisor shall in the event of immediate termination not be entitled to receive any payment in respect of the fees and other amounts described in Clause 6.
 
8                                    LIABILITIES
 
Neither the Owner nor the Construction Supervisor shall be under any liability for any failure to perform any of their obligations hereunder by reason of any cause whatsoever beyond their control.
 
Without prejudice to the foregoing, the Construction Supervisor shall be under no liability whatsoever for any loss, damage, delay or expense of whatever nature, whether direct or indirect (including but not limited to loss of profit arising out of or in connection with detention of or delay of the Vessel) and however arising in the course of performance of its duties under this Agreement, unless the same is proved to have resulted solely from the negligence or willful misconduct of the Construction Supervisor.
 
9                                    EMPLOYEES
 
9.1                                None of the employees and/or sub-contractors of the Construction Supervisor shall constitute, for the purposes of this Agreement, sub-agents of the Owner. The Construction Supervisor in its capacity as employer and contractor (and not in its capacity as agent for the Owner), shall (a) be responsible for the salaries, expenses and costs in respect of each of its employees and sub-contractors (not in its capacity as agent for the Owner) and (b) indemnify its employees and sub-contractors for any liabilities and losses incurred by such employees and sub-contractors. For the avoidance of doubt, the Owner shall not be liable for any liabilities, losses, costs or expenses incurred by the Construction Supervisor in its capacity as employer and contractor.
 
10                             GOVERNING LAW - JURISDICTION
 
10.1                         This Agreement shall be governed by and be construed in accordance with English law.
 
10.2                         The Construction Supervisor agrees, for the benefit of the Owner, that any legal action or proceedings arising out of or in connection with this Agreement shall be brought in the English courts and hereby irrevocably and unconditionally submits to the jurisdiction of such courts.  The submission to such jurisdiction shall not (and shall not be construed so as to) limit the competent jurisdiction nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not.

 
10.3                  The Construction Supervisor agrees that the process by which any proceedings are begun under this Agreement may be served on it by being delivered in connection with any proceedings in England, to             If this appointment ceases to be effective, the Construction Supervisor shall immediately appoint a further person in England to accept service of process on its behalf in England.  Nothing contained herein shall affect the right to serve process in any other manner permitted by law.
 
11                             COUNTERPARTS
 
This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument.
 
12                             NOTICES
 
12.1                   Every notice or other communication under this Agreement shall:
 
(a).                                    be in writing delivered personally or by first-class prepaid letter (airmail if available) or facsimile transmission or other means of telecommunication (other than telex) in permanent written form;
 
(b).                                    be deemed to have been received, in the case of a letter, when delivered personally or three (3) days after it has been put into the post and, in the case of a facsimile transmission or other means of telecommunication (other than telex) in permanent written form, at the time of dispatch (provided that if the date of dispatch is a Saturday or Sunday or a public holiday in the country of the addressee or if the time of dispatch is after the close of business in the country of the addressee it shall be deemed to have been received at the opening of business on the next day which is not a Saturday or Sunday or public holiday); and
 
(c).                                     be sent:
 
(i)                        To the Construction Supervisor at:
 
Danaos Shipping Co. Ltd
14 Akti Kondyli
185 45 Piraeus
Greece
Facsimile No.: +30 210 42 20 855
Attention:  Legal Department
 
(ii)                     To the Owner at:
 
Danaos Corporation
14 Akti Kondyli

 
185 45 Piraeus
Greece
Facsimile No.: +30 210 42 20 855
Attention:  Legal Department
 
or to such other address and/or numbers for a party as is notified by such party to the other party under this Agreement.
 
12.2                   Each communication and document made or delivered by one party to another pursuant to this Agreement shall be in the English language.
 
13                             CONTRACT (RIGHTS OF THIRD PARTIES) ACT 1999
 
A person who is not a party to this Agreement has no right under the Contract (Rights of Third Parties) Act 1999 to enforce any term of this Agreement.
 
IN WITNESS of which this Agreement has been duly executed the day and year first before written.

For the Owner	
 	
For the Construction Supervisor	

 
SCHEDULE 1
 
FORM OF CONSTRUCTION CERTIFICATE
 
[On the headed notepaper of the Construction Supervisor]
 
[Vessel Owner] (the “ Owner ”)
[Address]
Facsimile: [                  ]
Attention: [                  ]

 	Date:	 	 	
 
Dear Sirs,
 
[Name of Builder] (the “Builder”), [Name of Vessel] (the “Vessel”)
 
We refer to the construction supervision agreement dated [                  ] between the Owner and us (the “ Supervision Agreement ”).
 
Words and expression defined in the Supervision Agreement (whether expressly or by incorporation by reference to another document) shall have the same meaning where used in this certificate.
 
We hereby certify, pursuant to Clause 3(d) of the Supervision Agreement, as follows:
 
(i)                                      the Vessel has been duly completed and is ready for delivery to and acceptance by the Owner in or substantially in accordance with the Shipbuilding Contract and the Specifications and Plans;
 
(ii)                                   there is, to the best of our knowledge and belief having made due enquiry with the Builder, no lien or encumbrance on the Vessel other than the lien in favor of the Builder in respect of the deliver installment of the Contract Price due in accordance with Article [  ];
 
(iii)                                The Vessel is safe and undamaged; and
 
(iv)                               The vessel is recommended for classification by [Name of the classification society] (the “ Classification Society ”).

 
With respect to paragraph (iv) above, please find attached to this certificate the provisional certificate of the Classification Society recommending such classification of the Vessel / a duplicate or photocopy of the provisional certificate of the Classification Society recommending such classification of the Vessel / the following evidence of the Classification Society’s recommendation of such classification of the Vessel  [  ].

Yours faithfully	 	

for and on behalf of	 	
DANAOS SHIPPING COMPANY LIMITED	 	

 
APPENDIX III
 
Restrictive Covenant Agreement

 
DANAOS CORPORATION,
 
DR. JOHN COUSTAS,
 
PROTECTOR HOLDINGS INC.,
 
SEASONAL MARITIME CORPORATION
 
- and -
 
DANAOS INVESTMENTS LIMITED AS THE
TRUSTEE FOR THE 883 TRUST

 
RESTRICTIVE COVENANT AGREEMENT

 

 
THIS RESTRICTIVE COVENANT AGREEMENT is made on the [ · ] day of September 2006,
 
BY AND BETWEEN:
 
(1)                                  DANAOS CORPORATION , a Marshall Islands corporation (“ DC ”);
 
(2)                                  DR. JOHN COUSTAS , in his individual capacity (“ Dr. Coustas ”);
 
(3)                                  PROTECTOR HOLDINGS INC. , a Liberian corporation (“Protector Holdings”) ;
 
(4)                                  SEASONAL MARITIME CORPORATION, a Liberian corporation (“Seasonal Maritime”) ; and
 
(5)                                  DANAOS INVESTMENTS LIMITED AS TRUSTEE FOR THE 883 TRUST (the “ Coustas Family Trust ” and, together with Dr. John Coustas, Protector Holdings and Seasonal Maritime, the “ Coustas Entities ”).
 
WHEREAS:
 
(A)                                Pursuant to the Amended and Restated Management Agreement by and between DC and Danaos Shipping Company Limited, a Cypriot corporation (the “ Manager ”), made [ · ], 2006 (the “ Management Agreement ”), the Manager has agreed to provide certain management services to DC on an exclusive basis, restrict certain competitive activities and grant a right of first refusal to DC to purchase its assets and properties upon the occurrence of certain events, all as described therein.
 
(B)                                Each of the Coustas Entities directly or indirectly owns capital stock of the Manager.
 
(C)                                On or about the date hereof, Dr. Coustas will enter into an executive employment agreement with DC (the “ Employment Agreement ”), pursuant to the terms of which Dr. Coustas will agree to serve as Chief Executive Officer and President of DC.
 
(D)                                DC wishes to (i) limit the activities of Dr. Coustas, and the other Coustas Entities, on the terms and conditions set out in this Agreement to prohibit certain activities that may compete with the business of DC, (ii) ensure that the Coustas Entities collectively maintain ownership of at least 80% of the capital stock of the Manager and (iii) ensure that the Coustas Entities will not allow the Manager to violate certain of its obligations under the Management Agreement.
 
NOW, THEREFORE, in consideration of the terms and conditions set forth below, and other good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged), the parties hereto agree as follows:
 
1                                          INTERPRETATION
 
1.1                                In this Agreement, unless the context otherwise requires:

 
(a)                                  “ Board of Directors ” means the board of directors of DC as the same may be constituted from time to time.
 
(b)                                  “ Containership ” means any ocean-going vessel that is intended to be used primarily to transport containers or is being used to primarily transport containers.
 
(c)                                   “ Danaos Group ” means, at any time, DC and its subsidiaries at such time and “member of the Group” shall be construed accordingly.
 
(d)                                  “ Drybulk Carrier ” means any ocean-going vessel that is intended to be used primarily to transport non-liquid cargoes of commodities shipped in an unpackaged state.
 
(e)                                   “ 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 U.S. Securities Exchange Act of 1934 and the listing criteria of the New York Stock Exchange.
 
1.2                                The headings of this Agreement are for ease of reference and do not limit or otherwise affect the meaning hereof.
 
1.3                                All the terms of this Agreement, whether or not so expressed, shall be binding upon the parties hereto and their respective successors and assigns.
 
1.4                                Unless the context otherwise requires, words in the singular include the plural and vice versa.
 
2                                          ACKNOWLEDGEMENT AND REPRESENTATION
 
2.1                                Each of the Coustas Entities acknowledges he or it has received and reviewed the Management Agreement.
 
2.2                                Each of the Coustas Entities hereby represents and warrants that as of the date of this Agreement, collectively the Coustas Entities (a) own at least 80% of the capital stock of the Manager and (b) hold at least 80% of the voting power of the outstanding capital stock of the Manager considered for this purpose as a single class.
 
3                                          NON-COMPETITION
 
3.1                                During the term of the Management Agreement and for a period of one (1) year from the date of actual termination of the Management Agreement, the Coustas Entities shall not, subject to Section 3.2 hereof, directly or indirectly, engage in (a) the ownership or operation of Containerships of larger than 2,500 TEUs, (b) the ownership or operation of any Drybulk Carriers or (c) the acquisition of or investment in any business involved in the ownership or operation of Containerships of larger than 2,500 TEUs or Drybulk Carriers.
 
3.2                                Notwithstanding the foregoing, if a majority of the Independent Directors declines to pursue any opportunity for the benefit of DC or any of its subsidiaries (a) to acquire or invest in any business involved in the ownership or operation of Containerships of larger than 2,500 TEUs

 
or Drybulk Carriers or (b) to acquire a Containership of larger than 2,500 TEUs or a Drybulk Carrier, then any Coustas Entity (or any (i) current or future beneficiaries of the Coustas Family Trust, (ii) entities beneficially owned by such beneficiaries or the Coustas Entities or (iii) other trusts established for the benefit of such beneficiaries or the Coustas Entities) shall be permitted, directly or indirectly, to acquire any such Containership or Drybulk Carrier or acquire or invest in any such business; provided that, such acquisition or investment is completed (x) no later than the four-month anniversary of the date on which the Independent Directors declined to pursue such acquisition or investment and (y) on terms no more favorable to the acquiring or investing, as the case may be, party than those offered to DC and declined by the Independent Directors.
 
For the avoidance of doubt, nothing in this Agreement shall be construed to restrict the ability of any Coustas Entity (or any (i) current or future beneficiaries of the Coustas Family Trust, (ii) entities beneficially owned by such beneficiaries or the Coustas Entities or (iii) other trusts established for the benefit of such beneficiaries or the Coustas Entities) to acquire or invest in any vessel other than Containerships of larger than 2,500 TEUs or Drybulk Carriers.
 
4                                          MANAGEMENT SERVICES
 
4.1                                During the term of the Management Agreement, Dr. Coustas shall not personally provide, or establish, advise or assist any entity providing, commercial, crewing, technical, chartering or administrative vessel management services substantially similar to those the Manager provides under the Management Agreement to any owner and operator of Containerships of larger than 2,500 TEUs or Drybulk Carriers, other than members of the Danaos Group and Palmosa Shipping Corporation and its subsidiaries without receiving the prior written approval of a majority of the Independent Directors.
 
4.2                                During the term of the Management Agreement, none of the Coustas Entities shall, directly or indirectly, own any interest in any entity which provides commercial, crewing, technical, chartering or administrative vessel management services substantially similar to those the Manager provides under the Management Agreement to any owner and operator of Containerships of larger than 2,500 TEUs or Drybulk Carriers, other than members of the Danaos Group and Palmosa Shipping Corporation and its subsidiaries, without receiving the prior written approval of a majority of the Independent Directors.
 
4.3                                The restrictions set forth in Sections 4.1 and 4.2 hereof shall not apply with respect to Containerships larger than 2,500 TEUs, Drybulk Carriers or entities which any Coustas Entity (or any (i) current or future beneficiaries of the Coustas Family Trust, (ii) entities beneficially owned by such beneficiaries or the Coustas Entities or (iii) other trusts established for the benefit of such beneficiaries or the Coustas Entities) acquires or invests in pursuant to Section 3.2 hereof.
 
5                                          CONTROL OF MANAGER
 
5.1                                Unless expressly permitted by a majority of the Independent Directors, during the term of the Management Agreement, the Coustas Entities will at all times, directly or indirectly, collectively (a) own at least 80% of the outstanding capital stock of the Manager and (b) hold at least 80% of the voting power of the outstanding capital stock of the Manager, considered for this purpose as a single class.

 
5.2                                Each of the Coustas Entities hereby agrees to offer and, if such offer is accepted by DC, to sell the capital stock of the Manager owned by it to DC at the then fair market value of such capital stock if the provision set forth in Section 5.1 hereof is breached.
 
5.3                                For the avoidance of doubt, DC acknowledges that (a) the restriction set forth in Section 5.1 hereof shall not be construed so as to limit transfers of capital stock of the Manager to (i) current or future beneficiaries of the Coustas Family Trust, (ii) entities beneficially owned by such beneficiaries or the Coustas Entities or (iii) other trusts established for the benefit of such beneficiaries or the Coustas Entities and (b) any such transfers shall not trigger DC’s purchase right pursuant to Section 5.2 hereof; provided , that any such transferee agrees to be bound by the restrictions set forth herein (including, without limitation, in Sections 3 and 4 hereof) pursuant to an agreement acceptable in form and substance to a majority of the Independent Directors.
 
6                                          COVENANT COMPLIANCE OF MANAGER
 
6.1                                The Coustas Entities shall not allow the Manager to violate the covenants contained in Section 4.14, Section 14.4 and Sections 17.1 through 17.5 of the Management Agreement, and will cause the Manager to observe the right of first refusal requirement set forth in Section 17.3 of the Management Agreement.
 
7                                          NOTICES
 
7.1                                All notices, consents and other communications hereunder, or necessary to exercise any rights granted hereunder, shall be in writing, sent either by prepaid registered mail or telefax, and will be validly given if delivered on a business day to a party at its respective address set forth below:
 
Danaos Corporation
14 Akti Kondyli
185 45 Piraeus
Greece
Attention: [Chief Operating Officer]
 
Dr. John Coustas
[c/o Danaos Corporation
14 Akti Kondyli
185 45 Piraeus
Greece
Attention: Dr. John Coustas]
 
Protector Holdings Inc.
[c/o Danaos Corporation
14 Akti Kondyli
185 45 Piraeus
Greece
Attention: Dr. John Coustas]

 
Seasonal Maritime Corporation
[c/o Danaos Corporation
14 Akti Kondyli
185 45 Piraeus
Greece
Attention: Dr. John Coustas]
 
Danaos Investments Limited as the Trustee for the 883 Trust
[c/o Danaos Corporation
14 Akti Kondyli
185 45 Piraeus
Greece
Attention: Dr. John Coustas]
 
8                                          APPLICABLE LAW AND JURISDICTION
 
8.1                                This Agreement shall be governed by, and construed in accordance with, the laws of England. The parties hereto submit to the exclusive jurisdiction of the courts of England in connection with any claim arising out of or in connection with this Agreement.
 
9                                          ARBITRATION
 
9.1                                All disputes arising out of this Agreement shall be arbitrated in London in the following manner. One arbitrator is to be appointed by DC, a second by the Coustas Entities and a third by the two so chosen. Their decision or that of any two of the arbitrators shall be final and, for the purpose of enforcing any award, this Agreement may be made a rule of the court. The arbitrators shall be commercial persons, conversant with shipping matters. Such arbitration is to be conducted in accordance with the rules of the London Maritime Arbitrators Association terms current at the time when the arbitration proceedings are commenced and in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof.
 
9.2                                In the event that DC or the Coustas Entities shall state a dispute and designate an arbitrator, in writing, the other party shall have twenty (20) business days to designate its own arbitrator. Upon failure to do so, the arbitrator appointed by the other party can conduct the arbitration and render an award hereunder.
 
9.3                                Until such time as the arbitrators finally close the hearings, either of DC or the Coustas Entities shall have the right by written notice served on the arbitrators and on the other party to specify further disputes or differences under this Agreement for hearing and determination.
 
9.4                                The arbitrators may grant any relief, and render an award, which they or a majority of them deem just and equitable and within the scope of the Agreement of the parties, including but not limited to the posting of security. Awards pursuant to this Section 9 may include costs, including a reasonable allowance for attorneys’ fees, and judgments may be entered upon any award made herein in any court having jurisdiction.

 
10                                   MISCELLANEOUS
 
10.1                         This Agreement 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, with the exception of the Management Agreement. 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.
 
10.2                         It is the desire and intent of the parties hereto that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement is adjudicated to be invalid or unenforceable, such provision will be deemed amended to delete therefrom the portion thus adjudicated as invalid or unenforceable, such deletion to apply only with respect to the operation of such provision in the particular jurisdiction in which such adjudications is made.
 
10.3                         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.
 
[Remainder of page intentionally left blank.]

 
IN WITNESS whereof the undersigned have executed this Agreement as of the date first above written.

SIGNED by Dimitri J. Andritsoyiannis	 	
for and on behalf of	 	
DANAOS CORPORATION	 	

 	 	
SIGNED by	 	
DR. JOHN COUSTAS	 	

 	 	
SIGNED by Efstathios Sfiris	 	
for and on behalf of	 	
PROTECTOR HOLDINGS INC.	 	

 	 	
SIGNED by Efstathios Sfiris	 	
for and on behalf of	 	
SEASONAL MARITIME CORPORATION	 	

 	 	
SIGNED by Dr. John Coustas	 	
for and on behalf of	 	
DANAOS INVESTMENTS LIMITED AS THE	 	
TRUSTEE FOR THE 883 TRUST	 	

 
[Signature page to Restrictive Covenant Agreement]

Exhibit 4.31

 
SHAREHOLDERS AGREEMENT
 
dated as of August 5, 201 5
 
by and among
 
GEMINI SHIPHOLDINGS CORPORATION
 
and
 
THE SHAREHOLDERS SIGNATORY HERETO

 

 
TABLE OF CONTENTS

 	 	Page	
 	 	 	
ARTICLE 1                               CERTAIN DEFINITIONS	1	
 	 	 	
Section 1.1	Certain Definitions	1	
 	 	 	
ARTICLE 2                               EQUITY CONTRIBUTIONS; MANAGEMENT SERVICES	7	
 	 	 	
Section 2.1	Organizational Matters; Initial Capitalization	7	
Section 2.2	SPVs	7	
Section 2.3	Equity Contributions	8	
Section 2.4	Management Services	8	
 	 	 	
ARTICLE 3                               TRANSFER OF EQUITY SECURITIES	8	
 	 	 	
Section 3.1	Restrictions	8	
Section 3.2	Permitted Transfers	10	
Section 3.3	Sales Subject to Tag-Along Rights	11	
Section 3.4	Grant of Drag-Along Rights	12	
Section 3.5	First Refusal Rights	13	
Section 3.6	Grant of Preemptive Rights to Shareholders	14	
Section 3.7	Right to Purchase Upon Involuntary Transfer	15	
 	 	 	
ARTICLE 4                               OPTION TO PURCHASE COUSTAS INTERESTS	16	
 	 	 	
Section 4.1	Option to Purchase Coustas Interests	16	
Section 4.2	Procedures	16	
 	 	 	
ARTICLE 5                               BOARD OF DIRECTORS OF THE COMPANY	18	
 	 	 	
Section 5.1	Composition	18	
Section 5.2	Term	19	
Section 5.3	Vacancy and Removal	20	
Section 5.4	Limitation on Liability of Directors	20	
 	 	 	
ARTICLE 6                               SHAREHOLDER REPRESENTATIONS AND WARRANTIES	20	
 	 	 	
Section 6.1	Representations and Warranties	20	
 	 	 	
ARTICLE 7                               ACCOUNTING AND INFORMATION RIGHTS	22	
 	 	 	
Section 7.1	Financial Statements and Other Information	22	
Section 7.2	Fiscal Year	22	
Section 7.3	Independent Auditing Firm	22	
 	 	 	
ARTICLE 8                               MISCELLANEOUS	22	
 	 	 	
Section 8.1	No Appraisal Rights	22	
Section 8.2	Entire Agreement	23	
Section 8.3	Captions	23	
Section 8.4	Counterparts	23	
Section 8.5	Notices	23	
Section 8.6	Successors and Assigns	24	
Section 8.7	Governing Law	24	
Section 8.8	Submission to Jurisdiction; Waiver of Jury Trial	24	
Section 8.9	Benefits Only to Parties	25	
 
i 

 
TABLE OF CONTENTS
 (continued)

 	 	Page	
 	 	 	
Section 8.10	Termination	25	
Section 8.11	Publicity	26	
Section 8.12	Confidentiality	26	
Section 8.13	Compensation and Reimbursement	26	
Section 8.14	Amendments; Waivers	27	
Section 8.15	No Strict Construction	27	
Section 8.16	Other Business	27	
Section 8.17	Construction	28	
Section 8.18	Issuance of Preferred Stock	28	
Section 8.19	Limitation of Litigation	29	
 	 	 	
SCHEDULES	 	 	
 	 	 	
Schedule I	Equity Securities held by Shareholders	 	
 	 	 	
EXHIBITS	 	 	
 	 	 	
Exhibit A	Form of Joinder Agreement	 	
 	 	 	
Exhibit B	Form of Articles of Incorporation	 	
 	 	 	
Exhibit C	Form of Bylaws	 	
 
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SHAREHOLDERS AGREEMENT
 
THIS SHAREHOLDERS AGREEMENT (this “ Agreement ”) is dated as of August 5, 201 5, by and among Gemini Shipholdings Corporation, a Marshall Islands corporation (the “ Company ”), Virage International Ltd., a Marshall Islands corporation (the “ Coustas Shareholder ”), and Danaos Corporation (the “ DAC Shareholder ”, and together with the Coustas Shareholder, the “ Shareholders ”).
 
W   I   T   N   E   S   S   E   T   H  :
 
WHEREAS, the DAC Shareholder and the Coustas Shareholder have subscribed for shares of common stock, par value $0.01 per share, of the Company, of which the DAC Shareholder has subscribed for 49% of such shares and the Coustas Shareholder has subscribed for 51% of such shares;
 
WHEREAS, upon the consummation of the transactions contemplated above, the Shareholders will own Equity Securities (as defined below) in the amounts set forth in Schedule  I attached hereto;
 
WHEREAS, the Company will own one or more SPVs for the purpose, as further described in Section 2.2 , of acquiring, including through chartering-in, maintaining, managing, operating, chartering-out and disposing of containerships, including new building vessels;
 
WHEREAS, each containership will be acquired by a separate SPV, which will be a wholly-owned subsidiary of the Company; and
 
WHEREAS, the Company and each of the Shareholders desire to enter into this Agreement to, inter alia , regulate and limit certain rights relating to the Equity Securities and to limit the sale, assignment, transfer, encumbrance or other disposition of such Equity Securities and to provide for the consistent and uniform management of the Company as set forth herein.
 
NOW, THEREFORE, in consideration of the mutual covenants set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
 
ARTICLE 1
 
CERTAIN DEFINITIONS
 
Section 1.1                                    Certain Definitions .  For purposes of this Agreement, the following terms shall have the following meanings:
 
“ Acquiror ” shall have the meaning set forth in Section 3.4(a) .
 
“ Affiliate ” shall mean, when used with reference to a specific Person, any Person that directly or indirectly controls or is controlled by or is under common control with the specified Person; provided , that for the purposes of the definition of “ Permitted Transfers ” only, with respect to any Shareholder, each director, shareholder, general partner, member,

 
officer and employee (to the extent applicable) of such Shareholder or the spouse or children of any such director, shareholder, general partner, member, officer or employee or a trust or trusts solely for the benefit of such director, shareholder, general partner, member, officer or employee and/or the spouse or children of such director, shareholder, general partner, member, officer or employee shall, in each case, be deemed to be an Affiliate.  As used in this definition, “control” (including, with its correlative meanings, “controlled by” and “under common control with”) shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise).
 
“ Affiliate Transaction ” shall mean any agreement, transaction or arrangement between the Company or any of its Subsidiaries, on the one hand, and any Shareholder or any of such Shareholder’s Affiliates, on the other hand.
 
“ Agreement ” shall have the meaning set forth in the preamble to this Agreement.
 
“ Applicable Law ” shall mean, with respect to any Person, all provisions of laws, statutes, ordinances, rules, regulations, permits or certificates of any Governmental Authority applicable to such Person or any of its assets or property, and all judgments, injunctions, orders and decrees of any Governmental Authorities in proceedings or actions in which such Person is a party or by which any of its assets or properties are bound.
 
“ Board ” shall mean the board of directors of the Company.
 
“ Bona Fide Offer ” shall have the meaning set forth in Section 3.5(a) .
 
“ Business Day ” shall mean any day, other than a Saturday, a Sunday or a day on which banks located in New York, New York, London, England or Athens, Greece are authorized or required by Applicable Law to close.
 
“ Commercial Services ” shall have the meaning ascribed thereto in Section 2.4 .
 
“ Commission ” shall mean the Securities and Exchange Commission or any other Governmental Authority at the time administering the Securities Act.
 
“ Common Stock ” shall mean the common stock of the Company, $0.01 par value per share.
 
“ Common Stock Equivalents ” shall mean, at any time, (i) with respect to each share of Common Stock issued and outstanding, one (1) and (ii) with respect to any other Equity Security which is at such time exercisable, exchangeable or convertible into or for Common Stock at an exercise price equal to or less than the Equity Value of the Common Stock at such time, an amount equal to the number of shares of Common Stock, if any, into or for which such Equity Security may be exercised, exchanged or converted at such time.
 
“ Company ” shall have the meaning set forth in the preamble to this Agreement.
 
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“ Coustas Interests ” means all of the Coustas Shareholder’s rights, title and interests in Equity Securities of the Company.
 
“ Coustas Shareholder ” shall have the meaning set forth in the preamble to this Agreement.
 
“ Crewing & Technical Services ” shall have the meaning ascribed thereto in Section 2.4 .
 
“ DAC Shareholder ” shall have the meaning set forth in the preamble to this Agreement.
 
“ DAC Management Agreement ” shall mean that certain Amended & Restated Management Agreement, dated as of May 1, 2015, between Danaos Corporation and Danaos Shipping Co. Ltd., as it may be amended from time to time.
 
“ Directors ” shall mean the members of the Board.
 
“ Drag-Along Sale Purchase Price ” shall have the meaning set forth in Section 3.4(b) .
 
“ Drag-Along Right ” shall have the meaning set forth in Section 3.4(a) .
 
“ Drag-Along Sale ” shall have the meaning set forth in Section 3.4(a) .
 
“Dragging Shareholder ” shall have the meaning set forth in Section 3.4(a) .
 
“ Equity Securities ” shall mean, without duplication, all shares of Common Stock, all securities, directly or indirectly, convertible into or exchangeable or exercisable for shares of Common Stock and all options (including, without limitation, vested and unvested Stock Options), warrants and other rights to purchase or otherwise, directly or indirectly, acquire shares of Common Stock from the Company, or securities convertible into or exchangeable or exercisable for shares of Common Stock, whether at the time of issuance or upon the passage of time or the occurrence of some future event.
 
“ Equity Value ” shall mean, as of any date, the value of the shares of Common Stock determined as follows:  (a) if the Common Stock is listed on any established stock exchange, the Equity Value of a share of Common Stock shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or market (or the exchange or market with the greatest volume of trading in the Common Stock) on the last market trading day prior to the day of determination, as reported in The Wall Street Journal or such other source as the Board deems reliable; and (b) in the absence of such markets for the Common Stock, the Equity Value shall be determined by the Board.
 
“ Excess New Securities ” shall have the meaning set forth in Section 3.6(b) .
 
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“ Exchange Act ” shall mean the Securities Exchange Act of 1934, or any similar United States statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.
 
“ Governmental Authority ” shall mean any instrumentality, subdivision, court, administrative agency, commission, official or other authority of the United States or any other country or any state, province, prefect, municipality, locality or other government or political subdivision thereof, or any quasi-governmental or private body exercising any regulatory, taxing, importing or other governmental or quasi-governmental authority.
 
“ Initial Public Offering ” shall mean the first (1st) Public Offering.
 
“ Involuntary Transfer ” shall mean any transfer of title or beneficial ownership of Equity Securities on default, foreclosure, forfeit, divorce, court order or other than as a result of a voluntary decision on the part of a holder of Equity Securities.
 
“ Involuntary Transferee ” shall have the meaning set forth in Section 3.7(a) .
 
“ Management Agreement ” shall mean the agreement entered or to be entered among the Company and Danaos Shipping Co. Ltd. which contains substantially similar terms to the DAC Management Agreement.
 
“ New Securities ” shall mean any Equity Securities (other than contractual rights to receive payments, such as “phantom” stock or stock appreciation rights issued to employees or consultants of the Company solely in exchange for services, where the amount thereof is determined by reference to fair market or equity value of the Company or any Equity Securities), whether authorized now or in the future (including, without limitation, debt obligations which are convertible into Equity Securities, such other common equity securities, warrants or other rights to purchase or otherwise directly or indirectly acquire Common Stock from the Company), including any such rights that may become convertible into or exchangeable or exercisable for any Equity Securities, such other common equity securities, warrants or other rights to purchase or otherwise directly or indirectly acquire Common Stock from the Company; provided , that “New Securities” shall not include (i) securities issued by the Company on or prior to the date hereof, (ii) securities issued upon the direct or indirect conversion or exercise of any securities issued by the Company on or prior to the date hereof, (iii) securities issued upon the direct or indirect conversion of any Stock Options, (iv) securities issued by the Company in connection with any subdivision of securities (including any stock dividend or stock split), any combination of securities (including any reverse stock split) or any recapitalization, reorganization or reclassification of the Company, (v) any Stock Options, (vi) securities issued to any Person in connection with such Person becoming a board member or employee of the Company or any of its Subsidiaries, (vii) securities issued as consideration in any Sale of the Business, merger or recapitalization of the Company or issued as consideration for the acquisition of another Person or the assets of another Person (whether by merger, recapitalization, business combination or otherwise), (viii) any issuance of securities to any Person (including, without limitation, managers, directors, officers, employees or agents of the Company or any Subsidiary of the Company) which is determined by the Board in its sole and absolute discretion to be strategically beneficial to the operations of the Company or its Subsidiaries, (ix) securities issued as part of
 
4 

 
any financing transaction, so long as securities are not the only security component of such financing transaction, (x) one or more issuances of shares of Common Stock that are issued to one or more employees of the Company or any of its Subsidiaries at a price per share of Common Stock of not less than Equity Value and (xi) any issuance of Common Stock to one or more directors or senior officers of the Company or any of its Subsidiaries at a price per share of Common Stock of not less than Equity Value.
 
“ New Securities Price ” shall have the meaning set forth in Section 3.6(a) .
 
“ Non-Purchasing Shareholder ” shall have the meaning set forth in Section 3.5(c) .
 
“ Non-Qualified Person ” shall mean any Person, other than a Shareholder on the date hereof, who is (a) directly or indirectly engaged in any business which the Board determines, in good faith, to be competing with any business of the DAC Shareholder, the Company or any of its Subsidiaries, (b) any competitor, customer or supplier of the Company or any of its Subsidiaries, (c) an adverse party in any significant (as determined in good faith by the Board) legal or arbitration proceeding with the Company or any of its Subsidiaries or any Shareholder or (d) an Affiliate of any Person described in clauses (a) through (c).
 
“ Notice of Intention ” shall have the meaning set forth in Section 3.5(a) .
 
“ Offer Price ” shall have the meaning set forth in Section 3.5(a) .
 
“ Offered Securities ” shall have the meaning set forth in Section 3.5(a) .
 
“ Offeror ” shall have the meaning set forth in Section 3.5(a) .
 
“ Option Exercise Notice ” shall have the meaning set forth in Section 4.2(a) .
 
“ Option Exercise Period ” shall have the meaning set forth in Section 4.2(a) .
 
“ Over-Allotment Offer ” shall have the meaning set forth in Section 3.5(c) .
 
“ Participant ” shall have the meaning set forth in Section 3.3(b) .
 
“ Permitted Transfer ” shall have the meaning set forth in Section 3.2(a) .
 
“ Permitted Transferee ” shall have the meaning set forth in Section 3.2(a) .
 
“ Person ” shall mean any individual, corporation, limited partnership, general partnership, limited liability company, joint stock company, joint venture, association, company, trust, or any governmental or political subdivision or any agency, department or instrumentality thereof.
 
“ Preemptive Notice ” shall have the meaning set forth in Section 3.6(a) .
 
“ Prospective Buyer Notice ” shall have the meaning set forth in Section 3.5(b) .
 
5 

 
“ Public Offering ” shall mean any Underwritten Offering by the Company of Common Stock to the public pursuant to an effective registration statement filed with the Commission under the Securities Act (or the closing of another transaction that results in any Common Stock being publicly traded and widely held by the public); provided , however , that a Public Offering shall not include an offering made in connection with a business acquisition or combination or an employee benefit plan.
 
“ Qualified Public Offering ” shall mean a Public Offering which yields at least fifty-million U.S. Dollars ($50,000,000) of aggregate gross proceeds to the Company and any selling Shareholders.
 
“ Sale of the Business ” shall mean any transaction or series of transactions (whether structured as a stock sale, merger, consolidation, reorganization, recapitalization, redemption, asset sale or otherwise), which results in the sale or transfer of (a) a majority of the assets of the Company and its Subsidiaries (if any) taken as a whole (determined based on value), (b) beneficial ownership or control of a majority of the capital stock or other equity, ownership, proprietary or voting interests of the Company or (c) beneficial ownership or control of a majority of the capital stock or equity, ownership, proprietary or voting interest of any one (1) or more of the Company’s Subsidiaries owning, controlling or otherwise constituting a majority of the assets of the Company and its Subsidiaries taken as a whole (determined based on value), in each case, to a Person or a “group” (as such term is defined under Regulation 13D under the Exchange Act) other than to the Coustas Shareholder or any of their respective Affiliates; provided , that for purposes of Section 8.1 0 , a Sale of the Business shall not include any transaction effected solely for the purpose of changing, directly or indirectly, the form of organization or the organizational structure of the Company or any of its Subsidiaries.
 
“ Securities Act ” shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder, all as the same shall be in effect at the time.
 
“ Selling Shareholder ” shall have the meaning set forth in Section 3.5(a) .
 
“ Stock Options ” shall mean all options to purchase shares of Common Stock granted to non-management members of the Board, members of management and key employees of the Company or any of its Subsidiaries.
 
“ Shareholder ” shall have the meaning set forth in the preamble to this Agreement and any other Person that becomes a Shareholder pursuant to Section 3.2(b)  in accordance with the terms hereof by either executing this Agreement on the date hereof or a joinder agreement in the form attached hereto as Exhibit A .
 
“ Subsidiary ” shall mean, with respect to any Person, (a) any corporation more than fifty percent (50%) of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time stock of any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is owned by such Person directly or indirectly through one (1) or more Subsidiaries of such Person and (b) any
 
6 

 
partnership, association, joint venture or other entity in which such Person directly or indirectly through one (1) or more Subsidiaries of such Person has more than a fifty percent (50%) equity interest.
 
“ SPV ” shall mean a special purpose vehicle incorporated, formed or organized under the laws of Marshall Islands (or of such other jurisdiction as the parties hereto may agree upon), to acquire and operate a Vessel and SPVs shall mean all of them collectively.
 
“ Third Party Broker ” shall mean a mutually-agreed-upon independent investment banking firm, broker, expert advisor or other firm generally recognized in the shipping industry as qualified to perform the tasks for which such firm has been engaged.
 
“ Transfer ” shall have the meaning set forth in Section 3.1(a) .
 
“ Transfer Notice ” shall have the meaning set forth in Section 3.3(a) .
 
“ Transferring Shareholder ” shall have the meaning set forth in Section 3.3(a) .
 
“ Underwritten Offering ” shall mean a sale of securities of the Company to an underwriter or underwriters for reoffering to the public.
 
“ Vessel ” shall mean a container shipping vessel acquired by an SPV or to be acquired by an SPV in accordance with the terms of this Agreement.
 
“ Vessel Acquisition ” shall have the meaning set forth in the recitals of this Agreement.
 
ARTICLE 2
 
EQUITY CONTRIBUTIONS; MANAGEMENT SERVICES
 
Section 2.1                                    Organizational Matters; Initial Capitalization .  To the extent not yet effected as of the date hereof, the parties agree to cause the Company to adopt Amended and Restated Articles of Incorporation and Bylaws substantially in the form of Exhibit B and Exhibit C , respectively, and capitalize the Company with $15,000,000 in return for shares of Common Stock at a price of $15.00 per share, of which 510,000 shares shall be subscribed for and issued to the Coustas Shareholder, or 51% of the outstanding Common Stock of the Company, and 490,000 shares shall be subscribed for and issued to the DAC Shareholder, or 49% of the outstanding Common Stock of the Company.
 
Section 2.2                                    SPVs .  Each Vessel shall be separately acquired and owned through an SPV, each such SPV to be wholly owned by the Company capitalized with funds from the Shareholders.  Each SPV shall be a wholly-owned direct or indirect Subsidiary of the Company.  The business of each SPV shall be to own, charter-in, operate, charter-out and (where applicable) dispose of a Vessel with the objective of maximizing the value of the relevant return on investment for each of the Shareholders.
 
7 

 
Section 2.3                                     Equity Contributions .  (a)  In the event any issuance of Equity Securities by the Company is not subscribed for by the Shareholders in the same proportion as their respective shareholdings immediately prior to such issuance of Equity Securities, the purchase price for the Equity Securities being issued shall be negotiated in good faith among the Shareholders and if the Shareholders cannot mutually agree on an appropriate price for such Equity Securities within 10 Business Days, the purchase price for the Equity Securities being issued shall be determined by a Third Party Broker, taking into account the fair market value of the Company’s vessels and any newbuildings under construction, taking into account attached charters, based on shipbroker appraisals, and the Company’s capital structure, including outstanding indebtedness, cash and other assets and liabilities as reflected on the most recent balance sheet prepared in accordance with Section 7.1 hereof, or using such other methodology as mutually agreed by the Shareholders.
 
(b)                                  The Company shall use equity contributions made by each Shareholder to provide each SPV formed with funds sufficient to acquire a Vessel, to fund any expenses incurred in relation thereto, and to fund expenses for the operation of the Vessel in accordance with the terms of this Agreement.  Equity contributions shall be payable to the Company in readily available funds to an account of the Company or, at the Company’s direction, to an account of the applicable SPV.
 
Section 2.4                                     Management Services .  The Company shall enter into the Management Agreement (to which each SPV shall become a party) pursuant to which, among other things, Danaos Shipping Co. Ltd. shall provide, or cause to be provided, all (i) crewing and technical management services (including crewing, day-to-day operations, regulatory compliance for each Vessel, marine accounting and risk management services) (collectively, the “ Crewing & Technical Services ”) and (ii) commercial, chartering, administrative and insurance services (collectively, “ Commercial Services ”), as well as services of the executive officers of the Company.  The Management Agreement shall provide that the Company or the relevant SPV shall pay fees for Crewing & Technical Services and Commercial Services, respectively, at the same rates as charged from time to time, to Danaos Corporation pursuant to the DAC Management Agreement.
 
ARTICLE 3
 
TRANSFER OF EQUITY SECURITIES
 
Section 3.1                                     Restrictions .
 
(a)                                  No Shareholder shall, voluntarily or involuntarily, by operation of law or otherwise, directly or indirectly, sell, assign, donate, pledge, hypothecate, purchase any right or option with respect to, encumber or grant a security interest in, dispose of, or in any manner, transfer any Equity Securities, in whole or in part, or any right or interest therein, or enter into any transaction which results in the economic equivalent of a transfer to any Person, including, any derivative transaction that has the effect of changing the economic benefits and risks of ownership (each such action, a “ Transfer ”) except pursuant to a Permitted Transfer.
 
8 

 
(b)                                  From and after the date hereof, all certificates or other instruments representing Equity Securities held by each Shareholder and all certificates or other instruments issued in exchange for or upon the Transfer of any Equity Securities shall bear a legend which shall state:
 
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AND HAVE THE BENEFIT OF A SHAREHOLDERS AGREEMENT, DATED AS OF AUGUST 5, 201 5, AS THE SAME MAY BE AMENDED FROM TIME TO TIME, PURSUANT TO THE TERMS OF WHICH SUCH SECURITIES ARE SUBJECT TO CERTAIN RESTRICTIONS AND CONDITIONS ON TRANSFER.  SUCH SHAREHOLDERS AGREEMENT ALSO PROVIDES FOR VARIOUS OTHER LIMITATIONS AND OBLIGATIONS, AND ALL OF THE TERMS THEREOF ARE INCORPORATED BY REFERENCE HEREIN.  A COPY OF SUCH SHAREHOLDERS AGREEMENT HAS BEEN FILED IN THE PRINCIPAL EXECUTIVE OFFICE OF THE COMPANY WHERE THE SAME MAY BE INSPECTED DAILY DURING BUSINESS HOURS.
 
(c)                                   In addition to the legend required by Section 3.1(b)  above, all certificates representing Equity Securities held by each Shareholder and all certificates or other instruments issued in exchange for or upon the Transfer of any Equity Securities shall bear a legend which shall state:
 
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY OTHER SECURITIES LAW, AND SUCH SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES.
 
Notwithstanding the foregoing provisions of this Section 3.1(c) , the legend required by this Section 3.1(c)  shall be removed from any such certificates representing Equity Securities (i) when and so long as such Equity Securities shall have been effectively registered under the Securities Act and disposed of pursuant thereto or (ii) upon the request of any Shareholder to the Company, accompanied by a written opinion of counsel reasonably satisfactory to the Company that such Equity Securities may be freely transferred at any time without registration thereof under the Securities Act and that such legend may be removed.
 
(d)                                  Any attempt to Transfer any Equity Security which is not in accordance with this Agreement shall be null and void and the Company agrees that it will not cause, permit or give any effect to any Transfer of any Equity Securities to be made on its books and records
 
9 

 
unless such Transfer is permitted by this Agreement and has been made in accordance with the terms hereof.
 
(e)                                   Each Shareholder agrees that it will not effect any Transfer of Equity Securities unless such Transfer is a Permitted Transfer and is made (i) pursuant to an effective registration statement under the Securities Act or pursuant to an exemption from the registration requirements of the Securities Act and (ii) in accordance with all Applicable Laws (including, without limitation, all securities laws).
 
Section 3.2                                     Permitted Transfers .
 
(a)                                  Notwithstanding anything to the contrary contained herein, but subject to Section 3.1(a)  and Sections 3.1(e), and 3.2(b) , a Shareholder may at any time effect any of the following Transfers (each a “ Permitted Transfer ”, and each transferee of such Shareholder in respect of such Transfer, a “ Permitted Transferee ”):
 
(i)                                      any Transfer (other than a Transfer to a Non-Qualified Person) of any or all Equity Securities held by a Shareholder following such Shareholder’s death by will or intestacy to such Shareholder’s legal representative, heir or legatee;
 
(ii)                                   any Transfer (other than a Transfer to a Non-Qualified Person) of any or all Equity Securities held by a Shareholder as a gift or gifts during such Shareholder’s lifetime to such Shareholder’s spouse, children, grandchildren, parents or a trust or other similar legal entity for the benefit of such Shareholder or any of the foregoing;
 
(iii)                                any Transfer of any or all Equity Securities held by a Shareholder to any Affiliate of such Shareholder (other than the Company or any of its Subsidiaries) who is not a Non-Qualified Person; provided , that any such Affiliate shall Transfer such Equity Securities to the Shareholder from whom the Equity Securities were originally received or acquired within five (5) calendar days after ceasing to be an Affiliate of such Shareholder;
 
(iv)                               any Transfer of any or all Equity Securities held by a Shareholder which is made pursuant to and in compliance with (A) any stock repurchase agreement between a Shareholder and the Company or (B)  Section 3.7 ;
 
(v)                                  any Transfer of any or all Equity Securities held by a Shareholder which is made pursuant to an effective registration statement filed pursuant to the Securities Act;
 
(vi)                               any Transfer (other than a Transfer to a Non-Qualified Person) of any or all Equity Securities held by a Shareholder which is made pursuant to and in compliance with Section 3.3 hereof (subject to compliance with Section 3.5);
 
(vii)                            any Transfer (other than a Transfer to a Non-Qualified Person) of any or all Equity Securities held by a Shareholder which is made pursuant to and in compliance with Section 3.4 hereof (subject to compliance with Section 3.5);
 
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(viii)                         any Transfer (other than a Transfer to a Non-Qualified Person) of any and all Equity Securities by a Shareholder pursuant to Section 3.5 hereof;
 
(ix)                               any Transfer of any or all Equity Securities held by a Shareholder not described in any of clauses (i) through (viii) above to the extent expressly permitted by a majority of the disinterested members of the Board (it being understood that for purposes of this clause (ix), any director designated or nominated by a Shareholder, or elected to fill a vacancy or a newly created directorship by the vote of any such director, shall be deemed not to be disinterested with respect to any proposed Transfer by such Shareholder or another Shareholder who is an Affiliate of such Shareholder), notwithstanding that the transferee thereof may be a Non-Qualified Person;
 
provided , that the restrictions contained in this Section 3.2 will continue to be applicable to the Equity Securities after any Permitted Transfer (other than a Permitted Transfer made pursuant to Section 3.2(a)(v) ).
 
(b)                                  In any Transfer referred to in Section 3.2(a)  (other than Section 3.2(a)(v) ), the Permitted Transferee shall agree in writing to be bound by all of the provisions of this Agreement and shall execute and deliver to the Company a copy of the joinder agreement attached hereto as Exhibit A or other joinder instrument in form and substance reasonably acceptable to the Board.  Each such Permitted Transferee or other transferee permitted hereunder shall hold such shares of Equity Securities subject to the provisions of this Agreement as a “Shareholder” hereunder as if such Permitted Transferee or transferee were an original signatory hereto and shall be deemed to be a party to this Agreement.
 
Section 3.3                                     Sales Subject to Tag-Along Rights .
 
(a)                                  In the event that a Shareholder (the “ Transferring Shareholder ”) proposes to effect a Transfer of all of the shares of Common Stock and other Equity Securities held by such Shareholder (other than a Permitted Transfer pursuant to clauses 3.2(a)(i)-(v)), such Transferring Shareholder shall promptly give written notice (the “ Transfer Notice ”) to the Company and each of the non-Transferring Shareholders at least twenty (20) days prior to the closing of such Transfer.  The Transfer Notice shall describe in reasonable detail the proposed Transfer including, without limitation, the class and number of shares of Common Stock or other Equity Securities to be sold, the identity of the prospective transferee(s), the purchase price of each such share of Common Stock or other Equity Securities to be sold and the date such proposed sale is expected to be consummated.
 
(b)                                  Each of the Non-Transferring Shareholders shall have the right, exercisable upon delivery of an irrevocable written notice to the Transferring Shareholder within ten (10) Business Days after receipt of the Transfer Notice, to participate in such proposed Transfer on the same terms and conditions as set forth in the Transfer Notice.  Each non-Transferring Shareholder electing to participate in the Transfer described in the Transfer Notice (each, a “ Participant ”) shall indicate in its irrevocable notice of election to the Transferring Shareholder the maximum number of shares of Common Stock it desires to Transfer.  Each such Participant shall be entitled to Transfer a number of shares of Common Stock equal to such holder’s pro rata portion of the total number of shares of Common Stock to be Transferred, as set
 
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forth in the Transfer Notice, up to such maximum number.  For purposes of this Section 3.3(b) , “pro rata portion” shall mean for each Participant a fraction, the numerator of which is the total number of Common Stock Equivalents held by such Participant immediately prior to the Transfer proposed in the Transfer Notice and the denominator of which is the total number of Common Stock Equivalents held by all Shareholders immediately prior to the Transfer proposed in the Transfer Notice.  No holder of Equity Securities (other than shares of Common Stock) shall be entitled to sell Equity Securities (other than shares of Common Stock) pursuant to this Section 3.3 , but shall be permitted to convert, exchange or exercise its applicable portion of Equity Securities (subject to the terms of such Equity Securities) for shares of Common Stock concurrently with, and subject to, the consummation of the proposed Transfer.
 
(c)                                   Each Participant shall effect its participation in the Transfer by delivering to the representative of the Transferring Shareholder (to hold in trust as agent for such Participant), at least three (3) Business Days prior to the date scheduled for such Transfer as set forth in the Transfer Notice, (i) one (1) or more certificates or other instruments, as applicable, in proper form for transfer, which represent the number of shares of Common Stock which such Participant is entitled to Transfer in accordance with Section 3.3(b)  (but subject to the limitations set forth in Section 3.3(b) ), (ii) a joinder or other similar agreement pursuant to which such Participant shall agree to be bound by the terms and conditions of the transactions described in the Transfer Notice pursuant to Section 3.3(a)  in form and substance reasonably satisfactory to the Transferring Shareholder, and (iii) executed copies (or signature pages thereof) of such other agreements, documents or certificates as the Transferring Shareholders and/or its transferee shall reasonably request.  Such certificate or certificates or other instruments, as applicable, shall be delivered by the Transferring Shareholders to such transferee on the date scheduled for the consummation of the Transfer pursuant to the terms and conditions specified in the Transfer Notice and such transferee shall remit to each such Participant its pro rata portion of the net sale proceeds to which such Participant is entitled by reason of its participation in such sale.  For purposes of this Section 3.3(c) , “pro rata portion” shall mean for each Participant a fraction, the numerator of which is the number of shares of Common Stock to be Transferred by such Participant pursuant to this Section 3.3 and the denominator of which is the total number of shares of Common Stock to be Transferred pursuant to this Section 3.3 .  The Transferring Shareholder’s sale of shares of Common Stock in any sale proposed in a Transfer Notice shall be effected on terms and conditions not more favorable than those set forth in such Transfer Notice and those applicable to the other Participants.
 
Section 3.4                                     Grant of Drag-Along Rights .
 
(a)                                  If the Right of First Refusal under Section 3.5 has expired, a Shareholder holding more than 50% of the Common Stock Equivalents held by all Shareholders proposes to Transfer all of the Equity Securities held by such Shareholder, then such Shareholder (a “ Dragging Shareholder”) shall have the right (a “ Drag-Along Right ”), subject to compliance with Section 3.5 , to require (i) each of the other Shareholders to take all action necessary or appropriate in order to cause the Company to take all action necessary or appropriate to give effect to such transaction and (ii) each of the Shareholders to sell, transfer or otherwise dispose of a corresponding percentage of its Common Stock and Equity Securities to the proposed transferee (the “ Acquiror ”), on the terms contemplated by Section 3.4(b)  (a transaction described above, a “ Drag-Along Sale ” ) ; provided that such Drag-Along Right shall only be
 
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available if (i)(A) written notice of such Drag-Along Sale pursuant to Section 3.4(b) is first delivered to the other Shareholders after December 31, 2018 or (B) the Drag Along Sale Purchase Price (as defined below) exceeds the highest price per share of Common Stock paid by any Shareholder by at least 10%, (ii) the Acquiror is not a Non-Qualified Person and (iii) the consideration for the Equity Securities in such Drag-Along Sale is comprised entirely of cash.
 
(b)                                  In order to exercise a Drag-Along Right, the Dragging Shareholder shall notify each of the other Shareholders thereof, such notice to set forth the principal terms and conditions of the proposed Drag-Along Sale, including without limitation, the class and number of shares of Common Stock or other Equity Securities to be sold, the identity of the Acquiror, the purchase price of each share of Common Stock or other Equity Securities to be sold and the date the sale is expected to be sold.  Each of the other Shareholders will take all actions reasonably requested by the Dragging Shareholder in connection with the consummation of such Drag-Along Sale, and within 20 Business Days of the receipt of such notice (or such longer period of time as the Dragging Shareholder shall designate in such notice), each of the other Shareholders shall cause its Equity Securities to be sold to the proposed buyer on the same terms and conditions and for the same per share or per unit consideration (the “ Drag Along Sale Purchase Price ”) as the Equity Securities being sold by the Dragging Shareholder.  In furtherance of and not in limitation of the foregoing, in connection with a Drag-Along Sale, each non-Dragging Shareholder shall (x) consent to and raise no objections against the Drag-Along Sale or the process pursuant to which it was arranged, (y) waive any appraisal rights and other similar rights, and (z) execute all documents containing such reasonable and customary terms and conditions (including representations and warranties that relate specifically to a particular non-Dragging Shareholder).
 
(c)                                   The Dragging Shareholder shall pay for all costs and expenses in connection with a Drag-Along Sale to the extent such costs and expenses are not otherwise paid by the Company or the transferee; provided , however , that the costs and expenses incurred by any Shareholder on its own behalf will not be shared by any other Shareholder.
 
Section 3.5                                     First Refusal Rights .
 
(a)                                  Except for a Permitted Transfer pursuant to clauses 3.2(a)(i)-(v), if any Shareholder (a “ Selling Shareholder ”) proposes to Transfer any Common Stock or other Equity Securities prior to any Transfer it shall obtain a bona fide offer from a third party that is not an Affiliate of such Shareholder (a “ Bona Fide Offer ”) for the purchase of such securities, including any securities a Participant has elected to sell pursuant to Section 3.3(b)  hereof (collectively, the “ Offered Securities ”) and shall give written notice of the proposed Transfer (the “ Notice of Intention ”) to the Company and the other Shareholders accompanied by a copy of the Bona Fide Offer.  The Bona Fide Offer shall identify such purchaser (the “ Offeror ”), the price per share (which shall be in cash or a note or a combination thereof) being offered by the Third Party for the Offered Securities (the “ Offer Price ”) and all other material terms of the Bona Fide Offer.
 
(b)                                  For a period of 30 days following their receipt of the Notice of Intention, the other Shareholders shall have the irrevocable right to purchase at the Offer Price, and on the other terms specified in the Notice of Intention, their pro rata portion of the Offered Securities;
 
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provided that such Shareholder may not exercise such right to purchase for less than its full pro rata portion of the Offered Securities.  The right of the other Shareholders pursuant to this Section 3.5(b)  shall be exercisable by delivery to the Selling Shareholder and the Company of a notice (the “ Prospective Buyer Notice ”) and shall expire if unexercised within such 30 day period.
 
(c)                                   Each Shareholder shall have a right of over-allotment such that if any Shareholder elects not to purchase its pro rata portion of the Offered Securities (the “ Non-Purchasing Shareholder ”) pursuant to Section 3.5(b) , the other Shareholders shall have the right to purchase up to the balance of Offered Securities not so purchased.  Within 35 days following its delivery of the Notice of Intention, the Selling Shareholder shall give written notice to the Shareholders who exercised their purchase right set forth in Section 3.5(b) , which notice shall set forth the number of Offered Securities that remain unpurchased (the “ Over-Allotment Offer ”).  Such over-allotment right may be exercised by a Shareholder by accepting the Over-Allotment Offer in writing by delivery within five days of such Shareholder’s receipt of the Over-Allotment Offer of another Prospective Buyer Notice with respect to any amount of the unpurchased Offered Securities.  If, as a result thereof, the exercises of over-allotment rights exceed the total number of unpurchased Offered Securities, the Shareholders exercising such over-allotment rights shall be cut back with respect to such over-allotment rights on a pro rata basis.
 
(d)                                  If all notices required to be given pursuant to this Section 3.5 have been duly given, and the Company and the other Shareholders determine not to exercise their respective options to purchase all of the Offered Securities at the Offer Price and on the other terms specified in the Notice of Intention, then the Selling Shareholder shall have the right, for a period of 90 days following the earlier of (i) the expiration of the last applicable option period pursuant to this Section 3.5 and (ii) the date on which such Selling Shareholder receives notice from the Company and the other Shareholders that they will not exercise the options granted pursuant to this Section 3.5 , to sell to the Offeror, subject to the provisions of Section 3.2(a)  and Section 3.3 , the Offered Securities as to which such options have not been exercised under this Section 3.5 at a price not less than the Offer Price and on the other terms set forth in the Notice of Intention.
 
(e)                                   If the Selling Shareholder wishes to sell, transfer or otherwise dispose of any Equity Securities (i) to any person or entity other than the Offeror, (ii) on terms and conditions that are more favorable in any material respect to the Offeror than those set forth in the Notice of Intention, or (iii) more than 90 days after the expiration of the option periods granted pursuant to this Section 3.5 , then as a condition precedent to such transaction, such Equity Securities must again first be offered to the other Shareholders in accordance with the procedures and time periods set forth in this Section 3.5 .
 
Section 3.6                                     Grant of Preemptive Rights to Shareholders .
 
(a)                                  In the event that, at any time, the Company shall decide to undertake an issuance of New Securities (any such issuance being hereby expressly consented to by each Shareholder in its capacity as such), the Company shall at such time deliver to each Shareholder written notice of the Company’s decision, describing the amount, type and terms of such New
 
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Securities, the purchase price per New Security (the “ New Securities Price ”) to be paid by the purchasers of such New Securities and the other terms upon which the Company has decided to issue the New Securities including, without limitation, the expected timing of such issuance which will in no event be more than sixty (60) days or less than ten (10) days after the date upon which such notice is given (the “ Preemptive Notice ”).  Each such Shareholder shall have ten (10) days from the date on which the Preemptive Notice is given to agree by written notice to the Company to purchase up to its proportional share of such New Securities for the New Securities Price and upon the general terms specified in the Preemptive Notice and stating therein the quantity of New Securities to be purchased by such Shareholder.  In the event that in connection with such a proposed issuance of New Securities, any such Shareholder shall for any reason fail or refuse to give such written notice to the Company within such ten (10) day period, such Shareholder shall, for all purposes of this Section 3.6 , be deemed to have refused (in that particular instance only) to purchase any of such New Securities and to have waived (in that particular instance only) all of its rights under this Section 3.6 to purchase any of such New Securities.  For purposes of this Section 3.6 , a Shareholder’s “proportional share” shall mean, at any time, the quotient obtained by dividing the number of Common Stock Equivalents held by such Shareholder at such time by the aggregate number of Common Stock Equivalents held by all Shareholders at such time.
 
(b)                                  In the event and to the extent that any such Shareholder does not elect to purchase all of its respective proportional share in accordance with Section 3.6(a) , the Company shall be free to issue the New Securities which were available for purchase by such non-electing Shareholders (the “ Excess New Securities ”) to any Person; provided , that (i) the price per Excess New Security at which such Excess New Securities are being issued to and purchased by such Person is not less than the New Securities Price and (ii) the other terms and conditions pursuant to which such Person purchases such Excess New Securities are substantially equivalent to the terms set forth in the Preemptive Notice.  Any Excess New Securities not issued or sold within one hundred twenty (120) days after the date of the Preemptive Notice shall again be subject to the provisions of this Section 3.6 .
 
Section 3.7                                     Right to Purchase Upon Involuntary Transfer .
 
(a)                                  In the event of any Involuntary Transfer of Equity Securities, the Company shall have the right to purchase such Equity Securities pursuant to this Section 3.7 .  Upon the Involuntary Transfer of any Equity Securities of any Shareholder or other holder, as the case may be, such holder shall promptly (but in no event later than two (2) Business Days after such Involuntary Transfer) deliver written notice to the Company indicating that the Involuntary Transfer has occurred, specifying the name of the Person to whom such Equity Securities have been Transferred (the “ Involuntary Transferee ”) and giving a detailed description of the circumstances giving rise to, and stating the legal basis for, the Involuntary Transfer.  Upon the receipt of such notice, and for ninety (90) days thereafter (or at any time if such notice has not been given), the Company shall have the right to purchase, and the Involuntary Transferee shall have the obligation to sell, all or any portion of the Equity Securities acquired by the Involuntary Transferee for a purchase price equal to the lesser of (i) the Equity Value of such Equity Securities on the date of Transfer to the Involuntary Transferee and (ii) the amount of the indebtedness or other liability that gave rise to the Involuntary Transfer plus the excess, if any, of the price per Equity Security paid by the Shareholder over the amount of such indebtedness or
 
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other liability that gave rise to the Involuntary Transfer.  Notwithstanding the foregoing, the Board may, for good cause shown by the Shareholder or other holder, as the case may be, who made the Involuntary Transfer, determine that payment of a purchase price equal to the Equity Value of such Equity Securities on the date of Transfer to the Involuntary Transferee, if higher than the price determined pursuant to clause (ii) above, would be appropriate under the circumstances and direct that payment be made in such amount.
 
(b)                                  The purchase price for the purchase and sale of the shares of Common Stock pursuant to Section 3.7(a)  shall be paid in cash, by certified personal check or bank cashier’s check.
 
(c)                                   If the Company shall at any time during the term of this Agreement have the right pursuant to Section 3.7(a)  to purchase any Equity Securities acquired by an Involuntary Transferee and the Company at such time is either unable, or elects not, to exercise such right with respect to all or any part of such Equity Securities, the Company shall assign its right and delegate its obligations under Section 3.7(a)  to the DAC Shareholder, in the case of an Involuntary Transfer by the Coustas Shareholder or the Coustas Shareholder in the case of an Involuntary Transfer by the DAC Shareholder which may then exercise all of the rights of the Company with respect to the purchase of such Equity Securities as to which such rights are assigned.
 
ARTICLE 4
 
OPTION TO PURCHASE COUSTAS INTERESTS
 
Section 4.1                                     Option to Purchase Coustas Interests.
 
(a)                                  Subject to Section 4.2(b), the Coustas Shareholder hereby grants to the DAC Shareholder the unconditional right and option to purchase for fair market value all of the Coustas Interests at any time after the earlier to occur of (1) such time as the DAC Shareholder’s acquisition of the Coustas Interests would not conflict with or result in a breach or violation of any financing arrangement of Danaos Corporation or its subsidiaries and (2) December 31, 2018.
 
(b)                                  The parties acknowledge that the potential transfer of the Coustas Interests, pursuant to this Article 4 is subject to obtaining any and all written consents of Governmental Authorities and other third parties and to the terms of all agreements existing as of the date hereof in respect of the Coustas Interests. Each of the Coustas Shareholder and the Company hereby covenants and agrees to use its commercially reasonable efforts to obtain any such consents required to be obtained by it in connection with the transfer of the Coustas Interests pursuant to this Article 4.
 
Section 4.2                                     Procedures .
 
(a)                                  If the DAC Shareholder decides to exercise the option to purchase the Coustas Interests, it will provide written notice to the Coustas Shareholder and the Company of such exercise, the fair market value it proposes to pay for the Coustas Interests and the other material terms of the purchase (the “ Option Exercise Notice ”). The decision to purchase the Coustas Interests, the fair market value to be paid for the Coustas Interests, and the other terms
 
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of the purchase shall be approved by the independent directors of the DAC Shareholder. If the DAC Shareholder and the Coustas Shareholder are unable to agree on the fair market value of the Coustas Interests that are subject to the Option Exercise Notice and/or the other material terms of the Option Exercise Notice during the 30-day period (the “ Option Exercise Period ”) after receipt by the Coustas Shareholder of the Option Exercise Notice, the DAC Shareholder and the Coustas Shareholder shall appoint a Third Party Broker prior to the fifth business day following the end of the Option Exercise Period to determine the fair market value of the Coustas Interests and/or the other material terms on which the DAC Shareholder and the Coustas Shareholder are unable to agree. In determining the fair market value of the Coustas Interests and/or the other material terms on which the Coustas Interests are to be sold, the Third Party Broker will have access to the proposed sale and purchase values and terms for the Option Exercise Notice submitted by the DAC Shareholder and the Coustas Shareholder, respectively, and to all information prepared by or on behalf of the DAC Shareholder and the Coustas Shareholder with respect to the Coustas Interests and reasonably requested by such Third Party Broker. Such Third Party Broker shall be required to determine the fair market value of the Coustas Interests and/or the other material terms on which the DAC Shareholder and the Coustas Shareholder are unable to agree within 30 calendar days of its engagement and furnish the DAC Shareholder and Coustas Shareholder its determination. The fees and expenses of the Third Party Broker will be divided equally between the DAC Shareholder and Coustas Shareholder. Upon receipt of such determination, the DAC Shareholder will have the option, subject to Section 4.2(b), but not the obligation in to purchase the Coustas Interests for the fair market value and on the other material terms determined by the Third Party Broker, as soon as commercially practicable after such determinations have been made.
 
(b)                                  Notwithstanding anything to the contrary in this Agreement, the Coustas Shareholder shall not be obligated to sell any Coustas Interests pursuant to the DAC Shareholder’s exercise of its option pursuant to Section 4.1(a) if the fair market value of the Coustas Interests determined pursuant to the procedures set forth in Section 4.2(a) is below the net book value of the interest in the Company represented by the Coustas Interests as determined by the Company’s most recent financial statements.
 
(c)                                   If the DAC Shareholder chooses to exercise its option to purchase the Coustas Interests, the applicable parties shall enter into a purchase and sale agreement for the purchase and sale of the Coustas Interests pursuant to which the Coustas Shareholder shall be obligated to sell the Coustas Interests to the DAC Shareholder and the DAC Shareholder shall be obligated to purchase the Coustas Interests from the Coustas Shareholders. The terms of the purchase and sale agreement will include the following:
 
(i)                                      the DAC Shareholder will deliver a cash purchase price (unless the DAC Shareholder and the Coustas Shareholder agree that the consideration will be paid by means of equity of the DAC Shareholder, an interest-bearing promissory note, another form of consideration or a combination thereof);
 
(ii)                                   the Coustas Shareholder will provide customary representations and warranties with respect to title to the Coustas Interests and any other such matters as the DAC Shareholder may reasonably request; and
 
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(iii)                                neither the Coustas Shareholder nor the DAC Shareholder shall have any obligation to sell or buy the Coustas Interests if any of the consents referred to in Section 4.1(b) above have not been obtained.
 
(d)                                  If the DAC Shareholder chooses or is deemed to have chosen not to exercise the option to purchase the Coustas Interests at the price determined by the Third Party Broker under Section 4.2(a) all future rights to purchase the Coustas Interests by the DAC Shareholder will be extinguished (subject to any purchase rights that may arise under Article III), except as otherwise may be agreed.
 
ARTICLE 5
 
BOARD OF DIRECTORS OF THE COMPANY
 
Section 5.1                                     Composition .
 
(a)                                  Each Shareholder shall vote, at any time and from time to time, all of the shares of Common Stock held by such Shareholder and all other shares of Common Stock over which such Shareholder has voting control and shall take all other necessary or desirable action within such Shareholder’s control (whether in such Shareholder’s capacity as a shareholder, director or officer of the Company or otherwise), and the Company shall take all necessary or desirable action within its control, in order to cause, elect and maintain a Board composed of three (3) Directors as follows:
 
(i)                                      two (2) individuals designated by the Coustas Shareholder from time to time in their sole discretion, who shall initially be Dimitris Coustas and Roberto Coustas; and
 
(ii)                                   one (1) individual designated by the DAC Shareholder from time to time in their sole discretion, who shall initially be Iraklis Prokopakis.
 
Any member of the Board designated by the DAC Shareholder pursuant to Section 5.1(a)(ii)  shall also be appointed to each committee of the Board.  The Shareholders hereby agree not to (i) grant any proxy or become party to any voting trust or other agreement or arrangement which is inconsistent with, conflicts with or violates any provision of this Agreement or (ii) in any election of the members of the Board, cast any vote for any Person not nominated in accordance with the procedure set forth in this Section 5.1(a) .
 
(b)                                  At all times, to the extent permitted by Applicable Law, the composition of the board of directors or any comparable governing body of the Company’s Subsidiaries shall have the same composition as that of the Board (except as otherwise may be mutually agreed by the Coustas Shareholder and the DAC Shareholder) and shall be subject to the terms of this Article 4 with references to the Board referring to the board of directors or any comparable governing body of the Company’s Subsidiaries, as may be applicable.
 
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(c)                                   The by-laws of the Company shall provide that, except as otherwise provided by Applicable Law, no quorum shall exist at any meeting of the Board unless at least 80% of the directors of such Board are present at such meeting.
 
(d)                                  All actions to be taken by the Board of the Company shall be determined by a simple majority vote, provided that the following actions may only be approved by the Board on a unanimous basis:
 
(i)                                      acquiring or divesting any vessel, including entering into or disposing of any newbuilding construction contract;
 
(ii)                                   incurring, guaranteeing or assuming any material amount of indebtedness for borrowed money, including through sale leaseback arrangements, by the Company or any of its subsidiaries or obligating any Shareholder to do so;
 
(iii)                                appointing or replacing the Chief Executive Officer, the President, the Chief Operating Officer or the Chief Financial Officer of the Company;
 
(iv)                               compensation arrangements for senior officers of the Company;
 
(v)                                  entering into, terminating or amending the terms of any Affiliate Transaction (including approving the continuation of the term of the Management Agreement after any termination of the DAC Management Agreement by the DAC Shareholder);
 
(vi)                               amending the Articles of Incorporation or Bylaws of the Company or this Agreement, including a change in the number of directors or the required level of director approval of any action;
 
(vii)                            issuing any additional Equity Securities or repurchasing, redeeming or cancelling any Equity Securities of the Company;
 
(viii)                         approving any Sale of the Business or any other merger, sale of all or substantially all of the assets of the Company; or any recapitalization, reorganization, dissolution or liquidation of the Company or, except in the ordinary course, any of its direct or indirect subsidiaries, or any filing for bankruptcy, reorganization or similar protection from creditors;
 
(ix)                               approval of an Initial Public Offering;
 
(x)                                  changing the Company’s business plan or the nature of its business from owning and operating containerships.
 
Section 5.2                                     Term .  Unless otherwise removed or replaced in accordance with Section 5.1 or Section 5.3 , the members of the Board shall hold office until their respective successors shall have been duly appointed.
 
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Section 5.3                                     Vacancy and Removal .
 
(a)                                  Any member of the Board designated by the Coustas Shareholder shall only be removed from the Board upon the request or approval of the Coustas Shareholder.  Any member of the Board designated by the DAC Shareholder pursuant to Section 5.1(a)(ii)  shall only be removed from the Board upon the request or approval of the DAC Shareholder.
 
(b)                                  In the event that any director designated by the Coustas Shareholder pursuant to Section 5.1 ceases for any reason to serve as a member of the Board during his term of office, the resulting vacancy on the Board shall be filled by a representative designated by the Coustas Shareholder hereunder.  In the event that any director designated by the DAC Shareholder pursuant to Section 5.1 ceases for any reason to serve as a member of the Board during his term of office, the resulting vacancy on the Board shall be filled by a representative designated by the DAC Shareholder hereunder.
 
Section 5.4                                     Limitation on Liability of Directors .  No Director shall, by reason of being a Director, be bound by, or be personally liable to any third Person for a judgment decree or order of any Governmental Authority or in any other manner, for the expenses, liabilities or obligations of the Company whether arising in contract, tort or otherwise, solely by reason of being a member of the Board.
 
ARTICLE 6
 
SHAREHOLDER REPRESENTATIONS AND WARRANTIES
 
Section 6.1                                     Representations and Warranties .  Each Shareholder and each Person who becomes a Shareholder after the date hereof with respect to itself hereby represents and warrants to and acknowledges with the Company and each other Shareholder that:
 
(a)                                  such Shareholder has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of an investment in the Company and making an informed investment decision with respect thereto;
 
(b)                                  such Shareholder is able to bear the economic and financial risk of an investment in the Company for an indefinite period of time;
 
(c)                                   such Shareholder is acquiring or has acquired Equity Securities for its own account and not as nominee or agent for any other Person and for investment only and not with a view to, or for offer or sale in connection with, any distribution thereof or with any present intention of offering or selling or otherwise disposing of such Equity Securities, all without prejudice, however, to the right of such Shareholder at any time to sell or dispose of all or any part of the Equity Securities held by such Shareholder pursuant to a lawful Transfer in accordance with this Agreement;
 
(d)                                  such Shareholder is not party to any contract or agreement, including any voting trust or other voting arrangement, whereby any of the Equity Securities or any interest therein held by such party on the date hereof is to be offered, sold, assigned, pledged, hypothecated or otherwise transferred;
 
20 

 
(e)                                   such Shareholder understands that the Equity Securities have not been registered under the Securities Act or the securities or “blue sky” laws of any jurisdiction, and such Shareholder agrees that its Equity Securities cannot be transferred unless they are subsequently registered and/or qualified under the Securities Act or other applicable securities and “blue sky” laws, or are exempt from such qualification or registration, and the provisions of this Agreement have been complied with;
 
(f)                                    such Shareholder (i) has been provided with access to all information concerning the Equity Securities, the Company and its Subsidiaries, as he, she or it has requested and has had an opportunity to ask questions of management of the Company and to obtain such additional information concerning the Equity Securities, the Company and its Subsidiaries as such Shareholder deems necessary in connection with his, her or its acquisition of Equity Securities, (ii) understands that information with respect to existing business and historical operating results of the Company and its Subsidiaries and estimates and projections as to future operations involve significant subjective judgment and analysis, which may or may not be correct and (iii) acknowledges that on the date hereof the Company cannot, and does not, make any representation or warranty as to the accuracy of the information concerning the past or future results of any of its Subsidiaries;
 
(g)                                   if a natural person, (i) neither the Company nor any Person acting on behalf of the Company has offered to sell or sold the Equity Securities to such Person by means of any form of general solicitation or advertising, (ii) such Person has not received, paid or been given, directly or indirectly, any commission or remuneration for or on account of any sale, or the solicitation of any sale of the Equity Securities, and (iii) the address set forth below such Person’s name on the relevant Schedule is the address of the Person’s residence and domicile (not a temporary or transient residence);
 
(h)                                  if not a natural person, such Shareholder was not formed solely for the purpose of owning Equity Securities in the Company;
 
(i)                                      if a natural person, such Shareholder has the legal capacity to execute and deliver this Agreement (or the separate joinder, if applicable) and to consummate the transactions contemplated hereby (and thereby, if applicable) and, with or without the giving of notice or lapse of time, or both, neither shall require such Shareholder to obtain any consent or approval that has not been obtained or shall contravene or shall result in a breach or default which is material under any provision of any law, rule, regulation, order, judgment or decree applicable to such Shareholder or any agreement or instrument to which such Shareholder is party or by which such Shareholder or any of such Shareholder’s assets or properties is bound;
 
(j)                                     if not a natural person, the execution, delivery and performance of this Agreement (or the separate joinder executed by such Shareholder, if applicable) and the consummation of the transactions contemplated hereby (and thereby, if applicable) have been duly authorized by such Shareholder and, with or without the giving of notice or lapse of time, or both, do not require such Shareholder to obtain any consent or approval that has not been obtained and do not contravene or result in a breach or default which is material under any provision of any law, rule, regulation, order, judgment or decree applicable to such Shareholder, its certificate of incorporation, by-laws or other governing documents (if an entity) or any
 
21 

 
agreement or instrument to which such Shareholder is party or by which such Shareholder or any of such Shareholder’s assets or properties is bound; and
 
(k)                                  this Agreement is valid, binding and enforceable against such Shareholder in accordance with its terms except to the extent that its enforceability may be subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (regardless of whether such enforceability is considered in a proceeding brought in equity or at law).
 
ARTICLE 7
 
ACCOUNTING AND INFORMATION RIGHTS
 
Section 7.1                                     Financial Statements and Other Information .  The Company shall at all times, and shall cause each subsidiary of the Company at all times to, maintain accurate and complete accounting and other financial records in accordance with the requirements of U.S. GAAP.  The Company shall prepare or obtain and deliver to the Shareholders:
 
(a)                                  unaudited consolidated financial statements in respect of each quarter (including a balance sheet), without accompanying notes, in a format agreed to by the Parties, within 60 days of the end of the quarter in question, prepared in accordance with the requirements of U.S. GAAP;
 
(b)                                  audited consolidated financial statements of the Company in respect of each fiscal year within 120 days of the end of such fiscal year, prepared in accordance with the requirements of U.S. GAAP; and
 
(c)                                   such other information in relation to the financial position and affairs of the Company as each Shareholder may from time to time reasonably require.
 
Section 7.2                                     Fiscal Year .  The fiscal year of the Company and each SPV shall end on 31 December.
 
Section 7.3                                     Independent Auditing Firm .  The Company shall appoint PricewaterhouseCoopers S.A. as its auditors and shall cause the Board of each subsidiary to appoint such firm as its auditors, unless the Board shall select another firm of independent registered accountants
 
ARTICLE 8
 
MISCELLANEOUS
 
Section 8.1                                     No Appraisal Rights .  Each Shareholder, by executing this Agreement, hereby acknowledges that, in the event of any merger or consolidation involving the Company, such Shareholder shall be entitled only to the rights, if any, provided in the applicable plan of merger and shall not be entitled to appraisal or similar rights.
 
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Section 8.2                                     Entire Agreement .  This Agreement (including the schedules and exhibits hereto) contains the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior arrangements or understandings (whether written or oral) with respect thereto, except to the extent such matters are otherwise specifically addressed in the subscription agreements for Common Stock.
 
Section 8.3                                     Captions .  The Article and Section captions used herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.
 
Section 8.4                                     Counterparts .  For the convenience of the parties, any number of counterparts of this Agreement may be executed by the parties hereto, each of which shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.
 
Section 8.5                                     Notices .  Any notice or other communication required or permitted under this Agreement shall be deemed to have been duly given (i) five (5) Business Days following deposit in the mails if sent by registered or certified mail (postage prepaid), (ii) when sent, if sent by facsimile transmission, if receipt thereof is confirmed by telephone, (iii) when delivered, if delivered personally to the intended recipient and (iv) two (2) Business Days following deposit with a nationally recognized overnight courier service, in each case addressed as follows:
 
If to the Company, to:
 
Gemini Shipholdings Corporation
 c/o Danaos Shipping Co. Ltd.
14 Akti Kondyli
185 45 Piraeus, Greece
Attention: CEO
Telephone: +30 210 419 6400
Facsimile: +30 210 419 6489
 
If to the Coustas Shareholder, to:
 
Virage International Ltd.
c/o Danaos Shipping Co. Ltd.
14 Akti Kondyli
185 45 Piraeus, Greece
Attention:  CEO
Telephone: +30 210 419 6400
Facsimile: +30 210 419 6489
 
If to the DAC Shareholder, to:
 
23 

 
Danaos Corporation
 c/o Danaos Shipping Co. Ltd.
14 Akti Kondyli
185 45 Piraeus, Greece
Attention:  COO
Telephone: +30 210 419 6400
Facsimile: +30 210 419 6489
 
Section 8.6                                     Successors and Assigns .  This Agreement shall be binding upon and inure to the benefit of the Company, the Shareholders and their respective successors, assigns and Permitted Transferees.  Any or all of the rights of a Shareholder under this Agreement may be assigned or otherwise conveyed by any Shareholder only in connection with a Transfer of Equity Securities which is in compliance with this Agreement.
 
Section 8.7                                     Governing Law .  The corporate law of the Republic of the Marshall Islands shall govern all issues and questions concerning the relative rights of the Company and all of its Shareholders.  All other issues and questions concerning the construction, validity, interpretation and enforceability of this Agreement (and the exhibits and schedules hereto), and all matters relating hereto, shall be governed by, and construed in accordance with, the laws of the State of New York, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York.
 
Section 8.8                                     Submission to Jurisdiction; Waiver of Jury Trial .
 
(a)                                  Each of the parties hereto hereby irrevocably acknowledges and consents that any legal action or proceeding brought with respect to any of the obligations arising under or relating to this Agreement may be brought in the courts of the State of New York, County of New York or in the United States District Court for the Southern District of New York and each of the parties hereto hereby irrevocably submits to and accepts with regard to any such action or proceeding, for itself and in respect of its property, generally and unconditionally, the exclusive jurisdiction of the aforesaid courts.  Each party hereby further irrevocably waives any claim that any such courts lack jurisdiction over such party, and agrees not to plead or claim, in any legal action or proceeding with respect to this Agreement or the transactions contemplated hereby brought in any of the aforesaid courts, that any such court lacks jurisdiction over such party.  Each party irrevocably consents to the service of process in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to such party, at its address for notices set forth in Section 8. 5 , such service to become effective ten (10) days after such mailing.  Each party hereby irrevocably waives any objection to such service of process and further irrevocably waives and agrees not to plead or claim in any action or proceeding commenced hereunder or under any other documents contemplated hereby that service of process was in any way invalid or ineffective.  Subject to Section 8. 8(b) , the foregoing shall not limit the rights of any party to serve process in any other manner permitted by law.  The foregoing consents to jurisdiction shall not constitute general consents to service of process in the State of New York for any purpose except as provided above and shall not be deemed to confer rights on any Person other than the respective parties to this Agreement.
 
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(b)                                  Each of the parties hereto hereby waives any right it may have under the laws of any jurisdiction to commence by publication any legal action or proceeding with respect to this Agreement.  To the fullest extent permitted by Applicable Law, each of the parties hereto hereby irrevocably waives the objection which it may now or hereafter have to the laying of the venue of any suit, action or proceeding arising out of or relating to this Agreement in any of the courts referred to in Section 8. 8(a)  and hereby further irrevocably waives and agrees not to plead or claim that any such court is not a convenient forum for any such suit, action or proceeding.
 
(c)                                   The parties hereto agree that any judgment obtained by any party hereto or its successors or assigns or Permitted Transferees in any action, suit or proceeding referred to above may, in the discretion of such party (or its successors or assigns or Permitted Transferees), be enforced in any jurisdiction, to the extent permitted by Applicable Law.
 
(d)                                  The parties hereto agree that the remedy at law for any breach of this Agreement may be inadequate and that should any dispute arise concerning the sale, disposition or issuance of any Equity Securities or the voting thereof or any other matter hereunder, this Agreement shall be enforceable in a court of equity by an injunction or a decree of specific performance.  Such remedies shall, however, be cumulative and nonexclusive, and shall be in addition to any other remedies which the parties hereto may have.
 
(e)                                   Each Shareholder hereby waives, to the fullest extent permitted by Applicable Law, any right it may have to a trial by jury in respect of any litigation as between the parties directly or indirectly arising out of, under or in connection with this Agreement or the transactions contemplated hereby or disputes relating hereto.
 
Section 8.9                                     Benefits Only to Parties .  Nothing expressed by or mentioned in this Agreement is intended or shall be construed to give any Person, the parties hereto and their respective successors or assigns and Permitted Transferees, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained, this Agreement and all conditions and provisions hereof being intended to be and being for the sole and exclusive benefit of the parties hereto and their respective successors and assigns and Permitted Transferees, and for the benefit of no other Person.
 
Section 8.10                              Termination .
 
(a)                                  Subject to Section 8.10(b) ,this Agreement shall terminate upon the first to occur of:
 
(i)                                      the voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company (other than any dissolution, liquidation or winding up in connection with any reincorporation of the Company in another jurisdiction);
 
(ii)                                   the execution of a written instrument approving the termination of this Agreement, signed by the Company and each of the Coustas Shareholder and the DAC Shareholder; and
 
25 

 
(iii)                                the closing of (i) a Qualified Public Offering, or (ii) a Sale of the Business.
 
(b)                                  Upon the date on which the Company first becomes subject to the period reporting requirements of Sections 13 or 15(d) of the Exchange Act, the covenants set forth in Section 7.1 will immediately terminate.
 
Section 8.11                              Publicity .  Except as otherwise required by Applicable Law or any recognized securities exchange, including the New York Stock Exchange, none of the parties hereto shall issue or cause to be issued any press release or make or cause to be made any other public statement in each case relating to or connected with or arising out of this Agreement or the matters contained herein, without obtaining the prior written consent of the Coustas Shareholder, the DAC Shareholder and the Company to the contents and the manner of presentation and publication thereof.
 
Section 8.12                              Confidentiality .  Each of the parties hereto hereby agrees that throughout the term of this Agreement it shall keep (and, if not an individual, shall cause its directors, officers, general and limited partners, employees, representatives, outside advisors and Affiliates to keep) all information received as a Shareholder or Director relating to the Company (including any such information received prior to the date hereof) confidential except information which (a) is required by Applicable Law or recognized securities exchange, including the New York Stock Exchange, (b) becomes known to such Shareholder from a source, other than the Company, its directors, officers, employees, representatives or outside advisors, which source is not obligated to the Company to keep such information confidential or otherwise prohibited from transmitting the information to such Shareholder, or (c) becomes generally available to the public through no breach of this Agreement by any party hereto.  Each of the parties hereto agrees that (i) such information may be communicated to the directors, officers, general and limited partners, employees, representatives, outside advisors and Affiliates of any of the parties and (ii) if not an individual, it will cause its directors, officers, general and limited partners, employees, representatives, outside advisors or Affiliates to keep such non-public information confidential.  Each of the parties hereto agrees that such party will not, and if not an individual, will direct its directors, officers, general and limited partners, employees, representatives, outside advisors and Affiliates not to, use such non-public information to either to compete with the Company or to conduct itself in a manner inconsistent with the antitrust laws of any jurisdiction.
 
Section 8.13                              Compensation and Reimbursement .  As consideration for their agreement to serve as members of the Board, the Company may pay to members of its Board who are not employees of the Company an annual fee (paid quarterly or as otherwise determined by the Board), in amounts determined from time to time by the Board (which may be uniform among such Directors or disproportionate, as determined in the sole discretion of the Board), and the Company shall reimburse each of the respective members of its Board who are not employees of the Company for their reasonable out-of-pocket expenses incurred in connection with their serving on the Board.  Employees of the Company who incur expenses in connection with their attendance of meetings of the Board in the performance of their duties shall also be reimbursed in accordance with the Company’s usual expense reimbursement policies.
 
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Section 8.14                              Amendments; Waivers .  No provision of this Agreement may be amended, modified or waived without the prior written consent of the Coustas Shareholder and the DAC Shareholder; provided , however , that no amendment or modification to, waiver of a right in, or deletion of Section 8.1 0 or this Section 8.1 4 shall be effective unless unanimously approved by all of the Shareholders.  Notwithstanding the foregoing, the addition of parties to this Agreement in accordance with the terms of this Agreement shall not be deemed to be an amendment, modification or waiver requiring the consent of any Shareholder.  The failure of any party hereto to enforce any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms.
 
Section 8.15                              No Strict Construction .  The parties hereto have participated jointly in the negotiation and drafting of this Agreement.  In the event any ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by all parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.
 
Section 8.16                              Other Business .  The Coustas Shareholder and the DAC Shareholder and any of their respective Affiliates shall have the right to, and shall have no duty (contractual or otherwise) not to, directly or indirectly, engage in or possess an interest in any other business venture of any kind, nature or description, independently or with others, whether or not such ventures are competitive with the Company or any of its Subsidiaries, notwithstanding that representatives of any Coustas Shareholder or any DAC Shareholder or any of their respective Affiliates are serving on the Board.  None of the Coustas Shareholder, the DAC Shareholder nor any of their respective Affiliates, as a shareholder, officer or director of the Company or any of its Subsidiaries, shall have any obligation to communicate, present or offer first to the Company or any of its Subsidiaries any business opportunity or venture of any kind, nature or description that any Coustas Shareholder or any DAC Shareholder or any of their respective Affiliates, as the case may be, may wish to pursue from time to time, independently or with others.  Nothing in this Agreement shall be deemed to prohibit any Coustas Shareholder or any DAC Shareholder and/or any of their respective Affiliates from dealing, or otherwise engaging in business, with Persons transacting business with the Company or any of its Subsidiaries, including any client, customer, supplier, lender or investor of the Company or any of its Subsidiaries.  None of the Coustas Shareholder or any of the DAC Shareholder nor any of their respective Affiliates shall be liable to the Company or its Subsidiaries or any Shareholder for breach of any duty (contractual or otherwise) by reason of any such business ventures or of such Person’s participation therein or by reasons of the fact that any Coustas Shareholder or any DAC Shareholder, as applicable, or any of their respective Affiliates directly or indirectly pursues or acquires any such business opportunity or venture for itself, directs such opportunity or venture to another Person or does not communicate, present or offer first such opportunity or venture to the Company or any of its Subsidiaries.  Neither the Company (or any of its Subsidiaries) nor any Shareholder shall have any rights or obligations by virtue of this Agreement or the transactions contemplated hereby, in or to any independent venture of any Coustas Shareholder, any DAC Shareholder or any of their respective Affiliates, or the income or profits or losses or distributions derived therefrom, and such ventures shall not be deemed
 
27 

wrongful or improper even if competitive with the business of the Company or any of its Subsidiaries.
 
Section 8.17                              Construction .  In this Agreement, unless otherwise specified or where the context otherwise requires:
 
(a)                                  the headings of particular provisions of this Agreement are inserted for convenience only and shall not be construed as a part of this Agreement or serve as a limitation or expansion on the scope of any term or provision of this Agreement;
 
(b)                                  words importing any gender shall include other genders;
 
(c)                                   words importing the singular only shall include the plural and vice versa;
 
(d)                                  the words “include,” “includes” or “including” shall be deemed to be followed by the words “without limitation”;
 
(e)                                   the words “hereof,” “herein” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement;
 
(f)                                    references to “Schedules,” “Exhibits,” “Articles” or “Sections” shall be to Schedules, Exhibits, Articles or Sections of or to this Agreement;
 
(g)                                   references to any Person include the successors and permitted assigns of such Person;
 
(h)                                  the use of the words “or,” “either” and “any” shall not be exclusive;
 
(i)                                      wherever a conflict exists between this Agreement and any other agreement, this Agreement shall control but solely to the extent of such conflict;
 
(j)                                     references to any agreement, contract or schedule, unless otherwise stated, are to such agreement, contract or schedule as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof; and
 
(k)                                  the parties hereto have participated jointly in the negotiation and drafting of this Agreement; accordingly, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party hereto by virtue of the authorship of any provisions of this Agreement.
 
Section 8.18                              Issuance of Preferred Stock .  If at any time the Company issues preferred stock or other equity securities that are not “Equity Securities”, each of the parties hereto agrees to amend this Agreement to appropriately reflect such issuance and to preserve the respective rights and obligations of each of the parties hereunder.
 
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Section 8.19                              Limitation of Litigation .  No Shareholder shall be entitled to initiate or participate in a class action suit on behalf of all or any part of the Shareholders against the Company or against any other Shareholder, unless such action or suit has been approved by the Board.  A Shareholder who initiates a class action in violation of this Agreement shall be liable to the Company and any Shareholder who is a defendant party to the action or suit for all damages and expenses which they incur as a result, including without limitation reasonable fees and expenses of legal counsel and expert witnesses and court costs.  Further, each Shareholder irrevocably waives any right it may have to maintain any action for dissolution of the Company or for partition of the property of the Company.
 
*     *     *
 
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first set forth above.

 	GEMINI SHIPHOLDINGS CORPORATION	

 	By:	/s/ Dimitrios Koustas	
 	Name:	Dimitrios Koustas	
 	Title:	C.E.O. - President / Director	
 	 	
 	VIRAGE INTERNATIONAL LTD.	

 	By:	/s/ Efstathios Sfyris	
 	Name:	Efstathios Sfyris	
 	Title:	Director	
 	 	
 	DANAOS CORPORATION	

 	By:	/s/ Iraklis Prokopakis	
 	Name:	Iraklis Prokopakis	
 	Title:	C.O.O./ Senior Vice President - Director	
 
Signature Page to Shareholders Agreement

 
SCHEDULE I
 
EQUITY SECURITIES HELD BY SHAREHOLDERS

Name of Shareholder	 	Shares of Common
Stock Held	 	Options	 	
Virage International Ltd.	 	510,000	 	0	 	
Danaos Corporation	 	490,000	 	0	 	

 
EXHIBIT A
 
FORM OF JOINDER AGREEMENT
 
THIS JOINDER AGREEMENT (this “Agreement”) is made as of [ insert date ], by and among [ Insert Name of Investor ] (the “Investor”) and Gemini Shipholdings Corporation, a Marshall Islands corporation (the “Company”).
 
W I T N E S S E T H :
 
WHEREAS, reference is hereby made to that certain Shareholders Agreement (the “Shareholders Agreement”), dated as of August 5, 201 5, by and among the Company and the Shareholders signatory thereto; and
 
WHEREAS, this Agreement has been entered into to record and effect the admission of the Investor as a Shareholder under the Shareholders Agreement.
 
NOW, THEREFORE, in consideration of the mutual covenants set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
 
§1.  Definitions .  Capitalized terms defined in the Shareholders Agreement shall have the same meaning when used in this Agreement.
 
§2.  Admission of Investor .
 
(a)                                  By executing and delivering this Agreement to the Company, the Investor hereby agrees to become a party to, to be bound by, and to comply with the terms, conditions and provisions of the Shareholders Agreement in the same manner as if the undersigned Investor were an original signatory and named as a Shareholder thereunder.  By executing and delivering this Agreement to the Investor, the Company hereby consents to and confirms its acceptance of the Investor as a Shareholder for purposes of the Shareholders Agreement.
 
(b)                                  By executing and delivering this Agreement to the Company, the Investor hereby acknowledges, agrees and confirms (i) that his address details for notices under the Shareholders Agreement are as set forth on Schedule A attached hereto and made a part thereof, and (ii) the Investor has received a copy of the Shareholders Agreement and has reviewed the same and understands its contents.
 
§3.  Entire Agreement .  This Agreement and the Shareholders Agreement contain the entire understanding, whether oral or written, of the parties with respect to the matters covered hereby.  Any amendment or change in this Agreement shall not be valid unless made in writing and signed by both parties hereto.
 
§4.  Effect; Counterparts .  Except as herein provided, the Shareholders Agreement shall remain unchanged and in full force and effect.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

 
§5.  Governing Law; Submission to Jurisdiction; Waiver of Jury Trial .  The provisions of Sections 8. 7 (Governing Law) and 8. 8 (Submission to Jurisdiction; Waiver of Jury Trial) of the Shareholders Agreement shall apply to this Agreement as though set out in full herein.
 
§6.  Headings; Construction .  The headings of particular provisions of this Agreement are inserted for convenience only and shall not be construed as a part of this Agreement or serve as a limitation or expansion on the scope of any term or provision of this Agreement.  The parties hereto have participated jointly in the negotiation and drafting of this Agreement; accordingly, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party hereto by virtue of the authorship of any provisions of this Agreement.
 
*     *     *

 
IN WITNESS WHEREOF the parties have caused this Joinder Agreement to be duly executed on the date first written above.

 	GEMINI SHIPHOLDINGS	
 	CORPORATION	
 	 	
 	By:	 	
 	Name:	 	
 	Title:	 	

 	 	
 	[ Insert name of Investor ]	

 
SCHEDULE A
 
ADDRESS FOR NOTICES
 
[Insert Investor’s address]
 
Facsimile:
Attention:

 
Exhibit B
 
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
GEMINI SHIPHOLDINGS CORPORATION
 
PURSUANT TO THE MARSHALL ISLANDS BUSINESS CORPORATIONS ACT
 
Gemini Shipholdings Corporation (the “Corporation”), a corporation organized and existing under the Marshall Islands Business Corporations Act (“BCA”), certifies:
 
I.                                         The name of the Corporation is:
 
<GEMINI SHIPHOLDINGS CORPORATION>
 
II.                                    The date of filing of the Corporation’s Articles of Incorporation with the Office of the Registrar of Corporations of the Republic of the Marshall Islands was July 22, 2015.
 
III.                               Pursuant to Section 93 of the BCA, these Amended and Restated Articles of Incorporation include an amendment, restatement and renumbering of Section B as Section SECOND, an amendment, restatement and renumbering of Section C as Section THIRD, an amendment, restatement and renumbering of Section D as Section FOURTH, an amendment, restatement and renumbering of Section G as Section TENTH,  a restatement and renumbering of Section E as Section SIXTH, an amendment to add Sections FIFTH, SEVENTH, EIGHTH and NINTH and the omission of prior Section F.
 
IV.                                These Amended and Restated Articles of Incorporation were duly adopted in accordance with the provisions of Sections 88(1) and 93 of the BCA, the Board of Directors of the Corporation having adopted resolutions by unanimous written consent in accordance with Section 55(4) of the BCA setting forth and declaring advisable that these Amended and Restated Articles of Incorporation be adopted in their entirety. In lieu of a meeting and a vote of the stockholders of the Corporation, unanimous written consent to these Amended and Restated Articles of Incorporation has been signed by the holders of all of the outstanding stock of the Corporation entitled to vote in accordance with Section 67 of the BCA and such consent has been filed with the minutes of the proceedings of stockholders of the Corporation.
 
V.                                     The Articles of Incorporation of the Corporation are hereby amended and restated in their entirety to read as follows:
 
FIRST:                                                         The name of the Corporation shall be:
 
GEMINI SHIPHOLDINGS CORPORATION

 
SECOND:                                          The purpose of the Corporation is:
 
(1)                                  To purchase or otherwise acquire, own, use, operate, pledge, hypothecate, mortgage, lease, charter, sub-charter, sell, build, and repair steamships, motorships, containerships, vessels, sailing vessels, yachts, tugs, lighters, barges, and all other vessels and craft of any and all motive power whatsoever, including landcraft, and any and all means of conveyance and transportation by land or water, together with engines, boilers, machinery equipment and appurtenances of all kinds, including masts, sails, boats, anchors, cables, tackle, furniture and all other necessities thereunto appertaining and belonging, together with all materials, articles, tools, equipment and appliances necessary, suitable or convenient for the construction, equipment, use and operation thereof; and to equip, furnish, and outfit such vessels and ships.
 
(2)                                  To engage in ocean, coastwise and inland commerce, and generally in the carriage of freight, goods, cargo in containers, passengers, mail and personal effects by water between the various ports of the world and to engage generally in waterborne commerce.
 
(3)                                  To purchase or otherwise acquire, own, use, operate, lease, build, repair, sell or in any manner dispose of docks, piers, quays, wharves, dry docks, warehouses and storage facilities of all kinds, and any property, real, personal and mixed, in connection therewith.
 
(4)                                  To act as ship’s husband, shipbrokers, customhouse brokers, ship’s agents, manager of shipping property, freight contractors, forwarding agents, warehousemen, wharfingers, ship chandlers, and general traders.
 
(5) To engage in any other lawful act or activity related thereto for which corporations may be organized under the BCA.
 
THIRD:                                                    The registered address of the Corporation in the Marshall Islands is Trust Corporation Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960. The name of the Corporation’s registered agent at such address is The Trust Corporation of the Marshall Islands, Inc. However, the Board of Directors of the Corporation (the “Board of Directors”) may establish branches, offices or agencies in any place in the world and may appoint legal representatives anywhere in the world.
 
FOURTH:                                         The aggregate number of shares of stock that the Corporation is authorized to issue is fifty million (50,000,000) shares with a par value of one-tenth of one cent (US $0.001), consisting of fifty million (50,000,000) shares of common stock (the “Common Stock”) with a par value of one-tenth of one cent (US $0.001).
 
FIFTH:                                                        In the event that, at any time, the Corporation shall decide to undertake an issuance of New Securities, the Corporation shall at such time deliver to each

 
holder of Common Stock (each, a “Stockholder”) written notice of the Corporation’s decision, describing the amount, type and terms of such New Securities, the purchase price per New Security (the “New Securities Price”) to be paid by the purchasers of such New Securities and the other terms upon which the Corporation has decided to issue the New Securities including, without limitation, the expected timing of such issuance which will in no event be more than sixty (60) days or less than ten (10) days after the date upon which such notice is given (the “Preemptive Notice”).  Each such Stockholder shall have ten (10) days from the date on which the Preemptive Notice is given to agree by written notice to the Corporation to purchase up to its proportional share of such New Securities for the New Securities Price and upon the general terms specified in the Preemptive Notice and stating therein the quantity of New Securities to be purchased by such Stockholder.  In the event that in connection with such a proposed issuance of New Securities, any such Stockholder shall for any reason fail or refuse to give such written notice to the Corporation within such ten (10) day period, such Stockholder shall, for all purposes of this Article FIFTH, be deemed to have refused (in that particular instance only) to purchase any of such New Securities and to have waived (in that particular instance only) all of its rights under this Article FIFTH to purchase any of such New Securities.  For purposes of this Article FIFTH, a Stockholder’s “proportional share” shall mean, at any time, the quotient obtained by dividing the number of Common Stock Equivalents held by such Stockholder at such time by the aggregate number of Common Stock Equivalents held by all Stockholders at such time.
 
In the event and to the extent that any such Stockholder does not elect to purchase all of its respective proportional share in accordance with preceding paragraph of this Article FIFTH, the Corporation shall be free to issue the New Securities which were available for purchase by such non-electing Stockholder (the “Excess New Securities”) to any Person; provided , that (i) the price per Excess New Security at which such Excess New Securities are being issued to and purchased by such Person is not less than the New Securities Price and (ii) the other terms and conditions pursuant to which such Person purchases such Excess New Securities are substantially equivalent to the terms set forth in the Preemptive Notice.  Any Excess New Securities not issued or sold within one hundred twenty (120) days after the date of the Preemptive Notice shall again be subject to the provisions of this Article FIFTH.
 
“ Common Stock Equivalents ” shall mean, at any time, (i) with respect to each share of Common Stock issued and outstanding, one (1) and (ii) with respect to any other Equity Security which is at such time exercisable, exchangeable or convertible into or for Common Stock at an exercise price equal to or less than the Equity Value of the Common Stock at such time, an amount equal to the number of shares of Common Stock, if any, into or for which such Equity Security may be exercised, exchanged or converted at such time.

 
“ Equity Securities ” shall mean, without duplication, all shares of Common Stock, all securities, directly or indirectly, convertible into or exchangeable or exercisable for shares of Common Stock and all options (including, without limitation, vested and unvested Stock Options), warrants and other rights to purchase or otherwise, directly or indirectly, acquire shares of Common Stock from the Corporation, or securities convertible into or exchangeable or exercisable for shares of Common Stock, whether at the time of issuance or upon the passage of time or the occurrence of some future event.
 
“ Equity Value ” shall mean, as of any date, the value of the shares of Common Stock determined as follows:  (a) if the Common Stock is listed on any established stock exchange, the Equity Value of a share of Common Stock shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or market (or the exchange or market with the greatest volume of trading in the Common Stock) on the last market trading day prior to the day of determination, as reported in The Wall Street Journal or such other source as the Board of Directors of the Corporation deems reliable; and (b) in the absence of such markets for the Common Stock, the Equity Value shall be determined by the Board of Directors of the Corporation.
 
“ New Securities ” shall mean any Equity Securities (other than contractual rights to receive payments, such as “phantom” stock or stock appreciation rights issued to employees or consultants of the Corporation solely in exchange for services, where the amount thereof is determined by reference to fair market or equity value of the Corporation or any Equity Securities), whether authorized now or in the future (including, without limitation, debt obligations which are convertible into Equity Securities, such other common equity securities, warrants or other rights to purchase or otherwise directly or indirectly acquire Common Stock from the Corporation), including any such rights that may become convertible into or exchangeable or exercisable for any Equity Securities, such other common equity securities, warrants or other rights to purchase or otherwise directly or indirectly acquire Common Stock from the Corporation; provided , that “New Securities” shall not include (i) securities issued by the Corporation on or prior to the date hereof, (ii) securities issued upon the direct or indirect conversion, exchange or exercise of any securities issued by the Corporation on or prior to the date hereof, (iii) securities issued upon the direct or indirect exercise of any Stock Options, (iv) securities issued by the Corporation in connection with any subdivision of securities (including any stock dividend or stock split), any combination of securities (including any reverse stock split) or any recapitalization, reorganization or reclassification of the Corporation, (v) any Stock Options, (vi) securities issued to any Person in connection with such Person’s becoming a board member or employee of the Corporation or any of its subsidiaries, (vii) securities issued as consideration in any Sale of the Business, merger or recapitalization of the Corporation or issued as consideration for the acquisition of another Person or the assets of another Person (whether by merger, recapitalization, business combination or otherwise), (viii) any issuance of securities to any Person (including, without limitation, managers, directors, officers, employees or agents of the Corporation or any Subsidiary of the Corporation) which is determined by the Board in its sole and absolute discretion to be strategically beneficial to the operations of the Corporation or its Subsidiaries, (ix) securities issued as part of any financing transaction, so long as securities are not the only security component of such financing transaction, (x) one or more issuances of

 
shares of Common Stock that are issued to one or more employees of the Corporation or any of its Subsidiaries at a price per share of Common Stock of not less than Equity Value and (xi) any issuance of Common Stock to one or more directors or senior officers of the Corporation or any of its Subsidiaries at a price per share of Common Stock of not less than Equity Value.
 
“ Person ” shall mean any individual, corporation, limited partnership, general partnership, limited liability company, joint stock corporation, joint venture, association, company, trust, or any governmental or political subdivision or any agency, department or instrumentality thereof.
 
“ Sale of the Business ” shall mean any transaction or series of transactions (whether structured as a stock sale, merger, consolidation, reorganization, recapitalization, redemption, asset sale or otherwise), which results in the sale or transfer of (a) a majority of the assets of the Corporation and its subsidiaries (if any) taken as a whole (determined based on value), (b) beneficial ownership or control of a majority of the capital stock or other equity, ownership, proprietary or voting interests of the Corporation or (c) beneficial ownership or control of a majority of the capital stock or equity, ownership, proprietary or voting interest of any one (1) or more of the Corporation’s subsidiaries owning, controlling or otherwise constituting a majority of the assets of the Corporation and its subsidiaries taken as a whole (determined based on value), in each case, to a Person or a “group” (as such term is defined under Regulation 13D under the U.S. Securities Exchange Act of 1934) other than to Virage Holdings or any of its respective affiliates.
 
SIXTH:                                                      The Corporation shall have every power which a corporation now or hereafter organized under the BCA may have.
 
SEVENTH:                                  There shall be a minimum of three (3) directors and a maximum of ten (10) directors who shall constitute the Board of Directors.  The number of directors constituting the Board of Directors shall be fixed from time to time by the Board of Directors.  No director may be removed without the affirmative vote of the holders of not less than eighty percent (80%) of the voting power of all outstanding shares of stock of the Corporation entitled to vote generally in the election of directors, considered for this purpose as a single class. Vacancies shall be filled by, and only by, a vote of all of the directors then in office or by the sole remaining director.
 
Eighty percent (80%) of the directors at the time in office (but, unless the Board shall consist solely of one director, in no case less than one-third of total number of directors nor less than two directors), present in person or by proxy or communications equipment, shall constitute a quorum for the transaction of business.
 
The vote of the majority of the directors, present in person or by proxy or by means of communications equipment, at a meeting at which a quorum is present shall be the act of the directors, provided that the following actions may only be approved by a unanimous vote of the directors then in office:

 
(i)                                      acquiring or divesting any vessel, including entering into or disposing of any newbuilding construction contract;
 
(ii)                                   incurring, guaranteeing or assuming any material amount of indebtedness for borrowed money, including through sale leaseback arrangements, by the Corporation or any of its subsidiaries or obligating any stockholder of the Corporation to do so;
 
(iii)                                appointing or replacing the Chief Executive Officer, the President, the Chief Operating Officer or the Chief Financial Officer of the Corporation;
 
(iv)                               compensation arrangements for senior officers of the Corporation;
 
(v)                                  entering into, terminating or amending the terms of any agreement, transaction or arrangement between the Corporation or any of its subsidiaries, on the one hand, and any stockholder of the Corporation or any of such stockholder’s affiliates, on the other hand;
 
(vi)                               amending these Articles of Incorporation, the bylaws of the Corporation or the Stockholders Agreement, by and among the Corporation and the stockholders signatory thereto, including any change in the number of directors or the required level of director approval of any action;
 
(vii)                            issuing any additional capital stock or securities convertible into or exchangeable into or exercisable for any capital stock or repurchasing, redeeming or cancelling any capital stock or securities convertible into or exchangeable into or exercisable for any capital stock of the Corporation;
 
(viii)                         approving any sale of the business or any other merger, sale of all or substantially all of the assets of the Corporation; or any recapitalization, reorganization, dissolution or liquidation of the Corporation or, except in the ordinary course, any of its direct or indirect subsidiaries, or any filing for bankruptcy, reorganization or similar protection from creditors;
 
(ix)                               approval of the sale of securities of the Corporation to an underwriter or underwriters for reoffering to the public registered under the U.S. Securities Act of 1933, as amended;
 
(x)                                  changing the Corporation’s business plan or the nature of its business from owning and operating containerships and activities related thereto.
 
No director of the Corporation shall have personal liability to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except, if required by the BCA, as then in effect; provided, however, that this paragraph shall not eliminate or limit the liability of a director: (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders; (ii) for acts or omissions not undertaken in good faith or which involve intentional misconduct or a knowing violation of law; or (iii) for any transaction from which the director derived an improper personal benefit.

 
Notwithstanding any other provisions of these Articles of Incorporation or the bylaws of the Corporation (and notwithstanding the fact that some lesser percentage may be specified by law, these Articles of Incorporation or the bylaws of the Corporation), the affirmative vote of the holders of eighty percent (80%) or more of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class) shall be required to amend, alter, change or repeal this Article SEVENTH.
 
EIGHTH:                                           At all meetings of stockholders of the Corporation, except as otherwise expressly provided by law, the presence either in person or by proxy of stockholders of record entitled to cast at least 80% of the total number of votes eligible to be cast by holders of shares issued and outstanding and entitled to vote at such meetings shall constitute a quorum, except as otherwise provided by statute or these Articles of Incorporation.  If less than a quorum is present, a majority of the total number of votes represented by those shares present either in person or by proxy shall have power to adjourn any meeting until a quorum shall be present.
 
NINTH:                                                    The Corporation may transfer its corporate domicile from the Marshall Islands to any other place in the world.
 
TENTH:                                                  In furtherance and not in limitation of the powers conferred by the BCA, the Board of Directors is expressly authorized to make, alter or repeal the bylaws of the Corporation.
 
IN WITNESS WHEREOF, Gemini Shipholdings Corporation has caused these Amended and Restated Articles of Incorporation to be signed as of the 5th day of August 2015, by its Chief Executive Officer and President, who hereby affirms and acknowledges, under penalty of perjury, that these Amended and Restated Articles of Incorporation are the act and deed of the Corporation and that the facts stated herein are true.

GEMINI SHIPHOLDINGS CORPORATION

By:	 	 	
Name:	Dimitrios Koustas	 	
Title:	Chief Executive Officer and President	 	

 
Exhibit C
 
GEMINI SHIPHOLDINGS CORPORATION
 
BYLAWS
 
ARTICLE I
OFFICES
 
The principal place of business of the Corporation shall be at such place or places as the directors shall from time to time determine.  The Corporation may also have an office or offices at such other places within or without the Marshall Islands as the Board of Directors (the “ Board ”) may from time to time appoint or the business of the Corporation may require.
 
ARTICLE II
STOCKHOLDERS
 
Section 1.                         Annual Meeting .  The annual meeting of stockholders of the Corporation shall be held on such day and at such time and place within or without the Marshall Islands as the Board may determine, for the purpose of electing directors and for transacting such other business as may properly be brought before the meeting.
 
Section 2.                         Special Meetings .  A special meeting of the stockholders may be called by the Secretary of the Corporation at any time at the direction of the Board and shall be called by the Secretary upon the request of any Director.  Except as may be set forth in the Articles of Incorporation, no other person or persons are permitted to call a special meeting.  No business may be conducted at the special meeting other than such business as may be properly brought before the meeting.  If the Chairman of the special meeting determines that business was not properly brought before the special meeting, the Chairman shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted.
 
Section 3.                         Notice of Meetings .  Notice of every annual and special meeting of stockholders, other than any meeting the giving of notice of which is otherwise prescribed by law or the Articles of Incorporation, stating the date, time, place and purpose thereof, shall be given personally (including by telephone) or sent by mail, telegraph, cablegram, courier, telex, telecopy, electronic mail or other means deemed appropriate by the Board at least fifteen (15) but not more than sixty (60) days before such meeting, to each stockholder of record entitled to vote thereat and to each stockholder of record who, by reason of any action proposed at such meeting would be entitled to have his or her shares appraised if such action were taken, and the notice shall include a statement of that purpose and to that effect.  If mailed, notice shall be deemed to have been given when deposited in the mail, directed to the stockholder at his, her or its address as the same appears on the record of stockholders of the Corporation or at such address as to which the stockholder has given notice to the Secretary.  Notice of a meeting need not be given to any stockholder who submits a signed waiver of notice, whether before or after the meeting, or

 
who attends the meeting without protesting prior to the conclusion thereof the lack of notice to him or her.
 
Section 4.                         Adjournments .  Whether or not a quorum shall be present, any meeting of stockholders, annual or special, may adjourn from time to time to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken.  At the adjourned meeting the Corporation may transact any business which might have been transacted at the original meeting.  If the meeting is adjourned for lack of quorum, notice of the new meeting shall be given to each stockholder of record entitled to vote at the meeting.  If after an adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record on the new record date entitled to notice in Section 3 of this Article II.  The Board of Directors may postpone any meeting of stockholders or cancel any special meeting of stockholders by public announcement or disclosure prior to the time scheduled for the meeting.
 
Section 5.                         Quorum .  At all meetings of stockholders, except as otherwise expressly provided by law or the Articles of Incorporation, there must be present either in person or by proxy stockholders of record holding at least eighty percent (80%) of the shares issued and outstanding and entitled to vote at such meetings in order to constitute a quorum, but if less than a quorum is present, at least eighty percent (80%) of those shares present either in person or by proxy shall have power to adjourn any meeting until a quorum shall be present.  At any meeting of stockholders at which the holders of any class of stock of the Corporation shall be entitled to vote separately as a class, the holders of 80% in number of the total outstanding shares of such class, present in person or represented by proxy, shall constitute a quorum for purposes of such class vote unless the representation of a different number of shares of such class shall be required by law, by the Articles of Incorporation or by these bylaws.
 
Section 6.                         Organization .  The Chief Executive Officer or, in the absence of the Chief Executive Officer, the Chairman of the Board, if there is a Chairman of the Board, shall call all meetings of the stockholders to order, and shall act as chairman of such meetings.  In the absence of the Chief Executive Officer and the Chairman of the Board, the members of the Board of Directors who are present shall elect a chairman of the meeting.
 
The Secretary of the Corporation shall act as secretary of all meetings of the stockholders; and in the absence of the Secretary, the Chairman of the meeting may appoint any person to act as secretary of the meeting.  It shall be the duty of the Secretary of the Corporation to prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of stockholders entitled to vote at such meeting, arranged in alphabetical order and showing the address of each stockholder and the number of shares registered in the name of each stockholder.
 
Section 7.                         Voting .  At any meeting of stockholders, with respect to a matter for which a stockholder is entitled to vote, each such stockholder shall be entitled to one vote for each share it holds, except as otherwise expressly provided by law or in the Articles of Incorporation.  Each stockholder may exercise such voting right either in person or by proxy; provided, however, that no proxy shall be valid after the expiration of eleven months from the date such proxy was

 
authorized unless otherwise provided in the proxy.  A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in the law of the Marshall Islands to support an irrevocable power.  A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or another duly executed proxy bearing a later date with the Secretary of the Corporation.  If a quorum is present, and except as otherwise expressly provided by law or the Articles of Incorporation and except with respect to the election of directors, the affirmative vote of a majority of the shares of stock represented at the meeting shall be the act of the stockholders.  Subject to the rights of the holders of any series of preferred stock of the Corporation, directors shall be elected by a plurality of the votes cast at a meeting of stockholders by the stockholders entitled to vote in the election.
 
Shares of the stock of the Corporation belonging to the Corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by the Corporation, shall neither be entitled to vote nor be counted for quorum purposes.
 
Section 8.                         Voting Procedures and Inspectors .  The Corporation may, in advance of any meeting of stockholders, appoint one or more inspectors of election to act at the meeting and make a written report thereof.  Each inspector, before entering upon the discharge of the duties of inspector, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of such person’s ability.
 
The inspectors shall ascertain the number of shares outstanding and the voting power of each; determine the shares represented at the meeting and the validity of proxies and ballots; count all votes and ballots; determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by them; and certify their determination of the number of shares represented at the meeting, and their count of all votes and ballots.
 
Section 9.                         Consent of Stockholders in Lieu of Meeting .  Any action required or permitted to be taken by the stockholders of the Corporation, or any action which may be taken at a meeting of the stockholders, may be taken without a meeting if a consent in writing, setting forth the actions so taken, is signed by all the stockholders entitled to vote with respect to the subject matter thereof.  Such consent shall have the same effect as a unanimous vote of stockholders, and may be stated as such in any articles or documents filed with a Registrar of Corporations.
 
The consent shall be delivered to the Corporation by delivery to its registered office in the Marshall Islands, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded.  Delivery made to the Corporation’s registered office shall be made by hand or by certified or registered mail, return receipt requested.
 
Section 10.                  Fixing of Record Date .  For the purpose of determining the stockholders entitled to notice of and to vote at any meeting of stockholders, or to express consent to or dissent from any proposal without a meeting, to receive any distributions, or for any other action, the Board may fix a time not more than sixty (60) days prior to the date of for any such determination of

 
stockholders, nor, in the case of a meeting of stockholders, less than fifteen (15) days before the date of such meeting.
 
ARTICLE III
DIRECTORS
 
Section 1.                         Number and Term of Office .  The affairs, business and property of the Corporation shall be managed by a Board of Directors to consist of a minimum of three (3) directors and a maximum number of ten (10) directors, with the number of directors to be fixed from time to time by a resolution passed by all members of the Board then in office, subject to the Articles of Incorporation of the Corporation.  Except as otherwise provided by law, the directors of the Corporation shall be elected at each annual meeting of stockholders and each director so elected shall serve until the next annual meeting of stockholders and until his or her successor shall have been duly elected and qualified.  No decrease in the number of directors shall shorten the term of any incumbent director.  The directors need not be residents of the Marshall Islands or stockholders of the Corporation.  Corporations may, to the extent permitted by law, be elected or appointed directors.
 
Section 2.                         Remova l .  Any or all of the directors may be removed, with or without cause, by the affirmative vote of the holders of eighty percent (80%) of the voting power of all the outstanding shares of stock of the Corporation entitled to vote generally in the election of directors, considered for this purpose as a single class.  Notwithstanding the previous sentence, whenever any director shall have been elected by the holders of any class of stock of the Corporation voting separately as a class under the provisions of the Articles of Incorporation, such director may be removed and the vacancy filled only by the holders of eighty percent (80%) of the voting power of that class of stock voting separately as a class.
 
Section 3.                         Vacancies .  Vacancies in the Board occurring by death, resignation, creation of new directorship, failure of the stockholders to elect the whole class of directors required to be elected at any annual election of directors or for any other reason, including removal of directors, with or without cause, shall be filled only by the affirmative vote of all of the remaining directors then in office, although less than a quorum, at any special meeting called for that purpose or at any regular meeting of the Board.  Any director appointed to fill a vacancy or a newly created directorship pursuant to this Section 3 of Article III shall hold office until the annual meeting of stockholders next succeeding his or her appointment, and until his or her successor is elected and qualified or until his or her earlier resignation or removal.
 
Section 4.                         Regular meetings .  Regular meetings of the Board may be held at such time and place, within or without the Marshall Islands, as may be determined by resolution of the Board. 

 
No notice shall be required for any regular meeting.  Except as otherwise provided by law, any business may be transacted at any regular meeting of the Board.
 
Section 5.                         Special meetings .  Special meetings of the Board may be called from time to time by the Chairman, the Chief Executive Officer, or any officer of the Corporation who is also a director.  The Chief Executive Officer or the Secretary shall call a special meeting of the Board upon written request directed to either of them by any director stating the time, place and purpose of such special meeting.  Special meetings of the Board shall be held on a date and at such time and at such place, within or without the Marshall Islands, as may be designated in the notice thereof by the officer calling the meeting.
 
Section 6.                         Notice of Special Meetings .  Notice of the date, time and place of each special meeting of the Board shall be given to each Director at least forty-eight (48) hours prior to such meeting, unless the notice is given orally or delivered in person, in which case it shall be given at least twenty-four (24) hours prior to such meeting.  For the purpose of this section, notice shall be deemed to be duly given to a Director if given to him or her personally (including by telephone), or if such notice be delivered to such Director by mail, telegraph, cablegram, courier, telex, teleprinter, telecopy, electronic mail or other electronic means to his or her last known address. Notice of a meeting need not be given to any Director who submits a signed waiver of notice, whether before or after the meeting, or who attends the meeting without protesting, prior to the conclusion thereof, the lack of notice to him or her.
 
Section 7.                         Quorum .  Subject to the provisions of Section 3 of this Article III, eighty percent (80%) of the directors at the time in office (but, unless the Board shall consist solely of one director, in no case less than one-third of total number of directors nor less than two directors), present in person or by proxy or communications equipment, shall constitute a quorum for the transaction of business.
 
Section 8.                         Organization .  The Chairman of the Board or, in the absence of the Chairman of the Board, the Chief Executive Officer shall preside at all meetings of the Board of Directors.  In the absence of the Chairman of the Board and the Chief Executive, a chairman shall be elected from among the Directors present.  The Secretary of the Corporation shall act as secretary of all meetings of the directors.  In the absence of the Secretary of the Corporation, the chairman of the meeting may appoint any person to act as secretary of the meeting.
 
Section 9.                         Interested Directors .  No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board or committee thereof which authorizes the contract or transaction, or solely because his or her or their votes are counted for such purpose, if the material facts as to his or her relationship or interest and as to the contract or transaction are disclosed or are known to the Board or the committee and the Board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors or, if the votes of the disinterested directors are insufficient to constitute an act of the Board as defined in Section 55 of the

 
Marshall Islands Business Corporations Act (the “ BCA ”), by a unanimous vote of the disinterested directors.  Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board or of a committee which authorizes the contract or transaction.
 
Section 10.                  Voting .  The vote of the majority of the directors, present in person or by proxy or by means of communications equipment, at a meeting at which a quorum is present shall be the act of the directors, provided that the following actions may only be approved by a unanimous vote of the directors then in office:
 
(i)                                      acquiring or divesting any vessel, including entering into or disposing of any newbuilding construction contract;
 
(ii)                                   incurring, guaranteeing or assuming any material amount of indebtedness for borrowed money, including through sale leaseback arrangements, by the Corporation or any of its subsidiaries or obligating any shareholder of the Corporation to do so;
 
(iii)                                appointing or replacing the Chief Executive Officer, the President, the Chief Operating Officer or the Chief Financial Officer of the Corporation;
 
(iv)                               compensation arrangements for senior officers of the Corporation;
 
(v)                                  entering into, terminating or amending the terms of any agreement, transaction or arrangement between the Corporation or any of its subsidiaries, on the one hand, and any shareholder of the Corporation or any of such shareholder’s affiliates, on the other hand;
 
(vi)                               amending these bylaws or the Articles of Incorporation of the Corporation or the Shareholders Agreement, by and among the Corporation and the shareholders signatory thereto, including a change in the number of directors or the required level of director approval of any action;
 
(vii)                            issuing any additional capital stock or securities convertible into or exchangeable into or exercisable for any capital stock or repurchasing, redeeming or cancelling any capital stock or securities convertible into or exchangeable into or exercisable for any capital stock of the Corporation;
 
(viii)                         approving any sale of the business or any other merger, sale of all or substantially all of the assets of the Corporation; or any recapitalization, reorganization, dissolution or liquidation of the Corporation or, except in the ordinary course, any of its direct or indirect subsidiaries, or any filing for bankruptcy, reorganization or similar protection from creditors;
 
(ix)                               approval of the sale of securities of the Corporation to an underwriter or underwriters for reoffering to the public registered under the U.S. Securities Act of 1933, as amended;
 
(x)                                  changing the Corporation’s business plan or the nature of its business from owning and operating containerships.

 
Section 11.                  Consent of Directors in Lieu of Meeting .  Unless otherwise restricted by the Articles of Incorporation or by these bylaws, any action required or permitted to be taken at any meeting of the Board, or of any committee thereof, may be taken without a meeting if all members of the Board or of any committee, as the case may be, consent thereto in writing (including by telegraph, cablegram, telex, teleprinter, telecopy, electronic mail or other electronic means), and the writing or writings are filed with the minutes of proceedings of the Board or committee, as the case may be.
 
Section 12.                  Compensation of Directors and Members of Committees .  The Board may from time to time, in its discretion, fix the amounts which shall be payable in cash or in securities to members of the Board and to members of any committee, for attendance at the meetings of the Board or of such committee and for services rendered to the Corporation.  Directors shall be reimbursed for their reasonable expenses incurred in attending such meetings or otherwise in performing their duties as Directors.  No such payment or reimbursement shall preclude any Directors from serving the Corporation in any other capacity and receiving compensation therefor.
 
ARTICLE IV
COMMITTEES
 
Section 1.                         Executive and Other Committees .  The Board may, by resolution or resolutions passed by a majority of the entire Board, designate from among its members, an Executive Committee and other committees to consist of one or more of the directors of the Corporation which, to the extent provided in said resolution or resolutions, or in these bylaws, shall have and may exercise, to the extent permitted by law, all the powers of the Board in the management of the business and affairs of the Corporation, and may have power to authorize the seal of the Corporation to be affixed to all papers which may require it; provided, however, that no such committee shall have the power or authority to (i) submit to stockholders of any action that requires stockholders’ approval by law, (ii) fill a vacancy in the Board or in a committee thereof, (iii) fix compensation of the directors for serving on the Board or any other committee, (iv) amend or repeal any bylaw or adopt any new bylaw, or (v) amend or repeal any resolution of the entire Board which by its terms shall not be so amendable or repealable.
 
Section 2.                         Membership and Rules .  Members of any Board committee shall hold office for such period as may be prescribed by the vote of the entire Board, subject, however, to removal at any time by the vote of the Board.  Vacancies in membership of such committees shall be filled by vote of the Board.  Committees may adopt their own rules of procedures and may meet at stated times or on such notice as they may determine.  Each committee shall keep a record of its proceedings and report the same to the Board when required.
 
ARTICLE V
OFFICERS
 
Section 1.                         Number and Designation .  The officers of the Corporation shall include a Chief Executive Officer and a Secretary and may include a Chairman of the Board, one or more Vice Chairmen of the Board, a President, a Chief Operating Officer, a Treasurer, a Chief Financial

 
Officer, one or more Vice Presidents and such other officers, if any, as the Board may deem necessary.  Officers may be of any nationality and need not be residents of the Marshall Islands.  The officers shall be elected annually by the Board at its first meeting following the annual election of directors, but in the event of the failure of the Board to so elect any officer, such officer may be elected at any subsequent meeting of the Board.  The salaries of officers and any other compensation paid to them shall be fixed from time to time by the Board.  The Board may at any meeting elect additional officers.  Each officer shall hold office at the pleasure of the Board and may hold more than one office.  Any officer may be removed by the Board at any time with or without cause.  Any vacancy in an office may be filled by the Board at any regular or special meeting.
 
In addition to the powers and duties of the officers of the Corporation as set forth in these bylaws, the officers shall have such authority and shall perform such duties as from time to time may be determined by the Board.
 
Section 2.                         Chief Executive Officer .  The Board shall designate one of the officers of the Corporation to be the Chief Executive Officer of the Corporation.  Subject to the control of the Board, the Chief Executive Officer shall have general charge and control of all the business and affairs of the Corporation and shall have all powers and shall perform all duties incident to the position of Chief Executive Officer which may be required by law and such other duties as are required by the Board.  The Chief Executive Officer shall make reports to the Board and to the stockholders, and shall see that all orders and resolutions of the Board and of any committee thereof are carried into effect.  The Chief Executive Officer shall preside at all meetings of the stockholders and shall have such other powers and perform such other duties as may from time to time be assigned by these bylaws or by the Board of Directors.
 
Section 3.                         Chief Operating Officer .  The Board of Directors may designate one of the officers of the Corporation to be the Chief Operating Officer of the Corporation. Subject to the control of the Board of Directors and the Chief Executive Officer, the Chief Operating Officer shall have general charge and control of all the operations of the Corporation and shall have all powers and shall perform all duties incident to the position of Chief Operating Officer.  The Chief Operating Officer shall act in a general executive capacity and assist the Chief Executive Officer in the administration and operation of the Corporation’s business and general supervision of its policies and affairs.  The Chief Operating Officer shall perform the duties of the Chief Executive Officer in the absence of the Chief Executive Officer.  The Chief Operating Officer shall have such other powers and perform such other duties as may from time to time be assigned by these bylaws or by the Board of Directors or the Chief Executive Officer.
 
Section 4.                         Chief Financial Officer .  The Board may designate one of the officers of the Corporation to be the Chief Financial Officer of the Corporation.  Subject to the control of the Board and the Chief Executive Officer, the Chief Financial Officer shall have general charge and control of the financial affairs of the Corporation and shall have all powers and shall perform all duties incident to the position of Chief Financial Officer.  The Chief Financial Officer shall act in a general executive capacity and assist the Chief Executive Officer in the administration and operation of the Corporation’s financial affairs.  The Chief Financial Officer shall have such

 
other powers and perform such other duties as may from time to time be assigned by these bylaws or by the Board of Directors or the Chief Executive Officer.
 
Section 5.                         Chairman and Vice Chairmen of the Board .  The Board may elect a Chairman of the Board from among its members.  The Chairman of the Board shall preside at all meetings of the Board and shall have all powers and may perform all duties incident to the office of Chairman of the Board which shall be required by law and shall have such other powers and perform such other duties as shall from time to time be assigned by these bylaws or by the Board.  The Board of Directors also may elect one or more Vice Chairmen to act in the place of the Chairman upon his or her absence or inability to act.
 
Section 6.                         President and Vice Presidents .  The Board of Directors may elect a President and one or more Vice Presidents of the Corporation.  Subject to the control of the Board of Directors and the Chief Executive Officer, the President and each Vice President shall have all powers and shall perform all duties incident to their respective offices which may be required by law and shall have such other powers and perform such other duties as may from time to time be assigned by these bylaws or by the Board of Directors or the Chief Executive Officer.
 
Section 7.                         Secretary .  The Board shall elect a Secretary who shall act as Secretary of all meetings of the stockholders and of the Board at which he or she is present, shall have supervision over the giving and serving of notices of the Corporation, shall be the custodian of the corporate records and of the corporate seal of the Corporation, and shall be empowered to affix the corporate seal to those documents the execution of which, on behalf of the Corporation under its seal, is duly authorized and when so affixed may attest the same.  The Secretary shall also exercise such powers and perform such other duties as may be assigned to him or her by the Board or the President.
 
Section 8.                         Treasurer . The Board may elect a Treasurer who shall have general supervision over the care and custody of the funds, securities, and other valuable effects of the Corporation and shall deposit the same or cause the same to be deposited in the name of the Corporation in such depositories as the Board may designate, shall disburse the funds of the Corporation as may be ordered by the Board, shall have supervision over the accounts of all receipts and disbursements of the Corporation, and shall, whenever required by the Board, render or cause to be rendered financial statements of the Corporation. The Treasurer shall have the power and perform the duties usually incident to the office of Treasurer, and shall have such powers and perform such other duties as may be assigned to him or her by the Board or President.
 
Section 9.                         Other Officers . The Board may elect other officers of the Corporation who may exercise such powers and perform such duties as may be assigned to them by the Board or the Chief Executive Officer.
 
Section 10.                  Bond .  The Board shall have power to the extent permitted by law to require any officer, agent or employee of the Corporation to give bond for the faithful discharge of his or her duties in such form and with such surety as the Board may deem advisable.

 
ARTICLE VI
CERTIFICATES FOR SHARES
 
Section 1.                         Form and Execution of Certificates .  Certificates for the shares of stock of the Corporation shall be in such form as is consistent with the Articles of Incorporation and applicable law. Every holder of stock in the Corporation shall be entitled to have a certificate signed by or in the name of the Corporation by the Chairman of the Board of Directors, if elected, or the Chief Executive Officer, the President or any Vice-President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary, certifying the number of shares owned by such holder in the Corporation. Any or all of the signatures on the certificate may be facsimiles if the certificate is countersigned by the transfer agent for the Corporation. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued with the same effect as if he were such officer, transfer agent, or registrar at the date of issue.
 
Section 2.                         Transfer .  The Board shall have the power and authority to make such rules and regulations as it may deem expedient concerning the issuance, registration and transfer of certificates representing shares of the Corporation’s stock, and may appoint transfer agents and registrars thereof.
 
Section 3.                         Loss of Stock Certificates .  The Board may direct a new certificate of stock to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost or destroyed upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost or destroyed.  When authorizing such issue of a new certificate or certificates, the Board may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost or destroyed certificate or certificates, or his or her legal representative, to advertise the same in such manner as it shall require and/or give the Corporation a bond in such sum as it may direct indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost or destroyed.
 
Section 4.                         Registered Stockholders . The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the Marshall Islands.
 
ARTICLE VII
DIVIDENDS
 
Section 1.                         Declaration and Form .  Subject to the provisions of the Articles of Incorporation, dividends may be declared in conformity with applicable law by, and at the discretion of, the Board at any regular or special meeting.  Dividends may be declared and paid in cash, stock or other property of the Corporation.
 
Section 2.                         Record Date .  The Board may fix a time not exceeding sixty (60) days preceding the date fixed for the payment of any dividend, the making of any distribution, the allotment of any

 
rights or the taking of any other action, as a record time for the determination of the stockholders entitled to receive any such dividend, distribution, or allotment or for the purpose of such other action.
 
ARTICLE VIII
INDEMNIFICATION
 
Section 1.                         Nature of Indemnity .  The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation), by reason of the fact that the person is or was or has agreed to become a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director, officer, partner, manager, trustee or in any other capacity for another corporation, partnership, joint venture, limited liability company, trust, employee benefit plan or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person or on his or her behalf in connection with such action, suit or proceeding and any appeal therefrom, if the person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful.  The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful.
 
The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by or in the right of the Corporation to procure judgment in its favor by reason of the fact that the person is or was or has agreed to become a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director, officer, partner, manager, trustee or in any other capacity for another corporation, partnership, joint venture, limited liability company, trust, employee benefit plan or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in and not opposed to the best interest of the Corporation, and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his or her duties to the Corporation unless and only to the extent that the courts of the Marshall Islands or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the courts of the Marshall Islands or such other court shall deem proper.

 
Section 2.                         Successful Defense .  To the extent that a present or former director or officer of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Section 1 of this Article VIII or in defense of any claim, issue or matter therein, he or she shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him or her in connection therewith.
 
Section 3.                         Determination that Indemnification is Proper .  Any indemnification of a present or former director or officer of the Corporation under Section 1 of this Article VIII (unless ordered by a court) shall be made by the Corporation unless a determination is made that indemnification of the person is not proper in the circumstances because he or she has not met the applicable standard of conduct set forth in Section 1 of this Article VIII.  Any such determination shall be made with respect to a person who is a director or officer at the time of the determination (i) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (ii) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, or (iii) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (iv) by the stockholders.
 
Section 4.                         Advance Payment of Expenses .  Unless the Board of Directors otherwise determines in a specific case, expenses, including attorneys’ fees, incurred by a person who is a director or officer at the time in defending a civil or criminal or administrative or investigative action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director or officer to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Corporation as authorized in this Article VIII.  Such expenses (including attorneys’ fees) incurred by former directors and officers may be so paid upon such terms and conditions, if any, as the Corporation deems appropriate.  The Board of Directors may authorize the Corporation’s legal counsel to represent a present or former director or officer in any action, suit or proceeding, whether or not the Corporation is a party to such action, suit or proceeding.
 
Section 5.                         Survival; Preservation of Other Rights .  The foregoing indemnification provisions shall be deemed to be a contract between the Corporation and each director and officer who serves in any such capacity at any time while these provisions as well as the relevant provisions of the BCA are in effect and any repeal or modification thereof shall not affect any right or obligation then existing with respect to any state of facts then or previously existing or any action, suit, or proceeding previously or thereafter brought or threatened based in whole or in part upon any such state of facts.  Such a contract right may not be modified retroactively without the consent of such director or officer.
 
The rights to indemnification and advancement of expenses provided by this Article VIII shall not be deemed exclusive of any other rights to which a person seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, insurance policy, vote of stockholders or disinterested directors or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office, and shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person.  The Corporation may enter into an agreement with any of its directors or officers,

 
providing for indemnification and advancement of expenses, including attorneys fees, that may change, enhance, qualify or limit any right to indemnification or advancement of expenses created by this Article VIII.
 
Section 6.                         Severability .  If this Article VIII or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each present or former director or officer as to costs, charges and expenses (including attorneys’ fees), judgment, fines and amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative, including an action by or in the right of the Corporation, to the fullest extent permitted by any applicable portion of this Article VIII that shall not have been invalidated and to the fullest extent permitted by applicable law.
 
Section 7.                         Subrogation .  In the event of payment of indemnification to a person described in Section 1 of this Article VIII, the Corporation shall be subrogated to the extent of such payment to any right of recovery such person may have and such person, as a condition of receiving indemnification from the Corporation, shall execute all documents and do all things that the Corporation may deem necessary or desirable to perfect such right of recovery, including the execution of such documents necessary to enable the Corporation effectively to enforce any such recovery.
 
Section 8.                         No Duplication of Payments .  The Corporation shall not be liable under this Article VIII to make any payment in connection with any claim made against a person described in Section 1 of this Article VIII to the extent such person has otherwise received payment (under any insurance policy, bylaw, agreement or otherwise) of the amounts otherwise payable as indemnity hereunder.
 
Section 9.                         Insurance .  The Corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director or officer against any liability asserted against such person and incurred by such person in such capacity whether or not the Corporation would have the power to indemnify such person against such liability by law or under the provisions of these bylaws.
 
Section 10.                  Indemnification of Employees and Agents .  The Corporation may, to the extent authorized from time to time by the Board of Directors, provide rights to indemnification and to the advancement of expenses to employees and agents of the Corporation and its subsidiaries similar to those conferred in this Article VIII to directors and officers of the Corporation.
 
ARTICLE IX
CORPORATE SEAL
 
Form . The Seal of the Corporation, if any, shall be circular in form, with the name of the Corporation in the circumference and such other appropriate legend as the Board may from time to time determine.

 
ARTICLE X
FISCAL YEAR
 
Fiscal Year . The fiscal year of the Corporation shall be such period of twelve consecutive months as the Board may by resolution designate.
 
ARTICLE XI
MISCELLANEOUS PROVISIONS
 
Section 1.                         Checks, Notes, Etc .  All checks, drafts, bills of exchange, acceptances, notes or other obligations or orders for the payment of money shall be signed and, if so required by the Board, countersigned by such officers of the Corporation and other persons as the Board from time to time shall designate.
 
Checks, drafts, bills of exchange, acceptances, notes, obligations and orders for the payment of money made payable to the Corporation may be endorsed for deposit to the credit of the Corporation with a duly authorized depository by the Chairman of the Board, the Chief Executive Officer, the President, any Vice President, the Chief Financial Officer, the Treasurer, any Assistant Secretary, the Controller, any Assistant Controller and such other officers or persons, if any, as the Board of Directors from time to time may designate.
 
Section 2.                         Loans .  No loans and no renewals of any loans shall be contracted on behalf of the Corporation except as authorized by the Board.  When authorized so to do, any officer or agent of the Corporation may effect loans and advances for the Corporation from any bank, trust company or other institution or from any firm, corporation or individual, and for such loans and advances may make, execute and deliver promissory notes, bonds or other evidences of indebtedness of the Corporation.  Such authority may be general or confined to specific instances.
 
Section 3.                         Contracts .  The Chief Executive Officer, the President, any Vice President, the Treasurer and any other officer, employee or agent of the Corporation authorized by the Board may execute and deliver, in the name and on behalf of the Corporation, agreements, bonds, contracts, deeds, mortgages, security agreements and other instruments, either for the Corporation’s own account or in a fiduciary or other capacity, and, if appropriate, to affix the seal of the Corporation thereto.  The grant of such authority by the Board or any such officer may be general or confined to specific instances.
 
Section 4.                         Waivers of Notice .  Whenever any notice whatever is required to be given by law, by the Articles of Incorporation or by these bylaws to any person or persons, a waiver thereof in writing or by electronic transmission by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent thereto.

 
ARTICLE XII
AMENDMENTS
 
Amendments .  These bylaws and any amendment thereof may be altered, amended or repealed, or new bylaws may be adopted, by unanimous vote of the Board or by the holders of eighty (80%) of the outstanding stock of the Corporation entitled to vote generally for the election of directors, at any annual meeting or at any special meeting; provided, in the case of any special meeting, that notice of such proposed alteration, amendment, repeal or adoption is included in the notice of the meeting.

Exhibit 8
 
Subsidiaries

Company	 	Country of Incorporation	
Actaea Company Limited	 	Malta	
Asteria Shipping Company Limited	 	Malta	
Auckland Marine Inc.	 	Liberia	
Baker International S.A.	 	Liberia	
Balticsea Marine Inc.	 	Liberia	
Bayard Maritime Ltd.	 	Liberia	
Bayview Shipping Inc.	 	Liberia	
Blacksea Marine Inc.	 	Liberia	
Boulevard Shiptrade S.A.	 	Marshall Islands	
Bounty Investment Inc.	 	Liberia	
Boxcarrier (No. 1) Corp.	 	Liberia	
Boxcarrier (No. 2) Corp.	 	Liberia	
Boxcarrier (No. 3) Corp.	 	Liberia	
Boxcarrier (No. 4) Corp.	 	Liberia	
Boxcarrier (No. 5) Corp.	 	Liberia	
Cellcontainer (No. 1) Corp.	 	Liberia	
Cellcontainer (No. 2) Corp.	 	Liberia	
Cellcontainer (No. 3) Corp.	 	Liberia	
Cellcontainer (No. 4) Corp.	 	Liberia	
Cellcontainer (No. 5) Corp.	 	Liberia	
Cellcontainer (No. 6) Corp.	 	Liberia	
Cellcontainer (No. 7) Corp.	 	Liberia	
Cellcontainer (No. 8) Corp.	 	Liberia	
Channelview Marine Inc.	 	Liberia	
Containers Lines Inc.	 	Liberia	
Containers Services Inc.	 	Liberia	
Continent Marine Inc.	 	Liberia	
Erato Navigation Inc.	 	Liberia	
Expresscarrier (No. 1) Corp.	 	Liberia	
Expresscarrier (No. 2) Corp.	 	Liberia	
Karlita Shipping Company Limited	 	Cyprus	
Lito Navigation Inc.	 	Liberia	
Lydia Inc.	 	Liberia	
Medsea Marine Inc.	 	Liberia	
Megacarrier (No. 1) Corp.	 	Liberia	
Megacarrier (No. 2) Corp.	 	Liberia	
Megacarrier (No. 3) Corp.	 	Liberia	
Megacarrier (No. 4) Corp.	 	Liberia	
Megacarrier (No. 5) Corp.	 	Liberia	
Oceanew Shipping Limited	 	Cyprus	
Oceanprize Navigation Limited	 	Cyprus	
Ramona Marine Company Limited	 	Cyprus	
Sapfo Navigation Inc.	 	Liberia	
Sarond Shipping Inc.	 	Marshall Islands	
Seacarriers Lines Inc.	 	Liberia	
Seacarriers Services Inc.	 	Liberia	
Speedcarrier (No. 1) Corp.	 	Liberia	
Speedcarrier (No. 2) Corp.	 	Liberia	
Speedcarrier (No. 3) Corp.	 	Liberia	

 

Speedcarrier (No. 4) Corp.	 	Liberia	
Speedcarrier (No. 5) Corp.	 	Liberia	
Speedcarrier (No. 6) Corp.	 	Liberia	
Speedcarrier (No. 7) Corp.	 	Liberia	
Speedcarrier (No. 8) Corp.	 	Liberia	
Teucarrier (No. 1) Corp.	 	Liberia	
Teucarrier (No. 2) Corp.	 	Liberia	
Teucarrier (No. 3) Corp.	 	Liberia	
Teucarrier (No. 4) Corp.	 	Liberia	
Teucarrier (No. 5) Corp.	 	Liberia	
Trindade Maritime Company	 	Marshall Islands	
Tully Enterprises S.A.	 	Liberia	
Vilos Navigation Company Ltd	 	Malta	
Wellington Marine Inc.	 	Liberia	
Westwood Marine S.A.	 	Liberia	

Exhibit 12.1
 
CERTIFICATIONS
 
I, Dr. John Coustas, certify that:
 
1.                                       I have reviewed this annual report on Form 20-F of Danaos Corporation;
 
2.                                       Based on my knowledge, this annual 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 annual report;
 
3.                                       Based on my knowledge, the financial statements, and other financial information included in this annual 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 annual report;
 
4.                                       The Company’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have;
 
a.)                                   designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual 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 annual 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 annual 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 officers 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 function):
 
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 15, 2016

/s/ Dr. John Coustas	 	
Dr. John Coustas	 	
President and Chief Executive Officer	 	

Exhibit 12.2
 
I, Evangelos Chatzis, certify that:
 
1.                                       I have reviewed this annual report on Form 20-F of Danaos Corporation;
 
2.                                       Based on my knowledge, this annual 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 annual report;
 
3.                                       Based on my knowledge, the financial statements, and other financial information included in this annual 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 annual report;
 
4.                                       The Company’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have;
 
a.)                                   designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual 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 annual 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 annual 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 officers 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 function):
 
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 15, 2016

/s/ Evangelos Chatzis	 	
Evangelos Chatzis	 	
Chief Financial Officer	 	

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 Danaos Corporation (the “Company”) for the fiscal year ended December 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officer of the Company hereby certifies to the undersigned’s knowledge, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that:
 
1.          The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
 
2.          The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: March 15, 2016	 	
 	/s/ Dr. John Coustas	
 	Dr. John Coustas	
 	President and Chief Executive Officer	

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 Danaos Corporation (the “Company”) for the fiscal year ended December 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officer of the Company hereby certifies to the undersigned’s knowledge, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that:
 
1.               The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
 
2.               The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: March 15, 2016	 	
 	/s/ Evangelos Chatzis	
 	Evangelos Chatzis	
 	Chief Financial Officer	

Exhibit 15
 
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
We hereby consent to the incorporation by reference in the Registration Statements on Form F-3 (Nos. 333 –169101, No. 333-147099, No. 333- 174494 and No. 333-174500) and Form S-8 (No. 333-138449) of Danaos Corporation of our report dated March 15, 2016 relating to the consolidated financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 20-F.  We also consent to the reference to us under the heading “Selected Financial Data” in this Form 20-F.
 
/s/PricewaterhouseCoopers S.A.
 
Athens, Greece
March 15, 2016