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                                    OMI CORP.

                              AMENDED AND RESTATED
                  ANNUAL EXECUTIVE INCENTIVE COMPENSATION PLAN
                  --------------------------------------------

PURPOSE
-------

     To  improve  OMI  Corp.'s  financial   results  by  creating   compensation
incentives based on the performance of its executive personnel.

ELIGIBILITY
-----------

     Prior to the beginning of each calendar year (a  "Performance  Year"),  the
Chief  Executive  Officer will  recommend to the  Compensation  Committee of the
Board those  positions  eligible to  participate  in the plan for that year (the
"Participants").  Participation  in the plan is  restricted  to  positions  that
perform  managerial  or other  functions  that  have  significant  influence  on
corporate performance.

PLAN FEATURES
-------------

     Unit  Determination  - Each  Participant  shall have  allocated  a proposed
number of units for each  Performance  Year in which he or she is a Participant.
The person to whom the  Participant  reports  shall  evaluate the  Participant's
performance  prior  to the end of the  Performance  Year  and  recommend  to the
President or Senior Vice President to whom the Participant's  department reports
the  percentage  of the  allocated  units  to  which  the  Participant  shall be
entitled,  which percentage shall range from 0 to 125% with the norm expected to
be 75 to 100% and the  President or Senior Vice  President  shall  determine the
appropriate   percentage.   The  Chief  Executive  Officer  shall  evaluate  the
performance of those reporting directly to him, making a similar  recommendation
to the Compensation  Committee,  which shall (1) evaluate the performance of the

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Chairman  and (2)  determine  the  appropriate  percentages  for  the  Chairman,
President and Senior Vice Presidents  (such  determination  for each Participant
multiplied by the appropriate target incentive award units being the "Multiplier
Units" for the Participant for the Performance Year).

     COMPANY  PERFORMANCE  MEASURES - The performance  measures  selected may be
different  in a given  year  and may  vary  from  one  year to  another,  at the
discretion  of the  Compensation  Committee.  The chosen  measures  will reflect
important strategic and/or tactical objectives crucial to the Company's success.

     The  Compensation  Committee of the Board has selected the following  goals
for 1995 and until otherwise determined:

     (a)  Stock price: The stock price will be targeted at $7.50 for 1995, $8.50
          for 1996,  $9.50 for 1997 and $10.50 in 1998.  The  measurement  price
          shall be the average of the twenty  highest  closing prices during the
          calendar year. The differential  between the applicable targeted stock
          price and the average  weighted  closing price during the  measurement
          period shall be calculated (the "Price Differential").

     (b)  Free cash  flow:  Cash flow  after  debt  service  which is Net Income
          Before  Taxes +  Depreciation  - Scheduled  Principal  Amortization  +
          Drydock  Accrual.  (The drydock  accrual  shall be computed as accrued
          drydock  expense - actual  cash  expense.)  Free  cash  flow  shall be
          determined  based on the Company's  audited  financial  statements and
          shall be divided by the number of common  stock  shares of the Company
          outstanding on December 31 of the Performance Year (the "Cash Flow per
          share").

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     Calculation - The award (the "Incentive  Bonus") for a Participant shall be
the Participant's  Multiplier Units times the sum of (a) the Price  Differential
and (b) Cash flow per share.

PAYMENT AWARDS
--------------

     The Incentive Bonus shall be paid in full as soon as possible after the end
of the Performance Year, usually on or before March 1.

SPECIAL CONSIDERATIONS
----------------------

     If a  Participant's  employment  is  terminated  due  to  death,  long-term
disability,  or  retirement  prior  to  the  end of the  Performance  Year,  the
Participant or the Participant's  beneficiary shall be entitled to receive a PRO
RATA portion of the award that would have been received had the Participant been
active for the full year.

     If a  Participant's  employment is terminated  for reasons other than those
described  above,  including  resignation or discharge,  prior to the end of the
Performance Year any rights to an award will normally be forfeited,  except that
the Chief  Executive  Officer may  recommend an award amount for approval by the
Compensation Committee, subject to ratification by the Board.

     Individuals  who become  Participants  during a  performance  year  receive
incentive  award  opportunities  prorated  accordingly.   Participants  who  are
promoted to a position  at a higher  level of proposed  units are  eligible  for
prorated  award for the amount of time spent in each position and based upon the
performance level achieved in each position.

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LIMITATIONS
-----------

     Participation  in the Plan neither  implies nor  guarantees  continuance of
employment. No part of the Plan shall be construed as a compensation contract.

CHANGE OF CONTROL
-----------------

     In the event  that a Change in  Control  as defined in Section 3 of the OMI
Corp.  Separation  Allowance  Program  shall occur,  the  Participants  shall be
entitled to receive bonuses annually, using the same criteria as hereinabove set
forth except:

     (1)  neither the  Compensation  committee  nor any other person nor persons
          shall have the right to  terminate  nor the  discretion  to change the
          Plan without the written consent of each Participant affected.

     (2)  The  multiplier  Units  for  each  Participant  shall  be  100% of the
          Participant's target incentive award units

     (3)  The Price  Differential shall be the difference between (a) the higher
          of (i) stock  price at the time of the  calculation  of the bonus most
          recently  paid and (ii) the fair  market  value of shares of OMI Corp.
          common  stock at the time of the Change in Control  and (b) the target
          price for the applicable year,  provided that for any year for which a
          target price has not been established, the target price shall be $1.00
          higher than the previous year.

     (4)  If a Participant's  employment is terminated  other than for cause (as
          defined in any employment  agreement  between the  Participant and the
          Company,  if the same is in  effect,  or  otherwise  in the OMI  Corp.
          Separation Allowance Program) or due to death, long term disability or
          retirement prior to the end of a Performance  Year, the Participant or
          the 

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          Participant's  beneficiary  shall be  entitled  to  receive a PRO RATA
          portion of the award that would have been received had the Participant
          been active for the full year.