EXHIBIT 10.4.2
EXECUTION COPY
X.X.0
Xxxxxxxx Xx. XX-00000
XXXXXXXXX NO. 1 TO
COMMITMENT TO GUARANTEE OBLIGATIONS
THIS AMENDMENT NO. 1 TO COMMITMENT TO GUARANTEE OBLIGATIONS, dated as of
January 14, 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"), and K-SEA OPERATING PARTNERSHIP L.P.,
a Delaware limited partnership ("K-Sea OLP"; K-Sea OLP and K-Sea LP collectively
referred to as the "Shipowner" as set forth in Article II, Section 1(a)(ii)
below). Except to the extent otherwise expressly defined herein, capitalized
terms have the meanings set forth in Schedule X to the Amended and Restated
Security Agreement, Contract No. MA-13781 (the "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, Xxxxxxxx Xx. XX-00000,
dated June 7, 2002 (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. 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 and K-Sea Transportation (together with K-Sea Acquisition Corp., a
Delaware corporation, 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 (x) K-Sea LP and K-Sea OLP simultaneously herewith have
succeeded to all of the interests and obligations of the Original K-Sea Entities
relating to the Title XI Financing, including, without limitation, the
Obligations, the Original Indenture, the Secretary's Note, the Depository
Agreement, the Original Security Agreement, the Mortgage, and all other
documents and instruments related thereto, and the Vessels and (y) K-Sea OLP
simultaneously herewith has succeeded to all of the interests and obligations of
K-Sea LLC in the Construction Contract, as follows:
(i) EW Holding has merged into K-Sea Transition4 Corp.; K-Sea
Transition4 Corp. has entered into a merger with K-Sea LP4, L.P. (with both
entities surviving and all obligations, liabilities and assets relating to
the
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Title XI Financing having been allocated to and vested in K-Sea LP4, L.P.;
and K-Sea LP4, L.P. has merged into K-Sea OLP; and
(ii) K-Sea LLC has merged into K-Sea LP1, L.P.; K-Sea LP1, L.P. has
entered into a merger with K-Sea LP2, L.P. (with both entities surviving
and all obligations, liabilities and assets relating to the Title XI
Financing having been allocated to and vested in K-Sea LP2, L.P.); and
K-Sea LP2, L.P. has merged into K-Sea OLP.
F. The transfer of title to the Delivered Vessels is subject to the
existing first preferred mortgage liens in favor of the Secretary, such liens
will be assumed, respectively, under the Assumptions of Mortgage, Security
Agreement and Secretary's Note and such liens will be restated by K-Sea OLP in
accordance with the Restated Mortgage. The transfer resulting from the mergers
described in Recitals (E)(i) and (ii) above ultimately 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;
G. 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 and collectively the entities described in Recitals (E)(i) and
(ii) above 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
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obligations, duties, right, title and interest of the Original K-Sea Entities
and collectively the entities described in Recitals (E)(i) and (ii) above 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) issued its conditional approval of the MLP Transaction on December
24, 2003, (ii) except for warranties and representations made to the Secretary,
will, subject to (i) above, release K-Sea LLC and EW Holding and collectively
the entities described in Recitals (E)(i) and (ii) above from the Guarantee
Commitment, and (iii) 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.
ARTICLE II. AMENDMENTS TO GUARANTEE COMMITMENT
SECTION 1. 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 expression "Shipowner" or "Shipowners" shall be construed,
wherever it appears in the Guarantee Commitment, to mean K-Sea LP and K-Sea OLP,
provided, however, where the context refers to the Shipowner solely in its
capacity as owner of any Vessel, such reference shall be deemed to mean and
refer to K-Sea OLP alone.
(b) With effect from the date hereof, all references to the Guarantee
Commitment contained in any documents delivered under or pursuant to the
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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 Secretary's agreement to 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 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 and applied to
prepayment of all debt (other than the Title XI Financing) of K-Sea LLC and/or
EW Holding;
(b) Each of the Original K-Sea Entities, if necessary, and collectively
the entities described in Recitals (E)(i) and (ii) above, and K-Sea LP and K-Sea
OLP shall have entered into documentation providing for the mergers as
contemplated under the MLP Transaction;
(c) K-Sea LLC, K-Sea LP1, L.P., K-Sea LP2, L.P. and 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, collectively the entities described in
Recitals (E)(i) and (ii) above, 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) 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) exchanged Obligations;
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(vi) Assumption of Mortgage, Security Agreement and Secretary's
Note (Corp4 DBL 101); Assumption of Mortgage, Security
Agreement and Secretary's Note (LP4 DBL 101); and Assumption
of Mortgage, Security Agreement and Secretary's Note (OLP DBL
101);
(vii) 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); and
Assumption of Mortgage, Security Agreement and Secretary's
Note (OLP DBL 81, DBL 82);
(viii) Restated First Preferred Fleet Mortgage (the "Mortgage") from
K-Sea OLP in favor of the Secretary respecting the Delivered
Vessels;
(ix) Additional Mortgage;
(x) Assumption of Depository Agreement;
(xi) Termination of Depository Agreement (Segregated Account);
(xii) Acknowledgement regarding Bareboat Charters respecting the
Delivered Vessels;
(xiii) Additional Assignment of Insurance; and
(xiv) Assumption of Construction Contract.
(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;
(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);
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(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 forty-five (45) calendar days 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 the entities described in Recitals (E)(i) and (ii) above,
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;
(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;
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(l) There shall have been delivered to the Secretary by K-Sea LP and K-Sea
OLP opinions of counsel substantially in the form attached hereto;
(m) Prior to the MLP Closing Date, there shall have been delivered to the
Secretary pro forma consolidated balance sheets for the Consolidated Group as of
the MLP Closing Date immediately after the MLP Transaction, certified by an
officer of K-Sea LP showing, among other things, (i) all non-Title XI debt of
K-Sea LP and K-Sea OLP; and (ii) the qualifying requiremenets set forth in
Section 10 of the Financial Agreement shall have been complied with and
certified to as required therein;
(n) Appropriate instruments respecting each of the Delivered Vessels shall
have been filed for re-documentation 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;
(o) 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 covering the Delivered Vessels and the Additional Vessels as required
by the Security Agreement;
(p) On the MLP Closing Date, K-Sea OLP shall have granted in favor of the
Secretary the Additional Mortgage on the Additional Vessels with an aggregate
Orderly Liquidation Value of at least Ten Million Dollars ($10,000,000) as
additional collateral for the Guarantee;
(q) K-Sea Transition4 Corp., K-Sea LP4, L.P., K-Sea LP1, L.P. and K-Sea
LP2, L.P. shall have successively assumed the Obligations and all documents and
instruments related to the Title XI Financing; K-Sea LP and K-Sea OLP shall have
jointly and severally assumed the Obligations and all documents and instruments
related to the Title XI Financing;
(r) On 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
Restated 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
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Additional Mortgage respecting the Additional Vessels shall be maintained and
fully perfected;
(s) On or prior to the MLP Closing Date, K-Sea LP and K-Sea OLP shall have
delivered or deposited to the Title XI Reserve Fund the Additional Availability
of Funds in the aggregate amount of Eight Million Dollars ($8,000,000) in
accordance with the terms of Section 6 of the Financial Agreement;
(t) The partnership agreements of K-Sea LP and K-Sea OLP shall have been
amended to comply with the Security Agreement and to otherwise be satisfactory
in form and substance to the Secretary.
(u) The Reverter Agreement shall have been executed in form and substance
satisfactory to the Secretary that provides for returning the organizational
structure, ownership of assets and liabilities and obligations to substantially
the same state (as determined solely by the Secretary) they were in prior to the
commencement of the MLP Transaction if the MLP Transaction does not conclude
within 45 calendar days of K-Sea LP's delivery of a steps initiation notice to
the Secretary (the "Initiation Notice"), at the sole option of the Secretary.
K-Sea LLC, EW Holding, K-Sea Transition4 Corp., K-Sea LP4, L.P., K-Sea LP1, L.P.
and K-Sea LP2, L.P., K-Sea LP and K-Sea OLP have been bound by the restrictions
of Sections 8(a) and 8(b) of the Original Financial Agreement, as amended
through the date hereof, from the time the Initiation Notice is delivered, until
released by the Secretary.
(v) K-Sea LP and K-Sea OLP shall have at the MLP Closing evidence that all
liens and all non-Title XI debt relating to the Vessels and Additional Vessels,
if any, are subordinated or discharged in a manner acceptable to the Secretary
and that all non-Title XI debt that is not subordinated to the Secretary has
been discharged in a manner acceptable to the Secretary. K-Sea LP and K-Sea OLP
shall have provided to the Secretary at the MLP Closing with evidence in form
and substance satisfactory to the Secretary from KeyBank N.A. and The CIT
Group/Equipment Financing Inc. that KeyBank N.A. and The CIT Group/Equipment
Financing Inc. do not have any interest in the Secretary's collateral and will
not request an interest in the Secretary's collateral. If the DBL 102 is
delivered after the MLP Closing, K-Sea LP and K-Sea OLP shall have provided to
the Secretary at the delivery closing of the DBL 102 evidence from KeyBank N.A.
and The CIT Group/Equipment Financing Inc. that KeyBank N.A. and The CIT
Group/Equipment Financing Inc. do not have any interest in the DBL 102.
(w) K-Sea LP and K-Sea OLP shall have executed declarations at the closing
regarding lobbying activities pursuant to the provisions of 31 U.S.C. 1352
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and the Lobbying Disclosure Act of 1995 (Public Law 104-65) disclosing all
covered lobbying activities with respect to the MLP transaction.
(x) K-Sea LP and K-Sea OLP shall have paid to the Secretary an assumption
fee of $36,000 respecting the assumption and exchange of the Obligations by
K-Sea LP and K-Sea OLP in accordance with the terms of the Act;
(y) Each of the entities described in Recitals E(i) and (ii) above and
each of K-Sea LP and K-Sea OLP shall have continued, 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 and of the State of Texas, as
appropriate, to perfect the Secretary's interests in the Security;
(z) On or prior to the MLP Closing Date, CIT, GATX Financial Corporation
(f/k/a TBU Financial, Inc.), a Delaware corporation, Fifth Third Leasing, an
Ohio corporation, and Maritrans Operating Company, L.P., a Delaware limited
partnership, shall have executed all releases, terminations and consents
evidencing the payment and complete satisfaction of all current obligations by
the Original K-Sea Entities;
(aa) CIT, KeyBank, K-Sea LP and K-Sea OLP shall have executed the Revolving
Credit Facility dated as of the MLP Closing Date;
(bb) CIT and KeyBank shall have executed and delivered to the Secretary a
"No-Lien Certificate" in form and substance satisfactory to the Secretary.
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).
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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: /S/ XXXX X. XXXXXXX
--------------------
Secretary
Maritime Administration
/S/ XXXXX X. XXXXXXXXXX
-------------------------------
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: /S/ XXXX X. XXXXXX
--------------------
Name: Xxxx X. Xxxxxx
Title: Chief Financial Officer
/S/ XXXXX XXXX
-------------------------------
Attest:
K-SEA OPERATING PARTNERSHIP L.P.,
by its general partner K-Sea OLP GP, LLC
BY: /S/ XXXX X. XXXXXX
--------------------
Name: Xxxx X. Xxxxxx
Title: Chief Financial Officer
/S/ XXXXX XXXX
-------------------------------
Attest:
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