CREDIT AGREEMENT Providing for a Senior Revolving Credit Facility of US$500,000,000 AMONG OVERSEAS SHIPHOLDING GROUP, INC. OSG BULK SHIPS, INC. and |OSG INTERNATIONAL, INC., as Joint and Several Borrowers

" Adjusted Fixed Charges "

shall mean for each period of four consecutive fiscal quarters (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 fiscal quarter within such period;

" Administrative Agent "

shall have the meaning ascribed thereto in the preamble;

" Advance "

shall mean any amount advanced or requested to be advanced to the Borrowers in Dollars or an Alternate Currency pursuant to Section 2.1; provided that each Advance shall be, if in Dollars, in a minimum amount of $10,000,000 and in larger multiples of $1,000,000 and, if in an Alternate Currency, the Dollar Equivalent of such amounts;

" Advance Time Charter Revenues "

shall mean, as of the date of any determination thereof, the amount of advance time charter revenues of OSG and its Recourse Subsidiaries that 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 separate line items on such balance sheet, such amounts as are described separately in the applicable Compliance Certificate required pursuant to Section 8.1(A)(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;

" Alternate Currency "

shall mean any of Euros, Yen, Pounds or Swiss Francs or, subject to the consent of the Majority Lenders, any other currency;

" Alternate Currency Advance "

shall mean an Advance denominated in an Alternate Currency;

" Applicable Law "

shall mean any Law of any Authority, including, without limitation, all national, Federal, state and local 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 eight tenths of one percent (0.80%) per annum during the five (5) year period commencing on the date hereof and thereafter eighty-five hundredths of one percent (0.85%) per annum;

" 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 substantially in the form of Exhibit A;

" 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 sum of the Fair Market Value of any vessels subject to such transaction and the fair market value of any 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 national, Federal, state, local, 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;

" 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, for any asset of OSG and the Recourse Subsidiaries, the value at which the asset of OSG and the Recourse Subsidiaries is recorded and reported by OSG in its consolidated financial statements in accordance with GAAP, consistently applied;

" 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 "

of any Person shall mean any lease or other arrangement conveying the right to use real or personal property where the obligations for Rentals are 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 capitalized amount of all Rentals due and to become due under all Capitalized Leases of such Person, as lessee, 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 taxes calculated at the applicable rate for non-qualified withdrawals pursuant to Section 1177 of the Merchant Marine Act, 1936, as amended, 46 U.S.C. Appx. Section 1177, 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(A)(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(B)(c) 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 (a) Cash and (b) the value of marketable securities (as defined in accordance with GAAP) of OSG and the Recourse Subsidiaries, including, without limitation, marketable securities (net of taxes calculated as provided in the definition of Cash) in the Capital Construction Funds;

" Cash Adjusted Debt
Service Coverage Ratio "

shall mean, for each four consecutive fiscal quarter periods (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 (a) Cash and (b) the value of marketable securities (as defined in accordance with GAAP ) of OSG and the Recourse Subsidiaries, including, without limitation, marketable securities (net of taxes calculated as provided in the definition of Cash) in the Capital Construction Funds;

" 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, (iii) the average of the amounts of Cash outstanding as of the end of each of the four consecutive quarterly fiscal periods included in the determination, and (iv) the average value of marketable securities ( as defined in accordance with GAAP ) of OSG and the Recourse Subsidiaries as of the end of each of the four consecutive quarterly fiscal periods included in the determination, including, without limitation, marketable securities (net of taxes calculated as provided in the definition of Cash) in the Capital Construction Funds;

" 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 (ii) above, in each case having maturities of less than one year 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;

" Collateralized Assets "

shall mean as of the date of determination 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 Lender, the portion of the Facility set out opposite its name in Schedule I hereto, or as the case may be, as set out in any Assignment and Assumption Agreement, as changed from time to time pursuant to the terms of this Agreement;

" Compliance Certificate "

shall mean a certificate in the form set out in Exhibit D, or in such other form as the Administrative Agent may agree, certifying the compliance by each of the Borrowers with all of its covenants contained herein and showing the calculations thereof, which certificate shall be executed and delivered by the chief executive officer, the chief operating officer or the chief financial officer of OSG or the designee thereof to the Administrative Agent with sufficient copies for the other Creditors to be distributed to the other Creditors by the Administrative Agent promptly upon receipt thereof pursuant to Section 8.1(A)(d) ;

" Consolidated Funded Debt "

shall mean, as of the date of determination, 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(A)(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 upon the acquisition of such business after December 31, 2001 and after deducting all liabilities except deferred income taxes, deferred credits, Advance Time Charter Revenues, Minority Interests, 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 Administrative Agent and the Lenders, 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 or consolidated group of Persons shall mean the portion (determined in accordance with GAAP) of long-term Debt of such Person(s) shown as a current liability on the consolidated balance sheet of such Person(s);

" 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 mean a rate per annum equal to the greater of (i) two percent (2%) over the Applicable Rate then in effect and (ii) the sum of (x) two percent (2%) plus (y) the Applicable Margin plus (z) the LIBOR Rate for overnight or weekend deposits, as applicable;

" Defeased Amount "

shall have the meaning ascribed thereto in Section 9.1;

" 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;

" DnB NOR "

shall have the meaning ascribed thereto in the preamble;

" DOC "

shall mean a document of compliance issued to an Operator in accordance with rule 13 of the ISM Code;

" 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 Administrative Agent to be customary for the settlement in New York City of banking transactions of the type herein involved);

" Dollar Equivalent "

shall mean any notional amount of an Alternate Currency at the Dollar Exchange Rate;

" Dollar Exchange Rate "

shall be the average of the rates of exchange quoted by at least three (3) Lenders selected by the Administrative Agent or, if at the date of determination there are fewer than three (3) Lenders, all Lenders and as determined by the Administrative Agent on a date on which payment is due on any Advance hereunder or a day on which this Agreement requires the calculation of amounts advanced or available hereunder in Dollars, as the spot rate of exchange in the relevant interbank market of Dollars for any of the Alternate Currencies, as the case may be, or vice versa, in either case, including any costs associated with the relevant exchange contract, or if no such rates of exchange are offered on such date in respect of such Alternate Currency, such exchange rate in respect of such Alternate Currency as the Administrative Agent deems reasonable;

" Drawdown Date(s) "

shall mean, with respect to any Advance, the date, being a Banking Day, upon which the Borrowers have requested that such Advance be made available to the Borrowers as provided in Section 2.4;

" Drawdown Notice "

shall have the meaning ascribed thereto in Section 2.4;

" Environmental Affiliate "

shall have the meaning ascribed thereto in Section 8.1(A)(l);

" Environmental Approvals "

shall have the meaning ascribed thereto in Section 7(q);

" Environmental Claim "

shall have the meaning ascribed thereto in Section 7(q);

" Environmental Laws "

shall have the meaning ascribed thereto in Section 7(q);

" 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 its subsidiaries;

" Euro (s)"

shall mean the legal currency, at any relevant time hereunder, of the European Monetary Union;

" 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;

" Facility "

the line of credit, in an amount not to exceed Five Hundred Million Dollars ($500,000,000) in aggregate principal amount, to be made available to the Borrowers pursuant to Section 2 hereof, as the same may be reduced from time to time pursuant to Section 2.8 hereof; provided, however, that at any time one or more Alternate Currency Advances is outstanding or requested by the Borrowers, such amount shall be reduced by an amount equal to ten percent (10%) of the Dollar Equivalent of the aggregate amount of all outstanding Alternate Currency Advances;

" Facility Balance "

shall mean, as of the date of determination, the Dollar amount of the Facility outstanding at such time;

" Facility Period "

shall mean the period from the date hereof to the date which is seven (7) 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) independent brokers chosen from the brokers listed on Schedule III, 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 Administrative Agent. No appraisal shall be dated more than thirty (30) days prior to the date on which such appraisal is required pursuant to this Agreement;

" Fee Letter "

shall mean that certain letter agreement by and between the Administrative Agent and the Borrowers dated as of January 14, 2005;

" Final Payment Date "

shall mean the date which falls on the seventh (7 ^th ) anniversary of the date of this Agreement. If such day is not a Banking Day, the Final Payment Date shall be the immediately preceding Banking Day or such earlier date on which all sums become due and payable under this Agreement whether by prepayment, acceleration or otherwise;

" 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 of such Debt solely to the extent that such Person has sufficient availability under (i) existing credit facilities (including this Agreement) or (ii) underwritten commitments on terms reasonably satisfactory to the Administrative Agent to refinance such Current Portion for a period of at least 12 months;

" 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 (the "Guarantor") directly or indirectly guaranteeing or having the economic effect of a guarantee of 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 the Guarantor (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation or any security therefor (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 working capital, equity capital or any other financial statement condition or liquidity of such other Person 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 and all amortization of debt discount and expense on any particular Indebtedness for which such calculations are being made;

" Interest Notice "

means a notice from the Borrowers to the Administrative Agent to be delivered to the Administrative Agent at least three (3) Banking Days prior to the end of any then existing Interest Period and specifying the duration of any relevant Interest Period, substantially in the form of Exhibit E;

" Interest Period "

shall mean with respect to any Advance, (a) each seven (7) day period (a "Seven Day Interest Period") or each one (1), three (3), six (6) or twelve (12) month 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 (7 ^th ) day thereafter or on the same day in the first, third, sixth or twelfth calendar month thereafter, in each case, as selected by the Borrowers in the Interest Notice or, (b) in the Lenders' discretion, such other period(s) in excess of twelve (12) months as may be agreed; provided , however , (i) 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, (ii) that if no LIBOR Rate is quoted or available for a 12 month Interest Period or a Seven Day Interest Period, the Borrowers shall not request, and the Lenders need not fund, a 12 month Interest Period or a Seven Day Interest Period, as the case may be, (iii) there shall be no more than four (4) Seven Day Interest Periods outstanding at any time and (iv) there shall be no more than twelve (12) Interest Periods outstanding at any one time; provided , however , that Interest Periods may be consolidated at the end of any Interest Period. If at the end of any then existing Interest Period the Borrowers fail to deliver an Interest Notice or an Event of Default shall have occurred and be continuing, the relevant Interest Period shall be one month.

Notwithstanding the foregoing, (i) no Interest Period for any Advance 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, regardless of the form of consideration paid therefor, 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;

" ISPS Code "

shall mean the International Ship and Port Facility Code adopted by the International Maritime Organization at a conference in December 2002 and incorporated into the Safety of Life at Sea Convention and shall include any amendments or extensions thereto and any regulation issued pursuant thereto;

" ISSC "

shall mean the International Ship Security Certificate issued pursuant to the ISPS Code;

" Joint Venture "

shall mean at any date any Person (other than a Subsidiary) in which OSG or any Subsidiary has an ownership interest or profits or loss 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;

" Lender(s) "

shall have the meaning ascribed thereto in the preamble;

" LIBOR Rate "

shall mean, with respect to any Interest Period for any Advance, the rate per annum determined by the Administrative Agent to be equal to the quotient (rounded upwards, if necessary, to the next higher fourth decimal) of (y) (i) the rate of interest for deposits in Dollars or the relevant Alternate Currency, as the case may be for a period equal to the number of days in such Interest Period which appears as of 11:00 A.M., London time, on the day that is two (2) Banking Days prior to the first day of such Interest Period, as displayed on page LIBOR01 of the Reuters screen in the case of Dollars, Pounds, Yen or Euros (or such other page which may replace such page) or page LIBOR02 of the Reuters screen in the case of Swiss Francs (or such other page which may replace such page), as the case may be, on such system or on any other system of the information vendor being designated by the British Bankers' Association to calculate the BBA Interest Settlement Rate (as defined in the British Bankers' Association Recommended Terms and Conditions dated August 1985) or (ii) if no rate is so displayed at such time, LIBOR shall be equal to the arithmetic mean (rounded upward if necessary to four decimal places) of the rates respectively quoted to the Administrative Agent by each of the Reference Banks as the offered rate for deposits of Dollars or the relevant Alternate Currency, as the case may be, in an amount approximately equal to the amount in relation to which LIBOR is to be determined for a period equivalent to such Interest Period (or, in the case of a Seven Day Interest Period, if greater, the rate of interest for deposits in Dollars or the relevant Alternate Currency, as the case may be, for a one month period) to prime banks in the London Interbank Market at or about 11:00 a.m. (London time) on the second LIBOR Reference Day before the first day of such 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;

" LIBOR Reference Date "

shall mean the days on which banks in the London interbank market generally will provide quotations for deposits in the relevant currencies;

" Lien "

shall mean, with respect to any asset, any interest in such asset securing an obligation owed to, or a claim by, a Person other than the owner of the asset, whether such interest is based on the common law, statute or contract, and including but not limited to the security interest or lien arising from a mortgage, encumbrance, pledge, conditional sale, title retention agreement or trust receipt or a lease, consignment or bailment for security purposes or any arrangement having substantially the same economic effect as any of the foregoing. 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, any purchase options or calls, 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;

" List of Vessels "

shall mean a list of vessels more than fifty percent (50%) owned directly or indirectly by the Borrowers or any Subsidiary, which list shall describe each Lien on any such vessel;

" Majority Lenders "

shall mean Lenders whose aggregate Commitments exceed fifty-one percent (51%) of the total Commitments or if the Commitments have terminated, Lenders holding in the aggregate in excess of fifty-one percent (51%) of the Facility Balance;

" Material Adverse Change "

shall mean the occurrence of an event or condition which (a) materially impairs the ability of OSG and the Subsidiaries to meet or perform 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 or (b) materially impairs the rights of or benefits or remedies available to the Lenders under this Agreement;

" Material Financial Obligations "

means  a principal or face amount of Debt (in the case of Derivatives 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 Administrative Agent pursuant to Section 8.1(A)(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 (q);

" 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.;

" 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 a 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 excluding extraordinary gains or losses (adjusted for taxes, if any) during such period plus (to the extent used in the determination of 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) with respect to which Debt or Subsidiary neither OSG nor any of the Recourse Subsidiaries has any express obligation or has written any instrument or letter indicating its support for such Debt or Subsidiary; provided that Debt of such Subsidiary shall constitute Non-Recourse Debt only if (x) OSG shall have given the Lenders, through the Administrative 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 Lenders;

" Non-Recourse Subsidiary "

shall mean, at any time, a Subsidiary (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 Administrative Agent certifying that such Subsidiary is a Non-Recourse Subsidiary in accordance with the terms of this Agreement;

" Note "

shall mean promissory notes, to be executed by the Borrowers in favor of a Lender pursuant to Section 3.1(c) to evidence the Advances made by such Lender and substantially in the form set out in Exhibit B or in such other form as the Administrative Agent may agree and shall include any promissory note issued by the Borrowers pursuant to Section 10.4, 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 Country(ies) "

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, Greece, the Cayman Islands, 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 Lenders is of similar standing and with comparable rating categories and methodologies (a " Substitute Rating Agency ");

  (b) Investments in obligations directly issued by or fully and unconditionally guaranteed as to principal and interest by the United States of America or any agency or instrumentality of the United States of America, in either case, maturing in three (3) years or less from the date of acquisition thereof;

  (c) Investments in certificates of deposit, time deposits or bankers' acceptances issued by a Lender 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 $500,000,000 maturing in 270 days or less from the date of acquisition thereof;

4.  

5. 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 (3) years from the date of acquisition thereof (or, if maturing more than three (3) 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);

6.  

7. 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 $500,000,000 and which are registered under the Investment Company Act of 1940, as amended; and

8.  

9. 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;

" Pound(s) "

shall mean the legal currency, at any relevant time hereunder, of the United Kingdom;

" 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;

" Reference Banks "

shall mean the banks chosen from time to time by the British Bankers' Association for the purpose of establishing Interest Settlement Rates;

" 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 (i) 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), and (ii) hire and other amounts payable under any time charter of a vessel for a remaining period less than twelve (12) months, including any optional extensions or renewals) 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 incurred by such lessee or sublessee. 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;

" 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;

  (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 to which such Person is a party, (not including, in either case, OSG or any Recourse Subsidiary) 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 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;

" Shipping and Related Businesses "

shall mean any one or all of the following: owning, chartering, leasing, crewing, navigating, managing, supplying or operating or repairing commercial vessels of all kinds, including but not limited to cargo ships, liners, container ships, passenger vessels, 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 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 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;

" S&P "

shall mean Standard & Poor's Ratings Services, a division of McGraw-Hill Inc.;

" 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 principal amount of the Commitments or, if the Commitments have been terminated, of the Facility Balance) providing for the subordination of such unsecured Funded Debt to other Debt of the Borrowers, including, without limitation, to the Notes;

" subsidiary "

shall mean as to any particular Person, at any date, any corporation, limited liability company, partnership or other entity of which more than 50% (by number of votes of the Voting Stock or other ownership interests having ordinary voting power) are 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;

" Subsidiary Structurally Subordinated Assets "

shall mean, as of the date of any determination thereof, for any Recourse Subsidiary (other than OSG Bulk or OSG International), an amount equal to the Debt which is not Secured Debt plus one-third (1/3) of an amount equal to (i) the total Book Value of assets minus (ii) the total amount of Debt which is not Secured Debt:

" Swiss Francs "

shall mean the legal currency, at any time hereunder, of the Federation of Switzerland;

" 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 therefrom;

" 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 Lender 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 Lender (unless such jurisdiction is asserted solely by reason of the activities of the Borrowers 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;

" Transaction Documents "

shall mean each of this Agreement and the Notes;

" Unencumbered Assets "

shall mean, as of the date of any determination thereof, Tangible Assets (excluding the Book Value of any assets of any Subsidiaries, the shares of stock or any evidence of Indebtedness of which have been pledged to secure any obligations) less the sum of (without duplication) (i) Attributable Debt and (ii) the Book Value of any assets of OSG and any Recourse Subsidiary which have become or have been agreed to become subject to a Lien securing any Secured Debt and (iii) Subsidiary Structurally Subordinated Assets;

" 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, accrued but unpaid revenues for uncompleted voyages the amounts thereof determined in accordance with GAAP as reflected in the consolidated financial statements of OSG and the Recourse Subsidiaries;

" 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;

" Withdrawal Liability "

shall have the meaning given to such term under Part 1 of Subtitle E of Title IV of ERISA; and

" Yen "

shall mean the legal currency, at any time hereunder, of Japan.