the Company under Code Section 414(o).  No entity shall be treated as an Affiliate for any period during which it is not part of the controlled group, under common control or otherwise required to be aggregated under Code Section 414.

1.2          “Annual Salary” shall mean with regard to a Participant, the annual rate of pay for services paid by the Employer to the Participant at the time of his or her Termination of Employment from the Employer, as reflected in the Employer’s payroll records.  Annual Salary shall not include commissions, bonuses, overtime pay, incentive compensation, benefits paid under any qualified plan, any group medical, dental or other welfare benefit plan, non-cash compensation or any other additional compensation but, shall include any salary reduction contributions to a plan maintained pursuant to Code Section 401(k), 125 or 132(f) and amounts reduced pursuant to a nonqualified elective deferred compensation arrangement, if any, to the extent that in each such case the reduction is to base salary.

1.3          “Board” shall mean the Board of Directors of the Company.

1.4          “Bonus” shall mean, as applicable:

(i)    If the Participant is entitled to receive the Severance Benefit, the Participant’s annual bonus for the fiscal year in which the Participant suffers a Termination of Employment, as in effect immediately prior to the Termination of Employment, as set forth under the Participant’s individual employment agreement with the Employer or in any written bonus plan, program or arrangement approved by the Board or the Compensation Committee of the Board.  With respect to any such Bonus that is based on a range and/or subject to the achievement of a performance goal(s), the Bonus shall be deemed to be the Participant’s target level bonus without regard to the actual level of performance (whether individual performance or company performance) achieved.  Notwithstanding the foregoing, such Bonus shall not include any bonus to be paid upon the completion of any specified milestone or project or upon the occurrence of a specified event.

(ii)   If the Participant is entitled to receive the Enhanced Severance Benefit, the Participant’s highest annual target bonus in effect within one hundred eighty (180) days prior to, or at any time after, the Change in Control, or if no annual target bonus is in effect for the Participant during such period, then such Bonus shall be deemed to be 50% of the Participant’s Annual Salary in effect immediately prior to his or her termination (or if such termination is by the Participant pursuant to Section 1.16(i), Participant’s Annual Salary rate in effect immediately prior to such reduction of the rate of his Annual Salary),

1.5          “Cause” shall mean with regard to any Eligible Employee, the Eligible Employee’s: (i) negligence or misconduct with regard to the Company or the Employer or it or their assets; (ii) misappropriation or fraud with regard to the Company or the Employer or its or their assets; (iii) conviction of, or the pleading of guilty or nolo contendere to, a felony or other crime involving moral turpitude; (iv) material violation of, or a failure to follow, the Company’s or the Employer’s established policies and procedures; (v) repeated failure to perform the duties of the employment position held by the Eligible Employee; (vi) a violation of the Company’s or the

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Employer’s Code of Conduct; or (vii) willful misconduct which the Company or the Employer believes may negatively impact the Company or the Employee, respectively, or its or their reputation.  A Termination of Employment for Cause shall mean a termination by the Employer effected by written notice given to the Eligible Employee as a result of the Cause event.

1.6          “Change in Control” means the occurrence of any of the following events:  (i) any person (as defined in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and as used in Sections 13(d) and 14(d) thereof), excluding the Company, any “Subsidiary,” any employee benefit plan sponsored or maintained by the Company, or any Subsidiary (including any trustee of any such plan acting in his capacity as trustee), becomes the beneficial owner (as defined in Rule 13(d)-3 under the Exchange Act) of shares of the Company having at least thirty percent (30%) of the total number of votes that may be cast for the election of directors of the Company; provided, that no Change in Control will be deemed to have occurred as a result of an increase in ownership percentage in excess of thirty percent (30%) resulting solely from an acquisition of securities by the Company unless and until such person acquires additional shares of the Company; (ii) there is a merger or other business combination of the Company or a sale of all or substantially all of the Company’s assets or combination of the foregoing transactions, (a “Transaction”), other than a Transaction involving only the Company and one or more of its Subsidiaries, or a Transaction immediately following which the shareholders of the Company immediately prior to the Transaction continue to have a majority of the voting power in the resulting entity in approximately the same proportion as they had in the Company immediately prior to the Transaction; or (iii) during any period of twelve (12) consecutive months beginning on or after the date hereof, the persons who were directors of the Company immediately before the beginning of such period (the “Incumbent Directors”) shall cease (for any reason other than death) to constitute at least a majority of the Board or the board of directors of any successor to the Company, provided that, any director who was not a director as of the date hereof shall be deemed to be an Incumbent Director if such director was elected to the Board by, or on the recommendation of or with the approval of, at least a majority of the directors who then qualified as Incumbent Directors either actually or by prior operation of the foregoing unless such election, recommendation or approval occurs as a result of an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act or any successor provision) or other actual or threatened solicitation of proxies or contests by or on behalf of a person other than a member of the Board.  Only one (1) Change in Control may occur under the Plan.

1.7          “COBRA” shall mean the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended.

1.8          “Code” shall mean the Internal Revenue Code of 1986, as amended.

1.9          “Code Section 409A” shall mean Section 409A of the Code together with the treasury regulations and other official guidance promulgated thereunder.

1.10        “Committee” shall mean an administrative committee appointed by the Board to administer the Plan.

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1.11        “Disability” shall mean the inability due to physical or mental illness or injury to carry out job responsibilities which would qualify the Eligible Employee for benefits under the Company’s long-term disability plan without regard to any waiting period thereunder.

1.12        Eligible Employee” shall mean an Employee who on the earlier of the date of his or her Termination of Employment with the Employer or the date of a consummation of a Change in Control is classified in the Employer’s records as a Level 21, 22 or 23 employee.

1.13        “ Employee ” shall mean any active, regular, full-time or part-time employee of the Employer other than an employee whose terms and conditions of employment are covered by a collective bargaining agreement that does not provide for participation in the Plan.  Notwithstanding the preceding sentence, “Employee” does not include any temporary employees or any employee who works on a per diem basis.  “Employee” also does not include any individual (i) designated by the Employer as an independent contractor and not as an employee at the time of any determination, (ii) being paid by or through a third party agency, or (iii) who is a leased employee (as defined in Code Section 414(n)); any such individual shall not be an Eligible Employee even if he or she is later retroactively reclassified as a common-law or other type of employee of the Employer during all or any part of such period pursuant to applicable law or otherwise.

1.14        “ Enhanced Severance Benefit ” shall mean an amount equal to the sum of (i) the Participant’s Annual Salary, plus (ii) the Participant’s Bonus.

1.15        “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

1.16        “Good Reason” shall mean with regard to any Participant, the occurrence of any of the following events on or following a Change in Control without the Participant’s express written consent, provided the Participant gives notice to the Employer of his or her intent to resign for Good Reason within ninety (90) days of the occurrence of the Good Reason event and such Good Reason event is not corrected by the Employer in all material respects within thirty (30) days following receipt of the Participant’s written notification: (i) a reduction in the Participant’s Annual Salary (which includes shift differentials) by more than 10%; (ii) a relocation of the Participant’s principal business location to an area outside of a fifty (50) mile radius of the Participant’s then current principal business location; or (iii) a material reduction in the Participant’s duties.  A Termination of Employment for Good Reason shall mean a termination by a Participant effected by written notice given to the Employer within 150 days following the initial date on which the event Participant claims constitutes Good Reason occurred and which Good Reason event has not been cured during the period set forth above.

1.17        “ Individual Severance Agreement ” shall mean an approved, executed, written agreement between the Employer and an Eligible Employee that has not expired or been replaced prior to the termination of the Eligible Employee’s employment and that provides for specific severance for the Eligible Employee in connection with a Termination of Employment by the Employer without Cause.

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1.18        “ Individual Change in Control Severance Agreement ” shall mean an approved, executed, written agreement between the Employer and an Eligible Employee entered into prior to a Change in Control that has not expired or been replaced prior to the termination of the employee’s employment and that provides for specific severance for the employee in connection with a Termination of Employment due to a termination by the Employer without Cause or the Eligible Employee’s resignation for Good Reason at any time within two (2) years after the Change in Control.

1.19        “Participant” shall mean an Eligible Employee who is entitled to a Severance Benefit or Enhanced Severance Benefit under the Plan and who is not excluded from being a Participant pursuant to the penultimate sentence of the Introduction to the Plan.

1.20        “Plan” shall mean the Overseas Shipholding Group, Inc. Enhanced Severance Plan for Employees Level 21-23, effective as of January 1, 2009, as amended from time to time.

1.21        “Plan Administrator” shall mean the Committee on behalf of the Company.

1.22        “Retirement” shall mean a Termination of Employment by an Eligible Employee at his or her election on or after the Eligible Employee’s attainment of age sixty-five (65).

1.23        “Severance Benefit” shall mean an amount equal to three times the Participant’s Weekly Salary for every Year of Continuous Service.  Notwithstanding the foregoing, the Severance Benefit for any Participant shall not be less than 26 times the Participant’s Weekly Salary and shall not be greater than 78 times the Participant’s Weekly Salary.

1.24        “Severance Period” shall mean the period beginning on date of Termination of Employment and ending on the date the final installment of Severance Benefit payments is made to a Participant.

1.25        “Termination of Employment” shall mean an Eligible Employee’s termination of employment (i) by the Employer for Cause or without Cause, (ii) by the Eligible Employee for any reason, or (iii) due to the Eligible Employee’s death, Disability or Retirement.  An Eligible Employee on an approved leave of absence shall not be deemed to have incurred a Termination of Employment.  Notwithstanding anything in the Plan to the contrary, a Termination of Employment shall not include a termination of an Eligible Employee’s employment under any of the following circumstances: (a) the Eligible Employee is offered, but refuses, employment with his or her current Employer or another Employer, in a position that provides the Eligible Employee with base pay that is at least 85% of base pay which he or she was receiving from his or her Employer on the date of such offer and that is substantially comparable in all other respects to his or her position with his or her Employer on the date of such offer, as determined by the Plan Administrator, in its sole and absolute discretion; (b) the Eligible Employee works in a business (or the portion of such business) of an Employer (x) that is transferred in whole or in part to another corporation or company, whether by transfer of stock or assets, (y) that is merged or consolidated with another corporation or company or is part of a similar corporate transaction, or (z) that is outsourced to

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another corporation or company, and the Eligible Employee is offered employment with the purchaser or surviving business or the corporation or company to which the business is outsourced (whether or not he or she accepts any such position with the purchaser, surviving business or other company) in a position that provides the Eligible Employee with substantially equivalent base pay and job responsibilities as he or she had with the Employer immediately prior to such transaction, as determined by the Plan Administrator, in its sole and absolute discretion; or (c) an Eligible Employee fails to return to active employment after the cessation of a Disability or following a termination of a leave of absence.  In addition, an indefinite or temporary layoff or reduction in force does not constitute a Termination of Employment unless the layoff or reduction in force becomes permanent.  The determination as to whether a layoff or reduction in force is permanent shall be made by the Plan Administrator, in its sole and absolute discretion, and such determination shall be final and binding on all effected parties.  An Eligible Employee’s Termination of Employment shall occur on the last day of his or her employment with his or her Employer.

1.26        “Weekly Salary” shall mean with regard to a Participant, the weekly rate of pay for services paid by the Employer to the Participant at the time of his or her Termination of Employment from the Employer, as reflected in the Employer’s payroll records.  The Weekly Salary of a Participant whose rate of pay for services paid by the Employer to the Participant is based on an annual rate shall be equal to 1/52 of such annual rate at the time of his or her Termination of Employment from the Employer, as reflected in the Employer’s payroll records.  Weekly Salary shall not include commissions, bonuses, overtime pay, incentive compensation, benefits paid under any qualified plan, any group medical, dental or other welfare benefit plan, non-cash compensation or any other additional compensation but, shall include any salary reduction contributions to a plan maintained pursuant to Code Section 401(k), 125 or 132(f) and amounts reduced pursuant to a nonqualified elective deferred compensation arrangement, if any, to the extent that in each such case the reduction is to base salary.

1.27        “Year of Continuous Service” shall mean the twelve (12) consecutive month period commencing on a Participant’s most recent date of hire by an Employer and each twelve (12) consecutive month period thereafter during which a Participant is employed by an Employer.  Credit shall be granted hereunder for partial years.  An Eligible Employee’s direct transfer of employment from one Employer to another Employer shall not be a break in employment for the purposes of calculating Years of Continuous Service.

ARTICLE II

Benefits

2.1          Eligibility for Severance Benefit .   Subject to Section 2.2, in the event of an Eligible Employee’s Termination of Employment by the Employer without Cause, subject to Section 2.6 below, the Eligible Employee shall be entitled to a Severance Benefit.  An Eligible Employee shall not be entitled to a Severance Benefit or any additional benefits described in this Article II if the Eligible Employee’s employment is terminated (i) by the Employer for Cause, (ii) by the Eligible

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Employee for any reason, or (iii) on account of the Eligible Employee’s death, Disability or Retirement.

2.2          Eligibility for Enhanced Severance Benefit .   In the event that a Change in Control occurs and an Eligible Employee suffers a Termination of Employment due to a termination by the Employer without Cause or the Eligible Employee’s resignation for Good Reason at any time within two (2) years after the Change in Control, the Eligible Employee shall be entitled to an Enhanced Severance Benefit.  An Eligible Employee shall not be entitled to an Enhanced Severance Benefit or any additional benefits described in this Article II if the Eligible Employee’s employment is terminated (i) by the Employer for Cause, (ii) by the Eligible Employee other than for Good Reason, or (iii) on account of the Eligible Employee’s death, Disability or Retirement.

2.3          Form and Amount of Benefits .   Subject to Sections 2.6 and 7.14(b) and (c):

(a)           Severance Benefits shall be payable in installments in accordance with the Employer’s normal payroll practices (but off employee payroll) until the Severance Benefit has been paid,

(b)           Enhanced Severance Benefits shall be payable in a single lump sum payment on the sixtieth (60 th ) day following the date of the Participant’s Termination of Employment.

2.4          Additional Benefits .   Subject to Sections 2.6 and 7.14(b) and (c), a Participant entitled to receive a Severance Benefit or an Enhanced Severance Benefit shall also be entitled to receive additional benefits as provided below:

(a)           The Employer shall pay to the Participant in a lump sum within ten (10) business days following his or her Termination of Employment an amount representing accrued but unused vacation time as of the date of Termination of Employment.

(b)           The Employer shall pay to the Participant his or her Bonus for the year in which the Participant suffers a Termination of Employment, if any, pro rated based on the portion of the year that the Participant was employed, paid in the year following the year in which the date of his or her Termination of Employment occurs (the “ Pro Rata Bonus ”).

(c)           Subject to the Participant’s entitlement to, and timely election of, COBRA coverage and the Participant’s continued co-payment of any premiums which shall not exceed the percentage level of the co-payment made by similarly situated employees immediately prior to the Participant’s Termination of Employment, the Employer shall continue to provide any health benefits and coverage for the Participant and his or her eligible dependents under any Employer health insurance plans which cover the Participant until the earlier of the date on which the Participant is no longer eligible for COBRA coverage and (i) if the Participant is entitled to a Severance Benefit, the last day of the month during which the Participant’s Severance Period ends, or (ii) if the Participant is entitled to an Enhanced Severance Benefit, the longer of the period the Participant would have been entitled to receive such coverage under (i) and twelve

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(12) months following the Participant’s Termination of Employment (the applicable period under (i) or (ii) shall be referred to in the Plan as the “ Coverage Period ”).  Notwithstanding the foregoing, in the event such coverage would result in the Participant being taxed on such health benefits, then in lieu of the foregoing, if the Participant timely elects COBRA coverage then, subject to Section 7.14(b), during the Coverage Period the Employer shall reimburse the Participant for the amount that any such monthly COBRA premium exceeds the active employee rate (as determined based on the premium rate in effect for the Participant on the Participant’s date of Termination of Employment), which reimbursement payment shall be payable on the first payroll date of each the month during the Coverage Period, such payment to include a tax gross-up payment to the extent the amount taxable to the Participant is greater than the amount that would have been taxable to the Participant if the Participant was an employee and participated in the applicable health plans.  Further, notwithstanding the foregoing, the Employer’s obligation to continue to provide the benefits hereunder shall in any event cease upon the Participant’s employment with any employer following his or her Termination of Employment if the Participant is eligible for health benefits under a plan of such new employer.  Any period of continuation coverage hereunder shall be counted toward the period during which the Employer shall offer COBRA continuation health coverage to the Participant and his or her eligible dependents in accordance with applicable law.  The benefit provided under this Section 2.4(c) shall be referred to in the Plan as (the “ Health Continuation Benefit ”).

2.5          No Duty to Mitigate .   No Participant entitled to receive a Severance Benefit hereunder shall be required to seek other employment or to attempt in any way to reduce any amounts payable to him or her pursuant to the Plan.  Further, except as provided in Section 2.4(c) above, the amount of the Severance Benefit payable hereunder shall not be reduced by any compensation earned by the Participant as a result of employment by another employer or otherwise.

2.6          Optional Participation; Release .   Participation in the Plan is voluntary.  No Eligible Employee is required to accept any benefits whatsoever under the Plan.  In exchange for the Severance Benefit or the Enhanced Severance Benefit, the Pro Rata Bonus and the Health Continuation Benefit, the Eligible Employee will be required to sign an Agreement and Release substantially in the form attached hereto as Appendix B (with such changes as may be made by the Plan Administrator from time to time to comply with applicable law or as the Plan Administrator may otherwise deem desirable) (the “ Agreement and Release ”).  The Employer will provide an Eligible Employee with a copy of the Agreement and Release within seven (7) days following the date of his or her Termination of Employment.  The Eligible Employee will be free to choose whether to participate by signing the Agreement and Release, but no Severance Benefit, Enhanced Severance Benefit or Pro Rata Bonus will be paid to the Eligible Employee and the Eligible Employee will not be entitled to the Health Continuation Benefit if he or she does not provide the Employer with a fully effective copy of the Agreement and Release within sixty (60) days following the date of his or her Termination of Employment.

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2.7          Code Section 280G .

(a)           Notwithstanding anything in the Plan to the contrary, in the event that a Participant shall become entitled to payments and/or benefits provided by the Plan or any other amounts in the “nature of compensation” (whether pursuant to the terms of the Plan or any other plan, arrangement or agreement with the Company or the Employer, any person whose actions result in a change of ownership or effective control covered by Section 280G(b)(2) of the Code or any person affiliated with the Company or such person) as a result of a Change in Control (collectively the “ Company Payments ”), and if such Company Payments will be subject to the tax (the “ Excise Tax ”) imposed by Section 4999 of the Code (and any similar tax that may hereafter be imposed by any taxing authority), then the Company Payments, in the aggregate, shall be reduced to an amount that is one dollar ($1) less than the greatest amount that could be paid to the Participant such that the receipt of the Company Payments would not give rise to any Excise Tax (the “ Reduced Amount ”).  If the Reduced Amount is to be effective, the Company Payments shall be reduced in the following order:  (i) any cash severance based on a multiple of Annual Salary or Bonus, (ii) any other cash amounts payable to the Participant, (iii) any benefits valued as “parachute payments,” (iv) acceleration of vesting of any stock option or similar awards for which the exercise price exceeds the then fair market value, and (v) acceleration of vesting of any equity not covered by clause (iv) above.  In the event that the Internal Revenue Service or court ultimately makes a determination that the “excess parachute payments” plus the “base amount” is an amount other than as determined initially, an appropriate reduction shall be made with regard to the Reduced Amount to reflect the final determination and the resulting impact on whether this clause (a) applies.

(b)           For purposes of determining whether any of the Company Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) the Company Payments shall be treated as “parachute payments” within the meaning of Section 280G(b)(2) of the Code, and all “parachute payments” in