Exhibit 10(iii)(z)

 

OVERSEAS SHIPHOLDING GROUP, INC.
ENHANCED SEVERANCE PLAN
FOR EMPLOYEES LEVEL 21-23

 

Effective January 1, 2009

 

INTRODUCTION

 

The purpose of the Overseas Shipholding Group, Inc. Enhanced Severance Plan for
Employees Level 21-23 (the “Plan”) is to enable Overseas Shipholding Group, Inc.
(the “Company”) and its Affiliates (as defined herein, and collectively with the
Company, the “Employers” and, each with respect to an Eligible Employee (as
defined herein), as applicable, the “Employer”) to offer a form of protection
for a possible loss of income to an Eligible Employee who suffers a loss of
employment under the terms and conditions set forth in the Plan, including
enhanced protection if the Eligible Employee is (i) in good standing with the
Employer on the date of a Change in Control (as defined herein) and (ii) suffers
a loss of employment with the Employer under the terms and conditions set forth
in the Plan within the twenty-four (24) month period following a Change in
Control.  Accordingly, to accomplish this purpose, the Company’s Board of
Directors has adopted the Plan, effective January 1, 2009, in an effort to
assist Eligible Employees in replacing the loss of income caused by a
termination of employment under the circumstances described herein.  The Plan
amends and supersedes any severance, termination, change in control or similar
plans, policies and/or practices of the Employers in effect for Eligible
Employees with respect to the subject matter of the Plan.  An Eligible Employee
covered by the Plan shall not be eligible to participate in any other severance,
termination, change in control or similar plan, policy or practice of the
Employers which would otherwise apply under the circumstances described herein. 
For the avoidance of doubt, (i) an employee of an Employer covered by an
Individual Severance Agreement (as defined herein) shall not be eligible to
become a Participant under the Plan in accordance with Section 2.1 of the Plan
and the Plan does not amend or supersede any Individual Severance Agreement, and
(ii) an employee of an Employer covered by an Individual Change in Control
Severance Agreement (as defined herein) shall not be eligible to become a
Participant under the Plan in accordance with Section 2.2 of the Plan and the
Plan does not amend or supersede any Individual Change in Control Severance
Agreement.  Capitalized terms and phrases used herein shall have the meanings
ascribed thereto in Article I.

 

ARTICLE I

DEFINITIONS

 

1.1          “AFFILIATE” SHALL MEAN ANY ENTITY AFFILIATED WITH THE COMPANY
WITHIN THE MEANING OF CODE SECTION 414(B) WITH RESPECT TO A CONTROLLED GROUP OF
CORPORATIONS, CODE SECTION 414(C) WITH RESPECT TO TRADES OR BUSINESSES UNDER
COMMON CONTROL WITH THE COMPANY, CODE SECTION 414(M) WITH RESPECT TO AFFILIATED
SERVICE GROUPS AND ANY OTHER ENTITY REQUIRED TO BE AGGREGATED WITH

 

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THE COMPANY UNDER CODE SECTION 414(O).  NO ENTITY SHALL BE TREATED AS AN
AFFILIATE FOR ANY PERIOD DURING WHICH IT IS NOT PART OF THE CONTROLLED GROUP,
UNDER COMMON CONTROL OR OTHERWISE REQUIRED TO BE AGGREGATED UNDER CODE
SECTION 414.

 

1.2          “ANNUAL SALARY” SHALL MEAN WITH REGARD TO A PARTICIPANT, THE ANNUAL
RATE OF PAY FOR SERVICES PAID BY THE EMPLOYER TO THE PARTICIPANT AT THE TIME OF
HIS OR HER TERMINATION OF EMPLOYMENT FROM THE EMPLOYER, AS REFLECTED IN THE
EMPLOYER’S PAYROLL RECORDS.  ANNUAL SALARY SHALL NOT INCLUDE COMMISSIONS,
BONUSES, OVERTIME PAY, INCENTIVE COMPENSATION, BENEFITS PAID UNDER ANY QUALIFIED
PLAN, ANY GROUP MEDICAL, DENTAL OR OTHER WELFARE BENEFIT PLAN, NON-CASH
COMPENSATION OR ANY OTHER ADDITIONAL COMPENSATION BUT, SHALL INCLUDE ANY SALARY
REDUCTION CONTRIBUTIONS TO A PLAN MAINTAINED PURSUANT TO CODE SECTION 401(K),
125 OR 132(F) AND AMOUNTS REDUCED PURSUANT TO A NONQUALIFIED ELECTIVE DEFERRED
COMPENSATION ARRANGEMENT, IF ANY, TO THE EXTENT THAT IN EACH SUCH CASE THE
REDUCTION IS TO BASE SALARY.

 

1.3          “BOARD” SHALL MEAN THE BOARD OF DIRECTORS OF THE COMPANY.

 

1.4          “BONUS” SHALL MEAN, AS APPLICABLE:

 

(i)    If the Participant is entitled to receive the Severance Benefit, the
Participant’s annual bonus for the fiscal year in which the Participant suffers
a Termination of Employment, as in effect immediately prior to the Termination
of Employment, as set forth under the Participant’s individual employment
agreement with the Employer or in any written bonus plan, program or arrangement
approved by the Board or the Compensation Committee of the Board.  With respect
to any such Bonus that is based on a range and/or subject to the achievement of
a performance goal(s), the Bonus shall be deemed to be the Participant’s target
level bonus without regard to the actual level of performance (whether
individual performance or company performance) achieved.  Notwithstanding the
foregoing, such Bonus shall not include any bonus to be paid upon the completion
of any specified milestone or project or upon the occurrence of a specified
event.

 

(ii)   If the Participant is entitled to receive the Enhanced Severance Benefit,
the Participant’s highest annual target bonus in effect within one hundred
eighty (180) days prior to, or at any time after, the Change in Control, or if
no annual target bonus is in effect for the Participant during such period, then
such Bonus shall be deemed to be 50% of the Participant’s Annual Salary in
effect immediately prior to his or her termination (or if such termination is by
the Participant pursuant to Section 1.16(i), Participant’s Annual Salary rate in
effect immediately prior to such reduction of the rate of his Annual Salary),

 

1.5          “CAUSE” SHALL MEAN WITH REGARD TO ANY ELIGIBLE EMPLOYEE, THE
ELIGIBLE EMPLOYEE’S: (I) NEGLIGENCE OR MISCONDUCT WITH REGARD TO THE COMPANY OR
THE EMPLOYER OR IT OR THEIR ASSETS; (II) MISAPPROPRIATION OR FRAUD WITH REGARD
TO THE COMPANY OR THE EMPLOYER OR ITS OR THEIR ASSETS; (III) CONVICTION OF, OR
THE PLEADING OF GUILTY OR NOLO CONTENDERE TO, A FELONY OR OTHER CRIME INVOLVING
MORAL TURPITUDE; (IV) MATERIAL VIOLATION OF, OR A FAILURE TO FOLLOW, THE
COMPANY’S OR THE EMPLOYER’S ESTABLISHED POLICIES AND PROCEDURES; (V) REPEATED
FAILURE TO PERFORM THE DUTIES OF THE EMPLOYMENT POSITION HELD BY THE ELIGIBLE
EMPLOYEE; (VI) A VIOLATION OF THE COMPANY’S OR THE

 

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EMPLOYER’S CODE OF CONDUCT; OR (VII) WILLFUL MISCONDUCT WHICH THE COMPANY OR THE
EMPLOYER BELIEVES MAY NEGATIVELY IMPACT THE COMPANY OR THE EMPLOYEE,
RESPECTIVELY, OR ITS OR THEIR REPUTATION.  A TERMINATION OF EMPLOYMENT FOR CAUSE
SHALL MEAN A TERMINATION BY THE EMPLOYER EFFECTED BY WRITTEN NOTICE GIVEN TO THE
ELIGIBLE EMPLOYEE AS A RESULT OF THE CAUSE EVENT.

 

1.6          “CHANGE IN CONTROL” MEANS THE OCCURRENCE OF ANY OF THE FOLLOWING
EVENTS:  (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 IN 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 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 IN CONTROL MAY
OCCUR UNDER THE PLAN.

 

1.7          “COBRA” SHALL MEAN THE CONSOLIDATED OMNIBUS BUDGET RECONCILIATION
ACT OF 1986, AS AMENDED.

 

1.8          “CODE” SHALL MEAN THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.

 

1.9          “CODE SECTION 409A” SHALL MEAN SECTION 409A OF THE CODE TOGETHER
WITH THE TREASURY REGULATIONS AND OTHER OFFICIAL GUIDANCE PROMULGATED
THEREUNDER.

 

1.10        “COMMITTEE” SHALL MEAN AN ADMINISTRATIVE COMMITTEE APPOINTED BY THE
BOARD TO ADMINISTER THE PLAN.

 

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1.11        “DISABILITY” SHALL MEAN THE INABILITY DUE TO PHYSICAL OR MENTAL
ILLNESS OR INJURY TO CARRY OUT JOB RESPONSIBILITIES WHICH WOULD QUALIFY THE
ELIGIBLE EMPLOYEE FOR BENEFITS UNDER THE COMPANY’S LONG-TERM DISABILITY PLAN
WITHOUT REGARD TO ANY WAITING PERIOD THEREUNDER.

 

1.12        ELIGIBLE EMPLOYEE” SHALL MEAN AN EMPLOYEE WHO ON THE EARLIER OF THE
DATE OF HIS OR HER TERMINATION OF EMPLOYMENT WITH THE EMPLOYER OR THE DATE OF A
CONSUMMATION OF A CHANGE IN CONTROL IS CLASSIFIED IN THE EMPLOYER’S RECORDS AS A
LEVEL 21, 22 OR 23 EMPLOYEE.

 

1.13        “EMPLOYEE” SHALL MEAN ANY ACTIVE, REGULAR, FULL-TIME OR PART-TIME
EMPLOYEE OF THE EMPLOYER OTHER THAN AN EMPLOYEE WHOSE TERMS AND CONDITIONS OF
EMPLOYMENT ARE COVERED BY A COLLECTIVE BARGAINING AGREEMENT THAT DOES NOT
PROVIDE FOR PARTICIPATION IN THE PLAN.  NOTWITHSTANDING THE PRECEDING SENTENCE,
“EMPLOYEE” DOES NOT INCLUDE ANY TEMPORARY EMPLOYEES OR ANY EMPLOYEE WHO WORKS ON
A PER DIEM BASIS.  “EMPLOYEE” ALSO DOES NOT INCLUDE ANY INDIVIDUAL
(I) DESIGNATED BY THE EMPLOYER AS AN INDEPENDENT CONTRACTOR AND NOT AS AN
EMPLOYEE AT THE TIME OF ANY DETERMINATION, (II) BEING PAID BY OR THROUGH A THIRD
PARTY AGENCY, OR (III) WHO IS A LEASED EMPLOYEE (AS DEFINED IN CODE
SECTION 414(N)); ANY SUCH INDIVIDUAL SHALL NOT BE AN ELIGIBLE EMPLOYEE EVEN IF
HE OR SHE IS LATER RETROACTIVELY RECLASSIFIED AS A COMMON-LAW OR OTHER TYPE OF
EMPLOYEE OF THE EMPLOYER DURING ALL OR ANY PART OF SUCH PERIOD PURSUANT TO
APPLICABLE LAW OR OTHERWISE.

 

1.14        “ENHANCED SEVERANCE BENEFIT” SHALL MEAN AN AMOUNT EQUAL TO THE SUM
OF (I) THE PARTICIPANT’S ANNUAL SALARY, PLUS (II) THE PARTICIPANT’S BONUS.

 

1.15        “ERISA” SHALL MEAN THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED.

 

1.16        “GOOD REASON” SHALL MEAN WITH REGARD TO ANY PARTICIPANT, THE
OCCURRENCE OF ANY OF THE FOLLOWING EVENTS ON OR FOLLOWING A CHANGE IN CONTROL
WITHOUT THE PARTICIPANT’S EXPRESS WRITTEN CONSENT, PROVIDED THE PARTICIPANT
GIVES NOTICE TO THE EMPLOYER OF HIS OR HER INTENT TO RESIGN FOR GOOD REASON
WITHIN NINETY (90) DAYS OF THE OCCURRENCE OF THE GOOD REASON EVENT AND SUCH GOOD
REASON EVENT IS NOT CORRECTED BY THE EMPLOYER IN ALL MATERIAL RESPECTS WITHIN
THIRTY (30) DAYS FOLLOWING RECEIPT OF THE PARTICIPANT’S WRITTEN NOTIFICATION:
(I) A REDUCTION IN THE PARTICIPANT’S ANNUAL SALARY (WHICH INCLUDES SHIFT
DIFFERENTIALS) BY MORE THAN 10%; (II) A RELOCATION OF THE PARTICIPANT’S
PRINCIPAL BUSINESS LOCATION TO AN AREA OUTSIDE OF A FIFTY (50) MILE RADIUS OF
THE PARTICIPANT’S THEN CURRENT PRINCIPAL BUSINESS LOCATION; OR (III) A MATERIAL
REDUCTION IN THE PARTICIPANT’S DUTIES.  A TERMINATION OF EMPLOYMENT FOR GOOD
REASON SHALL MEAN A TERMINATION BY A PARTICIPANT EFFECTED BY WRITTEN NOTICE
GIVEN TO THE EMPLOYER WITHIN 150 DAYS FOLLOWING THE INITIAL DATE ON WHICH THE
EVENT PARTICIPANT CLAIMS CONSTITUTES GOOD REASON OCCURRED AND WHICH GOOD REASON
EVENT HAS NOT BEEN CURED DURING THE PERIOD SET FORTH ABOVE.

 

1.17        “INDIVIDUAL SEVERANCE AGREEMENT” SHALL MEAN AN APPROVED, EXECUTED,
WRITTEN AGREEMENT BETWEEN THE EMPLOYER AND AN ELIGIBLE EMPLOYEE THAT HAS NOT
EXPIRED OR BEEN REPLACED PRIOR TO THE TERMINATION OF THE ELIGIBLE EMPLOYEE’S
EMPLOYMENT AND THAT PROVIDES FOR SPECIFIC SEVERANCE FOR THE ELIGIBLE EMPLOYEE IN
CONNECTION WITH A TERMINATION OF EMPLOYMENT BY THE EMPLOYER WITHOUT CAUSE.

 

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1.18        “INDIVIDUAL CHANGE IN CONTROL SEVERANCE AGREEMENT” SHALL MEAN AN
APPROVED, EXECUTED, WRITTEN AGREEMENT BETWEEN THE EMPLOYER AND AN ELIGIBLE
EMPLOYEE ENTERED INTO PRIOR TO A CHANGE IN CONTROL THAT HAS NOT EXPIRED OR BEEN
REPLACED PRIOR TO THE TERMINATION OF THE EMPLOYEE’S EMPLOYMENT AND THAT PROVIDES
FOR SPECIFIC SEVERANCE FOR THE EMPLOYEE IN CONNECTION WITH A TERMINATION OF
EMPLOYMENT DUE TO A TERMINATION BY THE EMPLOYER WITHOUT CAUSE OR THE ELIGIBLE
EMPLOYEE’S RESIGNATION FOR GOOD REASON AT ANY TIME WITHIN TWO (2) YEARS AFTER
THE CHANGE IN CONTROL.

 

1.19        “PARTICIPANT” SHALL MEAN AN ELIGIBLE EMPLOYEE WHO IS ENTITLED TO A
SEVERANCE BENEFIT OR ENHANCED SEVERANCE BENEFIT UNDER THE PLAN AND WHO IS NOT
EXCLUDED FROM BEING A PARTICIPANT PURSUANT TO THE PENULTIMATE SENTENCE OF THE
INTRODUCTION TO THE PLAN.

 

1.20        “PLAN” SHALL MEAN THE OVERSEAS SHIPHOLDING GROUP, INC. ENHANCED
SEVERANCE PLAN FOR EMPLOYEES LEVEL 21-23, EFFECTIVE AS OF JANUARY 1, 2009, AS
AMENDED FROM TIME TO TIME.

 

1.21        “PLAN ADMINISTRATOR” SHALL MEAN THE COMMITTEE ON BEHALF OF THE
COMPANY.

 

1.22        “RETIREMENT” SHALL MEAN A TERMINATION OF EMPLOYMENT BY AN ELIGIBLE
EMPLOYEE AT HIS OR HER ELECTION ON OR AFTER THE ELIGIBLE EMPLOYEE’S ATTAINMENT
OF AGE SIXTY-FIVE (65).

 

1.23        “SEVERANCE BENEFIT” SHALL MEAN AN AMOUNT EQUAL TO THREE TIMES THE
PARTICIPANT’S WEEKLY SALARY FOR EVERY YEAR OF CONTINUOUS SERVICE. 
NOTWITHSTANDING THE FOREGOING, THE SEVERANCE BENEFIT FOR ANY PARTICIPANT SHALL
NOT BE LESS THAN 26 TIMES THE PARTICIPANT’S WEEKLY SALARY AND SHALL NOT BE
GREATER THAN 78 TIMES THE PARTICIPANT’S WEEKLY SALARY.

 

1.24        “SEVERANCE PERIOD” SHALL MEAN THE PERIOD BEGINNING ON DATE OF
TERMINATION OF EMPLOYMENT AND ENDING ON THE DATE THE FINAL INSTALLMENT OF
SEVERANCE BENEFIT PAYMENTS IS MADE TO A PARTICIPANT.

 

1.25        “TERMINATION OF EMPLOYMENT” SHALL MEAN AN ELIGIBLE EMPLOYEE’S
TERMINATION OF EMPLOYMENT (I) BY THE EMPLOYER FOR CAUSE OR WITHOUT CAUSE,
(II) BY THE ELIGIBLE EMPLOYEE FOR ANY REASON, OR (III) DUE TO THE ELIGIBLE
EMPLOYEE’S DEATH, DISABILITY OR RETIREMENT.  AN ELIGIBLE EMPLOYEE ON AN APPROVED
LEAVE OF ABSENCE SHALL NOT BE DEEMED TO HAVE INCURRED A TERMINATION OF
EMPLOYMENT.  NOTWITHSTANDING ANYTHING IN THE PLAN TO THE CONTRARY, A TERMINATION
OF EMPLOYMENT SHALL NOT INCLUDE A TERMINATION OF AN ELIGIBLE EMPLOYEE’S
EMPLOYMENT UNDER ANY OF THE FOLLOWING CIRCUMSTANCES: (A) THE ELIGIBLE EMPLOYEE
IS OFFERED, BUT REFUSES, EMPLOYMENT WITH HIS OR HER CURRENT EMPLOYER OR ANOTHER
EMPLOYER, IN A POSITION THAT PROVIDES THE ELIGIBLE EMPLOYEE WITH BASE PAY THAT
IS AT LEAST 85% OF BASE PAY WHICH HE OR SHE WAS RECEIVING FROM HIS OR HER
EMPLOYER ON THE DATE OF SUCH OFFER AND THAT IS SUBSTANTIALLY COMPARABLE IN ALL
OTHER RESPECTS TO HIS OR HER POSITION WITH HIS OR HER EMPLOYER ON THE DATE OF
SUCH OFFER, AS DETERMINED BY THE PLAN ADMINISTRATOR, IN ITS SOLE AND ABSOLUTE
DISCRETION; (B) THE ELIGIBLE EMPLOYEE WORKS IN A BUSINESS (OR THE PORTION OF
SUCH BUSINESS) OF AN EMPLOYER (X) THAT IS TRANSFERRED IN WHOLE OR IN PART TO
ANOTHER CORPORATION OR COMPANY, WHETHER BY TRANSFER OF STOCK OR ASSETS, (Y) THAT
IS MERGED OR CONSOLIDATED WITH ANOTHER CORPORATION OR COMPANY OR IS PART OF A
SIMILAR CORPORATE TRANSACTION, OR (Z) THAT IS OUTSOURCED TO

 

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ANOTHER CORPORATION OR COMPANY, AND THE ELIGIBLE EMPLOYEE IS OFFERED EMPLOYMENT
WITH THE PURCHASER OR SURVIVING BUSINESS OR THE CORPORATION OR COMPANY TO WHICH
THE BUSINESS IS OUTSOURCED (WHETHER OR NOT HE OR SHE ACCEPTS ANY SUCH POSITION
WITH THE PURCHASER, SURVIVING BUSINESS OR OTHER COMPANY) IN A POSITION THAT
PROVIDES THE ELIGIBLE EMPLOYEE WITH SUBSTANTIALLY EQUIVALENT BASE PAY AND JOB
RESPONSIBILITIES AS HE OR SHE HAD WITH THE EMPLOYER IMMEDIATELY PRIOR TO SUCH
TRANSACTION, AS DETERMINED BY THE PLAN ADMINISTRATOR, IN ITS SOLE AND ABSOLUTE
DISCRETION; OR (C) AN ELIGIBLE EMPLOYEE FAILS TO RETURN TO ACTIVE EMPLOYMENT
AFTER THE CESSATION OF A DISABILITY OR FOLLOWING A TERMINATION OF A LEAVE OF
ABSENCE.  IN ADDITION, AN INDEFINITE OR TEMPORARY LAYOFF OR REDUCTION IN FORCE
DOES NOT CONSTITUTE A TERMINATION OF EMPLOYMENT UNLESS THE LAYOFF OR REDUCTION
IN FORCE BECOMES PERMANENT.  THE DETERMINATION AS TO WHETHER A LAYOFF OR
REDUCTION IN FORCE IS PERMANENT SHALL BE MADE BY THE PLAN ADMINISTRATOR, IN ITS
SOLE AND ABSOLUTE DISCRETION, AND SUCH DETERMINATION SHALL BE FINAL AND BINDING
ON ALL EFFECTED PARTIES.  AN ELIGIBLE EMPLOYEE’S TERMINATION OF EMPLOYMENT SHALL
OCCUR ON THE LAST DAY OF HIS OR HER EMPLOYMENT WITH HIS OR HER EMPLOYER.

 

1.26        “WEEKLY SALARY” SHALL MEAN WITH REGARD TO A PARTICIPANT, THE WEEKLY
RATE OF PAY FOR SERVICES PAID BY THE EMPLOYER TO THE PARTICIPANT AT THE TIME OF
HIS OR HER TERMINATION OF EMPLOYMENT FROM THE EMPLOYER, AS REFLECTED IN THE
EMPLOYER’S PAYROLL RECORDS.  THE WEEKLY SALARY OF A PARTICIPANT WHOSE RATE OF
PAY FOR SERVICES PAID BY THE EMPLOYER TO THE PARTICIPANT IS BASED ON AN ANNUAL
RATE SHALL BE EQUAL TO 1/52 OF SUCH ANNUAL RATE AT THE TIME OF HIS OR HER
TERMINATION OF EMPLOYMENT FROM THE EMPLOYER, AS REFLECTED IN THE EMPLOYER’S
PAYROLL RECORDS.  WEEKLY SALARY SHALL NOT INCLUDE COMMISSIONS, BONUSES, OVERTIME
PAY, INCENTIVE COMPENSATION, BENEFITS PAID UNDER ANY QUALIFIED PLAN, ANY GROUP
MEDICAL, DENTAL OR OTHER WELFARE BENEFIT PLAN, NON-CASH COMPENSATION OR ANY
OTHER ADDITIONAL COMPENSATION BUT, SHALL INCLUDE ANY SALARY REDUCTION
CONTRIBUTIONS TO A PLAN MAINTAINED PURSUANT TO CODE SECTION 401(K), 125 OR
132(F) AND AMOUNTS REDUCED PURSUANT TO A NONQUALIFIED ELECTIVE DEFERRED
COMPENSATION ARRANGEMENT, IF ANY, TO THE EXTENT THAT IN EACH SUCH CASE THE
REDUCTION IS TO BASE SALARY.

 

1.27        “YEAR OF CONTINUOUS SERVICE” SHALL MEAN THE TWELVE (12) CONSECUTIVE
MONTH PERIOD COMMENCING ON A PARTICIPANT’S MOST RECENT DATE OF HIRE BY AN
EMPLOYER AND EACH TWELVE (12) CONSECUTIVE MONTH PERIOD THEREAFTER DURING WHICH A
PARTICIPANT IS EMPLOYED BY AN EMPLOYER.  CREDIT SHALL BE GRANTED HEREUNDER FOR
PARTIAL YEARS.  AN ELIGIBLE EMPLOYEE’S DIRECT TRANSFER OF EMPLOYMENT FROM ONE
EMPLOYER TO ANOTHER EMPLOYER SHALL NOT BE A BREAK IN EMPLOYMENT FOR THE PURPOSES
OF CALCULATING YEARS OF CONTINUOUS SERVICE.

 

ARTICLE II

BENEFITS

 

2.1          ELIGIBILITY FOR SEVERANCE BENEFIT.  SUBJECT TO SECTION 2.2, IN THE
EVENT OF AN ELIGIBLE EMPLOYEE’S TERMINATION OF EMPLOYMENT BY THE EMPLOYER
WITHOUT CAUSE, SUBJECT TO SECTION 2.6 BELOW, THE ELIGIBLE EMPLOYEE SHALL BE
ENTITLED TO A SEVERANCE BENEFIT.  AN ELIGIBLE EMPLOYEE SHALL NOT BE ENTITLED TO
A SEVERANCE BENEFIT OR ANY ADDITIONAL BENEFITS DESCRIBED IN THIS ARTICLE II IF
THE ELIGIBLE EMPLOYEE’S EMPLOYMENT IS TERMINATED (I) BY THE EMPLOYER FOR CAUSE,
(II) BY THE ELIGIBLE

 

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EMPLOYEE FOR ANY REASON, OR (III) ON ACCOUNT OF THE ELIGIBLE EMPLOYEE’S DEATH,
DISABILITY OR RETIREMENT.

 

2.2          ELIGIBILITY FOR ENHANCED SEVERANCE BENEFIT.  IN THE EVENT THAT A
CHANGE IN CONTROL OCCURS AND AN ELIGIBLE EMPLOYEE SUFFERS A TERMINATION OF
EMPLOYMENT DUE TO A TERMINATION BY THE EMPLOYER WITHOUT CAUSE OR THE ELIGIBLE
EMPLOYEE’S RESIGNATION FOR GOOD REASON AT ANY TIME WITHIN TWO (2) YEARS AFTER
THE CHANGE IN CONTROL, THE ELIGIBLE EMPLOYEE SHALL BE ENTITLED TO AN ENHANCED
SEVERANCE BENEFIT.  AN ELIGIBLE EMPLOYEE SHALL NOT BE ENTITLED TO AN ENHANCED
SEVERANCE BENEFIT OR ANY ADDITIONAL BENEFITS DESCRIBED IN THIS ARTICLE II IF THE
ELIGIBLE EMPLOYEE’S EMPLOYMENT IS TERMINATED (I) BY THE EMPLOYER FOR CAUSE,
(II) BY THE ELIGIBLE EMPLOYEE OTHER THAN FOR GOOD REASON, OR (III) ON ACCOUNT OF
THE ELIGIBLE EMPLOYEE’S DEATH, DISABILITY OR RETIREMENT.

 

2.3          FORM AND AMOUNT OF BENEFITS.  SUBJECT TO SECTIONS 2.6 AND
7.14(B) AND (C):

 

(A)           SEVERANCE BENEFITS SHALL BE PAYABLE IN INSTALLMENTS IN ACCORDANCE
WITH THE EMPLOYER’S NORMAL PAYROLL PRACTICES (BUT OFF EMPLOYEE PAYROLL) UNTIL
THE SEVERANCE BENEFIT HAS BEEN PAID,

 

(B)           ENHANCED SEVERANCE BENEFITS SHALL BE PAYABLE IN A SINGLE LUMP SUM
PAYMENT ON THE SIXTIETH (60TH) DAY FOLLOWING THE DATE OF THE PARTICIPANT’S
TERMINATION OF EMPLOYMENT.

 

2.4          ADDITIONAL BENEFITS.  SUBJECT TO SECTIONS 2.6 AND 7.14(B) AND (C),
A PARTICIPANT ENTITLED TO RECEIVE A SEVERANCE BENEFIT OR AN ENHANCED SEVERANCE
BENEFIT SHALL ALSO BE ENTITLED TO RECEIVE ADDITIONAL BENEFITS AS PROVIDED BELOW:

 

(a)           The Employer shall pay to the Participant in a lump sum within ten
(10) business days following his or her Termination of Employment an amount
representing accrued but unused vacation time as of the date of Termination of
Employment.

 

(b)           The Employer shall pay to the Participant his or her Bonus for the
year in which the Participant suffers a Termination of Employment, if any, pro
rated based on the portion of the year that the Participant was employed, paid
in the year following the year in which the date of his or her Termination of
Employment occurs (the “Pro Rata Bonus”).

 

(c)           Subject to the Participant’s entitlement to, and timely election
of, COBRA coverage and the Participant’s continued co-payment of any premiums
which shall not exceed the percentage level of the co-payment made by similarly
situated employees immediately prior to the Participant’s Termination of
Employment, the Employer shall continue to provide any health benefits and
coverage for the Participant and his or her eligible dependents under any
Employer health insurance plans which cover the Participant until the earlier of
the date on which the Participant is no longer eligible for COBRA coverage and
(i) if the Participant is entitled to a Severance Benefit, the last day of the
month during which the Participant’s Severance Period ends, or (ii) if the
Participant is entitled to an Enhanced Severance Benefit, the longer of the
period the Participant would have been entitled to receive such coverage under
(i) and twelve

 

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(12) months following the Participant’s Termination of Employment (the
applicable period under (i) or (ii) shall be referred to in the Plan as the
“Coverage Period”).  Notwithstanding the foregoing, in the event such coverage
would result in the Participant being taxed on such health benefits, then in
lieu of the foregoing, if the Participant timely elects COBRA coverage then,
subject to Section 7.14(b), during the Coverage Period the Employer shall
reimburse the Participant for the amount that any such monthly COBRA premium
exceeds the active employee rate (as determined based on the premium rate in
effect for the Participant on the Participant’s date of Termination of
Employment), which reimbursement payment shall be payable on the first payroll
date of each the month during the Coverage Period, such payment to include a tax
gross-up payment to the extent the amount taxable to the Participant is greater
than the amount that would have been taxable to the Participant if the
Participant was an employee and participated in the applicable health plans. 
Further, notwithstanding the foregoing, the Employer’s obligation to continue to
provide the benefits hereunder shall in any event cease upon the Participant’s
employment with any employer following his or her Termination of Employment if
the Participant is eligible for health benefits under a plan of such new
employer.  Any period of continuation coverage hereunder shall be counted toward
the period during which the Employer shall offer COBRA continuation health
coverage to the Participant and his or her eligible dependents in accordance
with applicable law.  The benefit provided under this Section 2.4(c) shall be
referred to in the Plan as (the “Health Continuation Benefit”).

 

2.5          NO DUTY TO MITIGATE.  NO PARTICIPANT ENTITLED TO RECEIVE A
SEVERANCE BENEFIT HEREUNDER SHALL BE REQUIRED TO SEEK OTHER EMPLOYMENT OR TO
ATTEMPT IN ANY WAY TO REDUCE ANY AMOUNTS PAYABLE TO HIM OR HER PURSUANT TO THE
PLAN.  FURTHER, EXCEPT AS PROVIDED IN SECTION 2.4(C) ABOVE, THE AMOUNT OF THE
SEVERANCE BENEFIT PAYABLE HEREUNDER SHALL NOT BE REDUCED BY ANY COMPENSATION
EARNED BY THE PARTICIPANT AS A RESULT OF EMPLOYMENT BY ANOTHER EMPLOYER OR
OTHERWISE.

 

2.6          OPTIONAL PARTICIPATION; RELEASE.  PARTICIPATION IN THE PLAN IS
VOLUNTARY.  NO ELIGIBLE EMPLOYEE IS REQUIRED TO ACCEPT ANY BENEFITS WHATSOEVER
UNDER THE PLAN.  IN EXCHANGE FOR THE SEVERANCE BENEFIT OR THE ENHANCED SEVERANCE
BENEFIT, THE PRO RATA BONUS AND THE HEALTH CONTINUATION BENEFIT, THE ELIGIBLE
EMPLOYEE WILL BE REQUIRED TO SIGN AN AGREEMENT AND RELEASE SUBSTANTIALLY IN THE
FORM ATTACHED HERETO AS APPENDIX B (WITH SUCH CHANGES AS MAY BE MADE BY THE PLAN
ADMINISTRATOR FROM TIME TO TIME TO COMPLY WITH APPLICABLE LAW OR AS THE PLAN
ADMINISTRATOR MAY OTHERWISE DEEM DESIRABLE) (THE “AGREEMENT AND RELEASE”).  THE
EMPLOYER WILL PROVIDE AN ELIGIBLE EMPLOYEE WITH A COPY OF THE AGREEMENT AND
RELEASE WITHIN SEVEN (7) DAYS FOLLOWING THE DATE OF HIS OR HER TERMINATION OF
EMPLOYMENT.  THE ELIGIBLE EMPLOYEE WILL BE FREE TO CHOOSE WHETHER TO PARTICIPATE
BY SIGNING THE AGREEMENT AND RELEASE, BUT NO SEVERANCE BENEFIT, ENHANCED
SEVERANCE BENEFIT OR PRO RATA BONUS WILL BE PAID TO THE ELIGIBLE EMPLOYEE AND
THE ELIGIBLE EMPLOYEE WILL NOT BE ENTITLED TO THE HEALTH CONTINUATION BENEFIT IF
HE OR SHE DOES NOT PROVIDE THE EMPLOYER WITH A FULLY EFFECTIVE COPY OF THE
AGREEMENT AND RELEASE WITHIN SIXTY (60) DAYS FOLLOWING THE DATE OF HIS OR HER
TERMINATION OF EMPLOYMENT.

 

8

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2.7          CODE SECTION 280G.

 

(A)           NOTWITHSTANDING ANYTHING IN THE PLAN TO THE CONTRARY, IN THE EVENT
THAT A PARTICIPANT SHALL BECOME ENTITLED TO PAYMENTS AND/OR BENEFITS PROVIDED BY
THE PLAN OR ANY OTHER AMOUNTS IN THE “NATURE OF COMPENSATION” (WHETHER PURSUANT
TO THE TERMS OF THE PLAN OR ANY OTHER PLAN, ARRANGEMENT OR AGREEMENT WITH THE
COMPANY OR THE EMPLOYER, ANY PERSON WHOSE ACTIONS RESULT IN A CHANGE OF
OWNERSHIP OR EFFECTIVE CONTROL COVERED BY SECTION 280G(B)(2) OF THE 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),
THEN THE COMPANY PAYMENTS, IN THE AGGREGATE, SHALL BE REDUCED TO AN AMOUNT THAT
IS ONE DOLLAR ($1) LESS THAN THE GREATEST AMOUNT THAT COULD BE PAID TO THE
PARTICIPANT SUCH THAT THE RECEIPT OF THE COMPANY PAYMENTS WOULD NOT GIVE RISE TO
ANY EXCISE TAX (THE “REDUCED AMOUNT”).  IF THE REDUCED AMOUNT IS TO BE
EFFECTIVE, THE COMPANY PAYMENTS SHALL BE REDUCED IN THE FOLLOWING ORDER: 
(I) ANY CASH SEVERANCE BASED ON A MULTIPLE OF ANNUAL SALARY OR BONUS, (II) ANY
OTHER CASH AMOUNTS PAYABLE TO THE PARTICIPANT, (III) ANY BENEFITS VALUED AS
“PARACHUTE PAYMENTS,” (IV) ACCELERATION OF VESTING OF ANY STOCK OPTION OR
SIMILAR AWARDS FOR WHICH THE EXERCISE PRICE EXCEEDS THE THEN FAIR MARKET VALUE,
AND (V) ACCELERATION OF VESTING OF ANY EQUITY NOT COVERED BY CLAUSE (IV) 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 REDUCTION SHALL BE
MADE WITH REGARD TO THE REDUCED AMOUNT TO REFLECT THE FINAL DETERMINATION AND
THE RESULTING IMPACT ON WHETHER THIS CLAUSE (A) APPLIES.

 

(b)           For purposes of determining whether any of the Company Payments
will be subject to the Excise Tax and the amount of such Excise Tax, (i) 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 Code 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 Code Section 280G(b)(2)) 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 (ii) 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 Participant at such time as it is requested by the Company or
the Participant.  The determination of the Accountants, subject to the
adjustments provided below, shall be final and binding upon the Company and the
Participant.

 

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

 

9

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(d)           The Company and the Participant 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.

 

(e)           The provisions of this Section 2.7 shall survive the Participant’s
Termination of Employment for any reason.

 

ARTICLE III

FUNDING

 

3.1          FUNDING.  THE PLAN SHALL BE “UNFUNDED” FOR THE PURPOSES OF ERISA
AND THE CODE AND ANY SEVERANCE BENEFITS SHALL BE PAID OUT OF THE GENERAL ASSETS
OF THE EMPLOYER AS AND WHEN A SEVERANCE BENEFITS IS PAYABLE UNDER THE PLAN.  ALL
PARTICIPANTS SHALL BE SOLELY UNSECURED GENERAL CREDITORS OF THE EMPLOYER.  IF
THE EMPLOYER DECIDES IN ITS SOLE DISCRETION TO ESTABLISH ANY ADVANCE ACCRUED
RESERVE ON ITS BOOKS AGAINST THE FUTURE EXPENSE OF BENEFITS PAYABLE HEREUNDER,
OR IF THE EMPLOYER DECIDES IN ITS SOLE DISCRETION TO FUND A TRUST UNDER THE
PLAN, SUCH RESERVE OR TRUST SHALL NOT UNDER ANY CIRCUMSTANCES BE DEEMED TO BE AN
ASSET OF THE PLAN.

 

ARTICLE IV

ADMINISTRATION OF THE PLAN

 

4.1          PLAN ADMINISTRATOR.  THE GENERAL ADMINISTRATION OF THE PLAN ON
BEHALF OF THE EMPLOYERS (AS PLAN ADMINISTRATOR UNDER SECTION 3(16)(A) OF ERISA)
SHALL BE PLACED WITH THE COMMITTEE.

 

4.2          REIMBURSEMENT OF EXPENSES OF PLAN COMMITTEE.  THE COMPANY MAY, IN
ITS SOLE DISCRETION, PAY OR REIMBURSE THE MEMBERS OF THE COMMITTEE FOR ALL
REASONABLE EXPENSES INCURRED IN CONNECTION WITH THEIR DUTIES HEREUNDER.

 

4.3          ACTION BY THE PLAN COMMITTEE.  DECISIONS OF THE COMMITTEE SHALL BE
MADE BY A MAJORITY OF ITS MEMBERS ATTENDING A MEETING AT WHICH A QUORUM IS
PRESENT (WHICH MEETING MAY BE HELD TELEPHONICALLY), OR BY WRITTEN ACTION IN
ACCORDANCE WITH APPLICABLE LAW.  SUBJECT TO THE TERMS OF THE PLAN AND PROVIDED
THAT THE COMMITTEE ACTS IN GOOD FAITH, THE COMMITTEE SHALL HAVE COMPLETE
AUTHORITY TO DETERMINE A PARTICIPANT’S PARTICIPATION AND BENEFITS UNDER THE
PLAN, TO INTERPRET AND CONSTRUE, IN ITS SOLE DISCRETION, THE PROVISIONS OF THE
PLAN, AND TO MAKE DECISIONS IN ALL DISPUTES INVOLVING THE RIGHTS OF ANY PERSON
INTERESTED IN THE PLAN.

 

4.4          DELEGATION OF AUTHORITY.  SUBJECT TO THE LIMITATIONS OF APPLICABLE
LAW, THE COMMITTEE MAY DELEGATE ANY AND ALL OF ITS POWERS AND RESPONSIBILITIES
HEREUNDER TO OTHER PERSONS BY FORMAL RESOLUTION FILED WITH AND ACCEPTED BY THE
BOARD.  ANY SUCH DELEGATION SHALL NOT BE EFFECTIVE

 

10

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UNTIL IT IS ACCEPTED BY THE BOARD AND THE PERSONS DESIGNATED AND MAY BE
RESCINDED AT ANY TIME BY WRITTEN NOTICE FROM THE COMMITTEE TO THE PERSON TO WHOM
THE DELEGATION IS MADE.

 

4.5          RETENTION OF PROFESSIONAL ASSISTANCE.  THE COMMITTEE MAY EMPLOY
SUCH LEGAL COUNSEL, ACCOUNTANTS AND OTHER PERSONS AS MAY BE REQUIRED IN CARRYING
OUT ITS WORK IN CONNECTION WITH THE PLAN.

 

4.6          ACCOUNTS AND RECORDS.  THE COMMITTEE SHALL MAINTAIN SUCH ACCOUNTS
AND RECORDS REGARDING THE FISCAL AND OTHER TRANSACTIONS OF THE PLAN AND SUCH
OTHER DATA AS MAY BE REQUIRED TO CARRY OUT ITS FUNCTIONS UNDER THE PLAN AND TO
COMPLY WITH ALL APPLICABLE LAWS.  THE RECORDS OF THE EMPLOYER WITH RESPECT TO
EMPLOYMENT HISTORY, MONTHLY SALARY, EMPLOYEE BENEFITS, AND ALL OTHER RELEVANT
MATTERS SHALL BE CONCLUSIVE FOR ALL PURPOSES OF THE PLAN.

 

4.7          COMPLIANCE WITH APPLICABLE LAW.  THE COMPANY SHALL BE DEEMED THE
PLAN ADMINISTRATOR FOR THE PURPOSES OF ANY APPLICABLE LAW AND SHALL BE
RESPONSIBLE FOR THE PREPARATION AND FILING OF ANY REQUIRED RETURNS, REPORTS,
STATEMENTS OR OTHER FILINGS WITH APPROPRIATE GOVERNMENTAL AGENCIES.  THE COMPANY
SHALL ALSO BE RESPONSIBLE FOR THE PREPARATION AND DELIVERY OF INFORMATION TO
PERSONS ENTITLED TO SUCH INFORMATION UNDER ANY APPLICABLE LAW.

 

4.8          INDEMNIFICATION.  THE COMPANY SHALL INDEMNIFY, TO THE FULL EXTENT
PERMITTED BY LAW AND ITS CERTIFICATE OF INCORPORATION AND BY-LAWS (BUT ONLY TO
THE EXTENT NOT DIRECTLY COVERED BY INSURANCE) ITS OFFICERS AND DIRECTORS, (AND
ANY EMPLOYEE INVOLVED IN CARRYING OUT THE FUNCTIONS OF THE COMPANY UNDER THE
PLAN), EACH MEMBER OF THE COMMITTEE, AND ANY PERSON DESIGNATED PURSUANT TO
SECTION 4.4 ABOVE, AGAINST ANY EXPENSES, INCLUDING AMOUNTS PAID IN SETTLEMENT OF
A LIABILITY, WHICH ARE REASONABLY INCURRED IN CONNECTION WITH ANY LEGAL ACTION
TO WHICH SUCH PERSON IS A PARTY BY REASON OF HIS OR HER DUTIES OR
RESPONSIBILITIES WITH RESPECT TO THE PLAN, EXCEPT WITH REGARD TO MATTERS AS TO
WHICH HE OR SHE SHALL BE ADJUDGED IN SUCH ACTION TO BE LIABLE FOR WILLFUL
MISCONDUCT OR FRAUD IN THE PERFORMANCE OF HIS OR HER DUTIES.

 

ARTICLE V

 

AMENDMENT AND TERMINATION

 

5.1          AMENDMENT AND TERMINATION.  THE COMPANY RESERVES THE RIGHT TO AMEND
OR TERMINATE, IN WHOLE OR IN PART, ANY OR ALL OF THE PROVISIONS OF THE PLAN BY
ACTION OF THE BOARD (OR A DULY AUTHORIZED COMMITTEE THEREOF) AT ANY TIME AND FOR
ANY REASON, INCLUDING, WITHOUT LIMITATION, THE RIGHT TO AMEND THE PROVISIONS OF
THE PLAN AT ANY TIME SOLELY TO COMPLY WITH THE REQUIREMENTS OF CODE SECTION 409A
AND TO AVOID THE IMPOSITION OF AN EXCISE TAX UNDER CODE SECTION 409A ON ANY
PAYMENT TO BE MADE HEREUNDER (A “409A AMENDMENT”); PROVIDED, THAT (I) ONCE A
PARTICIPANT BECOMES ENTITLED TO RECEIVE A SEVERANCE BENEFIT OR ENHANCED
SEVERANCE BENEFIT HEREUNDER, THE PLAN MAY NOT BE AMENDED TO REDUCE SUCH
BENEFITS, AND (II) OTHER THAN FOR A 409A AMENDMENT, THE COMPANY SHALL NOT AMEND
OR TERMINATE THE PLAN AT ANY TIME AFTER (A) THE OCCURRENCE OF A CHANGE IN
CONTROL OR (B) THE DATE THE COMPANY ENTERS INTO A DEFINITIVE AGREEMENT WHICH, IF
CONSUMMATED, WOULD RESULT IN A

 

11

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CHANGE IN CONTROL, UNLESS THE POTENTIAL CHANGE IN CONTROL IS ABANDONED (AS
PUBLICLY ANNOUNCED BY THE COMPANY), IN EITHER CASE UNTIL TWENTY-FOUR (24) MONTHS
AFTER THE OCCURRENCE OF A CHANGE IN CONTROL, PROVIDED THAT ALL SEVERANCE
BENEFITS AND ENHANCED SEVERANCE BENEFITS THAT ARE IN PAY STATUS UNDER THE PLAN
SHALL CONTINUE TO BE PAID IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE
PLAN.

 

ARTICLE VI

SUCCESSORS

 

6.1          SUCCESSORS.  FOR PURPOSES OF THE PLAN, THE COMPANY SHALL INCLUDE
ANY AND ALL SUCCESSORS AND ASSIGNEES, WHETHER DIRECT OR INDIRECT, BY PURCHASE,
MERGER, CONSOLIDATION OR OTHERWISE, TO ALL OR SUBSTANTIALLY ALL THE BUSINESS OR
ASSETS OF THE COMPANY AND SUCH SUCCESSORS AND ASSIGNEES SHALL PERFORM THE
COMPANY’S OBLIGATIONS UNDER THE PLAN, IN THE SAME MANNER AND TO THE SAME EXTENT
THAT THE COMPANY WOULD BE REQUIRED TO PERFORM IF NO SUCH SUCCESSION OR
ASSIGNMENT HAD TAKEN PLACE.  IN THE EVENT THE SURVIVING CORPORATION IN ANY
TRANSACTION TO WHICH THE COMPANY IS A PARTY IS A SUBSIDIARY OF ANOTHER
CORPORATION, THEN THE ULTIMATE PARENT CORPORATION OF SUCH SURVIVING CORPORATION
SHALL CAUSE THE SURVIVING CORPORATION TO PERFORM THE PLAN IN THE SAME MANNER AND
TO THE SAME EXTENT THAT THE COMPANY WOULD BE REQUIRED TO PERFORM IF NO SUCH
SUCCESSION OR ASSIGNMENT HAD TAKEN PLACE.  IN SUCH EVENT, THE TERM “COMPANY,” AS
USED IN THE PLAN, SHALL MEAN THE COMPANY, AS HEREINBEFORE DEFINED AND ANY
SUCCESSOR OR ASSIGNEE (INCLUDING THE ULTIMATE PARENT CORPORATION) TO THE
BUSINESS OR ASSETS WHICH BY REASON HEREOF BECOMES BOUND BY THE TERMS AND
PROVISIONS OF THE PLAN.

 

ARTICLE VII

 

MISCELLANEOUS

 

7.1          PAYMENT NOT SALARY.  ANY SEVERANCE BENEFITS PAYABLE UNDER THE PLAN
SHALL NOT BE DEEMED SALARY OR OTHER COMPENSATION TO THE PARTICIPANT FOR THE
PURPOSES OF COMPUTING BENEFITS TO WHICH HE OR SHE MAY BE ENTITLED UNDER ANY
PENSION PLAN OR OTHER ARRANGEMENT OF THE EMPLOYER MAINTAINED FOR THE BENEFIT OF
ITS EMPLOYEES, UNLESS SUCH PLAN OR ARRANGEMENT PROVIDES OTHERWISE.

 

7.2          NO ADDITIONAL RIGHTS CREATED.  NEITHER THE ESTABLISHMENT OF THE
PLAN, NOR ANY MODIFICATION THEREOF, NOR THE PAYMENT OF ANY BENEFITS HEREUNDER,
SHALL BE CONSTRUED AS GIVING TO ANY PARTICIPANT, ELIGIBLE EMPLOYEE OR OTHER
PERSON ANY LEGAL OR EQUITABLE RIGHT AGAINST THE COMPANY, THE EMPLOYERS, OR ANY
MEMBER OF THE COMMITTEE, FIDUCIARY OR EMPLOYEE OR AGENT OF THE COMPANY OR THE
EMPLOYERS; AND IN NO EVENT SHALL THE TERMS AND CONDITIONS OF EMPLOYMENT BY THE
EMPLOYER OF ANY EMPLOYEE BE MODIFIED OR IN ANY WAY AFFECTED BY THE PLAN.

 

7.3          HEADINGS.  THE HEADINGS OF THE PLAN ARE INSERTED FOR CONVENIENCE OF
REFERENCE ONLY AND SHALL HAVE NO EFFECT UPON THE MEANING OF THE PROVISIONS
HEREOF.

 

7.4          USE OF WORDS.  WHENEVER USED IN THIS INSTRUMENT, A SINGULAR WORD
SHALL BE DEEMED TO INCLUDE THE SINGULAR AND PLURAL, IN ALL CASES WHERE THE
CONTEXT SO REQUIRES.

 

12

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7.5          ERISA PROVISIONS (INCLUDING CLAIMS PROCEDURES).  THE PLAN IS
INTENDED TO BE AN “EMPLOYEE WELFARE BENEFIT PLAN” WITHIN THE MEANING OF
SECTION 3(1) OF ERISA.  IMPORTANT ADMINISTRATIVE PROVISIONS OF (AND INFORMATION
ABOUT) THE PLAN AND IMPORTANT INFORMATION ABOUT AN ELIGIBLE EMPLOYEE’S RIGHTS
UNDER THE PLAN AND APPLICABLE LAW ARE CONTAINED IN APPENDIX A.  THE PLAN
DOCUMENT, INCLUDING APPENDIX A, SHALL CONSTITUTE BOTH THE PLAN DOCUMENT AND
SUMMARY PLAN DESCRIPTION AND SHALL BE DISTRIBUTED TO ELIGIBLE EMPLOYEES IN THIS
FORM.

 

7.6          CONTROLLING LAW.  TO THE EXTENT LEGALLY REQUIRED, THE CODE AND
ERISA SHALL GOVERN THE PLAN AND, IF ANY PROVISION HEREOF IS IN VIOLATION OF ANY
APPLICABLE REQUIREMENT THEREOF, THE COMPANY RESERVES THE RIGHT TO RETROACTIVELY
AMEND THE PLAN TO COMPLY THEREWITH.  TO THE EXTENT NOT GOVERNED BY THE CODE AND
ERISA, THE PLAN SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO RULES RELATING TO CONFLICTS OF LAW.

 

7.7          WITHHOLDING.  THE EMPLOYER SHALL HAVE THE RIGHT TO MAKE SUCH
PROVISIONS AS IT DEEMS NECESSARY OR APPROPRIATE TO SATISFY ANY OBLIGATIONS IT
REASONABLY BELIEVES IT MAY HAVE TO WITHHOLD FEDERAL, STATE OR LOCAL INCOME OR
OTHER TAXES INCURRED BY REASON OF PAYMENTS PURSUANT TO THE PLAN.  IN LIEU
THEREOF, THE EMPLOYER SHALL HAVE THE RIGHT TO WITHHOLD THE AMOUNTS OF SUCH TAXES
FROM ANY OTHER SUMS DUE OR TO BECOME DUE FROM THE EMPLOYER TO THE PARTICIPANT
UPON SUCH TERMS AND CONDITIONS AS THE COMMITTEE MAY PRESCRIBE.

 

7.8          SEVERABILITY.  SHOULD ANY PROVISION OF THE PLAN BE DEEMED OR HELD
TO BE UNLAWFUL OR INVALID FOR ANY REASON, SUCH FACT SHALL NOT ADVERSELY AFFECT
THE OTHER PROVISIONS OF THE PLAN UNLESS SUCH DETERMINATION SHALL RENDER
IMPOSSIBLE OR IMPRACTICABLE THE FUNCTIONING OF THE PLAN, AND IN SUCH CASE, AN
APPROPRIATE PROVISION OR PROVISIONS SHALL BE ADOPTED SO THAT THE PLAN MAY
CONTINUE TO FUNCTION PROPERLY.

 

7.9          INCOMPETENCY.  IN THE EVENT THAT THE COMMITTEE FINDS THAT A
PARTICIPANT IS UNABLE TO CARE FOR HIS OR HER AFFAIRS BECAUSE OF ILLNESS OR
ACCIDENT, THEN BENEFITS PAYABLE HEREUNDER, UNLESS CLAIM HAS BEEN MADE THEREFOR
BY A DULY APPOINTED GUARDIAN, COMMITTEE, OR OTHER LEGAL REPRESENTATIVE, MAY BE
PAID IN SUCH MANNER AS THE COMMITTEE SHALL DETERMINE, AND THE APPLICATION
THEREOF SHALL BE A COMPLETE DISCHARGE OF ALL LIABILITY FOR ANY PAYMENTS OR
BENEFITS TO WHICH SUCH PARTICIPANT WAS OR WOULD HAVE BEEN OTHERWISE ENTITLED
UNDER THE PLAN.

 

7.10        PAYMENTS TO A MINOR.  ANY PAYMENTS TO A MINOR FROM THE PLAN MAY BE
PAID BY THE COMMITTEE IN ITS SOLE AND ABSOLUTE DISCRETION (A) DIRECTLY TO SUCH
MINOR; (B) TO THE LEGAL OR NATURAL GUARDIAN OF SUCH MINOR; OR (C) TO ANY OTHER
PERSON, WHETHER OR NOT APPOINTED GUARDIAN OF THE MINOR, WHO SHALL HAVE THE CARE
AND CUSTODY OF SUCH MINOR.  THE RECEIPT BY SUCH INDIVIDUAL SHALL BE A COMPLETE
DISCHARGE OF ALL LIABILITY UNDER THE PLAN THEREFOR.

 

7.11        AT WILL EMPLOYMENT.  THE PLAN IS NOT AN AGREEMENT OF EMPLOYMENT AND
IT SHALL NOT CONFER ANY ADDITIONAL EMPLOYMENT RIGHTS ON THE ELIGIBLE EMPLOYEES. 
EMPLOYMENT WITH THE EMPLOYER IS AT WILL AND THE EMPLOYER MAY TERMINATE THE
EMPLOYMENT OF ANY ELIGIBLE EMPLOYEE AT ANY TIME FOR ANY REASON OR FOR NO REASON,
WITH OR WITHOUT CAUSE OR ADVANCE NOTICE.  THE EMPLOYER ALSO MAINTAINS THE RIGHT
TO CHANGE THE TERMS AND CONDITIONS OF AN ELIGIBLE EMPLOYEE’S EMPLOYMENT,

 

13

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INCLUDING, WITHOUT LIMITATION, DEMOTION, DISCIPLINE, PROMOTION, COMPENSATION,
BENEFITS, DUTIES, AND LOCATION OF PERFORMANCE, AT ANY TIME WITH OR WITHOUT CAUSE
AND/OR WITHOUT NOTICE.

 

7.12        ASSIGNMENT AND ALIENATION.  THE BENEFITS PAYABLE TO A PARTICIPANT
UNDER THE PLAN SHALL NOT BE SUBJECT TO ALIENATION, TRANSFER, ASSIGNMENT,
GARNISHMENT, EXECUTION OR LEVY OF ANY KIND, THAT IS DUE TO THE ACTIONS OR
OMISSIONS OF THE PARTICIPANT AND ANY ATTEMPT TO CAUSE ANY BENEFITS TO BE SO
SUBJECTED SHALL NOT BE RECOGNIZED.

 

7.13        NON-EXCLUSIVITY.  THE ADOPTION OF THE PLAN BY THE COMPANY SHALL NOT
BE CONSTRUED AS CREATING ANY LIMITATIONS ON THE POWER OF THE COMPANY TO ADOPT
SUCH OTHER SUPPLEMENTAL RETIREMENT INCOME ARRANGEMENTS AS IT DEEMS DESIRABLE,
AND SUCH ARRANGEMENTS MAY BE EITHER GENERALLY APPLICABLE OR LIMITED IN
APPLICATION.

 

7.14        CODE SECTION 409A.

 

(a)           Although the Employers makes no guarantee with respect to the tax
treatment of payments hereunder and shall not be responsible in any event with
regard to non-compliance with Code Section 409A, the Plan is intended to either
comply with, or be exempt from, the requirements of Code Section 409A.  To the
extent that the Plan is not exempt from the requirements of Code Section 409A,
the Plan is intended to comply with the requirements of Code Section 409A and
shall be limited, construed and interpreted in accordance with such intent.  In
no event whatsoever shall the Employers be liable for any additional tax,
interest or penalty that may be imposed on an Eligible Employee or a Participant
by Code Section 409A or any damages for failing to comply with Code
Section 409A.

 

(b)           A termination of employment shall not be deemed to have occurred
for purposes of any provision of the Plan providing for the payment of any
amounts or benefits that are subject to Code Section 409A 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 Plan, references to a “termination,” “termination of
employment” or like terms shall mean “separation from service.”  If a
Participant is deemed on the date of his or her Termination of Employment 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
Employer 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 such payment
or benefit shall not be made or provided prior to the expiration of the period
commencing on the date the Participant incurs a Separation from Service from the
Employer until the earlier of (a) the six (6) month anniversary of the date of
such Separation from Service and (a) the date of the Participant’s death (the
“Delay Period”).  All payments delayed pursuant to this Section 7.14(b) (whether
they would have otherwise been payable in a single lump sum or in installments
in the absence of such delay) shall be paid to the Participant in a single lump
sum on the first Employer payroll date on or following the first day following
the expiration of the Delay Period, and any remaining payments and benefits due
under the Plan shall be paid or provided in accordance with the normal payment
dates specified for them herein.

 

14

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(c)           With regard to any installment payments provided for in the Plan,
each installment thereof shall be deemed a separate payment for purposes of Code
Section 409A.

 

(d)           Whenever a payment under the Plan 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.

 

(e)           Any gross-up payment due to a Participant under the Plan shall be
paid to the Participant no later than the end of the calendar year following the
year in which he or she paid the applicable tax.

 

[Signature page follows]

 

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IN WITNESS WHEREOF, the Plan has been adopted effective as of January 1, 2009,
and Overseas Shipholding Group, Inc. has caused this instrument to be signed by
its officer or representative duly authorized on this 30th day of December,
2008.

 

 

 

 

 

OVERSEAS SHIPHOLDING GROUP, INC.

 

 

 

 

 

 

 

By: 

/s/Morten Arntzen

 

Name:

Morten Arntzen

 

Title:

Chief Executive Officer

 

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APPENDIX A

 

PROVISIONS RELATING TO ERISA

 

A.            CLAIMS PROCEDURE

 

1.             ANY CLAIM BY AN ELIGIBLE EMPLOYEE OR HIS OR HER BENEFICIARY
(“CLAIMANT”) WITH RESPECT TO ELIGIBILITY, PARTICIPATION, CONTRIBUTIONS, BENEFITS
OR OTHER ASPECTS OF THE OPERATION OF THE PLAN SHALL BE MADE IN WRITING TO A
PERSON DESIGNATED BY THE COMMITTEE FROM TIME TO TIME FOR SUCH PURPOSE.  IF THE
DESIGNATED PERSON RECEIVING A CLAIM BELIEVES THAT THE CLAIM SHOULD BE DENIED, HE
OR SHE SHALL NOTIFY THE CLAIMANT IN WRITING OF THE DENIAL OF THE CLAIM WITHIN
NINETY (90) DAYS AFTER HIS OR HER RECEIPT THEREOF.  THIS PERIOD MAY BE EXTENDED
AN ADDITIONAL NINETY (90) DAYS IN SPECIAL CIRCUMSTANCES AND, IN SUCH EVENT, THE
CLAIMANT SHALL BE NOTIFIED IN WRITING OF THE EXTENSION, THE SPECIAL
CIRCUMSTANCES REQUIRING THE EXTENSION OF TIME AND THE DATE BY WHICH THE
COMMITTEE’S DESIGNEE EXPECTS TO MAKE A DETERMINATION WITH RESPECT TO THE CLAIM. 
IF THE EXTENSION IS REQUIRED DUE TO THE CLAIMANT’S FAILURE TO SUBMIT INFORMATION
NECESSARY TO DECIDE THE CLAIM, THE PERIOD FOR MAKING THE DETERMINATION WILL BE
TOLLED FROM THE DATE ON WHICH THE EXTENSION NOTICE IS SENT UNTIL THE DATE ON
WHICH THE CLAIMANT RESPONDS TO THE PLAN’S REQUEST FOR INFORMATION.

 

2.             IF A CLAIM IS DENIED IN WHOLE OR IN PART, OR ANY ADVERSE BENEFIT
DETERMINATION IS MADE WITH RESPECT TO THE CLAIM, THE CLAIMANT WILL BE PROVIDED
WITH A WRITTEN NOTICE SETTING FORTH (A) THE SPECIFIC REASON OR REASONS FOR THE
DENIAL MAKING REFERENCE TO THE PERTINENT PROVISIONS OF THE PLAN OR OF PLAN
DOCUMENTS ON WHICH THE DENIAL IS BASED, (B) A DESCRIPTION OF ANY ADDITIONAL
MATERIAL OR INFORMATION NECESSARY TO PERFECT OR EVALUATE THE CLAIM, AND EXPLAIN
WHY SUCH MATERIAL OR INFORMATION, IF ANY, IS NECESSARY, AND (C) INFORM THE
CLAIMANT OF HIS OR HER RIGHT, PURSUANT TO PARAGRAPH A(1) OF THIS EXHIBIT, TO
REQUEST REVIEW OF THE DECISION.  THE NOTICE SHALL ALSO PROVIDE AN EXPLANATION OF
THE PLAN’S CLAIMS REVIEW PROCEDURE AND THE TIME LIMITS APPLICABLE TO SUCH
PROCEDURE, AS WELL AS A STATEMENT OF THE CLAIMANT’S RIGHT TO BRING A CIVIL
ACTION UNDER SECTION 502(A) OF ERISA FOLLOWING AN ADVERSE BENEFIT DETERMINATION
ON REVIEW.  IF A CLAIMANT IS NOT NOTIFIED (OF THE DENIAL OR AN EXTENSION) WITHIN
NINETY (90) DAYS FROM THE DATE THE CLAIMANT NOTIFIES THE COMMITTEE’S DESIGNEE,
THE CLAIMANT MAY REQUEST A REVIEW OF THE APPLICATION AS IF THE CLAIM HAD BEEN
DENIED.

 

3.             A CLAIMANT MAY APPEAL THE DENIAL OF A CLAIM BY SUBMITTING A
WRITTEN REQUEST FOR REVIEW TO THE COMMITTEE, WITHIN SIXTY (60) DAYS AFTER
WRITTEN NOTIFICATION OF DENIAL IS RECEIVED.  SUCH PERIOD MAY BE EXTENDED BY THE
COMMITTEE FOR GOOD CAUSE SHOWN.  THE CLAIM WILL THEN BE REVIEWED BY THE
COMMITTEE.  IN CONNECTION WITH THIS APPEAL, THE CLAIMANT (OR HIS OR HER DULY
AUTHORIZED REPRESENTATIVE) MAY (A) BE PROVIDED, UPON WRITTEN REQUEST AND FREE OF
CHARGE, WITH REASONABLE ACCESS TO (AND COPIES OF) ALL DOCUMENTS, RECORDS, AND
OTHER INFORMATION RELEVANT TO THE CLAIM; AND (B) SUBMIT TO THE COMMITTEE WRITTEN
COMMENTS, DOCUMENTS, RECORDS, AND OTHER

 

A-1

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INFORMATION RELATED TO THE CLAIM.  IF THE COMMITTEE DEEMS IT APPROPRIATE, IT MAY
HOLD A HEARING AS TO A CLAIM.  IF A HEARING IS HELD, THE CLAIMANT SHALL BE
ENTITLED TO BE REPRESENTED BY COUNSEL.

 

4.             THE REVIEW BY THE COMMITTEE WILL TAKE INTO ACCOUNT ALL COMMENTS,
DOCUMENTS, RECORDS, AND OTHER INFORMATION THE CLAIMANT SUBMITS RELATING TO THE
CLAIM.  THE COMMITTEE WILL MAKE A FINAL WRITTEN DECISION ON A CLAIM REVIEW, IN
MOST CASES WITHIN SIXTY (60) DAYS AFTER RECEIPT OF A REQUEST FOR A REVIEW.  IN
SOME CASES, THE CLAIM MAY TAKE MORE TIME TO REVIEW, AND AN ADDITIONAL PROCESSING
PERIOD OF UP TO SIXTY (60) DAYS MAY BE REQUIRED.  IF THAT HAPPENS, THE CLAIMANT
WILL RECEIVE A WRITTEN NOTICE OF THAT FACT, WHICH WILL ALSO INDICATE THE SPECIAL
CIRCUMSTANCES REQUIRING THE EXTENSION OF TIME AND THE DATE BY WHICH THE
COMMITTEE EXPECTS TO MAKE A DETERMINATION WITH RESPECT TO THE CLAIM.  IF THE
EXTENSION IS REQUIRED DUE TO THE CLAIMANT’S FAILURE TO SUBMIT INFORMATION
NECESSARY TO DECIDE THE CLAIM, THE PERIOD FOR MAKING THE DETERMINATION WILL BE
TOLLED FROM THE DATE ON WHICH THE EXTENSION NOTICE IS SENT TO THE CLAIMANT UNTIL
THE DATE ON WHICH THE CLAIMANT RESPONDS TO THE PLAN’S REQUEST FOR INFORMATION.

 

5.             THE COMMITTEE DECISION ON THE CLAIM FOR REVIEW WILL BE
COMMUNICATED TO THE CLAIMANT IN WRITING.  IF AN ADVERSE BENEFIT DETERMINATION IS
MADE WITH RESPECT TO THE CLAIM, THE NOTICE WILL INCLUDE (A) THE SPECIFIC
REASON(S) FOR ANY ADVERSE BENEFIT DETERMINATION, WITH REFERENCES TO THE SPECIFIC
PLAN PROVISIONS ON WHICH THE DETERMINATION IS BASED; (B) A STATEMENT THAT THE
CLAIMANT IS ENTITLED TO RECEIVE, UPON REQUEST AND FREE OF CHARGE, REASONABLE
ACCESS TO (AND COPIES OF) ALL DOCUMENTS, RECORDS AND OTHER INFORMATION RELEVANT
TO THE CLAIM; AND (C) A STATEMENT OF THE CLAIMANT’S RIGHT TO BRING A CIVIL
ACTION UNDER SECTION 502(A) OF ERISA.  A CLAIMANT MAY NOT START A LAWSUIT TO
OBTAIN BENEFITS UNTIL AFTER HE OR SHE HAS REQUESTED A REVIEW AND A FINAL
DECISION HAS BEEN REACHED ON REVIEW, OR UNTIL THE APPROPRIATE TIME FRAME
DESCRIBED ABOVE HAS ELAPSED SINCE THE CLAIMANT FILED A REQUEST FOR REVIEW AND
YOU HAVE NOT RECEIVED A FINAL DECISION OR NOTICE THAT AN EXTENSION WILL BE
NECESSARY TO REACH A FINAL DECISION.  THE LAW ALSO PERMITS THE CLAIMANT TO
PURSUE HIS OR HER REMEDIES UNDER SECTION 502(A) OF ERISA WITHOUT EXHAUSTING
THESE APPEAL PROCEDURES IF THE PLAN HAS FAILED TO FOLLOW THEM.

 

B.            PLAN INTERPRETATION AND BENEFIT DETERMINATION

 

1.             THE COMMITTEE (OR, WHERE APPLICABLE, ANY DULY AUTHORIZED DELEGEE
OF THE COMMITTEE) SHALL HAVE THE EXCLUSIVE RIGHT, POWER, AND AUTHORITY, IN ITS
SOLE AND ABSOLUTE DISCRETION, TO ADMINISTER, APPLY AND INTERPRET THE PLAN AND
ANY OTHER DOCUMENTS, AND TO DECIDE ALL FACTUAL AND LEGAL MATTERS ARISING IN
CONNECTION WITH THE OPERATION OR ADMINISTRATION OF THE PLAN.

 

2.             WITHOUT LIMITING THE GENERALITY OF THE FOREGOING PARAGRAPH, THE
COMMITTEE (OR, WHERE APPLICABLE, ANY DULY AUTHORIZED DELEGEE OF THE COMMITTEE)
SHALL HAVE THE SOLE AND ABSOLUTE DISCRETIONARY AUTHORITY TO:

 

(A)           TAKE ALL ACTIONS AND MAKE ALL DECISIONS (INCLUDING FACTUAL
DECISIONS) WITH RESPECT TO THE ELIGIBILITY FOR, AND THE AMOUNT OF, BENEFITS
PAYABLE UNDER THE PLAN;

 

A-2

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(B)           FORMULATE, INTERPRET AND APPLY RULES, REGULATIONS AND POLICIES
NECESSARY TO ADMINISTER THE PLAN;

 

(C)           DECIDE QUESTIONS, INCLUDING LEGAL OR FACTUAL QUESTIONS, RELATING
TO THE CALCULATION AND PAYMENT OF BENEFITS, AND ALL OTHER DETERMINATIONS MADE,
UNDER THE PLAN;

 

(D)           RESOLVE AND/OR CLARIFY ANY FACTUAL OR OTHER AMBIGUITIES,
INCONSISTENCIES AND OMISSIONS ARISING UNDER THE PLAN OR OTHER PLAN DOCUMENTS;
AND

 

(E)           PROCESS, AND APPROVE OR DENY, BENEFIT CLAIMS AND RULE ON ANY
BENEFIT EXCLUSIONS.

 

All determinations made by the Committee (or, where applicable, any duly
authorized delegee of the Committee) with respect to any matter arising under
the Plan shall be final and binding on the Company, Eligible Employee,
Participant, beneficiary, and all other parties affected thereby.

 

C.            STATEMENT OF PARTICIPANTS RIGHTS UNDER ERISA.

 

AS A PARTICIPANT IN THE PLAN YOU ARE ENTITLED TO CERTAIN RIGHTS AND PROTECTIONS
UNDER THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
(“ERISA”).  ERISA PROVIDES THAT ALL PLAN PARTICIPANTS SHALL BE ENTITLED TO:

 

1.             RECEIVE INFORMATION ABOUT YOUR PLAN AND BENEFITS

 

(A)           EXAMINE, WITHOUT CHARGE, AT THE PLAN ADMINISTRATOR’S OFFICE AND AT
OTHER SPECIFIED LOCATIONS, SUCH AS WORKSITES, ALL DOCUMENTS GOVERNING THE PLAN.

 

(B)           OBTAIN, UPON WRITTEN REQUEST TO THE PLAN ADMINISTRATOR, COPIES OF
DOCUMENTS GOVERNING THE OPERATION OF THE PLAN.  THE PLAN ADMINISTRATOR MAY MAKE
A REASONABLE CHARGE FOR THE COPIES.

 

2.             Prudent Actions by Plan Fiduciaries.  In addition to creating
rights for Plan participants, ERISA imposes duties upon the people who are
responsible for the operation of the employee benefit plan.  The people who
operate your Plan, called “fiduciaries” of the Plan, have a duty to do so
prudently and in the interest of you and other Plan participants and
beneficiaries.  No one, including your employer or any other person, may fire
you or otherwise discriminate against you in any way to prevent you from
obtaining a welfare benefit or exercising your rights under ERISA.

 

3.             ENFORCE YOUR RIGHTS

 

(A)           IF YOUR CLAIM FOR A WELFARE BENEFIT IS DENIED OR IGNORED, IN WHOLE
OR IN PART, YOU HAVE A RIGHT TO KNOW WHY THIS WAS DONE, TO OBTAIN COPIES OF
DOCUMENTS RELATING TO THE DECISION WITHOUT CHARGE, AND TO APPEAL ANY DENIAL, ALL
WITHIN CERTAIN TIME SCHEDULES.

 

A-3

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(B)           UNDER ERISA, THERE ARE STEPS YOU CAN TAKE TO ENFORCE THE ABOVE
RIGHTS. FOR INSTANCE, IF YOU REQUEST A COPY OF PLAN DOCUMENTS OR THE LATEST
ANNUAL REPORT FROM THE PLAN AND DO NOT RECEIVE THEM WITHIN 30 DAYS, YOU MAY FILE
SUIT IN A FEDERAL COURT.  IN SUCH A CASE, THE COURT MAY REQUIRE THE PLAN
ADMINISTRATOR TO PROVIDE MATERIALS AND PAY YOU UP TO $110 A DAY UNTIL YOU
RECEIVE THE MATERIALS, UNLESS THE MATERIALS WERE NOT SENT BECAUSE OF REASONS
BEYOND THE CONTROL OF THE PLAN ADMINISTRATOR.  IF YOU HAVE A CLAIM FOR BENEFITS
WHICH IS DENIED OR IGNORED, IN WHOLE OR IN PART, AFTER YOU HAVE EXHAUSTED THE
PLAN’S CLAIM AND REVIEW PROCEDURES DESCRIBED ABOVE, YOU MAY FILE SUIT IN A STATE
OR FEDERAL COURT.  IF YOU ARE DISCRIMINATED AGAINST FOR ASSERTING YOUR RIGHTS,
YOU MAY SEEK ASSISTANCE FROM THE U.S. DEPARTMENT OF LABOR, OR YOU MAY FILE SUIT
IN A FEDERAL COURT.  THE COURT WILL DECIDE WHO SHOULD PAY COURT COSTS AND LEGAL
FEES.  IF YOU ARE SUCCESSFUL THE COURT MAY ORDER THE PERSON YOU HAVE SUED TO PAY
THESE COSTS AND FEES.  IF YOU LOSE, THE COURT MAY ORDER YOU TO PAY THESE COSTS
AND FEES, FOR EXAMPLE, IF IT FINDS YOUR CLAIM IS FRIVOLOUS.

 

4.             ASSISTANCE WITH YOUR QUESTIONS.

 

IF YOU HAVE ANY QUESTIONS ABOUT YOUR PLAN, YOU SHOULD CONTACT THE PLAN
ADMINISTRATOR.  IF YOU HAVE ANY QUESTIONS ABOUT THIS STATEMENT OR ABOUT YOUR
RIGHTS UNDER ERISA, OR IF YOU NEED ASSISTANCE IN OBTAINING DOCUMENTS FROM THE
PLAN ADMINISTRATOR, YOU SHOULD CONTACT THE NEAREST OFFICE OF THE EMPLOYEE
BENEFITS SECURITY ADMINISTRATION, U.S. DEPARTMENT OF LABOR, LISTED IN YOUR
TELEPHONE DIRECTORY OR THE DIVISION OF TECHNICAL ASSISTANCE AND INQUIRIES,
EMPLOYEE BENEFITS SECURITY ADMINISTRATION, U.S. DEPARTMENT OF LABOR, 200
CONSTITUTION AVENUE N.W., WASHINGTON, D.C.  20210.  YOU MAY ALSO OBTAIN CERTAIN
PUBLICATIONS ABOUT YOUR RIGHTS AND RESPONSIBILITIES UNDER ERISA BY CALLING THE
PUBLICATIONS HOTLINE OF THE EMPLOYEE BENEFITS AND SECURITY ADMINISTRATION.

 

D.            PLAN DOCUMENT.  THIS DOCUMENT (I.E., THE PLAN AND THE APPENDICES)
SHALL CONSTITUTE BOTH THE PLAN DOCUMENT AND SUMMARY PLAN DESCRIPTION AND SHALL
BE DISTRIBUTED TO ELIGIBLE EMPLOYEES IN THIS FORM.

 

E.             OTHER IMPORTANT FACTS.

 

OFFICIAL NAME OF THE PLAN:

Overseas Shipholding Group, Inc. Enhanced Severance Plan for Employees Level
21-23

 

 

SPONSOR:

Overseas Shipholding Group, Inc.

 

666 Third Avenue, 6th Floor

 

New York, New York 10017

 

(212) 953-4100

 

 

EMPLOYER IDENTIFICATION

13-2637623

NUMBER (EIN):

 

 

 

PLAN NUMBER:

507

 

A-4

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TYPE OF PLAN:

Employee Welfare Severance Benefit Plan

 

 

END OF PLAN YEAR:

December 31

 

 

TYPE OF ADMINISTRATION:

Employer Administered

 

 

PLAN ADMINISTRATOR:

The Committee, as designated by the Board of Directors of the Company

 

Overseas Shipholding Group, Inc.

 

666 Third Avenue, 6th Floor

 

New York, New York 10017

 

(212) 953-4100

 

 

EFFECTIVE DATE:

January 1, 2009

 

The Plan Administrator keeps records of the Plan and is responsible for the
administration of the Plan.  The Plan Administrator will also answer any
questions an Eligible Employee or Participant may have about the Plan.

 

Service of legal process may be made upon the Plan Administrator.

 

No individual may, in any case, become entitled to additional benefits or other
rights under the Plan after the Plan is terminated.  Under no circumstances,
will any benefit under the Plan ever vest or become nonforfeitable

 

A-5

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APPENDIX B

 

AGREEMENT AND RELEASE

 

[Employer] (“Employer”) and [name] (“Employee”), who resides at [address] agree
to the terms and conditions set forth below:

 

1.             (a)           In exchange for the general release in paragraph 3
below and other promises contained herein, and in accordance with the terms of
the Overseas Shipholding Group, Inc. Enhanced Severance Plan for Employees Level
21-23 (“Severance Plan”), which Employee hereby acknowledges receiving:

 

(i)            [IF EMPLOYEE IS RECEIVING A SEVERANCE BENEFIT:  Employee will
receive severance in the total gross amount of $[amount].  Such severance will
be payable in installments at the rate of $[amount] in accordance with the
Employer’s regularly scheduled payroll dates commencing on the first regular
payroll date after the Effective Date of this Agreement and Release.  Severance
payments will be subject to all applicable payroll withholding deductions.

 

[IF EMPLOYEE IS RECEIVING AN ENHANCED SEVERANCE BENEFIT:  Employee will receive
severance in the total gross amount of $[amount].  Such severance will be paid
on                             , subject to all applicable payroll withholding
deductions.

 

(ii)           The Employer shall pay to the Employee $[amount](1), paid in
20[    ](2).

 

(iii)          Subject to the Employee’s entitlement to, and timely election of,
COBRA coverage and the Employee’s continued co-payment of any premiums which
shall not exceed the percentage level of the co-payment made by similarly
situated employees immediately prior to the Employee’s date of termination, the
Employer shall continue to provide any health benefits and coverage for the
Employee and the Employee’s eligible dependents under any Employer health
insurance plans which cover the Employee until the earlier of the date on which
the Employee is no longer eligible for COBRA coverage and
                          (3) (the “Coverage

 

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(1)  Enter an amount equal to the Employee’s bonus for year of termination pro
rated based on the portion of the year that the Employee was employed.

 

(2)  Enter the year following the year in which the date Employees termination
of employment occurs.

 

(3) If the Employee is receiving a Severance Benefit, then enter the last day of
the month during which the Employee’s will receive the Severance Period (as
defined in the Severance Plan) ends, or (ii) if the Participant is receiving an
Enhanced Severance Benefit, then enter the later of the date from (i) or the
last day of the 12th month following the Participant’s Termination of
Employment.

 

--------------------------------------------------------------------------------

 

Period”).  Notwithstanding the foregoing, in the event such coverage would
result in the Employee being taxed on such health benefits, then in lieu of the
foregoing, if the Employee timely elects COBRA coverage then, subject to
Section 7.14(b) of the Severance Plan, during the Coverage Period the Employer
shall reimburse the Employee for the amount that any such monthly COBRA premium
exceeds the active employee rate (as determined based on the premium rate in
effect for the Employee on [his/her] date of termination), which reimbursement
payment shall be payable on the first payroll date of each the month during the
Coverage Period, such payment to include a tax gross-up payment to the extent
the amount taxable to the Employee is greater than the amount that would have
been taxable to the Employee if the Employee was an employee and participated in
the applicable health plans.  Further, notwithstanding the foregoing, in any
event the Employer’s obligation to continue to provide benefits hereunder shall
cease upon the Employee’s employment with any employer if the Employee is
eligible for health benefits under a plan of such new employer.  The period of
continuation coverage hereunder shall be counted toward the period during which
the Employer shall offer COBRA continuation health coverage to the Employee and
the Employee’s eligible dependents in accordance with applicable law.

 

2.             Employee hereby agrees and acknowledges that the payments and the
benefits provided in paragraph 1 exceed any payment, benefit or other thing of
value to which Employee might otherwise be entitled under any policy, plan or
procedure of Employer or its parent or affiliates or pursuant to any prior
agreement or contract with Employer or its parent or affiliates.

 

3.             (a)           In exchange for the consideration provided for by
paragraph 1 and other valuable consideration, Employee, for [himself/herself]
and for [his/her] heirs, executors, administrators and assigns (referred to
collectively as “Releasors”), forever releases and discharges [Overseas
Shipholding Group, Inc. (“Parent”),] Employer and any and all of [Parent’s and]
Company’s parent companies, partners, subsidiaries, affiliates, successors and
assigns and any and all of any of such parties past and/or present officers,
directors, partners, agents, employees, representatives, counsel, employee
benefit plans and their fiduciaries and administrators, successors and assigns
(referred to collectively as the “Releasees”), from any and all claims, demands,
causes of action, fees and liabilities of any kind whatsoever, whether known or
unknown, which Releasors ever had, now have or may have against Releasees by
reason of any actual or alleged act, omission, transaction, practice, conduct,
occurrence or other matter up to and including the date Employee signs this
Agreement and Release.

 

(b)           Without limiting the generality of the foregoing, this Agreement
and Release is intended to and shall release Releasees from any and all claims,
whether known or unknown, that Releasors ever had, now have or may have against
Releasees arising out of Employee’s employment with Employer or any of the
Releasees, the terms and conditions of such

 

B-2

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employment and/or the termination of such employment, including but not limited
to: (i) any claim under the Age Discrimination in Employment Act, as amended;
(ii) any claim under the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”), (iii) any claim under Title VII of the Civil Rights Act of
1964, as amended; (iv) any claim under the Americans with Disabilities Act, as
amended; (v) any claim under the Workers’ Adjustment and Retraining Notification
Act; (vi) any claim under the Family and Medical Leave Act; (vii) any claim
under the New York State and City Human Rights Laws, the New York Equal Pay Law,
and the New York State Constitution; (viii) any claim under the Florida Civil
Rights Act of 1992 f/k/a Human Rights Act of 1977, the Florida Whistle-Blower
Law (Fla. Stat. § 448.101 et seq.), the Florida Public Whistle Blower Law (Fla.
Stat. § 112.3187), retaliation claims under the Workers’ Compensation Law (Fla.
Stat. § 440.205), the Florida Equal Pay Act, or waivable rights under the
Florida Constitution; (ix) any other claim of discrimination, harassment or
retaliation in employment (whether based on federal, state or local law,
statutory or decisional) relating to or arising out of Employee’s employment,
the terms and conditions of such employment, the separation of such employment,
and/or any of the events relating directly or indirectly to or surrounding the
separation of that employment, including, but not limited to, breach of contract
(express or implied), wrongful discharge, detrimental reliance, defamation,
emotional distress or compensatory or punitive damages; (x) any claim sounding
in tort or contract (express or implied); and (xi) any claim for attorneys’
fees, costs, disbursements and/or the like.  By virtue of the foregoing,
Employee agrees that [he/she] has waived any damages and other relief available
to [him/her] (including, without limitation, money damages, equitable relief and
reinstatement) under the claims waived in this paragraph 3.  Notwithstanding
anything herein to the contrary, the sole matters to which this Agreement of
Release does not apply are: (i) claims arising after the date Employee signs
this Agreement and Release; (ii) claims for accrued, vested benefits under any
employee benefit plan of [Parent or] Employer (or of [Parent’s or] Employer’s
parent companies or affiliates) in accordance with the terms of such plans and
applicable law; or (iii) claims for any amounts due to Employee pursuant to
Section 2.7 of the Severance.  In addition, notwithstanding any other provision
of this Agreement and Release, this Agreement and Release is not intended to
interfere with Employee’s right to file a charge with the Equal Employment
Opportunity Commission (“EEOC”) in connection with any claim Employee believes
[he/she] may have against any Releasee.  However, by executing this Agreement
and Release, Employee hereby waives the right to recover in any proceeding
Employee may bring before the EEOC or any state human rights commission or in
any proceeding brought by the EEOC or any state human rights commission on
Employee’s behalf.

 

4.             Employee represents that [he/she] has returned (or will return)
to Employer all property belonging to Employer, including but not limited to
keys, card access to buildings and office floors, and business information and
documents.

 

5.             If any provision of this Agreement and Release is held to be
illegal, void, or unenforceable, such provision shall be of no force or effect. 
However, the illegality or unenforceability of such provision shall have no
effect upon, and shall not impair the enforceability of, any other provision of
this Agreement and Release.  Further, to the extent any

 

B-3

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provision of this Agreement and Release is deemed to be overbroad or
unenforceable as written, such provision shall be given the maximum effect
permissible under law.  Without limiting the foregoing, if the release set forth
in paragraph 3 is held to be illegal, void, or unenforceable, Employee hereby
agrees that [he/she] shall promptly upon Employer’s request execute a release
that is legal, valid and enforceable.

 

6.             This Agreement and Release represents the entire understanding
between the parties hereto with respect to the subject matter hereof, and may
not be changed or modified except by a written agreement signed by both of the
parties hereto after the Effective Date of this Agreement and Release.  In the
event of any conflict between any of the provisions of this Agreement and
Release and the provisions of the Severance Plan, the terms of the Severance
Plan shall govern.

 

7.             Except as preempted by ERISA, this Agreement and Release shall be
construed and enforced in accordance with the laws of the State of New York
without regard to conflict of law rules.

 

8.             This Agreement and Release is binding upon, and shall inure to
the benefit of, the parties and their respective heirs, executors,
administrators, successors and assigns.

 

9.             Employee acknowledges that [he/she]: (a) has carefully read this
Agreement and Release in its entirety; (b) has had an opportunity to consider
the terms of this Agreement and Release for at least [applicable period required
by law to be determined by Employer at termination: [twenty-one (21)] [[insert
only if employee is over 40:  and the disclosure information attached hereto as
Exhibit I (which is provided pursuant to the Older Workers Benefit Protection
Act)] forty-five (45)] days; (c) is hereby advised by Employer in writing to
consult with an attorney of [his/her] choice in connection with this Agreement
and Release; (d) fully understands the significance of all of the terms and
conditions of this Agreement and Release and has discussed them with an attorney
of [his/her] choice, or has had a reasonable opportunity to do so; and (e) is
signing this Agreement and Release voluntarily and of [his/her] own free will
and agrees to abide by all the terms and conditions contained herein.

 

10.           Employee may accept this Agreement and Release by signing it
before a notary public and delivering it to [INSERT NAME AND ADDRESS OF CONTACT]
on or before the [twenty-first (21st)] [forty-fifth (45th)] day after [he/she]
receives this Agreement and Release.  Notwithstanding the foregoing, Employee
may not sign this Agreement and Release before [his/her] last day of employment
and this Agreement and Release will not be accepted or effective if signed
before Employee’s termination date.  After signing this Agreement and Release,
Employee shall have seven (7) days (the “Revocation Period”) to revoke [his/her]
decision by indicating [his/her] desire to do so in writing delivered to [INSERT
NAME] at the above address by no later than the last day of the Revocation
Period.  If the last day of the Revocation Period falls on a Saturday, Sunday or
holiday, the last day of the Revocation Period

 

B-4

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will be deemed to be the next business day.  Provided Employee does not revoke
this Agreement and Release during the Revocation Period, the Effective Date of
this Agreement and Release shall be the day after the last day of the Revocation
Period (the “Effective Date”).

 

[Signature page to follow]

 

B-5

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I have read the Agreement and Release [and the information attached as
Exhibit I] and hereby accept the benefits provided under the Agreement of
Release, subject to the terms and conditions set forth in the Agreement and
Release.

 

Print Name:

 

 

Date:

 

 

Employee

 

 

 

 

 

 

 

 

Signature:

 

 

 

 

 

Employee

 

 

 

 

STATE OF NEW YORK

) ss

COUNTY OF

)

 

On this           day of                , 200    before me personally came
[name] to me known and known to me to be the person described in and who
executed the Agreement of Release, and [he/she] duly acknowledged to me that
[he/she] executed the same.

 

 

 

 

 

 

Notary Public

 

 

[EMPLOYER]

 

 

By:

 

 

 

[INSERT NAME]

 

 

[INSERT TITLE]

 

 

B-6

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