FIRST AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF US SHIPPING GENERAL PARTNER LLC

Exhibit 3.1

FIRST AMENDED AND RESTATED

US SHIPPING GENERAL PARTNER LLC

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

	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

	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

iii

FIRST AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
US SHIPPING GENERAL PARTNER LLC

THIS FIRST AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF US SHIPPING GENERAL PARTNER LLC, dated as of July 28, 2005, is entered into by and among United States Shipping Master LLC, a Delaware limited liability company (“Shipping Master”), and those individuals listed in Schedule A who 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 limited liability company under the Delaware Limited Liability Company Act on July 29, 2004 and a Certificate of Formation was filed with the Secretary of State of the State of Delaware on such date.

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

WHEREAS, on November 3, 2004, Shipping Master and certain other persons amended and restated the July 29, 2004 Limited Liability Company Agreement in connection with the initial public offering of the MLP to reflect contributions to the Company, the admission of the Executive Members (as defined below) and certain other matters.

WHEREAS, Shipping Master and the other persons signatory hereto now desire to execute this first amended and restated Limited Liability Company Agreement.

NOW THEREFORE, in consideration of the covenants, conditions and agreements contained herein, the parties hereto hereby enters into this Agreement:

ARTICLE I
DEFINITIONS

Section 1.1 Definitions. The following definitions shall be for all purposes, unless otherwise clearly indicated to the contrary, applied to the terms used in this Agreement. Capitalized terms used herein but not otherwise defined shall have the meaning assigned to such 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 any successor to such statute.

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

“Affiliate” 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.

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

“Assignee” means a Person to whom one or more Membership Interests have been transferred in a manner permitted under this Agreement, but who has not been admitted as a Substituted Member.

“Book Value” means, with respect to any Company property, the Company’s adjusted basis for Federal income tax purposes, adjusted from time to time to reflect the adjustments under Section 6.4 hereof; provided that the Book Value of any asset contributed to the Company shall be equal to the Fair Market Value of the contributed asset on the date of contribution, and the Book Value of any Company property distributed to any Member or Economic Owner shall be adjusted immediately prior to such distribution to equal its Fair Market Value. In the case of any asset that has a Book Value that differs from its adjusted tax basis, Book Value shall be adjusted by the amount of depreciation calculated for purposes of the definitions of “Net Profits” and “Net Losses” rather than the amount of depreciation determined for U.S. Federal income tax purposes.

“Business Day” means Monday through Friday of each week, except that a legal holiday recognized as such by the government of the United States of America 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 of Contributed Property that a Member contributes to the Company pursuant to this Agreement 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 B Units pursuant to Section 7.2 prior to the conversion of all Subordinated Units into Common Units pursuant to the MLP Agreement if the Percentage Interests of the Class B Units had been determined without regard to the first proviso in the definition of the term “Percentage Interest.”

“Certificate of Formation” means the Certificate of Formation of the Company filed with the Secretary of State of the State of Delaware as referenced in Section 2.1, as such Certificate of Formation may be amended, supplemented or restated from time to time.

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

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

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

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

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

“Code” means the Internal Revenue Code of 1986, as amended and in effect from time to time. Any reference herein to a specific section or sections of the Code shall be deemed to include a reference to any corresponding provision of successor law.

“Commission” means the United States Securities and Exchange Commission.

“Company” means US Shipping General Partner LLC, a Delaware limited liability 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 “partnership minimum gain” in Treasury Regulation Section 1.704-2(d).

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

“Contributed Property” means each property or other asset, in such form as 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 the Company’s Net Profits, Net Losses and distributions pursuant to this Agreement and the Act, but shall not include any right to participate in the management or affairs of the Company, including the right to vote on, consent to or otherwise participate in any decision of the Members, or any right to receive information concerning the business and affairs of the Company, in each case except to the extent provided for herein or otherwise required by the Act.

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

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

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

“Fair Market Value” means, except as otherwise provided in Sections 4.5 and 5.2, the fair market value of the asset in question, as determined in the good 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 Company out of the MLP’s Basic Surplus in respect of the Company’s General Partner Interest.

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

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

“Indemnitee” means (a) the Company Board, (b) any Person who is or was a Manager, Officer, employee, agent or trustee of the Company, (c) any Person who is or was a member, partner, director, officer, employee, agent or trustee of any Group Member, the MLP or any of their respective Affiliates and (d) any Person who is or was serving at the request of the Company Board as a member, partner, director, officer, employee, partner, agent, fiduciary or trustee of another Person, in each case, acting in such capacity, provided, that a Person shall not be an Indemnitee 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 the dissolution of the Company occurs.

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

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

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

“Member” means each Person identified on Schedule A hereto as of the date hereof who has executed this Agreement or a counterpart hereof and each Person who is hereafter admitted as a Member in accordance with the terms of this Agreement and the Act, in each case so long as such Person is shown 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, also include Economic Owners. The Members shall constitute the “members” (as that term is defined in the Act) of the Company. Except as expressly provided herein, the Members shall constitute a single class or group of members 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 participate in the management of the business and affairs of the Company, including the right, if any, to vote on, consent to or otherwise participate in any decision or action of or by the Members and the right to receive information concerning the business and affairs of the Company, in each case to the extent expressly provided in this Agreement or otherwise required by the Act. The Membership Interests are a security governed by Article 8 of the Uniform Commercial Code.

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

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

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

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

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

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

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

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

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

“Percentage Interest” of a class of Units means, as of any date of determination, a fraction, expressed as a percentage, the numerator of which is the number of outstanding Units of such class at such time and the denominator of 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 have converted into Common Units pursuant to the MLP Agreement, the Percentage Interest of the Class B Units shall be zero; and provided further, that upon conversion of at least 25% of the outstanding Subordinated Units, the number of Class B Units deemed to be outstanding for purposes of calculating Percentage Interest of the Class B Units shall be the determined by multiplying the Class B Units by a fraction, the numerator of which is the number of Subordinated Units that have converted into Common Units and the denominator of which is 5,272,341.

“Person” means an individual or a corporation, limited liability company, firm, partnership, joint venture, trust, unincorporated organization, association, governmental agency or political subdivision 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 or supplemented from time to time, filed by the MLP with the Commission under the Securities Act to register the offering and sale of the common units pursuant to the Underwriting Agreement.

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

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

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

“Subsidiary” means, with respect to any Person, (a) a corporation of which more than 50% of the voting power of shares entitled (without regard to the occurrence of any contingency) to vote in the election of directors or other governing body of such corporation is owned, directly or indirectly, at the date of determination, by such Person, by one or more Subsidiaries of such Person or a combination thereof, (b) a partnership (whether general or limited) in which such Person or a Subsidiary of such Person is, at the date of determination, a general or limited partner of such partnership, but only if more than 50% of the partnership interests of such partnership (considering all of 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 or more Subsidiaries of such Person, or a

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

“Substituted Member” means a Person who is admitted as a Member to the Company pursuant to Section 11.1 in place of and with all the rights of a Member 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 the Underwriting 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 the Underwriters, providing for the purchase of Common Units by such Underwriters.

“Unit” means an Economic Interest in the Company representing a fractional part of the entire Economic Interest in the Company, provided, that any class or group of Units issued shall have the relative rights, powers and duties set forth in this Agreement and the Economic Interest represented by such class or group of Units shall be determined in accordance with such relative rights, powers and duties.

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

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

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

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

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

ARTICLE II
ORGANIZATION

Section 2.1 Formation. On July 29, 2004, Shipping Master previously formed the Company as a limited liability company pursuant to the provisions of the Act by virtue of the filing of the Certificate of Formation with the Secretary of State of the State of Delaware. The Company Board caused certain other certificates or documents it determined in its sole discretion to be necessary or appropriate for the qualification and operation of the Company in certain other states. The Company Board shall use all reasonable efforts to cause to be filed such additional certificates or documents as may be determined by the Company Board in its sole discretion to be reasonable and necessary or appropriate

for the formation, continuation, qualification and operation of a limited liability company in the State of Delaware or any other state in which the Company may elect to do business or own property. To the extent that such action is determined by the Company Board in its sole discretion to be reasonable and necessary or appropriate, the Company Board shall cause to be filed amendments to and restatements of the Certificate of Formation and do all things to maintain the Company as a limited liability company under the laws of the State of Delaware or of any other state in which the 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 or mail a copy of the Certificate of Formation, any qualification document or any amendments thereto to any Member or Assignee.

Section 2.2 Name. The name of the Company shall be “US Shipping General Partner LLC”. The Company’s business may be conducted under any other name or names deemed necessary or appropriate by the Company Board in its sole discretion, including the name of the MLP. The words “Limited Liability Company,” “L.L.C.” or “LLC” or similar words or letters shall be included in the Company’s name where necessary for the purpose of complying with the laws of any jurisdiction that so requires. The Company Board Member in its discretion may change the name of the Company at any time and from time to time and shall notify the other Member(s) of such change in the next regular communication to the Members.

Section 2.3 Registered Office; Registered Agent; Principal Office; Other Offices. The registered office of the Company required by the Act to be maintained in the State of Delaware shall be the office of the initial registered agent named in the Certificate of Formation or such other office (which need not be a place of business of the Company) as the Company Board may designate from time to time in the manner provided by law. The registered agent of the Company in the State of Delaware shall be the initial registered agent named in the Certificate of Formation or such other Person(s) as the Company Board may designate from time to time in the manner provided by law. The principal office of the Company shall be at such place as the Company Board may designate from time to time, which need not be in the State of Delaware, and the Company shall maintain records there. The Company may have such other offices as the Company Board may designate from time to time.

Section 2.4 Purpose and Business. The purpose and nature of the business to be conducted by the Company shall be to (a) act as the general partner of the MLP and, in connection therewith, to exercise all of the rights and powers conferred upon the Company pursuant to the MLP Agreement, (b) manage, operate, lease, sell and otherwise deal with any and all assets or properties contributed to the Company by the Members or hereafter acquired by the Company, (c) serve as the sole member, partner or stockholder of its Subsidiaries and, in connection therewith, to exercise all the rights and powers conferred upon the Company as the sole member, partner or stockholder of such Subsidiaries pursuant to the operating agreements, partnership agreements or charter documents of each of such Subsidiaries, (d) engage directly in, or enter into or form any corporation, partnership, joint venture, limited liability company or other arrangement to engage indirectly in, any type of business or activity engaged in by the Company and its Subsidiaries and their predecessors prior to the Closing Date and, in connection therewith, to exercise all of the rights and powers conferred upon the Company pursuant to the agreements relating to such business activity, (e) engage directly in, or enter into or form any corporation, partnership, joint venture, limited liability company or other arrangement to engage indirectly in, any business activity that is approved by the Company Board and which lawfully may be conducted by a limited liability company organized pursuant to the Act and, in connection therewith, to exercise all of the rights and powers conferred upon the Company pursuant to the agreements relating to such business activity, (f) borrow money and issue evidences of indebtedness and guaranty indebtedness and secure any such indebtedness or guaranty by mortgage or pledge of, or other lien on, the assets of the Company and (g) do anything necessary or appropriate to the foregoing, including the making of capital contributions or loans to a Group Member, the MLP or any Subsidiary thereof. The Company Board has no obligation or

duty to the Company, the Members, or the Assignees to propose or approve, and in its discretion may decline to propose or approve, the conduct by the Company of any business.

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

Section 2.6 Power of Attorney.

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

(i) execute, swear to, acknowledge, deliver, file and record in the appropriate public offices (A) all certificates, documents and other instruments (including this Agreement and all amendments or restatements hereof and all amendments and restatements of the Certificate of Formation) that the Company Board or the Liquidator deems necessary or appropriate to form, qualify or continue the existence or qualification of the Company as a limited liability company in the State of Delaware and in all other jurisdictions in which the Company may conduct business or own property; (B) all certificates, documents and other instruments that the Company Board or the Liquidator deems necessary or appropriate 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 of cancellation) that the Company Board or the Liquidator deems necessary or appropriate to reflect the dissolution and liquidation of the Company pursuant to the terms of this Agreement; (D) all certificates, documents and other instruments relating to the admission, withdrawal, removal or substitution of any Member pursuant to, or other events described in, Article IV, XI or XII; and (E) all certificates, documents and other instruments relating to the determination of the rights, preferences and privileges of any class or series 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 or appropriate, in the discretion of the Company Board or the Liquidator, to make, evidence, give, confirm or ratify any vote, consent, approval, agreement or other action that is made or given by the Members hereunder or is consistent with the terms of this Agreement or is necessary or appropriate, in the discretion of the Company Board or the Liquidator, to effectuate the terms or intent of this Agreement; provided, that when required by any provision of this Agreement that establishes a percentage of the Members or of the Members of any class or series required to take any action, the Company Board and the Liquidator may exercise the power of attorney made in this Section 2.6(a)(ii) only after the necessary vote, consent or approval of the Members or of the Members of such class or series, as applicable.

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

(b) The foregoing power of attorney is hereby declared to be irrevocable and a power coupled with an interest, and it shall survive and, to the maximum extent permitted by law, not be affected by the subsequent dissolution, bankruptcy or termination of any Member or Assignee and the

transfer of all or any portion of such Member’s or Assignee’s Membership Interest and shall extend to such Member’s or Assignee’s successors and assigns. Each such Member or Assignee hereby agrees to be bound by any representation made by the Company Board or the Liquidator acting in good faith pursuant to such power of attorney; and each such Member or Assignee, to the maximum extent permitted by law, hereby waives any and all defenses that may be available to contest, negate or disaffirm the action of the Company Board or the Liquidator taken in good faith under such power of attorney. Each Member or Assignee shall execute and deliver to the Company Board or the Liquidator, within 15 days after receipt of the request therefor, such further designation, powers of attorney and other instruments as the Company Board or the Liquidator deems necessary to effectuate this Agreement and the purposes of the Company.

Section 2.7 Term. The term of the Company commenced upon the filing of the Certificate of Formation in accordance with the Act and shall continue in existence until the dissolution of the Company in accordance with the provisions of Article XII. The existence of the Company as a separate legal entity shall continue until the cancellation of the Certificate of Formation 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 be owned by the Company as an entity, and no Member, individually or collectively, shall have any ownership interest in such Company assets or any portion thereof.

ARTICLE III
RIGHTS OF MEMBERS

Section 3.1 Limitation of Liability. Except as otherwise provided by the Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and neither the Company Board, any other Member, any Assignee nor any person serving as an Officer of the Company shall be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a member of the Company Board, Member, Assignee or Officer of the Company. No Member shall be required to lend any funds to the Company. The Members shall only be liable to make payment of their capital contributions as and when due hereunder and other payments as expressly provided in this Agreement. If and to the extent the Member’s capital contribution shall be fully paid, such Member shall not, except as required by the express provisions of the Act regarding repayment of sums wrongfully distributed to the Member, be required to make any further contributions.

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

Section 3.3 Rights of Members.

(a) In addition to other rights provided by 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 such Member’s interest as a member in the Company, upon reasonable written demand and at such Member’s own expense:

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

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

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

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

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

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

(b) The Company Board may keep confidential from the Members and Assignees, for such period of time as the Company Board deems reasonable, (i) any information that the Company Board reasonably believes to be in the nature of trade secrets or (ii) other information the disclosure of which the Company Board in good faith believes (A) is not in the best interests of the Company Group, (B) could damage the Company Group or the MLP and its Subsidiaries or (C) that any Group Member is required by law or by agreement with any third party to keep confidential (other than agreements with Affiliates of the Company the primary purpose of which is to circumvent the obligations set forth in this Section 3.3).

ARTICLE IV
TRANSFERS OF INTERESTS

Section 4.1 Transfer Generally.

(a) The term “transfer,” when used in this Agreement with respect to a Membership Interest, shall be deemed to refer to a transaction by which the holder of a Membership Interest assigns such 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 be transferred, in whole or in part, except in accordance with the terms and conditions set forth in this Article IV. Any transfer or purported transfer of a Membership Interest not made in accordance with this Article IV shall be null and void.

(c) Nothing contained in this Agreement shall be construed to prevent a disposition by any member of the Company Board of any or all of the issued and outstanding membership interests in Shipping Master.

Section 4.2 Transfer of Membership Interests.

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

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

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

(d) Notwithstanding the other provisions of this Article IV, no transfer of any Membership Interest shall be made if such transfer would (i) violate the then applicable federal or state securities laws or rules and regulations of the Commission, any state securities commission or any other governmental authority with jurisdiction over such transfer, (ii) terminate the existence or qualification of the Company or the MLP under the laws of the jurisdiction of its formation, (iii) cause the Company or the MLP to be treated as an association taxable as a corporation or otherwise to be taxed as an entity for federal income tax purposes (to the extent not already so treated or taxed), (iv) cause the Company to become a Non U.S. Citizen (as such term is defined in the MLP Agreement) or (ii) result in the vessels owned by the MLP losing their eligibility to engage in the coastwise trade of the United States.

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

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

(g) Upon any transfer during any Fiscal Year 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 to such interest for such Fiscal Year shall be divided and allocated between the Assignor and the Assignee by taking into account their varying interests during such Fiscal Year, using any conventions permitted by law and selected by the Company Board in its sole discretion. All distributions on or before the date of such transfer shall be made to the Assignor and all distributions thereafter shall be made to the Assignee. Solely for purposes of making such allocations and distributions, the Company shall recognize such transfer not later than the end of the calendar month during which it is given notice of such transfer; provided that, if the Company is given notice of a transfer at least 10 business days prior to the transfer, the Company shall recognize such transfer as the date of such transfer, and provided, further, that, if the Company does not receive a notice stating the date such interest was transferred and such other information as the Company Board may reasonably require within 30 days after the end of the Fiscal Year during which the transfer occurs, then all such items shall be allocated, and all distributions shall be made, to the Unitholder that, according to the books and records of the Company, was the owner of the interest on the last day of the Fiscal Year during which the transfer occurs. Neither the Company nor the Company Board shall incur any liability for making allocations and distributions in accordance with the

provisions of this Section 4.2(e), whether or not the Company or the Company Board has knowledge of any transfer of any interest.

Section 4.3 Required Amendments; Continuation. If and to the extent any Assignee is admitted as a Substituted Member, this Agreement shall be amended to admit such Assignee or Person as a member and to reflect the elimination of the transferor member (or the reduction of such Member’s interest) and (if and to the extent then required by the Act) a certificate of amendment to the Certificate reflecting such admission and elimination (or reduction) shall be filed in accordance with the Act. The admission of any substitute Member pursuant to this Article IV shall be deemed effective on the effective date of such amendment to this Agreement.

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

Section 4.5 Sale of Shipping Master. If there occurs an event described in either clause (a) or (d) of the term “Sale of the Company” (as such term is set forth in the Master LLC Agreement), Shipping Master shall pay to each Executive Member an amount equal to the distribution that would have been made by the Company to such Executive Member at such time if all of the assets of the Company had been sold for cash in an amount equal to their respective Fair Market Values, and the proceeds thereof were distributed in accordance with Section 13.3(c). For this purpose, (a) the Fair Market Value of the General Partner Interest shall be equal to the product of (x) the average of the closing price per unit of the Common Units for the 20-consecutive trading day period preceding the Business Day prior to the date of 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 the Incentive Distribution Right shall be determined in good faith by the Company Board. Immediately upon the receipt of the payment described in the prior sentence, the Class B Units shall be cancelled and shall have no further rights (including, without limitation, any rights to distributions from the Company) and each of the Executive Members shall be deemed to have withdrawn from the Company.

Section 4.6 Resignation. No Member shall have the right to resign or withdraw 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 preceding sentence, any Executive who ceases to own any Units shall cease to be a Member for all purposes under this Agreement. Any Member that resigns without the consent of the Company Board in contravention of 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.

ARTICLE V
CAPITAL CONTRIBUTIONS AND ISSUANCE OF INTERESTS

Section 5.1 Prior to Closing Date. On July 29, 2004 in connection with the formation of the Company under the Act, Shipping Master made an initial Capital Contribution to the Company in the amount of $1,000 for all of the Membership Interests 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 Closing Contribution Agreement).

Section 5.2 Contributions at Closing. On the Closing Date, (a) Shipping Master has contributed to the Company the USS Chartering Interest (as defined in the Closing Contribution Agreement), which interest the Company will, pursuant to the Closing Contribution Agreement, convey to the MLP in exchange for a continuation of the Company’s general partner interest in the MLP and the Incentive Distribution Rights (as defined in the MLP Agreement), and (b) each Executive Member has contributed in cash the amount, if any, set forth in the books and records of the Company. The Members agrees that the Fair Market Value of the Capital Contributions made by Shipping Master on or prior to the Closing Date are equal to the sum of the Fair Market Values of the General Partner Interest and the Incentive Distribution Right. The Fair Market Value of the General Partner Interest on the Closing Date shall be equal to the product of (x) the price per Common Unit in the initial public offering of the MLP and (y) the number of Common Units equivalent to the 2% General Partner Interest in the MLP. The Fair Market Value of the Incentive Distribution Right on the Closing Date shall be determined 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 Additional Capital Contributions. With the consent 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 on Capital Contributions. No Member or Assignee shall be entitled to the withdrawal or return of its Capital Contribution, except to the extent, if any, that distributions made pursuant to this Agreement or upon termination of the Company may be considered as such by law and then only to the extent provided for in this Agreement. Except to the extent expressly provided in this Agreement, no Member or Assignee shall have priority over any other Member or Assignee either as to the return of Capital Contributions or as to profits, losses or distributions. Any such return shall be a compromise to which all Members or Assignees agree within the meaning of Section 18-502(b) of the Act.

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

Section 5.6 Issuances of Additional Company Securities.

(a) The Company may issue additional Class B Unites and options, rights, warrants and appreciation rights relating to the Class B Units for any Company purpose at any time and from time to time to Persons who become employees of the Company or its Subsidiaries for such consideration and on such terms and conditions as shall be established by the Company

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

(b) The Company Board is hereby authorized and directed to take all actions that it deems necessary or appropriate in connection with (i) each issuance of Class B Units and options, rights, warrants and appreciation rights relating to Class B Units pursuant to this Section 5.6 and (ii) the admission of additional Executive Members as Additional Members. The Company Board shall do all things necessary to comply with the Act and is authorized and directed to do all things it deems necessary or advisable in connection with any future issuance of Class B Units, including compliance with any statute, rule, regulation or guideline of any federal, state or other governmental agency.

(c) Notwithstanding the other provisions of this Section 5.6, the Company may not issue additional Class B Units, or options, rights, warrants and appreciation rights relating to Class B Units, if such issuance would (i) violate the then applicable federal or state securities laws or rules and regulations of the Commission, any state securities commission or any other governmental authority with jurisdiction over such transfer, (ii) cause the Company or the MLP to be treated as an association taxable as a corporation or otherwise to be taxed as an entity for federal income tax purposes (to the extent not already so treated or taxed), (iii) cause the Company to become a Non-U.S. Citizen (as such term is defined in the MLP Agreement) or (ii) result in the vessels owned by the MLP losing their eligibility to engage in the coastwise trade of the United States.

Section 5.7 No Preemptive Rights. No Person shall have preemptive, preferential or other similar rights with respect to (a) additional Capital Contributions; (b) issuance or sale of any class or series of Membership Interests, whether unissued, held in the treasury or hereafter created; (c) issuance of any obligations, evidences of indebtedness or other securities of the Company convertible into or exchangeable for, or carrying or accompanied by any rights to receive, purchase or subscribe to, any such Membership Interests; (d) issuance of any right of subscription to or right to receive, or any warrant or option for the purchase of, any such Membership Interests; or (e) issuance or sale 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 fully paid and non-assessable Membership Interests, except as such non-assessability may be affected by Section 18-607 of the Act.

ARTICLE VI
CAPITAL 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 initially reflecting an amount equal to such Member’s initial Capital Contributions pursuant to Sections 5.1 and 5.2. Each Member’s Capital Account shall be (a) increased by any additional Capital Contributions made by such Member pursuant to the terms of this Agreement and such Member’s share of Net Profits, the amount of any Company liabilities that are assumed by such Member or that are secured by any Company property distributed to such Member and any other items of income and gain allocated to such Member pursuant to Article VII, (b) decreased by such Member’s share of Net Losses, any distributions to such Member of cash or the Fair Market Value of any other Company property (net of liabilities assumed by such Member and liabilities to which such property is subject) distributed to such Member, the amount of any liabilities of such Member that are assumed by the Company and any other deduction allocated to such Member pursuant to Article VII, and (c) adjusted as otherwise required by the Code and the regulations thereunder, including but not limited to, the rules of Treasury Regulation Section 1.704-

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

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

(a) the computation of Net Profits and Net Losses shall include tax-exempt income and those 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 income or are not deductible for Federal income tax purposes;

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

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

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

(e) to the extent an adjustment to the adjusted tax basis of any Company asset pursuant 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 taken into account in determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis);

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

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

Section 6.3 Negative Capital Accounts. No Member shall be required to pay to the Company or any other Member any deficit or negative balance which may exist from time to time in such Member’s Capital Account.

Section 6.4 Adjustments to Book Value. The Company shall adjust the Book Value of its assets to fair market value in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv) as of the following times: (i) at the Company Board’s discretion in connection with the issuance of Units in the

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

Section 6.5 Compliance With Section 1.704-1(b). The provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Treasury Regulation Section 1.704-1(b), and shall be interpreted and applied in a manner consistent with such Treasury Regulation. In the event the Company Board shall determine that it is prudent to modify the manner in which the Capital Accounts, or any debits or credits thereto (including, without limitation, debits or credits relating to liabilities which are secured by contributed or distributed property or which are assumed by the Company or any Member), are computed in order to comply with such regulation, the Company Board may make such modification, provided that it is not likely to have a material effect on the amount distributable to any Member pursuant to Section 13.3 hereof upon the dissolution of the Company. The Company Board also shall (i) make any adjustments that are necessary or appropriate to maintain equality between the Capital Accounts of the Members and the amount of Company capital reflected on the Company’s balance sheet, as computed 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 unanticipated events might otherwise cause this Agreement not to comply with Treasury Regulation Section 1.704-1(b).

Section 6.6 Transfer of Capital Accounts. The original Capital Account established for each Substituted Member shall be in the same amount as the Capital Account of the Member (or portion thereof) which such Substituted Member succeeds, at the time such Substituted Member is admitted to the Company. The Capital Account of any Member whose interest in the Company shall be increased by means of the transfer to it of all or part of the Units of another Member shall be appropriately adjusted to reflect such transfer. Any reference in this Agreement to a Capital Contribution (or Cash Capital Contribution) of or distribution to a Member that has succeeded any other Member shall include any Capital Contributions (or Cash Capital Contribution) or distributions previously made by or to the former Member on account of the Units of such former Member transferred to such Member.

ARTICLE VII
DISTRIBUTIONS; ALLOCATIONS OF PROFITS AND LOSSES

Section 7.1 Generally. Subject to the provisions of Section 18-607 of the Act and to the provisions of this Article VII, the Company Board shall have sole discretion regarding the amounts and timing of distributions to Unitholders, in each case subject to the retention and establishment of reserves of, or payment to third parties of, such funds as it deems necessary with respect to the reasonable business needs of the Company which shall include the payment or the making of provision for the payment when due of the Company’s obligations, including the payment of any management or administrative fees and expenses or any other obligations. The making of distributions hereunder shall be subject to the terms and conditions of any indebtedness for borrowed money incurred 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 each Unitholder in the following order and priority:

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

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

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

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

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

(b) All distributions by the Company other than distributions of GP Income or IDR Income pursuant to Section 7.2(a) shall be made as follows:

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

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

Section 7.3 Book Allocations of Net Profits and Net Losses.

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

(a) the hypothetical distribution (if any) 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) all Company liabilities were satisfied in cash according to their terms (limited, with respect to each nonrecourse liability, to the Book Value of the assets securing such liability) and (z) the net proceeds thereof (after satisfaction of such liabilities) were distributed in full pursuant to Section 13.3, over

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

Section 7.4 Regulatory and Special Allocations. Notwithstanding the provisions of Section 7.3:

(a) Company Minimum Gain Chargeback. If there is a net decrease in Company Minimum Gain during any Taxable Year, each Unitholder shall be specially allocated items 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 the net decrease in Company Minimum Gain, determined in accordance with Treasury Regulation Section 1.704-2(g). The items to be so allocated shall be determined in accordance with Treasury Regulation Sections 1.704-2(f)(6) and 1.704-2(j)(2). This paragraph is intended to comply with the minimum gain chargeback requirement in Treasury Regulation Section 1.704-2(f) and shall be interpreted consistently therewith.

(b) Unitholder Nonrecourse Debt Minimum Gain Chargeback. Unitholder Nonrecourse Deductions shall be allocated in the manner required by Treasury Regulation Section 1.704-2(i). Except as otherwise provided in Treasury Regulation Section 1.704-2(i)(4), if there is a net decrease in Unitholder Minimum Gain during any Taxable Year, each Unitholder that has a share of such Unitholder Minimum Gain shall be specially allocated items of taxable income or gain for such Taxable Year (and, if necessary, subsequent Taxable Years) in an amount equal to that Unitholder’s share of the net decrease in Unitholder Minimum Gain. Items to be allocated pursuant to this paragraph shall be determined in accordance with Treasury Regulation Sections 1.704-2(i)(4) and 1.704-2(j)(2). This paragraph is intended to comply with the minimum 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 any adjustments, 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 allocated to such Unitholder in an amount and manner sufficient to eliminate the adjusted capital account deficit (determined according to Treasury Regulation Section 1.704-1(b)(2)(ii)(d)) created by such adjustments, allocations or distributions as quickly as possible. This paragraph is intended to comply with the qualified income offset requirement in Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

(d) Gross Income Allocation. In the event any Unitholder has a deficit Capital Account at the end of any Fiscal Year which is in excess of the sum of (i) the amount such Unitholder is obligated to restore, if any, pursuant to any provision of this Agreement and (ii) the amount such Unitholder is deemed to be obligated to restore pursuant to the penultimate sentences of Treasury Regulation Section 1.704-2(g)(1) and 1.704-2(i)(5), each such Unitholder shall be specially allocated items of Company income and gain in the amount of such excess as quickly as possible; provided that an allocation pursuant to this Section 7.4(d) shall be made only if and to the extent that a Unitholder would have a deficit Capital Account in excess of such sum after all other allocations provided for in this Article VII have been tentatively made as if Section 7.4(c) and this Section 7.4(d) were not in this Agreement.

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

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

requirements contained in Section 7.4(a) and Section 7.4(b), shall be made before any other allocations hereunder.

(g) Reallocation. The allocations set forth in paragraphs (a) through (f) above (the “Regulatory Allocations”) are intended to comply with certain requirements of the Treasury Regulations under Code Section 704. The Regulatory Allocations may not be consistent with the manner in which the Members intend to allocate Net Profits and 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 loss shall be reallocated among the Members so as to eliminate the effect of the Regulatory Allocations and thereby to cause the respective Capital Accounts of the Members to be in the amounts (or as close thereto as possible) they would have been if Net Profits and Net Losses (and such other items of income, gain, deduction and loss) had been allocated without reference to the Regulatory Allocations. In general, the Members anticipate that this will be accomplished by specially allocating other Net Profits and Net Losses (and such other items of income, gain, deduction and loss) among the Members so that the net amount of the Regulatory Allocations and such special allocations to each such Member is zero. In addition, if in any Fiscal Year or other period there is a decrease in Company Minimum Gain, or in Unitholder Nonrecourse Debt Minimum Gain, and application of the minimum gain chargeback requirements set forth in Section 7.4(a) or Section 7.4(b) would cause a distortion in the economic arrangement among the Members, the Members may, if they do not expect that the Company will have sufficient other income to correct such distortion, request the Internal Revenue Service to waive either or both of such minimum gain chargeback requirements. If such request is granted, this Agreement shall be applied in such instance as if it did not contain such minimum gain chargeback requirement.

(h) Offsetting Allocations. If, and to the extent that, any Member is deemed to recognize any item of income, gain, deduction or loss as a result of any transaction between such Member and the Company pursuant to Sections 1272-1274, 7872, 483, 482 or 83 of the Code or any similar provision now or hereafter in effect, and the Company Board determines that any corresponding Company items of Net Profits or Net Losses of the Member who recognizes such item should be allocated to such Member in order to reflect the Members’ Economic Interests in the Company, then the Company Board may so allocate such Net Profits or Net Losses.

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

Section 7.5 Tax Withholding. The Company shall withhold taxes from any allocation or distribution to any Member to the extent required by the Code or any other applicable law. For the purposes of this Agreement, any taxes so withheld by the Company shall be deemed to be a cash distribution or payment to such Member, and the Company shall reduce the amount otherwise distributable or allocable to such Member pursuant to this Agreement and shall reduce the Capital Account of such Member accordingly. To the extent the aggregate of such payments to a Member for any period exceeds the distributions to which such Member is entitled for such period, the amount of such excess shall be considered a demand loan from the Company to such Member, with per annum interest at the Company’s current rate of borrowing plus 1%, not to exceed the maximum rate permitted by applicable law, until discharged by the Member through repayment, which may be made out of distributions to which such Member would otherwise be entitled. The withholdings referred to in this Section 7.5 shall be made at the maximum applicable statutory rate under the applicable tax law unless the Company shall have received an opinion of counsel or other evidence, satisfactory to the Company Board, to the effect that a lower rate is applicable, or that no withholding is applicable. Each Member

hereby agrees to indemnify and hold harmless the Company and the other Members from and against any liability (including without limitation any liability for taxes, penalties, additions to tax, interest or failure to withhold taxes) with respect to income attributable 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 and expenses of the Company shall be allocated, for Federal, state and local income tax purposes, among the Members in accordance with the allocation of such income, gains, losses, deductions and expenses among the Members for computing their Capital Accounts, except that if any such allocation is not permitted by the Code or other applicable law, the Company’s subsequent income, gains, losses, deductions and expenses shall be allocated among the Members for tax purposes to the extent permitted by the Code and other applicable law, so as to reflect as nearly as possible the allocation set forth herein in computing their Capital Accounts.

(b) Contributed Property. In accordance with Code Section 704(c) and the Treasury Regulations thereunder, income, gain, loss, deduction and expense with 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 account of any variation between the adjusted basis of such property to the Company for Federal income tax purposes and its Fair Market Value at the time of contribution. The Company Board may, in its 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 “ceiling rule” 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 contributed property (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 is adjusted pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(f) as provided in Section 6.4, subsequent allocations of items of taxable income, gain, loss, deduction and expense with respect to such asset shall take account of any variation between the adjusted basis of such asset for Federal income tax purposes and its Book Value in the same manner as under Code Section 704(c).

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

(e) Tax Elections. Any elections or other decisions relating to such allocations shall be made by the Company Board in any manner that reasonably reflects the purpose and intent of this Agreement. Allocations pursuant to this Section 7.6 are 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 Account or share of profits, losses, other items or distributions pursuant to any provisions of this Agreement.

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

Section 7.7 Section 754 Election. The Company Board, may, in its sole discretion, cause the Company to elect, pursuant to Section 754 of the Code, to adjust the basis of Company property as permitted and provided in Sections 734 and 743 of the Code. Such election shall 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 of any Company asset or to the Member’s Capital Accounts (except as provided in Treasury Regulations Section 1.704-1(b)(2)(iv)(m)) or in the determination or allocation of Net Profits or Net Losses for purposes other than such tax purposes.

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

ARTICLE VIII
MANAGEMENT AND OPERATION OF BUSINESS

Section 8.1 Management by the Company Board.

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

(i) the making of any expenditures, the lending or borrowing of money, the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtedness, including indebtedness that is convertible into a Membership Interest, and the incurring of any other obligations;

(ii) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Company;

(iii) the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any or all of the assets of the Company or the merger or other combination of the Company with or into another Person;

(iv) the use of the assets of the Company (including cash on hand) for any purpose consistent with the terms of this Agreement, including the financing of the conduct of the operations of the Company Group, the lending of funds to other Persons (including the MLP or any Group Member), the repayment of obligations of the Company Group and the making of capital contributions to any Group Member;

(v) the negotiation, execution and performance of any contracts, conveyances or other instruments (including instruments that limit the liability of the Company under contractual arrangements to all or particular assets of the Company, with the other party to the contract to have no recourse against the MLP or its assets other than its interest in the Company, even if same results in the terms of the transaction being less favorable to the Company than would otherwise be the case);

(vi) the distribution of Company cash;

(vii) the selection and dismissal of Officers and agents, outside attorneys, accountants, consultants and contractors and the determination of their compensation and other terms of employment or hiring;

(viii) the maintenance of such insurance for the benefit of the Company Group and the Members as it deems necessary or appropriate;

(ix) the formation of, or acquisition of an interest in, and the contribution of property and the making of 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 any matters affecting the rights and obligations of the Company, including the bringing and defending of actions at law or in equity and otherwise engaging in the conduct of litigation and the incurring of legal expense and the settlement of claims and litigation;

(xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law;

(xii) the purchase, sale or other acquisition or disposition of Membership Interests, or the issuance of additional options, rights, warrants and appreciation rights relating to Membership Interests; and

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

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

(b) Number, Term of Office and Qualifications. The number of Managers constituting the Company Board shall be not less than three and not more than ten. Within these limits, the number of Managers constituting the Company Board shall be determined from time to time by Members holding a majority-in-interest of the Membership Interests. The Members hereby agree that the initial number of Managers constituting the Company Board shall be six. In the event MLP Securities are registered under the Securities Exchange Act of 1934, as amended, the Members further agree to take all such actions as may be reasonably necessary to insure that the Company Board is in compliance with all applicable rules and regulations of the Commission and any National Securities Exchange on which MLP Securities are registered. The members of the Company Board shall be elected by the Members, and each Manager elected shall hold office until his or her successor is elected and qualified or until his or her earlier death, resignation or removal in the manner hereinafter provided. Managers need not be Members. Managers must at all times be citizens of the United States by birth, naturalization or as otherwise authorized by law.

(c) Initial Managers. The Members hereby elect the following individuals, each of whom is a citizen of the United States, as the initial members of the Company Board, to serve until their respective successors are duly elected and qualified:

Xxxxx Xxxx

Xxxx X. Xxxxxxx

Xxxxxx X. Xxxxxxx

Xxxxxxx X. Xxxxxx, Xx.

M. Xxxxxxx Xxxxx, Xx.

Xxxxxxx X. Xxxxxxxx

Xxxxxx X. X’Xxxxxx

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

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

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

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

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

(i) Committees. The Company Board shall establish a (i) Conflicts Committee to serve as the Conflicts Committee under the MLP Agreement and meeting the requirements for such committee set forth in the MLP Agreement, (ii) an Audit Committee meeting the applicable requirements of the Commission and any National Securities Exchange on which MLP Securities are registered and (iii) a compensation committee meeting the applicable requirements of the Commission and 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 resolution and until dissolved by the Company Board, shall have and may exercise any or all of the authority of the Company Board. At every meeting of any such committee, the presence of a majority

of all the representatives thereof shall constitute a quorum, and the affirmative vote of a majority of the representatives present shall be necessary for the adoption of any resolution. The Company Board may dissolve any committee, other than the audit, conflicts and compensation committees, at any time.

(j) Managers Have No Exclusive Duty to Company. The Managers shall not be required to manage the Company as their sole and exclusive function and they may have other business interests and may engage 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 the terms of his employment agreement with such Group Member. Neither the Company nor any Member shall have any right, by virtue of this Agreement, to share or participate in such other investments or activities of any Manager or to the income or proceeds derived therefrom. The Managers shall incur no liability to the Company or to any of the Members as a result of engaging in any other business or venture.

Section 8.2 Officers.

(a) Designation and Appointment. The Company Board may, from time to time, employ and retain Persons as may be necessary or appropriate for the conduct of the Company’s business (subject to the supervision and control of the Company Board), including employees, agents and other Persons (any of whom may be a Member) who may be designated as Officers of the Company, with titles including but not limited to “chief executive officer,” “chairman,” “president,” “vice president,” “treasurer,” “secretary,” “general manager,” “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 same person. The Company Board may, in its discretion, choose not to fill any office for any period as it may deem advisable. Officers need not be residents of the State of Delaware or Members, but Officers must at all times be citizens of the United States by birth, naturalization or as otherwise authorized by law. Any Officers so designated shall have such authority and perform such duties as the Company Board may, from time to time, delegate to them. The Company Board may assign titles to particular Officers. Each Officer shall hold office until his or her successor shall be duly designated and shall qualify or until his or her death or until he or she shall resign or shall have been removed in the manner hereinafter provided. The salaries or other compensation, if any, of the Officers of the Company shall be fixed from time to time by the Company Board. The initial Officers of the Company shall be as follows:

Name		Title

Xxxx X. Xxxxxxx		Chairman of the Board and Chief Executive Officer
Xxxxxx Xxxxxxx		President and Chief Operating Officer
Xxxxxx Xxxx		Executive Vice President
Xxxxxx Xxxxxxxx		Vice President-Chief Financial Officer, Secretary and Treasurer
Xxxx Xxxxxxxx		Vice President-Operations
Xxxxxxx X. Xxxxxx		Vice President-Chartering

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

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

(d) Chief Executive Officer. Subject to the powers of the Company Board, the chief executive officer of the Company shall be in general and active charge of the entire business and affairs of the Company, and shall be its chief policy making Officer. He or she shall direct, coordinate and control the Company’s business and activities and its operating expenses and capital expenditures, and shall have general authority to exercise all the powers necessary for the chief executive officer of the Company, all in accordance with basic policies established by and subject to the control of the Company Board. In the absence of the chief executive officer, his or her duties shall be performed and his or her authority may be exercised by such Officer as may have been designated the most senior officer of the Company.

(e) President. The president shall, subject to the powers of the Company Board and chief executive officer, be the chief administrative officer of the Company and shall have general charge of the business, affairs and property of the Company, and control over its Officers (other than the chief executive officer), agents and employees. The president shall see that all orders and resolutions of the Company Board and the chief executive officer are carried into effect. He or she shall be responsible for the employment of employees, agents and Officers (other than the chief executive officer) as may be required for the conduct of the business and the attainment of the objectives of the Company. He or she 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 the suspension for Cause of any such Officer, to recommend to the Company Board what further action should be taken. In the absence of the president, his or her duties shall be performed and his or her authority may be exercised by the chief executive officer. In the absence of the president and the chief executive officer, the duties of the president shall be performed and his or her authority may be exercised by such Officer as may have been designated as the most senior officer of the Company. The president shall have such other powers and perform such other duties as may be prescribed by the chief executive officer or the Company Board.

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

(g) Chief Operating Officer. Subject to the powers of the Company Board, the chief executive officer and the president, the chief operating officer of the Company shall have general and active management of the business of the Company. The chief operating officer shall see that all orders and resolutions of the president are carried into effect. The chief operating officer shall have such other powers and perform such other duties as may from time to time be prescribed by the chief executive officer, the president or the Company Board.

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

(i) Secretary. The secretary shall attend all meetings of the Members, and shall record all the proceedings of the meetings in a book to be kept for that purpose. The secretary shall keep all documents as may be required under the Act. The secretary shall perform such other duties and have such other authority as may be prescribed elsewhere in this Agreement or 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 an assistant secretary or assistant secretaries, the assistant secretaries, in the order of their seniority, in the absence, disability or inability to act of the secretary, shall perform the duties and exercise the powers of the secretary, and shall perform such other duties as the chief executive officer, the president, the chief operating officer or the Company Board may from time to time prescribe.

Section 8.3 Restrictions on Certain Actions. Notwithstanding anything contrary contained herein, an Officer may not take any of the following actions without the prior approval of the Company Board:

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

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

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

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

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

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

(vii) make, or permit any of its Subsidiaries to make, any loans or advances to, guarantees for the benefit of, or investments in, any Person (other than a wholly-owned Subsidiary), except for (a) reasonable advances to employees in the ordinary course of business and (b) investments having a stated maturity no greater than one year from the date the Company makes such investment in (1) obligations of the United States government or any agency thereof or obligations guaranteed by the United States government, (2) certificates of deposit of commercial banks having combined capital and surplus of at least $500 million, (3) commercial paper with a rating of at least “Prime-1” by Xxxxx’x Investors Service, Inc. or (4) any other investment then permitted under the Company’s senior credit agreement;

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

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

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

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

(xii) enter into any partnership, 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 any agreement relating to a joint venture or a material business alliance of the Company or any of its Subsidiaries;

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

(xv) adopt, amend or terminate any (a) agreement with employees of the Company or its Subsidiaries, other than with respect to employees whose employment can be terminated without payment of any severance in excess of that provided generally to persons who are not Officers, (b) plan, policy, arrangement or understanding providing any of the following benefits to any current or former employee of the Company or its Subsidiaries: bonuses, pension, profit sharing, deferred compensation, incentive compensation, unit ownership, equity or quasi-equity purchase, equity or quasi-equity option, equity or quasi-equity appreciation rights, phantom equity or quasi-equity, retirement, vacation or severance, or (c) other material personnel practices or policies of the Company or its Subsidiaries;

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

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

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

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

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

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

(xxii) make any political or charitable contribution exceeding the amounts approved therefor by the Company Board in the annual budget;

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

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

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

Section 8.4 Limitation on Authority of Members. No Member shall participate in the management or control of the business of, or shall have any rights or powers with respect to, the Company except those expressly granted to it by the terms of this Agreement or those duly conferred on it by the Company Board. No Member is an agent of the Company solely by virtue of being a Member, and no Member has authority or power to act for or on behalf of the Company, to do any act that would be binding on the Company or to make any expenditures on behalf of the Company solely by virtue of being a Member, and the Members hereby consent to the exercise by the Company Board and Officers of the Company of the powers conferred on them by law and this Agreement. This Section 8.4 supersedes any authority granted to the Members pursuant to the Act. Any Member who takes any action or binds the Company in violation of this Section 8.4 shall be solely responsible for any loss and expense incurred by the Company as a result of the unauthorized action and shall indemnify and hold the Company harmless with respect to the loss or expense.

Section 8.5 Outside Activities.

(a) Except as specifically restricted by the Omnibus Agreement or as set forth in Services Agreement between various of the Officers and the Company, each Indemnitee shall have the right to engage in businesses of every type and description and other activities for profit and to engage in and possess an interest in other business ventures of any and every type or description, whether in businesses engaged in or anticipated to be engaged in by any Group Member, independently or with others, including business interests and activities in direct competition with the business and activities of any Group Member, and none of the same shall constitute a breach of this Agreement or any duty express or implied by law to any Group Member or any Member or Assignee. Neither any Group Member, any Member nor any other Person shall have any rights by virtue of this Agreement or the relationship established hereby in any business ventures of any Indemnitee.

(b) Subject to the terms of Section 8.5(a) and the Omnibus Agreement, but otherwise notwithstanding anything to the contrary in this Agreement, (i) the engaging in competitive activities by any Indemnitee in accordance with the provisions of this Section 8.5 is hereby approved by the Company and all Members, (ii) it shall be deemed not to be a breach of the Company Board’s fiduciary duty or any other obligation of any type whatsoever of the Company Board for the Indemnitees to engage in such business interests and activities in preference to or to the exclusion of the Company and (iii) except as set

forth in the Omnibus Agreement, the Company and the Indemnitees shall have no obligation to present business opportunities to the Company.

(c) Anything in this Agreement to the contrary notwithstanding, to the extent that provisions of this Agreement purport or are interpreted to have the effect of restricting the fiduciary duties that might otherwise, as a result of Delaware or other applicable law, be owed by the Company Board to the Company and its Members, or to constitute a waiver or consent by the Members to any such restriction, such provisions shall be inapplicable and have no effect in determining whether the Company Board has complied with its fiduciary duties in connection with determinations made by it under this Section 7.5.

Section 8.6 Indemnification.

(a) To the fullest extent permitted by law but subject to the limitations expressly provided in this Agreement, all Indemnitees shall be indemnified and held harmless 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 arising from any and all claims, demands, actions, suits or proceedings, whether civil, criminal, administrative or investigative, in which any Indemnitee may be involved, or is threatened to be involved, as a party or otherwise, by reason of its status as an Indemnitee; provided, that the Indemnitee shall not be indemnified and held harmless if there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that, in respect of the matter for which the Indemnitee is seeking indemnification pursuant to this Section 8.6, the Indemnitee acted in bad faith or engaged in fraud, willful misconduct or gross negligence or, in the case of a criminal matter, acted with knowledge that the Indemnitee’s conduct was unlawful; provided, further, no indemnification pursuant to this Section 8.6 shall be available to Shipping Master with respect to its obligations incurred pursuant to the Underwriting Agreement or the Closing Contribution Agreement. Any indemnification pursuant to this Section 8.6 shall be made only out of the assets of the Company, it being agreed that no Member shall (i) be personally liable for such indemnification or (ii) have no obligation to contribute or loan any monies or property to the Company to enable it to effectuate such indemnification.

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

(c) The indemnification provided by this Section 8.6 shall be in addition to any other 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 as to actions in the Indemnitee’s capacity as an Indemnitee and as to actions in any other capacity (including in its capacity as general partner of the MLP under the MLP Agreement), and shall continue as to an Indemnitee who has ceased to serve in such capacity and shall inure to the benefit of the heirs, successors, assigns and administrators of the Indemnitee.

(d) The Company may purchase and maintain (or reimburse Shipping Master or its Affiliates for the cost of) insurance, on behalf of the Company Board, its Affiliates and such other Persons as the Company Board shall determine, against any liability that may be asserted against or expense that may be incurred by such Person in connection with the Company’s activities or such Person’s activities on behalf of the Company, regardless of whether the Company would have the power to indemnify such Person against such liability under the provisions of this Agreement.

(e) For purposes of this Section 8.6, the Company shall be deemed to have requested an Indemnitee to serve as fiduciary of an employee benefit plan whenever the performance by it of its duties to the Company also imposes duties on, or otherwise involves services by, it to the plan or participants or beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect to 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 it with respect to any employee benefit plan in the performance of its duties for a purpose reasonably believed by it to be in the best interest of the participants and beneficiaries of the plan shall be deemed to be for a purpose which is in, or not opposed to, the best interests of the Company.

(f) In no event may an Indemnitee subject the Members to personal liability by reason of the indemnification provisions set forth in this Agreement.

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

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

(i) No amendment, modification or repeal of this Section 8.6 or any provision hereof shall in any manner terminate, reduce or impair the right of any past, present or future Indemnitee to be indemnified by the Company, nor the obligations of the Company to indemnify any such Indemnitee under and in accordance with the provisions of this Section 8.6 as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted.

Section 8.7 Liability of Indemnitees.

(a) Notwithstanding anything to the contrary set forth in this Agreement or the MLP Agreement, no Indemnitee shall be liable for monetary damages to the Company, the Members, the MLP, the Assignees or any other Persons who have acquired interests in the Company or MLP Securities, for losses sustained or liabilities incurred as a result of any act or omission of an Indemnitee unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that, in respect of the matter in question, the Indemnitee acted in bad faith or engaged in fraud, willful misconduct or gross negligence or, in the case of a criminal matter, acted with knowledge that the Indemnitee’s conduct was criminal.

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

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

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

(d) Any amendment, modification or repeal of this Section 8.7 or any provision hereof shall be prospective only and shall not in any way affect the limitations on the liability of the Indemnitees under this Section 8.7 as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted.

(e) No Member shall have any duty to the Company or any Member of the Company except as expressly set forth herein or in other written agreements. No Member, Manager or Officer of the Company shall be liable to the Company or to any Member for any loss or damage sustained by the Company or any Member (including without limitation as a result of its investment in the Company), unless the loss or damage shall have been 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 such Person’s duties pursuant to Section 8.2(c). In performing his or her duties, each such Person shall be entitled to rely in good faith on the provisions of this Agreement and on information, opinions, reports or statements (including financial statements and information, opinions, reports or statements as to the value or amount of the assets, liabilities, profits or losses of the Company or any facts pertinent to the existence and amount of assets from which distributions to Members might properly be paid) of the following other Persons or groups: one or more Officers or employees of the Company, any attorney, independent accountant, appraiser or other expert or professional employed or engaged by or on behalf of the Company, the Company Board or any other Person who has been selected with reasonable care by or on behalf of the Company or the Company Board, in each case as to matters which such relying Person reasonably believes to be within such other Person’s competence. The preceding sentence shall in no way limit any Person’s right to rely on information to the extent provided in Section 18-406 of the Act. No Member, Manager or Officer of the Company shall be personally liable under any judgment of a court, or in any other manner, for any debt, obligation or liability of the Company, whether that liability or obligation arises in contract, tort or otherwise, solely by reason of being a Member, Manager or Officer of the Company or any combination of the foregoing. The provisions of this Agreement, to the extent that they expand or restrict the duties and liabilities of a Member, Manager or Officer otherwise existing at law or in equity, are agreed by each of the Members to modify to that extent such duties and liabilities of the Members, Managers or Officers.

Section 8.8 Other Matters Concerning the Company Board.

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

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

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

(d) Any standard of care and duty imposed by this Agreement or under the Act or any applicable law, rule or regulation shall be modified, waived or limited, to the extent permitted by law, as required to permit the Company Board to act under this Agreement or any other agreement contemplated by this Agreement and to make any decision pursuant to the authority prescribed in this Agreement, so long as such action is reasonably believed by the Company Board to be in, or not inconsistent with, the best interests of the Company.

Section 8.9 Reliance by Third Parties. Notwithstanding anything to the contrary in this Agreement, any Person dealing with the Company shall be entitled to assume that the Company Board and any Officer authorized by the Company Board to act on behalf of and in the name of the Company has full power and authority to encumber, sell or otherwise use in any manner any and all assets of the Company and to enter into any authorized contracts on behalf of the Company, and such Person shall be entitled to deal with the Company Board 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 defenses or other remedies that may be available against such Person to contest, negate or disaffirm any action of the Company Board or any such officer in connection with any such dealing. In no event shall any Person dealing with the Company Board or any such officer or its representatives be obligated to ascertain that the terms of the Agreement have been complied with or to inquire into the necessity or expedience of any act or action of the Company Board or any such officer or its representatives. Each and every certificate, document or other instrument executed on behalf of the Company by the Company Board or its representatives shall be conclusive evidence in favor of any and every Person relying thereon or claiming thereunder that (a) at the time of the execution and delivery of such certificate, document or instrument, this Agreement was in full force and effect, (b) the Person executing and delivering such certificate, document or instrument was duly authorized and empowered to do so for and on behalf of the Company and (c) such certificate, document or instrument was duly executed and delivered in accordance with the terms and provisions of this Agreement and is binding upon the Company.

ARTICLE IX
BOOKS, RECORDS, ACCOUNTING AND REPORTS

Section 9.1 Records and Accounting. The Company Board shall keep or cause to be kept at the principal office of the Company appropriate books and records with respect to the Company’s business, including all books and records necessary to provide to the Members any information required to be provided pursuant to Section 3.3(a). Any books and records maintained by or on behalf of the Company in the regular course of its business, including books of account and records of Company proceedings, may be kept on, or be in the form of, computer disks, hard drives, punch cards, magnetic tape, photographs, micrographics or any other information storage device; provided, that the books and records so maintained are convertible into clearly legible written form within a reasonable period of time. The books of the Company shall be maintained, for financial reporting purposes, on an accrual basis in accordance with United States generally accepted accounting principles consistently applied.

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

ARTICLE X
TAX MATTERS

Section 10.1 Tax Returns and Information. The Company shall 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 a taxable year ending on December 31. The tax information reasonably required by the Members for federal and state income tax reporting purposes with respect to a taxable year shall be

furnished to them within 90 days of the close of the calendar year in which the Company’s taxable year ends. The classification, realization and recognition of income, gain, losses and deductions and other items shall be on the accrual method of accounting for federal income tax purposes.

Section 10.2 Tax Elections.

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

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

Section 10.3 Tax Matters Partner. Shipping Master shall 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 to represent the Company before the Internal Revenue Service and any other governmental agency with jurisdiction, and to sign such consents and to enter into settlements and other agreements with such agencies as the Company Board deems necessary or advisable. Promptly following the written request of the Tax Matters Partner, the Company shall, to the fullest extent permitted by law, reimburse and indemnify the Tax Matters Partner for all reasonable expenses, including reasonable legal and accounting fees, claims, liabilities, losses and damages incurred by the Tax Matters Partner in connection with any administrative or judicial proceeding (i) with respect to the tax liability of the Company and/or (ii) with respect to the tax liability of the Members in connection with the operations of the Company. The provisions of this Section 10.3 shall survive the termination of the Company or the termination of any Member’s interest in the Company and shall remain binding on the Members for as long a period of time as is necessary to resolve with the Internal Revenue Service any and all matters regarding the Federal income taxation of the Company or the Members.

ARTICLE XI
ADMISSION OF MEMBERS

Section 11.1 Admission of 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 seek admission as a Substituted Member subject to the conditions of, and in the manner permitted under, this Agreement. A transferor of a Membership Interest shall, however, only have (a) the authority to convey to a purchaser or other transferee and (b) the right to request admission as a Substituted Member to such purchaser or other transferee in respect of the transferred Membership Interests. Each transferee of a Membership Interest shall be an Assignee and be deemed to have applied to become a Substituted Member with respect to the Interests so transferred to such Person. Such Assignee shall become a Substituted Member (x) at such time as the Company Board’s consent thereto, which consent may be given or withheld in the Company Board’s discretion, and (y) when any such admission is shown on the books and records of the Company. If such consent is withheld, such transferee shall remain an Assignee. An Assignee shall have an interest in the Company equivalent to that of a Member with respect to allocations and distributions, including liquidating distributions, of the Company. With respect to voting rights attributable to Membership Interests that are held by Assignees, the Company 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.

Section 11.2 Admission of Additional Members.

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

(b) Notwithstanding anything to the contrary in this Section 11.2, no Person shall be admitted as an Additional Member without the consent of the Company Board, which consent may be given or withheld in the Company Board’s discretion. The admission of any Person as an Additional Member shall become effective on the date upon which the name of such Person is recorded as such in the books and records of the Company, following the consent of the Company Board to such admission.

Section 11.3 Amendment of Agreement and Certificate of Formation. To effect the admission to the Company of any Member, the Company Board shall take all steps necessary and appropriate under the Act to amend the records of the Company to reflect such admission and, if necessary, to prepare as 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 of Formation, and the Company Board may for this purpose, among others, exercise the power of attorney granted pursuant to Section 2.6.

ARTICLE XII
WITHDRAWAL OF MEMBERS; FORFEITURE OF UNITS

Section 12.1 Withdrawal of Members. Without the prior written consent of the Company Board, which may be granted or withheld in its sole discretion, no Member shall have the right to withdraw from the Company.

Section 12.2 Treatment of Class B Units upon Termination of Employment of Executive Member. Except as the Company Board may otherwise agree:

(i) upon any termination of the employment by Shipping Master or its Subsidiaries of any Executive Member for “justifiable cause” (as such term is defined in such Executive Member’s Services Agreement), or if such Executive Member terminates his employment without “good reason” (as such term is defined in such Executive Member’s Services Agreement), other than by reason of retirement, the Class B Units then held by such Executive Member shall be forfeited and shall cease to be outstanding;

(ii) upon any termination of the employment by Shipping Master or its Subsidiaries of any Executive Member other than for justifiable cause, death or disability (as such term is defined 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 of the employment by Shipping Master or its Subsidiaries of any Executive Member due to his death or disability, he shall forfeit a number of Class B Units equal to the product determined by multiplying the number of Class B Units owned by him by a fraction, the numerator of which is the number of Subordinated Units then outstanding and the denominator of which is 5,272,341; and

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

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

ARTICLE XIII
DISSOLUTION AND LIQUIDATION

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

(a) an election to dissolve the Company by the Company Board that is approved by all of the Members;

(b) the entry of a decree of judicial dissolution of the Company pursuant to the provisions of the Act;

(d) the dissolution of the MLP.

Section 13.2 Liquidator. Upon dissolution of the Company, the Company Board shall select one or more Persons to act as Liquidator. The Liquidator shall be entitled to receive such compensation for its services as may be approved by a majority of the Members. The Liquidator shall agree not to resign at any time without 15 days’ prior notice and may be removed at any time, with or without cause, by notice of removal approved by Members holding a majority-in-interest of the Membership Interests. Upon dissolution, removal or resignation of the Liquidator, a successor and substitute Liquidator (who shall have and succeed to all rights, powers and duties of the original Liquidator) shall within 30 days thereafter be approved by holders of at least a majority of the Members. The right to approve a successor or substitute Liquidator in the manner provided herein shall be deemed to refer also to any such successor or substitute Liquidator approved in the manner herein provided. Except as expressly provided in this Article XIII, the Liquidator approved in the manner provided herein shall have and may exercise, without further authorization or consent of any of the parties hereto, all of the powers conferred upon the Company Board under the terms of this Agreement (but subject to all of the applicable limitations, contractual and otherwise, upon the exercise of such powers) to the extent necessary or desirable in the good faith judgment of the Liquidator to carry out the duties and functions of the Liquidator hereunder for and during such period of time as shall be reasonably required in the good faith judgment of the Liquidator to complete the winding up and liquidation of the Company as provided for herein.

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

(a) The assets may be disposed of by public or private sale or by distribution in kind to one or more Members on such terms as the Liquidator and such Member or Members may

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

(b) Liabilities of the Company include amounts owed to Members otherwise than in respect of their distribution rights under Article VII. With respect to any liability that is contingent, conditional or unmatured or is otherwise not yet due and payable, the Liquidator shall either settle such claim for such amount as it thinks appropriate or establish a reserve of cash or other assets to provide for its payment. When paid, any unused portion of the reserve shall be distributed as additional liquidation proceeds.

(c) All property and all cash in excess of that required to discharge liabilities as provided in Section 13.3(b) shall be distributed to the Members in accordance with Section 7.2 (assuming for this purpose that all Subordinated Units had been converted into Common Units).

It is the Members’ intent that, after giving effect to all allocations of Net Profits or Net 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 the amounts to be distributed pursuant to this Section 13.3(c). In furtherance thereof, notwithstanding the provisions of Article VII, items of income, gain, deduction and loss for the final Taxable Year of the Company shall be allocated to the Unitholders’ Capital Accounts in such a manner that the Unitholders’ positive Capital Account balances shall be, immediately prior to the distribution pursuant to this Section 13.3(c), in such proportion. Distributions pursuant to this Section 13.3(c) shall be made by the end of the Taxable Year of the Company during which the liquidation occurs (or, if later, 90 days after the date of the liquidation).

Section 13.4 Cancellation of Certificate of Formation. Upon the completion of the distribution of Company cash and property as provided in Section 13.3 in connection with the liquidation of the Company, the Company shall be terminated and the Certificate of Formation, as well as all qualifications of the Company as a foreign limited liability company in jurisdictions other than the State of Delaware, shall be canceled and such other actions as may be necessary to terminate the Company shall be taken.

Section 13.5 Return of Capital Contributions. Neither the MLP nor Shipping Master shall be liable for, nor have any obligation to contribute or loan any monies or property to the Company to enable it to effectuate, the return of the Capital Contributions of the Members, or any portion thereof, it being expressly understood that any such return shall be made solely from Company assets.

Section 13.6 Waiver of Partition. To the maximum extent permitted by law, each Member hereby waives any right to partition of the Company property.

Section 13.7 Capital Account Restoration. No Member shall have any obligation to restore any negative balance in its Capital Account upon liquidation of the Company.

ARTICLE XIV
AMENDMENT OF AGREEMENT

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

(a) a change in the name of 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 this Agreement;

(c) a change that, in the sole discretion of the Company Board, is necessary or advisable to qualify or continue the qualification of the Company as a limited liability company in which the Members have limited liability under the laws of any state or to ensure that neither the Company nor the MLP will be treated as an association taxable as a corporation or otherwise taxed as an entity for federal income tax purposes;

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

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

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

(g) any amendment expressly permitted in this Agreement to be made by the Company Board acting alone;

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

(i) any other amendments substantially similar to the foregoing.

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

Section 14.2 Amendment Procedures. Except with respect to amendments of the type described in Section 14.1, all amendments to this Agreement shall be made in accordance with the following requirements. Amendments to this Agreement may be proposed only by or with the consent of the Company Board which consent may be given or withheld in its sole discretion. A proposed amendment shall be effective upon its approval by the Members.

ARTICLE XV
GENERAL PROVISIONS

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

Section 15.2 Further Action. The parties shall execute and deliver all documents, provide all information and take or refrain from taking action as may be necessary or appropriate to achieve the purposes of this Agreement.

Section 15.3 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their heirs, executors, administrators, successors, legal representatives and permitted assigns.

Section 15.4 Integration. This Agreement constitutes the entire agreement among the parties hereto pertaining to the subject matter hereof and supersedes all prior agreements and understandings pertaining thereto.

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

Section 15.6 Waiver. No failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute waiver of any such breach of any other covenant, duty, agreement or condition.

Section 15.7 Counterparts. This Agreement may be executed in counterparts, all of which together shall constitute an agreement binding on all the parties hereto, notwithstanding that all such parties are not signatories to the original or the same counterpart. Each party shall become bound by this Agreement immediately upon affixing its signature hereto, independently of the signature of any other party.

Section 15.8 Applicable Law. This Agreement shall be construed 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 Invalidity of Provisions. If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby.

Section 15.10 Consent of Members. Each Member hereby expressly consents and agrees that, whenever in this Agreement it is specified that an action may be taken upon the affirmative vote or consent of less than all of the Members, such action may be so taken upon the concurrence of less than all of the Members and each Member shall be bound by the results of such action.

* * * * *

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

UNITED STATES SHIPPING MASTER LLC


By:	/s/ Xxxx Xxxxxxx
		Name: Xxxx Xxxxxxx
		Title: Chairman


s/s Xxxxxx Xxxxxxxx
		Xxxxxx Xxxxxxxx


s/s Xxxxxx Xxxx
		Xxxxxx Xxxx


/s/ Xxxx Xxxxxxxx
		Xxxx Xxxxxxxx


/s/ Xxxxxx Xxxxxxx
		Xxxxxx Xxxxxxx


/s/ Xxxx Xxxxxxx
		Xxxx Xxxxxxx


/s/ Xxxx Xxxxxx
		Xxxx Xxxxxx

SCHEDULE A

Member/Address	Class of Units	Initial Number Of Units
Shipping Master	Class A	900
Xxxxxx Xxxxxxxx	Class B	15
Xxxxxx Xxxx	Class B	5
Xxxx Xxxxxxxx	Class B	15
Xxxxxx Xxxxxxx	Class B	25
Xxxx Xxxxxxx	Class B	25
Xxxx Xxxxxx	Class B	15
		1,000

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FIRST AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF US SHIPPING GENERAL PARTNER LLC

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