Document:

Exhibit 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                                                                                                                                                                                                                                                                                                 November 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:-

 

1                                         the letter of 24th of September 2010
of TBS International plc (i) notifying us that various companies within
the TBS Group would be suspending the payment of certain 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.

 

2                                         our letter to you of 30 September 2010 whereby we
agreed subject to the conditions therein to waive the Events of Default
specified therein arising under the Facility Agreement resulting from the
Payment Suspension;

 

3                                         your notification to us that you wish to extend the
period of the Payment Suspension until 29 December 2010 (the “Extended Suspension Period”) which will include the
suspension of payment of:-

 

 

(a)                                  the repayment of principal
instalments each in the amount of $417,500 which are scheduled due under the
Loan Agreement on 1 December 2010, 9 December 2010 and 23 December 2010;
and

 

(b)                                 the repayment of principal
instalments which are scheduled due under the other credit facilities (“Other Credit Facilities”) to the New Corporate Guarantor or
subsidiaries of the New Corporate Guarantee as set out in the schedule hereto.

 

(A)                              Should you decide not to pay the principal instalments
falling due under the Facility Agreement and the Other Credit Facilities during
the Extended Suspension Period and you request the forbearance of your lenders
and swap providers (the “Creditors”) to
them exercising our rights under the respective facilities and swap
arrangements arising from the corresponding payment default under the Facility
Agreement and Other Credit Facilities, we as Issuer confirm our agreement not
to exercise during the Extended Suspension Period any of our rights or remedies
under the Facility Agreement and other Finance Documents arising from the
Events of Default due to such payment default under Clause 13.1(f)(i) and
Clause 13.1(f)(ii) of the Facility Agreement and the Events of Default due
to the Extended Suspension Period under Clause 13.1(g)(ix) and Clause
13.1(f)(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 to the New Corporate Guarantor and/or its subsidiaries have confirmed
their forbearance in respect of the payment default and the Extended Suspension
Period.

 

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)                                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 forbearance set
forth above and an Event of Default under the Facility Agreement:-

 

1.                                       the Borrowers shall not for each calendar week ending
during the Extended Suspension Period permit the aggregate daily closing
balance of Qualified Cash of the Security Parties to be less than $15,000,000
on the last Business Day of any week or on average in any week, of which at
least $5,000,000 (excluding any restricted cash) is deposited with us as Agent
under the Loan Agreement at all times (and during the Extended Suspension
Period, but subject to the forbearance against the exercise of our
rights and remedies arising from the Events of Default referred to in (A) not
ceasing to be effective or terminating as the case may be, such covenant under
this paragraph 1 shall replace the minimum cash liquidity covenant in Schedule
8(a) of the Facility Agreement);

 

2.                                       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;

 

3.                                       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;

 

 

4.                                       J Alix Partners to continue as financial adviser to
the New Corporate Guarantor and Corporate Guarantor until otherwise agreed in
writing by us as Issuer.  Should J Alix
Partners terminate their existing involvement with the New Corporate Guarantor
and Corporate Guarantor an alternative financial advisor, satisfactory to us as
Issuer, shall be appointed within 5 business days of J Alix Partners advising
termination of their contract with the New Corporate Guarantor and Corporate
Guarantor.  The newly appointed financial advisor shall continue to assist
the New Corporate Guarantor and Corporate Guarantor until otherwise agreed in
writing by us as Issuer;

 

5.                                       the Borrowers, the Corporate Guarantor and the New
Corporate Guarantor to continue negotiations in good faith for the
restructuring of the Loan Agreement and Other Credit Facilities until the
payment of principal instalments under the Loan Agreement and Other Credit
Facilities have been resumed to the satisfaction of ourselves and the other
Creditors; and;

 

8.                                       the New Corporate Guarantor and its subsidiaries shall
not agree with the other Creditors any more favourable terms in relation to
their consent or forbearance than those agreed with us as Issuer.

 

In the event that any of the conditions
referred to in (A) above are not fulfilled, or if the covenants in (B) above
are not fulfilled, the forbearance against the exercise of our rights and
remedies arising from the Events of Default specified in (A) shall cease
to be effective or shall terminate as the case may be and we as Issuer shall
remain entitled to exercise our rights under the Finance Documents arising from
such Events of Default.  Furthermore we
as Issuer reserve all our rights and remedies under the Finance Documents in
respect of any other Events of Default which may arise or have arisen.

 

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. Charatte

  	
   

  
	
   

  	
  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

  	
   

  

 

 

Schedule

 

	
  Facility

  	
   

  	
  Principal Amount

  	
   

  	
  Date

  	
   

  
	
  Royal Bank of Scotland plc Term Loan
  Facility dated as of March 29, 2007 (as amended from time to time
  thereafter)

  	
   

  	
  $

  	
  417,500

  	
   

  	
  December 1,
  2010

  	
   

  
	
  $

  	
  417,500

  	
   

  	
  December 9,
  2010

  	
   

  
	
  $

  	
  417,500

  	
   

  	
  December 23,
  2010

  	
   

  
	
  Credit Suisse AG Loan Agreement dated as of
  December 7, 2007 (as amended)

  	
   

  	
  $

  	
  437,000

  	
   

  	
  November 19,
  2010

  	
   

  
	
  $

  	
  437,000

  	
   

  	
  December 13,
  2010

  	
   

  
	
  Joh. Berenberg, Gossler & Co. KG Loan Agreement dated as of June 19,
  2008 (as amended)

  	
   

  	
  $

  	
  812,500

  	
   

  	
  December 22,
  2010

  	
   

  
	
  Commerzbank AG dated as of May 28,
  2008 (as amended)

  	
   

  	
  $

  	
  1,000,000

  	
   

  	
  December 2,
  2010Exhibit 10.4

 

November 15, 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 (i) the Loan Agreement and (ii) the Letter Agreement dated as of September 30,
2010 (the “Forbearance Letter”) whereby the
Credit Parties agreed subject to the conditions therein to forbear from
exercising any of the rights or remedies arising from the Specified Events of
Default as provided therein.  Capitalized
terms defined in the Loan Agreement 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 Credit Parties 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 Credit Parties) until the earlier of (i) the occurrence of
a Forbearance Termination Event and (ii) 12:01 a.m. E.S.T. on January 13,
2011 (the “Forbearance Extension Period”).

 

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 November 15,
2010 in respect of each of the other loan facilities listed on Schedule 1
hereto, deferring and/or forbearing until no earlier than December 29,
2010 any rights of the respective creditor parties under such loan facilities
arising as a result of the Payment Suspension. 
In connection with your agreement hereunder, TBS International, plc
agrees to pay a fee to the consenting Credit Parties in an amount of 0.05% of such
Credit Parties’ total outstanding loan amount under the Loan Agreement.

 

 

Subject
to the conditions 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:

 

(i)            during the
Forbearance Extension Period, the following minimum cash liquidity covenant
shall replace the existing minimum cash liquidity covenant contained in the
Bank of America Facility Financial Covenants:

 

“For each calendar week ending during the Forbearance Extension Period,
permit the aggregate daily closing balance of Qualified Cash of the Loan
Parties to be less than $15,000,000 on the last business day of any week or on
average in any week, of which a minimum average balance of $5,625,000 must be
deposited with Bank of America, N.A.”

 

;
and

 

(ii)           to forbear from
exercising any of the rights or remedies arising solely from the Specified
Events of Default (which shall include (in addition those identified in the Forbearance
Letter) defaults arising from the suspension of payments by TBS International,
public limited company and its affiliates of certain scheduled principal
installments owing in respect of Indebtedness of such persons during the
Forbearance Extension Period, as more particularly described on Schedule 1
hereto) on the terms set forth in the Forbearance Letter, as modified by the
terms above.

 

[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 and Chief
  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  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 Amount

  	
   

  	
  Date

  	
   

  
	
  Royal Bank of Scotland plc
  Term Loan Facility dated as of March 29, 2007 (as amended from time to
  time thereafter)

  	
   

  	
  $

  	
  417,500

  	
   

  	
  December 1, 2010

  	
   

  
	
   

  	
  $

  	
  417,500

  	
   

  	
  December 9, 2010

  	
   

  
	
   

  	
  $

  	
  417,500

  	
   

  	
  December 23, 2010

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Credit Suisse AG Loan
  Agreement dated as of December 7, 2007 (as amended)

  	
   

  	
  $

  	
  437,000

  	
   

  	
  November 19, 2010

  	
   

  
	
   

  	
  $

  	
  437,000

  	
   

  	
  December 13, 2010

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Joh. Berenberg,
  Gossler & Co. KG Loan
  Agreement dated as of June 19, 2008 (as amended)

  	
   

  	
  $

  	
  812,500

  	
   

  	
  December 22, 2010

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Commerzbank AG dated as of May 28, 2008 (as amended)

  	
   

  	
  $

  	
  1,000,000

  	
   

  	
  December 2, 2010

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