exv10w1



 








Exhibit 10.1




ARLINGTON TANKERS LTD.

2007 BONUS PLAN

(As Amended on August 17, 2007)





     1.      Purpose. The purpose of this Bonus Plan (this “Plan”) is to retain and
to provide an incentive for the executive officers of Arlington Tankers Ltd., a Bermuda corporation
(the “Company”).



     2.      Period Covered by Plan. This Plan shall cover the fiscal year ending
December 31, 2007.



     3.      Eligibility. The co-chief executive officers of the Company as of the
date of the adoption of this Plan are eligible to participate in the Plan (each a “Participant”).
In order to be eligible to receive any bonus payments under this Plan, as described in Exhibit
A, the Participant must be employed by the Company as of December 31, 2007 (the “Determination
Date”).



     4.       Bonus Payments. In the event that the Company achieves an objective set
forth on Exhibit A attached hereto, each Participant shall be eligible to receive the bonus
payment set forth opposite such objective consistent with the terms set forth in this Plan. The
bonus amounts set forth on Exhibit A are cumulative, meaning that each Participant shall be
eligible to receive the bonus payment for each objective achieved, it being understood that (1) the
Qualified Transaction Bonus Payment would be paid only once, even if more than one Qualified
Transaction is completed during 2007; and (2) the Other Approved Transaction Objective may be
satisfied whether or not any Qualified Transactions are completed during 2007. If, prior to the
time that all Reconfirmation Payments shall have been paid, a Participant’s employment with the
Company is terminated in circumstances that would entitle such Participant to compensation under
Section 4.2 of such Participant’s Executive Change in Control Agreement, dated as of October 24,
2005 (a “Change in Control Agreement”), then, in addition to any other payments to which such
Participant would be entitled under such Change in Control Agreement, such Participant shall be
eligible to receive accelerated payment of any such unpaid Reconfirmation Payments.



     5.       Withholding Taxes. The Company may deduct from any payment otherwise due
to Participants under this Plan any amount required to be withheld by the Company under applicable
federal, state, and local or other income and employment tax withholding laws and regulations. If
the Company elects not to or cannot withhold such amounts from payments due to a Participant, each
Participant must pay the Company the full amount, if any, required for withholding.



     6.      Non-Assignability. No Participant shall have the power or right to
transfer, assign, mortgage, or otherwise encumber his interest under this Plan; nor shall such
interest be subject to seizure for the payment of a Participant’s debts, judgments, alimony, or
separate maintenance or be transferable by operation of law in the event of a Participant’s
bankruptcy, insolvency, divorce or separation. This Plan shall be binding upon and shall inure to
the benefit of the Company and its successors and assigns.



     7.       Amendment and Termination of this Plan. The Compensation Committee may
amend or terminate this Plan or any portion thereof at any time.



 









 





     8.      Administration. This Plan shall be administered by the Compensation
Committee of the Company’s Board of Directors. The Compensation Committee shall have authority to
adopt, amend and repeal such administrative rules, guidelines and practices relating to this Plan
as it shall deem advisable. The Compensation Committee shall have broad discretion to construe and
interpret the terms of this Plan, to make adjustments or amendments to this Plan, and to make
determinations as to whether the criteria for bonus payments have been satisfied. All decisions by
the Compensation Committee shall be made in the Compensation Committee’s sole discretion and shall
be final and binding on all Participants and all persons having or claiming any interest in this
Plan. No member of the Compensation Committee shall be liable for any action or determination
relating to or under this Plan unless it is demonstrated that such action or determination was made
in bad faith.



     9.      Compliance With Code Section 409A. Notwithstanding any other provision
of this Plan to the contrary, all bonus payments made hereunder should be made no later than thirty
days following the Determination Date. The Company shall have no liability to a Participant, or
any other party, if an Award that is intended to be exempt from, or compliant with, Section 409A of
the Internal Revenue Code is not so exempt or compliant or for any action taken by the
Compensation Committee.



     10.       Employment Rights. The adoption of this Plan does not confer upon any
Participant any right to continued employment with or service to the Company or interfere in any
way with the right of the Company to terminate the Participant’s employment or service at any time.



     11.       Unfunded, Unsecured Obligation. This Plan shall at all times be
entirely unfunded and no provisions shall at any time be made with respect to segregating assets of
the Company for payment of any benefits hereunder. Additionally, nothing contained herein shall be
construed as giving a Participant, his or her beneficiary, or any other person, any equity or other
interest of any kind in any assets of the Company or creating a trust of any kind or a fiduciary
relationship of any kind between the Company and any such person. As to any claim for any unpaid
amounts under this Plan, a Participant, his or her beneficiary, and any other person having a claim
for payment shall be unsecured creditors.



     12.      Governing Law. This Plan shall be construed, interpreted and enforced
in accordance with the internal laws of the State of Connecticut without regard to any applicable
conflicts of laws.



     13.      Effective Date. This Plan is effective on April 20, 2007 (the
“Effective Date”), the date on which the Board of Directors of the Company approved this Plan.




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Exhibit A






Objective




Complete at least one transaction
during 2007 that satisfies the
following criteria (the “Transaction
Criteria”):



•   Transaction
consideration with an
aggregate value equal
to or greater than $50
million; and



•   At the time of
the closing of the
transaction, the
projected cash
available for
dividends must be
greater than or equal
to the Company’s
blended cost of
capital of 8.3%,
referred to as
“Investment Criteria”,
for a minimum of five
years.



Any transaction that satisfies the
Transaction Criteria is referred to
as a “Qualified Transaction” and
this performance objective is
referred to as the “Qualified
Transaction Objective.”






Bonus Payment




One lump sum cash payment of
$200,000 (the “Qualified

Transaction Bonus Payment”),
payable within two business days
following the date on which the
Company holds its first regularly
scheduled Board of Directors
meeting in 2008.








 





With respect to any Qualified
Transaction completed in 2007, a
one-time re-confirmation by the
Compensation Committee that, as of
the first anniversary of the closing
of such Qualified Transaction, such
Qualified Transaction satisfies the
initial Investment Criteria (the
“Reconfirmation Objective”).






For each Qualified Transaction that
satisfies the Reconfirmation
Objective, four annual lump sum
cash payments (each, a
“Reconfirmation Bonus Payment” and,
collectively, the “Reconfirmation
Bonus Payments”), the first payable
within two business days following
the date on which the Company holds
its first regularly scheduled Board
of Directors meeting in 2009, so
long as the Participant is employed
by the Company as of December 31,
2008; the second payable on the
date on which the Company holds its
first regularly scheduled Board of
Directors meeting in 2010, so long
as the Participant is employed by
the Company as of December 31,
2009; the third payable on the date
on which the Company holds its
first regularly scheduled Board of
Directors meeting in 2011, so long
as the Participant is employed by
the Company as of December 31,
2010; and the fourth payable on the
date on which the Company holds its
first regularly scheduled Board of
Directors meeting in









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2012, so long
as the Participant is employed by
the Company as of December 31,
2011. The amount of each annual
Reconfirmation Bonus Payment for a
particular Qualified Transaction
shall be calculated based upon such
Qualified Transaction’s projected
amount of cash available for
dividends during the five-year
period following the closing of
such Qualified Transaction,
multiplied by 1.5%, and then
divided by four. For example, if
the Compensation Committee
estimates that such Qualified
Transaction will generate cash
available for dividends of $41.5
million during the five-year period
following the closing of such
transaction, then each executive
officer would be eligible to
receive an annual Reconfirmation
Bonus Payment of $155,625 ($41.5
million times 1.5%= $622,500/4=
$155,625).








 





Complete one or more transactions
during 2007 that are not Qualified
Transactions, but which are approved
by the Company’s Board of Directors,
but is less than $50 million (the
“Other Approved Transaction
Objective”).



The total amount of general and
administrative expenses during 2007,
excluding Participants’ bonus
compensation pursuant to this Plan,
as confirmed by the Company’s
independent auditors, does not
exceed the approved budget for
fiscal year 2007.






A maximum lump sum cash payment of
$150,000, payable within two
business days following the date on
which the Company holds its first
regularly scheduled Board of
Directors meeting in 2008.






A maximum lump sum cash payment of
$75,000, payable within two
business days following the date on
which the Company holds its first
regularly scheduled Board of
Directors meeting in 2008.









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