Document:

Exhibit 10.12

 

LINCOLN
EDUCATIONAL SERVICES CORPORATION

2005 DEFERRED
COMPENSATION PLAN

 

1.             Purpose

 

The Plan is intended to provide a select group of
management, highly compensated employees and non-employee directors of the
Company the opportunity to defer on an annual basis a portion of their
Compensation and all or a portion of their Restricted Stock Units.  Participation in the Plan is voluntary.

 

This Plan is intended to be a “plan which is unfunded
and maintained by an employer primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees”
within the meaning of Sections 201(2) and 301(a)(3) of ERISA and
shall be interpreted and administered in a manner consistent with that intent.

 

2.             Defined Terms

 

As used in the Plan, the following terms shall have
the indicated meanings:

 

“Account” means a
bookkeeping account maintained on the books and records of the Company to
record Deferred Amounts and credits and debits thereto in accordance with the
Plan.

 

“Account Value” means the
amount reflected on the books and records of the Company as the value of a
Participant’s Account at any date of determination, as determined in accordance
with the Plan.

 

“Applicable Maximum”
means (i) with respect to an Employee Participant, the maximum amount of
10% of Compensation that such Participant may elect to defer pursuant to a
Deferral Election and (ii) with respect to a Non-Employee Director
Participant, the maximum amount, if any, specified by the Committee from time
to time that such Participant may elect to defer pursuant to a Deferral
Election, which Applicable Maximum shall not include any Restricted Stock Unit
Deferral Amount.

 

“Beneficiary” means the
beneficiary or beneficiaries designated by a Participant (on such form and in
accordance with such rules and procedures as the Committee shall approve)
to receive payment of the Participant’s Account Value in the event of the
Participant’s death.  A Participant may
revoke or change such designation at any time, except that no Beneficiary
designation shall be effective unless it is in writing and received by the
Company prior to the date of the Participant’s death.

 

“Board” means the Board
of Directors of the Company.

 

“Cash Deferral Amount”
means the U.S. dollar amount of Compensation deferred by a Participant pursuant
to a Deferral Election.  For purposes of
the payment

 

 

provisions of the Plan, Cash Deferral Amount also
includes any earnings credited thereon.

 

“Change in Control” has the meaning
assigned to such term in the Lincoln Educational Services Corporation 2005
Long-Term Incentive Plan. 
Notwithstanding the foregoing, no event will constitute a Change in
Control for purposes of the Plan unless such event also constitutes a Change in
Control Event as defined under Section 409A of the Code and the
regulations and guidance promulgated thereunder.

 

“Code” means the
Internal Revenue Code of 1986, as amended, and the applicable rulings and
regulations thereunder.

 

“Committee” means the
Compensation Committee of the Board or such other committee appointed by the
Board to administer the Plan.

 

“Common Stock” means the
common stock of the Company, no par value per share.

 

“Company” means Lincoln
Educational Services Corporation or any successor to substantially all of its
business.

 

“Compensation” means (i) with
respect to an Employee Participant, the total cash compensation paid (or
otherwise payable but for a Deferral Election) to such Participant from the
Company or any of its Subsidiaries before deductions for elective contributions
to any savings plans.  By way of
illustration, but not limitation, Compensation for an Employee Participant
includes regular compensation such as salary, wages, overtime, shift
differentials, bonuses, commissions and incentive compensation, but excludes
relocation, expense reimbursements, tuition or other reimbursements and income
realized as a result of participation in any equity, stock purchase or similar
plan of the Company or any of its Subsidiaries and (ii) with respect to a Non-Employee
Director Participant, the total cash payments made (or otherwise payable but
for a Deferral Election) to such Participant in connection with such
Participant’s service on the Board or any committee thereto.  By way of illustration, but not limitation,
Compensation for a Non-Employee Director Participant includes annual retainer
fees and committee fees, but excludes expense reimbursements and any Restricted
Stock Unit Deferral Amount.

 

“Deferral Election” means
(i) a Participant’s annual, written election to defer payment of a portion
of his Compensation, subject to the terms and conditions of the Plan, and/or (ii) a
Non-Employee Director Participant’s election to defer Restricted Stock Units
receivable in any year in accordance with the terms of the Restricted Stock
Plan or any related award agreement.  The
Committee may permit a Non-Employee Director Participant to make a separate
Deferral Election with respect to his Compensation and any Restricted Stock Unit
Deferral Amount.  Unless the Committee
determines otherwise in accordance with applicable law, a Deferral Election
shall be irrevocable.

 

“Deferral Period” means a
period elected in writing by a Participant at the time of his Deferral Election
for the voluntary deferral of the Deferred Amounts subject to the
election.  Unless the Committee
determines otherwise, a Deferral Period shall be a period

 

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of not less than thirty-six months commencing
immediately following the first day of the Service Period to which the Deferral
Period relates, except that a Participant’s Deferral Period shall end on, and
the distribution of Deferred Amounts shall commence in accordance with Section 9(c) as
soon as practicable following, the Participant’s Termination Date.

 

“Deferred Amounts” means,
with respect to each Participant, (i) his Cash Deferral Amount and (ii) his
Restricted Stock Unit Deferral Amount, if any.

 

“Disability” has the
meaning set forth in Section 409A of the Code.

 

“Election
Date” means (1) with respect to Compensation,
the date designated by the Committee prior to the commencement of a Service
Period as the deadline on which a Deferral Election must be made and (2) with
respect to Restricted Stock Unit Deferral Amounts, such date as may be designated
in the Restricted Stock Plan; provided,
however, that in no event shall
such dates be later than December 31 of the taxable year prior to a
Service Period.  Notwithstanding the
foregoing on the first year in which a Participant becomes eligible to
participate in the Plan, such Deferral Election may be made with respect to a
Service Period to be performed subsequent to such election within thirty (30)
days after the date the Participant becomes eligible to participate in the
Plan.

 

“Eligible Person” means
an Employee or Non-Employee Director who satisfies the requirements of Section 3(a) of
the Plan.

 

“Eligibility Limit” means
the minimum U.S. dollar amount of annual base salary specified by the Committee
from time to time that an Employee must earn in order to qualify as an Eligible
Person in accordance with Section 3(a) of the Plan.  The initial Eligibility Limit shall be U.S.
$170,000.  The Eligibility Limit shall be
calculated without regard to Deferral Elections or deferrals under any plan or
program of the Company or any of its Subsidiaries.

 

“Employee” means any
person employed by the Company or any of its Subsidiaries and treated as such
on the Company’s books and records and shall not include (i) any person
treated by the Company on its books as an independent contractor or consultant
or (ii) any person serving the Company through an agency, consulting firm,
payroll service, sub-contractor or other third-party provider.

 

“ERISA” means the
Employee Retirement Income Security Act of 1974, as amended, and the
regulations thereunder.

 

“Investment Options”
means notional investment alternatives corresponding to the mutual funds or
other investment alternatives available to participants under the Company’s
401(k) savings plan from time to time and such other indices as the Committee
may specify from time to time.

 

“Minimum Deferral” means
the minimum U.S. dollar amount or, where applicable, amount of Restricted Stock
Units specified by the Committee from time to time that may be deferred
pursuant to a Deferral Election.

 

3

 

“Non-Employee Director”
means a director of the Company who is not an officer or employee of the
Company or any Subsidiary.

 

“Restricted Stock Unit Deferral Amount”
means the amount of Restricted Stock Units deferred by a Non-Employee Director
pursuant to a Deferral Election.

 

“Participant”
means an Eligible Person selected by the Committee to participate in the Plan
in accordance with Section 3(a) of the Plan.

 

“Payment
Election” means an election as to the form and
timing of distribution of Deferred Amounts elected in writing by a Participant
at the time of his corresponding Deferral Election.  Unless the Committee determines otherwise,
the form of distribution of a Participant’s Account Value attributable to his
Cash Deferral Amount (and any credits thereon) pursuant to a Payment Election
may be in the form of a single lump-sum distribution, or in up to ten annual
installments over ten years, or in up to one hundred and twenty monthly installments
over ten years.  Unless the Committee
determines otherwise, the form of distribution of a Participant’s Account Value
attributable to his Restricted Stock Unit Deferral Amount (and any dividend
equivalent related thereto) pursuant to a Payment Election will be in the form
of a single lump-sum distribution.

 

“Plan”
means the Lincoln Educational Services Corporation 2005 Deferred Compensation
Plan.

 

“Restricted
Stock Plan” means the Company’s 2005 Non-Employee
Directors Restricted Stock Plan and any successor plan thereto.

 

“Restricted
Stock Unit” has the meaning assigned to such term
in the Restricted Stock Plan.

 

“Retirement”
means, with respect to an Employee Participant, normal or early retirement from
employment with the Company in accordance with the terms of the applicable
pension plan document and the retirement policies of the Company employing the
Participant.

 

“Service
Period” means (i) with respect to Cash
Deferral Amounts, a calendar year or such other period as the Committee may
specify from time to time and (ii) with respect to Restricted Stock Unit
Deferral Amounts, any period applicable thereto.  With respect to Cash Deferral Amounts, the
first Service Period shall be calendar year 2006.

 

“Specified
Employee” has the meaning set forth in Section 409A
of the Code.

 

“Subsidiary”
means any (i) corporation if fifty percent (50%) or more of the total
combined voting power of all classes of stock is owned, either directly or
indirectly, by the Company or another Subsidiary or (ii) limited liability
company if fifty percent (50%) or more of the membership interests is owned,
either directly or indirectly, by the Company or another Subsidiary.

 

4

 

“Termination
Date” means (i) with respect to an Employee
Participant, the earlier of his Retirement or separation from service for any
reason other than Retirement, including, without limitation, a separation from
service with or without cause or resulting from such Participant’s death or
Disability and (ii) with respect to a Non-Employee Director Participant, a
termination of service on the Board for any reason.

 

3.             Deferral Elections

 

(a)           Eligibility.  Each Employee shall qualify as an Eligible Person for a
Service Period if his annualized base salary for the preceding calendar year is
equal to an amount that is not less than the Eligibility Limit or if the
Participant’s annualized base salary for the current Service Period is
reasonably likely, in the judgment of the Committee, to be equal to an amount
that is not less than the Eligibility Limit. 
Each Non-Employee Director shall qualify as an Eligible Person if he
elects to defer any Compensation and/or any Restricted Stock Units granted to
him under the Restricted Stock Plan. 
Notwithstanding the foregoing provisions, the Committee may exclude or
not select an Eligible Person as a Participant if the Committee determines that
excluding such individual from participation in the Plan may be in the best
interests of the Company or necessary or advisable to comply with the
requirements of applicable law.  Any
dispute as to whether an Employee or Non-Employee Director qualifies as an
Eligible Person shall be resolved by the Committee.

 

(b)           Deferral Elections.  Each Participant shall be offered the
opportunity to make a Deferral Election as specified in this Section 3(b).  A Participant shall make a Deferral Election
for a Service Period by completing, signing and submitting, during a period
specified by the Committee ending on the Election Date, a Deferral Election in
the form approved from time to time by the Committee.  The Committee may require a Participant, as a
condition to submitting a Deferral Election, to make such representations and
warranties, and to agree to such undertakings and conditions, as the Committee
shall determine.

 

(c)           Determination of Minimum Deferral and Applicable
Maximum.  The Minimum Deferral and Applicable Maximum for each Service
Period shall be established by the Committee, and either or both may be
increased or decreased from one Service Period to another.  The Committee may specify a separate Minimum
Deferral and Applicable Maximum applicable to the various components of a
Participant’s Compensation, including, without limitation, a Participant’s base
salary, annual cash bonus and annual retainer fees.  The Minimum Deferral and Applicable Maximum
applicable to any given Participant need not be the same as those applicable to
other Participants.

 

(d)           Timing of Deferrals.  Unless the Committee determines
otherwise, the portion of the Deferred Amount that represents an Employee
Participant’s base salary shall be deferred in equal installments during the
payroll periods applicable to the Service Period.  Unless the Committee determines otherwise,
the portion of the Deferred Amount that represents an Employee Participant’s
annual cash bonus shall be deferred at the time the bonus would have otherwise
been paid but for a Deferral Election. 
Unless the Committee determines otherwise, the portion of the Deferred
Amount that represents the Restricted Stock Unit Deferral Amount shall be
deferred at the time the Restricted Stock Unit becomes vested pursuant to the
terms and conditions of the Restricted Stock Plan.

 

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4.             Accounts

 

(a)           Credits.  The Deferred Amounts elected pursuant to a
Deferral Election shall be credited to the Account maintained in a Participant’s
name.  The Deferred Amounts shall be
credited to a Participant’s Account as soon as practicable after the date on
which the corresponding Compensation would otherwise have been paid and/or the
shares of Common Stock underlying the Restricted Stock Units would otherwise
have been delivered to the Participant but for a Deferral Election.  In addition to crediting the Account with the
Deferred Amount, the Account shall periodically be credited (or debited) with a
return on the Cash Deferral Amount, as provided in Section 6, and credited
with dividend equivalents in respect of the Restricted Stock Unit Deferral
Amount, as provided in Section 7(c).

 

(b)           Debiting for Distributions.  A Participant’s Account shall be
debited with any amount distributed to a Participant or his Beneficiary.

 

(c)           No Withdrawals or Loans.  A Participant shall have no
rights under the Plan to make withdrawals from an Account for any reason.

 

5.             Vesting

 

Participants shall be fully vested in their Deferred
Amounts, as such amounts are adjusted from time to time in accordance with the
terms of the Plan.

 

6.             Return on Cash Deferral Amounts

 

(a)           Election of Investment
Options.  For purposes only of determining the Account
Value, a Participant shall have the right to designate the manner in which his
Cash Deferral Amount shall be deemed allocated among one or more Investment
Options specified from time to time by the Committee.  Any minimum and maximum allocation to any
single Investment Option shall be specified from time to time by the
Committee.  The Company shall have no
obligation to invest the Cash Deferral Amount in investment vehicles
corresponding to the Investment Options selected by a Participant or in any
other investment alternative.  A
Participant may change his earlier elected Investment Options applicable to his
Account Value subject to the terms and restrictions established by the
Committee from time to time, including, without limitation, terms relating to
the date on which the change of Investment Options shall become effective.

 

(b)           Company’s Right to Change Investment Options.  The Committee may from time to
time change the Investment Options available under the Plan, and nothing in the
Plan shall be construed to confer on any Participant the right to continue to
have any particular Investment Option available for purposes of determining his
Account Value.

 

(c)           Committee
Determinations to Control.  All
determinations of the amount to be credited to an Account with respect to the
Investment Options selected by a Participant shall be made by the Committee,
whose determination shall be final and binding on all parties.

 

6

 

7.             Restricted Stock Unit Deferral
Amounts

 

(a)           Deferral.  A Non-Employee Director Participant may also
defer Restricted Stock Units awarded to him pursuant to the Restricted Stock
Plan.  The number of Restricted Stock
Units shall be credited to the Non-Employee Director Participant’s Account as
of the date the Restricted Stock Units vest and become nonforfeitable in
accordance with the terms and conditions of the Restricted Stock Plan.

 

(b)           Crediting.  Any Restricted Stock Units credited to a
Non-Employee Director Participant’s Account shall remain credited to such
Account as Restricted Stock Units until such time as such Restricted Stock
Units are settled through the delivery to such Participant (or his Beneficiary)
of shares of Common Stock in accordance with Section 9.

 

(c)           Dividend Equivalent Deferral.  Unless the Committee determines otherwise, if
the Company pays any cash or other dividend or makes any other distribution in
respect of the shares of Common Stock underlying Restricted Stock Units after
such Restricted Stock Units have been credited to a Non-Employee Director
Participant’s Account in accordance with the terms of Section 7(a), the
Company will maintain a bookkeeping record to which such amount of the dividend
or distribution in respect of such shares of Common Stock will be credited to
an account for the Non-Employee Director and distributed in whole shares of
Common Stock (with any fractional shares rounded down to the nearest whole
share) at the time the Restricted Stock Units are distributed in accordance
with the terms of Section 9 or 10 hereof.

 

8.             Determination of Account Value

 

The Company shall maintain (or cause to be maintained)
such records as shall permit it to determine the Account Value of each
Account.  The Company shall provide each
Participant with a statement reflecting the Participant’s Account Value as of
the end of each calendar year or at such other intervals as may be specified by
the Committee.  Calculation of an Account
Value as provided in this Section 8 shall be for informational purposes
only, and shall not confer on a Participant any right to receive the amount
reflected as an Account Value as of any given date.  A Participant’s rights to receive
distributions in respect of his Account Value shall be determined in accordance
with Section 9.

 

9.             Distribution of Deferred Amount

 

(a)           Payment in Cash.  All payments to Participants or their Beneficiaries of Cash
Deferral Amounts shall be in cash in U.S. dollars.

 

(b)           Delivery of Common Stock.  All Restricted Stock Units (and any dividend
equivalents related thereto) to be delivered to Non-Employee Directors or their
Beneficiaries shall be settled in whole shares of Common Stock (with any
fractional shares rounded down to the nearest whole share).

 

(c)           Timing of Payout.  Each Participant shall receive a distribution of his
Deferred Amount within a reasonable period specified by the Committee following
the last day of the Deferral Period in accordance with the Participant’s
Payment Elections applicable to the Deferred Amounts credited to the Account; provided, however, that no distribution of any Deferred Amounts to a
Specified Employee shall be made before the date which is six (6) months
after the Specified Employee’s separation from service.

 

7

 

(d)           Death.  In the event of a Participant’s death (occurring on or after
the Termination Date) prior to payment of his entire Account Value, the entire
Account Value of the Participant shall be distributed to the Participant’s Beneficiary
(i) in a cash lump sum with respect to Cash Deferral Amounts (and any
credits thereto) and/or (ii) by the delivery of shares of Common Stock
with respect to Restricted Stock Unit Deferral Amounts as soon as practicable
following the Participant’s death.

 

(e)           Amending Payment Elections.  The Committee may permit a
Participant to amend his Payment Election in accordance with the provisions of Section 409A
of the Code and such procedures as the Committee may establish from time to
time.

 

(f)            Extension of Deferral Period.  A Participant may elect to
extend the original Deferral Period specified in a Deferral Election in
accordance with the provisions of Section 409A of the Code.  Any additional extensions to a Deferral
Period applicable to the same Deferral Election may be made only with the
Committee’s consent.  A Participant’s
election to extend a Deferral Period shall be made at least twelve months prior
to the last day of the then-current Deferral Period.  Upon the making of such an election to extend,
the “Deferral Period” shall mean the original Deferral Period as so extended.

 

(g)           Early Payment.  Notwithstanding anything to the contrary in the Plan or a
Participant’s Deferral Election, the Committee shall at all times have the
right, to the extent permitted under Section 409A of the Code, to
accelerate distribution of any Participant’s Account Value.  In the event that the Committee makes such
election, the Account Value shall be distributed on such date or dates as shall
be specified by the Committee.

 

(h)           Valuation.  A distribution to a Participant shall be based on the
Account Value of the Participant’s Account determined as of the valuation date
specified by the Committee, which valuation date shall be on or prior to the
distribution date.  In determining the
amount of an installment payment, the Account Value (as determined in
accordance with the previous sentence) shall be divided by the number of
remaining installments (including the installment with respect to which the
payment is being calculated).

 

10.          Change
in Control

 

At least thirty days prior to a Change in Control, or
on such date less than thirty days prior to the date of the Change in Control
as the Committee shall specify, a Participant shall receive an immediate
distribution of his entire Account Value (a) in a cash lump-sum payment
with respect to Cash Deferral Amounts (and any credits thereon) and/or (b) by
the delivery of shares of Common Stock with respect to Restricted Stock Unit
Deferral Amounts.  This Section 10
shall supersede any other provision in the Plan to the extent such other
provision conflicts with this Section 10, including, without limitation,
Sections 9 and 12 hereof.

 

11.          Administration

 

The Plan shall be administered and operated by the
Committee (or such person or group of persons to which such duties are
delegated by the Committee), which shall be responsible for the interpretation
of the Plan and the establishment of the rules and regulations governing
the administration thereof.  The
Committee, in its sole and absolute discretion, shall

 

8

 

have full power and authority to administer the Plan and to exercise
all the powers and authorities either specifically granted to it under the Plan
or necessary or advisable in the administration of the Plan, including, without
limitation, to construe and interpret the Plan; to prescribe, amend and rescind
rules and regulations relating to the Plan; to make eligibility
determinations; to determine whether Deferral Elections shall be permitted for
each year; to determine the terms and provisions of the Deferral Election
forms; to make determinations with respect to federal, state and local income
tax withholding; to make determinations with respect to an Account Value or of
the return to be attributed to any Deferred Amounts; and to make all other
determinations deemed necessary or advisable for the administration of the
Plan.  All determinations, decisions,
interpretations and actions of the Committee shall be final, binding and
conclusive on all persons for all purposes, including the Company, the
Participants (and any person claiming any rights under the Plan from or through
a Participant).  No member of the
Committee shall be liable to any person for any action taken or omitted in good
faith in connection with the interpretation, construction, or administration of
the Plan.  The Company shall indemnify
and hold harmless the members of the Committee and the Company’s officers,
employees and directors against all expenses and liabilities arising out of any
action taken or omitted in good faith in administering the Plan.

 

12.          Amendment and Termination

 

(a)           The Committee may amend, modify or terminate the Plan at any
time, and upon such termination, no further Deferred Amounts shall be
made.  No amendment or termination of the
Plan shall adversely affect the rights of a Participant in any Account that has
been established prior to such amendment or termination absent the written
consent of the affected Participants. Notwithstanding the foregoing, any
amendment or modification of the Plan may be made (including retroactively, if
necessary) if the Committee deems such amendment or modification necessary or
proper to bring the Plan into conformity with any law or governmental regulation
relating to the Plan or to prevent any Deferred Amounts from being subject to
any federal, state or local tax prior to the distribution of such Deferred
Amounts in accordance with the terms of this Plan.

 

(b)           If any provision of the Plan
contravenes any regulations or Department of Treasury guidance promulgated
under Section 409A of the Code or could cause an Account Balance to be
subject to the interest and penalties under Section 409A of the Code, such
provision of the Plan shall be modified to maintain, to the maximum extent
practicable, the original intent of the applicable provision without violating
the provisions of Section 409A of the Code.

 

13.          Unfunded Plan

 

The deferred compensation arrangement provided for
herein is intended to be “unfunded” for purposes of U.S. federal income tax,
and the Accounts shall represent at all times unfunded and unsecured
contractual obligations of the Company. 
Participants and their Beneficiary shall be unsecured creditors of the
Company with respect to all obligations owed to any of them under the
Plan.  Amounts payable under the Plan
shall be satisfied solely out of the general assets of the Company subject to
the claims of its creditors, and Participants and their Beneficiary shall not
have any interest in any fund or in any specific asset of the Company of any

 

9

 

kind by reason of any amount credited to Participants hereunder, nor
shall the Participants or any of their Beneficiary or any other person have any
right to receive any distribution under the Plan except as, and to the extent,
expressly provided herein.  No provision
in the Plan shall create or be construed to create any claim, right or cause of
action against the Company, or against any of its employees, officers,
directors, agents, shareholders, members, partners or affiliates arising from
any diminution in the value of any Investment Option.

 

14.          General Terms

 

(a)           No Right to Continued Employment, Service or
Participation.  The Plan shall not be deemed to create or confer on any
individual any right to be retained in the employment or service of the
Company, nor to create or confer on any individual the right to make a Deferral
Election with respect to any future Service Period.  The terms and conditions of a Participant’s
employment or service with the Company shall be governed by arrangements
entered into independently of the Plan.

 

(b)           No Obligation to Continue the Plan for Future
Service Periods.  The Company shall not be under any obligation to continue
the arrangements provided for herein with respect to any future Service Period.

 

(c)           Right of Offset.  Notwithstanding any provisions of the Plan to the contrary,
the Company may offset any amounts to be paid to a Participant (or, in the
event of the Participant’s death, to his Beneficiary) under the Plan against
any amounts that such Participant may owe to the Company.

 

(d)           Taxes and Withholding.  As a condition to any payment or
distribution pursuant to the Plan, the Company may require a Participant to pay
such sum to the Company as may be necessary to discharge its obligations with
respect to any taxes, assessments or other governmental charges imposed on
property or income received by the Participant hereunder.  The Company may deduct or withhold such sum
from any payment or distribution to the Participant.

 

(e)           Headings.  The section headings in the Plan have been inserted for
convenience of reference only and are to be ignored in any construction of any
provision hereof.  If a provision of the
Plan is held to be not valid or enforceable, that fact shall in no way affect
the validity or enforceability of any other provision hereof.  Use of one gender includes the other, and the
singular and plural include each other, except where the context clearly requires
otherwise.

 

(f)            Notices.  Notices may be delivered to an Employee Participant at the
offices of the Company at which the Participant is principally employed.  Any Employee Participant who ceases to be an
Employee shall be responsible for furnishing the Company with the current and
proper address for the mailing of notices and delivery of payments.  Notices may be delivered to a Non-Employee
Director Participant at his principal residence.  A Non-Employee Director shall be responsible
for furnishing the Company with the current and proper address for the mailing
of notices and delivery of payments.  Any
notice required or permitted to be given to such a Participant shall be deemed
given if directed to the person to whom addressed

 

10

 

at such address and mailed by regular United States mail, first class
and prepaid.  If any item mailed to such
address is returned as undeliverable to the addressee, mailing will be
suspended until the Participant furnishes the proper address.

 

(g)           No Assignment; Binding Effect.  A Participant’s rights under the
Plan (including, without limitation, the right to receive payments as provided
herein) may not be assigned.  The
provisions of the Plan shall be binding on each Participant, such Participant’s
Beneficiary and the Company and its successors and assigns, including, without
limitation, any successor in connection with a Change in Control.

 

(h)           Governing Law.  The Plan shall be governed by, and construed in accordance
with, the laws of the State of New York applicable to agreements executed and
performed entirely therein.

 

(i)            Effective Date.  The Plan shall be effective as of May 16,
2005.

 

11Exhibit 10.32

 

FORM OF WARRANT EXCHANGE
AGREEMENT

 

                                This
WARRANT EXCHANGE AGREEMENT, dated as of _____ __, 2005, (this “Agreement”)
is by and among SEACOR HOLDINGS INC., a Delaware corporation (“SEACOR”), and the
warrant holder listed on the signature pages hereof (the “Holder”).

 

RECITALS

 

                                WHEREAS,
SEACOR, SBLK Acquisition Corp., a Delaware corporation, CORBULK LLC, a Delaware
limited liability company, and Seabulk International, Inc., a Delaware
corporation (“Seabulk”), are parties to that certain Agreement and Plan
of Merger, dated as of March 16, 2005 (the “Merger Agreement”).  Capitalized terms used herein and not
otherwise defined shall have the meanings assigned to such terms in the Merger
Agreement; and

 

                                WHEREAS,
the Holder owns warrants to purchase shares of common stock, par value $0.01
per share, of Seabulk ( the “Warrants”); and

 

                                WHEREAS,
pursuant to the terms of the Merger Agreement, SEACOR has agreed to use its
commercially reasonable efforts to come to an agreement with each holder
of  Warrants to cancel such holder’s
Warrants in exchange for consideration consisting of (i) the Per Share Merger
Consideration (as defined below) for each share of Seabulk common stock subject
to such Warrants minus (ii) the aggregate amount of the exercise prices payable
in respect of such Warrants; and

 

                                WHEREAS,
SEACOR desires to purchase from the Holder, and the Holder desires to sell and
transfer to SEACOR, all of the Warrants listed on Appendix I hereto in
exchange for the Warrant Consideration listed on Appendix I in
accordance with and subject to the terms and conditions set forth herein.

 

                                NOW,
THEREFORE, in consideration of the promises, mutual covenants and agreements
hereinafter contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

 

1.             Sale and Purchase of the Warrants.  Upon the terms and subject to the conditions
set forth in this Agreement, immediately prior to the Reverse Merger Effective
Time, the Holder shall sell, transfer, convey, assign and deliver to SEACOR,
and SEACOR shall purchase and acquire from the Holder, all of the rights, title
and interest in, to and under the Warrants, free and clear of all liens (the “Transfer”).  In consideration of the consummation of the
aforesaid Transfer and the covenants and agreements of the Holder set forth
herein, SEACOR shall deliver to the Holder (A) for each share of Seabulk common
stock subject to the Warrants, subject to adjustment pursuant to the terms of
the Merger Agreement (i) 0.2694 of a validly issued, fully paid and
nonassessable share of common stock, par value $0.01 per share, of SEACOR (“SEACOR
Common Stock”) and (ii) $4.00 in cash (the “Per Share Merger
Consideration”) minus (B) the aggregate amount of the exercise prices
payable in respect of such Warrants (the “Warrant Consideration”).  For purposes hereof, delivery of the Warrant
Consideration, together with the Transfer is referenced to as, the “Warrant
Exchange”.

 

 

 

2.             Closing.  (a)
Subject to (i) the satisfaction, or waiver, by SEACOR of each of the conditions
set forth in Section 2(b) and (ii) the satisfaction, or waiver, by the Holder
of each of the conditions set forth in Section 2(c), the closing of the Warrant
Exchange (the “Closing”) shall occur immediately prior to the Reverse
Merger Effective Time.

(b)           SEACOR’s obligation to consummate the
Warrant Exchange shall be subject to the following conditions:  (i) no law or order shall have been enacted,
issued, promulgated, enforced or entered that would restrain, enjoin or
otherwise prohibit consummation of the Warrant Exchange; (ii) each of the
representations and warranties of the Holder set forth herein shall be true and
correct in all material respects (other than the representations and warranties
set forth in Sections 5(d) and 5(e), which shall be true and correct in all
respects) when made and as of the Closing; (iii) the Holder shall have
performed in all material respects all of the Holder’s obligations and
covenants hereunder that are to be performed prior to the Closing; (iv) all
conditions to consummation of the Merger described in the Merger Agreement
shall have been satisfied; and (v) the Form S-4 shall have become effective
under the Securities Act and no stop order suspending the effectiveness of the
Form S-4 shall have been issued and no proceedings for that purpose shall have
been initiated or threatened by the SEC.

(c)           The Holder’s obligation to consummate
the Warrant Exchange shall be subject to the following conditions:  (i) no law or order shall have been enacted,
issued, promulgated, enforced or entered that would restrain, enjoin or
otherwise prohibit consummation of the Warrant Exchange; (ii) each of the
representations and warranties of SEACOR set forth herein shall be true and
correct in all material respects when made and as of the Closing; (iii) SEACOR
shall have performed in all material respects all of SEACOR’s obligations and
covenants hereunder that are to be performed prior to the Closing; and (iv) the
Form S-4 shall have become effective under the Securities Act and no stop order
suspending the effectiveness of the Form S-4 shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the
SEC.

3.             Further Assurances.  Each of the parties hereto hereby agrees to
execute such documents and other papers and to perform or cause to be performed
such further acts as may be required or advisable to effect the Warrant
Exchange on the terms set forth in this Agreement, including by promptly
executing and delivering such further instruments of assignment, transfer,
conveyance, endorsement, direction or authorization and other documents as may
be required or advisable to effectuate the purposes of this Agreement.

4.             Representations and Warranties of SEACOR.  SEACOR hereby represents and warrants to the
Holder that:

(a)           SEACOR is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby.

(b)           SEACOR has duly executed and
delivered this Agreement, and assuming due authorization, execution and
delivery by the Holder, this Agreement constitutes a valid and binding
obligation of SEACOR, enforceable against it in accordance with its terms.

 

2

 

(c)           SEACOR is not required to obtain any
consent, approval, authorization, waiver, permit, license or exemption with any
governmental or regulatory authority or other third party in connection with
the valid authorization, execution, delivery and performance by SEACOR of this
Agreement.  The execution, delivery and
performance of this Agreement by SEACOR will not (i) conflict with or result in
a violation, termination, contravention or default of or under any applicable
Law or (ii) conflict with or result in a violation, termination, contravention
or default of or under, or give to any other person any right of termination,
payment, acceleration, vesting or cancellation of or under, or accelerate the
performance required by or maturity of, any contract or other instrument
binding upon SEACOR, or to which the property of SEACOR is subject (other than,
in the case of this clause (ii), any contract or other instrument to which the
Holder or one of its controlled subsidiaries is a party with the SEACOR) that,
individually or in the aggregate, would reasonably be expected to prevent or
materially delay the consummation of the Warrant Exchange.

(d)           All shares of SEACOR Common Stock
deliverable pursuant to this Agreement have been duly authorized and, when
issued as contemplated by this Agreement, will be validly issued, fully paid,
nonassessable and free of preemptive rights.

5.             Representations and Warranties of the Holders.  The Holder hereby represents and warrants to
SEACOR that:

(a)           The Holder is a ________________ duly
organized, validly existing and in good standing under the laws of its state of
organization, and the Holder has full __________ power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby.

(b)           The Holder has duly executed and
delivered this Agreement, and assuming due authorization, execution and
delivery by SEACOR, this Agreement constitutes a valid and binding obligation
of the Holder, enforceable against it in accordance with its terms, except to
the extent such enforceability is limited by the Bankruptcy and Equity
Exception.

(c)           The Holder is not required to obtain
any consent, approval, authorization, waiver, permit, license or exemption with
any governmental or regulatory authority or other third party in connection
with the valid authorization, execution, delivery and performance by the Holder
of this Agreement.  The execution,
delivery and performance of this Agreement by the Holder will not (i) conflict
with or result in a violation under any applicable Law or (ii) conflict with or
result in a violation of any contract or other instrument binding upon the
Holder, or to which the property of the Holder is subject (other than, in the
case of this clause (ii), any contract or other instrument to which SEACOR or
one of its controlled subsidiaries is a party with the Holder) that,
individually or in the aggregate, would reasonably be expected to prevent or
materially delay the consummation of the Warrant Exchange.

 

3

 

(d)           The Holder is the sole record and
beneficial owner of the Warrants listed on Appendix I hereto, and has
good, valid and marketable title to such Warrants, free and clear of any Liens
(other than any Liens created hereby).

(e)           At the Closing, SEACOR will acquire
good and valid title to the Warrants, free and clear of any Liens.  The Holder is not subject to any bankruptcy,
reorganization or similar proceeding. 
Except for this Agreement, there are no outstanding contracts or
understandings between the Holder and any third party with respect to the
acquisition, disposition or transfer of or any other matters in any way
pertaining or relating to, or any restrictions on, the Warrants.

6.             Miscellaneous.

(a)           Nonsurvival of Representations and
Warranties.  The representations and
warranties of each of SEACOR and the Holder set forth in this Agreement shall
terminate at the Closing.

(b)           Amendments; Waiver.  This Agreement may not be amended except by
written instrument executed by each of the parties hereto.  The failure by any party hereto to enforce at
any time any of the provisions of this Agreement shall in no way be construed
to be a waiver of any such provision nor in any way to affect the validity of
this Agreement or any part hereof or the right of such party thereafter to
enforce each and every such provision. 
No waiver of any breach of, or non-compliance with, this Agreement shall
be held to be a waiver of any other breach or non-compliance herewith.  Any waiver made by any party hereto in
connection with this Agreement shall not be valid unless set forth in writing
by such party.

(c)           Entire Agreement.  This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings, written and oral, among the
parties with respect to the subject matter hereof.

(d)           Binding Effect; No Assignment.  This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective successors and
permitted assigns.  Nothing in this
Agreement is intended or shall be construed to confer upon any entity or person
other than the parties hereto and their respective successors and permitted
assigns any right, remedy or claim under or by reason of their Agreement or any
part hereof.  This Agreement may not be
assigned by any party hereto without the prior written consent of the other
parties hereto, and any purported assignment without such consent shall be void
and unenforceable.

(e)           Expenses.  Each of SEACOR and the Holder shall bear its
own direct and indirect out-of-pocket expenses (including all fees and expenses
of counsel, accountants, investment bankers, experts and consultants to a party
hereto and its affiliates) incurred by such party or on its behalf in
connection with or related to the authorization, preparation, negotiation,
execution and performance of this Agreement and the Warrant Exchange.

(f)            Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE 

 

4

 

SUBSTANTIVE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO ITS CONFLICT OF LAW PRINCIPLES.

(g)           Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same agreement, it being understood that
all of the parties need not sign the same counterpart.

[Remainder of page
intentionally left blank]

 

5

 

                                IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first above written.

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  SEACOR HOLDINGS INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
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  HOLDER:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [NAME]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
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