Exhibit 10.2


 


AMENDMENT
NO. 3


TO


LOAN AND
SECURITY AGREEMENT


 


AMENDMENT NO. 3 (this “Amendment”), dated as of April 3,
2006, by and among K-SEA OPERATING
PARTNERSHIP L.P. (the “Borrower”),
the several financial institutions party hereto (the “Lenders”),
KEYBANK NATIONAL ASSOCIATION, as
Administrative Agent for the Lenders (in such capacity, the “Administrative Agent”) and as
collateral trustee for the Lenders, and LASALLE BANK, NATIONAL
ASSOCIATION, as syndication agent.


 


RECITALS


 


A.                                   Borrower, the Lenders and the Administrative Agent
are parties to a Loan and Security Agreement, dated as of March 24, 2005
(as heretofore amended, and as it may be further amended, restated,
supplemented or otherwise modified from time to time, the “Loan
Agreement”). Unless otherwise defined herein, all capitalized
terms used herein or in the Acknowledgement and Consent annexed hereto shall
have the meanings ascribed to them in the Loan Agreement.


 


B.                                     Borrower has requested that the Administrative
Agent and the Lenders consent to the release by the Collateral Trustee of its
Lien on certain Pool Vessels in connection with the incurrence by Borrower of
certain indebtedness to be secured by a preferred ship mortgage on such Pool
Vessels.


 


C.                                     Borrower has advised the Administrative Agent and
the Lenders that it desires to amend the Loan Agreement in certain respects,
to, among other things, decrease the aggregate Commitments of the Lenders.


 


D.                                    The Administrative Agent has advised Borrower that
the Lenders are willing to agree to its requests to amend the Loan Agreement on
the terms and subject to the conditions set forth in this Amendment.


 


Accordingly, in consideration of the foregoing, the parties hereto
hereby agree as follows:


 


1.                                       CHANGE IN COMMITMENTS.


 


(a)                                  Commitments. From and after the Amendment
No. 3 Effective Date, the Commitment of each Lender shall be the amount
set forth opposite such Lender’s name on Schedule 2.01 to the Loan
Agreement (as amended hereby and attached hereto as Exhibit A)
under the caption “Commitment” as such amount may be increased or reduced
pursuant to the terms of the Loan Agreement, and such amount (if changed) shall
supersede and be deemed to amend the amount of such Lender’s Commitment as set
forth on Schedule 2.01 to the Loan Agreement as in effect on the Amendment
No. 2 Effective Date.


 


(b)                                 Adjustment of Outstanding Loans. If
any Loans are outstanding under the Loan Agreement on the Amendment No. 3
Effective Date, the Lenders shall on the Amendment No. 3 Effective Date,
at the direction of the Administrative Agent, make


 

















 


appropriate adjustments
among themselves in order to insure that the amount (and type) of the Loans
outstanding to Borrower from each Lender under the Loan Agreement (as of the Amendment
No. 3 Effective Date) are proportionate to the aggregate amount of all of
the Commitments, after giving effect to the decrease in the Maximum Amount and decrease
in the amount of the Commitments of each of the Lenders. Borrower agrees and
consents to the terms of this Section 1(b).


 


2.                                       RELEASE OF POOL VESSELS.


 


(a)                                  Consent to Release.                                     Each of the
Lenders hereby consents to (i) the release by the Collateral Trustee of
the Pool Vessels described on Exhibit B
from the Lien of the Mortgage and the other Loan Documents (including, without
limitation, all earnings and insurances related thereto) and (ii) the
execution, delivery and/or filing or recording by the Collateral Agent of all
instruments, documents and agreements deemed by the Collateral Agent as
necessary or appropriate to effectuate such release.


 


(b)                                 Limitation of Release.                         The Consent set forth in this Section 2
is limited to the Pool Vessels described on Exhibit B and shall not be
deemed to be a consent to the release of the Lien of the Collateral Agent on
any other Pool Vessel or a waiver of any violations of any provision of the Loan
Agreement or any other Loan Document.


 


3.                                       AMENDMENTS TO LOAN AGREEMENT.


 


(a)                                  Additional Definitions. Section 1.01
of the Loan Agreement is hereby amended by adding the following new definitions
in the appropriate alphabetical order:


 


“Amendment No. 3” means Amendment
No. 3 to Loan and Security Agreement, dated as of April 3, 2006,
among Borrower, the Lenders party thereto and the Administrative Agent.


 


“Amendment No. 3 Effective Date”
means April 3, 2006.


 


(b)                                 Amendments to Definitions.


 


(i)                                     Adjusted LIBOR Rate. Section 1.01 of the Loan Agreement
is hereby amended by deleting the definition of “Adjusted
LIBOR Rate” in its entirety and substituting the following
therefor:


 


“Adjusted LIBOR Rate” means, with
respect to any LIBOR Loan for any Interest Period, an interest rate per annum
equal to (a) LIBOR for such Interest Period multiplied by (b) the
Statutory Reserve Rate.


 


(ii)                                  Applicable Margin. Section 1.01
of the Loan Agreement is hereby amended by deleting the definition of “Applicable Margin”
in its entirety and substituting the following therefor:


 


 “Applicable Margin”
means, at all times during the applicable periods set forth below: (a) with
respect to Base Rate Loans, the


 


2

















 


percentage set forth below under the heading “Base Rate Margin” and
adjacent to such period, (b) with respect to LIBOR Loans, the percentage
set forth below under the heading “LIBOR Margin” and adjacent to such period
and (c) with respect to the Commitment Fees, the percentage set forth
below under the heading “Commitment Fee Margin” and adjacent to such period:


 


	
  Period

  	
   

  	
  Applicable Margin

  	
   

  
	
  When the Total

  Funded Debt to

  EBITDA Ratio

  is greater than

  or equal to

  	
   

  	
  And less

  than

  	
   

  	
  Base Rate

  Margin

  	
   

  	
  LIBOR

  Margin

  	
   

  	
  Commitment

  Fee Margin

  	
   

  
	
  3.50:1.00

  	
   

  	
   

  	
   

  	
  0.250

  	
  %

  	
  1.825

  	
  %

  	
  0.300

  	
  %

  
	
  3.00:1.00

  	
   

  	
  3.50:1.00

  	
   

  	
  0.000

  	
  %

  	
  1.575

  	
  %

  	
  0.200

  	
  %

  
	
  2.50:1.00

  	
   

  	
  3.00:1.00

  	
   

  	
  0.000

  	
  %

  	
  1.325

  	
  %

  	
  0.200

  	
  %

  
	
  2.00:1.00

  	
   

  	
  2.50:1.00

  	
   

  	
  0.000

  	
  %

  	
  1.075

  	
  %

  	
  0.150

  	
  %

  
	
   

  	
   

  	
  2.00:1.00

  	
   

  	
  0.000

  	
  %

  	
  0.825

  	
  %

  	
  0.150

  	
  %

  



 


Changes in the Applicable
Margin resulting from a change in the Total Funded Debt to EBITDA Ratio shall
be based upon the certificate most recently delivered under Section 6.01(b) and
shall become effective on the first day of the month immediately succeeding the
date such certificate is required to be delivered to the Administrative Agent
pursuant to Section 6.01(b). Notwithstanding anything to the contrary in
this definition, if Borrower shall fail to deliver to the Administrative Agent
such a certificate on or prior to any date required by Section 6.01(b),
the Total Funded Debt to EBITDA Ratio shall be deemed to be greater than
3.50:1.00 from and including such date to the
first day of the month immediately succeeding the date of delivery to the Administrative
Agent of such certificate.


 


(iii)                               Fixed Charge Coverage Ratio. Section 1.01 of the Loan Agreement is hereby amended by deleting
the definition of “Fixed
Charge Coverage Ratio” in its entirety and substituting the
following therefor:


 


“Fixed Charge Coverage Ratio” means, at
any date of determination, the ratio of (a) EBITDA less Maintenance CAPEX
divided by (b) Fixed Charges, in each case for the four fiscal quarter
period ending on such date or, if such date is not the last day of a fiscal quarter,
for the immediately preceding four fiscal quarter period; provided, that, for any such determination EBITDA shall
be adjusted to include, for the relevant four fiscal quarter period, pro forma
EBITDA in an amount reasonably acceptable to the Administrative Agent
respecting any vessel or business


 


3

















 


acquisition
for which debt service is incurred and included in Fixed Charges.


 


(iv)                              Maximum Amount. Section 1.01
of the Loan Agreement is hereby amended by deleting the definition of “Maximum Amount”
in its entirety and substituting the following therefor:


 


“Maximum Amount” means, with respect to
the Facility, Seventy-five Million Dollars ($75,000,000.00), as such amount may be
increased in the aggregate in accordance with Section 2.18 hereof or
decreased in the aggregate in accordance with Section 2.07.


 


(c)                                  Increase of Commitments. Section 2.18(a) of
the Loan Agreement is hereby amended by deleting the first sentence thereof in
its entirety and substituting the following therefor:


 


Provided that no Default
or Event of Default has occurred and is continuing, Borrower may, at any time
and from time to time, provide a written request to the Administrative Agent to
increase the Commitments of the Facility by up to an aggregate maximum amount
of Twenty-five Million Dollars ($25,000,000.00).


 


(d)                                 Vessels. Section 4.16(a) of
the Loan Agreement is hereby deleted in its entirety and the following
substituted therefor:


 


(a)                                  Set
forth on Schedule 1.01 (attached to Amendment No. 3 as Exhibit C)
is a complete and accurate list, as of the Amendment No. 3 Effective Date,
of all Pool Vessels, showing as of the Amendment No. 3 Effective Date with
respect to each such Pool Vessels the following:  (i) the name of each Pool Vessel and (ii) the
name of the Registered Owner of the Pool Vessels.


 


(e)                                  Fixed Charge Coverage Ratio. Section 7.01
of the Loan Agreement is hereby deleted in its entirety and the following
substituted therefor:


 


Section 7.01                            Fixed
Charge Coverage Ratio.                              Borrower shall not permit the Fixed Charge
Coverage Ratio as of the end of any fiscal quarter to be less than 1.85 to
1.00.


 


(f)                                    Total Funded Debt to Tangible Capitalization Ratio. Section 7.02
of the Loan Agreement is hereby deleted in its entirety and the following
substituted therefor:


 


Section 7.02                            Total
Funded Debt to Tangible Capitalization Ratio. Borrower shall not permit
the Total Funded Debt to Tangible Capitalization Ratio as of the end of any
fiscal quarter to be greater than 0.65 to 1.00.


 


(g)                                 Commitments. Schedule 2.01 to
the Loan Agreement is hereby deleted in its entirety and Exhibit A
to this Amendment substituted therefor.


 


4

















 


(h)                                 Pool Vessels. Schedule 1.01 to
the Loan Agreement is hereby deleted in its entirety and Exhibit C
to this Amendment substituted therefor.


 


(i)                                     General. All references to “this
Agreement” in the Loan Agreement and to “the Loan Agreement” in the other Loan
Documents shall be deemed to refer to the Loan Agreement as amended hereby.


 


4.                                       CONDITIONS TO EFFECTIVENESS. This
Amendment shall be effective upon the satisfaction of each of the following
conditions:


 


(a)                                  The
Administrative Agent (or its counsel) shall have received from each party
hereto either (x) a counterpart of this Amendment signed on behalf of
such party or (y) written evidence satisfactory to the Administrative
Agent (which may include telecopy transmission of a signed signature page of
this Amendment) that such party has signed a counterpart of this Amendment.


 


(b)                                 The
Lenders shall be reasonably satisfied that no material adverse change in the
business, assets, operations, properties, condition (financial or otherwise),
liabilities (including contingent liabilities) or material agreements of Borrower
and its Subsidiaries has occurred since June 30, 2005.


 


(c)                                  There
shall be no injunction, writ, preliminary restraining order or other order of
any nature issued by any Governmental Authority in any respect affecting the
transactions provided for in this Amendment and no action or proceeding by or
before any Governmental Authority shall have been commenced and be pending or,
to the knowledge of Borrower, threatened, seeking to prevent or delay the
transactions contemplated by this Amendment or challenging any other terms and
provisions hereof or thereof or seeking any damages in connection herewith or
therewith.


 


(d)                                 The
representations and warranties contained in the Loan Agreement shall be true
and correct in all material respects, except
to the extent such representations and warranties relate to an earlier date
and, after giving effect to (i) the consent set forth in Section 2
hereof and (ii) the amendments set forth in Section 3 hereof, no
Default or Event of Default shall exist.


 


(e)                                  The
Administrative Agent shall have received (i) for the account of the
Lenders party hereto pro rata in accordance with their respective Commitments
(after giving effect to the reduction of the Commitments pursuant to Section 1),
payable on the Amendment No. 3 Effective Date, an amendment fee equal to
the product of 0.10% multiplied by the Maximum Amount (after giving effect to
the reduction of the Commitments pursuant to Section 1) and (ii) all
other amounts due and payable on or prior to the Amendment No. 3 Effective
Date, including, to the extent invoiced, reimbursement or payment of all out-of-pocket
expenses required to be reimbursed or paid by Borrower hereunder.


 


(f)                                    All
legal matters with respect to and all legal documents (including, but not
limited to, the Loan Documents) executed in connection with the transactions
contemplated by this Amendment shall be satisfactory to counsel for the
Administrative Agent.


 


5

















 


(g)                                 Borrower
shall have paid the reasonable fees and disbursements of counsel to the
Administrative Agent and the Lenders in connection with this Amendment.


 


The Administrative Agent shall notify Borrower and the Lenders of the Amendment
No. 3 Effective Date, and such notice shall be conclusive and binding.


 


5.                                       REPRESENTATIONS AND WARRANTIES. Borrower
hereby represents and warrants to the Administrative Agent and the Lenders
that:


 


(a)                                  The
representations and warranties set forth in the Loan Documents are true and
correct in all material respects as of the date hereof and with the same effect
as though made on and as of the date hereof, except to the extent such representations and warranties relate to an
earlier date.


 


(b)                                 No
Default or Event of Default and no event or condition which, with the giving of
notice or lapse of time or both, would constitute such a Default or Event of
Default, now exists or would exist.


 


(c)                                  (i) 
The execution, delivery and performance by Borrower of this Amendment is within
its organizational powers and have been duly authorized by all necessary action
(corporate or otherwise) on the part of Borrower, (ii) this Amendment
is the legal, valid and binding obligation of Borrower, enforceable against
Borrower in accordance with its terms, and (iii) neither this Amendment
nor the execution, delivery and performance by Borrower hereof: (A) contravenes
the terms of Borrower’s organization documents, (B) conflicts with or
results in any breach or contravention of, or the creation of any Lien under,
any document evidencing any contractual obligation to which Borrower is a party
or any order, injunction, writ or decree to which Borrower or its property is
subject, or (C) violates any requirement of law.


 


6.                                       EFFECT; NO WAIVER.


 


(a)                                  Borrower
hereby (i) reaffirms and admits the validity and enforceability of the
Loan Documents and all of its obligations thereunder and (ii) agrees and
admits that it has no existing defenses to or offsets against any such
obligation. Except as specifically set forth herein, the Loan Agreement and the
other Loan Documents shall remain in full force and effect in accordance with
their terms and are hereby ratified and confirmed. The execution, delivery and
effectiveness of this Amendment shall not operate as a waiver of any existing
or future Default or Event of Default, whether known or unknown or any right,
power or remedy of the Administrative Agent or the Lenders under the Loan
Agreement, nor constitute a waiver of any provision of the Loan Agreement,
except as specifically set forth herein.


 


(b)                                 Borrower
hereby (i) reaffirms all of its agreements and obligations under the Loan Documents,
(ii) reaffirms that all Obligations of Borrower under or in connection
with the Loan Agreement as amended hereby are “Obligations”
as that term is defined in the Loan Documents and (iii) reaffirms that all
such Obligations continue to be secured by the Loan Documents, which remain in
full force and effect and are hereby ratified and confirmed.


 


6

















 


7.                                       MISCELLANEOUS.


 


(a)                                  Borrower
shall pay the Administrative Agent upon demand for all reasonable expenses,
including reasonable attorneys’ fees and expenses of the Administrative Agent,
incurred by the Administrative Agent in connection with the preparation,
negotiation and execution of this Amendment.


 


(b)                                 THIS
AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS (AS OPPOSED TO THE CONFLICTS OF LAW PROVISIONS, BUT INCLUDING SECTIONS
5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK) AND
DECISIONS OF THE STATE OF NEW YORK.


 


(c)                                  This
Amendment shall be binding upon Borrower, the Administrative Agent and the
Lenders and their respective successors and assigns, and shall inure to the
benefit of Borrower, the Administrative Agent and the Lenders and the
respective successors and assigns of the Administrative Agent and the Lenders.


 


(d)                                 This
Amendment may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed to be an original and all of which taken together
shall constitute one and the same instrument.


 


[Signature pages follow.]


 


7

















 


AS EVIDENCE of the agreement by the parties hereto to the terms and
conditions herein contained, each such party has caused this Amendment to be
executed on its behalf.


 


 


	
   

  	
  K-SEA OPERATING PARTNERSHIP

  L.P., by its general partner K-Sea OLP

  GP, LLC, as Borrower

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John J.
  Nicola

  	
   

  
	
   

  	
  Name:
  John J. Nicola

  
	
   

  	
  Title: Chief
  Financial Officer

  



 


K-SEA OPERATING
PARTNERSHIP AMENDMENT NO. 3 SIGNATURE PAGE


 

















 


	
   

  	
  KEYBANK NATIONAL

  ASSOCIATION, for itself as Lender, and

  as Administrative Agent and as Collateral

  Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steven B.
  Vitale 

  	
   

  
	
   

  	
  Name: Steven B.
  Vitale 

  
	
   

  	
  Title: Senior Vice
  President

  



 

















 


	
   

  	
  LASALLE
  BANK NATIONAL

  ASSOCIATION, as Syndication Agent and

  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kathleen L.
  Ross

  	
   

  
	
   

  	
  Name: Kathleen
  L. Ross

  
	
   

  	
  Title: Senior
  Vice President

  



 

















 


	
   

  	
  CITIZENS BANK OF PENNSYLVANIA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Devon Starks

  	
   

  
	
   

  	
  Name: Devon Starks

  
	
   

  	
  Title: Senior
  Vice President

  



 

















 


	
   

  	
  WACHOVIA
  BANK, NATIONAL

  ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen Karp

  	
   

  
	
   

  	
  Name: Stephen
  Karp

  
	
   

  	
  Title: Vice
  President

  



 

















 


ACKNOWLEDGEMENT
AND CONSENT


 


Each of the
undersigned Guarantors hereby (1) consents to the execution and delivery
by Borrower of the foregoing Amendment No. 3; (2) agrees that the
definition of “Obligations”
(and any other term referring to the indebtedness, liabilities and obligations
of Borrower to the Administrative Agent or any of the Lenders) in the Parent
Guaranty or its Subsidiary Guaranty, as the case may be, and the other
Loan Documents shall include the Indebtedness of Borrower under the foregoing Amendment
No. 3; (3) agrees that the definition of “Loan Agreement” in the Parent
Guaranty or its Subsidiary Guaranty, as the case may be, and the other
Loan Documents to which it is a party is hereby amended to mean the Loan
Agreement as amended by the foregoing Amendment No. 3; (4) reaffirms
its continuing liability under the Parent Guaranty or its Subsidiary Guaranty,
as the case may be (as modified hereby); (5) reaffirms all of its
agreements and obligations under the Loan Documents to which it is a party; (6) reaffirms
that all Obligations of Borrower under or in connection with the Loan Agreement
as amended by the foregoing Amendment No. 3 are “Obligations”
as that term is defined in the Parent Guaranty or its Subsidiary Guaranty, as
the case may be; (7) reaffirms that all such Obligations continue to
be secured by the Loan Documents to which it is a party, which remain in full
force and effect and are hereby ratified and confirmed; and (8) confirms
and agrees that it is a Guarantor and that the Parent Guaranty or its
Subsidiary Guaranty, as the case may be, and the other Loan Documents to
which it is a party are, and shall continue to be, in full force and effect in
accordance with their respective terms.


 


 


	
   

  	
  K-SEA
  TRANSPORTATION PARTNERS

  L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John J.
  Nicola

  	
   

  
	
   

  	
   

  	
  Name: John J.
  Nicola

  
	
   

  	
   

  	
  Title: Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
  K-SEA
  TRANSPORTATION INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John J.
  Nicola

  	
   

  
	
   

  	
   

  	
  Name: John J.
  Nicola

  
	
   

  	
   

  	
  Title: Chief
  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  SEA
  COAST TRANSPORTATION LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John J.
  Nicola

  	
   

  
	
   

  	
   

  	
  Name: John J.
  Nicola

  
	
   

  	
   

  	
  Title: Chief
  Financial Officer

  



 

















 


EXHIBIT A


TO


AMENDMENT NO. 3 TO LOAN AGREEMENT


 


SCHEDULE 2.01


 


Amendment No. 3 Effective Date Commitments


 




	
  Lender

  	
   

  	
  Commitment

  	
   

  
	
  KeyBank National
  Association

  	
   

  	
  $

  	
  24,193,548.39

  	
   

  
	
  LaSalle Bank
  National Association

  	
   

  	
  $

  	
  19,354,838.71

  	
   

  
	
  Citizens Bank of
  Pennsylvania

  	
   

  	
  $

  	
  17,903,225.81

  	
   

  
	
  Wachovia Bank,
  National Association

  	
   

  	
  $

  	
  13,548,387.09

  	
   

  
	
  Aggregate
  Commitments

  	
   

  	
   

  	
  $

  	
  75,000,000.00