Exhibit 10.5

 

EMPLOYMENT AGREEMENT

 

This AGREEMENT, dated as of July 17, 2016 (the “Agreement”), between Overseas
Shipholding Group, Inc. (the “Company”) and Samuel H. Norton (the “Executive”).

 

WHEREAS, the Company and the Executive mutually desire that the Executive serve
as Senior Vice President of the Company and President and Chief Executive
Officer of the U.S. Flag Strategic Business Unit of the Company on the terms and
conditions set forth herein.

 

NOW, THEREFORE, in consideration of the premises and mutual covenants herein and
for other good and valuable consideration, the parties agree as follows:

 

1.    Position and Duties

 

(a)   The Company hereby agrees to employ the Executive as Senior Vice President
of the Company and President and Chief Executive Officer of the U.S. Flag
Strategic Business Unit. The Executive hereby agrees to serve the Company in
such capacity during the Term, as defined in Section 2 hereof. The Executive
shall have such duties and responsibilities as are customary and reasonable to
such positions, as may be assigned to him by the Board of Directors of the
Company (the “Board”) from time to time. The Executive shall be subject to, and
shall act in accordance with, all lawful instructions and directions of, and
shall report to, the Board and all policies and rules of the Company applicable
to executive officers.

 

(b)  During the Term, excluding any periods of vacation and sick leave to which
the Executive is entitled, the Executive shall devote his full working time,
energy and attention to the performance of his duties and responsibilities
hereunder and shall diligently endeavor to promote the business and best
interests of the Company. Notwithstanding the foregoing, to the extent that it
does not interfere with the performance of Executive’s duties hereunder,
Executive may (i) with the prior consent of the Board, serve on the boards of
directors or equivalent bodies of trade associations and/or charitable
organizations; (ii) engage in charitable activities and community affairs; (iii)
manage his personal, financial and legal affairs; and (iv) continue to hold his
50% stake in, and participate in the businesses that are owned by, SeaChange
Partners LLC.

 

(c)   The Executive’s principal place of employment shall be Tampa, Florida.

 

(d)   During the Term, the Company shall put Executive up for election to serve
as a member of the Board. The Executive will receive no additional compensation
in respect of his service on the Board, but shall retain and continue to vest in
the equity awards granted coincident with the 2016 annual meeting of the
Company’s shareholders, in accordance with the terms and conditions of such
awards.

 

2.    Term

 

The Executive shall serve as Senior Vice President of the Company and President
and Chief Executive Officer of the U.S. Flag Strategic Business Unit (including
as President and Chief Executive Officer of OSG Bulk Ships, Inc.) commencing on
July [18], 2016 (the “Effective Date”) and shall continue until terminated (such
period, the “Term”) upon his “Separation from Service” with the Company in
connection with any of the events described in Section 4 hereof.

 

  1

 

 

3.    Compensation

 

(a)   Base Salary

 

As compensation for the agreements made by the Executive herein and the
performance by the Executive of his obligations hereunder, the Company shall pay
the Executive a base salary at the rate of $395,000 per annum (the “Base
Salary”), payable in accordance with the Company’s payroll practice as in effect
from time to time and subject to annual review and possible increase as
determined by the Board in its discretion.

 

(b)   Annual Incentives

 

In addition to the Base Salary, with respect to each fiscal year of the Company
during the Term, the Executive shall be eligible for annual performance-based
compensation (the “Annual Bonus”), with a target value of $1,250,000 (the
“Target Bonus”). The amount of the actual Annual Bonus that may be paid with
respect to any such fiscal year shall be based on the relative achievement of
annual individual and Company performance objectives established by the Board at
the beginning of the applicable fiscal year, as determined by the Board, and
subject to the Executive’s employment with the Company through the applicable
payment date for any such Annual Bonus. Following the end of the fiscal year to
which the Annual Bonus relates, fifty percent (50%) of the Annual Bonus shall be
paid in (i) fully vested non-qualified stock options with an exercise price
equal to the closing price of a share of Company Class A common stock on the
date of grant (the “Closing Price”), with an aggregate grant date Black-Scholes
present value equal to fifty percent (50%) of the earned Annual Bonus; and (ii)
fully vested shares of Company Class A common stock with an aggregate grant date
value based on the Closing Price equal to fifty percent (50%) of the earned
Annual Bonus, in either case granted under the Overseas Shipholding Group, Inc.
Management Incentive Compensation Plan, dated as of September 23, 2014 and as
amended from time in accordance with its terms (the “Plan”) or such other plan
as may be in effect from time to time.

 

(c)   Initial Equity Award; Special One-Time Incentive Compensation

 

The Executive will receive an initial grant pursuant to the Plan, comprised of
non-qualified stock options and restricted stock units (“RSUs”) with an
aggregate grant date value equal to the face value of 208,333 shares of Class A
common stock of the Company on the date of grant (such grant, the “Initial
Equity Award”). The grant of the Initial Equity Award shall be made promptly
following the Effective Date. Seventy-five percent (75%) of the award shall be
time-based vesting RSUs and the remaining twenty-five percent (25%) shall be
time-based vesting stock options, determined using the Black-Scholes present
value on the date of grant and with an exercise price equal to the Closing Price
on the date of grant. The RSUs and options shall vest in three substantially
equal tranches on January 1 of each of 2017, 2018 and 2019, and the Executive
shall only be entitled to elect to use net settlement with respect to the
Initial Equity Award with the consent of either (i) the Compensation Committee
of the Board or (ii) the Board. In the event the Company completes the
contemplated spin-off of its International Flag business, the awards will be
adjusted in the most efficient tax manner possible to preserve the Executive’s
economic interests to the maximum extent possible while providing the Executive
with shares of Company Class A common stock rather than shares in the spun-off
business, such that the Executive’s economic interests are substantially the
same on the business day immediately prior to the spin-off and on the business
day on which the spin-off occurs. In addition, the Executive may from time to
time be eligible to earn supplemental performance-based incentive compensation
at, and on such terms and conditions as may be determined in, the discretion of
the Compensation Committee of the Board.

 

(d)  Holding Requirement; Certain Forfeitures

 

Shares of Company Class A common stock acquired by the Executive other than
pursuant to the Initial Equity Award shall be held by the Executive at least
until the earliest to occur of (i) a Change in Control, as defined in the Plan,
(ii) the Separation from Service Date (as defined below), solely in the event of
a termination of the Executive’s employment and the Term by the Company without
Cause or by the Executive for Good Reason and (iii) the third (3rd) anniversary
of the date of such acquisition; provided, that the Executive shall be permitted
to elect to use net settlement to satisfy any exercise price or taxes due
thereon, in the Executive’s discretion. In addition, notwithstanding anything to
the contrary in this Agreement, in the event the Company experiences a major
safety and/or containment incident which results from gross negligence or
willful misconduct of management or results from a violation of federal
operation, safety or construction regulations, or if the responsible party fails
to report the incident or to cooperate with relevant authorities in responding
to such incident, all incentive based compensation other than the Initial Equity
Award, whether such incentive based compensation is subject to short or long
term performance criteria and/or time based vesting, and whether denominated or
payable in cash, shares of Class A common stock or other property, to the extent
unvested at the time the incident occurs may be cancelled at the discretion of
the Compensation Committee of the Board, and the Executive shall forfeit any
rights with respect to such awards without consideration therefor.

 

  2

 

 

(e)   Allowances; Reimbursement of Expenses

 

The Company will cover up to (i) $5,200 in 2016 and $7,300 in 2017 in air travel
expenses for the Executive between Tampa, Florida and Miami, Florida and (ii) up
to $200 per day for hotel accommodations for the two months immediately
following the Effective Date until local housing is concluded. During the Term,
except with respect to the foregoing reimbursements, the Company shall reimburse
the Executive for all business expenses incurred by the Executive in performing
his duties and responsibilities under this Agreement (“Business Expenses”), in
accordance and to the extent consistent with the Company’s policies for
reimbursement of business expenses incurred by other Company senior executive
officers.

 

(f)   Attorney’s Fees

 

The Company shall reimburse the Executive for all reasonable and customary
attorney’s fees incurred in connection with the negotiation and execution of
this Agreement.

 

(g)  Change in Control Bonus

 

In the event a Change in Control, as defined in the Plan, is consummated before
July 15, 2018, the Executive will receive, no later than thirty (30) days
following consummation of such Change in Control, an award of cash and/or equity
with an aggregate value equal to no less than $2,500,000, the proportion of
which is paid in cash and/or equity to be determined by the Board in its
discretion; provided that if the value of any equity delivered as a result of
the foregoing equals or exceeds $2,500,000, then no cash shall be paid pursuant
hereto. In the event of such a Change in Control on or after July 15, 2018, but
prior to July 15, 2019, the aggregate value of the award shall be no less than
$1,250,000; provided that if the value of any equity delivered as a result of
the foregoing equals or exceeds $1,250,000, then no cash shall be paid pursuant
hereto.

 

(h)  Other Benefits

 

During the Term, for so long as the Executive meets the eligibility requirements
of the applicable plan, policy or program: (i) the Executive shall be entitled
to participate in all savings and retirement plans, policies and programs of the
Company which are made available generally to other executive officers of the
Company and (ii) the Executive and/or the Executive’s immediate family including
children up to 26 years of age, as the case may be, shall be entitled to
participate in, and shall receive all benefits under, all welfare benefit plans,
policies and programs (including the Company’s health insurance and disability
plans) provided by the Company which are made available to other executive
officers of the Company (for the avoidance of doubt, such plans, policies or
programs shall not include any plan, policy or program which provides benefits
in the nature of severance or continuation pay).

 

  3

 

 

4.    Separation from Service

 

(a)   Death

 

The Executive shall separate from service with the Company, and the Term shall
terminate, upon the Executive’s death.

 

(b)   Disability

 

The Executive shall separate from service with the Company and the Term shall
terminate, if, as a result of the Executive’s incapacity due to physical or
mental illness or injury, the Executive (i) shall become eligible to receive a
benefit under the Company’s long-term disability plan applicable to the
Executive, or (ii) has been unable, due to physical or mental illness or
incapacity, to perform the essential duties of his employment with reasonable
accommodation for a continuous period of ninety (90) days or an aggregate of one
hundred-eighty (180) days within a one-year period (“Disability”). The
termination of the Executive’s employment for Disability shall not be considered
a termination without Cause for purposes of this Agreement.

 

(c)   Cause

 

The Company may terminate the Executive’s employment for Cause, and upon such
termination the Executive shall separate from service with the Company and the
Term shall terminate. For purposes of this Agreement, the term “Cause” shall
mean, when used in connection with the Executive’s Separation from Service with
the Company: (i) the Executive’s failure to attempt in good faith to perform his
duties (other than as a result of illness or injury); (ii) the Executive’s
willful misconduct or gross negligence of a material nature in connection with
the performance of his duties as an employee, which is or could reasonably be
expected to be injurious to the Company, or any of its affiliates (whether
financially, reputationally or otherwise); (iii) a breach by the Executive of
the Executive’s fiduciary duty or duty of loyalty to the Company or its
affiliates; (iv) the Executive’s intentional and unauthorized removal, use or
disclosure of the Company’s or any affiliate’s document (in any medium or form)
relating to the Company or an affiliate, or the customers of the Company or an
affiliate thereof and which is or could reasonably be expected to be injurious
to the Company, its customers or their respective affiliates; (v) the willful
performance by the Executive of any act or acts of dishonesty in connection with
or relating to the Company’s or its affiliates’ business or the willful
misappropriation (or willful attempted misappropriation) of any of the Company’s
or any of its affiliates’ funds or property; (vi) the conviction of the
Executive or a plea of guilty or nolo contendere by the Executive to any felony
or other serious crime involving moral turpitude; (vii) a material breach of any
of the Executive’s obligations under any agreement entered into between the
Executive and the Company or any of its affiliates that is material to the
employment relationship between Company or any of its affiliates and the
Executive or the relationship between the Company and the Executive as investor
or prospective investor in the Company; or (viii) a material breach of the
Company’s policies or procedures, which breach causes or could reasonably be
expected to cause harm to the Company or its business reputation; provided that,
with respect to the events in clauses (i), (ii), (iv) or (vii) herein, the
Company shall have delivered written notice to the Executive of its intention to
terminate the Executive’s employment for Cause, which notice specifies in
reasonable detail the circumstances claimed to give rise to the Company’s right
to terminate the Executive’s employment for Cause and the Executive shall not
have cured such circumstances, to the extent such circumstances are reasonably
susceptible to cure as determined by the Board in good faith, within fifteen
(15) days following the Company’s delivery of such notice.

 

(d)  Without Cause or Voluntarily (Other Than for Good Reason)

 

The Company may terminate the Executive’s employment without Cause. The
Executive may voluntarily terminate his employment, other than for Good Reason,
provided that the Executive provides the Company with notice of his intent to
terminate his employment at least sixty (60) days in advance of the Date of
Separation from Service (as defined below). Upon such termination, in each case,
the Executive shall separate from service with the Company and the Term shall
terminate.

 

  4

 

 

(e)   Good Reason

 

The Executive may terminate his employment and separate from service with the
Company for Good Reason. For purposes of this Agreement, the term “Good Reason”
shall mean, when used in connection with the Executive’s Separation from Service
with the Company, unless the Executive shall have consented in writing thereto:
(i) a material diminution in the Executive’s Base Salary; (ii) a material change
in the Executive’s principal place of employment; (iii) any material diminution
in the Executive’s authority, duties or responsibilities; (iv) the Executive
shall not have been appointed the President and Chief Executive Officer of the
Company on or before June 30, 2017; or (v) any other action or inaction that
constitutes a material breach of this Agreement by the Company; provided, in
each case, that within thirty (30) days following the initial occurrence of any
of the events set forth in (i) – (iii) or (v) herein or within thirty days
following June 30, 2017 in the case of (iv) herein, the Executive shall have
delivered written notice to the Company of his intention to terminate his
employment for Good Reason, which notice specifies in reasonable detail the
circumstances claimed to give rise to the Executive’s right to terminate
employment for Good Reason, the Company shall not have cured such circumstances
within thirty (30) days following the Company’s receipt of such notice, and the
Executive’s Separation from Service with the Company shall have occurred within
seventy (70) following the initial occurrence (or June 30, 2017, in the case of
clause (iv)) of the applicable event. Upon such termination the Executive shall
separate from service with the Company and the Term shall terminate.

 

5.    Procedure for Separation from Service

 

(a)   Notice of Separation from Service. Any separation of the Executive from
service with the Company (other than a separation from service on account of the
death of Executive) shall be communicated by written “Notice of Separation from
Service” to the other party hereto in accordance with Section 14(a) hereof.

 

(b)   Date of Separation from Service. The Date of Separation from Service shall
mean: (i) if the Separation from Service occurs due to the Executive’s death,
the date of the Executive’s death; (ii) if the Separation from Service pursuant
to Section 4(b), the date on which the Executive receives a Notice of Separation
from Service from the Company; (iii) if the Separation from Service occurs due
to the Executive’s voluntary termination without Good Reason, the date specified
in the notice given pursuant to Section 4(d) hereof, which shall not be less
than sixty (60) days after the Notice of Separation from Service; (iv) if the
Separation from Service occurs due to the Executive’s termination with Good
Reason, the date of his termination in accordance with Section 4(e) hereof; and
(v) if the Separation from Service occurs for any other reason, the date on
which a Notice of Separation from Service is given or any later date (within
thirty (30) days, or any alternative time period agreed upon by the parties,
after the giving of such notice) set forth in such Notice of Separation from
Service.

 

6.    Separation Payments

 

(a)   Without Cause or for Good Reason

 

In the event of the Executive’s Separation from Service due to termination by
the Company without Cause or by the Executive for Good Reason, the Company shall
pay or provide to the Executive the amounts or benefits described in paragraphs
(A), (B), (C) and (D) below at the times specified below, and, except for (x)
any vested benefits under any tax-qualified pension plans of the Company and (y)
continuation of health insurance benefits on the terms and to the extent
required by COBRA or such other analogous legislation as may be applicable to
the Executive, the Company shall have no additional obligations under this
Agreement.

 

(A)         Accrued Payments. Within ten (10) days following the Date of
Separation from Service, (w) any Base Salary earned by the Executive but not
paid through the Date of Separation from Service; (x) any Annual Bonus earned by
the Executive but not paid through the Date of Separation from Service; (y) the
Executive’s accrued but unused vacation pay through the Date of Separation from
Service; and (z) any expenses not reimbursed pursuant to Section 3(e) as of the
Date of Separation from Service (the amounts described in (w) through (z),
together, the “Accrued Payments”);

 

  5

 

 

(B)         Salary Continuation; Benefits. Salary continuation payments paid in
accordance with the Company’s standard payroll practices at the same rate as the
Executive’s then-current annual Base Salary and continued welfare benefits on
the same terms as applied as of immediately prior to the Date of Separation from
Service, in either case for a period of 12 months measured from the day of the
Executive’s Date of Separation from Service (such period, the “Severance Period”
and such payments and benefits, the “Continuation Payments”), provided that the
initial Continuation Payment shall be made or provided on the first payroll date
following the expiration of the Release Period (as defined below) and shall
include the Continuation Payments that would have been otherwise due prior
thereto.

 

(C)         Annual Incentives. Any incentive compensation to which Executive may
have been entitled with respect to the fiscal year in which the Date of
Separation from Service occurs pursuant to Section 3(b) of this Agreement shall
remain outstanding and shall be paid, following the end of such fiscal year in
accordance with the terms thereof; provided, that the Annual Bonus that may
become payable shall be pro rated to reflect the number of days in such fiscal
year that have lapsed as of the Date of Separation from Service.

 

(D)         Vesting of Equity Awards. All awards of options and RSUs that vest
solely based upon the continued provision of services and without regard to any
performance criteria, in either case granted to the Executive and outstanding
and to the extent not otherwise vested, shall be vested as of the Date of
Separation from Service in the event of termination of the Executive without
Cause or by the Executive for Good Reason, or by reason of death or Disability.

 

(b)   Cause or Voluntarily (other than for Good Reason).

 

In the event of the Executive’s Separation from Service with the Company due to
a termination of the Executive’s employment by the Company for Cause or
voluntarily by the Executive other than for Good Reason, the Company shall pay
the Executive the Accrued Payments within ten (10) days following the Date of
Separation from Service. Except as provided in this Section 6(b), and except for
any vested benefits under any tax qualified pension or equity incentive
compensation plans of the Company, and continuation of health insurance benefits
on the terms and to the extent required by COBRA or any other analogous
legislation as may be applicable to the Executive, the Company shall have no
additional obligations under this Agreement.

 

(c)   Disability or Death.

 

In the event of the Executive’s Separation from Service with the Company as a
result of the Executive’s death or Disability, the Company shall pay the
Executive or the Executive’s estate, as the case may be, within thirty (30) days
following the Date of Separation from Service, the Accrued Payments. Except as
provided in Section 6(a)(D) and this Section 6(c), and except for any vested
benefits under any tax qualified pension or equity incentive compensation plans
of the Company, and continuation of health insurance benefits on the terms and
to the extent required by COBRA or any other analogous legislation as may be
applicable to the Executive, the Company shall have no additional obligations
under this Agreement.

 

(d)  Release

 

Notwithstanding anything to the contrary in this Agreement, the payments and
benefits described in Section 6(a) and 6(c) above (together, the “Severance
Benefits”) shall be paid to the Executive subject to the condition that (i) the
Executive has delivered to the Company an executed copy of a waiver and general
release of claims (the “Release”) in a form attached hereto as Exhibit A, and
that such Release has become effective, enforceable and irrevocable in
accordance with its terms, not later than 30 days after the Date of Separation
from Service and (ii) the Executive complies with the covenants set forth in
Section 8 of this Agreement (the “Restrictive Covenants”). In the event that the
thirtieth day after the Date of Separation from Service occurs in the calendar
year following the year that includes the Date of Separation from Service, no
Severance Benefits that constitute deferred compensation subject to Section 409A
of the Internal Revenue Code shall be paid until the first day of the calendar
year following the year that includes the Date of Separation from Service, and
any Severance Benefits that would otherwise have been paid prior to such date
shall be paid as soon as practical after such date.

 

  6

 

 

7.    No Mitigation

 

The Executive shall not be required to seek other employment or otherwise
mitigate the amount of any payments to be made by the Company pursuant to this
Agreement. Except as otherwise provided in Section 6(d), the payments provided
pursuant to this Agreement shall not be reduced by any compensation earned by
the Executive as the result of employment by another employer after the
termination of the Executive’s employment or otherwise. The Company’s obligation
to make the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may have
against the Executive or others.

 

8.    Restrictive Covenants

 

(a)   Non-Solicitation. During the Term and for 12 months thereafter, the
Executive hereby agrees not to, directly or indirectly, solicit or hire or
assist any other person or entity in soliciting or hiring any employee of the
Company or any of its affiliates to perform services for any entity (other than
the Company or any of its affiliates), or attempt to induce any such employee to
leave the employ of the Company or any of its affiliates, or interfere in any
manner with any such employee’s relationship with the Company or any of its
affiliates, or solicit, hire or engage on behalf of herself or any other Person
(as defined below) any employee of the Company or any of its affiliates or
anyone who was employed by the Company or any of its affiliates during the
six-month period preceding such hiring or engagement. Notwithstanding the
foregoing, the provisions of this Section 8 shall not be violated by (i) the
Executive’s good faith performance of duties during the Term or (ii) an
individual’s response to a broad and general advertisement or solicitation not
specifically targeting or intending to target employees of the Company or any of
its affiliates.

 

(b)  Confidentiality; Non-Disclosure. The Executive hereby agrees that, during
the Term and thereafter, except in the furtherance of the Executive’s good faith
performance of duties hereunder, he will hold in strict confidence any
proprietary or Confidential Information related to the Company or any of its
affiliates. For purposes of this Agreement, the term “Confidential Information”
shall mean all information of the Company or any of its affiliates (in whatever
form) which has not been disclosed to the public other than by Executive in
violation of his obligations hereunder, including without limitation any
inventions, processes, methods of distribution, customer lists or customers’ or
trade secrets, provided that Confidential Information shall not include
information the Executive is required to disclose by applicable law, regulation
or legal process so long as the Executive notifies the Company promptly, unless
such notification would expose the Executive to legal jeopardy (it being
understood that “promptly” shall mean “prior to” unless prior notice is not
possible, in which case “promptly” shall mean as soon as practicable following)
of the Executive’s obligation to disclose Confidential Information by applicable
law, regulation or legal process and reasonably cooperates with the Company, at
the Company’s expense, to limit the extent of such disclosure.

 

(c)   Non-Competition. The Executive and the Company agree that the Company
would likely suffer significant harm from the Executive’s competing with the
Company during the Term and for some period of time thereafter. Accordingly, the
Executive agrees that he will not, during the Term and for a period of 12 months
following the termination of the Term, directly or indirectly, become employed
by, engage in business with, serve as an agent or consultant to, become a
partner, member, principal, stockholder or other owner (other than a holder of
less than 1% of the outstanding voting shares of any publicly held company) of,
any Person engaged in a maritime business involved in Jones Act trade (whether
or not for compensation) .

 

(d)  For purposes of this Section 8, the term “Person” shall mean any
individual, partnership, corporation, limited liability company, unincorporated
organization, trust or joint venture, or a governmental agency or political
subdivision thereof.

 

  7

 

 

9.    Injunctive Relief

 

It is impossible to measure in money the damages that will accrue to the Company
or any of its affiliates in the event that the Executive breaches any of the
Restrictive Covenants. In the event that the Executive breaches any such
Restrictive Covenant, the Company or any of its affiliates shall be entitled to
an injunction restraining the Executive from violating such Restrictive Covenant
. If the Company or any of its affiliates shall institute any action or
proceeding to enforce any such Restrictive Covenant, the Executive hereby waives
the claim or defense that the Company or any of its affiliates has an adequate
remedy at law and agrees not to assert in any such action or proceeding the
claim or defense that the Company or any of its affiliates has an adequate
remedy at law. The foregoing shall not prejudice the Company’s or any of its
affiliates’ right to require the Executive to account for and pay over to the
Company or any of its affiliates, and the Executive hereby agrees to account for
and pay over, the compensation, profits, monies, accruals or other benefits
derived or received by the Executive as a result of any transaction constituting
a breach of any of the Restrictive Covenants.

 

10.  Arbitration

 

(a)   Any dispute, claim or controversy arising under or in connection with this
Agreement or the Executive’s employment hereunder or the termination thereof,
other than injunctive relief under Section 9 hereof, shall be settled
exclusively by arbitration administered by the American Arbitration Association
(the “AAA”) and carried out in the State of Florida. The arbitration shall be
conducted in accordance with the AAA rules governing commercial arbitration in
effect at the time of the arbitration, except as modified herein. There shall be
three arbitrators, one of whom shall be nominated by the Company and one who
shall be nominated by the Executive within thirty (30) days of receipt by
respondent of the demand for arbitration, and the third arbitrator, who shall
chair the arbitral tribunal, shall be nominated by the party nominated
arbitrators within thirty (30) days of the nomination of the second arbitrator.
If any arbitrator is not appointed within the time limit provided herein, upon
request of any party to the arbitration, such arbitrator shall be appointed by
the AAA within fifteen (15) days of receiving such request.

 

(b)  The arbitration shall commence within forty-five (45) days after the
appointment of the third arbitrator; the arbitration shall be completed within
sixty (60) days of commencement; and the arbitrators’ award shall be made within
thirty (30) days following such completion. The parties may agree to extend the
time limits specified in the foregoing sentence.

 

(c)   The arbitral tribunal may award any form of relief permitted under this
Agreement and applicable law, including damages and temporary or permanent
injunctive relief, except that the arbitral tribunal is not empowered to award
damages in excess of compensatory damages, and each party hereby irrevocably
waives any right to recover punitive, exemplary or similar damages with respect
to any dispute. The award shall be in writing and shall state the reasons for
the award.

 

(d)   The decision rendered by the arbitral tribunal shall be final and binding
on the parties to this Agreement. Judgment may be entered in any court of
competent jurisdiction. The parties hereto waive, to the fullest extent
permitted by law, any rights to appeal to, or to seek review of such award by,
any court. The parties hereto further agree to obtain the arbitral tribunal’s
agreement to preserve the confidentiality of the arbitration.

 

  8

 

 

11.  Section 409A

 

The intent of the parties is that payments and benefits under this Agreement
comply with Section 409A of the Internal Revenue Code of 1986 as amended (“the
Code”) and the regulations and guidance promulgated thereunder (except to the
extent exempt as short-term deferrals or otherwise) and, accordingly, to the
maximum extent permitted, this Agreement shall be interpreted to be in
compliance therewith. A termination of employment shall not be deemed to have
occurred for purposes of any provision of this Agreement providing for the
payment of any amounts or benefits subject to Section 409A of the Code upon or
following a termination of employment unless such termination is also a
“separation from service” within the meaning of Section 409A of the Code and,
for purposes of any such provision of this Agreement, references to a
“termination,” “termination of employment,” or like terms shall mean “separation
from service.” The determination of whether and when a separation from service
has occurred shall be made in a manner consistent with, and based on the
presumptions set forth in, US Treasury Regulation Section 1.409A-1(h) or any
successor provision thereto. It is intended that each installment, if any, of
the payments and benefits provided hereunder shall be treated as a separate
“payment” for purposes of Section 409A of the Code. Neither the Company nor the
Executive shall have the right to accelerate or defer the delivery of any such
payments or benefits if such acceleration or deferral would result in the
imposition of an additional tax under Section 409A of the Code. All
reimbursements and in-kind benefits provided under this Agreement or otherwise
to the Executive shall be made or provided in accordance with the requirements
of Section 409A of the Code to the extent that such reimbursements or in-kind
benefits are subject to Section 409A of the Code. All expenses or other
reimbursements paid pursuant herewith and therewith that are taxable income to
the Executive shall in no event be paid later than the end of the calendar year
next following the calendar year in which the Executive incurs such expense or
pays such related tax. With regard to any provision herein that provides for
reimbursement of costs and expenses or in-kind benefits, except as permitted by
Section 409A of the Code, the right to reimbursement or in-kind benefits shall
not be subject to liquidation or exchange for another benefit, the amount of
expenses eligible for reimbursement, or in-kind benefits provided, during any
taxable year shall not affect the expenses eligible for reimbursement, or
in-kind benefits to be provided, in any other taxable year, provided that, the
foregoing clause shall not be violated with regard to expenses reimbursed under
any arrangement covered by Section 105(b) of the Code solely because such
expenses are subject to a limit related to the period the arrangement is in
effect and such payments shall be made on or before the last day of the
Executive’s taxable year following the taxable year in which the expense
occurred. In no event shall the Company be required to pay Executive any
“gross-up” or other payment with respect to any taxes or penalties imposed under
Section 409A of the Code with respect to any benefit paid or promised to
Executive hereunder, unless the Company shall unilaterally and not in good faith
or on the basis of advice of counsel take action that results in the imposition
of such taxes or penalties. In the event that at the time of a separation from
service the Executive is a “specified employee” as defined by Section 409A of
the Code, no amount payable to the Executive by reason of such separation from
service that constitutes deferred compensation subject to Section 409A of the
Code shall be paid until the earlier of the first day of the seventh month
following the month that includes the separation from service, or the date of
the Executive’s death, and any amount that would otherwise have been paid prior
to such date shall be paid as soon as practical following such date, in a lump
sum without interest.

 

12.  Section 280G

 

If any payment(s) or benefit(s) the Executive would receive pursuant to this
Agreement and/or pursuant to any other agreement, plan, policy or arrangement
would (i) constitute a “parachute payment” within the meaning of Section 280G of
the Code and the applicable regulations, and (ii) but for this Section 12 would
be subject to the excise tax imposed by Section 4999 of the Code (the “Excise
Tax”), then the Executive shall be entitled to receive either (A) the full
amount of the parachute payments, or (B) the maximum amount that may be provided
to the Executive without resulting in any portion of such parachute payments
being subject to the Excise Tax, whichever of clauses (A) and (B), after taking
into account applicable federal, state, and local taxes and the Excise Tax,
results in the receipt by the Executive, on an after-tax basis, of the greatest
portion of the parachute payments. The parachute payments shall be reduced in a
manner that maximizes the Executive’s economic position. Any reduction of
parachute payments pursuant to the preceding sentence shall be made in a manner
consistent with the requirements of Section 409A of the Code, and where two
economically equivalent amounts are subject to reduction but payable at
different times, such amounts shall be reduced on a pro rata basis but not below
zero.

 

13.  Nondisparagement

 

Both during the Term and at all times thereafter, regardless of the reason for
termination, the Executive shall not disparage the Company or its affiliates,
and the Company shall not, and shall use reasonable efforts to not permit the
members of the Board and the senior executives of the Company to disparage the
Executive, provided that nothing in this Section 13 shall limit the right of any
person to respond truthfully to any inquiry arising from any legal proceeding.

 

  9

 

 

14.  Miscellaneous

 

(a)          Any notice or other communication required or permitted under this
Agreement shall be effective only if it is in writing and shall be deemed to be
given when delivered personally or four days after it is mailed by registered or
certified mail, postage prepaid, return receipt requested or one day after it is
sent by a reputable overnight courier service and, in each case, addressed as
follows (or if it is sent through any other method agreed upon by the parties):

 

If to the Company:

 

Overseas Shipholding Group, Inc.

600 Third Avenue, 39th Floor
New York, NY 10016

Attn: Chairman of the Board

 

with a copy to:

 

Arthur Kohn

Cleary Gottlieb Steen & Hamilton LLP

One Liberty Plaza

New York, NY 10006

 

If to the Executive:

 

At such address on file with the Company

 

or to such other address as any party hereto may designate by notice to the
others.

 

(b)          This Agreement shall constitute the entire agreement among the
parties hereto with respect to the Executive’s employment hereunder, and
supersedes and is in full substitution for any and all prior understandings or
agreements with respect to the Executive’s employment, including, but not
limited to, any understandings or agreements under the Overseas Shipholding
Group, Inc. Severance Plan.

 

(c)          This Agreement may be amended only by an instrument in writing
signed by the parties hereto, and any provision hereof may be waived only by an
instrument in writing signed by the party or parties against whom or which
enforcement of such waiver is sought. The failure of any party hereto at any
time to require the performance by any other party hereto of any provision
hereof shall in no way affect the full right to require such performance at any
time thereafter, nor shall the waiver by any party hereto of a breach of any
provision hereof be taken or held to be a waiver of any succeeding breach of
such provision or a waiver of the provision itself or a waiver of any other
provision of this Agreement.

 

(d)          The parties hereto acknowledge and agree that each party has
reviewed and negotiated the terms and provisions of this Agreement and has had
the opportunity to contribute to its revision. Accordingly, the rule of
construction to the effect that ambiguities are resolved against the drafting
party shall not be employed in the interpretation of this Agreement. Rather, the
terms of this Agreement shall be construed fairly as to both parties hereto and
not in favor or against either party.

 

(e)          The parties hereto hereby represent that they each have the
authority to enter into this Agreement, and the Executive hereby represents to
the Company that the execution of, and performance of duties under, this
Agreement shall not constitute a breach of or otherwise violate any other
agreement to which the Executive is a party. The Executive hereby further
represents to the Company that he will not utilize or disclose any confidential
information obtained by the Executive in connection with any former employment
with respect to his duties and responsibilities hereunder.

 

  10

 

 

(f)          This Agreement is binding on and is for the benefit of the parties
hereto and their respective successors, assigns, heirs, executors,
administrators and other legal representatives. Neither this Agreement nor any
right or obligation hereunder may be assigned by the Executive.

 

(g)          The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume this
Agreement in the same manner and to the same extent that the Company would have
been required to perform it if no such succession had taken place. As used in
the Agreement, “the Company” shall mean both the Company as defined above and
any such successor that assumes this Agreement, by operation of law or
otherwise.

 

(h)          Any provision of this Agreement (or portion thereof) which is
deemed invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction and subject to this Section 14(h), be ineffective to the extent of
such invalidity, illegality or unenforceability, without affecting in any way
the remaining provisions thereof in such jurisdiction or rendering that or any
other provisions of this Agreement invalid, illegal, or unenforceable in any
other jurisdiction. If any covenant should be deemed invalid, illegal or
unenforceable because its scope is considered excessive, such covenant shall be
modified so that the scope of the covenant is reduced only to the minimum extent
necessary to render the modified covenant valid, legal and enforceable. No
waiver of any provision or violation of this Agreement by the Company shall be
implied by the Company’s forbearance or failure to take action.

 

(i)          The Company may withhold from any amounts payable to the Executive
hereunder all federal, state, city or other taxes that the Company may
reasonably determine are required to be withheld pursuant to any applicable law
or regulation, (it being understood that the Executive shall be responsible for
payment of all taxes in respect of the payments and benefits provided herein).

 

(j)          This Agreement shall be governed by and construed in accordance
with the laws of the State of New York without reference to its principles of
conflicts of law.

 

(k)          This Agreement may be executed in several counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument. A facsimile of a signature shall be deemed to be and have the
effect of an original signature.

 

(l)          Notwithstanding anything herein or in any other agreement with or
policy of the Company, nothing herein or therein shall (i) prohibit the
Executive from making reports of possible violations of federal law or
regulation to any governmental agency or entity in accordance with the
provisions of and rules promulgated under Section 21F of the Securities Exchange
Act of 1934 or Section 806 of the Sarbanes-Oxley Act of 2002, or of any other
whistleblower protection provisions of state or federal law or regulation, or
(ii) require notification or prior approval by the Company of any reporting
described in clause (i); provided, however, that the Executive is not authorized
to disclose communications with counsel that were made for the purpose of
receiving legal advice or that contain legal advice or that are protected by the
attorney work product or similar privilege. Furthermore, the Executive shall not
be held criminally or civilly liable under any federal or state trade secret law
for the disclosure of a trade secret that is made (1) in confidence to a
federal, state or local government official, either directly or indirectly, or
to an attorney, in each case, solely for the purpose of reporting or
investigating a suspected violation of law or (2) in a complaint or other
document filed in a lawsuit or proceeding, if such filings are made under seal.

 

(m)          The headings in this Agreement are inserted for convenience of
reference only and shall not be a part of or control or affect the meaning of
any provision hereof.

 

*      *      *      *      *      *      *

 

  11

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

 

  Samuel H. Norton       /s/ Samuel H Norton   Name: Samuel H. Norton      
Overseas Shipholding Group, Inc.       /s/ Ian T. Blackley   Name:  Ian T.
Blackley   Title:    President and CEO

 

  12

 

 

EXHIBIT A

 

RELEASE AGREEMENT

This Release Agreement (“Release”) is hereby made between Samuel H. Norton
(“Executive”) and Overseas Shipholding Group, Inc.1 (the “Company”),

 

I.           RECITALS

 

WHEREAS, Executive and the Company have entered into an Employment Agreement
dated July [●], 2016 (the “Employment Agreement”), pursuant to which Executive
may be entitled to receive severance and certain benefits pursuant to Section
6(a) of the Employment Agreement, as applicable (the “Severance Benefits”) in
the event of certain specified terminations of employment, subject to and
conditioned upon his execution of a general release.

 

WHEREAS, Executive and the Company desire to enter into this Release, in
satisfaction of such condition under the Employment Agreement.

 

II.          TERMS AND CONDITIONS

 

NOW, THEREFORE, in consideration of the mutual covenants and other good and
valuable consideration contained herein, the parties hereby agree as follows:

 

1.          Separation.  Executive’s employment with the Company and all of its
subsidiaries and Affiliates ended effective                      ,
____.  Executive has the right to receive Severance Benefits subject to his
execution of this Release, as provided under the Employment Agreement.

 

2.          General Release and Covenant Not to Sue. Executive hereby releases,
remises and acquits the Company and/or its direct or indirect parents,
subsidiaries, affiliates and related entities, and all of their predecessors,
successors, assigns, trustees and current or former officers, directors,
shareholders, members, partners, agents, employees, consultants, independent
contractors, attorneys and advisers (collectively, the “Releasees”), jointly and
severally, from any and all claims, known or unknown, which Executive or
Executive’s heirs, successors or assigns have or may have against any of the
Releasees arising on or prior to the date of execution of this Agreement and any
and all liability which any of the Releasees may have to Executive, heirs,
successors and assigns whether denominated claims, demands, causes of action,
obligations, damages or liabilities relating to or arising from his employment
with or service as a director on the board of directors of the Company or any
other Releasee or the termination of that employment or service from the
beginning of the world until the date of the execution hereof, however,
denominated, including but not limited to, the Age Discrimination in Employment
Act (“ADEA”), the Americans with Disabilities Act of 1990, the Family and
Medical Leave Act of 1993, Title VII of the United States Civil Rights Act of
1964, 42 U.S.C. § 1981, any other federal, state or local law (including any
civil or human rights law) and any workers’ compensation or disability claims
under any such laws or claims under any contract. Executive further agrees that
Executive will not file or permit to be filed on Executive’s behalf any such
claim. Notwithstanding the preceding sentence or any other provision of this
Agreement, this release is not intended to interfere with Executive’s right to
file a charge with the Equal Employment Opportunity Commission (the “EEOC”) in
connection with any claim he believes he may have against the Company. However,
by executing this Agreement, Executive hereby waives the right to recover in any
proceeding Executive may bring before the EEOC or any state or local human
rights commission or in any proceeding brought by the EEOC or any state or local
human rights commission on Executive’s behalf. In addition, this release is not
intended to interfere with Executive’s right to challenge that his waiver of any
and all ADEA claims pursuant to this Agreement is a knowing and voluntary
waiver, notwithstanding Executive’s specific representation that he has entered
into this Agreement knowingly and voluntarily. This release is for any relief,
no matter how denominated, including, but not limited to, injunctive relief,
wages, back pay, front pay, compensatory damages, or punitive damages. This
release shall not apply to any obligation of the Company pursuant to the
Employment Agreement or any equity award not covered by the Employment
Agreement, any rights in the nature of indemnification which Executive may have
(including, without limitation, under any insurance policy) with respect to
claims against Executive relating to or arising out of his employment with or
service as a director of the Company or his employment with or service as a
director of any other Releasee, any vested benefit to which Executive is
entitled under any tax qualified pension plan of the Company, any unpaid health
benefits, reimbursement for any business expenses to which the Executive is
entitled under the Company’s policies for reimbursement of expenses, COBRA
continuation coverage benefits or any other similar benefits required to be
provided by statute. A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IS IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.

 

 

1 To be updated to reflect change to employing entity as of time of termination,
if any.

 

  13

 

 

3.          Voluntary Agreement. Executive understands and acknowledges the
significance and consequences of this Release, that it is voluntary, that it has
not been given as a result of any coercion, and expressly confirms that it is to
be given full force and effect according to all of its terms, including those
relating to unknown Claims. Executive was hereby advised of Executive’s right to
seek the advice of an attorney prior to signing this Release. Executive
acknowledges and agrees he has signed this Release only after full reflection
and analysis, that he understands it and is entering into it voluntarily.

 

4.          Period for Consideration of Agreement and Other Matters. Executive
acknowledges that, before signing this Release, Executive was given a period of
at least twenty-one (21) days to consider this Release. Executive also
understands that he has the right to change his mind and cancel this Release by
providing written notice to the Company no later than seven (7) days following
the date that Executive has signed it. This Release will not be effective until
the end of this seven (7) day period. Executive acknowledges that Executive was
advised to consult with legal counsel prior to executing a copy of this Release.

 

5.          Non-Admission. Executive and the Company agree that this Agreement
does not constitute and shall not be construed, interpreted, or treated in any
respect as an admission of any liability or wrongdoing by Executive or the
Releasees. Executive and the Company further agree that this Release shall not
be admissible in any proceeding without Executive’s and the Company’s written
consent, except for a proceeding instituted by Executive or the Company
challenging the validity of this Release, a proceeding by Executive or the
Company alleging a breach of this Release or the Employment Agreement, any
proceeding in which a defense is asserted based on any provisions of this
Release, or as otherwise required by law.

 

6.          Choice of Law, Interpretation and Severability. Executive and the
Company agree that this Agreement shall be governed by Florida law and may be
modified by the Company, from time to time, to reflect any applicable changes in
Florida law. Executive and the Company agree that this Agreement shall not be
construed against any party on account of authorship and, if a court finds any
part of this Agreement to be illegal or invalid, the illegal or invalid portion
of the Agreement shall be severed and the rest of the Agreement will be
enforceable. Moreover, if any one or more of the provisions contained in this
Agreement is held to be excessively broad as to duration, scope, activity or
subject, such provisions will be construed by limiting and reducing them so as
to be enforceable to the maximum extent compatible with applicable law.

 

7.          Execution. This Agreement may be executed in two or more facsimiled
counterparts, each of which shall be equivalent to an original, but which
collectively shall constitute one Agreement.

 

8.          Entire Agreement. Except as otherwise set forth herein, the terms
contained in this Agreement constitute the entire agreement between the parties
with respect to the subject matter hereof and supersede all prior agreements
relating thereto whether written or oral.

 

  14

 

 

9.

 

AGREED TO AND ACCEPTED BY:

 

Executive   Overseas Shipholding Group, Inc2                       Date:    
Name:         Title:  

 

 

2 To be updated to reflect change to employing entity as of time of termination,
if any.

 

  15