Exhibit 10.1

 

OVERSEAS SHIPHOLDING GROUP, INC.

MANAGEMENT INCENTIVE COMPENSATION PLAN

(Dated of as September 23, 2014)

 

1.Purpose of the Plan

 

This Plan is intended to promote the interests of the Company and its
shareholders by providing certain employees of the Company, who are largely
responsible for the management, growth and protection of the business of the
Company, with incentives and rewards to encourage them to continue in the
service of the Company.

 

2.Definitions

 

As used in the Plan or in any instrument governing the terms of any Incentive
Award, the following definitions apply to the terms indicated below:

 

(a)          “Affiliate” means, with respect to a specified Person, a Person
that directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, the specified Person.

 

(b)          “Award Agreement” means a written agreement, in a form determined
by the Committee from time to time, entered into by each Participant and the
Company, evidencing the grant of an Incentive Award under the Plan.

 

(c)          “Board of Directors” means the Board of Directors of OSG.

 

(d)          “Cash Incentive Award” means an award granted to a Participant
pursuant to Section 8 of the Plan.

 

(e)          “Change in Control” means (i) any one Person, or more than one
Person acting as a group (as defined under Treasury Regulation §
1.409A-3(i)(5)(v)(B)), other than OSG or any employee benefit plan sponsored by
OSG, acquires ownership of stock of OSG that, together with stock held by such
Person or group, constitutes more than 50 percent of the total fair market value
or total Voting Power of the stock of OSG; or (ii) any one Person, or more than
one Person acting as a group (as defined under Treasury Regulation §
1.409A-3(i)(5)(v)(B)) other than OSG or any employee benefit plan sponsored by
OSG acquires (or has acquired during the 12-month period ending on the date of
the most recent acquisition by such Person or Persons) ownership of stock of OSG
possessing 30 percent or more of the total Voting Power of the stock of OSG; or
(iii) a majority of members of the Board of Directors is replaced during any
12-month period by directors whose appointment or election is not endorsed by a
majority of the members of the Board of Directors before the date of each
appointment or election; or (iv) any one Person, or more than one Person acting
as a group (as defined in Treasury Regulation § 1.409A-3(i)(5)(v)(B)) acquires
(or has acquired during the 12-month period ending on the date of the most
recent acquisition by such Person or Persons) assets from the Company that have
a total gross fair market value equal to or more than 40 percent of the total
gross fair market value of all of the assets of the Company immediately before
such acquisition or acquisitions. For purposes of subsection (iv), gross fair
market value means the value of the assets of the Company, or the value of the
assets being disposed of, determined without regard to any liabilities
associated with such assets. The foregoing subsections (i) through (iv) shall be
interpreted in a manner that is consistent with the Treasury Regulations
promulgated pursuant to Section 409A of the Code so that all, and only, such
transactions or events that could qualify as a “change in control event” within
the meaning of Treasury Regulation §1.409A-3(i)(5)(i) will be deemed to be a
Change in Control for purposes of this Plan.

 

 

 

 

(f)          “Code” means the Internal Revenue Code of 1986, as amended from
time to time, and all regulations, interpretations and administrative guidance
issued thereunder.

 

(g)          “Committee” means the Compensation Committee of the Board of
Directors or such other committee as the Board of Directors shall appoint from
time to time to administer the Plan and to otherwise exercise and perform the
authority and functions assigned to the Committee under the terms of the Plan.

 

(h)          “Common Stock” means OSG’s Class A common stock, $0.01 par value
per share, or any other security into which the common stock shall be changed
pursuant to the adjustment provisions of Section 10 of the Plan.

 

(i)          “Company” means Overseas Shipholding Group, Inc. and all of its
Subsidiaries, collectively.

 

(j)          “Covered Employee” means each Participant who is an executive
officer (within the meaning of Rule 3b-7 under the Exchange Act) of OSG.

 

(k)          “Deferred Compensation Plan” means any plan, agreement or
arrangement maintained by the Company from time to time that provides
opportunities for deferral of compensation.

 

(l)          “Effective Date” means the date the Plan is adopted.

 

(m)          “Employment” means the period during which an individual is
classified or treated by the Company as an employee of the Company.

 

(n)          “Exchange Act” means the Securities Exchange Act of 1934, as
amended.

 

(o)          “Fair Market Value” means, with respect to a share of Common Stock,
as of the applicable date of determination or if the exchange is not open for
trading on such date, the immediately preceding day on which the exchange is
open for trading, the closing price as reported on the date of determination on
the principal securities exchange on which shares of Common Stock are then
listed or admitted to trading (the “Securities Exchange”). In the event that the
price of a share of Common Stock shall not be so reported, the Fair Market Value
of a share of Common Stock shall be determined by the Committee in its sole
discretion taking into account the requirements of Section 409A of the Code.

 

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(p)          “Incentive Award” means one or more Stock Incentive Awards and/or
Cash Incentive Awards, collectively.

 

(q)          “Option” means a stock option to purchase shares of Common Stock
granted to a Participant pursuant to Section 6.

 

(r)          “OSG” means Overseas Shipholding Group, Inc., a Delaware
corporation (and any successor thereto).

 

(s)          “Other Stock-Based Award” means an award granted to a Participant
pursuant to Section 7.

 

(t)          “Participant” means an employee of the Company who is eligible to
participate in the Plan and to whom one or more Incentive Awards have been
granted pursuant to the Plan and have not been fully settled or cancelled and,
following the death of any such Person, his successors, heirs, executors and
administrators, as the case may be.

 

(u)          “Performance-Based Award” means any Incentive Award pursuant to
which any compensation paid is intended to be Performance-Based Compensation.

 

(v)         “Performance-Based Compensation” means compensation that is intended
to satisfy the requirements of Section 162(m) of the Code for “qualified
performance-based compensation.”

 

(w)          “Performance Measures” means such measures as are described in
Section 9 on which performance goals are based in order to qualify certain
awards granted hereunder as Performance-Based Compensation.

 

(x)          “Performance Percentage” means the factor determined pursuant to a
Performance Schedule that is to be applied to a Target Award and that reflects
actual performance compared to the Performance Target.

 

(y)          “Performance Period” means the period of time during which the
performance goals must be met in order to determine the degree of payout and/or
vesting with respect to an Incentive Award that is intended to qualify as
Performance-Based Compensation. Performance Periods may be overlapping.

 

(z)          “Performance Schedule” means a schedule or other objective method
for determining the applicable Performance Percentage to be applied to each
Target Award.

 

(aa)         “Performance Target” means performance goals and objectives with
respect to a Performance Period.

 

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(bb)         “Person” means a “person” as such term is used in Section 13(d) and
14(d) of the Exchange Act, including any “group” within the meaning of Section
13(d)(3) under the Exchange Act.

 

(cc)         “Plan” means the Overseas Shipholding Group, Inc. Management
Incentive Compensation Plan, as it may be amended from time to time.

 

(dd)         “Securities Act” means the Securities Act of 1933, as amended.

 

(ee)          “Stock Incentive Award” means an Option or Other Stock-Based Award
granted pursuant to the terms of the Plan.

 

(ff)           “Subsidiary” means any “subsidiary” within the meaning of Rule
405 under the Securities Act.

 

(gg)         “Target Award” means target payout amount for an Incentive Award.

 

(hh)         “Voting Power” means the number of votes available to be cast
(determined by reference to the maximum number of votes entitled to be cast by
the holders of Voting Securities upon any matter submitted to shareholders where
the holders of all Voting Securities vote together as a single class) by the
holders of Voting Securities.

 

(ii)         “Voting Securities” means any securities or other ownership
interests of an entity entitled, or which may be entitled, to vote on the
election of directors, or securities or other ownership interests which are
convertible into, or exercisable in exchange for, such Voting Securities,
whether or not subject to the passage of time or any contingency.

 

3.Stock Subject to the Plan and Limitations on Cash Incentive Awards

 

(a)          Stock Subject to the Plan

 

The maximum number of shares of Common Stock that may be covered by Incentive
Awards granted under the Plan shall not exceed 37,000,000 shares of Common Stock
in the aggregate. Out of such aggregate, the maximum number of shares of Common
Stock that may be covered by Options that are designated as “incentive stock
options” within the meaning of Section 422 of the Code shall not exceed
3,700,000 shares of Common Stock. The maximum number of shares referred to in
the preceding sentences of this Section 3(a) shall in each case be subject to
adjustment as provided in Section 10 and the following provisions of this
Section 3. Of the shares described, 100% may be delivered in connection with
“full-value Awards,” meaning Incentive Awards other than Options or stock
appreciation rights; provided, however, that any shares granted under Options or
stock appreciation rights shall be counted against the share limit on a
one-for-one basis and any shares granted as full-value Incentive Awards shall be
counted against the share limit as two (2) shares for every one (1) share
subject to such Incentive Award. Shares of Common Stock issued under the Plan
may be either authorized and unissued shares, treasury shares, shares purchased
by the Company in the open market, or any combination of the preceding
categories as the Committee determines in its sole discretion.

 

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For purposes of the preceding paragraph, shares of Common Stock covered by
Incentive Awards shall only be counted as used to the extent they are actually
issued and delivered to a Participant (or such Participant’s permitted
transferees as described in the Plan) pursuant to the Plan; provided, however,
that if an Incentive Award is settled for cash or if shares of Common Stock are
withheld to pay the exercise price of an Option or to satisfy any tax
withholding requirement in connection with an Incentive Award, both the shares
issued (if any), and the shares withheld, will be deemed delivered for purposes
of determining the number of shares of Common Stock that are available for
delivery under the Plan. In addition, if shares of Common Stock are issued
subject to conditions which may result in the forfeiture, cancellation or return
of such shares to the Company, any portion of the shares forfeited, cancelled or
returned shall be treated as not issued pursuant to the Plan. In addition, if
shares of Common Stock owned by a Participant (or such Participant’s permitted
transferees as described in the Plan) are tendered (either actually or through
attestation) to the Company in payment of any obligation in connection with an
Incentive Award, the number of shares tendered shall be added to the number of
shares of Common Stock that are available for delivery under the Plan. Shares of
Common Stock covered by Incentive Awards granted pursuant to the Plan in
connection with the assumption, replacement, conversion or adjustment of
outstanding equity-based awards in the context of a corporate acquisition or
merger (within the meaning of Section 303A.08 of the New York Stock Exchange
Listed Company Manual) shall not count as used under the Plan for purposes of
this Section 3.

 

(b)          Individual Award Limits

 

Subject to adjustment as provided in Section 10, the maximum number of shares of
Common Stock that may be covered by Incentive Awards granted under the Plan to
any Covered Employee in any calendar year shall not exceed 4,500,000 shares. For
this purpose, the number of shares “covered by” an Incentive Award shall be the
maximum number of shares that may be required to be delivered in settlement of
that Incentive Award. The amount payable to any Covered Employee with respect to
any calendar year for all Cash Incentive Awards shall not exceed $7,500,000. For
purposes of the preceding sentences, the phrase “amount payable with respect to
any calendar year” means the amount of cash, or value of other property,
required to be paid based on the achievement of applicable Performance Measures
during a Performance Period that ends in such calendar year, disregarding any
deferral pursuant to the terms of a Deferred Compensation Plan unless the terms
of the deferral are intended to comply with the requirements for qualified
performance-based compensation under Section 162(m) of the Code.

 

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4.Administration of the Plan

 

The Plan shall be administered by a Committee of the Board of Directors
consisting of two or more Persons, each of whom qualifies as a “non-employee
director” (within the meaning of Rule 16b-3 promulgated under Section 16 of the
Exchange Act), an “outside director” within the meaning of Treasury Regulation
Section 1.162-27(e)(3) and as “independent” as required by NYSE or any security
exchange on which the Common Stock is listed, in each case if and to the extent
required by applicable law or necessary to meet the requirements of such Rule,
Section or listing requirement at the time of determination. From time to time,
the Board may increase or decrease the size of the Committee, add additional
members to, remove members (with or without cause) from, appoint new members in
substitution therefor, and fill vacancies, however caused, in the Committee. The
Committee shall, consistent with the terms of the Plan, from time to time
designate those individuals who shall be granted Incentive Awards under the Plan
and the amount, type and other terms and conditions of such Incentive Awards.
All of the powers and responsibilities of the Committee under the Plan may be
delegated by the Committee, in writing, to any subcommittee thereof, in which
case the acts of such subcommittee shall be deemed to be acts of the Committee
hereunder. The Committee may also from time to time authorize a subcommittee
consisting of one or more members of the Board of Directors (including members
who are employees of the Company) or employees of the Company to grant Incentive
Awards to Persons who are not “executive officers” of the Company (within the
meaning of Rule 16a-1 under the Exchange Act), subject to such restrictions and
limitations as the Committee may specify and to the requirements of Section 157
of the Delaware General Corporation Law.

 

The Committee shall have full discretionary authority to administer the Plan,
including discretionary authority to interpret and construe any and all
provisions of the Plan and any Award Agreement thereunder, and to adopt, amend
and rescind from time to time such rules and regulations for the administration
of the Plan, including rules and regulations related to sub-plans established
for the purpose of satisfying applicable foreign laws and/or qualifying for
preferred tax treatment under applicable foreign tax laws, as the Committee may
deem necessary or appropriate. Decisions of the Committee shall be final,
binding and conclusive on all parties. For the avoidance of doubt, the Committee
may exercise all discretion granted to it under the Plan in a non-uniform manner
among Participants.

 

The Committee may delegate the administration of the Plan to one or more
officers or employees of the Company, and such administrator(s) may have the
authority to execute and distribute Award Agreements, to maintain records
relating to Incentive Awards, to process or oversee the issuance of Common Stock
under Incentive Awards, to interpret and administer the terms of Incentive
Awards, and to take such other actions as may be necessary or appropriate for
the administration of the Plan and of Incentive Awards under the Plan, provided
that in no case shall any such administrator be authorized (i) to grant
Incentive Awards under the Plan (except in connection with any delegation made
by the Committee pursuant to the first paragraph of this Section 4), (ii) to
take any action that would cause Incentive Awards intended to qualify as
Performance-Based Compensation to fail to so qualify, (iii) to take any action
inconsistent with Section 409A of the Code or (iv) to take any action
inconsistent with applicable provisions of the Delaware General Corporation Law.
Any action by any such administrator within the scope of its delegation shall be
deemed for all purposes to have been taken by the Committee and, except as
otherwise specifically provided, references in this Plan to the Committee shall
include any such administrator. The Committee and, to the extent it so provides,
any subcommittee, shall have sole authority to determine whether to review any
actions and/or interpretations of any such administrator, and if the Committee
shall decide to conduct such a review, any such actions and/or interpretations
of any such administrator shall be subject to approval, disapproval, or
modification by the Committee.

 

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On or after the date of grant of an Incentive Award under the Plan, the
Committee may (i) accelerate the date on which any such Incentive Award becomes
vested, exercisable or transferable, as the case may be, (ii) extend the term of
any such Incentive Award, including, without limitation, extending the period
following a termination of a Participant’s Employment during which any such
Incentive Award may remain outstanding, (iii) waive any conditions to the
vesting, exercisability or transferability, as the case may be, of any such
Incentive Award or (iv) provide for the payment of dividends or dividend
equivalents with respect to any such Incentive Award; provided, that the
Committee shall not have any such authority to the extent that the grant of such
authority would cause any tax to become due under Section 409A of the Code.
Notwithstanding anything herein to the contrary, the Company shall not reprice
any stock option (within the meaning of Section 303A.08 of the New York Stock
Exchange Listed Company Manual and any other formal or informal guidance issued
by the New York Stock Exchange) without the approval of the shareholders of OSG.

 

The Company shall pay any amount payable with respect to an Incentive Award in
accordance with the terms of such Incentive Award, provided that the Committee
may, in its discretion, defer, or give a Participant the election to defer, the
payment of amounts payable with respect to an Incentive Award subject to and in
accordance with the terms of a Deferred Compensation Plan.

 

No member of the Committee shall be liable for any action, omission, or
determination relating to the Plan, and OSG shall indemnify and hold harmless
each member of the Committee and each other director or employee of the Company
to whom any duty or power relating to the administration or interpretation of
the Plan has been delegated, against any cost or expense (including counsel
fees) or liability (including any sum paid in settlement of a claim with the
approval of the Committee) arising out of any action, omission or determination
relating to the Plan, unless, in either case, such action, omission or
determination was taken or made by such member, director or employee in bad
faith and without reasonable belief that it was in the best interests of the
Company.

 

5.Eligibility

 

The Persons who shall be eligible to receive Incentive Awards pursuant to the
Plan shall be those employees of the Company whom the Committee shall select
from time to time, including officers of OSG, whether or not they are directors.
Each Incentive Award granted under the Plan shall be evidenced by an Award
Agreement.

 

6.Options

 

The Committee may from time to time grant Options on such terms as it shall
determine, subject to the terms and conditions set forth in the Plan. The Award
Agreement shall clearly identify such Option as either an “incentive stock
option” within the meaning of Section 422 of the Code or as not an incentive
stock option.

 

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(a)          Exercise Price

 

The exercise price per share of Common Stock covered by any Option shall be not
less than 100% of the Fair Market Value of a share of Common Stock on the date
on which such Option is granted.

 

(b)          Term and Exercise of Options

 

(1)         Each Option shall become vested and exercisable on such date or
dates, during such period and for such number of shares of Common Stock as shall
be determined by the Committee on or after the date such Option is granted;
provided, however that no Option shall be exercisable after the expiration of
ten years from the date such Option is granted; and, provided, further, that
each Option shall be subject to earlier termination, expiration or cancellation
as provided in the Plan or the Award Agreement.

 

(2)         Each Option shall be exercisable in whole or in part; provided,
however that no partial exercise of a Option shall be for an aggregate exercise
price of less than $1,000. The partial exercise of an Option shall not cause the
expiration, termination or cancellation of the remaining portion thereof.

 

(3)         An Option shall be exercised by such methods and procedures as the
Committee determines from time to time, including without limitation through net
physical settlement or other method of cashless exercise.

 

(c)          Special Rules for Incentive Stock Options

 

(1)         The aggregate Fair Market Value of shares of Common Stock with
respect to which “incentive stock options” (within the meaning of Section 422 of
the Code) are exercisable for the first time by a Participant during any
calendar year under the Plan and any other stock option plan of OSG or any of
its “subsidiaries” (within the meaning of Section 424 of the Code) shall not
exceed $100,000. Such Fair Market Value shall be determined as of the date on
which each such incentive stock option is granted. In the event that the
aggregate Fair Market Value of shares of Common Stock with respect to such
incentive stock options exceeds $100,000, then incentive stock options granted
hereunder to such Participant shall, to the extent and in the order required by
regulations promulgated under the Code (or any other authority having the force
of regulations), automatically be deemed to be non-qualified stock options, but
all other terms and provisions of such incentive stock options shall remain
unchanged. In the absence of such regulations (and authority), or in the event
such regulations (or authority) require or permit a designation of the Options
which shall cease to constitute incentive stock options, incentive stock options
granted hereunder shall, to the extent of such excess and in the order in which
they were granted, automatically be deemed to be non-qualified stock options,
but all other terms and provisions of such incentive stock options shall remain
unchanged.

 

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(2)         Incentive stock options may only be granted to individuals who are
employees of the Company. No incentive stock option may be granted to an
individual if, at the time of the proposed grant, such individual owns stock
possessing more than ten percent of the total combined “voting power” (within
the meaning of Section 422 of the Code) of all classes of stock of OSG or any of
its “subsidiaries” (within the meaning of Section 424 of the Code), unless (i)
the exercise price of such incentive stock option is at least 110% of the Fair
Market Value of a share of Common Stock at the time such incentive stock option
is granted and (ii) such incentive stock option is not exercisable after the
expiration of five years from the date such incentive stock option is granted.

 

7.Other Stock-Based Awards

 

The Committee may from time to time grant equity-based or equity-related awards
not otherwise described herein in such amounts and on such terms as it shall
determine, subject to the terms and conditions set forth in the Plan. Without
limiting the generality of the preceding sentence, each such Other Stock-Based
Award may (i) involve the transfer of actual shares of Common Stock to
Participants, either at the time of grant or thereafter, or payment in cash or
otherwise of amounts based on the value of shares of Common Stock, (ii) be
subject to performance-based and/or service-based conditions, (iii) be in the
form of stock appreciation rights, phantom stock, restricted stock, restricted
stock units, performance shares, deferred share units or share-denominated
performance units, (iv) be designed to comply with applicable laws of
jurisdictions other than the United States and (v) be designed to qualify as
Performance-Based Compensation; provided, that each Other Stock-Based Award
shall be denominated in, or shall have a value determined by reference to, a
number of shares of Common Stock that is specified at the time of the grant of
such Incentive Award.

 

8.Cash Incentive Awards

 

The Committee may from time to time grant Cash Incentive Awards on such terms as
it shall determine, subject to the terms and conditions set forth in the Plan.
Cash Incentive Awards may be settled in cash or in other property, including
shares of Common Stock, provided that the term “Cash Incentive Award” shall
exclude any Option or Other Stock-Based Award.

 

9.Performance-Based Compensation

 

(a)          Calculation

 

The amount payable with respect to an Incentive Award that is intended to
qualify as Performance-Based Compensation shall be determined in a manner
permitted by Section 162(m) of the Code.

 

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(b)          Discretionary Reduction

 

Unless otherwise specified in the Award Agreement, the Committee may, in its
discretion, reduce or eliminate the amount payable to any Participant with
respect to the Incentive Award, based on such factors as the Committee may deem
relevant, but the Committee may not increase any such amount above the amount
established in accordance with the relevant Performance Schedule. For purposes
of clarity, the Committee may exercise the discretion provided for by the
foregoing sentence in a non-uniform manner among Participants.

 

(c)          Performance Measures

 

The performance goals upon which the payment or vesting of any Incentive Award
(other than Options and stock appreciation rights) that is intended to qualify
as Performance-Based Compensation depends shall (a) be objective business
criteria and shall otherwise meet the requirements of Section 162(m) of the
Code, including the requirement that the level or levels of performance targeted
by the Committee result in the achievement of performance goals being
“substantially uncertain” at the time of grant and (b) relate to one or more of
the following Performance Measures: market price of the Common Stock, net
earnings, earnings before or after any or all of interest, taxes, depreciation
and amortization, net income (including, net income or operating income), cash
flow (including, operating cash flow, free cash flow and cash flow return on
capital), cash position, cash valued added, customer satisfaction or growth
measures, safety, revenues (including net revenues, net revenue growth or gross
revenue), enterprise value, financial return ratios, market performance, margins
(including gross margins or operating margins), productivity or efficiency
ratios, costs, profits (including net profits, net operating profits, gross
profit, gross profit growth and profit returns or margins), earnings per share,
stock price, working capital turnover and targets, total shareholder return,
economic value added or other value added measurements, return on assets, return
on capital or invested capital, return on equity, return on sales, new product
innovation, product release schedules or ship targets, product cost reduction,
inventory or supply chain management activities, and budget and expense
management.

 

A Performance Measure (i) may relate to the performance of the Participant, OSG,
a Subsidiary, any business group, business unit or other subdivision of the
Company, or any combination of the foregoing, as the Committee deems appropriate
and (ii) may be expressed as an amount, as an increase or decrease over a
specified period, as a relative comparison to the performance of a group of
comparator companies or a published or special index, or any other measure of
the selected performance criteria, as the Committee deems appropriate. The
measurement of any Performance Measure shall exclude the impact (positive and/or
negative) of unusual, non-recurring or extraordinary items or expenses; charges
for restructurings; discontinued operations; acquisitions or divestitures; the
cumulative effect of changes in accounting treatment; changes in tax laws,
accounting standards or principles or other laws or regulatory rules affecting
reporting results; any impact of impairment of tangible or intangible assets;
any impact of the issuance or repurchase of equity securities and/or other
changes in the number of outstanding shares of any class of the Company’s equity
securities; any gain, loss, income or expense attributable to acquisitions or
dispositions of stock or assets; stock-based compensation expense; asset
write-downs, in-process research and development expense; gain or loss from all
or certain claims and/or litigation and insurance recoveries; foreign exchange
gains and losses; any impact of changes in foreign exchange rates and any
changes in currency; a change in the Company’s fiscal year; and any other items,
each determined in accordance with U.S. generally accepted accounting principles
and as identified in the Company’s audited financial statements, including the
notes thereto.

 

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(d)          Performance Schedules

 

Within 90 days after the beginning of a Performance Period, and in any case
before 25% of the Performance Period has elapsed, the Committee shall establish
(a) Performance Targets for such Performance Period, (b) Target Awards for each
Participant, and (c) Performance Schedules for such Performance Period.

 

(e)          Committee Discretion

 

Nothing in this Plan is intended to limit the Committee’s discretion to adopt
conditions with respect to any Incentive Award that is not intended to qualify
as Performance-Based Compensation that relate to performance other than the
Performance Measures. Furthermore, nothing in this Plan shall be construed to
require the Committee to grant any Incentive Award that is intended to qualify
as Performance-Based Compensation. The Committee may, subject to the terms of
the Plan, amend previously granted Incentive Awards in a way that disqualifies
them as Performance-Based Compensation.

 

(f)          Committee Determinations

 

Determinations by the Committee as to the establishment of Performance Measures,
the level of actual achievement of Performance Targets, and the amount payable
with respect to an Incentive Award intended to qualify as Performance-Based
Compensation shall be recorded in writing. Specifically, the Committee shall
certify in writing, in a manner conforming to applicable regulations under
Section 162(m) of the Code, prior to settlement of each such Incentive Award
granted to a Covered Employee, that the Performance Targets and other material
terms upon which settlement of the Incentive Award was conditioned have been
satisfied.

 

(g)          Shareholder Approval

 

The ability to grant Incentive Awards intended to qualify as Performance-Based
Compensation shall be subject to the approval of the Plan by the shareholders of
OSG and compliance with any other applicable requirements under Section 162(m)
of the Code.

 

10.Adjustment Upon Certain Changes

 

Subject to any action by the shareholders of OSG required by law, applicable tax
rules or the rules of any exchange on which shares of common stock of OSG are
listed for trading:

 

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(a)Shares Available for Grants

 

In the event of any change in the number of shares of Common Stock outstanding
by reason of any stock dividend or split, recapitalization, merger,
consolidation, combination or exchange of shares or similar corporate change,
the maximum aggregate number of shares of Common Stock with respect to which the
Committee may grant Incentive Awards and the maximum aggregate number of shares
of Common Stock with respect to which the Committee may grant Incentive Awards
to any individual Participant in any year shall be appropriately adjusted or
substituted by the Committee. In the event of any change in the number of shares
of Common Stock of OSG outstanding by reason of any other event or transaction,
the Committee shall, to the extent deemed appropriate by the Committee, make
such adjustments to the type or number of shares of Common Stock with respect to
which Incentive Awards may be granted.

 

(b)          Increase or Decrease in Issued Shares Without Consideration

 

In the event of any increase or decrease in the number of issued shares of
Common Stock resulting from a subdivision or consolidation of shares of Common
Stock or the payment of a stock dividend (but only on the shares of Common
Stock), or any other increase or decrease in the number of such shares effected
without receipt or payment of consideration by the Company, the Committee shall,
to the extent deemed appropriate by the Committee, adjust the type or number of
shares of Common Stock subject to each outstanding Incentive Award and the
exercise price per share of Common Stock of each such Incentive Award.

 

(c)          Certain Mergers and Other Transactions

 

In the event of any merger, consolidation or similar transaction as a result of
which the holders of shares of Common Stock receive consideration consisting
exclusively of securities of the surviving corporation in such transaction, the
Committee shall, to the extent deemed appropriate by the Committee, adjust each
Incentive Award outstanding on the date of such merger or consolidation so that
it pertains and applies to the securities which a holder of the number of shares
of Common Stock subject to such Incentive Award would have received in such
merger or consolidation.

 

In the event of (i) a dissolution or liquidation of OSG, (ii) a sale of all or
substantially all of the Company’s assets (on a consolidated basis), (iii) a
merger, consolidation or similar transaction involving OSG in which the holders
of shares of Common Stock receive securities and/or other property, including
cash, other than shares of the surviving corporation in such transaction, the
Committee shall, to the extent deemed appropriate by the Committee, have the
power to:

 

(i) cancel, effective immediately prior to the occurrence of such event, each
Incentive Award (whether or not then exercisable or vested), and, in full
consideration of such cancellation, pay to the Participant to whom such
Incentive Award was granted an amount in cash, for each share of Common Stock
subject to such Incentive Award, equal to the value, as determined by the
Committee, of such Incentive Award, provided that with respect to any
outstanding Option such value shall be equal to the excess of (A) the value, as
determined by the Committee, of the property (including cash) received by the
holder of a share of Common Stock as a result of such event over (B) the
exercise price of such Option; or

 

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(ii) provide for the exchange of each Incentive Award (whether or not then
exercisable or vested) for an Incentive Award with respect to (A) some or all of
the property which a holder of the number of shares of Common Stock subject to
such Incentive Award would have received in such transaction or (B) securities
of the acquiror or surviving entity and, incident thereto, make an equitable
adjustment as determined by the Committee in the exercise price of the Incentive
Award, or the number of shares or amount of property subject to the Incentive
Award or provide for a payment (in cash or other property) to the Participant to
whom such Incentive Award was granted in partial consideration for the exchange
of the Incentive Award.

 

(e)          Other Changes

 

In the event of any change in the capitalization of OSG or corporate change
other than those specifically referred to in Sections 10(b), (c) or (d), the
Committee shall, to the extent deemed appropriate by the Committee, make such
adjustments in the number and class of shares subject to Incentive Awards
outstanding on the date on which such change occurs and in such other terms of
such Incentive Awards as the Committee may consider appropriate.

 

(f)          Cash Incentive Awards

 

In the event of any transaction or event described in this Section 10, including
without limitation any corporate change referred to in paragraph (e) hereof, the
Committee shall, to the extent deemed appropriate by the Committee, make such
adjustments in the terms and conditions of any Cash Incentive Award.

 

(g)          No Other Rights

 

Except as expressly provided in the Plan or any Award Agreement, no Participant
shall have any rights by reason of any subdivision or consolidation of shares of
stock of any class, the payment of any dividends or dividend equivalents, any
increase or decrease in the number of shares of stock of any class or any
dissolution, liquidation, merger or consolidation of OSG or any other
corporation. Except as expressly provided in the Plan, no issuance by OSG of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number of shares or amount of other property subject to, or the
terms related to, any Incentive Award.

 

(h)          Savings Clause

 

No provision of this Section 10 shall be given effect to the extent that such
provision would cause any tax to become due under Section 409A of the Code.

 

With respect to Incentive Awards which are granted to Covered Employees and are
intended to qualify as Performance-Based Compensation, no provision of this
Section 10 shall be given effect to the extent that such provision would cause
such Incentive Award to fail to so qualify as Performance-Based Compensation
under Section 162(m) of the Code.

 

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Furthermore, no provision of this Section 10 shall be given effect to the extent
such provision would result in short-swing profits liability under Section 16 of
the Exchange Act or violate the exemptive conditions of Rule 16b-3 of the
Exchange Act.

 

11.Change in Control; Termination of Employment

 

(a)          Change in Control

 

The consequences of a Change in Control, if any, will be set forth in the Award
Agreement in addition to what is provided in this Section 11.

 

(b)          Termination of Employment

 

(1)         Except as to any awards constituting stock rights subject to Section
409A of the Code, termination of Employment shall mean a separation from service
within the meaning of Section 409A of the Code, unless the Participant is
retained as a consultant pursuant to a written agreement and such agreement
provides otherwise. The Employment of a Participant with the Company shall be
deemed to have terminated for all purposes of the Plan if such Person is
employed by or provides services to a Person that is a Subsidiary of the Company
and such Person ceases to be a Subsidiary of the Company, unless the Committee
determines otherwise. A Participant who ceases to be an employee of the Company
but continues, or simultaneously commences, services as a director of the
Company shall be deemed to have had a termination of Employment for purposes of
the Plan. Without limiting the generality of the foregoing, the Committee shall
determine whether an authorized leave of absence, or absence in military or
government service, shall constitute termination of Employment, provided that a
Participant who is an employee will not be deemed to cease employment in the
case of any leave of absence approved by the Company. Furthermore, no payment
shall be made with respect to any Incentive Awards under the Plan that are
subject to Section 409A of the Code as a result of any such authorized leave of
absence or absence in military or government service unless such authorized
leave or absence constitutes a separation from service for purposes of Section
409A of the Code.

 

(2)         The Award Agreement shall specify the consequences with respect to
such Option of the termination of Employment of the Participant holding the
Option.

 

(3)         The consequences with respect to a Performance-Based Award of the
termination of Employment of the Participant holding the Performance-Based Award
shall be determined by the Committee in its sole discretion and set forth in the
Award Agreement, it being intended that no agreement providing for a payment to
a Participant upon termination of Employment shall be given effect to the extent
that it would cause an Incentive Award that was intended to qualify as a
Performance-Based Award to fail to so qualify.

 

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12.Rights Under the Plan

 

No Person shall have any rights as a shareholder with respect to any shares of
Common Stock covered by or relating to any Incentive Award until the date of the
issuance of such shares on the books and records of OSG. Except as otherwise
expressly provided in Section 10 hereof, no adjustment of any Incentive Award
shall be made for dividends or other rights for which the record date occurs
prior to the date of such issuance. Nothing in this Section 12 is intended, or
should be construed, to limit authority of the Committee to cause the Company to
make payments based on the dividends that would be payable with respect to any
share of Common Stock if it were issued or outstanding, or from granting rights
related to such dividends.

 

The Company shall not have any obligation to establish any separate fund or
trust or other segregation of assets to provide for payments under the Plan. To
the extent any Person acquires any rights to receive payments hereunder from the
Company, such rights shall be no greater than those of an unsecured creditor.

 

13.No Special Employment Rights; No Right to Incentive Award

 

(a) Nothing contained in the Plan or any Award Agreement shall confer upon any
Participant any right with respect to the continuation of his or her Employment
by the Company or interfere in any way with the right of the Company at any time
to terminate such Employment or to increase or decrease the compensation of the
Participant from the rate in existence at the time of the grant of an Incentive
Award.

 

(b) No Person shall have any claim or right to receive an Incentive Award
hereunder. The Committee’s granting of an Incentive Award to a Participant at
any time shall neither require the Committee to grant an Incentive Award to such
Participant or any other Participant or other Person at any time nor preclude
the Committee from making subsequent grants to such Participant or any other
Participant or other Person.

 

14.Securities Matters

 

(a)          OSG shall be under no obligation to effect the registration
pursuant to the Securities Act of any shares of Common Stock to be issued
hereunder or to effect similar compliance under any state or local laws.
Notwithstanding anything herein to the contrary, OSG shall not be obligated to
cause to be issued shares of Common Stock pursuant to the Plan unless and until
OSG is advised by its counsel that the issuance is in compliance with all
applicable laws, regulations of governmental authority and the requirements of
any securities exchange on which shares of Common Stock are traded. The
Committee may require, as a condition to the issuance of shares of Common Stock
pursuant to the terms hereof, that the recipient of such shares make such
covenants, agreements and representations, and that any related certificates
representing such shares bear such legends, as the Committee, in its sole
discretion, deems necessary or desirable.

 

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(b)          The exercise or settlement of any Incentive Award (including,
without limitation, any Option) granted hereunder shall only be effective at
such time as counsel to OSG shall have determined that the issuance and delivery
of shares of Common Stock pursuant to such exercise is in compliance with all
applicable laws, regulations of governmental authority and the requirements of
any securities exchange on which shares of Common Stock are traded. OSG may, in
its sole discretion, defer the effectiveness of any exercise or settlement of an
Incentive Award granted hereunder in order to allow the issuance of shares
pursuant thereto to be made pursuant to registration or an exemption from
registration or other methods for compliance available under federal or state or
local securities laws. OSG shall inform the Participant in writing of its
decision to defer the effectiveness of the exercise or settlement of an
Incentive Award granted hereunder. During the period that the effectiveness of
the exercise of an Incentive Award has been deferred, the Participant may, by
written notice, withdraw such exercise and obtain the refund of any amount paid
with respect thereto.

 

15.Withholding Taxes

 

(a)          Cash Remittance

 

Whenever withholding tax obligations are incurred in connection with any
Incentive Award, OSG shall have the right to require the Participant to remit to
OSG in cash an amount sufficient to satisfy federal, state and local withholding
tax requirements, if any, attributable to such event. In addition, upon the
exercise or settlement of any Incentive Award in cash, or the making of any
other payment with respect to any Incentive Award (other than in shares of
Common Stock), OSG shall have the right to withhold from any payment required to
be made pursuant thereto an amount sufficient to satisfy the federal, state and
local withholding tax requirements, if any, attributable to such exercise,
settlement or payment.

 

(b)          Stock Remittance

 

At the election of the Participant, subject to the approval of the Committee,
whenever withholding tax obligations are incurred in connection with any
Incentive Award, the Participant may tender to OSG a number of shares of Common
Stock that have been owned by the Participant for at least six months (or such
other period as the Committee may determine) having a Fair Market Value at the
tender date determined by the Committee to be sufficient to satisfy the minimum
federal, state and local withholding tax requirements, if any, attributable to
such event. Such election shall satisfy the Participant’s obligations under
Section 15(a) hereof, if any.

 

(c)          Stock Withholding

 

At the election of the Participant, subject to the approval of the Committee,
whenever withholding tax obligations are incurred in connection with any
Incentive Award, OSG shall withhold a number of such shares having a Fair Market
Value determined by the Committee to be sufficient to satisfy the minimum
federal, state and local withholding tax requirements, if any, attributable to
such event. Such election shall satisfy the Participant’s obligations under
Section 15(a) hereof, if any.

 

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16.Amendment or Termination of the Plan

 

The Board of Directors may at any time suspend or discontinue the Plan or revise
or amend it in any respect whatsoever; provided, however, that to the extent
that any applicable law, tax requirement, or rule of a stock exchange requires
shareholder approval in order for any such revision or amendment to be
effective, such revision or amendment shall not be effective without such
approval. The preceding sentence shall not restrict the Committee’s ability to
exercise its discretionary authority hereunder pursuant to Section 4 hereof,
which discretion may be exercised without amendment to the Plan. No provision of
this Section 16 shall be given effect to the extent that such provision would
cause any tax to become due under Section 409A of the Code. Except as expressly
provided in the Plan, no action hereunder may, without the consent of a
Participant, adversely affect the Participant’s rights under any previously
granted and outstanding Incentive Award. Nothing herein shall cause a
Performance-Based Award to cease to qualify under Section 162(m). Nothing in the
Plan shall limit the right of the Company to pay compensation of any kind
outside the terms of the Plan.

 

17.Recoupment

 

Notwithstanding anything in the Plan or in any Award Agreement to the contrary,
the Company will be entitled to the extent permitted or required by applicable
law (including, without limitation, the Dodd-Frank Wall Street Reform and
Consumer Protection Act), Company policy and/or the requirements of an exchange
on which the Company’s shares are listed for trading, in each case, as in effect
from time to time to recoup compensation of whatever kind paid by the Company at
any time to a Participant under this Plan.

 

18.No Obligation to Exercise

 

The grant to a Participant of an Incentive Award shall impose no obligation upon
such Participant to exercise such Incentive Award.

 

19.Transfers

 

Incentive Awards may not be sold, pledged, assigned, hypothecated, transferred,
or disposed of in any manner other than by will or by the laws of descent or
distribution and may be exercised, during the lifetime of a Participant, only by
the Participant; provided, however that the Committee may permit Options that
are not incentive stock options to be sold, pledged, assigned, hypothecated,
transferred, or disposed of, on a general or specific basis, subject to such
conditions and limitations as the Committee may determine. Upon the death of a
Participant, outstanding Incentive Awards granted to such Participant may be
exercised only by the executors or administrators of the Participant’s estate or
by any Person or Persons who shall have acquired such right to exercise by will
or by the laws of descent and distribution. No transfer by will or the laws of
descent and distribution of any Incentive Award, or the right to exercise any
Incentive Award, shall be effective to bind OSG unless the Committee shall have
been furnished with (a) written notice thereof and with a copy of the will
and/or such evidence as the Committee may deem necessary to establish the
validity of the transfer and (b) an agreement by the transferee to comply with
all the terms and conditions of the Incentive Award that are or would have been
applicable to the Participant and to be bound by the acknowledgements made by
the Participant in connection with the grant of the Incentive Award.

 

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20.Expenses and Receipts

 

The expenses of the Plan shall be paid by OSG. Any proceeds received by OSG in
connection with any Incentive Award will be used for general corporate purposes.

 

21.Failure to Comply

 

In addition to the remedies of the Company elsewhere provided for herein,
failure by a Participant to comply with any of the terms and conditions of the
Plan or any Award Agreement, unless such failure is remedied by such Participant
within ten days after having been notified of such failure by the Committee,
shall be grounds for the cancellation and forfeiture of such Incentive Award, in
whole or in part, as the Committee, in its absolute discretion, may determine.

 

22.Relationship to Other Benefits

 

No payment with respect to any Incentive Awards under the Plan shall be taken
into account in determining any benefits under any pension, retirement, profit
sharing, group insurance or other benefit plan of the Company except as
otherwise specifically provided in such other plan.

 

23.Governing Law

 

The Plan and the rights of all Persons under the Plan shall be construed and
administered in accordance with the laws of the State of Delaware without regard
to its conflict of law principles.

 

24.Severability

 

If all or any part of this Plan is declared by any court or governmental
authority to be unlawful or invalid, such unlawfulness or invalidity shall not
serve to invalidate any portion of this Plan not declared to be unlawful or
invalid. Any Section or part of a Section so declared to be unlawful or invalid
shall, if possible, be construed in a manner that will give effect to the terms
of such Section or part of a Section to the fullest extent possible while
remaining lawful and valid.

 

25.Effective Date and Term of Plan

 

The Effective Date of the Plan is September 23, 2014. No grants of Incentive
Awards may be made under the Plan after September 23, 2024.

 

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