Document:

Fourth Waiver to Debtor-in-Possession Credit and Security Agreement

 Exhibit 4.1 
 EXECUTION COPY 
 FOURTH WAIVER TO DEBTOR-IN-POSSESSION CREDIT AND SECURITY AGREEMENT 

 FOURTH WAIVER, dated as of January 11, 2008 (this “Waiver”), to the Debtor-in-Possession Credit and Security
Agreement, dated as of November 19, 2007, as amended by the First Amendment and Waiver to the Debtor-in-Possession Credit and Security Agreement dated as of December 20, 2007 (as heretofore amended or otherwise modified, the
“Credit Agreement”), by and among POPE & TALBOT, INC., a Delaware corporation, as a debtor and debtor-in-possession under the US Bankruptcy Code and as a debtor company under the CCAA (the “Parent”),
POPE & TALBOT LTD., a Canadian corporation, as a debtor and debtor-in-possession under the US Bankruptcy Code, and as a debtor company under the CCAA (the “Borrower”), the Guarantors set forth on the signature pages
thereto, the several banks and other financial institutions or entities from time to time parties thereto (the “Lenders”), WELLS FARGO FINANCIAL CORPORATION CANADA, a Nova Scotia unlimited liability company, as administrative agent
(in such capacity, together with its permitted successors and assigns, the “Administrative Agent”), ABLECO FINANCE LLC, as Collateral Agent (in such capacity, together with its permitted successors and assigns, the
“Collateral Agent”), and ABLECO FINANCE LLC, as Term Loan B Agent (in such capacity, together with its permitted successors and assigns, the “Term Loan B Agent” and together with the Administrative Agent and the
Collateral Agent, each an “Agent” and collectively, the “Agents”). 
 WHEREAS, the Borrower, the Parent,
the Agents and the Lenders entered into that certain Third Waiver to the Credit Agreement dated as of January 7, 2008 in order to waive certain provisions of the Credit Agreement, subject to the terms and conditions set forth therein; and

 WHEREAS, the Agents and the Lenders are willing to enter into this Waiver in order to waive certain provisions of the Credit Agreement,
subject to the terms and conditions set forth in this Waiver. 
 NOW, THEREFORE, the Parent, the Borrower, the Agents and the Lenders hereby
agree as follows: 
 1. Capitalized Terms. Any capitalized term used herein which is defined in the Credit Agreement shall have the
meaning assigned to it in the Credit Agreement. 
 2. Limited Waivers. 
 (a) In accordance with Section 10.1 of the Credit Agreement and notwithstanding any of the provisions otherwise set forth in the
Credit Agreement, as of the Waiver Effective Date, the Majority Facility Lenders in respect of the Term Loan and the 

 
Majority Revolving Credit Facility Lenders hereby irrevocably and permanently waive any Default or Event of Default whether now existing or hereafter arising
under Section 8 (a)(a) of the Credit Agreement resulting from the occurrence of a Material Adverse Deviation with respect to the disbursement line items for (i) Payroll Taxes and Benefits for the week ended January 4, 2008 and on a
cumulative basis for all periods ended on or prior to January 4, 2008, (ii) Chemical payments during the week ended January 4, 2008 and (iii) Tax payments on a cumulative basis for all periods ended on or prior to January 4,
2008. 
 (b) The waiver set forth in this Section 2 shall (i) become effective after satisfaction of the conditions
set forth in Section 3, (ii) shall be effective only in this specific instance and for the specific purposes set forth herein, and (iii) does not allow for any other or further departure from the terms and conditions of the Credit
Agreement or any other Loan Document, which terms and conditions shall continue in full force and effect. 
 3. Conditions. This
Waiver shall become effective as of January 11, 2008, but only upon the satisfaction in full, in a manner reasonably satisfactory to the Agents, of the following conditions precedent (the first date upon which all such conditions have been
satisfied being herein called the “Waiver Effective Date”): 
 (a) Representations and Warranties. The
representations and warranties contained in this Waiver and in Section 4 of the Credit Agreement and in each other Loan Document, certificate or other writing delivered on or on behalf of any Loan Party to any Agent or any Lender pursuant to
the Credit Agreement or any other Loan Document on or prior to the Waiver Effective Date shall be true and correct on and as of the Waiver Effective Date as though made on and as of such date (except where such representations and warranties relate
to an earlier date in which case such representations and warranties shall be true and correct as of such earlier date). 
 (b) No Event of Default. No Default or Event of Default shall have occurred and be continuing on the Waiver Effective Date or would result from this Waiver becoming effective in accordance with its terms. 
 (c) Delivery of Documents. The Collateral Agent shall have received on or before the Waiver Effective Date the following, each in
form and substance reasonably satisfactory to the Collateral Agent and, unless indicated otherwise, dated the Waiver Effective Date: 
 (i) counterparts of this Waiver which bear the signatures of the Parent, the Borrower, the Agents and the Majority Facility Lenders in respect of the Term Loan and the Majority Revolving Credit Facility Lenders; and 
 (ii) an acknowledgment and consent, in the form attached as Exhibit A to this Waiver, duly executed by each Guarantor. 
 (d) Proceedings. All legal matters incident to this Waiver shall be reasonably satisfactory to the Agents and their counsel.

  

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 4. Representations and Warranties. To induce the Agents and Lenders to enter into this Waiver,
each of the Parent and the Borrower hereby represents and warrants to the Agents and Lenders as follows: 
 (a)
Organization, Good Standing, Etc. Each Loan Party (i) is duly organized, validly existing and in good standing under the laws of the state or jurisdiction of its organization, (ii) has all requisite power and authority to conduct
the business in which it is currently engaged, and to execute and deliver this Waiver, and to consummate the transactions contemplated hereby and by the Credit Agreement, and (iii) is duly qualified to do business and is in good standing in
each jurisdiction in which its ownership, lease or operation of Property or the conduct of its business requires such qualification, except where the failure to be so qualified could not reasonably be expected to have a Material Adverse Effect.

 (b) Authorization, Etc. The execution, delivery and performance of this Waiver and each other Loan Document being
executed in connection with this Waiver by each Loan Party that is a party thereto, and the performance of the Credit Agreement hereby (i) have been duly authorized by all necessary action, (ii) do not and will not contravene any Loan
Party’s Constituent Documents or any applicable law or any material contractual restriction binding on or otherwise affecting it or any of its properties, (iii) do not and will not result in or require the creation of any Lien (other than
pursuant to any Loan Document) upon or with respect to any of its properties, and (iv) do not and will not result in any default, noncompliance, suspension, revocation, impairment, forfeiture or nonrenewal of any material permit, license,
authorization or approval applicable to its operations or any of its properties. 
 (c) Governmental Approvals. No
authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or other regulatory body is required in connection with the due execution, delivery and performance by any Loan Party of this Waiver or any
other Loan Document to which it is a party being executed in connection with this Waiver, or for the performance of the Credit Agreement. 
 (d) Enforceability of Loan Documents. Each of this Waiver, the Credit Agreement, and each other Loan Document is a legal, valid and binding obligation of each Loan Party party thereto, enforceable against such
Loan Party in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws of general application relating to the enforcement of creditor’s rights
and by general equitable principles. 
 (e) Representations and Warranties; No Event of Default. The representations
and warranties herein, in Section 4 of the Credit Agreement and in each other Loan Document are true and correct on and as of the Waiver Effective Date as though made on and as of such date (except where such representations and warranties
relate to an earlier date in which case such representations and warranties shall be true and correct as of such earlier date), and no Default or Event of Default has occurred and is continuing as of the Waiver Effective Date or would result from
this Waiver becoming effective in accordance with its terms. 
  

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 (f) Existing Indentures. No consent with respect to the execution, delivery or
performance of this Waiver is required under the Existing Indentures. 
 5. Continued Effectiveness of the Credit Agreement and Loan
Documents. Each of the Parent and the Borrower hereby (i) acknowledges and consents to this Waiver, (ii) confirms and agrees that each Loan Document to which it is a party is, and shall continue to be, in full force and effect and is
hereby ratified and confirmed in all respects, and (iii) confirms and agrees that to the extent that any such Loan Document purports to assign or pledge to the Collateral Agent for the ratable benefit of the Secured Parties, or to grant to the
Collateral Agent for the ratable benefit of the Secured Parties a security interest in or Lien on, any Collateral as security for the Obligations of any Loan Party from time to time existing in respect of the Credit Agreement and the Loan Documents,
such pledge, assignment and/or grant of the security interest or Lien is hereby ratified and confirmed in all respects. This Waiver does not and shall not affect any of the Obligations of any Loan Party, other than as expressly provided herein.

 6. Waiver as Loan Document. Each of the Parent and the Borrower hereby acknowledges and agrees that this Waiver constitutes a
“Loan Document” under the Credit Agreement. Accordingly, it shall be an Event of Default under the Credit Agreement if (i) any representation or warranty made by the Parent or the Borrower under or in connection with this Waiver shall
have been untrue, false or misleading in any material respect when made, or (ii) the Parent or the Borrower shall fail to perform or observe any term, covenant or agreement contained in this Waiver. 
 7. Miscellaneous. 
 (a) This Waiver may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which shall be deemed to be an original but all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of this Waiver by telefacsimile or electronic mail shall be equally effective as delivery of an original executed counterpart of this Waiver. Any party delivering an executed counterpart of this Waiver
by telefacsimile or electronic mail also shall deliver an original executed counterpart of this Waiver, but the failure to deliver an original executed counterpart shall not affect the validity, enforceability and binding effect of this Waiver.

 (b) Section and paragraph headings herein are included for convenience of reference only and shall not constitute a part of
this Waiver for any other purpose. 
 (c) The Borrower will pay on demand all reasonable fees, costs and expenses of the
Agents in connection with the preparation, execution and delivery of this Waiver and all documents incidental hereto, including, without limitation, the reasonable fees, disbursements and other charges of counsel to the Collateral Agent and the
Administrative Agent. 
 (d) THIS WAIVER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK. 
  

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 (e) Any provision of this Waiver that is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.

 (f) THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS WAIVER OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. 
 [Signature Page Follows] 
  

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 IN WITNESS WHEREOF, the parties hereto have caused this Waiver to be executed and delivered as of the
date set forth on the first page hereof. 
  

					
	PARENT:
	
	POPE & TALBOT, INC., as a Debtor and Debtor-in-Possession under the US Bankruptcy Code and as a debtor company under the CCAA
		
	By:	 	/s/ R. Neil Stuart
		 	Name:	 	R. Neil Stuart
		 	Title:	 	VP and CFO
	
	BORROWER:
	
	POPE & TALBOT LTD., as a Debtor and Debtor-in-Possession under the US Bankruptcy Code and as a debtor company under the CCAA
		
	By:	 	/s/ R. Neil Stuart
		 	Name:	 	R. Neil Stuart
		 	Title:	 	VP and CFO
	
	COLLATERAL AGENT AND TERM LOAN B AGENT:
	
	 ABLECO FINANCE LLC,
 on behalf of itself and
its Affiliate assigns

		
	By:	 	/s/ Kevin Genda
		 	Name:	 	Kevin Genda
		 	Title:	 	Vice Chairman

					
	ADMINISTRATIVE AGENT AND LENDER:
	
	WELLS FARGO FINANCIAL CORPORATION CANADA
		
	By:	 	/s/ Nick Scarfo
		 	Name:	 	Nick Scarfo
		 	Title:	 	Vice President

					
	LENDERS:
	
	STYX PARTNERS, L.P.
		
	By:	 	Styx Associates, LLC, as its General Partner
		
	By:	 	/s/ Kevin Genda
		 	Name:	 	Kevin Genda
		 	Title:	 	Senior Managing Director

					
	OHSF FINANCING, LTD.
		
	By:	 	/s/ Scott D. Krase
		 	Name:	 	Scott D. Krase
		 	Title:	 	Authorized Signatory
	
	OHSF II FINANCING, LTD.
		
	By:	 	/s/ Scott D. Krase
		 	Name:	 	Scott D. Krase
		 	Title:	 	Authorized Signatory
	
	OAK HILL CREDIT OPPORTUNITIES FINANCING, LTD.
		
	By:	 	/s/ Scott D. Krase
		 	Name:	 	Scott D. Krase
		 	Title:	 	Authorized Signatory
	
	OAK HILL CREDIT ALPHA FINANCE I, LLC
		
	By:	 	Oak Hill Credit Alpha Fund, L.P., its Member
		
	By:	 	Oak Hill Credit Alpha Gen Par, L.P., its General Partner
		
	By:	 	Oak Hill Credit Alpha MGP, LLC, its General Partner
		
	By:	 	/s/ Scott D. Krase
		 	Name:	 	Scott D. Krase
		 	Title:	 	Authorized Signatory

					
	OAK HILL CREDIT ALPHA FINANCE I (OFFSHORE), LTD.
		
	By:	 	/s/ Scott D. Krase
		 	Name:	 	Scott D. Krase
		 	Title:	 	Authorized Signatory
	
	LERNER ENTERPRISES, L.P.
		
	By:	 	Oak Hill Advisors, L.P., as Investment Advisor for Lerner Enterprises, L.P.
		
	By:	 	/s/ Scott D. Krase
		 	Name:	 	Scott D. Krase
		 	Title:	 	Authorized Signatory
	
	OHA CAPITAL SOLUTIONS, L.P.
		
	By:	 	OHA Capital Solutions GenPar, L.P., its General Partner
		
	By:	 	OHA Capital Solutions MGP, LLC, its General Partner
		
	By:	 	/s/ Scott D. Krase
		 	Name:	 	Scott D. Krase
		 	Title:	 	Authorized Signatory
	
	OHA CAPITAL SOLUTIONS, LTD.
		
	By:	 	/s/ Scott D. Krase
		 	Name:	 	Scott D. Krase
		 	Title:	 	Authorized Signatory

					
	REGIMENT CAPITAL SPECIAL SITUATIONS FUND III, L.P.
		
	By:	 	Regiment Capital GP, LLC, its General Partner
		
	By:	 	/s/ Richard Miller
		 	Name:	 	Richard Miller
		 	Title:	 	Authorized Signatory

					
	DRAWBRIDGE SPECIAL OPPORTUNITIES FUND LP
		
	By:	 	Drawbridge Special Opportunities GP LLC, its general partner
		
	By:	 	/s/ Constantine M. Dakolias
		 	Name:	 	Constantine M. Dakolias
		 	Title:	 	President

					
	CREDIT GENESIS CLO 2005-1 LTD.
		
	By:	 	 
		 	Name:	 	
		 	Title:	 	
	
	DURHAM ACQUISITION CO., LLC
		
	By:	 	 
		 	Name:	 	
		 	Title:	 	

					
	HBK MASTER FUND L.P.
		
	By:	 	HBK Investments L.P. its Investment Advisor
		
	By:	 	/s/ J. Baker Gentry, Jr.
		 	Name:	 	J. Baker Gentry, Jr.
		 	Title:	 	Authorized Signatory

					
	BANK OF AMERICA, N.A.
		
	By:	 	/s/ Jonathan M. Barnes
		 	Name:	 	Jonathan M. Barnes
		 	Title:	 	Vice President

					
	 CONCORDIA PARTNERS, L.P.
 acting by and
through Concordia Advisors, L.L.C.,
 as a Lender

		
	By:	 	/s/ Allan A. Brown
		 	Name:	 	Allan A. Brown
		 	Title:	 	Portfolio Manager & Co-head of Distressed Debt Trading

					
	QUADRANGLE MASTER FUNDING LTD
		
	By:	 	 Quadrangle Debt Recovery Advisors LLC
 Its:
Advisor

		
	By:	 	 
		 	Name:	 	
		 	Title:	 	

					
	DK ACQUISITION PARTNERS, L.P.
		
	By:	 	M.H. Davidson & Co., its General Partner
		
	By:	 	/s/ Anthony Yoseloff
		 	Name:	 	Anthony Yoseloff
		 	Title:	 	General Partner

					
	ABN AMRO BANK N.V., Canada Branch
		
	By:	 	/s/ David Carson
		 	Name:	 	David Carson
		 	Title:	 	Vice President
		
	By:	 	/s/ Aaron Turner
		 	Name:	 	Aaron Turner
		 	Title:	 	Senior Vice President

 EXHIBIT A 
 ACKNOWLEDGMENT AND CONSENT 
 The undersigned, as a party to one or more Loan Documents, as defined in
the Debtor-in-Possession Credit and Security Agreement dated as of November 19, 2007, as amended by the First Amendment and Waiver to the Debtor-in-Possession Credit and Security Agreement dated as of December 20, 2007 (as heretofore
amended or otherwise modified, the “Credit Agreement”), by and among POPE & TALBOT, INC., a Delaware corporation, as a debtor and debtor-in-possession under the US Bankruptcy Code (the “Parent”),
POPE & TALBOT LTD., a Canadian corporation, as a debtor and debtor-in-possession under the US Bankruptcy Code, and as a debtor company under the CCAA (the “Borrower”), the Guarantors set forth on the signature pages
thereto, the several banks and other financial institutions or entities from time to time parties thereto (the “Lenders”), WELLS FARGO FINANCIAL CORPORATION CANADA, a Nova Scotia unlimited liability company, as administrative agent
(in such capacity, together with its permitted successors and assigns, the “Administrative Agent”), ABLECO FINANCE LLC, as Collateral Agent (in such capacity, together with its permitted successors and assigns, the
“Collateral Agent”), and ABLECO FINANCE LLC, as Term Loan B Agent (in such capacity, together with its permitted successors and assigns, the “Term Loan B Agent” and together with the Administrative Agent and the
Collateral Agent, each an “Agent” and collectively, the “Agents”), hereby (i) acknowledges and consents to the Third Waiver dated the date hereof (the “Waiver”, all terms defined therein being
used herein defined therein) to the Credit Agreement; (ii) confirms and agrees that each Loan Document to which it is a party is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects; and
(iii) confirms and agrees that to the extent that any such Loan Document purports to assign or pledge to the Collateral Agent, for the benefit of the Secured Parties, or to grant to the Collateral Agent, for the benefit of the Secured Parties,
a security interest in or lien on, any collateral as security for the obligations of any Guarantor from time to time existing in respect of the Loan Documents, such pledge, assignment and/or grant of a security interest or lien is hereby ratified
and confirmed in all respects as security for, in addition to the other obligations secured thereby, all obligations of such Guarantors outstanding upon the taking effect of the Waiver. 
 Dated: as of January 11, 2008 
 [signature pages follow] 

					
	POPE & TALBOT SPEARFISH LIMITED PARTNERSHIP, as a Debtor and Debtor-in-Possession under the US Bankruptcy Code
		
	By:	 	 POPE & TALBOT LTD.,
 as a Debtor and
Debtor-in-Possession under the US Bankruptcy Code and as a debtor company under the CCAA, as its General Partner

		
	By:	 	/s/ R. Neil Stuart
		 	Name:	 	R. Neil Stuart
		 	Title:	 	VP and CFO
	
	PENN TIMBER, INC., as a Debtor and Debtor-in-Possession under the US Bankruptcy Code and as a debtor company under the CCAA
		
	By:	 	/s/ R. Neil Stuart
		 	Name:	 	R. Neil Stuart
		 	Title:	 	VP and CFO
	
	POPE & TALBOT RELOCATION SERVICES, INC., as a Debtor and Debtor-in-Possession under the US Bankruptcy Code and as a debtor company under the CCAA
		
	By:	 	/s/ R. Neil Stuart
		 	Name:	 	R. Neil Stuart
		 	Title:	 	VP and CFO
	
	P&T POWER COMPANY, as a Debtor and Debtor-in-Possession under the US Bankruptcy Code and as a debtor company under the CCAA
		
	By:	 	/s/ R. Neil Stuart
		 	Name:	 	R. Neil Stuart
		 	Title:	 	VP and CFO

					
	POPE & TALBOT PULP SALES U.S., INC., as a Debtor and Debtor-in-Possession under the US Bankruptcy Code and as a debtor company under the CCAA
		
	By:	 	/s/ R. Neil Stuart
		 	Name:	 	R. Neil Stuart
		 	Title:	 	VP and CFO
	
	POPE & TALBOT LUMBER SALES, INC., as a Debtor and Debtor-in-Possession under the US Bankruptcy Code and as a debtor company under the CCAA
		
	By:	 	/s/ R. Neil Stuart
		 	Name:	 	R. Neil Stuart
		 	Title:	 	VP and CFO
	
	MACKENZIE PULP LAND LTD., as a Debtor and Debtor-in-Possession under the US Bankruptcy Code and as a debtor company under the CCAA
		
	By:	 	/s/ R. Neil Stuart
		 	Name:	 	R. Neil Stuart
		 	Title:	 	VP and CFO

					
	P&T LFP INVESTMENT LIMITED PARTNERSHIP, as a Debtor and Debtor-in-Possession under the US Bankruptcy Code
		
	By:	 	 P&T FUNDING LTD.,
 as a Debtor and
Debtor-in-Possession under the US Bankruptcy Code and as a debtor company under the CCAA, as its General Partner

		
	By:	 	/s/ R. Neil Stuart
		 	Name:	 	R. Neil Stuart
		 	Title:	 	VP and CFO
	
	P&T FUNDING LTD., as a Debtor and Debtor-in-Possession under the US Bankruptcy Code and as a debtor company under the CCAA
		
	By:	 	/s/ R. Neil Stuart
		 	Name:	 	R. Neil Stuart
		 	Title:	 	VP and CFO
	
	P&T FINANCE ONE LIMITED PARTNERSHIP, as a Debtor and Debtor-in-Possession under the US Bankruptcy Code
		
	By:	 	 PENN TIMBER, INC.,
 as a Debtor and
Debtor-in-Possession under the US Bankruptcy Code and as a debtor company under the CCAA, as its General Partner

		
	By:	 	/s/ R. Neil Stuart
		 	Name:	 	R. Neil Stuart
		 	Title:	 	VP and CFO

					
	P&T FINANCE TWO LIMITED PARTNERSHIP, as a Debtor and Debtor-in-Possession under the US Bankruptcy Code
		
	By:	 	 PENN TIMBER, INC.,
 as a Debtor and
Debtor-in-Possession under the US Bankruptcy Code and as a debtor company under the CCAA, as its General Partner

		
	By:	 	/s/ R. Neil Stuart
		 	Name:	 	R. Neil Stuart
		 	Title:	 	VP and CFO
	
	P&T FACTORING LIMITED PARTNERSHIP as a Debtor and Debtor-in-Possession under the US Bankruptcy Code
		
	By:	 	 POPE & TALBOT PULP SALES U.S., INC.,
 as a Debtor and Debtor-in-Possession under the US Bankruptcy Code and as a debtor company under the CCAA, as its Managing General Partner

		
	By:	 	/s/ R. Neil Stuart
		 	Name:	 	R. Neil Stuart
		 	Title:	 	VP and CFO
	
	P&T FINANCE THREE LLC, as a Debtor and Debtor-in-Possession under the US Bankruptcy Code and as a debtor company under the CCAA
		
	By:	 	 POPE & TALBOT LTD.,
 as a Debtor and
Debtor-in-Possession under the US Bankruptcy Code and as a debtor company under the CCAA, as its Manager

		
	By:	 	/s/ R. Neil Stuart
		 	Name:	 	R. Neil Stuart
		 	Title:	 	VP and CFOChange in Control Agreement

 Exhibit 10.1 
 CHANGE IN CONTROL AGREEMENT 
 THIS CHANGE IN CONTROL AGREEMENT (“Agreement”) is
entered into effective as of January 14, 2008, by and between Ambassadors International, Inc. a Delaware corporation (“Employer” or “Company”) and Blake T. Barnett (the “Executive”). 
 WITNESSETH 
 WHEREAS, the Compensation and
Nominating Committee of the Board (the “Committee”) recognizes that the possibility of a Change in Control (as hereinafter defined) exists or may exist in the future and that the threat or the occurrence of a Change in Control can result
in significant distractions of its key management personnel because of the uncertainties inherent in such a situation; 
 WHEREAS, the
Committee has determined that it is essential and in the best interest of the Company and the Company’s shareholders to retain the services of the Executive in the event of a threat or occurrence of a Change in Control and to ensure his
continued dedication and efforts in such event without undue concern for his personal financial and employment security; and 
 WHEREAS, in
order to induce the Executive to remain in the employ of the Company particularly in the event of a threat or the occurrence of a Change in Control, the Employer desires to enter into this Agreement with the Executive to provide the Executive with
certain benefits in the event of a Change in Control. 
 AGREEMENT 
 NOW, THEREFORE, in consideration of the respective agreements of the parties contained herein and other good and valuation consideration, the receipt and
sufficiency of which are hereby acknowledged, it is agreed as follows: 
 1. In the event of a Change in Control (as defined below),
Executive may elect to terminate his employment and shall be entitled to: 
  

	 	a.	All of the unpaid compensation, unpaid expenses, unpaid vacation days, prorated bonuses and other benefits accrued through the date of such termination; 

  

	 	b.	An amount equal to the projected cost of Executive’s medical insurance under COBRA for the eighteen (18) month period immediately following the termination;

  

	 	c.	An amount equal to one (1) times the average annual base salary plus one (1) times the average annual bonus paid to Executive for the two (2) full fiscal years
immediately preceding termination (in determining the annual bonuses, there shall be included the cash amounts as well as that value ascribed for financial accounting purposes on the dates of the grants to any and all option and share grants give to
Executive). If the Change in Control takes place before the Executive has been paid bonus for two (2) full fiscal years for the calculation above then bonus amount shall mean 100% of the target bonus that Executive would have been eligible to
receive that year; 

	 	d.	All of Executive’s unvested stock options and stock grants shall fully vest upon the date that the termination becomes effective; 

  

	 	e.	The payments provided for in clauses (a), (b) and (c) of this Section 1 shall be paid in full on the effective date of the termination and all such payments shall be
subject to the applicable withholding requirements of all appropriate governmental authorities; and 

  

	 	f.	Notwithstanding anything to the contrary contained herein, in the event that any payments and/or other consideration to be received by Executive under this Section 1 and or
other sections within this agreement are subject to the deduction limitations and tax imposed by Sections 280G and 4999 of the Internal Revenue Code of 1986, as amended (“Code”), or to any similar tax imposed by state or local law, or to
any interest or penalties with respect to such taxes (such taxes together with any such interest and penalties shall hereafter collectively be referred to as “Excise Tax”), then the total amount of such payments and value of the other
consideration shall be reduced, or refunded, as the case may be, by the minimum amount necessary so as to avoid the application of any Excise Tax. 

 2. Change in Control. In the event of a Change in Control, regardless of Executive’s election to terminate, all of Executive’s unvested stock options and stock grants shall fully vest. For purposes of
this Agreement, “Change in Control” means the occurrence of any of the following events: (i) any sale, lease, license, exchange or other transfer to a party not affiliated with Company (in one transaction or a series of related
transactions) of all, or substantially all, of the business and/or assets of Company; (ii) a merger or consolidation of Company and Company is not the surviving entity; (iii) a reorganization of the legal entities or liquidation of
Company; or (iv) a merger, consolidation, tender offer or any other transaction involving Company if the equity holders of Company immediately before such merger, consolidation, tender offer or other transaction do not own, directly or
indirectly, immediately following such merger, consolidation, tender offer or other transaction, more than fifty percent (50%) of the combined voting power of the outstanding voting securities of the entity resulting from such merger,
consolidation, tender offer or other transaction; or (v) a material change of the board; 3 directors elected to the board in a 15 month period that are not proposed by the Company. 
 3. Confidentiality of Information. Executive acknowledges and agrees that he has been and shall be exposed to Company’s Confidential
Information and Trade Secrets. Executive agrees to keep all such information strictly confidential at all times. Except as required by Executive’s duties for Company or by virtue of a subpoena or other court order applicable to Executive,
Executive agrees that, both during and after the Term of Employment, not to make, use or disclose any Confidential Information or Trade Secrets to any person, company, firm, organization or other entity, or encourage any such person, company, firm,
organization or other entity to make use of such Confidential Information or Trade Secrets. 
  

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 4. Disparaging Statements. Both the Company and the Executive agree that neither party will make
any disparaging comments about the Company, Executive, or any related Parties to any persons inside or outside the Company. 
 5.
General. 
  

	 	a.	Entire Agreement. This Agreement contains the entire under-standing between the parties hereto with respect to the subject matter herein and supersedes all other oral and
written agreements or understandings that may exist between them concerning the subject matter herein. 

  

	 	b.	Amendment. This Agreement may not be modified, amended, altered or supplemented except by written agreement between Executive and Company. 

  

	 	c.	Counterparts; Facsimile Signature. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original but all of which together
shall constitute one and the same instrument. This Agreement may be executed and delivered by facsimile signature. 

  

	 	d.	Jurisdiction. Each party hereby consents to the exclusive jurisdiction of the state and federal courts sitting in Orange County, California, in any action on a claim arising
out of, under or in connection with this Agreement or the transactions contemplated by this Agreement. Each party further agrees that personal jurisdiction over him or it may be effected by service of process by registered or certified mail
addressed as provided in Section 5(i) herein, and that when so made shall be as if served upon him or it personally within the State of California. 

  

	 	e.	Expenses. In the event an action at law or in equity is required to enforce or interpret the terms and conditions of this Agreement, the prevailing party shall be entitled to
reasonable attorney’s fees and costs in addition to any other relief to which that party may be entitled. 

  

	 	f.	Interpretation. The headings herein are inserted only as a matter of convenience and reference, and in no way define, limit or describe the scope of this Agreement or the
intent of any provisions thereof. No provision of this document is to be interpreted for or against any party because that party or party’s legal representative drafted it. 

  

	 	g.	Successors and Assigns. This Agreement shall be binding upon, and inure to the benefit of, the parties hereto and their heirs, successors, assigns and personal
representatives. As used herein, the successors of Company shall include, but not be limited to, any successor by way of merger, consolidation, sale of all or substantially all of its assets or similar reorganization. In no event may Executive
assign any rights or duties under this Agreement. 

  

 3 

	 	h.	Controlling Law; Severability. The validity and construction of this Agreement or of any of its provisions shall be determined under the laws of the State of California.
Should any provision of this Agreement be invalid either due to the duration thereof or the scope of the prohibited activity, such provision shall be limited by the court to the extent necessary to make it enforceable and, if invalid for any other
reason, such invalidity or unenforceability shall not affect or limit the validity and enforceability of the other provisions hereof. 

  

	 	i.	Notices. Any notice required or permitted to be given under this Agreement shall be sufficient if in writing and if personally received by the party to whom it is sent or
delivered, or if sent by registered or certified mail, postage prepaid, to Executive’s residence in the case of notice to Executive, or to its principal office if to Company. A notice is deemed received or delivered on the earlier of the day
received or three (3) days after being sent by registered or certified mail in the manner described in this Section. 

  

	 	j.	Waiver of Breach. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach.

  

	 	k.	Survival. Notwithstanding anything to the contrary contained in this Agreement, the rights and obligations of each party under Section 3 and 4 shall survive the
termination of Executive’s employment with Company. 

 IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written. 
  

			
	AMBASSADORS INTERNATIONAL, INC.
		
	By:	 	/s/ Richard D. C. Whilden
		 	Richard D. C. Whilden
		 	Chairman of Compensation and Nominating Committee
		
	By:	 	/s/ Blake T. Barnett
		 	Blake T. Barnett

  

 4

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