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Form of Agreement for Executive Officers

INCENTIVE AGREEMENT
FOR THE GRANT OF RESTRICTED STOCK UNITS
UNDER THE
INTERNATIONAL SHIPHOLDING CORPORATION 2011 STOCK INCENTIVE PLAN

This INCENTIVE AGREEMENT (this “Agreement”) is entered into as of [•] by and
between International Shipholding Corporation, a Delaware corporation (“ISC”),
and ________________ (the “Award Recipient”).
 
WHEREAS, ISC maintains the 2011 Stock Incentive Plan (the “Plan”), under which
the Compensation Committee of the Board of Directors of ISC (the “Committee”)
may, among other things, grant restricted stock units payable in shares of ISC’s
common stock, $1.00 par value per share (the “Common Stock”), to, among others,
key employees, officers, and directors of ISC or its subsidiaries (collectively,
the “Company”), subject to the Plan and such other terms, conditions, or
restrictions as it may deem appropriate; and
 
WHEREAS, pursuant to the Plan, the Committee has awarded to the Award Recipient
restricted stock units payable in shares of Common Stock on the terms and
conditions specified below.
 
NOW, THEREFORE, in consideration of these premises, the parties agree as
follows:
 
I.
 
Restricted Stock Units
 
1.1 Restricted Stock Units.  Effective on [•] (the “Date of Grant”), ISC hereby
grants to the Award Recipient an award of ______ restricted stock units (the
“RSUs”) under the Plan, subject to the terms, conditions, and restrictions set
forth in the Plan and in this Agreement.  _____ of the RSUs shall vest based on
the continued employment of the Award Recipient as provided in Section 1.3 below
(the “Time-Based RSUs”).  The remaining _______ RSUs shall vest based upon
continued employment and the satisfaction of certain specified performance
criteria as provided in Sections 1.4 and 1.5 below (the “Performance-Based
RSUs”).
 
1.2 Award Restrictions.  The RSUs may not be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated, whether voluntarily or
involuntarily.  The Award Recipient shall have no rights, including, but not
limited to, voting and dividend rights, in the shares of Common Stock underlying
the RSUs unless and until such shares are issued to the Award Recipient, or as
otherwise provided in the Plan or this Agreement.
 
1.3 Vesting of Time-Based RSUs.
 
(a) Time-Based Vesting.  Upon vesting under the terms and conditions of the Plan
and this Agreement, each Time-Based RSU represents the right to receive from ISC
one share of Common Stock, free of any restrictions except as otherwise provided
in the Plan or this Agreement, and all amounts, securities, and property
notionally credited to the Award Recipient’s Account (as defined in Section 2.1)
with respect to such Time-Based RSU.
 
(b) Vesting Schedule.  The Time-Based RSUs shall vest in installments as
follows, if, except as provided in Section 1.6, the Award Recipient remains
employed with the Company on such dates:
 
 
Percentage of
Time-Based RSUs
Vesting Date
one-third
[•]
one-third
[•]
remainder of Time-Based RSUs
[•]

 
 
1.4 Vesting of Absolute Performance-Based RSUs.  The vesting of _______ of the
Performance-Based RSUs (the “Absolute Performance-Based RSUs”) is subject to the
following terms and conditions:
 
(a) Performance-Based Vesting.  Upon vesting under the terms and conditions of
the Plan and this Agreement, each Absolute Performance-Based RSU represents the
right to receive from the Company a maximum of one-and-a-half shares of Common
Stock, free of any restrictions except as otherwise provided in the Plan or this
Agreement, and all amounts, securities, and property notionally credited to the
Award Recipient’s Account with respect to such Absolute Performance-Based RSU.
 
(b) Vesting Schedule.  Except as provided in Section 1.6, depending on Company’s
fiscal [•] earnings per share as measured against the targets established in
Section 1.4(b)(i) below (the “Absolute Measure”), the Absolute Performance-Based
RSUs shall vest and the Award Recipient shall be entitled to receive a number of
shares of Common Stock, determined in accordance with, and subject to, the
following terms and conditions:
 
(i) The number of Absolute Performance-Based RSUs granted under this Agreement
represents the target award.  The Award Recipient may receive a greater or
lesser number of shares of Common Stock under the Plan than the number of
Absolute Performance-Based RSUs granted under this Agreement, depending on the
Company’s performance as measured against the Absolute Measure, determined as
follows:
 
Performance Level
Company’s Fiscal [•] Earnings Per Share
Share Payout as a % of Absolute Performance-Based RSU Award
Maximum
≥ $ [•]
150%
Target
$ [•]
100%
Threshold
$ [•]
50%
Below Threshold
< $ [•]
0%

 
 
The number of shares vesting shall be prorated if the Company’s fiscal [•]
earnings per share falls between the threshold and target or the target and the
maximum amounts.  At performance below the threshold, all Absolute
Performance-Based RSUs will be forfeited.
 
(ii) Prior to the vesting of any Absolute Performance-Based RSUs and the payout
of any shares of Common Stock under the Plan and this Agreement, the Committee
shall certify in writing, by resolution or otherwise, the Company’s performance
as measured against the Absolute Measure, whether and to what extent the
Absolute Performance-Based RSUs have vested, and how many shares of Common Stock
will be issuable to the Award Recipient as determined by Section 1.4(b)(i),
rounded to the nearest whole share.
 
(iii) The Absolute Performance-Based RSUs shall vest and be paid out in the
number of shares, if any, as determined under this Section 1.4, on [•], provided
that the Award Recipient remains employed with the Company on such date.
 
1.5 Vesting Terms of Relative Performance-Based RSUs.  The vesting of _______ of
the Performance-Based RSUs (the “Relative Performance-Based RSUs”) is subject to
the following terms and conditions:
 
(a) Performance-Based Vesting.  Upon vesting under the terms and conditions of
the Plan and this Agreement, each Relative Performance-Based RSU represents the
right to receive from the Company a maximum of one-and-a-half shares of Common
Stock, free of any restrictions except as otherwise provided in the Plan or this
Agreement, and all amounts, securities, and property notionally credited to the
Award Recipient’s Account with respect to such Relative Performance-Based RSU.
 
(b) Vesting Schedule.  Except as provided in Section 1.6, depending on the
one-year total stockholder return of ISC during the period from [•] to [•] (the
“Relative Performance Period”) as measured against peer performance over the
same period, the Relative Performance-Based RSUs shall vest and the Award
Recipient shall be entitled to receive a number of shares of Common Stock,
determined in accordance with, and subject to, the following terms and
conditions:
 
(i) The number of Relative Performance-Based RSUs granted under this Agreement
represents the target award.  At the end of the Relative Performance Period, the
Award Recipient may receive a greater or lesser number of shares of Common Stock
under the Plan than the number of Relative Performance-Based RSUs granted under
this Agreement, depending on ISC’s Total Stockholder Return (as defined in
Section 1.5(b)(iii)) ranked in terms of a percentile in relation to that of the
companies comprising the Russell 2000 Index (the “Index”), which shall be
determined as follows:
 

  
 
 

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Performance Level
ISC’s Percentile Rank
Share Payout as a % of Relative Performance-Based RSU Award
Maximum
≥ 70th percentile
150%
Target
60th percentile
100%
Threshold
25th percentile
50%
Below Threshold
< 25th percentile
0%

 
 
The number of shares vesting shall be prorated if ISC’s TSR rank falls between
the threshold and target or the target and the maximum amounts.  At performance
below the threshold, all Relative Performance-Based RSUs will be forfeited.
 
(ii) Prior to the vesting of any Relative Performance-Based RSUs and the payout
of any shares of Common Stock under the Plan and this Agreement, the Committee
shall certify in writing, by resolution or otherwise, ISC’s Total Stockholder
Return level achieved as compared to that of the Index, whether and to what
extent the Relative Performance-Based RSUs have vested, and how many shares of
Common Stock are to be issued to the Award Recipient as determined by Section
1.5(b)(i), rounded to the nearest whole share.
 
(iii) The Relative Performance-Based RSUs shall vest and be paid out in the
number of shares, if any, as determined under this Section 1.5, on [•], provided
that the Award Recipient remains employed with the Company on such date.
 
(iv) For purposes of this Agreement, “Total Stockholder Return” or “TSR” for ISC
and each company in the Index means stock price appreciation from the beginning
to the end of the Relative Performance Period, including dividends and
distributions made or declared (calculated based on the assumption that such
dividends or distributions are reinvested in the common stock of ISC or any
company in the Index) during the Relative Performance Period, expressed as a
percentage return, using the following formula:
 
TSR = (Ending Stock Price (including dividends paid)/Beginning Stock Price) – 1
 
where the “Ending Stock Price” is equal to the volume-weighted average closing
price of the relevant stock during the final month of the Relative Performance
Period, and the “Beginning Stock Price” is equal to the volume-weighted average
closing price of the relevant stock during the last calendar month prior to the
Relative Performance Period.  The TSR of ISC or any company in the Index shall
be equitably adjusted to reflect any spin-off, stock split, reverse stock split,
stock dividend, recapitalization, or reclassification or other similar change in
the number of outstanding shares of common stock.
 
1.6 Effect of a Change of Control and Certain Terminations.
 
(a) Upon the earlier to occur of a Change of Control of ISC (as described in the
Plan) or the date the Award Recipient’s employment terminates due to death,
disability within the meaning of Section 22(e)(3) of the Internal Revenue Code
of 1986, as amended, or retirement on or after age 65:
 
(i) any remaining outstanding and unvested Time-Based RSUs shall immediately
vest and pay out in shares of Common Stock;
 
(ii) any remaining outstanding and unvested Performance-Based RSUs shall
immediately vest and pay out at the target levels of shares specified in
Sections 1.4 and 1.5 above, without regard to the attainment of performance
targets; and
 
(iii) any amounts, securities, and property notionally credited to the Award
Recipient’s Account with respect to such vesting RSUs shall vest and pay out in
accordance with Section 2.1.
 
(b) Except as otherwise expressly provided in this Section 1.6 or as otherwise
determined by the Committee in its sole discretion, termination of employment
shall result in forfeiture of all unvested RSUs.
 
II.
 
Dividend Equivalents and the Issuance of Shares Upon Vesting
 
2.1 Restricted Stock Unit Account and Dividend Equivalents.  The Company shall
maintain an account (the “Account”) on its books in the name of the Award
Recipient.  Such Account shall reflect the number of RSUs awarded to the Award
Recipient, as such number may be adjusted under the terms of the Plan and this
Agreement, as well as any additional RSUs or cash credited as a result of
dividend equivalents, administered as follows:
 
(a) The Account shall be for recordkeeping purposes only, and no assets or other
amounts shall be set aside from the Company’s general assets with respect to
such Account.
 
(b) If ISC declares a cash dividend payable any time between the Date of Grant
and the date immediately preceding the date the RSUs vest and pay out under this
Agreement (the “Vesting Period”), the Company shall credit the Award Recipient’s
Account with the amount of any cash that would have been received as a dividend
had the Award Recipient’s outstanding RSUs been shares of Common Stock on the
applicable record date for such cash dividend.
 
(c) If dividends are declared and paid in the form of shares of Common Stock
rather than cash, then the Award Recipient’s Account will be credited with one
additional RSU for each share of Common Stock that would have been received as a
dividend had the Award Recipient’s outstanding RSUs been shares of Common Stock
on the applicable record date for such stock dividend.
 
(d) All such cash and any additional RSUs credited via dividend equivalents
shall vest or be forfeited at the same time and on the same terms as the RSUs to
which they relate.
 
(e) In addition, if, pursuant to Section 1.4(b)(i) or Section 1.5(b)(i), the
Award Recipient receives a number of shares of Common Stock in excess of the
number of designated Performance-Based RSUs (the “Additional Shares”), the Award
Recipient also shall be entitled to receive, simultaneous with the issuance of
the Additional Shares, all dividends and distributions, whether payable in cash
or Common Stock, that were payable during the Vesting Period and that the Award
Recipient would have received had he owned the Additional Shares on the
applicable record date for such dividend or distribution.
 
2.2 Issuance of Shares of Common Stock.  As soon as practicable following the
date any RSUs vest under this Agreement, but no later than 30 days after such
date, the number of shares of Common Stock to which the Award Recipient is
entitled under this Agreement, rounded to the next whole share, shall be
transferred to the Award Recipient or his nominee via book entry or, upon the
Award Recipient’s request, ISC shall cause a stock certificate to be issued in
the name of the Award Recipient or his nominee.  Upon issuance of such shares,
the Award Recipient is free to hold or dispose of such shares, subject to
applicable securities laws and any internal Company policy then in effect and
applicable to the Award Recipient, including, but not limited to, ISC’s Insider
Trading Policy and Executive Stock Ownership Guidelines.  Notwithstanding
anything in this Agreement to the contrary, no fractional shares shall be issued
in settlement of any RSUs granted hereunder.
 
2.3 Additional Conditions to Issuance of Shares.  Anything in this Agreement to
the contrary notwithstanding, if, at any time prior to the vesting or settlement
of the RSUs granted hereby, the Company further determines, in its sole
discretion, that the listing, registration, or qualification (or any updating of
any such document) of the shares of Common Stock issuable pursuant hereto is
necessary on any securities exchange or under any federal or state securities or
blue sky law, or that the consent or approval of any governmental regulatory
body is necessary or desirable as a condition of, or in connection with the
issuance of shares of Common Stock pursuant thereto, or the removal of any
restrictions imposed on such shares, such shares of Common Stock shall not be
issued, in whole or in part, or the restrictions thereon removed, unless such
listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Company.  The
Company agrees to use commercially reasonable efforts to issue all shares of
Common Stock issuable hereunder on the terms provided herein.
 
III.
 
Defined Terms
 
The definition of all capitalized terms used herein and not otherwise defined
herein shall be as provided in the Plan.
 
IV.
 
Recoupment Policy
 
This Award is subject to (1) any recoupment of compensation, or “clawback,”
policies the Company has in place as of the Date of Grant and (2) any such
policies that the Company may adopt in order to satisfy the requirements of
Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and
any resulting rules issued by the Securities and Exchange Commission or the
national securities exchange on which the Common Stock trades.  All
determinations regarding the applicability of these provisions to this Award
shall be in the discretion of the Committee.
 
V.
 
Withholding Taxes
 
At any time that the Award Recipient is required to pay to the Company an amount
required to be withheld under the applicable employment and income tax laws in
connection with the vesting and payout of the RSUs, the Award Recipient must
deliver to ISC the amount of withholding required by law.  With respect to any
required income tax withholding, the Award Recipient shall have the right to
fully satisfy this tax withholding obligation by requesting ISC to withhold,
from the shares the Award Recipient otherwise would receive upon vesting of the
RSUs, that number of shares of Common Stock having an aggregate value (as
determined under the Plan) equal to the minimum amount required to be withheld;
provided, however, that to prevent the issuance of fractional shares and the
under-withholding of taxes, the Award Recipient agrees that the number of shares
withheld shall be rounded up to the next whole number of shares.  The Committee
does not have the right to disapprove of an election by the Award Recipient to
have shares withheld in satisfaction of the withholding tax obligation.  With
respect to applicable employment taxes, the Award Recipient expressly agrees
that unless he has delivered such amount to the Company, the Company has the
right to withhold such amount from any other amounts payable to the Award
Recipient by the Company.
 
VI.
 
No Contract of Employment Intended
 
Nothing in this Agreement shall confer upon the Award Recipient any right to
continue in the employment of the Company, or to interfere in any way with the
right of the Company to terminate the Award Recipient’s employment relationship
with the Company at any time.
 
VII.
 
Binding Effect
 
This Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective heirs, executors, administrators, and successors.
 
VIII.
 
Inconsistent Provisions
 
The RSUs granted hereby are subject to the provisions of the Plan, as in effect
on the date hereof and as it may be amended.  In the event any provision of this
Agreement conflicts with such a provision of the Plan, the Plan provision shall
control, except with regard to the limitations on the Committee’s discretion as
provided in the second sentence of Section 12.1 of this Agreement.  The Award
Recipient acknowledges that a copy of the Plan was distributed to the Award
Recipient and that the Award Recipient was advised to review such Plan prior to
entering into this Agreement.  The Award Recipient waives the right to claim
that the provisions of the Plan are not binding upon the Award Recipient and the
Award Recipient’s heirs, executors, administrators, legal representatives, and
successors.
 
IX.
 
Attorneys’ Fees and Expenses
 
Should any party to this Agreement retain counsel for the purpose of enforcing,
or preventing the breach of, any provision of this Agreement, including but not
limited to the institution of any action or proceeding in court (a) to enforce
any provision of this Agreement, (b) to obtain monetary or liquidated damages
for failure to perform under this Agreement, (c) for a declaration of such
parties’ rights or obligations with respect to this Agreement, or (d) for any
other judicial remedy, then the prevailing party shall be entitled to be
reimbursed by the losing party for all costs and expenses incurred thereby,
including, but not limited to, attorneys’ fees (including costs of appeal).
 
X.
 
Governing Law
 
This Agreement shall be governed by and construed in accordance with the laws of
the State of Delaware.
 
XI.
 
Severability
 
If any term or provision of this Agreement, or the application thereof to any
person or circumstance, shall at any time or to any extent be invalid, illegal
or unenforceable in any respect as written, the Award Recipient and the Company
intend for any court construing this Agreement to modify or limit such provision
so as to render it valid and enforceable to the fullest extent allowed by
law.  Any such provision that is not susceptible of such reformation shall be
ignored so as to not affect any other term or provision hereof, and the
remainder of this Agreement, or the application of such term or provision to
persons or circumstances other than those as to which it is held invalid,
illegal or unenforceable, shall not be affected thereby and each term and
provision of this Agreement shall be valid and enforced to the fullest extent
permitted by law.
 
XII.
 
Amendment, Modification, and Termination; Entire Agreement
 
12.1 The Committee may amend, modify, or terminate any RSUs at any time prior to
vesting in any manner not inconsistent with the terms of the Plan and this
Agreement.  If the RSUs are intended to qualify as performance-based
compensation under Section 162(m) of the Code, the Committee may not use its
discretion to increase the compensation payable to the Award Recipient hereunder
in violation of the “performance-based compensation” requirements of Section
162(m) of the Code.  Notwithstanding the foregoing, no amendment, modification,
or termination may materially impair the rights of an Award Recipient hereunder
without the written consent of the Award Recipient.
 
12.2 The Plan and this Agreement contain the entire agreement between the
parties with respect to the subject matter contained herein.  Any oral or
written agreements, representations, warranties, written inducements, or other
communications with respect to the subject matter contained herein made prior to
the execution of the Agreement shall be void and ineffective for all purposes.
 
By signature below, the Award Recipient represents that he is familiar with the
terms and provisions of the Plan, and hereby accepts this Agreement subject to
all of those terms and provisions.  The Award Recipient has reviewed the Plan,
this Agreement, and the related prospectus in their entirety and fully
understands all provisions of each.  The Award Recipient agrees to accept as
binding, conclusive, and final all decisions or interpretations of the Committee
upon any questions arising under the Plan or this Agreement.
 
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed
as of the day and year first above written.
 
INTERNATIONAL SHIPHOLDING CORPORATION:
 
 
By:                                                                                   
 
Name:                                                                                   
 
Title:                                                                                   
 
 
AWARD RECIPIENT:
 
 
 
 
Name:                                                                                   
 
 

                                                                     
 
 

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