Exhibit 10.2

 

EXECUTION COPY

UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF NEW YORK

 

 

 

 

 

 

 

X

 

 

In re

 

Chapter 11

 

 

 

U.S. SHIPPING PARTNERS L.P., et al.

 

Case No. 09-12711 (RDD)

 

 

 

Debtors.

 

(Jointly Administered)

 

 

 

 

 

 

X

 

 

U.S. SHIPPING PARTNERS L.P., et al.,

 

 

 

 

 

                  Plaintiffs,

 

 

 

 

 

- against -

 

Adv. Proc. No. 09-1170

 

 

(RDD)

BLACKSTONE CORPORATE DEBT
ADMINISTRATION L.L.C.; CERBERUS PARTNERS,
L.P.; STYX PARTNERS, L.P.; A3 FUNDING LP;
BLACKSTONE MEZZANINE PARTNERS II USS L.P.;
BLACKSTONE MEZZANINE HOLDINGS II L.P.;
BLACKSTONE FAMILY INVESTMENT
PARTNERSHIP V USS L.P.; BLACKSTONE FAMILY
INVESTMENT PARTNERSHIP V L.P.; BLACKSTONE
FAMILY INVESTMENT PARTNERSHIP V-A USS
SMD L.P.; BLACKSTONE PARTICIPATION
PARTNERSHIP V L.P.; BLACKSTONE
PARTICIPATION PARTNERSHIP V USS L.P.;
BLACKSTONE FAMILY INVESTMENT
PARTNERSHIP V-A L.P.; and BLACKSTONE
CAPITAL PARTNERS V USS L.P.,

 

 

 

 

 

                  Defendants.

 

 

X

 

 

 

 

 

SETTLEMENT AGREEMENT AND RELEASE

                    This Settlement Agreement and Release (the “Agreement”),
dated as of July 10, 2009, is entered into by and among U.S. Shipping Partners
L.P. (“USSP”), USS Product Manager LLC (“Product Manager”), USS Product Carriers
LLC (“Product Carriers”), USS PC Holding Corp. (collectively, the “Debtors”),
Blackstone Corporate Debt Administration L.L.C., Blackstone Capital Partners V
USS L.P., Blackstone Family Investment Partnership V USS L.P., Blackstone Family
Investment Partnership V-A USS SMD L.P., Blackstone Participation Partnership V
USS L.P., Blackstone Mezzanine Partners II USS L.P., Blackstone Mezzanine
Holdings II USS L.P., Blackstone Family Mezzanine Partnership II USS SMD L.P.,
Cerberus Partners, L.P., Styx Partners, L.P., and A3 Funding LP (collectively,
the “Blackstone/Cerberus Parties”9) and USS Products Investor LLC (“Products
Investor”) (taken together, the “Parties”):

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RECITALS

                    WHEREAS, on March 14, 2006, Product Carriers entered into a
contract with the National Steel and Shipbuilding Company (“NASSCO”), which was
subsequently amended and restated (the “Construction Contract”), under which
NASSCO would construct nine double-hulled tankers for USSP;

                    WHEREAS, on August 7, 2006, Product Carriers and certain of
the Blackstone/Cerberus Parties agreed to form a joint venture (the “Joint
Venture”) to finance the construction of the first five NASSCO vessels (the
“Vessels”);

                    WHEREAS, Products Investor was formed for the purpose of
carrying out the Joint Venture;

                    WHEREAS, some or all of the Parties entered into various
additional agreements to accomplish the Joint Venture’s goals, including but not
limited to a Limited Liability Company Agreement (the “LLC Agreement”), dated
August 7, 2006, a Revolving Notes Facility Agreement (the “Credit Agreement”),
dated August 7, 2006, and a Management and Operating Agreement (the “Management
Agreement”), dated August 7, 2006;

 

 

 

 

9 For purposes of this Agreement, the Blackstone/Cerberus Parties are understood
and agreed to encompass all Blackstone and Cerberus entities that are currently
Class A Members (as defined below) and/or lenders pursuant to the Credit
Agreement (as defined below).

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                    WHEREAS, pursuant to the LLC Agreement, certain of the
Blackstone/Cerberus Parties are “Class A Members” and Product Carriers is the
“Class B Member,” and Product Carriers was appointed as Products Investor’s
initial Managing Member;

                    WHEREAS, pursuant to the Management Agreement, Product
Manager was appointed to act as manager of the Vessels (“Vessel Manager”) and
was responsible for, among other things, construction oversight, chartering the
Vessels, and the crewing, management, maintenance and repair of the Vessels;

                    WHEREAS, in February 2009, the Blackstone/Cerberus Parties
sent a series of letters notifying Product Manager and Product Carriers that
they were taking certain actions under the operative agreements (i.e., the
Management Agreement, the LLC Agreement and the Credit Agreement), including,
among other things, (a) declaring an Event of Default under the Credit
Agreement; (b) terminating Product Manager as Vessel Manager; (c) removing
Product Carriers as Managing Member and designating Blackstone Capital Partners
V USS L.P. as the new Managing Member; and (d) advising Products Investor that
it was commencing foreclosure proceedings on certain of its assets
(collectively, the “February Actions”);

                    WHEREAS, Product Carriers and Product Manager sent
corresponding objections to the February Actions to the Blackstone/Cerberus
Parties;

                    WHEREAS, on April 3, 2009, Product Carriers and Product
Manager filed an action (the “State Court Action”), USS Product Carriers LLC and
USS Product Manager LLC v. Blackstone Corporate Debt Administration L.L.C. et
al. (Index No. 601038/2009), in the Supreme Court of the State of New York,
County of New York, seeking a declaration that the February Actions were
unauthorized and invalid and, pending a final determination of the State Court
Action, seeking a preliminary injunction to prevent the Blackstone/Cerberus
Parties from exercising their claimed rights under the operative agreements;

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                    WHEREAS, on April 8, 2009, the Blackstone/Cerberus Parties
filed an Answer and Counterclaim, together with a Cross-Motion for Preliminary
Injunction seeking to enjoin Product Carriers and Product Manager from holding
themselves out as Managing Member and Vessel Manager for Products Investor, and
from interfering with any foreclosure on Products Investor’s assets;

                    WHEREAS, pending a hearing on Product Carriers’ and Product
Manager’s motion for the preliminary injunction, Product Carriers, Product
Manager and the Blackstone/Cerberus Parties agreed to a temporary restraining
order restraining the Blackstone/Cerberus Parties from (i) foreclosing upon the
vessel Golden State or the membership interests in the Joint Venture’s
subsidiary that owns the vessel except upon five business days prior notice,
which notice could not be given before May 1, 2009, or (ii) replacing Product
Manager as vessel manager of the vessel Golden State and the other four vessels
currently being constructed for the Joint Venture prior to May 7, 2009, with
notice of replacement, if any, to be given at least five business days prior to
such replacement;

                    WHEREAS, Debtors commenced their voluntary cases under
chapter 11 of title 11 of the United States Code, 11 U.S.C. §§ 101 et seq., as
amended (the “Bankruptcy Code”), on April 29, 2009 (the “Petition Date”) in the
United States Bankruptcy Court for the Southern District of New York (the
“Bankruptcy Court”), Case No. 09-12711 (RDD) (Jointly Administered);

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                    WHEREAS, on the Petition Date, Debtors filed an adversary
proceeding, entitled U.S. Shipping Partners, L.P., et al. v. Blackstone
Corporate Debt Administration L.L.C. et al., No. 09-1170 (RDD) (the “Adversary
Proceeding”), and removed the State Court Action to United States District Court
for the Southern District of New York, which was subsequently referred to the
Bankruptcy Court (No. 09-1175 (RDD));

                    WHEREAS, by Motion dated April 29, 2009, the Debtors sought
(a) entry of an order enforcing the automatic stay of section 362 of the
Bankruptcy Code against the Blackstone/Cerberus Parties from, inter alia,
foreclosing upon the assets of the Joint Venture and interfering with the
Debtors’ functioning as Managing Member of the Joint Venture, and (b) if the
automatic stay did not apply, the issuance of a preliminary injunction pursuant
to section 105 of the Bankruptcy Code, and on April 30, 2009, Product Carriers,
Product Manager and the Blackstone/Cerberus Parties stipulated to the entry of a
temporary restraining order pending a hearing on the preliminary injunction
request;

                    WHEREAS, mutually desiring to avoid the burdens, risks and
expenses of potential litigation between themselves, the Parties have entered
into this Agreement to facilitate a full and final resolution and settlement of
the Adversary Proceeding and the State Court Action, and to fully and finally
resolve and settle any and all disputes between themselves;

                    WHEREAS, the Debtors have considered the benefit to the
Debtors’ estates and creditors that will be received as a result of the
settlement of the Adversary Proceeding and the State Court Action, particularly
in light of the costs, uncertainties and risks of further litigation, and have
concluded that the settlement contained herein is (i) fair and equitable, (ii) a
reasonable resolution of the Adversary Proceeding and the State Court Action,
and (iii) in the best interests of the Debtors, their estates, their creditors,
and all other parties-in-interest;

                    WHEREAS, the Parties desire to set forth detailed terms for
the settlement that was set forth on the Bankruptcy Court record by the Parties
on June 3, 2009,

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                     NOW, THEREFORE, in consideration of the foregoing, the
covenants and releases herein, and other good and valuable consideration, the
receipt of which is hereby acknowledged, the Parties agree as follows:

                    1.     Bankruptcy Court Approval/Effective Date. (a) This
Agreement is subject to approval by the Bankruptcy Court under Rule 9019 of the
Federal Rules of Bankruptcy Procedure (“Rule 9019”) and Sections 363(b) and (f)
of the Bankruptcy Code. If the Effective Date (as defined below) does not occur
and this Agreement is terminated, neither this Agreement, its terms, any
affidavits filed in support of this Agreement, correspondence regarding it, nor
any negotiations in connection with this Agreement shall be, or be construed as
or deemed to be, evidence of or an admission by or against any Party or
admissible in any judicial, administrative or other proceeding, and this
Agreement shall be null, void and of no further force or effect ab initio, and
the Parties shall retain all of their rights, claims and defenses vis-à-vis one
another, including, without limitation, the claims and defenses asserted or
assertable in the Adversary Proceeding and/or the State Court Action.

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                    (b)     The effective date of the Agreement (the “Effective
Date”) shall occur on the date that all of the following conditions precedent
are satisfied or, in the case of the condition in paragraph 1(b)(iv), satisfied
or waived: (i) this Agreement shall have been executed and delivered by all
Parties hereto; (ii) the Bankruptcy Court shall have entered on the docket an
order (the “Approval Order”) approving the settlement in form and substance
reasonably satisfactory to the Parties (including, without limitation, findings
by the Bankruptcy Court that the Parties had entered into this Agreement in good
faith and are entitled to the protections of Section 363(m) of the Bankruptcy
Code); (iii) no stay of the Approval Order prohibiting the consummation of the
transactions contemplated by this Agreement shall be in effect; and (iv) either
no appeal of the Approval Order shall have been filed or be pending on the 11th
day following the date of entry thereof or, if there has been an appeal of the
Approval Order, all appellate remedies have been fully exhausted and the
Approval Order has been affirmed. If all the conditions to the Effective Date
have been satisfied other than the condition in paragraph 1(b)(iv), the
Blackstone/Cerberus Parties shall have the right to waive, in their sole
discretion, satisfaction of such condition. In the event the Effective Date does
not occur or cannot occur because one of the conditions precedent cannot be
satisfied, and such conditions are not waived by the Blackstone/Cerberus
Parties, the terms set forth herein shall be null and void and of no binding
effect on any of the Parties. Each of the Parties hereto shall use their
commercially reasonable efforts to cause the Effective Date to occur as promptly
as possible after the date hereof, which for the avoidance of doubt shall not in
any way impair the Blackstone/Cerberus Parties right, in their sole discretion,
to not waive any unsatisfied condition precedent hereunder.

                    (c)     Debtors shall file a motion seeking approval under
Rule 9019 and Sections 363(b) and (f) of the Bankruptcy Code, in form and
substance reasonably acceptable to the Blackstone/Cerberus Parties, within 5
business days of the execution of this Agreement. The Parties hereto shall use
reasonable efforts to cause the entry of the Approval Order approving and
incorporating this Agreement. Reasonable efforts shall include the presentation
of necessary evidence (documentary and testimony) to support entry of the
Approval Order.

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                    2.     Transfer of Product Carriers’ Class B Interest. (a)
As of the Effective Date, Product Carriers shall irrevocably transfer, for
consideration of $1, all of its right, title and interest as the Class B Member
under the LLC Agreement, and all such right, title and interest, and all
obligations, of the Class B Member under the LLC Agreement shall be
automatically and irrevocably deemed transferred, free and clear of all Liens
(as defined below) other than the NASSCO Lien (as defined below), to the Class A
Members ratably according to each such Class A Member’s interest (obtained by
dividing such Class A Member’s Capital Account (as defined in the LLC Agreement)
balance by the aggregate Capital Account balances of all Class A Members).
Products Carriers agrees that it shall file, and cause to be filed, all tax
returns, reports and any other tax-related documents in a manner consistent with
the transfer of the Class B Member Interest for $1. Product Carriers represents
and warrants to the Blackstone/Cerberus Parties on the date hereof and
immediately prior to the transfer on the Effective Date that, Product Carriers
(i) is the record and beneficial owner of the Class B Member Interest (as
defined in the LLC Agreement), and (ii) has good and valid title to the Class B
Member Interest, free and clear of any lien, mortgage, pledge, claim,
encumbrance, charge or other security interest (a “Lien”), other than any Lien
(I) on payments and other distributions made in connection with the Class B
Member Interest arising as a result of the Collateral Assignment entered into
between Product Carriers and NASSCO on August 7, 2006, to secure obligations
owed under Article 36 of the Construction Contract (the “NASSCO Lien”) and (II)
on the Class B Member Interest, and any payments and distributions made in
respect thereof, arising as a result of the Bankruptcy Court’s Stipulation and
Second Interim Order Regarding Use of Cash Collateral and Adequate Protection,
dated May 27, 2009, and any subsequent interim or final order that supercedes
such Second Interim Order.

                    (b)     The Parties hereby acknowledge and agree that
effective as of the Effective Date (i) Product Carriers will not be and no
longer has the right to be the Managing Member of Products Investor, and (ii)
Product Carriers no longer has, nor has any right to appoint, any persons acting
as directors and representatives of the Class B Member on the Board of Directors
of Products Investor. Product Carriers shall, as of the Effective Date, deliver
to the Blackstone/Cerberus Parties the Certificate of Interest (as defined in
the LLC Agreement) with respect to the Class B Member Interest endorsed in blank
or accompanied by duly executed assignment documents.

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                    (c)     It is further understood and agreed that, except as
expressly set forth in this Agreement, (i) Product Carriers shall have as of the
Effective Date relinquished all rights under the LLC Agreement with respect to
Products Investor and (ii) the Debtors shall have as of the Effective Date
relinquished all rights in respect of Products Investor and the Joint Venture,
including all Vessels owned by or being constructed on behalf of the Joint
Venture.

                    (d)     At the Effective Date, there shall be a closing of
the books of Products Investor, and each item of income, gain, loss and
deduction of Products Investor for the period from January 1, 2009 through but
excluding the Effective Date shall be allocated among the Class A Members and
the Class B Member in accordance with the LLC Agreement as in effect on the date
hereof. For the avoidance of doubt, no item of income, gain, loss or deduction
arising from and after the Effective Date shall be allocated to Product
Carriers.

                    (e)     The Parties hereto acknowledge and agree that as of
the Effective Date the Performance Guaranty, dated as of August 7, 2006, made by
U.S. Shipping Partners L.P. and USS PC Holding Corp. to Products Investor, shall
be terminated and of no further force and effect.

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                    3.     Termination of Management Agreement. (a) Debtors
hereby acknowledge, confirm, and agree that as of the Effective Date Product
Manager shall be terminated as Vessel Manager with respect to all Vessels,
provided, however, that Product Manager shall remain as Vessel Manager and
continue to provide Management and Operating Services (as defined in the
Management Agreement) with respect to all Vessels, except as provided in this
Agreement (but for the avoidance of doubt, as of the Effective Date Product
Manager shall not provide Construction Supervision Services (as defined in the
Management Agreement) except to the extent requested by Products Investor in
accordance with paragraph 4(c)(i) hereof), until the earlier of (i) seventy-five
days following the Effective Date, provided that Product Manager has complied in
all material respects with its obligations in Section 3(b) below to cooperate
with and assist in the transition of vessel management duties, and (ii) such
time following the Effective Date as Products Investor and/or
Blackstone/Cerberus Parties appoint a replacement Vessel manager (the
“Replacement Vessel Manager”) in their sole discretion, the Replacement Vessel
Manager assumes full operational and management control of the Golden State, the
Pelican State and any other Vessel Delivered (as defined in the Construction
Contract) prior to the Effective Date (collectively the “Operating Vessels”),
and Debtors receive notification from Products Investor that full operational
and management control of the Operating Vessels has been assumed by such
Replacement Vessel Manager (which the Blackstone/Cerberus Parties estimate will
be completed within approximately 60 days from the Effective Date), such notice
to be given no later than one business day after the date all persons employed
by Debtors or USS Transport LLC have vacated the Golden State and the Pelican
State at the request of the Blackstone/Cerberus Parties (the period between the
Effective Date and the earlier of the foregoing dates being the “Management
Transition Period”). The Blackstone/Cerberus Parties agree to use commercially
reasonable efforts to (i) appoint a Replacement Vessel Manager as soon as
practicable after the Effective Date and (ii) cause the Replacement Vessel
Manager to assume full operational and management control of the Operating
Vessels within approximately 60 days after the Effective Date. Subject to
paragraph 3(e) of this Agreement, Product Manager shall not be entitled to any
Management Fees (as defined in the Management Agreement) from Products Investor
or the Blackstone/Cerberus Parties for the period from and after June 2, 2009,
except for payments that are expressly provided for by this Agreement. Product
Manager shall be entitled to receive from Products Investor, and Products
Investor shall pay to Product Manager, all Reimbursable Expenses (as defined in
the Management Agreement and including any such expenses as specified in
paragraph 3(c) hereof as being Reimbursable Expenses) pursuant to Section 4.3 of
the Management Agreement which are incurred prior to the end of the Management
Transition Period in providing Management and Operating Services under the
Management Agreement or pursuant to this paragraph 3(a), consistent with past
practice and regardless of whether incurred before or after the date of this
Agreement. All payments of Reimbursable Expenses shall be made in the ordinary
course of business consistent with past practice.

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                    (b)     During the Management Transition Period, Debtors
agree that Product Manager shall use commercially reasonable efforts to
cooperate with and assist the Replacement Vessel Manager with an orderly
transition of Vessel Manager duties with respect to the Operating Vessels. Upon
completion of the Management Transition Period, or at such earlier time as
Products Investor or the Blackstone/Cerberus Parties may request, upon at least
five (5) business days’ notice, with respect to any Vessel, Debtors and their
affiliates, crew, employees, staff, and agents shall immediately vacate all
Vessels, unless Products Investor or the Blackstone/Cerberus Parties in their
sole discretion determine to waive this requirement in writing on an
individual-by-individual basis for specifically identified Vessel personnel (it
being understood and agreed that any such individual may elect to remain in the
employ of Debtors). The Parties agree that the Management Agreement and all
rights and obligations of Product Manager thereunder shall be terminated upon
completion of the Management Transition Period; provided, however, that Sections
4.3, 7, 8, 12 through 16, 18, 20 and 21 of the Management Agreement shall
survive termination of the Management Agreement and shall apply to services
rendered pursuant to this Agreement as though they were provided pursuant to the
Management Agreement.

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                    (c)     Debtors agree to use commercially reasonable efforts
to assist Products Investor and Blackstone/Cerberus Parties in obtaining any
consents, novations, authorizations, approvals, exemptions, notices or other
agreements from third parties, including without limitation the U.S. Navy
Military Sealift Command, Marathon Petroleum Company LLC and BP West Coast
Products LLC, with regard to any charters, the appointment of the Replacement
Vessel Manager, and all other matters contemplated in this Agreement, as may be
reasonably requested by the Blackstone/Cerberus Parties, it being understood and
agreed that (i) Debtors shall not be required to expend any funds in assisting
the Blackstone/Cerberus Parties in obtaining any consents, novations,
authorizations, approvals, exemptions, notices or other agreements from third
parties hereunder unless such expenditure of funds is specifically requested by
the Blackstone/Cerberus Parties in writing, in which event such funds expended
by the Debtors shall be Reimbursable Expenses under the Management Agreement and
reimbursed to Product Manager in accordance with the Management Agreement and
(ii) the failure of Products Investor and the Blackstone/Cerberus Parties to
obtain any consents, novations, authorizations, approvals, exemptions, notices
or other agreements from third parties shall not affect the Settlement Payments
due Product Manager hereunder.

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                    (d)     As soon as practicable, Debtors shall deliver to
Products Investor, the Blackstone/Cerberus Parties, and/or the Replacement
Vessel Manager copies of all books, records, reports, and contracts of Products
Investor, Vessel Manager (with respect to the Vessels) and the Vessels and all
further information concerning Products Investor’s business, properties and,
except to the extent prohibited by applicable law, personnel, including but not
limited to the reports and statements set forth on Schedule A hereto, and any
other reports required pursuant to the LLC Agreement, Management Agreement, and
Credit Agreement as the Blackstone/Cerberus Parties may reasonably request.

                    (e)     The Parties agree that, in the event all conditions
to the Effective Date have been satisfied other than the condition in paragraph
1(b)(iv), until the Effective Date, Products Investor shall continue to pay to
Product Manager, in accordance with the terms of the Management Agreement, (i)
the Annual Management Fee (as defined in the Management Agreement) in respect of
each Operating Vessel (all payments made pursuant to this Section 3(e)(i) being
collectively referred to as the “Interim Management Fee”) and (ii) the Oversight
Fee (as defined in the Management Agreement) in respect of each Vessel under
construction (all payments made pursuant to this Section 3(e)(ii) being
collectively referred to as the “Interim Oversight Fee”). For the avoidance of
doubt, if all the conditions to the Effective Date other than the condition in
paragraph 1(b)(iv) have been satisfied, Product Manager shall be entitled to
receive from Products Investor, and Products Investor shall pay to Product
Manager, promptly following the eleventh day after entry of the Approval Order,
all Annual Management Fees and Oversight Fees that Product Manager would have
received during the period beginning on June 2, 2009 and ending on the date
hereof, and all payments of Annual Management Fees and Oversight Fees pursuant
to this sentence shall be Interim Management Fees and Interim Oversight Fees for
purposes of this Agreement.

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                    (f)     The Parties hereto acknowledge and agree that
simultaneous with the termination of the Management Agreement as set forth in
paragraph 3(b), all obligations of USSP and USS JV Manager Inc. (“JV Manager”)
to Products Investor under that certain Performance Guaranty, dated as of August
7, 2006, made by USSP and JV Manager to Products Investor (the “Performance
Guaranty”), shall be terminated and of no further force and effect; provided,
however, that notwithstanding the foregoing, the obligations of USSP and JV
Manager under the Performance Guaranty in respect of Product Manager’s
obligations under Section 7.3 of the Management Agreement shall survive
termination of the Performance Guaranty.

                    4.     Settlement Payments. On the Effective Date, the
Blackstone/Cerberus Parties, jointly and severally, shall deposit Fourteen
Million Dollars ($14,000,000) less the amount of Interim Management Fees and
Interim Oversight Fees actually paid to Product Manager between the date hereof
and the Effective Date into an escrow account (the “Escrow Account”) pursuant to
the terms of an escrow agreement substantially in the form attached hereto as
Exhibit A for the purpose of funding the payment obligations in paragraphs 4(a)
through 4(c). The Blackstone/Cerberus Parties shall, in cases of paragraphs 4(a)
through (c), cause distributions from the Escrow Account to, and Products
Investor shall, in cases of paragraphs 4(d) and (e) directly pay, Product
Manager at the times and in the manner set forth below (the “Settlement
Payments”):

                    (a)     On the Effective Date, Nine Million Dollars
($9,000,000) by wire transfer of immediately available funds less 50% of the
amount of Interim Management Fees actually paid to Product Manager between the
date hereof and the Effective Date.

                    (b)     On the 40th day following the conclusion of the
Management Transition Period (or, if such date is not a business day, on the
first business day after such date), subject to the orderly transition of vessel
management with respect to the Operating Vessels as provided in paragraph 3(b),
Two Million Three Hundred Thousand Dollars ($2,300,000) less 50% of the amount
of Interim Management Fees actually paid to Product Manager between the date
hereof and the Effective Date.

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                    (c)     Two Million Seven Hundred Thousand Dollars
($2,700,000) less the amount of Interim Oversight Fees actually paid to Product
Manager between the date hereof and the Effective Date, such amount to be paid
in equal monthly installments through December 2010, on the 17th day of each
calendar month (or, if such date is not a business day, on the first business
day after such date) commencing with the first month after the Effective Date.
For the avoidance of doubt, from and after the Effective Date (i) Debtors shall
have no obligation to, and shall not, perform Construction Supervision Services
on behalf of Products Investor except, and then only, to the extent reasonably
requested by Products Investor in writing and shall perform no other
Construction Supervision Services pertaining to any of the Vessels, (ii) the
payments due under this paragraph 4(c) are due and payable whether or not
Product Manager renders any Construction Supervision Services and (iii) neither
Product Manager nor any Manager’s Covered Person (as defined in the Management
Agreement) shall be liable, responsible or accountable in damages or otherwise
to Products Investor, the JV Subsidiaries (as defined in the Management
Agreement) or the Blackstone/Cerberus Parties for any losses, damages,
liabilities, demands or expenses suffered by Products Investor, the JV
Subsidiaries or the Blackstone/Cerberus Parties for mistakes of judgment or for
action or inaction in performing Construction Supervision Services on behalf of
Products Investor to the extent reasonably requested by Products Investor in
writing pursuant to clause (i) of this sentence, except to the extent arising
out of (A) the gross negligence or willful misconduct of such Manager’s Covered
Person or (B) a violation of any Applicable Law (as defined in the Management
Agreement) by the Manager’s Covered Person. The Blackstone/Cerberus Parties and
Products Investor hereby agree to hold harmless and indemnify the Debtors for
any damages or liabilities incurred by the Debtors during the period from the
Effective Date through and until the completion of construction of the Vessels,
arising from or related to the services performed by a person or construction
manager other than Product Manager or as a result of Products Investor not
appointing another person to provide Construction Supervision Services and not
requesting Product Manager to provide such services.

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                    (d)     Upon Delivery (as defined in the Construction
Contract) of any of Vessels 3, 4 and 5, to the extent Products Investor receives
a provisional deduction in Progress Payments (as defined in the Construction
Contract) made to NASSCO based on NASSCO’s cost performance pursuant to Article
3(e) of the Construction Contract with respect to such Vessel (such deduction
amount, a “Cost Under-run Provisional Deduction”), Products Investor shall,
within 2 days of making any Progress Payment that has been reduced to give
effect to such Cost Under-run Provisional Deduction, pay Product Manager (by
wire transfer of immediately available funds) an amount equal to 50% of the
first One Million Dollars ($1,000,000) of any such Cost Under-run Deduction. For
the avoidance of doubt, (i) the aggregate amount that Product Manager may
receive under this paragraph shall be up to, but not in excess of, Five Hundred
Thousand Dollars ($500,000) and (ii) if Product Manager does not receive
$500,000 in connection with any Cost Under-run Provisional Deduction in respect
of Vessel 3, then additional amounts shall be paid from the Cost Under-run
Provisional Deductions in respect of Vessel 4, if any, and, if necessary, Vessel
5, if any, until Product Manager has received a total of $500,000 in the
aggregate under this provision; provided that any payment due under this
paragraph 4(d) with respect to Vessel 5 shall be made within 2 days after
receipt of the Cost Under-run Payment (as defined below), if any, made by NASSCO
to Products Investor.

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                    (e)     Upon the expiration of Vessel 5’s Guarantee Period
(as defined in the Construction Contract), to the extent Products Investor
receives a payment based on NASSCO’s cost performance pursuant to Article 3(d)
of the Construction Contract with respect to such Vessel (such deduction amount,
a “Cost Under-run Payment”), Products Investor shall, within 2 days of receipt
of such Cost Under-run Payment, pay Product Manager (by wire transfer of
immediately available funds) an amount equal to 50% of the first $500,000 of any
such Cost Under-run Payment not applied to satisfy Products Investor’s
obligations under paragraph 4(d). For the avoidance of doubt, the aggregate
amount that Product Manager may receive under this paragraph 4(e) shall be up
to, but not in excess of, Two Hundred and Fifty Thousand Dollars ($250,000).

                    (f)     The payments to be made pursuant to paragraphs 4(a)
through (e) shall be in settlement of the termination of the Management
Agreement, and payment of management and other fees to have been paid
thereunder. For the avoidance of doubt, in addition to the payments to be made
pursuant to paragraphs 4(a) through (e), Product Manager shall be entitled to
receive, and Products Investor shall pay to Product Manager, in accordance with
the terms of the Management Agreement, all Reimbursable Expenses incurred by
Product Manager through the end of the Management Transition Period.

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                    (g)     The Settlement Payments shall be in full settlement
of any and all claims or interests whatsoever Debtors may have relating to
Products Investor and the Blackstone/Cerberus Parties, other than claims for
Reimbursable Expenses and indemnification under Section 7 of the Management
Agreement, and in full settlement of all other claims being released by Debtors
pursuant to this Agreement. The Settlement Payments shall be made by wire
transfer to an account in the United States to be designated by Product Manager.
Failure by Products Investor to make payments pursuant to paragraph 4(d) and (e)
in accordance with the dates set forth in this Agreement shall not be deemed a
default under this Agreement, unless a missed payment shall not have been cured
within 3 business days following receipt by Products Investor, the
Blackstone/Cerberus Parties, and their counsel, of written notice of such missed
payment by the Debtors. With respect to the payments due under paragraphs 4(d)
and (e), Product Investors shall provide Product Manager with notice of when the
respective Vessels are delivered, and, if the aggregate amount to be paid
thereunder to Product Manager is not paid with respect to any Vessel,
documentation demonstrating in reasonable detail whether or not a Cost-under Run
Payment is due and the calculation of the Cost-under Run Payment. For the
avoidance of doubt, except as provided in paragraph 4(i), the
Blackstone/Cerberus Parties’ obligations under this paragraph 4 shall be
satisfied in full, with respect to each payment, upon the transfer of funds to
the account or accounts designated by Product Manager for such payments.

                    5.     Jan Ziobro. The Debtors hereby agree that as of the
Effective Date of this Agreement, and for so long as Mr. Jan T. Ziobro is
employed by any of Debtors or their affiliates (it being understood and agreed
that Debtors shall have no obligation to retain Mr. Ziobro as an employee),
Debtors shall, upon reasonable prior notice, provide to Products Investor and/or
the person providing construction oversight services to Products Investor
reasonable access to Mr. Ziobro promptly upon request in connection with
oversight of Vessel construction, including following the termination of the
Management Agreement, consistent with past practice. For the avoidance of doubt,
no consideration shall be paid to Debtors in connection with the performance by
Mr. Ziobro of such services beyond the Settlement Payments set forth in this
Agreement.

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                    6.     Vessel Sales. (a) With respect to any one or more
Vessels, in the event Products Investor makes a bona fide decision to sell one
or more of the Vessels then, prior to effecting any such sale of one or more of
the Vessels, Products Investor shall provide written notice to Debtors that it
intends to effect a sale of a Vessel or Vessels (a “Proposed Sale Notice”).

                    (b)     Within 21 days of the date such Proposed Sale Notice
is delivered to Debtors, Debtors may elect, by delivery of a bona fide written
notice (a “Purchase Offer Notice”) to Products Investor not later than the end
of such 21 day period, to offer to purchase one or more of the Vessels offered.
The Purchase Offer Notice shall include evidence reasonably satisfactory to
Products Investor demonstrating that Debtors have adequate financial resources
to timely consummate the purchase of the Vessel or Vessels. The terms of any
Purchase Offer Notice shall expire on the tenth day following its delivery to
Products Investor. If Products Investor accepts the Purchase Offer Notice within
such ten day period, then Products Investor shall sell the Vessel or Vessels to
Debtors on a date designated by Debtors that is not more than 120 days after the
date the Purchase Offer Notice is accepted by Products Investor. For the
avoidance of doubt, Products Investor is under no obligation to accept any
Purchase Offer Notice.

                    (c)     In the event that a Purchase Offer Notice was
delivered but was not accepted by Products Investor, then Products Investor may
sell the Vessel or Vessels to a third party purchaser free of any right of
Debtors, provided, however, that Debtors will be permitted to fully participate
as a bidder in, and not be subject to a negative bias in connection with, any
such sales process. Products Investor shall exercise its commercially reasonable
business judgment in conducting any sales process and in determining the
successful bidder (if any) and the terms of any accepted purchase offer for any
Vessel or group of Vessels.

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                    7.     Releases. (a)     As of the Effective Date and again
as of the last day of the Management Transition Period, Debtors and each of
their predecessors, successors, assigns, agents, attorneys, insurers,
subsidiaries, affiliates, stockholders, officers, directors, employees, heirs,
executors, administrators, trusts, and trustees (collectively, “Debtor
Releasors”) fully and irrevocably release the Blackstone/Cerberus Parties, any
other Blackstone or Cerberus entity that at any time was a member of Products
Investor or a lender under the Credit Agreement, and Products Investor, and each
of their predecessors, successors, parents, subsidiaries, affiliates, divisions,
officers, present and former directors, members, partners, principals,
employees, agents, shareholders, assigns, heirs, executors, administrators,
trusts, trustees, and counsel (collectively, the “Blackstone/Cerberus
Releasees”) of and from any and all manner of claims, demands, rights,
liabilities, losses, obligations, duties, damages, debts, expenses, interest,
penalties, sanctions, fees, attorneys’ fees, costs, actions, potential actions,
causes of action, suits, agreements, judgments, decrees, matters, issues and
controversies of any kind, nature or description whatsoever, whether known or
unknown, disclosed or undisclosed, accrued or unaccrued, apparent or not
apparent, foreseen or unforeseen, matured or not matured, suspected or
unsuspected, liquidated or not liquidated, fixed or contingent, whether direct,
derivative, individual, representative, legal, equitable, or of any type, or in
any other capacity, whether based on state, local, foreign, federal, statutory,
regulatory, common, or other law that any or all Debtor Releasors ever had, now
have, or hereinafter shall or may have, against any or all of the
Blackstone/Cerberus Releasees for, upon or by reason of any matter, cause, or
thing whatsoever in any way relating to, involving, referring to, arising out
of, or based upon, directly or indirectly, any actions, transactions,
occurrences, statements, representations, misrepresentations, omissions,
allegations, facts, practices, events, claims or any other matters or things
whatsoever, or any series thereof, existing or occurring on or prior to the last
day of the Management Transition Period; provided, however, that nothing herein
shall release (i) the Blackstone/Cerberus Releasees from any of their
obligations under this Agreement, (ii) Products Investor from its obligations
under Sections 4.3 and 7.2 of the Management Agreement, or (iii) any claim of
any Debtor Releasor based on any Blackstone/Cerberus Releasees’ ownership of
USSP’s 13% Senior Secured Notes due 2014.

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                    (b)     As of the Effective Date and again as of the last
day of the Management Transition Period, the Blackstone/Cerberus Parties, on
behalf of themselves and on behalf of any other Blackstone or Cerberus entity
that at any time was a member of Products Investor or a lender under the Credit
Agreement, Products Investor and each of their predecessors, successors,
assigns, agents, attorneys, insurers, subsidiaries, affiliates, stockholders,
officers, directors, employees, heirs, executors, administrators, trusts, and
trustees (collectively, the “Blackstone/Cerberus Releasors”) fully and
irrevocably release Debtors and each of their predecessors, successors, parents,
subsidiaries, affiliates, divisions, officers, present and former directors,
members, partners, principals, employees, agents, shareholders, assigns, heirs,
executors, administrators, trusts, trustees, and counsel (collectively, “Debtor
Releasees”) of and from any and all manner of claims, demands, rights,
liabilities, losses, obligations, duties, damages, debts, expenses, interest,
penalties, sanctions, fees, attorneys’ fees, costs, actions, potential actions,
causes of action, suits, agreements, judgments, decrees, matters, issues and
controversies of any kind, nature or description whatsoever, whether known or
unknown, disclosed or undisclosed, accrued or unaccrued, apparent or not
apparent, foreseen or unforeseen, matured or not matured, suspected or
unsuspected, liquidated or not liquidated, fixed or contingent, whether direct,
derivative, individual, representative, legal, equitable, or of any type, or in
any other capacity, whether based on state, local, foreign, federal, statutory,
regulatory, common, or other law that any or all the Blackstone/Cerberus
Releasors ever had, now have, or hereinafter shall or may have, against any or
all of the Debtor Releasees for, upon or by reason of any matter, cause, or
thing whatsoever in any way relating to, involving, referring to, arising out
of, or based upon, directly or indirectly, any actions, transactions,
occurrences, statements, representations, misrepresentations, omissions,
allegations, facts, practices, events, claims or any other matters or things
whatsoever, or any series thereof, existing or occurring on or prior to the last
day of the Management Transition Period; provided, however, that nothing herein
shall release (i) the Debtor Releasees from any of their obligations under this
Agreement, (ii) Product Manager from its obligations under Section 7.3 of the
Management Agreement, or (iii) any claim of any Blackstone/Cerberus Releasor
based on such entity’s ownership of USSP’s 13% Senior Secured Notes due 2014.

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                    (c)     The Debtor Releasors and the Blackstone/Cerberus
Releasors, in connection with and as part of the releases described in
paragraphs 7(a) and (b) above, voluntarily waive Section 1542 of the California
Civil Code, or any similar, comparable or equivalent provision of the statutory
or non-statutory law of any other jurisdiction. Section 1542 provides:

 

 

 

A general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which
if known by him or her must have materially affected his or her settlement with
the debtor.

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                    (d)     The Parties acknowledge that they may hereafter
discover facts different from or in addition to those they now know or believe
to be true with respect to the matters that are the subject of this Agreement,
and they expressly agree to assume the risk of the possible discovery of
additional or different facts, and agree that the releases contained herein
shall be and remain effective in all respects regardless of such additional or
different facts, unless this Agreement shall be declared null and void as
provided herein.

                    8.     No Further Actions. (a) Other than enforcement of the
terms of this Agreement and Sections 4.3 and 7.2 of the Management Agreement,
the Debtor Releasors (i) shall not institute, commence, assert or prosecute
against any of the Blackstone/Cerberus Releasees any claim, demand, action, suit
or proceeding of any kind or nature whatsoever, in law or in equity, directly or
indirectly, whether by way of action, defense, set-off, cross-complaint,
counterclaim or otherwise, and whether for payment, damages, loss, specific
performance or otherwise, related to any claim to be released pursuant to
paragraph 7(a) herein; and (ii) shall indemnify and hold each of the
Blackstone/Cerberus Releasees harmless against any and all costs (including
attorneys’ fees and expenses) and liabilities incurred by them as a result of
the Debtor Releasors breach of the foregoing clause 8(a)(i).

                    (b)     Other than enforcement of the terms of this
Agreement and Section 7.3 of the Management Agreement, the Blackstone/Cerberus
Releasors (i) shall not institute, commence, assert or prosecute against any of
the Debtor Releasees any claim, demand, action, suit or proceeding of any kind
or nature whatsoever, in law or in equity, directly or indirectly, whether by
way of action, defense, set-off, cross-complaint, counterclaim or otherwise, and
whether for payment, damages, loss, specific performance or otherwise, related
to any claim to be released pursuant to paragraph 7(b) herein; and (ii) shall
indemnify and hold each of the Debtor Releasees harmless against any and all
costs (including attorneys’ fees and expenses) and liabilities incurred by them
as a result of the Blackstone/Cerberus Releasors’ breach of the foregoing clause
8(b)(i).

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                    (c)     The provisions of paragraphs 8(a) and (b) shall be
in full force and effect upon execution of this Agreement, and shall remain in
effect upon the Effective Date and thereafter.

                    9.     Dismissal of Actions. Upon the Effective Date, in
consideration of the mutual promises, covenants, agreements and other
consideration described in this Agreement, Debtors shall file or cause to be
filed appropriate notices and/or stipulations dismissing the Adversary
Proceeding with prejudice, and the Parties shall jointly file or cause to be
filed appropriate notices and/or stipulations dismissing the State Court Action
with prejudice. The Parties shall bear their own respective costs (including
without limitation attorneys’ fees) in the Adversary Proceeding and the State
Court Action.

                    10.     Confidential Information. The Debtors shall keep
confidential, and cause their affiliates, and Debtors’ and their affiliates’
respective officers, directors, employees and advisors to keep confidential, all
information relating to Products Investor and its subsidiaries, including but
not limited to information related to their business, charters and related
rates, vendors, customers, market analyses, financial information, business
plans, employee compensation information, and contracts (collectively,
“Confidential Information”), except as required by law and except for
information that is available to the public on the Effective Date, or thereafter
becomes available to the public other than as a result of a breach of this
paragraph 10. For purposes of this paragraph 10 the term “Confidential
Information” should not include any information that (a) is or becomes generally
available to the public or (b) was or becomes available to Debtors, its
affiliates, or any of their respective officers, directors, employees and
advisors on a non-confidential basis from a source other than the
Blackstone/Cerberus Parties or Products Investor.

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                    11.     Restriction on Certain Amendments to LLC Agreement
and Construction Contract. Products Investor shall not, and the
Blackstone/Cerberus Parties shall not permit Products Investor to, amend in any
respect (a) any provision of the LLC Agreement which would be effective for any
period prior to the Effective Date, (b) the Construction Contract if such
amendment would have the effect of (i) decreasing the Contract Price (as such
term is defined in the Construction Contract) for any Vessel or (ii) increasing
Contractor’s Actual Cost (as such term is defined in the Construction Contract),
for any Vessel or (c) Articles 3(a), (c), (d) or (e), 5, 6, 7 or 9 of the
Construction Contract, if, and only to the extent that, any of the foregoing
amendments of Articles 3(a), (c), (d) or (e), 5, 6, 7 or 9 of the Construction
Contract could otherwise reasonably be expected to adversely affect Product
Manager’s rights to receive payments pursuant to paragraph 4(d) or (e) of this
Agreement. For the avoidance of doubt, no amendment shall be deemed to adversely
affect Product Manager’s right to receive payments pursuant to paragraphs 4(d)
or (e) of this Agreement so long as Product Manager receives the payments
contemplated by those paragraphs at the time the payments would have been
received but for the amendments. Notwithstanding anything to the contrary
herein, Products Investor may amend the Construction Contract to defer progress
and other payments to NASSCO for no more than six months and such amendments
shall not be deemed to adversely affect Product Manager’s rights to receive
payments pursuant to paragraph 4(d) or (e) hereof as long as such amendments do
not have the effect of or result in a decrease in the Contract Price or an
increase in the Contractor’s Actual Cost.

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                    12.     Miscellaneous.

                              (a)     By entering into this Agreement, the
Parties do not intend to make, nor shall they be deemed to have made, any
admission of liability of any kind whatsoever. The Parties agree that they are
entering into this Agreement for the purpose of settling certain disputes
between them and to avoid further expense with respect to those disputes.

                              (b)     The Blackstone/Cerberus Parties and
Products Investor shall not, and shall instruct their officers, directors and
employees, and use commercially reasonable efforts to instruct the other persons
or entities who are Blackstone/Cerberus Releasors, not to, either directly or
through other persons or entities, publish or communicate any Disparaging (as
defined below) remarks, comments or statements concerning any of the Debtor
Releasees or the operations, prospects or business of the Debtors. The Debtors
shall not, and shall instruct their officers, directors and employees, and use
commercially reasonable efforts to instruct the other persons or entities who
are Debtor Releasors, not to, either directly or through other persons or
entities, publish or communicate any Disparaging remarks, comments or statements
concerning any of the Blackstone/Cerberus Releasees or the operations, prospects
or business of the Blackstone/Cerberus Parties. Notwithstanding the foregoing,
nothing in this paragraph shall prevent a Party from responding in a manner that
does not violate the preceding sentences to (i) inquiries regarding the State
Court Action or the Adversarial Proceeding, (ii) any statement made at any time
after the date hereof by another Party hereto, or (iii) any article appearing at
any time after the date hereof in the press. “Disparaging” remarks, comments or
statements are those that impugn the character, honesty, integrity, morality or
business acumen or abilities in connection with any aspect of the operation of
business of the covered individual or entity.

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                              (c)     This Agreement constitutes the entire
agreement between the Parties regarding the settlement of their disputes. Each
Party acknowledges that it has not executed this Agreement in reliance on any
representation, inducement, promise, agreement, or warranty that is not
contained in this Agreement.

                              (d)     The Parties agree that the prior drafting
history of this Agreement shall not be used to construe any term of this
Agreement.

                              (e)     This Agreement has been negotiated by each
Party and its respective attorneys, and the language hereof will not be
construed for or against any such Party as the principal drafter of this
Agreement.

                              (f)     The individuals signing this Agreement and
the Parties on whose behalf such individuals are signing hereby represent and
warrant that they are empowered and authorized to sign on behalf of and bind the
Parties for whom they have signed.

                              (g)     The Parties represent and warrant that, as
of the Effective Date of this Agreement, they have not assigned, conveyed, or
otherwise transferred the rights to any claims, demands, causes of action,
rights, or obligations related in any way to the claims to be released in
paragraphs 7(a) and (b) to any other person or entity, nor shall they hereafter
do so; provided, however, that (i) in August 2006 the Debtors granted to its
secured lenders a security interest in the Management Agreement and the proceeds
thereof and (ii) the Bankruptcy Court has entered orders, including its order
dated May 27, 2009 and any subsequent interim or final order that supercedes the
May 27, 2009 order, that provides the Debtors’ secured lenders with a security
interest in all of the property of the Debtors, now owned or hereafter acquired.

                              (h)     Each Party agrees that this Agreement
shall be binding upon the heirs, successors, assigns, subsidiaries, and
affiliates of each Party.

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                              (i)     The Parties agree that “Products Investor”
as used in this Agreement shall mean USS Products Investor LLC and its
successors and assigns.

                              (j)     Each Party represents and agrees: (i) that
it has fully reviewed this Agreement and has had the opportunity to seek advice
by independent counsel of its choosing in that regard; (ii) that it fully
understands the terms of this Agreement and has entered into this Agreement
voluntarily without any coercion or duress on the part of any person or entity;
and (iii) that it was given adequate time to consider all implications of this
Agreement prior to entering into it.

                              (k)     This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

                              (l)     This Agreement may not be amended or
modified except by a written instrument executed by the duly authorized
representatives of all of the Parties.

                              (m)    Each party to this Agreement shall do and
perform, or cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements, certificates,
instruments and documents, as any other party to this Agreement may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated herein.

                              (n)     This Agreement shall be governed by the
laws of the State of New York applicable to agreements entered into within the
State of New York excluding the choice of law rules thereof. The Parties agree
that they are subject to the continuing jurisdiction of the Bankruptcy Court for
the purpose of enforcing the provisions of this Agreement.

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                              (o)     The Debtors and the Blackstone/Cerberus
Parties agree that solely for purposes of executing this Agreement and
consummating the actions contemplated herein, Blackstone Capital Partners V USS,
L.P. shall be recognized as the managing member of Products Investor. To the
extent other actions are required to be taken by Products Investor prior to the
Effective Date, the Parties shall reasonably cooperate in implementing a
mechanism to effectuate such actions.

*   *   *   *   *   *

62

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
themselves or their duly authorized representatives as of the date hereof.

ACCEPTED AND AGREED:

 

 

 

 

 

U.S. SHIPPING PARTNERS L.P.

 

By:

US Shipping General Partner LLC, its General Partner

 

By:

/s/

 

 

 

 

 

 

 

Name: Joseph Gehegan

 

 

Title: Chief Operating Officer

 

 

 

 

USS PRODUCT MANAGER LLC

 

 

 

 

By:

/s/

 

 

 

 

 

 

Name: Joseph Gehegan

 

 

Title: Chief Operating Officer

 

 

 

 

USS PRODUCT CARRIERS LLC

 

 

 

 

By:

/s/

 

 

 

 

 

 

Name: Joseph Gehegan

 

 

Title: Chief Operating Officer

 

 

 

 

USS PC HOLDING CORP.

 

 

 

 

By:

/s/

 

 

 

 

 

 

Name: Joseph Gehegan

 

 

Title: Chief Operating Officer

 

 

 

 

 

BLACKSTONE CORPORATE DEBT ADMINISTRATION L.L.C.

 

 

 

 

By:

Blackstone Debt Advisors L.P., its Sole Member

 

 

 

 

By:

BCLO Advisors L.L.C., its General Partner

 

 

 

 

By:

/s/

 

 

 

 

 

 

 

Name: George Fan

 

 

Title: Managing Director

63

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BLACKSTONE CAPITAL PARTNERS V USS, L.P.

 

 

 

 

By: Blackstone Management Associates V USS L.L.C., its General Partner

 

 

 

 

By: BMA V USS L.L.C., its Sole Member

 

 

 

 

By:

/s/

 

 

 

 

 

 

 

Name: David I. Foley

 

 

Title: Senior Managing Director

 

 

 

 

BLACKSTONE FAMILY INVESTMENT PARTNERSHIP V USS L.P.

 

 

 

 

By: BCP V USS Side-by-Side GP L.L.C., its General Partner

 

 

 

 

By:

/s/

 

 

 

 

 

 

Name: David I. Foley

 

 

Title: Senior Managing Director

 

 

 

 

BLACKSTONE FAMILY INVESTMENT PARTNERSHIP V-A USS SMD L.P.

 

 

 

 

By: Blackstone Family GP L.L.C., its General Partner

 

 

 

 

By:

/s/

 

 

 

 

 

 

Name: David I. Foley

 

 

Title: Senior Managing Director

 

 

 

 

BLACKSTONE PARTICIPATION PARTNERSHIP V USS L.P.

 

 

 

 

By: BCP V USS Side-by-Side GP L.L.C., its General Partner

 

 

 

 

By:

/s/

 

 

 

 

 

 

Name: David I. Foley

 

 

Title: Senior Managing Director

64

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BLACKSTONE MEZZANINE PARTNERS II USS L.P.

 

 

 

 

By: Blackstone Mezzanine Associates II USS L.P., its General Partner

 

 

 

 

By: Blackstone Mezzanine Management Associates II USS L.L.C., its General
Partner

 

 

 

 

 

By:

/s/

 

 

 

 

 

 

 

Name: George Fan

 

 

Title:   Managing Director

 

 

 

 

BLACKSTONE MEZZANINE HOLDINGS II USS L.P.

 

 

 

 

By: BMP II USS Side by Side GP L.L.C., its General Partner

 

 

 

 

By:

/s/

 

 

 

 

 

 

Name: George Fan

 

 

Title:   Managing Director

 

 

 

 

BLACKSTONE FAMILY MEZZANINE PARTNERSHIP II USS SMD L.P.

 

 

 

 

By: Blackstone Family GP L.L.C., its General Partner

 

 

 

 

By:

/s/

 

 

 

 

 

 

Name: George Fan

 

 

Title:   Managing Director

65

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F&J COMMENTS: 6/30//09 TO
SRZ COMMENTS: 06/26/09
SUBJECT TO FRE 408

 

 

 

 

 

CERBERUS PARTNERS, L.P.

 

 

 

 

 

 

By:

Cerberus Associates, L.L.C., its General Partner

 

 

 

 

 

By:

/s/

 

 

 

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

STYX PARTNERS, L.P.

 

 

 

 

 

 

By:

Styx Associates, LLC, its General Partner

 

 

 

 

 

By:

/s/

 

 

 

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

A3 FUNDING LP

 

 

 

 

 

 

By:

A3 Fund Management LLC, its General Partner

 

 

 

 

 

By:

/s/

 

 

 

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

USS PRODUCTS INVESTOR LLC

 

 

 

 

 

 

By:

Blackstone Capital Partners V USS L.P.

 

 

 

 

 

 

By:

Blackstone Management Associates V L.L.C., its General Partner

 

 

 

 

 

 

 

 

 

By:

BMA V USS L.L.C., its Sole Member

 

 

 

 

 

 

By:

/s/

 

 

 

 

 

 

 

Name: David I. Foley

 

 

 

Title: Senior Managing Director

 

--------------------------------------------------------------------------------

Schedule A

 

 

1.

Consolidated audited financial statements for the Fiscal Year ending December
31, 2008 pursuant to Section 8.2(a) of the LLC Agreement.10

 

 

2.

Monthly reports for the months of May and June of 2009 pursuant to Section
8.2(f) of the LLC Agreement.

 

 

3.

Quarterly reports for the Fiscal Quarters ending March 31 and June 30 of 2009
pursuant to Section 8.2(c) of the LLC Agreement.

 

 

4.

Annual operating budget for Products Investor for the 2009 Fiscal Year pursuant
to Section 6.9 of the LLC Agreement.

 

 

5.

Annual operating budget for each Vessel for the 2009 Fiscal Year.

 

 

6.

Quarterly tax estimates for the Fiscal Quarter ended June 30, 2009, pursuant to
Section 8.3(b) of the LLC Agreement.

 

 

7.

Any and all materials received from NASSCO for the months of April, May and June
of 2009.

 

 

8.

Construction reports including status updates from the inspection team at the
Shipyard (as defined in the Construction Contract) for the months of March,
April, May and June of 2009 pursuant to Section (2)(ii) of the Management
Agreement.

 

 

 

 

10 The Blackstone/Cerberus Parties understand and acknowledge that these
financial statements will show all the existing debt of the Joint Venture to be
a current liability, and that all deferred financing costs will have been
written off.

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EXHIBIT A

ESCROW AGREEMENT

This Escrow Agreement (this “Escrow Agreement”) dated as of July [ ], 2009,
entered into by and among JP Morgan Chase Bank N.A. (“Escrow Agent”), USS
Product Manager LLC (“Product Manager”) and Blackstone Capital Partners V USS,
L.P. (“Blackstone Entity”).

RECITALS

WHEREAS, the Blackstone Entity, Product Manager and certain other parties have
entered into a Settlement Agreement and Release dated as of July 10, 2009 (the
“Settlement Agreement”). This Escrow Agreement shall become effective upon the
occurrence of the Effective Date as defined in the Settlement Agreement;

WHEREAS, the Blackstone Entity and Product Manager desire that the Escrow Agent
act as escrow agent for the purpose of holding the Escrow Funds (as defined
below) in the Escrow Account (as defined below) and making payments as provided
herein, and Escrow Agent is willing to act in such capacity pursuant to the
terms of this Escrow Agreement; and

WHEREAS, the Blackstone Entity and Product Manager intend that the funds
deposited into the Escrow Account contemporaneously with the execution of this
Agreement shall satisfy the payments to Products Manager pursuant to paragraphs
4(a)-(c) of the Settlement Agreement, subject to the terms and conditions of
this Escrow Agreement and the Settlement Agreement.

NOW THEREFORE,

The Blackstone Entity, Product Manager and Escrow Agent hereby agree that, in
consideration of the mutual promises and covenants contained herein, Escrow
Agent shall hold in escrow and shall distribute the Escrow Funds in accordance
with and subject to the terms and conditions set forth herein:

I. DEFINITIONS

1.        Certain Definitions

Capitalized terms used or incorporated herein but not defined herein will have
the meanings given to them in the Settlement Agreement.

II. INSTRUCTIONS

 

 

 

1.

Escrow Funds

 

 

 

 

(a)

On the Effective Date, the Blackstone/Cerberus Parties shall deposit with the
Escrow Agent the amount required pursuant to paragraph 4 of the Settlement
Agreement in immediately available funds (such amount, the “Deposit”). The
Deposit shall be deposited with Escrow Agent in Account Number [•] (the “Escrow
Account”).

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(b)

The foregoing Deposit, plus all interest, dividends, gains or other income
earned with respect thereto (if any), less any funds distributed or paid in
accordance with this Escrow Agreement, are collectively referred to herein as
“Escrow Funds.”

 

 

 

2.

Appointment of Escrow Agent

The Blackstone Entity and Product Manager hereby appoint Escrow Agent, and
Escrow Agent hereby agrees, to act as custodian of the Escrow Funds, and to
hold, invest, reinvest and distribute the Escrow Funds in accordance with the
instructions and terms and conditions of this Escrow Agreement. The Escrow Agent
shall, except to the extent prohibited by law, segregate the funds credited to
the Escrow Account from its other funds held as an agent or in trust.

 

 

 

3.

Investment of Escrow Funds

 

 

 

 

(a)

Upon receipt of the Deposit, the Escrow Agent shall deposit Escrow Funds in a
non-interest bearing account, unless otherwise instructed by the Blackstone
Entity and Product Manager. JP Morgan Chase Bank N.A. is a participant in the
FDIC’s Transaction Account Guarantee Program. A customer maintaining any
non-interest bearing transaction account(s) at JP Morgan Chase Bank N.A. may
benefit from the insurance coverage provided in the Program (the “Program”) in
the form of a full guarantee by the FDIC of such account(s). The FDIC maintains
the right to modify and/or interpret the provisions of the Program and,
accordingly, the Escrow Agent may implement such modifications and/or
interpretations at any time upon written notice to the Blackstone Entity and
Product Manager.

 

 

 

 

(b)

Escrow Agent shall have no liability for any loss arising from or related to any
such investment other than in accordance with paragraph 4 of the Terms and
Conditions sections of this Escrow Agreement.

 

 

 

 

(c)

All interest, gains, and other income (if any) earned with respect to the Escrow
Account (its “Escrow Earnings”) shall be credited to and held in such Escrow
Account.

 

 

 

4.

Distribution of Escrow Funds

 

 

 

 

(a)

4(a) Payment Amount.

 

 

 

 

 

          (i)     On the Effective Date, Product Manager and the Blackstone
Entity shall jointly execute and deliver to the Escrow Agent a certificate
substantially in the form of Exhibit A attached hereto (the “Joint Instruction
Certificate”) instructing the Escrow Agent to make a distribution of the amount
set forth in the Joint Instruction Certificate (the “4(a) Payment Amount”) to
Product Manager by wire transfer to the Product Manager Account identified on
Schedule A to this Escrow Agreement or such other account as may be designated
by Product Manager in writing to Escrow Agent from time to time (the “Product
Manager Account”).

 

 

 

 

 

          (ii)     Upon receipt of the Joint Instruction Certificate, Escrow
Agent shall as soon as practicable thereafter, release from the Escrow Account,
and pay to Product Manager in immediately available funds the 4(a) Payment
Amount in accordance with the disbursement instructions set forth in such Joint
Instruction Certificate.

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(b)

4(b) Payment Amount.

 

 

 

 

 

          (i)     No later than the 30th day following the conclusion of the
Management Transition Period, Product Manager shall execute and deliver to the
Escrow Agent a certificate substantially in the form of Exhibit B attached
hereto (the “4(b) Request Certificate”) instructing the Escrow Agent to make a
distribution from the Escrow Account of the amount required pursuant to
paragraph 4(b) of the Settlement Agreement (the “4(b) Payment Amount”) to
Product Manager by wire transfer to the Product Manager Account.

 

 

 

 

 

          (ii)     At the time of delivery of the 4(b) Request Certificate, a
duplicate copy of such certificate shall be delivered to the Blackstone Entity.
On the 40th day following the conclusion of the Management Transition Period
(or, if such date is not a business day, on the first business day after such
date) (the “4(b) Payment Date”), the Escrow Agent shall release from the Escrow
Account and pay to Product Manager from the Escrow Account in immediately
available funds the 4(b) Payment Amount in accordance with the disbursement
instructions set forth in the 4(b) Request Certificate, provided that such
distribution shall not be made if the Blackstone Entity shall have filed a
motion with the Bankruptcy Court requesting a determination that Product Manager
is not entitled to receive the payment under paragraph 4(b) of the Settlement
Agreement, such motion to have been filed with the Bankruptcy Court and a copy
delivered by the Blackstone Entity to the Escrow Agent and Product Manager at
least three days prior to the 4(b) Payment Date (a “4(b) Objection”).

 

 

 

 

(c)

4(c) Payment Amount.

 

 

 

 

 

          (i)     On the Effective Date, pursuant to paragraph 4(c) of the
Settlement Agreement, Product Manager shall execute and deliver to the Escrow
Agent a certificate substantially in the form of Exhibit C attached hereto (the
“4(c) Request Certificate”) instructing the Escrow Agent to make monthly
distributions from the Escrow Account on the amount set forth in the 4(c)
Request Certificate, (each a “4(c) Payment Amount”), such 4(c) Payment Amount to
be paid on the 17th day of each calendar month commencing with the first month
after the Effective Date (each a “4(c) Payment Date”), by wire transfer to the
Product Manager Account.

 

 

 

 

 

          (ii)     At the time of delivery of the 4(c) Request Certificate, a
duplicate copy of such certificate shall be delivered to the Blackstone Entity.
On each 4(c) Payment Date, the Escrow Agent shall release from the Escrow
Account and pay to Product Manager from the Escrow Account in immediately
available funds the 4(c) Payment Amount in accordance with the disbursement
instructions set forth in the 4(c) Request Certificate, provided that such
distributions shall not be made if the Blackstone Entity shall have filed a
motion with the Bankruptcy Court requesting a determination that Product Manager
is not entitled to receive payments under paragraph 4(c) of the Settlement
Agreement, such motion to have been filed with the Bankruptcy Court and a copy
delivered by the Blackstone Entity to the Escrow Agent and Product Manager at
least three days prior to a 4(c) Payment Date (a “4(c) Objection”).

 

 

 

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(d)

Resolution of Objection.

 

 

 

 

 

In the event that the Blackstone Entity shall deliver a 4(b) Objection or a 4(c)
Objection, Product Manager and the Blackstone Entity shall attempt in good faith
to agree upon the proper instructions to be given to the Escrow Agent with
respect to such distribution(s) (if any) in accordance with the applicable
provisions of the Settlement Agreement. If such parties should so agree, joint
written instructions of such parties setting forth such agreement shall be
prepared and signed by both parties and shall be furnished to the Escrow Agent.
The Escrow Agent shall be entitled to rely on any such joint written
instructions and make the one or more distributions (if any) from the Escrow
Account. If no such agreement is reached after good faith negotiation, the
Bankruptcy Court shall resolve the dispute.

 

 

 

The Escrow Agent will act solely on the instruction from the Product Manager
and/or the Blackstone Entity as provided in paragraph 4 of this Escrow
Agreement, and shall not be responsible for, nor chargeable with, knowledge of,
nor have any requirements to comply with the terms and conditions of the
Settlement Agreement.

 

 

 

5.

Addresses

Any notices, consents, waivers or other communications required or permitted to
be given under the terms of the Escrow Agreement must be in writing and will be
deemed to have been delivered: (i) upon receipt, when delivered personally; (ii)
upon receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one Business Day after deposit with an overnight courier service, in
each case properly addressed to the party to receive the same. The addresses and
facsimile numbers for such communications shall be:

 

 

 

 

(a)

If to the Escrow Agent:

 

 

 

 

 

JP Morgan Chase Bank N.A.

 

 

Escrow Services

 

 

4 New York Plaza, 21st Floor

 

 

New York, NY 10004

 

 

Attn: Andy Jacknick/Christopher Fasouletos

 

 

Telephone Number: (212) 623-6224

 

 

Facsimile Transmission No.: (212) 623-6168

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(b)

If to the Blackstone Entity:

 

 

 

 

 

 

 

Blackstone Entity

 

 

 

c/o Blackstone Capital Partners V USS, L.P.

 

 

 

345 Park Avenue

 

 

 

29th Floor

 

 

 

New York, New York 10154

 

 

 

Attention: David I. Foley

 

 

 

Telephone Number: (212) 583-5832

 

 

 

Facsimile Transmission No: (212) 583-5703

 

 

 

with a copy (which shall not constitute notice) to (legal counsel):

 

 

 

 

 

 

 

Schulte Roth & Zabel LLP

 

 

 

919 Third Avenue

 

 

 

New York, NY 10022

 

 

 

Attention: Adam C. Harris, Esq.

 

 

 

Telephone Number: (212) 756-2253

 

 

 

Facsimile Number: (212) 593-5955

 

 

 

 

 

 

(c)

If to Product Manager:

 

 

 

 

 

 

 

USS Product Manager LLC

 

 

 

399 Thornall Street

 

 

 

Edison, New Jersey 08837

 

 

 

Attention: Joe Gehegan

 

 

 

Telephone Number: 732-636-2701

 

 

 

Facsimile Number: 732-635-1918

 

 

 

with a copy (which shall not constitute notice) to (legal counsel):

 

 

 

 

 

 

 

Fulbright & Jaworski L.L.P.

 

 

 

666 Fifth Avenue

 

 

 

New York, New York 10103

 

 

 

Attention: David Barrack and Roy L. Goldman

 

 

 

Telephone Number: 212-318-3000

 

 

 

Facsimile: 212-318-3400

Notwithstanding the above, in the case of communications delivered to the Escrow
Agent pursuant to (i), (ii) and (iii) of this paragraph 5, such communications
shall be deemed to have been given on the date received by an officer of the
Escrow Agent or any employee of the Escrow Agent who reports directly to any
such officer at the above-referenced office. In the event that the Escrow Agent,
in its sole discretion, shall determine that an emergency exists, the Escrow
Agent may use such other means of communication as the Escrow Agent deems
appropriate. “Business Day” shall mean any day other than a Saturday, Sunday or
any other day on which the Escrow Agent located at the notice address set forth
above is authorized or required by law or executive order to remain closed.

 

 

 

6.

Distribution of Escrow Funds Upon Termination

 

Upon termination of the Escrow Agreement, any Escrow Funds then held hereunder
shall be distributed to the Blackstone Entity.

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7.

Compensation

 

 

 

 

          (a)          On the Effective Date, Escrow Agent shall be paid a fee
of $[ ], to be paid 50% by the Blackstone Entity and 50% by Product Manager, in
consideration of the services to be provided by the Escrow Agent hereunder.

 

 

 

 

          (b)          Promptly after receipt of documentation reasonably
satisfactory to the Blackstone Entity and Product Manager, Escrow Agent shall be
reimbursed upon demand for all reasonable and documented out-of-pocket expenses,
disbursements and advances incurred or made by Escrow Agent in connection with
this Escrow Agreement, in each case, to be paid 50% by the Blackstone Entity and
50% by Product Manager.

 

 

 

8.

Taxation of Escrow Earnings

 

 

 

 

          (a)          The parties hereto agree that, for tax reporting
purposes, Product Manager shall be treated as the owner of all Escrow Funds
while held by Escrow Agent, and Escrow Agent shall, for each calendar year (or
portion thereof) for which the Escrow Funds are so held report the interest,
dividend and other income (the “Earnings”) earned on the Escrow Funds on
Internal Revenue Service Form 1099. On the tenth day of each January, April,
June and September, and on each date Escrow Funds are released, in order to
allow Product Manager to satisfy its income tax liabilities with respect to the
Earnings, the Escrow Agent shall release and disburse to Product Manager in
accordance with payment instructions on Schedule A of the 4(c) Request
Certificate, an amount of cash from the Earnings in the Escrow Fund equal to the
product of 40% and the total amount of Earnings with respect to any period for
which Product Manager has not received a distribution under this Section 8(a).

 

 

 

 

          (b)          Product Manager will provide the Escrow Agent with its
tax identification number by furnishing an appropriate Internal Revenue Service
Form W-9 and any other forms and documents that the Escrow Agent may reasonably
request (collectively, “Tax Reporting Documentation”) to the Escrow Agent within
30 days after the date hereof. The parties hereto understand that, if such Tax
Reporting Documentation is not so provided to the Escrow Agent, the Escrow Agent
may be required by the Internal Revenue Code of 1986, as amended, to withhold
and promptly remit to the Internal Revenue Service a portion of any interest or
other income earned on the investment of monies or other property held by the
Escrow Agent pursuant to this Escrow Agreement.

 

 

 

III. TERMS AND CONDITIONS:

 

 

 

1.

The duties, responsibilities and obligations of Escrow Agent shall be limited to
those expressly set forth herein and no duties, responsibilities or obligations
shall be inferred or implied. Escrow Agent shall not be subject to, nor required
to comply with, any other agreement between or among the Blackstone Entity or
Product Manager or to which the Blackstone Entity or Product Manager are a
party, even though reference thereto may be made herein, or to comply with any
direction or instruction (other than those contained herein or delivered in
accordance with this Escrow Agreement) from the Blackstone Entity or Product
Manager or any entity acting on their behalf. Escrow Agent shall not be required
to, and shall not, expend or risk any of its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder, except in
the case of its fraud, gross negligence or willful misconduct.

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2.

This Escrow Agreement is for the sole and exclusive benefit of the parties
hereto and their respective successors hereunder, and shall not be deemed to
give or confer, either express or implied, any legal or equitable right, remedy,
benefit or claim to or upon any other entity or person whatsoever.

 

 

3.

If at any time Escrow Agent is served with any judicial or administrative order,
judgment, decree, writ or other form of judicial or administrative process which
in any way affects the Escrow Funds (including but not limited to orders of
attachment or garnishment or other forms of levies or injunctions or stays
relating to the transfer of Escrow Funds) (each, an “Order”), Escrow Agent
shall, within three (3) business days of receipt of such Order provide to the
Blackstone Entity and Product Manager a courtesy copy of such Order (which shall
include a copy of any written material provided with such Order). The Blackstone
Entity, Product Manager and Escrow Agent shall use their reasonable best efforts
to oppose or limit the effect of such Order. Escrow Agent is authorized to
comply with such Order in any manner as it or its legal counsel of its own
choosing deems reasonably appropriate; and if Escrow Agent reasonably complies
with any such Order, Escrow Agent shall not be liable to any of the parties
hereto or to any other person or entity even though such Order may be
subsequently modified or vacated or otherwise determined to have been without
legal force or effect.

 

 

4.

          (a)          Escrow Agent shall not be liable for any action taken or
omitted or for any loss or injury resulting from its actions or its performance
or lack of performance of its duties hereunder in the absence of fraud, gross
negligence or willful misconduct on its part. In no event shall Escrow Agent be
liable (i) for acting in accordance with or relying upon any joint instruction,
notice, demand, certificate or document from the Blackstone Entity or Product
Manager or any entities acting on their behalf, in each case as permitted by
this Escrow Agreement, (ii) for any consequential, punitive or special damages,
(iii) for the acts or omissions of its nominees, correspondents, designees,
subagents or subcustodians, or (iv) for an amount in excess of the value of the
Escrow Funds, valued as of the date of deposit.

 

 

 

          (b)          If any fees, expenses or costs incurred by, or any
obligations owed to, Escrow Agent hereunder are not promptly paid when due,
Escrow Agent shall give notice in writing to the Blackstone Entity and Product
Manager of such failure to pay. If such fees, expenses or costs are not paid by
the Blackstone Entity and Product Manager within ten (10) business days of such
notice, Escrow Agent may reimburse itself therefor from the Escrow Funds and may
sell, convey or otherwise dispose of any Escrow Funds for such purpose.

 

 

 

          (c)          Escrow Agent may consult with legal counsel at the
expense of the Blackstone Entity and Product Manager as to any matter relating
to this Escrow Agreement, and Escrow Agent shall not incur any liability in
acting in accordance with any advice from such counsel.

 

 

 

          (d)          Escrow Agent shall not incur any liability for not
performing any act or fulfilling any duty, obligation or responsibility
hereunder by reason of any occurrence beyond the control of Escrow Agent
(including but not limited to any act or provision of any present or future law
or regulation or governmental authority, any act of God or war, or the
unavailability of the Federal Reserve Bank wire or telex or other wire or
communication facility).

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5.

Unless otherwise specifically set forth herein, Escrow Agent shall proceed as
soon as practicable to collect any checks or other collection items at any time
deposited hereunder. All such collections shall be subject to Escrow Agent’s
usual collection practices or terms regarding items received by Escrow Agent for
deposit or collection. Escrow Agent shall not be required, or have any duty, to
notify anyone of any payment or maturity under the terms of any instrument
deposited hereunder, nor to take any legal action to enforce payment of any
check, note or security deposited hereunder or to exercise any right or
privilege which may be afforded to the holder of any such security.

 

 

6.

Escrow Agent shall provide to the Blackstone Entity and Product Manager monthly
statements identifying transactions, transfers or holdings of Escrow Funds and
each such statement shall be deemed to be correct and final upon receipt thereof
by each of the Blackstone Entity and Product Manager unless Escrow Agent is
notified in writing to the contrary within thirty (30) business days of the date
of such statement.

 

 

7.

Escrow Agent shall not be responsible in any respect for the form, execution,
validity, value or genuineness of documents or securities deposited hereunder,
or for any description therein, or for the identity, authority or rights of
persons executing or delivering or purporting to execute or deliver any such
document, security or endorsement.

 

 

8.

Escrow Agent is authorized to comply with and rely upon any notices,
instructions or other communications actually received by it and believed by it
to have been sent or given jointly by the Blackstone Entity and Product Manager
or by a person or persons authorized by them. Whenever under the terms hereof
the time for giving a notice or performing an act falls upon a Saturday, Sunday,
or banking holiday, such time shall be extended to the next day on which Escrow
Agent is open for business.

 

 

9.

The Blackstone Entity and Product Manager, jointly and severally, shall be
liable for and shall reimburse and indemnify Escrow Agent and hold Escrow Agent
harmless from and against any and all claims, losses, liabilities, costs,
damages or expenses (including reasonable attorneys’ fees and expenses)
(collectively, “Losses”) arising from or in connection with or related to this
Escrow Agreement or being Escrow Agent hereunder (including but not limited to
Losses incurred by Escrow Agent in connection with its successful defense, in
whole or in part, of any claim of fraud, gross negligence or willful misconduct
on its part), provided, however, that nothing contained herein shall require
Escrow Agent to be indemnified for Losses caused by its fraud, gross negligence
or willful misconduct.

 

 

10.

          (a)          The Blackstone Entity and Product Manager may jointly
remove Escrow Agent at any time by giving to Escrow Agent thirty (30) calendar
days’ prior notice in writing signed by the Blackstone Entity and Product
Manager. Escrow Agent may resign at any time by giving to the Blackstone Entity
and Product Manager thirty (30) calendar days’ prior written notice thereof;
provided, however, that no such resignation shall be effective until a successor
agent reasonably acceptable to the Blackstone Entity and Product Manager shall
have been appointed and such appointment shall have been accepted by such
successor escrow agent and Escrow Agent shall have delivered all Escrow Funds
and any instruments in which the Escrow Funds have been invested in accordance
with this Escrow Agreement to such successor escrow agent.

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          (b)          Within twenty (20) calendar days after giving the
foregoing notice of removal to Escrow Agent or receiving the foregoing notice of
resignation from Escrow Agent, the Blackstone Entity and Product Manager shall
jointly agree on and appoint a successor Escrow Agent. Any such successor escrow
agent shall agree to be bound by the terms of this Escrow Agreement and shall,
upon receipt of the Escrow Funds and any instruments in which the Escrow Funds
have been invested in accordance with this Escrow Agreement, become Escrow Agent
hereunder. If a successor Escrow Agent has not accepted such appointment by the
end of such 20-day period, Escrow Agent may, in its sole discretion, apply to a
court of competent jurisdiction for the appointment of a successor Escrow Agent
or for other appropriate relief. The costs and expenses (including reasonable
attorneys’ fees and expenses) incurred by Escrow Agent in connection with such
proceeding shall be paid by, and be deemed a joint and several obligation of,
the Blackstone Entity and Product Manager.

 

 

 

          (c)          Upon receipt of the identity of the successor Escrow
Agent, Escrow Agent shall deliver the Escrow Funds then held hereunder to the
successor Escrow Agent, less Escrow Agent’s fees, costs and expenses or other
obligations owed to Escrow Agent.

 

 

 

          (d)          Upon proper delivery of the Escrow Funds to a successor
Escrow Agent in accordance with the terms hereof, Escrow Agent shall have no
further duties, responsibilities or obligations hereunder.

 

 

11.

          (a)          In the event of any ambiguity or uncertainty hereunder or
in any notice, instruction or other communication received by Escrow Agent
hereunder, Escrow Agent may, in its sole discretion, refrain from taking any
action other than retain possession of the Escrow Funds, unless Escrow Agent
receives written instructions, signed by the Blackstone Entity and Product
Manager, which eliminates such ambiguity or uncertainty.

 

 

 

          (b)          In the event of any dispute between or conflicting claims
by or among the Blackstone Entity and Product Manager and/or any other person or
entity with respect to any Escrow Funds, Escrow Agent shall be entitled, in its
sole discretion, to refuse to comply with any and all claims, demands or
instructions with respect to such Escrow Funds so long as such dispute or
conflict shall continue, and Escrow Agent shall not be or become liable in any
way to the Blackstone Entity or Product Manager for failure or refusal to comply
with such conflicting claims, demands or instructions. Escrow Agent shall be
entitled to refuse to act until, in its sole discretion, either (i) such
conflicting or adverse claims or demands shall have been determined by a final
order, judgment or decree of the Bankruptcy Court, which order, judgment or
decree is not subject to appeal, or settled by agreement between the conflicting
parties as evidenced in a writing satisfactory to Escrow Agent or (ii) Escrow
Agent shall have received security or an indemnity satisfactory to it sufficient
to hold it harmless from and against any and all Losses which it may incur by
reason of so acting. Escrow Agent may, in addition, elect, in its sole
discretion, to commence in the Bankruptcy Court an interpleader action or seek
other judicial relief or orders as it may deem, in its sole discretion,
necessary. The costs and expenses (including reasonable attorneys’ fees and
expenses) incurred in connection with such proceeding shall be paid by, and
shall be deemed a joint and several obligation of, the Blackstone Entity and
Product Manager.

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12.

This Escrow Agreement shall be interpreted, construed, enforced and administered
in accordance with the internal substantive laws (and not the choice of law
rules) of the State of New York and the United States. Each of the Blackstone
Entity, Product Manager and the Escrow Agent hereby submits to the personal
jurisdiction of and each agrees that all proceedings relating hereto shall be
brought in the Bankruptcy Court. Each of the Blackstone Entity, Product Manager
and the Escrow Agent hereby waives the right to trial by jury. To the extent
that in any jurisdiction the Blackstone Entity, Product Manager or the Escrow
Agent may be entitled to claim, for itself or its assets, immunity from suit,
execution, attachment (whether before or after judgment) or other legal process,
each hereby irrevocably agrees not to claim, and hereby waives, such immunity.
Each of the Blackstone Entity, Product Manager and the Escrow Agent waives
personal service of process and consents to service of process by certified or
registered mail, return receipt requested, directed to it at the address last
specified for notices hereunder, and such service shall be deemed completed ten
(10) business days after the same is so mailed.

 

 

13.

This Escrow Agreement may be amended, waived or otherwise modified only by a
written amendment or waiver signed by all the parties hereto or, in the case of
a waiver, by the party or parties hereto against whom the waiver is to be
effective. No failure or delay by any party hereto in exercising any right,
power or privilege hereunder shall operate as a waiver thereof.

 

 

14.

The rights and remedies conferred upon the parties hereto shall be cumulative,
and the exercise or waiver of any such right or remedy shall not preclude or
inhibit the exercise of any additional rights or remedies. The waiver of any
right or remedy hereunder shall not preclude the subsequent exercise of such
right or remedy.

 

 

15.

Each of the Blackstone Entity, Product Manager and the Escrow Agent hereby
represents and warrants, individually and not with respect to any other party to
this Escrow Agreement (a) that this Escrow Agreement has been duly authorized,
executed and delivered on its behalf and constitutes its legal, valid and
binding obligation and (b) that the execution, delivery and performance of this
Escrow Agreement by itself do not and will not violate any applicable law or
regulation.

 

 

16.

The invalidity, illegality or unenforceability of any provision of this Escrow
Agreement shall in no way affect the validity, legality or enforceability of any
other provision; and if any provision is held to be enforceable as a matter of
law, the other provisions shall not be affected thereby and shall remain in full
force and effect.

 

 

17.

This Escrow Agreement, along with the Settlement Agreement, shall constitute the
entire agreement of the parties with respect to the subject matter and
supersedes all prior oral or written agreements in regard thereto, and to the
extent there is a conflict between the two agreements, the Settlement Agreement
shall control.

 

 

18.

Upon distribution of the final installment of the 4(c) Payment Amount to Product
Manager pursuant to paragraph 5(c)(1) hereof, this Escrow Agreement shall
terminate. The provisions of these Terms and Conditions shall survive
termination of this Escrow Agreement and/or the resignation or removal of the
Escrow Agent.

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19.

No printed or other material in any language, including prospectuses, notices,
reports, and promotional material which mentions “JP Morgan Chase Bank N.A.” by
name or the rights, powers, or duties of the Escrow Agent under this Escrow
Agreement shall be issued by any other parties hereto, or on such party’s
behalf, without the prior written consent of Escrow Agent.

 

 

20.

The headings contained in this Escrow Agreement are for convenience of reference
only and shall have no effect on the interpretation or operation hereof.

 

 

21.

This Escrow Agreement may be executed by each of the parties hereto in any
number of counterparts, each of which counterpart, when so executed and
delivered, shall be deemed to be an original and all such counterparts shall
together constitute one and the same agreement.

 

 

22.

The Escrow Agent does not have any interest in the Escrow Funds deposited
hereunder but is serving as escrow holder only and having only possession
thereof. The Blackstone Entity and Product Manager, jointly and severally, shall
pay or reimburse the Escrow Agent upon request for any transfer taxes or other
taxes relating to the Escrow Funds incurred in connection herewith and shall
indemnify and hold harmless the Escrow Agent any amounts that it is obligated to
pay in the way of such taxes. Any payments of income from the Escrow Accounts
shall be subject to withholding regulations then in force with respect to United
States taxes. It is understood that the Escrow Agent shall be responsible for
income reporting only with respect to income earned on investment of funds which
are a part of the Escrow Funds and is not responsible for any other reporting.

 

 

23.

Neither this Escrow Agreement nor any of the rights, interests or obligations
hereunder may be assigned by any party hereto (whether by operation of law or
otherwise) without the prior written consent of the other parties hereto, and
any attempted or purported assignment in violation of this paragraph 23 will be
null and void; provided that this Escrow Agreement (including the rights,
interests and obligations hereunder) may be assigned by the Blackstone Entity by
operation of any reorganization, restructuring, consolidation, merger or similar
transaction of the Blackstone Entity.

 

 

24.

Except as expressly provided in paragraphs 4(b) and 4(c) of the Terms and
Conditions herein, Escrow Agent hereby waives any and all rights to offset that
it may have against the Escrow Funds including, without limitation, claims
arising as a result of any claims, amounts, liabilities, costs, expenses,
damages, or other losses that Escrow Agent may be otherwise entitled to collect
from any party to this Escrow Agreement or any of their respective affiliates.

 

 

25.

Compliance with Court Orders. In the event that any escrow property shall be
attached, garnished or levied upon by any court order, or the delivery thereof
shall be stayed or enjoined by an order of a court, or any order, judgment or
decree shall be made or entered by any court order affecting the property
deposited under this Escrow Agreement, the Escrow Agent is hereby expressly
authorized, in its sole discretion, to obey and comply with all writs, orders or
decrees so entered or issued, which it is advised by legal counsel of its own
choosing is binding upon it, whether with or without jurisdiction, and in the
event that the Escrow Agent obeys or complies with any such writ, order or
decree it shall not be liable to any of the parties hereto or to any other
person, entity, firm or corporation, by reason of such compliance
notwithstanding such writ, order or decree be subsequently reversed, modified,
annulled, set aside or vacated.

-11-

--------------------------------------------------------------------------------

 

 

26.

Patriot Act Disclosure. Section 326 of the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001 (“USA PATRIOT Act”) requires the Escrow Agent to implement reasonable
procedures to verify the identity of any person that opens a new account with
it. Accordingly, the parties acknowledge that Section 326 of the USA PATRIOT Act
and the Escrow Agent’s identity verification procedures require the Escrow Agent
to obtain information which may be used to confirm the parties identity
including without limitation name, address and organizational documents
(“identifying information”). The parties agree to provide the Escrow Agent with
and consent to the Escrow Agent obtaining from third parties any such
identifying information required as a condition of opening an account with or
using any service provided by the Escrow Agent.

Security Procedures. In the event funds transfer instructions are given (other
than in writing at the time of execution of this Escrow Agreement), whether in
writing, by facsimile or otherwise, the Escrow Agent is authorized to seek
confirmation of such instructions by telephone call-back to the person or
persons designated on schedule 1 hereto (“Schedule 1”), and the Escrow Agent may
rely upon the confirmation of anyone purporting to be the person or persons so
designated. Each funds transfer instruction shall be executed by an authorized
signatory, a list of such authorized signatories is set forth on Schedule 1. The
persons and telephone numbers for call-backs may be changed only in a writing
actually received and acknowledged by the Escrow Agent. If the Escrow Agent is
unable to contact any of the authorized representatives identified in Schedule
1, the Escrow Agent is hereby authorized to seek confirmation of such
instructions by telephone call-back to any one or more of Blackstone Entity or
the Product Manger’s executive officers, (“Executive Officers”), as the case may
be, which shall include the titles of______________________, as the Escrow Agent
may select. Such “Executive Officer” shall deliver to the Escrow Agent a fully
executed incumbency certificate, and the Escrow Agent may rely upon the
confirmation of anyone purporting to be any such officer. The Escrow Agent and
the beneficiary’s bank in any funds transfer may rely solely upon any account
numbers or similar identifying numbers provided by Blackstone Entity and the
Product Manager to identify (a) the beneficiary, (b) the beneficiary’s bank, or
(c) an intermediary bank. The Escrow Agent may apply any of the escrowed funds
for any payment order it executes using any such identifying number, even when
its use may result in a person other than the beneficiary being paid, or the
transfer of funds to a bank other than the beneficiary’s bank or an intermediary
bank designated. The parties acknowledge that these security procedures are
commercially reasonable.

-12-

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, each of the parties has caused this Escrow Agreement to be
executed by a duly authorized officer as of the day and year first written
above.

 

 

 

  BLACKSTONE CAPITAL PARTNERS V USS, L.P.

 

 

 

  By:

BLACKSTONE MANAGEMENT

 

ASSOCIATES V L.L.C., its General Partner

 

 

  By:

BMA V USS L.L.C., its Sole Member

 

 

  By:

 

 

 

 

 

Name: David Foley

 

Title:   Senior Managing Director

 

 

 

 

 

  USS PRODUCT MANAGER LLC

 

 

  By:

 

 

 

 

 

Name:

 

Title:

 

  JP Morgan Chase Bank N.A., as Escrow Agent

 

 

 

 

 

 

 

  By:

 

 

 

 

 

 

 

 

Name:

 

 

 

Title:

 

 

--------------------------------------------------------------------------------

SCHEDULE 1

          Telephone Number(s) and authorized signature(s) for Person(s)
Designated to give Funds Transfer Instructions

If to Blackstone Entity:

 

 

 

 

 

 

 

 

Name

 

Telephone Number

 

Signature

 

 

 

 

 

 

 

 

 

 

 

 

1.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

If to Product Manager:

 

 

 

 

 

 

 

 

 

 

Name

 

Telephone Number

 

Signature

 

 

 

 

 

 

 

 

 

 

 

 

1.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

EXHIBIT A
JOINT INSTRUCTION CERTIFICATE

[DATE]                         

JP Morgan Chase Bank N.A.
Escrow Services
4 New York Plaza, 21st Floor
New York, NY 10004

Attn: Andy Jacknick/Christopher Fasouletos

          Re: Account #[               ]

Gentlemen:

                    Reference is made to the Escrow Agreement, dated as of July
[ ], 2009 (the “Escrow Agreement”), entered into by and among JP Morgan Chase
Bank N.A. (“Escrow Agent”), USS Product Manager LLC (“Product Manager”) and
Blackstone Capital Partners V USS, L.P. (“Blackstone Entity”).

                    Capitalized terms not defined herein shall have the meanings
assigned to them in the Escrow Agreement.

                    The instructions set forth in this letter constitute the
Joint Instruction Certificate given pursuant to Section II; Paragraph 4(a) of
the Escrow Agreement.

                    Pursuant to Section II; Paragraph 4(a) of the Escrow
Agreement, Product Manager and the Blackstone Entity hereby jointly instruct the
Escrow Agent to disburse the aggregate amount of _____________ Dollars
($_________)11 from the Escrow Account to Product Manager in accordance with the
written payment instructions of Product Manager (which are attached hereto as
Schedule A).

                    The Blackstone Entity and Product Manager hereby agree that
the disbursement of the 4(a) Payment Amount from the Escrow Account to Product
Manager in accordance with the provisions of this letter constitutes full
payment of the amount required by Section II; Paragraph 4(a) of the Escrow
Agreement and Section 4(a) of the Settlement Agreement, to be released by the
Escrow Agent on the Effective Date.

 

 

 

 

11 Such amount to be $9,000,000 less 50% of the amount of Interim Management
Fees actually paid to Product Manager between the date of the Settlement
Agreement and the Effective Date.

--------------------------------------------------------------------------------

                    The amount of the Escrow Account not disbursed pursuant to
the foregoing provisions of this letter shall remain subject to the terms and
conditions of the Escrow Agreement.

--------------------------------------------------------------------------------

                    Please acknowledge your receipt of this letter by your
signature below where indicated and your return of this letter, as so
acknowledged, to Adam C. Harris, Esq. of Schulte Roth & Zabel LLP, by facsimile
to (212) 593-5955 and to David Barrack and Roy L. Goldman, of Fulbright &
Jaworski L.L.P., by facsimile to (212) 318-3400.

 

 

 

Very truly yours,

 

 

 

 

 

 

BLACKSTONE CAPITAL PARTNERS V USS, L.P.

 

       

 

 

 

 

 

By:

BLACKSTONE MANAGEMENT

 

 

 

ASSOCIATES V L.L.C., its General Partner

 

 

 

 

 

 

By:

BMA V USS L.L.C., its Sole Member

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

 

 

Name: David Foley

 

 

 

Title: Senior Managing Director

 

 

 

 

 

 

 

 

 

 

USS PRODUCT MANAGER LLC

 

 

 

 

By:

 

 

 

 

 

 

 

 

Name:

 

 

Title:

 

 

 

Acknowledged:

 

JP Morgan Chase Bank N.A., as Escrow Agent

 

By:

 

 

 

 

 

 

Name:

 

 

Title:

 

--------------------------------------------------------------------------------

SCHEDULE A

Payment Instructions
of Product Manager

 

 

 

Name of Bank:

 

ABA Number:

 

Name of Account:

 

Account Number:

 

Ref:

--------------------------------------------------------------------------------

EXHIBIT B
4(b) REQUEST CERTIFICATE

 

 

 

[DATE]

JP Morgan Chase Bank N.A.
Escrow Services
4 New York Plaza, 21st Floor
New York, NY 10004

Attn: Andy Jacknick/Christopher Fasouletos

          Re: Account #[          ]

Gentlemen:

                    Reference is made to the Escrow Agreement, dated as of July
[ ], 2009 (the “Escrow Agreement”), entered into by and among JP Morgan Chase
Bank N.A. (“Escrow Agent”), USS Product Manager LLC (“Product Manager”) and
Blackstone Capital Partners V USS, L.P.

                    Capitalized terms not defined herein shall have the meanings
assigned to them in the Escrow Agreement.

                    The instructions set forth in this letter constitute the
4(b) Request Certificate given pursuant to Section II; Paragraph 4(b) of the
Escrow Agreement.

                    Pursuant to Section II; Paragraph 4(b) of the Escrow
Agreement, Product Manager hereby instructs the Escrow Agent to disburse the
aggregate amount of _____________ Dollars ($_________)12 from the Escrow Account
to Product Manager on ____, 2009, being the 40th day following the conclusion of
the Management Transition Period in accordance with the written payment
instructions of Product Manager (which are attached hereto as Schedule A).

                    Product Manager hereby agrees that the disbursement of the
4(b) Payment Amount from the Escrow Account to Product Manager in accordance
with the provisions of this letter constitutes full payment of the amount
required by Section II; Paragraph 4(b) of the Escrow Agreement and Section 4(b)
of the Settlement Agreement to be released by the Escrow Agent on the 4(b)
Payment Date.

                    The amount of the Escrow Account not disbursed pursuant to
the foregoing provisions of this letter shall remain subject to the terms and
conditions of the Escrow Agreement.

 

 

 

 

12 Such amount to be $2,300,000 less 50% of the amount of Interim Management
Fees actually paid to Product Manager between the date of the Settlement
Agreement and the Effective Date.

--------------------------------------------------------------------------------

                    Please acknowledge your receipt of this letter by your
signature below where indicated and your return of this letter, as so
acknowledged, to Adam C. Harris, Esq. of Schulte Roth & Zabel LLP, by facsimile
to (212) 593-5955 and to David Barrack and Roy L. Goldman, of Fulbright &
Jaworski L.L.P., by facsimile to (212) 318-3400.

 

 

 

 

 

        Very truly yours,

 

 

 

 

USS PRODUCT MANAGER LLC

 

 

 

 

By:

 

 

 

 

 

 

 

Name:

 

 

Title:

 

 

 

Acknowledged:

 

 

JP Morgan Chase Bank N.A., as Escrow Agent

 

 

By:

 

 

 

 

 

Name:

 

Title:

--------------------------------------------------------------------------------

SCHEDULE A

Payment Instructions
of Product Manager

 

 

 

Name of Bank:

 

ABA Number:

 

Name of Account:

 

Account Number:

 

Ref:

--------------------------------------------------------------------------------

EXHIBIT C
4(c) REQUEST CERTIFICATE

 

 

 

[DATE]

JP Morgan Chase Bank N.A.
Escrow Services
4 New York Plaza, 21st Floor
New York, NY 10004

Attn: Andy Jacknick/Christopher Fasouletos

          Re: Account #[             ]

Gentlemen:

                    Reference is made to the Escrow Agreement, dated as of July
[ ], 2009 (the “Escrow Agreement”), entered into by and among JP Morgan Chase
Bank N.A. (“Escrow Agent”), USS Product Manager LLC (“Product Manager”) and
Blackstone Capital Partners V USS, L.P.

                    Capitalized terms not defined herein shall have the meanings
assigned to them in the Escrow Agreement.

                    The instructions set forth in this letter constitute the
4(c) Request Certificate given pursuant to Section II; Paragraph 4(c) of the
Escrow Agreement.

                    Pursuant to Section II; Paragraph 4(c) of the Escrow
Agreement, Product Manager hereby instructs the Escrow Agent to disburse from
the Escrow Account to Product Manager an aggregate amount of _________ Dollars
($_____________) (the “Aggregate 4(c) Payment Amount”), paid in equal monthly
installments through December 2010, on the 17th day of each calendar month
commencing ______13 17, 2009 in accordance with the written payment instructions
of Product Manager (which are attached hereto as Schedule A).

                    Product Manager hereby agrees that the disbursement of the
Aggregate 4(c) Payment Amount from the Escrow Account to Product Manager in
accordance with the provisions of this letter shall constitute full payment of
the amount required by Section II; Paragraph 4(c) of the Escrow Agreement and
Section 4(c) of the Settlement Agreement.

                    The amount of the Escrow Account not disbursed pursuant to
the foregoing provisions of this letter shall remain subject to the terms and
conditions of the Escrow Agreement.

* * *

 

 

 

 

 

13

The first month after the Effective Date

--------------------------------------------------------------------------------

          Please acknowledge your receipt of this letter by your signature below
where indicated and your return of this letter, as so acknowledged, to Adam C.
Harris, Esq. of Schulte Roth & Zabel LLP, by facsimile to (212) 593-5955 and to
David Barrack and Roy L. Goldman, of Fulbright & Jaworski L.L.P., by facsimile
to (212) 318-3400.

 

 

 

 

 

     Very truly yours,

 

 

 

USS PRODUCT MANAGER LLC

 

 

 

 

By:

 

 

 

 

 

 

 

Name:

 

 

Title:

 

 

 

Acknowledged:

 

 

 

 

JP Morgan Chase Bank N.A., as Escrow Agent

 

 

 

 

By:

 

 

 

 

 

 

Name:

 

 

Title:

 

--------------------------------------------------------------------------------

SCHEDULE A

Payment Instructions
of Product Manager

 

 

 

Name of Bank:

 

ABA Number:

 

Name of Account:

 

Account Number:

 

Ref:

--------------------------------------------------------------------------------