<PAGE>

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                              ACQUISITION AGREEMENT


                         Dated as of September 15, 1997


                                  By and Among


                                   OMI CORP.,


                         UNIVERSAL BULK CARRIERS, INC.,


                          MARINE TRANSPORT LINES, INC.


                                       and


               THE PERSONS SET FORTH ON EXHIBIT A ATTACHED HERETO


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<PAGE>

                                TABLE OF CONTENTS


                                                                           Page
                                                                           ----



ARTICLE I  DEFINITIONS......................................................  2
         ss.1.1   Definitions...............................................  2
         ss.1.2   Principles of Construction................................ 14

ARTICLE II  ACQUISITION OF STOCK............................................ 14
         ss.2     Acquisition of Stock...................................... 14
         ss.2.2   Consideration and Adjustments............................. 15
         ss.2.3   Closing................................................... 26

ARTICLE III  REPRESENTATIONS OF THE COMPANY................................. 27
         ss.3     Representations of the Company............................ 27
         ss.3.1   Existence and Good Standing............................... 27
         ss.3.2   Capital Stock............................................. 27
         ss.3.3   Authorization and Validity of this Agreement.............. 27
         ss.3.4   Subsidiaries and Investments.............................. 28
         ss.3.5   Financial Statements; No Material Changes................. 30
         ss.3.6   Books and Records......................................... 31
         ss.3.7   Title to Properties; Encumbrances......................... 31
         ss.3.8   Real Property............................................. 32
         ss.3.9   Intellectual Property..................................... 32
         ss.3.10  Leases.................................................... 33
         ss.3.11  Material Contracts........................................ 34
         ss.3.12  Consents and Approvals; No Violations..................... 36
         ss.3.13  Litigation................................................ 36
         ss.3.14  Taxes..................................................... 37
         ss.3.15  Insurance................................................. 40
         ss.3.16  Compliance with Laws...................................... 40
         ss.3.17  Employment Relations...................................... 41
         ss.3.18  Company Employee Benefit Plans............................ 42
         ss.3.19  Interests in Customers, Suppliers, etc.................... 54
         ss.3.20  Environmental Matters and Claims.......................... 55
         ss.3.21  Compensation of Employees................................. 57
         ss.3.22  Conduct of Business....................................... 57
         ss.3.23  Restrictive Documents..................................... 57

                                      (i)

<PAGE>

                                                                           Page
                                                                           ----
         ss.3.24  No Changes Since Company Balance Sheet Date............... 58
         ss.3.25  Condition of Assets....................................... 59
         ss.3.26  Limitation of Warranties.................................. 59
         ss.3.27  Broker's or Finder's Fees................................. 60
         ss.3.28  Disclosure................................................ 60
         ss.3.29  Copies of Documents....................................... 61

ARTICLE IV  REPRESENTATIONS OF THE SHAREHOLDERS............................. 61
         ss.4     Representations of the Shareholders....................... 61
         ss.4.1   Ownership of Stock........................................ 61
         ss.4.2   Authorization and Validity of Agreement................... 62
         ss.4.3   Restrictive Documents..................................... 62
         ss.4.4   Acquisition for Investment................................ 63
         ss.4.5   Limitation of Warranties.................................. 64
         ss.4.6   Broker's or Finder's Fees................................. 65

ARTICLE V  REPRESENTATIONS OF THE ACQUIROR.................................. 65
         ss.5     Representations of the Acquiror........................... 65
         ss.5.1   Capital Stock............................................. 65
         ss.5.2   Existence and Good Standing; Power and Authority.......... 66
         ss.5.3   Subsidiaries and Investments.............................. 67
         ss.5.4   Consents and Approvals; No Violations..................... 69
         ss.5.5   Restrictive Documents..................................... 69
         ss.5.6   Books and Records......................................... 70
         ss.5.7   Financial Statements; No Material Changes................. 70
         ss.5.8   Title to Properties; Encumbrances......................... 72
         ss.5.9   Real Property............................................. 72
         ss.5.10  Intellectual Property..................................... 73
         ss.5.11  Leases and Ship Charters.................................. 73
         ss.5.12  Material Contracts........................................ 74
         ss.5.13  Litigation................................................ 76
         ss.5.14  Taxes..................................................... 76
         ss.5.15  Insurance................................................. 79
         ss.5.16  Acquisition for Investment................................ 80
         ss.5.17  Compliance with Laws...................................... 80
         ss.5.18  Employment Relations...................................... 81
         ss.5.19  Acquiror Employee Benefit Plans........................... 81
         ss.5.20  Interests in Customers, Suppliers, etc.................... 94
         ss.5.21  Environmental Matters and Claims.......................... 94
         ss.5.22  Compensation of Employees................................. 95
         ss.5.23  Conduct of Business....................................... 96
         ss.5.24  No Changes Since Domestic Businesses Balance Sheet Date... 96

                                      (ii)
<PAGE>

                                                                           Page
                                                                           ----
         ss.5.25  No Defaults............................................... 98
         ss.5.26  Condition of Assets....................................... 98
         ss.5.27  Limitation of Warranties.................................. 98
         ss.5.28  SEC Filings............................................... 98
         ss.5.29  Copies of Documents.......................................100
         ss.5.30  Disclosure................................................100
         ss.5.31  Broker's or Finder's Fees.................................100

ARTICLE VI  COVENANTS OF THE PARTIES........................................100
         ss.6.1   Conduct of Business of the Company........................100
         ss.6.2   Conduct of Business of Acquiror...........................103
         ss.6.3   Access to Information; Confidentiality....................105
         ss.6.4   Directors' and Officers' Indemnification and Insurance....106
         ss.6.5   Notification of Certain Matters...........................113
         ss.6.6   Tax Matters...............................................114
         ss.6.7   Proxy Statement...........................................115
         ss.6.8   Stockholders' Special Meeting.............................118
         ss.6.9   Further Action............................................119
         ss.6.10  Removal of Guarantees/Cancellation of Debt................120
         ss.6.11  Corporate Restructuring Transactions; Spin-Off............121
         ss.6.12  [Intentionally Left Blank]................................121
         ss.6.13  Antitrust Matters.........................................122
         ss.6.14  Antitakeover Statutes.....................................122
         ss.6.15  Covenants Relating to Company Employee Benefit Plans......123
         ss.6.16  Participation  of Acquiror and Domestic Business  
                  Employees in Company Employee
                  Benefit Plans.............................................123
         ss.6.17  Acquiror Stock Options....................................125
         ss.6.18  New Credit Facility Commitment............................125
         ss.6.19  Redemption of Common Stock................................126
         ss.6.20  Audited Consolidated Financial Statements.................126
         ss.6.21  Monthly Financial Statements..............................126
         ss.6.22  Stock Exchanges...........................................127
         ss.6.23  Permitted Dispositions....................................127
         ss.6.24  Certain Modifications to this Agreement...................127
         ss.6.25  Standstill................................................128
         ss.6.26  Schedules.................................................129
         ss.6.27  Restriction on Transfer...................................129
         ss.6.28  Purchase of Acquiror Shares...............................131
         ss.6.29  Expenses..................................................131
         ss.6.30  Private Letter Ruling.....................................132
         ss.6.31  Reverse Stock Split.......................................132
         ss.6.32  Non-Recourse..............................................132

                                      (iii)
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                                                                           Page
                                                                           ----

ARTICLE VII  CONDITIONS PRECEDENT...........................................133
         ss.7.1   Conditions to Obligations of Each Party to Effect the
                   Acquisition..............................................133
         ss.7.2   Additional Conditions to Obligations of the Acquiror......138
         ss.7.3   Additional Conditions to Obligations of the Shareholders..141

ARTICLE VIII  TERMINATION...................................................145
         ss.8.1   Grounds for Termination...................................145
         ss.8.2   Effect of Termination.....................................147
         ss.8.3   Waiver....................................................147

ARTICLE IX  SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION....................148
         ss.9.1   Survival of Representations...............................148
         ss.9.2   Indemnification...........................................148
         ss.9.3   Limitations on Indemnification Obligations................150
         ss.9.4   Indemnification Procedure.................................152
         ss.9.5   Indemnification Payments..................................156
         ss.9.6   Other Adjustments.........................................157
         ss.9.7   Obligations Absolute......................................157
         ss.9.8   Remedies Cumulative.......................................158

ARTICLE X  MISCELLANEOUS....................................................158
         ss.10.1  ROVER.....................................................158
         ss.10.2  Governing Law.............................................158
         ss.10.3  Captions..................................................159
         ss.10.4  Publicity.................................................159
         ss.10.5  Notices...................................................159
         ss.10.6  Parties in Interest.......................................160
         ss.10.7  Counterparts..............................................160
         ss.10.8  Entire Agreement..........................................160
         ss.10.9  Amendments................................................160
         ss.10.10  Severability.............................................161
         ss.10.11  Third Party Beneficiaries................................161
         ss.10.12  Jurisdiction.............................................161

                                      (iv)

<PAGE>

SCHEDULES
---------
Schedule       3.2              Options
Schedule       3.3(b)           Governmental Consents
Schedule       3.4(a)           Subsidiaries
Schedule       3.4(b)           List of Jurisdictions
Schedule       3.4(c)           Subsidiary Capitalization
Schedule       3.5(a)           Changes Since Company's
                                  Balance Sheet Date
Schedule       3.6              Books and Records
Schedule       3.7              Title to Properties; Encumbrances
Schedule       3.9              Intellectual Property
Schedule       3.10             Leases and Ship Charters
Schedule       3.11             Material Contracts
Schedule       3.11A            Audits of MARAD Contracts
Schedule       3.12             Required Filings and Consents
Schedule       3.13             Litigation
Schedule       3.14             Taxes
Schedule       3.14(c)(v)       Tax Sharing Agreements
Schedule       3.15             Insurance
Schedule       3.17             Employment Relations
Schedule       3.18             Company Employee Benefit Plans
Schedule       3.19             Interests in Customers, Suppliers, etc.
Schedule       3.20             Environmental Matters
Schedule       3.23             Restrictive Documents
Schedule       3.24             Changes Since Balance Sheet Date
Schedule       5.1              Options
Schedule       5.2(b)           Governmental Consents
Schedule       5.3(a)           Subsidiaries
Schedule       5.3(b)           Qualification as a Foreign Corporation
Schedule       5.3(c)           Subsidiary Capitalization
Schedule       5.4              Filings and Consents
Schedule       5.5              Restrictive Documents
Schedule       5.8              Title to Properties; Encumbrances
Schedule       5.9              Real Property
Schedule       5.10             Intellectual Property
Schedule       5.11             Leases and Ship Charters
Schedule       5.12             Material Contracts
Schedule       5.12A            Audits of MARAD Contract
Schedule       5.13             Litigation
Schedule       5.14             Other Tax Matters
Schedule       5.14(c)(v)       Tax Sharing Agreements


<PAGE>

Schedule       5.15             Insurance
Schedule       5.19             Acquiror Employee Benefit Plans
Schedule       5.20             Interests in Customers, Suppliers, etc.
Schedule       5.21             Environmental Matters
Schedule       5.24             Changes Since Domestic Businesses Balance
                                  Sheet Date
Schedule       6.1(c)           Company Executives
Schedule       6.6              Approved Actions
Schedule       6.16             Certain Acquiror Employees

EXHIBITS
--------
Exhibit A
                  Shareholders
Exhibit B
                  Escrow Agreement
Exhibit C
                  Company Pro Forma Closing Balance Sheet
Exhibit D
                  Distribution Agreement
Exhibit E
                  "comfort letter" [To Come]
Exhibit F
                  Company Financial Statements
Exhibit G
                  Domestic Businesses Individual Financial Statements
Exhibit H
                  Domestic Businesses Unaudited Consolidated Financial
                           Statements
Exhibit I
                  Acquiror's Pro Forma Closing Balance Sheet
Exhibit J
                  Proposed Form of Amendment to Company's Certificate
                           of Incorporation [To Come]
Exhibit K
                  Confidentiality Agreements
Exhibit L
                  Ruling Request Representations
Exhibit M
                  Management Agreements
Exhibit N
                  Tax Cooperation Agreement
Exhibit O-1
                  Opinion of Cadwalader, Wickersham & Taft [To Come]
<PAGE>

Exhibit O-2
                  Opinion of Cadwalader, Wickersham & Taft (First 
                           Closing Date) [To come]
Exhibit P
                  Opinion of Cadwalader, Wickersham & Taft--10b5 
                           [To Come]
Exhibit Q
                  Opinion of Skadden, Arps, Meagher & Flom LLP 
                           [To Come]
Exhibit R
                  Company and Acquiror Vessels
Exhibit S-1A
                  Opinion of White & Case [To Come]
Exhibit S-1B
                  Opinion of White & Case (First Closing Date) 
                           [To Come]
Exhibit S-2A
                  Opinion of Fredric S. London, Esq. [To Come]
Exhibit S-2B               Opinion of Fredric S. London, Esq. 
                           (First Closing Date) [To Come]
Exhibit T
                  Resigning Members of Acquiror's Board
Exhibit U
                  Employment Agreements to be Terminated
Exhibit V
                  New Nominees for Acquiror Board


<PAGE>
                              ACQUISITION AGREEMENT
                              ---------------------

     ACQUISITION  AGREEMENT  dated as of  September  15,  1997 by and  among OMI
CORP., a Delaware corporation (the "ACQUIROR"),  UNIVERSAL BULK CARRIERS INC., a
Liberian  corporation   ("UBC"),   MARINE  TRANSPORT  LINES,  INC.,  a  Delaware
corporation  (the  "COMPANY"),  and each of the  Persons  set forth on EXHIBIT A
                                                                       ---------
attached hereto (each a "SHAREHOLDER" and collectively, the "SHAREHOLDERS").


                              W I T N E S S E T H :
                              ---------------------


     WHEREAS,  the Acquiror  contemplates a plan of  distribution  which will be
consummated  prior to the Second Closing Date and pursuant to which prior to the
Second  Closing Date,  (a) Acquiror and its  Subsidiaries  will through  various
intercompany transfers and distributions restructure,  divide and separate their
existing  foreign and domestic  shipping  businesses  so that all of the assets,
liabilities  and  operations  of the  foreign  shipping  business  will be owned
directly and indirectly by UBC and (b) all of the shares of capital stock of UBC
will be  distributed  on a pro rata basis to the  stockholders  of Acquiror (the
"SPIN-OFF");

     WHEREAS,  each  Shareholder  owns the number of shares of Common  Stock set
forth opposite such Shareholder's name on EXHIBIT A attached hereto, such shares
of the Shareholders  being all of the outstanding shares of the capital stock of
the Company and which may be converted into Class A Common Stock as contemplated
by Section 6.1;

     WHEREAS,  the Shareholders desire to transfer,  and the Acquiror desires to
acquire, the Stock pursuant to this Agreement (the "ACQUISITION");

<PAGE>

     WHEREAS,  for  federal  income tax  purposes  it is  intended  that (a) the
Spin-Off will qualify as a tax-free  distribution  within the meaning of Section
355 and/or Section 368(a) of the Internal  Revenue Code of 1986, as amended (the
"CODE") and (b) the Acquisition will qualify as a tax-free reorganization within
the meaning of Section 368(a) of the Code; and

     WHEREAS,  it is the intention of the parties hereto that, upon consummation
of the  acquisition  and transfer of the Stock pursuant to this  Agreement,  the
Acquiror  shall  own all of the  outstanding  shares  of  capital  stock  of the
Company.

     NOW,  THEREFORE,  in  consideration  of the  Premises and of the mutual and
dependent promises, representations,  warranties and covenants herein contained,
the parties agree as follows:


ARTICLE I.

                                   DEFINITIONS
                                   -----------

     ss.1.1.  DEFINITIONS.  In addition to the terms  defined  elsewhere in this
Agreement,  the following  terms shall have the  respective  meanings  specified
therefor below (such meanings to be equally  applicable to both the singular and
plural forms of the terms defined).

     "ACCOUNTING PRINCIPLES" means the following: (i) GAAP, PROVIDED that if any
term  used  herein  or in any of the  financial  statements  or  balance  sheets
contemplated  hereby has a  different  meaning  than the meaning of such term in
accordance with GAAP, then such different meaning shall apply; (ii) with respect
to the calculation of levels of accounts,  unless otherwise  provided herein, no
change in accounting  principles  shall be made from those used in preparing the
Company Financial Statements or Acquiror's Pro Forma Closing Balance Sheet other
than  those

                                      -2-

<PAGE>

changes expressly permitted by this Agreement, as applicable, including, without
limitation,  with respect to the nature or classification  of accounts,  closing
proceedings, levels of reserves, or levels of accruals other than as a result of
objective  changes in underlying facts,  circumstances or events;  and (iii) for
purposes of the preceding clauses,  "CHANGES IN ACCOUNTING  PRINCIPLES" includes
all  changes in  accounting  principles,  policies,  practices,  procedures,  or
methodologies with respect to financial statements,  their  classifications,  or
their  display,  as well as  changes  in  practices,  methods,  conventions,  or
assumptions utilized in making accounting estimates.

     "ACQUISITION" has the meaning specified in the third Whereas clause of this
Agreement.

     "ACQUIROR" has the meaning specified in the preamble to this Agreement.

     "ACQUIROR CLAIM" has the meaning specified in Section 6.4.

     "ACQUIROR EMPLOYEE BENEFIT PLANS" has the meaning specified in Section 5.19

     "ACQUIROR INDEMNIFIED PARTIES" has the meaning specified in Section 6.4.

     "ACQUIROR MULTIEMPLOYER PLANS" has the meaning specified in Section 5.19.

     "ACQUIROR  SHARES" means shares of common stock,  par value $.50 per share,
of the Acquiror.

     "ACQUIROR'S  CLOSING  BALANCE  SHEET" has the meaning  specified in Section
2.2(d).

     "ACQUIROR'S PRO FORMA CLOSING  BALANCE SHEET" has the meaning  specified in
Section 5.7(b).

     "ACQUIROR SECURITIES FILINGS" has the meaning specified in Section 5.28.

     "ADDITIONAL SHORT-FALL AMOUNT" has the meaning specified in Section 2.2(h).

     "AFFILIATE" means, with respect to any Person, any other Person directly or
indirectly  controlling,  controlled  by,  or under  direct or  indirect  common
control with such Person. A

                                      -3-


<PAGE>

Person  shall  be  deemed  to  control  a second  Person  if such  first  Person
possesses,  directly  or  indirectly,  the  power (i) to vote 20% or more of the
securities  having  ordinary  voting  power for the  election  of  directors  or
managers of such second  Person or (ii) to direct or cause the  direction of the
management and policies of such second Person,  whether through the ownership of
voting securities, by contract or otherwise.

     "AGREEMENT" means this Agreement, as amended, modified or supplemented from
time to time.

     "APPROVED ACTIONS" means the actions set forth on Schedule 6.6 hereto.

     "BOARD NOMINEES" has the meaning specified in Section 6.7.

     "BONUS  PAYMENTS" means bonus payments that may be made to those executives
of the Company listed on Schedule  6.1(c) who are eligible to receive such bonus
payments,  which  payments  may  be up to  50%  of the  annual  salary  of  such
executives (including that portion of annual salary for the period in 1998 prior
to  the  Second  Closing  Date)  as  determined  by the  Company's  compensation
committee  composed of non-employees but which shall not in the aggregate exceed
$500,000 for all executives listed on Schedule 6.1(c) hereto.

     "BUSINESS  DAY" means any day other than a  Saturday,  Sunday,  or a day on
which banking institutions in New York City remain closed.

     "CLAIM" has the meaning specified in Section 9.4.

     "CLOSING PRICE" has the meaning specified in Section 2.2(a).

     "COBRA" has the meaning specified in Section 3.18.

     "CODE"  has the  meaning  specified  in the fourth  Whereas  clause of this
Agreement.

     "COMMON  STOCK"  means the common  stock of the  Company,  no par value per
share.

                                      -4-

<PAGE>

     "COMPANY" has the meaning specified in the preamble to this Agreement.

     "COMPANY BALANCE SHEET DATE" has the meaning specified in Section 3.5.

     "COMPANY EMPLOYEE BENEFIT PLANS" has the meaning specified in Section 3.18.

     "COMPANY FINANCIAL STATEMENTS" has the meaning specified in Section 3.5.

     "COMPANY PERMITTED ENCUMBRANCES" has the meaning specified in Section 3.7.

     "COMPANY  PRO FORMA  CLOSING  BALANCE  SHEET" has the meaning  specified in
Section 3.5.

     "COMPANY'S  CLOSING  BALANCE  SHEET" has the meaning  specified  in Section
2.2(d).

     "COMPANY SINGLE-EMPLOYER PLANS" has the meaning specified in Section 3.18.

     "COMPANY'S  PRELIMINARY CLOSING BALANCE SHEET" has the meaning specified in
Section 2.2(c).

     "CONDITION" has the meaning specified in Section 3.5.

     "CONSIDERATION" has the meaning specified in Section 2.2.

     "CORPORATE  RESTRUCTURING  TRANSACTIONS"  has the meaning  specified in the
Distribution Agreement.

     "DGCL" means the Delaware General Corporation Law.

     "DISTRIBUTION  AGREEMENT" means the Distribution Agreement by and among UBC
and the  Acquiror  in the form  attached  hereto as EXHIBIT D but with only such
changes  or  supplements  as  may be  necessary  for  the  Acquiror  to  receive
reasonably acceptable rulings from the IRS (as set forth in Section 7.1(v)), and
in regard to any other matters, such changes as the Shareholders' Representative
has  consented  to in writing in advance,  such  consent not to be  unreasonably
withheld;  PROVIDED, HOWEVER, that if any of the proposed changes or supplements
to the  Distribution  Agreement  would  have  the  effect  of (i)  changing  the
definition or division of Domestic Assets,

                                      -5-

<PAGE>

Domestic  Liabilities (or any of the other  definitions  referenced  therein) or
Domestic  Business,  (ii) changing the  definition or division of  International
Assets,  International  Liabilities (or any of the other definitions  referenced
therein) or  International  Business,  (iii) changing the scope or extent of the
indemnities  provided  in Article  VII of the  Distribution  Agreement,  or (iv)
changing  Sections  5.05,  5.10,  8.05,  8.11  and/or  8.16 of the  Distribution
Agreement, no such change shall be made without the prior written consent of the
Shareholders'  Representative,  such consent not to be unreasonably withheld. No
change or supplement shall be made to the Distribution  Agreement if such change
or supplement  would give rise to any obligation or liability on the part of any
of the Shareholders.

     "DNB" means Den Norske Bank ASA.

     "DOMESTIC  BUSINESSES"  means  OMI  Corp.,  as  constituted  following  the
Corporate  Restructuring  Transactions  and the  Spin-Off,  which  entity  shall
include:

     (i)  100% of OMI Petrolink Corp.,

     (ii) OMI Ship Management, Inc.,

     (iii)the  charter,  option and  management  contracts in respect of the OMI
          COLUMBIA,

     (iv) the COURIER,

     (v)  the PATRIOT,

     (vi) the ROVER,

     (vii) a capital construction fund containing the following assets:

          (a)  a promissory  Note from Argosy  Ventures  Ltd. to OMI  Challenger
               Transport, Inc. having a face amount of $7,200,000;

                                      -6-

<PAGE>

          (b)  approximately $300,000;

          (c)  51,000  convertible  preferred shares of Santander  Overseas Bank
               Series D (having a market value on August 29, 1997 of $25.250 per
               share);

          (d)  31,128  convertible  preferred  shares  of  U.S.  West  Financing
               (having a market  value on August 29, 1997 of $25.370 per share);
               and

          (e)  37,000  shares of  convertible  preferred  stock of Royal Bank of
               Scotland  Series C (having a fair market value on August 29, 1997
               of $26.250 per share).

          (viii) the assets  (including  cash of at least  $2,000,000 as well as
     cash in an  amount  equal  to the  fair  market  value  of  certain  of the
     furniture and fixtures  owned by Acquiror and currently  located at 90 Park
     Avenue, as appraised by an independent third-party appraiser), liabilities,
     revenue,  expenses,  contract  obligations related to or in connection with
     the  foregoing,   as  set  forth  on  the  Domestic  Businesses   Unaudited
     Consolidated  Financial  Statements,  including  the notes  and  exceptions
     thereto.

     "DOMESTIC BUSINESSES AUDITED CONSOLIDATED  FINANCIAL  STATEMENTS" means the
consolidated  balance  sheet of the Domestic  Businesses as of December 31, 1996
and the related consolidated statements of income and retained earnings and cash
flows  prepared  in  accordance  with  GAAP,  audited  by  Deloitte  & Touche in
accordance  with  statements on Standards  for  Accounting  and Review  Services
issued by the American Institute of Certified Public Accountants.

     "DOMESTIC  BUSINESSES  BALANCE  SHEET  DATE" has the meaning  specified  in
Section 5.7.


     "DOMESTIC BUSINESSES' PERMITTED  ENCUMBRANCES" has the meaning specified in
Section 5.8.

                                      -7-

<PAGE>

     "DOMESTIC BUSINESSES UNAUDITED  CONSOLIDATED  FINANCIAL STATEMENTS" has the
meaning specified in Section 5.7.

     "ENCUMBRANCES" has the meaning specified in Section 3.7. "Enterprise Value"
means $49,000,000.

     "ENVIRONMENTAL APPROVALS" has the meaning specified in Section 3.20.

     "ENVIRONMENTAL CLAIM" has the meaning specified in Section 3.20.

     "ENVIRONMENTAL LAWS" has the meaning specified in Section 3.20.

     "ERISA" has the meaning specified in Section 3.18.

     "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

     "EXCESS AMOUNT" has the meaning specified in Section 2.2(h).

     "FIRST CLOSING DATE" has the meaning specified in Section 2.3.

     "FOREIGN  BUSINESSES"  means all  businesses of the Acquiror  which are not
Domestic Businesses.

     "GAAP"  means  United  States  generally  accepted  accounting   principles
consistently applied throughout the periods indicated.

     "GOVERNMENTAL  AUTHORITY"  means any government,  governmental  department,
commission,  board,  bureau,  agency,  regulatory  authority,   instrumentality,
judicial or administrative  body, domestic or foreign,  federal,  state or local
having jurisdiction over the matter or matters in question.

     "HSR Act" means the Hart-Scott-Rodino  Antitrust  Improvements Act of 1976,
as amended.

                                      -8-

<PAGE>

     "INDEMNIFIABLE  LOSSES"  means,  with  respect to any  Person,  any and all
losses,  liabilities,   penalties,  claims,  fines,  damages,  amounts  paid  in
settlement,  demands,  judgments,  assessments,  costs and expenses  (including,
without limitation,  reasonable attorneys' fees,  investigation expenses and any
and  all  other   out-of-pocket   expenses,   but   excluding  any  punitive  or
consequential  damages to the  extent  prohibited  by law) or other  Liabilities
whatsoever that are assessed,  imposed, awarded against,  incurred or accrued by
such Person.

     "INDEMNITEE" has the meaning specified in Section 9.3.

     "INDEMNIFYING PARTY" has the meaning specified in Section 9.3.

     "INTELLECTUAL PROPERTY" has the meaning specified in Section 3.9.

     "IRS" has the meaning specified in Section 3.18.

     "IRS RULING LETTER" has the meaning specified in Section 7.1(a)(v).

     "KNOWLEDGE"  of any party  shall be deemed to mean actual  knowledge  of an
officer  of such  party  with the  title of Vice  President  or  higher or other
officer  who in the  ordinary  course of his duties is required to deal with the
matter at issue,  or in the  reasonable  exercise of the duties of such  officer
reason to know.

     "MARAD" has the meaning specified in Section 3.11.

     "MATERIAL  ADVERSE  EFFECT"  means  (a) a  material  adverse  effect on the
Condition  of a Person and its  Subsidiaries  taken as a whole or (b) a material
impairment  of the  ability  of such  person to perform  any of its  obligations
hereunder.

     "MATERIALS OF ENVIRONMENTAL  CONCERN" has the meaning  specified in Section
3.20.

     "NEW  CREDIT  FACILITY"  means the credit  facility  provided by Den Norske
Bank,  or other bank  reasonably  acceptable  to the  Acquiror,  consisting of a
long-term  loan  of at  least

                                      -9-

<PAGE>

$21,000,000  and a line of credit of at least  $3,000,000 to the Acquiror  which
will be available to draw upon on the Second Closing Date.

     "NEW CREDIT FACILITY  COMMITMENT"  means a firm commitment in the form of a
commitment  letter  reasonably  satisfactory  to the  Acquiror  obtained  by the
Company from Den Norske Bank or other bank reasonably acceptable to the Acquiror
to provide a credit  facility to the Acquiror  consisting of a long-term loan of
at least  $21,000,000 and a line of credit of at least  $3,000,000 which will be
available to draw upon on the Second Closing Date.

     "NON-MANAGEMENT STOCK" means Stock held by persons other than Richard T. du
Moulin,  Paul B. Gridley,  Mark L. Filanowski,  Peter N. Popov,  Esq., Thomas E.
Murphy, Thomas McIntyre, Jeffrey Miller and Nicholas Orfanidis.

     "NYSE" has the meaning specified in Section 6.22.

     "PBGC" has the meaning specified in Section 3.18.

     "PER SHARE VALUE" means the  quotient  obtained by dividing the  Enterprise
Value by a number of  Acquiror  Shares  derived as  follows:  Number of Acquiror
Shares=A+B+((3/7)(A+B)),  where A is the number of  Acquiror  Shares  issued and
outstanding  as of the close of business on the Business Day next  preceding the
First  Closing  Date  and B is the  number  of  Acquiror  Shares  issued  to the
Shareholders on the First Closing Date).

     "PERMITTED  ACTIONS" means (a) any action described in Section 6(a) (ii) or
(iii) of the Tax Cooperation Agreement; (b) the reflagging of one or more of the
following  ships;  the COURIER,  the PATRIOT and ROVER; (c) the issuance and any
redemption, exchange, transfer or other disposition of the Company Class B stock
(if such stock is issued);  (d) any  redemption or other  purchase by MTL or MTL
Common Stock for cash to the extent permitted by the Acquisition 

                                      -10-

<PAGE>

Agreement;  and (e) any action  required by law,  PROVIDED  that no  alternative
action could reasonably avoid such required action.

     "PERSON"  means  any   individual,   partnership,   joint  venture,   firm,
corporation,  limited liability company, association,  trust or other enterprise
or entity or any government or political  subdivision or any agency,  department
or instrumentality thereof.

     "PRO RATA INTEREST" means, with respect to any Shareholder,  the percentage
set forth opposite such Shareholders name on Exhibit A.

     "PROXY STATEMENT" has the meaning specified in Section 6.7.

     "RESPECTIVE REPRESENTATIVES" has the meaning specified in Section 6.3.

     "RETURNS" has the meaning specified in Section 3.14.

     "RULING  REQUEST"  means  the  letter  filed by the  Acquiror  with the IRS
requesting   rulings  from  the  IRS  regarding   certain   Federal  income  tax
consequences of the Spin-Off  (including all  attachments,  exhibits,  and other
materials  submitted with such letter) and any amendments or supplements to such
letter.

     "SEC" means the  Securities  and Exchange  Commission  or any  governmental
agencies substituted therefor.

     "SECOND  CLOSING  DATE" means the Business  Day after the Spin-Off  occurs.
"Securities Act" has the meaning specified in Section 4.4.

     "SHAREHOLDER" has the meaning specified in the preamble to this Agreement.

     "SHAREHOLDERS' REPRESENTATIVE" means a committee comprising Messrs. Shelby,
du Moulin and Sutin.

                                      -11-

<PAGE>

     "SHORT-FALL AMOUNT" has the meaning specified in Section 2.2(b).

     "SPIN-OFF"  has the meaning  specified in the first Whereas  clause of this
Agreement.

     "SPREAD" has the meaning specified in Section 2.2(c).

     "STOCK"  means (i) the shares of Common Stock set forth on Exhibit A hereto
or (ii) all of the issued and  outstanding  MTL Class A Common Stock held by the
Shareholders, if the Company redesignates, changes and converts the Common Stock
into MTL Class A Common Stock and issues Class B Common Stock.

     "STOCK ISSUANCE" has the meaning specified in Section 6.8.

     "STOCKHOLDERS' SPECIAL MEETING" has the meaning specified in Section 6.8.

     "SUBSIDIARY" means, (a) with respect to any Person:

          (i) any  corporation  of which at least a majority  in interest of the
     outstanding  voting stock (having by the terms  thereof  voting power under
     ordinary  circumstances  to  elect  a  majority  of the  directors  of such
     corporation,  irrespective of whether or not at the time stock of any other
     class or classes of such corporation  shall have or might have voting power
     by reason of the happening of a  contingency)  is at the time,  directly or
     indirectly, owned or controlled by such Person or by such Person and one or
     more of its Subsidiaries; or

          (ii) any non-corporate  entity in which such Person or such Person and
     one or more  Subsidiaries of such Person either (a) directly or indirectly,
     at the  date of  determination  thereof,  has at least  majority  ownership
     interest,  or (b) at the date of  determination  is a general partner or an
     entity performing  similar functions (E.G.,  manager of a Limited Liability
     Company or a trustee of a trust);

                                      -12-

<PAGE>

     and (b) with respect to the Company, Marine Car Carriers, Inc. (M.I.).

     "TAXES" means all taxes,  assessments,  charges,  duties,  fees,  levies or
other governmental charges,  including,  without limitation, all Federal, state,
local,  foreign and other income,  franchise,  profits,  capital gains,  capital
stock, transfer, sales, use, occupation,  property, excise, severance,  windfall
profits,  stamp,  license,  payroll,  withholding and other taxes,  assessments,
charges,  duties,  fees,  levies  or  other  governmental  charges  of any  kind
whatsoever  (whether  payable  directly  or by  withholding  and  whether or not
requiring  the filing of a  Return),  all  estimated  taxes,  additions  to tax,
penalties  and interest and shall  include any  liability  for such amounts as a
result  either  of  being a  member  of a  combined,  consolidated,  unitary  or
affiliated group or of a contractual obligation to indemnify any person or other
entity.

     "THIRD PARTY CLAIM" has the meaning specified in Section 9.4(b).

     "UBC" has the meaning specified in the preamble to this Agreement.

     "U.S.  SUBSIDIARIES"  shall mean the Subsidiaries of the Acquiror  together
with each of UBC and any of its  Subsidiaries  that have at any time  engaged in
whole or in part in the Domestic Business.

     "WORKING  CAPITAL"  means current  assets minus current  liabilities as set
forth on a consolidated balance sheet prepared in accordance with the Accounting
Principles;  PROVIDED,  HOWEVER,  that for  purposes of Sections  2.2 and 7.2(h)
Working  Capital (i) shall not include any  proceeds  from any amounts  borrowed
long-term by the Company to refinance  existing  debt or  otherwise,  (ii) shall
include the proceeds from the sale of the MARINE  RELIANCE,  net of Taxes, as if
transferred to the Company from its subsidiary, Marine Car Carriers, Inc., (iii)
subject to the  limitation in Section  2.2(c)(iii),  shall not be reduced by (x)
any legal or accounting  fees paid or 

                                      -13-

<PAGE>

accrued by the Company in connection with the transactions  contemplated hereby,
up to a maximum of $850,000,  (y) use of current assets to reduce Long-term debt
in excess of the amount  reflected on the Company's  Pro Forma  Closing  Balance
Sheet and (z) any amount payable under Section  6.29(c) to First Stanford or DNB
and (iv) shall be reduced in each case to the extent not  already  reflected  in
the  respective  balance  sheet by (x) any amount  payable as a Bonus Payment or
bonus payment,  permitted by Section 6.2, after the Second Closing Date, (y) any
legal or accounting  fees paid or accrued by the Company in connection  with the
transactions  contemplated  hereby in excess of $850,000 and (z) the amount paid
pursuant to any redemption permitted by Section 6.1(h) and cash fees paid by the
Company to First Stanford and DNB pursuant to the Consulting Agreement.


     ss. 1.2 PRINCIPLES OF  CONSTRUCTION.  References to Domestic  Businesses in
Article V shall mean the Domestic  Businesses  with those assets and liabilities
presented on the Acquiror's Pro Forma Closing Balance Sheet.

                                   ARTICLE II

                              ACQUISITION OF STOCK
                              --------------------

     ss. 2.1  ACQUISITION OF STOCK.  (a) Subject to the terms and conditions set
forth in this Agreement, the Acquiror shall acquire from each Shareholder on the
First Closing Date and Second Closing Date, and each Shareholder,  severally and
not  jointly,  shall  assign,  transfer and deliver to the Acquiror on each such
Closing Date,  the number of shares of Stock set forth opposite the name of such
Shareholder  on EXHIBIT A attached  hereto on the  respective  Closing Date. The
foregoing   obligation   of  each   Shareholder   shall  be  binding  upon  such
Shareholder's estate, personal  representatives,  heirs, successors and assigns.
The  certificates  representing  the Stock 

                                      -14-

<PAGE>

shall be duly endorsed in blank, or accompanied by stock powers duly executed in
blank, by the Shareholders transferring the same to the Acquiror, with signature
guaranteed by a domestic  commercial  bank or trust company,  with all necessary
transfer tax and other revenue stamps,  acquired at the  Shareholders'  expense,
affixed and cancelled.  Each Shareholder,  severally and not jointly,  agrees to
cure any  deficiencies  with  respect  to the  endorsement  of the  certificates
representing  the Stock owned by such  Shareholder  or with respect to the stock
power accompanying any such certificates.

     (b) ESCROW.  No later than 15 days  following the date hereof,  each of the
Shareholders (other than the Harrowston Corporation and the Wolfson Descendants'
1983 Trust)  shall  deliver  certificates  representing  the Stock owned by such
Shareholders  to The Chase Manhattan Bank as Escrow Agent in accordance with the
provisions  of the Escrow  Agreement  dated as of the date  hereof and  attached
hereto as EXHIBIT B. 

     ss. 2.2 CONSIDERATION AND ADJUSTMENTS. In consideration for the transfer by
the  Shareholders  of the Stock to the Acquiror,  the Acquiror  shall deliver to
each  Shareholder on the respective  Closing Dates such  Shareholder's  Pro Rata
Interest of the following (collectively, the "CONSIDERATION"):

     (a) FIRST CLOSING  DATE. On the First Closing Date,  the number of Acquiror
Shares (before giving effect to the Spin-Off) with a value of $5.0 million; such
number of shares to be determined by dividing $5.0 million by the average of the
daily  closing  prices for  Acquiror  Shares for the  previous  ten  consecutive
Trading Days  commencing  on the fifth Trading Day before the First Closing Date
(such average price, the "CLOSING PRICE").  The closing price for each day shall
be the last sales price regular way or, in

                                      -15-

<PAGE>

the case no sale takes  place on such day,  the  average of the  closing bid and
asked prices  regular way, in either case as officially  quoted in the principal
consolidated  transaction  reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange. For purposes of this clause,
the term  "TRADING  DAY" means each  Monday,  Tuesday,  Wednesday,  Thursday and
Friday,  other  than a day on which  securities  are not  traded on the New York
Stock Exchange.  No fractional shares shall be issued and no payments in lieu of
fractions shall be made.

     (b) SECOND  CLOSING DATE.  (i) On the Second  Closing  Date,  the number of
Acquiror Shares which, after giving effect to the issuance thereof,  is equal to
30% of the then issued and  outstanding  shares of the  Acquiror's  common stock
(giving  full  effect to all  options  issued and  outstanding  as of the Second
Closing  Date) less (x) a hold-back  of the number of Acquiror  Shares  having a
total value based on the Per Share Value equal to $1,000,000 (which shares shall
be deposited  with the Escrow  Agent by Acquiror on the Second  Closing Date and
shall be held by the  Escrow  Agent  pursuant  to the Escrow  Agreement  pending
resolution  of  the  post-closing  balance  sheet  adjustment   contemplated  by
subparagraph  (h)(ii) below) and (y) the number of Acquiror Shares calculated as
provided in subparagraph  (b)(ii) and (z) the number of Acquiror Shares having a
total value, based on the Per Share Value, equal to $250,000, which shares shall
be delivered by the Acquiror to First Stanford Corp.  ("FIRST  STANFORD") to pay
fees for services  rendered to the Company in  connection  with the  Acquisition
under that certain letter  agreement  dated February 28, 1996 among the Company,
First  Stanford  and  DNB  (for  purposes  of  this  Section,   the  "CONSULTING
AGREEMENT"); PROVIDED,

                                      -16-

<PAGE>

HOWEVER,  that the Acquiror  shall deliver such fewer  Acquiror  Shares as First
Stanford  may be  entitled  under the  Consulting  Agreement  in which  case the
Acquiror  shall deliver any such shares that are not used to settle fees payable
under the Consulting  Agreement promptly to the Shareholders  according to their
Pro Rata  Interests;  but  PROVIDED  FURTHER,  that the  Acquiror  shall have no
liability  to either  First  Stanford  or DNB for  payment of fees for  services
rendered to the Company under the Consulting  Agreement,  other than delivery of
Acquiror Shares as provided  above. No fractional  shares shall be issued and no
payments  in lieu of  fractions  shall be made  unless  Acquiror  effectuates  a
reverse stock split.

          (ii) If the Working Capital shown on the Company's Preliminary Closing
     Balance  Sheet  is  less  than  $359,000  (such  difference,  if  any,  the
     "SHORT-FALL  AMOUNT")  and the  Short-fall  Amount is not  greater  than $1
     million, then the number of Acquiror Shares delivered on the Second Closing
     Date shall be reduced by the number of Acquiror Shares having a total value
     based on the Per Share Value equal to the Short-fall Amount.

     (c)  COMPANY'S  PRELIMINARY  CLOSING  BALANCE  SHEET.  (i) Within seven (7)
Business  Days after  receipt of the notice of the First  Closing  Date from the
Acquiror  delivered pursuant to Section 2.3 hereof, the Company shall deliver to
the Acquiror and the Escrow Agent a balance sheet of the Company dated as of the
date of the Company's prior fiscal month close,  unless such balance sheet would
be delivered  before the seventh Business Day of the month, in which case within
five (5)  Business  Days after  receipt of the notice of the First  Closing Date
from the Acquiror  contemplated in Section 2.3 hereof, the Company shall deliver
to the Acquiror and the 

                                      -17-

<PAGE>

Escrow  Agent  a  balance  sheet  of the  Company  dated  as of the  date of the
Company's  second  preceding  fiscal month close (in either case, the "COMPANY'S
PRELIMINARY  CLOSING  BALANCE SHEET") and a computation of Working Capital using
amounts derived therefrom  accompanied by a certificate from the chief financial
officer of the Company certifying that the Company's Preliminary Closing Balance
Sheet fairly presents the  Consolidated  financial  condition of the Company and
its  Subsidiaries  as of the  date  thereof  and that it has  been  prepared  in
accordance with the Accounting Principles, except for the calculation of Working
Capital which the chief  financial  officer shall certify has been calculated in
accordance  with  the  definition  of  Working  Capital  herein.  The  Company's
Preliminary  Closing  Balance  Sheet  shall  also be  accompanied  by a "COMFORT
LETTER" from Ernst & Young  substantially in the form attached hereto as Exhibit
E. The Company's  Preliminary  Closing Balance Sheet shall be the basis on which
the parties will close the transactions contemplated by this Agreement, and will
be subject to adjustment as provided below.

     (ii) If the Short-fall  Amount shown on the Company's  Preliminary  Closing
Balance Sheet is greater than  $1,000,000 and the Company  increases its Working
Capital prior to the First Closing Date, in a manner reasonably  satisfactory to
the  Acquiror and  consistent  with the terms of this  Agreement,  to reduce the
Short-fall  Amount  (determined on a pro forma basis after giving effect to such
increase) to less than  $1,000,000,  the Company  shall have the right to adjust
the Company's Preliminary Closing Balance Sheet to reflect such increase,  which
balance sheet shall be deemed to be the Company's  Preliminary  Closing  Balance
Sheet for purposes of determining the Short-fall Amount and the reduction in the
number of Acquiror Shares to be delivered hereunder.

                                      -18-

<PAGE>

     (iii) If the total number of Acquiror  Shares to be  delivered  pursuant to
Section 2.2(a), (b) and (h) (assuming for the purposes hereof that the Company's
Preliminary  Closing Balance Sheet and Final Closing Balance Sheet are the same)
after  giving  effect to their  issuance,  would  exceed  40% of the  issued and
outstanding  shares of the Acquiror's common stock (such excess,  the "SPREAD"),
the  Acquiror  shall  permit the  Company,  before  delivery of the Stock to the
Acquiror on the First Closing Date, to make a pro rata  distribution  of cash to
the  Shareholders (in redemption of a portion of their Stock) in an amount equal
to the total value,  based on the Per Share Value,  of the  aggregate  number of
Acquiror Shares constituting the Spread less the legal or accounting fees not in
excess of  $850,000  paid or  accrued  by the  Company  in  connection  with the
transactions  contemplated  hereby.  If the Company  makes such a  distribution,
EXHIBIT A shall be deemed  amended  to give  effect to the  redemption,  and the
Company shall reduce Working  Capital on the Company's  Closing Balance Sheet by
an amount equal to any cash so distributed to the extent not already reduced.

     (d)  REVIEW OF  CLOSING  BALANCE  SHEETS.  (i) No later  than  thirty  days
following the Second  Closing Date, the Company shall prepare and deliver to UBC
and the  Escrow  Agent a balance  sheet of the  Company  dated as of the  Second
Closing  Date (the  "COMPANY'S  CLOSING  BALANCE  SHEET") and a  computation  of
Working Capital using amounts derived  therefrom.  The Company's Closing Balance
Sheet shall be accompanied by a certificate  from the chief financial  office of
the Company  certifying that the Company's Closing Balance Sheet fairly presents
the Condition of the Company and its  Subsidiaries as of the Second Closing Date
and that it has been  prepared in  accordance  with the  Accounting  Principles,
except for the calculation of Working Capital which the chief financial  officer
shall certify has been  calculated in accordance  with the

                                      -19-

<PAGE>

definition of Working Capital herein.  The Company's Closing Balance Sheet shall
be binding and conclusive upon, and deemed accepted by UBC unless UBC shall have
notified the Company,  the Shareholders'  Representative and the Escrow Agent in
writing of any  objections  thereto within thirty (30) days after the receipt by
UBC thereof,  which notice shall specify in  reasonable  detail each item on the
Company's  Closing  Balance Sheet that UBC disputes and a summary of the reasons
for such  dispute.  The  Company  shall  allow  UBC and any  agent of UBC,  upon
reasonable  advance  notice to the  Company,  access  to all books and  records,
accountants'  work  papers,  personnel  and all  other  documents  necessary  in
connection with its review of the Company's Closing Balance Sheet, during normal
working hours at the Company's  principal  places of business or at any location
where such  materials  are located,  and UBC and any agent of UBC shall have the
right,  at its cost,  to make copies of any such  materials.  In  addition,  the
Company  shall  authorize  and instruct its  accountants  to cooperate  with and
provide all assistance  reasonably deemed necessary by UBC and UBC's accountants
in connection  with the review of the Company's  Closing  Balance  Sheet.  UBC's
accountants  shall be entitled to carry out such  additional  inquiries  as they
reasonably consider appropriate in connection with the Company's Closing Balance
Sheet,  including access to the work papers,  if any,  prepared by the Company's
accountants  with respect thereto and detailed books and records relating to the
business.  The  Shareholders'  Representative  shall  also have  access to UBC's
accountants' work papers with respect to the Company's Closing Balance Sheet, if
any.

     (ii) No later than thirty days following the Second Closing Date, UBC shall
prepare and deliver to the Company a balance  sheet of the  Domestic  Businesses
dated as of the Second Closing Date (the  "ACQUIROR'S  CLOSING  BALANCE  SHEET")
prepared in accordance with the

                                      -20-

<PAGE>

Accounting Principles. The Acquiror's Closing Balance Sheet shall be accompanied
by a  certificate  from the chief  financial  officer  of UBC  stating  that the
Acquiror's  Closing  Balance Sheet (A) has been prepared in accordance  with the
Accounting  Principles,  (B)  fairly  presents  the  Condition  of the  Domestic
Businesses as of the Second Closing Date, (C) is substantially equivalent to the
Acquiror's  Pro  Forma  Closing  Balance  Sheet,  including  cash  of  at  least
$2,000,000  as well as cash in an  amount  equal  to the  fair  market  value of
certain of the  furniture  and  fixtures  owned by the  Acquiror  and  currently
located at 90 Park Avenue, as appraised by an independent  third-party appraiser
and working capital of at least $4,527,000, and (D) includes all Domestic Assets
and  Domestic  Liabilities  (as  defined  in  the  Distribution   Agreement)  as
determined in accordance  with GAAP. The Acquiror's  Closing Balance Sheet shall
also be accompanied by a "COMFORT LETTER" from Deloitte & Touche certifying that
the  Acquiror's  Closing  Balance  Sheet fairly  presents  the  Condition of the
Domestic Businesses as of the date thereof, has been prepared in accordance with
the Accounting Principles, and is substantially equivalent to the Acquiror's Pro
Forma Closing  Balance Sheet  including  cash of at least  $2,000,000 as well as
cash in an amount equal to the fair market value of certain of the furniture and
fixtures  owned by the Acquiror  and  currently  located at 90 Park  Avenue,  as
appraised  by an  independent  third-party  appraiser.  The  Acquiror's  Closing
Balance Sheet shall be binding and conclusive  upon, and deemed  accepted by the
Company and  Shareholders  unless the  Shareholders'  Representative  shall have
notified UBC in writing of any objections  thereto within thirty (30) days after
the receipt  thereof by the  Shareholders'  Representative  which  notice  shall
specify in reasonable  detail each item on the Acquiror's  Closing Balance Sheet
that the Shareholders'  Representative disputes and a summary of the reasons for
such dispute. UBC shall allow the

                                      -21-

<PAGE>

Shareholders' Representative and any agent of the Shareholders'  Representative,
upon  reasonable  advance  notice  to UBC,  access  to all  books  and  records,
accountants'  work  papers,  personnel  and all  other  documents  necessary  in
connection  with its review of the  Acquiror's  Closing  Balance  Sheet,  during
normal  working  hours at the  UBC's  principal  places  of  business  or at any
location where such materials are located, and the Shareholders'  Representative
and any agent of the Shareholders'  Representative  shall have the right, at its
cost, to make copies of any such materials. In addition, UBC shall authorize and
instruct its accountants to cooperate with and provide all assistance reasonably
deemed  necessary  by the  Shareholders'  Representative  and the  Shareholders'
Representative's  accountants  in connection  with the review of the  Acquiror's
Closing Balance Sheet. The Shareholders'  Representative's  accountants shall be
entitled to carry out such  additional  inquiries  as they  reasonably  consider
appropriate in connection with the Acquiror's  Closing Balance Sheet,  including
access  to the work  papers,  if any,  prepared  by the UBC's  accountants  with
respect  thereto and detailed  books and records  relating to the business.  UBC
shall also have access to the Shareholders'  Representative's  accountants' work
papers with respect to the Acquiror's Closing Balance Sheet, if any.

     (e) DISPUTES. Disputes between (i) UBC and the Shareholders' Representative
relating  to the  Company's  Closing  Balance  Sheet or (ii)  the  Shareholders'
Representative and UBC relating to the Acquiror's Closing Balance Sheet that are
not  resolved by them within  thirty (30) days after  receipt by the  respective
parties of the relevant  notices referred to in Paragraph 2.2(d) may be referred
thereafter for decision at the request of the  Shareholders'  Representative  or
UBC as the  case may be to  Coopers  &  Lybrand  LLP or such  other  independent
accounting firm  acceptable to the  Shareholders'  Representative  and UBC (such
firm being referred to herein as

                                      -22-

<PAGE>

the "AUDITOR").  The Auditor shall review only items in dispute.  Upon a request
to refer a matter to the Auditor,  the Shareholders'  Representative and the UBC
shall use their best  efforts to agree on the  procedures  to be followed by the
Auditor  (including  procedures with regard to presentation of evidence)  within
thirty (30) days following such request. If the Shareholders' Representative and
UBC are  unable to agree  upon  procedures  at the end of such  thirty  (30) day
period,  the Auditor shall  establish such  procedures  giving due regard to the
intention of the  Shareholders'  Representative  and UBC to resolve  disputes as
quickly, efficiently and inexpensively as possible, which procedures may be, but
need not be, those proposed by either the  Shareholders'  Representative or UBC.
The Shareholders'  Representative  and UBC shall then submit evidence in support
of its position on each item in dispute as well as the procedures to be followed
by the  Auditor,  and  the  Auditor  shall  decide  the  dispute  in  accordance
therewith.  In  reaching  a  decision  on each item in  dispute,  the  Auditor's
decision  is  expressly  limited to the  selection  of either the  Shareholders'
Representative's  or UBC's  position on each such disputed  item.  The Auditor's
decision on any matter referred to it shall be final and binding on the parties.
The fee of the  Auditor  shall be  borne  by the  Company  and the  Acquiror  in
proportion  to the net dollar value of the items  resolved in the other  party's
favor. By way of example, suppose UBC asserts that the Company's Closing Balance
Sheet  should  reflect  a  $500,000  downward   adjustment  in  Working  Capital
(attributable  to  various  disputed  items),   the  Company  asserts  that  the
Acquiror's  Closing Balance Sheet should reflect a $500,000 downward  adjustment
in working capital (also attributable to various disputed items) and the Auditor
decides that there should be a $250,000  downward  adjustment in Working Capital
and a $350,000  downward  adjustment in the Acquiror's  working capital.  If the
Auditor's fees are

                                      -23-

<PAGE>

$85,000,   the  fees  would  be  borne  as  follows:   Company--   (($250,000  +
$150,000)/$1,000,000)   x   $85,000   =   $34,000;   Acquiror--   (($250,000   +
$350,000)/$1,000,000) x $85,000 = $51,000.

     (f) FINAL CLOSING BALANCE SHEETS.  (i) The Company's  Closing Balance Sheet
shall  become  final and binding  upon the parties  upon the earliest of (x) the
failure  by UBC to object  thereto  within  the period  permitted  with  respect
thereto,  (y) the agreement  between UBC and the Company with respect thereto or
(z) the decision by the Auditor with  respect to any  disputes  under  Paragraph
2.2(e).  The  Company's  Closing  Balance  Sheet,  when  final  and  binding  in
accordance with the immediately preceding sentence, is referred to herein as the
"COMPANY'S FINAL CLOSING BALANCE SHEET."

     (ii) The  Acquiror's  Closing  Balance Sheet shall become final and binding
upon the  parties  upon the  earliest  of (x) the  failure by the  Shareholders'
Representative  to object  thereto  within the  period  permitted  with  respect
thereto, (y) the agreement between the Shareholders' Representative and UBC with
respect  thereto or (z) the decision by the Auditor with respect to any disputes
under Paragraph  2.2(e).  The Acquiror's  Closing Balance Sheet,  when final and
binding in accordance with the immediately  preceding  sentence,  is referred to
herein as the "ACQUIROR'S FINAL CLOSING BALANCE SHEET."

     (g)  AMOUNTS  NOT IN  DISPUTE.  Notwithstanding  anything  to the  contrary
contained in this Paragraph 2.2,  pending  resolution of all disputed items with
respect to the Company's  Closing  Balance Sheet,  the number of Acquiror Shares
held in escrow  having a total  value  based on the Per Share Value equal to the
amount of Consideration  that is not in dispute shall be released  promptly from
the escrow to the Shareholders. The number of Acquiror Shares having a total

                                      -24-

<PAGE>

value based on the Per Share Value equal to the amount of Consideration  that is
disputed shall be released  promptly upon resolution of any dispute with respect
to such amounts or portions.

     (h)  ADJUSTMENTS.  (i) If the Working  Capital shown on the Company's Final
Closing  Balance Sheet is less than $359,000 minus the  Short-fall  Amount (such
difference  between (x) $359,000 minus the Short-fall Amount and (y) the Working
Capital shown on the Company's  Final Closing  Balance  Sheet,  the  "ADDITIONAL
SHORT-FALL  AMOUNT"),  then the number of shares  deliverable out of Escrow upon
resolution  of any  disputes  shall be reduced by the number of Acquiror  Shares
having  a total  value  based on the Per  Share  Value  equal to the  Additional
Short-fall Amount.


     (ii) If the Working  Capital  shown on the Company  Final  Closing  Balance
Sheet exceeds  $1,409,000 (such excess,  the "EXCESS AMOUNT") then the number of
shares deliverable upon the resolution of any disputes shall be increased by the
number of  Acquiror  Shares  having a total  value  based on the Per Share Value
equal to the Excess Amount plus any Short-fall  Amount. In such event,  Acquiror
shall  issue and  deliver  such  number  of  additional  Acquiror  Shares to the
Shareholders as promptly as practicable  following  resolution of the adjustment
contemplated by this subparagraph;  PROVIDED,  HOWEVER, that the total number of
Acquiror  Shares  issued  to the  Shareholders,  after  giving  effect  to their
issuance,  shall not  exceed 44% of the  issued  and  outstanding  shares of the
Acquiror's common stock.

     (iii) If the cash shown on the  Acquiror's  Final Closing  Balance Sheet is
less than the sum of  $2,000,000  plus the fair  market  value of certain of the
furniture  and fixtures  currently  located at 90 Park Avenue and/or the working
capital  shown on the  Acquiror's  Final  Closing  Balance  Sheet  is less  than
$4,527,000, then, upon resolution of any disputes, UBC shall within

                                      -25-

<PAGE>

five (5) Business Days transfer to the Acquiror cash to make up any cash deficit
and/or cash and/or other current assets to make up any working capital deficit.

     (i)  RECAPITALIZATION,  ETC. In the event that any  capital  stock or other
securities are issued in respect of, in exchange for, or in substitution of, any
shares  of the  Acquiror's  capital  stock  by  reason  of  any  reorganization,
recapitalization,  reclassification, merger, consolidation, spin-off, partial or
complete  liquidation,  stock  dividend,  split-up,  reverse  split-up,  sale of
assets,  distribution  to  stockholders  or any other  change in the  Acquiror's
capital  structure  appropriate  adjustments  shall be made in the  amounts  and
percentage  (including  the  definition  of Per Share  Value)  specified in this
Agreement so as to fairly and equitably  preserve,  as far as  practicable,  the
original rights and obligations of the parties under this Agreement.

     ss. 2.3  CLOSING.  The  portion of the  Acquisition  referred to in Section
2.2(a)  shall  take  place at 10:00 A.M.  at the  offices of White & Case,  1155
Avenue of the Americas, New York, New York 10036 on a date set forth in a notice
from  the  Acquiror  to  the  Company,   Escrow  Agent  and  the   Shareholders'
Representative  which shall be a date (i) not less than ten (10)  Business  Days
and not more than 30 Business Days after the date of such notice, (ii) after all
conditions to the Spin-Off  shall have been satisfied and (iii) within the first
ten days of the calendar month (but in any event prior to the  Spin-Off),  or at
such other time and date (not later than July 31,  1998) as the  parties  hereto
shall agree in writing,  (such date, the "FIRST CLOSING  DATE").  The portion of
the Acquisition  referred to in Section 2.2(b) shall take place at 10:00 A.M. at
such offices of White & Case on the Second Closing Date.

                                      -26-

<PAGE>

                                   ARTICLE III

                         REPRESENTATIONS OF THE COMPANY
                         ------------------------------

     ss. 3.  REPRESENTATIONS  OF THE COMPANY.  The Company hereby represents and
warrants to the Acquiror that as of the date hereof:

     ss. 3.1 EXISTENCE  AND GOOD  STANDING.  The Company is a  corporation  duly
organized,  validly existing and in good standing under the laws of the State of
Delaware.  The Company has the requisite  corporate  power and authority to own,
lease and  operate  its  properties  and to carry on its  business  as now being
conducted.  The Company is duly  qualified  or licensed to do business and is in
good  standing in each  jurisdiction  in which the  character or location of the
properties  owned,  leased  or  operated  by the  Company  or the  nature of the
business conducted by the Company makes such qualification or license necessary,
except where the failure to be so duly  qualified,  licensed or in good standing
could not  reasonably  be  expected  to have a  Material  Adverse  Effect on the
Company.

     ss.  3.2  CAPITAL  STOCK.  The  Company  has an  authorized  capitalization
consisting  of  5,000,000  shares  of  Common  Stock,  .01 par  value,  of which
4,152,019 shares are issued and outstanding.  All outstanding  shares of capital
stock of the Company have been duly  authorized and validly issued and are fully
paid and  nonassessable.  Except  as set  forth on  Schedule  3.2,  there are no
outstanding  subscriptions,   options,  warrants,  rights,  calls,  commitments,
conversion  rights,  rights  of  exchange,  plans  or  other  agreements  of any
character  providing  for the  purchase,  issuance  or sale of any shares of the
capital stock of the Company.

     ss. 3.3 AUTHORIZATION  AND VALIDITY OF THIS AGREEMENT.  (a) The Company has
the requisite  corporate right,  power,  legal capacity and authority to execute
and deliver this Agreement and

                                      -27-

<PAGE>

to perform its obligations hereunder. The execution, delivery and performance of
this Agreement by the Company and the performance of its  obligations  hereunder
have been duly  authorized  and approved by its Board of Directors  and no other
corporate action on the part of the Company or action by the stockholders of the
Company is necessary to authorize the  execution,  delivery and  performance  of
this  Agreement  by the  Company.  This  Agreement  has been duly  executed  and
delivered by the Company and,  assuming due  execution of this  Agreement by the
Acquiror and each Shareholder,  is a valid and binding obligation of the Company
enforceable  against the  Company in  accordance  with its terms,  except to the
extent  that  its  enforceability  may  be  subject  to  applicable  bankruptcy,
insolvency,   reorganization,   moratorium   and  similar  laws   affecting  the
enforcement of creditors' rights generally and by general equitable principles.

     (b) Except as set forth on SCHEDULE 3.3(B), no consent,  approval, order or
authorization of, or registration,  declaration or filing with, any Governmental
Authority,  is required by or with respect to the Company in connection with the
execution  and  delivery  of,  and  the  consummation  by  the  Company  of  the
transactions  contemplated  by this  Agreement,  or to  permit  the  Company  to
continue,  without  material change,  the business  activities of the Company as
currently  conducted and as proposed to be  conducted,  except for the filing of
the appropriate documents with the relevant authorities of other states in which
the Company is qualified to do business.

     ss. 3.4  Subsidiaries  and  Investments.  (a) Set forth in Schedule  3.4(a)
attached  hereto  is a list of each  corporation  in  which  the  Company  owns,
directly or indirectly, any equity security. Each Subsidiary of the Company is a
corporation duly organized, validly existing and in good standing (to the extent
such  concept  is  applicable   under  relevant  law)  under  the  laws  of  the
jurisdiction of its organization  (which is set forth on SCHEDULE  3.4(A)),  and
has the corporate

                                      -28-

<PAGE>

power and  authority to own,  lease and operate its property and to carry on its
business as now being conducted.

     (b) Set forth on SCHEDULE 3.4(B) is a list of  jurisdictions  in which each
Subsidiary  of  the  Company  is  qualified  as  a  foreign  corporation.   Such
jurisdictions  are the only  jurisdictions in which the character or location of
the  properties  owned or leased by each such  Subsidiary,  or the nature of the
business conducted by each such Subsidiary,  makes such qualification  necessary
except  where the failure to be so qualified  would not have a Material  Adverse
Effect.

     (c) Each  Subsidiary  of the  Company has the  capitalization  set forth on
Schedule 3.4(c). The outstanding shares of capital stock of each such Subsidiary
have been duly authorized and validly  issued,  are (to the extent such concepts
are relevant under applicable law) fully paid and nonassessable,  and, except as
set forth in SCHEDULE  3.4(C),  are owned,  of record and  beneficially,  by the
Company, free and clear of all liens,  encumbrances,  restrictions and claims of
every kind.  Except as set forth on SCHEDULE 3.4(C),  no shares of capital stock
of any such  Subsidiary  are reserved for issuance and there are no  outstanding
options,  warrants,  rights,  subscriptions,  claims,  agreements,  obligations,
calls,  commitments,  conversion rights, rights of exchange or other commitments
of any character, contingent or otherwise, providing for the purchase, issuance,
sale or transfer of any shares of the capital stock of any such Subsidiary.

     (d)  Neither  the Company  nor any of its  Subsidiaries  owns,  directly or
indirectly,  any  capital  stock or other  equity or  ownership  or  proprietary
interest in any corporation,  partnership,  association, trust, joint venture or
other entity, except as set forth on SCHEDULE 3.4(A).

     ss. 3.5 FINANCIAL  STATEMENTS;  NO MATERIAL  CHANGES.  (a) The consolidated
balance sheets of the Company and its Subsidiaries as of December 31, 1996, 1995
and 1994, and the related

                                      -29-

<PAGE>

consolidated  statements of income and retained  earnings and cash flows for the
years or periods  then ended,  audited by Ernst & Young LLP in  accordance  with
statements  on  Standards  for  Accounting  and  Review  Services  issued by the
American Institute of Certified Public Accountants (attached hereto as EXHIBIT F
collectively,   the  "COMPANY  FINANCIAL  STATEMENTS").  The  Company  Financial
Statements,  including the footnotes thereto,  except as indicated therein, have
been  prepared  in  accordance  with  the  Accounting  Principles.  The  Company
Financial  Statements fairly present the financial  condition of the Company and
its Subsidiaries at the respective  dates thereof and the related  statements of
income and retained  earnings  and cash flows fairly  present the results of the
operations  of the  Company  and its  Subsidiaries  and  the  changes  in  their
financial position for the respective periods indicated. Since December 31, 1996
(the "COMPANY BALANCE SHEET DATE"),  and except as set forth on SCHEDULE 3.5(A),
there has been no (i) change that has or could  reasonably be expected to have a
Material  Adverse  Effect on the assets or  liabilities,  or in the  business or
financial  condition,  or in the results of operations (the  "Condition") of the
Company or its  Subsidiaries  and no fact or condition exists or is contemplated
or  threatened  with  respect to the  Company or its  Subsidiaries  which  could
reasonably  be  expected  to cause such a change in the future  (except  for the
possible  termination  or  non-renewal  of  existing  MARAD  Contracts)  or (ii)
material  damage,  destruction  or loss to any asset or  property,  tangible  or
intangible,  of the Company which materially  affects the ability of the Company
to conduct its business.

     (b) The Company has  delivered to the Acquiror a PRO FORMA balance sheet in
the form of EXHIBIT C hereto (the  "COMPANY PRO FORMA CLOSING  BALANCE  SHEET").
The  Company's  PRO  FORMA  Closing  Balance  Sheet   represents  the  Company's
reasonable best estimate on the date

                                      -30-

<PAGE>

hereof of the  Condition  of the  Company as of the  Second  Closing  Date.  The
Company Pro Forma Closing Balance Sheet has been prepared in accordance with the
Accounting Principles.  Any computation of Working Capital using amounts derived
from  the  Company  Pro  Forma  Closing  Balance  Sheet  will be  calculated  in
accordance with the definition of Working Capital.

     ss. 3.6 BOOKS AND RECORDS.  The respective  minute books of the Company and
its  Subsidiaries,  as  previously  made  available  to  the  Acquiror  and  its
representatives,  contain  accurate  records of all meetings  of, and  corporate
action  taken by  (including  action taken by written  consent)  the  respective
stockholders and Boards of Directors of the Company and each Subsidiary.  Except
as set forth on Schedule 3.6,  neither the Company nor any Subsidiary has any of
its  records,   systems,   controls,  data  or  information  recorded,   stored,
maintained, operated or otherwise wholly or partly dependent upon or held by any
means  (including any electronic,  mechanical or photographic  process,  whether
computerized or not) which (including all means of access thereto and therefrom)
are not under the  exclusive  ownership  and direct  control of the Company or a
Subsidiary.

     ss. 3.7 Title to Properties;  Encumbrances. Except as set forth on Schedule
3.7 attached  hereto and except for such  properties  and assets which have been
sold or otherwise  disposed of in the ordinary  course of business,  the Company
and each  Subsidiary has good and marketable  title to or a valid and subsisting
leasehold  interest in its material  properties  and assets (real and  personal,
tangible and  intangible),  including,  without  limitation,  the properties and
assets reflected in the Company Financial Statements, subject to no encumbrance,
lien,  charge or other  restriction  of any kind or character and in the case of
chartered   in   vessels,   mortgages   or  other   liens   against  the  vessel
("ENCUMBRANCES"), except for (i) Encumbrances reflected in the

                                      -31-

<PAGE>

Company Financial  Statements,  (ii) Encumbrances for current Taxes, not yet due
and  delinquent,   (iii)   Encumbrances   arising  by  operation  of  law,  (iv)
Encumbrances  imposed  by law,  such as  materialmen's,  mechanics',  carriers',
workmen's and repairmen's  liens and other similar  Encumbrances  arising in the
ordinary course of business  securing  obligations  including  maritime liens or
other  statutory  rights in rem  arising  in the  ordinary  course of owning and
operating  vessels and incurred in the ordinary  course of business that (a) are
not  overdue  for a period of more than 45 days and (b) either  individually  or
when  aggregated  with all other  Encumbrances  described  in this  Section  3.7
outstanding on any date of  determination,  do not materially  affect the use or
value of the  property to which they relate and (v)  Encumbrances  described  on
SCHEDULE 3.7 attached hereto (liens described in clauses (i), (ii),  (iii), (iv)
and (v)  above are  hereinafter  sometimes  referred  to as  "COMPANY  PERMITTED
ENCUMBRANCES").

     ss. 3.8 REAL PROPERTY. The Company owns no real property.

     ss. 3.9  INTELLECTUAL  PROPERTY.  Except as set forth on SCHEDULE  3.9, the
operation  of the  business  of the Company and its  Subsidiaries  as  currently
conducted  requires  no  rights  under  Intellectual  Property  (as  hereinafter
defined)  and within the six year period  immediately  prior to the date of this
Agreement,  the  business  of the Company  and its  Subsidiaries  made use of no
Intellectual Property rights. "INTELLECTUAL PROPERTY" means domestic and foreign
patents,  patent  applications,  registered  and  unregistered  trade  marks and
service marks,  trade dress,  registered and unregistered  copyrights,  computer
programs,  data  bases,  material  trade  secrets  and  proprietary  information
including,  without limitation,  any proprietary  know-how,  formulae,  computer
software (including source and object code listings and algorithms), procedures,
processes,  technology,  innovations,   inventions,  manufacturing  drawings  or
information, engineering draw-

                                      -32-

<PAGE>

ings or information,  product designs,  product  patterns,  and other intangible
property rights of the Company and its Subsidiaries.

     ss. 3.10 LEASES AND SHIP CHARTERS.  SCHEDULE 3.10 attached  hereto contains
an accurate and complete  list of all leases and ship charters  (including,  but
not limited to,  capital  leases) to which the  Company or any  Subsidiary  is a
party (as  lessee  or  lessor)  and  which  require  an  annual  rental  payment
aggregating at least $10,000.  Each lease and ship charter set forth on SCHEDULE
3.10 (or to the  Knowledge  of the Company  required to be set forth on SCHEDULE
3.10) is in full force and effect; all rents and additional rents due to date on
each such lease and ship  charter have been paid;  in each case,  the lessee has
been in peaceable possession since the commencement of the original term of such
lease or ship charter and is not in default thereunder and no waiver, indulgence
or postponement of the lessee's  obligations  thereunder has been granted by the
lessor;  and  there  exists no event of  default  by the  Company  or any of its
Subsidiaries or event, occurrence,  condition or act (including the consummation
of the transactions  contemplated  hereby) which, with the giving of notice, the
lapse of time or the happening of any further event or condition, would become a
default  by the  Company or any of its  Subsidiaries  or give rise to a right of
termination by a party (other than the Company or any of its Subsidiaries) under
such lease or ship charter.  Neither the Company nor any Subsidiary has violated
any of the terms or  conditions  under  any such  lease or ship  charter  in any
material respect,  and, to the Knowledge of the Company, all of the covenants to
be  performed  by any other party under any such lease or ship charter have been
performed in all material  respects.  The property  leased by the Company or any
Subsidiary  is in a state of good  maintenance  and repair and is  adequate  and
suit-

                                      -33-

<PAGE>

able for the purposes for which it is presently  being used. Each of the vessels
chartered or owned by the Company or any of its Subsidiaries is in class.

     ss. 3.11 MATERIAL CONTRACTS.  Except as set forth on SCHEDULE 3.11 attached
hereto,  neither  the  Company  nor any  Subsidiary  has or is  bound by (a) any
agreement,   contract  or  commitment   (other  than  purchase  orders  or  like
commitments in the ordinary course of business) that involves the performance of
services or the delivery of goods  and/or  materials by it of an amount or value
in excess of $25,000,  (b) any agreement,  indenture or other  instrument  which
contains  restrictions  with  respect  to  payment  of  dividends  or any  other
distribution  in respect of its capital stock,  (c) any  agreement,  contract or
commitment relating to capital  expenditures,  (d) any loan (other than accounts
receivable  arising in the  ordinary  course of  business  consistent  with past
practice)  or  advance  to (other  than  travel and  entertainment  advances  to
employees  made  in  the  ordinary  course  of  business  consistent  with  past
practice), or investment in, any Person or any agreement, contract or commitment
relating  to the  making  of any  such  loan,  advance  or  investment,  (e) any
guarantee  or other  contingent  liability  in  respect of any  indebtedness  or
obligation of any Person (other than the  endorsement of negotiable  instruments
for  collection  in  the  ordinary  course  of  business  consistent  with  past
practice),  (f) any  employment,  consulting or any other similar type contract,
(g) any agreement, contract or commitment limiting the ability of the Company or
any  Subsidiary to engage in any line of business or to compete with any Person,
(h) any  agreement,  contract or  commitment  not entered  into in the  ordinary
course of business  consistent with past practice which involves estimated total
payments of $25,000 or more and is not cancelable without penalty within 30 days
or (i) any  agreement,  contract  or  commitment  which  is  expected  to have a
Material Adverse Effect on the Company.  Each contract,  commitment or agreement
set forth on Schedule 3.11 (or required to be set forth on Schedule  3.11) is in
full  force and  effect  and there  exists no default or event of default by the
Company  or any of its  Subsidiaries  or  event,  occurrence,  condition  or act
(including the consummation of the transactions contemplated hereby) which, with
the giving of notice,  the lapse of time or the  happening of any other event or
condition,  would  become a default or event of default by the Company or any of
its  Subsidiaries  or give rise to a right of termination by a party (other than
the Company or any of its Subsidiaries) thereunder.  Neither the Company nor any
Subsidiary has violated any of the material terms or conditions of any contract,
commitment or agreement

                                      -34-

<PAGE>

set forth on SCHEDULE 3.11 (or required to be set forth on SCHEDULE 3.11) in any
material respect,  and, to the Knowledge of the Company,  except as set forth on
SCHEDULE 3.11, all of the material  covenants to be performed by any other party
thereto have been fully performed.  SCHEDULE 3.11A hereto sets forth the results
of the audits or  examinations  of the Company under the current and immediately
preceding United States Department of  Transportation,  Maritime  Administration
("MARAD")  contracts.  Except as set forth on SCHEDULE 3.11A, no past or present
actions, conditions, events or circumstances presently exist or to the Knowledge
of the Company is  threatened,  which  could (i) result in a  financial  finding
relating to any such contract or (ii)  disqualify the Company from future awards
of MARAD contracts,  except for MARAD's current policy restricting the number of
vessels that any one company can manage to 12.

     ss. 3.12 CONSENTS AND APPROVALS; NO VIOLATIONS.  The execution and delivery
of this Agreement by the Company and the  Shareholders  and the  consummation of
the  transactions  contemplated  hereby by the  Company  (a) will not violate or
contravene  any  provision  of the Articles of  Incorporation  or By-laws of the
Company or its Subsidiaries, (b) will not violate or con-

                                      -35-

<PAGE>

travene any  statute,  rule,  regulation,  order or decree of any public body or
authority by which the Company or any of its  Subsidiaries  is bound or by which
any of its  respective  properties or assets are bound subject to receipt of the
consents  set forth on  SCHEDULES  3.3(B)  AND 3.12,  (c) except as set forth on
SCHEDULE 3.12, will not require any filing with, or permit,  consent or approval
of, or the giving of any notice to any other  Person and (d) except as set forth
on SCHEDULE  3.12,  will not result in a violation or breach of,  conflict with,
constitute  (with or without  due notice or lapse of time or both) a default (or
give rise to any right of termination,  cancellation,  payment or  acceleration)
under, or result in the creation of any  Encumbrance  upon any of the properties
or assets of the  Company or any of its  Subsidiaries  under,  any of the terms,
conditions  or  provisions  of any material  note,  bond,  mortgage,  indenture,
license,  franchise,  permit, agreement, lease, franchise agreement or any other
instrument or obligation to which the Company or its Subsidiaries is a party, or
by which the Company or its Subsidiaries or any of their  respective  properties
or assets may be bound.

     ss.3.13  LITIGATION.  Except as set  forth on  SCHEDULE  3.13,  there is no
action, suit,  proceeding at law or in equity,  arbitration or administrative or
other  proceeding  by or  before  (or  to  the  Knowledge  of  the  Company  any
investigation by) any Governmental  Authority,  pending, or, to the Knowledge of
the  Company,  threatened,  against  or  affecting  the  Company  or  any of its
Subsidiaries  or any of their  properties  or rights which could have a Material
Adverse Effect on the Company or any of its  Subsidiaries;  and to the Knowledge
of the Company no valid basis for any such action,  proceeding or investigation.
Except  as set  forth on  SCHEDULE  3.13,  neither  the  Company  nor any of its
Subsidiaries is subject to any judgment,  order or decree entered in any lawsuit
or  proceeding  which could  reasonably  be expected to have a Material  Adverse
Effect.

                                      -36-

<PAGE>

ss. 3.14 TAXES. 

     (a) TAX  RETURNS.  Except  as  otherwise  disclosed  to an  officer  of the
Acquiror,  the  Company has timely  filed or caused to be timely  filed with the
appropriate  taxing  authorities  all material  returns,  statements,  forms and
reports for Taxes  ("RETURNS") that are required to be filed by, or with respect
to, the  Company  or any of its  Subsidiaries  on or prior to the First  Closing
Date.  The Returns  have  accurately  reflected  in all  material  respects  all
liability for Taxes of the Company and each of its  Subsidiaries for the periods
covered thereby.

     (b) PAYMENT OF TAXES.  Except as  otherwise  disclosed to an officer of the
Acquiror,  all material  Taxes and Tax  liabilities of the Company or any of its
Subsidiaries  for all  taxable  years or periods  that end on or before the date
hereof have been timely paid or accrued and adequately disclosed to the Acquiror
and  fully  provided  for on the  books  and  records  of the  Company  and  its
Subsidiaries  in accordance  with the Accounting  Principles.  The U.S.  Federal
income tax  liability  of the  Company  and its  Subsidiaries  has been  finally
determined  (or the  statute of  limitations  has  closed)  for all years to and
including the year ended December 31, 1992.

     (c) OTHER TAX MATTERS.  (i) Schedule  3.14  attached  hereto sets forth (A)
each  taxable  year  or  other  taxable  period  of  the  Company  or any of its
Subsidiaries for which an audit or other examination of Taxes by the appropriate
Tax  authorities of any nation,  state or locality is currently in progress (or,
to  the  Knowledge  of  the  Company,  scheduled  as of the  date  hereof  to be
conducted) together with the names of the respective Tax authorities  conducting
(or, to the  Knowledge  of the  Company,  scheduled  to conduct)  such audits or
examinations  and a  description  of  the  subject  matter  of  such  audits  or
examinations, (B) the most recent taxable year or other taxable period for which
an audit or other examination relating to U.S. Federal income taxes of

                                      -37-

<PAGE>

the  Company  or any of its  Subsidiaries  has been  finally  completed  and the
disposition of such audit or examination, (C) the taxable years or other taxable
periods of the Company or any of its Subsidiaries which, to the Knowledge of the
Company,  will not be subject to the normally  applicable statute of limitations
by reason of the existence of circumstances that would cause any such statute of
limitations for applicable Taxes to be extended,  (D) the amount of any proposed
adjustments (and the principal reason therefor)  relating to any Returns for Tax
liability of the Company or any of its Subsidiaries, which have been proposed or
assessed  by any taxing  authority  and have not been paid and (E) a list of all
notices  which,  to the  Knowledge  of the  Company,  have been  received by the
Company or any of its  Subsidiaries  from any taxing  authority  relating to any
issue  which  could  affect  the  Tax  liability  of the  Company  or any of its
Subsidiaries,  which  issue  has not  been  finally  determined  and  which,  if
determined adversely to the Company or any of its Subsidiaries,  could result in
a Tax liability.

     (ii) Neither the Company nor any of its  Subsidiaries  has been included in
and could reasonably be expected after the date hereof to have any liability for
Taxes from any  "CONSOLIDATED,"  "UNITARY" or  "COMBINED"  Return with any group
other than the one that  includes the Company  provided for under the law of the
United States, any foreign jurisdiction or any state or locality with respect to
Taxes for any  taxable  period  for which the  statute  of  limitations  has not
expired.

     (iii) All Taxes  which the Company or any of its  Subsidiaries  is (or was)
required by law to withhold or collect have been duly withheld or collected, and
have been  timely  paid over to the  proper  authorities  to the  extent due and
payable  other than those  Taxes the  failure of which 

                                      -38-

<PAGE>

to withhold, collect or timely pay over would not have a Material Adverse Effect
on the Company.

     (iv) Neither the Company nor any of its  Subsidiaries  is a "UNITED  STATES
REAL PROPERTY HOLDING  CORPORATION"  within the meaning of Section  897(c)(2) of
the Code.

     (v)  Except as set forth on  SCHEDULE  3.14(C),  there are no tax  sharing,
allocation,  indemnification  or similar  agreements  in effect as  between  the
Company,  any of its  Subsidiaries,  or any predecessor or Affiliate thereof and
any other party  (including the  Shareholders and any predecessors or Affiliates
thereof)  under which the  Acquiror  or the  Company or any of its  Subsidiaries
could be  liable  for any  Taxes of any  party  other  than the  Company  or its
Subsidiaries.

     (vi) No indebtedness of the Company or any of its Subsidiaries  consists of
"CORPORATE  ACQUISITION  INDEBTEDNESS"  within the meaning of Section 279 of the
Code.

     (vii) Neither the Company nor any of its Subsidiaries has applied for, been
granted, or agreed to any accounting method change for which it will be required
to take into account any adjustment under Section 481 of the Code or any similar
provision  of the Code or the  corresponding  tax laws of any  nation,  state or
locality.

     (viii) No election  under Section 341(f) of the Code has been made to treat
the Company or any of its Subsidiaries as a consenting  corporation,  as defined
in Section 341 of the Code.

     (ix) As a  result  of the  transactions  contemplated  by  this  Agreement,
neither the Company nor any of its  Subsidiaries  will be  obligated to make any
payment  that would  constitute  an  "EXCESS  PARACHUTE  PAYMENT"  as defined in
Section 280G of the Code.

                                      -39-

<PAGE>

     Solely for purposes of this section and section 5.14, "MATERIAL" shall mean
an amount of Taxes (including interest and penalties),  or an action giving rise
to an amount of such Taxes,  that when  aggregated with all other (i) Taxes that
could arise from not having filed any required Return, (ii) Taxes not accurately
reflected on a Return and (iii) Taxes not timely paid or accrued and  adequately
disclosed to Acquiror, does not exceed $100,000.


     ss.  3.15  INSURANCE.  Set  forth on  Schedule  3.15  attached  hereto is a
complete  list of  insurance  policies  or  binders  which the  Company  and its
Subsidiaries maintain with respect to their businesses, properties or employees.
Such  policies  or  binders  are in full  force and effect and are free from any
right of  termination  on the part of the insurance  carriers.  Such policies or
binders, with respect to their amounts and types of coverage, are in the opinion
of  management  adequate  to  insure  against  risks to which the  Company,  its
Subsidiaries and their property and assets are normally exposed in the operation
of their respective businesses and otherwise consistent with industry standards.
Since the Company Balance Sheet Date, except as disclosed on Schedule 3.15 there
has not been any material  adverse  change in the Company's or any  Subsidiary's
relationship  with its  insurers  or in the  premiums  payable  pursuant to such
policies.

     ss. 3.16 COMPLIANCE WITH LAWS. Each of the Company and its  Subsidiaries is
in compliance  with all  applicable  laws,  statutes,  ordinances,  regulations,
orders,  judgments  and  decrees  of any  government  or  political  subdivision
thereof, whether federal, state or local and whether domestic or foreign, or any
agency  or  instrumentality  thereof,  or any court or  arbitrator,  and has not
received  any notice  that any  violation  of the  foregoing  is being or may be
alleged  except  where  such  failure to comply or  violations  would not have a
Material Adverse Effect on the Company.

                                      -40-

<PAGE>

     ss. 3.17  EMPLOYMENT  RELATIONS.  (a) Except as set forth on Schedule 3.17,
(i) each of the Company and its  Subsidiaries  is in  compliance in all material
respects with all federal,  state or other applicable laws, domestic or foreign,
respecting  employment  and  employment  practices,   terms  and  conditions  of
employment  and wages and  hours,  and has not and is not  engaged in any unfair
labor practice;  (ii) no unfair labor practice  complaint against the Company or
any of its  Subsidiaries is pending before the National Labor  Relations  Board;
(iii) there is no labor strike, material dispute,  slowdown or stoppage actually
pending  or  threatened   against  or  involving  the  Company  or  any  of  its
Subsidiaries; (iv) no representation question exists respecting the employees of
the Company or any of its Subsidiaries;  (v) no grievance which could reasonably
be  expected to have a Material  Adverse  Effect  upon the  Company  exists,  no
arbitration  proceeding  arising  out  of or  under  any  collective  bargaining
agreement is pending and no claim  therefor has been asserted other than routine
grievance  procedures and routine claims for benefits under benefit plans;  (vi)
except as set forth on SCHEDULE  3.17,  no  collective  bargaining  agreement is
currently being negotiated by the Company or any of its Subsidiaries;  and (vii)
neither the Company nor any of its  Subsidiaries  has  experienced  any material
labor difficulty during the last three years.

     (b) There  has not been any  material  adverse  change  in  relations  with
employees  of  the  Company  or  any  of its  Subsidiaries  as a  result  of any
announcement of the transactions contemplated by this Agreement.

     ss. 3.18 Company  Employee  Benefit  Plans.  (a) Set forth on Schedule 3.18
attached hereto is an accurate and complete list of all domestic and foreign (i)
"EMPLOYEE  BENEFIT  PLANS,"  within the meaning of Section  3(3) of the Employee
Retirement Income Security Act of 1974,

                                      -41-

<PAGE>


as amended,  or any  successor  law,  and the rules and  regulations  thereunder
("ERISA");  (ii) bonus,  stock option,  stock purchase,  restricted stock, stock
appreciation rights, incentive, equity participation,  profit-sharing,  savings,
pension,  retirement,  deferred compensation,  medical,  health, sickness, life,
disability,  accident, severance, salary continuation,  accrued leave, vacation,
fringe benefit, sick pay, sick leave, cafeteria or flexible spending,  dependent
care,   supplemental   retirement  and  unemployment  benefit  plans,  programs,
arrangements,  commitments, obligations, practices, and/or funds (whether or not
insured) and "VOLUNTARY  EMPLOYEES'  BENEFICIARY  ASSOCIATIONS" (for purposes of
this Section,  "COMPANY  VEBAS") under Section  501(c)(9) of the Code; and (iii)
employment,  consulting,  termination, severance and change in control contracts
or  agreements;  in each  case  for  active,  retired  or  former  employees  or
directors, whether or not any such plans, programs,  arrangements,  commitments,
obligations, contracts, agreements, practices, and/or funds (referred to in (i),
(ii) or (iii) above) are in writing or are otherwise  exempt from the provisions
of ERISA; that are or have been  established,  maintained,  sponsored,  adopted,
followed,  participated  in or  contributed  to (or  with  respect  to  which an
obligation  to  contribute  has been  undertaken)  or with  respect to which any
obligation or liability (including,  for this purpose and for the purpose of all
of the representations in this Section 3.18, any indirect, contingent, potential
or  secondary  liability)  is  borne by the  Company  or any of its  current  or
previous  Subsidiaries  or affiliates  (including,  for this purpose and for the
purpose of all of the  representations in this Section 3.18, any predecessors to
the Company or to any such Subsidiaries or affiliates and all employers (whether
or not incorporated)  that would be treated together with the Company and/or any
of its  Subsidiaries  as a single employer (i) within the meaning of Section 414
of the Code or (ii) as a result of the Company, any Subsidiary or affiliate

                                      -42-

<PAGE>

being or having been a general  partner of any such employer) since September 2,
1974 ("COMPANY  EMPLOYEE BENEFIT  PLANS");  and such list identifies as such all
Company Employee Benefit Plans that are: (A) "SINGLE-EMPLOYER PLANS" (within the
meaning of Section  4001(a)(15) of ERISA) covered by Title IV of ERISA ("COMPANY
SINGLE-EMPLOYER  PLANS");  (B)  "MULTIEMPLOYER  PLANS"  (within  the  meaning of
Section  4001(a)(3)  of ERISA)  ("COMPANY  MULTIEMPLOYER  PLANS");  (C) "PENSION
PLANS"  (within  the meaning of Section  3(2) of ERISA) that are  intended to be
qualified  under Section  401(a) of the Code other than Company  Single-Employer
Plans and  Company  Multiemployer  Plans (all  Company  Employee  Benefit  Plans
identified  in (A),  (B),  and (C) above  collectively  referred  to as "COMPANY
QUALIFIED  PLANS");  (D) "PENSION  PLANS" (within the meaning of Section 3(2) of
ERISA) or deferred  compensation  plans or arrangements that are not intended to
be qualified under Section 401(a) of the Code, separately identifying such plans
and  arrangements  with  respect to which  assets are  allocated to or held in a
"RABBI TRUST" or similar  funding vehicle and such plans and  arrangements  with
respect to which  assets  are not so  allocated  or held;  (E)  "WELFARE  PLANS"
(within  the  meaning  of  Section  3(1) of ERISA)  ("COMPANY  WELFARE  PLANS"),
separately  identifying  such  plans  that are  insured  and such plans that are
self-insured; and (F) Company VEBAs.

     (b)(i) Except as set forth on SCHEDULE 3.18, each Company  Employee Benefit
Plan (and each related trust,  insurance contract or fund) complies in form with
the requirements of all applicable laws,  including,  without limitation,  ERISA
and the Code,  and has at all times been  maintained and operated in substantial
compliance  with its terms and the  requirements  of all such laws.  All filings
required by ERISA and the Code as to each  Company  Employee  Benefit  Plan have
been timely filed, and all reports,  notices and disclosures to participants and
beneficiaries

                                      -43-

<PAGE>

under each Company  Employee  Benefit Plan which is not a Company  Multiemployer
Plan  required by either  ERISA or the Code have been  timely and  appropriately
distributed or otherwise provided.

     (ii) No complete or partial  termination  of any Company  Employee  Benefit
Plan has occurred or is expected to occur.  No proceedings  have been instituted
to terminate or appoint a trustee to administer any Company Single-Employer Plan
or Company  Multiemployer Plan, and no event has occurred or circumstance exists
that may constitute  grounds under Section 4042 of ERISA for the termination of,
or appointment of a trustee to administer any such plan.

     (iii)  Except as  required  to  maintain  the  tax-qualified  status of any
Company  Qualified Plan under Section 401(a) of the Code, or in connection  with
the transactions contemplated by this Agreement,  neither the Company nor any of
its Subsidiaries has any express or implied commitment, obligation, intention or
understanding, whether formal or informal and whether legally binding or not, to
create,  modify,  amend,  terminate or adopt any Company  Employee Benefit Plan.
Except as required to maintain the tax-qualified status of any Company Qualified
Plan under Section 401(a) of the Code, no condition or circumstance  exists that
would prevent the amendment or termination of any Company Employee Benefit Plan,
and the Company and its Subsidiaries may terminate or cease contributions to any
Company Employee Benefit Plan without incurring any material liability.

     (iv)  To the  Knowledge  of the  Company,  no  event  has  occurred  and no
condition or circumstance  exists that could reasonably be expected to result in
a material  increase in the  benefits  under or the expense of  maintaining  any
Company Employee Benefit Plan from the level of benefits or expense incurred for
the most recent fiscal year ended thereof other than such increases

                                      -44-

<PAGE>

as may be the result of salary increases or workforce  changes  occurring in the
ordinary course of business.

     (v) No Company Employee  Benefit Plan is a "MULTIPLE  EMPLOYER PLAN" within
the meaning of the Code or ERISA.

     (c) Except as set forth on SCHEDULE 3.18: (i) No Company  Employee  Benefit
Plan (excluding Company  Multiemployer Plans) subject to Section 412 of the Code
or  Section  302 of ERISA  and,  to the  Knowledge  of the  Company,  no Company
Multiemployer  Plan, has incurred any accumulated  funding deficiency within the
meaning  of  Section  412  or  418B  of  the  Code  or  Section  302  of  ERISA,
respectively,  or has applied  for or  obtained a waiver of any minimum  funding
standard or an extension of any  amortization  period,  under Section 412 of the
Code  or  Section  303 or 304 of  ERISA,  and no such  waiver  or  extension  is
contemplated,  and no event has occurred or circumstance  exists that may result
in an accumulated funding deficiency as of the last day of the current plan year
of any such Company  Employee  Benefit Plan.  Except for payments of premiums to
the Pension Benefit Guaranty Corporation, or any successor thereto (the "PBGC"),
neither the Company nor any of its  Subsidiaries  has incurred any  liability to
the PBGC in  connection  with any Company  Employee  Benefit  Plan  covering any
active,  retired or former  employees  or directors of the Company or any of its
Subsidiaries, including, without limitation, any liability under Section 4069 or
4212(c) of ERISA or any penalty  imposed under Section 4071 of ERISA,  or ceased
operations at any facility or withdrawn from any such Company  Employee  Benefit
Plan in a manner which could subject it to liability under Section 4062, 4063 or
4064 of ERISA, or knows of any facts or  circumstances  that could reasonably be
expected to give rise to any liability of the Company or any of its Subsidiaries
to the PBGC

                                      -45-

<PAGE>

under Title IV of ERISA that could  reasonably be  anticipated  to result in any
claims  being  made  against  the  Acquiror  by the PBGC.  The  Company  and its
Subsidiaries  have paid all amounts due to the PBGC  pursuant to Section 4007 of
ERISA.

     (i)  Neither  the  Company nor any of its  Subsidiaries  has  incurred  any
withdrawal   liability   (including  any  contingent  or  secondary   withdrawal
liability)  within the  meaning of Section  4201 or 4204 of ERISA to any Company
Multiemployer  Plan,  and to the  Knowledge of the Company no event has occurred
and no condition or circumstance  has existed,  that presents a material risk of
the   occurrence  of  any  withdrawal   from  or  the  partition,   termination,
reorganization or insolvency of any such Company  Multiemployer Plan which could
reasonably  be expected to result in any  liability of the Company or any of its
Subsidiaries.  Neither  the  Company nor any of its  Subsidiaries  has  received
notice from any Company  Multiemployer  Plan that it is in  reorganization or is
insolvent,  that increased contributions may be required to avoid a reduction in
plan benefits or the  imposition of any excise tax, or that such plan intends to
terminate or has terminated.

     (ii) Neither the Company nor any of its Subsidiaries  maintains any Company
Welfare Plan which is a "GROUP  HEALTH PLAN" (as such term is defined in Section
607(1)  of  ERISA  or  Section  5000(b)(1)  of  the  Code)  that  has  not  been
administered  and operated in all  respects in  compliance  with the  applicable
requirements  of Part 6 of Subtitle B of Title I of ERISA and  Section  4980B of
the Code ("COBRA") and any applicable similar state law and neither the Company,
any  of  its  Subsidiaries  is or may be  subject  to  any  material  liability,
including, without limitation, additional contributions, fines, taxes, penalties
or loss of tax deduction, as a result of such administration and operation.

                                      -46-

<PAGE>

     (iii) No Company Employee  Benefit Plan (whether  qualified or nonqualified
within the meaning of Section 401(a) of the Code)  provides for  post-employment
or retiree welfare benefits (including,  without limitation,  health and/or life
insurance benefits but excluding any such benefits provided to comply with COBRA
or any applicable  state law requiring  continuation of welfare  benefits),  and
neither the Company nor any of its Subsidiaries is obligated to provide any such
benefits to any retired or former  employees or active  employees  following any
such employee's retirement or other termination of service.

     (iv) No Company  Welfare Plan has provided any  "DISQUALIFIED  BENEFIT" (as
such term is defined in  Section  4976(b) of the Code) with  respect to which an
excise tax could reasonably be expected to be imposed.

     (v)  Neither  the  Company  nor any of its  Subsidiaries  has any  unfunded
liabilities  pursuant to any Company  Employee  Benefit Plan described in Clause
(D) of subsection (a), above.

     (vi)  Neither the  Company nor any of its  Subsidiaries  has  incurred  any
liability to the Internal  Revenue Service  (including,  to the extent relevant,
the United States  Department  of the  Treasury),  or any successor  agency (the
"IRS"),  with respect to any Company  Employee  Benefit Plan which liability has
not been satisfied,  including,  without limitation, any liability imposed under
Chapter 43 of the Code,  and,  to the  Knowledge  of the  Company,  no event has
occurred and no condition or circumstance  has existed that could  reasonably be
expected to give rise to any such liability.

         (vii) No asset of the Company or any of its  Subsidiaries is subject to
any lien  arising  under  ERISA or the Code on account of any  Company  Employee
Benefit  Plan,  and no event has 

                                      -47-

<PAGE>

occurred and no condition  or  circumstance  has existed that could give rise to
any such lien. Neither the Company nor any of its Subsidiaries has been required
to provide any  security  under  Section 307 of ERISA or Section  401(a)(29)  or
412(f) of the Code,  and no event has occurred and no condition or  circumstance
has  existed  that  could  reasonably  be  expected  to give  rise  to any  such
requirement to provide any such security.

     (viii)  There  are  no  actions,  suits,  proceedings,   hearings,  audits,
investigations  or  claims  pending,  or,  to  the  Knowledge  of  the  Company,
threatened,  anticipated  or expected to be asserted with respect to any Company
Employee  Benefit  Plan,  or any  fiduciary  or sponsor  of any such plan,  with
respect to its duties  under  such plan,  or the assets of any such plan  (other
than routine claims for benefits and appeals of denied routine claims arising in
the ordinary course). There is no dispute pending between the Company and/or its
Subsidiaries  and  any  Company   Multiemployer   Plan  concerning   payment  of
contributions  or withdrawal  liability  payments.  No civil or criminal  action
brought  pursuant to the  provisions  of Title I, Subtitle B, Part 5 of ERISA is
pending, threatened, anticipated, or expected to be asserted against the Company
or any of its  Subsidiaries  or any  fiduciary of any Company  Employee  Benefit
Plan, in any case with respect to any Company  Employee Benefit Plan. No Company
Employee  Benefit Plan or any fiduciary  thereof has been the direct or indirect
subject  of an  audit,  investigation  or  examination  by any  governmental  or
quasi-governmental entity or agency.

     (d)(i) Except as set forth on SCHEDULE  3.18:  Full payment has been timely
made of all amounts  which the Company or any of its  Subsidiaries  is required,
under applicable law or under any Company Employee Benefit Plan or any agreement
relating to any Company Employee Benefit Plan to which the Company or any of its
Subsidiaries is a party, to have paid, including

                                      -48-

<PAGE>

all contributions and premiums thereunder, as of the last day of the most recent
fiscal  year of such  Company  Employee  Benefit  Plan  ended  prior to the date
hereof. All contributions, premiums and payments paid or accrued with respect to
any  Company  Employee  Benefit  Plan have been  fully  deducted  for income tax
purposes (to the extent deductible) and no such deduction has been challenged or
disallowed by any governmental  entity, and, to the Knowledge of the Company, no
event has  occurred  and no  condition  or  circumstance  has existed that could
reasonably be expected to give rise to any such  challenge or  disallowance.  No
amount,  or any asset,  with respect to any Company  Employee Benefit Plan is or
may be subject to tax as unrelated  business  taxable income under the Code. The
Company and its  Subsidiaries  have made adequate  provisions in their financial
records and  statements,  in accordance  with generally  accepted  United States
accounting  principles  applied on a consistent basis and prior practices of the
Company  or such  Subsidiary,  for all  obligations  and  liabilities  under all
Company  Employee Benefit Plans that have accrued but have not been paid because
they are not yet due under the terms of any  Company  Employee  Benefit  Plan or
related agreements.

     (ii) Benefits under all Company  Employee  Benefit Plans are as represented
and  subsequent  to the date as of which  documents  have been  provided no such
benefits have been  increased and neither the Company nor any  Subsidiary of the
Company has entered  into,  adopted,  created or amended  (except as required to
maintain the  tax-qualified  status of any Company  Qualified Plan under Section
401(a) of the Code or as otherwise required by law) any Company Employee Benefit
Plan.

         (iii)  From and  after  the  Closing  Date,  if and to the  extent  the
Acquiror and/or any of its Subsidiaries and/or affiliates assumes or succeeds to
any  obligation  under any Company  

                                      -49-

<PAGE>

Employee  Benefit Plan,  the Acquiror and any such  Subsidiaries  and affiliates
will receive for purposes of satisfying  such  respective  obligations  the full
benefit of any funds,  trusts,  accruals or reserves in connection with any such
Company Employee Benefit Plan.

     (e)(i)  As of  the  date  of  this  Agreement,  the  current  value  of the
accumulated  benefit  obligations  (whether  or not  vested  and  based  upon an
acceptable  funding  method under ERISA and the Code and  actuarial  assumptions
which are individually and in the aggregate reasonable in all respects and which
have been  furnished  to and relied  upon by the  Acquiror)  under each  Company
Single-Employer Plan did not exceed the current fair value of the assets of each
such Company  Single-Employer Plan allocable to such accrued benefits, and since
the Company Balance Sheet Date,  there has been: (A) no material  adverse change
in the financial condition of any Company Single-Employer Plan, (B) no change in
the actuarial  assumptions with respect to any Company  Single-Employer Plan and
(C) no increase in benefits under any Company  Single-Employer  Plan as a result
of plan amendments, written interpretations or announcements (whether written or
not),  change in  applicable  law or  otherwise,  which  individually  or in the
aggregate,  would  result in the current  value of any  Company  Single-Employer
Plan's  accrued  benefits  exceeding  the  current  value  of all  such  Company
Single-Employer Plan's assets.

         (ii) As of the date of this Agreement,  using actuarial assumptions and
computation  methods  consistent  with  Subpart 1 of  Subtitle  E of Title IV of
ERISA,  the aggregate  liabilities  of the Company and its  Subsidiaries  to all
Company Multiemployer Plans in the event of a complete withdrawal therefrom,  as
of the close of the most recent fiscal year of each Company  Multiemployer  Plan
ended prior to the date  hereof,  based on union  information,  would not exceed
$1.5 million.  To the Knowledge of the Company there has been no material change
in 

                                      -50-

<PAGE>

the  financial  condition  of any  Company  Multiemployer  Plan,  in any such
actuarial  assumption or computation method or in the benefits under any Company
Multiemployer  Plan as a result of collective  bargaining or otherwise since the
close of each such fiscal year which,  individually  or in the aggregate,  would
materially increase such liability.

     (f) Except as set forth on SCHEDULE 3.18:  (i) Each Company  Qualified Plan
has been  qualified  under Section 401(a) of the Code during the period from its
adoption to date and has been  determined  to be so qualified  by the IRS.  (ii)
Each trust  established in connection  with any Company  Qualified Plan has been
during the period from its creation to date exempt from Federal income  taxation
under Section 501(a) of the Code and has been  determined to be so exempt by the
IRS.  (iii) Each Company VEBA has qualified  during the period from its creation
to  date  as  a  voluntary  employees'  beneficiary  association  under  Section
501(c)(9)  of the Code  and has been  determined  by the IRS to be  exempt  from
Federal income tax. Since the date of each most recent determination referred to
in this  paragraph  (f), no event has occurred and no condition or  circumstance
has existed that  resulted or is likely to result in the  revocation of any such
determination,  approval or  exemption or that could  reasonably  be expected to
adversely  affect the qualified status of any such Company Employee Benefit Plan
or the exempt status of any such trust or Company VEBA.

     (g) Except as set forth on SCHEDULE  3.18:  (i) No  "REPORTABLE  EVENT" (as
such term is defined in Section  4043 of ERISA) has  occurred  or is expected to
occur with respect to any Company Single Employer Plan.

         (ii) Neither the Company nor any of its  Subsidiaries  nor any of their
respective directors,  officers,  employees or, to the Knowledge of the Company,
other persons who partic-

                                      -51-

<PAGE>

ipate in the operation of any Company  Employee Benefit Plan or related trust or
funding  vehicle,  has engaged in any  transaction  with  respect to any Company
Employee Benefit Plan or breached any fiduciary  responsibilities or obligations
under Title I of ERISA or other applicable law that could reasonably be expected
to subject the Company or its  Subsidiaries to a tax, penalty or liability under
ERISA  or  the  Code  (including,   without  limitation,  with  respect  to  any
transaction   in  violation   of  Section  406  of  ERISA  or  any   "PROHIBITED
TRANSACTION,"  within the  meaning  of  Section  4975 of the Code) or that would
otherwise result in liability on the part of the Company or its Subsidiaries.

     (h)  Except  as set  forth on  SCHEDULE  3.18:  (i) The  execution  of this
Agreement and the consummation of the transactions  contemplated  hereby, do not
constitute a triggering event under any Company  Employee Benefit Plan,  policy,
arrangement,   statement,  commitment  or  agreement,  whether  or  not  legally
enforceable,  which  (either alone or upon the  occurrence of any  additional or
subsequent  event)  will  or  may  result  in  any  payment,  severance,  bonus,
retirement or job security or similar-type  benefit, or increase any benefits or
accelerate  the  payment or vesting of any  benefits  to any  employee or former
employee or director of the Company or any of its Subsidiaries.  (ii) No Company
Employee Benefit Plan provides for the payment of severance, termination, change
in control or similar-type payments or benefits.

         (i) The Company has made available, delivered or caused to be delivered
to the  Acquiror  (or its  counsel)  true,  correct and  complete  copies of all
material  documents  in  connection  with each  Company  Employee  Benefit  Plan
(excluding Company  Multiemployer Plans unless specifically provided for below),
including,  without  limitation  (where  applicable):  (i) all Company  Employee
Benefit Plans as in effect on the date hereof,  together with all amendments 

                                      -52-

<PAGE>

and
written  interpretations  with respect  thereto,  including,  in the case of any
Company  Employee Benefit Plan not set forth in writing,  a written  description
thereof;  (ii) all current  summary  plan  descriptions,  summaries  of material
modifications,  material  communications  and other  summaries and  descriptions
furnished to participants and beneficiaries; (iii) all current trust agreements,
declarations   of  trust  and  other   documents   establishing   other  funding
arrangements  (and all amendments  thereto and the latest  financial  statements
thereof);  (iv) the most  recent  IRS  determination  letter  obtained,  and any
outstanding  request  for such a  determination,  with  respect to each  Company
Employee  Benefit Plan intended to be qualified under Section 401(a) of the Code
or exempt under Section 501(a) of the Code and each Company VEBA; (v) the annual
report on IRS Form 5500-series for each of the last three years for each Company
Employee  Benefit  Plan  required  to file such form,  including  all  schedules
thereto; (vi) the most recent PBGC Form 1 for each Company Employee Benefit Plan
required to file such form;  (vii) the most recent IRS Form 990 for each Company
VEBA;  (viii) the most recent reports  submitted by third party  administrators,
actuaries,  investment  managers,  consultants or other independent  contractors
with  respect  to  any  Company  Employee  Benefit  Plan,   including,   without
limitation,  the most  recently  prepared  actuarial  valuation  report for each
Company  Employee  Benefit Plan  covered by Title IV of ERISA;  (ix) a letter or
notice from the trustee or  administrator  of each  Company  Multiemployer  Plan
setting forth the estimated  withdrawal  liability which would be imposed on the
Company and/or its Subsidiaries in the event of a complete  withdrawal from each
such plan as of the close of the most recent fiscal year of each such plan ended
prior to the date hereof;  (x) the most recently prepared  financial  statements
and related opinions of independent accountants;  (xi) all collective bargaining
agreements  pursuant to which contributions are or have 

                                      -53-

<PAGE>

been made or obligations incurred (including for pension,  profit-sharing and/or
welfare benefits) by the Company and/or any of its Subsidiaries;  (xii) the most
recent  registration  statements  filed  with  respect to any  Company  Employee
Benefit Plan;  (xiii) standard  notifications to employees of their rights under
COBRA;  and  (xiv)  all  legally  binding  contracts,  agreements,  obligations,
promises  or  undertakings  (whether  written  or oral and  whether  express  or
implied)  relating to each Company  Employee  Benefit Plan,  including,  without
limitation, service provider agreements, insurance contracts, annuity contracts,
investment  management  agreements,   subscription   agreements,   participation
agreements, and recordkeeping agreements.

     ss. 3.19  INTERESTS IN CUSTOMERS,  SUPPLIERS,  ETC.  Except as set forth on
Schedule  3.19  attached  hereto,  neither the  Shareholders  nor any officer or
director  of the  Company  or any of its  Subsidiaries  possesses,  directly  or
indirectly, any ownership interest in, or is a director, officer or employee of,
any Person which is a supplier,  customer, lessor, lessee, licensor,  developer,
competitor or potential  competitor  of the Company or any of its  Subsidiaries.
Ownership of securities of a company whose  securities are registered  under the
Exchange Act of 1934 of 2% or less of any class of such securities  shall not be
deemed to be a financial interest for purposes of this Section 3.19.

     ss. 3.20 ENVIRONMENTAL  MATTERS AND CLAIMS. Except as set forth in Schedule
3.20 (i) the  Company,  each of its  Subsidiaries  and their  Affiliates  are in
substantial  compliance  with all  applicable  United States  federal and state,
local, foreign and international laws,  regulations,  conventions and agreements
relating  to  pollution   prevention  or  protection  of  human  health  or  the
environment (including,  without limitation,  ambient air, surface water, ground
water,  navigable  waters,  waters of the  contiguous  zone,  ocean  waters  and
international waters), including, without

                                      -54-

<PAGE>

limitation,  laws,  regulations,  conventions  and  agreements  relating  to (1)
emissions, discharges, releases or threatened releases of chemicals, pollutants,
contaminants,  wastes,  toxic substances,  hazardous  materials,  oil, hazardous
substances,  petroleum and petroleum  products and  by-products  ("MATERIALS  OF
ENVIRONMENTAL CONCERN"), or (2) the manufacture,  processing, distribution, use,
treatment,   storage,   disposal,   transport   or  handling  of   Materials  of
Environmental Concern  ("ENVIRONMENTAL  LAWS") except where the failure to be in
compliance could not reasonably be expected to have a Material Adverse Effect on
the  Company  or  any  of  its  Subsidiaries;  (ii)  the  Company,  each  of its
Subsidiaries  and  their  Affiliates,  have all  permits,  licenses,  approvals,
rulings,  variances,  exemptions,  clearances,  consents or other authorizations
required under applicable Environmental Laws ("ENVIRONMENTAL APPROVALS") and are
in  compliance  with all  Environmental  Approvals  required  to  operate  their
business  as then  being  conducted  except  where the  failure to have all such
Environmental  Approvals or be in compliance  therewith  could not reasonably be
expected  to  have  a  Material  Adverse  Effect  on the  Company  or any of its
Subsidiaries;  (iii) to the Knowledge of the Company,  none of the Company,  any
Subsidiary  nor any  Affiliate  thereof  has  received  any notice of any claim,
action,  cause  of  action,  investigation  or  demand  by any  person,  entity,
enterprise or Governmental  Authority,  alleging  potential  liability for, or a
requirement to incur,  material  investigatory  costs,  cleanup costs,  response
and/or remedial costs (whether incurred by a governmental  entity or otherwise),
natural resources damages, property damages, personal injuries,  attorneys' fees
and expenses,  or fines or  penalties,  in each case arising out of, based on or
resulting  from (1) the  presence,  or  release  or threat of  release  into the
environment,  of any Materials of Environmental Concern at any location, whether
or not owned by such person, or (2) circumstances forming the basis of any

                                      -55-

<PAGE>

violation,  or alleged  violation,  of any  Environmental  Law or  Environmental
Approval ("ENVIRONMENTAL CLAIM") (other than Environmental Claims that have been
fully and finally adjudicated or otherwise  determined and all fines,  penalties
and other costs, if any, payable by the Company, its Subsidiaries and Affiliates
in  respect  thereof  have  been  paid in full or which  are  fully  covered  by
insurance (including permitted  deductibles));  and (iv) to the Knowledge of the
Company, there are no circumstances that may prevent or interfere with such full
compliance in the future;  and (a) except as heretofore  disclosed in writing to
the Acquiror there is no Environmental  Claim pending or threatened  against the
Company,  any  Subsidiary  or any  Affiliate  thereof  and  there are no past or
present actions,  activities,  circumstances,  conditions,  events or incidents,
including,  without limitation, the release, emission,  discharge or disposal of
any Materials of  Environmental  Concern,  that to the Knowledge of the Company,
could form the basis of any Environmental Claim against such persons the adverse
disposition of which may result in a Material Adverse Effect.

     ss. 3.21 COMPENSATION OF EMPLOYEES. The Company has, prior to the execution
of this  Agreement,  delivered to the Acquiror an accurate and complete list for
calendar  year 1996 showing the names of all persons  employed by the Company or
any  Subsidiary  who  received  more  than  $60,000  in 1996  cash  compensation
(including,  without  limitation,  salary,  commission  and  bonus)  or who  are
reasonably  expected  to receive  more than  $60,000  in 1997 cash  compensation
(including,  without  limitation,  salary,  commission  and  bonus)  and who are
expected to be employed by the Company or any  Subsidiary on the Second  Closing
Date. Such list sets forth the present salary or hourly wage,  total in 1996 and
expected 1997 and 1998 cash

                                      -56-

<PAGE>

compensation (including,  without limitation,  salary, commission and bonus) and
fringe benefits, of each such person.

     ss. 3.22 CONDUCT OF  BUSINESS.  Except as  expressly  contemplated  by this
Agreement and the schedules  hereto,  since  December 31, 1996,  the Company has
taken no action which,  if taken  subsequent to the execution of this  Agreement
and on or prior to the Closing Dates, would constitute a breach of the Company's
agreements set forth in Section 6.1.

     ss. 3.23 RESTRICTIVE DOCUMENTS.  Except as set forth on Schedule 3.23, none
of the Company,  any of its  Subsidiaries or any Shareholder is subject to, or a
party to, any charter,  by-law,  mortgage,  lien, lease, ship charter,  license,
permit,  agreement,  contract,  instrument,  law, rule,  ordinance,  regulation,
order,  judgment or decree,  or any other  restriction of any kind or character,
which  (a)  has a  Material  Adverse  Effect  on the  Company,  or  which  might
reasonably  be expected to have a Material  Adverse  Effect on the Company,  (b)
would  prevent the  continued  operation of the  Company's  or any  Subsidiary's
business  after the date hereof or the Closing  Date on  substantially  the same
basis as heretofore  operated,  (c) would restrict the ability of the Company or
any Subsidiary to acquire any property or (d) would prevent  consummation by the
Company of the transactions contemplated by this Agreement.

     ss. 3.24 NO CHANGES  SINCE COMPANY  BALANCE  SHEET DATE.  Since the Company
Balance  Sheet  Date,  except as set forth on  SCHEDULE  3.24  attached  hereto,
disclosed in the Company Pro Forma Closing Balance Sheet or otherwise  permitted
by this  Agreement,  neither  the Company  nor any of its  Subsidiaries  has (a)
incurred any liability or obligation of any nature (whether  accrued,  absolute,
contingent or otherwise),  except in the ordinary course of business  consistent
with past  practice,  (b)  permitted  any of its assets to be  subjected  to any
mortgage, pledge, lien,

                                      -57-

<PAGE>

security  interest,  encumbrance,  restriction or charge of any kind (other than
Company Permitted Encumbrances),  (c) sold, transferred or otherwise disposed of
any  assets  except in the  ordinary  course of  business  consistent  with past
practice, or made any acquisition of all or any part of the properties,  capital
stock or  business  of any other  Person,  (d) sold,  transferred  or  otherwise
disposed  of any  vessel,  (e)  made any  capital  expenditures  or  commitments
therefor which in the aggregate  total more than $500,000,  (f) declared or paid
any dividend or made any  distribution  on any shares of its capital stock,  (g)
redeemed,  purchased or otherwise  acquired any shares of its capital stock, (h)
granted or issued any option,  warrant or other right to purchase or acquire any
shares of its capital stock,  (i) made any bonus or profit sharing  distribution
or payment of any kind,  except in the  ordinary  course of business  consistent
with past practice,  (j) increased its indebtedness  for borrowed money,  except
current borrowings from banks in the ordinary course of business consistent with
past  practice,  or made any loan to any Person (other than accounts  receivable
arising in the ordinary course of business  consistent with past practice),  (k)
written off as uncollectible any notes or accounts receivable, except write-offs
in the ordinary course of business consistent with past practice,  none of which
individually or in the aggregate is material to the Company or its Subsidiaries,
(l)  granted  any  increase  in the rate of wages,  salaries,  bonuses  or other
remuneration  of  any  employee,  except  in the  ordinary  course  of  business
consistent  with past practice,  (m)  cancelled,  waived or settled any material
claims or rights,  (n) made any change in any method,  principle  or practice of
accounting or auditing, (o) otherwise conducted its business or entered into any
transaction,  except in the usual and ordinary manner and in the ordinary course
of business consistent with past practice or (p) materially amended

                                      -58-

<PAGE>

or  terminated  any material  contract or agreement or entered into any material
contract or agreement.

     To the  Knowledge  of the  Company,  no  fact  or  condition  exists  or is
threatened  which is expected to cause any change  described in the  immediately
preceding  paragraph  and  none  of  the  Shareholders,   the  Company  and  its
Subsidiaries have agreed, whether or not in writing, to do any of the foregoing.

     ss. 3.25  CONDITION OF ASSETS.  The assets and  properties  utilized in and
material to the conduct of the Company's  business  (other than ships),  whether
owned or leased, are in the aggregate in good operating condition and repair and
are suitable for the purposes for which they are presently being used. All ships
which are owned,  leased or operated  by the Company or any of its  Subsidiaries
are in class.

     ss. 3.26  LIMITATION  OF  WARRANTIES.  In making its decision to enter into
this  Agreement and to consummate  the  transactions  contemplated  hereby,  the
Company has not relied upon any  representation,  warranty,  statement,  advice,
document,  projection or other  information of any type provided by the Acquiror
or its directors,  officers,  employees or agents  (whether during the Company's
due  diligence  process  or  otherwise)  or  the  Shareholders  other  than  the
representations  and  warranties  of the  Acquiror and  Shareholders  (including
Schedules relating thereto)  expressly set forth in this Agreement.  The Company
acknowledges and agrees that, except for the  representations  and warranties of
the Acquiror  expressly  set forth in this  Agreement  (including  the schedules
relating  thereto),  neither the  Acquiror nor any of its  directors,  officers,
employees  or  agents,  nor  the  Shareholders  has  made,  or  is  making,  any
representation or warranty, written

                                      -59-

<PAGE>

or oral, to the Company  concerning  the Acquiror or its  business,  operations,
prospects, financial statements, financial condition or results of operations or
any other matter whatsoever.

     ss. 3.27 BROKER'S OR FINDER'S  FEES.  Other than the fees of First Stanford
Corp.  and Den Norske Bank arising  under that certain  letter  agreement  dated
February  28,  1996,  no agent,  broker,  person or firm acting on behalf of the
Company or the  Shareholders,  is, or will be,  entitled  to any  commission  or
broker's or finder's  fees from any of the  parties  hereto,  or from any Person
controlling,  controlled  by or under  common  control  with any of the  parties
hereto,  in  connection  with  any  of the  transactions  contemplated  by  this
Agreement.

     ss. 3.28  DISCLOSURE.  The  Company  does not have any  Knowledge  that any
current material customer or supplier of the Company or its Subsidiaries  intend
to cease doing business with the Company or its Subsidiaries  (whether or not as
a result of the  transactions  contemplated  by this  Agreement)  or  materially
decrease  the amount of business  that such Person is  presently  doing with the
Company  or  its  Subsidiaries,   except  that  MARAD  currently  has  a  policy
restricting the number of vessels that any one company can manage to 12.

     ss. 3.29 COPIES OF DOCUMENTS.  The Company has caused to be made  available
for inspection and copying by the Acquiror and its advisers complete and correct
copies of all  documents  referred  to in this  Article  III or in any  Schedule
attached hereto.

                                   ARTICLE IV

                       REPRESENTATIONS OF THE SHAREHOLDERS
                       -----------------------------------

     ss. 4. REPRESENTATIONS OF THE SHAREHOLDERS.  Each Shareholder  severally as
to itself,  and not jointly,  represents and warrants to the Acquiror that as of
the date hereof:

                                      -60-

<PAGE>

     ss. 4.1  Ownership of Stock.  Such  Shareholder  is the lawful owner of the
number of shares of Stock listed  opposite his or its name in EXHIBIT A attached
hereto,  free and clear of all liens,  encumbrances,  restrictions and claims of
every kind except as provided  in (i) the  Amended  and  Restated  Stockholders'
Agreement  dated as of July 31, 1996 among the Company and certain  stockholders
of the  Company  as the same  may be  amended  by the  agreement  among  selling
stockholders referred to in SCHEDULE 3.11 (the "SHAREHOLDERS  AGREEMENT"),  (ii)
the option  agreement dated as of July 31, 1996 among the Company and Harrowston
Corporation and the Wolfson  Descendants'  1983 Trust as the same may be amended
by the agreement  among selling  stockholders  referred to in SCHEDULE 3.11 (the
"OPTION  AGREEMENT") (iii) the provisions of the Company's Restated  Certificate
of  Incorporation  and  By-laws  which  restrict  the  transfer  of the stock to
"ALIENS"  (as such term is defined in the  Company's  Bylaws  (the  "RESTRICTIVE
CHARTER AND BYLAW PROVISIONS") which restrictions except the Restrictive Charter
and Bylaw  Provision will  terminate on or before the Second Closing Date.  Such
Shareholder  has the full legal  right,  power and  authority to enter into this
Agreement  and to  assign,  transfer  and convey the shares of Stock so owned by
such Shareholder pursuant to this Agreement, and the delivery to the Acquiror of
the Stock  pursuant to the  provisions  of this  Agreement  will transfer to the
Acquiror good title thereto, free and clear of all Encumbrances.

     ss. 4.2  AUTHORIZATION  AND VALIDITY OF  AGREEMENT.  Such  Shareholder  has
requisite power and authority to execute and deliver this Agreement,  to perform
such  Shareholder's  obligations  hereunder and to consummate  the  transactions
contemplated to be performed by such Shareholder hereby. This Agreement has been
duly executed and delivered by such Shareholder and,  assuming the due execution
of this Agreement by the Acquiror, the Company and the other Share-

                                      -61-

<PAGE>

holders  party to this  Agreement,  is a valid and  binding  obligation  of such
Shareholder,  enforceable against such Shareholder in accordance with its terms,
except to the  extent  that its  enforceability  may be  subject  to  applicable
bankruptcy,   insolvency,   reorganization   and  similar  laws   affecting  the
enforcement of creditors' rights generally and to general equitable principles.

     ss. 4.3  RESTRICTIVE  DOCUMENTS.  Such  Shareholder  is not  subject to any
mortgage,  lien, lease,  agreement,  instrument,  order, law, rule,  regulation,
judgment or decree,  or any other restriction of any kind or character which, in
any  such  case,   would  prevent   consummation  by  such  Shareholder  of  the
transactions   contemplated  by  this  Agreement  except  (i)  the  Shareholders
Agreement,  (ii) the Option Agreement,  (iii) the Restrictive  Charter and Bylaw
Provisions,  (iv)  the  HSR  Act  and (v)  statutory  provisions  pertaining  to
citizenship  requirements for ownership of vessels  documented under the laws of
the United  States of America  (Sec. 2 of the  Shipping  Act of 1916,  46 U.S.C.
ss.802 and 46 U.S.C.  Chapter  121/Documentation of Vessels) and (vi) the Letter
Agreement dated November 16, 1989 among First City  Securities,  Inc.,  Intrepid
Shipping USA, Inc., Richard T. du Moulin,  Paul B. Gridley,  Mark Filanowski and
the Company,  but only to the extent that the  transaction  contemplated by this
Agreement would  constitute a "MARITIME  INVESTMENT" for purposes of such Letter
Agreement,  which  restriction  will  terminate on or before the Second  Closing
Date.  This  representation  assumes buyer is a citizen of the United States for
purposes of statutory  provisions  pertaining to  citizenship  requirements  for
ownership of vessels  documented  under the laws of the United States of America
(Sec.  2 of the Shipping Act of 1916,  46 U.S.C.  ss. 802 and 46 U.S.C.  Chapter
121/ Documentation of Vessels).

                                      -62-

<PAGE>

ss. 4.4
ACQUISITION  FOR  INVESTMENT.  (a) Each  Shareholder  represents  and  warrants,
severally and not jointly and solely as to itself, that: (i) such Shareholder is
acquiring the Acquiror Shares for investment for such  Shareholder's own account
and not with a view to, or for the resale in connection  with, the  distribution
or other  disposition  thereof in violation  of the  Securities  Act,  PROVIDED,
HOWEVER, that the disposition of each Shareholder's  property shall at all times
remain within the sole control of such  Shareholder;  (ii) such  Shareholder has
either (A) preexisting  personal or business  relationships with the Company, or
any of its respective officers, directors or any of its respective Affiliates or
(B)  knowledge and  experience in financial and business  matters such that such
Shareholder  is capable of  evaluating  the  merits  and risks  relating  to the
acquisition of Acquiror  Shares under this  Agreement,  or such  Shareholder has
been advised by a representative possessing such knowledge and experience who is
unaffiliated  with and who is not  compensated,  directly or indirectly,  by the
Acquiror;  (iii)  such  Shareholder  has been  given an  opportunity  which such
Shareholder deems adequate to obtain  information and documents  relating to the
Acquiror and to ask questions of and receive answers from representatives of the
Acquiror  concerning such Shareholder's  investment in the Acquiror Shares; (iv)
such Shareholder's  financial condition is such that such Shareholder can afford
to bear the  economic  risk of holding  the  Acquiror  Shares for an  indefinite
period of time;  such  Shareholder  has  adequate  means of  providing  for such
Shareholder's  current  needs  and  contingencies  and  has  no  need  for  such
Shareholder's  investment  in the  Acquiror  Shares to be  liquid;  and (v) such
Shareholder  can  afford  to  suffer  a  complete  loss  of  such  Shareholder's
investment in the Acquiror Shares.

                                      -63-

<PAGE>

     (b) Each Shareholder  further  acknowledges  that such Shareholder has been
advised by the Acquiror that: (i) the Acquiror  Shares have not been  registered
under the  Securities  Act of 1933, as amended (the  "SECURITIES  ACT"),  or the
securities  laws of any states and are being  offered  and sold in  reliance  on
exemptions  from the  registration  requirements  of the Securities Act and such
laws; (ii) the Acquiror  Shares are subject to  restrictions on  transferability
and resale and may not be  transferred  or resold except as permitted  under the
Securities  Act and such law pursuant to  registration  or exemption  therefrom;
(iii) a restrictive legend shall be placed on the certificates  representing the
Acquiror Shares; (iv) a notation shall be made in the appropriate records of the
Acquiror  indicating  that the Acquiror  Shares are subject to  restrictions  on
transfer;  and (v) the shares of common stock of UBC which the Shareholders will
receive in the Spin-Off will not be "RESTRICTED  SECURITIES"  within the meaning
Securities Act Rule 144(a)(3).

     ss. 4.5 LIMITATION OF WARRANTIES. In making its decision to enter into this
Agreement  and  to  consummate  the  transactions   contemplated   hereby,  such
Shareholder has not relied upon any representation, warranty, statement, advice,
document,  projection or other  information of any type provided by the Acquiror
or  its  directors,   officers,   employees  or  agents   (whether  during  such
Shareholder's due diligence process or otherwise) other than the representations
and warranties of the Acquiror (including  Schedules relating thereto) expressly
set forth in this  Agreement.  Each  Shareholder  acknowledges  and agrees that,
except for the  representations  and  warranties  of the Acquiror  expressly set
forth in this Agreement (including the schedules relating thereto),  neither the
Acquiror nor any of its directors,  officers,  employees or agents, has made, or
is making, any representation or warranty,  written or oral, to such Shareholder
concerning

                                      -64-

<PAGE>

the  Acquiror  or  its  or  their  business,  operations,  prospects,  financial
statements,  financial  condition or results of  operations  or any other matter
whatsoever.

     ss. 4.6 BROKER'S OR FINDER'S FEES. No agent, broker,  person or firm acting
on behalf of such  Shareholder  is, or will be,  entitled to any  commission  or
broker's or finder's  fees from any of the  parties  hereto,  or from any Person
controlling,  controlled  by or under  common  control  with any of the  parties
hereto,  in  connection  with  any  of the  transactions  contemplated  by  this
Agreement.

                                    ARTICLE V

                         REPRESENTATIONS OF THE ACQUIROR
                         -------------------------------

     ss.  5.  REPRESENTATIONS  OF THE  ACQUIROR.  The  Acquiror  represents  and
warrants to the Company and the Shareholders that as of the date hereof:

     ss. 51 CAPITAL  STOCK.  (a) The Acquiror has an  authorized  capitalization
consisting of 80,000,000  shares of common stock,  par value $.50 per share,  of
which on the date  hereof  43,008,593  shares of common  stock  are  issued  and
outstanding, and 5,000,000 shares of Preferred Stock, par value $1.00 per share,
none of which are issued or outstanding. All outstanding shares of capital stock
of the Acquiror have been duly  authorized and validly issued and are fully paid
and nonassessable.  Except for the options to purchase Common Stock set forth on
Schedule 5.1 attached hereto, there are no outstanding  subscriptions,  options,
warrants,  rights,  calls,  commitments,  conversion rights, rights of exchange,
plans or other agreements of any character providing for the purchase,  issuance
or sale of any shares of the capital stock of the Acquiror.

                                      -65-

<PAGE>

     (b) The Acquiror  Shares have been duly authorized and will be, when issued
and paid for in accordance  with the terms of this  Agreement,  validly  issued,
fully paid and nonassessable.

     ss. 5.2 EXISTENCE AND GOOD STANDING;  POWER AND AUTHORITY. (a) The Acquiror
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware.  The Acquiror has the requisite  corporate right,
power,  legal  capacity  and  authority  to own,  lease and operate its Domestic
Businesses,  enter  into,  execute and deliver  this  Agreement  and perform its
obligations  hereunder.  The U.S. Subsidiaries are duly qualified or licensed to
do business and are in good standing in each jurisdiction in which the character
or location of the properties owned, leased or operated by the U.S. Subsidiaries
or the nature of the  business  conducted  by the U.S.  Subsidiaries  makes such
qualification  or  license  necessary,  except  where the  failure to be so duly
qualified, licensed or in good standing could not reasonably be expected to have
a Material Adverse Effect on the Domestic  Businesses.  The execution,  delivery
and  performance  of this  Agreement by the Acquiror and the  performance of its
obligations  hereunder  have been duly  authorized  and approved by its Board of
Directors  and,  except for approval by the  Acquiror's  stockholders,  no other
corporate  action on the part of the Acquiror or action by the  stockholders  of
the Acquiror is necessary to authorize the execution,  delivery and  performance
of this  Agreement by the  Acquiror.  This  Agreement has been duly executed and
delivered by the Acquiror and,  assuming the due execution of this  Agreement by
the Company and by each  Shareholder,  is a valid and binding  obligation of the
Acquiror  enforceable  against the Acquiror in accordance with its terms, except
to the extent that its enforceability  may be subject to applicable  bankruptcy,
insolvency,  reorganization,  moratorium  and other  similar laws  affecting the
enforcement of creditors' rights generally and by general equitable principles.

                                      -66-

<PAGE>

     (b) Except as set forth on SCHEDULE 5.2(b), no consent,  approval, order or
authorization of, or registration,  declaration or filing with, any Governmental
Authority, is required by or with respect to the Acquiror in connection with the
execution and delivery of, and the  consummation by the Acquiror or its domestic
businesses of the  transactions  contemplated by this Agreement or to permit the
Acquiror to  continue,  without  material  change,  the Domestic  Businesses  as
currently  conducted and as proposed to be conducted,  except for (i) the filing
of the  appropriate  documents with the relevant  authorities of other states in
which the Acquiror is  qualified to do business,  (ii) filings with the SEC, the
New York Stock Exchange and appropriate state securities  authorities in respect
of the Spin-Off and Acquisition and (iii) filings under the HSR Act.

     ss. 5.3  SUBSIDIARIES  AND  INVESTMENTS.  (a) Set forth in SCHEDULE  5.3(a)
attached  hereto  is a list of each  corporation  in which  the  Acquiror  owns,
directly  or  indirectly,  any  equity  security.  Each  U.S.  Subsidiary  is  a
corporation duly organized, validly existing and in good standing (to the extent
such  concept  is  relevant  under   applicable  law)  under  the  laws  of  the
jurisdiction of its organization  (which is set forth on Schedule  5.3(a)),  and
has the corporate power and authority to own, lease and operate its property and
to carry on its business as now being conducted.

     (b) Set forth on SCHEDULE 5.3(b) is a list of  jurisdictions  in which each
U.S.  Subsidiary is qualified as a foreign  corporation.  Such jurisdictions are
the only  jurisdictions  in which the  character  or location of the  properties
owned or leased by each U.S. Subsidiary, or the nature of the business conducted
by each U.S.  Subsidiary,  makes such  qualification  necessary except where the
failure to be so qualified would not have a Material Adverse Effect.

                                      -67-

<PAGE>

     (c) Each U.S.  Subsidiary  has the  capitalization  set  forth on  Schedule
5.3(c).  The  outstanding  shares of capital stock of each U.S.  Subsidiary have
been duly  authorized and validly  issued,  are (to the extent such concepts are
applicable under relevant law) fully paid and nonassessable,  and, except as set
forth in  Schedule  5.3(c),  are  owned,  of  record  and  beneficially,  by the
Acquiror, free and clear of all liens, encumbrances,  restrictions and claims of
every kind. No shares of capital stock of any U.S.  Subsidiary  are reserved for
issuance and there are no outstanding options, warrants, rights,  subscriptions,
claims, agreements,  obligations, calls, commitments,  conversion rights, rights
of exchange or other  commitments  of any  character,  contingent  or otherwise,
providing  for the  purchase,  issuance,  sale or  transfer of any shares of the
capital stock of any U.S. Subsidiary.

     (d) None of the Domestic  Businesses or any U.S.  Subsidiary owns, directly
or  indirectly,  any capital  stock or other equity or ownership or  proprietary
interest in any corporation,  partnership,  association, trust, joint venture or
other entity, except as set forth on Schedule 5.3(a).

     ss. 5.4 CONSENTS AND APPROVALS;  NO VIOLATIONS.  The execution and delivery
of this  Agreement  by the  Acquiror and the  consummation  of the  transactions
contemplated  hereby (a) will not violate or  contravene  any  provision  of the
Articles of Incorporation  or By-laws of the Acquiror or its U.S.  Subsidiaries,
(b) will not violate or  contravene  any  statute,  rule,  regulation,  order or
decree  of any  public  body or  authority  by which  the  Acquiror  or its U.S.
Subsidiaries  are bound or by which any of its  respective  properties or assets
are bound (c) except as set forth on  SCHEDULE  5.4 will not  require any filing
with,  permit,  consent or approval of, or the giving of any notice to any other
Person,  and (d) as soon as  consents  or  waivers  from the  lenders  listed

                                      -68-

<PAGE>

on SCHEDULE 5.4 are obtained, which consents and waivers the Acquiror reasonably
believes will be obtained prior to the First Closing Date,  will not result in a
violation or breach of, conflict with, constitute (with or without due notice or
lapse of time or both) a  default  (or give  rise to any  right of  termination,
cancellation,  payment or acceleration)  under, or result in the creation of any
Encumbrance  upon any of the  properties  or assets of the  Domestic  Businesses
under,  any of the terms,  conditions or provisions of any material note,  bond,
mortgage,  indenture,  license,  franchise,  permit, agreement, lease, franchise
agreement or any other  instrument  or  obligation  to which any of the Domestic
Businesses  is a party,  or by which any of the  Domestic  Businesses  or any of
their respective properties or assets may be bound.

ss. 5.5  RESTRICTIVE  DOCUMENTS.  Except as set  forth in  Schedule  5.5,
neither the Acquiror nor any of its U.S.  Subsidiaries is subject to, or a party
to, any charter, by-law,  mortgage, lien, lease, ship charter,  license, permit,
agreement,  contract,  instrument,  order,  law,  rule,  ordinance,  regulation,
judgment or decree,  or any other restriction of any kind or character which (a)
has a Material  Adverse Effect,  or which might reasonably be expected to have a
Material  Adverse  Effect on the  Domestic  Businesses,  (b) would  restrict the
ability of the Domestic  Businesses to acquire any property or (c) would prevent
consummation  by it of the  transactions  contemplated  by this Agreement or the
Spin-Off. 

     ss. 5.6 BOOKS AND RECORDS. The minute books of the Acquiror,  as previously
made  available  to the  Company  and  Shareholders'  Representative  and  their
representatives,  contain  accurate  records of all meetings  of, and  corporate
action  taken by  (including  action taken by written  consent)  the  respective
stockholders and Boards of Directors of the Acquiror. The Acquiror does not have
any of its records,  systems,  controls,  data or information recorded,  stored,
maintained,

                                      -69-

<PAGE>

operated  or  otherwise  wholly  or partly  dependent  upon or held by any means
(including  any  electronic,   mechanical  or  photographic   process,   whether
computerized or not) which (including all means of access thereto and therefrom)
are not under the exclusive  ownership and direct control of one of the Domestic
Businesses.

     ss. 5.7 FINANCIAL  STATEMENTS;  NO MATERIAL  CHANGES.  (a) The Acquiror has
heretofore  furnished the Company and Shareholders'  Representative with (i) the
individual  financial statements for the Domestic Businesses for the years ended
1993-1996 and for the five months ended May 31, 1997 attached  hereto as EXHIBIT
G and (ii) the  consolidated  balance  sheets of the Domestic  Businesses  as of
December 31, 1996 and 1995,  and the related  consolidated  statements of income
and  retained  earnings  for the  years  or  periods  then  ended,  prepared  by
management  of the  Acquiror  attached  hereto as  Exhibit H (such  consolidated
financial  statements of the Domestic Businesses are hereinafter  referred to as
the "DOMESTIC  BUSINESSES UNAUDITED  CONSOLIDATED  FINANCIAL  STATEMENTS").  The
Domestic  Businesses  Unaudited  Consolidated  Financial  Statements,  except as
indicated  therein,  have been  prepared in  accordance  with GAAP  consistently
followed  throughout  the periods  indicated.  Except as  indicated in the notes
thereto,  the Domestic Businesses  Unaudited  Consolidated  Financial Statements
fairly present the financial  condition of the Domestic  Businesses as a unified
group at the respective dates thereof and, the related  statements of income and
retained earnings and cash flows fairly present the results of the operations of
the  Domestic  Businesses  and the  changes in its  financial  position  for the
respective periods indicated.  Since December 31, 1996 (the "DOMESTIC BUSINESSES
BALANCE SHEET DATE"),  except as permitted by the terms of this Agreement or the
Distribution  Agreement,  there  has  been  no (i)  change  that  has  or  could
reasonably be expected to have a Material Adverse

                                      -70-

<PAGE>

Effect  on the  Domestic  Businesses  and no  fact  or  condition  exists  or is
contemplated or is threatened that could  reasonably be expected to cause such a
change in the future  except as set forth in  Section  7.3(a) and except for the
possible termination or non-renewal of existing MARAD contracts or (ii) material
damage, destruction or loss to any asset or property, tangible or intangible, of
the Domestic  Businesses  which  materially  affects the ability of the Domestic
Businesses to conduct their respective businesses.

     (b) The Acquiror has  delivered to the Company a PRO FORMA balance sheet in
the form of EXHIBIT I hereto which gives effect to the Spin-Off (the "ACQUIROR'S
PRO FORMA CLOSING  BALANCE  Sheet").  The Acquiror's  PRO FORMA Closing  Balance
Sheet  represents the Acquiror's  reasonable best estimate on the date hereof of
the  Condition of the Domestic  Businesses as of the Second  Closing  Date.  The
Acquiror's  Pro  Forma  Closing  Balance  Sheet  has  been  prepared  on a basis
consistent  with  the  Domestic  Businesses  Unaudited   Consolidated  Financial
Statements.

     ss. 5.8 TITLE TO PROPERTIES;  ENCUMBRANCES. Except as set forth on SCHEDULE
5.8 attached  hereto and except for such  properties  and assets which have been
sold or otherwise  disposed of in the ordinary  course of business,  each of the
Domestic  Businesses has good and marketable  title to or a valid and subsisting
leasehold  interest in its respective  material  properties and assets (real and
personal,   tangible  and  intangible),   including,   without  limitation,  the
properties  and assets  reflected in the  Acquiror's  Pro Forma Closing  Balance
Sheet, subject to no Encumbrances,  except for (i) Encumbrances reflected in the
Domestic Business Unaudited Consolidated Financial Statements, (ii) Encumbrances
for current Taxes,  not yet due and delinquent,  (iii)  Encumbrances  arising by
operation  of law,  (iv)  Encumbrances  imposed by law,  such as  materialmen's,
mechanics',  carriers',  workmen's  and  repairmen's  liens  and  other  similar
Encumbrances  

                                      -71-

<PAGE>

arising  in the  ordinary  course of  business  securing  obligations  including
maritime liens or other  statutory  rights in rem arising in the ordinary course
of owning and operating  vessels and incurred in the ordinary course of business
that (a) are not  overdue  for a  period  of more  than 45 days  and (b)  either
individually or when aggregated  with all other  Encumbrances  described in this
Section 5.8 outstanding on any date of  determination,  do not materially affect
the use or value of the  property  to which  they  relate  and (v)  Encumbrances
described on Schedule 5.8 attached hereto (liens described in clauses (i), (ii),
(iii),  (iv) and (v) above are  hereinafter  sometimes  referred to as "DOMESTIC
BUSINESSES'  PERMITTED  ENCUMBRANCES").  Assuming  adequate cash, the assets set
forth on the  Acquiror's Pro Forma Closing  Balance Sheet  constitute all of the
assets necessary to conduct the Domestic Businesses as presently conducted.

     ss. 5.9 REAL PROPERTY.  SCHEDULE 5.9 attached  hereto  contains an accurate
and complete list of all real property owned in whole or in part by the Domestic
Businesses  and includes the name of the record title holder  thereof and a list
of all indebtedness  secured by a lien, mortgage or deed of trust thereon.  Each
of the Domestic  Businesses has good and  marketable  title in fee simple to all
the real  property  owned  by it,  free and  clear of all  encumbrances,  liens,
charges or other  restrictions  of any kind or  character,  except for  Domestic
Businesses'  Permitted  Encumbrances.  All  of  the  buildings,  structures  and
appurtenances  situated  on the real  property  owned in whole or in part by the
Domestic  Businesses  are in good  operating  condition  and in a state  of good
maintenance  and repair,  are  adequate  and suitable for the purposes for which
they are presently being used and, each of the Domestic  Businesses has adequate
rights of ingress and egress for  operation  of such  business  in the  ordinary
course.  None of such buildings,  structures or appurtenances  (or any equipment
therein),  nor the operation or maintenance  thereof,  violates 

                                      -72-

<PAGE>

any  restrictive  covenant or any provision of any federal,  state or local law,
ordinance, rule or regulation, or encroaches on any property owned by others. No
condemnation  proceeding is pending or, to the best  knowledge,  information and
belief of the Acquiror, threatened which would preclude or impair the use of any
such  property  by the  Domestic  Businesses  for the  purposes  for which it is
currently used.


     ss. 5.10 INTELLECTUAL  PROPERTY.  Except as set forth on SCHEDULE 5.10, the
operation of the  businesses of the Domestic  Businesses as currently  conducted
requires no rights  under  Intellectual  Property and within the six year period
immediately prior to the date of this Agreement,  the businesses of the Domestic
Businesses made use of no Intellectual Property.

     ss. 5.11 LEASES AND SHIP CHARTERS.  SCHEDULE 5.11 attached  hereto contains
an accurate and complete  list of all leases and ship charters  (including,  but
not limited to, capital leases)  relating to the Domestic  Businesses (as lessee
or lessor)  and which  require an annual  rental  payment  aggregating  at least
$10,000.  Each  lease and ship  charter  set forth on  Schedule  5.11 (or to the
Knowledge of the Acquiror  required to be set forth on Schedule 5.11) is in full
force and effect;  all rents and additional rents due to date on each such lease
and ship charter have been paid; in each case,  the lessee has been in peaceable
possession  since the  commencement  of the original  term of such lease or ship
charter  and  is  not  in  default  thereunder  and  no  waiver,  indulgence  or
postponement  of the  lessee's  obligations  thereunder  has been granted by the
lessor;  and there exists no event of default by any of the Domestic  Businesses
or event,  occurrence,  condition  or act  (including  the  consummation  of the
transactions contemplated hereby) which, with the giving of notice, the lapse of
time or the happening of any further event or condition,  would become a default
by the Domestic  Businesses  or give rise to a right of  termination  by a party
(other than 

                                      -73-

<PAGE>

the Domestic Businesses) under such lease or ship charter.  None of the Domestic
Businesses  has violated any of the terms or conditions  under any such lease or
ship charter in any material respect, and, to the Knowledge of the Acquiror, all
of the covenants to be performed by any other party under any such lease or ship
charter have been  performed in all material  respects.  The property  leased by
each of the Domestic Businesses is in a state of good maintenance and repair and
is adequate and suitable for the purposes for which it is presently  being used.
Each of the vessels chartered or owned by the Domestic Businesses is in class.

     ss. 5.12 MATERIAL CONTRACTS.  Except as set forth on SCHEDULE 5.12 attached
hereto,  none of the Domestic  Businesses  has or is bound by (a) any agreement,
contract or commitment  (other than purchase  orders or like  commitments in the
ordinary  course of business)  that involves the  performance of services or the
delivery  of goods  and/or  materials  by it of an  amount or value in excess of
$25,000,  (b) any  agreement,  indenture  or  other  instrument  which  contains
restrictions  with respect to payment of dividends or any other  distribution in
respect of its capital stock, (c) any agreement, contract or commitment relating
to capital expenditures, (d) any loan (other than accounts receivable arising in
the ordinary  course of business  consistent  with past  practice) or advance to
(other than travel and entertainment  advances to employees made in the ordinary
course of business consistent with past practice),  or investment in, any Person
or any  agreement,  contract  or  commitment  relating to the making of any such
loan, advance or investment,  (e) any guarantee or other contingent liability in
respect  of any  indebtedness  or  obligation  of any  Person  (other  than  the
endorsement of negotiable  instruments  for collection in the ordinary course of
business consistent with past practice), (f) any management service,  consulting
or any other similar type contract,  (g) any  agreement,  contract or commitment
limiting the ability of any of

                                      -74-

<PAGE>

the Domestic Businesses to engage in any line of business or to compete with any
Person,  (h) any  agreement,  contract or  commitment  not  entered  into in the
ordinary  course of  business  consistent  with  past  practice  which  involves
estimated  total  payments  of  $25,000  or more and is not  cancelable  without
penalty  within 30 days or (i) any  agreement,  contract or commitment  which is
expected  to have  Material  Adverse  Effect on the  Domestic  Businesses.  Each
contract,  commitment or agreement set forth on SCHEDULE 5.12 (or required to be
set forth on  SCHEDULE  5.12) is in full force and  effect  and there  exists no
default  or  event  of  default  by any of the  Domestic  Businesses  or  event,
occurrence,  condition or act (including the  consummation  of the  transactions
contemplated  hereby) which, with the giving of notice, the lapse of time or the
happening  of any other event or  condition,  would become a default or event of
default by such Domestic  Business or give rise to a right of  termination  by a
party  (other than the  Domestic  Businesses)  thereunder.  None of the Domestic
Businesses has violated any of the material terms or conditions of any contract,
commitment  or agreement to which such  Domestic  Business is bound set forth on
SCHEDULE  5.12 (or  required to be set forth on SCHEDULE  5.12) in any  material
respect, and, to the Knowledge of the Acquiror, all of the material covenants to
be performed  by any other party  thereto  have been fully  performed.  Schedule
5.12A  hereto  sets  forth the  results  of the  audits or  examinations  of the
Acquiror under the current and immediately preceding MARAD contracts. No past or
present actions,  conditions,  events or circumstances presently exist or to the
Knowledge  of  Acquiror  is  threatened,  which  could (i) result in a financial
finding  relating to any such contract or (ii)  disqualify  Acquiror from future
awards of MARAD  contracts,  except for MARAD's  current policy  restricting the
number of vessels that any one company can manage to 12.

                                      -75-

<PAGE>

     ss.  5.13  LITIGATION.  Except as set forth on Schedule  5.13,  there is no
action, suit,  proceeding at law or in equity,  arbitration or administrative or
other  proceeding  by or  before  (or  to the  Knowledge  of  the  Acquiror  any
investigation by) any Governmental  Authority  pending,  or, to the Knowledge of
the Acquiror, threatened, against or affecting any of the Domestic Businesses or
any of their  properties or rights which could have a Material Adverse Effect on
the Domestic  Businesses  and the Acquiror  knows of no valid basis for any such
action, proceeding or investigation.  Except as set forth on Schedule 5.13, none
of the Domestic  Businesses is subject to any judgment,  order or decree entered
in any  lawsuit or  proceeding  which  could  reasonably  be  expected to have a
Material Adverse Effect.

     ss.  5.14 TAXES.  (a) Tax  Returns.  Except as  otherwise  disclosed  to an
officer of the  Company,  the  Acquiror  has timely filed or caused to be timely
filed with the appropriate  taxing  authorities all Returns that are required to
be filed by, or with respect to, the Acquiror or any of its U.S. Subsidiaries on
or prior to the First Closing Date. The Returns have accurately reflected in all
material  respects all  liability for Taxes of the Acquiror and each of its U.S.
Subsidiaries for the periods covered thereby.

     (b) PAYMENT OF TAXES.  Except as  otherwise  disclosed to an officer of the
Company,  all material  Taxes and Tax  liabilities of the Acquiror or any of its
U.S.  Subsidiaries  for all taxable  years or periods  that end on or before the
date hereof have been timely  paid or accrued and  adequately  disclosed  to the
Company and fully  provided for on the books and records of the Acquiror and its
U.S. Subsidiaries in accordance with the Accounting Principles. The U.S. Federal
income tax liability of the Acquiror and its U.S.  Subsidiaries has been finally
determined


                                      -76-

<PAGE>

(or the statute of  limitations  has closed) for all years to and  including the
year ended December 31, 1993.

     (c) OTHER TAX MATTERS.  (i) SCHEDULE  5.14  attached  hereto sets forth (A)
each  taxable  year or other  taxable  period of the Acquiror or any of its U.S.
Subsidiaries for which an audit or other examination of Taxes by the appropriate
Tax  authorities of any nation,  state or locality is currently in progress (or,
to the  Knowledge  of  the  Acquiror,  scheduled  as of the  date  hereof  to be
conducted) together with the names of the respective Tax authorities  conducting
(or, to the  Knowledge of the  Acquiror,  scheduled  to conduct)  such audits or
examinations  and a  description  of  the  subject  matter  of  such  audits  or
examinations, (B) the most recent taxable year or other taxable period for which
an audit or other  examination  relating  to U.S.  Federal  income  taxes of the
Acquiror or any of its U.S.  Subsidiaries  has been  finally  completed  and the
disposition of such audit or examination, (C) the taxable years or other taxable
periods of the Acquiror or any of its U.S.  Subsidiaries to the Knowledge of the
Acquiror  which  will not be  subject  to the  normally  applicable  statute  of
limitations  by reason of the  existence of  circumstances  that would cause any
such statute of limitations for applicable Taxes to be extended,  (D) the amount
of any proposed  adjustments (and the principal reason therefor) relating to any
Returns for Tax liability of the Acquiror or any of its U.S. Subsidiaries, which
have been  proposed or assessed by any taxing  authority  and have not been paid
and (E) a list of all notices which, to the Knowledge of the Acquiror,  received
by the  Acquiror  or any of its  U.S.  Subsidiaries  from any  taxing  authority
relating to any issue which could  affect the Tax  liability  of the Acquiror or
any of its U.S.  Subsidiaries,  which issue has not been finally  determined and
which, if determined adversely to the Acquiror or any of its U.S.  Subsidiaries,
could result in a Tax liability.

                                      -78-

<PAGE>

     (ii)  Neither  the  Acquiror  nor any of its  U.S.  Subsidiaries  has  been
included in and could  reasonably  be expected to have any  liability  for Taxes
from any  "CONSOLIDATED,"  "UNITARY" or  "combined"  Return with any group other
than the one that includes the Acquiror provided for under the law of the United
States, any foreign  jurisdiction or any state or locality with respect to Taxes
for any taxable period for which the statute of limitations has not expired.

     (iii) All Taxes which the Acquiror or any of its U.S.  Subsidiaries  is (or
was)  required  by law to  withhold  or  collect  have  been  duly  withheld  or
collected,  and have been  timely  paid over to the  proper  authorities  to the
extent due and payable  other than those Taxes the failure of which to withhold,
collect  or timely  pay over  would not have a  Material  Adverse  Effect on the
Acquiror or any of its U.S. Subsidiaries.

     (iv)  Neither the Acquiror  nor any of its U.S.  Subsidiaries  is a "UNITED
STATES  REAL  PROPERTY  HOLDING  CORPORATION"  within  the  meaning  of  Section
897(c)(2) of the Code.

     (v) Except as set forth on SCHEDULE  5.14(C)(V),  there are no tax sharing,
allocation,  indemnification  or similar  agreements  in effect as  between  the
Acquiror, any of its U.S. Subsidiaries,  or any predecessor or Affiliate thereof
and any other party  under which the Company or the  Acquiror or any of its U.S.
Subsidiaries  could be liable for any Taxes of any party other than the Acquiror
or any of its U.S. Subsidiaries.

     (vi)  No  indebtedness  of the  Acquiror  or any of its  U.S.  Subsidiaries
consists of "CORPORATE  ACQUISITION  INDEBTEDNESS" within the meaning of Section
279 of the Code.

     (vii)  Neither the  Acquiror nor any of its U.S.  Subsidiaries  has applied
for, been granted,  or agreed to any accounting  method change for which it will
be required to take into account any

                                      -78-

<PAGE>

adjustment under Section 481 of the Code or any similar provision of the Code or
the corresponding tax laws of any nation, state or locality.

     (viii) No election  under Section 341(f) of the Code has been made to treat
the Acquiror or any of its U.S.  Subsidiaries  as a consenting  corporation,  as
defined in Section 341 of the Code.

     (ix) As a result of the transactions  contemplated by this Agreement or the
Distribution  Agreement,  neither the Acquiror nor any of its U.S.  Subsidiaries
will be obligated to make any payment that would constitute an "EXCESS PARACHUTE
PAYMENT" as defined in Section 280G of the Code.

     ss,  5.15  INSURANCE.  Set  forth on  Schedule  5.15  attached  hereto is a
complete  list of  insurance  policies  or binders  which  each of the  Domestic
Businesses  maintains with respect to its  businesses,  properties or employees.
Such  policies  or  binders  are in full  force and effect and are free from any
right of  termination  on the part of the insurance  carriers.  Such policies or
binders, with respect to their amounts and types of coverage, are in the opinion
of management  adequate to insure against risks to which the Domestic Businesses
and their  property  and assets are normally  exposed in the  operation of their
respective  businesses and otherwise  consistent with industry standards.  Since
the  Domestic  Businesses  Balance  Sheet Date,  there has not been any material
adverse change in the Domestic  Businesses  relationship  with their  respective
insurers or in the premiums  payable  pursuant to such  policies with respect to
the Domestic Businesses.

     ss. 5.16  ACQUISITION FOR  INVESTMENT.  The Acquiror will acquire the Stock
for its own  account  for  investment  and not with a view  toward  any  resale,
distribution  or  other  disposition  thereof;   PROVIDED,   HOWEVER,  that  the
disposition of the Acquiror's property shall at all times

                                      -79-

<PAGE>

remain within the sole control of the Acquiror.  The Acquiror  understands  that
(a) the  Stock  has  not  been  registered  under  the  Securities  Act,  or the
securities  laws of any  states and is being  offered  and sold in  reliance  on
exemptions  from the  registration  requirements  of the Securities Act and such
laws, (b) the Stock is subject to restrictions on transferability and resale and
may not be  transferred  or resold except as permitted  under the Securities Act
and such laws pursuant to registration or exemption  therefrom and (c) the Stock
is not  transferable,  and that there is no market into which the Acquiror could
sell the Stock.

     ss.  5.17  COMPLIANCE  WITH LAWS.  Each of the  Domestic  Businesses  is in
compliance with all applicable laws, statutes, ordinances,  regulations, orders,
judgments  and  decrees of any  government  or  political  subdivision  thereof,
whether federal,  state or local and whether domestic or foreign,  or any agency
or instrumentality thereof, or any court or arbitrator, and has not received any
notice that any  violation of the  foregoing  is being or may be alleged  except
where such  failure  to comply or  violation  would not have a Material  Adverse
Effect.

     ss. 5.18 EMPLOYMENT  RELATIONS.  (a) (i) Each of the Domestic Businesses is
in  compliance  in all  material  respects  with  all  federal,  state  or other
applicable  laws,  domestic or foreign,  respecting  employment  and  employment
practices,  terms and conditions of employment and wages and hours,  and has not
and is not engaged in any unfair labor  practice;  (ii) no unfair labor practice
complaint against any of the Domestic  Businesses is pending before the National
Labor  Relations  Board;  (iii) there is no labor strike,  dispute,  slowdown or
stoppage actually pending or threatened against or involving any of the Domestic
Businesses;  (iv) no representation  question exists respecting the employees of
the any of the Domestic  Businesses;  (v) no grievance which could reasonably be
expected to have a Material  Adverse Effect upon the Domestic

                                      -80-

Businesses or the conduct of their respective  businesses exists, no arbitration
proceeding  arising  out of or under  any  collective  bargaining  agreement  is
pending and no claim therefor has been asserted;  (vi) no collective  bargaining
agreement is currently being negotiated by any of the Domestic  Businesses;  and
(vii)  none of the  Domestic  Businesses  has  experienced  any  material  labor
difficulty during the last three years.

     (b) There  has not been any  material  adverse  change  in  relations  with
employees  of the Domestic  Businesses  as a result of any  announcement  of the
transactions contemplated by this Agreement.


     ss. 5.19 ACQUIROR  EMPLOYEE  BENEFIT PLANS.  (a) Set forth in SCHEDULE 5.19
attached hereto is an accurate and complete list of all domestic and foreign (i)
"EMPLOYEE  BENEFIT  PLANS,"  within the meaning of Section  3(3) of ERISA;  (ii)
bonus,  stock option,  stock  purchase,  restricted  stock,  stock  appreciation
rights,  incentive,  equity  participation,  profit-sharing,  savings,  pension,
retirement, deferred compensation,  medical, health, sickness, life, disability,
accident,  severance,  salary  continuation,  accrued  leave,  vacation,  fringe
benefit, sick pay, sick leave,  cafeteria or flexible spending,  dependent care,
supplemental retirement and unemployment benefit plans, programs,  arrangements,
commitments,  obligations,  practices, and/or funds (whether or not insured) and
"VOLUNTARY EMPLOYEES' BENEFICIARY ASSOCIATIONS" ("ACQUIROR VEBAS") under Section
501(c)(9) of the Code; and (iii) employment, consulting,  termination, severance
and change in control contracts or agreements;  in each case for active, retired
or former  employees  or  directors,  whether or not any such  plans,  programs,
arrangements, commitments, obligations, contracts, agreements, practices, and/or
funds  (referred to in (i), (ii) or (iii) above) are in writing or are otherwise
exempt from the provisions of ERISA; that are or have been established,

                                      -81-

<PAGE>

  maintained,  sponsored,  adopted,
followed,  participated  in or  contributed  to (or  with  respect  to  which an
obligation  to  contribute  has been  undertaken)  or with  respect to which any
obligation or liability (including,  for this purpose and for the purpose of all
of the representations in this Section 5.19, any indirect, contingent, potential
or  secondary  liability)  is borne by the  Acquiror  or any of its  current  or
previous  Subsidiaries  or affiliates  (including,  for this purpose and for the
purpose of all of the  representations in this Section 5.19, any predecessors to
the  Acquiror  or to any  such  Subsidiaries  or  affiliates  and all  employers
(whether or not  incorporated)  that would be treated together with the Acquiror
and/or any of its  Subsidiaries  as a single  employer (i) within the meaning of
Section 414 of the Code or (ii) as a result of the Acquiror,  any  Subsidiary or
affiliate  being or having been a general  partner of any such  employer)  since
September 2, 1974 ("ACQUIROR EMPLOYEE BENEFIT PLANS");  and such list identifies
as such all  Acquiror  Employee  Benefit  Plans that are:  (A)  "SINGLE-EMPLOYER
PLANS" (within the meaning of Section  4001(a)(15) of ERISA) covered by Title IV
of ERISA ("ACQUIROR  SINGLE-EMPLOYER  PLANS"); (B) "MULTIEMPLOYER PLANS" (within
the meaning of Section  4001(a)(3) of ERISA) ("ACQUIROR  MULTIEMPLOYER  Plans");
(C)  "PENSION  PLANS"  (within  the  meaning of Section  3(2) of ERISA) that are
intended to be qualified  under  Section  401(a) of the Code other than Acquiror
Single-Employer  Plans and Acquiror  Multiemployer  Plans (all Acquiror Employee
Benefit Plans identified in (A), (B), and (C) above collectively  referred to as
"ACQUIROR QUALIFIED PLANS");  (D) "PENSION PLANS" (within the meaning of Section
3(2) of ERISA)  or  deferred  compensation  plans or  arrangements  that are not
intended  to  be  qualified  under  Section  401(a)  of  the  Code,   separately
identifying  such  plans and  arrangements  with  respect  to which  assets  are
allocated  to or held in a "RABBI  TRUST" or similar  funding  vehicle  and such
plans and  arrangements  with  

                                      -82-

<PAGE>

respect to which  assets  are not so  allocated  or held;  (E)  "WELFARE  PLANS"
(within  the  meaning  of Section  3(1) of ERISA)  ("ACQUIROR  WELFARE  PLANS"),
separately  identifying  such  plans  that are  insured  and such plans that are
self-insured; and (F) Acquiror VEBAs.

     (b)(i) Except as set forth in SCHEDULE 5.19, each Acquiror Employee Benefit
Plan (and each related trust,  insurance contract or fund) complies in form with
the requirements of all applicable laws,  including,  without limitation,  ERISA
and the Code,  and has at all times been  maintained and operated in substantial
compliance with its terms and the  requirements of all such laws.  Except as set
forth on SCHEDULE  5.19,  all filings  required by ERISA and the Code as to each
Acquiror Employee Benefit Plan have been timely filed, and all reports,  notices
and disclosures to participants and  beneficiaries  under each Acquiror Employee
Benefit  Plan which is not an  Acquiror  Multiemployer  Plan  required by either
ERISA or the Code have been timely and  appropriately  distributed  or otherwise
provided.

     (ii)  Except  in  connection  with the  transactions  contemplated  by this
Agreement,  (and  as  set  forth  on  SCHEDULE  5.19)  no  complete  or  partial
termination of any Acquiror Employee Benefit Plan has occurred or is expected to
occur. No proceedings  have been instituted to terminate or appoint a trustee to
administer any Acquiror Single-Employer Plan or Acquiror Multiemployer Plan, and
no event has occurred or circumstance  exists that may constitute  grounds under
Section 4042 of ERISA for the  termination  of, or  appointment  of a trustee to
administer any such plan.

     (iii)  Except as  required  to  maintain  the  tax-qualified  status of any
Acquiror  Qualified Plan under Section 401(a) of the Code, or in connection with
the transactions contemplated by this Agreement, neither the Acquiror nor any of
its Subsidiaries has any express or implied

                                      -83-

<PAGE>

commitment,  obligation, intention or understanding,  whether formal or informal
and whether legally binding or not, to create, modify, amend, terminate or adopt
any  Acquiror  Employee  Benefit  Plan.  Except  as  required  to  maintain  the
tax-qualified  status of any Acquiror Qualified Plan under Section 401(a) of the
Code,  no condition or  circumstance  exists that would prevent the amendment or
termination  of any Acquiror  Employee  Benefit  Plan,  and the Acquiror and its
Subsidiaries  may  terminate or cease  contributions  to any  Acquiror  Employee
Benefit Plan without incurring any material liability.

     (iv) To the  Knowledge  of the  Acquiror,  no  event  has  occurred  and no
condition or circumstance  exists that could reasonably be expected to result in
a material  increase in the  benefits  under or the expense of  maintaining  any
Acquiror  Employee  Benefit Plan from the level of benefits or expense  incurred
for the most recent fiscal year ended  thereof other than such  increases as may
be the result of salary increases or workforce changes occurring in the ordinary
course of business.

     (v) No Acquiror Employee Benefit Plan is a "MULTIPLE  EMPLOYER PLAN" within
the meaning of the Code or ERISA.

     (c)(i) No Acquiror Employee Benefit Plan (excluding Acquiror  Multiemployer
Plans)  subject to Section  412 of the Code or Section  302 of ERISA and, to the
Knowledge of the  Acquiror,  no Acquiror  Multiemployer  Plan,  has incurred any
accumulated  funding deficiency within the meaning of Section 412 or 418B of the
Code or Section  302 of ERISA,  respectively,  or has  applied for or obtained a
waiver of any minimum  funding  standard  or an  extension  of any  amortization
period,  under  Section 412 of the Code or Section  303 or 304 of ERISA,  and no
such  waiver  or  extension  is  contemplated,  and no  event  has  occurred  or
circumstance  exists that 

                                      -84-

<PAGE>

may  result  in an  accumulated  funding  deficiency  as of the  last day of the
current  plan  year of any such  Acquiror  Employee  Benefit  Plan.  Except  for
payments  of  premiums  to  the  PBGC,  neither  the  Acquiror  nor  any  of its
Subsidiaries  has incurred  any  liability  to the PBGC in  connection  with any
Acquiror Employee Benefit Plan covering any active,  retired or former employees
or  directors  of the Acquiror or any of its  Subsidiaries,  including,  without
limitation,  any liability under Section 4069 or 4212(c) of ERISA or any penalty
imposed  under  Section 4071 of ERISA,  or ceased  operations at any facility or
withdrawn from any such Acquiror  Employee  Benefit Plan in a manner which could
subject it to liability  under Section 4062,  4063 or 4064 of ERISA, or knows of
any facts or circumstances that could reasonably be expected to give rise to any
liability of the Acquiror or any of its  Subsidiaries to the PBGC under Title IV
of ERISA that could reasonably be anticipated to result in any claims being made
against the Company by the PBGC. The Acquiror and its Subsidiaries have paid all
amounts due to the PBGC pursuant to Section 4007 of ERISA.

     (ii)  Neither the  Acquiror  nor any of its  Subsidiaries  has incurred any
withdrawal   liability   (including  any  contingent  or  secondary   withdrawal
liability)  within the meaning of Section  4201 or 4204 of ERISA to any Acquiror
Multiemployer  Plan,  and to the Knowledge of the Acquiror no event has occurred
and no condition or circumstance  has existed,  that presents a material risk of
the   occurrence  of  any  withdrawal   from  or  the  partition,   termination,
reorganization or insolvency of any such Acquiror Multiemployer Plan which could
reasonably  be expected to result in any liability of the Acquiror or any of its
Subsidiaries.  Neither the  Acquiror  nor any of its  Subsidiaries  has received
notice from any Acquiror  Multiemployer  Plan that it is in reorganization or is
insolvent, that increased contributions may be required to avoid a reduction

                                      -85-

<PAGE>

in plan benefits or the  imposition of any excise tax, or that such plan intends
to terminate or has terminated.

     (iii)  Neither  the  Acquiror  nor any of its  Subsidiaries  maintains  any
Acquiror Welfare Plan which is a "GROUP HEALTH PLAN" (as such term is defined in
Section  607(1) of ERISA or  Section  5000(b)(1)  of the Code) that has not been
administered  and operated in all  respects in  compliance  with the  applicable
requirements  of COBRA and any  applicable  similar  state law and  neither  the
Acquiror  nor  any of its  Subsidiaries  is or may be  subject  to any  material
liability,  including,  without  limitation,  additional  contributions,  fines,
taxes,  penalties or loss of tax deduction,  as a result of such  administration
and operation.

     (iv) Except as set forth on SCHEDULE  5.19,  no Acquiror  Employee  Benefit
Plan (whether qualified or nonqualified  within the meaning of Section 401(a) of
the Code) provides for  post-employment or retiree welfare benefits  (including,
without limitation, health and/or life insurance benefits but excluding any such
benefits  provided to comply with COBRA or any  applicable  state law  requiring
continuation  of welfare  benefits),  and  neither the  Acquiror  nor any of its
Subsidiaries  is obligated to provide any such benefits to any retired or former
employees or active employees following any such employee's  retirement or other
termination of service.

     (v) No Acquiror  Welfare Plan has provided any  "DISQUALIFIED  BENEFIT" (as
such term is defined in  Section  4976(b) of the Code) with  respect to which an
excise tax could reasonably be expected to be imposed.

     (vi) Except as set forth on SCHEDULE 5.19,  neither the Acquiror nor any of
its Subsidiaries has any unfunded  liabilities pursuant to any Acquiror Employee
Benefit Plan described in Clause (D) of Subsection (a), above.

                                      -86-

<PAGE>

     (vii)  Neither the  Acquiror nor any of its  Subsidiaries  has incurred any
liability to the IRS, with respect to any Acquiror  Employee  Benefit Plan which
liability has not been satisfied,  including,  without limitation, any liability
imposed under Chapter 43 of the Code, and, to the Knowledge of the Acquiror,  no
event has  occurred  and no  condition  or  circumstance  has existed that could
reasonably be expected to give rise to any such liability.

     (viii) No asset of the  Acquiror or any of its  Subsidiaries  is subject to
any lien  arising  under ERISA or the Code on account of any  Acquiror  Employee
Benefit  Plan,  and no event has occurred and no condition or  circumstance  has
existed  that could give rise to any such lien.  Neither the Acquiror nor any of
its  Subsidiaries has been required to provide any security under Section 307 of
ERISA or Section 401(a)(29) or 412(f) of the Code, and no event has occurred and
no condition or  circumstance  has existed that could  reasonably be expected to
give rise to any such requirement to provide any such security.

     (ix)  There  are  no  actions,  suits,   proceedings,   hearings,   audits,
investigations or claims pending, or, to the Knowledge the Acquiror, threatened,
anticipated  or expected to be asserted  with respect to any  Acquiror  Employee
Benefit Plan, or any fiduciary or sponsor of any such plan,  with respect to its
duties  under such  plan,  or the assets of any such plan  (other  than  routine
claims for benefits and appeals of denied routine claims arising in the ordinary
course).   There  is  no  dispute   pending  between  the  Acquiror  and/or  its
Subsidiaries  and  any  Acquiror   Multiemployer   Plan  concerning  payment  of
contributions  or withdrawal  liability  payments.  No civil or criminal  action
brought  pursuant to the  provisions  of Title I, Subtitle B, Part 5 of ERISA is
pending,  threatened,  anticipated,  or  expected  to be  asserted  against  the
Acquiror or any of its  Subsidiaries  or any fiduciary of any Acquiror  Employee
Benefit Plan, in any case with respect

                                      -87-

<PAGE>

to any Acquiror  Employee Benefit Plan. No Acquiror Employee Benefit Plan or any
fiduciary  thereof  has  been  the  direct  or  indirect  subject  of an  audit,
investigation or examination by any governmental or quasi-governmental entity or
agency.

     (d)(i) Full payment has been timely made of all amounts  which the Acquiror
or any of its  Subsidiaries  is  required,  under  applicable  law or under  any
Acquiror  Employee  Benefit  Plan  or any  agreement  relating  to any  Acquiror
Employee  Benefit  Plan to which the  Acquiror or any of its  Subsidiaries  is a
party, to have paid, including all contributions and premiums thereunder,  as of
the last day of the most recent  fiscal year of such Acquiror  Employee  Benefit
Plan ended prior to the date hereof.  All  contributions,  premiums and payments
paid or accrued  with respect to any  Acquiror  Employee  Benefit Plan have been
fully  deducted for income tax purposes (to the extent  deductible)  and no such
deduction has been challenged or disallowed by any governmental  entity, and, to
the  Knowledge  of the  Acquiror,  no event has  occurred  and no  condition  or
circumstance  has existed that could  reasonably be expected to give rise to any
such challenge or  disallowance.  No amount,  or any asset,  with respect to any
Acquiror Employee Benefit Plan is or may be subject to tax as unrelated business
taxable  income  under the Code.  The Acquiror  and its  Subsidiaries  have made
adequate  provisions in their financial  records and  statements,  in accordance
with  GAAP for all  obligations  and  liabilities  under all  Acquiror  Employee
Benefit  Plans that have accrued but have not been paid because they are not yet
due under the terms of any Acquiror Employee Benefit Plan or related agreements.

     (ii) Benefits under all Acquiror  Employee Benefit Plans are as represented
and  subsequent  to the date as of which  documents  have been  provided no such
benefits have been increased and, except as set forth on SCHEDULE 5.19,  neither
the Acquiror nor any  Subsidiary  of the

                                      -88-

<PAGE>

Acquiror has entered into,  adopted,  created or amended  (except as required to
maintain the tax-qualified  status of any Acquiror  Qualified Plan under Section
401(a)  of the  Code or as  otherwise  required  by law) any  Acquiror  Employee
Benefit Plan.

     (iii) From and after the  Closing  Date,  if and to the extent the  Company
and/or any of its  Subsidiaries  and/or  affiliates  assumes or  succeeds to any
obligation  under any Acquiror  Employee  Benefit Plan, the Company and any such
Subsidiaries  and  affiliates  will  receive  for  purposes of  satisfying  such
respective  obligations  the full  benefit of any  funds,  trusts,  accruals  or
reserves in connection with any such Acquiror Employee Benefit Plan.

     (e)(i)  As of  the  date  of  this  Agreement,  the  current  value  of the
accumulated  benefit  obligations  (whether  or not  vested  and  based  upon an
acceptable  funding  method under ERISA and the Code and  actuarial  assumptions
which are individually and in the aggregate reasonable in all respects and which
have been  furnished  to and relied  upon by the  Company)  under each  Acquiror
Single-Employer Plan did not exceed the current fair value of the assets of each
such Acquiror Single-Employer Plan allocable to such accrued benefits, and since
the Domestic  Businesses  Balance  Sheet Date,  there has been:  (A) no material
adverse change in the financial condition of any Acquiror  Single-Employer Plan,
(B)  no  change  in the  actuarial  assumptions  with  respect  to any  Acquiror
Single-Employer  Plan  and  (C) no  increase  in  benefits  under  any  Acquiror
Single-Employer Plan as a result of plan amendments,  written interpretations or
announcements  (whether written or not),  change in applicable law or otherwise,
which individually or in the aggregate, would result in the current value of any
Acquiror  Single-Employer Plan's accrued benefits exceeding the current value of
all such Acquiror Single-Employer Plan's assets.

                                      -89-

<PAGE>

     (ii) As of the date of this  Agreement,  using  actuarial  assumptions  and
computation  methods  consistent  with  Subpart 1 of  Subtitle  E of Title IV of
ERISA,  the aggregate  liabilities of the Acquiror and its  Subsidiaries  to all
Acquiror Multiemployer Plans in the event of a complete withdrawal therefrom, as
of the close of the most recent fiscal year of each Acquiror  Multiemployer Plan
ended  prior to the date  hereof,  based on union  information  would not exceed
$50,000.  To Knowledge of the Acquiror there has been no material  change in the
financial  condition of any Acquiror  Multiemployer  Plan, in any such actuarial
assumption  or  computation  method  or  in  the  benefits  under  any  Acquiror
Multiemployer  Plan as a result of collective  bargaining or otherwise since the
close of each such fiscal year which,  individually  or in the aggregate,  would
materially increase such liability.

     (f) Each Acquiror Qualified Plan has been qualified under Section 401(a) of
the Code during the period from its adoption to date and has been  determined to
be so  qualified  by the IRS.  Each trust  established  in  connection  with any
Acquiror  Qualified  Plan has been during the period  from its  creation to date
exempt from Federal  income  taxation  under Section  501(a) of the Code and has
been  determined  to be so exempt by the IRS.  Each  Acquiror VEBA has qualified
during  the  period  from  its  creation  to  date  as  a  voluntary  employees'
beneficiary  association  under  Section  501(c)(9)  of the  Code  and has  been
determined  by the IRS to be exempt from Federal  income tax.  Since the date of
each most recent  determination  referred to in this paragraph (f), no event has
occurred and no condition or circumstance has existed that resulted or is likely
to result in the revocation of any such determination,  approval or exemption or
that could  reasonably be expected to adversely  affect the qualified  status of
any such Acquiror  Employee  Benefit Plan or the exempt status of any such trust
or Acquiror VEBA.

                                      -90-

<PAGE>

     (g)(i) No  "REPORTABLE  EVENT" (as such term is defined in Section  4043 of
ERISA) has occurred or is expected to occur with respect to any Acquiror  Single
Employer Plan.

     (ii)  Neither the  Acquiror  nor any of its  Subsidiaries  nor any of their
respective directors,  officers, employees or, to the Knowledge of the Acquiror,
other persons who participate in the operation of any Acquiror  Employee Benefit
Plan or related trust or funding  vehicle,  has engaged in any transaction  with
respect  to any  Acquiror  Employee  Benefit  Plan  or  breached  any  fiduciary
responsibilities  or obligations  under Title I of ERISA or other applicable law
that could reasonably be expected to subject the Acquiror or its Subsidiaries to
a tax,  penalty  or  liability  under  ERISA  or the  Code  (including,  without
limitation, with respect to any transaction in violation of Section 406 of ERISA
or any "PROHIBITED TRANSACTION," within the meaning of Section 4975 of the Code)
or that would  otherwise  result in liability on the part of the Acquiror or its
Subsidiaries.

         (h) Except as set forth on SCHEDULE  5.19:  (i) The  execution  of this
Agreement and the consummation of the transactions  contemplated  hereby, do not
constitute a triggering event under any Acquiror Employee Benefit Plan,  policy,
arrangement,   statement,  commitment  or  agreement,  whether  or  not  legally
enforceable,  which  (either alone or upon the  occurrence of any  additional or
subsequent  event)  will  or  may  result  in  any  payment,  severance,  bonus,
retirement or job security or similar-type  benefit, or increase any benefits or
accelerate  the  payment or vesting of any  benefits  to any  employee or former
employee  or  director  of the  Acquiror  or any of its  Subsidiaries.  (ii)  No
Acquiror   Employee   Benefit  Plan  provides  for  the  payment  of  severance,
termination, change in control or similar-type payments or benefits.

                                      -91-

<PAGE>

     (i) The Acquiror delivered or caused to be delivered to the Company (or its
counsel)  true,  correct  and  complete  copies  of all  material  documents  in
connection  with  each  Acquiror  Employee  Benefit  Plan  (excluding   Acquiror
Multiemployer Plans unless specifically provided for below), including,  without
limitation  (where  applicable):  (i) all Acquiror  Employee Benefit Plans as in
effect  on  the  date  hereof,   together  with  all   amendments   and  written
interpretations  with respect  thereto,  including,  in the case of any Acquiror
Employee Benefit Plan not set forth in writing, a written  description  thereof;
(ii) all current summary plan descriptions, summaries of material modifications,
material  communications  and other  summaries  and  descriptions  furnished  to
participants and beneficiaries; (iii) all current trust agreements, declarations
of trust and other documents  establishing  other funding  arrangements (and all
amendments thereto and the latest financial statements  thereof);  (iv) the most
recent IRS determination letter obtained, and any outstanding request for such a
determination,  with respect to each Acquiror  Employee Benefit Plan intended to
be qualified  under Section 401(a) of the Code or exempt under Section 501(a) of
the Code and each Acquiror VEBA;  (v) the annual report on IRS Form  5500-series
for  each of the last  three  years  for each  Acquiror  Employee  Benefit  Plan
required  to file such form,  including  all  schedules  thereto;  (vi) the most
recent PBGC Form 1 for each Acquiror Employee Benefit Plan required to file such
form; (vii) the most recent IRS Form 990 for each Acquiror VEBA; (viii) the most
recent reports submitted by third party  administrators,  actuaries,  investment
managers,  consultants  or other  independent  contractors  with  respect to any
Acquiror Employee Benefit Plan, including, without limitation, the most recently
prepared  actuarial  valuation  report for each Acquiror  Employee  Benefit Plan
covered  by Title IV of  ERISA;  (ix) a letter  or notice  from the  trustee  or
administrator of each Acquiror Multiemployer Plan setting forth the

                                      -92-

<PAGE>

estimated withdrawal liability which would be imposed on the Acquiror and/or its
Subsidiaries in the event of a complete withdrawal from each such plan as of the
close of the most  recent  fiscal year of each such plan ended prior to the date
hereof; (x) the most recently prepared financial statements and related opinions
of independent  accountants;  (xi) all collective bargaining agreements pursuant
to which contributions are or have been made or obligations  incurred (including
for pension,  profit-sharing and/or welfare benefits) by the Acquiror and/or any
of its Subsidiaries;  (xii) the most recent  registration  statements filed with
respect to any Acquiror Employee Benefit Plan; (xiii) standard  notifications to
employees of their rights under COBRA; and (xiv) all legally binding  contracts,
agreements,  obligations,  promises or undertakings (whether written or oral and
whether  express or implied)  relating to each Acquiror  Employee  Benefit Plan,
including, without limitation, service provider agreements, insurance contracts,
annuity contracts,  investment management agreements,  subscription  agreements,
participation agreements, and recordkeeping agreements.

     ss. 5.20  INTERESTS IN CUSTOMERS,  SUPPLIERS,  ETC.  Except as set forth on
Schedule 5.20 attached hereto, no officer or director of the Domestic Businesses
possesses,  directly or indirectly, any ownership interest in, or is a director,
officer or  employee  of,  any Person  which is a  supplier,  customer,  lessor,
lessee, licensor, developer,  competitor or potential competitor of the Domestic
Businesses. Ownership of securities of a company whose securities are registered
under the Exchange Act of 2% or less of any class of such  securities  shall not
be deemed to be a financial interest for purposes of this Section 5.20.

ss. 5.21 ENVIRONMENTAL MATTERS
AND CLAIMS. (a) Except as set forth in SCHEDULE 5.21 (i) the Domestic Businesses
are in substantial compliance with all applicable Environmental Laws,

                                      -93-

<PAGE>

including,  without limitation,  laws,  regulations,  conventions and agreements
relating to (1)  Materials of  Environmental  Concern,  or (2) the  manufacture,
processing,  distribution,  use,  treatment,  storage,  disposal,  transport  or
handling of Materials of Environmental Concern except where the failure to be in
compliance could not reasonably be expected to have a Material Adverse Effect on
the Domestic Businesses;  (ii) the Domestic  Businesses,  have all Environmental
Approvals and are in compliance  with all  Environmental  Approvals  required to
operate their business as then being conducted  except where the failure to have
all such  Environmental  Approvals or be in compliance  could not  reasonably be
expected to have a Material Adverse Effect on the Domestic Businesses;  (iii) To
the Knowledge of the Acquiror none of the Domestic  Businesses  has received any
notice of any  Environmental  Claim (other than  Environmental  Claims that have
been  fully and  finally  adjudicated  or  otherwise  determined  and all fines,
penalties and other costs, if any, payable by any of the Domestic  Businesses in
respect  thereof have been paid in full or which are fully  covered by insurance
(including permitted  deductibles));  and (iv) to the Knowledge of the Acquiror,
there  are no  circumstances  that may  prevent  or  interfere  with  such  full
compliance in the future;  and (b) except as heretofore  disclosed in writing to
the Company there is no Environmental Claim pending or threatened against any of
the Domestic  Businesses and there are no past or present  actions,  activities,
circumstances,  conditions, events or incidents,  including, without limitation,
the release,  emission,  discharge or disposal of any Materials of Environmental
Concern,  that to the  Knowledge  of the  Acquiror,  could form the basis of any
Environmental  Claim against such persons the adverse  disposition  of which may
result in a Material Adverse Effect on the Domestic Businesses.

                                      -94-

<PAGE>

     ss.  5.22  COMPENSATION  OF  EMPLOYEES.  The  Acquiror  has,  prior  to the
execution of this  Agreement,  delivered to the Company an accurate and complete
list for  calendar  year 1996  showing the names of all persons  employed by the
Domestic  Businesses  or  who  are  expected  to be  employed  by  the  Domestic
Businesses  following  the Spin-Off who received  more than $50,000 in 1996 cash
compensation (including,  without limitation,  salary,  commission and bonus) or
who  are  reasonably  expected  to  receive  more  than  $50,000  in  1997  cash
compensation (including, without limitation, salary, commission and bonus). Such
list sets forth the present  salary or hourly  wage,  total in 1996 and expected
1997  and  1998  cash  compensation  (including,   without  limitation,  salary,
commission and bonus) and fringe benefits, of each such person.

     ss. 5.23 CONDUCT OF  BUSINESS.  Except as  expressly  contemplated  by this
Agreement and the schedules hereto or the Distribution Agreement, since December
31,  1996,  the  Acquiror  has  taken no action  with  respect  to its  Domestic
Businesses and has caused its Domestic  Businesses not to take any action which,
if taken  subsequent to the  execution of this  Agreement and on or prior to the
Closing Dates, would constitute a breach of the Acquiror's  agreements set forth
in Section 6.2.

     ss. 5.24 NO CHANGES SINCE DOMESTIC BUSINESSES BALANCE SHEET DATE. Since the
Domestic Businesses Balance Sheet Date, except as permitted by the terms of this
Agreement or the Distribution Agreement and except as set forth in SCHEDULE 5.24
attached  hereto,  neither the Acquiror nor any U.S.  Subsidiary has without the
written  consent of the Company (a) incurred any  liability or obligation of any
nature (whether accrued,  absolute,  contingent or otherwise with respect to its
Domestic Businesses),  except in the ordinary course of business consistent with
past practice,  (b) permitted any of its assets used in the Domestic  Businesses
to be subjected to any

                                      -95-

<PAGE>

mortgage, pledge, lien, security interest, encumbrance, restriction or charge of
any kind (other than Permitted Encumbrances), (c) sold, transferred or otherwise
disposed of any assets used in the  Domestic  Businesses  except in the ordinary
course of business consistent with past practice, or made any acquisition of all
or any part of the properties, capital stock or business of any other Person for
the Domestic  Businesses,  (d) sold,  transferred  or otherwise  disposed of any
vessel used in the  Domestic  Businesses,  (e) made any capital  expenditure  or
commitment  therefor which in the aggregate  total more than $500,000 other than
the purchase by Petrolink of an  additional  workboat,  (f) declared or paid any
dividend  or made any  distribution  on any  shares of its  capital  stock,  (g)
redeemed,  purchased or otherwise  acquired any shares of its capital stock, (h)
granted or issued any option,  warrant or other right to purchase or acquire any
shares of its capital stock,  (i) made any bonus or profit sharing  distribution
or payment of any kind,  except in the  ordinary  course of business  consistent
with past practice,  (j) increased its indebtedness  for borrowed money,  except
current borrowings from banks in the ordinary course of business consistent with
past  practice,  or made any loan to any Person (other than accounts  receivable
arising in the ordinary course of business  consistent with past practice),  (k)
written off as uncollectible any notes or accounts receivable, except write-offs
in the ordinary course of business consistent with past practice,  none of which
individually  or in the  aggregate is material to the Domestic  Businesses,  (l)
granted  any  increase  in  the  rate  of  wages,  salaries,  bonuses  or  other
remuneration  of  any  employee,  except  in the  ordinary  course  of  business
consistent  with past practice,  (m)  cancelled,  waived or settled any material
claims or rights,  (n) made any change in any method,  principle  or practice of
accounting   or  auditing   except  for  changes  in   allocating   general  and
administrative  expenses and interest expense on all debt and deferred taxes and
the change from

                                      -96-

<PAGE>

accruing  dry-dock  expenses to pre-paying  them,  (o)  otherwise  conducted its
business  or  entered  into any  transaction,  except in the usual and  ordinary
manner and in the ordinary  course of business  consistent with past practice or
(p)  materially  amended or  terminated  any  material  contract or agreement or
entered into any material contract or agreement.

     To the  Knowledge  of the  Acquiror,  no fact  or  condition  exists  or is
threatened  which is expected to cause any change  described in the  immediately
preceding  paragraph and none of the Acquiror or any of the Domestic  Businesses
have agreed, whether or not in writing, to do any of the foregoing.

     ss. 5.25 NO  DEFAULTS.  None of the  Domestic  Businesses  is in default in
respect of the terms or conditions of any indebtedness.

     ss. 5.26  CONDITION OF ASSETS.  The assets and  properties  utilized in and
material to the conduct of the Domestic  Businesses (other than ships),  whether
owned or leased, are in the aggregate in good operating condition and repair and
are suitable for the purposes for which they are presently being used. All ships
which are owned, leased or operated by the Domestic Businesses are in class and,
other than the ROVER, are eligible to trade in U.S. waters.

     ss. 5.27  LIMITATION  OF  WARRANTIES.  In making its decision to enter into
this  Agreement and to consummate  the  transactions  contemplated  hereby,  the
Acquiror has not relied upon any representation,  warranty,  statement,  advice,
document, projection or other information of any type provided by the Company or
its directors,  officers, employees or agents (whether during the Acquiror's due
diligence   process  or   otherwise)   or  the   Shareholders   other  than  the
representations  and  warranties  of the  Company  and  Shareholders  (including
Schedules relating thereto) expressly set forth in this Agreement.  The Acquiror
acknowledges and agrees that, except for the

                                      -97-

<PAGE>

representations  and  warranties  of the  Company  expressly  set  forth in this
Agreement  (including the schedules relating  thereto),  neither the Company nor
any of its directors,  officers,  employees or agents,  nor the Shareholders has
made,  or is making,  any  representation  or warranty,  written or oral, to the
Acquiror  concerning the Company or the  Shareholders  or its or their business,
operations,  prospects, financial statements,  financial condition or results of
operations or any other matter whatsoever.

     ss. 5.28 SEC FILINGS.  Acquiror  has made  available to the Company and the
Shareholders'  Representative  correct  and  complete  copies of (i) its  Annual
Reports on Form 10-K for the years ended  December 31, 1994,  1995 and 1996,  as
filed with the SEC, (ii) its proxy statements relating to all of the meetings of
shareholders  (whether  annual or special) of Acquiror since January 1, 1994, as
filed with the SEC, and (iii) all other reports  filed  pursuant to the Exchange
Act (including  Quarterly  Reports on Form 10-Q and Current Reports on Form 8-K,
as  amended)  filed by  Acquiror  with the SEC  since  January  1,  1994 and all
registration  statements  filed by Acquiror  with the SEC since  January 1, 1995
(the reports and statements set forth in clauses (i), (ii) and (iii), above, are
referred to collectively  as the "ACQUIROR  SECURITIES  FILINGS").  The Acquiror
Securities  Filings  complied  as to  form in all  material  respects  with  the
requirements of the Exchange Act and the rules and regulations of the Commission
thereunder,  and  Acquiror  has  received no notice of  violation  with  respect
thereto  from the SEC.  As of the date  hereof  there  are no  claims,  actions,
proceedings  or  investigations  pending or, to the best  knowledge of Acquiror,
threatened  against  Acquiror or any of its  Subsidiaries,  or any properties or
rights of Acquiror or any of its Subsidiaries, before any court, administrative,
governmental or regulatory  authority or body which is or will be required to be
described  in any Acquiror  Securities  Filing

                                      -98-

<PAGE>

that is not so  described.  Since  January  1,  1994,  other  than the  Acquiror
Securities  Filings,  Acquiror has not been required to file any report or other
document with the SEC pursuant to the requirements of the Exchange Act which has
not been timely filed with the SEC. Any documents filed by Acquiror with the SEC
after the date hereof,  that would have constituted  Acquiror Securities Filings
if filed prior to the date hereof,  shall be provided to the  Company;  and each
such document, shall constitute Acquiror Securities Filings for purposes hereof.

     ss. 5.29 COPIES OF DOCUMENTS.  The Acquiror has caused to be made available
for  inspection  and  copying  by the  Company  and the  Shareholders  and their
advisers,  complete  and  correct  copies of all  documents  referred to in this
Article V or in any Schedule attached hereto.

ss. 5.30 DISCLOSURE.  The Acquiror does not have any Knowledge that
any current material  customer or supplier of the Domestic  Businesses intend to
cease doing business with the Domestic Businesses (whether or not as a result of
the  transactions  contemplated  by this  Agreement) or materially  decrease the
amount  of  business  that such  Person is  presently  doing  with the  Domestic
Businesses,  except that MARAD currently has a policy  restricting the number of
vessels that any one company can manage to 12. 

ss. 5.31  BROKER'S OR FINDER'S  FEES.
Other than Smith Barney, Inc., no agent, broker, person or firm acting on behalf
of the  Acquiror  is, or will be,  entitled  to any  commission  or  broker's or
finder's fees from any of the parties  hereto,  or from any Person  controlling,
controlled  by or  under  common  control  with  any of the  parties  hereto  in
connection with any of the transactions contemplated by this Agreement.

                                   ARTICLE VI

                                      -99-

<PAGE>

                            COVENANTS OF THE PARTIES
                            ------------------------

     ss.6.1 CONDUCT OF BUSINESS OF THE COMPANY.  During the period from the date
of this  Agreement  to the Second  Closing  Date,  the  Company  and each of its
Subsidiaries  shall conduct their respective  operations only according to their
ordinary  and usual  course of business  consistent  with past  practice and use
their  commercially  reasonable best efforts to preserve intact their respective
business  organizations,  keep  available  the  services of their  officers  and
employees and maintain  satisfactory  relationships and goodwill with licensors,
suppliers,  distributors,  customers,  landlords,  employees,  agents and others
having  business  relationships  with  them.   Notwithstanding  the  immediately
preceding  sentence,  prior to the Second  Closing Date,  except as may be first
approved in writing by the Acquiror or as is otherwise  permitted or required by
this Agreement,  the Company and each of its Subsidiaries shall (a) refrain from
amending or modifying  the Company's  and each of its  Subsidiaries'  respective
Articles of  Incorporation  and/or By-Laws (or equivalent  governing  documents)
except as provided in clause (g) below,  (b) refrain from increasing  beyond the
levels in effect on the date of this  Agreement the  compensation  payable or to
become  payable by the  Company  and each of its  Subsidiaries  to any  officer,
employee  or agent  being paid or who would be paid  $60,000 per year or more on
the Company Balance Sheet Date, except for increases which are determined by the
Company or its  Subsidiaries  at  year-end  to be in the best  interests  of the
Company and are made in the ordinary  course of business and are consistent with
past practice, (c) except for (i) year-end bonuses to employees,  other than the
executives  listed on SCHEDULE 6.1(C) hereto, in the ordinary course of business
consistent  with past practice of the Company and each of its  Subsidiaries  and
(ii) Bonus  Payments to those  Company's  executives  listed on SCHEDULE  6.1(C)
hereto, refrain from making

                                     -100-

<PAGE>

any bonus,  pension,  retirement or insurance  payment or arrangement to or with
any such  persons  except  those that may have  already  been  accrued (all such
permitted  Bonus Payments and bonus payments in respect of 1997 and that portion
of 1998 prior to the Second  Closing Date shall have been  declared  and, if not
paid, accrued and reflected as a reduction on the Company's  Preliminary Closing
Balance Sheet), (d) refrain from entering into any contract or commitment except
contracts in the ordinary course of business consistent with past practice,  (e)
refrain  from making any change  affecting  any bank,  safe  deposit or power of
attorney  arrangements of the Company or any such Subsidiary  without  notifying
Acquiror of any such  change,  (f) refrain from taking any of the actions of the
type referred to in Section 3.24 (except as expressly  permitted  thereby),  (g)
refrain  from  issuing  or  selling  any  shares of  capital  stock or any other
securities or issuing any securities  convertible  into, or option,  warrants or
rights to purchase or subscribe to, or entering into any arrangement or contract
with  respect to the issue and sale of, any shares of its  capital  stock or any
other securities,  or making any other changes in its capital structure,  except
that the Company may amend its Certificate of Incorporation to authorize classes
of common stock having the rights set forth in the proposed form of amendment to
the Company's Certificate of Incorporation  attached hereto as Exhibit J and may
issue pro rata to each of the Shareholders,  Class B Common Stock upon the terms
and having the rights set forth in such proposed form of amendment,  (h) refrain
from declaring,  setting aside,  making or paying any distribution in redemption
of stock or a dividend,  payable in cash,  stock,  property or  otherwise,  with
respect to any class of the capital stock of the Company,  except Class B Common
Stock and for a distribution in cash not in excess of $2,500,000  (less any cash
fees paid by the Company to First  Stanford and DNB  pursuant to the  Consulting
Agreement)  plus any  amounts  distributed

                                     -101-

<PAGE>

pursuant  to Section  2.2(c)(iii)  in  redemption  of Common  Stock  immediately
preceding  the  Acquisition  and, in the event that the Class B Common Stock has
not been  distributed,  except for the possible  distribution of the stock of or
interests  in or assets of Marine  LNG I, Inc.  and/or  Marine LNG II,  Inc.  or
proceeds  from the sale of such stock or assets and (i) refrain from agreeing in
writing to do any of the  foregoing.  During  the  period  from the date of this
Agreement to the Second  Closing Date, the Company shall confer on a regular and
frequent basis with one or more  designated  representatives  of the Acquiror to
report material  operational matters and to report the general status of ongoing
operations.  The Company and each of its Subsidiaries  shall notify the Acquiror
of any unexpected emergency or other change in the normal course of its business
or in the  operation  of its  properties  and  of any  governmental  complaints,
investigations  or hearings (or  communications  indicating that the same may be
contemplated),   adjudicatory   proceedings,   budget  meetings  or  submissions
involving any material property of the Company and each of its Subsidiaries, and
keep the Acquiror fully  informed of such events and permit its  representatives
prompt access to all materials prepared in connection therewith.

     ss. 6.2 CONDUCT OF BUSINESS OF ACQUIROR.  Except as may be necessary in the
reasonable judgment of the Acquiror to carry out the Spin-Off, during the period
from the date of this  Agreement to the Second  Closing  Date,  the Acquiror and
each of its U.S.  Subsidiaries  shall conduct  their  Domestic  Businesses  only
according to their  ordinary and usual course of business  consistent  with past
practice and use their  commercially  reasonable best efforts to preserve intact
their  Domestic  Business  organizations,  keep  available the services of their
officers and employees and maintain satisfactory relationships and goodwill with
licensors, suppliers, distributors,  customers, landlords, employees, agents and
others having business relationships with them in

                                     -102-

<PAGE>

respect of their Domestic Businesses.  Notwithstanding the immediately preceding
sentence, prior to and including the Second Closing Date, except as may be first
approved  in  writing by the  Shareholders'  Representative  or as is  otherwise
permitted  or required by this  Agreement  and except as may be necessary in the
reasonable judgment of the Acquiror to carry out the Spin-Off,  the Acquiror and
each U.S. Subsidiary shall (a) refrain from amending or modifying the Acquiror's
and each of its U.S.  Subsidiaries  Articles of Incorporation and/or By-Laws (or
equivalent  governing documents) from their respective forms on the date of this
Agreement,  (b)  maintain at all times a  sufficient  amount of  authorized  but
unissued common stock to consummate the transactions  contemplated  hereby,  (c)
refrain from issuing or selling any shares of the  Acquiror's  Preferred  Stock,
par value  $1.00 per share,  or issuing  any  securities  convertible  into,  or
option,  warrants or rights to purchase or  subscribe  to, or entering  into any
arrangement or contract with respect to the issue and sale of, any shares of the
Acquiror's  Preferred  Stock,  (d) refrain from increasing  beyond the levels in
effect  on the date of this  Agreement  the  compensation  payable  or to become
payable by the Acquiror or any of its U.S. Subsidiaries to any officer, employee
or agent of the Domestic  Businesses being paid or who would be paid $60,000 per
year or more on the Domestic Businesses Balance Sheet Date, except for increases
which are determined by the Acquiror or its U.S.  Subsidiaries at year-end to be
in the best  interests of the  Acquiror  and are made in the ordinary  course of
business and are consistent  with past practice,  (e) refrain from entering into
any contract or commitment, including charters in respect of COURIER, PATRIOT or
ROVER in excess of three  months,  charters out in excess three months of any of
OMI  Petrolink  Corp.'s  vessels and  charters in of  additional  vessels by OMI
Petrolink  Corp.  in excess of three  months,  except  contracts in the ordinary
course of

                                     -103-

<PAGE>

business  consistent  with past practice,  (f) cause the Domestic  Businesses to
refrain  from taking any of the actions of the type  referred to in Section 5.24
(except as expressly permitted thereby), (g) refrain from agreeing in writing to
do any of the foregoing.

     During the period  from the date of this  Agreement  to the Second  Closing
Date,  Acquiror shall confer on a regular and frequent basis with the Company to
report operational  matters in respect of its domestic  operations and to report
the general status of ongoing domestic operations. The Acquiror shall notify the
Company of any unexpected  emergency or other change in the normal course of the
business of the Domestic  Businesses or in the operation of their properties and
of any governmental  complaints,  investigations or hearings (or  communications
indicating that the same may be contemplated),  adjudicatory proceedings, budget
meetings  or  submissions  involving  any  material  property  of  the  Domestic
Businesses,  and keep the Company  fully  informed of such events and permit its
representatives prompt access to all materials prepared in connection therewith.
Acquiror  shall also  provide the Company  with  advance  written  notice of any
proposed  changes  to  the  Distribution   Agreement,   Corporate  Restructuring
Transactions (as defined in the Distribution  Agreement) or Ancillary Agreements
(as defined in the Distribution  Agreement) whether or not such proposed changes
require the consent of the Shareholders' Representative.

     ss. 6.3 ACCESS TO  INFORMATION;  CONFIDENTIALITY.  (a)  Between the date of
this  Agreement  and the Second  Closing  Date,  and except as may  otherwise be
required by  applicable  law,  each of the Company and the  Acquiror  shall (and
shall cause its Subsidiaries and officers,  directors,  employees,  auditors and
agents to) afford the  officers,  employees  and agents of the other  party (the
"RESPECTIVE  REPRESENTATIVES")  reasonable access at all reasonable times to its
officers,

                                     -104-

<PAGE>

employees,  agents, properties,  offices, plants and other facilities, books and
records,  and shall furnish such Respective  Representatives with all financial,
operating  and other data and  information  as may be  reasonably  requested for
purposes of consummating the transactions  contemplated  hereby and conducting a
due diligence review to ensure that the Corporate Restructuring Transactions are
consummated on the terms and with the effect  contemplated  by the  Distribution
Agreement, in each case to the extent that such access and disclosure would not:

          (i) violate the terms of any agreement to which the  disclosing  party
     or any of its Affiliates is bound or any applicable law or regulation; or

          (ii) impair any  attorney-client  privilege of the  disclosing  party.
     Notwithstanding  the  foregoing,  the Acquiror  shall not be required  (and
     shall not be required to cause its  Subsidiaries  and officers,  directors,
     employees, auditors and agents) to provide the access, data and information
     described in the preceding  sentence with respect to the Foreign Businesses
     unless the Company has a reasonable interest in obtaining such access, data
     or information in connection with the Acquisition or the Spin-Off.

     (b)  All  information  obtained  by the  Company,  the  Acquiror  or  their
Respective  Representatives  pursuant  to Section  6.3(a)  hereof  shall be kept
confidential by such Persons in accordance with the confidentiality  agreements,
dated  March 3, 1997 and  February  7, 1997,  executed  by the  Company  and the
Acquiror attached as Exhibit K.

     (c) The  Foreign  Businesses  (and their  respective  direct  and  indirect
Subsidiaries and Affiliates)  shall be deemed third party  beneficiaries of this
Section 6.3 and all other provisions of this Agreement  necessary or appropriate
for purposes of enforcing this Section 6.3.

                                     -105-

<PAGE>

     ss. 6.4 DIRECTORS' AND OFFICERS'  INDEMNIFICATION AND INSURANCE.  (a) For a
period of five years or the  applicable  statute of  limitations,  whichever  is
longer,  after the Second  Closing Date,  the Acquiror shall not cause or permit
any amendment, repeal or other modification of the provisions of

          (i) Article VII, Section 7.4 of the by-laws of the Acquiror, or

          (ii) Article  Thirteenth of the  certificate of  incorporation  of the
     Acquiror,  in either  case in any manner  that would  adversely  affect the
     rights  thereunder  of  individuals  who at any time  prior  to the  Second
     Closing Date were  directors,  officers or employees of the Acquiror or any
     of  its  Subsidiaries  or  Affiliates  or who  are  otherwise  entitled  to
     indemnification  pursuant  to such  provisions  in  respect  of  actions or
     omissions  occurring  at or prior to the Second  Closing  Date  (including,
     without  limitation,  the  transactions  contemplated  by this  Agreement),
     unless such modification is required by the DGCL or applicable federal law,
     and then only to the extent of such applicable  requirements of the DGCL or
     federal law.

     (b) From and after the Second Closing Date,  the Acquiror shall  indemnify,
defend and hold harmless each Person who is now or has been at any time prior to
the First  Closing Date an officer,  director or employee of the Acquiror or any
of its Subsidiaries  (collectively,  the "ACQUIROR INDEMNIFIED PARTIES") against
all losses, expenses,  claims, damages,  liabilities or amounts that are paid in
settlement of, with the approval of the indemnifying party (which approval shall
not  unreasonably  be  withheld),  or  otherwise in  connection  with any claim,
action, suit,  proceeding or investigation (a "ACQUIROR CLAIM"),  based in whole
or in part on the  fact  that  such  Person  is or was a  director,  officer  or
employee of the Acquiror or any of its Subsidiaries

                                     -106-

<PAGE>

and  arising  out of actions or  omissions  occurring  at or prior to the Second
Closing Date (including,  without limitation,  the transactions  contemplated by
this  Agreement),  whether or not such Claim was asserted  prior to, at or after
the Second Closing Date, in each case to the fullest extent  permitted under the
DGCL (and shall pay  expenses  in advance of the final  disposition  of any such
Claim to each Acquiror  Indemnified  Party to the fullest extent permitted under
the DGCL, upon receipt from the Acquiror  Indemnified Party to whom expenses are
advanced of any undertaking to repay such advances required by Section 145(e) of
the DGCL).

     (c) Without  limiting the  generality  of the  foregoing,  in the event any
Claim is brought  against any  Acquiror  Indemnified  Party (for events  arising
before the Second Closing Date):

          (i) the Acquiror  Indemnified Party may retain counsel satisfactory to
     him with the consent of the Acquiror which consent may not be  unreasonably
     withheld or delayed;

          (ii) the Acquiror shall pay all  reasonable  fees and expenses of such
     counsel for the Acquiror  Indemnified Party promptly as statements therefor
     are received; and

          (iii) the Acquiror  will use all  reasonable  efforts to assist in the
     vigorous defense of any such matter.

     Any Acquiror Indemnified Party wishing to claim  indemnification under this
Section 6.4, upon learning of any such Claim, shall notify the Acquiror (but any
failure so to notify shall not relieve the Acquiror from any liability  which it
may have under this  Section 6.4,  except to the extent such failure  materially
prejudices  such party),  and shall  deliver to the  Acquiror,  any  undertaking
required by Section  145(e) of the DGCL. The Acquiror  Indemnified  Parties as a
group may retain only one law firm to  represent  them with respect to each such
Claim unless

                                     -107-

<PAGE>

there is, under  applicable  standards of professional  conduct,  a
conflict  on any  significant  issue  between the  positions  of any two or more
Acquiror Indemnified Parties.

     (d) (i) LEGAL  DEFENSE OF ACQUIROR  CLAIMS.  If an  Acquiror  Claim is made
against an  Acquiror  Indemnified  Party,  the  Acquiror  shall be  entitled  to
participate in the defense thereof and, if it so chooses,  to assume the defense
thereof with counsel selected by the Acquiror, which counsel shall be reasonably
satisfactory to the Acquiror  Indemnified Party. Should the Acquiror so elect to
assume  the  defense  of an  Acquiror  Claim  the  Acquiror  shall  pursuant  to
subparagraph (c)(ii) continue to be liable to the Acquiror Indemnified Party for
legal or other expenses  subsequently incurred by the Acquiror Indemnified Party
in connection with the defense  thereof.  If the Acquiror  assumes such defense,
the  Acquiror  Indemnified  Party  shall  have the right to  participate  in the
defense thereof and to employ counsel, at the Acquiror's expense,  separate from
the counsel  employed by the  Acquiror,  it being  understood  that the Acquiror
shall control such  defense.  If the Acquiror so elects to assume the defense of
any Acquiror,  all of the Acquiror  Indemnified Parties shall cooperate with the
Acquiror in the defense or prosecution thereof. Notwithstanding the foregoing:

          A. the  Acquiror  shall not be  entitled  to assume the defense of any
     Acquiror Indemnified Party (and shall be liable to the Acquiror Indemnified
     Party for the  reasonable  fees and  expenses  of counsel  incurred  by the
     Acquiror  Indemnified  Party  in  defending  such  Acquiror  Claim)  if the
     Acquiror  Claim seeks an order,  injunction  or other  equitable  relief or
     relief for other than money damages against the Acquiror  Indemnified Party
     which  the  Acquiror   Indemnified  Party  reasonably   determines,   after
     conferring with its counsel, cannot be separated from any related claim for
     money damages; PROVIDED,

                                     -108-


<PAGE>

     HOWEVER,  that if such  equitable  relief or other  relief  portion  of the
     Acquiror  Claim  can be so  separated  from  that for  money  damages,  the
     Acquiror shall be entitled to assume the defense of the portion relating to
     money damages;

          B. The  Acquiror  shall not be  entitled  to assume the defense of any
     Acquiror Claim (and shall be liable to the Acquiror  Indemnified  Party for
     the  reasonable  fees and  expenses  of counsel  incurred  by the  Acquiror
     Indemnified  Party in defending  such  Acquiror  Claim) if, in the Acquiror
     Indemnified  Party's  reasonable  judgment,  a conflict of interest between
     such Acquiror  Indemnified Party and the Acquiror exists in respect of such
     Acquiror Claim; and

          C. if at any time after  assuming the defense of an Acquiror Claim the
     Acquiror  shall fail to  prosecute  or  withdraw  from the  defense of such
     Acquiror Claim, the Acquiror  Indemnified Party shall be entitled to resume
     the  defense  thereof  and the  Acquiror  shall be liable  to the  Acquiror
     Indemnified  Party for the reasonable fees and expenses of counsel incurred
     by the Acquiror Indemnified Party in such defense.
        
     (ii) SETTLEMENT OF ACQUIROR CLAIMS.  Except as otherwise  provided below in
this Section 6.4(d)(ii), if the Acquiror has assumed the defense of any Acquiror
Claim, then

          A. in no event will the Acquiror Indemnified Party admit any liability
     with respect to, or settle,  compromise  or discharge,  any Acquiror  Claim
     without the Acquiror's prior written consent;  PROVIDED,  HOWEVER, that the
     Acquiror  Indemnified  Party shall have the right to settle,  compromise or
     discharge  such  Acquiror  Claim without the consent of the Acquiror if the
     Acquiror  Indemnified Party releases the Acquiror from its  indemnification
     obligation hereunder with respect to such Acquiror

                                     -109-

<PAGE>

     Claim and such  settlement,  compromise  or discharge  would not  otherwise
     adversely affect the Acquiror, and

          B. the  Acquiror  Indemnified  Party  will  agree  to any  settlement,
     compromise  or  discharge  of an  Acquiror  Claim  that  the  Acquiror  may
     recommend  and that by its terms  obligates  the  Acquiror  to pay the full
     amount of the liability in connection with such Acquiror Claim and releases
     the Acquiror  Indemnified Party completely in connection with such Acquiror
     Claim  and  that  would  not  otherwise   adversely   affect  the  Acquiror
     Indemnified Party.

     PROVIDED,  HOWEVER, that the Acquiror Indemnified Party may refuse to agree
     to any such settlement, compromise or discharge if the Acquiror Indemnified
     Party agrees that the Acquiror's indemnification obligation with respect to
     such  Acquiror  Claim shall not exceed the amount that would be required to
     be paid by or on behalf of the Acquiror in connection with such settlement,
     compromise or discharge.

     If the Acquiror has not assumed the defense of an Acquiror Claim then in no
event shall the Acquiror Indemnified Party settle,  compromise or discharge such
Acquiror Claim without  providing  prior written  notice to the Acquiror,  which
shall have the option within 15 Business Days  following  receipt of such notice
to:

          A. approve and agree to pay the settlement,

          B.  approve  the  amount  of the  settlement,  reserving  the right to
     contest the Acquiror  Indemnified  Party's  right to indemnity  pursuant to
     this Agreement,

                                     -110-

<PAGE>

          C. disapprove the settlement and assume in writing all past and future
     responsibility   for  such  Acquiror  Claim   (including  all  of  Acquiror
     Indemnified Party's prior expenditures in connection therewith), or

          D.   disapprove   the   settlement   and   continue  to  refrain  from
     participation  in the  defense  of such  Acquiror  Claim.  In the event the
     Acquiror  does  not  respond  to such  written  notice  from  the  Acquiror
     Indemnified Party within such 15 business-day period, the Acquiror shall be
     deemed to have elected option A.

     (e) (i)  MAINTENANCE OF D&O POLICIES.  Acquiror shall use its  commercially
reasonable best efforts to obtain and pre-pay before the First Closing Date five
years of premiums for a policy or policies of directors' and officers' liability
insurance ("D&O  POLICIES")  covering the directors and officers of the Acquiror
and having terms reasonably  similar to the policies  maintained by the Acquiror
on the date hereof (true and correct  copies of which have been delivered to the
Company)  with  respect  to acts and  omissions  occurring  prior to the  Second
Closing  Date. If Acquiror  obtains and prepays for the D&O Policies  before the
First Closing Date,  Acquiror shall issue a promissory note to UBC having a face
amount  equal to the  lesser of (x) the  amount  Acquiror  pre-paid  for the D&O
Policies and (y) $500,000,  a term of five years and bearing  interest at 8% per
annum, payable semi-annually in equal installments.

     (ii)  COOPERATION.  The Acquiror  shall  cooperate  with the  directors and
officers in the defense and settlement of any claim made against them based upon
or  arising  out of any  actual  or  alleged  wrongful  act (as such term may be
defined in the applicable D&O Policies or Replacement  D&O Policy)  occurring at
or prior to the Second Closing Date. The Acquiror shall

                                     -111-

<PAGE>

provide any reasonable
assistance  or  information  that may be  required  by a director  or officer in
connection  with any such  claim.  The  Acquiror  shall not cause any  action or
inaction that could reasonably be expected to jeopardize or otherwise impair the
rights or ability of the directors or officers to recover loss amounts due under
the D&O Policies.

     (f) The  Acquiror  shall  not take any  action  that  could  reasonably  be
expected to  jeopardize  or otherwise  interfere  with the ability of any of the
Acquiror  Indemnified  Parties to collect any proceeds  payable under any of the
D&O Policies.

     (g) This Section 6.4 (and all other provisions of this Agreement  necessary
or appropriate for purposes of enforcing this Section 6.4) is intended to be for
the benefit of, and shall be enforceable,  by the Acquiror  Indemnified Parties,
their heirs and  personal  representatives  and shall be binding on the Acquiror
and each of their respective successors and assigns.

     ss. 6.5  NOTIFICATION OF CERTAIN  MATTERS.  Between the date hereof and the
Second  Closing Date,  the Company and the Acquiror and the  Shareholders  shall
give prompt notice to the other parties upon becoming aware of:

          (i) the occurrence or  nonoccurrence  of any event,  the occurrence or
     nonoccurrence of which would likely cause:

               (A) any of its  representations  or warranties  contained in this
          Agreement to be untrue or inaccurate, or

               (B) any of its covenants,  conditions or agreements  contained in
          this Agreement not to be complied with or satisfied; and

          (ii) its  failure  to comply  with or  satisfy  any of its  covenants,
     conditions or agreements to be complied with or satisfied by it at or prior
     to the Second Closing Date;

                                     -112-

<PAGE>

PROVIDED,  HOWEVER, that the delivery of any notice pursuant to this Section 6.5
shall not limit or  otherwise  affect the  remedies  available  hereunder to the
party receiving such notice and, provided no owner of Non-Management Stock shall
have  any  obligation  to give  notice  of  events  relating  to the  conditions
contained in this Agreement.  

     ss. 6.6 TAX MATTERS.  (a) Each of the  Acquiror,  on the one hand,  and the
Company  and its  Subsidiaries,  on the other hand,  shall use its  commercially
reasonable  best  efforts  to  cause  the  Spin-Off  to  qualify  as a tax  free
distribution under Code Section 355 and/or Section 368(a). Neither the Acquiror,
on the one hand, nor the Company and its Subsidiaries,  on the other hand, shall
take any action other than an Approved Action that (i) is inconsistent  with (A)
the Tax treatment of the  Transactions set forth in the IRS Ruling Letter or (B)
a factual  statement  or  representation  set forth in the  Ruling  Request  (as
amended by any supplement) or (ii) causes a Corporate Restructuring  Transaction
for  which a ruling  is not  requested  from the IRS and  which is  intended  to
qualify as a tax-free transaction under Section 332, 351, 355 or 368, to fail to
so qualify.

     (b) In  furtherance  of Section  6.6(a) above,  the Acquiror shall make the
representations  set  forth  in  EXHIBIT  L  attached  hereto,  and  such  other
representations as are reasonably  necessary to ensure the tax-free treatment of
the Spin-Off and related  transactions  described in Section  6.6(a) above,  and
shall take  actions  that are  reasonably  necessary  to assure  the  continuing
accuracy of such representations.

     (c) In furtherance of Section 6.6(a) above, none of the Shareholders, shall
take any actions other than Approved  Actions,  either before or after the First
Closing  Date,  inconsistent  with the  representations  set forth in  EXHIBIT L
attached hereto. In addition, (i) the Company and

                                     -113-

<PAGE>

each of its  Subsidiaries  shall make such further  representations  as shall be
necessary  in the  reasonable  judgment of the  Acquiror to ensure the  tax-free
treatment  of the  Spin-Off  and (ii) each of the  Shareholders  shall make such
further  representations  as shall be (A)  reasonable  and (B)  necessary in the
reasonable  judgment of the  Acquiror to ensure the  tax-free  treatment  of the
Spin-Off;  PROVIDED,  HOWEVER,  that if the  Shareholders  are  asked to make or
confirm  representations  which have an adverse effect on the value or timing of
the Consideration to be received, the Shareholders will be given the opportunity
to review and consent to such requested representations,  such consent not to be
unreasonably  withheld.  Notwithstanding  anything to the contrary  contained in
this  Agreement,  none of the  holders of  Non-Management  Stock  shall have any
liability  or  obligation  to the  Acquiror,  the Company or any other Person by
reason of such  holders' of  Non-Management  Stock failure to comply with any of
the provisions of this Section  6.6(c),  it being agreed by the Company that (i)
any  liability  arising out of the owners' of  Non-Management  Stock  failure to
comply with the  provisions of this Section 6.6(a) shall be borne by the Company
and not the owners of  Non-Management  Stock and (ii) any such failure to comply
shall be  considered  an action of the Company for purposes of the  Distribution
Agreement.

     (d)  UBC  (and  its  respective   direct  and  indirect   Subsidiaries  and
Affiliates)  shall be deemed a third party  beneficiary  of this Section 6.6 and
all other provisions of this Agreement  necessary or appropriate for purposes of
enforcing this Section 6.6.

     ss. 6.7 PROXY  STATEMENT.  (a) As soon as  practicable  following  the date
hereof,  the Acquiror shall prepare and file, or cause to be prepared and filed,
with  the  SEC a  proxy  statement  (the  "PROXY  STATEMENT")  and  other  proxy
solicitation materials relating to the Stockholders' Special Meeting (as defined
in Section 6.8 hereof). The Company and its counsel shall be

                                     -114-

<PAGE>

afforded an adequate  opportunity to review and comment upon the Proxy Statement
before it is filed with the SEC.  Each of the  Acquiror  and the  Company  shall
furnish or cause to be furnished to the other party all  information  concerning
itself  and its  Subsidiaries  (including  any  audited  or PRO FORMA  financial
information)  as the other party may reasonably  request in connection with such
actions and the preparation of the Proxy Statement. The Acquiror shall take, and
cause its Subsidiaries to take such actions as may be required to have the Proxy
Statement cleared by the SEC, in each case as promptly as practicable, including
by responding  promptly to, any SEC comments with respect  thereto.  The Company
shall,  and cause its  Subsidiaries  to, take all reasonable  action that may be
necessary to assist Acquiror in causing the Proxy Statement to be cleared by the
SEC,  including  consulting with Acquiror.  As promptly as practicable after the
Proxy  Statement has been cleared by the SEC, the Acquiror  shall mail the Proxy
Statement  to its  stockholders,  and the  Proxy  Statement  shall  include  the
recommendation  of the  board  of  directors  of the  Acquiror  that  Acquiror's
stockholders  vote in favor of  adoption  and  approval of this  Agreement,  the
Acquisition,  and the Stock  Issuance (as defined in Section 6.8 hereof) and the
board nominees as provided in Section 7.3(g) (the "BOARD NOMINEES").

     (b) The  Acquiror  covenants  that  the  Proxy  Statement  (other  than the
information  supplied in writing to the Acquiror by the Company for inclusion in
the Proxy  Statement)  shall not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading, at any of:

          (i) the time the  Proxy  Statement  (or any  amendment  or  supplement
     thereto) is first mailed to the stockholders of the Acquiror;

          (ii) the time of each of the Stockholders' Special Meeting; and

                                     -115-

<PAGE>

          (iii) the Second Closing Date.

     (c) The Company covenants that the financial  information supplied or to be
supplied by the Company or its  representatives  in writing for inclusion in the
Proxy Statement shall comply as to form in all material respects with applicable
accounting  requirements and with the published rules and regulations of the SEC
with respect  thereto,  shall be prepared in  accordance  with GAAP applied on a
consistent  basis during the periods involved (except as may be indicated in the
notes thereto or, in the case of unaudited financial  information,  as permitted
by the rules of the SEC) and shall  fairly  present  the  financial  information
reflected  therein as of the dates thereof or for the periods then ended.  If at
any time prior to the Second Closing Date any event or circumstance  relating to
the  Company  or  any of its  Subsidiaries,  or  their  respective  officers  or
directors,  should be discovered by the Company or any of its Subsidiaries  that
should be set forth in an amendment or a supplement to the Proxy Statement,  the
Company shall promptly inform the Acquiror in writing.

     (d) The Company covenants that the information supplied in writing by or on
behalf of the Company for inclusion in the Proxy Statement shall not contain any
untrue  statement of a material fact or omit to state any material fact required
to be stated  therein or necessary in order to make the  statements  therein not
misleading, at

          (i) the time the Proxy  Statement is first mailed to the  stockholders
     of the Acquiror;

          (ii) the time of the Stockholders' Special Meeting; and

          (iii) the Second Closing Date.

                                     -116-

<PAGE>

     (e) The  Acquiror  covenants  that the  financial  information  included or
incorporated  by  reference  in the Proxy  Statement,  other than the  financial
information  supplied to the Acquiror by the Company for  inclusion in the Proxy
Statement,  shall comply as to form in all  material  respects  with  applicable
accounting  requirements and with the published rules and regulations of the SEC
with respect  thereto,  shall be prepared in  accordance  with GAAP applied on a
consistent  basis during the periods involved (except as may be indicated in the
notes thereto or, in the case of unaudited financial  information,  as permitted
by the  rules of the SEC) and  shall  fairly  present  (subject,  in the case of
unaudited  financial  information,  to normal,  recurring audit adjustments) the
financial  information  reflected  therein  as of the dates  thereof  or for the
periods then ended. The Acquiror  covenants that the Proxy Statement will comply
as to form in all material  respects with the provisions of the Exchange Act and
the rules and  regulations  thereunder or the  Securities  Act and the rules and
regulations thereunder,  as applicable,  except that no representation is herein
made by the Acquiror  with  respect to  statements  made in the Proxy  Statement
based on information  supplied by the Company or any of its  representatives  in
writing for inclusion in the Proxy Statement. If at any time prior to the Second
Closing  Date any event or  circumstance  relating to the Acquiror or any of its
Subsidiaries, or their respective officers or directors, should be discovered by
the  Acquiror  or  any of its  Subsidiaries  which  should  be set  forth  in an
amendment or a supplement to the Proxy  Statement,  the Acquiror  shall promptly
inform the Company and file the appropriate amendment with the SEC.

     ss. 6.8  STOCKHOLDERS'  SPECIAL MEETING.  The Acquiror,  acting through its
Board  of  Directors,  shall,  in  accordance  with  its  Amended  and  Restated
Certificate of  Incorporation  and By-laws and  applicable  law, take all action
necessary to convene a meeting of its stockholders

                                     -117-

<PAGE>

(the  "STOCKHOLDERS'  SPECIAL  Meeting")  as promptly as  practicable  (it being
intended that the Stockholders' Special Meeting shall be scheduled to occur near
or as soon as  practicable  after the receipt of the IRS Ruling  Letter) for the
purpose of voting  upon the  approval  of the  issuance  of  Acquiror  Shares in
connection  with the  Acquisition as  contemplated in this Agreement (the "STOCK
ISSUANCE"),  the  approval of the Board  Nominees  and for the purpose of voting
upon such other matters in respect of the  Certificate of  Incorporation  of the
Acquiror as the  Company  shall  reasonably  request.  Subject to its  fiduciary
duties under  applicable  law, the Board of Directors of the Acquiror shall make
the  recommendation   (and  shall  include  such  recommendation  in  the  Proxy
Statement)  that all holders of Acquiror common stock vote in favor of the Stock
Issuance  and the Board  Nominees,  and the Board of  Directors  of the Acquiror
shall use its  commercially  reasonable  best  efforts to cause to be  solicited
proxies from holders of Acquiror  common stock to be voted at the  Stockholders'
Special  Meeting in favor of the Stock  Issuance  and the Board  Nominees and to
take all other  actions  necessary or advisable to secure the vote or consent of
stockholders of the Acquiror required to effect the Acquisition.

     ss. 6.9 FURTHER ACTION. (a) Upon the terms and subject to the provisions of
this  Agreement,   each  of  the  parties  hereto  (other  than  the  owners  of
Non-Management  Stock)  shall use its  commercially  reasonable  best efforts to
take, or cause to be taken,  all appropriate  action,  and to do, or cause to be
done,  all things  necessary,  proper or  advisable  under  applicable  laws and
regulations   promptly  to  consummate  and  make  effective  the   transactions
contemplated  hereby,  including the Spin-Off (subject,  however, to the vote of
the  stockholders of the Acquiror),  including,  without  limitation,  using its
commercially reasonable best efforts to obtain all licenses,  permits, consents,
approvals, authorizations, qualifications and orders of

                                     -118-


Governmental  Authorities and parties to contracts with the Acquiror and, to the
extent required, the Company and their respective  Subsidiaries as are necessary
for the  consummation of the transactions  contemplated by this Agreement.  Each
party hereto shall  promptly  consult with each other party with respect to, and
provide  to  each  other  party  all  such   non-confidential   information   or
documentation  which shall be reasonably  requested with respect to, all filings
made by such party  with any  Governmental  Authority  in  connection  with this
Agreement and the transactions  contemplated  hereby.  In case at any time after
the Second  Closing  Date any further  action is necessary or desirable to carry
out the purposes of this  Agreement,  the proper  officers and directors of each
party to this Agreement  (other than the owners of  Non-Management  Stock) shall
use their reasonable best efforts to take all such action.

     (b) Each  party  shall  use its  reasonable  best  efforts  to not take any
action,   or  enter  into  any   transaction,   that  would  cause  any  of  its
representations or warranties contained in this Agreement to be untrue or result
in a breach of any covenant made by it in this Agreement.

     (c) Owners of Non-Management Stock shall use their commercially  reasonable
best efforts to take all  appropriate  action as is  necessary to perform  their
obligations hereunder.

     ss. 6.10 REMOVAL OF GUARANTEES/CANCELLATION OF DEBT. (a) The Acquiror shall
use its commercially  reasonable best efforts to have, on or prior to the Second
Closing  Date,  Domestic  Company  and any other  member of the  Domestic  Group
removed  as a  guarantor  of, or obligor  under or for,  any  obligation  of the
International  Company,  International  Subsidiaries  or any other member of the
International  Group  which the  Domestic  Company  or any  other  member of the
Domestic  Group is a guarantor of, or obligor under or for (as each such term is
defined in the Distribution Agreement).

                                     -119-

<PAGE>

     (b) The  Acquiror  shall use its  commercially  reasonable  best  effort to
terminate,  effective as of the Second  Closing Date,  each and every  agreement
between  Domestic  Group and  International  Group  other than the  Distribution
Agreement and any of the Ancillary  Agreements  (as each such term is defined in
the Distribution Agreement).

     (c) The  Acquiror  shall use its  commercially  reasonable  best efforts to
cause UBC to be substituted for the Acquiror,  and the Acquiror  released,  from
all liability under the Indenture dated as of November 1, 1993 between  Acquiror
and The Chase  Manhattan  Bank,  as Trustee  (successor  to Chemical  Bank),  as
amended.

     (d) As soon as  practicable  after the date  hereof,  the  Acquiror and the
Company will meet with  representatives  of Citicorp  North  America  Inc.,  and
Citibank,  N.A., as necessary,  to discuss  waiver of the  Acquiror's  financial
covenants  in  the  guaranty  of  OMI  Challenger   Transport,   Inc.'s  charter
obligations and the negative covenant regarding change of control,  effective as
of the Second Closing Date, under the Credit Agreement,  dated as of January 29,
1997 among Argosy Ventures Ltd, the Banks named therein,  Citicorp North America
Inc., and OMI Challenger Transport, Inc. and OMI Corp.

     ss. 6.11 CORPORATE RESTRUCTURING TRANSACTIONS; SPIN-OFF. The Acquiror shall
use  its   commercially   reasonable   best  efforts  to  effect  the  Corporate
Restructuring Transactions and the Spin-Off (as each such term is defined in the
Distribution Agreement).

     ss. 6.12 [Intentionally Left Blank]

     ss. 6.13  ANTITRUST  MATTERS.  (a) The Acquiror and the Company  shall file
with the Federal Trade  Commission and the Antitrust  Division of the Department
of Justice,  as promptly as practicable but in any event within 60 Business Days
of the date of this Agreement, the notifi-

                                     -120-

<PAGE>

cation and report form  required for the  transactions  contemplated  hereby and
shall  promptly  provide any  supplemental  information  which may be reasonably
requested in connection  therewith pursuant to the HSR Act, which  notification,
report and supplemental  information  shall comply in all material respects with
the requirements of the HSR Act.

     (b)  Although  the  parties do not  believe  that the  Acquisition  has any
antitrust implications, the Acquiror shall use all reasonable efforts to resolve
antitrust  objections,  if  any,  that  may  be  asserted  with  respect  to the
transactions contemplated hereby by the Federal Trade Commission,  the Antitrust
Division of the Department of Justice or any other federal or state agency.

     ss. 6.14 ANTITAKEOVER STATUTES. If any "FAIR PRICE," "MORATORIUM," "CONTROL
SHARE ACQUISITION" or other similar  antitakeover  statute or regulation enacted
under state or federal laws ("TAKEOVER  STATUTE") is or may become applicable to
the  transactions  contemplated  hereby,  each of the  parties  (other  than the
Shareholders)  hereto and the members of its board of directors shall grant such
approvals  and take  such  actions  as are  necessary  so that the  transactions
contemplated  by this Agreement may be consummated as promptly as practicable on
the terms  contemplated  hereby and  otherwise  act to eliminate or minimize the
effects of any Takeover Statute on any of the transactions  contemplated by this
Agreement; PROVIDED, HOWEVER, that no party hereto shall be required to take any
action if there is a substantial  risk that the subject  action would be held to
constitute  a breach of the  fiduciary  duties of the board of  directors of the
subject  party,  as  determined  by the subject board of directors in good faith
after  consultation  with and based upon the advice of independent legal counsel
(who may be the subject party's regularly engaged independent counsel).

                                     -121-

<PAGE>

     ss. 6.15 COVENANTS  RELATING TO COMPANY EMPLOYEE BENEFIT PLANS.  During the
period from the date of this  Agreement to the Second  Closing Date, the Company
shall take the actions with respect to certain  Company  Employee  Benefit Plans
that are described in a letter  agreement  relating to such matters  between the
Acquiror and the Company, dated of even date herewith.

     ss.6.16  Participation  of Acquiror  and  Domestic  Business  Employees  in
Company Employee Benefit VI.16  Participation of Acquiror and Domestic  Business
Employees in Company Employee Benefit Plans.  Effective no later than the Second
Closing Date, those employees of the Acquiror and the Domestic Businesses listed
on  Schedule  6.16 shall be  entitled to  participate  in all  Company  Employee
Benefit  Plans on the terms and  conditions  applicable  to  similarly  situated
employees of the Company,  or in employee benefit plans otherwise  maintained by
the Company the terms and  conditions  of which are  individually  substantially
equivalent to similar Company  Employee  Benefit Plans.  All service of any such
employee of the Acquiror  and the Domestic  Businesses  with the  Acquiror,  the
Domestic   Businesses,   and/or  their   Subsidiaries   or  Affiliates  (or  any
predecessors of any thereof) shall be treated as service with the Company and/or
its  Subsidiaries  or  Affiliates,  as  applicable,  for all purposes  under the
Company  Employee  Benefit  Plans or such other  employee  benefit  plans.  With
respect to  participation  of such  employees  of the  Acquiror and the Domestic
Businesses and their  dependents in the Company  Employee  Benefit Plans or such
other  employee  benefit plans,  which are "WELFARE  PLANS," the Company and its
Subsidiaries and Affiliates, other than the Shareholders,  shall, or shall cause
the  applicable  Company  Employee  Benefit Plan or other plan to, (a) waive any
waiting  periods or  affiliation  periods  and any  pre-existing  condition  and
actively-at-work  exclusions  (or similar  limitations on  participation)  which
would  otherwise  apply to such  employees  or their  dependents,  (b) waive any
evidence of insurability  requirements and (c) provide that all claims, expenses
and

                                     -122-

<PAGE>

premiums  of such  employees  and their  dependents  during any plan year within
which they commence participation in the Company Employee Benefit Plans or other
plan  shall  be  taken  into  account  for  purposes  of  satisfying  applicable
deductible,   coinsurance  and  maximum   out-of-pocket   provisions  (and  like
adjustments  or limitations on coverage)  under such plans;  PROVIDED,  HOWEVER,
that  neither the  Company  and its  Subsidiaries  and  Affiliates  nor any such
Employee  Benefit  Plan or other plan shall be  obligated  to effect the actions
described in the preceding clause if: (i) such action cannot be effected without
the consent of any third party (whether to a policy  amendment or otherwise) and
such consent is not obtained  after the exercise of reasonable  diligence by the
Company to obtain such  consent,  (ii) such actions are contrary to the terms of
any collective  bargaining agreement or union welfare plan, or (iii) the cost of
such actions would be prohibitive under the circumstances. The Company agrees to
cooperate and take all actions reasonably necessary to cause the trust under the
Marine  Transport  Lines,  Inc.  Salaried  Employees  Retirement  Income Plan to
accept,  on a date or dates following the Second Closing Date mutually agreed to
between  the  Company  and the then  sponsor of the OMI Corp.  Savings  Plan,  a
transfer from the trust under the OMI Corp. Savings Plan of assets  attributable
to the account balances under the OMI Corp.  Savings Plan of each participant in
such plan who is an  employee of the  Acquiror  and/or the  Domestic  Businesses
following the Second  Closing Date and who becomes a  participant  in the Marine
Transport Lines, Inc. Salaried  Employees  Retirement Income Plan, which amounts
shall be credited to the accounts respectively established for such participants
under the Marine Transport Lines,  Inc.  Salaried  Employees  Retirement  Income
Plan;  PROVIDED  that any  assets  other  than cash may be  transferred  only if
reasonably  acceptable  to the  trustee  of the  Marine  Transport  Lines,  Inc.
Salaried Employees Retirement

                                     -123-

<PAGE>

Income Plan. The Company  further agrees to make such  reasonable  amendments as
may  be  required  to  the  Marine  Transport  Lines,  Inc.  Salaried  Employees
Retirement Income Plan, prior to such asset transfer, so that such transfer will
not cause either the OMI Corp.  Savings Plan or the Marine Transport Lines, Inc.
Salaried Employees Retirement Income Plan to violate any applicable requirements
of the Code and/or ERISA.  Notwithstanding the preceding  sentence,  the Company
shall have no obligation to make any amendment that would  adversely  affect the
Company's  ability  to rely upon the  current  IRS  determination  letter of the
Marine Transport Lines, Inc., Salaried Employees Retirement Income Plan.

     ss. 6.17 ACQUIROR STOCK OPTIONS. The Acquiror shall use its best efforts to
obtain,  prior to the First Closing Date,  from each holder of then  outstanding
employee stock options to purchase Acquiror Shares or stock appreciation  rights
who is, or is expected to become, an employee of UBC or a Subsidiary of UBC such
holder's  agreement  to  surrender  his or her stock  options to the Acquiror in
exchange for employee stock options granted by UBC to purchase  capital stock of
UBC, effective immediately prior to the First Closing Date.

     ss. 6.18 NEW CREDIT  FACILITY  COMMITMENT.  (a) The  Company  shall use its
commercially   reasonable  best  efforts  to  obtain  the  New  Credit  Facility
Commitment  and  negotiate a definitive  agreement  providing for the New Credit
Facility.

     (b) The  Company  shall use its  commercially  reasonable  best  efforts to
obtain (i) an  extension  of the maturity  date of the loan  provided  under its
existing Term Loan and Revolving Credit Facility  Agreement dated as of July 23,
1996 between the Company and Den Norske Bank ASA until after the Second  Closing
Date and (ii)  agreement to extend  payment of principal  and interest and other
amounts outstanding thereunder until after the Second Closing and refinance

                                     -124-

<PAGE>

such principal and interest and other amounts under the New Credit Facility.

     ss. 6.19 REDEMPTION OF COMMON STOCK. The Company shall use its commercially
reasonable  best  efforts to redeem (i) $2.5  million of Common  Stock (less any
cash fees paid to First Stanford and DNB pursuant to the  Consulting  Agreement)
prior to the First Closing Date and (ii) such additional  shares of Common Stock
in accordance with Section 2.2(c)(iii).

     ss. 6.20 AUDITED  CONSOLIDATED  FINANCIAL  STATEMENTS.  As soon as they are
prepared,  the  Acquiror  shall  deliver to the  Company  and the  Shareholders'
Representative a copy of the Domestic Businesses Audited Consolidated  Financial
Statements.

     ss. 6.21 MONTHLY FINANCIAL  STATEMENTS.  (i) Within 15 Business Days of the
end of each month  following  the date hereof (other than the month in which the
First Closing occurs), the Company shall prepare and deliver to the Acquiror and
Shareholders' Representative (a) an unaudited, consolidated balance sheet of the
Company and its Subsidiaries and unaudited  consolidating  balance sheets of the
Company and its  Subsidiaries as of the end of the immediately  preceding month;
and (b) an  unaudited,  consolidated  income  statement  of the  Company and its
Subsidiaries  and  individual  consolidating  income  statements  reflecting the
results of  operations  for the period  ending as of the end of the  immediately
preceding  month.  These  monthly  financial  statements  shall be  prepared  in
accordance with the Accounting Principles.

     (ii) Within 15 Business  Days of the end of each month  following  the date
hereof  (other than the month in which the First Closing  occurs),  the Acquiror
shall prepare and deliver to the Company individual financial statements for the
Domestic Businesses as of the end of the

                                     -125-

<PAGE>

immediately  preceding  month.  These  monthly  financial  statements  shall  be
prepared in accordance with the Accounting Principles.

     ss.  6.22 STOCK  EXCHANGES.  The  Acquiror  will  cooperate  fully with the
Company to delist the Acquiror Shares from the New York Stock Exchange  ("NYSE")
and the  Stockholm  Stock  Exchange and list the Acquiror  Shares  following the
Second  Closing Date on the NASDAQ  Exchange or such other  national  securities
exchange as the Company, Acquiror and Shareholders' Representative shall agree.

     ss. 6.23  PERMITTED  DISPOSITIONS.  Prior to the Second  Closing Date,  the
Shareholders  or the Company may,  distribute or otherwise cause the disposition
of all or part of the stock or assets and  associated  liabilities of Marine LNG
I, Inc. and/or Marine LNG II, Inc. The Company will set aside or cause to be set
aside  adequate  reserves  to pay for any tax  liability  of the  Company or its
Subsidiaries incurred (at any time before or after the Second Closing Date) as a
result of such distribution or disposition.

     ss.  6.24  Certain  Modifications  to this  Agreement.  In the  event  of a
disposition described in Section 6.23 of this Agreement, the parties hereto will
use their  commercially  reasonable best efforts to restructure the Acquisition,
including  as a merger  of the  Company  into  the  Acquiror  or a newly  formed
Subsidiary of the Acquiror;  PROVIDED  that any  restructuring  shall not in the
reasonable  judgment  of the  Acquiror  adversely  affect  the  Spin-Off  or the
likelihood of a favorable  ruling in respect  thereof.  If the Acquisition is so
restructured,  this Agreement and, if necessary,  the Ruling  Request,  shall be
amended  in a manner  consistent  with any such  restructuring,  subject  to the
consent of all parties hereto.

                                     -126-

<PAGE>

     ss. 6.25 STANDSTILL.  Acquiror agrees that for the period commencing on the
date of this  Agreement  and  terminating  on the  first to occur of the  Second
Closing Date or December 31, 1998,  neither it nor any of its Affiliates nor any
of their  representatives,  officers,  directors,  agents or  stockholders  will
entertain,  accept or discuss  directly  or  indirectly,  any offer or  proposal
regarding a possible sale,  merger or other business  combination or transaction
involving the Domestic  Businesses or any interest therein or portion thereof (a
"POTENTIAL SALE"), with any party other than the Company and the Shareholders or
provide any information to any other party in connection therewith or enter into
any agreement or understanding requiring Acquiror to abandon,  terminate or fail
to consummate  the  transactions  contemplated  hereby.  Acquiror  agrees to (i)
immediately  notify the Company and the  Shareholders  if Acquiror or any of its
Affiliates  receives any  indications of interest,  requests for  information or
offers in respect of a Potential Sale,  (ii)  communicate to the Company and the
Shareholders in reasonable  detail the terms of any such indication,  request or
proposal,  and (iii) provide the Company and the Shareholders with copies of all
written  communications  relating to any such  indication,  request or proposal.
Acquiror hereby  represents that neither it nor any of its Affiliates is a party
to or bound by any  agreement  with respect to a Potential  Sale other than this
Agreement.  The provisions of this Section 6.25 shall survive any termination of
this Agreement other than (A) a termination by the Acquiror  pursuant to Section
8.1(iii),   (B)  a  termination   by  mutual   agreement  of  Acquiror  and  the
Shareholders' Representative, (C) a termination by any party pursuant to Section
8.1(ii),  (D) a termination  by the holders of a majority of the  Non-Management
Stock  pursuant  to Section  8.1(v) or (E) a  termination  by the  Shareholders'
Representative pursuant to Section 8.1(vi).

                                     -127-

<PAGE>

     ss. 6.26  SCHEDULES.  From the date hereof through the Second Closing Date,
each party (other than the Shareholders) shall supplement or amend the Schedules
and Exhibits  being  delivered  by it  concurrently  with the  execution of this
Agreement  and annexed  hereto with respect to any matter  hereafter  arising or
discovered which, if existing or known at the date of this Agreement, would have
been required to be set forth or described in the Schedules;  PROVIDED, HOWEVER,
that for the  purpose of the rights and  obligations  of the  parties,  any such
supplemental or amended disclosure shall not be deemed to have been disclosed as
of the date of this  Agreement  unless so agreed to in writing by the parties or
to  preclude  the other  parties  from  seeking a remedy in  damages  for losses
incurred as a result of such  supplemented or amended  disclosure.  Each party's
obligation  to amend or  supplement  the  Schedules  and  Exhibits  hereto shall
terminate on the Second Closing Date.

     ss. 6.27 RESTRICTION ON TRANSFER. (a) Each of the Shareholders acknowledges
and agrees  that the  Acquiror  Shares to be issued to each of the  Shareholders
pursuant  to Section  2.2 will  constitute  "RESTRICTED  SECURITIES"  within the
meaning of Rule 144 promulgated by the SEC under the Securities Act ("RULE 144")
and have not been  approved or  disapproved  by the SEC or any state  securities
commission of any State of the United States.

     (b) Each of the  Shareholders  acknowledges  and agrees that the  following
restrictive legend will be imprinted on the certificates evidencing the Acquiror
Shares issued to the  Shareholders  pursuant to Section 2.2 and that each of the
Shareholders  will hold such Acquiror  Shares subject to the  conditions  stated
therein:

     The shares  represented by this  Certificate have not been registered under
     the Securities  Act of 1933, as amended (the  "SECURITIES  ACT"),  and such
     shares may

                                     -128-

<PAGE>

     not be offered,  sold, pledged or otherwise transferred except (1) pursuant
     to an exemption from, or in a transaction not subject to, the  registration
     requirements under the Securities Act to the extent supported by an opinion
     of counsel who is reasonably acceptable to the issuer or (2) pursuant to an
     effective  registration statement under the Securities Act, in each case in
     accordance  with any applicable  securities laws of any State of the United
     States.

     (c) Each of the  Shareholders  acknowledges  and agrees  that the  Acquiror
shall not be  required  to effect any  transfer  of any of the  Acquiror  Shares
issued to the  Shareholders  pursuant to Section 2.2 to the extent such transfer
would be in  violation  of the  Securities  Act, and the Acquiror may require an
opinion of counsel  reasonably  satisfactory  to the Acquiror to the effect that
any  proposed  transfer is exempt from,  or is not subject to, the  registration
requirements of the Securities Act.

     (d) The  Acquiror  shall  cause any  restrictive  legend  imprinted  on the
certificates  evidencing the Acquiror Shares issued to the Shareholders pursuant
to Section  2.2 to be  removed at such time as all  conditions  to  transfer  of
restricted  securities  under Rule 144,  as  applicable  to such  shares and the
registered  holder of such shares,  are  satisfied.  The Acquiror may require an
opinion  of counsel  reasonably  satisfactory  to the  Acquiror  to support  the
removal of such restrictive legend.

     ss. 6.28 PURCHASE OF ACQUIROR SHARES. During the twenty consecutive Trading
Days prior to the First  Closing Date,  Acquiror  shall not, and shall cause its
Affiliates not to, purchase or otherwise acquire any Acquiror Shares.

                                     -129-

<PAGE>

     VI.29  Expenses.  (a) Except as provided in this Section 6.29,  the parties
shall pay their own expenses  relating to the transactions  contemplated by this
Agreement,  including,  without  limitation,  the  fees  and  expenses  of their
respective  counsel  and  financial  advisors.  The  Company  shall  reflect all
expenses  payable  by it  relating  to the  transactions  contemplated  by  this
Agreement on the Company's Preliminary Closing Balance Sheet. The Acquiror shall
reflect all expenses payable by it relating to the transactions  contemplated by
this  Agreement  on the  Acquiror's  Closing  Balance  Sheet  (except  for those
expenses to be paid by UBC).

     (b) Acquiror  shall be responsible  for all costs and expenses  relating to
the Spin-off,  including,  without limitation,  (i) the fees and expenses of its
counsel and  accountants  and (ii) the fees and expenses of Smith Barney Inc. up
to $350,000 ("FOR PURPOSES OF THIS SECTION, SPIN-OFF Expenses").  Acquiror shall
cause all Spin-off  Expenses to be paid on or prior to the First  Closing  Date.
The fees and  expenses of Smith  Barney  Inc.  in excess of $350,000  but not to
exceed $750,000 shall also be the  responsibility  of Acquiror and shall be paid
by Acquiror  on the Second  Closing  Date out of the  proceeds of the New Credit
Facility.

     (c) The fees and  expenses  of First  Stanford  Corp.  and Den Norske  Bank
arising under that certain letter agreement dated February 28, 1996 shall be the
responsibility  of the Company and shall be paid or provision  for payment shall
be made by the Company, on or before the Second Closing Date.

     ss.  6.30  PRIVATE  LETTER  RULING.  Prior  to or  promptly  following  the
execution  of this  Agreement,  Acquiror  shall cause to be filed with the IRS a
private  letter ruling  request in the form approved by the Company prior to the
date  hereof and shall take all  commercially  reasonable  action to obtain such
rulings from the IRS. After submission of such request to the IRS,

                                     -130-

<PAGE>

the  Acquiror  shall,  and shall  cause its counsel to report to the Company all
developments  (including  information  requests  from  the IRS and  supplemental
responses  to the IRS) in respect of the ruling  request.  Without  limiting the
foregoing, the Acquiror shall and shall cause its counsel to (i) promptly inform
the Company of any and all  contacts  (written or oral) made by the IRS with the
Acquiror or its counsel and (ii) consult with the Company  regarding any contact
(written or oral) to be made by the  Acquiror  with the IRS. The Acquiror or its
counsel shall provide the Company with a copy of any written  document  provided
by the IRS to Acquiror.  The Acquiror or its counsel  shall  provide the Company
with any written document  proposed to be submitted to the IRS and shall provide
the  Company  with a  reasonable  time to review and  comment on such  document.
Comments by the Company on such  documents  shall be reasonably  considered  for
inclusion in the  documents,  but the Acquiror  shall be under no  obligation to
include such comments.

     ss. 6.31 REVERSE  STOCK  SPLIT.  Acquiror  shall  include a proposal in its
Proxy  Statement which will seek approval for a reverse split of its outstanding
common stock immediately  after the Spin-Off.  The Proxy Statement shall include
the  recommendation  of the  board  of  directors  of the  Acquiror  in favor of
adoption and approval of this proposal.

     ss. 6.32 NON-RECOURSE. It is expressly understood and agreed by the parties
hereto  that  the  representations,  undertakings  and  agreements  made in this
Agreement  on the part of the Company  have been made,  and were  intended to be
made, solely as representations,  undertakings and agreements by the Company and
none of the  representations,  undertakings  or  agreement  made by the  Company
hereunder was made,  or was intended to be made,  as a personal  representation,
undertaking  or  agreement  on the part of any  Shareholder,  and no personal or
individual

                                      -131

<PAGE>

liability  is assumed  by, nor shall any  recourse  at any time be  asserted  or
enforced against,  any such Shareholder in connection with the  representations,
undertakings  and agreements by the Company,  all of which recourse  (whether in
common law, in equity,  by statute or  otherwise) is hereby  forever  waived and
released.  In addition,  no  Shareholder  shall have any liability or obligation
under or with respect to this Agreement except as expressly set forth in Article
II,   Article  IV,  and  Sections   6.5,   6.6(c)  (other  than  the  owners  of
Non-Management  Stock), 6.9, 6.24, 6.27, 6.29, 7.1(a)(iv),  7.1(b)(iii),  7.2(b)
(as to such  Shareholder),  7.2(d),  8.2, 9.1, 9.2(b),  9.3, 9.4, 9.5, 9.6, 9.7,
10.4, 10.5, 10.6, and 10.12 hereto,  all of which  obligations  shall be several
and not joint.

                                   ARTICLE VII

                              CONDITIONS PRECEDENT
                              --------------------

     ss. 7.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE  ACQUISITION.
(a) The respective  obligations of each party hereto to effect the First Closing
herein shall be subject to the  satisfaction,  at or prior to the First  Closing
Date, of the following conditions,  any and all of which may be waived, in whole
or in part, to the extent permitted by applicable law:

     (i) STOCKHOLDER APPROVAL.  This Agreement and the Acquisition and the Board
Nominees  shall have been  approved  and  adopted by the  requisite  vote of the
stockholders  of the  Acquiror  in  accordance  with the  Amended  and  Restated
Certificate of Incorporation of the Acquiror and the DGCL.

     (ii) HSR ACT.  The  waiting  period  under  the HSR Act  applicable  to the
transactions contemplated hereby shall have expired or been terminated.

                                     -132-

<PAGE>

     (iii) OTHER APPROVALS. All authorizations,  consents,  orders and approvals
of, and declarations or filings with, and expirations of waiting periods imposed
by, any  Governmental  Authority  or other Person which if not obtained or filed
would have a  Material  Adverse  Effect on the  Acquiror  or a Material  Adverse
Effect on the Company or a Material Adverse Effect on their respective abilities
to consummate  the  transactions  contemplated  hereby,  including the Spin-Off,
shall have been obtained or filed, as applicable, and shall be in full force and
effect.

     (iv) NO ORDER. No Governmental  Authority of competent  jurisdiction  shall
have  enacted,  issued,  promulgated,  enforced  or entered any  statute,  rule,
regulation,   executive  order,  decree,  injunction  or  other  order  (whether
temporary,  preliminary  or permanent)  which is in effect and which  materially
restricts,  prevents or prohibits  consummation of the Spin-Off,  Acquisition or
any transaction  contemplated by this  Agreement;  it being  understood that the
parties hereto hereby agree to use their commercially reasonable best efforts to
cause any such decree,  judgment,  injunction or other order  applicable to such
parties to be vacated or lifted as promptly as possible.

     (v) TAX RULING.  The Acquiror shall have received rulings from the Internal
Revenue  Service (the "IRS RULING  LETTER") in response to the request  therefor
submitted by the Acquiror,  reasonably acceptable to the Acquiror, which rulings
shall be in full force and effect as of the Distribution Date to the effect that
the  Distribution as contemplated  hereunder will be tax-free for federal income
tax purposes under Sections  355(c)(1) and/or 361(c) and 355(a) of the Code. The
rulings shall be deemed  reasonably  acceptable  for purposes of this  condition
notwithstanding that the Domestic Company,  the International  Company or any of
their

                                     -133-

<PAGE>

respective  Affiliates (as each  capitalized term is defined in the Distribution
Agreement)  incurs,  as a  result  of the  Spin-Off  or  any  of  the  Corporate
Restructuring Transactions, (i) Federal Income Taxes pursuant to Section 367 and
Section 1248 (as provided in any Tax regulations or Tax law enacted, proposed or
promulgated  as of the date  hereof)  and (ii) in addition to such Taxes in (i),
Federal Income Taxes that do not exceed $500,000.

     (vi)  MANAGEMENT  AGREEMENTS.  The  Acquiror  and the  Company  shall  have
executed employment agreements in form and substance reasonably  satisfactory to
each of the  Acquiror  and the  Company  relating  to senior  management  of the
Acquiror listed on Exhibit M and their compensation.

     (vii)   DISTRIBUTION   AGREEMENT  AND  TAX   COOPERATION   AGREEMENT.   The
Distribution  Agreement  shall have been duly  executed and delivered by all the
parties thereto promptly after Acquiror receives the IRS Ruling Letter and shall
be in full force and effect. The Tax Cooperation  Agreement by and among UBC and
the  Acquiror  in the form of  Exhibit  N shall  have  been  duly  executed  and
delivered  by all  parties  thereto  as of the date  hereof and shall be in full
force and effect.

     (viii)  ESCROW  AGREEMENT.  The Escrow  Agreement  in the form of Exhibit B
shall have been executed and delivered and shall be in full force and effect.

     (ix) REMOVAL OF  GUARANTEES/CANCELLATION OF DEBT. The removal of guarantees
and cancellation of all intercompany agreements as contemplated by Sections 5.05
and 5.07 of the Distribution Agreement shall have occurred. In addition,  within
60 days of the date hereof,  the Company and the Acquiror  shall have received a
positive  indication,  reasonably  acceptable to them, from  representatives  of
Citicorp North America Inc., and Citibank, N.A., as necessary,

                                     -134-

<PAGE>

regarding  the waiver of Acquiror's  financial  covenants in the guaranty of OMI
Challenger  Transport,  Inc.'s  charter  obligations  and the negative  covenant
regarding change of control,  effective as of the Second Closing Date, under the
Credit  Agreement,  dated as of January 29, 1997 among Argosy  Ventures Ltd, the
Banks named therein,  Citicorp North America Inc., and OMI Challenger Transport,
Inc. and OMI Corp.

     (x) BANK APPROVAL.  The Acquiror shall have obtained all consents,  waivers
and releases from Den Norske Bank ASA as arranger  under a Term Loan dated as of
July 9, 1996,  as may be  required  to permit the  Acquiror  to  consummate  the
transactions contemplated herein (including,  without limitation,  the Spin-Off)
without  triggering an Event of Default or acceleration of the loan  thereunder.
In addition,  the Acquiror  shall have  received the consents and  approvals set
forth on SCHEDULES 5.2(B) AND 5.4.

     (xi)  ASSUMPTION  OF  INDENTURE.  UBC shall have  assumed  by  supplemental
indenture  the  repayment  obligation  with respect to the  outstanding  10 1/4%
Senior  Notes due November 1, 2003,  and, if  necessary,  the other  obligations
contained in the Indenture, as amended.

     (xii) Bank Approval.  The Company shall have obtained all consent,  waivers
and releases from Den Norske Bank ASA, as Lender and Agent under a Term Loan and
Revolving  Credit  Facility  Agreement  dated  as of July  23,  1996,  as may be
required  to  permit  the  Company  and  the   Shareholders  to  consummate  the
transactions  contemplated  herein  without  triggering  an Event of  Default or
acceleration  of the loan  thereunder.  In  addition,  the  Company  shall  have
received the consents and approvals set forth on SCHEDULE  3.3(B) AND 3.12.  All
amounts  outstanding under the Subordinated  Promissory Note dated July 31, 1996
issued to 

                                     -135-

<PAGE>

Harrowston by the Company and the  Subordinated  Promissory  Note dated July 31,
1996 issued to Wolfson by the Company shall have been repaid.

     (b) The  respective  obligations  of each  party  hereto to the  effect the
Acquisition on the Second Closing Date and the other  transactions  contemplated
herein shall be subject to the  satisfaction  at or prior to the Second  Closing
Date of the following  conditions,  any and all of which may be waived, in whole
or in part, to the extent permitted by applicable law:

          (i) FIRST CLOSING. The First Closing shall have occurred.

          (ii) SPIN-OFF. The Spin-Off shall have occurred.

          (iii) NO ORDER.  No Governmental  Authority of competent  jurisdiction
     shall have enacted, issued,  promulgated,  enforced or entered any statute,
     rule,  regulation,  executive  order,  decree,  injunction  or other  order
     (whether temporary,  preliminary or permanent) which is in effect and which
     materially restricts,  prevents or prohibits  consummation of the Spin-Off,
     Acquisition or any transaction  contemplated  by this  Agreement;  it being
     understood  that the parties  hereto  hereby agree to use their  reasonable
     best efforts to cause any such decree, judgment,  injunction or other order
     (applicable  to such  parties)  to be  vacated  or  lifted as  promptly  as
     possible.

     ss.  7.2  ADDITIONAL  CONDITIONS  TO  OBLIGATIONS  OF  THE  ACQUIROR.   The
obligations  of the Acquiror to consummate the First Closing are also subject to
the satisfaction, at the First Closing Date, of all of the following conditions,
any one or more of which may be waived, in whole or in part, by the Acquiror:

     (a) NO MATERIAL ADVERSE CHANGE. Since the Company Balance Sheet Date, there
shall have been no  material  adverse  change in the  Condition  of the  Company
(other than the

                                     -136-

<PAGE>

disposition  of the LNGs in a manner  permitted  under this  Agreement)  and the
Company shall have delivered to the Acquiror an officer's certificate, dated the
First Closing Date, to such effect.  Without limiting the foregoing,  (i) if the
results of the tests of those  Company  Employee  Benefit  Plans to be tested in
accordance with the provisions of the letter agreement  relating to such matters
between the  Acquiror and the Company,  dated of even date  herewith  indicate a
material  monetary  liability  on the part of the Company  with  respect to such
Company Employee Benefit Plans, then such material  monetary  liability shall be
considered  a  material  adverse  change in the  Condition  of the  Company  for
purposes  hereof;  (ii) if  legislation is enacted before the First Closing Date
or, it is expected that, such  legislation  will be enacted  shortly  thereafter
which has or would  have the  effect of  prohibiting  the  MARINE  CHEMIST  from
remeasuring her gross tonnage in the manner contemplated by the analysis of cash
flow underpinning the Smith Barney fairness  opinion,  and, as a result thereof,
Smith Barney  withdraws its fairness  opinion or refuses to give a bring down of
its fairness  opinion at the First Closing Date, then such  legislation  will be
considered  a  material  adverse  change in the  Condition  of the  Company  for
purposes  hereof;  (iii) If in  connection  with the Fuji Bank,  Limited  matter
disclosed on SCHEDULE  3.13,  (A) the Company  expends or is obligated to expend
amounts in excess of  $500,000  prior to the First  Closing  Date and/or (B) the
Company is obligated  under the Accounting  Principles to reflect a liability in
excess of $2,000,000,  then such liability will be considered a material adverse
change in the Condition of the Company for purposes hereof.

     (b)  REPRESENTATIONS  AND  WARRANTIES.  Each  of  the  representations  and
warranties  of the Company and the  Shareholders  contained  in this  Agreement,
without giving effect to any

                                     -137-

<PAGE>

notification to the Acquiror delivered pursuant to Section 6.5 hereof,  shall be
true and  correct  on the First  Closing  Date as though  made on and as of such
date, except

          (i) for changes specifically permitted by this Agreement, and

          (ii) that those  representations  and warranties which address matters
     only as of a particular date shall remain true and correct as of such date,
     except that the  representation  made in Section 3.14(b) shall be made with
     respect to the Second  Closing Date and with respect to any taxable year or
     period  beginning  before and ending  after the Second  Closing  Date,  the
     portion of such taxable year or period  ending on and  including the Second
     Closing Date,

except in any case for such  failures  to be true and  correct  which would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.

     (c)  AGREEMENTS  AND  COVENANTS  OF THE  COMPANY.  The  Company  shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it at or prior to
the First Closing Date.

     (d) AGREEMENTS AND COVENANTS OF THE  SHAREHOLDERS.  The Shareholders  shall
have  performed or complied in all material  respects  with all  agreements  and
covenants required by this Agreement to be performed or complied with by them at
or prior to the First Closing Date.

     (e) OFFICERS' CERTIFICATES.  The Acquiror shall have received certificates,
dated the First Closing Date, of

          (i) the President and any Vice President of the Company  certifying as
     to the matters specified in Sections 7.2(a), (b), (c) and (d) hereof and

                                     -138-

<PAGE>

          (ii) the  Secretary  of the Company  certifying  as to the content and
     continuing   effectiveness  as  of  the  applicable  Closing  Date  of  the
     resolutions  of the  board  of  directors  of the  Company  approving  this
     Agreement and the transactions contemplated hereby, and

     (f) GOOD STANDING AND OTHER CERTIFICATES.  The Acquiror shall have received
(i) copies of the Articles of Incorporation,  including all amendments  thereto,
in each case certified by the Secretary of State of the State of Delaware,  (ii)
a certificate from the Secretary of State of the State of Delaware to the effect
that the Company is in good standing,  (iii) a certificate from the Secretary of
State or other  appropriate  official  in each  State in which  the  Company  is
qualified  to do business to the effect that the Company is in good  standing in
such  State  and (iv) a copy of the  By-Laws  of the  Company  certified  by the
Secretary  of the  Company as being true and  correct and in effect on the First
Closing Date.

     (g) Opinions of Counsel. (i) Cadwalader, Wickersham & Taft, special counsel
to the  Company and to the  Shareholders  listed in the first  paragraph  of the
opinion,  shall have furnished the Acquiror with an opinion,  dated of even date
herewith,  and an opinion, dated the First Closing Date, to the effect set forth
in EXHIBITS O-1 AND O-2 hereto.

     (ii)  Cadwalader,  Wickersham & Taft shall also have furnished the Acquiror
with an opinion,  dated the date of the Proxy  Statement to the effect set forth
in EXHIBIT P hereto.

     (iii) Skadden,  Arps,  Slate,  Meagher & Flom LLP,  special  counsel to the
Company and to the  Shareholders,  shall have  furnished  the  Acquiror  with an
opinion  with  respect to the Class B Common Stock of the Company (if such stock
has been issued), dated the First Closing Date,

                                     -139-

<PAGE>

similar in form and  substance  to Exhibit Q hereto,  to the effect  that in the
opinion of counsel the Class B Common  Stock of the  Company  will be treated as
common stock of the Company.

     (h) COMPANY'S  CLOSING  BALANCE SHEET.  The Short-fall  Amount shall not be
more than $1,000,000  after giving effect to any increases in Working Capital as
contemplated in Section 2.2(c).

     (i) FAIRNESS OPINION. The Acquiror's board of directors shall have received
a fairness  opinion from Smith Barney Inc. to the effect that the  consideration
to be paid by the  Acquiror in  connection  with the  transactions  contemplated
hereby  is  fair  from a  financial  point  of  view  to the  Acquiror  and  its
stockholders.

     (j) VESSELS' STATUS. Each of the Company's vessels set forth below its name
in Exhibit R shall be in class.

     ss. 7.3  ADDITIONAL  CONDITIONS TO  OBLIGATIONS  OF THE  SHAREHOLDERS.  The
obligations of the Shareholders to consummate the First Closing are also subject
to the  satisfaction,  at  the  First  Closing  Date  of  all  of the  following
conditions,  any one or more of which may be waived, in whole or in part, by the
Shareholders:

     (a) NO MATERIAL ADVERSE CHANGE.  Since the date of the Domestic Businesses'
Unaudited Consolidated  Financial Statements,  there shall have been no material
adverse  change in the  Condition  of the Domestic  Businesses  and the Acquiror
shall have  delivered to the Company an officer's  certificate,  dated the First
Closing  Date,  to  such  effect;   PROVIDED,   HOWEVER,  that  account  balance
fluctuations  between the Domestic Businesses Unaudited  Consolidated  Financial
Statements and the Domestic Businesses Audited Consolidated Financial Statements
caused by the  differences in allocating  general and  administrative  expenses,
interest  expense on all debt and

                                     -140-

<PAGE>

deferred taxes and the change from accruing dry-dock expenses to pre-paying them
shall not be deemed a material  adverse  change in the Condition of the Domestic
Businesses nor a breach of the  Acquiror's  representations;  PROVIDED  FURTHER,
that the costs and lost revenue associated with routine  maintenance and repairs
and  dry-docking to all vessels prior to the First Closing Date shall  similarly
not be deemed to be a material  adverse  change in the Condition of the Domestic
Businesses nor a breach of the Acquiror's representations.

     (b)  REPRESENTATIONS  AND  WARRANTIES.  Each  of  the  representations  and
warranties of the Acquiror contained in this Agreement, without giving effect to
any  notification  made  by the  Acquiror  to the  Company  or the  Shareholders
pursuant to Section 6.5 hereof,  shall be true and correct on the First  Closing
Date, as though made on and as of such date, except

          (i) for changes specifically permitted by this Agreement, and

          (ii) that those  representations  and warranties which address matters
     only as of a particular  date shall remain true and correct as of such date
     except that the  representation  made in Section 5.14(b) shall be made with
     respect to the Second Closing Date, and with respect to any taxable year or
     period  beginning  before and ending  after the Second  Closing  Date,  the
     portion of such taxable year or period  ending on and  including the Second
     Closing Date,

except in any case for such  failures  to be true and  correct  which would not,
individually or in the aggregate, have a Material Adverse Effect on the Domestic
Businesses.

     (c) AGREEMENTS AND COVENANTS.  The Acquiror and the Shareholders shall have
performed or complied in all material respects with all agreements and covenants
required by this  Agreement to be performed or complied with by them at or prior
to the First Closing Date.

                                     -141-

<PAGE>

     (d) OFFICERS'  CERTIFICATES.  The Company and Shareholders'  Representative
shall have received certificates, dated the First Closing Date, of

          (i) the President and any Vice President of the Acquiror certifying as
     to the matters specified in Sections 7.3(a), (b) and (c) hereof and

          (ii)  the  Secretaries  or  Assistant   Secretaries  of  the  Acquiror
     certifying  as to (A) the content and  continuing  effectiveness  as of the
     applicable  Closing Date of the resolution of the board of directors of the
     Acquiror approving this Agreement and the transactions contemplated hereby,
     and (B) the fact that the stock  issuance  has been  duly  approved  by the
     requisite vote of the  stockholders  of the Acquiror in accordance with the
     rules and  regulations of the NYSE, any other  applicable Law and that such
     approval is in full force and effect.

     (e) GOOD  STANDING AND OTHER  CERTIFICATES.  The Company and  Shareholders'
Representative  shall have  received  (i)  copies of the  Amended  and  Restated
Articles  of  Incorporation,  including  all  amendments  thereto,  in each case
certified by the Secretary of State of the State of Delaware, (ii) a certificate
from the  Secretary  of State of the State of  Delaware  to the effect  that the
Acquiror is in good standing, (iii) a certificate from the Secretary of State or
other  appropriate  official in each State in which the Acquiror is qualified to
do business to the effect  that the  Acquiror is in good  standing in such State
and (iv) a copy of the By-Laws of the Acquiror certified by the Secretary of the
Acquiror as being true and correct and in effect on the First Closing Date.

     (f)  OPINION  OF  COUNSEL.   The  Acquiror  shall  have  furnished  to  the
Shareholders and the Company (i) an opinion,  dated of even date herewith and an
opinion, dated the First Closing

                                     -142-

<PAGE>

Date, of White & Case,  special  counsel to the Acquiror to the effect set forth
in Exhibits S-1A and S-1B,  respectively,  attached  hereto and (ii) an opinion,
dated of even date  herewith and an opinion,  dated the First  Closing  Date, of
Fredric S. London, Esq., General Counsel of the Acquiror to the effect set forth
in Exhibits S-2A and S-2B, respectively, attached hereto.

     (g)  RESIGNATIONS.  All members of the Board of  Directors  of the Acquiror
listed on Exhibit T and all officers of the  Acquiror  listed on Exhibit T shall
have  tendered  their  resignations  from  such  positions  and  the  employment
agreements  listed on Exhibit U shall have been  terminated  effective as of the
Second Closing Date. Provided that the Acquisition is consummated, on the Second
Closing Date the members of the Board of Directors of the Acquiror  shall resign
and be replaced by those individuals  listed on Exhibit V who shall be nominated
in the Proxy  Statement by the current  Board of  Directors  for election by the
stockholders at the Stockholders' Special Meeting.

     (h) VESSELS'  STATUS.  Each of the  Acquiror's  vessels set forth below its
name in Exhibit M shall be in class and, except the ROVER,  shall be eligible to
trade in U.S. waters.

     (i)  REDEMPTION  OF STOCK.  The  Shareholders  shall have received (i) $2.3
million in  redemption  for  certain  shares of Stock and (ii) if the  Company's
Preliminary Closing Balance Sheet indicates that they are entitled to additional
cash in redemption of shares of Stock as set forth in Section 2.2(c)(iii),  such
additional cash in redemption of shares of Stock.

                                  ARTICLE VIII

                                     -143-

<PAGE>

                                   TERMINATION
                                   -----------

     ss. 8.1 Grounds for  Termination.  This  Agreement may be terminated at any
time prior to the First  Closing  Date,  whether  before or after  adoption  and
approval of this Agreement:

          (i)  by   the   mutual   written   agreement   of  the   Shareholders'
     Representative  and the Acquiror  authorized by their respective  boards of
     directors;

          (ii) by the Company or by the Acquiror if

               (A) the Acquisition shall not have been consummated prior to July
          31, 1998 unless  such  eventuality  shall be due to the failure of the
          party  seeking to  terminate  this  Agreement to perform or observe by
          such party on or prior to the First Closing Date,

               (B) any of the  Shareholders  do not  consent to make a requested
          representation pursuant to Section 6.6(c),

               (C) the Shareholders' Representative does not consent to a change
          to the  Distribution  Agreement in those  instances  where  consent is
          required by the terms of Section  7.1(a)  hereof and the  Distribution
          Agreement,

               (D) the Shareholders' Representative does not consent to a change
          to the Corporate  Restructuring  Transactions in those instances where
          consent is required by the terms of the Distribution Agreement,

               (E) the  Shareholders'  Representative  does not  consent  to any
          changes to Ancillary  Agreements in those  instances  where consent is
          required by the terms of the Distribution Agreement;

     (iii) by the Acquiror if

                                     -144-

<PAGE>

               (A) there has been a material  breach on the part of the  Company
          or the Shareholders in the representations, warranties or covenants of
          the Company or the  Shareholders  set forth herein,  or any failure on
          the part of the  Company  or the  Shareholders  to comply  with  their
          respective  obligations hereunder or any other events or circumstances
          shall have occurred such that, in any such case, any of the conditions
          to the  consummation  of the  Acquisition set forth in Sections 7.1 or
          7.2 hereof could not be satisfied on or prior to the termination  date
          contemplated by paragraph (ii) of this Section 8.1,

               (B) there has  occurred  any event,  change or effect which has a
          Material Adverse Effect on the Company; (iv) by the Company if

               (A) there has been a material  breach on the part of the Acquiror
          in the  representations,  warranties  or covenants of the Acquiror set
          forth  herein,  or any  failure on the part of the  Acquiror to comply
          with its  obligations  hereunder or any other events or  circumstances
          shall have occurred such that, in any such case, any of the conditions
          to the  consummation  of the  Acquisition set forth in Sections 7.1 or
          7.3 hereof could not be satisfied on or prior to the termination  date
          contemplated by paragraph (ii) of this Section 8.1,

               (B) the board of directors of the Acquiror withdraws,  amends, or
          modifies in a manner  materially  adverse to the Company its favorable
          recommendation  of  this  Agreement,  the  Acquisition  or  the  Board
          Nominees,

                                     -145-

<PAGE>

               (C) there has  occurred  any event,  change or effect which has a
          Material Adverse Effect on the Domestic Businesses, or

               (D) if the  Distribution  Agreement  is  terminated  pursuant  to
          Section 8.10 thereof prior to the First Closing Date.

     (v) by the holders of a majority of the Non-Management  Stock if the Second
Closing Date has not occurred by December 31, 1998.

     (vi) by the Shareholders'  Representative if the Distribution  Agreement is
terminated pursuant to Section 8.10 thereof prior to the First Closing Date.

     ss. 8.2 EFFECT OF  TERMINATION.  If this  Agreement  is  terminated  by the
Company  or by  the  Acquiror  as  permitted  under  Section  8.1  hereof,  such
termination  shall  be  without  liability  to  the  terminating  party,  or any
stockholder, director, officer, employee, agent, consultant or representative of
such  party,  but such  termination  shall not  relieve  any other  party of any
damages or other amounts for which it would  otherwise be liable for intentional
breach of any provision of this agreement.

     ss. 8.3 WAIVER.  Any time prior to the First Closing Date any party hereto,
by action  taken or  authorized  by its board of  directors,  may, to the extent
legally allowed:

          (i) extend the time for the  performance of any of the  obligations or
     other acts of the other parties hereto,

          (ii) waive any inaccuracies in the  representations  and warranties of
     the other parties  contained herein or in any document  delivered  pursuant
     hereto, and

                                     -146-

<PAGE>

          (iii) waive  compliance by any of the other parties hereto with any of
     the agreements or conditions  contained herein. Any waiver of rights by any
     party  hereto  shall be valid  only if set  forth in a  written  instrument
     signed on behalf of such party.

                                   ARTICLE IX

                  SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
                  --------------------------------------------

     ss. 9.1 SURVIVAL OF  REPRESENTATIONS.  The respective  representations  and
warranties of the Company,  the Shareholders and the Acquiror  contained in this
Agreement  shall  not  survive  past the  Second  Closing  Date  except  for the
representations  and  warranties of the  Shareholders  in Article IV which shall
survive for a period of eighteen  months  following  the Second  Closing,  Date,
after  which time no claim for breach or  indemnification  may be brought by the
other parties.

     ss.9.2  INDEMNIFICATION.  Subject to Section  9.1:  (a) The Company  hereby
agrees  to  indemnify  and  hold  the  Acquiror  and  its  officers,  directors,
Affiliates and agents, and any successors thereto, harmless from and against any
and all Indemnifiable  Losses incurred or suffered as a result of or arising out
of (i) the breach of any  covenant or  agreement  made or to be performed by the
Company pursuant to this Agreement,  (ii) the failure of any  representation  or
warranty  made by the Company in this  Agreement to be true and correct or (iii)
an Approved  Action (that is not a Permitted  Action)  taken by the Company or a
Subsidiary  of the Company  that causes (A) the Spin-off to fail to qualify as a
transaction  that is tax-free  pursuant to Section 355 and/or  Section 368(a) to
the  extent  described  in  the  Ruling  Request  or (B)  any  of the  Corporate
Restructuring   Transactions   which  is  intended  to  qualify  as  a  tax-free
transaction  under Section 332,  351, 355 or 368 to fail to so qualify,  or (iv)
the failure of any Company Employee

                                     -147-

<PAGE>

  Benefit  Plan  (other  than any  Company
Multiemployer  Plan) to be  administered,  maintained  or operated in accordance
with its terms and all applicable laws.

     (b) Each  Shareholder  severally  hereby  agrees to indemnify  and hold the
Acquiror and its officers, directors,  Affiliates (including without limitation,
after the Second  Closing  Date,  the  Company) and agents,  and any  successors
thereto,  harmless from and against any and all Indemnifiable Losses incurred or
suffered as a result of or arising out of (i) the failure of any  representation
or warranty made by such  Shareholder in Article IV of this Agreement to be true
and correct or (ii) the breach by such  Shareholder of any covenant or agreement
to be made or performed by such Shareholder  pursuant to Article II and Sections
6.5, 6.6(c) (other than the owners of  Non-Management  Stock),  6.9, 6.24, 6.27,
6.29, 7.2(b) (as to such Shareholder),  7.2(d), 8.2, 9.1, 9.2(b), 9.3, 9.4, 9.5,
9.6, 9.7, 10.4, 10.5, 10.6, and 10.12 of this Agreement.

     (c) The  Acquiror  hereby  agrees to indemnify  and hold the  Company,  the
Shareholders  and their  respective  affiliates,  officers,  directors,  agents,
successors  and assigns  harmless  from and  against  any and all  Indemnifiable
Losses  incurred  or suffered as a result of or arising out of (i) the breach of
any  covenant or agreement  made or to be performed by the Acquiror  pursuant to
this Agreement or (ii) the failure of any representation or warranty made by the
Acquiror in this Agreement to be true and correct.

     (d) Absent fraud,  the  foregoing  indemnification  provision  shall be the
exclusive remedy for any breach of the covenants,  obligations,  representations
or  warranties  set  forth  in  this  Agreement;  PROVIDED,  HOWEVER,  that  the
provisions of this Section 9.2(d) shall not prevent any of the Shareholders, the
Company or the Acquiror  from seeking the  remedies of specific

                                     -148-

<PAGE>

performance  or injunctive  relief in connection  with a breach of a covenant or
agreement of any party contained  herein.  

     ss.9.3 LIMITATIONS ON INDEMNIFICATION OBLIGATIONS.

     (a) REDUCTIONS FOR INSURANCE PROCEEDS AND OTHER RECOVERIES. The amount that
any party (an  "INDEMNIFYING  PARTY") is or may be  required to pay to any other
Person  (an  "INDEMNITEE")  pursuant  to  Section  9.2  above,  shall be reduced
(retroactively  or  prospectively)  by any  Insurance  Proceeds or other amounts
actually  recovered  from third  parties by or on behalf of such  Indemnitee  in
respect of the related  Indemnifiable  Losses.  The  existence  of a claim by an
Indemnitee   for   insurance  or  against  a  third  party  in  respect  of  any
Indemnifiable  Loss  shall  not,  however,  delay any  payment  pursuant  to the
indemnification  provisions  contained herein and otherwise determined to be due
and owing by an Indemnifying  Party.  Rather the  Indemnifying  Party shall make
payment in full of such amount so  determined  to be due and owing by it against
an assignment by the Indemnitee to the Indemnifying Party of the entire claim of
the Indemnitee  for such insurance or against such third party.  Notwithstanding
any other  provisions  of this  Agreement,  it is the  intention  of the parties
hereto  that no insurer or any other  third  party  shall be (i)  entitled  to a
benefit it would not be  entitled  to receive  in the  absence of the  foregoing
indemnification  provisions  or (ii) relieved of the  responsibility  to pay any
claims for which it is  obligated.  If an  Indemnitee  shall have  received  the
payment required by this Agreement from an Indemnifying  Party in respect of any
Indemnifiable Losses and shall subsequently  actually receive Insurance Proceeds
or other amounts in respect of such Indemnifiable  Losses,  then such Indemnitee
shall hold such Insurance Proceeds in trust for the benefit of such Indemnifying
Party and shall pay to such Indemnifying Party a sum equal to the amount of such
Insurance Proceeds

                                     -149-

<PAGE>

or other amounts actually  received,  up to the aggregate amount of any payments
received from such  Indemnifying  Party pursuant to this Agreement in respect of
such Indemnifiable Losses.

     (b) FOREIGN CURRENCY  ADJUSTMENTS.  All indemnification  payments hereunder
shall be in U.S.  Dollars.  In the event  that any  Indemnifiable  Loss shall be
denominated  in a currency other than U.S.  Dollars,  the amount of such payment
shall be translated into U.S.  Dollars using the foreign  exchange rate for such
currency determined in accordance with the following rules:

          (i) with respect to any Indemnifiable  Losses arising from the payment
     by a financial  institution  under a guarantee,  comfort letter,  letter of
     credit,  foreign  exchange  contract  or similar  instrument,  the  foreign
     exchange rate for such currency shall be determined as of the date on which
     such financial institution shall have been reimbursed;

          (ii) with respect to any  Indemnifiable  Losses  covered by insurance,
     the foreign  exchange rate for such currency shall be the foreign  exchange
     rate employed by the insurance company providing such insurance in settling
     such Indemnifiable Losses with the Indemnifying Party; and

          (iii) with respect to any  Indemnifiable  Losses not covered by either
     clause (i) or (ii) above, the foreign exchange rate for such currency shall
     be   determined   as  of  the  date  that  payment  with  respect  to  such
     Indemnifiable Losses shall be made to the Indemnitee.

     ss.   9.4   INDEMNIFICATION   PROCEDURE.   (a)   Any   Indemnitee   seeking
indemnification  from any Indemnifying Party with respect to any claim,  demand,
action,  proceeding  or other matter  pursuant to this  Agreement  (the "CLAIM")
shall  promptly  notify the  Indemnifying  Party of the  existence of the Claim,
setting  forth in  reasonable  detail  the  facts and  circumstances  pertaining
thereto  and the  basis  for the  Indemnitee's  right to  indemnification.  Such
Indemnifying Party shall

                                     -150-

<PAGE>

have a period of 15 Business  Days after the receipt of such notice within which
to respond thereto.  If such Indemnifying  Party does not respond within such 15
business-day  period, such Indemnifying Party shall be deemed to have refused to
accept  responsibility  to make  payment.  If such  Indemnifying  Party does not
respond within such 15 business-day  period or rejects such claim in whole or in
part, such Indemnitee  shall be free to pursue such remedies as may be available
to such party under applicable law or under this Agreement.

     (b) NOTICE OF THIRD  PARTY  CLAIMS.  If any third  party  shall  notify any
Indemnitee  with  respect  to any  matter  which  may give  rise to a Claim  for
indemnification  against an Indemnifying Party under this Agreement (such Claim,
a "THIRD PARTY CLAIM"),  such Indemnitee shall notify the Indemnifying  Party in
writing, and in reasonable detail, of the Third Party Claim promptly (and in any
event  within 15 Business  Days)  after  receipt by such  Indemnitee  of written
notice of the Third Party Claim;  PROVIDED,  HOWEVER,  that failure to give such
notification   shall  not  affect  the  Indemnitee's  right  to  indemnification
hereunder except to the extent the  Indemnifying  Party shall have been actually
prejudiced as a result of such failure (except that the Indemnifying Party shall
not be  liable  for any  expenses  incurred  during  the  period  in  which  the
Indemnitee failed to give such notice). Thereafter, the Indemnitee shall deliver
to the Indemnifying  Party,  promptly (and in any event within 15 Business Days)
after the  Indemnitee's  receipt  thereof,  copies of all notices and  documents
(including court papers) received by the Indemnitee  relating to the Third Party
Claim.

     (c) LEGAL  DEFENSE OF THIRD  PARTY  CLAIMS.  If a Third Party Claim is made
against an Indemnitee,  the Indemnifying  Party shall be entitled to participate
in the defense thereof and, if it so chooses, to assume the defense thereof with
counsel selected by the Indemnifying Party,

                                     -151-

<PAGE>

which counsel shall be reasonably  satisfactory  to the  Indemnitee.  Should the
Indemnifying  Party so elect to assume the defense of a Third Party  Claim,  the
Indemnifying  Party  shall not be liable  to the  Indemnitee  for legal or other
expenses  subsequently incurred by the Indemnitee in connection with the defense
thereof.  If the Indemnifying  Party assumes such defense,  the Indemnitee shall
have the right to participate in the defense thereof and to employ  counsel,  at
its own expense,  separate from the counsel employed by the Indemnifying  Party,
it being understood that the Indemnifying Party shall control such defense.  The
Indemnifying  Party  shall be liable for the  reasonable  fees and  expenses  of
counsel  employed by the Indemnitee for any period during which the Indemnifying
Party has failed to assume the  defense of the Third  Party  Claim  (other  than
during the period  prior to the time the  Indemnitee  shall have given notice of
the Third Party Claim as provided above). If the Indemnifying Party so elects to
assume the  defense  of any Third  Party  Claim,  all of the  Indemnitees  shall
cooperate with the  Indemnifying  Party in the defense or  prosecution  thereof.
Notwithstanding the foregoing:

          (i) the Indemnifying Party shall not be entitled to assume the defense
     of any Third  Party  Claim (and shall be liable to the  Indemnitee  for the
     reasonable  fees and  expenses  of counsel  incurred by the  Indemnitee  in
     defending  such Third  Party  Claim) if the Third  Party Claim seeks as its
     primary claim for relief an order,  injunction or other equitable relief or
     relief  for other than  money  damages  against  the  Indemnitee  which the
     Indemnitee reasonably determines, after conferring with its counsel, cannot
     be separated from any related claim for money damages;  PROVIDED,  HOWEVER,
     that if such  equitable  relief or other relief  portion of the Third Party
     Claim can be so separated  from 

                                     -152-

<PAGE>

     that for money damages,  the Indemnifying Party shall be entitled to assume
     the defense of the portion relating to money damages;

          (ii) an Indemnifying Party shall not be entitled to assume the defense
     of any Third  Party  Claim (and shall be liable to the  Indemnitee  for the
     reasonable  fees and  expenses  of counsel  incurred by the  Indemnitee  in
     defending  such  Third  Party  Claim)  if, in the  Indemnitee's  reasonable
     judgment,   a  conflict  of  interest  between  such  Indemnitee  and  such
     Indemnifying  Party  exists in respect of such  Third  Party  Claim or such
     claim involves the possibility of criminal  sanction or criminal  liability
     to the Indemnitee; and

          (iii) if at any time after assuming the defense of a Third Party Claim
     an Indemnifying  Party shall fail to prosecute or withdraw from the defense
     of such Third Party Claim,  the Indemnitee  shall be entitled to resume the
     defense  thereof  and  the  Indemnifying  Party  shall  be  liable  to  the
     Indemnitee for the reasonable fees and expenses of counsel  incurred by the
     Indemnitee in such defense.

     (d) Settlement of Third Party Claims. Except as otherwise provided below in
this Section 9.4(d),  if the  Indemnifying  Party has assumed the defense of any
Third Party Claim, then

          (i) in no event will the  Indemnitee  admit any liability with respect
     to, or settle,  compromise or discharge,  any Third Party Claim without the
     Indemnifying  Party's prior written consent;  PROVIDED,  HOWEVER,  that the
     Indemnitee  shall have the right to settle,  compromise  or discharge  such
     Third Party Claim  without  the  consent of the  Indemnifying  Party if the
     Indemnitee   releases  the  Indemnifying  Party  from  its  indemnification
     obligation  hereunder  with  respect  to such  Third  Party  Claim and such
     settlement,

                                     -153-

<PAGE>

     compromise  or  discharge   would  not  otherwise   adversely   affect  the
     Indemnifying Party, and

          (ii) the  Indemnitee  will  agree  to any  settlement,  compromise  or
     discharge of a Third Party Claim that the Indemnifying  Party may recommend
     and that by its  terms  obligates  the  Indemnifying  Party to pay the full
     amount of the  liability  in  connection  with such Third  Party  Claim and
     releases the  Indemnitee  completely  in  connection  with such Third Party
     Claim  and that  would  not  otherwise  adversely  affect  the  Indemnitee.
     PROVIDED,  HOWEVER,  that the  Indemnitee  may  refuse to agree to any such
     settlement,  compromise  or  discharge  if the  Indemnitee  agrees that the
     Indemnifying Party's indemnification  obligation with respect to such Third
     Party  Claim  shall not exceed the amount that would be required to be paid
     by or  on  behalf  of  the  Indemnifying  Party  in  connection  with  such
     settlement, compromise or discharge.

     If the  Indemnifying  Party has not  assumed  the  defense of a Third Party
Claim then in no event shall the Indemnitee settle, compromise or discharge such
Third Party Claim without  providing  prior written  notice to the  Indemnifying
Party,  which shall have the option within 15 Business Days following receipt of
such notice to:

               (A) approve and agree to pay the settlement,

               (B) approve the amount of the settlement,  reserving the right to
          contest  the  Indemnitee's   right  to  indemnity   pursuant  to  this
          Agreement,

               (C)  disapprove the settlement and assume in writing all past and
          future  responsibility  for such Third Party Claim  (including  all of
          Indemnitee's prior expenditures in connection therewith), or

                                     -154-

<PAGE>

               (D)  disapprove  the  settlement  and  continue  to refrain  from
          participation  in the defense of such Third Party Claim.  In the event
          the  Indemnifying  Party does not respond to such written  notice from
          the Indemnitee  within such 15 business-day  period,  the Indemnifying
          Party shall be deemed to have elected option (D).

          (e) The Indemnitee  shall be entitled to  reimbursement  of reasonable
     expenses included in Damages with respect to any Claim (including,  without
     limitation, the cost of defense,  preparation and investigation relating to
     such Claim) as such expenses are incurred by the Indemnitee.

     ss. 9.5 INDEMNIFICATION PAYMENTS.  Indemnification required by this Article
IX shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills are received or loss, liability,
claim, damage or expense is incurred. IX.6 Other Adjustments.justments

          (a) Adjustments for Taxes. The amount of any Indemnifiable  Loss shall
     be (i) increased to take account of any net Tax cost  actually  incurred by
     the  Indemnitee  arising from any payments  received from the  Indemnifying
     Party (grossed up for such  increase);  and (ii) reduced to take account of
     any net Tax  benefit  actually  realized  by  Indemnitee  arising  from the
     incurrence  or payment of any such  Indemnifiable  Loss.  In computing  the
     amount of such Tax cost or tax benefit,  the Indemnitee  shall be deemed to
     recognize all other items of income, gain, loss, deduction or credit before
     recognizing  any item  arising from the receipt of any payment with respect
     to an Indemnifiable  Loss or the incurrence or payment of any Indemnifiable
     Loss.

                                     -155-

<PAGE>

          (b) Reductions for Subsequent  Recoveries or Other Events. In addition
     to any  adjustments  required  pursuant  to Section  9.3 or Section  9.5(a)
     above,  if the  amount  of any  Indemnifiable  Losses  shall,  at any  time
     subsequent to any  indemnification  payment made by the Indemnifying  Party
     pursuant  to this  Article  IX,  be  reduced  by  recovery,  settlement  or
     otherwise,  the amount of such  reduction,  less any  expenses  incurred in
     connection  therewith,  shall  promptly be repaid by the  Indemnitee to the
     Indemnifying  Party,  up to the aggregate  amount of any payments  received
     from such Indemnifying  Party pursuant to this Agreement in respect of such
     Indemnifiable Losses.

     ss. 9.7  OBLIGATIONS  ABSOLUTE.  The foregoing  contractual  obligations of
indemnification set forth in this Article IX shall:

          (i) also apply to any and all Third Party  Claims that allege that any
     Indemnitee is independently, directly, vicariously or jointly and severally
     liable to such third party;

          (ii) to the extent  permitted  by  applicable  law,  apply even if the
     Indemnitee is negligent or otherwise  culpable or at fault,  whether or not
     such liability arises under any doctrine of strict liability; and

          (iii)  subject to Section  9.1,  be in addition  to any  liability  or
     obligation that an Indemnifying  Party may have other than pursuant to this
     Agreement.

     ss. 9.8 REMEDIES CUMULATIVE.  Subject to Section 9.1, the remedies provided
in this Article IX shall be cumulative  and shall not preclude  assertion by any
Indemnitee  of any other  rights or the  seeking  of any and all other  remedies
against any Indemnifying Party.

                                     -156-

<PAGE>

                                    ARTICLE X

                                  MISCELLANEOUS
                                  -------------

     ss. 10.1 ROVER.  By December 1, 1997, the Company shall send written notice
to the Acquiror  electing  whether to have the  Acquiror  put the ROVER  through
dry-dock or, in lieu thereof,  having the Acquiror increase by $800,000 the cash
on its Pro Forma Closing  Balance  Sheet.  If the Company sends a written notice
electing the latter,  this Agreement shall  automatically  be amended to reflect
such increase in Article II.

     ss.  10.2  GOVERNING  LAW.  THE  INTERPRETATION  AND  CONSTRUCTION  OF THIS
AGREEMENT, AND ALL MATTERS RELATING HERETO, SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO AGREEMENTS  EXECUTED AND TO BE PERFORMED  SOLELY
WITHIN SUCH STATE WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.

     ss. 10.3  CAPTIONS.  The Article and Section  captions  used herein are for
reference  purposes  only,  and  shall  not in any way  affect  the  meaning  or
interpretation of this Agreement.

     ss. 10.4 PUBLICITY.  Except as otherwise  required by law or stock exchange
regulation,  none of the parties hereto shall issue, prior to the Second Closing
Date,  any  press  release  or make any  other  public  statement,  in each case
relating  to,  connected  with or arising out of this  Agreement  or the matters
contained herein,  without  obtaining the prior approval of the Company,  on the
one hand, and the Acquiror, on the other hand, to the contents and the manner of
presentation  and  publication  thereof which approval shall not be unreasonably
withheld.

                                     -157-

<PAGE>

     ss. 10.5 NOTICES.  Any notice or other communication  required or permitted
under this Agreement shall be sufficiently  given if delivered in person or sent
by telecopy or by registered or certified mail,  postage  prepaid,  addressed as
follows:  if to the Acquiror,  to OMI Corp., 90 Park Avenue,  New York, New York
10016 (Facsimile  Number (212) 297-2288),  Attention:  Fredric S. London,  Esq.,
with a copy to its counsel, White & Case, 1155 Avenue of the Americas, New York,
New York 10036 (Facsimile  Number (212) 354-8113),  Attention:  Robert L. Clare,
III,  Esq.; if to the Company,  to Marine  Transport  Lines,  Inc.,  1200 Harbor
Boulevard,  Weehawken,  New Jersey  07087  (Facsimile  Number  (201)  330-9645),
Attention:  Peter  Popov,  Esq.  ,  with a  copy  to  its  counsel,  Cadwalader,
Wickersham & Taft, 100 Maiden Lane, New York, New York 10038  (Facsimile  Number
(212)  504-6666)   Attention:   Louis  J.  Bevilacqua,   Esq.;  and  if  to  the
Shareholders,  their  address as set forth on Exhibit A attached  hereto  with a
copy to Weil,  Gotshal & Manges,  767 Fifth  Avenue,  New York,  New York  10153
(Facsimile Number (212) 310-8007) Attention:  William M. Gutowitz,  Esq. or such
other address or number as shall be furnished in writing by any such party,  and
such notice or  communication  shall be deemed to have been given as of the date
so delivered, sent by facsimile or mailed.

     ss.  10.6  PARTIES IN  INTEREST.  This  Agreement  may not be  transferred,
assigned,  pledged or hypothecated by any party hereto,  other than by operation
of law; PROVIDED,  HOWEVER,  that UBC shall  automatically  assign its right and
delegate  its  obligations  under this  Agreement to the Person that becomes the
party  (other  than   Acquiror)   to  the   Distribution   Agreement   effective
simultaneously  with the  consummation  of the Spin-Off and assumes UBC's rights
and obligations  under this Agreement.  This Agreement shall be binding upon and
shall inure to the benefit of

                                     -158-

<PAGE>

the  parties  hereto  and their  respective  heirs,  executors,  administrators,
successors and permitted assigns.

     ss.  10.7  COUNTERPARTS.  This  Agreement  may be  executed  in two or more
counterparts,  all of which taken  together  shall  constitute  one  instrument.
Delivery of an executed  counterpart  of a signature  page to this  Agreement by
telecopier shall be as effective as delivery of a manually executed  counterpart
of this Agreement.

     ss. 10.8 ENTIRE  AGREEMENT.  This Agreement,  including the other documents
referred to herein and therein which form a part hereof and thereof, contain the
entire  understanding  of the parties  hereto with respect to the subject matter
contained herein and therein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.

     ss. 10.9 AMENDMENTS.  This Agreement may not be changed orally, but only by
an  agreement  in  writing  signed  by  the  Acquiror,   the  Company  and  each
Shareholder.

     ss. 10.10  SEVERABILITY.  In case any provision in this Agreement  shall be
held   invalid,   illegal  or   unenforceable,   the   validity,   legality  and
enforceability  of the  remaining  provisions  hereof  will  not  in any  way be
affected or impaired thereby.

     ss. 10.11 THIRD PARTY  BENEFICIARIES.  Except as expressly provided herein,
this Agreement shall not benefit or create any right or cause of action in or on
behalf of any Person other than the parties hereto.

     ss. 10.12 JURISDICTION.  Any judicial proceeding brought against any of the
parties to this  Agreement or any dispute  arising out of this  Agreement or any
matter  related hereto may be brought in the courts of the State of New York, or
in the United States District Court

                                     -159-

<PAGE>

for the Southern  District of New York,  and, by execution  and delivery of this
Agreement,  each of the parties to this Agreement  accepts the  jurisdiction  of
such courts, and irrevocably agrees to be bound by any judgment rendered thereby
in connection with this Agreement.  The foregoing consent to jurisdiction  shall
not be deemed to confer rights on any Person other than the  respective  parties
to this Agreement.  To the extent any party is not otherwise  subject to service
of process in the State of New York, such party appoints the  Corporation  Trust
Company,  as such party's agent in the State of New York for acceptance of legal
process and agrees that service made on any such agent shall have the same legal
force and effect as if served upon such party personally within the State of New
York; PROVIDED,  HOWEVER,  that Harrowston  Corporation appoints Weil, Gotshal &
Manges,  767 Fifth  Avenue,  New York,  New York 100153,  Attention:  William M.
Gutowitz, Esq. and the other Shareholders appoint Cadwalader, Wickersham & Taft,
100 Maiden Lane, New York, New York 10038, Attention: Louis J. Bevilacqua, Esq.

                            [SIGNATURE PAGE FOLLOWS]














                                     -160-

<PAGE>

     IN WITNESS  WHEREOF,  the  Company,  the Acquiror and UBC have caused their
corporate names to be hereunto subscribed by their respective officers thereunto
duly authorized and each of the Shareholders  has signed this Agreement,  all as
of the day and year first above written.

                                            MARINE TRANSPORT LINES, INC.



                                            By: /s/ Richard T. du Moulin
                                            ----------------------------
                                               Name:  Richard T. du Moulin
                                               Title:  Chairman



                                            OMI CORP.



                                            By: /s/ Fredric S. London
                                            -------------------------
                                               Name:  Fredric S. London
                                               Title:  Senior Vice President



                                            UNIVERSAL BULK CARRIERS, INC.



                                            By: /s/ Vincent J. de Sostoa
                                            ----------------------------
                                               Name:  Vincent J. de Sostoa
                                               Title: Senior Vice President


<PAGE>

                                  SHAREHOLDERS

================================================================================
/s/  Richard T. du Moulin                              /s/  Paul B. Gridley
--------------------------                             ---------------------
Richard T. du Moulin                                   Paul B. Gridley
================================================================================
/s/  Mark L. Filanowski                                /s/  Irwin S. Meyer
--------------------------                             ---------------------
Mark L. Filanowski                                          Irwin S. Meyer,
                                                         as registered owner
================================================================================
/s/  Jerome Shelby                              Wolfson Descendants' 1983 Trust
------------------
Jerome Shelby

                                                       /s/  Biniamine Amoyelle
                                                       -----------------------
                                                       By:  Biniamine Amoyelle
                                                       Title:  Trustee
================================================================================
Steamboat Road Holdings, Inc.                          Larchmont Partners, L.P.


/s/  Richard T. du Moulin                              /s/  Richard T. du Moulin
--------------------------                             -------------------------
By:  Richard T. du Moulin                              By:  Richard T. du Moulin
Title:  President                                      Title: G.P.

================================================================================
Harrowston Corporation                                 /s/  Peter N. Popov
                                                       ------------------------
                                                       Peter N. Popov

/s/  David Sutin
----------------
By:  David Sutin
Title:  Executive Vice President
================================================================================
/s/  Jeffrey Miller                                    /s/  Thomas E. Murphy
--------------------------                             ------------------------
Jeffrey Miller                                         Thomas E. Murphy
================================================================================
/s/  Douglas Newhouse                                  /s/  Stanley Rich
--------------------------                             ------------------------
Douglas Newhouse                                       Stanley Rich



<PAGE>

================================================================================
/s/  Nicholas Orfanidis                                /s/  Thomas McIntyre
--------------------------                             ------------------------
Nicholas Orfanidis                                     Thomas McIntyre

================================================================================
/s/  Ken Jones                                         Richard T. du Moulin
---------------
Ken Jones                                              and Mark Filanowski
                                                       as trustees under the
                                                       Trust Agreement dated
                                                       September 12, 1997
                                                       between the Company and
                                                       the Trustees


                                                   By:/s/ Richard T. du Moulin
                                                    ---------------------------
                                                          Richard T. du Moulin

                                                       By:/s/  Mark Filanowski
                                                       -----------------------
                                                                Mark Filanowski
================================================================================