EXHIBIT 10.3

AMENDED AND RESTATED

CHANGE OF CONTROL

PROTECTION AGREEMENT

 

This Amended and Restated Change of Control Protection Agreement (this
“Agreement”) is made and entered into as of December 31, 2008, (the “Effective
Date”) by and between Overseas Shipholding Group, Inc., a corporation
incorporated under the laws of Delaware with its principal office at 666 Third
Avenue, New York, New York 10017 (the “Company”) and Morten Arntzen (the
“Executive”).

W I T N E S S E T H:

WHEREAS, the Company believes that the establishment and maintenance of a sound
and vital management of the Company and its affiliates is essential to the
protection and enhancement of the interests of the Company and its stockholders;

WHEREAS, the Company also recognizes that the possibility of a Change of Control
(as defined in Section 1 hereof), with the attendant uncertainties and risks,
might result in the departure or distraction of key employees of the Company to
the detriment of the Company;

WHEREAS, the Company has determined that it is appropriate to take steps to
induce key employees to remain with the Company, and to reinforce and encourage
their continued attention and dedication, when faced with the possibility of a
Change of Control;

WHEREAS, the Company and the Executive are parties to that certain Agreement,
dated as of January 19, 2004, as amended on February 15, 2007 (the “Prior
Agreement”) which provided that the Executive would receive certain severance
benefits if his employment was terminated in connection with a Change of
Control; and

WHEREAS, the parties desire to amend and restate the Prior Agreement effective
as of the Effective Date on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained, the parties hereto hereby agree as follows:

1.     A Change of Control shall be deemed to have occurred if: (i) any person
(as defined in Section 3(a)(9) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”) and as used in Sections 13(d) and 14(d) thereof),
excluding the Company, any “Subsidiary,” any employee benefit plan sponsored or
maintained by the Company, or any Subsidiary (including any trustee of any such
plan acting in his capacity as trustee), becomes the beneficial owner (as
defined in Rule 13(d)-3 under the Exchange Act) of shares of the Company having
at least thirty percent (30%) of the total number of votes that may be cast for
the election of directors of the Company; provided, that no Change of Control
will be deemed to have occurred as a result of an increase in ownership
percentage in excess of thirty percent (30%) resulting solely from an
acquisition of securities by the Company unless and until such person acquires
additional shares of the Company; (ii) there is a merger or other business
combination of the Company, or a sale of all or substantially all of the
Company’s assets or combination of the foregoing transactions (a “Transaction”),
other than a Transaction involving only the Company and one or more of its
Subsidiaries, or a Transaction immediately following which the shareholders of
the Company immediately prior to the Transaction continue to have a majority of
the voting power in the resulting entity in approximately the same proportion as
they had in the Company immediately prior to the Transaction; or (iii) during
any period of twelve (12) consecutive months beginning on or after the date
hereof, the persons who were directors of the Company immediately before the
beginning of such period (the “Incumbent Directors”) shall cease (for any reason
other than death) to constitute at least a majority of the board of directors of
the Company (the “Board”) or the board of directors of any successor to the
Company, provided that, any director who was not a director as of the date
hereof shall be deemed to be an Incumbent Director if such director was elected
to the Board by, or on the recommendation of or with the approval of, at least a
majority of the directors who then qualified as Incumbent Directors either
actually or by prior operation of the foregoing unless such election,
recommendation or approval occurs as a result of an actual or threatened
election contest (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act or any successor provision) or other actual
or threatened solicitation of proxies or contests by or on behalf of a person
other than a member of the Board. Only one (1) Change of Control may occur under
this Agreement.

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2.         Term. This Agreement shall commence on the Effective Date and shall
expire on the earliest of (i) January 19, 2012 (the “Expiration Date”), subject
to the right of the Board and the Executive to extend the Expiration Date,
provided that if a Change of Control takes place prior to the Expiration Date,
the duration of this Agreement under this subpart (i) shall be until the end of
the two (2) year period commencing on the date of the consummation of a Change
of Control whether such two (2) year period ends before or after the Expiration
Date; (ii) the date of the death of the Executive or retirement or other
termination of the Executive’s employment (voluntarily or involuntarily) with
the Company prior to a Change of Control other than as a result of a termination
by the Company without Cause (as defined below) or by the Executive for Good
Reason (as defined below) that is an Anticipatory Termination (as defined
below); or (iii) one hundred twenty (120) days after an Anticipatory Termination
by the Company without Cause or by the Executive with Good Reason if a Change of
Control does not occur on or prior to such date. Notwithstanding anything in
this Agreement to the contrary, if the Company becomes obligated to make any
payment to the Executive pursuant to the terms hereof at or prior to the
expiration of this Agreement, then this Agreement shall remain in effect for
such and related purposes (including but not limited to under Section 5 hereof)
until all of the Company’s obligations hereunder are fulfilled. Further,
provided that a Change of Control has taken place prior to the termination of
this Agreement, the provisions of Sections 10 hereof shall survive and remain in
effect notwithstanding the termination of this Agreement, the termination of the
Executive’s employment or any breach or repudiation or alleged breach or
repudiation by the Company or the Executive of this Agreement or any one or more
of its terms.

3.         Termination Following Change of Control. If, and only if, a Change of
Control occurs and the Executive’s employment with the Company is terminated by
the Company without Cause or by the Executive for Good Reason at any time within
two (2) years after the Change of Control or there was an Anticipatory
Termination and the Change of Control has taken place within one hundred twenty
(120) days thereafter, the Executive shall be entitled to the amounts and
benefits provided in Section 4 upon such termination. In the event of an
Anticipatory Termination within one hundred twenty (120) days prior to a Change
in Control, if any equity grants which were granted prior to the Change of
Control would vest on a Change of Control after the Anticipatory Termination,
any such equity grants that otherwise would be forfeited (after application of
any other accelerated vesting provision) shall not be forfeited pending a
determination of whether or not a Change of Control occurs within one hundred
twenty (120) days thereafter (the “Determination Period”), but during the
Determination Period no unvested option shall vest or be exercisable, no other
unvested equity grant shall vest and no dividends shall be payable unless and
until the Change of Control takes place during the Determination Period. If a
Change of Control occurs during the Determination Period, and the option
exercise period would otherwise have expired, then the exercise period for any
equity grants which otherwise would have expired during the Determination Period
shall automatically be deemed to have been extended to the date which is thirty
(30) days following the first date after such Change of Control in which shares
of the Company could be traded by the Executive on the applicable market under
the Company’s trading window policies but, with regard to any outstanding
options on the Effective Date, not beyond the earlier of the latest date that
the option could have expired by its original terms under any circumstance or
the tenth (10th) anniversary of the original date of grant of the option.

The foregoing terms shall have the following meaning:

(i)        Termination for Good Reason. For purposes of this Agreement,
termination for Good Reason shall mean a termination of employment by the
Executive effected by a written notice given within ninety (90) days after the
occurrence of the Good Reason event. For purposes of this Agreement, “Good
Reason” shall mean the occurrence of any of the following events without the
Executive’s express written consent which event is not cured within ten (10)
days after written notice thereof from the Executive to the Company: (A) any
material diminution in the Executive’s position, duties, responsibilities or
authority, or the assignment to the Executive of duties and responsibilities
materially inconsistent with his position, except in connection with the
Executive’s termination for Cause or as a result of death, or temporarily as a
result of the Executive’s incapacity or other absence for an extended period;
(B) a reduction in the Executive’s annual base salary; (C) a relocation of the
Company’s principal business location to an area which is both outside of
Manhattan, New York City, New York and outside of a fifty (50) mile radius from
the Executive’s current principal residence; (D) failure by the Board to elect
or re-elect the Executive as a member of the Board or as Chief Executive Officer
or President or the Executive’s removal from any such position, in all cases if
such failure or removal is not for Cause; or (E) any material breach by the
Company of any material provision of the Executive’s employment letter agreement
with the Company, dated as of January 19, 2004, as amended (the “Employment
Agreement”), or of Section 11 of this Agreement.

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(ii)       Cause. As used herein, the term “Cause” shall mean: (A) the
Executive’s willful misconduct involving the Company or its assets, business or
employees or in the performance of his duties which is materially injurious to
the Company; (B) the Executive’s conviction of (or pleading guilty or nolo
contendre to) a felony (provided that for this purpose, a felony shall cover any
action or inaction that is a felony or crime under federal, state or local law
in the United States (collectively, “U.S. law”) and any action or inaction which
takes place outside of the United States, if it would be a felony under U.S.
law); (C) the Executive’s continued and substantial failure to attempt in good
faith to perform his duties with the Company (other than failure resulting from
his incapacity due to physical or mental illness or injury or that of any member
of the Executive’s immediate family (provided that in a situation relating to a
member of the Executive’s immediate family he has consulted with the Chairman of
the Board and has in good faith made a mutually satisfactory agreement for
coverage of his responsibilities and further provided that any temporary
adjustments in authority, duties or responsibility made by the Company in
connection therewith shall not be Good Reason)), which failure has continued for
a period of at least ten (10) days after written notice thereof from the
Company; (D) the Executive’s breach of any material provisions of any agreement
with the Company, which breach, if curable, is not cured within ten (10) days
after written notice thereof from the Company (provided that in the case of a
breach of the Employment Agreement, clause (iv) of the definition of Cause
therein shall apply); or (E) the Executive’s failure to attempt in good faith to
promptly follow a written direction of the Board which direction indicates that
failure to do so shall be grounds for termination, provided that the failure
shall not be considered “Cause” if the Executive, in good faith, believes that
such direction, or implementation thereof, is illegal and he promptly so
notifies the Chairman of the Board in writing. No act or failure to act by the
Executive shall be deemed to be “willful” if he believed in good faith that such
action or non-action was in or not opposed to, the best interests of the
Company.

(iii)      A Termination without Cause. As used herein, the term Termination
without Cause shall mean a Termination by the Company other than for a
termination for Cause or due to Disability.

(iv)      Disability. As used herein, Disability shall mean the Executive’s
failure to have performed his material duties and responsibilities as a result
of physical or mental illness or injury for more than one hundred eighty (180)
days during a three hundred sixty-five (365) day period.

(v)       Anticipatory Termination. As used herein, the term Anticipatory
Termination means a Termination without Cause or a Termination for Good Reason
that occurs after a tender offer is announced for the Company or after material
discussions have occurred with a possible acquiror with regard to a Transaction.

4.         Compensation on Change of Control Termination. If, pursuant to
Section 3, the Executive is entitled to amounts and benefits under this Section
4, the Executive shall receive the following payments and benefits from the
Company:

(a) (i) Subject to submission of appropriate documentation, any incurred but
unreimbursed business expenses for the period prior to the Executive’s
termination payable in accordance with the Company’s policies and practices;
(ii) any base salary, bonus (other than any annual bonus), vacation pay or other
compensation accrued or earned under law or in accordance with the Company’s
policies applicable to the Executive but not yet paid, payable in accordance
with the Company’s normal policies and practices for such compensation; and
(iii) any other amounts or vested benefits due under the then applicable
employee benefit (including, without limitation, any non-qualified pension plan
or arrangement), equity or incentive plans of the Company then in effect,
applicable to the Executive as shall be determined and paid in accordance with
such plans;

(b) Subject to Sections 4(i) and 22(b) hereof, a lump sum amount (without regard
to any interest which may have accrued thereon) paid within ten (10) days after
the Date of Termination (as defined below), equal to two (2) times the
Executive’s annual base salary rate in effect within one hundred eighty (180)
days prior to, or at any time after, the Change of Control (or if such
termination is by the Executive pursuant to Section 3(i), the greater of the
foregoing and Executive’s annual base salary rate in effect immediately prior to
such reduction of the rate of his annual base salary) (the “Severance Base
Salary Rate”);

(c) Subject to Section 22(b) hereof, a lump sum amount (without regard to any
interest which may have accrued thereon) paid on the 130th day after the Date of
Termination (as defined below) equal to the sum of :

(i)       the Severance Base Salary Rate, plus

(ii)       three (3) times the Executive’s highest target annual incentive
compensation in effect within one hundred eighty (180) days prior to, or at any
time after, the Change of Control; provided, that if no target annual incentive
compensation is in effect during such period, then for the purpose of this
Section 4(c)(ii), the Executive’s target incentive compensation shall be deemed
to be 50% of the Severance Base Salary Rate; plus

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(iii)      an amount equal to thirty-six (36) months of additional employer
contributions that would have been made for the Executive under any qualified or
nonqualified defined contribution pension plan or arrangement of the Company
applicable to the Executive as in effect on the Executive’s Date of Termination,
with an increase in his age by three (3) years for purposes of calculating any
early retirement subsidy or actuarial reduction, measured from the Executive’s
Date of Termination and not contributed to the extent that the Executive would
otherwise be entitled to such contributions during such period if the
Executive’s employment had not been terminated and he had contributed at the
maximum permitted salary reduction level during such period.

(d) Subject to Sections 4(i) hereof, a pro rata annual bonus for the year in
which Executive is terminated based on actual results for such year and pro
rated based on the portion of the year the Executive was employed, paid to the
Executive in the calendar year following the completed fiscal year of the
Company for which such bonus was earned when other executive’s of the Company
receive their bonuses for such fiscal year.

(e) Subject to Sections 4(i) hereof, any earned but unpaid annual bonus for a
previously completed fiscal year of the Company, paid to the Executive in the
calendar year following the completed fiscal year of the Company for which such
bonus was earned when other executive’s of the Company receive their bonuses for
such fiscal year.

(f) Subject to Section 4(i) hereof, (i) if benefits under the Company health
plans, in which the Executive participated immediately prior to the termination
of the Executive’s employment, or materially equivalent plans maintained by the
Company in replacement thereof (the “Health Plans”) will not be taxable to the
Executive, than continued coverage at the Company’s expense (other than as set
forth below) under the Health Plans, or (ii) if benefits under the Health Plans
will be taxable to the Executive, reimbursement for the Executive’s premiums for
continued coverage under the Health Plans in the amount that the cost of such
coverage exceeds the active employee rate under the Health Plans (as determined
based on the premium rate in effect for the Executive on the Executive’s Date of
Termination and excluding, for purposes of calculating cost, an employee’s
ability to pay premiums with pre-tax dollars), in either case for the Executive
and the Executive’s dependents until the earliest of (x) thirty-six (36) months
following the Executive’s Date of Termination and (y) the Executive’s
commencement of other substantially full-time employment (such period, the
“Coverage Period”). Notwithstanding the foregoing, in the case of (i), the
Executive shall pay the same premium amount for such coverage as the Executive
would pay if an active employee under the Health Plans (as determined based on
the premium rate in effect for the Executive on the Executive’s Date of
Termination and excluding, for purposes of calculating cost, an employee’s
ability to pay premiums with pre-tax dollars) and the Company portion of the
premium for any such coverage shall be paid on a monthly basis. In the case of
(ii), any such reimbursement payment shall be payable on the first Company
payroll date for the applicable month for which such premium amount is paid,
such payment to include a tax gross-up payment to the extent the amount taxable
to the Executive is greater than the amount that would have been taxable to the
Executive if the Executive was an employee and participated in the Health Plans.
The Coverage Period shall run concurrently with the applicable continuation
coverage for the Executive and the Executive’s dependents pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1985.

(g)       Continued coverage under the Company life insurance plan in which the
Executive participated immediately prior to the termination of the Executive’s
employment (at the same cost as for active employees of equivalent age) at a
benefit level equal to the higher of the level in effect immediately prior to
the Change of Control or immediately prior to the Executive’s termination or,
alternatively, equivalent coverage (on a tax grossed up basis, to the extent the
amount taxable to the Executive is greater than the amount taxable to him if he
was an employee and participated in the Company’s life insurance plan) for three
(3) years from the date of termination of the Executive’s employment, with any
Company portion of the premiums for such coverage paid on a monthly basis.

(h)       All of the Executive’s then unvested equity awards which were granted
prior to a Change of Control shall automatically vest and all restrictions
thereon shall lapse.

(i)        Notwithstanding anything herein to the contrary, in the event that
the Executive is entitled to the benefits under this Section 4 as a result of an
Anticipatory Termination that occurred within 120 days prior to a Change in
Control and if as a result of the termination of the Executive’s employment the
Executive was entitled to receive the payments and benefits provided under
Section 5(c) of the Employment Agreement, then the Executive shall continue to
be entitled to receive such payments and benefits under and in accordance with
the terms and conditions of the Employment Agreement and (i) the Executive shall
not be entitled to receive the amounts under Sections 4(b), 4(c) and 4(d); (ii)
the benefits or payments under Section 4(f) shall commence in the first month
following the expiration of any health plan or health care reimbursement
coverage provided to the Executive pursuant to the Employment Agreement
following a termination of his employment and the term “Coverage Period” shall
mean a period of twelve (12) months from the date that benefits under Section
4(f) commence in accordance with this Section 4(i)(ii); and (iii) all other
payments and benefits set forth in this Section 4 shall be provided to the
Executive as set forth herein.

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(j) Except as set forth in Section 4(i), in the event that the Executive is
entitled to receive the payments and benefits set forth in this Section 4, then
the Executive shall not be eligible to participate in any other severance,
termination, change in control or similar plan, policy or practice of the
Company.

5.         Excise Tax.

(a)       In the event that the Executive shall become entitled to payments
and/or benefits provided by this Agreement or any other amounts in the “nature
of compensation” (whether pursuant to the terms of this Agreement or any other
plan, arrangement or agreement with the Company, any person whose actions result
in a change of ownership or effective control covered by Section 280G(b)(2) of
the Internal Revenue Code of 1986, as amended (“Code”) or any person affiliated
with the Company or such person) as a result of a Change in Control
(collectively the “Company Payments”), and if such Company Payments will be
subject to the tax (the “Excise Tax”) imposed by Section 4999 of the Code (and
any similar tax that may hereafter be imposed by any taxing authority), the
Company shall pay to the Executive at the time specified in Section 5(e) hereof
anadditional amount (the “Gross-Up Payment”) such that the net amount retained
by the Executive, after deduction of any Excise Tax on the Company Payments and
any U.S. federal, state, and local income or payroll tax upon the Gross-Up
Payment provided for by this Section 5(a), but before deduction for any U.S.
federal, state, and local income or payroll tax on the Company Payments, shall
be equal to the Company Payments.

(b)       Notwithstanding the foregoing provisions of Section 5(a) to the
contrary, if it shall be determined that the Executive is entitled to a Gross-Up
Payment, but the Company Payments do not exceed 110% of the greatest amount (the
“Reduced Amount”) that could be paid to the Executive such that the receipt of
the Company Payments would not give rise to any Excise Tax, then no Gross-Up
Payment shall be made to the Executive and the Company Payments, in the
aggregate, shall be reduced to an amount that is one dollar ($1) less than the
Reduced Amount; provided, however, that the reduction shall occur only if the
reduced Company Payments received by the Executive (after taking into account
further reductions for applicable federal, state and local income, social
security and other taxes) would be greater than the unreduced Company Payments
to be received by the Executive minus (i) the Excise Tax payable with respect to
such Company Payments and (ii) all applicable federal, state and local income,
social security and other taxes on such Company Payments. If the Reduced Amount
is to be effective, the Company Payments shall be reduced in the following
order: (A) any cash severance based on a multiple of annual base salary or
bonus, (B) any other cash amounts payable to the Executive, (C) any benefits
valued as “parachute payments,” (D) acceleration of vesting of any stock option
or similar awards for which the exercise price exceeds the then fair market
value, and (E) acceleration of vesting of any equity not covered by clause (D)
above. In the event that the Internal Revenue Service or court ultimately makes
a determination that the “excess parachute payments” plus the “base amount” is
an amount other than as determined initially, an appropriate adjustment shall be
made with regard to the Gross-Up Payment or Reduced Amount, as applicable, to
reflect the final determination and the resulting impact on whether this Section
5(b) applies.

(c)       For purposes of determining whether any of the Company Payments will
be subject to the Excise Tax and the amount of such Excise Tax, (x) the Company
Payments shall be treated as “parachute payments” within the meaning of Section
280G(b)(2) of the Code, and all “parachute payments” in excess of the “base
amount” (as defined under Section 280G(b)(3) of the Code) shall be treated as
subject to the Excise Tax, unless and except to the extent that, in the opinion
of the Company’s independent certified public accountants appointed prior to any
change in ownership (as defined under Section 280G(b)(2) of the Code) or tax
counsel selected by such accountants (the “Accountants”) such Company Payments
(in whole or in part) either do not constitute “parachute payments,” including
giving effect to the recalculation of stock options in accordance with Treasury
Regulation Section 1.280G-1 Q/A33, represent reasonable compensation for
services actually rendered within the meaning of Section 280G(b)(4) of the Code
in excess of the “base amount” or are otherwise not subject to the Excise Tax,
and (y) the value of any non-cash benefits or any deferred payment or benefit
shall be determined by the Accountants in accordance with the principles of
Section 280G of the Code. All determinations hereunder shall be made by the
Accountants which shall provide detailed supporting calculations both to the
Company and the Executive at such time as it is requested by the Company or the
Executive. The determination of the Accountants, subject to the adjustments
provided below, shall be final and binding upon the Company and the Executive.

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(d)       For purposes of determining the amount of the Gross-Up Payment, the
Executive’s marginal blended actual rates of federal, state and local income
taxation in the calendar year in which the change in ownership or effective
control that subjects the Executive to the Excise Tax occurs shall be used. In
the event that the Excise Tax is subsequently determined by the Accountants to
be less than the amount taken into account hereunder at the time the Gross-Up
Payment is made, the Executive shall repay to the Company, at the time that the
amount of such reduction in Excise Tax is finally determined, the portion of the
prior Gross-Up Payment attributable to such reduction (plus the portion of the
Gross-Up Payment attributable to the Excise Tax and U.S. federal, state and
local income tax imposed on the portion of the Gross-Up Payment being repaid by
the Executive if such repayment results in a reduction in Excise Tax or a U.S.
federal, state and local income tax deduction), plus interest on the amount of
such repayment at the rate provided in Section 1274(b)(2)(B) of the Code.
Notwithstanding the foregoing, in the event that any portion of the Gross-Up
Payment to be refunded to the Company has been paid to any U.S. federal, state
and local tax authority, repayment thereof (and related amounts) shall not be
required until actual refund or credit of such portion has been made to the
Executive, and interest payable to the Company shall not exceed the interest
received or credited to the Executive by such tax authority for the period it
held such portion. The Executive and the Company shall mutually agree upon the
course of action to be pursued (and the method of allocating the expense
thereof) if the Executive’s claim for refund or credit is denied. In the event
that the Excise Tax is later determined by the Accountants or the Internal
Revenue Service (or other taxing authority) to exceed the amount taken into
account hereunder at the time the Gross-Up Payment is made (including by reason
of any payment the existence or amount of which cannot be determined at the time
of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment
in respect of such excess (plus any interest or penalties payable with respect
to such excess) promptly after the amount of such excess is finally determined.

(e)       The Gross-Up Payment or portion thereof provided for in Section 5(d)
above shall be paid not later than the sixtieth (60th) day following an event
occurring which subjects the Executive to the Excise Tax; provided, however,
that if the amount of such Gross-Up Payment or portion thereof cannot be finally
determined on or before such day, the Company shall pay to the Executive on such
day an estimate, as determined in good faith by the Accountants, of the minimum
amount of such payments and shall pay the remainder of such payments (together
with interest at the rate provided in Section 1274(b)(2)(B) of the Code),
subject to further payments pursuant to Section 5(d) above, as soon as the
amount thereof can reasonably be determined, but in no event later than the
ninetieth (90th) day after the occurrence of the event subjecting the Executive
to the Excise Tax. Subject to Sections 5(d) and 5(i), in the event that the
amount of the estimated payments exceeds the amount subsequently determined to
have been due, such excess shall constitute a loan by the Company to the
Executive, payable on the fifth (5th) day after demand by the Company (together
with interest at the rate provided in Section 1274(b)(2)(B) of the Code).

(f)        In the event of any controversy with the Internal Revenue Service (or
other taxing authority) with regard to the Excise Tax, the Executive shall
permit the Company to control issues related to the Excise Tax (at its expense),
provided that such issues do not potentially materially adversely affect the
Executive, but the Executive shall control any other issues. In the event the
issues are interrelated, the Executive and the Company shall in good faith
cooperate so as not to jeopardize resolution of either issue, but if the parties
cannot agree the Executive shall make the final determination with regard to the
issues. In the event of any conference with any taxing authority as to the
Excise Tax or associated income taxes, the Executive shall permit the
representative of the Company to accompany the Executive, and the Executive and
the Executive’s representative shall cooperate with the Company and its
representative.

(g)       The Company shall be responsible for all charges of the Accountants.

(h)       The Company and the Executive shall promptly deliver to each other
copies of any written communications, and summaries of any verbal
communications, with any taxing authority regarding the Excise Tax.

(i)        Nothing in this Section 5 is intended to violate the Sarbanes-Oxley
Act of 2002 and to the extent that any advance or repayment obligation hereunder
would do so, such obligation shall be modified so as to make the advance a
nonrefundable payment to the Executive and the repayment obligation null and
void.

(j)        The provisions of this Section 5 shall survive the Executive’s
Termination of Employment for any reason and any amount payable under this
Section 5 shall be subject to the provisions of Section 22(b).

6.         Notice of Termination. After a Change of Control, any purported
termination of the Executive’s employment (other than by reason of death) shall
be communicated by written Notice of Termination from one party hereto to the
other party hereto in accordance with Section 14. For purposes of this
Agreement, a “Notice of Termination” shall mean a notice which shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment. Further, a Notice of Termination for
Cause after a Change of Control is required to include a copy of a resolution
duly adopted by the affirmative vote of not less than two-thirds (2/3) of the
entire membership of the Board at a meeting of the Board which was called and
held for the purpose of considering such termination and which the Executive had
the right to attend and speak finding that, in the good faith opinion of the
Board, the Executive has engaged in conduct set forth in the definition of Cause
herein, and specifying the particulars thereof in detail.

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7.         Date of Termination. The Executive’s “Date of Termination” with
respect to any purported termination of the Executive’s employment after a
Change of Control, shall mean the date specified in the Notice of Termination
and, in the case of a termination by the Executive for Good Reason, shall not be
less than five (5) days nor more than sixty (60) days, from the date such Notice
of Termination is given). In the event a Notice of Termination is given by the
Company, the Executive may treat such notice as having a date of termination at
any date between the date of receipt of such notice and the date of termination
indicated in the Notice of Termination by the Company; provided, that the
Executive must give the Company written notice of the date of termination if he
deems it to have occurred prior to the date of termination indicated in the
Notice of Termination.

8.         No Duty to Mitigate/Set-off. Other than as set forth in Section 4(f),
the Company agrees that if the Executive’s employment with the Company is
terminated pursuant to this Agreement during the term of this Agreement, the
Executive shall not be required to seek other employment or to attempt in any
way to reduce any amounts payable to the Executive by the Company pursuant to
this Agreement. Further, the amount of any payment or benefit provided for in
this Agreement shall not be reduced by any compensation earned by the Executive
or benefit provided to the Executive as the result of employment by another
employer or otherwise. Except as otherwise provided herein and apart from any
disagreement between the Executive and the Company concerning interpretation of
this Agreement or any term or provision hereof, the Company’s obligations to
make the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any circumstances, including
without limitation, any set-off, counterclaim, recoupment, defense or other
right which the Company may have against the Executive. Except as otherwise set
forth in Section 4(i), the amounts due under Section 4 are inclusive, and in
lieu of, any amounts payable under any other salary continuation or cash
severance arrangement of the Company and to the extent paid or provided under
any other such arrangement shall be offset against the amount due hereunder.

9.         Service with Subsidiaries. For purposes of this Agreement, employment
by a subsidiary or a parent of the Company shall be deemed to be employment by
the Company and references to the Company shall include all such entities,
except that the payment obligation hereunder shall be solely that of the
Company. A Change of Control, however, as used in this Agreement, shall refer
only to a Change of Control of the Company.

10.         Confidentiality; No Resignation.

(a)       Without implication as to any other provisions of the Employment
Agreement, Section 6 of the Employment Agreement concerning confidentiality,
non-competition and non-solicitation (other than Section 6(m) thereof) shall
continue to apply following the Change of Control of the Company.

(b)       In consideration of this Agreement, the Executive agrees that he will
not resign from the Company without Good Reason for at least one hundred eighty
(180) days from the Effective Date, except the foregoing shall not apply after a
Change of Control.

(c)       In consideration of this Agreement and the payments and benefits under
Section 4, the Executive agrees that, if he is terminated from employment or if
he terminates employment, within ninety (90) days following a Change of Control,
he will, following a Change of Control and conditioned on timely payment of
amounts due him hereunder, if requested by the Company consult in a senior
advisory capacity to assist in the orderly transition to new management for a
period of ninety (90) days following a Change of Control. The parties agree that
in no event will the services that the Executive will be required to provide
under this Section 10(c) exceed 20% of the average level of services the
Executive provided to the Company during the 36-month period preceding the
Executive’s Date of Termination.

(d)       The Company shall continue to cover the Executive, or cause the
Executive to be covered, under any director and officer insurance maintained
after the Change of Control for directors and officers of the Company (whether
by the Company or another entity) at the highest level so maintained for any
other past or active director or officer with regard to any action or omission
of the Executive while an officer or director of the Company. Such coverage
shall continue for any period during which the Executive may have any liability
for the aforesaid actions or omissions.

(e)       Following a Change of Control, the Company shall, with regard to
matters related to Executive’s period of employment with the Company, indemnify
the Executive to the fullest extent permitted or authorized by the Company’s
bylaws against any claims, suits, judgments, expenses (including reasonable
attorney fees), with advancement of legal fees and disbursements to the fullest
extent permitted by law, arising from, out of, or in connection with the
Executive’s services as an officer or director of the Company, as an officer or
director of any affiliate for which the Executive was required to serve as such
by the Company or as a fiduciary of any benefit plan of the Company or any
affiliate.

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11.       Successors; Binding Agreement. In addition to any obligations imposed
by law upon any successor to the Company, the Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company to
expressly assume and agree in writing to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. This Agreement shall inure to the benefit
of and be enforceable by the Executive’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive shall die while any amount would still be payable to
the Executive hereunder if the Executive had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the executors, personal representatives or
administrators of the Executive’s estate. This Agreement is personal to the
Executive and neither this Agreement or any rights hereunder may be assigned by
the Executive.

12.       Miscellaneous. No provisions of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by the Executive and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. Except as otherwise
set forth herein, this Agreement constitutes the entire Agreement between the
parties hereto pertaining to the subject matter hereof. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement. All references to any law shall be deemed also to refer
to any successor provisions to such laws.

13.       Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.

14.       Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, or sent by
registered mail, postage prepaid. Any such notice shall be deemed given when so
delivered personally, or, if mailed, five days after the date of deposit in the
United States mails, or as follows:

(i)       If to the Company, to:

Overseas Shipholding Group, Inc.

666 Third Avenue

New York, New York 10017

Attention: Chairman

 

(ii)       If to the Executive, to his shown address on the books of the
Company.

Any party may by notice given in accordance with this Section to the other
parties, designate another address or person for receipt of notices hereunder.

15.       Separability. If any provisions of this Agreement shall be declared to
be invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect.

16.       Legal Fees. In the event the Company does not make the payments due
hereunder on a timely basis and the Executive collects any part or all of the
payments provided for hereunder or otherwise successfully enforces the terms of
this Agreement by or through a lawyer or lawyers, the Company shall pay all
costs of such collection or enforcement, including reasonable legal fees and
other reasonable fees and expenses which the Executive may incur (on a tax
grossed up basis, to the extent such amounts are taxable to the Executive), paid
(a) within 60 days after the arbitration award regarding such payment pursuant
to Section 17 below subject to the Executive’s providing the Company with
appropriate documentation of such amounts within 30 days after the arbitration
award, or (b) if the parties enter into a legally binding settlement with
respect to such disputed payment, by the earlier of (i) any day within 60 day
period after the date of such settlement subject to the Executive’s providing
the Company with appropriate documentation of such amounts within 30 days after
the date of such settlement, and (ii) December 31 of the calendar year in which
the parties enter into such settlement subject to the Executive’s providing the
Company with appropriate documentation of such amounts prior to such date. The
Company shall pay to the Executive interest at the prime lending rate (as
announced from time to time by Citibank, N.A.) on all or any part of any amount
to be paid to Executive hereunder that is not paid when due, such amount to be
paid (A) within 60 days after the arbitration award regarding such payment
pursuant to Section 17 below, or (B) if the parties enter into a legally binding
settlement with respect to such disputed payment, by the earlier of (I) within
60 days after the date of such settlement and (II) December 31 of the calendar
year in which the parties enter into such settlement. The prime rate for each
calendar quarter shall be the prime rate in effect on the first day of the
calendar quarter.

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17.       Arbitration. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration conducted in the
City of New York in the State of New York under the Commercial Arbitration Rules
then prevailing of the American Arbitration Association and such submission
shall request the American Arbitration Association to: (i) appoint an arbitrator
experienced and knowledgeable concerning the matter then in dispute; (ii)
require the testimony to be transcribed; (iii) require the award to be
accompanied by findings of fact and the statement for reasons for the decision;
and (iv) request the matter to be handled by and in accordance with the
expedited procedures provided for in the Commercial Arbitration Rules. The
determination of the arbitrators, which shall be based upon a de novo
interpretation of this Agreement, shall be final and binding and judgment may be
entered on the arbitrators’ award in any court having jurisdiction. The Company
shall pay all costs of the American Arbitration Association and the arbitrator.

18.       Non-Exclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Executive’s continuing or future participation in any benefit, bonus,
incentive, equity or other plan or program provided by the Company and for which
the Executive may qualify, nor shall anything herein (except Section 8) limit or
otherwise prejudice such rights as the Executive may have under any other
currently existing plan, agreement as to employment or severance from employment
with the Company or statutory entitlements, provided, that to the extent such
amounts are paid under Section 4 hereof or otherwise, they shall not be due
under any such program, plan, agreement, or statute. Amounts that are vested
benefits or which the Executive is otherwise entitled to receive under any plan
or program of the Company, at or subsequent to the date of termination shall be
payable in accordance with such plan or program, except as otherwise
specifically provided herein.

19.       Not an Agreement of Employment. This is not an agreement assuring
employment and, subject to any other agreement between the Executive and the
Company, the Company reserves the right to terminate the Executive’s employment
at any time with or without cause, subject to the payment provisions hereof, if
any, that are applicable. The Executive acknowledges that he is aware that he
shall have no claim against the Company hereunder or for deprivation of the
right to receive the amounts hereunder as a result of any termination that does
not specifically satisfy the requirements hereof or as a result of any other
action taken by the Company.

20.       Independent Representation. The Executive acknowledges that he has
been advised by the Company to have the Agreement reviewed by independent
counsel and has been given the opportunity to do so.

21.       Governing Law. This Agreement shall be construed, interpreted, and
governed in accordance with the laws of the State of Delaware without reference
to rules relating to conflicts of law.

22.       Code Section 409A.

(a)       Although the Company makes no guarantee with respect to the tax
treatment of payments hereunder, this Agreement is intended to either comply
with, or be exempt from, the requirements of Section 409A of the Code and the
regulations and guidance promulgated thereunder (“Code Section 409A”). To the
extent that this Agreement is not exempt from the requirements of Code Section
409A, this Agreement is intended to comply with the requirements of Code Section
409A and shall be limited, construed and interpreted in accordance with such
intent. If any provision of this Agreement would cause the Executive to incur
any additional tax or interest under Code Section 409A and modifying it would
avoid such additional tax or interest, the Company shall, upon the Executive’s
specific request and after consulting with the Executive, use its reasonable
business efforts to in good faith reform such provision; provided, that any such
modification shall not increase the economic burden to the Company and shall, to
the maximum extent practicable, maintain the original intent and economic
benefit to the Executive of the applicable provision without violating the
provisions of Code Section 409A.

(b)       A termination of employment shall not be deemed to have occurred for
purposes of any provision of this Agreement providing for the payment of any
amounts or benefits upon or following a termination of employment unless such
termination is also a “Separation from Service” within the meaning of Code
Section 409A and, for purposes of any such provision of this Agreement,
references to a “termination,” “termination of employment” or like terms shall
mean Separation from Service. If the Executive is deemed on the Executive’s Date
of Termination to be a “specified employee”, within the meaning of that term
under Code Section 409A(a)(2)(B) and using the identification methodology
selected by the Company from time to time, or if none, the default methodology,
then with regard to any payment or the providing of any benefit that constitutes
“non-qualified deferred compensation” pursuant to Code Section 409A, to the
extent required to be delayed in compliance with Code Section 409A(a)(2)(B),
such payment or benefit shall not be made or provided to the Executive prior to
the earlier of (i) the expiration of the six-month period measured from the date
of the Executive’s Separation from Service and (ii) the date of the Executive’s
death. On the first day of the seventh month following the date of the
Executive’s Separation from Service or, if earlier, on the date of the
Executive’s death, all payments delayed pursuant to this Section 22(b) (whether
they would have otherwise been payable in a single sum or in installments in the
absence of such delay) shall be paid or reimbursed to the Executive in a lump
sum, and any remaining payments and benefits due to the Executive under this
Agreement shall be paid or provided in accordance with the normal payment dates
specified for them herein.

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(c)       If under this Agreement, an amount is to be paid in two or more
installments, for purposes of Code Section 409A, each installment shall be
treated as a separate payment.

(d)       To the extent any reimbursement of costs and expenses provided for
under this Agreement constitutes taxable income to the Executive for Federal
income tax purposes, such reimbursements shall be made no later than December 31
of the calendar year next following the calendar year in which the expenses to
be reimbursed are incurred.

(e)       With regard to any provision herein that provides for reimbursement of
expenses or in-kind benefits, except as permitted by Code Section 409A, (i) the
right to reimbursement or in-kind benefits is not subject to liquidation or
exchange for another benefit, and (ii) the amount of expenses eligible for
reimbursement, or in-kind benefits, provided during any taxable year shall not
affect the expenses eligible for reimbursement, or in-kind benefits to be
provided, in any other taxable year, provided that the foregoing clause (ii)
shall not be violated with regard to expenses reimbursed under any arrangement
covered by Section 105(b) of the Code solely because such expenses are subject
to a limit related to the period the arrangement is in effect.

(f)        Any gross-up payment due to the Executive under this Agreement shall
be paid to the Executive no later than the end of the calendar year following
the year in which the Executive paid the applicable tax.

(g)       Whenever a payment under this Agreement specifies a payment period
with reference to a number of days, the actual date of payment within the
specified period shall be within the sole discretion of the Company.

23.       Withholding. Any payments made or benefits provided to the Executive
under this Agreement shall be reduced by any applicable withholding taxes or
other amounts required to be withheld by law or contract.

 

[Signature page follows]

 

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IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed
and the Executive has hereunto set his hand as of the date first set forth
above.

OVERSEAS SHIPHOLDING GROUP, INC.

 

 

 

By:

/s/James I. Edelson

 

Name:

James I. Edelson

 

Title:

General Counsel and Secretary

 

 

EXECUTIVE

 

 

/s/Morten Arntzen

Morten Arntzen