10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended

MARCH 31, 2000

OR

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from          to          

COMMISSION FILE NO.

                  1-6479-1     

OVERSEAS SHIPHOLDING GROUP, INC.

(Exact name of registrant as specified in its charter)

DELAWARE	13-2637623
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

511 Fifth Avenue, New York, New York         10017    

(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code  (212) 953-4100

                                                 No Change                                                         
Former name, former address and former fiscal year, if changed since last report

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES X NO    

Common Shares outstanding as of May 9, 2000 - 33,881,310

OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
IN THOUSANDS, AS OF MARCH 31, 2000 AND DECEMBER 31, 1999
	MARCH 31,                    2000	DECEMBER 31,                   1999
	(UNAUDITED)
ASSETS
Current Assets:
Cash, including interest-bearing deposits of
$30,279 and $53,451	$          30,944	$            56,727
Investments in marketable securities	33,597	32,266
Receivables	24,731	18,456
Prepaid expenses	12,683	13,534
Total Current Assets	101,955	120,983
Capital Construction Fund	183,239	181,933
Vessels, at cost, less accumulated depreciation
of $380,457 and $368,745 - Note F	1,189,238	1,188,348
Vessels Under Capital Leases, less accumulated
amortization of $74,270 and $72,925	47,820	49,165
Investments in Bulk Shipping Joint Ventures - Note D	73,403	75,914
Other Assets	102,741	104,602
	$      1,698,396	$        1,720,945
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$            2,944	$              3,073
Sundry liabilities and accrued expenses	30,566
	33,510	30,261
Current installments of long-term debt	10,179	9,870
Current obligations under capital leases	5,142
Total Current Liabilities	48,831	45,208
Long-term Debt - Note F	737,312	755,904
Obligations Under Capital Leases	70,725	71,468
Deferred Federal Income Taxes ($78,225 and
$77,877), Deferred Credits and Other Liabilities - Note E	180,312	187,307
Shareholders' Equity - Notes E and H2	661,216	661,058
Commitments and Other Comments - Note H
	$      1,698,396	$        1,720,945

(See Accompanying Notes)

OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
DOLLARS IN THOUSANDS, FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND MARCH 31, 1999
(UNAUDITED)
	MARCH 31, 2000	MARCH 31, 1999*
Net Shipping Revenues:
Revenue from voyages	$        77,990	$        96,616
Net voyage revenues of vessels in VLCC pool - Note D	6,051
Voyage expenses	(22,975)	(20,179)
	61,066	76,437
Shipping Expenses:
Vessel expenses, including drydock amortization of $4,212 and      $4,351	23,251	32,772
Time and bareboat charter hire expenses - Note D	9,231	3,956
Depreciation of vessels and amortization of capital leases	13,056	15,983
General and administrative	10,253	11,071
	55,791	63,782
Income from Vessel Operations	5,275	12,655
Equity in Results of Bulk Shipping Joint Ventures	788	1,563
Operating Income	6,063	14,218
Other Income (net) - Note G	5,321	2,799
	11,384	17,017
Interest Expense	10,323	12,359
Income before Federal Income Taxes and Cumulative Effect of   Change in Accounting Principle	1,061	4,658
Provision for Federal Income Taxes, reflecting deferred   provision/(credit) of $(300) and $1,600 - Note E	200	1,600
Income before Cumulative Effect of Change in Accounting   Principle	861	3,058
Cumulative Effect of Change in Accounting Principle, net of   income taxes of $1,800 - Note A	4,152
Net Income	$          5,013	$         3,058
Basic and Diluted Per Share Amounts - Note H3:
Income before cumulative effect of change in accounting     principle	$.03	$.08
Cumulative effect of change in accounting principle, net of      income taxes	$.12
Net income	$.15	$.08
Cash Dividends Declared per Share	$.15	$.15
* See General Note.

(See Accompanying Notes)

OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
IN THOUSANDS, FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND MARCH 31, 1999
(UNAUDITED)
	MARCH 31, 2000		MARCH 31, 1999
Net cash provided by Operating Activities	$           7,239		$            8,631
Cash Flows from Investing Activities:
Purchases of marketable securities	(3,064)		(382)
Proceeds from sales of marketable securities	59		365
Additions to vessels, including $6,977 and $1,915 related to    vessels under construction	(7,044)	*	(2,050)
Proceeds from sale of vessels held for disposal			8,859
Investments in and advances to bulk shipping joint ventures	(4,392)
Distributions from bulk shipping joint ventures	7,050
Purchases of other investments	(2,520)		(505)
Proceeds from dispositions of other investments	2,150
Other - net	3,968		(1,585)
Net cash provided by/(used in) investing activities	(3,793)		4,702
Cash Flows from Financing Activities:
Purchases of treasury stock			(2,735)
Issuance of long-term debt			89,000
Payments on long-term debt and
obligations under capital leases	(24,528)		(41,987)
Issuance of common stock upon exercise of stock options	829
Cash dividends paid	(5,051)		(5,514)
Other - net	(479)
Net cash provided by/(used in) financing activities	(29,229)		38,764
Net Increase/(decrease) in Cash	(25,783)		52,097
Cash, including interest-bearing
deposits, at beginning of period	56,727		51,005
Cash, including interest-bearing
deposits, at end of period	$         30,944		$      103,102
* Net of $5,558 of secured debt in connection with the construction of vessels.

(See Accompanying Notes)

OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
DOLLARS IN THOUSANDS, FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND MARCH 31, 1999
(UNAUDITED)
						Accumulated
		Paid-in				Other
	Common	Additional	Retained	Treasury Stock		Comprehensive
	Stock*	Capital	Earnings	Shares	Amount	(Loss)	**	Total
Balance at
January 1, 2000	$          39,591	$            96,156	$         618,453	5,918,462	$    (81,098)	$      (12,044)		$       661,058
Net Income			5,013					5,013
Unrealized (Loss) on
Available-For-Sale Securities						(1,590)		(1,590)
Comprehensive Income								3,423
Cash Dividends Declared			(5,051)					(5,051)
Options Exercised		97		(102,708)	1,387			1,484
Tax Benefit Related to       Options Exercised		302						302
Balance at  March 31,2000	$          39,591	$           96,555	$       618,415	5,815,754	$      (79,711)	$          (13,634)		$       661,216
Balance at
January 1, 1999	$          39,591	$96,156	$        625,132	2,809,062	$    (41,869)	$        (11,388)		$       707,622
Net Income			3,058					3,058
Unrealized (Loss) on
Available-For-Sale Securities						(2,793)		(2,793)
Comprehensive Income								265
Cash Dividends Declared			(5,514)					(5,514)
Common Stock Acquired				235,400	(2,848)			(2,848)
Balance at March 31, 1999	$          39,591	$           96,156	$         622,676	3,044,462	$      (44,717)	$        (14,181)		$        699,525
*Par value $1 per share; 60,000,000 shares authorized and 39,590,759 shares issued.
**Represents unrealized gains/(losses) on available-for-sale securities, net of tax.
(See Accompanying Notes)

OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Financial Statements

General - As contemplated by the Securities and Exchange Commission, the accompanying financial statements and footnotes, which have been rounded to the nearest thousand dollars, have been condensed and therefore do not contain all disclosures required by generally accepted accounting principles. The balance sheet at December 31, 1999 has been derived from the audited financial statements at that date. Reference should be made to the Company's Annual Report to Shareholders for the year ended December 31, 1999.

The statements as of and for the three month period ended March 31, 2000, and for the three month period ended March 31, 1999 are unaudited. In the opinion of the Company, all adjustments (which were of a normal recurring nature) have been made to present fairly the results for such unaudited interim periods.

The statement of income for the three month period ended March 31, 1999 has been reclassified to conform with the 2000 presentation of certain items.

The results of operations for the three month period ended March 31, 2000 are not necessarily indicative of those for a full fiscal year.

Note A - Change in Accounting for Voyage Revenue:

Prior to 2000, net voyage revenues for vessels operating on voyage charters were accounted for using the completed voyage method, with voyages being calculated on a load-to-load basis. Under that method, the net revenue of a voyage was included in operating results in the period in which that voyage was deemed completed, that is, its arrival at the subsequent voyage's initial load port.

Effective January 1, 2000, the Company changed its accounting policy for the recognition of net voyage revenues of vessels operating on voyage charters to the percentage of completion method, with voyages being calculated on a discharge-to-discharge basis. Under this method, net voyage revenue is recognized evenly over the period from a vessel's departure from its last discharge port to the projected departure from its next discharge port. The change in revenue recognition policy eliminates fluctuations in income from vessel operations attributable solely to the timing of completion of voyages. Further, the discharge-to-discharge basis is deemed by management to be a more reliable method of recognizing net voyage revenues under the percentage of completion method, since it eliminates uncertainty associated with predicting the actual location of the next load port. The cumulative effect of this change is shown separately in the condensed consolidated statement of income for the three months ended March 31, 2000, and resulted in income of $4,152,000. The cumulative effect of this change in accounting principle as of January 1, 2000, on the Company's condensed consolidated balance sheet was to increase total assets by $3,749,000, to reduce total liabilities by $403,000 and to increase shareholders' equity by $4,152,000.

(See Notes on Following Pages)

OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Financial Statements

Note A - Change in Accounting for Voyage Revenue (continued):

Assuming the above percentage of completion method had been applied retroactively, the pro forma income before cumulative effect of change in accounting principle for the three months ended March 31, 1999 would have been $4,038,000, or $.11 per basic and diluted share.

Note B - Segment Reporting:

The Company has five reportable segments: foreign flag VLCCs (very large crude carriers), Aframaxes and products carriers, and U. S. flag tankers and dry bulk carriers. Following the disposal of certain older tonnage in 1999, the Company revised its reportable segments in the first quarter of 2000. Segment information as of and for the three months ended March 31, 1999 has been restated to conform to the revised presentation. Information about the Company's reportable segments as of and for the three month periods ended March 31, 2000 and 1999 follows:

	Foreign flag			U.S. flag
			Products				Dry bulk
In thousands	VLCCs	Aframaxes	carriers		Tankers		carriers	All other	Totals
Three months ended March 31,2000:
Shipping revenues	$  17,502	$  25,995	$  13,151		$  9,904		$  7,276	$  10,213	$  84,041
Income/(loss) from vessel operations	5,593	3,637	2,199		3,317		(509)	1,291	15,528*
Total assets at March 31, 2000	690,718	351,251	112,687		6,919	**	17,395	188,810	1,367,780
Three months ended March 31,1999:
Shipping revenues	18,448	22,582	13,852		17,933		7,073	16,728	96,616
Income from vessel operations	6,679	3,004	3,474		6,418		1,447	2,704	23,726*
Total assets at March 31, 1999	584,076	310,303	119,581		86,637		20,714	242,794	1,364,105

* Segment totals are before general and administrative expenses, investment income and interest expense. The 1999 disclosures have been restated to conform with the 2000 presentation in this respect.

** The decrease from March 31, 1999 principally reflects the sale and leaseback under operating leases of five U. S. flag tankers and the reclassification of two other older tankers that now participate exclusively in the U. S. grain trade program.

(See Notes on Following Pages)

OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Financial Statements

Note B - Segment Reporting (continued):

Reconciliations of total assets of the segments to amounts included in the condensed consolidated balance sheets follow:

	IN THOUSANDS AS OF
	MARCH 31, 2000	MARCH 31, 1999
Total assets of all segments	$     1,367,780	$     1,364,105
Corporate cash and securities, including capital     construction fund	247,427	287,307
Other unallocated amounts	83,189	82,837
Consolidated total assets	$     1,698,396	$     1,734,249

Note C - Foreign Subsidiaries:

A condensed summary of the combined assets and liabilities of the Company's foreign (incorporated outside the U.S.) subsidiaries, whose operations are principally conducted in U.S. Dollars, follows:

	IN THOUSANDS AS OF
	MARCH 31,                     2000	DECEMBER 31,                      1999
Current assets	$        27,446	$         26,179
Vessels, net	1,134,761	1,132,973
Other assets	102,605	105,759
	1,264,812	1,264,911
Current installments of long-term debt, including
intercompany of $66,800 in 2000 and 1999	76,979	76,670
Other current liabilities	9,770	13,487
Total current liabilities	86,749	90,157
Long-term debt (including intercompany of $116,900
and $133,600), deferred credits and other liabilities	423,311	425,388
	510,060	515,545
Net assets	$      754,752	$       749,366

(See Notes on Following Pages)

OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Financial Statements

Note D - Bulk Shipping Joint Ventures and Pooling Arrangements:

In the first quarter of 1999, the Company, BP Amoco p.l.c. ("BP Amoco") and Keystone Shipping Company ("Keystone") completed the formation of Alaska Tanker Company ("ATC"). ATC, which is owned 37.5% by the Company, 37.5% by Keystone and 25% by BP Amoco, provides marine transportation services in the environmentally sensitive Alaskan crude oil trade. ATC currently manages the vessels carrying BP Amoco's Alaskan crude oil, including five of the Company's vessels. The long-term charters to BP Amoco covering these five vessels were converted in the second quarter of 1999 to bareboat charters to ATC, with BP Amoco guarantees, through their expiry dates (2005/2006 for four of these vessels and 2003 for the other) under the U. S. Oil Pollution Act of 1990. In addition, each member in ATC is entitled to receive its respective share of any incentive charter hire payable, if certain conditions are met, by BP Amoco to ATC. Hire under the bareboat charters out is included in revenue from voyages (payments required to be made by the Company in connection with its related August 1999 sale and leaseback of these five vessels are included in time and bareboat charter hire expenses) and the Company's share of incentive hire earned by ATC is included in equity in results of bulk shipping joint ventures in the accompanying condensed consolidated statement of income.

In December 1999, the Company, along with A.P. Moller, Euronav, Frontline, Osprey Maritime and Reederei "Nord" Klaus E. Oldendorff, agreed to establish Tankers International LLC ("TI") to pool their VLCC fleets. TI, which commenced operations in February 2000, commercially manages a fleet of 43 modern VLCCs, which number is expected to exceed 50 vessels by 2002. TI was formed to meet the global transportation requirements of international oil companies and other major charterers. As of March 31, 2000, five of the Company's VLCCs participate in TI and a sixth newbuilding VLCC is scheduled to join the pool upon its delivery in May 2000. TI reports the earnings of pool vessels on a time charter equivalent (voyage revenues less voyage expenses) basis. For periods prior to the commencement of pool operations, revenues from voyages and voyage expenses are separately reflected.

In March 2000, the Company acquired a 30% interest in a single-purpose company that purchased a 1993-built VLCC. The vessel acquisition was financed by the joint venture through long-term bank financing and approximately $9,750,000 in subordinated shareholder loans. In connection with the bank financing, the shareholders have severally issued guarantees aggregating $6,000,000.

(See Notes on Following Pages)

OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Financial Statements

Note E - Taxes:

Effective from January 1, 1987, earnings of the foreign shipping companies are subject to U.S. income taxation currently; post-1986 taxable income may be distributed to the U.S. parent without further tax. Prior thereto, tax on such earnings was deferred as long as the earnings were reinvested in foreign shipping operations. Foreign income, substantially all of which resulted from the operations of companies that are not subject to income taxes in their country of incorporation, aggregated $5,538,000 (three months ended March 31, 2000) and $5,845,000 (three months ended March 30, 1999), before any U.S. income tax effect. No provision for U.S. income taxes on the undistributed income of the foreign shipping companies accumulated through December 31, 1986 was required, since such undistributed earnings have been reinvested or are intended to be reinvested in foreign shipping operations so that the qualified investment therein is not expected to be reduced below the corresponding amount at December 31, 1986.

Federal income taxes paid during the three months ended March 31, 2000 amounted to $875,000, of which $700,000 related to 1999. No payments of federal income taxes were required or made during the three month period ended March 31, 1999.

Note F - Long-term Debt:

Agreements relating to long-term debt provide for prepayment privileges (in certain instances with penalties), a limitation on the amount of total borrowings, and acceleration of payment under certain circumstances, including if any of the financial covenants contained in certain of such agreements are not met.

As of March 31, 2000, the Company is a party to fixed to floating interest rate swaps with various major financial institutions covering notional amounts aggregating $240,000,000, pursuant to which it pays LIBOR (6.3% to 6.5% as of March 31, 2000, for a term equal to the swaps' reset frequency) and receives fixed rates ranging from 5.9% to 6.4% calculated on the notional amounts. The Company is also a party to floating to fixed interest rate swaps with various major financial institutions covering notional amounts aggregating approximately $292,000,000, pursuant to which it pays fixed rates ranging from 5.1% to 7.1% and receives LIBOR. These agreements contain no leverage features and have various maturity dates from late 2000 to 2008.

Approximately 16% of the net book amount of the Company's vessels, including vessels under construction, and vessels under capital leases, representing four foreign flag and four U.S. flag vessels, is pledged as collateral for certain long-term debt.

Interest paid approximated $6,698,000 (three months ended March 31, 2000) and $8,863,000 (three months ended March 31, 1999), excluding capitalized interest.

(See Notes on Following Pages)

OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Financial Statements

Note F - Long-term Debt (continued):

In April 2000, the Company concluded an unsecured revolving credit agreement that provides for borrowings of up to $350,000,000, on a revolving credit basis, through April 2005. In connection therewith, the existing long-term credit facility was reduced from $600,000,000 to $425,000,000. Amounts outstanding under this new facility will bear interest at a spread (currently 112.5 basis points) above LIBOR. The financial covenants contained in this agreement are substantially equivalent to those contained in existing debt agreements.

Note G - Other Income - net:

Other income - net consists of the following:

	IN THOUSANDS FOR THE
	THREE MONTHS ENDED
	MARCH 31,
	2000	1999
Investment income:
Interest and dividends	$      2,455	$         2,238
Gain on sale of securities	2,186	365
	4,641	2,603
Gain on disposal of vessels - net		258
Miscellaneous - net	680	(62)
	$       5,321	$         2,799

Note H - Commitments and Other Comments:

1. As of March 31, 2000, the Company has commitments for the construction of seven double-hulled foreign flag tankers, scheduled for delivery between late-May 2000 and early 2002, with an aggregate unpaid cost of approximately $114,200,000. Unpaid costs are net of $213,400,000 of progress payments and prepayments. The progress payments and prepayments are covered by refundment guaranties from major U.S. insurance companies.
   
2. Basic net income per share is based on the following weighted average number of common shares outstanding during each period: 33,699,000 shares (three months ended March 31, 2000) and 36,693,000 shares (three months ended March 31, 1999). Diluted net income per share, which gives effect to stock options, is based on the following weighted average number of shares during each period: 33,914,000 shares (three months ended March 31, 2000) and 36,693,000 shares (three months ended March 31, 1999). Stock options have not been included in the computation of diluted net income per share in 1999 since their effect thereon would be antidilutive.

(See Note on Following Page)


OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Financial Statements

Note H - Commitments and Other Comments (continued):


3. The Company has hedged its exchange rate risk with respect to contracted future charter revenues receivable in Japanese yen by entering into currency swaps with a major financial institution that will result in the Company receiving approximately $71,000,000 for such foreign currency from April 1, 2000 through 2004.
   
4. In February 2000, the Company's Board of Directors amended the 1998 stock option plan, subject to stockholder approval, to increase the number of shares available for grant pursuant to options under such plan from 1,300,000 to 2,800,000.

OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

OPERATIONS AND FINANCIAL CONDITION

Significant Events

All five of OSG's VLCCs operating in the spot market are trading in the Tankers International ("TI") pool (a sixth newbuilding VLCC is scheduled to join the pool upon its delivery in the second quarter). TI, which commenced operation in February 2000, was established by OSG and five other leading tanker companies to meet the global transportation requirements of international oil companies and other major charterers. Since its inception, TI has been able to improve vessel utilization through backhauls and other efficiencies facilitated by the size and quality of its modern VLCC fleet. In the first quarter of 2000, the Company's two 157,000 dwt Capesize dry bulk carriers joined a pool consisting of modern Capesize dry bulk carriers which should improve the financial performance of these vessels.

Operations

Income From Vessel Operations

Revenues and results of vessel operations of the Company are highly sensitive to patterns of supply and demand for vessels of the types and sizes owned and operated by the Company and the markets in which those vessels operate. Freight rates expressed as time charter equivalents (defined as voyage revenues less voyage expenses divided by round-trip voyage days), for major bulk commodities are determined by market forces including local and worldwide demand for such commodities, volumes of trade, distances between sources and destinations of cargoes, and the amount of available tonnage both at the time such tonnage is required and over periods of projected requirements. Available tonnage is affected, over time, by the number of newbuilding deliveries and removal of existing tonnage from service. Results in particular periods are also affected by such factors as the mix between voyage and time charters, the timing of the completion of voyage charters, the time and prevailing rates when charters that are currently being performed were negotiated, the levels of applicable rates and the business available as particular vessels come off existing charters, and the timing of drydocking of vessels.

In the world tanker markets, VLCC rates on the Middle East - West route began the first quarter near the $13,000 per day level, trending upwards to over $29,000 per day by the quarter's end. Despite the sizable increase, VLCC rates still averaged 35% below the corresponding 1999 quarter, reflecting the extremely depressed levels to which they had fallen in the latter half of 1999. This turnaround was mainly attributable to increasing Middle East fixtures as OPEC compliance with production constraints became more lax. Additionally, increased numbers of older vessels went to the scrapyard or met difficulty in finding employment, due, in part, to the major oil spill that occurred off the coast of France in December 1999. Vessel shortages arose as liftings increased from the Persian Gulf and West Africa to long-haul western destinations. By late April, freight rates had risen to $41,000 per day.

OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES

Income From Vessel Operations (continued)

Because VLCC voyages are predominantly longer haul, there is a delay in the inclusion in income of the improved rates noted above, and, accordingly first quarter results reflect only a portion of this dramatic improvement. With modern VLCCs currently trading at a two-year high, OSG's open tonnage, including a 304,700 dwt double-hulled vessel which delivered in mid-March (and its sistership to be delivered in the second quarter), provides the Company with significantly increased exposure to the strengthening VLCC markets.

Freight rates for Aframax tankers in the Caribbean were on average significantly higher than the same year ago period. Aframax rates began the year at $22,000 per day after having rallied strongly in the last quarter of 1999. Following a sharp decline in the first half of January to $11,000 per day, owing in part toY2K destocking, rates rose strongly through the end of March to close to $30,000 per day. This recovery was driven primarily by heavy spot liftings of increasing North Sea production. The benefit of this increase in rates was not fully reflected in the Company's results for the first quarter of 2000, which predominantly reflect fixtures made in the lower rate environment prevailing at the end of 1999 and early 2000. Rising Middle East production late in the quarter that continued into April increasingly shifted employment to VLCCs, precipitating a decline to the $19,000 per day level in late April. The Company's Aframax tanker pool with PDV Marina continues to complement its base of Venezuelan cargoes with backhauls and contracts of affreightment, resulting in increased operating efficiencies and reduced idle time for OSG's pool vessels.

Freight rates for product carriers in the Caribbean showed only a modest increase during the first quarter and were off 20% from those in the first quarter of 1999. This relatively sluggish performance can be attributed to destocking of Y2K gasoline inventories and reduced product exports from Venezuela early in the quarter, reflecting natural disasters and refinery problems.

Freight rates for large product carriers in the Pacific began the year at $11,500 per day, rising steadily to end the quarter at $18,500 per day. Average rates in the first quarter exceeded those of the same year ago period by 35%. In order to sustain strong economic growth in a high oil price environment, certain Asian governments sought to keep domestic oil product prices in check, in part by encouraging imports of lower cost refined products from the Middle East. In addition, recent capacity expansion in India, which has been a traditional importer of Persian Gulf oil products, has allowed some of these supplies to be diverted to the longer-haul Far East.

Capesize freight rates, which averaged better than $16,000 per day during the 1999 fourth quarter, a return about equal to the "pre-Asian crisis" levels in late 1997, edged higher in the first quarter to average about $17,000 per day, buoyed by the continuing economic recovery in Asia highlighted by surging Japanese steel production. In late April, Trans-Pacific Capesize rates were at $23,500 per day, $4,500 per day higher than Trans-Atlantic rates, underscoring the large proportion of the incremental growth in world dry bulk trade attributable to Asia.

OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES

Income From Vessel Operations (continued)

As one indication of recent trends in various charter markets, set forth below are selected average daily spot market rates for various types and sizes of vessels based on the published reports of Clarkson Research Studies, a well-known industry research organization. It is important to note that rates tend to fluctuate significantly over the course of time, and can vary widely based on factors such as the age, condition and position of a particular vessel. Accordingly, the rates shown are not necessarily indicative of rates achieved by the Company's vessels during either period.

Average Market Rates by Vessel Type

	First Quarter
Tankers	2000	1999
Modern VLCCs	$  26,500	$  29,800
Aframaxes (Caribbean market)	21,800	16,700
Product carriers (Worldwide)	10,300	9,400
Dry Bulk Carriers
Capesize	17,400	7,500

Income from vessel operations for the first three months of 2000 decreased by approximately $7,400,000 from the corresponding 1999 period. The results for the 2000 quarter, however, represent an $11,100,000 improvement from income from vessel operations for the previous quarter ended December 31, 1999. The results for the first quarter of 2000 were adversely affected compared with the comparable period of 1999, by higher average bunker prices; average bunker prices in the 2000 quarter more than doubled from the 1999 quarter. Although time charter equivalent (TCE - defined as voyage revenues less voyage expenses divided by round-trip voyage days) rates achieved by the Company's VLCCs in the first quarter of 2000 were approximately $10,000 per day higher than those obtained in the fourth quarter of last year, they were still close to $5,000 per day lower than the rates earned in the first quarter of 1999. For the Company's modern Aframaxes, first quarter 2000 TCE rates were $7,500 per day higher than rates earned in the fourth quarter of last year but only $1,000 per day higher than those rates achieved in the comparable period of the prior year. While there was a sharp rise in average TCE rates for VLCCs and Aframaxes late in the first quarter of 2000, first quarter results predominantly reflect fixtures made in the lower rate environment prevailing at the end of 1999 and early 2000. Operating results for the 2000 quarter were also negatively affected by a decline of approximately 350 revenue days from the first quarter of 1999 attributable to the results of two small U. S. flag dry bulk cargo ships and the sale of the Company's three older Suezmaxes in late 1999.

OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES

Income from Vessel Operations (continued)

The conversion of long-term time charters on five U. S. flag crude carriers in the second quarter of 1999 to bareboat charters, with BP Amoco guarantees, resulted in reductions in TCE revenue of approximately $7,700,000 in 2000. Vessel running expenses, however, attributable to these five vessels decreased by approximately the same amount since under bareboat charters such expenses are the responsibility of the charterer. Accordingly, this reduction in revenue had no material effect on income from vessel operations. The increased time charter hire expense in 2000 reflects the August 1999 sale and leaseback of these five vessels and is net of amortization of the related deferred gain. Such increase in shipping expenses is partially offset by a $2,800,000 reduction in depreciation resulting from the removal of these five vessels from the balance sheet. This net reduction in results from vessel operations of approximately $3,000,000 is offset by a decrease in interest expense resulting from the application of the net proceeds received (from the sale and leaseback transaction) of approximately $170,000,000 to reduce outstanding debt.

Interest Expense

Interest expense decreased in the first quarter of 2000 principally as a result of increased amounts capitalized in connection with vessel construction. A $25,000,000 decrease in the average amount of debt outstanding was offset by increases in the average interest rate paid on floating rate debt. Interest expense is net of amounts capitalized in connection with vessel construction of approximately $4,500,000 in 2000 and $1,800,000 in 1999. Interest expense in each period reflects $300,000 of net benefits from interest rate swaps referred to below in Liquidity and Sources of Capital.

Cumulative Effect of Accounting Change

The Company changed its accounting policy effective January 1, 2000, for the recognition of net voyage revenues of vessels operating on voyage charters to the percentage of completion method. Prior years' financial statements have not been restated. Net income for the three months ended March 31, 2000, includes $4,152,000, net of related income taxes, from the cumulative effect of this change in accounting principle. Assuming the percentage of completion method had been applied retroactively, the pro forma income before change in accounting principle for the three months ended March 31, 1999 would have been $4,038,000 or $ .11 per basic and diluted share.

OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES

New Accounting Standard

In June 1998, the Financial Accounting Standards Board issued Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("FAS 133"), which is required to be adopted in years beginning after June 15, 2000, as amended by Statement of Financial Accounting Standards No. 137. The Company expects to adopt the new statement effective January 1, 2001. FAS 133 will require the Company to recognize all derivatives on the balance sheet at fair value. The portion of a derivative's change in fair value that is deemed not to constitute a hedge will be immediately recognized in earnings. For derivatives that are hedges, depending on the nature of the hedges, changes in the fair value of derivatives will either be offset against changes in fair value of the hedged items or firm commitments through earnings or be recognized in other comprehensive income until the hedged item is recognized in earnings.

The Company believes that the adoption of FAS 133 will not have a material effect on its earnings and financial position.

Liquidity and Sources of Capital

Working capital at March 31, 2000 was approximately $57,800,000. Current assets are highly liquid, consisting principally of cash, interest-bearing deposits, investments in marketable securities and receivables. In addition, the Company maintains a Capital Construction Fund with a market value of approximately $183,000,000 at March 31, 2000. Net cash provided by operating activities in the first three months of 2000 approximated $7,000,000 (which is not necessarily indicative of the cash to be provided by operating activities for a full fiscal year). Current financial resources, together with cash anticipated to be generated from operations, are expected to be adequate to meet requirements in the next year.

The Company has an unsecured long-term credit facility of $600,000,000, of which $435,000,000 was used at March 31, 2000, and an unsecured short-term credit facility of $30,000,000, of which $1,000,000 was used at that date. The latter amount has been classified as long-term since it is expected to be refinanced under the long-term credit facility. In April 2000, the Company concluded an unsecured revolving credit agreement that provides for borrowings of up to $350,000,000, on a revolving credit basis, through April 2005. In connection therewith, the existing long-term credit facility was reduced from $600,000,000 to $425,000,000, resulting in a net increase in long-term credit availability to $775,000,000.

The Company has used interest rate swaps to effectively convert a portion of its debt, including capital lease obligations, either from a fixed to floating rate basis or from floating to fixed rate, reflecting management's interest rate outlook at various times. These agreements contain no leverage features and have various maturity dates from late 2000 to 2008. The Company has hedged its exchange rate risk with respect to contracted future charter revenues receivable in Japanese yen (to minimize the effect of foreign exchange rate fluctuations on reported income) by entering into currency swaps with a major financial institution to deliver such foreign currency at fixed rates. This will result in the Company receiving approximately $71,000,000 for such foreign currency from April 1, 2000 through 2004.

As of March 31, 2000, the Company has commitments for the construction of seven double-hulled foreign flag tankers scheduled for delivery between late-May 2000 and early 2002, with an aggregate unpaid cost of approximately $114,200,000. Unpaid costs are net of progress payments and prepayments, which are covered by refundment guarantees from major U. S. insurance companies.

OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES

Risk Management

The Company is exposed to market risk from changes in interest rates, which could impact its results of operations and financial condition. The Company manages this exposure to market risk through its regular operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. The Company manages its ratio of fixed to floating rate debt with the objective of achieving a mix that reflects management's interest rate outlook at various times. To manage this mix in a cost-effective manner, the Company, from time to time, enters into interest rate swap agreements, in which it agrees to exchange various combinations of fixed and variable interest rates based on agreed upon notional amounts. The Company uses derivative financial instruments as risk management tools and not for speculative or trading purposes. In addition, derivative financial instruments are entered into with a diversified group of major financial institutions in order to manage exposure to nonperformance on such instruments by the counterparties.

May 8, 2000

Independent Accountants' Report on Review of Interim Financial Information

The accompanying condensed consolidated financial statements as of March 31, 2000 and for the three months ended March 31, 2000 and 1999 are unaudited; however, such financial statements have been reviewed by the Company's independent accountants.

OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES

PART II

Item 1. Legal Proceedings

Reference is made to the investigation reported on in Item 1 of Part II of the Company's report on Form 10-Q for the quarter ended June 30, 1996 and incorporated herein by reference. The Company was advised that this investigation has been discontinued.

Item 6(a). Exhibits

See Exhibit Index on page 22.

Item 6(b). Reports on Form 8-K

The Registrant was not required to file any report on Form 8-K during the quarter ended March 31, 2000.

Ernst & Young LLP	787 Seventh Avenue	Phone: 212 773-3000
	New York, New York 10019

INDEPENDENT ACCOUNTANTS' REVIEW REPORT

To the Shareholders

Overseas Shipholding Group, Inc.

We have reviewed the accompanying condensed consolidated balance sheet of Overseas Shipholding Group, Inc. and subsidiaries as of March 31, 2000 and the related condensed consolidated statements of income, cash flows and changes in shareholders' equity for the three month periods ended March 31, 2000 and 1999. These financial statements are the responsibility of the Company's management.

We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States, which will be performed for the full year with the objective of expressing an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to the accompanying condensed consolidated financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States.

We have previously audited, in accordance with auditing standards generally accepted in the United States, the consolidated balance sheet of Overseas Shipholding Group, Inc. and subsidiaries as of December 31, 1999, and the related consolidated statements of operations, cash flows and changes in shareholders' equity for the year then ended, not presented herein, and in our report dated February 21, 2000 we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 1999, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

ERNST & YOUNG LLP

New York, New York

May 8, 2000

OVERSEAS SHIPHOLDING GROUP, INC.

                 AND SUBSIDIARIES                

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	OVERSEAS SHIPHOLDING GROUP, INC.
	(Registrant)
Date: May 12, 2000	Morton P. Hyman
	Morton P. Hyman
	President and Chief Executive Officer
Date: May 12, 2000	Myles R. Itkin
	Myles R. Itkin
	Senior Vice President, Chief
	Financial Officer and Treasurer

OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES

EXHIBIT INDEX

4.	Credit Agreement dated April 18, 2000, among the registrant, two subsidiaries of the registrant and certain banks.
10.	1989 Stock Option Plan, as amended on October 9, 1990, adopted for officers and key employees of the registrant or its subsidiaries (previously filed more than 10 years ago and refiled herewith).
15.	Letter from Ernst & Young LLP.
18.	Letter dated May 8, 2000 from Ernst & Young LLP relating to change in accounting principle.
27.	Financial Data Schedule.
NOTE:	Instruments authorizing long-term debt of the Registrant and subsidiaries, where the amounts authorized thereunder do not exceed 10% of total assets on a consolidated basis,
	are not being filed herewith. The Registrant agrees to furnish a copy of each such instrument to the Commission upon request.

EX-4

$350,000,000

CREDIT AGREEMENT

AMONG

OVERSEAS SHIPHOLDING GROUP, INC.,
OSG BULK SHIPS, INC.,
OSG INTERNATIONAL, INC.

AND

DEN NORSKE BANK ASA,
as Facility Agent, Arranger and Bank,

ING BANK N.V.,
as Documentation Agent, Arranger and Bank,

NEDSHIP BANK N.V.,
as Syndication Agent, Arranger and Bank,

MEESPIERSON CAPITAL CORP.,
as Arranger and Bank,

HAMBURGISCHE LANDESBANK - GIROZENTRALE,
as Co-Arranger and Bank,

CRÉDIT AGRICOLE INDOSUEZ,
as Senior Lead Manager and Bank,

SCOTIABANK (IRELAND) LIMITED,
as Senior Lead Manager and Bank,

LANDESBANK SCHLESWIG-HOLSTEIN GIROZENTRALE,
as Lead Manager and Bank,

THE BANK OF NEW YORK,
as Lead Manager and Bank

AND

NIB CAPITAL BANK N.V.,
as Lead Manager and Bank

Dated as of April 18, 2000

TABLE OF CONTENTS

		Page
1.	DEFINITIONS	1
	1.1. Defined Terms	21
	1.2. Computation of Time Periods; Other Definitional Provisions	21
	1.3. Accounting Terms	21
2.	THE ADVANCES	22
	2.1. Advances	22
	2.2. Drawdown Notice.	22
	2.3. Effect of Drawdown Notice	22
	2.4. Funding of Advances	22
	2.5. Notation of Advances	23
	2.6. Reduction of the Commitments	23
	2.7. Mandatory Prepayments	24
	2.8. Several Obligations	24
	2.9. Pro Rata Treatment	24
3.	CONDITIONS	24
	3.1. Conditions Precedent to Availability of the Facility	24
	3.2. Further Conditions Precedent	26
	3.3. Satisfaction after Drawdown	26
4.	REPAYMENT AND PREPAYMENT	26
	4.1. Repayment	26
	4.2. Prepayment	26
	4.3. Borrowers' Obligations Absolute	27
5.	INTEREST AND RATE	27
	5.1. Payment of Interest; Interest Rate	27
	5.2. Calculation of Interest	27
	5.3. Maximum Interest	27
6.	PAYMENTS	28
	6.1. Place of Payments; No Set Off	28
	6.2. Federal Income Tax Credits	28
	6.3. Sharing of Setoffs.	28
7.	REPRESENTATIONS AND WARRANTIES	29
	(a) Due Organization and Power	29
	(b) Authorization and Consents	29
	(c) Binding Obligations	30
	(d) No Violation	30
	(e) Litigation	30
	(f) No Default	30
	(g) Compliance with ERISA	30
	(h) Environmental Matters and Claims	31
	(i) Subsidiaries	32
	(j) Financial Statements	32
	(k) Tax Returns and Payments	32
	(l) Insurance	32
	(m) Foreign Trade Control Regulations	32
	(n) Investment Company Act	33
	(o) No Material Adverse Change	33
	(p) Compliance with ISM Code	33
	(q) No Threatened Withdrawal of DOC or SMC	33
	(r) No Proceedings to Dissolve	33
	(s) Compliance with Laws	33
	(t) OSG International Not Immune	33
	(u) No Marshall Islands Filing Necessary	34
8.	COVENANTS	34
	8.1. Affirmative Covenants	34
	(a) Performance of Agreements	34
	(b) Notice of Default	34
	(c) Obtain Consents	34
	(d) Financial Statements	34
	(e) Corporate Existence	36
	(f) Books, Records, etc	36
	(g) Inspection	37
	(h) Payment of Obligations	37
	(i) Compliance with Agreements, Statutes, etc.	37
	(j) Environmental Matters	37
	(k) Maintenance of Assets	38
	(l) Insurance	38
	(m) Shipping Management	38
	(n) Agent for Service of Process	38
	(o) Consolidated Tangible Net Worth	38
	(p) Cash Adjusted Debt Service Coverage Ratio	38
	(q) Unencumbered Assets to Unsecured Debt Ratio	38
	(r) Cash Adjusted Funded Debt to Cash Adjusted Consolidated Net Tangible Assets	39
	(s) Security Interest on Ratings Downgrade	39
	(t) Ownership of OSG Bulk and OSG International	41
	(u) Exchange Listing	41
	(v) Book Value	41
	8.2. Negative Covenants	41
	(a) Limitation on Liens	41
	(b) Limitations on Funded Debt	41
	(c) Conduct of Business	42
	(d) Limitation on Sale and Leasebacks	42
	(e) Mergers, Consolidations and Sales of Assets	42
	(f) Transactions with Affiliates	43
	(g) Use of Proceeds	44
	(h) Maximum Investments in Joint Ventures	44
	(i) No Competing Offering	44
9.	EVENTS OF DEFAULT	44
	9.1. Events of Default	44
	(a) Principal Payments	44
	(b) Interest and other Payments	44
	(c) Representations, etc.	44
	(d) Impossibility, Illegality	44
	(e) Certain Covenants	44
	(f) Covenants	44
	(g) Indebtedness and Other Obligations	45
	(h) Bankruptcy	45
	(i) Judgments	45
	(j) Inability to Pay Debts	45
	(k) ERISA Debt	45
	9.2. Indemnification	46
	9.3. Application of Moneys	46
10.	ASSIGNMENTS; PARTICIPATIONS; PLEDGES	47
	10.1. Assignments	47
	10.2. Participations	47
	10.3. Promissory Notes	48
	10.4. Security Interest	48
11.	ILLEGALITY, INCREASED COST, NON-AVAILABILITY, ETC.	48
	11.1. Illegality	48
	11.2. Increased Cost	48
	11.3. Nonavailability of Funds	49
	11.4. Determination of Losses	49
	11.5. Compensation for Losses	49
	11.6. Compensation for Breakage Costs	50
	11.7. Currency Indemnity	50
	11.8. Replacement of Bank or Participant	51
12.	FEES, EXPENSES AND INDEMNIFICATION	51
	12.1. Commitment Fee	51
	12.2. Expenses	52
	12.3. Indemnification	52
13.	APPLICABLE LAW, JURISDICTION AND WAIVER	53
	13.1. Applicable Law	53
	13.2. Jurisdiction	53
	13.3. WAIVER OF JURY TRIAL	53
14.	THE AGENTS	53
	14.1. Appointment and Authorization	53
	14.2. Agents and Affiliates	53
	14.3. Action by Agents	54
	14.4. Consultation with Experts	54
	14.5. Liability of the Agents	54
	14.6. Indemnification	54
	14.7. Credit Decision	55
	14.8. Successor Facility Agent	55
	14.9. Administrative Fee	55
	14.10. Distribution of Payments	55
	14.11. Holder of Interest in Notes	56
	14.12. Assumption re Event of Default	56
	14.13. Notification of Event of Default	56
	14.14. Limitations of Liability of Creditors	56
15.	NOTICES AND DEMANDS	56
16.	LIMITATION OF LIABILITY/SURVIVAL OF LIABILITY/CONTINUING INDEMNITIES	57
	16.1. Limitation of Liability	57
17.	MISCELLANEOUS	58
	17.1. Time of Essence	58
	17.2. Severability	59
	17.3. References	59
	17.4. Further Assurances	59
	17.5. Prior Agreements, Merger	59
	17.6. Entire Agreement, Amendments	59
	17.7. Headings	59
	17.8. Survival	59
	17.9. Confidentiality	60
	17.10. Counterparts	60
	17.11. WAIVER OF IMMUNITY	60
	SCHEDULE I - BANKS
	SCHEDULE II - APPLICABLE MARGIN
	SCHEDULE III - FUNDED DEBT AT DECEMBER 31, 1999
	SCHEDULE IV - ACCEPTABLE BROKERS
	EXHIBIT A - FORM OF ADMINISTRATIVE QUESTIONNAIRE
	EXHIBIT B - FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
	EXHIBIT C - PROMISSORY NOTE
	EXHIBIT D - FORM OF DRAWDOWN NOTICE
	EXHIBIT E - FORM OF COMPLIANCE CERTIFICATE

Page

CREDIT AGREEMENT

THIS CREDIT AGREEMENT (the "Agreement") is made as of the 18th day of April, 2000, by and among (1) OVERSEAS SHIPHOLDING GROUP, INC., a corporation incorporated under the laws of the State of Delaware ("OSG"), with offices at 511 Fifth Avenue, New York, New York 10017, (2) OSG BULK SHIPS, INC., a corporation incorporated under the laws of the State of New York ("OSG Bulk"), with offices at 511 Fifth Avenue, New York, New York 10017, (3) OSG INTERNATIONAL, INC., a corporation incorporated under the laws of the Republic of the Marshall Islands with offices at 511 Fifth Avenue, New York, New York 10017 (" OSG International," jointly and severally with OSG and OSG Bulk, the "Borrowers," each a "Borrower"), (4) MEESPIERSON CAPITAL CORP., HAMBURGISCHE LANDESBANK - GIROZENTRALE, CRÉDIT AGRICOLE INDOSUEZ, SCOTIABANK (IRELAND) LIMITED, LANDESBANK SCHLESWIG-HOLSTEIN GIROZENTRALE, THE BANK OF NEW YORK and NIB CAPITAL BANK N.V. (together with any assignee pursuant to Section 10, the "Banks," each a "Bank"), (5) DEN NORSKE BANK ASA, as facility agent and arranger for the Banks (the "Facility Agent"), (6) ING BANK N.V., as documentation agent and arranger for the Banks (the "Documentation Agent" ), and (7) NEDSHIP BANK N.V., as syndication agent and arranger for the Banks (the "Syndication Agent," and together with the Facility Agent and the Documentation Agent, the "Agents") .

WITNESSETH THAT:

WHEREAS, at the request of the Borrowers, each of the Agents has agreed to act in its respective capacity as set forth herein and the Banks have agreed to provide to the Borrowers a revolving credit facility in the amount of $350,000,000 on the terms and subject to the conditions set forth herein;

NOW, THEREFORE, in consideration of the premises set forth above, the covenants and agreements hereinafter set forth, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as set forth below:

1. DEFINITIONS

1.1 Defined Terms.

In this Agreement the words and expressions specified below shall, except where the context otherwise requires, have the meanings attributed to them below:

"Adjusted Fixed Charges"	shall mean for each four fiscal quarter period (taken as a single accounting period) for which a determination is being made, the sum of (i) Fixed Charges plus (ii) the average of the amount of Current Debt of OSG and the Recourse Subsidiaries outstanding as of the end of each such fiscal quarter;
"Administrative Questionnaire"	shall mean, with respect to each Bank, an administrative questionnaire substantially in the form of Exhibit A hereto, submitted to the Facility Agent (with a copy to the Borrowers) duly completed by such Bank;
"Advance"	shall mean any amount advanced to the Borrowers pursuant to Section 2.1; provided that each such Advance shall be in a minimum amount of $10,000,000 or any larger multiple of $1,000,000;
"Advance Time Charter Revenues"	shall mean, as of the date of any determination thereof, the amount at which advance time charter revenues of OSG and its Recourse Subsidiaries are properly included on the liability side of OSG's most recent consolidated balance sheet, determined in accordance with GAAP, and if not listed as a separate line item on such balance sheet, such amounts as are described separately in the officer's certificates required pursuant to Section 8.1(d)(iii);
"Affiliate"	shall mean, with respect to any Person, (i) any Person that directly, or indirectly through one or more intermediaries, Controls such Person (a "Controlling Person") or (ii) any Person (other than such Person or a Subsidiary of such Person) which is Controlled by or is under common Control with a Controlling Person;
"Agent(s)"	shall have the meaning ascribed thereto in the preamble;
"Applicable Law"	shall mean any Law of any Authority, including, without limitation, all Federal and state banking or securities laws, to which the Person in question is subject or by which it or any of its material property is bound;
"Applicable Margin"	shall mean a margin which will vary as set forth on Schedule II attached hereto based upon the rating levels assigned to OSG's senior unsecured debt (without third-party credit enhancement) by S&P and Moody's or, in the absence of any ratings, based upon the ratio of Cash Adjusted Funded Debt to Consolidated EBITDA. The Applicable Margin for an Advance shall be determined by the Facility Agent at or about 10:00 a.m. (New York City time) two (2) Banking Days prior to the Drawdown Date for such Advance and shall be promptly notified in writing to the Banks and the Borrowers, such determination of the Applicable Margin, absent manifest error, to be conclusive and binding upon the Borrowers;
"Applicable Rate"	shall mean, in respect of any Advance, the rate of interest on such Advance from time to time applicable pursuant to Section 5.1;
"Assignment and Assumption Agreement(s)"	shall mean the Assignment and Assumption Agreement(s) executed pursuant to Section 10.1 or 11.8 substantially in the form of Exhibit B;
"Attributable Debt"	shall mean, as of the date of any determination thereof, in connection with any Sale and Leaseback Transaction which is not permitted pursuant to Section 8.2(d)(ii), the lesser of (i) the Fair Market Value of any vessels subject to such transaction or the fair market value of any other non-vessel assets subject to such transaction or (ii) the present value (computed in accordance with GAAP at the imputed rate of interest used in such transaction) of the obligation of a lessee in such transaction for Rentals during the remaining term of any lease (including any period for which such lease has been extended or may, at the option of the lessor, be extended);
"Authority"	shall mean any governmental or quasi-governmental authority, whether executive, legislative, judicial, administrative or other, or any combination thereof, including, without limitation, any Federal, state, territorial, county, municipal or other government or governmental or quasi-governmental agency, arbitrator, board, body, branch, bureau, commission, corporation, court, department, instrumentality, master, mediator, panel, referee, system or other political unit or subdivision or other entity of any of the foregoing, whether domestic or foreign;
"Bank(s)"	shall have the meaning ascribed thereto in the preamble;
"Banking Day(s)"	shall mean day(s) on which banks are open for the transaction of business in London, England and New York, New York;
"Book Value"	shall mean, as of the date of any determination thereof, the value at which the assets of OSG and the Recourse Subsidiaries are recorded and reported by OSG in its consolidated financial statements;
"Borrower(s)"	shall have the meaning ascribed thereto in the preamble;
"Capital Construction Funds"	shall mean as of the date of any determination thereof, the aggregate amount on deposit in capital construction funds established and maintained pursuant to agreement with the Secretary of Transportation in accordance with Section 1177 of the Merchant Marine Act, 1936, as amended, 46 U.S.C. Appx. Section 1177, for the account of OSG and the Recourse Subsidiaries;
"Capitalized Lease"	shall mean any lease the obligation for Rentals with respect to which is required to be capitalized on a balance sheet of the lessee in accordance with GAAP;
"Capitalized Rentals"	of any Person shall mean, as of the date of any determination thereof, the amount at which the aggregate Rentals due and to become due under all Capitalized Leases under which such Person is a lessee would be reflected as a liability on the balance sheet of such Person;
"Cash"	shall mean as of the date of any determination thereof, the total amount of all cash and Cash Equivalents as determined in accordance with GAAP of OSG and the Recourse Subsidiaries including, without limitation, cash of OSG and the Recourse Subsidiaries included in Capital Construction Funds (net of any imputed taxes and penalties thereon, if any), interest-bearing deposits in banks or trust companies described in clause (c) of the definition of "Permitted Investments" with maturities of less than one year held by OSG and the Recourse Subsidiaries as the same are reflected in a consolidated balance sheet of OSG and the Subsidiaries delivered in accordance with Section 8.1(d), and "Cash" shall also include, for the purposes of the calculations of Cash Adjusted Consolidated Net Tangible Assets and Cash Adjusted Funded Debt required by Section 8.1(r) only, Cash of OSG and the Recourse Subsidiaries included in Restricted Funds;
"Cash Adjusted Consolidated Net Tangible Assets"	shall mean, as of the date of any determination thereof, Consolidated Net Tangible Assets less Cash;
"Cash Adjusted Debt Service Coverage Ratio"	shall mean, for each four fiscal quarter period (taken as a single accounting period) for which a determination is being made, the ratio of Cash Adjusted Income Available for Fixed Charges to Adjusted Fixed Charges;
"Cash Adjusted Funded Debt"	shall mean, as of the date of any determination thereof, Consolidated Funded Debt less Cash;
"Cash Adjusted Income Available for Fixed Charges"	shall mean, for any period, with respect to OSG and the Recourse Subsidiaries, the sum of (without duplication) (i) Net Income Available for Fixed Charges, (ii) depreciation and amortization of OSG and the Recourse Subsidiaries determined on a consolidated basis in accordance with GAAP for such period, and (iii) 75% of the average of the amounts of Cash outstanding as of the end of each of the four quarterly periods included in the determination;
"Cash Collateral"	shall have the meaning ascribed thereto in Section 8.1(s);
"Cash Equivalents"	shall mean (i) securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof), and (ii) time deposits, certificates of deposit or deposits in the interbank market of any commercial bank of recognized standing organized under the laws of the United States of America, any state thereof or any foreign jurisdiction having capital and surplus in excess of $500,000,000, and rated at least A or the equivalent thereof by S&P in respect of both (i) and (ii) above, in each case having maturities of not more than ninety (90) days from the date of acquisition ;
"Closing Date"	shall mean the date on which each of the conditions precedent to the availability of the Facility set forth in Section 3.1 shall have been met or waived;
"Code"	shall mean the Internal Revenue Code of 1986, as amended, and any successor statute and regulations promulgated thereunder;
"Collateral Date"	shall have the meaning ascribed thereto in Section 8.1(s);
"Collateralized Assets"	shall mean any assets of OSG that are pledged or mortgaged as security for any type of financing (including Capitalized Leases);
"Commitment"	shall mean, in relation to a Bank, the portion of the Facility set out opposite its name in Schedule I hereto or, as the case may be, in any relevant Assignment and Assumption Agreement, as changed from time to time pursuant to the terms of this Agreement;
"Commitment Fee"	shall have the meaning ascribed thereto in Section 12.1;
"Compliance Certificate"	shall mean a certificate certifying the compliance by each of the Borrowers with all of its covenants contained herein and showing the calculations thereof in sufficient detail as to permit the verification thereof by the Facility Agent, delivered by the chief financial officer of OSG to the Facility Agent with sufficient copies for the other Creditors to be distributed to the other Creditors by the Facility Agent promptly upon receipt thereof pursuant to Section 8.1(d)(i) and (ii) in the form set out in Exhibit E, or in such other form as the Facility Agent may agree;
"Consolidated EBITDA"	shall mean, for any period, with respect to OSG and the Recourse Subsidiaries, the sum of (without duplication) (i) Consolidated Net Income; (ii) all Interest Charges of OSG and the Recourse Subsidiaries; (iii) income taxes (other than income taxes (either positive or negative) attributable to extraordinary and non-recurring gains or losses) of OSG and the Recourse Subsidiaries; and (iv) depreciation and amortization of OSG and the Recourse Subsidiaries determined on a consolidated basis in accordance with GAAP for such period; provided that if any Recourse Subsidiary is not wholly-owned by OSG, Consolidated EBITDA shall be reduced (to the extent not otherwise reduced in accordance with GAAP) by an amount equal to (A) the amount of the Consolidated Net Income attributable to such Recourse Subsidiary multiplied by (B) the percentage ownership interest in the income of such Recourse Subsidiary not owned on the last day of such period by OSG;
"Consolidated Funded Debt"	shall mean all Funded Debt of OSG and the Recourse Subsidiaries, determined on a consolidated basis eliminating intercompany items;
"Consolidated Net Income"	for any period shall mean consolidated net income of OSG and the Recourse Subsidiaries for such period, as shown on the consolidated financial statements of OSG and the Recourse Subsidiaries delivered in accordance with Section 8.1(d);
"Consolidated Net Tangible Assets"	shall mean as of the date of any determination thereof the total amount of all Tangible Assets after excluding therefrom (i) all Restricted Investments (valued in accordance with GAAP) and (ii) any write-up of fixed assets of OSG and the Recourse Subsidiaries other than write-ups in accordance with GAAP of assets of a business made after the acquisition of such business after December 31, 1999 and after deducting all liabilities except deferred income taxes, deferred credits, Advance Time Charter Revenues, Minority Interests (if considered to be liabilities), Unterminated Voyage Revenues and Consolidated Funded Debt;
"Consolidated Tangible Net Worth"	shall mean, as of the date of any determination thereof, the total of stockholders' equity (as shown on the most recent consolidated balance sheet of OSG and the Recourse Subsidiaries) less Intangible Assets of OSG and the Recourse Subsidiaries;
"Control"	shall mean, for purposes of the definition of "Affiliate," with respect to any Person, possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by contract or otherwise (for purposes of the aforesaid definition, the term "Control" used as a verb has a corresponding meaning);
"Conversion Date"	shall have the meaning ascribed thereto in Section 11.7(a);
"Creditors"	shall mean, together, the Agents and the Banks, each, a "Creditor";
"Current Debt"	of any Person shall mean as of the date of any determination thereof (i) the Current Portion, (ii) all other Debt of such Person other than Funded Debt and (iii) (without duplication) Guarantees by such Person of Debt of the type described in clauses (i) and (ii);
"Current Portion"	with respect to any Person shall mean the portion (determined in accordance with GAAP) of long-term Debt of such Person shown as a current liability on the consolidated balance sheet of such Person;
"Debt"	of any Person shall mean (i) all liabilities for money borrowed (excluding, in the case of OSG or any Recourse Subsidiary, Debt defined herein as Non-Recourse Debt) as determined in accordance with GAAP eliminating intercompany items, (ii) (without duplication) all Capitalized Rentals of such Person (other than rentals owing from OSG or any Recourse Subsidiary to OSG or another Recourse Subsidiary), and (iii) (without duplication) all Guarantees by such Person of Debt of Persons (other than, in the case of OSG or any Recourse Subsidiary, Debt of OSG or any Recourse Subsidiary);
"Default"	shall mean any event that would, with the giving of notice or passage of time, or both, be an Event of Default;
"Default Rate"	shall have the meaning ascribed thereto in Section 5.1(b);
"Derivatives Obligations"	of any Person shall mean all obligations of such Person in respect of any rate swap transaction, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of the foregoing transactions) or any combination of the foregoing transactions;
"DOC"	shall mean a document of compliance issued to an Operator in accordance with rule 13 of the ISM Code;
"Documentation Agent"	shall have the meaning ascribed thereto in the preamble;
"Dollars" or "$"	shall mean the legal currency, at any relevant time hereunder, of the United States of America and, in relation to all payments hereunder, in same day funds settled through the New York Clearing House Interbank Payments System (or such other Dollar funds as may be determined by the Facility Agent to be customary for the settlement in New York City of banking transactions of the type herein involved);
"Drawdown Date"	shall mean any date, being a Banking Day, not later than the date falling one day prior to the Final Payment Date, upon which the Borrowers have requested that an Advance be made as provided in Section 2.1;
"Drawdown Notice"	shall have the meaning ascribed thereto in Section 2.2;
"Environmental Approvals"	shall have the meaning ascribed thereto in Section 7.1(h);
"Environmental Claim"	shall have the meaning ascribed thereto in Section 7.1(h);
"Environmental Laws"	shall have the meaning ascribed thereto in Section 7.1(h);
"ERISA"	shall mean the Employee Retirement Income Security Act of 1974, as amended;
"ERISA Affiliate"	shall mean a trade or business (whether or not incorporated) which is under common control with any Borrower within the meaning of Sections 414(b),(c),(m) or (o) of the Code;
"ERISA Group"	shall mean OSG and the Subsidiaries;
"Event(s) of Default"	shall mean any of the events set out in Section 9.1;
"Exchange Act"	shall mean the Securities Exchange Act of 1934, as amended;
"Existing Credit Facility"	shall mean the credit facility established pursuant to that certain Second Amended and Restated Credit Agreement in its entirety, dated as of August 19, 1997, among the Borrowers, the banks listed therein, The Chase Manhattan Bank, as Syndication Agent, Citibank, N.A., as Administrative Agent, and Morgan Guaranty Trust Company of New York, as Documentation Agent;
"Facility"	the sum to be made available by the Banks to the Borrowers in the aggregate principal amount not to exceed Three Hundred Fifty Million Dollars ($350,000,000) pursuant to Section 2 hereof, as the same may be reduced from time to time pursuant to Section 2.6 hereof;
"Facility Agent"	shall have the meaning ascribed thereto in the preamble;
"Facility Balance"	shall mean the Dollar amount of the Facility outstanding at any time;
"Facility Period"	shall mean the period from the date hereof to the date which is five (5) years from the date hereof;
"Fair Market Value"	shall mean, in respect of any vessel, the average of two sets of appraised values of such vessel as determined by two (2) of the brokers listed on Schedule IV, such vessel to be valued on a stand alone basis, free and clear of any liens, charters or other encumbrances and with no value given to any pooling arrangements. One broker shall be selected by the Borrowers and one broker shall be selected by the Agents. No such appraisal shall be dated more than thirty (30) days prior to the date on which such appraisal is required pursuant to this Agreement unless the Facility Agent consents in writing (on each occasion) to the use of an older appraisal;
"Federal Funds Rate"	shall mean, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a day on which banks are open for the transaction of business in New York, for the next preceding day on which banks are open for the transaction of business in New York) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Banking Day, the average of the quotations for such day on such transactions received by the Facility Agent from three (3) Federal funds brokers of recognized standing selected by the Facility Agent;
"Final Payment Date"	shall mean the date which falls on the fifth anniversary of the date of this Agreement or, if such day is not a Banking Day, the Final Payment Date shall be the immediately preceding Banking Day;
"Fixed Charges"	for any period shall mean on a consolidated basis the sum of (i) all Rentals (other than Capitalized Rentals) payable in respect of such period by OSG and the Recourse Subsidiaries, and (ii) all Interest Charges on all Indebtedness (including the interest component of Capitalized Rentals) of OSG and the Recourse Subsidiaries;
"Funded Debt"	of any Person shall mean all Debt of such Person having a final maturity of more than one year from the date of origin thereof (or which is renewable or extendible at the option of the obligor for a period or periods more than one year from the date of origin), excluding the Current Portion;
"GAAP"	shall mean generally accepted accounting principles at the time in the United States, except that (so long as the Statement of Financial Accounting Standards No. 94 (or any substantially similar successor statement) is in effect), with respect to financial statements of OSG and the Recourse Subsidiaries, the failure to consolidate Non-Recourse Subsidiaries shall be deemed to be in accordance with such principles;
"Guarantee"	by any Person shall mean, without duplication, any obligation (other than endorsements in the ordinary course of business of negotiable instruments for deposit or collection), contingent or otherwise, of such Person directly or indirectly guaranteeing any Debt or other obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation (whether arising by virtue of partnership arrangements, by agreement to keep-well, to take-or-pay (or similar arrangements involving the purchase of goods, securities or services), or to maintain financial statement conditions or otherwise); or (ii) entered into for the purpose of assuring in any other manner the obligee of such Debt or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided that the term "Guarantee" used as a verb has a corresponding meaning;
"Indebtedness"	of any Person shall mean and include all obligations of such Person which in accordance with GAAP shall be classified upon a balance sheet of such Person as liabilities of such Person, and in any event shall include all Debt of such Person;
"Intangible Assets"	shall mean, as of the date of any determination thereof, goodwill, patents, trade names, trademarks, copyrights, franchises, experimental expenses, organization expenses, unamortized debt discount and expenses, deferred charges (other than unamortized deferred drydock costs, unterminated voyage expenses, prepaid insurance, prepaid taxes, prepaid charterhire and other prepaid items properly excludable from intangible assets under GAAP), the excess of cost of shares acquired over fair value of underlying tangible assets and such other assets as are properly classified as "intangible assets" in accordance with GAAP;
"Interest Charges"	for any period shall mean all interest (excluding only capitalized interest in connection with vessel construction prior to delivery thereof, which capitalized interest is not paid or payable and is included in Debt) and all amortization of debt discount and expense on any particular Indebtedness for which such calculations are being made;
"Interest Period"	shall mean with respect to any Advance, (a) each period commencing on the date such Advance is made or the last day of the next preceding Interest Period with respect to such Advance and ending on the seventh (7th) day thereafter (a "Seven Day Interest Period") or on the same day in the first, third, sixth or twelfth calendar month thereafter, in each case, as selected by the Borrowers or, (b) in the Facility Agent's discretion, such other period(s) not to exceed twelve (12) months as may be agreed, or, (c) in the Banks' discretion, such other period(s) in excess of twelve (12) months as may be agreed, except, in each case, that each such Interest Period (if such Interest Period is a whole number of months) which commences on the last Banking Day of a calendar month (or on any day for which there is no numerically corresponding day in the appropriate subsequent calendar month) shall end on the last Banking Day of the appropriate subsequent calendar month. If at the end of any then existing Interest Period the Borrowers fail to give notice of a selected Interest Period or an Event of Default shall have occurred and be continuing, the relevant Interest Period shall be one month or such other period as the Facility Agent may select.
	Notwithstanding the foregoing, (i) no Interest Period may extend beyond the Final Payment Date; (ii) each Interest Period which would otherwise end on a day which is not a Banking Day shall end on the next succeeding Banking Day (or, if such next succeeding Banking Day falls in the next succeeding calendar month, on the next preceding Banking Day); and (iii) each Interest Period which would otherwise commence before and end after the Final Payment Date shall end on the Final Payment Date;
"Investments"	shall mean all investments, in cash or by delivery of property made, directly or indirectly in any Person, whether by acquisition of shares of capital stock, indebtedness or other obligations or Securities or by loan, advance, capital contribution or otherwise; provided, however, that "Investments" shall not mean or include routine investments in property to be used or consumed in the ordinary course of business;
"ISM Code"	shall mean the International Safety Management Code for the Safe Operating of Ships and for Pollution Prevention constituted pursuant to Resolution A.741(18) of the International Maritime Organization and incorporated into the Safety of Life at Sea Convention and shall include any amendments or extensions thereto and any regulation issued pursuant thereto;
"Joint Venture"	shall mean at any date any Person (other than a Subsidiary) in which OSG or any Subsidiary has an ownership interest which would be accounted for in the consolidated financial statements of OSG and its consolidated Subsidiaries by the equity method if such statements were prepared as of such date;
"Judgment Currency"	shall have the meaning ascribed thereto in Section 11.7(a);
"Law"	shall mean any law, rule, regulation or official code, consent decree, constitution, decree, directive, enactment, guideline, injunction, interpretation, judgment, order, ordinance, policy statement, proclamation, promulgation, requirement, rule of law, rule of public policy, settlement agreement, statute, or writ, of any Authority;
"LIBOR Rate"	shall mean, with respect to any Interest Period for any Advance, the rate per annum determined by the Facility Agent to be equal to the quotient (rounded upwards, if necessary, to the next higher 1/16 of 1%) of (y) (i) the rate of interest for deposits in Dollars for a period equal to the number of days in such Interest Period (or, in the case of a Seven Day Interest Period, if greater, the rate of interest for deposits in Dollars for a one month period) which appears on the Telerate Page 3750 as of 11:00 A.M., London time, on the day that is two Banking Days prior to the first day of such Interest Period, or (ii) if such rate does not appear on the Telerate Page 3750 at such time, the rate per annum at which deposits in Dollars are offered to the Facility Agent in immediately available funds at its LIBOR lending office in an amount comparable to the principal amount of such Advance for a period equal to such Interest Period (or, in the case of a Seven Day Interest Period, if greater, for a one month period) at approximately 10:00 A.M., New York City time, on the date two Banking Days before the first day of such Interest Period, divided by (z) a number equal to 1.00 minus the LIBOR Rate Reserve Percentage;
"LIBOR Rate Reserve Percentage"	shall mean, for any day, the maximum percentage (expressed as a decimal) specified from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirements (including, but not limited to, supplemental, marginal and emergency reserves) with respect to eurocurrency funding (currently referred to as "Eurocurrency Liabilities") of a member bank in such System. The LIBOR Rate shall be adjusted automatically with respect to any Advance outstanding on the effective date of any change in the LIBOR Rate Reserve Percentage, as of such effective date;
"Lien"	shall mean any interest in property securing an obligation owed to, or a claim by, a Person other than the owner of the property, whether such interest is based on the common law, statute or contract, and including but not limited to the security interest lien arising from a mortgage, encumbrance, pledge, conditional sale or trust receipt or a lease, consignment or bailment for security purposes. The term "Lien" shall include reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases and other title exceptions and encumbrances (including, with respect to stock, stockholder agreements, voting trust agreements, buy-back agreements and all similar arrangements) affecting property. For the purposes of this Agreement, OSG or a Recourse Subsidiary shall be deemed to be the owner of any property which it has acquired or holds subject to a conditional sale agreement, Capitalized Lease or other arrangement pursuant to which title to the property has been retained by or vested in some other Person for security purposes and such retention or vesting shall constitute a Lien;
"Majority Banks"	shall mean Banks whose aggregate Commitments exceed one-half of the total Commitments or if the Commitments have terminated, Banks holding in the aggregate in excess of one-half of the Facility Balance;
"Material Adverse Change"	shall mean the occurrence of an event or condition which materially impairs the ability of OSG and the Subsidiaries to meet any of their obligations with regard to (i) the Facility and the financing arrangements established in connection therewith or (ii) any of their respective other obligations that are material to OSG and the Subsidiaries considered as a whole;
"Material Financial Obligations"	means a principal or face amount of Debt (in the case of Derivative Obligations, determined in respect of any counterparty on a net basis), in each case of OSG and/or one or more of the Subsidiaries and arising in one or more related or unrelated transactions, exceeding in the aggregate $10,000,000 (or its equivalent in any other currency);
"Material Subsidiary"	shall mean, at any date each of the following: (i) any Subsidiary (other than OSG Bulk or OSG International) which owns, leases or charters any vessel on such date and/or (ii) any Subsidiary or Subsidiaries the assets of which, individually or in the aggregate, had an aggregate book value (net of depreciation) as of the date of the consolidated balance sheet of OSG and the Subsidiaries most recently delivered or required to be delivered to the Facility Agent pursuant to Section 8.1(d) prior to such date in excess of the lesser of (x) $50,000,000 and (y) 2% of the aggregate book value (net of depreciation) of all assets of OSG and the Subsidiaries as of the date of such balance sheet;
"Materials of Environmental Concern"	shall have the meaning ascribed thereto in Section 7.1(h);
"Minority Interests"	shall mean any shares of stock of any class of a Subsidiary (other than directors' qualifying shares as required by law) that are not owned by OSG and/or one or more of the Recourse Subsidiaries. Minority Interests shall be valued by valuing Minority Interests constituting preferred stock at the voluntary or involuntary liquidation value of such preferred stock, whichever is greater, and by valuing Minority Interests constituting common stock at the book value of capital and surplus applicable thereto adjusted, if necessary, to reflect any changes from the book value of such common stock required by the foregoing method of valuing Minority Interests in preferred stock;
"Moody's"	Shall mean Moody's Investors Service, Inc., a credit rating agency;
"Multiemployer Plan"	Shall mean a "multiemployer plan" (as defined in Section 4001(a)(3) of ERISA) to which any Borrower or any ERISA Affiliate is making or accruing an obligation to make contributions or has within any of the preceding five plan years made or accrued an obligation to make contributions;
"Multiple Employer Plan"	shall mean an employee benefit plan, other than a Multiemployer Plan, subject to Title IV of ERISA to which any Borrower or ERISA Affiliate, and one or more employers other than a Borrower or ERISA Affiliate, is making or accruing an obligation to make contributions or, in the event that any such plan has been terminated, to which a Borrower or ERISA Affiliate made or accrued an obligation to make contributions during any of the five plan years preceding the date of termination of such plan;
"Net Income Available for Fixed Charges"	for any period shall mean Consolidated Net Income during such period plus (to the extent deducted in determining Consolidated Net Income), (i) all provisions for any Federal, state or other taxes based on income made by OSG and the Recourse Subsidiaries during such period and (ii) Fixed Charges during such period;
"Non-Recourse Debt"	shall mean Debt of any Subsidiary (i) that is not Guaranteed by OSG or any Recourse Subsidiary, (ii) that is not secured by a Lien on any asset of OSG or any Recourse Subsidiary and (iii) in respect of which neither OSG nor any of the Recourse Subsidiaries has any express obligation or has written any instrument or letter indicating its support for such Subsidiary; provided that Debt of such Subsidiary shall constitute Non-Recourse Debt only if (x) OSG shall have given the Banks, through the Facility Agent, written notice at least twenty (20) days prior to the incurrence, issuance, assumption or Guarantee thereof (or, in the case of Debt of a Person to be acquired by such Subsidiary, prior to the time of such acquisition) and (y) the terms and conditions of the related documentation insofar as they relate to the non-recourse nature of such Debt, and the final form of such documentation with respect thereto, shall be reasonably satisfactory to the Majority Banks;
"Non-Recourse Subsidiary"	shall mean, at any time, a Subsidiary of OSG (i) having no Debt at such time (other than Non-Recourse Debt) and (ii) as to which an officer of OSG has, prior to the issuance, incurrence, assumption or Guarantee of any Non-Recourse Debt by such Subsidiary, delivered a certificate to the Facility Agent certifying that such Subsidiary is a Non-Recourse Subsidiary in accordance with the terms of this Agreement;
"Note"	shall mean a promissory note, to be executed by the Borrowers in favor of a Bank pursuant to Section 3.1(b) to evidence the Advances made by such Bank and substantially in the form set out in Exhibit C or in such other form as the Facility Agent may agree and shall include any promissory note issued by the Borrowers pursuant to Section 10.3, collectively, the "Notes";
"Operating Assets"	of OSG and the Recourse Subsidiaries shall mean, as of the date of any determination thereof, all assets of such Person as determined in accordance with GAAP other than Cash and marketable securities of OSG and the Recourse Subsidiaries;
"Operator"	shall mean, in respect of any of the Borrowers' vessels, the Person who is concerned with the operation of such vessel and falls within the definition of "Company" set out in rule 1.1.2 of the ISM Code;
"OSG"	shall have the meaning ascribed thereto in the preamble;
"OSG Bulk"	shall have the meaning ascribed thereto in the preamble;
"OSG International"	shall have the meaning ascribed thereto in the preamble;
"Participant"	shall have the meaning ascribed thereto in Section 10.2;
"PBGC"	shall mean the Pension Benefit Guaranty Corporation;
"Permitted Countries"	shall mean any or all of the following: United States of America, United Kingdom, Ireland, France, Belgium, the Netherlands, Germany, Sweden, Denmark, Norway, Switzerland, Finland, Austria, Spain, Portugal, Italy, Luxembourg, Canada and Japan;
"Permitted Investments"	shall mean any of the following: (a) Investments in commercial paper maturing in 270 days or less from the date of issuance which, at the time of acquisition by OSG or any Subsidiary, is rated one of the two highest ratings by S&P or by Moody's or any substantially similar commercial paper or short-term ratings by any other nationally recognized credit rating agency domiciled in the United States of America or the United Kingdom which in the reasonable opinion of the Majority Banks is of similar standing (a "Substitute Rating Agency"); (b) Investments in obligations issued by or guaranteed by the United States of America or any agency or instrumentality of the United States of America, in either case, maturing in three years or less from the date of acquisition thereof; (c) Investments in certificates of deposit, time deposits or bankers' acceptances issued by a Bank or any other bank or trust company organized under the laws of any Permitted Country or any state thereof, having capital, surplus and undivided profits aggregating at least $300,000,000; (d) Investments in indebtedness of any governmental body of the United States of America or any State or political subdivision thereof, which indebtedness is at all times accorded one of the two highest ratings by S&P, Moody's, or a Substitute Rating Agency maturing not later than three years from the date of acquisition thereof (or, if maturing more than three years after the date of acquisition, which is subject to a put at par by the holder thereof on a weekly or more frequent basis); (e) Investments in money market investment programs which are classified as a current asset in accordance with GAAP and which are administered by reputable financial institutions having capital, surplus and undivided profits of at least $300,000,000 and which are registered under the Investment Company Act of 1940, as amended; and (f) investments in money market and auction rate preferred stocks rated "A" or better by S&P or Moody's or a similar category by a Substitute Rating Agency;
"Person"	shall mean an individual, partnership, corporation, limited liability company, business trust, bank, trust company, joint venture, association, joint stock company, trust or other unincorporated organization, whether or not a legal entity, or any government or agency or political subdivision thereof;
"Plan"	shall mean any employee benefit plan (other than a Multiemployer Plan or a Multiple Employer Plan) covered by Title IV of ERISA or Section 302 of ERISA;
"rate of exchange"	shall have the meaning ascribed thereto in Section 11.7(d);
"Recourse Subsidiaries"	shall mean all Subsidiaries of OSG other than the Non-Recourse Subsidiaries;
"Regulation T"	shall mean Regulation T of the Board of Governors of the Federal Reserve System, as in effect from time to time;
"Regulation U"	shall mean Regulation U of the Board of Governors of the Federal Reserve System, as in effect from time to time;
"Regulation X"	shall mean Regulation X of the Board of Governors of the Federal Reserve System, as in effect from time to time;
"Rentals"	shall mean and include as of the date of any determination thereof all fixed payments (including as such all payments which the lessee is obligated to make to the lessor on termination of the lease or surrender of the property) payable by a Person, as lessee or sublessee under a lease of real or personal property (excluding fixed payments on any item of personal property involving rentals of less than $1,000 per month each and $10,000 per month in the aggregate), but shall be exclusive of any amounts required to be paid by such Person, directly or indirectly (whether or not designated as rents or additional rents), on account of maintenance, repairs, insurance, taxes and similar charges. Fixed rents under any so-called "percentage leases" shall be computed solely on the basis of the minimum rents, if any, required to be paid by the lessee regardless of sales volume or gross revenues;
"Replacement Bank"	shall have the meaning ascribed thereto in Section 11.8 of this Agreement;
"Restricted Funds"	shall mean restricted funds established and maintained pursuant to Title XI reserve fund and financial agreements between OSG or any of the Subsidiaries and the Secretary of Transportation in accordance with Title XI of the Merchant Marine Act, 1936, as amended, and the regulations promulgated thereunder; provided that "Restricted Funds" shall mean, for any period, the aggregate amount on deposit in Restricted Funds as so defined as of the last day of such period, as the same is reflected in a consolidated balance sheet of OSG and the Subsidiaries as of such date;
"Restricted Investments"	shall mean all Investments by OSG or any Recourse Subsidiary in any Person or property except the following: (a) Permitted Investments; (b) Cash; (c) Investments in Shipping and Related Businesses in whatever form; (d) Investments by OSG and the Recourse Subsidiaries in and to Recourse Subsidiaries, including any Investment in a corporation which, after giving effect to such Investment, will become a Recourse Subsidiary; (e) Investments in property to be used in the ordinary course of business; (f) Investments in marketable securities (as defined in accordance with GAAP); and (g) Investments (in addition to those listed in (a) through (f) above) in Persons not engaged in Shipping and Related Businesses and which are not Recourse Subsidiaries in an amount (excluding Investments existing as of the date of this Agreement) not to exceed the sum of (i) $10,000,000 plus (ii) 10% of Consolidated Tangible Net Worth;
"Sale and Leaseback Transaction"	shall mean any arrangement with any Person (not including OSG or any Recourse Subsidiary) or to which such Person is a party, providing for the leasing by OSG or a Recourse Subsidiary for a period, including renewals, in excess of three years of any asset which has been or is to be sold or transferred more than 180 days after the acquisition or occupancy thereof or the completion of construction and commencement of full operation thereof, whichever is later, by OSG or any Recourse Subsidiary to such Person;
"Secured Debt"	shall mean all Debt of OSG or any of the Recourse Subsidiaries which is secured by a Lien on any of the property or assets of OSG or any of the Recourse Subsidiaries;
"Securities and Exchange Commission"	shall mean the United States Securities and Exchange Commission or any other governmental authority of the United States of America at the time administrating the Securities Act of 1933, as amended, the Investment Company Act of 1940, as amended, or the Exchange Act;
"Security"	shall have the same meaning as in Section 2(1) of the Securities Act of 1933, as amended;
"Security Documents"	shall have the meaning ascribed thereto in Section 8.1(s);
"Seven Day Interest Period"	shall have the meaning ascribed thereto in the definition of "Interest Period";
"Shipping and Related Businesses"	shall mean any one or all of the following: owning, chartering, leasing, crewing, navigating, managing, supplying, operating, building or repairing commercial vessels of all kinds, including but not limited to cargo ships, liners, container ships, passenger vessels, fishing vessels, dredges, submersible and semi-submersible platforms, tugs, barges and ferries; owning, operating or managing transportation assets ancillary to or in furtherance of the transportation of freight and passengers by water; owning, operating or managing warehouses, terminals and other facilities of any kind incidental or ancillary to or in furtherance of the transportation of freight and passengers by water; and owning, managing or operating pipelines, terminals, docks, piers, quays, wharves, dry docks, storage facilities and port facilities incidental or ancillary to or in furtherance of the transportation of freight and passengers by water;
"Shipping Manager"	shall mean the principal company that, as of the date of this Agreement, is acting as agent for OSG and the Subsidiaries in respect of ships owned, leased or chartered by, and is providing substantially all of the general and administrative services to, OSG and the Subsidiaries, or any Person, if, for the period of two years after the date of formation of such Person, all or substantially all of the executive officers and directors were executive officers or directors, as the case may be, of the Shipping Manager immediately prior to the formation of such Person, except any executive officer or director who shall have been appointed or elected to such position as a result of any death, disability, retirement or incapacity of any such executive officer or director;
"S&P"	shall mean Standard & Poor's Ratings Services, a division of McGraw-Hill Inc., a credit rating agency;
"SMC"	means the safety management certificate issued in respect of any of the Borrowers' vessels in accordance with rule 13 of the ISM Code;
"Subordinated Funded Debt"	shall mean all unsecured Funded Debt of the Borrowers which shall contain or have applicable thereto subordination provisions (reasonably satisfactory to the holders of not less than 66 2/3% in aggregate of the Commitments or, if the Commitments have been terminated, of the Facility Balance) providing for the subordination thereof to other Debt of the Borrowers including, without limitation, the Notes;
"subsidiary"	shall mean as to any particular Person, any corporation or other entity of which more than 50% (by number of votes of the Voting Stock or other ownership interests having ordinary voting power) shall be beneficially owned or controlled, directly or indirectly, by such Person and/or one or more other subsidiaries of such Person;
"Subsidiary(ies)"	shall mean a/the subsidiary(ies) of OSG;
"Syndication Agent"	shall have the meaning ascribed thereto in the preamble;
"Tangible Assets"	shall mean, as of the date of determination thereof, the Book Value of assets of OSG and the Recourse Subsidiaries (less depreciation, depletion and other properly deductible valuation reserves) after deducting Intangible Assets thereof;
"Taxes"	shall mean any present or future income or other taxes, levies, duties, charges, fees, deductions or withholdings of any nature now or hereafter imposed, levied, collected, withheld or assessed by any taxing authority whatsoever, except for taxes on or measured by the overall net income of any Bank imposed by the United States of America, the State or The City of New York or any governmental subdivision or taxing authority of any thereof or by any other taxing authority having jurisdiction over such Bank (unless such jurisdiction is asserted solely by reason of the activities of the Borrower or any of the Subsidiaries);
"Termination Event"	shall mean (i) a "reportable event," as such term is defined in Section 4043 of ERISA, (ii) the withdrawal of any Borrower or any ERISA Affiliate from a Multiple Employer Plan during a plan year in which it was a "substantial employer," as such term is defined in Section 4001(a)(2) of ERISA, or the incurrence of liability by any Borrower or any ERISA Affiliate under Section 4064 of ERISA upon the termination of a Multiple Employer Plan, (iii) the filing of a notice of intent to terminate a Plan under Section 4041 of ERISA or the termination or the treatment of a Multiemployer Plan amendment as a termination under Section 4041A of ERISA, (iv) the institution of proceedings to terminate a Plan or a Multiemployer Plan or (v) any other event or condition which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan or Multiemployer Plan;
"Unencumbered Assets"	shall mean, as of the date of any determination thereof, Tangible Assets (excluding any assets which consist of shares of stock of Subsidiaries which have been pledged to secure any obligations) less the sum of (i) Attributable Debt and (without duplication) (ii) the Book Value of all assets of OSG and the Recourse Subsidiaries which are subject to a Lien securing Secured Debt;
"Unsecured Debt"	shall mean, as of the date of any determination thereof, all Debt of OSG and the Subsidiaries other than Secured Debt;
"Unterminated Voyage Revenues"	shall mean, as of the date of any determination thereof, the amounts thereof determined in accordance with GAAP as reflected in the consolidated financial statements of OSG and the Recourse Subsidiaries;
"Vessel Collateral"	shall have the meaning ascribed thereto in Section 8.1(s);
"Voting Stock"	shall mean, with respect to any Person, Securities of any class or classes, the holders of which are ordinarily, in the absence of contingencies, entitled to elect a majority of the corporate directors (or Persons performing similar functions) of such Person; and
"Withdrawal Liability"	shall have the meaning given to such term under Part 1 of Subtitle E of Title IV of ERISA.

1.2. Computation of Time Periods; Other Definitional Provisions.

In this Agreement and the Notes, in the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each mean "to but excluding"; words importing either gender include the other gender; references to "writing" include printing, typing, lithography and other means of reproducing words in a tangible visible form; the words " including," "includes" and "include" shall be deemed to be followed by the words "without limitation"; references to agreements and other contractual instruments (including this Agreement and the Notes) shall be deemed to include all subsequent amendments, amendments and restatements, supplements, extensions, replacements and other modifications to such instruments (without, however, limiting any prohibition on any such amendments, extensions and other modifications by the terms of this Agreement or the Notes); references to any matter that is "approved" or requires "approval" of a party shall mean approval given in the sole and absolute discretion of such party unless otherwise specified; words importing the singular number only shall include the plural and vice versa (except as indicated), as may be appropriate; references to any Person shall include such Person, its successors and permitted assigns and transferees.

1.3. Accounting Terms.

Unless otherwise specified herein, all accounting terms used in this Agreement and in the Notes shall be interpreted, and all financial statements and certificates and reports as to financial matters required to be delivered to the Facility Agent or to the Banks under this Agreement shall be prepared, in accordance with GAAP.

2. THE ADVANCES

2.1. Advances.

Each of the Banks, relying upon each of the representations and warranties set out in Section 7, hereby severally, and not jointly, agrees with the Borrowers that, subject to and upon the terms of this Agreement, it will on the Drawdown Dates from time to time during the Facility Period make its portion of the Advances available through the Facility Agent, to the Borrowers in an aggregate amount not to exceed its Commitment ratably with the other Banks according to their respective Commitments. The proceeds of the Advances shall be utilized for general corporate purposes. Multiple Advances may be outstanding at any one time during the Facility Period; provided, however, that there shall be no more than seven (7) different maturities for all Interest Periods relating to the Advances and only one (1) of such maturities may relate to a Seven Day Interest Period. Within the limits of this Section 2.1 and upon the conditions herein provided, the Borrowers may from time to time borrow pursuant to this Section 2.1, repay Advances pursuant to Section 4 and reborrow pursuant to this Section 2.1.

2.2. Drawdown Notice.

The Borrowers shall, in respect of all Advances, serve a written notice (a "Drawdown Notice") on the Facility Agent (which shall promptly furnish a copy to each Bank) not later than 11:00 A.M., New York City time, at least three (3) Banking Days prior to the date of the proposed Advance. Each Drawdown Notice shall specify (a) the date of the proposed borrowing (which shall be a Banking Day), (b) the principal amount of the Advance to be made by the Banks on that date, (c) the Interest Period requested by the Borrowers, (d) the disbursement instructions for the proceeds of such Advance, and (e) the name of the Borrower(s) which will draw down such Advance. Each Drawdown Notice shall be effective upon receipt by the Facility Agent, shall be irrevocable and shall be in the form set out in Exhibit D.

2.3. Effect of Drawdown Notice.

Each Drawdown Notice shall be deemed to constitute a warranty by the Borrowers: (a) that the representations and warranties stated in Section 7 are true and correct on the date of such Drawdown Notice and will be true and correct on the applicable Drawdown Date as if made on such date, and (b) that no Default or Event of Default has occurred and is continuing on such Drawdown Date or would result from the making of an Advance.

2.4. Funding of Advances.

(a) Upon receipt of a Drawdown Notice, the Facility Agent shall promptly notify each Bank of the contents thereof and of such Bank's share of the proposed Advance.

(b) Not later than 11:00 A.M. (New York City time) on the Drawdown Date of each Advance, each Bank shall (except as provided in subsection (c) of this Section) make available its share of such Advance, in Federal or other funds immediately available in New York City, to the Facility Agent at its address set forth on Schedule I. Unless the Facility Agent determines that any applicable condition specified in Section 3.1 or 3.2 has not been satisfied, the Facility Agent will make the funds so received from the Banks available to the Borrowers at the aforesaid address, subject to the receipt of funds by the Facility Agent as provided in the immediately preceding sentence, not later than 2:30 P.M. (New York City time) on the date of such Advance, and in any event as soon as practicable after receipt.

(c) If any Bank makes a new Advance hereunder to the Borrowers on a day on which the Borrowers are to repay all or any part of an outstanding Advance from such Bank, such Bank shall apply the proceeds of its new Advance to make such repayment and only an amount equal to the difference (if any) between the amount being borrowed by the Borrowers and the amount being repaid shall be made available by such Bank to the Facility Agent as provided in subsection (b) of this Section, or remitted by the Borrowers to the Facility Agent, as the case may be.

(d) Unless the Facility Agent shall have received notice from a Bank prior to the Drawdown Date of any Advance that such Bank will not make available to the Facility Agent such Bank's share of such Advance, the Facility Agent may assume that such Bank has made such share available to the Facility Agent on the date of such Advance in accordance with subsections (b) and (c) of this Section 2.4 and the Facility Agent may, in reliance upon such assumption, make available to the Borrowers on such date a corresponding amount. If and to the extent that such Bank shall not have so made such share available to the Facility Agent, such Bank and the Borrowers (but without duplication) severally agree to repay to the Facility Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrowers until the date such amount is repaid to the Facility Agent, at (i) in the case of the Borrowers, a rate per annum equal to the higher of the Federal Funds Rate and the interest rate applicable thereto pursuant to Section 5.1 and (ii) in the case of such Bank, the Federal Funds Rate. If such Bank shall repay to the Facility Agent such corresponding amount, such amount so repaid shall constitute such Bank's Advance included in such Advance for purposes of this Agreement as of the date such Advance was made. Nothing in this subsection (d) shall be deemed to relieve any Bank of its obligation to make Advances to the extent provided in this Agreement. Notwithstanding anything in this Agreement to the contrary, in the event the Borrowers are required to repay an Advance to the Facility Agent pursuant to this Section 2.4(d), the liability for any breakage costs as described in Section 11.6 shall be borne by the defaulting Bank and not the Borrowers.

2.5. Notation of Advances.

Each Advance made by a Bank to the Borrowers may be evidenced by a notation of the same made by such Bank on the applicable grid attached to such Bank's Note, which notation, absent manifest error, shall be prima facie evidence of the amount of the relevant Advance.

2.6. Reduction of the Commitments.

(a) Subject to Section 2.9, the Borrowers may from time to time reduce the Commitments of the Banks by $20,000,000 or any larger multiple of $5,000,000 upon five (5) Banking Days' written notice to the Facility Agent (which shall promptly notify each Bank). Any such reduction shall be permanent and irrevocable and pro rata among the Banks; provided that the amount of the aggregate Commitments after giving effect to such reduction of the Commitments shall at no time be less than the aggregate principal amount of all outstanding Advances.

(b) On the Final Payment Date, the Commitments shall be reduced to zero and any Advances then outstanding (together with accrued interest thereon) shall be due and payable on such date.

(c) After the effective date of any reduction pursuant to Section 2.6(a) hereof, the term "Commitment" shall mean the Commitments of each Bank in effect immediately prior to such reduction less the amount of such reduction of the Commitment.

2.7. Mandatory Prepayments.

If at any time the principal amount of outstanding Advances shall exceed the aggregate Commitments then the Borrowers shall immediately prepay the Advances in an amount equal to such excess.

2.8. Several Obligations.

The failure of any Bank to make any Advance to be made by it on the date specified therefor shall not relieve any other Bank of its obligation to make its Advance on such date, and none of the Agents nor any Bank shall be responsible for the failure of any other Bank to make an Advance to be made by such other Bank.

2.9. Pro Rata Treatment.

Each borrowing from the Banks hereunder shall be made from the Banks, each payment of the Commitment Fee or other fees and expenses under Section 12 shall be made for account of the Banks, and each termination or reduction of the amount of the Commitments shall be applied to the Commitments of the Banks, pro rata according to the amounts of their respective Commitments; each payment or prepayment of principal of Advances by the Borrowers shall be made for account of the Banks pro rata in accordance with the respective unpaid principal amounts of the Advances held by the Banks; and each payment of interest on Advances by the Borrowers shall be made for the account of the Banks pro rata in accordance with the amounts of interest due and payable to the respective Banks.

3. CONDITIONS

3.1. Conditions Precedent to Availability of the Facility.

The obligation of the Banks to make the Facility available to the Borrowers under this Agreement shall be expressly subject to the following conditions precedent:

(a) Corporate Authority. The Facility Agent shall have received the following documents in form and substance satisfactory to the Facility Agent and its legal advisers:

(i) copies, certified as true and complete by an officer of each of the Borrowers, of the resolutions of its board of directors evidencing approval of this Agreement and the Notes and authorizing an appropriate officer or officers or attorney-in-fact or attorneys-in-fact to execute the same on its behalf;

(ii) copies, certified as true and complete by an officer of each of the Borrowers, of all documents evidencing any other necessary action, approvals or consents with respect to this Agreement and the Notes and the transactions contemplated hereby and thereby;

(iii) copies, certified as true and complete by an officer of each of the Borrowers, of the certificate or articles of incorporation and by-laws or similar constituent document thereof;

(iv) a good standing certificate (or, in the case of OSG International, the equivalent thereof) of the jurisdiction of incorporation or formation of each of the Borrowers; and

(v) a certificate signed by the President, Treasurer, Comptroller, Controller or chief financial officer of each of the Borrowers to the effect that (A) no Default or Event of Default shall have occurred and be continuing and (B) the representations and warranties of the Borrowers contained in this Agreement are true and correct as of the date of such certificate.

(b) The Agreement and the Notes. The Borrowers shall have duly executed and delivered this Agreement and the Notes to the Facility Agent.

(c) The Creditors. The Facility Agent shall have received executed counterparts of this Agreement from each of the Banks and the Agents (or, in the case of any Bank as to which an executed counterpart shall not have been received, the Facility Agent shall have received in form satisfactory to it a telex, facsimile or other written confirmation from such Bank of the execution of a counterpart of this Agreement by such Bank).

(d) Fees. The Creditors shall have received payment in full of all other fees and expenses due to each thereof pursuant to the terms hereof on the date when due including, without limitation, all fees and expenses due under Section 12.

(e) Environmental Claims. The Banks shall be satisfied that none of the Borrowers nor any Subsidiary is subject to any Environmental Claim which could reasonably be expected to result in a Material Adverse Change.

(f) Legal Opinions. The Facility Agent shall have received opinions addressed to the Agents and the Banks from (i) Proskauer Rose LLP, special counsel to the Borrowers, (ii) Robert N. Cowen, Esq., Senior Vice President and Chief Operating Officer of OSG and counsel to OSG and OSG Bulk, (iii) Mark A. Lowe, Esq., counsel to OSG International, and (iv) Seward & Kissel LLP, special counsel to the Agents, in such form as the Agents may agree, as well as such other legal opinions as the Banks shall have required as to all or any matters under the laws of the State of Delaware, the United States of America and the State of New York covering the conditions and representations and warranties which are the subjects of Sections 3 and 7, respectively.

(g) Appointment of Process Agent. The Facility Agent shall have received a duly executed copy of the acceptance by OSG Ship Management, Inc. of its appointment as agent for service of process for OSG International.

(h) Officer's Certificate. The Facility Agent shall have received a certificate signed by the President or chief financial officer of OSG certifying that (i) the commitments of the banks or other lenders under the Existing Credit Facility shall have been, or simultaneously will be, reduced to $425,000,000 and (ii) under Applicable Law existing on the date hereof, no Borrower shall be compelled by law to withhold or deduct any Taxes from any amounts to become payable to the Facility Agent for the account of the Creditors hereunder.

(i) Insurance. Receipt by the Facility Agent of evidence satisfactory to it of the existence and effectiveness of the insurance required to be maintained by or on behalf of OSG, the Subsidiaries and the Joint Ventures pursuant to Section 8.1(l).

3.2. Further Conditions Precedent.

The obligation of the Banks to make an Advance available to the Borrowers shall be expressly and separately from the foregoing conditional upon, on each Drawdown Date:

(a) Drawdown Notice. The Facility Agent having received a Drawdown Notice in accordance with the terms of Section 2.2.

(b) Representations and Warranties True. The representations stated in Section 7 being true and correct as if made on that date; provided, however, that (i) the representations and warranties set forth in Section 7.1(e) and (o) shall be deemed inapplicable on such date if such Advance would not result in an incremental increase in the aggregate amount of Advances outstanding under the Facility and (ii) any representation and warranty which relates solely to an earlier date shall be true and accurate on and as of such earlier date.

(c) No Default. No Default or Event of Default having occurred and being continuing or would result from the making of an Advance.

(d) No Material Adverse Change. There having been no Material Adverse Change since December 31, 1999; provided however, that this condition shall not apply to any Advance which would not result in an incremental increase in the aggregate amount of Advances outstanding under the Facility.

3.3. Satisfaction after Drawdown.

Without prejudice to any of the other terms and conditions of this Agreement, in the event all of the Banks elect, in their sole discretion, to make an Advance prior to the satisfaction of all or any of the conditions referred to in Sections 3.1 and 3.2, the Borrowers hereby covenant and undertake to satisfy or procure the satisfaction of such condition or conditions within seven (7) days after the Drawdown Date (or such longer period as the Majority Banks, in their sole discretion, may agree).

4. REPAYMENT AND PREPAYMENT

4.1. Repayment.

Each Borrower jointly and severally agrees to repay to the Banks the principal of each Advance made to the Borrowers on the last day of the Interest Period therefor and any then outstanding principal of any and all of the Advances made to the Borrowers on the Final Payment Date.

4.2. Prepayment.

The Borrowers may, at their option, on any Banking Day, prepay all or any portion of the principal of any Advance. The Borrowers shall compensate the Banks and Participants or any thereof for any loss, cost or expense incurred by them as a result of a prepayment made on any day other than the last day of an Interest Period in accordance with the provisions of Section 11.6. Prepayments made on the last day of any Interest Period shall be without penalty or premium. Any prepayment shall be in an integral multiple of $1,000,000 with a minimum amount of $10,000,000. In addition, on the date of any prepayment hereunder, all accrued interest to the date of such prepayment must be paid in full with respect to the Advances or portions thereof being prepaid. The Borrowers shall deliver to the Facility Agent (which shall promptly furnish a copy to each Bank) notice of such prepayment on not less than three (3) Banking Days (which notice shall be irrevocable and shall specify the date and amount of prepayment).

4.3. Borrowers' Obligations Absolute.

The Borrowers' obligations to pay each Creditor hereunder and under the Notes shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms hereof and thereof, under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment which the Borrowers or any of them may have or have had against the Creditors.

5. INTEREST AND RATE

5.1. Payment of Interest; Interest Rate.

(a) Each Borrower hereby jointly and severally promises to pay to the Banks interest on the unpaid principal amount of each outstanding Advance made to the Borrowers for the period commencing on the date of such Advance until but not including the stated maturity thereof (whether by acceleration or otherwise) or the date of prepayment thereof at the Applicable Rate which shall be the rate per annum which is equal to the aggregate of (a) the LIBOR Rate for the relevant Interest Period plus (b) the Applicable Margin. The Applicable Rate with respect to each Advance shall be determined by the Facility Agent two Banking Days prior to the first day of the relevant Interest Period. The Facility Agent shall promptly notify the Borrowers and the Banks in writing of the Applicable Rate and the duration of each Interest Period as and when determined. Each such determination, absent manifest error, shall be conclusive and binding upon the Borrowers.

(b) Notwithstanding the foregoing, each Borrower jointly and severally agrees that after the occurrence and during the continuance of an Event of Default, each outstanding Advance shall bear interest at a rate per annum equal to the greater of (A) two percent (2%) plus the Applicable Rate in effect with respect to such Advance and (B) two percent (2%) plus the sum of (x) the Applicable Margin plus (y) the LIBOR Rate for overnight or weekend deposits (the "Default Rate"). In addition, each Borrower hereby jointly and severally promises to pay interest on any Advance made to the Borrowers or any installment thereof and (to the extent that the payment of such interest shall be legally enforceable) on any overdue installment of interest, and on any other amount payable by the Borrowers hereunder which shall not be paid in full when due (whether at stated maturity, by acceleration or otherwise), for the period commencing on the due date thereof until but not including the date the same is paid in full at the Default Rate.

(c) Except as provided in the next sentence, accrued interest on each Advance shall be payable (i) on the last day of each Interest Period, except that if the Borrowers shall select an Interest Period in excess of three (3) months, accrued interest shall be payable during such Interest Period on each three (3) month anniversary of the commencement of such Interest Period and upon the last day of such Interest Period, and (ii) with each repayment of principal thereof. Interest payable at the Default Rate shall be payable from time to time on demand of the Facility Agent.

5.2. Calculation of Interest.

All interest shall accrue from day-to-day and be calculated on the actual number of days elapsed and on the basis of a three hundred sixty (360) day year.

5.3. Maximum Interest.

Anything in this Agreement or the Notes to the contrary notwithstanding, the interest rate on any Advance shall in no event be in excess of the maximum rate permitted by Applicable Law.

6. PAYMENTS

6.1. Place of Payments; No Set Off.

All payments to be made hereunder by the Borrowers shall be made in Dollars on the due dates of such payments to the Facility Agent at its office located at 200 Park Avenue, New York, New York 10166-0396 or to such other branch of the Facility Agent as the Facility Agent may direct, without set-off or counterclaim and free from, clear of and without deduction for, any Taxes; provided, however, that if the Borrowers shall at any time be compelled by law to withhold or deduct any Taxes from any amounts payable to the Facility Agent for the account of the Banks or the other Creditors hereunder, then, the Borrowers shall pay such additional amounts as may be necessary in order that the net amounts received after withholding or deduction shall equal the amounts which would have been received if such withholding or deduction were not required and, in the event any withholding or deduction is made, whether for Taxes or otherwise, the Borrowers shall promptly send to the Facility Agent any documentary evidence they have with respect to such withholding or deduction. No Bank shall change its lending office if such change would result in the Borrowers being compelled by law to withhold or deduct any Taxes from any amounts payable to the Facility Agent for the account of the Banks or the other Creditors hereunder.

6.2. Federal Income Tax Credits.

(a) If any Bank obtains the benefit of a credit against its liability for federal income taxes imposed by the United States of America for all or part of the Taxes as to which the Borrowers have paid additional amounts as aforesaid then such Bank shall reimburse the Borrowers for the amount of the credit so obtained; (b) each of the Banks that is not a United States Person (as such term is defined in Section 7701(a)(30) of the Code) shall, on or prior to the first Drawdown Date (and in the case of an assignee, on or prior to the effective date of the relevant assignment) and from time to time thereafter when required by applicable provisions of the Code, provide the Borrowers with two duly completed copies of Internal Revenue Service Form 1001 or 4224, as appropriate, or any successor form prescribed by the Internal Revenue Service, certifying that such Bank is entitled to benefits under an income tax treaty to which the United States is a party that exempts withholding tax on payments under this Agreement or the Notes or certifying that the income receivable by it pursuant to this Agreement or the Notes is effectively connected with the conduct of a trade or business in the United States; (c) for any period with respect to which a Bank that is not a United States Person has failed to provide the Borrowers with the appropriate forms described in clause (b) above (other than if such failure is due to a change in law occurring after the date on which such person was originally required to provide such forms, or if such forms are otherwise not required under clause (b) above), such Bank shall not be entitled to payment of additional amounts under Section 6.1 with respect to Federal Taxes imposed by the United States; provided, however, that should a Bank become subject to Taxes because of its failure to deliver a form required hereunder, the Borrowers shall take such steps as such Bank shall reasonably request to assist such Bank to recover such Taxes if, in the judgment of the Borrowers such steps would avoid the need for, or reduce the amount of, any Taxes required to be deducted from or in respect of any sum payable hereunder to such Bank and would not, in the judgment of the Borrowers, be disadvantageous to the Borrowers.

6.3. Sharing of Setoffs.

Each Bank agrees that if it shall, through the exercise of a right of banker's lien, setoff or counterclaim or pursuant to a secured claim under Section 506 of the Federal Bankruptcy Code or other security or interest arising from, or in lieu of, such secured claim, exercised or received by such Bank under any applicable bankruptcy, insolvency or other similar law or otherwise, or by any other means (except in the event of such Bank's replacement pursuant to Section 11.8), obtain payment (voluntary or involuntary) in respect of any Advance or Advances as a result of which the unpaid principal portion of its Advances (and accrued and unpaid interest thereon) shall be proportionately less than the unpaid principal portion of the Advances (and accrued and unpaid interest thereon) of any other Bank, it shall be deemed simultaneously to have purchased from such other Bank at face value, and shall promptly pay to such other Bank the purchase price for, a participation in the Advances of such other Bank so that the aggregate unpaid principal amount of the Advances (and accrued and unpaid interest thereon) and participations in the Advances held by each Bank shall be in the same proportion to the aggregate unpaid principal amount of all Advances then outstanding as the principal amount of its Advances (and accrued and unpaid interest thereon) prior to such exercise of banker's lien, setoff or counterclaim or other event was to the principal amount of all Advances outstanding (and accrued and unpaid interest thereon) prior to such exercise of banker's lien, setoff or counterclaim or other event; provided, however, that, if any such purchase or purchases or adjustments shall be made pursuant to this Section 6.3 and the payment giving rise thereto shall thereafter be recovered, such purchase or purchases or adjustments shall be rescinded to the extent of such recovery and the purchase price or prices or adjustment restored without interest. Any Bank holding a participation in an Advance deemed to have been so purchased may exercise any and all rights of banker's lien, setoff or counterclaim with respect to any and all moneys owing to such Bank by reason thereof as fully as if such Bank had made an Advance in the amount of such participation. The Borrowers expressly consent to the foregoing arrangement.

7. REPRESENTATIONS AND WARRANTIES

7.1.

In order to induce the Creditors to enter into this Agreement and to make the Facility available, the Borrowers hereby, jointly and severally, represent and warrant to the Banks (which representations and warranties shall survive the execution and delivery of this Agreement and the Notes and each drawdown of the Facility) that:

(a) Due Organization and Power. Each of the Borrowers is a corporation duly formed and validly existing in good standing under the laws of its jurisdiction of incorporation and is duly qualified and is authorized to do business as a foreign corporation in each jurisdiction wherein the nature of the business transacted thereby makes such qualification necessary, except where failure to so qualify would not result in a Material Adverse Change, has full power and authority and, to the best of its knowledge, all material governmental licenses, authorizations, consents and approvals required to carry on its business as now being conducted and to own its properties and to enter into and perform its obligations under this Agreement and the Notes, and has complied with all statutory, regulatory and other requirements relative to such business, property and such agreements the noncompliance with which could reasonably be expected to result in a Material Adverse Change.

(b) Authorization and Consents. All necessary corporate action has been taken to duly authorize, and all necessary consents and authorities have been obtained and remain in full force and effect to permit, each of the Borrowers to enter into and perform its obligations under this Agreement and the Notes and to borrow, service and repay the Advances and, as of the date of this Agreement, no further consents or authorities are necessary for the service and repayment of the Advances or any part thereof.

(c) Binding Obligations. Each of this Agreement and the Notes constitutes a legal, valid and binding obligation of such Borrower enforceable against such Borrower in accordance with its terms.

(d) No Violation. Neither the execution and delivery by the Borrowers of this Agreement or the Notes, or any instrument or agreement referred to herein or therein, or contemplated hereby or thereby, nor the consummation of the transactions herein or therein contemplated, nor compliance with the terms, conditions and provisions hereof or thereof by it, will (i) conflict with, or result in a breach or violation of, or constitute a default under the organizational documents of the Borrowers; (ii) conflict with or contravene any Applicable Law or any contractual restriction binding on or affecting the Borrowers or any of their respective assets or properties; (iii) result in a material breach or violation of, or constitute a default under, or permit the acceleration of any obligation or liability in, or but for any requirement of the giving of notice or the passage of time (or both) would constitute such a conflict with, breach or violation of, or default under, or permit any such acceleration in, any contractual obligation or any agreement or document to which any of the Borrowers is a party or by which any of the Borrowers or any of their respective assets or properties is bound (or to which any such obligation, agreement or document relates); or (iv) result in any material Lien upon any of the Borrowers' respective assets or properties.

(e) Litigation. No action, suit or proceeding is pending or threatened against OSG or any Subsidiary before any court, board of arbitration or administrative agency which could be reasonably expected to result in any Material Adverse Change or which in any manner draws into question the validity or enforceability of this Agreement or the Notes.

(f) No Default. Neither OSG nor any of the Subsidiaries is in default under any material agreement by which it is bound and no circumstances, conditions, acts or events have occurred and are continuing or will result from the transactions contemplated hereby which constitute or would give rise to or would with the passage of time or the giving of notice or both constitute a default under any such agreement.

(g) ERISA. The execution and delivery of this Agreement and the consummation of the transactions hereunder will not involve any prohibited transaction within the meaning of ERISA or Section 4975 of the Code and no condition exists or event or transaction has occurred in connection with any Plan maintained or contributed to by any member of the ERISA Group or any ERISA Affiliate resulting from the failure of any thereof to comply with ERISA which is reasonably likely to result in any member of the ERISA Group or any ERISA Affiliate incurring any liability, fine or penalty which individually or in the aggregate could result in a Material Adverse Change. No member of the ERISA Group nor any ERISA Affiliate, individually or collectively, has incurred, or reasonably expects to incur, Withdrawal Liabilities or liabilities upon the happening of a Termination Event the aggregate of which for all such Withdrawal Liabilities and other liabilities exceeds or would exceed $30,000,000. With respect to any Multiemployer Plan, Multiple Employer Plan or Plan, no member of the ERISA Group nor any ERISA Affiliate is aware of or has been notified that any "variance" from the "minimum funding standard" has been requested (each such term as defined in Part 3, Subtitle B, of Title 1 of ERISA). No member of the ERISA Group nor any ERISA Affiliate has received any notice that any Multiemployer Plan is in reorganization, within the meaning of Title IV of ERISA, which reorganization could result in a Material Adverse Change.

(h) Environmental Matters and Claims. (A) OSG and each Subsidiary and the Affiliates of each thereof will, when required, be in compliance with all applicable United States federal and state, local, foreign and international laws, regulations, conventions and agreements relating to pollution, pollution prevention or protection of human health or the environment (including, without limitation, ambient air, surface water, ground water, navigable waters, waters of the contiguous zone, ocean waters and international waters), including, without limitation, laws, regulations, conventions and agreements relating to (1) emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous materials, oil, hazardous substances, petroleum and petroleum products and by-products ("Materials of Environmental Concern"), or (2) the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Materials of Environmental Concern ("Environmental Laws") (except as to all of the above, where the failure to do so would not be reasonably likely to result in a Material Adverse Change); (B) OSG, each Subsidiary and the Affiliates of each thereof will, when required, have all permits, licenses, approvals, rulings, variances, exemptions, clearances, consents or other authorizations required under applicable Environmental Laws ("Environmental Approvals") and will, when required, be in compliance with all Environmental Approvals required to operate their respective businesses as then being conducted (except where the failure to comply with, obtain or renew such permits, licenses, rulings, variances, exemptions, clearances, consents or other authorizations would not be reasonably likely to result in a Material Adverse Change); (C) neither OSG, nor any Subsidiary nor any Affiliates of any thereof has received any notice of any claim, action, cause of action, investigation or demand by any Person, entity, enterprise or government, or any political subdivision, intergovernmental body or agency, department or instrumentality thereof, alleging potential liability which would be reasonably likely to result in a Material Adverse Change or a requirement to incur, investigatory costs, cleanup costs, response and/or remedial costs (whether incurred by a governmental entity or otherwise), natural resources damages, property damages, personal injuries, attorneys' fees and expenses, or fines or penalties which would be reasonably likely to result in a Material Adverse Change, in each case arising out of, based on or resulting from (1) the presence, or release or threat of release into the environment, of any Materials of Environmental Concern at any location, whether or not owned by such person, or (2) circumstances forming the basis of any violation, or alleged violation, of any Environmental Law or Environmental Approval ("Environmental Claim") (other than Environmental Claims that have been fully and finally adjudicated or otherwise determined and all fines, penalties and other costs, if any, payable by OSG or any of the Subsidiaries in respect thereof have been paid in full or which are fully covered by insurance (including permitted deductibles)); (D) to the best of the Borrowers' knowledge, there are no circumstances that would be reasonably likely to prevent or interfere with such full compliance in the future; and (E) there is no Environmental Claim pending or, to the best of the Borrowers' knowledge, threatened against OSG, any Subsidiary or any Affiliate of any thereof and to the best of the Borrowers' knowledge, there are no past or present actions, activities, circumstances, conditions, events or incidents, including, without limitation, the release, emission, discharge or disposal of any Materials of Environmental Concern, that could reasonably be expected to form the basis of any Environmental Claim against such persons the adverse disposition of which could reasonably be expected to result in a Material Adverse Change.

(i) Subsidiaries. (A) Each Material Subsidiary is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation, and has all corporate powers and authority and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted and to own its properties and (B) there are no Non-Recourse Subsidiaries as of the date hereof.

(j) Financial Statements. Each of the audited consolidated balance sheet of OSG and the Subsidiaries as at December 31, 1999 and the related audited consolidated statements of operations and retained earnings and cash flows for the fiscal year then ended reported on by Ernst & Young LLP and included in OSG's 1999 Form 10-K, copies of all of which have been furnished to each Bank, fairly present, in all material respects, the consolidated financial condition of OSG and the Subsidiaries as at such dates and the consolidated results of the operations of OSG and the Subsidiaries for the periods ended on such dates, all in accordance with GAAP.

(k) Tax Returns and Payments. United States Federal income tax returns of OSG and the Subsidiaries have been examined and closed through the fiscal year ended December 31, 1996. OSG and the Subsidiaries have filed all United States Federal, state, local and foreign income tax returns and all other material tax or information returns which are required to be filed by them (collectively, the "Tax Returns"). All of the Tax Returns (and any tax or information return becoming due after the date hereof and on or before the Closing Date) are true and complete in all material respects. OSG and the Subsidiaries have paid all material federal, state, local and foreign taxes (collectively, the "OSG Taxes") due pursuant to the Tax Returns or pursuant to any assessment received by OSG or any Subsidiary, other than OSG Taxes which are being contested in good faith by appropriate proceedings and for which adequate reserves (in conformity with GAAP consistently applied) shall have been set aside on their books. The charges, accruals and reserves on the books of OSG and the Subsidiaries in respect of OSG Taxes are adequate in all material respects and in conformity with GAAP consistently applied. There is no material action, suit, proceeding, audit, investigation or claim pending or, to the knowledge of OSG, threatened in respect of any OSG Taxes for which OSG or any of the Subsidiaries is or may become liable nor has any deficiency or claim for any such OSG Taxes been proposed, asserted or, to the knowledge of OSG, threatened. OSG has not consented to any waivers or extensions of any statute of limitations with respect to the collection or assessment of any OSG Taxes against it.

(l) Insurance. Each of OSG and the Subsidiaries has insured its properties and assets against such risks and in such amounts as are customary for companies engaged in similar businesses. The properties and assets of each Joint Venture have been insured against such risks and in such amounts as are customary for companies engaged in similar businesses.

(m) Foreign Trade Control Regulations. None of the transactions contemplated herein will violate any of the provisions of the Foreign Assets Control Regulations of the United States of America (Title 31, Code of Federal Regulations, Chapter V, Part 500, as amended), any of the provisions of the Cuban Assets Control Regulations of the United States of America (Title 31, Code of Federal Regulations, Chapter V, Part 515, as amended), any of the provisions of the Libyan Assets Control Regulations of the United States of America (Title 31, Code of Federal Regulations, Chapter V, Part 550, as amended), any of the provisions of the Iranian Transaction Regulations of the United States of America (Title 31, Code of Federal Regulations, Chapter V, Part 560, as amended), any of the provisions of the Iraqi Sanctions Regulations (Title 31, Code of Federal Regulations, Chapter V, Part 575, as amended), any of the provisions of the Federal Republic of Yugoslavia (Serbia and Montenegro) and Bosnian Serb-Controlled Areas of the Republic of Bosnia and Herzegovina Sanctions Regulations (Title 31, Code of Federal Regulations, Chapter V, Part 585, as amended), any of the provisions of the Regulations of the United States of America Governing Transactions in Foreign Shipping of Merchandise (Title 31, Code of Federal Regulations, Chapter V, Part 505, as amended) or any other applicable foreign trade control regulation.

(n) Investment Company Act. Neither OSG nor any of the Subsidiaries is an "investment company" or an "affiliated person" of, or a "promoter" or "principal underwriter" for or a company " controlled" by, an "investment company" as such terms are defined in the Investment Company Act of 1940, as amended; neither the making of the Advances nor the application of the proceeds or repayment thereof by the Borrowers, nor the consummation of the other transactions contemplated hereby, will violate any provision of such act or any rule, regulation or order of the Securities and Exchange Commission thereunder.

(o) No Material Adverse Change. Since December 31, 1999, there has been no Material Adverse Change.

(p) Compliance with ISM Code. Each of the Borrowers' and Subsidiaries' vessels and each Operator thereof complies with the requirements of the ISM Code in all material respects including (but not limited to) obtaining all necessary ISM Code documentation and the maintenance and renewal of valid certificates pursuant thereto.

(q) No Threatened Withdrawal of DOC or SMC. There is no actual or, to the best of the Borrowers' knowledge, threatened withdrawal of any Operator's DOC, SMC or other certification or documentation related to the ISM Code in respect of any of the Borrowers' or Subsidiaries' vessels.

(r) No Proceedings to Dissolve. There are no proceedings or actions pending or, to the best of the Borrowers' knowledge, contemplated by any of the Borrowers to dissolve or terminate such Borrowers.

(s) Compliance with Laws. Each of the Borrowers is in compliance with all Applicable Laws, except where any failure to comply with any such Applicable Laws would not, alone or in the aggregate, result in a Material Adverse Change.

(t) OSG International Not Immune. OSG International is generally subject to suit, and neither OSG International nor any of its properties or assets has any immunity from the jurisdiction of any court or from legal process (whether through service of process or notice of attachment prior to judgment, attachment in aid of execution or otherwise) under the laws of the Marshall Islands or any political subdivision thereof.

(u) No Marshall Islands Filing Necessary. To ensure the enforceability or admissibility in evidence of this Agreement and/or the Notes, it is not necessary that this Agreement or any of the Notes be filed or recorded with any court or other authority in the Marshall Islands or any political subdivision thereof or that any stamp or similar tax be paid hereon or thereon or in respect hereof or thereof.

8. COVENANTS

8.1. Affirmative Covenants.  

Each of the Borrowers hereby covenants and undertakes with each of the Banks that, from the date hereof and so long as the Commitments are in effect or any principal, interest or other moneys are owing in respect of the Facility or otherwise owing under this Agreement or the Notes or any of them, such Borrower will:

(a) Performance of Agreements. Duly perform and observe the terms of this Agreement and the Notes.

(b) Notice of Default. Inform the Facility Agent (which shall promptly, and in any event within three (3) Banking Days, notify the Banks) of the occurrence of (i) any Default or Event of Default, (ii) any litigation or governmental proceeding pending or threatened against OSG or any Subsidiary which in any manner draws into question the validity or enforceability of this Agreement or any Note or which could reasonably be expected to result in a Material Adverse Change and (iii) any other event or condition of which it becomes aware which is reasonably likely to result in a Material Adverse Change, in each case, promptly, and in any event within three (3) Banking Days after becoming aware of the occurrence thereof.

(c) Consents. Without prejudice to Section 7.1 and this Section 8.1, obtain every consent and do all other acts and things which may from time to time be necessary for the continued due performance of all its obligations under this Agreement and the Notes.

(d) Financial Statements. Deliver to the Facility Agent with sufficient copies for the other Creditors to be distributed to the other Creditors by the Facility Agent promptly upon receipt thereof:

(i) as soon as available and in any event within 90 days after the end of each fiscal year of OSG, (A) a consolidated balance sheet of OSG and the Subsidiaries as of the end of such fiscal year and the related consolidated statements of income and retained earnings and cash flows for such fiscal year, setting forth in each case in comparative form the figures as of the end of and for the previous fiscal year, complying in all material respects with all applicable rules and regulations promulgated by the Securities and Exchange Commission, in each case accompanied by an unqualified opinion of Ernst & Young LLP or other independent public accountants of nationally recognized standing and (B) if there are any Non-Recourse Subsidiaries, an unaudited consolidated balance sheet of OSG and the Recourse Subsidiaries as of the end of such fiscal year and the related unaudited consolidated statements of income and retained earnings and cash flows for such fiscal year, setting forth in each case in comparative form the figures as of the end of and for the previous fiscal year, together with a letter from the independent public accountants referred to in the foregoing clause (A) confirming the mathematical accuracy of such financial statements and the derivation thereof on a reasonable basis from the audited financial statements referred to in clause (A);

(ii) as soon as available and in any event within 60 days after the end of each of the first three fiscal quarters of each fiscal year of OSG, (A) an unaudited consolidated balance sheet of OSG and the Subsidiaries as of the end of such fiscal quarter and the related unaudited consolidated statements of income and retained earnings and cash flows for such fiscal quarter and for the portion of OSG's fiscal year ended at the end of such fiscal quarter, setting forth in each case in comparative form the figures as of the end of and for the corresponding fiscal quarter and the corresponding portion of OSG's previous fiscal year, all certified (subject to normal year-end adjustments) as to fairness of presentation and compliance in all material respects with all applicable rules and regulations of the Securities and Exchange Commission with respect to interim financial statements and consistency by the chief financial officer or the chief accounting officer of OSG and (B) if there are any Non-Recourse Subsidiaries, an unaudited consolidated balance sheet of OSG and the Recourse Subsidiaries as of the end of such fiscal quarter and the related unaudited consolidated statements of income and retained earnings and cash flows for such fiscal quarter and for the portion of OSG's fiscal year ended at the end of such fiscal quarter, setting forth in each case in comparative form the figures as of the end of and for the corresponding fiscal quarter and the corresponding portion of OSG's previous fiscal year, together with a certificate of the chief financial officer or chief accounting officer of OSG as to the derivation of such financial statements from the financial statements referred to in clause (A) of this subsection (ii);

(iii) simultaneously with the delivery of each set of financial statements referred to in clauses (i)(A) and (ii)(A) above, a Compliance Certificate of OSG executed by OSG's chief financial officer or chief accounting officer (A) setting forth in reasonable detail the calculations required to establish whether the covenants set forth in Sections 8.1(o) through (r) and 8.2(a), (c), (e) and (h) were complied with on the date of such financial statements, and (B) stating whether any Default or Event of Default exists on the date of such Certificate and, if any Default or Event of Default then exists, setting forth the details thereof and the action which the Borrowers are taking or propose to take with respect thereto;

(iv) simultaneously with the delivery of each set of financial statements referred to in clause (i)(A) above, a statement of the firm of independent public accountants which reported on such statements (A) stating whether anything has come to their attention to cause them to believe that OSG and the Subsidiaries were not in compliance with any of the covenants set forth in Sections 8.1(o) through (r) and 8.2(a), (c), (e) and (h) on the date of such statements and (B) confirming the calculations set forth in the officer's certificates delivered simultaneously therewith pursuant to subsection (iii) above or, with respect to the calculations required to derive the amount referred to in the covenants set forth in Section 8.1(o) through (r) and 8.2 (a), (c), (e) and (h), verifying the mathematical accuracy of such calculations and comparing Consolidated Net Income for each of the relevant fiscal quarters with the consolidated income statement of OSG and the Recourse Subsidiaries for such fiscal quarter;

(v) within three Banking Days after the date on which any executive officer of any of the Borrowers obtains knowledge of (A) any Default or Event of Default, if such Default or Event of Default is then continuing or (B) a Material Adverse Change or any action, suit or proceeding of the type referred to in Section 7.1(e), a certificate of the chief financial officer or the chief accounting officer of each of the Borrowers setting forth the details thereof and the action which the Borrowers are taking or propose to take with respect thereto;

(vi) promptly upon the mailing thereof to the shareholders of OSG generally, copies of all financial statements, reports and proxy statements so mailed;

(vii) promptly upon the filing thereof, copies of all registration statements (other than the exhibits thereto and any registration statements on Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or their equivalents) which OSG shall have filed with the Securities and Exchange Commission;

(viii) as soon as possible, (A) copies of all reports and notices which any member of the ERISA Group or ERISA Affiliate files under ERISA with the Internal Revenue Service or the PBGC or the U.S. Department of Labor or the sponsor of a Multiemployer Plan or which any member of the ERISA Group or ERISA Affiliate receives from the PBGC or the sponsor of a Multiemployer Plan relating to (1) any Termination Event and (2) with respect to a Multiemployer Plan, any Withdrawal Liability, or any actual or expected reorganization (within the meaning of Title IV of ERISA) or termination of a Multiemployer Plan (within the meaning of Title IV of ERISA) and (B) a certificate of the chief financial officer or chief accounting officer of OSG setting forth in reasonable detail the calculation of the amount (to the extent then reasonably determinable) of any liability in connection with the foregoing;

(ix) within 72 hours after any officer of any of the Borrowers becomes aware of any change in the rating by Moody's or S&P of OSG's publicly-traded senior unsecured long-term debt securities, notice of such change;

(x) in the event of any change in OSG's fiscal year, OSG shall as soon as possible, restate such of its consolidated financial statements required to be delivered under this Section 8.1(d) for such twelve month period as shall be necessary in order to permit the calculation of the financial covenants set forth in this Agreement; and

(xi) from time to time such additional information regarding the financial position, results of operations, business or prospects of OSG and the Subsidiaries as the Facility Agent, at the request of any Bank, may reasonably request.

(e) Corporate Existence. Do or cause to be done all things necessary to preserve and keep in full force and effect the Borrowers' and each Material Subsidiary's corporate existence, and all licenses, franchises, permits and assets necessary to the conduct of the business of OSG and the Subsidiaries.

(f) Books and Records. Keep proper books and records throughout the Facility Period.

(g) Inspection. Allow any representative or representatives designated by any Bank, at the risk and expense of such Bank and during normal business hours, subject to applicable laws and regulations, to visit and inspect any of the Borrowers or Subsidiaries, and, on request, to examine the Borrowers' and Subsidiaries' books of account, records, reports and other papers (and to make copies thereof and to take extracts therefrom) and to discuss their affairs, finances and accounts with the Borrowers' and Subsidiaries' officers and executive employees all at such reasonable times and as often as such Bank reasonably requests.

(h) Payment of Obligations. Pay and discharge, or cause to be paid and discharged, and will cause each Subsidiary to pay and discharge, at or before maturity, all their respective material obligations and liabilities, including, without limitation, all taxes, assessments and governmental charges or levies imposed upon them, the Subsidiaries or their respective income or property prior to the date upon which penalties attach thereto; provided, however, that the Borrowers shall not be required to pay and discharge, or cause to be paid and discharged, any such obligation, liability, tax, assessment, charge or levy so long as the legality thereof shall be contested in good faith and by appropriate proceedings and they or the relevant Subsidiary or Subsidiaries shall maintain in accordance with GAAP appropriate reserves with respect thereto.

(i) Compliance with Agreements, Statutes, etc. Do or cause to be done all things necessary to comply with all material contracts or agreements to which any of the Borrowers or Material Subsidiaries is a party, and all laws and the rules and regulations thereunder, applicable to the Borrowers or any of the Subsidiaries including, without limitation, those laws, rules and regulations relating to employee benefit plans and environmental matters except where the failure to do so would not be reasonably likely to result in a Material Adverse Change.

(j) Environmental Matters. Promptly upon the occurrence of any of the following conditions, provide to the Facility Agent (which shall promptly furnish a copy thereof to each Bank) a certificate of an executive officer of each of the Borrowers, specifying in detail the nature of such condition and their proposed response or the response of their Environmental Affiliates (as hereinafter defined): (i) its receipt or the receipt by any of the Subsidiaries or any of their Environmental Affiliates of any communication whatsoever that alleges that such Person is not in compliance with any applicable Environmental Law or Environmental Approval, if such noncompliance could reasonably be expected to result in a Material Adverse Change, (ii) knowledge by it, any of the Subsidiaries or any of their Environmental Affiliates that there exists any Environmental Claim pending or threatened against any such Person, which could reasonably be expected to result in a Material Adverse Change, or (iii) any release, emission, discharge or disposal of any material that could form the basis of any Environmental Claim against it, any of the Subsidiaries or any of their Environmental Affiliates if such Environmental Claim could reasonably be expected to result in a Material Adverse Change. Upon the written request by the Facility Agent, each Borrower will submit to the Banks at reasonable intervals, a report providing an update of the status of any issue or claim identified in any notice or certificate required pursuant to this subsection. For the purposes of this subsection, "Environmental Affiliate" shall mean any Person or entity the liability of which for Environmental Claims OSG or any of the Subsidiaries may have assumed by contract or operation of law.

(k) Maintenance of Assets. Maintain and keep, and procure that each of the Subsidiaries shall maintain and keep, all properties used or useful in the conduct of their respective business in good condition, repair and working order (ordinary wear and tear excepted) and supplied with all necessary equipment and will make, or cause to be made, all necessary repairs, renewals and replacements thereof so that the business carried on in connection therewith and every material portion thereof may be properly conducted at all times except where the failure to do so would not be reasonably likely to result in a Material Adverse Change.

(l) Insurance. Maintain, cause each Subsidiary to maintain and use its best efforts to cause each Joint Venture to maintain, with financially sound and reputable insurance companies (which may include protection and indemnity clubs) (i) in the case of OSG or any Subsidiary or Joint Venture which engages in any shipping or shipping related business or in any business in products related to oil, including without limitation, owning, leasing or chartering any ship engaged in the transport of oil or related products, oil pollution insurance covering risks in amounts up to and including $1,000,000,000 or, if such insurance is not available at reasonable cost after taking into account the level of exposure to which OSG, the Subsidiaries and the Joint Ventures may be subject, such other amount as is usually insured against by companies of established repute engaged in the same or similar business from time to time and (ii) such other insurance on all their respective properties and against all such risks in at least such amounts as are usually insured against by companies of established repute engaged in the same or similar business from time to time.

(m) Shipping Management. At all times cause not less than 66 2/3% of the Consolidated Net Tangible Assets to be managed by OSG, any Subsidiary, the Shipping Manager, any subsidiary of the Shipping Manager, one or more other shipping management companies reasonably acceptable to the Majority Banks or any combination of the foregoing.

(n) Agent for Service of Process. OSG shall cause OSG International to maintain at all times OSG Ship Management, Inc. or another agent acceptable to the Majority Banks as its agent for service of process in the State of New York and shall cause any other such agent to execute and deliver to OSG and the Facility Agent a letter accepting such agency, prior to or concurrently with such other agent's acceptance of its appointment as agent for service of process for OSG International.

(o) Consolidated Tangible Net Worth. At all times maintain Consolidated Tangible Net Worth at an amount not less than $575,000,000, plus 50% of cumulative Consolidated Net Income (to the extent positive) for each fiscal quarter from and after June 30, 2000.

(p) Cash Adjusted Debt Service Coverage Ratio. At all times maintain a Cash Adjusted Debt Service Coverage Ratio measured as of the end of each fiscal quarter for the period of four consecutive fiscal quarters ended on that date (taken as a single accounting period) of not less than 1.75 to 1.

(q) Unencumbered Assets to Unsecured Debt Ratio. At all times maintain a ratio of Unencumbered Assets to Unsecured Debt of not less than 1.50 to 1.

(r) Cash Adjusted Funded Debt to Cash Adjusted Consolidated Net Tangible Assets. At all times maintain a ratio of Cash Adjusted Funded Debt to Cash Adjusted Consolidated Net Tangible Assets of not more than .60 to 1.

(s) Security Interest on Ratings Downgrade. (i) Unless the Banks unanimously consent to continue the Facility on an unsecured basis, upon the event of a downgrading of the ratings of OSG's senior unsecured debt (without third-party credit enhancement) to a combined rating of BB- or lower or BB on Credit Watch with negative outlook, in each case by S&P, and Ba3 or lower by Moody's, then OSG shall, or shall cause one or more of the Subsidiaries to:

(A) not later than the fifteenth (15^th) Banking Day after the occurrence of such ratings downgrade submit to the Documentation Agent for approval by the Banks a list of collateral for the Advances made or to be made hereunder which it proposes to grant a security interest in, pledge, assign or mortgage to or in favor of the Facility Agent for the benefit of the Creditors, as collateral for the Advances, pursuant to one or more agreements or other instruments to which OSG (and any relevant Subsidiary) is a party (collectively, "Security Documents"). The list of collateral shall contain a description and valuation of any proposed collateral. Such collateral shall consist of (1) vessels of OSG or any Subsidiary reasonably satisfactory to the Agents (the " Vessel Collateral"), such Vessel Collateral to be subject to no other Liens (other than Liens arising in the ordinary course of business which (x) do not secure Debt and (y) do not, individually or in the aggregate, materially detract from the value of the Vessel Collateral as collateral hereunder) and to have an aggregate Fair Market Value (taking into account such Liens) at least equal to 125% of the sum of the aggregate principal amount of all Advances outstanding on such fifteenth (15^th) Banking Day; (2) a cash collateral account of OSG or any Subsidiary maintained with the Facility Agent into which OSG or any Subsidiary shall propose to deposit cash in an amount equal to 100% of the sum of the aggregate principal amount of all Advances outstanding on such fifteenth (15^th) Banking Day (the "Cash Collateral") or (3) any combination of Vessel Collateral and Cash Collateral so long as the sum of (x) 80% of the Fair Market Value of any Vessel Collateral plus (y) any Cash Collateral, equals or exceeds the sum of the aggregate principal amount of all Advances outstanding on such fifteenth (15^th) Banking Day. The Documentation Agent shall notify OSG in writing as to whether the proposed collateral is acceptable to the Banks on or prior to the fifteenth (15th) Banking Day following its receipt of the list of proposed collateral from OSG. On or prior to the fifteenth (15th) Banking Day following its receipt of such notice from the Documentation Agent, OSG shall grant a security interest in, pledge, assign or mortgage to or in favor of the Facility Agent for the benefit of the Banks any such collateral as the Banks shall have approved pursuant to one or more Security Documents (such day, the "Collateral Date"). In the event the Banks do not find the proposed collateral to be reasonably acceptable, OSG shall propose alternative collateral on or prior to the fifteenth (15th) Banking Day following its receipt of the notice from the Documentation Agent. It shall constitute an Event of Default if the Banks shall fail to find such substitute collateral reasonably acceptable;

(B) on the Collateral Date, provide to the Documentation Agent one or more opinions of counsel, the form and substance of each such opinion and such counsel to be reasonably satisfactory in the opinion of the Documentation Agent, as to the creation, validity, effectiveness, perfection and priority of such security interests, pledges, assignments and mortgages, compliance with Regulation U, the absence of any fraudulent conveyance or transfer and such other matters as the Documentation Agent may reasonably request; and

(C) amend or modify this Agreement, pursuant to one or more amendments or modifications in form and substance satisfactory to the Documentation Agent, to the extent necessary or desirable, in the reasonable judgment of the Documentation Agent, to take into account the Security Documents entered into in accordance with this Section 8.1(s) and such security interests, pledges, assignments and mortgages and such other matters related thereto as the Documentation Agent may reasonably request, such amendments and modifications to include, without limitation, one or more representations and warranties, covenants, events of default and indemnities relating to the subject matter addressed in clauses (A) and (B) above, or the Security Documents, opinions or other writings referred to therein. In order for OSG to satisfy its obligations under this Section 8.1(s) and without limiting the provisions set forth above, the assets constituting Vessel Collateral hereunder, the determination of the Fair Market Value thereof and the form and substance of the Security Documents, the opinions referred to in clause (B) above and the amendments and modifications referred to in clause (C) above must each be satisfactory in form and substance to the Documentation Agent, and OSG must have received a certificate signed by the Documentation Agent stating that OSG has complied with its obligations under this Section 8.1(s); provided that, in the event the entity which is the Documentation Agent is no longer a Bank at the time the Borrowers become obligated to grant a security interest in, pledge, assign or mortgage collateral for the Advances under this Section 8.1(s), the Majority Banks may appoint one of the Banks as Documentation Agent to replace the then existing Documentation Agent.

(ii) At all times after the Collateral Date, the sum of (x) 80% of the Fair Market Value of any Vessel Collateral plus (y) any Cash Collateral, shall be at least equal to the aggregate principal amount of all Advances outstanding hereunder from time to time. In the event the sum of (A) 71.429% of the Fair Market Value of any Vessel Collateral plus (B)  any Cash Collateral, exceeds the aggregate principal amount of all Advances then outstanding hereunder, the Borrowers may withdraw Vessel Collateral, Cash Collateral or any combination of Vessel Collateral and Cash Collateral, in each case so long as the collateral to be released is reasonably acceptable to the Agents and so long as the sum of (A) 71.429% of the Fair Market Value of any remaining Vessel Collateral plus (B) any remaining Cash Collateral, equals or exceeds the aggregate principal amount of all Advances outstanding hereunder following any such release of collateral.

(iii) In the event OSG is no longer required under the indentures relating to its senior unsecured indebtedness to continue to have such indebtedness rated, the Borrowers shall, on or prior to the 120^th day after the expiration of OSG's credit ratings (A) and annually thereafter until the Final Payment Date, deliver to the Facility Agent, with sufficient copies for the Banks, a letter from either S&P or Moody's providing a rating of the Facility as BB or better, in the case of S&P, or as Ba2 or better, in the case of Moody's, or (B) and upon any failure to deliver a letter rating in accordance with (A) above, provide collateral in accordance with the provisions of subsections (i) and (ii) above.

(t) Ownership of OSG Bulk and OSG International. In respect of OSG only, cause OSG Bulk and OSG International to be direct or indirect wholly-owned Subsidiaries (excluding only directors' qualifying shares).

(u) Exchange Listing. In respect of OSG only, remain listed on the New York Stock Exchange, NASDAQ or such other exchange as is satisfactory to the Banks.

(v) Book Value. At all times use valuation procedures to determine Book Value which are consistent with GAAP.

8.2. Negative Covenants.

Each of the Borrowers hereby covenants and undertakes with each of the Banks that, from the date hereof and so long as the Commitments are in effect or any principal, interest or other moneys are owing in respect of the Facility or otherwise owing under this Agreement or the Notes or any of them, the Borrowers, without the prior written consent of the Majority Banks (or the Facility Agent acting with the written consent of the Majority Banks):

(a) Limitation on Secured Debt. Will not, and will not permit any Recourse Subsidiary to, create, assume, incur or in any manner become liable in respect of any Secured Debt unless immediately after giving effect thereto and to the application of the proceeds thereof, (i) the ratio of Unencumbered Assets to Unsecured Debt shall not be less than 1.50 to 1 and (ii) the ratio of Collateralized Assets to Consolidated Net Tangible Assets shall not exceed .25 to 1.

(b) Limitations on Funded Debt. Will not, and will not permit any Recourse Subsidiary to, create, assume or incur or in any manner be or become liable in respect of any Funded Debt, except:

(i) Funded Debt of OSG and the Recourse Subsidiaries outstanding as of December 31, 1999 as the same is set forth on Schedule III attached hereto;

(ii) Funded Debt of OSG and the Recourse Subsidiaries; provided, however, that at the time of issuance thereof and immediately after giving effect thereto the Borrowers shall be in compliance with Section 8.1(r);

(iii) Renewals, extensions or refundings of Funded Debt referred to in Section 8.2(b)(i) or incurred pursuant to the provisions of Section 8.2(b)(ii), without increase in the ranking or priority thereof or principal amount thereof; provided, that in the case of any refunding of any such Funded Debt, the newly issued Funded Debt shall have a weighted average life to maturity at least equal to the remaining weighted average life to maturity of the Funded Debt being refunded; and

(iv) Funded Debt under the Facility.

(c) Conduct of Business. Will not, and will not permit any Recourse Subsidiary to, acquire any Operating Assets or make any Investment in Operating Assets unless, after giving effect to such acquisition or Investment at least 70% (based on the most recent consolidated balance sheet of OSG and the Recourse Subsidiaries required to be provided pursuant to Section 8.1(d)) of the Operating Assets of OSG and the Recourse Subsidiaries are (on a consolidated basis) in Shipping and Related Businesses; provided, however, that the foregoing shall not limit or restrict the acquisition of assets to be used in the Shipping and Related Businesses of OSG and the Recourse Subsidiaries or of any equity interest in any Person engaged primarily in Shipping and Related Businesses.

(d) Limitation on Sale and Leasebacks. Will not, and will not permit any Recourse Subsidiary to, enter into any Sale and Leaseback Transaction unless either:

(i) after giving effect to such Sale and Leaseback Transaction, the ratio of Unencumbered Assets to Unsecured Debt shall be not less than 1.50 to 1; or

(ii) the proceeds of the sale of the assets to be leased are at least equal to their fair market value and such proceeds are applied (or committed to be applied within 24 months of receipt thereof pursuant to a binding written contract) to (A) the purchase, acquisition or construction of assets to be used in the business of OSG and the Subsidiaries or (B) retire Funded Debt; provided that the percentage of proceeds, if any, applied to pay Subordinated Funded Debt shall not exceed the percentage which Subordinated Funded Debt represents of Consolidated Funded Debt. Pending the actual application of such proceeds for the purposes described in clauses (A) or (B) above, such proceeds shall be held by OSG or the relevant Subsidiary in Permitted Investments.

(e) Mergers, Consolidations and Sales of Assets.

(i) (A) Will not, and will not permit any Material Subsidiary to, consolidate with or be a party to a merger with any other Person or (B) sell, lease (other than chartering in the ordinary course of business, which shall not include bareboat chartering for periods in excess of ten (10) years) or otherwise dispose of all or substantially all of the assets of OSG and the Subsidiaries, taken as a whole; provided, however, that OSG or any Subsidiary may consolidate or merge with any other Person if (A) at the time of such transaction and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing, and (B)  the surviving entity in such consolidation or merger shall have assumed all liabilities and obligations of the parties thereto; and provided further, that OSG or any Recourse Subsidiary may consolidate or merge with any Recourse Subsidiary, in the case of OSG, or OSG or any other Recourse Subsidiary, in the case of a Recourse Subsidiary.

(ii) In addition to the restrictions contained in Section 8.2(e)(i) OSG will not, and will not permit any Recourse Subsidiary to, sell, lease or otherwise dispose of (other than in the ordinary course of business) any Substantial Part (as defined in Section 8.2(e)(iii)) of the assets of OSG and the Subsidiaries, taken as a whole (including the creation of Minority Interests); provided that any Subsidiary may sell, lease or otherwise dispose of all or substantially all of its assets to OSG or a wholly-owned Subsidiary. For the purposes of any determination under this Section 8.2(e)(ii), a sale or other disposition of assets of OSG and the Subsidiaries shall include, but not be limited to, the creation of any Minority Interests and any other sale, transfer or other disposition of the capital stock or assets of any Subsidiary (other than to OSG or a wholly-owned Subsidiary) including any merger, consolidation or sale of all or substantially all of the assets of any Subsidiary if the surviving or continuing or acquiring corporation is not a Subsidiary.

(iii) As used in this Section 8.2(e), a sale, lease or other disposition of assets shall be deemed to be a "Substantial Part" of the assets of OSG and the Recourse Subsidiaries, taken as a whole, if the Book Value of such assets, when added to the Book Value of all other assets sold, leased or otherwise disposed of by OSG and the Subsidiaries (other than in the ordinary course of business) during the 12-month period ending with the date of such sale, lease or other disposition, exceeds 15% of Consolidated Net Tangible Assets, determined as of the end of the immediately preceding fiscal quarter. For the purposes of any determination of "Substantial Part" under this Section 8.2(e), a Qualified Joint Venture Transaction shall not be deemed a sale, lease or other disposition of assets by OSG and the Subsidiaries. A "Qualified Joint Venture Transaction" shall mean a contribution of property by OSG or a Subsidiary to a Joint Venture which, in the good faith judgment of the Board of Directors of OSG, is substantially equivalent in value to the property contributed by the other co-venturers in such Joint Venture whereunder (A) there are one or more co-venturers other than OSG or a Subsidiary and (B) OSG or a Subsidiary maintains at least a 50% equity interest and exercises (and is entitled to exercise) at least equivalent control of the management and administration of such Joint Venture as the co-venturers exercise (and are entitled to exercise).

For the purpose of making any determination of "Substantial Part," sales, leases and other dispositions of assets of OSG and its Subsidiaries shall not be included if the net proceeds are within twenty-four (24) months after such sale either (1) committed to be used pursuant to a binding written contract to purchase or construct other assets that are used in the business of OSG and its Subsidiaries or (2) used to pay or prepay Funded Debt; provided that the percentage of proceeds, if any, applied to pay Subordinated Funded Debt shall not exceed the percentage which Subordinated Funded Debt represents of Consolidated Funded Debt; provided further that pending the actual application of such proceeds for the purposes described in clause (1) or (2) above, such net proceeds shall be invested only in Permitted Investments.

(f) Transactions with Affiliates. Will not, and will not permit any Recourse Subsidiary to, enter into or become a party to any material transaction or arrangement with any Affiliate (including, without limitation, the purchase from, sale to, or exchange of property with, or the rendering of any service by or for, any Affiliate), except pursuant to the reasonable requirements of OSG's or such Subsidiary's business and upon terms which are fair and reasonable and in the best interests of OSG or such Subsidiary.

(g) Use of Proceeds. Will not use the proceeds of the Advances in violation of Regulation  T, U or X.

(h) Maximum Investments in Joint Ventures. Will not, and will not permit any Recourse Subsidiary to, make any Investment in any Joint Venture on any date if, immediately after giving effect to such Investment, the aggregate amount of all such Investments made by OSG and the Recourse Subsidiaries after December 31, 1999 would exceed 22.5% of Consolidated Net Tangible Assets based on the most recent consolidated balance sheet of OSG and the Recourse Subsidiaries required to be provided pursuant to Section 8.1(d).

(i) No Competing Offering. Until the earlier of (a) 30 days following the Closing Date, or (b) the date each Bank which is an Agent shall have reduced its Commitment to $40,000,000 or such greater amount as may be acceptable to each Agent, will not commence or permit any of their respective Affiliates or anyone acting on any of their behalf to commence any competing offering, placement or arrangement of any debt securities or bank financing.

9. EVENTS OF DEFAULT

9.1. Events of Default.

In the event that any of the following events shall occur and be continuing:

(a) Principal Payments. Any principal of the Advances is not paid on the due date therefor; or

(b) Interest and other Payments. Any interest on the Advances or any other amount becoming payable under this Agreement and under the Notes or under any of them, is not paid within three (3) Banking Days from the date when due; or

(c) Representations, etc. Any representation, warranty or other statement made by the Borrowers in this Agreement or in any other instrument, document or other agreement delivered in connection herewith proves to have been untrue or misleading in any material respect as at the date as of which it was made; or

(d) Impossibility, Illegality. It becomes impossible or unlawful for the Borrowers to fulfill any of the covenants and obligations contained herein or in the Notes, or (in the event of any illegality which arises solely as a result of the domicile of any Bank and the Borrower fails to obtain a Replacement Bank in accordance with Section 11.8 within thirty (30) days thereof) for any of the Banks to exercise any of the rights vested in any of them hereunder or under the Notes and such impossibility or illegality, in the reasonable opinion of such Bank, will have a material adverse effect on any of its rights hereunder or under the Notes or on any of its rights to enforce any thereof; or

(e) Certain Covenants. One or more of the Borrowers default in the performance or observance of any covenant contained in Section 8.1(b), 8.1(d)(v), 8.1(k), 8.1(l), 8.1(o) through 8.1(s), 8.2(a) through 8.2(e), 8.2(h) and 8.2(i); or

(f) Covenants. One or more of the Borrowers default in the performance of any term, covenant or agreement contained in this Agreement or in the Notes, or in any other instrument, document or other agreement delivered in connection herewith or therewith, in each case other than an Event of Default referred to elsewhere in this Section 9.1, and such default continues unremedied for a period of fifteen (15) days after written notice thereof has been given to the Borrowers by the Facility Agent at the request of any Bank; or

(g) Indebtedness and Other Obligations. There occurs any Event of Default (as such term is defined in the Existing Credit Facility) or event which, with the giving of notice or passage of time or both, would constitute such an Event of Default under the Existing Credit Facility which is continuing or OSG or any Recourse Subsidiary defaults under (i) any Material Financial Obligation or (ii) any other material contract or agreement to which it is a party or by which it is bound and, in the case of this (ii), such default could reasonably be expected to result in a Material Adverse Change; or

(h) Bankruptcy. Any of the Borrowers or Material Subsidiaries commences any proceedings relating to any substantial portion of its property under any reorganization, arrangement or readjustment of debt, dissolution, winding up, adjustment, composition, bankruptcy or liquidation law or statute of any jurisdiction, whether now or hereafter in effect (a "Proceeding"), or there is commenced against any thereof any Proceeding and such Proceeding remains undismissed or unstayed for a period of sixty (60) days; or any receiver, trustee, liquidator or sequestrator of, or for, any thereof or any substantial portion of the property of any thereof is appointed and is not discharged within a period of sixty (60) days; or any thereof by any act indicates consent to or approval of or acquiescence in any Proceeding or to the appointment of any receiver, trustee, liquidator or sequestrator of, or for, itself or any substantial portion of its property; or

(i) Judgments. Any judgment or order is made the effect whereof would be to render invalid this Agreement or the Notes or any material provision thereof or any Borrower asserts that any such agreement or provision thereof is invalid; or judgments or orders for the payment of money in excess of $10,000,000 in the aggregate for OSG and all Subsidiaries (or its equivalent in any other currency) shall be rendered against OSG and/or any Subsidiary and such judgments or orders shall continue unsatisfied and unstayed for a period of 30 days; or

(j) Inability to Pay Debts. Any Borrower or Material Subsidiary is unable to pay or admits its inability to pay its debts as they fall due or a moratorium shall be declared in respect of any Indebtedness of any thereof; or

(k) ERISA Debt. Any member of the ERISA Group or any ERISA Affiliate shall (i) fail to pay when due an amount or amounts aggregating in excess of $5,000,000 which it or they shall have become liable to pay under Title IV of ERISA or (ii) any member of the ERISA Group or any ERISA Affiliate, individually or collectively, shall incur, or shall reasonably expect to incur, any Withdrawal Liability or liability upon the happening of a Termination Event and the aggregate of all such Withdrawal Liabilities and such other liabilities shall be in excess of $30,000,000;

then, the Banks' obligation to make the Facility available shall cease and the Facility Agent on behalf of the Banks may, with the Majority Banks' consent and shall, upon the Majority Banks' instruction, by notice to the Borrowers, declare the entire Facility Balance, accrued interest and any other sums payable by the Borrowers hereunder and under the Notes due and payable whereupon the same shall forthwith be due and payable without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived; provided that upon the happening of an event specified in subclauses (h) or (j) of this Section 9.1, the Facility Balance, accrued interest and any other sums payable by the Borrowers hereunder and under the Notes shall be immediately due and payable without declaration, presentment, demand, protest or other notice to the Borrowers all of which are expressly waived. In such event, the Creditors may proceed to protect and enforce their rights by action at law, suit in equity or in admiralty or other appropriate proceeding, whether for specific performance of any covenant contained in this Agreement or in the Notes or in aid of the exercise of any power granted herein or therein, or the Banks or the Facility Agent may proceed to enforce the payment of the Notes when due or to enforce any other legal or equitable right of the Banks, or proceed to take any action authorized or permitted by Applicable Law for the collection of all sums due, or so declared due, including, without limitation, the right to appropriate and hold or apply (directly, by way of set-off or otherwise) to the payment of the obligations of the Borrowers to any of the Creditors hereunder and/or under the Notes (whether or not then due) all moneys and other amounts of the Borrowers then or thereafter in possession of any Creditor, the balance of any deposit account (demand or time, matured or unmatured) of the Borrowers then or thereafter with any Creditor and every other claim of the Borrowers then or thereafter against any of the Creditors.

9.2. Indemnification.

The Borrowers jointly and severally, agree to, and shall, indemnify and hold harmless each of the Creditors against any loss or reasonable costs or expenses (including legal fees and expenses) which any of the Creditors sustains or incurs as a consequence of any default in payment of the principal amount of the Advances or interest accrued thereon or any other amount payable hereunder or under the Notes, including, but not limited to, all actual losses incurred in liquidating or re-employing fixed deposits made by third parties or funds acquired to effect or maintain the Advances or any part thereof. A Creditor's certification of such costs and expenses shall, absent any manifest error, be conclusive and binding on the Borrowers.

9.3. Application of Moneys.

All moneys received by any of the Creditors under or pursuant to this Agreement or the Notes after the happening of any Event of Default shall be applied by the Facility Agent in the following manner:

(a) firstly, in or towards the payment or reimbursement of any expenses or liabilities incurred by any of the Creditors in connection with the ascertainment, protection or enforcement of its rights and remedies hereunder and under the Notes;

(b) secondly, in or towards payment of any interest owing in respect of the Advances;

(c) thirdly, in or towards repayment of the Advances;

(d) fourthly, in or towards payment of all other sums which may be owing to any of the Creditors under this Agreement or under the Notes; and

(e) fifthly, the surplus (if any) shall be paid to the Borrowers or to whomsoever else may be entitled thereto.

10. ASSIGNMENTS; PARTICIPATIONS; PLEDGES

10.1. Assignments.

(a) This Agreement shall be binding upon, and inure to the benefit of, the Borrowers and each of the Creditors and their respective successors and assigns, except that the Borrowers may not assign any of their rights or obligations hereunder without the prior written consent of the Banks. Any Bank may assign all or part of its rights and obligations under this Agreement to any one or more financial institutions approved by the Agents and the Borrowers, which approval shall not be unreasonably withheld; provided, however, that no such consent shall be required if the assignee is immediately prior to such assignment another Bank or an Affiliate of the assigning Bank (the expenses of any Bank in connection with any such assignment shall be for its own account); provided, further that no Borrower shall be required to pay any amount under Sections 6.1 or 11 that is greater than the amount which it would have been required to pay had no such assignment been made; provided, further that any assignment shall be made pursuant to an Assignment and Assumption Agreement substantially in the form of Exhibit B hereto; and provided, finally, that, in the case of a partial assignment by any Bank of its rights and obligations hereunder, unless such assignment is to another Bank or an Affiliate of a Bank, the minimum amount which may be assigned shall be $5,000,000 and, after giving effect to any such assignment, each such assigning Bank's pro rata portion of the Commitments and Advances shall aggregate not less than $10,000,000 unless, in each case, otherwise agreed by the Borrowers and the Facility Agent. The Borrowers will take all reasonable actions requested by the Banks to effect any such assignment, including, without limitation, the execution of a written consent to such Assignment and Assumption Agreement.

(b) Notwithstanding the foregoing, any Bank may at any time assign all or any portion of its rights under this Agreement and the Notes to a Federal Reserve Bank to secure extensions of credit by such Federal Reserve Bank to such Bank; provided that no such assignment shall release a Bank from any of its obligations hereunder or substitute any such Federal Reserve Bank for such Bank as a party hereto.

10.2. Participations.

Any Bank may at any time sell to one or more commercial banks or other financial institutions (each of such commercial banks and other financial institutions being herein called a "Participant") participating interests in any of the Advances, its Commitment or other interests of such Bank hereunder; provided, however, that

(a) no participation contemplated in this Section 10.2 shall relieve such Bank from its Commitment or its other obligations hereunder;

(b) such Bank shall remaining solely responsible for the performance of its Commitment and such other obligations;

(c) no Participant, unless such Participant is an Affiliate of such Bank, shall be entitled to require such Bank to take or refrain from taking any action hereunder, except that such Bank may agree with any Participant that such Bank will not, without such Participant's consent, approve any amendment or waiver of any provision of this Agreement or any Note, or consent to any departure by the Borrowers therefrom, if any such amendment, waiver or consent would require the affirmative consent of such Bank pursuant to the terms hereof; and

(d) no Borrower shall be required to pay any amount under Sections 6.1 or 11 that is greater than the amount which it would have been required to pay had no participating interest been sold.

10.3. Promissory Notes.

In order to facilitate assignments and participations hereunder, the Borrowers shall, at the request of any Bank assigning or selling participating interests in all or any portion of its rights under this Agreement and its Note pursuant to Section 10.1 or 10.2, duly execute and deliver to such Bank a promissory note or notes evidencing the portion of the Facility Balance owing by the Borrowers to such Bank hereunder.

10.4. Security Interest.

Notwithstanding any other provision set forth in this Agreement, any Bank or Participant may at any time create a security interest in all or any portion of its rights under this Agreement, including, without limitation, the Advances owing to it and the Note held by it.

11. ILLEGALITY, INCREASED COST, NON-AVAILABILITY, ETC.

11.1. Illegality.

In the event that by reason of any change in any applicable law, regulation or regulatory requirement or in the interpretation or application thereof by any authority, a Bank or Participant has a reasonable basis to conclude that it has become unlawful for such Bank or Participant to maintain or give effect to its obligations as contemplated by this Agreement, such Bank or Participant shall inform the Borrowers and the Facility Agent to that effect, whereafter the liability of such Bank or Participant to make its Commitment available shall forthwith cease and the Borrowers shall be required to repay to such Bank or Participant that portion of the Facility Balance advanced by such Bank or Participant immediately. In any such event, but without prejudice to the aforesaid obligations of the Borrowers to prepay the relevant portion of the Facility Balance, the Borrowers and such Bank or Participant shall negotiate in good faith with a view to agreeing on terms for making the Commitment available from another jurisdiction or otherwise restructuring the Commitment on a basis which is not unlawful.

11.2. Increased Cost.

If any change in applicable law, regulation or regulatory requirement or in the interpretation or application thereof by any Authority shall:

(a) subject any Bank or Participant to any Taxes; or

(b) change the basis of taxation to any Bank or Participant of payments of principal or interest or any other payment due or to become due pursuant to this Agreement (other than a change in the basis effected by the United States of America, the State or The City of New York or any governmental subdivision or other taxing authority having jurisdiction over such Bank or Participant (unless such jurisdiction is asserted solely by reason of the activities of OSG or any Subsidiary) or such other jurisdiction where the Advances may be payable); or

(c) impose, modify or deem applicable any reserve or capital adequacy requirements or require the making of any special deposits against or in respect of any assets or liabilities of, deposits with or for the account of, or loans by, any Bank or Participant; or

(d) impose on any Bank or Participant any other condition affecting the Facility or any part thereof;

and the result of the foregoing is either to increase the cost to such Bank or Participant of making available or maintaining the Facility or any part thereof or to reduce the rate of return on assets or equity of such Bank or Participant or the amount of any payment received by such Bank or Participant, then and in any such case if such increase or reduction in the opinion of such Bank or Participant materially affects the interests of such Bank or Participant under or in connection with this Agreement:

(i) such Bank or Participant shall notify the Borrowers and the Facility Agent in writing of the happening of such event;

(ii) the Borrowers agree forthwith upon receipt of notice from such Bank or Participant as aforesaid to pay to such Bank or Participant such amount as such Bank or Participant certifies to be necessary to compensate such Bank or Participant for such additional cost or such reduction.

Any such notice referred to in subsections (i) and (ii) of this Section 11.2 may be made by a Bank or Participant at any time before or within one (1) year after any repayment of the Facility Balance; provided, however , that before making any such demand, such Bank agrees to use its best efforts (consistent with its internal policy and legal and regulatory restrictions) to designate a different lending office if the making of such designation would avoid the need for, or reduce the amount of, such increased cost or such reduction and would not, in the judgment of such Bank, be otherwise disadvantageous to such Banks.

11.3. Nonavailability of Funds.

If the Facility Agent shall determine that, by reason of circumstances affecting the London Interbank Market generally, adequate and reasonable means do not or will not exist for ascertaining the Applicable Rate for any Advance for any Interest Period, the Facility Agent shall give notice of such determination to the Borrowers and the Banks. The Borrowers and the Facility Agent, acting in accordance with the instruction of the Banks, shall then negotiate in good faith in order to agree upon a mutually satisfactory interest rate and/or Interest Period to be substituted for those which would otherwise have applied under this Agreement. If the Borrowers and the Facility Agent are unable to agree upon such a substituted interest rate and/or Interest Period within thirty (30) days of the giving of such determination notice, the Facility Agent shall set an interest rate and Interest Period to take effect from the expiration of the Interest Period in effect at the date of determination, which rate shall be equal to the Applicable Margin plus the cost to the Banks and Participants (as certified by each Bank and Participant) of funding such Advance. In the event the state of affairs referred to in this Section 11.3 shall extend beyond the end of any Interest Period, the foregoing procedure shall continue to apply until circumstances are such that the Applicable Rate may be determined pursuant to Section 5.

11.4. Determination of Losses.

A certificate or determination notice of the Facility Agent or any affected Bank or Participant, as the case may be, as to any of the matters referred to in this Section 11 shall, absent manifest error, be conclusive and binding on the Borrowers.

11.5. Compensation for Losses.

Where any portion of the Facility Balance is to be prepaid by the Borrowers pursuant to Section 11.1 the Borrowers agree simultaneously with such prepayment to pay to the affected Bank or Participant all accrued interest to the date of actual payment and all other sums payable by the Borrowers to such Bank or Participant pursuant to this Agreement together with such amounts as may be certified by such Bank or Participant to be necessary to compensate such Bank or Participant for any actual loss, premium or penalties incurred or to be incurred by it on account of funds borrowed to make, fund or maintain its portion of the Facility Balance for the remainder (if any) of the then current Interest Period or Periods, but otherwise without penalty or premium.

11.6. Compensation for Breakage Costs.

The Borrowers shall pay to the Banks, Participants or any thereof, upon the request of any thereof such amount or amounts as shall be sufficient (in the reasonable opinion of the relevant Banks and/or Participants) to compensate them for any loss, cost or expense incurred by them as a result of:

(a) any payment or prepayment (including any such prepayment made pursuant to Sections 4.2 and 9.1) of an Advance on a date other than the last day of an Interest Period for such Advance; or

(b) any failure by the Borrowers to borrow (including without limitation any such failure resulting from a condition precedent set forth in Section 3) or prepay an Advance held by any Banks and/or Participants on the date for such borrowing or prepayment specified in the relevant request for such Advance or notice of prepayment delivered under Sections 2.2 or 4.2, respectively;

such compensation to include, without limitation, an amount equal to the excess, if any, of (i) the amount of interest which would have accrued on the principal amount so paid, prepaid or not borrowed for the period from the date of such payment, prepayment or failure to borrow to the last day of the then current Interest Period for such Advance or, in the case of a failure to borrow, the Interest Period for such Advance which would have commenced on the date of such failure to borrow, in each case at the applicable rate of interest for such Advance provided for herein over (ii)  the amount of interest which otherwise would have accrued on such principal amount at a rate per annum equal to the interest component (as reasonably determined by the relevant Banks and/or Participants) of the amount (as reasonably determined by such Banks and/or Participants) the Banks and/or Participants would have bid in the Eurocurrency market for Dollar deposits of amounts comparable to such principal amount and maturities comparable to such Interest Period. Any certification of a relevant Bank or Participant shall, absent manifest error, be conclusive and binding on the Borrowers as to the extent of any such losses.

11.7. Currency Indemnity.

(a) If for the purpose of obtaining or enforcing a judgment in any court in any country it becomes necessary to convert into any other currency (the "judgment currency") an amount due in Dollars under this Agreement or the Notes, then the conversion shall be made, in the discretion of the Facility Agent, at the rate of exchange prevailing either on the date of default or on the day before the day on which the judgment is given or the order for enforcement is made, as the case may be (the "Conversion Date"); provided that the Facility Agent shall not be entitled to recover under this clause any amount in the judgment currency which exceeds at the Conversion Date the amount in Dollars due under this Agreement and/or the Notes.

(b) If there is a change in the rate of exchange prevailing between the Conversion Date and the date of actual payment of the amount due, the Borrowers shall pay such additional amounts (if any, but in any event not a lesser amount) as may be necessary to ensure that the amount paid in the judgment currency when converted at the rate of exchange prevailing on the date of payment will produce the amount then due under this Agreement and/or the Notes, in Dollars; any excess over the amount due received or collected by the Creditors and Participants shall be remitted to the Borrowers.

(c) Any amount due from the Borrowers under Section 11.7(b) shall be due as a separate debt and shall not be affected by judgment being obtained for any other sums due under or in respect of this Agreement and/or the Notes.

(d) The term "rate of exchange" in this Section 11.7 means the rate at which the Facility Agent in accordance with its normal practices is able on the relevant date to purchase Dollars with the judgment currency and includes any premium and costs of exchange payable in connection with such purchase.

11.8. Replacement of Bank or Participant.

If the obligation of any Bank to make its pro rata share of any Advance has been suspended or terminated pursuant to Section 11.1, or if any Bank shall notify the Borrowers of the happening of any event leading to increased costs as described in Section 11.2, the Borrowers shall have the right, upon twenty (20) Banking Days' prior written notice to such Bank, to cause one or more banks (a "Replacement Bank(s)") (which may be one or more of the Banks), each such Replacement Bank to be reasonably satisfactory to the Majority Banks (determined for this purpose as if such transferor Bank had no Commitment and held no interest in the Note issued to it hereunder) and, in each case, with the written acknowledgment of the Facility Agent, to purchase such Bank's pro rata share of the Advances and assume the Commitment of such Bank pursuant to an Assignment and Assumption Agreement. If one or more such banks are identified by the Borrowers and approved as being reasonably satisfactory to the Majority Banks (determined as provided above), the transferor Bank shall consent to such sale and assumption by executing and delivering an Assignment and Assumption Agreement. Upon execution and delivery of an Assignment and Assumption Agreement by the Borrowers, the transferor Bank, the Replacement Bank and the Facility Agent, and payment by the Replacement Bank to the transferor Bank of an amount equal to the purchase price agreed between such transferor Bank and such Replacement Bank, such Replacement Bank shall become a Bank party to this Agreement (if it is not already a party hereto as applicable) and shall have all the rights and obligations of a Bank with a Commitment (which, if such Replacement Bank is already a party hereto, shall take into account such Replacement Bank's then existing Commitment hereunder) as set forth in such Assignment and Assumption Agreement and the transferor Bank shall be released from its obligations hereunder and no further consent or action by any other Person shall be required. In the event that the Facility Agent, in its capacity as a Bank, is required to sell its pro rata share of the Advances and its Commitment hereunder pursuant to this Section 11.8, the Facility Agent shall, promptly upon the consummation of any assignment pursuant to this Section 11.8, resign as Facility Agent hereunder and the Borrowers shall (subject to the consent of the Majority Banks) have the right to appoint another Agent as successor Facility Agent, all in accordance with Section 14.8.

12. FEES, EXPENSES AND INDEMNIFICATION

12.1. Commitment Fee.

OSG shall pay the Facility Agent (for the account of the Banks) a commitment fee, which fee shall be a per annum percentage which will vary based on the rating level assigned to OSG's senior unsecured debt without third party credit enhancement by S&P and Moody's, as per the grid set forth in Schedule II (the "Commitment Fee"), on the undrawn portion of the Facility, accruing from February 11, 2000, which shall be payable during the Facility Period quarterly in arrears beginning June 30, 2000 and on the day on which the Commitments terminate. Such Commitment Fee shall accrue from day to day and be calculated on the basis of actual days elapsed over a 365/366 day year.

12.2. Expenses.

The Borrowers jointly and severally agree, whether or not the transactions hereby contemplated are consummated, on demand to pay, or reimburse the Agents for the payment of the reasonable, documented expenses of the Agents and (after the occurrence and during the continuance of an Event of Default) the Banks incident to said transactions (and in connection with any supplements, amendments, waivers or consents relating thereto or incurred in connection with the enforcement or defense of any of the Agents' and the Banks' rights or remedies with respect thereto) including, without limitation, all reasonable costs and expenses of preparation, negotiation, execution and administration of this Agreement and the documents referred to herein, the reasonable fees and disbursements of the Agents' counsel in connection therewith, as well as reasonable travelling expenses of the Agents, the reasonable fees and expenses of any independent appraisers, surveyors, engineers and other consultants retained by the Agents in connection with this transaction, all reasonable costs and expenses, if any, in connection with the enforcement of this Agreement and the Notes and stamp and other similar taxes, if any, incident to the execution and delivery of the documents (including, without limitation, the Notes) herein contemplated and to hold the Creditors free and harmless in connection with any liability arising from the nonpayment of any such stamp or other similar taxes. Such taxes and, if any, interest and penalties related thereto as may become payable after the date hereof shall be paid immediately by the Borrowers to the Agents or the Banks, as the case may be, when liability therefor is no longer contested by such party or parties or reimbursed immediately by the Borrowers to such party or parties after payment thereof (if the Agents or the Banks, in their sole discretion, choose to make such payment). The Borrowers also jointly and severally agree, whether or not the transactions hereby contemplated are consummated, on demand to pay, or reimburse the Syndication Agent for all reasonable costs, charges and out-of-pocket expenses incurred by the Syndication Agent in connection with the syndication of the Facility.

12.3. Indemnification.

Neither any Creditor nor any of its directors, officers, agents or employees shall be liable to the Borrowers for any action taken or not taken by it in connection herewith in the absence of its own gross negligence or willful misconduct. The Borrowers hereby jointly and severally agree to indemnify the Creditors, their respective affiliates and the respective directors, officers, agents and employees of the foregoing (each an "Indemnitee") and hold each Indemnitee harmless from and against any and all liabilities, losses, damages, costs and expenses of any kind, including, without limitation, the reasonable fees and disbursements of counsel, which may be incurred by such Indemnitee in connection with any investigative, administrative or judicial proceeding (whether or not such Indemnitee shall be designated a party thereto) brought or threatened relating to or arising out of this Agreement, any actual or proposed use of proceeds of Advances hereunder, or any related transaction or claim; provided that (i) no Indemnitee shall have the right to be indemnified hereunder for such Indemnitee's own gross negligence or willful misconduct as determined by a court of competent jurisdiction and (ii) to the extent permitted by law, the Indemnitee shall provide the Borrowers with prompt notice of any such investigative, administrative or judicial proceeding after the Indemnitee becomes aware of such proceeding; provided, however, that the Indemnitee's failure to provide such notice in a timely manner shall not relieve the Borrowers of their obligations hereunder.

13. APPLICABLE LAW, JURISDICTION AND WAIVER

13.1. Applicable Law.

THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

13.2. Jurisdiction.

Each of the Borrowers hereby irrevocably submits to the jurisdiction of the courts of the State of New York and of the United States District Court for the Southern District of New York in any action or proceeding brought against it by any Creditor under this Agreement or any instrument delivered hereunder and hereby agrees that service of summons or other legal process thereon may be made by serving a copy of the summons or other legal process in any such action or proceeding (i)  on OSG or OSG Bulk by mailing or delivering the same by hand to OSG or OSG Bulk, as the case may be, at the address indicated for notices in Section 15 or, (ii) in the case of OSG International, on OSG Ship Management, Inc., 511 Fifth Avenue, New York, New York 10017 by mailing or delivering the same by hand at its address. The service, as herein provided, of such summons or other legal process in any such action or proceeding shall be deemed personal service and accepted by the Borrowers as such, and shall be legal and binding upon the Borrowers for all purposes of any such action or proceeding. Final judgment (a certified or exemplified copy of which shall be conclusive evidence of the fact and of the amount of any indebtedness of the Borrowers to any of the Creditors) against the Borrowers in any such legal action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment. In the event that any of the Borrowers shall not be conveniently available for such service, each Borrower hereby irrevocably appoints the Person who then is the Secretary of State of the State of New York as its attorney-in-fact and agent. The Borrowers will advise the Facility Agent promptly of any change of address for the purpose of service of process. Notwithstanding anything herein to the contrary, a Creditor may bring any legal action or proceeding in any other appropriate jurisdiction.

13.3. WAIVER OF JURY TRIAL.

IT IS MUTUALLY AGREED BY AND AMONG THE BORROWERS AND EACH OF THE CREDITORS THAT EACH OF THEM HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY HERETO AGAINST ANY OTHER PARTY HERETO ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT OR THE NOTES.

14. THE AGENTS

14.1. Appointment and Authorization.

Each Bank irrevocably appoints and authorizes each Agent to take such action as agent on its behalf and to exercise such powers under this Agreement and the Notes as are delegated to such Agent by the terms hereof or thereof, together with all such powers as are reasonably incidental thereto.

14.2. Agents and Affiliates.

So long as Nedship Bank N.V., Den norske Bank ASA and ING Bank N.V. remain Banks hereunder, they shall have the same rights and powers under this Agreement as any other Bank and may exercise or refrain from exercising the same as though it were not an Agent and the terms "Bank" and "Banks" shall include each Agent in its capacity as a Bank. Each Agent and its Affiliates may accept deposits from, lend money to, and generally engage in any kind of business with, the Borrowers, the Subsidiaries or any Affiliate thereof as if it were not an Agent hereunder.

14.3. Action by Agents.

The obligations of each Agent hereunder are only those expressly set forth herein. Without limiting the generality of the foregoing, no Agent shall be required to take any action with respect to any Event of Default, except, in the case of the Facility Agent, as expressly provided in Section 9. Each of the Agents shall be entitled to use its discretion with respect to exercising or refraining from exercising any rights which may be vested in it by, and with respect to taking or refraining from taking any action or actions which it may be able to take under or in respect of, this Agreement and the Notes, unless an Agent shall have been instructed by the Majority Banks (or, to the extent provided herein, all of the Banks) to exercise such rights or to take or refrain from taking such action; provided, however, that none of the Agents shall be required to take any action which exposes it to personal liability or which is contrary to this Agreement or Applicable Law.

14.4. Consultation with Experts.

Each Agent may consult with legal counsel (who may be counsel for one or more of the Borrowers), independent public accountants and other experts selected by it and shall not be liable to any Bank for any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts.

14.5. Liability of the Agents.

No Agent nor any of its respective directors, officers, agents or employees shall be liable to any Bank for any action taken or not taken by it in connection herewith (a) with the consent or at the request of the Majority Banks or (b) in the absence of its own gross negligence or willful misconduct. No Agent nor any of its respective directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into or verify (i) any statement, warranty or representation made in connection with this Agreement or any Advance hereunder; (ii) the performance or observance of any of the covenants or agreements of any Borrower; (iii) the satisfaction of any condition specified in Section 3, except receipt of items required to be delivered to such Agent; or (iv) the validity, effectiveness or genuineness of this Agreement, the Notes or any other instrument or writing furnished in connection herewith. Each Agent shall be entitled to assume that this Agreement, the Notes or any other instrument or writing furnished in connection herewith are valid, effective and genuine, have been signed or sent by the proper parties and are what they purport to be. No Agent shall incur any liability by acting in reliance upon any notice, consent, certificate, statement or other writing (which may be a bank wire, telex or similar writing) believed by it to be genuine or to be signed by the proper party or parties.

14.6. Indemnification.

Each Bank shall, ratably in accordance with its Commitment, indemnify each Agent, its affiliates and their respective directors, officers, agents and employees (to the extent not reimbursed by the Borrowers) against any cost, expense (including reasonable counsel fees and disbursements), claim, demand, action, judgment, suit, loss, damage, obligation, penalty, disbursement or liability of any kind whatsoever (except such as result from such indemnitee's gross negligence or willful misconduct) that such indemnitees may suffer or incur in connection with or in any way relating to or arising out of this Agreement or the Notes or that such indemnitees may suffer or incur in connection with any action taken or omitted by such indemnitees hereunder or thereunder. Without limiting the generality of the foregoing, each Bank agrees to reimburse each Agent promptly upon demand for its ratable share of any out-of-pocket expenses (including reasonable counsel fees and disbursements) incurred by such Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or waiver of any provision of, or legal advice in respect of rights or responsibilities under, this Agreement or the Notes, to the extent that such Agent is not reimbursed for such expenses by the Borrowers and to the extent the same does not result from the gross negligence or willful misconduct of such Agent. Under no circumstances shall any Agent be obligated to expend its own funds for the protection of the interests of the Banks, but each Agent shall be entitled to be indemnified to its satisfaction hereunder by the Banks prior to taking any action or expending any funds hereunder.

14.7. Credit Decision.

Each Bank acknowledges that it has, independently and without reliance upon any Agent or any other Bank, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Bank also acknowledges that it will, independently and without reliance upon any Agent or any other Bank, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking any action under this Agreement.

14.8. Successor Facility Agent.

The Facility Agent may resign at any time by giving written notice thereof to the Banks and OSG. Upon any such resignation, the Banks shall appoint a successor Facility Agent, subject to the consent of OSG, such consent not to be unreasonably withheld. OSG hereby consents to the appointment of any successor Agent that is a Creditor or a first class bank. If no successor Facility Agent shall have been so appointed by the Banks, and shall have accepted such appointment, within 30 days after the retiring Facility Agent gives notice of resignation, then the retiring Facility Agent may, on behalf of the Banks, appoint a successor Facility Agent, which shall be a bank or trust company of recognized standing having a combined capital and surplus of at least $500,000,000. Upon the acceptance of its appointment as Facility Agent hereunder by a successor Facility Agent, such successor Facility Agent shall thereupon succeed to and become vested with all the rights and duties of the retiring Facility Agent and the retiring Facility Agent shall be discharged from its duties and obligations hereunder. After any retiring Facility Agent's resignation hereunder as Facility Agent, the provisions of this Article shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Facility Agent.

14.9. Administrative Fee.

In connection with any assignment pursuant to Section 10.1, the transferor Bank shall pay to the Facility Agent an administrative fee for processing such assignment in the amount of $3,000.

14.10. Distribution of Payments.

Whenever any payment is received by the Facility Agent from the Borrowers for the account of the Banks, or any of them, whether of principal or interest on the Notes, Commitment Fees under Section 12.1, or otherwise, it will thereafter cause like funds relating to such payment to be promptly distributed ratably to the Banks according to their respective Commitments, in each case to be applied according to the terms of this Agreement. Notwithstanding any other provision of this Agreement, the Facility Agent (a) may, before making an amount available to a Bank, deduct and withhold from that amount any sum which is then due and payable to the Facility Agent from that Bank under this Agreement or any sum which the Facility Agent is then entitled under this Agreement to require that Bank to pay on demand, and (b) shall not be obliged to make available to the Borrowers or any Bank any sum which the Facility Agent is expecting to receive for remittance or distribution to the Borrowers or that Bank until the Facility Agent has satisfied itself that it has received that sum.

14.11. Holder of Interest in Notes.

The Facility Agent may treat each Bank as the holder of all of the interest of such Bank in its Note unless and until the Facility Agent has received a copy of an Assignment and Assumption Agreement evidencing the transfer of all or any part of such Bank's interest in the Facility.

14.12. Assumption re Event of Default.

Except as otherwise provided in Section 14.13, the Facility Agent shall be entitled to assume that no Default or Event of Default, has occurred and is continuing, unless the Facility Agent has been notified by the Borrowers of such fact or has been notified by a Bank that such Bank considers that a Default or Event of Default (specifying in detail the nature thereof) has occurred and is continuing. In the event that the Facility Agent shall have been notified by any party in the manner set forth in the preceding sentence of any Default or Event of Default, the Facility Agent shall notify the Banks and shall take such action and assert such rights under this Agreement and under the Notes as the Majority Banks (or, to the extent provided herein, all of the Banks) shall request in writing.

14.13. Notification of Event of Default.

The Facility Agent hereby undertakes promptly to notify the Banks, and each of the Banks hereby undertakes promptly to notify the Facility Agent and the other Banks, of the existence of any Event of Default which shall have occurred and be continuing of which the Facility Agent or such Bank has actual knowledge.

14.14. Limitations of Liability of Creditors.

None of the Creditors shall be under any liability or responsibility whatsoever:

(a) to any Borrower or any other person or entity as a consequence of any failure or delay in performance by, or any breach by, any other Creditor or any other person of any of its or their respective obligations under this Agreement or under the Notes;

(b) to any other Creditor as a consequence of any failure or delay in performance by, or any breach by, any Borrower of any of its respective obligations under this Agreement or under the Notes; or

(c) to any other Creditor for any statements, representations or warranties contained in this Agreement or in any document or instrument delivered in connection with the transactions hereby contemplated; or for the validity, effectiveness, enforceability or sufficiency of this Agreement, the Notes or any document or instrument delivered in connection with the transactions hereby contemplated.

15. NOTICES AND DEMANDS

All notices, requests, demands and other communications to any party hereunder shall be in writing (including prepaid overnight courier, facsimile transmission or similar writing) and shall be given to the Borrowers and the Facility Agent at their respective addresses or telecopy numbers set forth below and to any Bank at the address or telecopy number set forth in its Administrative Questionnaire or at such other address or telecopy number as such party may hereafter specify for the purpose by notice to each other party hereto. Each such notice, request or other communication shall be effective (i) if given by telecopy or e-mail, when such telecopy or e-mail is transmitted to the telecopy number or e-mail address, as the case may be, specified in this Section and (telephonic, in the case of a telecopy) confirmation of receipt thereof is obtained or (ii) if given by mail, prepaid overnight courier or any other means, when received at the address specified in this Section or when delivery at such address is refused.

If to the Borrowers:
511 Fifth Avenue
New York, New York 10017
Attention:  Robert N. Cowen
	Senior Vice President and Chief Operating Officer
Telephone: (212) 578-1870
Fax: (212) 578-1794
E-mail: rcowen@osgship.com
with a copy to:
Myles R. Itkin
Senior Vice President and Chief Financial Officer
Overseas Shipholding Group, Inc.
511 Fifth Avenue
New York, New York 10017
Telephone: (212) 578-1839
Fax: (212) 578-1832
E-mail: mitkin@osgship.com
If to the Facility Agent:
Den Norske Bank ASA
New York Branch
200 Park Avenue
New York, New York 10166-0396
Attention: Mr. Nikolai Nachamkin
Telephone: (212) 681-3863
Fax: (212) 681-3900
E-mail: nikolai.nachamkin@dnb.no

16. LIMITATION OF LIABILITY/SURVIVAL
        OF LIABILITY/CONTINUING INDEMNITIES

16.1. Limitation of Liability.

Notwithstanding anything to the contrary contained in this Agreement, in the event that any court or other judicial body of competent jurisdiction determines that legal principles of fraudulent conveyances, fraudulent transfers or similar concepts are applicable in evaluating the enforceability against any Borrower or its respective assets of this Agreement and that under such principles, this Agreement would not be enforceable against such Borrower or its assets unless the following provisions of this Section 16.1 had effect, then, the maximum liability of each Borrower hereunder (the "Maximum Liability Amount") shall be limited so that in no event shall such amount exceed the lesser of (i) the aggregate outstanding principal amount of the Advances drawn by such Borrower and (ii) an amount equal to the aggregate, without double counting, of (a) ninety-five percent (95%) of such Borrower's Adjusted Net Worth (as hereinafter defined) on the date hereof, or on the date enforcement of this Agreement is sought (the "Determination Date"), whichever is greater and (b) the amount of any Valuable Transfer (as hereinafter defined) to such Borrower; provided that such Borrower's liability under this Agreement shall be further limited to the extent, if any, required so that the obligations of such Borrower under this Agreement shall not be subject to being set aside or annulled under any applicable law relating to fraudulent transfers or fraudulent conveyances. As used herein "Adjusted Net Worth" of the respective Borrower shall mean, as of any date of determination thereof, an amount equal to the lesser of (a) an amount equal to the excess of (i) the amount of the present fair saleable value of the assets of such Borrower over (ii) the amount that will be required to pay such Borrower's probable liability on its then existing debts, including contingent liabilities (exclusive of its contingent liabilities hereunder), as they become absolute and matured, and (b) an amount equal to (i) the excess of the sum of such Borrower's property at a fair valuation over (ii) the amount of all liabilities of such Borrower, contingent or otherwise (exclusive of its contingent liabilities hereunder), as such terms are construed in accordance with applicable laws governing determinations of the insolvency of debtors. In determining the Adjusted Net Worth of a Borrower for purposes of calculating the Maximum Liability Amount for such Borrower, the liabilities of such Borrower to be used in such determination pursuant to each clause (ii) of the preceding sentence shall in any event exclude (a) the liability of such Borrower under this Agreement and (b) the liabilities of such Borrower subordinated in right of payment to this Agreement. As used herein "Valuable Transfer" shall mean, in respect of such Borrower, (a) all loans, advances or capital contributions made to such Borrower with proceeds of the Facility, (b) all debt securities or other obligations of such Borrower acquired from such Borrower or retired by such Borrower with proceeds of the Facility, (c) the fair market value of all property acquired with proceeds of the Facility and transferred, absolutely and not as collateral, to such Borrower, (d) all equity securities of such Borrower acquired from such Borrower with proceeds of the Facility, and (e) the value of any other economic benefits in accordance with applicable laws governing determinations of the insolvency of debtors, in each such case accruing to such Borrower as a result of the Facility and this Agreement.

17. MISCELLANEOUS

17.1. Time of Essence.

Time is of the essence under this Agreement but no failure or delay on the part of any Creditor to exercise any power or right under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise by any Creditor of any power or right hereunder preclude any other or further exercise thereof or the exercise of any other power or right. The remedies provided herein are cumulative and are not exclusive of any remedies provided by law.

17.2. Severability.

In case any one or more of the provisions contained in this Agreement or in the Notes would, if given effect, be invalid, illegal or unenforceable in any respect under any law applicable in any relevant jurisdiction, said provision shall not be enforceable against the Borrowers, but the validity, legality and enforceability of the remaining provisions herein or therein contained shall not in any way be affected or impaired thereby.

17.3. References.

References herein to Articles, Sections (or subdivisions of Sections), Schedules, Annexes or Exhibits are to be construed as references to articles, sections (or subdivisions of sections) of, and schedules, annexes or exhibits to, this Agreement or the Notes, as applicable, unless the context otherwise requires.

17.4. Further Assurances.

Each of the Borrowers agrees that if this Agreement or the Notes shall at any time be deemed by the Banks for any reason insufficient in whole or in part to carry out the true intent and spirit hereof or thereof, it will execute or cause to be executed such other and further assurances and documents as in the opinion of the Banks may be required in order more effectively to accomplish the purposes of this Agreement and/or the Notes.

17.5. Prior Agreements, Merger.

Any and all prior understandings and agreements heretofore entered into between the Borrowers on the one part, and the Creditors, on the other part, whether written or oral, are superseded by and merged into this Agreement and the Notes as to the subject matter hereof or thereof, which alone fully and completely express the agreements between the Borrowers and the Creditors as to such subject matter.

17.6. Entire Agreement, Amendments.

This Agreement and the Notes constitute the entire agreement of the parties hereto as to the subject matter hereof or thereof, including all parties added hereto pursuant to an Assignment and Assumption Agreement. Any provision of this Agreement or the Notes may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by the Borrowers and the Majority Banks (and, if the rights or duties of the Facility Agent are affected thereby, by the Facility Agent); provided that no amendment or waiver shall, unless signed by all the Banks, (a) increase or decrease the Commitment of any Bank or subject any Bank to any additional obligation, (b) reduce the principal of or rate of interest on any Advance or any fees hereunder, (c) postpone the date fixed for any payment of principal of or interest on any Advance or any fees hereunder or for any termination of any Commitment, (d) amend Section 10, (e) waive any condition precedent to the making of an Advance (other than the condition precedent set forth in Section 3.2(a)), (f) if any collateral shall have been granted pursuant to Section 8.1(s), release any such collateral, (g) consent to the assignment or transfer by the Borrowers of any of their rights and obligations under this Agreement or the Notes or (h) amend or modify the definition of "Majority Banks" or this Section 17.6 or otherwise change the percentage of the Commitments or of the aggregate unpaid principal amount of the Facility Balance, or the number or category of Banks, which shall be required for the Banks or any of them to take any action under this Section or any other provision of this Agreement.

17.7. Headings.

In this Agreement, section headings are inserted for convenience of reference only and shall not be taken into account in the interpretation of this Agreement.

17.8. Survival.

The obligations of the Borrowers under Sections 6, 9.2, 11 and 12 shall survive the termination of this Agreement and the payment in full of all obligations hereunder.

17.9. Confidentiality.

The Creditors shall hold all non-public information (either in the form of non-public documentation relating to the Facility or which otherwise has been identified as non-public information by the Borrowers) obtained pursuant to the requirements of this Agreement confidential for so long as such information remains non-public in accordance with its customary procedures for handling confidential information of this nature and in accordance with safe and sound banking practices and in any event shall have the right to make disclosure (1) to any of their respective examiners, Affiliates, outside auditors, counsel and other professional advisors in connection with this Agreement, (2) as reasonably required by any bona fide transferee or Participant, potential bona fide transferee or Participant, (3) as required or requested by any Authority or pursuant to legal process, (4) as required by Applicable Law or (5) in connection with any litigation to which both a Creditor and a Borrower are parties; provided, however, that

(a) unless specifically prohibited by Applicable Law or court order, such Agent or Bank shall notify the Borrowers of any request by any Authority (other than any such request in connection with an examination of the financial condition of such Agent or Bank by such Authority) for disclosure of any such non-public information as soon as possible after any such request;

(b) any such bona fide transferee or Participant by their acceptance of such assignment or participation shall be deemed to have agreed (i) to be bound by this Section 17.9 and (ii) to require any other Person to whom such transferee or Participant discloses such non-public information to be similarly bound by this Section 17.9;

(c) the Creditors shall require any potential bona fide transferee or Participant to whom the Creditors may disclose such non-public information to be bound by a confidentiality agreement containing provisions substantially identical to this Section 17.9 (except that subparagraph (d) shall not apply unless such Person becomes a transferee or Participant) or incorporating the same by reference; and

(d) except as may be required by an order of a court of competent jurisdiction and to the extent set forth therein (but in such case, the Creditors may retain any materials furnished by the Borrowers in accordance with their customary credit or document retention policies), the Creditors shall not be obligated or required to return any materials furnished by the Borrowers.

17.10. Counterparts.

This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all such counterparts together shall constitute one and the same instrument.

17.11. WAIVER OF IMMUNITY.

TO THE EXTENT THAT ANY BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM SUIT, JURISDICTION OF ANY COURT OR ANY LEGAL PROCESS (WHETHER THROUGH ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION, EXECUTION OF A JUDGMENT, OR FROM ANY OTHER LEGAL PROCESS OR REMEDY) WITH RESPECT TO ITSELF OR ITS PROPERTY, SUCH BORROWER HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE NOTES.

IN WITNESS whereof the parties hereto have caused this Agreement to be duly executed by their duly authorized representative as of the day and year first above written.

OVERSEAS SHIPHOLDING GROUP, INC., as

              Borrower

By                                                       

Name:

Title:

OSG BULK SHIPS, INC., as

              Borrower

By                                                       

Name:

Title:

OSG INTERNATIONAL, INC., as

               Borrower

By                                                       

Name:

Title:

DEN NORSKE BANK ASA,

                as Facility Agent, Arranger

                and Bank

By                                                       

Name:

Title:

By                                                       

Name:

Title:

ING BANK N.V., as Documentation Agent, Arranger

and Bank

By                                                       

Name:

Title:

NEDSHIP BANK N.V., as

Syndication Agent, Arranger and Bank

By                                                       

Name:

Title:

MEESPIERSON CAPITAL CORP.,

as Arranger and Bank

By                                                       

Name: Svein Engh

Title: Managing Director

By                                                       

Name: Christopher Turton

Title: Managing Director

HAMBURGISCHE LANDESBANK

- GIROZENTRALE, as

Co-Arranger and Bank

By                                                       

Name:

Title:

CRÉDIT AGRICOLE INDOSUEZ UK,

as Senior Lead Manager and Bank

By                                                       

Name: Thibaud Escoffier

Title: Senior Vice-President

SCOTIABANK (IRELAND) LIMITED,

                     as Senior Lead Manager and Bank

By                                                       

Name:

Title:

LANDESBANK SCHLESWIG-HOLSTEIN

GIROZENTRALE, as Lead

Manager and Bank

By                                                       

Name:

Title:

THE BANK OF NEW YORK,

as Lead Manager and Bank

By                                                       

Name:

Title:

NIB CAPITAL BANK N.V.,

as Lead Manager and Bank

By                                                       

Name:

Title:

SCHEDULE I

BANKS

Agents/Arrangers	Commitment
Den norske Bank ASA	$55,000,000
New York Branch
200 Park Avenue
New York, New York 10166-0396
Attention: Mr. Nikolai Nachamkin
Telephone: (212) 681-3863
Facsimile: (212) 681-3900
E-mail: nikolai.nachamkin@dnb.no
ING Bank N.V.	$55,000,000
Corporate Clients
Weena 501
3013 AL Rotterdam
The Netherlands
Attention: Mr. Hugh Baker
Telephone: 011-31-10-444-6856
Facsimile: 011-31-10-444-6791
E-mail: hugh.baker@mail.ing.nl
Nedship Bank N.V.	$55,000,000
Parklaan 2
3016 BB Rotterdam
The Netherlands
Attention: Mr. Ben Rosemoller
Telephone: 011-31-10-436-0841
Facsimile: 011-31-10-436-2957
E-mail: ben.rosenmoeller@ema.rabobank.com
Contact Address:
Nedship International Inc.
66 Field Point Road
Greenwich, CT 06830
Attention: Mr. Sybren Hoekstra
Telephone: (203) 422-2300
Facsimile: (203) 422-2320
E-mail: s.hoekstra.nedship@con.rabobank.com
Arranger
MeesPierson Capital Corp.	$50,000,000
Three Stamford Plaza 301 Tresser Boulevard
Stamford, CT 06901-3239
Attention: Chr. Tobias Backer
Assistant Vice President
Telephone: 1-203-705-5787
Facsimile: 1-203-705-5890
email: CTB@Meespiersonusa.com
Co-Arranger
Hamburgische Landesbank - Girozentrale -	$35,000,000
Gerhart-Hauptmann-Platz 50
20095 Hamburg
Attention: Ms. Uta Urbaniak Telephone: 011-49-40-3333-1769
Facsimile: 011-49-40-3333-3069
E-mail: uta.urbaniak@hamburglb.de
Senior Lead Managers
Crédit Agricole Indosuez	$25,000,000
9 Quai du Président Paul Doumer
92920 Courbevoie - La Défence Cedex
France
c/o Credit Agricole Indosuez UK
Shipping Department
122 Leadenhall Street
ECV 4QH London
UK
Attention: Mr. Marc Etcheberry
Telephone: 011-44-207-971-4238
Facsimile: 011-44-207-894-2307
E-mail: marc.etcheberry@indosuez.co.uk
Scotiabank (Ireland) Limited	$25,000,000
I.F.S.C. House
Custom House Quay
Dublin 1, Ireland
Attention: Mr. John R. M. Campbell
Telephone: 011-3531-790-2000
Facsimile: 011-3531-670-0684
E-mail: jcampbel@scotiabank.com
Lead Managers
Landesbank Schleswig-Holstein	$20,000,000
Girozentrale Martensdamm 6
24103 Kiel, Germany
Attention: Mr. Doerk Berkenbusch
Telephone: 011-49-431-900-1792
Facsimile: 011-49-431-900-1130
The Bank of New York	$15,000,000
One Wall Street - Marine Transportation Division 16th Floor
New York, New York 10286
Attention: Mr. Matthew G. Pacifico
Telephone: 212-635-7582
Facsimile: 212-635-7512
E-mail: mpacifico@bankofny.com
NIB Capital Bank N.V.	$15,000,000
4 Carnegieplein, P.O. Box 380
2501 BH The Hague
The Netherlands
Attention: Peter Bergman
Telephone: 011-31-70-342-5459
Facsimile: 011-31-70-342-5577
E-mail: peter.bergman@dnib.com

SCHEDULE II

APPLICABLE MARGIN

Rating Level1 (S&P/Moody's)	Applicable Margin	Commitment Fee
BBB+/Baa1 or better	62.5 bps	21.875 bps
BBB/Baa2	75.0 bps	26.250 bps
BBB-/Baa3	100.0 bps	35.000 bps
BB+/Ba1	112.5 bps	39.375 bps
BB/Ba2	135.0 bps	47.250 bps
BB-/Ba3 or worse	150.0 bps	52.500 bps

or, if OSG is no longer rated, the margin shall be determined by the ratio of Cash Adjusted Funded Debt to Consolidated EBITDA:

CAFD/CEBITDA	Applicable Margin	Commitment Fee
<2.5	62.5 bps	21.875 bps
2.5 < 3.0	75.0 bps	26.250 bps
3.0 < 4.25	100.0 bps	35.000 bps
4.25 < 5.5	112.5 bps	39.375 bps
5.5 < 7.0	135.0 bps	47.250 bps
> 7.0	150.0 bps	52.500 bps

___________________

1 If there is a split between the S&P and Moody's ratings, then the higher rating level shall be used for purposes of determining the Applicable Margin.

SCHEDULE III

FUNDED DEBT AT DECEMBER 31, 1999

In thousands at December 31,	1999
Unsecured Revolving Credit Agreement with banks	$ 457,000
8.75% Debentures due 2013, net of unamortized discount of $191	84,784
8% Notes due 2003, net of unamortized discount of $80	84,820
Floating rate secured Term Loans, due through 2008	102,046
Floating rate unsecured Promissory Note, due through 2005	24,350
Other	2,904
	$ 755,904

SCHEDULE IV

ACCEPTABLE BROKERS

P.F. Bassoe A/S (Norway)

Platou (Norway)

Fearnleys (Norway)

H. Clarkson (UK)

E.A. Gibson (UK)

A.L. Burbank (Shipbrokers) Ltd. (USA)

Jacq. Pierot Jr. & Sons, Inc. (USA)

EXHIBIT A

FORM OF ADMINISTRATIVE QUESTIONNAIRE

Lender Administrative Questionnaire

At closing, Den norske Bank, New York Branch will assume the duties and functions of Facility Agent for the Facility. This questionnaire should be completed in order to facilitate closing and ongoing communication.

FAX ALONG WITH COMMITMENT LETTER TO:
BARBARA GRONQUIST, Den norske Bank ASA, FAX# +1 212 681-3900
HUGH BAKER, ING Bank NV, FAX# +31 10 444-6791
KEVIN O'HARA, Nedship International, FAX# +1 203 422-2320

Borrower Information
Borrower Name:	Overseas Shipholding Group, Inc.
Amount and Facility:	$350,000,000 Senior Revolving Credit Facility
Borrower Tax ID(s)#:	13-2637623

Participant Information
Legal Name of Lender for Signature Page:
Name of Lender for any eventual tombstone:
Institution Tax ID#:
General Information	Domestic Lending Office:	Eurodollar Lending Office:
Institution Name:
Street Address:
City/State/Zip:
Country:

	Credit Contact	Operations Contact	Legal Counsel
Primary Contact:
Title:
Street Address:
City/State/Zip:
Country:
Telephone #:
Fax #:
Email Address:

Secondary Contact:

Title:

Street Address:

City/State/Zip:

Country:

Telephone #:

Fax #:

Email Address:

Wire Routing Instructions

Name of Lender:

ABA Number:

City/State:

Country:

Account Name:

Account Number:

Attention:

Reference:

Mailing Addresses
	Credit Agreement Delivery	Financial Information Delivery
Name:
Title:
Street Address:
City/State/Zip:
Country:
Telephone #:
Fax #:
Email Address:

Tax Withholding
Non-Resident Alien:	Yes, Form 4224 attached.
Tax ID Number:		Form W9 attached.

Facility Agent Information
	Credit Contact	Customer Service (Loan Administration)
Name:	Barbara Gronquist	Alberto Caceda
Title:	Senior Vice President
Street Address:	200 Park Avenue	200 Park Avenue
City/State/Zip:	New York, NY 10166	New York, NY 10166
Country:	USA	USA
Telephone #:	+1 (212) 681-3859	+1 (212) 681-3843
Fax #:	+1 (212) 681-3900	+1 (212) 681-4123
Email Address:	barbara.gronquist@dnb.no	alberto caceda@dnb.no

Facility Agent Wire Instructions
Bank:	Unibank, NY Branch
ABA Number:	026005694
F/O:	Overseas Shipholding Group
Account #:	11576999
Reference:	OSG Facility
Attn:	Alberto Caceda

Completed By

___________________
Signature

EXHIBIT B

=====================================================================

FORM OF

ASSIGNMENT AND ASSUMPTION AGREEMENT

between

[NAME OF ASSIGNOR]

and

[NAME OF ASSIGNEE]

=====================================================================

______________,

ASSIGNMENT AND ASSUMPTION AGREEMENT

ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement"), dated as of ___________, ____ between [NAME OF ASSIGNOR], a [bank]/[corporation] organized under the laws of [JURISDICTION OF ASSIGNOR] (the "Assignor"), and [NAME OF ASSIGNEE], a [bank]/[corporation] organized under the laws of [JURISDICTION OF ASSIGNEE] (the "Assignee"), supplemental to:

(i) that certain Credit Agreement, dated as of April 18, 2000 (as amended, restated, modified or supplemented from time to time, the "Credit Agreement"), made among (a) Overseas Shipholding Group, Inc., OSG Bulk Ships, Inc. and OSG International, Inc., as borrowers ("Borrowers"), (b) the banks and financial institutions parties thereto as lenders (the "Banks"), including the Assignor, (c) Den norske Bank ASA, as facility agent (the "Facility Agent"), (d) ING Bank N.V., as documentation agent, and (e) Nedship Bank N.V., as syndication agent, pursuant to which the Banks agreed, severally and not jointly, to make available to the Borrowers a revolving credit facility of up to $350,000,000 (the "Facility"); and

(ii) each promissory note made by the Borrowers payable to the order of each Bank dated May 2, 2000 (collectively, the "Notes") evidencing the Advances.

Except as otherwise defined herein, terms defined in the Credit Agreement have the same meaning when used herein.

In consideration of the premises and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1. The Assignor hereby sells, transfers and assigns to the Assignee, without recourse, ___% of the Assignor's right, title and interest in, to and under the: (a) Credit Agreement and (b) its Note (including, without limitation, its interest in the indebtedness evidenced by such Note). Simultaneously herewith, the Assignee shall pay to the Assignor an amount equal to the purchase price agreed between them in a separate writing.

2. The Assignee hereby assumes ___% of the obligations of the Assignor under the Credit Agreement and shall hereafter be a "Bank" for all purposes of the Credit Agreement and the Notes, the Assignee's Commitment thereunder being $________ in respect of the Facility.

3. The [Assignor] [Assignee] shall pay an administrative fee of Three Thousand Dollars ($3,000) to the Facility Agent to reimburse the Facility Agent for its cost in processing the assignment and assumption herein contained.

4. If it is not a U.S. person, the Assignee shall, on or prior to the date hereof and from time to time thereafter when required by applicable provisions of the United States Internal Revenue Code, provide the Borrower with two duly completed copies of Internal Revenue Service Form 1001 or 4224, as appropriate, or any successor form prescribed by the Internal Revenue Service, certifying that the Assignee is entitled to benefits under an income tax treaty to which the United States is a party that exempts withholding tax on payments under the Credit Agreement and the Note or certifying that the income receivable pursuant to the Credit Agreement or the Note is effectively connected with the conduct of a trade or business in the United States.

5. The Assignee irrevocably designates and appoints the Facility Agent as its agent, and irrevocably authorizes the Facility Agent, to take such action on its behalf and to exercise such powers on its behalf under the Credit Agreement and under its Note, each as supplemented hereby, as are delegated to the Facility Agent by the terms of each thereof, together with such powers as are reasonably incidental thereto all as provided in Section 14 of the Credit Agreement.

6. The Assignor makes no representation or warranty in connection with, and shall have no responsibility with respect to, the solvency, financial condition or statements of the Borrowers, or the validity and enforceability of the obligations of the Borrowers in respect of the Credit Agreement or the Note. The Assignee acknowledges that it has, independently and without reliance on the Assignor or the Facility Agent, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and will continue to be responsible for making its own independent appraisal of the business, affairs and financial condition of the Borrowers.

7. Every notice or demand under this Agreement shall be in writing and may be given by telecopy and shall be sent as follows:

If to the Assignor:

[NAME OF ASSIGNOR]
[ADDRESS]
Attention:
Telephone:
Facsimile:
E-mail:

If to the Assignee:

[NAME OF ASSIGNOR]
[ADDRESS]
Attention:
Telephone:
Facsimile:
E-mail:

Every notice or demand hereunder shall be deemed to have been received at the time of receipt thereof. The Assignee designates its address given above as its address for notices pursuant to Section 15 of the Credit Agreement.

8. EACH OF THE ASSIGNOR AND THE ASSIGNEE HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY HERETO ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT.

9. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

10. This Agreement may be executed in several counterparts with the same effect as if the parties executing such counterparts executed one agreement as of the date hereof and each counterpart when executed and delivered shall be deemed to be an original and all of such counterparts together shall constitute this Agreement.

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

	[NAME OF ASSIGNOR] By                                                           Name: Title:
	[NAME OF ASSIGNEE] By                                                           Name: Title:
Consented and Agreed this        day of                     ,           :
OVERSEAS SHIPHOLDING GROUP, INC.
By
Name: Title:
OSG BULK SHIPS, INC.
By
Name: Title:
OSG INTERNATIONAL, INC.
By
Name: Title:

EXHIBIT C

PROMISSORY NOTE

US $	May 2, 2000
	New York, New York

FOR VALUE RECEIVED, each of the undersigned, OVERSEAS SHIPHOLDING GROUP, INC., a corporation incorporated under the laws of Delaware, OSG BULK SHIPS, INC., a corporation incorporated under the laws of New York, and OSG INTERNATIONAL, INC., a corporation incorporated under the laws of the Republic of the Marshall Islands (each, a "Borrower" and collectively, the "Borrowers"), hereby jointly and severally promises to pay to the order of [INSERT NAME OF BANK], [INSERT JURISDICTION OF ORGANIZATION OF BANK AND TYPE OF ENTITY] ("__________"), with offices at [INSERT ADDRESS OF BANK], the principal sum of [INSERT AMOUNT OF COMMITMENT OF BANK] United States Dollars (US $___________) or, if less, the aggregate unpaid principal amount of the Advances from time to time outstanding made by _______ to the Borrowers pursuant to the Credit Agreement, dated as of April 18, 2000, by and among the Borrowers, MeesPierson Capital Corp., Hamburgische Landesbank - Girozentrale, Crédit Agricole Indosuez, Scotiabank (Ireland) Limited, Landesbank Schleswig-Holstein Girozentrale, The Bank of New York, NIB Capital Bank N.V., Den norske Bank ASA, ING Bank N.V. and Nedship Bank N.V. (as amended, restated, modified or supplemented from time to time, the "Credit Agreement"). The Borrowers shall repay the principal amount of such Advances as provided in Section 4 of the Credit Agreement, but in any event no later than the Final Payment Date.

Words and expressions used herein (including those in the foregoing paragraph) and defined in the Credit Agreement shall have the same meaning herein as therein defined.

Each Advance shall bear interest at the rate as set forth in Section 5.1 of the Credit Agreement. Any principal payment not paid when due, whether by acceleration or otherwise, shall bear interest thereafter at the Default Rate. All interest shall accrue and be calculated on the actual number of days elapsed and on the basis of a 360 day year and be payable as provided in the Credit Agreement.

Both principal and interest are payable in Dollars to the Facility Agent, at its office located at 200 Park Avenue, New York, New York (or to such other branch of the Facility Agent as the Facility Agent may direct).

__________________ may endorse the amount and the date of the making of each Advance evidenced hereby and each payment of principal hereunder on the grid annexed hereto and made a part hereof, which endorsement shall constitute prima facie evidence of the accuracy of the information so endorsed; provided, however, that any failure to endorse such information on such grid shall not in any manner affect the obligation of the Borrowers to make payment of principal and interest in accordance with the terms of this Promissory Note.

If this Promissory Note or any payment required hereunder becomes due and payable on a day which is not a Banking Day the due date thereof shall be extended until the next following Banking Day (in which event, interest shall be payable during such extension at the rate applicable immediately prior thereto), unless such next following Banking Day falls in the following month in which case such payment shall be payable on the Banking Day next preceding the day on which such payment would otherwise be payable.

Amounts due hereunder may be prepaid in accordance with the terms of the Credit Agreement.

This Promissory Note is one of the Notes referred to in, and is entitled to the benefits of, the Credit Agreement. Upon the occurrence of any Event of Default, the principal hereof and accrued interest hereon may become, or may be declared to be and shall thereupon become, forthwith due and payable.

Presentment, demand, protest and notice of dishonor of this Promissory Note and any other notice of any kind are hereby expressly waived.

THE BORROWERS AND, BY ITS ACCEPTANCE HEREOF, _______________ HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY HERETO OR ANY BENEFICIARY HEREOF ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS PROMISSORY NOTE.

THIS PROMISSORY NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

IN WITNESS WHEREOF, the Borrowers have executed and delivered this Promissory Note on the date and year first above written.

	OVERSEAS SHIPHOLDING GROUP, INC.
	By
	Name:
	Title:
OSG BULK SHIPS, INC.
By
Name:
Title:
OSG INTERNATIONAL, INC.
By
Name:
Title:

OVERSEAS SHIPHOLDING GROUP, INC.

Date
Amount of Advance Amount of Principal Paid
or Prepaid Unpaid
Principal
Balance
Notation
Made By

OSG BULK SHIPS, INC.

Date
Amount of Advance Amount of Principal Paid
or Prepaid Unpaid
Principal
Balance
Notation
Made By

OSG INTERNATIONAL, INC.

Date
Amount of Advance Amount of Principal Paid
or Prepaid Unpaid
Principal
Balance
Notation
Made By

EXHIBIT D

=====================================================================

FORM OF

DRAWDOWN NOTICE

=====================================================================

DRAWDOWN NOTICE

___________ __, ____

Den norske Bank ASA
New York Branch
200 Park Avenue
New York, New York 10166-0396

Attn: Mr. Nikolai Nachamkin

Ladies and Gentlemen:

Please be advised that, in accordance with the terms of Section 2.2 of the Credit Agreement, dated as of April 18, 2000, among Overseas Shipholding Group, Inc., OSG Bulk Ships, Inc. and OSG International, Inc., as borrowers (the " Borrowers"), the banks and financial institutions listed on Schedule I thereto, as lenders, Den norske Bank ASA, as facility agent, ING Bank N.V., as documentation agent, and Nedship Bank N.V., as syndication agent (the "Credit Agreement"), the undersigned hereby gives you notice of drawdown of an Advance. All terms used herein, shall have the meanings given thereto in the Credit Agreement.

Name(s) of Borrower(s) (and allocation if more than one Borrower):	_______________________
Amount of Advance:	US$___________________
Drawdown Date:
Initial Interest Period	[7 days] [1/3/6/12 month(s)]
Disbursement Instructions:	________________________ ________________________ ________________________

We hereby warrant that the representations and warranties stated in Section 7 (updated mutatis mutandis) of the Credit Agreement are true and correct on the date hereof and will be true and correct on the date that the Advance requested by this drawdown notice is made¹ and that no Default or Event of Default has occurred and is continuing.

In the event that the Banks and Participants, if any, shall not be obliged under the terms of the Credit Agreement to make the above requested Advance (including, without limitation any such failure resulting from the failure of the Borrowers to satisfy a condition precedent set forth in Section 3 of the Credit Agreement)², the Borrowers shall indemnify and hold fully harmless the Banks, Participants or any of them, against any losses which the Banks, Participants or any of them, may sustain as a result of borrowing or agreeing to borrow funds to meet the drawdown requirement in respect thereof and the certificate of the relevant Bank or Participant shall, absent manifest error, be conclusive and binding on the Borrowers as to the extent of any such losses.

This Drawdown Notice is effective upon receipt by you and shall be irrevocable.

OVERSEAS SHIPHOLDING GROUP, INC.

By__________________________________

Name:
Title:

OSG BULK SHIPS, INC.

By__________________________________

Name:
Title:

OSG INTERNATIONAL, INC.

By__________________________________

Name:
Title:

________________

1 Insert the following if the Advance would not result in an incremental increase in the aggregate amount of Advances outstanding under the Facility and such Advance is to be made after the initial Drawdown Date -- "provided , however that (i) the representations and warranties set forth in Section 7.1(e) and (o) of the Credit Agreement shall be deemed inapplicable as of the date hereof and as of the date of the Advance and (ii) any representation and warranty which relates solely to an earlier date shall be true and accurate on and as of such earlier date";

2 Insert the following in the initial Drawdown Notice -- "or the failure of the Credit Agreement to become effective"

EXHIBIT E

=====================================================================

FORM OF COMPLIANCE CERTIFICATE

from

OVERSEAS SHIPHOLDING GROUP, INC.,

OSG BULK SHIPS, INC.

AND OSG INTERNATIONAL, INC.

to

DEN NORSKE BANK ASA

=====================================================================

                       ,      

FORM OF COMPLIANCE CERTIFICATE

CERTIFICATE OF THE CHIEF FINANCIAL OFFICER

OF

OVERSEAS SHIPHOLDING GROUP, INC.

FOR THE PERIOD ENDED ______________

Reference is made to that certain Credit Agreement, dated as of April 18, 2000 (as amended from time to time, the "Credit Agreement"), among OVERSEAS SHIPHOLDING GROUP, INC. ("OSG"), OSG BULK SHIPS, INC. (" ;OSG Bulk") and OSG INTERNATIONAL, INC. (collectively with OSG and OSG Bulk, the "Borrowers"), the banks and financial institutions which are parties to the Credit Agreement (the "Banks"), DEN NORSKE BANK ASA, as facility agent (the "Facility Agent"), ING BANK N.V., as documentation agent, and NEDSHIP BANK N.V., as syndication agent. Capitalized terms used herein without definition have the meanings ascribed thereto in the Credit Agreement. The undersigned, being the chief financial officer of OSG hereby certifies, on behalf of the Borrowers, to the Facility Agent and the Banks as follows:

(i) I have reviewed the [audited] consolidated balance sheet of OSG and the Subsidiaries dated as of                   and the related [audited] consolidated statements of operations and retained earnings and cash flows for the              period then ended and such financial statements fairly present the financial condition of OSG and the Subsidiaries as of the dates indicated and the results of their operations and cash flows for the periods indicated; and

(ii) I have reviewed the terms of the Credit Agreement and have made, or caused to be made under my supervision, a review in reasonable detail of the transactions and the condition of OSG and the Subsidiaries during the accounting period covered by the financial statements referred to in clause (i) above; and

(iii) such review has not disclosed the existence during or at the end of such accounting period of any condition or event that constitutes a Default or an Event of Default, nor do I have knowledge of the existence of any such condition or event as at the date of this Certificate [EXCEPT, [IF SUCH CONDITION OR EVENT EXISTED OR EXISTS, DESCRIBE THE NATURE AND PERIOD OF EXISTENCE THEREOF AND WHAT ACTION OSG OR ANY SUBSIDIARY, AS THE CASE MAY BE, HAS TAKEN, IS TAKING AND PROPOSES TO TAKE WITH RESPECT THERETO]]; and

(iv) the Borrowers are in compliance with the covenants contained in Section 8 of the Credit Agreement, including, without limitation the covenants set forth in Sections 8.1(o) through 8.1(s), 8.2(a), (c), (e) and (h), and Annex A attached hereto shows the calculation thereof in sufficient detail as to permit the verification thereof by the Facility Agent.

IN WITNESS WHEREOF, the undersigned has executed this Certificate as of this       day of                            .

OVERSEAS SHIPHOLDING GROUP, INC.

By:                                           

     Name:

     Title:

ANNEX A

1.	Section 8.1(o) - Consolidated Tangible Net Worth
	Consolidated Tangible Net Worth
		(i) Stockholders' equity (as shown on
		the most recent consolidated balance sheet
		of OSG and the Recourse Subsidiaries)		$_____________
		minus		-
		(ii) Intangible Assets of OSG and
		the Recourse Subsidiaries		$_____________
			=	$_____________
		Requirement per Credit Agreement:

                     Consolidated Tangible Net Worth = not less than $575,000,000 plus 50% of cumulative Consolidated Net Income (to the extent positive) for each fiscal quarter from and after June 30, 2000.

2.		Section 8.1(p) - Cash Adjusted Debt Service Coverage Ratio
			(i) Cash Adjusted Income Available	$_____________
			for Fixed Charges
			to
			(ii) Adjusted Fixed Charges	$_____________
			Minimum Requirement per Credit Agreement - not less than 1.75:1
3.		Section 8.1(q) - Unencumbered Assets to Unsecured Debt Ratio
			(i) Unencumbered Assets
			Tangible Assets (excluding any assets	$______________
			which consist of shares of stock of Subsidiaries
			which have been pledged to secure any obligations)
			minus
			the sum of (A) Attributable Debt and (without	$_______________
			duplication) (B) the Book Value of OSG and
			the Recourse Subsidiaries which are subject to a Lien
			securing Secured Debt
			to
			(ii) Unsecured Debt	$_______________
			Minimum Requirement per Credit Agreement - not less than 1.50:1
4.	Section 8.1(r) - Cash Adjusted Funded Debt to Cash Adjusted Consolidated Net Tangible Assets
			(i) Cash Adjusted Funded Debt
			(A) Consolidated Funded Debt	$_______________
			minus
			(B) Cash	$_______________
			to
			(ii) Cash Adjusted Consolidated Net Tangible Assets
			(A) Consolidated Net Tangible Assets	$_______________
			minus
			(B) Cash	$_______________
	Minimum Requirement per Credit Agreement - not more than 0.60:1
5.	Section 8.1(s) - Security Interest on Ratings Downgrade
			(i) Fair Market Value of Vessel Collateral	$_______________
			(ii) Amount of Cash Collateral	$_______________
			(iii) Aggregate Principal Amount
			of all Advances outstanding	$_______________
	Requirement per Credit Agreement:

                      Under the circumstances described in Section 8.1(s), the sum of (x) 80% of the Fair Market Value of any Vessel Collateral, plus (y) any Cash Collateral, must equal or exceed the sum of the aggregate principal amount of all Advances outstanding on the date of calculation.

                      If the sum of (x) 71.429% of the Fair Market Value of any Vessel Collateral plus (y) any Cash Collateral exceeds the aggregate principal amount of all Advances outstanding on the date of calculation, collateral may be released pursuant to the terms of Section 8.1(s).

6.	Section 8.2(a) - Limitation on Secured Debt
		(i) Unencumbered Assets
		Tangible Assets (excluding any assets which	$_______________
		consist of shares of stock of Subsidiaries which
		have been pledged to secure any obligations)
		minus
		the sum of (A) Attributable Debt and (without	$_______________
		duplication) (B) the Book Value of all assets of
		OSG and the Recourse Subsidiaries which are
		subject to a Lien securing Secured Debt
		to
		(ii) Unsecured Debt	$_______________

                     Minimum Requirement per Credit Agreement - After giving effect to the creation, assumption or incurrence of Secured Debt and to the application of the proceeds thereof, not less than 1.50:1; and

(i) Collateralized Assets	$_______________
to
(ii) Consolidated Net Tangible Assets	$_______________

                     Minimum Requirement per Credit Agreement - After giving effect to the creation, assumption or incurrence of Secured Debt and to the application of the proceeds thereof, not greater than 0.25:1.

7.	Section 8.2(c) - Conduct of Business
		Operating Assets in Shipping and	$_______________
		Related Businesses
		Operating Assets	$_______________
	Requirement per Credit Agreement:

                    After giving effect to any acquisition of Operating Assets or Investments in Operating Assets, at least 70% (based on the most recent consolidated balance sheet of OSG and the Recourse Subsidiaries required to be provided pursuant to Section 8.1(d)) of the Operating Assets of OSG and the Recourse Subsidiaries must be (on a consolidated basis) in Shipping and Related Businesses.

8.	Section 8.2(e) - Mergers, Consolidations and Sales of Assets - calculation of "Substantial Part"
		Book Value of assets to be sold	$_______________
		Book Value of all other assets sold, leased
		or otherwise disposed of by OSG and the
		Subsidiaries during prior twelve months	$_______________
		Consolidated Net Tangible Assets	$_______________

                 If the Book Value of the assets, when added to the Book Value of all other assets sold, leased or otherwise disposed of by OSG and the Subsidiaries during the prior 12 months, exceeds 15% of Consolidated Net Tangible Assets, the sale, lease or other disposition of assets shall be deemed to be a "Substantial Part" of the assets of OSG and the Recourse Subsidiaries taken as a whole.

9.	Section 8.2(h) - Maximum Investments in Joint Ventures
		Aggregate amount of all Investments in
		Joint Ventures (after giving effect to a
		proposed Investment in any Joint Venture)
		("Aggregate Joint Venture Investments")	$_______________
		Consolidated Net Tangible Assets	$_______________
		Requirement per Credit Agreement:
		Aggregate Joint Venture Investments must not
		exceed 22.5% of Consolidated Net Tangible Assets

EX-10

OVERSEAS SHIPHOLDING GROUP_, INC.

1989 STOCK OPTION PLAN

(As Amended)

1. Plan. Options to purchase shares of the Common Stock of Overseas Shipholding Group, Inc., par value $1.00 per share (the "Common Stock"), or other Shares, as defined below, may be granted in accordance with this Plan to key employees or officers of the Corporation or one or more of its Subsidiaries selected by the Committee, provided that no option may be granted to any officer or key employee who has been appointed to the initial Committee designated to administer the Plan.

2. Definitions.

"Board" means the Board of Directors of Overseas Shipholding Group, Inc.

The "Code" means the Internal Revenue Code of 1986, as it may be amended from time to time.

The "Committee" means a committee which shall consist of three or more directors designated by the Board or pursuant to a procedure specified by the Board; provided that each such director shall be eligible to serve on the Committee only while he is a Disinterested Person. The Board shall have the power to remove or replace any member of the Committee and to designate and appoint new members of the Committee provided that each such new member of the Committee shall be a director and shall be eligible to serve on the Committee only while he is a Disinterested Person. If no Committee is designated by the Board, the Committee shall mean the entire Board, provided that a director shall vote on matters affecting the administration of this Plan or the grant of options pursuant to this Plan only while he is a Disinterested Person. Notwithstanding the foregoing, all members of the Board may be counted in determining the existence of a quorum at any meeting of the Board during which action is taken on such matters.

The "Corporation" means Overseas Shipholding Group, Inc., a Delaware corporation.

"Disability" shall mean permanent and total disability, as determined by the Committee in its sole discretion. Disability shall be deemed to occur at the time of the determination by the Committee of the Disability.

"Disinterested Person" shall mean a person who is not at the time he exercises discretion in administering the Plan eligible and has not at any time within one year prior thereto been eligible for selection as a person to whom stock may be allocated or to whom stock options or stock appreciation rights may be granted pursuant to the Plan or any other plan of the Corporation or any affiliate (as defined by the Securities and Exchange Commission in rules promulgated under the Securities Exchange Act of 1934) entitling the participants therein to acquire stock, stock options or stock appreciation rights of the Corporation or any affiliate.

"Shares" means shares of Common Stock, or such other shares as are substituted therefor pursuant to Section 6(d) or 6(e) hereof.

"Subsidiary" means any corporation in which the Corporation owns, directly or indirectly, stock possessing 50% or more of the total combined voting power of all classes of stock entitled to vote in the election of directors.

"Termination of Employment" means termination of the relationship with the Corporation and its Subsidiaries so that an individual is no longer an officer or employee of the Corporation or any Subsidiary. In the event an entity shall cease to be a Subsidiary, any individual who is not otherwise an employee or officer of the Corporation or another Subsidiary shall incur a Termination of Employment at the time the entity ceases to be a Subsidiary. A Termination of Employment shall not include a leave of absence approved by the Corporation, whether paid or unpaid.

3. Limitation on Aggregate Shares. The total number of Shares for which options may be granted under this Plan is 570,000, subject to adjustment in accordance with Sections 6(d) and (e) hereof. If any options expire unexercised or are cancelled, terminated or forfeited in any manner without the issuance of Shares, the Shares for which the options were granted shall again be available under this Plan. The Shares to be delivered hereunder shall be delivered from treasury shares.

4. Options. Options to be granted under this Plan shall be in such form or forms, consistent with this Plan, as the Board or the Committee may determine. None of the options shall be incentive stock options (within the meaning of Section 422A of the Code). Options granted under this Plan shall be subject to terms and conditions and evidenced by grants in the form or forms determined from time to time by the Committee and shall be subject to the terms and conditions set forth in Section 6 and elsewhere in this Plan, consistent with the following terms:

(a) Exercise Price. The exercise price per Share shall be $13.50 per share for any options granted prior to January 1, 1990 and shall be such price as is determined by the Committee, but not less than the lesser of (i) $13.50 per share or (ii) the fair market value of the Share (as determined in a manner approved by the Committee), for any options granted after December 31, 1989.

(b) Term of Options. All options granted prior to January 1, 1990 shall be exercisable for a period ending June 30, 2000, subject to earlier termination of exercisability and other limits on exercisability as provided in paragraphs (c), (d) or (e), below, and Section 6 hereof and subject to extension (but not beyond December 31, 2000) pursuant to paragraph (d) below. Options granted after December 31, 1989 shall be exercisable for a period ending not later than December 31, 2005 as determined by the Committee.

(c) Exercise of Options. An option granted under the Plan prior to January 1, 1990 shall become exercisable in installments as follows, provided (except as otherwise specifically provided herein) that with regard to any installment the holder has not incurred a Termination of Employment prior to the date such installment becomes exercisable: to the extent of ten (10) percent of the number of optioned Shares on December 31, 1990; and, to the extent of an additional ten (10) percent of such number of optioned Shares, on each December 31 thereafter through December 31, 1999; and such exercisability of installments shall be cumulative. Notwithstanding the foregoing, an option granted under the Plan shall become exercisable in full in the event of the death or Disability of the holder prior to Termination of Employment, and shall remain exercisable to the extent set forth in paragraph (d), below.

An option granted under the Plan after December 31, 1989 shall become exercisable at such times and in such installments as determined by the Committee.

In no event shall any option granted hereunder be exercisable for a period of six (6) months following the grant of such option, except in the case of the death or Disability of the holder. Options may be exercised in whole or in part from time to time, but an option may not be exercised for a fractional Share.

Subject to the foregoing, any option granted hereunder shall be exercisable under such conditions as shall be permissible under the terms of the Plan and of the option granted to the holder of the option.

Options shall be exercised by written notice to the Corporation (to the attention of the Corporate Secretary) accompanied by (i) payment in full of the exercise price, and (ii) any payment or other action required to satisfy the tax withholding requirement discussed in Section 9, below. Payment of the exercise price shall be made in cash (including check, bank draft, or money order) or, at the election of the holder, (i) by delivery of Shares already owned by the holder for six (6) months or more (valued at the fair market value thereof on the date of delivery, as determined in a manner approved by the Committee) or (ii) by delivery of a combination of cash and such Shares. In addition, the Committee may permit payment upon exercise by delivery of Shares owned by the holder for less than six (6) months (valued at the fair market value thereof on the date of delivery, as determined in a manner approved by the Committee) and, if permitted, subject to such conditions as prescribed by the Committee, provided that such delivery shall not be permitted for any holder in a manner that would subject the holder to recovery of profits under Section 16(b) of the Securities Exchange Act of 1934.

(d) Death or Disability. Upon the death or Disability of the holder, the option shall remain exercisable until 180 days after the date of such death or Disability (or any longer period as the Committee shall provide either at the time of grant or, in the case of death or Disability, within sixty (60) days after such death or Disability) by the holder (in case of Disability), or the estate or by a person who acquires the right to exercise such option by bequest or by inheritance (in case of death). To the extent that the option is not so exercised, it shall expire 180 days after death or Disability (or such longer period provided by the Committee).

(e) Termination of Employment Upon the Termination of Employment of an option holder (other than for Cause as defined below), the option, to the extent, if any, then exercisable, shall remain exercisable by the holder until the earlier of the expiration of the option or ninety (90) days after the date of such Termination of Employment (or any longer period as the Committee shall provide at any time prior to the Termination of Employment or within ninety (90) days thereafter). To the extent that the option is not so exercised, it shall expire at the earlier of the expiration of the option period or ninety (90) days after Termination of Employment (or such longer period provided by the Committee). Notwithstanding the foregoing, if an option holder incurs a Termination of Employment as a result of a termination for Cause, then to the extent that any option theretofore granted to the holder has not been exercised, such option shall automatically expire immediately upon such termination for Cause. The Committee shall determine whether a termination is for Cause and the determination of the Committee shall be conclusive. A termination for "Cause" shall mean a termination by the Corporation or its Subsidiary for insubordination, dishonesty, an act of moral turpitude, misconduct of any kind or the refusal of the holder to perform his or her normal duties and responsibilities for any reason other than illness or incapacity.

5. Eligibility. Subject to the limitations in Section 1 hereof, the Committee shall determine the key employees and officers to whom options shall be granted under this Plan and the number of Shares for which options shall be granted to each of them. In such determinations the Committee may take into account the nature of the services rendered by the prospective option recipients, their past, present and potential contributions to the success of the Corporation or its Subsidiaries and such other factors as the Committee in its discretion shall deem relevant.

6. Additional Provisions.

(a) Acceleration of Exercisability. The Committee may at any time accelerate the exercisability with regard to any outstanding option, provided that no option shall be exercisable for six (6) months after grant, except in the case of death or Disability of the holder.

(b) Listing, Registration and Compliance With Laws and Regulations. If the Corporation determines, in its discretion, that the listing, registration, or qualification of the option or the Shares subject to the option upon any securities exchange or under any state or federal securities or other law or regulations, or the exemption from such listing, registration or qualification requirements, or the consent or approval of any governmental regulatory body is necessary or desirable as a condition to or in connection with the granting of an option, the exercisability of an option or the delivery or purchase of Shares thereunder, no option may be exercised in whole or in part unless the listing, registration, qualification, exemption, consent or approval has been effected or obtained free of any conditions not acceptable to the Corporation. To the extent that any applicable law, regulation or stock exchange requirement requires approvals of any kind in connection with such option or the delivery or transfer of the underlying Shares, no option may be exercised in whole or in part unless and until such approvals have been obtained. The holder of the option will supply the Corporation with certificates, representations, and information that the Corporation requests and shall otherwise cooperate with the Corporation in obtaining the listing, registration, qualification, exemption, consent or approval. As a condition to the exercise of an option hereunder, the Corporation may require the person exercising the option to represent and warrant at the time of any such exercise that the Shares are being purchased for investment only and without any present intention to sell or distribute such Shares if, in the opinion of counsel to the Corporation, such a representation is required by relevant law. Without limiting the foregoing, no Shares shall be delivered or transferred upon exercise of an option if the Corporation determines that the delivery or transfer of shares upon exercise does not comply with any applicable federal and state securities laws; in such event, to the extent the Corporation in the Board's sole discretion, exercised in good faith, deems it reasonably feasible to do so, the Corporation shall take the necessary steps to comply with the applicable federal and state securities laws In the case of officers and other persons who are subject to Section 16(b) of the Securities Exchange Act of 1934, the Committee may at any time impose any limitations upon the exercise of an option which, in the Committee's discretion, are necessary or desirable in order to comply with Section 16(b) and the rules and regulations thereunder. If the Corporation, as part of an offering of securities or otherwise, finds it desirable, because of federal or state regulatory requirements, to reduce or suspend the period during which any options may be exercised, the Corporation may, in its discretion and without the holder's consent, reduce or suspend the exercise period on not less than fifteen (15) days' prior written notice to the holders; provided that, in the event of a reduction of the exercise period, the Corporation makes the options immediately fully exercisable.

(c) Nontransferability. Options may not be transferred other than by will or the laws of descent and distribution and, during the lifetime of the person to whom they are granted, may be exercised only by such person, or such person's guardian or legal representative. Any transfer in violation of this paragraph shall be void and of no effect.

(d) Effect of Changes in Shares. If the Corporation shall combine, subdivide or reclassify the Shares which have been or may be optioned, or shall declare thereon any dividend payable in Shares or shall reclassify or take any other action of a similar nature affecting the Shares, then the number and class of shares of stock as to which options may thereafter be granted shall be appropriately and, in the case of each option outstanding at the time of any such action, the number and class of shares which may thereafter be purchased pursuant to such option and the option price per share shall likewise be appropriately adjusted, all to such extent as may be determined by the Board or the Committee to be necessary to preserve unimpaired the rights of the option holders. Each and every such determination shall be conclusive and binding upon such option holder.

(e) Effect of Reorganization. In case of any one or more reclassifications, changes or exchanges of outstanding Shares or other stock (other than as provided in paragraph (d) above), or consolidations of the Corporation with, or mergers of the Corporation into, other corporations, or other recapitalizations or reorganizations (other than consolidations with a subsidiary in which the Corporation is the continuing corporation and which do not result in any reclassifications, changes or exchanges of outstanding shares of the Corporation), or in case of any one or more sales or conveyances to another corporation of the property of the Corporation as an entirety, or substantially as an entirety, any and all of which are hereinafter in this paragraph (e) called "Reorganizations," an option holder shall have the right, upon any subsequent exercise of an option, to acquire the same kind and amount of securities and property which such holder would then have if such holder had exercised such option immediately before the first of any such Reorganizations and continued to hold all securities and property which came to such holder as result of that and subsequent Reorganizations, less all securities and property surrendered or cancelled pursuant to any of same, the adjustment rights in paragraph (d) above and this paragraph (e) being continuing and cumulative, except that, notwithstanding any provisions of this Plan to the contrary, the Board or Committee shall have the right in connection with such Reorganizations, upon not less than 30 days' prior written notice to the holder, to terminate the exercisability of options upon the consummation of such Reorganization. In the event the Board or Committee terminates the exercisability of the options in accordance with the foregoing sentence, all outstanding options, other than options as to which the holder had incurred a Termination of Employment prior to the giving of such notice, shall immediately become fully exercisable. In addition, in the event of a Reorganization, the Committee or Board shall have the right to cancel and terminate any or all outstanding options as of the date of the Reorganization by paying to the holder at the time of the Reorganization an amount in cash for each such outstanding option equal to the difference between (i) the fair market value (as determined by the Board or Committee) of the Shares underlying the outstanding option on the date of the Reorganization and (ii) the exercise price of the option, provided that the Board or Committee may not implement the procedures in this sentence if the holder would be, or in a manner that would result in the holder being, subject to recovery of profits under Section 16(b) of the Securities Exchange Act of 1934.

7. Administration. This plan shall be administered by the Committee. The Committee shall have full power to construe and interpret this Plan and options granted under this Plan, to establish and amend rules for its administration, to grant options under this Plan, and to correct any defect or omission or reconcile any inconsistency in this Plan or in any option to the extent the Committee deems desirable to effectuate this Plan or any option. The Committee may, with the consent of the person entitled to exercise any outstanding option, amend an option within the confines of this Plan.

The Committee shall act by a majority of its members in office, and the Committee may act either by vote at a meeting or by a memorandum or other written instrument signed by all members of the Committee. All actions taken and decisions made by the Board or the Committee pursuant to this Plan shall be binding and conclusive on all persons interested in this Plan.

8. Termination and Amendment. This Plan shall terminate, other than with regard to outstanding options, on, and no option shall be granted hereunder after, December 31, 2000. The Board or the Committee at any time may suspend or terminate this Plan and make additions or amendments that it deems advisable under this Plan, provided that, except as otherwise provided herein, no right of any holder in any outstanding option may be suspended, terminated or amended adversely without his consent.

9. Withholding. The Corporation shall be entitled, if necessary or desirable, to withhold (or secure payment from the Plan participant in cash or other property, including Shares already owned by the holder for six (6) months or more (valued at the fair market value thereof on the date of delivery as determined in a manner approved by the Committee) in lieu of withholding) the amount of any Federal, state or local taxes required by law to be withheld by the Corporation for any Shares deliverable under this Plan, and the Corporation may defer delivery unless such withholding requirement is satisfied.

The Committee may permit any such withholding obligation to be satisfied by reducing the number of Shares otherwise deliverable. A person required to file reports under Section 16(a) of the Securities Exchange Act of 1934 with respect to securities of the Corporation may elect to have a sufficient number of Shares withheld to fulfill such tax obligations (hereinafter a "Withholding Election") only if the election complies with such conditions as are necessary to prevent the withholding of such shares from being subject to Section 16(b) of the Securities Exchange Act of 1934. To the extent necessary under then current law, such conditions shall include the following: (x) the Withholding Election shall be subject to the disapproval of the Committee and (y) the Withholding Election is made (i) during the period beginning on the third business day following the date of release for publication of the quarterly or annual summary statements of sales and earnings of the Company and ending on the twelfth business day following such date, (ii) six (6) months before the exercise of the option becomes taxable, or (iii) during any other period in which a Withholding Election may be made under the provisions of Rule 16b-3 promulgated pursuant to the Act. Any fraction of a Share required to satisfy such tax obligations shall be disregarded and the amount due shall be paid instead in cash by the person exercising the option.

10. Miscellaneous.

(a) Severability. The provisions of this Plan included herein are severable. If any provision shall be determined to be in conflict with statutory provisions or governmental regulations, or otherwise unlawful, or unenforceable, it shall be deemed severed from this Plan and every other provision of this Plan shall remain in full force and effect.

(b) Laws Governing. This Plan and all actions taken under it shall be governed as to construction and administration by the laws of the State of New York.

(c) Effect upon other Compensation Plans. This Plan shall not affect any other compensation or incentive plans in effect for the Corporation or any Subsidiary and this Plan shall not preclude the Board from establishing any other forms of incentive or compensation for key employees, or officers, of the Corporation or of any Subsidiary.

(d) No Limitation of Rights. Nothing contained in this Plan shall be construed to limit in any way the right of the Corporation or any Subsidiary to terminate the employment of any employee.

(e) Titles. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Plan.

(f) Rule 16b-3. Except as the Committee shall otherwise determine, this Plan is intended to comply with Rule 16b-3 under the Securities Exchange Act of 1934 and any provisions inconsistent with such Rule shall be inoperative and shall not affect the validity of the Plan.

EX-15

EXHIBIT 15

To the Shareholders

Overseas Shipholding Group, Inc.

We are aware of the incorporation by reference in the Registration Statements (Form S-8 No. 33-44013, Form S-8 No. 333-88581 and Form S-8 No. 333-95029) of Overseas Shipholding Group, Inc. of our report dated May 8, 2000 relating to the unaudited condensed consolidated interim financial statements of Overseas Shipholding Group, Inc. which are included in its Form 10-Q for the quarter ended March 31, 2000.

Pursuant to Rule 436(c) of the Securities Act of 1933, our report is not part of the registration statements prepared or certified by accountants within the meaning of Section 7 or 11 of the Securities Act of 1933.

ERNST & YOUNG LLP

New York, New York

May 11, 2000

EX-18

EXHIBIT 18

Ernst & Young LLP	787 Seventh Avenue	Phone: 212 773-3000
	New York, New York 10019

May 8, 2000

Mr. Myles R. Itkin
Senior Vice President, Chief Financial Officer
& Treasurer
Overseas Shipholding Group, Inc.
511 Fifth Avenue
New York, NY 10017

Dear Sir:

Note A of notes to the unaudited condensed consolidated financial statements of Overseas Shipholding Group, Inc. included in its Form 10-Q for the period ended March 31, 2000 describes a change in the method of accounting for voyage revenues from the completed voyage method calculated on a load-to-load basis to the percentage of completion method calculated on a discharge-to-discharge basis. There are no authoritative criteria for determining a "preferable" voyage-revenue method based on the particular circumstances; however, we conclude that such change in the method of accounting is to an acceptable alternative method which, based on your business judgment to make this change and for the stated reasons, is preferable in your circumstances. We have not conducted an audit in accordance with generally accepted auditing standards of any financial statements of the Company as of any date or for any period subsequent to December 31, 1999, and therefore we do not express any opinion on any financial statements of Overseas Shipholding Group, Inc. subsequent to that date.

Very Truly Yours,             

ERNST & YOUNG LLP

EX-27

 

<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from SEC Form
10-Q and is qualified in its entirety by reference to such financial statements.

<MULTIPLIER> 1,000

                             
<PERIOD-TYPE>                   3-MOS
<FISCAL-YEAR-END>                          DEC-31-2000
<PERIOD-END>                               MAR-31-2000
<CASH>                                          30,944
<SECURITIES>                                    33,597
<RECEIVABLES>                                   24,731
<ALLOWANCES>                                         0
<INVENTORY>                                          0
<CURRENT-ASSETS>                               101,955
<PP&E>                                       1,691,785
<DEPRECIATION>                                 454,727
<TOTAL-ASSETS>                               1,698,396
<CURRENT-LIABILITIES>                           48,831
<BONDS>                                        808,037
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                        39,591
<OTHER-SE>                                     621,625
<TOTAL-LIABILITY-AND-EQUITY>                 1,698,396
<SALES>                                              0
<TOTAL-REVENUES>                                90,150
<CGS>                                                0
<TOTAL-COSTS>                                   78,766
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                              10,323
<INCOME-PRETAX>                                  1,061
<INCOME-TAX>                                       200
<INCOME-CONTINUING>                                861
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                        4,152
<NET-INCOME>                                     5,013
<EPS-BASIC>                                       0.15
<EPS-DILUTED>                                     0.15