Exhibit 10.1

EXECUTION VERSION

PLAN SUPPORT AGREEMENT

               This PLAN SUPPORT AGREEMENT (including the Term Sheet (as defined
below), this “Agreement”), dated as of April 23, 2009, is entered into by and
among (i) U.S. Shipping Partners L.P. (“USSP”), U.S. Shipping Finance Corp.,
U.S. Shipping Operating LLC, USS Chartering LLC, USS ATB 1 LLC, USS ATB 2 LLC,
USS ATB 3 LLC, USS ATB 4 LLC, USS M/V Houston LLC, ITB Mobile LLC, USCS Chemical
Pioneer Inc., ITB Groton LLC, ITB New York LLC, ITB Jacksonville LLC, ITB
Baltimore LLC, USCS ATB LLC, USCS Sea Venture LLC, ITB Philadelphia LLC, USCS
Chemical Chartering LLC, USCS Charleston Chartering LLC, USCS Charleston LLC,
USS JV Manager Inc., USS Product Manager LLC, USS PC Holding Corp., US Shipping
General Partner LLC (“USSGP”), and USS Product Carriers LLC (the “U.S. Shipping
Entities”), (ii) the undersigned lenders party to the First Lien Credit
Agreement (as defined herein) (each, a “Senior Secured Lender” and collectively,
the “Senior Secured Lenders”), and (iii) the undersigned holders of Second Lien
Notes (as defined herein) (each, a “Second Lien Noteholder” and collectively,
the “Second Lien Noteholders” and, together with the Senior Secured Lenders,
each a “Secured Party” and collectively, the “Secured Parties”). The U.S.
Shipping Entities, the Secured Parties and any subsequent person that becomes a
party hereto in accordance with the terms hereof are referred to herein as the
“Parties.”

RECITALS

               WHEREAS, USSP, U.S. Shipping Operating LLC, ITB Baltimore LLC,
ITB Groton LLC, ITB Jacksonville LLC, ITB Mobile LLC, ITB New York LLC, ITB
Philadelphia LLC, USS Chartering LLC, USCS Chemical Chartering LLC, USCS
Chemical Pioneer Inc., USCS Charleston Chartering LLC, USCS Charleston LLC, USCS
ATB LLC, USS ATB 1 LLC, USS ATB 2 LLC, USCS Sea Venture LLC, USS M/V Houston
LLC, U.S. Shipping Finance Corp., USS Product Manager LLC, USS JV Manager Inc.,
USS PC Holding Corp., USS ATB 3 LLC and USS ATB 4 LLC have entered into that
certain Third Amended and Restated Credit Agreement, dated as of August 7, 2006
(as amended and modified from time to time, the “First Lien Credit Agreement”),
as borrowers or guarantors, providing for $350 million in senior revolving and
term loan credit facilities (the “Senior Credit Facilities”), with Canadian
Imperial Bank of Commerce as administrative agent, KeyBank National Association,
as collateral agent (in such capacity and in the capacity of escrow agent,
together with its affiliates in the capacity of securities intermediary and
their respective successors and assigns in such capacities, the “Collateral
Agent”) and the lenders, issuing banks and other agents party thereto;

               WHEREAS, as of the Exchange Date (as defined herein), the Senior
Secured Lenders hold at least 60% of the aggregate principal amount outstanding
of the Senior Credit Facilities (the holders of at least 60% in amount, the
“Requisite Lenders”);

               WHEREAS, USSP and U.S. Shipping Finance Corp. are the issuers of
$100 million aggregate principal amount outstanding of 13% Second Lien Notes
(the “Second Lien Notes”), maturing August 15, 2014 and issued pursuant to that
certain indenture dated August 7, 2006 (the “Second Lien Indenture”), which
Second Lien Notes are guaranteed by each of the U.S. Shipping Entities other
than USSP, U.S. Shipping Finance Corp., USSGP, USS Product Carriers LLC and USS
Vessel Management LLC;

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               WHEREAS, as of the Exchange Date (as defined herein), the Second
Lien Noteholders hold at least 60% of the aggregate principal amount outstanding
of the Senior Secured Notes (the holders of at least 60% in amount, the
“Requisite Noteholders”);

               WHEREAS, the U.S. Shipping Entities and the Secured Parties wish
to reorganize and recapitalize the U.S. Shipping Entities (the “Transactions”)
in accordance with a proposed pre-arranged chapter 11 plan of reorganization
(the “Plan”), whose material terms and conditions are set forth in the term
sheet attached hereto as Exhibit “A” (the “Term Sheet”);

               WHEREAS, the U.S. Shipping Entities intend to file petitions (the
“Chapter 11 Petitions”) commencing voluntary reorganization cases (the “Chapter
11 Cases”) under chapter 11 of title 11 of the United States Code (the
“Bankruptcy Code”) in the United States Bankruptcy Court for the Southern
District of New York (the “Bankruptcy Court”);

               WHEREAS, the U.S. Shipping Entities intend to file the Plan and
related disclosure statement (the “Disclosure Statement”) concurrently with the
filing of the Chapter 11 Petitions, or as soon as practicable thereafter, and to
seek Bankruptcy Court approval of the Disclosure Statement; and

               WHEREAS, the U.S. Shipping Entities intend to use their
commercially reasonable efforts to obtain Bankruptcy Court approval of the Plan
in accordance with the Bankruptcy Code and on terms consistent with this
Agreement and each Secured Party intends to use commercially reasonable efforts
to cooperate in that regard.

               NOW, THEREFORE, in consideration of the premises and mutual
covenants and agreements set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties hereby agree as follows:

          1. Term Sheet; Plan. The material terms and conditions of the
Transactions and the Plan are set forth in the Term Sheet. The Plan shall be in
form and substance reasonably satisfactory in all respects to the Steering
Committee and embody the terms contained in, and, in all material respects be
consistent with this Agreement. For the purposes of this Agreement, (i)
“Steering Committee” means the steering committee comprised of up to three
representatives of the Senior Secured Lenders (the “Senior Representatives”) and
one representative of the Second Lien Noteholders (the “Second Lien
Representative”), and (ii) “Acceptable Plan” shall mean the Plan, including all
exhibits thereto, as the same may be amended or supplemented from time to time
following the Exchange Date (as defined herein) by written approval of USSP and
the Steering Committee, in consultation with the Secured Parties.1 Each Senior
Secured Lender acknowledges and agrees that prior to the Exchange Date (as
defined herein) the names of the proposed Senior Representatives have been
disclosed to it and delivery of such Senior Secured Lender’s signature page to
this Agreement constitutes approval of the appointment of such proposed Senior
Representatives to the Steering Committee. Each Second Lien Noteholder

 

 

 

 

1 Where consultation with the Secured Parties is required as to a confidential
matter, only private side Senior Secured Lenders/restricted Second Lien
Noteholders will be consulted.

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acknowledges and agrees that prior to the Exchange Date (as defined herein) the
names of the proposed Second Lien Representative has been disclosed to it and
delivery of such Second Lien Noteholder’s signature page to this Agreement
constitutes approval of the appointment of such proposed Second Lien
Representative to the Steering Committee. Notice of all relevant matters will be
given to all Steering Committee members but, in the event of disagreement, the
Steering Committee shall act by majority vote of the persons present at any
meeting of the Steering Committee; provided, that at least three members of the
Steering Committee must be present at any meeting in order for valid action to
be taken by the Steering Committee; and, provided, further, that in the event of
a tie vote, the Senior Representative serving as chair of the Steering Committee
(the “Steering Committee Chair”) shall have the tie breaking vote. If a member
of the Steering Committee sells (in one or more transactions) a majority of its
position it shall resign as a member of the Steering Committee. If there is a
resignation the slot shall be filled by a majority-in-interest vote of the
Senior Secured Lenders (in the case of a Senior Representative) and by
majority-in-interest of the Second Lien Noteholders (in the case of the Second
Lien Representative).

          2. Bankruptcy Process. The U.S. Shipping Entities hereby agree that,
no later than three business days after the Exchange Date (as defined herein),
the U.S. Shipping Entities will file with the Bankruptcy Court the Chapter 11
Petitions and all other documents necessary to commence the Chapter 11 Cases
(the date on which such filing occurs the “Filing Date”). On the Filing Date, or
as soon as practicable thereafter, the U.S. Shipping Entities will file with the
Bankruptcy Court the Disclosure Statement and the Acceptable Plan.

          3. Confirmation of the Acceptable Plan. Each of the U.S. Shipping
Entities shall use their commercially reasonable efforts to obtain confirmation
of the Acceptable Plan as soon as reasonably practicable following the
commencement of the Chapter 11 Cases in accordance with the Bankruptcy Code, and
in any event within 120 days of the Filing Date, and on terms consistent with
this Agreement, and each Secured Party shall cooperate in that regard; provided,
however, that upon notice from either the U.S. Shipping Entities or the Steering
Committee to the other Parties hereto there shall be a 30-day extension of such
120-day period; provided, further, following such 30-day extension, USSP and the
Steering Committee may from time to time agree to further extend the period
within which the U.S. Shipping Entities shall obtain confirmation of the
Acceptable Plan by such number of days as is mutually agreed to by USSP and the
Steering Committee. Each of the U.S. Shipping Entities and each Secured Party
shall take all reasonable necessary and appropriate actions to achieve
confirmation of the Acceptable Plan.

          4. Support of the Reorganization; Additional Covenants.

          (a) Prior to the Termination Date (as defined below), no Secured Party
will (i) object to confirmation of the Acceptable Plan or object to, or
otherwise commence any proceeding to oppose or alter, the Acceptable Plan, the
Disclosure Statement, motions filed in connection therewith, or customary “first
day” motions, or any other documents or agreements to be executed or implemented
in connection with the Acceptable Plan and the consummation of the Transactions,
each of which documents and agreements shall be consistent in all material
respects with this Agreement (collectively, the “Restructuring Documents”),
(ii) vote for, consent to, support or participate in the formulation of any

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plan of reorganization other than the Acceptable Plan, (iii) directly or
indirectly seek, solicit, support or encourage any plan other than the
Acceptable Plan, or any sale, proposal or offer of dissolution, winding up,
liquidation, merger, reorganization or restructuring of the U.S. Shipping
Entities that reasonably could be expected to prevent, delay or impede the
successful implementation of the Transactions as contemplated by the Acceptable
Plan and the Restructuring Documents, or (iv) take any other action not required
by law that is inconsistent with, or that would materially delay, confirmation
or consummation of, the Acceptable Plan; provided, however, without limiting the
provisions of Section 15 herein, none of the foregoing will limit any Secured
Party’s rights to participate in the Chapter 11 Cases in a manner not
inconsistent with the foregoing or with the provisions of clause (b) below,
including, without limitation, appearing as a party in interest in any matter to
be adjudicated in the Chapter 11 Cases.

          (b) Prior to the Termination Date, each Secured Party (i) agrees to
vote (or cause the voting of) its claims arising from (as the case may be) the
Senior Credit Facilities (the “Senior Secured Claims”) or arising from the
Second Lien Indenture or in connection with the Second Lien Notes (the “Second
Lien Secured Claims” and, together with the Senior Secured Claims, the “Secured
Claims”), as applicable, to accept the Acceptable Plan (subject to its receipt
of the Disclosure Statement and other solicitation materials in respect of the
Plan that are approved by the Bankruptcy Court as containing “adequate
information” under section 1125 of the Bankruptcy Code), and will not change or
withdraw (or cause to be changed or withdrawn) such vote, (ii) consents to the
treatment of the Secured Claims as set forth in the Acceptable Plan, and
(iii) shall not directly or indirectly sell, assign, pledge, hypothecate, grant
an option on, or otherwise dispose of (each, a “transfer”) any of the Secured
Claims held by such Secured Party on the date such Secured Party executes this
Agreement; provided, however, that any Secured Party may transfer any of such
Secured Claims (so long as such transfer is not otherwise prohibited by any
order of the Bankruptcy Court) to an entity that agrees in writing, in the form
attached hereto as Exhibit “B” (the “Joinder”), to be bound by the terms of this
Agreement. This Agreement shall in no way be construed to preclude any Secured
Party from acquiring additional Secured Claims; provided, however, that, subject
to Section 26 herein, any such additional holdings shall automatically be deemed
to be subject to all of the terms of this Agreement. Subject to the terms and
conditions of any order of the Bankruptcy Court, each Secured Party agrees to
provide to the U.S. Shipping Entities’ counsel (i) a copy of any Joinder and
(ii) a notice of the acquisition of any additional Secured Claims, in each case
within five business days of the consummation of the transaction disposing of,
or acquiring, Secured Claims.

          (c) None of the U.S. Shipping Entities will move the Bankruptcy Court
for a KERP or file any other motion pertaining to employee benefits or
compensation without the consent of the Steering Committee.

          (d) Except as expressly contemplated by this Agreement, none of the
U.S. Shipping Entities will engage in any transaction for which Bankruptcy Court
approval is required under Section 363 of the Bankruptcy Code without the
consent of the Steering Committee.

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          (e) The U.S. Shipping Entities will present the Steering Committee
with a list of material executory contracts and will consult with the Steering
Committee in connection with the decision to assume or reject each such
contract.

          5. The U.S. Shipping Entities’ Fiduciary Obligations. Notwithstanding
anything to the contrary contained herein:

          (a) the U.S. Shipping Entities may, subject to an appropriate
confidentiality agreement, furnish or cause to be furnished information
concerning the U.S. Shipping Entities and their business, properties or assets
to a party that expresses a legitimate interest in, as well as the financial
wherewithal to consummate, a Business Combination (each a “Potential Acquiror”);
provided, however, that the Board (as hereinafter defined) has reached a
business judgment that the Potential Acquiror’s interest is bona fide and based
on adequate financial wherewithal; and, provided, further, however, that the
U.S. Shipping Entities shall promptly notify the Steering Committee of any
expressions of interest, letters of intent, or any proposals received by a
Potential Acquiror with respect to a Business Combination. For purposes hereof,
“Business Combination” means any merger, consolidation or combination to which
U.S. Shipping Entities is a party, any proposed sale, distribution, split or
other disposition of capital stock or other equity interest of U.S. Shipping
Entities or any proposed sale, dividend or other disposition of all or
substantially all of the assets and properties of the U.S. Shipping Entities;

          (b) following receipt of a proposal or offer for a Business
Combination from a Potential Acquiror, the U.S. Shipping Entities may negotiate
and discuss such proposal or offer with the Potential Acquiror;

          (c) following receipt of a proposal or offer for a Business
Combination from a Potential Acquiror, the U.S. Shipping Entities may disclose
the terms and conditions of such proposal or offer to the Secured Parties and,
if applicable, to the Bankruptcy Court, and

          (d) following receipt of a proposal or offer for a Business
Combination from a Potential Acquiror, the U.S. Shipping Entities may
immediately terminate their obligations under this Agreement by written notice
to the Steering Committee;

but in each case referred to in the foregoing clauses (a) through (d) only to
the extent that:

               (i) if an offer or proposal from a Potential Acquiror is received
prior to the commencement of the Chapter 11 Cases, USSP and the board of
directors of USSGP (the “Board”) conclude in good faith that (A) the Potential
Acquiror is proposing or offering a Business Combination that USSP and the Board
determine is reasonably likely, if negotiated to finality and consummated, to be
more favorable to the U.S. Shipping Entities, their creditors and the holders of
equity securities of USSP than the Acceptable Plan, and (B) such action is
necessary or appropriate in order for the Board to comply with its fiduciary
obligations to the USSP’s creditors and equity holders under applicable law; and

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               (ii) if an offer or proposal from a Potential Acquiror is
received after Filing Date, the Company shall request such relief from the
Bankruptcy Court as the Board deems appropriate to comply with its fiduciary
obligations to USSP’s creditors and equity holders under applicable law, and the
U.S. Shipping Entities may disclose any such offer or proposal to the Bankruptcy
Court in any and all circumstances.

          6. Termination of Agreement. This Agreement shall terminate, unless
waived by USSP and the Steering Committee in consultation with the Secured
Parties, upon the earliest to occur of the following (the date and time of such
termination, the “Termination Date”):

          (a) at 5:00 P.M. prevailing Eastern Time on the date which is three
business days after the Exchange Date (as defined herein) if the U.S. Shipping
Entities shall not have made the filings set forth in Section 2 on or before
such time;

          (b) at 5:00 P.M. prevailing Eastern Time on the 75th day after the
Filing Date if a hearing has not been held before the Bankruptcy Court on or
before such date to consider the approval of the Disclosure Statement; provided,
however, that upon notice from either the U.S. Shipping Entities or the Steering
Committee to the other Parties hereto there shall be a 30-day extension of such
75-day period;

          (c) at 5:00 P.M. prevailing Eastern Time on the 120th day after the
Filing Date if the Disclosure Statement has not been approved and the Acceptable
Plan has not been confirmed by the Bankruptcy Court on or before such date;
provided, however, that upon notice from either the U.S. Shipping Entities or
the Steering Committee to the other Parties hereto there shall be a 30-day
extension of such 120-day period;

          (d) at 5:00 P.M. prevailing Eastern Time on October 1, 2009 if there
has not occurred substantial consummation (as defined in Section 1101 of the
Bankruptcy Code) of the Acceptable Plan on or before such date; provided,
however, that upon notice from either the U.S. Shipping Entities or the Steering
Committee to the other Parties hereto there shall be an extension of such date
until November 2, 2009;

          (e) the Chapter 11 Cases are dismissed or converted to cases under
Chapter 7 of the Bankruptcy Code;

          (f) the U.S. Shipping Entities file, propose or otherwise support any
plan of reorganization other than the Acceptable Plan;

          (g) the material breach by any of the U.S. Shipping Entities of any of
the undertakings, representations, warranties or covenants of the U.S. Shipping
Entities set forth in this Agreement, which material breach remains uncured for
a period of five business days after the receipt of written notice of such
breach from the Steering Committee;

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          (h) the U.S. Shipping Entities file any motion or pleading with the
Bankruptcy Court that is not consistent in any material respect with this
Agreement or the Acceptable Plan (in each case with such amendments and
modifications as have been agreed to by USSP and the Steering Committee) and
such motion or pleading has not been withdrawn prior to the earlier of (i) five
business days after the U.S. Shipping Entities receive written notice from the
Steering Committee that such motion or pleading is inconsistent with this
Agreement or the Acceptable Plan, as applicable, and (ii) the entry of an order
of the Bankruptcy Court approving such motion; provided, that this Section 6(h)
shall not apply with respect to any motion or pleading that is inconsistent with
this Agreement if such motion or pleading is consistent with the Acceptable
Plan;

          (i) subject to the execution of an appropriate and otherwise
reasonable confidentiality agreement by any Secured Party not already subject to
appropriate confidentiality arrangements, the failure by any of the U.S.
Shipping Entities to provide to the Secured Parties and their advisors
reasonable access to the books and records of the U.S. Shipping Entities and the
management and advisors of the U.S. Shipping Entities for the purposes of
evaluating the U.S. Shipping Entities’ business plans and participating in the
process with respect to the consummation of the Transactions;

          (j) the Bankruptcy Court grants relief that is inconsistent with this
Agreement or the Acceptable Plan in any material respect (in each case with such
amendments and modifications as have been agreed to by USSP and the Steering
Committee); provided, that this Section 6(j) shall not apply with respect to any
relief that is inconsistent with this Agreement if such relief is consistent
with the Acceptable Plan; or

          (k) the issuance by any governmental authority, including the
Bankruptcy Court or any other regulatory authority or court of competent
jurisdiction, of any ruling or order enjoining the consummation of a material
portion of the Transactions,

provided, however, any of the dates set forth in this Section 6 may be extended
by agreement among USSP and the Steering Committee in consultation with the
Secured Parties. Upon termination of this Agreement, no Party shall have any
continuing liability or obligation to any other Party hereunder; provided,
however, that no such termination shall relieve any Party from liability for its
breach or non-performance of its obligations hereunder prior to the date of such
termination. Upon the occurrence of the Termination Date due to the breach by
any of the U.S. Shipping Entities under this Agreement, the fee and expense
reimbursements (including the fees and expenses of the advisors referred to in
Section 10 herein) required by the section of the Term Sheet titled “Secured
Claims” shall be payable for work through the Termination Date.

          7. Representations and Warranties. Each of the Parties represents and
warrants to each of the other Parties that the following statements are true,
correct and complete as of the date such Party executes this Agreement:

          (a) Power and Authority. It has all requisite power and authority to
enter into this Agreement and to carry out the transactions contemplated by, and
perform its respective obligations under, this Agreement.

          (b) Authorization. The execution and delivery of this Agreement and
the performance of its obligations hereunder have been duly authorized by all
necessary action on its part.

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          (c) Binding Obligation. This Agreement is the legally valid and
binding obligation of it, enforceable against it in accordance with its terms.

          (d) No Conflicts. The execution, delivery and performance by it of
this Agreement does not and shall not (i) violate any provision of law, rule or
regulation applicable to it or its certificate of incorporation or by-laws (or
other organizational document) or (ii) conflict with, result in a breach of, or
constitute (with due notice or lapse of time or both) a default under, any
material contractual obligation to which it is a party or under its certificate
of incorporation or by-laws (or other organizational documents).

          (e) Governmental Consents. The execution, delivery and performance by
it of this Agreement does not and shall not require any registration or filing
with, consent or approval of, or notice to, or other action to, with or by, any
Federal, state or other governmental authority or regulatory body other than the
Bankruptcy Court and pursuant to the Securities Exchange Act of 1934, as
amended, assuming, as to the U.S. Shipping Entities, the accuracy of the
representations and warranties herein of each Secured Party.

          8. Additional Representation of Senior Secured Lenders. Each Senior
Secured Lender represents and warrants as to itself only, severally and not
jointly with any other Senior Secured Lender, to each of the other Parties
hereto that, as of the date such Party executes this Agreement, (i) such Senior
Secured Lender either (A) is the sole legal and beneficial owner of the
aggregate principal amount of Senior Secured Claims set forth on its signature
page, in each case free and clear of all claims, liens, and encumbrances, other
than ordinary course pledges and/or swaps, or (B) has investment or voting
discretion with respect to discretionary accounts for the holders or beneficial
owners of the aggregate principal amount of Senior Secured Claims set forth on
its signature page and the related Senior Secured Claims and has the power and
authority to bind the beneficial owner(s) of such Senior Secured Claims to the
terms of this Agreement and (ii) such Senior Secured Lender has full power and
authority to vote on and consent to all matters concerning such Senior Secured
Claims and to exchange, assign, and transfer such Senior Secured Claims.

          9. Additional Representation of Second Lien Noteholders. Each Second
Lien Noteholder represents and warrants as to itself only, severally and not
jointly with any other Second Lien Noteholder, to each of the other Parties
hereto that, as of the date such party executes this Agreement, (i) such Second
Lien Noteholder either (A) is the sole legal and beneficial owner of the Second
Lien Notes set forth on its signature page and all related Second Lien Secured
Claims, in each case free and clear of all claims, liens, and encumbrances,
other than ordinary course pledges and/or swaps, or (B) has investment or voting
discretion with respect to the Second Lien Notes set forth on its signature page
and the related Second Lien Secured Claims and has the power and authority to
bind the beneficial owner(s) of such Second Lien Notes and Second Lien Secured
Claims to the terms of this Agreement and (ii) such Second Lien Noteholder has
full power and authority to vote on and consent to all matters concerning such
Second Lien Notes and Second Lien Secured Claims and to exchange, assign, and
transfer such Second Lien Notes and Second Lien Secured Claims.

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          10. Advisors to Certain Secured Parties. The U.S. Shipping Entities
shall pay the reasonable fees and expenses of (i) Pillsbury Winthrop Shaw
Pittman LLP (“Pillsbury”) for services rendered to the Senior Secured Lender
serving as Steering Committee Chair (including for services rendered to such
Senior Secured Lender before it was appointed as Steering Committee Chair), (ii)
Mayer Brown LLP, for services rendered to the Collateral Agent and as proposed
counsel to the Senior Secured Lenders in connection with the documentation of
the New Term Loan (as defined in the Term Sheet)(including the reasonable fees
and expenses of local counsel and/or special maritime counsel), and (iii)
Bracewell & Giuliani LLP (“Bracewell”) for services rendered to the Second Lien
Noteholder serving as Second Lien Representative (including for services
rendered to such Second Lien Noteholder before it was appointed as Second Lien
Representative) and to the trustee under the Second Lien Indenture (the
“Indenture Trustee”) (including, within Bracewell’s reimbursement, the
reasonable fees and expenses of Blank Rome LLP, as special maritime counsel to
the Second Lien Noteholder serving as Second Lien Representative), in each case
in connection with the prepetition discussions and the Chapter 11 Cases and
regardless of whether the transactions are consummated, as well as in accordance
with the Term Sheet or as otherwise agreed by USSP and the Steering Committee.
In furtherance of the foregoing, the U.S. Shipping Entities shall, immediately
following the Exchange Date, provide by wire transfer to each of Pillsbury and
Bracewell the sum of $200,000 to be applied to invoiced fees and expenses
incurred through the Exchange Date and with the remaining balance thereof for
each such firm to be retained as a fee reserve in respect of (but not as a cap
of) invoiced fees and expenses incurred after the Exchange Date to the extent
payable in accordance with this Agreement and/or the Term Sheet, with any such
amount in excess of the invoiced fees and expenses being returned to the U.S.
Shipping Entities upon the Termination Date.

          11. Obligation to Disclose Materials. The Secured Parties hereby
acknowledge and agree that USSP shall disclose to the public (i) promptly
following the occurrence of the Exchange Date (as defined herein), a summary of
the terms of this Agreement (including the Term Sheet but not including
identification of the individual signing Secured Parties or the members of the
Steering Committee except to the extent that the name of such Secured Party is
otherwise set forth in this Agreement, not including the signature pages hereto)
and (ii) no later than the opening of the market on the day following the Filing
Date in connection with the public disclosure of the filing of the Chapter 11
Cases, this Agreement (including the Term Sheet but not including identification
of the individual signing Secured Parties or the members of the Steering
Committee) with such redactions as may be reasonably requested by Pillsbury or
Bracewell to maintain the confidentiality of the items identified in Section 12
hereof. USSP will submit to Pillsbury and Bracewell, as counsel to the Steering
Committee Chair and the Second Lien Representative, respectively, a draft of the
form of disclosure pursuant to the immediately preceding sentence and afford
Pillsbury and Bracewell, as counsel to the Steering Committee Chair and the
Second Lien Representative, respectively, a reasonable opportunity, but in no
event less than one business day, to review and provide suggestions as to such
proposed disclosure and USSP shall consider such suggestions in good faith. In
the event that USSP fails to make the foregoing disclosure prior to the opening
of the market on the day following the Filing Date, any of the Secured Parties
may publicly disclose this Agreement, including the Term Sheet (subject to any
redactions required hereby). The U.S. Shipping Entities hereby release each
Secured Party and its advisors and professionals from any claims by or on behalf
of the U.S. Shipping Entities against any of the Secured Parties arising as a
result of such disclosure by any Secured Party in compliance with this
Agreement.

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          12. Publicity. The U.S. Shipping Entities will submit to each of
Pillsbury and Bracewell, as counsel to the Steering Committee Chair and the
Second Lien Representative, respectively, all press releases and public
documents that constitute the initial disclosure of the existence or terms of
this Agreement or any amendment to the terms of this Agreement for review and
potential suggestions on the same basis as in 11 herein. Except as required by
law (as determined by outside counsel to the U.S. Shipping Entities and with
reasonable prior notice to each of Pillsbury and Bracewell, as counsel to the
Steering Committee Chair and the Second Lien Representative, respectively), the
U.S. Shipping Entities shall not (a) use the name of any Secured Party in any
public manner without such Secured Party’s prior written consent (except to the
extent that the name of such Secured Party is otherwise set forth in this
Agreement, including the Term Sheet, not including the signature pages hereto)
or (b) disclose to any person (including, for the avoidance of doubt, any other
Secured Party) other than counsel and advisors to the U.S. Shipping Entities,
the principal amount, or percentage of, Secured Claims or any other equity or
debt securities or interests of the U.S. Shipping Entities held by any Secured
Party; provided, however, that the U.S. Shipping Entities shall be permitted to
disclose at any time the aggregate principal amount of and aggregate percentage
of Secured Claims held by the Senior Secured Lenders as a group and by the
Second Lien Noteholders as a group.

          13. Review of Documents. Each of the U.S. Shipping Entities shall,
except where it is not reasonably practicable, provide draft copies of all
motions or applications and other documents any of the U.S. Shipping Entities
intend to file with the Bankruptcy Court to each of Pillsbury and Bracewell, as
counsel to the Steering Committee Chair and the Second Lien Representative,
respectively, at least two business days prior to the date when the U.S.
Shipping Entities intend to file any such document, and shall consult in good
faith with such counsel regarding the form and substance of any such proposed
filing with the Bankruptcy Court.

          14. Sale of ITB New York.

          (a) ITB New York LLC has informed the Secured Parties that it desires
to sell the vessel “ITB New York” and retain the proceeds of such disposition
for use in the business of the U.S. Shipping Entities.

          (b) For all purposes under the Loan Documents, including without
limitation for the purposes of Section 7.2.11 of the First Lien Credit
Agreement, each of the Senior Secured Lenders hereby consents to the disposition
by ITB New York LLC of the vessel “ITB New York” and acknowledge and agrees that
(a) such sale shall not constitute a breach of, or default under, any provision
of any Loan Document or any other document, agreement or instrument related to
the foregoing documents, and (b) the U.S. Shipping Entities shall retain the
proceeds of such disposition for use in the business of the U.S. Shipping
Entities. For the purposes of this Agreement, “Loan Document” shall have the
meaning given to such term in the First Lien Credit Agreement. The
administrative agent and collateral agent under the Loan Documents and the
Indenture Trustee and the collateral agent under the Collateral Documents (as
defined in the Second Lien Indenture) shall each be entitled to rely on this
Section 14 as constituting such consent and direction; provided, however, that
the Collateral Agent shall not execute or deliver any release of any Liens on
the ITB New York unless and until the Administrative Agent has delivered to the
Collateral Agent a written directive to do so and certifies that the requisite
number of “Secured Parties” under the First Lien Credit Agreement have consented
to such disposition or that such disposition is otherwise specifically permitted
under the First Lien Credit Agreement.

7

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          (c) The Senior Secured Lenders hereby release any and all liens and
encumbrances created pursuant to the Loan Documents or any other document,
agreement or instrument related to the Loan Documents over the ITB New York or
the proceeds from the disposition of the ITB New York and agree to execute such
other documents and instruments as may be prepared by the U.S. Shipping Entities
and take such other actions that are reasonably required to effect the foregoing
release.

          (d) Prior to the Termination Date and notwithstanding anything in the
Loan Documents, to the contrary, no Secured Party will object to, or otherwise
commence any proceeding to oppose, the motions, applications and other documents
filed with the Bankruptcy Court in connection with the disposition of the ITB
New York and retention of the proceeds thereof by the U.S. Shipping Entities;
provided, for the avoidance of doubt, Section 13 herein shall apply with respect
to such motions, applications and other documents.

          15. No Waiver of Participation and Reservation of Rights. Except as
expressly provided in this Agreement, nothing herein is intended to, or does, in
any manner waive, limit, impair, or restrict any right of any Secured Party or
the ability of any Secured Party to protect and preserve its rights, remedies
and interests, including without limitation, its claims against the U.S.
Shipping Entities. If the transactions contemplated by this Agreement are not
consummated, or if this Agreement is terminated in accordance with Sections 5 or
6 herein, the U.S. Shipping Entities fully reserve any and all of their rights.

          16. Specific Performance. Each Party recognizes and acknowledges that
there would be no adequate monetary or other remedy at law for any damages that
accrue to any other Party by reason of its breach of any covenants or agreements
contained in this Agreement, and therefore each Party agrees that (i) in the
event of any such breach by any Secured Party, the U.S. Shipping Entities shall
be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief, and (ii) in the event of
any such breach by the U.S. Shipping Entities, the Secured Parties shall be
entitled to the remedy of specific performance of such covenants and agreements
and injunctive and other equitable relief if such relief is sought by either the
Senior Secured Lenders or the Second Lien Noteholders. Any Party against whom an
action or proceeding for specific performance is brought hereby waives the claim
or defense therein that such Party bringing such action or proceeding has an
adequate remedy at law, and such person shall not urge in any such action or
proceeding the claim or defense that such remedy at law exists. Any Party
entitled to the remedy of specific performance and injunctive and other
equitable relief pursuant to this Section 16 shall be entitled to obtain such
specific performance, injunctive or equitable relief without the necessity of
securing or posting a bond or other security in connection with such remedy, in
addition to any other remedy to which such Party may be entitled, at law or in
equity.

8

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          17. Remedies Cumulative. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any right,
power or remedy thereof by any Party shall not preclude the simultaneous or
later exercise of any other such right, power or remedy by such Party.

          18. Effectiveness; Amendments.

          (a) This Agreement shall become effective and binding on each Party
upon the execution, and receipt by USSP, of signature pages signed by the U.S.
Shipping Entities, the Requisite Lenders and the Requisite Noteholders by
facsimile transmission or e-mail (the date of such exchange of signature pages,
the “Exchange Date”)

          (b) This Agreement and the Plan may not be modified, amended or
supplemented except in a writing signed by USSP and the Steering Committee in
consultation with the Secured Parties; provided, however, that (i) no
modification, amendment or supplement that is materially adverse to the economic
interests of the Senior Secured Lenders as a whole or Second Lien Noteholders as
a whole shall be binding unless agreed to in a writing signed by a majority in
amount of the Senior Secured Lenders or a majority in amount of the Second Lien
Noteholders, as the case may be, (ii) any amendment, modification or supplement
that is materially adverse to the economic interests of an individual Senior
Secured Lender, without similarly affecting the rights hereunder of all Senior
Secured Lenders, shall not be effective as to such Senior Secured Lender without
its prior written consent, and (iii) any amendment, modification or supplement
that is materially adverse to the economic interests of an individual Second
Lien Noteholder, without similarly affecting the rights hereunder of all Second
Lien Noteholders, shall not be effective as to such Senior Secured Lender
without its prior written consent.

          19. Waivers. The failure of any Party to exercise any right, power or
remedy provided under this Agreement or otherwise available in respect hereof at
law or in equity, or to insist upon compliance by any other Party with its
obligations hereunder, and any custom or practice of the Parties at variance
with the terms hereof, shall not constitute a waiver by such Party of its right
to exercise any such or other right, power or remedy or to demand such
compliance. No charge of waiver, modification, consent or acquiescence with
respect to any provision of this Agreement may be made against (i) any of the
U.S. Shipping Entities, except on the basis of a written instrument executed by
or on behalf of USSP, or (ii) the Secured Parties, except on the basis of a
written instrument executed by or on behalf of the Steering Committee in
consultation with the Secured Parties.

          20. Governing Law; Jurisdiction. This Agreement shall be governed by,
and construed in accordance with, the internal laws of the State of New York,
without regard to any conflicts of law provision that would require the
application of the law of any other jurisdiction. By its execution and delivery
of this Agreement, subject to the U.S. Shipping Entities’ filing of the Chapter
11 Petitions in accordance with Section 2 hereto, each of the Parties hereby
irrevocably and unconditionally submits to the non-exclusive jurisdiction of the
Bankruptcy Court for purposes of any action, suit or proceeding arising out of
or relating to this Agreement or any of the transactions contemplated hereby.
Each Party irrevocably waives, to the fullest extent permitted by applicable
laws, jury trial and any objection it may have now or hereafter to the venue of
any action, suit or proceeding brought in such court or to the convenience of
the forum.

9

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          21. Notices. All demands, notices, requests, consents and
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) personally delivered by courier service or messenger, (ii)
sent by facsimile and acknowledged by the recipient, (iii) if duly deposited in
the mails, by certified or registered mail, postage prepaid-return receipt
requested, or (iv) sent by e-mail and acknowledged by the recipient, to the
following addresses, or such other addresses as may be furnished hereafter by
notice in writing, to the following Parties:

 

 

 

If to the U.S. Shipping Entities to:

 

 

 

399 Thornall St

 

8th Floor

 

Edison, NJ 08837

 

Facsimile No.: (732) 635 1918

 

Attn: Ronald L. O’Kelley

 

rokelley@usslp.com

 

 

 

with a copy to:

 

 

 

Weil, Gotshal & Manges LLP

 

700 Louisiana Street, Suite 1600

 

Houston, Texas 77002

 

Facsimile No.: (713) 224 9511

 

Attn: Alfredo Perez and Robert Jordan

 

alfredo.perez@weil.com

 

robert.jordan@weil.com

 

 

 

and

 

 

 

Fulbright & Jaworski L.L.P.

 

666 Fifth Avenue

 

New York, NY 10103

 

Facsimile No.: (212) 318 3400

 

Attn: Roy L. Goldman

 

rgoldman@fulbright.com

 

 

 

If to a Senior Secured Lender, to:

 

 

 

such Secured Lender at the address shown for such Secured Lender on the
applicable signature page hereto, to the attention of the person who has signed
this Agreement on behalf of such Secured Lender

10

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

 

 

 

with a copy to:

 

 

 

Pillsbury Winthrop Shaw Pittman LLP

 

1540 Broadway

 

New York, NY 10036

 

Facsimile No.: (212) 858 1500

 

Attn: Leo Crowley

 

leo.crowley@pillsburylaw.com

 

 

 

If to a Second Lien Noteholder, to:

 

 

 

such Secured Party at the address shown for such Secured Party on the applicable
signature page hereto, to the attention of the person who has signed this
Agreement on behalf of such Secured Party

 

 

 

with a copy to:

 

 

 

Bracewell & Giuliani LLP

 

225 Asylum Street

 

Suite 2600

 

Hartford, Connecticut, 06103-1516

 

Facsimile No.: (860) 760 6310

 

Attn: Evan Flaschen

 

evan.flaschen@bgllp.com

 

 

 

If to the Senior Representatives, to each Senior Representative at the address
notified by such Senior Representative to the other Parties hereto, to the
attention of the person nominated by such Senior Representative

 

 

 

with a copy to:

 

 

 

Pillsbury Winthrop Shaw Pittman LLP

 

1540 Broadway

 

New York, NY 10036

 

Facsimile No.: (212) 858 1500

 

Attn: Leo Crowley

 

leo.crowley@pillsburylaw.com

 

 

 

If to the Second Lien Representative, at the address notified by such Second
Lien Representative to the other Parties hereto, to the attention of the person
nominated by such Second Lien Representative

11

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

 

 

 

with a copy to:

 

 

 

Bracewell & Giuliani LLP

 

225 Asylum Street

 

Suite 2600

 

Hartford, Connecticut, 06103-1516

 

Facsimile No.: (860) 760-6310

 

Attn: Evan Flaschen

 

evan.flaschen@bgllp.com

 

 

 

If to the Collateral Agent, to the address shown for the Collateral Agent on the
applicable page of the First Lien Credit Agreement

 

 

 

With a copy to:

 

 

 

Mayer Brown LLP

 

700 Louisiana Street

 

Suite 3400

 

Houston, Texas 77002

 

Facsimile No.: (713) 238-4613

 

Attn: Margaret Davis

 

mndavis@mayerbrown.com

          22. Representation by Counsel. Each Party acknowledges that it has had
the opportunity to be represented by counsel in connection with this Agreement
and the transactions contemplated by this Agreement. Accordingly, any rule of
law or any legal decision that would provide any Party with a defense to the
enforcement of the terms of this Agreement against such Party based upon lack of
legal counsel, shall have no application and is expressly waived.

          23. Consideration. It is hereby acknowledged by the Parties that,
other than the agreements, covenants, representations and warranties of the
Parties, as more particularly set forth herein, no consideration shall be due or
paid to any of the U.S. Shipping Entities for its agreement to file and use its
commercially reasonable efforts to obtain approval for the Plan and Disclosure
Statement in accordance with the terms and conditions of this Agreement.

          24. Headings. The headings of the paragraphs and subparagraphs of this
Agreement are inserted for convenience only and shall not affect the
interpretation hereof.

          25. Successors and Assigns. This Agreement is intended to bind and
inure to the benefit of the Parties and their respective permitted successors,
assigns, heirs, executors, administrators and representatives.

12

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

          26. Limitations.

 

 

 

          (a) Notwithstanding anything herein to the contrary, this Agreement is
intended only to bind Senior Secured Lenders and Second Lien Noteholders to the
extent of the Secured Claims within their actual control or authority. By way of
example, this Agreement is not intended to bind other groups, divisions,
affiliates or funds related to a Senior Secured Lender or Second Lien Noteholder
as to which such Senior Secured Lender or Second Lien Noteholder does not have
the control or authority to provide votes or consents on behalf of such other
group, division, affiliate or fund.

 

 

 

          (b) The Senior Representatives are acting in their own interests and
Pillsbury is solely representing the Steering Committee Chair. Each Senior
Secured Lender acknowledges that (i) the Senior Representatives are not their
agents, (ii) Pillsbury is not its counsel, (iii) the interests of the Steering
Committee Chair and Pillsbury as its counsel may not coincide with, and may
conflict with, such Senior Secured Lender’s own interests, and (iv) nothing in
this Agreement or the Plan, or in any action taken or not taken by the Steering
Committee Chair, the other Senior Representatives or Pillsbury, shall create,
provide for, give rise to or imply any fiduciary or other duty by the Steering
Committee Chair, the other Senior Representatives or Pillsbury to such Senior
Secured Lender (or to any other Party) or to any claim or cause of action by
such Senior Secured Lender (or by any other Party) against the Steering
Committee Chair, the other Senior Representatives or Pillsbury.

 

 

 

          (c) The Second Lien Representative is acting in its own interests and
Bracewell is solely representing the Senior Representative and serving as
special counsel to the Indenture Trustee. Each Second Lien Noteholder
acknowledges that (i) the Second Lien Representative is not its agent, (ii)
Bracewell is not its counsel, (iii) the interests of the Second Lien
Representative and Bracewell as its counsel may not coincide with, and may
conflict with, such Second Lien Noteholder’s own interests, and (iv) nothing in
this Agreement or the Plan, or in any action taken or not taken by the Second
Lien Representative or Bracewell, shall create, provide for, give rise to or
imply any fiduciary or other duty by the Second Lien Representative or Bracewell
to such Second Lien Noteholder (or to any other Party) or to any claim or cause
of action by such Second Lien Noteholder (or by any other Party) against the
Second Lien Representative or Bracewell.

          27. Several, Not Joint, Obligations. The agreements, representations
and obligations of the Parties under this Agreement are, in all respects,
several and not joint.

          28. Further Assurances. Subject to the other terms of this Agreement,
the Parties agree to execute and deliver such other instruments and perform such
acts, in addition to the matters herein specified, as may be reasonably
appropriate or necessary, from time to time, to effectuate the Acceptable Plan
and consummate the Transactions.

          29. Complete Agreement. This Agreement is the entire agreement between
the Parties with respect to the subject matter hereof and supersedes all prior
agreements, oral or written, between the Parties with respect thereto, but shall
not supersede the Plan.

          30. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same Agreement. Delivery of an executed signature page of
this Agreement by facsimile or by email shall be as effective as delivery of a
manually executed signature page of this Agreement.

13

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

          31. No Third-Party Beneficiaries. Unless expressly stated herein, this
Agreement shall be solely for the benefit of the Parties, and no other person or
entity shall be a third party beneficiary hereof.

          32. Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.

          33. Additional Parties. Without in any way limiting the provisions
hereof, additional lenders under the Senior Credit Facilities and additional
holders of Second Lien Notes may elect to become Parties by executing and
delivering to the U.S. Shipping Entities a Joinder. Such additional lender or
holder of Second Lien Notes shall become a Party to this Agreement as a Senior
Secured Lender or Second Lien Noteholder, respectively, in accordance with the
terms of this Agreement.

          34. Acknowledgement by Secured Parties. Each Secured Party
acknowledges and agrees that (i) it has conducted its own independent review and
analysis of this Agreement, (ii) it is not relying on any statement,
presentation or information made by or on behalf of the Senior Representatives,
the Second Lien Representative, Pillsbury, Bracewell, the Collateral Agent,
Mayer Brown LLP, or the Indenture Trustee in determining whether to execute this
Agreement, and (iii) none of the Senior Representatives, the Second Lien
Representative, Pillsbury, the Collateral Agent, Mayer Brown LLP, Bracewell, or
the Indenture Trustee will have or be subject to any liability to such Secured
Party resulting from the distribution to such Secured Party, or their use of,
any statement, presentation or information regarding this Agreement, the
transactions or the U.S. Shipping Entities by the Senior Representatives, the
Second Lien Representative, Pillsbury, the Collateral Agent, Mayer Brown LLP,
Bracewell, or the Indenture Trustee.

          35. Cash Collateral Stipulation. Each Senior Secured Lender
acknowledges and agrees that the Debtors may use their cash, which cash is
pledged as collateral to the Senior Secured Lenders pursuant to the terms of
certain of the Loan Documents, to satisfy the Debtors’ working capital
requirements during the Chapter 11 Cases on the terms and conditions set forth
in the Term Sheet, including, without limitation, such terms and conditions with
respect to adequate protection. Such terms and conditions set forth in the Term
Sheet shall be memorialized in an order and stipulation (the “Cash Collateral
Stipulation”) submitted for approval by the Bankruptcy Court. The delivery of a
Senior Secured Lender’s signature page to this Agreement shall constitute the
consent of, and direction by, such Senior Secured Lender to the execution of the
Cash Collateral Stipulation by the Collateral Agent on behalf of the Senior
Secured Lenders containing customary terms consistent with the Term Sheet as
approved by the Senior Representatives; provided, however, that the Collateral
Agent shall not execute or deliver the Cash Collateral Stipulation unless and
until the Administrative Agent has delivered to the Collateral Agent a written
directive to do so and certifies that the requisite number of “Secured Parties”
under the First Lien Credit Agreement have consented to such execution and
delivery. Each Senior Secured Lender acknowledges and agrees that (a) all rights
and benefits of the Collateral Agent under Article IX of the First Lien Credit
Agreement and similar provisions relating to the liabilities, damages, losses,
acts and omissions of the Collateral Agent set forth in

14

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

the other Loan Documents (which such rights and benefits shall survive any
termination of this Agreement) shall extend to any and all liabilities,
obligations. losses, damages, claims, costs or expenses imposed on, incurred by,
or asserted against the Collateral Agent in any way relating to or arising out
of, and any and all acts, activities and omissions of the Collateral Agent taken
in connection with, this Agreement, including any execution of the Cash
Collateral Stipulation and any releases of Liens or other documents and
instruments executed and delivered in connection with any disposition of the ITB
New York as described in Section 14, and (b) neither this Agreement, the
effectuation of the Acceptable Plan nor the consummation of the Transaction
shall impose any obligation on KeyBank National Association and its affiliates
to serve as Collateral Agent beyond May 20, 2009.

          36. Third Party Beneficiary. The Parties acknowledge and agree that
the Collateral Agent is a third-party beneficiary of certain provisions under
this Agreement and shall be entitled as such to enforce, exercise or protect
such rights, interests and benefits provided hereunder, in all cases, to the
fullest extent permitted by applicable law. No waiver, modification, amendment
or supplement to this Agreement which may have a material adverse effect with
respect to the rights, interest or benefits granted to the Collateral Agent
hereunder shall be effective unless agreed to in a writing signed by the
Collateral Agent.

15

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

          IN WITNESS WHEREOF, each of the Parties has caused this Agreement to
be executed and delivered by its duly authorized officer.

 

 

 

 

U.S. SHIPPING PARTNERS L.P.

 

By:

US Shipping General Partner LLC, its general partner

 

 

 

 

By:

/s/ Ronald L. O’Kelley

 

 

 

 

 

Name: Ronald L. O’Kelley

 

 

Title: President and Chief Executive Officer

 

 

 

 

U.S. SHIPPING FINANCE CORP.

 

 

 

By:

/s/ Ronald L. O’Kelley

 

 

 

 

 

Name: Ronald L. O’Kelley

 

 

Title: President and Chief Executive Officer

 

 

 

 

U.S. SHIPPING OPERATING LLC

 

 

 

By:

/s/ Ronald L. O’Kelley

 

 

 

 

 

Name: Ronald L. O’Kelley

 

 

Title: President and Chief Executive Officer

 

 

 

 

USS CHARTERING LLC

 

 

 

By:

/s/ Ronald L. O’Kelley

 

 

 

 

 

Name: Ronald L. O’Kelley

 

 

Title: President and Chief Executive Officer

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

 

 

 

 

USS ATB 1 LLC

 

 

 

By:

/s/ Ronald L. O’Kelley

 

 

 

 

 

Name: Ronald L. O’Kelley

 

 

Title: President and Chief Executive Officer

 

 

 

 

USS ATB 2 LLC

 

 

 

By:

/s/ Ronald L. O’Kelley

 

 

 

 

 

Name: Ronald L. O’Kelley

 

 

Title: President and Chief Executive Officer

 

 

 

 

USS ATB 3 LLC

 

 

 

By:

/s/ Ronald L. O’Kelley

 

 

 

 

 

Name: Ronald L. O’Kelley

 

 

Title: President and Chief Executive Officer

 

 

 

 

USS ATB 4 LLC

 

 

 

By:

/s/ Ronald L. O’Kelley

 

 

 

 

 

Name: Ronald L. O’Kelley

 

 

Title: President and Chief Executive Officer

 

 

 

 

USS M/V HOUSTON LLC

 

 

 

By:

/s/ Ronald L. O’Kelley

 

 

 

 

 

Name: Ronald L. O’Kelley

 

 

Title: President and Chief Executive Officer

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

 

 

 

 

ITB MOBILE LLC

 

 

 

By:

/s/ Ronald L. O’Kelley

 

 

 

 

 

Name: Ronald L. O’Kelley

 

 

Title: President and Chief Executive Officer

 

 

 

 

USCS CHEMICAL PIONEER INC.

 

 

 

By:

/s/ Ronald L. O’Kelley

 

 

 

 

 

Name: Ronald L. O’Kelley

 

 

Title: President and Chief Executive Officer

 

 

 

 

ITB GROTON LLC

 

 

 

By:

/s/ Ronald L. O’Kelley

 

 

 

 

 

Name: Ronald L. O’Kelley

 

 

Title: President and Chief Executive Officer

 

 

 

 

ITB NEW YORK LLC

 

 

 

By:

/s/ Ronald L. O’Kelley

 

 

 

 

 

Name: Ronald L. O’Kelley

 

 

Title: President and Chief Executive Officer

 

 

 

 

ITB JACKSONVILLE LLC

 

 

 

By:

/s/ Ronald L. O’Kelley

 

 

 

 

 

Name: Ronald L. O’Kelley

 

 

Title: President and Chief Executive Officer

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

 

 

 

 

ITB BALTIMORE LLC

 

 

 

By:

/s/ Ronald L. O’Kelley

 

 

 

 

 

Name: Ronald L. O’Kelley

 

 

Title: President and Chief Executive Officer

 

 

 

 

USCS ATB LLC

 

 

 

By:

/s/ Ronald L. O’Kelley

 

 

 

 

 

Name: Ronald L. O’Kelley

 

 

Title: President and Chief Executive Officer

 

 

 

 

USCS SEA VENTURE LLC

 

 

 

By:

/s/ Ronald L. O’Kelley

 

 

 

 

 

Name: Ronald L. O’Kelley

 

 

Title: President and Chief Executive Officer

 

 

 

 

ITB PHILADELPHIA LLC

 

 

 

By:

/s/ Ronald L. O’Kelley

 

 

 

 

 

Name: Ronald L. O’Kelley

 

 

Title: President and Chief Executive Officer

 

 

 

 

USCS CHEMICAL CHARTERING LLC

 

 

 

By:

/s/ Ronald L. O’Kelley

 

 

 

 

 

Name: Ronald L. O’Kelley

 

 

Title: President and Chief Executive Officer

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

 

 

 

 

USCS CHARLESTON CHARTERING LLC

 

 

 

By:

/s/ Ronald L. O’Kelley

 

 

 

 

 

Name: Ronald L. O’Kelley

 

 

Title: President and Chief Executive Officer

 

 

 

 

USCS CHARLESTON LLC

 

 

 

By:

/s/ Ronald L. O’Kelley

 

 

 

 

 

Name: Ronald L. O’Kelley

 

 

Title: President and Chief Executive Officer

 

 

 

 

USS JV MANAGER INC.

 

 

 

By:

/s/ Ronald L. O’Kelley

 

 

 

 

 

Name: Ronald L. O’Kelley

 

 

Title: President and Chief Executive Officer

 

 

 

 

USS PRODUCT MANAGER LLC

 

 

 

By:

/s/ Ronald L. O’Kelley

 

 

 

 

 

Name: Ronald L. O’Kelley

 

 

Title: President and Chief Executive Officer

 

 

 

 

USS PC HOLDING CORP.

 

 

 

By:

/s/ Ronald L. O’Kelley

 

 

 

 

 

Name: Ronald L. O’Kelley

 

 

Title: President and Chief Executive Officer

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

 

 

 

 

US SHIPPING GENERAL PARTNER LLC

 

 

 

By:

/s/ Ronald L. O’Kelley

 

 

 

 

 

Name: Ronald L. O’Kelley

 

 

Title: President and Chief Executive Officer

 

 

 

 

USS PRODUCT CARRIERS LLC

 

 

 

By:

/s/ Ronald L. O’Kelley

 

 

 

 

 

Name: Ronald L. O’Kelley

 

 

Title: President and Chief Executive Officer

 

 

 

 

USS VESSEL MANAGEMENT LLC

 

 

 

By:

/s/ Ronald L. O’Kelley

 

 

 

 

 

Name: Ronald L. O’Kelley

 

 

Title: President and Chief Executive Officer

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

 

 

 

 

SENIOR SECURED LENDERS

 

[*]

 

 

By:

 

 

 

 

 

 

Name:

 

 

Title:

 

Principal amount of Senior Secured Claims held:

 

$___________________

 

Date: _______________

 

[Address]

 

Attention:

 

Fax: [*]

 

Email:

 

 

 

[*]

 

 

By:

 

 

 

 

 

 

Name:

 

 

Title:

 

Principal amount of Senior Secured Claims held:

 

$___________________

 

Date: _______________

 

[Address]

 

Attention:

 

Fax: [*]

 

Email:

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

 

 

 

 

[*]

 

 

By:

 

 

 

 

 

 

Name:

 

 

Title:

 

Principal amount of Senior Secured Claims held:

 

$___________________

 

Date: _______________

 

[Address]

 

Attention:

 

Fax: [*]

 

Email:

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

 

 

 

 

SECOND LIEN NOTEHOLDERS

 

[*]

 

 

By:

 

 

 

 

 

 

Name:

 

 

Title:

 

Principal amount of Second Lien Secured Claims held:

 

$___________________

 

Date: _______________

 

[Address]

 

Attention:

 

Fax: [*]

 

Email:

 

 

 

[*]

 

 

By:

 

 

 

 

 

 

Name:

 

 

Title:

 

Principal amount of Second Lien Secured Claims held:

 

$___________________

 

Date: _______________

 

[Address]

 

Attention:

 

Fax: [*]

 

Email:

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

 

 

 

 

[*]

 

 

By:

 

 

 

 

 

 

Name:

 

 

Title:

 

Principal amount of Second Lien Secured Claims held:

 

$___________________

 

Date: _______________

 

[Address]

 

Attention:

 

Fax: [*]

 

Email:

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

Exhibit A

Term Sheet

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

 

 

U.S. Shipping Partners L.P.

 

REVISED PLAN TERM SHEET

 

As of April 22, 2009

 

The following is a summary (the “Plan Term Sheet”) of certain material terms of
a proposed plan of reorganization (the “Plan”) of the Company (as defined
below), USS Product Carriers LLC (“USSPC”) and US Shipping General Partner, the
general partner of USSP (“USSGP”), under chapter 11 of title 11 of the United
States Code (the “Bankruptcy Code”). This Plan Term Sheet does not contain all
the terms, conditions, and other provisions of the Plan and the transactions
contemplated by this Plan Term Sheet are subject to conditions to be set forth
in definitive documents. This Plan Term Sheet is proffered in the nature of a
settlement proposal in furtherance of settlement discussions and is entitled to
protection from any use or disclosure to any party or person pursuant to Federal
Rule of Evidence 408 and any other rule of similar import. This Plan Term Sheet
and the information contained herein are strictly confidential and contain
material non-public information. It is being provided to the (i) Senior Secured
Lenders (as defined below) in accordance with the confidentiality provisions of
the First Lien Credit Agreement (as defined below) and (ii) those Second Lien
Noteholders (as defined below) who have agreed to maintain the confidentiality
hereof. This Plan Term Sheet does not constitute an offer of securities, nor is
it an offer or solicitation for any chapter 11 plan, and is being presented for
discussion and settlement purposes only.

It is anticipated that prior to filing chapter 11 petitions, the Company will
enter into a plan support agreement (“Plan Support Agreement”) with (i) Senior
Secured Lenders comprising more than one half in number of all Senior Secured
Lenders and holding at least sixty percent (60%) of the aggregate amount of the
Senior Secured Claims (as defined below) (the “Requisite Senior Lenders”) and
(ii) Second Lien Noteholders holding at least sixty percent (60%) of the
aggregate amount of the Second Lien Secured Claims (as defined below) (the
“Requisite Second Lien Noteholders”), pursuant to which the signatories thereto
will agree to support the Plan based on this Plan Term Sheet, which shall be
Exhibit “A” to such Plan Support Agreement. It is further anticipated that the
Plan Support Agreement will contain Milestones (as defined below) for the
Debtors’ chapter 11 cases filed in the Bankruptcy Court for the Southern
District of New York (the “Bankruptcy Court”).

 

 

I.

Parties

 

 

 

Debtors

 

U.S. Shipping Partners L.P. (“USSP”), and certain of its subsidiaries
(collectively, the “Company”or the “Debtors”), including, without limitation,
all Borrowers under the First Lien Credit Agreement and all Issuers and
Guarantors under the Second Lien Notes (as each term is defined below), USSPC
and USSGP.2

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

 

 

 

 

 

 

The First Lien Credit Agreement

 

Third Amended and Restated Credit Agreement, dated as of August 7, 2006 (as
amended, the “First Lien Credit Agreement”), among U.S. Shipping Partners L.P.,
U.S. Shipping Operating LLC, ITB Baltimore LLC, ITB Groton LLC, ITB Jacksonville
LLC, ITB Mobile LLC, ITB New York LLC, ITB Philadelphia LLC, USS Chartering LLC,
USCS Chemical Chartering LLC, USCS Chemical Pioneer Inc., USCS Charleston
Chartering LLC, USCS Charleston LLC, USCS ATB LLC, USS ATB 1 LLC, USS ATB 2 LLC,
USCS Sea Venture LLC, USS M/V Houston LLC, U.S. Shipping Finance Corp., USS
Product Manager LLC, USS JV Manager Inc., and USS PC Holding Corp., as borrowers
(collectively, the “Borrowers”), USS ATB 3 LLC and USS ATB 4 LLC as guarantors,
Canadian Imperial Bank of Commerce, as Administrative Agent (the “Administrative
Agent”) and Letter of Credit Issuer, the collateral agent under the First Lien
Credit Agreement (the “Collateral Agent”) and the lender parties thereto
(collectively, the “Senior Secured Lenders”) and any and all of the documents,
notes, instruments and other agreements (including, without limitation, each of
the Loan Documents (as defined in the First Lien Credit Agreement) and the ISDA
Master Agreements), executed, delivered or filed pursuant to or in connection
with the aforementioned Third Amended and Restated Credit Agreement, as such
Third Amended and Restated Credit Agreement, documents, notes and other
agreements and instruments (including the Loan Documents and the ISDA Master
Agreement) may have been amended, supplemented, modified or allonged.

 

 

 

Second Lien 13% Senior Secured Notes due 2014

 

Second Lien 13% Senior Secured Notes due 2014 (the “Second Lien Notes”) issued
pursuant to that certain Indenture, dated as of August 7, 2006 (the “Second Lien
Indenture”) among USSP and U.S. Shipping Finance Corp., as issuers (the
“Issuers”), U.S. Shipping Operating LLC, USS ATB 1 LLC, USS ATB 2 LLC, USS
Chartering LLC, USS M/V Houston LLC, USS Product Manager LLC, USS JV Manager
Inc., ITB Baltimore LLC, ITB Groton LLC, ITB Jacksonville LLC, ITB Mobile LLC,
ITB New York LLC, ITB Philadelphia LLC, USCS Chemical Pioneer Inc., USCS
Chemical Chartering LLC, USCS Charleston Chartering LLC, USCS Charleston LLC,
and USCS Sea Venture LLC, as guarantors (the “Guarantors”), and Wells Fargo
Bank, N.A., as indenture trustee (the “Indenture Trustee”).

 

 

 

 

2 In the event persons to whom USS Vessel Management LLC, a wholly-owned
subsidiary of USSGP that is funded directly by USSGP and indirectly by the
Company, has obligations based on prepetition agreements do not agree to accept
a settlement of such obligations less than or equivalent to what unsecured
creditors of the U.S. Shipping Entities are expected to receive pursuant to the
Plan, USS Vessel Management LLC shall be added as a debtor to the Debtors’
chapter 11 cases filed in the Bankruptcy Court.

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

 

 

II.

Proposed Restructuring

The Company will restructure its debt and equity interests pursuant to the Plan
as described below. Unless otherwise indicated, all transactions will take place
on the date the Plan becomes effective (the “Effective Date”).

 

 

 

 

Corporate and Capital Structure
of Reorganized Debtors3

 

The proposed Plan contemplates a reorganization of the Company (the
“Restructuring”) as a corporation under Delaware law that is compliant with
sections 12103 and 50501 of title 46 of the United States Code and Part 4.80 of
title 19 of the Code of Federal Regulations (collectively, the “U.S. Coastwise
Trade Laws”).

Through the Plan, all existing partnership and other equity interests in USSP
(the “USSP Prepetition Equity Interests”) shall be deemed cancelled and
extinguished. New common stock, par value $.001 per share (“New Common Stock”),
and warrants to purchase New Common Stock (“Warrants”) shall be issued to the
Senior Secured Lenders and holders of the Second Lien Notes (the “Second Lien
Noteholders,”) in reorganized USSP (“Reorganized USSP”).

The debt incurred in connection with the First Lien Credit Agreement will be
converted into a senior secured credit facility with a principal amount equal to
the current outstanding principal amount of approximately $332.6 million (but
for the avoidance of doubt, exclusive of any PIK interest) plus an amount equal
to the termination obligation of the interest rate swaps (the “New Term Loan”),
the terms of which are set forth below.

The Second Lien Notes will be converted into New Common Stock and Warrants as
set forth below.

Through the Plan, USSGP will be merged with and into Reorganized USSP on the
Effective Date, with Reorganized USSP being the surviving corporation.

 

 

 

 

Equity Ownership in Reorganized Debtors

 

The equity ownership of Reorganized USSP shall be held as follows:

 

 

 

 

3 Reorganized Debtorsmeans Reorganized USSP (as defined below), USS Chartering
LLC, USCS Chemical Pioneer Inc., USCS Charleston Chartering LLC, USCS Charleston
LLC, USS Product Manager LLC, USS JV Manager Inc., USS ATB 1 LLC, USS ATB 2 LLC,
USS ATB 3 LLC, USS M/V Houston LLC, ITB New York LLC, ITB Baltimore LLC, ITB
Mobile LLC, USCS ATB LLC, USCS Sea Venture LLC, ITB Philadelphia LLC, USCS
Chemical Chartering LLC and USS Product Carriers LLC on and after the Effective
Date (as defined below).

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

 

 

 

 

 

 

(a)

50% of the New Common Stock of Reorganized USSP (after giving effect to the
exercise of all Warrants issued pursuant to this clause (a) and clause (b) below
but before giving effect to the Management Equity Plan (as defined below)) shall
be issued to the Senior Secured Lenders (the “Senior Secured Lenders’ Equity
Share”). The Senior Secured Lenders’ Equity Share shall consist of shares of New
Common Stock and Warrants and be issued on the Effective Date, subject to the
following:

 

 

 

 

 

 

 

(i)

Each Senior Secured Lender that is a U.S. Citizen (“Domestic Holder”) shall be
issued shares of New Common Stock in an amount equal to its pro rata share4of
the Senior Secured Lenders’ Equity Share; and

 

 

 

 

 

 

(ii)

Each Senior Secured Lender who is not a U.S. Citizen for U.S. Coastwise Trade
Laws purposes5 (“Foreign Holder”) shall be issued shares of New Common Stock and
Warrants in an amount equal to its pro rata share of the Senior Secured Lenders’
Equity Share, with each Foreign Holder being allocated shares of New Common
Stock and Warrants as follows:

 

 

 

 

 

 

 

(A)

a number of shares of New Common Stock equal to the product determined by
multiplying (I) 11.5% of the total number of shares of New Common Stock to be
outstanding on the Effective Date by (II) a fraction, (x) the numerator of which
is the amount of such Foreign Holder’s Senior Secured Claim and (y) the
denominator of which is the total amount of Senior Secured Claims held by all
Foreign Holders; and

 

 

 

 

 

 

 

 

(B)

Warrants representing the number of shares of New Common Stock equal to such
Foreign Holder’s pro rata share of the Senior Secured Lenders’ Equity Share less
the number of shares of New Common Stock issued to such Foreign Holder pursuant
to subclause (A) above.

 

 

 

 

4 For purposes hereof, a Senior Secured Lender’s pro rata share shall equal the
percentage determined by dividing the amount of such Senior Secured Lender’s
Senior Secured Claim by the total of all Senior Secured Claims.

5 The term “U.S. Citizen” will hereinafter be used to refer to U.S. Citizens for
U.S. Coastwise Trade Laws purposes.

6 For purposes hereof, a Second Lien Noteholder’s pro rata share shall equal the
percentage determined by dividing the amount of such Second Lien Noteholder’s
Second Lien Secured Claim by the total of all Second Lien Secured Claims.

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

 

 

 

 

 

 

(b)

50% of the New Common Stock of Reorganized USSP (after giving effect to the
exercise of all Warrants issued pursuant to clause (a) above and this clause (b)
but before giving effect to the Management Equity Plan) shall be issued to the
Second Lien Noteholders (the “Second Lien Noteholders’ Equity Share”). The
Second Lien Noteholders’ Equity Share shall consist of shares of New Common
Stock and Warrants and be issued on the Effective Date, subject to the
following:

 

 

 

 

 

(i)

Each Second Lien Noteholder that is a Domestic Holder shall be issued shares of
New Common Stock in an amount equal to its pro rata share6 of the Second Lien
Noteholders’ Equity Share; and

 

 

 

 

 

 

(ii)

Each Second Lien Noteholder who is a Foreign Holder shall be issued shares of
New Common Stock and Warrants in an amount equal to its pro rata share of the
Second Lien Noteholders’ Equity Share, with each Foreign Holder being allocated
shares of New Common Stock and Warrants as follows:

 

 

 

 

 

 

 

(A)

a number of shares of New Common Stock equal to the product determined by
multiplying (I) 11.5% of the total number of shares of New Common Stock to be
outstanding on the Effective Date by (II) a fraction, (x) the numerator of which
is the amount of such Foreign Holder’s Second Lien Secured Claim and (y) the
denominator of which is the total amount of Second Lien Secured Claims held by
all Foreign Holders; and

 

 

 

 

 

 

 

 

(B)

Warrants representing the number of shares of New Common Stock equal to such
Foreign Holder’s pro rata share of the Second Lien Noteholders’ Equity Share
less the number of shares of New Common Stock issued to such Foreign Holder
pursuant to subclause (A) above.

 

In no event shall the Foreign Holders own more than 23% of the New Common Stock
outstanding on the Effective Date.

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

 

 

 

 

 

 

The allocations noted in clauses (a) and (b) above shall be subject to dilution
on account of the issuance of New Common Stock to the post-reorganization
management pursuant to the Management Equity Plan, described in further detail
below.

 

 

 

New Common Stock may be sold only to a U.S. Citizen.

 

 

 

New Common Stock and Warrants will be exempt from the registration requirements
of the Securities Act upon issuance pursuant to section 1145 of the Bankruptcy
Code and Reorganized USSP will not be subject to the reporting requirements of
the Securities Exchange Act of 1934. Transfer of New Common Stock and Warrants
shall not be registered and shall be subject to applicable securities laws
regarding transfer.

 

 

 

Operation of Post-Reorganization Business and Certain Limitations on
Distributions With Respect to New Common Stock

 

Following confirmation and consummation of the Plan, the Reorganized Debtors
shall continue to exist as separate corporate or limited liability company
entities in accordance with the laws of their respective states of incorporation
or formation and pursuant to their respective organizational documents in effect
prior to the Effective Date, except to the extent such organizational documents
are amended pursuant to the Plan. Such amendments to the organizational
documents for each Debtor shall include, among other things, provisions, to the
extent necessary or appropriate, effectuating the provisions of the Plan to
assure that Reorganized USSP continues to be a U.S. Citizen, and such other
provisions as may be agreed by the Debtors and a steering committee consisting
of (i) up to three persons appointed by a majority-in-interest of the Requisite
Senior Lenders (the “Senior Representatives”), and (ii) one person appointed by
a majority-in-interest of the Requisite Second Lien Noteholders (the “Second
Lien Representative” and, together with the Senior Representatives, the
“Steering Committee”). The Steering Committee shall act by majority vote of the
persons present at any meeting of the Steering Committee; provided that at least
three members of the Steering Committee must be present at any meeting in order
for valid action to be taken by the Steering Committee; and provided further
that in the event of a tie vote, the chairman shall have the tie breaking vote.
If a member of the Steering Committee sells a majority in amount of its position
it shall resign as a member of the Steering Committee. If there be a resignation
the slot shall be filled by a majority-in-interest of the Requisite Senior
Lenders (in the case of a Senior Representative) and by majority-in-interest of
the Requisite Second Lien Noteholders (in the case of the Second Lien
Representative).

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

 

 

 

 

 

The charter and/or bylaws of Reorganized USSP or a stockholder agreement to be
entered into by all material holders of New Common Stock shall (a) set forth
certain restrictions relating to the transfer of shares of Reorganized USSP for
Jones Act and securities law purposes, (b) regulate the membership of the new
Board of Directors of Reorganized USSP (the “New Board”) and officers to such
extent as will assure the preservation of Reorganized USSP’s status as a United
States Citizen within the provisions of U.S. Coastwise Trade Laws, (c) limit the
acquisition by any one person or group of persons acting in concert of
beneficial ownership of more than thirty percent (30%) of the New Common Stock
(subject to a pre-emergence grandfather clause) unless such person or group
simultaneously offers to acquire all the outstanding New Common Stock and
Warrants and (d) prohibit the distribution of dividends by Reorganized USSP (and
certain other restricted payments) prior to the payment in full of the New Term
Loan.

All New Board decisions on significant corporate events, including sale,
acquisition or disposition of non-immaterial assets and initiating any initial
public offering of Reorganized USSP will comply with Delaware law and require
the approval of at least a majority of the non-management directors who are U.S.
Citizens (a “Super Majority”).

All organizational documents and stockholder agreements shall be in form and
substance acceptable to the Steering Committee, whose consent shall not be
unreasonably withheld.

The structure of the Reorganized Debtors shall be such that, at all times, the
president, chief executive officer or chairman will be able to state in an
Affidavit of U.S. Citizenship that by no means whatsoever is control of more
than twenty-five percent (25%) of any equity interest in the Reorganized USSP
given or permitted to be exercised by a person who is not a U.S. Citizen.

 

 

 

Equity Issuance

 

Reorganized USSP may not issue and sell more than ten percent (10%) of the
outstanding shares of New Common Stock of Reorganized USSP, including pursuant
to a registration statement declared effective by the Securities and Exchange
Commission without the consent of a majority-in-interest of the New Common Stock
holders, which majority shall include a majority-in-interest of the Foreign
Holders, whose consent shall not be unreasonably withheld; provided that such
consent shall not be required for equity issued to cure a financial covenant
default. Existing shareholders shall have pre-emptive rights with respect to
issuances of New Common Stock, other than issuances (i) pursuant to a
registration statement declared effective by the Securities and Exchange
Commission and (ii) to effect an acquisition.

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

 

 

 

Warrants

The Warrants to be issued to Foreign Holders shall have the following terms:

 

 

 

(a)

the exercise price for the Warrants shall be equal to the par value of the
shares of the common stock underlying the Warrant and may be paid in cash or
pursuant to a cashless exercise procedure;

 

 

 

 

(b)

the Warrants shall expire on December 31, 2029;

 

 

 

 

(c)

the Warrants may be exercised only by an entity that is a U.S. Citizen;

 

 

 

 

(d)

the Warrants shall be freely transferable to any person, party or entity subject
to applicable securities laws; and

 

 

 

 

(e)

the Warrants shall include antidilution protection in the event of stock
dividend, recapitalization, stock split or reclassification of the common stock.

 

 

III.

Summary of Proposed Terms of New Term Loan

 

 

 

New Term Loan:

 

Term loan in an aggregate principal amount equal to the current outstanding
principal amount of approximately $332.6 million (but for the avoidance of
doubt, exclusive of any PIK interest) plus an amount equal to the termination
obligation of the interest rate swaps.7

 

 

 

Borrower:

 

USSP (on or after the Effective Date), USS Chartering LLC, USCS Chemical Pioneer
Inc., USCS Charleston Chartering LLC, USCS Charleston LLC, USS Product Manager
LLC, USS JV Manager Inc., USS ATB 1 LLC, USS ATB 2 LLC, USS ATB 3 LLC, USS M/V
Houston LLC, ITB New York LLC, ITB Baltimore LLC, ITB Mobile LLC, USCS ATB LLC,
USCS Sea Venture LLC, ITB Philadelphia LLC, USCS Chemical Chartering LLC, USS
Product Carriers LLC (collectively, the “Reorganized Debtors”).

 

 

 

Ratings:

 

The Company shall apply for and use its reasonable best efforts to obtain
private letter ratings from Standard & Poors and Moody’s within two months
following the Effective Date and use its reasonable best efforts to maintain
them thereafter.

 

 

 

 

 

7 The U.S. Shipping Entities and the Senior Representatives, after consultation
with the First Lien Lenders, may elect to issue the New Term Loan in two or more
ranked tranches as long as (i) the annual amount of interest paid on all the
tranches is in aggregate at least equal to the annual amount of interest to be
paid if there is only one tranche with the interest rate set out above and (ii)
the other terms of the tranches are in all material respects identical.

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

 

 

 

Lenders:

 

New Term Lenders.

 

 

 

Maturity:

 

The New Term Loan will mature on August 7, 2013 (the “Maturity Date”).

 

 

 

Interest Rate and Payment Dates:

 

Interest rate under the New Term Loan will be paid quarterly at a rate of, at
the Reorganized Debtors’ option, (i) LIBOR plus five percent (5%), subject to a
two percent (2%) LIBOR floor or (ii) ABR plus four percent (4%); provided that
upon the occurrence and during the continuance of any event of default, interest
shall only be at the ABR plus four percent (4%).

 

 

 

 

 

The US Shipping entities are considering purchasing one or more LIBOR caps on a
portion of the New Term Loan and will do so if requested by the Requisite Senior
Lenders and each such cap can be obtained on commercially reasonable terms.

 

 

 

Default Rate:

 

Upon the occurrence and during the continuance of any event of default
(including, without limitation, in respect of letters of credit), interest shall
be payable on demand at a default rate in an amount equal to two percent (2%)
over the then applicable interest rate.

 

 

 

Amortization:

 

No amortization prior to the completion of the first full year following the
Effective Date other than pursuant to the Excess Cash Sweep. Amortization of one
quarter of one percent (0.25%) per quarter beginning on the last day of the
first full fiscal quarter following completion of the first full fiscal year
following the Effective Date. The balance of the New Term Loan shall be payable
on the Maturity Date.

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

 

 

 

Excess Cash Sweep:

 

Cash flow sweep of one hundred percent (100%) of the Excess Cash Flow (as
defined below), over and above (i) a $30 million cash balance for the first
twelve (12) months after the Effective Date and (ii) a $20 million cash balance
after the first twelve (12) months after the Effective Date (provided that such
$20 million cash balance shall be reduced or increased (though never to exceed
$20 million) by $2 million for each vessel (including joint venture vessels)
that are removed or added to service following the Effective Date), to prepay
the outstanding principal amount of the New Term Loan. “Excess Cash Flow” shall
mean EBITDA in the previous quarter plus net proceeds (after deducting
reasonable and customary costs of sale) from any vessel sales minus (i) interest
and fee payments on the New Term Loan and letter of credit fees, (ii) any and
all cash drydocking costs in previous quarter, budgeted cash drydocking costs
for the next three quarters and all cash capital costs associated with the 4th
ATB not funded from cash escrow, (iii) necessary and appropriate repair and
maintenance costs to the extent such amounts are not already included in the
determination of EBITDA, (iv) any cash taxes paid in such quarter, (v) scheduled
amortization payments on the New Term Loan and (vi) any amounts used to
repurchase New Term Loan Notes (as defined below) as provided in “Repurchase of
New Term Loan Notes” below.

 

 

 

Repurchase of New Term Loan Notes:

 

The Reorganized Debtors shall be allowed to use up to 35% of Excess Cash Flow
(as defined above but excluding clause (vi)) to repurchase New Term Loan Notes
in the open market as long as (i) the purchase price is no more than 85% of the
face amount of the New Term Loan Notes repurchased and (ii) such repurchase will
not result in the rating agencies putting the Reorganized Debtors on “selective
default”. Such repurchased notes are to be treated as permanently retired for
all purposes including, but not limited to, interest payments, principal
payments, and voting. Furthermore, any gain recorded on such repurchase is not
to be included in any covenant calculation

 

 

 

Collateral:

 

The New Term Loan will be secured by all or substantially all of the Reorganized
Debtors’ assets (other than as to de minimis assets where it would not be
cost-effective to do so).

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

 

 

 

Representations, Covenants, Events of Default, etc.:

 

All representations, covenants, events of default, voting requirements,
indemnifications, assignment provisions and other terms and provisions of the
loan agreement under which the New Term Loan is to be issued shall be consistent
with the similar provisions in the First Lien Credit Agreement and otherwise in
form and substance reasonably acceptable to the Senior Representatives, except
that (i) there shall be no other indebtedness for borrowed money, whether or not
secured, provided that indebtedness constituting a capital lease arising from a
sale/leaseback transaction approved by the agent for the New Term Loan (such
approval not to be unreasonably withheld) where the net proceeds of such
transaction are used to prepay the New Term Loan shall not be considered
indebtedness for borrowed money, and (ii) the only financial covenants shall be
a four quarter rolling (A) interest coverage test (EBITDA/net interest) with a
minimum ratio of one and a half times (1.5x) and (B) a debt to EBITDA coverage
ratio to be determined (but consistent with the interest coverage test and the
projections provided by USSP to the Senior Secured Lenders), which covenants
shall only be measured beginning with the fourth full fiscal quarter following
the Effective Date; provided that if the Reorganized Debtors are in default of
either or both of these covenants, they shall be permitted to cure such default
by issuing equity securities representing not more than 25% of the outstanding
New Common Stock on a fully-diluted basis (calculated as if all outstanding
Warrants had been exercised) after giving effect to such issuance and using the
proceeds thereof to repay the New Term Loan in an amount such that after giving
effect to such repayment as if it had occurred on the measurement date the
Reorganized Debtors were in compliance with such financial covenant(s); and
provided further that if the Reorganized Debtors rights to manage one or more of
the vessels owned by the joint venture is terminated, the financial covenants
shall be appropriately modified to reflect the loss of the EBITDA from such
management fee.

 

 

 

 

 

Reorganized USSP shall be prohibited, without the prior consent of the Agent for
the New Term Loan lenders, from making capital expenditures other than capital
expenditures (i) for dry docks and UWILD inspections, (ii) as necessary to
maintain all existing assets in a proper condition as required by law or
customers or (iii) as set forth in a capital expenditures budget approved by the
New Board and consented to by the Agent for the New Term Loan lenders, such
consent not to be unreasonably withheld.

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

 

 

IV.

Treatment of Claims and Interests

 

 

 

 

•

Administrative Expense Claims

 

Except to the extent that a holder entitled to payment agrees to a less
favorable treatment, or has been paid prior to the Effective Date, in whole or
in part, on the latest of (i) the Effective Date, (ii) the date on which its
claim becomes an allowed, or (iii) the date on which its claim becomes payable
under any agreement relating thereto, or as soon as practicable thereafter, each
holder of an allowed administrative expense claim shall receive, in full
satisfaction, settlement, and release of and in exchange for such claim, cash
equal to the unpaid portion of its claim without interest. Notwithstanding the
forgoing, (a) any allowed administrative expense claim based on a liability
incurred by the Debtors in the ordinary course of business by the Debtors shall
be paid in full and performed by the Debtors or Reorganized Debtors, as the case
may be, in the ordinary course of business in accordance with the terms and
conditions of any agreements governing, instruments evidencing or other
documents relating to such transactions, and (b) any allowed administrative
expense claim may be paid on such other terms as may be agreed on between the
holder of such Claim and the Debtors; provided, further, that if any such
ordinary course expense is not billed or a request for payment is not made
within ninety (90) days after the Effective Date, such ordinary course expense
shall be barred.

 

 

 

 

•

Secured Tax and Priority Tax Claims

 

Except to the extent that a holder agrees to a different treatment or has been
paid prior to the Effective Date, each holder of an allowed secured tax claim or
priority tax claim shall, in full satisfaction, release, and discharge of such
claim, receive at the Debtors’ option: (a) cash, paid in full, representing the
full amount (without interest) of such holder’s unpaid claim on or as soon as
reasonably practicable following the later to occur of (x) the Effective Date,
and (y) the date on which such claim becomes allowed; or (b) receive such other
terms determined by the Bankruptcy Court to provide the holder deferred cash
payments having value, as of the Effective Date, equal to such claim. Upon
payment and satisfaction in full of all allowed secured tax claims and priority
tax claims, all liens and security interests granted to secure such obligations,
whether in these chapter 11 cases or otherwise, shall be terminated and of no
further force or effect.

 

 

 

 

•

Professional Compensation and Reimbursement Claims

 

All entities seeking awards by the Bankruptcy Court of compensation for services
rendered or reimbursement of expenses incurred through and including the date on
which the Plan is confirmed under sections 330, 331, 503(b)(2), 503(b)(3),
503(b)(4) or 503(b)(5) of the Bankruptcy Code shall (a) file, on or before the
date that is sixty (60) days after the Effective Date their respective
applications for final allowances of compensation for professional services
rendered and reimbursement of expenses incurred and (b) be paid in full without
interest, in cash, in such amounts as are allowed by the Bankruptcy Court in
accordance with the order relating to or allowing any such claim or upon such
other terms as may be mutually agreed upon between the holder of such claim and
the Debtors. The Reorganized Debtors are authorized to pay compensation for
services rendered or reimbursement of expenses incurred after the date of
confirmation of the Plan (the “Confirmation Date”) in the ordinary course of
business and without the need for Bankruptcy Court approval.

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

 

 

 

 

 

•

Priority Non-Tax Claims

 

Except to the extent that a holder (i) has been paid by the Debtors, in whole or
in part, prior to the Effective Date, or (ii) agrees to a less favorable
treatment, each holder of an allowed priority non-tax claim shall receive, in
full satisfaction of such claim, cash in the full amount of the claim (without
interest), on or as soon as reasonably practicable after the later of (a) the
Effective Date, or as soon thereafter as reasonably practicable, and (b) the
date such claim becomes allowed.

 

 

 

 

Secured Claims

 

 

 

 

 

 

•

Allowed First Lien Secured Claims

 

Under the Plan, claims arising under the First Lien Credit Agreement (the
“Senior Secured Claims”) shall be allowed, not subject to offset, defense,
counterclaim, reduction or credit of any kind whatsoever, in an amount equal to
the sum of (i) the aggregate principal amount outstanding under the First Lien
Credit Agreement (approximately $332.6 million) as of the Commencement Date (as
defined below), plus (ii) principal amounts drawn on the Letters of Credit from
the Commencement Date through the Effective Date, plus (iii) an amount equal to
the termination obligation in respect of ISDA Master Agreements governing
certain interest rate swaps, plus (iv) accrued and unpaid letter of credit fees
and administrative fees through the Commencement Date, plus (v) other unpaid
amounts due under the First Lien Credit Agreement, including, without
limitation, unpaid cash and PIK interest through and including the record date
for voting on the Plan.

 

 

 

 

 

 

 

The Senior Secured Lenders will receive in full, complete and final satisfaction
of the Senior Secured Claims the following:

 

 

 

 

 

 

 

 

(f)

Secured term loan notes in connection with the New Term Loan (the “New Term Loan
Notes”) in a principal amount equal to such holder’s pro rata share of the New
Term Loan (the Senior Secured Lenders, in their capacity as the holders of the
New Term Loan Notes, being referred to as the “New Term Lenders”);

 

 

 

 

 

 

 

 

(g)

The Senior Secured Lenders will receive shares of New Common Stock and Warrants
as set forth under “II. Proposed Restructuring—Equity Ownership” above; and

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

 

 

 

 

 

 

 

 

(h)

The pre-petition letters of credit under the First Lien Credit Agreement that
are outstanding as of the Effective Date shall be replaced and returned to the
Administrative Agent as issuing bank, marked “canceled” or, to the extent
Reorganized Debtors are unable to replace any of such letters of credit, such
letter of credit shall be (a) secured by a back-to-back letter of credit issued
by an institution acceptable to the Administrative Agent equal to 105% of the
face amount of such letters of credit or (b) cash collateralized in an amount
equal to 105% of the face amount of such letters of credit by the deposit of
cash in such percentage amount in an account designated by the Administrative
Agent, as issuing bank, which cash will be remitted to the Reorganized Debtors
upon the expiration, cancellation or other termination or satisfaction of the
reimbursement obligations in respect of such letters of credit.

 

 

 

 

 

 

 

 

The Debtors shall pay in cash, without interest, the fees and the reasonable
out-of-pocket expenses (including, without limitation, reasonable fees and
expenses of attorneys and advisors) incurred by, and administration fees payable
to, the Administrative Agent in their capacity as administrative agent under the
First Lien Credit Agreement, in each case to the extent not reimbursed on or
prior to the Effective Date, without the necessity of filing a fee application
or any other application of any kind or nature with the Bankruptcy Court.

 

 

 

 

 

 

 

The Debtors shall pay in cash, without interest, the fees and the reasonable
out-of-pocket expenses (including, without limitation, reasonable fees and
expenses of attorneys and advisors) incurred by, and administration fees payable
to, the Collateral Agent, in each case to the extent not reimbursed on or prior
to the Effective Date, without the necessity of filing a fee application or any
other application of any kind or nature with the Bankruptcy Court.

 

 

 

 

 

 

 

The prepetition and postpetition fees and expenses of Pillsbury Winthrop Shaw
Pittman LLP, counsel to the chairman of the Steering Committee, up to a maximum
of $300,000, shall be paid in cash on the Effective Date by the Reorganized
Debtors, without the need for application to, or approval of, the Bankruptcy
Court. Reorganized USSP shall pay the reasonable post-Effective Date fees and
expenses of Pillsbury (if any) reasonably needed to effectuate the Plan.

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

 

 

 

 

 

 

 

 

The fees and expenses of counsel to the Senior Secured Lenders in connection
with the documentation of the New Term Loan, which counsel shall be chosen by
the Senior Representatives and reasonably acceptable to USSP, and shall be paid
in cash on the Effective Date by the Reorganized Debtors, without the need for
application to, or approval of, the Bankruptcy Court.

 

 

 

 

•

Allowed Second Lien Noteholder Claims

 

Under the Plan, claims arising under the Second Lien Indenture (the “Second Lien
Secured Claims”) shall be allowed, not subject to offset, defense, counterclaim,
reduction or credit of any kind whatsoever, in the amount of $100,000,000
(representing the amount of principal outstanding under the Second Lien
Indenture), plus prepetition accrued and unpaid interest. Each Second Lien
Noteholder shall receive, in full, complete and final satisfaction of its Second
Lien Secured Claim, shares of New Common Stock and Warrants as set forth under
“II. Proposed Restructuring—Equity Ownership” above.

 

 

 

 

 

 

 

The prepetition and postpetition fees and expenses of the Indenture Trustee,
including administrative and professional fees and expenses (including the fees
and expenses of Seward &Kissel LLP as primary Indenture Trustee’s counsel),
shall be paid in cash on the Effective Date by the Reorganized Debtors, without
the need for application to, or approval of, the Bankruptcy Court.

 

 

 

 

 

 

 

The prepetition and postpetition fees and expenses of Bracewell & Giuliani LLP,
counsel to the Second Lien Representative and special co-counsel to the
Indenture Trustee, up to a maximum of $250,000 (including within such $250,000
reimbursement of the fees and expenses of Blank Rome LLP as special maritime
counsel to Second Lien Representative, up to a maximum amount of $15,000), shall
be paid in cash on the Effective Date by the Reorganized Debtors, without the
need for application to, or approval of, the Bankruptcy Court. Reorganized USSP
shall pay the reasonable post-Effective Date fees and expenses of Bracewell (if
any) reasonably needed to effectuate the Plan.

 

 

 

 

•

Other Secured Claims

 

Except to the extent that a holder agrees to a less favorable treatment, on the
Effective Date, at the sole option of the Debtors, (i) each Allowed Other
Secured Claim shall be reinstated and rendered unimpaired in accordance with
section 1124(2) of the Bankruptcy Code, or (ii) each holder of an Allowed Other
Secured Claim shall receive, in full satisfaction of such Claim, either (a) a
note with periodic Cash payments having a present value equal to the amount of
such holder’s Allowed Other Secured Claim, (b) the proceeds of the sale or
disposition of its Collateral securing such Claim to the extent of the value of
the holder’s secured interest in such Collateral, (c) the Collateral securing
such Claim and any interest on such Claim required to be paid pursuant to
section 506(b) of the Bankruptcy Code, or (d) such other distribution as
necessary to satisfy the requirements of the Bankruptcy Code.

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

 

 

 

 

 

Unsecured Claims

 

 

 

 

 

•

General Unsecured

 

To be agreed between the Reorganized Debtors and the Steering Committee, but not
to exceed $100,000.

 

 

 

 

•

Insured Claims

 

A holder of an allowed claim that is an insured claim shall be paid in the
ordinary course of the business of the Reorganized Debtors from the proceeds of
any insurance policy covering such claims maintained by or for the benefit of
the Debtors or the Reorganized Debtors.

 

 

 

 

Equity Interests

 

 

 

 

 

•

USSP Prepetition Equity Interests

 

On the Effective Date, all USSP Prepetition Equity Interests shall be deemed
cancelled and extinguished and the holders of USSP Prepetition Equity Interests
shall not be entitled to, and shall not receive or retain, any property or
interest in property on account of such Prepetition Equity Interests under the
Plan. Holders of USSP Prepetition Equity Interests shall not be required to
surrender their certificates or other interests evidencing ownership of such
Prepetition Equity Interests.

 

 

 

 

•

GP Prepetition Equity Interests

 

On the Effective Date, all prepetition equity interests in USSGP (“GP
Prepetition Equity Interests”) shall be deemed cancelled and extinguished and
the holders of GP Prepetition Equity Interests shall not be entitled to, and
shall not receive or retain, any property or interest in property on account of
such Prepetition Equity Interests under the Plan. Holders of GP Prepetition
Equity Interests shall not be required to surrender their certificates or other
interests evidencing ownership of such Prepetition Equity Interests.

 

 

 

 

 

V.

Cash Collateral

 

 

 

 

 

 

 

 

Cash Collateral

 

The Debtors will enter into a stipulation (the “Cash Collateral Stipulation”)
with the Collateral Agent regarding the use of cash collateral to satisfy the
ongoing working capital requirements of the Company during these chapter 11
cases on terms and conditions acceptable to the Senior Representatives, whose
consent shall not be unreasonably withheld.

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

 

 

 

 

 

 

Adequate Protection

 

Pursuant to sections 361, 362, 363(c) and 507 of the Bankruptcy Code, the
Collateral Agent, in each case for the benefit of itself and the Senior Secured
Lenders, shall be granted the following adequate protection (the “Adequate
Protection”) of the prepetition security interests of the Senior Secured
Lenders, for, and equal in amount to, the diminution in the value (the
“Diminution in Value”) of the pre-petition security interests of the Senior
Secured Lenders, calculated in accordance with section 506(a) of the Bankruptcy
Code, whether or not such Diminution in Value results from the sale, lease or
use by the Debtors of the collateral securing the First Lien Credit Agreement
(including, without limitation, cash collateral (as defined in Section 363(a) of
the Bankruptcy Code)), or the stay of enforcement of any prepetition security
interest arising from section 362 of the Bankruptcy Code, or otherwise.

 

 

 

 

 

 

 

 

(i)

Adequate Protection Lien. As security for and solely to the extent of the
Diminution in Value of the prepetition security interests of Collateral Agent,
the Collateral Agent shall be granted, effective and perfected as of the date
the stipulation ordering the use of Cash Collateral has been entered with the
Bankruptcy Court (the “Cash Collateral Stipulation”), and without the necessity
of the execution of mortgages, security agreements, pledge agreements, financing
statements or other agreements, a security interest in and lien on the
Collateral (as defined in the First Lien Credit Agreement) (the “Adequate
Protection Liens”), which Adequate Protection Liens shall rank in the same
relative priority and right as do the security interests and liens of the
Collateral Agent.

 

 

 

 

 

 

 

 

(j)

Super-Priority Claim. To the extent of any Diminution in Value of the
prepetition security interests of the Collateral Agent, the Collateral Agent
shall be granted a superpriority administrative expense claim as provided for in
section 507(b) of the Bankruptcy Code.

 

 

 

 

 

 

 

 

(k)

Interest. As additional adequate protection, the Senior Secured Lenders shall
receive cash payments of interest accruing on the principal amount of the loans
outstanding under the First Lien Credit Agreement at the Commencement Date at
LIBOR plus fifty basis points. Interest shall be paid quarterly in arrears on
the last day of each calendar quarter prior to the Effective Date and on the
Effective Date.

 

 

 

 

 

 

 

 

The Indenture Trustee, for the benefit of itself and each of the Second Lien
Noteholders, shall also be granted each of the foregoing forms of adequate
protection other than interest payments provided in clause (c), in all cases
subject to the limitations, subordination provisions and other terms and
conditions of the Intercreditor Agreement dated as of August 7, 2006, between,
among others, the Administrative Agent, the Collateral Agent and the Indenture
Trustee.

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

 

 

 

 

 

Termination Date

 

The earlier of (x) the Effective Date, (y) the date on which Cash Collateral is
used in a manner contrary to the Cash Collateral Stipulation and (z) October 1,
2009.

 

 

 

 

 

VI.

Other Plan Provisions

 

 

 

 

 

 

 

Releases and Exculpation

 

The Debtors will release their respective current and former officers and
directors, the Senior Secured Lenders, the Second Lien Noteholders, the
Administrative Agent, the Collateral Agent, the Indenture Trustee, the Senior
Representatives, the Second Lien Representative, and the respective officers,
directors, employees, agents, advisors, and professionals of each of the
foregoing, including the Debtors (all of the foregoing the “Releasees”), from
all claims arising before the Effective Date other than claims (i) based upon
willful misconduct, intentional fraud, or criminal conduct as determined by a
final order entered by a court of competent jurisdiction and (ii) claims against
any Senior Secured Lender and Second Lien Noteholder relating to the purported
termination of certain of Debtors’ rights and agreements with respect to USS
Products Investor LLC.

 

 

 

 

 

 

 

The Plan will include standard exculpation for the Releasees for participating
in the Debtors’ chapter 11 cases, including any parties’ respective present or
former officers, directors, employees, agents, and advisors of each of the
forgoing.

 

 

 

 

 

 

 

The Senior Secured Lenders and the Second Lien Noteholders will release the
Debtors and their respective current and former officers, directors, employees,
agents, advisors, and professionals from all claims arising on or before the
Effective Date, other than claims (i) based upon willful misconduct, intentional
fraud, or criminal conduct as determined by a final order entered by a court of
competent jurisdiction and (ii) claims relating to the purported termination of
certain of Debtors’ rights and agreements with respect to USS Products Investor
LLC.

 

 

 

 

 

 

 

To the extent permitted by applicable law, the Administrative Agent, the
Collateral Agent, the Indenture Trustee, the Senior Representatives, the Second
Lien Representative and their respective officers, directors, agents, advisors,
and professionals shall be released by all creditors and interest holders from
any and all claims arising at any time.

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

 

 

 

 

 

Governance

 

The New Board shall (a) have up to seven (7) members, two (2) of whom shall be
members of management, at least one (1) of whom shall be independent and shall
serve as the Chairman of the New Board, and the remainder shall not be members
of management. The initial New Board shall be appointed by the Requisite Senior
Lenders (in consultation with (but not subject to the consent of) the Second
Lien Representative, provided that the New Board shall include at least one
person proposed by the Second Lien Representative and reasonably acceptable to
the Senior Representatives, prior to the hearing to consider Confirmation of the
Plan; and provided further that the Requisite Senior Lenders shall use
commercially reasonable efforts to appoint as directors two individuals (one of
whom shall be the chairman) who are not affiliated with the Debtors, the Senior
Secured Lenders or the Second Lien Noteholders and who have relevant industry
experience. The members of the New Board shall have staggered terms and the New
Board shall meet the standards of the U.S. Coastwise Trade Laws.

 

 

 

 

 

 

 

All existing corporate governance documents of the Debtors shall be restated as
of the Effective Date in order to (i) be in compliance with the Bankruptcy Code
and (ii) to effectuate the provisions of the Plan. For the avoidance of doubt,
the senior management and the composition of the board of directors of
Reorganized Debtor (and the term of each director) at the Effective Date shall
be acceptable to the Steering Committee.

 

 

 

 

Management Equity Plan

 

The Plan shall provide for a Management Equity Plan of ten percent (10%) of New
Common Stock (the “Management Equity Plan”). The terms of the Management Equity
Plan, including an initial grant of five percent (5%) of New Common Stock
(twenty five percent (25%) of which will vest on the Effective Date and the
balance of which will vest in equal amounts on each of the first, second and
third anniversary of the Effective Date (subject to immediate vesting in full
upon a sale of the Reorganized Debtors)), and the reservation of an additional
five percent (5%) of New Common Stock for issuance from time to time following
the Effective Date to persons and upon terms established by the New Board, are
to be approved as part of the Plan. Management incentive compensation shall also
be developed and in all events shall be subject to objective criteria or
certified by independent financial or compensation advisors to be consistent
with industry comparables.

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

 

 

 

 

 

Milestones8

 

“Milestones” shall mean the following milestones related to the Debtors’ Cases:

 

 

 

 

 

 

 

 

•

The Debtors shall have filed the Plan and disclosure statement (the “Disclosure
Statement”) in support of the Plan, in form and in substance reasonably
acceptable to the Steering Committee, on the date of filing of these chapter 11
cases (the “Commencement Date”) or as soon as reasonably practicable thereafter.

 

 

 

 

 

 

 

 

•

The Bankruptcy Court shall have held a hearing to consider approval of such
disclosure statement and confirmation of such plan of reorganization within
seventy-five (75) days after the Commencement Date.

 

 

 

 

 

 

 

 

•

The Bankruptcy Court shall have entered an order in form and substance
reasonably satisfactory to the Steering Committee approving such disclosure
statement and confirming the Plan within one hundred and twenty (120) days after
the Commencement Date.

 

 

 

 

 

 

 

 

•

the substantial consummation (as defined in Section 1101 of the Bankruptcy Code)
of the Plan occurring and all conditions to the effectiveness of the Plan having
been satisfied or waived by the Steering Committee on or prior to October 1,
2009.

 

 

 

 

 

Other Terms and Conditions

 

The Plan and the documentation implementing the Plan will contain customary
release, injunction, discharge, integration, retention of jurisdiction and
governing law provisions, as well as customary conditions to confirmation and
effectiveness of the Plan and such other conditions to confirmation and
effectiveness of the Plan as may be reasonably required by the Steering
Committee.

 

 

 

 

 

 

 

The Plan and all related documentation shall reflect the terms and conditions of
this Plan Term Sheet to the parties’ mutual satisfaction and shall contain such
other terms and conditions as the parties mutually agree.

 

 

 

 

 

 

 

This Plan Term Sheet will become part of the Plan Support Agreement containing
customary terms and conditions to be executed by the Company and the Requisite
Senior Lenders and the Requisite Second Lien Noteholders in support of the Plan.

 

 

 

 

8 Any of the milestones are subject to the Bankruptcy Court calendar
availability, the milestones set forth in the second, third and fourth bullets
may be automatically extended by either USSP or the Steering Committee for 30
days and may be further modified or extended by agreement of USSP and the
Steering Committee.

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

 

 

 

 

 

 

 

 

The distributions on and treatment of claims contemplated herein shall become
effective and binding only upon the confirmation and effective date of a plan
under chapter 11 of the Bankruptcy Code which has been voted upon and approved
in accordance with section 1126(c) of the Bankruptcy Code, and confirmed by the
Bankruptcy Court.

 

 

 

 

 

 

 

The Reorganized Debtors shall use their reasonable best efforts to offset any
cancellation-of-indebtedness income arising from the Plan against all available
losses. To the extent there is any COD income remaining, the Reorganized Debtors
shall use their reasonable best efforts to obtain the benefits of the new tax
legislation permitting a deferral of such income.

 

 

 

 

 

 

 

Each member of the Steering Committee shall be acting only in its own interests
and shall not be liable in any way to any other Senior Secured Lender or Second
Lien Noteholder other than with respect to willful misconduct, intentional
fraud, or criminal conduct as determined by a final order entered by a court of
competent jurisdiction, and shall cease to act as representatives of the Senior
Secured Lenders and the Second Lien Noteholders, as the case may be, on the
Effective Date.

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

Exhibit B

Form of Joinder

          The undersigned (“Transferee”) hereby acknowledges that it has read
and understands the Plan Support Agreement, dated April 23, 2009 (the
“Agreement”), by and among U.S. Shipping Partners L.P., U.S. Shipping Finance
Corp., U.S. Shipping Operating LLC, USS Chartering LLC, USS ATB 1 LLC, USS ATB 2
LLC, USS ATB 3 LLC, USS ATB 4 LLC, USS M/V Houston LLC, ITB Mobile LLC, USCS
Chemical Pioneer Inc., ITB Groton LLC, ITB New York LLC, ITB Jacksonville LLC,
ITB Baltimore LLC, USCS ATB LLC, USCS Sea Venture LLC, ITB Philadelphia LLC,
USCS Chemical Chartering LLC, USCS Charleston Chartering LLC, USCS Charleston
LLC, USS JV Manager Inc., USS Product Manager LLC, USS PC Holding Corp., US
Shipping General Partner LLC, USS Product Carriers LLC and USS Vessel Management
LLC and [Transferor’s Name], certain lenders party to the First Lien Credit
Agreement (as defined in the Agreement) and certain holders of Second Lien Notes
(as such term is defined in the Agreement), and agrees to be bound by the terms
and conditions thereof to the extent Transferor was thereby bound, and shall be
deemed a [“Senior Secured Lender”/”Second Lien Noteholder”] under the terms of
the Agreement.

Date Executed:  ______, 2009

 

 

 

 

[Transferee’s name]

 

 

 

 

By:

 

 

 

 

 

 

 

 

 

Name:

 

 

Title:

 

 

 

 

Principal amount of Secured Claims held:
$___________________

 

Date: _______________

 

 

 

 

[Address]

 

Attention:

 

Fax: [*]

 

Email:

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