Exhibit 10.1

 

COMMON UNIT

PURCHASE AGREEMENT

 

 

by and between

 

 

K-SEA TRANSPORTATION PARTNERS L.P.

 

 

and

 

 

TORTOISE ENERGY INFRASTRUCTURE CORPORATION

 

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Table of Contents

 

ARTICLE I. DEFINITIONS

 

Section 1.01

Definitions

 

Section 1.02

Accounting Procedures and Interpretation

 

 

 

 

ARTICLE II. AGREEMENT TO SELL AND PURCHASE

 

Section 2.01

Authorization of Sale of Common Units

 

Section 2.02

Sale and Purchase

 

Section 2.03

Closing

 

Section 2.04

Conditions to the Closing

 

Section 2.05

K-Sea Deliveries

 

Section 2.06

Purchaser Deliveries

 

Section 2.07

Price Per Unit

 

Section 2.08

Lock-Up

 

 

 

 

ARTICLE III. REPRESENTATIONS AND WARRANTIES RELATED TO K-SEA

 

Section 3.01

Corporate Existence

 

Section 3.02

Capitalization and Valid Issuance of Purchased Units

 

Section 3.03

K-Sea SEC Documents

 

Section 3.04

No Material Adverse Change

 

Section 3.05

Litigation

 

Section 3.06

No Conflicts

 

Section 3.07

Authority

 

Section 3.08

Approvals

 

Section 3.09

MLP Status

 

Section 3.10

Offering

 

Section 3.11

Investment Company Status

 

Section 3.12

Certain Fees

 

Section 3.13

No Side Agreements

 

Section 3.14

Material Agreements

 

 

 

 

ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

Section 4.01

Corporate Existence

 

Section 4.02

No Conflicts

 

Section 4.03

Certain Fees

 

Section 4.04

No Side Agreements

 

Section 4.05

Unregistered Securities

 

 

 

 

ARTICLE V. INDEMNIFICATION, COSTS AND EXPENSES

 

Section 5.01

Indemnification by K-Sea

 

Section 5.02

Indemnification by Purchaser

 

Section 5.03

Indemnification Procedure

 

 

 

 

ARTICLE VI. MISCELLANEOUS

 

Section 6.01

Interpretation and Survival of Provisions

 

Section 6.02

Survival of Provisions

 

 

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Section 6.03

No Waiver; Modifications in Writing

 

Section 6.04

Binding Effect; Assignment

 

Section 6.05

Non-Disclosure

 

Section 6.06

Communications

 

Section 6.07

Removal of Legend

 

Section 6.08

Entire Agreement

 

Section 6.09

Governing Law

 

Section 6.10

Execution in Counterparts

 

Section 6.11

Termination

 

 

 

 

Exhibit A – Form of Registration Rights Agreement

 

Exhibit B – Form of Opinion or Opinions of K-Sea Counsel

 

 

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COMMON UNIT PURCHASE AGREEMENT

 

This COMMON UNIT PURCHASE AGREEMENT, dated as of June 1, 2005 (this
“Agreement”), is by and between K-SEA TRANSPORTATION PARTNERS L.P., a Delaware
limited partnership (“K-Sea”), and TORTOISE ENERGY INFRASTRUCTURE CORPORATION, a
Maryland closed-end management investment company (“Purchaser”).

 

WHEREAS, K-Sea desires to sell 500,000 Common Units to Purchaser and Purchaser
desires to purchase 500,000 Common Units from K-Sea in accordance with the
provisions of this Agreement;

 

WHEREAS, K-Sea has agreed to provide Purchaser with certain registration rights
with respect to the Common Units acquired pursuant hereto.

 

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth
herein and for good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereby agree as follows:

 

ARTICLE I.
DEFINITIONS

 

Section 1.01                              Definitions.  As used in this
Agreement, and unless the context requires a different meaning, the following
terms have the meanings indicated:

 

“Affiliate” means, with respect to a specified Person, any other Person,
directly or indirectly controlling, controlled by or under direct or indirect
common control with such specified Person.  For purposes of this definition,
“control” (including, with correlative meanings, “controlling”, “controlled by”,
and “under common control with”) means the power to direct or cause the
direction of the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise.

 

“Anniversary Date” means six months from the Closing Date.

 

“Basic Documents” means, collectively, this Agreement, the Registration Rights
Agreement, and any and all other agreements or instruments executed and
delivered to Purchaser by K-Sea or any Subsidiary of K-Sea hereunder or
thereunder.

 

“Business Day” means any day other than a Saturday, Sunday, or a legal holiday
for commercial banks in Wilmington, Delaware.

 

“Closing” shall have the meaning specified in Section 2.03.

 

“Closing Date” shall have the meaning specified in Section 2.03.

 

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

 

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“Common Unit Price” shall have the meaning specified in Section 2.07.

 

“Common Units” means the common units representing limited partner interests in
K-Sea.

 

“Confidentiality Agreement” means that certain letter agreement between K-Sea
and Purchaser dated May 10, 2005.

 

“Delaware LP Act” shall have the meaning specified in Section 3.02.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time, and the rules and regulations of the Commission promulgated thereunder.

 

“GAAP” means generally accepted accounting principles in the United States of
America in effect from time to time.

 

“General Partners” means K-Sea General Partner L.P., a Delaware limited
partnership and the general partner of K-Sea, and K-Sea General Partner GP, LLC,
a Delaware limited liability company and the general partner of K-Sea General
Partner L.P.

 

“Governmental Authority” means, with respect to a particular Person, the
country, state, county, city and political subdivisions in which such Person or
such Person’s Property is located or which exercises valid jurisdiction over any
such Person or such Person’s Property, and any court, agency, department,
commission, board, bureau or instrumentality of any of them and any monetary
authority which exercises valid jurisdiction over any such Person or such
Person’s Property.  Unless otherwise specified, all references to Governmental
Authority herein with respect to K-Sea means a Governmental Authority having
jurisdiction over K-Sea, its Subsidiaries or any of their respective Properties.

 

“Indemnified Party” shall have the meaning specified in Section 5.03.

 

“Indemnifying Party” shall have the meaning specified in Section 5.03.

 

“K-Sea” has the meaning set forth in the introductory paragraph.

 

“K-Sea Financial Statements” shall have the meaning specified in Section 3.03.

 

“K-Sea Form S-3” shall have the meaning specified in Section 3.03.

 

“K-Sea Material Adverse Effect” means any material and adverse effect on (a) the
assets, liabilities, financial condition, business, operations or affairs of
K-Sea and its Subsidiaries taken as a whole; (b) the ability of K-Sea and its
Subsidiaries taken as a whole to carry out their business as such business is
conducted as of the date hereof or to meet their obligations under the Basic
Documents on a timely basis; or (c) the ability of K-Sea to consummate the
transactions under any Basic Document; provided, however, that a K-Sea Material
Adverse Effect shall not include any material and adverse effect on the
foregoing to the extent such material and adverse effect results from, arises
out of, or

 

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relates to (x) a general deterioration in the economy or changes in the general
state of the industries in which the K-Sea Parties operate, except to the extent
that the K-Sea Parties, taken as a whole, are adversely affected in a
disproportionate manner as compared to other industry participants, (y) the
outbreak or escalation of hostilities involving the United States, the
declaration by the United States of a national emergency or war or the
occurrence of any other calamity or crisis, including acts of terrorism, or
(z) any change in accounting requirements or principles imposed upon K-Sea and
its Subsidiaries or their respective businesses or any change in applicable Law,
or the interpretation thereof.

 

“K-Sea Parties” means K-Sea, the General Partners, and all of K-Sea’s
Subsidiaries.

 

“K-Sea Related Parties” shall have the meaning specified in Section 5.02.

 

“K-Sea SEC Documents” shall have the meaning specified in Section 3.03.

 

“K-Sea’s Knowledge” means the actual knowledge of Timothy J. Casey and John J.
Nicola, after reasonable inquiry.

 

“Law” means any federal, state, local or foreign order, writ, injunction,
judgment, settlement, award, decree, statute, law, rule or regulation.

 

“Lien” means any interest in Property securing an obligation owed to, or a claim
by, a Person other than the owner of the Property, whether such interest is
based on the common law, statute or contract, and whether such obligation or
claim is fixed or contingent, and including but not limited to the lien or
security interest arising from a mortgage, encumbrance, pledge, security
agreement, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes. For the purpose of this Agreement, a Person shall be
deemed to be the owner of any Property which it has acquired or holds subject to
a conditional sale agreement, or leases under a financing lease or other
arrangement pursuant to which title to the Property has been retained by or
vested in some other Person in a transaction intended to create a financing.

 

“NYSE” means the New York Stock Exchange, Inc.

 

“Partnership Agreement” means the Second Amended and Restated Agreement of
Limited Partnership of K-Sea dated as of January 14, 2004, as amended.

 

“Partnership Securities” means any class or series of equity interest in K-Sea
(but excluding any options, rights, warrants and appreciation rights relating to
an equity interest in K-Sea), including without limitation Common Units,
Subordinated Units and Incentive Distribution Rights (as defined in the
Partnership Agreement).

 

“Permits” means, with respect to K-Sea or any of its Subsidiaries, any licenses,
permits, variances, consents, authorizations, waivers, grants, franchises,
concessions, exemptions, orders, registrations and approvals of Governmental
Authorities or other Persons necessary for the ownership, leasing, operation,
occupancy and use of its Properties and the conduct of its businesses as
currently conducted.

 

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“Person” means any individual, corporation, company, voluntary association,
partnership, joint venture, trust, limited liability company, unincorporated
organization or government or any agency, instrumentality or political
subdivision thereof, or any other form of entity.

 

“Property” means any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.

 

“Purchase Price” means the monetary commitment amount of $16,000,000.

 

“Purchased Units” means the number of Common Units equal to the quotient
determined by dividing (a) the Purchase Price by (b) the Common Unit Price.

 

“Purchaser” has the meaning set forth in the introductory paragraph.

 

“Purchaser Material Adverse Effect” means any material and adverse effect on
(a) the assets, liabilities, financial condition, business, operations or
affairs of Purchaser; (b) the ability of Purchaser to carry out its business as
such business is conducted as of the date hereof or to meet its obligations
under the Basic Documents to which it is a party on a timely basis; or (c) the
ability of Purchaser to consummate the transactions under any Basic Document to
which it is a party.

 

“Purchaser Related Parties” shall have the meaning specified in Section 5.01.

 

“Registration Rights Agreement” means the Registration Rights Agreement, to be
entered into at the Closing, between K-Sea and Purchaser in the form attached
hereto as Exhibit A.

 

“Representatives” of any Person means the officers, directors, employees,
agents, counsel, accountants, investment bankers and other representatives of
such Person.

 

“Securities Act” means the Securities Act of 1933, as amended from time to time,
and the rules and regulations of the Commission promulgated thereunder.

 

“Subordinated Units” means the subordinated units representing subordinated
limited partner interests in K-Sea.

 

“Subsidiary” means, as to any Person, any corporation or other entity of which:
(i) such Person or a Subsidiary of such Person is a general partner or manager;
or (ii) at least a majority of the outstanding equity interest having by the
terms thereof ordinary voting power to elect a majority of the board of
directors or similar governing body of such corporation or other entity
(irrespective of whether or not at the time any equity interest of any other
class or classes of such corporation or other entity shall have or might have
voting power by reason of the happening of any contingency) is at the time
directly or indirectly owned or controlled by such Person or one or more of its
Subsidiaries.

 

“Termination Date” has the meaning set forth in Section 6.11.

 

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Section 1.02                              Accounting Procedures and
Interpretation.  Unless otherwise specified herein, all accounting terms used
herein shall be interpreted, all determinations with respect to accounting
matters hereunder shall be made, and all K-Sea Financial Statements and
certificates and reports as to financial matters required to be furnished to
Purchaser hereunder shall be prepared, in accordance with GAAP applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q
promulgated by the Commission) and in compliance as to form in all material
respects with applicable accounting requirements and with the published
rules and regulations of the Commission with respect thereto.

 

ARTICLE II.
AGREEMENT TO SELL AND PURCHASE

 

Section 2.01                              Authorization of Sale of Common
Units.  K-Sea has authorized the issuance and sale to Purchaser of the Purchased
Units.

 

Section 2.02                              Sale and Purchase.  K-Sea hereby
agrees to issue and sell to Purchaser, and Purchaser hereby agrees to purchase
from K-Sea, the Purchased Units, and Purchaser agrees to pay K-Sea the Purchase
Price.

 

Section 2.03                              Closing.  Subject to the terms and
conditions hereof, the consummation of the purchase and sale of the Purchased
Units hereunder (the “Closing”) shall take place on June 1, 2005, or on such
other date not later than three full business days thereafter as K-Sea and the
Purchaser determine (such date, the “Closing Date”), at the offices of Baker
Botts L.L.P., One Shell Plaza, 910 Louisiana, Houston, Texas 77002.

 

Section 2.04                              Conditions to the Closing.

 

(A)                                  MUTUAL CONDITIONS.  THE RESPECTIVE
OBLIGATIONS OF EACH PARTY TO CONSUMMATE THE PURCHASE AND ISSUANCE AND SALE OF
THE PURCHASED UNITS SHALL BE SUBJECT TO THE SATISFACTION ON OR PRIOR TO THE
CLOSING DATE OF EACH OF THE FOLLOWING CONDITIONS (ANY OR ALL OF WHICH MAY BE
WAIVED BY A PARTICULAR PARTY ON BEHALF OF ITSELF IN WRITING, IN WHOLE OR IN
PART, TO THE EXTENT PERMITTED BY APPLICABLE LAW):

 

(I)             NO STATUTE, RULE, ORDER, DECREE OR REGULATION SHALL HAVE BEEN
ENACTED OR PROMULGATED, AND NO ACTION SHALL HAVE BEEN TAKEN, BY ANY GOVERNMENTAL
AUTHORITY OF COMPETENT JURISDICTION WHICH TEMPORARILY, PRELIMINARILY OR
PERMANENTLY RESTRAINS, PRECLUDES, ENJOINS OR OTHERWISE PROHIBITS THE
CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY OR MAKES THE TRANSACTIONS
CONTEMPLATED HEREBY ILLEGAL; AND

 

(II)          THERE SHALL NOT BE PENDING ANY SUIT, ACTION OR PROCEEDING BY ANY
GOVERNMENTAL AUTHORITY SEEKING TO RESTRAIN, PRECLUDE, ENJOIN OR PROHIBIT THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

 

(B)                                 PURCHASER’S CONDITIONS.  THE OBLIGATION OF
PURCHASER TO CONSUMMATE THE PURCHASE OF THE PURCHASED UNITS SHALL BE SUBJECT TO
THE SATISFACTION ON OR PRIOR TO THE CLOSING DATE OF EACH OF THE FOLLOWING
CONDITIONS (ANY OR ALL OF WHICH MAY BE

 

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WAIVED BY PURCHASER IN WRITING, IN WHOLE OR IN PART, TO THE EXTENT PERMITTED BY
APPLICABLE LAW):

 

(I)             K-SEA SHALL HAVE PERFORMED AND COMPLIED WITH THE COVENANTS AND
AGREEMENTS CONTAINED IN THIS AGREEMENT WHICH ARE REQUIRED TO BE PERFORMED AND
COMPLIED WITH BY K-SEA ON OR PRIOR TO THE CLOSING DATE;

 

(II)          THE REPRESENTATIONS AND WARRANTIES OF K-SEA CONTAINED IN THIS
AGREEMENT THAT ARE QUALIFIED BY MATERIALITY OR K-SEA MATERIAL ADVERSE EFFECT
SHALL BE TRUE AND CORRECT WHEN MADE AND AS OF THE CLOSING DATE AND ALL OTHER
REPRESENTATIONS AND WARRANTIES SHALL BE TRUE AND CORRECT IN ALL MATERIAL
RESPECTS WHEN MADE AND AS OF THE CLOSING DATE, IN EACH CASE AS THOUGH MADE AT
AND AS OF THE CLOSING DATE (EXCEPT THAT REPRESENTATIONS MADE AS OF A SPECIFIC
DATE SHALL BE REQUIRED TO BE TRUE AND CORRECT AS OF SUCH DATE ONLY);

 

(III)       SINCE THE DATE OF THIS AGREEMENT, NO K-SEA MATERIAL ADVERSE EFFECT
SHALL HAVE OCCURRED AND BE CONTINUING; AND

 

(IV)      K-SEA SHALL HAVE DELIVERED, OR CAUSED TO BE DELIVERED, TO PURCHASER AT
THE CLOSING, K-SEA’S CLOSING DELIVERIES DESCRIBED IN SECTION 2.05.

 

(C)                                  K-SEA’S CONDITIONS.   THE OBLIGATION OF
K-SEA TO CONSUMMATE THE SALE OF THE PURCHASED UNITS TO PURCHASER SHALL BE
SUBJECT TO THE SATISFACTION ON OR PRIOR TO THE CLOSING DATE OF THE CONDITION
(WHICH MAY BE WAIVED BY K-SEA IN WRITING, IN WHOLE OR IN PART, TO THE EXTENT
PERMITTED BY APPLICABLE LAW) THAT THE REPRESENTATIONS AND WARRANTIES OF
PURCHASER CONTAINED IN THIS AGREEMENT THAT ARE QUALIFIED BY MATERIALITY OR A
PURCHASER MATERIAL ADVERSE EFFECT SHALL BE TRUE AND CORRECT WHEN MADE AND AS OF
THE CLOSING DATE, ALL OTHER REPRESENTATIONS AND WARRANTIES SHALL BE TRUE AND
CORRECT IN ALL MATERIAL RESPECTS WHEN MADE AND AS OF THE CLOSING DATE, IN EACH
CASE AS THOUGH MADE AT AND AS OF THE CLOSING DATE (EXCEPT THAT REPRESENTATIONS
MADE AS OF A SPECIFIC DATE SHALL BE REQUIRED TO BE TRUE AND CORRECT AS OF SUCH
DATE ONLY, AND K-SEA SHALL HAVE RECEIVED A CERTIFICATE SIGNED ON BEHALF OF
PURCHASER TO SUCH EFFECT), AND PURCHASER SHALL HAVE DELIVERED, OR CAUSED TO BE
DELIVERED, TO K-SEA AT THE CLOSING PURCHASER’S CLOSING DELIVERIES DESCRIBED IN
SECTION 2.06.

 

Section 2.05                              K-Sea Deliveries.  At the Closing,
subject to the terms and conditions hereof, K-Sea will deliver, or cause to be
delivered, to Purchaser:

 

(A)                                  A CERTIFICATE OR CERTIFICATES REPRESENTING
THE PURCHASED UNITS (BEARING THE LEGEND SET FORTH IN SECTION 4.05(E)) AND
MEETING THE REQUIREMENTS OF THE PARTNERSHIP AGREEMENT, FREE AND CLEAR OF ANY
LIENS OF ANY OTHER PERSON, OTHER THAN TRANSFER RESTRICTIONS UNDER APPLICABLE
FEDERAL AND STATE SECURITIES LAWS;

 

(B)                                 COPIES OF THE CERTIFICATE OF LIMITED
PARTNERSHIP OF (I) K-SEA AND (II) K-SEA GENERAL PARTNER L.P., AND OF THE
CERTIFICATE OF FORMATION OF K-SEA GENERAL PARTNER GP, LLC, EACH CERTIFIED BY THE
SECRETARY OF STATE OF THE JURISDICTION OF ITS FORMATION AS OF A RECENT DATE;

 

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(C)                                  A CERTIFICATE OF THE SECRETARY OF STATE OF
THE STATE OF DELAWARE, DATED A RECENT DATE, THAT K-SEA IS IN GOOD STANDING;

 

(D)                                 A CERTIFICATE OF THE SECRETARY OR ASSISTANT
SECRETARY OF K-SEA GENERAL PARTNER GP, LLC, ON BEHALF OF K-SEA, CERTIFYING AS TO
(1) THE PARTNERSHIP AGREEMENT, (2) BOARD RESOLUTIONS AUTHORIZING THE EXECUTION
AND DELIVERY OF THIS AGREEMENT AND ALL OF THE AGREEMENTS AND INSTRUMENTS TO BE
EXECUTED AND DELIVERED BY K-SEA IN CONNECTION HEREWITH, AND THE CONSUMMATION OF
THE TRANSACTIONS CONTEMPLATED HEREBY AND (3) ITS INCUMBENT OFFICERS AUTHORIZED
TO EXECUTE AND DELIVER THIS AGREEMENT AND THE OTHER AGREEMENTS AND INSTRUMENTS
CONTEMPLATED HEREBY, SETTING FORTH THE NAME AND TITLE AND BEARING THE SIGNATURES
OF SUCH OFFICERS;

 

(E)                                  A CERTIFICATE, DATED THE CLOSING DATE AND
SIGNED BY (X) THE PRESIDENT AND CHIEF EXECUTIVE OFFICER AND (Y) THE CHIEF
FINANCIAL OFFICER OF K-SEA GENERAL PARTNER GP, LLC, IN THEIR CAPACITIES AS SUCH,
STATING THAT:

 

(I)             K-SEA HAS PERFORMED AND COMPLIED WITH THE COVENANTS AND
AGREEMENTS CONTAINED IN THIS AGREEMENT WHICH ARE REQUIRED TO BE PERFORMED AND
COMPLIED WITH BY K-SEA ON OR PRIOR TO THE CLOSING DATE; AND

 

(II)          THE REPRESENTATIONS AND WARRANTIES OF K-SEA CONTAINED IN THIS
AGREEMENT THAT ARE QUALIFIED BY MATERIALITY OR K-SEA MATERIAL ADVERSE EFFECT
SHALL BE TRUE AND CORRECT WHEN MADE AND AS OF THE CLOSING DATE AND ALL OTHER
REPRESENTATIONS AND WARRANTIES SHALL BE TRUE AND CORRECT IN ALL MATERIAL
RESPECTS WHEN MADE AND AS OF THE CLOSING DATE, IN EACH CASE AS THOUGH MADE AT
AND AS OF THE CLOSING DATE (EXCEPT THAT REPRESENTATIONS MADE AS OF A SPECIFIC
DATE SHALL BE REQUIRED TO BE TRUE AND CORRECT AS OF SUCH DATE ONLY); AND

 

(F)                                    A CERTIFICATE EXECUTED AND DELIVERED TO
PURCHASER BY K-SEA’S TRANSFER AGENT AND REGISTRAR CERTIFYING (I) THAT IT HAS
BEEN DULY APPOINTED AND DULY AUTHORIZED TO ACT AS TRANSFER AGENT AND REGISTRAR
FOR THE PURCHASED UNITS; AND (II) TO THE NUMBER OF OUTSTANDING COMMON UNITS AND
SUBORDINATED UNITS AS OF THE DATE OF THIS AGREEMENT AND THE CLOSING DATE;

 

(G)                                 A CROSS-RECEIPT EXECUTED BY K-SEA AND
DELIVERED TO PURCHASER CERTIFYING THAT IT HAS RECEIVED THE PURCHASE PRICE AS OF
THE CLOSING DATE;

 

(H)                                 AN OPINION OR OPINIONS ADDRESSED TO
PURCHASER FROM LEGAL COUNSEL TO K-SEA, DATED AS OF THE CLOSING, IN THE FORM AND
SUBSTANCE ATTACHED HERETO AS EXHIBIT B; AND

 

(I)                                     THE REGISTRATION RIGHTS AGREEMENT IN
SUBSTANTIALLY THE FORM ATTACHED HERETO AS EXHIBIT A, WHICH SHALL HAVE BEEN DULY
EXECUTED BY K-SEA.

 

Section 2.06                              Purchaser Deliveries

 

(A)                                  PAYMENT TO K-SEA OF THE PURCHASE PRICE
HERETO BY WIRE TRANSFER OF IMMEDIATELY AVAILABLE FUNDS TO AN ACCOUNT DESIGNATED
BY K-SEA IN WRITING AT

 

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LEAST THREE (3) BUSINESS DAYS (OR SUCH SHORTER PERIOD AS SHALL BE AGREEABLE TO
ALL PARTIES HERETO) PRIOR TO THE CLOSING;

 

(B)                                 A CERTIFICATE OF THE SECRETARY OR ASSISTANT
SECRETARY OF THE PURCHASER, ON BEHALF OF PURCHASER, CERTIFYING AS TO (1) ITS
ARTICLES OF INCORPORATION, (2) BOARD RESOLUTIONS AUTHORIZING THE EXECUTION AND
DELIVERY OF THIS AGREEMENT AND ALL OF THE AGREEMENTS AND INSTRUMENTS TO BE
EXECUTED AND DELIVERED BY PURCHASER IN CONNECTION HEREWITH, AND THE CONSUMMATION
OF THE TRANSACTIONS CONTEMPLATED HEREBY AND (3) ITS INCUMBENT OFFICERS
AUTHORIZED TO EXECUTE AND DELIVER THIS AGREEMENT AND THE OTHER AGREEMENTS AND
INSTRUMENTS CONTEMPLATED HEREBY, SETTING FORTH THE NAME AND TITLE AND BEARING
THE SIGNATURES OF SUCH OFFICERS;

 

(C)                                  A CERTIFICATE, DATED THE CLOSING DATE AND
SIGNED BY (X) THE PRESIDENT AND CHIEF EXECUTIVE OFFICER AND (Y) THE CHIEF
FINANCIAL OFFICER OF PURCHASER, IN THEIR CAPACITIES AS SUCH, STATING THAT:

 

(I)             PURCHASER HAS PERFORMED AND COMPLIED WITH THE COVENANTS AND
AGREEMENTS CONTAINED IN THIS AGREEMENT WHICH ARE REQUIRED TO BE PERFORMED AND
COMPLIED WITH BY PURCHASER ON OR PRIOR TO THE CLOSING DATE; AND

 

(II)          THE REPRESENTATIONS AND WARRANTIES OF PURCHASER CONTAINED IN THIS
AGREEMENT THAT ARE QUALIFIED BY MATERIALITY OR PURCHASER MATERIAL ADVERSE EFFECT
SHALL BE TRUE AND CORRECT WHEN MADE AND AS OF THE CLOSING DATE AND ALL OTHER
REPRESENTATIONS AND WARRANTIES SHALL BE TRUE AND CORRECT IN ALL MATERIAL
RESPECTS WHEN MADE AND AS OF THE CLOSING DATE, IN EACH CASE AS THOUGH MADE AT
AND AS OF THE CLOSING DATE (EXCEPT THAT REPRESENTATIONS MADE AS OF A SPECIFIC
DATE SHALL BE REQUIRED TO BE TRUE AND CORRECT AS OF SUCH DATE ONLY).

 

(D)                                 THE REGISTRATION RIGHTS AGREEMENT IN
SUBSTANTIALLY THE FORM ATTACHED HERETO AS EXHIBIT A, WHICH SHALL HAVE BEEN DULY
EXECUTED BY PURCHASER; AND

 

(E)                                  A CROSS-RECEIPT EXECUTED BY PURCHASER AND
DELIVERED TO K-SEA CERTIFYING THAT IT HAS RECEIVED THE PURCHASED UNITS AS OF THE
CLOSING DATE.

 

Section 2.07                              Price Per Unit.  The amount per Common
Unit the Purchaser will pay to K-Sea to purchase the Purchased Units (the
“Common Unit Price”) shall be $32.00.

 

Section 2.08                              Lock-Up.  Purchaser agrees that from
and after Closing it will not sell any of the Purchased Units prior to the
Anniversary Date.

 

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ARTICLE III.
REPRESENTATIONS AND WARRANTIES RELATED TO K-SEA

 

K-Sea represents and warrants to Purchaser as follows:

 

Section 3.01                              Corporate Existence.  K-Sea (a) is a
limited partnership duly formed, validly existing and in good standing under the
laws of the State of Delaware; and (b) has all requisite power and authority,
and has all governmental licenses, authorizations, consents and approvals
necessary, to own, lease, use and operate its Properties and carry on its
business as its business is now being conducted, except where the failure to
obtain such licenses, authorizations, consents and approvals would not be
reasonably likely to have a K-Sea Material Adverse Effect.  Each of K-Sea’s
Subsidiaries that is a corporation is a corporation duly incorporated, validly
existing and in good standing under the laws of the State or other jurisdiction
of its incorporation and has all requisite power and authority, and has all
governmental licenses, authorizations, consents and approvals necessary, to own,
lease, use or operate its respective Properties and carry on its business as now
being conducted, except where the failure to obtain such licenses,
authorizations, consents and approvals would not be reasonably likely to have a
K-Sea Material Adverse Effect.  Each of K-Sea’s other Subsidiaries has been duly
formed, is validly existing and in good standing under the laws of the State or
other jurisdiction of its organization and has all requisite power and
authority, and has all governmental licenses, authorizations, consents and
approvals necessary, to own, lease, use or operate its respective Properties and
carry on its business as now being conducted, except where the failure to obtain
such licenses, authorizations, consents and approvals would not be reasonably
likely to have a K-Sea Material Adverse Effect.  None of K-Sea or any of its
Subsidiaries are in default in the performance, observance or fulfillment of any
provision of, in the case of K-Sea, the Partnership Agreement or its Certificate
of Limited Partnership or, in the case of any Subsidiary of K-Sea, its
respective certificate of incorporation, certification of formation, bylaws,
limited liability company agreement or other similar organizational documents. 
Each of K-Sea and its Subsidiaries is duly qualified or licensed and in good
standing as a foreign limited partnership, limited liability company or
corporation, as applicable, and is authorized to do business in each
jurisdiction in which the ownership or leasing of its respective Properties or
the character of its respective operations makes such qualification necessary,
except where the failure to obtain such qualification, license, authorization or
good standing would not be reasonably likely to have a K-Sea Material Adverse
Effect.

 

Section 3.02                              Capitalization and Valid Issuance of
Purchased Units.

 

(A)                                  AS OF THE DATE OF THIS AGREEMENT, THE
ISSUED AND OUTSTANDING LIMITED PARTNER INTERESTS OF K-SEA CONSIST OF 4,167,250
COMMON UNITS AND 4,165,000 SUBORDINATED UNITS AND THE INCENTIVE DISTRIBUTION
RIGHTS, AS DEFINED IN THE PARTNERSHIP AGREEMENT.  THE ONLY ISSUED AND
OUTSTANDING GENERAL PARTNER INTERESTS OF K-SEA ARE THE INTERESTS OF K-SEA
GENERAL PARTNER L.P. DESCRIBED IN THE PARTNERSHIP AGREEMENT.  ALL OUTSTANDING
COMMON UNITS, SUBORDINATED UNITS AND INCENTIVE DISTRIBUTION RIGHTS AND

 

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THE LIMITED PARTNER INTERESTS REPRESENTED THEREBY HAVE BEEN DULY AUTHORIZED AND
VALIDLY ISSUED IN ACCORDANCE WITH THE PARTNERSHIP AGREEMENT AND ARE FULLY PAID
(TO THE EXTENT REQUIRED UNDER THE PARTNERSHIP AGREEMENT) AND NONASSESSABLE
(EXCEPT AS SUCH NONASSESSABILITY MAY BE AFFECTED BY MATTERS DESCRIBED IN
SECTIONS 17-303 AND 17-607 OF THE DELAWARE REVISED UNIFORM LIMITED PARTNERSHIP
ACT (THE “DELAWARE LP ACT”) AND OTHERWISE BY MATTERS DESCRIBED IN K-SEA’S
REGISTRATION STATEMENT ON FORM S-3 (REGISTRATION STATEMENT NO. 333-122668), AS
AMENDED (THE “K-SEA FORM S-3”), UNDER THE CAPTION “THE PARTNERSHIP
AGREEMENT—LIMITED LIABILITY”).

 

(B)                                 OTHER THAN K-SEA’S LONG-TERM INCENTIVE PLAN
AND K-SEA’S EMPLOYEE UNIT PURCHASE PLAN, K-SEA HAS NO EQUITY COMPENSATION PLANS
THAT CONTEMPLATE THE ISSUANCE OF COMMON UNITS (OR SECURITIES CONVERTIBLE INTO OR
EXCHANGEABLE FOR COMMON UNITS).  NO INDEBTEDNESS HAVING THE RIGHT TO VOTE (OR
CONVERTIBLE INTO OR EXCHANGEABLE FOR SECURITIES HAVING THE RIGHT TO VOTE) ON ANY
MATTERS ON WHICH K-SEA UNITHOLDERS MAY VOTE ARE ISSUED OR OUTSTANDING.  EXCEPT
AS SET FORTH IN THE FIRST SENTENCE OF THIS SECTION 3.02(B) OR AS ARE CONTAINED
IN THE PARTNERSHIP AGREEMENT, THE FIRST AMENDED AND RESTATED LIMITED LIABILITY
COMPANY AGREEMENT OF K-SEA GENERAL PARTNER GP LLC, THE FIRST AMENDED AND
RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF K-SEA GENERAL PARTNER L.P. AND THE
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF K-SEA OPERATING
PARTNERSHIP L.P., THERE ARE NO OUTSTANDING OR AUTHORIZED (I) OPTIONS, WARRANTS,
PREEMPTIVE RIGHTS, SUBSCRIPTIONS, CALLS, OR OTHER RIGHTS, CONVERTIBLE OR
EXCHANGEABLE SECURITIES, AGREEMENTS, CLAIMS OR COMMITMENTS OF ANY CHARACTER
OBLIGATING K-SEA OR ANY OF ITS SUBSIDIARIES TO ISSUE, TRANSFER OR SELL ANY
PARTNERSHIP INTERESTS OR OTHER EQUITY INTEREST IN, K-SEA OR ANY OF ITS
SUBSIDIARIES OR SECURITIES CONVERTIBLE INTO OR EXCHANGEABLE FOR SUCH PARTNERSHIP
INTERESTS, (II) OBLIGATIONS OF K-SEA OR ANY OF ITS SUBSIDIARIES TO REPURCHASE,
REDEEM OR OTHERWISE ACQUIRE ANY PARTNERSHIP INTERESTS OR EQUITY INTERESTS OF
K-SEA OR ANY OF ITS SUBSIDIARIES OR ANY SUCH SECURITIES OR AGREEMENTS LISTED IN
CLAUSE (I) OF THIS SENTENCE OR (III) VOTING TRUSTS OR SIMILAR AGREEMENTS TO
WHICH K-SEA OR ANY OF ITS SUBSIDIARIES IS A PARTY WITH RESPECT TO THE VOTING OF
THE EQUITY INTERESTS OF K-SEA OR ANY OF ITS SUBSIDIARIES.  NEITHER THE OFFERING
OR SALE OF THE PURCHASED UNITS OR THE REGISTRATION OF THE COMMON UNITS PURSUANT
TO THE REGISTRATION RIGHTS AGREEMENT, ALL AS CONTEMPLATED BY THIS AGREEMENT
GIVES RISE TO ANY RIGHTS FOR OR RELATING TO THE REGISTRATION OF ANY COMMON UNITS
OR OTHER SECURITIES OF THE PARTNERSHIP, OTHER THAN AS PROVIDED IN THE K-SEA
FORM S-3 AND THE PARTNERSHIP AGREEMENT.

 

(C)                                  (I) ALL OF THE ISSUED AND OUTSTANDING
EQUITY INTERESTS OF EACH OF K-SEA’S SUBSIDIARIES ARE OWNED, DIRECTLY OR
INDIRECTLY, BY K-SEA FREE AND CLEAR OF ANY LIENS (EXCEPT FOR SUCH RESTRICTIONS
AS MAY EXIST UNDER APPLICABLE LAW), AND ALL SUCH OWNERSHIP INTERESTS HAVE BEEN
DULY AUTHORIZED, VALIDLY ISSUED AND ARE FULLY PAID (TO THE EXTENT REQUIRED IN
THE ORGANIZATIONAL DOCUMENTS OF K-SEA’S SUBSIDIARIES, AS APPLICABLE) AND
NON-ASSESSABLE (EXCEPT AS SUCH NONASSESSABILITY MAY BE AFFECTED BY MATTERS
DESCRIBED IN SECTIONS 17-303 AND 17-607 OF THE DELAWARE LP ACT OR SECTIONS
18-303 AND 18-607 OF THE DELAWARE LIMITED LIABILITY COMPANY ACT) AND FREE OF
PREEMPTIVE RIGHTS (OTHER THAN SECTION 5.7 OF THE AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP OF K-SEA OPERATING PARTNERSHIP L.P.), WITH NO PERSONAL
LIABILITY ATTACHING TO THE OWNERSHIP THEREOF, AND (II) EXCEPT AS DISCLOSED IN
THE K-SEA SEC DOCUMENTS, NEITHER K-SEA NOR ANY OF ITS SUBSIDIARIES OWNS ANY
SHARES OF CAPITAL STOCK OR OTHER SECURITIES OF, OR INTEREST IN, ANY

 

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OTHER PERSON, OR IS OBLIGATED TO MAKE ANY CAPITAL CONTRIBUTION TO OR OTHER
INVESTMENT IN ANY OTHER PERSON.

 

(D)                                 THE COMMON UNITS BEING PURCHASED BY
PURCHASER HEREUNDER AND THE LIMITED PARTNER INTERESTS REPRESENTED THEREBY, WILL
BE DULY AUTHORIZED BY K-SEA PURSUANT TO THE PARTNERSHIP AGREEMENT PRIOR TO THE
CLOSING AND, WHEN ISSUED AND DELIVERED TO PURCHASER AGAINST PAYMENT THEREFOR IN
ACCORDANCE WITH THE TERMS OF THIS AGREEMENT, WILL BE VALIDLY ISSUED, FULLY PAID
(TO THE EXTENT REQUIRED BY THE PARTNERSHIP AGREEMENT) AND NONASSESSABLE (EXCEPT
AS SUCH NONASSESSABILITY MAY BE AFFECTED BY MATTERS DESCRIBED IN SECTIONS 17-303
AND 17-607 OF THE DELAWARE LP ACT) AND WILL BE FREE OF ANY AND ALL LIENS AND
RESTRICTIONS ON TRANSFER, OTHER THAN RESTRICTIONS ON TRANSFER UNDER THE
PARTNERSHIP AGREEMENT OR THIS AGREEMENT AND UNDER APPLICABLE STATE AND FEDERAL
SECURITIES LAWS AND OTHER THAN SUCH LIENS AS ARE CREATED BY PURCHASER.

 

(E)                                  THE COMMON UNITS ARE LISTED FOR TRADING ON
THE NYSE.  PRIOR TO THE ANNIVERSARY DATE, THE PURCHASED UNITS WILL HAVE BEEN
APPROVED FOR LISTING ON THE NYSE.

 

Section 3.03                              K-Sea SEC Documents.  K-Sea has timely
filed with the Commission all forms, registration statements, reports, schedules
and statements required to be filed by it under the Exchange Act or the
Securities Act (all such documents, collectively the “K-Sea SEC Documents”). 
The K-Sea SEC Documents, including, without limitation, any audited or unaudited
financial statements and any notes thereto or schedules included therein (the
“K-Sea Financial Statements”), at the time filed (in the case of registration
statements, solely on the dates of effectiveness) (except to the extent
corrected by a subsequently filed K-Sea SEC Document filed prior to the date
hereof) (a) did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading, (b) complied in all material respects with the applicable
requirements of the Exchange Act and the Securities Act, as the case may be,
(c) complied as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the Commission with
respect thereto, (d) were prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q
of the Commission), and (e) fairly present (subject in the case of unaudited
statements to normal, recurring and year-end audit adjustments) in all material
respects the consolidated financial position and status of the business of K-Sea
as of the dates thereof and the consolidated results of its operations and cash
flows for the periods then ended.  PricewaterhouseCoopers LLP is an independent
registered public accounting firm with respect to K-Sea and the General Partners
and has not resigned or been dismissed as independent registered public
accountants of K-Sea as a result of or in connection with any disagreement with
K-Sea on a matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure.

 

Section 3.04                              No Material Adverse Change.  Except as
set forth in or contemplated by the K-Sea SEC Documents filed with the
Commission on or prior to the

 

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date hereof and except for certain information covered by the Confidentiality
Agreement which K-Sea has discussed with Purchaser, since the date of K-Sea’s
most recent Form 10-K filing with the Commission, K-Sea and its Subsidiaries
have conducted their respective businesses in the ordinary course, consistent
with past practice, and there has been no (a) change, event, occurrence, effect,
fact, circumstance or condition that has had or would be reasonably likely to
have a K-Sea Material Adverse Effect, other than those occurring as a result of
general economic or financial conditions or other developments that are not
unique to K-Sea and its Subsidiaries but also affect other Persons who
participate or are engaged in the lines of business of which K-Sea and its
Subsidiaries participate or are engaged, except, in each case, to the extent
such condition or development affects K-Sea to a significantly greater extent
than other similarly situated companies generally, (b) acquisition or
disposition of any material asset by K-Sea or any of its Subsidiaries or any
contract or arrangement therefor, otherwise than for fair value in the ordinary
course of business or as disclosed in the K-Sea SEC Documents, or (c) material
change in K-Sea’s accounting principles, practices or methods.

 

Section 3.05                              Litigation.  Except as set forth in
the K-Sea SEC Documents, there is no action, suit, or proceeding pending
(including any investigation, litigation or inquiry) or, to K-Sea’s Knowledge,
contemplated or threatened against or affecting any of the K-Sea Parties or any
of their respective officers, directors, properties or assets, which
(individually or in the aggregate) (a) questions the validity of this Agreement
or the Registration Rights Agreement or the right of K-Sea to enter into this
Agreement or the Registration Rights Agreement or to consummate the transactions
contemplated hereby and thereby or (b) would be reasonably likely to result in a
K-Sea Material Adverse Effect.

 

Section 3.06                              No Conflicts.  The execution, delivery
and performance by K-Sea of the Basic Documents and all other agreements and
instruments to be executed and delivered by K-Sea in connection hereto or
thereto, and compliance by K-Sea with the terms and provisions hereof and
thereof, and the issuance and sale by K-Sea of the Purchased Units, do not and
will not (a) violate any provision of any Law or Permit having applicability to
K-Sea or any of its Subsidiaries or any of their respective Properties,
(b) conflict with or result in a violation or breach of any provision of the
Certificate of Limited Partnership or other organizational documents of K-Sea,
or the Partnership Agreement, or any organizational documents of any of K-Sea’s
Subsidiaries, (c) require any consent, approval or notice under or result in a
violation or breach of or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration) under any contract, agreement, instrument, obligation, note,
bond, mortgage, license, loan or credit agreement to which K-Sea or any of its
Subsidiaries is a party or by which K-Sea or any of its Subsidiaries or any of
their respective Properties may be bound, or (d) result in or require the
creation or imposition of any Lien upon or with respect to any of the Properties
now owned or hereafter acquired by K-Sea or any of its Subsidiaries; with the
exception of the conflicts stated in clause (b) of this Section 3.06, except
where such conflict, violation, default, breach, termination, cancellation,
failure to receive consent or approval, or acceleration with respect to the
foregoing provisions of this Section 3.06 would not be, individually or in the
aggregate, reasonably likely to have a K-Sea Material Adverse Effect.

 

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Section 3.07                              Authority.  K-Sea has all necessary
partnership power and authority to execute, deliver and perform its obligations
under the Basic Documents; and the execution, delivery and performance by K-Sea
of the Basic Documents have been duly authorized by all necessary action on its
part; and the Basic Documents constitute the legal, valid and binding
obligations of K-Sea, enforceable in accordance with their terms, except as such
enforceability may be limited by bankruptcy, insolvency, fraudulent transfer and
similar laws affecting creditors’ rights generally or by general principles of
equity.  No approval from the holders of the Common Units is required in
connection with K-Sea’s issuance and sale of the Purchased Units to Purchaser.

 

Section 3.08                              Approvals.  Except for the approvals
required by the Commission in connection with K-Sea’s obligations under the
Registration Rights Agreement, no authorization, consent, approval, waiver,
license, qualification or written exemption from, nor any filing, declaration,
qualification or registration with, any Governmental Authority or any other
Person is required in connection with the execution, delivery or performance by
K-Sea of any of the Basic Documents, except where the failure to receive such
authorization, consent, approval, waiver, license, qualification or written
exemption from, or to make such filing, declaration, qualification or
registration would not, individually or in the aggregate, be reasonably likely
to have a K-Sea Material Adverse Effect.

 

Section 3.09                              MLP Status.  K-Sea has, for each
taxable year beginning after December 31, 2003, during which K-Sea was in
existence, met the gross income requirements of Section 7704(c)(2) of the
Internal Revenue Code of 1986, as amended.

 

Section 3.10                              Offering.  Assuming the accuracy of
the representations and warranties of Purchaser contained in this Agreement, the
sale and issuance of the Purchased Units to Purchaser pursuant to this Agreement
is exempt from the registration requirements of the Securities Act, and neither
K-Sea nor any authorized agent acting on its behalf has taken or will take any
action hereafter that would cause the loss of such exemptions.

 

Section 3.11                              Investment Company Status.  K-Sea is
not an “investment company” within the meaning of the Investment Company Act of
1940, as amended.

 

Section 3.12                              Certain Fees.  No fees or commissions
are or will be payable by K-Sea to brokers, finders, or investment bankers with
respect to the sale of any of the Purchased Units or the consummation of the
transaction contemplated by this Agreement.  K-Sea agrees that it will indemnify
and hold harmless Purchaser from and against any and all claims, demands, or
liabilities for broker’s, finder’s, placement, or other similar fees or
commissions incurred by K-Sea or alleged to have been incurred by K-Sea in
connection with the sale of Purchased Units or the consummation of the
transactions contemplated by this Agreement.

 

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Section 3.13                              No Side Agreements.  There are no
agreements by, among or between K-Sea or any of its Affiliates, on the one hand,
and Purchaser or any of its Affiliates, on the other hand, with respect to the
transactions contemplated hereby nor promises or inducements for future
transactions between or among any of such parties.

 

Section 3.14                              Material Agreements.  K-Sea has
provided the Purchaser with, or made available to the Purchaser through the
K-Sea SEC Documents, correct and complete copies of all material agreements (as
defined in Section 601(b)(10) of Regulation S-K promulgated by the Commission),
including amendments to or other modifications of pre-existing material
agreements, entered into by K-Sea.

 

ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

Purchaser represents and warrants to K-Sea that:

 

Section 4.01                              Corporate Existence.  Purchaser (a) is
duly formed, legally existing and in good standing under the laws of its
jurisdiction of organization; and (b) has all requisite power and authority, and
has all governmental licenses, authorizations, consents and approvals necessary,
to own, lease, use and operate its Properties and carry on its business as its
business is now being conducted, except where the failure to obtain such
licenses, authorizations, consents and approvals would not have or would not
reasonably be expected to have a Purchaser Material Adverse Effect.  Purchaser
is not in default in the performance, observance or fulfillment of any provision
of its organizational documents, except where such default would not have or
would not be reasonably likely to have a Purchaser Material Adverse Effect.

 

Section 4.02                              No Conflicts.  The execution, delivery
and performance by Purchaser of this Agreement, the Registration Rights
Agreement and all other agreements and instruments to be executed and delivered
by Purchaser pursuant hereto or thereto or in connection with the transactions
contemplated by this Agreement, the Registration Rights Agreement or any such
other agreements and instruments, and compliance by Purchaser with the terms and
provisions hereof and thereof, and the purchase of the Purchased Units by
Purchaser do not and will not (a) violate any provision of any Law or Permit
having applicability to Purchaser or any of its Properties, (b) conflict with or
result in a violation or breach of any provision of the organizational documents
of Purchaser, (c) require any consent, approval or notice under or result in a
violation or breach of or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration) under any contract, agreement, instrument, obligation, note,
bond, mortgage, license, loan or credit agreement to which Purchaser is a party
or by which Purchaser or any of its Properties may be bound, or (d) result in or
require the creation or imposition of any Lien upon or with respect to any of
the Properties now owned or hereafter acquired by Purchaser; with the exception
of the conflicts stated in clause (b) of this Section 4.02, except where such
conflict, violation, default, breach, termination, cancellation, failure to
receive consent or approval, or acceleration with respect to the foregoing
provisions of this Section 4.02

 

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would not, individually or in the aggregate, be reasonably likely to have a
Purchaser Material Adverse Effect.

 

Section 4.03                              Certain Fees.  Except for a fee
payable by Purchaser to Lehman Brothers Inc., no fees or commissions are or will
be payable by Purchaser to brokers, finders, or investment bankers with respect
to the purchase of any of the Purchased Units or the consummation of the
transaction contemplated by this Agreement.  Purchaser agrees that it will
indemnify and hold harmless K-Sea from and against any and all claims, demands,
or liabilities for broker’s, finder’s, placement, or other similar fees or
commissions incurred by Purchaser or alleged to have been incurred by Purchaser
in connection with the purchase of the Purchased Units or the consummation of
the transactions contemplated by this Agreement.

 

Section 4.04                              No Side Agreements.  There are no
other agreements by, among or between Purchaser and any of its Affiliates, on
the one hand, and K-Sea or any of its Affiliates, on the other hand, with
respect to the transactions contemplated hereby nor promises or inducements for
future transactions between or among any of such parties.

 

Section 4.05                              Unregistered Securities.

 

(A)                                  INVESTMENT.  THE PURCHASED UNITS ARE BEING
ACQUIRED FOR ITS OWN ACCOUNT, NOT AS A NOMINEE OR AGENT, AND WITH NO INTENTION
OF DISTRIBUTING THE PURCHASED UNITS OR ANY PART THEREOF, AND THAT PURCHASER HAS
NO PRESENT INTENTION OF SELLING OR GRANTING ANY PARTICIPATION IN OR OTHERWISE
DISTRIBUTING THE SAME IN ANY TRANSACTION IN VIOLATION OF THE SECURITIES LAWS OF
THE UNITED STATES OF AMERICA OR ANY STATE, WITHOUT PREJUDICE, HOWEVER, TO
PURCHASER’S RIGHT AT ALL TIMES TO SELL OR OTHERWISE DISPOSE OF ALL OR ANY PART
OF THE PURCHASED UNITS UNDER A REGISTRATION STATEMENT UNDER THE SECURITIES ACT
AND APPLICABLE STATE SECURITIES LAWS OR UNDER AN EXEMPTION FROM SUCH
REGISTRATION AVAILABLE THEREUNDER (INCLUDING, WITHOUT LIMITATION, IF AVAILABLE,
RULE 144 PROMULGATED THEREUNDER).  IF PURCHASER SHOULD IN THE FUTURE DECIDE TO
DISPOSE OF ANY OF THE PURCHASED UNITS, PURCHASER UNDERSTANDS AND AGREES (A) THAT
IT MAY DO SO ONLY (I) IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAW, AS THEN IN EFFECT, OR (II) IN THE MANNER CONTEMPLATED BY ANY
REGISTRATION STATEMENT PURSUANT TO WHICH SUCH SECURITIES ARE BEING OFFERED, AND
(B) THAT STOP-TRANSFER INSTRUCTIONS TO THAT EFFECT WILL BE IN EFFECT WITH
RESPECT TO SUCH SECURITIES.

 

(B)                                 NATURE OF PURCHASER.  PURCHASER REPRESENTS
AND WARRANTS TO, AND COVENANTS AND AGREES WITH, K-SEA THAT, (A) IT IS AN
“ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501 OF REGULATION D PROMULGATED
BY THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO THE SECURITIES ACT AND
(B) BY REASON OF ITS BUSINESS AND FINANCIAL EXPERIENCE IT HAS SUCH KNOWLEDGE,
SOPHISTICATION AND EXPERIENCE IN MAKING SIMILAR INVESTMENTS AND IN BUSINESS AND
FINANCIAL MATTERS GENERALLY SO AS TO BE CAPABLE OF EVALUATING THE MERITS AND
RISKS OF THE PROSPECTIVE INVESTMENT IN THE PURCHASED UNITS, IS ABLE TO BEAR THE
ECONOMIC RISK OF SUCH INVESTMENT AND, AT THE PRESENT TIME, WOULD BE ABLE TO
AFFORD A COMPLETE LOSS OF SUCH INVESTMENT.

 

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(C)                                  RECEIPT OF INFORMATION; AUTHORIZATION. 
PURCHASER ACKNOWLEDGES THAT IT HAS (A) HAD ACCESS TO K-SEA’S PERIODIC FILINGS
WITH THE COMMISSION, INCLUDING K-SEA’S ANNUAL REPORT ON FORM 10-K, QUARTERLY
REPORTS ON FORM 10-Q, AND CURRENT REPORTS ON FORM 8-K, (B) RECEIVED CERTAIN
INFORMATION FROM K-SEA COVERED BY THE CONFIDENTIALITY AGREEMENT AND (C) BEEN
PROVIDED A REASONABLE OPPORTUNITY TO ASK QUESTIONS OF AND RECEIVE ANSWERS FROM
REPRESENTATIVES OF K-SEA REGARDING SUCH MATTERS.

 

(D)                                 RESTRICTED SECURITIES.  PURCHASER
UNDERSTANDS THAT THE PURCHASED UNITS IT IS PURCHASING ARE CHARACTERIZED AS
“RESTRICTED SECURITIES” UNDER THE FEDERAL SECURITIES LAWS INASMUCH AS THEY ARE
BEING ACQUIRED FROM K-SEA IN A TRANSACTION NOT INVOLVING A PUBLIC OFFERING AND
THAT UNDER SUCH LAWS AND APPLICABLE REGULATIONS SUCH SECURITIES MAY BE RESOLD
WITHOUT REGISTRATION UNDER THE SECURITIES ACT ONLY IN CERTAIN LIMITED
CIRCUMSTANCES.  IN THIS CONNECTION, PURCHASER REPRESENTS THAT IT IS
KNOWLEDGEABLE WITH RESPECT TO RULE 144 OF THE COMMISSION PROMULGATED UNDER THE
SECURITIES ACT.

 

(E)                                  LEGEND.  IT IS UNDERSTOOD THAT THE
CERTIFICATES EVIDENCING THE PURCHASED UNITS WILL BEAR THE FOLLOWING LEGEND: 
“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED.  THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES
UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.”

 

ARTICLE V.
INDEMNIFICATION, COSTS AND EXPENSES

 

Section 5.01                              Indemnification by K-Sea.  K-Sea
agrees to indemnify Purchaser and its Representatives (collectively, “Purchaser
Related Parties”) from, and hold each of them harmless against, any and all
actions, suits, proceedings (including any investigations, litigation or
inquiries), demands, and causes of action, and, in connection therewith, and
promptly upon demand, pay or reimburse each of them for all reasonable costs,
losses, liabilities, damages, or expenses of any kind or nature whatsoever,
including, without limitation, the reasonable fees and disbursements of counsel
and all other reasonable expenses incurred in connection with investigating,
defending or preparing to defend any such matter that may be incurred by them or
asserted against or involve any of them as a result of, arising out of, or in
any way related to the breach of any of the representations, warranties or
covenants of K-Sea contained herein, provided such claim for indemnification
relating to a breach of a representation or warranty is made prior to the
expiration of such representation or warranty.

 

Section 5.02                              Indemnification by Purchaser. 
Purchaser agrees to indemnify K-Sea, the General Partners and their respective
Representatives (collectively, “K-Sea Related Parties”) from, and hold each of
them harmless against, any and all actions, suits, proceedings (including any
investigations, litigation or inquiries), demands, and causes of action, and, in
connection therewith, and promptly upon demand, pay or reimburse each of them
for all reasonable costs, losses, liabilities, damages, or expenses of any kind
or nature whatsoever, including, without limitation, the reasonable fees and

 

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disbursements of counsel and all other reasonable expenses incurred in
connection with investigating, defending or preparing to defend any such matter
that may be incurred by them or asserted against or involve any of them as a
result of, arising out of, or in any way related to the breach of any of the
representations, warranties or covenants of Purchaser contained herein, provided
such claim for indemnification relating to a breach of the representations and
warranties is made prior to the expiration of such representations and
warranties.

 

Section 5.03                              Indemnification Procedure.  Promptly
after any K-Sea Related Party or Purchaser Related Party (hereinafter, the
“Indemnified Party”) has received notice of any indemnifiable claim hereunder,
or the commencement of any action, suit or proceeding by a third person, which
the Indemnified Party believes in good faith is an indemnifiable claim under
this Agreement, the Indemnified Party shall give the indemnitor hereunder (the
“Indemnifying Party”) written notice of such claim or the commencement of such
action, suit or proceeding, but failure to so notify the Indemnifying Party will
not relieve the Indemnifying Party from any liability it may have to such
Indemnified Party hereunder except to the extent that the Indemnifying Party is
materially prejudiced by such failure. Such notice shall state the nature and
the basis of such claim to the extent then known.  The Indemnifying Party shall
have the right to defend and settle, at its own expense and by its own counsel,
any such matter as long as the Indemnifying Party pursues the same diligently
and in good faith. If the Indemnifying Party undertakes to defend or settle, it
shall promptly notify the Indemnified Party of its intention to do so, and the
Indemnified Party shall cooperate with the Indemnifying Party and its counsel in
all commercially reasonable respects in the defense thereof and the settlement
thereof. Such cooperation shall include, but shall not be limited to, furnishing
the Indemnifying Party with any books, records and other information reasonably
requested by the Indemnifying Party and in the Indemnified Party’s possession or
control.  Such cooperation of the Indemnified Party shall be at the cost of the
Indemnifying Party.  After the Indemnifying Party has notified the Indemnified
Party of its intention to undertake to defend or settle any such asserted
liability, and for so long as the Indemnifying Party diligently pursues such
defense, the Indemnifying Party shall not be liable for any additional legal
expenses incurred by the Indemnified Party in connection with any defense or
settlement of such asserted liability; provided, however, that the Indemnified
Party shall be entitled (i) at its expense, to participate in the defense of
such asserted liability and the negotiations of the settlement thereof and
(ii) if (A) the Indemnifying Party has failed to assume the defense and employ
counsel or (B) if the defendants in any such action include both the Indemnified
Party and the Indemnifying Party and counsel to the Indemnified Party shall have
concluded that there may be reasonable defenses available to the Indemnified
Party that are different from or in addition to those available to the
Indemnifying Party or if the interests of the Indemnified Party reasonably may
be deemed to conflict with the interests of the Indemnifying Party, then the
Indemnified Party shall have the right to select a separate counsel and to
assume such legal defense and otherwise to participate in the defense of such
action, with the expenses and fees of such separate counsel and other expenses
related to such participation to be reimbursed by the Indemnifying Party as
incurred.  Notwithstanding any other provision of this Agreement, the
Indemnifying Party shall not settle any indemnified claim without the consent of
the Indemnified Party, unless the settlement

 

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thereof imposes no liability or obligation on, and includes a complete release
from liability of, the Indemnified Party.

 

ARTICLE VI.
MISCELLANEOUS

 

Section 6.01                              Interpretation and Survival of
Provisions.  Article, Section, Schedule, and Exhibit references are to this
Agreement, unless otherwise specified. All references to instruments, documents,
contracts, and agreements are references to such instruments, documents,
contracts, and agreements as the same may be amended, supplemented, and
otherwise modified from time to time, unless otherwise specified. The word
“including” shall mean “including but not limited to.” Whenever K-Sea has an
obligation under the Basic Documents, the expense of complying with that
obligation shall be an expense of K-Sea unless otherwise specified. Whenever any
determination, consent, or approval is to be made or given by Purchaser, such
action shall be in Purchaser’s sole discretion unless otherwise specified in
this Agreement.  If any provision in the Basic Documents is held to be illegal,
invalid, not binding, or unenforceable, such provision shall be fully severable
and the Basic Documents shall be construed and enforced as if such illegal,
invalid, not binding, or unenforceable provision had never comprised a part of
the Basic Documents, and the remaining provisions shall remain in full force and
effect.

 

Section 6.02                              Survival of Provisions.  The
representations and warranties set forth in Sections 3.02, 3.12, 3.13, 4.03,
4.04 and 4.05 hereunder shall survive the execution and delivery of this
Agreement indefinitely, and the other representations and warranties set forth
herein shall survive for a period of twelve (12) months following the Closing
Date regardless of any investigation made by or on behalf of K-Sea or
Purchaser.  The covenants made in this Agreement or any other Basic Document
shall survive the Closing of the transactions described herein and remain
operative and in full force and effect regardless of acceptance of any of the
Purchased Units and payment therefor and repayment, conversion, exercise or
repurchase thereof.  All indemnification obligations of K-Sea and Purchaser and
the provisions of Article V shall remain operative and in full force and effect
unless such obligations are expressly terminated in a writing referencing that
individual Section, regardless of any purported general termination of this
Agreement.

 

Section 6.03                              No Waiver; Modifications in Writing.

 

(A)                                  DELAY.  NO FAILURE OR DELAY ON THE PART OF
ANY PARTY IN EXERCISING ANY RIGHT, POWER, OR REMEDY HEREUNDER SHALL OPERATE AS A
WAIVER THEREOF, NOR SHALL ANY SINGLE OR PARTIAL EXERCISE OF ANY SUCH RIGHT,
POWER, OR REMEDY PRECLUDE ANY OTHER OR FURTHER EXERCISE THEREOF OR THE EXERCISE
OF ANY RIGHT, POWER, OR REMEDY. THE REMEDIES PROVIDED FOR HEREIN ARE CUMULATIVE
AND ARE NOT EXCLUSIVE OF ANY REMEDIES THAT MAY BE AVAILABLE TO A PARTY AT LAW OR
IN EQUITY OR OTHERWISE.

 

(B)                                 SPECIFIC WAIVER.  EXCEPT AS OTHERWISE
PROVIDED HEREIN, NO AMENDMENT, WAIVER, CONSENT, MODIFICATION, OR TERMINATION OF
ANY PROVISION OF THIS

 

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AGREEMENT OR ANY OTHER BASIC DOCUMENT SHALL BE EFFECTIVE UNLESS SIGNED BY EACH
OF THE PARTIES HERETO OR THERETO AFFECTED BY SUCH AMENDMENT, WAIVER, CONSENT,
MODIFICATION, OR TERMINATION.  ANY AMENDMENT, SUPPLEMENT OR MODIFICATION OF OR
TO ANY PROVISION OF THIS AGREEMENT OR ANY OTHER BASIC DOCUMENT, ANY WAIVER OF
ANY PROVISION OF THIS AGREEMENT OR ANY OTHER BASIC DOCUMENT, AND ANY CONSENT TO
ANY DEPARTURE BY K-SEA FROM THE TERMS OF ANY PROVISION OF THIS AGREEMENT OR ANY
OTHER BASIC DOCUMENT SHALL BE EFFECTIVE ONLY IN THE SPECIFIC INSTANCE AND FOR
THE SPECIFIC PURPOSE FOR WHICH MADE OR GIVEN. EXCEPT WHERE NOTICE IS
SPECIFICALLY REQUIRED BY THIS AGREEMENT, NO NOTICE TO OR DEMAND ON K-SEA IN ANY
CASE SHALL ENTITLE K-SEA TO ANY OTHER OR FURTHER NOTICE OR DEMAND IN SIMILAR OR
OTHER CIRCUMSTANCES.

 

Section 6.04                              Binding Effect; Assignment.

 

(A)                                  BINDING EFFECT.  THIS AGREEMENT SHALL BE
BINDING UPON K-SEA, PURCHASER, AND THEIR RESPECTIVE SUCCESSORS AND PERMITTED
ASSIGNS. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, THIS AGREEMENT SHALL
NOT BE CONSTRUED SO AS TO CONFER ANY RIGHT OR BENEFIT UPON ANY PERSON OTHER THAN
THE PARTIES TO THIS AGREEMENT AND THEIR RESPECTIVE SUCCESSORS AND PERMITTED
ASSIGNS.

 

(B)                                 ASSIGNMENT OF PURCHASED UNITS.  ALL OR ANY
PORTION OF PURCHASED UNITS PURCHASED PURSUANT TO THIS AGREEMENT MAY BE SOLD,
ASSIGNED OR PLEDGED BY PURCHASER, SUBJECT TO COMPLIANCE WITH APPLICABLE
SECURITIES LAWS, SECTION 2.08 HEREIN AND THE REGISTRATION RIGHTS AGREEMENT.

 

(C)                                  ASSIGNMENT OF RIGHTS.  ALL OR ANY PORTION
OF THE RIGHTS AND OBLIGATIONS OF PURCHASER UNDER THIS AGREEMENT MAY NOT BE
TRANSFERRED BY PURCHASER WITHOUT THE WRITTEN CONSENT OF K-SEA.

 

Section 6.05                              Non-Disclosure.  Notwithstanding
anything herein to the contrary, the Confidentiality Agreement shall remain in
full force and effect regardless of any termination of this Agreement.

 

Section 6.06                              Communications.  All notices and
demands provided for hereunder shall be in writing and shall be given by
registered or certified mail, return receipt requested, telecopy, air courier
guaranteeing overnight delivery or personal delivery to the following addresses:

 

(A)                                  IF TO PURCHASER:

 

Tortoise Energy Infrastructure Corporation

10801 Mastin, Suite 222

Overland Park, KS 66210

Attention:  David Schulte

Facsimile:  (913) 345-2763

 

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with a copy to:

 

Steven F. Carman

Blackwell Sanders Peper Martin LLP

4801 Main St., Ste. 1000

Kansas City, MO 64112

Facsimile:  (816) 983-8080

 

(B)                                 IF TO K-SEA:

 

K-Sea Transportation Partners L.P.

3245 Richmond Terrace

Staten Island, New York 10303

Attention: Timothy J. Casey

Facsimile: (718) 720-4358

 

with a copy to:

 

Sean Wheeler

Baker Botts L.L.P.

910 Louisiana Street

Houston, Texas 77002

Facsimile: (713) 229-7868

 

or to such other address as K-Sea or Purchaser may designate in writing. All
notices and communications shall be deemed to have been duly given: at the time
delivered by hand, if personally delivered; upon actual receipt if sent by
certified mail, return receipt requested, or regular mail, if mailed; when
receipt acknowledged, if sent via facsimile; and upon actual receipt when
delivered to an air courier guaranteeing overnight delivery.

 

Section 6.07                              Removal of Legend.  Purchaser may
request K-Sea to remove the legend described in Section 4.05(e) from the
certificates evidencing the Purchased Units by submitting to K-Sea such
certificates, together with an opinion of counsel to the effect that such legend
is no longer required under the Securities Act or applicable state laws, as the
case may be.

 

Section 6.08                              Entire Agreement.  This Agreement, the
other Basic Documents and the other agreements and documents referred to herein
are intended by the parties as a final expression of their agreement and
intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein and therein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein or therein with
respect to the rights granted by K-Sea or any of its Affiliates or Purchaser or
any of their Affiliates set forth herein or therein.  This Agreement, the other
Basic Documents and the other agreements and documents referred to herein
supersede all prior agreements and understandings between the parties with
respect to such subject matter.

 

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Section 6.09                              Governing Law.  This Agreement will be
construed in accordance with and governed by the laws of the State of Delaware
without regard to principles of conflicts of laws.

 

Section 6.10                              Execution in Counterparts.  This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which counterparts, when so executed
and delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement.

 

Section 6.11                              Termination.

 

(A)                                  NOTWITHSTANDING ANYTHING HEREIN TO THE
CONTRARY, THIS AGREEMENT MAY BE TERMINATED BY EITHER K-SEA OR PURCHASER IF THE
CLOSING SHALL NOT HAVE OCCURRED ON OR BEFORE JUNE 8, 2005 (THE “TERMINATION
DATE”), UNLESS THE TERM HEREOF IS EXTENDED BY AGREEMENT OF THE PARTIES HERETO.

 

(B)                                 IN THE EVENT OF THE TERMINATION OF THIS
AGREEMENT AS PROVIDED IN SECTION 6.11(A), THIS AGREEMENT SHALL FORTHWITH BECOME
NULL AND VOID AND THERE SHALL BE NO LIABILITY OR OBLIGATION ON THE PART OF ANY
PARTY HERETO OR THEIR RESPECTIVE REPRESENTATIVES, EXCEPT WITH RESPECT TO
ARTICLE V OF THIS AGREEMENT, THIS SECTION 6.11 AND EXCEPT WITH RESPECT TO THE
REQUIREMENT TO COMPLY WITH ANY CONFIDENTIALITY AGREEMENT IN FAVOR OF K-SEA,
INCLUDING THE CONFIDENTIALITY AGREEMENT; PROVIDED THAT NOTHING HEREIN SHALL
RELIEVE ANY PARTY FROM ANY LIABILITY OR OBLIGATION WITH RESPECT TO ANY WILLFUL
BREACH OF THIS AGREEMENT.

 

[The remainder of this page is intentionally left blank.]

 

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

 

 

K-SEA TRANSPORTATION PARTNERS LP.

 

 

 

By:

K-Sea General Partner L.P.,

 

 

its General Partner

 

 

 

 

By:

K-Sea General Partner GP LLC,

 

 

 

its General Partner

 

 

 

 

 

 

 

 

 

 

By:

 /s/ Timothy J. Casey

 

 

 

Timothy J. Casey

 

 

 

President and Chief Executive Officer

 

 

 

 

 

TORTOISE ENERGY INFRASTRUCTURE
CORPORATION

 

 

 

 

 

By:

 /s/ David J. Schulte

 

 

David J. Schulte

 

 

President

 

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