INCENTIVE AGREEMENT FOR THE GRANT OF RESTRICTED STOCK UNITS UNDER THE INTERNATIONAL SHIPHOLDING CORPORATION 2011 STOCK INCENTIVE PLAN

I.
Restricted Stock Units

1.1 Restricted Stock Units.  Subject to the terms, conditions, restrictions, and performance criteria set forth in the Plan and in this Agreement, effective on [•]  (the “Date of Grant”), ISH hereby grants to the Award Recipient an award of [•] restricted stock units (the “Performance-Based RSUs”) under the Plan, which shall vest based upon continued employment and the satisfaction of certain specified performance criteria as provided in Sections 1.3 and 1.4 below.

1.2 Award Restrictions.  The Performance-Based RSUs may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, whether voluntarily or involuntarily.  The Award Recipient shall have no rights, including, but not limited to, voting and dividend rights, in the shares of Common Stock underlying the Performance-Based RSUs unless and until such shares are issued to the Award Recipient, or as otherwise provided in the Plan or this Agreement.

1.3 Vesting of Absolute Performance-Based RSUs.  The vesting of _______ of the Performance-Based RSUs (the “Absolute Performance-Based RSUs”) is subject to the following terms and conditions:

(a) Performance-Based Vesting.  Upon vesting under the terms and conditions of the Plan and this Agreement, each Absolute Performance-Based RSU represents the right to

(b) Vesting Schedule.  Except as otherwise provided in Section 1.5, depending on Company’s fiscal [•] earnings per share as measured against the targets established in Section 1.3(b)(i) below (the “Absolute Measure”), the Absolute Performance-Based RSUs shall vest and the Award Recipient shall be entitled to receive a number of shares of Common Stock, determined in accordance with, and subject to, the following terms and conditions:

(i) The number of Absolute Performance-Based RSUs granted under this Section 1.3 represents the target award.  The Award Recipient may receive a greater or lesser number of shares of Common Stock under the Plan than the number of Absolute Performance-Based RSUs granted under this Section 1.3, depending on the Company’s performance as measured against the Absolute Measure, determined as follows:

(ii) Prior to the vesting of any Absolute Performance-Based RSUs and the payout of any shares of Common Stock under the Plan and this Agreement, the Committee shall certify in writing, by resolution or otherwise, the Company’s performance as measured against the Absolute Measure, whether and to what extent the Absolute Performance-Based RSUs have vested, and how many shares of Common Stock will be issuable to the Award Recipient as determined by Section 1.3(b)(i), rounded to the nearest whole share. 

(iii) The Absolute Performance-Based RSUs shall vest and be paid out in the number of shares, if any, as determined under this Section 1.3, on [•], provided that the Award Recipient remains employed with the Company on such date. 

1.4 Vesting Terms of Relative Performance-Based RSUs.  The vesting of _______ of the Performance-Based RSUs (the “Relative Performance-Based RSUs”) is subject to the following terms and conditions:

(a) Performance-Based Vesting.  Upon vesting under the terms and conditions of the Plan and this Agreement, each Relative Performance-Based RSU represents the right to receive from the Company a maximum of one-and-a-half shares of Common Stock, free of any restrictions except as otherwise provided in the Plan or this Agreement, and all amounts, securities, and property notionally credited to the Award Recipient’s Account with respect to such Relative Performance-Based RSU.

(b) Vesting Schedule.  Except as otherwise provided in Section 1.5, depending on the [•]-year total stockholder return of ISH during the period from [•] to [•] (the “Relative Performance Period”) as measured against peer performance over the same period as specified further below, the Relative Performance-Based RSUs shall vest and the Award Recipient shall be entitled to receive a number of shares of Common Stock, determined in accordance with, and subject to, the following terms and conditions: 

(i) The number of Relative Performance-Based RSUs granted under this Section 1.4 represents the target award.  At the end of the Relative Performance Period, the Award Recipient may receive a greater or lesser number of shares of Common Stock under the Plan than the number of Relative Performance-Based RSUs granted under this Section 1.4, depending on ISH’s Total Stockholder Return (as defined in Section 1.4(b)(iv)) ranked in terms of a percentile in relation to that of the companies comprising the Russell 2000 Index (the “Index”), which shall be determined as follows:

(ii) Prior to the vesting of any Relative Performance-Based RSUs and the payout of any shares of Common Stock under the Plan and this Agreement, the Committee shall certify in writing, by resolution or otherwise, ISH’s Total Stockholder Return level achieved as compared to that of the Index, whether and to what extent the Relative Performance-

(iii) The Relative Performance-Based RSUs shall vest and be paid out in the number of shares, if any, as determined under this Section 1.4, on [•], provided that the Award Recipient remains employed with the Company on such date.

(iv) For purposes of this Agreement, “Total Stockholder Return” or “TSR” for ISH and each company in the Index means stock price appreciation from the beginning to the end of the Relative Performance Period, including dividends and distributions made or declared (calculated based on the assumption that such dividends or distributions are reinvested in the common stock of ISH or any company in the Index) during the Relative Performance Period, expressed as a percentage return, using the following formula:

1.5 Effect of a Change of Control and Certain Terminations. 

(a) Upon the earlier to occur of a Change of Control of ISH (as defined in the Plan) or the date the Award Recipient’s employment terminates due to death or disability within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended:

(i) any remaining outstanding and unvested Performance-Based RSUs shall immediately vest and pay out at the target levels of shares specified in Sections 1.3 and 1.4 above, without regard to the attainment of performance targets; and

(ii) any amounts, securities, and property notionally credited to the Award Recipient’s Account with respect to such vesting Performance-Based RSUs shall vest and pay out in accordance with Section 2.1.

(b) In the event that the Award Recipient’s employment terminates due to retirement on or after age 65:

(i) the Award Recipient shall retain the rights to all Performance-Based RSUs granted under this Agreement, provided that the vesting and payout of such Performance-Based RSUs shall nonetheless remain subject to the terms and conditions of this Agreement, including the payment dates and the opportunity to earn a greater or lesser number of shares of Common Stock as specified in Sections 1.3 and 1.4; and

(ii) any amounts, securities, and property notionally credited to the Award Recipient’s Account with respect to such vesting Performance-Based RSUs shall vest and pay out in accordance with Section 2.1.

(c) Except as otherwise expressly provided in this Section 1.5 or as otherwise determined by the Committee in its sole discretion, termination of employment shall result in forfeiture of all unvested Performance-Based RSUs. 

II.
Dividend Equivalents and the Issuance of Shares Upon Vesting

2.1 Restricted Stock Unit Account and Dividend Equivalents.  The Company shall maintain an account (the “Account”) on its books in the name of the Award Recipient.  Such Account shall reflect the number of Performance-Based RSUs awarded to the Award Recipient, as such number may be adjusted under the terms of the Plan and this Agreement, as well as any additional restricted stock units or cash credited as a result of dividend equivalents, administered as follows:

(a) The Account shall be for recordkeeping purposes only, and no assets or other amounts shall be set aside from the Company’s general assets with respect to such Account. 

(b) If ISH declares a cash dividend payable any time between the Date of Grant and the date immediately preceding the date the Performance-Based RSUs vest and pay out under this Agreement (the “Vesting Period”), the Company shall credit the Award Recipient’s Account with the amount of any cash that would have been received as a dividend had the Award Recipient’s outstanding Performance-Based RSUs been shares of Common Stock on the applicable record date for such cash dividend.

(c) If dividends are declared and paid in the form of shares of Common Stock rather than cash, then the Award Recipient’s Account will be credited with one additional restricted stock unit for each share of Common Stock that would have been received as a dividend had the Award Recipient’s outstanding Performance-Based RSUs been shares of Common Stock on the applicable record date for such stock dividend.

(d) All such cash and any additional restricted stock units credited via dividend equivalents shall vest or be forfeited at the same time and on the same terms as the Performance-Based RSUs to which they relate. 

(e) In addition, if, pursuant to Section 1.3(b)(i) or Section 1.4(b)(i), the Award Recipient receives a number of shares of Common Stock in excess of the number of Performance-Based RSUs granted under either such section (the “Additional Shares”), the Award Recipient also shall be entitled to receive, simultaneous with the issuance of the Additional Shares, all dividends and distributions, whether payable in cash or Common Stock, that were payable during the Vesting Period and that the Award Recipient would have received had he owned the Additional Shares on the applicable record date for such dividend or distribution. 

2.2 Issuance of Shares of Common Stock.  As soon as practicable following the date any Performance-Based RSUs vest under this Agreement, but no later than 30 days after such date, the number of shares of Common Stock to which the Award Recipient is entitled under this Agreement, rounded to the next whole share, shall be transferred to the Award Recipient or his nominee via book entry or, upon the Award Recipient’s request, ISH shall cause a stock certificate to be issued in the name of the Award Recipient or his nominee.  Upon issuance of such shares, the Award Recipient is free to hold or dispose of such shares, subject to applicable securities laws and any internal Company policy then in effect and applicable to the Award Recipient, including, but not limited to, ISH’s Insider Trading Policy and Executive Stock Ownership Guidelines.  Notwithstanding anything in this Agreement to the contrary, no fractional shares shall be issued in settlement of any Performance-Based RSUs granted hereunder.

2.3 Additional Conditions to Issuance of Shares.  Anything in this Agreement to the contrary notwithstanding, if, at any time prior to the vesting or settlement of the Performance-Based RSUs granted hereby, the Company further determines, in its sole discretion, that the listing, registration, or qualification (or any updating of any such document) of the shares of Common Stock issuable pursuant hereto is necessary on any securities exchange or under any federal or state securities or blue sky law, or that the consent or approval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with the issuance of shares of Common Stock pursuant thereto, or the removal of any restrictions imposed on such shares, such shares of Common Stock shall not be issued, in whole or in part, or the restrictions thereon removed, unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Company.  The Company agrees to use commercially reasonable efforts to issue all shares of Common Stock issuable hereunder on the terms provided herein.

III.
Defined Terms

IV.
Recoupment Policy

V.
Withholding Taxes

VI.
No Contract of Employment Intended

VII.
Binding Effect

VIII.
Inconsistent Provisions

IX.
Attorneys’ Fees and Expenses

X.
Governing Law

XI.
Severability

XII.
Amendment, Modification, and Termination; Entire Agreement

12.1 The Committee may amend, modify, or terminate any Performance-Based RSUs at any time prior to vesting in any manner not inconsistent with the terms of the Plan and this Agreement.  If some or all of the Performance-Based RSUs granted under this Agreement are intended to qualify as performance-based compensation under Section 162(m) of the Code, the Committee may not use its discretion to increase the compensation payable to the Award Recipient hereunder in violation of the “performance-based compensation” requirements of Section 162(m) of the Code.  Notwithstanding the foregoing, no amendment, modification, or termination may materially impair the rights of an Award Recipient hereunder without the written consent of the Award Recipient.

12.2 The Plan and this Agreement contain the entire agreement between the parties with respect to the subject matter contained herein.  Any oral or written agreements, representations, warranties, written inducements, or other communications with respect to the