Exhibit 10.1


 


AMENDMENT NO. 3

TO

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT


 


AMENDMENT NO. 3 (this “Amendment”), dated as of December 23,
2009, by and among K-SEA OPERATING PARTNERSHIP L.P. (“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, BANK OF AMERICA, N.A. (successor to LaSalle Bank,
National Association) and CITIBANK, N.A., as
Co-Syndication Agents, and CITIZENS
BANK OF PENNSYLVANIA and HSBC BANK
USA, NATIONAL ASSOCIATION, as Co-Documentation Agents.


 


RECITALS


 


A.            Borrower, the
Lenders, the Co-Syndication Agents, the Co-Documentation Agents and the
Administrative Agent are parties to an Amended and Restated Loan and Security
Agreement, dated as of August 14, 2007 (as heretofore amended and
supplemented, 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 amend the Loan
Agreement in certain respects.


 


C.            The
Administrative Agent has advised Borrower that the Lenders party hereto 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 TRANCHE A COMMITMENTS.


 


(a)             Tranche A Commitments.  From and after the Amendment No. 3
Effective Date, the Tranche A Commitment of each Tranche A Lender shall be the
amount set forth opposite such Tranche A Lender’s name on Schedule 2.01 to the
Loan Agreement (as amended hereby and attached hereto as Exhibit A)  under the
caption “Tranche A Commitment” as such amount may be 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 Tranche A Lender’s Tranche A Commitment
as set forth on Schedule 2.01 to the Loan Agreement as in effect immediately
prior to the Amendment No. 3 Effective Date.


 


(b)             Adjustment of Outstanding Loans.  If any Tranche A Loans are outstanding under
the Loan Agreement on the Amendment No. 3 Effective Date, the Tranche A
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 Tranche A Loans outstanding
to Borrower from each Tranche A


 

















 


Lender
under the Loan Agreement (as of the Amendment No. 3 Effective Date) are
proportionate to the aggregate amount of all of the Tranche A Commitments,
after giving effect to the decrease in the Tranche A Maximum Amount and
decrease in the amount of the Tranche A Commitments of each of the Tranche A
Lenders. Borrower agrees and consents to the terms of this Section 1(b).


 


(c)           To the extent that, after
giving effect to the decrease in the Tranche A  Maximum Amount and decrease
in the amount of the Tranche A Commitments of each of the Tranche A Lenders,
the sum of the Tranche A Credit Exposures exceeds the Total Tranche A
Commitments, Borrower shall, on the Amendment No. 3 Effective Date, prepay
the Tranche A Loans in an amount sufficient to eliminate such excess.


 


2.             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 Amended and Restated Loan and Security Agreement, dated
as of December 23, 2009, among Borrower, the Lenders party thereto and the
Administrative Agent.


 


“Amendment No. 3 Effective Date”  means as of December 23, 2009.


 


“Debt Instrument” means any
bond, note, debenture, loan agreement, indenture, guaranty, trust agreement,
mortgage or other instrument or agreement in connection with the borrowing of
money or the deferred purchase price of a fixed asset to which Borrower or any
of its Subsidiaries is a party or by which it is bound, or by which any of its
properties or assets may be affected evidencing any Material Indebtedness.


 


“Liquidity” means, as of
any date of determination, the sum of (a) unrestricted cash of Borrower
determined on a consolidated basis as of such date plus (b)(i) the lesser
of (A) the Tranche A Maximum Amount as of such date and (B) the
Orderly Liquidation Value of the Pool Vessels as of such date divided by 1.333
minus (ii) the aggregate Tranche A Credit Exposure of all of the Lenders
as of such date.


 


“Maximum Distribution Amount”  means an amount equal to $0.45 per outstanding
unit of Capital Stock of K-Sea, which amount shall be adjusted for (a) any
subdivision of the outstanding units of Capital Stock into a larger number of
units and (b) any combination of the outstanding units of Capital Stock
into a smaller number of units, in each case at the time of such event, by
multiplying such amount by a fraction (i) the numerator of which shall be
the total number of outstanding units immediately prior to such event and (ii) the
denominator of which shall be the total number of outstanding units immediately
after such event.


 


“Orderly Liquidation Value”   means, with respect to any Pool
Vessel,  the net proceeds anticipated at a sale other than a forced sale upon
foreclosure,


 


2

















 


as
reasonably determined by the Administrative Agent or by independent appraisers
appointed by the Administrative Agent at the expense of Borrower.


 


“Test Quarter” has the meaning set forth
in Section 7.11 hereof. 


 


(b)           Amendments
to Definitions.


 


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

  	
   

  
	
  4.50:1.00

  	
   

  	
   

  	
   

  	
  3.750

  	
  %

  	
  4.750

  	
  %

  	
  0.625

  	
  %

  
	
  3.50:1.00

  	
   

  	
  4.50:1.00

  	
   

  	
  3.250

  	
  %

  	
  4.250

  	
  %

  	
  0.500

  	
  %

  
	
  2.50:1.00

  	
   

  	
  3.50:1.00

  	
   

  	
  2.750

  	
  %

  	
  3.750

  	
  %

  	
  0.450

  	
  %

  
	
  1.50:1.00

  	
   

  	
  2.50:1.00

  	
   

  	
  2.250

  	
  %

  	
  3.250

  	
  %

  	
  0.375

  	
  %

  
	
   

  	
   

  	
  1.50:1.00

  	
   

  	
  1.750

  	
  %

  	
  2.750

  	
  %

  	
  0.375

  	
  %

  






 


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, (i) during the period commencing on the Amendment No. 3
Effective Date and ending on the date that the certificate to be delivered
under Section 6.01(b) for the fiscal quarter ending December 31,
2009 is delivered to the Administrative Agent, the Applicable Margin shall be
determined based on a Total Funded Debt to EBITDA Ratio of greater than or
equal to 3.50:1.00 and less than 4.50:1.00 and (ii) if Borrower shall fail
to deliver to the Administrative Agent such a


 


3

















 


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 4.50:1.00 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.


 


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


 


“Asset Coverage Ratio” means, as of
any date of determination, the ratio of the Orderly Liquidation Value of all
Pool Vessels that are part of the Collateral divided by the aggregate Revolving
Credit Exposure of all Lenders.


 


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


 


“Base Rate” means, for any
day, a rate per annum equal to the greatest of (a) the Prime Rate, (b) one-half
of one percent (0.50%) in excess of the Federal Funds Effective Rate and (c) one
percent (1.00%) in excess of the Adjusted LIBOR Rate on such day for an
interest period of one month. Any change in the Base Rate due to a change in
the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBOR Rate
shall be effective from and including the effective date of such change in the
Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBOR Rate,
respectively.


 


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


 


“Borrowing Base” means 75% of
the Orderly Liquidation Value of the Pool Vessels.


 


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


 


“EBITDA” means, with respect to any
fiscal period of K-Sea and its consolidated Affiliates, including, without
limitation, Borrower and each Guarantor, on a consolidated basis, the sum of:


 


(1)             the net income (or net loss)
of Borrower (determined in accordance with GAAP) for such fiscal period,
without giving effect to any extraordinary pre-tax gains or losses; plus:


 


(2)             to the extent that any of
the items referred to in any of clauses (i) through (viii) below were
deducted in calculating such net income:


 


4

















 


(i)            Interest Expense of Borrower
for such fiscal period;


 


(ii)           Federal, state, local and
foreign income tax expenses of Borrower for such fiscal period;


 


(iii)          the amount of all
depreciation and amortization for such fiscal period;


 


(iv)          non-cash stock compensation incurred
during such fiscal period;


 


(v)           non-cash goodwill impairment
charges incurred during such fiscal period;


 


(vi)          other non-cash expenses
incurred during such fiscal period that are acceptable to the Administrative
Agent;


 


(vii)         non-recurring losses in an
aggregate amount not to exceed $1,300,000 incurred during the fiscal quarter
ending December 31, 2009 in connection with the purchase of real property
located at 150 South Main Street, Norfolk, Virginia; and


 


(viii)        losses from the sale,
exchange or other disposition of assets incurred during such period; minus


 


(3)           to the extent that any of
the items described in clauses (i)  or (ii) below were
added in calculating such net income:


 


(i)            gains from sales, exchanges
and other dispositions of assets not in the ordinary course of business; and


 


(ii)           non-cash gains.


 


(vi)          Material
Indebtedness.     The definition
of “Material  Indebtedness” set forth in Section 1.01 of the Loan Agreement is hereby amended
by deleting the reference to “$100,000.00” in clause (i) thereof and
substituting “$1,000,000.00” therefor.


 


(vii)         Proposed
Increased Commitment. Section 1.01 of the Loan Agreement is
hereby amended by deleting the definition of “Proposed
Increased Commitment” in its entirety.


 


(viii)        Qualified
Pool Vessels. Section 1.01 of the Loan Agreement is hereby
amended by deleting the proviso to the definition of “Qualified Pool Vessels” in its entirety.


 


5

















 


(ix)           Tranche
A Commitment. Section 1.01 of the Loan Agreement is hereby
amended by deleting clause (b) of the definition of “Tranche A Commitment” in its
entirety and substituting “[intentionally omitted]” therefor.


 


(x)            Tranche
A Maturity Date. Section 1.01 of the Loan Agreement is hereby
amended by deleting the definition of “Tranche
A Maturity Date” in its entirety and substituting the following
therefor:


 


“Tranche A Maturity Date” means July 1,
2012.


 


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


 


“Tranche A Maximum Amount”  means, with respect to the Tranche A Facility,
One Hundred Seventy-five Million Dollars ($175,000,000.00), as such amount may
be decreased in the aggregate in accordance with Section 2.06.


 


(c)             Prepayment of Loans.   Section 2.08
of the Loan Agreement is hereby amended by deleting the phrase “Fair Market
Value” each time it appears therein and substituting “Orderly Liquidation
Value” therefor.


 


(d)             Prepayments Generally.  Section 2.13(b) of the Loan
Agreement is hereby amended by (i) deleting the phrase “Fair Market Value”
each time it appears therein and substituting “Orderly Liquidation Value”
therefor and (ii) deleting the ratio “1.25:1.00” each time it appears
therein and substituting “1.333:1.00” therefor.


 


(e)             Increase of Commitments.   Section 2.17 of the Loan Agreement is
hereby deleted in its entirety and “[Intentionally Omitted.]” is substituted
therefor.


 


(f)              Substitution of Pool Vessel.  Section 3.02 of the Loan Agreement is
hereby amended by (i) deleting the phrase “Fair Market Value” each time it
appears therein and substituting “Orderly Liquidation Value” therefor and (ii) deleting
the ratio “1.25 to 1.00” each time it appears therein and substituting “1.333
to 1.00” therefor.


 


(g)             Fair Market Value.  Section 3.03 of the Loan Agreement is
hereby amended by: (i) deleting the caption thereof in its entirety and
substituting “Orderly Liquidation Value”
therefor; (ii) deleting the phrase “aggregate Fair Market Value” each time
it appears therein and substituting “aggregate Orderly Liquidation Value”
therefor; (iii) deleting the phrase “a Fair Market Value” each time it
appears therein and substituting “an Orderly Liquidation Value” therefor and (iv) deleting
the ratio “1.25 to 1.00” each time it appears therein and substituting “1.333
to 1.00” therefor.


 


(h)             Each Loan and Letter of Credit.  Section 5.02 of the Loan Agreement is
hereby amended by adding a new clause (e) thereto to read in its entirety
as follows:


 


(e)     The Administrative Agent shall have received a certificate of a  Financial
Officer, dated as of the date of such Loan or such issuance or renewal


 


6

















 


of
such Letter of Credit and in form reasonably satisfactory to the Administrative
Agent, setting forth Liquidity as of such date.


 


(i)            Financial Information and Other Information.  Section 6.01 of the Loan
Agreement is hereby amended by adding a new Section 6.01(e) hereto to
read in its entirety as follows:


 


(e)      Concurrently with any delivery of Financial Statements under
clause (a)(i) above, Borrower shall deliver to Lenders a certificate of a
Financial Officer setting forth a reasonably detailed calculation of Liquidity
as of the last day of the fiscal quarter to which such Financial Statements
relate.


 


(j)            Fixed Charge Coverage Ratio. Section 7.01
of the Loan Agreement is hereby deleted in its entirety and the following is
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 occurring during any period set forth
below to be less than the ratio set forth below with respect to such period:


 


	
  Period

  	
   

  	
  Ratio

  	
   

  
	
  Amendment
  No. 3 Effective Date to and including March 30, 2010

  	
   

  	
  1.85 to 1.00

  	
   

  
	
  March 31,
  2010 and thereafter

  	
   

  	
  1.50 to 1.00

  	
   

  



 


(k)           Total Funded Debt to EBITDA Ratio.  Section 7.03 of the Loan Agreement is
hereby deleted in its entirety and the following is substituted therefor:


 


Section 7.03   Total
Funded Debt to EBITDA Ratio.


 


Borrower shall not permit the Total Funded Debt to
EBITDA Ratio at any time during each period set forth below to be greater than
the ratio set forth below with respect to such period:


 


	
  Period

  	
   

  	
  Ratio

  	
   

  
	
  Amendment
  No. 3 Effective Date to and including March 30, 2010

  	
   

  	
  4.50 to 1.00

  	
   

  
	
  March 31,
  2010 to and including September 29, 2010

  	
   

  	
  5.00 to 1.00

  	
   

  
	
  September 30,
  2010 and thereafter

  	
   

  	
  4.50 to 1.00

  	
   

  



 


7

















 


(l)           Asset
Coverage Ratio.   Section 7.04 of the Loan Agreement is
hereby deleted in its entirety and the following is substituted therefor:


 


Section 7.04   Asset
Coverage Ratio.


 


Borrower shall not permit the Asset Coverage Ratio
as of the last day of each fiscal quarter to be less than 1.333 to 1.00.


 


(m)          Transactions with Affiliates.   Section 7.09 of the Loan Agreement is
hereby amended by deleting the proviso to the first sentence thereof in its
entirety and substituting the following therefor:


 


provided that the foregoing provisions of this Section 7.09
shall not prohibit any such Person from declaring or paying any lawful
Distributions which conform to the provisions of Section 7.11 hereof.


 


(n)           Limitations on Advances and Distributions.   Section 7.11 of the Loan
Agreement is hereby deleted in its entirety and the following is substituted
therefor:


 


Section 7.11   Limitations on Advances and Distributions.


 


(a)          Borrower shall not, and will
not permit any of the Subsidiaries to, declare or make, or agree to pay for or
make, directly or indirectly, any Distribution, provided that Borrower
and the Subsidiaries may make each of the following: (i) dividends by the
Borrower payable solely in Capital Stock of the Borrower; (ii) dividends
and distributions by any Subsidiary of Borrower payable to Borrower or any
other Subsidiary of Borrower; and (iii) Distributions by Borrower for any
purpose; provided that (A) each of such
Distributions may not be paid more than once in respect of any fiscal quarter
period (each such period for purposes herein, a “Test
Quarter”), (B) such Distributions paid in respect of any
Test Quarter shall not exceed the Maximum Distribution Amount, (C) no such
Distributions may be paid with respect to a Test Quarter until such time as the
financial statements required to be delivered pursuant to clause (i) of Section 6.01(a) in
respect of such Test Quarter have been delivered to the Administrative Agent in
accordance with clause (i) of Section 6.01(a) and the
certificate of the Borrower required to be delivered pursuant to Section 6.01(e) in
respect of such Test Quarter has been delivered pursuant to Section 6.01(e),
(D) at the time of the declaration of any such Distribution, both before
and after giving effect thereto, (I) no Default shall have occurred and be
continuing or result from any such declaration and (II) Liquidity shall be
not less than $17,500,000 and (E) at the time of the payment of any such
Distribution, both before and after giving effect to the payment thereof, (I) no
Default shall have occurred and be continuing or result from any such payment
and (II) Liquidity shall be not less than $17,500,000.


 


(b)         Borrower shall not make any
loans or advances to any Affiliate or related Persons of Borrower, except
K-Sea, any Excluded Subsidiary and any Subsidiary Guarantor; provided that, (i) except
for the loan described in clause (ii) of this proviso, the aggregate
outstanding amount of all such loans and advances to the Excluded Subsidiaries
shall not exceed $2,000,000 at any


 


8

















 


one
time and (ii) Borrower may make a loan to K-Sea Canada Corp. in a
principal amount not to exceed $13,100,000.


 


(o)           Limitations on Other Indebtedness.  Section 7.12 of the Loan Agreement is
hereby deleted in its entirety and the following is substituted therefor:


 


Section 7.12   Limitations on Other Indebtedness.


 


From and after the Amendment No. 3 Effective
Date, Borrower shall not, and will not permit any Subsidiary to enter into any
vessel operating lease agreement or permit to exist any obligations of a
character described in clause (i) of the definition of “Indebtedness” other than (a) vessel
operating lease agreements existing prior to the Amendment No. 3 Effective
Date and (b) vessel operating lease agreements entered into after the
Amendment No. 3 Effective Date in the ordinary course of business having a
term of one (1) year or less.


 


(p)           Capital Expenditures.  Section 7.17 of the Loan Agreement is
hereby deleted in its entirety and the following is substituted therefor:


 


Section 7.17   Capital Expenditures.


 


Borrower shall not make or become obligated to make,
and shall not permit any of its Subsidiaries to make or become obligated to
make, Capital Expenditures (other than Maintenance CAPEX) in respect of the
fiscal year ending June 30, 2010 and any subsequent fiscal year in excess
of $15,000,000; provided that, until such time as the Fixed Charge
Coverage Ratio as of the last day of a fiscal quarter of Borrower occurring
after the Amendment No. 3 Effective Date for the four fiscal quarters
ending on such day shall be greater than 2.00 to 1.00, Borrower shall not make
or become obligated to make, and shall not permit any of its Subsidiaries to
make or become obligated to make, Capital Expenditures the proceeds of which shall
be used for the acquisition or construction of vessels, other than construction
of vessels for which Borrower or a Subsidiary became obligated prior to the
Amendment No. 3 Effective Date; and provided, further,
that from and after such time as the Fixed Charge Coverage Ratio as of the last
day of a fiscal quarter of Borrower occurring after the Amendment No. 3
Effective Date for the four fiscal quarters ending on such day shall be greater
than 2.00 to 1.00, Borrower shall not make or become obligated to make, and
shall not permit any of its Subsidiaries to make or become obligated to make,
Capital Expenditures the proceeds of which shall be used for the acquisition or
construction of vessels (other than construction of vessels for which Borrower
or a Subsidiary became obligated prior to the Amendment No. 3 Effective
Date) in respect of any fiscal year in excess of $50,000,000.


 


9
















 


(q)                                      Prepayments of Indebtedness.  Section 7.18 of the Loan Agreement is
hereby deleted in its entirety and the following is substituted therefor:


 


Section 7.18   Prepayments and Repayments of Indebtedness.


 


Borrower shall not, and shall not permit any Subsidiary
to, (i) prepay or obligate itself to prepay any Indebtedness or (ii) amend
or otherwise modify the terms of any Indebtedness the effect of which is to
increase the principal amount of any periodic payment thereon or decrease the
period in which such payments are to be made, except (x) Indebtedness
under the Loan Documents and (y) refinancing on terms equal or more
favorable to Borrower of Indebtedness existing on the Amendment No. 3
Effective Date.


 


(r)                                         Debt Instruments.  Article VII of the Loan Agreement is
hereby amended by adding a new Section 7.19 to read in its entirety as
follows:


 


Section 7.19 
 Debt Instruments.


 


In the event that Borrower enters into, after the
Amendment No. 3 Effective Date, any Debt Instrument, or amends or modifies
after the Amendment No. 3 Effective Date any Debt Instrument, and such
Debt Instrument contains any material covenant, restriction or event of default
(other than pricing) that is more favorable to the other party or parties
thereto, or the holder thereof, than those contained in this Agreement or the
other Loan Documents, (i) Borrower shall notify the Administrative Agent
of such event, (ii) each such covenant, restriction or event of default
shall be deemed to be incorporated herein, and (iii) Borrower shall promptly
after the request of the Administrative Agent, enter into an amendment to this
Agreement (or other Loan Document), in form and substance reasonably
satisfactory to the Administrative Agent and the Required Lenders, that
incorporates such more favorable covenants, restrictions or events of default.


 


(s)                                       DBL 106.  On the date of delivery of that certain
100,000 barrel tank barge, being Bollinger Marine Fabricators, L.L.C.’s Hull No. 537
currently under construction pursuant to that certain Vessel Construction
Contract dated December 27, 2007 between Bollinger Marine Fabricators,
L.L.C. and Borrower, as buyer (such tank barge, hereinafter referred to as the
“DBL 106”), Borrower shall cause K-Sea LLC to document the DBL 106 in its sole
ownership under the laws of the United States and, within five (5) Business
Days of the date of delivery, and in any event no later than May 31, 2010:


 


(i)                                     grant a first
preferred ship mortgage thereon, subject to no liens, mortgages, claims, debts,
charges or encumbrances;


 


(ii)                                  deliver to the
Administrative Agent the following, in form and substance satisfactory to the
Administrative Agent, and in sufficient copies:


 


A.           Supplement and Amendment to
the K-Sea LLC Mortgage, which shall cover the DBL 106 and such Supplement and
Amendment to the K-Sea LLC Mortgage shall have been duly filed for recording
with the United States Coast Guard, and such Supplement and


 


10

















 


Amendment
to the K-Sea LLC Mortgage shall constitute a preferred ship mortgage on the DBL
106;


 


B.             proper UCC-1 financing
statements or UCC-3 financing statement amendments under the Uniform Commercial
Code for all jurisdictions that the Administrative Agent may deem necessary or
desirable in order to perfect and protect the first and only priority Liens and
security interests created under the Loan Agreement, the K-Sea LLC Mortgage and
the other Loan Documents, covering the DBL 106;


 


C.             evidence of the completion
of all other recordings and filings of or with respect to the Lien created by
the Loan Agreement, the K-Sea LLC Mortgage and the other Loan Documents that
the Administrative Agent may deem necessary or desirable in order to perfect
and protect the Liens created by such Loan Documents covering the DBL 106;


 


D.            an assignment covering the
earnings and requisition compensation, if any, of the DBL 106, in form and
substance satisfactory to the Administrative Agent, duly executed by K-Sea LLC
and, in connection therewith, K-Sea LLC shall have executed and delivered to
the Administrative Agent notices of assignment and authorizations to collect
insurance claims and to collect general average contributions, in such form and
in such number of counterparts as may be reasonably requested by the
Administrative Agent;


 


E.              an assignment covering the
insurances of the DBL 106, in form and substance satisfactory to the
Administrative Agent, duly executed by K-Sea LLC;


 


F.              copies of cover notes and
certificates of entry evidencing the insurance covered by the DBL 106;


 


G.             authorizations to inspect
class records of the DBL 106 by K-Sea LLC, in such form and such number of
counterparts as may be reasonably requested by the Administrative Agent, duly
executed by K-Sea LLC;


 


H.            a true and complete copy of
either (1) a certificate of ownership and encumbrance issued by the United
States Coast Guard or (2) an abstract of title issued by the United States
Coast Guard, in either case, showing K-Sea LLC to be the sole owner of the DBL
106 free and clear of all Liens of record except the K-Sea LLC Mortgage;


 


I.                 to the extent it is required
to be maintained in class in order to operate in the service in which it is
operating, the original current confirmation certificate of American Bureau of
Shipping for the DBL 106, confirming that the DBL 106 is in such class without
material recommendation, together with an American Bureau of Shipping SafeNet
database printout, certified by an officer of Borrower as true and correct;


 


11

















 


J.                a copy of the current
certificate of inspection issued by the United States Coast Guard for the DBL
106, if available, and reflecting no outstanding recommendations; and


 


K.            (1) written advice from
B&P International Insurance Brokerage LLC, insurance brokers, of the placement
of the insurances covering the DBL 106; (2) written confirmation from such
brokers, that they have received no notice of the assignment (except from the
Administrative Agent) of the insurances or any claim covering the DBL 106; (3) an
opinion of such brokers to the effect that such insurance complies with the
applicable provisions of the Loan Agreement and of the K-Sea LLC Mortgage,
where applicable; and (4) an agreement by such brokers, in form and
substance satisfactory to the Administrative Agent, whereunder the insurances
of the DBL 106, and claims thereunder, will not be affected by nonpayment of
premiums on any other insurances.


 


From
and after the date of delivery of the foregoing Loan Documents, the DBL 106
shall be deemed to be a Pool Vessel.


 


(t)                                    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.


 


3.                                       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 Borrower, each
Guarantor and the Required Lenders either (i) a counterpart of this
Amendment signed on behalf of such party or (ii) 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 K-Sea and its
consolidated Affiliates taken as a whole and its Subsidiaries has occurred
since June 30, 2009.


 


(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 the
amendments set forth in Section 2 hereof, no Default or Event of Default
shall exist.


 


12

















 


(e)                                       The
Administrative Agent shall have received (i) for the account of each
Lender that has executed this Amendment, payable on the Amendment No. 3
Effective Date, a fee equal to the product of 0.50% multiplied by such Lender’s
Tranche A Commitment 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.


 


(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.


 


4.                                       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 after giving effect to this Amendment.


 


(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.


 


5.                                       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


 


13

















 


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.                                  RELEASE.  AS MATERIAL CONSIDERATION
FOR THE EXECUTION OF THIS AMENDMENT BY THE ADMINISTRATIVE AGENT AND LENDERS
PARTY HERETO AND FOR OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND
SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, BORROWER, BY ITS EXECUTION OF
THIS AMENDMENT, AND THE GUARANTORS, BY THEIR EXECUTION OF THE ACKNOWLEDGMENT
AND CONSENT, FOR THEMSELVES AND ON BEHALF OF THEIR RESPECTIVE DIRECTORS,
OFFICERS, MEMBERS, EMPLOYEES, REPRESENTATIVES, SUCCESSORS AND ASSIGNS
(COLLECTIVELY, THE “RELEASORS”), HEREBY
WAIVE, RELEASE, REMISE, ACQUIT AND DISCHARGE THE ADMINISTRATIVE AGENT AND THE
LENDERS AND EACH AND ANY OF THEIR RESPECTIVE PARENTS, AFFILIATES, DIRECTORS,
OFFICERS, LENDERS, EMPLOYEES, REPRESENTATIVES, SHAREHOLDERS, ATTORNEYS,
ACCOUNTANTS, CONSULTANTS, ADVISORS, SUCCESSORS, AND ASSIGNS (COLLECTIVELY, THE “RELEASEES”) OF AND
FROM ANY AND ALL CONTROVERSIES, DAMAGES, COSTS, LOSSES, CAUSES OF ACTION,
SUITS, JUDGMENTS, CLAIMS, RECOUPMENTS, COUNTERCLAIMS OR DEMANDS, OF EVERY TYPE,
KIND, NATURE, DESCRIPTION OR CHARACTER, WHETHER NOW EXISTING OR THAT COULD,
MIGHT, OR MAY BE CLAIMED TO EXIST, OF WHATEVER KIND OR NAME, WHETHER KNOWN
OR UNKNOWN, LIQUIDATED OR UNLIQUIDATED, FIXED OR CONTINGENT, FORESEEABLE OR
UNFORESEEABLE, EACH AS THOUGH FULLY SET FORTH HEREIN AT LENGTH, IN LAW OR
EQUITY, WHICH ANY OF THE RELEASORS PREVIOUSLY HAD FROM THE BEGINNING OF THE
WORLD OR NOW HAVE AGAINST ANY OF THE RELEASEES THROUGH THE DATE HEREOF, RELATED
TO OR CONNECTED WITH THE LOAN DOCUMENTS, THIS AMENDMENT, OR THE TRANSACTIONS
CONTEMPLATED BY ANY OF THE FOREGOING.


 


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.


 


14

















 


(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.]


 


15
















 


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., as Borrower

  
	
   

  	
   

  
	
   

  	
  By: K-Sea OLP GP, LLC, its
  general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Terrence P. Gill

  
	
   

  	
  Name:

  	
  Terrence P. Gill

  
	
   

  	
  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/ Joseph Markey

  
	
   

  	
  Name:

  	
  Joseph Markey

  
	
   

  	
  Title:

  	
  MD

  



 


 


K-SEA
OPERATING PARTNERSHIP AMENDMENT NO. 3 SIGNATURE PAGE


 

















 


	
   

  	
  BANK OF AMERICA, N.A. (successor
  to LaSalle Bank National Association), as Co-Syndication Agent and Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Carlos Morales

  
	
   

  	
  Name:

  	
  Carlos Morales

  
	
   

  	
  Title:

  	
  Vice President

  



 


 


K-SEA OPERATING PARTNERSHIP AMENDMENT NO. 3 SIGNATURE PAGE


 

















 


	
   

  	
  CITIBANK, N.A., as
  Co-Syndication Agent and Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles J. Margiotti
  III

  
	
   

  	
  Name:

  	
  Charles J. Margiotti III

  
	
   

  	
  Title:

  	
  Vice President

  



 


 


K-SEA OPERATING PARTNERSHIP AMENDMENT NO. 3 SIGNATURE PAGE


 

















 


	
   

  	
  CITIZENS
  BANK OF PENNSYLVANIA, as Co-Documentation Agent and Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Devon Starks

  
	
   

  	
  Name:

  	
  Devon Starks

  
	
   

  	
  Title:

  	
  Senior Vice President

  



 


 


K-SEA OPERATING PARTNERSHIP AMENDMENT NO. 3 SIGNATURE PAGE


 

















 


	
   

  	
  HSBC BANK
  USA, NATIONAL ASSOCIATION, as Co-Documentation Agent
  and Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brendan L. Walsh

  
	
   

  	
  Name:

  	
  Brendan L. Walsh

  
	
   

  	
  Title:

  	
  Senior Relationship
  Manager

  



 


 


K-SEA OPERATING PARTNERSHIP AMENDMENT NO. 3 SIGNATURE PAGE


 

















 


	
   

  	
  WACHOVIA
  BANK, NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Craig DeSousa

  
	
   

  	
  Name:

  	
  Craig DeSousa

  
	
   

  	
  Title:

  	
  Senior Vice President

  



 


 


K-SEA OPERATING PARTNERSHIP AMENDMENT NO. 3 SIGNATURE PAGE


 

















 


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: K-Sea General Partner
  L.P., its general partner

  
	
   

  	
   

  
	
   

  	
  By:
   

  	
  K-Sea General Partner GP
  LLC, its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Terrence P. Gill

  
	
   

  	
   

  	
  Name:

  	
  Terrence P. Gill

  
	
   

  	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
  K-SEA TRANSPORTATION INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Terrence P. Gill

  
	
   

  	
  Name:

  	
  Terrence P. Gill

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
  K-SEA TRANSPORTATION LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Terrence P. Gill

  
	
   

  	
  Name:

  	
  Terrence P. Gill

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
					



 

















 


	
   

  	
  SMITH MARITIME LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Terrence P. Gill

  
	
   

  	
  Name:

  	
  Terrence P. Gill

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
  K-SEA HAWAII INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Terrence P. Gill

  
	
   

  	
  Name:

  	
  Terrence P. Gill

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
				



 


 


K-Sea
Amendment No. 3 Acknowledgement and Consent Signature Page


 

















 


EXHIBIT
A

TO

AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT


 


SCHEDULE
2.01


 


Amendment
No. 3 Effective Date Commitments


 


	
  Lender

  	
   

  	
  Tranche A Commitment

  	
   

  	
  Tranche B Commitment

  	
   

  
	
  KeyBank National Association

  	
   

  	
  $

  	
  35,437,500.00

  	
   

  	
  -0-

  	
   

  
	
  Bank of America, N.A.

  	
   

  	
  $

  	
  33,687,500.00

  	
   

  	
  -0-

  	
   

  
	
  Citibank, N.A.

  	
   

  	
  $

  	
  33,687,500.00

  	
   

  	
  -0-

  	
   

  
	
  Citizens Bank of Pennsylvania

  	
   

  	
  $

  	
  24,937,500.00

  	
   

  	
  -0-

  	
   

  
	
  HSBC Bank USA, National Association

  	
   

  	
  $

  	
  24,937,500.00

  	
   

  	
  -0-

  	
   

  
	
  Wachovia Bank, National Association

  	
   

  	
  $

  	
  22,312,500.00

  	
   

  	
  -0-

  	
   

  
	
  Aggregate
  Commitments

  	
   

  	
  $

  	
  175,000,000.00

  	
   

  	
  -0-