**Exhibit 3.1**

 

 

FIRST AMENDED AND RESTATED

 

LIMITED LIABILITY COMPANY AGREEMENT

 

OF

 

US SHIPPING GENERAL PARTNER LLC

 

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| ARTICLE I   | DEFINITIONS                                     |                                                                     |
|------------------|-------------------------------------------------|--------------------------------------------------------------------------|
|             |                                            |
|             | Section 1.1                                | Definitions                                                              |   |
|             |                                            |                                                                     |   |
|             | Section 1.2                                | Construction                                                             |   |
|             |                                            |                                                                     |
| ARTICLE II  | ORGANIZATION                                    |                                                                     |
|             |                                            |                                                                     |
|             | Section 2.1                                | Formation                                                                |   |
|             |                                            |                                                                     |   |
|             | Section 2.2                                | Name                                                                     |   |
|             |                                            |                                                                     |   |
|             | Section 2.3                                | Registered  Office; Registered Agent; Principal Office; Other Offices    |   |
|             |                                            |                                                                     |   |
|             | Section 2.4                                | Purpose and  Business                                                    |   |
|             |                                            |                                                                     |   |
|             | Section 2.5                                | Powers                                                                   |   |
|             |                                            |                                                                     |   |
|             | Section 2.6                                | Power of  Attorney                                                       |   |
|             |                                            |                                                                     |   |
|             | Section 2.7                                | Term                                                                     |   |
|             |                                            |                                                                     |   |
|             | Section 2.8                                | Title to  Company Assets                                                 |   |
|             |                                            |                                                                     |
| ARTICLE III | RIGHTS OF MEMBERS                               |                                                                     |
|             |                                            |                                                                     |
|             | Section 3.1                                | Limitation  of Liability                                                 |   |
|             |                                            |                                                                     |   |
|             | Section 3.2                                | Outside  Activities of the Members                                       |   |
|             |                                            |                                                                     |   |
|             | Section 3.3                                | Rights of  Members                                                       |   |
|             |                                            |                                                                     |
| ARTICLE IV  | TRANSFERS OF INTERESTS                          |                                                                     |
|             |                                            |                                                                     |
|             | Section 4.1                                | Transfer  Generally                                                      |   |
|             |                                            |                                                                     |   |
|             | Section 4.2                                | Transfer of  Membership Interests                                        |   |
|             |                                            |                                                                     |   |
|             | Section 4.3                                | Required  Amendments; Continuation                                       |   |
|             |                                            |                                                                     |   |
|             | Section 4.4                                | Sale by  Shipping Master of All or a Majority of the Membership Interest |   |
|             |                                            |                                                                     |   |
|             | Section 4.5                                | Sale of  Shipping Master                                                 |   |
|             |                                            |                                                                     |   |
|             | Section 4.6                                | Resignation                                                              |   |
|             |                                            |                                                                     |
| ARTICLE V   | CAPITAL CONTRIBUTIONS AND ISSUANCE OF INTERESTS |                                                                     |
|             |                                            |                                                                     |
|             | Section 5.1                                | Prior to  Closing Date                                                   |   |
|             |                                            |                                                                     |   |
|             | Section 5.2                                | Contributions  at Closing                                                |   |
|             |                                            |                                                                     |   |
|             | Section 5.3                                | Additional  Capital Contributions                                        |   |
|             |                                            |                                                                     |   |
|             | Section 5.4                                | Interest  and Withdrawal                                                 |   |
|             |                                            |                                                                     |   |
|             | Section 5.5                                | Loans from  Members                                                      |   |
|             |                                            |                                                                     |   |
|             | Section 5.6                                | Issuances  of Additional Company Securities                              |   |
|             |                                            |                                                                     |
| ARTICLE VI  | CAPITAL  ACCOUNTS                               |                                                                     |
|             |                                            |                                                                     |
|             | Section 6.1                                | Establishment  and Determination of Capital Accounts                     |   |
|                  |                                                 |                                                                          |  |  |  |  |  |  |  |  |

 

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|              | Section 6.2                                 | Computation  of Amounts                         |   |
|-------------------|--------------------------------------------------|-------------------------------------------------|--------|
|              |                                             |                                            |   |
|              | Section 6.3                                 | Negative  Capital Accounts                      |   |
|              |                                             |                                            |   |
|              | Section 6.4                                 | Adjustments  to Book Value                      |   |
|              |                                             |                                            |   |
|              | Section 6.5                                 | Compliance  With Section 1.704-1(b)        |   |
|              |                                             |                                            |   |
|              | Section 6.6                                 | Transfer of  Capital Accounts                   |   |
|              |                                             |                                            |
| ARTICLE VII  | DISTRIBUTIONS; ALLOCATIONS OF PROFITS AND LOSSES |                                            |
|              |                                             |                                            |
|              | Section 7.1                                 | Generally                                       |   |
|              |                                             |                                            |   |
|              | Section 7.2                                 | Distributions                                   |   |
|              |                                             |                                            |   |
|              | Section 7.3                                 | Book  Allocations of Net Profits and Net Losses |   |
|              |                                             |                                            |   |
|              | Section 7.4                                 | Regulatory  and Special Allocations             |   |
|              |                                             |                                            |   |
|              | Section 7.5                                 | Tax  Withholding                                |   |
|              |                                             |                                            |   |
|              | Section 7.6                                 | Tax  Allocations; Code Section 704(c)      |   |
|              |                                             |                                            |   |
|              | Section 7.7                                 | Section 754  Election                      |   |
|              |                                             |                                            |   |
|              | Section 7.8                                 | Apportionment  of Allocations and Distributions |   |
|              |                                             |                                            |
| ARTICLE VIII | MANAGEMENT AND OPERATION OF BUSINESS             |                                            |
|              |                                             |                                            |
|              | Section 8.1                                 | Management  by the Company Board                |   |
|              |                                             |                                            |   |
|              | Section 8.2                                 | Officers                                        |   |
|              |                                             |                                            |   |
|              | Section 8.3                                 | Restrictions on Certain Actions                 |   |
|              |                                             |                                            |   |
|              | Section 8.4                                 | Limitation on Authority of Members              |   |
|              |                                             |                                            |   |
|              | Section 8.5                                 | Outside Activities                              |   |
|              |                                             |                                            |   |
|              | Section 8.6                                 | Indemnification                                 |   |
|              |                                             |                                            |   |
|              | Section 8.7                                 | Liability of Indemnitees                        |   |
|              |                                             |                                            |   |
|              | Section 8.8                                 | Other Matters Concerning the Company Board      |   |
|              |                                             |                                            |   |
|              | Section 8.9                                 | Reliance by Third Parties                       |   |
|              |                                             |                                            |
| ARTICLE IX   | BOOKS, RECORDS, ACCOUNTING AND REPORTS           |                                            |
|              |                                             |                                            |
|              | Section 9.1                                 | Records and Accounting                          |   |
|              |                                             |                                            |   |
|              | Section 9.2                                 | Fiscal Year                                     |   |
|              |                                             |                                            |
| ARTICLE X    | TAX MATTERS                                      |                                            |
|              |                                             |                                            |
|              | Section 10.1                                | Tax Returns and Information                     |   |
|              |                                             |                                            |   |
|              | Section 10.2                                | Tax Elections                                   |   |
|              |                                             |                                            |   |
|              | Section 10.3                                | Tax Matters Partner                             |   |
|              |                                             |                                            |
| ARTICLE XI   | ADMISSION OF MEMBERS                             |                                            |
|                   |                                                  |                                                 |        |  |  |  |

 

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|              | Section 11.1                          | Admission of Substituted Members                                                    |   |
|-------------------|--------------------------------------------|-------------------------------------------------------------------------------------|--------|
|              |                                       |                                                                                |   |
|              | Section 11.2                          | Admission of Additional Members                                                     |   |
|              |                                       |                                                                                |   |
|              | Section 11.3                          | Amendment of Agreement and Certificate of  Formation                                |   |
|              |                                       |                                                                                |
| ARTICLE XII  | WITHDRAWAL OF MEMBERS; FORFEITURE OF UNITS |                                                                                |
|              |                                       |                                                                                |
|              | Section 12.1                          | Withdrawal of Members                                                               |   |
|              |                                       |                                                                                |   |
|              | Section 12.2                          | Treatment of Class B Units upon  Termination of Employment of Executive Member |   |
|              |                                       |                                                                                |
| ARTICLE XIII | DISSOLUTION AND LIQUIDATION                |                                                                                |
|              |                                       |                                                                                |
|              | Section 13.1                          | Dissolution                                                                         |   |
|              |                                       |                                                                                |   |
|              | Section 13.2                          | Liquidator                                                                          |   |
|              |                                       |                                                                                |   |
|              | Section 13.3                          | Liquidation                                                                         |   |
|              |                                       |                                                                                |   |
|              | Section 13.4                          | Cancellation of Certificate of Formation                                            |   |
|              |                                       |                                                                                |   |
|              | Section 13.5                          | Return of Capital Contributions                                                     |   |
|              |                                       |                                                                                |   |
|              | Section 13.6                          | Waiver of Partition                                                                 |   |
|              |                                       |                                                                                |   |
|              | Section 13.7                          | Capital Account Restoration                                                         |   |
|              |                                       |                                                                                |
| ARTICLE XIV  | AMENDMENT OF AGREEMENT                     |                                                                                |
|              |                                       |                                                                                |
|              | Section 14.1                          | Amendment to be Adopted Solely by the  Company Board                                |   |
|              |                                       |                                                                                |   |
|              | Section 14.2                          | Amendment Procedures                                                                |   |
|              |                                       |                                                                                |
| ARTICLE XV   | GENERAL PROVISIONS                         |                                                                                |
|              |                                       |                                                                                |
|              | Section 15.1                          | Addresses and Notices                                                               |   |
|              |                                       |                                                                                |   |
|              | Section 15.2                          | Further Action                                                                      |   |
|              |                                       |                                                                                |   |
|              | Section 15.3                          | Binding Effect                                                                      |   |
|              |                                       |                                                                                |   |
|              | Section 15.4                          | Integration                                                                         |   |
|              |                                       |                                                                                |   |
|              | Section 15.5                          | Creditors                                                                           |   |
|              |                                       |                                                                                |   |
|              | Section 15.6                          | Waiver                                                                              |   |
|              |                                       |                                                                                |   |
|              | Section 15.7                          | Counterparts                                                                        |   |
|              |                                       |                                                                                |   |
|              | Section 15.8                          | Applicable Law                                                                      |   |
|              |                                       |                                                                                |   |
|              | Section 15.9                          | Invalidity of Provisions                                                            |   |
|              |                                       |                                                                                |   |
|              | Section 15.10                         | Consent of Members                                                                  |   |
|                   |                                            |                                                                                     |        |  |  |

 

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**FIRST AMENDED AND RESTATEDLIMITED LIABILITY COMPANY AGREEMENTOFUS SHIPPING GENERAL PARTNER LLC**

 

THIS FIRST AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OFUS SHIPPING GENERAL PARTNER LLC, dated as of July 28, 2005, is enteredinto by and among United States Shipping Master LLC, a Delaware limitedliability company (“Shipping Master”), and those individuals listed in Schedule Awho execute a counterpart of this Agreement.

 

**R E C I T A L S:**

** **

WHEREAS, Shipping Master caused US Shipping General Partner LLC(referred to herein as the “Company”) to be formed as a limitedliability company under the Delaware Limited Liability Company Act on July 29,2004 and a Certificate of Formation was filed with the Secretary of State ofthe State of Delaware on such date.

 

WHEREAS, Shipping Master entered into aLimited Liability Company Agreement relating to the Company on July 29,2004.

 

WHEREAS, on November 3, 2004, Shipping Master and certain otherpersons amended and restated the July 29, 2004 Limited Liability CompanyAgreement in connection with the initial public offering of the MLP to reflectcontributions to the Company, the admission of the Executive Members (asdefined below) and certain other matters.

 

WHEREAS, Shipping Master and the other persons signatory hereto nowdesire to execute this first amended and restated Limited Liability CompanyAgreement.

 

NOW THEREFORE, in consideration of the covenants, conditions andagreements contained herein, the parties hereto hereby enters into thisAgreement:

 

**ARTICLE IDEFINITIONS**

 

Section 1.1             Definitions.  The following definitions shall be for allpurposes, unless otherwise clearly indicated to the contrary, applied to theterms used in this Agreement.  Capitalizedterms used herein but not otherwise defined shall have the meaning assigned tosuch term in the MLP Agreement.

 

“Act” means the Delaware Limited Liability Company Act, 6 Del. C. § 18-101,et seq., as amended, supplemented or restated from time to time, and anysuccessor to such statute.

 

“Additional Member” means a Person admitted to the Company as a Memberpursuant to Section 11.1 and who is shown as such on the books and recordsof the Company.

 

“Affiliate” means, with respect to any Person, any other Person thatdirectly or indirectly through one or more intermediariescontrols, is controlled by or is under common control with, the Person inquestion. As used herein, the term “control” means the possession, direct orindirect, of the power to direct or cause the direction of the management andpolicies of a Person, whether through ownership of voting securities, bycontract or otherwise.

 

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“Agreement” means this First Amended and Restated Limited LiabilityCompany Agreement of US Shipping General Partner LLC, as it may be amended,supplemented or restated from time to time. The Agreement shall constitute a “limitedliability company agreement” as such term is defined in the Act.

 

“Assignee” means a Person to whom one or more Membership Interests havebeen transferred in a manner permitted under this Agreement, but who has notbeen admitted as a Substituted Member. 

 

“Book Value” means, with respect to any Company property, the Company’sadjusted basis for Federal income tax purposes, adjusted from time to time toreflect the adjustments under Section 6.4 hereof; *provided that* the Book Value of any assetcontributed to the Company shall be equal to the Fair Market Value of thecontributed asset on the date of contribution, and the Book Value of anyCompany property distributed to any Member or Economic Owner shall be adjustedimmediately prior to such distribution to equal its Fair Market Value.  In the case of any asset that has a BookValue that differs from its adjusted tax basis, Book Value shall be adjusted bythe amount of depreciation calculated for purposes of the definitions of “NetProfits” and “Net Losses” rather than the amount of depreciation determined forU.S. Federal income tax purposes.

 

“Business Day” means Monday through Friday of each week, except that alegal holiday recognized as such by the government of the United States ofAmerica or the State of New Jersey shall not be regarded as a Business Day.

 

“Capital Account” has the meaning set forth in Section 6.1.

 

“Capital Contribution” means any cash, cash equivalents or the value ofContributed Property that a Member contributes to the Company pursuant to thisAgreement or the Closing Contribution Agreement.

 

“Catch-up Amount” means the amount of additional distributions, if any,that would have been made to the Executive Members in respect of the Class BUnits pursuant to Section 7.2 prior to the conversion of all SubordinatedUnits into Common Units pursuant to the MLP Agreement if the Percentage Interestsof the Class B Units had been determined without regard to the first provisoin the definition of the term “Percentage Interest.”

 

“Certificate of Formation” means the Certificate of Formation of theCompany filed with the Secretary of State of the State of Delaware asreferenced in Section 2.1, as such Certificate of Formation may beamended, supplemented or restated from time to time.

 

“Citizen” has the meaning set forth in the Master LLC Agreement.

 

“Class A Unit” means a Unit representinga fractional part of the ownership of the Company and having the rights,preferences and obligations specified with respect to Class A Units inthis Agreement.  

 

“Class B Unit” means a Unit representing a fractional part of theownership of the Company and having the rights, preferences and obligationsspecified with respect to Class B Units in this Agreement.  A Class B Unit shall have no right tovote under this Agreement.

 

“Closing Contribution Agreement” means the Contribution, Conveyance andAssumption Agreement, dated the Closing Date, among Shipping Master, theCompany, the MLP and certain other parties named therein, together with anyadditional documents and instruments contemplated or referenced thereunder.

 

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“Closing Date” means the first date on which Common Units are sold bythe MLP to the Underwriters pursuant to the provisions of the UnderwritingAgreement.

 

“Code” means the Internal Revenue Code of 1986, as amended and ineffect from time to time. Any reference herein to a specific section orsections of the Code shall be deemed to include a reference to anycorresponding provision of successor law.

 

“Commission” means the United States Securities and ExchangeCommission.

 

“Company” means US Shipping General Partner LLC, a Delaware limitedliability company, and any successors thereto.

 

“Company Board” means the Board of Managers of the Company.

 

“Company Group” means the Company and any Subsidiary of the Company,treated as a single consolidated entity.

 

“Company Minimum Gain” has the meaning set forth for “partnershipminimum gain” in Treasury Regulation Section 1.704-2(d).

 

“Company Security” means any class or series of membership interest inthe Company.

 

“Contributed Property” means each property or other asset, in such formas may be permitted by the Act, but excluding cash, contributed to the Company.

 

“Economic Interest” means a Member’s or Economic Owner’s share of theCompany’s Net Profits, Net Losses and distributions pursuant to this Agreement andthe Act, but shall not include any right to participate in the management oraffairs of the Company, including the right to vote on, consent to or otherwiseparticipate in any decision of the Members, or any right to receive informationconcerning the business and affairs of the Company, in each case except to theextent provided for herein or otherwise required by the Act.

 

“Economic Owner” means any owner of an Economic Interest who is not aMember.  No owner of an Economic Interestwhich is not a Member shall be deemed a “member” (as that term is used in theAct) of the Company.

 

“Executive” means any person rendering services to the MLP, the Companyor their respective Subsidiaries, whether as an Officer, employee, advisor,consultant, manager or otherwise.

 

“Executive Member” means any Person who becomes a party hereto who isan Executive, so long as such Person remains a Member.  Executive Members shall hold solely Class BUnits.

 

“Fair Market Value” means, except as otherwise provided in Sections 4.5and 5.2, the fair market value of the asset in question, as determined in thegood faith judgment of the Company Board.

 

“Fiscal Year” has the meaning set forth in Section 9.2.

 

“GP Income” means any cash distributions made by the MLP to the Companyout of the MLP’s Basic Surplus in respect of the Company’s General PartnerInterest.

 

“Group Member” means a member of the Company Group.

 

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“IDR Income” means any cash distributions made by the MLP to the Companyout of the MLP’s Basic Surplus in respect of the Company’s IncentiveDistribution Right.

 

“Indemnitee” means (a) the Company Board, (b) any Person whois or was a Manager, Officer, employee, agent or trustee of the Company, (c) anyPerson who is or was a member, partner, director, officer, employee, agent ortrustee of any Group Member, the MLP or any of their respective Affiliates and (d) anyPerson who is or was serving at the request of the Company Board as a member,partner, director, officer, employee, partner, agent, fiduciary or trustee ofanother Person, in each case, acting in such capacity, *provided*, that a Person shall not be anIndemnitee by reason of providing, on a fee-for-services basis, trustee,fiduciary or custodial services.

 

“Liquidation Date” means the date on which any event giving rise to thedissolution of the Company occurs.

 

“Liquidator” means one or more Personsselected by the Company Board to perform the functions described in Section 13.2as liquidating trustee of the Company within the meaning of the Act.

 

“Managers” means the individuals elected fromtime to time as members of the Company Board by the Members in accordance with Section 8.1to manage the business and affairs of the Company.

 

“Master LLC Agreement” means the Amended and Restated Limited LiabilityCompany Agreement of Shipping Master, as it may be amended, supplemented orrestated from time to time.

 

“Member” means each Person identified on Schedule A heretoas of the date hereof who has executed this Agreement or a counterpart hereofand each Person who is hereafter admitted as a Member in accordance with theterms of this Agreement and the Act, in each case so long as such Person isshown on the Company’s books and records as the owner of one or more Units and,solely for purposes of Articles VI, VII, X and XIII and Section 4.2,the term “Member” shall, unless the context indicates otherwise, alsoinclude Economic Owners.  The Membersshall constitute the “members” (as that term is defined in the Act) of the Company.  Except as expresslyprovided herein, the Members shall constitute a single class or group ofmembers of the Company for all purposes of the Act and this Agreement.

 

“Membership Interest” means a Member’s interest in the Company,including such Member’s Economic Interest and the right, if any, to participatein the management of the business and affairs of the Company, including theright, if any, to vote on, consent to or otherwise participate in any decisionor action of or by the Members and the right to receive information concerningthe business and affairs of the Company, in each case to the extent expresslyprovided in this Agreement or otherwise required by the Act. The MembershipInterests are a security governed by Article 8 of the Uniform CommercialCode.

 

“MLP” means U.S. Shipping Partners L.P., a Delaware limited partnership,and any successors thereto, for which the Company is serving as generalpartner.

 

“MLP Agreement” means the Amended and Restated Agreement of LimitedPartnership of U.S. Shipping Partners L.P., as it may be amended, supplementedor restated from time to time.

 

“MLP Security” has the meaning assigned to the term “PartnershipSecurity” in the MLP Agreement.

 

“National Securities Exchange” has the meaning assigned to such term inthe MLP Agreement.

 

“Non-Citizens” means Persons who are not Citizens.

 

4

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“Officer” means each Person designated as an officer of the Companypursuant to Section 8.2 for so long as such Person remains an officerpursuant to the provisions of Section 8.2.

 

“Omnibus Agreement” means the Omnibus Agreement, dated the ClosingDate, among the Company, the MLP, the Operating Company, and Shipping Master.

 

“Operating Company” means U.S. Shipping Operating LLC, a Delawarelimited liability company, and any successors thereto.

 

“Opinion of Counsel” means a written opinion of counsel (who may beregular counsel to the Company or the MLP or any of their respectiveAffiliates) acceptable to the Company Board in its reasonable discretion.

 

“Percentage Interest” of a class of Units means, as of any date ofdetermination, a fraction, expressed as a percentage, the numerator of which isthe number of outstanding Units of such class at such time and the denominatorof which is the total number of outstanding Units of all classes at such time;provided that until at least 25% of the outstanding Subordinated Units haveconverted into Common Units pursuant to the MLP Agreement, the PercentageInterest of the Class B Units shall be zero; and provided further, thatupon conversion of at least 25% of the outstanding Subordinated Units, the numberof Class B Units deemed to be outstanding for purposes of calculating PercentageInterest of the Class B Units shall be the determined by multiplying the Class BUnits by a fraction, the numerator of which is the number of Subordinated Unitsthat have converted into Common Units and the denominator of which is5,272,341.

 

“Person” means an individual or a corporation, limitedliability company, firm, partnership, joint venture, trust,unincorporated organization, association, governmental agency or politicalsubdivision thereof or other entity.

 

“Registration Statement” means the Registration Statement on Form S-1(Registration No. 333-118141) as it has been or as it may be amended orsupplemented from time to time, filed by the MLP with the Commission under theSecurities Act to register the offering and sale of the common units pursuantto the Underwriting Agreement.

 

“Services Agreement” has the meaning set forth in the Master LLCAgreement.

 

“Shipping Master” means United States Shipping Master LLC, a Delawarelimited liability company.

 

“Subordinated Units” means the Class ASubordinated Units as such term is defined in the MLP Agreement.

 

“Subsidiary” means, with respect to any Person, (a) a corporationof which more than 50% of the voting power of shares entitled (without regardto the occurrence of any contingency) to vote in the election of directors orother governing body of such corporation is owned, directly or indirectly, atthe date of determination, by such Person, by one or more Subsidiaries of suchPerson or a combination thereof, (b) a partnership (whether general orlimited) in which such Person or a Subsidiary of such Person is, at the date ofdetermination, a general or limited partner of such partnership, but only ifmore than 50% of the partnership interests of such partnership (considering allof the partnership interests of the partnership as a single class) is owned,directly or indirectly, at the date of determination, by such Person, by one ormore Subsidiaries of such Person, or a

 

5

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combination thereof, or (c) any otherPerson (other than a corporation or a partnership) in which such Person, one ormore Subsidiaries of such Person, or a combination thereof, directly orindirectly, at the date of determination, has (i) at least a majorityownership interest or (ii) the power to elect or direct the election of amajority of the directors or other governing body of such Person.

 

“Substituted Member” means a Person who is admitted as a Member to theCompany pursuant to Section 11.1 in place of and with all the rights of aMember and who is shown as a Member on the books and records of the Company.

 

“Transfer” has the meaning assigned to such term in Section 4.1(a).

 

“Underwriter” means each Person named as an underwriter in theUnderwriting Agreement who purchases Common Units pursuant thereto.

 

“Underwriting Agreement” means the Underwriting Agreement dated 28,2004 among the Company, the MLP, the Operating Company, Shipping Master and theUnderwriters, providing for the purchase of Common Units by such Underwriters.

 

“Unit” means an Economic Interest in the Company representing afractional part of the entire Economic Interest in the Company, *provided*, that any class or group of Unitsissued shall have the relative rights, powers and duties set forth in thisAgreement and the Economic Interest represented by such class or group of Unitsshall be determined in accordance with such relative rights, powers and duties.

 

“Unitholder” means any Person who holds a Unit, whether as a Member oras an unadmitted Assignee of a Member.

 

“Unitholder Minimum Gain” has the meaning set forth for “partnernonrecourse debt minimum gain” in Treasury Regulation Section 1.704-2(i).

 

“Unitholder Nonrecourse Debt Minimum Gain” has the meaning set forthfor “partner nonrecourse debt minimum gain” in Treasury Regulation Section 1.704-2(i)(2).

 

“Unitholder Nonrecourse Deductions” has the meaning set forth for “partnernonrecourse deductions” in Treasury Regulation Section 1.704-2(i).

 

Section 1.2             Construction.  Unlessthe context requires otherwise: (a) any pronoun used in this Agreementshall include the corresponding masculine, feminine or neuter forms, and thesingular form of nouns, pronouns and verbs shall include the plural and viceversa; (b) references to Articles and Sections refer to Articles andSections of this Agreement; and (c) the term “include” or “includes” meansincludes, without limitation, and “including” means including, withoutlimitation.

 

**ARTICLE IIORGANIZATION**

 

Section 2.1             Formation.  On July 29, 2004, Shipping Masterpreviously formed the Company as a limited liability company pursuant to theprovisions of the Act by virtue of the filing of the Certificate of Formationwith the Secretary of State of the State of Delaware.  The Company Board caused certain othercertificates or documents it determined in its sole discretion to be necessaryor appropriate for the qualification and operation of the Company in certainother states.  The Company Board shalluse all reasonable efforts to cause to be filed such additional certificates ordocuments as may be determined by the Company Board in its sole discretion tobe reasonable and necessary or appropriate

 

6

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for theformation, continuation, qualification and operation of a limited liabilitycompany in the State of Delaware or any other state in which the Company mayelect to do business or own property.  Tothe extent that such action is determined by the Company Board in its solediscretion to be reasonable and necessary or appropriate, the Company Boardshall cause to be filed amendments to and restatements of the Certificate ofFormation and do all things to maintain the Company as a limited liabilitycompany under the laws of the State of Delaware or of any other state in whichthe Company may elect to do business or own property.  Subject to the terms of Section 3.3(a),the Company Board shall not be required, before or after filing, to deliver ormail a copy of the Certificate of Formation, any qualification document or anyamendments thereto to any Member or Assignee.

 

Section 2.2             Name.  The name of the Company shall be “US ShippingGeneral Partner LLC”.  The Company’sbusiness may be conducted under any other name or names deemed necessary orappropriate by the Company Board in its sole discretion, including the name ofthe MLP.  The words “Limited LiabilityCompany,” “L.L.C.” or “LLC” or similar words or letters shall be included inthe Company’s name where necessary for the purpose of complying with the lawsof any jurisdiction that so requires.  TheCompany Board Member in its discretion may change the name of the Company atany time and from time to time and shall notify the other Member(s) of suchchange in the next regular communication to the Members.

 

Section 2.3             RegisteredOffice; Registered Agent; Principal Office; Other Offices.  The registered office of the Company requiredby the Act to be maintained in the State of Delaware shall be the office of theinitial registered agent named in the Certificate of Formation or such otheroffice (which need not be a place of business of the Company) as the CompanyBoard may designate from time to time in the manner provided by law.  The registered agent of the Company in theState of Delaware shall be the initial registered agent named in theCertificate of Formation or such other Person(s) as the Company Board maydesignate from time to time in the manner provided by law.  The principal office of the Company shall beat such place as the Company Board may designate from time to time, which neednot be in the State of Delaware, and the Company shall maintain recordsthere.  The Company may have such otheroffices as the Company Board may designate from time to time.

 

Section 2.4             Purpose and Business.  The purpose and nature of the business to beconducted by the Company shall be to (a) act as the general partner of theMLP and, in connection therewith, to exercise all of the rights and powersconferred upon the Company pursuant to the MLP Agreement, (b) manage,operate, lease, sell and otherwise deal with any and all assets or properties contributedto the Company by the Members or hereafter acquired by the Company, (c) serveas the sole member, partner or stockholder of its Subsidiaries and, inconnection therewith, to exercise all the rights and powers conferred upon theCompany as the sole member, partner or stockholder of such Subsidiariespursuant to the operating agreements, partnership agreements or charterdocuments of each of such Subsidiaries, (d) engage directly in, or enterinto or form any corporation, partnership, joint venture, limited liabilitycompany or other arrangement to engage indirectly in, any type of business oractivity engaged in by the Company and its Subsidiaries and their predecessorsprior to the Closing Date and, in connection therewith, to exercise all of the rightsand powers conferred upon the Company pursuant to the agreements relating tosuch business activity, (e) engage directly in, or enter into or form anycorporation, partnership, joint venture, limited liability company or otherarrangement to engage indirectly in, any business activity that is approved bythe Company Board and which lawfully may be conducted by a limited liabilitycompany organized pursuant to the Act and, in connection therewith, to exerciseall of the rights and powers conferred upon the Company pursuant to theagreements relating to such business activity, (f) borrow money and issueevidences of indebtedness and guaranty indebtedness and secure any suchindebtedness or guaranty by mortgage or pledge of, or other lien on, the assetsof the Company and (g) do anything necessary or appropriate to theforegoing, including the making of capital contributions or loans to a GroupMember, the MLP or any Subsidiary thereof.  The Company Board has no obligation or

 

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duty to theCompany, the Members, or the Assignees to propose or approve, and in itsdiscretion may decline to propose or approve, the conduct by the Company of anybusiness.

 

Section 2.5             Powers.  The Company shall be empowered to the fullestextent then permissible under the Act to do any and all acts and thingsnecessary, appropriate, proper, advisable, incidental to or convenient for thefurtherance and accomplishment of the purposes and business described in Section 2.4and for the protection and benefit of the Company.

 

Section 2.6             Power of Attorney.

 

(a)           Each Member and each Assignee herebyconstitutes and appoints the Company Board and, if a Liquidator shall have beenselected pursuant to Section 13.2, the Liquidator (and any successor tothe Liquidator by merger, transfer, assignment, election or otherwise) and eachof their authorized officers and attorneys-in-fact, as the case may be, withfull power of substitution, as its true and lawful agent and attorney-in-fact,with full power and authority in his name, place and stead, to:

 

(i)            execute,swear to, acknowledge, deliver, file and record in the appropriate publicoffices (A) all certificates, documents and other instruments (includingthis Agreement and all amendments or restatements hereof and all amendments andrestatements of the Certificate of Formation) that the Company Board or theLiquidator deems necessary or appropriate to form, qualify or continue theexistence or qualification of the Company as a limited liability company in theState of Delaware and in all other jurisdictions in which the Company mayconduct business or own property; (B) all certificates, documents andother instruments that the Company Board or the Liquidator deems necessary orappropriate to reflect, in accordance with its terms, any amendment, change,modification or restatement of this Agreement; (C) all certificates,documents and other instruments (including conveyances and a certificate ofcancellation) that the Company Board or the Liquidator deems necessary orappropriate to reflect the dissolution and liquidation of the Company pursuantto the terms of this Agreement; (D) all certificates, documents and otherinstruments relating to the admission, withdrawal, removal or substitution ofany Member pursuant to, or other events described in, Article IV, XI orXII; and (E) all certificates, documents and other instruments relating tothe determination of the rights, preferences and privileges of any class orseries of Membership Interests issued pursuant hereto; and

 

(ii)           execute,swear to, acknowledge, deliver, file and record all ballots, consents,approvals, waivers, certificates, documents and other instruments necessary orappropriate, in the discretion of the Company Board or the Liquidator, to make,evidence, give, confirm or ratify any vote, consent, approval, agreement orother action that is made or given by the Members hereunder or is consistentwith the terms of this Agreement or is necessary or appropriate, in thediscretion of the Company Board or the Liquidator, to effectuate the terms orintent of this Agreement; *provided*,that when required by any provision of this Agreement that establishes apercentage of the Members or of the Members of any class or series required totake any action, the Company Board and the Liquidator may exercise the power ofattorney made in this Section 2.6(a)(ii) only after the necessaryvote, consent or approval of the Members or of the Members of such class orseries, as applicable.

 

Nothing contained in this Section 2.6(a) shall be construedas authorizing the Company Board to amend this Agreement except in accordancewith Article XIII or as may be otherwise expressly provided for in thisAgreement.

 

(b)           The foregoing power of attorney ishereby declared to be irrevocable and a power coupled with an interest, and itshall survive and, to the maximum extent permitted by law, not be affected bythe subsequent dissolution, bankruptcy or termination of any Member or Assigneeand the

 

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transferof all or any portion of such Member’s or Assignee’s Membership Interest andshall extend to such Member’s or Assignee’s successors and assigns.  Each such Member or Assignee hereby agrees tobe bound by any representation made by the Company Board or the Liquidatoracting in good faith pursuant to such power of attorney; and each such Memberor Assignee, to the maximum extent permitted by law, hereby waives any and alldefenses that may be available to contest, negate or disaffirm the action ofthe Company Board or the Liquidator taken in good faith under such power ofattorney.  Each Member or Assignee shallexecute and deliver to the Company Board or the Liquidator, within 15 daysafter receipt of the request therefor, such further designation, powers ofattorney and other instruments as the Company Board or the Liquidator deemsnecessary to effectuate this Agreement and the purposes of the Company.

 

Section 2.7             Term.  The termof the Company commenced upon the filing of the Certificate of Formation inaccordance with the Act and shall continue in existence until the dissolutionof the Company in accordance with the provisions of Article XII.  The existence of the Company as a separatelegal entity shall continue until the cancellation of the Certificate ofFormation as provided in the Act.

 

Section 2.8             Title to Company Assets.  Title to Company assets, whether real,personal or mixed and whether tangible or intangible, shall be deemed to beowned by the Company as an entity, and no Member, individually or collectively,shall have any ownership interest in such Company assets or any portionthereof.

 

**ARTICLE IIIRIGHTS OF MEMBERS**

 

Section 3.1             Limitation of Liability.  Except as otherwise provided by the Act, thedebts, obligations and liabilities of the Company, whether arising in contract,tort or otherwise, shall be solely the debts, obligations and liabilities ofthe Company, and neither the Company Board, any other Member, any Assignee norany person serving as an Officer of the Company shall be obligated personallyfor any such debt, obligation or liability of the Company solely by reason ofbeing a member of the Company Board, Member, Assignee or Officer of theCompany.  No Member shall be required tolend any funds to the Company.  TheMembers shall only be liable to make payment of their capital contributions asand when due hereunder and other payments as expressly provided in thisAgreement.  If and to the extent theMember’s capital contribution shall be fully paid, such Member shall not,except as required by the express provisions of the Act regarding repayment ofsums wrongfully distributed to the Member, be required to make any furthercontributions.

 

Section 3.2             Outside Activities of the Members.  Subject to the provisions of Section 8.5and the Omnibus Agreement, which shall continue to be applicable to the Personsreferred to therein, regardless of whether such Persons shall also be Membersor Assignees, any Member or Assignee shall be entitled to and may have businessinterests and engage in business activities in addition to those relating tothe Company, including business interests and activities in direct competitionwith the Company Group.  Neither theCompany nor any other Member or Assignee shall have any rights by virtue ofthis Agreement in any business ventures of any Member or Assignee.

 

Section 3.3             Rightsof Members.

 

(a)           In addition to other rights providedby this Agreement or by applicable law, and except as limited by Section 3.3(b),each Member shall have the right, for a purpose reasonably related to suchMember’s interest as a member in the Company, upon reasonable written demandand at such Member’s own expense:

 

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(i)            to obtain true and full information regarding the status ofthe business and financial condition of the Company;

 

(ii)           promptlyafter becoming available, to obtain a copy of the Company’s federal, state andlocal income tax returns for each year;

 

(iii)          to have furnished to it a current list of the name and lastknown business, residence or mailing address of each Member;

 

(iv)          tohave furnished to it a copy of this Agreement and the Certificate of Formationand all amendments thereto, together with a copy of the executed copies of allpowers of attorney pursuant to which this Agreement, the Certificate ofFormation and all amendments thereto have been executed;

 

(v)           toobtain true and full information regarding the amount of cash and a descriptionand statement of the Capital Contributions made by each Member and which eachMember has agreed to contribute in the future, and the date on which eachbecame a Member; and

 

(vi)          to obtain such other information regarding the affairs ofthe Company as is just and reasonable.

 

(b)           The Company Board may keepconfidential from the Members and Assignees, for such period of time as the CompanyBoard deems reasonable, (i) any information that the Company Boardreasonably believes to be in the nature of trade secrets or (ii) otherinformation the disclosure of which the Company Board in good faith believes (A) isnot in the best interests of the Company Group, (B) could damage theCompany Group or the MLP and its Subsidiaries or (C) that any Group Memberis required by law or by agreement with any third party to keep confidential(other than agreements with Affiliates of the Company the primary purpose ofwhich is to circumvent the obligations set forth in this Section 3.3).

 

**ARTICLE IVTRANSFERS OF INTERESTS**

 

Section 4.1             Transfer Generally.

 

(a)           The term “transfer,” when usedin this Agreement with respect to a Membership Interest, shall be deemed torefer to a transaction by which the holder of a Membership Interest assignssuch Membership Interest to another Person who is or becomes a Member or an Assignee,and includes a sale, assignment, gift, pledge, encumbrance, hypothecation,mortgage, exchange or any other disposition by law or otherwise.

 

(b)           No Membership Interest shall betransferred, in whole or in part, except in accordance with the terms andconditions set forth in this Article IV.  Any transfer or purported transfer of aMembership Interest not made in accordance with this Article IV shall benull and void.

 

(c)           Nothing contained in this Agreementshall be construed to prevent a disposition by any member of the Company Boardof any or all of the issued and outstanding membership interests in ShippingMaster.

 

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Section 4.2             Transfer of Membership Interests.  

 

(a)           Subject to the provisions of Section 10.17of the Master LLC Agreement, Shipping Master may transfer all, or any part of, itsMembership Interest to another Person, and following any such transfer suchPerson may become a Substituted Member pursuant to Article XI.

 

(b)           No Executive Member shall have theright to transfer all or any portion of his or her Membership Interest to anyPerson. 

 

(c)           Except as set forth in Sections 4.2 (a) and(b), or in connection with any pledge of (or any related foreclosure on) aMember’s Membership Interest solely for the purpose of securing, directly orindirectly, indebtedness of the Company, the MLP or Shipping Master, a Membermay not transfer all or any part of its Membership Interest or withdraw fromthe Company.

 

(d)           Notwithstanding the other provisionsof this Article IV, no transfer of any Membership Interest shall be madeif such transfer would (i) violate the then applicable federal or statesecurities laws or rules and regulations of the Commission, any statesecurities commission or any other governmental authority with jurisdictionover such transfer, (ii) terminate the existence or qualification of theCompany or the MLP under the laws of the jurisdiction of its formation, (iii) causethe Company or the MLP to be treated as an association taxable as a corporationor otherwise to be taxed as an entity for federal income tax purposes (to theextent not already so treated or taxed), (iv) cause the Company to becomea Non U.S. Citizen (as such term is defined in the MLP Agreement) or (ii) resultin the vessels owned by the MLP losing their eligibility to engage in thecoastwise trade of the United States.

 

(e)           The Company Board may imposerestrictions on the transfer of Membership Interests if a subsequent Opinion ofCounsel determines that such restrictions are necessary to avoid a significantrisk of the Company or the MLP becoming taxable as a corporation or otherwiseto be taxed as an entity for federal income tax purposes.  The restrictions may be imposed by makingsuch amendments to this Agreement as the Company Board may determine to benecessary or appropriate to impose such restrictions.

 

(f)            A transfer by a Member or otherPerson shall not itself dissolve the Company or entitle such Member’s Assignee tobecome a Member or exercise any rights of a Member.

 

(g)           Upon any transfer during any FiscalYear of the Company made in compliance with the provisions of this Article IV,Net Profits, Net Losses, each item thereof and all other items attributable tosuch interest for such Fiscal Year shall be divided and allocated between theAssignor and the Assignee by taking into account their varying interests duringsuch Fiscal Year, using any conventions permitted by law and selected by theCompany Board in its sole discretion.  All distributions on or before the date of such transfer shall bemade to the Assignor and all distributions thereafter shall be made to theAssignee.  Solely for purposes ofmaking such allocations and distributions, the Company shall recognize such transfernot later than the end of the calendar month during which it is given notice ofsuch transfer; provided that, if the Company is given notice of a transfer atleast 10 business days prior to the transfer, the Company shall recognize such transferas the date of such transfer, and provided, further, that, if the Company doesnot receive a notice stating the date such interest was transferred and suchother information as the Company Board may reasonably require within 30 daysafter the end of the Fiscal Year during which the transfer occurs, then allsuch items shall be allocated, and all distributions shall be made, to theUnitholder that, according to the books and records of the Company, was theowner of the interest on the last day of the Fiscal Year during which the transferoccurs.  Neither the Company nor theCompany Board shall incur any liability for making allocations and distributionsin accordance with the

 

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provisionsof this Section 4.2(e), whether or not the Company or the Company Boardhas knowledge of any transfer of any interest.

 

Section 4.3             RequiredAmendments; Continuation.  If and tothe extent any Assignee is admitted as a Substituted Member, this Agreementshall be amended to admit such Assignee or Person as a member and to reflectthe elimination of the transferor member (or the reduction of such Member’sinterest) and (if and to the extent then required by the Act) a certificate ofamendment to the Certificate reflecting such admission and elimination (orreduction) shall be filed in accordance with the Act.  The admission of any substitute Memberpursuant to this Article IV shall be deemed effective on the effectivedate of such amendment to this Agreement. 

 

Section 4.4             Sale by Shipping Master of All or a Majority of theMembership Interest.  Upon a sale by Shipping Master of all of its MembershipInterests in the Company to a third-party, Shipping Master shall pay to eachExecutive Member an amount equal to the distribution that would have been made bythe Company to such Executive Member at such time if all of the assets of theCompany had been sold for cash in an amount equal to the consideration receivedby Shipping Master from such third-party in respect of the sale, net ofexpenses related to the sale, and the proceeds thereof were distributed inaccordance with Section 13.3(c). Immediately upon the receipt of the payment described in the priorsentence, the Class B Units shall be cancelled and shall have no furtherrights (including, without limitation, any rights to distributions from theCompany) and each of the Executive Members shall be deemed to have withdrawnfrom the Company.  Upon a sale byShipping Master of a majority, but less than all, of its Membership Interestsin the Company to a third-party, Shipping Master shall pay to each ExecutiveMember an amount equal to the product determined by multiplying the amountreceived by Shipping Master by each Executive Member’s Percentage Interest.

 

Section 4.5             Sale of Shipping Master.  If there occurs an event described in eitherclause (a) or (d) of the term “Sale of the Company” (as such term isset forth in the Master LLC Agreement), Shipping Master shall pay to eachExecutive Member an amount equal to the distribution that would have been made bythe Company to such Executive Member at such time if all of the assets of theCompany had been sold for cash in an amount equal to their respective Fair MarketValues, and the proceeds thereof were distributed in accordance with Section 13.3(c).  For this purpose, (a) the Fair MarketValue of the General Partner Interest shall be equal to the product of (x) theaverage of the closing price per unit of the Common Units for the20-consecutive trading day period preceding the Business Day prior to the dateof such sale and (y) the number of Common Units equivalent to the 2%General Partner Interest in the MLP, and (b) the Fair Market Value of theIncentive Distribution Right shall be determined in good faith by the CompanyBoard. Immediately upon the receipt of the payment described in the priorsentence, the Class B Units shall be cancelled and shall have no furtherrights (including, without limitation, any rights to distributions from theCompany) and each of the Executive Members shall be deemed to have withdrawnfrom the Company.

 

Section 4.6             Resignation.  No Member shall have the right to resign orwithdraw as a Member without the prior written consent of the Company Board,which may be given or withheld in its sole and absolute discretion.  Notwithstanding the immediately precedingsentence, any Executive who ceases to own any Units shall cease to be a Memberfor all purposes under this Agreement. Any Member that resigns without the consent of the Company Board in contraventionof this Section 4.4 shall be liable to the Company for all damages(including all lost profits and special, indirect and consequential damages)directly or indirectly caused by the resignation of such Member.

 

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**ARTICLE VCAPITAL CONTRIBUTIONS AND ISSUANCE OF INTERESTS**

 

Section 5.1             Prior to Closing Date.  On July 29, 2004 in connection with theformation of the Company under the Act, Shipping Master made an initial CapitalContribution to the Company in the amount of $1,000 for all of the MembershipInterests in the Company.  On November 3,2004, Shipping Master contributed to the Company its interests in Transport,Chemical Transport and Vessel Management (each term as defined in the ClosingContribution Agreement).

 

Section 5.2             Contributionsat Closing.  On the Closing Date, (a) ShippingMaster has contributed to the Company the USS Chartering Interest (as definedin the Closing Contribution Agreement), which interest the Company will, pursuantto the Closing Contribution Agreement, convey to the MLP in exchange for acontinuation of the Company’s general partner interest in the MLP and theIncentive Distribution Rights (as defined in the MLP Agreement), and (b) eachExecutive Member has contributed in cash the amount, if any, set forth in thebooks and records of the Company.  TheMembers agrees that the Fair Market Value of the Capital Contributions made byShipping Master on or prior to the Closing Date are equal to the sum of theFair Market Values of the General Partner Interest and the IncentiveDistribution Right.  The Fair MarketValue of the General Partner Interest on the Closing Date shall be equal to theproduct of (x) the price per Common Unit in the initial public offering of theMLP and (y) the number of Common Units equivalent to the 2% GeneralPartner Interest in the MLP.  The FairMarket Value of the Incentive Distribution Right on the Closing Date shall bedetermined in good faith by the Company Board. Following the foregoing transactions, and by execution of this Agreement,each Member shall hold the Units set forth opposite his or its name on Schedule A.

 

Section 5.3             AdditionalCapital Contributions.  With theconsent of the Company Board, any Member may, but shall not be obligated to,make additional Capital Contributions to the Company.

 

Section 5.4             Interest and Withdrawal.  No interest shall be paid by the Company onCapital Contributions.  No Member orAssignee shall be entitled to the withdrawal or return of its CapitalContribution, except to the extent, if any, that distributions made pursuant tothis Agreement or upon termination of the Company may be considered as such bylaw and then only to the extent provided for in this Agreement.  Except to the extent expressly provided inthis Agreement, no Member or Assignee shall have priority over any other Memberor Assignee either as to the return of Capital Contributions or as to profits,losses or distributions.  Any such returnshall be a compromise to which all Members or Assignees agree within themeaning of Section 18-502(b) of the Act.

 

Section 5.5             Loansfrom Members.  Loans by a Member tothe Company shall not constitute Capital Contributions.  If any Member shall advance funds to theCompany in excess of the amounts required hereunder to be contributed by it tothe capital of the Company, the making of such excess advances shall not resultin any increase in the amount of the Capital Account of such Member.  The amount of any such excess advances shallbe a debt obligation of the Company to such Member and shall be payable orcollectible only out of the Company assets in accordance with the terms andconditions upon which such advances are made.

 

Section 5.6             Issuancesof Additional Company Securities.

 

(a)           The Company may issue additional Class BUnites and options, rights, warrants and appreciation rights relating to the Class BUnits for any Company purpose at any time and from time to time to Persons whobecome employees of the Company or its Subsidiaries for such consideration andon such terms and conditions as shall be established by the Company

 

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Board.  The issuance by the Company of additional Class BUnits or rights, warrants or appreciation rights in respect thereof shall bedeemed an amendment to this Agreement.

 

(b)           The Company Board is herebyauthorized and directed to take all actions that it deems necessary orappropriate in connection with (i) each issuance of Class B Units andoptions, rights, warrants and appreciation rights relating to Class B Unitspursuant to this Section 5.6 and (ii) the admission of additionalExecutive Members as Additional Members. The Company Board shall do all things necessary to comply with the Actand is authorized and directed to do all things it deems necessary or advisablein connection with any future issuance of Class B Units, includingcompliance with any statute, rule, regulation or guideline of any federal,state or other governmental agency.

 

(c)           Notwithstanding the other provisionsof this Section 5.6, the Company may not issue additional Class BUnits, or options, rights, warrants and appreciation rights relating to Class BUnits, if such issuance would (i) violate the then applicable federal orstate securities laws or rules and regulations of the Commission, anystate securities commission or any other governmental authority withjurisdiction over such transfer, (ii) cause the Company or the MLP to betreated as an association taxable as a corporation or otherwise to be taxed asan entity for federal income tax purposes (to the extent not already so treatedor taxed), (iii) cause the Company to become a Non-U.S. Citizen (as suchterm is defined in the MLP Agreement) or (ii) result in the vessels ownedby the MLP losing their eligibility to engage in the coastwise trade of theUnited States.

 

Section 5.7             No Preemptive Rights.  No Person shall have preemptive, preferentialor other similar rights with respect to (a) additional CapitalContributions; (b) issuance or sale of any class or series of MembershipInterests, whether unissued, held in the treasury or hereafter created; (c) issuanceof any obligations, evidences of indebtedness or other securities of theCompany convertible into or exchangeable for, or carrying or accompanied by anyrights to receive, purchase or subscribe to, any such Membership Interests; (d) issuanceof any right of subscription to or right to receive, or any warrant or optionfor the purchase of, any such Membership Interests; or (e) issuance orsale of any other securities that may be issued or sold by the Company.

 

Section 5.8             Fully Paid and Non-Assessable Nature of Membership Interests.  All Membership Interests issued pursuant to,and in accordance with the requirements of this Article V shall be fullypaid and non-assessable Membership Interests, except as such non-assessabilitymay be affected by Section 18-607 of the Act.

 

**ARTICLE VICAPITAL ACCOUNTS**

 

Section 6.1             Establishment and Determination of Capital Accounts.  A capital account (“Capital Account”)shall be established for each Member on the books of the Company initiallyreflecting an amount equal to such Member’s initial Capital Contributionspursuant to Sections 5.1 and 5.2.  EachMember’s Capital Account shall be (a) increased by any additional CapitalContributions made by such Member pursuant to the terms of this Agreement andsuch Member’s share of Net Profits, the amount of any Company liabilities thatare assumed by such Member or that are secured by any Company propertydistributed to such Member and any other items of income and gain allocated tosuch Member pursuant to Article VII, (b) decreased by such Member’sshare of Net Losses, any distributions to such Member of cash or the FairMarket Value of any other Company property (net of liabilities assumed by suchMember and liabilities to which such property is subject) distributed to suchMember, the amount of any liabilities of such Member that are assumed by theCompany and any other deduction allocated to such Member pursuant to Article VII,and (c) adjusted as otherwise required by the Code and the regulationsthereunder, including but not limited to, the rules of Treasury RegulationSection 1.704-

 

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1(b)(2)(iv).  Any references in this Agreement to theCapital Account of a Member shall be deemed to refer to such Capital Account asthe same may be increased or decreased from time to time as set forthabove.  A Member who has more than oneUnit in the Company shall have a single Capital Account that reflects all suchUnits regardless of the Class of Unit owned and regardless of the time ormanner in which the Units were acquired.

 

Section 6.2             Computation of Amounts.  “Net Profits” or “Net Losses” for any FiscalPeriod shall mean the taxable income or loss of the Company for such period asdetermined in accordance with the accounting method used by the Company forFederal income tax purposes with the following adjustments:

 

(a)           thecomputation of Net Profits and Net Losses shall include tax-exempt income andthose items described in Treasury Regulation Section 1.704-1(b)(2)(iv)(i),without regard to the fact that such items are not includable in gross incomeor are not deductible for Federal income tax purposes;

 

(b)           ifthe Book Value of any Company property is adjusted pursuant to TreasuryRegulation Section 1.704-1(b)(2)(iv)(e) or (f), the amount of suchadjustment shall be taken into account as gain or loss from the disposition ofsuch property;

 

(c)           itemsof income, gain, loss or deduction attributable to the disposition of Companyproperty having a Book Value that differs from its adjusted basis for taxpurposes shall be computed by reference to the Book Value of such property;

 

(d)           itemsof depreciation, amortization and other cost recovery deductions with respectto Company property having a Book Value that differs from its adjusted basisfor tax purposes shall be computed by reference to the property’s Book Value inaccordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(g);

 

(e)           tothe extent an adjustment to the adjusted tax basis of any Company assetpursuant to Code Sections 732(d), 734(b) or 743(b) is required,pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to be takeninto account in determining Capital Accounts, the amount of such adjustment tothe Capital Accounts shall be treated as an item of gain (if the adjustmentincreases the basis of the asset) or loss (if the adjustment decreases suchbasis); 

 

(f)            tothe extent that the Company distributes any asset in kind to the Members, theCompany shall be deemed to have realized Net Profit or Net Loss thereon in thesame manner as if the Company had sold such asset for an amount equal to theFair Market Value (as determined by the Company Board) of such asset or, ifgreater and otherwise required by the Code, the amount of debts to which suchasset is subject; and

 

(g)           any items of income, gain, loss or deduction allocatedpursuant to Section 7.4 shall not be taken into account in computing suchtaxable income or loss.

 

Section 6.3             NegativeCapital Accounts.  No Member shall berequired to pay to the Company or any other Member any deficit or negativebalance which may exist from time to time in such Member’s Capital Account.

 

Section 6.4             Adjustmentsto Book Value.  The Company shalladjust the Book Value of its assets to fair market value in accordance withTreasury Regulation Section 1.704-1(b)(2)(iv) as of the followingtimes: (i) at the Company Board’s discretion in connection with theissuance of Units in the

 

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Company; (ii) at the Company Board’sdiscretion in connection with the distribution by the Company to a Member ofmore than a de minimis amount of Company assets, including money, if as aresult of such distribution, such Member’s interest in the Company is reduced;and (iii) the liquidation of the Company within the meaning of TreasuryRegulation Section 1.704-1(b)(2)(ii)(g).  Any such increase or decrease in Book Valueof an asset shall be allocated Net Profit or Net Losses to the Capital Accountsof the Members under Section 7.3 (determined immediately prior to theissuance of the new Units).

 

Section 6.5             ComplianceWith Section 1.704-1(b).  The provisions of this Agreement relating tothe maintenance of Capital Accounts are intended to comply with TreasuryRegulation Section 1.704-1(b), and shall be interpreted and applied in amanner consistent with such Treasury Regulation.  In the event the Company Board shalldetermine that it is prudent to modify the manner in which the Capital Accounts,or any debits or credits thereto (including, without limitation, debits orcredits relating to liabilities which are secured by contributed or distributedproperty or which are assumed by the Company or any Member), are computed inorder to comply with such regulation, the Company Board may make suchmodification, provided that it is not likely to have a material effect on theamount distributable to any Member pursuant to Section 13.3 hereof uponthe dissolution of the Company.  TheCompany Board also shall (i) make any adjustments that are necessary orappropriate to maintain equality between the Capital Accounts of the Membersand the amount of Company capital reflected on the Company’s balance sheet, ascomputed for book purposes, in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(q)and (ii) make any appropriate modifications in the event unanticipatedevents might otherwise cause this Agreement not to comply with TreasuryRegulation Section 1.704-1(b).

 

Section 6.6             Transfer of Capital Accounts.  The original Capital Account established foreach Substituted Member shall be in the same amount as the Capital Account ofthe Member (or portion thereof) which such Substituted Member succeeds, at thetime such Substituted Member is admitted to the Company.  The Capital Account of any Member whoseinterest in the Company shall be increased by means of the transfer to it ofall or part of the Units of another Member shall be appropriately adjusted toreflect such transfer.  Any reference inthis Agreement to a Capital Contribution (or Cash Capital Contribution) of ordistribution to a Member that has succeeded any other Member shall include anyCapital Contributions (or Cash Capital Contribution) or distributionspreviously made by or to the former Member on account of the Units of suchformer Member transferred to such Member.

 

**ARTICLE VIIDISTRIBUTIONS; ALLOCATIONS OF PROFITS AND LOSSES**

 

Section 7.1             Generally.  Subject to the provisions of Section 18-607of the Act and to the provisions of this Article VII, the Company Boardshall have sole discretion regarding the amounts and timing of distributions toUnitholders, in each case subject to the retention and establishment ofreserves of, or payment to third parties of, such funds as it deems necessarywith respect to the reasonable business needs of the Company which shallinclude the payment or the making of provision for the payment when due of theCompany’s obligations, including the payment of any management oradministrative fees and expenses or any other obligations.  The making of distributions hereunder shallbe subject to the terms and conditions of any indebtedness for borrowed moneyincurred by the Company or its Subsidiaries.

 

Section 7.2             Distributions.  Subject to Sections 7.1 and 7.8,distributions shall be made when and as declared by the Company Board to eachUnitholder in the following order and priority:

 

(a)           Distributions of GP Income and IDRIncome shall be made as follows:

 

(i)            prior to the conversion of any Subordinated Units intoCommon Units pursuant to the MLP Agreement, 100% of all GP Income distributedto the Company by the MLP pursuant to

 

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Sections 6.4(a)(i), (ii) or (iii) orSection 6.4(b)(i) of the MLP Agreement shall be distributed toShipping Master;

 

(ii)           followingthe conversion of a portion of the Subordinated Units into Common Unitspursuant to the MLP Agreement, GP Income distributed to the Company by the MLPpursuant to Sections 6.4(a)(i), (ii) or (iii) or Section 6.4(b)(i) ofthe MLP Agreement shall be distributed (A) first, to the Executive Memberspro rata in proportion to their respective Percentage Interests until the aggregateamount distributed pursuant to this Section 7.2(a)(ii)(A) is equal tothe Catch-Up Amount, and (B) thereafter, 100% to Shipping Master; and 

 

(iii)          all other GP Income and all IDR Income shall be distributedto the Unitholders of each class of Units pro rata in proportion to theirrespective Percentage Interests.

 

(b)           All distributions by the Companyother than distributions of GP Income or IDR Income pursuant to Section 7.2(a) shallbe made as follows:

 

(i)            first,to the Unitholders, pro rata in proportion to their respective Capital Contributionsuntil each such Unitholder has received cumulative distributions pursuant tothis Section 7.2(b)(i) in an amount equal to such Member’s aggregateCapital Contributions; and

 

(ii)           thereafter, to the Unitholders of each class of Units prorata in proportion to their respective Percentage Interests.

 

Section 7.3             BookAllocations of Net Profits and Net Losses. 

 

For each Fiscal Year of the Company, after adjusting each Member’sCapital Account for all Capital Contributions and distributions during suchFiscal Year and all special allocations pursuant to Section 7.4 withrespect to such Fiscal Year, all Net Profits and Net Losses (or items thereof) shallbe allocated to the Capital Account of each Member in a manner that will, asnearly as possible, cause the Capital Account balance of each Member (ascomputed for purposes of Code Section 704(b)) at the end of such FiscalYear to be equal to the excess (which may be negative) of:

 

(a)           the hypothetical distribution (ifany) that such Member would receive if, on the last day of such Fiscal Year,(x) all Company assets, including cash, were sold for cash equal to their Book Value,taking into account any adjustments thereto for such Fiscal Year, (y) allCompany liabilities were satisfied in cash according to their terms (limited,with respect to each nonrecourse liability, to the Book Value of the assetssecuring such liability) and (z) the net proceeds thereof (after satisfactionof such liabilities) were distributed in full pursuant to Section 13.3,over

 

(b)           the sum of (x) such Member’s share ofCompany Minimum Gain or Unitholder Nonrecourse Debt Minimum Gain, determined inaccordance with Treasury Regulation Section 1.704 2, and (y) the amount,if any, which such Member is obligated to contribute to the capital of theCompany as of the last day of such Fiscal Year (to the extent not taken intoaccount in determining the Member’s share of Company Minimum Gain or UnitholderNonrecourse Debt Minimum Gain).

 

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Section 7.4             Regulatoryand Special Allocations.  Notwithstandingthe provisions of Section 7.3:

 

(a)           Company Minimum Gain Chargeback.  If there is a net decrease in Company MinimumGain during any Taxable Year, each Unitholder shall be specially allocateditems of taxable income or gain for such Taxable Year (and, if necessary,subsequent Taxable Years) in an amount equal to such Unitholder’s share of thenet decrease in Company Minimum Gain, determined in accordance with TreasuryRegulation Section 1.704-2(g).  Theitems to be so allocated shall be determined in accordance with TreasuryRegulation Sections 1.704-2(f)(6) and1.704-2(j)(2).  This paragraph isintended to comply with the minimum gain chargeback requirement in TreasuryRegulation Section 1.704-2(f) and shall be interpreted consistentlytherewith.

 

(b)           UnitholderNonrecourse Debt Minimum Gain Chargeback.  Unitholder Nonrecourse Deductions shall beallocated in the manner required by Treasury Regulation Section 1.704-2(i).  Except as otherwise provided in TreasuryRegulation Section 1.704-2(i)(4), if there is anet decrease in Unitholder Minimum Gain during any Taxable Year, eachUnitholder that has a share of such Unitholder Minimum Gain shall be speciallyallocated items of taxable income or gain for such Taxable Year (and, ifnecessary, subsequent Taxable Years) in an amount equal to that Unitholder’sshare of the net decrease in Unitholder Minimum Gain.  Items to be allocated pursuant to thisparagraph shall be determined in accordance with Treasury Regulation Sections1.704-2(i)(4) and 1.704-2(j)(2).  This paragraph is intended to comply with theminimum gain chargeback requirements in Treasury Regulation Section 1.704-2(i)(4) and shall be interpreted consistently therewith.

 

(c)           Qualified Income Offset.  If any Unitholder unexpectedly receives anyadjustments, allocations or distributions described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4),(5) or (6), items of taxable income and gain shall be specially allocatedto such Unitholder in an amount and manner sufficient to eliminate the adjustedcapital account deficit (determined according to Treasury Regulation Section 1.704-1(b)(2)(ii)(d))created by such adjustments, allocations or distributions as quickly aspossible.  This paragraph is intended tocomply with the qualified income offset requirement in Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistentlytherewith.

 

(d)           Gross Income Allocation.  In the event any Unitholder has a deficitCapital Account at the end of any Fiscal Year which is in excess of the sum of (i) theamount such Unitholder is obligated to restore, if any, pursuant to anyprovision of this Agreement and (ii) the amount such Unitholder is deemedto be obligated to restore pursuant to the penultimate sentences of TreasuryRegulation Section 1.704-2(g)(1) and 1.704-2(i)(5), each suchUnitholder shall be specially allocated items of Company income and gain in theamount of such excess as quickly as possible; provided that an allocationpursuant to this Section 7.4(d) shall be made only if and to theextent that a Unitholder would have a deficit Capital Account in excess of suchsum after all other allocations provided for in this Article VII have beententatively made as if Section 7.4(c) and this Section 7.4(d) werenot in this Agreement.

 

(e)           Nonrecourse Deductions.  Nonrecourse Deductions (as determinedaccording to Treasury Regulation Section 1.704-2(b)(1))for any Fiscal Year shall be allocated to each Unitholder in an amount equal tothe amount by which the allocation of Net Profit to such Unitholder would havebeen greater, or the allocation of Net Loss to such Unitholder would have beenless, if all such Nonrecourse Deductions had been disregarded in determiningthe Company’s Net Profits or Net Losses for such Fiscal Year.

 

(f)            Ordering Rules.  Anything contained in this Agreement to thecontrary notwithstanding, allocations for any Fiscal Year or other period ofNonrecourse Deductions (as defined in clause (e) above), or of itemsrequired to be allocated pursuant to the minimum gain chargeback

 

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requirementscontained in Section 7.4(a) and Section 7.4(b), shall be madebefore any other allocations hereunder.

 

(g)           Reallocation.  The allocations set forth in paragraphs (a) through(f) above (the “Regulatory Allocations”) are intended to comply withcertain requirements of the Treasury Regulations under Code Section 704.  The Regulatory Allocations may not beconsistent with the manner in which the Members intend to allocate Net Profitsand Net Losses or make Company distributions. Accordingly, notwithstanding the other provisions of this Article VII,but subject to the Regulatory Allocations, income, gain, deduction and lossshall be reallocated among the Members so as to eliminate the effect of theRegulatory Allocations and thereby to cause the respective Capital Accounts ofthe Members to be in the amounts (or as close thereto as possible) they wouldhave been if Net Profits and Net Losses (and such other items of income, gain, deductionand loss) had been allocated without reference to the RegulatoryAllocations.  In general, the Membersanticipate that this will be accomplished by specially allocating other NetProfits and Net Losses (and such other items of income, gain, deduction andloss) among the Members so that the net amount of the Regulatory Allocationsand such special allocations to each such Member is zero.  In addition, if in any Fiscal Year or otherperiod there is a decrease in Company Minimum Gain, or in Unitholder NonrecourseDebt Minimum Gain, and application of the minimum gain chargeback requirementsset forth in Section 7.4(a) or Section 7.4(b) would cause adistortion in the economic arrangement among the Members, the Members may, ifthey do not expect that the Company will have sufficient other income tocorrect such distortion, request the Internal Revenue Service to waive eitheror both of such minimum gain chargeback requirements.  If such request is granted, this Agreementshall be applied in such instance as if it did not contain such minimum gainchargeback requirement.

 

(h)           Offsetting Allocations.  If, and to the extent that, any Member isdeemed to recognize any item of income, gain, deduction or loss as a result ofany transaction between such Member and the Company pursuant to Sections1272-1274, 7872, 483, 482 or 83 of the Code or any similar provision now orhereafter in effect, and the Company Board determines that any correspondingCompany items of Net Profits or Net Losses of the Member who recognizes suchitem should be allocated to such Member in order to reflect the Members’Economic Interests in the Company, then the Company Board may so allocate suchNet Profits or Net Losses.

 

(i)            Payee Allocation.  In the event any payment to any person that istreated by the Company as the payment of an expense is recharacterized by ataxing authority as a Company distribution to the payee as a Unitholder, suchpayee shall be specially allocated an amount of Company gross income and gainas quickly as possible equal to the amount of the distribution.

 

Section 7.5             Tax Withholding.  The Company shall withhold taxes from anyallocation or distribution to any Member to the extent required by the Code orany other applicable law.  For thepurposes of this Agreement, any taxes so withheld by the Company shall bedeemed to be a cash distribution or payment to such Member, and the Companyshall reduce the amount otherwise distributable or allocable to such Memberpursuant to this Agreement and shall reduce the Capital Account of such Memberaccordingly.  To the extent the aggregateof such payments to a Member for any period exceeds the distributions to whichsuch Member is entitled for such period, the amount of such excess shall beconsidered a demand loan from the Company to such Member, with per annuminterest at the Company’s current rate of borrowing plus 1%, not to exceed themaximum rate permitted by applicable law, until discharged by the Memberthrough repayment, which may be made out of distributions to which such Memberwould otherwise be entitled.  Thewithholdings referred to in this Section 7.5 shall be made at the maximumapplicable statutory rate under the applicable tax law unless the Company shallhave received an opinion of counsel or other evidence, satisfactory to theCompany Board, to the effect that a lower rate is applicable, or that nowithholding is applicable.  Each Member

 

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hereby agrees toindemnify and hold harmless the Company and the other Members from and againstany liability (including without limitation any liability for taxes, penalties,additions to tax, interest or failure to withhold taxes) with respect to incomeattributable to or distributions or other payments to such Member.

 

Section 7.6             Tax Allocations; Code Section 704(c).

 

(a)           Allocations.  The income, gains, losses, deductions andexpenses of the Company shall be allocated, for Federal, state and local incometax purposes, among the Members in accordance with the allocation of suchincome, gains, losses, deductions and expenses among the Members for computingtheir Capital Accounts, except that if any such allocation is not permitted bythe Code or other applicable law, the Company’s subsequent income, gains,losses, deductions and expenses shall be allocated among the Members for taxpurposes to the extent permitted by the Code and other applicable law, so as toreflect as nearly as possible the allocation set forth herein in computingtheir Capital Accounts.

 

(b)           Contributed Property.  In accordance with Code Section 704(c) andthe Treasury Regulations thereunder, income, gain, loss, deduction and expensewith respect to any property contributed to the capital of the Company shall,solely for tax purposes, be allocated among the Members so as to take accountof any variation between the adjusted basis of such property to the Company forFederal income tax purposes and its Fair Market Value at the time ofcontribution.  The Company Board may, inits sole discretion, make, or not make, “curative” or “remedial” allocations(within the meaning of the Treasury Regulations under Code Section 704(c))including, but not limited to:

 

(i)            “curative” allocations which offset the effect of the “ceilingrule” for a prior Taxable Year (within the meaning of Treasury Regulation Section 1.704-3(c)(3)(ii));and

 

(ii)           “curative” allocations from disposition of contributedproperty (within the meaning of Treasury Regulation Section 1.704-3(c)(3)(iii)(B)).

 

(c)           Adjusted Book Value.  If the Book Value of any Company asset isadjusted pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(f) as provided in Section 6.4, subsequentallocations of items of taxable income, gain, loss, deduction and expense withrespect to such asset shall take account of any variation between the adjustedbasis of such asset for Federal income tax purposes and its Book Value in thesame manner as under Code Section 704(c).

 

(d)           Tax Credits.  Allocations of tax credit, tax creditrecapture and any items related thereto shall be allocated to the Membersaccording to their interests in such items as determined by the Company Boardtaking into account the principles of Treasury Regulation Section 1.704-1(b)(4)(ii).

 

(e)           Tax Elections.  Any elections or other decisions relating tosuch allocations shall be made by the Company Board in any manner thatreasonably reflects the purpose and intent of this Agreement.  Allocations pursuant to this Section 7.6are solely for purposes of Federal, state and local taxes and shall not affect,or in any way be taken into account in computing, any Member’s Capital Accountor share of profits, losses, other items or distributions pursuant to anyprovisions of this Agreement.

 

(f)            Excess Nonrecourse Liabilities.  For purposes of determining the Membersshares of excess nonrecourse liabilities under Treasury Regulation Section 1.752-3,the Members’ percentage interests in Company profits shall be equal to theirrespective Percentage Interests.

 

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Section 7.7             Section 754 Election.  The Company Board, may, in its solediscretion, cause the Company to elect, pursuant to Section 754 of theCode, to adjust the basis of Company property as permitted and provided inSections 734 and 743 of the Code.  Such electionshall be effective solely for Federal (and, if applicable, state and local)income tax purposes and shall not result in any adjustment to the Book Value ofany Company asset or to the Member’s Capital Accounts (except as provided inTreasury Regulations Section 1.704-1(b)(2)(iv)(m))or in the determination or allocation of Net Profits or Net Losses for purposesother than such tax purposes.

 

Section 7.8             Apportionment of Allocations and Distributions.  Any distribution made to a class of Unitspursuant to Sections 7.2(a)(ii)(A), 7.2(a)(iii) or 7.2(b)(ii) (orcorresponding allocation pursuant to Section 7.3) shall be furtherallocated or distributed among the Unitholders of such class pro rata inproportion to the number of Units of such class held by each Unitholder.

 

**ARTICLE VIIIMANAGEMENT AND OPERATION OF BUSINESS**

 

Section 8.1             Management by the Company Board.

 

(a)           General Powers.  The Company Board shall be the “manager” ofthe Company within the meaning of the Act. All powers of the Company shall be exercised by the Company Board.  Decisions of the Company Board within itsscope of authority shall be binding upon the Company and each Member.  The Company Board shall have full, exclusiveand complete discretion, power and authority, subject to any other provisionsof this Agreement or by non-waivable provisions of applicable law, to manage,control, administer and operate the business and affairs of the Company, and tomake all decisions affecting such business and affairs, to exercise all powersset forth in Section 2.5 and to effectuate the purposes set forth in Section 2.4,including the following:

 

(i)            themaking of any expenditures, the lending or borrowing of money, the assumptionor guarantee of, or other contracting for, indebtedness and other liabilities,the issuance of evidences of indebtedness, including indebtedness that isconvertible into a Membership Interest, and the incurring of any otherobligations;

 

(ii)           themaking of tax, regulatory and other filings, or rendering of periodic or otherreports to governmental or other agencies having jurisdiction over the businessor assets of the Company;

 

(iii)          theacquisition, disposition, mortgage, pledge, encumbrance, hypothecation orexchange of any or all of the assets of the Company or the merger or othercombination of the Company with or into another Person;

 

(iv)          theuse of the assets of the Company (including cash on hand) for any purposeconsistent with the terms of this Agreement, including the financing of theconduct of the operations of the Company Group, the lending of funds to otherPersons (including the MLP or any Group Member), the repayment of obligationsof the Company Group and the making of capital contributions to any GroupMember;

 

(v)           thenegotiation, execution and performance of any contracts, conveyances or otherinstruments (including instruments that limit the liability of the Companyunder contractual arrangements to all or particular assets of the Company, withthe other party to the contract to have no recourse against the MLP or itsassets other than its interest in the Company, even if same results in theterms of the transaction being less favorable to the Company than wouldotherwise be the case);

 

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(vi)                              the distribution ofCompany cash;

 

(vii)                           the selection and dismissalof Officers and agents, outside attorneys, accountants, consultants andcontractors and the determination of their compensation and other terms ofemployment or hiring;

 

(viii)                        the maintenance of suchinsurance for the benefit of the Company Group and the Members as it deemsnecessary or appropriate;

 

(ix)                                the formation of, oracquisition of an interest in, and the contribution of property and the makingof loans to, any further limited or general partnerships, joint ventures,corporations or other Persons subject to the restrictions set forth in Section 2.4;

 

(x)                                   the control of anymatters affecting the rights and obligations of the Company, including thebringing and defending of actions at law or in equity and otherwise engaging inthe conduct of litigation and the incurring of legal expense and the settlementof claims and litigation;

 

(xi)                                the indemnification ofany Person against liabilities and contingencies to the extent permitted bylaw;

 

(xii)                             the purchase, sale orother acquisition or disposition of Membership Interests, or the issuance ofadditional options, rights, warrants and appreciation rights relating toMembership Interests; and

 

(xiii)                          the undertaking of any actionin connection with the Company’s participation in its Subsidiaries as the solemember or stockholder.

 

Except as otherwise expressly provided inthis Agreement or by non-waivable provisions of applicable law, the CompanyBoard shall have the sole power and authority to act on all matters thatrequire the approval of the Members (so that the approval of the Company Boardwill constitute all required Member approval) and no Member will have any rightto vote on such matter and such acts shall be subject only to the approval ofthe Company Board (and such approval shall be valid for all purposes of theAct).

 

(b)                                 Number,Term of Office and Qualifications. The number of Managers constituting the Company Board shall be not lessthan three and not more than ten.  Withinthese limits, the number of Managers constituting the Company Board shall bedetermined from time to time by Members holding a majority-in-interest of theMembership Interests.  The Members herebyagree that the initial number of Managers constituting the Company Board shallbe six.  In the event MLP Securities areregistered under the Securities Exchange Act of 1934, as amended, the Membersfurther agree to take all such actions as may be reasonably necessary to insurethat the Company Board is in compliance with all applicable rules andregulations of the Commission and any National Securities Exchange on which MLPSecurities are registered.  The membersof the Company Board shall be elected by the Members, and each Manager electedshall hold office until his or her successor is elected and qualified or untilhis or her earlier death, resignation or removal in the manner hereinafterprovided.  Managers need not beMembers.  Managers must at all times becitizens of the United States by birth, naturalization or as otherwiseauthorized by law.

 

(c)                                  InitialManagers.  The Members hereby electthe following individuals, each of whom is a citizen of the United States, asthe initial members of the Company Board, to serve until their respectivesuccessors are duly elected and qualified:

 

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Brian Ganz

Paul B. Gridley

Joseph P. Gehegan

William J. Kearns, Jr.

M. William Macey, Jr.

Douglas L. Newhouse

Ronald L. O’Kelley

 

(d)                                 Resignation.  Any Manager may resign as such by deliveringhis or her written resignation to the Company at the Company’s principal officeaddressed to the Company Board.  Suchresignation shall be effective upon receipt unless it is specified to beeffective at some other time or upon the happening of some other event.

 

(e)                                  Removal.  Any Manager may be removed as such by Membersholding a majority-in-interest of the Membership Interests.

 

(f)                                    Compensation.  A Manager who is not serving as an Officer ofthe Company may be paid such compensation by the Company for his or herservices as such as the Company Board shall from time to time deem appropriate.  The foregoing shall not be deemed to limit orrestrict the payment of any reasonable compensation or remuneration to anyPerson in such Person’s capacity as an Officer, employee, advisor or consultantto the Company or any agreement or arrangement with the Company which has beenapproved by the Company Board.

 

(g)                                 Reimbursement.  The Managers shall be entitled to bereimbursed for reasonable out-of-pocket costs and expenses incurred in thecourse of their service hereunder, including, without limitation, attendance atCompany Board meetings.

 

(h)                                 Meetingsof the Company Board; Actions. Meetings of the Company Board shall be held at the principal place ofbusiness of the Company or at any other place that a majority of the members ofthe Company Board determine.  At anymeeting, any Manager may participate by telephone or similar communicationequipment, provided each Manager can hear the others.  Persons present by telephone shall be deemedto be present “in person” for purposes hereof. The presence of at least a majority of the Managers shall constitute aquorum for the transaction of business. Meetings shall be held at least once each quarter, or more often inaccordance with a schedule established by the Company Board.  In addition, any two (2) or moreManagers may convene a meeting thereof upon at least ten (10) businessdays’ prior written notice to the other Managers; provided that a majority ofthe Managers present at a meeting may approve the presence of any other Personfor all or any portion of such meeting. The Company Board also may make decisions, without holding a meeting, bywritten consent of the Managers required for such decision, with prior noticethereof to all other Managers.  Minutesof each meeting and a record of each decision shall be kept by a designee ofthe Company Board.  Decisions of the CompanyBoard shall require the approval of at least a majority of its members.

 

(i)                                     Committees.  The Company Board shall establish a (i) ConflictsCommittee to serve as the Conflicts Committee under the MLP Agreement andmeeting the requirements for such committee set forth in the MLP Agreement, (ii) anAudit Committee meeting the applicable requirements of the Commission and anyNational Securities Exchange on which MLP Securities are registered and (iii) acompensation committee meeting the applicable requirements of the Commissionand any National Securities Exchange on which MLP Securities are registered.  The Company Board may, from time to time,designate one or more other committees. Any such committee, to the extent provided in the enabling resolutionand until dissolved by the Company Board, shall have and may exercise any orall of the authority of the Company Board. At every meeting of any such committee, the presence of a majority

 

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of all the representatives thereof shallconstitute a quorum, and the affirmative vote of a majority of therepresentatives present shall be necessary for the adoption of anyresolution.  The Company Board maydissolve any committee, other than the audit, conflicts and compensationcommittees, at any time.

 

(j)                                     ManagersHave No Exclusive Duty to Company. The Managers shall not be required to manage the Company as their soleand exclusive function and they may have other business interests and mayengage in other activities in addition to those relating to the Company,subject, in the case of an Manager that is employed by any Group Member, to theterms of his employment agreement with such Group Member.  Neither the Company nor any Member shall haveany right, by virtue of this Agreement, to share or participate in such otherinvestments or activities of any Manager or to the income or proceeds derivedtherefrom.  The Managers shall incur noliability to the Company or to any of the Members as a result of engaging inany other business or venture.

 

Section 8.2                                      Officers.

 

(a)                                  Designationand Appointment.  The Company Boardmay, from time to time, employ and retain Persons as may be necessary orappropriate for the conduct of the Company’s business (subject to thesupervision and control of the Company Board), including employees, agents andother Persons (any of whom may be a Member) who may be designated as Officersof the Company, with titles including but not limited to “chief executiveofficer,” “chairman,” “president,” “vice president,” “treasurer,” “secretary,” “generalmanager,” “director,” “chief financial officer” and “chief operating officer,”as and to the extent authorized by the Company Board.  Any number of offices may be held by the sameperson.  The Company Board may, in itsdiscretion, choose not to fill any office for any period as it may deemadvisable.  Officers need not beresidents of the State of Delaware or Members, but Officers must at all timesbe citizens of the United States by birth, naturalization or as otherwiseauthorized by law.  Any Officers sodesignated shall have such authority and perform such duties as the CompanyBoard may, from time to time, delegate to them. The Company Board may assign titles to particular Officers.  Each Officer shall hold office until his orher successor shall be duly designated and shall qualify or until his or herdeath or until he or she shall resign or shall have been removed in the mannerhereinafter provided.  The salaries orother compensation, if any, of the Officers of the Company shall be fixed fromtime to time by the Company Board.  Theinitial Officers of the Company shall be as follows:

 
| **Name**          | ** ** | **Title**                                                        |
|-------------------|------------|------------------------------------------------------------------|
| ** **        | ** ** | ** **                                                       |
| Paul B. Gridley   |       | Chairman of the Board and Chief Executive  Officer               |
| Joseph Gehegan    |       | President and Chief Operating Officer                            |
| Calvin Chew       |       | Executive Vice President                                         |
| Albert Bergeron   |       | Vice President-Chief Financial Officer,  Secretary and Treasurer |
| Alan Colletti     |       | Vice President-Operations                                        |
| Jeffrey M. Miller |       | Vice President-Chartering                                        |

 

(b)                                 Resignation/Removal.  Any Officer may resign as such at anytime.  Such resignation shall be made inwriting and shall take effect at the time specified therein, or if no time bespecified, at the time of its receipt by the Company Board.  The acceptance of a resignation shall not benecessary to make it effective, unless expressly so provided in theresignation.  Any Officer may be removedas such, either with or without cause, at any time by the Company Board.  Designation of an Officer shall not of itselfcreate any contractual or employment rights.

 

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(c)                                  Dutiesof Officers Generally.  The Officers,in the performance of their duties as such, shall owe to the Company duties ofloyalty and due care of the type owed by the officers of a corporation to suchcorporation and its equityholders under the laws of the State of Delaware.

 

(d)                                 ChiefExecutive Officer.  Subject to thepowers of the Company Board, the chief executive officer of the Company shallbe in general and active charge of the entire business and affairs of theCompany, and shall be its chief policy making Officer.  He or she shall direct, coordinate andcontrol the Company’s business and activities and its operating expenses andcapital expenditures, and shall have general authority to exercise all thepowers necessary for the chief executive officer of the Company, all inaccordance with basic policies established by and subject to the control of theCompany Board.  In the absence of thechief executive officer, his or her duties shall be performed and his or herauthority may be exercised by such Officer as may have been designated the mostsenior officer of the Company.

 

(e)                                  President.  The president shall, subject to the powers ofthe Company Board and chief executive officer, be the chief administrativeofficer of the Company and shall have general charge of the business, affairsand property of the Company, and control over its Officers (other than thechief executive officer), agents and employees. The president shall see that all orders and resolutions of the CompanyBoard and the chief executive officer are carried into effect.  He or she shall be responsible for theemployment of employees, agents and Officers (other than the chief executiveofficer) as may be required for the conduct of the business and the attainmentof the objectives of the Company.  He orshe shall have authority to suspend or to remove any employee, agent or Officer(other than the chief executive officer) of the Company and, in the case of thesuspension for Cause of any such Officer, to recommend to the Company Boardwhat further action should be taken.  Inthe absence of the president, his or her duties shall be performed and his orher authority may be exercised by the chief executive officer.  In the absence of the president and the chiefexecutive officer, the duties of the president shall be performed and his orher authority may be exercised by such Officer as may have been designated asthe most senior officer of the Company. The president shall have such other powers and perform such other dutiesas may be prescribed by the chief executive officer or the Company Board.

 

(f)                                    ChiefFinancial Officer.  The chieffinancial officer shall keep and maintain, or cause to be kept and maintained,adequate and correct books and records of accounts of the properties andbusiness transactions of the Company, including accounts of its assets,liabilities, receipts, disbursements, gains, losses, capital, Preferred Unitsand Common Interests.  The chieffinancial officer shall have the custody of the funds and securities of theCompany, and shall keep full and accurate accounts of receipts anddisbursements in books belonging to the Company, and shall deposit all moneysand other valuable effects in the name and to the credit of the Company in suchdepositories as may be designated by the Company Board.  The chief financial officer shall have suchother powers and perform such other duties as may from time to time beprescribed by the chief executive officer, the president or the Company Board.

 

(g)                                 ChiefOperating Officer.  Subject to thepowers of the Company Board, the chief executive officer and the president, thechief operating officer of the Company shall have general and active managementof the business of the Company.  Thechief operating officer shall see that all orders and resolutions of thepresident are carried into effect.  Thechief operating officer shall have such other powers and perform such otherduties as may from time to time be prescribed by the chief executive officer,the president or the Company Board.

 

(h)                                 VicePresident(s).  The vice president(s)shall perform such duties and have such other powers as the chief executiveofficer, the president, the chief operating officer or the Company Board mayfrom time to time prescribe, and may have such further denominations as “ExecutiveVice President”, “Senior Vice President”, “Assistant Vice President” and thelike.

 

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(i)                                     Secretary.  The secretary shall attend all meetings ofthe Members, and shall record all the proceedings of the meetings in a book tobe kept for that purpose.  The secretaryshall keep all documents as may be required under the Act.  The secretary shall perform such other dutiesand have such other authority as may be prescribed elsewhere in this Agreementor from time to time by the chief executive officer or the Company Board.  The secretary shall have the general duties,powers and responsibilities of a secretary of a corporation.  If the Company Board chooses to appoint anassistant secretary or assistant secretaries, the assistant secretaries, in theorder of their seniority, in the absence, disability or inability to act of thesecretary, shall perform the duties and exercise the powers of the secretary,and shall perform such other duties as the chief executive officer, thepresident, the chief operating officer or the Company Board may from time totime prescribe.

 

Section 8.3                                      Restrictionson Certain Actions.  Notwithstandinganything contrary contained herein, an Officer may not take any of thefollowing actions without the prior approval of the Company Board:

 

(i)                                     directly orindirectly declare or make any distributions upon any of its equity securities;

 

(ii)                                  directly orindirectly redeem, purchase or otherwise acquire, or permit any of itsSubsidiaries to redeem, purchase or otherwise acquire, any of the Company’s orany Subsidiary’s equity securities (including, without limitation, warrants,options and other rights to acquire equity securities);

 

(iii)                               authorize, issue, sell orenter into any agreement providing for the issuance (contingent or otherwise),or permit any of its Subsidiaries to authorize, issue, sell or enter into anyagreement providing for the issuance (contingent or otherwise) of any equitysecurities or debt securities with equity features or securities exercisable orconvertible into equity securities or debt securities with equity features;

 

(iv)                              merge or consolidate withany Person or permit any of its Subsidiaries to merge or consolidate with anyPerson (other than a wholly owned Subsidiary);

 

(v)                                 liquidate, dissolve oreffect, or permit any of its Subsidiaries to liquidate, dissolve or effect, arecapitalization or reorganization in any form of transaction;

 

(vi)                              create, incur, assume orsuffer to exist, or permit any of its Subsidiaries to create, incur, assume orsuffer to exist, indebtedness exceeding the amounts approved therefor by theCompany Board in the annual budget;

 

(vii)                           make, or permit any of itsSubsidiaries to make, any loans or advances to, guarantees for the benefit of,or investments in, any Person (other than a wholly-owned Subsidiary), exceptfor (a) reasonable advances to employees in the ordinary course ofbusiness and (b) investments having a stated maturity no greater than oneyear from the date the Company makes such investment in (1) obligations ofthe United States government or any agency thereof or obligations guaranteed bythe United States government, (2) certificates of deposit of commercialbanks having combined capital and surplus of at least $500 million, (3) commercialpaper with a rating of at least “Prime-1” by Moody’s Investors Service, Inc.or (4) any other investment then permitted under the Company’s seniorcredit agreement;

 

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(viii)                        enter into, or permit any ofits Subsidiaries to enter into, any transaction with any Person (or anyAffiliate thereof) who is an Affiliate of any Officer or Manager or related toany such Person by blood or marriage;

 

(ix)                                sell, lease, exchangeor otherwise dispose (including by license) of the assets or properties of theCompany or its Subsidiaries (other than damaged or obsolete equipment in theordinary course and consistent with past practice of the business) in an amountwhich exceeds $50,000;

 

(x)                                   make any capitalexpenditure, except for capital expenditures which have been authorized by theCompany Board in the annual budget;

 

(xi)                                (a) consent to anyamendment of the Omnibus Agreement or the MLP Agreement or (b) enter intoor make a material amendment of or terminate any other agreement, contract orcommitment representing a value to the Company or its Subsidiaries of greaterthan $50,000 or which is not reasonably expected to result in a normal profit,other than agreements, contracts or commitments entered into in the ordinarycourse of business that are not time charters and do not represent a value tothe Company greater than $250,000;

 

(xii)                             enter into anypartnership, joint venture or material business alliance, create any Subsidiary,or acquire any capital stock of or other ownership interest in any Person;

 

(xiii)                          amend or terminate anyagreement relating to a joint venture or a material business alliance of theCompany or any of its Subsidiaries;

 

(xiv)                         create any liens upon any assetsor properties of the Company or its Subsidiaries other than in connection withobligations pursuant to (vi) above;

 

(xv)                            adopt, amend or terminateany (a) agreement with employees of the Company or its Subsidiaries, otherthan with respect to employees whose employment can be terminated withoutpayment of any severance in excess of that provided generally to persons whoare not Officers, (b) plan, policy, arrangement or understanding providingany of the following benefits to any current or former employee of the Companyor its Subsidiaries: bonuses, pension, profit sharing, deferred compensation,incentive compensation, unit ownership, equity or quasi-equity purchase, equityor quasi-equity option, equity or quasi-equity appreciation rights, phantom equityor quasi-equity, retirement, vacation or severance, or (c) other materialpersonnel practices or policies of the Company or its Subsidiaries;

 

(xvi)                         appoint or remove (a) theCompany’s or its Subsidiaries’ accountants, (b) any counsel for the Companyor its Subsidiaries (including in respect of litigation and other proceedings),other than for litigation in the ordinary course that does not involve morethan $50,000 or (c) Officers of the Company or Officers of itsSubsidiaries;

 

(xvii)                      commence (including the filing ofa counterclaim) or settle any claim or litigation, regulatory proceeding orarbitration (other than ordinary course employee or commercial claims) to whichthe Company or its Subsidiaries is, or is to be, a party or by which the Companyor its Subsidiaries or any of its business, assets or properties may beaffected;

 

(xviii)                   register any of the Company’s or itsSubsidiaries’ securities under any securities laws;

 

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(xix)                           make any change in theCompany’s or its Subsidiaries’ fiscal year;

 

(xx)                              set or change value ofany goods or services contributed by any Members as a capital contribution orany distribution to any Member;

 

(xxi)                           make any amendment orterminate any constitutive or governing document of the Company or itsSubsidiaries, including without limitation this Agreement or Certificate;

 

(xxii)                        make any political orcharitable contribution exceeding the amounts approved therefor by the CompanyBoard in the annual budget;

 

(xxiii)                     cause the MLP to do any of theforegoing (as if the word MLP were substituted for Company and its referred tothe MLP, as applicable);

 

(xxiv)                    commit to do any of the foregoing,or

 

(xxv)                       delegate authority to any Personto approve the taking of any action set forth above.

 

Section 8.4                                      Limitationon Authority of Members.  No Membershall participate in the management or control of the business of, or shallhave any rights or powers with respect to, the Company except those expresslygranted to it by the terms of this Agreement or those duly conferred on it bythe Company Board.  No Member is an agentof the Company solely by virtue of being a Member, and no Member has authorityor power to act for or on behalf of the Company, to do any act that would bebinding on the Company or to make any expenditures on behalf of the Companysolely by virtue of being a Member, and the Members hereby consent to theexercise by the Company Board and Officers of the Company of the powersconferred on them by law and this Agreement. This Section 8.4 supersedes any authority granted to the Memberspursuant to the Act.  Any Member whotakes any action or binds the Company in violation of this Section 8.4shall be solely responsible for any loss and expense incurred by the Company asa result of the unauthorized action and shall indemnify and hold the Companyharmless with respect to the loss or expense.

 

Section 8.5                                      OutsideActivities.

 

(a)                                  Exceptas specifically restricted by the Omnibus Agreement or as set forth in ServicesAgreement between various of the Officers and the Company, each Indemniteeshall have the right to engage in businesses of every type and description andother activities for profit and to engage in and possess an interest in otherbusiness ventures of any and every type or description, whether in businessesengaged in or anticipated to be engaged in by any Group Member, independentlyor with others, including business interests and activities in directcompetition with the business and activities of any Group Member, and none ofthe same shall constitute a breach of this Agreement or any duty express orimplied by law to any Group Member or any Member or Assignee.  Neither any Group Member, any Member nor anyother Person shall have any rights by virtue of this Agreement or therelationship established hereby in any business ventures of any Indemnitee.

 

(b)                                 Subjectto the terms of Section 8.5(a) and the Omnibus Agreement, butotherwise notwithstanding anything to the contrary in this Agreement, (i) theengaging in competitive activities by any Indemnitee in accordance with theprovisions of this Section 8.5 is hereby approved by the Company and allMembers, (ii) it shall be deemed not to be a breach of the Company Board’sfiduciary duty or any other obligation of any type whatsoever of the CompanyBoard for the Indemnitees to engage in such business interests and activitiesin preference to or to the exclusion of the Company and (iii) except asset

 

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forth in the OmnibusAgreement, the Company and the Indemnitees shall have no obligation to presentbusiness opportunities to the Company.

 

(c)                                  Anythingin this Agreement to the contrary notwithstanding, to the extent thatprovisions of this Agreement purport or are interpreted to have the effect ofrestricting the fiduciary duties that might otherwise, as a result of Delawareor other applicable law, be owed by the Company Board to the Company and itsMembers, or to constitute a waiver or consent by the Members to any suchrestriction, such provisions shall be inapplicable and have no effect indetermining whether the Company Board has complied with its fiduciary duties inconnection with determinations made by it under this Section 7.5.

 

Section 8.6                                      Indemnification.

 

(a)                                  Tothe fullest extent permitted by law but subject to the limitations expresslyprovided in this Agreement, all Indemnitees shall be indemnified and heldharmless by the Company from and against any and all losses, claims, damages,liabilities, joint or several, expenses (including legal fees and expenses),judgments, fines, penalties, interest, settlements or other amounts arisingfrom any and all claims, demands, actions, suits or proceedings, whether civil,criminal, administrative or investigative, in which any Indemnitee may beinvolved, or is threatened to be involved, as a party or otherwise, by reasonof its status as an Indemnitee; *provided*,that the Indemnitee shall not be indemnified and held harmless if there hasbeen a final and non-appealable judgment entered by a court of competentjurisdiction determining that, in respect of the matter for which theIndemnitee is seeking indemnification pursuant to this Section 8.6, theIndemnitee acted in bad faith or engaged in fraud, willful misconduct or grossnegligence or, in the case of a criminal matter, acted with knowledge that theIndemnitee’s conduct was unlawful; provided, further, no indemnificationpursuant to this Section 8.6 shall be available to Shipping Master withrespect to its obligations incurred pursuant to the Underwriting Agreement orthe Closing Contribution Agreement. Any indemnification pursuant to this Section 8.6shall be made only out of the assets of the Company, it being agreed that noMember shall (i) be personally liable for such indemnification or (ii) haveno obligation to contribute or loan any monies or property to the Company toenable it to effectuate such indemnification.

 

(b)                                 Tothe fullest extent permitted by law, expenses (including legal fees andexpenses) incurred by an Indemnitee who is indemnified pursuant to Section 8.6(a) indefending any claim, demand, action, suit or proceeding shall, from time totime, be advanced by the Company prior to the final disposition of such claim,demand, action, suit or proceeding upon receipt by the Company of anyundertaking by or on behalf of the Indemnitee to repay such amount if it shallbe determined that the Indemnitee is not entitled to be indemnified asauthorized in this Section 8.6.

 

(c)                                  Theindemnification provided by this Section 8.6 shall be in addition to anyother rights to which an Indemnitee may be entitled under any agreement,pursuant to any vote of the Members, as a matter of law or otherwise, both asto actions in the Indemnitee’s capacity as an Indemnitee and as to actions inany other capacity (including in its capacity as general partner of the MLPunder the MLP Agreement), and shall continue as to an Indemnitee who has ceasedto serve in such capacity and shall inure to the benefit of the heirs,successors, assigns and administrators of the Indemnitee.

 

(d)                                 TheCompany may purchase and maintain (or reimburse Shipping Master or itsAffiliates for the cost of) insurance, on behalf of the Company Board, itsAffiliates and such other Persons as the Company Board shall determine, againstany liability that may be asserted against or expense that may be incurred bysuch Person in connection with the Company’s activities or such Person’sactivities on behalf of the Company, regardless of whether the Company would havethe power to indemnify such Person against such liability under the provisionsof this Agreement.

 

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(e)                                  Forpurposes of this Section 8.6, the Company shall be deemed to haverequested an Indemnitee to serve as fiduciary of an employee benefit planwhenever the performance by it of its duties to the Company also imposes dutieson, or otherwise involves services by, it to the plan or participants orbeneficiaries of the plan; excise taxes assessed on an Indemnitee with respectto an employee benefit plan pursuant to applicable law shall constitute “fines”within the meaning of Section 8.6(a); and action taken or omitted by itwith respect to any employee benefit plan in the performance of its duties fora purpose reasonably believed by it to be in the best interest of theparticipants and beneficiaries of the plan shall be deemed to be for a purposewhich is in, or not opposed to, the best interests of the Company.

 

(f)                                    Inno event may an Indemnitee subject the Members to personal liability by reasonof the indemnification provisions set forth in this Agreement.

 

(g)                                 AnIndemnitee shall not be denied indemnification in whole or in part under this Section 8.6because the Indemnitee had an interest in the transaction with respect to whichthe indemnification applies if the transaction was otherwise permitted by theterms of this Agreement.

 

(h)                                 Theprovisions of this Section 8.6 are for the benefit of the Indemnitees,their heirs, successors, assigns and administrators and shall not be deemed tocreate any rights for the benefit of any other Persons.

 

(i)                                     Noamendment, modification or repeal of this Section 8.6 or any provisionhereof shall in any manner terminate, reduce or impair the right of any past,present or future Indemnitee to be indemnified by the Company, nor theobligations of the Company to indemnify any such Indemnitee under and inaccordance with the provisions of this Section 8.6 as in effectimmediately prior to such amendment, modification or repeal with respect toclaims arising from or relating to matters occurring, in whole or in part,prior to such amendment, modification or repeal, regardless of when such claimsmay arise or be asserted.

 

Section 8.7                                      Liabilityof Indemnitees.

 

(a)                                  Notwithstandinganything to the contrary set forth in this Agreement or the MLP Agreement, noIndemnitee shall be liable for monetary damages to the Company, the Members, theMLP, the Assignees or any other Persons who have acquired interests in theCompany or MLP Securities, for losses sustained or liabilities incurred as aresult of any act or omission of an Indemnitee unless there has been a finaland non-appealable judgment entered by a court of competent jurisdictiondetermining that, in respect of the matter in question, the Indemnitee acted inbad faith or engaged in fraud, willful misconduct or gross negligence or, inthe case of a criminal matter, acted with knowledge that the Indemnitee’sconduct was criminal.

 

(b)                                 Subjectto its obligations and duties set forth in Section 8.1(a), the CompanyBoard may exercise any of the powers granted to it by this Agreement andperform any of the duties imposed upon it hereunder either directly or by orthrough its agents, and the Company Board shall not be responsible for anymisconduct or negligence on the part of any such agent appointed by the CompanyBoard in good faith.

 

(c)                                  Tothe extent that, at law or in equity, an Indemnitee has duties (includingfiduciary duties) and liabilities relating thereto to the Company or to theMembers, the Company Board and any other Indemnitee acting in connection withthe Company’s business or affairs shall not be liable to the Company or to anyMember for its good faith reliance on the provisions of this Agreement.  The provisions of this Agreement, to theextent that they restrict or otherwise modify the duties and liabilities

 

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of anIndemnitee otherwise existing at law or in equity, are agreed by the Members toreplace such other duties and liabilities of such Indemnitee.

 

(d)                                 Anyamendment, modification or repeal of this Section 8.7 or any provisionhereof shall be prospective only and shall not in any way affect thelimitations on the liability of the Indemnitees under this Section 8.7 asin effect immediately prior to such amendment, modification or repeal withrespect to claims arising from or relating to matters occurring, in whole or inpart, prior to such amendment, modification or repeal, regardless of when suchclaims may arise or be asserted.

 

(e)                                  NoMember shall have any duty to the Company or any Member of the Company exceptas expressly set forth herein or in other written agreements.  No Member, Manager or Officer of the Companyshall be liable to the Company or to any Member for any loss or damagesustained by the Company or any Member (including without limitation as aresult of its investment in the Company), unless the loss or damage shall havebeen the result of gross negligence, fraud or intentional misconduct by the Member,Manager or Officer in question or, in the case of an Officer, breach of suchPerson’s duties pursuant to Section 8.2(c).  In performing his or her duties, each suchPerson shall be entitled to rely in good faith on the provisions of thisAgreement and on information, opinions, reports or statements (includingfinancial statements and information, opinions, reports or statements as to thevalue or amount of the assets, liabilities, profits or losses of the Company orany facts pertinent to the existence and amount of assets from whichdistributions to Members might properly be paid) of the following other Personsor groups: one or more Officers or employees of the Company, any attorney,independent accountant, appraiser or other expert or professional employed orengaged by or on behalf of the Company, the Company Board or any other Personwho has been selected with reasonable care by or on behalf of the Company orthe Company Board, in each case as to matters which such relying Personreasonably believes to be within such other Person’s competence.  The preceding sentence shall in no way limitany Person’s right to rely on information to the extent provided in Section 18-406of the Act.  No Member, Manager orOfficer of the Company shall be personally liable under any judgment of acourt, or in any other manner, for any debt, obligation or liability of theCompany, whether that liability or obligation arises in contract, tort orotherwise, solely by reason of being a Member, Manager or Officer of the Companyor any combination of the foregoing.  Theprovisions of this Agreement, to the extent that they expand or restrict theduties and liabilities of a Member, Manager or Officer otherwise existing atlaw or in equity, are agreed by each of the Members to modify to that extentsuch duties and liabilities of the Members, Managers or Officers.

 

Section 8.8                                      OtherMatters Concerning the Company Board.

 

(a)                                  TheCompany Board may rely and shall be protected in acting or refraining fromacting upon any resolution, certificate, statement, instrument, opinion,report, notice, request, consent, order, bond, debenture or other paper ordocument believed by it to be genuine and to have been signed or presented bythe proper party or parties.

 

(b)                                 TheCompany Board and any committee thereof may consult with legal counsel,accountants, appraisers, management consultants, investment bankers and otherconsultants and advisers selected by it, and any act taken or omitted to betaken in reliance upon the opinion (including an Opinion of Counsel) of suchPersons as to matters that the Company Board reasonably believes to be withinsuch Person’s professional or expert competence shall be conclusively presumedto have been done or omitted in good faith and in accordance with such opinion.

 

(c)                                  TheCompany Board shall have the right, in respect of any of its powers orobligations hereunder, to act through any of its duly authorized officers, aduly appointed attorney or attorneys-in-fact or the duly authorized officers ofthe Company.

 

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(d)                                 Anystandard of care and duty imposed by this Agreement or under the Act or anyapplicable law, rule or regulation shall be modified, waived or limited,to the extent permitted by law, as required to permit the Company Board to actunder this Agreement or any other agreement contemplated by this Agreement andto make any decision pursuant to the authority prescribed in this Agreement, solong as such action is reasonably believed by the Company Board to be in, ornot inconsistent with, the best interests of the Company.

 

Section 8.9                                      Relianceby Third Parties.  Notwithstandinganything to the contrary in this Agreement, any Person dealing with the Companyshall be entitled to assume that the Company Board and any Officer authorizedby the Company Board to act on behalf of and in the name of the Company hasfull power and authority to encumber, sell or otherwise use in any manner anyand all assets of the Company and to enter into any authorized contracts onbehalf of the Company, and such Person shall be entitled to deal with the CompanyBoard or any such Officer as if it were the Company’s sole party in interest,both legally and beneficially. Each Member hereby waives any and all defensesor other remedies that may be available against such Person to contest, negateor disaffirm any action of the Company Board or any such officer in connectionwith any such dealing. In no event shall any Person dealing with the CompanyBoard or any such officer or its representatives be obligated to ascertain thatthe terms of the Agreement have been complied with or to inquire into thenecessity or expedience of any act or action of the Company Board or any suchofficer or its representatives. Each and every certificate, document or otherinstrument executed on behalf of the Company by the Company Board or itsrepresentatives shall be conclusive evidence in favor of any and every Personrelying thereon or claiming thereunder that (a) at the time of theexecution and delivery of such certificate, document or instrument, thisAgreement was in full force and effect, (b) the Person executing anddelivering such certificate, document or instrument was duly authorized andempowered to do so for and on behalf of the Company and (c) suchcertificate, document or instrument was duly executed and delivered inaccordance with the terms and provisions of this Agreement and is binding uponthe Company.

 

**ARTICLE IXBOOKS, RECORDS, ACCOUNTING AND REPORTS**

 

Section 9.1                                      Recordsand Accounting.  The Company Boardshall keep or cause to be kept at the principal office of the Companyappropriate books and records with respect to the Company’s business, includingall books and records necessary to provide to the Members any informationrequired to be provided pursuant to Section 3.3(a). Any books and recordsmaintained by or on behalf of the Company in the regular course of itsbusiness, including books of account and records of Company proceedings, may bekept on, or be in the form of, computer disks, hard drives, punch cards,magnetic tape, photographs, micrographics or any other information storagedevice; *provided*, that the booksand records so maintained are convertible into clearly legible written formwithin a reasonable period of time. The books of the Company shall bemaintained, for financial reporting purposes, on an accrual basis in accordancewith United States generally accepted accounting principles consistentlyapplied.

 

Section 9.2                                      FiscalYear.  The fiscal year of the Companyshall be a fiscal year ending December 31 (the “Fiscal Year”).

 

**ARTICLE XTAX MATTERS**

 

Section 10.1                                TaxReturns and Information.  The Companyshall timely file all returns of the Company that are required for federal,state and local income tax purposes on the basis of the accrual method and ataxable year ending on December 31. The tax information reasonablyrequired by the Members for federal and state income tax reporting purposeswith respect to a taxable year shall be

 

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furnished to them within 90 days of the closeof the calendar year in which the Company’s taxable year ends. Theclassification, realization and recognition of income, gain, losses anddeductions and other items shall be on the accrual method of accounting forfederal income tax purposes.

 

Section 10.2                                TaxElections.

 

(a)                                  TheCompany shall not elect to be treated as a corporation under the Code.

 

(b)                                 Exceptas otherwise provided herein, the Company Board shall determine whether theCompany should make any other elections permitted by the Code.

 

Section 10.3                                TaxMatters Partner.  Shipping Mastershall be the “Tax Matters Partner” and shall also be the “notice partner”within the meaning of Section 6223 of the Code.  The Tax Matters Partner is authorized torepresent the Company before the Internal Revenue Service and any othergovernmental agency with jurisdiction, and to sign such consents and to enterinto settlements and other agreements with such agencies as the Company Boarddeems necessary or advisable.  Promptlyfollowing the written request of the Tax Matters Partner, the Company shall, tothe fullest extent permitted by law, reimburse and indemnify the Tax MattersPartner for all reasonable expenses, including reasonable legal and accountingfees, claims, liabilities, losses and damages incurred by the Tax MattersPartner in connection with any administrative or judicial proceeding (i) withrespect to the tax liability of the Company and/or (ii) with respect tothe tax liability of the Members in connection with the operations of theCompany.  The provisions of this Section 10.3shall survive the termination of the Company or the termination of any Member’sinterest in the Company and shall remain binding on the Members for as long aperiod of time as is necessary to resolve with the Internal Revenue Service anyand all matters regarding the Federal income taxation of the Company or theMembers.

 

**ARTICLE XIADMISSION OF MEMBERS**

 

Section 11.1                                Admissionof Substituted Members.

 

By transfer of a Membership Interest in accordance with Article IV,the transferor shall be deemed to have given the transferee the right to seekadmission as a Substituted Member subject to the conditions of, and in themanner permitted under, this Agreement. A transferor of a Membership Interest shall, however, only have (a) theauthority to convey to a purchaser or other transferee and (b) the rightto request admission as a Substituted Member to such purchaser or othertransferee in respect of the transferred Membership Interests.  Each transferee of a Membership Interestshall be an Assignee and be deemed to have applied to become a SubstitutedMember with respect to the Interests so transferred to such Person.  Such Assignee shall become a SubstitutedMember (x) at such time as the Company Board’s consent thereto, which consentmay be given or withheld in the Company Board’s discretion, and (y) when anysuch admission is shown on the books and records of the Company.  If such consent is withheld, such transfereeshall remain an Assignee.  An Assigneeshall have an interest in the Company equivalent to that of a Member withrespect to allocations and distributions, including liquidating distributions,of the Company.  With respect to votingrights attributable to Membership Interests that are held by Assignees, theCompany Board shall be deemed to be the Member with respect thereto and shall,in exercising the voting rights in respect of such Interests on any matter,vote such Membership Interests at the written direction of the Assignee.  If no such written direction is received,such Membership Interests will not be voted. An Assignee shall have no other rights of a Member.

 

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Section 11.2                                Admissionof Additional Members.

 

(a)                                  APerson (other than a Substituted Member) who makes a Capital Contribution tothe Company or acquires Company Securities in accordance with this Agreementshall be admitted to the Company as an Additional Member only upon furnishingto the Company Board (i) evidence of acceptance in form satisfactory tothe Company Board of all of the terms and conditions of this Agreement,including the power of attorney granted in Section 2.6, and (ii) suchother documents or instruments as may be required in the discretion of the CompanyBoard to effect such Person’s admission as an Additional Member.

 

(b)                                 Notwithstandinganything to the contrary in this Section 11.2, no Person shall be admittedas an Additional Member without the consent of the Company Board, which consentmay be given or withheld in the Company Board’s discretion. The admission ofany Person as an Additional Member shall become effective on the date uponwhich the name of such Person is recorded as such in the books and records ofthe Company, following the consent of the Company Board to such admission.

 

Section 11.3                                Amendmentof Agreement and Certificate of Formation. To effect the admission to the Company of any Member, the Company Boardshall take all steps necessary and appropriate under the Act to amend therecords of the Company to reflect such admission and, if necessary, to prepareas soon as practicable an amendment to this Agreement and, if required by law,the Company Board shall prepare and file an amendment to the Certificate ofFormation, and the Company Board may for this purpose, among others, exercisethe power of attorney granted pursuant to Section 2.6.

 

**ARTICLE XIIWITHDRAWAL OF MEMBERS; FORFEITURE OF UNITS**

 

Section 12.1                                Withdrawalof Members.  Without the priorwritten consent of the Company Board, which may be granted or withheld in itssole discretion, no Member shall have the right to withdraw from the Company.

 

Section 12.2                                Treatmentof Class B Units upon Termination of Employment of Executive Member.  Except as the Company Board may otherwiseagree:

 

(i)                                     upon anytermination of the employment by Shipping Master or its Subsidiaries of anyExecutive Member for “justifiable cause” (as such term is defined in suchExecutive Member’s Services Agreement), or if such Executive Member terminateshis employment without “good reason” (as such term is defined in such ExecutiveMember’s Services Agreement), other than by reason of retirement, the Class BUnits then held by such Executive Member shall be forfeited and shall cease tobe outstanding;

 

(ii)                                  upon any terminationof the employment by Shipping Master or its Subsidiaries of any ExecutiveMember other than for justifiable cause, death or disability (as such term isdefined in his Services Agreement), or he terminates his employment for good reason,none of his Class B Units shall be subject to forfeit;

 

(iii)                               upon any termination ofthe employment by Shipping Master or its Subsidiaries of any Executive Member dueto his death or disability, he shall forfeit a number of Class B Unitsequal to the product determined by multiplying the number of Class B Unitsowned by him by a fraction, the numerator of which is the number of SubordinatedUnits then outstanding and the denominator of which is 5,272,341; and

 

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(iv)                              upon any retirement byExecutive from employment, he shall forfeit a number of Class B Unitsequal to the product determined by multiplying the number of Class B Unitsowned by him by a fraction, the numerator of which is the number ofSubordinated Units then outstanding and the denominator of which is 5,272,341.

 

The Company Board may, from time to time in its discretion, reissue anyforfeited Class B Units to new Executive Members who are admitted to theCompany pursuant to the terms of this Agreement.

 

**ARTICLE XIIIDISSOLUTION AND LIQUIDATION**

 

Section 13.1                                Dissolution.  The Company shall not be dissolved by theadmission of Substituted Members or Additional Members in accordance with theterms of this Agreement. The Company shall dissolve, and its affairs shall bewound up, upon:

 

(a)                                  anelection to dissolve the Company by the Company Board that is approved by allof the Members;

 

(b)                                 theentry of a decree of judicial dissolution of the Company pursuant to theprovisions of the Act;

 

(c)                                  thesale of all or substantially all of the assets and properties of the MLP andits Subsidiaries; or

 

(d)                                 thedissolution of the MLP.

 

Section 13.2                                Liquidator.  Upon dissolution of the Company, the CompanyBoard shall select one or more Persons to act as Liquidator. The Liquidatorshall be entitled to receive such compensation for its services as may beapproved by a majority of the Members. The Liquidator shall agree not to resignat any time without 15 days’ prior notice and may be removed at any time, withor without cause, by notice of removal approved by Members holding amajority-in-interest of the Membership Interests.  Upon dissolution, removal or resignation ofthe Liquidator, a successor and substitute Liquidator (who shall have andsucceed to all rights, powers and duties of the original Liquidator) shallwithin 30 days thereafter be approved by holders of at least a majority of theMembers. The right to approve a successor or substitute Liquidator in themanner provided herein shall be deemed to refer also to any such successor orsubstitute Liquidator approved in the manner herein provided. Except asexpressly provided in this Article XIII, the Liquidator approved in themanner provided herein shall have and may exercise, without furtherauthorization or consent of any of the parties hereto, all of the powersconferred upon the Company Board under the terms of this Agreement (but subjectto all of the applicable limitations, contractual and otherwise, upon theexercise of such powers) to the extent necessary or desirable in the good faithjudgment of the Liquidator to carry out the duties and functions of theLiquidator hereunder for and during such period of time as shall be reasonablyrequired in the good faith judgment of the Liquidator to complete the windingup and liquidation of the Company as provided for herein.

 

Section 13.3                                Liquidation.  The Liquidator shall proceed to dispose ofthe assets of the Company, discharge its liabilities, and otherwise wind up itsaffairs in such manner and over such period as the Liquidator determines to bein the best interest of the Members, subject to Section 18-804 of the Actand the following:

 

(a)                                  Theassets may be disposed of by public or private sale or by distribution in kindto one or more Members on such terms as the Liquidator and such Member orMembers may

 

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agree. If any property is distributed in kind, the Member receiving theproperty shall be deemed for purposes of Section 13.3(c) to havereceived cash equal to its fair market value; and contemporaneously therewith,appropriate cash distributions must be made to the other Members. TheLiquidator may, in its absolute discretion, defer liquidation or distributionof the Company’s assets for a reasonable time if it determines that animmediate sale or distribution of all or some of the Company’s assets would beimpractical or would cause undue loss to the Members. The Liquidator may, inits absolute discretion, distribute the Company’s assets, in whole or in part,in kind if it determines that a sale would be impractical or would cause undueloss to the Members.

 

(b)                                 Liabilitiesof the Company include amounts owed to Members otherwise than in respect oftheir distribution rights under Article VII. With respect to any liabilitythat is contingent, conditional or unmatured or is otherwise not yet due andpayable, the Liquidator shall either settle such claim for such amount as itthinks appropriate or establish a reserve of cash or other assets to providefor its payment. When paid, any unused portion of the reserve shall bedistributed as additional liquidation proceeds.

 

(c)                                  Allproperty and all cash in excess of that required to discharge liabilities asprovided in Section 13.3(b) shall be distributed to the Members in accordancewith Section 7.2 (assuming for this purpose that all Subordinated Unitshad been converted into Common Units).

 

It is theMembers’ intent that, after giving effect to all allocations of Net Profits orNet Losses for the current and all prior Taxable Years of the Company under Article VII,Unitholders’ positive Capital Account balances shall be in proportion to theamounts to be distributed pursuant to this Section 13.3(c).  In furtherance thereof, notwithstanding theprovisions of Article VII, items of income, gain, deduction and loss forthe final Taxable Year of the Company shall be allocated to the Unitholders’Capital Accounts in such a manner that the Unitholders’ positive CapitalAccount balances shall be, immediately prior to the distribution pursuant tothis Section 13.3(c), in such proportion. Distributions pursuant to this Section 13.3(c) shall be madeby the end of the Taxable Year of the Company during which the liquidationoccurs (or, if later, 90 days after the date of the liquidation).

 

Section 13.4                                Cancellationof Certificate of Formation.  Uponthe completion of the distribution of Company cash and property as provided in Section 13.3in connection with the liquidation of the Company, the Company shall beterminated and the Certificate of Formation, as well as all qualifications ofthe Company as a foreign limited liability company in jurisdictions other thanthe State of Delaware, shall be canceled and such other actions as may benecessary to terminate the Company shall be taken.

 

Section 13.5                                Returnof Capital Contributions.  Neitherthe MLP nor Shipping Master shall be liable for, nor have any obligation tocontribute or loan any monies or property to the Company to enable it toeffectuate, the return of the Capital Contributions of the Members, or anyportion thereof, it being expressly understood that any such return shall bemade solely from Company assets.

 

Section 13.6                                Waiverof Partition.  To the maximum extentpermitted by law, each Member hereby waives any right to partition of theCompany property.

 

Section 13.7                                CapitalAccount Restoration.  No Member shallhave any obligation to restore any negative balance in its Capital Account uponliquidation of the Company.

 

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**ARTICLE XIVAMENDMENT OF AGREEMENT**

 

Section 14.1                                Amendmentto be Adopted Solely by the Company Board. Each Member agrees that the Company Board, without the approval of anyMember, may amend any provision of this Agreement and execute, swear to,acknowledge, deliver, file and record whatever documents may be required inconnection therewith, to reflect:

 

(a)                                  a change in the nameof the Company, the location of the principal place of business of the Company,the registered agent of the Company or the registered office of the Company;

 

(b)                                 admission,substitution, withdrawal or removal of Members in accordance with thisAgreement;

 

(c)                                  a change that, in thesole discretion of the Company Board, is necessary or advisable to qualify orcontinue the qualification of the Company as a limited liability company inwhich the Members have limited liability under the laws of any state or toensure that neither the Company nor the MLP will be treated as an associationtaxable as a corporation or otherwise taxed as an entity for federal income taxpurposes;

 

(d)                                 a change that, in thediscretion of the Company Board, (i) does not adversely affect the Membersin any material respect, (ii) is necessary or advisable to (A) satisfyany requirements, conditions or guidelines contained in any opinion, directive,order, ruling or regulation of any federal or state agency or judicialauthority or contained in any federal or state statute (including the Act) or (B) facilitatethe trading of any MLP Security (including the division of any class or classesof outstanding limited partner interests of the MLP into different classes tofacilitate uniformity of tax consequences within such classes of limitedpartner interests of the MLP) or comply with any rule, regulation, guideline orrequirement of any National Securities Exchange on which such limited partnerinterests are or will be listed for trading, compliance with any of which the CompanyBoard determines in its discretion to be in the best interests of the MLP andthe limited partners of the MLP, (iii) is required to effect the intentexpressed in the Registration Statement or the intent of the provisions of thisAgreement or is otherwise contemplated by this Agreement or (iv) isrequired to conform the provisions of this Agreement with the provisions of theMLP Agreement as the provisions of the MLP Agreement may be amended,supplemented or restated from time to time;

 

(e)                                  a change in thefiscal year or taxable year of the Company and any changes that, in thediscretion of the Company Board, are necessary or advisable as a result of achange in the fiscal year or taxable year of the Company;

 

(f)                                    an amendment thatis necessary, in the Opinion of Counsel, to prevent the Company or itsdirectors, officers, trustees or agents from in any manner being subjected tothe provisions of the Investment Company Act of 1940, as amended, theInvestment Advisers Act of 1940, as amended, or “plan asset” regulationsadopted under the Employee Retirement Income Security Act of 1974, as amended,regardless of whether such are substantially similar to plan asset regulationscurrently applied or proposed by the United States Department of Labor;

 

(g)                                 any amendmentexpressly permitted in this Agreement to be made by the Company Board actingalone;

 

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(h)                                 an amendment that, inthe discretion of the Company Board, is necessary or advisable to reflect,account for and deal with appropriately the formation by the Company of, orinvestment by the Company in, any corporation, partnership, joint venture,limited liability company or other entity, in connection with the conduct bythe Company of activities permitted by the terms of Section 2.4; or

 

(i)                                     any otheramendments substantially similar to the foregoing.

 

Notwithstanding anything herein to the contrary, the definition of “PercentageInterest” and Sections 4.4, 4.5, 7.2 and 12.12 and this sentence of Section 14.1may not be amended in a manner adverse to the holders of the Class B Unitsunless such amendment shall be approved by holders of a majority-in-interest ofthe Class B Units.

 

Section 14.2                                AmendmentProcedures.  Except with respect toamendments of the type described in Section 14.1, all amendments to thisAgreement shall be made in accordance with the following requirements.  Amendments to this Agreement may be proposedonly by or with the consent of the Company Board which consent may be given orwithheld in its sole discretion.  Aproposed amendment shall be effective upon its approval by the Members.

 

**ARTICLE XVGENERAL PROVISIONS**

 

Section 15.1                                Addressesand Notices.  Any notice, demand,request, report or proxy materials required or permitted to be given or made toa Member under this Agreement shall be in writing and shall be deemed given ormade when delivered in person or when sent by first class United States mail orby other means of written communication to the Member at the address providedby such member. Any notice to the Company shall be deemed given if received bythe Company Board at the principal office of the Company designated pursuant toSection 2.3. The Company Board may rely and shall be protected in relyingon any notice or other document from a Member, Assignee or other Person ifbelieved by it to be genuine.

 

Section 15.2                                FurtherAction.  The parties shall executeand deliver all documents, provide all information and take or refrain fromtaking action as may be necessary or appropriate to achieve the purposes ofthis Agreement.

 

Section 15.3                                BindingEffect.  This Agreement shall bebinding upon and inure to the benefit of the parties hereto and their heirs,executors, administrators, successors, legal representatives and permittedassigns.

 

Section 15.4                                Integration.  This Agreement constitutes the entire agreementamong the parties hereto pertaining to the subject matter hereof and supersedesall prior agreements and understandings pertaining thereto.

 

Section 15.5                                Creditors.  None of the provisions of this Agreementshall be for the benefit of, or shall be enforceable by, any creditor of theCompany.

 

Section 15.6                                Waiver.  No failure by any party to insist upon thestrict performance of any covenant, duty, agreement or condition of thisAgreement or to exercise any right or remedy consequent upon a breach thereofshall constitute waiver of any such breach of any other covenant, duty,agreement or condition.

 

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Section 15.7                                Counterparts.  This Agreement may be executed incounterparts, all of which together shall constitute an agreement binding onall the parties hereto, notwithstanding that all such parties are notsignatories to the original or the same counterpart. Each party shall becomebound by this Agreement immediately upon affixing its signature hereto,independently of the signature of any other party.

 

Section 15.8                                ApplicableLaw.  This Agreement shall beconstrued in accordance with and governed by the laws of the State of Delaware,without regard to the principles of conflicts of law.

 

Section 15.9                                Invalidityof Provisions.  If any provision ofthis Agreement is or becomes invalid, illegal or unenforceable in any respect,the validity, legality and enforceability of the remaining provisions containedherein shall not be affected thereby.

 

Section 15.10                          Consentof Members.  Each Member herebyexpressly consents and agrees that, whenever in this Agreement it is specifiedthat an action may be taken upon the affirmative vote or consent of less thanall of the Members, such action may be so taken upon the concurrence of lessthan all of the Members and each Member shall be bound by the results of suchaction.

 

*                                         *                                         *                                         *                                         *

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement asof the date first written above.

 
|   | UNITED STATES SHIPPING MASTER LLC |
|--------|-----------------------------------|
|   |                              |
|   |                              |
|   | By:                               | /s/ Paul Gridley |   |
|   |                              | Name: Paul Gridley |
|   |                              | Title: Chairman |
|   |                              |   |
|   |                              |   |
|   | s/s Albert Bergeron               |   |
|   |                              | Albert Bergeron |
|   |                              |   |
|   |                              |   |
|   | s/s Calvin Chew                   |   |
|   |                              | Calvin Chew |
|   |                              |   |
|   |                              |   |
|   | /s/ Alan Colletti                 |   |
|   |                              | Alan Colletti |
|   |                              |   |
|   |                              |   |
|   | /s/ Joseph Gehegan                |   |
|   |                              | Joseph Gehegan |
|   |                              |   |
|   |                              |   |
|   | /s/ Paul Gridley                  |   |
|   |                              | Paul Gridley |
|   |                              |   |
|   |                              |   |
|   | /s/ Jeff  Miller                  |   |
|   |                              | Jeff Miller |
|        |                                   |  |  |  |

 

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SCHEDULE A

 
| **Member/Address** | ** ** | **Class of  Units** | ** ** | **Initial Number  Of Units** | ** ** |
|--------------------|------------|--------------------------|------------|------------------------------|------------|
| Shipping  Master   |       | Class A             |       | 900                          |       |
| Albert  Bergeron   |       | Class B             |       | 15                           |       |
| Calvin Chew        |       | Class B             |       | 5                            |       |
| Alan  Colletti     |       | Class B             |       | 15                           |       |
| Joseph  Gehegan    |       | Class B             |       | 25                           |       |
| Paul Gridley       |       | Class B             |       | 25                           |       |
| Jeff Miller        |       | Class B             |       | 15                           |       |
|               |       |                     |       | 1,000                        |       |

 

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