ex-10_7.htm


    TBS INTERNATIONAL LIMITED
& SUBSIDIARIES                EXHIBIT
10.7 

     

    



    


    


    


    Date 27
March 2009

    


    


    


    ARGYLE
MARITIME CORP.

    CATON
MARITIME CORP.

    DORCHESTER
MARITIME CORP.

    LONGWOODS
MARITIME CORP.

    McHENRY
MARITIME CORP.

    SUNSWYCK
MARITIME CORP.

    as Joint
and Several Borrowers

     

    – and
–

     

    TBS
INTERNATIONAL LIMITED

    as
Corporate Guarantor

     

    – and
–

     

    THE
BANKS AND FINANCIAL INSTITUTIONS

    listed
in Schedule 1

    as
Lenders

     

    – and
–

     

    THE
ROYAL BANK OF SCOTLAND PLC

    as
Mandated Lead Arranger

     

    – and
–

     

    THE
ROYAL BANK OF SCOTLAND PLC

    as
Bookrunner, Agent, Security Trustee and Swap Bank

    


    


    


    


    


                                                                                                 

     

    SUPPLEMENTAL
AGREEMENT

                                                                                                 

    


    relating
to

    a term
loan facility of US$150,000,000

    


    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    INDEX

    Clause Page

    


     

    1           INTERPRETATION 

     

    2           AGREEMENT
OF THE CREDITOR PARTIES 

     

    3           CONDITIONS
PRECEDENT 

     

    4           REPRESENTATIONS
AND WARRANTIES 

     

    5           AMENDMENTS
TO LOAN AGREEMENT AND OTHER FINANCE DOCUMENTS 

     

    6           FURTHER
ASSURANCES 

     

    7           FEES AND
EXPENSES 

     

    8           COMMUNICATIONS 

     

    9           SUPPLEMENTAL 

     

    10           LAW AND
JURISDICTION 

     

    SCHEDULE
1  LENDERS 

     

    SCHEDULE
2  FINANCIAL COVENANTS DURING COVENANT WAIVER
PERIOD 

     

    EXECUTION
PAGES 

     

    APPENDIX
1  CORPORATE GUARANTEE SUPPLEMENT 

     

    APPENDIX
II  SCHEDULE 5 REPAYMENT INSTALMENTS 

     

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    THIS AGREEMENT is made on 27
March 2009

     

    BETWEEN

     

    
      	
              (1)  

            	
              ARGYLE MARITIME CORP.,
      CATON MARITIME
      CORP., DORCHESTER
      MARITIME CORP., LONGWOODS MARITIME
      CORP., McHENRY
      MARITIME CORP. and SUNSWYCK MARITIME CORP.,
      each a company incorporated in the Marshall Islands whose registered
      office is at Trust Company Complex, Ajeltake Island, Majuro, Marshall
      Islands MH96960 as Joint
      and Several Borrowers;

            


    

     

    
      	
              (2)  

            	
              TBS INTERNATIONAL
      LIMITED, a company incorporated in Bermuda whose principal office
      is at Suite 306, Commerce Building, One Chancery Lane, Hamilton HM12,
      Bermuda as Corporate Guarantor;

            


    

     

    
      	
              (3)  

            	
              THE BANKS AND FINANCIAL
      INSTITUTIONS listed in Schedule 1 as Lenders;

            


    

     

    
      	
              (4)  

            	
              THE ROYAL BANK OF SCOTLAND
      PLC as Mandated
      Lead Arranger;

            


    

     

    
      	
              (5)  

            	
              THE ROYAL BANK OF SCOTLAND PLC
      as Bookrunner;

            


    

     

    
      	
              (6)  

            	
              THE ROYAL BANK OF SCOTLAND PLC
      as Agent;

            


    

     

    
      	
              (7)  

            	
              THE ROYAL BANK OF SCOTLAND PLC
      as Security
      Trustee; and

            


    

     

    
      	
              (8)  

            	
              THE ROYAL BANK OF SCOTLAND PLC
      as Swap
      Bank.

            


    

     

     

    BACKGROUND

     

    
      	
              (A)  

            	
              By
      a loan agreement dated 29 March 2007 as amended by a side letter dated 26
      March 2008 and made between (i) the Borrowers, (ii) the Lenders, (iii) the
      Mandated Lead Arrangers, (iv) the Bookrunner, (v) the Agent, (vi) the
      Security Trustee and (vii) the Swap Bank, the Lenders have made
      available to the Borrowers a facility of
  US$150,000,000.

            


    

     

    
      	
              (B)  

            	
              By
      a master agreement dated 29 March 2007 and made between the Borrowers
      and the Swap Bank the Borrowers may enter into certain
      transactions.

            


    

     

    
      	
              (C)  

            	
              This
      Agreement sets out the terms and conditions on which the Creditor Parties
      agree, with effect on and from the Effective Date, at the request of the
      Security Parties to waive certain covenants in the Loan Agreement on the
      terms and conditions set out herein and to the consequential amendment of
      the Loan Agreement, the Master Agreement and the other Finance Documents
      in connection with those matters.

            


    

     

     

    IT IS AGREED as follows:

     

    
      	
              1  

            	
              INTERPRETATION

            


    

     

    
      	
              1.1  

            	
              Defined
      expressions.  Words and expressions defined in the Loan
      Agreement, the Master Agreement and the other Finance Documents shall have
      the same meanings when used in this Agreement unless the context otherwise
      requires.

            


    

     

    
      	
              1.2  

            	
              Definitions.  In
      this Agreement, unless the contrary intention
  appears:

            


    

     

    “Amendment Fee Letter” means
the letter dated on or about the date of this Agreement between the Agent and
the Borrowers setting out the fees referred to in Clause 20.1(b), (c), (d), (e),
(f) and (g);

     

    “Corporate Guarantee
Supplement” means a letter supplemental to the Corporate Guarantee
executed or to be executed by the Corporate Guarantor in favour of the Security
Trustee substantially in the form set out in Appendix 1;

     

    “Covenant Waiver Period” means
the period commencing on the date of this Agreement and ending on 1 January 2010
(or such later date as the Agent may with the authorisation of the Lenders,
agree with the Borrowers);

     

    “Effective
Date”  means the date on which the conditions precedent in
Clause 3 are satisfied;

     

    “Loan
Agreement”  means the loan agreement referred to in Recital (A); and

     

    “Master Agreement” means the
master agreement referred to in Recital (B).

     

    
      	
              1.3  

            	
              Application of construction and
      interpretation provisions of Loan Agreement.  Clauses 1.2
      and 1.5 of the Loan Agreement apply, with any necessary modifications, to
      this Agreement.

            


    

     

    
      	
              2  

            	
              AGREEMENT
      OF THE CREDITOR PARTIES

            


    

     

    
      	
              2.1  

            	
              Agreement of the
      Lenders.  The Lenders agree, subject to and upon the
      terms and conditions of this Agreement, to the amendments to the Loan
      Agreement, the Master Agreement and the Finance Documents as set out in
      Clause 5.

            


    

     

    
      	
              2.2  

            	
              Agreement of the Creditor
      Parties.  The Creditor Parties agree, subject to and upon
      the terms and conditions of this Agreement, to the consequential amendment
      of the Loan Agreement, the Master Agreement and the other Finance
      Documents in connection with the matters referred to in Clause 2.1.

            


    

     

    
      	
              2.3  

            	
              Agreement of the Borrowers and
      the Corporate Guarantor.  The Borrowers and the Corporate
      Guarantor hereby agree to the amendments to the Loan Agreement, the Master
      Agreement and the Finance Documents as set out in Clause 5.

            


    

     

    
      	
              2.4  

            	
              Effective Date. The
      agreement of the Lenders and the other Creditor Parties contained in
      Clauses 2.1 and 2.2 shall have effect on and from the Effective
      Date.

            


    

     

    
      	
              3  

            	
              CONDITIONS
      PRECEDENT

            


    

     

    
      	
              3.1  

            	
              General.  The
      agreement of the Lenders and the other Creditor Parties contained in
      Clauses 2.1 and 2.2 is subject to the fulfilment of the
      conditions precedent in Clause 3.2.

            


    

     

    
      	
              3.2  

            	
              Conditions
      precedent.  The conditions referred to in Clause 3.1 are that the Agent shall have received the
      following documents and evidence in all respects in form and substance
      satisfactory to the Agent and its lawyers on or before 6 April 2009 or
      such later date as the Agent may agree with the Borrowers and the other
      Security Parties:

            


    

     

    
      	
              (a)  

            	
              documents
      of the kind specified in Schedule 3, Part A, paragraphs 2, 3, 4 and 5 of
      the Loan Agreement as amended and supplemented by this Agreement and
      updated with appropriate modifications to refer to this Agreement and the
      Corporate Guarantee Supplement;

            


    

     

    
      	
              (b)  

            	
              a
      duly executed original of this Agreement and the Corporate Guarantee
      Supplement duly executed by the parties to
it;

            


    

     

    
      	
              (c)  

            	
              evidence
      that the provisions of clause 9.1(d) and 9.1(e) of the Loan Agreement, as
      amended and supplemented by this Agreement and updated with appropriate
      modifications to refer to this Agreement, are complied with both as at the
      date of this Agreement and the Effective Date;
  and

            


    

     

    
      	
              (d)  

            	
              any
      further opinions, consents, agreements and documents in connection with
      this Agreement, the Master Agreement and the Finance Documents which the
      Agent may request by notice to the Borrowers and the Security Parties
      prior to the Effective Date.

            


    

     

    
      	
              4  

            	
              REPRESENTATIONS
      AND WARRANTIES

            


    

     

    
      	
              4.1  

            	
              Repetition of Loan Agreement
      representations and warranties.  The Borrowers represent
      and warrant to the Creditor Parties that the representations and
      warranties in clause 10 of the Loan Agreement, as amended and supplemented
      by this Agreement and updated with appropriate modifications to refer to
      this Agreement, remain true and not misleading if repeated on the date of
      this Agreement and the Effective Date with reference to the circumstances
      now and then existing.

            


    

     

    
      	
              4.2  

            	
              Repetition of Finance Document
      representations and warranties.  The Borrowers and each
      of the Security Parties represent and warrant to the Creditor Parties that
      the representations and warranties in the Finance Documents (other than
      the Loan Agreement) to which it is a party, as amended and supplemented by
      this Agreement and updated with appropriate modifications to refer to this
      Agreement, remain true and not misleading if repeated on the date of this
      Agreement and the Effective Date with reference to the circumstances now
      and then existing.

            


    

     

    
      	
              5  

            	
              AMENDMENTS
      TO LOAN AGREEMENT AND OTHER FINANCE
DOCUMENTS

            


    

     

    
      	
              5.1  

            	
              Specific amendments to Loan
      Agreement.  With effect on and from the Effective Date
      the Loan Agreement shall be, and shall be deemed by this Agreement to be,
      amended as follows:

            


    

     

    
      	
              (a)  

            	
              the
      definition of Margin in clause 1.1 shall be deleted and replaced with the
      following:

            


    

     

    “Margin” means in relation to
each Loan three point five per cent. (3.5%) per annum;”;

     

    
      	
              (b)  

            	
              so
      that Schedule 5 of the Loan Agreement is deleted and replaced with the
      amended schedule appended to this Agreement in Appendix
  II;

            


    

     

    
      	
              (c)  

            	
              clause
      8.4(a) shall be amended so that the words “or in the event that a Loan is
      being prepaid the amount of that Loan then outstanding” are inserted at
      the end;

            


    

     

    
      	
              (d)  

            	
              a
      new clause 8.14 shall be inserted at the end of clause 8 as
      follows:

            


    

     

    
      	
               
      

            	
              “8.14

            	
              Prepayment due to
      refinancing.  In the event that the Borrowers prepay the
      Loan Facility or any part thereof as a result of a refinancing arranged by
      a financial institution other than the Agent, the Borrowers shall pay to
      the Agent (for the account of the Lenders) a prepayment fee of one per
      cent. (1%) of the amount being prepaid such prepayment fee to be paid on
      the same date as the amount being
prepaid.”;

            


    

     

    
      	
              (e)  

            	
              so
      that the financial covenants set out in paragraphs (a), (b), (c) and (d)
      of Schedule 8 and referred to in clause 11.18 shall not apply during the
      Covenant Waiver Period and so that on the next succeeding Business Day
      following the last day of the Covenant Waiver Period the Borrowers shall
      provide a compliance certificate in the form set out in Schedule 9
      confirming that the Financial Covenants set out in Schedule 8 as amended
      by this Agreement have been complied with during the last financial
      quarter;

            


    

     

    
      	
              (f)  

            	
              so
      that during the Covenant Waiver Period the Borrowers and the Corporate
      Guarantor undertake to comply with the financial covenants and the
      undertakings set out in Schedule 2 of this
  Agreement;

            


    

     

    
      	
              (g)  

            	
              so
      that the minimum required security cover set out in clause 15.1 shall be
      reduced from One hundred and twenty five per cent. (125%) to One hundred
      per cent. (100%) during the Covenant Waiver
  Period;

            


    

     

    
      	
              (h)  

            	
              so
      that during the Covenant Waiver Period, the Lenders shall not be required
      to make an Advance if the Loans relating to Ships which have not yet been
      delivered (but including the Advance being requested by the Borrowers)
      exceed 75% of (i) the aggregate Contract Value of the Ships and (ii) the
      net realisable value of any additional security provided under the Loan
      Agreement as amended by this Agreement and for the purpose of this Clause,
      “Contract Value”
      shall mean:

            


    

     

    the
market value of a Ship at any date based on the acquisition price of the rights
and obligations under the Shipbuilding Contract relating to that Ship or a ship
of a similar size and type and due to be delivered at the same time as that Ship
as shown by a valuation prepared as at a date not more than 10 Business Days
previously by an independent international sale and purchase shipbroker which
the Agent has approved for the purpose and after deducting the estimated amount
of usual and reasonable expenses which would be incurred in connection with such
a sale;

     

    
      	
              (i)  

            	
              clauses
      20.1 (b) to (g) shall be deleted and replaced with the
      following:

            


    

     

    
      	
               
      

            	
              “(b)

            	
              quarterly
      in arrears during the period from (and including) 27 March 2009 to the
      earlier of (i) the Drawdown Date in relation to the Loan A Delivery
      Advance and (ii) 31 May 2009 (or such later date as the Agent, in its sole
      and absolute discretion shall agree) and on the last day of that period a
      commitment fee at the rate of One point five per cent. (1.5%) per annum on
      the undrawn balance of Loan A;

            


    

     

    
      	
               
      

            	
              (c)

            	
              quarterly
      in arrears during the period from (and including) 27 March 2009 to the
      earlier of (i) the Drawdown Date in relation to the Loan B Delivery
      Advance and (ii) 30 November 2009 (or such later date as the Agent, in its
      sole and absolute discretion shall agree) and on the last day of that
      period a commitment fee at the rate of One point five per cent. (1.5%) per
      annum on the undrawn balance of Loan
B;

            


    

     

    
      	
               
      

            	
              (d)

            	
              quarterly
      in arrears during the period from (and including) 27 March 2009 to the
      earlier of (i) the Drawdown Date in relation to the Loan C Delivery
      Advance and (ii) 30 April 2010 (or such later date as the Agent, in its
      sole and absolute discretion shall agree) and on the last day of that
      period a commitment fee at the rate of One point five per cent. (1.5%) per
      annum on the undrawn balance of Loan
C;

            


    

     

    
      	
               
      

            	
              (e)

            	
              quarterly
      in arrears during the period from (and including) 27 March 2009 to the
      earlier of (i) the Drawdown Date in relation to the Loan D Delivery
      Advance and (ii) 31 August 2010 (or such later date as the Agent, in its
      sole and absolute discretion shall agree) and on the last day of that
      period a commitment fee at the rate of One point five per cent. (1.5%) per
      annum on the undrawn balance of Loan
D;

            


    

     

    
      	
               
      

            	
              (f)

            	
              quarterly
      in arrears during the period from (and including) 27 March 2009 to the
      earlier of (i) the Drawdown Date in relation to the Loan E Delivery
      Advance and (ii) 30 June 2010 (or such later date as the Agent, in its
      sole and absolute discretion shall agree) and on the last day of that
      period a commitment fee at the rate of One point five per cent. (1.5%) per
      annum on the undrawn balance of Loan
E;

            


    

     

    
      	
               
      

            	
              (g)

            	
              quarterly
      in arrears during the period from (and including) 27 March 2009 to the
      earlier of (i) the Drawdown Date in relation to the Loan F Delivery
      Advance and (ii) 31 October 2010 (or such later date as the Agent, in its
      sole and absolute discretion shall agree) and on the last day of that
      period a commitment fee at the rate of One point five per cent. (1.5%) per
      annum on the undrawn balance of Loan
F”;”

            


    

     

    
      	
              (j)  

            	
              clause
      1.1 shall be amended to include the definition of Amendment Fee
      Letter;

            


    

     

    
      	
              (k)  

            	
              the
      definition of “Finance Documents” in clause 1.1 of the Loan Agreement
      shall be amended to include the Amendment Fee Letter;
  and

            


    

     

    
      	
              (l)  

            	
              the
      definitions of “Consolidated Interest Charges Coverage Ratio”,
      “Consolidated EBITDA” and “Consolidated Interest Charges” in Schedule 8
      shall be deleted and replaced with the
  following:

            


    

     

    ““Consolidated Interest Charges
Coverage Ratio” means, at any date of determination, the ratio of (a) the
result of (i) Consolidated EBITDA less (ii) the sums of Federal, State, local
and foreign income taxes paid in cash for the most recently completed
Measurement Period to (b) Consolidated Interest Charges for the most recently
completed Measurement Period.

     

    “Consolidated EBITDA” means, at
any date of determination, an amount equal to Consolidated Net Income of
Holdings and its Subsidiaries on a consolidated basis for the most recently
completed Measurement Period, plus (a) the following to the extent deducted in
calculating such Consolidated Net Income (and without
duplication):  (i) Consolidated Interest Charges, (ii) the provision
for Federal, state, local and foreign income taxes payable, (iii) depreciation
and amortization expense, (iv) net losses from the sales of vessels as permitted
under this Agreement and (v) any noncash impairment charges incurred during each
fiscal year of Holdings and its Subsidiaries ending December 31, 2008 and
December 31, 2009 in respect of any of Holdings’ or its Subsidiaries’ goodwill
and Vessels, (in each case of or by Holdings and its Subsidiaries for such
Measurement Period) and minus (b) the following to the extent included in
calculating such Consolidated Net Income, all net gains from the sales of
vessels as permitted under this Agreement (in each case of or by Holdings and
its Subsidiaries for such Measurement Period); provided that, to the extent
characterized as interest on the income statements of Holdings and its
Subsidiaries for such Measurement Period pursuant to FASB Interpretation No. 133
– Accounting for Derivative Instruments and Hedging Activities (June 1998),
noncash adjustments in connection with any interest rate Swap Contract entered
into by Holdings or any of its Subsidiaries, shall be excluded.

     

    “Consolidated Interest Charges”
means, for any Measurement Period, the sum of (a) all interest, premium
payments, debt discount, fees, charges and related expenses in connection with
borrowed money (including capitalized interest but excluding capitalized
interest on Permitted New Vessel Construction Indebtedness) or in connection
with the deferred purchase price of assets, in each case to the extent treated
as interest in accordance with GAAP, (b) all interest paid or payable with
respect to discontinued operations and (c) the portion of rent expense under
Capitalized Leases that is treated as interest in accordance with GAAP, in each
case, of or by Holdings and its Subsidiaries on a consolidated basis for the
most recently completed Measurement Period; provided that, to the extent
characterized as interest on the income statements of Holdings and its
Subsidiaries for such Measurement Period pursuant to FASB Interpretation No. 133
– Accounting for Derivative Instruments and Hedging Activities (June 1998),
noncash adjustments in connection with any interest rate Swap Contract entered
into by Holdings or any of its Subsidiaries, shall be excluded.”;

     

    
      	
              (m)  

            	
              the
      Borrowers and the Corporate Guarantor undertake to provide the Lenders
      with the benefit of any additional or more favourable financial covenants
      provided to other financing parties under other or future financing
      agreements in order that the Lenders shall be treated no less favourably
      than any other of the financing parties to the Borrowers or the Corporate
      Guarantor by providing details of such financial covenants in order that
      appropriate amendments can be made to the Loan Agreement and the relevant
      Finance Documents;

            


    

     

    
      	
              (n)  

            	
              at
      the end of the Covenant Waiver Period the parties to this Agreement agree
      to review the terms of the Loan Agreement being amended pursuant to this
      Agreement and any provisions that may need to be reviewed as a consequence
      of these amendments;

            


    

     

    
      	
              (o)  

            	
              so
      that during the Covenant Waiver Period the Corporate Guarantor shall
      provide to the Agent as soon as possible but in no event later than 30
      days after the end of each calendar month update financial projections
      including but not limited to revenues, operating expenses, net income,
      cash balances, loan balances, working capital requirements and equity for
      the period up to and including 31 December
2011;

            


    

     

    
      	
              (p)  

            	
              the
      definition of, and references throughout to, the Master Agreement and each
      Finance Document shall be construed as if the same referred to the Master
      Agreement or that Finance Document as amended and supplemented by this
      Agreement; and

            


    

     

    
      	
              (q)  

            	
              by
      construing references throughout to “this Agreement”, “hereunder” and other
      like expressions as if the same referred to the Loan Agreement as amended
      and supplemented by this Agreement.

            


    

     

    
      	
              5.2  

            	
              Amendments to Master Agreement
      and Finance Documents.  With effect on and from the
      Effective Date, the Master Agreement and each of the Finance Documents
      other than the Loan Agreement, shall be, and shall be deemed by this
      Agreement to be, amended as
follows:

            


    

     

    
      	
              (a)  

            	
              the
      definition of, and references throughout each of the Finance Documents to,
      the Loan Agreement, the Master Agreement and any of the other Finance
      Documents shall be construed as if the same referred to the Loan
      Agreement, the Master Agreement and those Finance Documents as amended and
      supplemented by this Agreement;

            


    

     

    
      	
              (b)  

            	
              by
      construing references throughout the Master Agreement and each of the
      Finance Documents to “this Agreement”, “this Deed”, “hereunder” and other
      like expressions as if the same referred to the Master Agreement and such
      Finance Documents as amended and supplemented by this
      Agreement.

            


    

     

    
      	
              5.3  

            	
              Master Agreement and
      Finance Documents to
      remain in full force and effect.  The Master Agreement
      and the Finance Documents shall remain in full force and effect as amended
      and supplemented by the amendments to the Finance Documents contained or
      referred to in Clause 5.1.

            


    

     

    
      	
              6  

            	
              FURTHER
      ASSURANCES

            


    

     

    
      	
              6.1  

            	
              Borrowers’ and each Security
      Party’s obligation to execute further documents
      etc.  Each Borrower and each Security Party
      shall:

            


    

     

    
      	
              (a)  

            	
              execute
      and deliver to the Security Trustee (or as it may direct) any assignment,
      mortgage, power of attorney, proxy or other document, governed by the law
      of England or such other country as the Security Trustee may, in any
      particular case, specify;

            


    

     

    
      	
              (b)  

            	
              effect
      any registration or notarisation, give any notice or take any other
      step;

            


    

     

    which the
Security Trustee may, by notice to that Borrower or that Security Party, specify
for any of the purposes described in Clause 6.2 or
for any similar or related purpose.

     

    
      	
              6.2  

            	
              Purposes of further
      assurances.  Those purposes
  are:

            


    

     

    
      	
              (a)  

            	
              validly
      and effectively to create any Security Interest or right of any kind which
      the Security Trustee intended should be created by or pursuant to the Loan
      Agreement or any other Finance Document, each as amended and supplemented
      by this Agreement; and

            


    

     

    
      	
              (b)  

            	
              implementing
      the terms and provisions of this
Agreement.

            


    

     

    
      	
              6.3  

            	
              Terms of further
      assurances.  The Security Trustee may specify the terms
      of any document to be executed by any Borrower or any Security Party under
      Clause 6.1, and those terms may include any
      covenants, powers and provisions which the Security Trustee considers
      appropriate to protect its
interests.

            


    

     

    
      	
              6.4  

            	
              Obligation to comply with
      notice.  Any Borrower or any Security Party shall comply
      with a notice under Clause 6.1 by the date
      specified in the notice.

            


    

     

    
      	
              6.5  

            	
              Additional corporate
      action.  At the same time as any Borrower or any Security
      Party delivers to the Security Trustee any document executed under Clause
      6.1(a), that Borrower or any Security Party
      shall also deliver to the Security Trustee a certificate signed by 2 of
      that Borrower’s or that Security Party’s directors which
      shall:

            


    

     

    
      	
              (a)  

            	
              set
      out the text of a resolution of that Borrower’s or that Security Party’s
      directors specifically authorising the execution of the document specified
      by the Security Trustee; and

            


    

     

    
      	
              (b)  

            	
              state
      that either the resolution was duly passed at a meeting of the directors
      validly convened and held throughout which a quorum of directors entitled
      to vote on the resolution was present or that the resolution has been
      signed by all the directors and is valid under that Borrower’s or that
      Security Party’s articles of association or other constitutional
      documents.

            


    

     

    
      	
              7  

            	
              FEES
      AND EXPENSES

            


    

     

    
      	
              7.1  

            	
              Amendment
      fee.  The Borrowers shall pay to the Agent an amendment
      fee in an amount specified in the Amendment Fee Letter on the date of this
      Agreement.

            


    

     

    
      	
              7.2  

            	
              Expenses.  The
      provisions of clauses 20.2 to 20.6 of the Loan Agreement, as amended and
      supplemented by this Agreement, shall apply to this Agreement as if they
      were expressly incorporated in this Agreement with any necessary
      modifications.

            


    

     

    
      	
              8  

            	
              COMMUNICATIONS

            


    

     

    
      	
              8.1  

            	
              General.  The
      provisions of clause 27 (notices) of the Loan Agreement, as amended and
      supplemented by this Agreement, shall apply to this Agreement as if they
      were expressly incorporated in this Agreement with any necessary
      modifications.

            


    

     

    
      	
              9  

            	
              SUPPLEMENTAL

            


    

     

    
      	
              9.1  

            	
              Counterparts.  This
      Agreement may be executed in any number of
  counterparts.

            


    

     

    
      	
              9.2  

            	
              Finance
      Documents.  This Agreement is a Finance
      Document.

            


    

     

    
      	
              9.3  

            	
              Third party
      rights.  A person who is not a party to this Agreement
      has no right under the Contracts (Rights of Third Parties) Act 1999 to
      enforce or to enjoy the benefit of any term of this
    Agreement.

            


    

     

    
      	
              10  

            	
              LAW
      AND JURISDICTION

            


    

     

    
      	
              10.1  

            	
              Governing
      law.  This Agreement and any non-contractual obligations
      arising from or in connection with it shall be governed by and construed
      in accordance with English law.

            


    

     

    
      	
              10.2  

            	
              Incorporation of the Loan
      Agreement provisions.  The provisions of clause 31 (law
      and jurisdiction) of the Loan Agreement, shall apply to this
      Agreement.

            


    

     

    


    THIS AGREEMENT has been duly
executed as a Deed on the date stated at the beginning of this
Agreement.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
1

     

    LENDERS

    


    
      	
              Lender

            	
              Lending
      Office

            	
              Commitment

            
	
              The
      Royal Bank of Scotland plc

            	
              Shipping
      Business Centre

              5-10
      Great Tower Street

              London
      EC3P 3HX

              Fax
      No:                    +
      44 207 085 7142

              Attn:
      Transaction and Portfolio Management

            	
              $35,000,000

            
	
              Citibank,
      N.A.

            	
              750
      Washington Boulevard

              Stamford
      CT06901

              USA

              Fax
      No: + 1 866 772 2935

              Attn:
      Gilbert Torres

            	
              $15,000,000

            
	
              Landesbank
      Hessen-Thüringen Girozentrale

            	
              420
      Fifth Avenue, 24th Floor

              New
      York, NY 100108-2729

              USA

              Fax
      No: +1 212 703 5256

              Attn:
      Corporate Finance/ Portfolio Management

            	
              $30,000,000

            
	
              Norddeutsche
      Landesbank Girozentrale

            	
              Ship
      and Aircraft Finance Department

              Friednichswall
      10

              30159
      Hannover, Germany

              Fax
      No: +49 511 361 4785

              Attn:
      International Shipping Group II - Sebastian Schubert

            	
              $30,000,000

            
	
              Alliance
      & Leicester Commercial Finance plc

            	
               

              298
      Deansgate

              Manchester

              M3
      4HH

              Fax
      No: + 44 161 953 3517

              Attn
      Corporate Administration Manager

               

               

            	
              $30,000,000

            
	
              Bank
      of America, N.A.

            	
              Bank
      of America

              100
      Federal Street

              Boston
      MA 02110

              Fax
      No: +617434 1955

              Attn:
      Transportation Division - Credit Products

            	
              $10,000,000

            


    

    


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    



    SCHEDULE
2

     

    


     

    FINANCIAL
COVENANTS DURING COVENANT WAIVER PERIOD

     

    The
Borrowers and the Corporate Guarantor undertake to comply with the following
financial covenants and undertakings during the Covenant Waiver
Period:

     

    
      	
              (a)  

            	
              Minimum
      Consolidated Interest Charges Ratio.  Permit the Consolidated
      Interest Charges Coverage Ratio as of the end of the period of
      determination indicated below and for such period then ending of Holdings
      and its Subsidiaries to be less than the ratio set forth below opposite
      such period:

            


    

     

    
      	
              Period
      of Determination

            	
              Minimum
      Consolidated Interest Charges Coverage Ratio

            
	
              Two
      fiscal quarters ending June 30, 2009

            	
              1.10:1.00

            
	
              Three
      fiscal quarters ending September 30, 2009

            	
              1.35:1.00

            
	
              Four
      fiscal quarters ending December 31, 2009

            	
              1.75:1.00

            
	 
      	 
      


    

    
      	
              (b)  

            	
              Minimum
      Cash Liquidity.  For each calendar month ending on or after the
      date hereof, minimum cash maintained by the Borrowers and the Corporate
      Guarantor shall be not less than $40,000,000 of
  which:

            


    

     

    
      	
              (i)  

            	
              a
      minimum average of $10,000,000 in any calendar month shall be credited to
      and continue to be held on an operating account maintained with the Agent
      in the name of TBS Pacific Liner, Ltd.;
and

            


    

     

    
      	
              (ii)  

            	
              $20,000,000
      shall be credited to a deposit account to be opened with the Agent and
      such sum shall only be available to the Borrowers to be used to pay
      instalments due under the Shipbuilding Contracts and which shall reduce as
      each such payment is made.

            


    

     

    
      	
              (c)  

            	
              No
      Dividends.  As long as no Event of Default has occurred the
      Borrowers may pay any dividends to the Corporate Guarantor. The Corporate
      Guarantor will not pay any dividend or make any other form of distribution
      which it may otherwise have been permitted to make pursuant to clause
      11.21 of the Loan Agreement.

            


    

     

    
      	
              (d)  

            	
              The
      Borrowers and the Corporate Guarantor each undertake not to purchase (and
      to procure that none of their subsidiaries purchase) any additional
      vessels without the prior written consent of the Agent acting on the
      instructions of the Majority
Lenders.

            


    

     

    
      	
              (e)  

            	
              The
      Borrowers and the Corporate Guarantor acting individually or together
      shall not invest more than $10,000,000 in aggregate in any joint ventures
      of which any amounts in excess of $5,000,000 shall require the prior
      written consent of the Agent acting on the instructions of the Majority
      Lenders.

            


    

     

    
      	
              (f)  

            	
              The
      Borrowers and the Corporate Guarantor shall not permit any new or increase
      their existing off balance sheet operating leases, operating lease
      payments and payments associated with vessels chartered in for more than 6
      months without the prior written consent of the Agent acting on the
      instructions of the Majority Lenders.  The Borrowers and the
      Corporate Guarantor shall be permitted to enter new or increase their
      existing off balance sheet operating leases, operating lease payments and
      payments associated with vessels chartered in for less than 6 months
      provided that they notify the Agent in writing promptly
      thereafter.

            


    

     

    
      	
              (g)  

            	
              The
      Borrowers and the Corporate Guarantor shall not permit any new or increase
      their existing Financial Indebtedness, as defined in the Loan Agreement,
      without the prior written consent of the Agent acting on the instructions
      of the Majority Lenders.

            


    

     

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXECUTION
PAGES

    


      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        
                                                                          
                                                                            
                                                                              
                                                                                
                                                                                  
                                                                                    
                                                                                      
                                                                                        
                                                                                          	
                                                                                                  BORROWERS

                                                                                                	 
      	 
      
	 
      	 
      	 
      
	
                                                                                                  EXECUTED as a DEED            

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  by                           

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  ARGYLE
      MARITIME CORP.       

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  acting
      by    Keith
      Krut            

                                                                                                	
                                                                                                  )

                                                                                                	
                                                                                                  /s/ Keith Krut

                                                                                                
	
                                                                                                  its
      duly authorised
      attorney-in-fact                  

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  in
      the presence
      of:                                             

                                                                                                	
                                                                                                  )

                                                                                                	
                                                                                                  /s/ Dimitrios Vourakis

                                                                                                
	
                                                                                                  Dimitrios
      Vourakis

                                                                                                	 
      	 
      
	
                                                                                                  1
      Roondwood Avenue

                                                                                                	 
      	 
      
	
                                                                                                  Stockley
      Park

                                                                                                	 
      	 
      
	
                                                                                                  UB
      11 1AU

                                                                                                	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                                                                                                  EXECUTED as a DEED                               

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  by        

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  CATON MARITIME
      CORP.                          

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  acting
      by  Keith
      Krut                                       

                                                                                                	
                                                                                                  )

                                                                                                	
                                                                                                  /s/ Keith Krut

                                                                                                
	
                                                                                                  its
      duly authorised
      attorney-in-fact             

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  in
      the presence
      of:                                            

                                                                                                	
                                                                                                  )

                                                                                                	
                                                                                                  /s/ Dimitrios Vourakis

                                                                                                
	
                                                                                                  Dimitrios
      Vourakis

                                                                                                	 
      	 
      
	
                                                                                                  1
      Roondwood Avenue

                                                                                                	 
      	 
      
	
                                                                                                  Stockley
      Park

                                                                                                	 
      	 
      
	
                                                                                                  UB
      11 1AU

                                                                                                	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                                                                                                  EXECUTED as a DEED         

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  by                     

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  DORCHESTER MARITIME
      CORP.  

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  acting
      by Keith
      Krut        

                                                                                                	
                                                                                                  )

                                                                                                	
                                                                                                  /s/ Keith Krut

                                                                                                
	
                                                                                                  its
      duly authorised attorney-in-fact  

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  in
      the presence
      of:          

                                                                                                	
                                                                                                  )

                                                                                                	
                                                                                                  /s/ Dimitrios Vourakis

                                                                                                
	
                                                                                                  Dimitrios
      Vourakis

                                                                                                	 
      	 
      
	
                                                                                                  1
      Roondwood Avenue

                                                                                                	 
      	 
      
	
                                                                                                  Stockley
      Park

                                                                                                	 
      	 
      
	
                                                                                                  UB
      11 1AU

                                                                                                	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                                                                                                  EXECUTED as a DEED           

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  by                                                                  

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  LONGWOODS MARITIME
      CORP.  

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  acting
      by      Keith
      Krut        

                                                                                                	
                                                                                                  )

                                                                                                	
                                                                                                  /s/ Keith Krut

                                                                                                
	
                                                                                                  its
      duly authorised attorney-in-fact    

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  in
      the presence
      of:           

                                                                                                	
                                                                                                  )

                                                                                                	
                                                                                                  /s/ Dimitrios Vourakis

                                                                                                
	
                                                                                                  Dimitrios
      Vourakis

                                                                                                	 
      	 
      
	
                                                                                                  1
      Roondwood Avenue

                                                                                                	 
      	 
      
	
                                                                                                  Stockley
      Park

                                                                                                	 
      	 
      
	
                                                                                                  UB
      11 1AU

                                                                                                	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                                                                                                  EXECUTED as a DEED          

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  by                     

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  McHENRY
      MARITIME CORP.    

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  acting
      by     Keith
      Krut       

                                                                                                	
                                                                                                  )

                                                                                                	
                                                                                                  /s/ Keith Krut

                                                                                                
	
                                                                                                  its
      duly authorised attorney-in-fact  

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  in
      the presence
      of:           

                                                                                                	
                                                                                                  )

                                                                                                	
                                                                                                  /s/ Dimitrios Vourakis

                                                                                                
	
                                                                                                  Dimitrios
      Vourakis

                                                                                                	 
      	 
      
	
                                                                                                  1
      Roondwood Avenue

                                                                                                	 
      	 
      
	
                                                                                                  Stockley
      Park

                                                                                                	 
      	 
      
	
                                                                                                  UB
      11 1AU

                                                                                                	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                                                                                                  EXECUTED as a DEED     

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  by                     

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  SUNSWYCK
      MARITIME CORP.    

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  acting
      by      Keith
      Krut         

                                                                                                	
                                                                                                  )

                                                                                                	
                                                                                                  /s/ Keith Krut

                                                                                                
	
                                                                                                  its
      duly authorised attorney-in-fact 

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  in
      the presence
      of:            

                                                                                                	
                                                                                                  )

                                                                                                	
                                                                                                  /s/ Dimitrios Vourakis

                                                                                                
	
                                                                                                  Dimitrios
      Vourakis

                                                                                                	 
      	 
      
	
                                                                                                  1
      Roondwood Avenue

                                                                                                	 
      	 
      
	
                                                                                                  Stockley
      Park

                                                                                                	 
      	 
      
	
                                                                                                  UB
      11 1AU

                                                                                                	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                                                                                                  CORPORATE
      GUARANTOR

                                                                                                	 
      	 
      
	 
      	 
      	 
      
	
                                                                                                  EXECUTED as a DEED       

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  by
      TBS INTERNATIONAL
      LIMITED 

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  acting
      by     Keith
      Krut        

                                                                                                	
                                                                                                  )

                                                                                                	
                                                                                                  /s/ Keith Krut

                                                                                                
	
                                                                                                  its
      duly authorised attorney-in-fact 

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  in
      the presence
      of:            

                                                                                                	
                                                                                                  )

                                                                                                	
                                                                                                  /s/ Dimitrios Vourakis

                                                                                                
	
                                                                                                  Dimitrios
      Vourakis

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  1
      Roondwood Avenue

                                                                                                	 
      	 
      
	
                                                                                                  Stockley
      Park

                                                                                                	 
      	 
      
	
                                                                                                  UB
      11 1AU

                                                                                                	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                                                                                                  LENDERS

                                                                                                	 
      	 
      
	 
      	 
      	 
      
	
                                                                                                  EXECUTED as a DEED         

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  by                                       

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  THE
      ROYAL BANK OF SCOTLAND PLC

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  acting
      by    G.A. Stares         

                                                                                                	
                                                                                                  )

                                                                                                	/s/ G.A. Stares
	
                                                                                                  its
      duly authorised
    attorney-in-fact     

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  in
      the presence
      of:                                            

                                                                                                	
                                                                                                  )

                                                                                                	
                                                                                                  /s/ C.L. Patrick

                                                                                                
	
                                                                                                  C.
      L. Patrick

                                                                                                	 
      	 
      
	
                                                                                                  The
      Royal Bank of Scotland Plc

                                                                                                	 
      	 
      
	
                                                                                                  Shipping
      Business Centre

                                                                                                	 
      	 
      
	
                                                                                                  5-10
      Great Tower Street

                                                                                                	 
      	 
      
	
                                                                                                  London
      EC3P 3HX

                                                                                                	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                                                                                                  EXECUTED as a DEED            

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  by                                                            

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  CITIBANK,
      N.A.                                     

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  acting
      by   Kavita
      Shah                          

                                                                                                	
                                                                                                  )

                                                                                                	
                                                                                                  /s/ Kavita Shah

                                                                                                
	
                                                                                                  its
      duly authorised attorney-in-fact 

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  in
      the presence
      of:                                     

                                                                                                	
                                                                                                  )

                                                                                                	
                                                                                                  /s/ Emily King

                                                                                                
	
                                                                                                  Emily
      King

                                                                                                	 
      	 
      
	
                                                                                                  Trainee
      Solicitor

                                                                                                	 
      	 
      
	
                                                                                                  Watson
      Farley & Williams LLP

                                                                                                	 
      	 
      
	
                                                                                                  15
      Appold Street

                                                                                                	 
      	 
      
	
                                                                                                  London
      EC2A 2HB

                                                                                                	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                                                                                                  EXECUTED as a DEED                                

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  by                                                                    

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  LANDESBANK
      HESSEN-THÜRINGEN                          

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  GIROZENTRALE                                                        

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  acting
      by    Kavita
      Shah                                        

                                                                                                	
                                                                                                  )

                                                                                                	
                                                                                                  /s/ Kavita Shah

                                                                                                
	
                                                                                                  its
      duly authorised
      attorney-in-fact              

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  in
      the presence
      of:                                                          

                                                                                                	
                                                                                                  )

                                                                                                	
                                                                                                  /s/ Emily King

                                                                                                
	
                                                                                                  Emily
      King

                                                                                                	 
      	 
      
	
                                                                                                  Trainee
      Solicitor

                                                                                                	 
      	 
      
	
                                                                                                  Watson
      Farley & Williams LLP

                                                                                                	 
      	 
      
	
                                                                                                  15
      Appold Street

                                                                                                	 
      	 
      
	
                                                                                                  London
      EC2A 2HB

                                                                                                	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                                                                                                  EXECUTED as a DEED                                    

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  by                                                                

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  NORDDEUTSCHE
      LANDESBANK                                    

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  GIROZENTRALE                                                                 

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  acting
      by    Kavita
      Shah                                                   

                                                                                                	
                                                                                                  )

                                                                                                	
                                                                                                  /s/ Kavita Shah

                                                                                                
	
                                                                                                  its
      duly authorised
      attorney-in-fact                             

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  in
      the presence
      of:                                                             

                                                                                                	 
      	
                                                                                                  /s/ Emily King

                                                                                                
	
                                                                                                  Emily
      King

                                                                                                	 
      	 
      
	
                                                                                                  Trainee
      Solicitor

                                                                                                	 
      	 
      
	
                                                                                                  Watson
      Farley & Williams LLP

                                                                                                	 
      	 
      
	
                                                                                                  15
      Appold Street

                                                                                                	 
      	 
      
	
                                                                                                  London
      EC2A 2HB

                                                                                                	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                                                                                                  EXECUTED as a DEED                                          

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  by                                                           

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  ALLIANCE &
      LEICESTER                                         

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  COMMERCIAL FINANCE
      PLC             

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  acting
      by      Mark
      Mccarthy                                     

                                                                                                	
                                                                                                  )

                                                                                                	
                                                                                                  /s/ Mark McCarthy

                                                                                                
	
                                                                                                  its
      duly authorised
      attorney-in-fact                             

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  in
      the presence
      of:                                                             

                                                                                                	
                                                                                                  )

                                                                                                	
                                                                                                  /s/ Barbara McCarthy

                                                                                                
	
                                                                                                  Barbara
      McCarthy

                                                                                                	 
      	 
      
	
                                                                                                  2
      Shorter Avenue

                                                                                                	 
      	 
      
	
                                                                                                  Shenfield,
      Essex

                                                                                                	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                                                                                                  EXECUTED as a DEED                                   

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  by                                                                

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  BANK OF AMERICA,
      N.A.                                              

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  acting
      by      Kavita
      Shah                                             

                                                                                                	
                                                                                                  )

                                                                                                	
                                                                                                  /s/ Kavita Shah

                                                                                                
	
                                                                                                  its
      duly authorised
      attorney-in-fact               

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  in
      the presence
      of:                                         

                                                                                                	
                                                                                                  )

                                                                                                	
                                                                                                  /s/ Emily King

                                                                                                
	
                                                                                                  Emily
      King

                                                                                                	 
      	 
      
	
                                                                                                  Trainee
      Solicitor

                                                                                                	 
      	 
      
	
                                                                                                  Watson
      Farley & Williams LLP

                                                                                                	 
      	 
      
	
                                                                                                  15
      Appold Street

                                                                                                	 
      	 
      
	
                                                                                                  London
      EC2A 2HB

                                                                                                	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                                                                                                  MANDATED
      LEAD ARRANGERS

                                                                                                	 
      	 
      
	 
      	 
      	 
      
	
                                                                                                  EXECUTED as a DEED                                                  

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  by                                                           

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  THE
      ROYAL BANK OF SCOTLAND PLC

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  acting
      by G. A.
      Stares                                               

                                                                                                	
                                                                                                  )

                                                                                                	  /s/
      G.A. Stares 
	
                                                                                                  its
      duly authorised
      attorney-in-fact                   

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  in
      the presence
      of:                     

                                                                                                	
                                                                                                  )

                                                                                                	
                                                                                                  /s/ C.L. Patrick

                                                                                                
	
                                                                                                  C.L.
      Patrick            

                                                                                                	 
      	 
      
	
                                                                                                  The
      Royal Bank of Scotland Plc

                                                                                                	 
      	 
      
	
                                                                                                  Shipping
      Business Centre

                                                                                                	 
      	 
      
	
                                                                                                  5-10
      Great Tower Street

                                                                                                	 
      	 
      
	
                                                                                                  London
      EC3P
      3HX                                           

                                                                                                	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                                                                                                  BOOKRUNNER

                                                                                                	 
      	 
      
	 
      	 
      	 
      
	
                                                                                                  EXECUTED as a DEED                                            

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  by                                                           

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  THE
      ROYAL BANK OF SCOTLAND PLC

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  acting
      by G.
      A. Stares                                                 

                                                                                                	
                                                                                                  )

                                                                                                	   /s/
      G.A. Stares  
	
                                                                                                  its
      duly authorised
      attorney-in-fact                   

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  in
      the presence
      of:                                                            

                                                                                                	
                                                                                                  )

                                                                                                	
                                                                                                  /s/ C.L. Patrick

                                                                                                
	
                                                                                                  C.L.
      Patrick            

                                                                                                	 
      	 
      
	
                                                                                                  The
      Royal Bank of Scotland Plc

                                                                                                	 
      	 
      
	
                                                                                                  Shipping
      Business Centre

                                                                                                	 
      	 
      
	
                                                                                                  5-10
      Great Tower Street

                                                                                                	 
      	 
      
	
                                                                                                  London
      EC3P
      3HX                                           

                                                                                                	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                                                                                                  AGENT

                                                                                                	 
      	 
      
	 
      	 
      	 
      
	
                                                                                                  EXECUTED as a DEED                                       

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  by                                                           

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  THE
      ROYAL BANK OF SCOTLAND PLC

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  acting
      by     Philip A. Pentney

                                                                                                	
                                                                                                  )

                                                                                                	
                                                                                                  /s/ Philip A. Pentney

                                                                                                
	
                                                                                                  Senior
      Director 

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  Head
      of Syndicated Loans
      Agency                                 

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  its
      duly authorised
      attorney-in-fact                           

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  in
      the presence
      of:                                                        

                                                                                                	
                                                                                                  )

                                                                                                	
                                                                                                  /s/ Jayne Jeffrey

                                                                                                
	
                                                                                                  Jayne
      Jeffrey

                                                                                                	 
      	 
      
	
                                                                                                  Syndicated
      Loans Agency

                                                                                                	 
      	 
      
	
                                                                                                  The
      Royal Bank of Scotland

                                                                                                	 
      	 
      
	
                                                                                                  135
      Bishopsgate

                                                                                                	 
      	 
      
	
                                                                                                  London
      EC2M 3UR

                                                                                                	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                                                                                                  SECURITY
      TRUSTEE

                                                                                                	 
      	 
      
	 
      	 
      	 
      
	
                                                                                                  EXECUTED as a DEED                           

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  by                                                 

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  THE
      ROYAL BANK OF SCOTLAND PLC

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  acting
      by   Philip A. Pentney

                                                                                                	
                                                                                                  )

                                                                                                	
                                                                                                  /s/ Philip A. Pentney

                                                                                                
	
                                                                                                  Senior
      Director 

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  Head
      of Syndicated Loans
      Agency             

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  its
      duly authorised
      attorney-in-fact                            

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  in
      the presence
      of:                                                       

                                                                                                	
                                                                                                  )

                                                                                                	
                                                                                                  /s/ Jayne Jeffrey

                                                                                                
	
                                                                                                  Jayne
      Jeffrey

                                                                                                	 
      	 
      
	
                                                                                                  Syndicated
      Loans Agency

                                                                                                	 
      	 
      
	
                                                                                                  The
      Royal Bank of Scotland

                                                                                                	 
      	 
      
	
                                                                                                  135
      Bishopsgate

                                                                                                	 
      	 
      
	
                                                                                                  London
      EC2M 3UR

                                                                                                	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                                                                                                  SWAP
      BANK

                                                                                                	 
      	 
      
	 
      	 
      	 
      
	
                                                                                                  EXECUTED as a DEED                                                  

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  by                                              

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  THE
      ROYAL BANK OF SCOTLAND PLC

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  acting
      by G.A. Stares                                    

                                                                                                	
                                                                                                  )

                                                                                                	 /s/ G. A. Stares
	
                                                                                                  its
      duly authorised
      attorney-in-fact             

                                                                                                	
                                                                                                  )

                                                                                                	 
      
	
                                                                                                  in
      the presence
      of:                                                      

                                                                                                	
                                                                                                  )

                                                                                                	
                                                                                                  /s/ C.L. Patrick

                                                                                                
	
                                                                                                  C.L.
      Patrick            

                                                                                                	 
      	 
      
	
                                                                                                  The
      Royal Bank of Scotland Plc

                                                                                                	 
      	 
      
	
                                                                                                  Shipping
      Business Centre

                                                                                                	 
      	 
      
	
                                                                                                  5-10
      Great Tower Street

                                                                                                	 
      	 
      
	
                                                                                                  London
      EC3P
      3HX                                           

                                                                                                	 
      	 
      
	 
      	 
      	 
      


                                                                                        

                                                                                      

                                                                                    

                                                                                  

                                                                                

                                                                              

                                                                            

                                                                          

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    
       

      
        
        

        
          

        

      

      
        
        

      

    

    



    APPENDIX
1

     

    CORPORATE
GUARANTEE SUPPLEMENT

    
       

      
        	
                To:

              	
                The
      Royal Bank of Scotland plc

              


      

       

      
        	
                 
      

              	
                Shipping
      Business Centre

              


      

       

      
        	
                 
      

              	
                5-10
      Great Tower Street

              


      

       

      
        	
                 
      

              	
                London
      EC3P 3HX

              


      

       

      


       

      
        	
                 
      

              	
                in
      its capacity as Security Trustee

              


      

       

      27 March
2009

       

      Dear
Sirs

       

      We refer
to:

       

      
        	
                (i)

              	
                the
      loan agreement dated 29 March 2007 as amended by a side letter dated 26
      March 2008 as further supplemented by a supplemental agreement dated 27
      March 2009 (the “Loan
      Agreement”) made between Argyle Maritime Corp., Caton Maritime
      Corp., Dorchester Maritime Corp., Longwoods Maritime Corp., McHenry
      Maritime Corp. and Sunswyck Maritime Corp., as joint and several borrowers
      (the “Borrowers”)
      the Lenders listed therein, yourselves as mandated lead arranger,
      bookrunner, agent, security trustee and swap bank pursuant to which the
      Lenders have made available to the Borrowers a loan facility of One
      hundred and fifty million Dollars ($150,000,000) upon the terms and
      conditions specified therein;

              


      

       

      
        	
                (ii)

              	
                the
      master agreement (on the 1992 ISDA Master Agreement
      (Multicurrency-Crossborder) form) dated 29 March 2007 (the “Master Agreement”) made
      between the Borrowers and yourselves as swap bank pursuant to which the
      Borrowers entered into or may enter into certain Transactions (as such
      term is defined in the said Master Agreement) pursuant to separate
      Confirmations (as such term is defined in the said Master Agreement) upon
      the terms and conditions therein
contained;

              


      

       

      
        	
                (iii)

              	
                the
      Guarantee dated 29 March 2007 (the “Corporate Guarantee”)
      executed in your favour in your capacity as security trustee whereby we
      have guaranteed all the obligations of the Borrowers under the Loan
      Agreement and the Master Agreement.

              


      

       

      Words and
expressions defined in the Loan Agreement shall have the same meanings when used
herein.

       

      We have
been advised by the Borrowers that you have agreed to (i) waive certain
covenants in the Loan Agreement and (ii) to certain consequential amendments to
the Loan Agreement, the Master Agreement and the other Finance Documents subject
to the terms and conditions contained in a supplemental agreement substantially
in the form annexed hereto (the “Supplemental
Agreement”).

       

      In
consideration of US$1 and other good and valuable consideration provided by the
Security Trustee (the receipt and sufficiency of which we hereby acknowledge) we
hereby agree to the amendments to the Loan Agreement, the Master Agreement and
the Finance Documents as contained in the Supplemental Agreement and agree that
the Corporate Guarantee shall apply to all the obligations of the Borrowers
under the Supplemental Agreement as if the Supplemental Agreement were referred
to in the Corporate Guarantee (in addition to the Loan Agreement, the Master
Agreement and the Finance Documents) and that all references to the Loan
Agreement, the Master Agreement and the Finance Documents in the Corporate
Guarantee and the other Finance Documents to which we are party shall be read
and construed as references to the Loan Agreement, the Master Agreement and the
Finance Documents as supplemented and amended by the Supplemental
Agreement.  Save as provided herein the Corporate Guarantee shall
remain in full force and effect.

       

      The
provisions of Clause 18 of the Corporate Guarantee shall apply to this
letter.

       

      Yours
faithfully

       

      /s/ Keith
Krut (As Attorney in Fact)

       

      TBS
INTERNATIONAL LIMITED


    

     

     

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    APPENDIX
II

     

    SCHEDULE
5

    REPAYMENT
INSTALMENTS

     

    


    Loan
A

     

    Loan A
shall be repaid by (i) 20 quarterly instalments each of $417,500 and (ii) a
balloon instalment of $16,650,000 payable simultaneously with the last such
quarterly instalment commencing with a first such quarterly instalment to be
paid on the date falling three months after the Drawdown Date of the Loan A
Delivery Advance and thereafter at three monthly intervals  Provided
that in the event such Loan is not drawndown in full such repayment instalments
shall be reduced pro-rata and provided further that any repayment instalments in
respect of such Loan due to be repaid on or before 1 January 2010 shall be
prepaid on the Drawdown Date of the Loan A Delivery Advance.

     

    Loan
B

     

    Loan B
will be repaid by (i) 20 quarterly instalments each of $417,500 and (ii) a
balloon instalment of $16,650,000 payable simultaneously with the last such
quarterly instalment commencing with a first such quarterly instalment to be
paid on the date falling three months after the Drawdown Date of the Loan B
Delivery Advance and thereafter at three monthly intervals  Provided
that in the event such Loan is not drawndown in full such repayment instalments
shall be reduced pro-rata.

     

    Loan
C

     

    Loan C
will be repaid by (i) 20 quarterly instalments each of $417,500 and (ii) a
balloon instalment of $16,650,000 payable simultaneously with the last such
quarterly instalment commencing with a first such quarterly instalment to be
paid on the date falling three months after the Drawdown Date of the Loan C
Delivery Advance and thereafter at three monthly intervals  Provided
that in the event such Loan is not drawndown in full such repayment instalments
shall be reduced pro-rata.

     

    Loan
D

     

    Loan D
will be repaid by (i) 20 quarterly instalments each of $417,500 and (ii) a
balloon instalment of $16,650,000 payable simultaneously with the last such
quarterly instalment commencing with a first such quarterly instalment to be
paid on the date falling three months after the Drawdown Date of the Loan D
Delivery Advance  and thereafter at three monthly
intervals  Provided that in the event such Loan is not drawndown in
full such repayment instalments shall be reduced pro-rata.

     

    Loan
E

     

    Loan E
will be repaid by (i) 20 quarterly instalments each of $417,500 and (ii) a
balloon instalment of $16,650,000 payable simultaneously with the last such
quarterly instalment commencing with a first such quarterly instalment to be
paid on the date falling three months after the Drawdown Date of the Loan E
Delivery Advance  and thereafter at three monthly
intervals  Provided that in the event such Loan is not drawndown in
full such repayment instalments shall be reduced pro-rata.

     

    Loan
F

     

    Loan F
will be repaid by (i) 20 quarterly instalments each of $417,500 and (ii) a
balloon instalment of $16,650,000 payable simultaneously with the last such
quarterly instalment commencing with a first such quarterly instalment to be
paid on the date falling three months after the Drawdown Date of the Loan F
Delivery Advance  and thereafter at three monthly
intervals  Provided that in the event such Loan is not drawndown in
full such repayment instalments shall be reduced pro-rata.