Exhibit 10.7


 


DIAMOND S SHIPPING
GROUP, INC.


2014 EQUITY AND PERFORMANCE
INCENTIVE PLAN


 


NONQUALIFIED STOCK
OPTION AGREEMENT


 


This AGREEMENT (this “Agreement”)
is made as of _______ __, 2014 (the “Date of Grant”) by and between Diamond S Shipping Group, Inc., a corporation
formed under the laws of The Republic of the Marshall Islands (the “Company”), and [________________] (the “Optionee”).


 


1.           Certain Definitions.   
Capitalized terms used, but not otherwise defined, in this Agreement will have the meanings given to such terms in the Company’s
2014 Equity and Performance Incentive Plan (the “Plan”).


 


2.           Grant of Stock Option.   Subject to and upon the terms, conditions, and restrictions set forth in this Agreement and in the Plan, the Company hereby grants
to the Optionee an option (the “Option”) to purchase [_____] shares of Common Stock (the “Option Shares”).
The Option may be exercised from time to time in accordance with the terms of this Agreement. The Option Shares may be purchased
pursuant to this Option at a price of $[_____] per share of Common Stock, subject to adjustment as hereinafter provided
(the “Option Price”). The Option is intended to be a nonqualified stock option and will not be treated as an “incentive
stock option” within the meaning of that term under Section 422 of the Code, or any successor provision thereto.


 


3.           Term of Option.   The
term of the Option will commence on the Date of Grant and, unless earlier terminated in accordance with Section 8, will expire
ten (10) years from the Date of Grant.


 


4.           Right to Exercise.   Subject to the terms of Section 6, the Option will be exercisable with respect to [25% of the Option Shares on each of _____
__, ____, _____ __, ____, _____ __, ____ and _____ __, ____], provided that the Optionee remains in the continuous employ
of the Company or any Subsidiary as of each such date. The Optionee will not be entitled to acquire a fraction of an Option Share
pursuant to this Option. The Optionee will be entitled to the privileges of ownership with respect to Option Shares purchased and
delivered to the Optionee upon the exercise of all or part of this Option.


 


For purposes of this Agreement, the continuous
employment of the Optionee with the Company or a Subsidiary will not be deemed to have been interrupted, and the Optionee will
not be deemed to have ceased to be an employee of the Company or any Subsidiary, by reason of (i) the transfer of his employment
among the Company and any of its Subsidiaries or (ii) his absence or leave approved by a duly constituted officer of the Company
or any of its Subsidiaries.


 


5.           Option Nontransferable.   The Optionee may not transfer or assign all or any part of the Option other than by will or by the laws of descent and distribution.
This Option may be exercised, during the lifetime of the Optionee, only by the Optionee, or in


 




    	 



    	 



    

 


the event of the Optionee’s legal incapacity,
by the Optionee’s guardian or legal representative acting on behalf of the Optionee in a fiduciary capacity under state law
and court supervision.


 


6.           Accelerated Vesting of Option.   Notwithstanding the provisions of Section 4, the Optionee’s right to exercise the Options covered by this Agreement will
become immediately vested earlier than the time provided in such section if any of the following circumstances apply:


 


(a)          Death or Disability.   The entire
Option subject to this Agreement will become immediately exercisable upon the Optionee’s death or Disability that occurs
while the Optionee is an employee of the Company or a Subsidiary.


 


(b)          Termination Without Cause or Termination
for Good Reason.   Conditioned on (i) the Optionee’s executing, prior to the 60th day following a Termination Without Cause
or a Termination for Good Reason, a release in the form required by the Company or any Subsidiary, as applicable, pursuant to the
terms of the Optionee’s employment agreement with the Company or any Subsidiary, as applicable, and (ii) any revocation period
applicable to such release expiring during such 60-day period without the Optionee revoking such release, such release to be in
full satisfaction of the Optionee’s rights and any benefits the Optionee might be entitled to under this Agreement, the entire
Option subject to this Agreement will become immediately exercisable upon the termination of the Optionee’s employment by
the Company or any Subsidiary as a result of a Termination Without Cause or by the Optionee as a result of a Termination for Good
Reason.


 


(c)          Definitions.   For purposes of
this Agreement, the following terms will have the following meanings:


 


(i)           “Disability”
means the failure by the Optionee, by reason of illness, incapacity or other disability, to perform the Optionee’s
duties or fulfill his employment or other service obligations to the Company or a Subsidiary, as determined by the Board or as
certified in writing by a competent medical physician chosen by the Board, for a cumulative total of 180 days in any 12-month period.


 


(ii)          “Notice of Good
Reason” means a written notice by the Optionee to the Company or a Subsidiary which sets forth in reasonable detail the specific
reason for a Termination for Good Reason and the facts and circumstances claimed to provide a basis for such termination and is
provided to the Company in accordance with the terms set forth in Section 6(c)(iv).


 


(iii)         “Termination for
Cause” means the termination by the Company or any Subsidiary of the Optionee’s employment with the Company or any
Subsidiary or the Optionee’s removal from office by the Company if the Optionee (A) has been convicted for a felony offense
or


 




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has entered a plea of guilty or nolo
contendere to a felony charge or crime involving moral turpitude, or, in the course of his employment or service has engaged in
fraudulent or criminal activity (whether or not prosecuted), (B) has failed to follow reasonable directions of the Board or other
supervisor, provided that the foregoing failure will not be a “Termination for Cause” if the Optionee in good faith
believes that such direction is illegal and promptly so notifies the Board or such other supervisor, (C), has failed to devote
substantial business time to the Company or any Subsidiary or other affiliate of the Company to which the Optionee has been assigned,
(D) has materially breached any policy or code of conduct of the Company or any Subsidiary or other affiliate of the Company applicable
to the Optionee, (E) has materially breached any provision of any agreement between the Optionee and the Company or any of its
Subsidiaries or affiliates, (F) has received a kickback or rebate of any fee or expense paid by the Company or any of its Subsidiaries
or affiliates, (G) has engaged in the use of illegal drugs, the persistent excessive use of alcohol, or any other activity that
materially impairs the Optionee’s ability to perform his duties hereunder or results in conduct bringing the Company or any
of its Subsidiaries or affiliates into substantial public disgrace or disrepute, or (H) engages in intentional, reckless, or grossly
negligent conduct that has or is reasonably likely to have a material adverse effect on the Company or any of its Subsidiaries
or affiliates. Notwithstanding the foregoing, no event listed in clauses (B), (C), (D), or (G) of the prior sentence will constitute
grounds for a “Termination for Cause” unless the Optionee has received prior written notice describing the actions
or omissions alleged to be grounds for the Termination for Cause and within 20 business days after receipt of such notice the Optionee
has not substantially cured or ceased, as the case may be, the actions or omissions so noticed. Determination as to whether or
not grounds for a Termination for Cause exists for termination of the Optionee’s employment will be made in good faith by
the Board.


 


(iv)        “Termination for
Good Reason” means the Optionee’s termination of the Optionee’s employment with the Company or a Subsidiary as
a result of the occurrence of any of the following events (each, a “Good Reason”) without the Optionee’s written
consent: (A) a substantial and continuing diminution in the nature of the Optionee’s responsibilities or (B) a material breach
by the Company of any material provision of any employment agreement between the Company and the Optionee. In addition to any notice
period required for termination of employment under any employment agreement between the Company and the Optionee, for the Optionee
to have a Termination for Good Reason, (x) the Company must be notified by the Optionee in writing within 30 calendar days after
the date the Optionee becomes aware of the event that would allow the Optionee to terminate employment under a Termination for
Good Reason, with such notice setting forth such event in reasonable detail (and the date such written notice is received is the


 




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“Notice Date”); (y) the
event must remain uncorrected by the Company for 30 calendar days following the Notice Date (the “Notice Period”);
and (z) such termination of employment by the Optionee must be effective within 30 calendar days after the expiration of the
Notice Period.


 


(v)         “Termination Without
Cause” means the termination by the Company or any Subsidiary of the Optionee’s employment with the Company or any
Subsidiary for any reason other than a termination for Disability or a Termination for Cause.


 


(vi)        “Voluntary Termination”
means the Optionee’s termination of the Optionee’s employment with the Company or any Subsidiary for any reason other
than a Termination for Good Reason.


 


7.           Notice of Exercise; Payment.


 


(a)          To the extent then exercisable, the
Option may be exercised in whole or in part by written notice to the Company stating the number of Option Shares for which the
Option is being exercised and the intended manner of payment. The date of such notice will be the exercise date.


 


(b)          Payment equal to the aggregate Option
Price of the Option Shares being purchased pursuant to an exercise of the Option must be tendered in full with the notice of exercise
to the Company in one or a combination of the following methods as specified by the Optionee in the notice of exercise: (i) cash
in the form of currency or check or by wire transfer as directed by the Company; (ii) through the surrender to the Company of shares
of Common Stock owned by the Optionee for at least six months having a value at the time of exercise equal to the aggregate Option
Price; (iii) by a combination of such methods of payment; or (iv) in such other form of consideration as is deemed acceptable
by the Board.


 


(c)          As soon as practicable upon the Company’s
receipt of the Optionee’s notice of exercise and payment, the Company will direct the due issuance of the Option Shares so
purchased.


 


8.           Termination of Agreement.   This Agreement and the Option granted hereby will terminate automatically and without further notice on the earliest of the following
dates:


 


(a)          one (1) year following the Optionee’s
termination of employment due to the Optionee’s death;


 


(b)          one (1) year following the Optionee’s
termination of employment due to Disability;


 


(c)          ninety (90) calendar days following
Optionee’s Termination Without Cause, Termination for Good Reason, or Voluntary Termination;


 




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(d)          the date of Optionee’s Termination
for Cause; or


 


(e)          ten (10) years from the Date of Grant.


 


In the event that the Optionee’s employment
is terminated in the circumstances described in Section 8(d), this Agreement will terminate at the time of such termination notwithstanding
any other provision of this Agreement and the Optionee’s entire Option will cease to be exercisable to the extent exercisable
as of such termination and will not be or become exercisable after such termination. The Optionee will be deemed to be an employee
of the Company or any Subsidiary if the Optionee is on a leave of absence approved by the Company or any Subsidiary.


 


9.           Adjustments.   The Board
will make or provide for such adjustments in the numbers of shares of Common Stock covered by the Option, in the Option Price,
and in the kind of securities covered thereby, as the Board, in its sole discretion, exercised in good faith, may determine is
equitably required to prevent dilution or enlargement of the Optionee’s rights that otherwise would result from (a) any stock
dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Company, (b) any
merger, consolidation, spin-off, split- off, spin-out, split-up, reorganization, partial or complete liquidation or other distribution
of assets, issuance of rights or warrants to purchase securities, or (c) any other corporate transaction or event having an effect
similar to any of the foregoing. Moreover, in the event of any such transaction or event or in the event of a Change of Control,
the Board, in its discretion, may provide in substitution for any or all the Optionee’s rights under this Agreement such
alternative consideration (including cash), if any, as it, in good faith, may determine to be equitable in the circumstances and
may require in connection therewith the surrender of all awards so replaced.


 


10.         No Employment Contract.   Nothing contained in this Agreement will confer upon the Optionee any right to be employed or remain employed by the Company or
any Subsidiary, or limit or affect in any manner the right of the Company or any Subsidiary to terminate the employment or adjust
the compensation of the Optionee.


 


11.         Compliance with Law.   The Company will make reasonable efforts to comply with all applicable federal and state securities laws; provided, however,
that notwithstanding any other provision of the Plan and this Agreement, the Option will not be exercisable if the exercise thereof
would result in a violation of any such law.


 


12.         Relation to Other Benefits.   Any economic or other benefit to the Optionee under this Agreement or the Plan will not be taken into account in determining any
benefits to which the Optionee may be entitled under any profit-sharing, retirement or other benefit or compensation plan maintained
by the Company or any Subsidiary and will not affect the amount of any life insurance coverage available to any beneficiary under
any life insurance plan covering employees of the Company or any Subsidiary.


 




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13.         Amendments.   Any amendment
to the Plan will be deemed to be an amendment to this Agreement to the extent that the amendment is applicable hereto; provided,
however, that (a) no amendment will adversely affect the rights of the Optionee under this Agreement without the Optionee’s
written consent, and (b) the Optionee’s consent will not be required to an amendment that is deemed necessary by the Company
to ensure compliance with Section 409A of the Code or the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the
“Dodd-Frank Act”) or any regulations promulgated thereunder, including as a result of the implementation of any recoupment
policy the Company adopts to comply with the requirements set forth in the Dodd-Frank Act.


 


14.         Severability.   In the
event that one or more of the provisions of this Agreement is invalidated for any reason by a court of competent jurisdiction,
any provision so invalidated will be deemed to be separable from the other provisions hereof, and the remaining provisions hereof
will continue to be valid and fully enforceable.


 


15.         Relation to Plan.   This
Agreement is subject to the terms and conditions of the Plan. In the event of any inconsistency between the provisions of this
Agreement and the Plan, the Plan will govern. The Board acting pursuant to the Plan, as constituted from time to time, will, except
as expressly provided otherwise herein or in the Plan, have the right to determine any questions which arise in connection with
the grant of the Option or its exercise.


 


16.         Successors and Assigns.   Without limiting Section 5, the provisions of this Agreement will inure to the benefit of, and be binding upon, the successors,
administrators, heirs, legal representatives and assigns of the Optionee, and the successors and assigns of the Company.


 


17.         Governing Law.   The
interpretation, performance, and enforcement of this Agreement will be governed by the laws of the State of Delaware, without giving
effect to the principles of conflict of laws thereof.


 


18.         Withholding Taxes.   To the extent that the Company or any Subsidiary is required to withhold any federal, state, local or foreign taxes in connection
with any payment made to or benefit realized by the Optionee or other person under this Agreement, and the amounts available to
the Company or any Subsidiary for such withholding are insufficient, it will be a condition to the receipt of such payment or the
realization of such benefit that the Optionee or such other person make arrangements satisfactory to the Company or any Subsidiary
for payment of the balance of such taxes required to be withheld, which arrangements (in the discretion of the Board) may include
relinquishment of a portion of such benefit. If the Optionee’s benefit is to be received in the form of shares of Common
Stock, and the Optionee fails to make arrangements for the payment of tax, the Company or any Subsidiary will withhold such shares
of Common Stock having a value equal to the amount required to be withheld. Notwithstanding the foregoing, when the Optionee is
required to pay the Company or any Subsidiary an amount required to be withheld under applicable income and


 




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employment tax laws, the Optionee may elect
to satisfy the obligation, in whole or in part, by electing to have withheld, from the shares of Common Stock required to be delivered
to the Optionee, shares of Common Stock having a value equal to the amount required to be withheld, or by delivering to the Company
or any Subsidiary other shares of Common Stock held by the Optionee. In no event will the Market Value per Share of the shares
of Common Stock to be withheld pursuant to this section to satisfy applicable withholding taxes in connection with the benefit
exceed the minimum amount of taxes required to be withheld or such other amount that will not result in a negative accounting impact.
The Optionee will also make such arrangements as the Company or any Subsidiary may require for the payment of any withholding tax
obligation that may arise in connection with the disposition of shares of Common Stock acquired upon the exercise of any portion
of the Option.


 


19.         Notices.   Any notice
provided for in this Agreement will be in writing and will be either personally delivered, sent by reputable overnight carrier
or mailed by first class mail, return receipt requested, and will be duly given when hand delivered or dispatched by electronic
facsimile transmission (with receipt thereof confirmed), or five (5) business days after having been mailed or three (3) business
days after having been sent by a nationally recognized overnight courier service such as Federal Express or UPS, addressed to the
Company (to the attention of the General Counsel of the Company) at its registered office and to the Optionee at the Optionee’s
principal residence, or to such other address as any party may have furnished to the other in writing and in accordance herewith,
except that notices of changes of address will be effective only upon receipt or such other address or to the attention of such
other person as the recipient party will have specified by prior written notice to the sending party. Any notice under this Agreement
will be deemed to have been given when so delivered.


 


20.         Compliance with Section 409A
of the Code.   To the extent applicable, it is intended that any amounts payable under this Agreement and the Plan and the
Company’s and the Optionee’s exercise of authority or discretion hereunder comply with the provisions of Section 409A
of the Code and the Treasury regulations relating thereto so as not to subject the Optionee to the payment of the additional tax,
interest and any tax penalty which may be imposed under Section 409A of the Code. In furtherance of this intent, to the extent
that any provision hereof would result in the Optionee being subject to payment of the additional tax, interest and tax penalty
under Section 409A of the Code, the parties agree to amend this Agreement in order to bring this Agreement into compliance with
Section 409A of the Code; and thereafter interpret its provisions in a manner that complies with Section 409A of the Code. Each
payment under this Agreement will be considered a separate payment and not one of a series of payments for purposes of Section
409A of the Code. Reference to Section 409A of the Code is to Section 409A of the Internal Revenue Code of 1986, as amended, and
will also include any proposed, temporary or final regulations, or any other guidance promulgated with respect to such Section
by the U.S. Department of the Treasury or the Internal Revenue Service. Notwithstanding the foregoing, no particular tax result
for the Optionee with respect to any income recognized by the Optionee in connection with this Agreement is guaranteed, and the
Optionee will be responsible for any taxes, penalties and interest


 




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imposed on the Optionee under or as a result
of Section 409A of the Code in connection with this Agreement.


 


21.         Acknowledgement.   The
Optionee acknowledges that the Optionee (a) has received a copy of the Plan, (b) has had an opportunity to review the terms
of this Agreement and the Plan, (c) understands the terms and conditions of this Agreement and the Plan and (d) agrees to such
terms and conditions.


 


22.         Counterparts.   This
Agreement may be executed in one or more counterparts, each of which will be deemed to be an original but all of which together
will constitute one and the same agreement.


 


[signature page follows]


 




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IN WITNESS WHEREOF, the Company has caused
this Agreement to be executed on its behalf by its duly authorized officer and the Optionee has executed this Agreement, as of
the day and year first above written.


 


	 	DIAMOND S SHIPPING GROUP, INC.
	 	 
	 	By:	 
	 	Name:
	 	Title:
	 	 
	 	 
	 	OPTIONEE
	 	Name:


 




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