Ex-10.11


 


EXECUTION VERSION


 


FORBEARANCE AGREEMENT


 


dated as of September 30, 2010


 


TBS
International Limited


Commerce
Building, One Chancery Lane


Hamilton
HM 12 Bermuda


 


Re:                             Forbearance
Agreement (this “Forbearance Agreement”)


 


Ladies
and Gentleman:


 


Reference
is hereby made to: (a) those certain extensions of credit made pursuant to
and as evidenced by, inter  alia, (i) that certain Amended
and Restated Credit Agreement, dated as of March 26, 2008 (as amended,
restated, supplemented or otherwise modified and in effect from time to time,
the “Credit Agreement”), among Albemarle Maritime Corp. and each of the
other entities identified on the signature pages thereof as Borrowers, TBS
International plc and TBS International Limited, as guarantors (collectively, “Holdings”),
TBS Shipping Services Inc., as Administrative Borrower, each of the financial
institutions party thereto as lenders, Bank of America, N.A., as Administrative
Agent (the “Administrative Agent”), Citibank, N.A. and DVB Group
Merchant Bank (Asia) Ltd., as co-Syndication Agents, TD Banknorth, N.A., as
Documentation Agent and Banc of America Securities LLC, as Sole Lead Arranger
and Sole Book Manager; and (b) those certain interest rate swap
transactions (collectively, the “Transactions”) entered into in
connection with and pursuant to that certain Master Agreement (on the 2002 ISDA
form as amended) dated as of June 28, 2005 (together with the Schedules
thereto and the Confirmations thereunder, and as amended, restated,
supplemented or otherwise modified and in effect from time to time, the “Master
Agreement”) among the Borrowers and TBS International Limited
(collectively, the “Swap Parties” and each a “Swap Party”) and
Bank of America, N.A. (“Bank of America”).


 


Each
Swap Party has advised Bank of America and hereby acknowledges that (a) the
Loan Parties (as defined in the Credit Agreement) have (i) failed to pay
the installment of principal due under the Credit Agreement on September 30,
2010, and (ii) the Loan Parties and certain other subsidiaries of the Loan
Parties failed to pay certain amounts due under certain other Indebtedness of
such entities and (b) as a result of such failures, and the occurrence of
Defaults and Events of Default under the Credit Agreement and such other
Indebtedness, Events of Default under Sections 5(a)(ii)(1), 5(a)(iii)(1) and
5(a)(vi) of the Master Agreement have occurred and are continuing (the “Specified
Defaults”).  The Swap Parties agree
that, but for the terms of this Forbearance Agreement, Bank of America may proceed
to enforce its rights and remedies under the Master Agreement.  Notwithstanding the foregoing, the Swap
Parties have requested that Bank of America forbear from enforcing its rights
and remedies under the Master Agreement and the Credit Support Documents and
applicable laws (the “Forbearance”) on the terms and conditions set
forth herein.  In response to such
request, Bank of America hereby agrees to refrain from enforcing such rights
and remedies until the Forbearance Termination Date (as hereinafter defined),
upon the following terms and conditions:


 

















 


§1.  Definitions.  All capitalized terms used herein without
definition that are defined in the Master Agreement shall have the same
meanings herein as therein.


 


§2.  Ratification
of Existing Agreements.   The Swap Parties
confirm and agree that the obligations, as evidenced by or otherwise arising
under the Master Agreement and the Credit Agreement  are, by the Swap Parties’ execution of this
Forbearance Agreement, ratified and confirmed in all respects.  In addition, by the execution of this
Forbearance Agreement, each of the Swap Parties represents and warrants that no
counterclaim, right of set-off (other than those arising under the Master
Agreement) or defense of any kind exists or is outstanding as of the
Forbearance Effective Date (as defined below) with respect to such obligations.


 


§3.  Representations and Warranties.  All
of the representations and warranties made by each of the Swap Parties in the
Master Agreement and the Credit Support Documents are true and correct on the
date hereof as if made on and as of the date hereof, except with respect to the
occurrence of the Specified Defaults and to the extent that any of such
representations and warranties relate by their terms to a prior date they shall
be true and correct as of such prior date.


 


§4.  Forbearance Obligations.  Subject to all of the other terms and
conditions set forth herein, and solely with respect to the Specified Defaults,
Bank of America agrees to forbear from exercising its rights and remedies under
the Master Agreement and the Credit Support Documents until that date (the “Forbearance
Termination Date”) which is the earliest to occur of (i) November 15,
2010, (ii) the failure after the date hereof of any of the Swap Parties to
comply with any of the terms or undertakings of this Forbearance Agreement, (iii) the
failure after the date hereof of any of the Swap Parties to comply with any of
the terms or undertakings of any forbearance or similar agreement with the
Administrative Agent under the Credit Agreement or the expiration, for any
reason, of any forbearance or similar period referred to therein and (iv) the
occurrence after the date hereof of any Default or Event of Default  under the Master Agreement (other than the
Specified Defaults), (each of the foregoing conditions described in the
immediately preceding clauses (i)-(iv) being referred to as a “Forbearance
Termination Event”).  Upon the
Forbearance Termination Date, the agreements of Bank of America to forbear from
exercising its rights and remedies in respect of the Specified Defaults set
forth herein shall automatically, without the requirement of any notice to any
Swap Party, terminate and Bank of America shall be free in its sole and
absolute discretion to proceed to enforce any or all of its rights and remedies
set forth in this Forbearance Agreement, the Master Agreement or the Credit
Support Documents and applicable law.


 


§5.  Covenants.  Each of Bank of
America and the Swap Parties hereby covenant and agree with and for the benefit
of Bank of America, notwithstanding anything to the contrary contained in the
Master Agreement or the Credit Support Documents, as follows:


 


(a)           Compliance
with Master Agreement. Each Swap Party will, and will cause each of its
Subsidiaries to, comply and continue to comply with all of the terms, covenants
and provisions contained in the Master Agreement and each Credit Support
Document to which each is a party and
any other instruments evidencing or creating any obligations pursuant to such
documents except as such terms, covenants and provisions are expressly modified
in Section 4 or this Section 5.


 


(b)           Further
Assurances. Each Swap Party will, and will cause its Subsidiaries to, at
any time or from time to time execute and deliver such further instruments,
each in form and substance satisfactory to Bank of America, and take such
further action as Bank of America may reasonably request, in each case further
to effect the purposes of this Forbearance Agreement, the Master Agreement and the Credit
Support Documents.


 

















 


§6.  Conditions to Effectiveness.  Bank of America and the Swap Parties agree
that the forbearance obligations of Bank of America herein shall be effective
upon the satisfaction of each of the following conditions precedent, each in
form and substance satisfactory to Bank of America, on September 30, 2010
(the “Forbearance Effective Date”):


 


(a)           The Swap Parties and
Bank of America shall have executed and delivered this Forbearance Agreement.


 


(b)           The applicable
Subsidiaries (as defined in the Credit Agreement) of the Loan Parties shall
have entered into amendments, waivers, forbearances or other modifications
reasonably satisfactory to Bank of America of each loan agreement evidencing
the existing Indebtedness (as defined in the Credit Agreement) of such
Subsidiaries of the Loan Parties described on Schedule 7.02 of the Credit
Agreement and any other material Indebtedness of such Subsidiaries (including,
without limitation, the various loan agreements among certain Subsidiaries of
Holdings and The Royal Bank of Scotland plc, DVB Group Merchant Bank (Asia)
Ltd., Credit Suisse, AIG Commercial Equipment Finance, Inc, Commerzbank AG
and Berenberg Bank) deferring or forbearing any rights with respect to the
failure to make any payments of principal due under such loan agreements to a
date which is no earlier than the Forbearance Termination Date, and Bank of
America shall have received a signed Officer’s Certificate, certified by a duly
authorized officer of Holdings to be true and complete, attaching true, correct
and complete fully executed copies of each such amendment, forbearance, waiver
and modification to each such loan agreement.


 


(c)           Bank of America
shall have received evidence that all corporate action necessary for the valid
execution and delivery by the Swap Parties of this Forbearance Agreement and
the performance of the transactions contemplated hereby and thereby shall have
been taken.


 


(d)           Bank of America
shall have received payment for the fees, and expenses including, without
limitation, fees and expenses incurred by their counsel and their restructuring
advisors and other consultants, for which invoices or estimates therefor have
been provided to the Swap Parties on or prior to the Forbearance Effective
Date.


 


(e)           The representations
and warranties of each of the Swap Parties in the Master Agreement and the
Credit Support Documents shall be true and correct as of the Forbearance
Effective Date, except with respect to the occurrence of the Specified Defaults
referred to herein and to the extent that any of such representations and
warranties relate by their terms to a prior date they shall be true and correct
as of such prior date.


 


(f)            There shall have
occurred no Default or Event of Default under the Master Agreement other than
the Specified Defaults.


 


§8.  No Present Claims; Release.  The Swap Parties hereby acknowledge and agree
that, as of the date hereof: (a) none of the Swap Parties or any of their
Affiliates has any claim or cause of action against Bank of America (or any of
its directors, officers, employees, attorneys or agents); (b) none of the
Swap Parties or any of their Affiliates, has offset rights (other than those
arising under the Master Agreement), counterclaims or defenses of any kind
against any of their obligations, indebtedness or liabilities to Bank of
America; and (c) Bank of America has heretofore properly performed and
satisfied in a timely manner all of its obligations to the Swap Parties and
each of their Affiliates.  Bank of
America wishes (and the Swap Parties agree) to eliminate any possibility that
any past conditions, acts, omissions, events, circumstances or matters would
impair or otherwise adversely affect any of the rights, interests, contracts,
collateral security or remedies of Bank of America.  Therefore, the Swap Parties, each on its own
behalf and on behalf of each of its respective successors and assigns, hereby
waives, releases and discharges Bank of America and all of its directors,
officers, employees, attorneys and agents, from any and all claims, demands,
actions or causes 


 

















 


of
action on or before the date hereof and arising out of or in any way relating
to the Master Agreement and any other documents, instruments, agreements
(including this Forbearance Agreement), dealings or other matters connected
with the Master Agreement, including, without limitation, all known and unknown
matters, claims, transactions or things occurring on or prior to the date of
this Forbearance Agreement related to the Master Agreement.  The waivers, releases, and discharges
contained in this paragraph shall be effective regardless of any other event
that may occur or not occur prior to, or on or after the date hereof.


 


§9.  Expenses.  The Swap Parties jointly and severally agree
to pay on demand all expenses incurred by Bank of America in connection with
the transactions contemplated by this Forbearance Agreement and in connection
with any amendments or waivers (whether or not the same become effective)
hereof and all expenses incurred by Bank of America in connection with the
enforcement of any rights hereunder, including, without limitation, (i) the
cost and expenses of preparing and duplicating this Forbearance Agreement, (ii) the
reasonable legal fees and all charges for costs, expenses and disbursements of
Bingham McCutchen LLP, special counsel to Bank of America, in connection with
the transactions contemplated by this Forbearance Agreement and any amendments,
modifications, approvals, consents or waivers hereunder,  and (iii) all expenses, costs and
liabilities, incurred by Bank of America in connection with (A) the
interpretation and administration of and exercise, enforcement or preservation
of rights under this Forbearance Agreement against any of the Swap Parties or
any of their officers or employees party thereto or the administration thereof
whether before or after the occurrence of a Default or Event of Default and (B) any
litigation, proceeding or dispute whether arising hereunder or otherwise, in
any way related to the relationship of Bank of America with the Swap Parties.


 


§10.  Amendments.  This Forbearance Agreement shall not be
amended without the written consent of Bank of America.


 


§11.  No Waiver.  Except as otherwise expressly provided for in
this Forbearance Agreement, nothing in this Forbearance Agreement shall extend
to or affect in any way any of the rights or obligations of the Swap Parties or
any of Bank of America’s obligations, rights and remedies arising under the
Master Agreement.  Bank of America shall
not be deemed to have waived any or all of its rights or remedies with respect
to any Default or Event of Default under the Master Agreement existing on the
date hereof or arising hereafter.


 


§12.  Marshalling.  Bank of America shall not be required to
marshal any present or future collateral security for the Swap Parties’
obligations to Bank of America under the Master Agreement or to resort to such
collateral security or other assurances of payment in any particular order, and
all of its rights in respect of such collateral security shall be cumulative
and in addition to all other rights, however existing or arising.  To the extent that they lawfully may, the
Swap Parties hereby agree that they will not invoke any law relating to the marshalling
of collateral which might cause delay in or impede Bank of America’s rights
under any document, agreement or instrument evidencing or securing the Swap
Parties’ obligations to Bank of America under the Master Agreement and, to the
extent that it lawfully may, each of the Swap Parties hereby irrevocably waives
the benefits of all such laws.


 


§13.  Miscellaneous.


 


(a)           THIS FORBEARANCE
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK,  (WITHOUT
REFERENCE TO ITS CONFLICT OF LAWS PROVISIONS, EXCEPT FOR SECTIONS 5-1401 AND
5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).


 


(b)           This Forbearance
Agreement may be executed in counterparts (and by different parties hereto in
different counterparts), each of which shall constitute an original, but all of
which when taken 


 

















 


together
shall constitute a single contract. 
Delivery of an executed counterpart of a signature page of this
Forbearance Agreement by facsimile, telecopy or other electronic transmission
shall be effective as delivery of a manually executed counterpart of this
Forbearance Agreement.


 


(c)           The failure to
comply with the covenants contained herein shall constitute an Event of Default
under the Master Agreement; and all obligations included in this Forbearance
Agreement (including, without limitation, all obligations for the payment of
principal, interest, fees, and other amounts and expenses) shall constitute
obligations under the Master Agreement.


 


(d)           Wherever possible,
each provision of this Forbearance Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Forbearance Agreement shall be prohibited by or rendered invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Forbearance Agreement.


 


[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


 

















 


If
you are in agreement with the foregoing, please sign and return the enclosed
copy of this Forbearance Agreement to Bank of America.


 


	
   

  	
  The
  Swap Parties:

  
	
   

  	
   

  
	
   

  	
  TBS
  INTERNATIONAL LIMITED

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Ferdinand V. Lepere

  
	
   

  	
  Name:

  	
  Ferdinand
  V. Lepere

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ALBEMARLE
  MARITIME CORP.

  
	
   

  	
  ARDEN
  MARITIME CORP.

  
	
   

  	
  AVON
  MARITIME CORP.

  
	
   

  	
  BIRNAM
  MARITIME CORP.

  
	
   

  	
  BRISTOL
  MARITIME CORP.

  
	
   

  	
  CHESTER
  SHIPPING CORP.

  
	
   

  	
  CUMBERLAND
  NAVIGATION CORP.

  
	
   

  	
  DARBY
  NAVIGATION CORP.

  
	
   

  	
  DOVER
  MARITIME CORP.

  
	
   

  	
  ELROD
  SHIPPING CORP.

  
	
   

  	
  EXETER
  SHIPPING CORP.

  
	
   

  	
  FRANKFORT
  MARITIME CORP.

  
	
   

  	
  GLENWOOD
  MARITIME CORP.

  
	
   

  	
  HANSEN
  SHIPPING CORP.

  
	
   

  	
  HARTLEY
  NAVIGATION CORP.

  
	
   

  	
  HENLEY
  MARITIME CORP.

  
	
   

  	
  HUDSON
  MARITIME CORP.

  
	
   

  	
  JESSUP
  MARITIME CORP.

  
	
   

  	
  MONTROSE
  MARITIME CORP.

  
	
   

  	
  OLDCASTLE
  SHIPPING CORP.

  
	
   

  	
  QUENTIN
  NAVIGATION CORP.

  
	
   

  	
  RECTOR
  SHIPPING CORP.

  
	
   

  	
  REMSEN
  NAVIGATION CORP.

  
	
   

  	
  SHEFFIELD
  MARITIME CORP.

  
	
   

  	
  SHERMAN
  MARITIME CORP.

  
	
   

  	
  STERLING
  SHIPPING CORP.

  
	
   

  	
  STRATFORD
  SHIPPING CORP.

  
	
   

  	
  VEDADO
  MARITIME CORP.

  
	
   

  	
  VERNON
  MARITIME CORP.

  
	
   

  	
  WINDSOR
  MARITIME CORP.

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Ferdinand V. Lepere

  
	
   

  	
  Name:

  	
  Ferdinand
  V. Lepere

  
	
   

  	
  Title:

  	
  Attorney-in-Fact

  



 

















 


	
   

  	
  BANK
  OF AMERICA, N.A.

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Robert L. Wallace, J.r

  
	
   

  	
  Name:

  	
  Robert
  L. Wallace, J.r

  
	
   

  	
  Title:
  

  	
  Senior
  Vice President