Document:

Exhibit 10.5

 

OMNIBUS AGREEMENT

AMONG

UNITED STATES
SHIPPING MASTER LLC

US SHIPPING GENERAL
PARTNER LLC

U.S. SHIPPING
OPERATING LLC

AND

U.S. SHIPPING
PARTNERS L.P.

 

OMNIBUS AGREEMENT

THIS
OMNIBUS AGREEMENT is entered into on, and effective as of, the Closing Date,
among United States Shipping Master LLC, a Delaware limited liability company
(“Shipping Master”), US Shipping General Partner LLC, a Delaware limited
liability company (including any permitted successors and assigns under the MLP
Agreement (as defined herein), the “General Partner”), for itself and on behalf
of the MLP in its capacity as general partner, U.S. Shipping Operating LLC, a
Delaware limited liability company (the “OLLC”), and U.S. Shipping Partners
L.P., a Delaware limited partnership (the “MLP”).  The above-named entities are sometimes referred to in this
Agreement each as a “Party” and collectively as the “Parties”.

R E C I T A L S:

The
Parties desire by their execution of this Agreement to evidence their
understanding, (i) as more fully set forth in Article II of this
Agreement, with respect to certain non-competition obligations on the part of
the Shipping Master Entities (as defined herein) during the term of this
Agreement; (ii) as more fully set forth in Article III of this Agreement,
with respect to certain indemnification obligations of Shipping Master; and
(iii) as more fully set forth in Article IV of this Agreement, with respect to
a tax payment loan to be made by the General Partner to the MLP.

In
consideration of the premises and the covenants, conditions, and agreements
contained herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Parties hereby agree as
follows:

ARTICLE
I

Definitions

1.1  Definitions.  (a) Capitalized terms used herein but not defined shall
have the meanings given them in the MLP Agreement.

(a)           As
used in this Agreement, the following terms shall have the respective meanings
set forth below:

“Agreement” means this Omnibus
Agreement, as it may be amended, modified, or supplemented from time to time in
accordance with the terms hereof.

“Assets” has the meaning given such term in
Section 3.1.

“Change of Control” means, with respect to any
Person (the “Applicable Person”), any of the following events:  (i) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all or
substantially all of the Applicable Person’s assets  to any other Person, unless immediately following such sale,
lease, exchange or other transfer such assets are owned, directly or
indirectly, by the Applicable Person; (ii) the dissolution or liquidation
of the Applicable Person; (iii) the consolidation or merger of the
Applicable Person with or into another Person pursuant to 

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a transaction in which the outstanding Voting Securities of  the Applicable Person are changed into or
exchanged for cash, securities or other property, other than any such
transaction where (a) the outstanding Voting Securities of the Applicable
Person are changed into or exchanged for Voting Securities of the surviving
corporation or its parent and (b) the holders of the Voting Securities of
the Applicable Person immediately prior to such transaction own, directly or
indirectly, not less than a majority of the outstanding Voting Securities of
the surviving corporation or its parent immediately after such transaction; and
(iv) a “person” or “group” (within the meaning of Sections 13(d) or
14(d)(2) of the Exchange Act) being or becoming the “beneficial owner” (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act) of more than 50%
of all of the then outstanding Voting Securities of the Applicable Person,
except in a merger or consolidation which would not constitute a Change of
Control under clause (iii) above.

“Closing Date” means the date of the
closing of the initial public offering of common units representing limited
partner interests in the MLP.

“Conflicts Committee” has the meaning given such
term in the MLP Agreement.

“Contribution Agreement” has the meaning given such
term in the MLP Agreement.

“control” means the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through ownership of voting
securities, by contract or otherwise.

“Covered Environmental Losses” means all
environmental and toxic tort losses, damages, liabilities, claims, demands,
causes of action, judgments, settlements, fines, penalties, costs and expenses
(including, without limitation, court costs and reasonable attorney’s and
experts’ fees) of any and every kind or character, suffered or incurred by the
Partnership Group by reason of or arising out of:

(i)                    any violation or correction of violation of
Environmental Laws or

(ii)                   any event or condition associated with ownership
or operation of the Assets (including, without limitation, the presence of
Hazardous Substances on, under, about or migrating to or from the Assets or the
disposal or release of Hazardous Substances generated by operation of the
Assets at non-Asset locations) including, without limitation, (A) the cost and
expense of any investigation, assessment, evaluation, monitoring, containment,
cleanup, repair, restoration, remediation or other corrective action required
or necessary under Environmental Laws, (B) the cost or expense of the
preparation and implementation of any closure, remedial or corrective action or
other plans required or necessary under Environmental Laws and (C) the cost and
expense for any environmental or toxic tort pre-trial, trial or appellate legal
or litigation support work;

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but only to the extent that such violation complained of under clause
(i), or such events or conditions included in clause (ii), occurred before the
Closing Date and were unknown by the MLP and its management at the time of the
Closing Date.

“Environmental Laws” means all federal,
state, and local laws, statutes, rules, regulations, orders, judgments and
ordinances relating to protection of health and safety and the environment
including, without limitation, the federal Comprehensive Environmental
Response, Compensation and Liability Act, the Superfund Amendments and
Reauthorization Act, the Resource Conservation and Recovery Act, the Clean Air
Act, the Clean Water Act, the Safe Drinking Water Act, the Toxic Substances
Control Act, the Oil Pollution Act of 1990, the Hazardous Materials
Transportation Act, the Marine Mammal Protection Act, the Endangered Species
Act, the National Environmental Policy Act, and other environmental
conservation and protection laws, each as amended through the Closing Date.

“Exchange Act” means the Securities
Exchange Act of 1934, as amended.

“General Partner” has the meaning given such
term in the introduction to this Agreement.

“Hazardous Substance” means (a) any
substance that is designated, defined or classified as a hazardous waste,
hazardous material, pollutant, contaminant or toxic or hazardous substance, or
that is otherwise regulated under any Environmental Law, including, without
limitation, any hazardous substance as defined under the Comprehensive
Environmental Response, Compensation and Liability Act and (b) oil as defined
in the Oil Pollution Act of 1990, including without limitation petroleum, oil,
gasoline, natural gas, fuel oil, motor oil, waste oil, diesel fuel, jet fuel
and any other refined petroleum hydrocarbons.

“Market Value” means (a) with respect to a
Common Unit, the average closing sales price per Common Unit on the New York
Stock Exchange, or other exchange or quotation service on which the Common
Units may be listed, for the [five] consecutive trading days immediately
preceding the date of determination (the “Common
Unit Closing Price”) and (b) with respect to a Subordinated Unit,
the Common Unit Closing Price, discounted by __%.

“Minimum Quarterly Distribution” has the
meaning given such term in term in the MLP Agreement.

“MLP” has the meaning given such term in
the introduction to this Agreement.

“MLP Agreement” means the Amended and
Restated Agreement of Limited Partnership of the MLP, dated as of the Closing
Date, as such agreement is in effect on the Closing Date, to which reference is
hereby made for all purposes of this Agreement. An amendment or modification to
the MLP Agreement subsequent to the Closing Date shall be given effect for the
purposes of this Agreement only if it has received the 

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approval that would be required pursuant to Section 6.6 hereof if such
amendment or modification were an amendment or modification of this Agreement.

“OLLC” has the meaning given such term in the
introduction to this Agreement.

“Partnership Entities” means the General Partner
and each member of the Partnership Group.

“Partnership Group” means the MLP, the OLLC and
any Subsidiary of any such Person.

“Person” means a corporation,
partnership, joint venture, trust, limited liability company, unincorporated
organization or any other entity.

“Prospectus” means the final prospectus,
dated October __, 2004, relating to the initial public offering of common units
representing limited partner interests in the MLP, as filed with Securities and
Exchange Commission pursuant to Rule 424(b) under the Securities Act of 1933.

“Restricted Businesses” has the meaning given such
term in Section 2.1.

“Retained Assets” has the meaning given such
term in the Contribution Agreement.

“Shipping Master Entities” means Shipping Master and
any Person controlled by Shipping Master, in each case other than the
Partnership Entities.

“Sponsor Units” means the Common Units and
Subordination Units received by Shipping Master pursuant to the Contribution
Agreement in connection with the formation of the MLP.

“Subsidiary” has the meaning given such
term in the MLP Agreement.

“Tax Payment Loan” has the meaning given such
term in Section 6.1.

“Unit” has the meaning given such term in the MLP
Agreement.

“Voting Securities” means securities of any
class of Person entitling the holders thereof to vote in the election of
members of the board of directors or other similar governing body of the
Person.

ARTICLE
II

Business Opportunities

2.1  Restricted Businesses.  For so long as
US Shipping General Partner LLC (or any Person that directly, or indirectly through
one or more intermediaries, is controlled by or under common control with
Shipping Master) is the general partner of the MLP, each of 

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the Shipping Master Entities shall
be prohibited from engaging in or acquiring any interest in (i) any business
providing marine transportation, distribution and logistics services or (ii)
any business that generates “qualifying income” within the meaning of
Section 7704(d) at the time such business is first proposed to be engaged
in by any such Shipping Master Entity (“Restricted Businesses”).  Notwithstanding the foregoing, a Shipping
Master Entity may own and/or operate any of the Retained Assets.

2.2  Conflicts Committee Exception.  Notwithstanding any
provision of Section 2.1 to the contrary, the Shipping Master Entities may
engage in any Restricted Business with the approval of the Conflicts Committee.

2.3  Scope of
Prohibition.  Except as provided in this Article II and
the MLP Agreement, each Shipping Master Entity shall be free to engage (whether
directly or through the acquisition of equity or debt interests in any Person)
in any business activity whatsoever, including those that may be in direct
competition with any Partnership Entity.

2.4  Enforcement.  Each Shipping
Master Entity agrees and acknowledges that the Partnership Entities do not have
an adequate remedy at law for the breach by the Shipping Master Entity of the
covenants and agreements set forth in this Article II, and that any breach by
any Shipping Master Entity of the covenants and agreements set forth in this
Article II would result in irreparable injury to the Partnership Entities.  Each Shipping Master Entity further agrees
and acknowledges that any Partnership Entity may, in addition to the other
remedies which may be available to the Partnership Entities, file a suit in
equity to enjoin any Shipping Master Entity from such breach, and each Shipping
Master Entity consents to the issuance of injunctive relief to enforce the
provisions of Article II of this Agreement.

ARTICLE
III

Indemnification

3.1  Shipping Master
Indemnification.  Subject to the provisions of Section 3.2 and
Section 3.3, Shipping Master shall indemnify, defend and hold harmless the
Partnership Group from and against: (a) any Covered Environmental Losses
relating to the assets contributed by the Shipping Master Entities to the
Partnership Group prior to or on the Closing Date (the “Assets”) for a period
of five (5) years from the Closing Date; (b) the failure of the Partnership Group
to be the owner of such valid leasehold interests or fee ownership interests in
and to the Assets as are necessary to enable the Partnership Entities to own
and operate the Assets in substantially the same manner that the Assets were
owned and operated by the Shipping Master Entities immediately prior to the
Closing Date to the extent that the Shipping Master Entities are notified of
any of the foregoing within four (4) years of the Closing Date; (c) the failure
of the Partnership Entities to have on the Closing Date any consent or
governmental permit necessary to allow the Partnership Entities to own or
operate the Assets in substantially the same manner that the Assets were owned
and operated by the Shipping Master Entities immediately prior to the Closing
Date to the extent that the Shipping Master Entities are notified of any of the
foregoing within three (3) years of the Closing Date; (d) any events or
conditions 

 

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attributable to or associated with
the ownership or operation of the Retained Assets, whether occurring before or
after the Closing Date; and  (e) all federal, state and local income tax liabilities
attributable to the operation of the Assets prior to the Closing Date,
including any such income tax liabilities of the Shipping Master Entities that
may result from the consummation of the formation transactions for the
Partnership Group and the General Partner until 60 days after the expiration of
any applicable statute of limitations, but excluding any federal, state and
local income taxes reserved on the books of the Partnership Group on the
Closing Date.

3.2  Limitation
Regarding Indemnification.

(a)           The aggregate
liability of Shipping Master under Section 3.1(a) above shall not exceed $10.0 million.  Furthermore, no claim may be made against
Shipping Master for indemnification pursuant to Section 3.1(a) unless the
aggregate dollar amount of all claims for indemnification pursuant to such
section shall exceed $500,000, in which case Shipping Master shall be liable
for claims for indemnification only to the extent such aggregate amount exceeds
$500,000.

(b)            The aggregate liability of Shipping
Master under Sections 3.1(b) and 3.1(c) above shall not exceed $10.0
million.  Furthermore, no claim may be
made against Shipping Master for indemnification pursuant to Sections 3.1(b)
and 3.1(c) unless the aggregate dollar amount of all claims for indemnification
pursuant to such sections shall exceed $500,000, in which case Shipping Master
shall be liable for claims for indemnification only to the extent such
aggregate amount exceeds $500,000.

3.3  Indemnification
Procedures.

(a)           The members of the Partnership Group agree that within a
reasonable period of time after they become aware of facts giving rise to a
claim for indemnification pursuant to Section 3.1, they will provide notice
thereof in writing to Shipping Master specifying the nature of and specific
basis for such claim.

(b)           Shipping
Master shall have the right to control all aspects of the defense of (and any
counterclaims with respect to) any claims brought against the Partnership Group
that are covered by the indemnification set forth in Section 3.1,
including, without limitation, the selection of counsel, determination of
whether to appeal any decision of any court and the settling of any such matter
or any issues relating thereto; provided,
however, that no such settlement shall be entered into without the
consent (which consent shall not be unreasonably withheld) of the Partnership
Group unless it includes a full release of the Partnership Group from such
matter or issues, as the case may be.

(c)           The
members of the Partnership Group agree to cooperate fully with Shipping Master
with respect to all aspects of the defense of any claims covered by the
indemnification set forth in Section 3.1, including, without limitation,
the prompt furnishing to Shipping Master of any correspondence or other notice
relating thereto that the Partnership Group may receive, permitting the names
of the members of the 

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Partnership Group to be utilized in
connection with such defense, the making available to Shipping Master of any
files, records or other information of the Partnership Group that Shipping
Master considers relevant to such defense and the making available to Shipping
Master of any employees of the Partnership Group; provided, however, that in connection therewith Shipping
Master agrees to use reasonable efforts to minimize the impact thereof on the
operations of the Partnership Group and further agrees to maintain the
confidentiality of all files, records and other information furnished by a
member of the Partnership Group pursuant to this Section 3.3.  In no event shall the obligation of the
Partnership Group to cooperate with Shipping Master as set forth in the
immediately preceding sentence be construed as imposing upon the Partnership
Group an obligation to hire and pay for counsel in connection with the defense
of any claims covered by the indemnification set forth in this Article III; provided, however, that the members of the
Partnership Group may, at their own option, cost and expense, hire and pay for
counsel in connection with any such defense. 
Shipping Master agrees to keep any such counsel hired by the Partnership
Group reasonably informed as to the status of any such defense, but Shipping
Master shall have the right to retain sole control over such defense.

(d)           In
determining the amount of any loss, cost, damage or expense for which any of
the members of the Partnership Group is entitled to indemnification under this
Agreement, the gross amount of the indemnification will be reduced by (i) any
insurance proceeds realized by the Partnership Group, and such correlative
insurance benefit shall be net of any incremental insurance premium that
becomes due and payable by the Partnership Group as a result of such claim and
(ii) all amounts recovered by the Partnership Group under contractual
indemnities from third Persons.  The
Partnership hereby agrees to use commercially reasonable efforts to realize any
applicable insurance proceeds or amounts recoverable under such contractual
indemnities.

3.4  Restriction on
Transfer of Sponsor Units.

(a)           Through
and until the expiration of the indemnity set forth in Section 3.1(a) above,
Shipping Master hereby agrees not to sell, convey, transfer, pledge or
otherwise dispose of or encumber any of its Sponsor Units, unless immediately
following the closing of such sale, conveyance, transfer, pledge or other
disposal or encumbrance, Shipping Master shall retain a number of Sponsor Units
having, in the aggregate, a Market Value of not less than $10.0 million, less
any amounts paid by the General Partner pursuant to its indemnification
obligation under Section 3.1(a) prior to such determination.  Shipping Master shall have no obligation to
retain or hold any Units other than as set forth in this Section 3.4.

ARTICLE
IV

Tax Payment Loan and Repayment

4.1  Tax Payment
Loan. 
The General Partner hereby agrees to loan to the MLP an aggregate amount
(the “Tax Payment Loan”) equal to the lesser of (a) $770,000 and (b) the
estimated tax liability payments to be made (including federal and state income
taxes) for the year 2005 by USCS Chemical Pioneer, Inc., a [Delaware] corporation
and an 

 

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indirect wholly-owned subsidiary
of the MLP (“Chemical Pioneer Inc.”). 
The Tax Payment Loan shall be disbursed in four equal installments.  The General Partner shall make such
disbursements to the MLP within ten days after the payment of each quarterly
distribution made by the MLP to unitholders in 2005.  Shipping Master hereby agrees to provide any funds needed by the
General Partner in order to fulfill its obligations under this Section 4.1.

4.2  MLP Repayment
of Tax Payment Loan.

(a)           The
MLP hereby agrees to repay the General Partner in respect of the Tax Payment
Loan an aggregate amount equal to the Tax Payment Loan, plus interest thereon
at the applicable federal rate (“Interest”). 
The MLP shall make repayments to the General Partner in an amount equal
to one-half of the Tax Payment Loan, plus Interest thereon, on each of December
31, 2007 and December 31, 2008, subject to the provisions of Section 4.2(b)
below.  The amounts repayable by the MLP
pursuant to this Section 4.2 shall accrue Interest assuming that one-quarter of
the amount repaid on each payment date was incurred on each of the four
installment dates for disbursement of the Tax Payment Loan set forth in Section
4.1 above.  The MLP may prepay the Tax
Payment Loan at any time, in whole or in part, without penalty or premium.

(b)           Notwithstanding
the provisions of Section 4.2(a) above, the MLP shall not be required to make
repayment of the Tax Payment Loan or portion thereof to the General Partner to
the extent such repayment would cause the MLP to be unable to distribute the
full Minimum Quarterly Distribution on all outstanding Units for any applicable
quarterly period.   With respect to any
amounts not  repaid by the MLP to the
General Partner pursuant to this Section 4.2(b), the MLP shall make a repayment
to the General Partner of such amount or portion thereof, plus Interest
thereon, on the last day of a quarter to the extent such repayment would not
prevent the MLP from distributing the full Minimum Quarterly Distribution on
all outstanding Units for such quarter.

 

ARTICLE V

Solvency Representation

 

5.1  Solvency of
Shipping Master Entities. Each of
the Shipping Master Entities is, and immediately after giving effect to the
transactions contemplated in the Contribution Agreement will be, Solvent.  For purposes of this Section 5.1, “Solvent”
means m with respect to the applicable party of any date of determination, that
on such date (a) the fair value of the property of such party is greater
than the total amount of liabilities, including, without limitation, contingent
liabilities of such party that would constitute liabilities under GAAP, (b) the
present fair saleable value of the assets of such party is not less than the
amount that will be required to pay its debts as they become absolute and
matured, taking into account the possibility of refinancing such obligations
and selling assets, (c) such party does not intend to, and does not believe
that it will, incur debts or liabilities beyond such party’s ability to pay
such debts as they mature taking into account the possibility of refinancing
such obligations and selling assets and (d) such 

 

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party is not engaged in business or a transaction, and does
not intend to engage in business or a transaction, for which such party’s
property remaining after such transaction would constitute unreasonably small
capital.

 

ARTICLE
VI

Miscellaneous

6.1  Choice of Law;
Submission to Jurisdiction.  This Agreement shall be subject to and
governed by the laws of the State of Delaware, excluding any conflicts-of-law
rule or principle that might refer the construction or interpretation of this
Agreement to the laws of another state. 
Each Party hereby submits to the jurisdiction of the state and federal
courts in the State of New York and to venue in New York, New York.

6.2  Notice.  All notices
or requests or consents provided for or permitted to be given pursuant to this
Agreement must be in writing and must be given by depositing same in the United
States mail, addressed to the Person to be notified, postpaid, and registered
or certified with return receipt requested or by delivering such notice in
person or by telecopier or telegram to such Party.  Notice given by personal delivery or mail shall be effective upon
actual receipt.  Notice given by
telegram or telecopier shall be effective upon actual receipt if received
during the recipient’s normal business hours, or at the beginning of the
recipient’s next business day after receipt if not received during the
recipient’s normal business hours.  All
notices to be sent to a Party pursuant to this Agreement shall be sent to or
made at the address set forth below such Party’s signature to this Agreement,
or at such other address as such Party may stipulate to the other Parties in
the manner provided in this Section 6.2.

6.3  Entire
Agreement. 
This Agreement constitutes the entire agreement of the Parties relating
to the matters contained herein, superseding all prior contracts or agreements,
whether oral or written, relating to the matters contained herein.

6.4  Termination.  The
provisions of Article II of this Agreement will be terminated upon a Change of
Control of Shipping Master.

6.5  Effect of
Waiver or Consent.  No waiver or consent, express or implied, by
any Party to or of any breach or default by any Person in the performance by
such Person of its obligations hereunder shall be deemed or construed to be a
consent or waiver to or of any other breach or default in the performance by
such Person of the same or any other obligations of such Person hereunder.  Failure on the part of a Party to complain
of any act of any Person or to declare any Person in default, irrespective of
how long such failure continues, shall not constitute a waiver by such Party of
its rights hereunder until the applicable statute of limitations period has
run.

6.6  Amendment or
Modification.  This Agreement may be amended or modified
from time to time only by the written agreement of all the Parties; provided,
however, that the MLP and the OLLC may not, without the prior approval of the
Conflicts Committee,

 

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agree to any amendment or
modification of this Agreement that, in the reasonable discretion of the
General Partner, will adversely affect the holders of Common Units.  Each such instrument shall be reduced to
writing and shall be designated on its face an “Amendment” or an “Addendum” to
this Agreement.

6.7  Assignment.  No Party shall
have the right to assign its rights or obligations under this Agreement without
the consent of the other Parties.

6.8  Counterparts.  This
Agreement may be executed in any number of counterparts with the same effect as
if all signatory Parties had signed the same document.  All counterparts shall be construed together
and shall constitute one and the same instrument.

6.9  Severability.  If any
provision of this Agreement or the application thereof to any Person or
circumstance shall be held invalid or unenforceable to any extent, the
remainder of this Agreement and the application of such provision to other
Persons or circumstances shall not be affected thereby and shall be enforced to
the greatest extent permitted by law.

6.10        Gender, Parts,
Articles and Sections.  Whenever the context requires, the gender of
all words used in this Agreement shall include the masculine, feminine and
neuter, and the number of all words shall include the singular and plural.  All references to Article numbers and
Section numbers refer to Articles and Sections of this Agreement.

6.11        Further
Assurances. 
In connection with this Agreement and all transactions contemplated by
this Agreement, each Party agrees to execute and deliver such additional
documents and instruments and to perform such additional acts as may be
necessary or appropriate to effectuate, carry out and perform all of the terms,
provisions and conditions of this Agreement and all such transactions.

6.12        Withholding or
Granting of Consent.  Each Party may, with respect to any consent
or approval that it is entitled to grant pursuant to this Agreement, grant or
withhold such consent or approval in its sole and uncontrolled discretion, with
or without cause, and subject to such conditions as it shall deem appropriate.

6.13        Laws and
Regulations.  Notwithstanding any provision of this
Agreement to the contrary, no Party shall be required to take any act, or fail
to take any act, under this Agreement if the effect thereof would be to cause
such Party to be in violation of any applicable law, statute, rule or
regulation.

6.14        Negotiation of
Rights of Shipping Master, Limited Partners, Assignees, and Third Parties.  The
provisions of this Agreement are enforceable solely by the Parties, and no
member of Shipping Master and no limited partner, member, assignee or other
Person of the MLP or the OLLC shall have the right, separate and apart from
Shipping Master, the MLP or the OLLC, to enforce any provision of this
Agreement or to compel any Party to comply with the terms of this Agreement.

 

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6.15        No Recourse
Against Officers or Directors.  For the avoidance of doubt, the provisions
of this Agreement shall not give rise to any right of recourse against any
officer or director of any Shipping Master Entity or any Partnership Entity.

 

[SIGNATURE
PAGE FOLLOWS]

 

 

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IN WITNESS WHEREOF, the
Parties have executed this Agreement on, and effective as of, the Closing Date.

 

 

	
   

  	
  UNITED STATES SHIPPING MASTER LLC

  
	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Mr. Paul Gridley

  
	
   

  	
  Chairman and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  Address for Notice:

  
	
   

  	
   

  
	
   

  	
  399 Thornall Street

  
	
   

  	
  8th Floor

  
	
   

  	
  Edison,
  New Jersey 08837

  
	
   

  	
  Phone:  (732) 635 1500

  
	
   

  	
  Fax:

  
	
   

  	
  Attention: Mr. Paul Gridley

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  US SHIPPING GENERAL PARTNER LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Mr. Paul Gridley

  
	
   

  	
  Chairman and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  Address for Notice:

  
	
   

  	
   

  
	
   

  	
  399
  Thornall Street

  
	
   

  	
  8th
  Floor

  
	
   

  	
  Edison,
  New Jersey 08837

  
	
   

  	
  Phone:  (732) 635 1500

  
	
   

  	
  Fax:

  
	
   

  	
  Attention: Mr. Paul Gridley

  
	
   

  	
   

  

 

 

 

	
   

  	
  U.S. SHIPPING OPERATING LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  U.S. SHIPPING PARTNERS L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  US Shipping General Partner LLC, its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Mr. Paul Gridley

  
	
   

  	
   

  	
  Chairman and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  Address for Notice:

  
	
   

  	
   

  
	
   

  	
  399
  Thornall Street

  
	
   

  	
  8th
  Floor

  
	
   

  	
  Edison,
  New Jersey 08837

  
	
   

  	
  Phone:  (732) 635 1500

  
	
   

  	
  Fax:

  
	
   

  	
  Attention: Mr. Paul Gridley

  
	
   

  	
   

  
	
   

  	
  U.S. SHIPPING PARTNERS L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  US Shipping General Partner LLC, its general partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Mr. Paul Gridley

  
	
   

  	
   

  	
  Chairman and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  Address for Notice:

  
	
   

  	
   

  
	
   

  	
  399
  Thornall Street

  
	
   

  	
  8th
  Floor

  
	
   

  	
  Edison,
  New Jersey 08837

  
	
   

  	
  Phone:  (732) 635 1500

  
	
   

  	
  Fax:

  
	
   

  	
  Attention: Mr. Paul GridleyExhibit 10.15

U.S. SHIPPING PARTNERS L.P.

EMPLOYEE UNIT PURCHASE PLAN

dated October [  ],
2004

1.             Purpose of the Plan.

The
U.S. Shipping Partners L.P. Employee Unit Purchase Plan (the “Plan”) is
intended to (i) promote the interests of U.S. Shipping Partners L.P., a
Delaware limited partnership (the “Partnership”), by providing to
Employees of the Partnership and its Affiliates the opportunity to acquire or
increase their ownership of Units, (ii) provide a means whereby such
individuals may develop a sense of proprietorship and personal involvement in
the development and financial success of the Partnership and (iii) encourage
such individuals to devote their best efforts to the business of the
Partnership, thereby advancing the interests of the Partnership.

2.             Definitions.

(a)           As used in the
Plan, the following terms shall have the meanings set forth below:

“Affiliates” means with respect to any
Person, any other Person that directly or indirectly through one or more
intermediaries controls, is controlled by or is under common control with, the
Person in question.  As used herein, the
term “control” means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through ownership of voting securities, by contract or otherwise.

“Board” means the Board of Directors of US
Shipping General Partner LLC, a Delaware limited liability company.

“Committee” means the Compensation
Committee of the Board.

“Employee” means any individual who is a United
States citizen for maritime law purposes and a full-time employee of the
Partnership or one of its Affiliates,  but, until the Committee decides
otherwise, excluding any employee covered by a collective bargaining agreement
unless such bargaining agreement provides for his participation in the Plan.

“Employer” means the Partnership and/or one
of its Affiliates, as the case may be.

“Fair Market Value” means, unless otherwise
determined by the Committee or required by applicable law, the closing sales price
of a Unit on the applicable date (or if there is no trading in the Units on
such date, on the next preceding date on which there was trading) as reported
in The
Wall Street Journal (or other reporting service approved by the
Committee).  In the event Units are not
publicly-traded at the time a determination of Fair Market Value is required to
be made hereunder, the determination of Fair Market Value shall be made in good
faith by the Committee.

“Offering Period” means each calendar
quarter or other period as designated by the Committee from time to time.

 

 

 

“Person” means an individual or a
corporation, limited liability company, partnership, joint venture, trust,
unincorporated organization, association, governmental agency or political
subdivision thereof or other entity.

“Purchase Period” means the 10-day period
following the end of each Offering Period; provided, however, the Purchase
Period shall include such other periods, if any, as may be designated by the
Committee from time to time.

“Unit” means a Common Unit of the
Partnership.

(b)           Gender
and Number. 
Except when otherwise indicated by the context, the masculine gender
shall also include the feminine gender, and the definition of any term herein
in the singular shall also include the plural.

3.             Eligibility.

(a)           Eligibility
and Plan Entry Date. 
All Employees shall be eligible to participate in the Plan.  An Employee is eligible to enter the Plan
beginning on the first day of the month following 180 days after such individual’s
employment commencement date.

(b)           Prior
Service Credit. 
The Committee, in it is discretion, may grant prior service credit to
individuals that become Employees pursuant to a corporate merger or
acquisition.

4.             Units Available Under the Plan.

(a)           Limits on Units Deliverable.  Subject to adjustment as provided in Section
4(c) below, the maximum number of Units that may be purchased under the Plan is
[     ].

(b)           Sources of Units Deliverable.  Units to be delivered under the Plan may be
Units acquired by the Partnership in the open market, Units already owned by
the Partnership, authorized but unissued Units, Units acquired directly from
any Person or any combination of the foregoing.

(c)           Adjustments.  In the event that the Committee determines
that any distribution (whether in the form of cash, Units, other securities, or
other property), recapitalization, split, reverse split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase or exchange
of Units or other securities of the Partnership, issuance of warrants or other
rights to purchase Units or other securities of the Partnership, or other
similar transaction or event affects the Units such that an adjustment is
determined by the Committee to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan, then the Committee shall, in such manner as it may deem
equitable, adjust any or all of the maximum number and type of Units (or other
securities or property) deliverable under the Plan, the maximum number and type
of Units (or other securities or property) acquired during a Purchase Period
and the applicable Unit price paid therefor. 
The adjustments determined by the Committee shall be final, binding and
conclusive.

2

 

5.             Purchase of Units.

(a)           Employee
Withholding Elections.  The Committee shall provide an Employee with the ability to
purchase Units under the Plan upon the following terms and conditions:

(i)                                     Effective
as of the beginning of any month or, if administratively feasible, the
beginning of the next payroll period, an Employee may elect to have his
Employer withhold from the Employee’s cash base salary or cash base wages for
each future pay period, for the purchase of Units hereunder, a designated whole
percentage of the Employee’s cash base pay or wages (in whole percentages only,
not to exceed 10%).  An Employee may
change (within the above limitations) or, subject to Section 5(a)(vi), stop his
withholding election at any time; however, only two such changes may be made
during any calendar year.  All Employee
elections and any changes to an election shall be in such written form as the
Committee or its delegate may establish from time to time.

(ii)                                  Each
withholding election made by an Employee hereunder shall be an ongoing election
until the earlier of the date changed by the Employee or the date the Employee
ceases to be eligible to participate in the Plan.

(iii)                               The
Employer shall maintain for each electing Employee a separate notional or
ledger account reflecting the aggregate amount of his cash base pay or wages
that has been withheld and not yet applied to the purchase of Units for such
Employee.  An Employer, other than the
Partnership, shall remit to the Partnership all amounts of base pay or wages
withheld by the Employer promptly upon request by the Partnership in order to
permit the Partnership to fulfill its obligations under this Plan with respect
to the purchase of Units for Employees. 
Amounts of base pay or wages withheld by the Employer and remitted to
the Partnership shall not be segregated from the general assets of the
Partnership and shall not bear interest.

(iv)                              During
each Purchase Period, the Partnership shall use, to the fullest extent practicable,
all amounts then credited to the notional accounts of the electing Employees to
purchase Units for such Employees. 
Purchases of Units may be made at any time or times during the Purchase
Period on any securities exchange on which the Units are traded, in the
over-the-counter market and/or in negotiated transactions as the Committee
shall determine.

(v)                                 Upon
an Employee’s termination of employment with his Employer, all amounts then
credited to his notional account under the Plan, if any, shall be paid to the
terminated Employee as soon as reasonably practicable.

(vi)                              Provided
an Employee submits his election to stop withholding prior to the fourteen
business day period before the beginning of an immediately upcoming Purchase
Period, all amounts then credited to such Employee’s notional account shall be
returned to the Employee as soon as administratively practicable.  Unless otherwise administratively feasible,
to the extent an Employee submits his 

3

 

election to stop withholding within the fourteen business
day period before the beginning of the immediately upcoming Purchase Period,
all amounts credited to such Employee’s notional account will be applied toward
the purchase of Units in the immediately following Purchase Period and the
Employee’s election to stop withholding shall become effective as of the
commencement of the next following Offering Period.  All requests to withdraw from the Plan submitted during a
Purchase Period will become effective as of the commencement of the next
following Offering Period.

(b)           Purchase
of Units and Plan Expenses. During each
Purchase Period, the Partnership, using funds withheld from Employees’ wages
pursuant to this Section 5, shall purchase for the electing Employees the
maximum number of Units (including fractional Units) that can be acquired
(using the Unit’s Fair Market Value on the date of purchase) based on amounts
then credited to the electing Employees’ notional accounts.  The Partnership shall pay, other than from
the notional accounts, all brokerage fees and other costs and expenses of the
Plan.  To the extent that Units are
purchased on multiple days or at multiple times during a single Purchase
Period, the Partnership shall use the average of the Units’ Fair Market Value
at the times of purchase as the applicable Unit price upon which Units are
allocated to the participating Employees.

(c)           Withholding
of Taxes. 
To the extent that the Employer is required to withhold any taxes in
connection with the purchase of Units, it will be a condition to the ownership
of such Units that the Employee make arrangements satisfactory to the Employer
for the payment of such taxes, which may include, but not be limited to, a
reduction in the Employee’s notional account.

6.             Restrictions on Units.

(a)           Holding
Period.  Subject to the
exception provided below under Section 6(b), all Units purchased under the Plan
shall be subject to a “Holding Period” which shall expire on the first
anniversary of the date the Units were purchased under the Plan.  During such Holding Period, each Employee
shall be prohibited from pledging, transferring, selling or otherwise disposing
of the restricted Units.  Upon the
expiration of such Holding Period, the Employee may, if he or she desires, make
a request to the Partnership (or its designated third party plan administrator,
if any) to receive certificates for all of such unrestricted whole Units.  Otherwise, such Units shall be held without
restriction (1) by the Partnership or (2) in the name of the third party
administrator (or its designee), if any, for the benefit of the Employee. Upon
payment during the Holding Period of any distribution with respect to Units,
each Employee shall receive an amount in cash equal to, and at the same time
as, the amount of such distribution multiplied by the number of Units allocated
to such Employee.

(b)           Holding
Period Exception. 
Notwithstanding the Holding Period imposed above under Section 6(a) and
subject to the conditions imposed pursuant to this Section 6(b), an Employee
will be permitted to pledge, transfer, sell or otherwise dispose of his
restricted whole Units during the one-year Holding Period (a “Restricted
Transfer”) by notifying the Employer (or its designated third party plan
administrator) of his intention to engage in a Restricted Transfer.  If a Restricted Transfer occurs, the
Employee shall be prohibited from participating in the Plan again until the
first Purchase Period following the first anniversary of the date of the
Restricted 

4

 

Transfer.  During this period of prohibition, no
amounts shall be withheld from the Employee’s cash base salary or cash base
wages.  Such withholding shall not be
allowed to resume, at the earliest, until the first pay period following the
first anniversary of the date of the Restricted Transfer.  To the extent an Employee has amounts
credited to his notional account under the Plan on the date of a Restricted
Transfer, all such amounts will be returned to the Participant.  To the extent a Participant has a fractional
Unit credited to his notional account under the Plan on the date of a
Restricted Transfer, such fractional Unit will be liquidated and the
Participant will receive his pro rata portion of the proceeds from such
liquidation.

(c)           Investment
Representation. 
Unless the Units subject to purchase under the Plan have been registered
under the Securities Act of 1933, as amended (the “1933 Act”), and, in
the case of any Employee who may be deemed an affiliate (for securities law
purposes) of the Partnership, such Units have been registered under the 1933
Act for resale by such Participant, or the Partnership has determined that an
exemption from registration is available, the Partnership may require prior to
and as a condition of the delivery of any Units that the person purchasing such
Units hereunder furnish the Partnership with a written representation in a form
prescribed by the Committee to the effect that such person is acquiring such
Units solely with a view to investment for his own account and not with a view
to the resale or distribution of all or any part thereof, and that such person
will not dispose of any of such Units otherwise than in accordance with the
provisions of Rule 144 under the 1933 Act unless and until either the Units are
registered under the 1933 Act or the Partnership is satisfied that an exemption
from such registration is available.

(d)           Compliance
with Securities Laws. 
Notwithstanding anything herein or in any other agreement to the
contrary, the Partnership shall not be obligated to sell or issue any Units to
an Employee under the Plan unless and until the Partnership is satisfied that
such sale or issuance complies with (i) all applicable requirements of the
securities exchange on which the Units are traded (or the governing body of the
principal market in which such Units are traded, if such Units are not then
listed on an exchange), (ii) all applicable provisions of the 1933 Act, and
(iii) all other laws or regulations by which the Partnership is bound or to
which the Partnership is subject.

7.             Rights of Employees; Participants.

(a)           Employment.  The Plan will not confer upon any Employee
any right with respect to continuance of employment or other service with the
Employer, nor will it interfere in any way with any right the Employer would
otherwise have to terminate such Employee’s employment or other service at any
time.

(b)           Nontransferability.  No right to purchase Units granted under the
Plan shall be assignable or transferable during the lifetime of any Employee
either voluntarily or involuntarily, or be subjected to any lien, directly or
indirectly, by operation of law, or otherwise, including execution, levy,
garnishment, attachment, pledge or bankruptcy.

5

 

8.             Plan Administration.

(a)           Authority
of Committee. 
The Plan shall be administered by the Committee.  Subject to the terms of the Plan and
applicable law, and in addition to other express powers and authorizations
conferred on the Committee by the Plan, the Committee shall have full power and
authority to: (i) determine which persons are Employees who may participate;
(ii) determine the number of Units to be purchased by an Employee; (iii)
determine the time and manner for purchasing Units; (iv) interpret, construe
and administer the Plan; (v) establish, amend, suspend, or waive such rules and
regulations and appoint such agents as it shall deem appropriate for the proper
administration of the Plan; (vi) make a determination as to the right of any
person to receive Units under the Plan; (vii) correct any defect, supply any
omission, or reconcile an inconsistency in the Plan; and (viii) make any other
determinations and take any other actions that the Committee deems necessary or
desirable for the administration of the Plan.

(b)           Determination
under the Plan. 
Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations, and other decisions under or with respect to
the Plan shall be within the sole discretion of the Committee, may be made at
any time and shall be final, conclusive, and binding upon all persons,
including the Partnership, the Employer or any Employee.  No member of the Committee shall be liable
for any action, determination or interpretation made in good faith, and all
members of the Committee shall, in addition to their rights as directors, be
fully protected by the Partnership with respect to any such action,
determination or interpretation.

9.             Plan Amendment, Modification and Termination.

Except
as otherwise required by applicable law or exchange requirements, the Board may
amend the Plan in any manner, including increasing the maximum number of Units
that may be purchased under the Plan, without the consent of any Person.  The Plan may be terminated at any time by the
Board at any time and shall automatically terminate when all Units authorized
for purchase pursuant to the Plan have been purchased.  On termination of the Plan, all amounts then
remaining credited to the notional accounts for Employees shall be returned to
the affected Employees.

10.          Nonexclusivity of the Plan.

The
adoption of the Plan by the Partnership shall not be construed as creating any
limitations on the power or authority of the Partnership or any of its
Affiliates to adopt such other or additional incentive or other compensation
arrangements of whatever nature as the Partnership or any of its Affiliates may
deem necessary or desirable or to preclude or limit the continuation of any
other plan, practice or arrangement for the payment of compensation or fringe
benefits to employees, non-employee directors, or consultants generally, or to
any class or group of employees, directors, or consultants, which the
Partnership or any of its Affiliates now has lawfully put into effect,
including, without limitation, any  long-term
incentive plan.

11.          Requirements of Law.

(a)           Requirements
of Law.  The issuance of
Units pursuant to the Plan shall be subject to all applicable laws, rules and
regulations.

 

6

 

(b)           Governing
Law.  The validity,
construction and effect of the Plan and any rules and regulations relating to
the Plan shall be determined in accordance with the laws of the State of
Delaware, without regard to conflicts of laws principles.

 

7

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