OVERSEAS SHIPHOLDING GROUP, INC. 666 Third Avenue New York, NY 10017

Title and Position.  You will continue to serve as President and CEO of the Company and, as such, have the duties and responsibilities commensurate with the position at public companies of similar size and ownership.  You will report to the Company’s Board of Directors (the “Board”).  While you are employed by the Company, you will (a) devote substantially all of your business time and reasonable best efforts to the performance of your duties and (b) discharge your duties diligently, faithfully and in what you believe in your good faith judgment is the best interests of the Company.  Notwithstanding the obligation to devote substantially all of your business time to the performance of our duties, you may manage your personal and family passive investments, be involved in charitable activities (including serving on their boards) and, with the prior consent of the Board, serve on other for profit boards, provided that such activities in the aggregate do not materially interfere with the performance of your duties or breach your fiduciary duty to the Company.

Employment.  Your employment is at will employment and as such may be terminated by you or the Company at any time for any reason or no reason, provided that, in the event of your voluntary termination of employment without Good Reason (as defined in Exhibit A) prior to October 12, 2016, you shall give the Company thirty (30) days’ prior written notice.  The period of time between the Effective Date and the termination of your employment hereunder will be referred to herein as the “Employment Term.”

Compensation.

(a)  

Base Salary.  As compensation for your services, the Company will pay you a base salary at the rate of $900,000 per year, in accordance with the usual payroll practices of the Company (as increased from time to time, the “Base Salary”).  Your Base Salary will be subject to annual review and may be increased (but may not be decreased) as determined by the Compensation Committee of the Board (the “Compensation Committee”) in its sole discretion, which determination may be based on, without limitation, market trends, internal considerations and/or your performance.

Bonus Payments.  You will be eligible to receive an annual bonus under the Company’s Executive Performance Incentive Plan, as amended from time to time or any successor plan thereto (the “Incentive Plan”), for each fiscal year that you remain employed by the Company with a target of 180% of the Base Salary for the applicable year (each a “Bonus”).  Each Bonus will be based on performance goals determined for such year by the Compensation Committee and will be paid to you in accordance with the terms and conditions of the Incentive Plan.

(c)  

Equity Awards.  In connection with your acceptance of the terms of this Agreement, the Compensation Committee has approved the grant of stock options and restricted stock units to you under the Overseas Shipholding Group, Inc. 2004 Stock Incentive Plan, as amended and restated as of June 2, 2010, pursuant to the terms and conditions of the Non-Qualified Stock Option Agreement and Restricted Stock Unit Award Agreement, respectively, between you and the Company, each dated as of the date hereof.

Benefits and Business Expenses.

 

(a)

(b)  

Future Grants.  You will be entitled to future equity grants as determined by the Board, or the applicable Committee thereof, and they shall be subject to such terms as provided in the applicable grant.

Perquisites.  You will be entitled to perquisites consistent with Company practices as in effect from time to time.

Business Expenses.  Upon presentation of appropriate documentation, you will be reimbursed by the Company for reasonable business expenses, in accordance with Company policies, in connection with the performance of your duties hereunder.

Disability Policy.  Upon presentation of appropriate documentation, the Company will pay the premiums for the Mass Mutual disability insurance policy number ###-###-#### and the Boston Mutual disability insurance policy number 5070-0012 maintained by you, in an amount up to $11,000 per annum.  The foregoing shall not limit your participation in the Company’s disability programs, except to the extent required by the underwriters thereof.

Legal Fees.  Within 30 days following the Effective Date, upon presentation of appropriate documentation (including time sheets), the Company shall pay reasonable legal fees (at your counsel’s lowest standard rate for each lawyer involved), and expenses incurred in connection with the negotiation and execution of this Agreement, but not in excess of $25,000.

Indemnification and Directors and Officers Liability Insurance.  You shall be indemnified and be covered by officers’ and directors’ liability insurance to the same extent that the Company covers the directors of the Company (subject to any legal or indemnity limitations).  Such indemnification and coverage shall continue after the Employment Term with regard to actions or inactions during your employment with the Company while liability exists to the same extent that directors are covered.

Consequences of Termination.

(a)  

Death.  If your employment with the Company terminates as a result of your death, the Company will pay or provide to your spouse or estate, as applicable, (i) any Base Salary earned but not yet paid as of the date of termination, paid in accordance with the usual payroll practices of the Company, (ii) any accrued vacation pay payable pursuant to the Company’s policies, (iii) any documented unreimbursed business expenses reimbursed in accordance with Company policies, (iv) any earned but unpaid Bonus for any prior completed fiscal year, earned and paid in accordance with Section 3(b) (the “Prior Year Bonus”), and (v) any amounts, benefits or rights you are due or entitled to pursuant to the terms of any plan, policy, program or arrangement of the Company applicable to you, including any equity grant in accordance therewith, paid or provided, as applicable, in accordance with the terms and conditions of the applicable plan, policy, program or arrangement (collectively the “Accrued Amounts”).  You will not be entitled to any other amounts, except rights with regard to indemnification and directors’ and officers’ liability insurance.

(b)  

Disability.  If your employment with the Company terminates as a result of your Disability, the Company will pay you the Accrued Amounts.  You will not be entitled to any other amounts, except rights with regard to indemnification and directors’ and officers’ liability insurance and as provided in the last sentence hereof.  For purposes of this Agreement, Disability means your failure (on an actual basis) or inability (on a projected basis (including any prior actual absence period) as determined by a physician selected by the Board in good faith and reasonably acceptable to you) to respectively, have performed or be able to perform your material duties and responsibilities as a result of physical or mental illness or injury for more than one hundred eighty (180) days during a three hundred sixty-five (365) day period.  In the event such termination is on a projected basis, your actual termination date shall be at the earliest of your actually satisfying the above actual absence requirement, your qualifying to commence receiving disability benefits under any Company paid for or sponsored long-term disability program, your death or six (6) months after such termination determination, but in such interim you shall be entitled to your compensation hereunder, but shall not have any offices, any responsibilities, duties or authority or any right to terminate for Good Reason.

(c)  

Without Cause or For Good Reason.  If the Company terminates your employment without Cause (as defined in Exhibit A) or you terminate your employment for Good Reason, you will receive your Accrued Amounts and, provided such termination is prior to October 12, 2016, subject to your execution and delivery to the Company of a waiver and general release in the form attached hereto as Exhibit C (with such changes as may be required to make the waiver and release voluntary and binding on you in accordance with applicable law) that has become effective within ninety (90) days after such termination, the Company agrees (i) subject to Section 7(l)(ii), to pay you at the same time as such amounts would be paid to you had you remained employed by the Company an amount equal to your proper monthly Base Salary (as defined herein) in effect on the date immediately prior to your termination for a period of twenty-four (24) months, subject to Section 6(m) below; provided that, subject to the delay set forth in Section 7(l)(ii), the payment of such amount shall commence on the ninetieth (90th) day after the date of such termination, which first payment shall include payment of any amounts that would otherwise be due prior thereto; (ii) to pay you a pro-rata portion of your Bonus for the fiscal year in which such termination occurs based on actual results for such year (determined by multiplying the amount of such Bonus which would be due for the full fiscal year by a fraction, the numerator of which is the number of days during the fiscal year of termination that you are employed by the Company and the denominator of which is 365), any such amount shall be earned and paid in accordance with Section 3(b); (iii)(A) if benefits under the Company health plans in which you participated immediately prior to the termination of your employment, or materially equivalent plans maintained by the Company in replacement thereof (the “Health Plans”) will not be taxable to you, then continued coverage at the Company’s expense (other than that set forth below) under the Health Plans, or (B) if benefits under the Health Plans will be taxable to you, reimbursement for your premiums for continued coverage under the Health Plans in the amount that the cost of such coverage exceeds the active employee rate under the Health Plans (as determined based on your premium rate in effect your date of termination and excluding, for purposes of calculating cost, an employee’s ability to pay premiums with pre-tax dollars), in either case for you and your dependents until the earliest of (x) you or your eligible dependents, as the case may be, ceasing to be eligible under Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), (y) eighteen (18) months following the date of your termination of employment and (z) the date of your permitted entry to any future employer’s health plan upon or following your commencement of other substantially full-time employment or the equivalent (such period, the “Coverage Period”).  If you receive the benefits under (iii)(A), then notwithstanding the forgoing, you shall pay the same premium amount for such coverage as you would pay if an active employee under the Health Plans (as determined based on your premium rate in effect on your date of termination and excluding, for purposes of calculating cost, an employee’s ability to pay premiums with pre-tax dollars) and the Company portion of the premium for any such coverage shall be paid on a monthly basis.  If you receive the payments under (iii)(B) then any such reimbursement payment shall be payable on the first Company payroll date for the applicable month for which such premium amount is paid.  The Coverage Period shall run concurrently with the applicable continuation coverage for you and your dependents pursuant to COBRA.  Notwithstanding the foregoing, if the Company terminates your employment without Cause or you terminate your employment for Good Reason at any time during the two (2) year period following a Change of Control (as defined in the Second Amended and Restated Change of Control Protection Agreement between you and the Company, dated as of October 12, 2011 (as amended or amended and restated from time to time, the “Change of Control Agreement”), (I) the Company shall pay you such amounts and provide you with such benefits as provided in the Change of Control Agreement, if then in effect, in lieu of the amounts and benefits under this Sections 5(c); and (II) any release requirement shall only be as required pursuant to the Change of Control Agreement then in effect.  You will not be entitled to any other amounts, except with regard to indemnification and directors’ and officers’ liability insurance.

(d)  

For Cause. If the Company terminates your employment for Cause, the Company will pay you the Accrued Amounts other than any unpaid Prior Year Bonus and you shall not be entitled to any other amount, except with regard to indemnification and directors’ and officers’ liability insurance.

(e)  

Voluntary Resignation Without Good Reason.  If your employment terminates as a result of your voluntary resignation without Good Reason or your voluntary resignation for any reason following October 12, 2016, the Company will pay you the Accrued Amounts.  You shall not be entitled to any other amounts, except with regard to indemnification and directors’ and officers’ liability insurance.

(f)  

No Mitigation.  Following your termination of employment, you shall be under no obligation to seek other employment and, except as provided under Section 5(c)(iii) and Section 6(m), there shall be no setoff against any amounts due you hereunder on account of remuneration attributable to any subsequent employment that you may obtain or, on other than a Cause termination, on account of any claim the Company or any affiliate may have against you.

(g)  

Resignation as a Director.  Upon any termination of your employment, you agree to promptly resign in a writing delivered to the Company as an officer and director of the Company and any affiliate and from any other fiduciary position with the foregoing.

Confidential Information, Non-Competition and Non-Solicitation.

(a)  

You acknowledge that as a result of your employment by the Company, you will obtain confidential information as to the Company and its affiliates and create relationships with customers, suppliers and other persons dealing with the Company and its affiliates and the Company and its affiliates will suffer substantial damage, which would be difficult to ascertain, if you should use such confidential information or take advantage of such relationship (other than in the good faith performance of your duties during the Employment Term) and that because of the nature of the information that will be known to you and the relationships created it is necessary for the Company and its affiliates to be protected by the prohibition against Competition as set forth herein, as well as the Confidentiality restrictions set forth herein.  For purposes of this Agreement, an affiliate of any entity means an entity that directly or indirectly controls, is controlled by, or is under common control with, such other entity.

(b)  

You acknowledge that the retention of the customers of the Company and its affiliates is important to the businesses of the Company and its affiliates and that you will create relationships with such customers as a result of being an executive of the Company, and, therefore, it is necessary for the Company and its affiliates to be protected from your Solicitation of such customers as set forth below.

(c)  

You acknowledge that the retention of nonclerical employees employed by the Company and its affiliates in which the Company and its affiliates have invested training and depends on for the operation of their businesses is important to the businesses of the Company and its affiliates, that you will obtain unique information as to such employees as an executive of the Company and will develop a unique relationship with such persons as a result of being an executive of the Company and, therefore, it is necessary for the Company and its affiliates to be protected from your Solicitation of such employees as set forth below.

(d)  

You acknowledge that the provisions of this Agreement are reasonable and necessary for the protection of the businesses of the Company and its affiliates and that part of the compensation paid under this Agreement and the agreement to pay severance in certain instances is in consideration for the agreements in this Section.

(e)  

While you are employed by the Company and for one (1) year after your termination of employment, you will not engage in Solicitation (other than in the good faith performance of your duties during the Employment Term) and will not enter into Competition with the Company or its affiliates.

(f)  

Competition means:  participating, directly or indirectly, as an individual proprietor, partners, stockholder, officer, employee, director, joint venturer, investor, lender, consultant or in any capacity whatsoever (within the United States of America, or in any country where the Company or its affiliates do business) in a business in competition with any Material Business (as defined below) conducted by the Company as of the date of the termination of your employment (“Competitor”), provided, however, that such participation will not include (i) the mere ownership of not more than one percent (1%) of the total outstanding stock of a publicly held company, (ii) working as an investment banker or financial consultant (other than as “disguised” employment for any Competitor), (iii) engaging in any activity with, or for, a non-competitive division, subsidiary or affiliate of any Competitor, or (iv) any activity engaged in with the prior written approval of the Board.  A business shall be deemed to be a Material Business of the Company if it generated more than 5% of the Company’s revenues in the fiscal year ending prior to termination of your employment or is projected to generate more than 5% of the Company’s revenues in the fiscal year of termination of your employment.

(g)  

Solicitation means:  (i) with regard to Section 6(c) and Section 6(e), the recruiting, soliciting or inducing, of any nonclerical employee or employees of the Company or its affiliates to terminate their employment with, or otherwise cease their relationship with, the Company or its affiliates, or hiring or assisting another person or entity to hire any nonclerical employee of the Company or its affiliates or any person who within six (6) months before had been a nonclerical employee of the Company or its affiliates and was not terminated by the Company without “cause” after the end of your employment, provided, however, that solicitation will not include (1) any of the foregoing activities engaged in with the prior written approval of the Board, (2) serving as a reference for a current or former employee of the Company or its affiliates if such employee has no relationship to any entity by which you are employed or are otherwise being compensated or retained at the time the reference is given (including as a likely prospective employer or retainer), or (3) the hiring of a current or former non-clerical employee of the Company or its affiliates by an entity by which you are employed, compensated or retained if you are in no way involved with such hire, or the identification of the person to be hired, and you give no endorsement or reference with regard to such hire; or (ii) with regard to Section 6(b) and Section 6(e), the soliciting, enticing or inducing, of any customer of the Company or an affiliate (which shall mean any person, firm or corporation which has done actual business with the Company prior to termination of your employment and within the one (1) year period immediately prior to the date of your action or was in active discussions with the Company during such period about such business and such discussions have not been terminated) to become a client or customer of any other person, firm or corporation with respect to products and/or services then sold or under development by the Company or to otherwise cease doing business with the Company or its affiliates or reduce the amount of business it does with the Company or its affiliates, and you will not approach any such person, firm or corporation for such purpose or authorize or knowingly approve the taking of such actions by any other person.

(h)  

If any restriction set forth in this Section 6 is found by any court of competent jurisdiction to be unenforceable because it extends for too long a period of time or over too great a range of activities or in too broad a geographic area, it will be interpreted to extend over the maximum period of time, range of activities or geographic area as to which it may be enforceable.  If any provision of this Section 6 is declared to be invalid or unenforceable, in whole or in part, as a result of the foregoing, as a result of public policy or for any other reason, such invalidity will not affect the remaining provisions of this Section which will remain in full force and effect.

(i)  

During and after the Employment Term (other than in the good faith performance of your duties during the Employment Term), you will hold in a fiduciary capacity for the benefit of the Company and its affiliates all secret or confidential information, knowledge or data relating to the Company and its affiliates, and their respective businesses, including any confidential information (which you know or should know is confidential) of customers of the Company and its affiliates, (i) obtained by you during your employment by the Company and its affiliates and (ii) not otherwise public knowledge or known within the applicable industry (“Confidential Information”).  For this purpose, Confidential Information shall not include the names, telephone numbers and addresses of customers and other persons that would otherwise be obtained from public records.  Other than in the good faith performance of your duties, you will not, without prior written consent of the Company, unless compelled or required pursuant to the order of a court or by action by a governmental, legislative, administrative or other legal body having actual or apparent jurisdiction over such matter, communicate or divulge any Confidential Information other than the Company and those designated by it.  In the event you are compelled by order of a court or by action of a governmental, legislative, administrative or legal body to communicate or divulge any Confidential Information to anyone other than the foregoing, you will promptly notify the Company of any such order and you will cooperate to the best of your ability with the Company in protecting such information to the extent possible under applicable law.  Nothing herein shall prevent you from disclosing any Confidential Information in connection with enforcing your rights under this Agreement or under any plan, policy, program or arrangement of, or any other agreement with, the Company, or its affiliates, to an arbitrator in an arbitration as provided for in Section 7(g) hereof.

(j)  

Upon termination of your employment with the Company and its affiliates, or at any time as the Company may request, you will promptly deliver to the Company, as requested, all documents (whether prepared by the Company, an affiliate, you or a third party and including Board related matters) relating to the Company, an affiliate or any of their businesses or property which you may possess or have under your direction or control other than (a) your personal items, such as photographs, personal and non-business related correspondence, personal and non-business related diaries or calendars, and phone books of a purely non-business nature, (b) copies, but not originals, of names, addresses and phone numbers from personal rolodexes and phone books which includes business contacts, (c) documents provided to you in your capacity as a participant in any employee benefit plan, policy or program of the Company or any agreement by and between you and the Company with regard to your employment, benefits or severance or (d) copies, but not originals, of expense reimbursement information which you reasonably believe may be needed for your personal tax purposes.  In the event of any litigation or investigation (including by a regulatory or governmental body) thereafter related to Board actions or inactions, upon your reasonable request and subject to satisfactory confidentiality agreements and protection of privilege, the Company shall make available to you copies of relevant Board minutes (including of any committee of the Board of which you were a member).

(k)  

During the Employment Term and thereafter, you will not criticize or disparage the Company or its affiliates or their officers, directors, employees, services or products.  The Company agrees that it will use reasonable business efforts to cause its senior officers and directors, while related to the Company, not to disparage you after you are no longer employed by the Company.  The foregoing limitations shall not be violated by statements or actions (i) while you are employed, in the performance of your duties or otherwise in meetings with the Board or Board members, (ii) in truthful testimony in response to legal process or regulatory inquiry, or (iii) after employment while in a competitive situation, so long as not based on your employment with the Company.  In addition, a party shall not be deemed to be criticizing or disparaging by merely denying or correcting the accuracy of a public statement or report.

(l)  

In the event of a breach or potential breach of this Section 6, you acknowledge that the Company and its affiliates will be caused irreparable injury and that money damages may not be an adequate remedy and agree that the Company and its affiliates will be entitled to injunctive relief (in addition to its other remedies at law) to have the provisions of this Section 6 enforced.  It is hereby acknowledged that the provisions of this Section 6 are for the benefit of the Company and all of the affiliates of the Company and each such entity may enforce the provisions of this Section 6 and only the applicable entity can waive the rights hereunder with respect to its confidential information and employees.  The foregoing shall apply to affiliates only to the extent your action relates to their Confidential Information or business.

(m)  

In the event of a material breach of this Section 6 by you (provided that if you are then employed by the Company, only if such breach would also be Cause), the Company shall provide you with written notice describing the conduct giving rise to such breach and may cease paying you, and shall be relieved of any obligation with regard to, any severance payments pursuant to Section 5(c) due after such breach, including, without limitation, any outstanding Options granted under, and as defined in, Exhibit B shall cease to be exercisable on the later of ninety (90) days after termination of your employment and the date of such breach.

Miscellaneous.

(a)  

Governing Law.  This Agreement is governed by and construed in accordance with the laws of the State of New York without reference to principles of conflict of laws.

(b)  

Entire Agreement/Amendment.  This Agreement, including the exhibits hereto, together with the Change in Control Agreement, contain the entire understanding between you and the Company with respect to your employment by the Company from and after the Effective Date and supersedes any prior agreements between the Company and you with respect thereto, including without limitation the Prior Agreement and the First Amended and Restated Change in Control Protection Agreement between you and the Company, made and entered into as of December 31, 2008.  This Agreement may not be altered, modified, amended or terminated except by a written instrument signed by you and the Company.  The severance amounts payable under Section 5(c) of this Agreement and under the Change in Control Agreement, as applicable, are in lieu of severance or similar payments under any plan or program of the Company or its affiliates and you shall not be entitled to any other such severance while you are entitled to severance under Section 5(c) or the Change in Control Agreement, as applicable.

Waivers.  No waiver by any person of any breach of any provision of this Agreement, including any Exhibit attached hereto, shall be deemed to be a waiver of any similar or dissimilar breach at the same or any other time.  To be effective, any waiver must be set forth in writing signed by the waiving person and must specifically refer to the breach that is being waived.  Notwithstanding the foregoing, in the event you do not assert a Good Reason event within one hundred and twenty (120) days after first learning of the occurrence thereof, it shall be deemed waived.

Assignment.  Your rights and obligations under this Agreement are not assignable by you, except as provided by will or operation of law or in accordance with this Section 7(d) or any plan, policy, program, arrangement or corporate governance document of, or other agreement with, the Company or any affiliate.  The Company’s rights and obligations under this Agreement are not assignable by the Company except to any successor to the Company or an acquirer of all or substantially all of the assets of the Company; provided such successor or acquirer agrees to assume the Company’s obligations under this Agreement either by contract or operation of law (the “Successors and Assigns”).  You shall be entitled, to the extent permitted under applicable law or under any applicable plan, program, policy, grant or agreement of the Company, to select and change a beneficiary or beneficiaries to receive any compensation or benefit hereunder following your death by giving the Company written notice thereof.  In the event of your death or a judicial determination of your incompetence, references to you in this Agreement, including any Exhibit attached hereto, shall be deemed, where appropriate, to refer to your beneficiary, estate or other legal representative.

Successors; Binding Agreement; Third Party Beneficiaries.  This Agreement will inure to the benefit of and be binding upon the person or legal representatives, executors, administrators, successors, heirs, distributes, devisees, legatees and permitted assigns of the parties hereto.

(f)  

Conflict and Representation.  You represent that you are not subject to any limitations that would be violated by you entering into this Agreement or performance of your obligations hereunder or interfere with, or limit, your ability to perform your duties hereunder.

(g)  

Arbitration.  Any dispute or controversy arising under or in connection with this Agreement, including any Exhibit attached hereto, other than with regard to Section 6 hereof (provided that if no injunctive or equitable relief is being sought in connection with such dispute or controversy (whether or not granted or rejected), issues under Section 6 shall be governed by this Section 7(g)), shall be settled exclusively by arbitration conducted in the City of New York in the State of New York under the Commercial Arbitration Rules then prevailing of the American Arbitration Association and such submission shall request the American Arbitration Association to:  (i) appoint an arbitrator, who shall be an attorney, experienced and knowledgeable concerning the matter then in dispute; (ii) require the testimony to be transcribed; (iii) require the award to be accompanied by findings of fact and the statement for reasons for the decision; and (iv) request the matter to be handled by and in accordance with the expedited procedures provided for in the Commercial Arbitration Rules.  The determination of the arbitrator shall be final and binding and judgment may be entered on the arbitrator’s award in any court having jurisdiction.  The Company and you shall be liable for your own expenses, including attorneys’ fees; provided, that if the arbitrator rules that you are the prevailing party with respect to at least one material issue, then the arbitrator shall also award you all of your costs and expenses (including, without limitation, your legal fees and expenses), which shall be paid by the Company within sixty (60) days after the arbitrator’s decision.

(h)  

Notices.  Any notice, consent, demand, request, or other communication given in connection with this Agreement shall be in writing and shall be deemed to have been given, provided that written acknowledgment of receipt is obtained, (a) when delivered personally or (b) give days after being sent by prepaid certified or registered mail, or two days after being sent by a nationally recognized overnight courier, to the address (if any) specified below for such person or entity (or to such other address as shall have specified by ten (10) days’ written advance notice given in accordance with this Section 7(h):

(i)  

Withholding.  The Company may withhold from any and all amounts payable under this Agreement such Federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation.

(j)  

Counterparts.  This Agreement may be signed in any number of counterparts, each of which will be an original, with the same force and effect as if the signature thereto and hereto were upon the same instrument.

Authority.  The Company represents and warrants that this Agreement has been authorized by all necessary corporate action and the person executing it has the authority to do so.

Section 409A Compliance.

OVERSEAS SHIPHOLDING GROUP, INC.

By:

/s/James I. Edelson

Name:

James I. Edelson

Title:

Senior Vice President, General Counsel and Secretary

Agreed & Accepted:

/s/Morten Arntzen

Morten Arntzen