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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 20-F

		
☐	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934	
OR	
☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2022	
OR	
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	
	For the transition period from to	
OR	
☐	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	

Date of event requiring this shell company report
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, Athens Branch
14 Akti Kondyli
185 45 Piraeus
Greece
(Address of principal executive offices)	
Evangelos Chatzis
Chief Financial Officer
c/o Danaos Shipping Co. Ltd, Athens Branch
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	    	Trading Symbol(s)	    	Name of each exchange on which registered	
Common stock, $0.01 par value per share		DAC		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:

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None.
As of December 31, 2022, there were 20,349,702 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:
☐ Yes ☒ No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
☐ Yes ☒ No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☒	Accelerated filer ☐	Non-accelerated filer ☐	Emerging growth company ☐	

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b) ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ☒	International Financial Reporting Standards as issued by the International Accounting Standards Board ☐	Other ☐	

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
☐ Item 17 ☐ Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐ Yes ☒ No
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report:
☒ Yes ☐ No

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	    	Page	
FORWARD-LOOKING INFORMATION		2	
PART I		3	
Item 1. Identity of Directors, Senior Management and Advisers		3	
Item 2. Offer Statistics and Expected Timetable		3	
Item 3. Key Information		3	
RISK FACTORS		5	
Item 4. Information on the Company		31	
Item 4A. Unresolved Staff Comments		48	
Item 5. Operating and Financial Review and Prospects		48	
Item 6. Directors, Senior Management and Employees		75	
Item 7. Major Shareholders and Related Party Transactions		82	
Item 8. Financial Information		88	
Item 9. The Offer and Listing		89	
Item 10. Additional Information		89	
Item 11. Quantitative and Qualitative Disclosures About Market Risk		103	
Item 12. Description of Securities Other than Equity Securities		104	
PART II		105	
Item 13. Defaults, Dividend Arrearages and Delinquencies		105	
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds		105	
Item 15. Controls and Procedures		105	
Item 16A. Audit Committee Financial Expert		106	
Item 16B. Code of Ethics		106	
Item 16C. Principal Accountant Fees and Services		106	
Item 16D. Exemptions from the Listing Standards for Audit Committees		107	
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers		107	
Item 16F. Change in Registrant’s Certifying Accountant		107	
Item 16G. Corporate Governance		108	
Item 16H. Mine Safety Disclosure		108	
Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections		109	
PART III		109	
Item 17. Financial Statements		109	
Item 18. Financial Statements		109	
Item 19. Exhibits		110	

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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;	

	●	the impact of the COVID-19 pandemic and efforts throughout the world to contain its spread;	

	●	the impact of the war in Ukraine;	

	●	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 container 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 or refinance 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 “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 March 7, 2023. As of March 7, 2023, we owned 68 containerships aggregating 421,293 TEU in capacity and 6 under construction containerships aggregating 46,200 TEU in capacity. 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
Capitalization and Indebtedness
The table below sets forth our consolidated capitalization as of December 31, 2022:

	●	on an actual basis; and	

	●	on an as adjusted basis to reflect, in the period from January 1, 2023 to March 7, 2023, scheduled debt repayments under the BNP Paribas/Credit Agricole $130 mil. Facility amounting to $5.0 million, Alpha Bank $55.25 mil. Facility amounting to $1.9 million and scheduled $4.3 million repayments related to our leasing obligations.	

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Other than these adjustments, there have been no other 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, 2023 and March 7, 2023.

		As of December 31, 2022	
	    	Actual	    	As Adjusted	
	
		(US Dollars in thousands)	
Capitalization	 		  	 		  	
Debt:	 		  	 		  	
Senior unsecured notes		$	262,766		$	262,766	
BNP Paribas/Credit Agricole $130 mil. Facility			120,000			115,000	
Alpha Bank $55.25 mil. Facility			55,250			53,375	
Citibank $382.5 mil. Revolving Credit Facility			—			—	
Leasing obligations			72,925			68,590	
Total debt(1) (2)		$	510,941		$	499,731	
Stockholders’ equity:		 	  		 	  	
Preferred stock, par value $0.01 per share; 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; 25,155,928 shares issued and 20,349,702 shares outstanding; actual and as adjusted		 	203		 	203	
Additional paid-in capital		 	748,109		 	748,109	
Accumulated other comprehensive loss		 	(74,209)		 	(74,209)	
Retained earnings(3)		 	1,886,311		 	1,886,311	
Total stockholders’ equity		 	2,560,414		 	2,560,414	
Total capitalization		$	3,071,355		$	3,060,145	

(1)	All of the indebtedness reflected in the table, other than our unsecured senior notes due 2028 ($262.8 million on an actual basis), is secured and is guaranteed by Danaos Corporation, in the case of leasing obligations of our subsidiaries ($72.9 million on an actual basis) and indebtedness of our subsidiaries ($55.25 million on an actual basis), or by our subsidiaries, in the case of indebtedness of Danaos Corporation ($120.0 million on an actual basis). See Note 5 “Fixed Assets, net and Advances for Vessels under Construction” and Note 10 “Long-Term Debt, net” to our consolidated financial statements included elsewhere in this report.	
(2)	Total debt is presented gross of deferred finance costs, which amounted to $9.0 million.	
(3)	Does not reflect dividend of $0.75 per share of common stock declared amounting to $15.3 million, which is payable on March 14, 2023 to holders of record as of February 28, 2023.	

Reasons for the Offer and Use of Proceeds
Not Applicable.
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RISK FACTORS
Risk Factor Summary
An investment in our common stock is subject to a number of risks. The following summarizes some, but not all, of these risks. Please carefully consider all of the information discussed in “Item 3. Key Information— Risk Factors” in this annual report for a more thorough description of these and other risks.
Risks Inherent in Our Business

	●	Our profitability and growth depend on the demand for containerships and global economic conditions, and charter rates for containerships may experience volatility or continue to decline.	

	●	The impact of the COVID-19 pandemic and efforts throughout the world to contain its spread, including effects on global economic activity, demand for seaborne transportation of containerized cargo, the ability and willingness of charterers to fulfill their obligations to us, charter rates for containerships, shipyards performing scrubber installations, drydocking and repairs, changing vessel crews and availability of financing.	

	●	The volatile container shipping market and difficulty finding profitable charters for our vessels.	

	●	The failure of our counterparties to meet their obligations under our charter agreements.	

	●	The loss of one of the limited number of customers that account for a large part of our revenues.	

	●	Global economic conditions, and the impact on consumer confidence and consumer spending.	

	●	Disruptions in world financial markets and the resulting governmental action could have a material adverse impact on our results of operations, financial condition and cash flows.	

	●	A decrease in the level of export of goods or an increase in trade protectionism globally could have a material adverse impact on our charterers’ business and could cause a material adverse impact on our business, financial condition, results of operations and cash flows.	

	●	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.	

	●	Containership values, which until recently had been at low levels for a prolonged period of time before reaching historic highs in recent years and declining in the second half of 2022 and early 2023, may fluctuate substantially and continue to decline. Depressed vessel values could cause us to incur impairment charges.	

	●	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.	

	●	The aging of our fleet may result in increased operating costs in the future.	

	●	Increased competition in technology could reduce our charter hire income and our vessels’ values.	

	●	We rely on our information systems to conduct our business, and failure to protect these systems against security breaches, or the failure or unavailability of these systems, could adversely affect our business and results of operations.	

	●	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.	

	●	Inflation could adversely affect our business and financial results by increasing the costs of labor and materials needed to operate our business.	

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Risks Related to our Financing Arrangements

	●	Our ability to comply with various financial and collateral covenants in our credit facilities and other financing arrangements.	

	●	Substantial debt levels could limit our flexibility to obtain additional financing and our ability to service our outstanding indebtedness will depend on our future operating performance.	

	●	The terms of the 8.500% Senior Notes due 2028 (the “Senior Notes”) issued by Danaos Corporation on February 11, 2021 contain covenants limiting our financial and operating flexibility.	

	●	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 are exposed to volatility in interest rates, including SOFR, and to exchange rate fluctuations.	

	●	We may enter into derivative contracts to hedge our exposure to fluctuations in interest rates, which could result in higher than market interest rates and charges against our income.	

Environmental, Regulatory and Other Industry Related Risks

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

	●	Increased inspection procedures, tighter import and export controls and new security regulations could cause disruption of our containership business.	

	●	Uncertainties related to compliance with sanctions and embargo laws.	

	●	Governments could requisition our vessels during a period of war or emergency, maritime claimants could arrest our vessels and we may be impacted by terrorist attacks or acts of piracy or have contraband smuggled onto our vessels.	

	●	Our insurance may be insufficient to cover losses due to the shipping industry’s operational risks.	

	●	Compliance with safety and other requirements imposed by classification societies may be very costly and may adversely affect our business.	

Risks Relating to Our Key Employees and Our Manager

	●	Our business depends upon certain employees who may not necessarily continue to work for us.	

	●	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.	

	●	We depend on our Manager to operate our business. Our Manager is a privately held company about which there is little publicly available information.	

Risk Related to Investment in a Marshall Islands Corporation

	●	We are a Marshall Islands corporation, which jurisdiction does not have well-developed corporate laws. It also may be difficult to enforce service of process or judgments against us, our officers and directors.	

Tax Risks

	●	We may have to pay tax on U.S.-source income or become a passive foreign investment company.	

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Risks Inherent in Our Business
Our profitability and growth depend on the demand for containerships and global economic conditions, and the impact of consumer confidence and consumer spending on containerized shipping volume and charter rates. Charter hire rates for containerships may experience volatility or continue to decline from recent highs, which would, in turn, adversely affect our profitability.
The ocean-going container shipping industry, from which we derive all of our revenues, is both cyclical and volatile in terms of charter hire rates and profitability. Charter rates are impacted by various factors, including the level of global trade, including exports from China to Europe and the United States, resulting demand for the seaborne transportation of containerized cargoes and containership capacity. After reaching highs in 2005, containership charters declined severely in 2008 and 2009 due to the effects of the economic crisis and generally remained weak until the second half of 2020, since which time there has been robust demand for seaborne transportation of containerized cargo, with freight volumes and freight rates rebounding sharply from the second half of 2020 onwards. The benchmark rates have been increased in all quoted size sectors through second half of 2022, with the benchmark one-year daily rate of a 4,400 TEU Panamax containership, which was $36,000 in May 2008, $24,600 at the end of December 2020, at an all-time high of $100,000 at the end of 2021 declined to $24,300 at the end of December 2022. Variations in containership charter rates, which have recently declined from historic highs to pre-pandemic levels and may further decline to low levels, 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. Demand for our vessels depends on demand for the shipment of cargoes in containers and, in turn, 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. Any slowdown in the global economy, including due to events such as the coronavirus variant outbreaks, and disruptions in the credit markets or changes in consumer preferences may further 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;	

	●	the globalization of manufacturing;	

	●	global and regional economic and political conditions;	

	●	developments in international trade;	

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

	●	port congestion.	

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. In addition, a change in consumer behavior that results in reduced purchases of goods in connection with any easing of the pandemic, or otherwise, as has appeared to be the case in the second half of 2022 and early 2023, could continue to have a similar effect. Such decreases in shipping volume could adversely impact our liner company customers and, in turn, demand for containerships. Such decreases in recent years, led to declines in charter rates and vessel values in the containership sector and increased counterparty risk associated with the charters for our vessels, including defaults by certain of our customers.
Our ability to charter our six newbuilding containerships scheduled for delivery in 2024, which do not yet have employment arranged, and recharter our containerships upon the expiration or termination of their current charters and the charter rates payable under any such charters will depend upon, among other things, the prevailing state of the charter market for containerships. As of March 7, 2023, the charters for 10 of our vessels expire in 2023 and 27 of our vessels expire in 2024. If the charter market remains at current level or has weakened when our vessels’ charters expire, we may be forced to recharter the containerships, if we were able to recharter such vessels at all, at 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 to the extent we acquire additional containerships and attempt to obtain multi-year charter arrangements as part of an acquisition and financing plan. The containership market also affects the value of our vessels, which follow the trends of freight rates and containership charter rates.
We may have difficulty securing profitable employment for our vessels in the containership market.
Of our 68 vessels, as of March 7, 2023, 10 of our vessels are employed on time charters expiring in 2023 and 27 in 2024. We also have six newbuilding containerships scheduled for delivery in 2024, which do not yet have employment arranged. Depending on the state of the containership charter market when we are seeking to employ these vessels, 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 68 containerships is currently employed under time or bareboat charters with 17 liner companies, with 73% of our revenues in 2022 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 2016, Hanjin Shipping cancelled the charters for eight of our vessels after it filed for court receivership in September 2016 and in July 2016 we agreed to modifications to the charters for 13 of our vessels with HMM with substantial charter rate reductions.
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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.
The time charters on which we deploy our containerships may provide for charter rates that are above market rates prevailing at any particular time, as is currently the case with some of our vessels. 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 and the overall financial condition of the counterparty. 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, particularly if weaker charter markets are then prevailing.
If our charterers fail to meet their obligations to us or attempt to renegotiate our charter agreements, as part of a court-supervised 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 comply with the covenants and refinance our credit facilities. In such an event, we could be unable to service our debt and other 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, HMM, Yang Ming, MSC and ZIM have represented substantial amounts of our revenue. In 2022, approximately 73% of our operating revenues were generated by six customers, including 26% from CMA CGM, 13% from MSC and 12% from HMM, and in 2021 approximately 72% of our operating revenues were derived from six customers. As of March 7, 2023, we have charters for sixteen of our vessels with CMA CGM, for eight of our vessels with COSCO, for six of our vessels with MSC, for five of our vessels with each of Maersk, HMM and ZIM, for four of our vessels with each of OOCL and Hapag Lloyd, for three of our vessels with each of Yang Ming, ONE and PIL and for one of our vessels with each of TS Lines, KMTC, Niledutch, Samudera, RifLine and OSC. We expect that a limited number of liner companies may continue to generate a substantial portion of our revenues. If any of these liner operators cease doing business or do not fulfill their obligations under their charters for our vessels, as was the case with Hanjin Shipping and HMM in 2016 for instance, due to financial pressure on these liner companies from any 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.
Containership values may again experience significant declines and over time may fluctuate substantially. Depressed vessel values could cause us to incur impairment charges for our vessels, or to incur a loss if these values are low at a time we are attempting to dispose of a vessel.
Containership market values can fluctuate substantially over time, and may again experience significant declines as they have in past years, 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	

	●	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.	

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As of December 31, 2018 and December 31, 2016, we recorded an impairment loss of $210.7 million and $415.1 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 or other assets again experience 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.
The COVID-19 virus pandemic and the resulting disruptions to the global economy and the container shipping industry could negatively affect our business, financial performance and our results of operations, including our ability to obtain charters and financing.
The outbreak of the COVID-19 virus has in 2020 led a number of countries, ports and organizations to take measures against its spread, such as quarantines and restrictions on travel. Such measures were taken initially in China, including Chinese ports, where we conduct a significant amount of our operations, and have since expanded to other countries globally covering most ports where we conduct business. These measures have and will likely continue to cause severe trade disruptions due to, among other things, the unavailability of personnel, supply chain disruption, interruptions of production and closure of businesses and facilities and reduced consumer demand. The duration and severity of this global health emergency and related disruptions remains uncertain.
The COVID-19 pandemic and the global response thereto has introduced uncertainty in a number of areas of our business, including our operational, commercial and financial activities. The severe impact of the pandemic on global economic activity resulted in a global recession and negatively affected global demand for the seaborne transportation of containerized cargoes in the first half of 2020, before demand recovered in the second half of 2020 through first half of 2022. Since then the demand has declined to pre-pandemic levels. If such conditions persist and again negatively affect demand for seaborne transportation of containerized cargoes, it could have a material adverse effect on our ability to secure charters at profitable rates, in a timely fashion without a period of off-hire, or at all, particularly for our vessels with charters expiring in 2023, as demand for additional charters could be significantly affected. Of our 68 vessels as of March 7, 2023, 10 vessels, 5 of which are below 6,500 TEU in capacity, are employed on time charters expiring in 2023. Container freight rates were volatile and containership charter market rates declined significantly in the first half of 2020 before significantly improving since that time through the first half of 2022, but have since declined to pre COVID-19 levels and may further decline, particularly if the negative impact of the pandemic on global economic activity persists for longer than anticipated or its easing impacts demand for the shipment of containerized goods due to shifts in consumer behavior or otherwise, as appears to have been the case in the second half of 2022 and early 2023. Containerized trade was estimated to have decreased by 5.3% in 2022 after it increased by 6.5% in 2021 compared to an estimated increase in global gross domestic product (“GDP”) of 3.2% in 2022, reflecting the effects of partial recovery from the COVID-19 pandemic. In general, container trade is correlated with global GDP, with container trade growing somewhat faster than global GDP over the past decade and accordingly a decline in global GDP, due to an extended period of COVID-19 related restrictions, effects of the war in Ukraine and related sanctions or otherwise, would be likely to cause container trade, and in turn charter rates and vessel values, to again decline.
These factors could also have a material adverse effect on the business of our liner company charterers, which could adversely affect their ability and willingness to perform their obligations under our existing charters as well as decreasing demand for future charters. If our charterers fail to meet their obligations to us or attempt to renegotiate our charter agreements, 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 comply with the covenants in, or refinance, our credit facilities.
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Until such time as the uncertainty surrounding the ability to contain the spread of COVID-19 abates, our business and the shipping industry as a whole may again be impacted by reduced demand for containerized shipping services, and continued disruptions from a reduced workforce and delays in crew changes as a result of quarantines applicable in numerous countries and ports and delays of vessels as a result of port checks due to cases, or suspected cases, of COVID-19 amongst crew, as well as delays in scheduled drydockings, intermediate or special surveys of vessels and scheduled and unscheduled ship repairs and upgrades, including the installation of scrubbers and ballast water treatment equipment. For example, we have experienced delays in Chinese shipyards related to the scheduled installations of the scrubbers on our vessels and delays in carrying of dry-docking repairs, which resulted in incremental off-hire time of our vessels ultimately leading to decreased operating revenue. In addition, travel restrictions imposed on a global level caused disruptions in scheduled crew changes on our vessels and delays in carrying out certain hull repairs and maintenance during the first quarter of 2020, which disruptions could continue to affect our operations.
The impact of COVID-19 on credit markets and financial institutions could also result in increased interest rate spreads and other costs of, and difficulty in obtaining, bank financing, including to refinance existing credit facilities and to finance the purchase price of additional vessel acquisitions, which could limit our ability to grow our business in line with our strategy.
Any prolonged slowdown in the global economy may again negatively impact worldwide demand for products transported by containerships, as it did in the first half of 2020, adversely affect the liquidity and financial position of our charterers and may decrease rechartering hire rates for our vessels, as could any decrease in demand for consumer products and other containerized cargo as the pandemic abates or otherwise as has been experienced beginning in the second half of 2022. This could result in reductions in our revenue and the market value of our vessels, which could materially adversely affect our business and results of operations, as well as our ability to service or refinance our debt and comply with financial covenants of our credit facilities.
Disruptions in world financial markets and the resulting governmental action could have a material adverse impact on our results of operations, financial condition and cash flows.
The global economy has generally improved recently but remains subject to significant downside economic risks, as well as geopolitical risks, the emergence of populist and protectionist political movements in advanced economies and extraordinary events such as the ongoing coronavirus outbreak, which may negatively impact global economic growth, disrupt financial markets, and may lead to weaker consumer demand. A slowdown in the global economy may result in a decrease in worldwide demand for products transported by containerships. These issues, along with the re-pricing of credit risk and the difficulties being experienced by some financial institutions have made, and will likely continue to make, it difficult to obtain financing in the shipping industry. As a result of past disruptions in the credit markets, the cost of obtaining bank financing in the shipping industry 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 reduced or ceased 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 any instability in the banking and securities markets around the world, among other factors. Major market disruptions and 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 under any future financial arrangements.
In addition, as a result of the economic situation in Greece, which has been slowly recovering 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 may disrupt our shoreside operations and those of our Manager located in Greece.
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If global economic conditions weaken, particularly in Europe and in the Asia Pacific region, it could have a material adverse effect on our business, financial condition and results of operations.
Global economic conditions impact worldwide demand for various goods and, thus, container shipping. 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, in particular China which has been one of the world’s fastest growing economies in recent years, can have a significant impact on the demand for container shipping. However, if China’s pace of growth declines and other countries in the Asia Pacific region experience slower or negative economic growth in the future, this may negatively affect the economies of the United States and the European Union, or “EU”, and thus, may negatively impact container shipping demand. For example, the introduction of tariffs on selected imported goods mainly from Asia has provoked retaliatory measures from the affected countries, including China, which may create impediments to trade. Risks remaining from the recent recovery in Europe, including the possibility of sovereign debt defaults by EU 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 COSCO for eight 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, as well as our future prospects, will likely be materially and adversely affected by an economic downturn in any of these countries.
In addition, public health threats, such as the coronavirus, influenza and other highly communicable diseases or viruses, outbreaks of which have from time to time occurred in various parts of the world in which we operate, including China, could adversely impact our operations, and the operations of our customers.
A decrease in the level of export of goods, in particular from Asia, or an increase in trade protectionism globally, including from the United States, could have a material adverse impact on our charterers’ business and, in turn, could cause a material adverse impact on our business, financial condition, results of operations and cash flows.
Our operations expose us to the risk that increased trade protectionism from the United States, China or other nations adversely affect our business. Governments may turn to trade barriers to protect or revive their domestic industries in the face of foreign imports, thereby depressing the demand for shipping. Restrictions on imports, including in the form of tariffs, could have a major impact on global trade and demand for shipping. Trade protectionism in the markets that our charterers serve may cause an increase in the cost of exported goods, the length of time required to deliver goods and the risks associated with exporting goods and, as a result, a decline in the volume of exported goods and demand for shipping.
In recent years, the United States instituted large tariffs on a wide variety of goods, including from China, which led to retaliatory tariffs from leaders of other countries including China. These policy pronouncements created significant uncertainty about the future relationship between the United States and China and other exporting countries, including with respect to trade policies, treaties, government regulations and tariffs and has led to concerns regarding the potential for an extended trade war. Tensions over trade and other matters remain high between the U.S. and China, and it is currently unclear what policies the current U.S. administration will pursue. Protectionist developments, or the perception they may occur, may have a material adverse effect on global economic conditions, and may significantly reduce global trade and, in particular, trade between the United States and other countries, including China.
Our containerships are deployed on routes involving containerized trade in and out of emerging markets, and our charterers’ container shipping and business revenue may be derived from the shipment of goods from Asia to various overseas export markets, including the United States and Europe. Any reduction in or hindrance to the output of Asia-based exporters could have a material adverse effect on the growth rate of Asia’s exports and on our charterers’ business.
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Furthermore, the government of China has implemented economic policies aimed at increasing domestic consumption of Chinese-made goods and containing capital outflows. These policies may have the effect of reducing the supply of goods available for exports and the level of international trading and may, in turn, result in a decrease in demand for container shipping. In addition, reforms in China for a gradual shift to a “market economy” including with respect to the prices of certain commodities, are unprecedented or experimental and may be subject to revision, change or abolition and if these reforms are reversed or amended, the level of imports to and exports from China could be adversely affected.
Any new or increased trade barriers or restrictions on trade would have an adverse impact on our charterers’ business, operating results and financial condition and could thereby affect their ability to make timely charter hire payments to us and to renew and increase the number of their time charters with us. Such adverse developments could in turn have a material adverse effect on our business, financial condition, results of operations, cash flow, and our ability to service or refinance our debt.
Demand for the seaborne transport of products in containers 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, remained at relatively low levels for a prolonged period from the onset of the global economic crisis of 2008 and 2009 until the second half of 2020. Consequently, during this period, the cargo volumes and freight rates achieved by liner companies, with which all of the existing vessels in our fleet are chartered, 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, before increasing alongside cargo volume and freight rates since the second half of 2020. In the second half of 2022 and early 2023, cargo volume and freight rates have declined as supply chain constraints experienced during the pandemic eased and global geopolitical and economic conditions weighed on demand.
Any decline in demand for the services of our liner company customers could reduce demand for containerships and increase the likelihood of one or more of our customers being unable or unwilling to pay us the contracted charterhire rates under the charters for our vessels, such as we agreed with HMM in 2016 and ZIM in 2014 and Hanjin Shipping’s cancellation of long-term charters for eight of our vessels in 2016. 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 adversely affect charter rates and 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, it increased in 2021 and 2022 and at the end of 2022 newbuilding containerships representing approximately 28% of the existing global fleet capacity at that time, and a higher percentage of large containerships. Notwithstanding that some orders may be cancelled or delayed, the size of the orderbook will likely result in an increase in the size of the world containership fleet over the next few years. An over-supply of containership capacity, particularly in conjunction with a decline in the level of demand for the seaborne transport of containers, could negatively affect charter rates, which continued liner company consolidation may accentuate. We do not hedge against our exposure to changes in charter rates, due to increased supply of containerships or otherwise. As such, if the charter rate environment is weak when the current charters for our containerships expire or are terminated or we are seeking to arrange employment for the six newbuilding containerships scheduled to be delivered to us in 2024, 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.
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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 is, when market conditions warrant, to acquire additional containerships in conjunction with entering into additional multi-year, fixed-rate time charters for these vessels, such as the vessels we acquired in 2020 and 2021. We also have six containerships under construction scheduled for delivery in 2024, for which we have not yet arranged charters. 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. In recent years, during the downturn in the containership charter market, other containership owners 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.
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.
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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, we would generally expect to target somewhat shorter charter terms, 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 or insufficient funds are available to cover our financing costs for related containerships.
Delays in deliveries of our six newbuilding vessels we ordered in 2022 or any secondhand vessels we may agree to acquire could harm our business.
Delays in the delivery of our six newbuilding containerships we ordered in 2022 with planned deliveries in 2024 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 contracted for our newbuildings may be affected by instability in 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 our newbuilding contracts we entered 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, in weak market conditions 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 financing arrangements.
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.
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, we intend to grow our business by ordering newbuilding containerships and through selective acquisitions of additional vessels. 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	

	●	obtaining required financing on acceptable terms.	

During periods in which charter rates are high, vessel values generally are high as well, as has recently been the case, and it may be difficult to acquire vessels at favorable prices at those times. 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 any growth plans or that we will not incur significant expenses and losses in connection with any future growth efforts.
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 pay dividends to our stockholders.
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. As a result, our ability to pay our contractual obligations and pay dividends to our stockholders 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 our financing arrangements, 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. Any limitations on our ability to receive cash from our subsidiaries may negatively affect our cash flows and ability to pay dividends to our stockholders.
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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 further grow our fleet, including our six newbuilding vessels under construction. We might not have sufficient borrowing availability under our existing credit facilities or other financing arrangements. In order to fund capital expenditures for future fleet growth, we generally plan to use equity and debt financing. 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, conditions in the containership charter market and contingencies and uncertainties that are beyond our control. 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, including the payment of dividends to our stockholders.
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, including the payment of dividends to our stockholders.
The aging of our fleet may result in increased operating costs in the future, which could adversely affect our earnings and cash flows.
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. Our current fleet of 68 containerships had an average age (weighted by TEU capacity) of approximately 14.1 years as of February 28, 2023 and 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, 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 results of operations.
We rely on our information systems to conduct our business, and failure to protect these systems against security breaches could adversely affect our business and results of operations. Additionally, if these systems fail or become unavailable for any significant period of time, our business could be harmed.
The efficient operation of our business is dependent on computer hardware and software systems. Information systems are vulnerable to security breaches by computer hackers and cyberterrorists. We rely on industry accepted security measures and technology to securely maintain confidential and proprietary information maintained on our information systems. However, these measures and technology may not adequately prevent security breaches. In addition, the unavailability of the information systems or the failure of these systems to perform as anticipated for any reason could disrupt our business and could result in decreased performance and increased operating costs, causing our business and results of operations to suffer. Any significant interruption or failure of our information systems or any significant breach of security could adversely affect our business, results of operations and financial condition, as well as our cash flows.
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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, 2022, we incurred approximately 22.4% of our vessels’ operating 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.
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.
Risks Related to our Financing Arrangements
Containership charter rates and vessel values may affect our ability to comply with various financial and collateral covenants in our credit facilities, and our financing arrangement impose operating and financial restrictions on us.
Our credit facilities and other financing arrangements, which are secured by, among other things, mortgages on our vessels, require us to maintain specified collateral coverage ratios and satisfy financial covenants. See “Item 5. Operating and Financial Review and Prospects—Credit Facilities.” Our ability to comply with covenants and restrictions contained in our financing arrangements may be affected by events beyond our control, including prevailing economic, financial and industry conditions. Low containership charter rates, or the failure of our charterers to fulfill their obligations under their charters for our vessels, due to financial pressure on these liner companies from weak demand for the seaborne transport of containerized cargo or otherwise, may adversely affect our ability to comply with these covenants. 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.
If we are unable to meet our covenant compliance obligations under our credit facilities and other financing arrangements, and are unable to reach an agreement with our lenders to obtain compliance waivers, our lenders could then accelerate our indebtedness and foreclose on the vessels in our fleet securing those credit facilities. Any such default could result in cross-defaults under our other credit facilities and financing arrangements, including the Senior Notes, and the consequent acceleration of the indebtedness thereunder and the commencement of similar foreclosure proceedings by other lenders. The loss of any of our vessels would have a material adverse effect on our operating results and financial condition and could impair our ability to operate our business.
In addition, our credit facilities, and any future credit facility we enter into likely will, impose operating and financial restrictions on us and our subsidiaries, including relating to incurrence of debt and liens, making acquisitions and investments and paying dividends on or repurchasing our stock. Therefore, we may need to seek permission from our lenders in order to engage in some actions. Our lenders’ interests may be different from ours and we may not be able to obtain our lenders’ permission when needed. This may limit our ability to finance our future operations or capital requirements, make acquisitions or pursue business opportunities or pay dividends on our shares.
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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.
We have an aggregate principal amount of indebtedness, including leaseback obligations, outstanding of $510.9 million, as of December 31, 2022. In addition, we may seek to incur substantial additional indebtedness, as market conditions warrant, to grow our fleet to the extent that we are able to obtain such financing. 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 a substantial portion of our free cash from operations to make principal and interest payments on our debt, reducing the funds that would otherwise be available for future business opportunities;	

	●	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	

	●	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 our vessels on shorter term time charters or other charters expiring in the near future, will have a significant impact on our ability to service our indebtedness. If we do not generate sufficient cash flow to service our debt, we may be forced to take actions such as reducing or delaying our business activities, acquisitions, investments or capital expenditures, selling assets, 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.
Although we had $382.5 million of additional amounts available for borrowing under our existing credit facilities as of December 31, 2022, if we need additional liquidity and are unable to obtain such liquidity from existing or new lenders or in the capital markets, or if our existing financing arrangements do not permit additional debt that we require (and we are unable to obtain waivers from required lenders), we may be unable to meet our liquidity obligations which could lead to a default under our credit facilities and Senior Notes. Our current financing arrangements also impose, and future financing arrangements may impose, operating and financial restrictions on us that may limit our ability to take certain actions, including the incurrence of additional indebtedness by existing subsidiaries, creating liens on our existing assets and selling capital stock of our existing subsidiaries.
The terms of the Senior Notes contain covenants limiting our financial and operating flexibility.
Covenants contained in the documentation relating to the Senior Notes restricts our ability and the ability of our subsidiaries to, among other things:

	●	pay dividends, make distributions, redeem or repurchase equity interests and make certain other restricted payments or investments;	
	●	incur additional indebtedness or issue certain equity interests;	
	●	merge, consolidate or sell all or substantially all of our assets;	
	●	issue or sell capital stock of some of our subsidiaries;	
	●	create liens on assets; and	
	●	enter into certain transactions with affiliates or related persons.	

All of these limitations are subject to limitations, exceptions and qualifications. These restrictive covenants could limit our ability to pursue our growth plan, restrict our flexibility in planning for, or reacting to, changes in our business and industry and increase our vulnerability to general adverse economic and industry conditions. We may enter into additional financing arrangements in the future which could further restrict our flexibility. Any defaults of covenants contained in the Senior Notes may lead to an event of default under the Senior Notes and the indenture and may lead to cross-defaults under our other indebtedness.
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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, as well as the perceived impact of emissions by our vessels on the climate.
Although we had $382.5 million of additional amounts available for borrowing under our existing credit facilities as of December 31, 2022, the amount available for borrowing under this facility will reduce over time on a quarterly basis. We also intend to borrow against vessels we may acquire in the future as part of our growth plan. 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.
In 2019, a number of leading lenders to the shipping industry and other industry participants announced a global framework by which financial institutions can assess the climate alignment of their ship finance portfolios, called the Poseidon Principles, and additional lenders have subsequently announced their intention to adhere to such principles. If the ships in our fleet are deemed not to satisfy the emissions and other sustainability standards contemplated by the Poseidon Principles, or other Environmental Social Governance (ESG) standards required by lenders or investors, the availability and cost of bank or other financing for such vessels may be adversely affected.
We are exposed to volatility in interest rates, including SOFR
Loans advanced under our credit facilities are, generally, advanced at a floating rate based on SOFR, which has increased recently, after a long period of relative stability at historically low levels, and has been volatile in past years, which can affect the amount of interest payable on our debt, and which, in turn, could have an adverse effect on our earnings and cash flow. SOFR rates were at historically low levels for an extended period of time and may continue to increase from these low levels. Our financial condition could be materially adversely affected at any time that we have not entered into interest rate hedging arrangements to hedge our interest rate exposure and the interest rates applicable to our credit facilities and any other financing arrangements we may enter into in the future increase. Moreover, even if we have entered into interest rate swaps or other derivative instruments for purposes of managing our interest rate or bunker cost exposure, our hedging strategies may not be effective and we may incur substantial losses.
Inflation could adversely affect our business and financial results.
Inflation could adversely affect our business and financial results by increasing the costs of labor and materials needed to operate our business. We continue to see near-term impacts on our business due to elevated inflation in the United States of America, Eurozone and other countries, including ongoing global prices pressures in the wake of the war in Ukraine, driving up energy prices, commodity prices, which continue to affect our operating expenses. Interest rates have increased rapidly and substantially as central banks in developed countries raise interest rates in an effort to subdue inflation. The eventual implications of tighter monetary policy, and potentially higher long-term interest rates may drive a higher cost of capital for our business. See “Item 5. Operating and Financial Review and Prospects-Inflation and Interest Rates Risk.”
We may enter into derivative contracts to hedge our exposure to fluctuations in interest rates, which could result in higher than market interest rates and charges against our income.
We do not currently have any interest rate swap arrangements. In the past, however, we have entered into interest rate swaps in substantial aggregate notional amounts, 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 interest rate swap agreements converting fixed interest rate exposure under our credit facilities advanced at a fixed rate of interest to floating rates based on LIBOR. Any hedging strategies we choose to employ, may not be effective and we may again incur substantial losses, as we did in 2015 and prior years. Unless we satisfy the requirements to qualify for hedge accounting for interest rate swaps and any other derivative instruments, we would recognize all fluctuations in the fair value of any such contracts in our consolidated Statements of Operations. Recognition of such fluctuations in our statement of operations may increase the volatility of our earnings. 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.
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Environmental, Regulatory and Other Industry Related Risks
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, or “BWM”. 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. To comply with these and other regulations, including: (i) the sulfur emission requirements of Annex VI of the International Convention for the Prevention of Marine Pollution from Ships, or “MARPOL”, which instituted a global 0.5% (lowered from 3.5% as of January 1, 2020) sulfur cap on marine fuel consumed by a vessel, unless the vessel is equipped with a scrubber, and (ii) the International Convention for the Control and Management of Ships’ Ballast Water and Sediments, or “BWM Convention”, of the International Maritime Organization, or “IMO”, which requires vessels to install expensive ballast water treatment systems, we may be required to incur additional costs to meet new maintenance and inspection requirements, develop contingency plans for potential spills, and obtain insurance coverage. Additionally, the increased demand for low sulfur fuels may increase the costs of fuel for our vessels that do not have scrubbers, although our charterers are responsible for the cost of fuel for vessels while under time or bareboat charter on which all of our vessels are currently deployed, and impact the charter rate charterers are willing to pay for vessels without scrubbers. 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. 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 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,” or “SMS”, that includes the adoption of a safety and environmental protection policy setting forth instructions and procedures for safe operation and describing procedures for dealing with emergencies. Failure to comply with the ISM 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.
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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 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, 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 MARPOL. For example, in 2021 the United States announced its commitment to working with the IMO to adopt a goal of achieving zero emissions from international shipping by 2050. In June 2021, the IMO, working with the Marine Environmental Protection Committee, passed amendments to Annex VI aimed at reducing carbon emissions produced by vessels and include two new metrics for measuring a vessel’s overall energy efficiency and actual carbon dioxide emissions: Energy Efficiency Existing Shipping Index (“EEXI”) and Carbon Intensity Indicator (“CII”), the latter of which came into force as of January 1, 2023. If our vessels are only able to comply with the maximum EEXI and CII thresholds by reducing their speed, our vessels may be less attractive to charterers, and we may only be able to charter our vessels for lower charter rates or to less creditworthy charterers, if we are able to do so at all. 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 increased container inspection rates and further increases have been contemplated. 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, additional vessel security requirements have been imposed including the installation of security alert and automatic information systems on board vessels.
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.
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.
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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 continued 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. However, on August 6, 2018, the U.S. re-imposed an initial round of secondary sanctions and as of November 5, 2018, all of the secondary sanctions the U.S. had suspended under the JCPOA have been re-imposed.
The U.S. government’s primary Iran sanctions have remained in place throughout recent years 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 2022, 2021 and 2020, no vessels operated by us made any calls to ports in Cuba, Iran, North Korea, Syria or Sudan. 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 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. We may also be adversely affected by the consequences of war, the effects of terrorism, civil unrest and governmental actions in these and surrounding countries.
Failure to comply with the U.S. Foreign Corrupt Practices Act and other anti-bribery legislation in other jurisdictions could result in fines, criminal penalties, contract terminations and an adverse effect on our business.
We may operate in a number of countries throughout the world, including countries known to have a reputation for corruption. We are committed to doing business in accordance with applicable anti-corruption laws and have adopted a code of business conduct and ethics which is consistent and in full compliance with the U.S. Foreign Corrupt Practices Act of 1977, or the “FCPA”. We are subject, however, to the risk that persons and entities whom we engage or their agents may take actions that are determined to be in violation of such anti-corruption laws, including the FCPA. Any such violation could result in substantial fines, sanctions, civil and/or criminal penalties, or curtailment of operations in certain jurisdictions, and might adversely affect our business, results of operations or financial condition. In addition, actual or alleged violations could damage our reputation and ability to do business. Furthermore, detecting, investigating, and resolving actual or alleged violations is expensive and can consume significant time and attention of our senior management.
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.
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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, Syria and Afghanistan may lead to additional acts of terrorism, regional conflict and other armed conflicts around the world, which may contribute to 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. The developing conflict between Russia and Ukraine, and related sanctions imposed by the U.S., EU and others, could affect the crewing operations of our Manager, which has crewing offices in St. Petersburg, Odessa and Mariupol, and trade patterns involving ports in the Black Sea or Russia.
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 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, and results of operations.
The smuggling of drugs or other contraband onto our vessels may lead to governmental claims against us.
Our vessels call in ports in South America and other areas where smugglers attempt to hide drugs and other contraband on vessels, with or without the knowledge of crew members. To the extent our vessels are found with contraband, whether inside or attached to the hull of our vessel and whether with or without the knowledge of any of our crew, we may face governmental or other regulatory claims or penalties which could have an adverse effect on our business, results of operations, cash flows and financial condition.
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;	
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	●	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. 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 fixed and floating objects, (ii) war risks insurance covering losses associated with the outbreak or escalation of hostilities, and (iii) protection and indemnity (“P&I”) 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 (except where such cover is provided in the hull and machinery policy), pollution arising from oil or other substances and salvage, towing and other related costs.
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 P&I 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 currently carry loss of hire insurance. 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.
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.
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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 (“DNV”) & Germanischer Lloyd, the Korean Register of Shipping and the American Bureau of Shipping.
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 International Convention for Safety of Life at Sea, or “SOLAS”, 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.
Risks Relating to Our Key Employees and Our Manager
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 our credit facilities and other financing arrangements, Dr. Coustas ceasing to serve as our Chief Executive Officer and a director of our Company, would give rise to the lenders being able to require us to repay in full debt outstanding under such 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.
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.
In addition, DIL as trustee of the 883 Trust and Dr. Coustas are permitted to terminate the restrictive covenant agreement upon the occurrence of certain transactions constituting a “Change of Control” of the Company which are not within the control of Dr. Coustas or DIL, including where Dr. Coustas ceases to be both the Chief Executive Officer of the Company and a director of the Company without his consent in connection with a hostile takeover of the Company by a third party. Upon such an occurrence, the non-competition restrictions on our Manager under our management agreement would also cease to apply.
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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;	

	●	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 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.
Risks Relating to Investment in a Marshall Islands Corporation
We are a Marshall Islands corporation, and the Marshall Islands does not have a well-developed body of corporate law or a bankruptcy act.
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.
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The Marshall Islands has no established bankruptcy act, and as a result, any bankruptcy action involving our company would have to be initiated outside the Marshall Islands, and our security holders may find it difficult or impossible to pursue their claims in such other 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.
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 and may continue to do so as a result of many factors, including future share issuances, sales of shares by existing stockholders, our actual results of operations and perceived prospects, the prospects of our competitors 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 broader market fluctuations.
We may not continue to pay dividends on our common stock, particularly if market conditions change.
We reinstated quarterly cash dividend payments on our common stock in 2021; however, there can be no assurance that we will pay dividends or as to the amount of any dividend. Declaration and payment of any future dividend is subject to the discretion of our board of directors. The timing and amount of dividend payments will be dependent upon our earnings, financial condition, cash requirements and availability, fleet renewal and expansion, restrictions in our credit facilities, finance leases and Senior Notes, which include limitations on the amount of dividends and other restricted payments that we may make, the provisions of Marshall Islands law affecting the payment of distributions to stockholders and other factors. Under our credit facilities, we are permitted to pay dividends if, among other things, a default has not occurred and is continuing or would occur as a result of the payment of such dividend, and we remain in compliance with the financial covenants applicable to the obligors thereunder. In addition, 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. We cannot assure you that we will continue to pay dividends in the future or the amounts of any such dividends.
Future issuances of equity and equity related securities may result in significant dilution and could adversely affect the market price of our common stock.
We may seek to sell shares in the future to satisfy our capital and operating needs and to finance further growth we may have to issue additional shares of common or preferred stock in addition to any additional debt we may incur. If we sell shares in the future, the prices at which we sell these future shares will vary, and these variations may be significant. 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.
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Sales of our common stock by stockholders, or the perception that these sales may occur, especially by our directors or significant stockholders, may cause our share price to decline.
If our stockholders, in particular our affiliates and significant stockholders, sell substantial amounts of our common stock in the public market, or are perceived by the public market as intending to sell, the trading price of our common stock could decline. In addition, sales of these shares of common stock could impair our ability to raise capital in the future. We have filed shelf registration statements with the SEC registering under the Securities Act close to half of the outstanding shares of our common stock for resale on behalf of existing stockholders, including our executive officers and directors. These shares may be resold in registered transactions and may also be resold subject to the requirements of Rule 144 under the Securities Act. We cannot predict the timing or amount of future sales of these shares of common stock, or the perception that such sales could occur, which may adversely affect prevailing market prices for our common stock.
Certain of our major stockholders will have significant influence over certain matters and may have interests that are different from the interests of our other stockholders.
Certain of our major stockholders may have interests that are different from, or are in addition to, the interests of our other stockholders. In particular, Danaos Investment Limited as Trustee of the 883 Trust (“DIL”), which is affiliated with our Chief Executive Officer, owns approximately 44.5% of our outstanding shares of common stock as of March 7, 2023. There may be real or apparent conflicts of interest with respect to matters affecting such stockholders and their affiliates whose interests in some circumstances may be adverse to our interests.
For so long as a stockholder continues to own a significant percentage of our common stock, it will be able to significantly influence the composition of our Board of Directors and the approval of actions requiring stockholder approval through its voting power. Accordingly, during such period of time, such stockholder will have significant influence with respect to our management, business plans and policies, including the appointment and removal of our officers. In particular, for so long as such stockholder continues to own a significant percentage of our common stock, it may be able to cause or prevent a change of control of our company or a change in the composition of our board of directors and could preclude an unsolicited acquisition of our company. The concentration of ownership could potentially deprive you of an opportunity to receive a premium for your common stock as part of a sale of our company and might affect the market price of our common stock.
Such a stockholder and its affiliates engage in a broad spectrum of activities. In the ordinary course of its business activities, such stockholder may engage in activities where its interests conflict with our interests or those of our stockholders. For example, it may have an interest in our pursuing acquisitions, divestitures and other transactions that, in its judgment, could enhance its investment, even though such transactions might involve risks to us and our other stockholders. Such potential conflicts may delay or limit the opportunities available to us, and it is possible that conflicts may be resolved in a manner adverse to us or result in agreements that are less favorable to us than terms that would be obtained in arm’s-length negotiations with unaffiliated third-parties.
As a foreign private issuer we are entitled to rely upon exemptions from certain NYSE corporate governance standards, and to the extent we elect to rely on these exemptions, you may not have the same protections afforded to stockholders of companies that are subject to all of the NYSE corporate governance requirements.
As a foreign private issuer, we are entitled to rely upon exemptions from many of the NYSE’s corporate governance practices. To the extent we rely on any of these exemptions, including to have an employee director on our nominating and corporate governance committee and issue shares without shareholder approval, you may not have the same protections afforded to stockholders of companies that are subject to all of the NYSE corporate governance requirements.
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Anti-takeover provisions in our organizational documents, as well as terms of our credit facilities and Senior Notes, 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:

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

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

	●	prohibit cumulative voting in the election of directors;	

	●	authorize the removal of directors only for cause and only upon the affirmative vote of the holders of at least 662/3% 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.	

In addition, a “Change of Control”, as defined in our senior secured facilities, which includes Dr. John Coustas ceasing to serve as CEO and a director of the Company, the Coustas family ceasing to own at least 15% of the outstanding voting share capital of the Company, Dr. John Coustas or DIL ceasing to control our manager, one or more persons acting in concert, other than members of the Coustas family, controlling our company, and changes to our board of directors in certain circumstances, will give rise to a mandatory prepayment in full of such facilities and a cancellation of the revolving credit facility. In addition, the terms of our Senior Notes require us to offer to repurchase all of our outstanding Senior Notes if there is a “change of control” as defined in the indenture for our Senior Notes. See “Item 5. Operating and Financial Review and Prospects—Senior Notes.”
These anti-takeover provisions 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.
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We believe that we and our subsidiaries have previously qualified for this statutory tax exemption and have taken that position for U.S. federal income tax reporting purposes. It is uncertain as to whether we will continue to qualify for this statutory tax exemption, and 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 stockholders 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 stockholders” (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 stockholders owned more 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 stockholders for any tax year.
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. We may choose to provide such information on our website.
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, 2022. 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.
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.
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Our Company’s long history in the shipping industry dates back to the 1960s. Our largest stockholder is DIL, an entity affiliated with our Chief Executive Officer, Dr. John Coustas. Dimitris Coustas, the father of Dr. Coustas, first invested in shipping in 1963 and founded our Manager, in 1972. Since that time it has continuously provided seaborne transportation services under the management of the Coustas family. After assuming management of our company in 1987, Dr. Coustas has focused our strategy on building a large, modern containership fleet to serve the container shipping industry and grown our fleet from three multi-purpose vessels with a capacity of 2,395 TEUs to our current fleet of 68 containerships aggregating 421,293 TEUs and 6 under construction containerships aggregating 46,200 TEUs as of March 7, 2023.
Danaos Corporation completed its initial public offering and was publicly listed on the New York Stock Exchange in October 2006. In August 2010, we completed a sale of $200 million of common stock, and in 2015 formed our Gemini joint venture. In August 2018, we consummated a comprehensive debt refinancing, which resulted in, among other things, a $551.0 million reduction in our debt. In November 2019, we completed a public offering of our common stock for gross proceeds of $56.5 million, including a significant investment by DIL and the Coustas family. In October 2020 we repurchased 4,339,271 shares of common stock for an aggregate purchase price of $31.1 million in privately negotiated transactions and in 2022 we repurchased another 466,955 shares of our common stock for an aggregate purchase price of $28.6 million under our share repurchase program of up to $100 million announced in June 2022. In February 2021, we sold $300 million of 8.50% senior unsecured notes due 2028. On July 1, 2021 we exercised our option to acquire the remaining 51% equity interest in Gemini. In 2022, we gradually reduced our total credit facilities to $510.9 million outstanding as of December 31, 2022 compared to $1,378.5 million outstanding as of December 31, 2021. See “Item 5. Operating and Financial Review and Prospects.”
Danaos Corporation operates through a number of subsidiaries incorporated in Liberia, Cyprus, Malta, the Republic of the Marshall Islands and Singapore, all of which are wholly owned by Danaos Corporation and either directly or indirectly own the vessels in our fleet. A list of our active subsidiaries as of March 7, 2023 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., Athens Branch, 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 March 7, 2023, we had a fleet of 68 containerships aggregating 421,293 TEUs and 6 under construction containerships aggregating 46,200 TEUs.
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 March 7, 2023, these customers included CMA-CGM, Hyundai Merchant Marine (“HMM”), MSC, Yang Ming, Hapag Lloyd, ZIM, Maersk, COSCO, OOCL, ONE, PIL, KMTC, Niledutch, Samudera, RifLine, OSC and TS Lines.
As of December 31, 2022, the average remaining duration of the charters for our 69 containerships was 3.4 years (weighted by aggregate contracted charter hire). As of December 31, 2022, these contracts are expected to provide total contracted revenues of approximately $2.1 billion during their fixed terms, which expire between 2023 and 2028. In January 2023, we completed the sale of the Amalia C, which was held for sale as of December 31, 2022. Our charters have initial terms ranging up to 18 years, which provide us with stable cash flows and high utilization rates. Our fleet ranges in size from 2,200–13,100 TEU, providing us flexibility to serve the diverse needs of our customers.
Our Fleet
General
Danaos is one of the largest containership operating lessors in the world. Since going public in 2006, we have more than tripled our TEU carrying capacity. Today, our fleet 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.
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We deploy our containership fleet principally under multi-year charters with major liner companies that operate regularly scheduled routes between large commercial ports, although in weaker containership charter markets such as is currently prevailing we charter more of our vessels on shorter term charters so as to be available to take advantage of any increase in charter rates. As of March 7, 2023, our containership fleet was comprised of 66 containerships deployed on time charters, 10 of which are scheduled to expire in 2023, and 2 containerships deployed on bareboat charters. The average age (weighted by TEU) of the 68 vessels in our containership fleet was approximately 14.1 years as of February 28, 2023. As of December 31, 2022, the average remaining duration of the charters for our containership fleet was 3.4 years (weighted by aggregate contracted charter hire).
Characteristics
The table below provides additional information, as of March 7, 2023, about our fleet of 68 cellular containerships.

Vessel Details		Charter Arrangements	
		Year		Size		Expiration of				Contracted Employment		Charter		Extension Options(4)	
Vessel Name	    	Built	    	(TEU)	    	Charter (1)	    	Charterer	    	through (2)	    	Rate (3)	    	Period	    	Charter Rate	
Hyundai Ambition	 	2012	 	13,100	 	June 2024	 	HMM	 	June 2024		$	64,918	 	+ 3 years		$	60,418	
Hyundai Speed	 	2012	 	13,100	 	June 2024	 	HMM	 	June 2024		$	64,918	 	+ 3 years		$	60,418	
Hyundai Smart	 	2012	 	13,100	 	May 2024	 	HMM	 	May 2024		$	64,918	 	+ 3 years		$	60,418	
Hyundai Respect(5)	 	2012	 	13,100	 	March 2024	 	HMM	 	March 2024		$	64,918	 	+ 3 years		$	60,418	
Hyundai Honour(5)	 	2012	 	13,100	 	February 2024	 	HMM	 	February 2024		$	64,918	 	+ 3 years		$	60,418	
Express Rome	 	2011	 	10,100	 	April 2023	 	Hapag Lloyd	 	April 2023		$	29,000	 	+ 10 to 14 months		$	30,000	
Express Berlin	 	2011	 	10,100	 	June 2023	 	Yang Ming	 	June 2023		$	27,750	 	+ 3 months		$	27,750	
Express Athens	 	2011	 	10,100	 	April 2023	 	Hapag Lloyd	 	April 2023		$	29,000	 	+ 10 to 14 months		$	30,000	
Le Havre	 	2006	 	9,580	 	June 2028	 	MSC	 	August 2023		$	23,000	 					
								Confidential (10)		June 2028		$	58,500		+ 4 months		$	58,500	
Pusan C	 	2006	 	9,580	 	May 2028	 	MSC	 	July 2023		$	23,000	 					
								Confidential (10)		May 2028		$	58,500		+ 4 months		$	58,500	
Bremen	 	2009	 	9,012	 	January 2028	 	MSC	 	March 2023		$	23,000	 					
								Confidential (10)		January 2028		$	56,000		+ 4 months		$	56,000	
C Hamburg	 	2009	 	9,012	 	January 2028	 	MSC	 	March 2023		$	23,000	 					
								Confidential (10)		January 2028		$	56,000		+ 4 months		$	56,000	
Niledutch Lion	 	2008	 	8,626	 	May 2026	 	Niledutch	 	May 2026		$	47,500	 	+ 4 months		$	47,500	
Belita (8)		2006		8,533		July 2026		CMA CGM		July 2026		$	45,000		+ 6 months		$	45,000	
Kota Manzanillo	 	2005	 	8,533	 	February 2026	 	PIL	 	February 2026		$	47,500	 	+ 4 months		$	47,500	
(ex Charleston)																			
CMA CGM Melisande	 	2012	 	8,530	 	June 2024	 	CMA CGM	 	December 2023		$	43,000	 					
	 		 		 		 		 	June 2024			at market (6)	 	+ 6 months			at market (6)	
CMA CGM Attila		2011		8,530		October 2023		CMA CGM	 	April 2023		$	43,000						
	 		 		 		 		 	October 2023			at market (6)	 	+ 6 months			at market (6)	
CMA CGM Tancredi		2011		8,530		November 2023		CMA CGM	 	May 2023		$	43,000						
										November 2023			at market (6)		+ 6 months			at market (6)	
CMA CGM Bianca		2011		8,530		January 2024		CMA CGM	 	July 2023		$	43,000						
	 		 		 		 		 	January 2024			at market (6)	 	+ 6 months			at market (6)	
CMA CGM Samson		2011		8,530		March 2024		CMA CGM	 	September 2023		$	43,000						
	 		 		 		 		 	March 2024			at market (6)	 	+ 6 months			at market (6)	
America		2004		8,468		April 2028		MSC	 	June 2023		$	22,000						
	 		 		 		 	Confidential (10)	 	April 2028		$	56,000	 	+ 4 months		$	56,000	
Europe	 	2004	 	8,468	 	May 2028	 	MSC	 	July 2023		$	22,000	 					
	 		 		 		 	Confidential (10)	 	May 2028		$	56,000	 	+ 4 months		$	56,000	
Kota Santos (ex Phoebe)	 	2005	 	8,463	 	August 2026	 	PIL	 	August 2023		$	60,000	 	  				
									 	August 2025		$	55,000						
	 		 		 		 		 	August 2026		$	50,000	 	+ 4 months		$	55,000	
CMA CGM Moliere	 	2009	 	6,500	 	March 2027	 	Confidential (10)	 	March 2027		$	55,000	 	+ 2 months		$	55,000	
CMA CGM Musset	 	2010	 	6,500	 	September 2025	 	Confidential (10)	 	September 2025		$	60,000	 	+ 23 to 25 months 		$	55,000	
CMA CGM Nerval	 	2010	 	6,500	 	November 2025	 	Confidential (10)	 	November 2025		$	40,000	 	+ 23 to 25 months 		$	30,000	
CMA CGM Rabelais	 	2010	 	6,500	 	January 2026	 	Confidential (10)	 	January 2026		$	40,000	 	+ 23 to 25 months 		$	30,000	
CMA CGM Racine	 	2010	 	6,500	 	February 2024	 	Confidential (10)	 	March 2023		$	133,333	 					
										February 2024		$	30,000	 	+ 2 months		$	30,000	
YM Mandate	 	2010	 	6,500	 	January 2028	 	Yang Ming	 	January 2028		$	26,890 (7)	 	+ 8 months		$	26,890	
YM Maturity	 	2010	 	6,500	 	April 2028	 	Yang Ming	 	April 2028		$	26,890 (7)	 	+ 8 months		$	26,890	
Dimitra C		2002		6,402		January 2024		Hapag Lloyd	 	January 2024		$	21,500	 	+ 3 months		$	21,500	
Zim Savannah	 	2002	 	6,402	 	May 2024	 	ZIM	 	May 2024		$	36,000	 	+ 6 months		$	36,000	
Kota Lima (8)		2002		5,544		November 2024		PIL	 	November 2024		$	39,999		+ 4 months		$	39,999	
	 		 		 		 		 					 	+ 10 to 14 months		$	27,500	
	 		 		 		 		 					 	+ 10 to 12 months		$	24,000	
Suez Canal (8)		2002		5,610	 	March 2023	 	TS Lines	 	March 2023		$	30,000	 					
						February 2024		Confidential (10)		February 2024		$	25,500		+ 1 months		$	25,500	
Wide Alpha (9)	 	2014	 	5,466	 	March 2024	 	ONE	 	March 2024		$	18,500	 	+ 3 months		$	18,500	
Stephanie C	 	2014	 	5,466	 	June 2025	 	Confidential (10)	 	June 2025		$	55,500	 	+ 4 months		$	55,500	
(ex Wide Bravo)(9)	 		 		 		 		 					 					
Maersk Euphrates (9)	 	2014	 	5,466	 	April 2024	 	Maersk	 	April 2024		$	17,500	 	+ 4 months		$	17,500	
Wide Hotel (9)		2015		5,466		May 2024		ONE	 	May 2024		$	18,500	 	+ 3 months		$	18,500	
Wide India (9)	 	2015	 	5,466	 	November 2025	 	Confidential (10)	 	November 2025		$	53,500	 	+4 months		$	53,500	
	 		 		 		 		 		 		 			 		 	
Wide Juliet (9)		2015		5,466		June 2023		ONE	 	June 2023		$	19,950	 	+ 3 months		$	19,950	
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Rio Grande	 	2008	 	4,253	 	November 2024	 	OOCL	 	December 2023		$	50,000	 					
	 		 		 		 		 	November 2024		$	17,000	 	+ 2 months		$	45,000	
ZIM Sao Paolo	 	2008	 	4,253	 	July 2023	 	Confidential (10)	 	July 2023		$	20,000	 	+ 1 month		$	20,000	
ZIM Kingston	 	2008	 	4,253	 	April 2023	 	ZIM	 	April 2023		$	25,500	 	+ 4 months		$	25,500	
ZIM Monaco	 	2009	 	4,253	 	October 2024	 	ZIM	 	April 2023		$	22,000	 					
	 		 		 		 	Confidential (10)	 	October 2024		$	53,000	 	+ 6 months		$	53,000	
Dalian		2009		4,253		March 2023		KMTC		March 2023		$	30,750						
						April 2026		Confidential (10)		April 2026		$	48,000		+ 3 months		$	48,000	
ZIM Luanda		2009		4,253		August 2025		ZIM		August 2025		$	30,000		+ 4 months		$	30,000	
Seattle C	 	2007	 	4,253	 	October 2024	 	OOCL	 	November 2023		$	50,000	 					
	 		 		 		 		 	October 2024		$	17,000	 	+ 2 months		$	45,000	
Vancouver	 	2007	 	4,253	 	November 2024	 	OOCL	 	December 2023		$	50,000	 	  				
	 		 		 		 		 	November 2024		$	17,000	 	+ 2 months		$	45,000	
Derby D	    	2004	    	4,253	    	January 2027	    	CMA CGM	    	January 2027	    	$	36,275	    	+ 3 months		$	36,275	
Tongala		2004		4,253		November 2024		ZIM	 	May 2023		$	30,750	 					
								Confidential (10)		November 2024		$	53,000		+ 6 months		$	53,000	
Dimitris C	 	2001	 	3,430	 	November 2025	 	CMA CGM	 	November 2025		$	40,000	 	+ 4 months		$	40,000	
Express Argentina	 	2010	 	3,400	 	May 2023	 	Maersk	 	May 2023		$	26,500	 	+ 4 months		$	26,500	
Express Brazil	 	2010	 	3,400	 	June 2025	 	CMA CGM	 	June 2025		$	37,750	 	+ 2 months		$	37,750	
Express France		2010		3,400		September 2025		CMA CGM		September 2025		$	37,750		+ 2 months		$	37,750	
Express Spain		2011		3,400		January 2025		Cosco		January 2025		$	40,000		+ 2 months		$	40,000	
Express Black Sea		2011		3,400		January 2025		Cosco		January 2025		$	40,000		+ 2 months		$	40,000	
Singapore		2004		3,314		May 2024		OOCL		November 2023		$	38,450						
										May 2024		$	21,000		+ 6 months		$	37,000	
Colombo		2004		3,314		January 2025		Cosco		January 2025		$	40,000		+ 2 months		$	40,000	
Zebra		2001		2,602		November 2024		Maersk		November 2024		$	32,000		+ 4 months		$	32,000	
Artotina		2001		2,524		May 2025		Confidential (10)		May 2025		$	28,000		+2 months		$	28,000	
Phoenix D (ex Vladivostok)		1997		2,200		March 2025		Maersk		March 2025		$	28,000		+ 6 months		$	28,000	
Stride		1997		2,200		January 2025		Cosco		January 2025		$	26,250		+ 2 months		$	26,250	
Sprinter		1997		2,200		December 2024		Cosco		December 2024		$	26,250		+ 2 months		$	26,250	
Future		1997		2,200		December 2024		Cosco		December 2024		$	26,250		+ 2 months		$	26,250	
Advance		1997		2,200		January 2025		Cosco		January 2025		$	26,250		+ 2 months		$	26,250	
Bridge		1998		2,200		December 2024		Samudera		December 2024		$	23,000		+ 6 months		$	23,000	
Highway		1998		2,200		July 2023		Confidential (10)		July 2023		$	16,000		+ 1 month		$	16,000	
Progress C		1998		2,200		November 2024		Cosco		November 2024		$	26,250		+ 2 months		$	26,250	

1.	Earliest date charters could expire. Most charters include options for the charterers to extend their terms as described in the “Extension Options” column.	

2.	This column indicates the date through which the charter rate set forth in the column to the immediate right of such date is payable. For charters with the same charter rate throughout the fixed term of the charter, this date is the same as the charter expiration date set forth in the “Expiration of Charter” column.	

3.	Gross charter rate, which does not include charter commissions.	

4.	At the option of the charterer.	

5.	A subsidiary of Danaos Corporation holds a leasehold bareboat charter interest in such vessel, pursuant to which such subsidiary will acquire all rights to such vessel at the end of such lease.	

6.	Daily charter rate for the contracted period of minimum 6 months – maximum 12 months will be the prevailing market rate at that time for such period.	

7.	Bareboat charter rate.	

8.	Vessels previously owned by Gemini Shipholdings Corporation, in which Danaos Corporation held a 49% equity interest through the end of the second quarter of 2021. On July 1, 2021, Danaos Corporation exercised its option to acquire the remaining 51% equity interests in Gemini Shipholdings Corporation and now holds 100%.	

9.	We took delivery of: (i) ‘Maersk Euphrates’ on August 25, 2021, (ii) ‘Wide India’ on September 20, 2021, (iii) ‘Stephanie C (ex Wide Bravo)’ on September 23, 2021, (iv) ‘Wide Juliet’ on September 27, 2021, (v) ‘Wide Alpha’ on September 28, 2021, and (vi) ‘Wide Hotel’ on October 6, 2021.	

10.	Charterer not disclosed due to confidentiality arrangements.	

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In November 2022, we sold Catherine C and Leo C, for gross proceeds of $130 million and in December 2022 we entered into agreement to sell Amalia C, for gross proceeds of $5.1 million. The Amalia C was delivered to its buyers in January 2023.
The specifications of our 6 contracted vessels under construction as of March 7, 2023 are as follows:

Name	    	Year Built	    	Size (TEU)	    	Shipyard	    	Expected Delivery Period	
Hull No. C7100-7	 	2024	 	7,100	 	Dalian Shipbuilding Industry	 	2nd Quarter 2024	
Hull No. C7100-8	 	2024	 	7,100	 	Dalian Shipbuilding Industry	 	3rd Quarter 2024	
Hull No. HN4009	 	2024	 	8,000	 	Daehan Shipbuilding	 	1st Quarter 2024	
Hull No. HN4010	 	2024	 	8,000	 	Daehan Shipbuilding	 	2nd Quarter 2024	
Hull No. HN4011	 	2024	 	8,000	 	Daehan Shipbuilding	 	2nd Quarter 2024	
Hull No. HN4012	 	2024	 	8,000	 	Daehan Shipbuilding	 	3rd Quarter 2024	

Gemini Shipholdings Corporation; ZIM
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 DIL, in connection with the formation of Gemini to acquire and operate containerships. As of June 30, 2021, Gemini owned five containerships aggregating 32,531 TEU in capacity. We and Virage owned 49% and 51%, respectively, of Gemini’s issued and outstanding share capital. On July 1, 2021 we exercised our option to acquire the remaining 51% equity interest in Gemini from Virage for $86.7 million, which was fully paid in cash in 2021. In November 2022, we sold Catherine C and Leo C (previously owned by Gemini), for gross proceeds of $130 million resulting in a gain on sale of $37.2 million.
On January 27, 2021, ZIM completed its initial public offering and listing on the NYSE of its ordinary shares. We owned 10,186,950 ordinary shares of ZIM following its listing on the NYSE. In 2021, we sold 3,000,000 shares of ZIM resulting in net proceeds of $120.7 million and we sold the remaining 7,186,950 shares for net proceeds of $246.6 million in 2022. Additionally, we received $147.1 million and $28.5 million in dividends, net of withholding taxes, on ZIM ordinary shares in the years ended December 31, 2022 and 2021, respectively.
Charterers
As the container shipping industry has grown, the major liner companies have contracted for additional containership capacity. As of March 7, 2023, our diverse group of customers in the containership sector included CMA-CGM, HMM, MSC, Yang Ming, Hapag Lloyd, ZIM, Maersk, COSCO, OOCL, ONE, PIL, KMTC, Niledutch, Samudera, RifLine, OSC and TS Lines.
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 2023 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. 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 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, the charterer has a right to terminate the charter agreement for that vessel. Charterers may 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.
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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, the term of which expires on December 31, 2024. Our Manager reports to us and our board of directors through our chief executive officer, chief operating officer, chief financial officer and deputy chief operating 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 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 DNV, 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 (damaged by the war) in Ukraine and in Zanzibar, Tanzania and we assume directly all related crewing, technical and other costs in our operating expenses. Investments in new facilities in Greece by Danaos Shipping enable enhanced training of seafarers and highly reliable infrastructure and services to the vessels. Due to the war in Ukraine, our Manager also cooperates with external crew agencies in order to hire and employ seafarers from Egypt, Ghana and Philippines.
Historically, Danaos Shipping only infrequently managed vessels other than those in our fleet and in prior years it did not actively manage any other company’s vessels, other than vessels previously 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. 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.
Danaos Shipping provides us with administrative, technical and certain commercial management services under a management agreement whose current term expires at the end of 2024. For 2023, our Manager will receive the following fees which are fixed at these levels through the remaining term of the agreement: (i) a daily management fee of $850, (ii) a daily vessel management fee of $425 for vessels on bareboat charter, prorated for the number of calendar days we own each vessel, (iii) a daily vessel management fee of $850 for vessels on time charter, prorated 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.
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Our Manager had agreed to outsource technical and crew management services to the previous managers Bernhard Shulte Shipmanagement (“BSM”) related to the recently acquired vessels Wide Alpha, Stephanie C (ex Wide Bravo) and Wide Juliet and OSM Ship Management Pte. Ltd. (“OSM”) related to the vessels Maersk Euphrates, Wide Hotel and Wide India since each vessel’s delivery date to us in the second half of 2021. The payment related to these services is an obligation of our Manager. Both BSM and OSM services were terminated in the fourth quarter of 2022 and technical and crew management services of these vessels commenced to be provided by our Manager in the first quarter of 2023.
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 Atlas Corporation, Zodiac Maritime and Costamare Inc. A number of our competitors in the containership sector have been financed by the German KG (Kommanditgesellschaft) system in the past years, 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 nature of the containership sector within the larger is such that significant time is necessary to develop the operating expertise and build up a professional reputation to obtain and retain customers. Further, a decline in the availability of secondhand containerships in past years has driven containership businesses to rely on building new containers, which can take several 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. We believe our large fleet capacity, combined with our long-established business relationships and long-term contracts provide us with an important advantage in the increasingly competitive containership business.
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 until April 30, 2015. As of December 31, 2022, 1,558 people were employed who served on board the vessels in our fleet and 164 people who provided services to us on shore. Other than the officers noted above, there are no other employees of Danaos Corporation or its subsidiaries. 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 related expenses. We are not responsible for the compensation of our Manager’s shore-based employees. 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 the 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 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 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 twelve 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.
The following table lists the next drydockings scheduled for the vessels in our current containership fleet for the next three years:

	    	2023	    	2024	    	2025	
Number of vessels	 	24	 	9	 	7	

	*	Does not include vessels under bareboat charters.	
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 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, DNV & Germanischer Lloyd and the Korean Register of Shipping.
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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, 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, P&I 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 Vice 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 P&I 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 carried a minimum loss of hire coverage with respect to the vessels Hyundai Honour and Hyundai Respect, to cover standard requirements of our sale and leaseback agreement until mid-2020. 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.
Protection and Indemnity Insurance
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 P&I insurance is provided by Mutual P&I Associations who are part of the International Group of P&I Clubs.
Our P&I insurance coverage in accordance with the International Group of P&I Club Agreement for pollution will be $1.0 billion per event. Our P&I Excess war risk coverage limit is $500.0 million and in respect of certain war and terrorist risks and the liabilities arising from bio-chemical etc., the limit is $30.0 million. For passengers and seaman risks, the limit is $3.0 billion, with a sub-limit of $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.
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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 BWM. These laws and regulations include OPA, the U.S. Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), the U.S. Clean Water Act, MARPOL, regulations adopted by the IMO and the EU, various volatile organic compound air emission requirements and various 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.
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 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
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 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.
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In September 1997, the IMO adopted Annex VI to MARPOL to address air pollution from vessels. Annex VI, which came into effect on May 19, 2005, set limits on SOx and nitrogen oxide (“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 obtain an International Air Pollution Prevention Certificate evidencing compliance with Annex VI. We have obtained International Air Pollution Prevention certificates for all of our vessels. Amendments to Annex VI, effective July 2010, set progressively stricter regulations to control SOx and NOx emissions from ships, which present both environmental and health risks. These amendments provided for a progressive reduction in SOx emissions from ships, with a global cap of 0.5% on sulfur in marine fuel used by vessels without scrubbers (reduced from 3.50%) effective from January 1, 2020. Vessels with scrubbers may use fuel with a maximum sulfur content of 3.5%. The Annex VI amendments have also established 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. In November 2022, amendments to MARPOL Annex VI adopted by the IMO came into effect. These amendments require ships to improve their energy efficiency with a view to reducing their greenhouse gas emissions, with a particular focus on carbon emissions, both through changes in technical specifications as well as in modifications in vessels’ operational parameters. The U.S. Coast Guard is working to implement the amended provisions of MARPOL Annex VI, chiefly through proposed rule 1625-AC78, which remains at the proposed rule stage since its original publication in October of 2022. The amended MARPOL provisions and the rules proposed by the U.S. Coast Guard to implement them, in addition to any other new or more stringent air emission regulations which may be adopted, could require significant capital expenditures to retrofit vessels and could otherwise increase our capital expenditures and operating costs.
Additionally, more stringent emission standards apply in coastal areas designated by the IMO’s Marine Environment Protection Committee (“MEPC”) as Emission Control Areas (“ECAs”). For SOx, current ECAs in which a 0.1% cap on the sulfur content of fuel is enforced include: (i) 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; (ii) the US Caribbean ECA, including Puerto Rico and the US Virgin Islands; (iii) the Baltic Sea ECA; and (iv) the North Sea ECA. Similar restrictions on the sulfur content of fuel apply in Icelandic and inland Chinese waters. Specifically, as of January 1, 2019, China expanded the scope of its Domestic Emission Control Areas to include all coastal waters within 12 nautical miles of the mainland. Effective from January 1, 2022, all vessels entering Korean ports are prohibited from consuming marine fuel with sulfur content exceeding 0.5% cap and are prohibited from consuming maritime fuel with sulfur content exceeding 0.1% cap in the SOx ECAs. For NOx, current ECAs in which certain requirements exist regarding the engines used by vessels and the attendant NOx emissions, include (i) the North American ECA, and (ii) the US Caribbean ECA. Additionally, two new NOx ECAs, the Baltic Sea and the North Sea, are being enforced for ships constructed (keel laying) on or after January 1, 2021, or existing ships which replace an engine with “non-identical” engines, or install an “additional” engine. We may incur costs to install control equipment on our engines in order to comply with these requirements. In December 2021, the member states of the Convention for the Protection of the Mediterranean Sea Against Pollution (“Barcelona Convention”) agreed to support the designation of a new ECA in the Mediterranean. The Mediterranean Sea Emission Control Area for Sulphur Oxides and Particulate Matter was approved at MEPC 78 and was formally designated during MEPC 79 in December 2022. 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 ISM Code, which was made effective in July 1998. The ISM Code requires shipowners and bareboat charterers to develop and maintain an extensive SMS that includes the adoption of a safety and environmental protection policy setting forth instructions and procedures for safe operation and describing procedures for dealing with emergencies. The ISM Code requires that vessel operators obtain a Safety Management Certificate for each vessel they operate. This certificate evidences compliance by a vessel’s management with ISM Code requirements for a SMS. 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.
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In 2001, the IMO adopted the International Convention on Civil Liability for Bunker Oil Pollution Damage (“the Bunker Convention”), which imposes strict liability on ship owners for pollution damage in jurisdictional waters of ratifying states caused by discharges of bunker 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. Liability limits under the Bunker Convention were increased as of June 2015. 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 Bunker 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 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;	

	●	real and personal property damage;	

	●	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.
Effective November 12, 2019, OPA liability is limited to the greater of $1,200 per gross ton or $997,100 for non-tank vessels, subject to adjustment by the U.S. Coast Guard (“USCG”) for inflation every three years. On December 23, 2022, the U.S. Coast Guard again adjusted those limits to the greater of $1,300 per gross ton or $1,076,000 per non-tank vessel. These latest adjustments are expected to take effect on March 23, 2023. 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 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.
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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.
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.
Compliance with any new OPA requirements could substantially impact our costs of operation or require us to incur additional expenses.
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 (the “CWA”), prohibits the discharge of oil or hazardous substances in navigable waters and imposes strict liability in the form of penalties for any unauthorized discharges. The CWA imposes substantial liability for the costs of removal, remediation and damages and complements the remedies available under OPA and CERCLA, discussed above. Under U.S. Environmental Protection Agency (“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 the EPA has designated as the Vessel General Permit for Discharges Incidental to the Normal Operation of Vessels (“VGP”), incorporates U.S. Coast Guard requirements for BWM, 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, owners of commercial vessels greater than 79 feet in length must submit a Notice of Intent (“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.
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On April 12, 2013, EPA issued the current VGP (the “2013 VGP”). 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 BWM Convention, discussed below, and are consistent with the USCG’s 2012 ballast water discharge standards, also 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. 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. The 2013 VGP was set to expire on December 13, 2018; however, its provisions will remain in effect until the regulations under the 2018 Vessel Incidental Discharge Act (“VIDA”) are final and enforceable. VIDA, signed into law on December 4, 2018, establishes a new framework for the regulation of vessel incidental discharges under CWA Section 312(p). VIDA requires the EPA to develop performance standards for those discharges within two years of enactment, and requires the USCG to develop implementation, compliance, and enforcement regulations within two years of the EPA’s promulgation of its performance standards. All provisions of the 2013 VGP will remain in force and effect until the USCG regulations under VIDA are finalized. On October 26, 2020, the EPA published a Notice of Proposed Rulemaking – Vessel Incident Discharge National Standards of Performance in the Federal Register for public comment. The comment period closed on November 25, 2020.
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. 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 content or less 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 the EPA or any 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 Paris Memorandum of Understanding on Port State Control (“Paris MoU”), to which 27 nations are parties, adopted the “New Inspection Regime” (“NIR”), 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 EU MRV (Monitoring, Reporting, Verification) regulation entered into force on July 1, 2015, and require ship owners and operators to annually monitor, report and verify carbon dioxide emissions for vessels larger than 5,000 gross tonnage calling at any EU, Norway and Iceland port. Data collection takes place on a per voyage basis and started on January 1, 2018. The reported carbon dioxide emissions, together with additional data, are to be verified by independent certified bodies and sent to a central database managed by the European Maritime Safety Agency (“EMSA”). Since the year 2019, it is mandatory for the companies to submit an approved by an independent verifier emissions report to the European Commission and to the responsible authorities of the flag states. The aggregated ship emission and efficiency data is published by the European Commission. In January 2023, the EU Parliament, Council and Commission reached a preliminary agreement to extend the EU’s Emission Trading System (“ETS”) to commercial cargo or passenger vessels above 5000 GT. Per this agreement, from 2025 on, the EU MRV will apply to offshore ships above 400 GT and general cargo ships between 400 and 5000 GT. From 2027 on, the ETS’ coverage will be expanded to include offshore ships above 5000 GT, while the EU authorities will also consider whether to include general cargo and offshore ships between 400 and 5000 GT in the ETS by 2026. Though this tentative agreement does not yet have the force of law, if enacted, it could impose significant additional regulatory burdens on our vessels.
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The U.S. National Invasive Species Act (“NISA”), was enacted in 1996 in response to growing reports of harmful organisms being released into U.S. ports through ballast water taken on by ships in foreign ports. Under NISA, the USCG adopted regulations in July 2004 imposing mandatory BWM 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 BWM 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 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 BWM 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 BWM 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. As of the date of this report, the USCG has approved forty BWM systems. Certain of our vessels have obtained extensions for drydocking and will install the BWM systems in the next scheduled dry-docking date and certain vessels installed the BWM systems afloat in 2022.
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 BWM legislation was upheld by the Sixth Circuit Court of Appeals, and California enacted legislation extending its BWM 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 BWM 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 took effect on September 8, 2017. Many of the implementation dates originally contained in the BWM Convention had already passed prior to its effectiveness, so that the period for installation of mandatory ballast water exchange requirements would be very short, with several thousand ships per year needing to install compliant systems. Consequently, the IMO Assembly passed a resolution in December 2013 revising the dates for implementation of the BWM requirements so that they are triggered by the entry into force date. In effect, this makes all vessels constructed before September 8, 2017 “existing” vessels, allowing for the installation of BWM systems on such vessels at the first renewal survey following entry into force of the BWM Convention. In July 2017, the implementation scheme was further changed to require vessels with International Oil Pollution Prevention (“IOPP”) certificates expiring between September 8, 2017 and September 8, 2019 to comply at their second IOPP renewal. All ships must have installed a ballast water treatment system by September 8, 2024.
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The Kyoto Protocol entered into force in February 2005 and required adopting countries to implement national programs to reduce emissions of certain greenhouse gases, but emissions from international shipping were not subject to the Kyoto Protocol. The second commitment period of the Kyoto Protocol expired in 2020. 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 Energy Efficiency Design Index (“EEDI”) establishes a minimum energy efficiency level per capacity mile and is applicable to new vessels. The Ship Energy Efficiency Management Plan (“SEEMP”) 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, particularly as the SEEMP will be strengthened (the so-called “Enhanced SEEMP”) to include mandatory content, including a CII target implementation plan (see below), on top of being subject to approval by appropriate authorities. These new requirements for existing ships will be reviewed by the end of 2025, with particular focus on the enforcement of the carbon intensity rating requirements. MARPOL amendments released in November 2020 and adopted in June 2021 build upon the EEDI and SEEMP and require ships to reduce carbon intensity based on a new Energy Efficiency Existing Ship Index and reduce operational carbon intensity reductions based on a new operational carbon intensity indicator, in line with the IMO strategy which aims to reduce carbon intensity of international shipping by 40% by 2030. The EEXI, which entered into force in January 2023, requires alterations to a vessel’s design, machinery or arrangements to meet a certain goal of CO2 grams emitted per capacity tonne mile under certain reference conditions. This measure accounts for the vessel’s engine power, fuel consumption and CO2 conversion capacity, all of which make it impossible to effect EEXI compliance by merely reducing the ship’s speed or cargo load. Alongside the EEXI, a mandatory Carbon Intensity Indicator (“CII”) was introduced on January 1, 2023. This measure of annual efficiency is used to rate vessels based on the grams of CO2 they emit per dwt-mile, giving all cargo vessels above 5,000 GT a rating of A to E every year. The rating thresholds will become increasingly stringent towards 2030. For ships that achieve a D rating for three consecutive years or an E rating, a corrective action plan needs to be developed as part of the SEEMP and approved. The USCG plans to develop and propose regulations to implement these provisions in the United States. 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, which went into effect in January 2018. In June 2022, the European Union revised proposed amendments to this regulation which would effectively impose an Emissions Trading System (“ETS”) on Marine Shipping going through ports or routes under the E.U.’s regulatory jurisdiction. If adopted, these amendments would impose an additional regulatory burden on us to ensure that our vessels meet the requirements of the revised EU-MRV, as well as potential additional costs related to the ETS. 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. Even in the absence of climate control legislation, our business may be indirectly affected to the extent that climate change may result in sea level changes or more intense weather events.
On June 29, 2017, the Global Industry Alliance, or the GIA, was officially inaugurated. The GIA is a program, under the Global Environmental Facility-United Nations Development Program- IMO project, which supports shipping, and related industries, as they move towards a low carbon future. Organizations including, but not limited to, shipowners, operators, classification societies, and oil companies, signed to launch the GIA.
The China Maritime Safety Administration (the “China MSA”) issued the Regulation on Data Collection of Energy Consumption for Ships in November 2018. This regulation is effective as of January 1, 2019 and requires ships calling on Chinese ports to report fuel consumption and transport work details directly to the China MSA. This regulation also contains additional requirements for Chinese-flagged vessels (domestic and international) and other non-Chinese-flagged international navigating vessels. In November 2022, the China MSA published an additional Regulation of Administrative Measures of Ship Energy Consumption Data and Carbon Intensity, which came into effect on December 22, 2022. This regulation was essentially enacted to implement MARPOL Annex VI to Chinese-flagged vessels, though a few of its provisions also apply to foreign ships with a gross tonnage of at least 400 entering and exiting Chinese ports. This Regulation essentially applies more stringent rules around that collection and reporting of data related to ships’ energy consumption, as is already required by the 2018 regulation.
In addition, the United States is currently experiencing changes in its environmental policy, the results of which have yet to be fully determined. For example, in 2021 the United States announced its commitment to working with the IMO to adopt a goal of achieving zero emissions from international shipping by 2050. Additional legislation or regulation applicable to the operation of our ships that may be implemented in the future could negatively affect our profitability.
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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 chapter of the convention dealing specifically with maritime security. The 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 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 (“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;	

	●	the development of vessel security plans;	

	●	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 requirement.
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 ship security plans and is maintaining best management practices during passage through security risk areas.
IMO Cyber security
The Maritime Safety Committee, at its 98th session in June 2017, also adopted Resolution MSC.428(98)—Maritime Cyber Risk Management in Safety Management Systems. The resolution encourages administrations to ensure that cyber risks are appropriately addressed in existing SMS no later than the first annual verification of the company’s Document of Compliance after January 1, 2021. Owners risk having ships detained if they have not included cyber security in the ISM Code SMS on their ships.
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Vessel Recycling Regulations
The EU has also recently adopted a regulation that seeks to facilitate the ratification of the IMO Recycling Convention and sets forth rules relating to vessel recycling and management of hazardous materials on vessels. In addition to new requirements for the recycling of vessels, the regulation contains rules for the control and proper management of hazardous materials on vessels and prohibits or restricts the installation or use of certain hazardous materials on vessels. The new regulation applies to vessels flying the flag of an EU member state and certain of its provisions apply to vessels flying the flag of a third country calling at a port or anchorage of a member state. For example, when calling at a port or anchorage of a member state, a vessel flying the flag of a third country will be required, among other things, to have on board an inventory of hazardous materials that complies with the requirements of the new regulation and the vessel must be able to submit to the relevant authorities of that member state a copy of a statement of compliance issued by the relevant authorities of the country of the vessel’s flag verifying the inventory. The new regulation took effect on non-EU-flagged vessels calling on EU ports of call beginning on December 31, 2020.
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 3, Christaki Kompou Street, Peters House, 3300, Limassol, Cyprus and 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 March 7, 2023, we had a fleet of 68 containerships aggregating 421,293 TEUs and 6 under construction containerships aggregating 46,200 TEUs, making us among the largest containership charter owners in the world, based on total TEU capacity. In November 2022, we sold two of our vessels Catherine C and Leo C for gross proceeds of $130 million resulting in a gain on sale of these vessels of $37.2 million. In December 2022, we entered into agreement to sell Amalia C, for gross proceeds of $5.1 million. The vessel was delivered to its buyers in January 2023 and resulted in a gain on sale of approximately $1.7 million.
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, although in weaker containership charter markets we charter more of our vessels on shorter term charters so as to be able to take advantage of any increase in charter rates. As of March 7, 2023, 66 of the 68 containerships in our fleet were employed on time charters, of which 10 expire in 2023 and 2 containerships were employed on bareboat charters. 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 March 7, 2023, our diverse group of customers in the containership sector included CMA CGM, MSC, HMM, ZIM, Hapag Lloyd, Maersk, Yang Ming, COSCO, OOCL, ONE, PIL, KMTC, Niledutch, Samudera, RifLine, OSC and TS lines.
The average number of containerships in our fleet for the years ended December 31, 2022, 2021 and 2020 was 70.7, 64.2 and 57.3, respectively.
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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 term of this agreement expires on December 31, 2024 (subject to certain termination rights described in “Item 7. Major Shareholders and Related Party Transactions”). Our manager is ultimately owned by DIL, which is also our largest stockholder. Our Manager had agreed to outsource technical and crew management services to the previous managers Bernhard Shulte Shipmanagement (“BSM”) related to the vessels acquired in 2021 Wide Alpha, Stephanie C (ex Wide Bravo) and Wide Juliet and OSM Ship Management Pte. Ltd. (“OSM”) related to the vessels acquired in 2021 Maersk Euphrates, Wide Hotel and Wide India. The agreements with BSM were in effect until January 2023 and the agreements with OSM were terminated in December 2022 and will be in effect until March 2023. The payment related to these services was an obligation of our Manager.
Recent Developments
Sale of Vessels
In November 2022, we sold two of our vessels Catherine C and Leo C for gross proceeds of $130 million resulting in a gain on sale of these vessels of $37.2 million. In December 2022, we entered into agreement to sell Amalia C, for gross proceeds of $5.1 million. The vessel was delivered to its buyers in January 2023, resulting in a gain of approximately $1.7 million.
Newbuilding Vessels
On March 11, 2022, we entered into contracts for the construction of two 7,100 TEU container vessels for an aggregate purchase price of $156.0 million, out of which $39.0 million was advanced in 2022, $31.2 million is expected to be paid in 2023 and $85.8 million in 2024. On April 1, 2022, as amended on April 21, 2022, we entered into contracts for the construction of four 8,000 TEU container vessels for an aggregate purchase price of $372.7 million, out of which $145.9 million was advanced in 2022 and $226.8 million is expected to be paid at vessels delivery in 2024. Additionally, a supervision fee of $725,000 per newbuilding vessel will be payable to Danaos Shipping Company Limited over the construction period starting from steel cutting. Interest expense amounting to $5.0 million was capitalized to the vessels under construction in the year ended December 31, 2022.
Impact of the War in Ukraine on our Business
The current conflict between Russia and Ukraine, and related sanctions imposed by the U.S., EU and others, adversely affect the crewing operations of our Manager, which has crewing offices in St. Petersburg, Odessa and Mariupol (damaged by the war), and trade patterns involving ports in the Black Sea or Russia, and as well as impacting world energy supply and creating uncertainties in the global economy, which in turn impact containership demand. The extent of the impact will depend largely on future developments.
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Effects of COVID-19
The COVID-19 pandemic initially negatively affected global demand for the seaborne transportation of containerized cargoes. Global seaborne container trade declined in 2020, with an estimated impact of around 1% in TEU terms. Liner companies initially responded to these circumstances by reducing service and cutting sailings, which increased idle containership fleet capacity in the first half of 2020 to a peak of 12%. As a result, container freight rates were volatile and containership charter market rates declined significantly in the first half of 2020. However, the ability of the liner companies to consistently manage capacity addressed the drop in volumes at the onset of the pandemic, which alleviated pressure on our customers’ cash flows, many of whom have since reported strong profitability, and stabilized and increased freight rates. The second half of 2020 and 2021 saw robust demand for seaborne transportation of containerized cargo, with freight volumes and freight rates rebounding sharply. The growth of e-commerce, together with the grounding of aircraft resulting from travel restrictions, shifted significant shipping volume to seaborne containers. The resulting demand for containerships resulted in negligible vessel capacity available in certain size segments increasing charter rates for all segments and enabling us to recharter many of our smaller vessels which had charters expiring during this year at higher rates. In the second half of 2022 and early 2023, demand and rates declined as supply chain constraints eased and pandemic related restrictions were lifted in many parts of the world, with containership charter rates returning to pre-pandemic levels. Many liner operators and containership owners reported improved results in the second half of 2020 and through the first half of 2022, due in part to improving container shipping industry market conditions. Our operating revenues increased to $993.3 million in the year ended December 31, 2022 compared to $689.5 million in the year ended December 31, 2021.
COVID-19 related travel restrictions imposed on a global level also caused disruptions in scheduled crew changes on our vessels, caused an increase in remuneration of our crew on the vessels and delays in carrying out of certain hull repairs and maintenance in 2020, which disruptions could continue to affect our operations. During the first quarter of 2020, we experienced delays in Chinese shipyards related to the scheduled installations of the scrubbers on certain of our vessels and delays in carrying out dry-docking repairs, which resulted in incremental 188 off-hire days of our vessels ultimately leading to decreased operating revenue by approximately $3.2 million compared to our expectations. The average daily operating cost per vessel per day for vessels on time charter for the year ended December 31, 2022 increased to $6,339 compared to $5,986 per vessel per day for the year ended December 31, 2021, mainly due to the COVID-19 and Ukraine war related increase in crew remuneration and increased insurance premiums in the year ended December 31, 2022.
The COVID-19 pandemic continues to unfold and may negatively affect our business in the future, financial performance and results of our operations, as it did in the first half of 2020. The extent of any such effects depends on factors beyond our control and cannot be predicted with certainty. See “—Impact of COVID-19 on our Business.”
Inflation and Interest Rates Risk
We continue to see near-term impacts on our business due to elevated inflation in the United States of America, Eurozone and other countries, including ongoing global prices pressures in the wake of the war in Ukraine, driving up energy prices, commodity prices, which continue to affect our operating expenses. Interest rates have increased rapidly and substantially as central banks in developed countries raise interest rates in an effort to subdue inflation. The eventual implications of tighter monetary policy, and potentially higher long-term interest rates may drive a higher cost of capital for our business.
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.	
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	●	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 many of 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 or we lose a charter such as occurred with the charter cancellations by Hanjin Shipping in 2016, 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 March 7, 2023, the charters for 10 of our vessels are scheduled to expire in 2023. Charter rate levels have improved in the second half of 2020 and through the first half of 2022 to levels higher than were prevailing when we entered into the charters for a number of our vessels but have since fallen to levels seen before the Covid-19 pandemic. We expect that we will have to re-charter these vessels for rates at or lower than their current charter rates.	

	●	Utilization of Our Fleet. Due to the multi-year charters under which they are often operated, our containerships have consistently been deployed at high levels of utilization. During 2022, our fleet utilization was 97.3%, compared to 98.2% in 2021 and 96.3% in 2020. 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 68, 292 and 286 total off-hire days for our entire fleet during the years ended December 31, 2022, 2021 and 2020, respectively, other than for scheduled drydockings and special surveys. An increase in annual off-hire days could reduce our utilization. We currently expect to drydock approximately 24 of our vessels in 2023. 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 any interest rate swap arrangements, and, accordingly, prevailing interest rates and the interest rates and other financing terms we may obtain in the future. See “—Liquidity and Capital Resources.”
The following table presents the contracted utilization of our operating fleet of 69 vessels as of December 31, 2022 and of our six newbuilding vessels scheduled for delivery in 2024, which do not yet have employment arranged as of December 31, 2022:

	    	2023	    	2024-2025	    	2026-2027	    	2028	    	Total	 	
Number of vessels whose charters are set to expire in the respective period(1)		 	13		 	40		 	8		 	8		 	69		
TEU’s on expiring charters in the respective period		 	81,494		 	219,470		 	55,661		 	67,120		 	423,745		
Contracted operating days (2)		 	21,883		 	24,270		 	7,321		 	663		 	54,137		
Total operating days (2)		 	24,418		 	52,686		 	52,646		 	23,983		 	153,733		
Contracted operating days/Total operating days		 	89.6	%  	 	46.1	%  	 	13.9	%  	 	2.8	%  	 	35.2	%	

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

(2)	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. Total operating days also include our six newbuilding vessels from the expected scheduled delivery date to us in 2024 and onwards.	

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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 a substantial portion of our revenues for the years ended December 31, 2022, 2021 and 2020. 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.
In May 2022, we received $238.9 million of charter hire prepayment related to charter contracts for 15 of our vessels, representing partial prepayment of charter hire payable up to January 2027. Our future expected minimum payments as of December 31, 2022, based on contracted charter rates, from our non-cancellable time charter and bareboat charter arrangements for our containerships is shown in the table below. Although these expected future minimum payments are based on contracted charter rates, any contract is subject to performance by the counterparties. If the charterers 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.”
Future Minimum Payments from Charters as of December 31, 2022(1)
(Amounts in millions of U.S. dollars)

Number of Vessels	    	2023	    	2024 - 2025	    	2026-2027	    	2028	    	Total	
69		$	785.7		$	935.9		$	333.6		$	34.0		$	2,089.2	

(1)	Annual calculations are based on an assumed 364 revenue days per annum representing contracted future minimum payments expected to be received on non-cancellable time charter and bareboat charter agreements based on contracted charter rates. Although these contracted future minimum payments are based on contractual charter rates, any contract is subject to performance by the counter parties and us. In addition to the contracted minimum payments reflected in the above table, the charter hire prepayment amounting to $238.9 million, received in May 2022 relating to 15 of our vessels, is recognized in revenue through the remaining period of the charter party agreement up to January 2027.	

As of March 7, 2023 we have 10 vessels employed on charters expiring in 2023 and 27 employed on charters expiring in 2024, as well as six newbuilding containerships scheduled for delivery in 2024 for which employment has not been arranged. 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.
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Amortization of Time Charters Assumed on Acquisition of Vessels
Eleven of our vessel additions in 2021 were acquired with attached time charter agreements, which were below market terms prevailing at their acquisition date. As the present value of the contractual cash flows of these time charter agreements assumed was lower than its current fair value, the difference was recorded as unearned revenue. Such liabilities are amortized as an increase in revenue over the period of each time charter assumed. Amortization of these time charter agreements resulted in an increase of our revenue by $56.7 million and $27.6 million in the year/period ended December 31, 2022 and 2021, respectively. Significant assumptions used in calculation of the fair value of the time charters assumed include daily time charter rate prevailing in the market for the similar size of the vessels available before the acquisition for a similar charter durations (including the estimated time charter expiry date). Other assumptions used are the discount rate based on the weighted average cost of capital for the shipping industry close to the acquisition date and the estimated average off-hire rate.
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 time charters and bareboat charters, such as those on which we charter our containerships, 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.
From time to time, in accordance with industry practice and in respect of the charters for our containerships we pay brokerage commissions of approximately 0.77% to 3.75% 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 5.0% to a limited number of our charterers. Our manager also receives 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 2022, 2021 and 2020 we paid a fee to our manager of 1.25% on all freight, charter hire, ballast bonus and demurrage for each vessel. In 2023, 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 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 March 7, 2023, 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 a 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.
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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.
Impairment Loss
There was no impairment loss in the years ended December 31, 2022, 2021 and 2020. See “Critical Accounting Estimates—Impairment of Long-lived Assets.”
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 2022, 2021 and 2020: (i) a daily management fee of $850, (ii) a daily vessel management fee of $425 for vessels on bareboat charter, pro rated for the number of calendar days we own each vessel, (iii) a daily vessel management fee of $850 for vessels on time charter, pro rated for the number of calendar days we own each vessel. Our executive officers received an aggregate of $2.1 million (€2.0 million), $2.1 million (€1.8 million) and $1.8 million (€1.5 million) in cash compensation for the years ended December 31, 2022, 2021 and 2020, respectively. We also recognized non-cash share-based compensation expense in respect of awards to our executive officers of $5.4 million, $11.8 million and $1.0 million in the years ended December 31, 2022, 2021, and 2020, respectively.
For 2023, we will pay 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.
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 the years ended December 31, 2022 and 2021, we recorded net other expenses of $6.6 million compared to net other income of $4.5 million, respectively. The decrease was mainly due to prior service cost of a defined benefit obligation amounting to $7.8 million in the year ended December 31, 2022 and the collection from Hanjin Shipping of $3.9 million as a partial payment of common benefit claim and interest in the year ended December 31, 2021. An amount of $0.7 million of the defined benefit obligation is expected to be recognized in other expenses in the year ending December 31, 2023, while an additional projected periodic benefit cost of $0.8 million is also expected to be recognized in the year ending December 31, 2023. See “Note 19. Executive Retirement Plan” to our audited consolidated financial statements included elsewhere in this report.
Interest Expense, Interest Income and Other finance expenses
We have incurred interest expense on outstanding indebtedness under our credit facilities which we included in interest expense. We also incurred financing costs in connection with establishing those facilities, which are included in other finance expenses. Further, we earn interest on cash deposits in interest bearing accounts and until the end of 2021 also on interest bearing securities, which we include in interest income. We will incur additional interest expenses in the future on our outstanding borrowings and under future borrowings.
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Gain/(loss) on investments
As of December 31, 2021, our remaining shareholding interest in ZIM of 7,186,950 ordinary shares has been fair valued at $423.0 million based on the closing price of ZIM’s ordinary shares on the NYSE on that date. A loss on this investment of $176.4 million was recognized in the year ended December 31, 2022 compared to a gain of $543.7 million in the year ended December 31, 2021, each relating to the change in fair value of our investment in ZIM. In 2022, we sold all of our remaining 7,186,950 ZIM ordinary shares resulting in proceeds to us of $246.6 million.
Dividend income
In the years ended December 31, 2022 and 2021 we also recognized $165.4 million and $34.3 million dividend income (gross of withholding taxes) on ZIM ordinary shares, respectively.
Gain on Debt Extinguishment
The gain on debt extinguishment of $4.4 million in the year ended December 31, 2022, which related to our early extinguishment of debt, decreased compared to $111.6 million in the year ended December 31, 2021, which resulted from our debt refinancing on April 12, 2021.
Equity income on investments
Equity income on investments in Gemini decreased to nil in the year ended December 31, 2022 compared to $68.0 million in the year ended December 31, 2021 following our acquisition and full consolidation of Gemini since July 1, 2021.
Unrealized Gain/(Loss) and Realized Loss on Derivatives
We currently have no outstanding interest rate swaps agreements. In past years, we had interest rate swaps agreements 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 were recorded in earnings under “Loss on derivatives”.
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. An amount of $3.6 million was reclassified from Accumulated Other Comprehensive Loss into earnings for each of the years ended December 31, 2022, 2021 and 2020, representing amortization of deferred realized losses on cash flow hedges over the depreciable life of the vessels.
Income taxes
We recorded income taxes of $18.3 million and $5.9 million in the years ended December 31, 2022 and 2021, respectively, related to the taxes withheld on dividend income earned.
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Results of Operations
The following table presents selected consolidated financial and other data of Danaos Corporation and its consolidated subsidiaries for each of the three years in the three year period ended December 31, 2022. The selected consolidated financial data of Danaos Corporation as of December 31, 2022 and 2021 and each of the three years ended December 31, 2022 is derived from our consolidated financial statements and notes thereto included elsewhere in this Form 20-F, which have been prepared in accordance with U.S. generally accepted accounting principles, or “U.S. GAAP”. Our audited consolidated statements of income, comprehensive income, changes in stockholders’ equity and cash flows for the years ended December 31, 2022, 2021 and 2020, and the consolidated balance sheets at December 31, 2022 and 2021, together with the notes thereto, are included in “Item 18. Financial Statements” and should be read in their entirety.

		Year ended December 31,	
		2022		2021		2020	
	
		In thousands, except per share amounts and	
		other data	
STATEMENT OF INCOME	    		  	    		  	    		  	
Operating revenues		$	993,344		$	689,505		$	461,594	
Operating expenses, net			(339,908)			(331,246)			(262,114)	
Income from operations		 	653,436		 	358,259		 	199,480	
Total other income/(expenses), net		 	(75,976)		 	700,472		 	(45,930)	
Income taxes			(18,250)			(5,890)			-	
Net income		$	559,210		$	1,052,841		$	153,550	
PER SHARE DATA		 	  		 	  		 		
Basic earnings/(loss) per share of common stock		$	27.30		$	51.75		$	6.51	
Diluted earnings/(loss) per share of common stock		$	27.28		$	51.15		$	6.45	
Basic weighted average number of shares (in thousands)		 	20,482		 	20,345		 	23,589	
Diluted weighted average number of shares (in thousands)		 	20,501		 	20,584		 	23,805	
Dividends declared per share		$	3.00		$	1.50		 	-	
CASH FLOW DATA		 	  		 			 		
Net cash provided by operating activities		$	934,741		$	428,111		$	265,679	
Net cash provided by/(used in) investing activities		 	176,572		 	(143,148)		 	(170,736)	
Net cash used in financing activities		 	(973,401)		 	(220,870)		 	(168,450)	
Net increase/(decrease) in cash, cash equivalents and restricted cash		 	137,912		 	64,093		 	(73,507)	
OTHER DATA		 	  		 			 		
Number of vessels at period end		 	69		 	71		 	60	
TEU capacity at period end		 	423,745		 	436,589		 	371,262	
Ownership days		 	25,807		 	23,430		 	20,982	
Operating days		 	25,111		 	23,004		 	20,209	

Year ended December 31, 2022 compared to the year ended December 31, 2021
During the year ended December 31, 2022, Danaos had an average of 70.7 containerships compared to 64.2 containerships during the year ended December 31, 2021. Our fleet utilization for the year ended December 31, 2022 was 97.3% compared to 98.2% for the year ended December 31, 2021. The decrease in utilization was mainly due to the increased days of scheduled dry-docking of our vessels.
Operating Revenues
Operating revenues increased by 44.1%, or $303.8 million, to $993.3 million in the year ended December 31, 2022 from $689.5 million in the year ended December 31, 2021.
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Operating revenues for the year ended December 31, 2022 reflect:
●a $260.6 million increase in revenues in the year ended December 31, 2022 compared to the year ended December 31, 2021 mainly as a result of higher charter rates;
●a $55.8 million increase in revenues in the year ended December 31, 2022 compared to the year ended December 31, 2021 due to the incremental revenue generated by newly acquired vessels;
●a $29.0 million increase in revenues in the year ended December 31, 2022 compared to the year ended December 31, 2021 due to amortization of assumed time charters;
●a $1.6 million decrease in revenues in the year ended December 31, 2022 compared to the year ended December 31, 2021 due to vessel disposals; and
●a $40.0 million decrease in revenue in the year ended December 31, 2022 compared to the year ended December 31, 2021 due to lower non-cash revenue recognition in accordance with US GAAP.

Voyage Expenses
Voyage expenses increased by $10.8 million to $35.1 million in the year ended December 31, 2022 from $24.3 million in the year ended December 31, 2021 primarily as a result of the increase in commissions due to the increase in revenue per vessel and the increase in the average number of vessels in our fleet.
Vessel Operating Expenses
Vessel operating expenses increased by $23.1 million to $159.0 million in the year ended December 31, 2022 from $135.9 million in the year ended December 31, 2021, primarily as a result of the increase in the average number of vessels in our fleet and an increase in the average daily operating cost for vessels on time charter to $6,339 per vessel per day for the year ended December 31, 2022 compared to $5,986 per vessel per day for the year ended December 31, 2021. The average daily operating cost increased mainly due to the COVID-19 and Ukraine war related increase in crew remuneration and increased insurance premiums in the year ended December 31, 2022 compared to the year ended December 31, 2021. Management believes that our daily operating costs remain among the most competitive in the industry.
Depreciation
Depreciation expense increased by 14.9%, or $17.4 million, to $134.3 million in the year ended December 31, 2022 from $116.9 million in the year ended December 31, 2021 due to recent acquisitions of 11 vessels.
Amortization of Deferred Drydocking and Special Survey Costs
Amortization of deferred dry-docking and special survey costs increased by $2.0 million to $12.2 million in the year ended December 31, 2022 from $10.2 million in the year ended December 31, 2021.
General and Administrative Expenses
General and administrative expenses decreased by $7.4 million to $36.6 million in the year ended December 31, 2022, from $44.0 million in the year ended December 31, 2021. The decrease was mainly attributable to a $9.3 million decrease in stock-based compensation, which was partially offset by a $2.0 million increase in management fees (due to the increased average size of our fleet) in the year ended December 31, 2022 compared to the year ended December 31, 2021.
Gain on sale of vessels
In November 2022, we completed the sale of the Catherine C and Leo C for net proceeds of $128.0 million resulting in a gain of $37.2 million.
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Interest Expense, Interest Income and Other Finance Expenses
Interest expense decreased by 10.0%, or $6.9 million, to $62.1 million in the year ended December 31, 2022 from $69.0 million in the year ended December 31, 2021. The decrease in interest expense is a combined result of:

	●	a $7.6 million decrease in interest expense due to a decrease in our average indebtedness by $407.4 million between the two periods (average indebtedness of $1,070.7 million in the year ended December 31, 2022 compared to average indebtedness of $1,478.1 million in the year ended December 31, 2021), which was partially offset by an increase in our debt service cost by 0.96 percentage points, mainly as a result of increase in the reference rates on our floating rate debt;	

	●	a $4.4 million decrease in the amortization of deferred finance costs and debt discount;	

	●	a $5.0 million decrease in interest expense due to capitalized interest on our vessels under construction in the year ended December 31, 2022 compared to none in the year ended December 31, 2021; and	

	●	a $10.1 million reduction in the recognition through our income statement of accumulated accrued interest that had been accrued in 2018 in relation to two of our credit facilities that were refinanced on April 12, 2021 and subsequently fully repaid on May 15, 2022, at which point the remaining accumulated accrued interest of $26.9 million was recognized in gain on debt extinguishment.	

During the year ended December 31, 2022, we reduced debt, bond and lease indebtedness by $1,042.8 million mainly as a result of $909.1 million early debt and lease repayments and recognized a $4.4 million gain related to this early debt extinguishment. On the other hand, our indebtedness increased by $130 million following consummation of the loan agreement to finance our six 5,466 TEU vessels that were acquired in 2021 and by a further $55.25 million, following consummation of a new credit facility during the quarter ended December 31, 2022. Additionally, during the quarter ended December 31, 2022 we entered into a $382.5 million Revolving Credit Facility which remains available and undrawn.
As of December 31, 2022, our outstanding bank debt, gross of deferred finance costs, was $438.0 million, which includes $262.8 million aggregate principal amount of our Senior Notes, and our leaseback obligation was $72.9 million. These balances compare to debt of $1,142.0 million and a leaseback obligation of $226.5 million, gross of deferred finance costs, as of December 31, 2021.
Interest income decreased by $7.6 million to $4.6 million in the year ended December 31, 2022 compared to $12.2 million in the year ended December 31, 2021, mainly as a result of full collection of accrued interest on ZIM and HMM bonds, which were redeemed by the issuers thereof in the year 2021.
Other finance expenses increased by $0.3 million to $1.6 million in the year ended December 31, 2022 compared to $1.3 million in the year ended December 31, 2021.
Gain/(loss) on investments
A loss on investments of $176.4 million was recognized in the year ended December 31, 2022 compared to a gain of $543.7 million in the year ended December 31, 2021, each relating to the change in fair value of our investment in ZIM. In April 2022, we sold 1,500,000 of these ZIM ordinary shares resulting in proceeds to us of $85.3 million. In September 2022, we sold all of our remaining 5,686,950 ZIM ordinary shares resulting in proceeds to us of $161.3 million.
Dividend income
Dividend income of $165.4 million was recognized on ZIM ordinary shares in the year ended December 31, 2022 compared to $34.3 million in the year ended December 31, 2021.
Gain on debt extinguishment
The gain on debt extinguishment of $4.4 million in the year ended December 31, 2022, which related to our early extinguishment of debt, decreased compared to $111.6 million in the year ended December 31, 2021, which resulted from our debt refinancing on April 12, 2021.
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Equity income on investments
Equity income on investments in Gemini decreased to nil in the year ended December 31, 2022 compared to $68.0 million in the year ended December 31, 2021 following our acquisition and full consolidation of Gemini since July 1, 2021.
Loss on Derivatives
Amortization of deferred realized losses on interest rate swaps remained stable at $3.6 million in each of the years ended December 31, 2022 and December 31, 2021.
Other income/(expenses), net
Other expenses, net were $6.6 million in the year ended December 31, 2022 compared to other income, net of $4.5 million in the year ended December 31, 2021. The decrease was mainly due to recognition of prior service cost of a defined benefit obligation of $7.8 million in the year ended December 31, 2022 and the collection from Hanjin Shipping of $3.9 million as a partial payment of common benefit claim and interest in the year ended December 31, 2021.
Income taxes
Income taxes were $18.3 million in the year ended December 31, 2022, related to the taxes withheld on dividend income earned on ZIM ordinary shares and compared to $5.9 million taxes withheld on dividend income in the year ended December 31, 2021.
Year ended December 31, 2021 compared to the year ended December 31, 2020
During the year ended December 31, 2021, Danaos had an average of 64.2 containerships compared to 57.3 containerships during the year ended December 31, 2020. Our fleet utilization for the year ended December 31, 2021 was 98.2% compared to 96.3% for the year ended December 31, 2020. Adjusted fleet utilization, excluding the effect of 188 days of incremental off-hire due to shipyard delays related to the COVID-19 pandemic, was 97.2% in the year ended December 31, 2020.
Operating Revenues
Operating revenues increased by 49.4%, or $227.9 million, to $689.5 million in the year ended December 31, 2021 from $461.6 million in the year ended December 31, 2020.
Operating revenues for the year ended December 31, 2021 reflect:

	●	a $107.9 million increase in revenues in the year ended December 31, 2021 compared to the year ended December 31, 2020 mainly as a result of higher charter rates and improved fleet utilization;	

	●	a $55.7 million increase in revenues in the year ended December 31, 2021 compared to the year ended December 31, 2020 due to the incremental revenue generated by newly acquired vessels;	

	●	a $36.7 million increase in revenues in the year ended December 31, 2021 compared to the year ended December 31, 2020 due to higher non-cash revenue recognition in accordance with US GAAP; and	

	●	a $27.6 million increase in revenues in the year ended December 31, 2021 compared to the year ended December 31, 2020 due to amortization of assumed time charters.	

Voyage Expenses
Voyage expenses increased by $10.0 million to $24.3 million in the year ended December 31, 2021 from $14.3 million in the year ended December 31, 2020 primarily as a result of the increase in commissions due to the increase in revenue per vessel and the increase in the average number of vessels in our fleet.
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Vessel Operating Expenses
Vessel operating expenses increased by $25.0 million to $135.9 million in the year ended December 31, 2021 from $110.9 million in the year ended December 31, 2020, primarily as a result of the increase in the average number of vessels in our fleet and an increase in the average daily operating cost for vessels on time charters to $5,986 per vessel per day for the year ended December 31, 2021 compared to $5,586 per vessel per day for the year ended December 31, 2020. The average daily operating cost increased mainly due to the COVID-19 related increase in crew remuneration in the year ended December 31, 2021. Management believes that our daily operating cost remains among the most competitive in the industry.
Depreciation
Depreciation expense increased by 15.2%, or $15.4 million, to $116.9 million in the year ended December 31, 2021 from $101.5 million in the year ended December 31, 2020 mainly due to our recent acquisition of sixteen vessels and installation of scrubbers on nine of our vessels in the year ended December 31, 2020.
Amortization of Deferred Drydocking and Special Survey Costs
Amortization of deferred dry-docking and special survey costs decreased by $0.8 million to $10.2 million in the year ended December 31, 2021 from $11.0 million in the year ended December 31, 2020.
General and Administrative Expenses
General and administrative expenses increased by $19.6 million to $43.9 million in the year ended December 31, 2021, from $24.3 million in the year ended December 31, 2020. The increase was mainly attributable to increased management fees due to the increased size of our fleet and increased stock-based compensation.
Interest Expense, Interest Income and Other Finance Expenses
Interest expense increased by 29.0%, or $15.5 million, to $69.0 million in the year ended December 31, 2021 from $53.5 million in the year ended December 31, 2020. The increase in interest expense is a combined result of:

	●	a $5.9 million decrease in interest expense due to a decrease in our debt service cost by approximately 0.25%, while our average indebtedness also decreased by $41.8 million between the two periods (average indebtedness of $1,478.1 million in the year ended December 31, 2021, compared to average indebtedness of $1,519.9 million in the year ended December 31, 2020);	

	●	a $22.3 million reduction in the recognition through our income statement of accumulated accrued interest that had been accrued in 2018 in relation to two of our credit facilities that were refinanced on April 12, 2021. As a result of the refinancing, the recognition of such accumulated interest has been decreased; and	

	●	a $0.9 million decrease in the amortization of deferred finance costs and debt discount related to our debt.	

Net proceeds from the issuance of our $300 million Senior Notes in February 2021 together with the net proceeds from a new $815 million senior secured credit facility and a new $135 million leaseback arrangement, each of which was drawn down on April 12, 2021, were used to refinance a substantial majority of our then outstanding indebtedness.
As of December 31, 2021, our outstanding debt, gross of deferred finance costs, was $1,142.0 million, which includes $300 million aggregate principal amount of our Senior Notes, and our leaseback obligation was $226.5 million. These balances compare to debt of $1,368.1 million and a leaseback obligation of $123.4 million as of December 31, 2020.
Interest income increased by $5.6 million to $12.2 million in the year ended December 31, 2021 compared to $6.6 million in the year ended December 31, 2020, mainly as a result of full collection of accrued interest on ZIM and HMM bonds, which were redeemed by the issuers thereof in 2021.
Other finance costs, net decreased by $1.0 million to $1.3 million in the year ended December 31, 2021 compared to $2.3 million in the year ended December 31, 2020 due to the decreased finance costs on the refinanced debt.
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Gain on investments
The gain on investments of $543.7 million in the year ended December 31, 2021 relates to the change in fair value of our shareholding interest in ZIM, which completed its initial public offering and listing on the New York Stock Exchange of its ordinary shares on January 27, 2021. In 2021, we sold 3,000,000 ordinary shares of ZIM resulting in net proceeds of $120.7 million. For the year ended December 31, 2021, the unrealized gain related to the ZIM ordinary shares still held on December 31, 2021 amounted to $422.97 million. Our remaining shareholding interest of 7,186,950 ordinary shares has been fair valued at $423.02 million as of December 31, 2021, based on the closing price of ZIM’s ordinary shares on the NYSE on that date compared to the book value of these shares of $75 thousand as of December 31, 2020.
Dividend income
In the year ended December 31, 2021, we recognized $34.3 million of dividend income, gross of withholding taxes, on ZIM ordinary shares.
Gain on debt extinguishment
The gain on debt extinguishment of $111.6 million in the year ended December 31, 2021 related to our debt refinancing on April 12, 2021.
Equity income on investments
Equity income on investments increased by $61.7 million to $68.0 million in the year ended December 31, 2021 compared to $6.3 million in the year ended December 31, 2020 mainly due to the non-cash gain of $64.1 million recognized on our acquisition of the remaining 51% equity interest in Gemini on July 1, 2021.
Loss on Derivatives
Amortization of deferred realized losses on interest rate swaps remained stable at $3.6 million in each of the years ended December 31, 2021 and December 31, 2020.
Other income/(expenses), net
Other income, net was $4.5 million in the year ended December 31, 2021 compared to $0.6 million of income in the year ended December 31, 2020. The increase was mainly due to the collection from Hanjin Shipping of $3.9 million as a partial payment of common benefit claim and interest.
Income taxes
Income taxes of $5.9 million in the year ended December 31, 2021 related to the taxes withheld on dividend income earned on ZIM ordinary shares.
Liquidity and Capital Resources
Our principal source of funds has been operating cash flows, vessel sales, and long-term bank borrowings, as well as equity provided by our stockholders from our initial public offering in October 2006; common stock sales in August 2010 and the fourth quarter of 2019, the capital contribution of Danaos Investment Limited as Trustee of the 883 Trust (“DIL”) on August 10, 2018 and dividends and sales proceeds from our recently divested investment in ZIM ordinary shares. In February 2021, we sold $300 million of 8.500% senior unsecured notes due 2028 (the “Senior Notes”). We used the net proceeds from the offering of Senior Notes, together with proceeds from a new $815 million senior secured credit facility with a four-year term (the “Citibank/Natwest $815 Million Facility”) and a new $135 million sale and leaseback arrangement (the “2021 Leaseback Agreement”), to implement a $1.25 billion refinancing of a substantial majority of our outstanding senior secured indebtedness consummated on April 12, 2021 (the “2021 Debt Refinancing”). 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 and repayment of debt.
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Our short-term liquidity needs primarily relate to the funding of our vessel operating expenses, drydocking costs, installment payments for our six contracted newbuildings, debt interest payments, servicing our debt obligations, payment of dividends and repurchase of our common stock. Our long-term liquidity needs primarily relate to installment payments for our six contracted newbuildings and any additional vessel acquisitions in the containership sector and debt repayment. We anticipate that our primary sources of funds will be cash from operations and equity or debt financings. We currently expect that the sources of funds available to us will be sufficient to meet our short-term liquidity (for the next 12 months after the issuance of the consolidated financial statements) and long-term liquidity requirements.
Under our existing multi-year charters as of December 31, 2022, we had $2.1 billion of total contracted cash revenues, or $785.7 million for 2023 and thereafter $1.3 billion. Although these contracted cash revenues are based on contracted charter rates, we are dependent on the ability and willingness of our charterers to meet their obligations under these charters. On May 5, 2022, we received a $238.9 million charter hire prepayment related to charter contracts for 15 of our vessels, representing partial prepayment of charter hire payable during the period from May 2022 through January 2027. This prepayment is recorded as unearned revenue on our balance sheet and recognized as revenue in our income statement over the term of the applicable charters.
As of December 31, 2022, we had cash and cash equivalents of $267.7 million. As of December 31, 2022, we had $382.5 million of remaining borrowing availability under a reducing revolving credit facility, the availability under which reduces on a quarterly basis. As of December 31, 2022, we had $510.9 million of outstanding indebtedness (gross of deferred finance costs), including $262.8 million relating to our Senior Notes, and $72.9 million of outstanding leaseback obligations (gross of deferred finance costs) with respect to two of our vessels. As of December 31, 2022, we were obligated to make quarterly fixed amortization payments, totaling $27.5 million to December 31, 2023, related to the long-term bank debt and aggregate payments of $27.5 million ($30.9 million including imputed interest) under our leaseback obligations to December 31, 2023 (gross of deferred finance costs). We are also obligated to make certain payments to our Manager, Danaos Shipping, under our management agreement which has a term through December 31, 2024. See “—Contractual Obligations” below. In January 2023, we gave an early termination notice to Oriental Fleet of our intention to fully repay our outstanding leaseback obligations related to two of our vessels, which totaled $72.9 million as of December 31, 2022, by May 12, 2023.
In May 2022, we early extinguished $270.0 million of the outstanding Natwest loan principal of the Citibank/Natwest $815 mil. Facility, which reduced the future quarterly instalments of the remaining facility to $12.9 million and the balloon payment at maturity was reduced to $309.0 million. Additionally, the reference to LIBOR was replaced with daily non-cumulative compounded secured overnight financing rate administered and published by the Federal Reserve Bank of New York (“SOFR”) plus credit spread adjustment. In May 2022, we also early terminated our leaseback obligation related to the 2021 Leaseback Agreement and repaid an aggregate outstanding amount of $94.2 million, together with additional fees amounting to $2.8 million. Additionally, in the second quarter of 2022, we early repaid in full to our lenders the: (i) $43.0 million loan outstanding with the Macquarie Bank, (ii) $20.6 million loan outstanding with Eurobank and (iii) $9.8 million loan outstanding with SinoPac. In June 2022, we drew down $130.0 million under a new senior secured term loan facility from BNP Paribas and Credit Agricole with five-year term, which is secured by six 5,466 TEU sister vessels acquired in 2021.
In December 2022, we early extinguished the remaining $437.75 million of the Citibank/Natwest $815 mil. Facility and replaced it with the $382.5 mil. Revolving Credit Facility with Citibank, out of which nil is drawn down as of December 31, 2022 and with the Alpha Bank $55.25 mil. Facility, which was drawn down in full and is outstanding as of December 31, 2022. The Citibank $382.5 mil. Revolving Credit Facility is reducing and repayable over 5 years in 20 quarterly reductions of $11.25 million each together with a final reduction of $157.5 million at maturity in December 2027. We pay a commitment fee at a rate of 0.8% on the undrawn amount of this facility. The Alpha Bank $55.25 mil. Facility is repayable over 5 years with 20 consecutive quarterly instalments of $1.875 million each, together with a balloon payment of $17.75 million at maturity in December 2027. In December 2022, we also repurchased $37.2 million aggregate principal amount of our unsecured senior notes in a privately negotiated transaction. The above debt extinguishments and the extinguishment of the 2021 Leaseback Agreement resulted in a total net gain on debt extinguishment of $4.4 million in the year ended December 31, 2022. We may also at any time and from time to time, seek to retire or purchase our outstanding debt securities through cash purchases, in open-market purchases, privately negotiated transactions or otherwise.
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On March 11, 2022, we entered into contracts for the construction of two 7,100 TEU container vessels for an aggregate purchase price of $156.0 million, out of which $39.0 million was advanced in 2022, $31.2 million is expected to be paid in 2023 and $85.8 million in 2024. On April 1, 2022, as amended on April 21, 2022, we entered into contracts for the construction of four 8,000 TEU container vessels for an aggregate purchase price of $372.7 million, out of which $145.9 million was advanced in 2022 and $226.8 million is expected to be paid at vessels delivery in 2024. Additionally, a supervision fee of $725 thousand per newbuilding vessel will be payable to Danaos Shipping Company Limited over the construction period starting from steel cutting. Interest expense amounting to $5.0 million was capitalized to the vessels under construction in the year ended December 31, 2022.
On February 14, 2023, we declared a dividend of $0.75 per share of common stock payable on March 14, 2023 to holders of record on February 28, 2023. We intend to pay a regular quarterly dividend on our common stock, which will have an impact on our liquidity. Payments of dividends are subject to the discretion of our board of directors, provisions of Marshall Islands law affecting the payment of distributions to stockholders and the terms of our credit facilities, which permit the payment of dividends so long as there has been no event of default thereunder nor would occur as a result of such dividend payment, finance leases and Senior Notes, which include limitations on the amount of dividends and other restricted payments that we may make, and will be subject to conditions in the container shipping industry, our financial performance and us having sufficient available excess cash and distributable reserves.
In June 2022, we announced a share repurchase program of up to $100 million of our common stock. We have repurchased 466,955 shares of our common stock in the open market for $28.6 million as of December 31, 2022. All purchases have been made on the open market within the safe harbor provisions of Regulation 10b-18 under the Exchange Act. Under the share repurchase program, shares of our common stock may be purchased in open market or privately negotiated transactions, at times and prices that are considered to be appropriate by the Company, and the program may be suspended or discontinued at any time.
ZIM Equity Securities
On January 27, 2021, ZIM completed its initial public offering and listing on the New York Stock Exchange of its ordinary shares. Following this offering the Company owned 10,186,950 ordinary shares of ZIM. These shares were recorded at a book value of $75 thousands as of December 31, 2020. In 2021, we sold 3,000,000 ZIM ordinary shares resulting in net proceeds to us of $120.7 million. In April 2022, we sold 1,500,000 ZIM ordinary shares resulting in net proceeds to us of $85.3 million and we sold our remaining shareholding interest in ZIM of 5,686,950 ordinary shares for $161.3 million in September 2022. For the year ended December 31, 2022 we recognized a $176.4 million loss on these shares. Additionally we recognized dividend income on these shares amounting to $165.4 million gross of withholding taxes of $18.3 million in the year ended December 31, 2022. See Note 7, “Other Current and Non-current Assets” to our consolidated financial statements included in this report.
Impact of COVID-19 on our Business
The spread of the COVID-19 virus, which was declared a pandemic by the World Health Organization, in 2020 has caused substantial disruptions in the global economy and the shipping industry, as well as significant volatility in the financial markets. The duration and full effects of this global health emergency and related disruptions are uncertain. The pandemic had severe impacts on the global economic activity. These trends may continue for the near future as, while the availability of effective vaccines has led to a developing economic recovery in parts of the world, the success and timing of COVID-19 containment strategies are uncertain, including due to the emergence of new variants, and negative impacts are expected to reverberate beyond the duration of the pandemic itself. However, the container shipping industry, in contrast with other sectors, reversed many of the negative impacts suffered in the first half of 2020 and experienced historic high levels of demand until the second half of 2022, since which time demand and rates have declined as supply chain constraints eased and demand for containerized cargoes declined, but currently remain at relatively healthy prepandemic levels.
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In particular as it pertains to our business, the COVID-19 pandemic initially negatively affected global demand for the seaborne transportation of containerized cargoes. Global seaborne container trade declined in 2020, with an estimated impact of around 1% in TEU terms. Liner companies initially responded to these circumstances by reducing service and cutting sailings, which increased idle containership fleet capacity in the first half of 2020 to a peak of 12%. As a result, container freight rates were volatile and containership charter market rates declined significantly in the first half of 2020. However, the ability of the liner companies to consistently manage capacity addressed the drop in volumes at the onset of the pandemic, which alleviated pressure on our customers’ cash flows, many of whom have since reported strong profitability, and stabilized and increased freight rates. The second half of 2020 through the first half of 2022 saw robust demand for seaborne transportation of containerized cargo, with freight volumes and freight rates rebounding sharply. The growth of e-commerce, together with the temporary grounding of aircraft resulting from travel restrictions which have now generally been lifted, has shifted significant shipping volume to seaborne containers. The resulting demand for containerships has resulted in negligible vessel capacity available in certain size segments during this period, increasing charter rates for all segments and enabled us to recharter many of our smaller vessels which had charters expiring during 2021 and 2022 at higher rates. Many liner operators and containership owners reported improved results in the second half of 2020, in 2021 and the first half of 2022, due in part to improving container shipping industry market conditions. Our operating revenues increased to $993.3 million in the year ended December 31, 2022 compared to $689.5 million in the year ended December 31, 2021. In the second half of 2022, containership demand and rates have declined from the recent historic highs, as supply chain constraints eased and demand for containerized cargoes declined, but currently remain at relatively healthy prepandemic levels.
COVID-19 related travel restrictions imposed on a global level also caused disruptions in scheduled crew changes on our vessels, caused an increase in remuneration of our crew on the vessels and delays in carrying out of certain hull repairs and maintenance in 2020, which disruptions could continue to affect our operations. During the first quarter of 2020, we experienced delays in Chinese shipyards related to the scheduled installations of the scrubbers on certain of our vessels and delays in carrying out dry-docking repairs, which resulted in incremental 188 off-hire days of our vessels ultimately leading to decreased operating revenue by approximately $3.2 million compared to our expectations. The average daily operating cost per vessel per day for vessels on time charter for the year ended December 31, 2021 increased to $6,339 compared to $5,986 per vessel per day for the year ended December 31, 2022, mainly due to the COVID-19 and Ukraine war related increase in crew remuneration and increased insurance premiums in the year ended December 31, 2022.
The Zero COVID-19 policy in China until recently strictly applied may continue to negatively affect our business. We may continue to experience delays in Chinese shipyards where we are building two of our contracted newbuilding container vessels as well as increased expenses and decreased operating revenue due to the delays in carrying out of dry-docking and repairs of our vessels. Until recently prevailing low interest rates, in part due to actions taken by central banks to stimulate economic activity in the face of the pandemic, has also reduced our interest expense, while lower fuel prices during 2020, which is a substantial expense borne by our customers, helped to bolster their financial position. Recently, fuel costs for our charterers have increased significantly along with the price of oil, and prevailing interest rates have significantly increased and are expected to increase further as central banks have sought to counter inflation.
The COVID-19 pandemic continues to unfold and may negatively affect our business, financial performance and results of our operations in the future, as it did in the first half of 2020. The extent of any such effects depends on factors beyond our control and cannot be predicted with certainty. Any prolonged slowdown in the global economy, or the effects of containment strategies such as recent lockdowns imposed in China, may again negatively impact worldwide demand for products transported by containerships, adversely affect the liquidity and financial position of our charterers and may decrease rechartering hire rates for our vessels, as could any decrease in demand for consumer products and other containerized cargo as the pandemic abates or otherwise, as has been the case recently as supply chain constraints ease and inflation and declining GDP growth, the uncertainties created by the war in Ukraine and energy supply concerns, have reduced demand for containerships. This could result in reductions in our revenue and the market value of our vessels, which could materially adversely affect our business and results of operations, as well as our ability to service or refinance our debt and comply with financial covenants of our credit facilities.
Impact of Inflation and Interest Rates Risk on our Business
We continue to see near-term impacts on our business due to elevated inflation in the United States of America, Eurozone and other countries, including ongoing global prices pressures in the wake of the war in Ukraine, driving up energy prices, commodity prices, which continue to affect our operating expenses. Interest rates have increased rapidly and substantially as central banks in developed countries raise interest rates in an effort to subdue inflation. The eventual implications of tighter monetary policy, and potentially higher long-term interest rates may drive a higher cost of capital for our business.
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Cash Flows

		Year ended		Year ended		Year ended	
	    	December 31, 2022	    	December 31, 2021	    	December 31, 2020	
	
		(In thousands)	
Net cash provided by operating activities		$	934,741		$	428,111		$	265,679	
Net cash provided by/(used in) investing activities		$	176,572		$	(143,148)		$	(170,736)	
Net cash used in financing activities		$	(973,401)		$	(220,870)		$	(168,450)	

Net Cash Provided by Operating Activities
Net cash flows provided by operating activities increased by 118.3%, or $506.6 million, to $934.7 million in the year ended December 31, 2022 compared to $428.1 million in the year ended December 31, 2021. The increase was the result of (i) a $260.6 million increase in operating revenues due to higher charter rates, (ii) $54.2 million of incremental revenues due to the net increase in the average number of vessels in our fleet, (iii) a $169.1 million prepayment of charter revenue related to future periods (iv) a $124.1 million increase in collection of dividends from ZIM (net of withholding taxes), which were partially offset by (i) a $36.3 million increase in total operating expenses, (ii) a $25.3 million increase in dry-docking expenses, (iii) a $8.1 million increase in net finance cost, (iv) collection of $10.2 million accumulated PIK interest income following redemption of HMM and ZIM notes in the year ended December 31, 2021 compared to none in the year ended December 31, 2022, (v) a $17.6 million change in working capital and (vi) a partial collection of common benefit claim of $3.9 million from Hanjin Shipping in the year ended December 31, 2021 compared to none in the year ended December 31, 2022.
Net Cash Used in Investing Activities
Net cash flows provided by investing activities increased by $319.7 million, to $176.6 million provided by investing activities in the year ended December 31, 2022 compared to $143.1 million used in investing activities in the year ended December 31, 2021. The increase was due to (i) an incremental $125.9 million in proceeds from sale of ZIM ordinary shares amounting to $246.6 million in the year ended December 31, 2022 compared to $120.7 million in the year ended December 31, 2021, (ii) lower by $156.6 million payments vessels in relation to vessels additions and advances for vessels under construction between the two periods and (iii) a $129.1 million proceeds and advances received from sale of vessels in the year ended December 31, 2022 compared to no such receipt in the year ended December 31, 2021, which were partially offset by (i) a $75.7 million decrease in bond redemption proceeds received in the year ended December 31, 2021 compared to no such proceeds received in the year ended December 31, 2022 and (ii) a $16.2 million decrease in acquired cash and restricted cash in the year ended December 31, 2021 compared to none in the year ended December 31, 2022.
Net Cash Used in Financing Activities
Net cash flows used in financing activities increased by $752.5 million, to $973.4 million used in financing activities in the year ended December 31, 2022 compared to $220.9 million used in financing activities in the year ended December 31, 2021 due to (i) a $889.2 million increase in payments of long-term debt and leaseback obligations mainly related to the early debt extinguishment described above, (ii) a $30.6 million increase in dividend payments on our common stock and (iii) a $28.6 million increase in repurchases of our common stock in the year ended December 31, 2022 compared to none in the year ended December 31, 2021, which were partially offset by (i) $182.7 million net proceeds from new credit facilities drawn down in the year ended December 31, 2022, (ii) a $7.0 million decrease in payments of accumulated accrued interest and (iii) a $6.2 million decrease in finance costs.
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.
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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 assumed time charters, amortization of deferred realized losses of cash flow interest rate swaps, amortization of deferred finance costs, debt discount and commitment fees. Adjusted EBITDA represents net income before interest income and expense, taxes other than withholding taxes on dividend, depreciation, amortization of deferred drydocking & special survey costs, amortization of assumed time charters, amortization of deferred realized losses of cash flow interest rate swaps, amortization of deferred finance costs, debt discount and commitment fees, stock based compensation, gain/loss on investments, gain on sale of vessels, equity income on investments and gain on debt extinguishment. 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.
Net Income Reconciliation to EBITDA and Adjusted EBITDA

		Year ended		Year ended		Year ended	
	    	December 31, 2022	    	December 31, 2021	    	December 31, 2020	
	
		(In thousands)	
Net income		$	559,210		$	1,052,841		$	153,550	
Depreciation and amortization of right-of-use assets		 	134,271		 	116,917		 	101,531	
Amortization of deferred drydocking & special survey costs		 	12,170		 	10,181		 	11,032	
Amortization of assumed time charters			(56,699)			(27,614)			—	
Amortization of deferred realized losses of cash flow interest rate swaps		 	3,622		 	3,622		 	3,632	
Amortization of finance costs, debt discount and commitment fees		 	11,775		 	15,913		 	16,817	
Finance costs accrued (Exit Fees under our Bank Agreement)		 	—		 	149		 	521	
Interest income		 	(4,591)		 	(12,230)		 	(6,638)	
Interest expense		 	50,620		 	53,078		 	36,687	
Income taxes			18,250			5,890			—	
EBITDA		 	728,628		 	1,218,747		 	317,132	
Loss/(gain) on investments and dividend withholding taxes		 	158,136		 	(549,543)		 	—	
Gain on debt extinguishment		 	(4,351)		 	(111,616)		 	—	
Gain on sale of vessels			(37,225)			—			—	
Equity income on investments		 	—		 	(64,063)		 	—	
Stock based compensation		 	5,972		 	15,278		 	1,199	
Adjusted EBITDA		$	851,160		$	508,803		$	318,331	

EBITDA decreased by $490.1 million, to $728.6 million in the year ended December 31, 2022, from $1,218.7 million in the year ended December 31, 2021. This decrease was mainly attributed to a change in fair value of investment and dividends from ZIM of $589.0 million, a $107.3 million decrease in gain on debt extinguishment, a $33.9 million increase in total operating expenses, a $68.0 million decrease in our equity income from our investment in Gemini following our acquisition and full consolidation of Gemini since July 1, 2021, a partial collection of a common benefit claim of $3.9 million from Hanjin Shipping in the year ended December 31, 2021, which were partially offset by a $274.8 million increase in operating revenue (net of $29.0 million increase in amortization of assumed time charters) and a $37.2 million gain on sale of vessels in the year ended December 31, 2022 compared to no such gain in the year ended December 31, 2021.
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Adjusted EBITDA increased by $342.4 million, to $851.2 million in the year ended December 31, 2022 from $508.8 million in the year ended December 31, 2021. As outlined above, the increase is mainly attributable to a $274.8 million increase in operating revenues (net of $29.0 million increase in amortization of assumed time charters) and a $118.7 million increase in dividends from ZIM (net of withholding taxes) in the year ended December 31, 2022, which were partially offset by a $43.2 million increase in total operating expenses, a $4.0 million decrease in our equity income from our investment in Gemini following our acquisition and full consolidation of Gemini since July 1, 2021 and a partial collection of common benefit claim of $3.9 million from Hanjin Shipping in the year ended December 31, 2021.
Credit Facilities
We, as borrower or guarantor, and certain of our subsidiaries, as borrowers or guarantors, have entered into a number of credit facilities in connection with financing the acquisition of certain vessels in our fleet. Our existing credit facilities are secured by, among other things, our vessels (as described below). The following summarizes certain terms of our credit facilities and our Senior Notes:

	    	Outstanding	    		
		 Principal 			
		Amount 			
		(in			
Credit Facility		 millions)(1)		Collateral Vessels	
BNP Paribas/Credit Agricole $130.0 mil. Facility		$	120.00	 	The Wide Alpha, the Stephanie C (ex Wide Bravo), the Maersk Euphrates, the Wide Hotel, the Wide India and the Wide Juliet	
Alpha Bank $55.25 mil. Facility		$	55.25	 	The Bremen and the Kota Santos (ex Phoebe)	
Citibank $382.5 mil. Revolving Credit Facility		$	—	 	The Express Berlin, the Express Rome, the Express Athens, the Hyundai Smart, the Hyundai Speed, the Hyundai Ambition, the Pusan C, the Le Havre, the Europe, the America, the CMA CGM Musset, the CMA CGM Racine, the CMA CGM Rabelais, the CMA CGM Nerval, the YM Maturity and the YM Mandate	
Senior Notes		$	262.8	 	None	

(1)	As of December 31, 2022.	

As of December 31, 2022, there was $382.5 million of remaining borrowing availability under our Citibank $382.5 mil. Revolving Credit Facility. As of December 31, 2022, 43 of our vessels were unencumbered. See Note 10 “Long-Term Debt, net” to our consolidated financial statements included elsewhere in this report for additional information regarding our outstanding debt and the related repayment schedule.
The weighted average interest rate on our borrowings for the years ended December 31, 2022, 2021 and 2020 was 5.3%, 4.4% and 4.6%, respectively (including leaseback obligations).
As of December 31, 2022, we also had $72.9 million of outstanding leaseback obligations. See Note 5 “Fixed Assets, net & Advances for Vessels under Construction” to our consolidated financial statements included elsewhere in this report for additional information regarding these arrangements and the related repayment schedule.
Citibank $382.5 million Senior Secured Revolving Credit Facility
In December 2022, we early extinguished the remaining $437.75 million of the Citibank/Natwest $815 mil. Facility and replaced it with an up to $382.5 mil. Revolving Credit Facility with Citibank, out of which nil is drawn down as of December 31, 2022 and with an Alpha Bank $55.25 mil. Facility (see below). The Citibank $382.5 mil. Revolving Credit Facility is reducing and repayable over 5 years in 20 quarterly reductions of $11.25 million each, together with a final reduction of $157.5 million at maturity in December 2027. This facility bears interest at SOFR plus a margin of 2.0% and commitment fee of 0.8% on any undrawn amount and is secured by sixteen of our vessels.
Alpha Bank $55.25 million Secured Credit Facility
The Alpha Bank $55.25 mil. Facility was drawn down in full in December 2022. This facility is secured by two of our vessels and is repayable over 5 years with 20 consecutive quarterly instalments of $1.875 million each, together with a balloon payment of $17.75 million at maturity in December 2027. This facility bears interest at SOFR plus a margin of 2.3%.
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BNP Paribas/Credit Agricole $130.0 million Secured Credit Facility
The BNP Paribas/Credit Agricole $130.0 mil. Facility was drawn down in full in June 2022. This facility is secured by six of our 5,466 TEU sister vessels acquired in 2021 and is repayable in eight quarterly instalments of $5.0 million each, twelve quarterly instalments of $1.9 million each, and a balloon payment of $67.2 million at the end of the five-year term. The facility bears interest at SOFR plus a margin of 2.16% as adjusted by the sustainability margin adjustment.
Financial Covenants and Securities
The Alpha Bank $55.25 mil. Facility and Citibank $382.5 mil. Revolving Credit Facility each contain a requirement to maintain a minimum fair market value of collateral vessels to loan value coverage of 120% and the BNP Paribas/Credit Agricole $130 mil. Facility contains a requirement to maintain a minimum fair market value of collateral vessels to loan value coverage of 125%. Additionally, these facilities require us to maintain the following financial covenants:

	(i)	minimum liquidity of $30.0 million;	
	(ii)	maximum consolidated debt (less cash and cash equivalents) to consolidated EBITDA ratio of 6.5x; and	
	(iii)	minimum consolidated EBITDA to net interest expense ratio of 2.5x.	

Each of our credit facilities, except for our unsecured Senior Notes, are collateralized by first 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, stock pledges and benefits from corporate guarantees. We were in compliance with the financial covenants contained in the credit facilities agreements as of December 31, 2022. Twenty-four of our vessels having a net carrying value of $1,592.4 million as of December 31, 2022, were subject to first preferred mortgages as collateral to our credit facilities (other than our unsecured Senior Notes).
Senior Notes
On February 11, 2021, we consummated an offering of $300 million aggregate principal amount of 8.500% Senior Notes due 2028 of Danaos Corporation, which we refer to as the Senior Notes. The Senior Notes are general senior unsecured obligations of Danaos Corporation.
The Senior Notes were issued pursuant to an Indenture, dated as of February 11, 2021, between the Company and Citibank, N.A., London Branch, as trustee, paying agent, registrar and transfer agent (the “Indenture”). The Senior Notes bear interest at a rate of 8.500% per year, payable in cash on March 1 and September 1 of each year, commencing September 1, 2021. The Senior Notes will mature on March 1, 2028.
In December 2022, we repurchased $37.2 million aggregate principal amount of our Senior Notes in a privately negotiated transaction. We may redeem some or all of the Senior Notes at any time or from time to time for cash: (i) prior to March 1, 2024, at 100.00% of the principal amount of such Senior Notes, plus an applicable “make-whole premium,” plus accrued and unpaid interest; (ii) on or after March 1, 2024 and prior to March 1, 2025, at 104.250% of the principal amount of such Senior Notes, plus accrued and unpaid interest; (iii) on or after March 1, 2025 and prior to March 1, 2026, at 102.125% of the principal amount of such Senior Notes, plus accrued and unpaid interest; and (iv) on or after March 1, 2026 and prior to maturity, at 100.000% of the principal amount of such Senior Notes, in each case plus accrued and unpaid interest to, but not including, the redemption date.
Subject to certain conditions, at any time and from time to time prior to March 1, 2024 we may redeem up to 35% of the original aggregate principal amount of the Senior Notes with the net cash proceeds of public equity offerings of the Company and certain contributions to the Company’s equity at a redemption price of 108.50% of their principal amount, plus accrued and unpaid interest, if any, to but excluding the redemption date; provided that at least 65% of the original aggregate principal amount of the Senior Notes remain outstanding.
If a “Change of Control” (as defined in the Indenture) of the Company occurs, the Company must make a “Change of Control Offer” (as defined in the Indenture) to each holder of the notes to repurchase all or any part of such holder’s Senior Notes at a purchase price in cash in an amount equal to 101% of the principal amount, plus accrued and unpaid interest to, but excluding, the repurchase date. In the event of certain developments affecting taxation, we may redeem the Senior Notes in whole, but not in part, at any time, at a redemption price of 100% of their principal amount, plus accrued and unpaid interest, if any, to the date of redemption.
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The Indenture contains covenants that limit, among other things, our ability and the ability of certain of our existing and future subsidiaries to:

	●	pay dividends, make distributions, redeem or repurchase capital stock and make certain other restricted payments of investments;	
	●	incur additional indebtedness or issue certain equity interests;	
	●	merge, consolidate or sell all or substantially all assets;	
	●	issue or sell capital stock of some of the Company’s subsidiaries;	
	●	sell or exchange assets or enter into new businesses;	
	●	create any restrictions on the payment of dividends, the making of distributions, the making of loans and the transfer of assets;	
	●	create liens on assets; and	
	●	enter into certain transactions with affiliates or related persons.	

The Senior Notes are listed on the Official List of The International Stock Exchange (the “ISE”). The ISE is not a regulated market for the purposes of Directive 2004/39/EC. There are no assurances that the Senior Notes will remain admitted for trading on the ISE.
The Senior Notes and the Indenture contain customary events of default, including failure to pay principal or interest, breach of covenants, cross-acceleration to other debt in excess of $30 million and bankruptcy events, all subject to terms, including notice and cure periods, set forth in the Indenture.
The Indenture and the Senior Notes are governed by New York law.
Principal Payments
The scheduled debt maturities of our credit facilities, including our unsecured Senior Notes, subsequent to December 31, 2022 are as follows (in thousands):

	    	Principal	
Payments due by period ended		repayments	
December 31, 2023		$	27,500	
December 31, 2024		 	21,300	
December 31, 2025		 	15,100	
December 31, 2026		 	15,100	
December 31, 2027		 	96,250	
Thereafter		 	262,766	
Total long‑term debt		$	438,016	

Interest Rate Swaps
In the past, we 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 paid 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. All of these interest rate swap agreements have expired and we do not currently have any outstanding interest rate swap agreements. See “Item 11. Quantitative and Qualitative Disclosures About Market Risk” and “—Factors Affecting our Results of Operations—Unrealized gain/(loss) and realized loss on derivatives.”
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Contractual Obligations
Our contractual obligations as of December 31, 2022 were:

		Payments Due by Period	
					Less than										
					1 year		2  –  3 years		4  –  5 years		More than	
	    	Total	    	(2023)	    	(2024  –  2025)	    	(2026  –  2027)	    	5 years	
	
		in thousands of Dollars	
Long-term debt obligations of contractual fixed debt principal repayments(1)		$	438,016		$	27,500		$	36,400		$	111,350	 	$	262,766	
Long-term leaseback obligations(2)		$	72,925		$	27,469		$	45,456			—	 		—	
Interest on long-term debt obligations(3)		$	152,972		$	37,054		$	59,769		$	52,364	 	$	3,785	
Commitment fees(4)		$	10,929		$	2,935		$	4,783		$	3,211			—	
Payments to shipyards for newbuilding vessels(5)		$	343,839		$	31,200		$	312,639			—			—	
Payments to our manager(6)		$	64,006		$	33,719		$	30,287			—	 		—	
Total		$	1,082,687		$	159,877		$	489,334		$	166,925	 	$	266,551	

(1)	These long-term debt obligations reflect our existing debt obligations and our Senior Notes as of December 31, 2022.	

(2)	Long-term leaseback obligations reflect our existing leaseback obligations related to two of our 13,100 TEU vessels. The monthly payments do not include imputed interest assumed in the leases, which is included in interest payments under (3) below. The leaseback obligations and related interest payments presented in the table have not been adjusted for an early termination notice we provided to Oriental Fleet in January 2023, of our intention to fully repay these outstanding leaseback obligations by May 12, 2023.	

(3)	The interest payments in this table reflect our existing debt obligations as of December 31, 2022. The calculation of interest is based on outstanding debt balances and leaseback obligations as of December 31, 2022 amortized by the contractual fixed amortization payments. The interest payments on debt obligations in this table are based on an assumed average SOFR rate of 4.72% in the year ended December 31, 2023, up to 3.85% in the twenty-four months ended December 31, 2025 and up to a maximum of 2.81% thereafter, and an imputed interest expense assumed in the leaseback agreement. The actual amortization we pay may differ from management’s estimates, potentially materially, which would result in different interest payment obligations. These interest payment obligations are gross of amounts, which will be capitalized to the cost of the vessels under construction under (4) below.	

(4)	The commitment fees represent maximum fee payable on our reducing $382.5 mil. Revolving Credit Facility with Citibank calculated at 0.8% rate on the undrawn amount over the five year term of this facility.	

(5)	Payments to shipyards for newbuilding vessels relate to remaining contracted payments for six of our vessels under construction, which are expected to be delivered to us in 2024.	

(6)	Under our management agreement with Danaos Shipping, 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, 2022, we had a fleet of 68 containerships held for use, out of which 66 were on time charter and 2 on bareboat charter. 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 thousand per newbuilding vessel, if any, for the supervision of any newbuilding contracts. We will be obligated to make the payments set forth in the above table under our management agreement, based on our contracted revenue as of December 31, 2022 for periods subsequent thereto, as reflected above under “—Factors Affecting Our Results of Operations—Operating Revenues” with respect to the fee of 1.25%, and assuming no change to the number of vessels in our fleet with respect to the per vessel per day fees described above except for the vessels Amalia C, which we sold in January 2023. In addition to the amounts set forth in the table, we will be obligated to pay the 1.25% fee on revenue generated by our vessels with uncontracted days during these periods under contracts that have not yet been arranged.	

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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 a sharp decrease in charter rates for containerships in the middle of 2015, in many cases to a level below operating costs, charter rates for containerships have generally improved to new all times high levels. Container freight rates were volatile and containership charter market rates declined significantly in the first half of 2020 before significantly improving since that time through first half of 2022, but have since declined to pre COVID-19 levels and may further decline, particularly if the negative impact of the pandemic on global economic activity persists for longer than anticipated or consumer preferences change. Containerized trade was estimated to have decreased by 5.3% in 2022, after increasing by 6.5% in 2021, compared to an estimated increase in global gross domestic product (“GDP”) of 3.2% in 2022. In general, container trade is correlated with global GDP, with container trade usually growing somewhat faster than global GDP over the past decade and accordingly a decline in global GDP, due to an extended period of COVID-19 related restrictions or otherwise, would be likely to cause container trade, and in turn charter rates and vessel values, to again decline. Currently, container trade is expected to decline further by approximately 2% in 2023.
Overall, available tonnage in the containership sector remains tight with very few ships available to fix at the end of 2022. The average idle capacity stood at approximately 2% of global fleet capacity at the end of 2022. The average idle capacity recorded in full year 2019 came to 6%.
Earnings with the guideline rate for a 4,400 TEU Panamax stood at $24,300 per day at the end of 2022 compared to $100,000 per day at the end of 2021 and $24,600 at the end of 2020, respectively. Containership newbuilding orders totaled 2.6 million TEU in 2022 compared to 4.4 million TEU in 2021, representing a significant increase compared to that seen in prior years. The size of the order book compared to global fleet capacity increased sharply to 28.3% compared to 9.9% at the end of 2020. The orderbook, both in absolute terms and as a percentage of the existing fleet, is highest in the segment for vessels over 12,000 TEU. 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. While generally reporting strong profitability in the second half of 2020 and 2021, a number of liner companies, including some of our customers, reported substantial losses in recent years, with Hanjin Shipping filing for bankruptcy in 2016, as well as having entered into consolidating mergers or formed cooperative alliances as part of efforts to reduce the size of their fleets to better align fleet capacity with the demand for marine transportation of containerized cargo, all of which may decrease the demand for chartered-in containership tonnage.
Critical Accounting Estimates
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 critical accounting estimates that involve a high degree of judgment and the methods of their application.
Impairment of Vessels
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. If any such indication exists, the Company performs step one of the impairment test by comparing the undiscounted projected net operating cash flows for each vessel to its carrying value. 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, vessel market values, expectations with respect to future operations, and other relevant factors.
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As of December 31, 2022, we concluded that events occurred and circumstances had changed, which may trigger the existence of potential impairment of some of our vessels. These indicators included volatility in the charter market and 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 certain of our vessels, for which an impairment indicator existed as of December 31, 2022, 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 have initial terms ranging from less than one to 18 years for our current vessels, providing us with contracted stable cash flows. The 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. As of December 31, 2021, no events or circumstances occurred, which may trigger the existence of potential impairment of some of our vessels.
As of December 31, 2022, our 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 time charter equivalent rates for the remaining life of the vessel after the completion of its current contracts i.e. non-contracted revenue days. The estimated daily time charter equivalent rate used for non-contracted revenue days of each vessel is considered a significant assumption. Recognizing that the container transportation industry is cyclical and subject to significant volatility based on factors beyond our control we believe that the most recent 5 to 15 years historical average time charter rates represent a reasonable benchmark for the estimated time charter equivalent rates for the non-contracted revenue days, as such averages take into account the volatility and cyclicality of the market.
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 scrapings, 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 were reasonable and appropriate at the time they 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 low levels or whether they will improve by a significant degree.
As of December 31, 2022, our assessment concluded that step two of the impairment analysis was not required for any vessel in our fleet held and used, as their undiscounted projected net operating cash flows exceed their carrying value.
Impairment Sensitivity Analysis
As of December 31, 2022, an internal analysis, which is based on our vessel’s market valuation as described in our credit facilities and accepted by our lenders as of December 31, 2022, suggests that 25 of our vessels may have current market values below their carrying values. We believe that each of the 25 vessels identified as having estimated market values less than their carrying values, all of which are currently under long-term charters expiring from March 2023 to April 2028, 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.
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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. 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 charter-free vessel values provided by the third-party independent brokers. Charter-free vessel values are highly volatile and 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 Company either determines to sell the vessel for a loss or determines that the vessel’s carrying value is not recoverable as discussed above.

						Net Book Value		Net Book Value	
						December 31, 2022		December 31, 2021	
				Year		(In thousands		(In thousands	
Vessel	    	TEU	    	Built	    	of Dollars)	    	of Dollars)	
Hyundai Honour		13,100	 	2012		$	124,032		$	129,832	
Hyundai Respect		13,100	 	2012		 	124,142		 	129,930	
Hyundai Smart		13,100	 	2012		 	125,531		 	131,346	
Hyundai Speed		13,100	 	2012		 	126,069		 	131,880	
Hyundai Ambition		13,100	 	2012		 	126,629		 	132,448	
Express Berlin		10,100	 	2011		 	99,325		 	104,098	
Express Rome		10,100	 	2011		 	99,788		 	104,588	
Express Athens		10,100	 	2011		 	99,923		 	104,542	
Le Havre		9,580	 	2006		 	48,468		 	51,199	
Pusan C		9,580	 	2006		 	47,661		 	50,368	
Bremen		9,012	 	2009		 	28,990		 	30,105	
C Hamburg		9,012	 	2009		 	29,000		 	30,117	
Niledutch Lion		8,626	 	2008		 	25,768		 	26,936	
Kota Manzanillo (ex Charleston)		8,533	 	2005		 	21,973		 	22,882	
Belita		8,533	 	2006		 	52,792		 	56,024	
CMA CGM Melisande		8,530	 	2012		 	83,923		 	87,726	
CMA CGM Attila		8,530	 	2011		 	79,453		 	83,148	
CMA CGM Tancredi		8,530	 	2011		 	81,230		 	84,995	
CMA CGM Bianca		8,530	 	2011		 	81,745		 	85,502	
CMA CGM Samson		8,530	 	2011		 	81,878		 	85,611	
America		8,468	 	2004		 	38,478		 	40,873	
Europe		8,468	 	2004		 	37,576		 	39,930	
Kota Santos (ex Phoebe)		8,463	 	2005		 	24,085		 	25,042	
CMA CGM Moliere		6,500	 	2009		 	58,942		 	61,918	
CMA CGM Musset		6,500	 	2010		 	59,957		 	62,895	
CMA CGM Nerval		6,500	 	2010		 	60,475		 	63,396	
CMA CGM Rabelais		6,500	 	2010		 	61,154		 	64,137	
CMA CGM Racine		6,500	 	2010	 		61,198	 		64,116	
YM Mandate		6,500	 	2010	 		63,391	 		66,612	
YM Maturity		6,500	 	2010	 		64,341	 		67,574	
Catherine C (1)		6,422	 	2001	 		—	 		45,834	
Leo C (1)		6,422	 	2002	 		—	 		47,417	
ZIM Savannah		6,402	 	2002	 		8,816	 		8,924	
Dimitra C		6,402	 	2002	 		8,959	 		9,033	
Suez Canal (2)		5,610		2002			36,619			—	
Kota Lima (2)		5,544		2002			36,950			—	
Wide Alpha		5,466	 	2014	 		52,439	 		54,617	
Stephanie C (ex Wide Bravo)		5,466	 	2014	 		52,511	 		54,658	
Maersk Euphrates		5,466	 	2014	 		52,311	 		54,431	
Wide Hotel		5,466	 	2015	 		54,091	 		56,255	
Wide India		5,466	 	2015	 		54,000	 		56,125	
Wide Juliet		5,466	 	2015	 		54,013	 		56,140	
Seattle C		4,253	 	2007	 		10,135	 		10,597	
Vancouver		4,253	 	2007	 		10,228	 		10,244	
Rio Grande		4,253	 	2008	 		11,422	 		11,784	
ZIM Sao Paolo		4,253	 	2008	 		11,874	 		12,252	
ZIM Kingston		4,253	 	2008	 		12,157	 		12,550	
ZIM Monaco		4,253	 	2009	 		12,465	 		12,927	
Dalian		4,253	 	2009	 		13,011	 		13,324	
ZIM Luanda		4,253	 	2009	 		13,391	 		13,890	
Derby D		4,253	 	2004	 		5,375	 		5,339	
Tongala		4,253	 	2004	 		5,286	 		5,334	
Dimitris C		3,430	 	2001	 		4,982	 		5,029	
Express Brazil		3,400	 	2010	 		6,694	 		6,656	
Express France		3,400	 	2010	 		6,688	 		6,640	
Express Spain		3,400	 	2011	 		6,950	 		6,955	
Express Argentina		3,400	 	2010	 		6,632	 		6,624	
Express Black Sea		3,400	 	2011	 		6,975	 		7,131	
Colombo		3,314	 	2004	 		8,648	 		8,914	
Singapore		3,314	 	2004	 		8,702	 		8,766	
Zebra		2,602	 	2001	 		4,050	 		4,119	
Artotina		2,524	 	2001	 		4,019	 		4,101	
Amalia C (1)		2,452		1998			—			3,492	
Advance		2,200		1997			2,898			2,733	
Future		2,200		1997			2,860			2,726	
Sprinter		2,200		1997			2,865			2,736	
Stride		2,200		1997			2,920			2,686	
Progress C		2,200		1998			2,896			2,737	
Bridge		2,200		1998			2,890			2,734	
Highway		2,200		1998			2,877			2,738	
Phoenix D (ex Vladivostok)		2,200		1997			2,978			2,689	
Total						$	2,721,494		$	2,861,651	

(1)	The vessels Catherine C and Leo C were sold in November 2022 and Amalia C was held for sale as of December 31, 2022 and delivered to its buyers in January 2023.	
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(2)	The vessels Suez Canal and Kotal Lima were transferred from right-of-use assets in July 2022.	

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 5 to 15 years, to the extent available, as such averages take into account the volatility and cyclicality of the market. Charter rates are, however, subject to change based on a variety of factors that we cannot control and we note that for all vessel categories, charter rates for the last one year have been greater than their ten and fifteen year historical averages.
In connection with the impairment testing of our vessels as of December 31, 2022, for the 25 vessels that our internal analysis suggests may have current market values below their carrying values, we performed a sensitivity analysis on the most sensitive and/or subjective assumption – the estimated daily time charter equivalent rates used for non-contracted revenue days 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 twenty-five 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.

	    			    	Assumed 	    			    			    			    			    			
					Rechartering 																
					Rate(9)/Percentage 																
					difference 																
					between break 		1 year 		1 year 		1 year 		1 year 		1 year 	
					even and 		charter rate 		charter rate 		charter rate 		charter rate 		charter rate 	
		Break Even 		assumed 		historical 		historical 		historical 		historical 		historical 	
		re‑chartering 		re‑chartering 		average of 		average of 		average of 		average of 		average of 	
		rates(8) 		rates(10) 		last 1 year 		last 3 years 		last 5 years 		last 10 years 		last 15 years 	
Vessel/Year Built		($ per day)		($ per day)/(%)		($ per day)		($ per day)		($ per day)		($ per day)		($ per day)	
5 × 13,100 TEU vessels (2012)(1)		$	25,156		$	58,800 / 57.2	%  	$	184,100		$	119,525		$	85,445		$	58,820		$	55,528	
3 × 10,100 TEU vessels (2011)(2)		$	24,267		$	45,700 / 46.9	%  	$	143,525		$	93,175		$	66,445		$	45,748		$	43,217	
5 × 8,530 TEU vessels (2011 ‑ 2012)(3)		$	19,936		$	38,900 / 48.7	%  	$	122,275		$	79,383		$	56,495		$	38,910		$	36,777	
1 × 8,530 TEU vessels (2006)(4)		$	8,040		$	47,700 / 83.1	%  	$	122,275		$	79,383		$	56,495		$	38,910		$	36,777	
7 × 6,500 TEU vessels (2009 ‑ 2010)(5)		$	11,161		$	30,500 / 63.4	%  	$	104,050		$	66,417		$	46,830		$	30,588		$	28,272	
2 × 5,500 TEU vessels (2002)(6)		$	15,462		$	33,600 / 54.0	%  	$	93,750		$	59,717		$	41,370		$	25,995		$	23,840	
2 × 5,500 TEU wide beam vessels (2014 ‑ 2015)(7)		$	9,772		$	31,900 / 69.4	%  	$	96,200		$	63,058		$	44,895		$	29,025		$	26,447	

	(1)	Our five 13,100 TEU vessels are under long-term time charter contracts with Hyundai with the earliest expiration dates of the charters being as follows: the Hyundai Honour in February 2024, the Hyundai Respect in March 2024, the Hyundai Smart in May 2024, the Hyundai Speed in June 2024 and the Hyundai Ambition in June 2024.	
	(2)	Our three 10,100 TEU vessels out of which two are under long-term time charter contracts with Hapag Lloyd and one on long-term charter with Yang Ming with the earliest expiration dates of the charters being as follows: the Express Rome in March 2023, the Express Athens in March 2023 and the Express Berlin in June 2023.	
	(3)	Our five 8,530 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 Attila in October 2023, the CMA CGM Tancredi in November 2023, the CMA CGM Bianca in January 2024, the CMA CGM Samson in March 2024 and the CMA CGM Melisande in June 2024.	
	(4)	Our 8,530 TEU vessel Belita is under long-term time charter contract with CMA-CGM with the earliest expiration date in July 2026.	
	(5)	Our five 6,500 TEU vessels are under long-term time charter contracts with the earliest expiration dates of the charters being as follows: the CMA CGM Moliere in March 2027, the CMA CGM Musset in September 2025, the CMA CGM Nerval in November 2025, the CMA CGM Rabelais in January 2026 and the CMA CGM Racine in February 2024. Additionally, two 6,500 TEU vessels are under long-term bareboat charter contracts with Yang Ming with earliest expiration dates of the charters being as follows: the YM Mandate in January 2028 and the YM Maturity in April 2028.	
	(6)	Our two 5,500 TEU vessels are under long-term time charter contracts with the earliest expiration dates of the charters being as follows: the Suez Canal in February 2024 and the Kota Lima in November 2024	
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	(7)	Our two 5,500 TEU wide beam vessels are under long-term time charter contracts with the earliest expiration dates of the charters being as follows: the Stephanie C in June 2025 and the Wide India in November 2025.	
	(8)	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.	
	(9)	Re-chartering rate used in our impairment testing as of December 31, 2022, to estimate the revenues for the remaining life of the respective vessels after the expiration of their existing charter contracts.	
	(10)	The variance in percentage points of the breakeven re-chartering rate per day compared to the per day re-chartering assumption used in our impairment testing analysis as of December 31, 2022.	
Furthermore, as discussed above, the Company’s internal analysis suggested that another 43 vessels had a market value in excess of its carrying value as of December 31, 2022.
Newly Implemented Accounting Principles:
None.

Item 6.  Directors, Senior Management and Employees
The following table sets forth, as of March 7, 2023, information for each of our directors and executive officers.

Name	    	Age	    	Position		
Dr. John Coustas		66		President and CEO and Class I Director		
Iraklis Prokopakis		72		Senior Vice President, Chief Operating Officer and Treasurer and Class II Director		
Evangelos Chatzis		49		Chief Financial Officer and Secretary		
Dimitris Vastarouchas		55		Deputy Chief Operating Officer		
Petros Christodoulou		62		Class I Director		
Myles R. Itkin		75		Class I Director		
William Repko		73		Class III Director		
Richard Sadler		61		Class III Director		

The term of our Class II director expires in 2023, the term of our Class I directors expires in 2024 and the term of our Class III directors expires in 2025. Certain biographical information about each of these individuals is set forth below.
Dr. John Coustas is our President, Chief Executive Officer and Chairman 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 Deputy Chairman of the board of directors of The Swedish Club. Additionally, he is a member of the board of directors of the Union of Greek Shipowners and a member of the DNV Council. Dr. Coustas holds a degree in Marine Engineering from the 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 40 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 DNV. He is a member of the Board of the Hellenic Chamber of Shipping and the Owners’ Committee of the Korean Register of Shipping.
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Evangelos Chatzis is our Chief Financial Officer and Secretary. Mr. Chatzis has been with Danaos Corporation since 2005 and has over 25 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 offering in the United States and has led the finance function 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 27 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).
Petros Christodoulou has been a member of our board of directors since June 2018. Mr. Christodoulou has been a member of the Board of Directors of Guardian Capital Group since 2016 and a member of the Institute of Corporate Directors of Canada. He has also been a member of the Board of Directors of Aegean Baltic Bank since 2017 and a member of the Board of Directors of Minetta Insurance. Mr. Christodoulou was Chief Executive Officer and Chief Financial Officer of Capital Product Partners, an owner of crude, product carriers and containerships, from September 2014 until 2015. From 2012 to 2014, Mr. Christodoulou was the Deputy Chief Executive Officer and Executive Member of the Board of the National Bank of Greece Group, acting as chairman of NBG Asset Management, Astir Palace SA and NBG BankAssurance. Mr. Christodoulou was a member of the Board of Directors of Hellenic Exchanges SA from 2012 to 2014 and Director General of the Public Debt Management Agency of Greece from 2010 to 2014, acting as its Executive Director from 2010 to 2012. Mr. Christodoulou holds an MBA from Columbia University and a Bachelor of Commerce degree from the Athens School of Commerce and Economics.
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. 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.
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. On January 23, 2017, Mr. Itkin, and OSG, consented to an SEC order finding they violated or caused the violation of, among other provisions, the negligence-based antifraud provisions as well as reporting, books-and-records, and internal controls provisions of the federal securities laws, in relation to the failure to recognize tax liabilities in OSG’s financial statements resulting from its controlled foreign subsidiary guaranteeing OSG’s debt. Mr. Itkin agreed to pay a $75,000 penalty and OSG agreed to pay a $5 million penalty subject to bankruptcy court approval.
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.
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Richard Sadler has been a member of our board of directors since July 2022. Mr. Sadler has been, since December 2021, an advisor to Purus Maritime, a U.S. holding company, that owns and leases environmentally advanced vessels and infrastructure, in four sectors, with a focus on technology that exceeds the decarbonization trajectory rate set by the IMO and Paris Agreement. In May 2022 he was elected to the Board of Britannia P&I Club having, since June 2020, been a Sustainable Business Advisor to the Board and senior leadership team. In that capacity he was responsible for the development, and publishing, of the Britannia Sustainability report. From June 2017 to June 2020, Mr. Sadler was Chief Operating Officer of NYSE-listed GasLog Ltd and GasLog Partners LP, who were leading owners and operators of LNG carriers. Prior to that, from October 2015 to June 2017, he was a consultant advisor to the Foresight Group, which operated in the shipping, drilling, hospitality and shoe retail and manufacturing industries, and from June 2007 to October 2015 he was Chief Executive Officer of Lloyd’s Register Group, which provided regulatory compliance and consultancy services through technical and management services in the marine, energy and other sectors. From 2004 to 2007, he was a director of asset management for the Royal Bank of Scotland (Shipping and Offshore Energy). Mr. Sadler is a member of the Trinity House Corporate Board and a fellow of the Royal Academy of Engineers. Mr. Sadler holds a Bachelors of Science, with honors, in Naval Architecture from Newcastle University and was awarded honorary doctorates from both Newcastle and Southampton University.
Compensation of Directors and Senior Management
Non-executive directors receive annual fees of $70,000, 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.” From January 1, 2021, the audit committee chairman receives an additional annual fee of $15,000. For the year ended December 31, 2022, non-executive directors received an additional bonus reward of $147,500 in the aggregate. 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 cash compensation of $2.1 million (€2.0 million), $2.1 million (€1.8 million) and $1.8 million (€1.5 million) for the years ended December 31, 2022, 2021 and 2020, respectively. As of January 1, 2023, the annual base compensation of our executive officers remains at €2.0 million in the aggregate. Our executive officers are also 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.” We recognized non-cash share-based compensation expense in respect of awards to executive officers of $5.4 million, $11.8 million and $1.0 million in the years ended December 31, 2022, 2021, and 2020, respectively.
In addition, effective from December 14, 2022, the Company maintains a defined benefit retirement plan for its executive officers. Prior service cost arising from the retrospective recognition of past service of $14.2 million was recognized in “Other Comprehensive Income” in 2022, out of which advances amounting to $7.8 million were exercised and recognized under “Other income/(expense), net” in the consolidated statement of income in the period ended December 31, 2022, out of which $6.8 million remain unpaid and presented under “Other current liabilities” on the Company’s balance sheet as of December 31, 2022. The remaining defined benefit obligation of $6.4 million is presented under “Other long-term liabilities” on the Company’s balance sheet as of December 31, 2022. See “Note 19, Executive Retirement Plan” to our audited consolidated financial statements included elsewhere in this report.
Our executive officers are entitled to severance payments for termination without “cause” or for “good reason” generally equal to (i) (x) the greater of (A) the amount of base salary that would have been payable during the remaining term of the agreements, which expire in December 2024, and (B) three 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 (y) a pro-rata bonus for the year in which termination occurs and continued benefits, if any, for 36 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) and (b) a specified dollar amount for each executive officer (approximately €4.6 million in the aggregate for all executive officers, excluding amounts payable under the defined benefit retirement plan), as well as continued benefits, if any, for 36 months.
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Employees
We directly employ our Chief Executive Officer, Chief Operating Officer, Chief Financial Officer and Deputy Chief Operating Officer, which are the only employees of Danaos Corporation or its subsidiaries. As of December 31, 2022, 1,558 people served on board the vessels in our fleet and 164 people who provided services to us on shore. Other than the officers noted above, there are no other employees of Danaos Corporation or its subsidiaries. Crew wages and other related expenses are paid by our Manager and our Manager is reimbursed by us. We are not responsible for the compensation of our Manager’s shore-based employees.
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 March 7, 2023, 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. Miklos Konkoly-Thege did not stand for re-election as a director at our 2022 Annual Meeting, and was replaced on the Board by Richard Sadler. 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.
Our board of directors has determined that a majority of our board of directors, each of Messrs. Christodoulou, Itkin, Repko and Sadler is independent within the requirements of the New York Stock Exchange.
In accordance with the terms of the August 6, 2010 subscription agreement between Sphinx Investment Corp. and us, we have agreed to nominate such person, who shall be acceptable to us, designated by Sphinx Investment Corp., for election by our stockholders to the board of directors at each annual meeting of stockholders at which the term of the person so nominated expires, as was the case in 2020 and at which time Anthony Kandylidis was so designated by Sphinx Investment Corp., so long as such investor beneficially owns at least 5% of our outstanding common stock, as it did until October 2020. We have been informed that our largest stockholder, a family trust established by Dr. John Coustas, and Dr. Coustas 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, owning at least 5% of our outstanding common stock, as it did until October 2020. Anthony Kandylidis was elected to the board of directors pursuant to this arrangement in July 2020, and resigned from our board of directors in January 2022. Under the terms of the subscription agreement, Sphinx Investment Corp. also has a right to participate in any subsequent issuances of our common stock pro rata based on its percentage ownership of our common stock immediately prior to such issuance.
To promote open discussion among the independent directors, those directors meet in regularly scheduled and ad hoc executive session without participation of our company’s management and will continue to do so in 2023. 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.
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. Our Restated Articles of Incorporation and amended and restated Bylaws are the foundation of our corporate governance. 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 and Ethics for Corporate Officers and Directors;	
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	●	an Ethics and Compliance Policy;	

	●	an Anti-Fraud Policy;	

	●	an Anti-Bribery and Corruption Policy and Anti-Money Laundering Policy;	

	●	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 “foreign private issuer” under SEC rules promulgated under the Securities Act and within the meaning of the New York Stock Exchange corporate governance standards. Pursuant to certain exceptions for foreign private issuers, we are not required to comply with certain of the corporate governance practices followed by domestic U.S. companies under the New York Stock Exchange listing standards. We have elected to comply, however, with the New York Stock Exchange corporate governance rules applicable to domestic U.S. issuers, except that (1) as permitted for foreign private issuers, one member of the Nominating and Corporate Governance Committee is a non-independent director and (2) we have not sought stockholder approval for the adoption of our amended and restated 2006 equity compensation plan and certain issuances of common stock and we may not seek stockholder approval for future issuances of capital stock, as permitted by applicable Marshall Islands law. See “Item 16G. Corporate Governance.”
Audit Committee
Our audit committee consists of Myles R. Itkin (chairman), William Repko and Petros Christodoulou each of whom our Board has determined is independent within the requirements of the NYSE and SEC. 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, 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 2022, there were four meetings of the audit committee.
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Compensation Committee
Our compensation committee consists of Petros Christodoulou (chairman), William Repko and Richard Sadler. 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 2022, there were five meetings of the compensation committee.
Environmental, Social and Governance (ESG) Committee
Our environmental, social and governance committee consists of Iraklis Prokopakis (chairman), Richard Sadler and Petros Christodoulou. The Board has established the ESG Committee to assist, advise and act on behalf of the board in: (1) providing oversight and guidance with respect to the Company’s environmental (including with respect to climate change), social (including with respect to social and political trends), and corporate responsibility matters (“ESG Matters”); (2) evaluating and recommending initiatives for ESG Matters for adoption by the Company; (3) assessing risks and opportunities regarding ESG Matters; (4) promoting practices for ESG Matters within the Company’s business culture and processes. During 2022, there was one meeting of the ESG Committee.
Nominating and Corporate Governance Committee
Our nominating and corporate governance committee consists of William Repko (chairman), Iraklis Prokopakis and Myles R. Itkin. 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 2022, there were four 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. 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.
The aggregate number of shares of common stock for which awards may be granted under the Plan shall not exceed 1,000,000 shares plus the number of shares subject to outstanding unvested awards granted before August 2, 2019. 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. These equity awards under our amended and restated 2006 equity compensation plan may be granted by the Company’s Compensation Committee or Board of Directors.
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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.
Except in connection with a corporate transaction, including any stock dividend, distribution, stock split, extraordinary cash dividend, recapitalization, change in control, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of common shares or other securities, or similar transactions, we may not, without obtaining stockholder approval, (i) amend the terms of outstanding stock options or stock appreciation rights to reduce the exercise price of such outstanding stock options or base price of such stock appreciation rights, (ii) cancel outstanding stock options or stock appreciation rights in exchange for stock options or stock appreciation rights with an exercise price or base price, as applicable, that is less than the exercise price or base price of the original stock options or stock appreciation rights or (iii) cancel outstanding stock options or stock appreciation rights with an exercise price or base price, as applicable, above the current stock price in exchange for cash or other securities.
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 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 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.
On September 14, 2018, the Company granted 298,774 shares of restricted stock to executive officers of the Company, out of which 149,386 restricted shares vested on December 31, 2019 and 149,388 restricted shares vested on December 31, 2021. On May 10, 2019, the Company granted 137,944 shares of restricted stock to certain employees of the Manager (including 35,714 shares to executive officers), out of which 4,168 shares were forfeited in 2019 and 66,888 restricted shares vested on December 31, 2019. In 2020 and 2021, 714 and 1,685 of these shares were forfeited, respectively, and 64,489 restricted shares vested on December 31, 2021. On February 12, 2021, the Company granted 110,000 fully vested shares to executive officers and Board of Directors members. On March 16, 2021, the Company granted 40,000 shares to certain employees of the Manager, out of which 10,000 fully vested on the grant date, 1,050 were forfeited and 9,650 restricted shares vested on December 31, 2021. An additional 224 restricted shares were forfeited in the year ended December 31, 2022 and the remaining 19,076 restricted shares vested on December 31, 2022. On December 10, 2021, the Company granted 110,000 fully vested shares to executive officers and Board of Directors members and on December 21, 2021, the Company granted 10,000 fully vested shares to certain employees of the Manager. On December 14, 2022, the Company granted 100,000 fully vested shares to executive officers. The fair value of shares granted was calculated based on the closing trading price of the Company’s shares at the grant date. Stock based compensation expenses of $6.0 million, $15.3 million and $1.2 million were recognized under “General and administrative expenses” in the Company’s Consolidated Statements of Income in the years ended December 31, 2022, 2021 and 2020, respectively. The average price of issued shares was $54.40 per share and $66.00 per share in the years ended December 31, 2022 and 2021, respectively. No restricted shares were issued and outstanding as of December 31, 2022. As of December 31, 2021, 19,300 shares of restricted stock were issued and outstanding.
The Company has also established the Directors Share Payment 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 the 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 Danaos common stock all or a portion of their compensation. During 2022, 2021 and 2020, none of the directors elected to receive his compensation in shares of Danaos common stock. Refer to Note 17, “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 Investment Limited as the trustee of the 883 Trust, of which Dr. Coustas and other members of the Coustas family are beneficiaries. Dr. Coustas has certain powers to remove and replace Danaos Investment Limited as trustee of the 883 Trust. DIL is also our largest stockholder, owning approximately 44.5% of our outstanding common stock as of March 7, 2023. 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.
In connection with the 2021 Debt Refinancing, on April 1, 2021, our management agreement with the Manager was amended and restated to eliminate references to the refinanced credit facilities and provisions related to arrangements with lenders under those credit facilities. The fees payable to the Manager pursuant to the management agreement were not changed in connection with this amendment and are fixed through the term of the management agreement, which extends until December 31, 2024.
Management fees in respect of continuing operations under our management agreement amounted to approximately $21.9 million in 2022, $19.9 million in 2021 and $17.7 million in 2020. The related expenses are presented under “General and administrative expenses” on the Consolidated Statement of Income. We pay monthly advances in regard to the next month’s vessels’ operating expenses. These prepaid monthly expenses are presented in our consolidated balance sheet under “Due from related parties” and totaled $34.0 million and $21.9 million as of December 31, 2022 and 2021, 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 war 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, Chief Financial Officer and Deputy Chief Operating 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 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	
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	●	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, Chief Financial Officer and Deputy Chief Operating Officer, each of which is appointed by our board of directors. Under our management agreement, our Chief Executive Officer, Chief Operating Officer, Chief Financial Officer and Deputy Chief Operating 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, Chief Financial Officer and Deputy Chief Operating Officer.
Compensation of Our Manager
For 2023 we will pay our manager the following fees, which are fixed through the current term of the management agreement expiring on December 31, 2024: (i) a daily management fee of $850, (ii) a daily vessel management fee of $425 for vessels on bareboat charter, pro-rated for the number of calendar days we own each vessel, (iii) a daily vessel management fee of $850 for vessels on time 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, 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.
We also advance 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 management agreement is for a term expiring on December 31, 2024.
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.	

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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;	

	●	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.	

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Non-competition
Our Manager has agreed that, during the term of the management agreement and for a period of one year following termination 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 has also personally agreed to the same restrictions on the provision, directly or indirectly, of management services during this period pursuant to a restrictive covenant agreement with us, which was amended in connection with our debt refinancing in 2018, including to (1) extend its term until December 31, 2024 and (2) provide that certain provisions of the agreement will cease to apply upon the occurrence of certain transactions constituting a “Change of Control” of the Company which are not within the control of Dr. Coustas or DIL, and in connection with the 2021 Debt Refinancing to eliminate references to the refinanced credit facilities and provisions related to arrangements with lenders under those credit facilities. 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.
The restrictions described above on our Manager, under the management agreement, and Dr. Coustas, under the restrictive covenant agreement, will cease to apply upon the occurrence of certain transactions constituting a “Change of Control” of the Company, which are not within the control of Dr. Coustas or DIL, including where Dr. Coustas ceases to be both the Chief Executive Officer of the Company and a director of the Company without his consent in connection with a hostile takeover of the Company by a third party, as set out in the restrictive covenant 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, a change in control of our Manager or a breach by our Manager of our management agreement would constitute an event of default under such financing agreements.
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, DIL, in connection with the formation of Gemini to acquire and operate containerships. We and Virage owned 49% and 51%, respectively, of Gemini’s issued and outstanding share capital from inception through the second quarter of 2021. On July 1, 2021 we exercised our option, under the Gemini Shareholders Agreement, to acquire from Virage the remaining 51% equity interest in Gemini not already owned by the Company. The purchase price for Virage’s 51% equity interest was $86.7 million in cash. Upon completion of the acquisition, we now own 100% of Gemini and consolidate Gemini within our financial results.
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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, 2022, 2021 and 2020, we paid premiums of $6.6 million, $5.2 million and $4.3 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.
Share Repurchases
On October 9, 2020, we repurchased 2,517,013 shares of common stock from The Royal Bank of Scotland for $7.19 per share and 1,822,258 shares of common stock from Sphinx Investment Corp. for $7.15 per share in privately negotiated transactions.
Major Stockholders
The following table sets forth certain information regarding the beneficial ownership of our outstanding common stock as of March 7, 2023 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.
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Beneficial ownership does not necessarily imply that the named person has the economic or other benefits of ownership. For purposes of this table, shares subject to options, warrants or rights or shares exercisable within 60 days of March 7, 2023 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 20,349,702 shares of common stock outstanding as of March 7, 2023. Information for certain holders is based on their latest filings with the SEC or information delivered to us.

		Number of			 	
		Shares of		Percentage	 	
		Common		of	 	
		Stock		Common	 	
	    	Owned	    	Stock	 	
Executive Officers and Directors:		  		  	 	
John Coustas(1)
Chairman, President and Chief Executive Officer	 	9,048,502	 	44.5	%	
Iraklis Prokopakis
Director, Senior Vice President and Chief Operating Officer	 	175,000	 	*		
Evangelos Chatzis
Chief Financial Officer and Secretary	 	70,000	 	*		
Dimitris Vastarouchas
Deputy Chief Operating Officer	 	15,000	 	*		
Myles R. Itkin
Director	 	4,000	 	*		
William Repko
Director	 	3,000	 	*		
Petros Christodoulou
Director	 	—	 	*		
Richard Sadler
Director	 	—	 	—		
All executive officers and directors as a group (8 persons)	 	9,315,502	 	45.8	%	
5% Beneficial Owners:	 		 	  		
Danaos Investment Limited as Trustee of the 883 Trust(2)	 	9,048,502	 	44.5	%	
RBF Capital LLC(3)	 	1,435,161	 	7.1	%	

*	Less than 1%.	
(1)	By virtue of shares owned indirectly through Danaos Investment Limited as Trustee of the 883 Trust, which is our largest stockholder. Please see footnote (2) below for further detail regarding DIL and the 883 Trust.	

(2)	According to a Schedule 13D/A jointly filed with the SEC on September 16, 2021 by DIL and John Coustas, DIL owns and has sole voting power and sole dispositive power with respect to all such shares. The beneficiaries of the 883 Trust are Dr. Coustas and members of his family. The board of directors of DIL consists of four members, none of whom are beneficiaries of the 883 Trust or members of the Coustas family, and has voting and dispositive control over the shares held by the 883 Trust. Dr. Coustas has certain powers to remove and replace DIL as trustee of the 883 Trust. This does not necessarily imply economic ownership of the securities.	

(3)	Based on information reported on a Schedule 13G/A filed with the SEC on January 21, 2020 by RBF Capital LLC.	

As of March 7, 2023, we had approximately 32 stockholders of record, one of which was located in the United States and held an aggregate of 20,323,047 shares of common stock. This United States stockholder of record is CEDEFAST, a nominee of The Depository Trust Company. 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. We are not aware of any arrangements the operation of which may at a subsequent date result in our change of control.
DIL owns approximately 44.5% of our outstanding common stock. This stockholder is able to exert significant influence on the outcome of matters on which our stockholders are entitled to vote, including the election of our board of directors and other significant corporate actions.
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A “Change of Control”, as defined in our senior secured facilities, will give rise to a mandatory prepayment in full of such facilities and a cancellation of the revolving credit facility. See “Item 5. Operating and Financial Review and Prospects— Credit Facilities.” In addition, the terms of our Senior Notes require us to offer to repurchase all of our outstanding Senior Notes if there is a “change of control” as defined in the indenture for our Senior Notes. See “Item 5. Operating and Financial Review and Prospects—Senior Notes.”

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.  On September 1, 2016, Hanjin Shipping, a charterer of eight of our vessels, referred to the Seoul Central District Court, which issued an order to commence the rehabilitation proceedings of Hanjin Shipping. Hanjin Shipping has cancelled all eight charter party agreements with the Company. On February 17, 2017 the Seoul Central District Court (Bankruptcy Division), declared the bankruptcy of Hanjin Shipping, converting the rehabilitation proceeding to a bankruptcy proceeding. The Seoul Central District Court (Bankruptcy Division) appointed a bankruptcy trustee to dispose of Hanjin Shipping’s remaining assets and distribute the proceeds from the sale of such assets to Hanjin Shipping’s creditors according to their priorities.
On October 12, 2018 the First Instance Court of Seoul issued its judgement on our submitted common benefit claim. Owners of the respective vessels were awarded with the total amount of $6.1 million plus interest and legal costs. The common benefit claim applies to the unpaid charter hires plus other outstandings for the period from the date of Hanjin Shipping’s filing for bankruptcy until the termination notices for each respective charterparty.
The Bankruptcy Trustee of Hanjin Shipping filed an appeal to the High Court (an appellate court in South Korea). On February 13, 2019, the appellate court in South Korea dismissed the appeal filed by the Bankruptcy Trustee of Hanjin Shipping in its entirety upholding the judgement of the First Instance Court of Seoul. On February 28, 2019 the Bankruptcy Trustee of Hanjin Shipping filed an appeal to the Supreme Court of Korea against the judgement rendered by the appellate court in South Korea. On December 27, 2019 the Supreme Court of Korea dismissed the appeal file by the Bankruptcy Trustee of Hanjin Shipping and confirmed the claim amounting to $6.1 million plus interest and legal costs amounting to approximately $1.2 million, which were submitted by the Company. On January 20, 2021 we received $3.9 million from Hanjin Shipping as a partial payment of common benefit claim applied to the unpaid charter hires plus other outstandings and interest for the period from the date of Hanjin Shipping’s filing for bankruptcy until the termination notices for each respective charterparty.
The Company ceased recognizing revenue from Hanjin Shipping effective from July 1, 2016 onwards and recognized a bad debt expense amounting to $15.8 million in its Consolidated Statements of Operations for the year ended December 31, 2016. The Company has a total unsecured claim submitted to the Seoul Central District Court for unpaid charter hire, charges, expenses and loss of profit against Hanjin Shipping totaling $597.9 million, which is not recognized in the accompanying Consolidated Balance Sheet as of December 31, 2022 and 2021.
We have not been involved in any other 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. We reinstated quarterly cash dividend payments in 2021. We declared and paid dividends of $30.9 million to our stockholders from our retained earnings in 2021, paying a dividend of $0.50 per share of common stock in June, August and December. We declared and paid dividends of $61.5 million to our stockholders from our retained earnings in 2022, paying a dividend of $0.75 per share of common stock in February, June, August and November. On February 14, 2023, we declared a dividend of $0.75 per share of common stock, which is payable on March 14, 2023 to shareholders of record as of February 28, 2023.
Under our credit facilities, we are permitted to pay dividends so long as no event of default has occurred or would occur as a result of the payment of such dividends, and we remain in compliance with the financial and other covenants thereunder. Our Senior
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Notes Indenture contains limitations on the amount we can pay as dividends on our capital stock. The timing and amount of dividend payments will be dependent upon our earnings, financial condition, cash requirements and availability, fleet renewal and expansion, restrictions in our financing arrangements, the provisions of Marshall Islands law affecting the payment of distributions to stockholders and other factors. Declaration and payment of any future dividend is subject to the discretion of our board of directors. 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 relating to our common stock” for a discussion of the risks related to dividend payments.

Item 9.  The Offer and Listing
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.”

Item 10.  Additional Information
Share Capital
On May 2, 2019, the Company effected a 1-for-14 reverse stock split of the issued and outstanding shares of common stock of the Company. The reverse stock split reduced the number of the Company’s outstanding shares of common stock from 213,324,455 to 15,237,456 on May 2, 2019 and affected all issued and outstanding shares of common stock. No fractional shares were issued in connection with the reverse stock split. Stockholders who would otherwise hold a fractional share of the Company’s common stock received a cash payment in lieu of such fractional share. The par value and other terms of the Company’s common stock were not affected by the reverse stock split.
Under our articles of incorporation, our authorized capital stock consists of 750,000,000 shares of common stock, $0.01 par value per share, and 100,000,000 shares of blank check preferred stock, $0.01 par value per share. In June 2022, we announced a share repurchase program of up to $100 million of our common stock. We repurchased 466,955 shares of our common stock in the open market for $28.6 million util December 31, 2022. In October 2020, we repurchased 4,339,271 shares of our common stock for an aggregate purchase price of $31.1 million in privately negotiated transactions. As of December 31, 2022, 25,155,928 shares of common stock were issued and 20,349,702 shares of common stock were outstanding, and as of March 7, 2023, 25,155,928 shares of common stock were issued and 20,349,702 shares of common stock were outstanding. No shares of preferred stock were issued or outstanding as of December 31, 2022 and March 7, 2023. All of our shares of stock are in registered form.
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.
Articles of Incorporation and Bylaws
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. Our board of directors
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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 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 such stockholder’s 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 100,000,000 shares of blank check preferred stock. Our board of directors may issue shares of preferred stock on terms calculated to discourage, delay or prevent a change of control of our company or the removal of our management.
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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 662/3% 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.
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. If, however, the date of our annual meeting is more than 30 days before or 30 days after the first anniversary date of the previous year’s annual meeting, a stockholder’s notice must be received at our principal executive offices by the later of (i) the close of business on the 90th day prior to such annual meeting date or (ii) the close of business on the tenth day following the date on which such annual meeting date is first publicly announced or disclosed by us. 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 aggregate market value of all our assets, determined on a consolidated basis, or the aggregate value of all our outstanding stock;	
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	●	certain transactions that result in the issuance or transfer by us of any stock of the Company or any direct or indirect majority-owned subsidiary of the Company 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 662/3% of our outstanding voting stock that is not owned by the interested stockholder;	

	●	the stockholder was or became an interested stockholder prior to the consummation of our initial public offering of 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 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.	

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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.
Amended and Restated Management Agreement. For a description of the Amended and Restated Management Agreement, dated April 1, 2021, between Danaos Shipping Company Limited and Danaos Corporation, please see “Item 7. Major Shareholders and Related Party Transactions—Management Agreement.”
Amended and Restated Restrictive Covenant Agreement. For a description of the Amended and Restated Restrictive Covenant Agreement, dated April 1, 2021, between Danaos Corporation, DIL and Dr. John Coustas, please see “Item 7. Major Shareholders and Related Party Transactions—Non-competition.”
Senior Notes Indenture. For a description of the Indenture, dated as of February 11, 2021, between Danaos Corporation and Citibank, N.A., London Branch, as trustee, paying agent, registrar and transfer agent, please see “Item 5. Operating and Financial Review and Prospects—Senior Notes”.
Senior Secured Credit Facility. For a description of the Facility Agreement for $382.5 million Senior Secured Revolving Credit Facility, dated December 1, 2022, between Danaos Corporation, as a borrower, certain of its subsidiaries as guarantors, and Citibank N.A. as lender please see “Item 5. Operating and Financial Review and Prospects-Credit Facilities”.
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.
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 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.
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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.
This section does not purport to be a comprehensive description of all of the tax considerations that may be relevant to us or each investor. This section does not address all aspects of U.S. federal income taxation that may be relevant to any particular investor based on such investor’s individual circumstances. In particular, this section considers only investors that will own common shares as capital assets and does not address the potential application of the alternative minimum tax or the U.S. federal income tax consequences to investors that are subject to special treatment, including broker-dealers, insurance companies, taxpayers who have elected mark-to-market accounting, tax-exempt organizations, regulated investment companies, real estate investment trusts, financial institutions or “financial services entities”, taxpayers who hold common shares as part of a straddle, hedge, conversion transaction or other integrated transaction, taxpayers required to recognize income for U.S. federal income tax purposes no later than when such income is reported on an “applicable financial statement”, taxpayers that own 10% or more, directly or constructively, of the common shares, certain expatriates or former long-term residents of the United States, taxpayers that are subject to the “base erosion and anti-avoidance” tax”, and United States Holders (as defined herein) whose functional currency is not the U.S. dollar. We have not sought, nor do we intend to seek, a ruling from the Internal Revenue Service (the “IRS”) as to any U.S. federal income tax consequence described herein. The IRS may disagree with the description herein, and its determination may be upheld by a court.
The following does not address any aspect of U.S. federal gift or estate tax laws, or state or local tax laws. Additionally, the section does not consider the tax treatment of partnerships or other pass-through entities or persons who hold our common shares through such entities. Shareholders should consult their tax advisors regarding the specific tax consequences to them of the acquisition, holding or disposition of our common shares, in light of their particular circumstances.
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 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.
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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
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 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 have previously satisfied the 50% Ownership Test, it is uncertain if we will continue to satisfy the 50% Ownership Test due to the public trading of our stock, because the 883 Trust does not own more than 50% of our shares. 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 2022, our common stock, which is the sole class of our issued and outstanding stock, was “primarily traded” on the New York Stock Exchange. We expect that that will also be the case for subsequent taxable years, but no assurance can be given that this will be the case, or that we otherwise will be eligible for the Publicly-Traded Test.
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 2022 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 for 2022. We expect to continue to satisfy these
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requirements for subsequent taxable years, but no assurance can be given that this will be the case. 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 2022 and may 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 may be owned by 5% stockholders. For any period that this is the case, 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 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 44.5% 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.
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 21%. In addition, we may be subject to the 30% “branch profits” taxes on
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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.	

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 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 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.
If a partnership holds our common stock, the tax treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership. Partners in a partnership holding our common stock are encouraged to consult their tax advisor.
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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 or her or its 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 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.
Sale, Exchange or other Disposition of Common Stock
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 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. 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. 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.
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 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	
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	●	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, 2022. We believe that, although there is no legal authority directly on point, the gross income that we derive from time chartering activities of our 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, including if we increase our cash on hand or our investment in ZIM increases in value, 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. 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.
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 information in order to make the QEF election described above with respect to our common stock and the stock of any Subsidiary PFIC. We may elect to provide such information on our website.
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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. 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;	

	●	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 shares 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.
If a United States Holder held our common stock 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. 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 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 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 during a period prior to the termination date when we qualified as a PFIC.
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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.
United States Federal Income Taxation of “Non-United States Holders”
A beneficial owner of common stock 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.”
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
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 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, 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 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.
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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 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 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 access our public filings and reports and other information regarding registrants, including us, that file electronically with the SEC without charge at a web site maintained by the SEC at http://www.sec.gov.

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Item 11.  Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
We currently have no outstanding interest rate swaps agreements. However, in the past years, we entered into interest rate swap agreements designed to pro-actively and efficiently manage our floating rate exposure on our credit facilities. 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.
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 were 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.
Cash Flow Interest Rate Swap Hedges
In prior years, we 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.
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These interest rate swaps were 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 as being probable of not occurring, the accumulated other comprehensive loss balance pertaining to these amounts would be reversed through earnings immediately.
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 $3.6 million was reclassified into earnings for each of the years ended December 31, 2022, 2021 and 2020, respectively, representing amortization over the depreciable life of the vessels.
Assuming no changes to our borrowings or hedging instruments after December 31, 2022, a 10 basis points increase in interest rates on our floating rate debt outstanding on December 31, 2022 would result in a $145 thousand increase in interest expense in 2023. These amounts are determined by calculating the effect of a hypothetical interest rate change on our floating rate debt. 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, 2022 we incurred approximately 22.4% of our operating expenses in currencies other than U.S. dollars (mainly in Euros). As of December 31, 2022, approximately 23.2% 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, 2022. 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, 2022.
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.
In making its assessment of our internal control over financial reporting as of December 31, 2022, 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, 2022, our internal control over financial reporting was effective.
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15C.  Attestation Report of the Independent Registered Public Accounting Firm
Deloitte Certified Public Accountants S.A., which has audited the consolidated financial statements of the Company for the year ended December 31, 2022, 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-4 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,Petros Christodoulou 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 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 and a Code of Conduct and Ethics for Corporate Officers and Directors, 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 or the Code of Conduct and Ethics have been granted to any person during the year ended December 31, 2022.

Item 16C.  Principal Accountant Fees and Services
Deloitte Certified Public Accountants S.A. (“Deloitte”), an independent registered public accounting firm, has audited our annual financial statements acting as our independent auditor for the fiscal year ended December 31, 2022.
PricewaterhouseCoopers S.A. (“PwC”), an independent registered public accounting firm, has audited our annual financial statements acting as our independent auditor for the fiscal years ended December 31, 2021 and 2020.
The chart below sets forth the total amount billed and accrued for the Deloitte’s services performed from May 17, 2022, the date of the Deloitte’s appointment, and onwards for 2022 and breaks down these amounts by the category of service.

	    	2022	
		(in thousands of dollars)	
Audit fees		$	332.5	
Audit-related fees		 	—	
Total fees		$	332.5	

The chart below sets forth the total amount billed and accrued for the PwC services performed in 2021 and breaks down these amounts by the category of service.

	    	2021	
		(in thousands of dollars)	
Audit fees		$	497.1	
Audit‑related fees		 	—	
Total fees		$	497.1	

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Audit Fees
Audit fees paid were compensation for professional services rendered for the audits of our consolidated financial statements and in connection with the review of the registration statements and related consents required for SEC or other regulatory filings.
Audit-related Fees; Tax Fees; All Other Fees
No audit-related, tax or other services were provided for the years ended December 31, 2022 and 2021.
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 June 14, 2022, we publicly announced that our Board of Directors had authorized the repurchase of up to $100,000,000 of shares of our common stock. Shares may be purchased from time to time in open market or privately negotiated transactions, which may include derivative transactions, at times and prices that are considered to be appropriate by the Company and the program may be discontinued at any time.
We have repurchased 466,955 shares of our common stock in the open market for $28.6 million in the period ended December 31, 2022 in accordance with our share repurchase program. The below table presents information about our stock repurchases through September 22, 2022, since which time we have not repurchased any shares. We have not repurchased any of our equity securities in January or February 2023. All purchases have been made on the open market within the safe harbor provisions of Regulation 10b-18 under the Exchange Act.

	    		    			    		    		Maximum 	
										approximate Dollar 	
							Total number of 			value of shares that 	
							shares purchased 			may yet be 	
							as part of publicly 			purchased under the 	
		Total number of 			Average price paid 		announced 			program 	
Period		shares purchased			per share (in US$)		program			(in US$ million)	
June 23 to June 30, 2022	 	177,900		$	63.00	 	177,900		$	88.8	
July 1 to July 18, 2022	 	231,300		$	60.21	 	409,200		$	74.9	
September 21 to September 22, 2022	 	57,755		$	59.18	 	466,955		$	71.4	
Total	 	466,955		$	61.15	 	466,955		$	71.4	

Item 16F.  Change in Registrant’s Certifying Accountant
Previous independent registered public accounting firm
PricewaterhouseCoopers S.A. (“PwC”), the Company’s prior independent registered public accounting firm, was dismissed by the Audit Committee on May 11, 2022. The decision to change auditor was not as a result of any disagreement between the Company and PwC on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures.
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The reports of PwC on the Company’s consolidated financial statements for the fiscal years ended December 31, 2020 and 2021 have contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principle.
During the fiscal years ended December 31, 2021 and 2020 and the subsequent period through May 11, 2022, there have been no disagreements with PwC on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure which, if not resolved to the satisfaction of PwC, would have caused PwC to make reference thereto in its reports on our financial statements for such years. During the fiscal years ended December 31, 2021 and 2020 and the subsequent period through May 11, 2022 there were no reportable events as the term is described in Item 16F(a)(1)(v) of Form 20-F.
We have requested that PwC furnish a letter addressed to the Securities and Exchange Commission stating whether or not PwC agrees with the statements above related to their firm. A copy of such letter is filed as Exhibit 15.3 to this report.
New independent registered public accounting firm
During the fiscal years ended December 31, 2021 and 2020 and the subsequent period through the engagement of Deloitte as of May 17, 2022, neither we, nor anyone acting on our behalf, consulted with Deloitte regarding (a) the application of accounting principles to a specific completed or proposed transaction, or the type of audit opinion that might be rendered on our consolidated financial statements, and either a written report or oral advice was provided to the Company by Deloitte that Deloitte concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue, or (b) any matter that was the subject of a disagreement, as that term is defined in Item 16F(a)(1)(iv) of Form 20-F (and the related instructions thereto) or a reportable event as set forth in Item 16F(a)(1)(v) of Form 20-F.
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. Domestic Issuers
Pursuant to certain exceptions for foreign private issuers, we are not required to comply with certain of the corporate governance practices followed by domestic U.S. 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 nominating and corporate governance committee of our board of directors and until September 2018 served on the compensation 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 and the adoption or amendment of equity compensation plans, specifically NYSE Rules 303A.08, 312.03(a), 312.03(b) and 312.03(c). 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 and the issuance of shares in our comprehensive debt refinancing consummated on August 10, 2018. In July 2019, our Board of Directors approved our amended and restated 2016 equity compensation plan in accordance with Marshall Islands law.
Item 16H.  Mine Safety Disclosure
Not Applicable.
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Item 16I.  Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not Applicable.
PART III
Item 17.  Financial Statements
Not Applicable.
Item 18.  Financial Statements
Reference is made to pages F-1 through F-40 included herein by reference.

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Item 19.  Exhibits

Number	    	Description	 	
1.1		Restated Articles of Incorporation of Danaos Corporation, as amended by Articles of Amendment dated August 10, 2018 and Articles of Amendment dated May 1, 2019 (incorporated by reference to Exhibit 1.1 to the Company’s Annual Report on Form 20-F for the year ended December 31, 2019 filed with the SEC on February 27, 2020)		
				
1.2		Amended and Restated Bylaws of Danaos Corporation (incorporated by reference to the Company’s Form 6-K filed with the SEC on September 23, 2009)		
				
2.1		Description of Securities (incorporated by reference to Exhibit 2.1 to the Company’s Annual Report on Form 20-F for the year ended December 31, 2021 filed with the SEC on March 3, 2022)		
				
2.2		Indenture, dated as of February 11, 2021, between Danaos Corporation and Citibank, N.A., London Branch, as trustee, paying agent, registrar and transfer agent, including form of Danaos Corporation 8.500% Senior Notes due 2028 (incorporated by reference to the Company’s Report on Form 6-K filed with the SEC on February 17, 2021)		
				
4.1		Amended and Restated Management Agreement with Danaos Shipping Co. Ltd., dated April 1, 2021, between Danaos Corporation and Danaos Shipping Company Limited (incorporated by reference to the Company’s Report on Form 6-K filed with the SEC on April 13, 2021)		
				
4.2		Amended and Restated Restrictive Covenant Agreement, dated April 1, 2021, among Danaos Corporation, Dr. John Coustas and Danaos Investment Limited as the Trustee of the 883 Trust (incorporated by reference to the Company’s Report on Form 6-K filed with the SEC on April 13, 2021)		
				
4.3		Amended and Restated Danaos Corporation 2006 Equity Compensation Plan (incorporated by reference to Exhibit 99.2 to the Company’s Form 6-K filed on August 6, 2019).		
				
4.4		Directors’ Share Payment Plan (incorporated by reference to the Company’s Annual Report on Form 20-F for the year ended December 31, 2008 filed with the SEC on July 13, 2009)		
				
4.5		2006 Equity Compensation Plan (incorporated by reference to the Company’s Registration Statement on Form F-1 (Reg. No. 333-137459) filed with the SEC September 19, 2006) and Amendment No. 1 to 2006 Equity Compensation Plan (incorporated by reference to the Company’s Annual Report on Form 20-F for the year ended December 31, 2016 filed with the SEC on March 6, 2017)		
				
4.6		Facility Agreement for $382.5 million Senior Secured Revolving Credit Facility, dated December 1, 2022, between Danaos Corporation, as a borrower, certain of its subsidiaries as guarantors, and Citibank N.A. as lender		
				
8		Subsidiaries		
				
11.1		Code of Business Conduct and Ethics (incorporated by reference to the Company’s Annual Report on Form 20-F for the year ended December 31, 2018 and filed with the SEC on March 5, 2019)		
				
11.2		Code of Conduct and Ethics for Corporate Officers and Directors (incorporated by reference to the Company’s Annual Report on Form 20-F for the year ended December 31, 2018 and filed with the SEC on March 5, 2019)		
				
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		
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Number	    	Description	 	
				
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		
				
15.1		Consent of Deloitte Certified Public Accountants S.A., Independent Registered Public Accounting Firm		
				
15.2		Consent of PricewaterhouseCoopers S.A., Independent Registered Public Accounting Firm		
				
15.3		Letter from PricewaterhouseCoopers S.A. regarding Item 16F.		
				
101		Attached as Exhibit 101 to this report are the following Interactive Data Files, formatted in eXtensible Business Reporting Language (XBRL):		
				
101.INS		Inline XBRL Instance Document		
				
101.SCH		Inline XBRL Taxonomy Extension Schema		
				
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase		
				
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase		
				
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase		
				
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase		
				
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).		

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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 9, 2023

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm: Deloitte Certified Public Accountants S.A. (PCAOB ID 1163)	    	F-2	
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting: Deloitte Certified Public Accountants S.A. (PCAOB ID 1163)		F-4	
Report of Independent Registered Public Accounting Firm: PricewaterhouseCoopers S.A. (PCAOB ID 1387)		F-5	
Consolidated Balance Sheets as of December 31, 2022 and 2021		F-6	
Consolidated Statements of Income for the Years Ended December 31, 2022, 2021 and 2020		F-7	
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2022, 2021 and 2020		F-8	
Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2022, 2021 and 2020		F-9	
Consolidated Statements of Cash Flows for the Years Ended December 31, 2022, 2021 and 2020		F-10	
Notes to the Consolidated Financial Statements		F-11	

F-1

Table of Contents
Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Danaos Corporation
Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Danaos Corporation and subsidiaries (the “Company”) as of December 31, 2022, the related consolidated statement of income, comprehensive income, changes in stockholders’ equity, and cash flows, for the year ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 9, 2023, expressed an unqualified opinion on the Company’s internal control over financial reporting.

Basis for Opinion

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

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

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Impairment of long-lived assets – Future Charter Rates – Refer to Note 2 of the consolidated financial statements.
Critical Audit Matter Description
The Company’s evaluation of vessels held for use by the Company for impairment involves an initial assessment of each vessel to determine whether events or changes in circumstances indicate that the carrying amount of the vessel assets may not be recoverable. Total carrying value of vessels as of December 31, 2022, was $2.7 billion.

When the initial assessment suggests impairment indicators, the Company compares undiscounted projected net operating cash flows to the carrying value of the related vessel to determine if the vessel is required to be impaired. When the Company’s estimate of undiscounted projected net operating cash flows, excluding interest charges, expected to be generated by the use and eventual disposition of the vessel is less than its carrying amount, the Company records an impairment loss equal to the difference between the vessel’s carrying value and fair market value.

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The Company makes significant assumptions and judgments to determine the undiscounted projected net operating cash flows expected to be generated over the remaining useful life of the vessel asset, including estimates and assumptions related to the future charter rates. Future charter rates are the most significant and subjective assumption that the Company uses for its impairment analysis. For periods of time where the vessels are not fixed under time charter contracts, the Company estimates the future daily time charter equivalent rate for the vessels’ unfixed days based on the most recent 5 to 15 years historical average time charter rates of similar size vessels, as such averages take into account the volatility and cyclicality of the market.

We identified future charter rates used in the future undiscounted net operating cash flows as a critical audit matter because of the complex judgements made by management to estimate them and the significant impact they have on undiscounted cash flows expected to be generated over the remaining useful life of the vessel.

This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate the reasonableness of management’s future charter rates.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the future charter rates utilized in the undiscounted projected net operating cash flows included the following, among others:

	●	We tested the effectiveness of controls over management’s review of the impairment analysis, including the future charter rates used within the undiscounted projected net operating cash flows.	

	●	We evaluated the reasonableness of the Company’s estimate of future charter rates through the performance of the following procedures:	

	1.	Evaluating the Company’s methodology for estimating the future charter rates by using our industry experience.	

	2.	Comparing the future charter rates utilized in the undiscounted projected net operating cash flows to 1) the Company’s historical rates 2) historical rate information by vessel class published by third parties and 3) other external market sources, including reports on prospective market outlook.	

	3.	Considering the consistency of the assumptions used in the future charter rates with evidence obtained in other areas of the audit. This included 1) internal communications by management to the board of directors, and 2) external communications by management to analysts and investors.	

	4.	Evaluating management’s ability to accurately forecast by comparing actual results to management’s historical forecasts.	

/s/ Deloitte Certified Public Accountants S.A.
Athens, Greece
March 9, 2023

We have served as the Company’s auditor since 2022.

F-3

Table of Contents
Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Danaos Corporation

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Danaos Corporation and subsidiaries (the “Company”) as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2022, of the Company and our report dated March 9, 2023, expressed an unqualified opinion on those financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Management’s Annual Report on Internal Control Over Financial Reporting”. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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

Definition and Limitations of Internal Control over Financial Reporting

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

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

/s/ Deloitte Certified Public Accountants S.A.
Athens, Greece
March 9, 2023

F-4

Table of Contents
Report of Independent Registered Public Accounting Firm

To the board of directors and the stockholders of Danaos Corporation

Opinion on the Financial Statements

We have audited the consolidated balance sheet of Danaos Corporation and its subsidiaries (the “Company”) as of December 31, 2021, and the related consolidated statements of income, comprehensive income, changes in stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2021, including the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers S.A.
Athens, Greece
March 3, 2022

We served as the Company’s auditor from 2000 to 2022.

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

				As of	
				December 31, 		December 31, 	
	    	Notes	    	2022	    	2021	
ASSETS									
CURRENT ASSETS									
Cash and cash equivalents		4		$	267,668		$	129,410	
Restricted cash		4		 	—		 	346	
Accounts receivable, net				 	5,635		 	7,118	
Inventories				 	16,099		 	12,579	
Prepaid expenses				 	1,312		 	2,032	
Due from related parties		11		 	34,002		 	21,875	
Other current assets		7		 	47,805		 	459,132	
Total current assets				 	372,521		 	632,492	
NON-CURRENT ASSETS									
Fixed assets at cost, net of accumulated depreciation of $1,182,402 (2021: $1,055,792)		5		 	2,721,494		 	2,861,651	
Right-of-use assets, net of accumulated amortization of nil (2021: $3,085)		3			—			79,442	
Advances for vessels under construction		5		 	190,736		 	—	
Deferred charges, net		6		 	25,554		 	11,801	
Other non-current assets		7		 	89,923		 	41,739	
Total non-current assets				 	3,027,707		 	2,994,633	
Total assets				$	3,400,228		$	3,627,125	
LIABILITIES AND STOCKHOLDERS’ EQUITY									
CURRENT LIABILITIES									
Accounts payable				$	24,505		$	18,925	
Accrued liabilities		8		 	21,362		 	20,846	
Current portion of long-term debt, net		10		 	27,500		 	95,750	
Current portion of long-term leaseback obligation, net		5		 	27,469		 	85,815	
Accumulated accrued interest, current portion		10		 	—		 	6,146	
Unearned revenue		3,5,7		 	111,149		 	83,180	
Other current liabilities				 	16,422		 	8,645	
Total current liabilities					228,407			319,307	
LONG-TERM LIABILITIES									
Long-term debt, net		10		 	402,440		 	1,017,916	
Long-term leaseback obligation, net of current portion		5			44,542			136,513	
Accumulated accrued interest, net of current portion		10			—			24,155	
Unearned revenue, net of current portion		3,5,7		 	111,564		 	37,977	
Other long-term liabilities				 	52,861		 	3,234	
Total long-term liabilities				 	611,407		 	1,219,795	
Total liabilities					839,814			1,539,102	
Commitments and Contingencies		16							
STOCKHOLDERS’ EQUITY									
Preferred stock (par value $0.01, 100,000,000 preferred shares authorized and not issued as of December 31, 2022 and December 31, 2021)		18		 	—		 	—	
Common stock (par value $0.01, 750,000,000 common shares authorized as of December 31, 2022 and December 31, 2021. 25,155,928 and 25,056,009 shares issued; and 20,349,702 and 20,716,738 shares outstanding as of December 31, 2022 and December 31, 2021, respectively)		18		 	203		 	207	
Additional paid-in capital				 	748,109		 	770,676	
Accumulated other comprehensive loss		7,13,19		 	(74,209)		 	(71,455)	
Retained earnings				 	1,886,311		 	1,388,595	
Total stockholders’ equity				 	2,560,414		 	2,088,023	
Total liabilities and stockholders’ equity				$	3,400,228		$	3,627,125	

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

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

				Year ended December 31, 	
	    	Notes	    	2022	    	2021	    	2020	
OPERATING REVENUES		14, 15		$	993,344		$	689,505		$	461,594	
												
OPERATING EXPENSES												
Voyage expenses		11		 	(35,145)		 	(24,325)		 	(14,264)	
Vessel operating expenses		11		 	(158,972)		 	(135,872)		 	(110,946)	
Depreciation and amortization of right-of-use assets		5		 	(134,271)		 	(116,917)		 	(101,531)	
Amortization of deferred drydocking and special survey costs		6		 	(12,170)		 	(10,181)		 	(11,032)	
General and administrative expenses		11			(36,575)			(43,951)			(24,341)	
Gain on sale of vessels		5		 	37,225		 	—		 	—	
Income from Operations				 	653,436		 	358,259		 	199,480	
												
OTHER INCOME (EXPENSES):												
Interest income				 	4,591		 	12,230		 	6,638	
Interest expense				 	(62,141)		 	(68,991)		 	(53,502)	
Gain/(loss) on investments		7			(176,386)			543,653			—	
Dividend income		7		 	165,399			34,341			—	
Gain on debt extinguishment, net		10		 	4,351			111,616			—	
Equity income on investments		3			—			68,028			6,308	
Other finance expenses				 	(1,590)		 	(1,326)		 	(2,335)	
Other income/(expense), net		16,19		 	(6,578)		 	4,543		 	593	
Loss on derivatives		13		 	(3,622)		 	(3,622)		 	(3,632)	
Total Other Income/(Expenses), net				 	(75,976)		 	700,472		 	(45,930)	
												
Income before income taxes					577,460			1,058,731			153,550	
Income taxes		7			(18,250)			(5,890)			—	
Net Income				$	559,210		$	1,052,841		$	153,550	
												
EARNINGS PER SHARE												
Basic earnings per share of common stock		 		$	27.30		$	51.75		$	6.51	
Diluted earnings per share of common stock				$	27.28		$	51.15		$	6.45	
Basic weighted average number of common shares		20		 	20,481,894		 	20,345,394		 	23,588,994	
Diluted weighted average number of common shares		20		 	20,501,021		 	20,583,796		 	23,805,251	

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

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

				Year ended December 31, 	
	    	Notes	    	2022	    	2021	    	2020	
Net Income				$	559,210		$	1,052,841		$	153,550	
Other comprehensive income/(loss):												
Unrealized gain on available for sale securities		7			—			20,803			26,633	
Reclassification to interest income		7			—			(9,211)			—	
Prior service cost of defined benefit plan		19		 	(14,184)		 	—		 	—	
Reclassification of prior service cost of defined benefit plan		19			7,808			—			—	
Amortization of deferred realized losses on cash flow hedges	 	13		 	3,622		 	3,622		 	3,632	
Total Other Comprehensive Income/(Loss)				 	(2,754)		 	15,214		 	30,265	
Comprehensive Income				$	556,456		$	1,068,055		$	183,815	

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

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DANAOS CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Expressed in thousands of United States dollars, except number of shares in thousands and per share
amounts in United States dollars)

		Common Stock					Accumulated							
		Number 				Additional		other							
		of		Par		paid-in		comprehensive		Retained				
	    	shares	    	value	    	capital	    	loss	    	earnings	    	Total	
As of January 1, 2020	 	24,789		$	248		$	785,274		$	(116,934)		$	213,102		$	881,690	
Net income		—		 	—		 	—		 	—		 	153,550		 	153,550	
Repurchase of common stock		(4,339)		 	(44)		 	(31,083)		 	—		 	—		 	(31,127)	
Stock compensation		(1)		 	—		 	1,199		 	—		 	—		 	1,199	
Net movement in other comprehensive income		—			—			—			30,265			—			30,265	
As of December 31, 2020	 	20,449		$	204		$	755,390		$	(86,669)		$	366,652		$	1,035,577	
Net income		—		 	—		 	—		 	—		 	1,052,841		 	1,052,841	
Dividends ($1.50 per share)		—		 	—		 	—		 	—		 	(30,898)		 	(30,898)	
Stock compensation		268		 	3		 	15,275		 	—		 	—		 	15,278	
Issuance of common stock		—			—			11			—			—			11	
Net movement in other comprehensive income		—			—			—			15,214			—			15,214	
As of December 31, 2021	 	20,717		$	207		$	770,676		$	(71,455)		$	1,388,595		$	2,088,023	
Net income	 	—			—			—			—			559,210			559,210	
Dividends ($3.00 per share)		—			—			—			—			(61,494)			(61,494)	
Repurchase of common stock		(467)			(5)			(28,548)			—			—			(28,553)	
Stock compensation		100			1			5,971			—			—			5,972	
Issuance of common stock		—			—			10			—			—			10	
Net movement in other comprehensive loss		—			—			—			(2,754)			—			(2,754)	
As of December 31, 2022	 	20,350		$	203		$	748,109		$	(74,209)		$	1,886,311		$	2,560,414	

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

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

		Year ended December 31, 	
	    	2022	    	2021	    	2020	
Cash flows from operating activities									    	
Net income		$	559,210		$	1,052,841		$	153,550	
Adjustments to reconcile net income to net cash provided by operating activities										
Depreciation and amortization of right-of-use assets		 	134,271		 	116,917		 	101,531	
Amortization of deferred drydocking and special survey costs		 	12,170		 	10,181		 	11,032	
Amortization of assumed time charters			(56,699)			(27,614)			—	
Amortization of finance costs		 	8,564		 	11,599		 	11,657	
Exit fee accrued on debt		 	—		 	149		 	521	
Debt discount amortization			2,956			4,314			5,690	
Prior service cost and periodic cost			7,846			—			—	
Loss/(gain) on investments			176,386			(543,653)			—	
Equity income on investments			—			(68,028)			(6,308)	
Gain on debt extinguishment			(4,351)			(111,616)			—	
Gain on sale of vessels			(37,225)			—			—	
PIK interest			—			726			2,911	
Payments for drydocking and special survey costs deferred			(29,939)			(4,643)			(16,916)	
Stock based compensation		 	5,972		 	15,278		 	1,199	
Amortization of deferred realized losses on interest rate swaps		 	3,622		 	3,622		 	3,632	
(Increase)/Decrease in:										
Accounts receivable		 	1,483		 	786		 	(411)	
Inventories		 	(3,520)		 	(2,068)		 	(1,125)	
Prepaid expenses		 	720		 	(1,096)		 	603	
Due from related parties		 	(12,127)		 	(588)		 	86	
Other assets, current and non-current		 	(52,347)		 	(41,270)		 	3,635	
Increase/(Decrease) in:										
Accounts payable		 	5,580		 	4,518		 	(181)	
Accrued liabilities		 	280		 	8,787		 	2,433	
Unearned revenue, current and long-term		 	158,255		 	(832)		 	(7,438)	
Other liabilities, current and long-term		 	53,634		 	(199)		 	(422)	
Net cash provided by operating activities		 	934,741		 	428,111		 	265,679	
Cash flows from investing activities										
Vessels additions and advances for vessels under construction		 	(199,135)		 	(355,720)		 	(170,661)	
Proceeds and advances received from sale of vessels			129,069			—			—	
Investments			246,638			196,350			(75)	
Acquired cash and cash equivalents			—			16,222			—	
Net cash provided by/(used in) investing activities		 	176,572		 	(143,148)		 	(170,736)	
Cash flows from financing activities										
Proceeds from long-term debt, net		 	182,726			1,105,311			69,850	
Payments of long-term debt		 	(892,928)		 	(1,343,725)		 	(146,747)	
Proceeds from sale-leaseback of vessels		 	—		 	135,000		 	139,080	
Payments of leaseback obligation		 	(153,546)		 	(53,799)		 	(153,904)	
Dividends paid			(61,483)			(30,887)			—	
Payments of accumulated accrued interest		 	(3,373)		 	(10,361)		 	(25,639)	
Finance costs			(16,244)			(22,409)			(19,963)	
Repurchase of common stock			(28,553)			—			(31,127)	
Net cash used in financing activities		 	(973,401)		 	(220,870)		 	(168,450)	
Net increase/(decrease) in cash, cash equivalents and restricted cash		 	137,912		 	64,093		 	(73,507)	
Cash, cash equivalents and restricted cash, beginning of year		 	129,756		 	65,663		 	139,170	
Cash, cash equivalents and restricted cash, end of year		$	267,668		$	129,756		$	65,663	
Supplemental cash flow information										
Cash paid for interest, net of amounts capitalized		$	53,954		$	42,836		$	35,215	

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

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Table of Contents
DANAOS CORPORATION
NOTES TO THE 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 Danaos Corporation and its subsidiaries (the “Company”) is the United States Dollar.
Danaos Corporation, 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 18, “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 11, “Related Party Transactions”).
The consolidated financial statements of the Company 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 income, consolidated statements of comprehensive income, cash flows and stockholders’ equity at and for each period since their respective incorporation or acquisition dates.
Impact of COVID-19 on the Company’s Business
The spread of the COVID-19 virus, which has been declared a pandemic by the World Health Organization, in 2020 has caused substantial disruptions in the global economy and the shipping industry, as well as significant volatility in the financial markets, the severity and duration of which remains uncertain.
The impact of the COVID-19 pandemic continues to unfold and may continue to have negative effect on the Company’s business, financial performance and the results of its operations, including due to decreased demand for global seaborne container trade and containership charter rates, mainly experienced in the first half of 2020. The extent of the impact will depend largely on future developments. As a result, many of the Company’s estimates and assumptions required increased judgment and carry a higher degree of variability and volatility. As events continue to evolve and additional information becomes available, the Company’s estimates may change in future periods.

Impact of the war in Ukraine on the Company’s Business
The current conflict between Russia and Ukraine, and related sanctions imposed by the U.S., EU and others, adversely affect the crewing operations of the Company’s Manager, which has crewing offices in St. Petersburg, Odessa and Marioupol (damaged by the war), and trade patterns involving ports in the Black Sea or Russia, and as well as impacting world energy supply and creating uncertainties in the global economy, which in turn impact containership demand. The extent of the impact will depend largely on future developments.

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Table of Contents
DANAOS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. Basis of Presentation and General Information (Continued)
As of December 31, 2022, Danaos consolidated the vessel owning companies (the “Danaos Subsidiaries”) listed below. All vessels are container vessels:

						Year			
Company	    	Date of Incorporation	    	Vessel Name	    	Built	    	TEU(1)	
Megacarrier (No. 1) Corp.		September 10, 2007	 	Hyundai Honour	 	2012	 	13,100	
Megacarrier (No. 2) Corp.		September 10, 2007	 	Hyundai Respect	 	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	 	Express Berlin	 	2011	 	10,100	
CellContainer (No. 7) Corp.		October 31, 2007	 	Express Rome	 	2011	 	10,100	
CellContainer (No. 8) Corp.		October 31, 2007	 	Express Athens	 	2011	 	10,100	
Karlita Shipping Co. Ltd.		February 27, 2003	 	Pusan C	 	2006	 	9,580	
Ramona Marine Co. Ltd.		February 27, 2003	 	Le Havre	 	2006	 	9,580	
Oceancarrier (No. 2) Corp.		October 15, 2020		Bremen		2009		9,012	
Oceancarrier (No. 3) Corp.		October 15, 2020		C Hamburg		2009		9,012	
Blackwell Seaways Inc.		January 9, 2020		Niledutch Lion		2008		8,626	
Oceancarrier (No. 1) Corp.		February 19, 2020		Kota Manzanillo (ex Charleston)		2005		8,533	
Springer Shipping Co.		April 29, 2019		Belita		2006		8,533	
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		Europe		2004		8,468	
Oceanprize Navigation Ltd.		January 21, 2003		America		2004		8,468	
Rewarding International Shipping Inc.		October 1, 2019		Kota Santos (ex Phoebe)		2005		8,463	
Boxcarrier (No. 2) Corp.		June 27, 2006		CMA CGM Musset		2010		6,500	
Boxcarrier (No. 3) Corp.		June 27, 2006		CMA CGM Nerval		2010		6,500	
Boxcarrier (No. 4) Corp.		June 27, 2006		CMA CGM Rabelais		2010		6,500	
Boxcarrier (No. 5) Corp.		June 27, 2006		CMA CGM Racine		2010		6,500	
Boxcarrier (No. 1) Corp.		June 27, 2006		CMA CGM Moliere		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	
Kingsland International Shipping Limited		June 26, 2015		Catherine C (2)		2001		6,422	
Leo Shipping and Trading S.A.		October 29, 2015		Leo C (2)		2002		6,422	
Actaea Company Limited		October 14, 2014		Zim Savannah		2002		6,402	
Asteria Shipping Company Limited		October 14, 2014		Dimitra C		2002		6,402	
Averto Shipping S.A.		June 12, 2015		Suez Canal		2002		5,610	
Sinoi Marine Ltd.		June 12, 2015		Kota Lima		2002		5,544	
Oceancarrier (No. 4) Corp.		July 6, 2021		Wide Alpha		2014		5,466	
Oceancarrier (No. 5) Corp.		July 6, 2021		Stephanie C (ex Wide Bravo)		2014		5,466	
Oceancarrier (No. 6) Corp.		July 6, 2021		Maersk Euphrates		2014		5,466	
Oceancarrier (No. 7) Corp.		July 6, 2021		Wide Hotel		2015		5,466	
Oceancarrier (No. 8) Corp.		July 6, 2021		Wide India		2015		5,466	
Oceancarrier (No. 9) Corp.		July 6, 2021		Wide Juliet		2015		5,466	
Continent Marine Inc.		March 22, 2006	 	Zim Monaco	 	2009	 	4,253	
Medsea Marine Inc.		May 8, 2006	 	Dalian	 	2009	 	4,253	
Blacksea Marine Inc.		May 8, 2006	 	Zim Luanda	 	2009	 	4,253	
Bayview Shipping Inc.		March 22, 2006	 	Rio Grande	 	2008	 	4,253	
Channelview Marine Inc.		March 22, 2006	 	Zim Sao Paolo	 	2008	 	4,253	
Balticsea Marine Inc.		March 22, 2006	 	Zim Kingston	 	2008	 	4,253	
Seacarriers Services Inc.		June 28, 2005	 	Seattle C	 	2007	 	4,253	
Seacarriers Lines Inc.		June 28, 2005	 	Vancouver	 	2007	 	4,253	
Containers Services Inc.		May 30, 2002	 	Tongala	 	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	 	Express Spain	 	2011	 	3,400	
CellContainer (No. 5) Corp.		March 23, 2007	 	Express Black Sea	 	2011	 	3,400	
CellContainer (No. 1) Corp.		March 23, 2007	 	Express Argentina	 	2010	 	3,400	
CellContainer (No. 2) Corp.		March 23, 2007	 	Express Brazil	 	2010	 	3,400	
CellContainer (No. 3) Corp.		March 23, 2007	 	Express France	 	2010	 	3,400	
Wellington Marine Inc.		January 27, 2005	 	Singapore	 	2004		3,314	
Auckland Marine Inc.		January 27, 2005	 	Colombo	 	2004		3,314	
Vilos Navigation Company Ltd.		May 30, 2013		Zebra		2001	 	2,602	
Sarond Shipping Inc.		January 18, 2013	 	Artotina	 	2001	 	2,524	
Trindade Maritime Company		April 10, 2013		Amalia C (3)		1998	 	2,452	
Speedcarrier (No. 7) Corp.		December 6, 2007	 	Highway	 	1998	 	2,200	
Speedcarrier (No. 6) Corp.		December 6, 2007	 	Progress C	 	1998	 	2,200	
Speedcarrier (No. 8) Corp.		December 6, 2007	 	Bridge	 	1998	 	2,200	
Speedcarrier (No. 1) Corp.		June 28, 2007	 	Phoenix D (ex Vladivostok)	 	1997	 	2,200	
Speedcarrier (No. 2) Corp.		June 28, 2007	 	Advance	 	1997	 	2,200	
Speedcarrier (No. 3) Corp.		June 28, 2007		Stride		1997	 	2,200	
Speedcarrier (No. 5) Corp.		June 28, 2007		Future		1997	 	2,200	
Speedcarrier (No. 4) Corp.		June 28, 2007		Sprinter		1997	 	2,200	
Vessels under construction									
Boxsail (No. 1) Corp.		March 4, 2022		Hull No. C7100-7		2024		7,100	
Boxsail (No. 2) Corp.		March 4, 2022		Hull No. C7100-8		2024		7,100	
Teushipper (No. 1) Corp.		March 14, 2022		Hull No. HN4009		2024		8,000	
Teushipper (No. 2) Corp.		March 14, 2022		Hull No. HN4010		2024		8,000	
Teushipper (No. 3) Corp.		March 14, 2022		Hull No. HN4011		2024		8,000	
Teushipper (No. 4) Corp.		March 14, 2022		Hull No. HN4012		2024		8,000	

	(1)	Twenty-foot equivalent unit, the international standard measure for containers and containership capacity.	
	(2)	The Company completed the sale of the Catherine C and the Leo C in November 2022.	
	(3)	The Company held the Amalia C for sale as of December 31, 2022 and completed the sale in January 2023.	
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Table of Contents
DANAOS CORPORATION
NOTES TO THE 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. 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 Income.
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 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, contingencies and defined benefit obligation. 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.
Reclassifications in Other Comprehensive Income/(Loss): The Company had the following reclassifications out of Accumulated Other Comprehensive Loss during the years ended December 31, 2022, 2021 and 2020, respectively (in thousands):

				Year ended December 31, 	
	    	Location of Reclassification into Income	    	2022	    	2021	    	2020	
Amortization of deferred realized losses on cash flow hedges		Loss on derivatives		$	3,622		$	3,622		$	3,632	
Reclassification of prior service cost of defined benefit plan		Other income/(expense), net			7,808			—			—	
Reclassification to interest income	 	Interest income	 		—	 		(9,211)	 		—	
Total Reclassifications				$	11,430		$	(5,589)		$	3,632	

F-13

Table of Contents
DANAOS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. Significant Accounting Policies (Continued)
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 Income. The foreign currency exchange gains/(losses) recognized in the accompanying Consolidated Statements of Income for each of the years ended December 31, 2022, 2021 and 2020 were $0.2 million loss $0.2 million loss and $0.4 million loss, respectively, and are presented under “Vessel operating expenses” in the Consolidated Statements of Income.
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 $267.7 million as of December 31, 2022 (December 31, 2021: $129.4 million) comprised cash balances and short-term deposits.
Restricted Cash: Cash restricted accounts include retention accounts and any cash that is legally restricted as to withdrawal or usage. The Company was required to maintain cash on a retention account as collateral for the then upcoming scheduled debt repayments related to the now repaid Eurobank $30 mil. Facility. On the rollover settlement date, both principal and interest were paid from the retention account. Refer to Note 4, “Cash, Cash Equivalents and Restricted Cash”.
Accounts Receivable, Net: The amount shown as Accounts Receivable, net, at each balance sheet date includes estimated recoveries from charterers for hire from operating leases accounted for in accordance with Topic 842 and demurrage billings, net of a provision for doubtful accounts. Accounts receivable are short term in duration as payments are expected to be received within one year. 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 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.
Deferred Financing Costs: Loan arrangement fees incurred for obtaining new loans, for loans that have been accounted for as modified and the fees paid to third parties for loans that have been accounted for as extinguished, where there is a replacement debt and the lender remains the same, are deferred and amortized over the loans’ respective repayment periods using the effective interest rate method and are presented in the consolidated balance sheets as a direct deduction from the carrying amount of debt liability or under “Other non-current assets” if no related debt liability is drawn down at a period-end. Unamortized deferred financing costs for extinguished facilities are written-off. Loan arrangement fees related to the facilities accounted for under troubled debt restructuring with future undiscounted cash flows greater than the net carrying value of the original debt are capitalized and amortized over the loan respective repayment period using the effective interest rate method. Additionally, amortization of deferred finance costs is included in interest expenses in the Consolidated Statements of Income.‌

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Table of Contents
DANAOS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. Significant Accounting Policies (Continued)
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.
The Company acquired six vessels in the secondhand market and five vessels from Gemini Shipholdings Corporation (“Gemini”) in 2021 and five vessels in the secondhand market in 2020, all of which were considered to be acquisitions of assets. Following adoption of ASU 2017-01 “Business Combinations (Topic 805)” on January 1, 2018, the Company evaluates if any vessel acquisition in secondhand market constitutes a business or not. When substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, the set is not a business. The following assets are considered as a single asset for the purposes of the evaluation (i) a tangible asset that is attached to and cannot be physically removed and used separately from another tangible assets (or an intangible asset representing the right to use a tangible asset); (ii) in place lease intangibles, including favorable and unfavorable intangible assets or liabilities, and the related leased assets.
The Company charters in certain vessels under a long-term sale and leaseback arrangement. The proceeds received by the Company from the buyer-lessor were recognized as a financial leaseback obligation as this arrangement did not qualify for a sale of these vessels. The Company has substantive repurchase obligation of these vessels at the end of the leaseback period or earlier, at the Company’s option, and retains the control over these vessels. Each leaseback payment is allocated between the liability and interest expense to achieve a constant interest rate on the leaseback obligation outstanding. The interest element of the leaseback payment is charged under “Interest expense” in the accompanying Consolidated Statements of Income over the leaseback period.
Time Charters Assumed on Acquisition of Vessels: The Company recognizes separately identified assets and liabilities arising from the market value of time charters assumed at the date of vessel delivery associated with the acquisition of secondhand vessels. When the present value of the contractual cash flows of the time charter assumed is lower than its current fair value, the difference is recorded as unearned revenue. When the opposite occurs the difference is recognized as accrued charter revenue. Such liabilities or assets are amortized as an increase in revenue and reduction of revenue, respectively, over the period of each time charter assumed. Significant assumptions used in calculation of the fair value of the time charters assumed include daily time charter rate prevailing in the market for a similar size of the vessels available before the acquisition for a similar charter duration (including the estimated time charter expiry date). Other assumptions used are the discount rate based on the weighted average cost of capital for the shipping industry close to the acquisition date and the estimated average off-hire rate.
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 5, “Fixed Assets, net & Right-of-use Assets”). Management has estimated the useful life of the Company’s vessels to be 30 years from the year built.
Right-of-Use Assets and Finance Lease Obligations: ASC 842 classifies leases from the standpoint of the lessee as finance leases or operating leases. The determination of whether an arrangement contains a finance lease is based on the substance of the arrangement and is based in accordance with the criteria set such as transfer of ownership, purchase options, lease duration and present value of lease payments.
Finance leases are accounted for as the acquisition of a right-of-use asset and the incurrence of a finance lease obligation by the lessee. On the lease commencement date, a lessee is required to measure and record a lease liability equal to the present value of the remaining lease payments, discounted using the rate of implicit in the lease or if the rate implicit in the lease is not readily determined, at the lessee’s incremental borrowing rate. Subsequently, the lease liability is increased by the interest on the lease liability, determined using effective interest rate that produces a constant periodic discount rate on the remaining balance of the liability, and decreased by the lease payments during the period.

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Table of Contents
DANAOS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. Significant Accounting Policies (Continued)
A lessee initially measures the right-of-use asset at cost, which consists of: the amount of the initial measurement of the lease liability, any lease payments made to the lessor at or before the commencement date, minus any lease incentives received and any initial direct cost incurred by the lessee. Subsequently, the right-of-use asset is measured at cost plus payment for leasehold improvement less any accumulated amortization and impairment charges. Amortization expense is calculated and recognized on a straight-line basis over the shorter of the useful life of the asset or the lease term, after considering the estimated residual value of the vessel. The residual value of the vessel is equal to the product of its lightweight tonnage and estimated scrap rate at $300 per ton. Amortization of right-of-use assets is included under “Depreciation and amortization of right-of-use assets” in the Consolidated Statements of Income. However, if the lease transfers ownership of the underlying asset to the lessee or the lessee is reasonably certain to exercise an option to purchase the underlying assets, the lessee shall amortize the right-of-use of asset to the end of the useful life of the underlying asset.
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 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.
Advances for Vessels under Construction: Advances for vessels under construction include installment payments, interest costs, financing costs, supervision costs and other pre-delivery costs incurred during the construction period.
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 a 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.
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.
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.

F-16

Table of Contents
DANAOS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. Significant Accounting Policies (Continued)
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. If any such indication exists, the Company performs step one of the impairment test by comparing the undiscounted projected net operating cash flows for each vessel to its carrying value. In the case of a vessel held and used, if the future net undiscounted cash flows are less than the carrying value of the vessel, the Company performs step two of impairment assessment by comparing the vessel’s fair value to its carrying value and an impairment loss is recorded equal to the difference between the vessel’s carrying value and fair value.
As of December 31, 2022, the Company concluded that events and circumstances triggered the existence of potential impairment of some of its vessels. These indicators included volatility in the charter market and 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 for some of the Company’s vessels 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 have the initial terms ranging from less than 1 to 18 years for vessels in its fleet, providing the Company with contracted stable cash flows. The Company used a number of factors and assumptions in its undiscounted projected net operating cash flow analysis including, 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 time charter equivalent rates for the remaining life of the vessel after the completion of its current contract for non-contracted revenue days. The estimated daily time charter equivalent rate used for the non-contracted revenue days of each vessel is considered a significant assumption. Recognizing that the container transportation industry is cyclical and subject to significant volatility based on factors beyond the Company’s control, management believes that the most recent 5 to 15 years historical average time charter rates represent a reasonable benchmark for the estimated time charter equivalent rates for the non-contracted revenue days, as such averages take into account the volatility and cyclicality of the market. 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, 2021, the Company concluded that no events and circumstances triggered the existence of potential impairment of its vessels. As of December 31, 2022, the Company’s assessment concluded that step two of the impairment analysis was not required for any vessel, as the undiscounted projected net operating cash flows of all vessels exceeded the carrying value of the respective vessels. As of December 31, 2022 and December 31, 2021, no impairment loss was identified.
Business Combinations: The Company allocates the purchase price of acquisitions to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The excess of the acquisition price over those estimated fair values is recorded as goodwill. Changes to the acquisition date provisional fair values prior to the end of the measurement period are recorded as adjustments to the associated goodwill. Acquisition related expenses and restructuring costs, if any, are expensed as incurred.
Investments in Debt Securities: Available for sale securities are carried at fair value with net unrealized gain/(loss) included in accumulated other comprehensive income/(loss), subject to impairment. An unrealized loss exists when the current fair value of an individual security is less than its amortized cost basis. Interest income, including amortization of premiums and accretion of discounts are recognized in the interest income in the Consolidated Statements of Income. Upon sale, realized gain/(loss) is recognized in the Consolidated Statement of Income based on specific identification method. The Company adopted ASU 2016-13 “Financial Instruments – Credit Losses (Topic 326)” on January 1, 2020. Management evaluates securities for 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: i) if the Company intends to sell the security (that is, it has decided to sell the security); ii) 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 iii) a credit loss exists. If it is determined that the Company intends to sell the security or it is more likely than not that the Company will be required to sell the securities before the recovery of its entire amortized cost basis, the impairment loss, difference between the fair value and amortized cost basis of the securities, will be recorded in the accompanying Consolidated Statements of Income.

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Table of Contents
DANAOS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. Significant Accounting Policies (Continued)
The fair value of debt securities is estimated based on a weighted combination of (1) a yield-to-maturity analysis based on a quoted (non-binding) price from a third party broker, (2) a yield-to-maturity analysis of a similar bond(s) in an active market, (3) the available market data for yield-to-maturity for the corporate bonds, if available and (4) if applicable, redemption information announced by the issuer of the security. The weightings and the yield-to-maturities used in the calculation of fair value of the debt securities are assumptions that require significant management judgment.
When the securities are impaired at the reporting date, and the Company does not meet the guidance for intending to sell or more likely than not being required to sell the securities before the amortized cost basis is recovered, the Company determines whether the impairment is related to credit or non-credit factors. To determine the amount of impairment related to credit, the Company compares the present value of the cash flows expected to be collected on the securities with the amortized cost basis of the securities. If the present value of cash flows expected to be collected is less than the securities’ amortized cost basis, the difference is recorded as an allowance for credit losses in the accompanying Consolidated Statements of Income. Any remaining difference between the securities’ fair value and amortized cost basis is considered to be non-credit related impairment and is recorded in the accompanying Consolidated Statements of Other Comprehensive Income.
Investments in Equity Securities: Following the adoption of ASU 2016-01 “Recognition and measurement of Financial Assets and Financial Liabilities” on January 1, 2018, the Company measured the investment in ZIM equity securities at cost, less impairment, adjusted for subsequent observable price changes. ZIM equity securities did not have readily determinable fair value until January 27, 2021 when ZIM completed its initial public offering and listing on the New York Stock Exchange of its ordinary shares. Since then, ZIM equity securities are valued based on the closing price of ZIM ordinary shares on the New York Stock Exchange at each balance sheet date and unrealized gain/(loss) is recognized in each relevant period. Realized gain/(loss) is recognized on sale of the shares as a difference between the net sale proceeds and original cost less impairment. Realized and unrealized gain/(loss) are reflected under “Gain/(loss) on investments” in the Consolidated Statements of Income. Dividends received on these shares are reflected under “Dividend income” and taxes withheld on dividend income are reflected under “Income taxes” in the Consolidated Statements of Income.
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.
Accounting for Revenue and Expenses: The Company derives its revenue from time charters and bareboat charters of its vessels, each of which contains a lease. These charters involve placing the specified vessel at charterers’ use for a specified rental period of time in return for the payment of specified daily hire rates. Most of the charters include options for the charterers to extend their terms. Under a time charter, the daily hire rate includes lease component related to the right of use of the vessel and non-lease components primarily related to the operating expenses of the vessel incurred by the Company such as commissions, vessel operating expenses: crew expenses, lubricants, certain insurance expenses, repair and maintenance, spares, stores etc. and vessel management fees. Under a bareboat charter, the daily hire rate includes only lease component related to the right of use of the vessel. The revenue earned based on time charters is not negotiated in separate components. Revenue from the Company’s time charters and bareboat charters of vessels is accounted for as operating leases on a straight line basis based on the average fixed rentals over the minimum fixed rental period of the time charter and bareboat charter agreements, as service is performed. Charter hire received in advance is recorded under “Unearned revenue” in the Consolidated Balance Sheets until charter services are rendered.
The Company elected the practical expedient which allows the Company to treat the lease and non-lease components as a single lease component for the leases where the timing and pattern of transfer for the nonlease component and the associated lease component to the lessees are the same and the lease component, if accounted for separately, would be classified as an operating lease. The combined component is therefore accounted for as an operating lease under ASC 842, as adopted by the Company on January 1, 2019, as the lease component is the predominant component in 2022, 2021 and 2020.

F-18

Table of Contents
DANAOS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. Significant Accounting Policies (Continued)
Voyage Expenses: Voyage expenses are expensed as incurred and 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 are expensed as incurred and 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, 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 are expensed as incurred and include management fees paid to the vessels’ manager (refer to Note 11, “Related Party Transactions”), audit fees, legal fees, board remuneration,service cost, stock based compensation, 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 Income.
Income taxes: Income taxes comprise of taxes withheld on dividend income earned on the Company’s investments.
Troubled Debt Restructuring and Accumulated Accrued Interest: Prior to the finalization of the 2018 Refinancing (refer to Note 10, “Long-Term Debt, Net”), the Company concluded that it was experiencing financial difficulty and that certain of the lenders granted a concession (as part of the Refinancing). The Company was experiencing financial difficulty primarily as a result of the projected cash flows not being sufficient to service the balloon payment due as of December 31, 2018 without restructuring and the Company was not able to obtain funding from sources other than existing creditors at an effective interest rate equal to the current market interest rate for similar debt. As a result, the accounting guidance for troubled debt restructuring (“TDR”) was applied at the Closing Date. The TDR accounting guidance required the Company to record the value of the new debt to its restructured undiscounted cash flows over the life of the loan, including cash flows associated with the remaining scheduled interest and principal payments not to exceed the carrying amount of the original debt. In cases in which the recorded value of the debt instrument exceeds the sum of undiscounted future cash flows to be received under the restructured debt instrument, the recorded value is reduced to the sum of undiscounted future cash flows, and a gain is recorded. As a result of the TDR accounting, the interest expense related to the future periods on certain facilities was recognized under the accumulated accrued interest line in the Balance Sheet. Interest payments relating to the future interest recognized in accumulated accrued interest, are recognized as a reduction to the accumulated accrued interest payable when these are paid. As a result, these interest payments are not recorded as interest expense. Following the refinancing of the related loan facilities and to the extent these facilities are extinguished and should no future cash interest payments be required, the accumulated accrued interest related to these loan facilities is recognized under the gain on debt extinguishment in the Consolidated Statements of Income.

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Table of Contents
DANAOS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. Significant Accounting Policies (Continued)
When interest rates change, actual cash flows will differ from the cash flows measured on the Refinancing closing date. The accounting treatment for changes in cash flows due to changes in interest rates depends on whether there is an increase or a decrease from the spot interest rate used in the initial TDR accounting (“threshold interest rate”). Fluctuations in the effective interest rate after the Refinancing from changes in the interest rate or other cause are accounted for as changes in estimates in the periods in which these changes occur. Upon an increase in the interest rates from the threshold interest rate used to calculate accumulated accrued interest payable, the Company recognizes additional interest expenses in the period the expense is incurred. The additional interest expense is calculated by multiplying the difference between the current interest rate and the threshold interest rate with the current carrying value of the debt. A gain due to decrease in interest rates (‘interest windfall’) will not be recognized until the debt facilities have been settled and there are no future interest payments. In case there are subsequent increases in interest rates above the threshold interest rate after a previous decrease in interest rates, the carrying amount of the accumulated accrued interest will be reduced by the interest payments in excess of the threshold interest rate until the prior interest windfall due to decrease in the interest rates is recaptured on a cumulative basis.
The Paid-in-kind interest (“PIK interest”) related to each period will increase the carrying value of the loan facility and correspondingly decrease the carrying value of the accumulated accrued interest. PIK interest in excess of the amount recognized in the accumulated accrued interest is expensed in the period the expense is incurred.
Going Concern: The management of the Company assesses the Company’s ability to continue as a going concern at each period end. The assessment evaluates whether there are conditions that give rise to substantial doubt to continue as a going concern within one year from the consolidated financial statements issuance date.
If a substantial doubt to continue as a going concern is identified and after considering management’s plans this substantial doubt is alleviated the Company discloses the following: (i) principal conditions or events that raised substantial doubt about the Company’s ability to continue as a going concern (before consideration of management’s plans), (ii) management’s evaluation of the significance of those conditions or events in relation to the Company’s ability to meet its obligations, (iii) management’s plans that alleviated substantial doubt about the Company’s ability to continue as a going concern.
If a substantial doubt to continue as a going concern is identified and after considering management’s plans this substantial doubt is not alleviated the Company discloses the following: (i) a statement indicating that there is substantial doubt about the Company’s ability to continue as a going concern, (ii) principal conditions or events that raised substantial doubt about the Company’s ability to continue as a going concern, (iii) management’s evaluation of the significance of those conditions or events in relation to the Company’s ability to meet its obligations, and (iv) management’s plans that are intended to mitigate the conditions or events that raised substantial doubt about the Company’s ability to continue as a going concern.
The Company updates the going concern disclosure in subsequent periods until the period in which substantial doubt no longer exists disclosing how the relevant conditions or events that raised substantial doubt were resolved.
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.
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 Income. 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.

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Table of Contents
DANAOS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. Significant Accounting Policies (Continued)
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 following 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 “Loss 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 Per Share: The Company has presented net earnings 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. Diluted earnings per share reflect the potential dilution that would occur if securities or other contracts to issue common stock were exercised. Unvested shares of restricted stock are included in the calculation of the diluted earnings per share, unless considered antidilutive, based on the weighted average number of shares of restricted stock outstanding during the period.
Treasury Stock: The Company recognizes treasury stock based on the price paid to repurchase its shares, including direct costs to acquire treasury stock. Treasury stock is recorded as a reduction from common stock at its par value and the price paid in excess of par value and direct costs, if any, as a reduction from additional paid-in capital. Treasury stock is excluded from average common shares outstanding for basic and diluted earnings per share.
Equity Compensation Plan: The Company has adopted an equity compensation plan (the “Plan”) in 2006 (as amended on August 2, 2019), 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 shall not exceed 1,000,000 shares plus the number of unvested shares granted before August 2, 2019. 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. Refer to Note 17, “Stock Based Compensation”.
Share based compensation represents the cost of shares and share options granted to employees of Danaos Shipping Company Limited (the “Manager”), executive officers and to directors, for their services, and is included under “General and administrative expenses” in the Consolidated Statements of Income. The shares are measured at their fair value equal to the market value of the Company’s common shares on the grant date. The shares that do not contain any future service vesting conditions are considered vested shares and the total fair value of such shares is expensed on the grant date. The shares that contain a time-based service vesting condition are considered non-vested shares on the grant date and a total fair value of such shares is recognized using the accelerated attribution method, which treats an award with multiple vesting dates as multiple awards and results in a front-loading of the costs of the award. Further, the Company accounts for restricted share award forfeitures upon occurrence.
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Table of Contents
DANAOS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. Significant Accounting Policies (Continued)
As of April 18, 2008, the Company established the Directors Share Payment Plan (“Directors 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 17, “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 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 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 17, “Stock Based Compensation”.
Executive Retirement Plan: The Company established defined benefit retirement plan for its executive officers in December 2022. The actuarial determination of the projected benefit obligation was determined by calculating the present value of the projected benefit at retirement based on service completed at the valuation date, which incorporates management’s best estimate of the discount rate, salary escalation rate and retirement ages of executive officers. The discount rate used to value the defined benefit obligation is derived based on high quality income investments with duration similar to the duration of the obligation. Prior service cost arising from the retrospective recognition of past service was recognized in the Other Comprehensive Income. Prior service cost reclassification and other gains or losses are recognized under “Other income/(expenses), net” in the Consolidated Statements of Income. The actuarially determined expense for current service is recognized under “General and administrative expenses” in the Consolidated Statements of Income. The actuarially determined net interest costs on the defined benefit plan obligation is recognized under “Other finance expenses” in the Consolidated Statements of Income. All actuarial remeasurements arising from defined benefit plan are recognized in full in the period in which they arise in the Other Comprehensive Income.‌

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Table of Contents
DANAOS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. Acquisitions
a. Gemini Shipholdings Corporation
Prior to July 1, 2021 the Company owned 49% of Gemini Shipholdings Corporation’s (“Gemini”) issued and outstanding share capital and accounted for its financial results under the equity method of accounting. On July 1, 2021, the Company exercised its option to acquire the remaining 51% equity interest in Gemini from Virage International Ltd. for $86.7 million, which was fully paid by November 1, 2021. Substantially all of the fair value of the gross assets acquired is concentrated in adjusted vessels value, and the Company therefore accounted for the acquisition of the five vessels of Gemini as an asset acquisition. The Company’s previously held equity interest in Gemini was remeasured to its fair value on July 1, 2021, the date the controlling interest was acquired and the resulting gain of $64.1 million was recognized in “Equity income on investments” in the Consolidated Statements of Income.
As of July 1, 2021, the Company fully consolidated the following vessel owning subsidiaries of Gemini:

Company	    	Vessel Name	    	Year Built	    	TEU	
Averto Shipping S.A.	 	Suez Canal	 	2002	 	5,610	
Sinoi Marine Ltd.	 	Kota Lima (ex Genoa)	 	2002	 	5,544	
Kingsland International Shipping Limited	 	Catherine C	 	2001	 	6,422	
Leo Shipping and Trading S.A.	 	Leo C	 	2002	 	6,422	
Springer Shipping Co.	 	Belita	 	2006	 	8,533	

The following table summarized the consideration exchanged and the fair value of assets acquired and liabilities assumed on July 1, 2021 (in thousands):

Purchase price:	    	  		
Purchase price (51%)		$	86,700	
Fair value of previously held interest (49%)		 	83,300	
Total purchase price		$	170,000	
Fair value of assets and liabilities acquired:		 	  	
Vessels		 	154,500	
Right-of-use assets		 	82,500	
Cash, cash equivalents and restricted cash		 	14,388	
Current assets		 	2,534	
Assumed time charter liabilities		 	(36,001)	
Long-term debt (including current portion)		 	(23,125)	
Obligations under finance lease		 	(21,880)	
Current liabilities		 	(2,916)	
Fair value of net assets acquired		$	170,000	

A condensed summary of the income statement of Gemini presented on a 100% basis is as follows for the periods that the entity was accounted for under the equity method of accounting (in thousands):

	    	Six months ended	    	Year ended	
		June 30, 2021		December 31, 2020	
Net operating revenues		$	17,984		$	31,844	
Net income		$	8,091		$	12,873	

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DANAOS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. Acquisitions (Continued)
The aggregate fair value of the assumed time charter liabilities was estimated at $36.0 million as determined at the acquisition date and is amortized under the straight line method over their estimated remaining charter duration. The weighted average remaining charter duration is 1.4 years at inception. The amortization of these assumed time charters amounted to $20.3 million and $15.3 million for the year ended December 31, 2022 and the period ended December 31, 2021, respectively, and is presented under “Operating revenues” in the Consolidated Statements of Income. The aggregate future amortization of the assumed time charters amounting to $0.4 million is presented under current “Unearned revenue” as of December 31, 2022.
In July 2022, the Company fully repaid the finance lease liability assumed in July 2021, related to the Gemini’s vessels Suez Canal and Kota Lima (ex Genoa), and took full ownership of these vessels.
b. Danaos Management Support Pte. Limited
On November 26, 2021, the Company acquired 100% of the issued and outstanding shares of Danaos Management Support Pte. Limited. (“DMS”), a company providing integrated web-enabled maritime software systems based in Singapore, for $2.1 million in cash payable on or before December 31, 2023, in order to establish the Company’s presence in Asia. The following table summarizes the consideration and the fair value of assets acquired and liabilities assumed on the acquisition date (in thousands):

Total purchase price	    	$	2,136	
Fair value of assets and liabilities acquired:		 	  	
Cash and cash equivalents		 	1,834	
Current assets		 	829	
Current liabilities		 	(527)	
Fair value of net assets acquired		$	2,136	

The pro forma results of the DMS business acquisition are not material to the Company’s Statements of Income.
4. Cash, Cash Equivalents and Restricted Cash
Cash, cash equivalents and restricted cash consisted of the following (in thousands):

	    	As of	    	As of	    	As of	
	    	December 31, 2022	    	December 31, 2021	    	December 31, 2020	
Cash and cash equivalents		$	267,668		$	129,410		$	65,663	
Restricted cash		 	—		 	346			—	
Total		$	267,668		$	129,756		$	65,663	

The Company was required to maintain cash on a retention account as collateral for the then upcoming scheduled debt payments related to the now repaid Eurobank $30 mil. Facility, which was recorded in restricted cash under current assets as of December 31, 2021.

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Table of Contents
DANAOS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. Fixed Assets, net & Advances for Vessels under Construction
Fixed assets, net consisted of the following (in thousands):

		Vessel		Accumulated 		Net Book	
	    	Costs	    	Depreciation	    	Value	
As of January 1, 2020		$	3,230,303		$	(840,429)		$	2,389,874	
Additions		 	191,594		 	—		 	191,594	
Depreciation		 	—		 	(101,531)		 	(101,531)	
As of December 31, 2020		$	3,421,897		$	(941,960)		$	2,479,937	
Additions		 	495,546		 	—		 	495,546	
Depreciation		 	—		 	(113,832)		 	(113,832)	
As of December 31, 2021		$	3,917,443		$	(1,055,792)		$	2,861,651	
Additions		 	4,580		 	—		 	4,580	
Transfers from right-of-use assets and to vessel held for sale			79,179			(5,896)			73,283	
Disposals		 	(97,306)		 	10,500		 	(86,806)	
Depreciation		 	—		 	(131,214)		 	(131,214)	
As of December 31, 2022		$	3,903,896		$	(1,182,402)		$	2,721,494	

On January 17, 2022, the Company entered into agreements to sell its vessels Catherine C and Leo C for an aggregate gross consideration of $130.0 million, resulting in a gain of $37.2 million in November 2022, when these vessels were delivered to their buyers. This gain is separately presented under “Gain on sale of vessels” in the Consolidated Statement of Income. On December 23, 2022, the Company entered into an agreement to sell the vessel Amalia C for an aggregate gross consideration of $5.1 million, which was delivered to its buyers in January 2023. The vessel is presented as held for sale under “Other current assets” and a $1.0 million advance payment received for sale of the vessel is presented under “Other current liabilities” as of December 31, 2022. All three vessels were sold for opportune prices.
On April 1, 2022, the Company entered into contracts, as amended on April 21, 2022, for the construction of four 8,000 TEU container vessels for an aggregate purchase price of $372.7 million, out of which $145.9 million was advanced in 2022 and $226.8 million is expected to be paid at vessels delivery in 2024. On March 11, 2022, the Company entered into contracts for the construction of two 7,100 TEU container vessels for an aggregate purchase price of $156.0 million, out of which $39.0 million was advanced in 2022, $31.2 million is expected to be paid in 2023 and $85.8 million in 2024. Additionally, a supervision fee of $725 thousand per newbuilding vessel will be payable to Danaos Shipping Company Limited. Interest expense amounting to $5.0 million was capitalized to the vessels under construction in the year ended December 31, 2022 and none in the year ended December 31, 2021.
On July 7, 2021, the Company entered into an agreement to acquire six 5,466 TEU sister vessels Wide Alpha, Stephanie C(ex Wide Bravo), Maersk Euphrates, Wide India, Wide Juliet and Wide Hotel (built in 2014 through 2015) together with their existing charter agreements for an aggregate gross purchase price amounting to $260.0 million in cash, which was fully paid by September 30, 2021. The vessels were delivered from August 25, 2021 to October 6, 2021. The aggregate fair value of the assumed time charter liabilities was estimated at $74.1 million and is amortized under the straight line method over their estimated remaining charter duration. The weighted average remaining charter duration was 2.0 years at inception. The amortization of these assumed time charters amounted to $36.5 million and $12.3 million for the year ended December 31, 2022 and the period ended December 31, 2021, respectively, and is presented under “Operating revenues” in the Consolidated Statements of Income. The aggregate future amortization of the assumed time charters as of December 31, 2022 is as follows (in thousands):

Amortization for the periods ending:	    	  		
December 31, 2023			20,806	
Until April 2024		 	4,534	
Total		 	25,340	
Less: Current portion		 	(20,806)	
Total non-current portion		$	4,534	

The amount of $20.8 million is presented under current “Unearned revenue” and $4.5 million under “Unearned revenue, net of current portion” in the Consolidated Balance Sheet as of December 31, 2022.
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Table of Contents
DANAOS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. Fixed Assets, net & Advances for Vessels under Construction (Continued)
As of December 31, 2022, the Company concluded that events and circumstances triggered the existence of potential impairment for some of the Company’s vessels. These indicators included volatility in the charter market and 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 for some of the Company’s vessels by comparing the undiscounted projected net operating cash flows for each of these vessels to its carrying values. As of December 31, 2022, the Company’s assessment concluded that step two of the impairment analysis was not required for any vessel, as the undiscounted projected net operating cash flows of all vessels exceeded the carrying value of the respective vessels. As of December 31, 2021, the Company concluded that no events and circumstances triggered the existence of potential impairment of the Company’s vessels as none of the vessels had current market value below its carrying value. As of December 31, 2022 and 2021, no impairment loss was identified.
The residual value (estimated scrap value at the end of the vessels’ useful lives) of the fleet was estimated at $487.3 million and $504.1 million as of December 31, 2022 and December 31, 2021, respectively. 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 vessels. The Company believes that $300 per ton is a reasonable estimate of future scrap prices, taking into consideration the cyclical 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.
On May 12, 2020, the Company refinanced the existing leaseback obligation related to the vessels Hyundai Honour and Hyundai Respect with a new sale and leaseback arrangement with Oriental Fleet International Company Limited (“Oriental Fleet”) amounting to $139.1 million with a four years term, at the end of which the Company will reacquire these vessels for an aggregate amount of $36.0 million or earlier, at the Company’s option, for a purchase price set forth in the agreement. This arrangement did not qualify for a sale of the vessels and the net proceeds were recognized as a financial leaseback liability.
On April 12, 2021, the Company entered into a sale and leaseback arrangement with Oriental Fleet for the vessels CMA CGM Melisande, CMA CGM Attila, CMA CGM Tancredi, CMA CGM Bianca and CMA CGM Samson amounting to gross proceeds of $135.0 million with a five year term, at the end of which the Company will reacquire these vessels for an aggregate amount of $31.0 million or earlier, at the Company’s option, for a purchase price set forth in the agreement. This new arrangement did not qualify for a sale of the vessels and the net proceeds were recognized as a financial leaseback liability. This leaseback liability was early repaid in full on May 12, 2022.
Under these lease arrangements, the Company is required to be in compliance with the same financial covenants as required by the credit facilities under Note 10 “Long-Term Debt, net”.
The carrying value of the two vessels subject to leasing obligations amounted to $248.2 million as of December 31, 2022. The scheduled leaseback instalments subsequent to December 31, 2022 are as follows (in thousands):

Instalments due by period ended:	    		  	
December 31, 2023		$	30,915	
Until May 2024		 	46,249	
Total leaseback instalments		 	77,164	
Less: Imputed interest		 	(4,239)	
Total leaseback obligation		 	72,925	
Less: Deferred finance costs, net			(914)	
Less: Current portion of long-term leaseback obligation			(27,469)	
Long-term leaseback obligation, net of current portion		$	44,542	

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Table of Contents
DANAOS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. Deferred Charges, net
Deferred charges, net consisted of the following (in thousands):

	    	Drydocking and	
		Special Survey	
		Costs	
As of January 1, 2020		$	11,455	
Additions		 	16,916	
Amortization		 	(11,032)	
As of December 31, 2020		$	17,339	
Additions			4,643	
Amortization			(10,181)	
As of December 31, 2021		$	11,801	
Additions		 	29,939	
Write-off			(4,016)	
Amortization		 	(12,170)	
As of December 31, 2022		$	25,554	

In November 2022, the Company wrote-off $4.0 million of drydocking deferred charges related to the sale of the vessels Catherine C and Leo C - see Note 5 “Fixed Assets, net & Advances for Vessels under Construction”. This write-off was reflected under the “Gain on sale of vessels” in the Consolidated Statement of Income.
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.

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Table of Contents
DANAOS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. Other Current and Non-current Assets
Other current and non-current assets consisted of the following (in thousands):

	    	2022	    	2021	
Equity participation ZIM			—		$	423,024	
Straight-lining of revenue		$	22,007			18,997	
Claims receivable			15,169			8,919	
Vessel held for sale			3,297			—	
Other assets			7,332			8,192	
Total current assets		$	47,805		$	459,132	
							
Straight-lining of revenue		$	83,873		$	39,927	
Other assets		 	6,050		 	1,812	
Total non-current assets		$	89,923		$	41,739	

a. ZIM
The Company classified its equity participation in ZIM, received after the charter restructuring agreements with ZIM in 2014, at cost as the Company did not have the ability to exercise significant influence. In 2016, the Company tested for impairment of its equity participation in ZIM based on the existence of triggering events that indicated the interest in equity may have been impaired and recorded an impairment loss of $28.7 million, thus reducing its book value to nil. In March 2020, the Company increased its equity participation in ZIM to approximately 10.2% by acquisition of additional shares for $75 thousand.
On January 27, 2021, ZIM completed its initial public offering and listing on the New York Stock Exchange (“NYSE”) of its ordinary shares. Following this offering the Company owned 10,186,950 ordinary shares of ZIM. In 2021, the Company sold 3,000,000 of ordinary shares of ZIM resulting in net proceeds of $120.7 million. The fair value of the remaining 7,186,950 ordinary shares of ZIM amounting to $423.0 million, representing 6.1% of ZIM’s outstanding ordinary shares, was presented under “Other current assets” in the Consolidated Balance Sheet as of December 31, 2021, based on the closing price of ZIM ordinary shares on the NYSE on that date. Refer to Note 13, “Financial Instruments—Fair value of Financial Instruments”. In 2022, the Company sold all the remaining shareholding interest of 7,186,950 ZIM’s ordinary shares for net proceeds of $246.6 million. For the years ended December 31, 2022 and 2021, the Company recognized $176.4 million loss and $543.7 million gain on these shares, respectively. These gains/losses are reflected under “Gain/(loss) on investments” in the Consolidated Statements of Income. Additionally, the Company recognized dividend income on these shares amounting to $165.4 million and $34.3 million in the years ended December 31, 2022 and 2021, respectively, which is recognized under “Dividend income” in the Consolidated Statements of Income. Taxes withheld on dividend income amounted to $18.3 million and $5.9 million in the years ended December 31, 2022 and 2021, respectively, and are reflected under “Income taxes” in the Consolidated Statements of Income.
The Company received $2.4 million of mandatory repayment of ZIM Series 1 Notes from excess cash of ZIM in March 2021 and $47.2 million of mandatory repayment of all remaining ZIM Series 1 and Series 2 Notes and accrued interest of $6.4 million in June 2021. The Company recognized $6.6 million and $4.3 million in relation to total interest income and fair value unwinding of ZIM notes in the Consolidated Statements of Income under “Interest income” for years ended December 31, 2021 and 2020, respectively.
Furthermore, in July 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, which expired in 2020 or 2021, for six of the Company’s vessels. This amount was recognized in the Consolidated Statements of Income under “Operating revenues” over the remaining life of the respective time charters. For each of the years ended December 31, 2021 and 2020, respectively, the Company recorded an amount of $1.1 million and $5.4 million of unearned revenue amortization in “Operating revenues”. As of December 31, 2021 the outstanding balance was nil.

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Table of Contents
DANAOS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. Other Current and Non current Assets (Continued)
b. HMM
In July 2016, after the charter restructuring agreements with HMM, the Company obtained interest bearing senior unsecured HMM notes consisting of $32.8 million Loan Notes 1 with original maturity in July 2024 and $6.2 million Loan Notes 2 with original maturity in December 2022 and 4.6 million HMM shares. On September 1, 2016, the Company sold all HMM shares and the net proceeds were used to repay outstanding debt obligations. The Company received $19.9 million of mandatory repayment of HMM Loan Notes 1 and related accrued interest of $3.0 million in May 2021 and $6.1 million of mandatory repayment of HMM Loan Notes 2 and related accrued interest of $1.1 million in December 2021. Furthermore, for the years ended December 31, 2021 and 2020, the Company recognized $5.0 million and $2.1 million, respectively, in relation to total interest income and fair value unwinding of HMM notes under “Interest income” in the Consolidated Statements of Income.
On July 18, 2016, the Company recognized unearned revenue of $75.6 million representing compensation to the Company for the future reductions in the daily charter rates payable by HMM under the time charter agreements. The amortization of unearned revenue is recognized in the Consolidated Statement of Income under “Operating revenues” over the remaining life of the respective charters. In each of the years ended December 31, 2022, 2021 and 2020, the Company recorded an amount of $8.2 million of unearned revenue amortization. As of December 31, 2022, the outstanding balances of the current and non-current portion of unearned revenue in relation to HMM amounted to $8.2 million and $2.5 million, respectively. As of December 31, 2021, the corresponding outstanding balances of the current and non-current portion of unearned revenue amounted to $8.2 million and $10.7 million, respectively.
c. Available for sale category
As described above, in 2021, ZIM and HMM redeemed all notes previously classified as available for sale. The following tables summarizes the gains/losses on available-for-sale debt securities for the years ended December 31, 2021 and December 31, 2020 (in thousands):

		Gain/(loss)	
		on available for	
	    	sale securities	
Balance as of January 1, 2020		$	(38,224)	
Unrealized gain on available for sale securities			26,633	
Balance as of December 31, 2020	 	$	(11,591)	
Gain on available for sale securities			20,803	
Reclassification to interest income		 	(9,212)	
Balance as of December 31, 2021			—	

8. Accrued Liabilities
Accrued liabilities consisted of the following (in thousands):

	    	2022	    	2021	
Accrued payroll		$	140		$	1,001	
Accrued interest		 	8,267		 	11,873	
Accrued dry-docking expenses			2,332			280	
Accrued expenses		 	10,623		 	7,692	
Total		$	21,362		$	20,846	

Accrued expenses mainly consisted of accruals related to the operation of the Company’s fleet and other expenses as of December 31, 2022 and December 31, 2021.

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DANAOS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. Lease Arrangements
Charters-out
As of December 31, 2022, the Company generated operating revenues from its 69 vessels on time charters or bareboat charter agreements, with remaining terms ranging from less than one year to June 2028. Under the terms of the charter party agreements, most charterers have options to extend the duration of contracts ranging from less than one year to three years after the expiration of the contract. The Company determines fair value of its vessels at the lease commencement date and at the end of lease term for lease classification with the assistance from valuations obtained by third party independent shipbrokers. The Company manages its risk associated with the residual value of its vessels after the expiration of the charter party agreements by seeking multi-year charter arrangements for its vessels.
In May 2022, the Company received $238.9 million of charter hire prepayment related to charter contracts for 15 of the Company’s vessels, representing partial prepayment of charter hire payable up to January 2027. The future minimum payments, expected to be received on non-cancellable time charters and bareboat charters classified as operating leases consisted of the following as of December 31, 2022 (in thousands):

2023	    	$	785,714	
2024		 	602,950	
2025		 	332,957	
2026		 	187,994	
2027		 	145,562	
Thereafter		 	34,054	
Total future rentals		$	2,089,231	

Rentals 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 future minimum rentals, 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.

10. Long-Term Debt, net
Long-term debt consisted of the following (in thousands):

		Balance as of		Balance as of	
Credit Facility	    	December 31, 2022	    	December 31, 2021	
BNP Paribas/Credit Agricole $130 mil. Facility		$	120,000			—	
Alpha Bank $55.25 mil. Facility			55,250			—	
Citibank $382.5 mil. Revolving Credit Facility			—			—	
Senior unsecured notes			262,766		$	300,000	
Citibank/Natwest $815 mil. Facility			—			774,250	
Macquarie Bank $58 mil. Facility		 	—			45,600	
SinoPac $13.3 mil. Facility		 	—			10,800	
Eurobank $30.0 mil. Facility			—			21,375	
Fair value of debt adjustment			—			(9,990)	
Total long-term debt		$	438,016		$	1,142,035	
Less: Deferred finance costs, net			(8,076)			(28,369)	
Less: Current portion			(27,500)			(95,750)	
Total long-term debt net of current portion and deferred finance costs		$	402,440		$	1,017,916	

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DANAOS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
10. Long-Term Debt, net (Continued)
In May 2022, the Company early extinguished $270.0 million of the outstanding Natwest loan principal of the Citibank/Natwest $815 mil. Facility, which reduced the future quarterly instalments of the remaining Citibank facility to $12.9 million and the balloon payment at maturity was reduced to $309.0 million. Additionally, the reference to LIBOR was replaced with daily non-cumulative compounded secured overnight financing rate administered and published by the Federal Reserve Bank of New York (“SOFR”) plus credit spread adjustment. In the second quarter of 2022, the Company also early extinguished (i) $43.0 million loan outstanding with Macquarie Bank (ii) $20.6 million loan outstanding with Eurobank and (iii) $9.8 million loan outstanding with SinoPac.
In June 2022, the Company drew down $130.0 million of senior secured term loan facility from BNP Paribas and Credit Agricole, which is secured by six 5,466 TEU sister vessels acquired in 2021. This facility is repayable in eight quarterly instalments of $5.0 million, twelve quarterly instalments of $1.9 million together with a balloon payment of $67.2 million payable over five-year term. The facility bears interest at SOFR plus a margin of 2.16% as adjusted by the sustainability margin adjustment.
In December 2022, the Company early extinguished the remaining $437.75 million of the Citibank/Natwest $815 mil. Facility and replaced it with Citibank of up to $382.5 mil. Revolving Credit Facility, out of which nil is drawn down as of December 31, 2022 and with Alpha Bank $55.25 mil. Facility, which was drawn down in full and outstanding as of December 31, 2022. Citibank $382.5 mil. Revolving Credit Facility is reducing and repayable over 5 years in 20 quarterly reductions of $11.25 million each together with a final reduction of $157.5 million at maturity in December 2027. This facility bears interest at SOFR plus a margin of 2.0% and commitment fee of 0.8% on any undrawn amount and is secured by sixteen of the Company’s vessels. Alpha Bank $55.25 mil. Facility is repayable over 5 years with 20 consecutive quarterly instalments of $1.875 million each, together with a balloon payment of $17.75 million at maturity in December 2027. This facility bears interest at SOFR plus a margin of 2.3% and is secured by two of the Company’s vessels.
The above debt extinguishments and the extinguishment of the Oriental Fleet leaseback arrangement (see Note 5 “Fixed Assets, net & Advances for Vessels under Construction”) resulted in a total net gain on debt extinguishment of $4.4 million in the year ended December 31, 2022 compared to total net gain on debt extinguishment of $111.6 million related to the debt refinancing on April 12, 2021. The Company incurred interest expense amounting to $55.7 million (including interest on leaseback obligations), out of which $5.0 million was capitalized in the year ended December 31, 2022 compared to $53.1 million of interest expense incurred (including interest on leaseback obligations) and none capitalized in the year ended December 31, 2021 and $36.7 million of interest expense incurred (including interest on leaseback obligations) and none capitalized in the year ended December 31, 2020. Total interest paid, net of amounts capitalized (including interest on leaseback obligations) during the years ended December 31, 2022, 2021 and 2020 was $54.0 million, $42.8 million and $35.2 million, respectively. The weighted average interest rate on long-term borrowings (including leaseback obligations) for the years ended December 31, 2022, 2021 and 2020 was 5.3%, 4.4% and 4.6%, respectively. As of December 31, 2022, there was a $382.5 million remaining borrowing availability under the Company’s Citibank $382.5 mil. Revolving Credit Facility.
Alpha Bank $55.25 mil. Facility and Citibank $382.5 mil. Revolving Credit Facility contain a requirement to maintain minimum fair market value of collateral vessels to loan value coverage of 120% and the BNP Paribas/Credit Agricole $130 mil. Facility of 125%. Additionally, these facilities require to maintain the following financial covenants:

	(i)	minimum liquidity of $30.0 million;	
	(ii)	maximum consolidated debt (less cash and cash equivalents) to consolidated EBITDA ratio of 6.5x; and	
	(iii)	minimum consolidated EBITDA to net interest expense ratio of 2.5x.	

Each of the credit facilities except for Senior unsecured notes are collateralized by first 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, stock pledges and benefits from corporate guarantees. The Company was in compliance with the financial covenants contained in the credit facilities agreements as of December 31, 2022 and December 31, 2021. Twenty-four of the Company’s vessels having a net carrying value of $1,592.4 million as of December 31, 2022, were subject to first preferred mortgages as collateral to the Company’s credit facilities other than Senior unsecured notes.

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DANAOS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
10. Long-Term Debt, net (Continued)
On February 11, 2021, the Company issued in a private placement, $300.0 million aggregate principal amount of senior unsecured notes, which bear interest at a fixed rate of 8.50% per annum and mature on March 1, 2028. At any time on or after March 1, 2024, March 1, 2025 and March 1, 2026 the Company may elect to redeem all or any portion of the notes, respectively, at a price equal to 104.25%, 102.125% and 100%, respectively, of the principal amount being redeemed. Prior to March 1, 2024 the Company may redeem up to 35% of the aggregate principal of the notes from equity offering proceeds at a price equal to 108.50% within 90 days after the equity offering closing. In December 2022, the Company repurchased $37.2 million aggregate principal amount of its unsecured senior notes in a privately negotiated transaction. Interest payments on the notes are payable semi-annually commencing on September 1, 2021. $9.0 million of bond issuance costs were deferred over the life of the bond and recognized through the effective interest method.
Principal Payments
The scheduled debt maturities of long-term debt subsequent to December 31, 2022 are as follows (in thousands):

		Principal	
Payments due by period ended	    	repayments	
December 31, 2023		$	27,500	
December 31, 2024			21,300	
December 31, 2025			15,100	
December 31, 2026			15,100	
December 31, 2027			96,250	
Thereafter			262,766	
Total long-term debt		$	438,016	

2021 Refinancing
On April 12, 2021, the Company consummated the refinancing of the existing 2018 credit facilities. The Company utilized the proceeds from the new $815 million facility with Citibank/NatWest, the proceeds from the new $135 million sale and leaseback agreement with Oriental Fleet and the net proceeds amounting to $294.4 million from the $300 million Senior Notes, to refinance the existing 2018 credit facilities. The Citibank/Natwest $815 million senior secured credit facility with four-year term was repayable in sixteen quarterly instalments of $20.4 million starting from July 12, 2021 together with a balloon payment of $489.0 million at maturity. The credit facility bore interest at LIBOR plus a margin of 2.50%.
The Company fully repaid Sinosure Cexim – Citibank – ABN Amro facility on March 18, 2021. The vessels CMA CGM Tancredi, CMA CGM Samson and CMA CGM Bianca previously mortgaged by this facility, together with CMA CGM Melisande and CMA CGM Attila, were refinanced through a $135 million sale and leaseback arrangement with Oriental Fleet on April 12, 2021. Refer to Note 5 “Fixed Assets, net & Advances for Vessels under Construction”.
Additionally, on July 1, 2021, the Company assumed outstanding principal of a Eurobank facility from Gemini related to the vessels Belita, Leo C and Catherine C. The assumed balance of $23.1 million was payable in thirteen consecutive quarterly instalments and a balloon payment of $13.5 million payable through August 2024 - see also Note 3 “Acquisitions”.
The outstanding loan balances, exit fees and deferred financing fees related to the lenders (other than Citibank and Natwest (Royal Bank of Scotland)) under the Company’s existing 2018 credit facilities were fully repaid and accounted for under the extinguishment accounting.

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DANAOS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
10. Long-Term Debt, net (Continued)
The present value of the cash flows for the Citibank and Natwest (Royal Bank of Scotland) facilities were not substantially different from the present value of the remaining cash flows under the terms of the original instruments prior to the debt refinancing for each of the lenders, and, as such, the Company accounted for the debt refinancing as a modification. Legal and other fees related to the refinancing of $2.3 million were recorded in the income statement under the gain on debt extinguishment and $15.6 million of loan arrangement fees were deferred over the life of the facility and recognized through the new effective interest method. Additional fees related to Citibank and Natwest (Royal Bank of Scotland) amounting to $12.0 million at the date of the refinancing, replaced the existing accrued exit fees due under the existing 2018 credit facilities and were payable in eight quarterly instalments. An outstanding amount of $6.0 million was presented under “Other current liabilities” and $3.0 million under “Other long-term liabilities” as of December 31, 2021. There is no remaining outstanding amount as of December 31, 2022, as these additional fees were paid together with the early extinguishment of these facilities in 2022.
Accumulated accrued interest related to the prior HSH Nordbank AG - Aegean Baltic Bank - Piraeus Bank $382.5 mil. Facility amounting to $75.3 million as of April 12, 2021 and which was fully refinanced, will no longer require any future cash interest payments and therefore, was recognized in the income statement under the gain on debt extinguishment. Accumulated accrued interest related to the Royal Bank of Scotland $475.5 mil. Facility, which was refinanced by the Natwest part of the Citibank/Natwest facility was partially extinguished and accounted for under modification accounting resulting in a gain of $35.6 million related to the accumulated accrued interest that will not require any future cash interest payments. The remaining amount of $33.3 million as of April 12, 2021 continued to be recognized in the income statement until May 2022 when all the remaining outstanding Natwest loan principal of the Citibank/Natwest $815 mil. Facility was early extinguished and then remaining amount of the accumulated accrued interest of $26.9 million was recognized in the gain on debt extinguishment. The 2021 Refinancing resulted in a total net gain on debt extinguishment of $111.6 million separately recognized in the Consolidated Statement of Income in the year ended December 31, 2021.

11. 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 largest shareholder controls the Manager.
On August 10, 2018, the term of the Company’s management agreement with the Manager was extended until December 31, 2024. Pursuant to the management agreement, the management fees are as follows for the years presented in the Consolidated Statements of Income: i) a daily management fee of $850, ii) a daily vessel management fee of $425 for vessels on bareboat charter and iii) a daily vessel management fee of $850 for vessels on time charter. Additionally, a fee of 1.25% on gross freight, charter hire, ballast bonus and demurrage with respect to each vessel in the fleet, a fee of 0.5% based on the contract price of any vessel bought and sold by the Manager on the Company’s behalf and a supervision fee of $725 thousand per vessel under construction are due to the Manager over the construction period starting from steel cutting.
Management fees in 2022 amounted to approximately $21.9 million (2021: $19.9 million, 2020: $17.7 million), which are presented under “General and administrative expenses” in the Consolidated Statements of Income. Commissions to the Manager in 2022 amounted to approximately $14.6 million (2021: $10.4 million, 2020: $5.7 million), which are presented under “Voyage expenses” in the Consolidated Statements of Income. Commission of 0.5% on the contract price of the vessels sold in 2022 amounted to approximately $0.7 million presented under “Gain on sale of vessels” (2021: $1.3 million, 2020: $0.7 million were capitalized to the cost of newly acquired vessels).

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DANAOS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11. Related Party Transactions (Continued)
The Company pays advances on account of the vessels’ operating expenses. These prepaid amounts are presented in the Consolidated Balance Sheets under “Due from related parties” totaling $34.0 million and $21.9 million as of December 31, 2022 and 2021, respectively. On July 1, 2021, the Company exercised its option to acquire the remaining 51% equity interest in Gemini from Virage International Ltd., a company controlled by the Company’s largest shareholder, for $86.7 million, which was fully paid by November 1, 2021 (refer to Note 3 “Acquisitions”).
The Company employs its executive officers. The executive officers received an aggregate of $2.1 million (€2.0 million), $2.1 million (€1.8 million) and $1.8 million (€1.5 million) for the years ended December 31, 2022, 2021 and 2020, respectively. Prior service costs related to a defined benefit plan of $14.2 million were recognized in the other comprehensive income in the year ended December 31, 2022. Advances related to this plan amounting to $7.8 million were exercised in the period ended December 31, 2022 (refer to Note 19 “Executive Retirement Plan”), out of which $6.8 million remain unpaid and are presented under “Other current liabilities” as of December 31, 2022. Additionally, an amount of $0.1 million was due to executive officers and is presented under “Accounts payable” in the Consolidated Balance Sheets as of December 31, 2022 and December 31, 2021, respectively. The Company recognized non-cash share-based compensation expense in respect of awards to executive officers of $5.4 million, $11.8 million and $1.0 million in the years ended December 31, 2022, 2021, and 2020, 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, 2022, 2021 and 2020 the Company paid premiums to The Swedish Club of $6.6 million, $5.2 million and $4.3 million, respectively, which are presented under “Vessel operating expenses” in the Consolidated Statements of Income. As of December 31, 2022 and 2021, the Company had payable to The Swedish Club amounting to $1.0 million and nil, respectively.

12. 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 under “Vessel operating expenses” in the accompanying Consolidated Statements of Income. 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 satisfied the more than 50% beneficial ownership requirement for 2022. 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, the Company’s shareholder composition and the anticipated widely-held ownership of the Company’s shares, but no assurance can be given that this will be the case or remain so in the future, since continued compliance with this rule is subject to factors outside of the Company’s control. Income taxes comprised of $18.3 million and $5.9 million taxes withheld on dividend income earned on the Company’s investments in the year ended December 31, 2022 and 2021, respectively.

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DANAOS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. Financial Instruments
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 10, “Long-term Debt, net”.
Concentration of Credit Risk: Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash, cash equivalents and trade accounts receivable. 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, 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 14, “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.
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 equity participation in ZIM was measured based on the closing price of ZIM ordinary shares on the NYSE.
Interest Rate Swaps: The Company currently has no outstanding interest rate swaps agreements. However, in the past years, the Company entered into interest rate swap agreements with its lenders in order to manage its floating rate exposure. Certain variable-rate interests on specific borrowings were associated with vessels under construction and were capitalized as a cost of the specific vessels. In accordance with the accounting guidance on derivatives and hedging, the amounts related to realized gains or losses on cash flow hedges that have been entered into and qualified for hedge accounting, in order to hedge the variability of that interest, were recognized in accumulated other comprehensive loss 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 $3.6 million was reclassified into earnings for each of the years ended December 31, 2022, 2021 and 2020, respectively, representing amortization over the depreciable life of the vessels. An amount of $3.6 million is expected to be reclassified into earnings within the next 12 months.
Fair Value of Financial Instruments
The estimated fair values of the Company’s financial instruments are as follows:

		As of December 31, 2022		As of December 31, 2021	
	    	Book Value	    	Fair Value	    	Book Value	    	Fair Value	
	
		(in thousands of $)	
Cash and cash equivalents		$	267,668		$	267,668		$	129,410		$	129,410	
Restricted cash (2)			—			—		$	346		$	346	
Equity participation ZIM			—			—		$	423,024		$	423,024	
Secured long-term debt, including current portion (1)		$	175,250		$	175,250		$	842,035		$	842,035	
Unsecured long-term debt (1)		$	262,766		$	255,868		$	300,000		$	300,000	

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DANAOS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. Financial Instruments (Continued)
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 as of December 31, 2022 (in thousands):

		Fair Value Measurements	
		as of December 31, 2022	
	    	Total	    	(Level I)	    	(Level II)	    	(Level III)	
	
			(in thousands of $)	
Cash and cash equivalents		$	267,668		$	267,668		$	—		$	—	
Secured long-term debt, including current portion (1)		$	175,250		$	—		$	175,250		$	—	
Unsecured long-term debt (1)		$	255,868		$	255,868		$	—		$	—	

The estimated fair value of the financial instruments that are measured at fair value on a recurring basis, categorized based upon the fair value hierarchy, are as follows as of December 31, 2021 (in thousands):

	    	Fair Value Measurements	
		as of December 31, 2021	
	    	Total	    	(Level I)	    	(Level II)	    	(Level III)	
	
		(in thousands of $)	
Equity participation ZIM		$	423,024		$	423,024		$	—		$	—	

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 as of December 31, 2021 (in thousands):

		Fair Value Measurements	
		as of December 31, 2021	
	    	Total	    	(Level I)	    	(Level II)	    	(Level III)	
	
		(in thousands of $)	
Cash and cash equivalents		$	129,410		$	129,410		$	—		$	—	
Restricted cash (2)		$	346		$	346		$	—		$	—	
Secured long-term debt, including current portion (1)		$	842,035		$	—		$	842,035		$	—	
Unsecured long-term debt (1)		$	300,000		$	—		$	300,000		$	—	

(1)	Secured and unsecured long-term debt, including current portion is presented gross of deferred finance costs of $8.1 million and $28.4 million as of December 31, 2022 and December 31, 2021, respectively. The fair value of the Company’s secured debt is estimated based on currently available debt with similar contract terms, interest rate and remaining maturities and does not include amounts related to the accumulated accrued interest.	
(2)	The Company was required to maintain cash on a retention account as collateral for the then upcoming scheduled debt payments related to the now repaid the Eurobank $30 mil. Facility, which was recorded in restricted cash under current assets as of December 31, 2021.	

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DANAOS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. Operating Revenue
Operating revenue from significant customers (constituting more than 10% of total revenue) for the years ended December 31, were as follows:

Charterer	    	2022	    	2021	    	2020		
CMA CGM	 	26	%  	30	%  	36	%	
HMM Korea		12	%  	17	%  	24	%	
MSC	 	13	%  	—		—		

15. Operating Revenue by Geographic Location
Operating revenue by geographic location of the customers for the years ended December 31, was as follows (in thousands):

Continent	    	2022	    	2021	    	2020	
Australia—Asia		$	482,769		$	323,172		$	203,991	
Europe		 	507,293		 	338,124		 	242,704	
America			3,282			28,209			14,899	
Total Revenue		$	993,344		$	689,505		$	461,594	

16. Commitments and Contingencies
On September 1, 2016, Hanjin Shipping, a charterer of eight of the Company’s vessels, referred to the Seoul Central District Court, which issued an order to commence the rehabilitation proceedings of Hanjin Shipping. Hanjin Shipping has cancelled all eight charter party agreements with the Company. On February 17, 2017, the Seoul Central District Court (Bankruptcy Division), declared the bankruptcy of Hanjin Shipping, converting the rehabilitation proceeding to a bankruptcy proceeding. The Seoul Central District Court (Bankruptcy Division) appointed a bankruptcy trustee to dispose of Hanjin Shipping’s remaining assets and distribute the proceeds from the sale of such assets to Hanjin Shipping’s creditors according to their priorities. The Company ceased recognizing revenue from Hanjin Shipping effective from July 1, 2016 onwards. The Company has a total unsecured claim submitted to the Seoul Central District Court for unpaid charter hire, charges, expenses and loss of profit against Hanjin Shipping totaling $597.9 million, which is not recognized in the accompanying Consolidated Balance Sheet as of December 31, 2022 and 2021. On January 20, 2021, the Company received $3.9 million from Hanjin Shipping as a partial payment of a common benefit claim plus interest. This payment is presented under “Other income/(expense), net” in the Company’s Consolidated Statements of Income.
There are no other 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.
The Company has outstanding commitments under vessel construction contracts and buyback obligations related to the sale and leaseback arrangements as of December 31, 2022, see Note 5 “Fixed Assets, Net & Advances for Vessels under Construction”.

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DANAOS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
17. 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 the Company’s 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 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 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.
On September 14, 2018, the Company granted 298,774 shares of restricted stock to executive officers of the Company, out of which 149,386 restricted shares vested on December 31, 2019 and 149,388 restricted shares vested on December 31, 2021. On May 10, 2019, the Company granted 137,944 shares of restricted stock to certain employees of the Manager (including 35,714 shares to executive officers), out of which 4,168 shares were forfeited in 2019 and 66,888 restricted shares vested on December 31, 2019. In 2020 and 2021, 714 and 1,685 of these shares were forfeited, respectively, and 64,489 restricted shares vested on December 31, 2021. On February 12, 2021, the Company granted 110,000 fully vested shares to executive officers and Board of Directors members. On March 16, 2021, the Company granted 40,000 shares to certain employees of the Manager, out of which 10,000 fully vested on the grant date, 1,050 were forfeited and 9,650 restricted shares vested on December 31, 2021. Additional 224 restricted shares were forfeited in the year ended December 31, 2022 and the remaining 19,076 restricted shares vested on December 31, 2022. On December 10, 2021, the Company granted 110,000 fully vested shares to executive officers and Board of Directors members and on December 21, 2021, the Company granted 10,000 fully vested shares to certain employees of the Manager. On December 14, 2022, the Company granted 100,000 fully vested shares to executive officers. The fair value of shares granted was calculated based on the closing trading price of the Company’s shares at the grant date. Stock based compensation expenses of $6.0 million, $15.3 million and $1.2 million were recognized under “General and administrative expenses” in the Company’s Consolidated Statements of Income in the years ended December 31, 2022, 2021 and 2020, respectively. The average price of issued shares was $54.40 per share and $66.00 per share in the years ended December 31, 2022 and 2021, respectively. No restricted shares were issued and outstanding as of December 31, 2022. As of December 31, 2021, 19,300 shares of restricted stock were issued and outstanding.
The aggregate number of shares of common stock for which awards may be granted under the Plan shall not exceed 1,000,000 shares plus the number of unvested shares granted before August 2, 2019. The equity awards may be granted by the Company’s Compensation Committee or Board of Directors under its amended and restated 2006 equity compensation plan. 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.
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. During 2022, 2021 and 2020, none of the directors elected to receive shares as compensation.

F-38

Table of Contents
DANAOS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
18. Stockholders’ Equity
In the year ended December 31, 2022, the Company declared and paid a dividend of $0.75 per share of common stock in each of February, May, August and November amounting to $61.5 million. In the year ended December 31, 2021, the Company declared a dividend of $0.50 per share of common stock in each of May, August and November amounting to $30.9 million. During 2020, the Company did not declare any dividends. The Company issued 143 and 146 shares of common stock at par value of $0.01 pursuant to its dividends reinvestment plan in the year ended December 31, 2022 and 2021, respectively, at an average price of $69.59 per share and $72.19 per share, respectively.
In June 2022, the Company announced a share repurchase program of up to $100 million of the Company’s common stock. The Company repurchased 466,955 shares of the Company’s common stock in the open market for $28.6 million until December 31, 2022. In October 2020, the Company repurchased 4,339,271 shares of the Company’s common stock for an aggregate purchase price of $31.1 million in privately negotiated transactions, including 2,517,013 shares from the Royal Bank of Scotland and 1,822,258 shares from Sphinx Investment Corp.
Refer to Note 17 “Stock Based Compensation” for information on the Company’s compensation plans.
As of December 31, 2022, 25,155,928 shares were issued and 20,349,702 shares were outstanding; and 25,056,009 shares were issued and 20,716,738 shares were outstanding and as of December 31, 2021. As of December 31, 2022 and December 31, 2021, 4,806,226 and 4,339,271 shares were held as Treasury shares, 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.
19. Executive Retirement Plan
Effective from December 14, 2022, the Company maintains a defined benefit retirement plan for its executive officers. The actuarial determination of the projected benefit obligation was determined by calculating the present value of the projected benefit at retirement based on service completed at the valuation date, which incorporates management’s best estimate of the discount rate of 3.8% (based on the Markit iBoxx EUR Corporates AA over 10 years index), salary escalation of up to 4.5% per annum,as well as assumed retirement ages of the executive officers between 65 to 74 years old. Prior service cost arising from the retrospective recognition of past service of $14.2 million was recognized in the Other Comprehensive Income, out of which advances amounting to $7.8 million were exercised in the period ended December 31, 2022. Defined benefit obligation of $6.4 million is presented under “Other long-term liabilities” as of December 31, 2022. The accumulated benefit obligation amounts to $3.0 million as of December 31, 2022.
Prior service cost of this defined benefit obligation amounting to $7.8 million was reclassified to “Other income/(expense), net” for the year ended December 31, 2022 and $0.7 million is expected to be reclassified in the year ending December 31, 2023. Additionally, projected periodic benefit cost of $0.8 million is expected in the year ending December 31, 2023. The assumptions used are the best estimates chosen from a range of possible actuarial assumptions, which may not necessarily be borne out in practice. The average remaining duration of the defined benefit obligation is 8.1 years as of December 31, 2022. The benefits of $0.7 million and $2.8 million are expected to be paid in 2025 and 2030, respectively, based on the assumptions used by the actuaries to measure the benefit obligations as of December 31, 2022.

F-39

Table of Contents
DANAOS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
20. Earnings per Share
The following table sets forth the computation of basic and diluted earnings per share for the years ended December 31 (in thousands):

	    	2022	    	2021	    	2020	
Numerator:										
Net income		$	559,210		$	1,052,841		$	153,550	
Denominator (number of shares in thousands):										
Basic weighted average common shares outstanding			20,482			20,345			23,589	
Effect of dilutive securities:										
Dilutive effect of non-vested shares		 	19		 	239		 	216	
Diluted weighted average common shares outstanding			20,501			20,584			23,805	

Basic and diluted earnings per share amount related to a gain on troubled debt write-off amounting to $29.4 million and $111.6 million recorded in the year ended December 31, 2022 and 2021, respectively, is $1.43 and $1.43 per share, respectively, in the year ended December 31, 2022; and $5.49 and $5.42 per share, respectively, in the year ended December 31, 2021 (see Note 10).

21. Subsequent Events
In January 2023, the Company gave early termination notice to Oriental Fleet about its intention to fully repay its outstanding leaseback obligations related to two of its vessels by May 12, 2023. See Note 5 “Fixed Assets, net & Advances for Vessels under Construction”.

On February 14, 2023, the Company declared a dividend of $0.75 per share of common stock amounting to $15.3 million, which is payable on March 14, 2023, to holders of record on February 28, 2023.

F-40

Exhibit 4.6

			
Date 1 December 2022
DANAOS CORPORATION
as Borrower
with
CITIBANK, N.A., JERSEY BRANCH
as Lender
guaranteed by
THE ENTITIES LISTED IN SCHEDULE 1
	
FACILITY AGREEMENT
for a
$382,500,000 Revolving Credit Facility

			
Contents	
Clause		Page	
Section 1 - Interpretation	1	
1	Definitions and interpretation	1	
Section 2 - The Facility	26	
2	The Facility	26	
3	Purpose	26	
4	Conditions of Utilisation	27	
Section 3 - Utilisation	28	
5	Utilisation	28	
Section 4 - Repayment, Prepayment and Cancellation	29	
6	Repayment	29	
7	Illegality, prepayment and cancellation	30	
8	Restrictions	32	
Section 5 - Costs of Utilisation	33	
9	Interest	33	
10	Interest Periods	34	
11	Changes to the calculation of interest	34	
12	Fees	35	
Section 6 - Additional Payment Obligations	36	
13	Tax gross-up and indemnities	36	
14	Increased costs	40	
15	Other indemnities	40	
16	Mitigation by the Lender	44	
17	Costs and expenses	45	
Section 7 - Guarantee	47	
18	Guarantee and indemnity	47	
Section 8 - Representations, Undertakings and Events of Default	51	
19	Representations	51	
20	Information undertakings	58	

			
21	Financial covenants	61	
22	General undertakings	64	
23	Dealings with Ship	68	
24	Condition and operation of Ship	70	
25	Insurance	75	
26	Minimum security value	79	
27	Chartering undertakings	82	
28	Bank accounts	83	
29	Business restrictions	85	
30	Events of Default	88	
Section 9 - Changes to Parties	97	
31	Changes to the Lender	97	
32	Changes to the Obligors	98	
Section 10 - Administration	99	
33	Payment mechanics	99	
34	Set-off	101	
35	Notices	101	
36	Calculations and certificates	104	
37	Partial invalidity	104	
38	Remedies and waivers	104	
39	Amendments and waivers	104	
40	Confidential Information	105	
41	Confidentiality of Funding Rates	109	
42	Counterparts	110	
43	Contractual recognition of bail-in	110	
Section 11 - Governing Law and Enforcement	111	
44	Governing law	111	
45	Enforcement	111	
Schedule 1	The original parties	112	
Schedule 2	Ship Information	122	

			
Schedule 3	Conditions precedent	131	
Schedule 4	Utilisation Request	136	
Schedule 5	Form of Compliance Certificate	137	
Schedule 6	Reference Rate Terms	138	
Schedule 7	Daily Non-Cumulative Compounded RFR Rate	141	
Schedule 8	Cumulative Compounded RFR Rate	143	

THIS AGREEMENT is dated 1 December 2022, and made between:

(1)	DANAOS CORPORATION whose details are set out in Part 1 of Schedule 1 (The original parties) as borrower (the Borrower);	
(2)	THE ENTITIES listed in Part 2 of Schedule 1 (The original parties) as guarantors (together the Guarantors); and	
(3)	CITIBANK, N.A., JERSEY BRANCH as lender (the Lender).	
IT IS AGREED as follows:
Section 1 - Interpretation

	1	Definitions and interpretation	
	1.1	Definitions	
In this Agreement and (unless otherwise defined in the relevant Finance Document) the other Finance Documents:
Account means any bank account, deposit or certificate of deposit opened, made or established in accordance with clause 28 (Bank accounts).
Account Bank means in relation to any Account, Citibank, N.A., London Branch, acting through its office at Citigroup Centre, Canada Square, London E14 5LB, England or another approved bank or financial institution at the request of the Borrower.
Account Holder(s) means, in relation to any Account, each Obligor in whose name that Account is held.
Account Security means, in relation to an Account, a first ranking deed or other instrument by the relevant Account Holder(s) in favour of the Lender in an agreed form conferring a Security Interest over that Account.
Accounting Principles has the meaning given to that term in clause 21.2 (Financial definitions).
Accounting Reference Date means 31 December or such other date as may be approved by the Lender.
Additional Business Day means any day specified as such in the Reference Rate Terms.
Affiliate means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company.
Approved Exchange means NYSE or NASDAQ or any other reputable national stock exchange approved by the Lender.
Approved Flag State means each of the Republic of Liberia, the Republic of Malta, the Republic of Cyprus, the Republic of Panama, the Republic of the Marshall Islands and the Hellenic Republic.
Article 55 BRRD means Article 55 of Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms.
Assignable Charter means, in relation to a Ship, any charter commitment for that Ship (including a Charter, a Valuation Charter or a Key Charter in relation to that Ship), made or (as the context may require) to be made from time to time between the relevant Owner as owner and any person as charterer or counterparty of such Owner thereunder and which is capable of lasting 24 months

1

or longer (but including any options to extend or renew contained therein) and Assignable Charters means together all or any of them.
Associate has the meaning given to that term in section 435 of the Insolvency Act 1986 of England and Wales, provided that only sub-sections (2) and (5) of such section (and any reference to the term "associate" in such sub-section (5) shall be a reference to such term as defined in sub-section (2)) shall apply insofar as it relates to the definition of Coustas Family.
Auditors means one of PricewaterhouseCoopers, Ernst & Young, KPMG or Deloitte & Touche or another approved firm.
Authorisation means any authorisation, consent, concession, approval, resolution, licence, exemption, filing, notarisation or registration.
Available Facility means at any relevant time, such part of the Commitment (drawn and undrawn) which is available for borrowing under this Agreement at such time in accordance with clause 4 (Conditions of Utilisation) to the extent that such part of the Commitment is not cancelled or reduced under this Agreement.
Bail-In Action means the exercise of any Write-down and Conversion Powers.
Bail-In Legislation means:

	(a)	in relation to an EEA Member Country which has implemented, or which at any time implements, Article 55 BRRD, the relevant implementing law or regulation as described in the EU Bail-In Legislation Schedule from time to time;	
	(b)	in relation to any state other than such an EEA Member Country and the United Kingdom, any analogous law or regulation from time to time which requires contractual recognition of any Write-down and Conversion Powers contained in that law or regulation; and	
	(c)	in relation to the United Kingdom, the UK Bail-In Legislation.	
Bareboat Equivalent Time Charter Income means, at any time and in relation to a charter commitment of a Relevant Vessel, the aggregate charter hire or freight due and payable to a Group Member for that Relevant Vessel for the remaining unexpired term of such charter commitment in respect of that Relevant Vessel at the relevant time assuming it expired at the time it was scheduled to expire, without any off-hire periods or other events entitling the charterer to not pay or otherwise to withhold charter hire or freight (but excluding any option to extend or renew contained therein exercisable by the relevant charterer) less, in the case of a charter commitment other than a bareboat charter, the aggregate operating expenses, insurances and dry-docking costs of that Relevant Vessel which would be ordinarily borne by a bareboat charterer and certified to the satisfaction of the Lender for the same period.
Basel II Accord means the “International Convergence of Capital Measurement and Capital Standards, a Revised Framework” published by the Basel Committee on Banking Supervision in June 2004 as updated prior to, and in the form existing on, the date of this Agreement, excluding any amendment thereto arising out of the Basel III Accord or Reformed Basel III.
Basel II Approach means either the Standardised Approach or the relevant Internal Ratings Based Approach (each as defined in the Basel II Regulations applicable to the Lender) adopted by the Lender (or any of its Affiliates) for the purposes of implementing or complying with the Basel II Accord.
Basel II Regulation means:

	(a)	any law or regulation in force as at the date hereof implementing the Basel II Accord (including the relevant provisions of CRR and CRR II) to the extent only that such law or regulation re-enacts and/or implements the requirements of the Basel II Accord but	

2

excluding any provision of such law or regulation implementing the Basel III Accord or Reformed Basel III; and

	(b)	any Basel II Approach adopted by the Lender or any of its Affiliates.	
Basel III Accord means, together:

	(a)	the agreements on capital requirements, a leverage ratio and liquidity standards contained in “Basel III: A global regulatory framework for more resilient banks and banking systems”, “Basel III: International framework for liquidity risk measurement, standards and monitoring” and “Guidance for national authorities operating the countercyclical capital buffer” published by the Basel Committee on Banking Supervision in December 2010, each as amended, supplemented or restated;	
	(b)	the rules for global systemically important banks contained in “Global systemically important banks: assessment methodology and the additional loss absorbency requirement – Rules text” published by the Basel Committee on Banking Supervision in November 2011, as amended, supplemented or restated; and	
	(c)	any further guidance or standards published by the Basel Committee on Banking Supervision relating to “Basel III”,	
other than, in each such case, the agreements, rules, guidance and standards set out in Reformed Basel III as amended, supplemented or restated after the date of this Agreement.
Basel III Increased Cost means an Increased Cost which is attributable to the implementation or application of or compliance with any Basel III Regulation (whether such implementation, application or compliance is by a government, regulator, the Lender or any of its Affiliates).
Basel III Regulation means any law or regulation implementing the Basel III Accord (including the relevant provisions of CRR and CRR II) save to the extent that such law or regulation re-enacts a Basel II Regulation and excluding any such law or regulation which implements Reformed Basel III.
Borrower means the corporation described as such in Part 1 of Schedule 1 (The original parties).
Break Costs means any amount specified as such in the Reference Rate Terms.
Business Day means a day (other than a Saturday or Sunday) on which banks are open for general business in London, New York, Athens or Piraeus, Greece and, in relation to:

	(a)	any date for payment or purchase of an amount relating to any of the Loans (or any relevant part of it) or any Unpaid Sum; or	
	(b)	the determination of the first day or the last day of an Interest Period for any of the Loans (or any relevant part of it) or any Unpaid Sum, or otherwise in relation to the determination of the length of such an Interest Period; or	
	(c)	the determination of a Utilisation Date,	
which is an Additional Business Day relating to any of the Loans (or any relevant part of it) or the relevant Unpaid Sum.
Category A Ship means each of the Ships described as such in Part A of Schedule 2 (Ship Information) and Category A Ships means all of them.
Category B Ship means each of the Ships described as such in Part B of Schedule 2 (Ship Information) and Category B Ships means all of them.

3

Central Bank Rate has the meaning given to that term in the Reference Rate Terms.
Central Bank Rate Adjustment has the meaning given to that term in the Reference Rate Terms.
Central Bank Rate Spread has the meaning given to that term in the Reference Rate Terms.
Change of Control occurs if at any time:

	(a)	the Coustas Family (and/or any funds controlled by the Coustas Family) ceases to ultimately beneficially own at least 15 per cent and one share of the issued voting share capital of the Borrower; or	
	(b)	the Coustas Family ceases to have the power to cast at a general meeting of the Borrower at least 15 per cent and one share of the maximum number of votes of the issued voting share capital that might be cast at a general meeting of the Borrower; or	
	(c)	Dr John Coustas ceases to be both the Chief Executive Officer of the Borrower and a director of the Borrower unless this is due to his death or disability and, in such case, a replacement person is appointed by the Borrower’s board of directors; or	
	(d)	any group of (i) the existing members of the board of directors of the Borrower as at the date of this Agreement and (ii) any directors appointed following nomination by the existing board of directors, does not comprise a majority of the board of directors of the Borrower; or	
	(e)	any one or more persons (who are not members of the Coustas Family) acting in concert controls the Borrower; or	
	(f)	Dr John Coustas and/or Danaos Investment Limited cease to own 80% of the capital stock and/or voting rights in the Manager of each Ship (other than the Manager of mv’s YM Maturity and YM Mandate as at the date of this Agreement) and/or cease to control such Manager; or	
	(g)	any Guarantor ceases to be a wholly-owned direct Subsidiary of, and/or to be controlled by, the Borrower.	
Charged Property means all of the assets of the Obligors which from time to time are, or are expressed or intended to be, the subject of the Transaction Security.
Charter means, in relation to a Ship, the charter commitment for that Ship details of which are provided under such Ship in Schedule 2 (Ship Information) and Charters means any or all of them.
Charter Assignment means, in relation to a Ship and its Charter Documents for an Assignable Charter, a first ranking assignment by the relevant Owner of its interest in such Charter Documents in favour of the Lender in the agreed form.
Charter Attached Vessel Value means, in relation to a Relevant Vessel that at the relevant time is subject to, and accepted for service under, a Valuation Charter, the aggregate of:

	(a)	the present value of the Bareboat Equivalent Time Charter Income of that Relevant Vessel; and	
	(b)	the present value of the Charter Free Value At End of Charter of that Relevant Vessel (as if it were a Charter Free Vessel at the relevant time of calculation).	
In calculating the above present values, the applicable discount rate shall be 7 per cent.

4

Charter Documents means, in relation to an Assignable Charter of a Ship, that Assignable Charter, any documents supplementing it and any guarantee (including any relevant Charter Guarantee) or other security given by any person for the relevant Charterer’s obligations under it.
Charter Free Value At End Of Charter means, at any time and in relation to a Relevant Vessel that is subject to, and accepted for service under, a Valuation Charter at that time, the Charter Free Vessel Value of that Relevant Vessel at the end of the relevant Valuation Charter, which shall be deemed to be equal to the current Charter Free Vessel Value of a vessel with similar characteristics to that Relevant Vessel, but having the age which that Relevant Vessel will have at the expiration of the term of the relevant Valuation Charter (but excluding any options to extend or renew contained therein exercisable by the relevant charterer).
Charter Free Vessel means, at any time, a Relevant Vessel that at that time is not subject to a Valuation Charter (but may be subject to a charter commitment having an unexpired term of up to 12 months).
Charter Free Vessel Value means, in relation to a Relevant Vessel that is not subject to a Valuation Charter, its market value determined pursuant to the most recent valuations obtained for that Relevant Vessel under this Agreement and in accordance with clause 26 (Minimum security value).
Charter Guarantee means, in relation to an Assignable Charter of a Ship, any guarantee in relation to that Assignable Charter (which includes, in the case of a Ship subject to a Charter, the charter guarantee named in Schedule 2 (Ship Information) as a “Charter Guarantee” for such Ship) and any other guarantee or surety issued by the relevant Charter Guarantor or any other person in favour of the relevant Owner in accordance with the relevant Assignable Charter.
Charter Guarantor means, in relation to an Assignable Charter of a Ship, any charter guarantor of the Charterer of that Ship (which includes, in the case of a Ship subject to a Charter, the person, named in Schedule 2 (Ship Information) as “Charter Guarantor” of such Ship under that Charter).
Charterer means, in relation to an Assignable Charter of a Ship, the charterer (or other counterparty or the Owner thereunder) of that Ship (which includes, in the case of a Ship subject to a Charter, the charterer or other counterparty named in Schedule 2 (Ship Information) as “Charterer” of that Ship under that Charter).
Classification means, in relation to a Ship, the classification specified in respect of such Ship in Schedule 2 (Ship Information) with the relevant Classification Society, the equivalent classification with another Classification Society or another classification approved by the Lender as its classification, at the request of the relevant Owner.
Classification Society means, in relation to a Ship, the classification society specified in respect of such Ship in Schedule 2 (Ship Information) or another classification society (being a member of the International Association of Classification Societies (IACS) or, if such association no longer exists, any similar association nominated by the Lender) approved by the Lender as its Classification Society, at the request of the relevant Owner.
Code means the US Internal Revenue Code of 1986.
Commitment means the amount which the Lender agreed to lend to the Borrower under clause 2.1 (the Facility) to the extent not cancelled, reduced or assigned by it under this Agreement.
Compliance Certificate means a certificate substantially in the form set out in Schedule 5 (Form of Compliance Certificate) or otherwise approved.
Compounding Methodology Supplement means, in relation to the Daily Non-Cumulative Compounded RFR Rate or the Cumulative Compounded RFR Rate, a document which:

5

	(a)	is agreed in writing by the Borrower and the Lender; and	
	(b)	specifies a calculation methodology for that rate.	
Confidential Information means all information relating to an Obligor, the Group, the Transaction Documents or the Facility of which the Lender becomes aware in its capacity as, or for the purpose of becoming, the Lender or which is received by the Lender in relation to, or for the purpose of becoming the Lender under, the Finance Documents or the Facility from any Group Member or any of its advisers, in whatever form, and includes information given orally and any document, electronic file or any other way of representing or recording information which contains or is derived or copied from such information but excludes:

	(a)	information that:	
	(i)	is or becomes public information other than as a direct or indirect result of any breach by the Lender of clause 40 (Confidential Information); or	
	(ii)	is identified in writing at the time of delivery as non-confidential by any Group Member or any of its advisers; or	
	(iii)	is known by the Lender before the date the information is disclosed to it in accordance with paragraphs (a) or (b) above or is lawfully obtained by the Lender after that date, from a source which is, as far as the Lender is aware, unconnected with the Group and which, in either case, as far as the Lender is aware, has not been obtained in breach of, and is not otherwise subject to, any obligation of confidentiality; and	
	(b)	any Funding Rate.	
Constitutional Documents means, in respect of an Obligor, such Obligor’s memorandum and articles of association, by-laws or other constitutional documents including as referred to in any certificate relating to an Obligor delivered pursuant to Schedule 3 (Conditions precedent).
Construction Vessel Value for a Relevant Vessel under construction shall be the net book value for it, as recorded in the Financial Statements.
Coustas Family means Dr John Coustas and any Associate of Dr John Coustas.
CRR means either CRR-EU, or as the context may require, CRR-UK.
CRR-EU means regulation 575/2013 of the European Union on prudential requirements for credit institutions and investment firms and regulation 2019/876 of the European Union amending Regulation (EU) No 575/2013 and all delegated and implementing regulations supplementing that Regulation.
CRR-UK means CRR-EU as amended and transposed into the laws of the United Kingdom by the European Union (Withdrawal) Act 2018 and the European Union (Withdrawal Agreement) Act 2020 and as amended by the Capital Requirements (Amendment) (EU Exit) Regulations 2019.
CRR II means either CRR II-EU or, as the context may require, CRR II-UK.
CRR II-EU means regulation 2019/876 amending CRR-EU as regards the leverage ratio, the net stable funding ratio, requirements for own funds and eligible liabilities, counterparty credit risk, market risk, exposures to central counterparties, exposures to collective investment undertakings, large exposures, reporting and disclosure requirements, and Regulation (EU) No 648/2012 and all delegated and implementing regulations supplementing that Regulation.
CRR II-UK means CRR II-EU as amended and transposed into the laws of the United Kingdom by the European Union (Withdrawal) Act 2018 and the European Union (Withdrawal Agreement)

6

Act 2020 and as amended by the Capital Requirements (Amendment) (EU Exit) Regulations 2019.
Cumulative Compounded RFR Rate means, in relation to an Interest Period for any Loan or any relevant part of it, or any Unpaid Sum, the percentage rate per annum determined by the Lender in accordance with the methodology set out in Schedule 8 (Cumulative Compounded RFR Rate) or in any relevant Compounding Methodology Supplement.
Daily Non-Cumulative Compounded RFR Rate means, in relation to any RFR Banking Day during an Interest Period for any Loan, or any relevant part of it, or any Unpaid Sum, the percentage rate per annum determined by the Lender in accordance with the methodology set out in Schedule 7 (Daily Non-Cumulative Compounded RFR Rate) or in any relevant Compounding Methodology Supplement.
Daily Rate means the rate specified as such in the Reference Rate Terms.
Danaos Investment Limited means Danaos Investment Limited, a limited company incorporated in New Zealand with its registered office at Bell Gully, Level 22, Vero Centre, 48 Shortland Street, Auckland, 1010, New Zealand as trustee of the 883 Trust, a trust established in the Cayman Islands and registered as a foreign trust in New Zealand.
Deed of Covenant means, in relation to a Ship in respect of which the Mortgage is in account current form, a first ranking deed of covenant (including an assignment of its interest in the Ship’s Insurances, Earnings and Requisition Compensation) in respect of such Ship by the relevant Owner in favour of the Lender in the agreed form.
Default means an Event of Default or any event or circumstance specified in clause 30 (Events of Default) which would (with the expiry of a grace period, the giving of notice, the making of any determination under the Finance Documents or any combination of any of the foregoing) be an Event of Default.
Delegate means any delegate, agent or attorney appointed by the Lender.
Disposal Reduction Date means, in relation to:

	(a)	a Total Loss of a Ship, the applicable Total Loss Reduction Date; or	
	(b)	a sale (including, without limitation, a sale for scrapping) of a Ship by the relevant Owner, the date upon which such sale is completed by the transfer of title to the purchaser in exchange for payment of all or part of the relevant purchase price (and upon or immediately prior to such completion).	
Disruption Event means either or both of:

	(a)	a material disruption to those payment or communications systems or to those financial markets which are, in each case, required to operate in order for payments to be made in connection with the Facility (or otherwise in order for the transactions contemplated by the Finance Documents to be carried out) which disruption is not caused by, and is beyond the control of, any of the Parties; or	
	(b)	the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to the treasury or payments operations of a Party preventing that, or any other Party:	
	(i)	from performing its payment obligations under the Finance Documents; or	
	(ii)	from communicating with other Parties in accordance with the terms of the Finance Documents,	

7

and which (in either such case) is not caused by, and is beyond the control of, the Party whose operations are disrupted.
Dormant Subsidiary means a Group Member which does not trade (for itself or as agent for any person) and does not own, legally or beneficially, assets (including, without limitation, indebtedness owed to it) which in aggregate have a value of $50,000 or more (or its equivalent in other currencies).
Earnings means, in relation to a Ship and a person, all money at any time payable to that person for or in relation to the use or operation of such Ship including freight, hire and passage moneys, money payable to that person for the provision of services by or from such Ship or under any charter commitment, requisition for hire compensation, remuneration for salvage and towage services, demurrage and detention moneys and damages for breach and payments for termination or variation of any charter commitment.
Earnings Account means any Account designated as an Earnings Account under clause 28 (Bank accounts), and Earnings Accounts means any or all of them.
EEA Member Country means any member state of the European Union, Iceland, Liechtenstein and Norway.
Environmental Claims means:

	(a)	enforcement, clean-up, removal or other governmental or regulatory action or orders or proceedings or formal notices or investigations or claims instituted or made pursuant to any Environmental Laws or resulting from a Spill; or	
	(b)	any claim made by any other person relating to a Spill.	
Environmental Incident means any Spill from any vessel in circumstances where:

	(a)	any Fleet Vessel or its owner, operator or manager is reasonably expected to be liable for Environmental Claims arising from the Spill (other than Environmental Claims arising and fully satisfied before the date of this Agreement); and/or	
	(b)	any Fleet Vessel is arrested or attached in connection with any such Environmental Claim.	
Environmental Laws means all laws, regulations and conventions concerning pollution or protection of human health or the environment.
EU Bail-In Legislation Schedule means the document described as such and published by the Loan Market Association (or any successor person) from time to time.
EU Ship Recycling Regulation means Regulation (EU) No 1257/2013 of the European Parliament and of the Council of 20 November 2013 on ship recycling and amending Regulation (EC) No 1013/2006 and Directive 2009/16/EC (Text with EEA relevance).
Event of Default means any event or circumstance specified as such in clause 30 (Events of Default).
Existing Indebtedness means the aggregate outstanding amounts of principal, interest and all other sums owing by (inter alios) the Borrower or any other Obligor or Group Member or a Manager, whether over or in relation to (inter alia) the Ships or otherwise under a facility agreement dated 1 April 2021 made between, amongst others, (i) the Borrower,  (ii) certain entities named thereto as guarantors, (iii) the financial institutions named thereto as lenders, (iv)  Citibank Europe Plc, UK Branch as agent and (v) Citibank, N.A., London Branch as security agent and trustee pursuant to which the lenders thereto agreed (inter alia) to make available to the Borrower a loan of up to $815,000,000 (originally) as amended and restated by a supplemental agreement dated 12 May 2022.

8

Facility means the revolving loan facility made available under this Agreement as described in clause 2 (The Facility).
Facility Office means the Jersey office of the Lender at 38 Esplanade, JE4 8QB, P.O. Box 104, Jersey, or such office or offices notified by the Lender to the Borrower in writing on or before the date it becomes the Lender (or, following that date, by not less than five Business Days' written notice) as the office or offices through which it will perform its obligations under this Agreement.
Facility Period means the period from and including the date of this Agreement to and including the date on which the Commitment has reduced to zero and all indebtedness of the Obligors under the Finance Documents has been fully paid and discharged.
FATCA means:

	(a)	sections 1471 to 1474 of the Code or any associated regulations;	
	(b)	any treaty, law or a regulation of any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of any law or regulation referred to in paragraph (a) above; or	
	(c)	any agreement pursuant to the implementation of any treaty, law or regulation referred to in paragraphs (a) or (b) above with the US Internal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction.	
FATCA Application Date means:

	(a)	in relation to a “withholdable payment” described in section 1473(1)(A)(i) of the Code (which relates to payments of interest and certain other payments from sources within the US), 1 July 2014; or	
	(b)	in relation to a “passthru payment” described in section 1471(d)(7) of the Code not falling within paragraph (a) above, the first date from which such payment may become subject to a deduction or withholding required by FATCA.	
FATCA Deduction means a deduction or withholding from a payment under a Finance Document required by FATCA.
FATCA Exempt Party means a Party that is entitled to receive payments free from any FATCA Deduction.
Fee Letter means any letter or letters dated on or before the date of this Agreement between (inter alios) the Lender and the Borrower setting out any of the fees referred to in clause 12 (Fees) and Fee Letters means any or all of them.
Final Reduction Date means, subject to clause 33.4 (Business days), the date falling sixty (60) Months after the date of this Agreement.
Finance Documents means this Agreement, any Fee Letter, the Security Documents, each Compliance Certificate, any Reference Rate Supplement, any Compounding Methodology Supplement and any other document designated as such by the Lender and the Borrower.
Finance Lease has the meaning given to it in clause 21.2 (Financial definitions).
Financial Indebtedness means any indebtedness for or in respect of:

	(a)	moneys borrowed and debit balances at banks or other financial institutions (including without limitation, any debit balance in respect of an Earnings Account);	

9

	(b)	any acceptance under any acceptance credit or bill discounting facility (or dematerialised equivalent);	
	(c)	any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument;	
	(d)	the amount of any liability in respect of any lease or hire purchase contract which would, in accordance with the Accounting Principles, be treated as a Finance Lease;	
	(e)	receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis) and meet any requirement for de-recognition under the Accounting Principles;	
	(f)	any Treasury Transaction (and, when calculating the value of that Treasury Transaction, only the marked to market value (or, if any actual amount is due as a result of the termination or close-out of that Treasury Transaction, that amount) shall be taken into account);	
	(g)	any counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution;	
	(h)	any amount raised by the issue of shares which are redeemable (other than at the option of the issuer) before all amounts outstanding under the Finance Documents have been discharged in full (or are otherwise classified as borrowings under the Accounting Principles);	
	(i)	any amount of any liability under an advance or deferred purchase agreement if (i) one of the primary reasons behind entering into the agreement is to raise finance or to finance the acquisition or construction of the asset or service in question or (ii) the agreement is in respect of the supply of assets or services and payment is due more than 180 days after the date of supply;	
	(j)	any amount raised under any other transaction (including any forward sale or purchase, sale and sale back or sale and leaseback agreement) of a type not referred to in any other paragraph of this definition) having the commercial effect of a borrowing or otherwise classified as borrowings under the Accounting Principles; and	
	(k)	(without double counting) the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in paragraphs (a) to (j) above.	
Financial Statements means, at any time, the consolidated financial statements of the Borrower (and its Subsidiaries) (whether quarterly or annual) delivered to the Lender under clause 20.3 (Financial statements).
Financial Quarter means the period commencing on the day after one Quarter Date and ending on the next Quarter Date.
Financial Year means the annual accounting period of each of the Borrower and the Guarantors, ending on or about the Accounting Reference Date in each year.
First Reduction Date means, subject to clause 33.4 (Business days), the date falling three Months after the date of this Agreement.
Flag State means, in relation to a Ship, the country specified in respect of such Ship in Schedule 2 (Ship Information), or such other state or territory as may be approved by the Lender pursuant to clause 23.2 (Ship’s name and registration), at the request of the relevant Owner, as being the Flag State of such Ship for the purposes of the Finance Documents.

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Fleet Vessel means each Mortgaged Ship and any other vessel owned, operated, managed or crewed by any Group Member.
Funding Rate means any individual rate notified by the Lender pursuant to paragraph (a)(ii) of clause 11.2 (Cost of funds).
General Assignment means, in relation to a Ship in respect of which the Mortgage is not in an account current form (but including any such Ship registered in Cyprus), a first ranking assignment of its interest in the Ship’s Insurances, Earnings and Requisition Compensation by the relevant Owner in favour of the Lender in the agreed form.
Group means the Borrower and its Subsidiaries (including the Guarantors) from time to time and, for the purposes of clause 20.3 (Financial statements) and clause 21 (Financial covenants), any other entity required to be treated as a subsidiary in the Borrower’s consolidated accounts in accordance with the Accounting Principles and/or any applicable law.
Group Member means any Obligor and any other entity which is a member of the Group.
Guarantee means the guarantee and other obligations of the Guarantors under clause 18 (Guarantee and indemnity).
Guarantor means each of the entities described as such in Part 2 of Schedule 1 (The original parties) and Guarantors means together all or any of them.
Holding Company means, in relation to a person, any other person in respect of which it is a Subsidiary.
Increased Costs has the meaning given to that term in paragraph (b) of clause 14.1 (Increased costs).
Indemnified Person means:

	(a)	the Lender, each Receiver, any Delegate and other person appointed by them under the Finance Documents;	
	(b)	each Affiliate of those persons; and	
	(c)	any officers, directors, employees, advisers (including attorneys), representatives or agents of any of the above persons.	
Insolvency Event in relation to an entity means that the entity:

	(a)	is dissolved (other than pursuant to a consolidation, amalgamation or merger);	
	(b)	becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due;	
	(c)	makes a general assignment, arrangement or composition with or for the benefit of its creditors;	
	(d)	institutes or has instituted against it, by a regulator, supervisor or any similar official with primary insolvency, rehabilitative or regulatory jurisdiction over it in the jurisdiction of its incorporation or organisation or the jurisdiction of its head or home office, a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation by it or such regulator, supervisor or similar official; or	
	(e)	has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting	

11

creditors’ rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition is instituted or presented by a person or entity not described in paragraph (d) above and:

	(i)	results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation; or	
	(ii)	is not dismissed, discharged, stayed or restrained in each case within 30 days of the institution or presentation thereof.	
Insurance Notice means, in relation to a Ship, a notice of assignment in the form scheduled to that Ship’s General Assignment, as the case may be, or Deed of Covenant or in another approved form.
Insurances means, in relation to a Ship:

	(a)	all policies and contracts of insurance; and	
	(b)	all entries in a protection and indemnity or war risks or other mutual insurance association,	
in the name of such Ship’s Owner or the joint names of its Owner and any other person which are from time to time, in place taken out or entered in respect of or in connection with such Ship and/or its Earnings or otherwise and all benefits thereof (including the right to receive claims and to return of premiums).
Interest Payment means the aggregate amount of interest that is, or is scheduled to become, payable under any Finance Document.
Interest Period means, in relation to a Loan (or any part of a Loan), each period determined in accordance with clause 10 (Interest Periods) and, in relation to an Unpaid Sum, each period determined in accordance with clause 9.3 (Default interest).
Inventory of Hazardous Material means, in relation to a Mortgaged Ship, a statement of compliance issued by the relevant Classification Society and which includes a list of any and all materials known to be potentially hazardous utilised in the construction of a Ship and which also may be referred to as a List of Hazardous Material.
Joint Venture means any joint venture entity, whether a company, unincorporated firm, undertaking association, joint venture or partnership or any other entity.
Key Charter means, in relation to a Ship at any time, a charter commitment in relation to such Ship entered into by (a) the Owner of such Ship as owner and (b) any other person (not being a Group Member) as the charterer thereunder, which at the relevant time has a remaining term of at least 24 months or longer (but excluding any option to extend or renew contained therein).
Last Availability Date means the date falling one (1) Month before the Final Reduction Date (or such later date as may be approved by the Lender).
Legal Opinion means any legal opinion delivered to the Lender under clause 4 (Conditions of Utilisation).
Legal Reservations means:

	(a)	the principle that equitable remedies may be granted or refused at the discretion of a court and the limitation of enforcement by laws relating to insolvency, reorganisation and other laws generally affecting the rights of creditors;	

12

	(b)	the time barring of claims under the Limitation Act 1980 and the Foreign Limitation Periods Act 1984, the possibility that an undertaking to assume liability for, or indemnify a person against, non-payment of UK stamp duty may be void and defences of set-off or counterclaim;	
	(c)	similar principles, rights and defences under the laws of any Relevant Jurisdiction; and	
	(d)	any other matters which are set out as qualifications or reservations as to matters of law of general application in any Legal Opinion.	
Lender means:

	(a)	the entity listed in Schedule 1 (the Original Parties) as the Lender; and	
	(b)	any bank, financial institution, trust, fund or other entity which has become the Lender in accordance with clause 31 (Changes to the Lender),	
which in each case has not ceased to be a Party in accordance with the terms of this Agreement.
Loan means a loan made or to be made under the Facility or the principal amount outstanding for the time being of that loan and Loans means any or all of them.
Lookback Period means the number of days specified as such in the Reference Rate Terms.
Loss Payable Clauses means, in relation to a Ship, the provisions concerning payment of claims under the Ship’s Insurances in the form scheduled to the Ship’s General Assignment or (as the case may be) Deed of Covenant or in another approved form.
Losses means any costs, expenses (including, but not limited to, legal fees), payments, charges, losses, demands, liabilities, taxes (including VAT) claims, actions, proceedings, penalties, fines, damages, judgments, orders or other sanctions.
Major Casualty means any casualty to a vessel for which the total insurance claim, inclusive of any deductible, exceeds or may exceed the Major Casualty Amount.
Major Casualty Amount means, in relation to a Ship, the amount specified as such against the name of that Ship in Schedule 2 (Ship Information) or the equivalent in any other currency.
Manager means:

	(a)	in relation to each Ship (other than mv’sYM Maturity and YM Mandate), Danaos Shipping Company Limited, a company incorporated in the Republic of Cyprus with its registered office at 3, Christaki Kompou Street, Peter’s House, 3011 Limassol, Cyprus, as technical manager and commercial manager of such Ship; and	
	(b)	in relation to each of mv YM Maturity and mv YM Mandate, Yang Ming Marine Transport Corp. of Taiwan (and, following the termination of its management by such entity, the entity described in paragraph (a) above),	
or, in each case, another manager appointed as the technical and/or commercial manager of such Ship in accordance with clause 23.4 (Manager).
Manager's Undertaking means, in relation to a Ship, a first ranking undertaking by any Manager of such Ship to the Lender in the agreed form, including pursuant to clause 23.4 (Manager).
Margin means two per cent (2%) per annum.
Market Disruption Rate means the rate (if any) specified as such in the Reference Rate Terms.

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Market Value for each Ship or other Relevant Vessel means, at any time, its value, being:

	(a)	the Charter Attached Vessel Value for that Ship or other Relevant Vessel that at the relevant time is subject to, and accepted for service under, a Valuation Charter;	
	(b)	the Charter Free Vessel Value for that Ship or other Relevant Vessel that at the relevant time is not subject to, and accepted for service under, a Valuation Charter; and	
	(c)	the Construction Vessel Value for that Ship or other Relevant Vessel that is at the relevant time subject to construction.	
Material Adverse Effect means a material adverse effect on:

	(a)	the business, operations, or condition (financial or otherwise) of the Group taken as a whole; or	
	(b)	the ability of the Obligors (taken as a whole) to perform their obligations under the Finance Documents; or	
	(c)	the legality, validity or enforceability of, or the effectiveness or ranking of any Security Interest granted or purporting to be granted pursuant to any of, the Finance Documents or the rights or remedies of the Lender under any of the Finance Documents.	
Minimum Value means, at any time, the amount in dollars which is at that time 120% of the Available Facility (including, for the avoidance of doubt, the aggregate of the Loans).
Month means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month, except that in relation to an Interest Period (or any other period for the accrual of commission or fees) or a period at the end of which a Reduction Date falls, a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month, subject to adjustment in accordance with the rules specified as Business Day Conventions in the Reference Rate Terms.
The above rules will only apply to last Month of any period.
Mortgage means, in relation to a Ship, a first priority or (as the case may be) first preferred mortgage of that Ship in the agreed form by the relevant Owner in favour of the Lender.
Mortgage Period means, in relation to a Mortgaged Ship, the period from the date the Mortgage over that Ship is executed and registered until the date such Mortgage is released and discharged or, if earlier, its Total Loss Reduction Date.
Mortgaged Ship means, at any relevant time, any Ship which is subject to a Mortgage and/or whose Earnings, Insurances and Requisition Compensation are subject to a Security Interest under the Finance Documents.
Net Charter Income means, at any time and in relation to a charter commitment of a Relevant Vessel, the aggregate charter hire or freight due and payable to a Group Member for that Relevant Vessel for the remaining unexpired term of such charter commitment in respect of that Relevant Vessel at the relevant time assuming it expired at the time it was scheduled to expire, without any off-hire periods or other events entitling the charterer to not pay or otherwise to withhold charter hire or freight (but excluding any option to extend or renew contained therein exercisable by the relevant charterer) less the aggregate operating expenses and insurances of that Relevant Vessel which are certified to the satisfaction of the Lender for the same period.
New Lender has the meaning given to that term in clause 31 (Changes to the Lender).

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Obligors means the parties to the Finance Documents (other than the Lender, the Manager of any Ship and any Charterers who would be Obligors solely by reason of entering into a Quiet Enjoyment Agreement and/or a Tripartite Agreement) and Obligor means any one of them.
Obligors’ Agent means the Borrower, appointed to act on behalf of each Obligor in relation to the Finance Documents pursuant to clause 2.2 (Obligors’ agent).
Original Financial Statements means the annual audited consolidated financial statements of the Borrower and its Subsidiaries (namely, the Group) for its financial year ended on 31 December 2021.
Original Jurisdiction means, in relation to an Obligor, the jurisdiction under whose laws that Obligor is incorporated, formed, as at the date of this Agreement or, in the case of any other Obligor, as at the date on which that Obligor becomes an Obligor.
Original Obligor means each party to this Agreement and the Original Security Documents (other than the Lender, the Manager of any Ship and any Charterers who would be Obligors solely by reason of entering into a Quiet Enjoyment Agreement and/or a Tripartite Agreement).
Original Security Documents means:

	(a)	the Mortgages over each of the Ships;	
	(b)	the Deeds of Covenant in relation to each of the Ships in respect of which the Mortgage is in account current form;	
	(c)	the General Assignments in relation to each of the Ships in respect of which the Mortgage is not in account current form (but including Ships registered in Cyprus);	
	(d)	a Charter Assignment in relation to each Ship’s Charter Documents;	
	(e)	the Account Security in relation to each Account;	
	(f)	a Manager’s Undertaking by the Manager of each Ship;	
	(g)	any Tripartite Agreements; and	
	(h)	any Quiet Enjoyment Agreements.	
Owner means, in relation to a Ship, the Guarantor specified against the name of that Ship in Schedule 2 (Ship Information) and Owners means any or all of them.
Participating Member State means any member state of the European Union that has adopted the euro as its lawful currency in accordance with legislation of the European Union relating to Economic and Monetary Union.
Party means a party to this Agreement.
Permitted Maritime Liens means, in relation to any Ship:

	(a)	any ship repairer’s or outfitter’s possessory lien in respect of the Ship for an amount not exceeding the Major Casualty Amount;	
	(b)	any lien on the Ship for master's, officer's or crew's wages outstanding or master’s disbursements in the ordinary course of its trading, provided that the amounts giving rise to such liens are not more than 30 days overdue;	
	(c)	any lien on the Ship for salvage or general average;	

15

	(d)	any lien on the Ship arising by operation of law for not more than two months’ prepaid hire under any charter commitment; and	
	(e)	any other lien on the Ship arising by operation of law for claims incurred in the ordinary course of the operation, repair or maintenance of the Ship and which are outstanding for not longer than 30 days.	
Permitted Security Interests means, in relation to any Ship, any Security Interest over it which is:

	(a)	granted by the Finance Documents; or	
	(b)	a Permitted Maritime Lien; or	
	(c)	approved.	
Pollutant means and includes crude oil and its products, any other polluting, toxic or hazardous substance and any other substance whose release into the environment is regulated or penalised by Environmental Laws.
Prohibited Person means any person (whether designated by name or by reason of being included in a class of persons) against whom Sanctions are directed.
Quarter Date means each of 31 March, 30 June, 30 September and 31 December of any calendar year.
Quasi-Security has the meaning given to that term in clause 29.2 (General negative pledge).
Quiet Enjoyment Agreement means, in relation to any Ship that is subject to an Assignable Charter, a quiet enjoyment letter or similar other contract in agreed form in respect of such Ship and its Assignable Charter entered into from time to time by the Lender, the Owner and the Charterer of such Ship.
Receiver means a receiver or receiver and manager or administrative receiver of the whole or any part of the Charged Property appointed under any relevant Security Document.
Reduction Date means, subject to clause 33.4 (Business Days):

	(a)	the First Reduction Date;	
	(b)	each of the dates falling at intervals of three (3) Months thereafter up to but not including the Final Reduction Date; and	
	(c)	the Final Reduction Date.	
Reference Rate Supplement means a document which:

	(a)	is agreed in writing by the Borrower  and the Lender; and	
	(b)	specifies the relevant terms which are expressed in this Agreement to be determined by reference to Reference Rate Terms.	
Reference Rate Terms means the terms set out in Schedule 6 (Reference Rate Terms) or in any Reference Rate Supplement.
Reformed Basel III means the agreements contained in “Basel III: Finalising post-crisis reforms” published by the Basel Committee on Banking Supervision in December 2017, as amended, supplemented or restated.

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Reformed Basel III Increased Cost means an Increased Cost which is attributable to the implementation or application of or compliance with any other law or regulation which implements Reformed Basel III (whether such implementation, application or compliance is by a government, regulator, the Lender or any of its Affiliates).
Registry means, in relation to each Ship, such registrar, commissioner or representative of the relevant Flag State who is duly authorised and empowered to register the relevant Ship, the relevant Owner’s title to such Ship and the relevant Mortgage under the laws of its Flag State.
Related Fund in relation to a fund (the first fund), means a fund which is managed or advised by the same investment manager or investment adviser as the first fund or, if it is managed by a different investment manager or investment adviser, a fund whose investment manager or investment adviser is an Affiliate of the investment manager or investment adviser of the first fund.
Relevant Jurisdiction means, in relation to an Obligor:

	(a)	its Original Jurisdiction;	
	(b)	any jurisdiction where any Charged Property owned by it is situated;	
	(c)	any jurisdiction where it conducts its business; and	
	(d)	any jurisdiction whose laws govern the perfection of any of the Security Documents entered into by it.	
Relevant Market means the market specified as such in the Reference Rate Terms.
Relevant Vessels means, at any relevant time, all of the vessels from time to time owned or leased (under a lease that constitutes a Finance Lease) by, or are under construction for the account and at the order of, Group Members which, at the relevant time, are included within Total Consolidated Assets in the Financial Statements or which would be included within Total Consolidated Assets in the Financial Statements if the Financial Statements were required to be prepared at that time (and it includes the Ships) and Relevant Vessel means any one of them.
RFR means the rate specified as such in the Reference Rate Terms.
RFR Banking Day means any day specified as such in the Reference Rate Terms.
Repeating Representations means each of the representations and warranties set out in clauses 19.2 (Status) to 19.13 (Ownership of Charged Property), clause 19.19 (No Event of Default), clause 19.23 (Anti-corruption law), clause 19.35 (No Money Laundering), clause 19.36 (Sanctions), clause 19.37 (Good title to assets) and clause 19.31 (No immunity).
Reporting Day means the day (if any) specified as such in the Reference Rate Terms.
Reporting Time means the relevant time (if any) specified as such in the Reference Rate Terms.
Representative means any delegate, agent, manager, administrator, nominee, attorney, trustee or custodian.
Requisition Compensation means, in relation to a Ship, any compensation paid or payable by a government entity for the requisition for title, confiscation or compulsory acquisition of such Ship.
Resolution Authority means any body which has authority to exercise any Write-down and Conversion Powers.
Rollover Loan means one or more Loans:

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(a)made or to be made on the same day that a maturing Loan is due to be repaid;
(b)the aggregate amount of which is equal to or less than the maturing Loan; and
(c)made or to be made for the purpose of refinancing a maturing Loan.
Sanctions means any sanctions, embargoes, freezing provisions, prohibitions or other restrictions relating to trading, doing business, investment, exporting, financing or making assets available (or other activities similar to or connected with any of the foregoing):

	(a)	imposed by law or regulation of the United Kingdom, the Council of the European Union, the United Nations or its Security Council or the United States of America, whether or not any Obligor or any other Group Member or any Manager which is affiliated with the Group (including for that purpose Danaos Shipping Company Limited as Manager) is legally bound to comply with the foregoing; or	
	(b)	otherwise imposed by any law or regulation by which any Obligor, any other Group Member or any Manager which is affiliated with the Group (including for that purpose Danaos Shipping Company Limited as Manager) is bound or, as regards a regulation, compliance with which is reasonable in the ordinary course of business of any Obligor, any other Group Member or any Manager which is affiliated with the Group (including for that purpose Danaos Shipping Company Limited as Manager).	
Secured Obligations means all indebtedness and obligations (whether present or future) at any time of any Obligor to the Lender under, or related to, the Finance Documents (as the same may be assigned, transferred or novated from time to time).
Security Documents means:

	(a)	the Original Security Documents; and	
	(b)	any other document as may be executed to guarantee and/or secure any amounts owing to the Lender under this Agreement or any other Finance Document.	
Security Interest means a mortgage, charge, pledge, lien, assignment, trust, hypothecation or other security interest of any kind securing any obligation of any person or any other agreement or arrangement having a similar effect.
Security Value means, at any time, the amount in dollars which, at that time, is the aggregate of (a) the Market Value of all Mortgaged Ships which have not then become a Total Loss and (b) the value of any additional security then held by the Lender provided under clause 26 (Minimum security value), in each case as most recently determined in accordance with this Agreement.
Ship means each of the ships described in Schedule 2 (Ship Information) and Ships means any or all of them.
Ship Representations means each of the representations and warranties set out in clauses 19.32 (Ship status) and 19.33 (Ship’s employment).
Spill means any spill, release or discharge of a Pollutant into the environment.
Subsidiary of a person means any other person:

	(a)	directly or indirectly controlled by such person; or	
	(b)	of whose dividends or distributions on ordinary voting share capital, such person is beneficially entitled to receive more than 50 per cent,	

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and a person is a “wholly-owned Subsidiary” of another person if it has no members except that other person and that other person’s wholly-owned Subsidiaries or persons acting on behalf of that other person or its wholly-owned Subsidiaries.
Tax means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same).
Total Consolidated Assets means, at any time, the “Total Assets” of the Group as appearing in the Financial Statements, excluding the mark to market fair value of any derivative financial instruments (where the entry into such derivative financial instrument is not prohibited by this Agreement) as recorded within the Financial Statements in accordance with the Accounting Principles.
Total Loss means, in relation to a Ship:

	(a)	its actual, constructive, compromised or arranged total loss; or	
	(b)	its requisition for title, confiscation or other compulsory acquisition by a government entity; or	
	(c)	the hijacking, theft, condemnation, capture (whether by piracy or otherwise), seizure, arrest, detention or confiscation of such Ship (other than where the same amounts to the compulsory acquisition of such Ship covered by paragraph (b) above) unless such Ship be released and restored to the relevant Owner from such hijacking, theft, condemnation, capture (whether by piracy or otherwise), seizure, arrest, detention or confiscation within 60 days thereof in the case of hijacking, theft or capture (whether by piracy or otherwise) or within 30 days thereof in all other cases.	
Total Loss Date means, in relation to the Total Loss of a Ship:

	(a)	in the case of an actual total loss, the date it happened or, if such date is not known, the date on which the vessel was last reported;	
	(b)	in the case of a constructive, compromised, agreed or arranged total loss, the earliest of:	
	(i)	the date notice of abandonment of the vessel is given to its insurers (provided a claim for total loss is admitted by the insurers); or	
	(ii)	if the insurers do not admit such a claim, the date upon which either a total loss is subsequently admitted by the insurers or a total loss is later determined by a competent court of law or arbitration tribunal to have been the date on which the total loss happened; or	
	(iii)	the date upon which a binding agreement as to such compromised or arranged total loss has been entered into by the vessel's insurers;	
	(c)	in the case of a requisition for title, confiscation or compulsory acquisition, the date it happened; and	
	(d)	in the case of hijacking, theft, condemnation, capture, seizure, arrest or detention, the date 60 days after the date upon which it happened in the case of hijacking, theft or capture (whether by piracy or otherwise) or 30 days after the date upon which it happened in all other cases.	

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Total Loss Reduction Date means, where a Ship has become a Total Loss, the earlier of:

	(a)	the date falling 150 days after its Total Loss Date; and	
	(b)	the date upon which insurance proceeds or Requisition Compensation for such Total Loss are paid by insurers or the relevant government entity.	
Transaction Document means:

	(a)	each of the Finance Documents; and	
	(b)	any Charter Document.	
Transaction Security means the Security Interests created or evidenced or expressed to be created or evidenced under or pursuant to the Security Documents.
Treasury Transaction means any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price.
Tripartite Agreement means, in relation to a Ship that is subject to a Charter which is a bareboat charter, the first priority tripartite agreement in respect of that Ship between the relevant Owner, the relevant Charterer and the Lender in the agreed form (or, where this is not agreed by the relevant Charterer, either (a) an assignment by that Charterer of its rights under the Insurances of that Ship in favour of the Lender or, in the alternative, (b) an assignment by the relevant Owner of such rights of the Charterer under such Insurances as such rights have been previously assigned by that Charterer to the relevant Owner, in each case in the agreed form).
UK Bail-In Legislation means Part I of the United Kingdom Banking Act 2009 and any other law or regulation applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (otherwise than through liquidation, administration or other insolvency proceedings).
Unpaid Sum means any sum due and payable but unpaid by an Obligor under the Finance Documents.
US means the United States of America.
US GAAP means current generally accepted accounting principles in the United States of America from time to time.
US Tax Obligor means:

	(a)	the Borrower if it is resident for tax purposes in the US; or	
	(b)	an Obligor some or all of whose payments under the Finance Documents are from sources within the US for US federal income tax purposes.	
Utilisation means the making of a Loan.
Utilisation Date means the date on which a Utilisation is to be made.
Utilisation Request means a notice substantially in the form set out in Schedule 4 (Utilisation Request).
Valuation Charter means, in relation to a Ship or other Relevant Vessel at any time, any charter commitment in respect of the same (including, if applicable, any Charter, Assignable Charter or Key Charter) between (a) a Group Member as the  registered owner or the disponent owner of the same and (b) any other person (not being a Group Member) as the charterer or the disponent

20

owner’s counterparty thereunder, which at the relevant time has a remaining term of at least 12 months or longer (but excluding any option to extend or renew contained therein).
VAT means:

	(a)	any value added tax imposed by the Value Added Tax Act 1994;	
	(b)	any tax imposed in compliance with the Council Directive of 28 November 2006 on the common system of value added tax (EC Directive 2006/112); and	
	(c)	any other tax of a similar nature, whether imposed in the United Kingdom or in a member state of the European Union in substitution for, or levied in addition to, such tax referred to in paragraph (a) or (b) above, or imposed elsewhere.	
Write-down and Conversion Powers means:

	(a)	in relation to any Bail-In Legislation described in the EU Bail-In Legislation Schedule from time to time, the powers described as such in relation to that Bail-In Legislation in the EU Bail-In Legislation Schedule;	
	(b)	in relation to any other applicable Bail-In Legislation other than the UK Bail-in Legislation:	
	(i)	any powers under that Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers; and	
	(ii)	any similar or analogous powers under that Bail-In Legislation; and	
	(c)	in relation to any UK Bail-In Legislation:	
	(i)	any powers under that UK Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that UK Bail-In Legislation that are related to or ancillary to any of those powers; and	
	(ii)	any similar or analogous powers under that UK Bail-In Legislation.	
1.2	Construction	
	(a)	Unless a contrary indication appears, any reference in any of the Finance Documents to:	
	(i)	Sections, clauses and Schedules are to be construed as references to the Sections and clauses of, and the Schedules to, the relevant Finance Document and references to a Finance Document include its Schedules and are for ease of reference only;	
	(ii)	a Finance Document or a Transaction Document or any other agreement or instrument is a reference to that Finance Document or a Transaction Document or	

21

other agreement or instrument as it may from time to time be amended, supplemented, restated, novated or replaced, however fundamentally;

	(iii)	words importing the plural shall include the singular and vice versa;	
	(iv)	a time of day are to London time;	
	(v)	any person (including, without limitation, the Account Bank, the Lender, any Obligor and any Party) includes its successors in title, permitted assignees or transferees;	
	(vi)	the knowledge, awareness and/or belief (and similar expressions) of any Obligor shall be construed so as to mean the knowledge, awareness and beliefs of the director and officers of such Obligor, having made due and careful enquiry;	
	(vii)	two or more persons are acting in concert if pursuant to an agreement or understanding (whether formal or informal) they actively co-operate, through the acquisition (directly or indirectly) of shares, partnership interest or units or limited liability company interests in an entity by any of them, either directly or indirectly, to obtain or consolidate control of that entity;	
	(viii)	a document in agreed form means:	
	(A)	where a Finance Document has already been executed by all of the relevant parties to it, such Finance Document in its executed form; and	
	(B)	prior to the execution of a Finance Document, the form of such Finance Document separately agreed in writing between the Lender and the Borrower as the form in which that Finance Document is to be executed or another form approved at the request of the Borrower;	
	(ix)	approved or approved by the Lender means approved in writing by the Lender (on such conditions as the Lender may respectively impose in its absolute discretion) and approval and approve shall be construed accordingly;	
	(x)	assets includes present and future properties, revenues and rights of every description;	
	(xi)	charter commitment means, in relation to a vessel, any charter or contract for the use, employment or operation of that vessel or the carriage of people and/or cargo or the provision of services by or from it and includes any agreement for pooling or sharing income derived from any such charter or contract;	
	(xii)	control of an entity means:	
	(A)	the power (whether by way of ownership of shares, proxy, contract, agency or otherwise, directly or indirectly) to:	
	(I)	cast, or control the casting of, more than 50 per cent of the maximum number of votes that might be cast at a general meeting of that entity; or	
	(II)	appoint or remove all, or the majority, of the directors or other equivalent officers of that entity; or	
	(III)	give directions with respect to the operating and financial policies of that entity with which the directors, or other equivalent officers of that entity are obliged to comply; and/or	

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	(B)	the holding beneficially of more than 50 per cent of the issued share capital of that entity, (excluding any part of that issued share capital, that carries no right to participate beyond a specified amount in a distribution of either profits or capital) (and, for this purpose, any Security Interest over share capital, shall be disregarded in determining the beneficial ownership of such share capital),	
and controlled shall be construed accordingly;

	(xiii)	the Lender’s cost of funds in relation to its participation in a Loan (or any relevant part of it) is a reference to the average cost (determined either or an actual or a notional basis) which the Lender would incur if it were to fund, from whatever source(s) it may reasonably select, an amount equal to the amount of that participation in that Loan (or any relevant part of it) for a period equal in length to the Interest Period of that Loan or relevant part of it;	
	(xiv)	the term disposal or dispose means a sale, transfer or other disposal (including by way of lease or loan but not including by way of loan of money) by a person of all or part of its assets, whether by one transaction or a series of transactions and whether at the same time or over a period of time, but not the creation of a Security Interest;	
	(xv)	the equivalent of an amount specified in a particular currency (the specified currency amount) shall be construed as a reference to the amount of the other relevant currency which can be purchased with the specified currency amount in the London foreign exchange market at or about 11 a.m. on the date the calculation falls to be made for spot delivery, as conclusively determined by the Lender (with the relevant exchange rate of any such purchase being the Lender’s spot rate of exchange);	
	(xvi)	a government entity means any government, state or agency of a state;	
	(xvii)	a guarantee means (other than in clause 18 (Guarantee and indemnity)) any guarantee, letter of credit, bond, indemnity or similar assurance against loss, or any obligation, direct or indirect, actual or contingent, to purchase or assume any indebtedness of any person or to make an investment in or loan to any person or to purchase assets of any person where, in each case, such obligation is assumed in order to maintain or assist the ability of such person to meet its indebtedness;	
	(xviii)	indebtedness includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;	
	(xix)	an obligation means any duty, obligation or liability of any kind;	
	(xx)	something being in the ordinary course of business of a person means something that is in the ordinary course of that person’s current day-to-day operational business (and not merely anything which that person is entitled to do under its Constitutional Documents);	
	(xxi)	pay, prepay or repay in clause 29 (Business restrictions) includes by way of set-off, combination of accounts or otherwise;	
	(xxii)	a person includes any individual, firm, company, corporation, government entity or any association, trust, Joint Venture, consortium or partnership or other entity (whether or not having separate legal personality);	
	(xxiii)	a regulation includes any regulation, rule, official directive, request or guideline (whether or not having the force of law) of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other	

23

authority or organisation and includes (without limitation) any Basel II Regulation or Basel III Regulation or any law or regulation which implements Reformed Basel III, in each case which is applicable to the Lender;

	(xxiv)	right means any right, privilege, power or remedy, any proprietary interest in any asset and any other interest or remedy of any kind, whether actual or contingent, present or future, arising under contract or law, or in equity;	
	(xxv)	trustee, fiduciary and fiduciary duty has in each case the meaning given to such term under applicable law;	
	(xxvi)	(i) the liquidation, winding up, dissolution, or administration of person or (ii) a receiver or administrative receiver or administrator in the context of insolvency proceedings or security enforcement actions in respect of a person shall be construed so as to include any equivalent or analogous proceedings or any equivalent and analogous person or appointee (respectively) under the law of the jurisdiction in which such person is established, or incorporated or any jurisdiction in which such person carries on business including (in respect of proceedings) the seeking or occurrences of liquidation, winding-up, reorganisation, dissolution, administration, arrangement, adjustment, protection or relief of debtors; and	
	(xxvii)	a provision of law is a reference to that provision as amended or re-enacted from time to time.	
	(b)	The determination of the extent to which a rate is for a period equal in length to an Interest Period shall disregard any inconsistency arising from the last day of that Interest Period being determined pursuant to the terms of this Agreement.	
	(c)	Where in this Agreement a provision includes a monetary reference level in one currency, unless a contrary indication appears, such reference level is intended to apply equally to its equivalent in other currencies as of the relevant time for the purposes of applying such reference level to any other currencies.	
	(d)	Unless a contrary indication appears, a term used in any other Finance Document or in any notice given under or in connection with any Finance Document has the same meaning in that Finance Document or notice as in this Agreement.	
	(e)	A Default (other than an Event of Default) is continuing if it has not been remedied or waived in writing and an Event of Default is continuing if it has not been remedied or waived in writing provided that if the Lender has served notice pursuant to clause 30.26 (Acceleration) an Event of Default will be deemed continuing unless waived in writing by the Lender.	
	(f)	A reference in this Agreement to a page or screen of an information service displaying a rate shall include:	
	(i)	any replacement page of that information service which displays that rate; and	
	(ii)	the appropriate page of such other information service which displays that rate from time to time in place of that information service,	
and, if such page or service ceases to be available, shall include any other page or service displaying that rate specified by the Lender after consultation with the Borrower.

	(g)	A reference in this Agreement to a Central Bank Rate shall include any successor rate to, or replacement rate for, that rate.	
	(h)	Any Reference Rate Supplement overrides anything in:	

24

	(i)	Schedule 6 (Reference Rate Terms); or	
	(ii)	any earlier Reference Rate Supplement.	
	(i)	A Compounding Methodology Supplement relating to the Daily Non-Cumulative Compounded RFR Rate or the Cumulative Compounded RFR Rate overrides anything relating to that rate in:	
	(i)	Schedule 7 (Daily Non-Cumulative Compounded RFR Rate) or Schedule 8 (Cumulative Compounded RFR Rate), as the case may be; or	
	(ii)	any earlier Compounding Methodology Supplement.	
1.3	Currency symbols and definitions	
$, USD and dollars denote the lawful currency of the United States of America.

1.4	Third party rights	
	(a)	Unless expressly provided to the contrary in a Finance Document for the benefit of the Lender or another Indemnified Person, a person who is not a party to a Finance Document has no right under the Contracts (Rights of Third Parties) Act 1999 (the Third Parties Act) to enforce or to enjoy the benefit of any term of the relevant Finance Document.	
	(b)	Any Finance Document may be rescinded or varied by the parties to it without the consent of any person who is not a party to it (unless otherwise provided by this Agreement).	
	(c)	An Indemnified Person who is not a party to a Finance Document may only enforce its rights under that Finance Document through the Lender and if and to the extent and in such manner as the Lender may determine.	
1.5	Finance Documents	
Where any other Finance Document provides that this clause 1.5 shall apply to that Finance Document, any other provision of this Agreement which, by its terms, purports to apply to all or any of the Finance Documents and/or any Obligor shall apply to that Finance Document as if set out in it but with all necessary changes.

1.6	Conflict of documents	
The terms of the Finance Documents (other than as relates to the creation and/or perfection of security) are subject to the terms of this Agreement and, in the event of any conflict between any provision of this Agreement and any provision of any Finance Document (other than in relation to the creation and/or perfection of security) the provisions of this Agreement shall prevail.

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Section 2 - The Facility

	2	The Facility	
2.1	The Facility	
Subject to the terms of this Agreement, the Lender makes available to the Borrower a revolving credit facility in the principal sum of up to three hundred and eighty two million five hundred thousand dollars ($382,500,000).

2.2	Obligors’ agent	
	(a)	Each Obligor (other than the Borrower) by its execution of this Agreement irrevocably appoints the Borrower (acting through one or more authorised signatories) to act on its behalf as its agent in relation to the Finance Documents and irrevocably authorises:	
	(i)	the Borrower on its behalf to supply all information concerning itself contemplated by this Agreement to the Lender and to give all notices and instructions, to make such agreements and to effect the relevant amendments, supplements and variations capable of being given, made or effected by any Obligor notwithstanding that they may affect the Obligor, without further reference to or the consent of that Obligor; and	
	(ii)	the Lender to give any notice, demand or other communication to that Obligor pursuant to the Finance Documents to the Borrower,	
and in each case the Obligor shall be bound as though the Obligor itself had given the notices and instructions or executed or made the agreements or effected the amendments, supplements or variations, or received the relevant notice, demand or other communication.

	(b)	Every act, omission, agreement, undertaking, settlement, waiver, amendment, supplement, variation, notice or other communication given or made by the Obligors’ Agent or given to the Obligors’ Agent under any Finance Document on behalf of another Obligor or in connection with any Finance Document (whether or not known to any other Obligor and whether occurring before or after such other Obligor became an Obligor under any Finance Document) shall be binding for all purposes on that Obligor as if that Obligor had expressly made, given or concurred with it.  In the event of any conflict between any notices or other communications of the Obligors’ Agent and any other Obligor, those of the Obligors’ Agent shall prevail.	
	3	Purpose	
3.1	Purpose	
The Borrower shall apply all amounts borrowed under the Facility solely for the purpose of assisting the Borrower to refinance in part the Existing Indebtedness and/or providing the Borrower with working capital and/or financing general corporate and investment purposes of the Group.

3.2	Monitoring	
The Lender is not bound to monitor or verify the application of any amount borrowed pursuant to this Agreement.

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	4	Conditions of Utilisation	
4.1	Initial conditions precedent	
The Borrower may not deliver a Utilisation Request and the Lender will not be obliged to comply with clause 5.4 (Lender’s obligation) in relation to the first Utilisation unless the Lender, or its duly authorised representative, has received all of the documents and other evidence listed in Part 1 of Schedule 3 (Conditions precedent to the first Utilisation) in form and substance satisfactory to the Lender.

4.2	Ship and security conditions precedent	
The Commitment may only be borrowed under this Agreement if on or before the first Utilisation the Lender, or its duly authorised representative, has received all of the documents and evidence listed in Part 2 of Schedule 3 (Ship and security conditions precedent) in form and substance satisfactory to the Lender.

4.3	Notice of satisfaction of conditions	
The Lender shall notify the Borrower promptly after receipt by it of the documents and evidence referred to in this clause 4 in form and substance satisfactory to it. The Lender shall not be liable for any damages, costs or losses whatsoever as a result of giving any such notification.

4.4	Further conditions precedent	
The Lender will only be obliged to comply with clause 5.4 (Lender's participation) if:

	(a)	in the case of a Rollover Loan, on the date of a Utilisation Request and on the proposed Utilisation Date, no Event of Default is continuing or would result from the proposed Loan;	
	(b)	in the case of any other Utilisation, on the date of that Utilisation Request and on the proposed Utilisation Date:	
	(i)	no Default is continuing or would result from the proposed Utilisation;	
	(ii)	the Security Value is not less than the Minimum Value (taking into account the relevant Loan of the proposed Utilisation); and	
	(iii)	the circumstances referred to in clause 11.1 (Market disruption) do not exist in respect of that Loan;	
	(c)	on the date of the first Utilisation Request and on the proposed Utilisation Date, all of the representations set out in clause 19 (Representations) are true; and	
	(d)	on the date of each subsequent Utilisation Request and on the proposed Utilisation Date, the Repeating Representations are true.	
4.5	Maximum number of Loans	
The Borrower may not deliver a Utilisation Request if, as result of the proposed Utilisation, 5 or more Loans would be outstanding.

4.6	Waiver of conditions precedent	
The conditions in this clause 4 are inserted solely for the benefit of the Lender and may be waived by the Lender in whole or in part and with or without conditions.

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Section 3 - Utilisation

	5	Utilisation	
5.1	Delivery of a Utilisation Request	
The Borrower may utilise the Facility by delivery to the Lender of a duly completed Utilisation Request not later than 11:00 a.m. three Business Days before the proposed Utilisation Date.

5.2	Completion of a Utilisation Request	
	(a)	A Utilisation Request is irrevocable and will not be regarded as having been duly completed unless:	
	(i)	the proposed Utilisation Date is a Business Day falling on or before the Last Availability Date;	
	(ii)	the currency and amount of the Utilisation comply with clause 5.3 (Currency and amount);	
	(iii)	the proposed Interest Period complies with clause 10 (Interest Periods); and	
	(iv)	it identifies the purpose for the Utilisation and that purpose complies with clause 3 (Purpose).	
	(b)	Only one Loan may be requested in each Utilisation Request.	
5.3	Currency and amount	
The currency specified in a Utilisation Request must be dollars and the amount of the proposed Loan must be a minimum of $1,000,000 or, if less, the amount of the Available Facility less the amount of the outstanding Loans and must not exceed (when aggregated with the outstanding loans) the Commitment.

5.4	Lender’s obligation	
	(a)	If the conditions set out in this Agreement have been met, and subject to clause 6.1 (Repayment), the Lender shall make each Loan available by 11:00 am on a Utilisation Date through its Facility Office.	
	(b)	The Lender shall advance each Loan to the Borrower or any account of the Borrower or to its order in accordance with the instructions contained in the relevant Utilisation Request.	

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Section 4 - Repayment, Prepayment and Cancellation

	6	Repayment	
6.1	Repayment	
	(a)	The Borrower shall repay each Loan on the last day of its Interest Period.	
	(b)	Without prejudice to the Borrower’s obligation under paragraph (a) above, if one or more Loans are to be made available to the Borrower on the same day that a maturing Loan is due to be repaid by the Borrower, the aggregate amount of the new Loans shall be treated as if applied in or towards repayment of the maturing Loan so that:	
	(i)	if the amount of the maturing Loan exceeds the aggregate amount of the new Loans:	
	(A)	the Borrower will only be required to make a payment under clause 33.1 (Payments to the Lender) in an amount equal to that excess; and	
	(B)	the new Loans shall be treated as having been made available and applied by the Borrower in or towards repayment of the maturing Loan and the Lender will not be required to make a payment under clause 5.4 (Lender’s obligation) in respect of the new Loans; and	
	(ii)	if the amount of the maturing Loan is equal to or less than the aggregate amount of the new Loans:	
	(A)	the Borrower will not be required to make a payment under paragraph (a) above; and	
	(B)	the Lender will be required to make a payment under clause 5.4 (Lender’s obligation) in respect of the new Loans only to the extent that the new Loans exceed the maturing Loan and the remainder of the new Loans shall be treated as having been made available and applied by the Borrower in or towards repayment of the maturing Loan.	
6.2	Scheduled reduction of Facility	
To the extent not previously reduced, the Commitment shall be reduced by instalments on each Reduction Date by the amount specified in the table below (as revised by clause 6.3 (Adjustment of scheduled reductions):

Reduction Date	Amount ($)	
First	11,250,000	
Second	11,250,000	
Third	11,250,000	
Fourth	11,250,000	
Fifth	11,250,000	
Sixth	11,250,000	
Seventh	11,250,000	
Eighth	11,250,000	
Ninth	11,250,000	

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Tenth	11,250,000	
Eleventh	11,250,000	
Twelfth	11,250,000	
Thirteenth	11,250,000	
Fourteenth	11,250,000	
Fifteenth	11,250,000	
Sixteenth	11,250,000	
Seventeenth	11,250,000	
Eighteenth	11,250,000	
Nineteenth	11,250,000	
Twentieth	168,750,000	
TOTAL	382,500,000	

(a)The twentieth instalment referred to above comprises two parts:

	(i)	a reduction instalment in the amount of $11,250,000; and	
	(ii)	a balloon instalment in the amount of $157,500,000.	
	(b)	On the Final Reduction Date (and notwithstanding any other provisions of this Agreement), the Commitment shall be reduced to zero and any outstanding Loans shall be repaid in full.	
6.3	Adjustment of scheduled reductions	
If the Commitment has been partially reduced under this Agreement (other than under clause 6.2 (Scheduled reduction of Facility)) before any Reduction Date, the amount of the instalment by which the Commitment shall be reduced under clause 6.2 (Scheduled reduction of Facility) on any such Reduction Date (as reduced by any earlier operation of this clause 6.3) shall be reduced pro rata to such reduction in the Commitment (inclusive of the balloon instalment referred to in sub-paragraph (ii) of paragraph (a) of Clause 6.2 (Scheduled reduction of Facility)).

	7	Illegality, prepayment and cancellation	
7.1	Illegality	
If, in any applicable jurisdiction, it becomes unlawful for the Lender to perform any of its obligations as contemplated by this Agreement or any of the other Finance Documents, or for the Lender to fund or maintain its participation in any Loan or it becomes unlawful for any Affiliate of the Lender for the Lender to do so:

	(a)	the Lender shall promptly notify the Borrower upon becoming aware of that event; and	
	(b)	upon the Lender notifying the Borrower, the Commitment will be immediately cancelled; and	

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	(c)	the Borrower shall repay each Loan on the last day of the Interest Period for each Loan occurring after the Lender has notified the Borrower (being no earlier than the last day of any applicable grace period permitted by law).	
7.2	Change of Control	
	(a)	The Borrower shall promptly notify the Lender upon any Obligor becoming aware of a Change of Control.	
	(b)	If a Change of Control occurs, the Lender may, by notice to the Borrower, cancel the Commitment with effect from a date specified in that notice (which is at least twenty (20) days (or such later date as approved) after the giving of the notice) and declare that all or part of the Loans, together with interest thereon and all other amounts accrued or outstanding under the Finance Documents, be payable on such date, whereupon, with effect from such date, the Commitment will be immediately cancelled, the Facility shall immediately cease to be available and the Loans, interest thereon and all such other accrued or outstanding amounts shall become due and payable on such date.	
7.3	Voluntary cancellation	
The Borrower may, if it gives the Lender not less than ten (10) Business Days' (or such shorter period as the Lender may agree) prior written notice, cancel the whole or any part (being a minimum amount of $1,000,000 or a multiple of such amount) of the Available Facility. Upon any such cancellation, the Commitment shall be reduced by the same amount.
The Borrower shall only be entitled to cancel the whole or any part of the Available Facility which is then drawn if the Borrower prepay such amount of the Loans as may be necessary to ensure that the outstanding Loans after the date of such cancellation will not exceed the Available Facility (as so reduced).

7.4	Voluntary prepayment	
The Borrower may, if it gives the Lender not less than 10 RFR Banking Days’ (or such shorter period as the Lender may agree) prior written notice, prepay the whole or any part of a Loan (but if in part, being an amount that reduces the amount of the relevant Loan by a minimum amount of $1,000,000 or a multiple of such amount, or such other amount agreed between the Lender and the Borrower), on the last day of an Interest Period in respect of the amount to be prepaid or, subject to payment of any Break Costs, on any other day.

7.5	Sale or Total Loss	
	(a)	If a Ship is sold or becomes a Total Loss before the first Utilisation, the Lender will consult with the Borrower as to how the Facility will be adjusted to take into account the effect of the loss or sale of such Ship, Provided however that if no agreement is reached between the Lender and the Borrower within 10 Business Days of such date, the Commitment shall be reduced to zero.	
	(b)	On a Mortgaged Ship’s Disposal Reduction Date (subject always to the other provisions of the Finance Documents restricting the disposal of Ships):	
	(i)	the Commitment (and consequently the Available Facility), will each be reduced by the amount which is equal to the higher of:	
	(A)	such amount as shall ensure that immediately after such reduction the Security Value shall be no less than the Minimum Value; and	
	(B)	the Applicable Fraction of the Available Facility; and	

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	(ii)	the Borrower shall prepay such part of the Loans as may be necessary to ensure that the outstanding Loans after such date will not exceed the Commitment or the Available Facility (each as so reduced).	
	(c)	For the purposes of this clause, Applicable Fraction means, in relation to a Mortgaged Ship being sold or which has become a Total Loss, a fraction having:	
	(i)	a numerator equal to the Market Value of the Ship sold or lost; and	
	(ii)	a denominator equal to the aggregate of the Market Value of all Ships (including the Ship lost or sold),	
in each case as determined by the Lender on or before the relevant Ship’s Disposal Reduction Date.

7.6	Automatic cancellation	
Any part of the Commitment which has not become available by the Last Availability Date shall be automatically cancelled at close of business in London on the Last Availability Date.

	8	Restrictions	
8.1	Notices of cancellation and prepayment	
Any notice of cancellation or prepayment given by any Party under clause 7 (Illegality, prepayment and cancellation) shall be irrevocable and, unless a contrary indication appears in this Agreement, shall specify the date or dates upon which the relevant cancellation or prepayment is to be made and the amount of that cancellation or prepayment.

8.2	Interest and other amounts	
Any prepayment under this Agreement shall be made together with accrued interest on the amount prepaid and, subject to any Break Costs, without premium or penalty.

8.3	Reborrowing	
Unless a contrary indication appears in this Agreement, any part of the Facility which is prepaid or repaid may be re-borrowed on or before the Last Availability Date and subject to and in accordance with the terms of this Agreement.

8.4	Prepayment in accordance with Agreement	
The Borrower shall not repay or prepay all or any part of the Loans or cancel all or any part of the Commitment except at the times and in the manner expressly provided for in this Agreement.

8.5	No reinstatement of Commitments	
No amount of the Commitment cancelled under this Agreement may be subsequently reinstated.

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Section 5 - Costs of Utilisation

	9	Interest	
9.1	Calculation of interest	
	(a)	The rate of interest on each Loan (or any relevant part of it for which there is a separate Interest Period) for any day during an Interest Period relating to it is the percentage rate per annum which is the aggregate of:	
	(i)	the Margin; and	
	(ii)	the Daily Non-Cumulative Compounded RFR Rate for that day.	
	(b)	If any day during an Interest Period for a Loan (or any relevant part of it) is not an RFR Banking Day, the rate of interest on a Loan (or any relevant part of it) for that day will be the rate applicable to the immediately preceding RFR Banking Day.	
9.2	Payment of interest	
The Borrower shall pay accrued interest on each Loan on the last day of each Interest Period.

9.3	Default interest	
	(a)	If an Obligor fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on the overdue amount from the due date up to the date of actual payment (both before and after judgment) at a rate which is 2 per cent (2%) per annum higher than the rate which would have been payable if the overdue amount had, during the period of non-payment, constituted a Loan for successive Interest Periods, each of a duration selected by the Lender (acting reasonably).	
	(b)	Any interest accruing under this clause 9.3 shall be immediately payable by the Obligors on demand by the Lender.	
	(c)	Default interest (if unpaid) arising on an overdue amount will be compounded with the overdue amount at the end of each Interest Period applicable to that overdue amount but will remain immediately due and payable.	
9.4	Notifications	
	(a)	The Lender shall promptly upon an Interest Payment being determinable notify the Borrower of:	
	(i)	that Interest Payment;	
	(ii)	each applicable rate of interest relating to the determination of that Interest Payment; and	
	(iii)	to the extent it is then determinable, the Market Disruption Rate (if any).	
This paragraph (a) shall not apply to any Interest Payment determined pursuant to clause 11.2 (Cost of funds).

	(b)	The Lender shall promptly notify the Borrower of each Funding Rate.	
	(c)	The Lender shall promptly notify the Borrower of the determination of a rate of interest to which clause 11.2 (Cost of funds) applies.	

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	(d)	This clause 9.4 shall not require the Lender to make any notification to any Party on a day which is not a Business Day.	
	10	Interest Periods	
10.1	Selection of Interest Periods	
	(a)	The Borrower may select an Interest Period for a Loan in the Utilisation Request for that Loan.	
	(b)	Subject to this clause 10, the Borrower may select an Interest Period of any period specified in the Reference Rate Terms or any other period agreed between the Borrower and the Lender.	
	(c)	If the Borrower fails to select an Interest Period for a Loan in accordance with paragraph 10.1(a) above, the relevant Interest Period will, subject to clause 10.2 (Interest Periods overrunning Reduction Dates), be the period specified in the Reference Rate Terms.	
	(d)	No Interest Period shall extend beyond the Final Reduction Date.	
	(e)	The Interest Period for a Loan shall start on its Utilisation Date.	
	(f)	A Loan has one Interest Period only.	
10.2	Interest Periods overrunning Reduction Dates	
The Borrower may not select an Interest Period for a Loan which would overrun any later Reduction Date where the making of that Loan for such Interest Period would result in the total amount of outstanding Loans maturing after that date exceeding the Commitment as scheduled to be reduced on or by that date under clause 6.2 (Scheduled reduction of Facility). If the Borrower seeks to select such an Interest Period, the relevant Loan shall nevertheless be advanced but the Interest Period for that Loan shall run from its Utilisation until the relevant Reduction Date.

10.3	Non-Business Days	
Any rules specified as “Business Day Conventions” in the Reference Rate Terms shall apply to each Interest Period for each Loan and each Unpaid Sum.

	11	Changes to the calculation of interest	
11.1	Market disruption	
If:

	(a)	a Market Disruption Rate is specified in the Reference Rate Terms; and	
	(b)	before the Reporting Time  the Lender notifies the Borrower that the cost to it of funding its participation in any Loan (or any part of it) from whatever source it may reasonably select for dollars would be in excess of that Market Disruption Rate,	
then clause 11.2 (Cost of funds) shall apply to that Loan (or relevant part of it) for the relevant Interest Period.

11.2	Cost of funds	
	(a)	If this clause 11.2 applies in respect of a Loan (or any part of it) the rate of interest on that Loan (or that part, as the case may be) for the relevant Interest Period shall be the percentage rate per annum which is the sum of:	

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	(i)	the Margin; and	
	(ii)	the rate notified to the Borrower by the Lender as soon as practicable and in any event by the Reporting Time, to be that which expresses as a percentage rate per annum the Lender’s cost of funds in respect of that Loan (or the relevant part of it, as the case be).	
	(b)	If this clause 11.2 applies and the Lender or the Borrower so require, the Lender and the Borrower shall enter into negotiations (for a period of not more than thirty (30) days) with a view to agreeing an alternative basis for determining the rate of interest.	
	(c)	Any alternative or substitute basis agreed pursuant to clause 11.2(b) above shall, with the prior consent of the Lender and the Borrower, be binding on all Parties.	
	(d)	If this clause 11.2 applies pursuant to clause 11.1 (Market disruption) in respect of a Loan and:	
	(i)	the Lender's Funding Rate is less than the Market Disruption Rate; or	
	(ii)	the Lender does not notify a rate by the Reporting Time,	
the Lender’s cost of funds in relation to that Loan (or the relevant part of it) for that Interest Period shall be deemed, for the purposes of clause 11.2(a) above, to be the Market Disruption Rate.

11.3	Notification to the Borrower	
If clause 11.2 (Cost of funds) applies the Lender shall, as soon as is practicable, notify the Borrower.

11.4	Break Costs	
If an amount is specified as Break Costs in the Reference Rate Terms, the Borrower shall, within three (3) Business Days of demand by the Lender, pay to the Lender its Break Costs attributable to all or any part of a Loan or Unpaid Sum being paid by the Borrower on a day other than the last day of an Interest Period for that Loan or Unpaid Sum or relevant part of it.

	12	Fees	
12.1	Commitment fee	
	(a)	The Borrower shall pay to the Lender a commitment fee in dollars computed at the rate of 0.8% per annum on the undrawn and uncancelled portion of the Commitment calculated from the date of this Agreement (the start date).	
	(b)	The Borrower shall pay the accrued commitment fee on the date falling three months after the start date, on the last day of each successive period of three months thereafter until the Final Reduction Date, on the Final Reduction Date and, if cancelled in full, on the cancelled amount of the Commitment at the time the cancellation is effective.	
12.2	Upfront fee	
The Borrower shall pay to the Lender an upfront fee of $382,500 on the date of this Agreement.

12.3	Other fees	
The Borrower shall pay to the Lender any other fees set out in Fee Letters in the amount and at the times agreed therein.

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Section 6 - Additional Payment Obligations

	13	Tax gross-up and indemnities	
13.1	Definitions	
	(a)	In this Agreement:	
Protected Party means the Lender or, in relation to clause 15.5 (Indemnity concerning security) and clause 15.8 (Interest) insofar as it relates to interest on any amount demanded by that Indemnified Person under clause 15.5 (Indemnity concerning security), any Indemnified Person, which is or will be subject to any liability, or required to make any payment, for or on account of Tax in relation to a sum received or receivable (or any sum deemed for the purposes of Tax to be received or receivable) under a Finance Document.
Tax Credit means a credit against relief or remission for, or repayment of any Tax.
Tax Deduction means a deduction or withholding for or on account of Tax from a payment under a Finance Document, other than a FATCA Deduction.
Tax Payment means either the increase in a payment made by an Obligor to the Lender under clause 13.2 (Tax gross-up) or a payment under clause 13.3 (Tax indemnity).

	(b)	Unless a contrary indication appears, in this clause 13 a reference to determines or determined means a determination made in the absolute discretion of the person making the determination.	
13.2	Tax gross-up	
	(a)	Each Obligor shall make all payments to be made by it under, or in connection with, any Finance Document without any Tax Deduction, unless a Tax Deduction is required by law.	
	(b)	The Borrower shall, promptly upon becoming aware that an Obligor must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction), notify the Lender accordingly. Similarly, the Lender shall notify the Borrower and that Obligor on becoming so aware in respect of a payment payable to the Lender.	
	(c)	If a Tax Deduction is required by law to be made by an Obligor, the amount of the payment due from that Obligor under the relevant Finance Document shall be increased to an amount which (after making any Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required.	
	(d)	If an Obligor is required to make a Tax Deduction, that Obligor shall make that Tax Deduction and any payment required in connection with that Tax Deduction within the time allowed and in the minimum amount required by law.	
	(e)	Within 30 days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Obligor making that Tax Deduction shall deliver to the Lender evidence reasonably satisfactory to it that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority.	
13.3	Tax indemnity	
	(a)	Each Obligor who is a party shall (within three Business Days of demand by the Lender) pay to a Protected Party an amount equal to the loss, liability or cost which that Protected Party determines will be or has been (directly or indirectly) suffered for or on account of Tax by that Protected Party in respect of a Finance Document.	

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	(b)	Paragraph (a) above shall not apply:	
	(i)	with respect to any Tax assessed on the Lender:	
	(A)	under the law of the jurisdiction in which the Lender is incorporated or, if different, the jurisdiction (or jurisdictions) in which the Lender is treated as resident for tax purposes; or	
	(B)	under the law of the jurisdiction in which the Lender’s Facility Office is located in respect of amounts received or receivable in that jurisdiction,	
if that Tax is imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or receivable) by the Lender; or

	(ii)	to the extent a loss, liability or cost:	
	(A)	is compensated for by an increased payment under clause 13.2 (Tax gross-up); or	
	(B)	relates to a FATCA Deduction required to be made by a Party or any Obligor which is not a Party.	
	(c)	A Protected Party making, or intending to make a claim under paragraph (a) above the Lender shall promptly notify the Borrower of the event which will give, or has given, rise to the claim.	
13.4	Tax Credit	
If an Obligor makes a Tax Payment and the Lender determines that:

	(a)	a Tax Credit is attributable (A) to an increased payment of which that Tax Payment forms part, (B) to that Tax Payment or (C) to a Tax Deduction in consequence of which that Tax Payment was required; and	
	(b)	the Lender has obtained and utilised that Tax Credit,	
the Lender shall pay an amount to the Obligor which the Lender determines will leave it (after that payment) in the same after-Tax position as it would have been in had the Tax Payment not been required to be made by the Obligor.

13.5	Indemnities on after Tax basis	
	(a)	If and to the extent that any sum payable to any Protected Party by an Obligor under any Finance Document by way of indemnity or reimbursement proves to be insufficient, by reason of any Tax suffered thereon, for that Protected Party to discharge the corresponding liability to a third party, or to reimburse that Protected Party for the cost incurred by it in discharging the corresponding liability to a third party, an Obligor shall pay that Protected Party such additional sum as (after taking into account any Tax suffered by that Protected Party on such additional sum) shall be required to make up the relevant deficit.	
	(b)	If and to the extent that any sum (the Indemnity Sum) constituting (directly or indirectly) an indemnity to any Protected Party but paid by an Obligor to any person other than that Protected Party, shall be treated as taxable in the hands of the Protected Party, an Obligor shall pay to that Protected Party such sum (the Compensating Sum) as (after taking into account any Tax suffered by that Protected Party on the Compensating Sum) shall reimburse that Protected Party for any Tax suffered by it in respect of the Indemnity Sum.	
	(c)	For the purposes of paragraphs (a) and (b) above, a sum shall be deemed to be taxable in the hands of a Protected Party if it falls to be taken into account in computing the profits or	

37

gains of that Protected Party for the purposes of Tax and, if so, that Protected Party shall be deemed to have suffered Tax on the relevant sum at the rate of Tax applicable to that Protected Party’s profits or gains for the period in which the payment of the relevant sum falls to be taken into account for the purposes of such Tax.

13.6	Stamp taxes	
The Borrower shall pay and, within three Business Days of demand, indemnify the Lender against any cost, loss or liability the Lender incurs in relation to all stamp duty, registration, documentary and other similar Taxes payable in respect of any Finance Document.

13.7	Value added tax	
	(a)	All amounts expressed in a Finance Document to be payable by any party to the Lender which (in whole or in part) constitute the consideration for any supply for VAT purposes are deemed to be exclusive of any VAT which is chargeable on that supply, and accordingly, if VAT is or becomes chargeable on any supply made by the Lender to any party under a Finance Document, and the Lender is required to account to the relevant tax authority for the VAT, that party must pay to the Lender (in addition to and at the same time as paying any other consideration for such supply) an amount equal to the amount of the VAT (and the Lender must promptly provide an appropriate VAT invoice to that party).	
	(b)	Where a Finance Document requires any party to it to reimburse or indemnify the Lender for any cost or expense, that party shall reimburse or indemnify (as the case may be) the Lender for the full amount of such cost or expense, including such part thereof as represents VAT save to the extent that the Lender reasonably determines that it is entitled to credit or repayment in respect of such VAT from the relevant tax authority.	
	(c)	Any reference in this clause 13.7 to any party shall, at any time when such party is treated as a member of a group for VAT purposes, include (where appropriate and unless the context otherwise requires) a reference to the representative member of such group at such time (the term “representative member” to have the same meaning as in the Value Added Tax Act 1994).	
	(d)	In relation to any supply made by the Lender to any party under a Finance Document, if reasonably requested by the Lender, that party must promptly provide the Lender with details of that party’s VAT registration and such other information as is reasonably requested in connection with the Lender’s VAT reporting requirements in relation to such supply.	
13.8	FATCA information	
	(a)	Subject to paragraph (c) below, each Party shall, within ten (10) Business Days of a reasonable request by another Party:	
	(i)	confirm to that other Party whether it is:	
	(A)	a FATCA Exempt Party; or	
	(B)	not a FATCA Exempt Party;	
	(ii)	supply to that other Party such forms, documentation and other information relating to its status under FATCA as that other Party reasonably requests for the purposes of that other Party’s compliance with FATCA; and	
	(iii)	supply to that other Party such forms, documentation and other information relating to its status as that other Party reasonably requests for the purposes of that other Party’s compliance with any other law, regulation, or exchange of information regime.	

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	(b)	If a Party confirms to another Party pursuant to paragraph (a)(i) above that it is a FATCA Exempt Party and it subsequently becomes aware that it is not or has ceased to be a FATCA Exempt Party, that Party shall notify that other Party reasonably promptly.	
	(c)	Paragraph (a) above shall not oblige the Lender to do anything, and paragraph (a)(iii) above shall not oblige any other Party to do anything, which would or might in its reasonable opinion constitute a breach of:	
	(i)	any law or regulation;	
	(ii)	any fiduciary duty; or	
	(iii)	any duty of confidentiality.	
	(d)	If a Party fails to confirm whether or not it is a FATCA Exempt Party or to supply forms, documentation or other information requested in accordance with paragraphs (a)(i) or (a)(ii) above (including, for the avoidance of doubt, where paragraph (c) above applies), then such Party shall be treated for the purposes of the Finance Documents (and payments under them) as if it is not a FATCA Exempt Party until such time as the Party in question provides the requested confirmation, forms, documentation or other information.	
	(e)	If the Borrower is a US Tax Obligor or the Lender reasonably believes that its obligations under FATCA or any other applicable law or regulation require it, the Lender shall, within ten  Business Days of the date of a request from the Lender supply to the Borrower:	
	(i)	a withholding certificate on Form W-8 or Form W-9 (or any other relevant form); or	
	(ii)	any withholding statement or other document, authorisation or waiver as the Borrower may require to certify or establish the status of the Lender under FATCA or that other law or regulation.	
	(f)	If any withholding certificate, withholding statement, document, authorisation or waiver provided to the Borrower by the Lender pursuant to paragraph (e) above is or becomes materially inaccurate or incomplete, the Lender shall promptly update it and provide such updated withholding certificate, withholding statement, document, authorisation or waiver to the Borrower unless it is unlawful for the Lender to do so (in which case the Lender shall promptly notify the Borrower).	
	(g)	The Borrower may rely on any withholding certificate, withholding statement, document, authorisation or waiver it receives from the Lender pursuant to paragraphs (e) or (f) above without further verification.	
13.9	FATCA Deduction	
	(a)	Each Party may make any FATCA Deduction it is required by FATCA to make, and any payment required in connection with that FATCA Deduction, and no Party shall be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction.	
	(b)	Each Party shall promptly upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction) notify the Party to whom it is making the payment.	

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	14	Increased costs	
14.1	Increased costs	
	(a)	Subject to clause 14.3 (Exceptions), the Borrower shall, within three Business Days of a demand by the Lender, pay to the Lender the amount of any Increased Cost incurred by the Lender or any of its Affiliates which:	
	(i)	arises as a result of (A) the introduction of or any change in (or in the interpretation, administration, policy in respect of, or application of) any law or regulation or (B) compliance with any law or regulation made after the date of this Agreement; and/or	
	(ii)	is a Basel III Increased Cost; and/or	
	(iii)	is a Reformed Basel III Increased Cost.	
	(b)	In this Agreement Increased Costs means:	
	(i)	a reduction in the rate of return from the Facility or on the Lender’s (or its Affiliate’s) overall capital;	
	(ii)	an additional or increased cost; or	
	(iii)	a reduction of any amount due and payable under any Finance Document,	
which is incurred or suffered by the Lender or any of its Affiliates to the extent that it is attributable to the Lender having entered into the Commitment or funding or performing its obligations under any Finance Document.

14.2	Increased cost claims	
	(a)	If the Lender intends to make a claim pursuant to clause 14.1 (Increased costs), it shall promptly notify the Borrower.	
	(b)	The Lender shall, as soon as practicable after a demand by the Borrower, provide a certificate confirming the amount of its Increased Costs.	
14.3	Exceptions	
	(a)	Clause 14.1 (Increased costs) does not apply to the extent any Increased Cost is:	
	(i)	attributable to a Tax Deduction required by law to be made by an Obligor;	
	(ii)	attributable to a FATCA Deduction required to be made by a Party;	
	(iii)	compensated for by clause 13.3 (Tax indemnity) (or would have been compensated for under clause 13.3 (Tax indemnity) but was not so compensated solely because any of the exclusions in paragraph (b) of clause 13.3 (Tax indemnity) applied); or	
	(iv)	attributable to the wilful breach by the Lender or its Affiliates of any law or regulation.	
	(b)	In paragraph (a) above, a reference to a Tax Deduction has the same meaning given to the term in clause 13.1 (Definitions).	
	15	Other indemnities	
15.1	Currency indemnity	
	(a)	If any sum due from an Obligor under the Finance Documents (a Sum), or any order, judgment or award given or made in relation to a Sum, has to be converted from the	

40

currency (the First Currency) in which that Sum is payable into another currency (the Second Currency) for the purpose of:

	(i)	making or filing a claim or proof against that Obligor; and/or	
	(ii)	obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,	
that Obligor shall, as an independent obligation, within three Business Days of demand by the Lender, indemnify the Lender against any Losses arising out of or as a result of the conversion including any discrepancy between (i) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (ii) the rate or rates of exchange available to that person at the time of its receipt of that Sum.

	(b)	Each Obligor waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currency unit other than that in which it is expressed to be payable.	
For the purpose of this clause 15.1 rate of exchange means the rate at which the Lender is able on the relevant date to purchase the Second Currency with the First Currency and shall take into account any commission, premium and other costs of exchange and Taxes payable in connection with such purchase.

15.2	Other indemnities	
	(a)	The Borrower shall (or shall procure that another Obligor will), within three Business Days of demand by the Lender, indemnify the Lender against any and all Losses incurred by the Lender as a result of:	
	(i)	the occurrence of any Event of Default;	
	(ii)	a failure by an Obligor to pay any amount due under a Finance Document on its due date; or	
	(iii)	funding, or making arrangements to fund, a Utilisation requested by the Borrower in a Utilisation Request but not made by reason of the operation of any one or more of the provisions of this Agreement (other than by reason of default or negligence by the Lender alone); or	
	(iv)	a Loan (or part of a Loan) not being prepaid in accordance with a notice of prepayment given by the Borrower.	
	(b)	The Borrower shall (or shall procure that another Obligor will) promptly indemnify the Lender, any of its Affiliates and each officer or employee of the Lender or any of its Affiliates, against any cost, loss or liability incurred by the Lender or any of its Affiliates (or officer or employee of the Lender or any of its Affiliates) in connection with or arising out of the transactions contemplated by or entered into in connection with the Transaction Documents (including but not limited to those incurred in connection with any litigation, arbitration or administrative proceedings or regulatory enquiry concerning the transactions contemplated by or entered into in connection with the Transaction Documents), unless such loss or liability is caused by the gross negligence or wilful misconduct of the Lender or any of its Affiliates (or officer or employee of the Lender or any of its Affiliates). Any Affiliate or any officer or employee of the Lender may rely on this clause 15.2 subject to clause 1.4 (Third party rights) and the provisions of the Third Parties Act.	
15.3	Environmental indemnity	
The Borrower shall (or shall procure that another Obligor will)  indemnify the Lender on demand and hold it harmless from and against all Losses or other outgoings of whatever nature (including those arising under Environmental Laws) which may be suffered, incurred or paid by or made or

41

asserted against the Lender at any time, whether before or after the prepayment in full of principal and interest under this Agreement, relating to, or arising directly in any manner or for any cause or reason whatsoever out of an Environmental Claim made or asserted against the Lender which would or could not have been brought if the Lender had not entered into any of the Finance Documents and/or exercised any of its rights, powers and discretions thereby conferred and/or performed any of its obligations thereunder and/or been involved in any of the transactions contemplated by the Finance Documents.

15.4	Indemnity to the Lender	
The Borrower shall promptly indemnify each Indemnified Person against:

	(a)	any and all Losses (together with any applicable VAT) incurred by that Indemnified Person (acting reasonably) as a result of:	
	(i)	investigating any event which it reasonably believes is a Default;	
	(ii)	acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised;	
	(iii)	instructing lawyers, accountants, tax advisers, insurance consultants, ship managers, valuers, surveyors or other professional advisers or experts as permitted under the Finance Documents; or	
	(iv)	any action taken by an Indemnified Person or any of its or their representatives, agents or contractors in connection with any powers conferred by any Security Document to remedy any breach of any Obligor’s obligations under the Finance Documents; and	
	(b)	any and all Losses (including, without limitation, in respect of liability, for negligence or any other category of liability whatsoever) (together with any applicable VAT) incurred by an Indemnified Person (otherwise than by reason of that Indemnified Person’s gross negligence or wilful default) (or, in the case of any cost, loss or liability pursuant to clause 33.7 (Disruption to payment systems etc.) notwithstanding the Indemnified Person’s negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of an Indemnified Person under the Finance Documents).	
15.5	Indemnity concerning security	
	(a)	The Borrower shall (or shall procure that another Obligor will) promptly indemnify each Indemnified Person against any and all Losses (together with any applicable VAT) incurred by it (otherwise than by reason of that Indemnified Person’s gross negligence or wilful default) as a result of:	
	(i)	any failure by the Borrower to comply with its obligations under clause 17 (Costs and expenses) or any similar provision in any other Finance Document;	
	(ii)	acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised;	
	(iii)	the taking, holding, protection or enforcement of the Transaction Security;	
	(iv)	the exercise or purported exercise of any of the rights, powers, discretions, authorities and remedies vested in the Lender and each Receiver, each Delegate and each Indemnified Person by the Finance Documents or by law (otherwise, in each case, than by reason of the Lender’s, Receiver’s, Delegate’s or Indemnified Person’s gross negligence or wilful default);	

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	(v)	any default by any Obligor in the performance of any of the obligations expressed to be assumed by it in the Finance Documents;	
	(vi)	any claim (whether relating to the environment or otherwise (but without double counting where an Indemnified Person has recovered for the same Loss under any other provision of this Agreement)) made or asserted against the Indemnified Person which would not have arisen but for the execution or enforcement of one or more Finance Documents (unless and to the extent it is caused by the gross negligence or wilful default of that Indemnified Person);	
	(vii)	instructing lawyers, accountants, tax advisers, insurance consultants, ship managers, valuers, surveyors or other professional advisers or experts as permitted under the Finance Documents; or	
	(viii)	(in the case of the Lender, any Receiver and any Delegate) acting as Lender and/or as holder of any of the Transaction Security, Receiver or Delegate under the Finance Documents or which otherwise relates to the Charged Property (otherwise, in each case, than by reason of the Lender’s, Receiver’s or Delegate’s gross negligence or wilful default).	
15.6	Continuation of indemnities	
The indemnities by the Borrower or any other Obligor in favour of any Indemnified Persons contained in this Agreement shall continue in full force and effect notwithstanding any breach by the Lender or any Obligor of the terms of this Agreement, the repayment or prepayment of the Loans, the cancellation of the Commitment or the repudiation by the Lender or any Obligor of this Agreement.

15.7	Third Parties Act	
	(a)	Each Indemnified Person may rely on the terms of clause 15.5 (Indemnity concerning security) and clauses 13 (Tax gross-up and indemnities) and 15.8 (Interest) insofar as it relates to interest on or the calculation of any amount demanded by that Indemnified Person under clause 15.5 (Indemnity concerning security), subject to clause 1.4 (Third party rights) and the provisions of the Third Parties Act.	
	(b)	Where an Indemnified Person (other than the Lender) (the Relevant Beneficiary) who is:	
	(i)	appointed by the Lender under the Finance Documents;	
	(ii)	an Affiliate of any such person or the Lender; or	
	(iii)	an officer, director, employee, adviser, representative or agent of any of the above persons or the Lender,	
is entitled to receive any amount (a Third Party Claim) under any of the provisions referred to in paragraph (a) above:

	(A)	the Borrower shall (or shall procure that another Obligor will) at the same time as the relevant Third Party Claim is due to the Relevant Beneficiary pay to the Lender a sum in the amount of that Third Party Claim;	
	(B)	payment of such sum to the Lender shall, to the extent of that payment, satisfy the corresponding obligations of the Borrower to pay the Third Party Claim to the Relevant Beneficiary; and	
	(C)	if the Borrower pays the Third Party Claim direct to the Relevant Beneficiary, such payment shall, to the extent of that payment, satisfy the corresponding obligations of the Borrower to the Lender under sub-paragraph (A) above.	

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15.8	Interest	
Moneys becoming due by the Borrower (or any other Obligor) to any Indemnified Person under the indemnities contained in this clause 15 or elsewhere in this Agreement shall be paid on demand made by such Indemnified Person and shall be paid together with interest on the sum demanded from the date of demand therefor to the date of reimbursement by the Borrower (or any other Obligor) to such Indemnified Person (both before and after judgment) at the rate referred to in clause 9.3 (Default interest).

15.9	Exclusion of liability	
Without prejudice to any other provision of the Finance Documents excluding or limiting the liability of any Indemnified Person, no Indemnified Person will be in any way liable or responsible to any Obligor (whether as mortgagee in possession or otherwise) who is a Party or is a party to a Finance Document to which this clause applies for any loss or liability arising from any act, default, omission or misconduct of that Indemnified Person, except to the extent caused by its own gross negligence or wilful default. Any Indemnified Person may rely on this clause 15.9 subject to clause 1.4 (Third party rights) and the provisions of the Third Parties Act.

15.10	Email indemnity	
The Borrower shall indemnify the Lender against any and all Losses together with any VAT thereon which the Lender may sustain or incur as a consequence of any email communication purporting to originate from any Obligor to the Lender being made or delivered fraudulently or without proper authorisation (unless such Losses are the direct result of the gross negligence or wilful default of the Lender).

15.11	Waiver	
In no event shall the Lender be liable on any theory of liability for any special, indirect, consequential or punitive damages and the Obligors who are a Party hereby waive, release and agree (for and on behalf of themselves and on behalf of the other Group Members and any Manager who is affiliated with the Group (including for that purpose Danaos Shipping Company Limited) and their respective Affiliates and shareholders) not to sue upon any such claim for any such damages, whether or not accrued and whether or not known or suspected to exist in their favour.

	16	Mitigation by the Lender	
16.1	Mitigation	
	(a)	The Lender shall, in consultation with the Borrower, take all reasonable steps to mitigate any circumstances which arise and which would result in the Facility ceasing to be available or any amount becoming payable under or pursuant to, or cancelled pursuant to, any of clause 7.1 (Illegality), clause 13 (Tax gross-up and indemnities), or clause 14 (Increased costs) including (but not limited to) assigning and/or transferring its rights and/or obligations under the Finance Documents to another Affiliate or Facility Office.	
	(b)	Paragraph (a) above does not in any way limit the obligations of any Obligor under the Finance Documents.	
16.2	Limitation of liability	
	(a)	The Borrower shall promptly indemnify the Lender for all costs and expenses incurred by the Lender as a result of steps taken by it under clause 16.1 (Mitigation).	
	(b)	The Lender is not obliged to take any steps under clause 16.1 (Mitigation) if, in the opinion of the Lender, to do so might be prejudicial to it.	

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	17	Costs and expenses	
17.1	Transaction expenses	
The Borrower shall, within 15 Business Days of demand, pay the Lender, the amount of all documented costs and expenses (including but not limited to fees, costs and expenses of lawyers, accountants, tax advisers, insurance consultants, ship managers, valuers, surveyors or other professional advisers or experts) (together with any applicable VAT) incurred by it (including by any Receiver or Delegate) in connection with the negotiation, preparation, printing, execution, registration and perfection and any release, discharge or reassignment of:

	(a)	this Agreement any other documents referred to in this Agreement and the Security Documents;	
	(b)	any other Finance Documents executed or proposed to be executed after the date of this Agreement including any document executed to provide additional security under clause 26 (Minimum security value) or executed pursuant to clause 39.2 (Transition to a term-based rate); or	
	(c)	any Security Interest expressed or intended to be granted by a Finance Document.	
17.2	Amendment costs	
If:

	(a)	an Obligor requests an amendment, waiver or consent; or	
	(b)	an amendment or waiver is required pursuant to clause 33.8 (Change of currency); or	
(c)an amendment is required as contemplated in clause 39.2 (Transition to a term-based rate),
the Borrower shall, within three Business Days of demand, reimburse the Lender for the amount of all documented costs and expenses (including but not limited to fees, costs and expenses of lawyers, accountants, tax advisers, insurance consultants, ship managers, valuers, surveyors or other professional advisers or experts) (together with any applicable VAT) incurred by the Lender (including by any Receiver or Delegate) in responding to, evaluating, negotiating or complying with that request or requirement and, in the case of clause 39.2 (Transition to a term-based rate), the drafting, negotiation and execution of any Compounding Methodology Supplement or Reference Rate Supplement.

17.3	Lender’s management time and additional remuneration	
	(a)	Any amount payable to the Lender under clause 15.4 (Indemnity to the Lender), clause 15.5 (Indemnity concerning security) or clause 17 (Costs and expenses) shall include the cost of utilising the Lender’s or (as the case may be) the Lender’s management time or other resources and will be calculated on the basis of such reasonable daily or hourly rates as the Lender may notify to the Borrower, and is in addition to any other fee paid or payable to the Lender.	
	(b)	Without prejudice to paragraph (a) above, in the event of:	
	(i)	a Default;	
	(ii)	the Lender being requested by an Obligor to undertake duties which the Lender and the Borrower agree to be of an exceptional nature or outside the scope of the normal duties of the Lender under the Finance Documents; or	

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	(iii)	the Lender and the Borrower agreeing that it is otherwise appropriate in the circumstances,	
the Borrower shall pay to the Lender any additional remuneration that may be agreed between them or determined pursuant to paragraph (c) below including (without limitation) in respect of ongoing costs and/or management fees.

	(c)	If the Lender and the Borrower fail to agree upon the nature of the duties, or upon the additional remuneration referred to in paragraph (b) above or whether additional remuneration is appropriate in the circumstances, any dispute shall be determined by an investment bank (acting as an expert and not as an arbitrator) selected by the Lender and approved by the Borrower or, failing approval, nominated (on the application of the Lender by the President for the time being of the Law Society of England and Wales (the costs of the nomination and of the investment bank being payable by the Borrower) and the determination of any investment bank shall be final and binding upon the Parties.	
17.4	Enforcement, preservation and other costs	
The Borrower shall, within fifteen Business Days of demand by the Lender, pay to the Lender the amount of all costs and expenses (including but not limited to fees, costs and expenses of lawyers, accountants, tax advisers, insurance consultants, ship managers, valuers, surveyors or other professional advisers or experts) (together with any applicable VAT) incurred by the Lender in connection with:

	(a)	the enforcement of, or the preservation of any rights under, any Finance Document and the Transaction Security and any proceedings instituted by or against any Indemnified Person as a consequence of taking or holding the Security Documents or enforcing those rights;	
	(b)	subject to clause 26.4 (Expenses of valuation) any valuation carried out under clause 26 (Minimum security value);	
	(c)	any inspection carried out under clause 24.9 (Inspection and notice of dry-docking); or	
	(d)	any survey carried out under clause 24.17 (Survey report) or any inspection carried out under clause 22.14 (Inspection).	

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Section 7 - Guarantee

	18	Guarantee and indemnity	
18.1	Guarantee and indemnity	
Each Guarantor hereby irrevocably and unconditionally and jointly and severally with the other Guarantors:

	(a)	guarantees to the Lender punctual performance by each other Obligor of all such Obligor’s obligations under the Finance Documents;	
	(b)	undertakes with the Lender that whenever another Obligor does not pay any amount when due under or in connection with any Finance Document, it shall immediately on demand pay that amount as if it was the principal obligor; and	
	(c)	agrees with the Lender that it will, as an independent and primary obligation, indemnify the Lender immediately on demand against any cost, loss or liability it incurs:	
(i)

	(A)	if any obligation guaranteed by it is or becomes unenforceable, invalid or illegal; or	
	(B)	by operation of law, and as a result of the same, the Borrower has not paid any amount which would, but for such unenforceability, invalidity, illegality or operation of law, have been payable by the Borrower under any Finance Document on the date when it would have been due; or	
	(ii)	if as a result (directly or indirectly) of the introduction of or any change in (or the interpretation, administration or application of) any law or regulation, or compliance with any law, regulation or administrative procedure made after entry into this Agreement (a Change in Law), there is a change in the currency, the value of the currency or the timing, place or manner in which any obligation guaranteed by a Guarantor is payable.	
The amount payable by each Guarantor under this indemnity:

	(A)	in respect of paragraph (i) above, shall be the amount it would have had to pay under this clause 18.1 if the amount claimed had been recoverable on the basis of a guarantee but for any relevant unenforceability, invalidity or illegality, and	
	(B)	in respect of paragraph (ii) above, shall include (aa) the difference between (x) the amount (if any) received by the Lender from the Borrower and (y) the amount that the Borrower was obliged to pay under the original express terms of the Finance Documents in the currency specified in the Finance Documents, disregarding any Change in Law (the Original Currency), and (bb) all further costs, losses and liabilities suffered or incurred by the Lender as a result of a Change in Law.	
For the purposes of (aa)(x) above, if payment was not received by the Lender in the Original Currency, the amount received by the Lender shall be deemed to be that payment’s equivalent in the Original Currency converted, actually or notionally at the Lender’s discretion, on the day of receipt at the then prevailing spot rate of exchange of the Lender or if, in the Lender’s opinion, it could not reasonably or properly have made a conversion on the day of receipt of the equivalent of that payment in the Original Currency, that payment’s equivalent as soon as the Lender could, in its opinion, reasonably and properly have made a conversion of the Original Currency with the currency of payment.

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If the Original Currency no longer exists, the Guarantors shall make such payment in such currency as is, in the reasonable opinion of the Lender, required, after taking into account any payments by the Borrower, to place the Lender in a position reasonably comparable to that it would have been in had the Original Currency continued to exist.

18.2	Continuing guarantee	
This guarantee is a continuing guarantee and will extend to the ultimate balance of sums payable by any Obligor under the Finance Documents, regardless of any intermediate payment or discharge in whole or in part.

18.3	Reinstatement	
If any payment is made by an Obligor, or any discharge, release or arrangement is given by the Lender (whether in respect of the obligations of any Obligor or any security for those obligations or otherwise) in whole or in part on the basis of any payment, security or other disposition, and the same is avoided or reduced or must be restored in, or as a result of, insolvency, liquidation, administration or any other similar event or otherwise, without limitation then:

	(a)	the liability of each Guarantor under this clause 18 shall continue or be reinstated as if the payment, discharge, release, arrangement, avoidance or reduction had not occurred; and	
	(b)	the Lender shall be entitled to recover the value or amount of that security or payment from each Guarantor, as if the payment, discharge, release, arrangement, avoidance or reduction had not occurred.	
18.4	Waiver of defences	
The obligations of each Guarantor under this clause 18 will not be affected by an act, omission, matter or thing (whether or not known to it or the Lender) which, but for this clause 18, would reduce, release or prejudice any of its obligations under this clause 18 including (without limitation):

	(a)	any time, waiver or consent granted to, or composition with, any Obligor or other person;	
	(b)	the release of any other Obligor or any other person under the terms of any composition or arrangement with any creditor of any other Obligor;	
	(c)	the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, any Obligor or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security;	
	(d)	any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of an Obligor or any other person;	
	(e)	any amendment, novation, supplement, extension, restatement (however fundamental and whether or not more onerous) or replacement of any Finance Document or any other document or security including without limitation any change in the purpose of, any extension of or any increase in any facility or the addition of any new facility under any Finance Document or other document or security;	
	(f)	any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document or any other document or security;	
	(g)	any law or regulation of any jurisdiction or any other event affecting any term of the guaranteed obligations;	

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	(h)	any other circumstance that might constitute a defence of the Guarantor; or	
	(i)	any insolvency or similar proceedings.	
18.5	Guarantor intent	
Without prejudice to the generality of clause 18.4 (Waiver of defences), each Guarantor expressly confirms that it intends that this guarantee shall extend from time to time to any (however fundamental) variation, increase, extension or addition of or to any of the Finance Documents and/or any facility or amount made available under any of the Finance Documents.

18.6	Immediate recourse	
Each Guarantor waives any right it may have of first requiring the Lender (or any trustee or agent on its behalf) to proceed against or enforce any other rights or security or claim payment from any person before claiming from that Guarantor under this clause 18. This waiver applies irrespective of any law or any provision of a Finance Document to the contrary.

18.7	Appropriations	
Until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full, the Lender (or any trustee or agent on its behalf) may:

	(a)	refrain from applying or enforcing any other moneys, security or rights held or received by the Lender (or any trustee or agent on its behalf) in respect of those amounts, or apply and enforce the same in such manner and order as it sees fit (whether against those amounts or otherwise) and no Guarantor shall be entitled to the benefit of the same; and	
	(b)	hold in an interest-bearing suspense account any moneys received from any Guarantor or on account of a Guarantor’s liability under this clause 18.	
18.8	Deferral of Guarantors’ rights	
	(a)	Until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full and unless the Lender otherwise directs, no Guarantor will exercise any rights which it may have by reason of performance by it of its obligations under the Finance Documents or by reason of any amount being payable, or liability arising, under this clause 18:	
	(i)	to be indemnified by another Obligor;	
	(ii)	to claim any contribution from any other guarantor of any Obligor’s obligations under the Finance Documents;	
	(iii)	to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Lender under the Finance Documents or of any other guarantee or security taken pursuant to, or in connection with, the Finance Documents by the Lender;	
	(iv)	to bring legal or other proceedings for an order requiring any Obligor to make any payment, or perform any obligation, in respect of which that Guarantor has given a guarantee, undertaking or indemnity under clause 18 (Guarantee and indemnity);	
	(v)	to exercise any right of set-off against any other Obligor; and/or	
	(vi)	to claim or prove as a creditor of any other Obligor in competition with the Lender.	

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	(b)	If a Guarantor receives any benefit, payment or distribution in relation to such rights it will promptly pay an equal amount to the Lender for application in accordance with clause  33 (Payment mechanics). This only applies until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full.	
18.9	Additional security	
This guarantee is in addition to and is not in any way prejudiced by any other guarantee or security now or subsequently held by the Lender.

18.10	Guarantors’ rights and obligations	
	(a)	The obligations of each Guarantor under the Guarantee and under this Agreement are joint and several. Failure by a Guarantor to perform its obligations under the Guarantee and/or this Agreement shall constitute a failure by all of the Guarantors.	
	(b)	Each Guarantor irrevocably and unconditionally jointly and severally with each other Guarantor:	
	(i)	agrees that it is responsible for the performance of the obligations of each other Guarantor under the Guarantee and this Agreement;	
	(ii)	acknowledges and agrees that it is a principal and original debtor in respect of all amounts due from the Guarantors under the Guarantee and under this Agreement; and	
	(iii)	agrees with the Lender that, if any obligation of another Guarantor under the Guarantee and this Agreement is or becomes unenforceable, invalid or illegal for any reason it will, as an independent and primary obligation, indemnify the Lender immediately on demand against any and all Losses it incurs as a result of another Guarantor not paying any amount which would, but for such unenforceability, invalidity or illegality, have been payable by that other Guarantor under the Guarantee and/or this Agreement. The amount payable under this indemnity shall be equal to the amount which the Lender would otherwise have been entitled to recover.	
	(c)	The obligations of each Guarantor under the Finance Documents shall continue until all amounts which may be or become payable by the Guarantors under or in connection with the Finance Documents have been irrevocably and unconditionally paid or discharged in full, regardless of any intermediate payment or discharge in whole or in part.	
18.11	Amendments and waivers in writing	
No waivers, consents, discharges or releases by the Lender or amendments to, of, or in connection with, the provisions of the Guarantee may be made or given, unless they are made or given in writing by the Parties and with the prior written consent of the Lender.

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Section 8 - Representations, Undertakings and Events of Default

	19	Representations	
19.1	Representations	
Each Obligor who is a Party makes and repeats the representations and warranties set out in this clause 19 to the Lender at the times specified in clause 19.39 (Times when representations are made).

19.2	Status	
	(a)	Each Obligor is a corporation or a limited company and it is duly incorporated and/or formed and validly existing under the laws of its Original Jurisdiction.	
	(b)	Each Obligor has power and authority to own its assets and to carry on its business as it is now being conducted and to perform its obligations under the Transaction Documents to which it is a party.	
19.3	Binding obligations	
Subject to the Legal Reservations:

	(a)	the obligations expressed to be assumed by each Obligor in each Transaction Document to which it is, or is to be, a party are or, when entered into by it, will be legal, valid, binding and enforceable obligations; and	
	(b)	(without limiting the generality of paragraph (a) above) each Security Document to which an Obligor is, or will be, a party, creates or will create the Security Interests which that Security Document purports to create and those Security Interests are or will be valid and effective.	
19.4	Non-conflict	
The entry into and performance by each Obligor of, and the transactions contemplated by the Transaction Documents and the granting of the Transaction Security do not and will not conflict with:

	(a)	any law or regulation applicable to any Obligor;	
	(b)	the Constitutional Documents of any Obligor; or	
	(c)	any agreement or other instrument binding upon any Obligor or any Obligor’s assets,	
or constitute a default or termination event (however described) under any such agreement or instrument or result in the creation of any Security Interest (save for a Permitted Maritime Lien or under a Security Document) on any Obligor’s assets, rights or revenues.

19.5	Power and authority	
	(a)	Each Obligor has the power to enter into, perform and deliver and comply with its obligations under, and has taken all necessary action to authorise its entry into, performance and delivery of, and compliance with, each Transaction Document to which it is, or is to be, a party and each of the transactions contemplated by those documents.	
	(b)	No limitation on any Obligor’s powers to borrow, create security or give guarantees will be exceeded as a result of any transaction under, or the entry into of, any Transaction Document to which such Obligor is, or is to be, a party.	

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19.6	Validity and admissibility in evidence	
	(a)	All Authorisations required:	
	(i)	to enable each Obligor lawfully to enter into, exercise its rights and comply with its obligations under each Transaction Document to which it is a party;	
	(ii)	to make each Transaction Document to which it is a party admissible in evidence in its Relevant Jurisdictions; and	
	(iii)	to ensure that the Transaction Security has the priority and ranking contemplated by the Security Documents,	
have been obtained or effected and are in full force and effect except any Authorisation or filing referred to in clause 19.15 (No filing or stamp taxes), which Authorisation or filing will be promptly obtained or effected within any applicable period.

	(b)	All Authorisations necessary for the conduct of the business, trade and ordinary activities of each Obligor have been obtained or effected and are in full force and effect if failure to obtain or effect those Authorisations might have a Material Adverse Effect.	
19.7	Governing law and enforcement	
Subject to Legal Reservations:

	(a)	the choice of governing law of any Transaction Document will be recognised and enforced in each Obligor’s Relevant Jurisdictions; and	
	(b)	any judgment obtained in relation to any Transaction Document in the jurisdiction of the governing law of that Transaction Document will be recognised and enforced in its Relevant Jurisdictions.	
19.8	No misleading information	
	(a)	Any factual information contained in the Information Package is true and accurate in all material respects as at the date of the relevant report or document containing the information or (as the case may be) as at the date the information is expressed to be given.	
	(b)	Any budget, financial projection or forecast contained in the Information Package has been prepared on the basis of recent historical information and on the basis of reasonable assumptions and was fair (as at the date of the relevant report or document containing the projection or forecast) and arrived at after careful consideration.	
	(c)	The expressions of opinion or intention provided by or on behalf of an Obligor for the purposes of the Information Package were made after careful consideration and (as at the date of the relevant report or document containing the expression of opinion or intention) were fair and based on reasonable grounds.	
	(d)	To the best of the Borrower’s knowledge and belief (having made due and careful enquiry) no event or circumstance has occurred or arisen and no information has been omitted from the Information Package and no information has been given or withheld that results in the information, opinions, intentions, forecasts or projections contained in the Information Package being untrue or misleading in any material respect.	
	(e)	To the best of the Borrower’s knowledge and belief (having made due and careful enquiry) all other written information provided by any Group Member (including its advisers) to the Lender was true, complete and accurate in all material respects as at the date it was provided and is not misleading in any respect.	

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	(f)	For the purposes of this clause 19.8, Information Package means any written information provided by any Obligor or any other Group Member or any of their respective advisors to the Lender in connection with the Transaction Documents or the transactions referred to in them.	
19.9	Original Financial Statements	
	(a)	The Original Financial Statements were prepared in accordance with US GAAP consistently applied.	
	(b)	The Original Financial Statements fairly present the consolidated financial condition as at the end of the relevant Financial Year and the consolidated results of operations during the relevant Financial Year of the Borrower and its Subsidiaries.	
	(c)	The Original Financial Statements do not consolidate the results, assets or liabilities of any person or business which does not form part of the Group.	
	(d)	There has been no material adverse change in the assets, business or financial condition of any Obligor (or the assets, business or consolidated financial condition of the Borrower and its Subsidiaries) since the date of the Original Financial Statements.	
19.10	Pari passu ranking	
Each Obligor’s payment obligations under the Finance Documents to which it is, or is to be, a party rank at least pari passu with all its other present and future unsecured and unsubordinated payment obligations, except for obligations mandatorily preferred by law applying to companies generally.

19.11	Ranking and effectiveness of security	
Subject to the Legal Reservations and any filing, registration or notice requirements which is referred to in any Legal Opinion:

	(a)	the Transaction Security has (or will have when the relevant Security Documents have been executed) the priority which it is expressed to have in the Security Documents;	
	(b)	the Charged Property is not subject to any Security Interest other than Permitted Security Interests; and	
	(c)	the Transaction Security will constitute perfected security on the assets described in the Security Documents.	
19.12	Centre of main interests and establishments	
Its centre of main interest (as that term is used in Article 3(1) of the Regulation (EU) 2015/848 of 20 May 2015 on insolvency proceedings (recast) (the Regulation)) of each Obligor is not in the United States of America and no Obligor has an “establishment” (as that term is used in Article 2(10) of the Regulation) in the United States of America.

19.13	Ownership of Charged Property	
Each Obligor is the sole legal and beneficial owner of the Charged Property over which it purports to grant a Security Interest under the Security Documents.

19.14	No insolvency	
No corporate action, legal proceeding or other procedure or step described in clause 30.9 (Insolvency proceedings) or creditors’ process described in clause 30.10 (Creditors’ process) has

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been taken or, to the knowledge of any Obligor, threatened in relation to a Group Member and none of the circumstances described in clause 30.8 (Insolvency) applies to any Group Member.

19.15	No filing or stamp taxes	
Under the laws of each Obligor’s Relevant Jurisdictions it is not necessary that any Transaction Document to which it is, or is to be, party be filed, recorded or enrolled with any court or other authority in that jurisdiction or that any stamp, registration, notarial, documentary or similar Taxes or fees be paid on or in relation to any such Transaction Document or the transactions contemplated by the Transaction Documents except any filing, recording or enrolling or any tax or fee payable in relation to any Finance Document which is referred to in any Legal Opinion and which will be made or paid promptly after the date of the relevant Transaction Document.

19.16	Deduction of Tax	
No Obligor is required to make any Tax Deduction (as defined in clause 13.1 (Definitions)) from any payment it may make under any Finance Document to which it is, or is to be, a party and no other party is required to make any such deduction from any payment it may make under any other Transaction Document.

19.17	Tax compliance	
	(a)	No Obligor or other Group Member is overdue in the filing of any Tax returns or overdue in the payment of any amount in respect of Tax.	
	(b)	No claims or investigations are being, or are reasonably likely to be, made or conducted against any Obligor or other Group Member with respect to Taxes such that a liability of, or claim against, any Obligor or other Group Member is reasonably likely to arise for an amount for which adequate reserves have not been provided in the Original Financial Statements and which might reasonably be expected to have a Material Adverse Effect or which would involve a liability, or a potential liability exceeding:	
	(i)	$5,000,000 (or its equivalent in other currencies) in relation to the Borrower or the Group taken as a whole; or	
	(ii)	$500,000 (or its equivalent in other currencies) in relation to any Group Member (other than the Borrower).	
19.18	Pension exposure	
No Guarantor is, or may be, liable to contribute funds to any form of pension scheme or similar arrangement (other than a scheme or arrangement which is mandatory by law, or where the benefits conferred by it on its members are calculated solely by reference to a payment or payments made by the relevant member or by any other person in respect of that member).

19.19	No Event of Default	
	(a)	No Event of Default is continuing or might reasonably be expected to result from the making of a Utilisation or the entry into, the performance of, or any transaction contemplated by, any Transaction Document.	
	(b)	No other event or circumstance is outstanding which constitutes (or, with the expiry of a grace period, the giving of notice, the making of any determination or any combination of any of the foregoing, would constitute) a default or termination event (however described) under any other agreement or instrument which is binding on any Obligor or any other Group Member or to which any Obligor’s (or any other Group Member’s) assets are subject which might reasonably be expected to have a Material Adverse Effect.	

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	19.20	No proceedings	
	(a)	No litigation, arbitration or administrative proceedings or investigations of, or before, any court, arbitral body or agency which, if adversely determined, might reasonably be expected to have a Material Adverse Effect has or have (to the best of any Obligor’s knowledge and belief (having made due and careful enquiry)) been started or threatened against any Obligor or any other Group Member.	
	(b)	No judgment or order of a court, arbitral tribunal or other tribunal or any order or sanction of any governmental, arbitral or other regulatory body or agency which is reasonably likely to have a Material Adverse Effect has (to the best of any Obligor’s knowledge and belief (having made due and careful enquiry)) been made against any Obligor or any other Group Member.	
19.21	No breach of laws	
	(a)	To the best of any Obligor’s knowledge and belief (having made due and careful enquiry) no Obligor or other Group Member has breached any law or regulation which breach might reasonably be expected to have a Material Adverse Effect.	
	(b)	No labour dispute is current or, to the best of any Obligor’s knowledge and belief (having made due and careful enquiry) threatened against any Obligor or other Group Member which might reasonably be expected to have a Material Adverse Effect.	
19.22	Environmental matters	
	(a)	To the best of any Obligor’s knowledge and belief (having made due and careful enquiry) no Environmental Law applicable to any Fleet Vessel and/or any Obligor or other Group Member has been violated in a manner or to an extent which might reasonably be expected to have, a Material Adverse Effect.	
	(b)	All consents, licences, Authorisations and approvals required or recommended under such Environmental Laws have been obtained and are currently in force.	
	(c)	No Environmental Claim has been made or, to the best of any Obligor’s knowledge and belief (having made due and careful enquiry), is pending against any Group Member or any Fleet Vessel where that claim might reasonably be expected to have a Material Adverse Effect and there has been no Environmental Incident which has given, or might give, rise to such a claim.	
19.23	Anti-corruption law	
Each Obligor and each Group Member has conducted its businesses in compliance with applicable anti-corruption laws and has instituted and maintained policies and procedures designed to promote and achieve compliance with such laws.

19.24	Security and Financial Indebtedness	
	(a)	No Security Interest or Quasi-Security exists over all or any of the present or future assets of any Obligor, in breach of this Agreement.	
	(b)	No Guarantor has any Financial Indebtedness outstanding in breach of or other than as permitted by this Agreement.	
	19.25	Shares	
	(a)	The shares of each Guarantor are fully paid and not subject to any option to purchase or similar rights and are not bearer shares.	

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	(b)	The Constitutional Documents of each Guarantor do not and could not restrict or inhibit any transfer of those shares on creation or enforcement of the Security Documents.	
	(c)	There are no agreements in force which provide for the issue or allotment of, or grant any person the right to call for the issue or allotment of, any share or loan capital of each Guarantor (including any option or right of pre-emption or conversion).	
19.26	Ownership of Obligors	
	(a)	The Coustas Family (and/or any funds controlled by the Coustas Family) ultimately beneficially own at least 15 per cent and one share of the issued voting share capital of the Borrower.	
	(b)	The Coustas Family have the power to cast at a general meeting of the Borrower at least 15 per cent and one share of the maximum number of votes of the issued voting share capital that might be cast at a general meeting of the Borrower.	
	(c)	Dr John Coustas is both the Chief Executive Officer of the Borrower and a director of the Borrower.	
	(d)	No one or more persons (who are not members of the Coustas Family) acting in concert controls the Borrower.	
	(e)	Dr John Coustas and Danaos Investment Limited own 80% of the capital stock and/or voting rights in the Manager of each Ship (other than the Manager of mv’s YM Maturity and YM Mandate as at the date of this Agreement) and/or control such Manager.	
	(f)	Each Guarantor is a wholly owned direct Subsidiary of, and is controlled by, the Borrower.	
19.27	No Change of Control	
There has not been a Change of Control.

19.28	Accounting Reference Date	
The Financial Year-end of each Obligor and each Group Member is the Accounting Reference Date.

19.29	Copies of documents	
The copies of those Transaction Documents which are not Finance Documents and the Constitutional Documents of the Obligors delivered to the Lender under clause 4 (Conditions of Utilisation) will be true, complete and accurate copies of such documents and include all amendments and supplements to them as at the time of such delivery and no other agreements or arrangements exist between any of the parties to those Transaction Documents which would affect the transactions or arrangements contemplated by them or modify, waive or release the obligations of any party under them.

19.30	No breach of any Charter Document	
	(a)	No Obligor nor (so far as the Obligors are aware) any other person is in material breach of any Charter Document to which it is a party nor has anything occurred which entitles or may entitle any party to rescind or terminate it or decline to perform its obligations under it.	
	(b)	For the purposes of paragraph (a) (but without limitation), any breach of any Charter Document relating to non-payment of charterhire, reduction of charterhire, frequency of charterhire payment, the termination rights of a Charterer, cancellation of an Assignable Charter, assignment and/or transfer of any rights and/or obligations under an Assignable	

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Charter or a change in the identity of a Charterer or Charter Guarantor shall be regarded as a material breach.

19.31	No immunity	
No Obligor nor any of its assets is immune to any legal action or proceeding.

19.32	Ship status	
Each Ship is:

	(a)	on the date of this Agreement permanently registered in the name of the relevant Owner through the relevant Registry as a ship under the laws and flag of the relevant Flag State;	
	(b)	on the date of this Agreement operationally seaworthy and in every way fit for service;	
	(c)	on the date of this Agreement classed with the relevant Classification free of any overdue requirements and recommendations of the relevant Classification Society; and	
	(d)	on the first day of its Mortgage Period insured in the manner required by the Finance Documents.	
19.33	Ship’s employment	
Each Ship shall, on the first day of the relevant Mortgage Period:

	(a)	if it is then subject to a Charter, have been delivered, and accepted for service, under such Charter;	
	(b)	be free of any other charter commitment which, if entered into after that date, would require approval under the Finance Documents; and	
	(c)	not be subject to any agreement or arrangement whereby the Earnings of that Ship may be shared with any other person (except for any profit sharing arrangements on an arm’s length basis and referring to an index or similar benchmark).	
19.34	Address commission	
There are no rebates, commissions or other payments in connection with any Charter other than those referred to in it.

19.35	No Money Laundering	
In relation to the borrowing by the Borrower of any Loan or any part of it, the performance and discharge of the Obligors’ obligations and liabilities under the Finance Documents, and the transactions and other arrangements effected or contemplated by this Agreement and the Finance Documents, the Obligors are acting for their own account and the foregoing will not involve or lead to a contravention of any applicable law, official requirement or other regulatory measure or procedure which has been implemented by any relevant regulatory authority or otherwise to combat money laundering.

19.36	Sanctions	
	(a)	None of the Obligors nor any other Group Member nor any Manager which is affiliated with the Group (including for that purpose Danaos Shipping Company Limited as Manager) is a Prohibited Person or is owned or controlled by, or acting directly or indirectly on behalf of or for the benefit of, a Prohibited Person and none of such persons owns or controls a Prohibited Person.	

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	(b)	Each Obligor, each other Group Member and any Manager which is affiliated with the Group (including for that purpose Danaos Shipping Company Limited as Manager) is in compliance with all Sanctions.	
19.37	Good title to assets	
Each Obligor has a good, valid and marketable title to, or valid leases or licences of, and all appropriate Authorisations to use, the assets necessary to carry on its business as presently conducted.

19.38	Status of Charter Documents	
Subject to any applicable Legal Reservations, the Charter Documents constitute legal, valid, binding and enforceable obligations of the Obligors in accordance with their respective terms.

19.39	Times when representations are made	
	(a)	All of the representations and warranties set out in this clause 19 (other than Ship Representations) are deemed to be made on the date of:	
	(i)	this Agreement;	
	(ii)	the first Utilisation Request; and	
	(iii)	the first Utilisation;	
	(b)	The Repeating Representations are deemed to be made or repeated on the dates of each subsequent Utilisation Request, each subsequent Utilisation and the first day of each Interest Period.	
	(c)	All of the Ship Representations in respect of a Ship are deemed to be made on the first day of the Mortgage Period for the relevant Ship.	
	(d)	Each representation or warranty deemed to be made after the date of this Agreement shall be deemed to be made and repeated by reference to the facts and circumstances existing at the date the representation or warranty is deemed to be made or repeated.	
	20	Information undertakings	
20.1	Undertaking to comply	
Each Obligor who is a Party undertakes that this clause 20 will be complied with throughout the Facility Period.

20.2	Definitions	
In this clause 20:
Annual Financial Statements means each of the audited consolidated financial statements for a Financial Year of the Borrower (and its Subsidiaries) delivered pursuant to paragraph (a) of clause 20.3 (Financial statements).
Quarterly Financial Statements means each of the unaudited consolidated financial statements for a Financial Quarter of the Borrower (and its Subsidiaries) delivered pursuant to paragraph (c) of clause 20.3 (Financial statements).

20.3	Financial statements	
The Obligors shall supply to the Lender:

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	(a)	the audited consolidated financial statements of the Borrower (and its Subsidiaries) on a consolidated basis for each Financial Year as soon as the same become available, but in any event within 180 days after the end of each Financial Year;  and	
	(b)	the unaudited consolidated financial statements of the Borrower (and its Subsidiaries) for each Financial Quarter (including on a year to date basis) as soon as the same become available, but in any event within 60 days after the end of each such Financial Quarter.	
20.4	Provision and contents of Compliance Certificate	
	(a)	The Obligors shall supply to the Lender with each set of Annual Financial Statements and Quarterly Financial Statements of the Borrower, a Compliance Certificate;	
	(b)	Each Compliance Certificate shall, amongst other things, set out (in reasonable detail) computations as to compliance with clause 21 (Financial covenants) and (subject to paragraph (c) below) have attached thereto valuations of the Mortgaged Ships (dated as at the end of the financial period to which such Compliance Certificate relates) demonstrating their Market Values and made in accordance with and on the basis of clause 26 (Minimum security value).	
	(c)	The Borrower may elect that any Compliance Certificate delivered in respect of a Financial Quarter ending in March or September of a Financial Year, is accompanied by the same valuations of the Mortgaged Ships attached to the immediately preceding Compliance Certificate delivered to the Lender and in that case the Market Values of the Mortgaged Ships shall be determined by reference to such older valuations (unless the Lender notifies the Borrower at any time (whether before or after such Compliance Certificate is issued), that it does not accept such election of the Borrower.	
	(d)	Each Compliance Certificate shall be signed by the chief financial officer or the chief operating officer of the Borrower or, in his absence, by two directors of the Borrower.	
20.5	Requirements as to financial statements	
	(a)	The Obligors shall procure that each set of Annual Financial Statements and Quarterly Financial Statements delivered pursuant to clause 20.3 (Financial statements) includes a profit and loss account, a balance sheet and a cashflow statement and that, in addition, each set of Annual Financial Statements shall be audited by the Auditors.	
	(b)	Each set of financial statements delivered pursuant to clause 20.3 (Financial statements) shall:	
	(i)	be prepared in accordance with the Accounting Principles;	
	(ii)	give a true and fair view of (in the case of Annual Financial Statements for any Financial Year), or fairly present (in other cases), and must be certified by an officer of the relevant Obligor as fairly presenting, its financial condition and operations, as at the date as at which those financial statements were drawn up; and	
	(iii)	in the case of Annual Financial Statements, not be the subject of any material qualification in the Auditors’ opinion.	
	(c)	The Obligors shall procure that each set of financial statements delivered pursuant to clause 20.3 (Financial statements) shall be prepared using the Accounting Principles, accounting practices and financial reference periods consistent with those applied in the preparation of the Original Financial Statements unless, in relation to any set of financial statements, the Borrower notifies the Lender that there has been a change in the Accounting Principles or the accounting practices and the Auditors deliver to the Lender:	

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	(i)	a description of any change necessary for those financial statements to reflect the Accounting Principles or accounting practices and reference periods upon which corresponding Original Financial Statements were prepared; and	
	(ii)	sufficient information, in form and substance as may be reasonably required by the Lender, to enable the Lender to determine whether clause 21 (Financial covenants) has been complied with and to make an accurate comparison between the financial position indicated in those financial statements and the Original Financial Statements.	
	(d)	Any reference in this Agreement to any financial statements shall be construed as a reference to those financial statements as adjusted to reflect the basis upon which the Original Financial Statements were prepared.	
20.6	Year-end	
The Obligors shall procure that each Financial Year-end of each Obligor and each Group Member falls on the Accounting Reference Date.

20.7	Information: miscellaneous	
The Obligors shall supply to the Lender:

	(a)	save to the extent publicly available, at the same time as they are dispatched, copies of all documents dispatched by the Borrower to any class of its shareholders generally or dispatched by the Borrower or any Obligors to any class of its creditors generally;	
	(b)	promptly upon becoming aware of them, the details of any litigation, arbitration or administrative proceedings which are current, threatened or pending against any Group Member, and which, if adversely determined, might have a Material Adverse Effect or which would involve a liability, or a potential or alleged liability, exceeding $5,000,000 (or its equivalent in other currencies);	
	(c)	promptly on request by the Lender, a budget and cash flow projections for the Group in respect of such Financial Year, in form and substance acceptable to the Lender;	
	(d)	promptly upon becoming aware of them, the details of any judgment or order of a court, arbitral tribunal or other tribunal or any order or sanction of any governmental, arbitral or other regulatory body or agency which is made against any Group Member and which is reasonably likely to have a Material Adverse Effect;	
	(e)	promptly, such information as the Lender may reasonably require about the Charged Property and compliance of the Obligors with the terms of any Security Documents; and	
	(f)	promptly on reasonable request from the Lender, such further information regarding the financial condition, assets and operations of the Group and/or any Group Member as the Lender may reasonably request (including, but not limited to, fleet employment lists, information about the Group’s newbuilding program and related obligations, financing offers and agreements in respect of such newbuildings etc.).	
20.8	Notification of Event of Default	
	(a)	The Obligors shall notify the Lender of any Event of Default (and the steps, if any, being taken to remedy it) promptly upon any Obligor becoming aware of its occurrence (unless that Obligor is aware that a notification has already been provided by another Obligor).	
	(b)	Promptly upon a request by the Lender, the Borrower shall supply to the Lender a certificate signed by two of the directors or senior officers of the Borrower certifying that no	

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Event of Default is continuing (or if an Event of Default is continuing, specifying the Event of Default and the steps, if any, being taken to remedy it).

20.9	“Know your customer” checks	
If:

	(a)	the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement or the application of the policies and procedures of the Lender;	
	(b)	any change in the status of an Obligor (or of a Holding Company of an Obligor) or the composition of the shareholders of an Obligor (or of a Holding Company of an Obligor) after the date of this Agreement; or	
	(c)	a proposed assignment and/or transfer by the Lender of any of its rights and/or obligations under this Agreement,	
obliges the Lender to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already available to it, each Obligor shall promptly upon the request of the Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Lender, in order for the Lender to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.

20.10	Money Laundering	
The Borrower will:

	(a)	provide the Lender with information, certificates and any documents required by the Lender to ensure compliance with any law official requirement or other regulatory measure or procedure implemented to combat money laundering (as defined in the provisions of the directive (2015/849/EC) of the European Parliament and of the Council throughout the Facility Period; and	
	(b)	notify the Lender as soon as it becomes aware of any matters evidencing that a breach of any law official requirement or other regulatory measure or procedure implemented to combat money laundering (as defined in the provisions of the directive (2015/849/EC) of the European Parliament and of the Council) may or is about to occur or that the person(s) who have or will receive the commercial benefit of this Agreement have changed from the date hereof.	
	21	Financial covenants	
21.1	Undertaking to comply	
Each Obligor who is a Party undertakes that this clause 21 will be complied with throughout the Facility Period.

21.2	Financial definitions	
In this clause 21:
Accounting Principles means US GAAP or, if chosen to be adopted by the Borrower, International Financial Reporting Standards (IFRS Standards) applicable from time to time.
Borrowings means, at any time, the aggregate face value of the outstanding principal or capital amount (and any fixed or minimum premium payable on prepayment or redemption) of any indebtedness of Group Members for or in respect of:

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	(a)	moneys borrowed and debit balances at banks or other financial institutions;	
	(b)	any acceptances under any acceptance credit or bill discount facility (or dematerialised equivalent);	
	(c)	any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument;	
	(d)	any Finance Lease;	
	(e)	receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis and meet any requirements for de-recognition under the Accounting Principles);	
	(f)	any counter-indemnity obligation in respect of a guarantee, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution in respect of an underlying liability of an entity which is not a Group Member which liability would fall within one of the other paragraphs of this definition;	
	(g)	any amount raised by the issue of shares which are redeemable (other than at the option of the issuer) before all amounts outstanding under the Finance Documents are discharged in full or are otherwise classified as borrowings under the Accounting Principles;	
	(h)	any amount of any liability under an advance or deferred purchase agreement if:	
	(i)	one of the primary reasons behind the entry into the agreement is to raise finance or to finance the acquisition or construction of the asset or service in question; or	
	(ii)	the agreement is in respect of the supply of assets or services and payment is due more than 90 days after the date of supply;	
	(i)	any amount raised under any other transaction (including any forward sale or purchase agreement, sale and sale back or sale and leaseback agreement) having the commercial effect of a borrowing or otherwise classified as borrowings under the Accounting Principles; and	
	(j)	(without double counting) the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in paragraphs (a) to (i) above,	
and, for the avoidance of doubt: (i) Borrowings shall not include any obligation or marked to market fair value recorded in the Financial Statements in respect of derivative financial instruments and (ii) the amount of principal or interest (or equivalent of principal or interest) constituting any such Borrowings shall be calculated by reference to the actual amount actually and legally owing and outstanding by Group Members at the time of determination, irrespective of any other method of calculation or treatment of such amounts under the Accounting Principles.
Cash and Cash Equivalents means, at any time, “Cash and Cash Equivalents” as shown in the Financial Statements, in each case if and to the extent Group Members are alone beneficially entitled to them at that time and provided they are not subject to any Security Interest (other than any Security Interest permitted under clause 29.2 (General negative pledge)) and the ability to deal in any of them or ability to apply the proceeds towards repayment of Financial Indebtedness is not subject to the prior discharge of any other Financial Indebtedness.
Consolidated Debt means, at any time, the aggregate of all obligations of any Group Member for or in respect of Borrowings at that time as reflected in the Financial Statements, but excluding any such obligations owing by a Group Member to another Group Member.
Consolidated EBITDA means, in respect of any Measurement Period, the Net Income:

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	(a)	before taking into account interest income and interest expense, gains or losses under any derivative financial instruments (whether realised or unrealised), tax, depreciation, amortisation and any other non cash or extraordinary item, asset impairments, amortisation of finance costs, capital gains or losses realised from the sale of any Relevant Vessel, Finance Charges and capital losses on Relevant Vessel cancellations each as reflected in the Financial Statements for the Measurement Period; and	
	(b)	before taking into account Non-Recurring Items (subject to the limitation set out in that definition) as reflected in the Financial Statements for the Measurement Period.	
Consolidated Net Leverage means, in respect of any Measurement Period, the ratio of Consolidated Debt (less Cash and Cash Equivalents) to Consolidated EBITDA in respect of that Measurement Period.
Finance Charges means, for any Measurement Period, the aggregate amount of the accrued interest (excluding any accrued or capitalised PIK interest), commission, exit fees, fees, discounts, prepayment fees, premiums or charges and other finance payments in respect of Borrowings whether paid, payable or capitalised by any Group Member as included in the Financial Statements (calculated on a consolidated basis) in respect of that Measurement Period:

	(a)	including any upfront fees or costs which are included as part of the effective interest rate adjustments (including in respect of permitted interest rate caps);	
	(b)	including the interest (but not the capital) element of payments in respect of Finance Leases;	
	(c)	including any commission, fees, discounts and other finance payments payable by (and deducting any such amounts payable to) any Group Member under any interest rate hedging arrangement; and	
	(d)	taking no account of any unrealised gains or losses on any derivative financial instruments,	
so that no amount shall be added (or deducted) more than once.
Finance Leases means any lease or hire purchase contract which would, in accordance with the Accounting Principles, be treated as a finance or capital lease.
Financial Quarter has the meaning given to it in clause 1.1 (Definitions and interpretation).
Financial Statements has the meaning given to it in clause 1.1 (Definitions and interpretation).
Interest Cover means, for any Measurement Period, the ratio of Consolidated EBITDA to Net Interest Expense.
Liquidity means the aggregate of all Cash and Cash Equivalents at any time.
Measurement Period means each period of twelve months ending on the last day of each Financial Quarter.
Net Income means:

	(a)	in relation to any Financial Year, the net income of the Group appearing in the Financial Statements for that Financial Year; and	
	(b)	in relation to any Financial Quarter, the net income of the Group appearing in the Financial Statements for that Financial Quarter.	

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Net Interest Expense in respect of a Measurement Period is equal to consolidated:

	(a)	interest expense (excluding capitalised interest and PIK interest), less;	
	(b)	interest income, less;	
	(c)	realised gains on interest rate swaps, plus;	
	(d)	realised losses on interest rate swaps,	
each as reflected in the Financial Statements for the Measurement Period. For the avoidance of doubt, Net Interest Expense excludes unrealised gains/losses on derivative financial instruments.
Non-Recurring Items means, in respect of a Measurement Period, any exceptional, one off, non-recurring or extraordinary items up to a maximum of 5 per cent of Consolidated EBITDA (excluding Non-Recurring Items), each as reflected in the Financial Statements for that Measurement Period.

21.3	Financial condition	
Each Obligor who is a Party shall ensure that throughout the Facility Period:

	(a)	Liquidity: at all times during each Measurement Period ending on each Quarter Date, Liquidity shall not at any time be less than $30,000,000; and	
	(b)	Consolidated net leverage ratio: at all times during each Measurement Period ending on each Quarter Date,  Consolidated Net Leverage shall be lower than 6.50:1.00; and	
	(c)	Interest Cover: at all times during each Measurement Period ending on each Quarter Date, Interest Cover shall be higher than 2.50:1.00.	
21.4	Financial testing	
The financial covenants set out in clause 21.3 (Financial condition) shall be calculated in accordance with the Accounting Principles on a consolidated basis and tested by reference to each of the Financial Statements and/or each Compliance Certificate delivered pursuant to clause 20.4 (Provision and contents of Compliance Certificate ).

	22	General undertakings	
22.1	Undertaking to comply	
Each Obligor who is a Party undertakes that this clause 22 will be complied with by and in respect of each Obligor throughout the Facility Period.

22.2	Use of proceeds	
The proceeds of any Utilisation shall be used exclusively for the purposes specified in clause 3 (Purpose).

22.3	Authorisations	
Each Obligor shall promptly:

	(a)	obtain, comply with and do all that is necessary to maintain in full force and effect; and	
	(b)	upon the Lender’s request, supply certified copies to the Lender of,	
any Authorisation required under any law or regulation of a Relevant Jurisdiction to:
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	(i)	enable it to perform its obligations under the Transaction Documents;	
	(ii)	ensure the legality, validity, enforceability or admissibility in evidence of any Transaction Document; and	
	(iii)	carry on its business where failure to do so has, or is reasonably likely to have, a Material Adverse Effect.	
22.4	Compliance with laws	
Each Obligor shall comply in all respects with all laws and regulations (including Environmental Laws) to which it may be subject, if failure to comply has, or is reasonably likely to have, a Material Adverse Effect.

22.5	Anti-corruption law	
	(a)	No Obligor shall (and shall ensure that no other Group Member will) directly or indirectly use the proceeds of the Facility for any purpose which would or might breach applicable anti-corruption laws including but not limited to, the Bribery Act 2010, the United States Foreign Corrupt Practices Act of 1977 or other similar legislation in other jurisdictions.	
	(b)	Each Obligor shall (and shall ensure that each other Group Member will):	
	(i)	conduct its businesses in compliance with applicable anti-corruption laws; and	
	(ii)	maintain policies and procedures designed to promote and achieve compliance with such laws.	
22.6	Tax compliance	
	(a)	Each Obligor shall pay and discharge all Taxes imposed upon it or its assets within the time period allowed without incurring penalties unless and only to the extent that:	
	(i)	such payment is being contested in good faith;	
	(ii)	adequate reserves are being maintained for those Taxes and the costs required to contest them which have been disclosed in its latest financial statements delivered to the Lender under clause 20.3 (Financial statements); and	
	(iii)	such payment can be lawfully withheld and failure to pay those Taxes does not have or is not reasonably likely to have, a Material Adverse Effect.	
22.7	Change of business or Constitutional Documents or domicile	
	(a)	Except as approved in writing, no change will be made to the general nature of the business of the Borrower or any of the other Obligors or the Group taken as a whole from that carried on at the date of this Agreement, or to the corporate and/or legal structure of the Group from that existing on the date of this Agreement.	
	(b)	Except as approved in writing, no change will be made to the Constitutional Documents of any Obligor which will affect such Obligor’s ability to perform its obligations under the Finance Documents or will affect the validity or enforceability of or the effectiveness or ranking of any Transaction Security granted by such Obligor pursuant to any of the Finance Documents or the rights or remedies or the Lender under any Finance Documents to which such Obligor is a party.	
	(c)	Except as approved in writing, no change will be made to the domicile of any Obligor.	

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22.8	Merger	
Except as approved:

	(a)	no Obligor shall enter into any amalgamation, demerger, merger, consolidation redomiciliation, legal migration or corporate reconstruction (other than the solvent liquidation of any Group Member which is not an Obligor so long as any payments or assets distributed as a result of such liquidation or reorganisation are distributed to other Group Members) Provided however that the Borrower may enter into a merger if:	
	(i)	it is the surviving entity;	
	(ii)	no Event of Default is continuing at the time or would occur as a result of such merger (and no breach of clause 21 (Financial covenants) exists prior to or would occur immediately after such merger if the financial covenants set out in such clause were tested at such times); and	
	(iii)	such merger does not result in a Change of Control.	
22.9	Pension exposure	
The Borrower shall ensure that no Guarantor is, or any time becomes, liable to contribute funds to any form of pension scheme or similar arrangement (other than as required by law and other than a scheme or arrangement where the benefits conferred by it on its members are calculated solely by reference to a payment or payments made by the relevant member or by any other person in respect of that member).

22.10	Further assurance	
	(a)	Each Obligor shall promptly do all such acts or execute all such documents (including assignments, transfers, mortgages, charges, notices and instructions) as the Lender may reasonably specify (and in such form as the Lender may reasonably require in favour of the Lender or its nominee(s)):	
	(i)	to perfect the Security Interests created or intended to be created by that Obligor under or evidenced by, the Security Documents (which may include the execution of a mortgage, charge, assignment or other security over all or any of the assets which are, or are intended to be, the subject of the Security Documents) or for the exercise of any rights, powers and remedies of the Lender provided by or pursuant to the Finance Documents or by law;	
	(ii)	to confer on the Lender Security Interests over any property and assets of that Obligor located in any jurisdiction equivalent or similar to the Security Interest intended to be conferred by or pursuant to the Security Documents;	
	(iii)	to facilitate the realisation of the assets which are, or are intended to be, the subject of the Security Documents; and/or	
	(iv)	to facilitate the accession by a New Lender to any Security Document following an assignment or transfer in accordance with clause 31.1 (Assignments or transfers by the Lender).	
	(b)	Each Obligor shall take all such action as is available to it (including making all filings and registrations) as may be necessary for the purpose of the creation, perfection, protection or maintenance of any Security Interest (or the priority of any Security Interest) conferred or intended to be conferred on the Lender by or pursuant to the Finance Documents.	

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22.11	Negative pledge in respect of Charged Property and Obligor’s shares	
	(a)	Except as approved and for Permitted Maritime Liens and Transaction Security, no Obligor will grant or allow to exist any Security Interest over:	
	(i)	any Charged Property; or	
	(ii)	the shares in any Guarantor or any rights deriving from, or related to, such shares.	
	(b)	Each Obligor will procure that all of the shares, partnership interest or units or limited liability company interest of or in all of the Obligors will be in registered form (and not in bearer form) at all times.	
22.12	Environmental matters	
	(a)	The Obligors will notify the Lender in writing as soon as reasonably practicable of any Environmental Claim being made against any Group Member or any Fleet Vessel which, if successful to any extent, might reasonably be expected to have a Material Adverse Effect and of any Environmental Incident which may give rise to such a claim and will be kept regularly and promptly informed in reasonable detail of the nature of, and response to, any such Environmental Incident and the defence to any such claim.	
	(b)	The Obligors will procure that no Environmental Laws (and any consents, licences, permits or approvals obtained under them) applicable to Fleet Vessels will be violated in a way which might have a Material Adverse Effect.	
22.13	Obligors’ own account	
Each Obligor will ensure that any borrowing by it and/or the performance of its obligations hereunder and under the other Finance Documents to which it is a party will be for its own account and will not involve any breach by it of any law, or regulatory measure relating to money laundering (as defined in the provisions of the directive (2015/849/EC) of the European Parliament and of the Council) or any equivalent law or regulatory measure in any other jurisdiction.

22.14	Inspection	
Each Obligor who is a Party undertakes with the Lender that, from the date of this Agreement and so long as any moneys are owing under any of the Finance Documents, upon the request of the Lender following the occurrence of an Event of Default which is continuing, it shall provide the Lender or any of their representatives, professional advisors and contractors with access to, and permit inspection of, books and records of any Group Member, in each case at reasonable times and upon reasonable notice.

22.15	Pari Passu	
Each Obligor will ensure that (a) its obligations under the Finance Documents shall, without prejudice to the Security Interests intended to be created by the Security Documents, at all times rank at least pari passu with all its other present and future unsecured and unsubordinated Indebtedness with the exception of any obligations which are mandatorily preferred by law and not by contract and (b) any Financial Indebtedness of any Obligor to any other Group Member or any of its shareholders or other Affiliates shall be in all respects subordinated in ranking and priority of payment to all amounts owing to the Lender under the Finance Documents.

22.16	Sanctions	
	(a)	Each Obligor shall comply, and shall procure that each other Group Member and each Manager which is affiliated with the Group (including for that purpose Danaos Shipping Company Limited as Manager) shall comply, in all respects with all Sanctions.	

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	(b)	No proceeds of a Loan shall be made available, directly or indirectly, to or for the benefit of a Prohibited Person or otherwise shall be, directly or indirectly, applied in a manner or for a purpose prohibited by Sanctions.	
	23	Dealings with Ship	
23.1	Undertaking to comply	
Each Obligor who is a Party undertakes that this clause 23 will be complied with in relation to each Ship throughout the Facility Period.

23.2	Ship’s name and registration	
	(a)	The Ship’s name shall only be changed after prior notice to the Lender and the relevant Owner shall promptly take all necessary steps to update all applicable insurance, classification and registration documents with such change of name.	
	(b)	The Ship shall be permanently registered in the name of the relevant Owner with the relevant Registry under the laws of its Flag State.  Except with approval, the Ship shall not be registered under any other flag or at any other port or fly any other flag (other than that of its Flag State), provided that no such approval shall be required for the registration of the Ship under the flag of another Approved Flag State as long as replacement Security Interests are granted in respect of the Ship (which are, in the opinion of the Lender, equivalent to those in place prior to registration) in favour of the Lender (at the cost of the Borrower) immediately following the registration of the Ship under the flag of that other Approved Flag State. If that registration is for a limited period, it shall be renewed at least 45 days before the date it is due to expire and the Lender shall be notified of such renewal at least 30 days before that date.	
	(c)	Nothing will be done and no action will be omitted (including by any Group Member) if that might result in such registration being cancelled, forfeited or imperilled or the Ship being required to be registered under the laws of another state of registry.	
23.3	Sale or other disposal of Ship	
Except if on completion of the sale of the Ship the Borrower is or will be in compliance with its obligations under clause 7.5 (Sale or Total Loss) in respect of such sale, and provided always that no Default is continuing at the time, the relevant Owner will not sell, transfer, abandon or otherwise dispose of the relevant Ship or any share or interest in it (or agree to do so) without prior approval.

23.4	Manager	
A manager of the Ship shall not be appointed unless that manager is approved (other than (a) Danaos Shipping Company Limited of 3, Christaki Kompou Street, Peter's House, 3011 Limassol, Cyprus who is hereby approved in respect of all the Ships and (b) Yang Ming Marine Transport Corp. of Taiwan who is hereby approved in respect of each of mv YM Maturity and mv YM Mandate and for as long as it is subject to its Charter), and unless the terms of its appointment are approved and it has delivered a duly executed Manager’s Undertaking to the Lender. There shall be no change to the terms of appointment of a manager whose appointment has been approved unless, such change is also approved.

23.5	Copy of Mortgage on board	
A properly certified copy of the relevant Mortgage shall be kept on board the Ship with its papers and shown to anyone having business with the Ship which might create or imply any commitment or Security Interest over or in respect of the Ship (other than a lien for crew’s wages and salvage) and to any representative of the Lender.

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23.6	Notice of Mortgage	
A framed printed notice of the Ship’s Mortgage shall be prominently displayed in the navigation room and in the Master’s cabin of the Ship. The notice must be in plain type and read as follows:
“NOTICE OF MORTGAGE
This Ship is subject to a first mortgage in favour of [here insert name of mortgagee] of [here insert address of mortgagee]. Under the said mortgage and related documents, neither the Owner nor any charterer nor the Master of this Ship has any right, power or authority to create, incur or permit to be imposed upon this Ship any commitments or encumbrances whatsoever other than for crew’s wages and salvage”.
No-one will have any right, power or authority to create, incur or permit to be imposed upon the Ship any lien whatsoever other than for crew’s wages and salvage.

23.7	Conveyance on default	
Where the Ship is (or is to be) sold in exercise of any power conferred by the Security Documents, the relevant Owner shall, upon the Lender’s request, immediately execute such form of transfer of title to the Ship as the Lender may require.

23.8	Chartering	
	(a)	Except with approval, the relevant Owner shall not enter into any charter commitment for the relevant Ship (other than the Ship’s Charter) which is:	
	(i)	a bareboat or demise charter or passes possession and operational control of the Ship to another person;	
	(ii)	on terms as to payment or amount of hire which are materially less beneficial to it than the terms which at that time could reasonably be expected to be obtained on the open market for vessels of the same age and type as the Ship under charter commitments of a similar type and period; or	
	(iii)	to another Group Member.	
	(b)	Further, without prejudice to the rights of the Lender under the provisions of paragraph (a) above or any other Finance Documents, the relevant Owner shall:	
	(i)	advise the Lender promptly of any proposed Assignable Charter in respect of the Ship (other than the Ship’s Charter);	
	(ii)	deliver a certified copy of the relevant Charter Documents to the Lender forthwith after their execution;	
	(iii)	forthwith after the Lender’s request, procure that the relevant Owner:	
	(A)	executes a Charter Assignment in respect of the relevant Charter Documents in favour of the Lender (and/or if the Assignable Charter is a bareboat charter, a tripartite agreement with the relevant Charterer and the Lender in agreed form);	
	(B)	executes a notice of assignment of such Charter Documents in the form provided in the relevant Charter Assignment (or, if applicable, such tripartite agreement); and	
	(C)	ensures that such notice of assignment is served on the relevant Charterer and/or Charter Guarantor and will use reasonable endeavours to ensure that	

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the relevant Charterer signs an acknowledgement of such notice (in such form as the Lender may reasonably require);

	(iv)	deliver to the Lender such documents and evidence of the type referred to in Part 2 of Schedule 3 (Conditions precedent), in relation to such Charter Documents, the relevant Charter Assignment, the relevant notice of assignment and its acknowledgment (including, but without limitations, legal opinions regarding the valid execution and binding effect thereof) as the Lender may require; and	
	(v)	pay on the Lender’s demand all legal and other costs and expenses incurred by any the Lender in connection with or in relation to any such assignment, notice of assignment and acknowledgement thereof.	
23.9	Merchant use	
The relevant Owner shall use the Ship only as a civil merchant trading ship (unless by mandatory operation of law it is used for any other purpose following its requisition by the government of its Flag State and only for the duration of such requisition, but subject always to the other provisions of this Agreement and the Finance Documents).

23.10	Lay up	
Except with approval, the Ship shall not be laid up or deactivated.

23.11	Sharing of Earnings	
Except with approval, the relevant Owner shall not enter into any arrangement under which its Earnings from the Ship may be shared with anyone else except for profit sharing arrangements on an arm’s length basis and referring to an index or similar benchmark.

23.12	Payment of Earnings	
The relevant Owner’s Earnings from the Ship shall be paid in the way required by the Ship’s General Assignment or Deed of Covenant. If any such Earnings are held by brokers or other agents, they shall be duly accounted for and paid to the Lender, if it requires this after the Earnings have become payable to it under the Ship’s General Assignment or Deed of Covenant.

23.13	Anti-drug abuse	
The relevant Owner shall take all necessary and proper precautions to prevent any infringements of the Anti-Drug Abuse Act of 1986 of the United States of America or any similar legislation applicable to the Ship in any jurisdiction in or to which the Ship shall be employed or located or trade or which may otherwise be applicable to the Ship and/or the relevant Owner and, if the Lender shall so require, procure that the relevant Owner  enters into a “Carrier Initiative Agreement” with the United States Customs Service and procure that such agreement (or any similar agreement hereafter introduced by any government entity of the United States of America) is maintained in full force and effect and performed by the relevant Owner.

	24	Condition and operation of Ship	
24.1	Undertaking to comply	
Each Obligor who is a Party undertakes that this clause 24 will be complied with in relation to each Ship throughout the Facility Period.

24.2	Defined terms	
In this clause 24.2 and in Schedule 3 (Conditions precedent):

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applicable code means any code or prescribed procedures required to be observed by the Ship or the persons responsible for its operation under any applicable law (including but not limited to those currently known as the ISM Code and the ISPS Code).
applicable law means all laws and regulations applicable to vessels registered in the Ship’s Flag State or which for any other reason apply to the Ship or to its condition or operation at any relevant time.
applicable operating certificate means any certificates, vessel response plans or other document relating to the Ship or its condition or operation required to be in force under any applicable law or any applicable code (including, without limitation, the document of compliance and safety management certificate relating to the Ship under ISM Code and the International Ship Security Certificate relating to the Ship under the ISPS Code).

24.3	Repair	
The Ship shall be kept in a good, safe and efficient state of repair consistent with first-class ship ownership and management practice. The quality of workmanship and materials used to repair the Ship or replace any damaged, worn or lost parts or equipment shall be sufficient to ensure that the Ship’s value is not materially reduced.

24.4	Modification	
Except with approval, the structure, type or performance characteristics of the Ship shall not be modified in a way which could or might materially alter the Ship or materially reduce its value.

24.5	Removal of parts	
Except with approval, no material part of the Ship or any equipment shall be removed from the Ship if to do so would materially reduce its value (unless at the same time it is replaced with equivalent parts or equipment owned by the relevant Owner free of any Security Interest except under the Security Documents).

24.6	Third party owned equipment	
Except with approval, equipment owned by a third party shall not be installed on the Ship if it cannot be removed without risk of causing damage to the structure or fabric of the Ship or incurring significant expense.

24.7	Maintenance of class; compliance with laws and codes and Inventory of Hazardous Material	
	(a)	The Ship’s class shall be the relevant Classification with the relevant Classification Society and it shall be maintained free of all overdue recommendations, requirements and conditions affecting class or adverse notation and neither the Classification nor the Classification Society of such Ship shall be changed without approval. The Ship and every person who owns, operates or manages the Ship shall comply with all applicable laws and the requirements of all applicable codes. There shall be kept in force and on board the Ship or in such person’s custody any applicable operating certificates which are required by applicable laws or applicable codes to be carried on board the Ship or to be in such person’s custody (including but not limited to the Inventory of Hazardous Material or any other applicable equivalent document required by applicable law).	
	(b)	Promptly upon the issuance of the Inventory of Hazardous Material in respect of the Ship, the relevant Owner shall provide to the Lender a copy of the same.	

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24.8	Surveys	
The Ship shall be submitted to periodical surveys and any other surveys which are required for it to maintain the Classification as its class. Copies of reports of those surveys shall be provided promptly to the Lender if it so requests.

24.9	Inspection and notice of dry-docking	
Not more than once per calendar year (unless a Default is continuing), the Lender and/or surveyors or other persons appointed by it for such purpose shall be allowed to board the Ship (at the cost of the Owner and at the risk of the Owner) at all reasonable times (so as not to interfere with the normal trading schedule the Ship) to inspect it and given all proper facilities needed for that purpose. The Lender shall be given reasonable advance notice of any intended dry-docking of the Ship (whatever the purpose of that dry-docking).

24.10	Prevention of arrest	
	(a)	All debts, damages, liabilities and outgoings which have given, or may give, rise to maritime, statutory or possessory liens on, or claims enforceable against, the Ship, its Earnings or Insurances or any part thereof, or lead to any of the same being arrested, attached or levied upon pursuant to legal process or purported legal process, shall be promptly paid and discharged when due or, if later, 30 days from the date they are incurred unless the relevant Owner is disputing in good faith whether it is contractually obliged to make the payment in question.	
	(b)	The Owner shall promptly discharge or settle all taxes, dues and other amounts charged and all other outgoings whatsoever in respect of the Ship, her Earnings or her Insurances.	
24.11	Release from arrest	
The Ship, its Earnings and Insurances shall promptly be released from any arrest, detention, attachment or levy, and any legal process against the Ship shall be promptly discharged, by whatever action is required to achieve that release or discharge.

24.12	Information about the Ship	
The Lender shall promptly be given any information which it may reasonably require about the Ship, its Earnings and Insurances, or its employment, position and engagements, use or operation (including any expenses incurred or paid or likely to be incurred or paid in connection with the operation, maintenance or repair of the Ship), including details of towages and salvages and reports on fuel oil consumption data as per Marpol Annex VI, and copies of all its charter commitments entered into by or on behalf of any Obligor and copies of any applicable operating certificates.

24.13	Notification of certain events	
The Lender shall promptly be notified by the Obligors in writing of:

	(a)	any damage to the Ship where the cost of the resulting repairs may exceed the Major Casualty Amount for the Ship;	
	(b)	any occurrence which may result in the Ship becoming a Total Loss;	
	(c)	any requisition of the Ship for hire;	
	(d)	any Environmental Incident involving the Ship and any Environmental Claim being made in relation to such an incident;	
	(e)	any withdrawal of any applicable operating certificate in respect of the Ship;	

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	(f)	the issue of any applicable operating certificate required under any applicable code in respect of the Ship;	
	(g)	the receipt of notification that any application for such a certificate has been refused in respect of the Ship;	
	(h)	any requirement, condition or recommendation made in relation to the Ship by any insurer or the Ship’s Classification Society or by any competent authority which is not, or cannot be, complied with in the manner or time required or recommended;	
	(i)	any arrest or detention of the Ship or any exercise of a lien or other claim on the Ship or its Earnings or Insurances or any part thereof; and	
	(j)	any intention to change the Ship’s Classification Society, or receipt of notification that the Ship’s Classification Society might be changed.	
24.14	Payment of outgoings	
All taxes, tolls, dues and other outgoings whatsoever in respect of the Ship and its Earnings and Insurances shall be paid promptly. Proper accounting records shall be kept of the Ship and its Earnings.

24.15	Evidence of payments	
The Lender shall be allowed proper and reasonable access to those accounting records when it requests it and, when it requires it, shall be given satisfactory evidence that:

	(a)	the wages and allotments and the insurance and pension contributions of the Ship’s crew (including the Ship’s master) are being promptly and regularly paid;	
	(b)	all deductions from its crew’s wages in respect of any applicable Tax liability are being properly accounted for; and	
	(c)	the Ship’s master has no claim for disbursements other than those incurred by him in the ordinary course of trading on the voyage then in progress.	
24.16	Repairers’ liens	
Except with approval, the Ship shall not be put into any other person’s possession for work to be done on the Ship if the cost of that work will exceed or is likely to exceed the Major Casualty Amount for such Ship unless that person gives the Lender a written undertaking in approved terms not to exercise any lien on the Ship or its Earnings for any of the cost of such work or it is demonstrated to the Lender’s reasonable satisfaction that the funds will be available to meet the full cost of that work, whether from insurers or otherwise (including sufficient reserves in the Earnings Account).

24.17	Survey report	
At intervals of 12 months or, after the occurrence of a Default as soon as reasonably practicable after the Lender requests it, the Lender shall be given a report on the seaworthiness and/or safe operation (including, without limitation with regard to crew training and safety procedures and cargo handling operations) of the Ship, from approved surveyors or inspectors. If any recommendations are made in such a report they shall be complied with in the way and by the time recommended in the report and evidence of such compliance shall be provided to the Lender upon request.

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24.18	Lawful use	
The Ship shall not be employed:

	(a)	in any way or in any manner, business or activity which is unlawful under international law or the domestic laws of any relevant country;	
	(b)	in carrying illicit or prohibited goods;	
	(c)	in a way which may make it liable to be condemned by a prize court or destroyed, seized or confiscated, penalised or made the subject of sanctions ; or	
	(d)	if there are hostilities in any part of the world (whether war has been declared or not), in carrying contraband goods,	
and the persons responsible for the operation of the Ship shall take all necessary and proper precautions to ensure that this does not happen.

24.19	War zones	
The Ship shall not enter, trade or continue to trade in or remain in any zone which has been declared a war zone by any government entity or the Ship’s war risk insurers except if any requirements of the Ship’s insurers necessary to ensure that the Ship remains properly insured in accordance with the Finance Documents (including any requirement for the payment of extra insurance premiums) are complied with.

24.20	Sustainable and socially responsible dismantling of Ships and Inventory of Hazardous Materials	
	(a)	Each Ship and each other Relevant Vessel will, when it is to be scrapped or when sold to an intermediary with the intention of being scrapped, be recycled at a recycling yard which conducts its recycling business in a socially and environmentally responsible manner in accordance with the provisions of The Hong Kong International Convention for the safe and Environmentally Sound Recycling of Ships 2009 (whether or not it is in force) and/or, if applicable, the EU Ship Recycling Regulation.	
	(b)	An Inventory of Hazardous Materials shall be maintained in relation to each Ship and each Relevant Vessel at all times.	
24.21	Poseidon principles	
	(a)	The Borrower shall, upon the request of the Lender and at the cost of the Borrower, on or before 31 July in each calendar year, supply or procure the supply to the Lender of all information necessary relating to the Ships which is required for the Lender to comply with its obligations under the Poseidon Principles in respect of the preceding year, including, without limitation, all ship fuel oil consumption data required to be collected and reported in accordance with Regulation 22A of Annex VI and any Statement of Compliance relating to the Ships. The Lender shall not publicly disclose such information with the identity of any Ship without the prior written consent of the Borrower. Such information shall be “Confidential Information” for the purposes of clause 40 (Confidential Information) but the Obligors acknowledge that, in accordance with the Poseidon Principles, such information will form part of the information published regarding the Lender’s portfolio climate alignment.	
	(b)	For the purposes of this clause 24.21 the following words shall have the following meanings:	

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Annex VI means Annex VI of the Protocol of 1997 (as subsequently amended from time to time) to amend the International Convention for the Prevention of Pollution from Ships 1973 (Marpol), as modified by the Protocol of 1978 relating thereto.
Poseidon Principles means the financial industry framework for assessing and disclosing the climate alignment of ship finance portfolios published on 18 June 2019 as the same may be amended or replaced (to reflect changes in applicable law or regulation or the introduction of or changes to mandatory requirements of the International Maritime Organisation) from time to time.
Statement of Compliance means a Statement of Compliance related to fuel oil consumption pursuant to regulations 6.6 and 6.7 of Annex VI.

	25	Insurance	
25.1	Undertaking to comply	
Each Obligor who is a Party undertakes that this clause 25 shall be complied with in relation to each Ship and its Insurances throughout the Facility Period.

25.2	Insurance terms	
In this clause 25:
excess risks means the proportion (if any) of claims for general average, salvage and salvage charges not recoverable under the hull and machinery insurances of a vessel in consequence of the value at which the vessel is assessed for the purpose of such claims exceeding its insured value.
excess war risk P&I cover means cover for claims only in excess of amounts recoverable under the usual war risk cover including (but not limited to) hull and machinery, crew and protection and indemnity risks.
hull cover means insurance cover against the risks identified in paragraph (a) of clause 25.3 (Coverage required).
minimum hull cover means, in relation to a Mortgaged Ship, an amount equal at the relevant time to 120% of such proportion of the Available Facility at such time as is equal to the proportion which the Market Value of such Mortgaged Ship bears to the Market Value of all of the Mortgaged Ships at that time.
P&I risks means the usual risks (including liability for oil pollution, excess war risk P&I cover) covered by a protection and indemnity association which is a member of the International Group of protection and indemnity associations (or, if the International Group ceases to exist, any other leading protection and indemnity association or other leading provider of protection and indemnity insurance) (including, without limitation, the proportion (if any) of any collision liability not covered under the terms of the hull cover).

25.3	Coverage required	
The Ship (including its hull and machinery, hull interest, disbursements and increased value) shall at all times be insured:

	(a)	against fire and usual marine risks (including excess risks) and war risks (including war protection and indemnity risks (including crew liability risks), terrorism risks and piracy and confiscation risks to the extent not covered by the hull and machinery policy) on an agreed value basis, for at least its minimum hull cover and no less than its Market Value;	

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	(b)	against P&I risks for the highest amount then available in the insurance market for vessels of similar age, size and type as the Ship (but, in relation to liability for oil pollution, for the maximum amount available in the relevant market, being on the date of this Agreement $1,000,000,000);	
	(c)	against such other risks and matters which the Lender notifies it that it considers reasonable for a prudent shipowner or operator to insure against in the ordinary course of business at the time of that notice; and	
	(d)	on terms which comply with the other provisions of this clause 25.	
25.4	Placing of cover	
The insurance coverage required by clause 25.3 (Coverage required) shall be:

	(a)	in the name of the relevant Owner and the relevant Manager and (in the case of the Ship’s hull cover) no other person (other than the Lender) as loss payee in accordance with the relevant Loss Payable Clause (unless such other person is approved and, if so required by the Lender, has duly executed and delivered a first priority assignment of its interest in the Ship’s Insurances to the Lender in an approved form and provided such supporting documents and opinions in relation to that assignment as the Lender requires);	
	(b)	if the Lender so requests, in the joint names of the relevant Owner and the relevant Manager and the Lender if required by the Lender (and, to the extent reasonably practicable in the insurance market, without liability on the part of the Lender for premiums or calls);	
	(c)	in dollars or another approved currency;	
	(d)	arranged through approved brokers or direct with approved insurers or protection and indemnity or war risks associations;	
	(e)	in full force and effect; and	
	(f)	on approved terms and with approved insurers or associations.	
25.5	Deductibles	
The aggregate amount of any excess or deductible under the Ship’s hull cover shall not exceed an approved amount.

25.6	Mortgagee’s insurance	
The Obligors shall promptly reimburse to the Lender the cost (as conclusively certified by the  Lender) of taking out and keeping in force in respect of the Ship and the other Ships on approved terms, or in considering or making claims under:

	(a)	a mortgagee’s interest insurance and a mortgagee’s additional perils (pollution) cover for the benefit of the Lender for an aggregate amount up to one hundred and twenty per cent (120%) of the Available Facility at such time; and	
	(b)	any other insurance cover which the Lender reasonably requires in respect of its interests and potential liabilities (whether as mortgagee of the Ship or beneficiary of the Security Documents) and, shall provide any information required by the Lender in connection with the placing of such insurance including, but not limited to, the name of the Ship, its IMO number and information concerning the Loans.	

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25.7	Fleet liens, set off and cancellations	
If the Ship’s hull cover also insures other vessels, the Lender shall either be given an undertaking in approved terms by the brokers or (if such cover is not placed through brokers or the brokers do not, under any applicable laws or insurance terms, have such rights of set off and cancellation) the relevant insurers that the brokers or (if relevant) the insurers will not:

	(a)	set off against any claims in respect of the Ship any premiums due in respect of any of such other vessels insured (other than other Mortgaged Ships) or any premiums due for other insurances; or	
	(b)	cancel that cover because of non-payment of premiums in respect of such other vessels or any premiums due for other insurances,	
or the relevant Owner shall ensure that hull cover for the Ship and any other Mortgaged Ships is provided under a separate policy from any other vessels.

25.8	Payment of premiums	
All premiums, calls, contributions or other sums payable in respect of the Insurances shall be paid punctually and the Lender shall be provided with all relevant receipts or other evidence of payment upon request.

25.9	Details of proposed renewal of Insurances	
At least 14 days before any of the Ship’s Insurances are due to expire, the Lender shall be notified of the names of the brokers, insurers and associations proposed to be used for the renewal of such Insurances and the amounts, risks and terms in, against and on which the Insurances are proposed to be renewed.

25.10	Instructions for renewal	
At least 7 days before any of the Ship’s Insurances are due to expire, instructions shall be given to brokers, insurers and associations for them to be renewed or replaced on or before their expiry.

25.11	Confirmation of renewal	
The Ship’s Insurances shall be renewed upon their expiry in a manner and on terms which comply with this clause 25 and confirmation of such renewal given by approved brokers or insurers to the Lender at least seven days (or such shorter period as may be approved) before such expiry.

25.12	P&I guarantees	
Any guarantee or undertaking required by any protection and indemnity or war risks association in relation to the Ship shall be provided when required by the association.

25.13	Insurance documents	
The Lender shall be provided with pro forma copies of all insurance policies and other documentation (including without limitation all slips, cover notes, policies, certificates of entry or other instruments) issued by brokers, insurers and associations in connection with the Ship’s Insurances as soon as they are available after they have been placed or renewed and all insurance policies and other documents (including without limitation all slips, cover notes, policies, certificates of entry or other instruments) relating to the Ship’s Insurances shall be deposited with any approved brokers or (if not deposited with approved brokers) the Lender or some other approved person.

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25.14	Letters of undertaking	
Unless otherwise approved where the Lender is satisfied that equivalent protection is afforded by the terms of the relevant Insurances and/or any applicable law and/or a letter of undertaking provided by another person, on each placing or renewal of the Insurances, the Lender shall be provided promptly with letters of undertaking in an approved form (having regard to general insurance market practice and law at the time of issue of such letter of undertaking) from the relevant brokers, insurers and associations.

25.15	Insurance Notices and Loss Payable Clauses	
The interest of the Lender as assignee of the Insurances shall be endorsed on all insurance policies and other documents by the incorporation of a Loss Payable Clause and an Insurance Notice in respect of the Ship and its Insurances signed by the relevant Owner and, unless otherwise approved, each other person assured under the relevant cover (other than the Lender if it is itself an assured).

25.16	Insurance correspondence	
If so required by the Lender, the Lender shall promptly be provided with copies of all written communications between the assureds and brokers, insurers and associations relating to any of the Ship’s Insurances as soon as they are available.

25.17	Qualifications and exclusions	
All requirements applicable to the Ship’s Insurances shall be complied with and the Ship’s Insurances shall only be subject to approved exclusions or qualifications.

25.18	Independent report	
If the Lender asks the Borrower for a detailed report from an approved independent firm of marine insurance brokers giving their opinion on the adequacy of the Ship’s Insurances and compliance with this clause 25, then the Lender shall be provided promptly by the Borrower with such a report at no cost to the Lender or (if the Lender obtains such a report itself, which it is entitled to do the Borrower shall reimburse the Lender for the cost of obtaining that report.
The cost of each such report will be borne by the Borrower only once in each calendar year, provided no Event of Default has occurred (but without taking into account the independent report under clause 4 (Conditions of Utilisation) and Schedule 3 (Conditions precedent), the cost of which shall always be borne by the Borrower).

25.19	Collection of claims	
All documents, evidence and other information and all assistance required by the Lender to assist it in trying to collect or recover any moneys and/or claims under the Ship’s Insurances shall be provided promptly.

25.20	Employment of Ship	
The Ship shall only be employed or operated in conformity with the terms of the Ship’s Insurances (including any express or implied warranties) and not in any other way (unless the insurers have, if required pursuant to the terms of the relevant Insurances, consented and any additional requirements (including, without limitation, as to extra premia) of the insurers have been satisfied).

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25.21	Declarations and returns	
If any of the Ship’s Insurances are on terms that require a declaration, certificate or other document to be made or filed before the Ship sails to, or operates within, an area, those terms shall be complied with within the time and in the manner required by those Insurances.

25.22	Application of recoveries	
All sums paid under the Ship’s Insurances to anyone other than the Lender shall be applied in repairing the damage and/or in discharging the liability in respect of which they have been paid except to the extent that the repairs have already been paid for and/or the liability already discharged.

25.23	Settlement of claims	
Any claim under the Ship’s Insurances for a Total Loss or Major Casualty shall only be settled, compromised or abandoned with prior approval.

25.24	Change in insurance requirements	
If the Lender gives notice to the Borrower to change the terms and requirements of this clause 25 (which the Lender may only do, in such manner as it considers appropriate, as a result of changes of circumstances or practice after the date of this Agreement), this clause 25 shall be modified in the manner so notified by the Lender on the date 14 days after such notice from the Lender is received.

	26	Minimum security value	
26.1	Undertaking to comply	
Each Obligor who is a Party undertakes that this clause 26 will be complied with throughout the Facility Period.

26.2	Valuation of assets	
For the purpose of the Finance Documents, the Market Value at any time of any Ship or the value of any other asset over which additional security is provided under this clause 26 will be its value as most recently determined in accordance with this clause 26.

26.3	Valuation frequency	
Valuation of each Ship and each such other asset in accordance with this clause 26, may be reasonably required by the Lender at any time (but in any event not less frequently than twice per calendar year at the times referred to in clause 20.4 (Provision and contents of Compliance Certificate) and without taking into account valuations obtained pursuant to clause 4.2 (Ship and security conditions precedent), clause 7.5 (Sale or Total Loss) and Schedule 3 (Conditions precedent)).

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26.4	Expenses of valuation	
The Borrower shall bear, and reimburse to the Lender where incurred by the Lender, all costs and expenses of providing any and all such valuations at any time, provided that, in the absence of an Event of Default that has occurred and is continuing, the Borrower shall bear the cost of the valuations of each Ship obtained under this clause 26 only twice per calendar year (but without taking into account valuations under, or for the purposes of, clause 4 (Conditions of Utilisation) and Schedule 3 (Conditions precedent) or clause 7.5 (Sale or Total Loss), the cost of which shall always be borne by the Borrower).

26.5	Valuations procedure	
The Market Value of any Ship (or any other vessel provided as additional security) shall be determined in accordance with, and by valuers approved and appointed in accordance with, this clause 26. Additional security provided under this clause 26 (other than a vessel) shall be valued in such a way, on such a basis and by such persons (including the Lender itself) as may be approved, or as may be agreed in writing by the Borrower and the Lender. Provided however that if the additional security is in the form of a dollar cash deposit with an approved bank and otherwise in accordance with clause 26.13 (Security shortfall), it is free from any Security Interest and pledged in favour of the Lender, full credit shall be given for such cash on a dollar for dollar basis.

26.6	Currency of valuation	
Valuations shall be provided by valuers in dollars or, if a valuer is of the view that the relevant type of vessel is generally bought and sold in another currency, in that other currency. If a valuation is provided in another currency, for the purposes of this Agreement it shall be converted into dollars at the Lender’s spot rate of exchange for the purchase of dollars with that other currency as at the date to which the valuation relates.

26.7	Basis of valuation	
Each valuation will be addressed to the Lender, it will be not more than 30 days old (except if a valuation is delivered pursuant to clause 20.4 (Provision and contents of Compliance Certificate) together with a Compliance Certificate in which case it must be dated as at the end of the financial period to which such Compliance Certificate relates) and made:

	(a)	without physical inspection (unless required by the Lender);	
	(b)	on the basis of a sale for prompt delivery for a price payable in full in cash on delivery at arm’s length on normal commercial terms between a willing buyer and a willing seller (and after deducting the estimated amount of the usual and reasonable expenses which would be incurred in connection with the sale); and	
	(c)	without taking into account the benefit or burden of any charter commitment (save where required for the purposes of calculating the Charter Attached Vessel Value of any Ship under the provisions of this Agreement).	
26.8	Information required for valuation	
The Borrower shall promptly provide to the Lender and any such valuer any information which they reasonably require for the purposes of providing such a valuation.

26.9	Approval of valuers	
All valuers must have been approved. The Lender may from time to time notify the Borrower of approval of one or more independent ship brokers or other persons as valuers for the purposes of this clause 26. The Lender shall respond promptly to any request by the Borrower for approval of a broker nominated by the Borrower. The Lender may at any time by notice to the Borrower

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withdraw any previous approval of a valuer for the purposes of future valuations if such valuer is no longer on the Lender’s approved panel of valuers. That valuer may not then be appointed to provide valuations unless it is once more approved.  If the Lender has not approved at least three brokers as valuers at a time when a valuation is required under this clause 26, the Lender shall (following consultation with the Borrower) promptly notify the Borrower of the names of at least three valuers which are approved. On the date of this Agreement, the following valuers are approved: Braemar ACM Valuations Ltd., Howe Robinson & Co Ltd, Simpson Spence Young Ltd, Fearnleys A/S, Maritime Strategies International Ltd, Golden Destiny S.A., Arrow Shipbroking Group Limited and Clarksons Valuations Limited Securities.

26.10	Appointment of valuers	
When a valuation is required for the purposes of this clause 26, the Borrower shall promptly appoint approved valuers to provide such a valuation. If the Borrower fails to do so promptly, the Lender may appoint approved valuers to provide that valuation.

26.11	Number of valuers	
	(a)	Each valuation may be carried out by two (2) approved valuers nominated by the Borrower. If the Borrower fails promptly to nominate a valuer then the Lender may nominate such valuer.	
	(b)	If the two valuations of a Ship made by two approved valuers vary by more than 10 per cent, then the Market Value of that Ship shall be determined by reference to those two valuations and a third valuation provided by a third approved valuer nominated and appointed by the Borrower to provide a valuation of such Ship. If the Borrower fails promptly to nominate a valuer then the Lender may nominate such valuer.	
26.12	Differences in valuations; common valuations	
	(a)	If an approved valuer provides a range of values for a Ship, the Market Value of such Ship for the purposes of the valuation shall be the mean average of the values comprising such range.	
	(b)	If valuations of a Ship provided by different approved valuers differ, the Market Value of the relevant Ship for the purposes of the Finance Documents will be the mean average of those valuations.	
26.13	Security shortfall	
	(a)	If at any time the Security Value is less than the Minimum Value, the Lender may by notice to the Borrower require that such deficiency be remedied. The Borrower shall then within 15 days of receipt of such notice ensure that the Security Value equals or exceeds the Minimum Value. For this purpose, the Borrower may:	
	(i)	provide additional security over other assets approved by the Lender in accordance with this clause 26; and/or	
	(ii)	cancel part of the Available Facility under clause 7.3 (Voluntary cancellation) and/or prepay under clause 7.4 (Voluntary prepayment) all or part of one or more Loans as necessary to ensure that the outstanding Loans do not exceed the Available Facility (as so reduced) (but, in each case, on five Business Days’ notice instead of the period required by  each such clause).	
	(b)	Any prepayment pursuant to clause 26.13(a)(ii) shall be made without any requirement as to any minimum amount required by clause 7.4 (Voluntary prepayment).	

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26.14	Creation of additional security	
The value of any additional security which the Borrower offers to provide to remedy all or part of a shortfall in the amount of the Security Value will only be taken into account for the purposes of determining the Security Value if and when:

	(a)	that additional security, its value and the method of its valuation have been approved (and providing to the Lender, for that purpose, pledged or charged and blocked cash deposits in dollars is hereby approved by the Lender;	
	(b)	a Security Interest over that security has been constituted in favour of the Lender in an approved form and manner;	
	(c)	this Agreement has been unconditionally amended in such manner as the Lender requires in consequence of that additional security being provided; and	
	(d)	the Lender, or its duly authorised representative, has received such documents and evidence it may require in relation to that amendment and additional security including documents and evidence of the type referred to in Schedule 3 (Conditions precedent) in relation to that amendment and additional security and its execution and (if applicable) registration.	
26.15	Release of additional security	
If (i) the Borrower shall previously have provided further security to the Lender pursuant to clause 26.13 (Security shortfall), and (ii) at any time thereafter when no Event of Default is continuing,  the Security Value shall exceed the Minimum Value for at least six consecutive calendar months and this has been certified by 2 consecutive Compliance Certificates delivered to the Lender during such period pursuant to clause 20.4 (Provision and contents of Certificate of Compliance) (with accompanying valuations, where applicable), then the Lender shall, as soon as reasonably practicable after notice from the Borrower to do so and subject to being indemnified to their satisfaction against the cost of doing so, procure the release of any such further security specified by the Borrower,  provided that the Lender is satisfied that:

	(a)	immediately following such release, the Security Value will equal or exceed the Minimum Value; and	
	(b)	no Event of Default is continuing at the time of such release or would occur as a result of such release.	
	27	Chartering undertakings	
27.1	Undertaking to comply	
Each Obligor who is a Party undertakes that this clause 27 will be complied with in relation to each Mortgaged Ship which is subject to an Assignable Charter and its Charter Documents throughout the relevant Mortgaged Ship’s Mortgage Period.

27.2	Variations	
	(a)	The Charter Documents shall not be materially varied, amended or supplemented.	
	(b)	For the purposes of paragraph (a) above and this clause 27.2, material variation, amendment or supplement shall mean any variation, amendment or supplement relating to non-payment of charterhire, reduction of charterhire, frequency of charterhire payment, the termination rights of a Charterer, withdrawal rights of an Owner, reduction in the fixed term of an Assignable Charter, the termination of any extension option of an Assignable Charter, cancellation of an Assignable Charter, assignment and/or transfer of any rights and/or obligations under the Assignable Charter, a change in the identity of the Charterer	

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or Charter Guarantor, the scope or extent of any Charter Guarantee or the reduction of the liabilities or indemnities undertaken thereunder by any Charter Guarantor, or a change in the governing law of an Assignable Charter or Charter Guarantee. The Lender shall be provided by the relevant Owner with a copy of any such variation, amendment or supplement which requires approval by the Lender not less than five Business Days prior to its execution.

27.3	Releases and waivers	
Except with approval, there shall be no release by the relevant Owner of any obligation of any other person under the relevant Charter Documents (including by way of novation, assignment or transfer), no waiver of any breach of any such obligation and no consent to anything which would otherwise be such a breach, if this would be materially prejudicial to the interests of the Lender (but always subject to the restrictions of the other provisions of this clause 27 and the other provisions of this Agreement and the other Finance Documents).

27.4	Termination by the relevant Owner	
Except with approval, the relevant Owner shall not terminate or rescind any relevant Charter Document or withdraw the relevant Ship from service under the relevant Assignable Charter or take any similar action.

27.5	Charter performance	
The relevant Owner shall perform its obligations under the relevant Charter Documents for the Ship and use its reasonable endeavours to ensure that each other party to them performs their obligations under the relevant Charter Documents.

27.6	Notice of assignment	
The relevant Owner shall give notice of assignment of the relevant Charter Documents to the other parties to such documents in the form specified by the Charter Assignment and/or the relevant Deed of Covenant or General Assignment or Tripartite Agreement for that Ship and shall use its reasonable endeavours to ensure that the Lender receives a copy of that notice acknowledged by each addressee in the form specified therein as soon as possible and in any event within 30 days of the date of the Ship’s Mortgage.

27.7	Payment of Charter Earnings	
All Earnings which the relevant Owner is entitled to receive under the relevant Charter Documents for the Ship shall be paid into the Earnings Account or, following an Event of Default, in the manner required by the Finance Documents.

	28	Bank accounts	
28.1	Undertaking to comply	
Each Obligor who is a Party undertakes that this clause 28 will be complied with throughout the Facility Period.

28.2	Earnings Accounts	
	(a)	Each Owner or the Owners jointly or the Borrower individually shall be the holder(s) of one or more Accounts, whether one or more per Mortgaged Ship or one or more for all Ships, with an Account Bank which is designated as an “Earnings Account” for the purposes of the Finance Documents. On the date of this Agreement there is only one Earnings Account for all Ships in the name of the Borrower as Account Holder.	

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	(b)	The Earnings of the Mortgaged Ships and all moneys payable to the relevant Owners under the Mortgaged Ships’ Insurances shall be paid by the persons from whom they are due to an Earnings Account unless required to be paid to the Lender under the relevant Finance Documents.	
	(c)	The relevant Account Holder(s) shall not withdraw amounts standing to the credit of an Earnings Account except as permitted by paragraph (d) below.	
	(d)	If there is no Event of Default which is continuing, amounts standing to the credit of the Earnings Accounts shall be at the free disposal of the relevant Account Holder(s) and the relevant Account Holder(s) may withdraw moneys from an Earnings Account for any purpose whatsoever which is not prohibited by the terms of this Agreement and the Finance Documents.	
28.3	Other provisions	
	(a)	An Account may only be designated for the purposes described in this clause 28 if:	
	(i)	such designation is made in writing by the Lender and acknowledged by the Borrower and specifies the name and address of the Account Bank and the number and any designation or other reference attributed to the Account;	
	(ii)	an Account Security has been duly executed and delivered by the relevant Account Holder(s) in favour of the Lender;	
	(iii)	any notice required by the Account Security to be given to an Account Bank has been given to, and acknowledged by, the Account Bank in the form required by the relevant Account Security; and	
	(iv)	the Lender, or its duly authorised representative, has received such documents and evidence it may require in relation to the Account and the Account Security including documents and evidence of the type referred to in Schedule 3 (Conditions precedent) in relation to the Account and the relevant Account Security.	
	(b)	The rates of payment of interest and other terms regulating any Account will be a matter of separate agreement between the relevant Account Holder(s) and an Account Bank.	
	(c)	If an Account is a fixed term deposit account, the relevant Account Holder(s) may select the terms of deposits until the relevant Account Security has become enforceable and the Lender directs otherwise.	
	(d)	The relevant Account Holder(s) shall not close any Account or alter the terms of any Account from those in force at the time it is designated for the purposes of this clause 28 or waive any of its rights in relation to an Account except with approval.	
	(e)	The relevant Account Holder(s) shall notify the Lender of any claim or notice relating to an Account from any other party and provide the Lender with any other information it may reasonably request concerning any Account.	
	(f)	The Lender agrees that if it is an Account Bank in respect of an Account then there will be no restrictions on creating a Security Interest over that Account as contemplated by this Agreement and it shall not exercise (in its capacity as Account Bank) any right of combination, consolidation or set-off which it may have in respect of that Account in a manner adverse to the rights of the Lender.	

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	29	Business restrictions	
29.1	Undertaking to comply	
Except as otherwise approved, each Obligor who is a Party undertakes that this clause 29 will be complied with by and in respect of each person to which each relevant provision of this clause is expressed to apply throughout the Facility Period.

29.2	General negative pledge	
	(a)	In this clause 29.2, Quasi-Security means an arrangement or transaction described in paragraph (c) below.	
	(b)	No Guarantor shall create or permit to subsist any Security Interest over any of its assets, except:	
	(i)	in favour of the Lender under the Finance Documents; or	
	(ii)	as otherwise approved by the Lender.	
	(c)	(Without prejudice to clauses 29.3 (Financial Indebtedness) and 29.7 (Disposals)), no Guarantor shall:	
	(i)	sell, transfer or otherwise dispose of any of its assets on terms whereby they are or may be leased to, or re-acquired by, an Obligor or any other Group Member (other than pursuant to disposals permitted under clause 29.7 (Disposals));	
	(ii)	sell, transfer, factor or otherwise dispose of any of its receivables on recourse terms;	
	(iii)	enter into any arrangement under which money or the benefit of a bank or other account may be applied, set-off or made subject to a combination of accounts; or	
	(iv)	enter into any other preferential arrangement having a similar effect,	
in circumstances where the arrangement or transaction is entered into primarily as a method of raising Financial Indebtedness or of financing the acquisition of an asset.

	(d)	Paragraphs (b) and (c) above do not apply to any Security Interest or (as the case may be) Quasi-Security, listed below:	
	(i)	those granted or expressed to be granted by any of the Security Documents; and	
	(ii)	in relation to a Ship, Permitted Security Interests for that Ship.	
29.3	Financial Indebtedness	
No Guarantor shall incur or permit to exist, any Financial Indebtedness owed by it to anyone else, except:

	(a)	the Existing Indebtedness and then only until the first Utilisation;	
	(b)	Financial Indebtedness incurred under the Finance Documents;	
	(c)	Financial Indebtedness owing to other Group Members or Affiliates of an Obligor or any of its Affiliates, which is unsecured and fully subordinated at all times to any indebtedness owing to the Lender under the Finance Documents from time to time and is otherwise on approved terms (including, for the avoidance of doubt, restrictions on payment of principal or interest);	

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	(d)	trade credit granted to it by its suppliers on normal commercial terms in the ordinary course of its trading activities;	
	(e)	Financial Indebtedness permitted under clause 29.4 (Guarantees); and	
	(f)	Financial Indebtedness permitted under clause 29.5 (Loans and credit).	
29.4	Guarantees	
No Guarantor shall give or permit to exist, any guarantee by it in respect of indebtedness of any person or allow any of its indebtedness to be guaranteed by anyone else, except:

	(a)	guarantees by any other person of such Guarantor’s own trade indebtedness to trade creditors given in the ordinary course of its business;	
	(b)	any guarantees issued by or in favour of any protection and indemnity or war risks association in the ordinary course of such Guarantor’s business; and	
	(c)	guarantees which are Financial Indebtedness permitted under clause 29.3 (Financial Indebtedness).	
29.5	Loans and credit	
No Guarantor shall be a creditor in respect of Financial Indebtedness other than in respect of:

	(a)	loans or credit to another Obligor permitted under clause 29.3 (Financial Indebtedness); and	
	(b)	trade credit granted by it to its customers on normal commercial terms in the ordinary course of its trading activities.	
29.6	Bank accounts, operating leases and other financial transactions	
No Guarantor shall:

	(a)	maintain any current or deposit account with a bank or financial institution except for the Accounts and the deposit of money, operation of current accounts and the conduct of electronic banking operations through the Accounts;	
	(b)	hold cash in any account (other than the Accounts); or	
	(c)	enter into any obligations under operating leases relating to assets other than in the ordinary course of business.	
29.7	Disposals	
No Guarantor shall enter into a single transaction or a series of transactions, whether related or not and whether voluntarily or involuntarily, to sell, lease, transfer or otherwise dispose of any asset except for any of the following disposals (so long as they are not prohibited by any other provision of the Finance Documents):

	(a)	disposals of assets made in (and on terms reflecting) the ordinary course of trading of the disposing entity;	
	(b)	disposals of obsolete assets, or assets which are no longer required for the purpose of the business of the relevant Guarantor, in each case for cash on normal commercial terms and on an arm’s length basis;	
	(c)	disposals permitted by clauses 29.2 (General negative pledge), 29.3 (Financial Indebtedness) or 23.3 (Sale or other disposal of a Ship);	

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	(d)	dealings with its own trade creditors with respect to book debts in the ordinary course of trading; and	
	(e)	the application of cash or cash equivalents in the acquisition of assets or services in the ordinary course of its business.	
29.8	Contracts and arrangements with Affiliates	
No Obligor shall be party to any arrangement or contract with any of its Affiliates unless such arrangement or contract is on an arm’s length basis.

29.9	Subsidiaries	
No Guarantor shall establish or acquire a company or other entity.

29.10	Acquisitions and investments	
No Guarantor shall acquire any person, business, assets or liabilities or make any investment in any person or business or undertaking or enter into any joint-venture arrangement, except:

	(a)	capital expenditure or investments related to maintenance of a Ship in the ordinary course of its business;	
	(b)	acquisitions of assets in the ordinary course of business (not being new businesses or vessels) for the purpose of investing in, upgrading or maintaining the Ships;	
	(c)	the incurrence of liabilities in the ordinary course of its business;	
	(d)	any loan or credit not otherwise prohibited under this Agreement; or	
	(e)	pursuant to any Finance Documents or any Charter Documents to which it is party.	
29.11	Reduction of capital	
No Guarantor shall redeem or purchase or otherwise reduce any of its equity or any other share capital or any warrants or any uncalled or unpaid liability in respect of any of them or reduce the amount (if any) for the time being standing to the credit of its share premium account or capital redemption or other undistributable reserve in any manner.

29.12	Increase in capital	
No Guarantor shall issue shares or other equity interests to any person who is not its shareholder as at the date of this Agreement.

29.13	Distributions and other payments	
No Obligor shall:

	(a)	declare or pay (including by way of set-off, combination of accounts or otherwise) any dividend, charge, fee or other distribution (or interest on any unpaid dividend, charge, fee or other distribution) (whether in cash or in kind) on or in respect of its share capital, partnership interest or units or limited liability company interest (or any class of the same) or any warrants for the time being in issue;	
	(b)	repay or distribute any dividend or share premium reserve;	
	(c)	redeem, repurchase, defease, retire or repay any of its share capital, partnership interest or units or limited liability company interest or resolve to do so; or	

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	(d)	make any payment (including by way of set-off, combination of accounts or otherwise) by way of interest, or repayment, redemption, purchase or other payment, in respect of any shareholder or member loan, loan stock or similar instrument,	
except if:

	(i)	no Event of Default has occurred and is continuing at the time of the declaration or payment of any such dividend, distribution or other payment;	
	(ii)	no Event of Default would result from the declaration or payment of the same;	
	(iii)	the Security Value is no less than the Minimum Value at the time of the declaration or payment of any such dividend, distribution or other payment; and	
	(iv)	the Lender is satisfied that immediately following such declaration or payment, the Security Value will continue to exceed the Minimum Value.	
29.14	Charter-in	
No Obligor shall charter in any vessel or enter into any other transaction or contract for such purpose.

	30	Events of Default	
Each of the events or circumstances set out in this clause 30 (except clause 30.26 (Acceleration)) is an Event of Default. For the purposes of this clause 30, Dormant Subsidiaries who are not Obligors shall not be treated as Group Members.

30.1	Non-payment	
An Obligor does not pay on the due date any amount payable pursuant to a Finance Document at the place at and in the currency in which it is expressed to be payable unless:

	(a)	its failure to pay is caused by an administrative or technical error or by a Disruption Event; and	
	(b)	payment is made within three (3) Business Days of its due date.	
30.2	Financial covenants	
The Obligors do not comply with clause 21 (Financial covenants).

30.3	Value of security	
The Obligors do not comply with clause 26 (Minimum security value).

30.4	Insurance	
	(a)	The Insurances of a Ship are not placed and kept in force in the manner required by clause 25.3 (Coverage required) (including as a result of cancellation by an Owner of its Ship’s Insurances as required by clause 25 (Insurance)).	
	(b)	Any insurer either:	
	(i)	cancels any such Insurances and such Insurances are not renewed or replaced before such cancellation takes or is to take place; or	
	(ii)	disclaims liability under them or asserts that its liability under them is or should be reduced by reason of any mis-statement or failure or default by any person (unless	

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the same is being contested in good faith by an Obligor and the insurer accepts liability in full for the relevant claim within a period of 15 days from the date of any such disclaimer or assertion).

30.5	Other obligations	
	(a)	An Obligor, a Manager or a Charterer does not comply with any provision of the Finance Documents, other than those referred to in clauses 30.1 (Non-payment), 30.2 (Financial covenants), 30.3 (Value of security), 30.4 (Insurance) or in any other provision of this clause 30;	
	(b)	No Event of Default under paragraph (a) above will occur if the Lender considers that the failure to comply is capable of remedy and the failure is remedied within 10 Business Days of the earlier of (A) the Lender giving notice to the Borrower and (B) the Borrower or any other Obligor, a Manager or a Charterer (as applicable) becoming aware of the failure to comply.	
30.6	Misrepresentation	
Any representation or statement made or deemed to be made by an Obligor, a Manager or a Charterer in the Finance Documents or any other document delivered by or on behalf of any Obligor, a Manager a Charterer under or in connection with any Finance Document is or proves to have been incorrect or misleading in any material respect when made or deemed to be made.

30.7	Cross default	
	(a)	Any Financial Indebtedness of any Group Member is not paid when due nor within any originally applicable grace period.	
	(b)	Any Financial Indebtedness of any Group Member is declared to be or otherwise becomes due and payable prior to its specified maturity as a result of an event of default (however described).	
	(c)	Any commitment for any Financial Indebtedness of any Group Member is cancelled or suspended by a creditor of any Group Member as a result of an event of default (however described).	
	(d)	The counterparty to a Treasury Transaction entered into by any Group Member becomes entitled to terminate that Treasury Transaction early by reason of an event of default (however described).	
	(e)	Any creditor of any Group Member becomes entitled to declare any Financial Indebtedness of that Group Member due and payable prior to its specified maturity as a result of an event of default (however described).	
	(f)	No Event of Default will occur under paragraphs (a) to (e) above if the aggregate amount of Financial Indebtedness or commitment for Financial Indebtedness falling within paragraphs (a) to (e) above is less than $5,000,000 (or its equivalent in any other currency or currencies).	
30.8	Insolvency	
	(a)	An Obligor:	
	(i)	is unable or admits inability to pay its debts as they fall due;	
	(ii)	is deemed to, or is declared to, be unable to pay its debts under applicable law;	
	(iii)	suspends or threatens to suspend making payments on any of its debts; or	

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	(iv)	by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors (excluding the Lender in its capacity as such) with a view to rescheduling any of its indebtedness unless such negotiations have concluded successfully within two months from the date of their commencement.	
	(b)	A moratorium is imposed by law or declared in respect of any indebtedness of any Obligor.  If a moratorium occurs, the ending of the moratorium will not remedy any Event of Default caused by that moratorium.	
30.9	Insolvency proceedings	
	(a)	Any corporate action, legal proceedings or other procedure or step is taken in relation to:	
	(i)	the suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, administration or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) of any Obligor;	
	(ii)	a composition, compromise, assignment or arrangement with any creditor of any Obligor;	
	(iii)	the appointment of a liquidator, receiver, administrative receiver, administrator, compulsory manager or other similar officer in respect of any Obligor or any of its assets (including the directors of any Obligor requesting a person to appoint any such officer in relation to it or any of its assets),	
or any analogous procedure or step is taken in any jurisdiction.

	(b)	Paragraph (a) above shall not apply to any winding-up petition (or analogous procedure or step) which is frivolous or vexatious or being contested in good faith and is discharged, stayed or dismissed within 30 days of commencement or, if earlier, the date on which it is advertised.	
30.10	Creditors’ process	
	(a)	Any expropriation, attachment, sequestration, distress, execution, enforcement of any Security Interest (subject to clause 30.18 (Arrest of Ship)) or any other analogous process or enforcement action (including enforcement by a landlord) in any jurisdiction affects any asset or assets of any Obligor having an aggregate value in excess of $5,000,000 (or its equivalent in other currencies) unless such process is frivolous or vexatious or being contested in good faith and, in either case, is discharged within 14 days.	
	(b)	Any judgment or order (or one or more judgements or orders) for an aggregate amount in excess of $5,000,000 (or its equivalent in other currencies) is made against any Obligor and is not stayed or complied with within 14 days.	
30.11	Unlawfulness and invalidity	
	(a)	It is or becomes unlawful for an Obligor to perform any of its obligations under the Finance Documents or any Transaction Security ceases to be effective.	
	(b)	Any obligation or obligations of any Obligor under any Finance Documents are not (subject to the Legal Reservations) or cease to be legal, valid, binding or enforceable.	
	(c)	Any Security Interest created or expressed to be created or evidenced by the Security Documents ceases to be effective.	
	(d)	Any Finance Document or any Transaction Security ceases to be in full force and effect or ceases to be legal, valid, binding, enforceable or effective or is alleged by a party to it (other than the Lender) to be ineffective for any reason.	

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	(e)	Any Security Document does not create legal, valid, binding and enforceable security over the assets charged under that Security Document or the ranking or priority of such security is adversely affected.	
30.12	Cessation of business	
	(a)	Any Obligor suspends or ceases to carry on (or threatens to suspend or cease to carry on) all or a material part of its business other than following the sale or Total Loss of a Relevant Vessel owned by it in accordance with the terms of this Agreement.	
	(b)	Except as otherwise expressly permitted under the Finance Documents, any merger, consolidation, spin-off or sale in respect of all or substantially all of the assets of the Borrower or the Group, whether in a single transaction or a series of related transactions, occurs.	
	(c)	Any Obligor substantially changes the nature of its business in a manner that deviates from the ownership, operation and management of maritime shipping assets (other than as a result of the sale or Total Loss of a Relevant Vessel owned by it in accordance with the terms of this Agreement).	
30.13	Expropriation	
The authority or ability of any Obligor to conduct its business is limited or wholly or substantially curtailed by any seizure, expropriation, nationalisation, intervention, restriction or other action by or on behalf of any governmental, regulatory or other authority or other person in relation to any Obligor or any of their respective assets.

30.14	Repudiation and rescission of Finance Documents	
Any party to any Finance Document (other than the Lender) rescinds or purports to rescind or repudiates or purports to repudiate a Finance Document or any of the Transaction Security or evidences an intention to rescind or repudiate a Finance Document or any Transaction Security.

30.15	Litigation	
Either:

	(a)	any litigation, alternative dispute resolution, arbitration or administrative governmental, regulatory or other investigations, proceedings or disputes are commenced or threatened; or	
	(b)	any judgment or order of a court, arbitral tribunal or other tribunal or any order or sanction of any governmental, arbitral or other regulatory body or agency is made,	
in relation to any Transaction Document or the transactions contemplated in the Transaction Documents or against any Obligor or any of its assets, rights or revenues which has or might reasonably be expected to have a Material Adverse Effect.

30.16	Material Adverse Effect	
Any event or circumstance (including any Environmental Incident or any change of law) occurs which the Lender reasonably believes has, or is reasonably likely to have, a Material Adverse Effect.

30.17	Security enforceable	
Any Security Interest (other than a Permitted Maritime Lien) in respect of Charged Property becomes enforceable.

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30.18	Arrest of Ship	
Any Ship is arrested, confiscated, seized, taken in execution, impounded, forfeited, detained in exercise or purported exercise of any possessory lien or other claim or otherwise taken from the possession of the relevant Owner (any such event, a relevant event) and the relevant Owner fails to procure the release/repossession of such Ship within a period of 15 days thereafter (or such longer period as may be approved) (unless such relevant event is in the reasonable opinion of the Lender also an insured event clearly constituting a Total Loss claim under the Ship’s insurances, in which case such 15 day period shall be extended to the Total Loss Reduction Date provided such relevant event constitutes such Total Loss or the date on which the Lender determines that such relevant event is not (or is no longer) an insured event clearly giving grounds for such a Total Loss claim and notifies the relevant Obligors accordingly).

30.19	Ship registration	
Except with approval, the registration of any Ship under the laws and flag of its Flag State is cancelled or terminated or, where applicable, not renewed or, if such Ship is only provisionally registered on the date of this Agreement, such Ship is not permanently registered under such laws within 20 days of such date.

30.20	Political risk	
	(a)	Either:	
	(i)	the Flag State of any Ship becomes involved in war (whether declared or not) or civil war or there is a seizure of power in the Flag State by unconstitutional means; or	
	(ii)	any Relevant Jurisdiction of an Obligor becomes involved in war (whether declared or not) or civil war or there is a seizure of power in such Relevant Jurisdiction by unconstitutional means.	
	(b)	No Event of Default under paragraph (a)(i) above will occur if the Borrower or the relevant Owner, within 15 Business Days of the relevant occurrence of the war (whether declared or not), civil war or seizure of power, changes the Flag State of the relevant Ship(s) to that of any other jurisdiction approved by the Lender (provided no such approval shall be required if the jurisdiction is another Approved Flag State) and grants in favour of the Lender such Security Interests (including a mortgage over the relevant Ship) as the Lender may request in documents in an approved form (including an agreement supplemental to this Agreement) and provided and delivered to the Lender in respect of such Security Interests any documents and evidence of the nature described in Schedule 3 (Conditions precedent) as required by the Lender, in each case at the cost and expense of the Borrower.	
30.21	Sanctions	
	(a)	Any of the Obligors or any other Group Member or any Manager which is affiliated with the Group (including for that purpose Danaos Shipping Company Limited as Manager) becomes a Prohibited Person or becomes owned or controlled by, or acts directly or indirectly on behalf of, a Prohibited Person or any of such persons becomes the owner or controller of a Prohibited Person.	
	(b)	Any proceeds of a Loan are made available, directly or indirectly, to or for the benefit of a Prohibited Person or otherwise is, directly or indirectly, applied in a manner or for a purpose prohibited by Sanctions.	
	(c)	Any Obligor or other Group Member or any Manager which is affiliated with the Group (including for that purpose Danaos Shipping Company Limited as Manager) is not in compliance with all Sanctions.	

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30.22	Charters	
	(a)	Except with approval, a Key Charter of a Ship (each an Affected Ship) is repudiated, cancelled, rescinded or otherwise terminated or (except as a result of the relevant Ship being a Total Loss) frustrated and/or any such Ship is withdrawn from service thereunder (each an Affected Charter), in each case before the time that such Key Charter was scheduled to expire.	
	(b)	No Event of Default under paragraph (a) above will occur in relation to an Affected Charter of a Category A Ship if and for as long as there is only one such Affected Charter of a Category A Ship and, as soon as possible and in any event within 90 days after the relevant event that would otherwise cause an Event of Default, the Security Value is equal to or higher than the Minimum Value.	
	(c)	Where there are two or more Affected Charters of Category A Ships, no Event of Default under paragraph (a) above will occur in relation to such Affected Charters if, as soon as possible and in any event within 90 days after the relevant rescission, repudiation, cancellation, frustration, termination or withdrawal in respect of the second such Affected Charter to occur (the Latest Remedy Date), the following conditions under paragraph (1) or, alternatively, paragraph (2) or, alternatively, paragraph (3) below have been met in respect of all such Affected Ships (and by no later than 7 Business Days before the Latest Remedy Date, the Borrower shall irrevocably notify the Lender in writing of its election of which of the three such alternatives it will comply with and such election as so notified will be conclusive and binding on the Borrower):	
(1)       Alternative 1:

	(i)	By no later than the Latest Remedy Date the relevant Owner of each Affected Ship has entered into another charter commitment (a Replacement Charter) in respect of the relevant Affected Ship with an approved charterer which provides for:	
	(A)	terms (including as to tenor and charter hire) which are in the opinion of the Lender not less favourable to the relevant Owner, the Group and the Lender than those of such original Affected Charter as at the time of its rescission, repudiation, cancellation, frustration, termination or withdrawal; or	
	(B)	economic value for the Affected Ship and the Group which is no worse than that of the Affected Charter by reference to such Ship’s Charter Attached Vessel Value, and is otherwise on terms, in form and substance satisfactory to the Lender; and	
	(ii)	such Affected Ship has been delivered under such Replacement Charter and the relevant Owner has granted in favour of the Lender (and at the Borrower’s cost and expense) replacement Security Interests in respect of such Replacement Charter in the same manner as for the relevant Affected Charter and under documents in an approved form and has provided and delivered to the Lender in respect of that charter commitment and Security Interest any documents and evidence of the nature described in Schedule 3 (Conditions precedent) as required by the Lender.	
(2)Alternative 2:

	(i)	After the date of this Agreement and before the Latest Remedy Date, the Owners have entered into new Assignable Charters or other new charter commitments for the Mortgaged Ships (including all the Affected Ships at the time) (together the New Charters) which have an aggregate Net Charter Income receivable during periods until the Final Reduction Date (calculated on a monthly basis throughout such periods) that is equal to or greater than the aggregate Net Charter Income of all Affected Charters for their respective Affected Periods (calculated also on a monthly basis throughout their respective Affected Periods) but has been lost to the Group	

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as a result of them becoming Affected Charters (such condition referred to as the Net Charter Income Test) Provided that if the Owners cannot meet the Net Charter Income Test solely with New Charters of Mortgaged Ships, the Obligors will be obliged to include in the above calculation all available Net Charter Income under charter commitments of Fleet Vessels which are not Mortgaged Ships at that time and which are not subject to any Security Interest in favour of other lenders or creditors of the Group, until the Obligors satisfy the Net Charter Income Test (and in any event all such charter commitments of Fleet Vessels which are not Mortgaged Ships and which are taken into account in such calculation will also be deemed to be New Charters); and

	(ii)	all such Mortgaged Ships (including the Affected Ships) and, if applicable, other Fleet Vessels have been delivered under such New Charters and the relevant Owners or other Group Members have granted in favour of the Lender (and at the Borrower’s cost and expense) first ranking Security Interests in respect of such New Charters in the same manner as for the relevant Affected Charters and under documents in an approved form and have provided and delivered to the Lender in respect of such New Charters and Security Interests any documents and evidence of the nature described in Schedule 3 (Conditions precedent) as required by the Lender,	
it being further agreed that the Obligors will be deemed to have satisfied the Net Charter Income Test if, by the Latest Remedy Date, (xx) the Obligors have included in the relevant calculation all Net Charter Income under New Charters of Mortgaged Ships and other Fleet Vessels available to them and have complied with the conditions of paragraph (ii) above in respect of the same, even if they have failed to satisfy the Net Charter Income Test for the entire Affected Periods of all Affected Charters, and (yy) the Obligors have satisfied the Net Charter Income Test for a charter period which is a minimum period of 12 consecutive months for each Affected Charter after the Latest Remedy Date (such shorter period for each Affected Charter, the Actual Replacement Period) Provided however that in such case:

	(aa)	it will be an Event of Default if at the end of the latest Actual Replacement Period for all Affected Charters (the New Test Date) such Net Charter Income Test is not then met for the entire Affected Periods of all Affected Charters (and the same remains unremedied for a period of more than 90 days from the New Test Date);	
	(bb)	the Obligors will be under a continuing obligation to meet the conditions of paragraphs (i) and (ii) above in respect of additional New Charters and available Net Charter Income in order to and until they meet the Net Charter Income Test referred to in paragraph (aa) above); and	
	(cc)	the Net Charter Income of any Key Charters of Category A Ships that become Affected Charters after the Latest Remedy Date will also be taken into account as Net Charter Income lost to the Group, in all calculations in respect of the Net Charter Income Test made on or after the Latest Remedy Date.	
(3)Alternative 3:
By no later than the Latest Remedy Date in respect of two or more Affected Charters, the Borrower has permanently cancelled pursuant to clause 7.3 (Voluntary cancellation), a part of the Commitment (and consequently the Available Facility) which is equal to the higher of:

	(i)	such amount as ensured that immediately after such cancellation, the Security Value was no less than the Minimum Value; and	

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	(ii)	such amount as ensured that immediately after such cancellation, the ratio (expressed as a percentage) of (A) the Security Value to (B) the Available Facility, is not lower than the same ratio (expressed as a percentage) immediately prior to such cancellation,	
and the Borrower has prepaid such part of the Loans as was necessary to ensure that the outstanding Loans after such date do not exceed the Commitment or the Available Facility (each as so reduced).
For the purposes of calculating the Security Value under this clause 30.22in relation to two or more Affected Ships in respect of which “Alternative 3” above applies (and their related Affected Charters), their Market Value (determined by the Lender on or before the relevant Latest Remedy Date in respect of such Affected Ships and their related Affected Charters), shall be as follows:

	(i)	their Market Value immediately before such cancellation, shall be deemed to be their Charter Attached Value by reference to the Affected Charters of such Affected Ships as if the same had not become Affected Charters; and	
	(ii)	their Market Value immediately after such cancellation, shall be their Charter Free Value except where any such Affected Ship is at that time subject to another Valuation Charter, in which case its Market Value will be its Charter Attached Vessel Value by reference to such other Valuation Charter.	
The minimum amounts of cancellation and notice periods referred to in clause 7.3 (Voluntary cancellation) do not apply to any cancellation made by the Borrower under this paragraph (3).
For the avoidance of doubt, if the Obligors have, on or after the Latest Remedy Date in respect of two or more Affected Charters, timely complied with the conditions of any of “Alternative 1”, “Alternative 2” or “Alternative 3” above (but in the case of application of “Alternative 2” having met the Net Charter Income Test for the entire Affected Periods of all Affected Charters at the times and in the manner referred to therein), then with effect from the date of such timely compliance the Event of Default under paragraph (a) above will be capable of application again in respect of any other Affected Charters or Affected Ships.
In this clause 30.22, Affected Period means, at any relevant time and in relation to an Affected Charter, the period (ending not later than the Final Reduction Date) during which Net Charter Income could have been receivable under such Affected Charter for its remaining unexpired firm tenor at the relevant time, if it expired at the time it was scheduled to expire (without any off hire periods or other events entitling the charterer to not pay or otherwise to withhold charter hire or freight) and the same had not become an Affected Charter.

	(d)	No Event of Default under paragraph (a) above will occur in relation to an Affected Charter of a Category B Ship, if:	
	(i)	the conditions described in paragraph (c)(1) above are satisfied for such Key Charter of such Category B Ship (and for that purpose paragraph (c)(1) above shall apply mutatis mutandis to this paragraph (d)(i)); or	
	(ii)	as soon as possible and in any event within 90 days after the relevant event that would otherwise cause an Event of Default, the Security Value is equal to or higher than the Minimum Value.	

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30.23	Breach for Ministerial Decision	
Except with approval, if the Hellenic Republic is the Flag State of a Mortgaged Ship, the relevant Owner commits any breach of or varies or cancels the Ministerial Decision (as defined in the relevant Mortgage) with respect to that Mortgaged Ship.

30.24	Manager	
Danaos Shipping Company Limited of the Republic of Cyprus ceases to be the Manager of any Ship (other than mv’s YM Maturity and YM Mandate and only for as long as the same have Yang Ming Maritime Transport Corp. of Taiwan as their Manager and for as long as they are subject to their Charter), except as permitted by the provisions of clause 23.4 (Manager) or is otherwise approved.

30.25	De-listing	
The common shares of the Borrower cease to be listed on an Approved Exchange.

30.26	Acceleration	
On and at any time after the occurrence of an Event of Default which is continuing the Lender may:

	(a)	by notice to the Borrower:	
	(i)	declare that no withdrawals be made from any Account; and/or	
	(ii)	cancel the Commitment and the Available Facility at which time they shall immediately be cancelled; and/or	
	(iii)	declare that all or part of the Loans, together with accrued interest, and all other amounts accrued or outstanding under the Finance Documents be immediately due and payable, at which time they shall become immediately due and payable; and/or	
	(iv)	declare that all or part of the Loans be payable on demand, at which time they shall immediately become payable on demand by the Lender; and/or	
	(b)	exercise or direct the Lender and/or any other beneficiary of the Security Documents to exercise any or all of its rights, remedies, powers or discretions under the Finance Documents.	

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Section 9 - Changes to Parties

	31	Changes to the Lender	
31.1	Assignments or transfers by the Lender	
Subject to this clause 31, the Lender may assign or transfer any of its rights and/or obligations under any Finance Document to another bank or financial institution or to a trust, fund or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets (the New Lender).

31.2	Conditions of assignment or transfer	
	(a)	The consent of the Borrower is not required for any assignment or transfer by the Lender.	
	(b)	The Lender will consult with the Borrower for no more than ten (10) Business Days before any assignment unless the relevant assignment or transfer is:	
	(i)	to an Affiliate of the Lender or a fund which is a Related Fund of the Lender; or	
	(ii)	made at a time when an Event of Default has occurred and is continuing,	
in which case no consultation shall be required.

	(c)	The Lender will immediately advise the Borrower of the relevant assignment.	
	(d)	The Obligors shall not be responsible for any costs or expenses incurred by the Lender or the New Lender in connection with the documentation effecting any such assignment or transfer.	
31.3	Other conditions of assignment or transfer	
	(a)	An assignment or transfer will only be effective:	
	(i)	if the Lender has given prior written notice of the proposed assignment or transfer to the Borrower and confirmed the identity of the New Lender in such written notice; and	
	(ii)	on the New Lender entering into any documentation required for it to accede as a party to any Security Document to which the Lender is a party in its capacity as the Lender and, in relation to such Security Documents, completing any filing, registration or notice requirements.	
	(b)	If:	
	(i)	the Lender assigns and/or transfers any of its rights and/or obligations under the Finance Documents or changes its Facility Office; and	
	(ii)	as a result of circumstances existing at the date the assignment, transfer or change occurs, an Obligor would be obliged to make a payment to the New Lender or Lender acting through its new Facility Office under clause 13 (Tax gross-up and indemnities) and/or clause 14 (Increased Costs),	
then the New Lender or Lender acting through its new Facility Office is only entitled to receive payment under the relevant clause to the same extent as the Lender or Lender acting through its previous Facility Office would have been if the assignment, transfer or change had not occurred (unless the assignment, transfer or change is made by the Lender at the Borrower’s request or with the Borrower’s agreement to mitigate any circumstances

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giving rise to a Tax Payment or increased cost, or a right to be prepaid and/or cancelled by reason of illegality).

31.4	Security over Lender’s rights	
In addition to the other rights provided to Lender under this clause 31, the Lender may without consulting with or obtaining consent from any Obligor, at any time charge, assign or otherwise create a Security Interest in or over (whether by way of collateral or otherwise) all or any of its rights under any Finance Document to secure obligations of the Lender including, without limitation:

	(a)	any charge, assignment or other Security Interest to secure obligations to a federal reserve or central bank; and	
	(b)	any charge, assignment or other Security Interest granted to any holders (or trustee or representatives of holders) of obligations owed, or securities issued, by the Lender as security for those obligations or securities,	
except that no such charge, assignment or other Security Interest shall:

	(i)	release the Lender from any of its obligations under the Finance Documents or substitute the beneficiary of the relevant charge, assignment or other Security Interest for the Lender as a party to any of the Finance Documents; or	
	(ii)	require any payments to be made by an Obligor other than or in excess of, or grant to any person any more extensive rights than, those required to be made or granted to the Lender under the Finance Documents.	
	32	Changes to the Obligors	
32.1	Assignment or transfer	
No Obligor may assign any of its rights or transfer any of its rights or obligations under the Finance Documents.

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Section 10 - Administration

	33	Payment mechanics	
33.1	Payments to the Lender	
	(a)	On each date on which an Obligor is required to make a payment under a Finance Document, that Obligor shall make the same available to the Lender (unless a contrary indication appears in a Finance Document) for value on the due date at the time and in such funds specified by the Lender as being customary at the time for settlement of transactions in the relevant currency in the place of payment.	
	(b)	Payment shall be made to such account in the principal financial centre of the country of that currency (or, in relation to euro, in London) with such bank as the Lender specifies.	
33.2	Partial payments	
	(a)	If the Lender receives a payment for application against amounts due under the Finance Documents that is insufficient to discharge all the amounts then due and payable by an Obligor under those Finance Documents, the Lender shall apply that payment towards the obligations of that Obligor under those Finance Documents in the following order:	
	(i)	first, in or towards payment of any unpaid fee or commission, costs and expenses which may be owing to the Lender under the Finance Documents;	
	(ii)	secondly, in or towards payment to the Lender of any accrued interest which is due but unpaid under the Finance Documents;	
	(iii)	thirdly, in or towards payment to the Lender of any principal which is due but unpaid under the Finance Documents; and	
	(iv)	fourthly, in or towards payment to the Lender of any other sum due but unpaid under the Finance Documents.	
	(b)	The Lender may vary the order set out in paragraphs (i) to (iv) of clause 32.2(a)	
	(c)	Clause 32.2(a) above will override any appropriation made by an Obligor.	
33.3	No set-off by Obligors	
All payments to be made by an Obligor under the Finance Documents shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim.

33.4	Business Days	
	(a)	Any payment under the Finance Documents which is due to be made on a day that is not a Business Day shall be made on the next Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not).	
	(b)	During any extension of the due date for payment of any principal or Unpaid Sum under this Agreement interest is payable on the principal or Unpaid Sum at the rate payable on the original due date.	
33.5	Payments on demand	
For the purposes of clause 30.1 (Non-payment) and subject to the Lender's right to demand interest under clause 8.3, payments on demand shall be treated as paid when due if paid within four (4) Business Days of demand.

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33.6	Currency of account	
	(a)	Subject to clauses 33.6(b) to 33.6(c), dollars is the currency of account and payment for any sum due from an Obligor under any Finance Document.	
	(b)	A repayment of all or part of a Loan or an Unpaid Sum and each payment of interest shall be made in dollars on its due date.	
	(c)	Each payment in respect of the amount of any costs, expenses or Taxes or other losses shall be made in dollars and, if they were incurred in a currency other than dollars, the amount payable under the Finance Documents shall be the equivalent in dollars of the relevant amount in such other currency on the date on which it was incurred.	
	(d)	All moneys received or held by the Lender or by a Receiver under a Security Document in a currency other than dollars may be sold for dollars and the Obligor which executed that Security Document shall indemnify the Lender against the full cost in relation to the sale.  Neither the Lender nor such Receiver will have any liability to that Obligor in respect of any loss resulting from any fluctuation in exchange rates after the sale.	
33.7	Disruption to payment systems etc.	
If either the Lender determines (in its discretion) that a Disruption Event has occurred or the Lender is notified by the Borrower that a Payment Disruption Event has occurred:

	(a)	the Lender may, and if requested to do so by the Borrower, consult with the Borrower with a view to agreeing with the Borrower such changes to the operation or administration of the Facility as the Lender may deem necessary in the circumstances;	
	(b)	the Lender shall not be obliged to consult with the Borrower in relation to any changes mentioned in paragraph (a) above if, in its opinion, it is not practicable to do so in the circumstances and, in any event, shall have no obligation to agree to such changes;	
	(c)	any such changes agreed upon by the Lender and the Borrower shall (whether or not it is finally determined that a Disruption Event has occurred) be binding upon the Parties as an amendment to (or, as the case may be, waiver of) the terms of the Finance Documents; and	
	(d)	the Lender shall not be liable for any damages, costs or losses whatsoever (including, without limitation for negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Lender) arising as a result of its taking, or failing to take, any actions pursuant to or in connection with this clause 33.7.	
33.8	Change of currency	
	(a)	Unless otherwise prohibited by law, if more than one currency or currency unit are at the same time recognised by the central bank of any country as the lawful currency of that country, then:	
	(i)	any reference in the Finance Documents to, and any obligations arising under the Finance Documents in, the currency of that country shall be translated into, or paid in, the currency or currency unit of that country designated by the Lender (after consultation with the Borrower); and	
	(ii)	any translation from one currency or currency unit to another shall be at the official rate of exchange recognised by the central bank for the conversion of that currency or currency unit into the other, rounded up or down by the Lender (acting reasonably).	

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	(b)	If a change in any currency of a country occurs, this Agreement will, to the extent the Lender (acting reasonably and after consultation with the Borrower) specifies to be necessary, be amended to comply with any generally accepted conventions and market practice in the Relevant Market and otherwise to reflect the change in currency.	
33.9	Lender’s tax affairs	
No provision of this Agreement will:

	(a)	interfere with the right of the Lender to arrange its affairs (tax or otherwise) in whatever manner it thinks fit;	
	(b)	oblige the Lender to investigate or claim any credit, relief, remission or repayment available to it or the extent, order and manner of any claim; or	
	(c)	oblige the Lender to disclose any information relating to its affairs (tax or otherwise) or any computations in respect of Tax.	
33.10	Conflicts	
	(a)	The Borrower acknowledges that the Lender and its parent undertaking, subsidiary undertakings and fellow subsidiary undertakings (together the Lender Group) may be providing debt finance, equity capital or other services (including financial advisory services) to other persons with which the Borrower may have conflicting interests in respect of the Facility or otherwise.	
	(b)	No member of the Lender Group shall use confidential information gained from any Obligor by virtue of the Facility or its relationships with any Obligor in connection with its performance of services for other persons. This shall not, however, affect any obligations that any member of the Lender Group has as Lender in respect of the Finance Documents. The Borrower also acknowledges that no member of the Lender Group has any obligation to use or furnish to any Obligor information obtained from other persons for their benefit.	
	(c)	The terms parent undertaking, subsidiary undertaking and fellow subsidiary undertaking when used in this clause have the meaning given to them in sections 1161 and 1162 of the Companies Act 2006.	
	34	Set-off	
The Lender may set off any matured obligation due from an Obligor under the Finance Documents against any matured obligation owed by the Lender to that Obligor, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Lender may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.

	35	Notices	
35.1	Communications in writing	
Any communication to be made under or in connection with the Finance Documents shall be made in writing and, unless otherwise stated, may be made by fax, e-mail or letter.

35.2	Addresses	
The address, email, and fax number (and the department or officer, if any, for whose attention the communication is to be made) of each Obligor or the Lender for any communication or document to be made or delivered under or in connection with the Finance Documents is:

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	(a)	in the case of any Obligor who is a Party, that identified with its name in Schedule 1 (The original parties);	
	(b)	in the case of any Obligor which is not a Party, that identified in any Finance Document to which it is a party; and	
	(c)	in the case of the Lender, that identified with its name in Schedule 1 (The original parties),	
or, in each case, any substitute address, email, fax number, or department or officer as an Obligor or the Lender may notify to the Lender (or the Lender may notify to the other Parties, if a change is made by the Lender) by not less than five Business Days’ notice.

35.3	Delivery	
	(a)	Any communication or document made or delivered by one person to another under or in connection with the Finance Documents will only be effective:	
	(i)	if by way of fax, when received in legible form; or	
	(ii)	if by way of letter, when it has been left at the relevant address or five Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that address,	
and, if a particular department or officer is specified as part of its address details provided under clause 35.2 (Addresses), if addressed to that department or officer.

	(b)	Any communication or document to be made or delivered to the Lender will be effective only when actually received by the Lender and then only if it is expressly marked for the attention of the department or officer identified in Schedule 1 (The original parties) (or any substitute department or officer as the Lender shall specify for this purpose).	
	(c)	Any communication or document made or delivered to the Borrower in accordance with this clause 35.3 will be deemed to have been made or delivered to each of the Obligors.	
	(d)	Any communication or document which becomes effective, in accordance with paragraphs (a) to (c) above, after 5:00pm in the place of receipt shall be deemed only to become effective on the following day.	
35.4	Notification of address and fax number	
Promptly upon changing its address or fax number, the Lender shall notify the other Parties on changing its address or fax number.

35.5	Electronic communication	
	(a)	Any communication to be made between any two Parties under or in connection with the Finance Documents may be made by electronic mail or other electronic means (including, without limitation, by way of posting to a secure website) if those two Parties:	
	(i)	notify each other in writing (whether pursuant to clause 35.2 (Addresses) or otherwise)  of their electronic mail address and/or any other information required to enable the transmission of information by that means; and	
	(ii)	notify each other of any change to their address or any other such information supplied by them by not less than five Business Days’ notice.	
	(b)	Any such electronic communication as specified in paragraph (a) above to be made between an Obligor and the Lender may only be made in that way to the extent that those	

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two Parties agree that, unless and until notified to the contrary, this is to be an accepted form of communication.

	(c)	Any such electronic communication as specified in paragraph (a) above made between any two Parties will be effective only when actually received (or made available) in readable form and in the case of any electronic communication made by a Party to the Lender only if it is addressed in such a manner as the Lender shall specify for this purpose.	
	(d)	Any electronic communication which becomes effective, in accordance with paragraph (c) above, after 5:00 p. m. in the place in which the Party to whom the relevant communication is sent or made available has its address for the purpose of this Agreement or any other Finance Document shall be deemed only to become effective on the following day.	
	(e)	Any reference in a Finance Document to a communication being sent or received shall be construed to include that communication being made available in accordance with this clause 35.5.	
	(f)	The Obligors who are Parties and the Lender hereby agree that they may send information via email to another such Obligor or the Lender or one or more third parties involved in the provision of services (each a Recipient). Each Recipient hereby acknowledges that:	
	(i)	any unencrypted information may be transported over an open, publicly accessible network and may, in principle, be viewed by others, which may enable conclusions to be drawn about a banking relationship;	
	(ii)	such information can be changed and/or manipulated by a third party;	
	(iii)	the identity of the sender of any such email may be assumed or otherwise manipulated;	
	(iv)	the Lender does not assume any liability for any loss incurred as a result of manipulation of the email address or content of such an email or the information therein nor for any loss incurred by any Recipient due to interruptions and/or delays in transmission caused by technical problems; and	
	(v)	the Lender is entitled to assume that all the orders and instructions received from any Obligor or a third party designated by any Obligor are from an authorised individual, irrespective of the existing signatory rights in accordance with the commercial register or the specimen signature. Each Obligor who is a Party shall further procure that all third parties referred to herein agree with the use of emails and are aware of the above terms and conditions related to the use of email.	
35.6	English language	
	(a)	Any notice given under or in connection with any Finance Document must be in English.	
	(b)	All other documents provided under or in connection with any Finance Document must be:	
	(i)	in English; or	
	(ii)	if not in English, and if so required by the Lender, accompanied by a certified English translation (at the Borrower’s cost) and, in this case, the English translation will prevail unless the document is a constitutional, statutory or other official document.	

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	36	Calculations and certificates	
36.1	Accounts	
In any litigation or arbitration proceedings arising out of or in connection with a Finance Document, the entries made in the accounts maintained by the Lender are prima facie evidence of the matters to which they relate.

36.2	Certificates and determinations	
Any certification or determination by the Lender of a rate or amount under any Finance Document is, in the absence of manifest error, conclusive evidence of the matters to which it relates.

36.3	Day count convention	
	(a)	Any interest, commission or fee accruing under a Finance Document will accrue from day to day and the amount of any such interest, commission or fee is calculated:	
	(i)	on the basis of the actual number of days elapsed and a year of (360) days or, in any case where the practice in the Relevant Market differs, in accordance with that market practice; and	
	(ii)	subject to paragraph (b) below, without rounding.	
	(b)	The aggregate amount of any accrued interest, commission or fee which is, or becomes, payable by an Obligor under a Finance Document shall be rounded to 2 decimal places.	
	37	Partial invalidity	
If, at any time, any provision of a Finance Document is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.

	38	Remedies and waivers	
No failure to exercise, nor any delay in exercising, on the part of the Lender, any right or remedy under a Finance Document shall operate as a waiver of any such right or remedy or constitute an election to affirm any Finance Document. No election to affirm any Finance Document on the part of the Lender shall be effective unless it is in writing. No single or partial exercise of any right or remedy shall prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in each Finance Document are cumulative and not exclusive of any rights or remedies provided by law.

	39	Amendments and waivers	
39.1	Required consents	
	(a)	Any term of the Finance Documents may be amended or waived only with the consent of the Lender and the Borrower and any such amendment or waiver will be binding on all other Obligors.	
	(b)	The Lender may engage, pay for and rely on the services of lawyers in determining the consent level required for and effecting any amendment, waiver or consent under this Agreement.	

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	(c)	Each Obligor agrees to any such amendment or waiver permitted by this clause 39 which is agreed to by the Borrower. This includes any amendment or waiver which would, but for this paragraph (c), require the consent of the Guarantors or any of them.	
39.2	Transition to a term-based rate	
	(a)	If there is extensive use of term-based rates in the loan markets, following the Borrower’s written request, the Borrower, the Guarantors and the Lender shall negotiate and enter into a supplemental agreement to this Agreement in order to replace the provisions relating to the Daily Non-Cumulative Compounded RFR Rate with a term SOFR based rate mechanism or other term-based rate provisions recommended by the LMA and prevailing in the loan markets at the time (and provided that the Lender has the technical ability for effecting such transition to a term-based rate mechanism). Such amendments will only be applied from the date on which the conditions in paragraph (b) below have been satisfied and throughout the rest of the Facility Period.	
	(b)	For the avoidance of doubt, no agreement between the Lender and the Borrower regarding a term-based rate shall be or become effective under this clause 39.2, without the prior written consent of the Lender and unless and until:	
	(i)	the Parties have executed such documents (including an agreement supplemental to this Agreement and an addendum to each Mortgage) documenting such agreement and any other documents requested by the Lender in its absolute discretion; and	
	(ii)	the Borrower has delivered to the Lender such documents and evidence of the type referred to in Schedule 3 (Conditions precedent) in relation to the documents referred to in paragraph (i) above as requested by the Lender in its absolute discretion,	
in each case in a form and substance satisfactory to the Lender.

	40	Confidential Information	
40.1	Confidential Information	
The Lender agrees to keep all Confidential Information confidential and not to disclose it to anyone, save to the extent permitted by clause 40.2 (Disclosure of Confidential Information) and clause 40.3 (Disclosure to numbering service providers), and to ensure that all Confidential Information is protected with security measures and a degree of care that would apply to its own confidential information.

	40.2	Disclosure of Confidential Information	
	(a)	The Lender may disclose to any of its Affiliates and Related Funds and any of its or their officers, directors, employees, professional advisers, auditors, partners and Representatives such Confidential Information as the Lender shall consider appropriate if any person to whom the Confidential Information is to be given pursuant to this paragraph (a) is informed in writing of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no such requirement to so inform if the recipient is subject to professional obligations to maintain the confidentiality of the information or is otherwise bound by requirements of confidentiality in relation to the Confidential Information.	
	(b)	The Lender may disclose to any underwriter, insurance company, mutual insurance association or other insurer (or their officers, directors, employees, professional advisers, auditors or partners) or broker with or through whom the Lender has effected or proposes to effect any form of insurance for the benefit of the Lender in relation to its interests and/or potential liabilities in relation to the Transaction Security (including, but not limited to, any	

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mortgagee interest insurance or mortgagee additional perils insurance) such Confidential Information as the Lender shall consider appropriate in relation to that insurance (including but not limited to the name of a Ship, its IMO number and the amount of the outstanding indebtedness in respect thereof).

	(c)	The Lender and any of its Affiliates may disclose to any person:	
	(i)	to (or through) whom it assigns or transfers (or may potentially assign or transfer) all or any of its rights and/or obligations under one or more Finance Documents or which succeeds (or which may potentially succeed) it as the Lender, and, in each case, to any of that person’s Affiliates, Related Funds, Representatives and professional advisers;	
	(ii)	with (or through) whom it enters into (or may potentially enter into), whether directly or indirectly, any sub-participation in relation to, or any other transaction under which payments are to be made or may be made by reference to, one or more Finance Documents and/or one or more Obligors and to any of that person’s Affiliates, Related Funds, Representatives and professional advisers;	
	(iii)	appointed by the Lender or any of its Affiliates or by a person to whom paragraphs (c)(i) or (c)(ii) above applies to receive communications, notices, information or documents delivered pursuant to the Finance Documents on its behalf;	
	(iv)	appointed by the Lender or any of its Affiliates or by a person to whom paragraph (c)(i) or (c)(ii) above applies to act as a verification agent in respect of any transaction referred to in paragraph (c)(ii) above;	
	(v)	appointed by the Lender or any of its Affiliates or by a person to whom paragraphs (c)(i) or (c)(ii) above applies in connection with the exercise, protection or enforcement of such person’s rights under the Finance Documents;	
	(vi)	who invests in or otherwise finances (or may potentially invest in or otherwise finance), directly or indirectly, any transaction referred to in paragraphs (c)(i) or (c)(ii) above;	
	(vii)	to whom information is required or requested to be disclosed by any court of competent jurisdiction or any governmental, banking, taxation or other regulatory authority or similar body, the rules of any relevant stock exchange or pursuant to any applicable law or regulation;	
	(viii)	to whom information is required to be disclosed in connection with, and for the purposes of, any litigation, arbitration, administrative or other investigations, proceedings or disputes;	
	(ix)	to whom or for whose benefit the Lender charges, assigns or otherwise creates a Security Interest (or may do so) pursuant to clause 31.4 (Security over Lender’s rights);	
	(x)	who is a Party; or	
	(xi)	with the consent of the Borrower,	
in each case, such Confidential Information as the Lender shall consider appropriate if:

	(A)	in relation to paragraphs (c)(i), (c)(ii), (c)(iii) and (c)(iv) above, the person to whom the Confidential Information is to be given has entered into confidentiality undertaking substantially in a recommended form of the Loan Market Association from time to time or in any other form agreed between the	

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Borrower and the Lender (a Confidentiality Undertaking) (save that no Obligor countersignature or consent to execution of such Confidentiality Undertaking shall be required) except that there shall be no requirement for a Confidentiality Undertaking if the recipient is a professional adviser and is subject to professional obligations to maintain the confidentiality of the Confidential Information;

	(B)	in relation to paragraph c(vi) above, the person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking or is otherwise bound by requirements of confidentiality in relation to the Confidential Information they receive and is informed that some or all of such Confidential Information may be price-sensitive information;	
	(C)	in relation to paragraphs (c)(vii),(c)(viii) and (c)(ix) above, the person to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no requirement to so inform if, in the opinion of the Lender, it is not practicable so to do in the circumstances.	
	(d)	The Lender and any of its Affiliates may disclose to any person appointed by the Lender or by a person to whom paragraphs (c)(i) or (c)(ii) above applies to provide administration or settlement services in respect of one or more of the Finance Documents including without limitation, in relation to the trading of participations in respect of the Finance Documents, such Confidential Information as may be required to be disclosed to enable such service provider to provide any of the services referred to in this paragraph (d) if the service provider to whom the Confidential Information is to be given has entered into a confidentiality agreement substantially in the form of the LMA Master Confidentiality Undertaking for Use With Administration/Settlement Service Providers or such other form of confidentiality undertaking agreed between the Borrower and the the Lender.	
	(e)	The Lender and any of its Affiliates may disclose to any rating agency (including its professional advisers) such Confidential Information as may be required to be disclosed to enable such rating agency to carry out its normal rating activities in relation to the Finance Documents and/or the Obligors if the rating agency to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such Confidential Information may be price sensitive information.	
40.3	Disclosure to numbering service providers	
	(a)	The Lender may disclose to any national or international numbering service provider appointed by the Lender to provide identification numbering services in respect of this Agreement, the Facility and/or one or more Obligors the following information:	
	(i)	names of Obligors;	
	(ii)	country of domicile of Obligors;	
	(iii)	place of incorporation of Obligors;	
	(iv)	date of this Agreement;	
	(v)	clause 44 (Governing law);	
	(vi)	the name of the Lender;	
	(vii)	date of each amendment and restatement of this Agreement;	
	(viii)	amount of the Facility;	

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	(ix)	amount of Commitment;	
	(x)	currency of the Facility;	
	(xi)	type of Facility;	
	(xii)	ranking of Facility;	
	(xiii)	changes to any of the information previously supplied pursuant to paragraphs (i) to (xii) above; and	
	(xiv)	such other information agreed between the Lender and the Borrower,	
to enable such numbering service provider to provide its usual syndicated loan numbering identification services.

	(b)	The Parties acknowledge and agree that each identification number assigned to this Agreement, the Facility and/or one or more Obligors by a numbering service provider and the information associated with each such number may be disclosed to users of its services in accordance with the standard terms and conditions of that numbering service provider.	
	(c)	Each Obligor represents that none of the information set out in paragraphs (i) to (xiv) of paragraph (a) above is, nor will at any time be, unpublished price-sensitive information.	
	(d)	The Lender shall notify the Borrower of:	
	(i)	the name of any numbering service provider appointed by the Lender in respect of this Agreement, the Facility and/or one or more Obligors; and	
	(ii)	the number or, as the case may be, numbers assigned to this Agreement, the Facility and/or one or more Obligors by such numbering service provider.	
40.4	Entire agreement	
This clause 40 constitutes the entire agreement between the Parties in relation to the obligations of the Lender under the Finance Documents regarding Confidential Information and supersedes any previous agreement, whether express or implied, regarding Confidential Information.

40.5	Inside information	
The Lender acknowledges that some or all of the Confidential Information is or may be price-sensitive information and that the use of such information may be regulated or prohibited by applicable legislation including securities law relating to insider dealing and market abuse and the Lender undertakes not to use any Confidential Information for any unlawful purpose.

40.6	Notification of disclosure	
The Lender agrees (to the extent permitted by law and regulation) to inform the Borrower:

	(a)	of the circumstances of any disclosure of Confidential Information made to any person to whom information is required or requested to be disclosed by any court of competent jurisdiction or any governmental, banking, taxation or other regulatory authority or similar body or the rules of any relevant stock exchange or pursuant to any applicable law or regulation pursuant to clause 40.2 (Disclosure of Confidential Information) except where such disclosure is made to any such person during the ordinary course of its supervisory or regulatory function; and	
	(b)	upon becoming aware that Confidential Information has been disclosed in breach of this clause 40.	

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40.7	Continuing obligations	
The obligations in this clause 40 are continuing and, in particular, shall survive and remain binding on the Lender for a period of twelve months from the earlier of:

	(a)	the date on which all amounts payable by the Obligors under or in connection with the Finance Documents have been paid in full and all Commitments have been cancelled or otherwise cease to be available; and	
	(b)	the date on which the Lender otherwise ceases to be a Party.	
	41	Confidentiality of Funding Rates	
41.1	Confidentiality and disclosure	
	(a)	Each Obligor agrees to keep each Funding Rate confidential and not to disclose it to anyone, save to the extent permitted by paragraph (b) below.	
	(b)	Each Obligor may disclose any Funding Rate to:	
	(i)	any of its Affiliates and any of its or their officers, directors, employees, professional advisers, auditors, partners and Representatives if any person to whom that Funding Rate is to be given pursuant to this paragraph (i) is informed in writing of its confidential nature and that it may be price-sensitive information except that there shall be no such requirement to so inform if the recipient is subject to professional obligations to maintain the confidentiality of that Funding Rate or is otherwise bound by requirements of confidentiality in relation to it;	
	(ii)	any person to whom information is required or requested to be disclosed by any court of competent jurisdiction or any governmental, banking, taxation or other regulatory authority or similar body, the rules of any relevant stock exchange or pursuant to any applicable law or regulation if the person to whom that Funding Rate is to be given is informed in writing of its confidential nature and that it may be price-sensitive information except that there shall be no requirement to so inform if, in the opinion of the relevant Obligor, as the case may be, it is not practicable to do so in the circumstances;	
	(iii)	any person to whom information is required to be disclosed in connection with, and for the purposes of, any litigation, arbitration, administrative or other investigations, proceedings or disputes if the person to whom that Funding Rate is to be given is informed in writing of its confidential nature and that it may be price-sensitive information except that there shall be no requirement to so inform if, in the opinion of the Lender or the relevant Obligor, as the case may be, it is not practicable to do so in the circumstances; and	
	(iv)	any person with the consent of the Lender.	
41.2	Related obligations	
	(a)	Each Obligor acknowledges that each Funding Rate is or may be price-sensitive information and that its use may be regulated or prohibited by applicable legislation including securities law relating to insider dealing and market abuse and each Obligor undertakes not to use any Funding Rate for any unlawful purpose.	
	(b)	Each Obligor agrees (to the extent permitted by law and regulation) to inform the Lender:	
	(i)	of the circumstances of any disclosure made pursuant to clause 41.1(b)(ii) (Confidentiality and disclosure) except where such disclosure is made to any of the	

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persons referred to in that paragraph during the ordinary course of its supervisory or regulatory function; and

	(ii)	upon becoming aware that any information has been disclosed in breach of this clause 41.	
41.3	No Event of Default	
No Event of Default will occur under clause 30.5 (Other obligations) by reason only of an Obligor’s failure to comply with this clause 41.

	42	Counterparts	
Each Finance Document may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of the Finance Document.

	43	Contractual recognition of bail-in	
Notwithstanding any other term of any Finance Document or any other agreement, arrangement or understanding between the Parties, each Party (and any other Obligor who is a party to any other Finance Document to which this clause is expressed by the terms of that other Finance Document to apply) acknowledges and accepts that any liability of the Lender to an Obligor under or in connection with the Finance Documents may be subject to Bail-In Action by the relevant Resolution Authority and acknowledges and accepts to be bound by the effect of:

	(a)	any Bail-In Action in relation to any such liability, including (without limitation):	
	(i)	a reduction, in full or in part, in the principal amount, or outstanding amount due (including any accrued but unpaid interest) in respect of any such liability;	
	(ii)	a conversion of all, or part of, any such liability into shares or other instruments of ownership that may be issued to, or conferred on, it; and	
	(iii)	a cancellation of any such liability; and	
	(b)	a variation of any term of any Finance Document to the extent necessary to give effect to any Bail-In Action in relation to any such liability.	

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Section 11 - Governing Law and Enforcement

	44	Governing law	
This Agreement and any non-contractual obligations connected with it are governed by English law.

	45	Enforcement	
45.1	Jurisdiction of English courts	
	(a)	The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement or any non-contractual obligations connected with it (including a dispute regarding the existence, validity or termination of this Agreement) (a Dispute).	
	(b)	The Parties agree that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary.	
	(c)	This clause 45.1 is for the benefit of the Lender only. As a result the Lender shall not be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Lender may take concurrent proceedings in any number of jurisdictions.	
45.2	Service of process	
Without prejudice to any other mode of service allowed under any relevant law, any Obligor who is a Party:

	(a)	irrevocably appoints the person named in Schedule 1 (The original parties) as that Obligor’s English process agent as its agent for service of process in relation to any proceedings before the English courts in connection with any Finance Document;	
	(b)	agrees that failure by an agent for service of process to notify the relevant Obligor of the process will not invalidate the proceedings concerned; and	
	(c)	if any person appointed as process agent for an Obligor is unable for any reason to act as agent for service of process, that Obligor must immediately (and in any event within ten days of such event taking place) appoint another agent on terms acceptable to the Lender.  Failing this, the Lender may appoint another agent for this purpose.	
This Agreement has been entered into on the date stated at the beginning of this Agreement.

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Schedule 1
The original parties
Part 1
Borrower

Name:	Danaos Corporation	
Original Jurisdiction	Marshall Islands	
Registration number (or equivalent, if any)	16381	
English process agent	Law Debenture Corporate Services Limited
8th Floor
100 Bishopsgate
London EC2N 4AG
	
Registered office	Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960
	
Address for service of notices	DANAOS SHIPPING COMPANY LIMITED
14 Akti Kondyli Street
185 45 Piraeus
Greece

E-mail:***************
Attention:Legal Department

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Part 2
Guarantors

Name:	Boxcarrier (No.5) Corp.	
Original Jurisdiction	Liberia	
Registration number (or equivalent, if any)	C-108723	
English process agent	Law Debenture Corporate Services Limited
8th Floor
100 Bishopsgate
London EC2N 4AG
	
Registered office	80 Broad Street
Monrovia
Liberia
	
Address for service of notices	DANAOS SHIPPING COMPANY LIMITED
14 Akti Kondyli Street
185 45 Piraeus
Greece

E-mail:***************

		
Name:	Megacarrier (No.5) Corp.	
Original Jurisdiction	Liberia	
Registration number (or equivalent, if any)	C-110530	
English process agent	Law Debenture Corporate Services Limited
8th Floor
100 Bishopsgate
London EC2N 4AG
	
Registered office	80 Broad Street
Monrovia
Liberia
	
Address for service of notices	DANAOS SHIPPING COMPANY LIMITED
14 Akti Kondyli Street
185 45 Piraeus
Greece

E-mail:***************

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Name:	Oceanprize Navigation Limited	
Original Jurisdiction	Cyprus	
Registration number (or equivalent, if any)	HE 135751	
English process agent	Law Debenture Corporate Services Limited
8th Floor
100 Bishopsgate
London EC2N 4AG
	
Registered office	Panteli Katelari,16 Diagoras House, 7th floor 1097 Nicosia, Cyprus	
Address for service of notices	DANAOS SHIPPING COMPANY LIMITED
14 Akti Kondyli Street
185 45 Piraeus
Greece

E-mail:***************

		
Name:	Cellcontainer (No.7) Corp.	
Original Jurisdiction	Liberia	
Registration number (or equivalent, if any)	C-110808	
English process agent	Law Debenture Corporate Services Limited
8th Floor
100 Bishopsgate
London EC2N 4AG
	
Registered office	80 Broad Street
Monrovia
Liberia
	
Address for service of notices	DANAOS SHIPPING COMPANY LIMITED
14 Akti Kondyli Street
185 45 Piraeus
Greece

E-mail:***************

114

		
Name:	Megacarrier (No.3) Corp.	
Original Jurisdiction	Liberia	
Registration number (or equivalent, if any)	C-110528	
English process agent	Law Debenture Corporate Services Limited
8th Floor
100 Bishopsgate
London EC2N 4AG
	
Registered office	80 Broad Street
Monrovia
Liberia
	
Address for service of notices	DANAOS SHIPPING COMPANY LIMITED
14 Akti Kondyli Street
185 45 Piraeus
Greece

E-mail:***************

		
Name:	Boxcarrier (No.2) Corp.	
Original Jurisdiction	Liberia	
Registration number (or equivalent, if any)	C-108726	
English process agent	Law Debenture Corporate Services Limited
8th Floor
100 Bishopsgate
London EC2N 4AG
	
Registered office	80 Broad Street
Monrovia
Liberia
	
Address for service of notices	DANAOS SHIPPING COMPANY LIMITED
14 Akti Kondyli Street
185 45 Piraeus
Greece

E-mail:***************

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Name:	Oceanew Shipping Limited	
Original Jurisdiction	Cyprus	
Registration number (or equivalent, if any)	HE 127025	
English process agent	Law Debenture Corporate Services Limited
8th Floor
100 Bishopsgate
London EC2N 4AG
	
Registered office	Panteli Katelari, 16 Diagoras House, 7th floor 1097 Nicosia, Cyprus
	
Address for service of notices	DANAOS SHIPPING COMPANY LIMITED
14 Akti Kondyli Street
185 45 Piraeus
Greece

E-mail:***************

		
Name:	Boxcarrier (No.4) Corp.	
Original Jurisdiction	Liberia	
Registration number (or equivalent, if any)	C-108729	
English process agent	Law Debenture Corporate Services Limited
8th Floor
100 Bishopsgate
London EC2N 4AG
	
Registered office	80 Broad Street
Monrovia
Liberia
	
Address for service of notices	DANAOS SHIPPING COMPANY LIMITED
14 Akti Kondyli Street
185 45 Piraeus
Greece

E-mail:***************

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Name:	Expresscarrier (No.2) Corp.	
Original Jurisdiction	Liberia	
Registration number (or equivalent, if any)	C-109643	
English process agent	Law Debenture Corporate Services Limited
8th Floor
100 Bishopsgate
London EC2N 4AG
	
Registered office	80 Broad Street
Monrovia
Liberia
	
Address for service of notices	DANAOS SHIPPING COMPANY LIMITED
14 Akti Kondyli Street
185 45 Piraeus
Greece

E-mail:***************

		
Name:	Cellcontainer (No.8) Corp.	
Original Jurisdiction	Liberia	
Registration number (or equivalent, if any)	C-110809	
English process agent	Law Debenture Corporate Services Limited
8th Floor
100 Bishopsgate
London EC2N 4AG
	
Registered office	80 Broad Street
Monrovia
Liberia
	
Address for service of notices	DANAOS SHIPPING COMPANY LIMITED
14 Akti Kondyli Street
185 45 Piraeus
Greece

E-mail:***************

117

		
Name:	Boxcarrier (No.3) Corp.	
Original Jurisdiction	Liberia	
Registration number (or equivalent, if any)	C-108728	
English process agent	Law Debenture Corporate Services Limited
8th Floor
100 Bishopsgate
London EC2N 4AG
	
Registered office	80 Broad Street
Monrovia
Liberia
	
Address for service of notices	DANAOS SHIPPING COMPANY LIMITED
14 Akti Kondyli Street
185 45 Piraeus
Greece

E-mail:***************

		
Name:	Ramona Marine Company Limited	
Original Jurisdiction	Cyprus	
Registration number (or equivalent, if any)	HE 136611	
English process agent	Law Debenture Corporate Services Limited
8th Floor
100 Bishopsgate
London EC2N 4AG
	
Registered office	Panteli Katelari, 16 Diagoras House, 7th floor 1097 Nicosia, Cyprus	
Address for service of notices	DANAOS SHIPPING COMPANY LIMITED
14 Akti Kondyli Street
185 45 Piraeus
Greece

E-mail:***************

118

		
Name:	Expresscarrier (No.1) Corp.	
Original Jurisdiction	Liberia	
Registration number (or equivalent, if any)	C-109642	
English process agent	Law Debenture Corporate Services Limited
8th Floor
100 Bishopsgate
London EC2N 4AG
	
Registered office	80 Broad Street
Monrovia
Liberia
	
Address for service of notices	DANAOS SHIPPING COMPANY LIMITED
14 Akti Kondyli Street
185 45 Piraeus
Greece

E-mail:***************

		
Name:	Karlita Shipping Company Limited	
Original Jurisdiction	Cyprus	
Registration number (or equivalent, if any)	HE 136599	
English process agent	Law Debenture Corporate Services Limited
8th Floor
100 Bishopsgate
London EC2N 4AG
	
Registered office	Panteli Katelari, 16 Diagoras House, 7th floor 1097 Nicosia, Cyprus	
Address for service of notices	DANAOS SHIPPING COMPANY LIMITED
14 Akti Kondyli Street
185 45 Piraeus
Greece

E-mail:***************

119

		
Name:	Megacarrier (No.4) Corp.	
Original Jurisdiction	Liberia	
Registration number (or equivalent, if any)	C-110529	
English process agent	Law Debenture Corporate Services Limited
8th Floor
100 Bishopsgate
London EC2N 4AG
	
Registered office	80 Broad Street
Monrovia
Liberia
	
Address for service of notices	DANAOS SHIPPING COMPANY LIMITED
14 Akti Kondyli Street
185 45 Piraeus
Greece

E-mail:***************

		
Name:	Cellcontainer (No.6) Corp.	
Original Jurisdiction	Liberia	
Registration number (or equivalent, if any)	C-110807	
English process agent	Law Debenture Corporate Services Limited
8th Floor
100 Bishopsgate
London EC2N 4AG
	
Registered office	80 Broad Street
Monrovia
Liberia
	
Address for service of notices	DANAOS SHIPPING COMPANY LIMITED
14 Akti Kondyli Street
185 45 Piraeus
Greece

E-mail:***************

120

Part 3
The Lender

Name	Citibank, N.A., Jersey Branch	
Facility Office, contact details for notices and account details for payments	Facility Office:
Citibank N.A., Jersey Branch,
P O Box 104, 38 Esplanade, Jersey, JE4 8QB
Notices and contact details
For any payments and payments-related purposes:
LOANS PROCESSING UNIT
Citibank Europe plc, Poland Branch
Prosta 36 Street
00-838 Warsaw, Poland

Magdalena Buszko       Tel: +48 (22) 148 1393
Justyna Jaworska         Tel: +48 (22) 148 1394
Juliusz Stefanski           Tel: +48 (22) 148 1391
Kamil Glazewski           Tel: +48 (22) 148 1016
Aleksandra Bochniak    Tel: +48 (22) 148 2643
Agata Witaszek             Tel: +48 (22) 148 1395
email: ***************
with a copy to:
Petros Patronis
Citibank Europe plc, Greece Branch
8 Othonos Street, Athens 105 57, Greece
Tel: +30 210 3292125
email: ***************
For notices for credit and/or notices for any other matter:
Petros Patronis
Citibank Europe plc, Greece Branch
8 Othonos Street, Athens 105 57, Greece
Tel: +30 210 3292125
email: ***************

Account details for payments:
******************************
******************************
******************************
******************************
******************************
******************************
******************************	
Commitment $	382,500,000	

121

Schedule 2
Ship Information
Part A
CATEGORY A SHIPS

Owner	Karlita Shipping Company Limited	
Name	Pusan C	
IMO Number	9307229	
Year of build	2006	
Charter	Time charter dated 25 October 2018 as amended by a first addendum dated 29 November 2019, a second addendum dated 25 February 2020, a third addendum dated 16 April 2021 and a fourth addendum dated 4 January 2022.	
Charterer	Mediterranean Shipping Company S.A.	
Flag State	Cyprus	
Classification	100A1 CONTAINER SHIP, SHIPRIGHT(SDA, FDA, CM), BoxMax, *IWS, LI,
LMC, UMS, NAV1, CAC(2), EGCS (OPEN,PARTIAL)	
Charter Guarantee	N/A	
Charter Guarantor	N/A	
Classification Society	LR	
Major Casualty Amount	$1,000,000	

122

Owner	Ramona Marine Company Limited	
Name	Le Havre	
IMO Number	9307243	
Year of build	2006	
Charter	Time charter dated 25 October 2018 as amended by a first addendum dated 29 November 2019, a second addendum dated 25 February 2020, a third addendum dated 16 April 2021 and a fourth addendum dated 4 January 2022	
Charterer	Mediterranean Shipping Company S.A.	
Flag State	Cyprus	
Classification	100A1 CONTAINER SHIP, SHIPRIGHT (SDA, FDA, CM), BoxMax, *IWS, LI, EP LMC, UMS, NAV1, CAC(2), EGCS (OPEN,PARTIAL)  	
Charter Guarantee	N/A	
Charter Guarantor	N/A	
Classification Society	LR	
Major Casualty Amount	$1,000,000	

Owner	Oceanprize Navigation Limited	
Name	America	
IMO Number	9285990	
Year of build	2004	
Charter	Time charter dated 16 October 2018 as amended by a first addendum dated 29 January 2020, a second addendum dated 29 January 2020, a third addendum dated 29 January 2020, a fourth addendum dated 16 April 2021 and a fifth addendum dated 4 January 2022.	
Charterer	Mediterranean Shipping Company S.A.	
Flag State	Cyprus	
Classification	100A1; CONTAINER SHIP; *IWS; LI; SHIPRIGHT (SDA,FDA,CM); EP, BOXMAX.
LMC, UMS, NAV1, CAC(2), EGCS (OPEN,PARTIAL)	
Charter Guarantee	N/A	
Charter Guarantor	N/A	
Classification Society	LR	
Major Casualty Amount	$1,000,000	

123

Owner	Oceanew Shipping Limited	
Name	Europe	
IMO Number	9285988	
Year of build	2004	
Charter	Time charter dated 16 October 2018 as amended by a first addendum dated 29 January 2020, a second addendum dated 29 January 2020, a third addendum dated 16 April 2021 and a fourth addendum dated 4 January 2022.	
Charterer	Mediterranean Shipping Company S.A.	
Flag State	Cyprus	
Classification	100 A1 CONTAINER SHIP *IWS LI SHIPRIGHT(SDA,FDA,CM) EP, BOXMAX(V, W)
LMC, UMS, NAV1, CAC(2), EGCS (OPEN, PARTIAL)	
Charter Guarantee	N/A	
Charter Guarantor	N/A	
Classification Society	LR	
Major Casualty Amount	$1,000,000	

Owner	Boxcarrier (No.5) Corp.	
Name	CMA CGM Racine	
IMO Number	9406647	
Year of build	2010	
Charter	Time charter dated 10 August 2006 as amended by a first addendum dated 27 May 2009, a second addendum dated 15 December 2009, a third addendum dated 22 February 2010, a fourth Addendum dated 8 September 2010, a fifth addendum dated 5 May 2015, a sixth addendum dated 12 July 2016, a seventh addendum dated 21 December 2017, an eighth addendum dated 12 April 2021, a ninth addendum dated 5 May 2022 and a tenth addendum dated 5 September 2022.	
Charterer	CMA CGM S.A.	
Flag State	Malta	
Classification	100 A5 Container ship BWM SOLAS-II-2,Reg.19 IW LC RSCS MC AUT CM- PS	
Charter Guarantee	N/A	
Charter Guarantor	N/A	
Classification Society	DNV	
Major Casualty Amount	$1,000,000	

124

Owner	Expresscarrier (No.1) Corp.	
Name	YM Mandate	
IMO Number	9438523	
Year of build	2010	
Charter	Bareboat charter dated 23 May 2007 as amended by a side letter dated 23 May 2007, a first addendum dated 24 January 2008, a second addendum dated 20 August 2009, a third addendum dated 14 February 2017, a fourth addendum dated 20 August 2018, a fifth addendum dated 11 September 2019.	
Charterer	Yang Ming (UK) Ltd.	
Flag State	Liberia	
Classification	1A1 CONTAINER CARRIER BIS BWM (T), DG-(P) E0) NAUTICUS (NEWBUILDING) RSCS	
Charter Guarantee	Charter guarantee given under a letter of confirmation dated 18 May 2010	
Charter Guarantor	Yang Ming Marine Transport Corp.	
Classification Society	DNV	
Major Casualty Amount	$1,000,000	

Owner	Expresscarrier (No.2) Corp.	
Name	YM Maturity	
IMO Number	9438535	
Year of build	2010	
Charter	Bareboat charter dated 23 May 2007 as amended by a side letter dated 23 May 2007, a first addendum dated 24 January 2008, a second addendum dated 20 August 2009, a third addendum dated 14 February 2017 and a fourth addendum dated 20 August 2018.	
Charterer	Yang Ming (UK) Ltd.	
Flag State	Liberia	
Classification	1A1 CONTAINER CARRIER BIS BWM(T) DG(P) E0 NAUTICUS (NEWBUILDING) RSCS TMON	
Charter Guarantee	Charter guarantee given under a letter of confirmation dated 21 June 2010	
Charter Guarantor	Yang Ming Marine Transport Corp.	
Classification Society	DNV	
Major Casualty Amount	$1,000,000	

125

Owner	Megacarrier (No.5) Corp.	
Name	Hyundai Ambition	
IMO Number	9475703	
Year of build	2012	
Charter	Time charter dated 18 October 2007 as amended by a first addendum dated 18 February 2008, a second addendum dated 18 June 2009, a third addendum dated 18 October 2010, a fourth addendum dated 17 February 2012, a fifth addendum dated 28 June 2012, a sixth addendum dated 29 January 2013, a seventh addendum dated 12 August 2015, a ninth addendum dated 3 September 2018 and a tenth addendum dated 7 January 2019.	
Charterer	Hyundai Merchant Marine Co., Ltd.	
Flag State	Liberia	
Classification	1A1 Container carrier BIS BWM(T) DG(P) E0 LC NAUTICUS(Newbuilding) RSCS TMON	
Charter Guarantee	N/A	
Charter Guarantor	N/A	
Classification Society	DNV	
Major Casualty Amount	$1,250,000	

Owner	Megacarrier (No.4) Corp.	
Name	Hyundai Speed	
IMO Number	9475698	
Year of build	2012	
Charter	Time charter dater 18 October 2007 as amended by a first addendum dated 18 February 2008, a second addendum dated 18 June 2009, a third addendum 18 October 2010, a fourth addendum dated 17 February 2012, a fifth addendum dated 29 January 2013, a sixth addendum dated 12 August 2015, a commission agreement dated 19 September 2016, an eight addendum dated 7 January 2019, a ninth addendum dated 7 March 2019 and a tenth addendum dated 8 October 2019.	
Charterer	Hyundai Merchant Marine Co., Ltd.	
Flag State	Greece	
Classification	1A1 Container carrier BIS BWM(E(s)) DG(P) E0 LC NAUTICUS(Newbuilding) RSCS TMON	
Charter Guarantee	N/A	
Charter Guarantor	N/A	
Classification Society	DNV	
Major Casualty Amount	$1,250,000	

126

		
Owner	Megacarrier (No.3) Corp.	
Name	Hyundai Smart	
IMO Number	9475686	
Year of build	2012	
Charter	Time charter dated 18 October 2007 as amended by a first addendum dated 18 February 2008, a second addendum dated 18 June 2009, a third addendum 18 October 2010, a fourth addendum dated 17 February 2012, a fifth addendum dated 29 January 2013, a sixth addendum dated 5 May 2015, a seventh addendum dated 12 August 2015, a commission agreement dated 19 September 2016, a ninth addendum dated 7 January 2019 and a tenth addendum dated 8 October 2019.	
Charterer	Hyundai Merchant Marine Co., Ltd.	
Flag State	Greece	
Classification	100 A5 Container ship BWM DG IW LC RSCS RSD
MC AUT CM-PS	
Charter Guarantee	N/A	
Charter Guarantor	N/A	
Classification Society	 DNV	
Major Casualty Amount	$1,250,000	

127

PART B
(B) CATEGORY B SHIPS

Owner	Boxcarrier (No.2) Corp.	
Name	CMA CGM Musset	
IMO Number	9406611	
Year of build	2010	
Charter	Time charter dated 10 August 2006 as amended by a first addendum dated 16 February 2009, a second addendum dated 27 May 2009, a third addendum dated 15 December 2009, a fourth addendum dated 22 February 2010, a fifth addendum dated 8 September 2010, a sixth addendum dated 15 January 2013, a seventh addendum dated 26 August 2014, an eight addendum dated 12 July 2016, a ninth addendum dated 21 December 2017, a tenth addendum dated 12 April 2021, a tenth addendum bis dated 1 April 2022, an eleventh addendum dated 5 May 2022 and a twelfth addendum dated 10 June 2022.	
Charterer	CMA CGM S.A.	
Flag State	Malta	
Classification	100 A5 Container ship BWM SOLAS-II-2, Reg.19 IW LC RSCS
MC AUT CM-PS	
Charter Guarantee	N/A	
Charter Guarantor	N/A	
Classification Society	DNV	
Major Casualty Amount	$1,000,000	

Owner	Boxcarrier (No.3) Corp.	
Name	CMA CGM Nerval	
IMO Number	9406623	
Year of build	2010	
Charter	Time charter dated 10 August 2006 as amended by a first addendum dated 27 May 2009, a second addendum dated 15 December 2009, a third addendum dated 22 February 2010, a fourth addendum dated 8 September 2010, a fifth addendum dated 12 July 2016, a sixth addendum dated 21 December 2017, a seventh addendum dated 12 April 2021, an eighth addendum dated 5 May 2022 and a ninth addendum dated 6 June 2022.	
Charterer	CMA CGM S.A.	
Flag State	Malta	
Classification	100 A5 Container ship BWM SOLAS-II-2, Reg.19 IW LC RSCS
MC AUT CM-PS	
Charter Guarantee	N/A	
Charter Guarantor	N/A	
Classification Society	DNV	
Major Casualty Amount	$1,000,000	

128

Owner	Boxcarrier (No.4) Corp.	
Name	CMA CGM Rabelais	
IMO Number	9406635	
Year of build	2010	
Charter	Time charter dated 10 August 2006 as amended by a first addendum dated 27 May 2009, a second addendum dated 15 December 2009, a third addendum dated 22 February 2010, a fourth addendum dated 8 September 2010, a fifth addendum dated 22 March 2011, a sixth addendum dated 12 July 2016, a seventh addendum dated 21 December 2017, an eight addendum dated 13 March 2019, a ninth addendum dated 12 April 2021, a tenth addendum dated 5 May 2022 and an eleventh addendum dated 22 July 2022.	
Charterer	CMA CGM S.A.	
Flag State	Malta	
Classification	100 A5 Container ship BWM SOLAS-II-2, Reg.19 IW LC RSCS
MC AUT CM-PS	
Charter Guarantee	N/A	
Charter Guarantor	N/A	
Classification Society	DNV	
Major Casualty Amount	$1,000,000	

Owner	Cellcontainer (No.7) Corp.	
Name	Express Rome	
IMO Number	9484936	
Year of build	2011	
Charter	Time charter dated 02 October 2017 as amended by a first addendum dated 19 April 2018, a second addendum dated 10 September 2018, a third addendum dated 8 March 2019, a fourth addendum dated 22 October 2019, a fifth addendum dated 5 February 2021 and a sixth addendum dated 17 September 2021.	
Charterer	Hapag Lloyd AG	
Flag State	Liberia	
Classification	+KRS1 CONTAINER SHIP
LS(CL, RS) SeaTrust(DSA2,FSA3,HCM) CLEAN1 IWS CDG IHM EDD
OHIMP LG LI
+KRM1 UMA PMS BWE STCM NBS1	
Charter Guarantee	N/A	
Charter Guarantor	N/A	
Classification Society	KR	
Major Casualty Amount	$1,000,000	

129

Owner	Cellcontainer (No.6) Corp.	
Name	Express Berlin	
IMO Number	9484924	
Year of build	2011	
Charter	Time charter dated 6 October 2017 as amended by a first addendum dated 31 January 2019 and a second addendum dated 1 October 2021.	
Charterer	Yang Ming Marine Transport Corp.	
Flag State	Greece	
Classification	+KRS1 CONTAINER SHIP
LS(CL, RS) SeaTrust(DSA2,FSA3,HCM) CLEAN1 IWS CDG IHM EDD
OHIMP LG LI
+KRM1 UMA PMS BWE STCM NBS1	
Charter Guarantee	N/A	
Charter Guarantor	N/A	
Classification Society	KR	
Major Casualty Amount	$1,000,000	

Owner	Cellcontainer (No.8) Corp.	
Name	Express Athens	
IMO Number	9484948	
Year of build	2011	
Charter	Time charter dated 29 November 2017 as amended by a first addendum dated 23 August 2018, a second addendum dated 10 September 2018, a third addendum dated 22 October 2019, , a fourth addendum dated 5 February 2021 and a fifth addendum dated 27 September 2021).	
Charterer	Hapag Lloyd AG	
Flag State	Liberia	
Classification	+KRS1 CONTAINER SHIP
LS(CL, RS) SeaTrust(DSA2,FSA3,HCM) CLEAN1 IWS CDG IHM EDD
OHIMP LG LI
+KRM1 UMA PMS BWE STCM NBS1	
Charter Guarantee	N/A	
Charter Guarantor	N/A	
Classification Society	KR	
Major Casualty Amount	$1.000.000	

130

Schedule 3
Conditions precedent
Part 1
Conditions precedent to the first Utilisation

1	Original Obligors' corporate documents	
	(a)	A copy of the Constitutional Documents of each Original Obligor and the Manager of each Ship (other than mv’s YM Maturity and YM Mandate).	
	(b)	A copy of a resolution of the board of directors or board of managers of each Original Obligor and the Manager of each Ship (other than mv’s YM Maturity and YM Mandate):	
	(i)	approving the terms of, and the transactions contemplated by, the Transaction Documents to which it is a party (its Relevant Documents) and resolving that it execute, deliver and perform the Relevant Documents;	
	(ii)	authorising a specified person or persons to execute its Relevant Documents on its behalf; and	
	(iii)	authorising a specified person or persons, on its behalf, to sign and/or despatch all documents and notices (including, if relevant, any Utilisation Request) to be signed and/or despatched by it under or in connection with its Relevant Documents.	
	(c)	A specimen of the signature of each person authorised by the resolution referred to in paragraph (b) above in relation to its Relevant Documents and any related documents.	
	(d)	A copy of a resolution signed by all the holders of the issued shares in each Original Obligor (other than the Borrower) and the Manager of each Ship (other than mv’s YM Maturity and YM Mandate), approving the terms of, and the transactions contemplated by, its Relevant Documents.	
	(e)	A copy of a resolution of the board of directors of each corporate shareholder of each Original Obligor (other than the Borrower) and the Manager of each Ship (other than mv’s YM Maturity and YM Mandate), approving the terms of the resolution referred to in paragraph (d) above.	
	(f)	A certificate of the Borrower (signed by a director) confirming that borrowing or guaranteeing or securing, as appropriate, the Commitment would not cause any borrowing, guarantee, security or similar limit binding on any Original Obligor to be exceeded.	
	(g)	A copy of any power of attorney under which any person is appointed by any Original Obligor and the Manager of each Ship (other than mv’s YM Maturity and YM Mandate) to execute any of its Relevant Documents on its behalf.	
	(h)	A certificate of an authorised signatory of each relevant Original Obligor and the Manager of each Ship (other than mv’s YM Maturity and YM Mandate) certifying that each copy document relating to it specified in this Part of this Schedule is correct, complete and in full force and effect and has not been amended or superseded as at a date no earlier than the date of this Agreement and that any such resolutions or power of attorney have not been revoked.	
	(i)	A certificate of good standing for each Original Obligor and the Manager of each Ship (other than mv’s YM Maturity and YM Mandate) or other evidence that each such Original Obligor and such Manager is in good standing in its country of incorporation.	

131

2	Legal opinions	
	(a)	A legal opinion of Norton Rose Fulbright LLP, Greece addressed to the Lender, on matters of English law, substantially in the form approved by the Lender.	
	(b)	A legal opinion of the legal advisers to the Lender in England and also each jurisdiction in which an Obligor and the Manager of each Ship (other than mv’s YM Maturity and YM Mandate) is formed or (as the case may be) incorporated and/or registered, or in which an Account opened at the relevant time is established substantially in the form distributed to the Lender and approved by the Lender.	
3	Other documents and evidence	
	(a)	Evidence that any process agent referred to in clause 45.2 (Service of process) or any equivalent provision of any other Finance Document entered into on or before the first Utilisation Date, if not an Original Obligor, has accepted its appointment.	
	(b)	A copy of any other Authorisation or other document, opinion or assurance which the Lender considers to be necessary or desirable (if it has notified the Borrower accordingly) in connection with the entry into and performance of the transactions contemplated by any Finance Document or for the validity and enforceability of any Finance Document.	
	(c)	The Original Financial Statements.	
	(d)	The Fee Letters duly executed and evidence that the fees, commissions, costs and expenses then due from the Borrower pursuant to clause 12 (Fees), any Fee Letter and clause 17 (Costs and expenses) have been paid or will be paid by the first Utilisation Date.	
4	Bank Accounts	
Evidence that any Account required to be established under clause 28 (Bank accounts) has been opened and established, that any Account Security in respect of each such Account has been executed and delivered by the relevant Account Holder(s) and that any notice required to be given to an Account Bank under that Account Security has been given to it and acknowledged by it in the manner required by that Account Security and that an amount has been credited to it.

5	Charters	
The Charter and any related Charter Document for each Ship duly executed.

6	"Know your customer" information	
Such documentation and information as the Lender may reasonably request to comply with "know your customer" or similar identification procedures under all laws and regulations applicable to it.

7	Existing Indebtedness	
Evidence that the Existing Indebtedness has been repaid in full and that all Security Interests created under or in respect of the Existing Indebtedness by the Borrower or any other Obligor or Group Member or a Manager, whether over or in relation to the Ships or any other Charged Property or otherwise relevant to such Existing Indebtedness, have been discharged and any prior registration of any such Security Interest in respect of the Existing Indebtedness has been cancelled.

132

Part 2
Ship and security conditions precedent

1	Corporate documents	
	(a)	If required by the Lender and its legal advisers, a certificate of an authorised signatory of the relevant Owner certifying that each copy document relating to it specified in Part 1 of this Schedule remains correct, complete and in full force and effect as at a date no earlier than a date approved for this purpose and that any resolutions or power of attorney referred to in Part 1 of this Schedule in relation to it have not been revoked or amended.	
	(b)	If required by the Lender and its legal advisers, a certificate of an authorised signatory of each other Obligor and the Manager of each Ship (other than mv’s YM Maturity and YM Mandate) which are party to any of the Original Security Documents required to be executed at or before the first Utilisation Date, certifying that each copy document relating to it specified in Part 1 of this Schedule remains correct, complete and in full force and effect as at a date no earlier than a date approved for this purpose and that any resolutions or power of attorney referred to in Part 1 of this Schedule in relation to it have not been revoked or amended.	
2	Security	
	(a)	The Mortgage and the Deed of Covenant and/or (as applicable) the General Assignment in respect of each Ship duly executed by the relevant Owner.	
	(b)	If a Ship is subject to a Charter, the relevant Charter Assignment duly executed by the relevant Owner.	
	(c)	If applicable in respect of a Ship (other than mv’s YM Maturity and YM Mandate), a Tripartite Agreement in respect of such Ship duly executed by the relevant Owner, the relevant Charterer and the Lender.	
	(d)	A Manager's Undertaking in respect of each Ship duly executed by the Manager of each such Ship (other than the Manager of mv’s YM Maturity and YM Mandate).	
	(e)	Any Quiet Enjoyment Agreement required by the Charterer of Ship (other than mv’s YM Maturity and YM Mandate) subject to a Charter, and agreed by the Lender.	
	(f)	Duly executed notices of assignment as required by any of the above Security Documents together with evidence of their service or delivery to their addressees.	
	(g)	Evidence that the relevant Charterer in respect of mv’s YM Maturity and YM Mandate has consented to the granting of the Mortgage over each such Ship and to the assignment of the relevant Charter under the relevant Charter Assignment for each such Ship (in form satisfactory to the Lender, including by way of the acknowledgement of the notice of assignment under the relevant Charter Assignment).	
3	Delivery and registration of Ship	
In the case of each Ship, evidence that:

	(h)	it is legally and beneficially owned by the relevant Owner and permanently registered in the name of the relevant Owner free from any Security Interests (other than Security Interests created under the Finance Documents and Permitted Maritime Liens) through the relevant Registry as a ship under the laws and flag of the relevant Flag State;	
	(i)	it is classed with the relevant Classification free of all overdue requirements and recommendations of the relevant Classification Society; and	
	(j)	it is insured in the manner required by the Finance Documents.	

133

	(k)	in the case of a Ship subject to a Charter, it has been delivered, and accepted for service, under such Charter; and	
	(l)	in the case of a Ship, it is free of any charter commitment (except for its Charter) which would require approval under the Finance Documents.	
4	Mortgage registration	
Evidence that the Mortgage in respect of each of the Ships has been registered with first priority and/or preferred status against each of the Ships through the relevant Registry under the laws and flag of the relevant Flag State.

5	Legal opinions	
	(m)	A legal opinion of Norton Rose Fulbright LLP Greece addressed to the Lender on matters of English law, substantially in the form approved by the Lender.	
	(n)	A legal opinion of the legal advisers to the Lender in each jurisdiction in which an Obligor is formed or (as the case may be) incorporated and/or registered and/or which is or is to be the Flag State of a Ship, or in which an Account opened at the relevant time is established, substantially in the form approved by the Lender.	
6	Insurance	
In relation to each of the Insurances of the Ships:

	(o)	an opinion from insurance consultants appointed by the Lender on such Insurances;	
	(p)	evidence that such Insurances have been placed in accordance with clause 25 (Insurance); and	
	(q)	evidence that approved brokers, insurers and/or associations have issued or will issue letters of undertaking in favour of the Lender in an approved form in relation to such Insurances of the Ships.	
7	ISM and ISPS Code	
Copies of:

	(r)	the document of compliance issued in accordance with the ISM Code to the person who is the operator of the Ships for the purposes of that code;	
	(s)	the safety management certificate in respect of the Ships issued in accordance with the ISM Code;	
	(t)	the international ship security certificate in respect of the Ships issued under the ISPS Code;	
	(u)	if so requested by the Lender, any other certificates issued under any applicable code required to be observed by the Ships or in relation to its operation under any applicable law; and	
	(v)	the Inventory of Hazardous Material for the Ships.	
8	Value of security	
Valuations (dated not more than 15 days before the first Utilisation Date) of each Ship demonstrating their Market Values, each obtained and made in accordance with clause 26 (Minimum security value) in form and substance acceptable to the Lender at the cost of the Borrower.

134

9	Fees and expenses	
Evidence that the fees, commissions, costs and expenses then due from the Borrower pursuant to clause 12 (Fees), any Fee Letter and clause 17 (Costs and expenses) and 25.6 (Mortgagee’s insurance) have been paid or will be paid by the relevant Utilisation Date.

10	Management Agreement	
Where a manager of a Ship (other than mv’s YM Maturity and YM Mandate) has been approved in accordance with clause 23.4 (Manager), a copy, certified by an approved person to be a true and complete copy, of the agreement between the relevant Owner and the manager relating to the appointment of the manager.

11	Process agent	
Evidence that any process agent of any Obligor referred to in clause 45.2 (Service of process) or any equivalent provision of any other Finance Document entered into on or before the first Utilisation Date, if not an Obligor, has accepted its appointment.

12	Other documents	
Any other documents as may be requested by the Lender.

135

Schedule 4
Utilisation Request

From:	Danaos Corporation	
		
To:	Citibank, N.A. Jersey Branch as Lender	
		
Dated:	[⚫]	
		
Dear Sirs		

$382,500,000 Facility Agreement dated [⚫] 2022 (the Facility Agreement)

1	We refer to the Facility Agreement. This is a Utilisation Request. Terms defined in the Facility Agreement have the same meaning in this Utilisation Request unless given a different meaning in this Utilisation Request.	
2	We wish to borrow a Loan on the following terms:	
Proposed Utilisation Date:[⚫] (or, if that is not a Business Day, the next Business Day)
Amount:$[⚫]

3	We confirm that each condition specified in clause 4.4 (Further conditions precedent) of the Facility Agreement is satisfied on the date of this Utilisation Request.	
4	The purpose of this Loan is [specify purpose complying with clause 3 of the Facility Agreement] and its proceeds should be credited to [⚫].	
5	We confirm that we will use the proceeds of this Loan for our benefit and under our full responsibility and exclusively for the purposes specified in the Facility Agreement.	
6	We request that the first Interest Period for this Loan be [⚫] Month.	
7	This Utilisation Request is irrevocable.	
Yours faithfully

…………………………………………..		
authorised signatory for		
DANAOS CORPORATION		

136

Schedule 5
Form of Compliance Certificate

To:	Citibank, N.A., Jersey Branch as Lender	
		
From:	Danaos Corporation as Borrower	
		
Dated:	[⚫]	
		
Dear Sirs		

$382,500,000 Facility Agreement dated [⚫] 2022 (the Facility Agreement)

1	I/We refer to the Facility Agreement. This is a Compliance Certificate. Terms defined in the Facility Agreement have the same meaning when used in this Compliance Certificate unless given a different meaning in this Compliance Certificate.	
2	I/We confirm that at all times during and as at the end of the Measurement Period ended on [31 March] [30 June] [30 September] [31 December] [⚫]:	
	(a)	Liquidity: the Group’s Liquidity is $[⚫], calculated as shown in Appendix A and compared against a minimum required amount of $[⚫].	
	(b)	Consolidated net leverage ratio: Consolidated Net Leverage was [⚫]:1.0, calculated as shown in Appendix B and compared against a maximum required ratio of 6.50:1.0.	
	(c)	Interest Cover: Interest Cover was [⚫]:1.00, calculated as shown in Appendix C and compared against a minimum required ratio of 2.50:1.0.	
3	We confirm that the Security Value is $[⚫] calculated as shown in Appendix D, compared against a Minimum Value of $[⚫].	
4	[I/We confirm that there is no Change of Control].	
5	We confirm that no [Event of] Default is continuing.] [If this statement cannot be made, the certificate should identify any [Event of] Default that is continuing and the steps, if any, being taken to remedy it.]	
Signed by:

……………………………………………………		
[Chief Financial Officer]		
Danaos Corporation		

137

Schedule 6
Reference Rate Terms
Cost of funds as a fallback: Cost of funds will not apply as fallback

1	Definitions	
Additional Business Day means an RFR Banking Day.
Break Costs means all costs and expenses suffered or incurred by the Lender as a result of any repayment or prepayment of a Loan otherwise than on the last day of an Interest Period.
Central Bank Rate means:

	(a)	the short-term interest rate target set by the US Federal Open Market Committee as published by the Federal Reserve Bank of New York from time to time; or	
	(b)	if that target is not a single figure, the arithmetic mean of:	
	(i)	the upper bound of the short-term interest rate target range set by the US Federal Open Market Committee and published by the Federal Reserve Bank of New York; and	
	(ii)	the lower bound of that target range.	
Central Bank Rate Adjustment means, in relation to the Central Bank Rate prevailing at close of business on any RFR Banking Day, the 20 per cent. trimmed arithmetic mean (calculated by the Lender) of the Central Bank Rate Spreads for the five most immediately preceding RFR Banking Days for which the RFR is available.
Central Bank Rate Spread means, in relation to any RFR Banking Day, the difference (expressed as a percentage rate per annum) calculated by the Lender between (a) the Central Bank Rate prevailing at close of business on that RFR Banking Day and (b) the relevant Daily Rate.
Daily Rate means, in relation to any RFR Banking Day:

	(a)	the RFR for that RFR Banking Day; or	
	(b)	if the RFR is not available for that RFR Banking Day, the percentage rate per annum which is the aggregate of:	
	(i)	the Central Bank Rate for that RFR Banking Day; and	
	(ii)	the applicable Central Bank Rate Adjustment; or	
	(c)	if paragraph (b) above applies but the Central Bank Rate for that RFR Banking Day is not available, the percentage rate per annum which is the aggregate of:	
	(i)	the most recent Central Bank Rate for a day which is no more than five (5) RFR Banking Days before that RFR Banking Day; and	
	(ii)	the applicable Central Bank Rate Adjustment,	
rounded, in either case, to four decimal places and if, in either case, the relevant rate is less than zero, the Daily Rate shall be deemed to be zero.
Lookback Period means five RFR Banking Days.

138

Market Disruption Rate means, in relation to any Loan, the percentage rate per annum which is the Cumulative Compounded RFR Rate for the Interest Period of that Loan.
Relevant Market means the market for overnight cash borrowing collateralised by US Government securities.
Reporting Day means the Business Day which follows the day which is the Lookback Period prior to the last day of the Interest Period.
RFR means the secured overnight financing rate (SOFR) administered by the Federal Reserve Bank of New York (or any other person which takes over the administration of that rate) published by the Federal Reserve Bank of New York (or any other person which takes over the publication of that rate).
RFR Banking Day means any day other than:

	(a)	a Saturday or Sunday; and	
	(b)	a day on which the Securities Industry and Financial Markets Association (or any successor organisation) recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in US Government securities.	
2	Business Day Conventions	
	(a)	If any period is expressed to accrue by reference to a Month or any number of Months then, in respect of the last Month of that period:	
	(i)	subject to paragraph (iii) below, if the numerically corresponding day is not a Business Day, that period shall end on the next Business Day in that calendar month in which that period is to end if there is one, or if there is not, on the immediately preceding Business Day;	
	(ii)	if there is no numerically corresponding day in the calendar month in which that period is to end, that period shall end on the last Business Day in that calendar month; and	
	(iii)	if an Interest Period begins on the last Business Day of a calendar month, that Interest Period shall end on the last Business Day in the calendar month in which that Interest Period is to end.	
	(b)	If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).	
3	Interest Period default selections	
	(a)	The length of an Interest Period for a Loan which will apply under clause 10.1(c) if the Borrower fails to select an Interest Period, will, subject to clause 9.2 (Interest Periods overrunning Reduction Dates), be one Month.	
	(b)	The periods capable of selection as Interest Periods referred to in clause 10.1(b) are one Month or three Months (but subject to paragraph (c)).	
	(c)	The Borrower could also elect that the Interest Period could end on the same day as the current Interest Period of any other outstanding Loan at the time.	
4	Reporting Times	
The following are the Reporting Times:

139

	(a)	the deadline for the Lender to report market disruption in accordance with clause 11.1 (Market disruption) is close of business in London on the Reporting Day for a Loan (or any relevant part of it); and	
	(b)	the deadline for the Lender to report their cost of funds in accordance with clause 11.2 (Cost of funds) is close of business on the date falling one Business Day after the Reporting Day for that Loan (or any relevant part of it) (or, if earlier, on the date falling three Business Days before the date on which interest is due to be paid in respect of the relevant Interest Period).	

140

Schedule 7
Daily Non-Cumulative Compounded RFR Rate
The Daily Non-Cumulative Compounded RFR Rate for any RFR Banking Day "i" during an Interest Period is the percentage rate per annum (without rounding, to the extent reasonably practicable for the Lender performing the calculation, taking into account the capabilities of any software used for that purpose) calculated as set out below:

·	where:	
UCCDRi means the Unannualised Cumulative Compounded Daily Rate for that RFR Banking Day "i";
UCCDRi-1 means, in relation to that RFR Banking Day "i", the Unannualised Cumulative Compounded Daily Rate for the immediately preceding RFR Banking Day (if any) during that Interest Period;
dcc means 360 or, in any case where market practice in the Relevant Market is to use a different number for quoting the number of days in a year, that number;
ni means the number of calendar days from, and including, that RFR Banking Day "i" up to, but excluding, the following RFR Banking Day; and
the Unannualised Cumulative Compounded Daily Rate for any RFR Banking Day (the Cumulated RFR Banking Day) during that Interest Period is the result of the below calculation (without rounding, to the extent reasonably practicable for the Lender performing the calculation, taking into account the capabilities of any software used for that purpose):

·	where:	
ACCDR means the Annualised Cumulative Compounded Daily Rate for that Cumulated RFR Banking Day;
tni means the number of calendar days from, and including, the first day of the Cumulation Period to, but excluding, the RFR Banking Day which immediately follows the last day of the Cumulation Period;
Cumulation Period means the period from, and including, the first RFR Banking Day of that Interest Period to, and including, that Cumulated RFR Banking Day;
dcc has the meaning given to that term above; and
the Annualised Cumulative Compounded Daily Rate for that Cumulated RFR Banking Day is the percentage rate per annum (rounded to five decimal places) calculated as set out below:

141

·	where:	
d0 means the number of RFR Banking Days in the Cumulation Period;
Cumulation Period has the meaning given to that term above;
i means a series of whole numbers from one to d0, each representing the relevant RFR Banking Day in chronological order in the Cumulation Period;
DailyRatei-LP means, for any RFR Banking Day "i" in the Cumulation Period, the Daily Rate for the RFR Banking Day which is the Lookback Period prior to that RFR Banking Day "i";
ni  means, for any RFR Banking Day "i" in the Cumulation Period, the number of calendar days from, and including, that RFR Banking Day "i" up to, but excluding, the following RFR Banking Day;
dcc has the meaning given to that term above; and
tni has the meaning given to that term above.

142

Schedule 8
Cumulative Compounded RFR Rate
The "Cumulative Compounded RFR Rate" for any Interest Period is the percentage rate per annum (rounded to the same number of decimal places as is specified in the definition of "Annualised Cumulative Compounded Daily Rate" in Schedule 7 (Daily Non-Cumulative Compounded RFR Rate)) calculated as set out below:

·	where:	
d0 means the number of RFR Banking Days during the Interest Period;
i means a series of whole numbers from one to d0, each representing the relevant RFR Banking Day in chronological order during the Interest Period;
DailyRatei-LP means for any RFR Banking Day "i" during the Interest Period, the Daily Rate for the RFR Banking Day which is the Lookback Period prior to that RFR Banking Day "i";
ni means, for any RFR Banking Day "i", the number of calendar days from, and including, that RFR Banking Day "i" up to, but excluding, the following RFR Banking Day;
dcc means 360 or, in any case where market practice in the Relevant Market is to use a different number for quoting the number of days in a year, that number; and
d means the number of calendar days during that Interest Period.

143

SIGNATURES

THE BORROWER			
			
DANAOS CORPORATION	)	/s/ Maria Horaka	
By: Maria Horaka	)	Attorney-in-fact	

THE GUARANTORS

EXECUTED as a DEED	)		
by Maria Horaka	)		
for and on behalf of	)	/s/ Maria Horaka	
BOXCARRIER (NO.5) CORP.	)	Attorney-in-fact	
as Guarantor	)		
in the presence of:	)		

			
			
/s/ Serafeim Papadias			
Witness			
Name: Serafeim Papadias			
Address: Norton Rose Fulbright
Greece			
Occupation:			

			
EXECUTED as a DEED	)		
by Maria Horaka	)		
for and on behalf of	)	/s/ Maria Horaka	
MEGACARRIER (NO.5) CORP.	)	Attorney-in-fact	
as Guarantor	)		
in the presence of:	)		

			
			
/s/ Serafeim Papadias			
Witness			
Name: Serafeim Papadias			
Address: Norton Rose Fulbright
Greece			
Occupation:			

			
EXECUTED as a DEED	)		
by Maria Horaka	)		
for and on behalf of	)	/s/ Maria Horaka	
OCEANPRIZE NAVIGATION LIMITED	)	Attorney-in-fact	
as Guarantor	)		
in the presence of:	)		

144

			
			
/s/ Serafeim Papadias			
Witness			
Name: Serafeim Papadias			
Address: Norton Rose Fulbright
Greece			
Occupation:			

145

			
EXECUTED as a DEED	)		
by Maria Horaka	)		
for and on behalf of	)	/s/ Maria Horaka	
CELLCONTAINER (NO.7) CORP.	)	Attorney-in-fact	
as Guarantor	)		
in the presence of:	)		

			
/s/ Serafeim Papadias			
Witness			
Name: Serafeim Papadias			
Address: Norton Rose Fulbright
Greece			
Occupation:			

EXECUTED as a DEED	)		
by Maria Horaka	)		
for and on behalf of	)	/s/ Maria Horaka	
MEGACARRIER (NO.3) CORP.	)	Attorney-in-fact	
as Guarantor	)		
in the presence of:	)		

			
/s/ Serafeim Papadias			
Witness			
Name: Serafeim Papadias			
Address: Norton Rose Fulbright
Greece			
Occupation:			

EXECUTED as a DEED	)		
by Maria Horaka	)		
for and on behalf of	)	/s/ Maria Horaka	
BOXCARRIER (NO.2) CORP.	)	Attorney-in-fact	
as Guarantor	)		
in the presence of:	)		

			
/s/ Serafeim Papadias			
Witness			
Name: Serafeim Papadias			
Address: Norton Rose Fulbright
Greece			
Occupation:			

			
EXECUTED as a DEED	)		
by Maria Horaka	)		
for and on behalf of	)	/s/ Maria Horaka	
OCEANEW SHIPPING LIMITED	)	Attorney-in-fact	
as Guarantor	)		
in the presence of:	)		

146

			
			
/s/ Serafeim Papadias			
Witness			
Name: Serafeim Papadias			
Address: Norton Rose Fulbright
Greece			
Occupation:			

147

			
EXECUTED as a DEED	)		
by Maria Horaka	)		
for and on behalf of	)	/s/ Maria Horaka	
BOXCARRIER (NO.4) CORP.	)	Attorney-in-fact	
as Guarantor	)		
in the presence of:	)		

			
			
/s/ Serafeim Papadias			
Witness			
Name: Serafeim Papadias			
Address: Norton Rose Fulbright
Greece			
Occupation:			

			
EXECUTED as a DEED	)		
by Maria Horaka	)		
for and on behalf of	)	/s/ Maria Horaka	
EXPRESSCARRIER (NO.2) CORP.	)	Attorney-in-fact	
as Guarantor	)		
in the presence of:	)		

			
			
/s/ Serafeim Papadias			
Witness			
Name: Serafeim Papadias			
Address: Norton Rose Fulbright
Greece			
Occupation:			

			
EXECUTED as a DEED	)		
by Maria Horaka	)		
for and on behalf of	)	/s/ Maria Horaka	
CELLCONTAINER (NO.8) CORP.	)	Attorney-in-fact	
as Guarantor	)		
in the presence of:	)		

			
/s/ Serafeim Papadias			
Witness			
Name: Serafeim Papadias			
Address: Norton Rose Fulbright
Greece			
Occupation:			

148

			
EXECUTED as a DEED	)		
by Maria Horaka	)		
for and on behalf of	)	/s/ Maria Horaka	
BOXCARRIER (NO.3) CORP.	)	Attorney-in-fact	
as Guarantor	)		
in the presence of:	)		

			
/s/ Serafeim Papadias			
Witness			
Name: Serafeim Papadias			
Address: Norton Rose Fulbright
Greece			
Occupation:			

149

			
EXECUTED as a DEED	)		
by Maria Horaka	)		
for and on behalf of	)	/s/ Maria Horaka	
RAMONA MARINE COMPANY LIMITED	)	Attorney-in-fact	
as Guarantor	)		
in the presence of:	)		

			
			
/s/ Serafeim Papadias			
Witness			
Name: Serafeim Papadias			
Address: Norton Rose Fulbright
Greece			
Occupation:			

Maria Horaka			
EXECUTED as a DEED	)		
by Maria Horaka	)		
for and on behalf of	)	/s/ Maria Horaka	
EXPRESSCARRIER (NO.1) CORP.	)	Attorney-in-fact	
as Guarantor	)		
in the presence of:	)		

			
			
/s/ Serafeim Papadias			
Witness			
Name: Serafeim Papadias			
Address: Norton Rose Fulbright
Greece			
Occupation:			

			
EXECUTED as a DEED	)		
by Maria Horaka	)		
for and on behalf of	)	/s/ Maria Horaka	
KARLITA SHIPPING COMPANY LIMITED	)	Attorney-in-fact	
as Guarantor	)		
in the presence of:	)		

			
/s/ Serafeim Papadias			
Witness			
Name: Serafeim Papadias			
Address: Norton Rose Fulbright
Greece			
Occupation:			

150

			
EXECUTED as a DEED	)		
by Maria Horaka	)		
for and on behalf of	)	/s/ Maria Horaka	
MEGACARRIER (NO.4) CORP.	)	Attorney-in-fact	
as Guarantor	)		
in the presence of:	)		

			
/s/ Serafeim Papadias			
Witness			
Name: Serafeim Papadias			
Address: Norton Rose Fulbright
Greece			
Occupation:			

151

			
EXECUTED as a DEED	)		
by Maria Horaka	)		
for and on behalf of	)	/s/ Maria Horaka	
CELLCONTAINER (NO.6) CORP.	)	Attorney-in-fact	
as Guarantor	)		
in the presence of:	)		

			
			
/s/ Serafeim Papadias			
Witness			
Name: Serafeim Papadias			
Address: Norton Rose Fulbright
Greece			
Occupation:			

THE LENDER

CITIBANK, N.A., JERSEY BRANCH	)	/s/ Peter Lemoucheux	
By: Peter Lemoucheux	)	Senior Vice President	

152

Exhibit 8

Subsidiaries

Company	    	Country of Incorporation	
Actaea Company Limited	 	Liberia	
Asteria Shipping Company Limited	 	Marshall Islands	
Auckland Marine Inc.	 	Liberia	
Averto Shipping S.A.		Liberia	
Balticsea Marine Inc.	 	Liberia	
Bayview Shipping Inc.	 	Liberia	
Blacksea Marine Inc.	 	Liberia	
Blackwell Seaways Inc.	 	Liberia	
Boulevard Shiptrade S.A.	 	Marshall Islands	
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	
Boxsail (No. 1) Corp.		Liberia	
Boxsail (No. 2) 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	
Daisy Holding Corp.	 	Marshall Islands	
Danaos Management Pte. Ltd.		Singapore	
Danaos Management Support Pte. Limited		Singapore	
Expresscarrier (No. 1) Corp.	 	Liberia	
Expresscarrier (No. 2) Corp.	 	Liberia	
Foxtrot Holding Corp.	 	Marshall Islands	
Gemini Shipholdings Corporation		Marshall Islands	
Karlita Shipping Company Limited	 	Cyprus	
Kingsland International Shipping Limited		Liberia	
Leo Shipping and Trading S.A.		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	
Oceancarrier (No. 1) Corp.	 	Liberia	
Oceancarrier (No. 2) Corp.		Liberia	
Oceancarrier (No. 3) Corp.		Liberia	
Oceancarrier (No. 4) Corp.		Marshall Islands	
Oceancarrier (No. 5) Corp.		Marshall Islands	
Oceancarrier (No. 6) Corp.		Marshall Islands	
Oceancarrier (No. 7) Corp.		Marshall Islands	
Oceancarrier (No. 8) Corp.		Marshall Islands	
Oceancarrier (No. 9) Corp.		Marshall Islands	
Oceanew Shipping Limited	 	Cyprus	
Oceanprize Navigation Limited	 	Cyprus	

Ramona Marine Company Limited	 	Cyprus	
Rewarding International Shipping Inc.	 	Liberia	
Sarond Shipping Inc.	 	Marshall Islands	
Seacarriers Lines Inc.	 	Liberia	
Seacarriers Services Inc.	 	Liberia	
Sinoi Marine Ltd.		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	
Springer Shipping Co.		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	
Teushipper (No. 1) Corp.		Liberia	
Teushipper (No. 2) Corp.		Liberia	
Teushipper (No. 3) Corp.		Liberia	
Teushipper (No. 4) Corp.		Liberia	
Trindade Maritime Company	 	Marshall Islands	
Vilos Navigation Company Ltd	 	Liberia	
Wellington Marine Inc.	 	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 report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;	

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;	

4.	The Company’s other certifying 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(t) and 15d-15(t)) for the Company and have;	

	a.)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;	

	b.)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;	

	c.)	evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and	

	d.)	disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and	

5.	The Company’s other certifying 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 9, 2023		
		
/s/ Dr. John Coustas		
Dr. John Coustas		
President and Chief Executive Officer		

Exhibit 12.2

CERTIFICATIONS

I, Evangelos Chatzis, certify that:

l.	I have reviewed this annual report on Form 20-F of Danaos Corporation;	

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;	

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;	

4.	The Company’s other certifying 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 report is being prepared;	

	b.)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;	

	c.)	evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and	

	d.)	disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over fmancial 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 fmancial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report fmancial 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 9, 2023		
		
/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, 2022 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:

	l.	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 9, 2023	    		
			
		/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, 2022 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 9, 2023	    		
			
		/s/ Evangelos Chatzis	
		Evangelos Chatzis	
		Chief Financial Officer	

Exhibit 15.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement Nos. 333-169101, 333-147099, 333- 174494, 333-230106, 333-237284 and 333-255984 on Form F-3, the post-effective Amendment to Form F-1 in the Registration Statement on Form F-3 (File No. 333-226096) and Registration Statement Nos. 333-233128 and 333-138449 on Form S-8 of our reports dated March 9, 2023, relating to the consolidated financial statements of Danaos Corporation and the effectiveness of Danaos Corporation’s internal control over financial reporting appearing in this Annual Report on Form 20-F for the year ended December 31, 2022.

/s/ Deloitte Certified Public Accountants S.A.		
Athens, Greece		
March 9, 2023		

Exhibit 15.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form F-3 (No. 333-169101, No. 333-147099, No. 333-174494, No. 333-230106, No.333-237284 and No. 333-255984), the post effective Amendment to Form F-1 in the Registration Statement on Form F-3 (File No. 333-226096) and Form S-8 (No. 333-233128 and No. 333-138449) of Danaos Corporation of our report dated March 3, 2022 relating to the consolidated financial statements, which appears in this Form 20-F.

/s/ PricewaterhouseCoopers S.A.		
		
Athens, Greece		
March 9, 2023		

Exhibit 15.3

March 8, 2023
Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Commissioners:
We have read the statements made by Danaos Corporation pursuant to Item 16F(a) of Form 20-F (copy attached), which we understand will be filed with the Securities and Exchange Commission on Form 20-F of Danaos Corporation for the year ended December 31, 2022. We agree with the statements concerning our Firm contained therein.
Very truly yours,
/s/ PricewaterhouseCoopers S.A
Attachment
PricewaterhouseCoopers S.A., 260 Kifissias Avenue,
Halandri 15232, Athens, Greece
T: (30) 210 68 74 400

Previous independent registered public accounting firm
PricewaterhouseCoopers S.A. (“PwC”), the Company’s prior independent registered public accounting firm, was dismissed by the Audit Committee on May 11, 2022. The decision to change auditor was not as a result of any disagreement between the Company and PwC on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures.
The reports of PwC on the Company’s consolidated financial statements for the fiscal years ended December 31, 2020 and 2021 have contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principle.
During the fiscal years ended December 31, 2021 and 2020 and the subsequent period through May 11, 2022, there have been no disagreements with PwC on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure which, if not resolved to the satisfaction of PwC, would have caused PwC to make reference thereto in its reports on our financial statements for such years. During the fiscal years ended December 31, 2021 and 2020 and the subsequent period through May 11, 2022 there were no reportable events as the term is described in Item 16F(a)(1)(v) of Form 20-F.