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                                                                 Exhibit 10(iii)






                                                                   June 23, 2003



Mr. Morton P. Hyman
Chairman & Chief Executive Officer
Overseas Shipholding Group, Inc.
511 Fifth Avenue
New York, NY  10017

Dear Mr. Hyman:

In light of your long and valued service to Overseas Shipholding Group, Inc.
("OSG"), and your expressed desire to retire from your positions as Chairman of
the Board of Directors (the "Chairman") and Chief Executive Officer ("CEO") of
OSG, and to separate from your employment with OSG no later than the end of this
year, this letter agreement and the General Release attached hereto set forth
the arrangement agreed to by OSG and you regarding such retirement and
separation.

1.   (a) You shall continue to serve as Chairman and CEO of OSG, at your current
     rate of salary, until the earliest to occur of (i) December 31, 2003, (ii)
     the date on which a successor Chairman and CEO is appointed by the Board of
     Directors of OSG (the "Board") and commences employment with OSG, or (iii)
     your date of death (the "Retirement Date"). You may continue to serve as a
     director of OSG (without compensation) through the regularly scheduled 2004
     annual meeting of the shareholders of OSG. If your Retirement Date occurs
     prior to December 31, 2003 (and other than due to your death), your duties
     as an ongoing employee shall be mutually determined by you and the Board,
     but in any event your salary shall continue at its current rate through the
     earlier to occur of December 31, 2003 or your date of death. You shall also
     be entitled to receive your bonus for 2003, to be based solely on OSG's
     financial performance, as computed by the Compensation Committee utilizing
     the applicable provisions of the bonus formula currently in existence under
     OSG's Incentive Compensation Plan, which will be paid to you on the date on
     which bonuses for 2003 are payable to other senior executives of OSG.

     (b) Prior to your Retirement Date, all matters of a strategic nature
     received by you will be referred to the Board for its consideration and
     review.

2.   Your employment with OSG shall end as of December 31, 2003 or, if earlier,
     your date of death. Except in the event of your earlier death or as
     otherwise set forth herein, December 31, 2003 shall be the termination date
     for purposes of your participation in and

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     coverage as an active employee under all employee benefit plans and
     programs sponsored by OSG or its subsidiaries, including but not limited
     to, vacation accrual, tuition reimbursement, participation in any pension
     plan or savings plan, and eligibility for short-term and long-term
     disability benefits and life insurance. All benefits due you shall be paid
     or made available to you in accordance with the terms of those established
     policies or plans of OSG. Moreover, any benefit continuation or conversion
     rights existing under such policies or plans will be made available to you
     in accordance with the terms of such established policies or plans.

3.   You shall resign as an officer and director of any subsidiaries, affiliates
     and  related  companies  of OSG,  including  but not  limited  to,  Tankers
     International  and Aframax  International,  effective as of the  Retirement
     Date.

4.   During the period from January 1, 2004 through June 30, 2004 (the
     "Transition Period"), you shall serve as an independent consultant to OSG,
     and as such shall be reasonably available at mutually-agreed times and
     places to consult with your successor on matters relating to your
     experience as Chairman and CEO. During the Transition Period, OSG shall pay
     you a monthly consulting fee (payable as soon as practicable after the end
     of each such month) which shall be based on your current annual salary
     (i.e., the total fee will be equal to $600,000) and reimburse you, in
     accordance with OSG's reimbursement and expense policies, for all
     reasonable expenses incurred by you in performing the consulting services
     described herein.

5.   Subject to your execution of the General Release following your separation
     of employment and your election not to exercise your right to revoke the
     General Release as described therein, you shall be entitled to a lump sum
     cash payment of $1,200,000, payable on the first business day following the
     eighth day after your execution of such General Release.

6.   On January 5, 2004, in full settlement of your rights and benefits under
     the Overseas Shipholding Group, Inc. Supplemental Executive Retirement Plan
     and the Overseas Shipholding Group, Inc. Supplemental Executive Retirement
     Plan Plus, OSG shall pay you, in cash, a lump sum of $15,852,846, minus the
     present value of your accrued benefit under the Pension Plan for Employees
     of OSG Ship Management, Inc. as of December 31, 2003 (the "Pension Plan"),
     calculated pursuant to the Pension Plan using the Pension Plan's actuarial
     assumptions applicable to payment of a retirement benefit thereunder in the
     form of a lump sum.

7.   Effective as of the Retirement Date, all of your OSG stock options that are
     not yet vested will become fully vested and exercisable. Thereafter, all of
     your OSG options shall be subject to the terms and conditions of the
     applicable stock option plans, provided that such options shall remain
     exercisable until the earlier of January 4, 2005 or the end of their
     original ten-year terms.

8.   OSG shall provide you with the use of a suitable, mutually agreed-upon
     office off of the OSG premises and full-time secretary (who shall be your
     current secretary unless you determine otherwise) at OSG's expense (subject
     to an all-inclusive monthly billing

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     system acceptable to OSG) for the period beginning on the Retirement Date
     and ending on June 30, 2004.

9.   OSG shall pay all reasonable legal fees and expenses of Simpson Thacher &
     Bartlett LLP incurred by you in connection with the negotiations of this
     letter agreement and the General Release; provided, however, that such fees
     shall not exceed $25,000.

10.  You shall retain all rights to indemnification under applicable law or
     under OSG's Certificate of Incorporation or By-Laws, as they may be amended
     or restated from time to time. In addition, OSG shall maintain Director's
     and Officer's liability insurance on your behalf, at the level in effect
     for all other officers and directors of OSG from time to time, through
     December 31, 2003 and throughout the period of any applicable statute of
     limitations.

11.  (a) You agree not to disclose any information, files, documents and other
     materials proprietary to OSG and not in the public domain which relate to
     OSG or its business and which are treated as confidential by OSG, its
     subsidiaries, affiliates or related companies, except (i) with the prior
     consent of OSG or (ii) as otherwise required by law or legal process.
     Nothing in the preceding sentence shall be deemed to limit what you may
     discuss with the other directors of OSG.

     (b) Through June 30, 2005 you agree not to use any proprietary or
     confidential information relating to OSG, its subsidiaries, affiliates or
     related companies ("Confidential Information") in any commercial activity
     in which you engage, other than on behalf of OSG, whether as an officer,
     employee, director, owner, partner or otherwise; provided, however, that
     Confidential Information shall not include any information which is or has
     been acquired by you other than only through your position as an officer or
     director of OSG, its subsidiaries or affiliates.

12.  (a) Until such time as OSG files this document with the Securities and
     Exchange Commission, (i) except as may be required by law or legal process,
     OSG shall keep the terms of this letter agreement confidential and not
     disclose such terms to anyone other than directors, officers, employees,
     attorneys, advisors, auditors and agents of OSG, its subsidiaries,
     affiliates and related companies, without your prior consent, each of whom
     shall be requested by OSG to maintain such information in confidence, and
     (ii) you agree to keep the terms of this letter agreement confidential and
     not to disclose its contents to anyone without OSG's prior consent, except
     members of your immediate family, your attorney, financial consultant or
     other professional advisor and any potential employer, each of whom shall
     be requested by you to maintain such information in confidence.

     (b) Notwithstanding anything herein to the contrary, either party to this
     letter agreement (and any employee, representative, or other agent of any
     party to this letter agreement) may disclose to any and all persons,
     without limitation of any kind, the tax treatment and tax structure of the
     transactions contemplated by this letter agreement and all materials of any
     kind (including opinions or other tax analyses) that are provided to it
     relating to such tax treatment and tax structure. However, any such
     information relating to the tax


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     treatment or tax structure is required to be kept confidential to the
     extent necessary to comply with any applicable federal or state securities
     laws.

13.  You agree not to make, participate in the making of, or encourage any other
     person to make, any statements, written or oral, which criticize, disparage
     or defame the goodwill or reputation of OSG, its subsidiaries, affiliates
     or related companies, or any of their respective directors, officers and
     employees. OSG agrees not to make, participate in the making of, or
     encourage any other person to make, any statements, written or oral, which
     criticize, disparage or defame your reputation.

14.  The parties to this letter agreement shall issue a joint public
     announcement regarding your retirement. The parties agree that no public
     disclosure, press release or discussions with the press will be made or
     occur with respect to this letter agreement and the General Release without
     the other party's prior written consent, except as required by law.

15.  (a) Any breach of the provisions of sections 11, 12, 13 and 16 hereof by
     you or any person to whom you have made a permitted disclosure of the terms
     of this letter agreement shall be considered a material breach of this
     letter agreement. In the event of such breach, and due to the difficulties
     in calculating damages that might be sustained (directly or indirectly) as
     a result of such breach, you specifically consent to the entry of
     injunctive relief against you, in addition to any and all of OSG's remedies
     under the law, and you further agree that OSG may obtain the foregoing
     relief without the posting of a bond.

     (b) Any breach of the provisions of sections 10, 12 and 13 hereof by OSG or
     any person to whom OSG has made a permitted disclosure of the terms of this
     letter agreement shall be considered a material breach of this letter
     agreement. In the event of such breach, and due to the difficulties in
     calculating damages that might be sustained (directly or indirectly) as a
     result of such breach, OSG specifically consents to the entry of injunctive
     relief against it, in addition to any and all of your remedies under the
     law, and OSG further agrees that you may obtain the foregoing relief
     without the posting of a bond.

16.  (a) During the period from the date hereof through the first anniversary of
     the Retirement Date, you agree not to directly or indirectly: (i) enter the
     employ of, or render services to, any business that competes with the
     business of OSG or any of its subsidiaries, affiliates or related companies
     as of the Retirement Date in any geographical area that is within any
     geographical area where OSG or any of its subsidiaries, affiliates or
     related companies provides its products or services (a "Competitive
     Business"); or (ii) acquire a financial interest in, or otherwise become
     actively involved with, any Competitive Business as an individual, partner,
     shareholder, officer, director, principal, agent, trustee or consultant.

     (b) Notwithstanding anything to the contrary in this letter agreement, you
     may directly or indirectly own, solely as an investment, securities of any
     Competitive Business which is publicly traded on a national or regional
     stock exchange or on the over-the-counter market if you (i) are not a
     controlling person of, or a member of a group which controls,

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     such Competitive Business and (ii) do not, directly or indirectly, own 5%
     or more of any class of securities of such Competitive Business.

17.  During the period from the date hereof through the fifth anniversary of the
     last day of the Transition Period, you agree not to solicit directly or
     indirectly for employment any person who is employed by or under contract
     with OSG or any of its subsidiaries or affiliates (other than (a) your
     secretary or (b) for the benefit of OSG or any of its subsidiaries or
     affiliates).

18.  You agree to return all property belonging to OSG as of the last day of the
     Transition Period; except that you may purchase from OSG any office
     furniture currently in your office and any laptop computers (devoid of OSG
     property) which you currently use, each at the depreciated book value of
     such property on the books of OSG.

19.  The parties to this letter agreement shall execute the General Release as
     soon as practicable following your separation of employment hereunder.

20.  This letter agreement and the General Release contain the entire agreement
     between you and OSG and supersede any and all prior agreements or
     understandings, other than that certain agreement dated as of October 21,
     1996 between OSG and you, as amended through June 21, 2002, relating to a
     Change of Control of OSG (the "Change of Control Agreement"), with respect
     to the subject matter hereof and the terms and provisions of this letter
     agreement may not be modified or amended, except in a writing signed by
     both parties; provided, however, that (a) clause (iii) of Section 2 of the
     Change of Control Agreement hereby shall be amended to read "one hundred
     twenty (120) days after the Retirement Date (as defined in the letter
     agreement dated June 23, 2003 between the Company and the Executive) if a
     Change of Control does not occur on or prior to such date" and (b) the
     payments under Sections 4 and 5 of this letter agreement shall offset any
     payments to you under the Change of Control Agreement.

21.  You represent and warrant that (a) you have carefully read this letter
     agreement in its entirety and you fully understand the significance of all
     of the terms and conditions hereof, and (b) you are signing this letter
     agreement voluntarily and of your own free will, and assent to all the
     terms and conditions contained herein.

22.  No waiver by either party of any breach by the other party of its
     obligations hereunder shall be deemed a waiver of any prior or subsequent
     breach. Except to the extent otherwise specifically provided herein, any
     waiver must be in writing and signed by you or an authorized officer of
     OSG, as the case may be.

23.  Nothing contained in this letter agreement or the General Release shall (a)
     affect your rights to indemnification in your continued capacity as a
     director of OSG and (b) affect or limit your ability to perform your duties
     and obligations as a director of OSG.

24.  All payments made by OSG to you pursuant to this letter agreement shall be
     subject to appropriate deductions for FICA, Federal, state and local income
     taxes.

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25.  You shall not be required to mitigate the amount of any payment provided
     for pursuant to this letter agreement by seeking other employment or
     otherwise and the amount of any payment provided for pursuant to this
     letter agreement shall not be reduced by any amounts earned by you for
     subsequent employment or otherwise.

26.  This letter agreement and the General Release shall be governed by,
     construed and enforced in accordance with, the laws of the State of New
     York applicable to contracts to be performed therein.

27.  This letter agreement and all the provisions hereof shall inure to the
     benefit of, and be binding upon, the successors, permitted assigns, heirs,
     executors and administrators of the parties hereto.

If you agree to the foregoing, please so indicate by dating and signing both
enclosed copies of this letter agreement. One copy of the letter agreement
should be returned to the undersigned. The second original is for you.

On behalf of OSG, I wish to thank you for your many years of valuable service to
OSG, and wish you well in your future endeavors.

Sincerely,

OVERSEAS SHIPHOLDING GROUP, INC.



By:      /s/ ROBERT N. COWEN
         ---------------------
         Name:  Robert N. Cowen
               -----------------
         Title: Senior Vice President and Chief Operating Officer
               ----------------------------------------------------


I hereby agree to be bound by the terms and conditions of the above letter
agreement.



Date:  June 23, 2003                     /s/ MORTON P. HYMAN
                                         --------------------
                                         Morton P. Hyman





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                                                                       EXHIBIT A



                                 GENERAL RELEASE
                                 ---------------

Reference is made to the letter agreement, dated June 23, 2003, which you
countersigned on June 23, 2003, between Overseas Shipholding Group, Inc.
("OSG") and you (herein referred to as the "Agreement").

OSG hereby agrees as follows:

         OSG, on behalf of itself and any affiliated companies and their past
         and present parents and subsidiaries, agrees to forever release you,
         your wife, children, estate, agents, attorneys, heirs, executors,
         successors and assigns from any and all claims, demands, causes of
         action, controversies, agreements, promises and remedies, in connection
         with or in relationship to your capacity as (a) an employee or officer
         of OSG or any of its subsidiaries, affiliates and related companies and
         (b) a director of OSG or any of its subsidiaries, affiliates and
         related companies, which they may have as of the date hereof, whether
         known or unknown (collectively, the "Company Release"); provided,
         however, that the Company Release shall not apply with respect to any
         conduct on your part which is grossly negligent, fraudulent or illegal,
         or includes willful misconduct or is otherwise violative of any
         applicable laws or rules or regulations issued under such laws.

You hereby agree as follows:

         You, on your behalf, as well as your heirs, executors, administrators,
         successors and assigns, hereby irrevocably and unconditionally release
         and discharge OSG, OSG Ship Management, Inc., their predecessors and
         transferors and affiliated and related companies, all of their
         respective shareholders, officers, directors, employees, agents,
         principals, advisors, parents and subsidiaries, and each of their
         respective heirs, executors, administrators, successors and assigns
         (collectively, the "Company Released Parties" and each, a "Company
         Released Party"), from all claims, demands, causes of action,
         controversies, agreements, promises and remedies, in connection with or
         in relationship to your capacity as an employee, shareholder, officer
         or director of any of the Company Released Parties which you may have
         as of the date hereof, whether known or unknown, including under any
         statute, rule, order, law or ordinance, express or implied contract,
         public policy or otherwise (collectively, "Employee Claims"). This
         General Release applies to all Employee Claims, including any and all
         Employee Claims relating to the terms and conditions of your employment
         with any of the Company Released Parties or the termination of your
         employment; any and all Employee Claims for discrimination on the basis
         of age, alienage, color, creed, disability, gender, handicap, marital
         status, national origin, race, religion, sex or sexual orientation; any
         and all claims arising under Title VII of the Civil Rights Act of 1964,
         the Age Discrimination in Employment Act, the Equal Pay Act, the
         Rehabilitation Act, the Americans with Disabilities Act, the New York
         State Human Rights Act, the New York City Human Rights Law, all as
         amended, and any other federal, state or local statute, ordinance,
         rule, regulation or order relating to employment; and any and all
         Employee Claims for attorney's fees, costs or disbursements.

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         You agree that you will not, from any source or proceeding, seek or
         accept any award or settlement with respect to any Employee Claim
         covered hereunder. In addition, except as otherwise prohibited by law,
         you represent and warrant that you will not sue or commence any
         proceeding (judicial or administrative), or participate in any action,
         suit or proceeding, against any of the Company Released Parties, with
         respect to any act, event, occurrence, or any alleged failure to act,
         released hereunder.

         Notwithstanding the foregoing, nothing herein shall be deemed to
         release the Company Released Parties in respect of your rights (i)
         under the Agreement including, but not limited to, your rights pursuant
         to section 23 of the Agreement, (ii) to indemnification, in your
         capacity as a current or former director or officer of any of the
         Company Released Parties, under the by-laws and articles of
         incorporation of each Company Released Party, as in effect from time to
         time, or pursuant to indemnification policies maintained by one or more
         of the Company Released Parties, (iii) to any unpaid salary and other
         compensation (including any bonus under OSG's Incentive Compensation
         Plan), (iv) to reimbursement pursuant to the policies of any Company
         Released Party for expenses incurred by you prior to January 1, 2004 or
         pursuant to section 4 of the Agreement, and (v) to any benefits payable
         to you pursuant to any qualified pension plan or employee benefit plan
         maintained by the Company Released Parties.

         You represent and warrant that you have carefully read this General
         Release in its entirety; that you have had an opportunity to consider
         fully the terms of this General Release for twenty-one (21) days; that
         you have been advised by OSG in writing to consult with an attorney of
         your choosing in connection with this General Release; that you fully
         understand the significance of all of the terms and conditions of the
         Agreement and this General Release; that you have discussed it with
         your independent legal counsel, or you have had a reasonable
         opportunity to do so; that you have had answered to your satisfaction
         any questions that you have asked with regard to the meaning and
         significance of any of the provisions of the Agreement and this General
         Release; and that you are signing this General Release voluntarily and
         of your own free will and you assent to all the terms and conditions
         contained in the Agreement and herein.

         You further acknowledge that after executing the General Release you
         have seven (7) days to revoke it by delivery of a Notice of Revocation
         to the Released Parties, directed to the attention of [____], prior to
         the eighth (8th) day after execution and delivery by you of the General
         Release. You understand that if so revoked by you, this General Release
         shall be deemed to be null and void.

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                                                                               3

If you agree to the foregoing, please so indicate by dating and signing both
enclosed copies of this General Release. One copy of the General Release should
be returned to the undersigned. The second original is for you.

Sincerely,

OVERSEAS SHIPHOLDING GROUP, INC.



By:      _______________________________

         Name:  ________________________

         Title: ________________________



Agreed to and accepted by:



_______________________________
Morton P. Hyman

Date:  ____________________