Exhibit
10.4.2


 


I.A.2


 


Contract No.
MA-13779


 


FORM OF AMENDMENT NO. 1 TO

COMMITMENT TO GUARANTEE OBLIGATIONS


 


THIS AMENDMENT NO. 1 TO
COMMITMENT TO GUARANTEE OBLIGATIONS, dated as of
January     , 2004 (this “Amendment”) made and entered
into by the UNITED STATES OF AMERICA (the “United States”), represented by the
SECRETARY OF TRANSPORTATION, acting by and through the MARITIME ADMINISTRATOR
(the “Secretary”), and accepted on said date by K-SEA TRANSPORTATION PARTNERS
L.P., a Delaware limited partnership (“K-Sea LP” or “Parent Company”), and
K-SEA OPERATING PARTNERSHIP L.P., a Delaware limited partnership (“K-Sea OLP”
or the “Shipowner”).  Except to the
extent otherwise expressly defined herein, capitalized terms have the meanings
set forth in Schedule X to the Restated Security Agreement, Contract No.
MA-13781 (the “Restated Security Agreement”), dated as of the date hereof, by
and among     K-Sea LP, K-Sea OLP and
the Secretary.


 


RECITALS:


 


WHEREAS:


 


A.            K-Sea
Transportation LLC, a Delaware limited liability company (“K-Sea LLC”), and EW
Holding Corp., a New York corporation (“EW Holding”), are parties to that
certain Commitment to Guarantee Obligations, Contract No. MA-13779, dated
June 7, 2003 (the “Guarantee Commitment”), made and entered into by the
United States, acting by and through the Secretary, and accepted on said date
by K-Sea LLC and EW Holding;


 


B.            K-Sea LLC and EW
Holding authorized the issuance of, and executed and delivered, obligations
designated “United States Government Guaranteed Ship Financing Obligations,
K-Sea Series 2002-1, 2002-2, 2002-3 and 2002-4” in an aggregate principal
amount of Forty Million Four Hundred Forty-One Thousand United States Dollars
($40,441,000) (generally referred to as the “Title XI Financing”) to finance a
portion of the cost of construction of DBL 101, O.N. 1119760 (“DBL 101”), DBL
81, O.N. 1132231 (“DBL 81”), DBL 82, O.N. 1137538 (“DBL 82”), and Hull No. 422,
to be known as DBL 102 (collectively with DBL 101, DBL 81 and DBL 82, the
“Vessels”, and each, a “Vessel”);


 

















 


C.            The Shipyard delivered
DBL 101 to EW Holding on July 23, 2002, and DBL 101 has been documented in
the name of EW Holding under the laws of the United States; the Shipyard
delivered DBL 81 to K-Sea LLC on February 5, 2003, and DBL 81 has been documented
in the name of K-Sea LLC under the laws of the United States; the Shipyard
delivered DBL 82 to K-Sea LLC on June 27, 2003, and DBL 82 has been
documented in the name of K-Sea LLC under the laws of the United States (DBL
101, DBL 81 and DBL 82 are herein referred to as the “Delivered Vessels”).  Contemporaneously with its respective
delivery by the Shipyard, each Delivered Vessel was chartered to K-Sea
Transportation Corp., a New York corporation (“K-Sea Transportation”), pursuant
to a bareboat charter approved by the Secretary;


 


D.            The Shipyard has under
construction Hull No. 422, to be known as DBL 102 (the “Remaining Vessel”),
expected to be delivered to K-Sea OLP on or about January 2004, and upon
delivery, the Remaining Vessel will be documented in the name of K-Sea OLP, as
Shipowner, under the laws of the United States;


 


E.             With the Secretary’s
consent and in connection with the initial public offering of common units
representing limited partner interests in K-Sea LP on the date hereof and all transactions
and agreements contemplated or incidental thereto, including the execution of
the Contribution, Conveyance and Assumption Agreement dated as of the date
hereof (the “Contribution Agreement”) by and among K-Sea LLC, EW Holding, K-Sea
Acquisition Corp., a Delaware corporation, and K-Sea Transportation
(collectively, the “Original K-Sea Entities”), K-Sea Investors L.P., a Delaware
limited partnership, K-Sea LP and K-Sea OLP and the performance of the terms
and transactions set forth in the Contribution Agreement (collectively, the
“MLP Transaction”), by assumption, merger and operation of law K-Sea LP and
K-Sea OLP simultaneously herewith have succeeded to substantially all of the
interests and obligations of the Original K-Sea Entities including, without
limitation, the Obligations, the documents and instruments referenced in the
Secretary’s action dated January       ,
2004 by the Secretary with respect to the MLP Transaction (the “Secretary’s
Consent”), and the Vessels;


 


F.             The
transfer of title to the Delivered Vessels is subject to the existing first
preferred mortgage liens in favor of the Secretary, and such liens will be
assumed and restated by K-Sea OLP in accordance with the Assumption of
Mortgage, Security Agreement and Secretary’s Note (OLP DBL 101), the Assumption
of Mortgage, Security Agreement and Secretary’s Note (OLP DBL 81, DBL 82) and
the Mortgage.  The transfer to K-Sea OLP
of any other security in favor of the Secretary is subject to the existing
first priority security interest in favor of the Secretary;


 


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G.            As
set forth in the Secretary’s Consent, each of K-Sea LP and K-Sea OLP, jointly
and severally, specifically is assuming all of the respective rights and
obligations of each of the Original K-Sea Entities with respect to the Title XI
Financing;


 


H.            Pursuant to the
Guarantee Commitment, the United States, acting by and through the Secretary,
guaranteed certain amounts specified in the Guarantee Commitment in connection
with the Title XI Financing; and


 


I.              The parties hereto
desire to amend the Guarantee Commitment and, in the case of K-Sea LP and K-Sea
OLP, to obtain the consent of the Secretary, as required by Section VI of
the Guarantee Commitment.


 


 


NOW THEREFORE, in consideration of the
premises and the mutual covenants herein contained, and of other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:


 


 


ARTICLE I.                  Assumption and Consent


 


SECTION 1.  Assumption of Guarantee Commitment.  Pursuant to Articles V and VI of the
Guarantee Commitment, K-Sea LP and K-Sea OLP, jointly and severally, hereby
expressly assume all of the respective former, present and future obligations,
duties, right, title and interest of the Original K-Sea Entities in and to the
Title XI Financing, together with all documents and instruments evidencing any
such obligations, duties, right, title and interest thereto, and K-Sea LP and
K-Sea OLP expressly agree, jointly and severally, specifically to perform all
of the respective agreements and obligations of K-Sea LLC and EW Holding under
the Guarantee Commitment as amended hereby.


 


SECTION 2.  Secretary’s Consent. 
The United States, acting through the Secretary (i) having by the
Secretary’s Consent acknowledged, consented and agreed to the MLP Transaction;
(ii) having by the Secretary’s Consent acknowledged, consented and agreed that
K-Sea LP, K-Sea OLP and their direct and indirect subsidiaries, together with
each of the Original K-Sea Entities, may enter into such documents or
agreements that are reasonably related to the MLP Transaction; and (iii) having
granted all consents necessary to be obtained under the Title XI Financing,
including without limitation, its consent and approval as required under
Articles V and VI of the Guarantee Commitment, hereby (a) releases K-Sea LLC
and EW Holding from the Guarantee Commitment, and (b) agrees that from and
after the date hereof, the Guarantee Commitment shall be assumed by K-Sea LP
and K-Sea OLP and amended by this Amendment.


 


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ARTICLE II.                Amendments to Guarantee Commitment


 


SECTION 1.  Rules of Interpretation and Definitions.  As of, and with effect from, the date hereof
(the “MLP Closing Date”), the Guarantee Commitment is amended as follows:


 


(a)           the expressions “the
Guarantee Commitment”, “this Guarantee Commitment”, “hereof” and “hereunder”
shall be construed, wherever they appear in the Guarantee Commitment and
wherever the context so permits, to mean the Guarantee Commitment as amended by
this Amendment;


 


(i)            the expressions “EW
Holding” and “K-Sea” shall be construed, wherever either appears in the
Guarantee Commitment, to mean collectively K-Sea LP and K-Sea OLP, jointly and
severally as joint and several successors in interest to K-Sea LLC and EW
Holding provided, however, where the context refers either to K-Sea LLC or EW
Holding solely in its capacity as a shipowner, such reference shall be deemed
to mean and refer to K-Sea OLP alone; and


 


(ii)           the expressions “the
Shipowners” or “any Shipowner” shall be construed, wherever it appears in the
Guarantee Commitment, to mean K-Sea OLP, as Shipowner and as successor in
interest to K-Sea LLC and EW Holding in such capacity.


 


(b)           With effect from the
date hereof, all references to the Guarantee Commitment contained in any
documents delivered under or pursuant to the Guarantee Commitment shall be
construed as references to the Guarantee Commitment as amended by the terms of
this Amendment and as it may be further amended, modified or supplemented from
time to time.


 


 


ARTICLE III.               Conditions to Execution and Delivery of this Amendment


 


The obligation of the
Secretary to execute and deliver this Amendment is subject to the following
conditions having been met or being met simultaneously herewith on the date
hereof, unless waived in writing by the Secretary:


 


(a)           The
MLP Transaction as described in the Secretary’s Consent shall have closed or
shall close simultaneously with this Amendment and the proceeds thereof shall
have been paid to or shall be paid simultaneously with this Amendment to the
order of K-Sea LP;


 


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(b)           Each
of the Original K-Sea Entities, if necessary, and K-Sea LP and K-Sea OLP shall
have entered into documentation providing for the assumptions, mergers and
operations of law as set forth in the Secretary’s Consent;


 


(c)           K-Sea
OLP shall have executed and delivered to the Secretary the Assumption of
Construction Contract, subject to the first priority security interest of the
Secretary, and the Shipyard shall have executed the Consent of Shipyard;


 


(d)           The Original K-Sea
Entities, K-Sea LP, K-Sea OLP and the Secretary, as required, shall have
executed and delivered the following documents, each document or instrument
being in form and substance satisfactory to each of the Original K-Sea
Entities, K-Sea LP, K-Sea OLP and the Secretary, and if a party thereto, the
Indenture Trustee and the Depository:


 


(i)            Restated Security Agreement,
including Schedule X definitions;


 


(ii)           Restated Title XI
Reserve Fund and Financial Agreement;


 


(iii)          Supplemental Indenture
No. 1, including Schedule A definitions;


 


(iv)          Assumption of
Secretary’s Note;


 


(v)           Obligations;


 


(vi)          Assumption of Mortgage,
Security Agreement and Secretary’s Note (OLP DBL 101); Assumption of Mortgage,
Security Agreement and Secretary’s Note (OLP DBL 81, DBL 82);


 


(vii)         Restated First Preferred
Fleet Mortgage (the “Mortgage”) from K-Sea OLP in favor of the Secretary respecting
DBL 101, DBL 81 and DBL 82;


 


(viii)        Additional Mortgage;


 


(ix)           Assumption of
Depository Agreement;


 


(x)            Termination of
Depository Agreement (Segregated Account); and


 


(xi)           Acknowledgement
regarding Bareboat Charters respecting DBL 101, DBL 81 and DBL 82;


 


(e)           The Secretary shall
have received two executed original counterparts of all documents delivered by
K-Sea LP and K-Sea OLP, the Indenture Trustee or the Depository in connection
with this Amendment;


 


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(f)            K-Sea LP and K-Sea OLP
shall have caused:


 


(i)            K-Sea Transition4
Corp., a Texas corporation (“Corp #4”), to execute and deliver the Assumption
of Mortgage, Security Agreement and Secretary’s Note (Corp4 DBL 101);


 


(ii)           K-Sea LP4, L.P., a
Texas limited partnership (“LP #4”), to execute and deliver the Assumption of
Mortgage, Security Agreement and Secretary’s Note (LP4 DBL 101);


 


(iii)          K-Sea LP1, L.P., a Texas
limited partnership (“LP #1”), to execute and deliver the Assumption of
Mortgage, Security Agreement and Secretary’s Note (LP1 DBL 81, DBL 82);


 


(iv)          K-Sea LP2, L.P., a Texas
limited partnership (“LP #2”), to execute and deliver the Assumption of
Mortgage, Security Agreement and Secretary’s Note (LP2 DBL 81, DBL 82); and


 


(v)           One or more Letters of
Credit to be issued and delivered to the Secretary in an amount equal to the
difference between $8,000,000 and the amount of Additional Deposits.


 


(g)           The Secretary shall
have received a letter agreement from K-Sea LP and K-Sea OLP to provide the Secretary
within a reasonable time after the MLP Closing Date, with eight conformed
copies of this Amendment and each of the Appendices and Exhibits thereto
executed on or prior to such date;


 


(h)           Each of K-Sea LP and
K-Sea OLP shall have furnished to the Secretary on the date hereof an affidavit
complying with the requirements of 46 CFR 355, demonstrating U.S. citizenship;


 


(i)            Each of K-Sea LP and
K-Sea OLP shall have executed an Officer’s Certificate representing and
warranting the truth of the following statements as of the MLP Closing Date:


 


(1)           each of the
representations and warranties set out at Section 2.01 of the General
Provisions of the Security Agreement; and


 


(2)           each of K-Sea LP and
K-Sea OLP is not in violation of any Federal laws having a substantial adverse
effect on the interest of the United States of America under the Title XI
Financing and the consummation of the transactions contemplated by this
Amendment complies in all material respects with non-Title XI Federal law;


 


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(j)            K-Sea LP and K-Sea OLP
shall have complied in all material respects with its agreements under this
Amendment;


 


(k)           There shall not have
occurred any event which constitutes (or after any period of time or any
notice, or both, would constitute) a “Default” under the Security Agreement,
unless waived by the Secretary;


 


(l)            There shall have been
delivered to the Secretary by K-Sea LP and K-Sea OLP an opinion of counsel
substantially in the form attached hereto;


 


(m)          On the MLP Closing Date
immediately after the MLP Transaction, the qualifying requirements set forth in
Section 10 of the Financial Agreement shall have been complied with and
certified to as required therein;


 


(n)           Prior to the MLP
Closing Date, there shall have been delivered to the Secretary pro forma
consolidated balance sheets for the Consolidated Group, certified by an officer
of K-Sea LP showing, among other things, all non-Title XI debt of K-Sea LP and
K-Sea OLP;


 


(o)           Each of the Delivered
Vessels shall have been re-documented under the laws of the United States in
the name of K-Sea OLP as owner thereof free and clear of all liens of record
other than the Mortgage;


 


(p)           At least ten (10) days
prior to the MLP Closing Date, K-Sea LP and K-Sea OLP shall have provided the
Secretary with satisfactory evidence of marine insurance as required by the
Restated Security Agreement;


 


(q)           On or prior to the MLP
Closing Date, the Assumption of Mortgage, Security Agreement and Secretary’s
Note (Corp4 DBL 101); Assumption of Mortgage, Security Agreement and
Secretary’s Note (LP4 DBL 101); Assumption of Mortgage, Security Agreement and
Secretary’s Note (OLP DBL 101); Assumption of Mortgage, Security Agreement and
Secretary’s Note (LP1 DBL 81, DBL 82); Assumption of Mortgage, Security
Agreement and Secretary’s Note (LP2 DBL 81, DBL 82); Assumption of Mortgage,
Security Agreement and Secretary’s Note (OLP DBL 81, DBL 82); the Mortgage and
the Additional Mortgage, shall have been filed for recording in the National
Vessel Documentation Center of the U.S. Coast Guard (the “NVDC”) so that the
Mortgage respecting the Delivered Vessels and the Additional Mortgage
respecting the Additional Vessels shall be maintained and fully perfected;


 


(r)            On or prior to the MLP
Closing Date, K-Sea LP and K-Sea OLP shall have delivered or deposited the
Additional Availability of Funds in the aggregate


 


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amount of Eight Million
Dollars ($8,000,000) to the Title XI Reserve Fund in accordance with the terms
of Section 6 of the Financial Agreement;


 


(s)           K-Sea LP and K-Sea OLP
shall have paid to the Secretary an assumption fee [of
$                        ]
respecting the exchange of the Obligations in accordance with the terms of the
Act;


 


(t)            K-Sea LP and K-Sea OLP
shall have granted or caused to be granted to the Secretary a fully perfected,
first priority security interest in each of the assets that constitute the
Security; and each shall duly effect the filing of a Uniform Commercial Code
financing statement (UCC-1) with the Secretary of State of the State of
Delaware to perfect the Secretary’s interests in the Security;


 


(u)           On or prior to the MLP
Closing Date, CIT, GATX, Fifth Third and Maritrans shall have executed all
releases, terminations and consents evidencing the payment and complete
satisfaction of all current obligations by the Original K-Sea Entities.


 


(v)           CIT, KeyBank, K-Sea LP
and K-Sea OLP shall have executed the Revolving Credit Facility dated as of the
MLP Closing Date.


 


ARTICLE IV.               Continuation
in Effect


 


Except as expressly
amended by this Amendment, the Guarantee Commitment shall remain in full force
and effect.


 


 


ARTICLE V.                Counterparts


 


This Amendment may be
executed in any number of counterparts. 
All such counterparts shall be deemed to be originals, and together
shall constitute but one and the same instrument.


 


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ARTICLE VI.               Governing
Law


 


THIS
AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE UNITED STATES OF
AMERICA, TO THE EXTENT APPLICABLE, AND OTHERWISE IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK WITHOUT REGARD TO ITS CONFLICT OF LAWS PROVISIONS (OTHER
THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).


 


[signatures on next page]


 


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IN WITNESS WHEREOF,
this Amendment No. 1 to Commitment to Guarantee Obligations has been executed
by the parties hereto as of the day and year first above written.


 


	
   

  	
   

  	
  UNITED STATES OF AMERICA,

  SECRETARY OF TRANSPORTATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BY:  MARITIME
  ADMINISTRATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BY:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Secretary 

  
	
   

  	
   

  	
   

  	
  Maritime Administration

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  K-SEA TRANSPORTATION PARTNERS

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

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

  General Partner GP LLC  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BY:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: John J. Nicola

  
	
   

  	
   

  	
   

  	
  Title:  Chief
  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  K-SEA OPERATING PARTNERSHIP L.P.,

  by its general partner K-Sea OLP GP, LLC 
  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BY:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: John J. Nicola

  
	
   

  	
   

  	
   

  	
  Title:  Chief
  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Attest: