Document:

Exhibit 10.2

 

REGISTRATION RIGHTS AGREEMENT

 

by and among

 

DIANA SHIPPING INC.

 

and

 

COROZAL COMPANIA NAVIERA S.A.

 

IRONWOOD TRADING CORP.

 

and

 

ZOE S. COMPANY LTD.

 

 

 

Dated as of             ,
2005

 

1

 

 

REGISTRATION
RIGHTS AGREEMENT dated as of              ,
2005, by and among DIANA SHIPPING INC., a Marshall Islands company (the “Company”),
COROZAL COMPANIA NAVIERA S.A., (a Panamanian corporation “Corozal”), IRONWOOD
TRADING CORP., (a Panamanian corporation (“Ironwood”) and ZOE S. COMPANY
LTD., a Bahamian Corporation (“Zoe” and, together with Corozal and
Ironwood, the “Stockholders”).

 

In
consideration of the mutual covenants and agreements herein contained and other
good and valid consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties to this Agreement hereby agree as follows:

 

1.                                      Certain
Definitions.

 

In
addition to the terms defined elsewhere in this Agreement, the following terms
shall have the following meanings:

 

1.1                                 “Affiliate”
of any Person means any other Person which directly or indirectly through one
or more intermediaries, controls, or is controlled by, or is under common
control with, such Person.  The term “control”
(including the terms “controlling,” “controlled by” and “under common control
with”) as used with respect to any Person means the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise.

 

1.2                                 “Agreement”
means this Registration Rights Agreement, including all amendments,
modifications and supplements and any exhibits or schedules to any of the
foregoing, and shall refer to this Registration Rights Agreement as the same
may be in effect at the time such reference becomes operative.

 

1.3                                 “Common
Stock” means common shares, par value $0.01 per share, of the Company and any
other shares into which such shares are converted pursuant to a
recapitalization or reorganization.

 

1.4                                 “Company”
has the meaning set forth in the introductory paragraph.

 

1.5                                 “Demand
Registration” has the meaning set forth in Section 2(a) hereof.

 

1.6                                 “Exchange
Act” means the Securities Exchange Act of 1934, as amended.

 

1.7                                 “Governmental
Entity” means any national, federal, state, municipal, local, territorial,
foreign or other government or any department, commission, board, bureau,
agency, regulatory authority or instrumentality thereof, or any court,
judicial, administrative or arbitral body or public or private tribunal.

 

1.8                                 “Holder”
means any holder of record of Registrable Common Shares and any transferees of
at least 50% of such Registrable Common Shares from such Holders.  For purposes of this Agreement, the Company
may deem and treat the registered holder of Registrable Common Shares as the
Holder and absolute owner thereof, and the Company shall not be affected by any
notice to the contrary.

 

1.9                                 “Initiating
Holders” has the meaning set forth in Section 2(a) hereof.

 

2

 

1.10                           “Person”
means any individual, sole proprietorship, partnership, limited liability
company, joint venture, trust, incorporated organization, association,
corporation, institution, public benefit corporation, Governmental Entity or
any other entity.

 

1.11                           “Piggyback
Registration” has the meaning set forth in Section 3(a) hereof.

 

1.12                           “Prospectus”
means the prospectus or prospectuses included in any Registration Statement, as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Common Shares covered by such
Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated
by reference in such prospectus or prospectuses.

 

1.13                           “Qualifying
IPO” means the sale in an underwritten initial public offering registered under
the Securities Act of shares of common equity securities of the Company.

 

1.14                           “Registrable
Common Shares” means the Common Shares held by the Stockholders or affiliates
of the Stockholders as of the date of the Qualifying IPO, provided however,
Registrable Common Shares shall not include any securities sold by a Person to
the public either pursuant to a Registration Statement or Rule 144.

 

1.15                           “Registration
Expenses” has the meaning set forth in Section 7(a) hereof.

 

1.16                           “Registration
Statement” means any registration statement of the Company which covers any of
the Registrable Common Shares pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such Registration
Statement, including post-effective amendments, all exhibits and all materials
incorporated by reference in such Registration Statement.

 

1.17                           “SEC”
means the Securities and Exchange Commission.

 

1.18                           “Securities
Act” means the Securities Act of 1933, as amended.

 

1.19                           “Stockholders”
has the meaning set forth in the introductory paragraph.

 

1.20                           “Suspension
Notice” has the meaning set forth in Section 6(l) hereof.

 

1.21                           “Underwritten
registration or underwritten offering” means a registration in which securities
of the Company are sold to underwriters for reoffering to the public.

 

1.22                           “Withdrawn
Demand Registration” has the meaning set forth in Section 2(g) hereof.

 

2.                                      Demand
Registrations.

 

(a)                                  Right
to Request Registration.  At any time
commencing 180 days following the closing of a Qualifying IPO, any Holder or
Holders may request registration under the Securities Act (“Initiating
Holders”) of all or part of the Registrable Common Shares (“Demand
Registration”); provided, that each Demand Registration be at least equal
to 10% of the Company’s outstanding common shares immediately following the
closing of such Qualifying IPO.

 

Within
10 days after receipt of any such request for Demand Registration, the Company
shall give written notice of such request to all other Holders of Registrable
Common Shares and shall, subject to the provisions of Section 2(d) hereof,
include in such registration all

 

3

 

such Registrable Common
Shares with respect to which the Company has received written requests for
inclusion therein within 15 days after the receipt of the Company’s notice.

 

(b)                                 Number
of Demand Registrations.  Subject to
the provisions of Section 2(a), the Initiating Holders of Registrable
Common Shares shall collectively be entitled to request an aggregate of three
(3) Demand Registrations.  A registration
shall not count as one of the permitted Demand Registrations (i) until it has
become effective, (ii) if the Initiating Holders requesting such registration
are not able to have registered and sold at least 50% of the Registrable Common
Shares requested by such Initiating Holders to be included in such registration
or (iii) in the case of a Demand Registration that would be the last permitted
Demand Registration requested hereunder, if the Initiating Holders requesting
such registration are not able to have registered and sold all of the
Registrable Common Shares requested to be included by such Initiating Holders
in such registration.

 

(c)                                  Priority
on Demand Registrations.  Except as
provided in Section 2(g), the Company shall not include in any Demand
Registration any securities which are not Registrable Common Shares without the
written consent of the Holders of a majority of the Registrable Common Shares
to be included in such registration, or, if such Demand Registration is an
underwritten offering, without the written consent of the managing underwriters.  If the managing underwriters of the requested
Demand Registration advise the Company in writing that in their opinion the
number of shares of Registrable Common Shares proposed to be included in any
such registration exceeds the number of securities which can be sold in such
offering without having an adverse affect on such offering, including the price
at which such Registrable Common Shares can be sold, the Company shall include
in such registration only the number of shares of Registrable Common Shares
which in the opinion of such managing underwriters can be sold without having
the adverse effect referred to above.  If
the number of shares which can be sold without having the adverse effect
referred to above is less than the number of shares of Registrable Common
Shares proposed to be registered, the amount of Registrable Common Shares to be
so sold shall be allocated pro rata among the Holders of Registrable Common
Shares desiring to participate in such registration on the basis of the amount
of such Registrable Common Shares initially proposed to be registered by such
Holders. If the number of shares which can be sold exceeds the number of shares
of Registrable Common Shares proposed to be sold, such excess shall be
allocated pro rata among the other holders of securities, if any, desiring to
participate in such registration based on the amount of such securities
initially requested to be registered by such holders or as such holders may
otherwise agree.

 

(d)                                 Restrictions
on Demand Registrations.  The Company
shall not be obligated to effect any Demand Registration within three months
after the termination of an offering under a previous Demand Registration or a
previous registration under which the Initiating Holder had piggyback rights
pursuant to Section 4 hereof where the Initiating Holder was permitted to
register and sell 50% of the Registrable Common Shares requested to be included
therein.  The Company may postpone for up
to ninety (90) days the filing or the effectiveness of a Registration Statement
for a Demand Registration if, based on the good faith judgment of the Company’s
board of directors, such postponement or withdrawal is necessary in order to
avoid premature disclosure of a matter the board has determined would not be in
the best interest of the Company to be disclosed at such time; provided, that
in no event shall the Company withdraw a Registration Statement after such
Registration Statement has been declared effective; and provided, further,
however, that in the event described above, the Initiating Holders requesting
such Demand Registration shall be entitled to withdraw such request and, if
such request is withdrawn, such Demand Registration shall not count as one of
the permitted Demand Registrations.  The
Company shall provide written notice to the Initiating Holders requesting such
Demand Registration of (i) any postponement or withdrawal of the filing or
effectiveness of a

 

4

 

Registration Statement
pursuant to this Section 2(d), (ii) the Company’s decision to file or seek
effectiveness of such Registration Statement following such withdrawal or
postponement and (iii) the effectiveness of such Registration Statement.  The Company may defer the filing of a particular
Registration Statement pursuant to this Section 2(d) only once during any
twelve-month period.

 

(e)                                  Selection
of Underwriters.  If any of the
Registrable Common Shares covered by a Demand Registration are to be sold in an
underwritten offering, the Initiating Holders shall have the right to select
the managing underwriter(s) to administer the offering subject to the approval
of the Company, which will not be unreasonably withheld.

 

(f)                                    Effective
Period of Demand Registrations. 
After any Demand Registration filed pursuant to this Agreement has
become effective, the Company shall use its best efforts to keep such Demand
Registration effective for a period equal to 180 days from the date on which
the SEC declares such Demand Registration effective (or if such Demand Registration
is not effective during any period within such 180 days, such 180-day period
shall be extended by the number of days during such period when such Demand
Registration is not effective), or such shorter period which shall terminate
when all of the Registrable Common Shares covered by such Demand Registration
have been sold pursuant to such Demand Registration.  If the Company shall withdraw any Demand
Registration pursuant to Section 2(d) (a “Withdrawn Demand Registration”),
the Initiating Holders of the Registrable Common Shares remaining unsold and
originally covered by such Withdrawn Demand Registration shall be entitled to a
replacement Demand Registration which (subject to the provisions of this Section 2)
the Company shall use its best efforts to keep effective for a period
commencing on the effective date of such Demand Registration and ending on the
earlier to occur of the date (i) which is 180 days from the effective date of
such Demand Registration and (ii) on which all of the Registrable Common Shares
covered by such Demand Registration have been sold.  Such additional Demand Registration otherwise
shall be subject to all of the provisions of this Agreement.

 

3.                                      Shelf
Registration.

 

(a)                                  (i)
At such time as the Company is able to use Form F-3 under the Securities Act
(or any successor form) for sales of Registrable Common Shares by a Holder, at
the request of Holders of the lesser of (x) 5% of the Registrable Common Shares
(without reduction for Common Shares that cease to be Registrable Common Shares)
and (y) Registrable Common Shares having an aggregate market value of at least
$25 million, the Company shall use its commercially reasonable efforts to
effect, as expeditiously as possible, the registration under the Securities Act
of any number of Registrable Common Shares for which it receives requests in
accordance with Section 3(a) (the “Shelf Registration”). The
Company shall use its commercially reasonable best efforts to cause such
Registration Statement to become effective as promptly as practicable and
maintain the effectiveness of such Registration Statement (subject to the terms
and conditions herein) for a period ending on the earlier of (i) two years
following the date on which such Registration Statement first becomes effective
(but one year if the Company is not able to use Form F-3 under the Securities
Act (or any successor form)), and (ii) the date on which all Registrable Common
Shares covered by such Registration Statement have been sold and the
distribution contemplated thereby has been completed or have become freely
tradeable pursuant to Rule 144 without regard to volume.

 

(b)                                 The
Shelf Registration Statement pursuant to this Section 3 shall to the
extent possible under applicable law, be effected to permit sales on a
continuous basis pursuant to Rule 415 under the Securities Act. Any takedown
under the Shelf Registration pursuant to this Section 3 may or may not be
underwritten; provided that (i) Holders may request any underwritten takedown
only to be effected as a Demand Registration (in which event, unless such
Demand

 

5

 

Registration would not
require representatives of the Company to meet with prospective purchasers of
the Company’s securities, a Demand Registration must be available thereunder
and the number of Demand Registrations available shall be reduced by one
subject Section 2(b)) or (ii) Holders may request an unlimited number of
underwritten takedowns to be effected in accordance with the terms of Section 4.
The Company shall be entitled to effect the Shelf Registration on any available
form under the Securities Act.

 

(c)                                  In
the event of a request for a Shelf Registration pursuant to Section 3(a),
the Company shall give written notice of the proposed filing of the Registration
Statement in connection therewith to all Holders of Registrable Common Shares
offering to each such Holder the opportunity to have any or all of the
Registrable Common Shares held by such Holder included in such registration
statement. Each Holder of Registrable Common Shares desiring to have its
Registrable Common Shares registered under this Section 3(c) shall so
advise the Company in writing within 15 days after the date of such notice from
the Company (which request shall set forth the amount of Registrable Common
Shares for which registration is requested), and the Company shall include in
such Registration Statement all such Registrable Common Shares so requested to
be included therein.

 

(d)                                 The
number, percentage, fraction or kind of shares referred to in this Section 4
shall be appropriately adjusted for any stock dividend, stock split, reverse
stock split, combination, recapitalization, reclassification, merger or
consolidation, exchange or distribution in respect of the shares of Common
Stock.

 

(e)                                  (e)
The Company, and any other holder of the Company’s securities who has
registration rights, may include its securities in any Shelf Registration
effected pursuant to this Section 3.

 

4.                                      Piggyback
Registrations.

 

(a)                                  Right
to Piggyback.  If at any time
commencing 180 days following the closing of a Qualifying IPO the Company
proposes to register any of its common equity securities under the Securities
Act (other than a registration statement on Form S-8 or on Form F-4 or any
similar successor forms thereto), whether for its own account or for the
account of one or more stockholders of the Company, and the registration form
to be used may be used for any registration of Registrable Common Shares (a “Piggyback
Registration”), the Company shall give prompt written notice (in any event
within 20 days after its receipt of notice of any exercise of other demand
registration rights) to all Holders of its intention to effect such a
registration and, subject to Sections 4(b) and 4(c), shall include in such registration
all Registrable Common Shares with respect to which the Company has received
written requests for inclusion therein within 15 days after the effectiveness
of the Company’s notice.  The Company may
postpone or withdraw the filing or the effectiveness of a Piggyback
Registration at any time in its sole discretion.

 

(b)                                 Priority
on Primary Registrations.  If a
Piggyback Registration is an underwritten primary registration on behalf of the
Company, and the managing underwriters advise the Company in writing that in
their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering without
having an adverse effect on such offering, the Company shall include in such
registration (i) first, the securities the Company proposes to sell, (ii)
second, the Registrable Common Shares requested to be included therein by the
Holders, pro rata among the Holders of such Registrable Common Shares on the
basis of the number of shares requested to be registered by such Holders, and
(iii) third, other securities requested to be included in such registration pro
rata among the holders of such

 

6

 

securities on the basis
of the number of shares requested to be registered by such holders or as such
holders may otherwise agree.

 

(c)                                  Priority
on Secondary Registrations.  If a
Piggyback Registration is an underwritten secondary registration on behalf of a
holder of the Company’s securities other than Registrable Common Shares, and
the managing underwriters advise the Company in writing that in their opinion
the number of securities requested to be included in such registration exceeds
the number which can be sold in such offering without having an adverse effect
on such offering, the Company shall include in such registration (i) first the
securities requested to be included therein by the holders requesting such
registration and the Registrable Common Shares requested to be included in such
registration, pro rata among the holders of such securities on the basis of the
number of shares requested to be registered by such holders, and (ii) second,
other securities requested to be included in such registration pro rata among
the holders of such securities on the basis of the number of shares requested
to be registered by such holders or as such holders may otherwise agree.

 

(d)                                 Selection
of Underwriters.  If any Piggyback
Registration is an underwritten primary offering, the Company shall have the
right to select the managing underwriter or underwriters to administer any such
offering.

 

(e)                                  Other
Registrations.  If the Company has
previously filed a Registration Statement with respect to Registrable Common
Shares, and if such previous registration has not been withdrawn or abandoned,
the Company shall not be obligated to cause to become effective any other
registration of any of its securities under the Securities Act, whether on its
own behalf or at the request of any holder or holders of such securities, until
a period of at least ninety (90) days has elapsed from the termination of the
offering under the previous registration.

 

5.                                      Holdback
Agreements.

 

The
Company agrees not to effect any sale or distribution of any of its equity
securities during the 10 days prior to and during the 180 days beginning on the
effective date of any underwritten Demand Registration or any underwritten
Piggyback Registration (except as part of such underwritten registration or
pursuant to registrations on Form S-8 or F-4 or any successor forms thereto)
unless the underwriters managing the offering otherwise agree to a shorter
period.

 

6.                                      Registration
Procedures.

 

(a)                                  Whenever
the Holders request that any Registrable Common Shares be registered pursuant
to this Agreement, the Company shall use its best efforts to effect the
registration and the sale of such Registrable Common Shares in accordance with
the intended methods of disposition thereof, and pursuant thereto the Company
shall as expeditiously as possible:

 

(i)             prepare
and file with the SEC a Registration Statement with respect to such Registrable
Common Shares and use its best efforts to cause such Registration Statement to
become effective as soon as practicable thereafter; and before filing a
Registration Statement or Prospectus or any amendments or supplements thereto,
furnish to the Holders of Registrable Common Shares covered by such
Registration Statement and the underwriter or underwriters, if any, copies of
all such documents proposed to be filed, including documents incorporated by
reference in the Prospectus and, if requested by such Holders, the exhibits
incorporated by reference, and such Holders shall have the opportunity to
object to any information pertaining to such Holders that is contained therein
and the Company will make the corrections reasonably requested by such Holders
with

 

7

 

respect
to such information prior to filing any Registration Statement or amendment
thereto or any Prospectus or any supplement thereto;

 

(ii) prepare
and file with the SEC such amendments and supplements to such Registration
Statement and the Prospectus used in connection therewith as may be necessary
to keep such Registration Statement effective for a period of not less than 180
days, in the case of a Demand Registration or such shorter period as is
necessary to complete the distribution of the securities covered by such
Registration Statement and comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such Registration
Statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such Registration Statement;

 

(iii)
furnish to each seller of Registrable Common Shares such number of copies of
such Registration Statement, each amendment and supplement thereto, the
Prospectus included in such Registration Statement (including each preliminary
Prospectus) and such other documents as such seller may reasonably request in
order to facilitate the disposition of the Registrable Common Shares owned by
such seller;

 

(iv)
use its best efforts to register or qualify such Registrable Common Shares
under such other securities or blue sky laws of such jurisdictions as any
seller reasonably requests and do any and all other acts and things which may
be reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Common Shares owned by
such seller (provided, that the Company will not be required to (1) qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this subparagraph 6.(a)(iv), (2) subject itself to
taxation in any such jurisdiction, or (3) consent to general service of process
in any such jurisdiction);

 

(v)
notify each seller of such Registrable Common Shares, at any time when a
Prospectus relating thereto is required to be delivered under the Securities
Act, of the occurrence of any event as a result of which the Prospectus included
in such Registration Statement contains an untrue statement of a material fact
or omits any fact necessary to make the statements therein not misleading, and,
at the request of any such seller, the Company shall prepare a supplement or
amendment to such Prospectus so that, as thereafter delivered to the purchasers
of such Registrable Common Shares, such Prospectus shall not contain an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein not misleading;

 

(vi)
in the case of an underwritten offering, enter into such customary agreements
(including underwriting agreements in customary form with customary
indemnification provisions) and take all such other actions as the Holders of a
majority of the Registrable Common Shares being sold or the underwriters
reasonably request in order to expedite or facilitate the disposition of such
Registrable Common Shares (including, without limitation, making members of
senior management of the Company available to participate in, and cause them to
cooperate with the underwriters in connection with, “road-show” and other
customary marketing activities (including one-on-one meetings with prospective
purchasers of the Registrable Common Shares)) and cause to be delivered to the
underwriters and the sellers, if any, opinions of counsel to the Company in

 

8

 

customary
form, covering such matters as are customarily covered by opinions for an
underwritten public offering as the underwriters may request and addressed to
the underwriters and the sellers;

 

(vii)
make available, for inspection by any seller of Registrable Common Shares, any
underwriter participating in any disposition pursuant to such Registration
Statement, and any attorney, accountant or other agent retained by any such
seller or underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company’s officers,
directors, employees and independent accountants to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant or
agent in connection with such Registration Statement;

 

(viii)
use its best efforts to cause all such Registrable Common Shares to be listed
on each securities exchange on which securities of the same class issued by the
Company are then listed;

 

(ix)
if requested, cause to be delivered, immediately prior to the effectiveness of
the Registration Statement (and, in the case of an underwritten offering, at
the time of delivery of any Registrable Common Shares sold pursuant thereto),
letters from the Company’s independent certified public accountants addressed
to each selling Holder (unless such selling Holder does not provide to such
accountants the appropriate representation letter required by rules governing
the accounting profession) and each underwriter, if any, stating that such
accountants are independent public accountants within the meaning of the
Securities Act and the applicable rules and regulations adopted by the SEC
thereunder, and otherwise in customary form and covering such financial and
accounting matters as are customarily covered by letters of the independent
certified public accountants delivered in connection with primary or secondary
underwritten public offerings, as the case may be;

 

(x)
make generally available to its stockholders a consolidated earnings statement
(which need not be audited) for the 12 months beginning after the effective
date of a Registration Statement as soon as reasonably practicable after the
end of such period, which earnings statement shall satisfy the requirements of
an earning statement under Section 11(a) of the Securities Act; and

 

(xi)
promptly notify each seller of Registrable Common Shares and the underwriter or
underwriters, if any:

 

(A)  when the
Registration Statement, any pre-effective amendment, the Prospectus or any
Prospectus supplement or post-effective amendment to the Registration Statement
has been filed and, with respect to the Registration Statement or any
post-effective amendment, when the same has become effective;

 

(B)   of any comments of
the SEC or of any written request by the SEC for amendments or supplements to
the Registration Statement or Prospectus;

 

(C)   of the
notification to the Company by the SEC of its initiation of any proceeding with
respect to the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement; and

 

9

 

(D)  of the receipt by
the Company of any notification with respect to the suspension of the
qualification of any Registrable Common Shares for sale under the applicable
securities or blue sky laws of any jurisdiction.

 

(b)                                 The
Company shall ensure that no Registration Statement (including any amendments
or supplements thereto and Prospectuses contained therein) shall contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein, or necessary to make the statements therein not misleading
(except, with respect to any Holder, for an untrue statement or alleged untrue
statement of a material fact or omission or alleged omission of a material fact
made in reliance on and in conformity with written information furnished to the
Company by or on behalf of such Holder specifically for use therein).

 

(c)                                  The
Company shall make available to each Holder whose Registrable Common Shares are
included in a Registration Statement (i) promptly after the same is prepared
and publicly distributed, filed with the SEC, or received by the Company, one
copy of each Registration Statement and any amendment thereto, each preliminary
Prospectus and Prospectus and each amendment or supplement thereto, each letter
written by or on behalf of the Company to the SEC or the staff of the SEC (or
other governmental agency or self-regulatory body or other body having
jurisdiction, including any domestic or foreign securities exchange), and each
item of correspondence from the SEC or the staff of the SEC (or other
governmental agency or self-regulatory body or other body having jurisdiction,
including any domestic or foreign securities exchange), in each case relating
to such Registration Statement (other than any portion thereof which contains
information for which the Company has sought confidential treatment), and (ii)
such number of copies of a Prospectus, including a preliminary Prospectus, and
all amendments and supplements thereto and such other documents as such Holder
may reasonably request in order to facilitate the disposition of the
Registrable Common Shares owned by such Holder. 
The Company will promptly notify each Holder by facsimile of the
effectiveness of each Registration Statement or any post-effective amendment.  The Company will promptly respond to any and
all comments received from the SEC, with a view towards causing each
Registration Statement or any amendment thereto to be declared effective by the
SEC as soon as practicable and shall file an acceleration request as soon as
practicable following the resolution or clearance of all SEC comments or, if
applicable, following notification by the SEC that any such Registration
Statement or any amendment thereto will not be subject to review.

 

(d)                                 At
all times after the Company has filed a registration statement with the SEC
pursuant to the requirements of either the Securities Act or the Exchange Act,
the Company shall file all reports required to be filed by it under the
Securities Act and the Exchange Act and the rules and regulations adopted by
the SEC thereunder, and take such further action as any Holders may reasonably
request, all to the extent required to enable such Holders to be eligible to
sell Registrable Common Shares pursuant to Rule 144 (or any similar rule then
in effect).

 

(e)                                  the
Company may require each seller of Registrable Common Shares as to which any
registration is being effected to furnish to the Company any other information
regarding such seller and the distribution of such securities as the Company
may from time to time reasonably request in writing.

 

(f)                                    Each
seller of Registrable Common Shares agrees by having its shares treated as
Registrable Common Shares hereunder that, upon notice of the happening of any
event as a result of which the Prospectus included in such Registration
Statement contains an untrue statement of a material fact or omits any material
fact necessary to make the statements therein not misleading (a “Suspension
Notice”), such seller will forthwith discontinue disposition of Registrable
Common Shares for a reasonable length of time not to exceed 60 days until such
seller is advised

 

10

 

in writing by the Company
that the use of the Prospectus may be resumed and is furnished with a
supplemented or amended Prospectus as contemplated by Section 6(c) hereof,
and, if so directed by the Company, such seller will deliver to the Company (at
the Company’s expense) all copies, other than permanent file copies then in
such seller’s possession, of the Prospectus covering such Registrable Common
Shares current at the time of receipt of such notice; provided, however, that
such postponement of sales of Registrable Common Shares by the Holders shall
not exceed ninety (90) days in the aggregate in any one year.  If the Company shall give any notice to
suspend the disposition of Registrable Common Shares pursuant to a Prospectus,
the Company shall extend the period of time during which the Company is
required to maintain the Registration Statement effective pursuant to this
Agreement by the number of days during the period from and including the date
of the giving of such notice to and including the date such seller either is
advised by the Company that the use of the Prospectus may be resumed or
receives the copies of the supplemented or amended Prospectus contemplated by Section 6(e).  In any event, the Company shall not be
entitled to deliver more than three (3) Suspension Notices in any one year.

 

7.                                      Registration
Expenses.

 

(a)                                  All
expenses incident to the Company’s performance of or compliance with this
Agreement, including, without limitation, all registration and filing fees,
fees and expenses of compliance with securities or blue sky laws, listing
application fees, printing expenses, transfer agent’s and registrar’s fees,
cost of distributing Prospectuses in preliminary and final form as well as any
supplements thereto, and fees and disbursements of counsel for the Company and
all independent certified public accountants and other Persons retained by the
Company (all such expenses being herein called “Registration Expenses”)
(but not including any underwriting discounts or commissions attributable to
the sale of Registrable Common Shares or fees and expenses of more than one
counsel representing the Holders of Registrable Common Shares), shall be borne
by the Company.  In addition, the Company
shall pay its internal expenses (including, without limitation, all salaries
and expenses of its officers and employees performing legal or accounting
duties), the expense of any annual audit or quarterly review, the expense of
any liability insurance and the expenses and fees for listing the securities to
be registered on each securities exchange on which they are to be listed.

 

(b)                                 In
connection with each registration initiated hereunder (whether a Demand
Registration or a Piggyback Registration), the Company shall reimburse the
Holders covered by such registration or sale for the reasonable fees and
disbursements of one law firm chosen by the Holders of a majority of the
Registrable Common Shares included in such registration or sale.

 

(c)                                  The
obligation of the Company to bear the expenses described in Section 7(a)
and to reimburse the Holders for the expenses described in Section 7(b)
shall apply irrespective of whether a registration, once properly demanded, if
applicable, becomes effective, is withdrawn or suspended, is converted to
another form of registration and irrespective of when any of the foregoing
shall occur; provided, however, that Registration Expenses for any Registration
Statement withdrawn solely at the request of a Holder of Registrable Common
Shares (unless withdrawn following postponement of filing by the Company in
accordance with Section 2(d)(i) or (ii)) or any supplements or amendments
to a Registration Statement or Prospectus resulting from a misstatement
furnished to the Company by a Holder shall be borne by such Holder.

 

8.                                      Indemnification.

 

(a)                                  The
Company shall indemnify, to the fullest extent permitted by law, each Holder,
its officers, directors and Affiliates and each Person who controls such Holder
(within the meaning of the Securities Act) against all losses, claims, damages,
liabilities and expenses arising out of or based upon any untrue or alleged
untrue statement of material fact contained in any

 

11

 

Registration Statement,
Prospectus or preliminary Prospectus or any amendment thereof or supplement
thereto or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading or
any violation or alleged violation by the Company of the Securities Act, the
Exchange Act or applicable “blue sky” laws, except insofar as the same are made
in reliance and in conformity with information relating to such Holder
furnished in writing to the Company by such Holder expressly for use therein or
caused by such Holder’s failure to deliver to such Holder’s immediate purchaser
a copy of the Registration Statement or Prospectus or any amendments or
supplements thereto (if the same was required by applicable law to be so
delivered).  In connection with an
underwritten offering, the Company shall indemnify such underwriters, their
officers and directors and each Person who controls such underwriters (within
the meaning of the Securities Act) to the same extent as provided above with
respect to the indemnification of the Holders.

 

(b)                                 In
connection with any Registration Statement in which a Holder of Registrable
Common Shares is participating, each such Holder shall furnish to the Company
in writing such information and affidavits as the Company reasonably requests
for use in connection with any such Registration Statement or Prospectus and,
shall indemnify, to the fullest extent permitted by law, the Company, its
officers, directors Affiliates, and each Person who controls the Company
(within the meaning of the Securities Act) against all losses, claims, damages,
liabilities and expenses arising out of or based upon any untrue or alleged
untrue statement of material fact contained in the Registration Statement,
Prospectus or preliminary Prospectus or any amendment thereof or supplement
thereto or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading, but
only to the extent that the same are made in reliance and in conformity with
information relating to such Holder furnished in writing to the Company by such
Holder expressly for use therein or caused by such Holder’s failure to deliver
to such Holder’s immediate purchaser a copy of the Registration Statement or
Prospectus or any amendments or supplements thereto (if the same was required
by applicable law to be so delivered) after the Company has furnished such
Holder with a sufficient number of copies of the same; provided, however, that
the obligation to indemnify shall be several, not joint and several, among such
Holders and the liability of each such Holder shall be in proportion to and
limited to the net amount received by such Holder from the sale of Registrable
Common Shares pursuant to such Registration Statement.

 

(c)                                  Any
Person entitled to indemnification hereunder shall (i) give prompt written
notice to the indemnifying party of any claim with respect to which it seeks
indemnification, provided that the failure to notify the indemnifying party
shall not relieve the indemnifying party from any liability that it may have
under this Section 8 except to the extent that it has been materially
prejudiced (through the forfeiture of substantive rights or defenses) by such
failure; and provided, further, that the failure to notify the indemnifying
party shall not relieve the indemnifying party from any liability that it may
have to an indemnified party otherwise than under this Section 8 and (ii)
unless in such indemnified party’s reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist with respect to
such claim, permit such indemnifying party to assume the defense of such claim
with counsel reasonably satisfactory to the indemnified party.  If such defense is assumed, the indemnifying
party shall not be subject to any liability for any settlement made by the
indemnified party without its consent (but such consent will not be
unreasonably withheld).  An indemnifying
party who is not entitled to, or elects not to, assume the defense of a claim
shall not be obligated to pay the fees and expenses of more than one counsel
for all parties indemnified by such indemnifying party with respect to such
claim, unless in the reasonable judgment of any indemnified party there may be
one or more legal or equitable defenses available to such indemnified party
which are in addition to or may conflict with those available to another
indemnified party with respect to such claim.

 

12

 

Failure to give prompt
written notice shall not release the indemnifying party from its obligations
hereunder.

 

(d)                                 The
indemnification provided for under this Agreement shall remain in full force
and effect regardless of any investigation made by or on behalf of the
indemnified party or any officer, director or controlling Person of such
indemnified party and shall survive the transfer of securities.

 

(e)                                  If
the indemnification provided for in or pursuant to this Section 8 is due
in accordance with the terms hereof, but is held by a court to be unavailable
or unenforceable in respect of any losses, claims, damages, liabilities or
expenses referred to herein, then each applicable indemnifying party, in lieu
of indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified Person as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the statements or omissions which result
in such losses, claims, damages, liabilities or expenses as well as any other
relevant equitable considerations.  The
relative fault of the indemnifying party on the one hand and of the indemnified
Person on the other shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party, and by such
party’s relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. 
In no event shall the liability of any selling Holder be greater in
amount than the amount of net proceeds received by such Holder upon such sale
or the amount for which such indemnifying party would have been obligated to
pay by way of indemnification if the indemnification provided for under Section 8(a)
or 8(b) hereof had been available under the circumstances.

 

9.                                      Participation
in Underwritten Registrations.

 

No
Person may participate in any registration hereunder which is underwritten
unless such Person (a) agrees to sell such Person’s securities on the basis
provided in any underwriting arrangements approved by the Person or Persons
entitled hereunder to approve such arrangements and (b) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements
and other documents required under the terms of such underwriting arrangements.

 

10.                               Rule
144.

 

The
Company covenants that it will file the reports required to be filed by it
under the Securities Act and the Exchange Act and the rules and regulations
adopted by the SEC thereunder, and it will take such further action as any
Holder may reasonably request to make available adequate current public
information with respect to the Company meeting the current public information
requirements of Rule 144(c) under the Securities Act, to the extent required to
enable such Holder to sell Registrable Common Shares without registration under
the Securities Act within the limitation of the exemptions provided by (i) Rule
144 under the Securities Act, as such Rule may be amended from time to time, or
(ii) any similar rule or regulation hereafter adopted by the SEC.  Upon the request of any Holder, the Company
will deliver to such Holder a written statement as to whether it has complied
with such information and requirements.

 

11.                               Miscellaneous.

 

(a)                                  Notices.  All notices, requests, consents and other
communications required or permitted hereunder shall be in writing and shall be
hand delivered or mailed postage prepaid by

 

13

 

registered or certified
mail or by facsimile transmission (with immediate telephone confirmation
thereafter),

 

If to
the Company:

Diana
Shipping Inc.

16,
Pendelis Street

Palaio
Faliro

175 64
Athens, Greece

 

with a
copy to:

Seward
& Kissel LLP

One
Battery Park Plaza

New
York, New York 10004

Attention:  Gary J. Wolfe, Esq.

Facsimile
No.:  (212) 480-8421

 

If to
the Stockholder:

 

 

Attention:

Facsimile
No.:

 

or if to another Holder,
to the addresses set forth on the counterpart signature pages of this Agreement
signed by such Holders.

 

If to a transferee
Holder, to the address of such Holder set forth in the transfer documentation
provided to the Company or at such other address as such party each may specify
by written notice to the others, and each such notice, request, consent and
other communication shall for all purposes of the Agreement be treated as being
effective or having been given when delivered personally or upon receipt of
facsimile confirmation if transmitted by facsimile, or, if sent by mail, at the
time of its receipt.

 

(b)                                 No
Waivers.  No failure or delay by any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.  The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or remedies
provided by law.

 

(c)                                  Successors
and Assigns.  The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, it being understood that
subsequent Holders of the Registrable Common Shares are intended third party
beneficiaries of this Agreement.

 

(d)                                 Governing
Law.  The laws of the State of New
York shall govern the enforceability and validity of this Agreement, the
construction of its terms and the interpretation of the rights and duties of
the parties, without regard to the principles of conflicts of laws thereof.

 

(e)                                  Jurisdiction.  Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby may be
brought in any federal or state court located in the County and State

 

14

 

of New York, and each of
the parties hereby consents to the jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court or that any such suit, action or
proceeding which is brought in any such court has been brought in an
inconvenient forum.  Process in any such
suit, action or proceeding may be served on any party anywhere in the world,
whether within or without the jurisdiction of any such court.  Without limiting the foregoing, each party
agrees that service of process on such party as provided in Section 10(a)
shall be deemed effective service of process on such party.

 

(f)                                    Waiver
of Jury Trial.  EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

 

(g)                                 Counterparts;
Effectiveness.  This Agreement may be
executed in any number of counterparts (including by facsimile) and by
different parties hereto in separate counterparts, with the same effect as if
all parties had signed the same document. 
All such counterparts shall be deemed an original, shall be construed
together and shall constitute one and the same instrument.  This Agreement shall become effective when
each party hereto shall have received counterparts hereof signed by all of the
other parties hereto.

 

(h)                                 Entire
Agreement.  This Agreement contains
the entire agreement among the parties hereto with respect to the subject
matter hereof and supersedes and replaces all other prior agreements, written
or oral, among the parties hereto with respect to the subject matter hereof.

 

(i)                                     Captions.  The headings and other captions in this
Agreement are for convenience and reference only and shall not be used in
interpreting, construing or enforcing any provision of this Agreement.

 

(j)                                     Severability.  If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party.  Upon such a determination, the parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner in order
that the transactions contemplated hereby be consummated as originally
contemplated to the fullest extent possible.

 

(k)                                  Amendments.  The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given without the prior written consent of the Holders of a majority of the
Registrable Common Shares (as constituted on the date hereof); provided,
however, that without a Holder’s written consent no such amendment,
modification, supplement or waiver shall affect adversely such Holder’s rights
hereunder in a discriminatory manner inconsistent with its adverse effects on
rights of other Holders hereunder (other than as reflected by the different
number of shares held by such Holder); provided, further, that the consent or
agreement of the Company shall be required with regard to any termination, amendment,
modification or supplement of, or waivers or consents to departures from, the
terms hereof, which affect the Company’s obligations hereunder.  This Agreement cannot be changed, modified,
discharged or terminated by oral agreement.

 

15

 

(l)                                     Aggregation
of Shares.  All Registrable Common
Shares held by or acquired by any Affiliated Persons will be aggregated
together for the purpose of determining the availability of any rights under
this Agreement.

 

(m)                               Equitable
Relief.  Without limiting the
remedies available, the parties hereto acknowledge that any failure by the
Company to comply with its obligations under this Agreement will result in
material irreparable injury to the Holders for which there is no adequate
remedy at law, that it will not be possible to measure damages for such
injuries precisely and that, in the event of any such failure, any Holder shall
have the right to obtain such relief as may be required to specifically enforce
the Company’s obligations under this Agreement.

 

IN
WITNESS WHEREOF, this Registration Rights Agreement has been duly executed by
each of the parties hereto as of the date first written above.

 

 

	
   

  	
  COROZAL COMPANIA
  NAVIERA S.A.

  
	
  DIANA SHIPPING
  INC.

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
   

  	
   

  
	
  By: 

  	
   

  	
   

  	
  Name:

  
	
  Name:

  	
  Title:

  
	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  IRONWOOD TRADING
  CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ZOE S. COMPANY
  LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
						

 

16EXHIBIT 10.3

 

DIANA
SHIPPING INC.

2005 STOCK INCENTIVE PLAN

 

ARTICLE I.

General

 

1.1.                              Purpose

 

The Diana Shipping Inc. 2005 Stock Incentive Plan (the
“Plan”) is designed to provide certain key persons, on whose initiative and
efforts the successful conduct of the business of Diana Shipping Inc. (the “Company”)
depends, with incentives to: (a) enter into and remain in the service of the
Company (b) acquire a proprietary interest in the success of the Company, (c)
maximize their performance and (d) enhance the long-term performance of the
Company.

 

1.2.                              Administration

 

(a)                                  Administration
by Board of Directors.  The Plan shall be
administered by the Company’s Board of Directors (the “Administrator”).  The
Administrator shall have the authority
(i) to exercise all of the powers granted to it under the Plan, (ii) to
construe, interpret and implement the Plan and any Award Agreements executed
pursuant to Section 2.1 in its sole discretion with all such determination
being final, binding and conclusive, (iii) to prescribe, amend and rescind
rules and regulations relating to the
Plan, including rules governing its own operations, (iv) to make all determinations necessary or
advisable in administering the Plan, and (v) to correct any defect, supply any
omission and reconcile any inconsistency in the Plan.

 

(b)                                 Administrator
Action.  Actions of the Administrator shall be taken by the vote of a
majority of its members.  Any action may
be taken by a written instrument signed by a majority of the Administrator
members, and action so taken shall be fully as effective as if it had been
taken by a vote at a meeting.  Except to
the extent prohibited by applicable law or the applicable rules of a stock
exchange, the Administrator may allocate all or any portion of its responsibilities
and powers to any one or more of its members and may delegate all or any part of its responsibilities to any
person or persons selected by it, and may revoke any such allocation or
delegation at any time.

 

1.3.                              Persons
Eligible for Awards

 

The persons eligible to receive awards under the Plan
are those officers, directors, and executive,
managerial, administrative and professional employees of the Company, (collectively, “key persons”) as the Administrator
in its sole discretion shall select, taking into account the duties of
the respective employees, their present and potential contributions to the
success of the Company, and such other factors as the Administrator shall deem
relevant in connection with accomplishing the purpose of the Plan.  The Administrator may from time to time, in
its sole discretion, determine that any key person shall be ineligible to
receive awards under the Plan.

 

 

1.4.                              Types
of Awards Under Plan

 

Awards may be made under the Plan in the form of (a)
incentive stock options, (b) non-qualified stock options, (c) stock
appreciation rights, (d) dividend equivalent rights, (e) restricted stock,
(f) unrestricted stock, (g) restricted stock units, and (h) performance
shares, all as more fully set forth in Article II.  The term “award”
means any of the foregoing.  No incentive
stock option may be granted to a person who is not an employee of the
Company on the date of grant.

 

1.5.                              Shares
Available for Awards

 

(a)                                  Subject
to the provisions of Section 1.5(b), the aggregate number of shares of common
stock of the Company (“Common Stock”) with respect to which options or
restricted shares may at any time be granted under the Plan are
[    ] shares of Common Stock.

 

(b)                                 Shares
issued pursuant to the Plan may be authorized but unissued Common Stock.  The Administrator may direct that any stock
certificate evidencing shares issued pursuant to the Plan shall bear a legend
setting forth such restrictions on transferability as may apply to such shares.

 

(c)                                  Adjustment Upon Changes in Common Stock.  Upon certain changes in Common Stock, the
number of shares of Common Stock available for issuance with respect to awards
that may be granted under the Plan pursuant to Section 1.5(a), shall be
adjusted pursuant to Section 3.7(a).

 

(d)                                 Certain
Shares to Become Available Again.  The following shares of Common Stock shall
again become available for awards under the Plan: any shares that are subject
to an award under the Plan and that remain unissued upon the cancellation or
termination of such award for any reason whatsoever; any shares of restricted
stock forfeited pursuant to Section 2.7(e), provided that any dividends paid on
such shares are also forfeited pursuant to such Section 2.7(e); and any shares
in respect of which a stock appreciation right or performance share award is
settled for cash.

 

(e)                                  Individual
Limit.  Except for the limits set forth
in this Section 1.5(d) and 2.2(i), no provision of this Plan shall be deemed to
limit the number or value of shares with respect to which the Administrator may
make awards to any eligible person.  Subject to adjustment as provided in Section
3.7(a), the total number of shares of Common Stock with respect to which awards
may be granted to any one employee of the
Company during any one calendar year shall not exceed
[   ] shares.  Stock
options and stock appreciation rights granted and subsequently canceled or
deemed to be canceled in a calendar year count against this limit even after
their cancellation.

 

1.6.                              Definitions
of Certain Terms

 

(a)                                  The
“Fair Market Value” of a share of Common Stock on any day shall be the closing
price on the New York Stock Exchange as reported for such day in The Wall
Street Journal or, if no such price is reported for such day, the average of
the high bid and low asked price of Common Stock as reported for such day.  If no quotation is made for the applicable
day, the Fair Market Value of a share of Common Stock on such day shall be
determined in the manner set forth in the preceding sentence using quotations
for the next preceding day for which there were quotations, provided that such
quotations shall have been made within the
ten (10)

 

 

business days preceding the
applicable day.  Notwithstanding the foregoing, if deemed necessary or appropriate
by the Administrator, the Fair Market Value of a share of Common Stock on any
day shall be determined by the Administrator.  In no event shall the Fair Market Value of
any share of Common Stock be less than
its par value.

 

(b)                                 The
term “incentive stock option” means an option that is intended to qualify for special federal income tax treatment
pursuant to sections 421 and 422 of the Code as now constituted or
subsequently amended, or pursuant to a successor provision of the Code, and
which is so designated in the applicable Grant Certificate.  Any option that is not specifically
designated as an incentive stock option shall under no circumstances be
considered an incentive stock option. 
Any option that is not an incentive stock option is referred to herein
as a “non-qualified stock option.”

 

(c)                                  The
term “cause” in connection with a termination of employment or Board membership
by reason of a dismissal for cause shall mean:

 

(i)                                to
the extent that there is an employment, severance or other agreement governing
the relationship between the grantee and the Company, a Company subsidiary or a
Company joint venture, which agreement contains a definition of “cause,” cause
shall consist of those acts or omissions that would constitute “cause” under
such agreement; and otherwise,

 

(ii)                             the
grantee’s termination of employment or Board membership by the Company or an
affiliate on account of any one or more of the following:

 

(A)                              any
failure by the grantee substantially to perform the grantee’s employment or
Board membership duties;

 

(B)                                any
excessive unauthorized absenteeism by the grantee;

 

(C)                                any
refusal by the grantee to obey the lawful orders of the Board or any other
person or Administrator to whom the grantee reports;

 

(D)                               any
act or omission by the grantee that is or may be injurious to the Company,
monetarily or otherwise;

 

(E)                                 any
act by the grantee that is inconsistent with the best interests of the Company;

 

(F)                                 the
grantee’s material violation of any of the Company’s policies, including,
without limitation, those policies relating to discrimination or sexual
harassment;

 

(G)                                the
grantee’s unauthorized (a) removal from the premises of the Company or an
affiliate of any document (in any medium or form) relating to the Company or an
affiliate or the customers or clients of the
Company or an affiliate or (b) disclosure to any person or entity of any
of the Company’s, or its affiliates’ confidential or proprietary information;

 

 

(H)                               the
grantee’s commission of any felony, or any other crime involving moral
turpitude; and

 

(I)                                    the
grantee’s commission of any act involving dishonesty or fraud.

 

Any rights the Company may have hereunder in respect
of the events giving rise to cause shall be in addition to the rights the
Company may have under any other agreement with a grantee or at law or in
equity.  Any determination of whether a
grantee’s employment or Board membership is (or is deemed to have been)
terminated for cause shall be made by the Administrator in its discretion,
which determination shall be final, binding and conclusive on all parties.  If, subsequent to a grantee’s voluntary
termination of employment or involuntary termination of employment without
cause, it is discovered that the grantee’s employment could have been
terminated for cause, the Administrator may deem such grantee’s employment or
Board membership to have been terminated for cause.  A grantee’s termination of employment or
Board membership for cause shall be effective as of the date of the occurrence
of the event giving rise to cause, regardless
of when the determination of cause is made.

 

ARTICLE II.

Awards Under The Plan

 

2.1.                              Agreements
Evidencing Awards

 

Each award granted under the Plan
(except an award of unrestricted stock) shall be evidenced by a written
certificate (“Award Agreement”) which shall
contain such provisions as the Administrator may, in its sole discretion, deem necessary or desirable.  By executing an Award Agreement pursuant to
the Plan, a grantee thereby agrees that the award shall be subject to all of
the terms and provisions of the Plan and the applicable Award Agreement.

 

2.2.                              Grant
of Stock Options, Stock Appreciation Rights, Restricted Stock Units and
Dividend Equivalent Rights

 

(a)                                  Stock
Option Grants.  The Administrator may
grant incentive stock options and non-qualified stock options (“options”) to purchase
shares of Common Stock from the Company, to such key persons, and in such
amounts and subject to such vesting and forfeiture provisions and other terms and conditions, as the Administrator shall
determine, in its sole discretion, subject to the provisions of the
Plan.  The Administrator may not grant
incentive stock options to non-employee directors.

 

(b)                                 Stock Appreciation Right Grants; Types of Stock
Appreciation Rights.  The
Administrator may grant stock appreciation rights to such key persons, and in
such amounts and subject to such vesting and forfeiture provisions and other
terms and conditions, as the Administrator shall determine, in its sole
discretion, subject to the provisions of the Plan.  The terms of a stock appreciation right may
provide that it shall be automatically exercised for a cash payment upon the
happening of a specified event that is outside the control of the grantee, and
that it shall not be otherwise exercisable. 
Stock appreciation rights may be
granted in connection with all or any part of, or independently of, any option
granted under the Plan.  A stock
appreciation right granted in connection
with an option may be granted at or after the time of grant of such option.

 

 

(c)                                  Nature
of Stock Appreciation Rights.  The grantee
of a stock appreciation right shall have the right, subject to the terms of the
Plan and the applicable Award Agreement, to
receive from the Company an amount equal to (i) the excess of the Fair
Market Value of a share of Common Stock on the date of exercise of the stock
appreciation right over the Fair Market Value of a share of Common Stock on the date of grant (or over the option exercise
price if the stock appreciation right is granted in connection with an
option), multiplied by (ii) the number of shares with respect to which the
stock appreciation right is exercised. 
Payment upon exercise of a stock appreciation right shall be in cash or in shares of Common Stock (valued at their Fair
Market Value on the date of exercise of the stock appreciation right) or
both, all as the Administrator shall determine in its sole discretion.  Upon the exercise of a stock appreciation
right granted in connection with an option, the number of shares subject to the
option shall be reduced by the number of shares with respect to which the stock appreciation right is exercised.  Upon the exercise of an option in
connection with which a stock appreciation right has been granted, the number of shares subject to the stock
appreciation right shall be reduced by the number of shares with respect
to which the option is exercised.

 

(d)                                 Option
Exercise Price.  Each Award Agreement
with respect to an option shall set forth the amount (the “option exercise
price”) payable by the grantee to the Company upon exercise of the option evidenced
thereby.  The option exercise price per share shall be determined by the Administrator
in its sole discretion; provided, however, that the option exercise
price of an incentive stock option shall be at least 100% of the Fair Market
Value of a share of Common Stock on the date the option is granted, and
provided further that in no event shall the option exercise price be less than
the par value of a share of Common Stock.

 

(e)                                  Exercise
Period.  Each Award Agreement with
respect to an option or stock appreciation right shall set forth the periods
during which the award evidenced thereby shall be exercisable, whether in whole
or in part.  Such periods shall be
determined by the Administrator in its sole discretion; provided, however, that
no option or a stock appreciation right shall be exercisable more than 10 years
after the date of grant, and provided further that, except as and to the extent that the Administrator may otherwise provide
pursuant to Sections 2.5, 3.7 or 3.8, no option or stock appreciation
right shall be exercisable prior to the first anniversary of the date of grant.
(See the default exercise period provided for under Sections 2.3(a) and (b).)

 

(f)                                    Reload
Options.  The Administrator may, in its
sole discretion, include in any Award Agreement with respect to an option (the “original
option”) a provision that an additional option (the “reload option”) shall be
granted to any grantee who, pursuant to Section 2.3(e)(ii), delivers shares of
Common Stock in partial or full payment of the exercise price of the original
option.  The reload option shall be for a
number of shares of Common Stock equal to the number thus delivered, shall have
an exercise price equal to the Fair Market Value of a share of Common Stock on
the date of exercise of the original option, and shall have an expiration date
no later than the expiration date of the original option.  In the event that a Award Agreement provides
for the grant of a reload option, such Agreement shall also provide that the
exercise price of the original option be no
less than the Fair Market Value of a share of Common Stock on its date
of grant, and that any shares that are delivered pursuant to Section 2.3 (e)
(ii) in payment of such exercise price shall have been held for at least six
months.

 

(g)                                 Dividend Equivalent Rights.  The Administrator may, in its sole
discretion, include in any Award Agreement with respect to an option, stock
appreciation right or performance shares, a dividend equivalent right entitling
the grantee to receive amounts equal to the ordinary dividends

 

 

that would be paid, during the
time such award is outstanding and unexercised, on the shares of Common Stock
covered by such award if such shares were then outstanding.  In the event such a provision is included in
a Award Agreement, the Administrator shall determine whether such payments
shall be made in cash or in shares of Common Stock, whether they shall be
conditioned upon the exercise of the award to which they relate, the time or
times at which they shall be made, and such other vesting and forfeiture
provisions and other terms and conditions as the Administrator shall deem
appropriate.

 

(h)                                 Restricted Stock Units.  The Administrator may, in its sole
discretion, grant stock restricted stock units to such key persons, and in such
amounts and subject to such vesting and forfeiture provisions and other terms
and conditions, as the Administrator shall determine, in its sole discretion,
subject to the provisions of the Plan.  A
restricted stock unit granted under the Plan shall confer upon the grantee a
right to receive from the Company, upon the occurrence of an event specified in
the Award Agreement, such grantee’s vested restricted stock units multiplied by
the Fair Market Value of a share of Common Stock.  Restricted stock units may be granted in connection with all or any part of, or independently
of, any award granted under the Plan.  A
restricted stock unit granted in connection
with another award may be granted at or after the time of grant of such award.

 

(i)                                     Incentive Stock Option Limitation:
Exercisability.  To the extent that the
aggregate Fair Market Value (determined as of the time the option is granted)
of the stock with respect to which incentive stock options are first exercisable
by any employee during any calendar year shall exceed $100,000, or such higher
amount as may be permitted from time to time under section 422 of the Code,
such options shall be treated as non-qualified stock options.

 

(j)                                     Incentive
Stock Option Limitation: 10% Owners.  Notwithstanding  the provisions of paragraphs (d) and (e) of this Section 2.2, an
incentive stock option may not be granted under the Plan to an
individual who, at the time the option is granted, owns stock possessing more
than 10% of the total combined voting power of all classes of stock of his
employer corporation or of its parent or subsidiary corporations (as such
ownership may be determined for purposes of section 422(b) (6) of the Code)
unless (i) at the time such incentive stock option is granted the option exercise
price is at least 110% of the Fair Market
Value of the shares subject thereto and (ii) the incentive stock option
by its terms is not exercisable after the expiration of 5 years from the date
it is granted.

 

2.3.                              Exercise
of Options, Stock Appreciation Rights and Restricted Stock Units

 

Subject to the other provisions of this Article II,
each option, stock appreciation right and restricted stock unit granted under
the Plan shall be exercisable as follows:

 

(a)                                  Timing
and Extent of Exercise.  Options, stock
appreciation rights and restricted stock units shall be exercisable at such
times and under such conditions as set forth in the corresponding Award
Agreement, but in no event shall any such award be exercisable prior to the
first anniversary or subsequent to the tenth anniversary of the date on which
such award was granted.  Unless the
applicable Award Agreement otherwise provides, an option, stock appreciation
right or restricted stock unit may be exercised from time to time as to all or
part of the shares or units as to which such award
is then exercisable.  A stock
appreciation right granted in connection with an option may be exercised
at any time when, and to the same extent that, the related option may be
exercised.

 

 

(b)                                 Notice
of Exercise.  An option, stock
appreciation right or restricted stock unit shall be exercised by the filing of
a written notice with the Company or the Company’s
designated exchange agent (the “exchange agent”), on such form and in
such manner as the Administrator shall in its sole discretion prescribe.

 

(c)                                  Payment
of Exercise Price.  Any written notice of
exercise of an option shall be accompanied by payment for the shares being
purchased.  Such payment shall be made:
(i) by certified or official bank check (or the equivalent thereof acceptable to the Company or its exchange agent) for
the full  option exercise price; or
(ii) with the consent of the Administrator, by delivery of  shares of Common Stock having a Fair Market Value
(determined as of the exercise date) equal to all or part of the option exercise price and a certified or official
bank check (or the equivalent thereof
acceptable to the Company or its exchange agent) for any remaining portion of
the full option exercise price; or (iii) at the discretion of the Administrator
and to the extent permitted by law, by such other provision, consistent with
the terms of the Plan, as the Administrator may from time to time prescribe
(whether directly or indirectly through the exchange agent).

 

(d)                                 Delivery
of Certificates Upon Exercise.  Subject
to the provision of section 2.3(e), promptly after receiving payment of the
full option exercise price, or after receiving notice of the exercise of a
stock appreciation right for which payment will be made partly or entirely in
shares, the Company or its exchange agent shall, subject to the provisions of Section 3.2, deliver to the
grantee or to such other person  as may
then have the right to exercise the award, a certificate or certificates
for the shares of Common Stock for which the award has been exercised.  If the method of payment employed upon option
exercise so requires, and if applicable law permits, an optionee may direct the
Company, or its exchange agent as the case may be, to deliver the stock
certificate(s) to the optionee’s stockbroker.

 

(e)                                  Investment
Purpose and Legal Requirements. 
Notwithstanding the foregoing, at the time of the exercise of any
option, the Company may, if it shall deem it necessary or advisable for any
reason, require the holder of such option (i) to represent in writing to
the Company that it is the optionee’s then intention to acquire the Shares with
respect to which the option is to be exercised for investment and not with a
view to the distribution thereof, or (ii) to postpone the date of exercise until
such time as the Company has available for delivery to the optionee a
prospectus meeting the requirements of all applicable securities laws; and no
shares shall be issued or
transferred upon the exercise of any option unless and until all legal requirements
applicable to the issuance or transfer of such Shares have been complied with
to the satisfaction of the Company.  The
Company shall have the right to condition any issuance of shares to any
optionee hereunder on such optionee’s undertaking in writing to comply with
such restrictions on the subsequent transfer of such shares as the Company
shall deem necessary or advisable as a result of any applicable law, regulation
or official interpretation thereof, and certificates representing such shares
may contain a legend to reflect any such restrictions.

 

(f)                                    No
Stockholder Rights.  No grantee of an
option, stock appreciation right or restricted stock unit (or other person
having the right to exercise such award) shall have any of the rights of a
stockholder of the Company with respect to shares subject to such award until
the issuance of a stock certificate to such person for such shares.  Except as otherwise provided in Section
1.5(b), no adjustment shall be made for dividends, distributions or other rights
(whether ordinary or extraordinary, and whether in cash, securities or other
property) for which the record date is prior
to the date such stock certificate is issued.

 

 

2.4.                              Compensation
in Lieu of Exercise of an Option

 

Upon written application of the grantee of an option,
the Administrator may in its sole discretion
determine to substitute, for the exercise of such option, compensation
to the grantee not in excess of the difference between the option exercise
price and the Fair Market Value of the shares covered by such written
application on the date of such application. 
Such compensation may be in cash, in shares of Common Stock, or both,
and the payment thereof may be subject to conditions,
all as the Administrator shall determine in its sole discretion.  In the  event compensation is substituted pursuant to this Section 2.4 for the
exercise, in whole or in part, of an option, the number of shares
subject to the option shall be reduced by the number of shares for which such
compensation is substituted.

 

2.5.                              Termination
of Employment; Death Subsequent to a Termination of Employment

 

(a)                                  General
Rule.  Except to the extent otherwise
provided in paragraphs (b), (c), (d) or (e) of this Section 2.5 or Section
3.8(b)(iii), a grantee who incurs a termination of employment may exercise any
outstanding option or stock appreciation right on the following terms and
conditions: (i) exercise may be made only to the extent that the grantee was
entitled to exercise the award on the
termination of employment date; and (ii) exercise must occur within
three months after termination of employment but in no event after the original
expiration date of the award.

 

(b)                                 Dismissal
for Cause; Resignation.  If a grantee
incurs a termination of employment as the
result of a dismissal for cause or resignation without the Company’s
prior consent, as applicable, all options and stock appreciation rights not
theretofore exercised shall terminate upon the grantee’s termination of
employment.

 

(c)                                  Retirement.  If a
grantee incurs a termination of employment as the result of his
retirement, then any outstanding option, stock appreciation right or restricted
stock unit shall be exercisable pursuant to its terms.  For this purpose “retirement” shall mean a grantee’s termination of employment, under
circumstances other than those described in paragraph (b) above, on or
after: (x) his 65th birthday, (y) the date on which he has attained age 60 and
completed at least five years of service with the Company, as applicable,
(using any method of calculation the
Administrator deems appropriate) or (z) if approved by the Administrator, on or after he has completed at
least 20 years of service.

 

(d)                                 Disability.  If a
grantee incurs a termination of employment by reason of a disability (as
defined below), then any outstanding option, stock appreciation right or
restricted stock unit shall be exercisable pursuant to its terms.  For this purpose “disability” shall mean,
except in connection any physical or mental condition that would qualify a
grantee for a disability benefit under the long-term disability plan maintained
by the Company, if there is no such plan, a physical or mental condition that
prevents the grantee from performing the essential functions of the grantee’s
position (with or without reasonable accommodation) for a period of six
consecutive months.  The existence of a
disability shall be determined by the Administrator in its sole and absolute
discretion.

 

(e)                                  Death.

 

(i)             Termination of
Employment as a Result of Grantee’s Death. 
If a grantee incurs a termination of employment as the result of his
death, then any

 

 

outstanding option, stock
appreciation right or restricted stock unit shall be exercisable
pursuant to its terms.

 

(ii)          Restrictions on Exercise
Following Death.  Any such exercise of an award following a grantee’s death shall be
made only by the grantee’s executor or administrator or other duly appointed
representative reasonably acceptable to the
Administrator, unless the grantee’s will specifically disposes of such
award, in which case such exercise shall be made only by the recipient of such
specific disposition.  If a grantee’s
personal representative or the recipient of a specific disposition under the
grantee’s will shall be entitled to exercise any award pursuant to the preceding
sentence, such representative or recipient shall be bound by all the terms and
conditions of the Plan and the applicable Award Agreement which would have
applied to the grantee including, without limitation, the provisions of
Sections 3.2 and 3.5 hereof.

 

(f)                                    Special
Rules for Incentive Stock Options.  No
option that remains exercisable for more than three months following a grantee’s
termination of employment for any reason other than death or disability, or for
more than one year following a grantee’s termination of employment as the
result of his becoming disabled, may be treated as an incentive stock option.

 

(g)                                 Administrator Discretion.  The Administrator, in the applicable Award
Agreement, may waive or modify the application of the foregoing provisions of
this Section 2.5.

 

2.6.                              Transferability
of Options, Stock Appreciation Rights and Restricted Stock Units

 

Except as otherwise provided in an applicable Award
Agreement evidencing an option, stock appreciation right or restricted stock
unit, during the lifetime of a grantee, each such award granted to a grantee
shall be exercisable only by the grantee and
no such award shall be assignable or transferable otherwise than by will
or by the laws of descent and distribution. 
The Administrator may, in any
applicable Award Agreement evidencing an option (other than an incentive stock
option to the extent inconsistent with the requirements of section 422 of the
Code applicable to incentive stock options), permit a grantee to transfer all
or some of the options to (A) the grantee’s spouse, children or grandchildren (“Immediate
Family Members”), (B) a trust or trusts for the exclusive benefit of such
Immediate Family Members, or (C) other parties approved by the Administrator in
its sole and absolute discretion. 
Following any such transfer, any transferred options shall continue to
be subject to the same terms and conditions as were applicable immediately
prior to the transfer.

 

2.7.                              Grant
of Restricted Stock

 

(a)                                  Restricted
Stock Grants.  The Administrator may
grant restricted shares of Common Stock to such key persons, in such amounts,
and subject to such vesting and forfeiture provisions and other terms and
conditions as the Administrator shall determine in its sole discretion, subject
to the provisions of the Plan. 
Restricted stock awards may be made independently of or in connection with any other award under the Plan.  A grantee of a restricted stock award shall
have no rights with respect to such award unless such grantee accepts the award
within such period as the Administrator shall specify by accepting delivery of
a restricted stock agreement in such form as
the Administrator shall determine and, in the event the restricted
shares are newly issued by the Company, makes payment to the Company its

 

 

exchange agent by certified or
official bank check (or the  equivalent
thereof acceptable to the Company) in an amount at least equal to the
par value of the shares covered by the award.

 

(b)                                 Issuance
of Stock Certificate(s).  Promptly after
a grantee accepts a restricted stock award,
the Company or its exchange agent shall issue to the grantee a stock
certificate or stock certificates for the shares of Common Stock covered by the
award or shall establish an account evidencing ownership of the stock in uncertificated
form.  Upon the issuance of such stock
certificate(s), or establishment of such account, the grantee shall have the
rights of a stockholder with respect to the restricted stock, subject to: (i)
the nontransferability restrictions and forfeiture provision described in paragraphs (d) and (e) of this Section 2.7; (ii) in
the Administrator’s discretion,  to a
requirement that any dividends paid on such shares shall be held in escrow
until all restrictions on such shares have lapsed; and (iii) any other
restrictions and conditions contained in the applicable restricted stock
agreement.

 

(c)                                  Custody
of Stock Certificate(s).  Unless the
Administrator shall otherwise determine, any stock certificates issued
evidencing shares of restricted stock shall
remain in the possession of the Company until such shares are free of
any restrictions specified in the applicable restricted stock agreement. 
The Administrator may direct that such stock certificate(s) bear a
legend setting forth the applicable restrictions on transferability.

 

(d)                                 Nontransferability.  Shares of restricted stock may not be sold,
assigned, transferred, pledged or otherwise encumbered or disposed of except as
otherwise specifically provided in this Plan or the applicable restricted stock agreement.  The Administrator at the time of grant shall
specify the date or dates (which may depend upon or be related to the
attainment of performance goals and other conditions) on which the
nontransferability of the restricted stock shall lapse.

 

(e)                                  Consequence
of Termination of Employment.  A grantee’s
termination of employment for any reason (including death) shall cause the
immediate forfeiture of all shares of restricted stock that have not yet vested
as of the date of such termination of employment.  All dividends paid on such shares also shall be forfeited, whether by
termination of any escrow arrangement under which such dividends are
held, by the grantee’s repayment of dividends he received directly, or
otherwise.

 

2.8.                              Grant
of Unrestricted Stock

 

The Administrator may grant (or sell at a purchase
price at least equal to par value) shares of Common Stock free of restrictions
under the Plan, to such key persons and in
such amounts and subject to such forfeiture provisions as the
Administrator shall determine in its sole discretion.  Shares may be thus granted or sold in respect
of past services or other valid consideration.

 

2.9.                              Grant
of Performance Shares

 

(a)                                  Performance
Share Grants.  The Administrator may
grant performance share awards to such key persons, and in such amounts and
subject to such vesting and forfeiture provisions and other terms and
conditions, as the Administrator shall in its sole discretion determine,
subject to the provisions of the Plan.  Such
an award shall entitle the grantee to acquire shares of Common Stock, or to be
paid the value thereof in cash, as the Administrator shall determine, if
specified performance goals are met. 
Performance shares may be awarded

 

 

independently of, or in connection
with, any other award under the Plan. 
A grantee shall have no rights with respect to a performance share award
unless such grantee accepts the award by accepting delivery of a Award
Agreement at such time and in such form as the Administrator shall determine.

 

(b)                                 Stockholder
Rights.  The grantee of a performance share award will have the rights of a
stockholder only as to shares for which a stock certificate has been issued
pursuant to the award and not with respect to any other shares subject to the
award.

 

(c)                                  Consequence
of Termination of Employment.  Except as
may otherwise be provided by the Administrator at any time prior to a grantee’s
termination of employment, the rights of a
grantee of a performance share award shall automatically terminate upon
the grantee’s termination of employment by the Company or its subsidiaries for
any reason (including death).

 

(d)                                 Exercise
Procedures; Automatic Exercise.  At the
discretion of the Administrator, the
applicable Award Agreement may set out the procedures to be followed in
exercising a performance share award or it may provide that such exercise shall
be made automatically after satisfaction of the applicable performance goals.

 

(e)                                  Tandem
Grants; Effect on Exercise.  Except as
otherwise specified by the Administrator, (i)
a performance share award granted in tandem with an option may be
exercised only while the option is exercisable, (ii) the exercise of a
performance share award granted in tandem with any other award shall reduce the
number of shares subject to such other award in the manner specified in the
applicable Award Agreement, and (iii) the exercise of any award granted in
tandem with a performance share award shall reduce the number of shares subject
to the latter in the manner specified in the applicable Award Agreement.

 

(f)                                    Nontransferability.  Performance shares may not be sold, assigned, transferred, pledged or otherwise
encumbered or disposed of except as otherwise specifically provided in
this Plan or the applicable Award Agreement.  The Administrator at the time of grant shall
specify the date or dates  (which may
depend upon or be related to the attainment of performance goals and
other conditions) on which the nontransferability of the performance shares
shall lapse.

 

ARTICLE III.

Miscellaneous

 

3.1.                              Amendment
of the Plan; Modification of Awards

 

(a)                                  Amendment of the Plan.  The Board may from time to time suspend,
discontinue, revise or amend the Plan in any respect whatsoever, except that no such amendment shall materially
impair any rights or materially increase any
obligations under any award theretofore made under the Plan without the consent
of the grantee (or, upon the grantee’s death, the person having the right to
exercise the award).  For purposes of
this Section 3.1, any action of the Board or the Administrator that in any way
alters or affects the tax treatment of any award shall not be considered to
materially impair any rights of any grantee.

 

 

(b)                                 Stockholder Approval Requirement.  Stockholder approval shall be required with
respect to any amendment to the Plan that (i) increases the aggregate number of
shares that may be issued pursuant to incentive stock options or changes the
class of employees eligible to receive such options; or (ii) materially
increases the benefits under the Plan to persons whose transactions in Common
Stock are subject to section 16(b) of the 1934 Act or increases the benefits
under the Plan to someone who is, materially increases the number of shares
which may be issued to such persons, or materially modifies the eligibility
requirements affecting such persons.

 

(c)                                  Modification of Awards.  The Administrator may cancel any award under
the Plan.  The Administrator also may
amend any outstanding Award Agreement, including, without limitation, by
amendment which would: (i) accelerate the time or times at which the award
becomes unrestricted or may be exercised, provided that, except as and to the
extent that the Administrator may otherwise provide pursuant to Section 2.5,
3.7 or 3.8, no option, stock appreciation right or restricted stock unit shall
be exercisable prior to the first anniversary of its date of grant; (ii) waive
or amend any goals, restrictions or conditions set forth in the Agreement; or
(iii) waive or amend the operation of Section 2.5 with respect to the
termination of the award upon termination of employment.  However, any such cancellation or amendment
(other than an amendment pursuant to Sections 3.7 or 3.8(b)) that
materially impairs the rights or materially increases the obligations of a
grantee under an outstanding award shall be made only with the consent of the
grantee (or, upon the grantee’s death, the person having the right to exercise
the award).

 

3.2.                              Consent
Requirement

 

(a)                                  No
Plan Action Without Required Consent.  If
the Administrator shall at any time determine that any Consent (as hereinafter
defined) is necessary or desirable as a
condition of, or in connection with, the granting of any award under the
Plan, the issuance or purchase of shares or other rights thereunder, or the taking of any other action thereunder
(each such action being hereinafter referred to as a “Plan Action”),
then such Plan Action shall not be taken, in whole or in part, unless and until
such Consent shall have been effected or obtained to the full satisfaction of
the Administrator.

 

(b)                                 Consent
Defined.  The term “Consent” as used
herein with respect to any Plan Action means (i) any and all listings,
registrations or qualifications in respect thereof upon any securities exchange
or under any federal, state or local law, rule or regulation, (ii) any and all
written agreements and representations by the
grantee with respect to the disposition of shares, or with respect to
any other matter, which the Administrator shall deem necessary or desirable to
comply with the terms of any such listing, registration or qualification or to
obtain an exemption from the requirement that any such listing, qualification
or registration be made and (iii) any and all consents, clearances and
approvals in respect of a Plan Action by any governmental or other regulatory
bodies.

 

3.3.                              Nonassignability

 

Except as provided in Sections 2.5(e), 2.6, 2.7(d) and
2.9(f): (a) no award or right
granted to any person under the Plan or under any Award Agreement shall be
assignable or transferable other than by will or by the laws of descent and
distribution; and (b) all rights granted under the Plan or any Award Agreement shall be exercisable during the
life of the grantee only by the grantee or the grantee’s legal
representative.

 

 

3.4.                              Requirement
of Notification of Election Under Section 83(b) of the Code

 

If any grantee shall, in connection with the
acquisition of shares of Common Stock under
the Plan, make the election permitted under section 83(b) of the Code
(i.e., an election to include in gross income in the year of transfer the
amounts specified in section 83(b)), such grantee shall notify the Company of
such election within 10 days of filing notice of the election with the Internal
Revenue Service, in addition to any filing
and notification required pursuant to regulations
issued under the authority of Code section 83(b).

 

3.5.                              Requirement
of Notification Upon Disqualifying Disposition Under Section 421(b) of the Code

 

Each Award Agreement with respect to an incentive
stock option shall require the grantee to notify
the Company of any disposition of shares of Common Stock issued pursuant
to the exercise of such option under the circumstances described in section
421(b) of the Code (relating to certain disqualifying dispositions), within 10
days of such disposition.

 

3.6.                              Withholding
Taxes

 

(a)                                  With
Respect to Cash Payments.  Whenever cash
is to be paid pursuant to an award under the Plan, the Company shall be
entitled to deduct therefrom an amount
sufficient in its opinion to satisfy all federal, state and other governmental
tax withholding requirements related to such payment.

 

(b)                                 With
Respect to Delivery of Common Stock. 
Whenever shares of Common Stock are to be delivered pursuant to an award
under the Plan, the Company shall be entitled
to require as a condition of delivery that the grantee remit to the
Company an amount sufficient in the opinion of the Company to satisfy all
federal, state and other governmental tax withholding requirements related
thereto.  With the approval of the
Administrator, which the Administrator shall have sole discretion whether or
not to give, the grantee may satisfy the foregoing condition by electing to
have the Company withhold from delivery shares having a value equal to the
amount of tax to be withheld. Such shares shall
be valued at their Fair Market Value as of the date on which the amount of
tax to be withheld is determined. Fractional share amounts shall be settled in cash.  Such a
withholding election may be made with respect to all or any portion of
the shares to be delivered pursuant to an award.

 

3.7.                              Adjustment
Upon Changes in Common Stock

 

(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, reverse stock split, recapitalization,
merger, consolidation, combination or exchange of shares or similar
corporate change, the maximum number of shares of Common Stock with respect to
which the Administrator may grant awards under Article II hereof, as described
in Section 1.5(a), and the individual annual limit described in
Section 1.5(d), shall be appropriately adjusted by the Administrator.  In the event of any change in the number of
shares of Common Stock outstanding by reason of any other event or transaction,
the Administrator may, but need not, make such adjustments in the number and
class of shares of Common Stock with respect
to which awards: (i) may be granted under Article II hereof  and (ii) granted to any one employee of the Company
or a subsidiary during any one calendar year, in each case as the
Administrator may deem appropriate.

 

 

(b)                                 Outstanding
Restricted Stock and Performance Shares. 
Unless the Administrator in its sole
and absolute discretion otherwise determines, any securities or other
property (including dividends paid in cash) received by a grantee with respect
to a share of restricted stock, the issue date with respect to which occurs
prior to such event, but which has not vested as of the date of such event, as
a result of any dividend, stock split, reverse stock split, recapitalization,
merger, consolidation, combination, exchange of shares or otherwise will not vest until such share of
restricted stock vests, and shall be promptly deposited with the Company
or other custodian designated pursuant to Section 2.7(c) hereof.

 

The Administrator may, in its absolute discretion,
adjust any grant of shares of restricted stock, the issue date with respect to
which has not occurred as of the date of the
occurrence of any of the following events, or any  grant of performance shares, to reflect any
dividend, stock split, reverse stock  split,
recapitalization, merger, consolidation, combination, exchange of shares
or similar corporate change as the
Administrator may deem appropriate to prevent the enlargement or dilution of rights of grantees.

 

(c)                                  Outstanding
Options, Stock Appreciation Rights and Dividend Equivalent Rights—Increase or Decrease in Issued Shares Without
Consideration.   Subject to any
required action by the stockholders of the Company, 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
of consideration by the Company, the Administrator shall proportionally adjust
the number of shares of Common Stock subject to each outstanding option and
stock appreciation right, and the exercise price-per-share of Common Stock of
each such option and stock appreciation right
and the number of any related dividend equivalent rights.

 

(d)                                 Outstanding
Options, Stock Appreciation Rights, Restricted Stock Units and Dividend
Equivalent Rights—Certain Mergers.   Subject
to any required action by the stockholders of the Company, in the event that
the Company shall be the surviving corporation in any merger or consolidation
(except a merger or consolidation as a result
of which the holders of shares of Common Stock receive securities of
another corporation), each option, stock appreciation right and dividend
equivalent right outstanding on the date of such merger or consolidation shall pertain to and apply to the
securities which a holder of the number of shares of Common Stock
subject to such option, stock appreciation right, restricted stock unit or
dividend equivalent right would have received in such merger or consolidation.

 

(e)                                  Outstanding
Options, Stock Appreciation Rights, Restricted Stock Units and Dividend Equivalent
Rights—Certain Other Transactions.   In
the event of (i) a dissolution or liquidation of the Company, (ii) a sale of
all or substantially all of the Company’s assets, (iii) a merger or
consolidation involving the Company in which the Company is not the surviving
corporation or (iv) a merger or consolidation involving the Company in which
the Company is the surviving corporation but the holders of shares of Common
Stock receive securities of another
corporation and/or other property, including cash, the Administrator shall,
in its absolute discretion, have the power to:

 

(i)             cancel, effective
immediately prior to the occurrence of such event, each option, stock
appreciation right and restricted stock unit (including each dividend
equivalent right related thereto) outstanding immediately prior to such event
(whether or

 

 

not then exercisable), and, in full consideration of
such cancellation, pay to the grantee to whom such option or stock appreciation
right was granted an amount in cash, for each share of Common Stock subject to
such option or stock appreciation right, respectively, equal to the excess of
(x) the value, as determined by the Administrator in its absolute discretion,
of the property (including cash) received by the holder of a share of Common
Stock as a result of such event over (y) the exercise price of such option or
stock appreciation right; or

 

(ii)          provide for the exchange of each option, stock
appreciation right and restricted stock unit (including any related dividend
equivalent right) outstanding immediately prior to such event (whether or not
then exercisable) for an option on, stock appreciation right, restricted stock
unit and dividend equivalent right with respect to, as appropriate, some or all
of the property which a holder of the number of shares of Common Stock subject
to such option, stock appreciation right or restricted stock unit would have
received and, incident thereto, make an equitable adjustment as determined by
the Administrator in its absolute discretion in the exercise price of the
option, stock appreciation right or restricted stock unit, or the number of
shares or amount of property subject to the option, stock appreciation right,
restricted stock unit or dividend equivalent right or, if appropriate, provide for
a cash payment to the grantee to whom such option, stock appreciation right or
restricted stock unit was granted in partial consideration for the exchange of
the option, stock appreciation right or restricted stock unit.

 

(f)                                    Outstanding
Options, Stock Appreciation Rights, Restricted Stock Units and Dividend
Equivalent Rights—Other Changes.   In the event of any change in the
capitalization of the Company or a corporate change other than those
specifically referred to in Sections 3.7(c), (d) or (e) hereof, the
Administrator may, in its absolute discretion, make such adjustments in the
number and class of shares subject to options, stock appreciation rights,
restricted stock units and dividend equivalent
rights outstanding on the date on which such change occurs and in the  per-share exercise price of each such option, stock
appreciation right and restricted stock unit as the  Administrator may
consider appropriate to prevent dilution or enlargement of rights.  In addition, if and to the extent the
Administrator determines it is appropriate, the Administrator may elect to
cancel each option, stock appreciation right and restricted stock unit
(including each dividend equivalent right related thereto) outstanding
immediately prior to such event (whether or not then exercisable), and, in full
consideration of such cancellation, pay to the grantee to whom such option, stock appreciation right or restricted stock unit
was granted an amount in cash, for each share of Common  Stock subject to such option, stock appreciation
right or restricted stock unit, respectively, equal to the excess of (i)
the Fair Market Value of Common Stock on the date of such cancellation over
(ii) the exercise price of such option, stock appreciation right or restricted
stock unit.

 

(g)                                 No
Other Rights.  Except as expressly provided in the Plan, no grantee shall have
any rights by reason of any subdivision or consolidation of shares of stock of
any class, the payment of any dividend, any increase or decrease in the number
of shares of stock of any class or any dissolution, liquidation, merger or
consolidation of the Company or any other corporation.  Except as
expressly provided in the Plan, no issuance by the Company 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 of Common Stock subject to an award or the
exercise price of any option or stock appreciation right.

 

 

3.8.                              Change
in Control

 

(a)                                  Change
in Control Defined.  For purposes of this
Section 3.8, “Change in Control” shall mean the occurrence of any of the
following:

 

(i)             any person or “group”
(within the meaning of Section 13(d)(3) of the 1934 Act), other than
entities which the Chairman of the Board directly or indirectly controls (as
defined in Rule 12b-2 under the 1934 Act), acquiring “beneficial ownership” (as
defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of fifty
percent (50%) or more of the aggregate voting power of the capital stock
ordinarily entitled to elect directors of the Company;

 

(ii)          the sale of all or
substantially all of the Company’s assets in one or more related transactions
to a person other than such a sale to a subsidiary of the Company which does
not involve a change in the equity holdings of the Company or to an entity
which the Chairman directly or indirectly controls; or

 

(iii)       any merger, consolidation,
reorganization or similar event of the Company or any of its subsidiaries, as a
result of which the holders of the voting stock of the Company immediately
prior to such merger, consolidation, reorganization or similar event do not
directly or indirectly hold at least fifty-one percent (51%) of the aggregate
voting power of the capital stock of the surviving entity.

 

(b)                                 Effect
of a Change in Control.   Unless the
Administrator provides otherwise in a Award Agreement, upon the occurrence of a
Change in Control:

 

(i)             notwithstanding any
other provision of this Plan, any award then
outstanding shall become fully vested and any award in the form of an
option, stock appreciation right or restricted stock unit shall be immediately
exercisable;

 

(ii)          to the extent permitted
by law, the Administrator may, in its sole discretion, amend any Award
Agreement in such manner as it deems appropriate;

 

(iii)       a grantee who incurs a termination of employment
for any reason, other than a dismissal for cause, concurrent with or
within one year following the Change
in Control may exercise any outstanding option, stock appreciation right or restricted stock unit, but only to the extent that
the grantee was entitled to exercise the award on his termination of employment
date, until the earlier of (A) the original expiration date of the award and
(B) the later of (x) the date provided for under the terms of Section 2.5
without reference to this Section 3.8(b)(iii) and (y) the first anniversary of
the grantee’s termination of
employment.

 

(c)                                  Miscellaneous. 
Whenever deemed appropriate by the Administrator, any action
referred to in paragraph (b)(ii) of this Section 3.8 may be made
conditional upon the consummation of the applicable Change in Control
transaction.

 

 

3.9.                              Right
of Discharge Reserved

 

Nothing in the Plan or in any Award Agreement shall
confer upon any grantee the right to continue
his employment with the Company or affect any right that the Company may
have to terminate such employment.

 

3.10.                        Non-Uniform Determinations

 

The Administrator’s determinations under the Plan need
not be uniform and may be made by it selectively among persons who receive, or
who are eligible to receive, awards under the Plan (whether or not such persons
are similarly situated).  Without limiting the generality of the
foregoing, the Administrator shall be entitled, among other things, to make
non-uniform and selective determinations, and to enter into non-uniform and
selective Award Agreements, as to (a) the persons to receive awards under the
Plan, and (b) the terms and provisions of awards under the Plan.

 

3.11.                        Other Payments or Awards

 

Nothing contained in the Plan shall be deemed in any
way to limit or restrict the Company from making any award or payment to any
person under any other plan, arrangement or
understanding, whether now existing or hereafter in effect.

 

3.12.                        Headings

 

Any section, subsection, paragraph or other
subdivision headings contained herein are for
the purpose of convenience only and are not intended to expand, limit or
otherwise define the contents of such subdivisions.

 

3.13.                        Effective Date and Term of Plan

 

(a)                                  Adoption;
Stockholder Approval.  The Plan was
adopted by the Board and although the Company intends to obtain approval of the
Plan by the Company’s stockholders within the time period required to allow grants of options hereunder to qualify as incentive
stock options, awards under the Plan prior to such stockholder approval
may, but need not, be made subject to such approval.

 

(b)                                 Termination
of Plan.  Unless sooner terminated by the
Board or pursuant to Paragraph (a) above, the
provisions of the Plan respecting the grant of incentive stock options
shall terminate on the tenth anniversary of the adoption of the Plan by the
Board, and no incentive stock option awards shall thereafter be made under the
Plan.  All such awards made under the
Plan prior to its termination shall remain in
effect until such awards have been satisfied or terminated in accordance
with the terms and provisions of the Plan and the applicable Award Agreements.

 

3.14.                        Restriction on Issuance of
Stock Pursuant to Awards

 

The Company shall not permit any shares of Common
Stock to be issued pursuant to Awards granted
under the Plan unless such shares of Common Stock are fully paid and
non-assessable under applicable law.

 

 

3.15.                        Governing Law

 

Except to the extent preempted by any applicable federal
law, the Plan will be construed and
administered in accordance with the laws of the State of New York, without giving effect to principles of conflict of laws.

 

 

EXHIBIT
A

 

DIANA
SHIPPING INC.

2005 STOCK INCENTIVE PLAN

 

OPTION
AGREEMENT

 

 

THIS
OPTION AGREEMENT made this [      ] day of                              ,
200    , between Diana Shipping Inc., (the “Company”) and [                            ]
(the “Optionee”).

 

WHEREAS,
the Company desires to carry out the purpose of the Diana Shipping Inc. 2005
Stock Incentive Plan (the “Plan”), a copy of which is attached hereto as
Exhibit A, by affording the Optionee an opportunity to purchase its common
stock;

 

WHEREAS,
any terms defined in the Plan shall have the same meaning in this Agreement;

 

NOW
THEREFORE, under the Plan and in consideration of the mutual covenants
hereinafter set forth, the parties hereto agree as follows:

 

1.               Grant of Option
– The Company hereby grants to the Optionee the right and option (the “Option”)
to purchase [               ]
shares of common stock of the Company, par value $              
per share (the “Shares”) on the terms and conditions set forth under the Plan
and this Agreement.  The Options issued
pursuant to this Agreement shall constitute nonqualified stock options.

 

2.               Option Price
– Subject to Section 5 below, the purchase price of the Shares covered by the
Option shall be $__.__ per Share (equaling the offer price per Share in the
Company’s follow-on offering) which shall be paid in full at the time of
exercise.  The Option Price is the
purchase price per Share times the number of Options to be exercised.  The Option Price may be adjusted by the
Administrator as provided in Section 3.7 of the Plan.

 

3.               Method of
Exercise – Subject to the terms and conditions of the Plan and this
Agreement, the vested Options may be exercised upon notice to the Company on
the form provided by the Administrator and delivery of the Option Price
attributable to the optioned Shares to be purchased. 

 

4.               Time and Method
of Payment - The Option Price for the optioned Shares to be purchase shall
be paid in full at the time an Option is exercised.  The Option Price may be paid in a combination
of cash and Shares having a Market Price equal to the balance of the Option
Price.  A valid exercise requires that
the Optionee deliver the form of exercise and full payment for the optioned
Shares to be purchased to the Company.

 

5.               Dividend
Equivalents – For any full calendar year following the date of grant in
which the dividends per share distributed to Company shareholders exceeds three
percent (3%) of the Option Price as of the grant date, the Option Price shall
be reduced by the amount of the dividends the Optionee would have received with
respect to the optioned Shares had the Optionee been a shareholder of record on
the record date with respect to such dividend distribution.

 

 

6.               Vesting and Term
of Option – The Options shall vest with respect to 25% of the Options on                        ,
2006 and each of the three anniversaries thereafter, conditioned upon the
Optionee’s continued service as an employee of the Company or an affiliate (an “Employee”)
or as a director of the Company from the date of this Agreement until the date
such Options vest.  In the event the
Optionee’s ceases to be a member of the Board or an Employee, as applicable,
for any reason, the Optionee shall forfeit all rights to the non-vested
Options.  Except as otherwise permitted
by the Administrator, this Option shall not be exercisable to any extent prior
to                        ,
2006 or after                        ,
2014.

 

7.               Exercise -
During the term of the Option, a vested Option may be exercised in one or more
exercises in part or in whole at any time. 
The Administrator, as provided in Section 3.1(c) of the Plan, may
accelerate the exercisability of the Option at such time and under such
circumstances as the Administrator, in its sole discretion, deems appropriate.

 

8.               Termination of
Employment or Board Membership – Upon the Optionee’s termination of service
as an Employee or as a member of the Board for any reason, any Options not
vested shall be forfeited.  Except as
provided in the case of the Optionee’s termination of employment by reason of
the Optionee’s death, Disability or Retirement, each Option granted hereunder
shall expire, to the extent vested and not theretofore exercised, upon the
earlier of the date the Optionee ceases to be an Employee or a member of the
Board, or when the Option would otherwise expire.

 

9.               Death,
Disability or Retirement of Optionee – If an Optionee shall die or become
Disabled while an Employee or member of the Board, or Retire, all vested
Options theretofore granted to such Optionee may be exercised pursuant to their
terms.  In the event of death or
incapacity an Option shall be exercised by a legal representative of an
Optionee, written notice of such exercise shall be accompanied by a certified
copy of letters testamentary or equivalent proof of the right of such legal
representative to exercise such Option.

 

10.         Taxes - If the
Administrator shall so require, as a condition of exercise of an Option, the
Optionee shall agree that no later than the date of exercise, the Optionee will
pay to the Company or make arrangements satisfactory to the Administrator
regarding payment of any federal, state or local taxes of any kind required by
law to be withheld in connection with the exercise of an Option.

 

11.         Nontransferability
– The Option is nontransferable other than by will or by the laws of descent
and distribution.

 

12.         Legal Requirements
– At the time of the exercise of any Option, the Company or the Administrator
may postpone the date of exercise until such time as the Company has available
for delivery to the Optionee a prospectus meeting the requirements of all
applicable securities laws, and no Shares shall be issued or transferred upon
the exercise of any Option unless and until all legal requirements applicable
to the issuance or transfer of Shares have been complied with to the
satisfaction of the Company.

 

13.         Representation of
Optionee – Prior to the issuance of any Shares pursuant to the exercise of
Options hereunder, at the request of the Administrator, the Optionee shall
represent in writing to the Company that it is the Optionee’s intention to
acquire the Shares with respect

 

 

to which the Option is to be exercised for investment
and not with a view to the distribution thereof.

 

14.         Changes in Capital
Structure – As determined by the Administrator within the discretion
granted under Section 7 of the Plan, if any change described in Section 7 of
the Plan is made to the Shares, an appropriate adjustment in the number of
Shares for which Options which have been or may be granted under the Plan and
the Option Price will be made.

 

15.         Rights as a
Shareholder - An Optionee shall have no rights as a shareholder with
respect to any Shares covered by the Option until the date of the issuance of a
stock certificate for such Shares.  No
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions of other rights for which
the record date is prior to the date such stock certificate is issued, except
as provided in Section 5 above and Section 7 of the Plan.

 

16.         Amendment and
Termination of the Plan - The Board at any time and from time to time may
suspend, terminate, modify or amend the Plan; provided, however, except as
provided in Section 7 of the Plan, no suspension, termination,
modification or amendment of the Plan may, without the express written consent
of the Optionee involved, adversely affect any Option previously granted to the
Optionee.

 

17.         Governing Law -
The Plan and this Agreement are governed by the internal substantive laws but
not the choice of law rules of New York.

 

IN
WITNESS WHEREOF, THE PARTIES HERETO HAVE EXECUTED THIS OPTION AGREEMENT ON THE
DATE FIRST WRITTEN ABOVE.

 

 

	
   

  	
  DIANA SHIPPING INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00078-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00078-of-00352.parquet"}]]