Exhibit 10.(iii)(y)

 

CHANGE OF CONTROL

 

PROTECTION AGREEMENT

 

Agreement (this “Agreement”) made as of January 1, 2006, by and between Overseas
Shipholding Group, Inc., a corporation incorporated under the laws of Delaware
with its principal office at 666 Third Avenue, New York, New York 10017 (the
“Company”) and Mats Berglund (the “Executive”).

 

W I T N E S S E T H:

 

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

 

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

 

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

 

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

 

1.                                       DEFINITIONS.  THE FOREGOING TERMS SHALL
HAVE THE FOLLOWING MEANING:

 

(i)                                     “Anticipatory Termination” means a
Termination without Cause or for Good Reason that occurs after a tender offer is
announced for the Company or after material discussions have occurred with a
possible acquirer with regard to a Transaction, provided, that such offer or
discussions have not terminated.

 

(ii)                                  “Cause” shall mean: (A) the Executive’s
willful misconduct involving the Company or its assets, business or employees or
in the performance of his duties which is materially injurious to the Company
(in a manner which would effect the Company economically or as to its
reputation); (B) the Executive’s indictment for, or conviction of , or pleading
guilty or nolo contendre to, a felony (provided that for this purpose, a felony
shall cover any action or inaction that is a felony or crime under federal,
state or local law in the United States (collectively, “U.S. law”) and any
action or inaction which takes place outside of the United States, if it would
be a felony under U.S. law); (C) the Executive’s continued and substantial
failure to attempt in good faith to perform his duties with the Company (other
than failure resulting from his incapacity due to physical or mental illness or
injury), which failure has continued for a period of at least ten (10) days
after written notice thereof from the Company; (D) the Executive’s breach of any
material provisions of any agreement with the Company, which breach, if curable,
is not cured within ten (10) days after written notice thereof from the Company;
or (E) the Executive’s failure to attempt in good faith to promptly follow a
written

 

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direction of the Board of Directors of the Company (the “Board”) or a more
senior officer, provided that the failure shall not be considered “Cause” if the
Executive, in good faith, believes that such direction, or implementation
thereof, is illegal and he promptly so notifies the Chairman of the Board in
writing.  No act or failure to act by the Executive shall be deemed to be
“willful” if he believed in good faith that such action or non-action was in or
not opposed to, the best interests of the Company.

 

(iii)                               A “Change of Control” shall mean the
occurrence of any of the following events:  (i) any person (as defined in
Section 3(a)(9) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) and as used in Sections 13(d) and 14(d) thereof), excluding the
Company, any “Subsidiary,” any employee benefit plan sponsored or maintained by
the Company, or any Subsidiary (including any trustee of any such plan acting in
his capacity as trustee), becomes the beneficial owner (as defined in
Rule 13(d)-3 under the Exchange Act) of shares of the Company having at least
thirty percent (30%) of the total number of votes that may be cast for the
election of directors of the Company; provided, that no Change of Control will
be deemed to have occurred as a result of an increase in ownership percentage in
excess of thirty percent (30%) resulting solely from an acquisition of
securities by the Company unless and until such person acquires additional
shares of the Company; (ii) there is a merger or other business combination of
the Company, sale of all or substantially all of the Company’s assets or
combination of the foregoing transactions or a liquidation of the Company, (a
“Transaction”), other than a Transaction involving only the Company and one or
more of its Subsidiaries, or a Transaction immediately following which the
shareholders of the Company immediately prior to the Transaction continue to
have a majority of the voting power in the resulting entity in approximately the
same proportion as they had in the Company immediately prior to the Transaction;
or (iii) during any period of two (2) consecutive years beginning on or after
the date hereof, the persons who were directors of the Company immediately
before the beginning of such period (the “Incumbent Directors”) shall cease (for
any reason other than death) to constitute at least a majority of the Board or
the board of directors of any successor to the Company, provided that, any
director who was not a director as of the date hereof shall be deemed to be an
Incumbent Director if such director was elected to the Board by, or on the
recommendation of or with the approval of, at least two-thirds (2/3) of the
directors who then qualified as Incumbent Directors either actually or by prior
operation of the foregoing unless such election, recommendation or approval
occurs as a result of an actual or threatened election contest (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act or
any successor provision) or other actual or threatened solicitation of proxies
or contests by or on behalf of a person other than a member of the Board.  Only
one (1) Change of Control may occur under this Agreement.

 

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

 

(v)                                 “Good Reason” shall mean a termination by
the Executive effected by a written notice given within ninety (90) days after
the occurrence of the Good Reason event.  For purposes of this Agreement, “Good
Reason” shall mean the occurrence of any of the following events without the
Executive’s express written consent which event is not cured within ten
(10) days after written notice thereof from the Executive to the Company:
(A) any material

 

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diminution in the Executive’s position, duties, responsibilities, title or
authority, or the assignment to the Executive of duties and responsibilities
materially inconsistent with his position, except in connection with the
Executive’s termination for Cause or as a result of death, or temporarily as a
result of the Executive’s incapacity or other absence for an extended period;
(B) a reduction in the Executive’s annual base salary; (C) a relocation of the
Executive’s principal business location to an area outside of a fifty (50) mile
radius of both the Executive’s current principal business location and the
Executive’s principal residence; or (D) any breach of Section 13 of this
Agreement.

 

(vi)                              A termination “without Cause” shall mean a
termination of the Executive’s employment by the Company other than for a
termination for Cause or due to Disability.

 

2.                                       TERM.  THIS AGREEMENT SHALL COMMENCE ON
THE DATE HEREOF AND SHALL EXPIRE ON THE EARLIEST OF (I) THREE (3) YEARS FROM THE
DATE HEREOF, SUBJECT TO THE RIGHT OF THE BOARD AND THE EXECUTIVE TO EXTEND IT,
PROVIDED THAT, IF A CHANGE OF CONTROL TAKES PLACE PRIOR TO THREE (3) YEARS FROM
THE DATE HEREOF, THE DURATION OF THIS AGREEMENT UNDER THIS SUBPART (I) SHALL BE
UNTIL TWO (2) YEARS AFTER THE CHANGE OF CONTROL WHETHER SUCH TWO (2) YEAR PERIOD
ENDS BEFORE OR AFTER THE END OF SUCH THREE (3) YEAR PERIOD; (II) THE DATE OF THE
DEATH OF THE EXECUTIVE OR RETIREMENT OR OTHER TERMINATION OF THE EXECUTIVE’S
EMPLOYMENT (VOLUNTARILY OR INVOLUNTARILY) WITH THE COMPANY PRIOR TO A CHANGE OF
CONTROL OTHER THAN AS A RESULT OF A TERMINATION BY THE COMPANY WITHOUT CAUSE OR
BY THE EXECUTIVE FOR GOOD REASON THAT IS AN ANTICIPATORY TERMINATION; OR
(III) NINETY (90) DAYS AFTER AN ANTICIPATORY TERMINATION BY THE COMPANY WITHOUT
CAUSE OR BY THE EXECUTIVE WITH GOOD REASON IF A CHANGE OF CONTROL DOES NOT OCCUR
ON OR PRIOR TO SUCH DATE.  NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE
CONTRARY, IF THE COMPANY BECOMES OBLIGATED TO MAKE ANY PAYMENT TO THE EXECUTIVE
PURSUANT TO THE TERMS HEREOF AT OR PRIOR TO THE EXPIRATION OF THIS AGREEMENT,
THEN THIS AGREEMENT SHALL REMAIN IN EFFECT FOR SUCH AND RELATED PURPOSES
(INCLUDING BUT NOT LIMITED TO UNDER SECTION 5 HEREOF) UNTIL ALL OF THE COMPANY’S
OBLIGATIONS HEREUNDER ARE FULFILLED.  FURTHER, PROVIDED THAT A CHANGE OF CONTROL
HAS TAKEN PLACE PRIOR TO THE TERMINATION OF THIS AGREEMENT, THE PROVISIONS OF
SECTIONS 10 AND 12 HEREOF SHALL SURVIVE AND REMAIN IN EFFECT NOTWITHSTANDING THE
TERMINATION OF THIS AGREEMENT, THE TERMINATION OF THE EXECUTIVE’S EMPLOYMENT OR
ANY BREACH OR REPUDIATION OR ALLEGED BREACH OR REPUDIATION BY THE COMPANY OR THE
EXECUTIVE OF THIS AGREEMENT OR ANY ONE OR MORE OF ITS TERMS.

 

3.                                       TERMINATION FOLLOWING CHANGE OF
CONTROL.  IF, AND ONLY IF, (I) A CHANGE OF CONTROL OCCURS AND THE EXECUTIVE’S
EMPLOYMENT WITH THE COMPANY IS TERMINATED BY THE COMPANY WITHOUT CAUSE OR BY THE
EXECUTIVE FOR GOOD REASON AT ANY TIME WITHIN TWO (2) YEARS AFTER THE CHANGE OF
CONTROL OR (II) THERE WAS AN ANTICIPATORY TERMINATION AND THE CHANGE OF CONTROL
HAS TAKEN PLACE WITHIN NINETY (90) DAYS THEREAFTER, THE EXECUTIVE SHALL BE
ENTITLED TO THE AMOUNTS PROVIDED IN SECTION 4 UPON SUCH TERMINATION.  IN THE
EVENT OF AN ANTICIPATORY TERMINATION, IF ANY EQUITY GRANTS WHICH WERE GRANTED
PRIOR TO A CHANGE OF CONTROL WOULD VEST ON A CHANGE OF CONTROL AFTER AN
ANTICIPATORY TERMINATION, ANY SUCH EQUITY GRANTS THAT OTHERWISE WOULD BE
FORFEITED (AFTER APPLICATION OF ANY OTHER ACCELERATED VESTING PROVISION) SHALL
NOT BE FORFEITED PENDING A DETERMINATION OF WHETHER OR NOT A CHANGE OF CONTROL
OCCURS WITHIN NINETY (90) DAYS THEREAFTER (THE “DETERMINATION PERIOD”), BUT
DURING THE DETERMINATION PERIOD NO UNVESTED OPTION SHALL VEST OR BE EXERCISABLE,
NO OTHER UNVESTED EQUITY GRANT SHALL VEST AND NO DIVIDENDS SHALL BE PAYABLE
UNLESS AND UNTIL THE CHANGE OF CONTROL TAKES PLACE DURING THE

 

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DETERMINATION PERIOD.  IF A CHANGE OF CONTROL OCCURS DURING THE DETERMINATION
PERIOD, AND THE OPTION EXERCISE PERIOD WOULD OTHERWISE HAVE EXPIRED, THEN THE
EXERCISE PERIOD FOR ANY EQUITY GRANTS WHICH OTHERWISE WOULD HAVE EXPIRED DURING
THE DETERMINATION PERIOD SHALL AUTOMATICALLY BE DEEMED TO HAVE BEEN EXTENDED TO
THE DATE WHICH IS THIRTY (30) DAYS FOLLOWING THE FIRST DATE AFTER SUCH CHANGE OF
CONTROL IN WHICH SHARES OF THE COMPANY COULD BE TRADED BY THE EXECUTIVE ON THE
APPLICABLE MARKET UNDER THE COMPANY’S TRADING WINDOW POLICIES BUT, WITH REGARD
TO ANY OUTSTANDING OPTIONS ON THE DATE HEREOF, NOT BEYOND THE LAST DAY OF
EXTENSION PERMITTED UNDER SECTION 409A (“CODE SECTION 409A”) OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), WITHOUT SUCH OPTION BEING DEEMED
SUBJECT TO CODE SECTION 409A AS OF THE DATE GRANTED.

 

4.                                       COMPENSATION ON CHANGE OF CONTROL
TERMINATION.  (A)  IF, PURSUANT TO SECTION 3, THE EXECUTIVE IS ENTITLED TO
AMOUNTS AND BENEFITS UNDER THIS SECTION 4, THE EXECUTIVE SHALL RECEIVE THE
FOLLOWING PAYMENTS AND BENEFITS FROM THE COMPANY:

 

(A)  (I) SUBJECT TO SUBMISSION OF APPROPRIATE DOCUMENTATION, ANY INCURRED BUT
UNREIMBURSED BUSINESS EXPENSES FOR THE PERIOD PRIOR TO THE EXECUTIVE’S
TERMINATION PAYABLE IN ACCORDANCE WITH THE COMPANY’S POLICIES AND PRACTICES;
(II) ANY BASE SALARY, BONUS, VACATION PAY OR OTHER COMPENSATION ACCRUED OR
EARNED UNDER LAW OR IN ACCORDANCE WITH THE COMPANY’S POLICIES APPLICABLE TO THE
EXECUTIVE BUT NOT YET PAID; AND (III) ANY OTHER AMOUNTS OR VESTED BENEFITS DUE
UNDER THE THEN APPLICABLE EMPLOYEE BENEFIT (INCLUDING, WITHOUT LIMITATION, ANY
NON-QUALIFIED PENSION PLAN OR ARRANGEMENT), EQUITY OR INCENTIVE PLANS OF THE
COMPANY THEN IN EFFECT, APPLICABLE TO THE EXECUTIVE AS SHALL BE DETERMINED AND
PAID IN ACCORDANCE WITH SUCH PLANS;

 

(B)  subject to Section 4(b) and Section 8 hereof, in a lump sum (without regard
to any interest which may have accrued thereon) within ten (10) days after the
satisfaction of the requirements of Section 8 hereof (or, if such termination
occurred prior to a Change of Control, within ten (10) days after the latter of
the aforesaid date or the Change of Control), (i) two (2) times the sum of
(x) the Executive’s annual base salary rate in effect immediately prior to his
termination (or if such termination is by the Executive pursuant to
Section 1(v)(B), Executive’s annual base salary rate in effect immediately prior
to such reduction of the rate of his annual base salary), plus (y) the
Executive’s highest target annual incentive compensation in effect within one
hundred eighty (180) days prior to, or at any time after, the Change of Control;
provided, that if no target annual incentive compensation is in effect during
such period, then for the purpose of this Section 4(a)(B)(i)(y), the Executive’s
target incentive compensation shall be deemed to be 50% of the Executive’s
annual base salary rate in effect immediately prior to his termination (or if
such termination is by the Executive pursuant to Section 1(v)(B), Executive’s
annual base salary rate in effect immediately prior to such reduction of the
rate of his annual base salary); (ii) a lump sum amount equal to twenty-four
(24) months of additional employer contributions under any qualified or
nonqualified defined contribution pension plan or arrangement of the Company
applicable to the Executive, measured from the date of termination of employment
and not contributed to the extent that the Executive would otherwise be entitled
to such contributions during such period if he had contributed at the maximum
permitted salary reduction level during such period; (iii) a pro rata target
bonus for the year in which Executive is terminated based on the portion of the
year the Executive was employed, provided that, if no target annual incentive
compensation is in effect during such period, then for the purpose of this
Section 4(a)(B)(iii), the Executive’s target incentive compensation shall be
deemed to be 50% of the Executive’s annual base salary rate in effect
immediately prior to his termination (or if such

 

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termination is by the Executive pursuant to Section 1(v)(B), Executive’s annual
base salary rate in effect immediately prior to such reduction of the rate of
his annual base salary); and (iv) to the extent not paid pursuant to
Section 4(a)(A) above, any earned but unpaid bonus for a previously completed
fiscal year of the Company; provided that such bonus shall be paid to the
Executive in the year following the completed fiscal year of the Company when
other executive’s of the Company receive their bonuses; and

 

(C)  subject to Section 4(b) and Section 8 hereof, (i) continued coverage
pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”)
under the Company health plans in which the Executive participated immediately
prior to the date of termination of the Executive’s employment, or materially
equivalent plans thereto (the “Health Plans”), for the Executive and the
Executive’s dependents until the earliest of (a) the Executive or the
Executive’s eligible dependents, as the case may be, ceasing to be eligible
under COBRA, (b) twenty-four (24) months following the date of termination of
the Executive’s employment, and (c) the Executive’s commencement of other
substantially full-time employment; provided that the Executive timely elects
such COBRA coverage and pays the same premium amount for such coverage as the
Executive would pay if an active employee; and further provided that such
coverage shall cease to the extent that the providing of such coverage would
violate applicable law or result in the Executive or other participants being
taxed on the benefits under such Health Plan or alternative materially
equivalent coverage or a payment therefor (on a tax grossed up basis, to the
extent the amount taxable to the Executive is greater than the amount taxable to
him if he was an employee and participated in the Health Plans); and (ii) all of
the Executive’s then unvested equity awards which were granted prior to a Change
of Control shall automatically vest and all restrictions thereon shall lapse.

 

(b)  If the Company determines in good faith that any payment under
Section 4(a) would cause a violation of Code Section 409A if paid within the
first six (6) months after termination of the Executive’s employment, such
amount(s) shall not be paid during such six (6) month period but shall instead
be paid in a lump sum (without interest) immediately after the end of such six
(6) month period.  Thereafter, payments shall be made in accordance with the
Company’s normal payroll practices.

 

5.                                       EXCISE TAX. IN THE EVENT THAT THE
EXECUTIVE SHALL BECOME ENTITLED TO PAYMENTS AND/OR BENEFITS PROVIDED BY THIS
AGREEMENT OR ANY OTHER AMOUNTS IN THE “NATURE OF COMPENSATION” (WHETHER PURSUANT
TO THE TERMS OF THIS AGREEMENT OR ANY OTHER PLAN, ARRANGEMENT OR AGREEMENT WITH
THE COMPANY, ANY PERSON WHOSE ACTIONS RESULT IN A CHANGE OF OWNERSHIP OR
EFFECTIVE CONTROL COVERED BY SECTION 280G(B)(2) OF THE CODE OR ANY PERSON
AFFILIATED WITH THE COMPANY OR SUCH PERSON) AS A RESULT OF A CHANGE OF CONTROL
(COLLECTIVELY THE “COMPANY PAYMENTS”), AND IF SUCH COMPANY PAYMENTS WILL BE
SUBJECT TO THE TAX (THE “EXCISE TAX”) IMPOSED BY SECTION 4999 OF THE CODE (AND
ANY SIMILAR TAX THAT MAY HEREAFTER BE IMPOSED BY ANY TAXING AUTHORITY) THE
AMOUNTS OF ANY COMPANY PAYMENTS SHALL BE AUTOMATICALLY REDUCED TO AN AMOUNT ONE
DOLLAR LESS THAN AN AMOUNT THAT WOULD SUBJECT THE EXECUTIVE TO THE EXCISE TAX;
PROVIDED, HOWEVER, THAT THE REDUCTION SHALL OCCUR ONLY IF THE REDUCED COMPANY
PAYMENTS RECEIVED BY THE EXECUTIVE (AFTER TAKING INTO ACCOUNT FURTHER REDUCTIONS
FOR APPLICABLE FEDERAL, STATE AND LOCAL INCOME, SOCIAL SECURITY AND OTHER TAXES)
WOULD BE GREATER THAN THE UNREDUCED COMPANY PAYMENTS TO BE RECEIVED BY THE
EXECUTIVE MINUS (I) THE EXCISE TAX PAYABLE WITH RESPECT TO SUCH COMPANY PAYMENTS
AND (II) ALL APPLICABLE FEDERAL, STATE AND LOCAL INCOME, SOCIAL

 

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SECURITY AND OTHER TAXES ON SUCH COMPANY PAYMENTS.  THE EXECUTIVE MAY ELECT
WHICH PAYMENTS AND BENEFITS SHALL BE REDUCED TO ACCOMPLISH THE FOREGOING, BUT,
IF THE EXECUTIVE DOES NOT MAKE SUCH AN ELECTION, CASH PAYMENTS SHALL BE REDUCED
FIRST.

 

(A)                                  FOR PURPOSES OF DETERMINING WHETHER ANY OF
THE COMPANY PAYMENTS WILL BE SUBJECT TO THE EXCISE TAX AND THE AMOUNT OF SUCH
EXCISE TAX, (X) THE COMPANY PAYMENTS SHALL BE TREATED AS “PARACHUTE PAYMENTS”
WITHIN THE MEANING OF SECTION 280G(B)(2) OF THE CODE, AND ALL “PARACHUTE
PAYMENTS” IN EXCESS OF THE “BASE AMOUNT” (AS DEFINED UNDER CODE
SECTION 280G(B)(3) OF THE CODE) SHALL BE TREATED AS SUBJECT TO THE EXCISE TAX,
UNLESS AND EXCEPT TO THE EXTENT THAT, IN THE OPINION OF THE COMPANY’S
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS APPOINTED PRIOR TO ANY CHANGE IN
OWNERSHIP (AS DEFINED UNDER CODE SECTION 280G(B)(2)) OR TAX COUNSEL SELECTED BY
SUCH ACCOUNTANTS (THE “ACCOUNTANTS”) SUCH COMPANY PAYMENTS (IN WHOLE OR IN PART)
EITHER DO NOT CONSTITUTE “PARACHUTE PAYMENTS,” INCLUDING GIVING EFFECT TO THE
RECALCULATION OF STOCK OPTIONS IN ACCORDANCE WITH TREASURY REGULATION
SECTION 1.280G-1 Q/A33, REPRESENT REASONABLE COMPENSATION FOR SERVICES ACTUALLY
RENDERED WITHIN THE MEANING OF SECTION 280G(B)(4) OF THE CODE IN EXCESS OF THE
“BASE AMOUNT” OR ARE OTHERWISE NOT SUBJECT TO THE EXCISE TAX, AND (Y) THE VALUE
OF ANY NON-CASH BENEFITS OR ANY DEFERRED PAYMENT OR BENEFIT SHALL BE DETERMINED
BY THE ACCOUNTANTS IN ACCORDANCE WITH THE PRINCIPLES OF SECTION 280G OF THE
CODE.  TO THE EXTENT PERMITTED UNDER REVENUE PROCEDURE 2003-68, THE VALUE
DETERMINATION SHALL BE RECALCULATED TO THE EXTENT IT WOULD BE BENEFICIAL TO THE
EXECUTIVE, AT THE REQUEST OF THE EXECUTIVE.

 

(B)                                 FOR PURPOSES OF MAKING THE CALCULATION
HEREUNDER, THE EXECUTIVE SHALL BE DEEMED TO PAY U.S. FEDERAL INCOME TAXES AT THE
HIGHEST MARGINAL RATE OF U.S. FEDERAL INCOME TAXATION IN THE CALENDAR YEAR IN
WHICH THE COMPANY PAYMENTS ARE TO BE MADE AND STATE AND LOCAL INCOME TAXES AT
THE HIGHEST MARGINAL RATE OF TAXATION IN THE STATE AND LOCALITY OF THE
EXECUTIVE’S RESIDENCE FOR THE CALENDAR YEAR IN WHICH THE COMPANY PAYMENTS ARE TO
BE MADE, NET OF THE MAXIMUM REDUCTION IN U.S. FEDERAL INCOME TAXES WHICH COULD
BE OBTAINED FROM DEDUCTION OF SUCH STATE AND LOCAL TAXES IF PAID IN SUCH YEAR.

 

(C)                                  IN THE EVENT OF ANY CONTROVERSY WITH THE
INTERNAL REVENUE SERVICE (OR OTHER TAXING AUTHORITY) WITH REGARD TO THE EXCISE
TAX, THE EXECUTIVE SHALL PERMIT THE COMPANY TO CONTROL ISSUES RELATED TO THE
EXCISE TAX (AT ITS EXPENSE), PROVIDED THAT SUCH ISSUES DO NOT POTENTIALLY
MATERIALLY ADVERSELY AFFECT THE EXECUTIVE, BUT THE EXECUTIVE SHALL CONTROL ANY
OTHER ISSUES.  IN THE EVENT THE ISSUES ARE INTERRELATED, THE EXECUTIVE AND THE
COMPANY SHALL IN GOOD FAITH COOPERATE SO AS NOT TO JEOPARDIZE RESOLUTION OF
EITHER ISSUE, BUT IF THE PARTIES CANNOT AGREE THE EXECUTIVE SHALL MAKE THE FINAL
DETERMINATION WITH REGARD TO THE ISSUES.  IN THE EVENT OF ANY CONFERENCE WITH
ANY TAXING AUTHORITY AS TO THE EXCISE TAX OR ASSOCIATED INCOME TAXES, THE
EXECUTIVE SHALL PERMIT THE REPRESENTATIVE OF THE COMPANY TO ACCOMPANY THE
EXECUTIVE, AND THE EXECUTIVE AND THE EXECUTIVE’S REPRESENTATIVE SHALL COOPERATE
WITH THE COMPANY AND ITS REPRESENTATIVE.

 

(D)                                 THE COMPANY SHALL BE RESPONSIBLE FOR ALL
CHARGES OF THE ACCOUNTANTS.

 

(E)                                  THE COMPANY AND THE EXECUTIVE SHALL
PROMPTLY DELIVER TO EACH OTHER COPIES OF ANY WRITTEN COMMUNICATIONS, AND
SUMMARIES OF ANY VERBAL COMMUNICATIONS, WITH ANY TAXING AUTHORITY REGARDING THE
EXCISE TAX.

 

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6.                                       NOTICE OF TERMINATION.  AFTER A CHANGE
OF CONTROL, ANY PURPORTED TERMINATION OF THE EXECUTIVE’S EMPLOYMENT (OTHER THAN
BY REASON OF DEATH) SHALL BE COMMUNICATED BY WRITTEN NOTICE OF TERMINATION FROM
ONE PARTY HERETO TO THE OTHER PARTY HERETO IN ACCORDANCE WITH SECTION 16.  FOR
PURPOSES OF THIS AGREEMENT, A “NOTICE OF TERMINATION” SHALL MEAN A NOTICE WHICH
SHALL SET FORTH IN REASONABLE DETAIL THE FACTS AND CIRCUMSTANCES CLAIMED TO
PROVIDE A BASIS FOR TERMINATION OF THE EXECUTIVE’S EMPLOYMENT.  FURTHER, A
NOTICE OF TERMINATION FOR CAUSE AFTER A CHANGE OF CONTROL IS REQUIRED TO INCLUDE
A COPY OF A RESOLUTION DULY ADOPTED BY THE AFFIRMATIVE VOTE OF NOT LESS THAN
TWO-THIRDS (2/3) OF THE ENTIRE MEMBERSHIP OF THE BOARD AT A MEETING OF THE BOARD
WHICH WAS CALLED AND HELD FOR THE PURPOSE OF CONSIDERING SUCH TERMINATION AND
WHICH THE EXECUTIVE HAD THE RIGHT TO ATTEND AND SPEAK FINDING THAT, IN THE GOOD
FAITH OPINION OF THE BOARD, THE EXECUTIVE HAS ENGAGED IN CONDUCT SET FORTH IN
THE DEFINITION OF CAUSE HEREIN, AND SPECIFYING THE PARTICULARS THEREOF IN
DETAIL.

 

7.                                       DATE OF TERMINATION.  “DATE OF
TERMINATION,” WITH RESPECT TO ANY PURPORTED TERMINATION OF THE EXECUTIVE’S
EMPLOYMENT AFTER A CHANGE OF CONTROL, SHALL MEAN THE DATE SPECIFIED IN THE
NOTICE OF TERMINATION AND, IN THE CASE OF A TERMINATION BY THE EXECUTIVE FOR
GOOD REASON, SHALL NOT BE LESS THAN FIVE (5) DAYS NOR MORE THAN SIXTY (60) DAYS,
FROM THE DATE SUCH NOTICE OF TERMINATION IS GIVEN.  IN THE EVENT A NOTICE OF
TERMINATION IS GIVEN BY THE COMPANY, THE EXECUTIVE MAY TREAT SUCH NOTICE AS
HAVING A DATE OF TERMINATION AT ANY DATE BETWEEN THE DATE OF RECEIPT OF SUCH
NOTICE AND THE DATE OF TERMINATION INDICATED IN THE NOTICE OF TERMINATION BY THE
COMPANY; PROVIDED, THAT THE EXECUTIVE MUST GIVE THE COMPANY WRITTEN NOTICE OF
THE DATE OF TERMINATION IF HE DEEMS IT TO HAVE OCCURRED PRIOR TO THE DATE OF
TERMINATION INDICATED IN THE NOTICE OF TERMINATION.

 

8.                                       ACCEPTANCE AND RELEASE. ANY AND ALL
AMOUNTS PAYABLE AND BENEFITS OR ADDITIONAL RIGHTS PROVIDED PURSUANT TO SECTIONS
4(A)(B) AND (C) ABOVE SHALL ONLY BE PAYABLE IF THE EXECUTIVE EXECUTES AND
DELIVERS TO THE COMPANY AN ACCEPTANCE FORM AND RELEASE IN THE FORM ATTACHED
HERETO AS EXHIBIT A DISCHARGING ALL CLAIMS OF THE EXECUTIVE WHICH MAY HAVE
OCCURRED UP TO THE DATE OF TERMINATION (WITH SUCH CHANGES THEREIN AS MAY BE
NECESSARY TO MAKE IT VALID AND ENCOMPASSING UNDER APPLICABLE LAW) WITHIN THE
APPROPRIATE TIME DESCRIBED IN THE ACCEPTANCE FORM AND RELEASE PRESENTED BY THE
COMPANY TO THE EXECUTIVE.  NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IF
THE EXECUTIVE MATERIALLY BREACHES ANY OF THE PROVISIONS OF SECTION 10 OF THIS
AGREEMENT, THE COMPANY MAY CEASE ALL PAYMENTS AND BENEFITS DUE TO THE EXECUTIVE
THEREAFTER UNDER SECTIONS 4(A)(B) AND (C) ABOVE (OTHER THAN AS REQUIRED BY LAW).

 

9.                                       NO DUTY TO MITIGATE/SET-OFF.  OTHER
THAN AS SET FORTH IN SECTION 4(A)(C), THE COMPANY AGREES THAT IF THE EXECUTIVE’S
EMPLOYMENT WITH THE COMPANY IS TERMINATED PURSUANT TO THIS AGREEMENT DURING THE
TERM OF THIS AGREEMENT, THE EXECUTIVE SHALL NOT BE REQUIRED TO SEEK OTHER
EMPLOYMENT OR TO ATTEMPT IN ANY WAY TO REDUCE ANY AMOUNTS PAYABLE TO THE
EXECUTIVE BY THE COMPANY PURSUANT TO THIS AGREEMENT.  FURTHER, THE AMOUNT OF ANY
PAYMENT OR BENEFIT PROVIDED FOR IN THIS AGREEMENT SHALL NOT BE REDUCED BY ANY
COMPENSATION EARNED BY THE EXECUTIVE OR BENEFIT PROVIDED TO THE EXECUTIVE AS THE
RESULT OF EMPLOYMENT BY ANOTHER EMPLOYER OR OTHERWISE.  EXCEPT AS OTHERWISE
PROVIDED HEREIN AND APART FROM ANY DISAGREEMENT BETWEEN THE EXECUTIVE AND THE
COMPANY CONCERNING INTERPRETATION OF THIS AGREEMENT OR ANY TERM OR PROVISION
HEREOF, THE COMPANY’S OBLIGATIONS TO MAKE THE PAYMENTS PROVIDED FOR IN THIS
AGREEMENT AND OTHERWISE TO PERFORM ITS OBLIGATIONS HEREUNDER SHALL NOT BE
AFFECTED BY ANY CIRCUMSTANCES, INCLUDING WITHOUT LIMITATION, ANY SET-OFF,
COUNTERCLAIM, RECOUPMENT, DEFENSE OR

 

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OTHER RIGHT WHICH THE COMPANY MAY HAVE AGAINST THE EXECUTIVE.  THE AMOUNTS DUE
UNDER SECTION 4 ARE INCLUSIVE, AND IN LIEU OF, ANY AMOUNTS PAYABLE UNDER ANY
OTHER SALARY CONTINUATION OR CASH SEVERANCE ARRANGEMENT OF THE COMPANY AND TO
THE EXTENT PAID OR PROVIDED UNDER ANY OTHER SUCH ARRANGEMENT SHALL BE OFFSET
AGAINST THE AMOUNT DUE HEREUNDER.

 

10.                                 CONFIDENTIALITY, NON-COMPETITION,
NON-SOLICITATION AND COOPERATION.

 

(A)                                  DURING THE EXECUTIVE’S EMPLOYMENT WITH THE
COMPANY AND THEREAFTER, THE EXECUTIVE AGREES NOT TO, DIRECTLY OR INDIRECTLY, FOR
ANY REASON WHATSOEVER, COMMUNICATE OR DISCLOSE TO ANY UNAUTHORIZED PERSON, FIRM
OR CORPORATION, OR USE FOR THE EXECUTIVE’S OWN ACCOUNT, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE BOARD OR THE CHIEF EXECUTIVE OFFICER OF THE COMPANY (THE
“CEO”), ANY PROPRIETARY PROCESSES, TRADE SECRETS OR OTHER CONFIDENTIAL DATA OR
INFORMATION OF THE COMPANY AND ITS RELATED AND AFFILIATED COMPANIES CONCERNING
THEIR BUSINESSES OR AFFAIRS, ACCOUNTS, PRODUCTS, SERVICES OR CUSTOMERS, IT BEING
UNDERSTOOD, HOWEVER, THAT THE OBLIGATIONS OF THIS SECTION 10(A) SHALL NOT APPLY
TO THE EXTENT THAT THE AFORESAID MATTERS (I) ARE DISCLOSED IN CIRCUMSTANCES IN
WHICH THE EXECUTIVE IS LEGALLY REQUIRED TO DO SO, PROVIDED THAT THE EXECUTIVE
GIVES THE COMPANY PROMPT WRITTEN NOTICE OF RECEIPT OF NOTICE OF ANY LEGAL
PROCEEDINGS SO AS THE COMPANY HAS THE OPPORTUNITY TO OBTAIN A PROTECTIVE ORDER,
OR (II) BECOME KNOWN TO AND AVAILABLE FOR USE BY THE PUBLIC OTHER THAN BY THE
EXECUTIVE’S WRONGFUL ACT OR OMISSION.

 

(B)                                 DURING THE EXECUTIVE’S EMPLOYMENT WITH THE
COMPANY AND THEREAFTER, THE EXECUTIVE AGREES TO FULLY COOPERATE WITH THE COMPANY
OR ITS COUNSEL IN CONNECTION WITH ANY MATTER, INVESTIGATION, PROCEEDING OR
LITIGATION REGARDING ANY MATTER IN WHICH THE EXECUTIVE WAS INVOLVED DURING THE
EXECUTIVE’S EMPLOYMENT WITH THE COMPANY OR TO WHICH THE EXECUTIVE HAS KNOWLEDGE
BASED ON THE EXECUTIVE’S EMPLOYMENT WITH THE COMPANY.

 

(C)                                  DURING THE EXECUTIVE’S EMPLOYMENT WITH THE
COMPANY AND, IF THE EXECUTIVE IS RECEIVING THE AMOUNTS AND BENEFITS PROVIDED
UNDER SECTION 4, FOR THE ONE (1) YEAR PERIOD FOLLOWING THE TERMINATION OF THE
EXECUTIVE’S EMPLOYMENT WITH THE COMPANY, THE EXECUTIVE AGREES NOT TO
PARTICIPATE, DIRECTLY OR INDIRECTLY, AS AN INDIVIDUAL PROPRIETOR, PARTNER,
STOCKHOLDER, OFFICER, EMPLOYEE, DIRECTOR, JOINT VENTURER, INVESTOR, LENDER,
CONSULTANT OR IN ANY CAPACITY WHATSOEVER (WITHIN THE UNITED STATES OF AMERICA,
OR IN ANY COUNTRY WHERE THE COMPANY OR ITS AFFILIATES DO BUSINESS) IN A BUSINESS
IN COMPETITION WITH ANY MATERIAL BUSINESS (AS DEFINED BELOW) CONDUCTED BY THE
COMPANY AS OF THE DATE OF THE TERMINATION OF THE EXECUTIVE’S EMPLOYMENT
(“COMPETITOR”), PROVIDED, HOWEVER, THAT SUCH PARTICIPATION WILL NOT INCLUDE
(I) THE MERE OWNERSHIP OF NOT MORE THAN ONE PERCENT (1%) OF THE TOTAL
OUTSTANDING STOCK OF A PUBLICLY HELD COMPANY, (II) ENGAGING IN ANY ACTIVITY
WITH, OR FOR, A NON-COMPETITIVE DIVISION, SUBSIDIARY OR AFFILIATE OF ANY
COMPETITOR, OR (III) ANY ACTIVITY ENGAGED IN WITH THE PRIOR WRITTEN APPROVAL OF
THE BOARD OR THE CEO.  A BUSINESS SHALL BE DEEMED TO BE A “MATERIAL BUSINESS” OF
THE COMPANY IF IT GENERATED MORE THAN 5% OF THE COMPANY’S REVENUES IN THE FISCAL
YEAR ENDING IMMEDIATELY PRIOR TO TERMINATION OF THE EXECUTIVE’S EMPLOYMENT OR IS
PROJECTED TO GENERATE MORE THAN 5% OF THE COMPANY’S REVENUES IN THE FISCAL YEAR
OF TERMINATION OF THE EXECUTIVE’S EMPLOYMENT.

 

(D)                                 DURING THE EXECUTIVE’S EMPLOYMENT WITH THE
COMPANY AND, IF THE EXECUTIVE IS RECEIVING THE AMOUNTS AND BENEFITS PROVIDED
UNDER SECTION 4, FOR THE ONE (1) YEAR PERIOD FOLLOWING THE TERMINATION OF THE
EXECUTIVE’S EMPLOYMENT WITH THE COMPANY, THE

 

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EXECUTIVE AGREES THAT HE WILL NOT, DIRECTLY OR INDIRECTLY, INDIVIDUALLY OR ON
BEHALF OF ANY OTHER PERSON, FIRM, CORPORATION OR OTHER ENTITY, SOLICIT, INDUCE,
HIRE OR RETAIN ANY EMPLOYEE OF THE COMPANY (OR ANY PERSON WHO HAD BEEN SUCH AN
EMPLOYEE IN THE PRIOR SIX (6) MONTHS) TO LEAVE THE EMPLOY OF THE COMPANY OR TO
ACCEPT EMPLOYMENT OR RETENTION AS AN INDEPENDENT CONTRACTOR WITH, OR RENDER
SERVICES TO OR WITH ANY OTHER PERSON, FIRM, CORPORATION OR OTHER ENTITY
UNAFFILIATED WITH THE COMPANY OR TAKE ANY ACTION TO ASSIST OR AID ANY OTHER
PERSON, FIRM, CORPORATION OR OTHER ENTITY IN IDENTIFYING, SOLICITING, HIRING OR
RETAINING ANY SUCH EMPLOYEE; PROVIDED, THE EXECUTIVE MAY SERVE AS A REFERENCE
AFTER THE EXECUTIVE IS NO LONGER EMPLOYED BY THE COMPANY, BUT NOT WITH REGARD TO
ANY ENTITY WITH WHICH THE EXECUTIVE IS AFFILIATED OR FROM WHICH THE EXECUTIVE IS
RECEIVING COMPENSATION AND THIS PROVISION SHALL NOT BE VIOLATED BY GENERAL
ADVERTISING NOT SPECIFICALLY TARGETED AT EMPLOYEES OF THE COMPANY.

 

(E)                                  DURING THE EXECUTIVE’S EMPLOYMENT WITH THE
COMPANY AND, IF THE EXECUTIVE IS RECEIVING THE AMOUNTS AND BENEFITS PROVIDED
UNDER SECTION 4, FOR THE ONE (1) YEAR PERIOD FOLLOWING THE TERMINATION OF THE
EXECUTIVE’S EMPLOYMENT WITH THE COMPANY, THE EXECUTIVE WILL NOT SOLICIT OR
INDUCE ANY CUSTOMER OF THE COMPANY TO PURCHASE GOODS OR SERVICES OFFERED BY THE
COMPANY FROM ANOTHER PERSON, FIRM, CORPORATION OR OTHER ENTITY OR ASSIST OR AID
ANY OTHER PERSONS OR ENTITY IN IDENTIFYING OR SOLICITING ANY SUCH CUSTOMER.

 

(F)                                    BECAUSE THE COMPANY’S REMEDIES AT LAW FOR
A BREACH OR THREATENED BREACH OF ANY OF THE PROVISIONS OF THIS SECTION WOULD BE
INADEQUATE, THE EXECUTIVE ACKNOWLEDGES AND AGREES THAT, IN THE EVENT OF SUCH A
BREACH OR THREATENED BREACH, IN ADDITION TO ANY REMEDIES AT LAW, THE COMPANY
SHALL BE ENTITLED TO OBTAIN EQUITABLE RELIEF IN THE FORM OF SPECIFIC
PERFORMANCE, A TEMPORARY RESTRAINING ORDER, A TEMPORARY OR PERMANENT INJUNCTION
OR ANY OTHER EQUITABLE REMEDY WHICH MAY THEN BE AVAILABLE.

 

(G)                                 IF IT IS DETERMINED BY A COURT OF COMPETENT
JURISDICTION THAT ANY RESTRICTION IN THIS SECTION 10 IS EXCESSIVE IN DURATION OR
SCOPE OR IS UNREASONABLE OR UNENFORCEABLE, IT IS THE INTENTION OF THE PARTIES
THAT SUCH RESTRICTION MAY BE MODIFIED OR AMENDED BY THE COURT TO RENDER IT
ENFORCEABLE TO THE MAXIMUM EXTENT PERMITTED.

 

(H)                                 THE OBLIGATIONS CONTAINED IN THIS SECTION 10
SHALL SURVIVE THE TERMINATION, SEPARATION, OR EXPIRATION OF THE EXECUTIVE’S
EMPLOYMENT WITH THE COMPANY AND SHALL BE FULLY ENFORCEABLE THEREAFTER.

 

11.                                 SERVICE WITH SUBSIDIARIES.  FOR PURPOSES OF
THIS AGREEMENT, EMPLOYMENT BY A SUBSIDIARY OR A PARENT OF THE COMPANY SHALL BE
DEEMED TO BE EMPLOYMENT BY THE COMPANY AND REFERENCES TO THE COMPANY SHALL
INCLUDE ALL SUCH ENTITIES, EXCEPT THAT THE PAYMENT OBLIGATION HEREUNDER SHALL BE
SOLELY THAT OF THE COMPANY.  A CHANGE OF CONTROL, HOWEVER, AS USED IN THIS
AGREEMENT, SHALL REFER ONLY TO A CHANGE OF CONTROL OF THE COMPANY.

 

12.                                 NO RESIGNATION.

 

(A)                                  IN CONSIDERATION OF THIS AGREEMENT, THE
EXECUTIVE AGREES THAT HE WILL NOT RESIGN FROM THE COMPANY WITHOUT GOOD REASON
FOR AT LEAST ONE HUNDRED EIGHTY (180) DAYS FROM THE DATE HEREOF, EXCEPT THE
FOREGOING SHALL NOT APPLY AFTER A CHANGE OF CONTROL.

 

9

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(B)                                 THE COMPANY SHALL CONTINUE TO COVER THE
EXECUTIVE, OR CAUSE THE EXECUTIVE TO BE COVERED, UNDER ANY DIRECTOR AND OFFICER
INSURANCE MAINTAINED AFTER THE CHANGE OF CONTROL FOR DIRECTORS AND OFFICERS OF
THE COMPANY (WHETHER BY THE COMPANY OR ANOTHER ENTITY) AT THE HIGHEST LEVEL SO
MAINTAINED FOR ANY OTHER PAST OR ACTIVE DIRECTOR OR OFFICER WITH REGARD TO ANY
ACTION OR OMISSION OF THE EXECUTIVE WHILE AN OFFICER OR DIRECTOR OF THE
COMPANY.  SUCH COVERAGE SHALL CONTINUE FOR ANY PERIOD DURING WHICH THE EXECUTIVE
MAY HAVE ANY LIABILITY FOR THE AFORESAID ACTIONS OR OMISSIONS.

 

(C)                                  FOLLOWING A CHANGE OF CONTROL, THE COMPANY
SHALL, WITH REGARD TO MATTERS RELATED TO EXECUTIVE’S PERIOD OF EMPLOYMENT WITH
THE COMPANY, INDEMNIFY THE EXECUTIVE TO THE FULLEST EXTENT PERMITTED OR
AUTHORIZED BY THE COMPANY’S BYLAWS AGAINST ANY CLAIMS, SUITS, JUDGMENTS,
EXPENSES (INCLUDING REASONABLE ATTORNEY FEES), WITH ADVANCEMENT OF LEGAL FEES
AND DISBURSEMENTS TO THE FULLEST EXTENT PERMITTED BY LAW, ARISING FROM, OUT OF,
OR IN CONNECTION WITH THE EXECUTIVE’S SERVICES AS AN OFFICER OR DIRECTOR OF THE
COMPANY, AS AN OFFICER OR DIRECTOR OF ANY AFFILIATE FOR WHICH THE EXECUTIVE WAS
REQUIRED TO SERVE AS SUCH BY THE COMPANY OR AS A FIDUCIARY OF ANY BENEFIT PLAN
OF THE COMPANY OR ANY AFFILIATE.

 

13.                                 SUCCESSORS; BINDING AGREEMENT.  IN ADDITION
TO ANY OBLIGATIONS IMPOSED BY LAW UPON ANY SUCCESSOR TO THE COMPANY, THE COMPANY
WILL REQUIRE ANY SUCCESSOR (WHETHER DIRECT OR INDIRECT, BY PURCHASE, MERGER,
CONSOLIDATION OR OTHERWISE) TO ALL OR SUBSTANTIALLY ALL OF THE BUSINESS AND/OR
ASSETS OF THE COMPANY TO EXPRESSLY ASSUME AND AGREE IN WRITING TO PERFORM THIS
AGREEMENT IN THE SAME MANNER AND TO THE SAME EXTENT THAT THE COMPANY WOULD BE
REQUIRED TO PERFORM IT IF NO SUCH SUCCESSION HAD TAKEN PLACE.  THIS AGREEMENT
SHALL INURE TO THE BENEFIT OF AND BE ENFORCEABLE BY THE EXECUTIVE’S PERSONAL OR
LEGAL REPRESENTATIVES, EXECUTORS, ADMINISTRATORS, SUCCESSORS, HEIRS,
DISTRIBUTEES, DEVISEES AND LEGATEES.  IF THE EXECUTIVE SHALL DIE WHILE ANY
AMOUNT WOULD STILL BE PAYABLE TO THE EXECUTIVE HEREUNDER IF THE EXECUTIVE HAD
CONTINUED TO LIVE, ALL SUCH AMOUNTS, UNLESS OTHERWISE PROVIDED HEREIN, SHALL BE
PAID IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT TO THE EXECUTORS, PERSONAL
REPRESENTATIVES OR ADMINISTRATORS OF THE EXECUTIVE’S ESTATE.  THIS AGREEMENT IS
PERSONAL TO THE EXECUTIVE AND NEITHER THIS AGREEMENT OR ANY RIGHTS HEREUNDER MAY
BE ASSIGNED BY THE EXECUTIVE.

 

14.                                 MISCELLANEOUS.  NO PROVISIONS OF THIS
AGREEMENT MAY BE MODIFIED, WAIVED OR DISCHARGED UNLESS SUCH WAIVER, MODIFICATION
OR DISCHARGE IS AGREED TO IN WRITING AND SIGNED BY THE EXECUTIVE AND SUCH
OFFICER AS MAY BE SPECIFICALLY DESIGNATED BY THE BOARD.  NO WAIVER BY EITHER
PARTY HERETO AT ANY TIME OF ANY BREACH BY THE OTHER PARTY HERETO OF, OR
COMPLIANCE WITH, ANY CONDITION OR PROVISION SHALL BE DEEMED A WAIVER OF SIMILAR
OR DISSIMILAR PROVISIONS OR CONDITIONS AT THE SAME OR AT ANY PRIOR OR SUBSEQUENT
TIME.  THIS AGREEMENT CONSTITUTES THE ENTIRE AGREEMENT BETWEEN THE PARTIES
HERETO PERTAINING TO THE SUBJECT MATTER HEREOF.  NO AGREEMENTS OR
REPRESENTATIONS, ORAL OR OTHERWISE, EXPRESS OR IMPLIED, WITH RESPECT TO THE
SUBJECT MATTER HEREOF HAVE BEEN MADE BY EITHER PARTY WHICH ARE NOT EXPRESSLY SET
FORTH IN THIS AGREEMENT.  ALL REFERENCES TO ANY LAW SHALL BE DEEMED ALSO TO
REFER TO ANY SUCCESSOR PROVISIONS TO SUCH LAWS.

 

15.                                 COUNTERPARTS.  THIS AGREEMENT MAY BE
EXECUTED IN SEVERAL COUNTERPARTS, EACH OF WHICH SHALL BE DEEMED TO BE AN
ORIGINAL BUT ALL OF WHICH TOGETHER WILL CONSTITUTE ONE AND THE SAME INSTRUMENT.

 

10

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16.                                 NOTICES.  ANY NOTICE OR OTHER COMMUNICATION
REQUIRED OR PERMITTED HEREUNDER SHALL BE IN WRITING AND SHALL BE DELIVERED
PERSONALLY, OR SENT BY REGISTERED MAIL, POSTAGE PREPAID.  ANY SUCH NOTICE SHALL
BE DEEMED GIVEN WHEN SO DELIVERED PERSONALLY, OR, IF MAILED, FIVE DAYS AFTER THE
DATE OF DEPOSIT IN THE UNITED STATES MAILS, OR AS FOLLOWS:

 

(i)

If to the Company, to:

 

Overseas Shipholding Group, Inc.

 

666 Third Avenue

 

New York, New York 10017

 

Attention: Chairman

 

 

(ii)

If to the Executive, to his shown address on

 

the books of the Company.

 

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

 

17.                                 SEPARABILITY.  IF ANY PROVISIONS OF THIS
AGREEMENT SHALL BE DECLARED TO BE INVALID OR UNENFORCEABLE, IN WHOLE OR IN PART,
SUCH INVALIDITY OR UNENFORCEABILITY SHALL NOT AFFECT THE REMAINING PROVISIONS
HEREOF WHICH SHALL REMAIN IN FULL FORCE AND EFFECT.

 

18.                                 LEGAL FEES.  IN THE EVENT THE COMPANY DOES
NOT MAKE THE PAYMENTS DUE HEREUNDER ON A TIMELY BASIS (AS DETERMINED BY AN
ARBITRATOR) AND THE MATTER IS ARBITRATED PURSUANT TO SECTION 19 BELOW, IF THE
EXECUTIVE PREVAILS IN SUCH ARBITRATION, THE COMPANY SHALL PAY ALL COSTS OF SUCH
ARBITRATION, INCLUDING REASONABLE LEGAL FEES AND OTHER REASONABLE FEES AND
EXPENSES WHICH THE EXECUTIVE MAY INCUR (ON A TAX GROSSED UP BASIS, TO THE EXTENT
SUCH AMOUNTS ARE TAXABLE TO THE EXECUTIVE).  THE COMPANY SHALL PAY TO THE
EXECUTIVE INTEREST AT THE PRIME LENDING RATE (AS ANNOUNCED FROM TIME TO TIME BY
CITIBANK, N.A.) ON ALL OR ANY PART OF ANY AMOUNT TO BE PAID TO EXECUTIVE
HEREUNDER THAT IS NOT PAID WHEN DUE.  THE PRIME RATE FOR EACH CALENDAR QUARTER
SHALL BE THE PRIME RATE IN EFFECT ON THE FIRST DAY OF THE CALENDAR QUARTER.

 

19.                                 ARBITRATION.  ANY DISPUTE OR CONTROVERSY
ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT SHALL BE SETTLED EXCLUSIVELY
BY ARBITRATION CONDUCTED IN THE CITY OF NEW YORK IN THE STATE OF NEW YORK UNDER
THE COMMERCIAL ARBITRATION RULES THEN PREVAILING OF THE AMERICAN ARBITRATION
ASSOCIATION AND SUCH SUBMISSION SHALL REQUEST THE AMERICAN ARBITRATION
ASSOCIATION TO:  (I) APPOINT AN ARBITRATOR EXPERIENCED AND KNOWLEDGEABLE
CONCERNING THE MATTER THEN IN DISPUTE; (II) REQUIRE THE TESTIMONY TO BE
TRANSCRIBED; (III) REQUIRE THE AWARD TO BE ACCOMPANIED BY FINDINGS OF FACT AND
THE STATEMENT FOR REASONS FOR THE DECISION; AND (IV) REQUEST THE MATTER TO BE
HANDLED BY AND IN ACCORDANCE WITH THE EXPEDITED PROCEDURES PROVIDED FOR IN THE
COMMERCIAL ARBITRATION RULES.  THE DETERMINATION OF THE ARBITRATORS, WHICH SHALL
BE BASED UPON A DE NOVO INTERPRETATION OF THIS AGREEMENT, SHALL BE FINAL AND
BINDING AND JUDGMENT MAY BE ENTERED ON THE ARBITRATORS’ AWARD IN ANY COURT
HAVING JURISDICTION.  THE COMPANY SHALL PAY ALL COSTS OF THE AMERICAN
ARBITRATION ASSOCIATION AND THE ARBITRATOR.

 

20.                                 WITHHOLDING.  ANY PAYMENTS MADE OR BENEFITS
PROVIDED TO THE EXECUTIVE UNDER THIS AGREEMENT SHALL BE REDUCED BY ANY
APPLICABLE WITHHOLDING TAXES OR OTHER AMOUNTS REQUIRED TO BE WITHHELD BY LAW OR
CONTRACT.

 

11

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21.                                 CODE SECTION 409A.  IF ANY PROVISION OF THIS
AGREEMENT WOULD CAUSE THE EXECUTIVE TO INCUR ANY ADDITIONAL TAX OR INTEREST
UNDER CODE SECTION 409A OR ANY REGULATIONS OR TREASURY GUIDANCE PROMULGATED
THEREUNDER, THE COMPANY SHALL, AFTER CONSULTING WITH THE EXECUTIVE, REFORM SUCH
PROVISION; PROVIDED THAT THE COMPANY AGREES TO MAINTAIN, TO THE MAXIMUM EXTENT
PRACTICABLE, THE ORIGINAL INTENT AND ECONOMIC BENEFIT TO THE EXECUTIVE OF THE
APPLICABLE PROVISION WITHOUT VIOLATING THE PROVISIONS OF CODE SECTION 409A.  THE
COMPANY SHALL INDEMNIFY AND HOLD THE EXECUTIVE HARMLESS, ON AN AFTER-TAX BASIS,
FOR ANY ADDITIONAL TAX (INCLUDING INTEREST AND PENALTIES WITH RESPECT THERETO)
IMPOSED ON THE EXECUTIVE AS A RESULT OF CODE SECTION 409A WITH REGARD TO THE
PAYMENTS AND BENEFITS HEREUNDER.

 

22.                                 NON-EXCLUSIVITY OF RIGHTS.  NOTHING IN THIS
AGREEMENT SHALL PREVENT OR LIMIT THE EXECUTIVE’S CONTINUING OR FUTURE
PARTICIPATION IN ANY BENEFIT, BONUS, INCENTIVE, EQUITY OR OTHER PLAN OR PROGRAM
PROVIDED BY THE COMPANY AND FOR WHICH THE EXECUTIVE MAY QUALIFY, NOR SHALL
ANYTHING HEREIN (EXCEPT SECTION 9) LIMIT OR OTHERWISE PREJUDICE SUCH RIGHTS AS
THE EXECUTIVE MAY HAVE UNDER ANY OTHER CURRENTLY EXISTING PLAN, AGREEMENT AS TO
EMPLOYMENT OR SEVERANCE FROM EMPLOYMENT WITH THE COMPANY OR STATUTORY
ENTITLEMENTS, PROVIDED, THAT (I) TO THE EXTENT SUCH AMOUNTS ARE PAID UNDER
SECTION 4 HEREOF OR OTHERWISE, THEY SHALL NOT BE DUE UNDER ANY SUCH PROGRAM,
PLAN, AGREEMENT, OR STATUTE, AND (II) TO THE EXTENT SUCH AMOUNTS ARE PAID UNDER
ANY SUCH PROGRAM, PLAN, AGREEMENT, STATUTE, OR OTHERWISE, THEY SHALL NOT BE DUE
UNDER SECTION 4 HEREOF.  AMOUNTS THAT ARE VESTED BENEFITS OR WHICH THE EXECUTIVE
IS OTHERWISE ENTITLED TO RECEIVE UNDER ANY PLAN OR PROGRAM OF THE COMPANY, AT OR
SUBSEQUENT TO THE DATE OF TERMINATION SHALL BE PAYABLE IN ACCORDANCE WITH SUCH
PLAN OR PROGRAM, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED HEREIN.

 

23.                                 NOT AN AGREEMENT OF EMPLOYMENT.  THIS IS NOT
AN AGREEMENT ASSURING EMPLOYMENT AND, SUBJECT TO ANY OTHER AGREEMENT BETWEEN THE
EXECUTIVE AND THE COMPANY, THE COMPANY RESERVES THE RIGHT TO TERMINATE THE
EXECUTIVE’S EMPLOYMENT AT ANY TIME WITH OR WITHOUT CAUSE, SUBJECT TO THE PAYMENT
PROVISIONS HEREOF, IF ANY, THAT ARE APPLICABLE.  THE EXECUTIVE ACKNOWLEDGES THAT
HE IS AWARE THAT HE SHALL HAVE NO CLAIM AGAINST THE COMPANY HEREUNDER OR FOR
DEPRIVATION OF THE RIGHT TO RECEIVE THE AMOUNTS HEREUNDER AS A RESULT OF ANY
TERMINATION THAT DOES NOT SPECIFICALLY SATISFY THE REQUIREMENTS HEREOF OR AS A
RESULT OF ANY OTHER ACTION TAKEN BY THE COMPANY.

 

24.                                 INDEPENDENT REPRESENTATION.  THE EXECUTIVE
ACKNOWLEDGES THAT HE HAS BEEN ADVISED BY THE COMPANY TO HAVE THE AGREEMENT
REVIEWED BY INDEPENDENT COUNSEL AND HAS BEEN GIVEN THE OPPORTUNITY TO DO SO.

 

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

 

12

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

 

 

OVERSEAS SHIPHOLDING GROUP, INC.

 

 

 

By:

 /s/Morten Arntzen

 

Name:

Morten Arntzen

 

Title:

President and Chief Executive Officer

 

 

 

 

 

EXECUTIVE

 

 

 

 /s/Mats Berglund

 

Mats Berglund

 

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EXHIBIT A

 

ACCEPTANCE FORM AND RELEASE

 

Release

 

1.                                       I AGREE AND ACKNOWLEDGE THAT THE
PAYMENTS AND OTHER BENEFITS PROVIDED PURSUANT TO THE CHANGE OF CONTROL
PROTECTION AGREEMENT (“AGREEMENT”), DATED JANUARY 1, 2006: (I) ARE IN FULL
DISCHARGE OF ANY AND ALL LIABILITIES AND OBLIGATIONS OF THE COMPANY TO ME,
MONETARILY OR WITH RESPECT TO EMPLOYEE BENEFITS OR OTHERWISE, INCLUDING BUT NOT
LIMITED TO ANY AND ALL OBLIGATIONS ARISING UNDER ANY ALLEGED WRITTEN OR ORAL
EMPLOYMENT AGREEMENT, POLICY, PLAN OR PROCEDURE OF THE COMPANY AND/OR ANY
ALLEGED UNDERSTANDING OR ARRANGEMENT BETWEEN ME AND THE COMPANY; AND (II) EXCEED
ANY PAYMENT, BENEFIT, OR OTHER THING OF VALUE TO WHICH I MIGHT OTHERWISE BE
ENTITLED UNDER ANY POLICY, PLAN OR PROCEDURE OF THE COMPANY AND/OR ANY AGREEMENT
BETWEEN ME AND THE COMPANY.

 

2.                                       IN CONSIDERATION FOR THE PAYMENTS AND
BENEFITS TO BE PROVIDED TO ME PURSUANT TO THE AGREEMENT, I FOREVER RELEASE AND
DISCHARGE THE COMPANY FROM ANY AND ALL CLAIMS.  THIS INCLUDES CLAIMS THAT ARE
NOT SPECIFIED IN THIS ACCEPTANCE FORM AND RELEASE (THIS “RELEASE”), CLAIMS OF
WHICH I AM NOT CURRENTLY AWARE, CLAIMS UNDER: (I) THE AGE DISCRIMINATION IN
EMPLOYMENT ACT, AS AMENDED; (II) TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, AS
AMENDED; (III) THE AMERICANS WITH DISABILITIES ACT, AS AMENDED; (IV) THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (EXCLUDING CLAIMS
FOR ACCRUED, VESTED BENEFITS UNDER ANY EMPLOYEE BENEFIT PENSION PLAN OF THE
COMPANY IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF SUCH PLAN AND APPLICABLE
LAW); (V) THE WORKERS’ ADJUSTMENT AND RETRAINING NOTIFICATION ACT; (VI) THE
FAMILY AND MEDICAL LEAVE ACT; (VII) ANY CLAIM UNDER THE NEW YORK STATE HUMAN
RIGHTS LAW AND THE NEW YORK CITY ADMINISTRATIVE CODE; (VIII) ANY OTHER CLAIM
(WHETHER BASED ON FEDERAL, STATE, OR LOCAL LAW, STATUTORY OR DECISIONAL)
RELATING TO OR ARISING OUT OF MY EMPLOYMENT, THE TERMS AND CONDITIONS OF SUCH
EMPLOYMENT, THE SEPARATION OF SUCH EMPLOYMENT, AND/OR ANY OF THE EVENTS RELATING
DIRECTLY OR INDIRECTLY TO OR SURROUNDING THE SEPARATION OF THAT EMPLOYMENT,
INCLUDING, BUT NOT LIMITED TO, BREACH OF CONTRACT (EXPRESS OR IMPLIED), WRONGFUL
DISCHARGE, DETRIMENTAL RELIANCE, DEFAMATION, EMOTIONAL DISTRESS OR COMPENSATORY
OR PUNITIVE DAMAGES; AND (IX) ANY CLAIM FOR ATTORNEYS’ FEES, COSTS,
DISBURSEMENTS AND/OR THE LIKE.  NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY,
THE SOLE MATTERS TO WHICH THIS RELEASE DOES NOT APPLY ARE (I) THE RIGHTS OF
INDEMNIFICATION AND DIRECTORS AND OFFICERS LIABILITY INSURANCE COVERAGE TO WHICH
I WAS ENTITLED IMMEDIATELY PRIOR TO MY TERMINATION; AND (II) MY RIGHTS UNDER ANY
TAX-QUALIFIED PENSION PLAN OR CLAIMS FOR ACCRUED VESTED BENEFITS UNDER ANY OTHER
EMPLOYEE BENEFIT PLAN, POLICY OR ARRANGEMENT MAINTAINED BY THE COMPANY OR UNDER
THE CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT OF 1985.

 

3.                                       THIS RELEASE APPLIES TO ME AND TO
ANYONE WHO SUCCEEDS TO MY RIGHTS, SUCH AS MY HEIRS, EXECUTORS, ADMINISTRATORS OF
MY ESTATE, TRUSTEES, AND ASSIGNS.  THIS RELEASE IS FOR THE BENEFIT OF (I) THE
COMPANY, (II) ANY RELATED CORPORATION OR ENTITY, (III) ANY DIRECTOR, OFFICER,
EMPLOYEE, OR AGENT OF THE COMPANY OR OF ANY SUCH RELATED CORPORATION OR ENTITY,
OR (IV) ANY PERSON, CORPORATION OR ENTITY WHO OR THAT SUCCEEDS TO THE RIGHTS OF
THE COMPANY OR OF ANY SUCH PERSON, CORPORATION OR ENTITY.

 

4.                                       I ACKNOWLEDGE THAT I: (A) HAVE
CAREFULLY READ IN THEIR ENTIRETY THE AGREEMENT, THIS RELEASE [AND THE
INFORMATION ATTACHED AS APPENDIX I PROVIDED PURSUANT TO THE OLDER WORKERS
BENEFIT PROTECTION ACT]; (B) HAVE HAD AN OPPORTUNITY TO CONSIDER FULLY FOR AT
LEAST [TWENTY-ONE

 

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(21)] [FORTY-FIVE (45)] DAYS THE TERMS OF THE AGREEMENT, THIS RELEASE [AND
INFORMATION ATTACHED AS APPENDIX I]; (C) HAVE BEEN ADVISED BY THE COMPANY IN
WRITING TO CONSULT WITH AN ATTORNEY OF MY CHOOSING IN CONNECTION WITH THE
AGREEMENT, THIS RELEASE [AND THE INFORMATION ATTACHED AS APPENDIX I]; (D) FULLY
UNDERSTAND THE SIGNIFICANCE OF ALL OF THE TERMS AND CONDITIONS OF THE AGREEMENT,
RELEASE [AND THE INFORMATION ATTACHED AS APPENDIX I], AND HAVE DISCUSSED THEM
WITH MY INDEPENDENT LEGAL COUNSEL, OR HAVE HAD A REASONABLE OPPORTUNITY TO DO
SO; (E) HAVE HAD ANSWERED TO MY SATISFACTION ANY QUESTIONS I HAVE ASKED WITH
REGARD TO THE MEANING AND SIGNIFICANCE OF ANY OF THE PROVISIONS OF THE
AGREEMENT, THIS RELEASE [AND THE INFORMATION ATTACHED AS APPENDIX I]; AND (F) AM
SIGNING THIS RELEASE VOLUNTARILY AND OF MY OWN FREE WILL AND ASSENT TO ALL THE
TERMS AND CONDITIONS CONTAINED HEREIN AND CONTAINED IN THE AGREEMENT AND THE
RELEASE.

 

5.                                       I UNDERSTAND THAT I WILL HAVE
[TWENTY-ONE (21)] [FORTY-FIVE (45)] DAYS FROM THE DATE OF RECEIPT OF THIS
RELEASE [AND INFORMATION ATTACHED AS APPENDIX I] TO CONSIDER THE TERMS AND
CONDITIONS OF THOSE DOCUMENTS. I MAY ACCEPT THIS RELEASE BY SIGNING AND
RETURNING IT TO                               .  AFTER EXECUTING THIS RELEASE
AND RETURNING IT TO                               , I SHALL HAVE SEVEN (7) DAYS
(THE “REVOCATION PERIOD”) TO REVOKE THIS RELEASE BY INDICATING MY DESIRE TO DO
SO IN WRITING DELIVERED BY NO LATER THAN 5:00 P.M. ON THE SEVENTH (7TH) DAY
FOLLOWING THE DATE I SIGN AND RETURN THIS RELEASE.  THE EFFECTIVE DATE OF THIS
RELEASE SHALL BE THE EIGHTH (8TH) DAY FOLLOWING MY SIGNING AND RETURN OF THIS
RELEASE.  IF THE LAST DAY OF THE REVOCATION PERIOD FALLS ON A SATURDAY, SUNDAY
OR HOLIDAY, THE LAST DAY OF THE REVOCATION PERIOD WILL BE DEEMED TO BE THE NEXT
BUSINESS DAY. IN THE EVENT I DO NOT ACCEPT THIS RELEASE, OR IN THE EVENT I
REVOKE THIS RELEASE DURING THE REVOCATION PERIOD, MY RIGHTS UNDER THE AGREEMENT,
THIS RELEASE, INCLUDING BUT NOT LIMITED TO MY RIGHTS TO RECEIVE PAYMENTS AND
OTHER BENEFITS FROM THE COMPANY, SHALL BE DEEMED AUTOMATICALLY NULL AND VOID.

 

 

Print Name:

 

 

Date:

 

 

Employee

 

 

 

 

 

 

 

 

 

 

 

 

 

Signature:

 

 

 

 

 

Employee

 

 

 

 

 

 

 

STATE OF NEW YORK

)

 

 

 

 

) ss:

 

 

 

COUNTY OF                       

)

 

 

 

 

On this        day of                                    , before me personally
came                          to be known and known to me to be the person
described and who executed the foregoing Release, and (s)he duly acknowledged to
me that (s)he executed the same.

 

 

 

Notary Public

 

 

3

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ACCEPTANCE FORM AND RELEASE

 

Acceptance Form:

 

I have read the Change of Control Protection Agreement, dated January 1, 2006
(“Agreement”) and the accompanying Release [and the information attached as
Appendix I] and hereby accept the benefits provided under the Agreement, subject
to the terms and conditions set forth in the Agreement and Release.

 

Print Name:

 

 

Date:

 

 

Employee

 

 

 

 

 

 

 

 

 

 

 

 

 

Signature:

 

 

 

 

 

Employee

 

 

 

 

 

 

 

STATE OF NEW YORK

)

 

 

 

 

) ss:

 

 

 

COUNTY OF                       

)

 

 

 

 

On this        day of                                    , before me personally
came                          to be known and known to me to be the person
described and who executed the foregoing Release, and (s)he duly acknowledged to
me that (s)he executed the same.

 

 

 

Notary Public

 

 

4

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