Document:

Exhibit 10.1

 

EXECUTION VERSION

 

SECOND AMENDMENT TO FORBEARANCE AGREEMENT

 

dated as of December 23,  2010

 

TBS International Limited

Commerce Building, One Chancery Lane

Hamilton HM 12 Bermuda

 

Re:          Second Amendment to Forbearance Agreement (this “Amendment”)

 

Ladies and Gentleman:

 

Reference is hereby made to (i) those certain extensions of credit (the “Loans”) made pursuant to and as evidenced by, inter  alia, (a) that certain Amended and Restated Credit Agreement, dated as of March 26, 2008 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “Credit Agreement”), among Albemarle Maritime Corp. and each of the other entities identified on the signature pages thereof as Borrowers (the “Borrowers”), TBS International plc and TBS International Limited, as guarantors (collectively, “Holdings”), TBS Shipping Services Inc., as Administrative Borrower (the “Administrative Borrower”), each of the financial institutions party thereto as lenders (the “Lenders”), Bank of America, N.A., as Administrative Agent (the “Administrative Agent”), Citibank, N.A. and DVB Group Merchant Bank (Asia) Ltd., as co-Syndication Agents, TD Banknorth, N.A., as Documentation Agent and Banc of America Securities LLC, as Sole Lead Arranger and Sole Book Manager; and (b) the other Loan Documents (as defined in the Credit Agreement) and (ii) that certain Forbearance Agreement, dated as of September 30, 2010 (as amended by that certain First Amendment to Forbearance Agreement, dated as of November 15, 2010 (the “First Amendment”), by and among the Borrowers, Holdings, the Administrative Borrower, certain Subsidiaries of Holdings as Guarantors, each of the Lenders party thereto and the Administrative Agent, the “Forbearance Agreement”) by and among Borrowers, Holdings, Administrative Borrower, certain Subsidiaries of Holdings as Guarantors, the Administrative Agent and the other Lenders signatory thereto.  All capitalized terms used herein without definition that are defined in the Credit Agreement or the Forbearance Agreement shall have the same meanings herein as therein, as applicable.

 

Each Loan Party acknowledges that the Specified Defaults have occurred and are continuing.  The Loan Parties agree that, but for the terms of the Forbearance Agreement, the Administrative Agent may, if Required Lenders consent, and shall, at the direction of Required Lenders, proceed to enforce its rights and remedies under the Credit Agreement to collect the Borrowers’ indebtedness to the Administrative Agent and the Lenders under the Credit Agreement.  Each Loan Party acknowledges that the Forbearance pursuant to the Forbearance Agreement will expire on December 29, 2010 (unless the Forbearance Termination Date occurs prior to such date).  The Administrative Agent, the Required Lenders and the Loan Parties hereby agree to amend certain provisions of and extend the period of Forbearance under the Forbearance Agreement upon the following terms and conditions:

 

 

§1 Amendment to Forbearance Agreement.   Subject to the satisfaction of the conditions to effectiveness set forth in Section 6 of this Amendment, the Forbearance Agreement is hereby amended as follows:

 

(a)           Forbearance Termination Date.  Section 4 of the Forbearance Agreement is hereby amended by deleting the date “December 29, 2010” in clause (i) of the first sentence thereof and substituting the date “12:01 a.m. on February 1, 2011” in lieu thereof.

 

(b)           Specified Defaults.  The definition of “Specified Defaults” contained in the recitals to the Forbearance Agreement is hereby amended to include any Default or Event of Default which occurs under Section 2.07, 6.04 or 8.01(a), (c), (e) or (m) of the Credit Agreement due to the failure of the Loan Parties to pay the installment of principal due on December 31, 2010.

 

§2.  Ratification of Existing Agreements.   The Loan Parties confirm and agree that the Obligations, as evidenced by or otherwise arising under the Credit Agreement and the other Loan Documents, are, by the Loan Parties’ execution of this Amendment, ratified and confirmed in all respects.  The Loan Parties confirm and agree that to the extent that any Loan Document purports to assign or pledge to the Administrative Agent, for the benefit of the Lenders, or to grant to the Administrative Agent, for the benefit of the Lenders, a security interest in or lien on, any assets of the Loan Parties as security for any of the Obligations from time to time existing in respect of the Loan Documents, such pledge, assignment and/or grant of a security interest or lien is hereby ratified and confirmed in all respects as security for all of the Obligations, whether now existing or hereafter arising. In addition, by the execution of this Amendment, each of the Loan Parties represents and warrants that no counterclaim, right of set-off or defense of any kind exists or is outstanding as of the Second Amendment Effective Date (as defined below) with respect to such Obligations.

 

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

 

§4.  Acknowledgements.  Each of the Loan Parties hereby acknowledges that it shall work diligently and use commercially reasonable efforts to negotiate in good faith definitive documentation substantially reflecting the provisions of the draft Global Bank Restructuring Proposal Term Sheet, dated as of December 3, 2010, negotiated pursuant to Section 4(e) of the First Amendment, with the objective that such documentation be in agreed form by the Loan Parties, the Administrative Agent and the Lenders on or about January 14, 2011, subject to receipt of internal approvals and such other conditions as the parties thereto may agree.

 

§5.  Covenants.  Each of the Administrative Agent, the Required Lenders and the Loan Parties hereby covenant and agree with and for the benefit of the Administrative Agent and the Lenders, notwithstanding anything to the contrary contained in the Credit Agreement or any of the other Loan Documents, as follows:

 

(a)           Borrowers’ Restructuring Advisor. AlixPartners, LLP shall continue as Borrowers’ Restructuring Advisor to the Loan Parties until otherwise agreed in writing by the Administrative Agent.  In the event that AlixPartners, LLP terminates their existing involvement with the Borrowers, the Borrowers shall appoint one of the other restructuring advisors set forth on Schedule B to the Forbearance Agreement, or such other restructuring advisor satisfactory to the Administrative Agent, within 5 Business Days of AlixPartners, LLP providing the Borrowers written notice of termination of their 

 

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contract with the Borrowers.  The Borrowers shall cause the newly appointed restructuring advisor to continue to serve as Borrowers’ Restructuring Advisor until otherwise agreed in writing by the Administrative Agent.  The Borrowers agree that any final reports of the Borrowers’ Restructuring Advisor provided to the Borrowers will also be provided to the Lenders within a reasonable period of time following the Borrowers’ receipt of such final report.

 

(b)           Compliance with Forbearance Agreement and other Loan Documents. Each Loan Party will, and will cause each of its Subsidiaries to, comply and continue to comply with all of the terms, covenants and provisions contained in the Forbearance Agreement and each other Loan Document to which it is a party and any other instruments evidencing or creating any of the Obligations except as such terms, covenants and provisions are expressly modified by the Forbearance Agreement or this Section 5.

 

(c)           Further Assurances. Each Loan Party will, and will cause its Subsidiaries to, at any time or from time to time execute and deliver such further instruments, each in form and substance satisfactory to the Administrative Agent, and take such further action as the Administrative Agent may reasonably request, in each case further to effect the purposes of this Amendment, the Forbearance Agreement, the Loan Documents and all documents, agreements and instruments executed in connection therewith.

 

§6.  Conditions to Effectiveness.  The Administrative Agent, the Required Lenders and the Loan Parties agree that the extension of the forbearance obligations of the Administrative Agent and the Lenders under the Forbearance Agreement shall be effective upon the satisfaction of each of the following conditions precedent, each in form and substance satisfactory to the Administrative Agent, no later than December 29, 2010 (the “Second Amendment Effective Date”):

 

(a)           The Loan Parties, the Required Lenders and the Administrative Agent shall have executed and delivered to the Administrative Agent this Amendment.

 

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

 

(c)           The Loan Parties shall have delivered to the Administrative Agent a schedule in form and substance satisfactory to the Administrative Agent setting forth the milestones necessary to complete the restructuring no later than January 31, 2010.

 

(d)           The Administrative Agent shall have received evidence that all corporate action necessary for the valid execution and delivery by the Loan Parties of this Amendment and the performance of the transactions contemplated hereby and thereby shall have been taken.

 

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(e)           The Administrative Agent shall have received payment for the fees, and expenses including, without limitation, fees and expenses incurred by their counsel and their restructuring advisors and other consultants, for which invoices or estimates therefor have been provided to the Loan Parties on or prior to the Second Amendment Effective Date.

 

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

 

(g)           There shall have occurred no Default or Event of Default other than the Specified Defaults.

 

§7.  No Present Claims; Release.  The Loan Parties hereby acknowledge and agree that, as of the date hereof: (a) none of the Loan Parties or any of their Affiliates has any claim or cause of action against the Administrative Agent or any Lender (or any of their directors, officers, employees, attorneys or agents); (b) none of the Loan Parties or any of their Affiliates, has offset rights, counterclaims or defenses of any kind against any of their obligations, indebtedness or liabilities to the Administrative Agent or any Lender; and (c) the Administrative Agent and the Lenders have heretofore properly performed and satisfied in a timely manner all of their obligations to the Loan Parties and each of their Affiliates.  The Administrative Agent and the Lenders wish (and the Loan Parties agree) to eliminate any possibility that any past conditions, acts, omissions, events, circumstances or matters would impair or otherwise adversely affect any of the rights, interests, contracts, collateral security or remedies of the Administrative Agent or the Lenders. Therefore, the Loan Parties, each on its own behalf and on behalf of each of its respective successors and assigns, hereby waives, releases and discharges the Administrative Agent and the Lenders and all of their directors, officers, employees, attorneys and agents, from any and all claims, demands, actions or causes of action on or before the date hereof and arising out of or in any way relating to the Credit Agreement, the Loan Documents and any other documents, instruments, agreements (including the Forbearance Agreement and this Amendment), dealings or other matters connected with the Credit Agreement, including, without limitation, all known and unknown matters, claims, transactions or things occurring on or prior to the date of this Amendment related to the Credit Agreement.  The waivers, releases, and discharges contained in this paragraph shall be effective regardless of any other event that may occur or not occur prior to, or on or after the date hereof.

 

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

 

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§9.  No Waiver.  Except as otherwise expressly provided for in this Amendment and the Forbearance Agreement, nothing in this Amendment or the Forbearance Agreement shall extend to or affect in any way any of the rights or obligations of the Loan Parties or any of the Administrative Agent’s or Lenders’ obligations, rights and remedies arising under the Credit Agreement.  The Administrative Agent and the Lenders shall not be deemed to have waived any or all of their rights or remedies with respect to any Default or Event of Default existing on the date hereof or arising hereafter.

 

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

 

§11.  Miscellaneous.

 

(a)           THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW (OTHER THAN THE NEW YORK GENERAL OBLIGATIONS LAW §5-1401 AND §5-1402).

 

(b)           This Amendment may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  Delivery of an executed counterpart of a signature page of this Amendment by facsimile, telecopy or other electronic transmission shall be effective as delivery of a manually executed counterpart of this Amendment.

 

(c)           This Amendment shall constitute a Loan Document under the Credit Agreement; the failure to comply with the covenants contained herein shall constitute an Event of Default under the Credit Agreement; and all obligations included in this Amendment (including, without limitation, all obligations for the payment of principal, interest, fees, and other amounts and expenses) shall constitute obligations under the Credit Agreement and secured by the collateral security for the Obligations.

 

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

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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If you are in agreement with the foregoing, please sign and return the enclosed copy of this Amendment to the Administrative Agent.

 

	
 
  	
The Borrowers:
  
	
 
  	
 
  
	
 
  	
ALBEMARLE MARITIME CORP.
  
	
 
  	
ARDEN MARITIME CORP.
  
	
 
  	
AVON MARITIME CORP.
  
	
 
  	
BIRNAM MARITIME CORP.
  
	
 
  	
BRISTOL MARITIME CORP.
  
	
 
  	
CHESTER SHIPPING CORP.
  
	
 
  	
CUMBERLAND NAVIGATION CORP.
  
	
 
  	
DARBY NAVIGATION CORP.
  
	
 
  	
DOVER MARITIME CORP.
  
	
 
  	
ELROD SHIPPING CORP.
  
	
 
  	
EXETER SHIPPING CORP.
  
	
 
  	
FRANKFORT MARITIME CORP.
  
	
 
  	
GLENWOOD MARITIME CORP.
  
	
 
  	
HANSEN SHIPPING CORP.
  
	
 
  	
HARTLEY NAVIGATION CORP.
  
	
 
  	
HENLEY MARITIME CORP.
  
	
 
  	
HUDSON MARITIME CORP.
  
	
 
  	
JESSUP MARITIME CORP.
  
	
 
  	
MONTROSE MARITIME CORP.
  
	
 
  	
OLDCASTLE SHIPPING CORP.
  
	
 
  	
QUENTIN NAVIGATION CORP.
  
	
 
  	
RECTOR SHIPPING CORP.
  
	
 
  	
REMSEN NAVIGATION CORP.
  
	
 
  	
SHEFFIELD MARITIME CORP.
  
	
 
  	
SHERMAN MARITIME CORP.
  
	
 
  	
STERLING SHIPPING CORP.
  
	
 
  	
STRATFORD SHIPPING CORP.
  
	
 
  	
VEDADO MARITIME CORP.
  
	
 
  	
VERNON MARITIME CORP.
  
	
 
  	
WINDSOR MARITIME CORP.
  
	
 
  	
 
  
	
 
  	
 
  
	
 
  	
By:
  	
/s/  Ferdinand V. Lepere
  
	
 
  	
Name:
  	
Ferdinand V. Lepere
  
	
 
  	
Title:
  	
Attorney-in-Fact
  

 

 

	
 
  	
Holdings:
  
	
 
  	
 
  
	
 
  	
TBS INTERNATIONAL LIMITED
  
	
 
  	
 
  	
 
  
	
 
  	
By:
  	
/s/  Ferdinand V. Lepere
  
	
 
  	
Name:
  	
Ferdinand V. Lepere
  
	
 
  	
Title:
  	
Attorney-in-Fact
  
	
 
  	
 
  	
 
  
	
 
  	
TBS INTERNATIONAL PLC
  
	
 
  	
 
  	
 
  
	
 
  	
By:
  	
/s/  Ferdinand V. Lepere
  
	
 
  	
Name:
  	
Ferdinand V. Lepere
  
	
 
  	
Title:
  	
Senior Executive Vice President and CFO
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
 
  	
The Administrative Borrower:
  
	
 
  	
 
  
	
 
  	
TBS SHIPPING SERVICES INC.
  
	
 
  	
 
  	
 
  
	
 
  	
By:
  	
/s/  Ferdinand V. Lepere
  
	
 
  	
Name:
  	
Ferdinand V. Lepere
  
	
 
  	
Title:
  	
Senior Executive Vice President and CFO
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
 
  	
The Guarantors:
  
	
 
  	
 
  
	
 
  	
TBS U.S. ENTERPRISES LLC
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
By:
  	
TBS SHIPPING SERVICES INC., its sole member
  
	
 
  	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  	
By:
  	
/s/  Ferdinand V. Lepere
  
	
 
  	
 
  	
 
  	
Name:
  	
Ferdinand V. Lepere
  
	
 
  	
 
  	
 
  	
Title:
  	
Senior Executive Vice President and CFO
  
	
 
  	
 
  	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  	
 
  	
 
  
	
 
  	
TBS ENERGY LOGISTICS L.P.
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
By:
  	
TBS U.S. ENTERPRISES LLC, its general partner
  
	
 
  	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  	
By:
  	
TBS SHIPPING SERVICES INC., its sole member
  
	
 
  	
 
  	
 
  	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  	
 
  	
By:
  	
/s/  Ferdinand V. Lepere
  
	
 
  	
 
  	
 
  	
 
  	
Name:
  	
Ferdinand V. Lepere
  
	
 
  	
 
  	
 
  	
 
  	
Title:
  	
Senior Executive Vice President and CFO
  
								

 

 

	
 
  	
The Guarantors (continued):
  
	
 
  	
 
  
	
 
  	
TBS LOGISTICS INCORPORATED
  
	
 
  	
ROYMAR SHIP MANAGEMENT, INC.
  
	
 
  	
 
  	
 
  
	
 
  	
By:
  	
/s/  Ferdinand V. Lepere
  
	
 
  	
Name:
  	
Ferdinand V. Lepere
  
	
 
  	
Title:
  	
Senior Executive Vice President 
  
	
 
  	
 
  	
 
  
	
 
  	
 
  
	
 
  	
TBS SHIPPING SERVICES INC.
  
	
 
  	
 
  
	
 
  	
 
  
	
 
  	
By:
  	
/s/  Ferdinand V. Lepere
  
	
 
  	
Name:
  	
Ferdinand V. Lepere
  
	
 
  	
Title:
  	
Senior Executive Vice President and CFO
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
 
  	
AZALEA SHIPPING & CHARTERING, INC.
  
	
 
  	
COMPASS CHARTERING CORP.
  
	
 
  	
 
  
	
 
  	
By:
  	
/s/  Ferdinand V. Lepere
  
	
 
  	
Name:
  	
Ferdinand V. Lepere
  
	
 
  	
Title:
  	
Treasurer
  
	
 
  	
 
  	
 
  
	
 
  	
TBS INTERNATIONAL PLC
  
	
 
  	
 
  
	
 
  	
By:
  	
/s/  Ferdinand V. Lepere
  
	
 
  	
Name:
  	
Ferdinand V. Lepere
  
	
 
  	
Title:
  	
Senior Executive Vice President and CFO
  

 

 

	
 
  	
TBS INTERNATIONAL LIMITED
  
	
 
  	
TBS HOLDINGS LIMITED
  
	
 
  	
WESTBROOK HOLDINGS LTD.
  
	
 
  	
TRANSWORLD CARGO CARRIERS, S.A.
  
	
 
  	
MERCURY MARINE LTD. (F/K/A TBS LOGISTICS LTD.)
  
	
 
  	
TBS WORLDWIDE SERVICES INC.
  
	
 
  	
BEEKMAN SHIPPING CORP.
  
	
 
  	
FAIRFAX SHIPPING CORP.
  
	
 
  	
LEAF SHIPPING CORP.
  
	
 
  	
PACIFIC RIM SHIPPING CORP.
  
	
 
  	
TBS AFRICAN VENTURES LIMITED
  
	
 
  	
TBS DO SUL LTD.
  
	
 
  	
TBS EUROLINES, LTD.
  
	
 
  	
TBS HOLDINGS LIMITED
  
	
 
  	
TBS LATIN AMERICA LINER, LTD.
  
	
 
  	
TBS MIDDLE EAST CARRIERS, LTD.
  
	
 
  	
TBS NORTH AMERICA LINER LTD.
  
	
 
  	
TBS OCEAN CARRIERS, LTD.
  
	
 
  	
TBS PACIFIC LINER, LTD.
  
	
 
  	
TBS WAREHOUSE & DISTRIBUTION GROUP LTD.
  
	
 
  	
TBS WAREHOUSE & EQUIPMENT HOLDINGS LTD.
  
	
 
  	
TBS LOGISTICS INCORPORATED
  
	
 
  	
TBSI NEW SHP DEVELOPMENT CORP.
  
	
 
  	
TBS MINING LIMITED
  
	
 
  	
 
  
	
 
  	
By:
  	
/s/ Ferdinand V. Lepere
  
	
 
  	
Name:
  	
Ferdinand V. Lepere
  
	
 
  	
Title:
  	
Attorney-in-Fact
  

 

 

	
 
  	
The Administrative Agent:
  
	
 
  	
 
  
	
 
  	
BANK OF AMERICA, N.A.
  
	
 
  	
 
  
	
 
  	
By:
  	
/s/ Judith A. Huckins
  
	
 
  	
Name:
  	
Judith A. Huckins
  
	
 
  	
Title:
  	
Vice President
  

 

 

	
 
  	
The Required Lenders:
  
	
 
  	
 
  
	
 
  	
BANK OF AMERICA, N.A.
  
	
 
  	
 
  
	
 
  	
By:
  	
/s/ Judith A. Huckins
  
	
 
  	
Name:
  	
Judith A. Huckins
  
	
 
  	
Title:
  	
Vice President
  

 

Signature Page to Second Amendment to Forbearance Agreement

 

 

	
 
  	
The Required Lenders (continued):
  
	
 
  	
 
  
	
 
  	
DVB GROUP MERCHANT BANK (ASIA) LTD.,
  
	
 
  	
as co-Syndication Agent and a Lender
  
	
 
  	
 
  
	
 
  	
 
  
	
 
  	
By:
  	
/s/ Amy L. Kyle
  
	
 
  	
Name:
  	
Amy L. Kyle
  
	
 
  	
Title:
  	
Attorney-in-fact
  

 

Signature Page to Second Amendment to Forbearance Agreement

 

 

	
 
  	
CITIBANK, N.A., as co-Syndication Agent and a Lender
  
	
 
  	
 
  
	
 
  	
By:
  	
/s/  Mark McElwain
  
	
 
  	
Name:
  	
Mark McElwain
  
	
 
  	
Title:
  	
Vice President
  

 

Signature Page to Second Amendment to Forbearance Agreement

 

 

	
 
  	
TD BANKNORTH, N.A., as Documentation Agent and a Lender
  
	
 
  	
 
  
	
 
  	
 
  
	
 
  	
By:
  	
/s/  Bethany H. Buitenberg
  
	
 
  	
Name:
  	
Bethany H. Buitenberg
  
	
 
  	
Title:
  	
Vice President
  

 

Signature Page to Second Amendment to Forbearance Agreement

 

 

	
 
  	
KEYBANK NATIONAL ASSOCIATION., as a Lender
  
	
 
  	
 
  
	
 
  	
By: 
  	
/s/ Richard B. Saulsbury
  
	
 
  	
Name: Richard B. Saulsbury
  
	
 
  	
Title: Vice President
  

 

 

	
 
  	
CAPITAL ONE LEVERAGE FINANCE CORP., as a Lender
  
	
 
  	
 
  
	
 
  	
By:
  	
/s/  Jon Oldham
  
	
 
  	
Name:
  	
Jon Oldham
  
	
 
  	
Title:
  	
Senior Vice President
  

 

Signature Page to Second Amendment to Forbearance Agreement

 

 

	
 
  	
MERRILL LYNCH COMMERCIAL FINANCE CORP., as a Lender
  
	
 
  	
 
  
	
 
  	
By:
  	
/s/  Judith A. Huckins
  
	
 
  	
Name:
  	
Judith A. Huckins
  
	
 
  	
Title:
  	
Vice President
  

 

Signature Page to Second Amendment to Forbearance Agreement

 

 

	
 
  	
WEBSTER BANK NATIONAL ASSOCIATION, as a Lender
  
	
 
  	
 
  
	
 
  	
 
  
	
 
  	
By:
  	
/s/  Stephen J. Corcoran
  
	
 
  	
Name:
  	
Stephen J. Corcoran
  
	
 
  	
Title:
  	
Senior Vice President
  

 

Signature Page to Second Amendment to Forbearance Agreement

 

 

	
 
  	
COMERICA BANK, as a Lender
  
	
 
  	
 
  
	
 
  	
 
  
	
 
  	
By:
  	
/s/  Sarah R. Miller
  
	
 
  	
Name:
  	
Sarah R. Miller
  
	
 
  	
Title:
  	
Vice President
  

 

Signature Page to Second Amendment to Forbearance AgreementExhibit 10.2

 

23 December 2010

 

The Royal Bank of Scotland plc

Level 5

135 Bishopsgate

London EC2M 3UR

 

Dear Sirs

 

Loan Agreement dated 29 March 2007 as amended by a side letter dated 24 July 2007, a supplemental letter agreement dated 26 March 2008, a supplemental agreement dated 27 March 2009, a side letter dated 27 May 2009, a side letter dated 3 September 2009, a side letter dated 31 December 2009, a supplemental agreement dated 7 January 2010, a side letter dated 28 February 2010, a side letter dated 31 March 2010, an amending and restating agreement dated 6 May 2010 and a supplemental letter agreement dated 16 August 2010 each made between (i) Argyle Maritime Corp., Caton Maritime Corp., Dorchester Maritime Corp., Longwoods Maritime Corp., McHenry Maritime Corp. and Sunswyck Maritime Corp. as joint and several Borrowers, (ii) the banks and financial institutions listed therein as Lenders, (iii) the Royal Bank of Scotland plc as Mandated Lead Arranger and (iv) the Royal Bank of Scotland plc as Bookrunner, Agent, Security Trustee and Swap Bank relating to a term loan facility of US$150,000,000 (together the “Loan Agreement”)

 

Reference is hereby made to (i) the Loan Agreement and (ii) the Letter Agreement dated as of 12 November 2010 (the “Forbearance Letter”) whereby the Lenders agreed subject to the conditions therein to forbear from exercising any of the rights or remedies arising from the Events of Default as specified therein (the “Specified Events of Default”). Capitalized terms defined in the Loan Agreement or the Forbearance Letter and not otherwise defined herein are used herein as therein defined.

 

In order to allow time for TBS International plc and its affiliates to work with their various lenders (including the Lenders party to the Loan Agreement) towards a mutually agreeable solution on their outstanding indebtedness, we hereby request that the Lenders extend the period under which they agreed to forbear from exercising any of the rights or remedies arising from the Specified Events of Default available to them under the Finance Documents or under applicable law (all of which rights and remedies are hereby expressly reserved by the Lenders) until the earlier of (i) the occurrence of a Forbearance Termination Event and (ii) 12:01 a.m. E.S.T. on 1 February 2011 (the “Forbearance Extension Period”).  As used herein; a “Forbearance Termination Event” shall mean the occurrence of (i) any Event of Default under the Loan Agreement other than the Specified Events of Default or the Further Specified Events of Default (as defined below) or (ii) a breach of any of the conditions of this letter.

 

Such forbearance in respect of the Lenders’ rights and remedies under the Finance Documents is conditioned upon and subject to TBS International plc and/or their applicable subsidiaries and

 

 

affiliates having entered into amendments, waivers, forbearances or other modifications on or before 29 December 2010 in respect of each of (i) the other loan facilities listed on Schedule 1 hereto and (ii) any swap and guarantee facilities to which TBS International plc and/or their applicable subsidiaries and affiliates are a party, deferring and/or forbearing until no earlier than 1 February 2011 any rights of the respective creditor parties under such facilities arising as a result of the Specified Events of Default and Further Specified Events of Default.

 

(A)        In connection with your agreement hereunder, TBS International plc agrees:-

 

(a)                             that, subject to fulfilment of the condition set out in paragraph (B) below, $6,175,000 of the funds on the Restricted Equity Deposit Account shall be utilised by the Borrowers to meet payment of the delivery instalment of the Contract Price under the Shipbuilding Contract for Ship E which is scheduled for delivery on 5 January 2011;

 

(b)                            that each of the conditions referred to in (B) 1-5, 7 and 8 of the Forbearance Letter shall continue to apply during the Forbearance Extension Period;

 

(c)                             that the Term Sheet (as hereinafter defined) shall be read and construed to include the term that TBS International plc to provide on a semi annual basis within such period as may be agreed after the end of each financial half year updated financial projections for a period of not less than 24 months;

 

(d)                            not to agree to any material amendments to the Global Term Sheet as set out in Schedule 5 without the prior written consent of the Agent.

 

(B)                                TBS International plc’s agreement to utilise the $6,175,000 of the funds on the Restricted Equity Deposit Account to meet the payment of the delivery instalment for Ship E is conditional upon the Agent providing to TBS International plc prior to 5 January 2011 confirmation that all the Lenders have approved, subject to documentation, the proposed restructuring of the Loan Facility as per the term sheet attached at Schedule 4 (the “Term Sheet”), which approval shall be evidenced by the Agent providing TBS International plc with a copy of this letter signed by each Lender.

 

In the event that the condition specified in (B) above is not satisfied by 5 January 2011, then only $1,335,000 of the scheduled equity portion of the delivery instalment of Ship E (being $2,420,000) shall be utilised out of the Restricted Equity Deposit Account to meet the payment of such delivery instalment on delivery of Ship E (with the balance of such equity portion coming from cash flow) provided that TBS International plc agrees that, once the condition specified in (B|) above is subsequently satisfied after 5 January 2011, the Agent shall be entitled to request with the approval of all the Lenders that the balance of the funds on the Restricted Equity Deposit Account shall be applied towards prepayment of Loan E and that upon such request such prepayment shall be promptly made.

 

The Agent, for and on behalf of the Lenders, agrees that the drawdown for the Loans in respect of Ship D, Ship E and Ship F shall be modified to accommodate the above so that:

 

(i)                                     in the case where the $6,175,000 of the funds on the Restricted Equity Deposit Account are utilised to meet the payment of the delivery instalment for Ship E on delivery, the drawdown schedule is as set out in Schedule 3 Part (B);

 

 

(ii)                                  in the case where only $1,335,000 of the funds on the Restricted Equity Deposit Account are utilised to meet the payment of the delivery instalment for Ship E on delivery and the balance of the funds on the Restricted Equity Deposit Account are subsequently applied upon request of the Agent with the approval of all the Lenders towards prepayment of Loan E upon satisfaction of the condition specified in (B) above, the Borrowers shall be permitted to redraw the funds so prepaid after 5 January 2011 and so that the drawdown schedule is as set out in Schedule 3 Part (C).

 

Furthermore, the Agent, for and on behalf of the Lenders, agrees that for the purposes of determining whether the loan to value conditions specified in Clauses 4.2(a)(iii) and 4.2(b)(iii) and at the end of Clause 9.1)(g) of the Loan Agreement are satisfied in relation to the drawdown of the Advances relative to Ship D and Ship F under the applicable revised drawdown schedule:

 

(i)                                     the “Loans” shall exclude that part of the debt which has been attributed to such Ship which prior to the changes to the drawdown schedule would have been attributable to Ship E; and

 

(ii)                                  the amount of debt which would have been attributable to Ship E shall be the amount which would have been available for drawing when carrying out the tests in Clauses 4.2(a)(iii) and 4.2(b)(iii) and in the proviso at the end of Clause 9.1(g) of the Loan Agreement on delivery of Ship E as if there had been no rescheduling of the drawdowns.

 

Once all of Ship D, Ship E and Ship F have been delivered, the Lenders shall re-allocate the debt so that it is equal among the three Ships referred to above.

 

Subject to the terms and conditions set forth above, by counter-signing this letter the Agent, for itself and on behalf of the other Lenders, agree to forbear from exercising any of the rights or remedies arising solely from the Specified Events of Default and the defaults under Clause 19.1(f)(i), Clause 19.1(f)(ii) and Clause 19.1(g)(ix) of the Loan Agreement (the “Further Specified Events of Default”) arising from the suspension of payments by TBS International plc and its affiliates of certain scheduled principal installments owing in respect of Financial Indebtedness of such persons during the Forbearance Extension Period, as more particularly described in Schedule 2 hereto on the terms set forth in the Forbearance Letter, as modified by the terms above.

 

	
 
  	
Yours faithfully,
  
	
 
  	
 
  
	
 
  	
 
  
	
 
  	
TBS INTERNATIONAL PLC
  
	
 
  	
for itself, the Borrowers and the Corporate Guarantor
  
	
 
  	
 
  
	
 
  	
By: 
  	
/s/ Ferdinand V. Lepere
  
	
 
  	
 
  	
Name: Ferdinand V. Lepere
  
	
 
  	
 
  	
Title: Senior Executive Vice President Finance
  

 

 

Acknowledged and Agreed,

 

 

	
THE ROYAL BANK OF SCOTLAND PLC
  	
 
  
	
as Agent
  	
 
  
	
 
  	
 
  
	
By: 
  	
/s/ Jaine Tobin
  	
 
  
	
 
  	
Name: Jaine Tobin
  	
 
  
	
 
  	
Title: Associate Director
  	
 
  
	
 
  	
 
  
	
 
  	
 
  
	
Acknowledged and Agreed,
  	
 
  
	
 
  	
 
  
	
 
  	
 
  
	
THE ROYAL BANK OF SCOTLAND PLC
  	
 
  
	
as Lender
  	
 
  
	
 
  	
 
  
	
By: 
  	
/s/ Christopher L. Patrick
  	
 
  
	
 
  	
Name: Christopher L. Patrick
  	
 
  
	
 
  	
Title: Director, Transaction & Portfolio Management
  	
 
  
	
 
  	
 
  
	
 
  	
 
  
	
Acknowledged and Agreed,
  	
 
  
	
 
  	
 
  
	
CITIBANK, N.A.
  	
 
  
	
as Lender
  	
 
  
	
 
  	
 
  
	
By: 
  	
/s/ N. Thomas Eck
  	
 
  
	
 
  	
Name: N. Thomas Eck
  	
 
  
	
 
  	
Title: Vice President
  	
 
  
				

 

 

Acknowledged and Agreed,

 

 

	
LANDESBANK HESSEN-THURINGEN GIROZENTRALE
  
	
as Lender
  
	
 
  	
 
  
	
By: 
  	
/s/ Gerhard Winklmeier
  	
 
  
	
 
  	
Name: Gerhard Winklmeier
  	
 
  
	
 
  	
Title: Senior Vice President
  	
 
  
	
 
  	
 
  	
 
  
	
By: 
  	
/s/ Ralf Goebel
  	
 
  
	
 
  	
Name: Ralf Goebel
  	
 
  
	
 
  	
Title: Senior Vice President
  	
 
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
Acknowledged and Agreed,
  	
 
  
	
 
  	
 
  
	
 
  	
 
  
	
NORDDEUTSCHE LANDESBANK GIROZENTRALE
  	
 
  
	
as Lender
  	
 
  
	
 
  	
 
  	
 
  
	
By: 
  	
/s/ Christian Shmeding
  	
 
  
	
 
  	
Name: Christian Shmeding
  	
 
  
	
 
  	
Title:
  	
 
  
	
 
  	
 
  	
 
  
	
By: 
  	
/s/ Sebastian Schubert
  	
 
  
	
 
  	
Name: Sebastian Schubert
  	
 
  
	
 
  	
Title:
  	
 
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
Acknowledged and Agreed,
  	
 
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
SANTANDER UK PLC
  	
 
  
	
as Lender
  	
 
  
	
 
  	
 
  	
 
  
	
By: 
  	
/s/ Mark McCarthy
  	
 
  
	
 
  	
Name: Mark McCarthy
  	
 
  
	
 
  	
Title: Head of Shipping
  	
 
  

 

 

	
Acknowledged and Agreed,
  	
 
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
BANK OF AMERICA, N.A.
  	
 
  
	
as Lender
  	
 
  
	
 
  	
 
  	
 
  
	
By: 
  	
/s/ Robert L. Wallace, Jr.
  	
 
  
	
 
  	
Name: Robert L. Wallace, Jr.
  	
 
  
	
 
  	
Title: Senior Vice President
  	
 
  

 

 

Schedule 1

 

TBS CREDIT FACILITIES

 

Bank of America Credit Facilities

 

DVB Group Merchant Bank (Asia) Ltd Credit Facility

 

Credit Suisse Credit Facility

 

AIG Commercial Equipment Finance, Inc. Credit Facility

 

Commerzbank AG Credit Facility

 

Berenberg Bank Credit Facility

 

The Royal Bank of Scotland Credit Facility

 

 

Schedule 2

 

	
Facility
  	
 
  	
Principal Amount
  	
 
  	
Date
  	
 
  
	
Bank of America Facility as amended and restated on 26 March 2008
  	
 
  	
$
  	
9,500,000
  	
 
  	
31 December 2010
  	
 
  
	
AIG Facility dated as of 7 December 2007 
  	
 
  	
$
  	
1,750,000
  	
 
  	
1 January 2011
  	
 
  
	
DVB Facility dated as of 16 January 2008
  	
 
  	
$
  	
2,608,000
  	
 
  	
25 January 2011
  	
 
  

 

 

Schedule 3

 

Revised Drawdown Schedule

 

(A)          Existing Drawdown Schedule

 

	
 
  	
 
  	
Ship D
  	
 
  	
Ship E
  	
 
  	
Ship F
  	
 
  
	
Delivery Advance
  	
 
  	
$
  	
5,000,000
  	
 
  	
$
  	
5,000,000
  	
 
  	
$
  	
5,000,000
  	
 
  
	
Cash Flow
  	
 
  	
$
  	
1,085,000
  	
 
  	
$
  	
0
  	
 
  	
$
  	
0
  	
 
  
	
Restricted Cash
  	
 
  	
$
  	
1,335,000
  	
 
  	
$
  	
2,420,000
  	
 
  	
$
  	
2,420,000
  	
 
  
	
Payment to Seller
  	
 
  	
$
  	
7,420,000
  	
 
  	
$
  	
7,420,000
  	
 
  	
$
  	
7,420,000
  	
 
  

 

(B)           Revised Drawdown Schedule (with utilisation of all funds on Restricted Deposit Equity Account on delivery of Ship E)

 

	
 
  	
 
  	
Ship D
  	
 
  	
Ship E
  	
 
  	
Ship F
  	
 
  
	
Delivery Advance
  	
 
  	
$
  	
7,420,000
  	
 
  	
$
  	
160,000
  	
 
  	
$
  	
7,420,000
  	
 
  
	
Cash Flow
  	
 
  	
$
  	
0
  	
 
  	
$
  	
1,085,000
  	
 
  	
$
  	
0
  	
 
  
	
Restricted Cash
  	
 
  	
$
  	
0
  	
 
  	
$
  	
6,175,000
  	
 
  	
$
  	
0
  	
 
  
	
Payment to Seller
  	
 
  	
$
  	
7,420,000
  	
 
  	
$
  	
7,420,000
  	
 
  	
$
  	
7,420,000
  	
 
  

 

(C)           Revised Drawdown Schedule (with prepayment of Loan E from funds on Restricted Deposit Equity Account after delivery of Ship E)

 

	
 
  	
 
  	
Ship D
  	
 
  	
Ship E
  	
 
  	
Ship F
  	
 
  
	
Delivery Advance
  	
 
  	
$
  	
7,420,000
  	
 
  	
$
  	
5,000,000
  	
*
  	
$
  	
7,420,000
  	
 
  
	
Equity
  	
 
  	
$
  	
0
  	
 
  	
$
  	
2,420,000
  	
*
  	
$
  	
0
  	
 
  
	
Payment to Seller
  	
 
  	
$
  	
7,420,000
  	
 
  	
$
  	
7,420,000
  	
 
  	
$
  	
7,420,000
  	
 
  

 

*                 re-drawing of amount prepaid/increase of equity to be applied for Ship D and Ship F

 

 

Schedule 4

 

Term Sheet

 

 

Schedule 5

 

Global Term Sheet

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