UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

(Mark One)

OR

For the fiscal year ended December 31, 20092010

OR

OR

Date of event requiring this shell company report                     

For the transition period from                     to                     

Commission file number 1-32591

SEASPAN CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Republic of The Marshall Islands

(Jurisdiction of Incorporation or Organization)

Unit 2, 7th Floor, Bupa Centre

141 Connaught Road West

Hong Kong

China

(Address of Principal Executive Offices)

Sai W. Chu

Unit 2, 7th Floor, Bupa Centre

141 Connaught Road West

Hong Kong

China

Telephone: +852 (2540) 1686

Facsimile: +852 (2540) 1689

(Name, Telephone, E-mail and/or Facsimile Number and Address of Company Contact Person)

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

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

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

67,734,81168,601,240 Class A Common Shares, par value of $0.01 per share

100 Class C Common Shares, par value of $0.01 per share

200,000 Series A Preferred Shares, par value of $0.01 per share

260,000 Series B Preferred Shares, par value of $0.01 per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

    Yes  ¨    No  x

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

    Yes  ¨    No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

    Yes  ¨    No  ¨

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

Large accelerated filer  ¨    Accelerated filer  x    Non-accelerated filer  ¨

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

U.S. GAAP  x  International Financial Reporting Standards as Issued by the International Accounting Standards Board  ¨    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  x

SEASPAN CORPORATION

INDEX TO REPORT ON FORM 20-F

ii

PART I

ThisOur disclosure and analysis in this Annual Report should be read in conjunction with the consolidated financial statements and accompanying notes included in this report.

This Annual Report on Form 20-F for the year ended December 31, 2009 contains certain forward-looking statements (as such term is defined in Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act) concerning future events and our operations, performancecash flows, and financial condition,position, including, in particular, the likelihood of our success in developing and expanding our business.business, include forward-looking statements. Statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” “projects,” “forecasts,” “will,” “may,” “potential,” “should,” and similar expressions are forward-looking statements. Although these statements are based upon assumptions we believe to be reasonable based upon available information, including projections of revenues, operating margins, earnings, cash flow, working capital and capital expenditures, they are subject to risks and uncertainties that are described more fully in this Annual Report in the section titled “Risk Factors.” These forward-looking statements reflect management’s current viewsrepresent our estimates and assumptions only as of the date of this Annual Report and are not intended to give any assurance as to future results. As a result, you are cautioned not to rely on any forward-looking statements. Forward-looking statements appear in a number of places in this Annual Report. Although these statements are based upon assumptions we believe to be reasonable based upon available information, including operating margins, earnings, cash flow, working capital and capital expenditures, they are subject to risks and uncertainties. These risks and uncertainties include, but are not limited to:among others:

We expressly disclaim any obligation to time in our periodic reports.

Forward-looking statements in this Annual Report are estimates reflecting the judgmentupdate or revise any of senior management and involve known and unknown risks and uncertainties. These forward-looking statements are based upon a number of assumptions and estimates that are inherently subject to significant uncertainties and contingencies, many of which are beyond our control. Actual results may differ materially from those expressed

or implied by such forward-looking statements. Accordingly, these forward-looking statements, should be considered in lightwhether because of various important factors, including those set forth in this Annual Report under the heading “Risk Factors.”

We do not intend to revise any forward-looking statements in order to reflect anyfuture events, new information, a change in our views or expectations, or events or circumstances that may subsequently arise.otherwise. We make no prediction or statement about the performance of our common shares. You should carefully review and consider the various disclosures included in this Annual Report and in our other filings made with the Securities and Exchange Commission, or the SEC, that attempt to advise interested parties of the risks and factors that may affect our business, prospects and results of operations.securities.

Unless we otherwise specify, when used in this Annual Report, the terms “Seaspan,” the “Company,” “we,” “our” and “us” refer to Seaspan Corporation and its wholly-owned subsidiaries and, for periods before our initial public offering, our predecessor, Seaspan Container Lines Limited or SCLL.subsidiaries. References to our Manager are to Seaspan Management Services Limited and its wholly-ownedwholly owned subsidiaries, thatwhich provide us with all of our technical, administrative and strategic services. References to SSML are to Seaspan Ship Management Ltd., our Manager’s ship management affiliate. References to SCML are to Seaspan Crew Management Ltd., our Manager’s crew management affiliate.

Shipbuilders. References to Samsung are to Samsung Heavy Industries Co., Ltd. References to HHI are to Hyundai Heavy Industries Co., Ltd. References to HSHI are to Hyundai Samho Heavy Industries Co., Ltd., a subsidiary of HHI. References to Jiangsu are to Jiangsu Yangzijiang Shipbuilding Co., Ltd. References to New Jiangsu are to Jiangsu New Yangzi Shipbuilding Co., Ltd. References to Zhejiang are to Zhejiang Shipbuilding Co. Ltd. References to Odense-Lindo are to Odense-Lindo Shipyard Ltd. Samsung, HHI, HSHI, Jiangsu, New Jiangsu, Zhejiang and Odense-Lindo are commonly referred to as our shipbuilders.

Customers. References to CSCL Asia are to China Shipping Container Lines (Asia) Co., Ltd., a subsidiary of China Shipping Container Lines Co., Ltd., or CSCL. References to APM are to A.P. Møller-Mærsk A/S. References to HL USA are to Hapag-Lloyd USA, LLC, a subsidiary of Hapag-Lloyd, AG, or Hapag-Lloyd. References to COSCON are to COSCO Container Lines Co., Ltd., a subsidiary of China COSCO Holdings Company Limited. References to K-Line are to Kawasaki Kisen Kaisha Ltd. References to MOL are to Mitsui O.S.K. Lines, Ltd. References to CSAV are to Compañia Sud Americana De Vapores S.A.

We use the term “twenty foot equivalent unit,” or “TEU,” the international standard measure of containers, in describing the capacity of our containerships, which References to UASC are also commonly referred to as vessels. The following table sets forth the actual capacities of the vessels in our fleet by class and shipbuilder.

RECENT DEVELOPMENTS

Since December 31, 2009, we have accepted delivery of three containerships that we agreed to acquire: on January 8, 2010, the MOL Empire, a 5100 TEU vessel built by HHI and chartered by MOL; on March 5, 2010, the COSCO Japan, a 8500 TEU vessel built by HHI and chartered by COSCON; and, on March 5, 2010, the Guayaquil Bridge, a 2500 TEU vessel built by Jiangsu and chartered by K-Line.United Arab Shipping Company (S.A.G.).

Item 1.

Identity of Directors, Senior Management and Advisors

Not applicable.

Not applicable.

A.    Selected Financial Data

Our consolidated financial statements are prepared in accordance with United States generally accepted accounting principles, or GAAP.

		Year Ended December 31,																August 12 to December 31, 2005				January 1 to August 11, 2005(1)
		2009				2008				2007				2006
Statements of cash flows data (period ended, in thousands of dollars):
Cash flows provided by (used in):
Operating activities		$	94,576			$	124,752			$	113,168			$	71,363			$	24,115			$	19,289
Investing activities			(409,520	)			(634,782	)			(1,104,704	)			(605,652	)			(826,253	)			(20,939	)
Financing activities			312,059				523,181				1,022,443				610,798				817,856				793
Selected balance sheet data (at period end, in thousands of dollars):
Cash and cash equivalents		$	133,400			$	136,285			$	123,134			$	92,227			$	15,718			$	3,209
Current assets			146,053				141,711				130,318				96,655				18,070				22,316
Vessels			3,485,350				3,126,489				2,424,253				1,198,782				621,163				466,112
Fair value of financial instruments, asset(3)			—				—				—				10,711				4,799				—
Deferred charges			21,667				20,306				17,240				7,879				6,526				8,548
Total assets			3,664,447				3,296,872				2,576,901				1,317,216				650,558				496,976
Current liabilities (excluding current portion of long-term debt)			30,692				23,654				15,716				11,167				4,226				5,357
Current portion of long-term debt (4)			—				—				—				—				—				26,203
Long-term debt(4)			1,883,146				1,721,158				1,339,438				563,203				122,893				405,495
Due to related party			—				—				—				—				—				43,393
Fair value of financial instruments, liability(3)			280,445				414,769				135,617				15,831				—				11,552
Owner’s equity			—				—				—				—				—				4,976
Share capital			679				668				575				475				360				—
Total shareholders’ equity			1,059,566				746,360				862,326				725,015				523,439				—
Other data:
Number of vessels in operation at period end			42				35				29				23				13				10
TEU capacity at period end			187,456				158,483				143,207				108,473				63,719				50,960
Fleet utilization(5)			99.7	%			99.3	%			99.0	%			99.0	%			100.0	%			99.8	%

		Year Ended December 31,
		2010				2009				2008				2007				2006
Selected balance sheet data (at period end, in thousands of dollars):
Cash and cash equivalents		$	34,219			$	133,400			$	136,285			$	123,134			$	92,227
Current assets			46,764				146,053				141,711				130,318				96,655
Vessels(4)			4,210,872				3,485,350				3,126,489				2,424,253				1,198,782
Fair value of financial instruments, asset			—				—				—				—				10,711
Deferred charges			37,607				21,667				20,306				17,240				7,879
Other assets			81,985				11,377				8,366				5,090				3,189
Total assets			4,377,228				3,664,447				3,296,872				2,576,901				1,317,216
Current liabilities (excluding current portion of other long-term liabilities)			39,090				30,692				23,654				15,716				11,167
Current portion of other long-term liabilities			31,281				—				—				—				—
Long-term debt			2,396,771				1,883,146				1,721,158				1,339,438				563,203
Other long-term liability			512,531				410,598				390,931				223,804				—
Fair value of financial instruments, liability			407,819				280,445				414,769				135,617				15,831
Share capital			691				679				668				575				475
Total shareholders’ equity			989,736				1,059,566				746,360				862,326				725,015
Other data:
Number of vessels in operation at period end			55				42				35				29				23
TEU capacity at period end			265,300				187,456				158,483				143,207				108,473
Fleet utilization (5)			98.7	%			99.7	%			99.3	%			99.0	%			99.0	%

agreements that were designated as hedging instruments in accordance with the requirements in the accounting literature, the changes in the fair value of these interest rate swap agreements were reported in accumulated other comprehensive income. The fair value will change as market interest rates change. For designated swaps, amounts payable or receivable under the interest rate swaps are included in earnings when and where the designated interest payments are included. The ineffective portion of the interest rate swaps are recognized immediately in net income. Other interest rate swap agreements and derivative instruments that are not designated as hedging instruments are marked to market and are recorded on the balance sheet at fair value. The changes in the fair value of these instruments are recorded in earnings. On January 31, 2008, we de-designated two of our interest swaps for which we were obtaining hedge accounting. On September 30, 2008, we elected to prospectively de-designate all 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 of our interest rate swap agreements and the swaption agreement are marked to market subsequent to this date and the changes in the fair value of these instruments are recorded in earnings.

(4)	Vessel amounts include the net book value of vessels in operation and deposits on vessels under construction.

B.    Capitalization and Indebtedness

Not applicable.

C.    Reasons for the Offer and Use of Proceeds

Not applicable.

D.    Risk Factors

Some of the following risks relate principally to the industry in which we operate and to our business in general. Other risks relate principally to the securities market and to ownership of our common shares. The occurrence of any of the events described in this section could significantly and negatively affect our business, financial condition, operating results and ability to pay dividends or cash available for distributionsredeem our Series C Preferred Shares, or the trading price of our common shares.

Risks Inherent in Our Business

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

Our policy since our initial public offering has been toWe will pay quarterly dividends.dividends on our shares from funds legally available for such purpose when, as and if declared by our board of directors. We may not however, have sufficient cash available each quarter to pay dividends in the future.dividends. In addition, we may have insufficient cash available to redeem our Series C Preferred Shares. The amount of dividends we can pay or the amount we can use to redeem the Series C Preferred Shares depends upon the amount of cash we generate from our operations, which may fluctuate based on, among other things:

In addition, before we can determine the amount of cash available for the payment of dividends or to redeem our Series C Preferred Shares, we must pay fees to our Manager for the technical, commercial, administrative

and strategic services. We are also required to reimburse our Manager for certain extraordinary costs and capital expenditures as provided for in our management agreements. For information about fees we pay to our Manager, please read “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Our Management Agreements.”

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

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

In addition, before we can determine the amount of cash available for the payment of dividends, we must pay fees to our Manager for the technical management of our vessels, and a monthly administrative services fee not to exceed a total of $6,000 per month and reimburse our Manager for all reasonable costs in providing us with administrative and strategic services. We will also be required to reimburse our Manager for certain extraordinary costs and capital expenditures as provided for in our management agreements.

The amount of cash we generate from our operations may differ materially from our net income or loss for the period, which will be affected by non-cash items. We may incur other expenses or liabilities that would reduce or eliminate the cash available for distribution as dividends. Our credit facilities and lease arrangements also restrictfacilities on our declaration and payment ofability to declare or pay dividends if an event of default has occurred and is continuing or if the payment of the dividend would result in an event of default. In addition,default;

The amount of cash we generate from our operations may differ materially from our net income or loss for the period, which will be affected by non-cash items, and any such dividend may be discontinued at the discretion of our board of directors. In addition, if our quarterly cash dividend exceeds $0.485 per common share, our Manager will sharedirectors in incremental dividends through the incentive shares based upon specified sharing ratios, which will reduce the cash available for dividends on our common shares.its discretion may elect not to declare any dividends. As a result of these and the other factors mentioned above, we may pay dividends during periods when we record losses and may not pay dividends during periods when we record net income. On January 22, 2010, we announced a quarterly cash dividend of $0.10 per common share for the three months ended December 31, 2009.

The continuation of the recent state of global financial markets and economic conditions may adversely impact our ability to obtain financing on acceptable terms which may hinder or prevent us from meeting our future capital needs.

Global financial markets and economic conditions have been, and may continue to be, disrupted and volatile. The debt and equity capital markets have been exceedingly distressed. These issues, along with significant write-offs in the financial services sector, the re-pricing of credit risk and the continuation of weak economic conditions have made, and will likely continue to make, it difficult to obtain financing.

In particular, the cost of raising money in the equity capital markets has increased substantially while the availability of funds from those markets has diminished significantly. Although we have debt financing in place, after taking into consideration the $200 million proceeds from the sale of our Series A 12% Cumulative Preferred Shares, par value $0.01 per share, or our Series A Preferred Shares, we will require in the range of approximately $180 to $240 million in common or other equity capital and or other forms of capital to fund the remaining portion of the purchase price of the vessels we have contracted to purchase. We must raise this capital starting in approximately the fourth quarter of 2010 or first quarter of 2011 and ending in approximately second quarter of 2012. These amounts are based on a quarterly dividend of $0.10 per common share. The continuation of the recent state of global financial markets and current economic conditions might adversely impact our ability to issue additional equity at prices which will not be dilutive to our existing shareholders or preclude us from issuing equity at all.

Also, as a result of concerns about the stability of financial markets generally and the solvency of counterparties specifically, the cost of obtaining money from the credit markets has increased as many lenders have increased interest rates, enacted tighter lending standards, refused to refinance existing debt at all or on terms similar to current debt and reduced, and in some cases ceased, to provide funding to borrowers. Although we have committed credit facilities in place to satisfy our short, medium and long-term debt needs and have not experienced any difficulties drawing on those facilities to date, we may be unable to obtain adequate funding under our current credit facilities in the future because our lenders may be unwilling or unable to meet their funding obligations or we may not be able to obtain funds at the interest rate agreed in our credit facilities due to market disruption events or increased costs.

In addition, these economic conditions could limit our ability to borrow funds under one of our credit facilities by causing a reduction in the market values of our vessels. While our credit facilities do not contain traditional vessel market value covenants that require us to repay our facilities solely because the market value of our vessels declines below a specified level, a decline in the market value of certain vessels has impaired our ability to draw the full amount available under our $1.3 Billion Credit Facility, which contains a loan to market value ratio requirement that must be met before we can borrow funds under that facility. We are able to draw down funds under that facility so long as the loan to market value ratio, being the ratio of the outstanding principal amount of the loan immediately after a drawing to the market value of the vessels that are provided as collateral under that facility, calculated on a without charter basis does not exceed 70%. As of December 31, 2009, we have drawn approximately $1.0 billion of our $1.3 Billion Credit Facility. However, based on a valuation of the vessels financed under the $1.3 Billion Credit Facility that was obtained in December of 2009 (which was on a without charter basis as required by our credit facility), we are currently unable to borrow the remaining approximately $267 million available under this facility.

Due to these factors, we cannot be certain that financing will be available if needed and to the extent required, on acceptable terms. 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 or we may be unable to enhance our existing business, complete acquisitions or otherwise take advantage of business opportunities or respond to competitive pressures, any of which could have a material adverse effect on our results of operations, financial condition and ability to pay dividends.

The business and activity levels of many of our charterers, shipbuilders and related parties and their respective ability to fulfill their obligations under agreements with us, including payments for the charter of our vessels, may be impacted by the recent deterioration in the credit markets.

All of our vessels that are currently chartered and those that we will acquire will be chartered to customers under long-term time charters. Payments to us under those charters are and will be our sole source of operating cash flow. Many of our charterers finance their activities through cash flow from operations, the incurrence of debt or the issuance of equity. Recently, there has been a significant decline in the credit markets and the availability of credit. Additionally, the equity value of many of our charterers has substantially declined. The combination of a reduction of cash flow resulting from declines in world trade, a reduction in borrowing bases under reserve based credit facilities and the lack of availability of debt or equity financing may result in a significant reduction in the ability of our charterers to make charter payments to us.

During 2009, we received requests from certain of our charterers to re-negotiate the terms under certain of our time charters. We have not and do not currently intend to renegotiate hire rates or other material terms of our charter parties. If any of our charterers are unable to make charter payments to us in the future or if worsening economic conditions force us to accept material changes to the terms of our charters, our results of operations, financial condition and ability to pay dividends may be materially and adversely affected. If any of our charterers are in default of their respective charter parties, we may not be able to recharter the relevant vessels at rates equal to the rates in our current charters or at all.

Similarly, the shipbuilders with whom we have contracted may be affected by the instability of the financial markets and other market conditions, including with respect to the fluctuating price of commodities and currency exchange rates. As well, the refund guarantors under our shipbuilding contracts, which are banks, financial institutions and other credit agencies, may also be affected by financial market conditions in the same manner as our lenders and, as a result, may be unable or unwilling to meet their obligations under their refund guarantees due to their own financial condition. If our shipbuilders or refund guarantors are unable or unwilling to meet their obligations to us, this will impact our acquisition of vessels and may materially and adversely affect our operations and our obligations under our credit facilities.

Our ability to obtain additional debt financing for future acquisitions of vessels may be dependent ondepend upon the performance of our then existing charters and the creditworthiness of our charterers.customers.

The actual or perceived credit quality of our charterers,customers, and any defaults by them, may materially affect our ability to obtain the additional capital resources thatfunds we willmay require to purchase additional vessels in the future or may significantly increase our costs of obtaining such capital.funds. Our inability to obtain additional financing at all or at attractive costs, may materially affectif at all, could harm our business, results of operations, financial condition and ability to pay dividends.

We will be required to make substantial capital expenditures to complete the acquisition of our fleet thatnewbuilding containerships and any additional vessels we have contracted to purchase over approximatelyacquire in the next two years,future, which may causeresult in increased financial leverage, dilution of our equity holders’ interests or our decreased ability to pay dividends on our shares or to be diminished,redeem our financial leverage to increase, or our common shares to be diluted.Series C Preferred Shares.

We have agreed to acquire an additional 2611 newbuilding containerships over approximately the next 30 months.with scheduled delivery dates through April 2012. We have entered into contracts to purchase 21seven of those containerships and aslease financing arrangements, under which we are the lessee, for four vessels. As of December 31, 2009,March 25, 2011, the total purchase price of the 21seven vessels remaining to be paid was estimated to be approximately $2.6 billion.$701.8 million. Our obligation to purchase the 21seven vessels is not conditional upon our ability to obtain financing for such purchases. We will lease the remaining five of the 26 vessels from Peony Leasing Limited, or Peony, an affiliate of Bank of Scotland plc and Lloyds Banking Group. Under the terms of our lease financing arrangements with Peony,for the remaining four vessels, we have the ability tomay purchase the five vessels from Peonyat the end of their respective lease terms at a price approximately equal to their fair market value at the end of their relevantsuch lease terms.terms for two of the vessels and at a fixed price per vessel for the remaining two vessels. Although we currently intend to purchase all fivefour vessels, we cannot assure you that we willmay not be able to purchase them on terms favorable to us or at all.

We intend to significantly expand the size of our fleet beyond our existing contracted newbuilding program. The acquisition of additional newbuilding or existing vessels or businesses will require significant additional capital expenditures.

To fund the remaining portion of theseother and otherfuture capital expenditures, we willintend to use cash from operations, incur borrowings, or raise capital through the sale of additional securities.securities, enter into other sale-leaseback or financing arrangements, or use a combination of these methods. Use of cash from operations may

reduce cash available for dividends to our shareholders. Our ability to obtain bank financing or to access the capital markets for future offerings may be limited by our financial condition at the time of any such financing or offering and the covenants in our existing debt agreements, as well as by adverse market conditions resulting from, among other things, poor economic conditions and contingencies and uncertainties that are beyond our control.

To fund the remaining portion of the price of the vessels we have contracted to purchase, we need to raise in the range of approximately $180 million to $240 million in common or other equity and or other forms of capital beginning no later than approximately the fourth quarter of 2010 or first quarter of 2011 and ending in approximately the second quarter of 2012. This amount of capital is based on a quarterly dividend of $0.10 per common share. The amount of capital required decreased from a range of approximately $500 million to $600 million because of the decision of our board of directors to reduce the quarterly dividend from $0.475 to $0.10 per share as announced on April 28, 2009. Due to the uncertainties associated with the global recession and the capital markets, our board of directors cannot determine how long this reduction will be in effect. The reduction will enable Seaspan to retain an approximate additional amount of $100 million per year that can be redeployed to fund its newbuilding program.

The continuation of the recent state of global financial markets and economic conditions might adversely impact our ability to issue additional equity at prices which will not be dilutive to our existing shareholders or preclude us from issuing equity at all. In addition, our credit facilities contain “gearing” covenants, which prohibit us from incurring total borrowings in an amount greater than 65% of our total assets. Also, our $1.3 Billion Credit Agreement contains a loan to market value ratio requirement that must be met before we can borrow additional funds under that facility. Based on a valuation obtained in December of 2009 (which was on a without charter basis as required by our credit facility), the market decline in the value of the vessels securing that credit facility has impacted our ability to draw under this facility. We are currently unable to borrow the remaining approximately $267 million available under the facility. Further, even if we are not in breach of the gearing covenants and the market value of our vessels has not declined, lenders under our credit facilities may be unable to meet their funding obligations or may refuse to do so because of poor market conditions or because of their own financial condition. As a result, we may not be able to borrow funds with which to complete the acquisition of the remaining vessels in our contracted fleet or to further expand the size of our fleet.

Our failure to obtain the funds for necessary future capital expenditures would likely have a material adverse effect on our business, results of operations, financial condition and ability to pay dividends. Even if we are successful in obtaining the necessary funds, the terms of such financings could limit our ability to pay dividends to our shareholders. In addition, incurringIncurring additional debt may significantly increase our interest expense and financial leverage, and issuing additional equity securities may result in significant shareholder dilution, which, subject to the relative priority of our equity securities, could negatively affect our ability to pay dividends. Our ability to obtain or access bank financing or to access the capital markets for future debt or equity financings may be limited by our financial condition at the time of any such financing or offering and would increase the aggregate amountcovenants in our credit facilities, as well as by adverse market conditions. Our failure to obtain funds for our capital expenditures at attractive rates, if at all, could harm our business, results of cash required to distribute a consistent level of dividends from earnings to our shareholders, which could have a material adverse effect on ouroperations, financial condition and ability to pay dividends.

Over the long-term,long term, we will be required to make substantial capital expenditures to preserve the operating capacity of our fleet, which could result in a reduction or elimination ofnegatively affect our ability to pay dividends.dividends on our shares or redeem our Series C Preferred Shares.

We must make substantial capital expenditures over the long-term to preserve the operating capacity of our fleet. If, however, we do not retain funds in our business in amounts necessary to preserve the operating capacity of our capital base,fleet, over the long-term we will not be able to continue to refinance our indebtedness or maintain our payment of dividends. At some time in the future, we will likely need to retain additional funds, on an annual basis, to provide reasonable assurance of maintaining the operating capacity of our capital basefleet over the long-term. There are a number ofseveral factors that will not be determinable for a number of years, but that will be considered bywhich our board of directors will consider in future decisions regardingabout the amount of funds to be retained in our business to preserve our capital base. UnlessTo the extent we are successful in making accretive acquisitions with outside sourcesuse or retain available funds to make capital expenditures to preserve the operating capacity of financing that add a material amount to our cash available for retention in our business or unless our board of directors concludes that we will likely be able to recharter our fleet, whenthere will be less funds available to pay dividends on our current charters expire at rates higher than the rates inshares or to redeem our current charters, our

board of directors will likely determine at some future date to reduce, or possibly eliminate, our dividend in order to be able to have reasonable assurance that it is retaining the funds necessary to preserve our capital base. When we refer to accretive acquisitions, we mean acquisitions that will increase our distributable cash flow per share.Series C Preferred Shares.

Unless we set aside reserves or are able to borrow funds for vessel replacement at the end of a vessel’s useful life, our revenue will decline.

Unless we maintain reserves andor are able to borrow or otherwise raise funds for vessel replacement, we will be unable to replace the vessels in our fleet upon the expiration of their remaining useful lives. Our cash flows and income are dependent ondepend upon the revenues earned by the chartering of our vessels to customers. If we are unable to replace the vessels in our fleet upon the expiration of their useful lives, our results of operations, financial condition and ability to pay dividends will be materially and adversely affected.harmed. Additionally, any reserves set aside for vessel replacement would not be available for dividends.dividends or to redeem our Series C Preferred Shares.

We cannot assure you that we will be able to borrow amounts under our credit facilities, and restrictiveRestrictive covenants in our credit facilities and lease arrangementsfacilities impose financial and other restrictions on us, includingwhich may limit, among other things, our ability to borrow funds under such facilities and our ability to pay dividends.

Prior to each drawdownTo borrow funds under our credit facilities, each of our credit facilities requires us,we must, among other things, to meet specified financial ratios and other requirements. Specifically,covenants. For example, we are prohibited under eachcertain of our existing credit facilities from incurring total borrowings in an amount greater than 65% of our total assets. Total borrowings and total assets are terms defined in our credit facilities and differ from those used in preparing our consolidated financial statements, which are prepared in accordance with GAAP. In addition, although our credit facilities do not contain traditional vessel market value covenants that require us to repay our facilities solely because the market value of our vessels declines below a certain level, our $1.3 Billion Credit Agreementbillion credit agreement contains a loan to market valueloan-to-market-value ratio requirement that must be met before we can borrow funds under that facility. The lastBased on a semi-annual valuation we obtained was in December of 20092010 (which was on a without charterwithout-charter basis as required by our credit facility), and the decline

in lightthe market value of the vessels as a result of the recent economic environment, vessel valuations inslowdown continues to limit our ability to borrow under the marketplace have declined significantly since 2008. As a result, wefacility. We are currently unable to borrow the remaining approximately $267 million otherwise available under the $1.3 Billion Credit Facility. facility. In addition, under this facility, there are certain circumstances that could require us to prepay a portion of the outstanding loan or provide additional acceptable security in order to meet the borrowing base ratio requirement. One of these circumstances includes the termination or expiration of a specified percentage of charters if we do not find suitable charterers or negotiate charter terms acceptable to our lenders. During 2011, we could trigger the borrowing base ratio requirement if, upon the expiration of certain charters for four of our vessels, we are unable to extend or replace the charters for at least three such vessels with charters acceptable to our lenders.

To the extent that we are not able to satisfy the requirements in our credit facilities, we may not be able to draw downborrow additional funds under our creditthe facilities, and to the extentif we exceed theare not in compliance with specified financial ratios andor other requirements, we willmay be in breach of our credit facilities.the facilities, which could require us to repay outstanding amounts. We may also be required to prepay amounts borrowed under our credit facilities if we, or in certain circumstances, our charterers,customers, experience a change of control.

Our credit facilities and lease arrangements alsofacilities impose operating and financial restrictions on us and require us to comply with certain financial covenants. These restrictions and covenants limit our ability to, among other things:

Therefore,Accordingly, we may need to seek permissionconsent from our lenders or lessors in order to engage in some corporate actions. The interests of our lenders or lessors may be different from ours, and we cannot guarantee that we willmay be ableunable to obtain our lenders’ or lessors’ consent when and if needed. If we do not comply with the restrictions and covenants in our credit agreements or lease arrangements,agreements, our results of operations, financial condition and ability to pay dividends will be materially adversely affected.harmed.

We cannot assure you that we willmay not be able to timely repay or be able to refinance any future indebtedness incurred under our credit facilities.

We intend to substantially finance our future fleet expansion program partially with secured indebtedness drawn under our credit facilitiesexisting or future credit or lease facilities. We have significant repayment obligations under our credit and lease facilities, both prior to and at maturity. The earliest maturity date of our current credit facilities is 2015, and while we intend to refinance amounts drawn under our credit facilitiesexisting or future credit facilities with replacement facilities, the net proceeds of future debt or equity offerings, we cannot assure you that we will be able to do so at an interest rate or on terms that are acceptable to us or at all.a combination thereof. If we are not able to refinance these amounts with the net proceeds of debt or equity offeringsoutstanding indebtedness at an interest rate or on terms acceptable to us, or at all, we will have to dedicate a significant portion of our cash flow from operations to pay the principal and interest of thisrepay such indebtedness. If we are not able to satisfy these obligations (whether or not refinanced) under our credit or lease facilities with cash flow from operations, we may have to undertakeseek alternative financing plans. The actualplans, which may not be available on terms attractive to us or perceived credit quality of our charterers, any defaults by them, and the market value of our fleet, among other things, may materially affect our ability to obtain alternative financing arrangements. In addition, debt service payments under our credit facilities, future credit facilities, future issuance of debt securities or alternative financing arrangements may limit funds otherwise available for working capital, capital expenditures and other purposes.at all. If we

are unable to meet our debt obligations, or if we otherwise default under our credit facilities, future credit facilities, future debt securities or an alternative financing arrangements, our lenders could declare the debt, together with accrued interest and fees,all outstanding indebtedness to be immediately due and payable and foreclose on the vessels insecuring such indebtedness. The market value of our fleet,vessels, which could result influctuates with market conditions, will also affect our ability to obtain financing or refinancing as vessels serve as collateral for loans. Lower vessel values at the accelerationtime of other indebtedness thatany financing or refinancing may reduce the amounts of funds we may have at such time and the commencement of similar foreclosure proceedings by other lenders.borrow.

Our substantial debt levels and vessel lease obligations may limit our flexibility in obtaining additional financing and in pursuing other business opportunities.

FollowingAs of March 25, 2011, we had approximately $2.4 billion outstanding on our credit facilities and lease obligations of approximately $556.1 million. These amounts outstanding under our credit facilities and our lease obligations will increase further following the completion of our acquisition of the remaining 2611 newbuilding containerships that we have contracted to purchase or lease, as the case may be, we will have substantial indebtedness.and lease. Our level of debt and vessel lease obligations could have important consequences to us, including the following:

Our ability to service our debt and vessel lease obligations 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. If our operating results are not sufficient to service our current or future indebtedness and vessel lease obligations, we will be forced to take actions such as reducing dividends, reducing or delaying our business activities, acquisitions, investments or capital expenditures, selling assets, restructuring or refinancing our debt, or seeking additional equity capital or bankruptcy protection. We may not be able to effect any of these remedies on satisfactory terms, or at all.

Future disruptions in global financial markets and economic conditions or changes in lending practices may harm our ability to obtain financing on acceptable terms, which could hinder or prevent us from meeting our capital needs.

Global financial markets and economic conditions in recent years were disrupted and volatile. The debt and equity capital markets were exceedingly distressed, and it was difficult generally to obtain financing and the cost of any available financing increased significantly. If global financial markets and economic conditions significantly deteriorate in the future, we may be unable to obtain adequate funding under our current credit facilities because our lenders may be unwilling or unable to meet their funding obligations or we may not be able to obtain funds at the interest rate agreed in our credit facilities due to market disruption events or increased costs. Such deterioration may also cause lenders to be unwilling to provide us with new financing to the extent needed to fund our ongoing operations and growth. In addition, in recent years, the number of lenders for shipping companies has decreased and ship-funding lenders have generally lowered their loan-to-value ratios and shortened loan terms and accelerated repayment schedules. These factors may hinder our ability to access financing.

If financing or refinancing is not available when needed, or is available only on unfavorable terms, we may be unable to meet our obligations as they come due or we may be unable to implement our growth strategy, complete acquisitions or otherwise take advantage of business opportunities or respond to competitive pressures, any of which could harm our business, results of operations, financial condition and ability to pay dividends.

The business and activity levels of many of our customers, shipbuilders and related parties and their respective abilities to fulfill their obligations under agreements with us, including payments for the charter of our vessels, may be hindered by any deterioration in the credit markets.

Our current vessels are, and those that we will acquire will be, primarily chartered to customers under long-term time charters. Payments to us under those charters are and will be our sole source of operating cash flow. Many of our customers finance their activities through cash flow from operations, the incurrence of debt or the issuance of equity. During the recent financial and economic crises, there occurred a significant decline in the credit markets and the availability of credit. Additionally, the equity value of many of our customers substantially declined during that period. The combination of a reduction of cash flow resulting from declines in world trade, a reduction in borrowing bases under reserve-based credit facilities and the lack of availability of debt or equity financing potentially reduced the ability of our customers to make charter payments to us. Any recurrence of the significant financial and economic disruption of the last few years could result in similar effects on our customers or other third parties with which we do business, which in turn could harm our business, results of operations, financial condition and ability to pay dividends.

Similarly, the shipbuilders with whom we have contracted may be affected by future instability of the financial markets and other market conditions, including with respect to the fluctuating price of commodities and currency exchange rates. In addition, the refund guarantors under our shipbuilding contracts (which are banks, financial institutions and other credit agencies that guarantee, under certain circumstances, the repayment of installment payments we make to the shipbuilders), may also be negatively affected by adverse financial market conditions in the same manner as our lenders and, as a result, be unable or unwilling to meet their obligations to us due to their own financial condition. If our shipbuilders or refund guarantors are unable or unwilling to meet their obligations to us, this will harm our fleet expansion and may harm our business, results of operations, financial condition and ability to pay dividends.

We will be paying all costs for the 21seven newbuilding vessels that we have contracted to purchase and have incurred borrowings to fund, in part, through installment payments under the relevant shipbuilding contracts. If any of these vessels are not delivered as contemplated, we may be required to refund all or a portion of the amounts we borrowed.

The construction period currently required for a newbuilding containership similar to those we have ordered is approximately one year. For each of the newbuilding vessels that we have agreed to purchase, we are required to make certain payment installments, each ranging from approximately 5% to 20% of the total contracted purchase price for each vessel, as well as a final installment payment, generally equal to approximately 50% of the total vessel purchase price. We have entered into long-term credit facilities to partially fund the construction of these vessels. We are required to make these payments to the shipbuilder and to pay the debt service cost under the credit facilities in advance of receiving any revenue under the time charters for the vessels, which commences following delivery of the vessels.

If a shipbuilder is unable to deliver a vessel or if we reject a vessel, we may in certain circumstances be required to pay back a portionor one of the outstanding balance of the relevant credit facility. Further, if a chartererour customers rejects a vessel, we may in certain circumstances be required to pay backrepay a portion of the outstanding balance of the relevant credit facility. Such an outcome could have a material adverse effect onharm our results of operations, financial condition and ability to pay dividends.

We are relying on Peony, subject to the aggregate cap of $400.0 million agreed in the leases,lessors under finance leasing arrangements to pay all costsan aggregate amount of up to approximately $450 million of the construction cost for the five 4500 TEUfour newbuilding vessels that we have agreed to lease from Peony upon delivery of the vessels. If Peonya lessor fails to make suchits payments under these arrangements, we may havebe required to finance the construction of these vessels before they begin generating revenue.

WeIn 2007 we entered into vessel construction contracts in November and December 2007 to purchase five 4500 TEU newbuilding vessels from Samsung. We subsequently novated thoseSamsung, one of which was delivered in October 2010 and two of which were delivered in January 2011. Also in

2007, we entered into vessel construction contracts to Peony in connection with the lease financingpurchase two 13100 TEU vessels from HHI. The construction costs of the 4500 TEU vessels. Pursuant to the terms of the novation and lease agreements for thefour vessels Peony is responsible for all costs relating to the construction and delivery of the five 4500 TEU vessels that we have contracted to lease, but have not yet been delivered up to a maximum aggregate amountare financed through three sale-leaseback transactions. If the lessor under any of $400.0 million.

If Peonythese agreements becomes insolvent or otherwise fails to continue to make construction payments for the 4500 TEUany of these four vessels, Samsung has the right to further novate the contracts back to us and we may need to finance the containershipssuch vessel through alternative arrangements before they beginit begins operating and generating revenue,revenue. In such a case, we cannot assure you that we would be able to enter into alternative arrangements on terms favorable to us, if at all, which could adversely affectharm our results of operations, financial condition or ability to pay dividends. Please read “Information on the Company—“Item 5. Operating and Financial Review and Prospects—B. Business Overview—Liquidity and Capital Resources—Financing Facilities—Our $400.0 Million UK Lease Facility” in this Annual Report.Facilities.”

We currently derive the substantial majority of our revenue from six charterers,a limited number of customers, and the loss of certain or a combinationany of charterers could result in a significant loss ofsuch customers would harm our revenue and cash flow.

Customers for our current operating fleet are: CSCL Asia, HL USA, COSCON, APM, MOL and CSAV.

The following table shows the number of vessels in our currentoperating fleet that are chartered to our six chartererseight current customers and the percentage of our total containership revenue attributable to each chartererthe charters for the year ended December 31, 2009:2010:

All of our vessels are chartered to charterers under long-term time charters, and these charterers’customer payments to us are our primary source of operating cash flow. At any given time in the future, cash reserves of the charterers may be diminished or exhausted, and we cannot assure you that the charterers will be able to make charter payments to us in a timely manner or at all. The loss of any of these charters or any material decrease in payments thereunder could materially and adversely affectharm our business, results of operations, financial condition and ability to pay dividends.

Under some circumstances, we could lose a charterertime charter or payments under the benefits of a time charter if:

Any recurrence of the significant financial and economic disruption of the last few years could result in our customers being unable to make charter payments to us in the future or seeking to amend the terms of our charters. Any such event could harm our business, results of operations, financial condition and ability to pay dividends.

Our growth depends upon continued growth in demand for containerships.

Our growth will generally depend on continued growth in world and regional demand for containership chartering. The ocean-going shipping container industry is both cyclical and volatile in terms of charter hire rates and profitability. Containership charter rates peaked in 2005 and generally stayed strong until the middle of 2008,

when the effects of the recent economic crisis began to affect global container trade. Rates fell significantly in 2009 into early 2010 to levels below those in 2001. Rates rose throughout 2010, albeit to levels below historical averages. Rates have continued to rise in 2011.In the future, rates may moderate or continue to fluctuate. Fluctuations in containership charter rates result from changes in the supply and demand for vessel capacity and changes in the supply and demand for the major products internationally transported by containerships. The factors affecting the supply and demand for containerships and supply and demand for products shipped in containers are outside of our control, and the nature, timing and degree of changes in industry conditions are unpredictable.

Factors that influence demand for containership capacity include, among others:

Factors that influence the supply of containership capacity include, among others:

Our ability to recharter our containerships upon the expiration or termination of their current time charters and the charter rates payable under any renewal or replacement charters will depend upon, among other things, the then current state of the containership market. The existing time charters for ten of our vessels will expire (excluding options to extend) before 2013. If charter rates are low when our existing time charters expire, we may be required to recharter our vessels at reduced rates or even possibly a rate whereby we incur a loss, which would harm our operating results. The same issues will exist if we acquire additional vessels and seek to charter them under long-term time charter arrangements as part of our growth strategy.

Forty of the vessels in our current or contracted fleet are or will be chartered to Chinese customers. The legal system in China is not fully developed and has inherent uncertainties that could limit the legal protections available to us, and the geopolitical risks associated with chartering vessels to Chinese customers could have a material adverse impact onharm our results of operations, financial condition and ability to pay dividends.

Twenty-twoAs of March 25, 2011, 22 of the 6869 vessels in our current or contracted fleet are or will be chartered to CSCL Asia, and 18 vessels are or will be chartered to COSCON. CSCL Asia and COSCON are subsidiaries of Chinese

companies. Our vessels that are chartered to Chinese customers are subject to various risks as a result of uncertainties in Chinese law, including (i)(a) the risk of loss of revenues, property or equipment as a result of expropriation, nationalization, changes in laws, exchange controls, war, insurrection, civil unrest, strikes or other political risks and (ii)(b) being subject to foreign laws and legal systems and the exclusive jurisdiction of Chinese courts and tribunals.

The Chinese legal system is based on written statutes and their legal interpretation by the standing Committee of the National People’s Congress. Prior court decisions may be cited for reference but have limited precedential value. Since 1979, the Chinese government has been developing a comprehensive system of laws and regulations dealing with economic matters such as foreign investment, corporate organization and governance, commerce, taxation and trade. However, because these laws and regulations are relatively new, and because of the limited volume of published cases and their non-binding nature, interpretation and enforcement of these laws and regulations involve uncertainties.

If we are required to commence legal proceedings against a bank, a charterercustomer or a charter guarantor based in China with respect to the provisions of a credit facility, a time charter or a time charter guarantee, we may have difficulties in enforcing any judgment obtained in such proceedings in China. Similarly, our shipbuilders based in China provide warranties against certain defects for the vessels that they will construct for us and refund guarantees from a Chinese financial institution for the installment payments that we will make to them. Although the shipbuilding contracts and refund guarantees are governed by English law, if we are required to commence legal proceedings against these shipbuilders with respect to the provisions of the shipbuilding contracts or the warranties, or against the refund guarantor, for a refund of our installment payments, we may have difficulties enforcing in China any judgment obtained in such proceeding in China.proceeding.

A decrease in the level of China’s export of goods or an increase in trade protectionism will have a material adverse impact onharm our charterers’customers’ business and, in turn, affectharm our business, results of operations and ability to pay dividends.

China exports considerably more goods than it imports. Most of our charterers’ container shippingcustomers’ containership business revenue is derived from the shipment of goods from the Asia Pacific region, primarily China, to various overseas export markets, including the United States and Europe. Any reduction in or hindrance to the output of China-based exporters could have a material adverse effect onnegatively affect the growth rate of China’s exports and on our charterers’customers’ business. For instance, the government of China has recently implemented economic policies aimed at increasing domestic consumption of Chinese-made goods. This may have the effect of reducingreduce the supply of goods available for export and may, in turn, result in a decrease of demand for shipping.in shipping demand.

Our international operations expose us to the risk that increased trade protectionism will adversely affectharm our business. If the global economic crisis continues,challenges exist, governments may turn to trade barriers to protect their domestic industries against foreign imports, thereby depressing the demand for shipping.shipping demand. Specifically, increasing trade protectionism in the markets that our chartererscustomers serve has caused and may continue to cause an increase in: (i)in (a) the

cost of goods exported from China, (ii)(b) the length of time required to deliver goods from China and (iii)(c) the risks associated with exporting goods from China. Such increases may also affect the quantity of goods to be shipped, shipping time schedules, voyage costs and other associated costs.

Any increased trade barriers or restrictions on trade, especially trade with China and Asia, would have an adverse impact onharm our charterers’customers’ business, operating results and financial condition and could thereby affect their ability to make timely charter hire payments to us and to renew and increase the number of their time charters with us. This could have an adverse impact onharm our results of operations, financial condition and ability to pay dividends.

The continuation of recentFuture adverse economic conditions throughout the world,globally, and especially in the Asia Pacific region, the European Union or the United States, could have a material adverse effect onharm our business, financial condition, and results of operations.operations and ability to pay dividends.

The global economy recently experienced disruption and volatility following adverse changes in global capital markets. The deterioration in the global economy has caused, and any renewed deterioration may continue to cause, a

decrease in worldwide demand for certain goods and thus, shipping. Continuing economicEconomic instability in the future could have a material adverse effect onharm our business, financial condition, results of operations and ability to pay dividends.

In particular, because a significant number of the port calls made by our vessels involves the loading or discharging of containerships in ports in the Asia Pacific region, continued economic turmoil in that region especially in Japan and China, may exacerbate the effect on the recentof any economic slowdown on us. In recent years, China has been one of the world’s fastest growing economies in terms of gross domestic product, which has increased the demand for shipping. Like the rest of the world, however, China and Japan have recently experienced slowed or negative economic growth and this trend could continue. Moreover, the recent economic slowdown in the United States, the European Union and other Asian countries may further adversely affect demand for shipping.return. Our financial condition,business, results of operations, financial condition and ability to pay dividends will likely be materially and adversely affectedharmed by a continuing or worseningany significant economic downturn in any of these countries.the Asia Pacific region, including China, or in the European Union or the United States.

Our growth and our ability to recharter our vessels depends on our ability to expand relationships with existing chartererscustomers and obtaindevelop relationships with new charterers,customers, for which we will face substantial competition.

One of our principal objectives isWe intend to acquire additional containerships over the mid to long-term and as market conditions allow in conjunction with entering primarily into additional long-term, fixed-rate time charters for such ships.ships, and to recharter our existing vessels following the expiration of their current long-term time charters to the extent we retain those vessels in our fleet. The existing time charters for ten of our vessels will expire (excluding options to extend) before 2013. The charterer has exercised its option to extend for two of these vessels. For nine other vessels, the charterer may elect to terminate the charters with two years’ prior written notice upon payment of a termination fee. The process of obtaining new long-term time charters is highly competitive and generally involves an intensive screening process and competitive bids, and often extends for several months. Container shippingContainership charters are awarded based upon a variety of factors relating to the vessel operator, including:including, among others:

We expect substantial competitionCompetition for providing new containership servicecontainerships for chartering purposes comes from a number of experienced shipping companies, including direct competition from other independent charter owners and indirect competition from state-sponsored and other major entities and major shipping companies. Manywith their own fleets. Some of theseour competitors have significantly greater financial resources than we do and can therefore operate larger fleets and may be able to

offer better charter rates. An increasing number of marine transportation companies have entered the containership sector, including many with strong reputations and extensive resources and experience in the marine transportation industry. This increased competition may cause greater price competition for time charters. In addition, the recent deterioration in the global economy has caused and may continue to cause a decrease in demand for shipping. As a result of this decreased demand, containership owners may face increased competition to secure time charters. As a result of these factors, we may be unable to expand our relationships with existing customers or obtainto develop relationships with new customers on a profitable basis, if at all, which would have a material adverse effect onharm our business, results of operations, financial condition and ability to pay dividends.

If a more active short-term or spot container shippingcontainership market develops, we may have more difficulty entering into long-term, fixed-rate time charters and our existing customers may begin to pressure us to reduce our charter rates.

One of our principal strategies is to enter into long-term, fixed-rate time charters. As more vessels become available for the spot or short-term market, we may have difficulty entering into additional long-term, fixed-rate time charters for our vessels due to the increased supply of vessels and possibly cheaperlower rates in the spot market and, asmarket. As a result, our cash flow may be subject to instability in the long-term.long term. A more active short-term or spot market may require us to enter into charters based on changing market prices, as opposed to contracts based on a fixed-rate,fixed rate, which could result in a decrease in our cash flow in periods when the market price for container shippingcontainerships is depressed or insufficient funds are available to cover our financing costs for related vessels. In addition, the development of an active short-term or spot container shippingcontainership market could affect rates under our existing time charters as our current customers may begin to pressure us to reduce our rates.

We may be unable to make or realize expected benefits from acquisitions or investments, and implementing our growth strategy through acquisitions of existing businesses or vessels or investments in other containership businesses may harm our business, results of operations, financial condition and ability to pay dividends.

Our growth strategy includes selectively acquiring new containerships, existing containerships, containership-related assets and containership business as market conditions allow. We may also invest in other containership businesses. Factors that may limit the number of acquisition or investment opportunities in the containership industry include the ability to access capital to fund such transactions, the overall economic environment and the status of global trade and the ability to secure long-term, fixed-rate charters.

Any acquisition of or investment in a vessel or business may not be profitable to us at or after the time we acquire or make it and may not generate cash flow sufficient to justify our investment. In addition, our acquisition growth strategy exposes us to risks that may harm our business, financial condition and operating results, including risks that we may:

Our four 4800 TEU vessels were acquired secondhand and we may acquire other existing vessels. The purchase of existing, secondhand vessels has inherent risks that are not present when purchasing newbuilding vessels. Unlike newbuildings, existing containerships typically do not carry warranties as to their condition. While we would inspect existing containerships prior to purchase, such an inspection would normally not provide us with as much knowledge of a containership’s condition as we would possess if it had been built for us and operated by us during its life. Repairs and maintenance costs for existing vessels are difficult to predict and may be substantially higher than for vessels we have operated since they were built. These costs could harm our business, operating results, financial condition and ability to pay dividends.

Our ability to grow may be reduced by the introduction of new accounting rules for leasing.

International and U.S. accounting standard-setting organizations have proposed the elimination of operating leases. The proposals are expected to be finalized in 2011 and implemented in 2013 or later. If the proposals are enacted, they would have the effect of bringing most off-balance sheet leases onto a lessee’s balance sheet as liabilities. This proposed change could affect our customers and potential customers and may cause them to breach certain financial covenants. This may make them less likely to enter into time charters for our containerships, which could reduce our growth opportunities.

Under the time charters for certainsome of our vessels, if a vessel is off-hire for an extended period, the charterercustomer has a right to terminate the charter agreement for that vessel.

Pursuant toUnder most of our time charter agreements, if a vessel is not available for service, or off hire,off-hire, for an extended period, the charterercustomer has a right to terminate the charter agreement for that vessel. If a time charter is terminated early, we may be unable to re-deploy the related vessel on terms as favorable to us.us, if at all. In the worst case, we may not receive any revenuesrevenue from that vessel, but may be required to continue to pay financing costs for the vessel and expenses necessary to maintain the vessel in proper operating condition. Please see “Informationread “Item 4. Information on the Company—B. Business Overview—Time Charters.”

Risks inherent in the operation of ocean-going vessels could affectharm our business and reputation, which could adversely affect our results of operations, financial condition and ability to pay dividends.reputation.

The operation of ocean-going vessels carries inherent risks. These risks include the possibility of:

Such occurrences could result in death or injury to persons, loss of property or environmental damage, delays in the delivery of cargo, loss of revenue 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 revenue, which could result in reduction in the market price of our securities and materially affect our results of operations, business condition and ability to pay dividends. The involvement of our vessels in an environmental disaster maycould harm our reputation as a safe and reliable vessel owner and operator. Any of these circumstances or events could harm our business, results of operations, financial condition and ability to pay dividends.

Acts of piracy on ocean-going vessels have recently increased in frequency, which could adversely affectharm our business.

Piracy is an inherent risk in the operation of ocean-going vessels and has historically affected vessels trading in regions of the world, such asincluding, among other areas, the South China Sea and in the Gulf of Aden off the coast of Somalia. Throughout 2008 and 2009, theThe frequency of piracy incidents against commercial shipping vessels has increased significantly in recent years, particularly in the Gulf of Aden off the coast of Somalia.Aden. We may not be adequately insured to cover losses from these incidents, which could have a material adverse effect onharm our results of operations, financial condition and ability to pay dividends. In addition, crew costs, including due to employing onboard security guards, could increase in such circumstances. Any of these events, or the loss of use of a vessel due to piracy, may materially adversely affectharm our charterers,customers, impairing their ability to make payments to us under our charters.

Terrorist attacks and international hostilities could affectharm our results of operations, financial condition and ability to pay dividends.

Terrorist attacks such as the attacks on the United States on September 11, 2001, and the continuing response of the United States to these attacks, as well as the threat of future terrorist attacks, continue to cause uncertainty in the world financial marketsmarkets. Conflicts in Afghanistan and may affectother nations and tensions between North and South Korea (where many of our results of operations, financial condition and ability to pay dividends. The continuing conflicts in Iraq and Afghanistanshipbuilders are located) may lead to additional acts of terrorism, regional conflict and other armed conflict around the world, which may contribute to further economic instability in the global financial markets.markets or in regions where our customers do business or, in the case of South Korea, affect our access to new vessels. These uncertainties or events could also adversely affectharm our business, results of operations and financial condition, including our ability to obtain additional financing on terms acceptable to us or at all.

Terroristall, and our ability to pay dividends. In addition, terrorist attacks targeted at sea vessels such as the October 2002 attack in Yemen on theVLCC Limburg, a ship not related to us, may in the future also negatively affect our operations and financial condition and directly impactaffect 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. HostilitiesAny hostilities in South Korea could constitute a force majeure event under our contracts with Samsung, HHI and HSHI and could impactnegatively affect the construction of our newbuildings or result in theirthe shipyards’ inability to perform under the contracts. In addition, future hostilities or other political instability in regions where our vessels trade could affect our trade patterns and adversely affectharm our business, operations results, financial condition and performance.ability to pay dividends.

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.

We maintain insurance for our fleet against risks commonly insured against by vessel owners and operators. Our insurance includes hull and machinery insurance, war risks insurance and protection and indemnity insurance (which includes environmental damage and pollution insurance). We can give no assurance that we willmay not be adequately insured against all risks or thatand our insurers willmay not pay a particular claim. Even if our insurance coverage is adequate to cover our losses,any vessel loss, we may not be able to timely obtain timely a replacement vessel in the event of a loss. Under the terms of ourvessel. Our credit facilities and lease agreements we will be subject to restrictions on therestrict our use of any proceeds we may receive from claims under our insurance policies. Furthermore,In addition, 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 supplementary or additional calls, or premiums, in amounts based not only on our own claim records but also the claim records of all other members of the protection and indemnity associations, as an industry group, through which we receive indemnity insurance coverage for statutory, contractual and tort liability, due to the sharing and reinsurance arrangements stated in the insurance rules. Our insurance policies also contain deductibles, limitations and exclusions which, although we believe are standard in the shipping industry, may nevertheless directly or indirectly increase our costs.

In addition, we do not carry loss-of-hire insurance, which covers the loss of revenue during extended vessel off-hire periods, such as those that occur during an unscheduled dry-docking due to damage to the vessel from accidents. Accordingly, any loss of a vessel or extended vessel off-hire, due to an accident or otherwise, could have a material adverse effect onharm our business, results of operations, financial condition and ability to pay dividends.

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

International container shippingcontainership traffic is subject to security and customs inspection and related procedures or inspection procedures, in countries of origin, destination and trans-shipment points. These inspection proceduresinspections 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.customers.

Since the events of September 11, 2001, U.S. and Canadian authorities have increased container inspection rates. 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.

It is unclear what changes, if any, to the existing inspection procedures will ultimately be proposed or implemented, or how any such changes will affect the industry. It is possible that suchSuch changes couldmay impose additional financial and legal obligations including additional responsibility for inspecting and recording the contents of containers. Changes to the inspection 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 procedures or future proposalsinspection procedures may not be fully recoverable from customers through higher rates or security surcharges.

Governments Any of these effects could requisition our containerships during a period of war or emergency, resulting in loss of earnings.

The government of a ship’s registry could requisition for title or seize our containerships. 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 containerships may negatively impact our revenue.

Our growth depends upon continued growth in demand for containerships, and the recent global economic slowdown may impede our ability to continue to grow our business.

Our articles of incorporation limitharm our business, to the chartering or rechartering of containerships to othersoperating results and any other lawful act or activity customarily conducted in conjunction with the chartering or rechartering of containerships to others, although our business purpose may be modified by our board of directors subject to the approval of the holders of a majority of our Series A Preferred Shares and, for as long as the management agreements with our Manager are in effect, the approval of the holders of our incentive shares. Our growth will generally depend on continued growth in world and regional demand for chartering marine container shipping, and the recent global economic slowdown may impede our ability to continue to grow our business.

The ocean-going shipping container industry is both cyclical and volatile in terms of charter hire rates and profitability. Containership charter rates peaked in 2005 and generally stayed strong until the middle of 2008, when the effects of the recent economic crisis began to affect global container trade. Rates have fallen significantly and are now estimated to be lower than late 2001 levels, with the possibility for further pressure

through at least 2010. In the future, rates may continue to decline. Fluctuations in charter rates result from changes in the supply and demand for ship capacity and changes in the supply and demand for the major products internationally transported by containerships. The factors affecting the supply and demand for containerships and supply and demand for products shipped in containers are outside of our control, and the nature, timing and degree of changes in industry conditions are unpredictable.

The factors that influence demand for containership capacity include:

The factors that influence the supply of containership capacity include:

Our ability to recharter our containerships upon the expiration or termination of their current time charters and the charter rates payable under any renewal or replacement charters will depend upon, among other things, the then current state of the containership market. If the containership market is in a period of depression when our ships’ charters expire, we may be forced to recharter our ships at reduced rates or even possibly a rate whereby we incur a loss, which may reduce our earnings or make our earnings volatile. The same issues will exist if we acquire additional vessels and attempt to subject them to a long-term time charter arrangement as part of our acquisition and financing plan.financial results.

An over-supply of containership capacity may lead to reductions in charter hire rates and profitability.

While the size of the containership orderbook has declined over the last 12 months, newbuilding containerships with an aggregate capacity of 4.84.0 million TEUs, representing approximately 35%28% of the total fleet capacity as of December 31, 2009,March 1, 2011, were under construction.construction as of that date. The size of the orderbook is large relative to

historical levels and will result in the increase in the size of the world containership fleet over the next few years. An over-supply of containership capacity, combined with astability or any decline in the demand for containerships, may result in a further reduction of charter hire rates. If such a reduction occurs when we seek to charter newbuilding vessels, our growth opportunities may be diminished. If such a reduction occurs upon the expiration or termination of our containerships’ current time charters, we may only be able to recharter our containerships for reduced rates or unprofitable rates or we may not be able to recharter our containerships at all.

Over time, containership values may fluctuate substantially and, if these values are lower at a time when we are attempting to dispose of a containership, we may incur a loss or we may not be able to dispose of such containership at all.

Containership values can fluctuate substantially over time due to a number of different factors, including:including, among others:

If a charter terminates, we may be unable to re-deploy the vessel at attractive rates and, rather than continue to incur costs to maintain and finance the vessel, may seek to dispose of it. Our inability to dispose of the containership at a reasonable price, or at all, could result in a loss on its sale and adversely affectharm our results of operations, financial condition and ability to pay dividends.

Maritime claimants could arrest our vessels, which could interrupt our cash flow.

Crew members, suppliers of goods and services to a vessel, shippers of cargo and other parties may be entitled to a maritime lien against that vessel for unsatisfied debts, claims or damages. In many jurisdictions, a maritime lienholder may enforce its lien by arresting a vessel through foreclosure proceedings. The arrest or attachment of one or moreage of our 4800 TEU secondhand vessels could interrupt our cash flow and require us to pay large sums of funds 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.

Thegeneral aging of our fleet may result in increased operating costs in the future, which could adversely affectharm our earnings.operating results.

In general, the cost of maintaining a vessel in good operating condition increases with the age of the vessel. AsOur fleet includes four 4800 TEU secondhand vessels that had an average age of approximately 22 years as of March 25, 2011. For these vessels, and as the rest of our fleet ages, and to the extent we acquire any older existing vessels, we will incur increased costs. Oldercosts as older vessels are typically more costly to maintain than more recently constructednewer vessels. CargoIn addition, cargo insurance rates increase with the age of a vessel, making older vessels less desirable to charterers.customers. Governmental regulations and safety or other equipment standards related to the age of vessels may

also require expenditures for alterations, or the addition of new equipment, to ourolder vessels and may restrict the type of activities in which ourthese vessels may engage. Increased costs or restrictions on the operation of our older vessels may prevent us from operating them profitably during the remainder of their useful lives and may harm our business, operating results, financial condition and ability to pay dividends.

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

Our business and the operationsoperation of our containerships are materially affected by environmental regulation in the form of international conventions, national, state and local laws and regulations in force in the jurisdictions in

which our containerships 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, water discharges and ballast water management. Because such conventions, laws and regulations are often revised, we cannot predict the ultimate cost or effect of complying with such requirements or the impacteffect thereof on the resale price or useful life of our containerships. Additional conventions, laws and regulations may be adopted that could limit our ability to do business or increase the cost of our doing business, and which may materially adversely affectharm our operations. We are required by various governmentalbusiness, operating results, financial condition and quasi-governmental agenciesability 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 oil spills, and our compliance with these requirements can be costly.pay dividends.

Environmental requirements can also affect the resale value or useful lives of our vessels, require a reduction in cargo capacity, ship modifications or operational changes or restrictions, lead to decreased availability of insurance coverage for environmental matters or result in substantial penalties, fines or other sanctions, including 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, in the event thatif there is a release of petroleum or other hazardous materials from our vessels or otherwise in connection with our operations. We could also become subject to personal injury or property damage claims relating to the release of hazardous materials 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 containerships is also affected by the requirements set forth in the International Maritime Organization’s International Management Code for the Safe Operation of Ships and Pollution Prevention, or the ISM Code. The ISM Code requires shipowners and bareboat charterers to develop and maintain an extensive “Safety Management System” that includes the adoption of a safety and environmental protection policy setting forth instructions and procedures for safe operation and describing procedures for dealing with emergencies. Failure to comply with the ISM 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 addition, in complying with existing environmental laws and regulations and those that may be adopted, we may incur significant costs in meeting new maintenance and inspection requirements and new restrictions on air emissions from our containerships, in developing contingency arrangements for potential spills and in obtaining insurance coverage. Government regulation of vessels, particularly in the areas of safety and environmental requirements, can be expected to become stricter in the future and require us to incur significant capital expenditures on our vessels to keep them in compliance, or even to scrap or sell certain vessels altogether. Substantial violations of applicable requirements or a catastrophic release of bunker fuel from one of our containerships could have a material adverse impact onharm our business, operating results, financial condition and results of operations.ability to pay dividends.

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

The hull and machinery of every commercial vessel must be classed by a classification society authorized by its country of registry. The classification society certifies that a vessel is safe and seaworthy in accordance with the applicable rules and regulations of the country of registry of the vessel and the Safety of Life at Sea Convention.

All of our currently operating vessels have been awarded certification under the ISM Code and we expect that each of the vessels to be delivered in the future will be awarded certification under the ISM Code upon delivery.

A vessel must undergo annual surveys, intermediate surveys and special surveys.surveys to maintain classification society certification. In lieu of a special survey, a vessel’s machinery may be on a continuous survey cycle under which the machinery would beis surveyed

periodically over a five-year period. Each of the operating vessels in our fleet is on a special survey cycle for hull inspection and a continuous survey cycle for machinery inspection. These vessels have qualified within their respective classification societies for dry-docking once every five years for inspection of the underwater parts of such vessel.

If any vessel does not maintain its class and/or fails any annual survey, intermediate survey or special survey, the vessel will be unable to trade between ports and will be unemployable and we could be in violation of certain covenants in our loan agreementscredit facilities and our lease agreements for the 4500 TEU vessels.agreements. This could negatively impactharm our business, results of operations, financial condition and ability to pay dividends.

Delays in deliveries of our newly builtnewbuilding containerships could harm our business and operating results.

We are currently under contract to purchase 21seven and lease fivefour additional newbuilding containerships, which are scheduled to be delivered at various times over approximately the next 30 months.through April 2012. These vessels are being built by Jiangsu, New Jiangsu, HHI, HSHI and Samsung (individually, the “Shipbuilder” and collectively, the “Shipbuilders”).shipyards. The delivery of these vessels, or any other newbuildings we may order, could be delayed, which would delay our receipt of revenue under the time charters for the containerships and, therefore adversely affectif the delay is prolonged, could permit our customers to terminate the newbuilding time charter. Any of such events could harm our results of operations, financial condition and ability to pay dividends.

The delivery of the newbuildings could be delayed because of:

In addition, each of the shipbuilding contracts for the additional 2611 newbuilding vessels containcontains “force majeure” provisions whereby the occurrence of certain events could delay delivery or possibly result in termination of the contract. If delivery of a containership is materially delayed or if a shipbuilding contract is terminated, it could adversely affectharm our results of operations, financial condition and ability to pay dividends.

Due to our lack of diversification, adverse developments in our containership transportation business could have an adverse effect onharm our results of operations, financial condition and ability to pay dividends.

Our articles of incorporation currently limit our business to the chartering or rechartering of containerships to others and other related activities, unless otherwise approved by our board or directors, the holders of a majority of our Series A Preferred Shares and, for as long as the management agreements with our Manager are in effect, the approval of the holders of our Class C common shares.

We rely exclusively on the cash flow generated from our charters that operate in the containership transportation business. Due to our lack of diversification, an adverse development in the container shippingcontainership industry may have amore significantly greater impact onharm our financial condition, results of operations, financial condition and ability to pay dividends than if we maintained more diverse assets or lines of business.

The age of our 4800 TEU secondhand vessels will result in increased operating costs, which could adversely affect our results of operations, financial condition or ability to pay dividends.

In general, the cost of maintaining a vessel in good operating condition increases with the age of the vessel. Our 4800 TEU secondhand vessels have an average age of approximately 21 years as of December 31, 2009. Older vessels are typically more costly to maintain than more recently constructed vessels. Cargo insurance rates also increase with the age of a vessel, making older vessels less desirable to charterers. Governmental regulations, including environmental regulations, safety or other equipment standards related to the age of vessels may require expenditures for alterations, or the addition of new equipment to these 4800 TEU secondhand vessels and may restrict the type of activities in which these vessels may engage. The increased costs associated with these vessels may prevent us from operating them profitably during the remainder of their useful lives and may adversely affect our results of operations, financial condition and ability to pay dividends.

Our charter revenue from the four 4800 TEU secondhand vessels will decrease if APM exercises its options to extend its charters beyond the initial charter period of five years, and if APM does not exercise its options to extend, we may not be able to recharter these vessels at favorable rates or at all.

We purchased theour four 4800 TEU secondhand vessels from APM in 2006. Simultaneously with the delivery of the four 4800 TEU vessels, we entered into five-year charter agreements for each of these vessels with APM at

a daily hire rate of $23,450. Upon the expiration of the initial five-year time charter term for each of the four 4800 TEU vessels in 2011, APM will have two consecutive one-year options to charter each vessel at $22,400 and $21,400 per day, respectively, and a final two-year option to charter each vessel at $20,400 per day. Our Manager will operate the four 4800 TEU vessels purchased from APM for a fixed fee of $7,848 per day through December 31, 2011. The daily fixed fee thereafter will be subject to renegotiation every three years. If APM exercises its options, our charter revenue from the four 4800 TEU secondhand vessels will decrease during the option years. In addition, the 4800 TEU vessels are approximately 2122 years old, which is relatively old for containerships. If APM does not exercise its options to extend these time charters, the age of these vessels may prevent us from rechartering them at rates favorable to us or at all. If we are unable to recharter our 4800 TEU vessels, we may attempt to sell them. The age of the 4800 TEU vessels may prevent us from being able to sell them at a profit or at all.

EachBecause each existing and newbuilding vessel in our contracted fleet is built or will be built in accordance with standard designs and uniform in all material respect to all other vessels in its TEU class, thus any material design defect in one vessellikely will likely affect all of our other vessels in such class.

Each existing and newbuilding vessel in our fleet is built or will be built in accordance with standard designs and uniform in all material respects to all other vessels in its class. As a result, any latent design defect discovered in one of our vessels will likely affect all of our other vessels in that class. Any disruptions in the operation of our vessels resulting from these defects could adversely affectharm our receipt of revenue under time charters for the vessels affected.business, operating results, financial condition and ability to pay dividends.

There aremay be greater than normal operational risks with respect to theour 9600 TEU vessels that we have purchased.vessels.

The two 9600 TEU vessels that we have purchased are some of the first vessels of this type to be built. AlthoughThere is one other company before us has built, serviced orthat operated similar vessels built by Samsung, and there are unknown and possiblymay exist greater than normal operational risks associated with these vessels. Problems with operation ofAny operational risks arising from these vessels could be encountered, which would adversely affect our reputation, the receipt of revenue under time charters for or the operating cost of these vessels, as well asand their future resale value.

There are greater than normal construction, delivery and operational risks with respect to theour 13100 TEU newbuilding vessels and any newbuilding New Panamax 10000 TEU vessels that we have agreed to purchase.may order.

The eight 13100 TEU newbuilding vessels that we have purchasedare under construction are some of the first vessels of this type to be built. In addition, we have entered into a letter of intent to order a significant number of New Panamax 10000 TEU vessels. If this order is completed, these will be the first vessels constructed using this new design and the first vessels constructed of this size at the particular shipyard. As such, there are unknown and possiblymay exist greater than normal construction, delivery and operational risks associated

with these vessels. Deliveries of these vessels could be delayed and problems with operation of these vessels could be encountered, either of which wouldcould adversely affect our reputation, the receipt of revenue under time charters for or the operating cost of these vessels, as well asand their future resale value.

Increased competitiontechnological innovation in technological innovationcompeting vessels could reduce our charter hire income and the value of our vessels.

The charter hire rates and the value and operational life of a vessel are determined by a number of factors, including the vessel’s efficiency, operational flexibility and physical life. Efficiency includes speed, fuel economy and the ability to be loaded and unloaded quickly. 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 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 we receive for our vessels once their initial charters are terminatedend and the resale value of our vessels. As a result, our operating results and financial condition could be harmed.

Maritime claimants could arrest our vessels, which could interrupt our cash availableflow.

Crew members, suppliers of goods and services to a vessel, shippers of cargo and other parties may be entitled to a maritime lien against the applicable vessel for unsatisfied debts, claims or damages. In many jurisdictions, a maritime lienholder may enforce its lien by arresting a vessel through foreclosure proceedings. In addition, in some jurisdictions, such as South Africa, under the service“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 debt obligationsships. The arrest or attachment of one or more of our vessels could interrupt our business and cash flow and require us to pay significant amounts to have the paymentarrest lifted.

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

The government of a ship’s registry could be adversely affected.requisition for title or seize our containerships. 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 containerships could harm our business, operating results, financial condition and ability to pay dividends.

We depend on our Manager to operate our business, and if our Manager fails to satisfactorily perform its management services, our business, results of operations, financial condition and ability to pay dividends may be harmed.

We were incorporated in May 2005, and we do not currently have any employees. Pursuant to our management agreements, our Manager and certain of its affiliates will provide us with certainall of our officersemployees (other than our chief executive officer) and with all of our services, including technical, commercial, administrative and strategic services (including vessel maintenance, crewing, purchasing, shipyard supervision, insurance, assistance with regulatory compliance and financial services). Our operational success and our ability to grow will depend significantly upon our Manager’s satisfactory performance of these services. Our business will be harmed if our Manager fails to perform these services satisfactorily. In addition, if any of the management agreements were to be terminated or if their terms were to be altered,amended, our business could be adversely affected asharmed if we maycould not be able to immediately replace suchtimely find adequate replacement services, or even if replacement services are immediately available, the terms offered may be less favorable than the ones currently offered by our Manager.

Our ability to compete for and to enter into new charters and expand our relationships with our charterers will depend largely oncustomers depends upon 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:to, among other things:

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

As we expand our business or if our Manager provides services to third parties, our Manager may need to improve its operating and financial systems, and expand ourits commercial and technical management staff, and it will need to recruit suitable employees and crew for our vessels.

Since our initial public offering in 2005, we have increased the size of our existing and contracted fleet to 68, which is approximately triple the size of our contracted fleet at the time of our initial public offering.from 23 to 69 vessels. Our Manager’s

current operating and financial systems may not be adequate if we further expand the size of our fleet or if our Manager provides services to third parties and attempts to improve those systems may be ineffective. In March 2011, our Manager agreed to provide technical, commercial and certain administrative services for vessels to Greater China Intermodal Investments LLC, an investment vehicle, or the Vehicle, and to affiliates of Dennis R. Washington for vessels that they may acquire. Please read “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Agreements Related to Our Investment in Carlyle Containership-Focused Investment Vehicle—Greater China Intermodal Investments LLC Agreement—Services Agreements.” In addition, if we expand our fleet, or as our Manager provides services to third parties, our Manager will need to recruit suitable additional administrative and management personnel. We cannot guarantee that ourOur Manager willmay not be able to continue to hire suitable employees as we expand our fleet. In the event ofin such circumstances. If there exists a shortage of experienced labor or if our Manager encounters business or financial difficulties, our Manager may not be able to adequately staff our vessels. If we expand our fleet, or our as Manager provides services to third parties and our Manager is unable to grow its financial and operating systems or to recruit suitable employees, our business, results of operations, financial condition and customer relationshipsability to pay dividends may be adversely affected.harmed.

The fixed fees that we pay our Manager for its technical management of our ships have increased since our initial public offering and may continue to increase over time.increase. Additional increases in our technical management or other existing fees, wouldor the introduction of new fees, could significantly increase our operating costs and could have a material adverse effect onharm our results of operations, financial condition and ability to pay dividends.

Under the management agreements for all our vessels, we currently pay our Manager a fixed fee for its technical management of such vessels. The fixed fees that we pay our Manager for itsthe technical management of our fleetvessels. These fixed fees have increased and may continue to increase in the future. Pursuant to theour management agreements, the current technical fee structure is effective until December 31, 2011, at which time we will need to renegotiate the fee structure. Based on the technical management fees and thereafter, weadditional fees under the management agreement between our Manager and the Vehicle, and disclosure by other public containership companies and third-party management companies, the owners of our Manager are requiredproposing increases to renegotiateexisting fees and the inclusion of additional new fees every three years. If we andunder our Manager are unable to agree on new fees, the management agreements, require that an arbitrator determines a fairwhich they believe reflect current market fee.practice. Any increase in thesethe technical management fees willwe pay our Manager and any additional new fees could be substantial and would increase our operating costs and could have a material adverse effect onimpact our results of operations, financial condition and ability to pay dividends. In addition, we are in discussions with our Manager about potentially acquiring all or a significant portion of our Manager, and any increases or anticipated increases in the fee arrangements under the management agreements could result in an increase to the purchase price of our Manager. Please read “Item 5. Operating and Financial Review and Prospects—A. General—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Potential Transactions—Potential Acquisition of Seaspan Management Services Limited and Change in Management Fees.”

Our Manager and its affiliates have conflicts of interest and limited fiduciary and contractual duties, which may permit them to favor their own interests to your detriment and ours.

Conflicts of interest may arise between our Manager and its affiliates, on the one hand, and us and holders of our securities, on the other hand. As a result of these conflicts, our Manager may favor its own interests and the interests of its affiliates over the interests of the holders of our securities. These conflicts include, among others, the following situations:

these agreements may have resulted in prices and other terms that are less favorable to us than terms we might have obtained in arm’s-length negotiations with unaffiliated third parties for similar services;

Even if our board of directors or our shareholders are dissatisfied with our Manager, there are limited circumstances under which the management agreements governing the management of our vessels can be terminated by us. On the other hand, our Manager has substantial rights to terminate the management agreements and, under certain circumstances, could receive very substantial sums in connection with such termination.

Under the management agreements governing our vessels, our Manager currently has the right after five years from our initial public offering to terminate the management agreements on twelve12 months’ notice, although the covenant limiting our Manager’s ability to compete with us continues for two years following such termination.termination, and we can elect for our Manager to continue to provide services to us for such two-year period as long as the Manager continues to be in the business of providing services to third parties for similar types of vessels. Our Manager also has the right to terminate the management agreements after a dispute resolution if we have materially breached any of the management agreements, in which case none of the covenants would continue to apply to our Manager.

The management agreements will each terminate upon the sale of substantially all of our assets to a third party, upon our liquidation or after any change of control of our company occurs. If the management agreements are terminatedterminate as a result of an asset sale, our liquidation or change of control, then our Manager may be paid the fair market value of the incentive shares as determined by an appraisal process. Any such payment could be substantial.

In addition, our rights to terminate the management agreements are limited. Even if we are not satisfied with the Manager’s efforts in managing our business, unless our Manager materially breaches one of the agreements, we may not be able to terminate any of the management agreements until 2020. This early termination right requires a2020, and only with the approval of two-thirds approval of our independent directors, anddirectors. Even if we elect to do so or if we elect to terminate the management agreements then or at the end of their initial terms in 2025 or a subsequent renewal term, our Manager will continue to receive dividends on the incentive shares for a five-year period from the date of termination.termination, if available.

Our Manager could receive substantial sums based on its ownership of the incentive shares if our quarterly dividends to our shareholders are increased, reducing the amount of cash that would otherwise have been available for increased dividends to our shareholders.

Our Manager shares in incremental dividends, based on specified sharing ratios, on its incentive shares if and to the extent that the available cash from operating surplus paid by us exceeds specified target dividend levels. Because these incentive dividends are taken from the total pool of dividends payable to holders of common shares, such dividends will reduce the amount of cash which would otherwise have been available to increase the amount to

be paid as dividends to our shareholders. Please read “Information on the Company—“Item 7. Major Shareholders and Related Party Transactions—B. Business Overview—Related Party Transactions—Our Management Agreements—Compensation of Our Manager.”

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 depends 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 generally available. As a result, an investor in our securities might have little advance warning of problems affecting our Manager, even though these problems could have a material adverse effect on us.harm our business, operating results, financial condition and ability to pay dividends. As part of our reporting obligations as a public company, we disclose information regarding our Manager that has a material impact on us to the extent that we become aware of such information.

Our Manager will engage in other businesses and may compete with us.

Pursuant to an omnibus agreement entered into in connection with our initial public offering, our Manager, Seaspan Marine Corporation (formerly known as Seaspan International Ltd.), or Seaspan International,SIL, and Norsk Pacific Steamship Company Limited, or Norsk, generally agreed to, and agreed to cause their controlled affiliates (which does not include us), not to engage in the business of chartering or rechartering containerships to others during the term of our Initial Management Agreement (as defined below in “Information on the

Company—management agreement with our Manager. Please read “Item 7. Major Shareholders and Related Party Transactions—B. Business Overview—Related Party Transactions—Our Management Agreements.”) The omnibus agreement, however, contains significant exceptions that may allow these entities to compete with us. For instance, in certain circumstances these entities are permitted to acquire and operate containerships to the extent that such containership assets were part of an acquired business, provided that (i)(a) a majority of the fair market value of the total assets of the acquired business is not attributable to the containership business and (ii)(b) such entity has offered to sell to us the containership assets of the acquired business. In addition, in March 2011, in connection with our participation in the Vehicle, we amended the omnibus agreement to permit our Manager and the other parties to the agreement to provide certain technical, commercial and administrative services to the Vehicle and certain affiliates of it and Dennis R. Washington. Please read “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Omnibus Agreement.”

Our officers do not devote all of their time to our business.

Our Manager and its affiliates as well as certain of our officers are involved in other business activities that may result in their spending less time than is appropriate or necessary in order to manage our business successfully. Pursuant to the recent employment agreement ofbetween us and our chief executive officer, Gerry Wang, Mr. Wang is permitted to devote substantially all of his timeprovide services to us and our Manager, on our businessTiger Management Limited and affairs.Greater China Intermodal Investments LLC and certain of their respective affiliates, in addition to the services that he provides to us. In addition, Mr. Wang’s employment contract will expire in 2013 unless itWang is renewed.the chairman of the board of managers of Greater China Intermodal Investments LLC. Our chief financial officer is also employed by our Manager and he also devoteswill devote substantially all of his time to us and our Manager. Other officers appointed by our Manager may spend a material portion of their time providing services to our Manager and its affiliates on matters unrelated to us. Please read “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Certain Relationships and Transactions.”

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 and co-chairman of our board of directors, Gerry Wang, and certain members of our senior management and that of our Manager. Mr. Wang has substantial experience and relationships in the container shippingcontainership industry and has worked with our Manager for many years. Mr. Wang has been instrumental in developing our relationships with our customers. Mr. Wang and others employed by our Manager are crucial to the development of our business strategy and to the growth and development of our business. If they, and Mr. Wang in particular, were no longer to be affiliated

with our Manager, or if we otherwise cease to receive advisory services from them, we may fail to recruit other employees with equivalent talent, experience and experience,relationships, and our business, operating results and financial condition may sufferbe significantly harmed as a result. Although Mr. Wang has an employment agreement with our Manager, he does not have anus through January 1, 2013, Mr. Wang could terminate his employment agreement with us. In addition, Mr. Wang’s employment agreement is due to expire at the end of 2013 unless it is renewed.any time. As such, it is possible that Mr. Wang will no longer provide services to us and that our business may be adversely affectedharmed by the loss of such services.

We may not achieve expected benefits from our participation in the Carlyle investment vehicle.

In March 2011, we agreed to participate in the Vehicle, an investment vehicle established by an affiliate of global alternative asset manager The Carlyle Group, or Carlyle, which will invest in containership assets, primarily newbuilding vessels strategic to the People’s Republic of China, Taiwan, Hong Kong and Macau, or Greater China. We believe that the combined scale of our business and the Vehicle, together with current excess capacity at shipyards, will allow us to realize volume discounts for newbuilding orders and to negotiate fuel-efficient design improvements from shipyards that will be attractive to our customers. To the extent excess shipyard capacity decreases, we may be unable to make or realize expected benefits from acquisitions,achieve these benefits. In addition, we may be unable to obtain more attractive vessel financing through the Vehicle than otherwise available to us on our own.

The Vehicle intends to compete in our markets, and implementing our growth strategy through acquisitions of existing businesses or vesselsits entry into the containership market may harm our business, operating results, of operations, financial conditionposition and ability to pay dividends.

OurCarlyle is a leading global alternative asset manager with nearly $100 billion of assets under management. The Vehicle intends to invest up to $900 million of equity capital in containership assets, primarily newbuilding vessels strategic to Greater China, which is similar to our growth strategy includes selectively acquiring newof investing in primarily newbuilding vessels strategic to Greater China. The involvement of Carlyle in the Vehicle and the amount of funds that the Vehicle may invest in containerships existingcould result in the Vehicle becoming the owner of a significant fleet of containerships, containership related assets and container shipping business over the midwhich could compete with us for growth opportunities, subject to long term and as market conditions allow. Factorscertain rights of first refusal in our favor that may continue up to March 31, 2015, subject to earlier termination. Please read “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Agreements Related to Our Investment in Carlyle Containership-Focused Investment Vehicle—Rights of First Refusal and First Offer Agreements.” Our business, operating results, financial condition and ability to pay dividends could be harmed to the extent the Vehicle successfully competes against us for containership opportunities.

We have reduced the fiduciary duties of Gerry Wang and Graham Porter in relation to certain growth opportunities that become subject to our right of first refusal with the Vehicle, which may limit our rights in such growth opportunities to our rights under the numberright of first refusal.

Pursuant to agreements between us and each of our chief executive officer and co-chairman of our board of directors, Gerry Wang, and our director Graham Porter, we have reduced the fiduciary duties of Mr. Wang and Mr. Porter in relation to certain containership vessel and business opportunities to the extent such opportunities are subject to our right of first refusal with the Vehicle and (a) the conflicts committee of our board of directors has decided to reject such opportunity or we have failed to exercise our right of first refusal to pursue such opportunity, (b) we have exercised such right but failed to pursue such opportunity or (c) we do not have the right under our right of first refusal to pursue such opportunity. Our rights to such opportunities may be limited to our rights under our right of first refusal with the Vehicle, which would be more restrictive than the rights we otherwise would have relating to such opportunities.

In order to timely exercise our right of first refusal from the Vehicle, we may be required to enter into containership construction contracts without financing arrangements or charter contracts then being in place, which may result in financing on less than favorable terms or employment of the vessels other than on long-term, fixed-rate charters, if at all.

Under our right of first refusal with the Vehicle relating to containership acquisition opportunities, inwe generally must exercise our right of first refusal within 12 business days of receiving a notice from the containership industry includeVehicle of the ability to access capital to fund such acquisitions, the overall economic environment and the status of global trade and the ability to secure long-term, fixed-rate charters.

Any acquisition of a vessel or business may not be profitable to us at or afteropportunity. At the time we must exercise our right of first refusal, there may be no financing

arrangement or charter commitment relating to the newbuilding or existing containership to be acquired. If we elect to acquire it andthe vessel without a financing arrangement or charter commitment then in place, we may not generatebe unable subsequently to obtain financing or charter the vessel on a long-term, fixed-rate basis, on terms that will result in positive cash flow sufficient to justifyus from operation of the vessel, or at all. Accordingly, our investment. In addition, our acquisition growth strategy exposes us to risks that may harm our business,operating results, financial condition and operating results,ability to pay dividends may be harmed.

Certain of our officers and directors or their affiliates will have separate interests in the Vehicle, which may result in conflicts of interest between their interests and those of us and our shareholders relative to the Vehicle.

Our director Graham Porter, through his interest in Tiger Management Limited, is an indirect investor in Greater China Industrial Investments LLC, the member with the largest capital commitment in the Vehicle. An affiliate of Dennis R. Washington, who controls entities that together represent our largest shareholder, has an indirect interest in Tiger Management Limited. As a result, Mr. Porter and the affiliate of Mr. Washington will have an indirect interest in incentive distributions received by Greater China Industrial Investments LLC from the Vehicle. These incentive distributions will range between 20% and 30% after a cumulative compounded rate of return of 12% has been generated on all member capital contributions. Gerry Wang, co-chairman of our board of directors and our chief executive officer, may become an indirect investor in Greater China Industrial Investments LLC. Messrs. Wang and Porter are members of the Vehicle’s transaction committee, which will be primarily responsible for approving the purchase, newbuild contracting, chartering, financing and technical management of new and existing investments for the Vehicle. Kyle R. Washington, co-chairman of our board of directors, is a non-voting member of the Vehicle’s transaction committee. Mr. Wang is also chairman of the Vehicle’s board of managers. In addition, affiliates of Messrs. Wang and Porter will provide certain transactional and financing services to the Vehicle, for which they will receive compensation. The affiliate of Mr. Washington has a right of first refusal on containership acquisition opportunities available to the Vehicle, which right is subordinate to our right of first refusal.

As a result of these interests relating to the Vehicle, the interests of Messrs. Wang, Porter and Kyle R. Washington may conflict with those of us or our shareholders relative to the Vehicle.

The return on our investment in the Vehicle will be reduced by various fees and preferential returns.

We have committed to invest up to $100 million in the Vehicle over a five year period. The return on any investment we are required to make in the Vehicle will be reduced by the amount of technical ship management, financing, transaction and other fees payable by the Vehicle under services agreements, including risks thatagreements with affiliates of the Vehicle, and by the payment of preferential incentive distributions ranging between 20% and 30% after a cumulative compounded rate of return of 12% has been generated on all member capital contributions.

Compensation payable under new employment or services agreements with Gerry Wang, Graham Porter or their affiliates will increase our expenses and may dilute the interests of our equity holders.

In connection with our investment in the Vehicle, we may:

Our four 4800 TEU vessels were acquired secondhand. The purchase of existing, secondhand vessels has inherent risks that are not present when purchasing newbuilding vessels. Unlike newbuildings, existing containerships typically do not carry warranties as to their condition. While we would inspect existing containerships prior to purchase, such an inspection would normally not provide us with as much knowledge of a containership’s condition as we would possess if it had been built for us and operated by us during its life. Repairs and maintenance costs for existing vessels are difficult to predict and may be substantially higher than for vessels we have operated since they were built. These costs could decrease our cash flowexpenses and reduce our liquidity.operating results. To the extent we issue common shares as partial compensation under these agreements, the interests of our equity holders will be diluted.

Anti-takeover provisions in our organizational documents could make it difficult for our shareholders to replace or remove our current board of directors or have the effect of discouraging, delaying or preventing a merger or acquisition, which could adversely affect the market price of our securities.

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

These provisions include:

In addition, upon a change of control, our Manager may elect to have us purchase the incentive shares, which could result in a substantial payment to our Manager and discourage a change of control that might otherwise be beneficial to shareholders.

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

In addition, as a result of our recent offering of our Series A Preferred Shares, holders of our Series A Preferred Shares were grantedhave the power to vote as a single class to approve certain major corporate changes, including any merger, consolidation, asset sale or other disposition of all or substantially all of our assets. These shareholders could exercise this power to block a change of control that might otherwise be beneficial to holders of our common shares. PleaseFor more information, please read “Information on the Company—B. Business Overview—“Item 5. Operating and Financial Review and Prospects—A. General—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Equity Offerings—Our Series A Preferred Share Offering” in this Annual Report.Offerings.”

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

Substantial future sales of our common shares in the public market could cause the price of our common shares to fall.

The market price of our common stock could decline due to sales of a large number of shares in the market, including sales of shares by our large shareholders, or the perception that these sales could occur. These sales

could also make it more difficult or impossible for us to sell equity securities in the future at a time and price that we deem appropriate to raise funds through future offerings of common stock. In connection with our initial public offering, our Series A Preferred Share Offering and our entry into employment or services agreements with our chief executive officer, Gerry Wang, and an affiliate of our director, Graham Porter, we have granted registration rights to the holders of certain of our Series A Preferred Shares.securities, including common shares or securities convertible into common shares. These shareholders have the right, subject to certain conditions, to require us to file registration statements covering the sale by them of such common shares that are issuable upon the conversion of the Series A Preferred Shares. In addition, in connection with our initial public offering, the holders of our class B common shares were granted similar registration rights with respect to the class A common shares issuable upon their conversion. The class B common shares converted into class A common shares in 2008.shares. Following their sale under an applicable registration statement, those securitiesany such common shares will become freely tradable. By exercising their registration rights and selling a large number of common shares, these shareholders could cause the price of our common shares to decline.

We are incorporated in the Republic of the Marshall Islands, which does not have a well developed body of corporate law.

Our corporate affairs are governed by our articles of incorporation and bylaws and by the Marshall Islands Business Corporations Act, or BCA. The provisions of the BCA resemble provisions of the corporation laws of a number ofsome states in the United States. However, there have been few judicial cases in the Republic of the Marshall Islands interpreting the BCA. The rights and fiduciary responsibilities of directors under the laws of the Republic of the Marshall Islands are not as clearly established as the rights and fiduciary responsibilities of directors under statutes or judicial precedent in existence in certain United States jurisdictions. Shareholder 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 shareholders may have more difficulty in protecting their interests in the face of actions by management, directors or controlling shareholders than would shareholders of a corporation incorporated in a United States jurisdiction.

Because we are organized under the laws of the Marshall Islands, it may be difficult to serve us with legal process or enforce judgments against us, our directors or our management.

We are organized under the laws of the Marshall Islands, and all of our assets are located outside of the United States. Our principal executive offices are located in Hong Kong.Kong and a majority of our directors and officers are residents outside of the United States. As a result, it may be difficult or impossible for you to bring an action against us or against our directors or our management in the United States if you believe that your rights have been infringed under securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Marshall Islands and of other jurisdictions may prevent or restrict you from enforcing a judgment against our assets or our directors and officers.

Our ability to pay dividends on our shares and to redeem our Series C Preferred Shares is limited by the requirements of Marshall Islands law.

Marshall Islands law provides that we may pay dividends on our shares and redeem our Series C Preferred Shares only to the extent that assets are legally available for such purposes. Legally available assets generally are limited to our surplus, which essentially represents our retained earnings and the excess of consideration received by us for the sale of shares above the par value of the shares. In addition, under Marshall Islands law we may not pay dividends on our shares or redeem our Series C Preferred Shares if we are insolvent or would be rendered insolvent by the payment of such a dividend or the making of such redemption.

Tax Risks

In addition to the following risk factors, you should read “Item 4. Information on the Company—B. Business Overview—Taxation of the Company,” and “Item 10. Additional Information—E. Taxation”Taxation,” for a more complete discussion of the expected material U.S. federal and non-U.S. income tax considerations relating to us and the ownership and disposition of our common shares.

We, or any of our vessel-owning subsidiaries, may become subject to U.S. federal income taxation on our U.S. source income, which would reduce our earnings.

Under the U.S. Internal Revenue Code of 1986, as amended, or the Code, 50% of the gross income of a vessel owning or chartering corporation, such as ourselves and our subsidiaries, that is attributable to transportation that either begins or ends, but that does not both begin and end, in the United States is characterized as U.S. source transportation income. Such income generally is subject to a 4% U.S. federal income tax without allowance for deduction or, if such income is effectively connected with the conduct of a trade or business in the United States, U.S. federal corporate income tax (the highest statutory rate presently is 35%) as well as a branch profits tax (presently imposed at a 30% rate on effectively connected earnings), unless the corporation qualifies for exemption from tax under Section 883 of the Code and the Treasury Regulations promulgated thereunder, or the Section 883 Exemption.

We believe that we and each of our subsidiaries qualified for the Section 883 Exemption for the year ended December 31, 2009, or our 2009 Year, and we will take this position for U.S. federal income tax return reporting purposes. However, there are legal uncertainties involved in this determination, and therefore, no assurance can be given that the Internal Revenue Service, or the IRS, will accept our position. Further, we can give no assurance regarding our continued qualification for the Section 883 Exemption due to the factual nature of determining whether the exemption applies for any taxable year. If we or our subsidiaries are not entitled to the Section 883 Exemption for a taxable year, we or our subsidiaries generally would be subject to a 4% U.S. federal gross income tax on our U.S. source transportation income for such year. The imposition of this taxation would result in decreased earnings available for distribution to our shareholders and could have a negative effect on our business. Please refer to “Item 10. Additional Information—E. Taxation—U.S. Federal Income Tax Considerations—U.S. Federal Income Taxation of the Company” for additional information related to the Section 883 Exemption.

U.S. tax authorities could treat us as a “passive foreign investment company,” which could have adverse U.S. federal income tax consequences to U.S. shareholders.

A non-U.S. entity treated as a corporation for U.S. federal income tax purposes will be treated as a “passive foreign investment company,” or a PFIC, for such purposes in any taxable year for which either (i) at least 75% of its gross income consists of certain types of “passive income” or (ii) 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 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) andbut does not include income derived from the performance of services.

Based on the current and expected composition of our assets and income (and that of our subsidiaries), we believe that we were not a PFIC for our 2009 Year, and we do not expect to become a PFIC with respect to any other taxable year. However, thereThere are legal uncertainties involved in this determination,determining whether the income derived from our time-chartering activities constitutes rental income or income derived from the performance of services, including the decision inTidewater Inc. v. United States, 565 F.3d 299 (5^th(5th Cir. 2009), in which the United States Court of Appeals for the Fifth Circuit concludedheld that income derived from certain time charters were appropriately characterizedchartering activities should be treated as leasesrental income rather than service agreementsservices income for purposes of thea foreign sales corporation provisionsprovision of the Internal Revenue Code of 1986, as amended, or the Code. WhileHowever, the court’s conclusion was contraryIRS stated in an Action on Decision (AOD 2010-01) that it disagrees with, and will not acquiesce to, the position ofway that the U.S. Internal Revenue Service, or IRS,rental versus services framework was applied to the facts in theTidewater decision, and in its discussion stated that the time charters shouldat issue inTidewater would be treated as producing services agreements,income for PFIC purposes. The IRS’s statement with respect toTidewater cannot be relied upon or otherwise cited as precedent by taxpayers. Consequently, in the Tidewater decision may heightenabsence of any binding legal authority specifically relating to the risk of a challenge regarding our status and the status of shipping companies that engage in time chartering operations generally. Therefore, no assurance can be given that the IRS will accept our position. Further, our PFIC status for

any taxable year will not be determinable until after the end of such taxable year, and accordingly,statutory provisions governing PFICs, there can be no assurance that the IRS or a court would not follow theTidewater decision in interpreting the PFIC provisions of the Code. Nevertheless, based on the current composition of our assets and operations (and that of our subsidiaries), we willintend to take the position that we are not now and have never been a PFIC. No assurance can be treated asgiven, however, that we would not constitute a PFIC for any future taxable year. year if there were to be changes in our assets, income or operations.

If the IRS were to find that we are or have been a PFIC for any taxable year, our U.S. shareholders would face adverse tax consequences. For a more comprehensive discussion regarding our status as a PFIC and the tax consequences to U.S. shareholders if we are treated as a PFIC, please read “Item 10. Additional Information—E. Taxation—U.S. Federal Income Tax Considerations—U.S. Federal Income Taxation of U.S. Shareholders—Holders—PFIC Status and Significant Tax Consequences.”

The preferential tax rates applicable to qualified dividend income are temporary.

Certain of our distributions may be treated as qualified dividend income eligible for preferential rates of U.S. federal income tax to individual U.S. shareholders (and certain other U.S. shareholders). In the absence of legislation extending the term for these preferential tax rates, all dividends received by such U.S. shareholders in tax years beginning on January 1, 2011after December 31, 2012 or later will be taxed at graduated tax rates applicable to ordinary income.

We, may become a resident of Canada and have to pay tax in Canada on our worldwide income, which could reduce our earnings, and shareholders could then become taxable in Canada in respect of their ownership of our shares. Moreover, as a non-resident of Canada we may have to pay tax in Canada on our Canadian source income, which could reduce our earnings.

Under the Income Tax Act (Canada), or the Canada Tax Act, a corporation that is resident in Canada is subject to tax in Canada on its worldwide income, and shareholders of a corporation resident in Canada may be subject to Canadian capital gains tax on a disposition of its shares and to Canadian withholding tax on dividends paid in respect of such shares.

Our place of residence, under Canadian law, would generally be determined on the basis of where our central management and control are, in fact, exercised. It is not our current intention that our central management and control be exercised in Canada but, even if it were, there is a specific statutory exemption under the Canada Tax Act that provides that a corporation incorporated, or otherwise formed, under the laws of a country other than Canada will not be resident in Canada in a taxation year if its principal business is the operation of ships that are used primarily in transporting passengers or goods in international traffic, all or substantially all of its gross revenue for the year consists of gross revenue from the operation of ships in transporting passengers or goods in that international traffic, and it was not granted articles of continuance in Canada before the end of the year.

Based on our operations, we do not believe that we are, nor do we expect to be, resident in Canada for purposes of the Canada Tax Act, and we intend that our affairs will be conducted and operated in a manner such that we do not become a resident of Canada under the Canada Tax Act. However, if we were or become resident in Canada, we would be or become subject under the Canada Tax Act to Canadian income tax on our worldwide income. Further, shareholders who are non-residents of Canada may be or become subject under the Canada Tax Act to tax in Canada on any gains realized on the disposition of our shares and would be or become subject to Canadian withholding tax on dividends paid or deemed to be paid by us, subject to any relief that may be available under a tax treaty or convention.

Generally, a corporation that is not resident in Canada will be taxable in Canada on income it earns from carrying on a business in Canada and on gains from the disposition of property used in a business carried on in Canada. However, there are specific statutory exemptions under the Canada Tax Act that provide that income earned in Canada by a non-resident corporation from the operation of a ship in international traffic, and gains realized from the disposition of ships used principally in international traffic, are not included in a non-resident corporation’s income for Canadian tax purposes where the corporation’s country of residence grants substantially similar relief to a Canadian resident. A Canadian resident corporation that carries on an international shipping business, as described in the previous sentence, in the Republic of the Marshall Islands is exempt from income tax under the current laws of the Republic of the Marshall Islands.

We expect that we will qualify for these statutory exemptions under the Canada Tax Act. Based on our operations, we do not believe that we are, nor do we expect to be, carrying on a business in Canada for purposes of the Canada Tax Act other than a business that would provide us with these statutory exemptions from Canadian income tax. However, these statutory exemptions are contingent upon reciprocal treatment being provided under the laws of the Republic of the Marshall Islands. If in the future as a non-resident of Canada, we are carrying on a business in Canada that is not exempt from Canadian income tax, or these statutory exemptions are not accessible due to changes in the laws of the Republic of the Marshall Islands or otherwise, we would be subject to Canadian income tax on our non-exempt income earned in Canada which could reduce our earnings available for distribution to shareholders.

Please read “Additional Information—E. Taxation—Canadian Federal Income Tax Consequences” for a discussion of expected material Canadian federal income tax consequences of owning and disposing of our common shares.

We, or any of our subsidiaries, may become subject to income tax in onejurisdictions in which we are organized or more non-U.S. jurisdictions,operate, including the United States, Canada and Hong Kong, which would reduce our earnings if under the laws of any such jurisdiction, we or such subsidiary is consideredand potentially cause certain shareholders to be carrying on a trade or businesssubject to tax in such jurisdiction or earn income that is considered to be sourced in such jurisdiction and we do not or such subsidiary does not qualify for an exemption.jurisdictions.

We intend that our affairs and the business of each of our subsidiaries will be conducted and operated in a manner that minimizes income taxes imposed upon us and our subsidiaries. However, there is a risk that we will be subject to income tax in one or more jurisdictions, including the United States, Canada and Hong Kong, if under the laws of any such jurisdiction, we or such subsidiary is considered to be carrying on a trade or business there or earn income that is considered to be sourced there and we do not or such subsidiary does not qualify for an exemption.

The question Please read “Item 4. Information on the Company—B. Business Overview—Taxation of whetherthe Company.” In addition, while we or our subsidiaries will be treated as carrying on a trade or business, or generating income that is sourced, in any particular jurisdiction, including Hong Kong, will be largely a question of fact to be determined based upon an analysis of our contractual arrangements and the way we conduct business or operations, all of which may change over time. Furthermore, the laws of Hong Kong or any other jurisdiction may change in a manner that causes that jurisdiction’s taxing authorities to determinedo not believe that we are, carrying onnor do we expect to be, resident in Canada, in the

event that we were treated as a traderesident of Canada, shareholders who are non-residents of Canada may be or business in, or generating income that is sourced in, such jurisdiction and arebecome subject to its taxation laws. Any taxes imposedtax in Canada. Please read “Item 4. Information on us or our subsidiaries will reduce our earnings.the Company—B. Business Overview—Taxation of the Company —Canadian Taxation” and “Item 10. Additional Information—E. Taxation—Canadian Federal Income Tax Consequences.”

A.    History and Development of the Company

We are Seaspan Corporation, awere incorporated in the Republic of the Marshall Islands corporation that was incorporated onin May 3,2005 to acquire all of the containership business of Seaspan Container Lines Limited, or SCLL. In August 2005, we completed our initial public offering of 28,570,000 Class A Common Shares at a price of $21 per share, and the underwriters subsequently exercised their over-allotment option for an additional 276,500 Class A Common Shares in September 2005. We areFrom an owner of containerships and we charter them pursuant to long-term, fixed-rate time charters to major container liner companies. As of December 31, 2009, we owned and operated ainitial operating fleet of 42 containerships10 vessels, as of March 25, 2011, we have grown to an operating fleet of 58 vessels (including three leased vessels) and have entered into contracts for theto purchase of an additional 21seven containerships and contracts to lease an additional fivefour containerships. Customers for our current operating fleet are CSCL Asia, HL USA, APM, COSCON, CSAV and MOL. Customers for the additional 26 vessels will include MOL, Kawasaki Kisen Kaisha Ltd., or K-Line, CSAV, and COSCON. Our primary objective is to continue to grow our business through accretive acquisitions over the mid to long-term and as market conditions allow.

We deploy all our vessels on long-term, fixed-rate time charters to take advantage of the stable cash flow and high utilization rates that are typically associated with long-term time charters. As of December 31, 2009, the charters on the 42 vessels in our operating fleet had an average remaining term of 7.1 years plus certain options.

We maintain our principal executive offices at Unit 2, 7th Floor, Bupa Centre, 141 Connaught Road West, Hong Kong, China. Our telephone number is (852) 2540-1686.

B.    Business Overview

General

Our business is to ownWe are a leading independent charter owner of containerships, which we charter themprimarily pursuant to long-term, fixed-rate charters andtime charters. We seek additional accretive vessel acquisitions over the mid to long-term and as market conditions allow. We primarily deploy all our vessels on long-term, fixed-rate time charters to take advantage of the stable cash flow and high utilization rates that are typically associated with long-term time charters.

As of December 31, 2009March 25, 2011 we owned and operated a fleet of 4258 containerships (including three leased vessels) and have entered into contracts to purchase an additional 21seven containerships and to lease an additional fivefour containerships. The average age of the 4258 vessels in our fleet was 4.9approximately five years as of December 31, 2009. Please read “Information on the Company—D. Property, Plants and Equipment—Our Fleet” for more information.

March 25, 2011. Our customer selection process is targeted at well-established container liner companies that charter-in vessels on a long-term basis as part of their fleet expansion strategy. Currently, 22 containerships inCustomers for our operating fleet are under time charters with CSCL Asia. CSCL Asia, a British Virgin Islands company, is a subsidiary of CSCL. Nine containerships in our current fleet are under time charters with HL USA, an affiliate of TUI AG, or TUI. APM, COSCON, CSAV, MOL, K-Line and UASC. Customers for the additional 11 vessels will include K-Line and COSCON. Please read “—Our four 4800 TEU vessels are chartered to APM. Our two 3500 TEU vessels are under time charters with COSCON. Two of our 4250 TEU vessels are under time charters with CSAV. Our three 5100 TEU vessels are under time charters with MOL. The 26 containerships that we have contracted to purchase or lease, as the case may be, will similarly be chartered on a long-term basis to well established container liner companies.Fleet” for more information.

Most of our charterers’ container shippingcustomers’ containership business revenues are derived from the shipment of goods from the Asia Pacific region, primarily China, to various overseas export markets in the United States and in Europe.

Our Manager and certain of its wholly-ownedwholly owned subsidiaries provide all of our employees, other than our chief executive officer, and all of the technical, administrative and strategic services necessary to support our business. Our Manager provides a variety of ship management services,business, including purchasing supplies, crewing, vessel maintenance, insurance procurement and claims handling, inspections, and ensuring compliance with flag, class and other statutory requirements. For more information about the agreements with our Manager that govern the provision of management services for our fleet, please read “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Our Management Agreements.”

In additionMarch 2011, we agreed to participate in the Vehicle, an investment vehicle established by an affiliate of global alternative asset manager Carlyle. The Vehicle will invest up to $900 million equity capital in containership assets, primarily newbuilding vessels strategic to the ship management services providedPeople’s Republic of China, Taiwan, Hong Kong and Macau, or Greater China. The amount of equity capital will be reduced to us,the extent that the Carlyle affiliate member of the Vehicle separately invests in non-containership assets. Please read “Item 5. Operating and

Financial Review and Prospects—A. General—Management’s Discussion and Analysis of Financial Condition and Results of Operations—2011 Recent Developments—Investment in Carlyle Containership-Focused Investment Vehicle” for more information.

In February 2011, we also signed a letter of intent to purchase a significant number of newbuilding containerships to be constructed by a leading Chinese shipyard. This is our Manager also provides limited ship management servicesfirst newbuilding order since 2007. There exists only a letter of intent for this order at this time, and there is no assurance that definitive agreements relating to Dennis R. Washington’s personal vessel owning companies.this order will be entered into or that the orders will be completed. Please read “Item 5. Operating and Financial Review and Prospects—A. General—Management’s Discussion and Analysis of Financial Condition and Results of Operations—2011 Recent Developments—Newbuilding Order” for more information.

Our Fleet

Our Operating Fleet

The following table summarizes key facts regarding our vessels as of March 25, 2011:

Vessel Name		Vessel Class (TEU)		Year Built		Charter Start Date		Charterer		Length of Time Charter		Daily Charter Rate (in thousands)
New Delhi Express		4250		2005		10/19/05		HL USA		3 years + seven 1-year extensions + two 1-year options(12)			18.0	(13)
Dubai Express		4250		2006		1/3/06		HL USA		3 years + seven 1-year extensions + two 1-year options(12)			18.0	(13)
Jakarta Express		4250		2006		2/21/06		HL USA		3 years + seven 1-year extensions + two 1-year options(12)			18.0	(13)
Saigon Express		4250		2006		4/6/06		HL USA		3 years + seven 1-year extensions + two 1-year options(12)			18.0	(13)
Lahore Express		4250		2006		7/11/06		HL USA		3 years + seven 1-year extensions + two 1-year options(12)			18.0	(13)
Rio Grande Express		4250		2006		10/20/06		HL USA		3 years + seven 1-year extensions + two 1-year options(12)			18.0	(13)
Santos Express		4250		2006		11/13/06		HL USA		3 years + seven 1-year extensions + two 1-year options(12)			18.0	(13)
Rio de Janeiro Express		4250		2007		3/28/07		HL USA		3 years + seven 1-year extensions + two 1-year options(12)			18.0	(13)
Manila Express		4250		2007		5/23/07		HL USA		3 years + seven 1-year extensions + two 1-year options(12)			18.0	(13)
CSAV Loncomilla		4250		2009		4/28/09		CSAV		6 years			25.9
CSAV Lumaco		4250		2009		5/14/09		CSAV		6 years			25.9
CSAV Lingue		4250		2010		5/17/10		CSAV		6 years			25.9
CSAV Lebu		4250		2010		6/7/10		CSAV		6 years			25.9
UASC Madinah		4250		2009		7/1/10		UASC		2 years			20.5	(14)
COSCO Fuzhou		3500		2007		3/27/07		COSCON		12 years			19.0
COSCO Yingkou		3500		2007		7/5/07		COSCON		12 years			19.0
CSCL Panama		2500		2008		5/14/08		CSCL Asia		12 years			16.8	(15)
CSCL São Paulo		2500		2008		8/11/08		CSCL Asia		12 years			16.8	(15)
CSCL Montevideo		2500		2008		9/6/08		CSCL Asia		12 years			16.8	(15)
CSCL Lima		2500		2008		10/15/08		CSCL Asia		12 years			16.8	(15)
CSCL Santiago		2500		2008		11/8/08		CSCL Asia		12 years			16.8	(15)
CSCL San Jose		2500		2008		12/1/08		CSCL Asia		12 years			16.8	(15)
CSCL Callao		2500		2009		4/10/09		CSCL Asia		12 years			16.8	(15)
CSCL Manzanillo		2500		2009		9/21/09		CSCL Asia		12 years			16.8	(15)
Guayaquil Bridge		2500		2010		3/8/10		K-Line		10 years			17.9
Calicanto Bridge		2500		2010		5/30/10		K-Line		10 years			17.9