Document:

EX-10.3

 

	
  To :

  	
  (1)

  	
  TBS International plc

  
	
   

  	
   

  	
  Arthur Cox Building

  
	
   

  	
   

  	
  Earls Fort Terrace

  
	
   

  	
   

  	
  Dublin 2

  
	
   

  	
   

  	
  Ireland

  
	
   

  	
   

  	
   

  
	
   

  	
  (2)

  	
  Argyle Maritime Corp.

  
	
   

  	
   

  	
  Caton Maritime Corp.

  
	
   

  	
   

  	
  Dorchester Maritime Corp.

  
	
   

  	
   

  	
  Longwoods Maritime Corp.

  
	
   

  	
   

  	
  McHenry Maritime Corp.

  
	
   

  	
   

  	
  Sunswyck Maritime Corp.

  
	
   

  	
   

  	
  c/o Suite 306

  
	
   

  	
   

  	
  Commerce Building

  
	
   

  	
   

  	
  1 Chancery Lane

  
	
   

  	
   

  	
  Hamilton HM12

  
	
   

  	
   

  	
  Bermuda

  
	
   

  	
   

  	
   

  
	
   

  	
  (3)

  	
  TBS International Limited

  
	
   

  	
   

  	
  Suite 306,

  
	
   

  	
   

  	
  Commerce Building

  
	
   

  	
   

  	
  1 Chancery Lane

  
	
   

  	
   

  	
  Hamilton HM12

  
	
   

  	
   

  	
  Bermuda

  	
  30 September 2010

  

 

Dear Sirs

 

Facility Agreement dated 29 March 2007 as
amended from time to time and 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 Obligors, (ii) The
Royal Bank of Scotland plc as Issuer relating to a guarantee facility of
US$84,000,000 (the “Facility Agreement”)

 

We refer to the Facility Agreement.  Words and expressions defined therein shall
have the same meaning when used herein except as expressly provided in this
letter.

 

We refer to the letter of 24th of September 2010
of TBS International plc (the “TBS Request Letter”)
(i) notifying us that various companies within the TBS Group will be
suspending the payment of certain upcoming scheduled principal instalments
owing in respect of certain indebtedness of such companies as more particularly
described therein for a period of 45 days beginning on 30th September 2010
(the “Payment Suspension”) and (ii) requesting
a waiver of the Events of Default arising under the Facility Agreement
resulting from the Payment Suspension.

 

We acknowledge that the payment described in
the TBS Request Letter owed to Commerzbank was due and payable as of September 2,
2010 and such payment was made on September 30, 2010 (the “Commerzbank Payment”) and your request that we waive 

 

 

the Events of Default arising from the failure
to make the Commerzbank Payment on its due date (the “Commerzbank
Payment Default”).

 

(A)                              We as Issuer confirm our agreement to waive the Events
of Default arising from the Payment Suspension and the Commerzbank Payment
Default under clause 13.1(g) (ix) and clause 13.1(f)(i) and (ii) of
the Facility Agreement subject to the fulfilment of the following conditions:-

 

1.                                       You provide satisfactory evidence that (i) each
of the lenders under the facilities (the “Schedule 1 Facilities”)
listed in schedule 1 to the TBS Request Letter (attached hereto as Appendix I)
have consented to the Payment Suspension and the Commerzbank Payment Default
(the “Schedule 1 Consents”) and (ii) (a) any
other lenders to the New Corporate Guarantor or subsidiaries of the New
Corporate Guarantor not listed in schedule 1 to the TBS Request Letter and (b) any
swap providers under any of the swap arrangements of the New Corporate
Guarantor or subsidiaries, as necessary, both (a) and (b) inclusive
have consented to the Payment Suspension and the Commerzbank Payment Default or
waived cross default provisions as appropriate (the “Other
Lenders’ Consents”).

 

2.                                       We receive from you a copy of this letter duly
acknowledged by each of the Borrowers, the New Corporate Guarantor and the
Corporate Guarantor.

 

(B)                                In the event you are unable to obtain any of the
Schedule 1 Consents and/or the Other Lenders’ Consents (and therefore you are
unable to fulfil the condition in (A) 1. above) but you decide not to pay
the principal instalments falling due under the Schedule 1 Facilities during
the 45 day period and you request the forbearance of your lenders and swap
providers to them exercising their rights under the respective facilities and
swap arrangements arising from the corresponding payment default under the
Schedule 1 Facilities, we as Issuer confirm our agreement to waive the Events
of Default arising from such payment default and the Commerzbank Payment
Default under Clause 13.1(f)(i), and Clause 13.1(f)(ii) of the Facility
Agreement and to waive the Events of Default arising from the Payment
Suspension and the Commerzbank Payment Default under Clause 13.1(g)(ix) and
Clause 13.1(f)(i) and (ii) of the Facility Agreement subject to the
following conditions:

 

1.                                       You provide satisfactory evidence that all lenders
under bilateral facilities, all syndicates under syndicated facilities and all
swap providers under all swap facilities to the New Corporate Guarantor and/or
its subsidiaries have confirmed their forbearance in respect of the payment
default and the Commerzbank Payment Default.

 

2.                                       The condition referred to in (A).2 above is fulfilled.

 

(C)                                By signing the acknowledgement to this letter, each of
the Corporate Guarantor and the New Corporate Guarantor hereby agree to the
perform the following covenants and acknowledge and agree that failure to
perform such covenants shall result in a termination of the waiver set forth
above and an Event of Default under the Facility Agreement:-

 

 

1.                                       The New Corporate Guarantor to provide 13 week cash
flow statements showing in reasonable detail cash receipts and disbursements to
be updated and provided on a weekly basis;

 

2.                                       The New Corporate Guarantor to provide within 35 days
from the end of each calendar month (in addition to the monthly management
information to be provided under clause 9.5(d) of the Facility Agreement)
monthly financials including income statements, balance sheets, cash flows and
key performance indicators for the business.

 

3.               The New Corporate Guarantor to appoint a financial
advisor to assist it with the long term restructuring and negotiations with its
various lenders.  The financial advisor
will be selected from the list attached hereto as Appendix II.

 

In the event that any of the conditions
referred to in (A) and (B) above are not fulfilled, or if the
consents in (C) above are not fulfilled, the Events of Default referred to
in (A) and (B) above shall not be waived and we shall remain entitled
to exercise our rights under the Finance Documents arising therefrom.  Furthermore we reserve all our rights and
remedies under the Finance Documents in respect of any other Events of Default
which may arise or have arisen.

 

We also record our agreement that the remaining
past due commitment fee payable under Clause 14.1(b) of the Facility
Agreement for the period 1 October 2008 to 26 March 2010 inclusive
amounting to $498,406.48, shall be paid by the Obligors in two equal instalments
of $249,203.24 on 30 September 2010 and 29 October 2010 respectively.

 

Other than as set out in this letter the
provisions of the Facility Agreement shall remain unchanged and in full force
and effect.

 

This letter shall constitute a Finance Document
for the purposes of the Facility Agreement.

 

The provisions of clause 25 (Law and
Jurisdiction) of the Facility Agreement shall apply to this letter as if set
out in full but so that the references to “this agreement” are amended to read “this
letter”.

 

	
   

  	
  Yours
  faithfully

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  The
  Royal Bank of Scotland plc

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/
  Jon A. Charette

  	
   

  
	
   

  	
  Jon
  A. Charette

  	
   

  
	
   

  	
  Senior
  Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
  Accepted and agreed

  
	
  for and on behalf of

  
	
   

  
	
  TBS International Limited

  
	
  (as Corporate Guarantor)

  

 

 

	
  /s/ Ferdinand V. Lepere

  	
   

  
	
   

  	
   

  
	
  For and on behalf of

  	
   

  
	
   

  	
   

  
	
  Argyle Maritime Corp.

  	
   

  
	
  Caton Maritime Corp.

  	
   

  
	
  Dorchester Maritime Corp.

  	
   

  
	
  Longwoods Maritime Corp.

  	
   

  
	
  McHenry Maritime Corp.

  	
   

  
	
  Sunswyck Maritime Corp.

  	
   

  
	
  /s/ Ferdinand V. Lepere

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  For and on behalf of

  	
   

  
	
   

  	
   

  
	
  TBS International plc

  	
   

  
	
  (as New Corporate Guarantor)

  	
   

  
	
  /s/ Ferdinand V. Lepere

  	
   

  

 

 

Appendix
I

 

TBS
Request Letter

 

 

September 24, 2010

 

The Royal Bank of Scotland plc

Shipping Business Center

5-10 Great Tower Street

London EC3P 3HX

Fax: No:+44 207 085 7142

Attn: Transaction and Portfolio Management

 

RE; Request for waiver
under the Loan Agreement (as defined below)

 

Reference
is hereby made to the Amended and Restated Loan Agreement dated 6 May 2010 among  (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 (as amended to date, the “Loan Agreement”). Capitalized
terms defined in the Loan Agreement and not otherwise defined herein arc used
herein as therein defined.

 

We
hereby notify you that the Borrowers will be suspending the payment of certain
upcoming scheduled principal installments owing in respect of certain
Indebtedness of such persons, as more particularly described on Schedule 1
hereto, for a period of 45 days beginning on September 30, 2010 (the “Payment
Suspension”). The Payment Suspension will result in one or more Events of
Default occurring under the Loan Agreement, including under Section 19.1(f) of
the Loan Agreement (any such Event of Default resulting from the Payment
Suspension. the “Specified Events of Default”).

 

In
order to allow time for the Borrowers and affiliates to work with their various
lenders, including the Agent and the Lenders, towards a mutually agreeable
solution on their outstanding indebtedness, we hereby request that the Agent
and the other Lenders under the Loan Agreement waive the Specified Events of
Default.

 

By
counter-signing this letter, the Agent and the Lenders agrees to waive the
Specified Events of Default.

 

[Remainder of page intentionally
left blank]

 

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  	
  TBS International plc

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Ferdinand V. Lepere

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Ferdinand V. Lepere

  
	
   

  	
   

  	
  Title: Senior Executive
  Vice President 

  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Acknowledged and Agreed.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  The Royal Bank of Scotland plc,

  as Agent and Lender

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
                                                                        ,
  as Lender

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  Name:

  
	
   

  	
  Title:

  	
   

  	
   

  
								

 

 

Schedule 1

 

	
  Facility

  	
   

  	
  Principal Amount

  	
   

  	
  Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bank
  of America Facility, as amended and restated on March 26, 2008

  	
   

  	
  $

  	
  9,500,000

  	
   

  	
  September 30, 2010

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  AIG
  Facility dated as of December 7, 2007

  	
   

  	
  $

  	
  1,800,000

  	
   

  	
  October 1, 2010

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Commerzbank
  AG Facility dated as of May 28, 2008

  	
   

  	
  $

  	
  1,000,000

  	
   

  	
  October 1, 2010

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DVB
  Facility dated as of January 16, 2008

  	
   

  	
  $

  	
  2,600,000

  	
   

  	
  October 23, 2010

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Credit
  Suisse dated as of December 7, 2007

  	
   

  	
  $

  	
  400,000

  	
   

  	
  November 12, 2010

  	
   

  

 

 

Appendix
II

 

Financial
Advisor

 

1.              J. Alix Partners

 

2.              Blackstone

 

3.              FTI Consulting

 

4.              Zolfo Cooper

 

5.              Alvarez & Marsal

 

6.              Miller BuckfireEx-10.4

 

September 30, 2010

 

DVB
GROUP MERCHANT BANK (ASIA) LTD.

77
Robinson Road 30-02

Singapore

Attention: Martijn van Tuyl

Facsimile: +65 6511 0700

 

RE:                           Loan Agreement dated as of January 16, 2008 (as
amended, the “Loan Agreement”) among, inter alia, the parties
named therein as Borrowers (the “Borrowers”), the parties named therein
as Guarantors, the banks and financial institutions named therein as Lenders,
the banks and financial institutions named therein as Swap Banks, and DVB Group
Merchant Bank (Asia) Ltd. as Facility Agent (in such capacity, the “Facility
Agent”) and Security Trustee

 

Reference
is hereby made to the Loan Agreement. 
Capitalized terms defined in the Loan Agreement and not otherwise
defined herein are used herein as therein defined.

 

We
hereby notify you that  TBS
International plc and its subsidiaries and affiliates (including the Borrowers)
will be suspending the payment of certain upcoming scheduled principal
installments owing in respect of certain Financial Indebtedness of such persons,
as more particularly described on Schedule 1 hereto, for a period of 45 days
beginning on September 30, 2010 (the “Payment Suspension”).  The Payment Suspension will result in an
Event of Default under (i) Section 13.1(a) of the Loan Agreement
with respect to the principal installment due under the Loan Agreement on October 23,
2010 and (ii) Section 13.1(c) of the Loan Agreement with respect
to the scheduled principal installments due under the other loan facilities in
the amounts and on the dates set forth on Schedule 1 (such Events of Default,
the “Specified Events of Default”).

 

In
order to allow time for TBS International plc and its subsidiaries and
affiliates, including the Borrowers, 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 Credit Parties 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 Credit Parties) until the earlier of (i) the
occurrence of a Forbearance Termination Event and (ii) 12:01 a.m.
E.S.T. on November 15, 2010.  As
used herein, a “Forbearance Termination Event” shall mean the occurrence
of any Event of Default under the Loan Agreement other than the Specified
Events of Default.

 

 

Such
forbearance in respect of the Credit Parties’ 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 September 30,
2010 in respect of each of the other loan facilities listed on Schedule 1
hereto, deferring and/or forbearing any rights of the respective creditor
parties under such loan facilities arising as a result of the Payment
Suspension.

 

Subject
to the condition precedent stated in the preceding paragraph and subject to the
other terms and conditions set forth above, by counter-signing this letter the
Facility Agent, for itself and on behalf of the other Credit Parties, agrees to
forbear from exercising any of the rights or remedies arising from the
Specified Events of Default.

 

[Remainder of page intentionally left blank]

 

 

	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TBS INTERNATIONAL, PLC

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Ferdinand V. Lepere

  
	
   

  	
   

  	
  Name:
  Ferdinand V. Lepere

  
	
   

  	
   

  	
  Title:
  Senior Executive Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
  Acknowledged
  and Agreed,

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  DVB
  GROUP MERCHANT BANK (ASIA) LTD.,

  	
   

  
	
  As Facility Agent, for and on behalf of itself and
  the other Credit Parties

  
	
   

  
	
   

  	
   

  
	
  By:
  

  	
  /s/
  Jane Freeberg Sarma

  	
   

  	
   

  
	
   

  	
  Name:
  Jane Freeberg Sarma

  	
   

  	
   

  
	
   

  	
  Title:
  Attorney-in-fact

  	
   

  	
   

  

 

 

Schedule 1

 

	
  Facility

  	
   

  	
  Principal Payment Amount

  	
   

  	
  Date Due

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bank of America Facility,
  as amended and restated on March 26, 2008

  	
   

  	
  $

  	
  9,500,000

  	
   

  	
  September 30, 2010

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  AIG Facility dated as of
  December 7, 2007

  	
   

  	
  $

  	
  1,800,000

  	
   

  	
  October 1, 2010

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DVB Facility dated as of
  January 16, 2008

  	
   

  	
  $

  	
  2,608,000

  	
   

  	
  October 23, 2010

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