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As filed with the Securities and Exchange Commission on May 5, 2003.

Registration No. 333-              

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

OVERSEAS SHIPHOLDING GROUP, INC.
(Exact Name of Registrant as Specified in its Charter)

DELAWARE
(State or Other Jurisdiction of
Incorporation or Organization) 		  4412
(Primary Standard Industrial
Classification Code Number) 		  13-2637623
(I.R.S. Employer Identification Number)

511 FIFTH AVENUE, NEW YORK, NEW YORK 10017
(212) 953-4100
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)

JAMES I. EDELSON, ESQ.
OVERSEAS SHIPHOLDING GROUP, INC.
511 FIFTH AVENUE, NEW YORK, NEW YORK 10017
(212) 251-1153
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)

COPIES TO:

PETER SAMUELS, ESQ.
PROSKAUER ROSE LLP
1585 BROADWAY
NEW YORK, NEW YORK 10036
(212) 969-3000

        APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after this Registration Statement becomes effective.

        If securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.     o

        If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.     o

        If this form is a post effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.     o

CALCULATION OF REGISTRATION FEE

Title of Each Class of
Securities to be
Registered
  Amount to
be Registered
  Proposed Maximum
Offering Price
Per Unit
  Proposed Maximum
Aggregate
Offering Price(1)
  Amount of Registration Fee
8.250% Notes Due 2013   $200,000,000   100%   $200,000,000   $16,180(1)
(1)
Estimated pursuant to Rule 457(f) solely for the purpose of calculating the registration fee.

         The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

Subject to Completion, dated May 5, 2003

$200,000,000
Overseas Shipholding Group, Inc.
Offer to Exchange outstanding 8.250% Senior Notes due March 15, 2013,
for 8.250% Senior Notes due March 15, 2013,
which have been Registered under the Securities Act of 1933

The Exchange Offer

The Exchange Notes

Resales of Exchange Notes


        If you are a broker-dealer and you receive Exchange Notes for your own account, you must acknowledge that you will deliver a prospectus in connection with any resale of such Exchange Notes. By making such acknowledgement, you will not be deemed to admit that you are an "underwriter" under the Securities Act of 1933.

        Broker-dealers may use this prospectus in connection with any resale of Exchange Notes received in exchange for outstanding Notes where such outstanding Notes were acquired by the broker-dealer as a result of market-making activities or trading activities.

        We will make this prospectus available to any broker-dealer for use in any such resale for a period of up to 180 days after the date of this prospectus.

        A broker-dealer may not participate in the exchange offer with respect to outstanding Notes acquired other than as a result of market-making activities or trading activities.

        If you are an affiliate of Overseas Shipholding Group, Inc. or are engaged in, or intend to engage in, or have an agreement or understanding to participate in, a distribution of the Exchange Notes, you must comply with the registration requirements of the Securities Act of 1933 in connection with any resale transaction.

         You should consider carefully the Risk Factors beginning on page 16 of this prospectus before participating in the Exchange Offer.

        Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

        Prospectus dated May    , 2003.


AVAILABLE INFORMATION

        Overseas Shipholding Group, Inc. ("OSG") files annual, quarterly and special reports, proxy statements and other information with the Securities and Exchange Commission, or SEC. You may read and copy any document OSG files at the SEC's public reference rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please call the SEC at 1-888-SEC-0330 for further information on the public reference rooms. OSG's SEC filings are also available to the public from the SEC's web site at www.sec.gov or from OSG's web site at www.osg.com. However, the information on OSG's web site does not constitute a part of this prospectus.

        We have filed with the SEC a registration statement on Form S-4 under the Securities Act of 1933. This prospectus, which forms a part of the registration statement, does not contain all of the information in the registration statement. We have omitted parts of the registration statement, as permitted by the rules and regulations of the SEC. You may inspect and copy the registration statement, including exhibits, at the SEC's public reference facilities or its web site. Our statements in this prospectus about the contents of any contract or other document are not necessarily complete. You should refer to the copy of each contract or other document we have filed as an exhibit to the registration statement for complete information.

        In this document, OSG "incorporates by reference" the information it files with the SEC, which means that OSG can disclose important information to you by referring to that information. The information incorporated by reference is considered to be a part of this prospectus, and later information filed with the SEC will update and supersede this information. OSG incorporates by reference the documents listed in the table below and any future filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of this prospectus and until this offering is completed.

Our Filings with the Securities and Exchange Commission
  Period or Date
Annual Report on Form 10-K   Year Ended December 31, 2002
Proxy Statement for 2003 Annual Shareholders Meeting   April 30, 2003

        You may request a copy of these filings, at no cost, by writing or telephoning OSG at: Corporate Secretary, Overseas Shipholding Group, Inc., 511 Fifth Avenue, New York, New York 10017, telephone: (212) 953-4100.

        If at any time during the two year period following the date of original issue of the outstanding Notes, OSG is not subject to the information requirements of Section 13 or 15(d) of the Exchange Act, OSG will furnish to holders of outstanding Notes and prospective purchasers thereof the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act in order to permit compliance with Rule 144A in connection with resales of such Notes.

        You should rely only upon the information provided in this prospectus or incorporated by reference into this prospectus. OSG has not authorized anyone to provide you with different information. You should not assume that the information in this prospectus, including any information incorporated by reference, is accurate as of any date other than the date of this prospectus.

        The indenture pursuant to which the Notes offered by this prospectus will be issued contains a covenant that requires OSG to provide to the trustee under the indenture all information, documents and reports required to be filed by OSG with the SEC pursuant to section 13 or 15(d) of the Exchange Act.

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FORWARD-LOOKING STATEMENTS

        This prospectus contains forward-looking statements regarding the outlook for tanker and dry cargo markets, and OSG's prospects, including its anticipated acquisition of newbuildings, prospects for certain strategic alliances and the implementation of certain overhead and operating cost reductions. There are a number of factors, risks and uncertainties that could cause actual results to differ from the expectations reflected in these forward-looking statements, including changes in production of or demand for oil and petroleum products, either generally or in particular regions; greater than anticipated levels of newbuilding orders or less than anticipated rates of scrapping of older vessels; the availability to OSG of suitable vessels for acquisition or chartering in on terms it deems favorable; changes in the pooling arrangements in which OSG participates, including withdrawal of participants or termination of such arrangements; changes affecting the vessel owning joint ventures in which OSG is a party; changes in trading patterns for particular commodities significantly impacting overall tonnage requirements; changes in the rates of growth of the world and various regional economies; risks incident to vessel operation, including pollution; increases in costs of operation and unanticipated delays in implementing various cost reduction measures; and unanticipated changes in laws and regulations. Forward-looking statements in this prospectus are qualified in their entirety by the cautionary statement contained in this paragraph and in other reports hereafter filed by OSG with the SEC.


CERTAIN TERMS AND INFORMATION

        Unless otherwise specifically noted or the context otherwise requires, the term "outstanding Notes" refers to the $200 million aggregate principal amount of 8.250% Senior Notes due 2013, that we issued on March 7, 2003; the term "Exchange Notes" refers to the notes offered by this prospectus in exchange for the outstanding Notes; and the term "Notes" refers to the outstanding Notes and the Exchange Notes.

        The term "Registration Rights Agreement" refers to the Exchange and Registration Rights Agreement dated March 7, 2003 between OSG and the initial purchaser of the outstanding Notes and the term "Indenture" refers to the Indenture dated as of March 7, 2003 between OSG and Wilmington Trust Company, as trustee, pursuant to which the Notes are or will be issued.

        All dollar references in this prospectus are to U.S. Dollars, unless otherwise specifically indicated.

        Certain statistical and graphical information contained in this prospectus, including the documents incorporated herein by reference, is derived from data published by third-party sources. While we have no reason to believe that such information is inaccurate in any material respect, we cannot warrant its accuracy. In addition, you are advised that some information in such databases is based on estimates or subjective judgments.

        The OSG logo and the name Overseas Shipholding Group, Inc. are among our trademarks. All other trademarks and trade names referred to in this prospectus are the property of their respective owners.

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PROSPECTUS SUMMARY

         This summary highlights selected information contained in this prospectus. This summary is included for convenience only and may not include all of the information that is important to you. You should carefully read this entire prospectus, including our financial statements and the notes to those financial statements appearing elsewhere in this prospectus.


The Exchange Offer

        On March 7, 2003, we completed a private offering of our 8.250% Senior Notes due March 15, 2013. We received proceeds of approximately $195 million from the sale of the outstanding Notes.

        In connection with the offering of outstanding Notes, we entered into the Registration Rights Agreement in which we agreed to deliver this prospectus and to use our best efforts to complete the exchange offer for the outstanding Notes by September 3, 2003. In the exchange offer, you are entitled to exchange your outstanding Notes for Exchange Notes, with substantially identical terms, that are registered under the Securities Act of 1933. You should read the discussion under the heading "The Exchange Offer" beginning on page 74 and "Description of the Notes" beginning on page 84 for further information about the Exchange Notes. After the exchange offer is completed, you will no longer be entitled to any exchange or, with limited exceptions, registration rights for your outstanding Notes.

The Exchange Offer   We are offering to exchange up to $200 million principal amount of the Exchange Notes for up to $200 million principal amount of the outstanding Notes. Outstanding Notes may only be exchanged in $1,000 increments.

 
 
The terms of the Exchange Notes are identical in all material respects to those of the outstanding Notes except the Exchange Notes will not be subject to transfer restrictions and holders of Exchange Notes, with limited exceptions, will have no registration rights. Also, the Exchange Notes will not contain provisions for an increase in their stated interest rate related to any registration or exchange delay.

 
 
Outstanding Notes that are not tendered for exchange will continue to be subject to transfer restrictions and, with limited exceptions, will not have registration rights. Therefore, the market for secondary resales of outstanding Notes that are not tendered for exchange is likely to be minimal.

 
 
We will issue registered Exchange Notes on or promptly after the expiration of the exchange offer.
         

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Expiration Date
 
The exchange offer will expire at 5:00 p.m. New York City time, on June    , 2003, unless we decide to extend the expiration date. Please read "The Exchange Offer—Extensions, Delay In Acceptance, Termination Or Amendment" beginning on page 76 for more information about an extension of the expiration date.

Withdrawal of Tenders
 
You may withdraw your tender of outstanding Notes at any time prior to the expiration date.

 
 
We will return to you, without charge, promptly after the expiration or termination of the exchange offer any outstanding Notes that you tendered but that were not accepted for exchange.

Conditions to the Exchange Offer
 
We will not be required to accept outstanding Notes for exchange:

 
 
•
 
if the exchange offer would be unlawful or would violate any interpretation of the staff of the SEC, or

 
 
•
 
if any legal action has been instituted or threatened that would impair our ability to proceed with the exchange offer.

 
 
The exchange offer is not conditioned upon any minimum aggregate principal amount of outstanding Notes being tendered. Please read "The Exchange Offer—Conditions To The Exchange Offer" on page 76 for more information about the conditions to the exchange offer.

Procedures for Tendering Outstanding Notes
 
If your outstanding Notes are held through The Depository Trust Company, or "DTC," and you wish to participate in the exchange offer, you may do so through DTC's automated tender offer program. If you tender under this program, you will agree to be bound by the letter of transmittal that we are providing with this prospectus as though you had signed the letter of transmittal. By signing or agreeing to be bound by the letter of transmittal, you will represent to us that, among other things:

 
 
•
 
any Exchange Notes that you receive will be acquired in the ordinary course of your business,
         

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•
 
you have no arrangement or understanding with any person to participate in the distribution of the outstanding Notes or the Exchange Notes,

 
 
•
 
you are not our "affiliate," as defined in Rule 405 of the Securities Act of 1933, or, if you are our affiliate, you will comply with any applicable registration and prospectus delivery requirements of the Securities Act,

 
 
•
 
if you are not a broker-dealer, you are not engaged in and do not intend to engage in the distribution of the Exchange Notes, and

 
 
•
 
if you are a broker-dealer that will receive Exchange Notes for your own account in exchange for outstanding Notes that you acquired as a result of market-making activities or other trading activities, you will deliver a prospectus in connection with any resale of such Exchange Notes.

Special Procedures for Beneficial Owners
 
If you own a beneficial interest in outstanding Notes that are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender the outstanding Notes in the exchange offer, please contact the registered holder as soon as possible and instruct the registered holder to tender on your behalf and to comply with our instructions described in this prospectus.

Guaranteed Delivery Procedures
 
You must tender your outstanding Notes according to the guaranteed delivery procedures described in "The Exchange Offer—Guaranteed Delivery Procedures" beginning on page 81 if any of the following apply:

 
 
•
 
you wish to tender your outstanding Notes but they are not immediately available,

 
 
•
 
you cannot deliver your outstanding Notes, the letter of transmittal or any other required documents to the exchange agent prior to the expiration date, or

 
 
•
 
you cannot comply with the applicable procedures under DTC's automated tender offer program prior to the expiration date.
         

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Resales
 
Except as indicated herein, we believe that the Exchange Notes may be offered for resale, resold and otherwise transferred without compliance with the registration and prospectus delivery provisions of the Securities Act of 1933, provided that:

 
 
•
 
you are acquiring the Exchange Notes in the ordinary course of your business;

 
 
•
 
you are not participating, do not intend to participate, and have no arrangement or understanding with any person to participate, in the distribution of the Exchange Notes; and

 
 
•
 
you are not an affiliate of OSG.

 
 
Our belief is based on existing interpretations of the Securities Act by the SEC staff set forth in several no action letters to third parties. We do not intend to seek our own no action letter, and there is no assurance that the SEC staff would make a similar determination with respect to the Exchange Notes. If this interpretation is inapplicable, and you transfer any Exchange Note without delivering a prospectus meeting the requirements of the Securities Act or without an exemption from such requirements, you may incur liability under the Securities Act. We do not assume or indemnify holders of Notes against such liability.

 
 
Each broker-dealer that is issued Exchange Notes for its own account in exchange for outstanding Notes that were acquired by such broker-dealer as a result of market-making or other trading activities must acknowledge that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of the Exchange Notes. A broker-dealer may use this prospectus for an offer to resell, resale or other transfer of the Exchange Notes. Please read "Plan of Distribution" on page 105.

U.S. Federal Income Tax Considerations
 
The exchange of outstanding Notes for Exchange Notes will not be a taxable exchange for United States federal income tax purposes. You will not recognize any taxable gain or loss or any interest income as a result of such exchange. Please read "Tax Considerations—United States Federal Income Tax Consequences" beginning on page 101.
         

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Use of Proceeds
 
We will not receive any proceeds from the issuance of the Exchange Notes pursuant to the exchange offer. We will pay all our expenses incident to the exchange offer.

Registration Rights
 
If we fail to complete the exchange offer as required by the Registration Rights Agreement, we may be obligated to pay additional interest to holders of outstanding Notes. Please read "Registration Rights; Special Interest" beginning on page 100 for more information regarding your rights as a holder of outstanding Notes.


The Exchange Agent

        We have appointed Wilmington Trust Company as exchange agent for the exchange offer. Please direct questions and requests for assistance, requests for additional copies of this prospectus or of the letter of transmittal and requests for the notice of guaranteed delivery to the exchange agent. If you are not tendering under DTC's automated tender offer program, you should send the letter of transmittal and any other required documents to the exchange agent as follows:

BY HAND DELIVERY:

Wilmington Trust Company
301 West 11 th Street
Wilmington, Delaware 19801

BY OVERNIGHT COURIER:

Wilmington Trust Company
1100 North Market Street
Rodney Square North
Wilmington, Delaware 19890-1615

BY FIRST CLASS MAIL:

Wilmington Trust Company
1100 North Market Street
Rodney Square North
Wilmington, Delaware 19890-1615

TO CONFIRM RECEIPT OF NOTICE OF GUARANTEED DELIVERY:

FAX #: (302) 636-4145
FAX CONFIRMATION #: (302) 636-6472

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The Exchange Notes

        The summary below describes the principal terms of the Exchange Notes. Certain of the terms and conditions described below are subject to important limitations and exceptions. The "Description of the Notes" section of this prospectus contains a more detailed description of the terms and conditions of the Exchange Notes.

Issuer   Overseas Shipholding Group, Inc.
Notes Offered   $200 million principal amount of 8.250% Senior Notes due March 15, 2013.
Maturity Date   March 15, 2013.
Interest   The Exchange Notes will accrue interest at the rate of 8.250% per annum, payable semiannually in arrears on March 15 and September 15, commencing on September 15, 2003.
Optional Redemption   The Exchange Notes will be redeemable at the option of the Company, in whole or in part, at any time on or after March 15, 2008 at the redemption prices set forth herein, plus accrued and unpaid interest to the date of redemption. See "Description of Notes—Optional Redemption."
Ranking   The Exchange Notes will be general, unsecured obligations of Overseas Shipholding Group, Inc. The Exchange Notes will rank equally and ratably in right of payment with all existing and future unsecured senior indebtedness of OSG, including the outstanding Notes. As of December 31, 2002, unsecured senior indebtedness of OSG included $536 million outstanding under our revolving credit facilities, $155 million aggregate principal amount outstanding of our notes due 2003 and our debentures due 2013, and $35 million in guarantees of indebtedness of our joint ventures. The Exchange Notes will rank senior in right of payment to all existing and future subordinated debt of OSG. The Exchange Notes will be effectively subordinated to all of OSG's secured debt to the extent of the collateral securing such debt and structurally subordinated to all existing and future debt and other liabilities of OSG's subsidiaries. At December 31, 2002, after giving effect to the issuance of the outstanding Notes and the application of the net proceeds therefrom, (1) OSG's senior indebtedness was approximately $696 million and (2) the indebtedness of OSG's subsidiaries was $256 million in the aggregate.
         

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Change of Control   Upon a Change of Control, we will be required to make an offer to purchase all Notes then outstanding at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase. See "Description of Notes—Change of Control."
Restrictive Covenants   The indenture governing the Exchange Notes contains covenants limiting our ability and the ability of our restricted subsidiaries to:
    •   create liens; and
    •   enter into sale and leaseback transactions.
    In addition, our ability to merge or consolidate with another person, and the ability of our restricted subsidiaries to incur indebtedness, will be restricted.
    These covenants are subject to important exceptions and qualifications. See "Description of Notes—Certain Covenants."
Registration Rights   If we fail to complete the exchange offer as required by the Registration Rights Agreement, we may be obligated to pay additional interest to holders of outstanding Notes. Please read "Registration Rights; Special Interest" beginning on page 100 for more information regarding your rights as a holder of outstanding Notes.
Use of Proceeds   We will not receive any proceeds from the issuance of the Exchange Notes pursuant to the exchange offer. We will pay all our expenses incident to the exchange offer. See "Use of Proceeds."
Absence of Public Market for the Exchange Notes   There is no market for the Exchange Notes. There can be no assurance that an active trading market for the Exchange Notes will develop, or, if it develops, will continue to exist. Although the initial purchaser of the outstanding Notes has informed us that it currently intends to make a market in the Exchange Notes, it is not obligated to do so, and any such market making may be discontinued at any time without notice. Accordingly, there can be no assurance as to the development or liquidity of any market for the Exchange Notes.


Risk Factors

        You should carefully consider all of the information contained in this prospectus, including the information incorporated by reference. In particular, you should consider carefully the information set forth in the section of this prospectus entitled "Risk Factors" beginning on page 16.

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Overseas Shipholding Group, Inc.

        Since our formation in 1969, we have become one of the world's leading independent bulk shipping companies. Our customers include many of the world's largest oil companies. As of April 30, 2003, our fleet consisted of 51 vessels aggregating approximately 8.7 million deadweight tons, including 42 vessels operating in the international market and nine vessels operating in the U.S. market.

        In our international business, our fleet is concentrated in two vessel segments: Very Large Crude Carriers (VLCCs) and Aframaxes. Our VLCC Fleet consists of 21 vessels, 19 of which participate in the Tankers International LLC pool, the world's largest commercial operator of VLCCs. Tankers International, which we formed with other leading tanker companies in 1999, commercially manages 44 modern VLCCs as of February 28, 2003.

        We also have a fleet of 12 Aframaxes and will take delivery of two additional Aframax newbuildings over the next 12 months. Our Aframaxes participate in the Aframax International pool that we formed in 1996 with PDV Marina S.A., the marine transportation subsidiary of the Venezuelan state oil company. The Aframax International pool consists of 25 vessels that generally operate in the Atlantic Basin, making it one of the largest operators of Aframaxes in the region. Until the resumption of normal levels of crude oil exports from Venezuela, we are trading our Aframaxes in the Caribbean as well as in the North Sea and Mediterranean.

        Our VLCC and Aframax fleets are among the youngest fleets in the world. As of December 31, 2002, our VLCCs had an average age of 4.7 years, compared with an industry average of 9.6 years, and our Aframaxes had an average age of 6.1 years, compared with an industry average of 11.7 years.

        We also have a fleet of six Product Carriers. Four of these Product Carriers are Bostonmaxes, which serve the East Coast ports of North America. The other two are Panamaxes, which serve the longer routes between the Arabian Gulf and Asia or Asia and the West Coast of North America. Our remaining three international vessels consist of one Suezmax and two Capesize Dry Bulk Carriers.

        In our U.S. business, our fleet consists of nine vessels: four Crude Tankers, two Product Carriers, two Bulk Carriers and one Pure Car Carrier. Seven of the nine vessels are on long term charter, which provides a steady and predictable stream of revenue.

        Our modern and well maintained fleet, combined with our reputation for safety and reliability, are key competitive advantages, especially as customers express concern over environmental safety, most recently heightened by the pollution arising from the sinking of the Prestige off the coast of Spain in November 2002.


Industry Trends and Opportunities

        We believe the following industry trends create market opportunities and improve the prospects for us as an owner of modern tankers, particularly when such vessels are marketed as part of a large, unified fleet as they are by our pools:

        Greater focus on environmental and safety concerns.     Major oil companies are increasingly concerned with environmental and safety issues. As a result, established operators of modern, high quality ships such as OSG generally receive preferential employment.

        New environmental regulations may increase scrapping rates.     International Maritime Organization (IMO) regulations have imposed strict age limits on the use of older vessels. The sinking of the 1976 built, single-hulled Aframax, Prestige , in November 2002 off the coast of Spain has significantly heightened the awareness of European governments to the risks posed by older, single-hulled vessels. In light of the Prestige pollution incident, the European Commission has

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recently proposed further trading restrictions on single-hulled vessels and acceleration of their phase out dates. In addition, the three coastal nations most affected by the sinking (Spain, France and Portugal) are already unilaterally imposing trading restrictions on single-hulled vessels carrying fuel oils and heavy crude.

        World oil consumption is increasing.     A major factor in determining tanker demand is world oil consumption, which is expected to rise in 2003 after experiencing a decline in late 2001 and early 2002. The International Energy Agency projects that world oil consumption will increase by an average of 1.7% per year through 2010.

        Consolidation of tanker assets.     The tanker industry is highly fragmented, which provides an opportunity for larger operators such as OSG to acquire assets of smaller operators and employ those assets more productively as part of a larger fleet, facilitating superior asset utilization and operating efficiencies.

        Consolidation of integrated oil companies.     The consolidation trend among our oil company customers and their desire to outsource non core activities, including the transportation of crude oil, represent an opportunity for large, high quality operators such as OSG that are able to offer a broad range of transportation solutions.


Our Competitive Strengths

        We believe that we possess significant competitive advantages in the tanker industry that permit us to enhance the financial performance of our shipping assets. These advantages include the following:

        Our international fleet of modern, well maintained vessels.     Our VLCC and Aframax fleets are among the youngest in the industry, allowing us to better meet our customers' needs, capture higher charter rates, comply with more stringent environmental regulations, reduce off hire from vessel breakdowns, and achieve lower operating costs compared to older vessels. We have almost completed a major modernization program commenced in 1999. Since that time, we have spent approximately $800 million on modern VLCCs and Aframaxes. This modernization program will be completed over the next 12 months, with only $30 million of capital expenditures remaining.

        Our participation in leading strategic alliances.     We have benefited by placing a large number of our vessels in commercial pools that we helped create. The scale and market presence of these pools have resulted in enhanced financial performance of our vessels through improved asset utilization.

        Our strong financial profile.     We have a strong financial profile and a low liquidity adjusted debt to capital ratio relative to many of our reporting industry peers. This allows us to take advantage of market opportunities, including acquiring new and quality second hand vessels.

        Our fully integrated technical and commercial operations.     Our experienced in house personnel are capable of providing all commercial and operating services to our fleet, which permits us to better control the quality and cost of our operations.

        Our long established industry reputation and experienced management team.     We have a reputation in the tanker industry for excellent service, quality vessels and expert technical operations. We have an experienced and dedicated management team, many of whom have been with us for many years.

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Our Strategy

        Our strategy is to employ our competitive strengths to further our industry position as a leading provider of international tanker services. Our strategic initiatives include:

        Continuing to be a preferred provider of tankers.     We focus on the needs of our customers and seek to be a preferred provider by marketing high quality, well operated vessels.

        Enhancing vessel earnings by deploying our vessels in strategic alliances.     Through participation in the Tankers International and the Aframax International commercial pools, we enhance fleet utilization, generating increased vessel earnings.

         Opportunistically growing VLCC and Aframax fleets through newbuildings, acquisitions and joint ventures. We utilize our commercial, financial and operating expertise to opportunistically acquire modern vessels and order newbuildings, either alone or through joint ventures.

        Maintaining our competitive cost structure.     We have completed a cost reduction program, begun in 1998, that has yielded annualized savings of approximately $60 million per year, which were fully realized during 2002. We intend to maintain our competitive cost structure and will continue to actively review such cost structure and improve our efficiency, without adversely impacting the quality of our operations.

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Summary Consolidated Financial Data

        We present below our summary consolidated financial data as of and for each of the five years ended December 31, 2002. We derived the summary consolidated statement of operations data for the years ended December 31, 2002, 2001 and 2000 and the summary consolidated balance sheet data as of December 31, 2002 and 2001 from our audited consolidated financial statements included elsewhere in this prospectus. We derived the summary consolidated statement of operations data for the years ended December 31, 1999 and 1998 and the summary consolidated balance sheet data as of December 31, 2000, 1999 and 1998 from our audited consolidated financial statements not included in this prospectus. You should read the information set forth below together with the information under "Selected Historical Consolidated Financial Data", "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our financial statements and the related notes thereto included elsewhere in this prospectus.

 
  Year Ended December 31,
 
 
  2002
  2001
  2000
  1999
  1998
 
 
  (in thousands)

 
Statement of Operations Data:                                
Time Charter Equivalent Revenues(a)   $ 266,725   $ 381,018   $ 370,081   $ 253,217   $ 326,519  
Income from Vessel Operations(b)     44,888     130,686     134,066     23,366     41,050  
Operating Income     56,295     151,160     145,515     30,498     37,450  
Net Income/(Loss)(c)     (17,620 )   101,441     90,391     14,764     (37,920 )
Balance Sheet Data (at period end):                                
Working Capital   $ 77,140   $ 61,090   $ 88,207   $ 75,775   $ 47,627  
Total Assets     2,034,842     1,964,275     1,823,913     1,720,945     1,695,515  
Current Installments of Long-Term Debt and Current Obligations under Capital Leases     21,075     23,764     14,294     14,947     24,438  
Long-Term Debt and Obligations under Capital Leases     985,035     854,929     836,497     827,372     833,893  
Shareholders' Equity     784,149     813,426     750,167     661,058     707,622  
Other Data:                                
EBITDA(d)   $ 110,769   $ 269,392   $ 249,794   $ 128,228   $ 160,093  
Expenditures for Vessels     152,640     112,012     117,974     177,334     123,960  
Drydock Amortization     10,369     10,268     14,912     18,005     19,525  
Ratio of Liquidity Adjusted Debt to Total Capitalization(e)     49.5 %   42.6 %   45.5 %   48.4 %   48.2 %
(a)
Represents shipping revenues less voyage expenses.

(b)
Income from Vessel Operations in 2001 is net of a restructuring charge of $10,439 to cover costs associated with the reduction of staff at the New York headquarters and the transfer of ship management and administrative functions to our subsidiary in Newcastle, U.K.

(c)
Results for 2000 include income of $4,152 ($.12 per share) from the cumulative effect of a change in accounting principle from the completed voyage method to the percentage of completion method of recognizing net voyage revenues of vessels operating on voyage charters. Assuming the percentage of completion method had been applied retroactively, the pro forma net income/(loss) before cumulative effect of change in accounting principle would have been income of $13,450, or $0.37 per share in 1999; and a loss of $40,780, or $1.11 per share in 1998.

(Footnotes continued on following page)

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(d)
EBITDA represents operating earnings, which is before interest expense, income taxes and cumulative effect of change in accounting principle, plus other income and depreciation and amortization expense. EBITDA for 2002 has been reduced by $27,539 for a charge of $42,055 recorded in connection with the write-down of marketable securities in accordance with FAS 115, net of $14,516 for the write-down applicable to marketable securities subsequently sold. EBITDA should not be considered a substitute for net income, cash flows from operating activities and other operations or cash flow statement data prepared in accordance with accounting principles generally accepted in the United States or as a measure of profitability or liquidity. EBITDA is presented to provide additional information with respect to our ability to satisfy debt service, capital expenditure and working capital requirements. While EBITDA is frequently used as a measure of operating results and the ability to meet debt service requirements, it is not necessarily comparable to other similarly titled captions of other companies due to differences in methods of calculation. The following table is a reconciliation of operating income, as reflected in our consolidated statements of operations, to EBITDA:

 
  Year Ended December 31,
 
  2002
  2001
  2000
  1999
  1998
 
  (in thousands)

Operating Income   $ 56,295   $ 151,160   $ 145,515   $ 30,498   $ 37,450
Other Income/(Expense)     (24,466 )   48,320     34,141     21,870     32,312
Depreciation and Amortization     78,940     69,912     70,138     75,860     90,331
   
 
 
 
 
EBITDA   $ 110,769   $ 269,392   $ 249,794   $ 128,228   $ 160,093
   
 
 
 
 
(e)
Equals the quotient of (x) long-term debt and capital lease obligations (exclusive of current portions) less the sum of cash and investments in marketable securities and the tax-adjusted (35% tax rate) Capital Construction Fund balance divided by (y) total capitalization. The ratio of liquidity adjusted debt to total capitalization is calculated as follows:

 
  December 31,
 
 
  2002
  2001
  2000
  1999
  1998
 
 
  (in thousands)

 
Long-term Debt and Obligations under Capital Leases   $ 985,035   $ 854,929   $ 836,497   $ 827,372   $ 833,893  
Cash and Cash Equivalents     (36,944 )   (30,256 )   (15,781 )   (56,727 )   (51,005 )
Investments in Marketable Securities     (28,796 )   (69,958 )   (54,985 )   (32,266 )   (10,684 )
Capital Construction Fund, Adjusted for Income Taxes     (150,197 )   (151,431 )   (138,736 )   (118,256 )   (114,500 )
   
 
 
 
 
 
Liquidity Adjusted Debt     769,098     603,284     626,995     620,123     657,704  
Total Shareholders' Equity     784,149     813,426     750,167     661,058     707,622  
   
 
 
 
 
 
Total Capitalization   $ 1,553,247   $ 1,416,710   $ 1,377,162   $ 1,281,181   $ 1,365,326  
   
 
 
 
 
 
Ratio of Liquidity Adjusted Debt to Total Capitalization     49.5 %   42.6 %   45.5 %   48.4 %   48.2 %

15


RISK FACTORS

         You should consider carefully the following factors, as well as the other information set forth in this prospectus, before making an investment in the Notes.

Industry Specific Risk Factors

A decline in demand for crude oil could cause demand for tanker capacity and charter rates to decline, which would decrease our revenues and profitability

        The demand for tanker capacity to transport crude oil is influenced by the demand for crude oil and other factors, including:

        Any of these factors could adversely affect the demand for tanker capacity and charter rates. Any decrease in demand for tanker capacity or decrease in charter rates would adversely affect our business.

        Demand for our vessels and our related services in transporting crude oil is also dependent upon world and regional oil markets. Historically, these markets have been volatile as a result of the many conditions and events that can affect the price, demand, production, and transport of oil. Any decrease in the shipment of crude oil in these markets could result in tanker charter rates declining in our markets, which could have a material adverse effect on our revenues and profitability.

An increase in the supply of tankers without an increase in demand for tankers could cause charter rates to decline, which could have a material adverse effect on our revenues and profitability

        Historically, the tanker industry has been cyclical. The profitability and asset values of companies in the industry have fluctuated based on changes in the supply and demand of tankers. The supply of tankers generally increases with deliveries of new vessels and decreases with the scrapping of older vessels. Currently, there are substantial newbuilding orderbooks for delivery over the next three years for all size tankers of the types owned by us, particularly Aframaxes. If the number of new ships delivered exceeds the number of vessels being scrapped, tanker capacity will increase. If the supply of tanker capacity increases and the demand for tanker capacity does not, the charter rates for our vessels could decline significantly. A decline in charter rates could have a material adverse effect on our revenues and profitability.

Charter rates may decline from their current level, which could have a material adverse effect on our revenues and profitability

        In the fourth quarter of 2002 and continuing through the present, spot market freight rates for tankers increased dramatically to high levels after three quarters of low rates in 2002. Anticipated fall-off in seasonal demand as well as a number of other factors suggest that such high rates are

16


likely to decline. Because many of the factors that influence the supply of, and demand for, tanker capacity are unpredictable and beyond our control, the nature, timing and degree of changes in charter rates are unpredictable. A decline in charter rates could have a material adverse effect on our revenues and profitability.

Our revenues are subject to seasonal variations

        We operate our tankers in markets that have historically exhibited seasonal variations in demand for tanker capacity, and therefore, charter rates. Charter rates for tankers are typically higher in the fall and winter months as a result of increased oil consumption in the Northern Hemisphere. Because a majority of our vessels trade in the spot market, seasonality has affected our operating results on a quarter-to-quarter basis and could continue to do so in the future.

Environmental costs and liabilities could have a material adverse effect on our business, results of operations and financial condition

        Our operations are subject to extensive laws, treaties and international agreements governing the management, transportation and discharge of petroleum and hazardous materials, all of which are designed to protect the environment from pollution. We are required to satisfy insurance and financial responsibility requirements for potential oil spills and other pollution incidents. Our vessels must also meet stringent operational, maintenance and structural requirements, and they are subject to rigorous inspections by governmental authorities such as the U.S. Coast Guard. In addition, our personnel must follow approved safety management and emergency preparedness procedures. Violations of applicable requirements could result in substantial penalties, and in certain instances, seizure or detention of our vessels.

        From time to time, in connection with our shipping operations, we have experienced spills of oil or other materials and incurred cleanup costs relating to such spills. We could be required to pay the costs of responding to future oil spills or cleaning up contaminated properties pursuant to the Oil Pollution Act of 1990 (OPA 90), the Comprehensive Environmental Response, Compensation, and Liability Act and other U.S. and foreign laws and regulations. We also could become subject to personal injury or property damage claims relating to exposure to hazardous substances in connection with our existing and historical operations. Our existing insurance may not be sufficient to cover all such risks, in which case such risks could have a material adverse effect on our business, results of operations or financial condition.

        In order to maintain compliance with existing and future laws, treaties and international agreements, we incur, and expect to continue to incur, substantial costs in meeting maintenance and inspection requirements, developing and implementing emergency preparedness procedures, and obtaining insurance coverage or other required evidence of financial ability sufficient to address pollution incidents. These laws, treaties and international agreements can:

        Future environmental requirements may be adopted that could limit our ability to operate, require us to incur substantial additional costs or otherwise have a material adverse effect on our business, results of operations or financial condition.

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The market value of vessels fluctuates significantly, which could adversely affect our liquidity, result in breaches of our financing agreements or otherwise adversely affect our financial condition

        The market value of vessels has fluctuated over time. The fluctuation in market value of oil tankers over time is based upon various factors, including:

        Declining vessel values of our tankers could adversely affect our liquidity by limiting our ability to raise cash by refinancing vessels. Declining vessel values could also result in a breach of loan covenants or trigger events of default under relevant financing agreements that require us to maintain certain loan-to-value ratios. In such instances, if we are unable to pledge additional collateral to offset the decline in vessel values, the lenders could accelerate our debt and foreclose on our vessels pledged as collateral for the loans.

Shipping is a business with inherent risks, and our insurance may not be adequate to cover our losses

        Our vessels and their cargoes are at risk of being damaged or lost because of events such as:

        In addition, transporting crude oil creates a risk of business interruptions due to political circumstances in foreign countries, hostilities, labor strikes, port closings and boycotts. Any of these events may result in loss of revenues and increased costs.

        We carry insurance to protect against most of the accident-related risks involved in the conduct of our business. We currently maintain one billion dollars in coverage for each of our vessels for liability for spillage or leakage of oil or pollution. We also carry insurance covering lost revenue resulting from vessel off-hire due to vessel damage. Nonetheless, risks may arise against which we are not adequately insured. For example, a catastrophic spill could exceed our insurance coverage and have a material adverse effect on our operations. In addition, we may not be able to procure

18


adequate insurance coverage at commercially reasonable rates in the future, and we cannot guarantee that any particular claim will be paid. In the past, new and stricter environmental regulations have led to higher costs for insurance covering environmental damage or pollution, and new regulations could lead to similar increases or even make this type of insurance unavailable. Furthermore, even if insurance coverage is adequate to cover our losses, we may not be able to timely obtain a replacement ship in the event of a loss. We may also be subject to calls, or premiums, in amounts based not only on our own claim records but also the claim records of all other members of the protection and indemnity associations through which we obtain insurance coverage for tort liability. Our payment of these calls could result in significant expenses to us which would reduce our profits or cause losses.

Because we conduct our business on a worldwide basis, we face a number of significant risks that could result in losses or higher costs

        Our vessels operate all over the world, exposing us to many risks, including:

        As a result of these risks, we may incur losses or higher costs, including those incurred as a result of the impairment of our assets or a curtailment of our operations.

Our vessels could be arrested by maritime claimants, which could result in a significant loss of earnings and cash flow for the related off-hire period

        Crew members, suppliers of goods and services to a vessel, shippers of cargo and other parties may be entitled to a maritime lien against a vessel for unsatisfied debts, claims or damages. In many jurisdictions, a maritime lienholder may enforce its lien by either arresting or attaching a vessel through foreclosure proceedings. The arrest or attachment of one or more of our vessels could result in a significant loss of earnings and cash flow for the related off-hire period.

        In addition, international vessel arrest conventions and certain national jurisdictions allow so-called "sister ship" arrests, that allow the arrest of vessels that are within the same legal ownership as the vessel which is subject to the claim or lien. Certain jurisdictions go further, permitting not only the arrest of vessels within the same legal ownership, but also any "associated" vessel. In nations with these laws, an "association" may be recognized when two vessels are owned by companies controlled by the same party. Consequently, a claim may be asserted against us, any of our subsidiaries or our vessels for the liability of one or more of the other vessels we own.

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Company Specific Risk Factors

Our substantial debt could adversely affect our financial condition and prevent us from fulfilling our obligations under the Notes

        We have substantial debt and debt service requirements. At December 31, 2002, our consolidated total debt, including capital lease obligations, was approximately $1.0 billion and our unused borrowing capacity under our revolving credit facilities was $209.0 million.

        The amount of our debt could have important consequences to you. For example, it could:

To service our debt, we will require a significant amount of cash, which may not be available to us when needed

        Our ability to repay our debt, including the Notes, will depend largely upon our future operating performance and a number of other factors, many of which are beyond our control. Such factors include the impact of the general economy on the demand for oil and thus the oil shipping market. In addition, we will rely on dividends and other intercompany cash flows from our subsidiaries to repay our obligations. Financing arrangements between some of our subsidiaries and their respective lenders contain restrictions on dividends by and distributions from such subsidiaries to us.

        If we are unable to generate sufficient cash flow to meet our debt service requirements, we may have to renegotiate the terms of our debt. We cannot assure you that we would be able to renegotiate successfully those terms or refinance our debt when required. If we were unable to refinance our debt or obtain new financing under these circumstances, we would have to consider other options, such as:

However, our credit agreements and the indenture governing the Notes may restrict our ability to do some of these things.

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The terms of our revolving credit facilities could, under certain circumstances, require us to defease the covenants under our existing notes and debentures

        Our revolving credit facilities require us to grant security interests in vessels or in cash to the participating banks in the event that the credit rating of our senior unsecured debt is downgraded to a combined rating of (i) BB- or lower or BB on Credit Watch with a negative outlook (in the case of Standard & Poor's) and (ii) Ba3 or lower (in the case of Moody's). In the event we provide the banks under our credit facilities with a security interest in any vessels, such vessel collateral must be free of all liens (other than those arising in the ordinary course of business or that do not otherwise materially detract from the value of the vessel as collateral). The indenture governing our existing notes and debentures provides that, if we incur any debt that is secured by a mortgage or other security interest in excess of 15% of our consolidated net tangible assets, the notes and debentures must be secured on an equal and ratable basis with such secured debt. Accordingly, if we are required to grant such security interest in our vessels to the banks under our revolving credit facilities, unless the required banks under our revolving credit facilities waive the requirement that any such collateral be free of all liens not permitted thereunder, we would not be able to apply the same collateral to secure such existing notes and debentures equally and ratably. In order to avoid a default under such indenture (which, in turn, would cause a default under the terms of the indenture pursuant to which the Notes are issued), we could either repay all outstanding indebtedness under the credit facilities or defease the covenants under our existing notes and debentures by depositing an amount sufficient to redeem the notes and debentures in trust. As of December 31, 2002, the outstanding principal amount of our existing notes and debentures was $155 million, of which approximately $70 million matures on December 1, 2003 and the balance matures on December 1, 2013. We cannot assure you that in such circumstances we will have adequate resources to repay all outstanding indebtedness under our credit facilities or to defease the covenants under our existing notes and debentures.

Our assets may not be sufficient to satisfy all our obligations in the event of a ratings downgrade

        The indenture governing the Notes requires us to secure the Notes equally and comparably with any indebtedness under our revolving credit facilities in the event we are required to secure the debt outstanding under these credit facilities as a result of a downgrade in the credit rating of our senior unsecured debt. In other words, we would be required to provide separate pools of collateral that are comparable in value to secure our obligations under the credit facilities and the Notes. Our assets may not be sufficient to satisfy this requirement, which would result in a default under the indenture governing the Notes. In addition, the terms of our credit facilities may not permit the granting of a security interest in our assets to secure our obligations under the Notes at the time this would be required under the indenture governing the Notes. Failure to grant such security interest could result in a default under the indenture governing the Notes which in turn would result in a default under our credit facilities. See "Description of Other Indebtedness—Revolving Credit Facilities."

Our subsidiaries conduct all of our operations and own all of our operating assets, and the Notes will be structurally subordinated to the liabilities of our subsidiaries

        We are a holding company, and our subsidiaries conduct all of our operations and own all of our operating assets. Our only material asset is our ownership of the capital stock of our subsidiaries. As a result, our ability to make required payments on the Notes depends on the operations of our subsidiaries and our subsidiaries' ability to distribute funds to us. To the extent our subsidiaries are unable to distribute, or are restricted from distributing, funds to us, we may be

21


unable to fulfill our obligations under the Notes. Our subsidiaries will have no obligation to pay amounts due on the Notes, and none of our subsidiaries will guarantee the Notes.

        The rights of holders of the Notes will be structurally subordinated to the rights of our subsidiaries' lenders. A default by a subsidiary under its debt obligations would result in a block on distributions from the affected subsidiary to us. The Notes will be effectively junior to all liabilities of our subsidiaries. In the event of a bankruptcy, liquidation or reorganization of any of our subsidiaries, creditors of our subsidiaries will generally be entitled to payment of their claims from the assets of those subsidiaries before any assets are made available for distribution to us. Assuming we had completed this offering on December 31, 2002, the Notes would have been effectively junior to an aggregate of $256 million of debt owed by certain of our subsidiaries.

The Notes will be unsecured and will be effectively subordinated to our secured debt and secured debt of our subsidiaries

        The Notes are unsecured and will therefore be subordinated to any secured debt we, or our subsidiaries, currently maintain or may incur to the extent of the value of the assets securing the debt. In the event of bankruptcy or similar proceeding involving us or a subsidiary, the assets that serve as collateral will be available to satisfy the obligations under any secured debt before any payments are made on the Notes. Assuming we had completed this offering on December 31, 2002, the Notes would have been junior to $256 million in outstanding secured debt secured by certain tankers.

Failure to comply with covenants could lead to acceleration of debt

        Our existing financing agreements and those of our subsidiaries impose operating and financial restrictions that restrict our actions or those of our subsidiaries. These restrictions limit or prohibit our ability or the ability of our subsidiaries to, among other things:

        Failure to comply with any of the covenants in our existing or future financing agreements could result in a default under those agreements and under other agreements containing cross-default provisions. A default would permit lenders to accelerate the maturity of the debt under these agreements and to foreclose upon any collateral securing that debt. Under these circumstances, we might not have sufficient funds or other resources to satisfy all of our obligations, including our obligations under the Notes offered by this prospectus. In addition, the secured nature of a portion of our other debt, together with the limitations imposed by financing agreements on our ability to incur additional debt and to take other actions, might significantly impair our ability to obtain other financing.

        Some of our existing financing agreements also impose restrictions on changes of control of us or our ship-owning subsidiaries, including requirements for prior consent and requirements that we make an offer to redeem certain debt. See "Description of Other Indebtedness."

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We may be unable to raise the funds necessary to finance the change of control offer required by the indenture governing the Notes

        Upon the occurrence of a Change of Control, we will be required to offer to purchase the Notes at a purchase price equal to 101% of the principal amount of the Notes, plus accrued interest to the date of the purchase. In the event of a change of control triggering event, the total debt represented by the Notes could become due and payable. We may not have sufficient funds available at the time of any change of control to repurchase the Notes. See "Description of Notes—Change of Control."

When our credit facilities mature, we may not be able to refinance or replace them

        When our indebtedness matures, we may need to refinance it and we may not be able to do so on favorable terms or at all. If we are able to refinance maturing indebtedness, the terms of any refinancing or alternate credit arrangements may contain terms and covenants that restrict our financial and operating flexibility.

Interest rate fluctuations may significantly affect our loan payments

        As of December 31, 2002, after giving effect to the issuance of the outstanding Notes, all of our debt with the exception of the outstanding Notes and $155 million aggregate principal amount outstanding of our notes due 2003 and debentures due 2013 bore interest at floating interest rates. As of December 31, 2002, after giving effect to the issuance of the outstanding Notes, we have entered into interest rate swaps with respect to a portion of this floating rate indebtedness, resulting in approximately $288 million of our total indebtedness being subject to interest rate fluctuation. Increases in interest rates would increase interest payments on that indebtedness.

We are highly dependent upon volatile spot market charter rates

        We depend on spot charters for a significant portion of our revenues. In 2002, 2001 and 2000, we derived approximately 70%, 73% and 76%, respectively, of our net shipping revenues in the spot market.

        Although our reliance on the spot market affords us greater opportunity to increase income from operations when rates rise, dependence on the spot market could result in earnings volatility.

We may not be able to renew time charters when they expire

        There can be no assurance that any of our existing time charters will be renewed; or if renewed, that they will be renewed at favorable rates. If, upon expiration of the existing time charters, we are unable to obtain time charters or voyage charters at rates comparable to those received under the charters, our profitability may be adversely affected.

Termination or change in the nature of our relationship with the Tankers International pool or the Aframax International pool could adversely affect our business and our ability to grow our VLCC and Aframax fleets

        Substantially all of our VLCCs participate in the Tankers International pool and all of our Aframaxes participate in the Aframax International pool. Participation in these pools enhances the financial performance of our vessels as a result of the higher vessel utilization. Any participant in either pool has the right to withdraw upon notice in accordance with the relevant pool agreement. The termination of either pool or the withdrawal of any participants could adversely affect our ability to commercially market our VLCC and Aframax fleets.

23


We may not be able to grow our VLCC and Aframax fleets

        One part of our strategy is to continue to grow, on an opportunistic basis, our VLCC and Aframax fleets. Our ability to grow these fleets will depend upon a number of factors, many of which we cannot control. These factors include our ability to:

Termination or change in ownership of our vessel-owning joint ventures could adversely affect our business and financial position

        We have interests in joint ventures that own 11 vessels. The joint venture agreements permit any member to terminate the joint ventures under certain circumstances. As of December 31, 2002, the joint ventures had aggregate indebtedness of approximately $333 million, approximately $35 million of which we have guaranteed. If a joint venture were to terminate, the vessel owned by such joint venture would have to be sold to a member or a third party and the associated indebtedness would have to be satisfied. If the vessel were sold to a third party and the proceeds were insufficient to satisfy the outstanding indebtedness, we would be liable on the remaining indebtedness to the extent of our guarantee.

The general strike in Venezuela has reduced oil exports from that nation

        In December 2002 a general strike halted the production and export of oil from Venezuela by the state-owned oil company, PDVSA. In recent months, the Venezuelan government has succeeded in restoring a significant portion of pre-strike production and exports, although the precise levels of production are not known. Pending normalization of Venezuelan production and exports, we are trading our vessels in the Caribbean as well as in the North Sea and the Mediterranean. PDV Marina, the marine transportation subsidiary of PDVSA, is our principal pool partner in Aframax International. Since the strike began, PDV Marina vessels normally employed in the Aframax International pool have been carrying proprietary Venezuelan cargoes outside of the pool. If normalization of Venezuelan production does not take place, PDV Marina may decide to no longer participate in the Aframax International pool, which would eliminate preferred access to PDVSA proprietary cargoes carried by Aframaxes and could reduce pool efficiencies.

Our strategy of growing our business in part through acquisitions is capital intensive, time consuming and subject to a number of inherent risks

        Part of our business strategy is to opportunistically acquire complementary businesses or vessels. If we fail to develop and integrate any acquired businesses or vessels effectively, our earnings may be adversely affected. In addition, our management team will need to devote substantial time and attention to the integration of the acquired businesses or vessels, which could distract them from their other duties and responsibilities.

Operating costs and capital expenses will increase as our vessels age

        In general, capital expenditures and other costs necessary for maintaining a vessel in good operating condition increase as the age of the vessel increases. Accordingly, it is likely that the operating costs of our older vessels will increase. In addition, changes in governmental regulations

24


and compliance with classification society standards may require us to make additional expenditures for new equipment. In order to add such equipment, we may be required to take our vessels out of service. There can be no assurance that market conditions will justify such expenditures or enable us to operate our older vessels profitably during the remainder of their economic lives.

Our purchase of second-hand vessels carries risks associated with the quality of those vessels

        Our expansion strategy includes the opportunistic acquisition of quality second-hand vessels. Second-hand vessels typically do not carry warranties with respect to their condition, whereas warranties are generally available for newbuildings. While we generally inspect all second-hand vessels prior to purchase, such an inspection would normally not provide us with as much knowledge about vessel condition as we would possess if the vessels had been built for us.

In the highly competitive international tanker market, we may not be able to effectively compete for charters with companies with greater resources

        Our vessels are employed in a highly competitive market. Competition arises from other tanker owners, including major oil companies, which may have substantially greater resources than we do. Competition for the transportation of crude oil and other petroleum products depends on price, location, size, age, condition, and the acceptability of the vessel operator to the charterer. We believe that because ownership of the world tanker fleet is highly fragmented, no single vessel owner is able to influence charter rates. To the extent we enter into new geographic regions or provide new services, we may not be able to compete profitably. New markets may involve competitive factors which differ from those of our current markets, and the competitors in those markets may have greater financial strength and capital resources than we do.

We depend on our key personnel and may have difficulty attracting and retaining skilled employees

        Our success depends to a significant extent upon the abilities and efforts of our key personnel. The loss of the services of any of our key personnel or our inability to attract and retain qualified personnel in the future could have a material adverse effect on our business, financial condition and operating results.

We may face unexpected drydock costs for our vessels

        Vessels must be drydocked periodically. The cost of repairs and renewals required at each drydock are difficult to predict with certainty and can be substantial. Our insurance does not cover these costs. In addition, vessels may have to be drydocked in the event of accidents or other unforeseen damage. Our insurance may not cover all of these costs. Large drydocking expenses could significantly decrease our profits.

Offering Specific Risks

An active public market may not develop for your Notes, which may hinder your ability to liquidate your investment

        There is no established trading market for the Notes. Although the initial purchaser of the outstanding Notes has informed us that it intends to make a market in the Exchange Notes after the exchange offer, it may stop making a market at any time. Accordingly, we cannot assure you that a market for the Exchange Notes will develop. Furthermore, if a market were to develop, the market price for the Notes may be adversely affected by changes in our financial performance, changes in

25


the overall market for similar securities and the performance or prospects for companies in our industry.

        The outstanding Notes have not been registered under the Securities Act of 1933 or any state securities laws and may not be offered or sold except pursuant to an exemption from the registration requirements of the Securities Act and applicable state securities laws, or pursuant to an effective registration statement.

        The liquidity of, and trading market for, the Exchange Notes may also be adversely affected by general declines in the market for similar securities or by changes in our financial performance. Such a market decline may adversely affect such liquidity and trading markets independent of our financial performance and resources.


USE OF PROCEEDS

        We issued $200 million principal amount of the outstanding Notes on March 7, 2003 to the initial purchaser of those Notes. We are making the exchange offer to satisfy our obligations under the outstanding Notes, the Indenture and the Registration Rights Agreement. We will not receive any cash proceeds from the exchange offer. In consideration of issuing the Exchange Notes in the exchange offer, we will receive an equal principal amount of outstanding Notes. Any outstanding Notes that are properly tendered in the exchange offer will be accepted, canceled and retired and cannot be reissued.

        Our net proceeds from the offering of the outstanding Notes, which does not include accrued interest on the Notes, were approximately $195 million, after deducting the discount payable to the initial purchaser. We used these net proceeds to repay outstanding balances under our revolving credit facilities and for general corporate purposes.

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CAPITALIZATION

        The following table sets forth our capitalization as of December 31, 2002:

        You should read the information in this table together with our consolidated financial statements and the related notes included elsewhere in this prospectus, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Use of Proceeds."

 
  December 31, 2002
 
 
  Actual
  As Adjusted
 
 
  (in thousands)

 
Cash and cash equivalents   $ 36,944   $ 36,944  
Investments in marketable securities     28,796     28,796  
   
 
 
    $ 65,740   $ 65,740  
   
 
 
Long-term debt and Obligations under Capital Leases(1):              
  Notes     —   $ 200,000  
  Unsecured revolving credit facilities(2)   $ 536,000     341,000  
  8.75% Debentures due 2013     84,826     84,826  
  8% Notes due 2003     70,391     70,391  
  Floating rate secured term loans(3)     256,000     256,000  
  Obligations under Capital Leases(4)     58,893     58,893  
  Current installments of long-term debt and current obligations under Capital Leases     (21,075 )   (21,075 )
   
 
 
Total Long-term Debt and Obligations under Capital Leases   $ 985,035   $ 990,035  
   
 
 
Shareholders' equity:              
  Common stock, $1.00 par value   $ 39,591   $ 39,591  
  Paid-in additional capital     106,154     106,154  
  Retained earnings     731,201     731,201  
  Cost of treasury stock     (70,270 )   (70,270 )
  Accumulated other comprehensive income/(loss)     (22,527 )   (22,527 )
   
 
 
Total Shareholders' Equity   $ 784,149   $ 784,149  
   
 
 
  Total capitalization   $ 1,769,184   $ 1,774,184  
   
 
 
(1)
For information concerning our borrowing arrangements, see "Description of Other Indebtedness."

(2)
Subsequent to December 31, 2002, we repaid $319,000 of amounts outstanding under our unsecured revolving credit facilities.

(3)
Subsequent to December 31, 2002, we repaid $7,142 of amounts outstanding under our floating rate secured term loans.

(4)
Subsequent to December 31, 2002, we repaid approximately $1,223 of obligations under capital leases.

27


SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

        This section presents our selected historical consolidated financial data. You should read carefully our consolidated financial statements included elsewhere in this prospectus, including the notes to those consolidated financial statements. The selected historical consolidated financial data in this section are not intended to replace our financial statements.

        We derived the selected historical consolidated statement of operations data for the years ended December 31, 2002, 2001 and 2000 and the selected historical consolidated balance sheet data as of December 31, 2002 and 2001 from our audited consolidated financial statements included elsewhere in this prospectus. We derived the selected historical consolidated statement of operations data for the years ended December 31, 1999 and 1998 and the selected historical consolidated balance sheet data as of December 31, 2000, 1999 and 1998 from our audited consolidated financial statements not included in this prospectus. The selected financial data set forth below should be read together with "Management's Discussion and Analysis of Financial Condition and Results of Operations," and our financial statements, including the notes, appearing elsewhere in this prospectus.

 
  Year Ended December 31,
 
 
  2002
  2001
  2000
  1999
  1998
 
 
  (dollars in thousands)

 
Statement of Operations Data:                                
Time Charter Equivalent Revenues(a)   $ 266,725   $ 381,018   $ 370,081   $ 253,217   $ 326,519  
Vessel Expenses     84,617     84,058     81,929     92,395     130,669  
Time and Bareboat Charter Hire Expenses     25,359     43,956     41,326     22,288     18,289  
Depreciation and Amortization     78,940     69,912     70,138     75,860     90,331  
General and Administrative     32,921     41,967     42,622     39,308     46,180  
Restructuring Charge(b)     —     10,439     —     —     —  
   
 
 
 
 
 
      221,838     250,332     236,015     229,851     285,469  
   
 
 
 
 
 
Income from Vessel Operations     44,888     130,686     134,066     23,366     41,050  
Equity in Income of Joint Ventures     11,407     20,474     11,449     7,132     (3,600 )
   
 
 
 
 
 
Operating Income     56,295     151,160     145,515     30,498     37,450  
Other Income/(Expense)     (24,466 )   48,320     34,141     21,870     32,312  
Gain on Sale of Investment in Cruise Business     —     —     —     —     42,288  
Gain/(Provision for Loss) on Planned Vessel Dispositions     —     —     —     12,404     (85,072 )
Interest Expense     (52,693 )   (45,035 )   (46,667 )   (43,008 )   (83,198 )
   
 
 
 
 
 
      (20,864 )   154,445     132,989     21,764     (56,220 )
(Provision)/Credit for Federal Income Tax     3,244     (53,004 )   (46,750 )   (7,000 )   18,300  
   
 
 
 
 
 
      (17,620 )   101,441     86,239     14,764     (37,920 )
Cumulative Effect of Change in Accounting Principle(c)     —     —     4,152     —     —  
   
 
 
 
 
 
Net Income/(Loss)   $ (17,620 ) $ 101,441   $ 90,391   $ 14,764   $ (37,920 )
   
 
 
 
 
 
Balance Sheet Data (at period end):                                
Working Capital   $ 77,140   $ 61,090   $ 88,207   $ 75,775   $ 47,627  
Total Assets     2,034,842     1,964,275     1,823,913     1,720,945     1,695,515  
Current Installments of Long-Term Debt and Current Obligations under Capital Leases     21,075     23,764     14,294     14,947     24,438  
Total Long-Term Debt and Capital Lease Obligations     985,035     854,929     836,497     827,372     833,893  
Shareholders' Equity     784,149     813,426     750,167     661,058     707,622  

(Table continued on following page)

28

 
  Year Ended December 31,
 
 
  2002
  2001
  2000
  1999
  1998
 
 
  (dollars in thousands)

 
Other Data:                                
EBITDA(d)   $ 110,769   $ 269,392   $ 249,794   $ 128,228   $ 160,093  
Expenditures for Vessels     152,640     112,012     117,974     177,334     123,960  
Drydock Amortization     10,369     10,268     14,912     18,005     19,525  
Ratio of Liquidity Adjusted Debt to Total Capitalization(e)     49.5 %   42.6 %   45.5 %   48.4 %   48.2 %
Ratio of Earnings to Fixed Charges(f)     —     2.9 x   2.6 x   —     —  
Revenue Days     15,106     13,891     14,367     14,327     15,529  
Calendar Days     15,617     14,522     14,693     15,039     16,588  
(a)
Represents shipping revenues less voyage expenses.

(b)
To cover costs associated with the reduction of staff at the New York headquarters and the transfer of ship management and administrative functions to our subsidiary in Newcastle, U.K.

(c)
Results for 2000 include income of $4,152 ($.12 per share) from the cumulative effect of a change in accounting principle from the completed voyage method to the percentage of completion method of recognizing net voyage revenues of vessels operating on voyage charters. Assuming the percentage of completion method had been applied retroactively, the pro forma net income/(loss) before cumulative effect of change in accounting principle would have been income of $13,450, or $0.37 per share in 1999; and a loss of $40,780, or $1.11 per share in 1998.

(d)
EBITDA represents operating earnings, which is before interest expense, income taxes and cumulative effect of change in accounting principle, plus other income and depreciation and amortization expense. EBITDA for 2002 has been reduced by $27,539 for a charge of $42,055 recorded in connection with the write-down of marketable securities in accordance with FAS 115, net of $14,516, for the write-down applicable to marketable securities subsequently sold. EBITDA should not be considered a substitute for net income, cash flows from operating activities and other operations or cash flow statement data prepared in accordance with accounting principles generally accepted in the United States or as a measure of profitability or liquidity. EBITDA is presented to provide additional information with respect to our ability to satisfy debt service, capital expenditure and working capital requirements. While EBITDA is frequently used as a measure of operating results and the ability to meet debt service requirements, it is not necessarily comparable to other similarly titled captions of other companies due to differences in methods of calculation. The following table is a reconciliation of operating income, as reflected in our consolidated statements of operations, to EBITDA:

 
  Year Ended December 31,
 
  2002
  2001
  2000
  1999
  1998
 
  (in thousands)

Operating Income   $ 56,295   $ 151,160   $ 145,515   $ 30,498   $ 37,450
Other Income/(Expense)     (24,466 )   48,320     34,141     21,870     32,312
Depreciation and Amortization     78,940     69,912     70,138     75,860     90,331
   
 
 
 
 
EBITDA   $ 110,769   $ 269,392   $ 249,794   $ 128,228   $ 160,093
   
 
 
 
 

(Footnotes continued on following page)

29

(e)
Equals the quotient of (x) long-term debt and capital lease obligations (exclusive of current portions) less the sum of cash and investments in marketable securities and the tax-adjusted (35% tax rate) Capital Construction Fund balance divided by (y) total capitalization. The ratio of liquidity adjusted debt to total capitalization is calculated as follows:

 
  December 31,
 
 
  2002
  2001
  2000
  1999
  1998
 
 
  (in thousands)

 
Long-Term Debt and Obligations under Capital Leases   $ 985,035   $ 854,929   $ 836,497   $ 827,372   $ 833,893  
Cash and Cash Equivalents     (36,944 )   (30,256 )   (15,781 )   (56,727 )   (51,005 )
Investments in Marketable Securities     (28,796 )   (69,958 )   (54,985 )   (32,266 )   (10,684 )
Capital Construction Fund, Adjusted for Income Taxes     (150,197 )   (151,431 )   (138,736 )   (118,256 )   (114,500 )
   
 
 
 
 
 
Liquidity Adjusted Debt     769,098     603,284     626,995     620,123     657,704  
Total Shareholders' Equity     784,149     813,426     750,167     661,058     707,622  
   
 
 
 
 
 
Total Capitalization   $ 1,553,247   $ 1,416,710   $ 1,377,162   $ 1,281,181   $ 1,365,326  
   
 
 
 
 
 
Ratio of Liquidity Adjusted Debt to Total Capitalization     49.5 %   42.6 %   45.5 %   48.4 %   48.2 %
(f)
The ratio of earnings to fixed charges has been computed by dividing the sum of (a) pretax income from continuing operations (pretax income excluding the effects of the gain on sale of investment in cruise business, the gain or loss on planned vessel dispositions, and the cumulative effect of change in accounting principle), (b) fixed charges (reduced by the amount of interest capitalized during the period) and (c) amortization expense related to capitalized interest, by fixed charges. Fixed charges consist of all interest (both expensed and capitalized), amortization of debt issue costs, and the interest portion of time charter hire expense. The deficiency of earnings necessary to cover fixed charges for the years ended December 31, 2002, 1999 and 1998 was $34,220, $5,386 and $9,871, respectively. For the year ended December 31, 2002, the pro forma deficiency of earnings, as adjusted to give effect to the offering of the outstanding Notes and the application of the net proceeds therefrom, was $44,870.

30


MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

         You should carefully read the following discussion in conjunction with "Risk Factors," "Selected Historical Consolidated Financial Data" and our consolidated financial statements and related notes included elsewhere in this prospectus.

General

        We are one of the largest independent bulk shipping companies in the world. As of December 31, 2002, our operating fleet consisted of 52 vessels aggregating 8.5 million deadweight tons, including 11 vessels that are owned by joint ventures in which we have an average interest of 41%. As of December 31, 2002, one additional VLCC and two additional Aframaxes are scheduled to be delivered in the next 12 months.

Operations

        Our revenues are highly sensitive to patterns of supply and demand for vessels of the size and design configurations owned and operated by us and the trades in which those vessels operate. Rates for the transportation of crude oil and refined petroleum products from which we earn a substantial majority of our revenue are determined by market forces such as the supply and demand for oil, the distance that cargoes must be transported, and the number of vessels expected to be available at the time such cargoes need to be transported. The demand for oil shipments is significantly affected by the state of the global economy and level of OPEC's exports. The number of vessels is affected by newbuilding deliveries and by the removal of existing vessels from service, principally because of scrapping. Our revenues are also affected by the mix of charters between spot (voyage charter) and long-term (time charter). Because shipping revenues and voyage expenses are significantly affected by the mix between voyage charters and time charters, we manage our vessels based on Time Charter Equivalent (TCE) revenues. We make economic decisions based on anticipated TCE rates and evaluate financial performance based on TCE rates achieved.

        Set forth in the tables below are daily TCE rates that prevailed in various markets in which our vessels operated for the periods indicated. In each case, the rates may differ from the actual TCE rates achieved by us in the period indicated because of the timing and length of voyages and the portion of revenue generated from long-term charters. It is important to note that the spot market is quoted in Worldscale rates, a published list of rates upon which charters are based. The conversion of Worldscale rates to the following TCE rates necessarily required us to make certain assumptions as to brokerage commissions, port time, port costs, speed and fuel consumption, all of which will vary in actual usage.

Foreign Flag VLCC Segment

 
  Spot Market TCE Rates
VLCCs in the Arabian Gulf
 
  Q1-2002
  Q2-2002
  Q3-2002
  Q4-2002
  2002
  2001
  2000
Average   $ 13,600   $ 10,800   $ 9,500   $ 42,500   $ 19,000   $ 32,700   $ 46,100
High   $ 20,600   $ 26,800   $ 18,800   $ 81,500   $ 81,500   $ 69,800   $ 79,700
Low   $ 7,500   $ 4,700   $ 3,500   $ 13,400   $ 3,500   $ 11,700   $ 11,000

        For 2002, spot freight rates for modern VLCCs trading East and West out of the Arabian Gulf averaged $19,000 per day, which is 42% lower than the average for 2001 and 59% lower than the average for 2000.

31


        Freight rates, which had declined steadily on a quarter-to-quarter basis during 2001, continued this downward trend for the first three quarters of 2002 as OPEC implemented a fourth reduction in production quotas effective from January 1, 2002. While reductions in Iraqi production during the second quarter led to lower exports from its Mediterranean terminal at Ceyhan, other OPEC producers, particularly in the Arabian Gulf, increased exports with an accompanying temporary beneficial effect on VLCC freight rates. As a result, rates spiked to $26,800 per day during the second quarter but thereafter plunged to a low of just $3,500 per day during the third quarter. Concerns about armed conflict with Iraq were exacerbated in the second half of 2002 by the terrorist attack on a VLCC off Yemen in October and the terrorist bombing in Bali. As a result, demand for crude oil increased in anticipation of an imminent supply disruption during the year's final quarter. Global economic activity also increased as the year progressed, reversing the year-on-year decline in oil demand and increasing demand for tankers. Despite OPEC maintaining its production quota throughout 2002, over production increased as the year progressed and in the fourth quarter OPEC production was 11% above established quotas. In December, OPEC increased its production by 1.3 million barrels per day (b/d) effective from January 2003, in an effort to legitimize and limit this over production. These factors combined with reduced availability of tonnage in the Arabian Gulf resulted in a surge in freight rates during the fourth quarter to a 2002 high of $81,500 per day reached in mid December and an average rate of $42,500 per day. Since the VLCC market predominantly entails longer-haul voyages, in a rising rate environment, such as that which prevailed in the fourth quarter, there is typically a lag before an increase in rates is fully reflected in actual operating results.

        A general strike in Venezuela that started in early December has significantly reduced oil production and exports from Venezuela. Accordingly, exports of oil to the U.S., its major market, have been sharply curtailed. The North Sea, West Africa and the Middle East have increased shipments to the U.S. to offset this shortfall with a resulting rise in rates in each of these trades. Rates in the Caribbean trades fell markedly in December, and many vessels ballasted across the Atlantic to take advantage of the higher rates that prevailed in the North Sea and Mediterranean trades. OPEC agreed to raise production quotas by 1.5 million b/d effective from February 2003 to offset this shortfall in Venezuelan exports. The resulting increase in long-haul imports into the U.S. has raised demand for VLCC tonnage, in particular.

Foreign Flag Aframax Segment

 
  Spot Market TCE Rates
Aframaxes in the Caribbean
 
  Q1-2002
  Q2-2002
  Q3-2002
  Q4-2002
  2002
  2001
  2000
Average   $ 12,700   $ 17,800   $ 14,000   $ 19,700   $ 16,100   $ 24,800   $ 30,600
High   $ 24,000   $ 24,000   $ 22,000   $ 34,000   $ 34,000   $ 51,000   $ 56,000
Low   $ 10,500   $ 13,500   $ 8,500   $ 9,000   $ 8,500   $ 12,000   $ 11,200

        Aframax freight rates have derived support from increasing crude oil exports from the Former Soviet Union (FSU), which have increased by 17% over 2001 and largely utilize Aframax and Suezmax tonnage. In December, the Venezuelan strike effectively closed all ports in that country and rates in the Caribbean market fell significantly to a low of $9,000 per day in conjunction with the reduction in available cargoes. For the first ten months of the year, average crude oil imports into the U.S. from the Caribbean region (Colombia, Venezuela, Trinidad and Mexico) rose by just 0.5% over the average for 2001. This modest increase was more than offset by a reduction of 18% in long-haul crude oil imports from the Middle East, which although principally impacting the VLCC market, reduced the demand for Aframaxes in lightering operations in the U.S. Gulf. U.S. imports of North Sea oil, most of which is carried in Aframax tankers, rose by 37%.

32


        As a result, rates for Aframaxes operating in the Caribbean trades in 2002 averaged $16,100 per day, a decline of 35% from the 2001 level and 47% from the 2000 average. Caribbean freight rates reached a 2002 low of just $8,500 per day during the third quarter, but rose rapidly to reach $34,000 per day in early November, due largely to a limited availability of tonnage. A number of vessels normally available for trading had been chartered for use in lightering operations in the U.S. Gulf as long-haul imports into the U.S. increased. At the start of the fourth quarter, the Turkish authorities imposed stricter regulations on vessels transiting the Bosphorus Strait and rates in this region rose to compensate for the resulting delays. The sinking of the single-hulled, 1976-built Prestige in November 2002 has led to an increased preference on the part of many charterers for modern double-hulled vessels, especially for trades involving the European region. These factors reduced availability of suitable vessels, contributing to the rise in rates in the North Sea and Mediterranean trades in the fourth quarter.

Foreign Flag Product Carriers Segment

 
  Spot Market TCE Rates
Panamaxes in the Pacific and Bostonmaxes in the Caribbean
 
  Q1-2002
  Q2-2002
  Q3-2002
  Q4-2002
  2002
  2001
  2000
Panamax Average   $ 12,000   $ 10,700   $ 13,600   $ 16,000   $ 13,100   $ 27,100   $ 22,100
Panamax High   $ 13,300   $ 13,300   $ 14,800   $ 23,500   $ 23,500   $ 58,000   $ 50,000
Panamax Low   $ 9,500   $ 9,000   $ 12,000   $ 13,000   $ 9,000   $ 10,500   $ 11,500

Bostonmax Average
 
$
9,400
 
$
11,300
 
$
8,900
 
$
10,700
 
$
10,100
 
$
18,200
 
$
15,900
Bostonmax High   $ 12,000   $ 12,400   $ 11,500   $ 15,000   $ 15,000   $ 32,000   $ 28,700
Bostonmax Low   $ 8,300   $ 9,000   $ 8,000   $ 7,200   $ 7,200   $ 7,300   $ 7,000

        Rates for Panamax Product Carriers in 2002 were weak in comparison to the two previous years, with rates in the Pacific averaging only $13,100 per day in 2002, a decline of 52% from the 2001 average and 41% from the 2000 average. Rates in the first half of the year were particularly weak, reflecting a 6% year-over-year reduction in deliveries of refined products to Japan. Longer-haul imports from the Middle East were replaced by shorter-haul supplies from non-OECD countries in Asia (primarily China, India and Singapore) reducing ton-mile demand and placing additional pressure on rates. In the second half of the year, however, rates staged a modest recovery as Japanese fuel oil imports for oil-fired power generation compensated for shortfalls in nuclear power generation attributable to technical difficulties at a number of nuclear power stations. Additionally, petrochemical producers in the Asian region stepped up imports to build up inventory levels in anticipation of potential supply disruptions from the Middle East.

        Bostonmax Product Carrier rates similarly failed to match their 2001 levels, with rates averaging just $10,100 per day, 45% below the 2001 average and 37% below the 2000 average. Over the first ten months of the year, total U.S. refined product imports fell by 12% from the comparable period in 2001. Almost 54% of this decrease occurred in imports from the Caribbean region, primarily Venezuela. Rates reached $12,400 per day during the second quarter as U.S. imports of gasoline peaked in anticipation of the start of the summer driving season. Overall refined product inventory levels in the U.S. declined during the third quarter and heating oil inventories entered the winter approximately 18 million barrels, or 13%, lower than one year earlier. Consequently, U.S. imports of heating oil surged during the fourth quarter as colder than normal weather blanketed the Northeast. The general strike in Venezuela that started in December hobbled the Venezuelan oil industry and initially caused Caribbean rates to weaken. Caribbean Product Carrier rates, however, have subsequently improved as significant amounts of tonnage were repositioned to take advantage of higher rates available elsewhere. Towards the end of the fourth quarter, Caribbean Product Carrier rates reached a high for the year of $15,000 per day.

33


Critical Accounting Policies

        Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States, which require us to make estimates in the application of our accounting policies based on our best assumptions, judgments, and opinions. Following is a discussion of the accounting policies that involve a higher degree of judgment and the methods of their application. For a description of all of our material accounting policies, see Note A to our consolidated financial statements included elsewhere in this prospectus.

Revenue Recognition

        We generate a majority of our revenue from voyage charters. Within the shipping industry, there are two methods used to account for voyage revenue and expenses: percentage of completion and completed voyage. The percentage of completion method is the most prevalent method of accounting for voyage revenues and expenses, and it is the method we currently use. Under each method, voyages may be calculated on either a load-to-load or discharge-to-discharge basis.

        Prior to 2000, we accounted for voyage revenues and expenses using the completed voyage method, with voyages calculated on a load-to-load basis. Accordingly, we did not recognize the revenues and expenses of voyages until vessels had completed their trips to the next load ports, and our revenues fluctuated from period to period because of the timing of voyage completions. The change to the percentage of completion method, with voyages calculated on a discharge-to-discharge basis, eliminates these fluctuations since specific voyage results are allocated on a pro rata basis to the periods over which they are performed.

        In applying the percentage of completion method, we believe that the discharge-to-discharge basis of calculating voyages more accurately estimates voyage results than the load-to-load basis. Since, at the time of discharge, we generally know the next load port and expected discharge port, the discharge-to-discharge calculation of voyage revenues and expenses can be estimated with a greater degree of accuracy.

        In accordance with Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements," we do not begin recognizing voyage revenue until a charter has been agreed to by both us and the customer, even if the vessel has discharged its cargo and is sailing to the anticipated load port on its next voyage.

Vessel Lives and Impairment

        The carrying value of each of our vessels represents its original cost at the time it was delivered or purchased less depreciation calculated using an estimated useful life of 25 years from the date such vessel was originally delivered from the shipyard. In the shipping industry, use of a 25-year life has become the standard. The actual life of a vessel may be different. We have evaluated the impact of the revisions to MARPOL Regulation 13G on the economic lives assigned to the tankers in our Foreign Flag fleet. Current regulations will not require that any of the single-hulled or double-sided Foreign Flag tankers be removed from service prior to attaining 25 years of age.

        The carrying values of our vessels may not represent their fair market value at any point in time since the market prices of second-hand vessels tend to fluctuate with changes in charter rates and the cost of newbuildings. Both charter rates and newbuilding costs tend to be cyclical. We record impairment losses only when events occur that cause us to believe that future cash flows for any individual vessel will be less than its carrying value.

34


Market Value of Marketable Securities

        In accordance with Statement of Financial Accounting Standards No. 115 ("FAS 115"), our holdings in marketable securities are classified as available-for-sale and, therefore, are carried on the balance sheet at fair value (determined by using period-end sales prices on U.S. or foreign stock exchanges) with changes in carrying value being recorded in accumulated other comprehensive income/(loss) until the investments are sold. Accordingly, these changes in value are not reflected in our statements of operations. If, however, pursuant to the provisions of FAS 115 and Staff Accounting Bulletin No. 59, we determine that a material decline in the fair value below our cost basis is other-than-temporary, we record a noncash impairment loss as a charge in the statement of operations in the period in which that determination is made. As a matter of policy, we evaluate all material declines in fair value for impairment whenever the fair value of a stock has been below its cost basis for six consecutive months. In the period in which a decline in fair value is determined to be other-than-temporary, the carrying value of that security is written down to its fair value at the end of such period, thereby establishing a new cost basis. Based on a number of factors, including the magnitude of the drop in market values below our cost bases and the length of time that the declines have been sustained, we concluded that declines in fair value of securities with an aggregate cost basis of $72,521,000, including $9,898,000 attributable to securities in the Capital Construction Fund, were other-than-temporary. During the third and fourth quarters of 2002, we recorded pre-tax noncash impairment losses aggregating $42,055,000 related to such marketable securities, including $6,413,000 related to securities held in the Capital Construction Fund. These impairment losses are reflected in the consolidated statement of operations for 2002 included elsewhere in this prospectus.

        The fair value of certain other marketable securities has declined below our cost bases in those securities. See Note F to the consolidated financial statements included elsewhere in this prospectus for additional information on pre-tax unrealized losses as of December 31, 2002. Certain of these securities have had fair values below their carrying values for more than six months. We have evaluated the circumstances surrounding the declines in market values as of December 31, 2002 and believe that these declines are temporary and, accordingly, continue to record the net after tax unrealized losses in accumulated other comprehensive income/(loss). If, however, the market values of these securities do not recover in the near term, the declines may then be considered other-than-temporary, resulting in impairment charges to earnings in future periods, which charges previously have been included in accumulated other comprehensive income/(loss).

Drydocking

        Within the shipping industry, there are three methods that are used to account for drydockings: (1) capitalize drydocking costs as incurred (deferral method) and amortize such costs over the period to the next scheduled drydocking, (2) accrue the estimated cost of the next scheduled drydocking over the period preceding such drydocking, and (3) expense drydocking costs as incurred. Since drydocking cycles typically extend over two and a half years or longer, we believe that the deferral method provides a better matching of revenues and expenses than the expense-as-incurred method. We further believe that the deferral method is preferable to the accrual method because estimates of drydocking costs can differ greatly from actual costs, and anticipated drydockings may not be performed if we decide to dispose of the vessels before their scheduled drydock dates.

Deferred Tax Assets and Valuation Allowance

        The carrying value of our deferred tax assets is based on the assumption that we will generate sufficient taxable income in the future in order to permit us to take deductions and use tax-credit carryforwards. The deferred tax assets are net of a valuation allowance. As of December 31, 2002,

35


we recorded a valuation allowance of $3,640,000 related to capital losses arising from the write-down of certain marketable securities. We believe that it is more likely than not that a portion of the capital losses may expire unused because the generation of future taxable capital gains cannot be assured. If these assumptions and estimates change in the future, we could be required to increase the valuation allowance against our deferred tax assets, which will result in additional income tax expense in our statement of operations. Each quarter, we evaluate the realizability of the deferred tax assets and assess the need for changes to the valuation allowance.

Pension and Other Postretirement Benefits

        We have recorded pension and other postretirement benefit costs based on complex valuations developed by our actuarial consultant. These valuations are based on key estimates and assumptions related to the discount rates used and the rates expected to be earned on investments of plan assets. We are required to consider market conditions in selecting a discount rate that is representative of the rates of return currently available on high-quality fixed income investments. A higher discount rate would result in a lower benefit obligation and a lower rate would result in a higher benefit obligation. The expected rate of return on plan assets is our best estimate of expected returns. A decrease in the expected rate of return will increase future net periodic benefit costs and an increase in the expected rate of return will decrease future benefit costs. As of December 31, 2002, we reduced the discount rate and the rate of return on plan assets by 0.4% and 0.25%, respectively. Changes in pension and other postretirement benefit costs may occur in the future as a result of changes in these rates.

Special Purpose Entity ("SPE")

        In 1999, we facilitated the creation of an SPE that purchased from and bareboat chartered back to us five U.S. Flag Crude Tankers that were being time chartered to BP for the transportation of Alaskan crude oil. The purchase price of $170 million was financed by a term loan from a commercial lender and a substantive equity capital investment by the owner of the SPE. We did not guarantee the vessels' residual values or guarantee the SPE's debt. We immediately thereafter bareboat chartered the vessels to a joint venture in which we have a 37.5% interest. The joint venture, in turn, has time chartered the vessels to BP under a "hell or highwater" lease through the date on which they must be removed from service in accordance with OPA 90. The portion of the charter hire payments from BP to the joint venture representing bareboat charter hire to us is sufficient to fully amortize the debt of the SPE. Such payments have been assigned to the SPE. We have not consolidated the SPE. As of December 31, 2002, total assets and total liabilities on the books of the SPE were $58.6 million and $52.5 million, respectively. On July 1, 2003, we expect to consolidate this SPE in accordance with FASB Interpretation No. 46.

Income from Vessel Operations

        During 2002, TCE revenues decreased by $114,293,000 to $266,725,000 from $381,018,000 in 2001, as a result of a sharp decline in average daily TCE rates for vessels operating in the spot market partially offset by an increase in revenue days. During 2001, TCE revenues increased by $10,937,000 to $381,018,000 from $370,081,000 in 2000 because of an increase in average daily TCE rates and revenue days. During 2002, approximately 70% of our TCE revenues were derived in the spot market, including vessels in pools that predominantly perform voyage charters compared with 73% in 2001 and 76% in 2000. In 2002, approximately 30% of TCE revenues were generated from long-term charters compared with 27% in 2001 and 24% in 2000. The increased percentage contribution from long-term charters during 2002 compared with 2001 and 2000 reflects the sharp decline in average daily TCE rates for the vessels operating in the spot market.

36


        The reliance on the spot market contributes to fluctuations in our revenue, cash flow, and net income/(loss), but affords us greater opportunity to increase income from vessel operations when rates rise. On the other hand, time and bareboat charters provide us with a predictable level of revenues.

        During 2002, income from vessel operations decreased by $85,798,000 to $44,888,000 from $130,686,000 in 2001. Excluding the impact of the restructuring charge of $10,439,000 recorded in 2001, income from vessel operations decreased by $96,237,000. This reduction resulted from a decrease in average daily TCE rates and revenues for all of our Foreign Flag segments (see Note C to the consolidated financial statements included elsewhere in this prospectus for additional information on our segments). Average daily vessel expenses decreased by more than $370 per day on a consolidated basis for 2002 compared with 2001.

        During 2001, income from vessel operations increased by approximately $7,059,000 from $134,066,000 in 2000, before taking into account a $10,439,000 restructuring charge in 2001. The improvement resulted from an increase in average daily TCE rates and revenues for the Aframax and Product Carriers segments, partially offset by a decrease in TCE rates and revenues for the VLCC segment.

 
  2002
  2001
  2000
VLCC Segment:                  
TCE revenues (in thousands)   $ 79,714   $ 112,820   $ 118,156
Running expenses (in thousands)(a)     61,026     48,467     43,927
   
 
 
Income from vessel operations (in thousands)(b)   $ 18,688   $ 64,353   $ 74,229
   
 
 
Average daily TCE rate   $ 20,545   $ 37,432   $ 44,137
Average number of vessels(c)     9.8     7.4     6.4
Average number of vessels chartered in under operating leases     1.1     1.0     1.0
Number of revenue days(d)     3,880     3,014     2,677
Number of ship-operating days(e)     3,972     3,077     2,701
(a)
Running expenses represent vessel expenses, time and bareboat charter hire expenses, and depreciation and amortization.

(b)
Income from vessel operations by segment is before general and administrative expenses and the restructuring charge.

(c)
The average is calculated to reflect the addition and disposal of vessels during the year.

(d)
Revenue days represent ship-operating days less days that vessels were not available for employment due to repairs, drydock or lay-up.

(e)
Ship-operating days represent calendar days.

37

        The VLCC segment includes two vessels that were time chartered out during the three years ended December 31, 2002. The charter on one of these vessels expired at the end of February 2002, at which time the vessel commenced participation in the Tankers pool. The following table presents information for the VLCCs generating revenue in the spot market.

 
  2002
  2001
  2000
Spot Market:                  
TCE revenues (in thousands)   $ 65,536   $ 89,631   $ 91,419
Running expenses (in thousands)     51,923     35,990     31,729
   
 
 
Income from vessel operations (in thousands)   $ 13,613   $ 53,641   $ 59,690
   
 
 
Average daily TCE rate   $ 18,827   $ 38,987   $ 47,002
Number of revenue days     3,481     2,299     1,945

        During 2002, TCE revenues for the VLCC segment decreased by $33,106,000, or 29%, to $79,714,000 from $112,820,000 in 2001. This reduction in TCE revenues resulted from a decrease of $16,887 per day in the average daily TCE rate earned partially offset by an increase in the number of revenue days. The increase in revenue days resulted from the delivery of three VLCC newbuildings (two in the second half of 2001 and one in early April 2002). Running expenses increased by $12,559,000 to $61,026,000 in 2002 from $48,467,000 in the prior year as a result of an increase in ship-operating days. Average daily running expenses, however, were relatively unchanged.

        During 2001, TCE revenues for the VLCC segment decreased by $5,336,000, or 5%, to $112,820,000 from $118,156,000 in 2000 because of a decrease of $6,705 per day in the average daily TCE rate earned partially offset by an increase in the number of revenue days. The increase in revenue days resulted from the delivery of two VLCC newbuildings in the second half of 2001 and the operation for all of 2001 of two VLCC newbuildings delivered in the first half of 2000, partially offset by an increase in days spent repairing and drydocking the segment's vessels. Running expenses increased by $4,540,000 to $48,467,000 in 2001 from $43,927,000 in 2000 as a result of an increase in ship-operating days, but average daily running expenses were relatively unchanged.

 
  2002
  2001
  2000
Aframax Segment:                  
TCE revenues (in thousands)   $ 71,121   $ 111,293   $ 86,101
Running expenses (in thousands)     43,685     44,575     36,868
   
 
 
Income from vessel operations (in thousands)   $ 27,436   $ 66,718   $ 49,233
   
 
 
Average daily TCE rate   $ 17,389   $ 29,505   $ 26,957
Average number of vessels     11.5     9.9     9.0
Average number of vessels chartered-in under operating leases     —     0.5     0.1
Number of revenue days     4,090     3,772     3,194
Number of ship-operating days     4,187     3,810     3,295

        During 2002, TCE revenues for the Aframax segment decreased by $40,172,000, or 36%, to $71,121,000 from $111,293,000 in 2001. This reduction in TCE revenues resulted from a decrease of $12,116 per day in the average daily TCE rate earned partially offset by an increase in revenue days. The increase in revenue days primarily resulted from the delivery of four new vessels since January 1, 2001. TCE revenues for 2002 reflect a loss of $697,000 generated by forward freight agreements compared with income of $3,197,000 in 2001. Running expenses decreased by $890,000 to $43,685,000 from $44,575,000 in 2001 as a result of a reduction in charter-in expense partially offset by an increase in ship-operating days. Average daily running expenses, excluding the impact of charter-in expense, were relatively unchanged.

38


        During 2001, TCE revenues for the Aframax segment increased by $25,192,000, or 29%, to $111,293,000 from $86,101,000 in 2000 because of an increase of $2,548 per day in the average daily TCE rate earned and an increase in revenue days resulting from the delivery of three Aframaxes in 2001 and a decrease in days spent repairing and drydocking the segment's vessels. TCE revenues for 2001 include $3,197,000 resulting from forward freight agreements. Running expenses increased in 2001 as a result of an increase in ship-operating days, but average daily running expenses were relatively unchanged.

 
  2002
  2001
  2000
Product Carrier Segment:                  
TCE revenues (in thousands)   $ 35,053   $ 58,078   $ 54,354
Running expenses (in thousands)     24,493     27,818     29,416
   
 
 
Income from vessel operations (in thousands)   $ 10,560   $ 30,260   $ 24,938
   
 
 
Average daily TCE rate   $ 12,226   $ 21,212   $ 16,541
Average number of vessels     8.0     8.0     8.0
Average number of vessels chartered in under operating leases     —     0.2     1.0
Number of revenue days     2,867     2,738     3,286
Number of ship-operating days     2,920     3,007     3,293

        During 2002, TCE revenues for the Product Carrier segment decreased by $23,025,000, or 40%, to $35,053,000 from $58,078,000 in 2001. This reduction in TCE revenues resulted from a decrease of $8,986 per day in the average daily TCE rate earned and the redelivery of a chartered-in vessel to its owner in late-March 2001 partially offset by an increase in revenue days caused by a 216-day reduction in repair and drydocking days. Running expenses decreased by $3,325,000 to $24,493,000 from $27,818,000 in 2001 as a result of decreases in charter-in expense and insurance costs related to hull and machinery claims. Average daily running expenses, excluding the impact of charter-in expense and insurance costs related to hull and machinery claims, were relatively unchanged.

        During 2001, TCE revenues for the Product Carrier segment increased by $3,724,000, or 7%, to $58,078,000 from $54,354,000 in 2000 because of an increase of $4,671 per day in the average daily TCE rate earned partially offset by a decrease in revenue days resulting from the expiration in early 2001 of an operating lease on a chartered-in vessel and an increase in days spent repairing and drydocking the segment's vessels. Running expenses decreased by $1,598,000 to $27,818,000 in 2001 from $29,416,000 in 2000 because of a decrease in ship-operating days, partially offset by an increase of $2,000,000 in damage repair expenses involving two vessels.

U.S. Flag Crude Tanker Segment

        TCE revenues in 2002 for the U.S. Flag Crude Tanker segment were unchanged from 2001 because the segment's vessels are bareboat chartered at fixed rates to Alaska Tanker Company ("ATC").

        During 2001, TCE revenues for the U.S. Flag Crude Tanker segment decreased by $9,247,000 to $28,052,000 from $37,299,000 in 2000 principally because of a reduction of the number of segment vessels from five to four. This reduction resulted from the cancellation of both the bareboat charter-in and bareboat charter-out for one vessel that was sold by the owner of the SPE in October 2000 in connection with the merger of BP p.l.c. (BP) with ARCO.

39


U.S. Flag Dry Bulk Carrier Segment

        During 2002, TCE revenues for the U.S. Flag Dry Bulk Carrier segment decreased by $2,541,000, or 17%, to $12,331,000 from $14,872,000 in 2001. This reduction in TCE revenues resulted from a 216-day reduction in revenue days because of the sale of two vessels (one in June 2002 and one in June 2001) offset by a decrease of 178 days to 47 days in 2002 from 225 days in 2001, in time waiting for cargoes. This reduction in revenue days was partially offset by an increase of $840 per day in the charter rates earned. Running expenses decreased by $4,490,000 to $15,757,000 from $20,247,000 in 2001 due to the sale of segment vessels discussed above. Average daily running expenses, however, were relatively unchanged.

        During 2001, TCE revenues for the U.S. Flag Dry Bulk Carriers segment decreased by $9,862,000, or 40%, to $14,872,000 from $24,734,000 in 2000 because of lower charter rates, an increase of 100 days to 225 days in 2001 from 125 in 2000 in time waiting for cargoes, and a 202-day reduction in revenue days caused by the sale in 2001 of an older U.S. Flag Product Carrier that had participated in the U.S. grain trade program since the beginning of 2000. Running expenses decreased by $1,472,000 because of the vessel sale discussed above.

All Other

        We also own and operate a U.S. Flag Pure Car Carrier, two U.S. Flag Handysize Product Carriers operating in the Jones Act trade, and a Foreign Flag Suezmax, all on long-term charter, as well as two Foreign Flag Dry Bulk Carriers that operate in a pool of Capesize Dry Bulk Carriers. During 2002, TCE revenues decreased by $15,449,000, or 28%, to $40,454,000 from $55,903,000 in 2001. The reduction in TCE revenues resulted from our reduced participation in the charter-in of vessels that were commercially managed by the pool of Capesize Dry Bulk Carriers and a 56-day decrease in revenue days for drydockings in 2002 and a $3,414 per day decrease in TCE rates earned by the two Foreign Flag Dry Bulk Carriers.

        During 2001, TCE revenues increased by $6,466,000, or 13%, to $55,903,000 from $49,437,000 in 2000 principally because of our participation in the charter-in of vessels that were commercially managed by the pool of Capesize Dry Bulk Carriers. Running expenses similarly increased because of the charter-in expense attributable to such vessel interests. The increase in TCE revenues earned in 2001 by the two U.S. Flag Product Carriers, which commenced long-term charters in that year, was offset by significantly weaker results from the two Foreign Flag Dry Bulk Carriers.

        The average daily rates paid with respect to the chartered-in vessels discussed in the two preceding paragraphs were higher than the TCE rates earned by such vessels during 2002 and 2001. Accordingly, the reduced participation in the charter-in of vessels positively affected consolidated income from vessel operations by $1,254,000 in 2002 compared with 2001.

        Since December 1996, the Pure Car Carrier has received payments of $2,100,000 per year under the U.S. Maritime Security Program, which continues through late 2005, subject to annual congressional appropriations.

General and Administrative Expenses

        During 2002, general and administrative expenses decreased by $9,046,000 to $32,921,000 from $41,967,000 in 2001 principally due to a decrease in cash compensation and related benefits. Such reductions were principally attributable to the New York headquarters staff reductions discussed in Note O to the consolidated financial statements included elsewhere in this prospectus.

40


        During 2001, general and administrative expenses decreased by $655,000 to $41,967,000 from $42,622,000 in 2000 because of a decrease of $3,364,000 in cash compensation and related benefits, partially offset by increases of $1,377,000 in non-cash stock compensation and $962,000 in net periodic pension and other postretirement plan costs.

Equity in Income of Joint Ventures

        As of December 31, 2002, we are a partner in joint ventures that own 11 foreign flag vessels (ten VLCCs and one Aframax). As of December 31, 2002, eight of these VLCCs participate in the Tankers pool and two operate on long-term charters, one to us and one to the other joint venture partner, a major oil company, and do not participate in the Tankers pool. The Aframax participates in the Aframax International pool.

        During the three years ended December 31, 2002, our various joint ventures made the following acquisitions:

        The following is a summary of our interest in all of our joint ventures, excluding ATC (see discussion below), and the revenue days for the respective vessels since their acquisition date. Revenue days are adjusted for our percentage ownership in order to state the revenue days on a basis comparable to that of a wholly-owned vessel. For the joint venture VLCCs operating in the Tankers pool, the ownership percentage reflected below is an average as of December 31, 2002. Our actual ownership percentages for these joint ventures ranged from 30% to 49.9%:

 
   
  Number of Revenue Days
 
  Average %
Ownership
 
  2002
  2001
  2000
VLCCs participating in Tankers pool   37.1 % 997   555   89
VLCCs owned jointly with a major oil company   50.0 % 365   365   366
Aframax in Aframax International pool   50.0 % 165   183   91
       
 
 
Total       1,527   1,103   546
       
 
 

        Additionally, we are a partner in ATC, a joint venture that operates ten U.S. Flag tankers transporting Alaskan crude oil for BP. The participation in ATC provides us with the opportunity to earn additional income (in the form of its share of incentive hire paid by BP to ATC) based on ATC's meeting certain predetermined performance standards.

        During 2002, equity in income of joint ventures decreased by $9,067,000 to $11,407,000 from $20,474,000 in 2001, principally due to a decrease in average daily rates earned by the joint venture vessels. The impact of this decrease in rates was partially offset by an increase in revenue days of joint venture VLCCs participating in the Tankers pool to 997 in 2002 from 555 in 2001, resulting from the delivery since January 1, 2001 of seven vessels. In addition, our share of incentive hire earned by ATC in 2002 decreased by $580,000 from 2001.

        During 2001, equity in income of joint ventures increased by $9,025,000 to $20,474,000 from $11,449,000 in 2000, principally because of the inclusion of the earnings of vessels acquired by joint ventures (as discussed above) and an increase in incentive hire earned by ATC. Of the total

41


increase, $3,193,000 resulted from the acquisition of six VLCCs from March 2000 to August 2001, all of which have joined the Tankers pool, as reflected by the increase in revenue days to 555 days in 2001 from 89 days in 2000. The increase in our share of incentive hire earned by ATC amounted to $3,108,000. An increase of $908,000 resulted from the operation of the Aframax for the full year in 2001, as reflected by the increase in revenue days to 183 days from 91 days in 2000.

Interest Expense

        The components of interest expense are as follows (in thousands):

In thousands for the year ended December 31,
  2002
  2001
  2000
 
Interest before impact of swaps and capitalized interest   $ 43,798   $ 53,386   $ 63,364  
Impact of swaps     13,844     4,800     (1,286 )
Capitalized interest     (4,949 )   (13,151 )   (15,411 )
   
 
 
 
Interest expense   $ 52,693   $ 45,035   $ 46,667  
   
 
 
 

        During 2002, interest expense increased by $7,658,000 to $52,693,000 from $45,035,000 in 2001 as a result of an increase in the average amount of debt outstanding of $89,930,000 and a reduction of $8,202,000 ($4,949,000 in 2002 compared with $13,151,000 in 2001) in interest capitalized in connection with vessel construction. Such increases were offset by a decrease of 210 basis points in the average rate paid on floating rate debt to 3.0% in 2002 from 5.1% in 2001. The impact of this decline in rates was substantially offset by the impact of floating-to-fixed interest rate swaps that increased interest expense by $13,844,000 in 2002 compared with an increase of $4,800,000 in 2001.

        During 2001, interest expense decreased by $1,632,000 to $45,035,000 from $46,667,000 in 2000 because of a decrease of 210 basis points in the average rate paid on floating rate debt to 5.1% in 2001 from 7.2% in 2000. The impact of this decline in rates was partially offset by an increase in the average amount of debt outstanding of $26,500,000. Interest expense reflects the impact of interest rate swaps that increased interest expense by $4,800,000 in 2001 and reduced interest expense by $1,286,000 in 2000. Interest expense is net of amounts capitalized in connection with vessel construction of $13,151,000 in 2001 compared with $15,411,000 in 2000.

Provision/(Credit) for Federal Income Taxes

        The credit for income taxes in 2002 and the income tax provisions in 2001 and 2000 are based on pre-tax income/(loss), adjusted to reflect items that are not subject to tax and the dividends received deduction. The credit for income taxes for 2002 also reflects the recording of a valuation allowance offset of $3,640,000 against the deferred tax asset resulting from the write-down of certain marketable securities. The valuation allowance was established because we believe, based on currently available evidence, that it is more likely than not that the full amount of the deferred tax asset will not be realized through the generation of capital gains in the future.

Effects of Inflation

        We do not believe that inflation has had or is likely, in the foreseeable future, to have a significant impact on vessel operating expenses, drydocking expenses and general and administrative expenses.

Newly Issued Accounting Standard

        In January 2003, the Financial Accounting Standards Board issued FASB Interpretation No. 46, "Consolidation of Variable Interest Entities." This interpretation requires the consolidation of SPEs

42


by the company that is deemed to be the primary beneficiary of such entities. This represents a significant change from current rules, which require consolidation by the entity with voting control and according to which we accounted for our 1999 sale-leaseback transaction of U.S. Flag Crude Tankers as an off-balance sheet financing. On July 1, 2003, we expect to consolidate Alaska Equity Trust, the SPE that now owns these vessels and holds the associated bank debt used to purchase them. Alaska Equity Trust's bank debt of approximately $52,100,000 as of December 31, 2002 is secured by the vessels but is otherwise nonrecourse to us. In addition, we did not issue any repayment or residual-value guaranties. Therefore, we are not exposed to any loss as a result of its involvement with Alaska Equity Trust. We are currently analyzing the effect that the adoption of FASB Interpretation No. 46 and the consolidation of Alaska Equity Trust will have on our consolidated results of operations and financial position, but we do not expect such effect to be material to net income.

Liquidity and Sources of Capital

        Working capital at December 31, 2002 was approximately $77,000,000 compared with $61,000,000 at December 31, 2001 and $88,000,000 at December 31, 2000. Current assets are highly liquid, consisting principally of cash, interest-bearing deposits, investments in marketable securities and receivables. In addition, we maintain a Capital Construction Fund with a market value of approximately $231,000,000 at December 31, 2002. Net cash provided by operating activities approximated $13,000,000 in 2002 compared with $193,000,000 in 2001 and $102,000,000 in 2000. Net cash provided by operating activities in 2002 reflects $24,500,000 of payments with respect to estimated 2001 federal income taxes. Current financial resources, together with cash anticipated to be generated from operations, are expected to be adequate to meet financial requirements in the next year.

        As of December 31, 2002, our total debt, including capital lease obligations, was $1,006,110,000 compared with $878,693,000 at December 31, 2001. The aggregate principal payments required to be made during the five years subsequent to December 31, 2002 are $21,075,000 (2003), $18,532,000 (2004), $369,422,000 (2005), $276,351,000 (2006) and $20,554,000 (2007). In December 2001, we concluded a new five-year unsecured revolving credit agreement that provides for borrowings of up to $300,000,000, which was increased to $350,000,000 in January 2002 during syndication. We have $700,000,000 of long-term unsecured credit availability, of which $192,000,000 was unused at December 31, 2002. Our two $350,000,000 long-term revolving credit facilities mature in 2005 and 2006. In February 2002, we increased our unsecured short-term credit facility from $15,000,000 to $45,000,000, of which $17,000,000 was unused at December 31, 2002. We intend to refinance both the outstanding balance of the 8% Notes, which mature in December 2003, and the $28,000,000 balance outstanding under the short-term credit facility as of December 31, 2002, using amounts available under the long-term credit facilities. Accordingly, the aggregate amount outstanding of $98,391,000 has been classified as long-term. We were in compliance with all of the financial covenants contained in our debt agreements as of December 31, 2002.

        As of December 31, 2002, the joint ventures in which we participate had total debt of $333,132,000. Our percentage interests in these joint ventures range from 30% to 50%. We have guaranteed a total of $35,249,000 of the joint venture debt at December 31, 2002. The balance of the joint venture debt is nonrecourse to us. The amount of our guaranties reduces proportionately as the principal amounts of the joint venture debt are paid down. See Note E to the consolidated financial statements for disclosures concerning long-term debt of the joint ventures.

        We finance vessel additions primarily with cash provided by operating activities and long-term borrowings. In 2002, 2001 and 2000, cash used for vessel additions approximated $153,000,000, $112,000,000 and $107,000,000, respectively, excluding additions financed directly by secured debt.

43


In July 2002, we prepaid approximately $47,600,000 of progress payments for two newbuildings realizing the benefit of a contractually-provided discount. As of December 31, 2002, we had non-cancelable commitments for the construction of three double-hulled Foreign Flag tankers for delivery between February 2003 and January 2004, with an aggregate unpaid cost of approximately $30,100,000. Unpaid costs are net of progress payments and prepayments, which are covered by refundment guaranties. Scheduled payments will be funded in 2003. We expect to finance such vessel commitments from working capital, cash anticipated to be generated from operations, existing long-term credit facilities and additional long-term debt, as required. The amounts of working capital and cash generated from operations that may, in the future, be utilized to finance vessel commitments are dependent on the rates at which we can charter our vessels. Such rates are volatile. Cancellation of these contracts by us, except as provided in the contracts, could require us to reimburse the shipyard for any losses that the shipyard may incur as a result of such cancellation.

        We have used interest rate swaps to effectively convert a portion of our debt either from a fixed to floating rate basis or from a floating to fixed rate basis, reflecting our interest rate outlook at various times. These agreements contain no leverage features and have various maturity dates from February 2003 to August 2014. As of December 31, 2002, the interest rate swaps effectively convert our interest rate exposure on $309,000,000 from a floating rate based on LIBOR to an average fixed rate of 6.74%.

Risk Management

        We are exposed to market risk from changes in interest rates, which could impact our results of operations and financial condition. We manage this exposure to market risk through our regular operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. We manage our ratio of fixed to floating rate debt with the objective of achieving a mix that reflects our interest rate outlook at various times. To manage this mix in a cost-effective manner, we, from time-to-time, enters into interest rate swap agreements, in which we agree to exchange various combinations of fixed and variable interest rates based on agreed upon notional amounts. We use such 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.

        The following tables provide information about our derivative financial instruments and other financial instruments that are sensitive to changes in interest rates. For investment securities and debt obligations, the tables present principal cash flows and related weighted average interest rates by expected maturity dates. Additionally, we have assumed that our fixed income securities are similar enough to aggregate those securities for presentation purposes. For interest rate swaps, the tables present notional amounts and weighted average interest rates by contractual maturity dates. Notional amounts are used to calculate the contractual cash flows to be exchanged under the contracts.

44


Interest Rate Sensitivity

Principal (Notional) Amount (dollars in millions) by Expected Maturity and Average Interest (Swap) Rate

At December 31, 2002
  2003
  2004
  2005
  2006
  2007
  Beyond
2007
  Total
  Fair Value at
Dec. 31, 2002
 
Assets                                                  
Fixed income securities   $ 0.8   $ 0.2   $ 1.0   $ 1.3   $ 1.6   $ 64.4   $ 69.3   $ 69.3  
  Average interest rate     6.3 %   8.0 %   2.6 %   5.9 %   4.6 %   7.3 %            

Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt and capital lease obligations, including current portion:                                                  
    Fixed rate   $ 77.2   $ 7.3   $ 8.2   $ 8.7   $ 9.3   $ 150.4   $ 261.1   $ 249.6  
    Average interest rate     8.2 %   7.7 %   8.0 %   8.1 %   8.2 %   8.0 %            
   
Variable rate
 
$
14.3
 
$
11.3
 
$
361.3
 
$
197.2
 
$
11.2
 
$
149.7
 
$
745.0
 
$
745.0
 
    Average spread over LIBOR     1.01 %   1.07 %   1.12 %   1.66 %   1.07 %   1.06 %            

Interest Rate Swaps Related to Debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pay fixed/receive variable*   $ 19.5   $ 17.9   $ 22.8   $ 213.0   $ 14.0   $ 131.2   $ 418.4   $ (33.9 )
Average pay rate     6.3 %   5.4 %   5.7 %   5.4 %   5.1 %   4.9 %            
At December 31, 2001
  2002
  2003
  2004
  2005
  2006
  Beyond
2006
  Total
  Fair Value at
Dec. 31, 2001
 
Assets                                                  
Fixed income securities   $ 1.9   $ 0.8   $ 1.5   $ 8.8   $ 1.0   $ 50.5   $ 64.5   $ 64.5  
  Average interest rate     7.0 %   6.3 %   6.8 %   6.8 %   6.1 %   6.8 %            

Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt and capital lease obligations, including current portion:                                                  
    Fixed rate   $ 6.2   $ 78.2   $ 4.3   $ 5.1   $ 5.7   $ 121.8   $ 221.3   $ 215.7  
    Average interest rate     9.8 %   8.2 %   10.0 %   10.0 %   10.0 %   9.1 %            
   
Variable rate
 
$
17.6
 
$
12.6
 
$
12.6
 
$
367.5
 
$
187.7
 
$
59.4
 
$
657.4
 
$
657.4
 
    Average spread over LIBOR     1.15 %   0.90 %   0.90 %   1.11 %   1.29 %   1.00 %            
Interest Rate Swaps Related to Debt                                                  
Pay fixed/receive variable*   $ 150.8   $ 19.5   $ 11.8   $ 16.6   $ 206.9   $ 53.8   $ 459.4   $ (13.7 )
Average pay rate     5.2 %   6.3 %   5.9 %   6.1 %   5.4 %   5.4 %            

* LIBOR

        In August 2002, floating-to-fixed interest rate swaps, with notional amounts aggregating $133 million matured. Pursuant to these agreements, we paid fixed rates of 5.1% and received floating rates based on LIBOR. In late-September 2002, we entered into 11-year floating-to-fixed amortizing interest rate swaps with major financial institutions that commence in the third quarter of 2003. These swaps are designated and qualify as cash flow hedges. As of December 31, 2002, we have effectively converted the full $256 million of floating rate, secured loans, borrowed in the third quarter, into fixed rate debt for periods up to 12 years, at a weighted average effective rate of 5.74%.

        As of December 31, 2002, debt in the amount of $158,000,000 bears interest at LIBOR plus a margin, where the margin is dependent upon our leverage.

45



THE INTERNATIONAL TANKER INDUSTRY

         The information contained under this heading has been reviewed by Maritime Strategies International Ltd., or MSI, and they confirmed to us that this information is a general, accurate description of the international tanker market, subject to the availability and reliability of the data supporting the statistical and graphic information as described below in this paragraph. The statistical and graphic information in this prospectus has been compiled by MSI from its databases. Its methodologies for collecting data, and therefore the data collected, may differ from those of other sources, and its data do not reflect all or even necessarily a comprehensive set of the actual transactions occurring in the market. MSI collects market data from a number of industry sources, but there can be no assurance that these data reflect actual market conditions. Data compilation is subject to limited audit and validation procedures by MSI and may contain errors. For these reasons, you should not place undue reliance on the statistical data contained in this discussion.

Overview

        The international tanker industry provides ocean transportation of crude and refined petroleum products. Over two-thirds of global oil consumption is transported by oil tankers. Customers for oil tanker services include oil companies, oil traders, large oil consumers, petroleum-product producers, government agencies and storage facility operators. Oil transportation rates can be volatile as a result of supply and demand economics. Demand for oil tankers is influenced by many factors, including international economic activity, oil production, consumption, price levels, crude and refined products inventories, and the distances over which oil is transported. Tanker supply is influenced by newbuildings, the scrapping of older tankers, the drydocking of existing tankers, environmental regulations and other factors.

Industry Ownership

        Ocean transportation of crude oil and petroleum products is provided by two main types of tanker owners: major oil companies and independent shipowners. The trend by major oil companies toward outsourcing non-core activities, such as shipping, has caused the number of tankers owned by oil companies to decrease in recent years. As a result, independent tanker companies now own a large majority of the global tanker fleet.

        In recent years, there has been some consolidation of independent tanker companies seeking to exploit the commercial and operational advantages of a larger fleet. Some independent owners, such as OSG, have placed their vessels in commercial "pools" to gain scale in chartering. Pools have greater ability to enter into complex charters, including contracts of affreightment, and to minimize unloaded backhauls and non-earning days through scheduling efficiencies.

Tanker Demand

        The amount of oil transported in tankers is driven by oil demand, which is affected by general economic conditions and oil production, consumption, prices and inventories. Tanker demand is influenced by the transportation distance from oil-producing locations to oil-consuming destinations. Tanker demand can be expressed in "ton-miles," which is equal to the amount of oil transported in tankers multiplied by the distance over which this oil is transported.

        The distance over which oil is transported is the more variable element of the ton-mile demand equation. It is determined by oil distribution patterns, which are influenced by the location of production facilities and the optimal economic distribution of that production for refining and consumption purposes. Ocean transportation patterns are also influenced by geopolitical events that divert tankers from normal trading patterns, as well as by inter-regional oil trading activity created by global supply and demand imbalances. Tankers, particularly older vessels, are also used as "floating storage" by oil companies, most notably during times of supply uncertainty.

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Oil Consumption and Ocean Transportation

        The greatest portion of oil delivered by sea is delivered to the major industrial and industrializing economies of the world, such as the United States, Western Europe, Japan, the Pacific Rim and India. This oil is shipped by tankers from the main exporting regions, primarily the Middle East, which has the world's largest proven oil reserves and accounts for almost half of all crude oil exports. Due to the relatively long distances between Middle Eastern loading terminals and discharge ports in most of these importing regions, the level of oil exports from the Middle East strongly affects the demand for tanker capacity and hence tanker rates. Oil exports from regions such as Latin America and the North Sea are typically shipped over much shorter distances and thus have a relatively smaller impact on tanker demand and rates.

        The following chart outlines world oil consumption and seaborne trade from 1980 to 2002:


OIL CONSUMPTION AND SEABORNE TRADE

         GRAPHIC

        In recent years, growth in ocean transportation of oil has leveled off because of a global economic slowdown in 2001 and the first nine months of 2002, the impact of successive OPEC quota reductions, and the emergence of oil sources located closer to the major consuming areas, which displaced longer-haul trades and reduced ton-miles.

        As the tables below illustrate, growth in oil demand over the last five years has been strongest in Asia and, to a lesser extent, North America. In contrast, demand in Western Europe has been flat or falling. At the same time, oil supply has grown fastest in non-OPEC regions, while output from both the Middle East and other OPEC areas has been lower than it was in 1998, having fallen quite steeply since 2000. This change in oil trading patterns is due partly to increased productive capacity outside OPEC, particularly in the FSU. Nevertheless, the Middle East remains the world's 'residual' supplier of oil. As a consequence, shipments from this region change disproportionately more in relation to import demand cycles than do shipments from other export regions.

        The effect of recent cuts in long-haul Middle Eastern supplies on the demand for oil tankers has been significant. The tanker tonnage required to ship one million barrels per day from the

47


Middle East to the United States is approximately 13 million dwt, compared with approximately five million dwt for a similar journey from a supplier in the North Sea.

 
  World Oil Demand (Million Metric Tons)
   
 
 
  Compound Annual
Growth Rate
1998-2002
 
 
  1998
  1999
  2000
  2001
  2002
 
North America   951   976   986   984   986   0.9 %
Western Europe   689   689   687   691   682   -0.3 %
Asia   860   902   934   928   938   2.2 %
Rest of World   910   914   912   908   931   0.6 %
   
 
 
 
 
     
Total   3,410   3,481   3,519   3,511   3,537   0.9 %
   
 
 
 
 
     

Source: MSI Ltd

 
  World Oil Supply (Million Metric Tons)
   
 
 
  Compound Annual
Growth Rate
1998-2002
 
 
  1998
  1999
  2000
  2001
  2002
 
North Sea   283   287   287   280   274   -0.8 %
Other Non-OPEC   1,757   1,749   1,808   1,845   1,918   2.2 %
   
 
 
 
 
     
Total Non-OPEC   2,040   2,036   2,095   2,125   2,192   1.8 %
   
 
 
 
 
     

Arabian Gulf OPEC
 
1,001
 
955
 
1,018
 
977
 
926
 
(1.9
)%
Other OPEC   493   466   482   483   458   (1.8 )%
   
 
 
 
 
     
Total OPEC   1,494   1,421   1,500   1,460   1,384   (1.9 )%
   
 
 
 
 
     
Total   3,534   3,457   3,595   3,585   3,576   0.3 %
   
 
 
 
 
     

Source: MSI Ltd

Tanker Supply

        The supply of tanker capacity is measured by the amount of suitable tonnage available to transport oil and depends on the aggregate tonnage of the existing world tanker fleet, the number of newbuildings, the scrapping of older tankers and the number of tankers in storage, drydocked or otherwise unavailable for use.

        The decision to order newbuildings and scrap older vessels is influenced by many factors, including prevailing and expected charter rates, newbuilding and scrap prices, availability of delivery dates and government and industry regulation of maritime transportation practices, particularly environmental protection laws and regulations. In general, it takes from 18 to 36 months from the date a newbuilding contract is placed to the date a shipowner takes delivery of the vessel.

        Scrapping is likely to increase based on the age profile of the world fleet as a result of stricter inspection and the regulatory and political pressures that are accelerating the mandatory retirement of older tonnage. The age of the global tanker fleet has been increasing in recent years, and a large number of ships that were built in the late 1970s or earlier are now approaching the end of their economic lives. For example, the proportion of the fleet aged 25 years or more rose from 2% in 1985 to peak at over 13% in 2001, but the near record scrapping levels recorded in 2002 has reduced this proportion to 9%. OPA 90 prohibits all single-hulled tankers over 23 years of age and over 30,000 gross tons (the latter category includes the vast majority of crude tankers) from calling at most U.S. ports (except for the Louisiana Offshore Oil Port) unless retrofitted with double hulls. Similarly, the IMO, after the Erika incident off the coast of France, passed regulations in April 2001 to restrict the trading life of old and substandard oil tankers. These regulations further advanced the timetable for the elimination of single-hulled tankers. Whereas previously some single-hulled tankers could continue trading up to their 30th anniversary, by the end of 2007 none will be able to trade beyond their 26th anniversary. More recently, the loss of the Prestige off the coast of Spain has prompted the European Commission to propose a ban on single-hulled vessels from carrying fuel

48


oil and certain grades of heavy crude, as well as to accelerate the phase-out of all single-hulled vessels by 2010, rather than by 2015 as laid down in the IMO regulations. Pending formal adoption of the proposals by the EU Council and Parliament, several European governments have already implemented a ban on single-hulled vessels carrying "persistent oils" within their waters.

Major Tanker Segments

        Crude tankers are customarily divided into the following four market segments:

Category
  Size Range (dwt)
VLCC   200,000 - 320,000
Suezmax   120,000 - 200,000
Aframax     80,000 - 120,000
Panamax     50,000 - 80,000  

        The table below sets forth information about the number of vessels and deadweight capacity of each of these market segments. The information below for VLCCs includes Ultra Large Crude Carriers, or ULCCs, which are 320,000 dwt and above. The information for Aframaxes and Panamaxes includes coated tankers, which can transport refined products as well as crude oil.


Crude Oil Tanker Fleet as of December 31, 2002

 
  Number of Vessels
  Deadweight Capacity
 
Segment
  Total
  Share (%)
  Total (millions)
  Share (%)
 
VLCCs   427   28 % 124.8   52 %
Suezmax   286   18 % 42.0   17 %
Aframax   565   36 % 54.6   23 %
Panamax   283   18 % 18.1   8 %
TOTAL   1,561   100 % 239.5   100 %

VLCC Segment

        VLCC Trade Routes.     VLCCs are the largest segment of the crude carrying tanker fleet and constituted 52% of fleet capacity by dwt as of December 31, 2002. Because of their size and economies of scale, VLCCs primarily transport crude oil on long-haul trade routes. Typical routes include those from the Arabian Gulf to the Far East, from the Arabian Gulf to Western Europe via the Cape of Good Hope and from the Arabian Gulf to the U.S. Gulf/Caribbean. VLCCs carry approximately 80-85% of all crude oil exported from the Middle East. The recent reductions in annual cargo volumes from the Middle East and the emergence of some shorter-haul trade routes have benefited smaller tankers. Even so, VLCC employment has expanded by 24% since 1990 compared with around 21% for the rest of the tanker market.

        VLCCs have been able to diversify into North Sea and West African trades due to increased oil production and port developments in West Africa that have opened routes to the U.S. Gulf and to India and the People's Republic of China. These new routes have added to the flexibility and efficiency of VLCC trading and have allowed operators to reduce the distances vessels travel without cargo. Significant new oil output planned for West Africa over the next ten years, combined with above-average oil demand growth anticipated in the Asia-Pacific region, should support expansion of this long-haul trade.

        VLCC Fleet Ownership.     VLCC ownership is fragmented. There are over 90 different owners of the 427 vessels in the world VLCC fleet, putting the average number of vessels per owner at only 4.4. The distribution of VLCC ownership is uneven. For example, as of December 31, 2002, the 20 largest owners owned about 61% of the fleet. The remaining owners owned an average of only 2.1 vessels each.

49

        VLCC Fleet Profile.     The chart below outlines the VLCC fleet by year built, including scheduled new deliveries as of December 31, 2002:


VLCC FLEET BY YEAR OF BUILD AND SCHEDULED DELIVERIES
(AS OF DECEMBER 31, 2002)

         GRAPHIC

As a result of the uneven pattern of deliveries over the last 20 to 25 years (as illustrated above), the VLCC fleet has an age profile featuring a substantial proportion of single-hulled tankers now reaching the end of their economic lives. The effect of this skewed age distribution on the growth in tonnage aged 20 or more years since the first half of the 1990s is illustrated in the chart below.


PERCENTAGE OF THE VLCC FLEET AGED 20 YEARS
OR MORE AT YEAR END

         GRAPHIC

50

        VLCC Scrapping.     The key factors influencing the scrapping of VLCCs have been their age and the repair and maintenance costs of keeping them in class, relative to their earning power. Scrappings reached record levels in 2002 of 10.9 million dwt. Of the currently active fleet, 78 vessels will (if not scrapped) reach their 25th anniversary by 2012, and of these, 57 will reach their 30th anniversary (see chart below).


VLCCs AGED 25+ AND 30+ YEARS
OVER THE NEXT 10 YEARS* BY DWT

         GRAPHIC

        Between 1993 and 2002, the average age of VLCCs sold for scrap rose from 20 to 26 years (see table below). Most of the fleet built during the 1970s did not approach its 25th anniversary until the end of the last decade. In addition, until the second half of 2001, market conditions generally favored continued trading of older vessels. As a result, 42 VLCCs are now trading beyond their 25th anniversary. Current IMO regulations do not permit VLCCs to continue trading after their 30th anniversary without a double hull, and this deadline will drop progressively between 2003 and 2007 to their 26th anniversary under the recent modifications to the IMO regulations. Given the considerable cost of retrofitting a second hull to a vessel of this size and age, it is highly likely that all these ships will be scrapped.


VLCCs Sold for Scrap: Number of Vessels, Average Age and Deadweight Tonnage

 
  1993
  1994
  1995
  1996
  1997
  1998
  1999
  2000
  2001
  2002
Number of ships   24   33   30   14   8   15   34   25   29   33
Average age (years)   20   20   21   22   24   23   24   25   25   26
Dwt (in millions)   6.0   8.7   7.6   3.6   2.0   4.2   9.9   7.1   8.3   10.9

Source: MSI Ltd

        VLCC Newbuildings.     Although actual deliveries will depend on whether shipyards alter their delivery schedules and on changes to the volume of new orders placed, short-term additions to VLCC capacity may be inferred from the current orderbook schedule (see "VLCC Fleet by Year of Build and Scheduled New Deliveries" chart). In 2003, 40 vessels of 12.3 million dwt are scheduled for delivery, with a further 18 tankers (5.4 million dwt) scheduled for delivery the following year.

        With the exception of 2001, the number of deliveries has increased each year since 1997, but the overall net addition after accounting for deletions has remained modest. In 2002, while 12.0 million dwt of new VLCC tankers was delivered, 10.9 million dwt was scrapped and a further

51


2.5 million dwt were sold for conversion to floating production, storage and off-loading vessels, resulting in a net decline in the fleet of 1.4 million dwt.

        The following chart shows that the VLCC orderbook represents an increasing percentage of the volume of VLCCs aged 20 years or more. Before 1988, there were no VLCCs aged over 20 years and consequently no need to scrap ships because of their age. As a result, the new supply during that time period was not offset by the scrapping of such vessels. During much of the 1990s, the proportion of the fleet over 20 years of age was considerably larger than the size of the newbuilding orderbook as a proportion of the fleet. As a result, ship scrapping has offset most of the tonnage delivered since the mid-1990s. However, by 2002 the tonnage of vessels over 20 years old and the tonnage of vessels on order were nearly equivalent.


VLCC ORDERBOOK AND 20 YEARS AND OLDER VLCC FLEET
(END OF YEAR)

         GRAPHIC

        Given the current backlog in the orderbook and lack of available building berths, no new VLCC orders could be delivered before late 2004. Several yards are currently unable to deliver VLCCs before late 2005.

        VLCC Earnings.     VLCC freight rates can be highly volatile and vary substantially even on a day-to-day basis. While VLCC rates depend largely on the market fundamentals of VLCC supply and demand, other factors (including the cost of bunkers and port charges) also influence earnings levels. Modern vessels typically earn more than older vessels due to fuel and other efficiencies. In addition, older vessels are prone to longer off-hire periods, which reduce their earnings capabilities.

        At the end of 2000, VLCC spot and time charter rates reached 25-year highs and, although rates subsequently collapsed to six-year (spot) and eight-year (time charter) lows, VLCC earnings have now recovered close to previous highs. Modern double-hulled VLCCs on one-year period time charters earn a substantial premium compared with their 1970s-built, single-hulled counterparts. This premium has increased in both absolute and percentage terms since the end of the 1990s.

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Aframax Segment

        Aframax Trade Routes.     As a result of their flexibility and size, Aframaxes are deployed in much more diverse trading patterns than the larger tankers and transport crude from virtually all the major crude exporting regions. Aframax crude carriers are typically deployed on short-haul routes where there are draft or other size restrictions or where crude oil is produced in smaller quantities.

        The principal trading areas for Aframax crude carriers are Europe and the Mediterranean (including the Black Sea), the Atlantic Basin (including the Caribbean and North Sea) and the Asia Pacific region. Aframaxes also transport crude on long-haul routes. They operate across the Atlantic Ocean, particularly westbound from Europe to North America.

        There are also potential opportunities for Aframaxes related to offshore developments in the North Sea, the Gulf of Mexico and off southwest Africa, which may substantially boost Aframax demand. Aframaxes are also likely to benefit from increased oil production in the Caspian Sea, particularly if crude oil is transported by pipeline to Black Sea or Eastern Mediterranean terminals. In the Pacific Rim countries, rapid industrialization, combined with the large number of planned expansions of oil refining capacity, should also increase demand for Aframaxes. The rise in oil production in the Former Soviet Union has also led to an increase in export opportunities from the Baltic and from the Sakhalin Island developments in the Far East.

        Aframax Fleet Ownership.     Ownership of the Aframax fleet is even more fragmented than that of VLCCs. As of December 31, 2002, there were more than 150 owners, with an average of only 3.6 vessels per owner. The 20 largest Aframax owners controlled approximately 48% of the total fleet, while the top five controlled 23%.

        Aframax Fleet Profile.     As of December 31, 2002, Aframax tankers accounted for the second largest share (after VLCCs) of the total crude tanker fleet by dwt (23% of the world tanker fleet). However, in terms of the number of vessels, Aframax tankers were the most numerous, representing 36% of the world tanker fleet.


AFRAMAX FLEET BY YEAR OF BUILD AND SCHEDULED DELIVERIES
(AS OF DECEMBER 31, 2002)

         GRAPHIC

53

        The above chart outlines the Aframax fleet by year built, including scheduled new deliveries. Although the average age of the Aframax fleet is high relative to other segments (11.7 years compared with 9.6 for VLCCs), the Aframax tanker sector has the lowest proportion of vessels over 25 years old. However, 21.1% of the fleet was built prior to 1982, compared with a newbuilding orderbook that amounts to 26% of the fleet. Of the Aframax fleet capacity of 54.6 million dwt (as of December 31, 2002), approximately 50% was built during or after 1992 and less than 10% was built in the 1970s (see chart above).


PERCENTAGE OF THE AFRAMAX FLEET AGED 20 YEARS OR MORE
AT THE YEAR END

         GRAPHIC

        Aframax Scrapping.     There is substantially less single-hulled Aframax tonnage approaching their IMO phase-out dates than in the VLCC sector. Nevertheless, some 21% of the Aframax fleet was built prior to 1983. The percentage of the Aframax fleet aged 25 years or more has risen from 2.1% in 1995 to just under 6% currently. This tonnage will probably all have to be scrapped over the next five years.

        Aframax Newbuildings.     At December 31, 2002, the Aframax orderbook had increased rapidly to 14.2 million dwt and exceeds the 11.5 million dwt of Aframax tonnage aged 20 years or more (see chart below).

54



AFRAMAX ORDERBOOK AND 20 YEARS AND OLDER AFRAMAX
FLEET (END OF YEAR)

         GRAPHIC

        Aframax Earnings.     Aframax earnings are highly volatile and vary substantially even on a day-to-day basis. While Aframax earnings depend largely on the supply-demand balance, other factors affect earnings as well. In light of reduced Venezuelan output, seasonal demand, low inventory levels and Middle East tensions, Aframax charter rates have increased, in some cases reaching $70,000 per day. This reflects increased tonnage demand as longer-haul crude replaces lost Venezuelan output. In addition, since the Prestige incident, charterers, particularly in Europe, have been willing to pay a premium to charter modern double-hulled tonnage.


AFRAMAX FREIGHT RATES

         GRAPHIC

55

        Aframax average spot rates increased sharply towards the end of 2002 to over $30,000 per day, compared with $12,000 per day just three months earlier. Time charter rates have also rallied, but less strongly, and they are close to average prevailing levels during the last ten years.

56


BUSINESS

Company Background

        We were incorporated in the state of Delaware in 1969 and became a U.S. public company in 1970 with a listing of our common stock on the American Stock Exchange. At the time, our fleet consisted of 31 vessels totaling 1.0 million deadweight tons. In 1973, we changed our stock listing to the New York Stock Exchange, where it has since remained. In the years since, our fleet has grown to 51 vessels totaling 8.7 million deadweight tons, making us a leading tanker company with an international fleet that includes 21 VLCCs, one Suezmax, 12 Aframaxes, and six Product Carriers. Our U.S. tanker fleet includes six tankers consisting of four Crude Tankers and two Product Carriers. All 46 of these vessels are engaged in the ocean transportation of oil and refined petroleum products. Rounding out our fleet are two Foreign Flag Dry Bulk Carriers, two U.S. Flag Dry Bulk carriers and one U.S. Flag Pure Car Carrier.

        We are headquartered in New York City and maintain offices in Newcastle, England and in Singapore.

Our Competitive Strengths

        We believe that we possess significant competitive advantages that permit us to maintain and improve our leadership position in the tanker industry. These advantages include the following:

Our International Fleet of Modern, High Quality Vessels

        Our international fleet of VLCCs and Aframaxes is among the most modern fleets in the industry. We have almost completed a major modernization program commenced in 1999. Since that time, we have spent approximately $800 million on modern VLCCs and Aframaxes. This modernization program will be completed over the next 12 months, with only $30 million of capital expenditures remaining. Having a modern fleet is a key competitive advantage for several reasons, including:

Our Participation in Leading Strategic Alliances

        We participate in strategic alliances with other leading tanker companies to consolidate the commercial management of multiple owners. Our participation in these pools, which include Tankers International (which manages 44 modern VLCCs) and Aframax International (which consists of 25 Aframaxes), has enabled us to enhance the financial performance of our vessels by improving asset utilization through combination voyages and scheduling efficiencies.

Our Strong Financial Profile

        We have a strong balance sheet and a low debt to capital ratio relative to many of our reporting industry peers. As of December 31, 2002, our cash and marketable securities totaled approximately $65.7 million, our tax adjusted Capital Construction Fund totaled approximately $150.2 million and our availability under unsecured credit facilities was $209.0 million, resulting in total liquidity of approximately $424.9 million. Our lower-than-industry average leverage and our

57


available liquidity allow us to take advantage of market opportunities, including selectively acquiring new vessels or businesses.

Our Fully Integrated Technical and Commercial Operations

        Our experienced in-house personnel are capable of providing all commercial and operating services to our fleet, including chartering, technical supervision and purchasing. We believe this capability permits us to better control the quality of our operations and costs.

Our Long-Established Industry Reputation and Experienced Management Team

        We have built a strong reputation for quality and service in the tanker industry and have become recognized for excellent service, quality vessels, and expert technical operations. We have an experienced management team, many of whom have been with us for over 20 years. We believe that our customer relationships, reputation and commitment to customer service will continue to benefit us and permit us to strengthen existing relationships and establish new relationships.

Our Business Strategy

        Our strategy is to employ our competitive strengths to further our industry position as a leading provider of ocean transportation services. Our strategic initiatives include:

Continuing To Be a Preferred Provider of Tankers

        We believe that major customers consider other factors besides charter rates, including the reputation of the vessel owner. We believe that we have a reputation in the international tanker community for the highest standards for service, safety and reliability. As one of the first major shipowners to obtain certification of compliance with the International Standards Organization's ISO 9000 series of Quality Assurance Standards, we have directed our efforts towards safe and environmentally conscious vessel operations. In addition, in 2002, we obtained ISO 14001 Certification for Environmental Management Systems for our subsidiary in New York.

Enhancing Vessel Earnings by Deploying Our Vessels in Strategic Alliances

        Through participation in the Tankers International and the Aframax International pools, we enhance fleet utilization, generating increased vessel earnings. In addition, these alliances have helped us reduce our operating costs and offer charterers the efficiencies and capabilities inherent in a larger fleet of vessels. We plan to enter our Aframax newbuildings in the Aframax International pool.

Opportunistically Growing VLCC and Aframax Fleets Through Newbuildings, Acquisitions and Joint Ventures

        We utilize our commercial, financial and operating expertise to opportunistically acquire modern vessels and order newbuildings, either alone or through joint ventures. The VLCC and Aframax markets are highly fragmented with more than 90 owners of VLCCs and 150 owners of Aframaxes. As of December 31, 2002, 56% of the VLCC owners owned fewer than three VLCCs and 61% of the Aframax owners owned fewer than three Aframaxes. Therefore, we believe that we have significant opportunity to expand our fleets and achieve greater economies of scale.

Maintaining a Competitive Cost Structure

        Since 1998, we have implemented a major cost reduction program. This program has resulted in annualized overhead, operating and other cost reductions of approximately $60 million, which

58


were fully realized during 2002. We intend to maintain our competitive cost structure and will continue to evaluate such structure so as to increase our efficiency, without adversely impacting the quality of our operations.

Our International Fleet

        Our international fleet consists of 42 foreign flag vessels with an average age of 5.6 years aggregating over 8.3 million dwt, with an additional two newbuildings on order aggregating 0.2 million dwt. Our foreign flag fleet includes 21 VLCCs, one Suezmax, 12 Aframaxes (plus the two newbuildings on order), six Product Carriers and two Capesize Dry Bulk Carriers.

International Fleet Listing

        The following table sets forth certain information with respect to our international fleet as of April 30, 2003:

Vessel Name
  Notes
  Year
Built
  DWT
  Hull Type(5)
VLCC Fleet                
OVERSEAS ROSALYN   (2)   2003   312,916   DH
HAKATA   (1,2)   2002   293,752   DH
OVERSEAS MULAN   (2)   2002   313,485   DH
TANABE   (1,2)   2002   293,847   DH
OVERSEAS CHRIS   (2)   2001   304,401   DH
OVERSEAS ANN   (2)   2001   304,494   DH
SAKURA I   (1,2)   2001   293,925   DH
ARIAKE   (1,2)   2001   293,816   DH
ICHIBAN   (1,2)   2000   293,808   DH
OVERSEAS DONNA   (2)   2000   304,608   DH
RAPHAEL   (2)   2000   304,722   DH
REGAL UNITY   (2)   1997   305,069   DH
MERIDIAN LION   (1)   1997   295,830   DH
EQUATORIAL LION   (1)   1997   295,603   DH
SOVEREIGN UNITY   (2)   1996   304,996   DH
MAJESTIC UNITY   (2)   1996   295,800   DH
CROWN UNITY   (2)   1996   295,734   DH
FRONT TOBAGO   (1,2)   1993   255,887   SH
DUNDEE   (1,2)   1993   297,654   DS
EDINBURGH   (1,2)   1993   297,714   DS
OLYMPIA   (2)   1990   270,920   SH
           
   
  TOTAL Dwt           6,228,981    
           
   

Suezmax Fleet
 
 
 
 
 
 
 
 
ECLIPSE       1989   145,170   SH

Aframax Fleet
 
 
 
 
 
 
 
 
OVERSEAS PORTLAND   (3)   2002   110,368   DH
OVERSEAS FRAN   (3)   2001   110,347   DH
OVERSEAS JOSEFA CAMEJO   (3)   2001   110,427   DH
OVERSEAS SHIRLEY   (3)   2001   110,286   DH
ANIA   (3)   1994   93,349   DH
ELIANE   (3)   1994   93,315   DH
                 

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BRAVERY   (3)   1994   108,716   DH
PACIFIC RUBY   (3)   1994   94,836   DH
PACIFIC SAPPHIRE   (3)   1994   94,653   DH
BERYL   (3)   1994   93,301   DH
REBECCA   (3)   1994   93,374   DH
COMPASS I   (1,3)   1992   95,544   DS
           
   
  TOTAL Dwt           1,208,516    
           
   

Product Carrier Fleet (50-80,000 dwt)
 
 
 
 
 
 
 
 
DIANE       1987   63,127   DS
MARY ANN       1986   63,224   DS
           
   
  TOTAL Dwt           126,351    
           
   

Product Carrier Fleet (30-50,000 dwt)
 
 
 
 
 
 
 
 
VEGA       1989   39,084   DS
DELPHINA       1989   39,047   DS
NEPTUNE       1989   39,452   DS
URANUS       1988   39,452   DS
           
   
  TOTAL Dwt           157,035    
           
   

Capesize Dry Bulk Carrier Fleet
 
 
 
 
 
 
 
 
MATILDE   (4)   1997   157,485   N/A
CHRISMIR   (4)   1997   157,305   N/A
           
   
  TOTAL Dwt           314,790    
           
   

Total Dwt of International Fleet
 
 
 
 
 
8,180,863
 
 
           
   
(1)
Joint Venture

(2)
Participates in VLCC pool (Tanker International)

(3)
Participates in Aframax Pool (Aframax International)

(4)
Participates in a pool of Capesize Dry Bulk Carriers

(5)
DH means Double Hull

        SH means Single Hull

        DS means Double Sided

Commercial Operation

        We maintain an experienced chartering staff located at our New York headquarters responsible for the day-to-day commercial management of our Foreign Flag Product Carriers. With respect to our VLCCs and Aframaxes, which are entered in the Tankers International and Aframax International pools, daily chartering is delegated to the pool. However, our staff actively monitors their chartering activity and consults with pool personnel on commercial strategies. The U.S. chartering offices of Tankers International and Aframax International are located in our New York headquarters.

        Tankers International.     In December 1999, we and five other leading tanker companies formed Tankers International to pool the commercial operation of the members' modern VLCCs. In

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June 2002, one of the members of the pool announced its intention to withdraw its 20 vessels from the pool, which withdrawal was completed in January 2003. As of December 31, 2002, Tankers International managed a fleet of 43 modern VLCCs (of which we contributed 18 vessels, including eight ships owned by joint ventures in which our interests range from 30% to 49.9%). Tankers International's fleet constitutes 10.3% of the world VLCC fleet based on deadweight tons.

        Tankers International commercially manages its participants' vessels. It collects revenues from customers, pays voyage-related expenses and distributes TCE revenues to the participants, after deducting administrative fees, according to a formula based upon the relative carrying capacity, speed, and fuel consumption of each vessel.

        The large number of vessels managed by Tankers International and the contracts of affreightment (COAs) into which it has entered give it the ability to enhance vessel utilization. With higher requirements for imported crude oil by China, India and other Asian countries, crude oil shipments from West Africa to Asia have expanded, increasing opportunities for vessels returning in ballast (i.e., without cargo) from Europe and North America to load cargoes in West Africa for delivery in Asia. This commercial management strategy is referred to as triangulation and is one that is used to maximize vessel utilization by minimizing the distance vessels travel in ballast.

        By consolidating the commercial management of this substantial VLCC fleet, Tankers International is able to offer its customers "one-stop shopping" for high quality modern VLCC tonnage. The size of the fleet enables Tankers International to become the logistics partner of major customers, providing new and improved tools to help them better manage their shipping programs, inventories and risk.

        Aframax International.     Since 1996, we and PDV Marina, the marine transportation subsidiary of the Venezuelan state oil company, have pooled the commercial management of their Aframax fleets. In 2002, Reederei "Nord" Klaus E. Oldendorff (Oldendorff) joined the pool and in April 2003 Seaarland Shipping Management GMBH (Seaarland) joined the pool. With 25 vessels that generally trade in the Atlantic Basin, the Aframax International pool has been able to supplement baseload cargoes with backhauls and COAs. As a result, the pool has enhanced vessel utilization, thereby generating higher TCE revenues than would otherwise be attainable in the spot market. The Company's two Aframax newbuildings are scheduled to enter the pool upon delivery as are Seaarland's three Aframax newbuildings, further increasing the pool's size and presence in the Atlantic Basin.

        In December 2002, major unions and businesses, including unions representing employees and managers of Petróleos de Venezuela S.A., began a general strike in Venezuela. The strike has substantially reduced oil exports from Venezuela. As a result of the strike, the 17 vessels owned by us, Oldendorff and Seaarland are trading in the Caribbean as well as in the North Sea and Mediterranean. Earnings on our Aframaxes were not significantly affected as the relatively longer routes in the trans-Atlantic trades delivering crude oil to the U.S. East Coast sharply increased ton-mile demand and TCE rates in these trades. Pending the resumption of normal Venezuelan exports, the PDV Marina Aframaxes have been carrying Venezuelan proprietary cargoes outside the pool.

        Product Carriers.     We operate a fleet of six Product Carriers. This reflects the recent sales in March and April 2003 of two Panamax Product Carriers. Our four Bostonmax Product Carriers (39,000 dwt) operate in the Atlantic Basin and provide our customers full access to all Boston-area terminals, allowing maximum discharge flexibility. Our two Panamax Product Carriers (65,000 dwt), which for many years traded from the Arabian Gulf to the Far East, have adapted to changing trade patterns and are now also carrying products from Korea to the U.S. West Coast as well as in the intra-Asian trades.

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        Dry Bulk Carriers.     We own two modern Capesize (157,000 dwt) Dry Bulk Carriers which are entered into a pool of such vessels managed by Bocimar N.V., a subsidiary of CMB N.V., a publicly held company based in Belgium. As of December 31, 2002, this pool consisted of more than 30 vessels. As part of the pool arrangement, we also participate in the financial results of several Capesize vessels chartered in by pool participants for varying periods, generally less than one year.

Our U.S. Flag Fleet

        We are the only major international tanker company that also has a significant presence in the U.S. Flag oceangoing bulk shipping business. Our U.S. Flag fleet consists of nine vessels with an average age of 25.2 years, aggregating more than 0.50 million dwt. Our U.S. Flag fleet includes four Crude Oil Tankers, two Bulk Carriers, two Product Carriers and one Pure Car Carrier.

U.S. Fleet Listing

        The following table sets forth certain information with respect to our U.S. Flag fleet as of April 30, 2003:

Vessel Name
  Notes
  Year Built
  DWT
  Hull Type(e)
Crude Tanker                
OVERSEAS WASHINGTON   (a)   1978   90,515   DB
OVERSEAS NEW YORK   (a)   1977   90,383   DB
OVERSEAS CHICAGO   (a)   1977   90,637   DB
OVERSEAS BOSTON   (a,b)   1974   120,820   SH
           
   
  TOTAL Dwt           392,365    
           
   

Product Carrier
 
 
 
 
 
 
 
 
OVERSEAS NEW ORLEANS   (c)   1983   42,953   DB
OVERSEAS PHILADELPHIA   (d)   1982   42,702   DB
           
   
  TOTAL Dwt           85,655    
           
   

Bulk Carrier
 
 
 
 
 
 
 
 
OVERSEAS HARRIETTE   (d)   1978   25,541   N/A
OVERSEAS MARILYN   (d)   1978   25,541   N/A
           
   
  TOTAL Dwt           51,082    
           
   

Pure Car Carrier
 
 
 
 
 
 
 
 
OVERSEAS JOYCE       1987   15,886   N/A
           
   
  Total Dwt of U.S. Fleet           544,988    
           
   
(a)
Vessels subject to securitization financing

(b)
Rebuilt 1981

(c)
22-year Capital Leases, commencing in 1989

(d)
25-year Capital Leases, commencing in year built

(e)
DB means Double Bottom
SH means Single Hull

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Commercial Operation

        Our U.S. Flag Fleet operates in a substantially separate market from the international tanker market because under the Jones Act of 1916, as amended (Jones Act) shipping between United States ports, including the movement of Alaskan crude oil, is reserved for U.S. Flag vessels that are built in the U.S. and owned by U.S. companies, more than 75% owned and controlled by U.S. citizens. In addition, the Merchant Marine Act of 1936, as amended, requires that preference be given to U.S. Flag vessels, if available at reasonable rates, in the shipment of at least half of all U.S. government-generated cargoes and 75% all of food-aid cargoes.

        Alaska Tanker Company, LLC.     Building on our 30-year relationship with BP, in early 1999, we and BP, along with Keystone Shipping Company, formed Alaska Tanker Company, which is the leading provider of marine transportation services in the environmentally sensitive Alaskan crude oil trade. Alaska Tanker Company, which is owned 37.5% by us, 37.5% by Keystone and 25% by BP, manages the vessels carrying BP Alaskan crude oil, including four of our vessels. At the time Alaska Tanker Company was established, charters for five of our U.S. Flag Crude Tankers that had been on long-term time charter to BP were converted into bareboat charters of such vessels to Alaska Tanker Company, with BP guaranties. Each bareboat charter expires shortly before the date that OPA 90 precludes such single-hulled tanker from calling on U.S. ports; the last charter expires in 2006. The four bareboat charters (the fifth vessel having been disposed of) will generate U.S. Flag TCE earnings averaging approximately $21 million per year for us through 2005. In addition, our participation in Alaska Tanker Company provides us with the ability to earn additional incentive hire income based upon Alaska Tanker Company's meeting certain predetermined performance standards.

        In August 1999, we sold the foregoing four vessels (and a fifth that was subsequently disposed of by the owner in 2000) and leased them back as part of an off-balance sheet financing that generated approximately $170 million, which was used to reduce long-term debt. As of December 31, 2002, the balance of debt on the books of the entity to which such vessels were sold aggregated $52.1 million. Such debt, which is due in monthly installments through August 2005, is repayable in full from bareboat charter revenues from Alaska Tanker Company, which are guaranteed by BP. On July 1, 2003, we expect to consolidate this entity in accordance with FASB Interpretation No. 46. For additional information, see the "Newly Issued Accounting Standard" section of Management's Discussion and Analysis of Financial Condition and Results of Operations, included elsewhere in this prospectus.

        Capital Construction Fund.     To encourage private investment in U.S. Flag vessels, the Merchant Marine Act of 1970 permits deferral of taxes on earnings from U.S. Flag vessels deposited into a Capital Construction Fund and amounts earned thereon, which can be used for the construction or acquisition of, or retirement of debt on, qualified U.S. Flag vessels (primarily those limited to United States foreign, Great Lakes and noncontiguous domestic trades). We are a party to an agreement under the Act. Under the agreement, the general objective is (by use of assets accumulated in the fund) for three U.S. Flag vessels to be constructed or acquired by the end of 2004. If the agreement is terminated or amounts are withdrawn from the Capital Construction Fund for non-qualified purposes, such amounts will then be subject to federal income taxes. Monies can remain tax-deferred in the fund for a maximum period of 25 years (commencing January 1, 1987 for deposits prior thereto). We had approximately $231 million in our Capital Construction Fund as of December 31, 2002. Our balance sheet at December 31, 2002 includes a liability of approximately $71 million for deferred taxes on the fund deposits and earnings thereon.

        Other U.S. Flag Operations.     Vessels in our U.S. Flag fleet have been chartered from time to time to the Military Sealift Command of the United States Navy (MSC). Charters to MSC reflect the requirements of the United States military for transportation of cargoes and, accordingly, depend, in

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part, on United States foreign policy. Revenues from charters to MSC were not significant during the three years ended December 31, 2002.

        Since late 1996, our U.S. Flag Pure Car Carrier, which is under a long-term charter that was extended through late 2007, has participated in the U.S. Maritime Security Program, which ensures that militarily-useful U.S. Flag vessels are available to the Department of Defense in the event of war or national emergency. Under the program, we receive approximately $2.1 million per year through 2005, subject to annual Congressional appropriations.

        During 2001, our two U.S. Flag Jones Act Product Carriers entered into time charters extending through 2004.

Ship Management, Crewing and Employees

        We maintain a shoreside staff and on-board crew of experienced operating personnel capable of providing all key technical and operating functions for our fleet. Our shoreside staff provides technical supervision, safety monitoring, purchasing, insurance and crewing services to our fleet worldwide. Our shoreside staff also supervises newbuilding construction and drydocking and provides financial, accounting and information technology services for our fleet. In addition, our crews regularly inspect each vessel (both at sea and in port) and perform most of the necessary ordinary course maintenance. Our shoreside staff inspects each vessel typically twice a year, making specific notations and recommendations regarding the overall condition of the vessel, maintenance, safety and crew welfare. In addition, approximately 10% of our fleet is inspected annually by independent consultants. Some of the vessels owned by our joint ventures, the Suezmax tanker and the U.S. flag crude carriers that are on bareboat charters are managed and operated by the joint ventures or by the charterer, as the case may be.

        Many of our sea staff are long-time employees and have received extensive training to support their functions. We support various cadet-training programs worldwide in order to ensure a continuing source of competent personnel to crew our vessels. All seagoing personnel serving on our international fleet are employed by the relevant shipowning subsidiary through manning agencies and work exclusively for us.

        As of December 31, 2002, we had 1,731 employees: 1,587 seagoing personnel and 144 shoreside staff. We have collective bargaining agreements with three different maritime unions, covering 130 seagoing personnel employed on our U.S. Flag vessels. These agreements are in effect through June 15, 2003 with one of the unions, June 15, 2005 with another union, and June 15, 2006 with a third union. Under the collective bargaining agreements, we are obligated to make contributions to pension and other welfare programs. We believe that we have a satisfactory relationship with our employees.

Customers

        Our customers include major oil companies, major oil traders, large oil consumers and petroleum product producers, government agencies and various other entities dependent upon the VLCC and Aframax tanker market and the products carriers market.

Classification, Inspection and Certification

        In accordance with standard industry practice, all of our vessels have been certified as being "in class" by their respective classification societies: principally American Bureau of Shipping and Lloyd's Register. Most insurance underwriters require an "in class" certification by a classification society before they will extend coverage to a vessel. The classification society certifies that the vessel has been built and maintained in accordance with the rules of such society and complies

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with applicable rules and regulations of the country of registry of the vessel and the international conventions of which that country is a member. Inspections are conducted on the vessel by a surveyor of the classification society in three surveys of varying frequency and thoroughness: annual surveys each year, an intermediate survey every two to three years and a special survey every four to five years. As part of an intermediate survey, vessels may be required to be inspected at 24- to 30-month intervals. The inspection may be carried out by an approved diving company with respect to the underwater parts of the vessel with the classification society in attendance.

        Our vessels and shoreside operations are also inspected periodically by major oil companies, in some cases as a precondition to chartering our vessels. We maintain all necessary approvals required for our vessels to operate in their normal trades. We believe that the high quality of our modern tonnage, our crews and shoreside staff are an advantage when competing against other major shipowners for long-term business.

ISO 9002 and ISM Code

        We were among the first major shipowners to obtain certification of compliance with the International Standards Organization's ISO 9000 series of Quality Assurance Standards. In 2002, OSG Ship Management, Inc. in New York obtained 14001 Certification for Environmental Management Systems.

        Under the International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention promulgated by the IMO, vessel operators are required to develop an extensive safety management system for each of the vessels over which they have operational control. The system includes, among other things, the adoption of a safety and environmental protection policy setting forth instructions and procedures for safe operation and describing procedures for dealing with emergencies. The ISM Code requires a certificate of compliance to be obtained both for the vessel manager and for each vessel that it operates. We have obtained such certificates for our shoreside offices and for all of the vessels that we manage.

Environmental Matters

Domestic Requirements

        Since 1990, the tanker industry has experienced a more rigorous regulatory environment. Safety and pollution concerns have led to a greater emphasis on quality and to the strengthening of the inspection programs of Classification Societies, governmental authorities and charters.

        OPA 90 affects all vessel owners shipping oil to, from, or within the United States. Under OPA 90, a vessel owner or operator is liable without fault for removal costs and damages, including economic loss without physical damage to property, of up to $1,200 per gross ton of the vessel. When a spill is proximately caused by a vessel owner's or operator's gross negligence, wilful misconduct or a violation of a federal safety, construction or operating regulation, liability is unlimited. OPA 90 did not preempt state law and, therefore, states remain free to enact legislation imposing additional liability. Virtually all coastal states have enacted pollution prevention, liability and response laws, many with some form of unlimited liability.

        OPA 90 phases out the use of tankers having single hulls. It requires that tankers over 5,000 gross tons calling at U.S. ports have double hulls if contracted after June 30, 1990, or delivered after January 1, 1994. Furthermore, OPA 90 calls for the elimination of all single-hulled vessels by the year 2010 on a phase-out schedule that is based on size and age, unless the tankers are retrofitted with double hulls. The law permits then existing single-hulled tankers to operate until the year 2015 if they discharge at deep water ports, or lighter (i.e., offload cargo) more than 60 miles

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offshore. OPA 90 prohibits vessels having double sides or double bottoms from calling at U.S. ports after January 1, 2015.

        Our two single-hulled VLCCs (including one in which we have a 30% interest) and our Suezmax will not be permitted to trade to U.S. ports after 2009. Two 49.9% owned double-sided VLCCs are not permitted to trade to U.S. ports after 2014. Our 50% owned double-sided Aframax is required to stop trading to U.S. ports in 2015. The two U.S. Flag Jones Act Product Carriers, which are operated under capital leases expiring in 2011, are not affected by the OPA 90 phase-out schedule. The OPA 90 phase-out dates for our six Foreign Flag Product Carriers are subsequent to their respective IMO phase-out dates (see the discussion of International Requirements below). One of our four U.S. Flag Crude Tankers is required to be phased out in 2004, two in 2005 and one in 2006, at which time each of these tankers will be at the end of their commercial lives.

        OPA 90 also requires owners and operators of vessels calling at U.S. ports to adopt contingency plans for reporting and responding to various oil spill scenarios up to a worst-case oil spill under adverse weather conditions. The plans must include contractual commitments with clean-up response contractors in order to endure an immediate response to an oil spill. Furthermore, training programs and drills for vessel, shore and response personnel are required. We have developed and filed our vessel response plans with the U.S. Coast Guard and have received approval of such plans.

        Under U.S. Coast Guard financial responsibility regulations issued pursuant to OPA 90, all vessels entering U.S. waters are required to obtain Certificates of Financial Responsibility (COFRs) from the U.S. Coast Guard demonstrating financial capability to meet potential oil spill liabilities. All the vessels in our U.S. and Foreign Flag fleets have requisite COFRs.

International Requirements

        Our vessels undergo regular and rigorous in-house safety reviews. They are also routinely inspected by flag and port state authorities, Classification Societies and major oil companies. All of our vessels are certified under the standards reflected in International Standards Organization's 9002 quality assurance program, and IMO's International Safety Management's safety and pollution prevention protocols.

        MARPOL 73/78 regulations of the IMO, as amended in 2001, require double hulls or equivalent tanker designs for newbuildings ordered after 1993 and limit the maximum age for continued trading by tankers to 30 years in 2003 (vessels delivered in 1973 and earlier) decreasing to 26 years by the end of 2007 (vessels delivered in 1981 and later). For owners of older, single-hulled tankers, scrapping decisions are increasingly influenced by the need to comply with these regulations. In view of the age profile of the world VLCC fleet and the IMO timetable, the regulations are likely to concentrate scrapping of older VLCCs in 2004 and 2005; however, commercial considerations may cause the scrapping schedule to advance. Since the percentage of the world Aframax fleet that was built in the 1970s is smaller than for the world VLCC fleet, scrapping of older, single-hulled Aframaxes will be less pronounced in the short term.

        The MARPOL regulations have been adopted by over 100 nations covering more than 90% of the world's tanker fleet. The U.S. has not adopted the 2001 amendments; therefore, U.S. Flag Vessels operating exclusively in Jones Act shipping are only subject to OPA regulations.

        Since our Foreign Flag tanker fleet is mostly modern and double-hulled, the impact of the IMO phase-out schedule will be limited. None of the vessels in our international fleet are affected by the IMO timetable prior to reaching 25 years of age. Out of the 20 VLCCs in our operating fleet, one of the two single-hulled VLCCs is required to be phased out by 2015 and, under certain circumstances, the phase-out date of the other single-hulled VLCC (in which we have a 30%

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interest) may be extended to 2017. The two 49.9% owned double-sided VLCCs are required to be phased out in 2018. Our Suezmax is required to be phased out in 2015. Of our 12 existing Foreign Flag Aframaxes, a 50% owned double-sided vessel is required to be phased out in 2017. Of our six Foreign Flag Product Carriers, one is to be phased out in 2012, one in 2013, one in 2014 and three in 2015. Further, our U.S. Flag Crude Tankers and Product Carriers participate in the U.S. Jones Act trades and are therefore not affected by the IMO phase-out schedule.

        The sinking of the Prestige , a 1976-built, 81,300 dwt, single hull oil tanker off the coast of Spain in mid-November 2002 and the resulting pollution to the Atlantic coasts of Spain and France has prompted the European Union (EU) to propose an immediate ban on the transport of heavy crude oil and fuel oil in single hull oil tankers loading or discharging at EU ports. The EU Transport Council has also proposed that Category I single hull tankers over the age of 23 years be phased out immediately with all Category I single hull tankers being phased out by 2005. For Category II tankers, the comparable restrictions would be a maximum age of 28 years and a phase-out date of 2010 and for Category III, a maximum age of 28 years and a phase-out date of 2015, respectively. Category I encompasses larger (over 20-30,000 dwt) pre-1982 tankers, Category II are larger (over 20-30,000 dwt) post-1982 tankers and Category III are smaller tankers. The European Commission has called for adoption of this proposal by the European Council and Parliament by March 2003. The EU is also urging that neighboring countries outside the EU adopt the same principles for the heavy crude and fuel oil trade as have been proposed to apply in EU waters.

        Without awaiting action by the European Council and Parliament, certain EU nations have implemented a total ban on single hull vessels carrying fuel oil and heavy crude oils. Spain has banned single hull tankers over 5,000 dwt from entering her ports carrying such cargoes from January 1, 2003. Italy has announced that analogous measures will be implemented during the first half of 2003. Since December 2002, Spain, France and Portugal have prohibited single hull tankers carrying such cargoes from passing through their 200-mile economic exclusion zones.

        Many charterers operating around Europe are showing a distinct preference for double hull tankers and are willing to pay a higher Worldscale rate for such tonnage than for single hull tankers. It is becoming increasingly more difficult to obtain clearance for single hull tankers from many countries and oil terminals.

Risk of Loss and Liability Insurance

General

        The operation of cargo vessels includes risks such as mechanical failure, collision, property loss, cargo loss or damage and business interruption due to political circumstances in foreign countries, hostilities and labor strikes. In addition, there is always an inherent possibility of marine disaster, including oil spills and other environmental mishaps, and the liabilities arising from owning and operating vessels in international trade. OPA 90, which imposes virtually unlimited liability upon owners, operators and demise charterers of any vessel trading in the U.S. economic exclusion zone for certain oil pollution accidents in the United States, has made liability insurance more expensive for shipowners and operators trading in the U.S. market. While we believe that our present insurance coverage is adequate, not all risks can be insured, and there can be no guarantee that any specific claim will be paid, or that we will always be able to obtain adequate insurance coverage at reasonable rates.

Hull and Machinery Insurance

        We have obtained marine hull and machinery and war risk insurance, which includes the risk of actual or constructive total loss, for all of our vessels. The vessels are each covered up to at least fair market value, with deductibles ranging from $100,000 to $185,000 per vessel per incident.

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Loss of Hire Insurance

        We currently maintain loss of hire insurance to cover loss of charter income resulting from accidents or breakdowns of our owned vessels that are covered under the vessels' hull and machinery insurance. Although loss of hire insurance covers up to 120 days lost charter income, we have to bear the first 27 of days loss.

Protection and Indemnity Insurance

        Consistent with the currently prevailing practice in the industry, we presently carry protection and indemnity (P&I) insurance coverage for pollution of $1.0 billion per occurrence on every vessel in our fleet. P&I insurance is provided by mutual protection and indemnity associations (P&I Associations). The 13 P&I Associations that comprise the International Group insure approximately 90% of the world's commercial tonnage and have entered into a pooling agreement to reinsure each association's liabilities. Each P&I Association has capped its exposure to each of its members at approximately $4.25 billion. As a member of a P&I Association, which is a member of the International Group, we are subject to calls payable to the associations based on its claim record as well as the claim records of all other members of the individual associations, and members of the pool of P&I Associations comprising the International Group. While we have historically been able to obtain pollution coverage at commercially reasonable rates, no assurances can be given that such insurance will continue to be available in the future.

Competition

        The bulk shipping industry is highly competitive and fragmented, with no one shipping group owning or controlling more than 6.1% of the world tanker fleet. We compete with other owners of U.S. and Foreign Flag tankers and dry cargo ships operating on an unscheduled basis similar to us.

        In the spot and short-term charter market, our vessels compete with all other vessels of a size and type required by a customer that can be available at the date specified. In the spot market, competition is based primarily on price, although charterers have become more selective with respect to the quality of vessels they hire, with particular emphasis on such factors as age, double hulls, and the reliability and quality of operations. Increasingly, major charterers are demonstrating a preference for modern vessels based on concerns about the environmental risks associated with older vessels. Consequently, owners of large modern fleets have been able to gain a competitive advantage over owners of older fleets. In the time charter markets, factors such as the age and quality of a vessel and the reputation of the owner and the operator tend to be more significant in competing for business.

        In both the VLCC and Aframax sectors, we compete against a large number of companies that own or operate vessels in these segments. Competitors include other independent shipowners, oil companies and state-owned entities with fleets ranging from one to more than 60 vessels in a particular segment. While some companies operate worldwide, others focus on one or more geographical areas such as the Pacific, the Mediterranean or the Caribbean. In the VLCC sector, we have more than 100 competitors.

        As of December 31, 2002, we own 20 VLCCs (5.9 million dwt) of which 18 (5.3 million dwt) are commercially managed through Tankers International. Our two remaining VLCCs are operating on long-term charters. In February 2003, we took delivery of a VLCC newbuilding (0.3 million dwt) that was entered in the Tankers International pool. Eight of the foregoing VLCCs entered in Tankers are owned jointly with others. As of December 31, 2002, Tankers International had a fleet of 43 VLCCs (12.9 million dwt) with four newbuildings (1.2 million dwt) scheduled to join Tankers International

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upon delivery. Tankers' fleet as of December 31, 2002, represents 10.3%, based on deadweight tons, of the total world VLCC fleet.

        In the VLCC market segment, Tankers International competes with more than 90 owners, the largest being Frontline Ltd. (42 vessels, 12.9 million dwt), Mitsui OSK Lines Ltd. (28 vessels, 7.6 million dwt), World-Wide Shipping Agency (S) Pte. Ltd. (24 vessels, 6.9 million dwt), Nippon Yusen Kabushiki Kaisha (24 vessels, 6.6 million dwt) and VELA International Marine Ltd., the shipping arm of the Saudi Arabian oil company (18 vessels, 5.4 million dwt).

        As of December 31, 2002, Aframax International consisted of 24 Aframaxes (2.4 million dwt), including one 50% owned vessel, that generally trade in the Atlantic Basin. Our two Aframax newbuildings are scheduled to enter this pool upon delivery, further increasing the pool's size and presence in the Atlantic Basin. More than 150 owners operate in the Aframax market segment. Our main competitors include Teekay Shipping Corporation (63 vessels, 6.3 million dwt), Neptune Orient Lines and its subsidiaries (22 vessels, 2.2 million dwt), General Maritime Corp. (14 vessels, 1.3 million dwt) and Tsakos Energy Navigation (14 vessels, 1.3 million dwt).

        In the U.S. Flag trades, we compete with other owners of U.S. Flag vessels. Demand for U.S. Flag Product Carriers is closely linked to changes in regional energy demands and in refinery activity. These vessels also compete with pipelines and oceangoing barges, and are affected by the level of imports on Foreign Flag Product Carriers.

Legal Proceedings

        We are a party, as plaintiff or defendant, to various suits in the ordinary course of business for monetary relief arising principally from personal injuries, collision or other casualty and to claims arising under charter parties. All such personal injury, collision and casualty claims against us are fully covered by insurance (subject to deductibles not material in amount).

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MANAGEMENT

        The following table sets forth information concerning the individuals who serve as our executive officers and directors:

Name
  Age
  Position Held
Morton P. Hyman   67   Chairman of the Board, President and Chief Executive Officer
Robert N. Cowen   54   Senior Vice President, Chief Operating Officer and Secretary; Director
Myles R. Itkin   55   Senior Vice President, Chief Financial Officer and Treasurer
Robert E. Johnston   55   Senior Vice President and Chief Commercial Officer
Peter J. Swift   59   Senior Vice President and Head of Shipping Operations
Oudi Recanati   53   Director
Alan R. Batkin   58   Director
Thomas B. Coleman   60   Director
Charles Fribourg   46   Director
William L. Frost   76   Director
Stanley Komaroff   68   Director
Solomon N. Merkin   46   Director
Joel I. Picket   64   Director
Ariel Recanati   39   Director
Michael J. Zimmerman   52   Director

        The term of office of each executive officer continues until the first meeting of our Board of Directors immediately following the next annual meeting of our stockholders, and until the election and qualification of his successor. There is no family relationship between any of the executive officers. Ariel Recanati and Oudi Recanati, two of our directors, are first cousins.

Morton P. Hyman has been our Chairman of the Board since September 2000 and has served as one of our directors since 1969. Mr. Hyman has been our President and Chief Executive Officer since 1971.

Robert N. Cowen assumed the title of Chief Operating Officer in 1999 and has been our Senior Vice President since 1993 and our Secretary since 1982. Mr. Cowen has been one of our directors since 1993.

Myles R. Itkin has been our Senior Vice President, Chief Financial Officer and Treasurer since 1995.

Robert E. Johnston has been our Chief Commercial Officer since 1999 and Senior Vice President since 1998. In addition, Mr. Johnston has served as an officer and director of certain of our subsidiaries during the past five years; he also served for more than the five years ended in 1998 as a senior officer of Maritime Overseas Corporation, the corporation that managed the fleet from our inception in 1969 to 1998.

Peter J. Swift has been our Senior Vice President and Head of Shipping Operations since June 1999 and was our Vice President from October 1998 until June 1999. Mr. Swift has served as an officer and director of certain of our subsidiaries since October 1998; he also served as an officer of Maritime Overseas Corporation and one of its subsidiaries for more than the five years ended in 1998.

Oudi Recanati has been one of our directors since 1996. Mr. Recanati is currently a director of IDB Holding Corporation Ltd., which is engaged in investment and finance, and several of its subsidiaries. Mr. Recanati served as Chairman of Discount Bank and Trust Company from 1999 through the middle of 2002. Until April 1, 2001, Mr. Recanati was Co-Chairman from 1999, and Co-Chief Executive from 1996, of IDB Holding Corporation Ltd.; he was Chairman of Discount Investment Corporation Ltd., engaged in investment, from 1997 through May 2001, and he was

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Chairman of the Board of Y.L.R. Capital Markets Ltd., engaged in investment banking, for more than five years prior to 1998.

Alan R. Batkin has been one of our directors since 1999. Mr. Batkin has been Vice Chairman of Kissinger Associates, Inc., a geopolitical consulting firm, for at least the past five years. Mr. Batkin is currently a director of Diamond Offshore Drilling, Inc., Hasbro, Inc. and Schweitzer-Mauduit International, Inc.

Thomas B. Coleman has been one of our directors since February 2003. He has served since 1992 as President of International Tank Terminals, Ltd. and since 1975 as Chief Executive Officer and Managing Partner of International-Matex Tank Terminals, a nationwide deep water bulk liquid terminals and logistics company.

Charles Fribourg has been one of our directors since 2000. Mr. Fribourg has been Directeur General of Finagrain S.A., an agribusiness investment holding company and a subsidiary of the ContiGroup Companies, Inc., since 1999. From 1994 to 1999, Mr. Fribourg was Senior Vice President and General Manager of the South American Division of Continental Grain Company (now known as ContiGroup Companies, Inc.).

William L. Frost has been one of our directors since 1989. Mr. Frost has been President of the Lucius N. Littauer Foundation for at least the past five years.

Stanley Komaroff has been one of our directors since 1993. Mr. Komaroff is a Senior Partner in the law firm of Proskauer Rose LLP, our outside counsel.

Solomon N. Merkin has been one of our directors since 1989. Mr. Merkin has been Vice President of Leib Merkin, Inc., a private investment company, for at least the past five years.

Joel I. Picket has been one of our directors since 1989. Mr. Picket has been Chairman of the Board and Chief Executive Officer of Gotham Organization Inc., a real estate construction and development company, since 1999 and was President of Gotham for more than five years prior to 1999.

Ariel Recanati has been one of our directors since 1999. He currently is President of a privately owned dry bulk shipping company. He served as our Chief Strategic and Planning Officer from June 1999 through January 2003 and our Senior Vice President from 1998 through January 2003.

Michael J. Zimmerman has been one of our directors since 2000. Mr. Zimmerman has been Executive Vice President and Chief Financial Officer of ContiGroup Companies, Inc., a diversified agribusiness and finance company, since 1999. From 1996 to 1999, Mr. Zimmerman was Senior Vice President-Investment and Strategy of Continental Grain Company. Mr. Zimmerman is currently a director of Premium Standard Farms, Inc.

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DESCRIPTION OF OTHER INDEBTEDNESS

Existing Notes and Debentures

        In 1993, we issued $100 million of notes and $100 million of debentures that will mature on December 1, 2003 and December 1, 2013, respectively, in an underwritten public offering pursuant to an indenture dated December 1, 1993 between us and Chase Manhattan Bank, as Trustee. The notes and debentures pay interest semiannually on each June 1 and December 1 at 8% and 8 3 / 4 % per annum, respectively.

        The indenture governing the notes and debentures provides for the following restrictive covenants: (1) limitations on secured debt above 15% of Consolidated Net Tangible Assets, as defined, unless the notes and debentures are secured on an equal and ratable basis, (2) prohibition on sales and leasebacks exceeding three years on any assets except newly acquired or constructed assets unless there is equivalent room under the secured debt covenant described in (1) above or the proceeds of the sale and leaseback transaction are used to purchase, acquire or construct assets to be used in our business or to retire long-term debt, and (3) limitations on the incurrence of subsidiary debt in excess of 10% of Consolidated Net Tangible Assets, except that excluded from the calculation of subsidiary debt is the amount of any subsidiary debt existing on December 1, 1993 and debt incurred pursuant to certain U.S. government sponsored vessel financing programs. The foregoing covenants are subject to certain exceptions further described in the indenture. Within 120 days after the end of each fiscal year, we are required to deliver to the Trustee an Officers' Certificate stating whether or not we are in default under any terms of the indenture.

        The notes and debentures are redeemable in whole or in part at our option at any time at a redemption price equal to par plus accrued interest plus a make-whole premium. As of December 31, 2002, there was $155 million aggregate principal amount outstanding of notes and debentures.

Revolving Credit Facilities

        On April 18, 2000, we entered into a credit agreement with Den Norske Bank, as facility agent and arranger for the syndication banks, for the provision of a $350 million revolving credit facility terminating on the fifth anniversary of the agreement (the "2005 Facility"). Borrowings under the 2005 Facility bear interest at LIBOR plus a margin ranging from 0.625% to 1.50% based on our credit rating ranging from BBB+/Baa1 or better to BB-/Ba3 or worse, respectively. The 2005 Facility currently bears interest at LIBOR plus 1.125%. The 2005 Facility requires us to maintain net worth of no less than $575 million plus 50% of consolidated net income for each quarter from and after June 30, 2000. In addition, the 2005 Facility contains restrictive covenants requiring the maintenance of financial ratios related to debt service coverage, unencumbered assets to unsecured debt, and debt to consolidated net tangible assets, as further described below. The 2005 Facility also places limitations on our levels of secured debt, total debt and investments in joint ventures, and contains restrictions on our ability to enter into sale and leaseback transactions unless certain financial ratios are satisfied or the proceeds of the transaction are used to purchase, acquire or construct assets to be used in our business or to retire long-term debt. As of December 31, 2002, there was $350 million outstanding under the 2005 Facility.

        On December 12, 2001, we entered into a credit agreement with JPMorgan Chase Bank, as administrative agent and lender, for the provision of a $300 million revolving credit facility terminating on the fifth anniversary of the agreement (the "2006 Facility"). On January 22, 2002, the 2006 Facility was amended to increase the borrowing availability to $350 million. Borrowings under this facility bear interest at LIBOR plus a margin ranging from 1.00% to 2.00% based on our credit rating ranging from BBB+/Baa1 or better to BB-/Ba3 or worse, respectively. There is a plus or

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minus .20% adjustment based on cash adjusted funded debt to EBITDA ratio and a plus .20% adjustment when amounts outstanding under the 2006 Facility exceed $175 million. The 2006 Facility currently bears interest at LIBOR plus 1.70%. The 2006 Facility requires us to maintain net worth of no less than $659 million plus 50% of consolidated net income for each quarter from and after June 30, 2001. The 2006 Facility contains the same financial ratio covenants as the 2005 Facility and places substantially similar limitations on our levels of secured debt, total debt, investments in joint ventures and ability to enter into sale and leaseback transactions. As of December 31, 2002, there was $158 million outstanding under the 2006 Facility.

        The financial ratios included the 2005 Facility and the 2006 Facility are as follows: (1) maintenance of a cash adjusted debt service coverage ratio of not less than 1.75 to 1, (2) maintenance of an unencumbered assets to unsecured debt ratio of not less than 1.50 to 1, and (3) maintenance of a cash adjusted funded debt to cash adjusted consolidated net tangible assets ratio of not more than 0.60 to 1. Both the 2005 Facility and the 2006 Facility call for us to grant security interests in vessels or in cash to the participating banks upon a ratings downgrade to BB- or lower or BB on Credit Watch with negative outlook (in the case of Standard & Poor's) and Ba3 or lower (in the case of Moody's). In such an instance, the fair market value of the collateral we offer must equal 125% of the borrowings in the case of vessels or 100% in the case of cash under facilities.

        On February 28, 2002, we entered into a credit agreement with Bank of Nova Scotia ("BNS") for the provision of a $45 million revolving credit facility for an initial term ending on February 27, 2003 that was renewed for another year. Money market advances under this facility bear interest at BNS's cost of funds plus a margin of 1.50%. Under this facility, we are required to grant BNS security interests in vessels or cash in the event there is any collateral granted under the 2005 Facility and the 2006 Facility as a result of a ratings downgrade. As of December 31, 2002, there was $28 million outstanding under this facility.

Secured Loan Agreements

        In July and August 2002, we entered into four secured loan agreements aggregating $256 million, which have been collateralized by liens on three modern VLCCs and four modern Aframaxes. The loan agreements call for semi-annual payments of principal and interest over terms ranging from 10 to 12 years plus final balloon payments. Interest is based on LIBOR plus a fixed margin ranging from 0.78% to 1.15% depending on the loan agreement. The loan agreements require us to maintain the same net worth, financial ratios (except for unencumbered assets to unsecured debt ratio, which is not applicable), and limitation on investments in joint ventures as the 2006 Facility. In addition, each loan agreement contains an asset maintenance test that requires us to deliver additional collateral or prepay part or all of amounts outstanding under the facility if the fair market value of the collateral securing the facility falls below 110% or 115%, depending on the loan agreement, of the amounts outstanding under the facility. The additional collateral may consist of cash, cash equivalents or VLCC tankers. As of December 31, 2002, $256 million in the aggregate was outstanding under these loan agreements.

Outstanding Notes

        On March 7, 2003, we issued $200 million aggregate principal amount of Senior Notes bearing interest at 8.250% per year and maturing on March 15, 2013, which are subject to exchange pursuant to this offering. The terms and conditions of the outstanding Notes are substantially identical to the terms and conditions of the Exchange Notes being offered hereby as described in "Description of Notes."

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Other Obligations

        As of December 31, 2002, total current and long-term obligations under our capital leases aggregated approximately $58.9 million relative to four U.S. Flag vessels. Two of the leases expire in 2003 and two expire in 2011. The implicit interest rates on these four leases range from 9.6% to 10.0%. For additional information about our capital lease obligations, refer to Note M of our consolidated financial statements included elsewhere in this prospectus.

        Our joint ventures, in which we hold interests ranging between 30% and 49.9%, entered into four secured loan agreements, which are non-recourse to us, between March 2000 and July 2002. At December 31, 2002, amounts outstanding under these loan agreements aggregated approximately $333 million, of which $35 million is guaranteed by us. The loans are collateralized by liens on eight VLCCs owned by the respective joint ventures. For additional information about our joint ventures and their debt obligations, refer to Note E of our consolidated financial statements included elsewhere in this prospectus.


THE EXCHANGE OFFER

Purpose Of The Exchange Offer

        In connection with the sale of the outstanding Notes, we entered into the Registration Rights Agreement with the initial purchaser of the outstanding Notes. In that agreement, we agreed to use our best efforts to file and have declared effective within 180 days of the sale of the outstanding Notes this registration statement relating to an offer to exchange the Exchange Notes for the outstanding Notes. We also agreed to use our best efforts to complete the exchange offer for the outstanding Notes within 45 days after the effective date of this registration statement. We are offering the Exchange Notes under this prospectus in the exchange offer for the outstanding Notes to satisfy our obligations under the Registration Rights Agreement. We refer to our offer to exchange the Exchange Notes for the outstanding Notes as the "exchange offer."

Resale Of Exchange Notes

        Based on interpretations of the SEC staff in no-action letters issued to third parties, we believe that each Exchange Note issued in the exchange offer may be offered for resale, resold and otherwise transferred by you without compliance with the registration and prospectus delivery provisions of the Securities Act of 1933 if, among other things:

        If you tender your outstanding Notes in the exchange offer with the intention of participating in any manner in a distribution of the Exchange Notes or you are an affiliate of the Company, you:

        This prospectus may be used for an offer to resell, resale or otherwise transfer Exchange Notes only as specifically described in this prospectus. Only those broker-dealers that acquired

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outstanding Notes as a result of market-making activities or other trading activities may participate in the exchange offer. Each broker-dealer that receives Exchange Notes for its own account in exchange for outstanding Notes, where that broker-dealer acquired such outstanding Notes as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. Please read "Plan of Distribution" for more details regarding the transfer of Exchange Notes.

Terms Of The Exchange Offer

        Upon the terms and subject to the conditions described in this prospectus and in the letter of transmittal, we will accept for exchange any outstanding Notes properly tendered and not withdrawn prior to the expiration date of the exchange offer. We will issue $1,000 principal amount of Exchange Notes in exchange for each $1,000 principal amount of outstanding Notes surrendered under the exchange offer. Outstanding notes may be tendered only in integral multiples of $1,000.

        The exchange offer is not conditioned upon any minimum aggregate principal amount of outstanding Notes being tendered for exchange.

        As of the date of this prospectus, there is $200 million principal amount of outstanding Notes, all of which are subject to exchange pursuant to the exchange offer. This prospectus and the letter of transmittal are being sent to all registered holders of outstanding Notes. There will be no fixed record date for determining registered holders of outstanding Notes entitled to participate in the exchange offer.

        We intend to conduct the exchange offer in accordance with the provisions of the Registration Rights Agreement, the applicable requirements of the Securities Act of 1933 and the Securities Exchange Act of 1934 and the rules and regulations of the SEC. Outstanding Notes that are not tendered for exchange in the exchange offer:

        We will be deemed to have accepted for exchange properly tendered outstanding Notes when we have given oral or written notice of the acceptance to the exchange agent and complied with the applicable provisions of the Registration Rights Agreement. The exchange agent will act as agent for the tendering holders for the purposes of receiving the Exchange Notes from us.

        If you tender outstanding Notes in the exchange offer, you will not be required to pay brokerage commissions or fees or, subject to the instructions in the letter of transmittal, transfer taxes with respect to the exchange of outstanding Notes. We will pay all charges and expenses, other than certain applicable taxes described below, in connection with the exchange offer. It is important that you read "—Fees And Expenses" for more details about fees and expenses incurred in the exchange offer.

        We will return any outstanding Notes that we do not accept for exchange for any reason without expense to the tendering holder as promptly as practicable after the expiration or termination of the exchange offer.

Expiration Date

        The exchange offer will expire at 5:00 p.m., New York City time, on June            , 2003, unless in our sole discretion we extend it. We do not currently intend to extend the Expiration Date.

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Extensions, Delay In Acceptance, Termination Or Amendment

        We expressly reserve the right, at any time or at various times, to extend the period of time during which the exchange offer is open. We may delay acceptance for exchange of any outstanding Notes by giving oral or written notice of the extension to their holders. During any such extensions, all outstanding Notes you have previously tendered will remain subject to the exchange offer, and we may accept them for exchange.

        To extend the exchange offer, we will notify the exchange agent orally or in writing of any extension. We also will make a public announcement of the extension no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date.

        If any of the conditions described below under "—Conditions to the Exchange Offer" have not been satisfied with respect to the exchange offer, we reserve the right, in our sole discretion:

        We will give oral or written notice of such delay, extension or termination to the exchange agent. Subject to the terms of the Registration Rights Agreement, we also reserve the right to amend the terms of the exchange offer in any manner.

        Any such delay in acceptance, extension, termination or amendment will be followed as promptly as practicable by oral or written notice thereof to the registered holders of outstanding Notes. If we amend the exchange offer in a manner that we determine to constitute a material change, we will promptly disclose that amendment by means of a prospectus supplement. We will distribute the supplement to the registered holders of the outstanding Notes. Depending upon the significance of the amendment and the manner of disclosure to the registered holders, we will extend the exchange offer if the exchange offer would otherwise expire during such period.

        Without limiting the manner in which we may choose to make public announcements of any delay in acceptance, extension, termination or amendment of the exchange offer, we have no obligation to publish, advertise or otherwise communicate any such public announcement, other than by making a timely release to an appropriate news agency.

Conditions To The Exchange Offer

        Despite any other term of the exchange offer, we will not be required to accept for exchange, or exchange any Exchange Notes for any outstanding Notes, and we may terminate the exchange offer as provided in this prospectus before accepting any outstanding Notes for exchange, if in our reasonable judgment:

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        In addition, we will not be obligated to accept for exchange the outstanding Notes of any holder that has not made to us:

        We expressly reserve the right to amend or terminate the exchange offer, and to reject for exchange any outstanding Notes not previously accepted for exchange in the exchange offer, upon the occurrence of any of the conditions to the exchange offer specified above. We will give oral or written notice of any extension, amendment, nonacceptance or termination to the holders of the outstanding Notes as promptly as practicable.

        These conditions are for our sole benefit, and we may assert them or waive them in whole or in part at any time or at various times in our sole discretion. Our failure at any time to exercise any of these rights will not mean that we have waived our rights. Each right will be deemed an ongoing right that we may assert at any time or at various times.

        In addition, we will not accept for exchange any outstanding Notes tendered, and will not issue Exchange Notes in exchange for any such outstanding Notes, if at such time any stop order has been threatened or is in effect with respect to the registration statement of which this prospectus constitutes a part or the qualification of the Indenture relating to the Notes under the Trust Indenture Act of 1939.

Exchange Agent

        We have appointed Wilmington Trust Company as exchange agent for the exchange offer. Please direct questions and requests for assistance, requests for additional copies of this prospectus or of the letter of transmittal and requests for the notice of guaranteed delivery to the exchange agent. If you are not tendering under DTC's automated tender offer program, you should send the letter of transmittal and any other required documents to the exchange agent as follows:

BY HAND DELIVERY:

Wilmington Trust Company
301 West 11 th Street
Wilmington, Delaware 19801

BY OVERNIGHT COURIER:

Wilmington Trust Company
1100 North Market Street
Rodney Square North
Wilmington, Delaware 19890-1615

BY FIRST CLASS MAIL:

Wilmington Trust Company
1100 North Market Street
Rodney Square North
Wilmington, Delaware 19890-1615

TO CONFIRM RECEIPT OF NOTICE OF GUARANTEED DELIVERY:

FAX #:   (302) 636-4145
FAX CONFIRMATION #:   (302) 636-6472

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Procedures For Tendering

        Only a holder of outstanding Notes may tender such outstanding Notes in the exchange offer. To tender in the exchange offer, a holder must either (1) comply with the procedures for physical tender, described below, or (2) comply with the automated tender offer program procedures of The Depository Trust Company, or "DTC," described below.

        The tender by a holder that is not withdrawn prior to the expiration date and our acceptance of that tender will constitute an agreement between the holder and us in accordance with the terms and subject to the conditions described in this prospectus and in the letter of transmittal.

        THE METHOD OF DELIVERY OF OUTSTANDING NOTES, THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT YOUR ELECTION AND RISK. RATHER THAN MAIL THESE ITEMS, WE RECOMMEND THAT YOU USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, YOU SHOULD ALLOW SUFFICIENT TIME TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. YOU SHOULD NOT SEND THE LETTER OF TRANSMITTAL OR OUTSTANDING NOTES TO US. YOU MAY REQUEST YOUR BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE TO EFFECT THE ABOVE TRANSACTIONS FOR YOU.

How To Tender If You Are A Beneficial Owner

        If you beneficially own outstanding Notes that are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender those Notes, you should contact the registered holder as soon as possible and instruct the registered holder to tender on your behalf. If you are a beneficial owner and wish to tender on your own behalf, you must, prior to completing and executing the letter of transmittal and delivering your outstanding Notes, either:

        The transfer of registered ownership may take considerable time and may not be completed prior to the expiration date.

Procedures For Physical Tender

        To complete a physical tender, a holder must:

        To be tendered effectively, the exchange agent must receive any physical delivery of the letter of transmittal and other required documents at its address provided above under "—Exchange Agent" prior to the expiration date.

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Signatures And Signature Guarantees

        You must have signatures on a letter of transmittal or a notice of withdrawal described below under "—Withdrawal Of Tenders" guaranteed by an eligible institution unless the outstanding Notes are tendered:

        An eligible institution is a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States, or an eligible guarantor institution within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, that is a member of one of the recognized signature guarantee programs identified in the letter of transmittal.

When Endorsements Or Bond Powers Are Needed

        If a person other than the registered holder of any outstanding Notes signs the letter of transmittal, the outstanding Notes must be endorsed or accompanied by a properly completed bond power. The registered holder must sign the bond power as the registered holder's name appears on the outstanding Notes. An eligible institution must guarantee that signature.

        If the letter of transmittal or any outstanding Notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, or officers of corporations or others acting in a fiduciary or representative capacity, those persons should so indicate when signing. Unless we waive this requirement, they also must submit evidence satisfactory to us of their authority to deliver the letter of transmittal.

Tendering Through DTC'S Automated Tender Offer Program

        The exchange agent and DTC have confirmed that any financial institution that is a participant in DTC's system may use DTC's automated tender offer program to tender. Accordingly, participants in the program may, instead of physically completing and signing the letter of transmittal and delivering it to the exchange agent, transmit their acceptance of the exchange offer electronically. They may do so by causing DTC to transfer the outstanding Notes to the exchange agent in accordance with its procedures for transfer. DTC will then send an agent's message to the exchange agent.

        An agent's message is a message transmitted by DTC to and received by the exchange agent and forming part of the book-entry confirmation, stating that:

        To complete a tender through DTC's automated tender offer program, the exchange agent must receive, prior to the expiration date, a timely confirmation of book-entry transfer of such outstanding Notes into the exchange agent's account at DTC according to the procedure for book-entry transfer described below or a properly transmitted agent's message.

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Determinations Under The Exchange Offer

        We will determine in our sole discretion all questions as to the validity, form, eligibility, time of receipt, acceptance of tendered outstanding Notes and withdrawal of tendered outstanding Notes. Our determination will be final and binding. We reserve the absolute right to reject any outstanding Notes not properly tendered or any outstanding Notes our acceptance of which might, in the opinion of our counsel, be unlawful. We also reserve the right to waive any defects or irregularities of tenders or conditions of the exchange offer as to particular outstanding Notes. Our interpretation of the terms and conditions of the exchange offer, including the instructions in the letter of transmittal, will be final and binding on all parties.

        Unless waived, any defects or irregularities in connection with tenders of outstanding Notes must be cured within such time as we determine. Neither we, the exchange agent nor any other person will be under any duty to give notification of defects or irregularities with respect to tenders of outstanding Notes, nor will we or those persons incur any liability for failure to give such notification. Tenders of outstanding Notes will not be deemed made until such defects or irregularities have been cured or waived. Any outstanding Notes received by the exchange agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned to the tendering holder, unless otherwise provided in the letter of transmittal, as soon as practicable following the expiration date.

When We Will Issue Exchange Notes

        In all cases, we will issue Exchange Notes for outstanding Notes that we have accepted for exchange in the exchange offer only after the exchange agent timely receives:

Return Of Outstanding Notes Not Accepted Or Exchanged

        If we do not accept any tendered outstanding Notes for exchange for any reason described in the terms and conditions of the exchange offer or if outstanding Notes are submitted for a greater principal amount than the holder desires to exchange, we will return the unaccepted or nonexchanged outstanding Notes without expense to their tendering holder. In the case of outstanding Notes tendered by book-entry transfer into the exchange agent's account at DTC according to the procedures described below, such nonexchanged outstanding Notes will be credited to an account maintained with DTC. These actions will occur as promptly as practicable after the expiration or termination of the exchange offer.

Your Representations To Us

        By signing or agreeing to be bound by the letter of transmittal, you will represent to us that, among other things:

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Book-Entry Transfer

        The exchange agent will make a request to establish an account with respect to the outstanding Notes at DTC for purposes of the exchange offer promptly after the date of this prospectus. Any financial institution participating in DTC's system may make book-entry delivery of outstanding Notes by causing DTC to transfer such outstanding Notes into the exchange agent's account at DTC in accordance with DTC's procedures for transfer. If you are unable to deliver confirmation of the book-entry tender of your outstanding Notes into the exchange agent's account at DTC or all other documents required by the letter of transmittal to the exchange agent on or prior to the expiration date, you must tender your outstanding Notes according to the guaranteed delivery procedures described below.

Guaranteed Delivery Procedures

        If you wish to tender your outstanding Notes but they are not immediately available or if you cannot deliver your outstanding Notes, the letter of transmittal or any other required documents to the exchange agent or comply with the applicable procedures under DTC's automated tender offer program prior to the expiration date, you may tender if:

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        Upon request to the exchange agent, the exchange agent will send a notice of guaranteed delivery to you if you wish to tender your outstanding Notes according to the guaranteed delivery procedures described above.

Withdrawal Of Tenders

        Except as otherwise provided in this prospectus, you may withdraw your tender at any time prior to 5:00 p.m., New York City time, on the expiration date.

        For a withdrawal to be effective:

        Any notice of withdrawal must:

        If outstanding Notes have been tendered under the procedure for book-entry transfer described above, any notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawn outstanding Notes and otherwise comply with the procedures of DTC.

        We will determine all questions as to the validity, form, eligibility and time of receipt of notice of withdrawal, and our determination shall be final and binding on all parties. We will deem any outstanding Notes so withdrawn not to have been validly tendered for exchange for purposes of the exchange offer.

        Any outstanding Notes that have been tendered for exchange but that are not exchanged for any reason will be returned to their holder without cost to the holder or, in the case of outstanding Notes tendered by book-entry transfer into the exchange agent's account at DTC according to the procedures described above, such outstanding Notes will be credited to an account maintained with DTC for the outstanding Notes. This return or crediting will take place as soon as practicable after withdrawal, rejection of tender or termination of the exchange offer. You may retender properly withdrawn outstanding Notes by following one of the procedures described under "—Procedures For Tendering" above at any time on or prior to 5:00 p.m., New York City time, on the expiration date.

Fees And Expenses

        We will bear the expenses of soliciting tenders. The principal solicitation is being made by mail; however, we may make additional solicitation by facsimile, email, telephone or in person by our officers and regular employees and those of our affiliates.

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        We have not retained any dealer-manager in connection with the exchange offer and will not make any payments to broker-dealers or others soliciting acceptances of the exchange offer. We will, however, pay the exchange agent reasonable and customary fees for its services and reimburse it for its related reasonable out-of-pocket expenses. We may also pay brokerage houses and other custodians, nominees and fiduciaries the reasonable out-of-pocket expenses incurred by them in forwarding copies of this prospectus, letters of transmittal and related documents to the beneficial owners of the outstanding Notes and in handling or forwarding tenders for exchange.

        We will pay the cash expenses to be incurred in connection with the exchange offer. These expenses include:

Transfer Taxes

        If you tender your outstanding Notes for exchange, you will not be required to pay any transfer taxes. We will pay all transfer taxes, if any, applicable to the exchange of outstanding Notes in the exchange offer. The tendering holder will, however, be required to pay any transfer taxes, whether imposed on the registered holder or any other person, if:

        If satisfactory evidence of payment of any transfer taxes payable by a tendering holder is not submitted with the letter of transmittal, the amount of such transfer taxes will be billed directly to that tendering holder. The exchange agent will retain possession of Exchange Notes with a face amount equal to the amount of the transfer taxes due until it receives payment of the taxes.

Consequences Of Failure To Exchange

        If you do not exchange your outstanding Notes for Exchange Notes in the exchange offer, you will remain subject to the existing restrictions on transfer of the outstanding Notes. In general, you may not offer or sell the outstanding Notes unless either they are registered under the Securities Act of 1933 or the offer or sale is exempt from or not subject to registration under the Securities Act and applicable state securities laws. Except as required by the Registration Rights Agreement, we do not intend to register resales of the outstanding Notes under the Securities Act.

        The tender of outstanding Notes in the exchange offer will reduce the outstanding principal amount of the outstanding Notes. Due to the corresponding reduction in liquidity, this may have an adverse effect upon, and increase the volatility of, the market price of any outstanding Notes that you continue to hold.

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Accounting Treatment

        We will amortize our expenses of the exchange offer and the offering of the outstanding Notes over the term of the Exchange Notes under accounting principles generally accepted in the United States.

Other

        Participation in the exchange offer is voluntary, and you should carefully consider whether to accept. You are urged to consult your financial and tax advisors in making your decision on what action, if any, to take. In the future, we may seek to acquire untendered outstanding Notes in open market or privately negotiated transactions, through subsequent exchange offers or otherwise. We have no present plan to acquire any outstanding Notes that are not tendered in the exchange offer or to file a registration statement to permit resales of any untendered outstanding Notes, except as required by the Registration Rights Agreement.


DESCRIPTION OF NOTES

        The outstanding Notes were issued, and the Exchange Notes will be issued, by Overseas Shipholding Group, Inc. under an Indenture dated as of March 7, 2003 (the "Indenture"), between Overseas Shipholding Group, Inc. and Wilmington Trust Company, as Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act.

        Certain terms used in this description are defined under the subheading "—Certain Definitions" and elsewhere in this description. Capitalized terms that are used but not otherwise defined in this description have the meanings ascribed to them in the Indenture. In this description, the word "Company" refers only to Overseas Shipholding Group, Inc. and not to any of its subsidiaries.

        The following description is only a summary of the material provisions of the Indenture and the Registration Rights Agreement. We urge you to read the Indenture and the Registration Rights Agreement because they, not this description, define your rights as Holders of the Notes. The Indenture and the Registration Rights Agreement have been filed as exhibits to the registration statement of which this prospectus is a part. You may request copies of these agreements at our address set forth under the heading "Available Information".

        The Notes will constitute a single series of debt securities under the Indenture. If the exchange offer is consummated, any holders of outstanding Notes who do not exchange their outstanding Notes for Exchange Notes will vote together with all other holders of the Notes for all relevant purposes under the Indenture. Accordingly, in determining whether the required holders have given any notice, consent or waiver or taken any other action permitted under the Indenture, any outstanding Notes that remain outstanding after the exchange offer will be aggregated with the other Notes, and the holders of the outstanding Notes and the other Notes will vote together as a single series. All references in this prospectus to specified percentages in aggregate principal amount of the Notes mean, at any time after the exchange offer is consummated, the percentages in aggregate principal amount of the outstanding Notes and the Exchange Notes.

General

        The Notes:

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        At December 31, 2002, after giving effect to the offering of the outstanding Notes and the application of the net proceeds therefrom:

Principal, Maturity and Interest

        In this exchange offer, the Company will issue up to $200 million aggregate principal amount of Exchange Notes. The Indenture provides for the issuance of other Notes having identical terms and conditions to the Notes. The Notes and any other notes subsequently issued under the Indenture would be treated as a single class for all purposes under the Indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase. The Company will issue the Exchange Notes in denominations of $1,000 and integral multiples of $1,000. The Exchange Notes will mature on March 15, 2013.

        Interest on the Notes will accrue at the rate of 8.250% per annum and will be payable semiannually in arrears on March 15 and September 15, commencing on September 15, 2003. We will make each interest payment to the Holders of record of the Notes on the immediately preceding March 1 and September 1. Interest on the Notes will accrue from March 7, 2003 or, if interest has already been paid on the Notes, from the date it was most recently paid. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.

Optional Redemption

        We will not be entitled to redeem the Notes at our option prior to March 15, 2008.

        On and after March 15, 2008, we will be entitled at our option to redeem all or a portion of the Notes upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed in percentages of principal amount on the redemption date), plus accrued interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period commencing on March 15 of the years set forth below:

Period
  Redemption Price
 
2008   104.125 %
2009   102.750 %
2010   101.375 %
2011 and thereafter   100.000 %

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Selection and Notice of Redemption

        If we are redeeming less than all the Notes at any time, the Trustee will select Notes on a pro rata basis, by lot or by such other method as the Trustee in its sole discretion shall deem to be fair and appropriate.

        We will redeem Notes of $1,000 or less in whole and not in part. We will cause notices of redemption to be mailed by first-class mail at least 30 but not more than 60 days before the redemption date to each Holder of Notes to be redeemed at its registered address.

        If any Note is to be redeemed in part only, the notice of redemption that relates to that Note will state the portion of the principal amount thereof to be redeemed. We will issue a new Note in a principal amount equal to the unredeemed portion of the original Note in the name of the Holder upon cancellation of the original Note. Notes called for redemption become due on the date fixed for redemption. On and after the redemption date, interest ceases to accrue on Notes or portions of them called for redemption.

Mandatory Redemption; Offers to Purchase; Open Market Purchases

        We are not required to make any mandatory redemption or sinking fund payments with respect to the Notes. However, under certain circumstances, we may be required to offer to purchase Notes as described under the caption "—Change of Control". We may at any time and from time to time purchase Notes in the open market or otherwise.

Change of Control

        The Indenture provides that upon the occurrence of a Change of Control, each Holder of Notes will have the right to require the Company to repurchase such Holder's Notes, in whole or in part, in integral multiples of $1,000, at a purchase price in cash equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase, in accordance with the procedures set forth in the Indenture. A "Change of Control" or similar event may also constitute an event of default under certain of the Company's other debt agreements. There can be no assurance that the Company will have sufficient funds to pay the purchase price referred to above at the time of the Change of Control. The existence of a Holder's right to require the Company to repurchase Notes upon the occurrence of a Change of Control may deter a third party from acquiring the Company in a transaction which would constitute a Change of Control. For the definition of Change of Control, please read "—Certain Definitions."

Certain Covenants

Insurance

        The Company will maintain, and cause its Subsidiaries to maintain, insurance coverage by financially sound and reputable insurers in such forms and amounts and against such risks as are at that time customary for corporations of established reputation engaged in the same or a similar business and owning and operating similar properties including general liability insurance and (but without duplication) protection and indemnity insurance, hull and machinery insurance, oil pollution insurance and, if available at commercially reasonable rates, loss of hire insurance.

Limitation on Liens

        If subsequent to the date of original issuance of the Notes, the Company or any Restricted Subsidiary shall Incur any Debt, or any existing Debt shall become, secured by a Mortgage on any property or assets owned or leased by the Company or any Restricted Subsidiary or on any shares of stock or Debt of any Subsidiary, the Company will secure, or cause such Restricted Subsidiary to

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secure, the Notes equally and ratably with (or prior to) such secured Debt, unless after giving effect thereto the aggregate amount of all such secured Debt Incurred after the date of the Indenture and then outstanding (including preexisting Debt that becomes secured after the date of the Indenture) together with all Attributable Debt Incurred after the date of the Indenture and then outstanding in respect of sale and leaseback transactions involving any property or assets owned or leased by the Company or a Restricted Subsidiary would not exceed 15% of Consolidated Net Tangible Assets of the Company and its Restricted Subsidiaries. This restriction will not apply to, and therefore the following shall be excluded in computing secured Debt for the purpose of such restriction: Debt secured by (a) Mortgages on property of, or on any shares of stock or Debt of, any corporation existing at the time such corporation becomes a Subsidiary, (b) Mortgages in favor of the Company or any Restricted Subsidiary, (c) Mortgages in favor of the United States of America, or any agency, department or other instrumentality thereof, to secure progress, advance or other payments pursuant to any contract or provision of any statute, (d) Mortgages on property, shares of stock or Debt existing at the time of acquisition thereof (including acquisition through merger or consolidation) and purchase money Mortgages and construction cost Mortgages (including those incurred or committed for under a binding agreement within 120 days following the purchase or completion of the construction of the property in question), provided that such Mortgages shall be limited to all or part of such property or stock, and (e) any extension, renewal or replacement of any Mortgage referred to in the foregoing clauses (a) through (d) inclusive whether existing on the date of the Indenture or thereafter or of any Mortgage existing on the date of the Indenture; provided, that such extension, renewal or replacement Mortgage shall be limited to the same property, shares of stock or Debt that secured the Mortgage extended, renewed or replaced and that the Debt secured by such Mortgage is not increased.

        Notwithstanding anything to the contrary above, the Indenture will provide that, if any Debt under any of the Credit Facilities shall become secured by a Mortgage on any property or assets owned or leased by the Company or any Restricted Subsidiary as a result of the Company's senior unsecured debt being downgraded to or below the levels specified in the Credit Facilities, the limitation on liens covenant described in the foregoing paragraph will be deemed to be satisfied if the Company secures, or causes such Restricted Subsidiary to secure, the Notes equally and comparably with such secured Debt. For purposes of determining whether the collateral securing the Notes as provided for in the preceding sentence is "comparable" to that securing the Debt under the Credit Facilities, the Indenture will provide that all non-cash collateral will be valued on the same basis that non-cash collateral is valued under the Credit Facilities.

Limitation on Sales and Leasebacks

        Neither the Company nor any Restricted Subsidiary may enter into any sale and leaseback transaction involving any property or assets owned or leased by the Company or any Restricted Subsidiary, the acquisition of which, or completion of construction and commencement of full operation of which, has occurred more than 120 days prior to such sale and leaseback transaction, unless (a) the Company or such Restricted Subsidiary could create Debt secured by a Mortgage on such property or assets in accordance with the immediately preceding paragraph in an amount equal to the Attributable Debt with respect to the sale and leaseback transaction without equally and ratably securing the Notes or (b) the Company or such Restricted Subsidiary, within 120 days after the sale or transfer of such property, applies to (i) the purchase, acquisition or construction of property or assets to be used in the business of the Company and its Restricted Subsidiaries (which includes the entering into, within such 120 day period, of an agreement for such purchase, acquisition or construction of property or assets) or (ii) to the retirement of Funded Debt of the Company or any Restricted Subsidiary, an amount not less than the greater of (A) the net proceeds of the sale of the assets or property sold and leased back pursuant to such arrangement or (B) the fair market value of the property or assets so sold and leased back (as determined by any two of

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the following: the Chairman of the Board of the Company, its President, any Executive or Senior Vice President of the Company, its Chief Financial Officer, its Treasurer and its Controller), subject to credits for certain voluntary retirements of Funded Debt. This restriction will not apply to any sale and leaseback transaction (x) between the Company and a Restricted Subsidiary or between Restricted Subsidiaries or (y) involving a lease for a period of three years or less.

Limitation on Incurrence of Indebtedness of Restricted Subsidiaries

        The Company will not permit any of its Restricted Subsidiaries to Incur any Funded Debt unless after giving effect to the Incurrence of such Funded Debt by such Restricted Subsidiary and the receipt and application of the proceeds thereof, the aggregate outstanding amount of Funded Debt of all Restricted Subsidiaries of the Company does not exceed 10% of Consolidated Net Tangible Assets of the Company and its Restricted Subsidiaries; provided, however, that this restriction will not apply to, and there will be excluded from Funded Debt at the time of any computation under this provision of the Indenture, (a) any Funded Debt owed to the Company or any other Restricted Subsidiary, (b) any Funded Debt of a Restricted Subsidiary outstanding on the date of the Indenture, (c) any Funded Debt that (i) is supported in full by a direct-pay or standby letter of credit or letter of guarantee on which the Company (but not any of its Restricted Subsidiaries) is the account party and as to which the terms of the related reimbursement agreement do not permit the issuing bank any recourse against any Restricted Subsidiary of the Company and (ii) is not supported by any other letter of credit, letter of guarantee or similar instrument in respect of which any Restricted Subsidiary of the Company has any obligation, and (d) any Funded Debt of a Restricted Subsidiary incurred pursuant to a United States Government sponsored vessel financing program, including Title XI or a successor or similar program and (e) any Funded Debt secured by a Mortgage permitted pursuant to clause (a) or (d) under "—Limitation on Liens."

        The Indenture does not contain covenants specifically designed to protect Holders in the event of a highly leveraged transaction or similar transaction involving the Company. Except as specified above, the Indenture will not restrict the incurring of Debt by the Company or its Subsidiaries.

Restricted Subsidiaries

        Every Subsidiary of the Company existing on the date of the Indenture shall be a Restricted Subsidiary. The Board of Directors may designate any Person as an Unrestricted Subsidiary if and only if (A) the Company has delivered to the Trustee an Officer's Certificate within 60 days after such Person became a Subsidiary (the "Notice Period") designating such Person as an Unrestricted Subsidiary and (B) (i) such Person is not a Subsidiary on the date of the Indenture, (ii) such Person was not a Restricted Subsidiary prior to the commencement of the Notice Period, (iii) an Officers' Certificate is delivered to the Trustee stating that the Board of Directors has determined that at the time of such Person's acquisition or formation it was not contemplated that such Person would own, acquire or lease under a lease which would be considered a Capitalized Lease any ocean going vessel designed to carry cargo in bulk which vessel was originally contracted for by the Company or one of its Subsidiaries, (iv) neither the Company nor any Restricted Subsidiary has guaranteed or in any other manner become liable for or otherwise created a Mortgage on its property as security for any Funded Debt of such Person, and (v) such Person does not own or hold, directly or indirectly, any Funded Debt or equity securities of any Restricted Subsidiary or own, lease or operate any assets or properties (other than cash, cash equivalents or marketable securities) transferred to it by the Company or any Restricted Subsidiary.

        The Company may change the designation of any Subsidiary from Unrestricted Subsidiary to Restricted Subsidiary by giving written notice to the Trustee that the Board of Directors has made such change, provided that no such change shall be effective if after giving effect to such change

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the aggregate amount of Funded Debt of all Restricted Subsidiaries of the Company then outstanding (after giving effect to the exclusions provided in the first paragraph of "—Limitation on Incurrence of Indebtedness by Restricted Subsidiaries") would exceed 10% of the Consolidated Net Tangible Assets of the Company and its Restricted Subsidiaries. If at any time (1) the Company or a Restricted Subsidiary guarantees or in any other manner becomes liable for or otherwise creates a Mortgage on its property as security for any Funded Debt of an Unrestricted Subsidiary, (2) an Unrestricted Subsidiary owns or holds, directly or indirectly, any Funded Debt or equity securities of any Restricted Subsidiary or (3) an Unrestricted Subsidiary owns, leases or operates any assets or properties (other than cash, cash equivalents and marketable securities) transferred to it by the Company or any Restricted Subsidiary, the designation of such Unrestricted Subsidiary shall thereupon, without further action, but subject to the condition set forth in the proviso to the first sentence of this paragraph, be deemed to have been changed to a Restricted Subsidiary. The Company will not itself, and will not permit any Subsidiary to, take any of the actions referred to in clauses (1), (2) or (3) of the preceding sentence unless the Unrestricted Subsidiary referred to in such sentence can be designated a Restricted Subsidiary in conformity with the provisions of the Indenture.

        The acquisition of a Restricted Subsidiary or the change of designation of an Unrestricted Subsidiary to a Restricted Subsidiary shall, as of the date of such acquisition or change, constitute an Incurrence by Restricted Subsidiaries of the Company of Funded Debt in the amount of the Funded Debt of such Restricted Subsidiary as of such date, and, for purposes of determining Consolidated Net Tangible Assets of the Company and its Restricted Subsidiaries as of such date, pro forma effect shall be given to such acquisition or change.

Consolidation, Merger and Sale of Assets

        The Company, without the consent of the Holders of any outstanding Notes, may not consolidate with or merge into, or convey, transfer or lease all or substantially all of its properties and assets to, any Person, and may not permit any Person to merge into, or convey, transfer or lease all or substantially all of its properties and assets to, the Company, unless:

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Events of Default

        Each of the following will constitute an Event of Default under the Indenture:

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        If an Event of Default (other than an Event of Default described in clause (7) above) shall occur and be continuing, either the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes outstanding by notice as provided in the Indenture may declare the principal amount of the Notes to be due and payable immediately. If an Event of Default described in clause (7) above shall occur, the principal amount of all the Notes will automatically, and without any action by the Trustee or any Holder, become immediately due and payable. After any such acceleration, but before a judgment or decree based on acceleration, the Holders of a majority in aggregate principal amount of the Notes outstanding may, under certain circumstances, rescind and annul such acceleration if all Events of Default, other than the non-payment of accelerated principal (or other specified amount), have been cured or waived as provided in the Indenture. For information as to waiver of defaults, see "—Modification and Waiver".

        Subject to the provisions of the Indenture relating to the duties of the Trustee in case an Event of Default shall occur and be continuing, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request or direction of any of the Holders, unless such Holders shall have offered to the Trustee reasonable indemnity. Subject to such provisions for the indemnification of the Trustee, the Holders of a majority in aggregate principal amount of the Notes outstanding will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee with respect to the Notes.

        No Holder of a Note will have any right to institute any proceeding with respect to the Indenture, or for the appointment of a receiver or a trustee, or for any other remedy thereunder, unless (1) such Holder has previously given to the Trustee written notice of a continuing Event of Default with respect to the Notes, (2) the Holders of at least 25% in aggregate principal amount of the Notes outstanding have made written request, and such Holder or Holders have offered reasonable indemnity, to the Trustee to institute such proceeding as trustee and (3) the Trustee has failed to institute such proceeding, and has not received from the Holders of a majority in aggregate principal amount of the outstanding Notes a direction inconsistent with such request, within 60 days after such notice, request and offer.

        However, such limitations do not apply to a suit instituted by a Holder of a Note for the enforcement of payment of the principal of or any premium or interest on such Note on or after the applicable due date specified in such Note.

        The Company will be required to furnish to the Trustee annually a statement by certain of its officers as to whether or not the Company, to their knowledge, is in default in the performance or observance of any of the terms, provisions and conditions of the Indenture and, if so, specifying all such known defaults.

Modification and Waiver

        Modifications and amendments of the Indenture may be made by the Company and the Trustee with the consent of the Holders of 66 2 / 3 % in aggregate principal amount of the Notes outstanding affected by such modification or amendment; provided, however, that no such modification or amendment may, without the consent of the Holder of each outstanding Note affected thereby:

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        The Holders of 66 2 / 3 % in principal amount of the Notes outstanding may waive compliance by the Company with certain restrictive provisions of the Indenture. The Holders of a majority in principal amount of the Notes outstanding may waive any past default under the Indenture, except a default in the payment of principal, premium or interest and certain covenants and provisions of the Indenture which cannot be amended without the consent of the Holder of each Note outstanding affected.

        Except in certain limited circumstances, the Company will be entitled to set any day as a record date for the purpose of determining the Holders of Notes outstanding entitled to give or take any direction, notice, consent, waiver or other action under the Indenture, in the manner and subject to the limitations provided in the Indenture. To be effective, such action must be taken by Holders of the requisite principal amount of such Notes within a specified period following the record date. For any particular record date, this period will be 180 days or such shorter period as may be specified by the Company (or the Trustee, if it set the record date), and may be shortened or lengthened (but not beyond 180 days) from time to time.

Defeasance

        The Indenture provides that the Company will be discharged from all its obligations with respect to the Notes (except for certain obligations to exchange or register the transfer of Notes, to replace stolen, lost or mutilated Notes, to maintain paying agencies and to hold moneys for payment in trust) upon the deposit in trust for the benefit of the Holders of the Notes of money or U.S. Government Obligations, or both, which, through the payment of principal and interest in respect thereof in accordance with their terms, will provide money in an amount sufficient to pay the principal of and any premium and interest on the Notes on their Stated Maturity in accordance with the terms of the Indenture and the Notes. Such defeasance or discharge may occur only if, among other things, the Company has delivered to the Trustee an Opinion of Counsel to the effect that the Company has received from, or there has been published by, the United States Internal Revenue Service a ruling, or there has been a change in tax law, in either case to the effect that Holders of the Notes will not recognize gain or loss for Federal income tax purposes as a result of such deposit, defeasance and discharge and will be subject to Federal income tax on the same amount, in the same manner and at the same times as would have been the case if such deposit, defeasance and discharge were not to occur.

        The Indenture provides that the Company may omit to comply with its obligations under "—Change of Control" and certain restrictive covenants, including those described under "—Certain Covenants", and the occurrence of certain Events of Default, which are described above in clauses (3), (4) and (5) under "—Events of Default", will be deemed not to be or result in an Event of Default. The Company, in order to exercise such option, will be required to deposit, in trust for the benefit of the Holders of the Notes, money or U.S. Government Obligations, or both, which, through the payment of principal and interest in respect thereof in accordance with their terms, will provide money in an amount sufficient to pay the principal of and any premium and interest on the

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Notes on their Stated Maturity in accordance with the terms of the Indenture and the Notes. The Company will also be required, among other things, to deliver to the Trustee an Opinion of Counsel to the effect that Holders of the Notes will not recognize gain or loss for Federal income tax purposes as a result of such deposit and defeasance of certain obligations and will be subject to Federal income tax on the same amount, in the same manner and at the same times as would have been the case if such deposit and defeasance were not to occur. In the event the Company exercises this option with respect to the Notes and the Notes are declared due and payable because of the occurrence of any Event of Default, the amount of money and U.S. Government Obligations so deposited in trust will be sufficient to pay amounts due on the Notes at the time of their Stated Maturity but may not be sufficient to pay amounts due on the Notes upon any acceleration resulting from such Event of Default. In such case, the Company would remain liable for such payments.

Notices

        Notices to Holders of Notes will be given by mail to the addresses of such Holders as they may appear in the Note Register.

Title

        The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name a Note is registered as the absolute owner thereof (whether or not such Note may be overdue) for the purpose of making payment and for all other purposes.

No Recourse

        A director, officer, employee, stockholder or Affiliate, as such, of the Company will not have any liability for any obligations of the Company under the Notes or the Indenture. Each Holder by accepting a Note waives and releases all such liability subject to any liability imposed by the Securities Act or the Trust Indenture Act.

Governing Law

        The Indenture and the Notes are governed by, and construed in accordance with, the law of the State of New York.

Regarding the Trustee

        Wilmington Trust Company is the Trustee under the Indenture. The Indenture provides that, except during the continuance of an Event of Default, the Trustee will perform only such duties as are specifically set forth in the Indenture. During the existence of an Event of Default, the Trustee will exercise such rights and powers vested in it under the Indenture and use the same degree of care and skill in its exercise as a prudent person would exercise under the circumstance in the conduct of such person's own affairs.

Book-Entry, Delivery and Form

        We will issue the Exchange Notes by one or more Notes in registered, global form (the "Global Notes"). The Global Notes will be deposited upon issuance with the Trustee as custodian for The Depository Trust Company ("DTC"), in New York, New York, and registered in the name of DTC or its nominee, in each case for credit to an account of a direct or indirect participant in DTC as described below.

        The Global Notes will be deposited on behalf of the acquirers of the Exchange Notes for credit to the respective accounts of the acquirers or to such other accounts as they may direct at DTC.

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        Except as set forth below, the Global Notes may be transferred, in whole and not in part, only to another nominee of DTC or to a successor of DTC or its nominee. Beneficial interests in the Global Notes may not be exchanged for Notes in certificated form except in the limited circumstances described below. See "—Exchange of Global Notes for Certificated Notes". Except in the limited circumstances described below, owners of beneficial interests in the Global Notes will not be entitled to receive physical delivery of Notes in certificated form.

Depository Procedures

        The following description of the operations and procedures of DTC, Euroclear System ("Euroclear") and Clearstream Banking, S.A. ("Clearstream") (Euroclear and Clearstream are indirect participants in DTC) are provided solely as a matter of convenience. These operations and procedures are solely within the control of the respective settlement systems and are subject to changes by them. We take no responsibility for these operations and procedures and urge investors to contact the system or their participants directly to discuss these matters.

        DTC has advised us that DTC is a limited-purpose trust company created to hold securities for its participating organizations (collectively, the "Participants") and to facilitate the clearance and settlement of transactions in those securities between Participants through electronic book-entry changes in accounts of its Participants. The Participants include securities brokers and dealers (including the initial purchaser), banks, trust companies, clearing corporations and certain other organizations. Access to DTC's system is also available to other entities such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Participant, either directly or indirectly (collectively, the "Indirect Participants"). Persons who are not Participants may beneficially own securities held by or on behalf of DTC only through the Participants or the Indirect Participants. The ownership interests in, and transfers of ownership interests in, each security held by or on behalf of DTC are recorded on the records of the Participants and Indirect Participants.

        DTC has also advised us that, pursuant to procedures established by it, ownership of interests in the Global Notes will be shown on, and the transfer of ownership thereof will be effected only through, records maintained by DTC (with respect to the Participants) or by the Participants and the Indirect Participants (with respect to other owners of beneficial interests in the Global Notes).

         Except as described below, owners of an interest in the Global Notes will not have Notes registered in their names, will not receive physical delivery of Notes in certificated form and will not be considered the registered owners or "Holders" thereof under the Indenture for any purpose.

        Payments in respect of the Global Notes registered in the name of DTC or its nominee will be payable to DTC in its capacity as the registered Holder under the Indenture. Under the terms of the Indenture, the Company and the Trustee will treat the Persons in whose names the Notes, including the Global Notes, are registered as the owners of the Notes for the purpose of receiving payments and for all other purposes. Consequently, neither the Company, the Trustee nor any agent of the Company or the Trustee has or will have any responsibility or liability for:

        DTC has advised us that its current practice, upon receipt of any payment in respect of securities such as the Notes (including principal and interest), is to credit the accounts of the

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relevant Participants with the payment on the payment date unless DTC has reason to believe it will not receive payment on such payment date. Each relevant Participant is credited with an amount proportionate to its beneficial ownership of an interest in the principal amount of the relevant security as shown on the records of DTC. Payments by the Participants and the Indirect Participants to the beneficial owners of Notes will be governed by standing instructions and customary practices and will be the responsibility of the Participants or the Indirect Participants and will not be the responsibility of DTC, the Trustee or the Company. Neither the Company nor the Trustee will be liable for any delay by DTC or any of its Participants in identifying the beneficial owners of the Notes, and the Company and the Trustee may conclusively rely on and will be protected in relying on instructions from DTC or its nominee for all purposes.

        Transfers between Participants in DTC will be effected in accordance with DTC's procedures, and will be settled in same-day funds, and transfers between participants in Euroclear and Clearstream will be effected in accordance with their respective rules and operating procedures.

        Subject to compliance with the transfer restrictions applicable to the Notes described herein, cross-market transfers between the Participants in DTC, on the one hand, and Euroclear or Clearstream participants, on the other hand, will be effected through DTC in accordance with DTC's rules on behalf of Euroclear or Clearstream, as the case may be, by its respective depositary; however, such cross-market transactions will require delivery of instructions to Euroclear or Clearstream, as the case may be, by the counterparty in such system in accordance with the rules and procedures and within the established deadlines (Brussels time) of such system. Euroclear or Clearstream, as the case may be, will, if the transaction meets its settlement requirements, deliver instructions to its respective depositary to take action to effect final settlement on its behalf of delivering or receiving interests in the relevant Global Note in DTC, and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Euroclear participants and Clearstream participants may not deliver instructions directly to the depositories for Euroclear or Clearstream.

        DTC has advised the Company that it will take any action permitted to be taken by a Holder of Notes only at the direction of one or more Participants to whose account DTC has credited the interests in the Global Notes and only in respect of such portion of the aggregate principal amount of the Notes as to which such Participant or Participants has or have given such direction. However, if there is an Event of Default under the Notes, DTC reserves the right to exchange the Global Notes for legended Notes in certificated form, and to distribute such Notes to its Participants.

        Although DTC, Euroclear and Clearstream have agreed to the foregoing procedures to facilitate transfers of interests in the Global Notes among participants in DTC, Euroclear and Clearstream, they are under no obligation to perform or to continue to perform such procedures, and may discontinue such procedures at any time. Neither the Company nor the Trustee nor any of their respective agents will have any responsibility for the performance by DTC, Euroclear or Clearstream or their respective participants or indirect participants of their respective obligations under the rules and procedures governing their operations.

Exchange of Global Notes for Certificated Notes

        A Global Note is exchangeable for Certificated Notes if:

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        In addition, beneficial interests in a Global Note may be exchanged for Certificated Notes under prior written notice given to the Trustee by or on behalf of DTC in accordance with the Indenture. In all cases, Certificated Notes delivered in exchange for any Global Note or beneficial interests in Global Notes will be registered in the names, and issued in any approved denominations, requested by or on behalf of the depositary (in accordance with its customary procedures). Any such exchange will be effected through the DTC Deposit/Withdrawal at Custodian ("DWAC") system and an appropriate adjustment will be made on the records of the applicable security registry to reflect a decrease in the principal amount of the relevant Global Note.

Same Day Settlement and Payment

        The Company will make payments in respect of the Notes represented by the Global Notes (including principal, premium, if any, and interest) by wire transfer of immediately available funds to the accounts specified by a Global Note holder. The Company will make all payments of principal, interest and premium with respect to Certificated Notes by wire transfer of immediately available funds to the accounts specified by the Holders of the Certificated Notes or, if no such account is specified, by mailing a check to each such Holder's registered address. The Notes represented by the Global Notes are expected to be eligible to trade in The PORTAL Market and to trade in DTC's Same-Day Funds Settlement System, and any permitted secondary market trading activity in such Notes will, therefore, be required by DTC to be settled in immediately available funds. The Company expects that secondary trading in any Certificated Notes will also be settled in immediately available funds.

        Because of time zone differences, the securities account of a Euroclear or Clearstream participant purchasing an interest in a Global Note from a Participant in DTC will be credited, and any such crediting will be reported to the relevant Euroclear or Clearstream participant, during the securities settlement processing day (which must be a business day for Euroclear and Clearstream) immediately following the settlement date of DTC. DTC has advised the Company that cash received in Euroclear or Clearstream as a result of sales of interests in a Global Note by or through a Euroclear or Clearstream participant to a Participant in DTC will be received with value on the settlement date of DTC but will be available in the relevant Euroclear or Clearstream cash account only as of the business day for Euroclear or Clearstream following DTC's settlement date.

Certain Definitions

        "Attributable Debt" will be defined, as to any sale and leaseback transaction relating to any property or assets under which any Person is at the time liable and which is not permitted under clause (b) under "Certain Covenants—Limitation on Sales and Leasebacks," at any date as of which the amount thereof is to be determined, as the lesser of (i) the fair market value of the assets subject to such transaction as determined by any two of the Chairman of the Board of the Company, its President, any Executive or Senior Vice President of the Company, its Chief Financial Officer, its Treasurer and its Controller or (ii) the total net amount of Rentals required to be paid by such Person under such lease during the remaining term thereof, discounted from the respective due dates thereof to such date at the rate per annum equal to the discount rate which would be applicable to a capital lease obligation with like term in accordance with generally accepted accounting principles.

        "Capitalized Lease" will be defined as 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 generally accepted accounting principles.

        "Capitalized Rentals" of any Person will be defined as of the date of any determination thereof as the amount at which the aggregate Rentals due and to become due under all Capitalized Leases

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under which such Person is a lessee would be reflected as a liability on a balance sheet of such Person in accordance with generally accepted accounting principles.

        "Change of Control" will be defined as the occurrence of any of the following events:

        "Consolidated Net Tangible Assets of the Company and its Restricted Subsidiaries" will be defined as the aggregate amount of assets (less applicable reserves and other properly deductible items) after deducting therefrom (a) all current liabilities (excluding any thereof constituting Funded Debt) and (b) all goodwill, trade names, trademarks, patents, copyrights, franchises, experimental expense, organization expense, unamortized debt discount and expenses, deferred charges (other than unamortized deferred dry dock costs, unterminated voyage expenses, prepaid insurance, prepaid taxes, prepaid charter hire and other prepaid items properly excludable from intangibles under generally accepted accounting principles) and other like intangibles, all as set forth on or included in the most recent consolidated balance sheet of the Company and its Restricted Subsidiaries, such balance sheet to be prepared (except for the exclusion of Subsidiaries which are not Restricted Subsidiaries) in accordance with generally accepted accounting principles.

        "Credit Facilities" means (a) the credit agreement dated as of April 18, 2000, among the Company, certain of its Subsidiaries, Den Norske Bank, as facility agent and arranger, and the other banks party thereto, which terminates in May 2005, (b) the credit agreement dated as of December 12, 2001, as amended January 22, 2002, among the Company, certain of its Subsidiaries, JPMorgan Chase Bank, as administrative agent and lender, and the other banks party thereto, which terminates in December 2006, and (c) the credit agreement dated as of February 28, 2002, among the Company, certain of its Subsidiaries and The Bank of Nova Scotia, as amended, which terminates in February 2004.

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        "Debt" of a Person will be defined as, without duplication, (i) any indebtedness for money borrowed whether or not evidenced by Notes, bonds, debentures or other similar evidences of indebtedness for money borrowed, (ii) all Capitalized Rentals of such Person (other than Rentals owing from the Company or any Restricted Subsidiary to the Company or another Restricted Subsidiary), and (iii) all Guaranties by such Person of any obligation described in clause (i) or (ii) of any other Person (other than any such obligation of the Company or any Subsidiary).

        "Exchange Notes" means the debt securities of the Company issued pursuant to the Indenture in exchange for, and in an aggregate principal amount equal to, the outstanding Notes, in compliance with the terms of the Registration Rights Agreement.

        "Funded Debt" will be defined as all Debt having (a) a maturity of more than 12 months from the date as of which the amount thereof is to be determined or (b) a maturity of less than 12 months and that is (i) by its terms renewable or extendable beyond 12 months from such date at the option of the borrower or (ii) included in long-term Debt on the consolidated balance sheet of the Company in accordance with generally accepted accounting principles.

        "Guaranties" by any Person will be defined as all obligations (other than endorsements in the ordinary course of business of negotiable instruments for deposit or collection) of such Person guaranteeing, or in effect guaranteeing, any indebtedness, dividend or other obligation of any other Person (the "primary obligor") in any manner, whether directly or indirectly, including, without limitation, all obligations incurred through an agreement, contingent or otherwise, by such Person: (i) to purchase such indebtedness or obligation or any property or assets constituting security therefor, (ii) to advance or supply funds (x) for the purchase or payment of such indebtedness or obligation, (y) to maintain working capital or other balance sheet condition or otherwise to advance or make available funds for the purchase or payment of such indebtedness or obligation, (iii) to lease property or to purchase securities or other property or services primarily for the purpose of assuring the owner of such indebtedness or obligation of the ability of the primary obligor to make payment of the indebtedness or obligation, or (iv) otherwise to assure the owner of the indebtedness or obligation of the primary obligor against loss in respect thereof. For the purposes of all computations made under the Indenture, a Guaranty in respect of any indebtedness for borrowed money will be deemed to be indebtedness equal to the principal amount of such indebtedness for borrowed money which has been guaranteed, and a Guaranty in respect of any other obligation or liability or any dividend will be deemed to be indebtedness equal to the maximum aggregate amount of such obligation, liability or dividend.

        "Holder" means the Person in whose name a Note is registered on the Registrar's books.

        "Incur," with respect to any Debt, will be defined to mean to incur, create, issue, assume, guarantee or otherwise become liable for any such Debt ("Incurrence," "Incurred," "Incurrable" and "Incurring" will have meanings correlative to the foregoing).

        "Mortgage" will be defined as any pledge of, conditional sale or other title retention of, or mortgage or other lien or security interest or encumbrance of any kind on, any property or assets owned or leased by the Company or any Subsidiary, or any shares of stock or Debt of any Subsidiary.

        "Person" will be defined as any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.

        "Rentals" will be defined as of the date of any determination thereof, as all rent payable by the lessee under a lease of any property or assets, after excluding amounts required to be paid on account of maintenance and repairs, insurance, taxes, assessments, water rates and similar charges. Rents under any "percentage leases" shall be computed solely on the basis of minimum rents, if any, required to be paid by the lessee regardless of sales volume or gross revenues. In the

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case of any lease which is terminable by the lessee upon the payment of a penalty, such net amount will also include the amount of such penalty, but no rent will be considered as required to be paid under such lease subsequent to the first date upon which it may be so terminated.

        "Restricted Subsidiary" will be defined as any Subsidiary existing on the date of the Indenture and any Subsidiary existing, created or acquired subsequent to the date of the Indenture unless designated by the Board of Directors as an Unrestricted Subsidiary in accordance with the provisions set forth in "Certain Covenants—Restricted Subsidiaries."

        "Stated Maturity" means, with respect to any security, the date specified in such security as the fixed date on which the final payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof upon the happening of any contingency unless such contingency has occurred).

        "Subsidiary" will be defined as a corporation more than 50% of the outstanding voting stock of which is owned, directly or indirectly, by the Company or by one or more other Subsidiaries, or by the Company and one or more other Subsidiaries. For the purposes of this definition, "voting stock" will be defined as stock which ordinarily has voting power for the election of directors, whether at all times or only so long as no senior class of stock has such voting power by reason of any contingency.

        "Unrestricted Subsidiary" will be defined as any Subsidiary that is not a Restricted Subsidiary.

Registration Rights; Special Interest

        The Company and the initial purchaser have entered into the Registration Rights Agreement pursuant to which the Company agreed to file with the SEC this exchange offer registration statement on the appropriate form under the Securities Act with respect to the Exchange Notes (the "Exchange Offer Registration Statement"). Upon the effectiveness of the Exchange Offer Registration Statement, the Company will offer to the Holders who are able to make certain representations the opportunity to exchange their outstanding Notes for Exchange Notes (the "Exchange Offer").

        If:

then the Company will file with the SEC a shelf registration statement (the "Shelf Registration Statement") to cover resales of the Notes by the Holders of the Notes who satisfy certain conditions relating to the provision of information in connection with the Shelf Registration Statement.

        The Company will use its reasonable best efforts to cause the applicable registration statement to be declared effective as promptly as possible by the SEC.

        The Registration Rights Agreement provides that:

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        If:

then the Company will pay special interest ("Special Interest") to each Holder of Notes, with respect to the first 90-day period immediately following the occurrence of the first Registration Default in an amount equal to 0.50% per annum of the principal amount of Notes held by such Holder.

        The amount of the Special Interest will increase by an additional 0.50% per annum of the principal amount of the Notes with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of Special Interest for all Registration Defaults of 2.0% per annum of the principal amount of the Notes. We will pay Special Interest on regular interest payment dates. Following the cure of all Registration Defaults, the accrual of Special Interest will cease.

        Holders of Notes are required to make certain representations to the Company (as described in the Registration Rights Agreement) in order to participate in the Exchange Offer. In addition, Holders are required to deliver certain information to be used in connection with the Shelf Registration Statement and will need to provide comments, if any, on the Shelf Registration Statement within the time periods set forth in the Registration Rights Agreement in order to have their Notes included in the Shelf Registration Statement. Holders of Notes will be required to suspend their use of the prospectus included in the Shelf Registration Statement under certain circumstances upon receipt of written notice to that effect from the Company.


TAX CONSIDERATIONS

United States Federal Income Tax Consequences

General

        The following summary describes the material United States federal income tax consequences relevant to the purchase, ownership, and disposition of the Exchange Notes. Except where indicated, this summary deals only with Exchange Notes held as capital assets by holders of the

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Exchange Notes and does not purport to be a complete analysis of all the potential tax considerations that may be relevant to such holders. The discussion does not include special rules that might apply to certain holders such as dealers in securities or currencies, financial institutions, investors in pass-through entities, tax-exempt organizations or pension plans, life insurance companies, persons holding notes as a part of a hedging or conversion transaction or a straddle or United States holders whose "functional currency" is not the U.S. dollar. In addition, the following discussion, as well as the conclusions regarding certain issues of United States federal income tax law that are reflected in that discussion, are based upon the provisions of the United States Internal Revenue Code of 1986, as amended (the "Code"), and related regulations, rulings and judicial decisions existing as of the date of this prospectus, and upon the advice received by us from special U.S. tax counsel. Changes in existing laws or regulations or their interpretation may occur, which could be retroactive. Applicable authorities may be repealed, revoked or modified so as to result in United States federal income tax consequences different from those discussed below. Our views have no binding effect or official status of any kind, and no assurance can be given that the conclusions discussed below would be sustained by a court if challenged by the Internal Revenue Service.

        THE DISCUSSION BELOW IS A SUMMARY FOR GENERAL INFORMATION ONLY AND DOES NOT ADDRESS ALL POTENTIAL TAX CONSIDERATIONS THAT DEPEND UPON CIRCUMSTANCES SPECIFIC TO EACH INVESTOR. PERSONS CONSIDERING THE PURCHASE, OWNERSHIP OR DISPOSITION OF EXCHANGE NOTES SHOULD SATISFY THEMSELVES AS TO THE OVERALL TAX CONSEQUENCES OF THEIR OWNERSHIP OF THE EXCHANGE NOTES, INCLUDING STATE, LOCAL AND NON-UNITED STATES TAX CONSEQUENCES THEREOF (WHICH ARE NOT REVIEWED IN THIS DISCUSSION) AND CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THEIR PARTICULAR CIRCUMSTANCES.

        As used in this section of the prospectus, a "United States holder" of a note means a holder that is an individual citizen or resident of the United States, a corporation or partnership created or organized in or under the laws of the United States or any political subdivision, an estate the income of which is subject to United States federal income taxation regardless of its source, or a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust, or a trust that was in existence on August 20, 1996, was treated as a United States person on August 19, 1996 and elected to be treated as a United States person at all times thereafter. A "Non-United States holder" of a note is a holder that is not a United States holder.

The Exchange Offer

        The exchange of an outstanding Note for an Exchange Note in the exchange offer will not constitute a significant modification of the outstanding Note for United States federal income tax purposes. Therefore, the Exchange Note received will be treated as a continuation of the outstanding Note in your hands. As a result, there will be no United States federal income tax consequences to you upon the exchange of an outstanding Note for an Exchange Note in the exchange offer and you will have the same adjusted tax basis and holding period in the Exchange Note as you had in the outstanding Note immediately before the exchange.

United States Holder

Payments of Interest

        Interest on the Exchange Notes will be "qualified stated interest." Qualified stated interest is generally defined as stated interest that is unconditionally payable in cash or other property (other than debt instruments of the issuer) at least annually at a single fixed rate. The Exchange Notes will

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not be issued with "original issue discount" under the Code. Thus, any payment of interest on an Exchange Note will generally be taxable to a United States holder as ordinary income at the time it is paid or accrued in accordance with the United States holder's regular method of accounting for tax purposes.

Amortizable Bond Premium

        A United States holder who purchases an Exchange Note for an amount in excess of the principal amount will be considered to have purchased the Exchange Note at a "premium." A United States holder may elect to amortize the premium over the remaining term of the Exchange Note on a constant yield method. A United States holder who elects to amortize the premium on an Exchange Note must reduce its tax basis in the Exchange Note by the amount of premium amortized in any year. An election to amortize bond premium applies to all taxable instruments then owned and thereafter acquired by the taxpayer and may be revoked only with the consent of the Internal Revenue Service.

Sale, Exchange or Retirement of Exchange Notes

        A United States holder's tax basis in an Exchange Note generally will be the United States holder's cost for the Exchange Note. Upon the sale, exchange or retirement of an Exchange Note by a United States holder that acquired the Exchange Note for a purchase price that is not less than the principal amount, the holder will recognize gain or loss equal to the difference between the amount realized upon the sale, exchange or retirement (less any accrued interest, which will be taxable as such) and the adjusted tax basis of the Exchange Note. In general, such gain or loss will be capital gain or loss and will be long-term capital gain or loss if at the time of sale, exchange or retirement the Exchange Note has been held for more than one year. Capital gain recognized on the sale, exchange or retirement of an Exchange Note held by a noncorporate holder for more than one year will be taxed at a maximum rate of 20% (18% in the case of Exchange Notes held more than five years). Capital gain from the sale, exchange or retirement of an Exchange Note held for one year or less is taxed at the rates applicable to ordinary income, i.e., up to 38.6%. Holders must aggregate capital gains and losses for each taxable year. In the event a holder realizes a net capital loss for any year, there are limitations on the amount of these capital losses that can be deducted.

        If a United States holder acquires an Exchange Note in a secondary market transaction for a purchase price that is less than the principal amount of the Exchange Note, the difference is treated for tax purposes as market discount. In general, when an Exchange Note containing market discount is sold, exchanged or retired, the portion of the amount realized by the holder of the Exchange Note equal to the accrued market discount is taxed as ordinary income rather than as capital gain. The amount of market discount that accrues annually will be calculated on a straight-line basis over the remaining term to maturity of the Exchange Note unless the holder elects to accrue market discount using a constant-yield method. Limitations, which are intended to match deductions with the taxation of income, may defer deductions of interest paid by a holder on indebtedness incurred or continued to purchase or carry an Exchange Note with market discount. A holder who elects to include market discount in gross income as it accrues is exempt from this rule and also will not be subject to tax on the accrued market discount when the Exchange Note is sold, exchanged or retired. This election would apply to all of the holder's debt investments acquired with market discount in or after the taxable year in which the Exchange Notes are acquired and not just to the Exchange Notes.

Backup Withholding And Information Reporting

        In general, information reporting will apply to United States holders (other than certain exempt recipients) with respect to payments of interest on the Exchange Notes and proceeds from the sale of an Exchange Note to or through the United States office of a broker. Additionally, a 30% backup

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withholding tax currently will apply to such payments if the United States holder fails to provide a correct taxpayer identification number or certification of exempt status. (The rate of backup withholding is scheduled to be reduced over time to 28% in 2006.) If the 30% backup withholding tax applies to a United States holder, the holder may credit the amounts withheld against the holder's United States federal income tax liability as long as the holder provides certain information to the Internal Revenue Service.

Non-United States Holder

Payments of Interest

        Interest paid or accrued to a non-United States holder of an Exchange Note that is not effectively connected with the conduct of a trade or business within the United States by the holder will generally be considered "portfolio interest" and will not be subject to United States federal income tax or withholding tax as long as the holder is not actually or constructively a 10 percent shareholder of OSG and the holder provides (or under certain circumstances causes a financial institution to provide on its behalf) to OSG or the paying agent an appropriate statement (e.g., Form W-8BEN or successor form) that is signed under penalties of perjury, certifying that the beneficial owner of the note is a foreign person and providing that foreign person's name and address. Additional reporting requirements may apply to interest payments made to a non-United States holder of an Exchange Note that is not an individual or corporation (or an entity treated as a corporation for federal income tax purposes). If the information provided in this statement changes, the holder must provide a new Form W-8BEN (or successor form) within 30 days. If the holder fails to satisfy these requirements so that interest on the holder's Exchange Notes is not portfolio interest, interest payments will be subject to United States federal withholding tax at a rate of 30% unless reduced or eliminated under an applicable income tax treaty. To qualify for any reduction as the result of an income tax treaty, the holder must provide OSG or the paying agent with Form W-8BEN (or successor form).

        If a partnership (including for this purpose any entity treated as a partnership for federal income tax purposes) is a beneficial owner of an Exchange Note, the treatment of a partner in the partnership will generally depend upon the status of the partner and upon the activities of the partnership. A holder that is a partnership and partners in such partnership should consult their tax advisors about the federal income tax consequences of holding and disposing of an Exchange Note, as the case may be.

        Interest on an Exchange Note held by a non-United States holder that is effectively connected with the conduct of a trade or business in the United States by the holder will be subject to United States federal income tax at regular income tax rates. (At the same time, the holder may be exempt from withholding tax if a Form W-8ECI (or successor form) is furnished to OSG or the paying agent.) In addition, if the holder is a foreign corporation, it may be subject to a branch profits tax equal to 30% of its "effectively connected earnings and profits" for the taxable year, as adjusted for certain items, unless it qualifies for a lower rate under an applicable tax treaty.

Sale, Exchange or Retirement of Exchange Notes

        Gain, realized on the sale, exchange or retirement of Exchange Notes by a non-United States holder generally will be exempt from United States federal income and withholding tax, unless the gain is effectively connected with the conduct by such holder of a trade or business within the United States, or in the case of an individual, the non-United States holder has been present in the United States for 183 days or more during the taxable year of the sale, exchange or retirement and certain other conditions are satisfied. If the gain realized by a foreign corporate holder of an Exchange Note is effectively connected with the conduct of a United States trade or business, such gain may also be subject to the branch profits tax. See "Non-United States Holder—Payments of

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Interest." If an individual holder is present in the United States for 183 days or more during the taxable year, the gain on the sale, exchange or retirement of the Exchange Notes could be subject to a 30% tax unless reduced by treaty.

Backup Withholding and Information Reporting

        Information reporting and backup withholding generally will not apply to payments of interest on the Exchange Notes made by OSG or a paying agent to a non-United States holder of an Exchange Note if (1) the beneficial owner of such Exchange Note certifies (e.g., on Form W-8BEN), under penalties of perjury, that it is not a United States holder and provides its name and address or (2) a securities clearing organization, bank or other financial institution that holds customers' securities in the ordinary course of its trade or business and holds the Exchange Notes certifies (on Form W-8IMY), under penalties of perjury, that such statement has been received from the beneficial owner of such Exchange Note by it or by a financial institution between it and the beneficial owner and furnishes OSG or the paying agent with a copy thereof. Additionally, OSG and the paying agent must not have actual knowledge that such beneficial owner is a United States person.

        Proceeds received from the sale of an Exchange Note by a non-United States holder to or through the United States office of a broker generally are subject to information reporting and backup withholding unless the holder or beneficial owner certifies as to its non-United States status or otherwise establishes an exemption from information reporting and backup withholding. If backup withholding tax applies to a non-United States holder, the holder may credit the amounts withheld against the holder's United States federal income tax liability as long as the non-United States holder provides certain information to the Internal Revenue Service.

        PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF ANY INVESTMENT IN THE EXCHANGE NOTES, INCLUDING THE APPLICATION OF UNITED STATES FEDERAL, STATE, LOCAL AND NON-UNITED STATES TAX LAWS.


PLAN OF DISTRIBUTION

        Each broker-dealer that receives Exchange Notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. This prospectus, as it may be amended or supplemented, may be used by a broker-dealer in connection with resales of Exchange Notes received in exchange for outstanding Notes only where such outstanding Notes were acquired as a result of market-making activities or other trading activities. We have agreed to make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale for a period of 180 days from the date on which the exchange offer is consummated, or such shorter period as will terminate when all outstanding Notes acquired by broker-dealers for their own accounts as a result of market-making activities or other trading activities have been exchanged for Exchange Notes and such Exchange Notes have been resold by such broker-dealers.

        We will not receive any proceeds from any sale of Exchange Notes by broker-dealers. Exchange Notes received by broker-dealers for their own account pursuant to the exchange offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Exchange Notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any Exchange Notes. Any broker-dealer that resells Exchange Notes that were received by it for its own account pursuant to the

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exchange offer and any broker or dealer that participates in a distribution of such Exchange Notes may be deemed to be an "underwriter" within the meaning of the Securities Act of 1933 and any profit on any such resale of Exchange Notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act of 1933.

        We have agreed to pay all our expenses incident to the exchange offer, including reasonable fees of not more than one counsel retained by the holders of outstanding Notes in connection with the filing of a shelf registration statement, if required, but excluding commissions or concessions of any brokers or dealers and the fees of any other advisors or experts retained by the holders of outstanding Notes, except as expressly set forth in the Registration Rights Agreement, and will indemnify the holders of outstanding Notes (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act of 1933.


LEGAL MATTERS

        The legality of the Exchange Notes will be passed upon for us by James I. Edelson, Esq., our Associate General Counsel, and certain legal matters relating to United States federal income tax consequences relevant to the Exchange Notes will be passed upon for us by Proskauer Rose LLP, New York, New York.


EXPERTS

        Ernst & Young LLP, independent auditors, have audited our consolidated financial statements at December 31, 2002 and 2001 and for each of the three years in the period ended December 31, 2002, as set forth in their report, which is included in this prospectus. We have included our financial statements in this prospectus and elsewhere in the registration statement of which this prospectus is a part in reliance on Ernst & Young LLP's report given on their authority as experts in accounting and auditing.

        The section in this prospectus entitled "Overview of the International Tanker Industry" has been reviewed by Maritime Strategies International Ltd. (MSI), which has confirmed to us that it accurately describes the international tanker industry, subject to the availability and reliability of the data supporting the statistical and graphical information presented in this prospectus as indicated in the consent of MSI filed as an exhibit to the registration statement of which this prospectus is a part.

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INDEX TO FINANCIAL STATEMENTS

 
  Page
Report of Independent Auditors   F-2

Consolidated Balance Sheets at December 31, 2002 and 2001
 
F-3

Consolidated Statements of Operations for the Years Ended December 31, 2002, 2001 and 2000
 
F-4

Consolidated Statements of Cash Flows for the Years Ended December 31, 2002, 2001 and 2000
 
F-5

Consolidated Statements of Changes in Shareholders' Equity for the Years Ended December 31, 2002, 2001 and 2000
 
F-6

Notes to Consolidated Financial Statements
 
F-7

F-1


REPORT OF INDEPENDENT AUDITORS

To the Shareholders
Overseas Shipholding Group, Inc.

        We have audited the accompanying consolidated balance sheets of Overseas Shipholding Group, Inc. and subsidiaries as of December 31, 2002 and 2001, and the related consolidated statements of operations, cash flows, and changes in shareholders' equity for each of the three years in the period ended December 31, 2002. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

        We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Overseas Shipholding Group, Inc. and subsidiaries at December 31, 2002 and 2001, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2002, in conformity with accounting principles generally accepted in the United States.

        As discussed in Note B to the consolidated financial statements, in 2000 the Company changed its method of accounting for net voyage revenues for vessels operating on voyage charters.

                        /s/ Ernst & Young LLP

New York, New York
February 24, 2003

F-2

Consolidated Balance Sheets
Overseas Shipholding Group, Inc. and Subsidiaries

Dollars in thousands at December 31,
  2002
  2001
 
Assets              
Current Assets:              
Cash and cash equivalents   $ 36,944   $ 30,256  
Investments in marketable securities—Note F     28,796     69,958  
Voyage receivables, including unbilled of $35,637 and $18,221     38,755     29,593  
Other receivables, including federal income taxes recoverable of $6,098 in 2002     12,777     8,461  
Inventories     1,155     3,046  
Prepaid expenses     4,960     5,308  
   
 
 
  Total Current Assets     123,387     146,622  
Capital Construction Fund—Notes F and J     231,072     232,971  
Vessels, at cost, less accumulated depreciation—Notes A5 and I     1,383,744     1,307,311  
Vessels under Capital Leases, less accumulated amortization—Note A6     33,030     38,408  
Investments in Joint Ventures—Note E     168,315     149,775  
Other Assets—Note A5     95,294     89,188  
   
 
 
    Total Assets   $ 2,034,842   $ 1,964,275  
   
 
 
Liabilities and Shareholders' Equity              
Current Liabilities:              
Accounts payable   $ 2,201   $ 3,132  
Sundry liabilities and accrued expenses—Notes H and O     22,971     34,880  
Federal income taxes     —     23,756  
Short-term debt and current installments of long-term debt—Note I     14,284     17,600  
Current obligations under capital leases—Note M1     6,791     6,164  
   
 
 
    Total Current Liabilities     46,247     85,532  
Long-term Debt—Note I     932,933     795,736  
Obligations under Capital Leases—Note M1     52,102     59,193  
Deferred Federal Income Taxes ($134,204 and $132,170), Deferred Credits and Other Liabilities — Notes E and J     219,411     210,388  
Commitments—Note Q              
Shareholders' Equity—Notes G, I, J, K and L:              
Common stock ($1 par value; 60,000,000 shares authorized; 39,590,759 shares issued)     39,591     39,591  
Paid-in additional capital     106,154     103,529  
Retained earnings     731,201     769,457  
   
 
 
      876,946     912,577  
Cost of treasury stock (5,139,684 and 5,312,867 shares)     70,270     72,868  
   
 
 
      806,676     839,709  
Accumulated other comprehensive income/(loss)     (22,527 )   (26,283 )
   
 
 
    Total Shareholders' Equity     784,149     813,426  
   
 
 
    Total Liabilities and Shareholders' Equity   $ 2,034,842   $ 1,964,275  
   
 
 

See notes to consolidated financial statements.

F-3

Consolidated Statements of Operations
Overseas Shipholding Group, Inc. and Subsidiaries

Dollars in thousands, except per share amounts,
for the year ended December 31,
  2002
  2001
  2000
 
Shipping Revenues—Note C:                    
Voyage charter revenues   $ 69,881   $ 285,706   $ 268,010  
Time and bareboat charter revenues, including vessels operating in certain pools     227,402     183,627     199,608  
   
 
 
 
      297,283     469,333     467,618  
Voyage Expenses     (30,558 )   (88,315 )   (97,537 )
   
 
 
 
Time Charter Equivalent Revenues     266,725     381,018     370,081  
   
 
 
 
Ship Operating Expenses:                    
Vessel expenses     84,617     84,058     81,929  
Time and bareboat charter hire expenses—Notes E and M1     25,359     43,956     41,326  
Depreciation and amortization     78,940     69,912     70,138  
General and administrative     32,921     41,967     42,622  
Restructuring charge—Note O     —     10,439     —  
   
 
 
 
Total Ship Operating Expenses     221,837     250,332     236,015  
   
 
 
 
Income from Vessel Operations     44,888     130,686     134,066  
Equity in Income of Joint Ventures—Note E     11,407     20,474     11,449  
   
 
 
 
Operating Income     56,295     151,160     145,515  
Other Income/(Expense)—Note P     (24,466 )   48,320     34,141  
   
 
 
 
      31,829     199,480     179,656  
Interest Expense, net of gain on early extinguishment of debt in 2000—Note I     52,693     45,035     46,667  
   
 
 
 
Income/(Loss) before Federal Income Taxes and Cumulative Effect of Change in Accounting Principle     (20,864 )   154,445     132,989  
Provision/(Credit) for Federal Income Taxes—Note J     (3,244 )   53,004     46,750  
   
 
 
 
Income/(Loss) before Cumulative Effect of Change in Accounting Principle     (17,620 )   101,441     86,239  
Cumulative Effect of Change in Accounting Principle, net of income taxes of $1,800—Note B     —     —     4,152  
   
 
 
 
Net Income/(Loss)   $ (17,620 ) $ 101,441   $ 90,391  
   
 
 
 
Weighted Average Number of Common Shares Outstanding—Note K:                    
Basic     34,394,977     34,168,944     33,870,154  
Diluted     34,394,977     34,696,823     34,315,257  
Per Share Amounts:                    
Basic net income/(loss) before cumulative effect of change in accounting principle   $ (0.51 ) $ 2.97   $ 2.55  
Diluted net income/(loss) before cumulative effect of change in accounting principle   $ (0.51 ) $ 2.92   $ 2.51  
Cumulative effect of change in accounting principle     —     —   $ 0.12  
Basic net income/(loss)   $ (0.51 ) $ 2.97   $ 2.67  
Diluted net income/(loss)   $ (0.51 ) $ 2.92   $ 2.63  
Cash dividends declared and paid   $ 0.60   $ 0.60   $ 0.60  

See notes to consolidated financial statements.

F-4

Consolidated Statements of Cash Flows
Overseas Shipholding Group, Inc. and Subsidiaries

In thousands for the year ended December 31,
  2002
  2001
  2000
 
Cash Flows from Operating Activities:                    
Net income/(loss)   $ (17,620 ) $ 101,441   $ 90,391  
Items included in net income/(loss) not affecting cash flows:                    
  Cumulative effect of change in accounting principle     —     —     (5,952 )
  Depreciation and amortization     78,940     69,912     70,138  
  Amortization of deferred gain on sale and leaseback     (13,774 )   (13,775 )   (17,353 )
  Restructuring charge     —     10,439     —  
  Deferred compensation relating to stock option grants     2,262     2,659     1,282  
  Unrealized loss on write-down of marketable securities     42,055     —     —  
  Provision for deferred federal income taxes     2,759     25,862     35,040  
  Equity in results of joint ventures     (4,026 )   (7,937 )   (9,057 )
  Other—net     (13,515 )   (6,482 )   (10,851 )
Items included in net income/(loss) related to investing and financing activities:                    
  Gain on sale of securities—net     (3,643 )   (27,227 )   (3,513 )
  (Gain)/loss on disposal of other vessels     861     (436 )   (21,064 )
  Gain on early extinguishment of debt     —     —     (803 )
Changes in operating assets and liabilities:                    
  Decrease/(increase) in receivables     (12,611 )   22,281     (23,695 )
  Increase/(decrease) in Federal income taxes payable     (24,500 )   18,851     4,105  
  Net change in prepaid items, accounts payable and sundry liabilities and accrued expenses     (24,015 )   (2,563 )   (6,626 )
   
 
 
 
    Net cash provided by operating activities     13,173     193,025     102,042  
   
 
 
 
Cash Flows from Investing Activities:                    
Purchases of marketable securities     —     (116,969 )   (38,968 )
Proceeds from sales of marketable securities     40,326     96,402     15,148  
Expenditures for vessels, including $116,830, $109,960 and $105,037 related to vessels under construction*     (152,640 )   (112,012 )   (106,858 )
Proceeds from disposal of vessels     12,729     1,142     8,148  
Investments in and advances to joint ventures     (19,756 )   (59,845 )   (6,845 )
Distributions from joint ventures     5,661     2,749     7,074  
Purchases of other investments     (1,339 )   (890 )   (3,912 )
Proceeds from dispositions of other investments     2,150     1,147     6,475  
Other—net     (1,442 )   1,241     (3,096 )
   
 
 
 
    Net cash (used in) investing activities     (114,311 )   (187,035 )   (122,834 )
   
 
 
 
Cash Flows from Financing Activities:                    
Issuance of debt*     256,000     41,000     74,000  
Payments on debt and obligations under capital leases     (127,864 )   (14,565 )   (75,885 )
Cash dividends paid     (20,636 )   (20,512 )   (20,316 )
Issuance of common stock upon exercise of stock options     2,627     4,547     4,795  
Other—net     (2,301 )   (1,985 )   (2,748 )
   
 
 
 
    Net cash provided by/(used in) financing activities     107,826     8,485     (20,154 )
   
 
 
 
Net increase/(decrease) in cash and cash equivalents     6,688     14,475     (40,946 )
Cash and cash equivalents at beginning of year     30,256     15,781     56,727  
   
 
 
 
Cash and cash equivalents at end of year   $ 36,944   $ 30,256   $ 15,781  
   
 
 
 
*
Net of $11,116 (2000) of secured debt in connection with the construction of vessels.

See notes to consolidated financial statements.

F-5

Consolidated Statements of Changes in Shareholders' Equity
Overseas Shipholding Group, Inc. and Subsidiaries

 
   
   
   
  Treasury Stock
  Accumulated
Other
Comprehensive
Income/(Loss)
   
 
Dollars in thousands
  Common
Stock
  Paid-in
Additional
Capital
  Retained
Earnings
   
 
  Shares
  Amount
  Total
 
Balance at December 31, 1999   $ 39,591   $ 96,156   $ 618,453   5,918,462   $ (81,098 ) $ (12,044 ) $ 661,058  
Net Income                 90,391                     90,391  
Other Comprehensive Income, net of tax:                                          
  Net unrealized holding gains on available-for-sale securities*                                 11,940     11,940  
                                     
 
Comprehensive Income                                       102,331  
Cash Dividends Declared and Paid                 (20,316 )                   (20,316 )
Deferred Compensation Related to                                          
Options Granted           1,282                           1,282  
Options Exercised and Employee Stock Purchase Plan           554         (314,187 )   4,241           4,795  
Tax Benefit Related to Options Exercised           1,017                           1,017  
   
 
 
 
 
 
 
 
Balance at December 31, 2000     39,591     99,009     688,528   5,604,275     (76,857 )   (104 )   750,167  
Net Income                 101,441                     101,441  
Cumulative Effect of Change in Accounting Principle, net of taxes of $1,861—Note A10                                 3,455     3,455  
Other Comprehensive (Loss), net of tax:                                          
  Net unrealized holding losses on available-for-sale securities*                                 (16,341 )   (16,341 )
  Effect of derivative
instruments—Note L 		                                (9,469 )   (9,469 )
  Minimum pension liability                                 (3,824 )   (3,824 )
                                     
 
Comprehensive Income                                       75,262  
                                     
 
Cash Dividends Declared and Paid                 (20,512 )                   (20,512 )
Deferred Compensation Related to Options Granted           2,659                           2,659  
Options Exercised and Employee Stock Purchase Plan           558         (291,408 )   3,989           4,547  
Tax Benefit Related to Options Exercised           1,303                           1,303  
   
 
 
 
 
 
 
 
Balance at December 31, 2001     39,591     103,529     769,457   5,312,867     (72,868 )   (26,283 )   813,426  
Net Loss                 (17,620 )                   (17,620 )
Other Comprehensive (Loss), net of tax:                                          
  Net unrealized holding gains on available-for-sale securities**                                 16,777     16,777  
  Effect of derivative
instruments—Note L 		                                (13,880 )   (13,880 )
  Minimum pension liability                                 859     859  
                                     
 
Comprehensive Loss                                       (13,864 )
                                     
 
Cash Dividends Declared and Paid                 (20,636 )                   (20,636 )
Deferred Compensation Related to Options Granted           2,262                           2,262  
Options Exercised and Employee Stock Purchase Plan           29         (173,183 )   2,598           2,627  
Tax Benefit Related to Options Exercised           334                           334  
   
 
 
 
 
 
 
 
Balance at December 31, 2002   $ 39,591   $ 106,154   $ 731,201   5,139,684   $ (70,270 ) $ (22,527 ) $ 784,149  
   
 
 
 
 
 
 
 
*
Net of realized gains included in net income of $18,230 (2001) and $3,056 (2000).

**
Net of write-down of marketable securities of $30,976 and realized gains of $2,173 that were included in net loss.

See notes to consolidated financial statements.

F-6

Notes to Consolidated Financial Statements
Overseas Shipholding Group, Inc. and Subsidiaries

Note A—Summary of Significant Accounting Policies:

        1.     Basis of presentation and description of business —The consolidated financial statements include the accounts of Overseas Shipholding Group, Inc., a U.S. corporation, and its majority-owned subsidiaries (the "Company" or "OSG"). For the three years ended December 31, 2002, all subsidiaries were wholly owned. All significant intercompany balances and transactions have been eliminated in consolidation. Investments in 50% or less owned joint ventures, in which the Company exercises significant influence, are accounted for by the equity method.

        The Company owns and operates a fleet of oceangoing vessels engaged in the transportation of liquid and dry bulk cargoes in the international market and the U.S. Flag trades.

        The consolidated statements of cash flows for 2001 and 2000 have been reclassified to conform with the 2002 presentation of certain items. The consolidated statement of operations for 2000 has been reclassified to not reflect the gain on early extinguishment of debt as an extraordinary item in accordance with the provisions of Statement of Financial Accounting Standards No. 145, "Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections" (see Note I).

        2.     Cash and cash equivalents— Interest-bearing deposits that are highly liquid investments and have a maturity of three months or less when purchased are included in cash and cash equivalents.

        3.     Marketable securities —The Company's investments in marketable securities are classified as available-for-sale and are carried at fair value. Net unrealized gains or losses are reported as a component of accumulated other comprehensive income/(loss) within shareholders' equity.

        The Company accounts for investments in marketable securities in accordance with the provisions of Statement of Financial Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" and Staff Accounting Bulletin No. 59, "Noncurrent Marketable Equity Securities." Accordingly, if a material decline in the fair value below the Company's cost basis is determined to be other-than-temporary, a noncash impairment loss is recorded as a charge in the statement of operations in the period in which that determination is made. As a matter of policy, the Company evaluates all material declines in fair value for impairment whenever the fair value of a stock has been below its cost basis for more than six consecutive months. In the period in which a decline in fair value is determined to be other-than-temporary, the carrying value of that security is written down to its fair value at the end of such period, thereby establishing a new cost basis.

        The classification of investments in marketable securities in the consolidated balance sheets as a current asset reflects management's view with respect to the portfolio's availability for use in current operations.

        4.     Inventories— Inventories, which consist of fuel, are stated at cost determined on a first-in, first-out basis.

        5.     Vessels and deferred drydocking expenditures— Vessels include vessels under construction aggregating $126,093,000 and $120,521,000 at December 31, 2002 and 2001, respectively (see Note Q).

        Vessels are recorded at cost and are depreciated to their estimated salvage value on the straight-line basis, using a vessel life of 25 years. Each vessel's salvage value is equal to the product of its lightweight tonnage and an estimated scrap rate. Accumulated depreciation was $423,344,000 and $434,442,000 at December 31, 2002 and 2001, respectively.

F-7


        Interest costs are capitalized to vessels during the period that vessels are under construction. Interest capitalized aggregated $4,949,000 in 2002, $13,151,000 in 2001 and $15,411,000 in 2000.

        Expenditures incurred during a drydocking are deferred and amortized on the straight-line basis over the period until the next scheduled drydocking, generally two and a half to five years. Expenditures for maintenance and repairs are expensed when incurred. Amortization of capitalized drydock expenditures, which is included in depreciation and amortization in the consolidated statements of operations, amounted to $10,369,000 in 2002, $10,268,000 in 2001 and $14,912,000 in 2000. The unamortized portion of deferred drydocking expenditures, which is included in other assets in the consolidated balance sheets, was $18,647,000 and $12,202,000 at December 31, 2002 and 2001, respectively.

        6.     Vessels under capital leases —The Company charters in four U.S. Flag Vessels that it accounts for as capital leases. Amortization of capital leases is computed by the straight-line method over 22 or 25 years, representing the terms of the leases (see Note M1). Accumulated amortization was $89,060,000 and $83,681,000 at December 31, 2002 and 2001, respectively.

        7.     Impairment of long-lived assets— The carrying amounts of long-lived assets held and used by the Company are reviewed for potential impairment whenever events or changes in circumstances indicate that the carrying amount of a particular asset may not be fully recoverable. In such instances, an impairment charge would be recognized if the estimate of the undiscounted future cash flows expected to result from the use of the asset and its eventual disposition is less than the asset's carrying amount. This assessment is made at the individual vessel level since separately identifiable cash flow information for each vessel is available. The amount of an impairment charge, if any, would be determined using discounted cash flows.

        8.     Deferred finance charges —Finance charges incurred in the arrangement of debt are deferred and amortized to interest expense on the straight-line basis over the life of the related debt. Deferred finance charges of $6,826,000 and $7,116,000 are included in other assets at December 31, 2002 and 2001, respectively. Amortization amounted to $1,711,000 in 2002, $1,282,000 in 2001 and $1,149,000 in 2000.

        9.     Revenue and expense recognition —Time charters and bareboat charters that are operating leases are reported on the accrual basis. Effective January 1, 2000, voyage revenues and expenses are reported using the percentage of completion method (see Note B). For 1999 and earlier periods, voyage revenues and expenses were reported on the completed voyage basis. Under voyage charters, expenses such as fuel, port charges, canal tolls, cargo handling operations and brokerage commissions are paid by the Company whereas, under time and bareboat charters, such voyage costs are paid by the Company's customers. For voyage charters, time charter equivalent revenues represent shipping revenues less voyage expenses. For time and bareboat charters, time charter equivalent revenues represent shipping revenues less brokerage commissions, if applicable, which are included in voyage expenses.

        For the Company's vessels operating in the Tankers International LLC ("Tankers") pool and the Dry Bulk Carrier pool, revenues and voyage expenses are pooled and allocated to each pool's participants on a time charter equivalent basis in accordance with an agreed-upon formula.

        Beginning in 2002, operation of the PDVM/OSG pool, now named Aframax International, changed to be substantially similar to the operations of the Tankers and Dry Bulk Carrier pools . Accordingly, in the first quarter of 2002, Aframax International began reporting results on a time charter equivalent basis in accordance with an agreed-upon formula. For the Company's vessels operating in Aframax International prior to 2002, the Company billed and collected its own revenues and paid its own voyage expenses. Accordingly, prior to 2002, revenues and voyage expenses were reported on a gross basis in the consolidated statements of operations. Settlements between

F-8


the pool participants were recorded as adjustments of shipping revenues on a one-quarter lag, in accordance with an agreed-upon formula.

        Ship operating expenses exclude voyage expenses. Vessel expenses include crew costs, vessel stores and supplies, lubricating oils, maintenance and repairs, insurance and communication costs.

        10.   Derivatives —In June 1998, the Financial Accounting Standards Board issued Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("FAS 133"). FAS 133 requires the Company to recognize all derivatives on the balance sheet at fair value. Derivatives that are not effective hedges must be adjusted to fair value through income. If the derivative is an effective hedge, depending on the nature of the hedge, a change in the fair value of the derivative is either offset against the change in fair value of the hedged item (fair value hedge), or recognized in other comprehensive income/(loss) until the hedged item is reflected in earnings (cash flow hedge). The ineffective portion (that is, the change in fair value of the derivative that does not offset the change in fair value of the hedged item) of an effective hedge and the full amount of an ineffective hedge will be immediately recognized in earnings. The adoption of FAS 133 on January 1, 2001 resulted in the cumulative effect of an accounting change, net of taxes, of $3,455,000 being recognized as a gain in other comprehensive income/(loss). The cumulative effect of such accounting change on net income was insignificant.

        The Company uses derivatives to reduce market risks associated with its operations. The Company uses interest rate swaps for the management of interest rate risk exposure. The interest rate swaps effectively convert a portion of the Company's debt either from a fixed to a floating rate basis, which swaps are designated and qualify as fair value hedges, or from a floating to a fixed rate, which swaps are designated and qualify as cash flow hedges. The Company uses foreign currency swaps from time-to-time, which swaps are designated and qualify as cash flow hedges, to minimize the effect of foreign exchange rate fluctuations on reported revenues and protect against the reduction in value of forecasted foreign currency cash flows from future charter revenues receivable in currencies other than U.S. dollars. The Company also uses forward freight agreements and fuel swaps from time-to-time in order to reduce its exposure to the spot charter market for specified trade routes by creating synthetic time charters for the terms of the agreements. The forward freight agreements involve contracts to provide a fixed number of theoretical voyages at fixed rates. The forward freight agreements to date have not met the 80% effectiveness threshold required by FAS 133; therefore, they have not been accounted for as effective cash flow hedges. For interest rate swaps, the Company assumes no ineffectiveness since each interest rate swap either meets the conditions required under FAS 133 to apply the short-cut method or the critical terms method in the case of prepayable debt such as borrowings under the Company's long-term revolving credit facilities. Accordingly, no gains or losses have been recorded in income relative to the Company's interest rate swaps. Any gain or loss realized upon the early termination of an interest rate swap is recognized as an adjustment of interest expense over the shorter of the remaining term of the swap or the hedged debt. For foreign currency swaps, effectiveness is assessed based on changes in forward rates and, accordingly, there is no hedge ineffectiveness. Any gain or loss realized upon the termination of foreign currency swaps would be recognized as an adjustment of shipping revenues over the remaining term of the related charter.

        For 2000 and earlier periods, amounts receivable or payable under interest rate swaps (designated as hedges against certain existing debt) were accrued and reflected as adjustments of interest expense. Such receivables or payables were included in other receivables or sundry liabilities and accrued expenses, respectively. Changes in the value of currency swaps (designated as hedges against contracted future charter revenues receivable in a foreign currency) were deferred and offset against corresponding changes in the value of the charter hire, over the related charter periods.

F-9


        11.   Stock-based compensation— As of December 31, 2002, the Company has four stock-based employee compensation plans, which are more fully described in Note K. The Company accounts for those plans in accordance with the recognition and measurement principles of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"). Compensation cost for stock options is recognized as an expense based on the excess, if any, of the quoted market price of the stock at the grant date of the award or other measurement date, over the amount an employee or non-employee director must pay to acquire the stock. The following table presents the effects on net income/(loss) and earnings per share if the Company had applied the fair value recognition provisions of Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("FAS 123"), to stock-based compensation.

In thousands, except per share amounts, for the year ended December 31,
  2002
  2001
  2000
 
Net income/(loss), as reported   $ (17,620 ) $ 101,441   $ 90,391  

Deduct: Total stock-based compensation expense determined under fair value based method for all awards, net of tax
 
 
(561
)
 
(1,527
)
 
(1,382
)
   
 
 
 
Pro forma net income/(loss)   $ (18,181 ) $ 99,914   $ 89,009  
   
 
 
 
Per share amounts:                    
  Basic—as reported   $ (0.51 ) $ 2.97   $ 2.67  
  Basic—pro forma   $ (0.53 ) $ 2.93   $ 2.63  
 
Diluted—as reported
 
$
(0.51
)
$
2.92
 
$
2.63
 
  Diluted—pro forma   $ (0.53 ) $ 2.88   $ 2.59  

        12.   Use of estimates —The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

        13.   Newly issued accounting standard —In January 2003, the Financial Accounting Standards Board issued FASB Interpretation No. 46, "Consolidation of Variable Interest Entities." This interpretation requires the consolidation of special purpose entities by the company that is deemed to be the primary beneficiary of such entities. This represents a significant change from current rules, which require consolidation by the entity with voting control and according to which OSG accounted for its 1999 sale-leaseback transaction of U.S. Flag Crude Tankers as an off-balance sheet financing. On July 1, 2003, the Company expects to consolidate the SPE ("Alaska Equity Trust") that now owns these vessels and holds the associated bank debt used to purchase them. The SPE's bank debt of approximately $52,100,000 as of December 31, 2002 is secured by the vessels but is otherwise nonrecourse to OSG. In addition, OSG did not issue any repayment or residual-value guaranties. Therefore, OSG is not exposed to any loss as a result of its involvement with Alaska Equity Trust. The Company is currently analyzing the effect that the adoption of FASB Interpretation No. 46 and consolidation of Alaska Equity Trust will have on its consolidated results of operations and financial position, but does not expect such effect to be material to net income.

Note B—Change in Accounting for Voyage Revenue:

        Prior to 2000, revenues and voyage expenses 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, revenue of a voyage was included in operating results in the period in which that voyage was deemed completed, that is, upon the vessel's arrival at the subsequent voyage's initial load port.

F-10


        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, voyage revenues and expenses are 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, because 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 consolidated statement of operations for 2000, and resulted in income, net of taxes, of $4,152,000 in the first quarter. The cumulative effect of this change in accounting principle as of January 1, 2000 on the Company's 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.

Note C—Business and Segment Reporting:

        The Company is engaged primarily in the ocean transportation of crude oil and petroleum products in both the international market and the U.S. Flag trades through the ownership and operation of a diversified fleet of bulk cargo vessels. The bulk shipping industry has many distinct market segments based, in large part, on the size and design configuration of vessels required and, in some cases, on the flag of registry. Rates in each market segment are determined by a variety of factors affecting the supply and demand for vessels to move cargoes in the trades for which they are suited. Bulk vessels, unlike container and liner vessels, which the Company does not own, are not bound to specific ports or schedules and therefore can respond to market opportunities by moving between trades and geographical areas. The Company charters its vessels to commercial shippers and U.S. and foreign governments and governmental agencies primarily on voyage charters and also on time and bareboat charters, which are longer term (see Note M2).

        The Company has five reportable segments: Foreign Flag VLCCs, Aframaxes and Product Carriers, which participate in the international market, and U.S. Flag Crude Tankers and Dry Bulk Carriers, which participate in the U.S. Flag trades. Segment results are evaluated based on income from vessel operations before general and administrative expenses. The Company uses time charter equivalent revenues to analyze fluctuations in revenues between periods and to make decisions regarding the deployment and use of its vessels. The accounting policies followed by the reportable segments are the same as those followed in the preparation of the Company's consolidated financial statements.

F-11


        Information about the Company's reportable segments for the three years ended December 31, 2002 follows:

 
  Foreign Flag
  U.S. Flag
   
   
 
In thousands
  VLCCs
  Aframaxes
  Product
Carriers
  Crude
Tankers
  Dry Bulk
Carriers
  All other
  Totals
 
2002                                            
Shipping revenues**   $ 81,039   $ 71,162   $ 52,020   $ 28,052   $ 24,162   $ 40,848   $ 297,283  
Time charter equivalent revenues     79,714     71,121     35,053     28,052     12,331     40,454     266,725  
Depreciation and amortization     30,033     22,554     9,807     —     3,607     12,939     78,940  
Income/(loss) from vessel operations     18,688     27,436     10,560     13,724     (3,426 )   10,827     77,809 *
Equity in income of joint ventures     3,404     132     —     7,776     —     95     11,407  
Gain/(loss) on disposal of vessels     —     (1,549 )   —     —     688     —     (861 )
Investments in joint ventures at December 31, 2002     149,869     10,590     —     7,813     —     43     168,315  
Total assets at December 31, 2002     892,068     488,895     91,287     10,462     5,254     163,575     1,651,541  
Expenditures for vessels     59,269     88,724     113     —     262     4,272     152,640  

2001
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shipping revenues**     113,614     160,221     73,992     28,052     37,051     56,403     469,333  
Time charter equivalent revenues     112,820     111,293     58,078     28,052     14,872     55,903     381,018  
Depreciation and amortization     23,815     20,096     9,486     —     3,439     13,076     69,912  
Income/(loss) from vessel operations     64,353     66,718     30,260     14,233     (5,375 )   12,903     183,092 *
Equity in income of joint ventures     7,161     4,924     —     8,356     —     33     20,474  
Gain on disposal of vessels     —     —     —     —     436     —     436  
Investments in joint ventures at December 31, 2001     138,420     4,100     —     7,165     —     90     149,775  
Total assets at December 31, 2001     839,001     417,074     99,411     12,630     13,470     157,882     1,539,468  
Expenditures for vessels     40,225     70,878     909     —     —     —     112,012  

2000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shipping revenues**     120,549     132,006     76,655     37,486     47,490     53,432     467,618  
Time charter equivalent revenues     118,156     86,101     54,354     37,299     24,734     49,437     370,081  
Depreciation and amortization     20,857     18,553     9,402     4,600     3,791     12,935     70,138  
Income from vessel operations     74,229     49,233     24,938     12,843     3,015     12,430     176,688 *
Equity in income/(loss) of joint ventures     2,736     4,016     —     5,248     —     (551 )   11,449  
Gain on disposal of vessels     —     1,353     —     19,711     —     —     21,064  
Investments in joint ventures at December 31, 2000     72,703     5,879     —     4,644     —     1,516     84,742  
Total assets at December 31, 2000     764,118     374,288     110,666     6,628     28,577     174,163     1,458,440  
Expenditures for vessels     86,126     31,317     174     —     145     212     117,974  
   
 
 
 
 
 
 
 
*
Segment totals for income/(loss) from vessel operations are before general and administrative expenses and the restructuring charge.

**
Revenues of VLCCs operating in the Tankers pool amounted to $66,757 (2002), $89,971 (2001) and $88,943 (2000). Beginning in 2002, operation of the PDVM/OSG pool, now named Aframax International, changed to be substantially similar to the operations of the Tankers and Dry Bulk Carrier pools. Accordingly, in the first quarter of 2002, Aframax International began reporting results on a time charter equivalent basis (after reduction for voyage expenses). Prior to 2002, revenues of the Aframaxes were reported on a voyage charter basis, that is, before reduction for voyage expenses that aggregated $48,928 (2001) and $45,905 (2000). Revenues of $7,243 (2002), $22,436 (2001) and $19,630 (2000) from vessels operating in the Dry Bulk Carrier pool are reported in All other.

        For vessels operating in pools or on time or bareboat charters, shipping revenues are substantially the same as time charter equivalent revenues.

F-12


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

In thousands at December 31,
  2002
  2001
  2000
Total assets of all segments   $ 1,651,541   $ 1,539,468   $ 1,458,440
Corporate cash and securities, including Capital Construction Fund     296,812     333,185     284,206
Other unallocated amounts     86,489     91,622     81,267
   
 
 
  Consolidated total assets   $ 2,034,842   $ 1,964,275   $ 1,823,913
   
 
 

        Certain additional information about the Company's operations for the three years ended December 31, 2002 follows:

In thousands
  Consolidated
  Foreign Flag*
  U.S. Flag
2002                  
Shipping revenues   $ 297,283   $ 215,626   $ 81,657
Vessels and vessels under capital leases at December 31, 2002     1,416,774     1,360,027 **   56,747
   
 
 
2001                  
Shipping revenues     469,333     374,414     94,919
Vessels and vessels under capital leases at December 31, 2001     1,345,719     1,283,833 **   61,886
   
 
 
2000                  
Shipping revenues     467,618     355,397     112,221
Vessels and vessels under capital leases at December 31, 2000     1,293,958     1,224,004 **   69,954
   
 
 
*
Principally Marshall Islands as of December 31, 2002.

**
Includes vessels under construction of $126,093 (2002), $120,521 (2001) and $260,937 (2000).

See Note J for information relating to taxation of income and undistributed earnings of foreign subsidiaries and unconsolidated affiliates.

F-13


Note D—Assets and Liabilities of Foreign Subsidiaries:

        A condensed summary of the combined assets and liabilities of the Company's foreign subsidiaries, whose operations are principally conducted in U.S. dollars, is as follows:

In thousands at December 31,
  2002
  2001
Current assets   $ 54,186   $ 35,182
Vessels, net     1,337,260     1,259,383
Other assets     165,324     166,238
   
 
Total Assets   $ 1,556,770   $ 1,460,803
   
 
Current installments of long-term debt, including intercompany of $66,800 in 2001   $ 14,284   $ 79,400
Other current liabilities     10,461     16,135
   
 
Total current liabilities     24,745     95,535
Long-term debt, deferred credits and other liabilities     451,881     304,861
Equity     1,080,144     1,060,407
   
 
Total Liabilities and Equity   $ 1,556,770   $ 1,460,803
   
 

Note E—Bulk Shipping Joint Ventures and Certain Pooling Arrangements:

        In the first quarter of 1999, OSG, BP, and Keystone Shipping Company formed Alaska Tanker Company ("ATC") to manage the vessels carrying Alaskan crude oil for BP. ATC, which is owned 37.5% by OSG, 37.5% by Keystone and 25% by BP, provides marine transportation services in the environmentally sensitive Alaskan crude oil trade. Each member in ATC is entitled to receive its respective share of any incentive charter hire payable, if certain conditions are met, by BP to ATC. In the second quarter of 1999, the charters for five of the Company's U.S. Flag Crude Tankers, which were previously time chartered to BP, were converted to bareboat charters to ATC, with guaranties from BP, to employ the vessels through their OPA 90 retirement dates, ranging from December 2003 through 2006. In August 1999, the Company sold these five vessels and leased them back as part of an off-balance sheet financing that generated $170 million, which was used to reduce long-term debt. The gain on the sale-leaseback transaction was deferred and is being amortized over the leaseback period as a reduction in time and bareboat charter hire expense in the consolidated statements of operations (see Note A13).

        In October 2000, one of the vessels referred to above was sold by the owner in connection with BP's merger with ARCO and OSG was released from its leaseback commitment. As a result of the sale, OSG recorded a gain of $19.7 million in other income, equal to the unamortized balance of the deferred gain on the sale-leaseback transaction, net of the vessel's unamortized deferred drydocking expenditures.

        As of December 31, 2002 and 2001, the unamortized balance of deferred gain on the sale-leaseback transaction was $28,029,000 and $41,803,000, respectively, and was included in other noncurrent liabilities.

        Revenue from the bareboat charters of these vessels to ATC is included in time and bareboat charter revenue. The cost of leasing back these vessels is included in time and bareboat charter hire expense. The Company accounts for its 37.5% interest in ATC according to the equity method.

        In December 1999, the Company and other leading tanker companies established Tankers to pool their VLCC fleets. Tankers, which commenced operations in February 2000, commercially manages a fleet of more than 40 modern VLCCs. Tankers was formed to meet the global transportation requirements of international oil companies and other major customers. As of

F-14


December 31, 2002, ten of the Company's VLCCs participate in the Tankers pool. In addition, eight other VLCCs that are owned by joint ventures, as discussed below, participate in the Tankers pool. The Company's one remaining VLCC newbuilding is scheduled to enter the pool upon its delivery. The Company and certain of the other pool members have interests in a chartered-in VLCC, which commenced during the third quarter of 2002, that participates in the Tankers pool. OSG's share of the cost of such charter-in expense was $1,113,000 for 2002.

        In March 2000, the Company acquired a 30% interest in a joint venture that purchased a 1993-built VLCC for approximately $37 million, which immediately began participating in the Tankers pool. The vessel's acquisition was financed by the joint venture through long-term bank financing and subordinated partner loans. As of December 31, 2002, the outstanding balance of such subordinated partner loans advanced by the Company was $2,281,000. In connection with the bank financing, the partners have severally issued guaranties aggregating $6,000,000 at December 31, 2002, of which the Company's share was 30%.

        In early 2001, the Company formed joint ventures that entered into an agreement whereby companies in which OSG holds a 49.9% interest acquired two 1993-built VLCCs for approximately $103 million. Such acquisitions were financed by the joint ventures through long-term bank financing and subordinated partner loans. As of December 31, 2002, the outstanding balance of such subordinated partner loans advanced by the Company was $22,159,000. In connection with the bank financing, the partners have severally issued guaranties aggregating $15,934,000 at December 31, 2002, of which the Company's share was 49.9%. The amount of these guaranties reduces proportionately as the principal amount of the bank loan is paid down.

        In June 2001, the Company agreed to acquire a 33.3% interest in joint ventures formed to purchase six new VLCCs. The number of vessels to be purchased was reduced to five in August 2001. Three vessels were delivered to the joint ventures in the third quarter of 2001. The remaining two were delivered to the joint ventures upon completion of their construction in February and July 2002. The total purchase price for the vessels of $399 million and the joint ventures' then remaining commitments under the construction contracts for two of those vessels were financed by the joint ventures through long-term bank financing and subordinated partner loans. As of December 31, 2002, the outstanding balance of such subordinated partner loans advanced by the Company was $57,660,000. In connection with the bank financings for the five vessels, the partners have severally issued guaranties aggregating approximately $76,492,000 at December 31, 2002, of which the Company's share was 33.3%. The amount of these guaranties reduces proportionately, to a stated minimum amount, as the bank loans are paid down.

        During the first quarter of 2000, the Company and other major vessel owners agreed to pool their Capesize Dry Bulk Carriers. The pool currently commercially manages a fleet of more than 30 vessels, including the Company's two Foreign Flag Dry Bulk Carriers. The Company and certain of the other pool members have interests in a number of short-term charters-in that participate in the pool. OSG's share of the cost of such charter-in expense for 2002, 2001 and 2000 was $1,284,000, $14,612,000 and $8,868,000, respectively.

        In May 2000, the Company invested $1,500,000 for a 50% interest in a newly formed joint venture that bareboat chartered in a 1992-built Aframax tanker, which was accounted for as a capital lease by the joint venture. In May 2002, such joint venture exercised a purchase option and acquired the vessel. The purchase price of approximately $13,000,000 was financed through capital contributions from the partners. The Company provided certain charter guaranties to its joint venture partner through the May 2002 exercise of the purchase option; daily TCE revenues in excess of an agreed amount were for the Company's benefit through the May 2002 exercise of the purchase option. This Aframax tanker participates in the Aframax International pool.

F-15


        The Company has a 50% interest in two other joint ventures with a major oil company that own two VLCCs, which are operating on long-term charters, one to OSG (which vessel has been time chartered to the major oil company) and one to such major oil company, and do not participate in the Tankers pool.

        A condensed summary of the combined assets and liabilities and results of operations of the joint ventures, follows:

In thousands at December 31,
  2002
  2001
 
Current assets   $ 102,307   $ 78,338  
Vessels, net     666,214     571,159 *
Other assets     11,034     4,510  
   
 
 
Total Assets   $ 779,555   $ 654,007  
   
 
 

Current installments of long-term debt
 
$
42,046
 
$
33,211
 
Other current liabilities     53,388     46,828  
   
 
 
Total current liabilities     95,434     80,039  
Long-term debt     291,086     244,349  
Other liabilities, including subordinated loans of $224,652 and $166,082 due to the joint venture partners     225,177     171,422  
Equity (principally undistributed net earnings)     167,858     158,197  
   
 
 
Total Liabilities and Equity   $ 779,555   $ 654,007  
   
 
 
*Includes
vessels under construction of $38,898.

        As of December 31, 2002, the joint ventures in which the Company had interests ranging from 30% to 50% had bank debt of $333,132,000 and subordinated loans payable to all joint venture partners of $224,652,000. The Company's guaranties in connection with the joint ventures' bank financings, which are otherwise nonrecourse to the joint venture partners, aggregated $35,249,000 at December 31, 2002. The amount of these guaranties reduces as the bank loans are paid down. The terms of these guaranties are equal to the terms of the related debt that matures between March 2005 and June 2009.

In thousands for the year ended December 31,
  2002
  2001
  2000
 
Time charter equivalent revenues   $ 261,217   $ 243,288   $ 240,054  
Ship operating expenses     217,936     194,125     210,981  
   
 
 
 
Income from vessel operations     43,281     49,163     29,073  
Other income     639     1,020     1,057  
Interest expense*     (26,516 )   (17,062 )   (6,368 )
   
 
 
 
Net income   $ 17,404   $ 33,121   $ 23,762  
   
 
 
 
*
Includes interest on subordinated loans payable to the joint venture partners of $14,488 (2002), $6,063 (2001) and $762 (2000). The Company's share of such interest is eliminated in recording the results of the joint ventures by the equity method.

Note F—Investments in Marketable Securities and Capital Construction Fund:

        Based on a number of factors, including the magnitude of the drop in market values below the Company's cost bases and length of time that the declines had been sustained, management concluded that declines in fair value of certain securities with an aggregate cost basis of

F-16


$72,521,000, including $9,898,000 attributable to securities in the Capital Construction Fund were other-than-temporary. Accordingly, during the third and fourth quarters of 2002, the Company recorded impairment losses aggregating $42,055,000 related to such marketable securities, including $6,413,000 related to securities held in the Capital Construction Fund, in the accompanying consolidated statement of operations. During the fourth quarter, the Company sold certain of the securities for which a write-down aggregating $14,516,000 had previously been recorded at September 30, 2002, resulting in the recognition of a gain of $3,821,000 (see Note P).

        Certain information, which gives effect to the above write-downs, concerning the Company's marketable securities (including securities in the Capital Construction Fund), all of which are accounted for as available-for-sale securities, follows:

 
   
  Gross unrealized
  Approximate
market value and
carrying
amount
In thousands at December 31,
   
  Cost
  Gains
  Losses
2002                        
Capital Construction Fund:                        
U.S. Treasury securities and obligations of U.S. government agencies   $ 8,662   $ 567   $ —   $ 9,229
Mortgage-backed securities     44,373     885     4     45,254
Other debt securities     14,173     779     165     14,787
   
 
 
 
Total debt securities     67,208     2,231     169     69,270
Equity securities     41,359     5,869     12,974     34,254
Cash and cash equivalents     127,548     —     —     127,548
   
 
 
 
Total Capital Construction Fund   $ 236,115   $ 8,100   $ 13,143   $ 231,072
   
 
 
 
Equity securities included in investments in marketable securities   $ 23,244   $ 5,884   $ 332   $ 28,796
   
 
 
 

        At February 24, 2003, the aggregate market quotation of the above marketable securities was approximately $133,300,000 compared with a market value of $132,320,000 as of December 31, 2002.

 
   
  Gross unrealized
  Approximate
market value and
carrying
amount
In thousands at December 31,
   
  Cost
  Gains
  Losses
2001                        
Capital Construction Fund:                        
U.S. Treasury securities and obligations of U.S. government agencies   $ 9,822   $ 21   $ 36   $ 9,807
Mortgage-backed securities     34,962     372     183     35,151
Other debt securities     19,667     287     397     19,557
   
 
 
 
Total debt securities     64,451     680     616     64,515
Equity securities     64,203     2,323     4,046     62,480
Cash and cash equivalents     105,976     —     —     105,976
   
 
 
 
Total Capital Construction Fund   $ 234,630   $ 3,003   $ 4,662   $ 232,971
   
 
 
 
Equity securities included in investments in marketable securities   $ 91,764   $ —   $ 21,806   $ 69,958
   
 
 
 

F-17

        The cost and approximate market value of debt securities held by the Company as of December 31, 2002, by contractual maturity (except for mortgage-backed securities, which do not have a single maturity date), follow:

In thousands
  Cost
  Approximate
market value
Due in one year or less   $ 820   $ 825
Due after one year through five years     3,147     3,247
Due after five years through ten years     7,987     8,431
Due after ten years     10,881     11,513
   
 
      22,835     24,016
Mortgage-backed securities     44,373     45,254
   
 
    $ 67,208   $ 69,270
   
 

Note G—Derivatives and Fair Value of Financial Instruments:

        The following methods and assumptions were used to estimate the fair value of each class of financial instruments:

         Cash and cash equivalents —The carrying amounts reported in the consolidated balance sheet for interest-bearing deposits approximate their fair value.

         Investment securities —The fair value for marketable securities is based on quoted market prices or dealer quotes.

         Debt, including capital lease obligations —The carrying amounts of the borrowings under the revolving credit agreements and the other floating rate loans approximate their fair value. The fair values of the Company's fixed rate debt are estimated using discounted cash flow analyses, based on the rates currently available for debt with similar terms and remaining maturities.

         Interest rate swaps —The fair value of interest rate swaps (used for hedging purposes) is the estimated amount that the Company would receive or pay to terminate the swaps at the reporting date.

         Foreign currency swaps —The fair value of foreign currency swaps (used for hedging purposes) is the estimated amount that the Company would receive or pay to terminate the swaps at the reporting date.

         Forward freight agreements —The fair value of forward freight agreements is the estimated amount that the Company would receive or pay to terminate the agreements at the reporting date.

        The estimated fair values of the Company's financial instruments, other than derivatives, follow:

In thousands at December 31,
  Carrying
amount
2002
  Fair
value
2002
  Carrying
amount
2001
  Fair
value
2001
 
Financial assets (liabilities)                          
Cash and cash equivalents   $ 36,944   $ 36,944   $ 30,256   $ 30,256  
Capital Construction Fund—See Note F     231,072     231,072     232,971     232,971  
Investments in marketable securities     28,796     28,796     69,958     69,958  
Debt, including capital lease obligations     (1,006,110 )   (994,645 )   (878,693 )   (873,126 )

        As of December 31, 2002, the Company is a party to floating-to-fixed interest rate swaps with various major financial institutions covering notional amounts aggregating approximately $418,000,000, including 11-year swaps that commence in the third quarter of 2003, pursuant to

F-18


which it pays, or will pay, fixed rates ranging from 4.6% to 7.1% and receives floating rates based on the London interbank offered rate ("LIBOR") (approximately 1.4% at December 31, 2002). These agreements contain no leverage features and have various maturity dates from February 2003 to August 2014. As of December 31, 2002, the Company has recorded a liability of $30,606,000 related to the fair values of these swaps in other liabilities.

        In July 2001, the Company terminated all $60,000,000 of its fixed-to-floating interest rate swaps that were to mature in December 2003. The gain of $1,760,000 realized on such termination is being recognized ratably over the period through December 2003, as an adjustment of interest expense.

        Shipping revenues for 2002 have been reduced by $534,000, because of forward freight agreements with a notional value of $8,370,000 that extend to December 2003. The fair value of these agreements, which do not qualify as effective hedges, is recorded as a liability in other liabilities.

Note H—Sundry Liabilities and Accrued Expenses:

        Sundry liabilities and accrued expenses follows:

In thousands at December 31,
  2002
  2001
Payroll and benefits   $ 3,851   $ 8,147
Restructuring reserve     214     2,345
Interest     7,659     8,132
Insurance     1,582     2,448
Other     9,665     13,808
   
 
    $ 22,971   $ 34,880
   
 

Note I—Debt:

        Debt consists of the following:

In thousands at December 31,
  2002
  2001
Unsecured revolving credit facilities   $ 536,000   $ 534,000
8.75% Debentures due 2013, net of unamortized discount of $149 and $163     84,826     84,812
8% Notes due 2003, net of unamortized discount of $15 and $32     70,391     71,124
Floating rate secured Term Loans, due through 2014     256,000     102,950
Floating rate unsecured Promissory Note, due through 2005     —     20,450
   
 
      947,217     813,336
Less current portion     14,284     17,600
   
 
Long-term portion   $ 932,933   $ 795,736
   
 

F-19

        The weighted average effective interest rates for debt outstanding at December 31, 2002 and 2001 are 5.1% and 6.1%, respectively. Such rates take into consideration related interest rate swaps.

        In late July and early August 2002, the Company entered into four secured loan agreements aggregating $256,000,000. Seven vessels (three VLCCs and four Aframaxes) were pledged as collateral in connection with such loans. The loans have terms ranging from 10 to 12 years (with an average life of approximately eight years) and currently carry interest rates based on a spread above LIBOR. The interest rate basis applicable to $50,000,000 of such loans will convert to a fixed rate in August 2003. The Company used the proceeds received from these borrowings to pay down existing secured Term Loans and the unsecured Promissory Note with an aggregate outstanding balance of $117,100,000, which loans had significantly shorter remaining terms, and to reduce amounts then outstanding under the Company's revolving credit facilities. The full $256,000,000 had been effectively converted into fixed rate debt for periods up to 12 years by the end of the third quarter of 2002.

        In December 2001, the Company concluded a new $300 million, five-year unsecured revolving credit facility (the "2006 Facility"), which was increased to $350 million in January 2002 during syndication. The terms, conditions, and financial covenants are substantially similar to those contained in the existing $350 million revolving credit facility (the "2005 Facility") that runs through April 2005. Borrowings under both the 2006 Facility and the 2005 Facility bear interest at a rate based on LIBOR plus a margin that, with respect to the 2006 Facility, depends in part on the financial leverage of the Company. Borrowings against the Company's $425 million revolving credit facility, which was due to expire in August 2002, were repaid in early 2002 with borrowings from the 2006 Facility and the $425 million revolving credit facility was terminated on February 1, 2002. Accordingly, $107 million outstanding as of December 31, 2001 under the $425 million facility was classified as long-term at such date.

        In February 2002, the Company increased its unsecured committed short-term line of credit facility with a bank from $15,000,000 to $45,000,000, of which $17,000,000 was unused as of December 31, 2002. The $5,000,000 outstanding under this facility at December 31, 2001 was reflected as short-term debt in the accompanying consolidated balance sheet.

        The Company intends to refinance both the $70,391,000 balance of the 8% Notes, which mature in December 2003, and the $28,000,000 balance outstanding under the short-term line of credit facility as of December 31, 2002, using amounts available under the long-term revolving credit facilities. Accordingly, the aggregate amount of $98,391,000 has been classified as long-term as of December 31, 2002.

        Agreements related to long-term debt provide for prepayment privileges (in certain instances with penalties), limitations on the amount of total borrowings and secured debt (as defined), and acceleration of payment under certain circumstances, including failure to satisfy the financial covenants contained in certain of such agreements. The most restrictive of these covenants requires the Company to maintain net worth as of December 31, 2002 of approximately $674,000,000 (increasing quarterly by an amount related to net income).

        In June 2000, the Company repurchased 8% Notes with an aggregate principal amount of $15,180,000, at a discount of $803,000. Such discount has been reported in the Company's consolidated statement of operations as an offset to interest expense.

        As of December 31, 2002, approximately 25.0% of the net book amount of the Company's vessels, representing seven foreign flag vessels, is pledged as collateral under certain debt agreements.

F-20


        The aggregate annual principal payments required to be made on debt are as follows:

In thousands at December 31, 2002
   
2003   $ 14,284
2004     14,284
2005     364,284
2006     270,676
2007     14,284
Thereafter     269,405
   
    $ 947,217
   

        Interest paid amounted to $52,147,000 in 2002, $41,874,000 in 2001 and $47,387,000 in 2000, excluding capitalized interest. Capitalized interest (see Note A5) decreased in 2002 compared with 2001 and 2000 principally due to vessel deliveries.

Note J—Taxes:

        Since January 1, 1987, earnings of the foreign shipping companies (exclusive of foreign joint ventures in which the Company has a less than 50% interest) are subject to U.S. income taxation in the year earned and may be distributed to the U.S. parent without further tax. Income of foreign shipping companies earned from January 1, 1976 through December 31, 1986 ("Deferred Income") is excluded from U.S. income taxation to the extent that such income is reinvested in foreign shipping operations. Foreign shipping income earned before 1976 is not subject to tax unless distributed to the U.S. parent. A determination of the amount of qualified investments in foreign shipping operations, as defined, is made at the end of each year and such amount is compared with the corresponding amount at December 31, 1986. If, during any determination period, there is a reduction of qualified investments in foreign shipping operations, Deferred Income, limited to the amount of such reduction, would become subject to tax. The Company believes that it will be reinvesting sufficient amounts in foreign shipping operations so that U.S. income taxes on the undistributed income of its foreign companies accumulated through December 31, 1986 will be postponed indefinitely. U.S. income taxes on the income of its foreign companies accumulated through December 31, 1986 will be provided at such time as it becomes probable that a liability for such taxes will be incurred and the amount thereof can reasonably be estimated. No provision for U.S. income taxes on the income of the foreign shipping companies accumulated through December 31, 1986 was required at December 31, 2002 since undistributed earnings of foreign shipping companies have been reinvested or are intended to be reinvested in foreign shipping operations. As of December 31, 2002, such undistributed earnings aggregated approximately $475,000,000, including $114,000,000 earned prior to 1976; the unrecognized deferred U.S. income tax attributable to such undistributed earnings approximated $165,000,000. Further, no provision for U.S. income taxes on the Company's share of the undistributed earnings of the less than 50%-owned foreign shipping joint ventures was required as of December 31, 2002, since it is intended that such undistributed earnings ($3,500,000 at December 31, 2002) will be indefinitely reinvested; the unrecognized deferred U.S. income taxes attributable thereto approximated $1,200,000.

        Pursuant to the Merchant Marine Act of 1936, as amended, the Company is a party to an agreement that permits annual deposits, related to taxable income of certain of its domestic subsidiaries, into a Capital Construction Fund. Payments of federal income taxes on such deposits and earnings thereon are deferred until, and if, such funds are withdrawn for nonqualified purposes or termination of the agreement; however, if withdrawn for qualified purposes (acquisition of U.S. Flag vessels or retirement of debt on U.S. Flag vessels), such funds remain tax-deferred and the federal income tax basis of any such vessel is reduced by the amount of such withdrawals. Under

F-21


the agreement, the Company is expected to use the fund to acquire or construct three U.S. Flag vessels by the end of 2004. Monies can remain tax-deferred in the fund for a maximum of 25 years (commencing January 1, 1987 for deposits prior thereto).

        The significant components of the Company's deferred tax liabilities and assets follow:

In thousands at December 31,
  2002
  2001
 
Deferred tax liabilities:              
Excess of tax over book depreciation—net   $ 93,939   $ 83,859  
Tax benefits related to the Capital Construction Fund     70,871     71,738  
Costs capitalized and amortized for book, expensed for tax     8,358     7,869  
Other—net     7,518     8,070  
   
 
 
  Total deferred tax liabilities     180,686     171,536  
   
 
 
Deferred tax assets:              
Capital leases     802     1,148  
Write-down of marketable securities     7,975     —  
Other comprehensive income—Note L     10,680     11,737  
Alternative minimum tax credit carryforwards, which can be carried forward indefinitely     30,565     26,981  
   
 
 
  Total deferred tax assets     50,022     39,866  
Valuation allowance     3,640     —  
   
 
 
  Net deferred tax assets     46,382     39,866  
   
 
 
Net deferred tax liabilities     134,304     131,670  
Current portion of net deferred tax (assets)/liabilities     100     (500 )
   
 
 
Long-term portion of net deferred tax liabilities   $ 134,204   $ 132,170  
   
 
 

        During 2002, the Company established a valuation allowance of $3,640,000 against the deferred tax asset resulting from the write-down of certain marketable securities (see Note F). The valuation allowance was established because the Company believes, based on currently available evidence, that it is more likely than not that the full amount of the deferred tax asset will not be realized through the generation of capital gains in the future. The above valuation allowance has been recorded as a reduction in the federal income tax credit in the accompanying consolidated statement of operations for the year ended December 31, 2002.

        The components of income/(loss) before federal income taxes and cumulative effect of change in accounting principle follow:

In thousands for the year ended December 31,
  2002
  2001
  2000
Foreign   $ 17,321   $ 136,395   $ 117,105
Domestic     (38,185 )   18,050     15,884
   
 
 
    $ (20,864 ) $ 154,445   $ 132,989
   
 
 

        Substantially all of the above foreign income resulted from the operations of companies that were not subject to income taxes in their countries of incorporation.

F-22


        The components of the provision/(credit) for federal income taxes follow:

In thousands for the year ended December 31,
  2002
  2001
  2000
Current   $ (6,003 ) $ 27,142   $ 14,529
Deferred     2,759     25,862     32,221
   
 
 
    $ (3,244 ) $ 53,004   $ 46,750
   
 
 

        Actual federal income taxes paid amounted to $24,500,000 in 2002 (all of which related to 2001), $6,100,000 in 2001 ($3,100,000 of which related to 2000) and $9,850,000 in 2000 ($950,000 of which related to 1999).

        Reconciliations of the actual federal income tax rate attributable to pretax income/(loss) before cumulative effect of change in accounting principle and the U.S. statutory income tax rate follow:

For the year ended December 31,
  2002
  2001
  2000
 
Actual federal income tax provision/(credit) rate   (15.6 )% 34.3 % 35.2 %
Adjustments due to:              
  Dividends received deduction   1.0 % 0.1 % 0.1 %
  Income/(loss) not subject to U.S. income taxes   (4.4 )% 0.7 % 0.7 %
  Other   1.4 % (0.1 )% (1.0 )%
Valuation allowance   (17.4 )% —   —  
   
 
 
 
U.S. statutory income tax provision/(credit) rate   (35.0 )% 35.0 % 35.0 %
   
 
 
 

Note K—Capital Stock and Stock Compensation:

        In September 2002, the Company's Board of Directors ("Board") authorized the repurchase of up to 3,000,000 shares of the Company's common stock from time-to-time in the open market. Such purchases will be made at the Company's discretion and take into account such factors as price and prevailing market conditions. As of December 31, 2002, there have been no purchases under this program.

        The Company has granted options under its 1989 nonqualified stock option plan, as amended, at $14.00 per share (the market price at date of grant). Options covering 100,000 shares are outstanding and remain exercisable until October 2003.

        The Company has granted options under its 1990 nonqualified stock option plan, as amended at exercise prices ranging from $14.00 to $19.50 per share (the market prices at the dates of grant). Options covering 128,600 shares are outstanding and remain exercisable over various periods that end between 2003 and 2005.

        The Company's 1998 stock option plan, as amended, provides for options for up to 2,800,000 shares to be granted at exercise prices of at least market value at the date of grant. Options granted vest and become exercisable over a three-year period and expire ten years from the date of grant. Options covering 1,422,076 shares are outstanding with exercise prices ranging from $12.50 to $16.00 per share (the market prices at dates of grant). Options covering 854,460 shares are available for grant under the 1998 stock option plan as of December 31, 2002.

        The 1999 non-employee director (as defined) stock option plan, makes available up to 150,000 shares of the Company's stock. The plan provides for the grant of an initial option for 7,500 shares and an annual option for 1,000 shares thereafter to each non-employee director at an exercise price equal to market value at the date of the grant. Initial options vest and become exercisable over a three-year period; annual options vest and become exercisable one year from the date of the grant. All options expire ten years from the date of grant. Options covering 89,000 shares are outstanding

F-23


with exercise prices ranging from $13.31 to $29.67 per share (the market prices at dates of grant). Options covering 46,000 shares are available for grant under the 1999 non-employee director stock option plan as of December 31, 2002.

        Stock option activity under all plans is summarized as follows:

Options Outstanding at December 31, 1999   1,796,086  
Granted   722,000  
Forfeited   (25,236 )
Exercised ($13.31 to $16.00 per share)   (308,821 )
   
 
Options Outstanding at December 31, 2000   2,184,029  
Granted   9,000  
Forfeited   (22,814 )
Exercised ($13.81 to $16.00 per share)   (276,726 )
   
 
Options Outstanding at December 31, 2001   1,893,489  
Granted   8,000  
Forfeited   (2,297 )
Exercised ($13.31 to $16.00 per share)   (159,516 )
   
 
Options Outstanding at December 31, 2002   1,739,676  
   
 
Options Exercisable at December 31, 2002   1,482,023  
   
 

        The weighted average remaining contractual life of the outstanding stock options at December 31, 2002 was 6.1 years. The weighted average exercise price of the stock options outstanding at December 31, 2002 was $14.24.

        The Company follows APB 25 and related interpretations in accounting for its stock options. For purposes of determining compensation cost for the Company's stock option plans using the fair value method of FAS 123, for grants made subsequent to 1994, the fair values of the options granted were estimated on the dates of grant using the Black-Scholes option pricing model with the following weighted average assumptions for 2002, 2001 and 2000: risk free interest rates of 5.1%, 4.2% and 5.0%, dividend yields of 2.9%, 2.0% and 4.1%, expected stock price volatility factors of .36, .45 and .37, and expected lives of 6.0, 7.7 and 7.7 years. The weighted average grant-date fair values of options granted in 2002, 2001 and 2000 were $6.50, $12.71 and $4.41, respectively.

        The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions, including the expected stock price volatility. Since the Company's stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its stock options.

        Diluted net income/(loss) per share gives effect to the aforementioned stock options. Such options have not been included in the computation of diluted net (loss) per share for 2002 since their effect thereon would be antidilutive.

        In October 1998, the Board adopted a Stockholder Rights Plan, and declared a rights distribution under the plan of one common stock purchase right on each outstanding share of common stock of the Company. The rights plan is designed to guard against attempts to take over the Company for a price that does not reflect the Company's full value, or that are conducted in a manner or on terms not approved by the Board as being in the best interests of the Company and

F-24


the stockholders. The rights are preventative in nature and were not distributed in response to any known attempt to acquire control of the Company.

Note L—Accumulated Other Comprehensive Income/(Loss):

        The components of accumulated other comprehensive income/(loss), net of related taxes, follow:

In thousands at December 31,
  2002
  2001
 
Unrealized gains/(losses) on available-for-sale securities   $ 332   $ (16,445 )
Unrealized losses on derivative instruments     (19,894 )   (6,014 )
Minimum pension liability     (2,965 )   (3,824 )
   
 
 
    $ (22,527 ) $ (26,283 )
   
 
 

        At December 31, 2002, the Company expects to reclassify $8,192,000 of net losses on derivative instruments from accumulated other comprehensive income/(loss) to earnings during the next twelve months due to the payment of variable rate interest associated with floating rate debt.

        The components of the change in the accumulated unrealized loss on derivative instruments, net of related taxes follow:

December 31, In thousands for the year ended
  2002
  2001
 
Cumulative effect of change in accounting principle—Note A10   $ —   $ 3,455  
Reclassification adjustments for (gains)/losses included in net income, net:              
  Interest expense     8,765     3,129  
  Shipping revenues     (595 )   (1,670 )
  Other income*     —     (2,902 )
Change in unrealized loss on derivative instruments     (22,050 )   (8,026 )
   
 
 
    $ (13,880 ) $ (6,014 )
   
 
 
*
This amount was included in other income in the first quarter of 2001 and relates to a foreign currency swap reclassified upon receipt of notice that the charter extension to which such swap applied would not be exercised.

        The income tax expense/(benefit) allocated to each component of other comprehensive income/(loss) follows:

In thousands for the year ended December 31,
  2002
  2001
  2000
 
Unrealized gains/(losses) on available-for-sale securities   $ (2,711 ) $ 2,871   $ 7,945  
Unrealized losses on derivative instruments     (11,873 )   (2,461 )   —  
Minimum pension liability     150     (2,059 )   —  
Reclassification adjustments included in net income/(loss):                    
  Write-down of marketable securities     11,079     —     —  
  Gains on sale of securities     (1,170 )   (9,816 )   (1,645 )
  (Gains)/losses on derivative instruments     4,399     (777 )   —  
   
 
 
 
    $ (126 ) $ (12,242 ) $ 6,300  
   
 
 
 

F-25

Note M—Leases:

1.
Charters-in:

        The future minimum commitments under charters-in are as follows:

In thousands at December 31, 2002
  Capital
  Operating
2003   $ 12,751   $ 39,529
2004     9,313     29,246
2005     9,692     17,054
2006     9,692     1,064
2007     9,692     —
Thereafter     36,369     —
   
 
Net minimum lease payments     87,509     86,893
Less amount representing interest     28,616     —
   
 
Present value of net minimum lease payments   $ 58,893   $ 86,893
   
 

        As of December 31, 2002, the Company participates in the charter-in of three vessels (two Capesize Dry Bulk Carriers at an average rate of $11,500 per day and one VLCC at an average rate of $23,700 per day), which are commercially managed by pools in which the Company participates. As of December 31, 2002, these charters-in, which principally commenced during the third quarter of 2002, have remaining terms ranging from six months for one of the Dry Bulk Carriers to 31 months for the VLCC. The Company's share of such charter-in obligations as of December 31, 2002, which amounts are included in the above table, are $4,191,000 (2003), $3,712,000 (2004) and $1,995,000 (2005).

        The total rental expense for charters accounted for as operating leases amounted to $25,391,000 in 2002 (including the $2,397,000 referred to in Note E), $51,904,000 in 2001 (including the $14,612,000 referred to in Note E) and $51,053,000 in 2000 (including the $8,868,000 referred to in Note E).

        Included in rental expense during 2002, 2001 and 2000 is $8,399,000, $7,889,000 and $7,366,000, respectively, for the charter-in of a VLCC from a 50% owned joint venture.

2.
Charters-out:

        The future minimum revenue expected to be received on noncancelable time charters and bareboat charters are as follows:

In thousands at December 31, 2002
   
2003   $ 85,567
2004     63,601
2005     23,334
2006     7,775
2007     4,099
   
Net minimum lease payments   $ 184,376
   

        Revenues from a time charter are not generally received when a vessel is off-hire, including time required for normal periodic maintenance of the vessel. In arriving at the minimum future charter revenues, an estimated time off-hire to perform periodic maintenance on each vessel has been deducted, although there is no assurance that such estimate will be reflective of the actual off-hire in the future.

F-26


        Included in shipping revenue during 2002, 2001 and 2000 is $28,052,000, $28,052,000 and $37,486,000, respectively, received from the bareboat charter-out of four (five prior to October 2000) U.S. Flag Crude Tankers to ATC, a 37.5% owned joint venture.

Note N—Pension and Other Postretirement Benefit Plans:

        The Company is the sponsor of a noncontributory defined benefit pension plan covering substantially all of its domestic shore-based employees. Retirement benefits are based primarily on years of service and compensation earned during the last years of employment. The Company's policy is to fund pension costs as accrued, but not in excess of amounts allowable under income tax regulations. The Company has an unfunded, nonqualified supplemental pension plan covering certain employees, which provides for additional benefits, primarily those benefits that would otherwise have been payable to such employees under the Company's pension plan in the absence of limitations imposed by income tax regulations. The accrued benefit liabilities for this supplemental plan were $16,200,000 and $15,513,000 at December 31, 2002 and 2001, respectively, and have been reflected in the accrued benefit costs shown in the table below.

        Certain of the Company's foreign subsidiaries have pension plans that, in the aggregate, are not significant to the Company's consolidated financial position.

        The Company also provides certain postretirement health care and life insurance benefits to qualifying domestic retirees and their eligible dependents. The health care plan is contributory; the life insurance plan is noncontributory. In general, postretirement medical coverage is provided to employees who retire and have met minimum age and service requirements, under a formula related to total years of service. The Company does not currently fund these benefit arrangements and has the right to amend or terminate the health care benefits at any time.

F-27


        Certain information as of December 31, 2002 and 2001 and for the three years ended December 31, 2002 with respect to the above domestic plans follows:

 
  Pension benefits
  Other benefits
 
In thousands
 
  2002
  2001
  2002
  2001
 
Change in benefit obligation:                          
Benefit obligation at beginning of year   $ 43,152   $ 33,273   $ 3,872   $ 4,793  
Cost of benefits earned (service cost)     1,803     1,053     55     69  
Interest cost on benefit obligation     2,715     2,993     276     318  
Plan participants' contributions     —     —     74     75  
Amendments and changes in prescribed interest rates     2,454     1,012     152     (2,920 )
Actuarial (gains)/losses     (1,879 )   6,213     (229 )   1,711  
Benefits paid     (8,842 )   (3,882 )   (370 )   (459 )
Terminations, curtailments, settlements and other similar events     (1,414 )   2,490     —     285  
   
 
 
 
 
  Benefit obligation at December 31     37,989     43,152     3,830     3,872  
   
 
 
 
 
Change in plan assets:                          
Fair value of plan assets at beginning of year     38,777     36,976     —     —  
Actual return on plan assets     (4,110 )   5,617     —     —  
Benefits paid     (8,299 )   (3,816 )   —     —  
Terminations, curtailments, settlements and other similar events     (3,450 )   —     —     —  
   
 
 
 
 
  Fair value of plan assets at December 31     22,918     38,777     —     —  
   
 
 
 
 
Funded status at December 31 (unfunded)     (15,071 )   (4,375 )   (3,830 )   (3,872 )
Unrecognized prior-service costs     687     405     (1,259 )   (1,414 )
Unrecognized net actuarial loss     11,786     3,645     320     399  
Unrecognized transition obligation     —     —     208     228  
Additional minimum liability     (5,162 )   (6,352 )   —     —  
   
 
 
 
 
Accrued benefit cost at December 31   $ (7,760 ) $ (6,677 ) $ (4,561 ) $ (4,659 )
   
 
 
 
 

        The unfunded status of the pension benefits in the preceding table is attributable to the nonqualified supplemental pension plan disclosed above. The Company's defined benefit pension plan is overfunded as of December 31, 2002.

 
  Pension benefits
  Other benefits
 
In thousands for the year ended December 31,
 
  2002
  2001
  2000
  2002
  2001
  2000
 
Components of expense:                                      
Cost of benefits earned   $ 1,803   $ 1,053   $ 908   $ 55   $ 69   $ 135  
Interest cost on benefit obligation     2,715     2,993     2,361     276     318     324  
Expected return on plan assets     (2,477 )   (3,466 )   (3,314 )   —     —     —  
Amortization of prior-service costs     456     656     757     (154 )   (128 )   7  
Amortization of transition obligation     —     —     (261 )   20     48     176  
Recognized net actuarial loss     297     447     23     2     36     (52 )
   
 
 
 
 
 
 
Net periodic benefit cost     2,794     1,683     474     199     343     590  
(Gain)/loss on terminations, curtailments, settlements and other similar events     (1,090 )   1,815     —     —     1,535     —  
   
 
 
 
 
 
 
Net periodic benefit cost after terminations, curtailments, settlements and other similar events   $ 1,704   $ 3,498   $ 474   $ 199   $ 1,878   $ 590  
   
 
 
 
 
 
 

F-28

        The 2001 loss on terminations, curtailments and settlements and other similar events has been included in the restructuring charge.

        The weighted average discount rate and assumed rate of future compensation increases used in determining the benefit obligation at December 31, 2002 were 7.4% and 4%, respectively. The expected long-term return on plan assets was 8.75%. The assumed health care cost trend rate for measuring the benefit obligation included in Other Benefits above is 4%.

        Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A 1% change in assumed health care cost trend rates would have the following effects:

In thousands
  1% increase
  1% decrease
 
Effect on total of service and interest cost components in 2002   $ 23   $ (19 )

Effect on postretirement benefit obligation as of December 31, 2002
 
$
197
 
$
(175
)

        The Company also has a 401(k) employee savings plan covering all eligible employees. Contributions are limited to amounts allowable for income tax purposes. Employer matching contributions to the plan are at the discretion of the Company.

        Certain subsidiaries make contributions to union-sponsored multi-employer pension plans covering seagoing personnel. The Employee Retirement Income Security Act of 1974 requires employers who are contributors to domestic multi-employer plans to continue funding their allocable share of each plan's unfunded vested benefits in the event of withdrawal from or termination of such plans. The Company has been advised by the trustees of such plans that it has no withdrawal liability as of December 31, 2002. Certain other seagoing personnel of U.S. Flag vessels are covered under a defined contribution plan, the cost of which is funded as accrued. The costs of these plans were not material during the three years ended December 31, 2002.

Note O—Restructuring Charge:

        In the first quarter of 2001, the Company completed a review of its ship management and administrative functions and adopted a plan to transfer a major portion of such functions to its subsidiary in Newcastle, United Kingdom, resulting in New York headquarters staff reductions numbering approximately 100 persons. In connection with such staff reductions, the Company recorded a restructuring charge of $10,439,000. The charge includes $8,869,000 related to employee termination and severance costs associated with the reduction in workforce and $1,570,000 for the disposal of certain assets. The restructuring has been completed. The liability for severance costs of $214,000 as of December 31, 2002 will be sufficient to cover the remaining severance payments.

F-29


Note P—Other Income/(Expense):

        Other income/(expense) consists of:

In thousands for the year ended December 31,
  2002
  2001
  2000
 
Investment income:                    
  Interest   $ 6,613   $ 9,789   $ 9,766  
  Dividends     2,402     6,004     1,280  
  Realized gain on sale of securities—net (based on first-in, first-out method)     3,643     27,227     3,513  
  Write-down of marketable securities—See Note F     (42,055 )   —     —  
  Foreign currency exchange gain/(loss)     5,324     (49 )   —  
   
 
 
 
      (24,073 )   42,971     14,559  
Gain/(loss) on disposal of vessels—net     (861 )   436     21,064  
Gain on derivative transactions     325     4,465     —  
Miscellaneous—net     143     448     (1,482 )
   
 
 
 
    $ (24,466 ) $ 48,320   $ 34,141  
   
 
 
 

        Gains on sale of securities are net of realized losses of $14,869,000 (2002), $5,665,000 (2001) and $18,805,000 (2000). Gains on sale of securities for 2002 include $3,821,000 recognized in the fourth quarter attributable to securities that were written down as of September 30, 2002, in accordance with the provisions of FAS 115 (see Note F).

Note Q—Commitments:

        In July 2002, the Company prepaid approximately $47,600,000 of vessel construction costs to realize the benefit of a contractually-provided discount of $4,400,000 on what had been a $52,000,000 commitment. As of December 31, 2002, the Company had remaining commitments of $30,100,000 on non-cancelable contracts for the construction of three double-hulled Foreign Flag tankers (one VLCC and two Aframaxes), scheduled for delivery between February 2003 and January 2004. Unpaid costs, which are net of $118,500,000 of progress payments and prepayments, will be funded in 2003. The progress payments and prepayments are covered by refundment guaranties.

F-30


Note R—2002 and 2001 Quarterly Results of Operations (Unaudited):

Results of Operations for Quarter Ended (in thousands, except per share amounts)
  March 31,
  June 30,
  Sept. 30,
  Dec. 31,
2002                        
Shipping revenues   $ 73,495   $ 70,745   $ 68,955   $ 84,088
Income from vessel operations     9,535     8,134     8,088     19,131
Gain/(loss) on disposal of vessels—net     —     688     (1,549 )   —
Net income/(loss)   $ 744   $ 3,670   $ (29,661 ) $ 7,627
   
 
 
 
Basic and diluted net income/(loss) per share   $ 0.02   $ 0.11   $ (0.86 ) $ 0.22
   
 
 
 
2001                        
Shipping revenues   $ 149,739   $ 129,127   $ 97,435   $ 93,032
Income from vessel operations     57,497     47,348     16,900     8,941
Gain on disposal of vessels—net     —     436     —     —
Net income   $ 40,363   $ 42,711   $ 11,162   $ 7,205
   
 
 
 
Basic net income per share   $ 1.19   $ 1.25   $ 0.33   $ 0.21
Diluted net income per share   $ 1.17   $ 1.23   $ 0.32   $ 0.21
   
 
 
 

F-31

    No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus. You must not rely on any unauthorized information or representations. This prospectus is an offer to exchange the outstanding Notes for the Exchange Notes, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.

TABLE OF CONTENTS

 
  Page
Available Information   2
Forward-Looking Statements   3
Certain Terms and Information   3
Prospectus Summary   4
Risk Factors   16
Use of Proceeds   26
Capitalization   27
Selected Historical Consolidated Financial Data   28
Management's Discussion and Analysis of Financial Condition and Results of Operations   31
The International Tanker Industry   46
Business   57
Management   70
Description of Other Indebtedness   72
The Exchange Offer   74
Description of Notes   84
Tax Considerations   101
Plan of Distribution   105
Legal Matters   106
Experts   106
Index To Financial Statements   F-1

$200,000,000

Overseas Shipholding Group, Inc.

Offer to Exchange
8.250% Senior Notes
due March 15, 2013 for
8.250% Senior Notes due
March 15, 2013, which have
been registered under the
Securities Act of 1933

LOGO

May     , 2003


PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 20.    Indemnification of Directors and Officers.

        We are incorporated in Delaware. Under Section 145 of the Delaware General Corporation Law, or the DGCL, a corporation has the power, under specified circumstances, to indemnify its directors, officers, employees and agents in connection with actions, suits or proceedings brought against them by a third party or in the right of the corporation, by reason of the fact that they were or are such directors, officers, employees or agents, against expenses incurred in any action, suit or proceeding. Article Tenth of our Certificate of Incorporation provides for indemnification of directors and officers to the fullest extent permitted by the DGCL. We also have directors and officers liability insurance policies.

        Section 102(b)(7) of the DGCL provides that a certificate of incorporation may contain a provision eliminating or limiting the personal liability of a director to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided that such provision shall not eliminate or limit the liability of a director:

    (i)
    for any breach of the director's duty of loyalty to the corporation or its stockholders;

    (ii)
    for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;

    (iii)
    under Section 174 (relating to liability for unauthorized acquisitions or redemptions of, or dividends on, capital stock) of the DGCL; or

    (iv)
    for any transactions from which the director derived an improper personal benefit.

Article Tenth of our Certificate of Incorporation contains such a provision.

Item 21.    Exhibits.

  4(a)(1)   Form of Indenture dated as of December 1, 1993 between the registrant and The Chase Manhattan Bank (National Association) providing for the issuance of debt securities by the registrant from time to time (filed as Exhibit 4(d)(1) to the registrant's Annual Report on Form 10-K for 1993 and incorporated herein by reference).

  4(a)(2)
 
Resolutions dated December 2, 1993 fixing the terms of two series of debt securities issued by the registrant under the Indenture (filed as Exhibit 4(d)(2) to the registrant's Annual Report on Form 10-K for 1993 and incorporated herein by reference).

  4(a)(3)
 
Form of 8% Notes due December 1, 2003 of the registrant (filed as Exhibit 4(d)(3) to the registrant's Annual Report on Form 10-K for 1993 and incorporated herein by reference).

  4(a)(4)
 
Form of 8 3 / 4 % Debentures due December 1, 2013 of the registrant (filed as Exhibit 4(d)(4) to the registrant's Annual Report on Form 10-K for 1993 and incorporated herein by reference).

  4(b)
 
Credit Agreement dated April 18, 2000 among the registrant, two subsidiaries of the registrant and certain banks (filed as Exhibit 4 to the registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2000 and incorporated herein by reference).

  4(c)
 
Credit Agreement dated December 12, 2001 among the registrant, two subsidiaries of the registrant and certain banks (filed as Exhibit 4(d) to the registrant's Annual Report on Form 10-K for 2001 and incorporated herein by reference).

 
 
 

II-1


  4(d)
 
Amendment dated January 22, 2002 to the Credit Agreement listed at Exhibit 4(c) (filed as Exhibit 4(e) to the registrant's Annual Report on Form 10-K for 2001 and incorporated herein by reference).

  4(e)(1)
 
Indenture dated as of March 7, 2003 between the registrant and Wilmington Trust Company, as trustee, providing for the issuance of debt securities of the registrant from time to time.(1)

  4(e)(2)
 
Resolutions dated as of February 27, 2003 fixing the terms of a series of debt securities issued by the registrant under the Indenture.(1)

  4(e)(3)
 
Form of 8.250% Senior Notes due March 15, 2013 of the registrant.(1)

  4(e)(4)
 
Exchange and Registration Rights Agreement dated March 7, 2003 between the registrant and Goldman, Sachs & Co. as the initial purchaser of the 8.250% Senior Notes due March 15, 2013 of the registrant. (1)

  4(e)(5)
 
Form of Exchange Agent Agreement between the registrant and Wilmington Trust Company. (1)

  4(e)(6)
 
Letter of Transmittal relating to the exchange offer.(1)

  4(e)(7)
 
Notice of Guaranteed Delivery relating to the exchange offer.(1)

 
 
NOTE: The Exhibits filed herewith do not include other instruments authorizing long-term debt of the registrant and its subsidiaries, where the amounts authorized thereunder do not exceed 10% of total assets of the registrant and its subsidiaries on a consolidated basis. The registrant agrees to furnish a copy of each such instrument to the Commission upon request.

  5(a)
 
Opinion of James I. Edelson, Esq.(1)

  5(b)
 
Opinion of Proskauer Rose LLP.(1)

12
 
Computation of Ratio of Earnings to Fixed Charges. (1)

23(a)
 
Consent of Ernst & Young LLP.(1)

23(b)
 
Consent of James I. Edelson, Esq. (included in his opinion filed as Exhibit 5(a)).(1)

23(c)
 
Consent of Proskauer Rose LLP (included in its opinion filed as Exhibit 5(b)).(1)

23(d)
 
Consent of Maritime Strategies International Ltd.(1)

24
 
Power of Attorney (included on signature page).(1)

25
 
Statement of Eligibility of Trustee.(1)
(1)
Filed herewith.

Item 22.    Undertakings

    (a)
    The undersigned registrant hereby undertakes:

            (1)  To file, during any period in which offers for sales are being made, a post-effective amendment to this registration statement:

              (i)    To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;

II-2

              (ii)  To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and

              (iii)  To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

    Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this section do not apply if the registration statement is on Form S-3, Form S-8 or Form F-3, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement.

            (2)  That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

            (3)  To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

            (4)  If the registrant is a foreign private issuer, to file a post-effective amendment to the registration statement to include any financial statement required by Item 8.A of Form 20-F at the start of any delayed offering or throughout a continuous offering. Financial statements and information otherwise required by Section 10(a)(3) of the Act need not be furnished, provided that the registrant includes in the prospectus, by means of a post-effective amendment, financial statements required pursuant to this paragraph (a)(4) and other information necessary to ensure that all other information in the prospectus is at least as current as the date of those financial statements. Notwithstanding the foregoing, with respect to registration statements on Form F-3, a post-effective amendment need not be filed to include financial statements and information required by Section 10(a)(3) of the Act or sec.210.3-19 of this chapter if such financial statements and information are contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Form F-3.

        (b)  The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in this registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-3

        (c)  Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

        (d)  The undersigned registrant hereby undertakes: (i) to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this form within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means; and (ii) to arrange or provide for a facility in the U.S. for the purpose of responding to such requests. The undertaking in subparagraph (i) above includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.

        (e)  The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.

II-4

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of New York, State of New York on May 5, 2003

    OVERSEAS SHIPHOLDING GROUP, INC.
         
    By:   /s/   MORTON P. HYMAN       
Morton P. Hyman
Chairman, President and
Chief Executive Officer


POWER OF ATTORNEY

        Each person whose signature appears below constitutes and appoints Morton P. Hyman, Myles R. Itkin and Robert N. Cowen his true and lawful attorneys-in-fact and agents, each acting alone, with full power of substitution and resubstitution, for and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement on Form S-4, and to file same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, each acting alone, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue thereof.

        Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities indicated below and on the dates indicated.

Signatures
  Titles
  Date

 
 
 
 
 
/s/   MORTON P. HYMAN       
Morton P. Hyman 		  Chairman, President and Chief Executive Officer (Principal Executive Officer)   May 5, 2003

/s/   MYLES R. ITKIN       
Myles R. Itkin
 
Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)
 
May 5, 2003

/s/   ALAN R. BATKIN       
Alan R. Batkin
 
Director
 
May 5, 2003

/s/   THOMAS B. COLEMAN       
Thomas B. Coleman
 
Director
 
May 5, 2003

/s/   ROBERT N. COWEN       
Robert N. Cowen
 
Director
 
May 5, 2003

 
 
 
 
 

/s/   CHARLES FRIBOURG       
Charles Fribourg
 
Director
 
May 5, 2003

/s/   WILLIAM L. FROST       
William L. Frost
 
Director
 
May 5, 2003

/s/   STANLEY KOMAROFF       
Stanley Komaroff
 
Director
 
May 5, 2003

/s/   SOLOMON N. MERKIN       
Solomon N. Merkin
 
Director
 
May 5, 2003

/s/   JOEL I. PICKET       
Joel I. Picket
 
Director
 
May 5, 2003

/s/   ARIEL RECANATI       
Ariel Recanati
 
Director
 
May 5, 2003

/s/   OUDI RECANATI       
Oudi Recanati
 
Director
 
May 5, 2003

/s/   MICHAEL J. ZIMMERMAN       
Michael J. Zimmerman
 
Director
 
May 5, 2003


QuickLinks

AVAILABLE INFORMATION
FORWARD-LOOKING STATEMENTS
CERTAIN TERMS AND INFORMATION
PROSPECTUS SUMMARY
The Exchange Offer
The Exchange Agent
The Exchange Notes
Risk Factors
Overseas Shipholding Group, Inc.
Industry Trends and Opportunities
Our Competitive Strengths
Our Strategy
Summary Consolidated Financial Data
RISK FACTORS
USE OF PROCEEDS
CAPITALIZATION
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE INTERNATIONAL TANKER INDUSTRY
OIL CONSUMPTION AND SEABORNE TRADE
Crude Oil Tanker Fleet as of December 31, 2002
VLCC FLEET BY YEAR OF BUILD AND SCHEDULED DELIVERIES (AS OF DECEMBER 31, 2002)
PERCENTAGE OF THE VLCC FLEET AGED 20 YEARS OR MORE AT YEAR END
VLCCs AGED 25+ AND 30+ YEARS OVER THE NEXT 10 YEARS* BY DWT
VLCCs Sold for Scrap: Number of Vessels, Average Age and Deadweight Tonnage
VLCC ORDERBOOK AND 20 YEARS AND OLDER VLCC FLEET (END OF YEAR)
AFRAMAX FLEET BY YEAR OF BUILD AND SCHEDULED DELIVERIES (AS OF DECEMBER 31, 2002)
PERCENTAGE OF THE AFRAMAX FLEET AGED 20 YEARS OR MORE AT THE YEAR END
AFRAMAX ORDERBOOK AND 20 YEARS AND OLDER AFRAMAX FLEET (END OF YEAR)
AFRAMAX FREIGHT RATES
BUSINESS
MANAGEMENT
DESCRIPTION OF OTHER INDEBTEDNESS
THE EXCHANGE OFFER
DESCRIPTION OF NOTES
TAX CONSIDERATIONS
PLAN OF DISTRIBUTION
LEGAL MATTERS
EXPERTS
INDEX TO FINANCIAL STATEMENTS
REPORT OF INDEPENDENT AUDITORS
PART II INFORMATION NOT REQUIRED IN PROSPECTUS
POWER OF ATTORNEY

EXHIBIT 4(e)(1)

OVERSEAS SHIPHOLDING GROUP, INC.

and

WILMINGTON TRUST COMPANY,
as Trustee

INDENTURE

Dated as of March 7, 2003

OVERSEAS SHIPHOLDING GROUP, INC.
Certain Sections of this Indenture
relating to Sections 310 through 318,

inclusive, of the Trust Indenture Act of 1939: 

Trust Indenture
  Act Section                                                Indenture Section
Section 310(a)(1)     .....................................  609
           (a)(2)     .....................................  609
           (a)(3)     .....................................  Not Applicable
           (a)(4)     .....................................  Not Applicable
           (b)        .....................................  608
                                                             610
Section 311(a)        .....................................  613
           (b)        .....................................  613
Section 312(a)        .....................................  701
                                                             702
           (b)        .....................................  702
           (c)        .....................................  702
Section 313(a)        .....................................  703
           (b)        .....................................  703
           (c)        .....................................  703
           (d)        .....................................  703
Section 314(a)        .....................................  704
           (a)(4)     .....................................  101
                                                             1004
           (b)        .....................................  Not Applicable
           (c)(1)     .....................................  102
           (c)(2)     .....................................  102
           (c)(3)     .....................................  Not Applicable
           (d)        .....................................  Not Applicable
           (e)        .....................................  102
Section 315(a)        .....................................  601
           (b)        .....................................  602
           (c)        .....................................  601
           (d)        .....................................  601
           (e)        .....................................  514
Section 316(a)        .....................................  101
           (a)(1) (A) .....................................  502
                                                             512
           (a)(1) (B) .....................................  513
           (a)(2)     .....................................  Not Applicable
           (b)        .....................................  508
           (c)        .....................................  104
Section 317(a)(1)     .....................................  503
           (a)(2)     .....................................  504
           (b)        .....................................  1003
Section 318(a)        .....................................  107

----------
NOTE: THIS RECONCILIATION AND TIE SHALL NOT, FOR ANY PURPOSE, BE DEEMED TO BE A
PART OF THE INDENTURE.

- 2 -

TABLE OF CONTENTS 

                                                                                                     PAGE
                                                                                                     ----
PARTIES ..............................................................................................   1
RECITALS OF THE COMPANY ..............................................................................   1

                                   ARTICLE ONE

             DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

SECTION 101.   Definitions:...........................................................................   1
               Act....................................................................................   2
               Affiliate; control.....................................................................   2
               Attributable Debt......................................................................   2
               Authenticating Agent...................................................................   2
               Board of Directors.....................................................................   2
               Board Resolution.......................................................................   2
               Business Day...........................................................................   2
               Capital Stock..........................................................................   3
               Capitalized Lease......................................................................   3
               Capitalized Rentals....................................................................   3
               Change of Control......................................................................   3
               Commission.............................................................................   4
               Common Stock...........................................................................   4
               Company................................................................................   4
               Company Request; Company Order.........................................................   4
               Consolidated Net Tangible Assets.......................................................   4
               Consolidated Net Tangible Assets of the
               Company and its Restricted Subsidiaries................................................   4
               Corporate Trust Office.................................................................   5
               corporation............................................................................   5
               Covenant Defeasance....................................................................   5
               Credit Facilities......................................................................   5
               Debt...................................................................................   5
               Defaulted Interest.....................................................................   5
               Defeasance.............................................................................   5
               Depositary.............................................................................   5
               Event of Default.......................................................................   5
               Exchange Act...........................................................................   5
               Expiration Date........................................................................   5
               Funded Debt............................................................................   5
               Global Security........................................................................   6
               Guaranties.............................................................................   6
               Holder.................................................................................   6
               Incur..................................................................................   6
               Indenture..............................................................................   6
               interest...............................................................................   7
               Interest Payment Date..................................................................   7
               Investment Company Act.................................................................   7
               Maturity...............................................................................   7
               Mortgage...............................................................................   7
               Notice of Default......................................................................   7
               Officers' Certificate..................................................................   7
               Opinion of Counsel.....................................................................   7
               Original Issue Discount Security.......................................................   7

- i - 
               Outstanding............................................................................   7
               Paying Agent...........................................................................   9
               Person.................................................................................   9
               Place of Payment.......................................................................   9
               Predecessor Security...................................................................   9
               Preferred Stock........................................................................   9
               Redemption Date........................................................................   9
               Redemption Price.......................................................................   9
               Regular Record Date....................................................................   9
               Rentals................................................................................   9
               Responsible Officer....................................................................  10
               Restricted Subsidiary..................................................................  10
               Securities.............................................................................  10
               Securities Act.........................................................................  10
               Security Register; Security Registrar..................................................  10
               Special Record Date....................................................................  10
               Stated Maturity........................................................................  10
               Subsidiary.............................................................................  10
               Trust Indenture Act....................................................................  10
               Trustee................................................................................  11
               Unrestricted Subsidiary................................................................  11
               U.S. Government Obligation.............................................................  11
               Vice President.........................................................................  11
               Voting Stock...........................................................................  11

SECTION 102.   Compliance Certificates and Opinions...................................................  11
SECTION 103.   Form of Documents Delivered to Trustee.................................................  12
SECTION 104.   Acts of Holders; Record Dates..........................................................  12
SECTION 105.   Notices, Etc., to Trustee and Company..................................................  15
SECTION 106.   Notice to Holders; Waiver..............................................................  15
SECTION 107.   Conflict with Trust Indenture Act......................................................  16
SECTION 108.   Effect of Headings and Table of Contents...............................................  16
SECTION 109.   Successors and Assigns.................................................................  16
SECTION 110.   Separability Clause....................................................................  16
SECTION 111.   Benefits of Indenture..................................................................  16
SECTION 112.   Governing Law..........................................................................  16
SECTION 113.   Legal Holidays.........................................................................  17
SECTION 114.   No Recourse............................................................................  17

                                   ARTICLE TWO

                                 SECURITY FORMS

SECTION 201.   Forms Generally........................................................................  17
SECTION 202.   Form of Face of Security...............................................................  17
SECTION 203.   Form of Reverse of Security............................................................  20
SECTION 204.   Form of Legend for Global Securities...................................................  24
SECTION 205.   Form of Trustee's Certificate of Authentication........................................  24

                                  ARTICLE THREE

                                 THE SECURITIES

SECTION 301.   Amount Unlimited; Issuable in Series...................................................  25
SECTION 302.   Denominations..........................................................................  27

- ii - 
SECTION 303.   Execution, Authentication, Delivery and Dating.........................................  28
SECTION 304.   Temporary Securities...................................................................  29
SECTION 305.   Registration, Registration of Transfer
                  and Exchange........................................................................  30
SECTION 306.   Mutilated, Destroyed, Lost and Stolen Securities.......................................  32
SECTION 307.   Payment of Interest; Interest Rights Preserved.........................................  33
SECTION 308.   Persons Deemed Owners..................................................................  35
SECTION 309.   Cancellation...........................................................................  35
SECTION 310.   Computation of Interest................................................................  35

                                  ARTICLE FOUR

                           SATISFACTION AND DISCHARGE

SECTION 401.   Satisfaction and Discharge of Indenture................................................  35
SECTION 402.   Application of Trust Money.............................................................  37

                                  ARTICLE FIVE

                                    REMEDIES

SECTION 501.   Events of Default......................................................................  37
SECTION 502.   Acceleration of Maturity; Rescission and
                  Annulment...........................................................................  39
SECTION 503.   Collection of Indebtedness and Suits for
                  Enforcement by Trustee..............................................................  40
SECTION 504.   Trustee May File Proofs of Claim.......................................................  41
SECTION 505.   Trustee May Enforce Claims Without
                  Possession of Securities............................................................  42
SECTION 506.   Application of Money Collected.........................................................  42
SECTION 507.   Limitation on Suits....................................................................  42
SECTION 508.   Unconditional Right of Holders to Receive
                  Principal, Premium and Interest.....................................................  43
SECTION 509.   Restoration of Rights and Remedies.....................................................  43
SECTION 510.   Rights and Remedies Cumulative.........................................................  44
SECTION 511.   Delay or Omission Not Waiver...........................................................  44
SECTION 512.   Control by Holders.....................................................................  44
SECTION 513.   Waiver of Past Defaults................................................................  44
SECTION 514.   Undertaking for Costs..................................................................  45
SECTION 515.   Waiver of Usury, Stay or Extension Laws................................................  45

                                   ARTICLE SIX

                                   THE TRUSTEE

SECTION 601.   Certain Duties and Responsibilities....................................................  45
SECTION 602.   Notice of Defaults.....................................................................  46
SECTION 603.   Certain Rights of Trustee..............................................................  46
SECTION 604.   Not Responsible for Recitals or Issuance
                  of Securities.......................................................................  47
SECTION 605.   May Hold Securities....................................................................  47
SECTION 606.   Money Held in Trust....................................................................  47
SECTION 607.   Compensation and Reimbursement.........................................................  48
SECTION 608.   Conflicting Interests..................................................................  49

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SECTION 609.   Corporate Trustee Required; Eligibility................................................  49
SECTION 610.   Resignation and Removal; Appointment of
                  Successor...........................................................................  49
SECTION 611.   Acceptance of Appointment by Successor.................................................  51
SECTION 612.   Merger, Conversion, Consolidation or
                  Succession to Business..............................................................  52
SECTION 613.   Preferential Collection of Claims Against
                  Company.............................................................................  53
SECTION 614.   Appointment of Authenticating Agent....................................................  53

                                  ARTICLE SEVEN

                HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

SECTION 701.   Company to Furnish Trustee Names and
                  Addresses of Holders................................................................  55
SECTION 702.   Preservation of Information; Communications
                  to Holders..........................................................................  55
SECTION 703.   Reports by Trustee.....................................................................  56
SECTION 704.   Reports by Company.....................................................................  56

                                  ARTICLE EIGHT

              CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

SECTION 801.   Company May Consolidate, Etc., Only
                  on Certain Terms....................................................................  56
SECTION 802.   Successor Substituted..................................................................  59

                                  ARTICLE NINE

                             SUPPLEMENTAL INDENTURES

SECTION 901.   Supplemental Indentures Without Consent
                  of Holders..........................................................................  59
SECTION 902.   Supplemental Indentures With Consent of Holders........................................  61
SECTION 903.   Execution of Supplemental Indentures...................................................  62
SECTION 904.   Effect of Supplemental Indentures......................................................  62
SECTION 905.   Conformity with Trust Indenture Act....................................................  62
SECTION 906.   Reference in Securities to Supplemental
                  Indentures..........................................................................  62

                                   ARTICLE TEN

                                    COVENANTS

SECTION 1001.  Payment of Principal, Premium and Interest.............................................  63
SECTION 1002.  Maintenance of Office or Agency........................................................  63
SECTION 1003.  Money for Securities Payments to Be Held
                  in Trust............................................................................  63
SECTION 1004.  Statement by Officers as to Default....................................................  64
SECTION 1005.  Existence .............................................................................  65
SECTION 1006.  Maintenance of Properties..............................................................  65

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SECTION 1007.  Insurance .............................................................................  65
SECTION 1008.  Payment of Taxes and Other Claims......................................................  65
SECTION 1009.  Limitation on Liens....................................................................  66
SECTION 1010.  Limitation on Sales and Leasebacks.....................................................  67
SECTION 1011.  Limitation on Incurrence of Indebtedness
                  by Restricted Subsidiaries..........................................................  68
SECTION 1012.  Restricted Subsidiaries................................................................  69
SECTION 1013.  Offer to Repurchase Upon a Change of Control...........................................  70
SECTION 1014.  Waiver of Certain Covenants............................................................  72

                                 ARTICLE ELEVEN

                            REDEMPTION OF SECURITIES

SECTION 1101.  Applicability of Article...............................................................  72
SECTION 1102.  Election to Redeem; Notice to Trustee..................................................  73
SECTION 1103.  Selection by Trustee of Securities to
                  Be Redeemed.........................................................................  73
SECTION 1104.  Notice of Redemption...................................................................  74
SECTION 1105.  Deposit of Redemption Price............................................................  74
SECTION 1106.  Securities Payable on Redemption Date..................................................  75
SECTION 1107.  Securities Redeemed in Part............................................................  75

                                 ARTICLE TWELVE

                                  SINKING FUNDS

SECTION 1201.  Applicability of Article...............................................................  75
SECTION 1202.  Satisfaction of Sinking Fund Payments
                  with Securities.....................................................................  76
SECTION 1203.  Redemption of Securities for Sinking Fund..............................................  76


                                ARTICLE THIRTEEN

                       DEFEASANCE AND COVENANT DEFEASANCE

SECTION 1301.  Company's Option to Effect Defeasance or
                  Covenant Defeasance.................................................................  77
SECTION 1302.  Defeasance and Discharge...............................................................  77
SECTION 1303.  Covenant Defeasance....................................................................  77
SECTION 1304.  Conditions to Defeasance or Covenant Defeasance........................................  78
SECTION 1305.  Deposited Money and U.S. Government Obligations
                  to Be Held in Trust; Miscellaneous Provisions.......................................  80
SECTION 1306.  Reinstatement..........................................................................  81

Testimonium ..........................................................................................  81
Signatures and Seals .................................................................................  81
Acknowledgements .....................................................................................  82

Exhibit A -- Form of IAI Certificate
Exhibit B - Form of Regulation S Certificate

NOTE: THIS TABLE OF CONTENTS SHALL NOT, FOR ANY PURPOSE, BE DEEMED TO BE A PART OF THE INDENTURE.

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INDENTURE, dated as of March 7, 2003, between Overseas Shipholding Group, Inc., a corporation duly organized and existing under the laws of the State of Delaware (herein called the "Company"), having its principal office at 511 Fifth Avenue, New York, New York 10017, and Wilmington Trust Company, a Delaware banking corporation, as Trustee (herein called the "Trustee").

RECITALS OF THE COMPANY

The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its unsecured debentures, notes or other evidences of indebtedness (herein called the "Securities"), to be issued in one or more series as in this Indenture provided.

All things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done.

NOW, THEREFOR, THIS INDENTURE WITNESSETH:

For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually agreed, for the equal and proportionate benefit of all Holders of the Securities or of series thereof, as follows:

ARTICLE ONE

DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

SECTION 101. DEFINITIONS.

For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:

(1) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular;

(2) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein;

(3) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles, and, except as otherwise herein expressly provided, the term "generally accepted accounting principles" with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted at the date of such computation;

(4) unless the context otherwise requires, any reference to an "Article" or a "Section" refers to an Article or a Section, as the case may be, of this Indenture; and

(5) the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision.

"Act", when used with respect to any Holder, has the meaning specified in Section 104.

"Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing.

"Attributable Debt" of a Person means, as to any sale and leaseback transaction relating to any property or assets under which any Person is at the time liable and which is not permitted under Section 1010(2), at any date as of which the amount thereof is to be determined, the lesser of (i) the fair market value of the assets subject to such transaction as determined by any two of the Chairman of the Board of the Company, its President, any Executive or Senior Vice President of the Company, its Chief Financial Officer, its Treasurer and its Controller or (ii) the total net amount of Rentals required to be paid by such Person under such lease during the remaining term thereof, discounted from the respective due dates thereof to such date at a rate per annum equal to the discount rate which would be applicable to a capital lease obligation with like term in accordance with generally accepted accounting principles.

"Authenticating Agent" means any Person authorized by the Trustee pursuant to Section 614 to act on behalf of the Trustee to authenticate Securities of one or more series.

"Board of Directors" means either the board of directors of the Company or any duly authorized committee of that board.

"Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee.

"Business Day", when used with respect to any Place of Payment (including the Corporate Trust Office), means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in that Place of Payment are authorized or obligated by law or executive order to close.

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"Capital Stock" of any Person means any and all shares, interests, rights to purchase, warrants, options, participation or other equivalents of or interests in (however designated) equity of such Person, including any Preferred Stock, but excluding any debt securities convertible into such equity.

"Capitalized Lease" means 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 generally accepted accounting principles.

"Capitalized Rentals" of any Person means 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 a balance sheet of such Person in accordance with generally accepted accounting principles.

"Change of Control" means the occurrence of any of the following events:

(1) any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of this clause (1) such person shall be deemed to have "beneficial ownership" of all shares that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the total voting power of the Voting Stock of the Company;

(2) individuals who on the date of original issuance of the Securities constituted the Board of Directors (together with any new directors whose election by such Board of Directors or whose nomination for election by the stockholders of the Company was approved by a vote of a majority of the directors of the Company then still in office who were either directors on the date of original issuance or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors then in office;

(3) the adoption of a plan relating to the liquidation or dissolution of the Company; or

(4) the merger or consolidation of the Company with or into another Person or the merger of another Person with or into the Company, or the sale of all or substantially all the assets of the Company (determined on a consolidated basis) to another Person other than a transaction following which (A) in the case of a merger or consolidation transaction, holders of securities that represented 100% of the Voting Stock of the Company immediately prior to such

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transaction (or other securities into which such securities are converted as part of such merger or consolidation transaction) own directly or indirectly at least a majority of the voting power of the Voting Stock of the surviving Person in such merger or consolidation transaction immediately after such transaction and (B) in the case of a sale of assets transaction, each transferee becomes an obligor in respect of the Securities and a Subsidiary of the transferor of such assets.

"Commission" means the Securities and Exchange Commission, from time to time constituted, created under the Exchange Act, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time.

"Common Stock" means with respect to any Person, any and all shares, interests or other participations in, and other equivalents (however designated and whether voting or non-voting) of such Person's common stock, whether or not outstanding on the date of original issuance of the Securities, and includes, without limitation, all series and classes of such common stock.

"Company" means the Person named as the "Company" in the first paragraph of this instrument until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Person.

"Company Request" or "Company Order" means a written request or order signed in the name of the Company by its Chairman of the Board, its Vice Chairman of the Board, its President or a Vice President, and by its Controller, Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee.

"Consolidated Net Tangible Assets of the Company and its Restricted Subsidiaries" means the aggregate amount of assets (less applicable reserves and other properly deductible items) after deducting therefrom (a) all current liabilities (excluding any thereof constituting Funded Debt) and (b) all goodwill, trade names, trademarks, patents, copyrights, franchises, experimental expense, organization expense, unamortized debt discount and expenses, deferred charges (other than unamortized deferred dry dock costs, unterminated voyage expenses, prepaid insurance, prepaid taxes, prepaid charter hire and other prepaid items properly excludable from intangibles under generally accepted accounting principles) and other like intangibles, all as set forth on or included in the most recent consolidated balance sheet of the Company and its Restricted Subsidiaries, such balance sheet to be prepared (except for the exclusion of Subsidiaries which are not Restricted Subsidiaries) in accordance with generally accepted accounting principles.

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"Corporate Trust Office" means the principal office of the Trustee at which at any particular time its corporate trust business shall be administered, which at the date hereof is Wilmington Trust Company, 1100 North Market Street, Wilmington, Delaware 19890.

"corporation" means a corporation, association, company, joint-stock company or business trust.

"Covenant Defeasance" has the meaning specified in Section 1303.

"Credit Facilities" means (a) the Credit Agreement dated as of April 18, 2000, among the Company, certain of its Subsidiaries, Den Norske Bank, as facility agent and arranger, and the other banks party thereto, (b) the Credit Agreement dated as of December 12, 2001, among the Company, certain of its Subsidiaries, JPMorgan Chase Bank, as administrative agent and lender, and the other banks party thereto, and (c) the Credit Agreement dated as of February 28, 2002, among the Company, certain of its Subsidiaries and The Bank of Nova Scotia, in each case as may be amended from time to time.

"Debt" of a Person means, without duplication, (i) any indebtedness for money borrowed, whether or not evidenced by notes, bonds, debentures or other similar evidences of indebtedness for money borrowed, (ii) all Capitalized Rentals of such Person (other than Rentals owing from the Company or any Restricted Subsidiary to the Company or another Restricted Subsidiary), and
(iii) all Guaranties by such Person of any obligation described in clause (i) or
(ii) of any other Person (other than any such obligation of the Company or any Subsidiary).

"Defaulted Interest" has the meaning specified in Section 307.

"Defeasance" has the meaning specified in Section 1302.

"Depositary" means, with respect to Securities of any series issuable in whole or in part in the form of one or more Global Securities, a clearing agency registered under the Exchange Act that is designated to act as Depositary for such Securities as contemplated by Section 301.

"Event of Default" has the meaning specified in Section 501.

"Exchange Act" means the Securities Exchange Act of 1934 and any statute successor thereto, in each case as amended from time to time.

"Expiration Date" has the meaning specified in Section 104.

"Funded Debt" means all Debt having (a) a maturity of more than 12 months from the date as of which the amount thereof is to be determined or (b) a maturity of less than 12 months and that

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is (i) by its terms renewable or extendable beyond 12 months from such date at the option of the borrower or (ii) included in long-term Debt on the consolidated balance sheet of the Company in accordance with generally accepted accounting principles.

"Global Security" means a Security that evidences all or part of the Securities of any series and bears the legend set forth in Section 204 (or such legend as may be specified as contemplated by Section 301 for such Securities).

"Guaranties" by any Person shall mean all obligations (other than endorsements in the ordinary course of business of negotiable instruments for deposit or collection) of such Person guaranteeing, or in effect guaranteeing, any indebtedness, dividend or other obligation of any other Person (the "primary obligor") in any manner, whether directly or indirectly, including, without limitation, all obligations incurred through an agreement, contingent or otherwise, by such Person: (i) to purchase such indebtedness or obligation or any property or assets constituting security therefor, (ii) to advance or supply funds (x) for the purchase or payment of such indebtedness or obligation, (y) to maintain working capital or other balance sheet condition or otherwise to advance or make available funds for the purchase or payment of such indebtedness or obligation, (iii) to lease property or to purchase securities or other property or services primarily for the purpose of assuring the owner of such indebtedness or obligation of the ability of the primary obligor to make payment of the indebtedness or obligation, or (iv) otherwise to assure the owner of the indebtedness or obligation of the primary obligor against loss in respect thereof. For the purposes of all computations made under this Indenture, a Guaranty in respect of any indebtedness for borrowed money shall be deemed to be indebtedness equal to the principal amount of such indebtedness for borrowed money which has been guaranteed, and a Guaranty in respect of any other obligation or liability or any dividend shall be deemed to be indebtedness equal to the maximum aggregate amount of such obligation, liability or dividend.

"Holder" means a Person in whose name a Security is registered in the Security Register.

"Incur", with respect to any Debt, means to incur, create, issue, assume, guarantee or otherwise become liable for any such Debt (and "Incurrence", "Incurred", "Incurrable" and "Incurring" shall have meanings correlative to the foregoing).

"Indenture" means this instrument as originally executed and as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof, including, for all purposes of this instrument and any such supplemental indenture, the provisions of the Trust Indenture Act that are deemed to be a part of and govern this instrument and any such supplemental indenture, respectively. The term "Indenture" shall also include the terms

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of particular series of Securities established as contemplated by Section 301.

"interest", when used with respect to an Original Issue Discount Security which by its terms bears interest only after Maturity, means interest payable after Maturity.

"Interest Payment Date", when used with respect to any Security, means the Stated Maturity of an installment of interest on such Security.

"Investment Company Act" means the Investment Company Act of 1940 and any statute successor thereto, in each case as amended from time to time.

"Maturity", when used with respect to any Security, means the date on which the principal of such Security or an installment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.

"Mortgage" means any pledge of, conditional sale or other title retention of, or mortgage or other lien or security interest or encumbrance of any kind on, any property or assets owned or leased by the Company or any Subsidiary, or any shares of stock or Debt of any Subsidiary.

"Notice of Default" means a written notice of the kind specified in
Section 501(4) or 501(5).

"Officers' Certificate" means a certificate signed by the Chairman of the Board, a Vice Chairman of the Board, the President or a Vice President, and by the Controller, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company, and delivered to the Trustee. One of the officers signing an Officers' Certificate given pursuant to Section 1004 shall be the principal executive, financial or accounting officer of the Company.

"Opinion of Counsel" means a written opinion of counsel, who may be counsel for the Company (whether inside counsel or outside counsel).

"Original Issue Discount Security" means any Security which provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502.

"Outstanding", when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except:

(1) Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation;

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(2) Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities; provided that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made;

(3) Securities as to which Defeasance has been effected pursuant to
Section 1302; and

(4) Securities which have been paid pursuant to Section 306 or in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a bona fide purchaser in whose hands such Securities are valid obligations of the Company; provided, however, that in determining whether the Holders of the requisite principal amount of the Outstanding Securities have given, made or taken any request, demand, authorization, direction, notice, consent, waiver or other action hereunder as of any date, (A) the principal amount of an Original Issue Discount Security which shall be deemed to be Outstanding shall be the amount of the principal thereof which would be due and payable as of such date upon acceleration of the Maturity thereof to such date pursuant to Section 502, (B) if, as of such date, the principal amount payable at the Stated Maturity of a Security is not determinable, the principal amount of such Security which shall be deemed to be Outstanding shall be the amount as specified or determined as contemplated by Section 301, (C) the principal amount of a Security denominated in one or more foreign currencies or currency units which shall be deemed to be Outstanding shall be the U.S. dollar equivalent, determined as of such date in the manner provided as contemplated by Section 301, of the principal amount of such Security (or, in the case of a Security described in Clause (A) or (B) above, of the amount determined as provided in such Clause), and (D) Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent, waiver or other action, only Securities which the Trustee knows to be so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor.

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"Paying Agent" means any Person authorized by the Company to pay the principal of or any premium or interest on any Securities on behalf of the Company.

"Person" means any individual, corporation, partnership, joint venture, trust, unincorporated organization or government or any agency or political subdivision thereof.

"Place of Payment", when used with respect to the Securities of any series, means the place or places where the principal of and any premium and interest on the Securities of that series are payable as specified as contemplated by Section 301.

"Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 306 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security.

"Preferred Stock" means, as applied to the Capital Stock of any Person, the Capital Stock of such Person (other than the Common Stock of such Person) of any class or classes (however designated) that ranks prior, as to the payment of dividends or as to the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding-up of such Person, to shares of Capital Stock of any other class of such Person.

"Redemption Date", when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture.

"Redemption Price", when used with respect to any Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture.

"Regular Record Date" for the interest payable on any Interest Payment Date on the Securities of any series means the date specified for that purpose as contemplated by Section 301.

"Rentals" means, as of the date of any determination thereof, all rent payable by the lessee under a lease of any property or assets, after excluding amounts required to be paid on account of maintenance and repairs, insurance, taxes, assessments, water rates and similar charges. Rents under any "percentage leases" shall be computed solely on the basis of minimum rents, if any, required to be paid by the lessee regardless of sales volume or gross revenues. In the case of any lease which is terminable by the lessee upon the payment of a penalty, such net amount shall also include the amount of such penalty, but no rent shall be considered as required to be paid under such lease subsequent to the first date upon which it may be so terminated.

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"Responsible Officer", when used with respect to the Trustee, means the chairman or any vice-chairman of the board of directors, the chairman or any vice-chairman of the executive committee of the board of directors, the chairman of the trust committee, the president, any vice president, the secretary, any assistant secretary, the treasurer, any assistant treasurer, the cashier, any assistant cashier, any trust officer or assistant trust officer, the controller or any assistant controller or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject.

"Restricted Subsidiary" means any Subsidiary existing on the date hereof and any Subsidiary existing, created or acquired subsequent to the date hereof unless designated by the Board of Directors as an Unrestricted Subsidiary in accordance with Section 1012.

"Securities" has the meaning stated in the first recital of this Indenture and more particularly means any Securities authenticated and delivered under this Indenture.

"Securities Act" means the Securities Act of 1933 and any statute successor thereto, in each case as amended from time to time.

"Security Register" and "Security Registrar" have the respective meanings specified in Section 305.

"Special Record Date" for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 307.

"Stated Maturity", when used with respect to any Security or any installment of principal thereof or interest thereon, means the date specified in such Security as the fixed date on which the principal of such Security or such installment of principal or interest is due and payable.

"Subsidiary" means a corporation more than 50% of the outstanding voting stock of which is owned, directly or indirectly, by the Company or by one or more other Subsidiaries, or by the Company and one or more other Subsidiaries. For the purposes of this definition, "voting stock" means stock which ordinarily has voting power for the election of directors, whether at all times or only so long as no senior class of stock has such voting power by reason of any contingency.

"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at the date as of which this instrument was executed; provided, however, that in the event the Trust Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means, to

- 10 -

the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended.

"Trustee" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean or include each Person who is then a Trustee hereunder, and if at any time there is more than one such Person, "Trustee" as used with respect to the Securities of any series shall mean the Trustee with respect to Securities of that series.

"Unrestricted Subsidiary" means any Subsidiary that is not a Restricted Subsidiary.

"U.S. Government Obligation" has the meaning specified in Section 1304.

"Vice President", when used with respect to the Company or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title "vice president".

"Voting Stock" means, with respect to any Person, securities of any class or classes of Capital Stock in such Person entitling the holders thereof (whether at all times or only so long as no senior class of stock has voting power by reason of any contingency) to vote in the election of members of the Board of Directors or other governing body of such Person.

SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.

Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee such certificates and opinions as may be required under the Trust Indenture Act. Each such certificate or opinion shall be given in the form of an Officers' Certificate, if to be given by an officer of the Company, or an Opinion of Counsel, if to be given by counsel, and shall comply with the requirements of the Trust Indenture Act and any other requirements set forth in this Indenture.

Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (except for certificates provided for in Section 1004) shall include,

(1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto;

(2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

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(3) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with.

SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.

In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.

Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or opinion of counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous.

Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.

SECTION 104. ACTS OF HOLDERS; RECORD DATES.

Any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given, made or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the

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Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 601) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section.

The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient.

The ownership of Securities shall be proved by the Security Register.

Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security.

The Company may set any day as a record date for the purpose of determining the Holders of Outstanding Securities of any series entitled to give, make or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given, made or taken by Holders of Securities of such series, provided that the Company may not set a record date for, and the provisions of this paragraph shall not apply with respect to, the giving or making of any notice, declaration, request or direction referred to in the next paragraph. If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities of the relevant series on such record date, and no other Holders, shall be entitled to take the relevant action, whether or not such Holders remain Holders after such record date; provided that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of Outstanding Securities of such series on such record date. Nothing in this paragraph shall be construed to prevent the Company from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be cancelled and of no effect), and nothing in this paragraph shall be construed to render ineffective any action taken by Holders of the requisite principal amount of Outstanding Securities of the

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relevant series on the date such action is taken. Promptly after any record date is set pursuant to this paragraph, the Company, at its own expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Trustee in writing and to each Holder of Securities of the relevant series in the manner set forth in Section 106.

The Trustee may set any day as a record date for the purpose of determining the Holders of Outstanding Securities of any series entitled to join in the giving or making of (i) any Notice of Default, (ii) any declaration of acceleration referred to in Section 502, (iii) any request to institute proceedings referred to in Section 507(2) or (iv) any direction referred to in
Section 512, in each case with respect to Securities of such series. If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities of such series on such record date, and no other Holders, shall be entitled to join in such notice, declaration, request or direction, whether or not such Holders remain Holders after such record date; provided that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of Outstanding Securities of such series on such record date. Nothing in this paragraph shall be construed to prevent the Trustee from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be cancelled and of no effect), and nothing in this paragraph shall be construed to render ineffective any action taken by Holders of the requisite principal amount of Outstanding Securities of the relevant series on the date such action is taken. Promptly after any record date is set pursuant to this paragraph, the Trustee, at the Company's expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Company in writing and to each Holder of Securities of the relevant series in the manner set forth in Section 106.

With respect to any record date set pursuant to this Section, the party hereto which sets such record dates may designate any day as the "Expiration Date" and from time to time may change the Expiration Date to any earlier or later day; provided that no such change shall be effective unless notice of the proposed new Expiration Date is given to the other party hereto in writing, and to each Holder of Securities of the relevant series in the manner set forth in
Section 106, on or prior to the existing Expiration Date. If an Expiration Date is not designated with respect to any record date set pursuant to this Section, the party hereto which set such record date shall be deemed to have initially designated the 180th day after such record date as the Expiration Date with respect thereto, subject to its right to change the Expiration Date as provided in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be later than the 180th day after the applicable record date.

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Without limiting the foregoing, a Holder entitled hereunder to take any action hereunder with regard to any particular Security may do so with regard to all or any part of the principal amount of such Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such principal amount.

SECTION 105. NOTICES, ETC., TO TRUSTEE AND COMPANY.

Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with,

(1) the Trustee by any Holder or by the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust Office, Attention: Corporate Trust Administration, or

(2) the Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to the Company addressed to it to the attention of its Secretary at the address of its principal office specified in the first paragraph of this instrument or at any other address previously furnished in writing to the Trustee by the Company.

SECTION 106. NOTICE TO HOLDERS; WAIVER.

Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at his address as it appears in the Security Register, not later than the latest date (if any), and not earlier than the earliest date (if any), prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.

In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give

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such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder.

SECTION 107. CONFLICT WITH TRUST INDENTURE ACT.

If any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act which is required under such Act to be a part of and govern this Indenture, the latter provision shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act which may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or to be excluded, as the case may be.

SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS.

The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.

SECTION 109. SUCCESSORS AND ASSIGNS.

All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not.

SECTION 110. SEPARABILITY CLAUSE.

In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

SECTION 111. BENEFITS OF INDENTURE.

Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder and the Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture.

SECTION 112. GOVERNING LAW.

This Indenture and the Securities shall be governed by and construed in accordance with the law of the State of New York.

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SECTION 113. LEGAL HOLIDAYS.

In any case where any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day at any Place of Payment, then (notwithstanding any other provision of this Indenture or of the Securities (other than a provision of any Security which specifically states that such provision shall apply in lieu of this Section)) payment of interest or principal (and premium, if any) need not be made at such Place of Payment on such date, but may be made on the next succeeding Business Day at such Place of Payment with the same force and effect as if made on the Interest Payment Date or Redemption Date, or at the Stated Maturity.

SECTION 114. NO RECOURSE.

A director, officer, employee, stockholder or Affiliate, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or this Indenture. Each Holder by accepting a Security waives and releases all such liability; provided, however, that nothing in this Section shall be deemed to relieve any Person referred to herein for any liability imposed by the Securities Act or the Trust Indenture Act.

ARTICLE TWO

SECURITY FORMS

SECTION 201. FORMS GENERALLY.

The Securities of each series shall be in substantially the form set forth in this Article, or in such other form as shall be established by or pursuant to a Board Resolution or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or Depositary therefor or as may, consistently herewith, be determined by the officers executing such Securities, as evidenced by their execution thereof. If the form of Securities of any series is established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or an Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Company Order contemplated by Section 303 for the authentication and delivery of such Securities.

The definitive Securities shall be printed, lithographed or engraved on steel engraved borders or may be produced in any

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other manner, all as determined by the officers executing such Securities, as evidenced by their execution of such Securities.

SECTION 202. FORM OF FACE OF SECURITY.

[Insert any legend required by the Internal Revenue Code and the regulations thereunder.]

OVERSEAS SHIPHOLDING GROUP, INC.

No. ___________ $ __________

Overseas Shipholding Group, Inc., a corporation duly organized and existing under the laws of Delaware (herein called the "Company", which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to ____________________________________, or registered assigns, the principal sum of ___________________________________________ Dollars on ______________________________________________ [if the Security is to bear interest prior to Maturity, insert --, and to pay interest thereon from ______________ or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on _____________ and ____________ in each year, commencing _________, at the rate of ____% per annum, until the principal hereof is paid or made available for payment [if applicable, insert --, provided that any principal and premium, and any such installment of interest, which is overdue shall bear interest at the rate of ___% per annum (to the extent that the payment of such interest shall be legally enforceable), from the dates such amounts are due until they are paid or made available for payment, and such interest shall be payable on demand]. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the ________ or ________ (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such

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notice as may be required by such exchange, all as more fully provided in said Indenture].

[If the Security is not to bear interest prior to Maturity, insert -- The principal of this Security shall not bear interest except in the case of a default in payment of principal upon acceleration, upon redemption or at Stated Maturity and in such case the overdue principal and any overdue premium shall bear interest at the rate of _____% per annum (to the extent that the payment of such interest shall be legally enforceable), from the dates such amounts are due until they are paid or made available for payment. Interest on any overdue principal or premium shall be payable on demand. [Any such interest on overdue principal or premium which is not paid on demand shall bear interest at the rate of _____% per annum (to the extent that the payment of such interest on interest shall be legally enforceable), from the date of such demand until the amount so demanded is paid or made available for payment. Interest on any overdue interest shall be payable on demand.]]

Payment of the principal of (and premium, if any) and [if applicable, insert -- any such] interest on this Security will be made at the office or agency of the Company maintained for that purpose in The City of New York, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts [if applicable, insert --; provided, however, that at the option of the Company payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register].

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

In Witness Whereof, the Company has caused this instrument to be duly executed under its corporate seal.

Dated:

Overseas Shipholding Group, Inc.

Attest:

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SECTION 203. FORM OF REVERSE OF SECURITY.

This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture, dated as of ______ ___, 200_ (herein called the "Indenture", which term shall have the meaning assigned to it in such instrument), between the Company and _______________, as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), and reference is hereby made to the Indenture for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof [if applicable, insert -- , limited in aggregate principal amount to $____________].

[If applicable, insert -- The Securities of this series are subject to redemption upon not less than 30 days' notice by mail, [if applicable, insert --
(1) on ___________ in any year commencing with the year _______ and ending with the year _________ through operation of the sinking fund for this series at a Redemption Price equal to 100% of the principal amount, and (2)] at any time [if applicable, insert -- on or after ___________, 20__], as a whole or in part, at the election of the Company, at the following Redemption Prices (expressed as percentages of the principal amount): If redeemed [if applicable, insert -- on or before ________________, ____%, and if redeemed] during the 12-month period beginning _____________ of the years indicated, 

            Redemption                         Redemption
Year          Price               Year           Price
----        ----------            ----         ----------

and thereafter at a Redemption Price equal to _____% of the principal amount, together in the case of any such redemption [if applicable, insert -- (whether through operation of the sinking fund or otherwise)] with accrued interest to the Redemption Date, but interest instalments whose Stated Maturity is on or prior to such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant Record Dates referred to on the face hereof, all as provided in the Indenture.]

[If applicable, insert -- The Securities of this series are subject to redemption upon not less than 30 days' notice by mail, (1) on _______________ in any year commencing with the year ____ and

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ending with the year _____ through operation of the sinking fund for this series at the Redemption Prices for redemption through operation of the sinking fund (expressed as percentages of the principal amount) set forth in the table below, and (2) at any time [if applicable, insert -- on or after ______________], as a whole or in part, at the election of the Company, at the Redemption Prices for redemption otherwise than through operation of the sinking fund (expressed as percentages of the principal amount) set forth in the table below: If redeemed during the 12-month period beginning _____________ of the years indicated, 

             Redemption Price
              For Redemption               Redemption Price For
             Through Operation             Redemption Otherwise
                  of the                  Than Through Operation
Year           Sinking Fund                of the Sinking Fund
----         -----------------            ----------------------

and thereafter at a Redemption Price equal to _____% of the principal amount, together in the case of any such redemption (whether through operation of the sinking fund or otherwise) with accrued interest to the Redemption Date, but interest instalments whose Stated Maturity is on or prior to such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant Record Dates referred to on the face hereof, all as provided in the Indenture.]

[If applicable, insert -- Notwithstanding the foregoing, the Company may not, prior to ______________, redeem any Securities of this series as contemplated by [if applicable, insert -- Clause (2) of] the preceding paragraph as a part of, or in anticipation of, any refunding operation by the application, directly or indirectly, of moneys borrowed having an interest cost to the Company (calculated in accordance with generally accepted financial practice) of less than ______% per annum.]

[If applicable, insert -- The sinking fund for this series provides for the redemption on _______________ in each year beginning with the year __________ and ending with the year _____ of [if applicable, insert -- not less than $___________ ("mandatory sinking fund") and not more than] $___________ aggregate principal amount of Securities of this series. Securities of this series acquired or redeemed by the Company otherwise than through [if applicable, insert -- mandatory] sinking fund payments may be credited against subsequent [if applicable, insert -- mandatory] sinking fund payments otherwise required to be made [if applicable, insert -- , in the inverse order in which they become due].]

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[If the Security is subject to redemption of any kind, insert -- In the event of redemption of this Security in part only, a new Security or Securities of this series and of like tenor for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof.]

[If applicable, insert paragraph regarding subordination of the Security.]

[If applicable, insert -- The Indenture contains provisions for defeasance at any time of [the entire indebtedness of this Security] [or]
[certain restrictive covenants and Events of Default with respect to this Security] [, in each case] upon compliance with certain conditions set forth in the Indenture.]

[If the Security is not an Original Issue Discount Security, insert -- If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.]

[If the Security is an Original Issue Discount Security, insert -- If an Event of Default with respect to Securities of this series shall occur and be continuing, an amount of principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. Such amount shall be equal to -- insert formula for determining the amount. Upon payment (i) of the amount of principal so declared due and payable and (ii) of interest on any overdue principal, premium and interest (in each case to the extent that the payment of such interest shall be legally enforceable), all of the Company's obligations in respect of the payment of the principal of and premium and interest, if any, on the Securities of this series shall terminate.]

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of 66 2/3% in principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

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As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Securities of this series, the Holders of not less than 25% in principal amount of the Securities of this series at the time Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee reasonable indemnity, and the Trustee shall not have received from the Holders of a majority in principal amount of Securities of this series at the time Outstanding a direction inconsistent with such request, and shall have failed to institute any such proceeding, for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Security for the enforcement of any payment of principal hereof or any premium or interest hereon on or after the respective due dates expressed herein.

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed.

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of and any premium and interest on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.

The Securities of this series are issuable only in registered form without coupons in denominations of $_______ and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

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Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture.

SECTION 204. FORM OF LEGEND FOR GLOBAL SECURITIES.

Unless otherwise specified as contemplated by Section 301 for the Securities evidenced thereby, every Global Security authenticated and delivered hereunder shall bear a legend in substantially the following form:

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

SECTION 205. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.

The Trustee's certificates of authentication shall be in substantially the following form:

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

Wilmington Trust Company,

As Trustee

By
Authorized Officer

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ARTICLE THREE

THE SECURITIES

SECTION 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES.

The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited.

The Securities may be issued in one or more series. There shall be established in or pursuant to a Board Resolution and, subject to Section 303, set forth, or determined in the manner provided, in an Officers' Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Securities of any series,

(1) the title of the Securities of the series (which shall distinguish the Securities of the series from Securities of any other series);

(2) any limit upon the aggregate principal amount of the Securities of the series which may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Section 304, 305, 306, 906 or 1107 and except for any Securities which, pursuant to Section 303, are deemed never to have been authenticated and delivered hereunder);

(3) the Person to whom any interest on a Security of the series shall be payable, if other than the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest;

(4) the date or dates on which the principal of any Securities of the series is payable;

(5) the rate or rates at which any Securities of the series shall bear interest, if any, the date or dates from which any such interest shall accrue, the Interest Payment Dates on which any such interest shall be payable and the Regular Record Date for any such interest payable on any Interest Payment Date;

(6) the place or places where the principal of and any premium and interest on any Securities of the series shall be payable;

(7) the period or periods within which, the price or prices at which and the terms and conditions upon which any Securities of the series may be redeemed, in whole or in part, at the option of the Company and, if other than by a Board Resolution, the manner in which any election by the Company to redeem the Securities shall be evidenced;

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(8) the obligation, if any, of the Company to redeem or purchase any Securities of the series pursuant to any sinking fund or analogous provisions or at the option of the Holder thereof and the period or periods within which, the price or prices at which and the terms and conditions upon which any Securities of the series shall be redeemed or purchased, in whole or in part, pursuant to such obligation;

(9) if other than denominations of $1,000 and any integral multiple thereof, the denominations in which any Securities of the series shall be issuable;

(10) if the amount of principal of or any premium or interest on any Securities of the series may be determined with reference to an index or pursuant to a formula, the manner in which such amounts shall be determined;

(11) if other than the currency of the United States of America, the currency, currencies or currency units in which the principal of or any premium or interest on any Securities of the series shall be payable and the manner of determining the equivalent thereof in the currency of the United States of America for any purpose, including for purposes of the definition of "Outstanding" in Section 101;

(12) if the principal of or any premium or interest on any Securities of the series is to be payable, at the election of the Company or the Holder thereof, in one or more currencies or currency units other than that or those in which such Securities are stated to be payable, the currency, currencies or currency units in which the principal of or any premium or interest on such Securities as to which such election is made shall be payable, the periods within which and the terms and conditions upon which such election is to be made and the amount so payable (or the manner in which such amount shall be determined);

(13) if other than the entire principal amount thereof, the portion of the principal amount of any Securities of the series which shall be payable upon declaration of acceleration of the Maturity thereof pursuant to Section 502;

(14) if the principal amount payable at the Stated Maturity of any Securities of the series will not be determinable as of any one or more dates prior to the Stated Maturity, the amount which shall be deemed to be the principal amount of such Securities as of any such date for any purpose thereunder or hereunder, including the principal amount thereof which shall be due and payable upon any Maturity other than the Stated Maturity or which shall be deemed to be Outstanding as of any date prior to the Stated Maturity (or, in any such case, the manner in which such amount deemed to be the principal amount shall be determined);

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(15) if applicable, that the Securities of the series, in whole or any specified part, shall be defeasible pursuant to Section 1302 or Section 1303 or both such Sections and, if other than by a Board Resolution, the manner in which any election by the Company to defease such Securities shall be evidenced;

(16) if applicable, that any Securities of the series shall be issuable in whole or in part in the form of one or more Global Securities and, in such case, the respective Depositaries for such Global Securities, the form of any legend or legends which shall be borne by any such Global Security in addition to or in lieu of that set forth in Section 204 and any circumstances in addition to or in lieu of those set forth in Clause (2) of the last paragraph of Section 305 in which any such Global Security may be exchanged in whole or in part for Securities registered, and any transfer of such Global Security in whole or in part may be registered, in the name or names of Persons other than the Depositary for such Global Security or a nominee thereof;

(17) any addition to or change in the Events of Default which applies to any Securities of the series and any change in the right of the Trustee or the requisite Holders of such Securities to declare the principal amount thereof due and payable pursuant to Section 502;

(18) any addition to or change in the covenants set forth in Article Ten which applies to Securities of the series; and

(19) any other terms of the series (which terms shall not be inconsistent with the provisions of this Indenture, except as permitted by
Section 901(5)).

All Securities of any one series shall be substantially identical except as to denomination and except as may otherwise be provided in or pursuant to the Board Resolution referred to above and (subject to Section 303) set forth, or determined in the manner provided, in the Officers' Certificate referred to above or in any such indenture supplemental hereto.

If any of the terms of the series are established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or an Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Officers' Certificate setting forth the terms of the series.

SECTION 302. DENOMINATIONS.

The Securities of each series shall be issuable only in registered form without coupons and only in such denominations as shall be specified as contemplated by Section 301. In the absence of any such specified denomination with respect to the Securities

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of any series, the Securities of such series shall be issuable in denominations of $1,000 and any integral multiple thereof.

SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.

The Securities shall be executed on behalf of the Company by its Chairman of the Board, its Vice Chairman of the Board, its President or one of its Vice Presidents, under its corporate seal reproduced thereon attested by its Secretary or one of its Assistant Secretaries. The signature of any of these officers on the Securities may be manual or facsimile.

Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities.

At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with the Company Order shall authenticate and deliver such Securities. If the form or terms of the Securities of the series have been established by or pursuant to one or more Board Resolutions as permitted by Sections 201 and 301, in authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and (subject to Section 601) shall be fully protected in relying upon, an Opinion of Counsel stating,

(1) if the form of such Securities has been established by or pursuant to Board Resolution as permitted by Section 201, that such form has been established in conformity with the provisions of this Indenture;

(2) if the terms of such Securities have been established by or pursuant to Board Resolution as permitted by Section 301, that such terms have been established in conformity with the provisions of this Indenture; and

(3) that such Securities, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and legally binding obligations of the Company enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles.

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If such form or terms have been so established, the Trustee shall not be required to authenticate such Securities if the issue of such Securities pursuant to this Indenture will affect the Trustee's own rights, duties or immunities under the Securities and this Indenture or otherwise in a manner which is not reasonably acceptable to the Trustee.

Notwithstanding the provisions of Section 301 and of the preceding paragraph, if all Securities of a series are not to be originally issued at one time, it shall not be necessary to deliver the Officers' Certificate otherwise required pursuant to Section 301 or the Company Order and Opinion of Counsel otherwise required pursuant to such preceding paragraph at or prior to the authentication of each Security of such series if such documents are delivered at or prior to the authentication upon original issuance of the first Security of such series to be issued.

Each Security shall be dated the date of its authentication.

No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by manual signature, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Trustee for cancellation as provided in Section 309, for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture.

SECTION 304. TEMPORARY SECURITIES.

Pending the preparation of definitive Securities of any series, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities.

If temporary Securities of any series are issued, the Company will cause definitive Securities of that series to be prepared without unreasonable delay. After the preparation of definitive Securities of such series, the temporary Securities of such series shall be exchangeable for definitive Securities of such series upon surrender of the temporary Securities of such series at the office or agency of the Company in a Place of

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Payment for that series, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities of any series, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor one or more definitive Securities of the same series, of any authorized denominations and of like tenor and aggregate principal amount. Until so exchanged, the temporary Securities of any series shall in all respects be entitled to the same benefits under this Indenture as definitive Securities of such series and tenor.

SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.

The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register (the register maintained in such office and in any other office or agency of the Company in a Place of Payment being herein sometimes collectively referred to as the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and of transfers of Securities. The Trustee is hereby appointed "Security Registrar" for the purpose of registering Securities and transfers of Securities as herein provided.

Upon surrender for registration of transfer of any Security of a series at the office or agency of the Company in a Place of Payment for that series, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of the same series, of any authorized denominations and of like tenor and aggregate principal amount.

At the option of the Holder, Securities of any series may be exchanged for other Securities of the same series, of any authorized denominations and of like tenor and aggregate principal amount, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive.

All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange.

Every Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed, by the Holder thereof or his attorney duly authorized in writing.

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No service charge shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Section 304, 906 or 1107 not involving any transfer.

If the Securities of any series (or of any series and specified tenor) are to be redeemed in part, the Company shall not be required (A) to issue, register the transfer of or exchange any Securities of that series (or of that series and specified tenor, as the case may be) during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of any such Securities selected for redemption under Section 1103 and ending at the close of business on the day of such mailing, or (B) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part.

The provisions of Clauses (1), (2), (3) and (4) below shall apply only to Global Securities:

(1) Each Global Security authenticated under this Indenture shall be registered in the name of the Depositary designated for such Global Security or a nominee thereof and delivered to such Depositary or a nominee thereof or custodian therefor, and each such Global Security shall constitute a single Security for all purposes of this Indenture.

(2) Notwithstanding any other provision in this Indenture, no Global Security may be exchanged in whole or in part for Securities registered, and no transfer of a Global Security in whole or in part may be registered, in the name of any Person other than the Depositary for such Global Security or a nominee thereof unless (A) such Depositary (i) has notified the Company that it is unwilling or unable to continue as Depositary for such Global Security or (ii) has ceased to be a clearing agency registered under the Exchange Act, (B) there shall have occurred and be continuing an Event of Default with respect to such Global Security or (C) there shall exist such circumstances, if any, in addition to or in lieu of the foregoing as have been specified for this purpose as contemplated by Section 301.

(3) Subject to Clause (2) above, any exchange of a Global Security for other Securities may be made in whole or in part, and all Securities issued in exchange for a Global Security or any portion thereof shall be registered in such names as the Depositary for such Global Security shall direct.

(4) Every Security authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, a Global Security or any portion thereof, whether pursuant to this Section, Section 304, 306, 906 or 1107 or otherwise, shall

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be authenticated and delivered in the form of, and shall be, a Global Security, unless such Security is registered in the name of a Person other than the Depositary for such Global Security or a nominee thereof.

The following provisions shall apply with respect to any proposed transfer of a Security (other than a Security the resale of which has been registered or which has been exchanged for a Security pursuant to an exchange offer registration statement) or a beneficial interest therein prior to the date which is two years after the later of the date of its original issue and the last date on which the Company or any affiliate of the Company was the owner of such Security (or any predecessor thereto) (the "Resale Restriction Termination Date"):

(1) a transfer of a Security or a beneficial interest therein to a "qualified institutional buyer", as defined in Rule 144A under the Securities Act ("Rule 144A"), shall be made upon the representation of the transferee in the form as set forth on the reverse of the Security that it is purchasing for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A;

(2) a transfer of a Security or a beneficial interest therein to an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) shall be made upon receipt by the Trustee or its agent of a certificate substantially in the form set forth in Exhibit A hereto from the proposed transferee and, if requested by the Company, the delivery of an opinion of counsel, certification and/or other information satisfactory to it; and

(3) a transfer of a Security or a beneficial interest therein to a person who is not a U.S. person, as defined in Regulation S under the Securities Act ("Registration S"), in reliance upon Regulation S shall be made upon receipt by the Trustee or its agent of a certificate substantially in the form set forth in Exhibit B hereto from the proposed transferee and, if requested by the Company, the delivery of an opinion of counsel, certification and/or other information satisfactory to it.

SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES.

If any mutilated Security is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and

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deliver in exchange therefor a new Security of the same series and of like tenor and principal amount and bearing a number not contemporaneously outstanding.

If there shall be delivered to the Company and the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of the same series and of like tenor and principal amount and bearing a number not contemporaneously outstanding.

In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security.

Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.

Every new Security of any series issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of that series duly issued hereunder.

The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.

SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.

Except as otherwise provided as contemplated by Section 301 with respect to any series of Securities, interest on any Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest.

Any interest on any Security of any series which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the Holder on the relevant Regular Record

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Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in Clause (1) or
(2) below:

(1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security of such series and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this Clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be given to each Holder of Securities of such series in the manner set forth in Section 106, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following Clause (2).

(2) The Company may make payment of any Defaulted Interest on the Securities of any series in any other lawful manner not inconsistent with the requirements of any securities exchange on which such Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this Clause, such manner of payment shall be deemed practicable by the Trustee.

Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security.

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SECTION 308. PERSONS DEEMED OWNERS.

Prior to due presentment of a Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of principal of and any premium and (subject to Section 307) any interest on such Security and for all other purposes whatsoever, whether or not such Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary.

SECTION 309. CANCELLATION.

All Securities surrendered for payment, redemption, registration of transfer or exchange or for credit against any sinking fund payment shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly cancelled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and may deliver to the Trustee (or to any other Person for delivery to the Trustee) for cancellation any Securities previously authenticated hereunder which the Company has not issued and sold, and all Securities so delivered shall be promptly cancelled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities cancelled as provided in this Section, except as expressly permitted by this Indenture. All cancelled Securities held by the Trustee shall be disposed of as directed by a Company Order.

SECTION 310. COMPUTATION OF INTEREST.

Except as otherwise specified as contemplated by Section 301 for Securities of any series, interest on the Securities of each series shall be computed on the basis of a 360-day year of twelve 30-day months.

ARTICLE FOUR

SATISFACTION AND DISCHARGE

SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE.

This Indenture shall upon Company Request cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Securities herein expressly provided for), and the Trustee, at the expense of the Company, shall

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execute proper instruments acknowledging satisfaction and discharge of this Indenture, when

(1) either

(A) all Securities theretofore authenticated and delivered (other than (i) Securities which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 306 and (ii) Securities for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 1003) have been delivered to the Trustee for cancellation; or

(B) all such Securities not theretofore delivered to the Trustee for cancellation

(i) have become due and payable, or

(ii) will become due and payable at their Stated Maturity within one year, or

(iii) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company,

and the Company, in the case of (i), (ii) or (iii) above, has deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose money in an amount sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal and any premium and interest to the date of such deposit (in the case of Securities which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be;

(2) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and

(3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with.

Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 607, the obligations of the Trustee to any Authenticating Agent under Section 614 and, if money shall have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of this Section, the obligations of the Trustee under Section 402 and the last paragraph of Section 1003 shall survive.

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SECTION 402. APPLICATION OF TRUST MONEY.

Subject to the provisions of the last paragraph of Section 1003, all money deposited with the Trustee pursuant to Section 401 shall be held in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal and any premium and interest for whose payment such money has been deposited with the Trustee.

ARTICLE FIVE

REMEDIES

SECTION 501. EVENTS OF DEFAULT.

"Event of Default", wherever used herein with respect to Securities of any series, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

(1) default in the payment of any interest upon any Security of that series when it becomes due and payable, and continuance of such default for a period of 30 days; or

(2) default in the payment of the principal of or any premium on any Security of that series at its Maturity; or

(3) default in the deposit of any sinking fund payment, when and as due by the terms of a Security of that series; or

(4) default in the payment of the principal of (or any premium on) and any interest upon any Security required to be purchased upon the occurrence of a Change of Control, when and as due by the terms of a Security of that series; or

(5) default in the performance, or breach, of any covenant or warranty of the Company in this Indenture (other than a covenant or warranty a default in whose performance or whose breach is elsewhere in this Section specifically dealt with or which has expressly been included in this Indenture solely for the benefit of series of Securities other than that series), and continuance of such default or breach for a period of 30 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities of that series a written notice specifying such default or breach and requiring it to be

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remedied and stating that such notice is a "Notice of Default" hereunder; or

(6) a default under any bond, debenture, note or other evidence of indebtedness for money borrowed by the Company or any Restricted Subsidiary (including a default with respect to Securities of any series other than that series) having an aggregate principal amount outstanding of at least $10,000,000, or under any Mortgage, indenture or instrument (including this Indenture) under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Company or any Restricted Subsidiary having an aggregate principal amount outstanding of at least $10,000,000, whether such indebtedness now exists or shall hereafter be created, which default shall have resulted in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable, without such indebtedness having been discharged, or such acceleration having been rescinded or annulled, within a period of 10 days after there shall have been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities of that series a written notice specifying such default and requiring the Company to cause such indebtedness to be discharged or cause such acceleration to be rescinded or annulled, as the case may be, and stating that such notice is a "Notice of Default" hereunder; provided, however, that, subject to the provisions of Sections 601 and 602, the Trustee shall not be deemed to have knowledge of such default unless either (A) a Responsible Officer of the Trustee shall have actual knowledge of such default or (B) the Trustee shall have received written notice thereof from the Company, from any Holder, from the holder of any such indebtedness or from the trustee under any such mortgage, indenture or other instrument; or

(7) any final judgment or order (not covered by insurance) for the payment of money in excess of $10,000,000 individually or $20,000,000 in the aggregate for all such final judgments or orders against all such Persons
(treating any deductibles, self-insurance or retention as not so covered) shall be rendered against the Company or any Subsidiary and shall not be paid or discharged, and there shall be any period of 60 consecutive days following entry of the final judgment or order in excess of $10,000,000 individually or that causes the aggregate amount for all such final judgments or orders outstanding and not paid or discharged against all such Persons to exceed $20,000,000 during which a stay of enforcement of such final judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or

(8) the entry by a court having jurisdiction in the premises of (A) a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or (B) a decree or order

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adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under any applicable Federal or State law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 60 consecutive days; or

(9) the commencement by the Company of a voluntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable Federal or State law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company in furtherance of any such action; or

(10) any other Event of Default provided with respect to Securities of that series.

SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.

If an Event of Default (other than an Event of Default specified in
Section 501(8) or 501(9)) with respect to Securities of any series at the time Outstanding occurs and is continuing, then in every such case the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities of that series may declare the principal amount of all the Securities of that series (or, if any Securities of that series are Original Issue Discount Securities, such portion of the principal amount of such Securities as may be specified by the terms thereof) to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration such principal amount (or specified amount) shall become immediately due and payable. If an Event of Default specified in Section 501(8) or 501(9) with respect to Securities of any series at the time Outstanding occurs, the principal amount of all the Securities of that series (or, if any Securities of that series are Original Issue Discount Securities, such portion of the principal amount of such Securities as may be

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specified by the terms thereof) shall automatically, and without any declaration or other action on the part of the Trustee or any Holder, become immediately due and payable.

At any time after such a declaration of acceleration with respect to Securities of any series has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of the Outstanding Securities of that series, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if

(1) the Company has paid or deposited with the Trustee a sum sufficient to pay

(A) all overdue interest on all Securities of that series,

(B) the principal of (and premium, if any, on) any Securities of that series which have become due otherwise than by such declaration of acceleration and any interest thereon at the rate or rates prescribed therefor in such Securities,

(C) to the extent that payment of such interest is lawful, interest upon overdue interest at the rate or rates prescribed therefor in such Securities, and

(D) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and

(2) all Events of Default with respect to Securities of that series, other than the non-payment of the principal of Securities of that series which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 513.

No such rescission shall affect any subsequent default or impair any right consequent thereon.

SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.

The Company covenants that if

(1) default is made in the payment of any interest on any Security when such interest becomes due and payable and such default continues for a period of 30 days, or

(2) default is made in the payment of the principal of (or premium, if any, on) any Security at the Maturity thereof,

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the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal and any premium and interest and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal and premium and on any overdue interest, at the rate or rates prescribed therefor in such Securities, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.

If an Event of Default with respect to Securities of any series occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities of such series by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.

SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM.

In case of any judicial proceeding relative to the Company (or any other obligor upon the Securities), its property or its creditors, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized under the Trust Indenture Act in order to have claims of the Holders and the Trustee allowed in any such proceeding. In particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 607.

No provision of this Indenture shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding; provided, however, that the Trustee may, on behalf of the Holders, vote for the election of a trustee in bankruptcy or similar official and be a member of a creditors' or other similar committee.

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SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES.

All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered.

SECTION 506. APPLICATION OF MONEY COLLECTED.

Any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal or any premium or interest, upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:

First: To the payment of all amounts due the Trustee under Section 607; and

Second: To the payment of the amounts then due and unpaid for principal of and any premium and interest on the Securities in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal and any premium and interest, respectively.

SECTION 507. LIMITATION ON SUITS.

No Holder of any Security of any series shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless

(1) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities of that series;

(2) the Holders of not less than 25% in principal amount of the Outstanding Securities of that series shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;

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(3) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request;

(4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and

(5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Securities of that series;

it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other of such Holders, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all of such Holders.

SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM AND INTEREST.

Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of and any premium and (subject to Section 307) interest on such Security on the respective Stated Maturities expressed in such Security (or, in the case of redemption, on the Redemption Date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder.

SECTION 509. RESTORATION OF RIGHTS AND REMEDIES.

If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted.

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SECTION 510. RIGHTS AND REMEDIES CUMULATIVE.

Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of
Section 306, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

SECTION 511. DELAY OR OMISSION NOT WAIVER.

No delay or omission of the Trustee or of any Holder of any Securities to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.

SECTION 512. CONTROL BY HOLDERS.

The Holders of a majority in principal amount of the Outstanding Securities of any series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Securities of such series, provided that

(1) such direction shall not be in conflict with any rule of law or with this Indenture, and

(2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction.

SECTION 513. WAIVER OF PAST DEFAULTS.

The Holders of not less than a majority in principal amount of the Outstanding Securities of any series may on behalf of the Holders of all the Securities of such series waive any past default hereunder with respect to such series and its consequences, except a default

(1) in the payment of the principal of or any premium or interest on any Security of such series, or

(2) in respect of a covenant or provision hereof which under Article Nine cannot be modified or amended without the

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consent of the Holder of each Outstanding Security of such series affected.

Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.

SECTION 514. UNDERTAKING FOR COSTS.

In any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of such suit, and may assess costs against any such party litigant, in the manner and to the extent provided in the Trust Indenture Act; provided that neither this Section nor the Trust Indenture Act shall be deemed to authorize any court to require such an undertaking or to make such an assessment in any suit instituted by the Company.

SECTION 515. WAIVER OF USURY, STAY OR EXTENSION LAWS.

The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

ARTICLE SIX

THE TRUSTEE

SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES.

The duties and responsibilities of the Trustee shall be as provided by the Trust Indenture Act. Notwithstanding the foregoing, no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Whether or not therein expressly

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so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section.

SECTION 602. NOTICE OF DEFAULTS.

If a default occurs hereunder with respect to Securities of any series, the Trustee shall give the Holders of Securities of such series notice of such default as and to the extent provided by the Trust Indenture Act; provided, however, that in the case of any default of the character specified in Section 501(4) with respect to Securities of such series, no such notice to Holders shall be given until at least 30 days after the occurrence thereof. For the purpose of this Section, the term "default" means any event which is, or after notice or lapse of time or both would become, an Event of Default with respect to Securities of such series.

SECTION 603. CERTAIN RIGHTS OF TRUSTEE.

Subject to the provisions of Section 601:

(1) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;

(2) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order, and any resolution of the Board of Directors shall be sufficiently evidenced by a Board Resolution;

(3) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate;

(4) the Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;

(5) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction;

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(6) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney; and

(7) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder.

SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.

The recitals contained herein and in the Securities, except the Trustee's certificates of authentication, shall be taken as the statements of the Company, and neither the Trustee nor any Authenticating Agent assumes any responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities. Neither the Trustee nor any Authenticating Agent shall be accountable for the use or application by the Company of Securities or the proceeds thereof.

SECTION 605. MAY HOLD SECURITIES.

The Trustee, any Authenticating Agent, any Paying Agent, any Security Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to Sections 608 and 613, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Security Registrar or such other agent.

SECTION 606. MONEY HELD IN TRUST.

Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed with the Company.

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SECTION 607. COMPENSATION AND REIMBURSEMENT.

The Company agrees

(1) to pay to the Trustee from time to time such reasonable compensation for all services rendered by it hereunder as shall be agreed upon in writing (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);

(2) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and

(3) to indemnify the Trustee (which, for purposes of this Section 607, shall include its officers, directors, employees and agents) for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder.

To secure the Company's payment obligations in this Section 607, the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest on particular Securities.

When the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 501(6) or 501(7), such expenses (including the reasonable charges and expenses of its counsel) and the compensation for such services are intended to constitute expenses of administration under any bankruptcy law.

In no event shall the Trustee be liable for any indirect, special, punitive or consequential loss or damage of any kind whatsoever, including, but not limited to, lost profits, even if the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.

In no event shall the Trustee be liable for any failure or delay in the performance of its obligations hereunder because of circumstances beyond its control, including, but not limited to, acts of God, flood, war (whether declared or undeclared), terrorism, fire, riot, embargo, government action, including any laws, ordinances, regulations, governmental action or the like

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which delay, restrict or prohibit the providing of the services contemplated by this Indenture.

The provisions of this Section 607 shall survive the resignation or removal of the Trustee or the termination of this Indenture.

SECTION 608. CONFLICTING INTERESTS.

If the Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture. To the extent permitted by such Act, the Trustee shall not be deemed to have a conflicting interest by virtue of being a trustee under this Indenture with respect to Securities of more than one series.

SECTION 609. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.

There shall at all times be one (and only one) Trustee hereunder with respect to the Securities of each series, which may be Trustee hereunder for Securities of one or more other series. Each Trustee shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such, has a combined capital and surplus of at least $50,000,000. If any such Person publishes reports of condition at least annually, pursuant to law or to the requirements of its supervising or examining authority, then for the purposes of this Section and to the extent permitted by the Trust Indenture Act, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee with respect to the Securities of any series shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article.

SECTION 610. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.

No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 611.

The Trustee may resign at any time with respect to the Securities of one or more series by giving written notice thereof to the Company. If the instrument of acceptance by a successor Trustee required by Section 611 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of

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competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series.

The Trustee may be removed at any time with respect to the Securities of any series by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series, delivered to the Trustee and to the Company.

If at any time:

(1) the Trustee shall fail to comply with Section 608 after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security for at least six months, or

(2) the Trustee shall cease to be eligible under Section 609 and shall fail to resign after written request therefor by the Company or by any such Holder, or

(3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation,

then, in any such case, (A) the Company by a Board Resolution may remove the Trustee with respect to all Securities, or (B) subject to Section 514, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee with respect to all Securities and the appointment of a successor Trustee or Trustees.

If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, with respect to the Securities of one or more series, the Company, by a Board Resolution, shall promptly appoint a successor Trustee or Trustees with respect to the Securities of that or those series (it being understood that any such successor Trustee may be appointed with respect to the Securities of one or more or all of such series and that at any time there shall be only one Trustee with respect to the Securities of any particular series) and shall comply with the applicable requirements of Section 611. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Securities of any series shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 611, become the successor Trustee with respect to the Securities of such series and to that extent supersede the successor Trustee appointed by the Company. If no

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successor Trustee with respect to the Securities of any series shall have been so appointed by the Company or the Holders and accepted appointment in the manner required by Section 611, any Holder who has been a bona fide Holder of a Security of such series for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series.

The Company shall give notice of each resignation and each removal of the Trustee with respect to the Securities of any series and each appointment of a successor Trustee with respect to the Securities of any series to all Holders of Securities of such series in the manner provided in Section 106. Each notice shall include the name of the successor Trustee with respect to the Securities of such series and the address of its Corporate Trust Office.

SECTION 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.

In case of the appointment hereunder of a successor Trustee with respect to all Securities, every such successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder.

In case of the appointment hereunder of a successor Trustee with respect to the Securities of one or more (but not all) series, the Company, the retiring Trustee and each successor Trustee with respect to the Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates, (2) if the retiring Trustee is not retiring with respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for

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or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Trustee shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates; but, on request of the Company or any successor Trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect to the Securities of that or those series to which the appointment of such successor Trustee relates.

Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in the first or second preceding paragraph, as the case may be.

No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article.

SECTION 612. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.

Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities.

SECTION 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.

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If and when the Trustee shall be or become a creditor of the Company (or any other obligor upon the Securities), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against the Company (or any such other obligor).

SECTION 614. APPOINTMENT OF AUTHENTICATING AGENT.

The Company may appoint an Authenticating Agent or Agents with respect to one or more series of Securities which shall be authorized to act on behalf of the Trustee to authenticate Securities of such series issued upon original issue and upon exchange, registration of transfer or partial redemption thereof or pursuant to Section 306, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Trustee and shall at all times be a corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by Federal or State authority. If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section.

Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency or corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent, provided such corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent.

An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Company may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating

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Agent and to the Trustee. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Company may appoint a successor Authenticating Agent which shall be acceptable to the Trustee and shall give notice of such appointment in the manner provided in
Section 106 to all Holders of Securities of the series with respect to which such Authenticating Agent will serve. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section.

The Company agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section.

If an appointment with respect to one or more series is made pursuant to this Section, the Securities of such series may have endorsed thereon, in addition to the Trustee's certificate of authentication, an alternative certificate of authentication in the following form:

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

Wilmington Trust Company

As Trustee

By
As Authenticating Agent

By
Authorized Officer

ARTICLE SEVEN

HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.

The Company will furnish or cause to be furnished to the Trustee

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(1) semi-annually, not later than 15 days after the Regular Record Date for each series of Securities, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders of Securities of each series as of such Regular Record Day, and

(2) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished;

excluding from any such list names and addresses received by the Trustee in its capacity as Security Registrar.

SECTION 702. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS.

The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 701 and the names and addresses of Holders received by the Trustee in its capacity as Security Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.

The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding rights and privileges of the Trustee, shall be as provided by the Trust Indenture Act.

Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of any disclosure of information as to names and addresses of Holders made pursuant to the Trust Indenture Act.

SECTION 703. REPORTS BY TRUSTEE.

The Trustee shall transmit to Holders such reports concerning the Trustee and its actions under this Indenture as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant thereto.

A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which any Securities are listed, with the Commission and with the Company. The Company will notify the Trustee when any Securities are listed on any stock exchange.

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SECTION 704. REPORTS BY COMPANY.

The Company shall file with the Trustee and the Commission, and transmit to Holders, such information, documents and other reports, and such summaries thereof, as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant to such Act; provided that any such information, documents or reports required to be filed with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act shall be filed with the Trustee within 15 days after the same is so required to be filed with the Commission.

ARTICLE EIGHT

CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

SECTION 801. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.

The Company shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, and the Company shall not permit any Person to consolidate with or merge into the Company or convey, transfer or lease its properties and assets substantially as an entirety to the Company, unless:

(1) in case the Company shall consolidate with or merge into another Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the Person formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Company substantially as an entirety shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of and any premium and interest on all the Securities (and any Successor Additional Amounts in respect thereof) and the performance or observance of every covenant of this Indenture on the part of the Company to be performed or observed;

(2) immediately after giving effect to such transaction and treating any Debt which becomes an obligation of the Company or any Restricted Subsidiary as a result of such transaction as having been Incurred by the Company or such Restricted Subsidiary at the time of such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing;

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(3) if, as a result of any such consolidation or merger or such conveyance, transfer or lease, properties or assets of the Company would become subject to a Mortgage which would not be permitted by this Indenture, the Company or such successor Person, as the case may be, shall take such steps as shall be necessary effectively to secure the Securities equally and ratably with (or prior to) all Debt secured thereby; and

(4) any Person formed by the consolidation with the Company or into which the Company is merged or which acquires by conveyance or transfer, or which leases, the properties and assets substantially as an entirety of the Company and which is not organized and validly existing under the laws of the United States, any State thereof or the District of Columbia, shall expressly agree, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, (A) to indemnify the Holder of each Security against (i) any tax, assessment or governmental charge imposed on such Holder or required to be withheld or deducted from any payment to such Holder as a consequence of such consolidation, merger, conveyance, transfer or lease, to the extent that, in the aggregate, such tax, assessment or governmental charge imposed upon such Holder (net of deductions or credits) exceeds the aggregate amount of such tax, assessment or governmental charge which would have been imposed on such Holder if the successor Person had been organized and validly existing under the laws of the United States, any State thereof or the District of Columbia; provided, however, that such successor Person will not be required to agree to indemnify, pursuant to this clause (A), against any tax, assessment or governmental charge of the type described in clause (a) or (d) below that is imposed by the jurisdiction of organization of such Person or any of its territories or political subdivisions, and (ii) any costs or expenses of the act of such consolidation, merger, conveyance, transfer or lease, and (B) that all payments pursuant to the Securities in respect of the principal of and any premium and interest on the Securities shall be made without withholding or deduction for, or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed or levied by or on behalf of the jurisdiction of organization of such Person or any political subdivision or taxing authority thereof or therein, unless such taxes, duties, assessments or governmental charges are required by such jurisdiction or any such subdivision or authority to be withheld or deducted, in which case such Person will pay such additional amounts of, or in respect of, principal and any premium and interest ("Successor Additional Amounts") as will result (after deduction of such taxes, duties, assessments or governmental charges and any additional taxes, duties, assessments or governmental charges payable in respect of such) in the payment to each Holder of a Security of the amounts which would have been payable pursuant to the Securities had no such withholding or deduction been required, except that no Successor Additional Amounts shall be so payable for or on account of:

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(a) any tax, duty, assessment or other governmental charge which would not have been imposed but for the fact that such Holder: (i) was a resident, domiciliary or national of, or engaged in business or maintained a permanent establishment or was physically present in, the jurisdiction of organization of such Person or any of its territories or any political subdivision thereof or otherwise had some connection with such jurisdiction other than the mere ownership of, or receipt of payment under, such Security; (ii) presented such Security for payment in such jurisdiction or any of its territories or any political subdivision thereof, unless such Security could not have been presented for payment elsewhere; or (iii) presented such Security more than thirty (30) days after the date on which the payment in respect of such Security first became due and payable or provided for, whichever is later, except to the extent that the Holder would have been entitled to such Successor Additional Amounts if it had presented such Security for payment on any day within such period of thirty (30) days;

(b) any estate, inheritance, gift, sale, transfer, personal property or similar tax, assessment or other governmental charge;

(c) any tax, assessment or other governmental charge which is payable otherwise than by withholding or deduction from payments of (or in respect of) principal of or any premium or interest on, the Securities;

(d) any tax, assessment or other governmental charge that is imposed or withheld by reason of the failure to comply by the Holder or the beneficial owner of a Security with a request of the Company addressed to the Holder (i) to provide information concerning the nationality, residence or identity of the Holder or such beneficial owner or (ii) to make any declaration or other similar claim or satisfy any information or reporting requirement, which, in the case of (i) or (ii), is required or imposed by statute, treaty, regulation or administrative practice of the taxing jurisdiction as a precondition to exemption from all or part of such tax, assessment or other governmental charge; or

(e) any combination of items (a), (b), (c) and (d);

nor shall Successor Additional Amounts be paid with respect to any payment of the principal of or any premium or interest on any such Security to any Holder who is a fiduciary or partnership or other than the sole beneficial owner of such Security to the extent such payment would be required by the laws of the jurisdiction of organization of such Person (or any political subdivision or taxing authority thereof or therein) to be included in the income for tax purposes of a beneficiary or settlor with respect to such fiduciary or a member of such partnership or a beneficial owner who would not have been entitled to such Successor Additional Amounts of interest had it been the Holder of the Security; and

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(5) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with.

SECTION 802. SUCCESSOR SUBSTITUTED.

Upon any consolidation of the Company with, or merger of the Company into, any other Person or any conveyance, transfer or lease of the properties and assets of the Company substantially as an entirety in accordance with
Section 801, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein, and thereafter, except in the case of a lease, the predecessor Person shall be relieved of all obligations and covenants under this Indenture and the Securities.

ARTICLE NINE

SUPPLEMENTAL INDENTURES

SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.

Without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes:

(1) to evidence the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company herein and in the Securities; or

(2) to add to the covenants of the Company for the benefit of the Holders of all or any series of Securities (and if such covenants are to be for the benefit of less than all series of Securities, stating that such covenants are expressly being included solely for the benefit of such series) or to surrender any right or power herein conferred upon the Company; or

(3) to add any additional Events of Default for the benefit of the Holders of all or any series of Securities (and if such additional Events of Default are to be for the benefit of less than all series of Securities, stating that such additional

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Events of Default are expressly being included solely for the benefit of such series); or

(4) to add to or change any of the provisions of this Indenture to such extent as shall be necessary to permit or facilitate the issuance of Securities in bearer form, registrable or not registrable as to principal, and with or without interest coupons, or to permit or facilitate the issuance of Securities in uncertificated form; or

(5) to add to, change or eliminate any of the provisions of this Indenture in respect of one or more series of Securities, provided that any such addition, change or elimination (A) shall neither (i) apply to any Security of any series created prior to the execution of such supplemental indenture and entitled to the benefit of such provision nor (ii) modify the rights of the Holder of any such Security with respect to such provision or (B) shall become effective only when there is no such Security Outstanding; or

(6) to secure the Securities pursuant to the requirements of Section 1009 or otherwise; or

(7) to establish the form or terms of Securities of any series as permitted by Sections 201 and 301; or

(8) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 611; or

(9) to cure any ambiguity, to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Indenture, provided that such action pursuant to this Clause (9) shall not adversely affect the interests of the Holders of Securities of any series in any material respect.

SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.

With the consent of the Holders of not less than 66_% in principal amount of the Outstanding Securities of each series affected by such supplemental indenture, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of Securities of such series under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security affected thereby,

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(1) change the Stated Maturity of the principal of, or any installment of principal of or interest on, any Security, or reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof, or reduce the amount of the principal of an Original Issue Discount Security or any other Security which would be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to
Section 502, or change the coin or currency in which, any Security or any premium or interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date), or

(2) reduce the percentage in principal amount of the Outstanding Securities of any series, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver (of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences) provided for in this Indenture, or

(3) modify any of the provisions of this Section, Section 513 or
Section 1013, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby; provided, however, that this clause shall not be deemed to require the consent of any Holder with respect to changes in the references to "the Trustee" and concomitant changes in this Section and Section 1013, or the deletion of this proviso, in accordance with the requirements of Sections 611 and 901(8).

A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities, or which modifies the rights of the Holders of Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series.

It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.

SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES.

In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 601) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The

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Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise.

SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES.

Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.

SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT.

Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act.

SECTION 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.

Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities of any series so modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities of such series.

ARTICLE TEN

COVENANTS

SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.

The Company covenants and agrees for the benefit of each series of Securities that it will duly and punctually pay the principal of and any premium and interest on the Securities of that series in accordance with the terms of the Securities and this Indenture.

SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY.

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The Company will maintain in each Place of Payment for any series of Securities an office or agency where Securities of that series may be presented or surrendered for payment, where Securities of that series may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Securities of that series and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands.

The Company may also from time to time designate one or more other offices or agencies where the Securities of one or more series may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in each Place of Payment for Securities of any series for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.

SECTION 1003. MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST.

If the Company shall at any time act as its own Paying Agent with respect to any series of Securities, it will, on or before each due date of the principal of or any premium or interest on any of the Securities of that series, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal and any premium and interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act.

Whenever the Company shall have one or more Paying Agents for any series of Securities, it will, prior to each due date of the principal of or any premium or interest on any Securities of that series, deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be held as provided by the Trust Indenture Act, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act.

The Company will cause each Paying Agent for any series of Securities other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will (1) comply with the provisions of the Trust Indenture Act applicable to it as a Paying Agent and (2) during

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the continuance of any default by the Company (or any other obligor upon the Securities of that series) in the making of any payment in respect of the Securities of that series, upon the written request of the Trustee, forthwith pay to the Trustee all sums held in trust by such Paying Agent for payment in respect of the Securities of that series.

The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.

Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of or any premium or interest on any Security of any series and remaining unclaimed for two years after such principal, premium or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company.

SECTION 1004. STATEMENT BY OFFICERS AS TO DEFAULT.

The Company will deliver to the Trustee, within 120 days after the end of each fiscal year of the Company ending after the date hereof, an Officers' Certificate, stating whether or not to the best knowledge of the signers thereof the Company is in default in the performance and observance of any of the terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder) and, if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge.

SECTION 1005. EXISTENCE.

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Subject to Article Eight, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its existence, rights (charter and statutory) and franchises; provided, however, that the Company shall not be required to preserve any such right or franchise if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and that the loss thereof is not disadvantageous in any material respect to the Holders.

SECTION 1006. MAINTENANCE OF PROPERTIES.

The Company will cause all properties used or useful in the conduct of its business or the business of any Subsidiary to be maintained and kept in good condition, repair and working order, ordinary wear and tear excepted, and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this Section shall prevent the Company from discontinuing the operation or maintenance of any of such properties if such discontinuance is, in the judgment of the Company, desirable in the conduct of its business or the business of any Subsidiary and not disadvantageous in any material respect to the Holders.

SECTION 1007. INSURANCE.

The Company will maintain, and cause its Subsidiaries to maintain, insurance coverage by financially sound and reputable insurers in such forms and amounts and against such risks as are at that time customary for corporations of established reputation engaged in the same or a similar business and owning and operating similar properties including general liability insurance and (but without duplication) protection and indemnity insurance, hull and machinery insurance, oil pollution insurance and, if available at commercially reasonable rates, loss of hire insurance.

SECTION 1008. PAYMENT OF TAXES AND OTHER CLAIMS.

The Company will pay or discharge or cause to be paid or discharged, (1) before the same shall become delinquent, all material taxes, assessments and governmental charges levied or imposed upon the Company or any Subsidiary or upon the income, profits or property of the Company or any Subsidiary, and (2) all material lawful claims for labor, materials and supplies which give rise to a lien or which, if unpaid, might by law become a lien upon the property of the Company or any Subsidiary, prior to the time the holder of such lien evidences its intention to

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realize upon its lien; provided, however, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings.

SECTION 1009. LIMITATION ON LIENS.

The Company will not itself, and will not permit any Restricted Subsidiary to, Incur any Debt, nor shall any existing Debt of the Company or any Restricted Subsidiary become, secured by a Mortgage on any property or assets owned or leased by the Company or any Restricted Subsidiary, or any shares of stock or Debt of any Subsidiary, without effectively providing that the Securities (together with, if the Company shall so determine, any other Debt of the Company or such Restricted Subsidiary then existing or thereafter created which is not subordinate to the Securities) shall be secured equally and ratably with (or prior to) such secured Debt, so long as such secured Debt shall be so secured, unless, after giving effect thereto, the aggregate amount of all such secured Debt Incurred after the date hereof and then outstanding (including Debt existing as of the date of this Indenture that thereafter becomes secured) plus all Attributable Debt Incurred after the date hereof and then outstanding of the Company and its Restricted Subsidiaries in respect to sale and leaseback transactions (as defined in Section 1010) would not exceed 15% of Consolidated Net Tangible Assets of the Company and its Restricted Subsidiaries; provided, however, that this Section shall not apply to, and there shall be excluded from secured Debt in any computation under this Section, Debt secured by:

(1) Mortgages on property of, or on any shares of stock or Debt of, any corporation existing at the time such corporation becomes a Subsidiary;

(2) Mortgages in favor of the Company or any Restricted Subsidiary;

(3) Mortgages in favor of the United States of America, or any agency, department or other instrumentality thereof, to secure progress, advance or other payments pursuant to any contract or provision of any statute;

(4) Mortgages on property, shares of stock or Debt existing at the time of acquisition thereof (including acquisition through merger or consolidation) or to secure the payment of all or any part of the purchase price or construction cost thereof or to secure any Debt Incurred or committed to under a binding agreement prior to, at the time of, or within 120 days after, the acquisition of such property or shares or Debt or the completion of any such construction for the purpose of financing all or any part of the purchase price or construction cost thereof, provided that such Mortgages shall be limited to all or part of such property or stock; and

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(5) any extension, renewal or replacement (or successive extensions, renewals or replacements), as a whole or in part, of any Mortgage referred to in the foregoing clauses (1) to (4), inclusive whether existing now or hereafter or of any Mortgage existing on the date hereof; provided, that (i) such extension, renewal or replacement Mortgage shall be limited to all or a part of the same property, shares of stock or Debt that secured the Mortgage extended, renewed or replaced (plus improvements on such property) and (ii) the Debt secured by such Mortgage at such time is not increased.

Notwithstanding anything to the contrary above, if any existing or future Debt under any of the Credit Facilities shall become secured by a Mortgage on any property or assets owned or leased by the Company or any Restricted Subsidiary as a result of the Company's senior unsecured debt being downgraded to or below the levels specified in the Credit Facilities, the covenant described in the foregoing paragraph shall be deemed to be satisfied if the Company secures, or causes such Restricted Subsidiary to secure, the Securities equally and comparably with such secured Debt. For purposes of determining whether the collateral securing the Securities as provided for in the preceding sentence is "comparable" to that securing the Debt under the Credit Facilities, the same types of collateral shall be permitted hereunder as under the Credit Facilities, all non-cash collateral will be valued on the same basis that non-cash collateral is valued under the Credit Facilities and the required collateral margin shall be the same hereunder as under the Credit Facilities (including similar release provisions).

SECTION 1010. LIMITATION ON SALES AND LEASEBACKS.

The Company will not itself, and it will not permit any Restricted Subsidiary to, enter into any arrangement with any bank, insurance company or other lender or investor (not including the Company or any Restricted Subsidiary) or to which any such lender or investor is a party, providing for the leasing by the Company or any such Restricted Subsidiary for a period, including renewals, in excess of three years of any property or assets owned or leased by the Company or such Restricted Subsidiary which has been or is to be sold or transferred, more than 120 days after the acquisition thereof or after the completion of construction and commencement of full operation thereof, by the Company or any such Restricted Subsidiary to such lender or investor or to any person to whom funds have been or are to be advanced by such lender or investor on the security of such property or assets (herein referred to as a "sale and leaseback transaction") unless either:

(1) the Company or such Restricted Subsidiary could create Debt secured by a Mortgage pursuant to Section 1009 on the property or assets to be leased back in an amount equal to the Attributable Debt with respect to such sale and

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leaseback transaction without equally and ratably securing the Securities, or

(2) the Company or such Restricted Subsidiary within 120 days after the sale or transfer shall have been made by the Company or by any such Restricted Subsidiary, applies an amount not less than the greater of (i) the net proceeds of the sale of the property or assets sold and leased back pursuant to such arrangement or (ii) the fair market value of the property or assets so sold and leased back at the time of entering into such arrangement (as determined by any two of the following: the Chairman of the Board of the Company, its President, any Executive or Senior Vice President of the Company, its Chief Financial Officer, its Treasurer and its Controller) to (a) the purchase, acquisition or construction of property or assets to be used in the business of the Company and its Restricted Subsidiaries (which shall include the entering into, within such 120 day period, of an agreement for such purchase, acquisition or construction of property or assets) or
(b) to the retirement of Funded Debt of the Company or any Restricted Subsidiary; provided, that (x) the amount to be applied to the retirement of Funded Debt of the Company shall be reduced by the principal amount of any Securities delivered within 120 days after such sale to the Trustee for retirement and cancellation and (y) the amount to be applied to the retirement of Funded Debt of the Company or any Restricted Subsidiary shall be reduced by the principal amount of Funded Debt of the Company, other than Securities, or the principal amount of Funded Debt of any Restricted Subsidiary, as the case may be, voluntarily retired by the Company or any Restricted Subsidiary within 120 days after such sale. Notwithstanding the foregoing, no retirement referred to in this clause (2) may be effected by payment at maturity or pursuant to any mandatory prepayment provision.

SECTION 1011. LIMITATION ON INCURRENCE OF INDEBTEDNESS BY RESTRICTED SUBSIDIARIES.

The Company will not permit any of its Restricted Subsidiaries to Incur any Funded Debt unless after giving effect to the Incurrence of such Funded Debt by such Restricted Subsidiary and the receipt and application of the proceeds thereof, the aggregate outstanding amount of Funded Debt of all Restricted Subsidiaries of the Company shall not exceed 10% of Consolidated Net Tangible Assets of the Company and its Restricted Subsidiaries; provided, however, that this sentence shall not apply to, and there shall be excluded from Funded Debt at the time of any computation under this sentence, (a) any Funded Debt owed to the Company or to any other Restricted Subsidiary, (b) any Funded Debt of a Restricted Subsidiary outstanding on the date hereof, (c) any Funded Debt that
(i) is supported in full by a direct-pay or standby letter of credit or letter of guarantee on which the Company (but not any of its Restricted Subsidiaries) is the account party and as to which the

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terms of the related reimbursement agreement shall not permit the issuing bank any recourse against any Restricted Subsidiary of the Company and (ii) is not supported by any other letter of credit, letter of guarantee or similar instrument in respect of which any Restricted Subsidiary of the Company has any obligation, (d) any Funded Debt of a Restricted Subsidiary Incurred pursuant to a United States Government sponsored vessel financing program, including Title XI or a successor or similar program and (e) any Funded Debt secured by a Mortgage permitted pursuant to paragraph (1) or (4) of Section 1009.

SECTION 1012. RESTRICTED SUBSIDIARIES.

Each Subsidiary of the Company shall be a Restricted Subsidiary unless such Subsidiary has been designated as an Unrestricted Subsidiary in accordance with the provisions set forth herein.

The Board of Directors may designate any Person as an Unrestricted Subsidiary if and only if (A) the Company has delivered to the Trustee an Officer's Certificate within 60 days after such Person became a Subsidiary (the "Notice Period") designating such Person as an Unrestricted Subsidiary and (B)
(i) such Person is not a Subsidiary on the date hereof, (ii) such Person was not a Restricted Subsidiary prior to the commencement of the Notice Period, (iii) an Officers' Certificate is delivered to the Trustee stating that the Board of Directors has determined that at the time of such Person's acquisition or formation it was not contemplated that such Person would own, acquire or lease under a lease which would be considered a Capitalized Lease any ocean going vessel designed to carry cargo in bulk which vessel was originally contracted for by the Company or one of its Subsidiaries, (iv) neither the Company nor any Restricted Subsidiary has guaranteed or in any other manner become liable for or otherwise created a Mortgage on its property as security for any Funded Debt of such Person, and (v) such Person does not own or hold, directly or indirectly, any Funded Debt or equity securities of any Restricted Subsidiary or own, lease or operate any assets or properties (other than cash, cash equivalents or marketable securities) transferred to it by the Company or any Restricted Subsidiary.

The Company may change the designation of any Subsidiary from Unrestricted Subsidiary to Restricted Subsidiary by giving written notice to the Trustee that the Board of Directors has made such change, provided that no such change shall be effective if after giving effect to such change the aggregate amount of Funded Debt of all Restricted Subsidiaries of the Company then outstanding (after giving effect to the exclusions provided for in Section 1011 hereof) would exceed 10% of the Consolidated Net Tangible Assets of the Company and its Restricted Subsidiaries. If at any time (i) the Company or a Restricted Subsidiary guarantees or in any other manner becomes liable for or otherwise creates a Mortgage on its property as security for any Funded Debt of an Unrestricted Subsidiary, (ii) an Unrestricted Subsidiary owns or holds, directly or indirectly, any Funded Debt

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or equity securities of any Restricted Subsidiary or (iii) an Unrestricted Subsidiary owns, leases or operates any assets or properties (other than cash, cash equivalents and marketable securities) transferred to it by the Company or any Restricted Subsidiary, the designation of such Unrestricted Subsidiary shall thereupon, without further action, but subject to the condition set forth in the proviso to the first sentence of this paragraph, be deemed to have been changed to a Restricted Subsidiary. The Company will not itself, and it will not permit any Subsidiary to, take any of the actions referred to in clauses (i), (ii) or
(iii) of the preceding sentence unless the Unrestricted Subsidiary referred to in such sentence can be designated a Restricted Subsidiary in conformity with the provisions of this Section.

The acquisition of a Restricted Subsidiary or the change of designation of an Unrestricted Subsidiary to a Restricted Subsidiary shall, as of the date of such acquisition or change, constitute an Incurrence by Restricted Subsidiaries of the Company of Funded Debt in the amount of the Funded Debt of such Restricted Subsidiary as of such date, and, for purposes of determining Consolidated Net Tangible Assets of the Company and its Restricted Subsidiaries as of such date, pro forma effect shall be given to such acquisition or change.

SECTION 1013. OFFER TO REPURCHASE UPON A CHANGE OF CONTROL.

Upon the occurrence of a Change of Control, each Holder shall have the right to require the Company to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of that Holder's Securities pursuant to the Change of Control offer on the terms set forth in this Indenture (a "Change of Control Offer") at an offer price in cash equal to 101% of the aggregate principal amount of Securities repurchased plus accrued and unpaid interest, if any, on the Securities repurchased to the date of purchase (the "Change of Control Payment"). Within 30 days following any Change of Control, the Company shall mail a notice to each Holder stating:

(1) the transaction or transactions that constitute the Change of Control;

(2) that the Change of Control Offer is being made pursuant to this Section 1013 and that all Securities tendered shall be accepted for payment;

(3) the purchase price and the purchase date, which date shall be no earlier than 30 days and no later than 60 days from the date the notice is mailed (the "Change of Control Payment Date");

(4) that any Security not tendered or properly withdrawn shall continue to accrue interest;

(5) that, unless the Company defaults in the payment of the Change of Control Payment, all Securities accepted

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for payment pursuant to the Change of Control Offer shall cease to accrue interest after the Change of Control Payment Date;

(6) that Holders electing to have any Securities purchased pursuant to a Change of Control Offer shall be required to surrender the Securities, together with such form or forms as may be specified, to a Paying Agent at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date;

(7) that Holders shall be entitled to withdraw their election if the Paying Agent receives, not later than the close of business on the second Business Day preceding the Change of Control Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of Securities delivered for purchase, and a statement that such Holder is withdrawing its election to have the Securities purchased; and

(8) that Holders whose Securities are being purchased only in part shall be issued new Securities equal in principal amount to the unpurchased portion of the Securities surrendered, which unpurchased portion must be equal to $1,000 in principal amount or an integral multiple thereof.

On the Change of Control Payment Date, the Company shall, to the extent lawful:

(1) accept for payment all Securities or portions of Securities validly tendered and not properly withdrawn pursuant to the Change of Control Offer;

(2) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Securities or portions of Securities properly tendered and not properly withdrawn pursuant to the Change of Control Offer; and

(3) deliver or cause to be delivered to the Trustee the Securities so accepted together with an Officers' Certificate stating the aggregate principal amount of Securities or portions of Securities being purchased by the Company.

The Paying Agent shall promptly mail to each Holder of Securities validly tendered and not properly withdrawn the Change of Control Payment for such Securities, and the Trustee shall promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Security equal in principal amount to any unpurchased portion of the Securities surrendered, if any; provided that each new Security will be in a principal amount of $1,000 or an integral multiple thereof.

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The Company shall publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date.

The Company shall not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Indenture applicable to a Change of Control Offer made by the Company and purchases all Securities validly tendered and not properly withdrawn under such Change of Control Offer.

The Company shall comply with the Requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the Securities as a result of a Change of Control. To the extent that the provisions of any securities laws or regulations conflict with the Change of Control provisions of this Indenture, the Company shall comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this Section 1013 by virtue of such conflict.

SECTION 1014. WAIVER OF CERTAIN COVENANTS.

Except as otherwise specified as contemplated by Section 301 for Securities of such series, the Company may, with respect to the Securities of any series, omit in any particular instance to comply with any term, provision or condition set forth in any covenant provided pursuant to Section 301(18), 901(2) or 901(7) for the benefit of the Holders of such series or in any of Sections 1006 to 1013, inclusive, if before the time for such compliance the Holders of at least 66 2/3% in principal amount of the Outstanding Securities of such series shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such term, provision or condition, but no such waiver shall extend to or affect such term, provision or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and the duties of the Trustee in respect of any such term, provision or condition shall remain in full force and effect.

ARTICLE ELEVEN

REDEMPTION OF SECURITIES

SECTION 1101. APPLICABILITY OF ARTICLE.

Securities of any series which are redeemable before their Stated Maturity shall be redeemable in accordance with their

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terms and (except as otherwise specified as contemplated by Section 301 for such Securities) in accordance with this Article.

SECTION 1102. ELECTION TO REDEEM; NOTICE TO TRUSTEE.

The election of the Company to redeem any Securities shall be evidenced by a Board Resolution or in another manner specified as contemplated by Section 301 for such Securities. In case of any redemption at the election of the Company of less than all the Securities of any series (including any such redemption affecting only a single Security), the Company shall, at least 60 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date, of the Redemption Price, of the principal amount of Securities of such series to be redeemed and, if applicable, of the tenor of the Securities to be redeemed. In the case of any redemption of Securities prior to the expiration of any restriction on such redemption provided in the terms of such Securities or elsewhere in this Indenture, the Company shall furnish the Trustee with an Officers' Certificate evidencing compliance with such restriction.

SECTION 1103. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED.

If less than all the Securities of any series are to be redeemed (unless all the Securities of such series and of a specified tenor are to be redeemed or unless such redemption affects only a single Security), the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of a portion of the principal amount of any Security of such series, provided that the unredeemed portion of the principal amount of any Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security. If less than all the Securities of such series and of a specified tenor are to be redeemed (unless such redemption affects only a single Security), the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series and specified tenor not previously called for redemption in accordance with the preceding sentence.

The Trustee shall promptly notify the Company in writing of the Securities selected for redemption as aforesaid and, in case of any Securities selected for partial redemption as aforesaid, the principal amount thereof to be redeemed.

The provisions of the two preceding paragraphs shall not apply with respect to any redemption affecting only a single Security, whether such Security is to be redeemed in whole or in part. In the case of any such redemption in part, the unredeemed

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portion of the principal amount of the Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security.

For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities which has been or is to be redeemed.

SECTION 1104. NOTICE OF REDEMPTION.

Notice of redemption shall be given by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Securities to be redeemed, at his address appearing in the Security Register.

All notices of redemption shall state:

(1) the Redemption Date,

(2) the Redemption Price,

(3) if less than all the Outstanding Securities of any series consisting of more than a single Security are to be redeemed, the identification (and, in the case of partial redemption of any such Securities, the principal amounts) of the particular Securities to be redeemed and, if less than all the Outstanding Securities of any series consisting of a single Security are to be redeemed, the principal amount of the particular Security to be redeemed,

(4) that on the Redemption Date the Redemption Price will become due and payable upon each such Security to be redeemed and, if applicable, that interest thereon will cease to accrue on and after said date,

(5) the place or places where each such Security is to be surrendered for payment of the Redemption Price, and

(6) that the redemption is for a sinking fund, if such is the case.

Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company and shall be irrevocable.

SECTION 1105. DEPOSIT OF REDEMPTION PRICE.

Prior to any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided

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in Section 1003) an amount of money sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) accrued interest on, all the Securities which are to be redeemed on that date.

SECTION 1106. SECURITIES PAYABLE ON REDEMPTION DATE.

Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified, and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) such Securities shall cease to bear interest. Upon surrender of any such Security for redemption in accordance with said notice, such Security shall be paid by the Company at the Redemption Price, together with accrued interest to the Redemption Date; provided, however, that, unless otherwise specified as contemplated by Section 301, installments of interest whose Stated Maturity is on or prior to the Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant Record Dates according to their terms and the provisions of Section 307.

If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal and any premium shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Security.

SECTION 1107. SECURITIES REDEEMED IN PART.

Any Security which is to be redeemed only in part shall be surrendered at a Place of Payment therefor (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new Security or Securities of the same series and of like tenor, of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered.

ARTICLE TWELVE

SINKING FUNDS

SECTION 1201. APPLICABILITY OF ARTICLE.

The provisions of this Article shall be applicable to any sinking fund for the retirement of Securities of any series

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except as otherwise specified as contemplated by Section 301 for such Securities.

The minimum amount of any sinking fund payment provided for by the terms of any Securities is herein referred to as a "mandatory sinking fund payment", and any payment in excess of such minimum amount provided for by the terms of such Securities is herein referred to as an "optional sinking fund payment". If provided for by the terms of any Securities, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 1202. Each sinking fund payment shall be applied to the redemption of Securities as provided for by the terms of such Securities.

SECTION 1202. SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES.

The Company (1) may deliver Outstanding Securities of a series (other than any previously called for redemption) and (2) may apply as a credit Securities of a series which have been redeemed either at the election of the Company pursuant to the terms of such Securities or through the application of permitted optional sinking fund payments pursuant to the terms of such Securities, in each case in satisfaction of all or any part of any sinking fund payment with respect to any Securities of such series required to be made pursuant to the terms of such Securities as and to the extent provided for by the terms of such Securities; provided that the Securities to be so credited have not been previously so credited. The Securities to be so credited shall be received and credited for such purpose by the Trustee at the Redemption Price, as specified in the Securities so to be redeemed, for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly.

SECTION 1203. REDEMPTION OF SECURITIES FOR SINKING FUND.

Not less than 45 days prior to each sinking fund payment date for any Securities, the Company will deliver to the Trustee an Officers' Certificate specifying the amount of the next ensuing sinking fund payment for such Securities pursuant to the terms of such Securities, the portion thereof, if any, which is to be satisfied by payment of cash and the portion thereof, if any, which is to be satisfied by delivering and crediting Securities pursuant to
Section 1202 and will also deliver to the Trustee any Securities to be so delivered. Not less than 30 days prior to each such sinking fund payment date, the Trustee shall select the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 1103 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 1104. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Sections 1106 and 1107.

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ARTICLE THIRTEEN

DEFEASANCE AND COVENANT DEFEASANCE

SECTION 1301. COMPANY'S OPTION TO EFFECT DEFEASANCE OR COVENANT DEFEASANCE.

The Company may elect, at its option at any time, to have Section 1302 or Section 1303 applied to any Securities or any series of Securities, as the case may be, designated pursuant to Section 301 as being defeasible pursuant to such Section 1302 or 1303, in accordance with any applicable requirements provided pursuant to Section 301 and upon compliance with the conditions set forth below in this Article. Any such election shall be evidenced by a Board Resolution or in another manner specified as contemplated by Section 301 for such Securities.

SECTION 1302. DEFEASANCE AND DISCHARGE.

Upon the Company's exercise of its option (if any) to have this Section applied to any Securities or any series of Securities, as the case may be, the Company shall be deemed to have been discharged from its obligations with respect to such Securities as provided in this Section on and after the date the conditions set forth in Section 1304 are satisfied (hereinafter called "Defeasance"). For this purpose, such Defeasance means that the Company shall be deemed to have paid and discharged the entire indebtedness represented by such Securities and to have satisfied all its other obligations under such Securities and this Indenture insofar as such Securities are concerned (and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging the same), subject to the following which shall survive until otherwise terminated or discharged hereunder: (1) the rights of Holders of such Securities to receive, solely from the trust fund described in Section 1304 and as more fully set forth in such Section, payments in respect of the principal of and any premium and interest on such Securities when payments are due, (2) the Company's obligations with respect to such Securities under Sections 304, 305, 306, 1002 and 1003, (3) the rights, powers, trusts, duties and immunities of the Trustee hereunder and (4) this Article. Subject to compliance with this Article, the Company may exercise its option (if any) to have this Section applied to any Securities notwithstanding the prior exercise of its option (if any) to have
Section 1303 applied to such Securities.

SECTION 1303. COVENANT DEFEASANCE.

Upon the Company's exercise of its option (if any) to have this Section applied to any Securities or any series of Securities, as the case may be, (1) the Company shall be released from its obligations under Section 801(3), Sections 1006 through 1013, inclusive, and any covenants provided pursuant to
Section 301(18), 901(2) or 901(7) for the benefit of the Holders

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of such Securities and (2) the occurrence of any event specified in Sections 501(4), 501(5) (with respect to any of Section 801(3), Sections 1006 through 1013, inclusive, and any such covenants provided pursuant to Section 301(18), 901(2) or 901(7)), 501(6), 501(7) and 501(10) shall be deemed not to be or result in an Event of Default in each case with respect to such Securities as provided in this Section on and after the date the conditions set forth in
Section 1304 are satisfied (hereinafter called "Covenant Defeasance"). For this purpose, such Covenant Defeasance means that, with respect to such Securities, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such specified Section (to the extent so specified in the case of Section 501(5)), whether directly or indirectly by reason of any reference elsewhere herein to any such Section or by reason of any reference in any such Section to any other provision herein or in any other document, but the remainder of this Indenture and such Securities shall be unaffected thereby.

SECTION 1304. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE.

The following shall be the conditions to the application of Section 1302 or Section 1303 to any Securities or any series of Securities, as the case may be:

(1) The Company shall irrevocably have deposited or caused to be deposited with the Trustee (or another trustee which satisfies the requirements contemplated by Section 609 and agrees to comply with the provisions of this Article applicable to it) as trust funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefits of the Holders of such Securities, (A) money in an amount, or (B) U.S. Government Obligations which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than one day before the due date of any payment, money in an amount, or (C) a combination thereof, in each case sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge, and which shall be applied by the Trustee (or any such other qualifying trustee) to pay and discharge, the principal of and any premium and interest on such Securities on the respective Stated Maturities, in accordance with the terms of this Indenture and such Securities. As used herein, "U.S. Government Obligation" means (x) any security which is (i) a direct obligation of the United States of America for the payment of which the full faith and credit of the United States of America is pledged or (ii) an obligation of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case (i) or
(ii), is not callable or redeemable at the option of the issuer thereof, and
(y) any depositary receipt issued by

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a bank (as defined in Section 3(a)(2) of the Securities Act) as custodian with respect to any U.S. Government Obligation which is specified in Clause
(x) above and held by such bank for the account of the holder of such depositary receipt, or with respect to any specific payment of principal of or interest on any U.S. Government Obligation which is so specified and held, provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of principal or interest evidenced by such depositary receipt.

(2) In the event of an election to have Section 1302 apply to any Securities or any series of Securities, as the case may be, the Company shall have delivered to the Trustee an Opinion of Counsel stating that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date of this instrument, there has been a change in the applicable Federal income tax law, in either case (A) or (B) to the effect that, and based thereon such opinion shall confirm that, the Holders of such Securities will not recognize gain or loss for Federal income tax purposes as a result of the deposit, Defeasance and discharge to be effected with respect to such Securities and will be subject to Federal income tax on the same amount, in the same manner and at the same times as would be the case if such deposit, Defeasance and discharge were not to occur.

(3) In the event of an election to have Section 1303 apply to any Securities or any series of Securities, as the case may be, the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the Holders of such Securities will not recognize gain or loss for Federal income tax purposes as a result of the deposit and Covenant Defeasance to be effected with respect to such Securities and will be subject to Federal income tax on the same amount, in the same manner and at the same times as would be the case if such deposit and Covenant Defeasance were not to occur.

(4) The Company shall have delivered to the Trustee an Officer's Certificate to the effect that neither such Securities nor any other Securities of the same series, if then listed on any securities exchange, will be delisted as a result of such deposit.

(5) No event which is, or after notice or lapse of time or both would become, an Event of Default with respect to such Securities or any other Securities shall have occurred and be continuing at the time of such deposit or, with regard to any such event specified in Sections 501(6) and (7), at any time on or prior to the 90th day after the date of such deposit (it being understood that this condition shall not be deemed satisfied until after such 90th day).

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(6) Such Defeasance or Covenant Defeasance shall not cause the Trustee to have a conflicting interest within the meaning of the Trust Indenture Act (assuming all Securities are in default within the meaning of such Act).

(7) Such Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under, any other agreement or instrument to which the Company is a party or by which it is bound.

(8) Such Defeasance or Covenant Defeasance shall not result in the trust arising from such deposit constituting an investment company within the meaning of the Investment Company Act unless such trust shall be registered under such Act or exempt from registration thereunder.

(9) The Company shall have delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent with respect to such Defeasance or Covenant Defeasance have been complied with.

SECTION 1305. DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD IN TRUST; MISCELLANEOUS PROVISIONS.

Subject to the provisions of the last paragraph of Section 1003, all money and U.S. Government Obligations (including the proceeds thereof) deposited with the Trustee or other qualifying trustee (solely for purposes of this
Section and Section 1306, the Trustee and any such other trustee are referred to collectively as the "Trustee") pursuant to Section 1304 in respect of any Securities shall be held in trust and applied by the Trustee, in accordance with the provisions of such Securities and this Indenture, to the payment, either directly or through any such Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Holders of such Securities, of all sums due and to become due thereon in respect of principal and any premium and interest, but money so held in trust need not be segregated from other funds except to the extent required by law.

The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the U.S. Government Obligations deposited pursuant to Section 1304 or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of Outstanding Securities.

Anything in this Article to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon Company Request any money or U.S. Government Obligations held by it as provided in Section 1304 with respect to any Securities which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, are in excess of the amount thereof which would then be required to be deposited

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to effect the Defeasance or Covenant Defeasance, as the case may be, with respect to such Securities.

SECTION 1306. REINSTATEMENT.

If the Trustee or the Paying Agent is unable to apply any money in accordance with this Article with respect to any Securities by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the obligations under this Indenture and such Securities from which the Company has been discharged or released pursuant to Section 1302 or 1303 shall be revived and reinstated as though no deposit had occurred pursuant to this Article with respect to such Securities, until such time as the Trustee or Paying Agent is permitted to apply all money held in trust pursuant to Section 1305 with respect to such Securities in accordance with this Article; provided, however, that if the Company makes any payment of principal of or any premium or interest on any such Security following such reinstatement of its obligations, the Company shall be subrogated to the rights (if any) of the Holders of such Securities to receive such payment from the money so held in trust.

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

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written.

OVERSEAS SHIPHOLDING GROUP, INC. 

By     /s/Myles R. Itkin
     ----------------------
     Myles R. Itkin, Senior
     Vice President, Chief
     Financial Officer and
     Treasurer

WILMINGTON TRUST COMPANY,
as Trustee 

By      /s/James D. Nesci
     ----------------------
     James D. Nesci
     Authorized Signer

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State of New York   )
                    )  ss.:
County of New York  )

On the 7th day of March, 2003, before me personally came _______________, to me known, who, being by me duly sworn, did depose and say that he is___________________of Overseas Shipholding Group, Inc., one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority.

Notary Public, State of New York 

State of New York   )
                    )  ss.:
County of Kings     )

On the 7th day of March, 2003, before me personally came _____________, to me known, who, being by me duly sworn, did depose and say that [he] [she] is __________________________of Wilmington Trust Company, one of the corporations described in and which executed the foregoing instrument; that [he] [she] knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation; and that [he] [she] signed [his] [her] name thereto by like authority.

Notary Public, State of New York

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Exhibit A

IAI CERTIFICATE

CUSIP_______
ISIN_______

Overseas Shipholding Group, Inc
c/o Wilmington Trust Company, as Trustee Rodney Square North
1100 North Market Street
Wilmington, DE 19890

Attention: Corporate Trust Administration

Re: Overseas Shipholding Group, Inc.
[DESCRIBE SECURITY]

Dear Sirs:

This certificate is delivered to request a transfer of $_______ principal amount of the [DESCRIBE SECURITY] (the "Securities") of Overseas Shipholding Group, Inc. (the "Company").

Upon transfer, the Securities would be registered in the name of the new beneficial owner as follows:

Name:

Address:

Taxpayer ID Number:

The Undersigned Transferee represents and warrants to you that:

1. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the "Securities Act")), purchasing for our own account or for the account of such an institutional "accredited investor" in each case in a minimum principal amount of Securities of $250,000 and we are acquiring the Securities for investment purposes and not with a view to, or for offer or sale in connection with, any distribution in violation of the Securities Act. We have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risk of our investment in the Securities and we invest in or purchase securities similar to the Securities in the normal course of our business. We and any accounts for which we

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are acting are each able to bear the economic risk of our or their investment.

2. We understand that the Securities have not been registered under the Securities Act and, unless so registered, may not be offered, sold or otherwise transferred except as permitted in the following sentence. We agree on our own behalf and on behalf of any investor account for which we are purchasing Securities to offer, sell or otherwise transfer such Securities prior to the date which is two years after the later of the date of original issue and the last date on which the Company or any affiliate of the Company was the owner of such Securities (or any predecessor thereto) (the "Resale Restriction Termination Date") only (a) to the Company, (b) pursuant to a registration statement which has been declared effective under the Securities Act, (c) in a transaction complying with the requirements of Rule 144A under the Securities Act ("Rule 144A"), to a person we reasonably believe is a "qualified institutional buyer" under Rule 144A ("QIB") that purchases for its own account or for the account of a QIB and to whom notice is given that the transfer is being made in reliance on Rule 144A, (d) pursuant to offers and sales that occur outside the United States in accordance with Regulation S under the Securities Act, (e) to an institutional "accredited investor" (within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act) that is purchasing for its own account or for the account of such institutional "accredited investor," in each case in a minimum principal amount of Securities of $250,000, for investment purposes and not with a view to, or for offer or sale in connection with, any distribution in violation of the Securities Act, or (f) pursuant to any other available exemption from the registration requirements of the Securities Act, subject in each of the foregoing cases to any requirement of law that the disposition of our property or the property of such investor account or accounts be at all times within our or their control and in compliance with any applicable state securities laws. The foregoing restriction on resale will not apply subsequent to the Resale Restriction Termination Date. If any resale or other transfer of the Securities is proposed to be made pursuant to clause (e) above prior to the Resale Restriction Termination Date, the transferor shall deliver a letter from the transferee substantially in the form of this letter to the Company and the Trustee, which shall provide, among other things, that the transferee is an institutional "accredited investor" (within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act) that is acquiring such Securities for investment purposes and not for distribution in violation of the Securities Act. Each purchaser acknowledges that the Company and the Trustee

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reserve the right prior to any offer, sale or other transfer of the Securities prior to the Resale Restriction Termination Date pursuant to clauses (d), (e) and (f) above to require the delivery of an opinion of counsel, certifications and/or other information satisfactory to the Company and the Trustee.

3. You are entitled to rely upon this letter, and you are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby. 

Transferee:                              Transferor:

By:                                      By:
   -------------------------                -------------------------

Date:                                    Date:

                                  - 85 -

                                                                    Exhibit B

REGULATION S CERTIFICATE

CUSIP_______
ISIN_______

Overseas Shipholding Group, Inc
c/o Wilmington Trust Company, as Trustee Rodney Square North
1100 North Market Street
Wilmington, DE 19890

Attention: Corporate Trust Administration

Re: Overseas Shipholding Group, Inc.
[DESCRIBE SECURITY]

Ladies and Gentlemen:

This certificate is delivered to request a transfer of $________ principal amount of the [DESCRIBE SECURITY] (the "Securities") of Overseas Shipholding Group, Inc. (the "Company").

Upon transfer, the Securities would be registered in the name of the new beneficial owner as follows:

Name:

Address:

Taxpayer ID Number:

In connection with our proposed sale of $_______ aggregate principal amount of the Securities, we confirm that such sale has been effected pursuant to and in accordance with Regulation S under the Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we represent that:

(a) the offer of the Securities was not made to a person in the United States;

(b) either (i) at the time the buy order was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States or (ii) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither we nor any person acting on our behalf knows that the transaction has been pre-arranged with a buyer in the United States;

(c) neither we, any of our affiliates, nor any person acting on our or their behalf has made any directed selling efforts in the United States in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, as applicable; and

(d) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act.

In addition, if the sale is made during a restricted period and the provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable thereto, we confirm that such sale has been made in accordance with the applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may be.

You and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S.

Transferor:

By

Date:

- 2 -

EXHIBIT 4(e)(2)

RESOLVED, that the Corporation hereby authorizes the issuance and sale of up to $200,000,000 principal amount of senior notes (the "Notes") on the terms and in the manner set forth in the Indenture and the Purchase Agreement, and as determined by the Pricing Committee (each as hereinafter defined).

RESOLVED, that a Pricing Committee of the Board of Directors is hereby established to be comprised of Morton P. Hyman and Robert N. Cowen, which shall have authority to determine all matters relating to the pricing, issuance, sale and terms of the Notes, including without limitation, (i) the term, maturity and interest rate of the Notes, (indications are that the maturity of the Notes will be for seven years or ten years and that the interest rate will be between 8.625% and 8.875% per annum but these indications shall not limit the authority of Pricing Committee), the subordination provisions of the Notes and the redemption rights and obligations of the Corporation with respect to the Notes and (ii) the offering price of the Notes to qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and to non-U.S. persons outside the U.S. in reliance on Regulation S under the Securities Act, the discount and other fees payable to the initial purchaser of the Notes (the "Initial Purchaser"), the issue price of the Notes to the Initial Purchaser, and the aggregate principal amount of Notes to be sold pursuant to the Purchase Agreement.

RESOLVED, that the Chairman of the Board and any Senior Vice President (the "Authorized Officers") hereby are, and each of them acting without the others hereby is, authorized, in the name and on behalf of the Corporation, to negotiate, execute and deliver a purchase agreement between the Corporation and the Initial Purchaser (the "Purchase Agreement") in such form and containing such terms and provisions (not inconsistent with the terms and provisions thereof approved by the Pricing Committee) as the Authorized Officers or Officer executing the same shall approve, relating to the sale of the Notes, the execution and delivery of the Purchase Agreement by such Authorized Officers or Officer being conclusive evidence of their or his approval thereof.

RESOLVED, that the Authorized Officers of the Corporation hereby are, and each of them with full authority to act without the others hereby is, authorized, in the name and on behalf of the Corporation, to prepare and deliver to the Initial Purchaser an Offering Circular relating to the sale of the Notes in reliance on Rule 144A under the Securities Act and Regulation S under the Securities Act.

RESOLVED, that the Authorized Officers of the Corporation hereby are, and each of them with full authority to act without the others hereby is, authorized, in the name and on behalf of the Corporation, to negotiate, execute and deliver an exchange and registration rights agreement between the Corporation and the Initial Purchaser (the "Registration Rights Agreement"), in such form and containing such terms and provisions as the Authorized Officers or Officer executing the same shall approve, relating to the Corporation filing under the Securities Act
(i) a registration statement concerning an offer to exchange any or all of the Notes for a like principal amount of notes issued by the Corporation which are substantially identical to the Notes except that they have been registered under the Securities Act and (ii) under certain circumstances, a "shelf" registration statement providing for the registration of, and the sale of, the Notes on a continuous or delayed basis by the holders of the Notes pursuant to Rule 415 or any similar rule under the Securities Act, the execution and delivery of the Registration Rights Agreement by such Authorized Officer or Officer being conclusive evidence of their or his approval thereof.

RESOLVED, that the Authorized Officers of the Corporation hereby are, and each of them with full authority to act without the others hereby is, authorized, in the name and on behalf of the Corporation, to execute a registration statement in accordance with the Registration Rights Agreement on the appropriate form (the "Note Registration Statement") covering the registration under the Securities Act of the Notes and the qualification of the Indenture under the Trust Indenture Act of 1939, to procure all necessary signatures thereon and to file the Registration Statement (together with appropriate exhibits thereto) and any amendments thereto with the Securities and Exchange Commission.

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RESOLVED, that, in connection with the filing of the Note Registration Statement with the Securities and Exchange Commission, the signature of any officer required to be affixed to the Note Registration Statement or any amendments thereto may be so affixed pursuant to a power of attorney granted by such officer to any other officer of the Corporation.

RESOLVED, that a financial institution to be selected by the Pricing Committee hereby is appointed paying agent in respect of the Notes and Wilmington Trust Company or another financial institution to be selected by the Pricing Committee hereby is appointed trustee under the Indenture, on the terms and conditions set forth in the final form of the Indenture, and that the Authorized Officers hereby are, and each of them with full authority to act without the others hereby is, authorized to appoint such additional paying agents as the Authorized Officers or Officer shall deem necessary or desirable, and the Authorized Officers hereby are, and each of them with full authority to act without the others hereby is, authorized, in the name and on behalf of the Corporation, to prepare, execute and deliver any documents as they or he may deem necessary or desirable to complete such appointments, the execution and delivery of any such document by such Authorized Officers or Officer to be conclusive evidence that they or he deemed such document to be necessary or desirable.

RESOLVED, that the form of any other resolution in connection with the appointment of any paying agent or trustee as described in the preceding resolution is hereby adopted, provided that any Authorized Officer considers the adoption of such resolution necessary or desirable; in which case the Secretary or Assistant Secretary of the Corporation hereby is directed to insert as an appendix to the minutes of this meeting a copy of such resolution, which shall thereupon be deemed to have been adopted by this Board of Directors at this meeting with the same force and effect as if presented verbatim to this meeting.

RESOLVED, that the Authorized Officers hereby are, and each of them with full authority to act without the others hereby is, authorized, in the name and on behalf of the Corporation, to negotiate, execute and deliver the Indenture, including the form of Notes (both temporary global and definitive Notes), containing such terms and provisions (not inconsistent with the terms and provisions thereof approved by the Pricing Committee) as the Authorized Officers or Officer executing the same shall approve, the execution and delivery of

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the Indenture by such Authorized Officers or Officer being conclusive evidence of their or his approval thereof.

RESOLVED, that the Notes (both temporary global and definitive Notes) shall be substantially in the form (including the form of the Trustee's certificate of authentication) to be determined by any Authorized Officer, with such changes therein authorized by the Indenture as are approved by such Authorized Officer delivering the Notes; that the Notes shall bear the manual or facsimile signatures of the present or any future Authorized Officer and the corporate seal, which may be in the form of a facsimile thereof, all of which facsimile signatures and seal hereby are adopted for that purpose with the same effect as if such facsimile signatures and seal were manually written or impressed thereon, and the Corporation may use the facsimile signature of any person who shall have been such Authorized Officer notwithstanding the fact that at the time when the Notes shall be authenticated and delivered or disposed of he shall have ceased to be such Authorized Officer of the Corporation; and that the Notes when so signed shall be delivered to the Trustee for authentication and delivery.

RESOLVED, that any Authorized Officer is authorized and directed to deliver the Notes to the Trustee under the Indenture for authentication and that any Authorized Officer is authorized to sign one or more written orders to the Trustee called for by the Indenture.

RESOLVED, that the Trustee under the Indenture, unless otherwise specifically instructed in writing by an Authorized Officer, may use any Note certificate that may be on hand from time to time bearing the signatures or facsimile signatures of persons heretofore or hereafter duly authorized to sign any Note certificate on behalf of the Corporation even if such persons, or any of them, shall no longer be duly authorized to sign on behalf of the Corporation; and any such Note certificate may be authenticated and registered by the Trustee with the same effect and validity as if such persons who originally signed on behalf of the Corporation were still authorized to sign on behalf of the Corporation.

RESOLVED, that it is desirable and in the best interest of the Corporation that the Notes be qualified or registered for sale, or that an exemption from such registration or qualification be perfected, in various jurisdictions; that the Authorized Officers hereby are, and each of them with full authority to act without the others hereby is, authorized to

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determine the jurisdictions in which appropriate action shall be taken to qualify or register for sale or exemption all or such part of the Notes as they or he may deem advisable; that the Authorized Officers hereby are, and each of them with full authority to act without the others hereby is, authorized to perform on behalf of the Corporation any and all such acts as they or he may deem necessary or advisable in order to comply with the applicable laws of any such jurisdictions, and in connection therewith to execute and file all requisite papers and documents, including, but not limited to, applications, reports, surety bonds, irrevocable consents and appointments of attorneys for service of process; and the execution by any of such Authorized Officers of any such paper or document or the doing by him or them of any act in connection with the foregoing matters shall conclusively establish their or his authority therefor from the Corporation and the approval and ratification by the Corporation of the papers and documents so executed and the action so taken.

RESOLVED, that the form of any other resolution in connection with such qualification or registration or exemption in any jurisdiction is hereby adopted, provided that any Authorized Officer, with the advice of counsel, considers the adoption of such resolution necessary or desirable, in which case the Secretary or Assistant Secretary of the Corporation hereby is directed to insert as an appendix to the minutes of this meeting a copy of such resolution, which shall thereupon be deemed to have been adopted by this Board of Directors at this meeting with the same force and effect as if presented verbatim to this meeting.

RESOLVED, that the Authorized Officers hereby are, and each of them with full authority to act without the others hereby is, authorized to take all such further action and to execute and deliver all such further instruments and documents, in the name and on behalf of the Corporation and under its corporate seal or otherwise, and to pay such fees and expenses as in their or his judgment shall be necessary, proper or advisable in order fully to carry out the intent and to accomplish the purposes of the foregoing resolutions, and the execution by any of such Authorized Officers of any of such instruments or documents, or the doing by any of them of any act in connection with the foregoing matters, shall conclusively establish their or his authority therefor from the Corporation and the approval and ratification by the Corporation of the instruments and documents so executed and the actions so taken.

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EXHIBIT 4(e)(3)

[THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE

HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.]
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

CUSIP No.: 690368 AF 2

OVERSEAS SHIPHOLDING GROUP, INC.

8.250% Senior Notes due 2013

No. ___ $_____________

Overseas Shipholding Group, Inc., a corporation duly organized and existing under the laws of Delaware (herein called the "Company", which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to _____________________________________, as nominee for The Depository Trust Company (the "Holder"), or to its registered assigns, the principal sum of ___________________ Dollars on March 15, 2013, and to pay interest thereon from March 7, 2003 or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on March 15 and September 15 in each year, commencing September 15, 2003, at the rate of 8.250% per annum, until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be March 1 or September 1 (whether or not a Business Day), as the case may be, next

F-1

preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture.

Payment of the principal of (and premium, if any) and interest on this Security will be made at the office or agency of the Company maintained for that purpose in The City of New York, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

In Witness Whereof, the Company has caused this instrument to be duly executed under its corporate seal.

Dated as of March 7, 2003

Overseas Shipholding Group, Inc.

By:

Name:


Title:

Attest:

, Secretary

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

Wilmington Trust Company, as Trustee

By:

Authorized Officer

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This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture, dated as of March 7, 2003 (herein called the "Indenture," which term shall have the meaning assigned to it in such instrument), between the Company and Wilmington Trust Company, as Trustee (herein called the "Trustee," which term includes any successor trustee under the Indenture), and reference is hereby made to the Indenture for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof, limited in aggregate principal amount to $200,000,000.

The Company shall not be entitled to redeem the Securities prior to March 15, 2008. On and after March 15, 2008, the Securities of this series are subject to redemption upon not less than 30 nor more than 60 days' notice by mail, as a whole or in part, at the election of the Company, at the following Redemption Prices (expressed as percentages of the principal amount): If redeemed during the 12-month period beginning on March 15 of the years indicated, 

                Redemption
    Year          Price
------------    ----------
2008            104.125%
2009            102.750%
2010            101.375%
2011            100.000%

and thereafter at a Redemption Price equal to 100% of the principal amount, together in the case of any such redemption with accrued interest to the Redemption Date, but interest installments whose Stated Maturity is on or prior to such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant Record Dates referred to on the face hereof, as all provided in the Indenture.

If a Change of Control shall occur, Holders of the Securities will have the right to require the Company to redeem such Holder's Securities, in whole or in part, in integral multiples of $1,000, at a Redemption Price equal to 101.000% of the principal amount thereof and unpaid interest, if any, to the Redemption Date, all as provided in the Indenture.

In the event of redemption of this Security in part only, a new Security or Securities of this series and of like tenor for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof.

The Indenture contains provisions for defeasance at any time of the entire indebtedness of this Security or certain restrictive covenants and Events of Default with respect to this Security, in each case upon compliance with certain conditions set forth in the Indenture.

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If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of 66-2/3% in principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Securities of this series, the Holders of not less than 25% in principal amount of the Securities of this series at the time Outstanding shall have made written request to the Trustee to institute proceedings in respect to such Event of Default as Trustee and offered the Trustee reasonable indemnity, and the Trustee shall not have received from the Holders of a majority in principal amount of Securities of this series at the time Outstanding a direction inconsistent with such request, and shall have failed to institute any such proceeding, for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Security for the endorsement of any payment of principal hereof or any premium or interest hereon on or after the respective due dates expressed herein.

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed.

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of and any premium and interest on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.

R-2

The Securities of this series are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as request by the Holder surrendering the same.

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture.

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EXHIBIT 4(e)(4)

OVERSEAS SHIPHOLDING GROUP, INC.

$200,000,000

8.250% SENIOR NOTES DUE 2013

EXCHANGE AND REGISTRATION RIGHTS AGREEMENT

March 7, 2003

Goldman, Sachs & Co.,
85 Broad Street
New York, New York 10004

Ladies and Gentlemen:

Overseas Shipholding Group, Inc., a Delaware corporation (the "Company"), proposes to issue and sell to the Purchaser (as defined herein) upon the terms set forth in the Purchase Agreement (as defined herein) its $200,000,000 8.250% Senior Notes due 2013. As an inducement to the Purchaser to enter into the Purchase Agreement and in satisfaction of a condition to the obligations of the Purchaser thereunder, the Company agrees with the Purchaser for the benefit of holders (as defined herein) from time to time of the Registrable Securities (as defined herein) as follows:

1. CERTAIN DEFINITIONS. For purposes of this Exchange and Registration Rights Agreement, the following terms shall have the following respective meanings:

"BASE INTEREST" shall mean the interest that would otherwise accrue on the Securities under the terms thereof and the Indenture, without giving effect to the provisions of this Agreement.

The term "BROKER-DEALER" shall mean any broker or dealer registered with the Commission under the Exchange Act.

"CLOSING DATE" shall mean the date on which the Securities are initially issued.

"COMMISSION" shall mean the United States Securities and Exchange Commission, or any other federal agency at the time administering the Exchange Act or the Securities Act, whichever is the relevant statute for the particular purpose.

"EFFECTIVE TIME," in the case of (i) an Exchange Registration, shall mean the time and date as of which the Commission declares the Exchange Registration Statement effective or as of which the Exchange Registration Statement otherwise becomes effective and (ii) a Shelf Registration, shall mean the time and date as of which the Commission declares the Shelf Registration Statement effective or as of which the Shelf Registration Statement otherwise becomes effective.

"ELECTING HOLDER" shall mean any holder of Registrable Securities that has returned a completed and signed Notice and Questionnaire to the Company in accordance with Section 3(d)(ii) or 3(d)(iii) hereof.

"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, or any successor thereto, as the same shall be amended from time to time.

"EXCHANGE OFFER" shall have the meaning assigned thereto in Section 2(a) hereof.

"EXCHANGE REGISTRATION" shall have the meaning assigned thereto in Section 3(c) hereof.

"EXCHANGE REGISTRATION STATEMENT" shall have the meaning assigned thereto in Section 2(a) hereof.

"EXCHANGE SECURITIES" shall have the meaning assigned thereto in Section 2(a) hereof.

The term "HOLDER" shall mean the Purchaser and other persons who acquire Registrable Securities from time to time (including any successors or assigns), in each case for so long as such person owns any Registrable Securities.

"INDENTURE" shall mean the Indenture, dated as of March 7, 2003 between the Company and Wilmington Trust Company, as Trustee, as the same shall be amended from time to time.

"NOTICE AND QUESTIONNAIRE" means a Notice of Registration Statement and Selling Securityholder Questionnaire substantially in the form of Exhibit A hereto.

The term "PERSON" shall mean a corporation, association, partnership, organization, business, individual, government or political subdivision thereof or governmental agency.

"PURCHASE AGREEMENT" shall mean the Purchase Agreement, dated as of March 4, 2003, between the Purchaser and the Company relating to the Securities.

"PURCHASER" shall mean the Purchaser named in Schedule I to the Purchase Agreement.

"REGISTRABLE SECURITIES" shall mean the Securities; PROVIDED, HOWEVER, that a Security shall cease to be a Registrable Security when (i) in the circumstances contemplated by Section 2(a) hereof, the Security has been exchanged for an Exchange Security in an Exchange Offer as contemplated in
Section 2(a) hereof (PROVIDED that any Exchange Security that, pursuant to the last two sentences of Section 2(a), is included in a prospectus for use in connection with resales by broker-dealers shall be deemed to be a Registrable Security with respect to Sections 5, 6 and 9 until resale of such Registrable Security has been effected within the 180-day period referred to in Section 2(a)); (ii) in the circumstances contemplated by Section 2(b) hereof, a Shelf Registration Statement registering such Security under the Securities Act has been declared or becomes effective and such Security has been sold or otherwise transferred by the holder thereof pursuant to and in a manner contemplated by such effective Shelf Registration Statement; (iii) such Security is sold pursuant to Rule 144 under circumstances in which any legend borne by such Security relating to restrictions on transferability thereof, under the Securities Act or otherwise, is removed by the Company or pursuant to the Indenture; (iv) such Security is eligible to be sold pursuant to paragraph (k) of Rule 144; or (v) such Security shall cease to be outstanding.

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"REGISTRATION DEFAULT" shall have the meaning assigned thereto in Section 2(c) hereof.

"REGISTRATION EXPENSES" shall have the meaning assigned thereto in Section 4 hereof.

"RESALE PERIOD" shall have the meaning assigned thereto in Section 2(a) hereof.

"RESTRICTED HOLDER" shall mean (i) a holder that is an affiliate of the Company within the meaning of Rule 405, (ii) a holder who acquires Exchange Securities outside the ordinary course of such holder's business, (iii) a holder who has arrangements or understandings with any person to participate in the Exchange Offer for the purpose of distributing Exchange Securities and
(iv) a holder that is a broker-dealer, but only with respect to Exchange Securities received by such broker-dealer pursuant to an Exchange Offer in exchange for Registrable Securities acquired by the broker-dealer directly from the Company.

"RULE 144," "RULE 405" AND "RULE 415" shall mean, in each case, such rule promulgated under the Securities Act (or any successor provision), as the same shall be amended from time to time.

"SECURITIES" shall mean, collectively, the $200,000,000 8.250% Senior Notes due 2013 of the Company to be issued and sold to the Purchaser, and securities issued in exchange therefor or in lieu thereof pursuant to the Indenture.

"SECURITIES ACT" shall mean the Securities Act of 1933, or any successor thereto, as the same shall be amended from time to time.

"SHELF REGISTRATION" shall have the meaning assigned thereto in Section 2(b) hereof.

"SHELF REGISTRATION STATEMENT" shall have the meaning assigned thereto in
Section 2(b) hereof.

"SPECIAL INTEREST" shall have the meaning assigned thereto in Section 2(c) hereof.

"TRUST INDENTURE ACT" shall mean the Trust Indenture Act of 1939, or any successor thereto, and the rules, regulations and forms promulgated thereunder, all as the same shall be amended from time to time.

Unless the context otherwise requires, any reference herein to a "Section" or "clause" refers to a Section or clause, as the case may be, of this Exchange and Registration Rights Agreement, and the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Exchange and Registration Rights Agreement as a whole and not to any particular Section or other subdivision.

2. REGISTRATION UNDER THE SECURITIES ACT.

(a) Except as set forth in Section 2(b) below, the Company agrees to file under the Securities Act, as soon as practicable, but no later than 60 days after the Closing Date, a registration statement relating to an offer to exchange (such registration statement, the "Exchange Registration Statement", and such offer, the "Exchange Offer") any and all of the Securities for a like aggregate principal amount of debt securities issued by the Company, which debt securities are substantially identical to the Securities (and are entitled to the benefits of a trust indenture which is substantially identical to the Indenture or is the Indenture and which has been qualified under the Trust Indenture Act), except that they

3

have been registered pursuant to an effective registration statement under the Securities Act and do not contain provisions for the additional interest contemplated in Section 2(c) below (such new debt securities hereinafter called "Exchange Securities"). The Company agrees to use its best efforts to cause the Exchange Registration Statement to become effective under the Securities Act as soon as practicable, but no later than 180 days after the Closing Date. The Exchange Offer will be registered under the Securities Act on the appropriate form and will comply with all applicable tender offer rules and regulations under the Exchange Act. The Company further agrees to use its best efforts to commence and complete the Exchange Offer promptly, but no later than 45 days after such registration statement has become effective, hold the Exchange Offer open for at least 30 days and exchange Exchange Securities for all Registrable Securities that have been properly tendered and not withdrawn on or prior to the expiration of the Exchange Offer. The Exchange Offer will be deemed to have been "completed" only if the debt securities received by holders other than Restricted Holders in the Exchange Offer for Registrable Securities are, upon receipt, transferable by each such holder without restriction under the Securities Act and the Exchange Act and without material restrictions under the blue sky or securities laws of a substantial majority of the States of the United States of America. The Exchange Offer shall be deemed to have been completed upon the earlier to occur of (i) the Company having exchanged the Exchange Securities for all outstanding Registrable Securities pursuant to the Exchange Offer and (ii) the Company having exchanged, pursuant to the Exchange Offer, Exchange Securities for all Registrable Securities that have been properly tendered and not withdrawn before the expiration of the Exchange Offer, which shall be on a date that is at least 30 days following the commencement of the Exchange Offer. The Company agrees (x) to include in the Exchange Registration Statement a prospectus for use in any resales by any holder of Exchange Securities that is a broker-dealer and (y) to keep such Exchange Registration Statement effective for a period (the "Resale Period") beginning when Exchange Securities are first issued in the Exchange Offer and ending upon the earlier of the expiration of the 180th day after the Exchange Offer has been completed or such time as such broker-dealers no longer own any Registrable Securities. With respect to such Exchange Registration Statement, such broker-dealers shall have the benefit of the rights of indemnification and contribution set forth in Sections 6(a), (c),
(d) and (e) hereof.

(b) If (i) on or prior to the time the Exchange Offer is completed, existing Commission interpretations are changed such that the debt securities received by holders other than Restricted Holders in the Exchange Offer for Registrable Securities are not or would not be, upon receipt, transferable by each such holder without restriction under the Securities Act, (ii) the Exchange Offer has not been completed within 225 days following the Closing Date or (iii) the Exchange Offer is not available to any holder of the Securities, the Company shall, in lieu of (or, in the case of clause (iii), in addition to) conducting the Exchange Offer contemplated by Section 2(a), file under the Securities Act as soon as practicable, but no later than 30 days after the time such obligation to file arises, a "shelf" registration statement providing for the registration of, and the sale on a continuous or delayed basis by the holders of, all of the Registrable Securities, pursuant to Rule 415 or any similar rule that may be adopted by the Commission (such filing, the "Shelf Registration" and such registration statement, the "Shelf Registration Statement"). The Company agrees to use its best efforts (x) to cause the Shelf Registration Statement to become or be declared effective no later than 120 days after such Shelf Registration Statement is filed and to keep such Shelf Registration Statement continuously effective for a period ending on the earlier of the second anniversary of the Effective Time or such time as there are no longer any Registrable Securities outstanding, PROVIDED, HOWEVER, that no holder shall be entitled to be

4

named as a selling securityholder in the Shelf Registration Statement or to use the prospectus forming a part thereof for resales of Registrable Securities unless such holder is an Electing Holder, and (y) after the Effective Time of the Shelf Registration Statement, promptly upon the request of any holder of Registrable Securities that is not then an Electing Holder, to take any action reasonably necessary to enable such holder to use the prospectus forming a part thereof for resales of Registrable Securities, including, without limitation, any action necessary to identify such holder as a selling securityholder in the Shelf Registration Statement, PROVIDED, HOWEVER, that nothing in this Clause (y) shall relieve any such holder of the obligation to return a completed and signed Notice and Questionnaire to the Company in accordance with Section 3(d)(iii) hereof. The Company further agrees to supplement or make amendments to the Shelf Registration Statement, as and when required by the rules, regulations or instructions applicable to the registration form used by the Company for such Shelf Registration Statement or by the Securities Act or rules and regulations thereunder for shelf registration, and the Company agrees to furnish to each Electing Holder copies of any such supplement or amendment prior to its being used or promptly following its filing with the Commission.

(c) In the event that (i) the Company has not filed the Exchange Registration Statement or Shelf Registration Statement on or before the date on which such registration statement is required to be filed pursuant to
Section 2(a) or 2(b), respectively, or (ii) such Exchange Registration Statement or Shelf Registration Statement has not become effective or been declared effective by the Commission on or before the date on which such registration statement is required to become or be declared effective pursuant to Section 2(a) or 2(b), respectively, or (iii) the Exchange Offer has not been completed within 45 days after the initial effective date of the Exchange Registration Statement relating to the Exchange Offer (if the Exchange Offer is then required to be made) or (iv) any Exchange Registration Statement or Shelf Registration Statement required by Section 2(a) or 2(b) hereof is filed and declared effective but shall thereafter either be withdrawn by the Company or shall become subject to an effective stop order issued pursuant to Section 8(d) of the Securities Act suspending the effectiveness of such registration statement (except as specifically permitted herein) without being succeeded immediately by an additional registration statement filed and declared effective (each such event referred to in clauses (i) through (iv), a "Registration Default" and each period during which a Registration Default has occurred and is continuing, a "Registration Default Period"), then, as liquidated damages for such Registration Default, subject to the provisions of Section 9(b), special interest ("Special Interest"), in addition to the Base Interest, shall accrue at a per annum rate of 0.50% for the first 90 days of the Registration Default Period, at a per annum rate of 1.00% for the second 90 days of the Registration Default Period, at a per annum rate of 1.50% for the third 90 days of the Registration Default Period and at a per annum rate of 2.0% thereafter for the remaining portion of the Registration Default Period.

(d) The Company shall take all actions necessary or advisable to be taken by it to ensure that the transactions contemplated herein are effected as so contemplated.

(e) Any reference herein to a registration statement as of any time shall be deemed to include any document incorporated, or deemed to be incorporated, therein by reference as of such time and any reference herein to any post-effective amendment to a registration statement as of any time shall be deemed to include any document incorporated, or deemed to be incorporated, therein by reference as of such time.

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3. REGISTRATION PROCEDURES.

If the Company files a registration statement pursuant to Section 2(a) or Section 2(b), the following provisions shall apply:

(a) At or before the Effective Time of the Exchange Offer or the Shelf Registration, as the case may be, the Company shall qualify the Indenture under the Trust Indenture Act of 1939.

(b) In the event that such qualification would require the appointment of a new trustee under the Indenture, the Company shall appoint a new trustee thereunder pursuant to the applicable provisions of the Indenture.

(c) In connection with the Company's obligations with respect to the registration of Exchange Securities as contemplated by Section 2(a) (the "Exchange Registration"), if applicable, the Company shall, as soon as practicable (or as otherwise specified):

(i) prepare and file with the Commission, as soon as practicable but no later than 60 days after the Closing Date, an Exchange Registration Statement on any form which may be utilized by the Company and which shall permit the Exchange Offer and resales of Exchange Securities by broker-dealers during the Resale Period to be effected as contemplated by Section 2(a), and use its best efforts to cause such Exchange Registration Statement to become effective as soon as practicable thereafter, but no later than 180 days after the Closing Date;

(ii) prepare and file with the Commission such amendments and supplements to such Exchange Registration Statement and the prospectus included therein as may be necessary to effect and maintain the effectiveness of such Exchange Registration Statement for the periods and purposes contemplated in Section 2(a) hereof and as may be required by the applicable rules and regulations of the Commission and the instructions applicable to the form of such Exchange Registration Statement, and promptly provide each broker-dealer holding Exchange Securities with such number of copies of the prospectus included therein (as then amended or supplemented), in conformity in all material respects with the requirements of the Securities Act and the Trust Indenture Act and the rules and regulations of the Commission thereunder, as such broker-dealer reasonably may request prior to the expiration of the Resale Period, for use in connection with resales of Exchange Securities;

(iii) promptly notify each broker-dealer that has requested or received copies of the prospectus included in such registration statement, and confirm such advice in writing, (A) when such Exchange Registration Statement or the prospectus included therein or any prospectus amendment or supplement or post-effective amendment has been filed, and, with respect to such Exchange Registration Statement or any post-effective amendment, when the same has become effective, (B) of any comments by the Commission and by the blue sky or securities commissioner or regulator of any state with respect thereto or any request by the Commission for amendments or supplements to such Exchange Registration Statement or prospectus or for additional information, (C) of the issuance by the Commission of any stop order suspending the effectiveness of such Exchange Registration Statement or the initiation or threatening of any proceedings for that purpose, (D) if at any time the representations and warranties of the Company contemplated by

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Section 5 cease to be true and correct in all material respects, (E) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Exchange Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, or (F) at any time during the Resale Period when a prospectus is required to be delivered under the Securities Act, that such Exchange Registration Statement, prospectus, prospectus amendment or supplement or post-effective amendment does not conform in all material respects to the applicable requirements of the Securities Act and the Trust Indenture Act and the rules and regulations of the Commission thereunder or contains an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;

(iv) in the event that the Company would be required, pursuant to
Section 3(c)(iii)(F) above, to notify any broker-dealers holding Exchange Securities, without delay prepare and furnish to each such holder a reasonable number of copies of a prospectus supplemented or amended so that, as thereafter delivered to purchasers of such Exchange Securities during the Resale Period, such prospectus shall conform in all material respects to the applicable requirements of the Securities Act and the Trust Indenture Act and the rules and regulations of the Commission thereunder and shall not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;

(v) use its best efforts to obtain the withdrawal of any order suspending the effectiveness of such Exchange Registration Statement or any post-effective amendment thereto at the earliest practicable date;

(vi) use its best efforts to (A) register or qualify the Exchange Securities under the securities laws or blue sky laws of such jurisdictions as are contemplated by Section 2(a) no later than the commencement of the Exchange Offer, (B) keep such registrations or qualifications in effect and comply with such laws so as to permit the continuance of offers, sales and dealings therein in such jurisdictions until the expiration of the Resale Period and (C) take any and all other actions as may be reasonably necessary or advisable to enable each broker-dealer holding Exchange Securities to consummate the disposition thereof in such jurisdictions; PROVIDED, HOWEVER, that the Company shall not be required for any such purpose to (1) qualify as a foreign corporation in any jurisdiction wherein it would not otherwise be required to qualify but for the requirements of this Section 3(c)(vi),
(2) consent to general service of process in any such jurisdiction or
(3) make any changes to its certificate of incorporation or by-laws or any agreement between it and its stockholders;

(vii) use its best efforts to obtain the consent or approval of each governmental agency or authority, whether federal, state or local, which may be required to effect the Exchange Registration, the Exchange Offer and the offering and sale of Exchange Securities by broker-dealers during the Resale Period;

(viii) provide a CUSIP number for all Exchange Securities, not later than the applicable Effective Time;

(ix) comply with all applicable rules and regulations of the Commission, and make generally available to its securityholders as soon as practicable but no later

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than eighteen months after the effective date of such Exchange Registration Statement, an earning statement of the Company and its subsidiaries complying with Section 11(a) of the Securities Act (including, at the option of the Company, Rule 158 thereunder).

(d) In connection with the Company's obligations with respect to the Shelf Registration, if applicable, the Company shall, as soon as practicable (or as otherwise specified):

(i) prepare and file with the Commission, as soon as practicable but in any case within the time periods specified in Section 2(b), a Shelf Registration Statement on any form which may be utilized by the Company and which shall register all of the Registrable Securities for resale by the holders thereof in accordance with such method or methods of disposition as may be specified by such of the holders as, from time to time, may be Electing Holders and use its best efforts to cause such Shelf Registration Statement to become effective as soon as practicable but in any case within the time periods specified in Section 2(b);

(ii) not less than 30 calendar days prior to the Effective Time of the Shelf Registration Statement, mail the Notice and Questionnaire to the holders of Registrable Securities; no holder shall be entitled to be named as a selling securityholder in the Shelf Registration Statement as of the Effective Time, and no holder shall be entitled to use the prospectus forming a part thereof for resales of Registrable Securities at any time, unless such holder has returned a completed and signed Notice and Questionnaire to the Company by the deadline for response set forth therein; PROVIDED, HOWEVER, holders of Registrable Securities shall have at least 28 calendar days from the date on which the Notice and Questionnaire is first mailed to such holders to return a completed and signed Notice and Questionnaire to the Company;

(iii) after the Effective Time of the Shelf Registration Statement, upon the request of any holder of Registrable Securities that is not then an Electing Holder, promptly send a Notice and Questionnaire to such holder; PROVIDED that the Company shall not be required to take any action to name such holder as a selling securityholder in the Shelf Registration Statement or to enable such holder to use the prospectus forming a part thereof for resales of Registrable Securities until such holder has returned a completed and signed Notice and Questionnaire to the Company;

(iv) prepare and file with the Commission such amendments and supplements to such Shelf Registration Statement and the prospectus included therein as may be necessary to effect and maintain the effectiveness of such Shelf Registration Statement for the period specified in Section 2(b) hereof and as may be required by the applicable rules and regulations of the Commission and the instructions applicable to the form of such Shelf Registration Statement, and furnish to the Electing Holders copies of any such supplement or amendment simultaneously with or prior to its being used or filed with the Commission;

(v) comply with the provisions of the Securities Act with respect to the disposition of all of the Registrable Securities covered by such Shelf Registration Statement in accordance with the intended methods of disposition by the Electing Holders provided for in such Shelf Registration Statement;

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(vi) provide (A) the Electing Holders, (B) the underwriters (which term, for purposes of this Exchange and Registration Rights Agreement, shall include a person deemed to be an underwriter within the meaning of Section 2(a)(11) of the Securities Act), if any, thereof, (C) any sales or placement agent therefor, (D) counsel for any such underwriter or agent and (E) not more than one counsel for all the Electing Holders the opportunity to participate in the preparation of such Shelf Registration Statement, each prospectus included therein or filed with the Commission and each amendment or supplement thereto;

(vii) for a reasonable period prior to the filing of such Shelf Registration Statement, and throughout the period specified in Section
2(b), make available at reasonable times at the Company's principal place of business or such other reasonable place for inspection by the persons referred to in Section 3(d)(vi) who shall certify to the Company that they have a current intention to sell the Registrable Securities pursuant to the Shelf Registration such financial and other information and books and records of the Company, and cause the officers, employees, counsel and independent certified public accountants of the Company to respond to such inquiries, as shall be reasonably necessary, in the judgment of the respective counsel referred to in such Section, to conduct a reasonable investigation within the meaning of Section 11 of the Securities Act; PROVIDED, HOWEVER, that each such party shall be required to maintain in confidence and not to disclose to any other person any information or records reasonably designated by the Company as being confidential, until such time as (A) such information becomes a matter of public record (whether by virtue of its inclusion in such registration statement or otherwise), or (B) such person shall be required so to disclose such information pursuant to a subpoena or order of any court or other governmental agency or body having jurisdiction over the matter (subject to the requirements of such order, and only after such person shall have given the Company prompt prior written notice of such requirement), or (C) such information is required to be set forth in such Shelf Registration Statement or the prospectus included therein or in an amendment to such Shelf Registration Statement or an amendment or supplement to such prospectus in order that such Shelf Registration Statement, prospectus, amendment or supplement, as the case may be, complies with applicable requirements of the federal securities laws and the rules and regulations of the Commission and does not contain an untrue statement of a material fact or omit to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;

(viii) promptly notify each of the Electing Holders, any sales or placement agent therefor and any underwriter thereof (which notification may be made through any managing underwriter that is a representative of such underwriter for such purpose) and confirm such advice in writing, (A) when such Shelf Registration Statement or the prospectus included therein or any prospectus amendment or supplement or post-effective amendment has been filed, and, with respect to such Shelf Registration Statement or any post-effective amendment, when the same has become effective, in each case making a public announcement thereof by release made to Bloomberg Business News, (B) of any comments by the Commission and by the blue sky or securities commissioner or regulator of any state with respect thereto or any request by the Commission for amendments or supplements to such Shelf Registration Statement or prospectus or for additional information, (C) of the issuance by the Commission of any stop order suspending the effectiveness of such

9

Shelf Registration Statement or the initiation or threatening of any proceedings for that purpose, (D) if at any time the representations and warranties of the Company contemplated by Section 3(d)(xvii) or Section 5 cease to be true and correct in all material respects, (E) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, or (F) if at any time when a prospectus is required to be delivered under the Securities Act, that such Shelf Registration Statement, prospectus, prospectus amendment or supplement or post-effective amendment does not conform in all material respects to the applicable requirements of the Securities Act and the Trust Indenture Act and the rules and regulations of the Commission thereunder or contains an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;

(ix) use its best efforts to obtain the withdrawal of any order suspending the effectiveness of such registration statement or any post-effective amendment thereto at the earliest practicable date;

(x) if requested by any managing underwriter or underwriters, any placement or sales agent or any Electing Holder, promptly incorporate in a prospectus supplement or post-effective amendment such information as is required by the applicable rules and regulations of the Commission and as such managing underwriter or underwriters, such agent or such Electing Holder specifies should be included therein relating to the terms of the sale of such Registrable Securities, including information with respect to the principal amount of Registrable Securities being sold by such Electing Holder or agent or to any underwriters, the name and description of such Electing Holder, agent or underwriter, the offering price of such Registrable Securities and any discount, commission or other compensation payable in respect thereof, the purchase price being paid therefor by such underwriters and with respect to any other terms of the offering of the Registrable Securities to be sold by such Electing Holder or agent or to such underwriters; and make all required filings of such prospectus supplement or post-effective amendment promptly after notification of the matters to be incorporated in such prospectus supplement or post-effective amendment;

(xi) furnish to each Electing Holder, each placement or sales agent, if any, therefor, each underwriter, if any, thereof and the respective counsel referred to in Section 3(d)(vi) an executed copy (or, in the case of an Electing Holder, a conformed copy) of such Shelf Registration Statement, each such amendment and supplement thereto (in each case including all exhibits thereto (in the case of an Electing Holder of Registrable Securities, upon request) and documents incorporated by reference therein) and such number of copies of such Shelf Registration Statement (excluding exhibits thereto and documents incorporated by reference therein unless specifically so requested by such Electing Holder, agent or underwriter, as the case may be) and of the prospectus included in such Shelf Registration Statement (including each preliminary prospectus and any summary prospectus), in conformity in all material respects with the applicable requirements of the Securities Act and the Trust Indenture Act and the rules and regulations of the Commission thereunder, and such other documents, as such Electing Holder, agent, if any, and underwriter, if any, may reasonably request in order to facilitate the offering and disposition of the

10

Registrable Securities owned by such Electing Holder, offered or sold by such agent or underwritten by such underwriter and to permit such Electing Holder, agent and underwriter to satisfy the prospectus delivery requirements of the Securities Act; and the Company hereby consents to the use of such prospectus (including such preliminary and summary prospectus) and any amendment or supplement thereto by each such Electing Holder and by any such agent and underwriter, in each case in the form most recently provided to such person by the Company, in connection with the offering and sale of the Registrable Securities covered by the prospectus (including such preliminary and summary prospectus) or any supplement or amendment thereto;

(xii) use its best efforts to (A) register or qualify the Registrable Securities to be included in such Shelf Registration Statement under such securities laws or blue sky laws of such jurisdictions as any Electing Holder and each placement or sales agent, if any, therefor and underwriter, if any, thereof shall reasonably request, (B) keep such registrations or qualifications in effect and comply with such laws so as to permit the continuance of offers, sales and dealings therein in such jurisdictions during the period the Shelf Registration is required to remain effective under Section 2(b) above and for so long as may be necessary to enable any such Electing Holder, agent or underwriter to complete its distribution of Securities pursuant to such Shelf Registration Statement and (C) take any and all other actions as may be reasonably necessary or advisable to enable each such Electing Holder, agent, if any, and underwriter, if any, to consummate the disposition in such jurisdictions of such Registrable Securities; PROVIDED, HOWEVER, that the Company shall not be required for any such purpose to (1) qualify as a foreign corporation in any jurisdiction wherein it would not otherwise be required to qualify but for the requirements of this Section 3(d)(xii), (2) consent to general service of process in any such jurisdiction or (3) make any changes to its certificate of incorporation or by-laws or any agreement between it and its stockholders;

(xiii) use its best efforts to obtain the consent or approval of each governmental agency or authority, whether federal, state or local, which may be required to effect the Shelf Registration or the offering or sale in connection therewith or to enable the selling holder or holders to offer, or to consummate the disposition of, their Registrable Securities;

(xiv) Unless any Registrable Securities shall be in book-entry only form, cooperate with the Electing Holders and the managing underwriters, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold, which certificates, if so required by any securities exchange upon which any Registrable Securities are listed, shall be penned, lithographed or engraved, or produced by any combination of such methods, on steel engraved borders, and which certificates shall not bear any restrictive legends; and, in the case of an underwritten offering, enable such Registrable Securities to be in such denominations and registered in such names as the managing underwriters may request at least two business days prior to any sale of the Registrable Securities;

(xv) provide a CUSIP number for all Registrable Securities, not later than the applicable Effective Time;

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(xvi) enter into one or more underwriting agreements, engagement letters, agency agreements, "best efforts" underwriting agreements or similar agreements, as appropriate, including customary provisions relating to indemnification and contribution, and take such other actions in connection therewith as any Electing Holders aggregating at least 25% in aggregate principal amount of the Registrable Securities at the time outstanding shall request in order to expedite or facilitate the disposition of such Registrable Securities;

(xvii) whether or not an agreement of the type referred to in
Section 3(d)(xvi) hereof is entered into and whether or not any portion of the offering contemplated by the Shelf Registration is an underwritten offering or is made through a placement or sales agent or any other entity, (A) make such representations and warranties to the Electing Holders and the placement or sales agent, if any, therefor and the underwriters, if any, thereof in form, substance and scope as are customarily made in connection with an offering of debt securities pursuant to any appropriate agreement or to a registration statement filed on the form applicable to the Shelf Registration; (B) obtain an opinion of counsel to the Company in customary form and covering such matters, of the type customarily covered by such an opinion, as the managing underwriters, if any, or as any Electing Holders of at least 25% in aggregate principal amount of the Registrable Securities at the time outstanding may reasonably request, addressed to such Electing Holder or Electing Holders and the placement or sales agent, if any, therefor and the underwriters, if any, thereof and dated the effective date of such Shelf Registration Statement (and if such Shelf Registration Statement contemplates an underwritten offering of a part or all of the Registrable Securities, dated the date of the closing under the underwriting agreement relating thereto) (it being agreed that the matters to be covered by such opinion shall include the due incorporation and good standing of the Company and its subsidiaries; the qualification of the Company and its subsidiaries to transact business as foreign corporations; the due authorization, execution and delivery of the relevant agreement of the type referred to in Section 3(d)(xvi) hereof; the due authorization, execution, authentication and issuance, and the validity and enforceability, of the Securities; the absence of material legal or governmental proceedings involving the Company; the absence of a breach by the Company or any of its subsidiaries of, or a default under, material agreements binding upon the Company or any subsidiary of the Company; the absence of governmental approvals required to be obtained in connection with the Shelf Registration, the offering and sale of the Registrable Securities, this Exchange and Registration Rights Agreement or any agreement of the type referred to in Section 3(d)(xvi) hereof, except such approvals as may be required under state securities or blue sky laws; the material compliance as to form of such Shelf Registration Statement and any documents incorporated by reference therein and of the Indenture with the requirements of the Securities Act and the Trust Indenture Act and the rules and regulations of the Commission thereunder, respectively; and, as of the date of the opinion and of the Shelf Registration Statement or most recent post-effective amendment thereto, as the case may be, the absence from such Shelf Registration Statement and the prospectus included therein, as then amended or supplemented, and from the documents incorporated by reference therein (in each case other than the financial statements and other financial information contained therein) of an untrue statement of a material fact or the omission to state therein a material fact necessary to make the statements therein not misleading (in the case of such documents, in the light of the circumstances existing at the time that such documents were filed with the

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Commission under the Exchange Act)); (C) obtain a "cold comfort" letter or letters from the independent certified public accountants of the Company addressed to the selling Electing Holders, the placement or sales agent, if any, therefor or the underwriters, if any, thereof, dated (i) the effective date of such Shelf Registration Statement and
(ii) the effective date of any prospectus supplement to the prospectus included in such Shelf Registration Statement or post-effective amendment to such Shelf Registration Statement which includes unaudited or audited financial statements as of a date or for a period subsequent to that of the latest such statements included in such prospectus (and, if such Shelf Registration Statement contemplates an underwritten offering pursuant to any prospectus supplement to the prospectus included in such Shelf Registration Statement or post-effective amendment to such Shelf Registration Statement which includes unaudited or audited financial statements as of a date or for a period subsequent to that of the latest such statements included in such prospectus, dated the date of the closing under the underwriting agreement relating thereto), such letter or letters to be in customary form and covering such matters of the type customarily covered by letters of such type; (D) deliver such documents and certificates, including officers' certificates, as may be reasonably requested by any Electing Holders of at least 25% in aggregate principal amount of the Registrable Securities at the time outstanding or the placement or sales agent, if any, therefor and the managing underwriters, if any, thereof to evidence the accuracy of the representations and warranties made pursuant to clause (A) above or those contained in Section 5(a) hereof and the compliance with or satisfaction of any agreements or conditions contained in the underwriting agreement or other agreement entered into by the Company; and (E) undertake such obligations relating to expense reimbursement, indemnification and contribution as are provided in Section 6 hereof;

(xviii) notify in writing each holder of Registrable Securities of any proposal by the Company to amend or waive any provision of this Exchange and Registration Rights Agreement pursuant to Section 9(h) hereof and of any amendment or waiver effected pursuant thereto, each of which notices shall contain the text of the amendment or waiver proposed or effected, as the case may be;

(xix) in the event that any broker-dealer registered under the Exchange Act shall underwrite any Registrable Securities or participate as a member of an underwriting syndicate or selling group or "assist in the distribution" (within the meaning of the Conduct Rules (the "Conduct Rules") of the National Association of Securities Dealers, Inc. ("NASD") or any successor thereto, as amended from time to time) thereof, whether as a holder of such Registrable Securities or as an underwriter, a placement or sales agent or a broker or dealer in respect thereof, or otherwise, assist such broker-dealer in complying with the requirements of such Conduct Rules, including by (A) if such Conduct Rules shall so require, engaging a "qualified independent underwriter" (as defined in such Conduct Rules) to participate in the preparation of the Shelf Registration Statement relating to such Registrable Securities, to exercise usual standards of due diligence in respect thereto and, if any portion of the offering contemplated by such Shelf Registration Statement is an underwritten offering or is made through a placement or sales agent, to recommend the yield of such Registrable Securities, (B) indemnifying any such qualified independent underwriter to the extent of the indemnification of underwriters provided in Section 6 hereof (or to such other customary extent as may be requested by such underwriter), and (C) providing such information to such broker-dealer as may be

13

required in order for such broker-dealer to comply with the requirements of the Conduct Rules; and

(xx) comply with all applicable rules and regulations of the Commission, and make generally available to its securityholders as soon as practicable but in any event not later than eighteen months after the effective date of such Shelf Registration Statement, an earning statement of the Company and its subsidiaries complying with Section 11(a) of the Securities Act (including, at the option of the Company, Rule 158 thereunder).

(e) In the event that the Company would be required, pursuant to Section 3(d)(viii)(F) above, to notify the Electing Holders, the placement or sales agent, if any, therefor and the managing underwriters, if any, thereof, the Company shall without delay prepare and furnish to each of the Electing Holders, to each placement or sales agent, if any, and to each such underwriter, if any, a reasonable number of copies of a prospectus supplemented or amended so that, as thereafter delivered to purchasers of Registrable Securities, such prospectus shall conform in all material respects to the applicable requirements of the Securities Act and the Trust Indenture Act and the rules and regulations of the Commission thereunder and shall not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing. Each Electing Holder agrees that upon receipt of any notice from the Company pursuant to Section 3(d)(viii)(F) hereof, such Electing Holder shall forthwith discontinue the disposition of Registrable Securities pursuant to the Shelf Registration Statement applicable to such Registrable Securities until such Electing Holder shall have received copies of such amended or supplemented prospectus, and if so directed by the Company, such Electing Holder shall deliver to the Company (at the Company's expense) all copies, other than permanent file copies, then in such Electing Holder's possession of the prospectus covering such Registrable Securities at the time of receipt of such notice.

(f) In the event of a Shelf Registration, in addition to the information required to be provided by each Electing Holder in its Notice and Questionnaire, the Company may require such Electing Holder to furnish to the Company such additional information regarding such Electing Holder and such Electing Holder's intended method of distribution of Registrable Securities as may be required in order to comply with the Securities Act. Each such Electing Holder agrees to notify the Company as promptly as practicable of any inaccuracy or change in information previously furnished by such Electing Holder to the Company or of the occurrence of any event in either case as a result of which any prospectus relating to such Shelf Registration contains or would contain an untrue statement of a material fact regarding such Electing Holder or such Electing Holder's intended method of disposition of such Registrable Securities or omits to state any material fact regarding such Electing Holder or such Electing Holder's intended method of disposition of such Registrable Securities required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing, and promptly to furnish to the Company any additional information required to correct and update any previously furnished information or required so that such prospectus shall not contain, with respect to such Electing Holder or the disposition of such Registrable Securities, an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing.

14

(g) Until the expiration of two years after the Closing Date, the Company will not, and will not permit any of its "affiliates" (as defined in Rule 144) to, resell any of the Securities that have been reacquired by any of them except pursuant to an effective registration statement under the Securities Act.

4. REGISTRATION EXPENSES.

The Company agrees to bear and to pay or cause to be paid promptly all expenses incident to the Company's performance of or compliance with this Exchange and Registration Rights Agreement, including (a) all Commission and any NASD registration, filing and review fees and expenses including fees and disbursements of counsel for the placement or sales agent or underwriters in connection with such registration, filing and review, (b) all fees and expenses in connection with the qualification of the Securities for offering and sale under the State securities and blue sky laws referred to in Section 3(d)(xii) hereof and determination of their eligibility for investment under the laws of such jurisdictions as any managing underwriters or the Electing Holders may designate, including any fees and disbursements of counsel for the Electing Holders or underwriters in connection with such qualification and determination,
(c) all expenses relating to the preparation, printing, production, distribution and reproduction of each registration statement required to be filed hereunder, each prospectus included therein or prepared for distribution pursuant hereto, each amendment or supplement to the foregoing, the expenses of preparing the Securities for delivery and the expenses of printing or producing any underwriting agreements, agreements among underwriters, selling agreements and blue sky or legal investment memoranda and all other documents in connection with the offering, sale or delivery of Securities to be disposed of (including certificates representing the Securities), (d) messenger, telephone and delivery expenses relating to the offering, sale or delivery of Securities and the preparation of documents referred in clause (c) above, (e) fees and expenses of the Trustee under the Indenture, any agent of the Trustee and any counsel for the Trustee and of any collateral agent or custodian, (f) internal expenses (including all salaries and expenses of the Company's officers and employees performing legal or accounting duties), (g) fees, disbursements and expenses of counsel and independent certified public accountants of the Company (including the expenses of any opinions or "cold comfort" letters required by or incident to such performance and compliance), (h) fees, disbursements and expenses of any "qualified independent underwriter" engaged pursuant to Section 3(d)(xix) hereof, (i) fees, disbursements and expenses of one counsel for the Electing Holders retained in connection with a Shelf Registration, as selected by the Electing Holders of at least a majority in aggregate principal amount of the Registrable Securities held by Electing Holders (which counsel shall be reasonably satisfactory to the Company), (j) any fees charged by securities rating services for rating the Securities, and (k) fees, expenses and disbursements of any other persons, including special experts, retained by the Company in connection with such registration (collectively, the "Registration Expenses"). To the extent that any Registration Expenses are incurred, assumed or paid by any holder of Registrable Securities or any placement or sales agent therefor or underwriter thereof, the Company shall reimburse such person for the full amount of the Registration Expenses so incurred, assumed or paid promptly after receipt of a request therefor. Notwithstanding the foregoing, the holders of the Registrable Securities being registered shall pay all agency fees and commissions and underwriting discounts and commissions attributable to the sale of such Registrable Securities and the fees and disbursements of any counsel or other advisors or experts retained by such holders (severally or jointly), other than the counsel and experts specifically referred to above.

5. REPRESENTATIONS AND WARRANTIES.

15

The Company represents and warrants to, and agrees with, the Purchaser and each of the holders from time to time of Registrable Securities that:

(a) Each registration statement covering Registrable Securities and each prospectus (including any preliminary or summary prospectus) contained therein or furnished pursuant to Section 3(d) or Section 3(c) hereof and any further amendments or supplements to any such registration statement or prospectus, when it becomes effective or is filed with the Commission, as the case may be, and, in the case of an underwritten offering of Registrable Securities, at the time of the closing under the underwriting agreement relating thereto conformed or will conform in all material respects to the applicable requirements of the Securities Act and the Trust Indenture Act and the applicable rules and regulations of the Commission thereunder and did not and will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and at all times subsequent to the Effective Time when a prospectus would be required to be delivered under the Securities Act, other than from (i) such time as a notice has been given to holders of Registrable Securities pursuant to Section 3(d)(viii)(F) or Section 3(c)(iii)(F) hereof until (ii) such time as the Company furnishes an amended or supplemented prospectus pursuant to
Section 3(e) or Section 3(c)(iv) hereof, each such registration statement, and each prospectus (including any summary prospectus) contained therein or furnished pursuant to Section 3(d) or Section 3(c) hereof, as then amended or supplemented, will conform in all material respects to the applicable requirements of the Securities Act and the Trust Indenture Act and the applicable rules and regulations of the Commission thereunder and will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; PROVIDED, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by a holder of Registrable Securities expressly for use therein.

(b) Any documents incorporated by reference in any prospectus referred to in Section 5(a) hereof, when they became effective or were filed with the Commission, as the case may be, conformed in all material respects to the requirements of the Securities Act or the Exchange Act, as applicable and the rules and regulations of the commission thereunder, and none of such documents contained an untrue statement of a material fact or will omit or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and any further documents so filed and incorporated by reference in any prospectus referred to in Section 5(a) hereof or any further amendment or supplement thereto, when such documents become effective or are filed with the Commission, as the case may be, will conform in all material respects to the requirements of the Securities Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; PROVIDED, HOWEVER, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by a holder of Registrable Securities expressly for use therein.

(c) The compliance by the Company with all of the provisions of this Exchange and Registration Rights Agreement and the consummation of the transactions herein contemplated will not conflict with or result in a breach or violation of any of the material

16

terms or provisions of, or constitute a default under, any material indenture, mortgage, deed of trust, loan agreement or other material agreement or instrument to which the Company or any of its subsidiary is a party or by which the Company or any of its subsidiary is bound or to which any of the property or assets of the Company or any of its subsidiary is subject, nor will such action result in any violation of the provisions of the Certificate of Incorporation or the By-laws of the Company or any of its subsidiaries or any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiary or any of their properties; and no consent, approval, authorization, order, registration or qualification of or with any court or governmental agency or body is required for the consummation by the Company of the transactions contemplated by this Exchange and Registration Rights Agreement, except the registration under the Securities Act of the Securities, qualification of the Indenture under the Trust Indenture Act and such consents, approvals, authorizations, registrations or qualifications as may be required under State securities or Blue Sky laws in connection with the offering and distribution of the Securities.

(d) This Exchange and Registration Rights Agreement has been duly authorized, and when the Registrable Securities are issued and delivered pursuant to this Agreement, will have been duly executed and delivered by the Company.

6. INDEMNIFICATION.

(a) INDEMNIFICATION BY THE COMPANY. The Company will indemnify and hold harmless each of the holders of Registrable Securities included in an Exchange Registration Statement, each of the Electing Holders of Registrable Securities included in a Shelf Registration Statement and each person who participates as a placement or sales agent or as an underwriter in any offering or sale of such Registrable Securities against any losses, claims, damages or liabilities, joint or several, to which such holder, agent or underwriter may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Exchange Registration Statement or Shelf Registration Statement, as the case may be, under which such Registrable Securities were registered under the Securities Act, or any preliminary, final or summary prospectus contained therein or furnished by the Company to any such holder, Electing Holder, agent or underwriter, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse such holder, such Electing Holder, such agent and such underwriter for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such action or claim as such expenses are incurred; PROVIDED, HOWEVER, that the Company shall not be liable to any such person in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, or preliminary, final or summary prospectus, or amendment or supplement thereto, in reliance upon and in conformity with written information furnished to the Company by such person expressly for use therein.

(b) INDEMNIFICATION BY THE HOLDERS AND ANY AGENTS AND UNDERWRITERS. The Company may require, as a condition to including any Registrable Securities in any registration statement filed pursuant to Section 2(b) hereof and to entering into any underwriting agreement with respect thereto, that the Company shall have received an undertaking

17

reasonably satisfactory to it from the Electing Holder of such Registrable Securities and from each underwriter named in any such underwriting agreement, severally and not jointly, to (i) indemnify and hold harmless the Company, and all other holders of Registrable Securities, against any losses, claims, damages or liabilities to which the Company or such other holders of Registrable Securities may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in such registration statement, or any preliminary, final or summary prospectus contained therein or furnished by the Company to any such Electing Holder, agent or underwriter, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by such Electing Holder or underwriter expressly for use therein, and (ii) reimburse the Company for any legal or other expenses reasonably incurred by the Company in connection with investigating or defending any such action or claim as such expenses are incurred; PROVIDED, HOWEVER, that no such Electing Holder shall be required to undertake liability to any person under this Section 6(b) for any amounts in excess of the dollar amount of the proceeds to be received by such Electing Holder from the sale of such Electing Holder's Registrable Securities pursuant to such registration.

(c) NOTICES OF CLAIMS, ETC. Promptly after receipt by an indemnified party under subsection (a) or (b) above of written notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party pursuant to the indemnification provisions of or contemplated by this Section 6, notify such indemnifying party in writing of the commencement of such action; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party otherwise than under the indemnification provisions of or contemplated by Section 6(a) or 6(b) hereof. In case any such action shall be brought against any indemnified party and it shall notify an indemnifying party of the commencement thereof, such indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, such indemnifying party shall not be liable to such indemnified party for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment
(i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.

(d) CONTRIBUTION. If for any reason the indemnification provisions contemplated by Section 6(a) or Section 6(b) are unavailable to or insufficient to hold harmless an

18

indemnified party in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such indemnifying party or by such indemnified party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just and equitable if contributions pursuant to this Section 6(d) were determined by pro rata allocation (even if the holders or any agents or underwriters or all of them were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 6(d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages, or liabilities (or actions in respect thereof) referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 6(d), no holder shall be required to contribute any amount in excess of the amount by which the dollar amount of the proceeds received by such holder from the sale of any Registrable Securities (after deducting any fees, discounts and commissions applicable thereto) exceeds the amount of any damages which such holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission, and no underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Registrable Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The holders' and any underwriters' obligations in this Section 6(d) to contribute shall be several in proportion to the principal amount of Registrable Securities registered or underwritten, as the case may be, by them and not joint.

(e) The obligations of the Company under this Section 6 shall be in addition to any liability which the Company may otherwise have and shall extend, upon the same terms and conditions, to each officer, director and partner of each holder, agent and underwriter and each person, if any, who controls any holder, agent or underwriter within the meaning of the Securities Act; and the obligations of the holders and any agents or underwriters contemplated by this Section 6 shall be in addition to any liability which the respective holder, agent or underwriter may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Company and to each person, if any, who controls the Company within the meaning of the Securities Act.

7. UNDERWRITTEN OFFERINGS.

(a) SELECTION OF UNDERWRITERS. If any of the Registrable Securities covered by the Shelf Registration are to be sold pursuant to an underwritten offering, the managing underwriter

19

or underwriters thereof shall be designated by Electing Holders holding at least a majority in aggregate principal amount of the Registrable Securities to be included in such offering, provided that such designated managing underwriter or underwriters is or are reasonably acceptable to the Company.

(b) PARTICIPATION BY HOLDERS. Each holder of Registrable Securities hereby agrees with each other such holder that no such holder may participate in any underwritten offering hereunder unless such holder (i) agrees to sell such holder's Registrable Securities on the basis provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements.

8. RULE 144.

(a) The Company covenants to the holders of Registrable Securities that to the extent it shall be required to do so under the Exchange Act, the Company shall timely file the reports required to be filed by it under the Exchange Act or the Securities Act (including the reports under Section 13 and 15(d) of the Exchange Act referred to in subparagraph (c)(1) of Rule 144 adopted by the Commission under the Securities Act) and the rules and regulations adopted by the Commission thereunder, and shall take such further action as any holder of Registrable Securities may reasonably request, all to the extent required from time to time to enable such holder to sell Registrable Securities without registration under the Securities Act within the limitations of the exemption provided by Rule 144 under the Securities Act, as such Rule may be amended from time to time, or any similar or successor rule or regulation hereafter adopted by the Commission. Upon the request of any holder of Registrable Securities in connection with that holder's sale pursuant to Rule 144, the Company shall deliver to such holder a written statement as to whether it has complied with such requirements.

(b) The Company covenants to the holders of Registrable Securities that, at any time when the Company is not subject to Section 13 or 15 (d) of the Exchange Act, the Company shall furnish at its expense, upon request, to holders of Registrable Securities and prospective purchasers of Registrable Securities information satisfying the requirements of subsection (d) (4) (l) of Rule 144A under the Securities Act.

9. MISCELLANEOUS.

(a) NO INCONSISTENT AGREEMENTS. The Company represents, warrants, covenants and agrees that it has not granted, and shall not grant, registration rights with respect to Registrable Securities or any other securities which would be inconsistent with the terms contained in this Exchange and Registration Rights Agreement.

(b) SPECIFIC PERFORMANCE. The parties hereto acknowledge that there would be no adequate remedy at law if the Company fails to perform any of its obligations hereunder and that the Purchaser and the holders from time to time of the Registrable Securities may be irreparably harmed by any such failure, and accordingly agree that the Purchaser and such holders, in addition to any other remedy to which they may be entitled at law or in equity, shall be entitled to compel specific performance of the obligations of the Company under this Exchange and Registration Rights Agreement in accordance with the terms and

20

conditions of this Exchange and Registration Rights Agreement, in any court of the United States or any State thereof having jurisdiction.

(c) NOTICES. All notices, requests, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered by hand, if delivered personally or by courier, or three days after being deposited in the mail (registered or certified mail, postage prepaid, return receipt requested) as follows: If to the Company, to it at Overseas Shipholding Group, Inc., 511 Fifth Avenue, New York, New York 10017, and if to a holder, to the address of such holder set forth in the security register or other records of the Company, or to such other address as the Company or any such holder may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

(d) PARTIES IN INTEREST. All the terms and provisions of this Exchange and Registration Rights Agreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the parties hereto and the holders from time to time of the Registrable Securities and the respective successors and assigns of the parties hereto and such holders. In the event that any transferee of any holder of Registrable Securities shall acquire Registrable Securities, in any manner, whether by gift, bequest, purchase, operation of law or otherwise, such transferee shall, without any further writing or action of any kind, be deemed a beneficiary hereof for all purposes and such Registrable Securities shall be held subject to all of the terms of this Exchange and Registration Rights Agreement, and by taking and holding such Registrable Securities such transferee shall be entitled to receive the benefits of, and be conclusively deemed to have agreed to be bound by all of the applicable terms and provisions of this Exchange and Registration Rights Agreement. If the Company shall so request, any such successor, assign or transferee shall agree in writing to acquire and hold the Registrable Securities subject to all of the applicable terms hereof.

(e) SURVIVAL. The respective indemnities, agreements, representations, warranties and each other provision set forth in this Exchange and Registration Rights Agreement or made pursuant hereto shall remain in full force and effect regardless of any investigation (or statement as to the results thereof) made by or on behalf of any holder of Registrable Securities, any director, officer or partner of such holder, any agent or underwriter or any director, officer or partner thereof, or any controlling person of any of the foregoing, and shall survive delivery of and payment for the Registrable Securities pursuant to the Purchase Agreement and the transfer and registration of Registrable Securities by such holder and the consummation of an Exchange Offer.

(f) GOVERNING LAW. THIS EXCHANGE AND REGISTRATION RIGHTS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

(g) HEADINGS. The descriptive headings of the several Sections and paragraphs of this Exchange and Registration Rights Agreement are inserted for convenience only, do not constitute a part of this Exchange and Registration Rights Agreement and shall not affect in any way the meaning or interpretation of this Exchange and Registration Rights Agreement.

(h) ENTIRE AGREEMENT; AMENDMENTS. This Exchange and Registration Rights Agreement and the other writings referred to herein (including the Indenture and the form of Securities) or delivered pursuant hereto which form a part hereof contain the entire understanding of the parties with respect to its subject matter. This Exchange and Registration Rights Agreement supersedes all prior agreements and understandings between the parties with respect to its subject matter. This Exchange and Registration

21

Rights Agreement may be amended and the observance of any term of this Exchange and Registration Rights Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only by a written instrument duly executed by the Company and the holders of at least a majority in aggregate principal amount of the Registrable Securities at the time outstanding. Each holder of any Registrable Securities at the time or thereafter outstanding shall be bound by any amendment or waiver effected pursuant to this Section 9(h), whether or not any notice, writing or marking indicating such amendment or waiver appears on such Registrable Securities or is delivered to such holder.

(i) INSPECTION. For so long as this Exchange and Registration Rights Agreement shall be in effect, this Exchange and Registration Rights Agreement and a complete list of the names and addresses of all the holders of Registrable Securities shall be made available for inspection and copying on any business day by any holder of Registrable Securities for proper purposes only (which shall include any purpose related to the rights of the holders of Registrable Securities under the Securities, the Indenture and this Agreement) at the offices of the Company at the address thereof set forth in
Section 9(c) above and at the office of the Trustee under the Indenture.

(j) COUNTERPARTS. This agreement may be executed by the parties in counterparts, each of which shall be deemed to be an original, but all such respective counterparts shall together constitute one and the same instrument.

22

If the foregoing is in accordance with your understanding, please sign and return to us one counterpart hereof for the Company plus one counterpart hereof for each counsel, and upon the acceptance hereof by you, this letter and such acceptance hereof shall constitute a binding agreement between you and the Company.

Very truly yours,

Overseas Shipholding Group, Inc. 

By: /s/Myles R. Itkin
   -----------------------------

   Name:  Myles R. Itkin
   Title: Senior Vice President, Chief
          Financial Officer and Treasurer

Accepted as of the date hereof:
Goldman, Sachs & Co. 

By:    /s/Goldman, Sachs & Co.
      -------------------------

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EXHIBIT A

OVERSEAS SHIPHOLDING GROUP, INC.

INSTRUCTION TO DTC PARTICIPANTS

(DATE OF MAILING)

URGENT - IMMEDIATE ATTENTION REQUESTED

DEADLINE FOR RESPONSE: [DATE]*

The Depository Trust Company ("DTC") has identified you as a DTC Participant through which beneficial interests in the Overseas Shipholding Group, Inc. (the "Company") $200,000,000 8.250% Senior Notes due 2013 (the "Securities") are held.

The Company is in the process of registering the Securities under the Securities Act of 1933 for resale by the beneficial owners thereof. In order to have their Securities included in the registration statement, beneficial owners must complete and return the enclosed Notice of Registration Statement and Selling Securityholder Questionnaire.

IT IS IMPORTANT THAT BENEFICIAL OWNERS OF THE SECURITIES RECEIVE A COPY OF THE ENCLOSED MATERIALS AS SOON AS POSSIBLE as their rights to have the Securities included in the registration statement depend upon their returning the Notice and Questionnaire by [DEADLINE FOR RESPONSE]. Please forward a copy of the enclosed documents to each beneficial owner that holds interests in the Securities through you. If you require more copies of the enclosed materials or have any questions pertaining to this matter, please contact Overseas Shipholding Group, Inc., 511 Fifth Avenue, New York, New York 10017, telephone:
(212) 953-4100.

*Not less than 28 calendar days from date of mailing.

A-1

OVERSEAS SHIPHOLDING GROUP, INC.

Notice of Registration Statement
and
SELLING SECURITYHOLDER QUESTIONNAIRE

(Date)

Reference is hereby made to the Exchange and Registration Rights Agreement (the "Exchange and Registration Rights Agreement") between Overseas Shipholding Group, Inc. (the "Company") and the Purchasers named therein. Pursuant to the Exchange and Registration Rights Agreement, the Company has filed with the United States Securities and Exchange Commission (the "Commission") a registration statement on Form [__] (the "Shelf Registration Statement") for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the "Securities Act"), of the Company's $200,000,000 8.250% Senior Notes due 2013 (the "Securities"). A copy of the Exchange and Registration Rights Agreement is attached hereto. All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Exchange and Registration Rights Agreement.

Each beneficial owner of Registrable Securities (as defined below) is entitled to have the Registrable Securities beneficially owned by it included in the Shelf Registration Statement. In order to have Registrable Securities included in the Shelf Registration Statement, this Notice of Registration Statement and Selling Securityholder Questionnaire ("Notice and Questionnaire") must be completed, executed and delivered to the Company's counsel at the address set forth herein for receipt ON OR BEFORE [DEADLINE FOR RESPONSE]. Beneficial owners of Registrable Securities who do not complete, execute and return this Notice and Questionnaire by such date (i) will not be named as selling securityholders in the Shelf Registration Statement and (ii) may not use the Prospectus forming a part thereof for resales of Registrable Securities.

Certain legal consequences arise from being named as a selling securityholder in the Shelf Registration Statement and related Prospectus. Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling securityholder in the Shelf Registration Statement and related Prospectus.

The term "REGISTRABLE SECURITIES" is defined in the Exchange and Registration Rights Agreement.

A-2

ELECTION

The undersigned holder (the "Selling Securityholder") of Registrable Securities hereby elects to include in the Shelf Registration Statement the Registrable Securities beneficially owned by it and listed below in Item (3). The undersigned, by signing and returning this Notice and Questionnaire, agrees to be bound with respect to such Registrable Securities by the terms and conditions of this Notice and Questionnaire and the Exchange and Registration Rights Agreement, including, without limitation, Section 6 of the Exchange and Registration Rights Agreement, as if the undersigned Selling Securityholder were an original party thereto.

Upon any sale of Registrable Securities pursuant to the Shelf Registration Statement, the Selling Securityholder will be required to deliver to the Company and Trustee the Notice of Transfer set forth in Appendix A to the Prospectus and as Exhibit B to the Exchange and Registration Rights Agreement.

The Selling Securityholder hereby provides the following information to the Company and represents and warrants that such information is accurate and complete:

A-3

QUESTIONNAIRE

(1) (a) Full Legal Name of Selling Securityholder:
(b) Full Legal Name of Registered Holder (if not the same as in (a) above) of Registrable Securities Listed in Item (3) below:
(c) Full Legal Name of DTC Participant (if applicable and if not the same as (b) above) Through Which Registrable Securities Listed in Item (3) below are Held: 
(2)       Address for Notices to Selling Securityholder:

                          _______________________________
                          _______________________________
                          _______________________________
          Telephone:      _______________________________
          Fax:            _______________________________
          Contact Person: _______________________________

(3) Beneficial Ownership of Securities:

EXCEPT AS SET FORTH BELOW IN THIS ITEM (3), THE UNDERSIGNED DOES NOT
BENEFICIALLY OWN ANY SECURITIES.

(a) Principal amount of Registrable Securities beneficially owned:________
CUSIP No(s). of such Registrable Securities:__________________________

(b) Principal amount of Securities other than Registrable Securities beneficially owned:___________________________________________________ CUSIP No(s). of such other Securities:________________________________

(c) Principal amount of Registrable Securities which the undersigned wishes to be included in the Shelf Registration Statement:____________ CUSIP No(s). of such Registrable Securities to be included in the Shelf Registration Statement: ________________________________________

(4) Beneficial Ownership of Other Securities of the Company:

EXCEPT AS SET FORTH BELOW IN THIS ITEM (4), THE UNDERSIGNED SELLING SECURITYHOLDER IS NOT THE BENEFICIAL OR REGISTERED OWNER OF ANY OTHER SECURITIES OF THE COMPANY, OTHER THAN THE SECURITIES LISTED ABOVE IN
ITEM (3).

State any exceptions here:

A-4

(5) Relationships with the Company:

EXCEPT AS SET FORTH BELOW, NEITHER THE SELLING SECURITYHOLDER NOR ANY OF ITS AFFILIATES, OFFICERS, DIRECTORS OR PRINCIPAL EQUITY HOLDERS (5% OR MORE) HAS HELD ANY POSITION OR OFFICE OR HAS HAD ANY OTHER MATERIAL RELATIONSHIP WITH THE COMPANY (OR ITS PREDECESSORS OR AFFILIATES) DURING THE PAST THREE YEARS.

State any exceptions here:

(6) Plan of Distribution:

EXCEPT AS SET FORTH BELOW, THE UNDERSIGNED SELLING SECURITYHOLDER INTENDS TO DISTRIBUTE THE REGISTRABLE SECURITIES LISTED ABOVE IN ITEM (3) ONLY AS FOLLOWS (IF AT ALL): SUCH REGISTRABLE SECURITIES MAY BE SOLD FROM TIME TO TIME DIRECTLY BY THE UNDERSIGNED SELLING SECURITYHOLDER OR, ALTERNATIVELY, THROUGH UNDERWRITERS, BROKER-DEALERS OR AGENTS. SUCH REGISTRABLE SECURITIES MAY BE SOLD IN ONE OR MORE TRANSACTIONS AT FIXED PRICES, AT PREVAILING MARKET PRICES AT THE TIME OF SALE, AT VARYING PRICES DETERMINED AT THE TIME OF SALE, OR AT NEGOTIATED PRICES. SUCH SALES MAY BE EFFECTED IN TRANSACTIONS (WHICH MAY INVOLVE CROSSES OR BLOCK TRANSACTIONS) (i) ON ANY NATIONAL SECURITIES EXCHANGE OR QUOTATION SERVICE ON WHICH THE REGISTERED SECURITIES MAY BE LISTED OR QUOTED AT THE TIME OF SALE, (ii) IN THE OVER-THE-COUNTER MARKET, (iii) IN TRANSACTIONS OTHERWISE THAN ON SUCH EXCHANGES OR SERVICES OR IN THE OVER-THE-COUNTER MARKET, OR (iv) THROUGH THE WRITING OF OPTIONS. IN CONNECTION WITH SALES OF THE REGISTRABLE SECURITIES OR OTHERWISE, THE SELLING SECURITYHOLDER MAY ENTER INTO HEDGING TRANSACTIONS WITH BROKER-DEALERS, WHICH MAY IN TURN ENGAGE IN SHORT SALES OF THE REGISTRABLE SECURITIES IN THE COURSE OF HEDGING THE POSITIONS THEY ASSUME. THE SELLING SECURITYHOLDER MAY ALSO SELL REGISTRABLE SECURITIES SHORT AND DELIVER REGISTRABLE SECURITIES TO CLOSE OUT SUCH SHORT POSITIONS, OR LOAN OR PLEDGE REGISTRABLE SECURITIES TO BROKER-DEALERS THAT IN TURN MAY SELL SUCH SECURITIES.

State any exceptions here:

By signing below, the Selling Securityholder acknowledges that it understands its obligation to comply, and agrees that it will comply, with the provisions of the Exchange Act and the rules and regulations thereunder, particularly Regulation M.

In the event that the Selling Securityholder transfers all or any portion of the Registrable Securities listed in Item (3) above after the date on which such information is provided to the Company, the Selling Securityholder agrees to notify the transferee(s) at the time of the transfer of its rights and obligations under this Notice and Questionnaire and the Exchange and Registration Rights Agreement.

By signing below, the Selling Securityholder consents to the disclosure of the information contained herein in its answers to Items (1) through (6) above and the inclusion of such information in the Shelf Registration Statement and related Prospectus. The Selling Securityholder understands that such information will be relied upon by the Company in connection with the preparation of the Shelf Registration Statement and related Prospectus.

A-5

In accordance with the Selling Securityholder's obligation under Section 3(d) of the Exchange and Registration Rights Agreement to provide such information as may be required by law for inclusion in the Shelf Registration Statement, the Selling Securityholder agrees to promptly notify the Company of any inaccuracies or changes in the information provided herein which may occur subsequent to the date hereof at any time while the Shelf Registration Statement remains in effect. All notices hereunder and pursuant to the Exchange and Registration Rights Agreement shall be made in writing, by hand-delivery, first-class mail, or air courier guaranteeing overnight delivery as follows:

(i) To the Company:

OVERSEAS SHIPHOLDING GROUP, INC.

511 FIFTH AVENUE

NEW YORK, NY 10017

(ii) With a copy to:

PROSKAUER ROSE LLP

1585 BROADWAY

NEW YORK, NY 10036

Once this Notice and Questionnaire is executed by the Selling Securityholder and received by the Company's counsel, the terms of this Notice and Questionnaire, and the representations and warranties contained herein, shall be binding on, shall inure to the benefit of and shall be enforceable by the respective successors, heirs, personal representatives, and assigns of the Company and the Selling Securityholder (with respect to the Registrable Securities beneficially owned by such Selling Securityholder and listed in Item (3) above. This Agreement shall be governed in all respects by the laws of the State of New York.

A-6

IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent.

Dated:

Selling Securityholder
(Print/type full legal name of beneficial owner of Registrable Securities)

By:
Name:
Title:

PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE FOR RECEIPT ON OR BEFORE [DEADLINE FOR RESPONSE] TO THE COMPANY'S COUNSEL AT:

PROSKAUER ROSE LLP

1585 BROADWAY

NEW YORK, NY 10036

A-7

EXHIBIT B

NOTICE OF TRANSFER PURSUANT TO REGISTRATION STATEMENT

Wilmington Trust Company
Overseas Shipholding Group, Inc.
c/o Wilmington Trust Company
1100 North Market Street
Wilmington, DE 19890

Attention: Trust Officer

Re: Overseas Shipholding Group, Inc. (the "Company") $200,000,000
8.250% Senior Notes Due 2013

Dear Sirs:

Please be advised that _____________________________ has transferred $ _________ __________________ aggregate principal amount of the above-referenced Notes pursuant to an effective Registration Statement on Form [___] (File No. 333-_____) filed by the Company.

We hereby certify that the prospectus delivery requirements, if any, of the Securities Act of 1933, as amended, have been satisfied and that the above-named beneficial owner of the Notes is named as a "Selling Holder" in the Prospectus dated [DATE] or in supplements thereto, and that the aggregate principal amount of the Notes transferred are the Notes listed in such Prospectus opposite such owner's name.

Dated:

Very truly yours,

(Name)

By:
(Authorized Signature)

B-1

EXHIBIT 4(e)(5)

May ___, 2003

EXCHANGE AGENT AGREEMENT

Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890

Ladies and Gentlemen:

Overseas Shipholding Group, Inc., a Delaware corporation (the "Company"), proposes to make an offer (the "Exchange Offer") to exchange its 8.25% Senior Notes due March 15, 2013, (the "New Notes") for a like principal amount of its outstanding 8.25% Senior Notes due March 15, 2013 (the "Old Notes"). The terms and conditions of the Exchange Offer as currently contemplated are set forth in a prospectus (the "Prospectus" included in the Company's registration statement on Form S-4 (File No. 333-______) as amended (the "Registration Statement")) filed with the Securities and Exchange Commission (the "SEC"), and proposed to be distributed to all record holders of the Old Notes. The Old Notes and the New Notes are collectively referred to in this Exchange Agent Agreement (this "Agreement") as the "Notes" or the "Securities." Capitalized terms used herein and not defined shall have the respective meanings ascribed to them in the Registration Statement or the accompanying letter of transmittal (the "Letter of Transmittal").

The Company hereby appoints Wilmington Trust Company to act as exchange agent (the "Exchange Agent") in connection with the Exchange Offer. References hereinafter to "you" shall refer to Wilmington Trust Company.

The Exchange Offer is expected to be commenced by the Company on or about May ___, 2003. The Letter of Transmittal accompanying the Registration Statement is to be used by the holders of the Old Notes to tender into the Exchange Offer, and contains instructions with respect to the delivery of Old Notes tendered. The Exchange Agent's obligations with respect to receipt and inspection of the Letter of Transmittal in connection with the Exchange Offer shall be satisfied for all purposes hereof by (1) inspection of the electronic message transmitted to the Exchange Agent by Exchange Offer participants in accordance with the Automated Tender Offer Program ("ATOP") of the Depositary Trust Company ("DTC"), and by otherwise observing and complying with all procedures established by DTC in connection with ATOP, to the extent that ATOP is utilized by Exchange Offer participants, or (2) by inspection of the Letter of Transmittal by each respective holder of Old Notes.

The Exchange Offer shall expire at 5:00 p.m., New York City time, on June ___, 2003, or on such later date or time to which the Company may extend the Exchange Offer (the "Expiration Date"). Subject to the terms and conditions set forth in the Registration Statement, the Company expressly reserves the right to extend the Exchange Offer from time to time and may extend the Exchange Offer by giving oral (confirmed in writing) or written notice to you at any time before 9:00 a.m., New York City time, on the business day following the previously scheduled Expiration Date, and in such case the term "Expiration Date" shall mean the time and date on which the Exchange Offer as so extended shall expire.

The Company expressly reserves the right, in its sole discretion, to delay, amend or terminate the Exchange Offer, and not to accept for exchange any Old Notes not theretofore accepted for exchange, in among other cases upon the occurrence of any of the conditions of the Exchange Offer specified in the Registration Statement under the caption "The Exchange Offer -- Extensions, Delays in Acceptance, Termination or Amendment." The Company will give to you as promptly as practicable oral (confirmed in writing) or written notice of any delay, amendment, termination or non-acceptance.

In carrying out your duties as Exchange Agent, you are to act in accordance with the following instructions:

1. You will perform such duties and only such duties as are specifically set forth herein or in the section of the Registration Statement captioned the "The Exchange Offer", in the Letter of Transmittal accompanying the Registration Statement and such duties which are necessarily incidental thereto.

2. You will establish a book-entry account with respect to the Old Notes at The Depository Trust Company (the "Book-Entry Transfer Facility") for purposes of the Exchange Offer within two business days after the date of the Registration Statement, and any financial institution that is a participant in the Book-Entry Transfer Facility's systems may make book-entry delivery of the Old Notes by causing the Book-Entry Transfer Facility to transfer such Old Notes into your account in accordance with the Book-Entry Transfer Facility's procedure for such transfer.

3. You are to examine each of the Letters of Transmittal and certificates for Old Notes (or confirmation of book-entry transfers into your account at the Book-Entry Transfer Facility) and any other documents delivered or mailed to you by or for holders of the Old Notes to ascertain whether: (i) the Letters of Transmittal, certificates and any such other documents are duly executed and properly completed in accordance with instructions set forth therein and in the Registration Statement and that such book-entry confirmations are in due and proper form and contain the information required to be set forth therein, and
(ii) the Old Notes have otherwise been properly tendered. In each case where the Letter of Transmittal or any other document has been improperly completed or executed or where book-entry confirmations are not in due and proper form or omit certain information or any of the certificates for Old Notes are not in proper form for transfer or some other irregularity in connection with the acceptance of the Exchange Offer exists, you will endeavor to inform the presenters of the need for fulfillment of all

2

requirements and to take any other action as may be necessary or advisable to cause such irregularity to be corrected.

4. With the approval of the President or any Senior Vice President of the Company (such approval, if given orally, promptly to be confirmed in writing) or any other party designated by such officer in writing, you are authorized to waive any irregularities in connection with any tender of Old Notes pursuant to the Exchange Offer. You are not otherwise authorized to waive any such irregularities.

5. Tenders of Old Notes may be made only as set forth in the Letter of Transmittal and in the sections of the Registration Statement captioned "The Exchange Offer -- Procedures for Physical Tender", "The Exchange Offer -- When Endorsements Or Bond Powers Are Needed" and "The Exchange Offer -- Tendering Through DTC's Automated Tender Offer Program" and Old Notes shall be considered properly tendered to you only when tendered in accordance with the procedures set forth therein.

Notwithstanding the provisions of this paragraph 5, Old Notes which the President or any Senior Vice President of the Company or any other party designated by any such officer in writing shall approve as having been properly tendered shall be considered to be properly tendered (such approval, if given orally, shall be promptly confirmed in writing).

6. You shall promptly advise the Company with respect to any Old Notes delivered subsequent to the Expiration Date and accept its instructions with respect to disposition of such Old Notes.

7. You shall accept tenders:

(a) in cases where the Old Notes are registered in two or more names only if signed by all named holders;

(b) in cases where the signing person (as indicated on the Letter of Transmittal) is acting in a fiduciary or a representative capacity only when proper evidence of his or her authority so to act is submitted; and

(c) from persons other than the registered holder of Old Notes provided that customary transfer requirements, including any payment of applicable transfer taxes, are fulfilled.

You shall accept partial tenders of Old Notes where so indicated and as permitted in the Letter of Transmittal and return any untendered Old Notes to the holder (or such other person as may be designated in the Letter of Transmittal) as promptly as practicable after expiration or termination of the Exchange Offer. A new certificate for the remainder of the principal amount of the Old Notes will be sent to the holders of Old Notes unless otherwise indicated by partial tendering holders of Old Notes.

3

8. Upon satisfaction or waiver of all of the conditions to the Exchange Offer, the Company will notify you (such notice if given orally, promptly to be confirmed in writing) of its acceptance, promptly after the Expiration Date, of all Old Notes properly tendered and you, on behalf of the Company, will exchange such Old Notes for New Notes and cause such Old Notes to be cancelled. Delivery of New Notes, will be made on behalf of the Company by you at the rate of $1,000 principal amount of New Notes for each $1,000 principal amount of the Old Notes tendered, and, in the case of Old Notes tendered, promptly after notice (such notice if given orally, promptly to be confirmed in writing) of acceptance of said Old Notes by the Company; PROVIDED, HOWEVER, that in all cases, Old Notes tendered pursuant to the Exchange Offer will be exchanged only after timely receipt by you of certificates for such Old Notes (or confirmation of book-entry transfer into your account at the Book-Entry Transfer Facility), a properly completed and duly executed Letter of Transmittal (or facsimile thereof) and an Agent's Message (as defined in the Registration Statement) with any required signature guarantees and any other required document. You shall issue New Notes only in denominations of $1,000 or any integral multiple thereof.

9. Tenders pursuant to the Exchange Offer are irrevocable after the Expiration Date. Subject to the terms and upon the conditions set forth in the Registration Statement and the Letter of Transmittal, Old Notes tendered pursuant to the Exchange Offer may be withdrawn at any time on or prior to the Expiration Date in accordance with the terms of the Exchange Offer.

10. The Company shall not be required to exchange any Old Notes tendered if any of the conditions set forth in the Registration Statement are not met. Notice of any decision by the Company not to exchange any Old Notes tendered shall be given (such notices if given orally, promptly shall be confirmed in writing) by the Company to you.

11. If, pursuant to the Registration Statement, the Company does not accept for exchange all or part of the Old Notes tendered because of an invalid tender, the occurrence of certain other events set forth in the Registration Statement or otherwise, you shall as soon as practicable after the expiration or termination of the Exchange Offer return those certificates for unaccepted Old Notes (or effect appropriate book-entry transfer), together with any related required documents and the Letters of Transmittal relating thereto that are in your possession, to the persons who deposited them (or effected such book-entry transfer).

12. All certificates for reissued Old Notes, unaccepted Old Notes or New Notes, as the case may be (other than those effected by book-entry transfer), shall be forwarded by (a) first-class mail, postage pre-paid under a blanket surety bond protecting you and the Company from loss or liability arising out of the non-receipt or non-delivery of such certificates or (b) by registered mail insured separately for the replacement value of each of such certificates.

13. You are not authorized to pay or offer to pay any concessions, commissions or solicitation fees to any broker, dealer, bank or other persons or to engage or utilize any persons to solicit tenders.

4

14. As Exchange Agent hereunder you:

(a) will be regarded as making no representations and having no responsibilities as to the validity, sufficiency, value or genuineness of any of the Old Notes deposited with you pursuant to the Exchange Offer, and will not be required to and will make no representation as to the validity, value or genuineness of the Registration Statement;

(b) shall not be obligated to take any legal action hereunder which might in your reasonable judgment involve any expense or liability, unless you shall have been furnished with reasonable indemnity;

(c) shall not be liable to the Company for any action taken or omitted by you, or any action suffered by you to be taken or omitted, without negligence, misconduct or bad faith on your part, by reason of or as a result of the administration of your duties hereunder in accordance with the terms and conditions of this Agreement or by reason of your compliance with the instructions set forth herein or with any written or oral instructions delivered to you pursuant hereto, and may reasonably rely on and shall be protected in acting in good faith in reliance upon any certificate, instrument, opinion, notice, letter, facsimile or other document or security delivered to you and reasonably believed by you to be genuine and to have been signed by the proper party or parties;

(d) may reasonably act upon any tender, statement, request, comment, agreement or other instrument whatsoever not only as to its due execution and validity and effectiveness of its provisions, but also as to the truth and accuracy of any information contained therein, which you shall in good faith reasonably believe to be genuine or to have been signed or represented by a proper person or persons;

(e) may rely on and shall be protected in acting upon written notice or oral instructions from the President or any Senior Vice President of the Company or any other party designated by any such officer of the Company;

(f) shall not advise any person tendering Old Notes pursuant to the Exchange Offer as to whether to tender or refrain from tendering all or any portion of Old Notes or as to the market value, decline or appreciation in market value of any Old Notes that may or may not occur as a result of the Exchange Offer or as to the market value of the Exchange Notes;

(g) may consult with counsel with respect to any questions relating to your duties and responsibilities, and the written advice or opinion of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by you hereunder in good faith and in reliance thereon; and

(h) shall act solely as agent of the Company and shall not assume any obligation, or relationship of agency or trust for or, with any of the owners or holders of the Old Notes.

5

15. You shall send to all holders of Old Notes a copy of the Registration Statement, the Letter of Transmittal, the Notice of Guaranteed Delivery (as defined in the Registration Statement) and such other documents (collectively, the "Exchange Offer Documents") as may be furnished by the Company to commence the Exchange Offer and take such other action as may from time to time be requested by the Company or its counsel (and such other action as you may reasonably deem appropriate) to furnish copies of the Exchange Offer Documents or such other forms as may be approved from time to time by the Company, to all holders of Old Notes and to all persons requesting such documents and to accept and comply with telephone requests for information relating to the Exchange Offer, provided that such information shall relate only to the procedures for accepting (or withdrawing from) the Exchange Offer. The Company will furnish you with copies of such documents at your request. All other requests for information relating to the Exchange Offer shall be directed to the Company, Attention: Associate General Counsel, at the Company's offices at 511 Fifth Avenue, New York, New York 10017, telephone number: 1-212-251-1153.

16. You shall advise by facsimile transmission, email, or by telephone, and promptly thereafter confirm in writing to the Chief Financial Officer or Associate General Counsel of the Company, and such other person or persons as the Company may request in writing, daily, and more frequently during the week immediately preceding the Expiration Date and if otherwise requested, up to and including the Expiration Date, as to the aggregate principal amount of Old Notes which have been tendered pursuant to the Registration Statement and the items received by you pursuant to the Exchange Offer and this Agreement, separately reporting and giving cumulative totals as to items properly received and items improperly received. In addition, you will also inform, and cooperate in making available to, the Company or any such other person or persons as the Company requests in writing from time to time prior to the Expiration Date of such other information as it or he or she reasonably requests. Such cooperation shall include, without limitation, the granting by you to the Company and such person as the Company may request of access to those persons on your staff who are responsible for receiving tenders, in order to ensure that immediately prior to the Expiration Date the Company shall have received information in sufficient detail to enable it to decide whether to extend the Exchange Offer. You shall prepare a final list of all persons whose tenders were accepted, the aggregate principal amount of Old Notes tendered, the aggregate principal amount of Old Notes accepted and the identity of any participating broker-dealers and the aggregate principal amount of Exchange Notes delivered to each, and deliver said list to the Company.

17. Letters of Transmittal and Notices of Guaranteed Delivery shall be stamped by you as to the date and, after the expiration of the Exchange Offer, the time of receipt thereof shall be preserved by you for a period of time at least equal to the period of time you customarily preserve other records pertaining to the transfer of securities, or one year, whichever is longer, and thereafter shall be delivered by you to the Company. You shall dispose of unused Letters of Transmittal and other surplus materials in accordance with your customary procedures.

18. You hereby expressly waive any lien, encumbrance or right of set-off whatsoever that you may have with respect to funds deposited with you for the payment of transfer taxes by reasons of amounts, if any, borrowed by the Company, or any of its subsidiaries or affiliates pursuant to any loan or credit agreement with you or for compensation owed to you hereunder.

6

19. For services rendered as Exchange Agent hereunder you shall be entitled to such compensation and reimbursement of out-of-pocket expenses as agreed in the attached Schedule A.

20. You hereby acknowledge receipt of the Registration Statement, the Letter of Transmittal and the other documents associated with the Exchange Offer attached hereto and further acknowledge that you have examined each of them. Any inconsistency between this Agreement, on the one hand, and the Registration Statement, the Letter of Transmittal and such other forms (as they may be amended from time to time), on the other hand, shall be resolved in favor of the Registration Statement, the Letter of Transmittal and such other forms, except with respect to the duties, liabilities and indemnification of you as Exchange Agent which shall be controlled by this Agreement.

21. The Company agrees to indemnify and hold you harmless in your capacity as Exchange Agent hereunder against any liability, cost or expense, including reasonable attorneys' fees and expenses, arising out of or in connection with your appointment as Exchange Agent and the performance of your duties hereunder, including, without limitation, any act, omission, delay or refusal made by you in reasonable reliance upon any signature, endorsement, assignment, certificate, order, request, notice, instruction or other instrument or document reasonably believed by you to be valid, genuine and sufficient and in accepting any tender or effecting any transfer of Old Notes reasonably believed by you in good faith to be authorized, and in delaying or refusing in good faith to accept any tenders or effect any transfer of Old Notes; PROVIDED, HOWEVER, that the Company shall not be liable for indemnification or otherwise for any loss, liability, cost or expense to the extent arising out of your gross negligence, willful misconduct or bad faith. The Company's obligations under this paragraph 21 shall survive the termination of this Agreement and the discharge of your obligation hereunder and any other termination of this Agreement under any federal or state bankruptcy law.

22. You shall arrange to comply with all requirements under the tax laws of the United States, including those relating to missing Tax Identification Numbers, and shall file any appropriate reports with the Internal Revenue Service. The Company understands that you are required, in certain instances, to deduct thirty and one half percent (30.5%) with respect to interest paid on the New Notes and proceeds from the sale, exchange, redemption or retirement of the New Notes from holders who have not supplied their correct Taxpayer Identification Numbers or required certification. Such funds will be turned over to the Internal Revenue Service in accordance with applicable regulations.

23. You shall notify the Company of the amount of any transfer taxes payable in respect of the exchange of Old Notes and shall deliver or cause to be delivered, in a timely manner, to each governmental authority to which any transfer taxes are payable in respect of the exchange of Old Notes your check in the amount of all transfer taxes so payable, and the Company shall reimburse you for the amount of any and all transfer taxes payable in respect of the exchange of Old Notes; PROVIDED, HOWEVER, that you shall reimburse the Company for amounts refunded to you in respect of your payment of any such transfer taxes, at such time as such refund is received by you.

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24. This Agreement and your appointment as Exchange Agent hereunder shall be construed and enforced in accordance with the laws of the State of New York applicable to agreements made and to be performed entirely within such state, and without regard to conflicts of law principles, and shall inure to the benefit of, and the obligations created hereby shall be binding upon, the successors and assigns of each of the parties hereto and nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. Without limitation of the foregoing, the parties hereto expressly agree that no holder of Old Notes or Exchange Notes shall have any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

25. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

26. In case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

27. This Agreement shall not be deemed or construed to be modified, amended, rescinded, canceled or waived, in whole or in part, except by a written instrument signed by a duly authorized representative of the party to be charged.

28. Unless otherwise provided herein, all notices, requests and other communications to any party hereunder shall be in writing (including facsimile) and shall be given to such party, addressed to it, as its address or telecopy number set forth below:

If to the Company:

Overseas Shipholding Group, Inc.
511 Fifth Avenue
New York, New York 10017

Facsimile: 212-578-1832
Attention: Chief Financial Officer and
Facsimile: 212-251-1180
Attention: Associate General Counsel

If to the Exchange Agent:

Wilmington Trust Company

Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890 Facsimile: (302) 636-4145 Attention: Corporate Trust Operations

8

29. Unless terminated earlier by the parties hereto, this Agreement shall terminate 90 days following the Expiration Date. Notwithstanding the foregoing, Paragraphs 18, 19, 21 and 22 shall survive the termination of this Agreement. Upon any termination of this Agreement, you shall promptly deliver to the Company any certificates for notes, funds or property (including, without limitation, Letters of Transmittal and any other documents relating to the Exchange Offer) then held by you as Exchange Agent under this Agreement.

30. This Agreement shall be binding and effective as of the date hereof.

Please acknowledge receipt of this Agreement and confirm the arrangements herein provided by signing and returning the enclosed copy.

OVERSEAS SHIPHOLDING GROUP, INC.

By:

Name:

Title: Senior Vice President

Accepted as the date
first above written:

WILMINGTON TRUST COMPANY,
as exchange agent

By:
Name:
Title:

9

SCHEDULE A

AS EXCHANGE AGENT
(payable in advance) $3,500.00

10

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LETTER OF TRANSMITTAL

Regarding the Offer to Exchange All Outstanding
8.250% Senior Notes Due March 15, 2013
In Exchange For
Registered 8.250% Senior Notes Due March 15, 2013
of

OVERSEAS SHIPHOLDING GROUP, INC.

CUSIP NO. 690368 AE5      

NOTES TENDERED IN SUCH EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME
PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.

The Exchange Agent is:

WILMINGTON TRUST COMPANY

YOU CAN DELIVER THIS LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED
DOCUMENTATION TO THE EXCHANGE AGENT AT THE ADDRESSES AS FOLLOWS:

By Hand Delivery:
Wilmington Trust Company
301 West 11th Street
Wilmington, Delaware 19801 		  By Overnight Courier:
Wilmington Trust Company
1100 North Market Street
Rodney Square North
Wilmington, Delaware 19890-1615

By First Class Mail:
Wilmington Trust Company
1100 North Market Street
Rodney Square North
Wilmington, Delaware 19890-1615
 
To Confirm Receipt of
Notice of Guaranteed Delivery:
Fax #: (302) 636-4145
Fax Confirmation #: (302) 636-6472

DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE
WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING
THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE
THE LETTER OF TRANSMITTAL IS COMPLETED.

        The undersigned hereby acknowledges receipt and review of the prospectus dated May     , 2003, of Overseas Shipholding Group, Inc. (the "Company") and this letter of transmittal. These two documents together constitute the Company's offer to exchange its 8.250% Senior Notes due March 15, 2013 (the "Exchange Notes"), the issuance of which has been registered under the Securities Act of 1933, as amended (the "Securities Act"), for a like principal amount of its issued and outstanding 8.250% Senior Notes due March 15, 2013 (the "Original Notes") (the "Exchange Offer").

        The Company reserves the right, at any time or from time to time, to extend the period of time during which the Exchange Offer for the Original Notes is open, at its discretion, in which event the term "Expiration Date" shall mean the latest date to which such Exchange Offer is extended. The Company shall notify Wilmington Trust Company (the "Exchange Agent") of any extension by oral or


written notice and shall make a public announcement thereof no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date.

        This letter of transmittal is to be used by a holder of Original Notes (i) if certificates of Original Notes are to be forwarded herewith or (ii) if delivery of Original Notes is to be made by book-entry transfer to the account maintained by the Exchange Agent at The Depository Trust Company ("DTC") pursuant to the procedures set forth in the prospectus under the caption "The Exchange Offer—Book-Entry Transfer" and an "agent's message" is not delivered as described in the prospectus under the caption "The Exchange Offer—Tendering Through DTC's Automated Tender Offer Program." Tenders by book-entry transfer may also be made by delivering an agent's message in lieu of this letter of transmittal. Holders of Original Notes whose Original Notes are not immediately available, or who are unable to deliver their Original Notes, this letter of transmittal and all other documents required hereby to the Exchange Agent on or prior to the Expiration Date for the Exchange Offer, or who are unable to complete the procedure for book-entry transfer on a timely basis, must tender their Original Notes according to the guaranteed delivery procedures set forth in the prospectus under the caption "The Exchange Offer—Guaranteed Delivery Procedures" by the Expiration Date. See Instruction 2. DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.

        The term "holder" with respect to the Exchange Offer for Original Notes means any person in whose name such Original Notes are registered on the books of the Company, any person who holds such Original Notes and has obtained a properly completed bond power from the registered holder or any participant in the DTC system whose name appears on a security position listing as the holder of such Original Notes and who desires to deliver such Original Notes by book-entry transfer at DTC. The undersigned has completed, executed and delivered this letter of transmittal to indicate the action the undersigned desires to take with respect to such Exchange Offer. Holders who wish to tender their Original Notes must complete this letter of transmittal in its entirety (unless such Original Notes are to be tendered by book-entry transfer and an agent's message is delivered in lieu hereof).

PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS CAREFULLY BEFORE CHECKING ANY BOX BELOW.

        THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED. QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.

2

        List below the Original Notes to which this letter of transmittal relates. If the space below is inadequate, list the registered numbers and principal amounts on a separate signed schedule and affix the list to this letter of transmittal.


DESCRIPTION OF ORIGINAL NOTES TENDERED

Name(s) and Address(es) of Registered Holder(s)
Exactly as Name(s) appear(s) on Original Notes
(Please fill in, if blank)

  Registered
Number(s)*

  Aggregate Principal
Amount Represented
By Note(s)

  Aggregate
Principal Amount
Tendered**








 
 
TOTAL
 
 
 
 
*
Need not be completed by book-entry holders.

**
Unless otherwise indicated, any tendering holder of Original Notes will be deemed to have tendered the entire aggregate principal amount represented by such Original Notes. All tenders must be in integral multiples of $1,000.

/
/    CHECK HERE IF TENDERED ORIGINAL NOTES ARE ENCLOSED HEREWITH.

/
/    CHECK HERE AND COMPLETE THE FOLLOWING IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC (FOR USE BY ELIGIBLE INSTITUTIONS ONLY):

        Name of Tendering Institution: 

        DTC Account Number(s): 

        Transaction Code Number(s): 

/
/    CHECK HERE AND COMPLETE THE FOLLOWING IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY EITHER ENCLOSED HEREWITH OR PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT (COPY ATTACHED) (FOR USE BY ELIGIBLE INSTITUTIONS ONLY):

        Name(s) of Registered holder(s) of Original Notes: 

        Date of Execution of Notice of Guaranteed Delivery: 

        Window Ticket Number (if available): 

        Name of Eligible Institution that Guaranteed Delivery: 

        DTC Account Number(s) (if delivered by book-entry transfer): 

        Transaction Code Number(s) (if delivered by book-entry transfer): 

        Name of Tendering Institution (if delivered by book-entry transfer): 

3


/
/    CHECK HERE AND COMPLETE THE FOLLOWING IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO:

Name:  

Address:
 

        If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Exchange Notes. If the undersigned is a broker-dealer that will receive Exchange Notes for its own account in exchange for Original Notes that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Notes; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act.

SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ
THE ACCOMPANYING INSTRUCTIONS CAREFULLY

        Subject to the terms and conditions of the Exchange Offer, the undersigned hereby tenders to the Company for exchange the principal amount of Original Notes indicated above. Subject to and effective upon the acceptance for exchange of the principal amount of Original Notes tendered in accordance with this letter of transmittal, the undersigned hereby exchanges, assigns and transfers to, or upon the order of, the Company all right, title and interest in and to such Original Notes tendered for exchange hereby. The undersigned hereby irrevocably constitutes and appoints the Exchange Agent the true and lawful agent and attorney-in-fact for the undersigned (with full knowledge that said Exchange Agent also acts as the agent for the Company in connection with the Exchange Offer) with respect to the tendered Original Notes with full power of substitution to (i) deliver such Original Notes, or transfer ownership of such Original Notes on the account books maintained by DTC, to the Company and deliver all accompanying evidences of transfer and authenticity, and (ii) present such Original Notes for transfer on the books of the Company and receive all benefits and otherwise exercise all rights of beneficial ownership of such Original Notes, all in accordance with the terms of the Exchange Offer. The power of attorney granted in this paragraph shall be deemed to be irrevocable and coupled with an interest.

        The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, exchange, assign and transfer the Original Notes tendered hereby and to acquire the Exchange Notes issuable upon the exchange of such tendered Original Notes, and that the Company will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim, when the same are accepted for exchange by the Company.

        The undersigned acknowledges that the Exchange Offer is being made in reliance upon interpretations set forth in no-action letters issued to third parties (the "Prior No-Action Letters") by the staff of the Securities and Exchange Commission (the "SEC") that the Exchange Notes issued in exchange for the Original Notes pursuant to the Exchange Offer may be offered for resale, resold and otherwise transferred by holders thereof (other than any such holder that is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act), without compliance with the registration and prospectus delivery provisions of the Securities Act, PROVIDED that such Exchange Notes are acquired in the ordinary course of such holders' business and such holders are not engaging in, do not intend to engage in and have no arrangement or understanding with any person to

4


participate in a distribution of such Exchange Notes. The SEC has not, however, considered the Exchange Offer in the context of a no-action letter, and there can be no assurance that the staff of the SEC would make a similar determination with respect to the Exchange Offer as in other circumstances.

        The undersigned hereby further represents to the Company that (i) any Exchange Notes received are being acquired in the ordinary course of business of the person receiving such Exchange Notes, whether or not the undersigned, (ii) neither the undersigned nor any such other person has an arrangement or understanding with any person to participate in the distribution of the Original Notes or the Exchange Notes within the meaning of the Securities Act and (iii) neither the holder nor any such other person is an "affiliate," as defined in Rule 405 under the Securities Act, of the Company or, if it is such an affiliate, it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable.

        If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Exchange Notes. If the undersigned is a broker-dealer that will receive Exchange Notes for its own account in exchange for Original Notes that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Notes; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. The undersigned acknowledges that if the undersigned is tendering Original Notes in the Exchange Offer with the intention of participating in any manner in a distribution of the Exchange Notes (i) the undersigned cannot rely on the position of the staff of the SEC set forth in the Prior No-Action Letters and, in the absence of an exemption therefrom, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction of the Exchange Notes, in which case the registration statement must contain the selling security holder information required by Item 507 or Item 508, as applicable, of Regulation S-K of the SEC, and (ii) failure to comply with such requirements in such instance could result in the undersigned incurring liability under the Securities Act for which the undersigned is not indemnified by the Company.

        The undersigned will, upon request, execute and deliver any additional documents deemed by the Exchange Agent or the Company to be necessary or desirable to complete the exchange, assignment and transfer of the Original Notes tendered hereby, including the transfer of such Original Notes on the account books maintained by DTC.

        For purposes of the Exchange Offer, the Company shall be deemed to have accepted for exchange validly tendered Original Notes when, as and if the Company gives oral or written notice thereof to the Exchange Agent. Any tendered Original Notes that are not accepted for exchange pursuant to such Exchange Offer for any reason will be returned, without expense, to the undersigned as promptly as practicable after the Expiration Date for such Exchange Offer.

        All authority conferred or agreed to be conferred by this letter of transmittal shall survive the death, incapacity or dissolution of the undersigned, and every obligation of the undersigned under this letter of transmittal shall be binding upon the undersigned's successors, assigns, heirs, executors, administrators, trustees in bankruptcy and legal representatives.

        The undersigned acknowledges that the Company's acceptance of properly tendered Original Notes pursuant to the procedures described under the caption "The Exchange Offer—Procedures for Tendering" in the prospectus and in the instructions hereto will constitute a binding agreement between the undersigned and the Company upon the terms and subject to the conditions of the Exchange Offer.

        The Exchange Offer is subject to certain conditions set forth in the prospectus under the caption "The Exchange Offer—Conditions To The Exchange Offer." The undersigned recognizes that as a

5


result of these conditions (which may be waived, in whole or in part, by the Company), the Company may not be required to exchange any of the Original Notes tendered hereby.

        Unless otherwise indicated under "Special Issuance Instructions," please issue the Exchange Notes issued in exchange for the Original Notes accepted for exchange, and return any Original Notes not tendered or not exchanged, in the name(s) of the undersigned (or, in the case of a book-entry delivery of Original Notes, please credit the account indicated above maintained at DTC). Similarly, unless otherwise indicated under "Special Delivery Instructions," please mail or deliver the Exchange Notes issued in exchange for the Original Notes accepted for exchange and any Original Notes not tendered or not exchanged (and accompanying documents, as appropriate) to the undersigned at the address shown below the undersigned's signature(s). In the event that both "Special Issuance Instructions" and "Special Delivery Instructions" are completed, please issue the Exchange Notes issued in exchange for the Original Notes accepted for exchange in the name(s) of, and return any Original Notes not tendered or not exchanged to, the person(s) (or account(s)) so indicated. The undersigned recognizes that the Company has no obligation pursuant to the "Special Issuance Instructions" and "Special Delivery Instructions" to transfer any Original Notes from the name of the registered holder(s) thereof if the Company does not accept for exchange any of the Original Notes so tendered for exchange.

6

Name:  
PLEASE TYPE OR PRINT
Address:  

(Include Zip Code)
Taxpayer Identification or Social Security Number:

 

PLEASE TYPE OR PRINT
Name:  
PLEASE TYPE OR PRINT
Address:  

(Include Zip Code)
Taxpayer Identification or Social Security Number:

PLEASE TYPE OR PRINT

/ /    Credit unexchanged Original Notes delivered by book-entry transfer to DTC set forth below:

DTC Account Number:

7

Dated       , 2003  
   
     

Name(s):
 
    
(Please Type or Print)                
Capacity:       
Address:       
(Include Zip Code)
Area Code and Telephone Number:  
Taxpayer Identification or Social Security Number:  
Dated     , 2003
   
 

8


INSTRUCTIONS

FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER

        1.    DELIVERY OF THIS LETTER OF TRANSMITTAL AND ORIGINAL NOTES OR AGENT'S MESSAGE AND BOOK-ENTRY CONFIRMATIONS. All physically delivered Original Notes or any confirmation of a book-entry transfer to the Exchange Agent's account at DTC of Original Notes tendered by book-entry transfer (a "Book-Entry Confirmation"), as well as a properly completed and duly executed copy of this letter of transmittal or facsimile hereof (or an agent's message in lieu hereof), and any other documents required by this letter of transmittal, must be received by the Exchange Agent at its address set forth herein prior to 5:00 p.m., New York City time, on the Expiration Date for the Exchange Offer, or the tendering holder must comply with the guaranteed delivery procedures set forth below. THE METHOD OF DELIVERY OF THE TENDERED ORIGINAL NOTES, THIS LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE HOLDER AND, EXCEPT AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED OR CONFIRMED BY THE EXCHANGE AGENT. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT THE HOLDER USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR ORIGINAL NOTES SHOULD BE SENT TO THE COMPANY.

        2.    GUARANTEED DELIVERY PROCEDURES. Holders who wish to tender their Original Notes and (a) whose Original Notes are not immediately available, (b) who cannot deliver their Original Notes, this letter of transmittal or any other documents required hereby to the Exchange Agent prior to the applicable Expiration Date or (c) who are unable to comply with the applicable procedures under the DTC's Automated Tender Offer Program on a timely basis, must tender their Original Notes according to the guaranteed delivery procedures set forth in the prospectus. Pursuant to such procedures: (i) such tender must be made by or through a firm which is a member of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or a trust company having an office or correspondent in the United States or an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended (an "Eligible Institution"); (ii) prior to the applicable Expiration Date, the Exchange Agent must have received from the Eligible Institution a properly completed and duly executed notice of guaranteed delivery (by facsimile transmission, mail or hand delivery) or a properly transmitted agent's message and notice of guaranteed delivery setting forth the name and address of the holder of the Original Notes, the registration number(s) of such Original Notes and the total principal amount of Original Notes tendered, stating that the tender is being made thereby and guaranteeing that, within three New York Stock Exchange trading days after such Expiration Date, this letter of transmittal (or facsimile hereof or an agent's message in lieu hereof) together with the Original Notes in proper form for transfer (or a Book-Entry Confirmation) and any other documents required hereby, will be deposited by the Eligible Institution with the Exchange Agent; and (iii) this letter of transmittal (or facsimile hereof or an agent's message in lieu hereof) together with the certificates for all physically tendered Original Notes in proper form for transfer (or Book-Entry Confirmation, as the case may be) and all other documents required hereby are received by the Exchange Agent within three New York Stock Exchange trading days after such Expiration Date.

        Any holder of Original Notes who wishes to tender Original Notes pursuant to the guaranteed delivery procedures described above must ensure that the Exchange Agent receives the notice of guaranteed delivery prior to 5:00 p.m., New York City time, on the applicable Expiration Date. Upon request of the Exchange Agent, a notice of guaranteed delivery will be sent to holders who wish to tender their Original Notes according to the guaranteed delivery procedures set forth above.

        See "The Exchange Offer—Guaranteed Delivery Procedures" section of the prospectus.

9

        3.    TENDER BY HOLDER. Only a holder of Original Notes may tender such Original Notes in the Exchange Offer. Any beneficial holder of Original Notes who is not the registered holder and who wishes to tender should arrange with the registered holder to execute and deliver this letter of transmittal on his behalf or must, prior to completing and executing this letter of transmittal and delivering his Original Notes, either make appropriate arrangements to register ownership of the Original Notes in such holder's name or obtain a properly completed bond power from the registered holder.

        4.    PARTIAL TENDERS. Tenders of Original Notes will be accepted only in integral multiples of $1,000. If less than the entire principal amount of any Original Notes is tendered, the tendering holder should fill in the principal amount tendered in the fourth column of the box entitled "Description of Original Notes Tendered" above. The entire principal amount of Original Notes delivered to the Exchange Agent will be deemed to have been tendered unless otherwise indicated. If the entire principal amount of all Original Notes is not tendered, then Original Notes for the principal amount of Original Notes not tendered and Exchange Notes issued in exchange for any Original Notes accepted will be returned to the holder as promptly as practicable after the Original Notes are accepted for exchange.

        5.    SIGNATURES ON THIS LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS; GUARANTEE OF SIGNATURES. If this letter of transmittal (or facsimile hereof) is signed by the registered holder(s) of the Original Notes tendered hereby, the signature(s) must correspond exactly with the name(s) as written on the face of the Original Notes without alteration, enlargement or any change whatsoever. If this letter of transmittal (or facsimile hereof) is signed by a participant in DTC, the signature must correspond with the name as it appears on the security position listing as the holder of the Original Notes.

        If this letter of transmittal (or facsimile hereof) is signed by the registered holder(s) of Original Notes listed and tendered hereby and the Exchange Notes issued in exchange therefor are to be issued (or any untendered principal amount of Original Notes is to be reissued) to the registered holder(s), the said holder(s) need not and should not endorse any tendered Original Notes, nor provide a separate bond power. In any other case, such holder(s) must either properly endorse the Original Notes tendered or transmit a properly completed separate bond power with this letter of transmittal, with the signatures on the endorsement or bond power guaranteed by an Eligible Institution.

        If this letter of transmittal (or facsimile hereof) or any Original Notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by the Company, evidence satisfactory to the Company of their authority to act must be submitted with this letter of transmittal.

        NO SIGNATURE GUARANTEE IS REQUIRED IF (i) THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF) IS SIGNED BY THE REGISTERED HOLDER(S) OF THE ORIGINAL NOTES TENDERED HEREIN (OR BY A PARTICIPANT IN DTC WHOSE NAME APPEARS ON A SECURITY POSITION LISTING AS THE OWNER OF THE TENDERED ORIGINAL NOTES) AND THE EXCHANGE NOTES ARE TO BE ISSUED DIRECTLY TO SUCH REGISTERED HOLDER(S) (OR, IF SIGNED BY A PARTICIPANT IN DTC, DEPOSITED TO SUCH PARTICIPANT'S ACCOUNT AT DTC) AND NEITHER THE BOX ENTITLED "SPECIAL DELIVERY INSTRUCTIONS" NOR THE BOX ENTITLED "SPECIAL ISSUANCE INSTRUCTIONS" HAS BEEN COMPLETED, OR (ii) SUCH ORIGINAL NOTES ARE TENDERED FOR THE ACCOUNT OF AN ELIGIBLE INSTITUTION. IN ALL OTHER CASES, ALL SIGNATURES ON THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF) MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION.

        6.    SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. Tendering holders should indicate, in the applicable box or boxes, the name and address to which Exchange Notes or substitute Original Notes for principal amounts not tendered or not accepted for exchange are to be issued or sent, if different from the name and address of the person signing this letter of transmittal. In the case

10


of issuance in a different name, the taxpayer identification or social security number of the person named must also be indicated. Holders tendering Original Notes by book-entry transfer may request that Original Notes not exchanged be credited to such account maintained at DTC as such noteholder may designate hereon. If no such instructions are given, such Original Notes not exchanged will be returned to the name and address (or account number) of the person signing this letter of transmittal.

        7.    TRANSFER TAXES. The Company will pay all transfer taxes, if any, applicable to the exchange of Original Notes pursuant to the Exchange Offer. If, however, Exchange Notes or Original Notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be registered or issued in the name of, any person other than the registered holder of the Original Notes tendered hereby, or if tendered Original Notes are registered in the name of any person other than the person signing this letter of transmittal, or if a transfer tax is imposed for any reason other than the exchange of Original Notes pursuant to the Exchange Offer, then the amount of any such transfer taxes (whether imposed on the registered holder or any other persons) will be payable by the tendering holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted with this letter of transmittal, the amount of such transfer taxes will be billed directly to such tendering holder and the Exchange Agent will retain possession of an amount of Exchange Notes with a face amount at least equal to the amount of such transfer taxes due by such tendering holder pending receipt by the Exchange Agent of the amount of such taxes.

        8.    TAX IDENTIFICATION NUMBER. To prevent backup withholding, each tendering holder must provide the Company with its correct taxpayer identification number ("TIN") as instructed in this section 8 and under "Form W-9 Guidelines" below. The Company reserves the right in its sole discretion to take whatever steps are necessary to comply with the Company's obligations regarding backup withholding.

        Certain foreign individuals and entities will not be subject to backup withholding or information reporting if they submit a Form W-8BEN, signed under penalties of perjury, attesting to their foreign status. A Form W-8BEN can be obtained from the Exchange Agent.

        By requesting the information described in this section 8 and the section "W-9 Guidelines" below, the Company is hereby notifying each holder or beneficial owner that to the extent that the holder or beneficial owner is able to comply without undue hardship, the certification, identification and reporting requirements described herein are required under the law of the United States as a precondition to exemption from all or part of the tax due.

        9.    VALIDITY OF TENDERS. All questions as to the validity, form, eligibility, time of receipt, acceptance and withdrawal of tendered Original Notes will be determined by the Company in its sole discretion, which determination will be final and binding. The Company reserves the absolute right to reject any and all Original Notes not properly tendered or any Original Notes the Company's acceptance of which might, in the opinion of the Company's counsel, be unlawful. The Company also reserves the absolute right to waive any conditions of the Exchange Offer or defects or irregularities of tenders as to particular Original Notes. The Company's interpretation of the terms and conditions of the Exchange Offer (including this letter of transmittal and the instructions hereto) shall be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Original Notes must be cured within such time as the Company shall determine. Neither the Company, the Exchange Agent nor any other person shall be under any duty to give notification of defects or irregularities with respect to tenders of Original Notes nor shall any of them incur any liability for failure to give such notification.

        10.    WAIVER OF CONDITIONS. The Company reserves the absolute right to waive, in whole or part, any of the conditions to the Exchange Offer set forth in the prospectus.

        11.    NO CONDITIONAL TENDER. No alternative, conditional, irregular or contingent tender of Original Notes will be accepted.

11


        12.    MUTILATED, LOST, STOLEN OR DESTROYED ORIGINAL NOTES. Any holder whose Original Notes have been mutilated, lost, stolen or destroyed should contact the Exchange Agent at the address indicated above for further instructions. This letter of transmittal and related documents cannot be processed until the procedures for replacing lost, stolen or destroyed Original Notes have been followed.

        13.    REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance or for additional copies of the prospectus or this letter of transmittal may be directed to the Exchange Agent at the address set forth on the cover page of this letter of transmittal. Holders may also contact their broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Exchange Offer.

        14.    WITHDRAWAL. Tenders may be withdrawn only pursuant to the limited withdrawal rights set forth in the prospectus under the caption "The Exchange Offer—Withdrawal of Tenders."

        IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE HEREOF OR AN AGENT'S MESSAGE IN LIEU HEREOF (TOGETHER WITH THE ORIGINAL NOTES DELIVERED BY BOOK-ENTRY TRANSFER OR IN ORIGINAL HARD COPY FORM) MUST BE RECEIVED BY THE EXCHANGE AGENT, OR THE NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE EXCHANGE AGENT, PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.


FORM W-9 GUIDELINES

        A holder of any Original Notes or Exchange Notes must provide the Company (as payor) with its correct taxpayer identification number ("TIN"), which, in the case of a holder who is an individual is his or her social security number. If the Company is not provided with the correct TIN, the holder may be subject to a $50 penalty imposed by the Internal Revenue Service and backup withholding of 30% on interest payments on the Exchange Notes.

        To prevent backup withholding, each tendering holder must provide such holder's correct TIN by completing the Substitute Form W-9 set forth herein, certifying that the TIN provided is correct (or that such holder is awaiting a TIN), and that (i) the holder has not been notified by the Internal Revenue Service that such holder is subject to backup withholding as a result of failure to report all interest or dividends or (ii) the Internal Revenue Service has notified the holder that such holder is no longer subject to backup withholding. If the Exchange Notes will be registered in more than one name or will not be in the name of the actual owner, consult the instructions on Internal Revenue Service Form W-9, which may be obtained from the Exchange Agent, for information on which TIN to report.

        If such holder does not have a TIN, such holder should consult the instructions on Form W-9 concerning applying for a TIN, check the box in Part 3 of the Substitute Form W-9, write "applied for" in lieu of its TIN and sign and date the form and the Certificate of Awaiting Taxpayer Identification Number. Checking this box, writing "applied for" on the form and signing such certificate means that such holder has already applied for a TIN or that such holder intends to apply for one in the near future. If such holder does not provide its TIN to the Company within 60 days, backup withholding will begin and continue until such holder furnishes its TIN to the Company.

        Backup withholding is not an additional Federal income tax. Rather, the amount of such tax withheld will be credited against the Federal income tax liability of persons subject to backup withholding. If backup withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service.


IMPORTANT TAX INFORMATION

        WHAT TAXPAYER IDENTIFICATION NUMBER TO GIVE THE EXCHANGE AGENT. The registered holder or transferee(s), if any, is required to give the Exchange Agent the social security number or taxpayer identification number of the holder of the Note(s).

12


SUBSTITUTE
FORM W-9
Department of the Treasury
Internal Revenue Service
 
Part I: PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND CERTIFY BY SIGNING AND DATING BELOW

Social security number(s)

OR ________________________
Employer Identification Number
(if awaiting TIN write "Applied For")

Payer's Request for Taxpayer
Identification Number (TIN)
and Certification 		  Part II—For Payees exempt from backup withholding, see the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 and complete as instructed therein.
    Part III: Awaiting TIN    / /
Certification. Under penalties of perjury, I certify that:

(1) The Number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me),

(2) I am not subject to backup withholding either because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (IRS) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding and

(3) I am a U.S. person (including a U.S. resident alien).

Certificate Instructions. You must cross out item (2) above if you have been notified by the IRS that you are subject to backup withholding because you have failed to report all interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding you received another notification from the IRS that you are no longer subject to backup withholding, do not cross out item (2). (Also see instructions in the enclosed Guidelines.)

 
 
 
 
 
Signature    Date    

NOTE:
 
FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 30% OF ANY PAYMENT MADE TO YOU IN RESPECT OF THE NOTES. PLEASE REVIEW THE FOREGOING GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING YOUR TIN.

CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION

             I certify under penalties of perjury that a TIN has not been issued to me, and either (a) I have mailed or delivered an application to receive a TIN to the appropriate IRS Center or Social Security Administration Office or (b) I intend to mail or deliver such an application in the near future. I understand that if I do not provide a TIN by the time of payment, all reportable payments made to me thereafter will be subject to a 30% backup withholding tax.

Signature       
  Date       
 

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NOTICE OF GUARANTEED DELIVERY

FOR TENDER OF ALL OUTSTANDING
8.250% SENIOR NOTES DUE MARCH 15, 2013
IN EXCHANGE FOR
REGISTERED 8.250% SENIOR NOTES DUE MARCH 15, 2013
OF

OVERSEAS SHIPHOLDING GROUP, INC.

CUSIP NO. 690368 AE5

        This form, or one substantially equivalent hereto, must be used by a holder to accept the Exchange Offer of Overseas Shipholding Group, Inc. (the "Company") and to tender 8.250% Senior Notes due March 15, 2013 (the "Original Notes") to the Exchange Agent pursuant to the guaranteed delivery procedures described in "The Exchange Offer—Guaranteed Delivery Procedures" of the Company's prospectus dated May    , 2003 and in Instruction 2 to the related Letter of Transmittal. Any holder who wishes to tender Original Notes pursuant to such guaranteed delivery procedures must ensure that Wilmington Trust Company, as exchange agent (the "Exchange Agent"), receives this notice of guaranteed delivery, properly completed and duly executed, prior to the Expiration Date (as defined below) of the Exchange Offer for such series. Capitalized terms used but not defined herein have the meanings ascribed to them in the Letter of Transmittal.

        THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON JUNE    , 2003, UNLESS EXTENDED (THE "EXPIRATION DATE"). NOTES TENDERED IN SUCH EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.

THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
WILMINGTON TRUST COMPANY
YOU CAN DELIVER THIS NOTICE OF GUARANTEED DELIVERY
TO THE EXCHANGE AGENT
AT THE ADDRESSES AS FOLLOWS:


 
 
 
BY HAND DELIVERY:
WILMINGTON TRUST COMPANY
301 WEST 11th STREET
WILMINGTON, DELAWARE 19801 		  BY OVERNIGHT COURIER:
WILMINGTON TRUST COMPANY
1100 NORTH MARKET STREET
RODNEY SQUARE NORTH
WILMINGTON, DELAWARE 19890-1615

BY FIRST CLASS MAIL:
WILMINGTON TRUST COMPANY
1100 NORTH MARKET STREET
RODNEY SQUARE NORTH
WILMINGTON, DELAWARE 19890-1615
 
TO CONFIRM RECEIPT OF NOTICE OF
GUARANTEED DELIVERY:
FAX #: (302) 636-4145
FAX CONFIRMATION #: (302) 636-6472

        DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS NOTICE OF GUARANTEED DELIVERY SHOULD BE READ CAREFULLY BEFORE THE NOTICE OF GUARANTEED DELIVERY IS COMPLETED.

        This notice of guaranteed delivery is not to be used to guarantee signatures. If a signature on a Letter of Transmittal is required to be guaranteed by an "Eligible Institution" under the instructions thereto, such signature guarantee must appear in the applicable space in the box provided on the Letter of Transmittal for guarantee of signatures.

Ladies and Gentlemen:

        The undersigned hereby tenders to the Company, in accordance with the Company's offer, upon the terms and subject to the conditions set forth in the prospectus and the related Letter of Transmittal, receipt of which is hereby acknowledged, the principal amount of Original Notes set forth below pursuant to the guaranteed delivery procedures set forth in the prospectus under the caption "The Exchange Offer—Guaranteed Delivery Procedures" and in Instruction 2 of the Letter of Transmittal.

        The undersigned hereby tenders the Original Notes listed below:

------------------------------------------------------------------------------------------------------------------------------------------


Certificate Number(s)
(if known) of Original Notes or
Account Number at the DTC

 
Aggregate Principal
Amount Represented

 
Aggregate Principal
Amount Tendered*

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PLEASE SIGN AND COMPLETE

Names of Record Holder(s):   Signature(s):    
 
   
 
   

Address: 		       
   
   
(Include Zip Code)    

Area Code and Telephone Number: 		   
   

Dated:  
, 2003 		   
*
Unless otherwise indicated, any tendering holder of Original Notes will be deemed to have tendered the entire aggregate principal amount represented by such Original Notes. All tenders must be in integral multiples of $1,000.

        THIS NOTICE OF GUARANTEED DELIVERY MUST BE SIGNED BY THE REGISTERED HOLDER(S) OF ORIGINAL NOTES EXACTLY AS THE NAME(S) OF SUCH PERSON(S) APPEAR(S) ON CERTIFICATES FOR ORIGINAL NOTES OR ON A SECURITY POSITION LISTING AS THE OWNER OF ORIGINAL NOTES, OR BY PERSON(S) AUTHORIZED TO BECOME HOLDER(S) BY ENDORSEMENTS AND DOCUMENTS TRANSMITTED WITH THIS NOTICE OF GUARANTEED DELIVERY. IF SIGNATURE IS BY A TRUSTEE, EXECUTOR, ADMINISTRATOR, GUARDIAN, ATTORNEY-IN-FACT, OFFICER OR OTHER PERSON ACTING IN A FIDUCIARY OR REPRESENTATIVE CAPACITY, SUCH PERSON MUST PROVIDE THE FOLLOWING INFORMATION:

PLEASE PRINT NAME(S) AND ADDRESS(ES)

   

Name(s): 		       
   

Capacity: 		       
   

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Address(es):









GUARANTEE
(Not to be used for signature guarantee)

        The undersigned, a firm which is a member of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or a trust company having an office or correspondent in the United States, or an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, hereby guarantees deposit with the Exchange Agent of the Letter of Transmittal (or facsimile thereof or agent's message in lieu thereof), together with the Original Notes of the series tendered hereby in proper form for transfer (or confirmation of the book-entry transfer of such Original Notes into the Exchange Agent's account at the DTC described in the prospectus under the caption "The Exchange Offer—Book-Entry Transfer" and in the Letter of Transmittal) and any other required documents, all by 5:00 p.m., New York City time, within three New York Stock Exchange trading days following the Expiration Date for such series.


Name of Firm:
 
 


 
    (AUTHORIZED SIGNATURE)

Address:
 
Name:


 


 

Title:
(INCLUDE ZIP CODE)    

 
 
    (PLEASE TYPE OR PRINT)

Area Code and Telephone Number:
 
 


 
Date:   , 2003

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        DO NOT SEND ORIGINAL NOTES WITH THIS FORM. ACTUAL SURRENDER OF ORIGINAL NOTES MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS.


INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY

        1.    DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY. A properly completed and duly executed copy of this notice of guaranteed delivery (or facsimile hereof or an agent's message and notice of guaranteed delivery in lieu hereof) and any other documents required by this notice of guaranteed delivery with respect to the Original Notes must be received by the Exchange Agent at its address set forth herein prior to the Expiration Date of the Exchange Offer. Delivery of such notice of guaranteed delivery may be made by facsimile transmission, mail or hand delivery. THE METHOD OF DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY AND ANY OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND SOLE RISK OF THE HOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. As an alternative to delivery by mail, the holders may wish to consider using an overnight or hand delivery service. In all cases, sufficient time should be allowed to assure timely delivery. For a description of the guaranteed delivery procedures, see Instruction 2 of the Letter of Transmittal.

        2.    SIGNATURES ON THIS NOTICE OF GUARANTEED DELIVERY. If this notice of guaranteed delivery (or facsimile hereof) is signed by the registered holder(s) of the Original Notes referred to herein, the signature(s) must correspond exactly with the name(s) as written on the face of the Original Notes without alteration, enlargement or any change whatsoever. If this notice of guaranteed delivery (or facsimile hereof) is signed by a DTC participant whose name appears on a security position listing as the owner of the Original Notes, the signature must correspond with the name as it appears on the security position listing as the owner of the Original Notes.

        If this notice of guaranteed delivery (or facsimile hereof) is signed by a person other than the registered holder(s) of any Original Notes listed or a DTC participant, this notice of guaranteed delivery must be accompanied by appropriate bond powers, signed as the name(s) of the registered holder(s) appear(s) on the Original Notes or signed as the name(s) of the participant appears on DTC's security position listing.

        If this notice of guaranteed delivery (or facsimile hereof) is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing and submit herewith evidence satisfactory to the Exchange Agent of such person's authority to so act.

        3.    REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for assistance and requests for additional copies of the prospectus and this notice of guaranteed delivery may be directed to the Exchange Agent at the address set forth on the cover page hereof. Holders may also contact their broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Exchange Offer.

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QuickLinks

NOTICE OF GUARANTEED DELIVERY FOR TENDER OF ALL OUTSTANDING 8.250% SENIOR NOTES DUE MARCH 15, 2013 IN EXCHANGE FOR REGISTERED 8.250% SENIOR NOTES DUE MARCH 15, 2013 OF OVERSEAS SHIPHOLDING GROUP, INC.
PLEASE SIGN AND COMPLETE
GUARANTEE (Not to be used for signature guarantee)
INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY

EXHIBIT 5(a)

(Letterhead of James I. Edelson, Esq.)

May 5, 2003

Overseas Shipholding Group, Inc.
511 Fifth Avenue
New York, New York 10017

Ladies and Gentlemen:

I am the Associate General Counsel of Overseas Shipholding Group, Inc., a Delaware corporation (the "Company"), and I have acted as counsel to the Company in connection with the offer by the Company to exchange outstanding 8.250% Senior Notes due March 15, 2013 of the Company (the "outstanding Notes") issued under the Indenture dated as of March 7, 2003 (the "Indenture") between the Company and Wilmington Trust Company, as Trustee (the "Trustee"), for 8.250% Senior Notes due March 15, 2013 of the Company (the "Exchange Notes") which will be registered under the Securities Act of 1933, as amended, pursuant to a Registration Statement on Form S-4 filed by the Company with the Securities and Exchange Commission (the "Registration Statement"). This opinion is delivered in connection with the filing of the Registration Statement.

As to the various questions of fact material to my opinion, I have relied on certificates of officers of the Company. I have also examined such corporate documents and records, and have made such investigations, as I have deemed necessary in order to render the opinion hereinafter set forth. I have assumed the authenticity of all documents submitted to me as originals, the genuineness of all signatures, the legal capacity of natural persons and the conformity to the originals of all documents submitted to me as copies. I have also assumed that all documents examined by me have been duly and validly authorized, executed and delivered by each of the parties thereto (other than the Company).

Based upon and subject to the foregoing, I render the following opinion:

1. The Indenture has been duly authorized, executed and delivered by the Company and constitutes a valid and legally binding instrument of the Company, enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditor's rights and to general equity principles.

2. The form of the Exchange Note has been established in conformity with the provisions of the Indenture.

3. The Exchange Notes have been duly authorized for issuance by the Company, and when duly executed by the proper officers of the Company in accordance with the Indenture, duly authenticated by the Trustee and duly exchanged for the same principal amount of outstanding Notes, will constitute valid and legally binding obligations of the Company entitled to the benefits of the Indenture, enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditor's rights and to general equity principles.

I hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to me under the caption "Legal Matters" in the Registration Statement. In so doing, I do not admit that I am in the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Securities and Exchange Commission promulgated thereunder.

Very truly yours, 

                                        /s/ James I. Edelson, Esq.

JIE-8641

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EXHIBIT 5(b)

Proskauer Rose LLP

ALAN P. PARNES
Member of the Firm

Direct Dial 212.969.3820
aparnes@proskauer.com

May 5, 2003

Overseas Shipholding Group, Inc.
511 Fifth Avenue
New York, NY 10017

Dear Sirs:

We have acted as counsel to Overseas Shipholding Group, Inc., a Delaware corporation ("OSG"), in connection with the proposed offer to exchange 8.25% Notes of OSG due March 15, 2013 for outstanding 8.25% Notes of OSG due March 15, 2013 (the "Exchange"). In that connection, we have reviewed the section entitled "Tax Considerations - United States Federal Income Tax Consequences" contained in the Registration Statement on Form S-4 (the "Registration Statement") of OSG as filed with the Securities and Exchange Commission (the "Commission") on the date hereof. It is our opinion that such section of the Registration Statement is an accurate general discussion, under currently applicable law, of the principal Federal income tax consequences of the Exchange.

We hereby consent to the filing with the Commission of this opinion as an exhibit to the Registration Statement and to the reference to this firm in the Registration Statement in the section entitled "Tax Considerations - United States Federal Income Tax Consequences." In giving such consent, we do not admit that we come within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the Commission thereunder.

Very truly yours, 

                              /s/ Proskauer Rose LLP
JIE-8645

EXHIBIT 12

OVERSEAS SHIPHOLDING GROUP, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES 

                                                                                  YEAR ENDED DECEMBER 31,
                                               PROFORMA     ------------------------------------------------------------------
                                                 2002          2002          2001          2000          1999          1998
                                              --------------------------------------------------------------------------------
EARNINGS:
Income/(loss) before income taxes             $  (31,514)   $  (20,864)   $  154,445    $  132,989    $   21,764    $  (56,220)
Less equity in (earnings) of 50%-
or-less-owned companies                          (11,407)      (11,407)      (20,474)      (11,449)       (7,132)        3,600
Less (gain) on sale of investment in
cruise business                                        -             -             -             -             -       (42,288)
Less (gain)/provision for loss on planned
vessel dispositions                                    -             -             -             -       (12,404)       85,072
                                              --------------------------------------------------------------------------------
Pretax income from continuing operations         (42,921)      (32,271)      133,971       121,540         2,228        (9,836)
Add Fixed Charges                                 72,425        61,775        63,468        67,920        58,285        89,796
Less interest capitalized during the period       (4,949)       (4,949)      (13,151)      (15,411)      (10,614)       (3,035)
Add amortization of capitalized interest           3,000         3,000         3,000         3,000         3,000         3,000
                                              --------------------------------------------------------------------------------
Total Earnings                                $   27,555    $   27,555    $  187,288    $  177,049    $   52,899    $   79,925
                                              ================================================================================

FIXED CHARGES:
Interest expense, including amortization
of deferred finance costs                     $   63,343    $   52,693    $   45,035    $   46,667    $   43,008    $   83,197
Add interest capitalized                           4,949         4,949        13,151        15,411        10,614         3,035
Add interest portion of rental expense:            4,133         4,133         5,282         5,842         4,663         3,564
                                              --------------------------------------------------------------------------------
Total Fixed Charges                           $   72,425    $   61,775    $   63,468    $   67,920    $   58,285    $   89,796
                                              ================================================================================

RATIO OF EARNINGS TO FIXED CHARGES                     -             -           2.9X          2.6X            -             -
                                              ================================================================================

THE DEFICIENCY OF EARNINGS NECESSARY TO
COVER FIXED CHARGES                           $   44,870    $   34,220                                $    5,386    $    9,871
                                              ================================================================================

EXHIBIT 23(a)

We consent to the reference to our firm under the caption "Experts" and to the use of our report dated February 24, 2003, in the Registration Statement on Form S-4 and the related Prospectus of Overseas Shipholding Group, Inc. (the "Company") relating to the offer by the Company to exchange outstanding 8.250% Senior Notes due March 15, 2013 of the Company for 8.250% Senior Notes due March 15, 2013 of the Company which have been registered under the Securities Act of 1933, as amended. 

                                                  /s/ Ernst & Young LLP


New York, New York
May 5, 2003

EXHIBIT 23(d)

CONSENT OF MARITIME STRATEGIES INTERNATIONAL LTD.

We hereby consent to the inclusion of our report and the reference to our firm under the heading "The International Tanker Industry" in the prospectus which is part of the Registration Statement on Form S-4 of Overseas Shipholding Group, Inc. (the "Company") relating to the Offer to Exchange outstanding 8.250% Senior Notes due March 15, 2013 of the Company for 8.250% Senior Notes due March 15, 2013 of the Company which have been registered under the Securities Act of 1933.

MARITIME STRATEGIES INTERNATIONAL LTD. 

By:   /s/ Daniel P. Jessel
   -----------------------------------
   Name:   Daniel P. Jessel
   Title:  Managing Director

EXHIBIT 25

Registration No.

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM T-1

STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) /_/

WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter) 

        Delaware                                         51-0055023
(State of incorporation)                    (I.R.S. employer identification no.)

                               Rodney Square North
                            1100 North Market Street
                           Wilmington, Delaware 19890
                    (Address of principal executive offices)

                               Cynthia L. Corliss
                        Vice President and Trust Counsel
                            Wilmington Trust Company
                               Rodney Square North
                           Wilmington, Delaware 19890
                                 (302) 651-8516
            (Name, address and telephone number of agent for service)

OVERSEAS SHIPHOLDING GROUP INC.
(Exact name of obligor as specified in its charter) 

        Delaware                                        13-2637623
(State of incorporation)                    (I.R.S. employer identification no.)

       511 Fifth Avenue
      New York, New York                                       10017
 (Address of principal executive offices)                 (Zip Code)

                              8.250% Notes due 2013
                       (Title of the indenture securities)

ITEM 1. GENERAL INFORMATION.

Furnish the following information as to the trustee:

(a) Name and address of each examining or supervising authority to which it is subject. 

Federal Deposit Insurance Co.         State Bank Commissioner
Five Penn Center                     Dover, Delaware
Suite #2901
Philadelphia, PA

(b) Whether it is authorized to exercise corporate trust powers.

The trustee is authorized to exercise corporate trust powers.

ITEM 2. AFFILIATIONS WITH THE OBLIGOR.

If the obligor is an affiliate of the trustee, describe each affiliation:

Based upon an examination of the books and records of the trustee and upon information furnished by the obligor, the obligor is not an affiliate of the trustee.

ITEM 16. LIST OF EXHIBITS.

List below all exhibits filed as part of this Statement of Eligibility and Qualification.

A. Copy of the Charter of Wilmington Trust Company, which includes the certificate of authority of Wilmington Trust Company to commence business and the authorization of Wilmington Trust Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section 321(b) of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust Company.

Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, Wilmington Trust Company, a corporation organized and existing under the laws of Delaware, has duly caused this Statement of Eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Wilmington and State of Delaware on the 2nd day of May, 2003.

WILMINGTON TRUST COMPANY 

[SEAL]

Attest:   /s/ Sandra R. Ortiz                   By:  /s/ Bruce L. Bisson
       ----------------------------                -------------------------
       Assistant Secretary                      Name:  Bruce L. Bisson
                                                Title: Vice President

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EXHIBIT A

AMENDED CHARTER

WILMINGTON TRUST COMPANY

WILMINGTON, DELAWARE

AS EXISTING ON MAY 9, 1987

AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY

WILMINGTON TRUST COMPANY, originally incorporated by an Act of the General Assembly of the State of Delaware, entitled "An Act to Incorporate the Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the name of which company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter or Act of Incorporation of which company has been from time to time amended and changed by merger agreements pursuant to the corporation law for state banks and trust companies of the State of Delaware, does hereby alter and amend its Charter or Act of Incorporation so that the same as so altered and amended shall in its entirety read as follows:

FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.

SECOND: - The location of its principal office in the State of Delaware is at Rodney Square North, in the City of Wilmington, County of New Castle; the name of its resident agent is WILMINGTON TRUST COMPANY whose address is Rodney Square North, in said City. In addition to such principal office, the said corporation maintains and operates branch offices in the City of Newark, New Castle County, Delaware, the Town of Newport, New Castle County, Delaware, at Claymont, New Castle County, Delaware, at Greenville, New Castle County Delaware, and at Milford Cross Roads, New Castle County, Delaware, and shall be empowered to open, maintain and operate branch offices at Ninth and Shipley Streets, 418 Delaware Avenue, 2120 Market Street, and 3605 Market Street, all in the City of Wilmington, New Castle County, Delaware, and such other branch offices or places of business as may be authorized from time to time by the agency or agencies of the government of the State of Delaware empowered to confer such authority.

THIRD: - (a) The nature of the business and the objects and purposes proposed to be transacted, promoted or carried on by this Corporation are to do any or all of the things herein mentioned as fully and to the same extent as natural persons might or could do and in any part of the world, viz.:

(1) To sue and be sued, complain and defend in any Court of law or equity and to make and use a common seal, and alter the seal at pleasure, to hold, purchase, convey, mortgage or otherwise deal in real and personal estate and property, and to appoint such officers and agents as the business of the Corporation shall require, to make by-laws not inconsistent with the Constitution or laws of the United States or of this State, to discount bills, notes or other evidences of debt, to receive deposits of money, or securities for money, to buy gold and silver bullion and foreign coins, to buy and sell bills of exchange, and generally to use,

exercise and enjoy all the powers, rights, privileges and franchises incident to a corporation which are proper or necessary for the transaction of the business of the Corporation hereby created.

(2) To insure titles to real and personal property, or any estate or interests therein, and to guarantee the holder of such property, real or personal, against any claim or claims, adverse to his interest therein, and to prepare and give certificates of title for any lands or premises in the State of Delaware, or elsewhere.

(3) To act as factor, agent, broker or attorney in the receipt, collection, custody, investment and management of funds, and the purchase, sale, management and disposal of property of all descriptions, and to prepare and execute all papers which may be necessary or proper in such business.

(4) To prepare and draw agreements, contracts, deeds, leases, conveyances, mortgages, bonds and legal papers of every description, and to carry on the business of conveyancing in all its branches.

(5) To receive upon deposit for safekeeping money, jewelry, plate, deeds, bonds and any and all other personal property of every sort and kind, from executors, administrators, guardians, public officers, courts, receivers, assignees, trustees, and from all fiduciaries, and from all other persons and individuals, and from all corporations whether state, municipal, corporate or private, and to rent boxes, safes, vaults and other receptacles for such property.

(6) To act as agent or otherwise for the purpose of registering, issuing, certificating, countersigning, transferring or underwriting the stock, bonds or other obligations of any corporation, association, state or municipality, and may receive and manage any sinking fund therefor on such terms as may be agreed upon between the two parties, and in like manner may act as Treasurer of any corporation or municipality.

(7) To act as Trustee under any deed of trust, mortgage, bond or other instrument issued by any state, municipality, body politic, corporation, association or person, either alone or in conjunction with any other person or persons, corporation or corporations.

(8) To guarantee the validity, performance or effect of any contract or agreement, and the fidelity of persons holding places of responsibility or trust; to become surety for any person, or persons, for the faithful performance of any trust, office, duty, contract or agreement, either by itself or in conjunction with any other person, or persons, corporation, or corporations, or in like manner become surety upon any bond, recognizance, obligation, judgment, suit, order, or

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decree to be entered in any court of record within the State of Delaware or elsewhere, or which may now or hereafter be required by any law, judge, officer or court in the State of Delaware or elsewhere.

(9) To act by any and every method of appointment as trustee, trustee in bankruptcy, receiver, assignee, assignee in bankruptcy, executor, administrator, guardian, bailee, or in any other trust capacity in the receiving, holding, managing, and disposing of any and all estates and property, real, personal or mixed, and to be appointed as such trustee, trustee in bankruptcy, receiver, assignee, assignee in bankruptcy, executor, administrator, guardian or bailee by any persons, corporations, court, officer, or authority, in the State of Delaware or elsewhere; and whenever this Corporation is so appointed by any person, corporation, court, officer or authority such trustee, trustee in bankruptcy, receiver, assignee, assignee in bankruptcy, executor, administrator, guardian, bailee, or in any other trust capacity, it shall not be required to give bond with surety, but its capital stock shall be taken and held as security for the performance of the duties devolving upon it by such appointment.

(10) And for its care, management and trouble, and the exercise of any of its powers hereby given, or for the performance of any of the duties which it may undertake or be called upon to perform, or for the assumption of any responsibility the said Corporation may be entitled to receive a proper compensation.

(11) To purchase, receive, hold and own bonds, mortgages, debentures, shares of capital stock, and other securities, obligations, contracts and evidences of indebtedness, of any private, public or municipal corporation within and without the State of Delaware, or of the Government of the United States, or of any state, territory, colony, or possession thereof, or of any foreign government or country; to receive, collect, receipt for, and dispose of interest, dividends and income upon and from any of the bonds, mortgages, debentures, notes, shares of capital stock, securities, obligations, contracts, evidences of indebtedness and other property held and owned by it, and to exercise in respect of all such bonds, mortgages, debentures, notes, shares of capital stock, securities, obligations, contracts, evidences of indebtedness and other property, any and all the rights, powers and privileges of individual owners thereof, including the right to vote thereon; to invest and deal in and with any of the moneys of the Corporation upon such securities and in such manner as it may think fit and proper, and from time to time to vary or realize such investments; to issue bonds and secure the same by pledges or deeds of trust or mortgages of or upon the whole or any part of the property held or owned by the Corporation, and to sell and pledge such bonds, as and when the Board of Directors shall determine, and in the promotion of its said corporate business of investment and to the extent authorized by law, to lease, purchase, hold, sell, assign, transfer, pledge, mortgage and convey real

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and personal property of any name and nature and any estate or interest therein.

(b) In furtherance of, and not in limitation, of the powers conferred by the laws of the State of Delaware, it is hereby expressly provided that the said Corporation shall also have the following powers:

(1) To do any or all of the things herein set forth, to the same extent as natural persons might or could do, and in any part of the world.

(2) To acquire the good will, rights, property and franchises and to undertake the whole or any part of the assets and liabilities of any person, firm, association or corporation, and to pay for the same in cash, stock of this Corporation, bonds or otherwise; to hold or in any manner to dispose of the whole or any part of the property so purchased; to conduct in any lawful manner the whole or any part of any business so acquired, and to exercise all the powers necessary or convenient in and about the conduct and management of such business.

(3) To take, hold, own, deal in, mortgage or otherwise lien, and to lease, sell, exchange, transfer, or in any manner whatever dispose of property, real, personal or mixed, wherever situated.

(4) To enter into, make, perform and carry out contracts of every kind with any person, firm, association or corporation, and, without limit as to amount, to draw, make, accept, endorse, discount, execute and issue promissory notes, drafts, bills of exchange, warrants, bonds, debentures, and other negotiable or transferable instruments.

(5) To have one or more offices, to carry on all or any of its operations and businesses, without restriction to the same extent as natural persons might or could do, to purchase or otherwise acquire, to hold, own, to mortgage, sell, convey or otherwise dispose of, real and personal property, of every class and description, in any State, District, Territory or Colony of the United States, and in any foreign country or place.

(6) It is the intention that the objects, purposes and powers specified and clauses contained in this paragraph shall (except where otherwise expressed in said paragraph) be nowise limited or restricted by reference to or inference from the terms of any other clause of this or any other paragraph in this charter, but that the objects, purposes and powers specified in each of the clauses of this paragraph shall be regarded as independent objects, purposes and powers.

FOURTH: - (a) The total number of shares of all classes of stock which the Corporation shall have authority to issue is forty-one million (41,000,000) shares, consisting of:

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(1) One million (1,000,000) shares of Preferred stock, par value $10.00 per share (hereinafter referred to as "Preferred Stock"); and

(2) Forty million (40,000,000) shares of Common Stock, par value $1.00 per share (hereinafter referred to as "Common Stock").

(b) Shares of Preferred Stock may be issued from time to time in one or more series as may from time to time be determined by the Board of Directors each of said series to be distinctly designated. All shares of any one series of Preferred Stock shall be alike in every particular, except that there may be different dates from which dividends, if any, thereon shall be cumulative, if made cumulative. The voting powers and the preferences and relative, participating, optional and other special rights of each such series, and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series at any time outstanding; and, subject to the provisions of subparagraph 1 of Paragraph (c) of this Article FOURTH, the Board of Directors of the Corporation is hereby expressly granted authority to fix by resolution or resolutions adopted prior to the issuance of any shares of a particular series of Preferred Stock, the voting powers and the designations, preferences and relative, optional and other special rights, and the qualifications, limitations and restrictions of such series, including, but without limiting the generality of the foregoing, the following:

(1) The distinctive designation of, and the number of shares of Preferred Stock which shall constitute such series, which number may be increased (except where otherwise provided by the Board of Directors) or decreased (but not below the number of shares thereof then outstanding) from time to time by like action of the Board of Directors;

(2) The rate and times at which, and the terms and conditions on which, dividends, if any, on Preferred Stock of such series shall be paid, the extent of the preference or relation, if any, of such dividends to the dividends payable on any other class or classes, or series of the same or other class of stock and whether such dividends shall be cumulative or non-cumulative;

(3) The right, if any, of the holders of Preferred Stock of such series to convert the same into or exchange the same for, shares of any other class or classes or of any series of the same or any other class or classes of stock of the Corporation and the terms and conditions of such conversion or exchange;

(4) Whether or not Preferred Stock of such series shall be subject to redemption, and the redemption price or prices and the time or times at which, and the terms and conditions on which, Preferred Stock of such series may be redeemed.

(5) The rights, if any, of the holders of Preferred Stock of such series upon the voluntary or involuntary liquidation, merger, consolidation, distribution or sale

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of assets, dissolution or winding-up, of the Corporation.

(6) The terms of the sinking fund or redemption or purchase account, if any, to be provided for the Preferred Stock of such series; and

(7) The voting powers, if any, of the holders of such series of Preferred Stock which may, without limiting the generality of the foregoing include the right, voting as a series or by itself or together with other series of Preferred Stock or all series of Preferred Stock as a class, to elect one or more directors of the Corporation if there shall have been a default in the payment of dividends on any one or more series of Preferred Stock or under such circumstances and on such conditions as the Board of Directors may determine.

(c) (1) After the requirements with respect to preferential dividends on the Preferred Stock (fixed in accordance with the provisions of section (b) of this Article FOURTH), if any, shall have been met and after the Corporation shall have complied with all the requirements, if any, with respect to the setting aside of sums as sinking funds or redemption or purchase accounts (fixed in accordance with the provisions of section (b) of this Article FOURTH), and subject further to any conditions which may be fixed in accordance with the provisions of section (b) of this Article FOURTH, then and not otherwise the holders of Common Stock shall be entitled to receive such dividends as may be declared from time to time by the Board of Directors.

(2) After distribution in full of the preferential amount, if any, (fixed in accordance with the provisions of section (b) of this Article FOURTH), to be distributed to the holders of Preferred Stock in the event of voluntary or involuntary liquidation, distribution or sale of assets, dissolution or winding-up, of the Corporation, the holders of the Common Stock shall be entitled to receive all of the remaining assets of the Corporation, tangible and intangible, of whatever kind available for distribution to stockholders ratably in proportion to the number of shares of Common Stock held by them respectively.

(3) Except as may otherwise be required by law or by the provisions of such resolution or resolutions as may be adopted by the Board of Directors pursuant to section (b) of this Article FOURTH, each holder of Common Stock shall have one vote in respect of each share of Common Stock held on all matters voted upon by the stockholders.

(d) No holder of any of the shares of any class or series of stock or of options, warrants or other rights to purchase shares of any class or series of stock or of other securities of the Corporation shall have any preemptive right to purchase or subscribe for any unissued stock of any class or series or any additional shares of any class or series to be issued by reason of any increase of the authorized capital stock of the Corporation of any class or series, or bonds, certificates of indebtedness, debentures or other securities

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convertible into or exchangeable for stock of the Corporation of any class or series, or carrying any right to purchase stock of any class or series, but any such unissued stock, additional authorized issue of shares of any class or series of stock or securities convertible into or exchangeable for stock, or carrying any right to purchase stock, may be issued and disposed of pursuant to resolution of the Board of Directors to such persons, firms, corporations or associations, whether such holders or others, and upon such terms as may be deemed advisable by the Board of Directors in the exercise of its sole discretion.

(e) The relative powers, preferences and rights of each series of Preferred Stock in relation to the relative powers, preferences and rights of each other series of Preferred Stock shall, in each case, be as fixed from time to time by the Board of Directors in the resolution or resolutions adopted pursuant to authority granted in section (b) of this Article FOURTH and the consent, by class or series vote or otherwise, of the holders of such of the series of Preferred Stock as are from time to time outstanding shall not be required for the issuance by the Board of Directors of any other series of Preferred Stock whether or not the powers, preferences and rights of such other series shall be fixed by the Board of Directors as senior to, or on a parity with, the powers, preferences and rights of such outstanding series, or any of them; provided, however, that the Board of Directors may provide in the resolution or resolutions as to any series of Preferred Stock adopted pursuant to section (b) of this Article FOURTH that the consent of the holders of a majority (or such greater proportion as shall be therein fixed) of the outstanding shares of such series voting thereon shall be required for the issuance of any or all other series of Preferred Stock.

(f) Subject to the provisions of section (e), shares of any series of Preferred Stock may be issued from time to time as the Board of Directors of the Corporation shall determine and on such terms and for such consideration as shall be fixed by the Board of Directors.

(g) Shares of Common Stock may be issued from time to time as the Board of Directors of the Corporation shall determine and on such terms and for such consideration as shall be fixed by the Board of Directors.

(h) The authorized amount of shares of Common Stock and of Preferred Stock may, without a class or series vote, be increased or decreased from time to time by the affirmative vote of the holders of a majority of the stock of the Corporation entitled to vote thereon.

FIFTH: - (a) The business and affairs of the Corporation shall be conducted and managed by a Board of Directors. The number of directors constituting the entire Board shall be not less than five nor more than twenty-five as fixed from time to time by vote of a majority of the whole Board, provided, however, that the number of directors shall not be reduced so as to shorten the term of any director at the time in

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office, and provided further, that the number of directors constituting the whole Board shall be twenty-four until otherwise fixed by a majority of the whole Board.

(b) The Board of Directors shall be divided into three classes, as nearly equal in number as the then total number of directors constituting the whole Board permits, with the term of office of one class expiring each year. At the annual meeting of stockholders in 1982, directors of the first class shall be elected to hold office for a term expiring at the next succeeding annual meeting, directors of the second class shall be elected to hold office for a term expiring at the second succeeding annual meeting and directors of the third class shall be elected to hold office for a term expiring at the third succeeding annual meeting. Any vacancies in the Board of Directors for any reason, and any newly created directorships resulting from any increase in the directors, may be filled by the Board of Directors, acting by a majority of the directors then in office, although less than a quorum, and any directors so chosen shall hold office until the next annual election of directors. At such election, the stockholders shall elect a successor to such director to hold office until the next election of the class for which such director shall have been chosen and until his successor shall be elected and qualified. No decrease in the number of directors shall shorten the term of any incumbent director.

(c) Notwithstanding any other provisions of this Charter or Act of Incorporation or the By-Laws of the Corporation (and notwithstanding the fact that some lesser percentage may be specified by law, this Charter or Act of Incorporation or the By-Laws of the Corporation), any director or the entire Board of Directors of the Corporation may be removed at any time without cause, but only by the affirmative vote of the holders of two-thirds or more of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class) cast at a meeting of the stockholders called for that purpose.

(d) Nominations for the election of directors may be made by the Board of Directors or by any stockholder entitled to vote for the election of directors. Such nominations shall be made by notice in writing, delivered or mailed by first class United States mail, postage prepaid, to the Secretary of the Corporation not less than 14 days nor more than 50 days prior to any meeting of the stockholders called for the election of directors; provided, however, that if less than 21 days' notice of the meeting is given to stockholders, such written notice shall be delivered or mailed, as prescribed, to the Secretary of the Corporation not later than the close of the seventh day following the day on which notice of the meeting was mailed to stockholders. Notice of nominations which are proposed by the Board of Directors shall be given by the Chairman on behalf of the Board.

(e) Each notice under subsection (d) shall set forth (i) the name, age, business address and, if known, residence address of each nominee proposed in such notice, (ii) the principal occupation or employment of such nominee and (iii) the number of shares of

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stock of the Corporation which are beneficially owned by each such nominee.

(f) The Chairman of the meeting may, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedure, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded.

(g) No action required to be taken or which may be taken at any annual or special meeting of stockholders of the Corporation may be taken without a meeting, and the power of stockholders to consent in writing, without a meeting, to the taking of any action is specifically denied.

SIXTH: - The Directors shall choose such officers, agents and servants as may be provided in the By-Laws as they may from time to time find necessary or proper.

SEVENTH: - The Corporation hereby created is hereby given the same powers, rights and privileges as may be conferred upon corporations organized under the Act entitled "An Act Providing a General Corporation Law", approved March 10, 1899, as from time to time amended.

EIGHTH: - This Act shall be deemed and taken to be a private Act.

NINTH: - This Corporation is to have perpetual existence.

TENTH: - The Board of Directors, by resolution passed by a majority of the whole Board, may designate any of their number to constitute an Executive Committee, which Committee, to the extent provided in said resolution, or in the By-Laws of the Company, shall have and may exercise all of the powers of the Board of Directors in the management of the business and affairs of the Corporation, and shall have power to authorize the seal of the Corporation to be affixed to all papers which may require it.

ELEVENTH: - The private property of the stockholders shall not be liable for the payment of corporate debts to any extent whatever.

TWELFTH: - The Corporation may transact business in any part of the world.

THIRTEENTH: - The Board of Directors of the Corporation is expressly authorized to make, alter or repeal the By-Laws of the Corporation by a vote of the majority of the entire Board. The stockholders may make, alter or repeal any By-Law whether or not adopted by them, provided however, that any such additional By-Laws, alterations or repeal may be adopted only by the affirmative vote of the holders of two-thirds or more of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class).

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FOURTEENTH: - Meetings of the Directors may be held outside of the State of Delaware at such places as may be from time to time designated by the Board, and the Directors may keep the books of the Company outside of the State of Delaware at such places as may be from time to time designated by them.

FIFTEENTH: - (a) (1) In addition to any affirmative vote required by law, and except as otherwise expressly provided in sections (b) and
(c) of this Article FIFTEENTH:

(A) any merger or consolidation of the Corporation or any Subsidiary (as hereinafter defined) with or into (i) any Interested Stockholder (as hereinafter defined) or (ii) any other corporation (whether or not itself an Interested Stockholder), which, after such merger or consolidation, would be an Affiliate (as hereinafter defined) of an Interested Stockholder, or

(B) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of related transactions) to or with any Interested Stockholder or any Affiliate of any Interested Stockholder of any assets of the Corporation or any Subsidiary having an aggregate fair market value of $1,000,000 or more, or

(C) the issuance or transfer by the Corporation or any Subsidiary (in one transaction or a series of related transactions) of any securities of the Corporation or any Subsidiary to any Interested Stockholder or any Affiliate of any Interested Stockholder in exchange for cash, securities or other property (or a combination thereof) having an aggregate fair market value of $1,000,000 or more, or

(D) the adoption of any plan or proposal for the liquidation or dissolution of the Corporation, or

(E) any reclassification of securities (including any reverse stock split), or recapitalization of the Corporation, or any merger or consolidation of the Corporation with any of its Subsidiaries or any similar transaction (whether or not with or into or otherwise involving an Interested Stockholder) which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class of equity or convertible securities of the Corporation or any Subsidiary which is directly or indirectly owned by any Interested Stockholder, or any Affiliate of any Interested Stockholder,

shall require the affirmative vote of the holders of at least two-thirds of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, considered for the purpose of this Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall be required notwithstanding the fact that no vote may be required, or that some lesser percentage may be specified, by law or in any agreement with any national securities exchange or otherwise.

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(2) The term "business combination" as used in this Article FIFTEENTH shall mean any transaction which is referred to in any one or more of clauses (A) through (E) of paragraph 1 of the section (a).

(b) The provisions of section (a) of this Article FIFTEENTH shall not be applicable to any particular business combination and such business combination shall require only such affirmative vote as is required by law and any other provisions of the Charter or Act of Incorporation or By-Laws if such business combination has been approved by a majority of the whole Board.

(c) For the purposes of this Article FIFTEENTH:

(1) A "person" shall mean any individual, firm, corporation or other entity.

(2) "Interested Stockholder" shall mean, in respect of any business combination, any person (other than the Corporation or any Subsidiary) who or which as of the record date for the determination of stockholders entitled to notice of and to vote on such business combination, or immediately prior to the consummation of any such transaction:

(A) is the beneficial owner, directly or indirectly, of more than 10% of the Voting Shares, or

(B) is an Affiliate of the Corporation and at any time within two years prior thereto was the beneficial owner, directly or indirectly, of not less than 10% of the then outstanding voting Shares, or

(C) is an assignee of or has otherwise succeeded in any share of capital stock of the Corporation which were at any time within two years prior thereto beneficially owned by any Interested Stockholder, and such assignment or succession shall have occurred in the course of a transaction or series of transactions not involving a public offering within the meaning of the Securities Act of 1933.

(3) A person shall be the "beneficial owner" of any Voting Shares:

(A) which such person or any of its Affiliates and Associates (as hereafter defined) beneficially own, directly or indirectly, or

(B) which such person or any of its Affiliates or Associates has
(i) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise,

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or (ii) the right to vote pursuant to any agreement, arrangement or understanding, or

(C) which are beneficially owned, directly or indirectly, by any other person with which such first mentioned person or any of its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of capital stock of the Corporation.

(4) The outstanding Voting Shares shall include shares deemed owned through application of paragraph (3) above but shall not include any other Voting Shares which may be issuable pursuant to any agreement, or upon exercise of conversion rights, warrants or options or otherwise.

(5) "Affiliate" and "Associate" shall have the respective meanings given those terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as in effect on December 31, 1981.

(6) "Subsidiary" shall mean any corporation of which a majority of any class of equity security (as defined in Rule 3a11-1 of the General Rules and Regulations under the Securities Exchange Act of 1934, as in effect on December 31, 1981) is owned, directly or indirectly, by the Corporation; provided, however, that for the purposes of the definition of Investment Stockholder set forth in paragraph (2) of this section (c), the term "Subsidiary" shall mean only a corporation of which a majority of each class of equity security is owned, directly or indirectly, by the Corporation.

(d) majority of the directors shall have the power and duty to determine for the purposes of this Article FIFTEENTH on the basis of information known to them, (1) the number of Voting Shares beneficially owned by any person (2) whether a person is an Affiliate or Associate of another, (3) whether a person has an agreement, arrangement or understanding with another as to the matters referred to in paragraph (3) of section (c), or (4) whether the assets subject to any business combination or the consideration received for the issuance or transfer of securities by the Corporation, or any Subsidiary has an aggregate fair market value of $1,000,000 or more.

(e) Nothing contained in this Article FIFTEENTH shall be construed to relieve any Interested Stockholder from any fiduciary obligation imposed by law.

SIXTEENTH: Notwithstanding any other provision of this Charter or Act of Incorporation or the By-Laws of the Corporation (and in addition to any other vote that may be required by law, this Charter or Act of Incorporation by the By-Laws), the affirmative vote of the holders of at least two-thirds of the outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class) shall be required to amend, alter or repeal any

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provision of Articles FIFTH, THIRTEENTH, FIFTEENTH or SIXTEENTH of this Charter or Act of Incorporation.

SEVENTEENTH: (a) a Director of this Corporation shall not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a Director, except to the extent such exemption from liability or limitation thereof is not permitted under the Delaware General Corporation Laws as the same exists or may hereafter be amended.

(b) Any repeal or modification of the foregoing paragraph shall not adversely affect any right or protection of a Director of the Corporation existing hereunder with respect to any act or omission occurring prior to the time of such repeal or modification."

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EXHIBIT B

BY-LAWS

WILMINGTON TRUST COMPANY

WILMINGTON, DELAWARE

AS EXISTING ON JANUARY 16, 2003

BY-LAWS OF WILMINGTON TRUST COMPANY

ARTICLE I
STOCKHOLDERS' MEETINGS

Section 1. ANNUAL MEETING. The annual meeting of stockholders shall be held on the third Thursday in April each year at the principal office at the Company or at such other date, time or place as may be designated by resolution by the Board of Directors.

Section 2. SPECIAL MEETINGS. Special meetings of stockholders may be called at any time by the Board of Directors, the Chairman of the Board, the Chief Executive Officer or the President.

Section 3. NOTICE. Notice of all meetings of the stockholders shall be given by mailing to each stockholder at least ten (10) days before said meeting, at his last known address, a written or printed notice fixing the time and place of such meeting.

Section 4. QUORUM. A majority in the amount of the capital stock of the Company issued and outstanding on the record date, as herein determined, shall constitute a quorum at all meetings of stockholders for the transaction of any business, but the holders of a smaller number of shares may adjourn from time to time, without further notice, until a quorum is secured. At each annual or special meeting of stockholders, each stockholder shall be entitled to one vote, either in person or by proxy, for each share of stock registered in the stockholder's name on the books of the Company on the record date for any such meeting as determined herein.

ARTICLE 2
DIRECTORS

Section 1. MANAGEMENT. The affairs and business of the Company shall be managed by or under the direction of the Board of Directors.

Section 2. NUMBER. The authorized number of directors that shall constitute the Board of Directors shall be fixed from time to time by or pursuant to a resolution passed by a majority of the Board of Directors within the parameters set by the Charter of the Company. No more than two directors may also be employees of the Company or any affiliate thereof.

Section 3. QUALIFICATION. In addition to any other provisions of these Bylaws, to be qualified for nomination for election or appointment to the Board of Directors, a person must have not attained the age of sixty-nine years at the time of such election or appointment, provided however, the Nominating and Corporate Governance Committee may waive such qualification as to a particular candidate otherwise qualified to serve as a director upon a good faith determination by such committee that such a waiver is in the best interests of the Company and its stockholders. The

Chairman of the Board and the Chief Executive Officer shall not be qualified to continue to serve as directors upon the termination of their service in those offices for any reason.

Section 4. MEETINGS. The Board of Directors shall meet at the principal office of the Company or elsewhere in its discretion at such times to be determined by a majority of its members, or at the call of the Chairman of the Board of Directors, the Chief Executive Officer or the President.

Section 5. SPECIAL MEETINGS. Special meetings of the Board of Directors may be called at any time by the Chairman of the Board, the Chief Executive Officer or the President, and shall be called upon the written request of a majority of the directors.

Section 6. QUORUM. A majority of the directors elected and qualified shall be necessary to constitute a quorum for the transaction of business at any meeting of the Board of Directors.

Section 7. NOTICE. Written notice shall be sent by mail to each director of any special meeting of the Board of Directors, and of any change in the time or place of any regular meeting, stating the time and place of such meeting, which shall be mailed not less than two days before the time of holding such meeting.

Section 8. VACANCIES. In the event of the death, resignation, removal, inability to act or disqualification of any director, the Board of Directors, although less than a quorum, shall have the right to elect the successor who shall hold office for the remainder of the full term of the class of directors in which the vacancy occurred, and until such director's successor shall have been duly elected and qualified.

Section 9. ORGANIZATION MEETING. The Board of Directors at its first meeting after its election by the stockholders shall appoint an Executive Committee, an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee, and shall elect from its own members a Chairman of the Board, a Chief Executive Officer and a President, who may be the same person. The Board of Directors shall also elect at such meeting a Secretary and a Chief Financial Officer, who may be the same person, and may appoint at any time such committees as it may deem advisable. The Board of Directors may also elect at such meeting one or more Associate Directors. The Board of Directors, the Executive Committee or another committee designated by the Board of Directors may elect or appoint such other officers as they may deem advisable.

Section 10. REMOVAL. The Board of Directors may at any time remove, with or without cause, any member of any committee appointed by it or any associate director or officer elected by it and may appoint or elect his successor.

Section 11. RESPONSIBILITY OF OFFICERS. The Board of Directors may designate an officer to be in charge of such departments or divisions of the Company as it may deem advisable.

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Section 12. PARTICIPATION IN MEETINGS. The Board of Directors or any committee of the Board of Directors may participate in a meeting of the Board of Directors or such committee, as the case may be, by conference telephone, video facilities or other communications equipment. Any action required or permitted to be taken at any meeting of the Board of Directors or any committee thereof may be taken without a meeting if all of the members of the Board of Directors or the committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of the Board of Directors or such committee.

ARTICLE 3
COMMITTEES OF THE BOARD OF DIRECTORS

Section 1. EXECUTIVE COMMITTEE.

(A) The Executive Committee shall be composed of not more than nine
(9) members, who shall be selected by the Board of Directors from its own members, and who shall hold office at the pleasure of the Board of Directors.

(B) The Executive Committee shall have and may exercise, to the fullest extent permitted by law, all of the powers of the Board of Directors when it is not in session to transact all business for and on behalf of the Company that may be brought before it.

(C) The Executive Committee shall meet at the principal office of the Company or elsewhere in its discretion at such times to be determined by a majority of its members, or at the call of the Chairman of the Executive Committee, the Chairman of the Board, the Chief Executive Officer or the President. The majority of its members shall be necessary to constitute a quorum for the transaction of business. Special meetings of the Executive Committee may be held at any time when a quorum is present.

(D) Minutes of each meeting of the Executive Committee shall be kept and submitted to the Board of Directors at its next meeting.

(E) In the event of an emergency of sufficient severity to prevent the conduct and management of the affairs and business of the Company by its directors and officers as contemplated by these Bylaws, any two available members of the Executive Committee as constituted immediately prior to such emergency shall constitute a quorum of that Committee for the full conduct and management of the affairs and business of the Company in accordance with the provisions of Article 3 of these Bylaws. In the event of the unavailability, at such time, of a minimum of two members of the Executive Committee, any three available directors shall constitute the Executive Committee for the full conduct and management of the affairs and business of the Company in accordance with the foregoing provisions of this Section. This Bylaw shall be subject to implementation by resolutions of the Board of Directors presently existing or hereafter passed from time to time for that purpose, and any provisions of these Bylaws (other than this Section) and any resolutions which are contrary

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to the provisions of this Section or to the provisions of any such implementing resolutions shall be suspended during such a disaster period until it shall be determined by any interim Executive Committee acting under this Section that it shall be to the advantage of the Company to resume the conduct and management of its affairs and business under all of the other provisions of these Bylaws.

Section 2. AUDIT COMMITTEE.

(A) The Audit Committee shall be composed of not more than five (5)
members, who shall be selected by the Board of Directors from its own members, none of whom shall be an officer or employee of the Company, and shall hold office at the pleasure of the Board.

(B) The Audit Committee shall have general supervision over the Audit Services Division in all matters however subject to the approval of the Board of Directors; it shall consider all matters brought to its attention by the officer in charge of the Audit Services Division, review all reports of examination of the Company made by any governmental agency or such independent auditor employed for that purpose, and make such recommendations to the Board of Directors with respect thereto or with respect to any other matters pertaining to auditing the Company as it shall deem desirable.

(C) The Audit Committee shall meet whenever and wherever its Chairperson, the Chairman of the Board, the Chief Executive Officer, the President or a majority of the Committee's members shall deem it to be proper for the transaction of its business. A majority of the Committee's members shall constitute a quorum for the transaction of business. The acts of the majority at a meeting at which a quorum is present shall constitute action by the Committee.

Section 3. COMPENSATION COMMITTEE.

(A) The Compensation Committee shall be composed of not more than five (5) members, who shall be selected by the Board of Directors from its own members, none of whom shall be an officer or employee of the Company, and shall hold office at the pleasure of the Board of Directors.

(B) The Compensation Committee shall in general advise upon all matters of policy concerning compensation, including salaries and employee benefits.

(C) The Compensation Committee shall meet whenever and wherever its Chairperson, the Chairman of the Board, the Chief Executive Officer, the President or a majority of the Committee's members shall deem it to be proper for the transaction of its business. A majority of the Committee's members shall constitute a quorum for the transaction of business. The acts of the majority at a meeting at which a quorum is present shall constitute action by the Committee.

SECTION 4. NOMINATING AND CORPORATE GOVERNANCE COMMITTEE.

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(A) The Nominating and Corporate Governance Committee shall be composed of not more than five members, who shall be selected by the Board of Directors from its own members, none of whom shall be an officer or employee of the Company, and shall hold office at the pleasure of the Board of Directors.

(B) The Nominating and Corporate Governance Committee shall provide counsel and make recommendations to the Chairman of the Board and the full Board with respect to the performance of the Chairman of the Board and the Chief Executive Officer, candidates for membership on the Board of Directors and its committees, matters of corporate governance, succession planning for the Company's executive management and significant shareholder relations issues.

(C) The Nominating and Corporate Governance Committee shall meet whenever and wherever its Chairperson, the Chairman of the Board, the Chief Executive Officer, the President, or a majority of the Committee's members shall deem it to be proper for the transaction of its business. A majority of the Committee's members shall constitute a quorum for the transaction of business. The acts of the majority at a meeting at which a quorum is present shall constitute action by the Committee.

Section 5. OTHER COMMITTEES. The Company may have such other committees with such powers as the Board may designate from time to time by resolution or by an amendment to these Bylaws.

Section 6. ASSOCIATE DIRECTORS.

(A) Any person who has served as a director may be elected by the Board of Directors as an associate director, to serve at the pleasure of the Board of Directors.

(B) Associate directors shall be entitled to attend all meetings of directors and participate in the discussion of all matters brought to the Board of Directors, but will not have a right to vote.

Section 7. ABSENCE OR DISQUALIFICATION OF ANY MEMBER OF A COMMITTEE. In the absence or disqualification of any member of any committee created under Article III of these Bylaws, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.

ARTICLE 4
OFFICERS

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Section 1. CHAIRMAN OF THE BOARD. The Chairman of the Board shall preside at all meetings of the Board of Directors and shall have such further authority and powers and shall perform such duties the Board of Directors may assign to him from time to time.

Section 2. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall have the powers and duties pertaining to the office of Chief Executive Officer conferred or imposed upon him by statute, incident to his office or as the Board of Directors may assign to him from time to time. In the absence of the Chairman of the Board, the Chief Executive Officer shall have the powers and duties of the Chairman of the Board.

Section 3. PRESIDENT. The President shall have the powers and duties pertaining to the office of the President conferred or imposed upon him by statute, incident to his office or as the Board of Directors may assign to him from time to time. In the absence of the Chairman of the Board and the Chief Executive Officer, the President shall have the powers and duties of the Chairman of the Board.

Section 4. DUTIES. The Chairman of the Board, the Chief Executive Officer or the President, as designated by the Board of Directors, shall carry into effect all legal directions of the Executive Committee and of the Board of Directors and shall at all times exercise general supervision over the interest, affairs and operations of the Company and perform all duties incident to his office.

Section 5. VICE PRESIDENTS. There may be one or more Vice Presidents, however denominated by the Board of Directors, who may at any time perform all of the duties of the Chairman of the Board, the Chief Executive Officer and/or the President and such other powers and duties incident to their respective offices or as the Board of Directors, the Executive Committee, the Chairman of the Board, the Chief Executive Officer or the President or the officer in charge of the department or division to which they are assigned may assign to them from time to time.

Section 6. SECRETARY. The Secretary shall attend to the giving of notice of meetings of the stockholders and the Board of Directors, as well as the committees thereof, to the keeping of accurate minutes of all such meetings, recording the same in the minute books of the Company and in general notifying the Board of Directors of material matters affecting the Company on a timely basis. In addition to the other notice requirements of these Bylaws and as may be practicable under the circumstances, all such notices shall be in writing and mailed well in advance of the scheduled date of any such meeting. He shall have custody of the corporate seal, affix the same to any documents requiring such corporate seal, attest the same and perform other duties incident to his office.

Section 7. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall have general supervision over all assets and liabilities of the Company. He shall be custodian of and responsible for all monies, funds and valuables of the Company and for the keeping of proper records of the evidence of property or indebtedness and of all transactions of the Company. He shall have general supervision of the expenditures of the Company and periodically shall report to the Board of Directors the condition of the Company, and perform such other duties incident to his office or as the

6

Board of Directors, the Executive Committee, the Chairman of the Board, the Chief Executive Officer or the President may assign to him from time to time.

Section 8. CONTROLLER. There may be a Controller who shall exercise general supervision over the internal operations of the Company, including accounting, and shall render to the Board of Directors or the Audit Committee at appropriate times a report relating to the general condition and internal operations of the Company and perform other duties incident to his office.

There may be one or more subordinate accounting or controller officers however denominated, who may perform the duties of the Controller and such duties as may be prescribed by the Controller.

Section 9. AUDIT OFFICERS. The officer designated by the Board of Directors to be in charge of the Audit Services Division of the Company, with such title as the Board of Directors shall prescribe, shall report to and be directly responsible to the Audit Committee and the Board of Directors.

There shall be an Auditor and there may be one or more Audit Officers, however denominated, who may perform all the duties of the Auditor and such duties as may be prescribed by the officer in charge of the Audit Services Division.

Section 10. OTHER OFFICERS. There may be one or more officers, subordinate in rank to all Vice Presidents with such functional titles as shall be determined from time to time by the Board of Directors, who shall ex officio hold the office of Assistant Secretary of the Company and who may perform such duties as may be prescribed by the officer in charge of the department or division to which they are assigned.

Section 11. POWERS AND DUTIES OF OTHER OFFICERS. The powers and duties of all other officers of the Company shall be those usually pertaining to their respective offices, subject to the direction of the Board of Directors, the Executive Committee, the Chairman of the Board, the Chief Executive Officer or the President and the officer in charge of the department or division to which they are assigned.

Section 12. NUMBER OF OFFICES. Any one or more offices of the Company may be held by the same person, except that (A) no individual may hold more than one of the offices of Chief Financial Officer, Controller or Audit Officer and (B) none of the Chairman of the Board, the Chief Executive Officer or the President may hold any office mentioned in Section 12(A).

ARTICLE 5
STOCK AND STOCK CERTIFICATES

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Section 1. TRANSFER. Shares of stock shall be transferable on the books of the Company and a transfer book shall be kept in which all transfers of stock shall be recorded.

Section 2. CERTIFICATES. Every holder of stock shall be entitled to have a certificate signed by or in the name of the Company by the Chairman of the Board, the Chief Executive Officer or the President or a Vice President, and by the Secretary or an Assistant Secretary, of the Company, certifying the number of shares owned by him in the Company. The corporate seal affixed thereto, and any of or all the signatures on the certificate, may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Company with the same effect as if he were such officer, transfer agent or registrar at the date of issue. Duplicate certificates of stock shall be issued only upon giving such security as may be satisfactory to the Board of Directors or the Executive Committee.

Section 3. RECORD DATE. The Board of Directors is authorized to fix in advance a record date for the determination of the stockholders entitled to notice of, and to vote at, any meeting of stockholders and any adjournment thereof, or entitled to receive payment of any dividend, or to any allotment of rights, or to exercise any rights in respect of any change, conversion or exchange of capital stock, or in connection with obtaining the consent of stockholders for any purpose, which record date shall not be more than 60 nor less than 10 days preceding the date of any meeting of stockholders or the date for the payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, or a date in connection with obtaining such consent.

ARTICLE 6
SEAL

The corporate seal of the Company shall be in the following form:

Between two concentric circles the words "Wilmington Trust Company" within the inner circle the words "Wilmington, Delaware."

ARTICLE 7
FISCAL YEAR

The fiscal year of the Company shall be the calendar year.

ARTICLE 8
EXECUTION OF INSTRUMENTS OF THE COMPANY

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The Chairman of the Board, the Chief Executive Officer, the President or any Vice President, however denominated by the Board of Directors, shall have full power and authority to enter into, make, sign, execute, acknowledge and/or deliver and the Secretary or any Assistant Secretary shall have full power and authority to attest and affix the corporate seal of the Company to any and all deeds, conveyances, assignments, releases, contracts, agreements, bonds, notes, mortgages and all other instruments incident to the business of this Company or in acting as executor, administrator, guardian, trustee, agent or in any other fiduciary or representative capacity by any and every method of appointment or by whatever person, corporation, court officer or authority in the State of Delaware, or elsewhere, without any specific authority, ratification, approval or confirmation by the Board of Directors or the Executive Committee, and any and all such instruments shall have the same force and validity as though expressly authorized by the Board of Directors and/or the Executive Committee.

ARTICLE 9
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES

Directors and associate directors of the Company, other than salaried officers of the Company, shall be paid such reasonable honoraria or fees for attending meetings of the Board of Directors as the Board of Directors may from time to time determine. Directors and associate directors who serve as members of committees, other than salaried employees of the Company, shall be paid such reasonable honoraria or fees for services as members of committees as the Board of Directors shall from time to time determine and directors and associate directors may be authorized by the Company to perform such special services as the Board of Directors may from time to time determine in accordance with any guidelines the Board of Directors may adopt for such services, and shall be paid for such special services so performed reasonable compensation as may be determined by the Board of Directors.

ARTICLE 10
INDEMNIFICATION

Section 1. PERSONS COVERED. The Company shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a "proceeding") by reason of the fact that he, or a person for whom he is the legal representative, is or was a director of the Company or is or was serving at the request of the Company as a director, officer, employee, fiduciary or agent of another corporation, partnership, limited liability company, joint venture, trust, enterprise or non-profit entity that is not a subsidiary or affiliate of the Company, including service with respect to employee benefit plans, against all liability and loss suffered and expenses reasonably incurred by such person. The Company shall be required to indemnify such a person in connection with a proceeding initiated by such person only if the proceeding was authorized by the Board of Directors.

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The Company may indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person who was or is made or threatened to be made a party or is otherwise involved in any proceeding by reason of the fact that he, or a person for whom he is the legal representative, is or was an officer, employee or agent of the Company or a director, officer, employee or agent of a subsidiary or affiliate of the Company, against all liability and loss suffered and expenses reasonably incurred by such person. The Company may indemnify any such person in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board of Directors.

Section 2. ADVANCE OF EXPENSES. The Company shall pay the expenses incurred in defending any proceeding involving a person who is or may be indemnified pursuant to Section 1 in advance of its final disposition, provided, however, that the payment of expenses incurred by such a person in advance of the final disposition of the proceeding shall be made only upon receipt of an undertaking by that person to repay all amounts advanced if it should be ultimately determined that the person is not entitled to be indemnified under this Article 10 or otherwise.

Section 3. CERTAIN RIGHTS. If a claim under this Article 10 for (A) payment of expenses or (B) indemnification by a director or person who is or was serving at the request of the Company as a director, officer, employee, fiduciary or agent of another corporation, partnership, limited liability company, joint venture, trust, enterprise or nonprofit entity that is not a subsidiary or affiliate of the Company, including service with respect to employee benefit plans, is not paid in full within sixty days after a written claim therefor has been received by the Company, the claimant may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action, the Company shall have the burden of proving that the claimant was not entitled to the requested indemnification or payment of expenses under applicable law.

Section 4. NON-EXCLUSIVE. The rights conferred on any person by this Article 10 shall not be exclusive of any other rights which such person may have or hereafter acquire under any statute, provision of the Charter or Act of Incorporation, these Bylaws, agreement, vote of stockholders or disinterested directors or otherwise.

Section 5. REDUCTION OF AMOUNT. The Company's obligation, if any, to indemnify any person who was or is serving at its request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, enterprise or nonprofit entity shall be reduced by any amount such person may collect as indemnification from such other corporation, partnership, joint venture, trust, enterprise or nonprofit entity.

Section 6. EFFECT OF MODIFICATION. Any amendment, repeal or modification of the foregoing provisions of this Article 10 shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such amendment, repeal or modification.

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ARTICLE 11
AMENDMENTS TO THE BYLAWS

These Bylaws may be altered, amended or repealed, in whole or in part, and any new Bylaw or Bylaws adopted at any regular or special meeting of the Board of Directors by a vote of a majority of all the members of the Board of Directors then in office.

ARTICLE 12
MISCELLANEOUS

Whenever used in these Bylaws, the singular shall include the plural, the plural shall include the singular unless the context requires otherwise and the use of either gender shall include both genders.

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EXHIBIT C

SECTION 321(b) CONSENT

Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as amended, Wilmington Trust Company hereby consents that reports of examinations by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon requests therefor.

WILMINGTON TRUST COMPANY 

Dated: May 2, 2003                              By:   /s/ Bruce L. Bisson
                                                   ----------------------
                                                Name:  Bruce L. Bisson
                                                Title: Vice President

EXHIBIT D

NOTICE

This form is intended to assist state nonmember banks and savings banks with state publication requirements. It has not been approved by any state banking authorities. Refer to your appropriate state banking authorities for your state publication requirements.

REPORT OF CONDITION

Consolidating domestic subsidiaries of the

WILMINGTON TRUST COMPANY of WILMINGTON
Name of Bank City

in the State of DELAWARE, at the close of business on December 31, 2002.

ASSETS 

                                                                                               Thousands of dollars
Cash and balances due from depository institutions:
     Noninterest-bearing balances and currency and coins....................................................232,178
     Interest-bearing balances....................................................................................0
Held-to-maturity securities...................................................................................3,887
Available-for-sale securities.............................................................................1,259,128
Federal funds sold in domestic offices......................................................................342,300
Securities purchased under agreements to resell...................................................................0
Loans and lease financing receivables:
     Loans and leases held for sale............................................0
     Loans and leases, net of unearned income..........................5,554,642
     LESS: Allowance for loan and lease losses............................76,138
     Loans and leases, net of unearned income, allowance, and reserve.....................................5,478,504
Assets held in trading accounts...................................................................................0
Premises and fixed assets (including capitalized leases)....................................................145,353
Other real estate owned.......................................................................................2,901
Investments in unconsolidated subsidiaries and associated companies...........................................1,771
Customers' liability to this bank on acceptances outstanding......................................................0
Intangible assets:
     a. Goodwill................................................................................................157
     b. Other intangible assets..............................................................................11,755
Other assets................................................................................................137,791
Total assets..............................................................................................7,615,725

CONTINUED ON NEXT PAGE

LIABILITIES 

Deposits:
In domestic offices.......................................................................................6,231,789
     Noninterest-bearing...............................................1,169,807
     Interest-bearing..................................................5,061,982
Federal funds purchased in domestic offices.................................................................174,200
Securities sold under agreements to repurchase..............................................................182,345
Trading liabilities (from Schedule RC-D)..........................................................................0
Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases:..............334,810
Bank's liability on acceptances executed and outstanding..........................................................0
Subordinated notes and debentures.................................................................................0
Other liabilities (from Schedule RC-G)......................................................................128,622
Total liabilities.........................................................................................7,051,766

EQUITY CAPITAL

Perpetual preferred stock and related surplus.....................................................................0
Common Stock....................................................................................................500
Surplus (exclude all surplus related to preferred stock).....................................................62,118
a. Retained earnings........................................................................................503,661
b. Accumulated other comprehensive income....................................................................(2,320)
Total equity capital........................................................................................563,959
Total liabilities, limited-life preferred stock, and equity capital.......................................7,615,725